-----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, E2BtuVq8JyH2cVSpYedGya2ZzAO8eZmBW/tqbMJ7pAEXd4x1aAoBIbVo1mbGamxJ hwUZOqN5MjckBxNGSief4Q== 0000900092-05-000061.txt : 20050302 0000900092-05-000061.hdr.sgml : 20050302 20050302105313 ACCESSION NUMBER: 0000900092-05-000061 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041231 FILED AS OF DATE: 20050302 DATE AS OF CHANGE: 20050302 EFFECTIVENESS DATE: 20050302 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-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-02688 FILM NUMBER: 05652692 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-CSRS 1 ml7230.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 811-02688 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: Robert C. Doll, Jr., 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: 06/30/05 Date of reporting period: 07/01/04 - 12/31/04 Item 1 - Report to Stockholders (BULL LOGO) Merrill Lynch Investment Managers www.mlim.ml.com Merrill Lynch Municipal Bond Fund, Inc. Semi-Annual Report December 31, 2004 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) at www.mutualfunds.ml.com; and (3) on the Securities and Exchange Commission's Web site at http://www.sec.gov. Information about how the Fund voted proxies relating to securities held in the Fund's portfolio during the most recent 12-month period ended June 30 is available (1) at www.mutualfunds.ml.com and (2) on the Securities and Exchange Commission's Web site at http://www.sec.gov. Merrill Lynch Municipal Bond Fund, Inc. Box 9011 Princeton, NJ 08543-9011 A Letter From the President and Chief Investment Officer Dear Shareholder The U.S. equity market ended 2004 in positive territory, although not without some suspense along the way. Fixed income markets also performed well, with high yield bond investors enjoying some of the greatest returns. Over the past year, the equity market generally found support from a healthy economic environment, above-average corporate earnings, increased capital spending and still-low interest rates. Stalling the momentum somewhat throughout the year was a contentious election, negligible inflation amid a rising federal funds interest rate, record-high oil prices and the seemingly ever-present worries over terrorism and the war in Iraq. Still, the Standard & Poor's 500 Index posted a 12-month return of +10.88% and a six-month return of +7.19% as of December 31, 2004. The fourth quarter of the year proved to be the most telling, as the S&P 500 Index was up only 1.51% year-to-date as of September 30, 2004. As the price of oil relaxed and election uncertainties subsided, the market headed more convincingly upward in the last quarter of the year. Given the relatively positive environment for equities, the favorable performance of the bond market came as somewhat of a surprise. The Lehman Brothers Aggregate Bond Index posted a 12-month return of +4.34% and a six-month return of +4.18% as of December 31, 2004. The tax-exempt market performed just as well, with a 12-month return of +4.48% and a six-month return of +5.19%, as measured by the Lehman Brothers Municipal Bond Index. Those comfortable with a higher degree of risk benefited this past year, as the Credit Suisse First Boston High Yield Index posted a 12-month return of +11.95% and a six-month return of +9.26%. Interestingly, as the Federal Reserve Board began raising its target short-term interest rate, long-term bond yields were little changed. In fact, the yield on the 10-year Treasury was 4.24% at year-end compared to 4.27% at December 31, 2003. The yield on the two-year Treasury climbed to 3.08% at year-end 2004 from 1.84% a year earlier. As always, our investment professionals are closely monitoring the markets, the economy and the overall environment in an effort to make well-informed decisions for the portfolios they manage. For the individual investor, the key to investment success - particularly during uncertain times - is to maintain a long-term perspective and adhere to the disciplines of asset allocation, diversification and rebalancing. We encourage you to work with your financial advisor to ensure these time-tested techniques are incorporated into your investment plan. 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, (Robert C. Doll, Jr.) Robert C. Doll, Jr. President and Chief Investment Officer Merrill Lynch Investment Managers MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 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 team has 28 years of investment experience. 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 Portfolio Information 13 Disclosure of Expenses 14 Schedule of Investments--Limited Maturity Portfolio 16 Schedule of Investments--Insured Portfolio 20 Schedule of Investments--National Portfolio 24 Financial Statements 36 Financial Highlights 42 Notes to Financial Statements 54 Officers and Directors 61 MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 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 CFA Institute. In addition to Mr. DiMella, the investment team includes Portfolio Assistant Janine Bianchino and Analysts Jeff Moore, Mary Ezzo and Timothy Milway. Mr. Moore and Mr. Milway are CFA charterholders and members of the CFA Institute. Together, the team has more than 78 years of investment experience. 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. He is a CFA R charterholder and a member of the CFA Institute as well as a member of the New York Society of Security Analysts. In addition to Mr. O'Connor, the team includes Jim Schwartz and Greg Bennett. Mr. Schwartz earned a bachelor's degree from Rutgers College and an MBA from Monmouth University. He is a CFA charterholder. Mr. Bennet earned a bachelor's degree from West Chester University. The team has a combined 28 years of investment experience. Walter C. O'Connor Senior Portfolio Manager CFA R and Chartered Financial Analyst R are trademarks owned by the Association for Investment Management and Research. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 A Discussion With Your Portfolio Managers As the Federal Reserve Board embarked on a series of interest rate increases, the Portfolios continued to focus on preserving net asset value and enhancing the yield provided to shareholders. Describe the recent market environment relative to municipal bonds. Over the past six months, the Federal Reserve Board (the Fed) embarked on a monetary tightening policy that culminated in a 2.25% federal funds rate at December 31, 2004. As short-term bond yields rose in concert with the Fed interest rate hikes, long-term bond yields actually declined as their prices, which move in the opposite direction, increased. The rise in long-term bond prices came as somewhat of a surprise, as the economy generally continued to improve over the past six months. Gross domestic product growth was recently reported at 4% for the third quarter of 2004, up from 3.4% in the second quarter. Nevertheless, improvements in domestic business activity were offset by inflationary measures remaining in the 1.5% - 2% range. The first of five Fed interest rate hikes came on June 30. Although investors believed the Fed would continue to increase its short-term interest rate target, the Fed clearly articulated its intention to take a "measured" approach to monetary tightening. This removed much of the earlier concern that the Fed might embark on a dramatic series of interest rate increases, and the prospect for a more moderate tightening sequence helped support higher long-term bond prices. The four subsequent Fed interest rate increases had limited market impact, as monthly U.S. employment gains remained modest. In addition, strong currency-related demand for U.S. Treasury issues from many foreign governments helped bolster fixed income bond prices. By the end of December 2004, long-term U.S. Treasury bond yields stood at 4.85%, a decline of 46 basis points over the past six months. The yield on the 10-year U.S. Treasury note fell 36 basis points to 4.24%. In contrast, the two-year Treasury yield increased 38 basis points to 3.08% at December 31, 2004. While tax-exempt bond yields generally followed the same pattern as their taxable counterparts, yield volatility was more subdued than that seen in the U.S. Treasury market. Long-term revenue bond yields, as measured by the Bond Buyer Revenue Bond Index, fell 30 basis points over the six months. As reported by Municipal Market Data, AAA-rated issues maturing in 30 years saw their yields decline 41 basis points to 4.61%, while yields on 10-year AAA-rated issues declined 43 basis points to 3.52%. At the shorter end, yields on two- year AAA-rated municipal bonds rose 12 basis points, while yields on three-year AAA-rated issues actually fell 17 basis points, resulting in a flatter yield curve in this area. During the period, more than $170 billion in new long-term tax- exempt bonds was underwritten, a decline of nearly 7.5% versus the same six months a year ago. Supply of short-term municipal securities was limited during the period as well. The declining supply trend allowed tax-exempt bond prices to register significant gains over the period, performing similar to their taxable counterparts. New-issue municipal volume should be easily manageable in early 2005, continuing to support the tax-exempt market's favorable technical position. 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, 2004, Limited Portfolio's Class A, Class B, Class C and Class I Shares had total returns of +.61%, +.48%, +.48% and +.66%, respectively. (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.) For the same period, the Portfolio's unmanaged benchmarks, the Lehman Brothers Municipal Bond 3-Year General Obligation Index and the Lehman Brothers Municipal Bond Index, had respective returns of +2.15% and +5.19%. The Portfolio's comparable Lipper category of Short Municipal Debt Funds recorded an average return of +1.26% for the six-month period. (Funds in the Short Municipal Debt Funds category invest primarily in municipal debt issues with dollar- weighted average maturities of less than three years.) MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 A Discussion With Your Portfolio Managers (continued) In general, the Portfolio has more limited investment parameters than its benchmarks. While the indexes, particularly the Lehman Brothers Municipal Bond Index, measure the performance of longer- dated, higher-yielding securities, the Portfolio is limited to a maximum average maturity of two years. As short-term interest rates remained near their historic lows, bonds on the longer end of the yield curve offered more attractive yields, putting the Portfolio at a relative disadvantage. Compared to its Lipper peers, the Portfolio's underweight exposure to three-year and four-year bonds detracted from performance as the yields on these bonds fell and the short end of the yield curve flattened. The Fed's monetary tightening initiative has had the most significant impact on the short portion of the municipal yield curve, where the Portfolio invests. Overall, our strategy has been consistent during the past several periods, in anticipation of the upward trend in interest rates. Relative performance during the period reflected our defensive management strategy, as we remained focused on maintaining net asset value stability in the rising interest rate environment. Accordingly, we kept the Portfolio's duration - or sensitivity to changes in interest rates - at slightly above one year, shorter than the market average. At the same time, we kept the Portfolio's cash reserve position low in an effort to enhance yields for our shareholders. What changes were made to the Portfolio during the period? We did not make significant changes to the Portfolio or our strategy over the past six months. Based on our belief that short-term interest rates will continue to rise, we have been comfortable in allowing the Portfolio's duration to drift lower. This affords us the liquidity to reinvest at the most attractive levels. Having said that, we did take advantage of occasional opportunities to enhance short-term performance when bonds with attractive relative values became available. Throughout the period, we maintained the Portfolio's underweighting in bonds with three-year and four-year maturities. This portion of the yield curve has flattened considerably, giving us little incentive to assume additional market risk for only an incremental pickup in yield. Finally, we continued to emphasize securities offering higher coupon income, as these have generally outperformed lower-coupon bonds in rising interest rate environments. How would you characterize the Portfolio's position at the close of the period? We believe the Portfolio is well positioned for rising interest rates. If it appears the Fed will take a more aggressive approach to future rate hikes than is currently expected, we would consider positioning the Portfolio even more defensively. This might entail increasing our cash position, among other steps. Such a strategy would enable us to reinvest proceeds in a higher-rate environment in addition to making the Portfolio more interest rate-sensitive at a more opportune time. Peter J. Hayes Vice President and Senior Portfolio Manager January 18, 2005 Effective January 3, 2005, Merrill Lynch Municipal Bond Fund, Inc. - Limited Maturity Portfolio changed its name to Merrill Lynch Municipal Bond Fund, Inc. - Short-Term Portfolio. The name change does not affect the Portfolio's investment objective or your individual holding. The Portfolio's management team, investment process and fund symbols remain the same. We believe the new name better reflects the Portfolio's strategy of investing primarily in investment grade municipal bonds that have a maturity of less than four years or in municipal notes. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 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, 2004, Insured Portfolio's Class A, Class B, Class C and Class I Shares had total returns of +5.21%, +5.08%, +5.05% and +5.48%, respectively. (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 performed in line with its unmanaged benchmark, the Lehman Brothers Municipal Bond Index, which returned +5.19% for the same period. The Portfolio outperformed its comparable Lipper category of Insured Municipal Debt Funds, which had an average return of +4.72% for the six-month period. (Funds in this Lipper category invest primarily in municipal debt issues insured as to timely payment.) For the most part, we attribute the Portfolio's relative outperformance to our yield curve positioning and the competitive yield we have been able to achieve. Although the Portfolio was defensively structured with respect to interest rate sensitivity, we were underweight in bonds with maturities of less than 10 years. This contributed to relative performance as the yield curve flattened substantially during the period, causing shorter bonds to lose value while longer bonds increased in price. What changes were made to the Portfolio during the period? We maintained a focus on securities that we believed could offer our shareholders the best relative value in the insured municipal marketplace. To that end, we reduced the Portfolio's exposure to California tax-exempt bonds as their yields continued to approach their historical averages, making them less compelling investments. Profits were achieved from these sales. We added to our holdings in New Jersey and New York tax-exempt bonds, as increased supply served to weaken bond prices in both states, presenting an attractive buying opportunity. In addition, we continued to shift our focus further out on the yield curve. Our observations revealed that the yield curve had steepened significantly between 15 years and 30 years, causing spreads to approach their historical highs. We sought to take advantage of this phenomenon by investing in bonds with slightly longer maturities, specifically between 23 years and 26 years. How would you characterize the Portfolio's position at the close of the period? The Portfolio is fully invested and defensively positioned in anticipation of higher long-term interest rates. We will continue to emphasize a competitive yield and the preservation of the Portfolio's net asset value. Although our recent restructuring activity has involved bonds with slightly longer maturities, our focus has been on premium-coupon bonds exhibiting defensive characteristics. We believe this approach should help insulate the Portfolio from the market volatility that may accompany a rise in interest rates. Robert A. DiMella Vice President and Senior Portfolio Manager January 18, 2005 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, 2004, National Portfolio's Class A, Class B, Class C and Class I Shares had total returns of +5.08%, +4.82%, +4.69% and +5.12%, respectively. (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.) Portfolio results for the period were in line with the +5.19% return of the benchmark Lehman Brothers Municipal Bond Index. Notably, the Portfolio outperformed its comparable Lipper category of General Municipal Debt Funds, which had an average return of +4.72% for the six-month period. (Funds in this Lipper category invest primarily in municipal debt issues in the top four credit-rating categories.) MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 A Discussion With Your Portfolio Managers (concluded) We maintained a defensive market posture throughout the period in anticipation of rising long-term interest rates. Although that defensive positioning, including a shorter-than-average duration, results in slight underperformance during periods when interest rates fall, we believe it is the appropriate approach as the Fed continues on its mission to move short-term and long-term interest rates higher. Nevertheless, the Portfolio was able to provide competitive returns, in fact, outperforming its Lipper category average because of an above-average current yield. What changes were made to the Portfolio during the period? Throughout the past six months, we continued to emphasize a high level of tax-exempt income. We did not make any significant changes to the Portfolio's overall structure. We sought to maintain an above- average level of coupon income, with the average coupon in the Portfolio at 6.25%. The Portfolio remained fully invested throughout most of the six-month period. Given the strong demand for tax-exempt securities over the past several months, the yield penalty for holding cash reserves would have been far too severe. Because we were concerned about the potential for interest rate volatility, we sought to protect the Fund's net asset value by keeping its duration below the industry average and investing only in bonds meeting our strict standards for credit quality. In general, purchasing and selling activity was minimal, a strategy that was more tax-efficient for our shareholders. The trades we did make tended to focus on swap transactions designed to improve the Portfolio's current yield. How would you characterize the Portfolio's position at the close of the period? We maintained our defensive positioning with respect to interest rates at period-end. Despite recent improvements in bond prices, we continue to believe that the prudent strategy is to protect the Portfolio's net asset value. Thus, we are not looking to "chase" the current market rally by purchasing more interest rate-sensitive securities. With interest rates still near their historic lows, a number of municipalities have called back debt issued in higher interest rate environments. For the Portfolio, this has resulted in a year-end cash position of 3.5% of net assets. The challenge in the period ahead is to reinvest these assets on the long end of the tax-exempt yield curve while avoiding sectors of lower-rated securities where credit spread tightening has removed value. As we pursue this goal, we also want to avoid extending the Portfolio's duration, given our concerns about the future direction of interest rates. Walter C. O'Connor Vice President and Senior Portfolio Manager January 18, 2005 MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Performance Data About Fund Performance Investors are able to purchase shares of the Fund through multiple pricing alternatives: * Class A Shares incur a maximum initial sales charge (front-end load) of 4% and an account maintenance fee of 0.25% per year (but no distribution fee) for Insured and National Portfolios. Limited Maturity Portfolio incurs a maximum initial sales charge (front-end load) of 1% and an account maintenance fee of 0.10% per year (but no distribution fee). * 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. AllClass 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% per year and an account maintenance fee of 0.25% per year. Limited Maturity Portfolio is subject to a distribution fee of 0.20% per year and an account maintenance fee of 0.15% per year. All three classes of shares automatically convert to Class A Shares after approximately 10 years. (There is no initial sales charge for automatic share conversions.) * Class C Shares are subject to a distribution fee of 0.55% per year and an account maintenance fee of 0.25% per year for Insured and National Portfolios. Limited Maturity Portfolio is subject to a distribution fee of 0.20% per year and an account maintenance fee of 0.15% per year. 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 performance data current to the most recent month-end. 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 gain distributions, if any, 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. The Fund's Investment Adviser reimbursed a portion of its management fee. Without such reimbursement, performance would have been lower. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Performance Data (continued) Recent Performance Results*
6-Month 12-Month 10-Year Standardized As of December 31, 2004 Total Return Total Return Total Return 30-day Yield Limited Maturity Portfolio Class A Shares +0.61% +0.63% +42.36% 1.72% Limited Maturity Portfolio Class B Shares +0.48 +0.37 +38.60 1.48 Limited Maturity Portfolio Class C Shares +0.48 +0.46 +37.90 1.48 Limited Maturity Portfolio Class I Shares +0.66 +0.73 +43.63 1.82 Insured Portfolio Class A Shares +5.21 +4.33 +83.11 3.69 Insured Portfolio Class B Shares +5.08 +3.80 +74.06 3.34 Insured Portfolio Class C Shares +5.05 +3.75 +73.19 3.29 Insured Portfolio Class I Shares +5.48 +4.72 +87.92 3.93 National Portfolio Class A Shares +5.08 +5.34 +90.57 3.79 National Portfolio Class B Shares +4.82 +4.80 +81.16 3.45 National Portfolio Class C Shares +4.69 +4.65 +80.09 3.40 National Portfolio Class I Shares +5.12 +5.50 +95.15 4.04 Lehman Brothers 3-Year General Obligation Bond Index++ +2.15 +1.92 +62.25 -- Lehman Brothers Municipal Bond Index++++ +5.19 +4.48 +97.78 -- * Investment results shown do not reflect sales charges; results shown would be lower if a sales charge were included. Cumulative 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. ++ This unmanaged Index consists of state and local government obligation bonds that mature in 3 - 4 years, rated Baa or better. ++++ This unmanaged Index consists of revenue bonds, prerefunded bonds, general obligation bonds and insured bonds, all of which mature within 30 years.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Performance Data (continued) Average Annual Total Return--Limited Maturity Portfolio Return Without Return With Sales Charge Sales Charge** Class A Shares* One Year Ended 12/31/04 +0.63% -0.38% Five Years Ended 12/31/04 +3.16 +2.95 Ten Years Ended 12/31/04 +3.59 +3.49 * Maximum sales charge is 1%. ** Assuming maximum sales charge. Return Return Without CDSC With CDSC** Class B Shares* One Year Ended 12/31/04 +0.37% -0.62% Five Years Ended 12/31/04 +2.87 +2.87 Ten Years Ended 12/31/04 +3.32 +3.32 * 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 12/31/04 +0.46% -0.53% Five Years Ended 12/31/04 +2.87 +2.87 Ten Years Ended 12/31/04 +3.27 +3.27 * 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 12/31/04 +0.73% -0.28% Five Years Ended 12/31/04 +3.24 +3.03 Ten Years Ended 12/31/04 +3.69 +3.58 * Maximum sales charge is 1%. ** Assuming maximum sales charge. Average Annual Total Return--Insured Portfolio Return Without Return With Sales Charge Sales Charge** Class A Shares* One Year Ended 12/31/04 +4.33% +0.15% Five Years Ended 12/31/04 +6.99 +6.12 Ten Years Ended 12/31/04 +6.24 +5.80 * Maximum sales charge is 4%. ** Assuming maximum sales charge. Return Return Without CDSC With CDSC** Class B Shares* One Year Ended 12/31/04 +3.80% -0.19% Five Years Ended 12/31/04 +6.45 +6.14 Ten Years Ended 12/31/04 +5.70 +5.70 * 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 12/31/04 +3.75% +2.75% Five Years Ended 12/31/04 +6.40 +6.40 Ten Years Ended 12/31/04 +5.65 +5.65 * 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 12/31/04 +4.72% +0.53% Five Years Ended 12/31/04 +7.26 +6.38 Ten Years Ended 12/31/04 +6.51 +6.08 * Maximum sales charge is 4%. ** Assuming maximum sales charge. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Performance Data (concluded) Average Annual Total Return--National Portfolio Return Without Return With Sales Charge Sales Charge** Class A Shares* One Year Ended 12/31/04 +5.34% +1.12% Five Years Ended 12/31/04 +7.43 +6.56 Ten Years Ended 12/31/04 +6.66 +6.23 * Maximum sales charge is 4%. ** Assuming maximum sales charge. Return Return Without CDSC With CDSC** Class B Shares* One Year Ended 12/31/04 +4.80% +0.80% Five Years Ended 12/31/04 +6.89 +6.58 Ten Years Ended 12/31/04 +6.12 +6.12 * 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 12/31/04 +4.65% +3.65% Five Years Ended 12/31/04 +6.84 +6.84 Ten Years Ended 12/31/04 +6.06 +6.06 * 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 12/31/04 +5.50% +1.28% Five Years Ended 12/31/04 +7.70 +6.82 Ten Years Ended 12/31/04 +6.91 +6.48 * Maximum sales charge is 4%. ** Assuming maximum sales charge. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Portfolio Information as of December 31, 2004 Distribution by Market Sector Percent of Total Limited Maturity Portfolio Investments Other Revenue Bonds 50.2% General Obligation and Tax Revenue Bonds 42.5 Prerefunded Bonds 7.3 Percent of Total Insured Portfolio Investments Other Revenue Bonds 71.0% General Obligation & Tax Revenue Bonds 26.7 Prerefunded Bonds* 2.3 * Backed by escrow fund. Percent of Total National Portfolio Investments Other Revenue Bonds 74.8% General Obligation Bonds 16.6 Prerefunded Bonds 8.6 MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Disclosure of Expenses Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees, distribution fees including 12(b)-1 fees, and other Fund expenses. The following example (which is based on a hypothetical investment of $1,000 invested on July 1, 2004 and held through December 31, 2004) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds. The first table of each Portfolio provides information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 and then multiply the result by the number in the first line under the heading entitled "Expenses Paid During the Period." The second table of each Portfolio provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses. In order to assist shareholders in comparing the ongoing expenses of investing in this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds' shareholder reports. The expenses shown in the table are intended to highlight shareholders ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. Therefore, the second table is useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.
Expenses Paid Ending During the Period* Beginning Account Value July 1, 2004 to Account Value December 31, December 31, Limited Maturity Portfolio July 1, 2004 2004 2004 Actual Class A $1,000 $1,006.10 $2.76 Class B $1,000 $1,004.80 $4.09 Class C $1,000 $1,004.80 $4.09 Class I $1,000 $1,006.60 $2.25 Hypothetical (5% annual return before expenses)** Class A $1,000 $1,022.73 $2.78 Class B $1,000 $1,021.40 $4.12 Class C $1,000 $1,021.40 $4.12 Class I $1,000 $1,023.24 $2.27 * For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (.54% for Class A, .80% for Class B, .80% for Class C and .44% for Class I), multiplied by the average account value over the period, multiplied by 186/365 (to reflect the one-half year period shown). ** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the most recent fiscal half-year divided by 365.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Disclosure of Expenses (concluded)
Expenses Paid Ending During the Period* Beginning Account Value July 1, 2004 to Account Value December 31, December 31, Insured Portfolio July 1, 2004 2004 2004 Actual Class A $1,000 $1,052.10 $3.66 Class B $1,000 $1,050.80 $6.32 Class C $1,000 $1,050.50 $6.58 Class I $1,000 $1,054.80 $2.36 Hypothetical (5% annual return before expenses)** Class A $1,000 $1,021.91 $3.61 Class B $1,000 $1,019.31 $6.23 Class C $1,000 $1,019.06 $6.48 Class I $1,000 $1,023.19 $2.32 * For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (.70% for Class A, 1.21% for Class B, 1.26% for Class C and .45% for Class I), multiplied by the average account value over the period, multiplied by 186/365 (to reflect the one-half year period shown). ** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the most recent fiscal half-year divided by 365.
Expenses Paid Ending During the Period* Beginning Account Value July 1, 2004 to Account Value December 31, December 31, National Portfolio July 1, 2004 2004 2004 Actual Class A $1,000 $1,050.80 $4.44 Class B $1,000 $1,048.20 $7.10 Class C $1,000 $1,046.90 $7.35 Class I $1,000 $1,051.20 $3.14 Hypothetical (5% annual return before expenses)** Class A $1,000 $1,021.15 $4.38 Class B $1,000 $1,018.55 $6.99 Class C $1,000 $1,018.29 $7.25 Class I $1,000 $1,022.42 $3.09 * For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (.85% for Class A, 1.36% for Class B, 1.41% for Class C and .60% for Class I), multiplied by the average account value over the period, multiplied by 186/365 (to reflect the one-half year period shown). ** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the most recent fiscal half-year divided by 365.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments Limited Maturity Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Arizona--5.8% $ 4,000 Arizona State University, COP, Refunding, 4% due 7/01/2006 (d) $ 4,103 4,000 Central Arizona, Water Conservation District, Contract Revenue Refunding Bonds (Central Arizona Project), Series A, 5.40% due 11/01/2005 4,111 Maricopa County, Arizona, Pollution Control Corporation, PCR, VRDN, Refunding (Arizona Public Service Company) (b): 2,500 Series C, 1.95% due 3/01/2005 2,498 4,000 Series E, 1.875% due 3/01/2005 3,994 8,640 Phoenix, Arizona, Civic Improvement Corporation, Water System Revenue Bonds, Junior Lien, 5.90% due 7/01/2006 (a) 9,112 Salt River Project, Arizona, Agriculture Improvement and Power District, Electric System Revenue Refunding Bonds (Salt River Project): 6,710 Series A, 5.25% due 1/01/2006 6,915 890 Series B, 7% due 1/01/2005 890 1,455 Series B, 7% due 1/01/2005 (g) 1,455 Arkansas--1.0% Fayetteville, Arkansas, Sales and Use Tax Capital Improvement, Special Assessment Bonds: 1,970 4% due 12/01/2005 2,005 2,115 4% due 12/01/2006 2,182 1,500 Little Rock, Arkansas, GO, Refunding (Capital Improvement), 4% due 4/01/2006 (e) 1,532 California--3.0% 3,165 California Pollution Control Financing Authority, PCR (Southern California Edison Company), VRDN, Series B, 2% due 3/01/2006 (b) 3,133 10,000 California Statewide Communities Development Authority Revenue Bonds (Kaiser Permanente), VRDN, Series C, 3.70% due 6/01/2005 (b) 10,067 3,750 Natomas, California, Unified School District, COP (Natomas High School Project), 2.50% due 2/01/2028 (c) 3,752 Colorado--0.9% 5,000 Denver, Colorado, City and County Airport Revenue Refunding Bonds, AMT, Series A, 5.25% due 11/15/2006 (f) 5,257 Connecticut--1.0% 2,700 Connecticut State, GO, Refunding, Series C, 4% due 12/15/2005 2,751 2,630 Waterbury, Connecticut, GO, Refunding, 4% due 2/01/2005 (h) 2,634 Delaware--0.7% 4,125 Delaware State, GO, Series A, 5% due 1/01/2006 4,246 Florida--0.7% 1,000 Florida State Board of Education, Capital Outlay, GO (Public Education), Series B, 5.625% due 6/01/2005 1,015 2,500 Florida State Board of Education, Lottery Revenue Bonds, Series B, 5.25% due 7/01/2005 (f) 2,541 400 Hillsborough County, Florida, Aviation Authority, Revenue Refunding Bonds (Tampa International Airport), AMT, Series A, 5% due 10/01/2005 (c) 409 Georgia--4.8% 5,000 Coweta County, Georgia, School District, GO, Sales Tax, 4.50% due 8/01/2005 5,073 2,550 Georgia State, GO, Refunding, Series A, 6.25% due 3/01/2006 2,670 4,360 Georgia State, GO, Series B, 4.50% due 5/01/2006 4,496 Gwinnett County, Georgia, School District, GO, Refunding: 4,000 4% due 2/01/2005 4,007 1,000 4.50% due 2/01/2006 1,026 4,680 Henry County, Georgia, GO, 4% due 7/01/2006 4,804 5,000 Henry County, Georgia, School District, GO, 5% due 4/01/2007 (f) 5,299
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 FHA Federal Housing Authority 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 M/F Multi-Family PCR Pollution Control Revenue Bonds RIB Residual Interest Bonds S/F Single-Family TRAN Tax Revenue Anticipation Notes VRDN Variable Rate Demand Notes MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments (continued) Limited Maturity Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Hawaii--0.6% $ 3,505 Hawaii State Highway, Revenue Refunding Bonds, 3% due 7/01/2005 (e) $ 3,522 Illinois--3.2% 4,000 Chicago, Illinois, Transit Authority, Capital Grant Receipts Revenue Bonds (Federal Transit Administration Section 5307 Formula Funds), Series A, 4% due 6/01/2006 (c) 4,097 7,000 Illinois Development Finance Authority, PCR, Refunding (Commonwealth Edison Company Project), Series A, 4.40% due 12/01/2006 (c) 7,248 3,740 Metropolitan Pier and Exposition Authority, Illinois, Dedicated State Tax Revenue Refunding Bonds, Series A, 6% due 12/15/2006 (c) 4,002 University of Illinois, COP (Utility Infrastructure Projects), Refunding (c): 1,065 4% due 8/15/2005 1,078 2,000 5% due 8/15/2006 2,086 Indiana--0.8% 4,300 Indiana State Development Finance Authority, PCR, Refunding (Southern Indiana Gas & Electric), AMT, Series C, 5% due 3/01/2006 (c) 4,392 Iowa--2.2% Ankeny, Iowa, GO, BAN: 6,920 Series C, 1.50% due 6/01/2005 6,925 5,775 Series D, 2% due 12/01/2005 5,773 Kansas--3.5% 20,229 Unified Government of Wyandotte County and Kansas City, Kansas, GO (Municipal Temporary Notes), Series I, 1.35% due 4/01/2005 20,183 Louisiana--0.7% 4,000 Orleans Parish, Louisiana, School Board, GO, 7.50% due 9/01/2005 (a)(f) 4,144 Maryland--2.0% 10,000 Maryland State, GO, Refunding, 5% due 2/01/2007 10,574 1,050 Maryland State Health and Higher Educational Facilities Authority, Revenue Refunding Bonds (Lifebridge Health), Series A, 4% due 7/01/2006 1,075 Massachusetts--2.7% 15,070 New England Education Loan Marketing Corporation, Massachusetts, Student Loan Revenue Refunding Bonds, AMT, Series A, 5.70% due 7/01/2005 15,335 Michigan--5.1% 5,000 Detroit, Michigan, Economic Development Corporation, Resource Recovery Revenue Refunding Bonds, AMT, Series A, 3.80% due 5/01/2005 (c) 5,030 32,750 Huron Valley, Michigan, School District, GO, 6.535%* due 5/01/2006 (a)(f) 11,668 Michigan Municipal Bond Authority Revenue Bonds: 1,000 (Local Government Loan Program), Series C, 4% due 5/01/2006 1,023 6,890 (Pooled Project), Series B, 5.625% due 4/01/2006 (a) 7,314 Michigan State Hospital Finance Authority, Revenue Refunding Bonds (Oakwood Obligated Group): 2,000 5% due 11/01/2005 2,039 2,000 5% due 11/01/2006 2,081 Minnesota--2.5% 8,315 Minneapolis, Minnesota, Revenue Bonds (Minneapolis Society of Fine Arts), VRDN, 1.75% due 10/14/2015 (b) 8,306 6,000 Minnesota State Housing Finance Agency Revenue Bonds (Residential Housing Finance), Series D, 1.40% due 7/21/2005 5,978 Missouri--2.3% 3,980 Kansas City, Missouri, Passenger Facility Charge Revenue Bonds, AMT, 5% due 4/01/2007 (c) 4,191 4,000 Kansas City, Missouri, School District, Building Revenue Refunding Bonds, Series A, 5% due 2/01/2006 (f) 4,121 5,000 Missouri State Public Utilities Commission, Interim Construction Notes, 2.75% due 10/01/2005 5,019 New Jersey--3.2% Jersey City, New Jersey, GO, Refunding: 4,550 (Public Improvement), Series A, 4% due 9/01/2007 (d) 4,741 4,680 (Real Property Tax Appeal), Series A, 2.50% due 1/07/2005 4,680 3,000 New Jersey EDA, Market Transition Facility, Revenue Refunding Bonds, Senior Lien, Series A, 5% due 7/01/2006 (d) 3,122 5,000 New Jersey State Transit Corporation, COP, 6.50% due 4/01/2007 (a)(e) 5,506 New Mexico--4.5% 6,645 New Mexico Finance Authority, Public Project Revolving Fund Revenue Bonds, Series C, 4% due 6/01/2006 (c) 6,810 5,000 New Mexico State Severance Tax Refunding Bonds, Series A, 5% due 7/01/2005 5,075 3,595 Rio Rancho, New Mexico, Water and Wastewater System Revenue Bonds, Series A, 6% due 5/15/2006 (a)(e) 3,779 10,000 San Juan County, New Mexico, Gross Receipts Tax Revenue Bonds, Subordinate Series A, 2.50% due 8/15/2005 10,026 New York--5.6% 5,000 Metropolitan Transportation Authority, New York, Service Contract Revenue Bonds, Series B, 5.25% due 7/01/2006 5,214 7,500 Monroe County, New York, BAN, 4% due 7/28/2005 7,558 7,000 New York City, New York, GO, Refunding, Series G, 5% due 8/01/2005 7,119 7,805 New York State Dormitory Authority, City University System Consolidated Revenue Refunding Bonds (Fourth General Resolution), Series A, 5% due 7/01/2006 8,099 4,000 Suffolk County, New York, IDA, Southwest Sewer System Revenue Refunding Bonds, 4% due 2/01/2006 (h) 4,074
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments (continued) Limited Maturity Portfolio (In Thousands)
Face State Amount Municipal Bonds Value North Carolina--5.0% $ 6,100 North Carolina State, GO, Refunding, 4% due 3/01/2007 $ 6,330 10,900 North Carolina State, Highway Improvements, GO, 3% due 5/01/2006 11,027 5,000 North Carolina State, Public School Building, GO, 4.60% due 4/01/2006 5,154 6,085 Wake County, North Carolina, GO, Refunding, 4% due 3/01/2007 6,315 Ohio--1.8% Ohio State, Highway Capital Improvement, GO: 5,375 Series C, 4.75% due 5/01/2005 5,426 4,850 Series F, 5% due 5/01/2005 4,900 Oklahoma--1.1% 630 Midwest City, Oklahoma, Municipal Authority, Capital Improvement Revenue Bonds, 4.55% due 6/01/2005 (e)(g) 637 3,040 Oklahoma City, Oklahoma, Airport Trust Revenue Refunding Bonds, Junior Lien, AMT, 28th Series, 4% due 7/01/2005 (d) 3,069 2,500 Oklahoma Development Finance Authority Revenue Bonds (Conoco Project), VRDN, AMT, Series B, 2.17% due 8/01/2037 (b) 2,500 Oregon--0.4% 2,385 Tri-County, Oregon, Metropolitan Transportation District Revenue Bonds, Series A, 5.25% due 8/01/2005 2,430 Pennsylvania--2.3% 9,620 Allegheny County, Pennsylvania, Port Authority, Subordinate Lien Special Revenue Transportation Bonds, 5.375% due 6/01/2006 (d) 10,045 3,000 Midway Sewerage Authority, Pennsylvania, Revenue Notes, 2% due 12/01/2005 2,991 Rhode Island--2.3% 2,500 Rhode Island Housing and Mortgage Finance Corporation, Homeowner Opportunity Revenue Bonds, AMT, Series 41-C, 3.375% due 11/01/2005 2,521 10,000 Rhode Island State Economic Development Corporation, Grant Anticipation Bonds (Rhode Island Department of Transportation), 5% due 6/15/2006 10,386 South Carolina--0.8% 3,565 Beaufort County, South Carolina, School District, GO, Refunding, Series C, 5% due 4/01/2007 3,780 500 South Carolina State Highway, GO, Series B, 5.25% due 4/01/2005 504 Tennessee--0.7% 3,815 Hamilton County, Tennessee, GO, Refunding, 4% due 10/01/2005 (f) 3,872 Texas--12.4% 3,310 Corpus Christi, Texas, GO (General Improvement), Refunding, Series A, 5% due 3/01/2006 (e) 3,412 1,250 Dallas County, Texas, Community College District, GO (Maintenance Tax Notes), 5% due 2/15/2008 1,343 6,000 Dallas, Texas, Airport Revenue Bonds, 5% due 4/01/2007 (c) 6,335 1,000 El Paso, Texas, Airport Revenue Refunding Bonds (El Paso International Airport), AMT, 4% due 8/15/2005 (e) 1,012 8,180 Gulf Coast Waste Disposal Authority, Texas, PCR (Amoco Oil Company Project), 2% due 10/01/2006 8,130 14,000 Matagorda County, Texas, Navigation District No. 1, PCR (Central Power and Light Company), Refunding, Series A, 4.55% due 11/01/2006 14,425 4,000 Texas A & M University, Financing System Revenue Refunding Bonds, 4.65% due 5/15/2006 4,128 10,025 Texas Public Finance Authority, Capital Appreciation Building Revenue Refunding Bonds, 2.45%* due 8/01/2006 (d)(g) 9,662 3,000 Texas Water Development Board Revenue Bonds (State Revolving Fund), Senior Lien, Series A, 6% due 7/15/2006 3,168 4,000 Trinity River Authority, Texas, Regional Wastewater System Revenue Refunding Bonds, 5% due 8/01/2006 (d) 4,169 4,950 University of Houston, Texas, University Revenue Refunding Bonds, Series B, 5% due 2/15/2005 (e) 4,968 10,000 Weatherford, Texas, Independent School District, GO, Series A, 2.50% due 8/01/2005 10,003 Virginia--3.1% 7,000 Amelia County, Virginia, IDA, Solid Waste Disposal Revenue Refunding Bonds (Waste Management Project), AMT, 4.90% due 4/01/2005 7,035 6,875 Louisa, Virginia, IDA, Solid Waste and Sewer Disposal Revenue Bonds (Virginia Electric and Power Company Project), AMT, Series A, 2.35% due 4/01/2007 6,760 3,900 Virginia State Public School Authority, School Financing, GO, Series B, 4% due 8/01/2005 3,946 Washington--5.1% 3,345 King County, Washington, GO, Refunding, 5% due 12/01/2005 3,434 2,180 Seattle, Washington, GO, 5% due 8/01/2006 2,274 Seattle, Washington, GO, Refunding and Improvement: 5,000 4% due 8/01/2005 5,059 3,455 4% due 8/01/2006 3,550 2,180 Seattle, Washington, GO, Refunding, Series A, 5.25% due 3/01/2005 2,192 7,195 Washington State, GO, Series B and AT-7, 6.10% due 6/01/2006 7,576 5,000 Washington State Public Power Supply System, Revenue Refunding Bonds (Nuclear Project Number 1), Series A, 6% due 7/01/2005 (c) 5,098 West Virginia--0.4% 2,230 West Virginia State Building Commission Revenue Bonds, Series A, 5.50% due 7/01/2006 (d) 2,336 Wisconsin--3.0% 4,800 Racine, Wisconsin, Waterworks System, BAN, 2.125% due 9/01/2005 4,801 11,795 Wisconsin State, GO, Series C, 4% due 5/01/2006 12,066
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments (concluded) Limited Maturity Portfolio (In Thousands)
Face Amount Municipal Bonds Value Puerto Rico--3.3% Puerto Rico Commonwealth Highway and Transportation Authority, Highway Revenue Refunding Bonds, Series AA: $13,505 5% due 7/01/2005 $ 13,704 5,000 5% due 7/01/2006 5,196 Total Municipal Bonds (Cost--$563,672)--98.5% 562,653 Shares Held Short-Term Securities 7,204 Merrill Lynch Institutional Tax-Exempt Fund (i) 7,204 Total Short-Term Securities (Cost--$7,204)--1.3% 7,204 Total Investments (Cost--$570,876**)--99.8% 569,857 Other Assets Less Liabilities--0.2% 1,205 --------- Net Assets--100.0% $ 571,062 ========= (a) Prerefunded. (b) Security has a maturity of more than one year, but has variable rate and demand features that qualify it as a short-term security. The rate disclosed is that currently in effect. This rate changes periodically based upon prevailing market rates. (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) were as follows: (in Thousands) Net Dividend Affiliate Activity Income Merrill Lynch Institutional Tax-Exempt Fund (9,610) $127 * Represents a zero coupon bond; the interest rate shown reflects the effective yield at the time of purchase by the Fund. ** The cost and unrealized appreciation/depreciation of investments as of December 31, 2004, as computed for federal income tax purposes, were as follows: (in Thousands) Aggregate cost $ 570,876 ============== Gross unrealized appreciation $ 895 Gross unrealized depreciation (1,914) -------------- Net unrealized depreciation $ (1,019) ============== See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments Insured Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Alabama--2.3% Alabama Water Pollution Control Authority Revenue Bonds (b): $ 3,020 5.75% due 8/15/2018 $ 3,393 1,585 Revolving Fund Loan, Series A, 6.75% due 8/15/2005 (a) 1,631 10,000 Lauderdale County and Florence, Alabama, Health Care Authority, Revenue Refunding Bonds (Coffee Health Group), Series A, 6% due 7/01/2029 (e) 11,373 7,000 University of Alabama, University Revenue Bonds (Birmingham), 6% due 10/01/2020 (g) 7,880 Arkansas--1.1% University of Arkansas, University Revenue Bonds (Various Facilities, Fayetteville Campus) (g): 6,060 5.50% due 12/01/2021 6,795 5,000 5% due 12/01/2027 5,155 California--19.8% 19,000 California Pollution Control Financing Authority, PCR, Refunding (Pacific Gas & Electric), AMT, Series A, 5.35% due 12/01/2016 (e) 20,534 2,075 California State Department of Veteran Affairs, Home Purpose Revenue Refunding Bonds, Series A, 5.35% due 12/01/2027 (b) 2,161 California State Department of Water Resources, Power Supply Revenue Bonds, Series A: 12,000 5.375% due 5/01/2017 (f) 13,306 10,250 5.375% due 5/01/2021 (e) 11,235 6,385 5.375% due 5/01/2022 (e) 6,981 3,500 California State Economic Recovery Bonds, GO, Series A, 5.25% due 7/01/2014 (g) 3,976 Golden State Tobacco Securitization Corporation of California, Tobacco Settlement Revenue Bonds, Series B (g): 23,200 5.375% due 6/01/2028 24,450 5,000 5.50% due 6/01/2033 5,431 Industry, California, Urban Development Agency, Tax Allocation Bonds, Series 1-B (e): 5,645 5% due 5/01/2020 6,039 6,000 5% due 5/01/2021 6,380 26,085 Los Angeles, California, Community College District, GO, Series A, 5.50% due 8/01/2019 (e) 29,177 5,000 Los Angeles, California, GO, Series A, 5% due 9/01/2019 (e) 5,366 Los Angeles, California, Unified School District, GO: 24,465 (Election of 1997), Series F, 5% due 1/01/2028 (g) 25,374 13,800 Series A, 5% due 1/01/2028 (e) 14,312 8,965 Modesto, California, Schools Infrastructure Financing Agency, Special Tax Bonds, 5.50% due 9/01/2036 (b) 9,743 6,440 Palm Springs, California, Financing Authority, Lease Revenue Refunding Bonds (Convention Center Project), Series A, 5.50% due 11/01/2035 (e) 7,071 11,685 Rialto, California, Unified School District, GO, Series A, 6.24%* due 6/01/2025 (g) 4,162 5,075 Sacramento, California, Unified School District, GO (Election of 1999), Series B, 5% due 7/01/2026 (g) 5,268 8,390 San Joanquin Hills, California, Transportation Corridor Agency, Toll Road Revenue Refunding Bonds, Series A, 5.28%* due 1/15/2024 (e) 3,228 2,755 Tahoe Truckee, California, Unified School District, GO (School Facilities Improvement District Number 2), Series A, 5.25% due 8/01/2029 (e) 2,923 5,400 Tamalpais, California, Union High School District, GO (Election of 2001), 5% due 8/01/2028 (i) 5,583 Colorado--5.6% 19,250 Aurora, Colorado, COP, 6% due 12/01/2025 (b) 21,834 31,160 Denver, Colorado, City and County Airport Revenue Refunding Bonds, RIB, Series 153, 9.971% due 11/15/2025 (d)(e) 33,915 4,000 Logan County, Colorado, Justice Center Finance Corporation, COP, 5.50% due 12/01/2020 (e) 4,475 Florida--2.2% 5,500 Dade County, Florida, Water and Sewer System Revenue Bonds, 5.25% due 10/01/2026 (g) 5,807 15,000 Escambia County, Florida, Health Facilities Authority, Health Facility Revenue Bonds (Florida Health Care Facility Loan), 5.95% due 7/01/2020 (b) 15,272 2,240 West Coast Regional Water Supply Authority, Florida, Capital Improvement Revenue Bonds, 10.40% due 10/01/2010 (a)(b) 2,910 Georgia--3.5% Georgia Municipal Electric Authority, Power Revenue Bonds, Series Y (b): 8,510 6.40% due 1/01/2013 10,016 490 6.40% due 1/01/2013 (c) 583 20,000 Georgia Municipal Electric Authority, Power Revenue Refunding Bonds, Series EE, 7% due 1/01/2025 (b) 26,934 Hawaii--1.0% 10,170 Honolulu, Hawaii, City and County GO, Refunding, Series B, 5% due 7/01/2009 (e) 11,137
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments (continued) Insured Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Illinois--3.5% Chicago, Illinois, O'Hare International Airport Revenue Bonds, 3rd Lien, AMT, Series B-2: $ 9,215 5.75% due 1/01/2024 (i) $ 10,117 17,690 6% due 1/01/2027 (e) 19,747 6,800 Illinois State, GO, 5.75% due 5/01/2021 (e) 7,212 Kansas--0.5% 5,145 Manhattan, Kansas, Hospital Revenue Bonds (Mercy Health Center), 5.50% due 8/15/2020 (i) 5,724 Kentucky--0.3% 2,490 Knox County, Kentucky, GO, Series B, 5.625% due 6/01/2036 (f) 2,756 Louisiana--1.0% 10,250 Louisiana Public Facilities Authority, FHA-Insured Mortgage Revenue Refunding Bonds (Baton Rouge General Medical Center Project), 5.25% due 7/01/2033 (e) 10,718 Maryland--0.5% 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) 5,799 Massachusetts--3.1% 4,000 Massachusetts State HFA, Rental Housing Mortgage Revenue Bonds, AMT, Series C, 5.60% due 1/01/2045 (i) 4,130 Massachusetts State Special Obligation Dedicated Tax Revenue Bonds (g): 4,750 5.25% due 1/01/2025 5,128 10,000 5.25% due 1/01/2026 10,749 12,250 5.25% due 1/01/2027 13,111 Michigan--2.7% 4,305 Michigan State, HDA, Rental Housing Revenue Refunding Bonds, Series B, 6.15% due 10/01/2015 (e) 4,423 Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds: 13,145 (Detroit Edison Company Project), AMT, Series A, 5.50% due 6/01/2030 (f) 13,893 10,000 (Detroit Edison Company), Series AA, 6.40% due 9/01/2025 (e) 10,453 Minnesota--1.5% 5,860 Delano, Minnesota, Independent School District Number 879, GO, Series A, 5.875% due 2/01/2025 (i) 6,661 Sauk Rapids, Minnesota, Independent School District Number 047, GO, Series A (e): 3,735 5.65% due 2/01/2020 4,193 4,440 5.70% due 2/01/2021 5,000 Mississippi--1.2% 1,320 Harrison County, Mississippi, Wastewater Management District Revenue Refunding Bonds (Wastewater Treatment Facilities), Series A, 8.50% due 2/01/2013 (g) 1,775 10,000 Mississippi Hospital Equipment and Facilities Authority Revenue Bonds (Forrest County General Hospital Project), 6% due 1/01/2030 (i) 11,188 Missouri--2.2% Kansas City, Missouri, Airport Revenue Refunding and Improvement Bonds, Series A (e): 12,990 5.50% due 9/01/2013 14,158 9,000 5.50% due 9/01/2014 9,809 Nevada--6.2% Clark County, Nevada, IDR, AMT, Series A: 10,000 (Power Company Project), 6.70% due 6/01/2022 (g) 10,259 9,575 (Southwest Gas Corporation Project), 5.25% due 7/01/2034 (b) 9,875 45,000 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra Pacific Power Company), AMT, 6.65% due 6/01/2017 (e) 46,688 New Jersey--6.8% 6,810 Cape May County, New Jersey, Industrial Pollution Control Financing Authority Revenue Refunding Bonds (Atlantic City Electric Company Project), Series A, 6.80% due 3/01/2021 (e) 8,916 Garden State Preservation Trust of New Jersey (i): 3,125 Open Space and Farmland Preservation Revenue Bonds, Series A, 5.80% due 11/01/2021 (k) 3,500 8,310 Open Space and Farmland Preservation Revenue Bonds, Series A, 5.80% due 11/01/2022 (k) 9,289 4,340 Open Space and Farmland Preservation Revenue Bonds, Series A, 5.80% due 11/01/2023 (k) 4,830 23,000 Revenue Bonds, Series B, 5.17%* due 11/01/2024 8,874 23,000 New Jersey EDA, Motor Vehicle Surcharge Revenue Bonds, Series A, 5.25% due 7/01/2033 (e) 24,505 12,500 New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds (NUI Corporation), RIB, Series 371, 10.43% due 10/01/2022 (b)(d) 13,083 New York--11.2% 10,000 Metropolitan Transportation Authority, New York, Service Contract Revenue Bonds, Series B, 5.50% due 1/01/2013 (e) 11,438 12,075 New York City, New York, City Municipal Water Finance Authority, Water and Sewer System Revenue Bonds, RIB, Series 158, 9.267% due 6/15/2026 (d)(e) 13,540 New York City, New York, GO: 11,500 Series C, 5.625% due 3/15/2018 (f) 12,981 21,000 Series I, 6% due 4/15/2007 (a)(i) 22,774
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments (continued) Insured Portfolio (In Thousands)
Face State Amount Municipal Bonds Value New York $ 5,155 New York City, New York, GO, Refunding, Series G, 5.75% due 2/01/2006 (a)(i) $ 5,420 (concluded) 11,600 New York City, New York, Sales Tax Asset Receivable Corporation Revenue Bonds, Series A, 5.25% due 10/15/2027 (b) 12,472 9,190 New York State Dormitory Authority Revenue Bonds (School Districts Financing Program), Series D, 5.25% due 10/01/2023 (e) 10,007 365 New York State Dormitory Authority, Revenue Refunding Bonds, Series A, 5.75% due 8/15/2022 (e) 395 4,110 New York State Urban Development Corporation, Personal Income Tax Revenue Bonds (State Facilities), Series A-1, 5.25% due 3/15/2034 (g) 4,358 5 Niagara Falls, New York, GO, Public Improvement, 6.90% due 3/01/2024 (e) 5 25,000 Tobacco Settlement Financing Corporation of New York Revenue Bonds, Series A-1, 5.25% due 6/01/2022 (b) 26,890 North Carolina--0.3% 3,370 North Carolina HFA, Home Ownership Revenue Bonds, AMT, Series 14-A, 5.35% due 1/01/2022 (b) 3,514 North Dakota--0.4% 3,810 North Dakota State, HFA, Revenue Bonds (Housing Finance Program), Series C, 5.30% due 7/01/2022 (b) 3,948 Ohio--0.1% 1,075 Ohio State Water Development Authority, Pollution Control Facilities Revenue Bonds (Water Control Loan Fund--Water Quality Series), 5.50% due 12/01/2007 (a)(e) 1,180 Oklahoma--0.7% 6,385 Oklahoma State IDR, Refunding (Health System), Series A, 6.25% due 8/15/2016 (e) 7,262 Oregon--1.4% 8,700 Oregon State Department, Administrative Services, COP, Series A, 6.25% due 5/01/2010 (a)(b) 10,202 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) 4,706 Pennsylvania--3.1% 5,000 Pennsylvania HFA, S/F Revenue Bonds, AMT, Series 72A, 5.25% due 4/01/2021 (e) 5,188 8,350 Pennsylvania State, GO, Second Series, 5.25% due 6/01/2015 (i) 9,394 5,000 Pennsylvania State Turnpike Commission, Turnpike Revenue Refunding Bonds, Series T, 5.50% due 12/01/2013 (g) 5,759 6,000 Philadelphia, Pennsylvania, Gas Works Revenue Bonds, 12th Series B, 7% due 5/15/2020 (c)(e) 7,472 4,420 Philadelphia, Pennsylvania, Redevelopment Authority Revenue Bonds (Neighborhood Transformation), Series A, 5.50% due 4/15/2020 (g) 4,936 Rhode Island--0.7% 6,815 Rhode Island State Economic Development Corporation, Airport Revenue Bonds, Series B, 6% due 7/01/2028 (g) 7,699 South Carolina--0.6% 2,200 Medical University Hospital Authority, South Carolina, FHA-Insured Mortgage Hospital Facilities, Revenue Refunding Bonds, Series A, 5% due 8/15/2031 (e) 2,230 4,200 South Carolina State Public Service Authority, Revenue Refunding Bonds, Series A, 6.25% due 1/01/2006 (a)(b) 4,450 Texas--3.8% 17,975 Dallas-Fort Worth, Texas, International Airport Revenue Bonds, DRIVERS, AMT, Series 202, 9.739% due 11/01/2028 (d)(g) 21,510 El Paso, Texas, Water and Sewer Revenue Refunding and Improvement Bonds, Series A (i): 4,375 6% due 3/01/2018 5,024 4,645 6% due 3/01/2019 5,334 3,500 Houston, Texas, Water Conveyance System Contract, COP, Series J, 6.25% due 12/15/2013 (b) 4,176 Texas State Department of Housing and Community Affairs, S/F Mortgage Revenue Bonds, AMT, Series A (e)(j): 2,110 5.45% due 9/01/2023 2,203 2,750 5.50% due 3/01/2026 2,847 Utah--1.6% 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) 10,241 Utah Water Finance Agency Revenue Bonds (Pooled Loan Financing Program), Series A (b): 2,515 5.75% due 10/01/2015 2,837 3,770 6% due 10/01/2020 4,284 Virginia--3.0% 19,755 Fairfax County, Virginia, EDA, Resource Recovery Revenue Refunding Bonds, AMT, Series A, 6.10% due 2/01/2011 (b) 22,519 9,690 Virginia State HDA, Commonwealth Mortgage Revenue Bonds, Series J, Sub-Series J-1, 5.20% due 7/01/2019 (e) 9,895 Washington--0.7% 7,225 Chelan County, Washington, Public Utility District Number 001, Consolidated Revenue Bonds (Chelan Hydro System), AMT, Series A, 5.45% due 7/01/2037 (b) 7,525 West Virginia--1.2% 12,250 Pleasants County, West Virginia, PCR, Refunding (Potomac-Pleasants), Series C, 6.15% due 5/01/2015 (b) 12,758 Wisconsin--1.2% 9,000 Superior, Wisconsin, Limited Obligation Revenue Refunding Bonds (Midwest Energy Resources), Series E, 6.90% due 8/01/2021 (g) 11,828 1,075 Wisconsin State, GO, AMT, Series B, 6.50% due 5/01/2025 (e) 1,090
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments (concluded) Insured Portfolio (In Thousands)
Face Amount Municipal Bonds Value Puerto Rico--0.2% $ 1,750 Puerto Rico Commonwealth, Highway and Transportation Authority, Transportation Revenue Bonds, Series G, 5.25% due 7/01/2017 (g) $ 1,949 Total Municipal Bonds (Cost--$955,726)--95.2% 1,022,613 Shares Held Mutual Funds 300 BlackRock California Insured Municipal 2008 Term Trust, Inc. 4,884 810 BlackRock Insured Municipal 2008 Term Trust, Inc. 13,211 775 BlackRock Insured Municipal Term Trust, Inc. 8,757 Total Mutual Funds (Cost--$27,440)--2.5% 26,852 Short-Term Securities 24,317 Merrill Lynch Institutional Tax-Exempt Fund (h) 24,317 Total Short-Term Securities (Cost--$24,317)--2.3% 24,317 Total Investments (Cost--$1,007,483**)--100.0% 1,073,782 Other Assets Less Liabilities--0.0% 351 ----------- Net Assets--100.0% $ 1,074,133 =========== (a) Prerefunded. (b) AMBAC Insured. (c) Escrowed to maturity. (d) The rate disclosed is that currently in effect. The rate changes periodically and inversely based upon prevailing market rates. (e) MBIA Insured. (f) XL Capital Insured. (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) were as follows: (in Thousands) Net Dividend Affiliate Activity Income Merrill Lynch Institutional Tax-Exempt Fund 21,300 $203 (i) FSA Insured. (j) FNMA/GNMA Collateralized. (k) When-issued security. * Represents a zero coupon bond; the interest rate shown reflects the effective yield at the time of purchase by the Fund. ** The cost and unrealized appreciation/depreciation of investments as of December 31, 2004, as computed for federal income tax purposes, were as follows: (in Thousands) Aggregate cost $ 1,007,381 ============== Gross unrealized appreciation $ 68,705 Gross unrealized depreciation (2,304) -------------- Net unrealized appreciation $ 66,401 ============== Forward interest rate swaps outstanding as of December 31, 2004 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 3.837% interest Broker, JPMorgan Chase Bank Expires November 2018 $11,500 $ (23) See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Alabama--0.5% $ 3,820 Alabama Incentives Financing Authority, Special Obligation Revenue Refunding Bonds, Series A, 6% due 10/01/2029 (c) $ 4,328 500 Mobile, Alabama, Industrial Development Board, Environmental Improvement Revenue Refunding Bonds (International Paper Company Project), AMT, Series A, 6.35% due 5/15/2016 538 2,500 Selma, Alabama, IDB, Environmental Improvement Revenue Refunding Bonds (International Paper Company Project), AMT, Series A, 6.70% due 2/01/2018 2,733 Alaska--0.5% 3,000 Alaska State Housing Financial Corporation, General Mortgage Revenue Refunding, Series A, 6% due 6/01/2027 (f) 3,129 3,860 Anchorage, Alaska, School, GO, Series B, 5.875% due 12/01/2010 (e)(j) 4,463 Arizona--3.1% 4,000 Arizona Health Facilities Authority Revenue Bonds (Catholic Healthcare West Project), Series A, 6.625% due 7/01/2020 4,468 1,000 Glendale, Arizona, Development Authority, Educational Facilities Revenue Refunding Bonds (American Graduate School International), 7.125% due 7/01/2005 (a)(j) 1,035 1,000 Maricopa County, Arizona, Hospital Revenue Refunding Bonds (Sun Health Corporation), 6.125% due 4/01/2018 1,055 3,600 Maricopa County, Arizona, IDA, Education Revenue Bonds (Arizona Charter Schools Project 1), Series A, 6.75% due 7/01/2029 3,570 1,625 Maricopa County, Arizona, IDA, Health Facilities Revenue Refunding Bonds (Catholic Healthcare West Project), Series A, 5% due 7/01/2021 1,628 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) 1,020 Maricopa County, Arizona, Pollution Control Corporation, PCR, Refunding, Series A: 1,200 (El Paso Electric Company Project), 6.25% due 5/01/2037 1,223 1,000 (Public Service Company of New Mexico Project), 6.30% due 12/01/2026 1,058 Peoria, Arizona, Improvement District No. 8401, Special Assessment Bonds No. 8802: 430 7.20% due 1/01/2010 444 510 7.20% due 1/01/2013 527 Peoria, Arizona, Improvement District, Special Assessment Bonds No. 8801: 190 7.30% due 1/01/2009 196 395 7.30% due 1/01/2011 408 2,330 Phoenix, Arizona, Civic Improvement Corporation, Municipal Facilities, Excise Tax Revenue Bonds, 5.75% due 7/01/2016 (e) 2,634 5,000 Phoenix, Arizona, IDA, Airport Facility Revenue Refunding Bonds (America West Airlines Inc. Project), AMT, 6.30% due 4/01/2023 3,782 2,720 Phoenix, Arizona, IDA, Revenue Bonds (Camelback Crossing), 6.20% due 9/20/2020 (d) 2,869 5,800 Pinal County, Arizona, COP, 5% due 12/01/2029 5,804 545 Prescott Valley, Arizona, Improvement District, Special Assessment Bonds (Sewer Collection System Roadway Repair), 7.90% due 1/01/2012 569 3,515 Tucson, Arizona, IDA, Senior Living Facilities Revenue Bonds (Christian Care Tucson Inc. Project), Series A, 6.125% due 7/01/2024 (m) 3,934 3,180 University of Arizona, COP, Refunding, Series A, 5.50% due 6/01/2018 (c) 3,550 1,000 University of Arizona, COP (University of Arizona Parking and Student Housing), 5.75% due 6/01/2019 (c) 1,108 3,000 Vistancia, Arizona, Community Facilities District, GO, 6.75% due 7/15/2022 3,085 Arkansas--0.1% 75 Arkansas State Development Finance Authority, S/F Mortgage Revenue Bonds (Mortgage-Backed Securities Program), Series H, 6.15% due 7/01/2016 (i) 78 250 Arkansas State Student Loan Authority Revenue Bonds, AMT, Sub-Series B, 7.25% due 6/01/2009 279 200 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) 214 250 North Little Rock, Arkansas, Health Facilities Board, Health Care Revenue Bonds (Baptist Health), 5.50% due 7/01/2016 263 500 Pine Bluff, Arkansas, Environmental Improvement Revenue Refunding Bonds (International Paper Company Project), AMT, Series A, 6.70% due 8/01/2020 546 250 University of Central Arkansas, Housing System Revenue Bonds, 6.50% due 1/01/2031 (h) 289
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value California--10.2% $ 2,500 Agua Caliente Band of Cahuilla Indians, California, Casino Revenue Bonds, 6% due 7/01/2018 $ 2,585 9,145 Alameda County, California, COP (Financing Project), 6% due 9/01/2006 (f)(j) 9,867 2,805 American Canyon, California, Finance Authority, Reassessment Revenue Bonds, Series A, 5% due 9/02/2031 (m) 2,822 California Rural Home Mortgage Finance Authority, S/F Mortgage Revenue Bonds (Mortgage-Backed Securities Program), AMT, Class 5 (i)(l): 515 Series C, 6.75% due 3/01/2029 518 355 Series D, 6.70% due 5/01/2029 356 415 California Rural Home Mortgage Finance Authority, S/F Mortgage Revenue Refunding Bonds (Mortgage-Backed Securities Program), AMT, Series A-2, 7% due 9/01/2029 (i)(l) 417 7,500 California State Department of Water Resources, Power Supply Revenue Bonds, Series A, 5.75% due 5/01/2017 8,439 2,000 California State, GO, Refunding, 5.75% due 5/01/2030 2,190 14,100 California State, Various Purpose, GO, 5.50% due 11/01/2033 15,054 9,880 California Statewide Communities Development Authority, Health Facility Revenue Bonds (Memorial Health Services), Series A, 6% due 10/01/2023 10,716 2,880 Capistrano, California, Unified School District, Community Facility District, Special Tax Bonds (No. 90-2 Talega), 6% due 9/01/2032 2,964 Chula Vista, California, Community Facilities District, Special Tax Bonds (No 06-1, Eastlake Woods Area), Series A: 1,080 6.05% due 9/01/2020 1,149 2,965 6.15% due 9/01/2026 3,104 Contra Costa County, California, Special Tax Bonds (Community Facilities District Number 2001-01): 1,585 6% due 9/01/2026 1,641 1,200 6.10% due 9/01/2031 1,244 11,300 Desert, California, Community College District, GO, Series A, 5% due 8/01/2029 (f) 11,691 3,100 Elk Grove, California, Poppy Ridge Community Facilities Number 3 Special Tax, Series 1, 6% due 9/01/2028 3,163 Golden State Tobacco Securitization Corporation of California, Tobacco Settlement Revenue Bonds: 3,200 Series A-4, 7.80% due 6/01/2042 3,497 2,785 Series A-5, 7.875% due 6/01/2042 3,057 5,160 Los Angeles, California, Department of Water and Power, Electric Plant Revenue Refunding Bonds, RIB, Series 370, 9.71% due 2/15/2024 (g) 5,314 2,740 Pomona, California, Public Financing Authority, Revenue Refunding Bonds (Merged Redevelopment Project), Series A1, 5.75% due 2/01/2034 2,824 1,100 Poway, California, Unified School District, Special Tax Bonds (Community District No. 6), Series A, 6.05% due 9/01/2025 1,159 2,695 Riverside, California, Improvement Bond Act of 1915, Special Assessment (Riverwalk Assessment District), 6.375% due 9/02/2026 2,817 Roseville, California, Special Tax (Stoneridge Community Facilities Number 1): 1,250 6.20% due 9/01/2021 1,320 1,125 6% due 9/01/2025 1,164 2,500 6.30% due 9/01/2031 2,595 Sacramento, California, Special Tax (North Natomas Community Facilities): 2,200 Series 01-03, 6% due 9/01/2028 2,271 2,270 Series 4-C, 6% due 9/01/2028 2,357 10,000 San Diego, California, Public Facilities Financing Authority, Subordinated Water Revenue Refunding Bonds, 5% due 8/01/2032 (f) 10,249 11,520 San Diego, California, Unified School District, GO (Election of 1998), Series F, 5% due 7/01/2028 (h) 11,943 San Francisco California, City and County Redevelopment Agency Revenue Bonds (Community Facilities District Number 6-Mission): 5,000 6% due 8/01/2021 5,289 2,500 GO, Series A, 6% due 8/01/2025 2,605 1,075 San Francisco, California, Uptown Parking Corporation, Parking Revenue Bonds (Union Square), 6% due 7/01/2020 (f) 1,244 Santa Margarita, California, Water District, Special Tax Refunding Bonds (Community Facilities District No. 99), Series 1: 3,680 6.20% due 9/01/2020 3,884 3,000 6.25% due 9/01/2029 3,104
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Colorado--2.2% $ 500 Boulder County, Colorado, Hospital Development Revenue Bonds (Longmont United Hospital Project), 6% due 12/01/2030 (m) $ 549 660 Colorado HFA, Revenue Bonds (S/F Program), Series B-3, 6.55% due 10/01/2016 665 Colorado HFA, Revenue Refunding Bonds (S/F Program): 545 AMT, Senior Series A-2, 7.50% due 4/01/2031 560 210 AMT, Senior Series B-2, 7.10% due 4/01/2017 215 1,415 AMT, Senior Series B-2, 7.25% due 10/01/2031 1,452 95 AMT, Senior Series B-3, 6.80% due 11/01/2028 96 725 AMT, Senior Series C-2, 7.25% due 10/01/2031 (b) 745 190 Senior Series A-3, 7.35% due 10/01/2030 195 1,020 Senior Series C-3, 6.75% due 10/01/2021 (b) 1,065 305 Senior Series C-3, 7.15% due 10/01/2030 (b) 308 2,500 Colorado Health Facilities Authority, Revenue Refunding Bonds (Catholic Health Initiatives), 5.50% due 9/01/2017 2,693 550 Colorado Water Resource and Power Development Authority, Small Water Resource Revenue Bonds, Series A, 5.80% due 11/01/2020 (e) 619 Elk Valley, Colorado, Public Improvement Revenue Bonds (Public Improvement Fee): 7,560 Series A, 7.35% due 9/01/2031 8,074 1,400 Series B, 7% due 9/01/2031 1,437 3,685 Larimer County, Colorado, Poudre School District Number R-1, GO, 6% due 12/15/2010 (e)(j) 4,288 7,700 Plaza Metropolitan District No. 1, Colorado, Tax Allocation Revenue Bonds (Public Improvement Fees), 8% due 12/01/2025 8,035 Connecticut--2.0% 1,000 Connecticut State Development Authority, Governmental Lease Revenue Bonds, 6.60% due 6/15/2014 (f) 1,024 1,500 Connecticut State Development Authority, Solid Waste Disposal Facilities Revenue Bonds (Pfizer Inc. Project), AMT, 7% due 7/01/2025 1,564 1,250 Connecticut State Development Authority, Water Facility Revenue Bonds (Bridgeport Hydraulic Company), AMT, 6.15% due 4/01/2035 (c) 1,361 1,200 Connecticut State, HFA, Revenue Refunding Bonds (Housing Mortgage Finance Program), Series C-1, 6.30% due 11/15/2017 1,251 Connecticut State Health and Educational Facilities Authority Revenue Bonds: 1,000 (Bridgeport Hospital), Series A, 6.625% due 7/01/2018 (f) 1,003 1,500 (Waterbury Hospital Issue), Series C, 5.75% due 7/01/2020 (m) 1,633 1,000 (Westover School), Series A, 5.70% due 7/01/2030 (m) 1,066 Connecticut State Health and Educational Facilities Authority, Revenue Refunding Bonds: 5,025 DRIVERS, Series 215, 10.734% due 6/01/2030 (g)(m) 6,472 2,000 (Eastern Connecticut Health Network), Series A, 6.50% due 7/01/2030 (m) 2,288 640 (Sacred Heart University), 6.625% due 7/01/2026 (m) 689 5,710 (University of Hartford), Series E, 5.50% due 7/01/2022 (m) 6,214 1,000 (Yale--New Haven Hospital Issue), Series H, 5.70% due 7/01/2025 (f) 1,062 Connecticut State Higher Education, Supplemental Loan Authority Revenue Bonds (Family Education Loan Program), AMT, Series A: 295 6.40% due 11/15/2014 295 930 5.50% due 11/15/2020 (f) 931 1,000 Connecticut State Regional Learning Educational Service Center Revenue Bonds (Office/Education Center Facility), 7.75% due 2/01/2006 (j) 1,074 860 Waterbury, Connecticut, GO, 6% due 02/01/2009 (j)(m) 982 District of 5,000 District of Columbia, GO, Refunding, DRIVERS, Series 214, 9.709% due Columbia--0.4% 6/01/2026 (f)(g) 6,053 Florida--6.3% 2,000 Anthem Park Community Development District, Florida, Capital Improvement Revenue Bonds, 5.80% due 5/01/2036 2,003 1,700 Ballantrae, Florida, Community Development District, Capital Improvement Revenue Bonds, 6% due 5/01/2035 1,722 1,895 Beacon Tradeport Community, Florida, Development District, Special Assessment Revenue Refunding Bonds (Commercial Project), Series A, 5.25% due 5/01/2016 (m) 2,059 2,500 CFM Community Development District, Florida, Capital Improvement Revenue Bonds, Series B, 5.875% due 5/01/2014 2,549 2,725 Duval County, Florida, School Board, COP, 5.75% due 7/01/2017 (h) 3,027 Fiddlers Creek, Florida, Community Development District Number 2, Special Assessment Revenue Bonds: 5,350 Series A, 6.375% due 5/01/2035 5,511 1,250 Series B, 5.75% due 5/01/2013 1,272
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Florida $ 6,330 Florida HFA Revenue Bonds (Antigua Club Apartments), AMT, Series A-1, 7% (concluded) due 2/01/2035 (c) $ 6,464 1,100 Heritage Isles Community Development District, Florida, Special Assessment Revenue Refunding Bonds, 5.90% due 11/01/2006 1,102 5,000 Hillsborough County, Florida, IDA, Exempt Facilities Revenue Bonds (National Gypsum), AMT, Series A, 7.125% due 4/01/2030 5,512 9,500 Jacksonville, Florida, Electric Authority, Water and Sewer Revenue Bonds, Series A, 6% due 10/01/2024 9,681 7,000 Lee County, Florida, Airport Revenue Bonds, RIB, AMT, Series 580X, 9.65% due 10/01/2029 (g)(h) 8,423 4,500 Lee County, Florida, Transportation Facilities Revenue Bonds, 5.75% due 10/01/2005 (f)(j) 4,712 1,200 Lexington Oaks, Florida, Community Development District, Special Assessment Revenue Bonds, Series A, 6.70% due 5/01/2033 1,256 Mediterra, Florida, South Community Development District, Capital Improvement Revenue Bonds: 1,055 6.85% due 5/01/2031 1,118 1,765 Series B, 5.50% due 5/01/2010 1,790 2,500 Middle Village Community Development District, Florida, Special Assessment Bonds, Series A, 6% due 5/01/2035 2,532 6,095 Midtown Miami, Florida, Community Development District, Special Assessment Revenue Bonds, Series A, 6.25% due 5/01/2037 6,310 2,500 Old Palm Community Development District, Florida, Special Assessment Bonds (Palm Beach Gardens), Series B, 5.375% due 5/01/2014 2,497 2,375 Orange County, Florida, HFA, M/F Housing Revenue Bonds, Series A, 6.40% due 1/01/2031 (f) 2,480 185 Orange County, Florida, HFA, Mortgage Revenue Bonds, AMT, Series A, 8.375% due 3/01/2021 (b)(d) 185 5,000 Orange County, Florida, Tourist Development, Tax Revenue Bonds, 5.50% due 10/01/2020 (c) 5,484 180 Panther Trace, Florida, Community Development District, Special Assessment Revenue Bonds, Series B, 6.50% due 5/01/2009 182 Park Place Community Development District, Florida, Special Assessment Revenue Bonds: 1,000 6.75% due 5/01/2032 1,054 2,500 6.375% due 5/01/2034 2,570 2,000 Saint Lucie, Florida, West Services District, Utility Revenue Refunding Bonds, Senior Lien, 6% due 10/01/2022 (f) 2,306 1,000 Sterling Hill, Florida, Community Development District, Capital Improvement Revenue Refunding Bonds, Series B, 5.50% due 11/01/2010 1,017 945 Stoneybrook West, Florida, Community Development District, Special Assessment Revenue Bonds, Series B, 6.45% due 5/01/2010 962 730 Verandah West, Florida, Community Development District, Capital Improvement Revenue Bonds, Series B, 5.25% due 5/01/2008 734 2,705 Vista Lakes Community, Florida, Development District, Capital Improvement Revenue Bonds, Series B, 5.80% due 5/01/2008 2,723 Georgia--1.7% 5,000 Atlanta, Georgia, Tax Allocation Revenue Bonds (Atlantic Station Project), 7.90% due 12/01/2024 5,446 Brunswick & Glynn County, Georgia, Development Authority, First Mortgage Revenue Bonds (Coastal Community Retirement Corporation Project), Series A: 2,285 7.125% due 1/01/2025 2,272 3,305 7.25% due 1/01/2035 3,301 5,210 College Park, Georgia, Business and IDA Revenue Bonds (Civic Center Project), 5.75% due 9/01/2026 (c) 5,887 3,450 Fulton County, Georgia, Development Authority Revenue Bonds (Morehouse College Project), 5.875% due 12/01/2030 (c) 3,914 2,250 Fulton County, Georgia, Residential Care Facilities Revenue Refunding Bonds (Canterbury Court Project), Series A, 6% due 2/15/2022 2,267 1,500 Milledgeville-Baldwin County, Georgia, Development Authority Revenue Bonds (Georgia College and State University Foundation), 6% due 9/01/2033 1,598 Hawaii--0.3% Kuakini, Hawaii, Health System, Special Purpose Revenue Bonds, Series A: 1,410 6.30% due 7/01/2022 1,478 3,000 6.375% due 7/01/2032 3,123 Illinois--7.3% 10,620 Chicago, Illinois, Board of Education, GO, DRIVERS, Series 199, 9.268% due 12/01/2020 (c)(g) 13,060 1,400 Chicago, Illinois, GO (Neighborhoods Alive 21 Program), 5.875% due 1/01/2019 (e) 1,587 26,800 Chicago, Illinois, O'Hare International Airport Revenue Bonds, 3rd Lien, AMT, Series B-2, 6% due 1/01/2029 (k) 29,749 3,000 Chicago, Illinois, O'Hare International Airport, Special Facility Revenue Refunding Bonds (American Airlines Inc. Project), 8.20% due 12/01/2024 2,585
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Illinois Chicago, Illinois, Park District, GO (e): (concluded) $ 2,265 Refunding, Series B, 5.75% due 1/01/2015 $ 2,558 1,500 Series A, 5.75% due 1/01/2016 1,691 840 Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT, Series A, 7.15% due 9/01/2031 (i)(l) 845 2,000 Chicago, Illinois, Special Assessment Bonds (Lake Shore East), 6.75% due 12/01/2032 2,068 3,210 Cicero, Illinois, GO, Refunding (Corporate Purpose), 6% due 12/01/2028 (f) 3,646 7,000 Decatur, Illinois, GO, Refunding, 6% due 3/01/2008 (e)(j) 7,761 10,000 Hodgkins, Illinois, Environmental Improvement Revenue Bonds (Metro Biosolids Management LLC Project), AMT, 6% due 11/01/2023 10,160 Illinois Development Finance Authority Revenue Bonds: 3,140 (Community Rehabilitation Providers Facility), Series A, 6.50% due 7/01/2022 3,340 660 Series B, 6.40% due 9/01/2031 (h) 712 Illinois State, GO, 1st Series (f): 8,890 5.75% due 12/01/2015 10,047 3,745 5.75% due 12/01/2016 4,230 4,000 5.75% due 12/01/2017 4,509 3,000 Illinois State, Sales Tax Revenue Bonds, 6% due 6/15/2020 3,387 2,000 Lake County, Illinois, Forest Preservation District, GO (Land Acquisition and Development), 5.75% due 12/15/2016 2,275 Indiana--0.9% 5,000 Indiana Transportation Finance Authority, Highway Revenue Bonds, Series A, 5.25% due 6/01/2025 (e) 5,405 6,000 MSD Warren Township, Indiana, Vision 2005, School Building Corporation Revenue Bonds, First Mortgage, 5.50% due 7/15/2020 (e) 6,645 Iowa--0.7% 1,000 Iowa City, Iowa, Sewer Revenue Bonds, 5.75% due 7/01/2021 (f) 1,046 6,860 Iowa Finance Authority, Health Care Facilities Revenue Refunding Bonds (Care Initiatives Project), 9.25% due 7/01/2025 8,319 Kansas--0.7% 2,810 Sedgwick and Shawnee Counties, Kansas, S/F Revenue Bonds, AMT, Series A-1, 6.95% due 6/01/2029 (d) 2,848 2,500 Witchita, Kansas, Hospital Facilities Revenue Refunding and Improvement Bonds, Series III, 6.25% due 11/15/2019 2,793 4,500 Wyandotte County, Kansas, Kansas City Unified Government, Revenue Refunding Bonds (General Motors Corporation Project), 6% due 6/01/2025 4,749 Louisiana--2.0% 9,500 Louisiana Local Government, Environmental Facilities, Community Development Authority Revenue Bonds (Capital Projects and Equipment Acquisition), Series A, 6.30% due 7/01/2030 (c) 10,422 2,900 New Orleans, Louisiana, GO, Refunding, 6.125% due 10/01/2016 (c) 3,010 13,000 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain Company Project), 7.50% due 7/01/2013 13,468 2,000 Rapides Finance Authority, Louisiana, Environmental Improvement Revenue Bonds (International Paper Company Project), AMT, Series A, 6.55% due 11/15/2023 2,169 Maine--1.1% 8,635 Maine Finance Authority, Solid Waste Recycling Facilities Revenue Bonds (Great Northern Paper Project--Bowater), AMT, 7.75% due 10/01/2022 8,647 6,045 Maine State Housing Authority, Mortgage Purpose Revenue Bonds, DRIVERS, AMT, Series 170, 9.726% due 11/15/2028 (g) 6,519 Maryland--0.5% 500 Anne Arundel County, Maryland, Special Obligation Revenue Bonds (Arundel Mills Project), 7.10% due 7/01/2009 (j) 601 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 1,065 1,175 Maryland State Community Development Administration, Department of Housing and Community Development, Residential Revenue Refunding Bonds, Series A, 5.60% due 3/01/2017 (b) 1,228 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 1,055 240 Maryland State Economic Development Corporation Revenue Bonds (Health and Mental Hygiene Program), Series A, 7.125% due 3/01/2006 247 1,000 Maryland State Energy Financing Administration, Solid Waste Disposal Revenue Bonds, Limited Obligation (Wheelabrator Water Projects), AMT, 6.45% due 12/01/2016 1,050 Maryland Water Quality Financing Administration, Revolving Loan Fund Revenue Bonds, Series A: 300 6.375% due 9/01/2010 301 465 6.55% due 9/01/2014 467 500 Prince George's County, Maryland, Housing Authority, Mortgage Revenue Refunding Bonds (Parker Apartments Project), Series A, 7.25% due 11/20/2016 (d) 501 1,000 University of Maryland, System Auxiliary Facility and Tuition Revenue Bonds, Series A, 5.75% due 10/01/2019 1,112
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Massachusetts--0.9% $ 435 Massachusetts Educational Financing Authority, Education Loan Revenue Refunding Bonds, AMT, Issue E, 5.85% due 7/01/2014 (c) $ 443 1,000 Massachusetts State Development Finance Agency, Revenue Refunding Bonds (Eastern Nazarene College), 5.625% due 4/01/2029 895 1,705 Massachusetts State, HFA, Housing Revenue Refunding Bonds, Series B, 6.05% due 12/01/2009 (f) 1,748 550 Massachusetts State, HFA, S/F Housing Revenue Bonds, AMT, Series 48, 6.35% due 6/01/2026 (f) 556 4,950 Massachusetts State Health and Educational Facilities Authority Revenue Bonds (Medical Center of Central Massachusetts), CARS, Series B, 11.425% due 6/23/2022 (c)(g) 6,017 1,000 Massachusetts State Industrial Finance Agency, Higher Education Revenue Refunding Bonds (Hampshire College Project), 5.625% due 10/01/2007 (j) 1,100 130 Massachusetts State Water Pollution Abatement Trust, Water Abatement Revenue Bonds, Series A, 6.375% due 2/01/2015 133 1,600 Montachusett, Massachusetts, Regional Vocational Technical School District, GO, 5.95% due 1/15/2020 (f) 1,808 Michigan--1.4% 7,500 Delta County, Michigan, Economic Development Corporation, Environmental Improvement Revenue Refunding Bonds (Mead Westvaco--Escanaba), Series A, 6.25% due 4/15/2027 8,021 500 Dickinson County, Michigan, Economic Development Corporation, Environmental Improvement Revenue Refunding Bonds (International Paper Company Project), Series A, 5.75% due 6/01/2016 541 1,000 Eastern Michigan University Revenue Refunding Bonds, 6% due 6/01/2024 (c) 1,138 3,000 Flint, Michigan, Hospital Building Authority, Revenue Refunding Bonds (Hurley Medical Center), 6% due 7/01/2020 3,064 615 Kalamazoo, Michigan, Hospital Finance Authority, Hospital Facility Revenue Refunding and Improvement Bonds (Bronson Methodist Hospital), Series A, 6.375% due 5/15/2017 (f) 625 3,325 Macomb County, Michigan, Hospital Finance Authority, Hospital Revenue Bonds (Mount Clemens General Hospital), Series B, 5.875% due 11/15/2034 3,205 1,500 Michigan State Hospital Finance Authority, Revenue Refunding Bonds (Mercy Mount Clemens), Series A, 6% due 5/15/2014 (f) 1,684 1,060 Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds (Detroit Edison Company), Series AA, 6.40% due 9/01/2025 (f) 1,108 Minnesota--1.1% 1,070 Anoka County, Minnesota, Solid Waste Disposal Revenue Bonds (Natural Rural Utilities), AMT, Series A, 6.95% due 12/01/2008 1,088 1,000 Eden Prairie, Minnesota, M/F Housing Revenue Bonds (Rolling Hills Project), Series A, 6.15% due 8/20/2031 (d) 1,087 680 Minneapolis, Minnesota, Community Development Agency, Supported Development Revenue Bonds (Common Bond Fund), AMT, Series 2, 6.20% due 6/01/2017 706 Minneapolis, Minnesota, Health Care System Revenue Bonds (Allina Health System), Series A: 1,500 5.70% due 11/15/2022 1,604 2,665 5.75% due 11/15/2032 2,820 Minneapolis and Saint Paul, Minnesota, Metropolitan Airports Commission, Airport Revenue Bonds, AMT, Sub-Series D (e): 470 5.75% due 1/01/2012 522 470 5.75% due 1/01/2014 518 2,060 5.75% due 1/01/2015 2,268 1,110 Ramsey County, Minnesota, Housing and Redevelopment Authority, M/F Housing Revenue Bonds (Hanover Townhouses Project), AMT, 6% due 7/01/2031 1,147 1,000 Saint Cloud, Minnesota, Health Care Revenue Refunding Bonds (Saint Cloud Hospital Obligation Group), Series A, 6.25% due 5/01/2020 (h) 1,146 1,000 Saint Francis, Minnesota, Independent School District No. 015, GO, Series A, 6.35% due 2/01/2013 (h) 1,043 1,500 Waconia, Minnesota, Health Care Facilities Revenue Bonds (Ridgeview Medical Center Project), Series A, 6.125% due 1/01/2029 (m) 1,656 Mississippi--0.1% 1,700 Warren County, Mississippi, Environmental Improvement Revenue Refunding Bonds (International Paper Company Project), AMT, Series B, 6.75% due 8/01/2021 1,862 Missouri--0.7% Fenton, Missouri, Tax Increment Revenue Refunding and Improvement Bonds (Gravois Bluffs): 1,050 6.75% due 10/01/2015 1,069 4,000 7% due 10/01/2021 4,317 1,500 Kansas City, Missouri, IDA, First Mortgage Health Facilities Revenue Bonds (Bishop Spencer Place), Series A, 6.50% due 1/01/2035 1,533 2,200 Saint Louis, Missouri, Airport Revenue Bonds (Airport Development Program), Series A, 5.625% due 7/01/2019 (f) 2,468
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Montana--0.4% $ 6,000 Montana State Higher Education, Student Assistance Corporation, Student Loan Revenue Refunding Bonds, AMT, Sub-Series B, 6.40% due 12/01/2032 $ 6,295 Nevada--2.1% 5,000 Clark County, Nevada, IDR (Power Company Project), AMT, Series A, 6.70% due 6/01/2022 (e) 5,129 1,550 Clark County, Nevada, Improvement District No. 142 Special Assessment, 6.375% due 8/01/2023 1,597 Elko, Nevada, GO (Airport Improvement), AMT, Series B (f): 165 6.10% due 10/01/2014 180 245 6.30% due 10/01/2019 269 320 6.75% due 10/01/2024 357 225 7% due 10/01/2029 252 2,990 Henderson, Nevada, Local Improvement Districts, Special Assessment, Series NO T-14, 5.80% due 3/01/2023 3,078 Las Vegas, Nevada, Local Improvement Bonds, Special Assessment, Special Improvement District Number 808, Summerlin: 1,765 5.875% due 6/01/2009 1,833 2,040 6.125% due 6/01/2012 2,118 2,270 6.25% due 6/01/2013 2,356 175 Nevada Housing Division, S/F Program, AMT, Senior Series E, 7.05% due 4/01/2027 (b) 178 2,000 Reno, Nevada, Special Assessment District Number 4 (Somerset Parkway), 6.625% due 12/01/2022 2,040 Sparks, Nevada, Redevelopment Agency, Tax Allocation Revenue Refunding Bonds, Series A (m): 3,110 6% due 1/15/2015 3,435 6,315 6% due 1/15/2023 6,958 New Hampshire--0.1% 1,750 New Hampshire Health and Education Facilities Authority, Revenue Refunding Bonds (Elliot Hospital), Series B, 5.60% due 10/01/2022 1,822 New Jersey--4.1% 570 Camden County, New Jersey, Pollution Control Financing Authority, Solid Waste Resource Recovery Revenue Refunding Bonds, AMT, Series B, 7.50% due 12/01/2009 570 3,300 New Jersey EDA, Retirement Community Revenue Bonds (Cedar Crest Village Inc. Facility), Series A, 7.25% due 11/15/2031 3,475 5,000 New Jersey EDA, Revenue Refunding Bonds (RWJ Health Care Corporation), 6.50% due 7/01/2024 (h) 5,116 2,000 New Jersey EDA, Special Facility Revenue Bonds (Continental Airlines Inc. Project), AMT, 6.25% due 9/15/2029 1,625 3,680 New Jersey EDA, State Lease Revenue Bonds (State Office Buildings Projects), 6% due 6/15/2010 (c)(j) 4,238 New Jersey Health Care Facilities Financing Authority Revenue Bonds: 3,000 (Pascack Valley Hospital Association), 6% due 7/01/2013 2,838 3,130 (South Jersey Hospital), 6% due 7/01/2026 3,347 2,250 New Jersey Health Care Facilities Financing Authority, Revenue Refunding Bonds (Capital Health System Inc.), Series A, 5.75% due 7/01/2023 2,405 1,090 New Jersey State Housing and Mortgage Finance Agency, M/F Housing Revenue Refunding Bonds, Series B, 6.25% due 11/01/2026 (h) 1,156 New Jersey State Turnpike Authority, Turnpike Revenue Refunding Bonds (f): 10,000 DRIVERS, Series 155, 9.224% due 1/01/2018 (g) 12,203 10,000 Series A, 5.75% due 1/01/2018 11,101 9,500 Tobacco Settlement Financing Corporation of New Jersey Revenue Bonds, 7% due 6/01/2041 9,595 New Mexico--0.6% 8,000 Farmington, New Mexico, PCR, Refunding (Public Service Company of New Mexico - San Juan), Series B, 6.30% due 12/01/2016 8,625 190 New Mexico Mortgage Finance Authority, Revenue Refunding Bonds, Mortgage-Backed Securities, Series F, 7% due 1/01/2026 (i) 206 250 Santa Fe County, New Mexico, Correctional System Revenue Bonds, 6% due 2/01/2027 (h) 304 New York--11.1% 9,500 Metropolitan Transportation Authority, New York, Commuter Facilities, Service Contract Revenue Refunding Bonds, Series 8, 5.50% due 7/01/2013 (h)(j) 10,985 10,000 Metropolitan Transportation Authority, New York, Transit Facilities Revenue Bonds, Series A, 5.625% due 7/01/2007 (f)(j) 10,963 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 3,313 2,000 New York City, New York, City IDA Revenue Bonds (Visy Paper Inc. Project), AMT, 7.95% due 1/01/2028 2,096 4,050 New York City, New York, City IDA, Special Facility Revenue Bonds (British Airways PLC Project), AMT, 7.625% due 12/01/2032 4,198
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value New York $10,000 New York City, New York, City Municipal Water Finance Authority, Water (concluded) and Sewer System Revenue Bonds, RIB, Series 158, 9.267% due 6/15/2026 (g) $ 11,214 3,000 New York City, New York, City Transit Authority, Triborough Metropolitan Transportation Authority, COP, 5.75% due 01/01/2010 (c)(j) 3,453 6,000 New York City, New York, City Transitional Finance Authority Revenue Bonds, Future Tax Secured, Series B, 6% due 11/15/2010 6,909 New York City, New York, City Transitional Finance Authority, Revenue Refunding Bonds, Series C: 12,015 5.875% due 11/01/2015 13,630 8,000 Future Tax Secured, 5.875% due 11/01/2017 9,054 New York City, New York, GO, Refunding: 6,600 Series A, 6% due 5/15/2010 (j)(k) 7,501 2,210 Series A, 6.25% due 5/15/2026 (k) 2,535 4,000 Series B, 8.25% due 6/01/2006 (k)(n) 4,337 4,000 Series C, 5.875% due 08/01/2006 (e)(j) 4,278 8,885 Series G, 5.75% due 02/01/2006 (f)(j) 9,360 6,115 Series G, 5.75% due 2/01/2014 (f)(j) 6,425 1,000 Series H, 6% due 8/01/2007 (j)(k) 1,097 10,000 New York City, New York, GO, Series B, 5.875% due 8/01/2015 (f) 11,419 New York State Dormitory Authority Revenue Bonds (Catholic Health Services--Long Island): 1,175 5% due 7/01/2012 1,250 1,775 5% due 7/01/2013 1,880 1,935 5% due 7/01/2014 2,038 New York State Dormitory Authority, Revenue Refunding Bonds: 3,370 (Concord Nursing Home Inc.), 6.25% due 7/01/2016 3,707 2,500 (Concord Nursing Home Inc.), 6.50% due 7/01/2029 2,729 3,000 (Mount Sinai Health), Series A, 6.50% due 7/01/2016 3,190 3,950 (Mount Sinai Health), Series A, 6.50% due 7/01/2025 4,131 3,000 (State University Educational Facilities), Series A, 7.50% due 5/15/2013 3,832 1,360 New York State Environmental Facilities Corporation, State Clean Water and Drinking Revenue Bonds (Revolving Funds), Series B, 5.875% due 1/15/2019 1,534 2,285 Oneida County, New York, IDA Revenue Bonds (Civic Facility-Faxton Hospital), Series C, 6.625% due 1/01/2015 (m) 2,592 95 Suffolk County, New York, IDA, Civic Facility Revenue Bonds (Special Needs Facilities Pooled Program), Series D-1, 6% due 7/01/2012 97 705 Westchester County, New York, IDA, Civic Facilities Revenue Bonds (Special Needs Facilities Pooled Program), Series E-1, 6% due 7/01/2012 723 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 8,251 North Carolina--2.7% 920 Brunswick County, North Carolina, COP, 6% due 6/01/2016 (h) 1,048 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 1,544 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 2,049 North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds: 1,500 Series B, 5.875% due 1/01/2021 (f) 1,618 4,000 Series D, 6.75% due 1/01/2026 (o) 4,444 4,440 North Carolina Eastern Municipal Power Agency, Power System Revenue Refunding Bonds, Series D, 6.70% due 1/01/2019 4,984 290 North Carolina HFA, S/F Revenue Bonds, Series W, 6.50% due 3/01/2018 292 2,500 North Carolina Medical Care Commission, Health Care Facilities, First Mortgage Revenue Bonds (Presbyterian Homes Project), 6.875% due 10/01/2021 2,678 2,000 North Carolina Medical Care Commission, Health Care Housing Revenue Bonds (The ARC of North Carolina Projects), Series A, 5.80% due 10/01/2034 2,015 North Carolina Medical Care Commission, Retirement Facilities, First Mortgage Revenue Bonds: 1,625 (Forest at Duke Project), 6.375% due 9/01/2032 1,705 2,500 (Givens Estates Project), Series A, 6.50% due 7/01/2032 2,566
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value North Carolina North Carolina Municipal Power Agency Number 1, Catawba Electric Revenue (concluded) Refunding Bonds, Series B: $ 1,580 6.375% due 1/01/2013 $ 1,776 7,500 6.50% due 1/01/2020 8,451 1,175 North Carolina State Educational Assistance Authority Revenue Bonds (Guaranteed Student Loan), AMT, Sub-lien, Series C, 6.35% due 7/01/2016 1,230 Piedmont, North Carolina, Triad Airport Authority, Airport Revenue Refunding Bonds, Series A (h): 1,000 6.375% due 7/01/2016 1,143 1,000 6% due 7/01/2024 1,124 Ohio--1.2% 1,000 Cuyahoga County, Ohio, Health Care Facilities Revenue Refunding Bonds (Benjamin Rose Institute Project), 5.50% due 12/01/2028 943 1,200 Huron County, Ohio, GO, Human Services Building, 7.25% due 12/01/2005 (f)(j) 1,277 630 Ohio HFA, Mortgage Revenue Bonds, AMT, Series A-1, 6.15% due 3/01/2029 (d) 657 8,000 Ohio State Air Quality Development Authority, Revenue Refunding Bonds (Dayton Power & Light Company), Series B, 6.40% due 8/15/2027 (f) 8,025 1,000 Ohio State Water Development Authority, Pollution Control Facilities Revenue Refunding Bonds (Pennsylvania Power Co. Project), 6.15% due 8/01/2023 (c) 1,023 1,470 Port of Greater Cincinnati Development Authority, Ohio, Special Assessment Revenue Bonds (Cooperative Public Parking Infrastructure Project), 6.40% due 2/15/2034 1,516 3,005 Toledo-Lucas County, Ohio, Lodging Tax Revenue Refunding Bonds (Convention Center Project), 5.70% due 10/01/2015 (f) 3,230 Oregon--0.7% Forest Grove, Oregon, Campus Improvement Revenue Refunding Bonds (Pacific University) (m): 250 6% due 5/01/2015 275 250 6.20% due 5/01/2020 278 2,485 Jackson County, Oregon, Central Point School District Number 006, GO, 5.75% due 6/15/2010 (e)(j) 2,837 Oregon State Housing and Community Services Department, Mortgage Revenue Refunding Bonds (S/F Mortgage Program), Series A: 95 6.40% due 7/01/2018 97 60 AMT, 6.20% due 7/01/2027 63 500 Portland, Oregon, M/F Housing Authority Revenue Bonds (Lovejoy Station Apartments Project), AMT, 5.90% due 7/01/2023 (f) 527 1,000 Portland, Oregon, Sewer System Revenue Bonds, Series A, 5.75% due 8/01/2018 (e) 1,122 Portland, Oregon, Urban Renewal and Redevelopment Revenue Refunding Bonds, Series A (c): 1,000 (Downtown Waterfront), 5.75% due 6/15/2018 1,128 3,190 (South Park Blocks), 5.75% due 6/15/2018 3,597 Pennsylvania--0.9% 2,220 Allegheny County, Pennsylvania, Sanitation Authority, Sewer Revenue Bonds, 5.75% due 12/01/2017 (f) 2,523 4,000 Pennsylvania State Higher Educational Facilities Authority Revenue Bonds (University of Pennsylvania Medical Center Health System), Series A, 6% due 1/15/2031 4,286 1,265 Philadelphia, Pennsylvania, Authority for IDR, Commercial Development, 7.75% due 12/01/2017 1,293 5,000 Sayre, Pennsylvania, Health Care Facilities Authority, Revenue Refunding Bonds (Guthrie Health), Series A, 5.875% due 12/01/2031 5,287 Rhode Island--0.6% 6,815 Rhode Island State Economic Development Corporation, Airport Revenue Bonds, Series B, 6% due 7/01/2028 (e) 7,699 1,000 Rhode Island State Economic Development Corporation Revenue Bonds (Providence Place Mall), 6.125% due 7/01/2020 (m) 1,128 South Carolina--1.3% Medical University Hospital Authority, South Carolina, Hospital Facilities Revenue Refunding Bonds (j): 2,450 6.50% due 8/15/2012 2,928 5,400 Series A, 6.375% due 8/15/2012 6,409 Piedmont Municipal Power Agency, South Carolina, Electric Revenue Refunding Bonds (e): 1,745 6.75% due 1/01/2019 2,221 1,255 6.75% due 1/01/2019 (n) 1,629 5,000 South Carolina Jobs EDA, Residential Care Facilities Revenue Bonds (South Carolina Episcopal--Still Hopes Residence Project), Series A, 6.375% due 5/15/2032 5,040 South Dakota--0.3% 3,750 Pierre, South Dakota, School District Number 32-2, GO, 5.75% due 08/01/2010 (h)(j) 4,288
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Tennessee--2.1% Chattanooga, Tennessee, Industrial Development Board, Lease Rent Revenue Bonds (Southside Redevelopment Corporation) (c): $ 4,485 5.75% due 10/01/2017 $ 5,046 3,740 5.75% due 10/01/2018 4,208 1,000 Johnson City, Tennessee, Health and Educational Facilities Board, Retirement Facility Revenue Bonds (Appalachian Christian Village Project), Series A, 6.25% due 2/15/2032 995 4,950 McMinn County, Tennessee, IDB, Solid Waste Revenue Bonds (Recycling Facility-- Calhoun Newsprint), AMT, 7.40% due 12/01/2022 4,975 5,000 Metropolitan Government of Nashville and Davidson County, Tennessee, GO, 5.875% due 5/15/2026 5,256 Shelby County, Tennessee, Health, Educational and Housing Facility Board, Hospital Revenue Refunding Bonds (Methodist Healthcare): 4,380 6.50% due 09/01/2012 (j) 5,285 2,920 6.50% due 9/01/2026 (n) 3,513 Texas--13.8% Austin, Texas, Convention Center Revenue Bonds (Convention Enterprises Inc.): 5,300 First Tier, Series A, 6.60% due 1/01/2021 5,640 2,300 First Tier, Series A, 6.70% due 1/01/2028 2,459 6,740 Trust Certificates, Second Tier, Series B, 6% due 1/01/2023 7,145 10,630 Austin, Texas, Revenue Bonds (Town Lake Community Events Center Venue), 6.20% due 11/15/2029 (e) 12,000 Bexar County, Texas, Health Facilities Development Corporation, Revenue Refunding Bonds (Army Retirement Residence Project): 600 6.125% due 7/01/2022 641 1,750 6.30% due 7/01/2032 1,851 2,280 Brazos River Authority, Texas, PCR, Refunding (Texas Utility Company), AMT, Series A, 7.70% due 4/01/2033 2,706 4,250 Brazos River Authority, Texas, Revenue Refunding Bonds (Reliant Energy Inc. Project), Series B, 7.75% due 12/01/2018 4,689 3,700 Brazos River, Texas, Harbor Navigation District, Brazoria County Environmental Revenue Refunding Bonds (Dow Chemical Company Project), AMT, Series A-7, 6.625% due 5/15/2033 4,080 1,045 Central Texas Housing Finance Corporation, S/F Mortgage Revenue Bonds (GNMA Mortgage Program), AMT, 8.20% due 6/28/2017 (b)(d) 1,056 3,620 Dallas-Fort Worth, Texas, International Airport Facility, Improvement Corporation Revenue Bonds (Learjet Inc.), AMT, Series 2001-A-1, 6.15% due 1/01/2016 3,651 18,250 Dallas-Fort Worth, Texas, International Airport Revenue Bonds, DRIVERS, AMT, Series 201, 9.739% due 11/01/2024 (e)(g) 21,955 1,260 Fort Bend County, Texas, Municipal Utility District Number 23, GO, 6.625% due 9/01/2007 (j)(m) 1,400 1,400 Fort Worth, Texas, Certificates of Obligation, GO, 6.25% due 3/01/2005 (j) 1,410 Gregg County, Texas, Health Facilities Development Corporation, Hospital Revenue Bonds (Good Shepherd Medical Center Project) (m): 1,000 6.875% due 10/01/2020 1,164 3,500 6.375% due 10/01/2025 3,983 2,465 Gulf Coast, Texas, Waste Disposal Authority, Revenue Refunding Bonds (International Paper Company), AMT, Series A, 6.10% due 8/01/2024 2,604 2,500 Harris County, Texas, Health Facilities Development Corporation, Revenue Refunding Bonds (Saint Luke's Episcopal Hospital), Series A, 5.625% due 2/15/2017 2,695 3,000 Houston, Texas, Airport System, Special Facilities Revenue Bonds (Continental Airlines Terminal Improvement), AMT, Series B, 6.125% due 7/15/2027 2,327 22,000 Houston, Texas, Combined Utility System, First Lien Revenue Refunding Bonds, Series A, 5.125% due 5/15/2028 (f) 22,913 8,080 Matagorda County, Texas, Navigation District Number 1 Revenue Refunding Bonds (Reliant Energy Inc.), Series C, 8% due 5/01/2029 8,955 7,350 Matagorda County, Texas, Port of Bay City Authority Revenue Bonds (Hoechst Celanese Corp. Project), AMT, 6.50% due 5/01/2026 7,331 1,000 Pflugerville, Texas, Independent Industrial School District, GO, 5.75% due 8/15/2020 1,116 4,825 Port Corpus Christi, Texas, Individual Development Corporation, Environmental Facilities Revenue Bonds (Citgo Petroleum Corporation Project), AMT, 8.25% due 11/01/2031 5,155 2,495 Red River Authority, Texas, PCR, Refunding (Celanese Project), Series A, 6.45% due 11/01/2030 2,528 1,000 Red River, Texas, Education Finance Revenue Bonds (Saint Mark's School--Texas Project), 6% due 8/15/2019 1,106 2,025 South Plains, Texas, Housing Finance Corporation, S/F Mortgage Revenue Bonds, AMT, Series A, 7.30% due 9/01/2031 (i) 2,072
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Texas Southeast Texas, Housing Finance Corporation Revenue Bonds, AMT (d)(l): (concluded) $ 225 Series A, 8% due 11/01/2025 $ 229 245 Series B, 8.50% due 11/01/2025 247 Texas State Public Finance Authority, Building Revenue Bonds (h)(j): 2,100 (General Services Commission Project), Series A, 6% due 2/01/2010 2,410 1,000 (State Preservation Project), Series B, 6% due 8/01/2009 1,141 45,000 Texas State Turnpike Authority, Central Texas Turnpike System Revenue Bonds, First Tier, Series A, 5.75% due 8/15/2038 (c) 50,202 4,930 Upper Trinity Regional Water District, Texas, Water Revenue Bonds (Regional Treated Water Supply System), Series A, 6% due 8/01/2020 (e) 5,579 2,305 Webster, Texas, GO, COP, Series A, 6% due 3/01/2021 (h) 2,588 Virginia--0.6% 2,425 Chesterfield County, Virginia, IDA, PCR, Refunding (Virginia Electric and Power Company), Series B, 5.875% due 6/01/2017 2,667 Norfolk, Virginia, Redevelopment and Housing Authority, First Mortgage Revenue Bonds (Retirement Community), Series A: 500 6% due 1/01/2025 501 1,100 6.125% due 1/01/2035 1,101 4,250 Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds, Senior Series A, 5.50% due 8/15/2028 3,937 Washington--1.9% 2,065 Kitsap County, Washington, GO, 5.875% due 7/01/2020 (c) 2,322 3,000 Port Seattle, Washington, Special Facilities Revenue Bonds, Series A, 6% due 9/01/2029 (f) 3,381 3,010 Seattle, Washington, Drain and Wastewater Utility Revenue Bonds, 5.75% due 11/01/2022 (f) 3,376 Seattle, Washington, Housing Authority Revenue Bonds: 2,750 (Newholly Project), AMT, 6.25% due 12/01/2035 2,784 4,875 (Replacement Housing Project), 6.125% due 12/01/2032 4,820 7,750 Tacoma, Washington, Electric System Revenue Refunding Bonds, Series A, 5.75% due 1/01/2017 (h) 8,768 1,625 University of Washington, University Revenue Bonds (Student Facilities Fee), 5.875% due 6/01/2017 (h) 1,838 West Virginia--0.5% 7,500 Upshur County, West Virginia, Solid Waste Disposal Revenue Bonds (TJ International Project), AMT, 7% due 7/15/2025 7,800 Wisconsin--0.6% 2,725 Wisconsin State, GO, AMT, Series B, 6.20% due 11/01/2026 (f) 2,784 Wisconsin State Health and Educational Facilities Authority Revenue Bonds (Synergyhealth Inc.): 3,250 6% due 11/15/2023 3,442 1,700 6% due 11/15/2032 1,765 Wyoming--1.3% 8,400 Sweetwater County, Wyoming, PCR, Refunding (Idaho Power Company Project), Series A, 6.05% due 7/15/2026 (f) 8,986 9,000 Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds (FMC Corporation Project), AMT, Series A, 7% due 6/01/2024 9,162 Guam--0.0% 115 Guam Housing Corporation, S/F Mortgage Revenue Bonds, AMT, Series A, 5.75% due 9/01/2031 (l) 126 Puerto Rico--2.3% Puerto Rico Commonwealth Highway and Transportation Authority, Transportation Revenue Bonds: 8,045 5.75% due 7/01/2022 8,977 1,000 Series B, 6% due 07/01/2005 (j) 1,030 2,000 Series B, 5.875% due 7/01/2021 (f) 2,268 785 Puerto Rico Commonwealth, Public Improvement, GO, Refunding, 5.70% due 7/01/2020 (f) 874 15,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series NN, 5.125% due 7/01/2029 15,517 2,000 Puerto Rico Industrial Tourist Educational, Medical and Environmental Control Facilities Revenue Bonds (Ascension Health), RIB, Series 377, 9.96% due 11/15/2030 (g) 2,503 960 Puerto Rico Public Finance Corporation, Commonwealth Appropriation Revenue Bonds, Series E, 5.50% due 8/01/2029 1,015 U.S. Virgin 8,000 Virgin Islands Government Refinery Facilities Revenue Refunding Bonds Islands--0.6% (Hovensa Coker Project), AMT, 6.50% due 7/01/2021 8,750 Total Municipal Bonds (Cost--$1,260,569)--94.5% 1,346,953
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Schedule of Investments (concluded) National Portfolio (In Thousands)
Shares Held Short-Term Securities Value 40,623 Merrill Lynch Institutional Tax-Exempt Fund* $ 40,623 Total Short-Term Securities (Cost--$40,623)--2.9% 40,623 Total Investments (Cost--$1,301,192**)--97.4% 1,387,576 Other Assets Less Liabilities--2.6% 36,869 ----------- Net Assets--100.0% $ 1,424,445 =========== (a) Connie Lee Insured. (b) FHA Insured. (c) AMBAC Insured. (d) GNMA Collateralized. (e) FGIC Insured. (f) MBIA Insured. (g) The rate disclosed is that currently in effect. This rate changes periodically and inversely based upon prevailing market rates. (h) FSA Insured. (i) FNMA/GNMA Collateralized. (j) Prerefunded. (k) XL Capital Insured. (l) FHLMC Collateralized. (m) Radian Insured. (n) Escrowed to maturity. (o) ACA Insured. * 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) were as follows: (in Thousands) Net Dividend Affiliate Activity Income Merrill Lynch Institutional Tax-Exempt Fund 23,200 $206 ** The cost and unrealized appreciation/depreciation of investments, as of December 31, 2004, as computed for federal income tax purposes, were as follows: (in Thousands) Aggregate cost $ 1,301,037 ============== Gross unrealized appreciation $ 89,461 Gross unrealized depreciation (2,922) -------------- Net unrealized appreciation $ 86,539 ============== See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Statements of Assets and Liabilities
Limited Maturity Insured National As of December 31, 2004 Portfolio Portfolio Portfolio Assets Investments in unaffiliated securities, at value* $ 562,653,134 $ 1,049,465,571 $ 1,346,952,957 Investments in affiliated securities, at value** 7,203,784 24,316,723 40,623,245 Cash 93,064 51,579 61,166 Receivables: Interest 6,949,329 15,645,168 23,846,447 Securities sold -- 3,700,000 17,795,706 Capital shares sold 86,153 79,975 1,241,987 Dividends from affiliates 347 1,173 1,959 Prepaid expenses and other assets 61,555 783,733 438,095 --------------- --------------- --------------- Total assets 577,047,366 1,094,043,922 1,430,961,562 --------------- --------------- --------------- Liabilities Unrealized depreciation on forward interest rate swaps -- 22,793 -- Payables: Securities purchased -- 16,321,085 -- Dividends to shareholders 305,455 1,538,277 2,236,706 Capital shares redeemed 5,293,103 1,313,244 3,033,412 Distributor 73,097 157,610 249,762 Investment adviser 185,620 370,393 642,093 Other affiliates 35,127 67,692 146,838 Accrued expenses and other liabilities 93,203 119,624 208,051 --------------- --------------- --------------- Total liabilities 5,985,605 19,910,718 6,516,862 --------------- --------------- --------------- Net Assets Net assets $ 571,061,761 $ 1,074,133,204 $ 1,424,444,700 =============== =============== =============== Net Assets Consist of Class A Common Stock, $.10 par value++ $ 1,871,513 $ 2,261,308 $ 2,097,969 Class B Common Stock, $.10 par value++++ 506,933 1,313,548 1,867,304 Class C Common Stock, $.10 par value++++++ 1,194,923 803,685 870,034 Class I Common Stock, $.10 par value++++++++ 2,123,397 9,176,784 8,676,025 Paid-in capital in excess of par 568,269,841 1,004,290,205 1,393,545,427 --------------- --------------- --------------- Undistributed investment income--net 441,211 1,172,969 840,783 Accumulated realized capital losses--net (2,326,589) (11,161,616) (69,836,716) Unrealized appreciation/depreciation--net (1,019,468) 66,276,321 86,383,874 --------------- --------------- --------------- Total accumulated earnings (losses)--net (2,904,846) 56,287,674 17,387,941 --------------- --------------- --------------- Net Assets $ 571,061,761 $ 1,074,133,204 $ 1,424,444,700 =============== =============== ===============
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Statements of Assets and Liabilities (concluded)
Limited Maturity Insured National As of December 31, 2004 Portfolio Portfolio Portfolio Net Asset Value Class A: Net assets $ 187,878,460 $ 179,151,058 $ 221,276,990 =============== =============== =============== Shares outstanding 18,715,131 22,613,084 20,979,692 =============== =============== =============== Net asset value and redemption price per share $ 10.04 $ 7.92 $ 10.55 =============== =============== =============== Class B: Net assets $ 50,851,285 $ 104,026,133 $ 196,782,048 =============== =============== =============== Shares outstanding 5,069,330 13,135,476 18,673,040 =============== =============== =============== Net asset value and redemption price per share $ 10.03 $ 7.92 $ 10.54 =============== =============== =============== Class C: Net assets $ 119,348,060 $ 63,665,895 $ 91,733,109 =============== =============== =============== Shares outstanding 11,949,231 8,036,854 8,700,343 =============== =============== =============== Net asset value and redemption price per share $ 9.99 $ 7.92 $ 10.54 =============== =============== =============== Class I: Net assets $ 212,983,956 $ 727,290,118 $ 914,652,553 =============== =============== =============== Shares outstanding 21,233,965 91,767,836 86,760,253 =============== =============== =============== Net asset value and redemption price per share $ 10.03 $ 7.93 $ 10.54 =============== =============== =============== * Identified cost $ 563,672,602 $ 983,166,457 $ 1,260,569,083 =============== =============== =============== ** Identified cost for affiliated securities $ 7,203,784 $ 24,316,723 $ 40,623,245 =============== =============== =============== ++ 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, 2004 Statements of Operations
Limited Maturity Insured National For the Six Months Ended December 31, 2004 Portfolio Portfolio Portfolio Investment Income Interest $ 6,854,261 $ 27,879,521 $ 41,153,006 Dividends from affiliates 127,475 203,359 205,706 Dividends -- 735,749 -- --------------- --------------- --------------- Total income 6,981,736 28,818,629 41,358,712 --------------- --------------- --------------- Expenses Investment advisory fees 1,103,214 2,025,988 3,454,283 Account maintenance and distribution fees--Class C 241,381 258,538 342,013 Accounting services 115,978 166,279 214,051 Account maintenance fees--Class A 113,914 234,264 275,010 Account maintenance and distribution fees--Class B 102,792 414,706 791,109 Registration fees 44,615 30,555 35,351 Transfer agent fees--Class I 36,564 134,859 306,859 Transfer agent fees--Class A 35,492 33,649 72,338 Transfer agent fees--Class C 25,361 14,163 31,715 Professional fees 23,407 28,189 33,109 Printing and shareholder reports 22,006 32,619 41,222 Custodian fees 16,933 26,443 35,301 Transfer agent fees--Class B 11,466 24,242 78,764 Pricing services 10,792 11,186 28,447 Directors' fees and expenses 7,124 10,400 13,709 Other 22,631 29,187 31,586 --------------- --------------- --------------- Total expenses before waiver 1,933,670 3,475,267 5,784,867 Waiver of expenses (19,385) (32,198) (31,953) --------------- --------------- --------------- Total expenses after waiver 1,914,285 3,443,069 5,752,914 --------------- --------------- --------------- Investment income--net 5,067,451 25,375,560 35,605,798 --------------- --------------- --------------- Realized & Unrealized Gain (Loss)--Net Realized gain (loss) on: Investments--net (692,087) 5,543,490 7,636,534 Forward interest rate swaps--net -- (848,984) -- --------------- --------------- --------------- Total realized gain (loss)--net (692,087) 4,694,506 7,636,534 --------------- --------------- --------------- Change in unrealized appreciation/depreciation on: Investments--net (149,477) 26,896,007 27,015,335 Forward interest rate swaps--net -- 259,072 -- --------------- --------------- --------------- Total unrealized appreciation/depreciation--net (149,477) 27,155,079 27,015,335 --------------- --------------- --------------- Total realized and unrealized gain (loss)--net (841,564) 31,849,585 34,651,869 --------------- --------------- --------------- Net Increase in Net Assets Resulting from Operations $ 4,225,887 $ 57,225,145 $ 70,257,667 =============== =============== =============== See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 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: 2004 2004 Operations Investment income--net $ 5,067,451 $ 12,246,871 Realized loss--net (692,087) (1,056,145) Change in unrealized depreciation--net (149,477) (8,070,447) --------------- --------------- Net increase in net assets resulting from operations 4,225,887 3,120,279 --------------- --------------- Dividends to Shareholders Investment income--net: Class A (1,810,547) (4,538,777) Class B (391,074) (1,050,664) Class C (920,019) (2,160,826) Class I (1,987,091) (4,488,624) --------------- --------------- Net decrease in net assets resulting from dividends to shareholders (5,108,731) (12,238,891) --------------- --------------- Capital Share Transactions Net decrease in net assets derived from capital share transactions (124,030,272) (14,166,003) --------------- --------------- Net Assets Total decrease in net assets (124,913,116) (23,284,615) Beginning of period 695,974,877 719,259,492 --------------- --------------- End of period* $ 571,061,761 $ 695,974,877 =============== =============== * Undistributed investment income--net $ 441,211 $ 482,491 =============== =============== See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Statements of Changes in Net Assets (continued) Insured Portfolio
For the Six For the Months Ended Year Ended December 31, June 30, Increase (Decrease) in Net Assets: 2004 2004 Operations Investment income--net $ 25,375,560 $ 57,675,729 Realized gain--net 4,694,506 5,207,367 Change in unrealized appreciation--net 27,155,079 (62,104,593) --------------- --------------- Net increase in net assets resulting from operations 57,225,145 778,503 --------------- --------------- Dividends to Shareholders Investment income--net: Class A (4,187,587) (8,990,802) Class B (2,191,442) (5,785,538) Class C (1,263,449) (2,766,852) Class I (17,721,265) (40,101,428) --------------- --------------- Net decrease in net assets resulting from dividends to shareholders (25,363,743) (57,644,620) --------------- --------------- Capital Share Transactions Net decrease in net assets derived from capital share transactions (47,362,823) (123,327,160) --------------- --------------- Net Assets Total decrease in net assets (15,501,421) (180,193,277) Beginning of period 1,089,634,625 1,269,827,902 --------------- --------------- End of period* $ 1,074,133,204 $ 1,089,634,625 =============== =============== * Undistributed investment income--net $ 1,172,969 $ 1,161,152 =============== =============== See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Statements of Changes in Net Assets (concluded) National Portfolio
For the Six For the Months Ended Year Ended December 31, June 30, Increase (Decrease) in Net Assets: 2004 2004 Operations Investment income--net $ 35,605,798 $ 61,264,642 Realized gain (loss)--net 7,636,534 (1,437,730) Change in unrealized appreciation--net 27,015,335 (32,654,407) --------------- --------------- Net increase in net assets resulting from operations 70,257,667 27,172,505 --------------- --------------- Dividends to Shareholders Investment income--net: Class A (5,342,608) (10,513,482) Class B (4,589,899) (12,045,994) Class C (1,836,540) (3,332,550) Class I (23,802,111) (35,485,746) --------------- --------------- Net decrease in net assets resulting from dividends to shareholders (35,571,158) (61,377,772) --------------- --------------- Capital Share Transactions Net increase (decrease) in net assets derived from capital share transactions (17,699,888) 217,980,200 --------------- --------------- Net Assets Total increase in net assets 16,986,621 183,774,933 Beginning of period 1,407,458,079 1,223,683,146 --------------- --------------- End of period* $ 1,424,444,700 $ 1,407,458,079 =============== =============== * Undistributed investment income--net $ 840,783 $ 806,143 =============== =============== See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 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: 2004 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of period $ 10.06 $ 10.18 $ 10.14 $ 10.06 $ 9.86 ---------- ---------- ---------- ---------- ---------- Investment income--net .08++ .17++ .24++ .32 .38 Realized and unrealized gain (loss)--net (.02) (.12) .04 .08 .20 ---------- ---------- ---------- ---------- ---------- Total from investment operations .06 .05 .28 .40 .58 ---------- ---------- ---------- ---------- ---------- Less dividends from investment income (.08) (.17) (.24) (.32) (.38) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 10.04 $ 10.06 $ 10.18 $ 10.14 $ 10.06 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share .61%+++ .50% 2.77% 3.99% 5.96% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of reimbursement .54%* .52% .52% .56% .54% ========== ========== ========== ========== ========== Expenses .55%* .53% .53% .56% .54% ========== ========== ========== ========== ========== Investment income--net 1.58%* 1.68% 2.31% 3.13% 3.80% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 187,878 $ 244,741 $ 248,454 $ 140,744 $ 42,619 ========== ========== ========== ========== ========== Portfolio turnover 28.38% 69.08% 44.61% 74.74% 51.94% ========== ========== ========== ========== ========== * 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, 2004 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: 2004 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of period $ 10.05 $ 10.17 $ 10.13 $ 10.06 $ 9.86 ---------- ---------- ---------- ---------- ---------- Investment income--net .07++ .14++ .21++ .29 .35 Realized and unrealized gain (loss)--net (.02) (.12) .04 .07 .20 ---------- ---------- ---------- ---------- ---------- Total from investment operations .05 .02 .25 .36 .55 ---------- ---------- ---------- ---------- ---------- Less dividends from investment income (.07) (.14) (.21) (.29) (.35) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 10.03 $ 10.05 $ 10.17 $ 10.13 $ 10.06 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share .48%+++ .24% 2.51% 3.62% 5.69% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of reimbursement .80%* .77% .78% .82% .80% ========== ========== ========== ========== ========== Expenses .80%* .78% .79% .82% .80% ========== ========== ========== ========== ========== Investment income--net 1.32%* 1.43% 2.10% 2.87% 3.55% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 50,851 $ 63,135 $ 83,886 $ 81,967 $ 31,480 ========== ========== ========== ========== ========== Portfolio turnover 28.38% 69.08% 44.61% 74.74% 51.94% ========== ========== ========== ========== ========== * 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, 2004 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: 2004 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of period $ 10.01 $ 10.13 $ 10.09 $ 10.01 $ 9.82 ---------- ---------- ---------- ---------- ---------- Investment income--net .07++ .14++ .19++ .29 .35 Realized and unrealized gain (loss)--net (.02) (.12) .06 .08 .19 ---------- ---------- ---------- ---------- ---------- Total from investment operations .05 .02 .25 .37 .54 ---------- ---------- ---------- ---------- ---------- Less dividends from investment income (.07) (.14) (.21) (.29) (.35) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 9.99 $ 10.01 $ 10.13 $ 10.09 $ 10.01 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share .48%+++ .23% 2.52% 3.72% 5.59% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of reimbursement .80%* .77% .78% .82% .81% ========== ========== ========== ========== ========== Expenses .80%* .78% .79% .82% .81% ========== ========== ========== ========== ========== Investment income--net 1.32%* 1.42% 1.92% 2.91% 3.53% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 119,348 $ 144,656 $ 135,782 $ 1,596 $ 602 ========== ========== ========== ========== ========== Portfolio turnover 28.38% 69.08% 44.61% 74.74% 51.94% ========== ========== ========== ========== ========== * 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, 2004 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: 2004 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of period $ 10.05 $ 10.17 $ 10.13 $ 10.05 $ 9.85 ---------- ---------- ---------- ---------- ---------- Investment income--net .09++ .18++ .27++ .34 .39 Realized and unrealized gain (loss)--net (.02) (.12) .02 .08 .20 ---------- ---------- ---------- ---------- ---------- Total from investment operations .07 .06 .29 .42 .59 ---------- ---------- ---------- ---------- ---------- Less dividends from investment income (.09) (.18) (.25) (.34) (.39) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 10.03 $ 10.05 $ 10.17 $ 10.13 $ 10.05 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share .66%+++ .59% 2.87% 4.10% 6.07% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of reimbursement .44%* .42% .42% .46% .44% ========== ========== ========== ========== ========== Expenses .45%* .43% .43% .46% .44% ========== ========== ========== ========== ========== Investment income--net 1.68%* 1.78% 2.44% 3.30% 3.91% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 212,984 $ 243,443 $ 251,137 $ 204,936 $ 191,481 ========== ========== ========== ========== ========== Portfolio turnover 28.38% 69.08% 44.61% 74.74% 51.94% ========== ========== ========== ========== ========== * 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, 2004 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: 2004 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of period $ 7.70 $ 8.07 $ 7.79 $ 7.69 $ 7.36 ---------- ---------- ---------- ---------- ---------- Investment income--net .18++++ .38++++ .39++++ .39 .37 Realized and unrealized gain (loss)--net .22 (.37) .28 .10 .33 ---------- ---------- ---------- ---------- ---------- Total from investment operations .40 .01 .67 .49 .70 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.18) (.38) (.39) (.39) (.37) Realized gain--net -- -- -- --++ -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.18) (.38) (.39) (.39) (.37) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 7.92 $ 7.70 $ 8.07 $ 7.79 $ 7.69 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share 5.21%+++ .10% 8.77% 6.63% 9.74% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of reimbursement .70%* .71% .71% .72% .70% ========== ========== ========== ========== ========== Expenses .71%* .71% .71% .72% .70% ========== ========== ========== ========== ========== Investment income--net 4.47%* 4.79% 4.88% 5.10% 4.94% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 179,151 $ 183,007 $ 187,805 $ 161,110 $ 145,688 ========== ========== ========== ========== ========== Portfolio turnover 23.57% 49.27% 38.17% 32.78% 64.39% ========== ========== ========== ========== ========== * Annualized. ** Total investment returns exclude the effects of sales charges. ++ Amount is less than $(.01) per share. ++++ Based on average shares outstanding. +++ Aggregate total investment return. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 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: 2004 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of period $ 7.69 $ 8.07 $ 7.79 $ 7.68 $ 7.36 ---------- ---------- ---------- ---------- ---------- Investment income--net .16++++ .34++++ .35++++ .36 .34 Realized and unrealized gain (loss)--net .23 (.38) .28 .11 .32 ---------- ---------- ---------- ---------- ---------- Total from investment operations .39 (.04) .63 .47 .66 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.16) (.34) (.35) (.36) (.34) Realized gain--net -- -- -- --++ -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.16) (.34) (.35) (.36) (.34) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 7.92 $ 7.69 $ 8.07 $ 7.79 $ 7.68 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share 5.08%+++ (.53%) 8.21% 6.23% 9.04% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of reimbursement 1.21%* 1.21% 1.22% 1.23% 1.21% ========== ========== ========== ========== ========== Expenses 1.22%* 1.22% 1.22% 1.23% 1.21% ========== ========== ========== ========== ========== Investment income--net 3.97%* 4.29% 4.38% 4.58% 4.43% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 104,026 $ 111,524 $ 160,177 $ 182,241 $ 223,710 ========== ========== ========== ========== ========== Portfolio turnover 23.57% 49.27% 38.17% 32.78% 64.39% ========== ========== ========== ========== ========== * Annualized. ** Total investment returns exclude the effects of sales charges. ++ Amount is less than $(.01) per share. ++++ Based on average shares outstanding. +++ Aggregate total investment return. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 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: 2004 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of period $ 7.69 $ 8.07 $ 7.79 $ 7.68 $ 7.36 ---------- ---------- ---------- ---------- ---------- Investment income--net .16++++ .33++++ .34++++ .35 .33 Realized and unrealized gain (loss)--net .23 (.38) .28 .11 .32 ---------- ---------- ---------- ---------- ---------- Total from investment operations .39 (.05) .62 .46 .65 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.16) (.33) (.34) (.35) (.33) Realized gain--net -- -- -- --++ -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.16) (.33) (.34) (.35) (.33) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 7.92 $ 7.69 $ 8.07 $ 7.79 $ 7.68 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share 5.05%+++ (.58%) 8.16% 6.18% 8.99% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of reimbursement 1.26%* 1.26% 1.27% 1.28% 1.26% ========== ========== ========== ========== ========== Expenses 1.27%* 1.27% 1.27% 1.28% 1.26% ========== ========== ========== ========== ========== Investment income--net 3.91%* 4.23% 4.31% 4.56% 4.38% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 63,666 $ 61,794 $ 66,089 $ 34,541 $ 14,392 ========== ========== ========== ========== ========== Portfolio turnover 23.57% 49.27% 38.17% 32.78% 64.39% ========== ========== ========== ========== ========== * Annualized. ** Total investment returns exclude the effects of sales charges. ++ Amount is less than $(.01) per share. ++++ Based on average shares outstanding. +++ Aggregate total investment return. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 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: 2004 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of period $ 7.70 $ 8.07 $ 7.80 $ 7.69 $ 7.36 ---------- ---------- ---------- ---------- ---------- Investment income--net .19++++ .40++++ .41++++ .41 .39 Realized and unrealized gain (loss)--net .23 (.37) .27 .11 .33 ---------- ---------- ---------- ---------- ---------- Total from investment operations .42 .03 .68 .52 .72 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.19) (.40) (.41) (.41) (.39) Realized gain--net -- -- -- --++ -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.19) (.40) (.41) (.41) (.39) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 7.93 $ 7.70 $ 8.07 $ 7.80 $ 7.69 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share 5.48%+++ .35% 8.88% 7.03% 10.01% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of reimbursement .45%* .46% .46% .47% .45% ========== ========== ========== ========== ========== Expenses .46%* .46% .46% .47% .45% ========== ========== ========== ========== ========== Investment income--net 4.72%* 5.04% 5.13% 5.35% 5.19% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 727,290 $ 733,310 $ 855,757 $ 878,018 $ 920,597 ========== ========== ========== ========== ========== Portfolio turnover 23.57% 49.27% 38.17% 32.78% 64.39% ========== ========== ========== ========== ========== * Annualized. ** Total investment returns exclude the effects of sales charges. ++ Amount is less than $(.01) per share. ++++ Based on average shares outstanding. +++ Aggregate total investment return. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 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: 2004 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of period $ 10.29 $ 10.54 $ 10.27 $ 10.15 $ 9.71 ---------- ---------- ---------- ---------- ---------- Investment income--net .26+++ .52+++ .53+++ .53 .52 Realized and unrealized gain (loss)--net .26 (.25) .27 .12 .44 ---------- ---------- ---------- ---------- ---------- Total from investment operations .52 .27 .80 .65 .96 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.26) (.52) (.53) (.53) (.52) Realized gain--net -- -- -- --++ -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.26) (.52) (.53) (.53) (.52) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 10.55 $ 10.29 $ 10.54 $ 10.27 $ 10.15 ========== ========== ========== ========== ========== Total Investment Return* Based on net asset value per share 5.08%++++ 2.62% 7.98% 6.72% 10.04% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of reimbursement .85%** .85% .84% .87% .83% ========== ========== ========== ========== ========== Expenses .85%** .85% .84% .87% .83% ========== ========== ========== ========== ========== Investment income--net 4.86%** 4.97% 5.10% 5.30% 5.16% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 221,277 $ 207,376 $ 200,108 $ 137,225 $ 124,082 ========== ========== ========== ========== ========== Portfolio turnover 13.97% 22.46% 37.75% 35.75% 80.88% ========== ========== ========== ========== ========== * Total investment returns exclude the effects of sales charges. ** Annualized. ++ 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, 2004 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: 2004 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of period $ 10.28 $ 10.53 $ 10.26 $ 10.14 $ 9.70 ---------- ---------- ---------- ---------- ---------- Investment income--net .23+++ .47+++ .48+++ .53 .46 Realized and unrealized gain (loss)--net .26 (.26) .27 .12 .44 ---------- ---------- ---------- ---------- ---------- Total from investment operations .49 .21 .75 .65 .90 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.23) (.46) (.48) (.53) (.46) Realized gain--net -- -- -- --++ -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.23) (.46) (.48) (.53) (.46) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 10.54 $ 10.28 $ 10.53 $ 10.26 $ 10.14 ========== ========== ========== ========== ========== Total Investment Return* Based on net asset value per share 4.82%++++ 2.10% 7.43% 6.18% 9.49% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of reimbursement 1.36%** 1.35% 1.34% 1.38% 1.34% ========== ========== ========== ========== ========== Expenses 1.36%** 1.36% 1.35% 1.38% 1.34% ========== ========== ========== ========== ========== Investment income--net 4.36%** 4.47% 4.59% 4.80% 4.67% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 196,782 $ 217,814 $ 321,477 $ 295,827 $ 227,592 ========== ========== ========== ========== ========== Portfolio turnover 13.97% 22.46% 37.75% 35.75% 80.88% ========== ========== ========== ========== ========== * Total investment returns exclude the effects of sales charges. ** Annualized. ++ 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, 2004 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: 2004 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of period $ 10.29 $ 10.54 $ 10.26 $ 10.14 $ 9.71 ---------- ---------- ---------- ---------- ---------- Investment income--net .23+++ .46+++ .47+++ .53 .46 Realized and unrealized gain (loss)--net .25 (.25) .28 .12 .43 ---------- ---------- ---------- ---------- ---------- Total from investment operations .48 .21 .75 .65 .89 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.23) (.46) (.47) (.53) (.46) Realized gain--net -- -- -- --++ -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.23) (.46) (.47) (.53) (.46) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 10.54 $ 10.29 $ 10.54 $ 10.26 $ 10.14 ========== ========== ========== ========== ========== Total Investment Return* Based on net asset value per share 4.69%++++ 2.05% 7.48% 6.13% 9.33% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of reimbursement 1.41%** 1.40% 1.39% 1.43% 1.39% ========== ========== ========== ========== ========== Expenses 1.41%** 1.41% 1.40% 1.43% 1.39% ========== ========== ========== ========== ========== Investment income--net 4.30%** 4.42% 4.54% 4.76% 4.61% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 91,733 $ 74,849 $ 77,906 $ 52,822 $ 31,880 ========== ========== ========== ========== ========== Portfolio turnover 13.97% 22.46% 37.75% 35.75% 80.88% ========== ========== ========== ========== ========== * Total investment returns exclude the effects of sales charges. ** Annualized. ++ 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, 2004 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: 2004 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of period $ 10.29 $ 10.54 $ 10.26 $ 10.14 $ 9.70 ---------- ---------- ---------- ---------- ---------- Investment income--net .27+++ .55+++ .56+++ .62 .54 Realized and unrealized gain (loss)--net .25 (.25) .28 .12 .44 ---------- ---------- ---------- ---------- ---------- Total from investment operations .52 .30 .84 .74 .98 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.27) (.55) (.56) (.62) (.54) Realized gain--net -- -- -- --++ -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.27) (.55) (.56) (.62) (.54) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 10.54 $ 10.29 $ 10.54 $ 10.26 $ 10.14 ========== ========== ========== ========== ========== Total Investment Return* Based on net asset value per share 5.12%++++ 2.88% 8.34% 6.98% 10.32% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of reimbursement .60%** .60% .59% .62% .58% ========== ========== ========== ========== ========== Expenses .60%** .60% .59% .62% .58% ========== ========== ========== ========== ========== Investment income--net 5.11%** 5.23% 5.35% 5.55% 5.42% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 914,653 $ 907,419 $ 624,192 $ 626,935 $ 653,685 ========== ========== ========== ========== ========== Portfolio turnover 13.97% 22.46% 37.75% 35.75% 80.88% ========== ========== ========== ========== ========== * Total investment returns exclude the effects of sales charges. ** Annualized. ++ 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, 2004 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. On January 3, 2005, the Limited Maturity Portfolio changed its name to the Short- Term Portfolio. The Fund's financial statements are prepared in conformity with U.S. generally accepted accounting principles, which may require the use of management accruals and estimates. Actual results may differ from these estimates. These unaudited financial statements reflect all adjustments, which are, in the opinion of management, necessary to present a fair statement of the results for the interim period. 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 (except Class B shareholders may vote on certain changes to the Class A distribution plan). 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 Portfolio. All Portfolios: Municipal bonds are traded primarily in the over-the- counter markets and are valued at the last available bid price in the over-the-counter market or on the basis of values as obtained by a pricing service. Pricing services use valuation matrixes that incorporate both dealer-supplied valuations and valuation models. The procedures of the pricing service and its valuations are reviewed by the officers of the Fund under the general direction of the Board of Directors. Such valuations and procedures are reviewed periodically by the Board of Directors of the Fund. Financial futures contracts and options thereon, which are traded on exchanges, are valued at their closing prices as of the close of such exchanges. Options written or purchased are valued at the last sale price in the case of exchange-traded options. In the case of options traded in the over-the-counter market, valuation is the last asked price (options written) or the last bid price (options purchased). Swap agreements are valued by quoted fair values received daily by the Fund's pricing service. Short-term investments with a remaining maturity of 60 days or less are valued at amortized cost which approximates market value, under which method the investment is valued at cost and any premium or discount is amortized on a straight line basis to maturity. Investments in open- end investment companies are valued at their net asset value each business day. Securities and other assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Board of Directors of the Fund. (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. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Notes to Financial Statements (continued) * Forward interest rate swaps--The Fund may enter into forward interest rate swaps. In a forward interest rate swap, the Fund 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 Fund from the counterparty. When the agreement is closed, the Fund records 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. (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 FAM has agreed to reimburse its advisory fee for each Portfolio by the amount of advisory fee each Portfolio pays to FAM indirectly through each Portfolio's investment in the Merrill Lynch Institutional Tax-Exempt Fund. For the six months ended December 31, 2004, FAM reimbursed Limited Maturity Portfolio, Insured Portfolio and National Portfolio in the amounts of $19,385, $32,198 and $31,953, respectively. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Notes to Financial Statements (continued) 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, 2004, 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 $ 949 $ 150 $ 9,337 $ 1,235 Insured $ 2,831 $ 2,845 $ 31,184 $ 17,223 National $ 10,292 $ 7,087 $ 74,821 $ 34,648 For the six months ended December 31, 2004, MLPF&S received contingent deferred sales charges of $189,077 relating to transactions in Class B Shares, amounting to $34,826, $42,281 and $111,970 in the Limited Maturity, Insured and National Portfolios, respectively, and $30,398 relating to transactions in Class C Shares, amounting to $18,894, $2,483 and $9,021 in the Limited Maturity, Insured and National Portfolios, respectively. In addition, MLPF&S received $1,000 in commissions on the execution of portfolio transactions in the Insured Portfolio for the six months ended December 31, 2004. For the six months ended December 31, 2004, the Fund reimbursed FAM $7,746, $11,913 and $15,771 in the Limited Maturity, Insured and National Portfolios, respectively, for certain accounting services. Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co., is the Fund's transfer agent. 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, 2004 were as follows: Purchases Sales Limited Maturity Portfolio $ 150,903,790 $ 214,685,640 Insured Portfolio $ 251,197,002 $ 297,956,915 National Portfolio $ 190,485,927 $ 221,330,994 4. Capital Share Transactions: Net increase (decrease) in net assets derived from capital share transactions for the six months ended December 31, 2004 and for the year ended June 30, 2004 were $(124,030,272) and $(14,166,003), respectively, for the Limited Maturity Portfolio; $(47,362,823) and $(123,327,160), respectively, for the Insured Portfolio; $(17,699,888) and $217,980,200, respectively, for the National Portfolio. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 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, 2004 Shares Amount Shares sold 3,047,057 $ 30,688,399 Automatic conversion of shares 101,101 1,018,183 Shares issued to shareholders in reinvestment of dividends 92,035 926,841 -------------- --------------- Total issued 3,240,193 32,633,423 Shares redeemed (8,863,502) (89,223,050) -------------- --------------- Net decrease (5,623,309) $ (56,589,627) ============== =============== Limited Maturity Portfolio Class A Shares for the Year Dollar Ended June 30, 2004 Shares Amount Shares sold 16,779,060 $ 170,216,123 Automatic conversion of shares 774,841 7,859,627 Shares issued to shareholders in reinvestment of dividends 259,274 2,627,508 -------------- --------------- Total issued 17,813,175 180,703,258 Shares redeemed (17,884,341) (181,029,076) -------------- --------------- Net decrease (71,166) $ (325,818) ============== =============== Limited Maturity Portfolio Class B Shares for the Six Months Ended Dollar December 31, 2004 Shares Amount Shares sold 233,504 $ 2,348,901 Shares issued to shareholders in reinvestment of dividends 24,241 243,890 -------------- --------------- Total issued 257,745 2,592,791 -------------- --------------- Automatic conversion of shares (101,151) (1,018,183) Shares redeemed (1,370,306) (13,782,897) -------------- --------------- Total redeemed (1,471,457) (14,801,080) -------------- --------------- Net decrease (1,213,712) $ (12,208,289) ============== =============== Limited Maturity Portfolio Class B Shares for the Year Dollar Ended June 30, 2004 Shares Amount Shares sold 1,583,097 $ 16,032,729 Shares issued to shareholders in reinvestment of dividends 66,270 671,027 -------------- --------------- Total issued 1,649,367 16,703,756 -------------- --------------- Automatic conversion of shares (775,261) (7,859,627) Shares redeemed (2,838,410) (28,733,527) -------------- --------------- Total redeemed (3,613,671) (36,593,154) -------------- --------------- Net decrease (1,964,304) $ (19,889,398) ============== =============== Limited Maturity Portfolio Class C Shares for the Six Months Ended Dollar December 31, 2004 Shares Amount Shares sold 1,041,542 $ 10,434,755 Shares issued to shareholders in reinvestment of dividends 58,137 582,494 -------------- --------------- Total issued 1,099,679 11,017,249 Shares redeemed (3,608,713) (36,130,568) -------------- --------------- Net decrease (2,509,034) $ (25,113,319) ============== =============== Limited Maturity Portfolio Class C Shares for the Year Dollar Ended June 30, 2004 Shares Amount Shares sold 7,434,781 $ 74,991,846 Shares issued to shareholders in reinvestment of dividends 138,151 1,392,490 -------------- --------------- Total issued 7,572,932 76,384,336 Shares redeemed (6,522,342) (65,705,019) -------------- --------------- Net increase 1,050,590 $ 10,679,317 ============== =============== Limited Maturity Portfolio Class I Shares for the Six Months Ended Dollar December 31, 2004 Shares Amount Shares sold 1,285,265 $ 12,926,374 Shares issued to shareholders in reinvestment of dividends 119,938 1,206,662 -------------- --------------- Total issued 1,405,203 14,133,036 Shares redeemed (4,400,308) (44,252,073) -------------- --------------- Net decrease (2,995,105) $ (30,119,037) ============== =============== MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Notes to Financial Statements (continued) Limited Maturity Portfolio Class I Shares for the Year Dollar Ended June 30, 2004 Shares Amount Shares sold 7,654,936 $ 77,520,808 Shares issued to shareholders in reinvestment of dividends 279,125 2,825,785 -------------- --------------- Total issued 7,934,061 80,346,593 Shares redeemed (8,397,998) (84,976,697) -------------- --------------- Net decrease (463,937) $ (4,630,104) ============== =============== Insured Portfolio Class A Shares for the Six Months Ended Dollar December 31, 2004 Shares Amount Shares sold 430,968 $ 3,386,481 Automatic conversion of shares 505,789 3,987,719 Shares issued to shareholders in reinvestment of dividends 257,972 2,034,857 -------------- --------------- Total issued 1,194,729 9,409,057 Shares redeemed (2,363,940) (18,609,609) -------------- --------------- Net decrease (1,169,211) $ (9,200,552) ============== =============== Insured Portfolio Class A Shares for the Year Dollar Ended June 30, 2004 Shares Amount Shares sold 1,293,482 $ 10,118,653 Automatic conversion of shares 2,938,903 23,195,012 Shares issued to shareholders in reinvestment of dividends 542,688 4,271,669 -------------- --------------- Total issued 4,775,073 37,585,334 Shares redeemed (4,263,021) (33,478,095) -------------- --------------- Net increase 512,052 $ 4,107,239 ============== =============== Insured Portfolio Class B Shares for the Six Months Ended Dollar December 31, 2004 Shares Amount Shares sold 170,002 $ 1,337,806 Shares issued to shareholders in reinvestment of dividends 119,473 941,549 -------------- --------------- Total issued 289,475 2,279,355 -------------- --------------- Automatic conversion of shares (505,789) (3,987,719) Shares redeemed (1,146,400) (9,014,211) -------------- --------------- Total redeemed (1,652,189) (13,001,930) -------------- --------------- Net decrease (1,362,714) $ (10,722,575) ============== =============== Insured Portfolio Class B Shares for the Year Dollar Ended June 30, 2004 Shares Amount Shares sold 899,906 $ 7,113,726 Shares issued to shareholders in reinvestment of dividends 325,764 2,563,893 -------------- --------------- Total issued 1,225,670 9,677,619 -------------- --------------- Automatic conversion of shares (2,939,322) (23,195,012) Shares redeemed (3,642,371) (28,526,319) -------------- --------------- Total redeemed (6,581,693) (51,721,331) -------------- --------------- Net decrease (5,356,023) $ (42,043,712) ============== =============== Insured Portfolio Class C Shares for the Six Months Ended Dollar December 31, 2004 Shares Amount Shares sold 607,883 $ 4,789,662 Shares issued to shareholders in reinvestment of dividends 84,583 667,091 -------------- --------------- Total issued 692,466 5,456,753 Shares redeemed (686,639) (5,402,299) -------------- --------------- Net increase 5,827 $ 54,454 ============== =============== Insured Portfolio Class C Shares for the Year Dollar Ended June 30, 2004 Shares Amount Shares sold 1,599,948 $ 12,660,609 Shares issued to shareholders in reinvestment of dividends 187,529 1,476,225 -------------- --------------- Total issued 1,787,477 14,136,834 Shares redeemed (1,946,278) (15,252,191) -------------- --------------- Net decrease (158,801) $ (1,115,357) ============== =============== Insured Portfolio Class I Shares for the Six Months Ended Dollar December 31, 2004 Shares Amount Shares sold 460,793 $ 3,623,487 Shares issued to shareholders in reinvestment of dividends 927,479 7,316,174 -------------- --------------- Total issued 1,388,272 10,939,661 Shares redeemed (4,882,377) (38,433,811) -------------- --------------- Net decrease (3,494,105) $ (27,494,150) ============== =============== MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Notes to Financial Statements (continued) Insured Portfolio Class I Shares for the Year Dollar Ended June 30, 2004 Shares Amount Shares sold 1,834,025 $ 14,548,109 Shares issued to shareholders in reinvestment of dividends 2,141,518 16,867,743 -------------- --------------- Total issued 3,975,543 31,415,852 Shares redeemed (14,710,762) (115,691,182) -------------- --------------- Net decrease (10,735,219) $ (84,275,330) ============== =============== National Portfolio Class A Shares for the Six Months Ended Dollar December 31, 2004 Shares Amount Shares sold 3,093,108 $ 32,271,346 Automatic conversion of shares 905,283 9,486,854 Shares issued to shareholders in reinvestment of dividends 228,946 2,404,002 -------------- --------------- Total issued 4,227,337 44,162,202 Shares redeemed (3,397,399) (35,426,536) -------------- --------------- Net increase 829,938 $ 8,735,666 ============== =============== National Portfolio Class A Shares for the Year Dollar Ended June 30, 2004 Shares Amount Shares sold 3,242,405 $ 34,070,043 Automatic conversion of shares 3,679,692 38,392,291 Shares issued to shareholders in reinvestment of dividends 468,701 4,887,876 -------------- --------------- Total issued 7,390,798 77,350,210 Shares redeemed (6,225,568) (64,975,100) -------------- --------------- Net increase 1,165,230 $ 12,375,110 ============== =============== National Portfolio Class B Shares for the Six Months Ended Dollar December 31, 2004 Shares Amount Shares sold 367,195 $ 3,842,257 Shares issued to shareholders in reinvestment of dividends 178,322 1,870,732 -------------- --------------- Total issued 545,517 5,712,989 -------------- --------------- Automatic conversion of shares (905,995) (9,486,854) Shares redeemed (2,148,276) (22,472,877) -------------- --------------- Total redeemed (3,054,271) (31,959,731) -------------- --------------- Net decrease (2,508,754) $ (26,246,742) ============== =============== National Portfolio Class B Shares for the Year Dollar Ended June 30, 2004 Shares Amount Shares sold 1,044,188 $ 10,862,907 Shares issued to shareholders in reinvestment of dividends 485,738 5,059,800 -------------- --------------- Total issued 1,529,926 15,922,707 -------------- --------------- Automatic conversion of shares (3,682,766) (38,392,291) Shares redeemed (7,189,222) (74,707,980) -------------- --------------- Total redeemed (10,871,988) (113,100,271) -------------- --------------- Net decrease (9,342,062) $ (97,177,564) ============== =============== National Portfolio Class C Shares for the Six Months Ended Dollar December 31, 2004 Shares Amount Shares sold 2,064,425 $ 21,637,778 Shares issued to shareholders in reinvestment of dividends 100,058 1,050,369 -------------- --------------- Total issued 2,164,483 22,688,147 Shares redeemed (739,249) (7,756,773) -------------- --------------- Net increase 1,425,234 $ 14,931,374 ============== =============== National Portfolio Class C Shares for the Year Dollar Ended June 30, 2004 Shares Amount Shares sold 1,945,227 $ 20,206,826 Shares issued to shareholders in reinvestment of dividends 180,902 1,886,143 -------------- --------------- Total issued 2,126,129 22,092,969 Shares redeemed (2,244,207) (23,326,697) -------------- --------------- Net decrease (118,078) $ (1,233,728) ============== =============== National Portfolio Class I Shares for the Six Months Ended Dollar December 31, 2004 Shares Amount Shares sold 1,395,767 $ 14,630,089 Shares issued to shareholders in reinvestment of dividends 1,442,328 15,135,951 -------------- --------------- Total issued 2,838,095 29,766,040 Shares redeemed (4,288,429) (44,886,226) -------------- --------------- Net decrease (1,450,334) $ (15,120,186) ============== =============== MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Notes to Financial Statements (concluded) National Portfolio Class I Shares for the Year Dollar Ended June 30, 2004 Shares Amount Shares sold 2,236,079 $ 23,176,738 Shares issued resulting from reorganization 35,155,756 368,217,557 Shares issued to shareholders in reinvestment of dividends 1,843,445 19,167,463 -------------- --------------- Total issued 39,235,280 410,561,758 Shares redeemed (10,268,772) (106,545,376) -------------- --------------- Net increase 28,966,508 $ 304,016,382 ============== =============== 5. Short-Term Borrowings: The Fund, on behalf of the Portfolios, along with certain other funds managed by FAM and its affiliates, is a party to a $500,000,000 credit agreement with a group of 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 .07% 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 defined in the credit agreement. The Fund did not borrow under the credit agreement during the six months ended December 31, 2004. On November 26, 2004, the credit agreement was renewed for one year under substantially the same terms. 6. Capital Loss Carryforward: At June 30, 2004, the Limited Maturity Portfolio had a net capital loss carryforward of approximately $876,881, of which $119,413 expires in 2008, $426,094 expires in 2009 and $331,374 expires in 2012; the Insured Portfolio had a net capital loss carryforward of $14,666,460, all of which expires in 2009; and the National Portfolio had a net capital loss carryforward of approximately $71,478,450, of which $23,598 expires in 2005, $12,553,988 expires in 2006, $18,502,015 expires in 2007, $10,488,608 expires in 2008, $26,931,578 expires in 2009, $444,566 expires in 2010, $942,957 expires in 2011 and $1,591,140 expires in 2012. These amounts will be available to offset like amounts of any future taxable gains. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Officers and Directors Terry K. Glenn, President and Director Ronald W. Forbes, Director Cynthia A. Montgomery, Director Jean Margo Reid, 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 Jeffrey Hiller, Chief Compliance Officer Alice A. Pellegrino, Secretary 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 Effective January 1, 2005, Terry K. Glenn, President and Director and Kevin A. Ryan, Director of Merrill Lynch Municipal Bond Fund, Inc. retired. The Fund's Board of Directors wishes Messrs. Glenn and Ryan well in their retirements. Effective January 1, 2005, Robert C. Doll, Jr. became President and Director of the Fund. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 Availability of Quarterly Schedule of Investments The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004 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 Web site at 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, 2004 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 - Schedule of Investments - Not Applicable Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies - Not Applicable Item 8 - Portfolio Managers of Closed-End Management Investment Companies - Not Applicable Item 9 - Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers - Not Applicable Item 10 - Submission of Matters to a Vote of Security Holders - Not Applicable Item 11 - Controls and Procedures 11(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. 11(b) - There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the last fiscal half-year of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12 - Exhibits attached hereto 12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report 12(a)(2) - Certifications - Attached hereto 12(a)(3) - Not Applicable 12(b) - Certifications - 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/ Robert C. Doll, Jr._______ Robert C. Doll, Jr., President of Merrill Lynch Municipal Bond Fund, Inc. Date: February 24, 2005 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/ Robert C. Doll, Jr.________ Robert C. Doll, Jr., President of Merrill Lynch Municipal Bond Fund, Inc. Date: February 24, 2005 By: _/s/ Donald C. Burke________ Donald C. Burke, Chief Financial Officer of Merrill Lynch Municipal Bond Fund, Inc. Date: February 24, 2005 EX-99.CERT 2 ex99cert.txt EX-99 CERT EX-99. CERT CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Robert C. Doll, Jr., 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; 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 officer(s) 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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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 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 24, 2005 /s/ Robert C. Doll, Jr. Robert C. Doll, Jr., 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 officer(s) 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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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 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 24, 2005 /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, Robert C. Doll, Jr., 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 24, 2005 /s/ Robert C. Doll, Jr. Robert C. Doll, Jr., 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 24, 2005 /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-----