-----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, H7a5zR0Ja4YYBJY50zr93RvT0eKfb1XO3fe12up+zDKpwWM2p5f2ORkcJtEiVnE8 eceR9GYUPn43QtBWM2jC7w== 0000900092-05-000416.txt : 20050902 0000900092-05-000416.hdr.sgml : 20050902 20050902132351 ACCESSION NUMBER: 0000900092-05-000416 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050630 FILED AS OF DATE: 20050902 DATE AS OF CHANGE: 20050902 EFFECTIVENESS DATE: 20050902 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERRILL LYNCH MUNICIPAL BOND FUND INC CENTRAL INDEX KEY: 0000225635 IRS NUMBER: 132896246 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-02688 FILM NUMBER: 051067080 BUSINESS ADDRESS: STREET 1: 800 SCUDDERS MILL RD CITY: PLAINSBORO STATE: NJ ZIP: 08536 BUSINESS PHONE: 6092822026 FORMER COMPANY: FORMER CONFORMED NAME: ONE LIBERTY MUNICIPAL BOND FUND INC DATE OF NAME CHANGE: 19780622 N-CSR 1 ml7289.txt MERRILL LYNCH MUNICIPAL BOND FUND, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR 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., Chief Executive Officer, 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 - 06/30/05 Item 1 - Report to Stockholders Merrill Lynch Municipal Bond Fund, Inc. Annual Report June 30, 2005 (BULL LOGO) Merrill Lynch Investment Managers www.mlim.ml.com Mercury Advisors A Division of Merrill Lynch Investment Managers www.mercury.ml.com 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. (GO PAPERLESS LOGO) It's Fast, Convenient, & Timely! To sign up today, go to www.icsdelivery.com/live. A Letter From the President Dear Shareholder The financial markets continued to face a number of crosscurrents over the past several months. On June 30, 2005, the Federal Reserve Board (the Fed) increased the federal funds rate for the ninth consecutive time since June 2004, bringing the target short-term interest rate to 3.25%. During the same week, first quarter 2005 U.S. gross domestic product growth was revised upward to 3.8% - behind the 4.4% annualized growth rate recorded for all of 2004 but ahead of many economists' expectations. Signs of a slowing economy, coupled with easing inflationary fears, have prompted some observers to believe that the Fed may soon end its monetary tightening campaign. After ending 2004 in a strong rally, U.S. equity markets have struggled to record meaningful gains in 2005. Continued high oil prices and Fed interest rate hikes have exerted downward pressure on stocks. Offsetting this somewhat have been surprisingly strong corporate earnings and lower long-term bond yields. Outside U.S. borders, results have been mixed. Several European markets have been performing well despite ongoing economic problems. In Asia, many markets have benefited from higher economic growth rates and relatively attractive valuations, although Japanese stocks have struggled as a result of slowing exports and high oil prices. In the bond markets, the yield curve flattening "conundrum" continued. As short-term yields increased in concert with Fed interest rate hikes, yields on longer-term bonds declined (as their prices, which move opposite yields, increased). Over the past year, the two-year Treasury yield rose 96 basis points (.96%) while the 10-year Treasury yield declined 68 basis points. At period-end, the spread between two-year and 10-year Treasury yields was just 28 basis points. Amid these conditions, the major market benchmarks posted six-month and 12-month returns as follows:
Total Returns as of June 30, 2005 6-month 12-month U.S. equities (Standard & Poor's 500 Index) -0.81% + 6.32% Small-cap U.S. equities (Russell 2000 Index) -1.25% + 9.45% International equities (MSCI Europe Australasia Far East Index) -1.17% +13.65% Fixed income (Lehman Brothers Aggregate Bond Index) +2.51% + 6.80% Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +2.89% + 8.24% High yield bonds (Credit Suisse First Boston High Yield Index) +0.77% +10.10%
Entering the second half of 2005, we expect more of the same type of "muddle through" environment that has befallen financial markets in the first half of the year. Nevertheless, opportunities do exist and we encourage you to work with your financial advisor to diversify your portfolio among a variety of asset types. This can help to diffuse risk while also tapping into the potential benefits of a broader range of investment alternatives. We thank you for trusting Merrill Lynch Investment Managers with your investment assets, and we look forward to serving you in the months and years ahead. Sincerely, (Robert C. Doll, Jr.) Robert C. Doll, Jr. President and Director MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 We are pleased to present to you the management teams of Merrill Lynch Municipal Bond Fund, Inc. Short Term Portfolio Peter Hayes, who joined Merrill Lynch Investment Managers in 1987, is the Senior Portfolio Manager of Merrill Lynch Municipal Bond Fund, Inc. - Short Term Portfolio. Mr. Hayes received a bachelor's degree from the College of the Holy Cross. Mr. Hayes' team includes Thomas Steffens. Mr. Steffens received a bachelor's degree from Villanova University. Peter J. Hayes Senior Portfolio Manager Table of Contents A Letter From the President 2 A Discussion With Your Fund's Portfolio Managers 5 Performance Data 9 Portfolio Information 17 Disclosure of Expenses 18 Schedule of Investments--Short Term Portfolio 20 Schedule of Investments--Insured Portfolio 23 Schedule of Investments--National Portfolio 27 Financial Statements 38 Financial Highlights 44 Notes to Financial Statements 56 Report of Independent Registered Public Accounting Firm 63 Important Tax Information 63 Officers and Directors 64 MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Insured Portfolio Robert DiMella, who joined Merrill Lynch Investment Managers in 1993, is the Senior Portfolio Manager of Merrill Lynch Municipal Bond Fund, Inc. - Insured Portfolio. 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. Mr. DiMella's 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. Robert A. DiMella Senior Portfolio Manager National Portfolio Walter O'Connor, who joined Merrill Lynch Investment Managers in 1991, is the Senior Portfolio Manager of Merrill Lynch Municipal Bond Fund, Inc. - National Portfolio. Mr. O'Connor 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. Mr. O'Connor's 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. Bennett earned a bachelor's degree from West Chester University. 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. JUNE 30, 2005 A Discussion With Your Fund's Portfolio Managers As the yield curve flattened and long-term bond yields remained lower than expected, we took advantage of opportunities to extend duration in an effort to achieve the greatest relative value for our shareholders. Describe the recent market environment relative to municipal bonds. Over the past year, long-term bond yields declined as their prices, which move in the opposite direction, increased. In the meantime, the Federal Reserve Board (the Fed) raised short-term interest rates at each of its meetings during the past year, lifting the federal funds target from 1% in June 2004 to 3.25% by period-end. As longer-term bond yields declined and short-term yields moved upward in unison with the Fed interest rate hikes, the yield curve flattened considerably. Over the 12 months ended June 30, 2005, 30-year U.S. Treasury bond yields declined 113 basis points (1.13%) to 4.16% and yields on the 10-year Treasury note fell 68 basis points to 3.94%. The two-year Treasury yield, in the meantime, increased 96 basis points to 3.66%. In the tax-exempt market, yields on 30-year revenue bonds, as measured by the Bond Buyer Revenue Bond Index, fell 57 basis points during the year to 4.77% at June 30, 2005. According to Municipal Market Data, yields on AAA-rated issues maturing in 30 years declined 76 basis points to 4.26%, while AAA-rated bonds maturing in 10 years saw their yields decline 50 basis points to 3.45%. Conversely, yields on two-year, AAA-rated municipal securities rose 53 basis points over the course of the year. The declining tax-exempt bond yields have prompted municipalities to both issue new debt and refund outstanding, higher-couponed issues. Over the past year, more than $377 billion in new long-term tax-exempt bonds was issued, a slight increase versus last year's total of $372 billion. In recent months, the pace of new bond issuance has strengthened. During the first six months of 2005, more than $206 billion in new municipal bonds was underwritten, an increase of 8.6% compared to the same six months in 2004. The new issuance was boosted by a greater than 55% increase in refunding issues, which have been heavily weighted in the 10-year - 20-year maturity range to lower the overall interest cost of the refunding issue. This concentration has put pressure on intermediate tax-exempt bond yields while supporting longer-term bond prices. Investor demand for municipal product generally has remained positive. According to statistics from the Investment Company Institute, through May 31, 2005, year-to-date net new cash flows into long-term municipal bond funds have exceeded $1.35 billion. This represents a significant improvement from the $7.86 billion net outflow seen during the same period in 2004. Recent June weekly figures from AMG Data Service have also shown continued positive flows. Throughout much of the past six months, high yield tax-exempt bond funds have been the principal target for these new cash inflows. During June, these lower- rated/non-rated bond funds received an average of $150 million per week. The need to invest these cash flows has led to very strong demand for lower-rated issues and a consequent narrowing of credit spreads. Additionally, thus far in 2005, the percentage of new issues bearing an insurer's guarantee has risen to nearly 60%, up from 53.6% during the same period a year ago. The increasing percentage of insured issuance has further reduced the availability of lower- rated municipal securities, lending more support to higher prices for these issues. Looking forward, the tax-exempt market's technical position remains generally favorable. Municipal bond issues have underperformed in recent months as U.S. Treasury bonds have enjoyed increased demand from foreign governments, which are unable to benefit from the tax advantage inherent in tax-exempt products. However, this underperformance has resulted in attractive tax-exempt bond yield ratios, which should continue to attract both traditional and nontraditional investors to the marketplace, especially if new municipal bond issuance should remain modest. MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 A Discussion With Your Fund's Portfolio Managers (continued) Short Term Portfolio How did the Portfolio perform during the fiscal year? For the 12-month period ended June 30, 2005, Short Term Portfolio's Class A, Class B, Class C and Class I Shares had total returns of +1.20%, +1.04%, +.94% and +1.30%, 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 - 16 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 +2.58% and +8.24%. The Portfolio's comparable Lipper category of Short Municipal Debt Funds recorded an average return of +1.82% for the 12-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.) During the first half of the period, our management strategy was shaped by our belief that short-term interest rates would rise in line with the Fed's monetary tightening policy. Accordingly, we kept the Portfolio's average maturity below the market average and maintained some cash reserves to limit the negative effect that rising rates would have on the Portfolio's net asset value. As short-term interest rates increased and the Fed continued to raise the federal funds rate at a "measured" pace, we sought to take advantage of higher yields by extending the Portfolio's average maturity. Although the Portfolio was well positioned for higher short-term interest rates, performance relative to our benchmarks and Lipper peers suffered as long-term bond yields fell unexpectedly (and their prices increased accordingly). Unlike the benchmarks and the majority of the funds in our peer group - both of which can own longer- dated bonds - we are restricted to owning securities with maturities of less than four years. This limitation hindered the Portfolio's relative performance as longer-term bonds outperformed short-term securities. What changes were made to the Portfolio during the period? Most notably, we extended the Portfolio's average maturity from a below-market stance to a neutral or even slightly above-average posture. With the Fed having raised interest rates by 2.25% since June 2004, we believed that the current interest rate tightening cycle was nearing an end. As the yield curve flattened, with short rates rising more than longer rates, we sought to lock in higher yields by adding to our weighting in the three-year - four-year part of the curve - an area that was previously under-represented in the portfolio. We also swapped out of bonds with one-year - two-year maturities, which we bought when yields were lower. These strategies benefited performance as the period continued and helped to increase the Portfolio's yield. How would you characterize the Portfolio's position at the close of the period? We expect to maintain an approximately neutral duration stance with limited cash reserves, as we believe the Fed is nearing the end of its program of interest rate hikes. We also anticipate continuing to overweight higher- quality bonds. Credit spreads (the difference in yield between lower-rated and higher-rated bonds of comparable maturity) are currently very tight, leading us to expect an eventual widening. In our view, this would make high-grade issues the better relative value over their lower-rated counterparts. High- quality bonds also are more liquid and historically have tended to outperform in periods of market volatility. We will continue to monitor the economy's progress, analyzing new data in the coming months and evaluating the Fed's future interest rate policy. As market and economic conditions evolve, we will adjust our investment strategy accordingly. Peter J. Hayes Vice President and Senior Portfolio Manager MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Insured Portfolio How did the Portfolio perform during the fiscal year? For the 12-month period ended June 30, 2005, Insured Portfolio's Class A, Class B, Class C and Class I Shares had total returns of +8.47%, +7.93%, +8.01% and +8.74%, 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 - 16 of this report to shareholders.) Portfolio returns were highly competitive with the +8.24% return of the benchmark Lehman Brothers Municipal Bond Index. The Portfolio outperformed its comparable Lipper category of Insured Municipal Debt Funds, which had an average return of +7.27% for the 12-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 positive performance to our yield curve positioning and the competitive yield we have been able to achieve. Although the Portfolio was defensively structured with respect to its interest rate sensitivity, we also were overweighted in bonds with maturities greater than 20 years for most of the period. This strategy benefited the Portfolio's relative performance as the yield curve flattened, with interest rates on 20-year and longer bonds declining faster than rates on shorter bonds. What changes were made to the Portfolio during the period? Throughout the period, we continued to focus on securities that we felt offered our shareholders the best relative value in the insured municipal marketplace. In light of the yield curve flattening phenomenon, we continued to shift our emphasis further out on the curve, favoring bonds with maturity dates of 20 years and longer while reducing our exposure to 15-year - 20-year bonds. The Portfolio purchased bonds recently issued by Puerto Rico Electric Power Authority. These bonds were insured by XL Capital Assurance (XLCA) and CIFG Services, Inc., relatively new AAA-rated insurers in the municipal marketplace. In anticipation that they would outperform over time, these bonds came with yields at a generous spread above those offered by bonds backed by traditional insurers, such as Financial Guaranty Insurance Company (FGIC), Financial Security Assurance (FSA) and Ambac Financial Group, Inc. (Bonds issued by U.S. territories generally are fully income tax-exempt for residents of all 50 states.) Other new purchases have focused on issuers that we believed were more likely to defease existing debt to help close budget deficits. (When bonds are defeased, the securities are retired at their first call date, generally resulting in substantial price appreciation.) Massachusetts, California and New Jersey all have been aggressive in employing this strategy, and offered a number of investment opportunities during the period. How would you characterize the Portfolio's position at the close of the period? At period-end, the Portfolio was fully invested and, in anticipation of higher long-term interest rates, defensively positioned. We continue to emphasize competitive yield and preservation of the Portfolio's net asset value. While we have begun to restructure the Portfolio with bonds offering slightly longer maturity dates, those securities added in recent months have tended to be premium-coupon bonds with defensive characteristics. Such a defensive posture has enabled the Portfolio to increase its yield generation potential while helping to insulate it from the volatility expected to accompany a rising interest rate environment. Robert A. DiMella Vice President and Senior Portfolio Manager MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 A Discussion With Your Fund's Portfolio Managers (concluded) National Portfolio How did the Portfolio perform during the fiscal year? For the 12-month period ended June 30, 2005, National Portfolio's Class A, Class B, Class C and Class I Shares had total returns of +8.73%, +8.18%, +8.02% and +8.89%, 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 - 16 of this report to shareholders.) For the same period, the Portfolio's benchmark, the Lehman Brothers Municipal Bond Index, returned +8.24% and the Lipper General Municipal Debt Funds category posted an average return of +7.30%. (Funds in this Lipper category invest primarily in municipal debt issues in the top four credit-rating categories.) With the Fed on an interest rate hiking campaign, we expected volatility all along the yield curve and positioned the Portfolio defensively in an effort to protect its underlying value. However, to the surprise of many observers and the Fed, a rise in rates did not materialize on the long end of the curve (in fact, long-term rates declined), and our defensive positioning hampered the Portfolio's performance potential to some extent. Despite this, our above- average yield accrual throughout the period more than offset this, allowing the Portfolio to deliver returns consistent with the broad market and superior to its Lipper peers. What changes were made to the Portfolio during the period? Throughout the past 12 months, we focused on maintaining a high level of tax- exempt income for our shareholders by enhancing current return and maintaining our above-average coupon structure. In fact, the Portfolio's average coupon of 6.25% far exceeded the market average for long-term municipal bonds of less than 4.50% (based on the Municipal Market Data scale). Early in the period, we expected the municipal market to be quite volatile as the Fed embarked on its measured program of interest rate increases. This prompted us to establish our defensive interest rate posture in order to cushion the portfolio from volatility and preserve its net asset value. Later, as long-term interest rates began to rise somewhat, we started to reposition the Portfolio's duration to be closer to neutral. To that end, we purchased zero-coupon securities as well as longer-maturity revenue bonds with rate- sensitive structures. Finally, throughout the year, we worked closely with our in-house Municipal Research Group to increase the Portfolio's exposure to lower-rated credits offering a yield advantage over higher-grade paper. How would you characterize the Portfolio's position at the close of the period? The Portfolio remained defensively positioned at period-end but closer to a neutral duration posture than when the period began. We would emphasize that this is a gradual transition to neutral, as we are not targeting an aggressive duration stance. Overall, we remain focused on maintaining the Portfolio's superior yield and high coupon structure relative to the broad market. At period-end, the Portfolio was essentially fully invested, with limited cash reserves. Walter C. O'Connor Vice President and Senior Portfolio Manager July 27, 2005 MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 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. Short Term 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. Short Term Portfolio is subject to a maximum contingent deferred sales charge of 1% if redeemed within three years of purchase. All Class B Shares purchased prior to December 1, 2002 will maintain the four-year schedule and one-year schedule, respectively. In addition, Insured and National Portfolios are subject to a distribution fee of 0.50% per year and an account maintenance fee of 0.25% per year. Short Term 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. Short Term 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. Short Term 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. JUNE 30, 2005 Performance Data (continued) Recent Performance Results*
6-Month 12-Month 10-Year Standardized As of June 30, 2005 Total Return Total Return Total Return 30-day Yield Short Term Portfolio Class A Shares +0.59% +1.20% +38.21% 2.35% Short Term Portfolio Class B Shares +0.56 +1.04 +34.83 2.13 Short Term Portfolio Class C Shares +0.46 +0.94 +33.97 2.12 Short Term Portfolio Class I Shares +0.63 +1.30 +39.59 2.45 Insured Portfolio Class A Shares +3.10 +8.47 +72.29 3.47 Insured Portfolio Class B Shares +2.71 +7.93 +63.57 3.12 Insured Portfolio Class C Shares +2.82 +8.01 +62.94 3.06 Insured Portfolio Class I Shares +3.09 +8.74 +76.61 3.72 National Portfolio Class A Shares +3.47 +8.73 +79.60 3.57 National Portfolio Class B Shares +3.21 +8.18 +70.71 3.22 National Portfolio Class C Shares +3.18 +8.02 +69.71 3.17 National Portfolio Class I Shares +3.59 +8.89 +84.10 3.82 Lehman Brothers 3-Year General Obligation Bond Index++ +0.42 +2.58 +55.15 -- Lehman Brothers Municipal Bond Index++++ +2.89 +8.24 +85.59 -- * Investment results shown do not reflect sales charges; results shown would be lower if a sales charge was 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. JUNE 30, 2005 Performance Data (continued) Short Term Portfolio TOTAL RETURN BASED ON A $10,000 INVESTMENT Class A & Class B Shares A line graph illustrating the growth of a $10,000 investment in Short Term Portfolio++ Class A and Class B Shares* compared to a similar investment in the Lehman Brothers Municipal Bond Index++++ and Lehman Brothers 3-Year General Obligation Bond Index++++++. Values illustrated are as follows: Short Term Portfolio++ Class A Shares* Date Value June 1995 $ 9,900.00 June 1996 $10,251.00 June 1997 $10,702.00 June 1998 $11,147.00 June 1999 $11,511.00 June 2000 $11,877.00 June 2001 $12,587.00 June 2002 $13,091.00 June 2003 $13,454.00 June 2004 $13,521.00 June 2005 $13,683.00 Short Term Portfolio++ Class B Shares* Date Value June 1995 $10,000.00 June 1996 $10,337.00 June 1997 $10,764.00 June 1998 $11,183.00 June 1999 $11,519.00 June 2000 $11,855.00 June 2001 $12,531.00 June 2002 $12,987.00 June 2003 $13,313.00 June 2004 $13,344.00 June 2005 $13,483.00 Lehman Brothers Municipal Bond Index++++ Date Value June 1995 $10,000.00 June 1996 $10,664.00 June 1997 $11,544.00 June 1998 $12,544.00 June 1999 $12,890.00 June 2000 $13,309.00 June 2001 $14,638.00 June 2002 $15,650.00 June 2003 $17,018.00 June 2004 $17,147.00 June 2005 $18,559.00 Lehman Brothers 3-Year General Obligation Bond Index++++++ Date Value June 1995 $10,000.00 June 1996 $10,517.00 June 1997 $11,074.00 June 1998 $11,669.00 June 1999 $12,098.00 June 2000 $12,541.00 June 2001 $13,501.00 June 2002 $14,322.00 June 2003 $15,032.00 June 2004 $15,125.00 June 2005 $15,515.00 * Assuming maximum sales charge, transaction costs and other operating expenses, including advisory fees. ++ Short Term Portfolio invests primarily in investment grade municipal bonds (bonds rated Baa or better) with a maximum maturity not to exceed 4 years. ++++ This unmanaged Index consists of revenue bonds, prerefunded bonds, general obligation bonds and insured bonds, all of which mature within 30 years. ++++++ This unmanaged Index consists of state and local government obligation bonds that mature in 3 - 4 years, rated Baa or better. Past performance is not predictive of future results. Average Annual Total Return Return Without Return With Sales Charge Sales Charge** Class A Shares* One Year Ended 6/30/05 +1.20% +0.19% Five Years Ended 6/30/05 +2.87 +2.66 Ten Years Ended 6/30/05 +3.29 +3.19 * Maximum sales charge is 1%. ** Assuming maximum sales charge. Return Return Without CDSC With CDSC** Class B Shares* One Year Ended 6/30/05 +1.04% +0.05% Five Years Ended 6/30/05 +2.60 +2.60 Ten Years Ended 6/30/05 +3.03 +3.03 * Maximum contingent deferred sales charge is 1% and is reduced to 0% after three years. ** Assuming payment of applicable contingent deferred sales charge. MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Performance Data (continued) Short Term Portfolio TOTAL RETURN BASED ON A $10,000 INVESTMENT Class C & Class I Shares A line graph illustrating the growth of a $10,000 investment in Short Term Portfolio++ Class C and Class I Shares* compared to a similar investment in the Lehman Brothers Municipal Bond Index++++ and Lehman Brothers 3-Year General Obligation Bond Index++++++. Values illustrated are as follows: Short Term Portfolio++ Class C Shares* Date Value June 1995 $10,000.00 June 1996 $10,297.00 June 1997 $10,720.00 June 1998 $11,136.00 June 1999 $11,458.00 June 2000 $11,791.00 June 2001 $12,451.00 June 2002 $12,916.00 June 2003 $13,241.00 June 2004 $13,272.00 June 2005 $13,397.00 Short Term Portfolio++ Class I Shares* Date Value June 1995 $ 9,900.00 June 1996 $10,271.00 June 1997 $10,723.00 June 1998 $11,180.00 June 1999 $11,557.00 June 2000 $11,937.00 June 2001 $12,663.00 June 2002 $13,183.00 June 2003 $13,561.00 June 2004 $13,642.00 June 2005 $13,820.00 Lehman Brothers Municipal Bond Index++++ Date Value June 1995 $10,000.00 June 1996 $10,664.00 June 1997 $11,544.00 June 1998 $12,544.00 June 1999 $12,890.00 June 2000 $13,309.00 June 2001 $14,638.00 June 2002 $15,650.00 June 2003 $17,018.00 June 2004 $17,147.00 June 2005 $18,559.00 Lehman Brothers 3-Year General Obligation Bond Index++++++ Date Value June 1995 $10,000.00 June 1996 $10,517.00 June 1997 $11,074.00 June 1998 $11,669.00 June 1999 $12,098.00 June 2000 $12,541.00 June 2001 $13,501.00 June 2002 $14,322.00 June 2003 $15,032.00 June 2004 $15,125.00 June 2005 $15,515.00 * Assuming maximum sales charge, transaction costs and other operating expenses, including advisory fees. ++ Short Term Portfolio invests primarily in investment grade municipal bonds (bonds rated Baa or better) with a maximum maturity not to exceed 4 years. ++++ This unmanaged Index consists of revenue bonds, prerefunded bonds, general obligation bonds and insured bonds, all of which mature within 30 years. ++++++ This unmanaged Index consists of state and local government obligation bonds that mature in 3 - 4 years, rated Baa or better. Past performance is not predictive of future results. Average Annual Total Return Return Return Without CDSC With CDSC** Class C Shares* One Year Ended 6/30/05 +0.94% -0.05% Five Years Ended 6/30/05 +2.58 +2.58 Ten Years Ended 6/30/05 +2.97 +2.97 * 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 6/30/05 +1.30% +0.29% Five Years Ended 6/30/05 +2.97 +2.76 Ten Years Ended 6/30/05 +3.39 +3.29 * Maximum sales charge is 1%. ** Assuming maximum sales charge. MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Performance Data (continued) Insured Portfolio TOTAL RETURN BASED ON A $10,000 INVESTMENT Class A & Class B Shares A line graph illustrating the growth of a $10,000 investment in Insured Portfolio++ Class A and Class B Shares* compared to a similar investment in the Lehman Brothers Municipal Bond Index++++. Values illustrated are as follows: Insured Portfolio++ Class A Shares* Date Value June 1995 $ 9,600.00 June 1996 $10,104.00 June 1997 $10,857.00 June 1998 $11,688.00 June 1999 $11,855.00 June 2000 $11,965.00 June 2001 $13,132.00 June 2002 $14,005.00 June 2003 $15,232.00 June 2004 $15,248.00 June 2005 $16,540.00 Insured Portfolio++ Class B Shares* Date Value June 1995 $10,000.00 June 1996 $10,471.00 June 1997 $11,181.00 June 1998 $11,990.00 June 1999 $12,085.00 June 2000 $12,151.00 June 2001 $13,251.00 June 2002 $14,079.00 June 2003 $15,235.00 June 2004 $15,155.00 June 2005 $16,357.00 Lehman Brothers Municipal Bond Index++++ Date Value June 1995 $10,000.00 June 1996 $10,664.00 June 1997 $11,544.00 June 1998 $12,544.00 June 1999 $12,890.00 June 2000 $13,309.00 June 2001 $14,638.00 June 2002 $15,650.00 June 2003 $17,018.00 June 2004 $17,147.00 June 2005 $18,559.00 * Assuming maximum sales charge, transaction costs and other operating expenses, including advisory fees. ++ Insured Portfolio invests primarily in long-term, investment grade municipal bonds (bonds rated Baa or better) covered by portfolio insurance guaranteeing the timely payment of principal at maturity and interest. ++++ This unmanaged Index consists of revenue bonds, prerefunded bonds, general obligation bonds and insured bonds, all of which mature within 30 years. Past performance is not predictive of future results. Average Annual Total Return Return Without Return With Sales Charge Sales Charge** Class A Shares* One Year Ended 6/30/05 +8.47% +4.13% Five Years Ended 6/30/05 +6.68 +5.82 Ten Years Ended 6/30/05 +5.59 +5.16 * Maximum sales charge is 4%. ** Assuming maximum sales charge. Return Return Without CDSC With CDSC** Class B Shares* One Year Ended 6/30/05 +7.93% +3.93% Five Years Ended 6/30/05 +6.12 +5.80 Ten Years Ended 6/30/05 +5.04 +5.04 * Maximum contingent deferred sales charge is 4% and is reduced to 0% after six years. ** Assuming payment of applicable contingent deferred sales charge. MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Performance Data (continued) Insured Portfolio TOTAL RETURN BASED ON A $10,000 INVESTMENT Class C & Class I Shares A line graph illustrating the growth of a $10,000 investment in Insured Portfolio++ Class C and Class I Shares* compared to a similar investment in the Lehman Brothers Municipal Bond Index++++. Values illustrated are as follows: Insured Portfolio++ Class C Shares* Date Value June 1995 $10,000.00 June 1996 $10,465.00 June 1997 $11,183.00 June 1998 $11,971.00 June 1999 $12,060.00 June 2000 $12,120.00 June 2001 $13,211.00 June 2002 $14,029.00 June 2003 $15,174.00 June 2004 $15,086.00 June 2005 $16,294.00 Insured Portfolio++ Class I Shares* Date Value June 1995 $ 9,600.00 June 1996 $10,129.00 June 1997 $10,912.00 June 1998 $11,790.00 June 1999 $11,973.00 June 2000 $12,115.00 June 2001 $13,329.00 June 2002 $14,269.00 June 2003 $15,536.00 June 2004 $15,591.00 June 2005 $16,954.00 Lehman Brothers Municipal Bond Index++++ Date Value June 1995 $10,000.00 June 1996 $10,664.00 June 1997 $11,544.00 June 1998 $12,544.00 June 1999 $12,890.00 June 2000 $13,309.00 June 2001 $14,638.00 June 2002 $15,650.00 June 2003 $17,018.00 June 2004 $17,147.00 June 2005 $18,559.00 * Assuming maximum sales charge, transaction costs and other operating expenses, including advisory fees. ++ Insured Portfolio invests primarily in long-term, investment grade municipal bonds (bonds rated Baa or better) covered by portfolio insurance guaranteeing the timely payment of principal at maturity and interest. ++++ This unmanaged Index consists of revenue bonds, prerefunded bonds, general obligation bonds and insured bonds, all of which mature within 30 years. Past performance is not predictive of future results. Average Annual Total Return Return Return Without CDSC With CDSC** Class C Shares* One Year Ended 6/30/05 +8.01% +7.01% Five Years Ended 6/30/05 +6.09 +6.09 Ten Years Ended 6/30/05 +5.00 +5.00 * 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 6/30/05 +8.74% +4.39% Five Years Ended 6/30/05 +6.95 +6.08 Ten Years Ended 6/30/05 +5.85 +5.42 * Maximum sales charge is 4%. ** Assuming maximum sales charge. MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Performance Data (continued) National Portfolio TOTAL RETURN BASED ON A $10,000 INVESTMENT Class A & Class B Shares A line graph illustrating the growth of a $10,000 investment in National Portfolio++ Class A and Class B Shares* compared to a similar investment in the Lehman Brothers Municipal Bond Index++++. Values illustrated are as follows: National Portfolio++ Class A Shares* Date Value June 1995 $ 9,600.00 June 1996 $10,245.00 June 1997 $11,122.00 June 1998 $12,011.00 June 1999 $12,134.00 June 2000 $12,183.00 June 2001 $13,408.00 June 2002 $14,311.00 June 2003 $15,452.00 June 2004 $15,858.00 June 2005 $17,241.00 National Portfolio++ Class B Shares* Date Value June 1995 $10,000.00 June 1996 $10,617.00 June 1997 $11,458.00 June 1998 $12,322.00 June 1999 $12,386.00 June 2000 $12,371.00 June 2001 $13,547.00 June 2002 $14,386.00 June 2003 $15,455.00 June 2004 $15,781.00 June 2005 $17,071.00 Lehman Brothers Municipal Bond Index++++ Date Value June 1995 $10,000.00 June 1996 $10,664.00 June 1997 $11,544.00 June 1998 $12,544.00 June 1999 $12,890.00 June 2000 $13,309.00 June 2001 $14,638.00 June 2002 $15,650.00 June 2003 $17,018.00 June 2004 $17,147.00 June 2005 $18,559.00 * Assuming maximum sales charge, transaction costs and other operating expenses, including advisory fees. ++ National Portfolio invests primarily in long-term municipal bonds rated in any rating category. ++++ This unmanaged Index consists of revenue bonds, prerefunded bonds, general obligation bonds and insured bonds, all of which mature within 30 years. Past performance is not predictive of future results. Average Annual Total Return Return Without Return With Sales Charge Sales Charge** Class A Shares* One Year Ended 6/30/05 +8.73% +4.38% Five Years Ended 6/30/05 +7.19 +6.32 Ten Years Ended 6/30/05 +6.03 +5.60 * Maximum sales charge is 4%. ** Assuming maximum sales charge. Return Return Without CDSC With CDSC** Class B Shares* One Year Ended 6/30/05 +8.18% +4.18% Five Years Ended 6/30/05 +6.65 +6.34 Ten Years Ended 6/30/05 +5.49 +5.49 * Maximum contingent deferred sales charge is 4% and is reduced to 0% after six years. ** Assuming payment of applicable contingent deferred sales charge. MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Performance Data (concluded) National Portfolio TOTAL RETURN BASED ON A $10,000 INVESTMENT Class C & Class I Shares A line graph illustrating the growth of a $10,000 investment in National Portfolio++ Class C and Class I Shares* compared to a similar investment in the Lehman Brothers Municipal Bond Index++++. Values illustrated are as follows: National Portfolio++ Class C Shares* Date Value June 1995 $10,000.00 June 1996 $10,601.00 June 1997 $11,446.00 June 1998 $12,303.00 June 1999 $12,361.00 June 2000 $12,341.00 June 2001 $13,494.00 June 2002 $14,323.00 June 2003 $15,394.00 June 2004 $15,711.00 June 2005 $16,971.00 National Portfolio++ Class I Shares* Date Value June 1995 $ 9,600.00 June 1996 $10,271.00 June 1997 $11,178.00 June 1998 $12,113.00 June 1999 $12,268.00 June 2000 $12,335.00 June 2001 $13,610.00 June 2002 $14,562.00 June 2003 $15,776.00 June 2004 $16,230.00 June 2005 $17,674.00 Lehman Brothers Municipal Bond Index++++ Date Value June 1995 $10,000.00 June 1996 $10,664.00 June 1997 $11,544.00 June 1998 $12,544.00 June 1999 $12,890.00 June 2000 $13,309.00 June 2001 $14,638.00 June 2002 $15,650.00 June 2003 $17,018.00 June 2004 $17,147.00 June 2005 $18,559.00 * Assuming maximum sales charge, transaction costs and other operating expenses, including advisory fees. ++ National Portfolio invests primarily in long-term municipal bonds rated in any rating category. ++++ This unmanaged Index consists of revenue bonds, prerefunded bonds, general obligation bonds and insured bonds, all of which mature within 30 years. Past performance is not predictive of future results. Average Annual Total Return Return Return Without CDSC With CDSC** Class C Shares* One Year Ended 6/30/05 +8.02% +7.02% Five Years Ended 6/30/05 +6.57 +6.57 Ten Years Ended 6/30/05 +5.43 +5.43 * 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 6/30/05 +8.89% +4.54% Five Years Ended 6/30/05 +7.45 +6.58 Ten Years Ended 6/30/05 +6.29 +5.86 * Maximum sales charge is 4%. ** Assuming maximum sales charge. MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Portfolio Information as of June 30, 2005 Distribution by Market Sector Percent of Total Short Term Portfolio Investments Other Revenue Bonds 57.6% General Obligation Bonds 39.1 Prerefunded Bonds 3.3 Percent of Total Insured Portfolio Investments Other Revenue Bonds 66.1% General Obligation Bonds 25.7 Prerefunded Bonds 8.2 Percent of Total National Portfolio Investments Other Revenue Bonds 60.8% General Obligation Bonds 22.8 Prerefunded Bonds 16.4 MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 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 January 1, 2005 and held through June 30, 2005) 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 Beginning Ending During the Period* Account Value Account Value January 1, 2005 January 1, June 30, to June 30, Short Term Portfolio 2005 2005 2005 Actual Class A $1,000 $1,005.90 $2.61 Class B $1,000 $1,005.60 $3.89 Class C $1,000 $1,004.60 $3.83 Class I $1,000 $1,006.30 $2.12 Hypothetical (5% annual return before expenses)** Class A $1,000 $1,021.92 $2.63 Class B $1,000 $1,020.65 $3.91 Class C $1,000 $1,020.70 $3.86 Class I $1,000 $1,022.41 $2.13 * For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (.53% for Class A, .79% for Class B, .78% for Class C and .43% for Class I), multiplied by the average account value over the period, multiplied by 179/365. ** 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. JUNE 30, 2005 Disclosure of Expenses (concluded)
Expenses Paid Beginning Ending During the Period* Account Value Account Value January 1, 2005 January 1, June 30, to June 30, Insured Portfolio 2005 2005 2005 Actual Class A $1,000 $1,031.00 $3.54 Class B $1,000 $1,027.10 $6.06 Class C $1,000 $1,028.20 $6.32 Class I $1,000 $1,030.90 $2.29 Hypothetical (5% annual return before expenses)** Class A $1,000 $1,021.04 $3.52 Class B $1,000 $1,018.54 $6.04 Class C $1,000 $1,018.29 $6.29 Class I $1,000 $1,022.26 $2.28 * For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (.71% for Class A, 1.22% for Class B, 1.27% for Class C and .46% for Class I), multiplied by the average account value over the period, multiplied by 179/365. ** 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 Beginning Ending During the Period* Account Value Account Value January 1, 2005 January 1, June 30, to June 30, National Portfolio 2005 2005 2005 Actual Class A $1,000 $1,034.70 $4.19 Class B $1,000 $1,032.10 $6.68 Class C $1,000 $1,031.80 $6.97 Class I $1,000 $1,035.90 $2.95 Hypothetical (5% annual return before expenses)** Class A $1,000 $1,020.40 $4.16 Class B $1,000 $1,017.95 $6.63 Class C $1,000 $1,017.65 $6.93 Class I $1,000 $1,021.63 $2.92 * For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class (.84% for Class A, 1.34% for Class B, 1.40% for Class C and .59% for Class I), multiplied by the average account value over the period, multiplied by 179/365. ** 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. JUNE 30, 2005 Schedule of Investments Short Term Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Alaska--0.5% $ 2,150 Alaska Student Loan Corporation, Capital Project Revenue Bonds, Series A, 5% due 1/01/2008 (e) $ 2,259 Arizona--2.3% 10,070 Salt River Project, Arizona, Agriculture Improvement and Power District, Electric System Revenue Refunding Bonds (Salt River Project), Series D, 5% due 1/01/2007 10,409 Arkansas--0.5% 2,115 Fayetteville, Arkansas, Sales and Use Tax Capital Improvement, Special Assessment Bonds, 4% due 12/01/2006 2,154 Connecticut--1.7% 2,700 Connecticut State, GO, Refunding, Series C, 4% due 12/15/2005 2,717 5,000 Connecticut State, Special Tax Obligation Revenue Bonds (Transportation Infrastructure), Series A, 5.75% due 6/01/2006 (a)(f) 5,192 Delaware--2.1% Delaware State, GO, Series A: 4,125 5% due 1/01/2006 4,175 5,190 5% due 1/01/2008 5,474 Florida--5.4% 3,690 Collier County, Florida, Limited, GO (Conservation Collier Program), Series A, 5% due 1/01/2007 (c) 3,814 10,000 Florida State Board of Education, GO (Public Education Capital Outlay), Refunding, Series B, 5% due 6/01/2007 10,421 2,500 Florida State Board of Education, Lottery Revenue Bonds, Series B, 5.25% due 7/01/2005 (f) 2,500 2,860 Florida State Turnpike Authority, Turnpike Revenue Refunding Bonds (Department of Transportation), Series A, 5.25% due 7/01/2008 (e) 3,056 400 Hillsborough County, Florida, Aviation Authority Revenue Refunding Bonds (Tampa International Airport), AMT, Series A, 5% due 10/01/2005 (c) 402 4,365 Saint John's River Management District, Florida, Land Acquisition Revenue Refunding Bonds, 4.50% due 7/01/2007 (e) 4,511 Georgia--4.4% 5,000 Cobb County, Georgia, GO, TAN, 3.50% due 12/30/2005 5,021 5,000 Coweta County, Georgia, School District, GO, Sales Tax, 4.50% due 8/01/2005 5,008 6,225 Georgia Municipal Electric Authority, Power Revenue Refunding Bonds, Series DD, 7% due 1/01/2008 (d)(g) 6,830 2,550 Georgia State, GO, Refunding, Series A, 6.25% due 3/01/2006 2,611 1,000 Gwinnett County, Georgia, School District, GO, Refunding, 4.50% due 2/01/2006 1,011 Illinois--6.0% 12,500 Chicago, Illinois, O'Hare International Airport, Revenue Refunding Bonds, Third Lien, Series A, 5% due 1/01/2008 (d) 13,123 4,950 Illinois State, GO, Series A, 5% due 3/01/2009 5,294 3,740 Metropolitan Pier and Exposition Authority, Illinois, Dedicated State Tax Revenue Refunding Bonds, Series A, 6% due 12/15/2006 (c) 3,914 5,000 Naperville, Illinois, IDR (General Motors Corporation), Refunding, VRDN, 4.35% due 12/01/2012 (b) 5,000 Indiana--3.2% 10,000 Indiana Health Facilities Financing Authority, Subordinate Credit Group Revenue Bonds (Ascension Health), Series A, 5% due 5/01/2008 10,513 4,300 Indiana State Development Finance Authority, PCR, Refunding (Southern Indiana Gas & Electric), AMT, Series C, 5% due 3/01/2030 4,342 Iowa--0.9% 4,000 Iowa Finance Authority, State Revolving Fund, Revenue Refunding Bonds, 5% due 8/01/2008 4,255 Louisiana--2.2% 10,000 Louisiana HFA, S/F Mortgage Revenue Refunding Bonds, VRDN, AMT, 3.864% due 4/30/2007 (b) 10,000 Michigan--0.9% Michigan State Hospital Finance Authority, Revenue Refunding Bonds (Oakwood Obligated Group): 2,000 5% due 11/01/2005 2,014 2,000 5% due 11/01/2006 2,051 Minnesota--2.6% 5,195 Minneapolis, Minnesota, GO, Refunding, Series A, 5% due 3/01/2009 5,578 3,235 Minneapolis-St. Paul Metropolitan Area Council, Minnesota, Transit, GO, Refunding, Series B, 5% due 2/01/2007 3,351 2,890 Minneapolis-St. Paul Metropolitan Area Council, Minnesota, Waste Water, GO, Refunding, Series B, 5% due 5/01/2008 3,061
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 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 RAW Revenue Anticipation Warrants RIB Residual Interest Bonds S/F Single-Family TAN Tax Anticipation Notes TRAN Tax Revenue Anticipation Notes VRDN Variable Rate Demand Notes MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Schedule of Investments (continued) Short Term Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Missouri--2.9% $ 3,980 Kansas City, Missouri, Passenger Facility Charge Revenue Bonds, AMT, 5% due 4/01/2007 (c) $ 4,117 4,000 Kansas City, Missouri, School District, Building Revenue Refunding Bonds, Series A, 5% due 2/01/2006 (f) 4,055 5,000 Missouri State Public Utilities Commission, Interim Construction Notes, 2.75% due 10/01/2005 5,002 Nebraska--1.6% 7,000 Nebraska Public Power District, General Revenue Refunding Bonds, Series B-2, 5% due 1/01/2009 (f) 7,477 Nevada--1.9% 5,825 Las Vegas Valley Water District, Nevada, GO, Refunding, Series B, 4% due 6/01/2007 5,958 2,430 Nevada State, Capital Improvement, GO, Refunding, Series A, 5% due 2/01/2009 2,595 New Jersey--5.2% 14,000 New Jersey EDA, Market Transition Facility, Senior Lien Revenue Refunding Bonds, Series A, 6% due 7/01/2007 (d) 14,869 3,375 New Jersey State, GO, Refunding, Series M, 5% due 7/15/2007 (c) 3,523 5,000 New Jersey State Transit Corporation, COP, 6.50% due 4/01/2007 (a)(e) 5,370 New Mexico--2.2% 10,000 San Juan County, New Mexico, Gross Receipts Tax Revenue Bonds, Subordinate Series A, 2.50% due 8/15/2005 9,997 New York--7.2% 9,800 Long Island Power Authority, New York, Electric System Revenue Refunding Bonds, Series A, 6% due 12/01/2007 (c) 10,527 7,500 Monroe County, New York, BAN, 4% due 7/28/2005 7,504 New York City, New York, GO: 3,910 Series J, 5% due 3/01/2008 4,112 3,645 Series M, 4% due 4/01/2008 3,743 New York City, New York, GO, Refunding, Series G: 2,375 5% due 8/01/2005 (g) 2,380 4,625 5% due 8/01/2005 4,634 North Carolina--1.1% 5,000 North Carolina State, Public School Building, GO, 4.60% due 4/01/2006 5,075 Ohio--1.0% 4,500 Ohio State Water Development Authority, Water Pollution Control, Revenue Refunding Bonds, Series A, 3.35% due 6/01/2033 4,502 Oklahoma--1.2% 3,040 Oklahoma City, Oklahoma, Airport Trust Revenue Refunding Bonds, Junior Lien, AMT, 28th Series, 4% due 7/01/2005 (d) 3,040 2,500 Oklahoma Development Finance Authority Revenue Bonds (Conoco Project), VRDN, AMT, Series B, 2.45% due 8/01/2037 (b) 2,500 Oregon--0.5% 2,385 Tri-County, Oregon, Metropolitan Transportation District Revenue Bonds, Series A, 5.25% due 8/01/2005 (g) 2,391 Pennsylvania--3.2% 9,620 Allegheny County, Pennsylvania, Port Authority, Subordinate Lien Special Revenue Transportation Bonds, 5.375% due 6/01/2006 (d) 9,857 3,000 Midway Sewerage Authority, Pennsylvania, Revenue Notes, 2% due 12/01/2005 2,989 2,000 Pennsylvania State, GO, First Series, 5% due 1/01/2008 (d) 2,107 Rhode Island--0.5% 2,500 Rhode Island Housing and Mortgage Finance Corporation, Homeowner Opportunity Revenue Bonds, AMT, Series 41-C, 3.375% due 11/01/2005 2,503 Tennessee--2.1% 3,815 Hamilton County, Tennessee, GO, Refunding, 4% due 10/01/2005 (f) 3,828 5,830 Metropolitan Government of Nashville and Davidson County, Tennessee, GO, Refunding, Series B, 4% due 1/01/2007 5,941 Texas--19.0% 9,080 Brazos River Authority, Texas, PCR, Refunding (Utilities Electric Company), AMT, Series B, 5.05% due 6/19/2006 9,228 3,205 Corpus Christi, Texas, GO (General Improvement), Refunding, Series A, 5% due 3/01/2006 (e) 3,254 1,250 Dallas County, Texas, Community College District, GO (Maintenance Tax Notes), 5% due 2/15/2008 1,316 4,500 El Paso, Texas, GO, 5.75% due 8/15/2007 (a)(e) 4,777 8,180 Gulf Coast Waste Disposal Authority, Texas, PCR (Amoco Oil Company Project), 2% due 10/01/2006 8,081 5,000 Lower Colorado River Authority, Texas, Revenue Refunding Bonds, Series B, 6% due 5/15/2007 (e) 5,291 14,000 Matagorda County, Texas, Navigation District No. 1, PCR (Central Power and Light Company), Refunding, Series A, 4.55% due 11/01/2006 14,250 3,885 Tarrant Regional Water District, Texas, Water Improvement Revenue Refunding Bonds, 5% due 3/01/2009 (e) 4,153 10,025 Texas Public Finance Authority, Capital Appreciation Building Revenue Refunding Bonds, 2.45%* due 8/01/2006 (d)(g) 9,733 4,300 Texas State, GO, Refunding, Series A, 8% due 10/01/2007 4,783 12,000 Texas State Turnpike Authority, Central Texas Turnpike System Revenue Bonds, Second Tier, BAN, 5% due 6/01/2008 12,696 10,000 Weatherford, Texas, Independent School District, GO, Series A, 2.50% due 2/01/2035 9,999 Utah--1.6% 7,000 Intermountain Power Agency, Utah, Power Supply Revenue Refunding Bonds, Series A, 5% due 7/01/2007 (d) 7,301
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Schedule of Investments (concluded) Short Term Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Virginia--5.7% $ 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 $ 6,738 4,490 Virginia Beach, Virginia, Development Authority, Public Facility Revenue Refunding Bonds, Series A, 5% due 5/01/2007 4,673 3,900 Virginia State Public School Authority, School Financing, GO, Series B, 4% due 8/01/2005 3,905 Virginia State Public School Authority, School Financing Revenue Bonds: 5,660 Series C, 5% due 8/01/2007 5,921 4,635 Series D, 5% due 2/01/2008 4,888 Washington--8.4% 11,500 Energy Northwest, Washington, Electric Revenue Refunding Bonds (Columbia Generating Station), Series A, 5.25% due 7/01/2008 12,258 3,345 King County, Washington, GO, Refunding, 5% due 12/01/2005 3,378 5,000 Washington State, GO (Motor Vehicle Fuel Tax), Refunding, Series R, 4.50% due 1/01/2009 (d) 5,254 5,075 Washington State, GO (Motor Vehicle Fuel Tax), Series B, 5% due 7/01/2007 (f) 5,294 7,195 Washington State, GO, Series B and AT-7, 6.10% due 6/01/2006 7,416 5,000 Washington State Public Power Supply System, Revenue Refunding Bonds (Nuclear Project Number 1), Series A, 6% due 7/01/2005 (c) 5,000 Wisconsin--0.9% 4,250 Franklin, Wisconsin, Solid Waste Disposal, Revenue Bonds, 3.625% due 5/01/2006 4,247 Puerto Rico--1.1% 5,000 Puerto Rico Commonwealth Highway and Transportation Authority, Highway Revenue Refunding Bonds, Series AA, 5% due 7/01/2006 5,106 Total Municipal Bonds (Cost--$459,961)--100.0% 459,597 Shares Held Short-Term Securities 4 Merrill Lynch Institutional Tax-Exempt Fund (h) 4 Total Short-Term Securities (Cost--$4)--0.0% 4 Total Investments (Cost--$459,965**)--100.0% 459,601 Liabilities in Excess of Other Assets--0.0% (80) --------- Net Assets--100.0% $ 459,521 ========= * 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 June 30, 2005, as computed for federal income tax purposes, were as follows: (in Thousands) Aggregate cost $ 459,965 ============== Gross unrealized appreciation $ 516 Gross unrealized depreciation (880) -------------- Net unrealized depreciation $ (364) ============== (a) Prerefunded. (b) Security may have a maturity of more than one year at time of issuance, 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) 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 (16,810) $435 See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 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 $ 3,354 1,585 Revolving Fund Loan, Series A, 6.75% due 8/15/2005 (a) 1,593 10,000 Lauderdale County and Florence, Alabama, Health Care Authority, Revenue Refunding Bonds (Coffee Health Group), Series A, 6% due 7/01/2029 (e) 11,262 7,000 University of Alabama, University Revenue Bonds (Birmingham), 6% due 10/01/2020 (g) 7,758 Arkansas--1.2% University of Arkansas, University Revenue Bonds (Various Facility, Fayetteville Campus) (g): 6,060 5.50% due 12/01/2012 (a) 6,912 5,000 5% due 12/01/2027 5,285 California--19.8% 10,680 California Pollution Control Financing Authority, PCR, Refunding, DRIVERS, AMT, Series 878Z, 7.566% due 12/01/2009 (e)(j) 12,754 2,075 California State Department of Veteran Affairs, Home Purpose Revenue Refunding Bonds, Series A, 5.35% due 12/01/2027 (b) 2,207 California State, Department of Water Resources, Power Supply Revenue Bonds, Series A: 12,000 5.375% due 5/01/2017 (k) 13,305 10,250 5.375% due 5/01/2021 (e) 11,450 6,385 5.375% due 5/01/2022 (e) 7,133 East Side Union High School District, California, Santa Clara County, GO (Election of 2002), Series D (k): 1,375 5% due 8/01/2016 1,517 2,795 5% due 8/01/2017 3,068 3,480 5% due 8/01/2022 3,746 Golden State Tobacco Securitization Corporation of California, Tobacco Settlement Revenue Bonds, Series B (g): 23,200 5.375% due 6/01/2028 24,868 5,000 5.50% due 6/01/2033 5,544 Industry, California, Urban Development Agency, Tax Allocation Bonds, Series 1-B (e): 5,645 5% due 5/01/2020 5,962 6,000 5% due 5/01/2021 6,344 5,000 Los Angeles, California, GO, Series A, 5% due 9/01/2019 (e) 5,427 Los Angeles, California, Unified School District, GO: 24,465 (Election of 1997), Series F, 5% due 1/01/2028 (g) 26,126 13,780 Series A, 5% due 1/01/2028 (e) 14,716 8,965 Modesto, California, Schools Infrastructure Financing Agency, Special Tax Bonds, 5.50% due 9/01/2036 (b) 10,030 12,040 Mount Diablo, California, Unified School District, GO (Election of 2002), 5% due 7/01/2027 (g) 12,824 6,440 Palm Springs, California, Financing Authority, Lease Revenue Refunding Bonds (Convention Center Project), Series A, 5.50% due 11/01/2035 (e) 7,276 11,685 Rialto, California, Unified School District, GO, Series A, 6.24%* due 6/01/2025 (g) 4,704 5,000 Roseville, California, Joint Union High School District, GO (Election of 2004), Series A, 5% due 8/01/2029 (g) 5,354 5,075 Sacramento, California, Unified School District, GO (Election of 1999), Series B, 5% due 7/01/2026 (g) 5,366 3,700 San Jose, California, GO (Libraries, Parks and Public Safety Projects), 5% due 9/01/2030 (e) 3,940 2,755 Tahoe Truckee, California, Unified School District, GO (School Facilities Improvement District Number 2), Series A, 5.25% due 8/01/2029 (e) 2,999 9,330 Tustin, California, Unified School District, Senior Lien Special Tax Bonds (Community Facilities District No. 97-1), Series A, 5% due 9/01/2038 (i) 9,764 Colorado--5.6% 19,250 Aurora, Colorado, COP, 6% due 12/01/2025 (b) 21,556 31,160 Denver, Colorado, City and County Airport Revenue Refunding Bonds, RIB, Series 153, 8.811% due 11/15/2025 (e)(j) 32,974 4,000 Logan County, Colorado, Justice Center Finance Corporation, COP, 5.50% due 12/01/2020 (e) 4,425 Connecticut--0.7% Hartford, Connecticut, GO, Refunding, Series D (e): 1,300 5% due 9/01/2017 1,447 1,105 5% due 9/01/2018 1,224 1,700 5% due 9/01/2021 1,855 2,670 New Haven, Connecticut, GO, Refunding, Series A, 5% due 9/01/2015 (e) 2,996 Florida--1.9% 5,500 Dade County, Florida, Water and Sewer System Revenue Bonds, 5.25% due 10/01/2026 (g) 5,793 1,605 Escambia County, Florida, Health Facilities Authority, Health Facility Revenue Bonds (Florida Health Care Facility Loan), 5.95% due 7/01/2020 (b) 1,619 9,425 Jacksonville Electric Authority, Florida, Water and Sewer System Revenue Bonds, Series C, 5% due 10/01/2039 (i) 9,711 2,240 West Coast Regional Water Supply Authority, Florida, Capital Improvement Revenue Bonds, 10.40% due 10/01/2010 (a)(b) 2,698 Georgia--3.7% Georgia Municipal Electric Authority, Power Revenue Refunding Bonds (b): 20,000 Series EE, 7% due 1/01/2025 27,669 90 Series Y, 6.40% due 1/01/2011 (a) 105 490 Series Y, 6.40% due 1/01/2013 (c) 572 8,420 Series Y, 6.40% due 1/01/2013 9,860
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Schedule of Investments (continued) Insured Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Hawaii--1.0% $ 9,630 Honolulu, Hawaii, City and County GO, Refunding, Series A, 5% due 7/01/2022 (e) $ 10,426 Illinois--1.8% 8,845 Chicago, Illinois, O'Hare International Airport Revenue Bonds, DRIVERS, AMT, Series 845-Z, 9.108% due 1/01/2012 (e)(j)(k) 11,333 6,800 Illinois State, GO, 5.75% due 5/01/2021 (e) 7,095 Kansas--0.5% 5,145 Manhattan, Kansas, Hospital Revenue Bonds (Mercy Health Center), 5.50% due 8/15/2020 (i) 5,663 Louisiana--0.3% 2,535 Louisiana Public Facilities Authority, Mortgage Revenue Refunding Bonds (Baton Rouge General Medical Center Project), 5.25% due 7/01/2033 (d)(e) 2,705 Maryland--0.6% 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) 5,880 Massachusetts--4.0% 7,250 Massachusetts State Development Finance Agency, Revenue Bonds (Williston Northampton School Project), 5% due 10/01/2037 (k) 7,691 4,000 Massachusetts State, HFA, Rental Housing Mortgage Revenue Bonds, AMT, Series C, 5.60% due 1/01/2045 (i) 4,273 27,000 Massachusetts State Special Obligation Dedicated Tax Revenue Bonds, 5.25% due 1/01/2014 (a)(g) 30,259 Michigan--2.1% 4,305 Michigan State, HDA, Rental Housing Revenue Refunding Bonds, Series B, 6.15% due 10/01/2015 (e) 4,397 Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds: 6,170 DRIVERS, AMT, Series 858Z, 7.867% due 12/01/2011 (j)(k) 7,252 10,000 (Detroit Edison Company), Series AA, 6.40% due 9/01/2025 (e) 10,256 Minnesota--1.5% 5,860 Delano, Minnesota, Independent School District Number 879, GO, Series A, 5.875% due 2/01/2025 (i) 6,538 Sauk Rapids, Minnesota, Independent School District Number 047, GO, Series A (e): 3,735 5.65% due 2/01/2020 4,129 4,440 5.70% due 2/01/2021 4,924 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) 1,754 10,000 Mississippi Hospital Equipment and Facilities Authority Revenue Bonds (Forrest County General Hospital Project), 6% due 1/01/2030 (i) 11,207 Missouri--2.2% Kansas City, Missouri, Airport Revenue Refunding and Improvement Bonds, Series A (e): 12,990 5.50% due 9/01/2013 13,874 9,000 5.50% due 9/01/2014 9,613 Nevada--6.4% Clark County, Nevada, IDR, AMT, Series A: 10,000 (Power Company Project), Series A, 6.70% due 6/01/2022 (g) 10,163 9,575 (Southwest Gas Corporation Project), Series A, 5.25% due 7/01/2034 (b) 10,195 45,000 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra Pacific Power Company), AMT, 6.65% due 6/01/2017 (e) 46,664 New Jersey--6.1% 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) 9,031 Garden State Preservation Trust of New Jersey, Open Space and Farmland Preservation Revenue Bonds, Series A (i)(m): 3,125 5.80% due 11/01/2021 3,599 8,310 5.80% due 11/01/2022 9,525 4,340 5.80% due 11/01/2023 4,957 16,500 Garden State Preservation Trust of New Jersey, Revenue Bonds, Series B, 5.17%* due 11/01/2024 (i) 7,019 23,000 New Jersey EDA, Motor Vehicle Surcharge Revenue Bonds, Series A, 5.25% due 7/01/2033 (e) 25,137 4,000 New Jersey EDA, School Facility Construction, Revenue Refunding Bonds, Series K, 5.25% due 12/15/2017 (g) 4,522 New York--15.6% Metropolitan Transportation Authority, New York, Revenue Bonds, Series B: 10,000 5% due 11/15/2030 (b) 10,780 13,500 5% due 11/15/2035 (e) 14,530 8,415 New York City, New York, City Municipal Water Finance Authority, Water and Sewer System Revenue Bonds, Series B, 5.75% due 6/15/2006 (a)(e) 8,752 15,735 New York City, New York, City Municipal Water Finance Authority, Water and Sewer System, Revenue Refunding Bonds, Series B, 5.75% due 6/15/2026 (e) 16,347 New York City, New York, GO: 11,500 Series C, 5.625% due 3/15/2018 (k) 12,891 21,000 Series I, 6% due 4/15/2007 (i) 22,345 5,155 New York City, New York, GO, Refunding, Series G, 5.75% due 2/01/2006 (i) 5,319 11,600 New York City, New York, Sales Tax Asset Receivable Corporation Revenue Bonds, Series A, 5.25% due 10/15/2027 (b) 12,829
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Schedule of Investments (continued) Insured Portfolio (In Thousands)
Face State Amount Municipal Bonds Value New York New York State Dormitory Authority, Mental Health Revenue Refunding Bonds, (concluded) Series A (e): $ 245 5.75% due 2/15/2007 (a) $ 262 120 5.75% due 8/15/2022 127 New York State Dormitory Authority, Non-State Supported Debt, Revenue Refunding Bonds (School Districts Bond Financing Program), Series B (e): 3,665 5% due 10/01/2025 3,955 3,925 5% due 10/01/2034 4,218 9,190 New York State Dormitory Authority Revenue Bonds (School Districts Financing Program), Series D, 5.25% due 10/01/2023 (e) 10,082 9,110 New York State Urban Development Corporation, Personal Income Tax Revenue Bonds (State Facilities), Series A-1, 5.25% due 3/15/2034 (g) 9,919 5 Niagara Falls, New York, GO, Public Improvement, 6.90% due 3/01/2024 (a)(e) 5 22,500 Tobacco Settlement Financing Corporation of New York Revenue Bonds, Series A-1, 5.25% due 6/01/2022 (b) 24,568 West Islip, New York, Union Free School District, GO, Refunding (i): 1,535 5% due 10/01/2015 1,721 4,120 5% due 10/01/2016 4,599 North Carolina--0.3% 3,370 North Carolina HFA, Home Ownership Revenue Bonds, AMT, Series 14-A, 5.35% due 1/01/2022 (b) 3,519 North Dakota--0.8% 3,480 North Dakota State, HFA, Revenue Bonds (Housing Finance Program), Series C, 5.30% due 7/01/2022 (b) 3,612 4,370 Oliver County, North Dakota, PCR, Refunding (Square Butte Electric Cooperative), Series A, 5.30% due 1/01/2027 (b) 4,668 Oklahoma--0.7% Oklahoma State Industries Authority, Health System Revenue Refunding Bonds (Integris Obligated Group), Series A (e): 2,680 6.25% due 8/15/2009 (a) 3,041 3,705 6.25% due 8/15/2016 4,163 Oregon--1.4% 8,700 Oregon State Department, Administrative Services, COP, Series A, 6.25% due 5/01/2010 (a)(b) 10,019 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) 4,643 Pennsylvania--3.6% 11,500 Lehigh County, Pennsylvania, IDA, PCR, Refunding (Pennsylvania Power and Light Utilities Corporation Project), 4.75% due 2/15/2027 (g) 11,886 5,000 Pennsylvania HFA, S/F Revenue Bonds, AMT, Series 72A, 5.25% due 4/01/2021 (e) 5,181 2,035 Pennsylvania State Higher Educational Facilities Authority, Revenue Bonds (Slippery Rock University Foundation, Inc.), Series A, 5% due 7/01/2019 (k) 2,217 5,000 Pennsylvania State Turnpike Commission, Turnpike Revenue Refunding Bonds, Series T, 5.50% due 12/01/2013 (g) 5,749 6,000 Philadelphia, Pennsylvania, Gas Works Revenue Bonds, 12th Series B, 7% due 5/15/2020 (c)(e) 7,421 4,420 Philadelphia, Pennsylvania, Redevelopment Authority Revenue Bonds (Neighborhood Transformation), Series A, 5.50% due 4/15/2020 (g) 4,888 Rhode Island--0.8% 6,815 Rhode Island State Economic Development Corporation, Airport Revenue Bonds, Series B, 6% due 7/01/2010 (a)(g) 7,796 South Carolina--0.4% 4,200 South Carolina State Public Service Authority Revenue Refunding Bonds, Series A, 6.25% due 1/01/2006 (b) 4,359 Texas--3.9% 17,975 Dallas-Fort Worth, Texas, International Airport Revenue Bonds, DRIVERS, AMT, Series 202, 9.113% due 11/01/2028 (g)(j) 21,272 El Paso, Texas, Water and Sewer Revenue Refunding and Improvement Bonds, Series A (i): 8,620 6% due 3/01/2012 (a) 10,010 195 6% due 3/01/2018 225 205 6% due 3/01/2019 236 3,500 Houston, Texas, Water Conveyance System Contract, COP, Series J, 6.25% due 12/15/2013 (b) 4,147 Texas State Department of Housing and Community Affairs, S/F Mortgage Revenue Bonds, AMT, Series A (e)(f): 2,085 5.45% due 9/01/2023 2,187 2,735 5.50% due 3/01/2026 2,862 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) 10,107 Utah Water Finance Agency Revenue Bonds (Pooled Loan Financing Program), Series A (b): 2,515 5.75% due 10/01/2015 2,812 3,770 6% due 10/01/2020 4,242 Virginia--0.2% 2,560 Virginia State HDA, Commonwealth Mortgage Revenue Bonds, Series J, Sub-Series J-1, 5.20% due 7/01/2019 (e) 2,582 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) 7,725 West Virginia--1.2% 12,250 Pleasants County, West Virginia, PCR, Refunding (Potomac-Pleasants), Series C, 6.15% due 5/01/2015 (b) 12,496 Wisconsin--1.3% 9,000 Superior, Wisconsin, Limited Obligation Revenue Refunding Bonds (Midwest Energy Resources), Series E, 6.90% due 8/01/2021 (g) 11,990 1,075 Wisconsin State, GO, AMT, Series B, 6.50% due 5/01/2025 (e) 1,078
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Schedule of Investments (concluded) Insured Portfolio (In Thousands)
Face Amount Municipal Bonds Value Puerto Rico--2.5% $ 1,750 Puerto Rico Commonwealth, Highway and Transportation Authority, Transportation Revenue Bonds, Series G, 5.25% due 7/01/2017 (g) $ 1,952 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series RR: 8,200 5% due 7/01/2027 (k) 8,836 14,400 5% due 7/01/2028 (l) 15,491 Total Municipal Bonds (Cost--$957,836)--97.9% 1,023,834 Shares Held Mutual Funds 300 BlackRock California Insured Municipal 2008 Term Trust, Inc. 4,851 810 BlackRock Insured Municipal 2008 Term Trust, Inc. 13,057 281 BlackRock Insured Municipal Term Trust, Inc. 3,143 Total Mutual Funds (Cost--$21,943)--2.0% 21,051 Short-Term Securities 11,017 Merrill Lynch Institutional Tax-Exempt Fund (h) 11,017 Total Short-Term Securities (Cost--$11,017)--1.1% 11,017 Total Investments (Cost--$990,796**)--101.0% 1,055,902 Liabilities in Excess of Other Assets--(1.0%) (10,515) ---------- Net Assets--100.0% $1,045,387 ========== * 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 June 30, 2005, as computed for federal income tax purposes, were as follows: (in Thousands) Aggregate cost $ 990,682 ============== Gross unrealized appreciation $ 66,389 Gross unrealized depreciation (1,169) -------------- Net unrealized appreciation $ 65,220 ============== (a) Prerefunded. (b) AMBAC Insured. (c) Escrowed to maturity. (d) FHA Insured. (e) MBIA Insured. (f) FNMA/GNMA Collateralized. (g) FGIC Insured. (h) Investments in companies considered to be an affiliate of the Fund (such companies are defined as "Affiliated Companies" in Section 2(a)(3) of the Investment Company Act of 1940) were as follows: (in Thousands) Net Dividend Affiliate Activity Income Merrill Lynch Institutional Tax-Exempt Fund 8,000 $347 (i) FSA Insured. (j) The rate disclosed is that currently in effect. This rate changes periodically and inversely based upon prevailing market rates. (k) XL Capital Insured. (l) CIFG Insured. (m) When-issued security. Forward interest rate swaps outstanding as of June 30, 2005 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 3.82% Broker, JPMorgan Chase Bank Expires November 2018 $11,500 $(297) See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 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) $ 4,281 500 Mobile, Alabama, Industrial Development Board, Environmental Improvement Revenue Refunding Bonds (International Paper Company Project), AMT, Series A, 6.35% due 5/15/2016 540 2,500 Selma, Alabama, IDB, Environmental Improvement Revenue Refunding Bonds (International Paper Company Project), AMT, Series A, 6.70% due 2/01/2018 2,758 Alaska--0.5% 2,065 Alaska State Housing Financial Corporation, General Mortgage Revenue Refunding, Series A, 6% due 6/01/2027 (f) 2,182 3,860 Anchorage, Alaska, School, GO, Series B, 5.875% due 12/01/2010 (e)(j) 4,394 Arizona--2.5% 4,000 Arizona Health Facilities Authority Revenue Bonds (Catholic Healthcare West), Series A, 6.625% due 7/01/2020 4,474 Maricopa County, Arizona, Hospital Revenue Refunding Bonds (Sun Health Corporation): 730 6.125% due 4/01/2007 (j) 783 270 6.125% due 4/01/2018 284 3,600 Maricopa County, Arizona, IDA, Education Revenue Bonds (Arizona Charter Schools Project 1), Series A, 6.75% due 7/01/2029 3,583 1,625 Maricopa County, Arizona, IDA, Health Facilities Revenue Refunding Bonds (Catholic Healthcare West Project), Series A, 5% due 7/01/2021 1,664 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 1,204 1,000 (Public Service Company of New Mexico Project), 6.30% due 12/01/2026 1,065 New Peoria, Arizona, Improvement District No. 8401, Special Assessment Bonds No. 8802: 430 7.20% due 1/01/2010 443 510 7.20% due 1/01/2013 525 Peoria, Arizona, Improvement District, Special Assessment Bonds No. 8801: 190 7.30% due 1/01/2009 196 395 7.30% due 1/01/2011 407 2,330 Phoenix, Arizona, Civic Improvement Corporation, Municipal Facilities, Excise Tax Revenue Bonds, 5.75% due 7/01/2016 (e) 2,612 5,000 Phoenix, Arizona, IDA, Airport Facility, Revenue Refunding Bonds (America West Airlines Inc. Project), AMT, 6.30% due 4/01/2023 3,703 545 Prescott Valley, Arizona, Improvement District, Special Assessment Bonds (Sewer Collection System Roadway Repair), 7.90% due 1/01/2012 568 3,515 Tucson, Arizona, IDA, Senior Living Facilities Revenue Bonds (Christian Care Tucson Inc. Project), Series A, 6.125% due 7/01/2024 (m) 3,930 3,180 University of Arizona, COP, Refunding, Series A, 5.50% due 6/01/2018 (c) 3,547 1,000 University of Arizona, COP (University of Arizona Parking and Student Housing), 5.75% due 6/01/2009 (c)(j) 1,105 Vistancia Community Facilities District, Arizona, GO: 3,000 6.75% due 7/15/2022 3,257 2,125 5.75% due 7/15/2024 2,174 Arkansas--0.1% 50 Arkansas State Development Finance Authority, S/F Mortgage Revenue Bonds (Mortgage-Backed Securities Program), Series H, 6.15% due 7/01/2016 (i) 52 250 Arkansas State Student Loan Authority Revenue Bonds, AMT, Sub-Series B, 7.25% due 6/01/2009 273 200 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) 209 250 North Little Rock, Arkansas, Health Facilities Board, Health Care Revenue Bonds (Baptist Health), 5.50% due 7/01/2016 264 500 Pine Bluff, Arkansas, Environmental Improvement Revenue Refunding Bonds (International Paper Company Project), AMT, Series A, 6.70% due 8/01/2020 549 250 University of Central Arkansas, Housing System Revenue Bonds, 6.50% due 1/01/2031 (h) 286 California--12.0% 2,500 Agua Caliente Band of Cahuilla Indians, California, Casino Revenue Bonds, 6% due 7/01/2018 2,643 9,145 Alameda County, California, COP (Financing Project), 6% due 9/01/2006 (f)(j) 9,657 California Rural Home Mortgage Finance Authority, S/F Mortgage Revenue Bonds (Mortgage-Backed Securities Program), AMT, Class 5 (i)(l): 260 Series C, 6.75% due 3/01/2029 261 190 Series D, 6.70% due 5/01/2029 192 260 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) 261 7,500 California State Department of Water Resources, Power Supply Revenue Bonds, Series A, 5.75% due 5/01/2017 8,450 5,000 California State, GO, 5.25% due 4/01/2029 5,400 2,000 California State, GO, Refunding, 5.75% due 5/01/2030 2,220 14,100 California State, Various Purpose, GO, 5.50% due 11/01/2033 15,713
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value California $ 9,880 California Statewide Communities Development Authority, Health Facility Revenue (concluded) Bonds (Memorial Health Services), Series A, 6% due 10/01/2023 $ 11,080 2,880 Capistrano, California, Unified School District, Community Facility District, Special Tax Bonds (No. 90-2 Talega), 6% due 9/01/2032 3,115 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 1,167 2,965 6.15% due 9/01/2026 3,182 13,000 Clovis, California, Unified School District, Capital Appreciation, GO (Election of 2004), Series A, 5.05%* due 8/01/2029 (e) 4,167 Contra Costa County, California, Special Tax Bonds (Community Facilities District No. 2001-01): 1,585 6% due 9/01/2026 1,668 1,200 6.10% due 9/01/2031 1,262 3,100 Elk Grove, California, Poppy Ridge Community Facilities Number 3 Special Tax, Series 1, 6% due 9/01/2028 3,247 Golden State Tobacco Securitization Corporation of California, Tobacco Settlement Revenue Bonds: 2,000 Series A-4, 7.80% due 6/01/2042 2,399 2,785 Series A-5, 7.875% due 6/01/2042 3,351 8,000 Lancaster, California, Redevelopment Agency, Subordinate Tax Allocation Refunding Bonds (Combined Redevelopment Project Areas--Housing Programs), Series B, 5% due 8/01/2034 (e) 8,440 6,795 Midpeninsula Regional Open Space District Financing Authority, California, Revenue Refunding Bonds, 5% due 9/01/2034 (c) 7,210 2,740 Pomona, California, Public Financing Authority Revenue Refunding Bonds (Merged Redevelopment Project), Series A1, 5.75% due 2/01/2034 2,863 1,100 Poway, California, Unified School District, Special Tax Bonds (Community District No. 6), Series A, 6.05% due 9/01/2025 1,169 2,695 Riverside, California, Improvement Bond Act of 1915, Special Assessment (Riverwalk Assessment District), 6.375% due 9/02/2026 2,948 Roseville, California, Special Tax (Stoneridge Community Facilities No. 1): 1,250 6.20% due 9/01/2021 1,343 1,125 6% due 9/01/2025 1,206 2,500 6.30% due 9/01/2031 2,695 Sacramento, California, Special Tax (North Natomas Community Facilities): 2,200 Series 01-03, 6% due 9/01/2028 2,335 2,270 Series 4-C, 6% due 9/01/2028 2,440 20,075 Sacramento County, California, Sanitation District Financing Authority Revenue Bonds, Series A, 5% due 12/01/2035 (c) 21,507 10,000 San Diego, California, Public Facilities Financing Authority, Subordinated Water Revenue Refunding Bonds, 5% due 8/01/2032 (f) 10,556 11,520 San Diego, California, Unified School District, GO (Election of 1998), Series F, 5% due 7/01/2028 (h) 12,348 San Francisco California, City and County Redevelopment Agency Revenue Bonds (Community Facilities District No. 6-Mission): 5,000 6% due 8/01/2021 5,287 2,500 GO, Series A, 6% due 8/01/2025 2,649 1,075 San Francisco, California, Uptown Parking Corporation, Parking Revenue Bonds (Union Square), 6% due 7/01/2020 (f) 1,223 Santa Margarita, California, Water District, Special Tax Refunding Bonds (Community Facilities District No. 99), Series 1: 3,680 6.20% due 9/01/2020 4,021 3,000 6.25% due 9/01/2029 3,210 Colorado--2.1% 500 Boulder County, Colorado, Hospital Development Revenue Bonds (Longmont United Hospital Project), 6% due 12/01/2030 (m) 559 560 Colorado HFA, Revenue Bonds (S/F Program), Series B-3, 6.55% due 10/01/2016 586 Colorado HFA, Revenue Refunding Bonds (S/F Program): 465 AMT, Senior Series A-2, 7.50% due 4/01/2031 488 190 AMT, Senior Series B-2, 7.10% due 4/01/2017 192 1,270 AMT, Senior Series B-2, 7.25% due 10/01/2031 1,306 75 AMT, Senior Series B-3, 6.80% due 11/01/2028 76 600 AMT, Senior Series C-2, 7.25% due 10/01/2031 (b) 617 160 Senior Series A-3, 7.35% due 10/01/2030 164 810 Senior Series C-3, 6.75% due 10/01/2021 (b) 830 240 Senior Series C-3, 7.15% due 10/01/2030 (b) 251 2,500 Colorado Health Facilities Authority, Revenue Refunding Bonds (Catholic Health Initiatives), 5.50% due 9/01/2017 2,705
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Colorado $ 550 Colorado Water Resource and Power Development Authority, Small Water Resource (concluded) Revenue Bonds, Series A, 5.80% due 11/01/2020 (e) $ 615 Elk Valley, Colorado, Public Improvement Revenue Bonds (Public Improvement Fee): 7,560 Series A, 7.35% due 9/01/2031 8,103 1,400 Series B, 7% due 9/01/2031 1,448 3,685 Larimer County, Colorado, Poudre School District Number R-1, GO, 6% due 12/15/2010 (e)(j) 4,215 7,700 Plaza Metropolitan District No. 1, Colorado, Tax Allocation Revenue Bonds (Public Improvement Fees), 8% due 12/01/2025 8,576 Connecticut--2.2% 4,000 Bridgeport, Connecticut, Senior Living Facilities Revenue Bonds (3030 Park Retirement Community Project), 7.25% due 4/01/2035 4,150 1,000 Connecticut State Development Authority, Governmental Lease Revenue Bonds, 6.60% due 6/15/2014 (f) 1,013 1,250 Connecticut State Development Authority, Water Facility Revenue Bonds (Bridgeport Hydraulic Company), AMT, 6.15% due 4/01/2035 (c) 1,338 1,200 Connecticut State HFA Revenue Refunding Bonds (Housing Mortgage Finance Program), Series C-1, 6.30% due 11/15/2017 1,240 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) 1,629 1,000 (Westover School), Series A, 5.70% due 7/01/2030 (m) 1,092 Connecticut State Health and Educational Facilities Authority, Revenue Refunding Bonds: 5,025 DRIVERS, Series 215,10.149% due 6/01/2030 (m)(n) 6,393 2,000 (Eastern Connecticut Health Network), Series A, 6.50% due 7/01/2030 (m) 2,272 640 (Sacred Heart University), 6.625% due 7/01/2026 (m) 675 5,710 (University of Hartford), Series E, 5.50% due 7/01/2022 (m) 6,347 1,000 (Yale--New Haven Hospital Issue), Series H, 5.70% due 7/01/2025 (f) 1,044 855 Connecticut State Higher Education Supplemental Loan Authority Revenue Bonds (Family Education Loan Program), AMT, Series A, 5.50% due 11/15/2020 (f) 871 1,000 Connecticut State Regional Learning Educational Service Center Revenue Bonds (Office/Education Center Facility), 7.75% due 2/01/2006 (j) 1,047 860 Waterbury, Connecticut, GO, 6% due 2/01/2009 (j)(m) 957 District of Columbia-- 5,000 District of Columbia, GO, Refunding, DRIVERS, Series 214, 9.144% due 0.4% 6/01/2026 (f)(n) 5,800 Florida--5.9% 2,000 Anthem Park Community Development District, Florida, Capital Improvement Revenue Bonds, 5.80% due 5/01/2036 2,035 1,700 Ballantrae, Florida, Community Development District, Capital Improvement Revenue Bonds, 6% due 5/01/2035 1,777 1,870 Beacon Tradeport Community, Florida, Development District, Special Assessment Revenue Refunding Bonds (Commercial Project), Series A, 5.25% due 5/01/2016 (m) 2,038 2,500 CFM Community Development District, Florida, Capital Improvement Revenue Bonds, Series B, 5.875% due 5/01/2014 2,582 2,725 Duval County, Florida, School Board, COP, 5.75% due 7/01/2017 (h) 2,982 1,500 East Homestead Community Development District, Florida, Special Assessment Revenue Bonds, 5.45% due 5/01/2036 1,523 Fiddlers Creek, Florida, Community Development District Number 2, Special Assessment Revenue Bonds: 5,350 Series A, 6.375% due 5/01/2035 5,704 1,250 Series B, 5.75% due 5/01/2013 1,307 600 Heritage Isles Community Development District, Florida, Special Assessment Revenue Refunding Bonds, 5.90% due 11/01/2006 607 5,000 Hillsborough County, Florida, IDA, Exempt Facilities Revenue Bonds (National Gypsum Company), AMT, Series A, 7.125% due 4/01/2030 5,637 7,000 Lee County, Florida, Airport Revenue Bonds, RIB, AMT, Series 580X, 9.41% due 10/01/2029 (h)(n) 8,603 4,500 Lee County, Florida, Transportation Facilities Revenue Bonds, 5.75% due 10/01/2005 (f)(j) 4,626 1,200 Lexington Oaks, Florida, Community Development District, Special Assessment Revenue Bonds, Series A, 6.70% due 5/01/2033 1,291 1,040 Mediterra, Florida, South Community Development District, Capital Improvement Revenue Bonds, 6.85% due 5/01/2031 1,115 2,500 Middle Village Community Development District, Florida, Special Assessment Bonds, Series A, 6% due 5/01/2035 2,583 6,095 Midtown Miami, Florida, Community Development District, Special Assessment Revenue Bonds, Series A, 6.25% due 5/01/2037 6,464 2,500 Old Palm Community Development District, Florida, Special Assessment Bonds (Palm Beach Gardens), Series B, 5.375% due 5/01/2014 2,555 Orange County, Florida, HFA, M/F Housing Revenue Bonds: 3,500 (Loma Vista Project), Series G, 5.50% due 3/01/2032 3,554 2,375 Series A, 6.40% due 1/01/2031 (f) 2,479
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Florida $ 135 Orange County, Florida, HFA, Mortgage Revenue Bonds, AMT, Series A, 8.375% (concluded) due 3/01/2021 (b)(d) $ 135 1,000 Orange County, Florida, Health Facilities Authority, Hospital Revenue Bonds (Orlando Regional Healthcare), 5.70% due 7/01/2026 1,018 5,000 Orange County, Florida, Tourist Development, Tax Revenue Bonds, 5.50% due 10/01/2009 (c)(j) 5,497 Panther Trace, Florida, Community Development, Special Assessment Revenue Bonds: 45 District, Series B, 6.50% due 5/01/2009 46 5,000 District II, Series A, 5.60% due 5/01/2035 5,083 Park Place Community Development District, Florida, Special Assessment Revenue Bonds: 1,000 6.75% due 5/01/2032 1,070 2,500 6.375% due 5/01/2034 2,633 2,000 Saint Lucie, Florida, West Services District, Utility Revenue Refunding Bonds, Senior Lien, 6% due 10/01/2022 (f) 2,284 2,875 Somerset Community Development District, Florida, Capital Improvement Revenue Bonds, 5% due 5/01/2015 2,879 990 Sterling Hill, Florida, Community Development District, Capital Improvement Revenue Refunding Bonds, Series B, 5.50% due 11/01/2010 999 770 Stoneybrook West, Florida, Community Development District, Special Assessment Revenue Bonds, Series B, 6.45% due 5/01/2010 780 565 Verandah West, Florida, Community Development District, Capital Improvement Revenue Bonds, Series B, 5.25% due 5/01/2008 570 1,950 Vista Lakes Community, Florida, Development District, Capital Improvement Revenue Bonds, Series B, 5.80% due 5/01/2008 1,972 Georgia--1.8% 5,000 Atlanta, Georgia, Tax Allocation Bonds (Atlantic Station Project), 7.90% due 12/01/2024 5,474 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 2,416 3,305 7.25% due 1/01/2035 3,531 5,210 College Park, Georgia, Business and IDA Revenue Bonds (Civic Center Project), 5.75% due 9/01/2026 (c) 5,831 1,075 Fulton County, Georgia, Development Authority, PCR (General Motors Corporation), Refunding, VRDN, 4.35% due 4/01/2010 (g) 1,075 3,450 Fulton County, Georgia, Development Authority Revenue Bonds (Morehouse College Project), 5.875% due 12/01/2030 (c) 3,874 2,250 Fulton County, Georgia, Residential Care Facilities, Revenue Refunding Bonds (Canterbury Court Project), Series A, 6% due 2/15/2022 2,283 1,500 Milledgeville-Baldwin County, Georgia, Development Authority Revenue Bonds (Georgia College and State University Foundation), 6% due 9/01/2033 1,638 Hawaii--0.3% Kuakini, Hawaii, Health System, Special Purpose Revenue Bonds, Series A: 1,410 6.30% due 7/01/2022 1,526 3,000 6.375% due 7/01/2032 3,247 Illinois--7.4% 10,620 Chicago, Illinois, Board of Education, GO, DRIVERS, Series 199, 8.642% due 12/01/2020 (c)(n) 12,494 1,400 Chicago, Illinois, GO (Neighborhoods Alive 21 Program), 5.875% due 7/01/2010 (e)(j) 1,592 26,800 Chicago, Illinois, O'Hare International Airport Revenue Bonds, 3rd Lien, AMT, Series B-2, 6% due 1/01/2029 (k) 30,507 3,000 Chicago, Illinois, O'Hare International Airport, Special Facility Revenue Refunding Bonds (American Airlines Inc. Project), 8.20% due 12/01/2024 2,847 2,265 Chicago, Illinois, Park District, GO, Refunding, Series B, 5.75% due 1/01/2015 (e) 2,520 Chicago, Illinois, Park District, Limited Tax, GO, Series A (e): 1,270 5.75% due 1/01/2011 (j) 1,435 230 5.75% due 1/01/2016 256 535 Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT, Series A, 7.15% due 9/01/2031 (i)(l) 547 2,000 Chicago, Illinois, Special Assessment Bonds (Lake Shore East), 6.75% due 12/01/2032 2,086 3,210 Cicero, Illinois, GO, Refunding (Corporate Purpose), 6% due 12/01/2028 (f) 3,598 7,000 Decatur, Illinois, GO, Refunding, 6% due 3/01/2008 (e)(j) 7,563 10,000 Hodgkins, Illinois, Environmental Improvement Revenue Bonds (Metro Biosolids Management LLC Project), AMT, 6% due 11/01/2023 10,675 Illinois Development Finance Authority Revenue Bonds: 3,140 (Community Rehabilitation Providers Facilities), Series A, 6.50% due 7/01/2022 3,399 660 Series B, 6.40% due 9/01/2031 (h) 698 1,750 Illinois State Finance Authority Revenue Bonds (Friendship Village of Schaumburg), Series A, 5.625% due 2/15/2037 1,736 Illinois State, GO, 1st Series (f): 8,890 5.75% due 12/01/2015 9,935 3,745 5.75% due 12/01/2016 4,183 4,000 5.75% due 12/01/2017 4,462
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Illinois $ 3,000 Illinois State, Sales Tax Revenue Bonds, 6% due 6/15/2020 $ 3,353 (concluded) 2,000 Lake County, Illinois, Forest Preservation District, GO (Land Acquisition and Development), 5.75% due 12/15/2016 2,252 780 Naperville, Illinois, IDR (General Motors Corporation), Refunding, VRDN, 4.35% due 12/01/2012 (g) 780 Indiana--0.8% 5,000 Indiana Transportation Finance Authority, Highway Revenue Bonds, Series A, 5.25% due 6/01/2025 (e) 5,457 6,000 MSD Warren Township, Indiana, Vision 2005, School Building Corporation Revenue Bonds, First Mortgage, 5.50% due 1/15/2011 (e)(j) 6,714 Iowa--0.7% 1,000 Iowa City, Iowa, Sewer Revenue Bonds, 5.75% due 7/01/2021 (f) 1,029 6,780 Iowa Finance Authority, Health Care Facilities, Revenue Refunding Bonds (Care Initiatives Project), 9.25% due 7/01/2025 8,310 Kansas--0.4% 2,420 Sedgwick and Shawnee Counties, Kansas, S/F Revenue Bonds, AMT, Series A-1, 6.95% due 6/01/2029 (d) 2,451 2,500 Wichita, Kansas, Hospital Facilities Revenue Refunding and Improvement Bonds, Series III, 6.25% due 11/15/2019 2,803 Louisiana--4.4% 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) 10,408 30,000 Louisiana State, Gas and Fuels Tax Revenue Bonds, Series A, 5% due 5/01/2035 (e) 32,116 1,770 Louisiana State, HFA, Single Family Revenue Refunding Bonds (Home Ownership Program), Series B-2, AMT, 6.20% due 12/01/2029 (b)(i) 1,835 2,900 New Orleans, Louisiana, GO, Refunding, 6.125% due 10/01/2005 (c)(j) 2,955 13,000 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain Company Project), 7.50% due 7/01/2013 13,443 2,000 Rapides Finance Authority, Louisiana, Environmental Improvement Revenue Bonds (International Paper Company Project), AMT, Series A, 6.55% due 11/15/2023 2,170 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 8,680 6,045 Maine State Housing Authority, Mortgage Purpose Revenue Bonds, DRIVERS, AMT, Series 170, 9.101% due 11/15/2028 (n) 6,586 Maryland--0.7% 500 Anne Arundel County, Maryland, Special Obligation Revenue Bonds (Arundel Mills Project), 7.10% due 7/01/2009 (j) 585 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 1,060 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) 1,218 1,000 Maryland State Community Development Administration, Department of Housing and Community Development Revenue Bonds (Waters Landing II Apartments), AMT, Series A, 5.875% due 8/01/2033 1,064 125 Maryland State Economic Development Corporation Revenue Bonds (Health and Mental Hygiene Program), Series A, 7.125% due 3/01/2006 127 1,000 Maryland State Energy Financing Administration, Solid Waste Disposal Revenue Bonds, Limited Obligation (Wheelabrator Water Projects), AMT, 6.45% due 12/01/2016 1,049 2,400 Maryland State Health and Higher Education Facilities Authority (Union Hospital-- Cecil County), Issue, 5% due 7/01/2040 2,467 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 4/01/2010 (j) 1,120 Massachusetts--0.8% 400 Massachusetts Educational Financing Authority, Education Loan Revenue Refunding Bonds, AMT, Issue E, 5.85% due 7/01/2014 (c) 401 1,000 Massachusetts State Development Finance Agency, Revenue Refunding Bonds (Eastern Nazarene College), 5.625% due 4/01/2029 1,005 1,605 Massachusetts State, HFA, Housing Revenue Refunding Bonds, Series B, 6.05% due 12/01/2009 (f) 1,639 4,850 Massachusetts State Health and Educational Facilities Authority Revenue Bonds (Medical Center of Central Massachusetts), CARS, Series B,10.12% due 6/23/2022 (c)(n) 5,675 1,000 Massachusetts State Industrial Finance Agency, Higher Education Revenue Refunding Bonds (Hampshire College Project), 5.625% due 10/01/2007 (j) 1,076 130 Massachusetts State Water Pollution Abatement Trust, Water Abatement Revenue Bonds, Series A, 6.375% due 2/01/2015 132 1,600 Montachusett, Massachusetts, Regional Vocational Technical School District, GO, 5.95% due 1/15/2020 (f) 1,794 Michigan--1.4% 7,500 Delta County, Michigan, Economic Development Corporation, Environmental Improvement Revenue Refunding Bonds (Mead Westvaco--Escanaba), Series A, 6.25% due 4/15/2012 (j) 8,839 500 Dickinson County, Michigan, Economic Development Corporation, Environmental Improvement Revenue Refunding Bonds (International Paper Company Project), Series A, 5.75% due 6/01/2016 553 1,000 Eastern Michigan University Revenue Refunding Bonds, 6% due 6/01/2024 (c) 1,126 3,000 Flint, Michigan, Hospital Building Authority, Revenue Refunding Bonds (Hurley Medical Center), 6% due 7/01/2020 3,118
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Michigan $ 3,325 Macomb County, Michigan, Hospital Finance Authority, Hospital Revenue Bonds (concluded) (Mount Clemens General Hospital), Series B, 5.875% due 11/15/2034 $ 3,381 1,500 Michigan State Hospital Finance Authority, Revenue Refunding Bonds (Mercy-- Mount Clemens), Series A, 6% due 5/15/2014 (f) 1,660 1,060 Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds (Detroit Edison Company), Series AA, 6.40% due 9/01/2025 (f) 1,087 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 1,086 1,000 Eden Prairie, Minnesota, M/F Housing Revenue Bonds (Rolling Hills Project), Series A, 6.15% due 8/20/2031 (d) 1,095 Minneapolis and Saint Paul, Minnesota, Metropolitan Airports Commission, Airport Revenue Bonds, AMT, Sub-Series D (e): 470 5.75% due 1/01/2012 521 470 5.75% due 1/01/2014 517 2,060 5.75% due 1/01/2015 2,262 635 Minneapolis, Minnesota, Community Development Agency, Supported Development Revenue Bonds (Common Bond Fund), AMT, Series 2, 6.20% due 6/01/2017 657 Minneapolis, Minnesota, Health Care System Revenue Bonds (Allina Health System), Series A: 1,500 5.70% due 11/15/2022 1,625 2,665 5.75% due 11/15/2032 2,875 1,110 Ramsey County, Minnesota, Housing and Redevelopment Authority, M/F Housing Revenue Bonds (Hanover Townhouses Project), AMT, 6% due 7/01/2031 1,159 1,000 Saint Cloud, Minnesota, Health Care Revenue Refunding Bonds (Saint Cloud Hospital Obligation Group), Series A, 6.25% due 5/01/2020 (h) 1,134 1,000 Saint Francis, Minnesota, Independent School District No. 015, GO, Series A, 6.35% due 2/01/2013 (h) 1,021 1,500 Waconia, Minnesota, Health Care Facilities Revenue Bonds (Ridgeview Medical Center Project), Series A, 6.125% due 1/01/2029 (m) 1,657 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 1,878 Missouri--0.6% Fenton, Missouri, Tax Increment Revenue Refunding and Improvement Bonds (Gravois Bluffs): 610 6.75% due 10/01/2015 616 4,000 7% due 10/01/2021 4,331 1,500 Kansas City, Missouri, IDA, First Mortgage Health Facilities Revenue Bonds (Bishop Spencer Place), Series A, 6.50% due 1/01/2035 1,576 2,200 Saint Louis, Missouri, Airport Revenue Bonds (Airport Development Program), Series A, 5.625% due 7/01/2011 (f)(j) 2,449 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 6,346 Nevada--2.1% 5,000 Clark County, Nevada, IDR (Power Company Project), AMT, Series A, 6.70% due 6/01/2022 (e) 5,082 1,550 Clark County, Nevada, Improvement District No. 142 Special Assessment, 6.375% due 8/01/2023 1,598 Elko, Nevada, GO (Airport Improvement), AMT, Series B (f): 165 6.10% due 10/01/2014 177 245 6.30% due 10/01/2019 264 320 6.75% due 10/01/2024 349 225 7% due 10/01/2029 247 2,970 Henderson, Nevada, Local Improvement Districts, Special Assessment, Series NO T-14, 5.80% due 3/01/2023 3,062 Las Vegas, Nevada, Local Improvement Bonds, Special Assessment, Special Improvement District Number 808, Summerlin: 1,760 5.875% due 6/01/2009 1,826 2,025 6.125% due 6/01/2012 2,100 2,265 6.25% due 6/01/2013 2,349 145 Nevada Housing Division, S/F Program, AMT, Senior Series E, 7.05% due 4/01/2027 (b) 147 1,970 Reno, Nevada, Special Assessment District No. 4 (Somerset Parkway), 6.625% due 12/01/2022 2,031 Sparks, Nevada, Redevelopment Agency, Tax Allocation Revenue Refunding Bonds, Series A (m): 3,110 6% due 1/15/2015 3,433 6,315 6% due 1/15/2023 6,956 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 1,875 New Jersey--3.7% 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 573 3,300 New Jersey EDA, Retirement Community Revenue Bonds (Cedar Crest Village Inc. Facility), Series A, 7.25% due 11/15/2031 3,574
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value New Jersey $ 2,000 New Jersey EDA, Special Facility Revenue Bonds (Continental Airlines Inc. (concluded) Project), AMT, 6.25% due 9/15/2029 $ 1,738 3,680 New Jersey EDA, State Lease Revenue Bonds (State Office Buildings Projects), 6% due 6/15/2010 (c)(j) 4,179 New Jersey Health Care Facilities Financing Authority Revenue Bonds: 2,740 (Pascack Valley Hospital Association), 6% due 7/01/2013 2,615 3,130 (South Jersey Hospital), 6% due 7/01/2026 3,411 2,250 New Jersey Health Care Facilities Financing Authority, Revenue Refunding Bonds (Capital Health System Inc.), Series A, 5.75% due 7/01/2023 2,445 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) 1,160 New Jersey State Turnpike Authority, Turnpike Revenue Refunding Bonds (f): 10,000 DRIVERS, Series 155, 8.659% due 1/01/2018 (a)(n) 12,017 7,025 Series A, 5.75% due 1/01/2010 (j) 7,839 2,975 Series A, 5.75% due 1/01/2018 3,275 9,500 Tobacco Settlement Financing Corporation of New Jersey Revenue Bonds, 7% due 6/01/2041 10,853 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 8,359 160 New Mexico Mortgage Finance Authority, Revenue Refunding Bonds, Mortgage-Backed Securities, Series F, 7% due 1/01/2026 (i) 171 250 Santa Fe County, New Mexico, Correctional System Revenue Bonds, 6% due 2/01/2027 (h) 317 New York--11.6% 9,500 Metropolitan Transportation Authority, New York, Commuter Facilities, Service Contract Revenue Refunding Bonds, Series 8, 5.50% due 7/01/2013 (h)(j) 10,923 10,000 Metropolitan Transportation Authority, New York, Transit Facilities Revenue Bonds, Series A, 5.625% due 7/01/2007 (f)(j) 10,717 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 3,356 2,000 New York City, New York, City, IDA Revenue Bonds (Visy Paper Inc. Project), AMT, 7.95% due 1/01/2028 2,094 4,050 New York City, New York, City, IDA, Special Facility Revenue Bonds (British Airways Plc Project), AMT, 7.625% due 12/01/2032 4,522 New York City, New York, City Municipal Water Finance Authority, Water and Sewer System Revenue Bonds, Series B (j): 3,500 5.75% due 6/15/2006 (f) 3,640 10,000 5.875% due 6/15/2026 (h) 10,383 6,500 New York City, New York, City Municipal Water Finance Authority, Water and Sewer System, Revenue Refunding Bonds, Series B, 5.75% due 6/15/2026 (f) 6,753 3,000 New York City, New York, City Transit Authority, Triborough Metropolitan Transportation Authority, COP, 5.75% due 1/01/2010 (c)(j) 3,377 6,000 New York City, New York, City Transitional Finance Authority Revenue Bonds, Future Tax Secured, Series B, 6% due 5/15/2010 (j) 6,870 New York City, New York, City Transitional Finance Authority Revenue Refunding Bonds, Series C (j): 12,015 5.875% due 5/01/2010 13,669 8,000 Future Tax Secured, 5.875% due 5/01/2010 9,101 New York City, New York, GO, Refunding: 5,870 Series A, 6% due 5/15/2010 (j) 6,715 730 Series A, 6% due 5/15/2021 (k) 821 2,210 Series A, 6.25% due 5/15/2026 (k) 2,505 4,000 Series B, 8.25% due 6/01/2006 (a)(k) 4,204 4,000 Series C, 5.875% due 8/01/2006 (e)(j) 4,190 15,000 Series G, 5.75% due 2/01/2006 (f)(j) 15,503 25 Series H, 6% due 8/01/2007 (j)(k) 27 975 Series H, 6% due 8/01/2017 (k) 1,046 New York City, New York, GO, Series B (f): 2,060 5.875% due 8/01/2010 (j) 2,353 7,940 5.875% due 8/01/2015 9,013 New York State Dormitory Authority Revenue Bonds (Catholic Health Services-- Long Island): 1,175 5% due 7/01/2012 1,258 1,775 5% due 7/01/2013 1,896 1,935 5% due 7/01/2014 2,071 New York State Dormitory Authority, Revenue Refunding Bonds: 3,165 (Concord Nursing Home Inc.), 6.25% due 7/01/2016 3,476 2,500 (Concord Nursing Home Inc.), 6.50% due 7/01/2029 2,759 3,000 (Mount Sinai Health), Series A, 6.50% due 7/01/2016 3,201 3,950 (Mount Sinai Health), Series A, 6.50% due 7/01/2025 4,221 3,000 (State University Educational Facilities), Series A, 7.50% due 5/15/2013 3,803
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value New York $ 1,360 New York State Environmental Facilities Corporation, State Clean Water and (concluded) Drinking Revenue Bonds (Revolving Funds), Series B, 5.875% due 1/15/2019 $ 1,518 2,285 Oneida County, New York, IDA, Revenue Bonds (Civic Facility--Faxton Hospital), Series C, 6.625% due 1/01/2015 (m) 2,579 95 Suffolk County, New York, IDA, Civic Facility Revenue Bonds (Special Needs Facilities Pooled Program), Series D-1, 6% due 7/01/2012 99 705 Westchester County, New York, IDA, Civic Facilities Revenue Bonds (Special Needs Facilities Pooled Program), Series E-1, 6% due 7/01/2012 733 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 8,623 North Carolina--2.5% 920 Brunswick County, North Carolina, COP, 6% due 6/01/2010 (h)(j) 1,051 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 1,534 North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds: 1,500 Series B, 5.875% due 1/01/2021 (f) 1,591 4,000 Series D, 6.75% due 1/01/2026 (o) 4,490 4,440 North Carolina Eastern Municipal Power Agency, Power System Revenue Refunding Bonds, Series D, 6.70% due 1/01/2019 (o) 4,980 190 North Carolina HFA, S/F Revenue Bonds, Series W, 6.50% due 3/01/2018 191 2,500 North Carolina Medical Care Commission, Health Care Facilities, First Mortgage Revenue Bonds (Presbyterian Homes Project), 6.875% due 10/01/2021 2,687 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 2,043 North Carolina Medical Care Commission, Retirement Facilities, First Mortgage Revenue Bonds: 1,625 (Forest at Duke Project), 6.375% due 9/01/2032 1,744 2,500 (Givens Estates Project), Series A, 6.50% due 7/01/2032 2,681 North Carolina Municipal Power Agency No. 1, Catawba Electric Revenue Refunding Bonds, Series B: 500 6.375% due 1/01/2013 559 1,080 6.375% due 1/01/2013 (o) 1,211 5,000 6.50% due 1/01/2020 5,605 2,500 6.50% due 1/01/2020 (o) 2,802 1,175 North Carolina State Educational Assistance Authority Revenue Bonds (Guaranteed Student Loan), AMT, Sub-Lien, Series C, 6.35% due 7/01/2016 1,222 Piedmont, North Carolina, Triad Airport Authority, Airport Revenue Refunding Bonds, Series A (h): 1,000 6.375% due 7/01/2016 1,128 1,000 6% due 7/01/2024 1,107 Ohio--1.2% 1,000 Cuyahoga County, Ohio, Health Care Facilities Revenue Refunding Bonds (Benjamin Rose Institute Project), 5.50% due 12/01/2028 1,004 1,200 Huron County, Ohio, GO, Human Services Building, 7.25% due 12/01/2005 (f)(j) 1,247 510 Ohio HFA, Mortgage Revenue Bonds, AMT, Series A-1, 6.15% due 3/01/2029 (d) 523 8,000 Ohio State Air Quality Development Authority, Revenue Refunding Bonds (Dayton Power & Light Company), Series B, 6.40% due 8/15/2027 (f) 8,022 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 1,569 3,005 Toledo-Lucas County, Ohio, Lodging Tax Revenue Refunding Bonds (Convention Center Project), 5.70% due 10/01/2015 (f) 3,167 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 277 2,485 Jackson County, Oregon, Central Point School District No. 006, GO, 5.75% due 6/15/2010 (e)(j) 2,791 Oregon State Housing and Community Services Department, Mortgage Revenue Refunding Bonds (S/F Mortgage Program), Series A: 90 6.40% due 7/01/2018 91 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) 528 1,000 Portland, Oregon, Sewer System Revenue Bonds, Series A, 5.75% due 8/01/2010 (e)(j) 1,126 Portland, Oregon, Urban Renewal and Redevelopment Revenue Refunding Bonds, Series A (c): 1,000 (Downtown Waterfront), 5.75% due 6/15/2018 1,121 3,190 (South Park Blocks), 5.75% due 6/15/2018 3,577
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Pennsylvania--1.0% $ 2,220 Allegheny County, Pennsylvania, Sanitation Authority, Sewer Revenue Bonds, 5.75% due 12/01/2010 (f)(j) $ 2,518 4,000 Pennsylvania State Higher Educational Facilities Authority Revenue Bonds (University of Pennsylvania Medical Center Health System), Series A, 6% due 1/15/2031 4,445 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 Healthcare System), Series A, 5.875% due 12/01/2031 5,388 Rhode Island--0.6% 6,815 Rhode Island State Economic Development Corporation, Airport Revenue Bonds, Series B, 6% due 7/01/2010 (e)(j) 7,796 1,000 Rhode Island State Economic Development Corporation Revenue Bonds (Providence Place Mall), 6.125% due 7/01/2020 (m) 1,135 South Carolina--1.3% Medical University Hospital Authority, South Carolina, Hospital Facilities Revenue Refunding Bonds (j): 2,450 6.50% due 8/15/2012 2,942 5,400 Series A, 6.375% due 8/15/2012 6,443 Piedmont Municipal Power Agency, South Carolina, Electric Revenue Refunding Bonds (e): 1,745 6.75% due 1/01/2019 2,238 1,255 6.75% due 1/01/2019 (a) 1,642 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 5,278 South Dakota--0.3% 3,750 Pierre, South Dakota, School District Number 32-2, GO, 5.75% due 8/01/2010 (h)(j) 4,221 Tennessee--2.0% Chattanooga, Tennessee, Industrial Development Board, Lease Rent Revenue Bonds (Southside Redevelopment Corporation) (c): 4,485 5.75% due 10/01/2017 4,997 3,740 5.75% due 10/01/2018 4,167 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 1,018 4,950 McMinn County, Tennessee, IDB, Solid Waste Revenue Bonds (Recycling Facility-- Calhoun Newsprint), AMT, 7.40% due 12/01/2022 4,976 5,000 Metropolitan Government of Nashville and Davidson County, Tennessee, GO, 5.875% due 5/15/2026 5,167 Shelby County, Tennessee, Health, Educational and Housing Facility Board, Hospital Revenue Refunding Bonds (Methodist Healthcare): 4,380 6.50% due 9/01/2012 (j) 5,247 2,920 6.50% due 9/01/2026 (a) 3,485 Texas--13.4% Austin, Texas, Convention Center Revenue Bonds (Convention Enterprises Inc.): 5,300 First Tier, Series A, 6.60% due 1/01/2021 5,671 2,300 First Tier, Series A, 6.70% due 1/01/2028 2,487 6,740 Trust Certificates, Second Tier, Series B, 6% due 1/01/2023 7,287 10,630 Austin, Texas, Revenue Bonds (Town Lake Community Events Center Venue), 6.20% due 11/15/2009 (e)(j) 12,008 Bexar County, Texas, Health Facilities Development Corporation, Revenue Refunding Bonds (Army Retirement Residence Project): 600 6.125% due 7/01/2022 651 1,750 6.30% due 7/01/2032 1,903 2,280 Brazos River Authority, Texas, PCR, Refunding (Texas Utility Company), AMT, Series A, 7.70% due 4/01/2033 2,711 4,250 Brazos River Authority, Texas, Revenue Refunding Bonds (Reliant Energy Inc. Project), Series B, 7.75% due 12/01/2018 4,715 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 4,120 885 Central Texas Housing Finance Corporation, S/F Mortgage Revenue Bonds (GNMA Mortgage Program), AMT, 8.20% due 6/28/2017 (b)(d) 929 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 3,655 18,250 Dallas-Fort Worth, Texas, International Airport Revenue Bonds, DRIVERS, AMT, Series 201, 9.113% due 11/01/2024 (e)(n) 21,598 1,260 Fort Bend County, Texas, Municipal Utility District No. 23, GO, 6.625% due 9/01/2007 (j)(m) 1,363 Gregg County, Texas, Health Facilities Development Corporation, Hospital Revenue Bonds (Good Shepherd Medical Center Project) (m): 1,000 6.875% due 10/01/2020 1,156 3,500 6.375% due 10/01/2025 3,965 2,465 Gulf Coast, Texas, Waste Disposal Authority, Revenue Refunding Bonds (International Paper Company), AMT, Series A, 6.10% due 8/01/2024 2,654 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 2,709
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Schedule of Investments (continued) National Portfolio (In Thousands)
Face State Amount Municipal Bonds Value Texas $ 3,000 Houston, Texas, Airport System, Special Facilities Revenue Bonds (Continental (concluded) Airlines Terminal Improvement), AMT, Series B, 6.125% due 7/15/2027 $ 2,489 20,000 Houston, Texas, Combined Utility System, First Lien Revenue Refunding Bonds, Series A, 5.125% due 5/15/2028 (f) 21,516 2,750 La Joya, Texas, Independent School District, GO, 5% due 2/15/2029 2,908 8,080 Matagorda County, Texas, Navigation District No. 1, Revenue Refunding Bonds (Reliant Energy Inc.), Series C, 8% due 5/01/2029 8,898 7,350 Matagorda County, Texas, Port of Bay City Authority Revenue Bonds (Hoechst Celanese Corp. Project), AMT, 6.50% due 5/01/2026 7,526 4,825 Port Corpus Christi, Texas, Individual Development Corporation, Environmental Facilities Revenue Bonds (Citgo Petroleum Corporation Project), AMT, 8.25% due 11/01/2031 5,172 1,000 Red River, Texas, Education Finance Revenue Bonds (Saint Mark's School--Texas Project), 6% due 8/15/2019 1,101 1,815 South Plains, Texas, Housing Finance Corporation, S/F Mortgage Revenue Bonds, AMT, Series A, 7.30% due 9/01/2031 (i) 1,825 Southeast Texas, Housing Finance Corporation Revenue Bonds, AMT (d)(l): 100 Series A, 8% due 11/01/2025 105 225 Series B, 8.50% due 11/01/2025 238 Texas State Public Finance Authority, Building Revenue Bonds (h)(j): 2,100 (General Services Commission Project), Series A, 6% due 2/01/2010 2,363 1,000 (State Preservation Project), Series B, 6% due 8/01/2009 1,115 45,000 Texas State Turnpike Authority, Central Texas Turnpike System Revenue Bonds, First Tier, Series A, 5.75% due 8/15/2038 (c) 50,609 4,930 Upper Trinity Regional Water District, Texas, Water Revenue Bonds (Regional Treated Water Supply System), Series A, 6% due 8/01/2020 (e) 5,517 2,305 Webster, Texas, GO, COP, Series A, 6% due 3/01/2021 (h) 2,558 Utah--0.1% 995 Utah State HFA, S/F Mortgage Revenue Refunding Bonds, AMT, Series C, Class III, 5.50% due 1/01/2018 1,037 Virginia--0.6% 2,425 Chesterfield County, Virginia, IDA, PCR, Refunding (Virginia Electric and Power Company), Series B, 5.875% due 6/01/2017 2,671 Norfolk, Virginia, Redevelopment and Housing Authority, First Mortgage Revenue Bonds (Retirement Community), Series A: 500 6% due 1/01/2025 512 1,100 6.125% due 1/01/2035 1,121 3,825 Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds, Senior Series A, 5.50% due 8/15/2028 3,981 Washington--1.9% 2,065 Kitsap County, Washington, GO, 5.875% due 7/01/2010 (c)(j) 2,330 3,000 Port of Seattle, Washington, Special Facilities Revenue Bonds, Series A, 6% due 9/01/2029 (f) 3,339 3,010 Seattle, Washington, Drain and Wastewater Utility Revenue Bonds, 5.75% due 11/01/2022 (f) 3,329 Seattle, Washington, Housing Authority Revenue Bonds: 2,750 (Newholly Project), AMT, 6.25% due 12/01/2035 2,800 4,875 (Replacement Housing Project), 6.125% due 12/01/2032 4,879 7,750 Tacoma, Washington, Electric System Revenue Refunding Bonds, Series A, 5.75% due 1/01/2017 (h) 8,680 1,625 University of Washington, University Revenue Bonds (Student Facilities Fee), 5.875% due 6/01/2010 (h)(j) 1,840 Wisconsin--0.7% Wisconsin State Health and Educational Facilities Authority Revenue Bonds (Synergyhealth Inc.): 3,250 6% due 11/15/2023 3,563 3,700 6% due 11/15/2032 4,023 2,725 Wisconsin State, GO, AMT, Series B, 6.20% due 11/01/2026 (f) 2,732 Wyoming--1.2% 8,400 Sweetwater County, Wyoming, PCR, Refunding (Idaho Power Company Project), Series A, 6.05% due 7/15/2026 (f) 8,824 9,000 Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds (FMC Corporation Project), AMT, Series A, 7% due 6/01/2024 9,100 Guam--0.0% 115 Guam Housing Corporation, S/F Mortgage Revenue Bonds, AMT, Series A, 5.75% due 9/01/2031 (l) 132 Puerto Rico--3.2% Puerto Rico Commonwealth, Highway and Transportation Authority, Transportation Revenue Bonds: 8,045 5.75% due 7/01/2022 9,019 2,000 Series B, 5.875% due 7/01/2021 (f) 2,252 Puerto Rico Commonwealth, Infrastructure Financing Authority, Special Tax and Capital Appreciation Revenue Bonds, Series A: 30,000 4.640%* due 7/01/2032 (e) 8,791 11,785 4.670%* due 7/01/2036 (c) 2,867 5,000 4.772%* due 7/01/2044 (c) 811 14,285 4.769%* due 7/01/2045 (e) 2,208
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Schedule of Investments (concluded) National Portfolio (In Thousands)
Face Amount Municipal Bonds Value Puerto Rico $ 785 Puerto Rico Commonwealth, Public Improvement, GO, Refunding, 5.70% due (concluded) 7/01/2020 (f) $ 868 15,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series NN, 5.125% due 7/01/2029 15,902 2,000 Puerto Rico Industrial Tourist Educational, Medical and Environmental Control Facilities Revenue Bonds (Ascension Health), RIB, Series 377, 9.69% due 11/15/2030 (n) 2,516 960 Puerto Rico Public Finance Corporation, Commonwealth Appropriation Revenue Bonds, Series E, 5.50% due 8/01/2029 1,035 U.S. Virgin Islands--0.6% 8,000 Virgin Islands Government Refinery Facilities, Revenue Refunding Bonds (Hovensa Coker Project), AMT, 6.50% due 7/01/2021 9,140 Total Municipal Bonds (Cost--$1,308,853)--97.6% 1,407,558 Shares Held Short-Term Securities 1,923 Merrill Lynch Institutional Tax-Exempt Fund** 1,923 Total Short-Term Securities (Cost--$1,923)--0.1% 1,923 Total Investments (Cost--$1,310,776***)--97.7% 1,409,481 Other Assets Less Liabilities--2.3% 33,320 ---------- Net Assets--100.0% $1,442,801 ========== * Represents a zero coupon bond; the interest rate shown reflects the effective yield at the time of purchase by the Fund. ** 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 (15,500) $565 *** The cost and unrealized appreciation (depreciation) of investments as of June 30, 2005, as computed for federal income tax purposes, were as follows: (in Thousands) Aggregate cost $ 1,310,591 ============= Gross unrealized appreciation $ 100,930 Gross unrealized depreciation (2,040) ------------- Net unrealized appreciaton $ 98,890 ============= (a) Escrowed to maturity. (b) FHA Insured. (c) AMBAC Insured. (d) GNMA Collateralized. (e) FGIC Insured. (f) MBIA Insured. (g) Security may have a maturity of more than one year at time of issuance, 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. (h) FSA Insured. (i) FNMA/GNMA Collateralized. (j) Prerefunded. (k) XL Capital Insured. (l) FHLMC Collateralized. (m) Radian Insured. (n) The rate disclosed is that currently in effect. This rate changes periodically and inversely based upon prevailing market rates. (o) ACA Insured. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Statements of Assets and Liabilities
Short Term Insured National As of June 30, 2005 Portfolio Portfolio Portfolio Assets Investments in unaffiliated securities, at value* $ 459,597,444 $ 1,044,885,076 $ 1,407,558,332 Investments in affiliated securities, at value** 3,784 11,016,723 1,923,245 Cash 110,600 62,674 35,616 Receivables: Interest 6,030,281 14,092,105 23,583,253 Securities sold 6,019,504 18,746,120 27,522,658 Capital shares sold 351,504 175,549 1,240,221 Dividends*** -- 88,196 123 Prepaid expenses and other assets 48,511 775,649 609,200 --------------- --------------- --------------- Total assets 472,161,628 1,089,842,092 1,462,472,648 --------------- --------------- --------------- Liabilities Unrealized depreciation on forward interest rate swaps -- 296,964 -- Payables: Securities purchased 10,552,464 41,462,917 15,184,605 Dividends to shareholders 229,330 798,925 1,482,928 Capital shares redeemed 1,614,169 1,332,709 2,020,387 Distributor 51,027 136,145 230,894 Investment adviser 106,086 258,508 468,320 Other affiliates 32,189 70,548 150,402 Accrued expenses and other liabilities 55,024 98,483 133,728 --------------- --------------- --------------- Total liabilities 12,640,289 44,455,199 19,671,264 --------------- --------------- --------------- Net Assets Net assets $ 459,521,339 $ 1,045,386,893 $ 1,442,801,384 =============== =============== =============== Net Assets Consist of Undistributed investment income--net $ 483,742 $ 1,184,748 $ 872,793 Accumulated realized capital gains (losses)--net (5,081,508) 199,142 (66,280,009) Unrealized appreciation (depreciation)--net (364,193) 64,808,824 98,704,918 --------------- --------------- --------------- Total accumulated earnings (losses)--net (4,961,959) 66,192,714 33,297,702 --------------- --------------- --------------- Class A Common Stock, $.10 par value++ 1,411,312 2,278,290 2,327,413 Class B Common Stock, $.10 par value++++ 385,839 1,142,658 1,666,135 Class C Common Stock, $.10 par value++++++ 933,543 808,804 1,011,939 Class I Common Stock, $.10 par value++++++++ 1,869,859 8,838,183 8,527,853 Paid-in capital in excess of par 459,882,745 966,126,244 1,395,970,342 --------------- --------------- --------------- Net Assets $ 459,521,339 $ 1,045,386,893 $ 1,442,801,384 =============== =============== ===============
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Statements of Assets and Liabilities (concluded)
Short Term Insured National As of June 30, 2005 Portfolio Portfolio Portfolio Net Asset Value Class A: Net assets $ 141,172,038 $ 182,215,679 $ 248,230,825 =============== =============== =============== Shares outstanding 14,113,120 22,782,900 23,274,126 =============== =============== =============== Net asset value and redemption price per share $ 10.00 $ 8.00 $ 10.67 =============== =============== =============== Class B: Net assets $ 38,564,865 $ 91,355,062 $ 177,552,509 =============== =============== =============== Shares outstanding 3,858,391 11,426,576 16,661,350 =============== =============== =============== Net asset value and redemption price per share $ 10.00 $ 7.99 $ 10.66 =============== =============== =============== Class C: Net assets $ 92,907,491 $ 64,682,117 $ 107,893,027 =============== =============== =============== Shares outstanding 9,335,430 8,088,036 10,119,385 =============== =============== =============== Net asset value and redemption price per share $ 9.95 $ 8.00 $ 10.66 =============== =============== =============== Class I: Net assets $ 186,876,945 $ 707,134,035 $ 909,125,023 =============== =============== =============== Shares outstanding 18,698,587 88,381,830 85,278,526 =============== =============== =============== Net asset value and redemption price per share $ 9.99 $ 8.00 $ 10.66 =============== =============== =============== * Identified cost $ 459,961,637 $ 979,779,288 $ 1,308,853,414 =============== =============== =============== ** Identified cost for affiliated securities $ 3,784 $ 11,016,723 $ 1,923,245 =============== =============== =============== *** Dividends from affiliates -- $ 26 $ 123 =============== =============== =============== ++ 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. JUNE 30, 2005 Statements of Operations
Short Term Insured National For the Year Ended June 30, 2005 Portfolio Portfolio Portfolio Investment Income Interest $ 12,951,469 $ 52,387,620 $ 79,360,121 Dividends* 434,603 1,640,437 565,221 Other -- 88,042 -- --------------- --------------- --------------- Total income 13,386,072 54,116,099 79,925,342 --------------- --------------- --------------- Expenses Investment advisory fees 1,948,338 3,912,421 6,798,398 Account maintenance and distribution fees--Class B 179,363 773,990 1,478,014 Account maintenance and distribution fees--Class C 423,459 508,491 731,864 Account maintenance fees--Class A 194,346 453,808 562,010 Accounting services 194,880 321,112 411,321 Transfer agent fees--Class I 65,010 267,309 595,334 Transfer agent fees--Class A 58,960 66,825 146,727 Transfer agent fees--Class B 19,542 46,163 145,788 Registration fees 66,513 56,253 68,715 Professional fees 44,921 55,214 59,661 Custodian fees 38,003 57,606 80,178 Printing and shareholder reports 35,757 58,521 77,539 Transfer agent fees--Class C 44,086 28,339 67,966 Pricing services 16,679 21,975 54,188 Directors' fees and expenses 13,118 20,500 26,383 Other 44,023 55,241 -- --------------- --------------- --------------- Total expenses before waiver 3,386,998 6,703,768 11,304,086 Waiver of expenses (49,706) (48,267) (69,530) --------------- --------------- --------------- Total expenses after waiver 3,337,292 6,655,501 11,234,556 --------------- --------------- --------------- Investment income--net 10,048,780 47,460,598 68,690,786 --------------- --------------- --------------- Realized & Unrealized Gain (Loss)--Net Realized gain (loss) on: Investments--net (3,447,006) 16,217,910 11,191,578 Futures contracts and forward interest rate swaps--net -- (162,646) -- --------------- --------------- --------------- Total realized and unrealized gain (loss)--net (3,447,006) 16,055,264 11,191,578 --------------- --------------- --------------- Change in unrealized appreciation/depreciation on: Investments--net 505,798 25,702,681 39,336,379 Forward interest rate swaps--net -- (15,099) -- --------------- --------------- --------------- Total unrealized appreciation--net 505,798 25,687,582 39,336,379 --------------- --------------- --------------- Total realized and unrealized gain (loss)--net (2,941,208) 41,742,846 50,527,957 --------------- --------------- --------------- Net Increase in Net Assets Resulting from Operations $ 7,107,572 $ 89,203,444 $ 119,218,743 =============== =============== =============== * Dividends from affiliates $ 434,603 $ 347,170 $ 565,221 =============== =============== =============== See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Statements of Changes in Net Assets Short Term Portfolio
For the Year Ended June 30, Increase (Decrease) in Net Assets: 2005 2004 Operations Investment income--net $ 10,048,780 $ 12,246,871 Realized loss--net (3,447,006) (1,056,145) Change in unrealized depreciation--net 505,798 (8,070,447) --------------- --------------- Net increase in net assets resulting from operations 7,107,572 3,120,279 --------------- --------------- Dividends to Shareholders Investment income--net: Class A (3,411,719) (4,538,777) Class B (770,673) (1,050,664) Class C (1,822,838) (2,160,826) Class I (4,042,560) (4,488,624) --------------- --------------- Net decrease in net assets resulting from dividends to shareholders (10,047,790) (12,238,891) --------------- --------------- Capital Share Transactions Net decrease in net assets derived from capital share transactions (233,513,320) (14,166,003) --------------- --------------- Net Assets Total decrease in net assets (236,453,538) (23,284,615) Beginning of year 695,974,877 719,259,492 --------------- --------------- End of year* $ 459,521,339 $ 695,974,877 =============== =============== * Undistributed investment income--net $ 483,742 $ 482,491 =============== =============== See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Statements of Changes in Net Assets (continued) Insured Portfolio
For the Year Ended June 30, Increase (Decrease) in Net Assets: 2005 2004 Operations Investment income--net $ 47,460,598 $ 57,675,729 Realized gain--net 16,055,264 5,207,367 Change in unrealized appreciation--net 25,687,582 (62,104,593) --------------- --------------- Net increase in net assets resulting from operations 89,203,444 778,503 --------------- --------------- Dividends to Shareholders Investment income--net: Class A (7,853,231) (8,990,802) Class B (3,953,506) (5,785,538) Class C (2,393,785) (2,766,852) Class I (33,236,480) (40,101,428) --------------- --------------- Net decrease in net assets resulting from dividends to shareholders (47,437,002) (57,644,620) --------------- --------------- Capital Share Transactions Net decrease in net assets derived from capital share transactions (86,014,174) (123,327,160) --------------- --------------- Net Assets Total decrease in net assets (44,247,732) (180,193,277) Beginning of year 1,089,634,625 1,269,827,902 --------------- --------------- End of year* $ 1,045,386,893 $ 1,089,634,625 =============== =============== * Undistributed investment income--net $ 1,184,748 $ 1,161,152 =============== =============== See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Statements of Changes in Net Assets (concluded) National Portfolio
For the Year Ended June 30, Increase (Decrease) in Net Assets: 2005 2004 Operations Investment income--net $ 68,690,786 $ 61,264,642 Realized gain (loss)--net 11,191,578 (1,437,730) Change in unrealized appreciation--net 39,336,379 (32,654,407) --------------- --------------- Net increase in net assets resulting from operations 119,218,743 27,172,505 --------------- --------------- Dividends to Shareholders Investment income--net: Class A (10,680,106) (10,513,482) Class B (8,386,163) (12,045,994) Class C (3,829,101) (3,332,550) Class I (45,655,416) (35,485,746) --------------- --------------- Net decrease in net assets resulting from dividends to shareholders (68,550,786) (61,377,772) --------------- --------------- Capital Share Transactions Net increase (decrease) in net assets derived from capital share transactions (15,324,652) 217,980,200 --------------- --------------- Net Assets Total increase in net assets 35,343,305 183,774,933 Beginning of year 1,407,458,079 1,223,683,146 --------------- --------------- End of year* $ 1,442,801,384 $ 1,407,458,079 =============== =============== * Undistributed investment income--net $ 872,793 $ 806,143 =============== =============== See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Financial Highlights Short Term Portfolio
Class A The following per share data and ratios have been derived For the Year Ended June 30, from information provided in the financial statements. 2005 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of year $ 10.06 $ 10.18 $ 10.14 $ 10.06 $ 9.86 ---------- ---------- ---------- ---------- ---------- Investment income--net .18++ .17++ .24++ .32 .38 Realized and unrealized gain (loss)--net (.06) (.12) .04 .08 .20 ---------- ---------- ---------- ---------- ---------- Total from investment operations .12 .05 .28 .40 .58 ---------- ---------- ---------- ---------- ---------- Less dividends from investment income--net (.18) (.17) (.24) (.32) (.38) ---------- ---------- ---------- ---------- ---------- Net asset value, end of year $ 10.00 $ 10.06 $ 10.18 $ 10.14 $ 10.06 ========== ========== ========== ========== ========== Total Investment Return* Based on net asset value per share 1.20% .50% 2.77% 3.99% 5.96% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver .53% .52% .52% .56% .54% ========== ========== ========== ========== ========== Expenses .54% .53% .53% .56% .54% ========== ========== ========== ========== ========== Investment income--net 1.76% 1.68% 2.31% 3.13% 3.80% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of year (in thousands) $ 141,172 $ 244,741 $ 248,454 $ 140,744 $ 42,619 ========== ========== ========== ========== ========== Portfolio turnover 87.42% 69.08% 44.61% 74.74% 51.94% ========== ========== ========== ========== ========== * Total investment returns exclude the effects of sales charges. ++ Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Financial Highlights (continued) Short Term Portfolio
Class B The following per share data and ratios have been derived For the Year Ended June 30, from information provided in the financial statements. 2005 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of year $ 10.05 $ 10.17 $ 10.13 $ 10.06 $ 9.86 ---------- ---------- ---------- ---------- ---------- Investment income--net .15++ .14++ .21++ .29 .35 Realized and unrealized gain (loss)--net (.05) (.12) .04 .07 .20 ---------- ---------- ---------- ---------- ---------- Total from investment operations .10 .02 .25 .36 .55 ---------- ---------- ---------- ---------- ---------- Less dividends from investment income--net (.15) (.14) (.21) (.29) (.35) ---------- ---------- ---------- ---------- ---------- Net asset value, end of year $ 10.00 $ 10.05 $ 10.17 $ 10.13 $ 10.06 ========== ========== ========== ========== ========== Total Investment Return* Based on net asset value per share 1.04% .24% 2.51% 3.62% 5.69% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver .79% .77% .78% .82% .80% ========== ========== ========== ========== ========== Expenses .80% .78% .79% .82% .80% ========== ========== ========== ========== ========== Investment income--net 1.50% 1.43% 2.10% 2.87% 3.55% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of year (in thousands) $ 38,565 $ 63,135 $ 83,886 $ 81,967 $ 31,480 ========== ========== ========== ========== ========== Portfolio turnover 87.42% 69.08% 44.61% 74.74% 51.94% ========== ========== ========== ========== ========== * Total investment returns exclude the effects of sales charges. ++ Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Financial Highlights (continued) Short Term Portfolio
Class C The following per share data and ratios have been derived For the Year Ended June 30, from information provided in the financial statements. 2005 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of year $ 10.01 $ 10.13 $ 10.09 $ 10.01 $ 9.82 ---------- ---------- ---------- ---------- ---------- Investment income--net .15++ .14++ .19++ .29 .35 Realized and unrealized gain (loss)--net (.06) (.12) .06 .08 .19 ---------- ---------- ---------- ---------- ---------- Total from investment operations .09 .02 .25 .37 .54 ---------- ---------- ---------- ---------- ---------- Less dividends from investment income--net (.15) (.14) (.21) (.29) (.35) ---------- ---------- ---------- ---------- ---------- Net asset value, end of year $ 9.95 $ 10.01 $ 10.13 $ 10.09 $ 10.01 ========== ========== ========== ========== ========== Total Investment Return* Based on net asset value per share .94% .23% 2.52% 3.72% 5.59% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver .79% .77% .78% .82% .81% ========== ========== ========== ========== ========== Expenses .80% .78% .79% .82% .81% ========== ========== ========== ========== ========== Investment income--net 1.51% 1.42% 1.92% 2.91% 3.53% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of year (in thousands) $ 92,907 $ 144,656 $ 135,782 $ 1,596 $ 602 ========== ========== ========== ========== ========== Portfolio turnover 87.42% 69.08% 44.61% 74.74% 51.94% ========== ========== ========== ========== ========== * Total investment returns exclude the effects of sales charges. ++ Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Financial Highlights (continued) Short Term Portfolio
Class I The following per share data and ratios have been derived For the Year Ended June 30, from information provided in the financial statements. 2005 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of year $ 10.05 $ 10.17 $ 10.13 $ 10.05 $ 9.85 ---------- ---------- ---------- ---------- ---------- Investment income--net .19++ .18++ .27++ .34 .39 Realized and unrealized gain (loss)--net (.06) (.12) .02 .08 .20 ---------- ---------- ---------- ---------- ---------- Total from investment operations .13 .06 .29 .42 .59 ---------- ---------- ---------- ---------- ---------- Less dividends from investment income--net (.19) (.18) (.25) (.34) (.39) ---------- ---------- ---------- ---------- ---------- Net asset value, end of year $ 9.99 $ 10.05 $ 10.17 $ 10.13 $ 10.05 ========== ========== ========== ========== ========== Total Investment Return* Based on net asset value per share 1.30% .59% 2.87% 4.10% 6.07% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver .43% .42% .42% .46% .44% ========== ========== ========== ========== ========== Expenses .44% .43% .43% .46% .44% ========== ========== ========== ========== ========== Investment income--net 1.88% 1.78% 2.44% 3.30% 3.91% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of year (in thousands) $ 186,877 $ 243,443 $ 251,137 $ 204,936 $ 191,481 ========== ========== ========== ========== ========== Portfolio turnover 87.42% 69.08% 44.61% 74.74% 51.94% ========== ========== ========== ========== ========== * Total investment returns exclude the effects of sales charges. ++ Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Financial Highlights (continued) Insured Portfolio
Class A The following per share data and ratios have been derived For the Year Ended June 30, from information provided in the financial statements. 2005 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of year $ 7.70 $ 8.07 $ 7.79 $ 7.69 $ 7.36 ---------- ---------- ---------- ---------- ---------- Investment income--net .34++++ .38++++ .39++++ .39 .37 Realized and unrealized gain (loss)--net .30 (.37) .28 .10 .33 ---------- ---------- ---------- ---------- ---------- Total from investment operations .64 .01 .67 .49 .70 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.34) (.38) (.39) (.39) (.37) Realized gain--net -- -- -- --++ -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.34) (.38) (.39) (.39) (.37) ---------- ---------- ---------- ---------- ---------- Net asset value, end of year $ 8.00 $ 7.70 $ 8.07 $ 7.79 $ 7.69 ========== ========== ========== ========== ========== Total Investment Return* Based on net asset value per share 8.47% .10% 8.77% 6.63% 9.74% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver .71% .71% .71% .72% .70% ========== ========== ========== ========== ========== Expenses .71% .71% .71% .72% .70% ========== ========== ========== ========== ========== Investment income--net 4.33% 4.79% 4.88% 5.10% 4.94% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of year (in thousands) $ 182,216 $ 183,007 $ 187,805 $ 161,110 $ 145,688 ========== ========== ========== ========== ========== Portfolio turnover 55.00% 49.27% 38.17% 32.78% 64.39% ========== ========== ========== ========== ========== * Total investment returns exclude the effects of sales charges. ++ Amount is less than $(.01) per share. ++++ Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Financial Highlights (continued) Insured Portfolio
Class B The following per share data and ratios have been derived For the Year Ended June 30, from information provided in the financial statements. 2005 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of year $ 7.69 $ 8.07 $ 7.79 $ 7.68 $ 7.36 ---------- ---------- ---------- ---------- ---------- Investment income--net .30++++ .34++++ .35++++ .36 .34 Realized and unrealized gain (loss)--net .30 (.38) .28 .11 .32 ---------- ---------- ---------- ---------- ---------- Total from investment operations .60 (.04) .63 .47 .66 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.30) (.34) (.35) (.36) (.34) Realized gain--net -- -- -- --++ -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.30) (.34) (.35) (.36) (.34) ---------- ---------- ---------- ---------- ---------- Net asset value, end of year $ 7.99 $ 7.69 $ 8.07 $ 7.79 $ 7.68 ========== ========== ========== ========== ========== Total Investment Return* Based on net asset value per share 7.93% (.53%) 8.21% 6.23% 9.04% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver 1.21% 1.21% 1.22% 1.23% 1.21% ========== ========== ========== ========== ========== Expenses 1.22% 1.22% 1.22% 1.23% 1.21% ========== ========== ========== ========== ========== Investment income--net 3.83% 4.29% 4.38% 4.58% 4.43% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of year (in thousands) $ 91,355 $ 111,524 $ 160,177 $ 182,241 $ 223,710 ========== ========== ========== ========== ========== Portfolio turnover 55.00% 49.27% 38.17% 32.78% 64.39% ========== ========== ========== ========== ========== * Total investment returns exclude the effects of sales charges. ++ Amount is less than $(.01) per share. ++++ Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Financial Highlights (continued) Insured Portfolio
Class C The following per share data and ratios have been derived For the Year Ended June 30, from information provided in the financial statements. 2005 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of year $ 7.69 $ 8.07 $ 7.79 $ 7.68 $ 7.36 ---------- ---------- ---------- ---------- ---------- Investment income--net .30++++ .33++++ .34++++ .35 .33 Realized and unrealized gain (loss)--net .31 (.38) .28 .11 .32 ---------- ---------- ---------- ---------- ---------- Total from investment operations .61 (.05) .62 .46 .65 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.30) (.33) (.34) (.35) (.33) Realized gain--net -- -- -- --++ -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.30) (.33) (.34) (.35) (.33) ---------- ---------- ---------- ---------- ---------- Net asset value, end of year $ 8.00 $ 7.69 $ 8.07 $ 7.79 $ 7.68 ========== ========== ========== ========== ========== Total Investment Return* Based on net asset value per share 8.01% (.58%) 8.16% 6.18% 8.99% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver 1.26% 1.26% 1.27% 1.28% 1.26% ========== ========== ========== ========== ========== Expenses 1.27% 1.27% 1.27% 1.28% 1.26% ========== ========== ========== ========== ========== Investment income--net 3.77% 4.23% 4.31% 4.56% 4.38% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of year (in thousands) $ 64,682 $ 61,794 $ 66,089 $ 34,541 $ 14,392 ========== ========== ========== ========== ========== Portfolio turnover 55.00% 49.27% 38.17% 32.78% 64.39% ========== ========== ========== ========== ========== * Total investment returns exclude the effects of sales charges. ++ Amount is less than $(.01) per share. ++++ Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Financial Highlights (continued) Insured Portfolio
Class I The following per share data and ratios have been derived For the Year Ended June 30, from information provided in the financial statements. 2005 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of year $ 7.70 $ 8.07 $ 7.80 $ 7.69 $ 7.36 ---------- ---------- ---------- ---------- ---------- Investment income--net .36++++ .40++++ .41++++ .41 .39 Realized and unrealized gain (loss)--net .30 (.37) .27 .11 .33 ---------- ---------- ---------- ---------- ---------- Total from investment operations .66 .03 .68 .52 .72 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.36) (.40) (.41) (.41) (.39) Realized gain--net -- -- -- --++ -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.36) (.40) (.41) (.41) (.39) ---------- ---------- ---------- ---------- ---------- Net asset value, end of year $ 8.00 $ 7.70 $ 8.07 $ 7.80 $ 7.69 ========== ========== ========== ========== ========== Total Investment Return* Based on net asset value per share 8.74% .35% 8.88% 7.03% 10.01% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver .46% .46% .46% .47% .45% ========== ========== ========== ========== ========== Expenses .46% .46% .46% .47% .45% ========== ========== ========== ========== ========== Investment income--net 4.58% 5.04% 5.13% 5.35% 5.19% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of year (in thousands) $ 707,134 $ 733,310 $ 855,757 $ 878,018 $ 920,597 ========== ========== ========== ========== ========== Portfolio turnover 55.00% 49.27% 38.17% 32.78% 64.39% ========== ========== ========== ========== ========== * Total investment returns exclude the effects of sales charges. ++ Amount is less than $(.01) per share. ++++ Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Financial Highlights (continued) National Portfolio
Class A The following per share data and ratios have been derived For the Year Ended June 30, from information provided in the financial statements. 2005 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of year $ 10.29 $ 10.54 $ 10.27 $ 10.15 $ 9.71 ---------- ---------- ---------- ---------- ---------- Investment income--net .50+++ .52+++ .53+++ .53 .52 Realized and unrealized gain (loss)--net .38 (.25) .27 .12 .44 ---------- ---------- ---------- ---------- ---------- Total from investment operations .88 .27 .80 .65 .96 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.50) (.52) (.53) (.53) (.52) Realized gain--net -- -- -- --++ -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.50) (.52) (.53) (.53) (.52) ---------- ---------- ---------- ---------- ---------- Net asset value, end of year $ 10.67 $ 10.29 $ 10.54 $ 10.27 $ 10.15 ========== ========== ========== ========== ========== Total Investment Return* Based on net asset value per share 8.73% 2.62% 7.98% 6.72% 10.04% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver .84% .85% .84% .87% .83% ========== ========== ========== ========== ========== Expenses .85% .85% .84% .87% .83% ========== ========== ========== ========== ========== Investment income--net 4.76% 4.97% 5.10% 5.30% 5.16% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of year (in thousands) $ 248,231 $ 207,376 $ 200,108 $ 137,225 $ 124,082 ========== ========== ========== ========== ========== Portfolio turnover 35.28% 22.46% 37.75% 35.75% 80.88% ========== ========== ========== ========== ========== * Total investment returns exclude the effects of sales charges. ++ Amount is less than $(.01) per share. +++ Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Financial Highlights (continued) National Portfolio
Class B The following per share data and ratios have been derived For the Year Ended June 30, from information provided in the financial statements. 2005 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of year $ 10.28 $ 10.53 $ 10.26 $ 10.14 $ 9.70 ---------- ---------- ---------- ---------- ---------- Investment income--net .45+++ .47+++ .48+++ .53 .46 Realized and unrealized gain (loss)--net .38 (.26) .27 .12 .44 ---------- ---------- ---------- ---------- ---------- Total from investment operations .83 .21 .75 .65 .90 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.45) (.46) (.48) (.53) (.46) Realized gain--net -- -- -- --++ -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.45) (.46) (.48) (.53) (.46) ---------- ---------- ---------- ---------- ---------- Net asset value, end of year $ 10.66 $ 10.28 $ 10.53 $ 10.26 $ 10.14 ========== ========== ========== ========== ========== Total Investment Return* Based on net asset value per share 8.18% 2.10% 7.43% 6.18% 9.49% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver 1.35% 1.35% 1.34% 1.38% 1.34% ========== ========== ========== ========== ========== Expenses 1.36% 1.36% 1.35% 1.38% 1.34% ========== ========== ========== ========== ========== Investment income--net 4.27% 4.47% 4.59% 4.80% 4.67% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of year (in thousands) $ 177,553 $ 217,814 $ 321,477 $ 295,827 $ 227,592 ========== ========== ========== ========== ========== Portfolio turnover 35.28% 22.46% 37.75% 35.75% 80.88% ========== ========== ========== ========== ========== * Total investment returns exclude the effects of sales charges. ++ Amount is less than $(.01) per share. +++ Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Financial Highlights (continued) National Portfolio
Class C The following per share data and ratios have been derived For the Year Ended June 30, from information provided in the financial statements. 2005 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of year $ 10.29 $ 10.54 $ 10.26 $ 10.14 $ 9.71 ---------- ---------- ---------- ---------- ---------- Investment income--net .44+++ .46+++ .47+++ .53 .46 Realized and unrealized gain (loss)--net .37 (.25) .28 .12 .43 ---------- ---------- ---------- ---------- ---------- Total from investment operations .81 .21 .75 .65 .89 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.44) (.46) (.47) (.53) (.46) Realized gain--net -- -- -- --++ -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.44) (.46) (.47) (.53) (.46) ---------- ---------- ---------- ---------- ---------- Net asset value, end of year $ 10.66 $ 10.29 $ 10.54 $ 10.26 $ 10.14 ========== ========== ========== ========== ========== Total Investment Return* Based on net asset value per share 8.02% 2.05% 7.48% 6.13% 9.33% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver 1.40% 1.40% 1.39% 1.43% 1.39% ========== ========== ========== ========== ========== Expenses 1.41% 1.41% 1.40% 1.43% 1.39% ========== ========== ========== ========== ========== Investment income--net 4.20% 4.42% 4.54% 4.76% 4.61% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of year (in thousands) $ 107,893 $ 74,849 $ 77,906 $ 52,822 $ 31,880 ========== ========== ========== ========== ========== Portfolio turnover 35.28% 22.46% 37.75% 35.75% 80.88% ========== ========== ========== ========== ========== * Total investment returns exclude the effects of sales charges. ++ Amount is less than $(.01) per share. +++ Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Financial Highlights (concluded) National Portfolio
Class I The following per share data and ratios have been derived For the Year Ended June 30, from information provided in the financial statements. 2005 2004 2003 2002 2001 Per Share Operating Performance Net asset value, beginning of year $ 10.29 $ 10.54 $ 10.26 $ 10.14 $ 9.70 ---------- ---------- ---------- ---------- ---------- Investment income--net .53+++ .55+++ .56+++ .62 .54 Realized and unrealized gain (loss)--net .37 (.25) .28 .12 .44 ---------- ---------- ---------- ---------- ---------- Total from investment operations .90 .30 .84 .74 .98 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.53) (.55) (.56) (.62) (.54) Realized gain--net -- -- -- --++ -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.53) (.55) (.56) (.62) (.54) ---------- ---------- ---------- ---------- ---------- Net asset value, end of year $ 10.66 $ 10.29 $ 10.54 $ 10.26 $ 10.14 ========== ========== ========== ========== ========== Total Investment Return* Based on net asset value per share 8.89% 2.88% 8.34% 6.98% 10.32% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver .59% .60% .59% .62% .58% ========== ========== ========== ========== ========== Expenses .60% .60% .59% .62% .58% ========== ========== ========== ========== ========== Investment income--net 5.02% 5.23% 5.35% 5.55% 5.42% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of year (in thousands) $ 909,125 $ 907,419 $ 624,192 $ 626,935 $ 653,685 ========== ========== ========== ========== ========== Portfolio turnover 35.28% 22.46% 37.75% 35.75% 80.88% ========== ========== ========== ========== ========== * Total investment returns exclude the effects of sales charges. ++ Amount is less than $(.01) per share. +++ Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Notes to Financial Statements 1. Significant Accounting Policies: Merrill Lynch Municipal Bond Fund, Inc. ("the Fund") (consisting of Merrill Lynch Short Term Portfolio (formerly Merrill Lynch Limited Portfolio), Merrill Lynch Insured Portfolio and Merrill Lynch National Portfolio) is registered under the Investment Company Act of 1940, as amended, as a diversified, open- end management investment company. The Fund's financial statements are prepared in conformity with U.S. generally accepted accounting principles, which may require the use of management accruals and estimates. Actual results may differ from these estimates. 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 that 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 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--Municipal bonds are traded primarily in the over- the-counter ("OTC") markets and are valued at the last available bid price in the OTC 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 OTC 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. Losses may arise due to changes in the value of the contract or if the counterparty does not perform under the contract. * Financial futures contracts--The Fund may purchase or sell financial futures contracts and options on such futures contracts. Futures contracts are contracts for delayed delivery of securities at a specific future date and at a specific price or yield. Upon entering into a contract, the Portfolios deposit and maintain as collateral such initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Portfolios agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Portfolios as unrealized gains or losses. When the contract is closed, the Portfolios record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. * Forward interest rate swaps--The Fund 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. MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Notes to Financial Statements (continued) (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 expense 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. (h) Insurance--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. (i) Reclassification--U.S. generally accepted accounting principles require that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. Accordingly, during the current year, with respect to the Short Term Portfolio, $261 has been reclassified between paid-in capital in excess of par and undistributed net investment income as a result of a permanent difference attributable to non- deductible expenses. In addition, with respect to the National Portfolio, $71,687 has been reclassified between undistributed net investment income and paid-in capital in excess of par and $1,663 has been reclassified between undistributed net investment income and accumulated net realized capital gains as a result of permanent differences attributable to the payment of reorganization expenses and amortization methods for premiums and discounts on fixed income securities. These reclassifications have no effect on net assets or net asset values per share. 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 Short Net Assets of the Three Term 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 waive 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 year ended June 30, 2005, FAM waived Short Term Portfolio, Insured Portfolio and National Portfolio in the amounts of $49,706, $48,267 and $69,530, respectively. MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 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 Short Term .10% .15% .15% Insured .25% .25% .25% National .25% .25% .25% Distribution Fees Portfolio Class A Class B Class C Short Term -- .20% .20% Insured -- .50% .55% National -- .50% .55% Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), an affiliate of FAM, 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 year ended June 30, 2005, 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 Short Term $ 1,379 $ 221 $ 13,706 $ 1,436 Insured $ 7,601 $ 7,751 $ 72,966 $ 44,421 National $ 21,441 $ 18,289 $ 178,552 $ 77,861 For the year ended June 30, 2005, MLPF&S received contingent deferred sales charges of $314,970 relating to transactions in Class B Shares, amounting to $53,013, $89,195 and $172,762 in the Short Term, Insured and National Portfolios, respectively, and $47,556 relating to transactions in Class C Shares, amounting to $24,829, $3,140 and $19,587 in the Short Term, Insured and National Portfolios, respectively. Furthermore, MLPF&S received deferred sales charges of $26 relating to transactions subject to front-end sales charge waivers in Class A Shares for the Short Term Portfolio. In addition, MLPF&S received $1,000 in commissions on the execution of portfolio transactions in the Insured Portfolio for the year ended June 30, 2005. For the year ended June 30, 2005, the Fund reimbursed FAM $14,851, $24,126 and $30,232 in the Short Term, 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 year ended June 30, 2005 were as follows: Purchases Sales Short Term Portfolio $422,756,347 $474,079,321 Insured Portfolio $581,147,883 $659,868,484 National Portfolio $497,476,736 $483,540,681 4. Capital Share Transactions: Net increase (decrease) in net assets derived from capital share transactions for the years ended June 30, 2005 and June 30, 2004 were $(233,513,320) and $(14,166,003), respectively, for the Short Term Portfolio; $(86,014,174) and $(123,327,160), respectively, for the Insured Portfolio; and $(15,324,652) and $217,980,200, respectively, for the National Portfolio. Transactions in capital shares for each class were as follows: Short Term Portfolio Class A Shares for the Year Dollar Ended June 30, 2005 Shares Amount Shares sold 3,374,057 $ 33,962,460 Automatic conversion of shares 146,594 1,473,218 Shares issued to shareholders in reinvestment of dividends 184,448 1,850,964 --------------- --------------- Total issued 3,705,099 37,286,642 Shares redeemed (13,930,419) (139,907,342) --------------- --------------- Net decrease (10,225,320) $ (102,620,700) =============== =============== MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Notes to Financial Statements (continued) Short Term 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) =============== =============== Short Term Portfolio Class B Shares for the Year Dollar Ended June 30, 2005 Shares Amount Shares sold 269,378 $ 2,707,532 Shares issued to shareholders in reinvestment of dividends 48,450 485,847 --------------- --------------- Total issued 317,828 3,193,379 --------------- --------------- Automatic conversion of shares (146,687) (1,473,218) Shares redeemed (2,595,792) (26,034,176) --------------- --------------- Total redeemed (2,742,479) (27,507,394) --------------- --------------- Net decrease (2,424,651) $ (24,314,015) =============== =============== Short Term 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) =============== =============== Short Term Portfolio Class C Shares for the Year Dollar Ended June 30, 2005 Shares Amount Shares sold 1,680,127 $ 16,793,553 Shares issued to shareholders in reinvestment of dividends 117,775 1,175,754 --------------- --------------- Total issued 1,797,902 17,969,307 Shares redeemed (6,920,737) (69,093,002) --------------- --------------- Net decrease (5,122,835) $ (51,123,695) =============== =============== Short Term 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 =============== =============== Short Term Portfolio Class I Shares for the Year Dollar Ended June 30, 2005 Shares Amount Shares sold 2,389,803 $ 23,968,954 Shares issued to shareholders in reinvestment of dividends 246,614 2,472,327 --------------- --------------- Total issued 2,636,417 26,441,281 Shares redeemed (8,166,900) (81,896,191) --------------- --------------- Net decrease (5,530,483) $ (55,454,910) =============== =============== Short Term 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 Year Dollar Ended June 30, 2005 Shares Amount Shares sold 1,066,208 $ 8,437,549 Automatic conversion of shares 1,094,647 8,649,488 Shares issued to shareholders in reinvestment of dividends 495,949 3,921,138 --------------- --------------- Total issued 2,656,804 21,008,175 Shares redeemed (3,656,199) (28,860,424) --------------- --------------- Net decrease (999,395) $ (7,852,249) =============== =============== MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Notes to Financial Statements (continued) 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 Year Dollar Ended June 30, 2005 Shares Amount Shares sold 283,542 $ 2,237,673 Shares issued to shareholders in reinvestment of dividends 218,648 1,727,424 --------------- --------------- Total issued 502,190 3,965,097 --------------- --------------- Automatic conversion of shares (1,094,676) (8,649,488) Shares redeemed (2,479,128) (19,581,853) --------------- --------------- Total redeemed (3,573,804) (28,231,341) --------------- --------------- Net decrease (3,071,614) $ (24,266,244) =============== =============== 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 Year Dollar Ended June 30, 2005 Shares Amount Shares sold 1,281,216 $ 10,135,537 Shares issued to shareholders in reinvestment of dividends 162,591 1,285,374 --------------- --------------- Total issued 1,443,807 11,420,911 Shares redeemed (1,386,798) (10,955,958) --------------- --------------- Net increase 57,009 $ 464,953 =============== =============== 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 Year Dollar Ended June 30, 2005 Shares Amount Shares sold 1,160,854 $ 9,184,822 Shares issued to shareholders in reinvestment of dividends 1,785,849 14,124,090 --------------- --------------- Total issued 2,946,703 23,308,912 Shares redeemed (9,826,814) (77,669,546) --------------- --------------- Net decrease (6,880,111) $ (54,360,634) =============== =============== 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 Year Dollar Ended June 30, 2005 Shares Amount Shares sold 5,528,841 $ 58,067,896 Automatic conversion of shares 1,765,411 18,581,047 Shares issued to shareholders in reinvestment of dividends 477,278 5,031,328 --------------- --------------- Total issued 7,771,530 81,680,271 Shares redeemed (4,647,158) (48,641,136) --------------- --------------- Net increase 3,124,372 $ 33,039,135 =============== =============== MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Notes to Financial Statements (continued) 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 Year Dollar Ended June 30, 2005 Shares Amount Shares sold 628,757 $ 6,605,915 Shares issued to shareholders in reinvestment of dividends 330,341 3,477,776 --------------- --------------- Total issued 959,098 10,083,691 --------------- --------------- Automatic conversion of shares (1,766,807) (18,581,047) Shares redeemed (3,712,735) (39,022,894) --------------- --------------- Total redeemed (5,479,542) (57,603,941) --------------- --------------- Net decrease (4,520,444) $ (47,520,250) =============== =============== 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 Year Dollar Ended June 30, 2005 Shares Amount Shares sold 4,140,886 $ 43,609,428 Shares issued to shareholders in reinvestment of dividends 217,764 2,295,644 --------------- --------------- Total issued 4,358,650 45,905,072 Shares redeemed (1,514,374) (15,959,537) --------------- --------------- Net increase 2,844,276 $ 29,945,535 =============== =============== 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 Year Dollar Ended June 30, 2005 Shares Amount Shares sold 2,524,187 $ 26,563,911 Shares issued to shareholders in reinvestment of dividends 2,816,177 29,669,505 --------------- --------------- Total issued 5,340,364 56,233,416 Shares redeemed (8,272,425) (87,022,488) --------------- --------------- Net decrease (2,932,061) $ (30,789,072) =============== =============== 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, which expires November 2005. 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 year ended June 30, 2005. MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Notes to Financial Statements (concluded) 6. Distributions to Shareholders: The tax character of distributions paid by the Short Term Portfolio during the fiscal years ended June 30, 2005 and June 30, 2004 was as follows: 6/30/2005 6/30/2004 Distributions paid from: Tax-exempt income $ 10,047,790 $ 12,238,891 --------------- --------------- Total distributions $ 10,047,790 $ 12,238,891 =============== =============== The tax character of distributions paid by the Insured Portfolio during the fiscal years ended June 30, 2005 and June 30, 2004 was as follows: 6/30/2005 6/30/2004 Distributions paid from: Tax-exempt income $ 47,437,002 $ 57,644,620 --------------- --------------- Total distributions $ 47,437,002 $ 57,644,620 =============== =============== The tax character of distributions paid by the National Portfolio during the fiscal years ended June 30, 2005 and June 30, 2004 was as follows: 6/30/2005 6/30/2004 Distributions paid from: Tax-exempt income $ 68,550,786 $ 61,377,772 --------------- --------------- Total distributions $ 68,550,786 $ 61,377,772 =============== =============== As of June 30, 2005, the components of accumulated earnings (losses) on a tax basis were as follows: Short Term Portfolio Undistributed tax-exempt income--net $ 483,742 Undistributed long-term capital gains--net -- --------------- Total undistributed earnings--net 483,742 Capital loss carryforward (1,978,680)* Unrealized losses--net (3,467,021)** --------------- Total accumulated losses--net $ (4,961,959) =============== Insured Portfolio Undistributed tax-exempt income--net $ 1,071,110 Undistributed long-term capital gains--net 1,334,587 --------------- Total undistributed earnings--net 2,405,697 Capital loss carryforward -- Unrealized gains--net 63,787,017** --------------- Total accumulated earnings--net $ 66,192,714 =============== National Portfolio Undistributed tax-exempt income--net $ 687,354 Undistributed long-term capital gains--net -- --------------- Total undistributed earnings--net 687,354 Capital loss carryforward (63,982,664)* Unrealized gains--net 96,593,012** --------------- Total accumulated earnings--net $ 33,297,702 =============== * At June 30, 2005, the Short Term Portfolio had a net capital loss carryforward of approximately $1,978,680, of which $119,413 expires in 2008, $426,094 expires in 2009, $331,374 expires in 2012 and $1,101,799 expires in 2013; the National Portfolio had a net capital loss carryforward of approximately $63,982,664, of which $5,081,800 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. ** The difference between book-basis and tax-basis net unrealized gains (losses) is attributable primarily to the tax deferral of losses on straddles, the difference between book and tax amortization methods for premiums and discounts on fixed income securities and the deferral of post-October capital losses for tax purposes. MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Merrill Lynch Municipal Bond Fund, Inc.: We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Merrill Lynch Municipal Bond Fund, Inc. (the "Funds") comprising the Short Term (formerly Limited Maturity), Insured and National Portfolios as of June 30, 2005, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of June 30, 2005, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective portfolios constituting the Merrill Lynch Municipal Bond Fund, Inc. as of June 30, 2005, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles. Deloitte & Touche LLP Princeton, New Jersey August 23, 2005 Important Tax Information (unaudited) All of the net investment income distributions paid monthly by Merrill Lynch Municipal Bond Fund, Inc. during the taxable year ended June 30, 2005 qualify as tax-exempt interest dividends for federal income tax purposes. MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Officers and Directors
Number of Portfolios in Other Public Position(s) Length of Fund Complex Directorships Held with Time Overseen by Held by Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director Interested Director Robert C. Doll, Jr.* President 2005 to President of the MLIM/FAM-advised funds since 125 Funds None P.O. Box 9011 and present 2005; President of MLIM and FAM since 2001; 169 Portfolios Princeton, Director Co-Head (Americas Region) thereof from 2000 NJ 08543-9011 to 2001 and Senior Vice President from 1999 Age: 50 to 2001; President and Director of Princeton Services, Inc. ("Princeton Services") since 2001; President of Princeton Administrators, L.P. ("Princeton Administrators") since 2001; Chief Investment Officer of Oppenheimer Funds, Inc. in 1999 and Executive Vice President thereof from 1991 to 1999. * Mr. Doll is a director, trustee or member of an advisory board of certain other investment companies for which MLIM or FAM acts as investment adviser. Mr. Doll is an "interested person," as defined in the Investment Company Act, of the Fund based on his current positions with MLIM, FAM, Princeton Services and Princeton Administrators. Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. As Fund President, Mr. Doll serves at the pleasure of the Board of Directors.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Officers and Directors (continued)
Number of Portfolios in Other Public Position(s) Length of Fund Complex Directorships Held with Time Overseen by Held by Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director Independent Directors* Ronald W. Forbes** Director 1977 to Professor Emeritus of Finance, School of 48 Funds None P.O. Box 9095 present Business, State University of New York at 51 Portfolios Princeton, Albany since 2000 and Professor thereof from NJ 08543-9095 1989 to 2000; International Consultant, Urban Age: 64 Institute, Washington D.C. from 1995 to 1999. Cynthia A. Montgomery Director 1994 to Professor, Harvard Business School since 48 Funds Newell P.O. Box 9095 present 1989; Associate Professor, J.L. Kellogg 51 Portfolios Rubbermaid, Inc. Princeton, Graduate School of Management, Northwestern (manufacturing) NJ 08543-9095 University from 1985 to 1989; Associate Age: 52 Professor, Graduate School of Business Administration, University of Michigan from 1979 to 1985; Director, Harvard Business School of Publishing since 2005. Jean Margo Reid Director 2004 to Self-employed consultant since 2001; Counsel 48 Funds None P.O. Box 9095 present of Alliance Capital Management (investment 51 Portfolios Princeton, adviser) in 2000; General Counsel, Director NJ 08543-9095 and Secretary of Sanford C. Bernstein & Co., Age: 59 Inc. (investment adviser/broker-dealer) from 1997 to 2000; Secretary, Sanford C. Bernstein Fund, Inc. from 1994 to 2000; Director and Secretary of SCB, Inc. since 1998; Director and Secretary of SCB Partners, Inc. since 2000; Director of Covenant House from 2001 to 2004. Roscoe S. Suddarth Director 2000 to President, Middle East Institute from 1995 48 Funds None P.O. Box 9095 present to 2001; Foreign Service Officer, United 51 Portfolios Princeton, States Foreign Service from 1961 to 1995; NJ 08543-9095 Career Minister from 1989 to 1995; Deputy Age: 69 Inspector General, U.S. Department of State from 1991 to 1994; U.S. Ambassador to The Hashemite Kingdom of Jordan from 1987 to 1990. Richard R. West Director 1981 to Professor of Finance from 1984 to 1995, 48 Funds Bowne & Co., P.O. Box 9095 present Dean from 1984 to 1993 and since 1995 51 Portfolios Inc. (financial Princeton, Dean Emeritus of New York University Leonard printers); NJ 08543-9095 N. Stern School of Business Administration. Vornado Realty Age: 67 Trust (real estate company); Alexander's, Inc. (real estate company) Edward D. Zinbarg Director 2000 to Self-employed financial consultant since 48 Funds None P.O. Box 9095 present 1994; Executive Vice President of The 51 Portfolios Princeton, Prudential Insurance Company of America from NJ 08543-9095 1988 to 1994; former Director of Prudential Age: 70 Reinsurance Company and former Trustee of the Prudential Foundation. * Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. ** Chairman of the Board and the Audit Committee.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 Officers and Directors (concluded)
Position(s) Length of Held with Time Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years Fund Officers* Donald C. Burke Vice 1993 to First Vice President of MLIM and FAM since 1997 and Treasurer thereof since 1999; P.O. Box 9011 President present Senior Vice President and Treasurer of Princeton Services since 1999 and Director Princeton, and and since 2004; Vice President of FAM Distributors, Inc. ("FAMD") since 1999; Vice NJ 08543-9011 Treasurer 1999 to President of MLIM and FAM from 1990 to 1997; Director of Taxation of MLIM from Age: 45 present 1990 to 2001; Vice President, Treasurer and Secretary of the IQ Funds since 2004. Kenneth A. Jacob Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund P.O. Box 9011 Vice present Management) of MLIM from 1997 to 2000. Princeton, President NJ 08543-9011 Age: 54 John M. Loffredo Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund P.O. Box 9011 Vice present Management) of MLIM from 1997 to 2000. Princeton, President NJ 08543-9011 Age: 41 Robert A. DiMella Vice 1999 to Managing Director of MLIM since 2004; Director (Municipal Tax-Exempt Fund P.O. Box 9011 President present Management) of MLIM from 2002 to 2004; Vice President of MLIM from 1996 Princeton, to 2001. NJ 08543-9011 Age: 38 Peter J. Hayes Vice 1996 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund P.O. Box 9011 President present Management) of MLIM from 1997 to 2000. Princeton, NJ 08543-9011 Age: 46 Walter C. O'Connor Vice 1996 to Managing Director of MLIM since 2003; Director (Municipal Tax-Exempt Fund P.O. Box 9011 President present Management) of MLIM from 2000 to 2003; Vice President of MLIM from 1993 Princeton, to 2000. NJ 08543-9011 Age: 43 Jeffrey Hiller Chief 2004 to Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice President and P.O. Box 9011 Compliance present Chief Compliance Officer of MLIM (Americas Region) since 2004; Chief Compliance Princeton, Officer Officer of the IQ Funds since 2004; Global Director of Compliance at Morgan Stanley NJ 08543-9011 Investment Management from 2002 to 2004; Managing Director and Global Director of Age: 53 Compliance at Citigroup Asset Management from 2000 to 2002; Chief Compliance Officer at Soros Fund Management in 2000; Chief Compliance Officer at Prudential Financial from 1995 to 2000; Senior Counsel in the Commission's Division of Enforcement in Washington, D.C. from 1990 to 1995. Alice A. Pellegrino Secretary 2004 to Director (Legal Advisory) of MLIM since 2002; Vice President of MLIM from 1999 to P.O. Box 9011 present 2002; Attorney associated with MLIM since 1997; Secretary of MLIM, FAM, FAMD Princeton, and Princeton Services since 2004. NJ 08543-9011 Age: 45 * Officers of the Fund serve at the pleasure of the Board of Directors.
Further information about the Fund's Officers and Directors is available in the Fund's Statement of Additional Information, which can be obtained without charge by calling 1-800-MER-FUND. 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 Fund Address Box 9011 Princeton, NJ 08543-9011 MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005 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. 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. JUNE 30, 2005 Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as of the end of the period covered by this report, that applies to the registrant's principal executive officer, principal financial officer and principal accounting officer, or persons performing similar functions. A copy of the code of ethics is available without charge upon request by calling toll-free 1-800-MER-FUND (1-800-637-3863). Item 3 - Audit Committee Financial Expert - The registrant's board of directors has determined that (i) the registrant has the following audit committee financial experts serving on its audit committee and (ii) each audit committee financial expert is independent: (1) Ronald W. Forbes, (2) Richard R. West, and (3) Edward D. Zinbarg. Item 4 - Principal Accountant Fees and Services Short Term Portfolio of Merrill Lynch Municipal Bond Fund, Inc. (a) Audit Fees - Fiscal Year Ending June 30, 2005 - $27,000 Fiscal Year Ending June 30, 2004 - $30,200 (b) Audit-Related Fees - Fiscal Year Ending June 30, 2005 - $0 Fiscal Year Ending June 30, 2004 - $0 (c) Tax Fees - Fiscal Year Ending June 30, 2005 - $5,700 Fiscal Year Ending June 30, 2004 - $5,610 The nature of the services include tax compliance, tax advice and tax planning. (d) All Other Fees - Fiscal Year Ending June 30, 2005 - $0 Fiscal Year Ending June 30, 2004 - $0 National Portfolio of Merrill Lynch Municipal Bond Fund, Inc. (a) Audit Fees - Fiscal Year Ending June 30, 2005 - $35,700 Fiscal Year Ending June 30, 2004 - $34,200 (b) Audit-Related Fees - Fiscal Year Ending June 30, 2005 - $10,500 Fiscal Year Ending June 30, 2004 - $0 The nature of the services include assurance and related services reasonably related to the performance of the audit of financial statements not included in Audit Fees. (c) Tax Fees - Fiscal Year Ending June 30, 2005 - $5,700 Fiscal Year Ending June 30, 2004 - $15,210 The nature of the services include tax compliance, tax advice and tax planning. (d) All Other Fees - Fiscal Year Ending June 30, 2005 - $0 Fiscal Year Ending June 30, 2004 - $0 Insured Portfolio of Merrill Lynch Municipal Bond Fund, Inc. (a) Audit Fees - Fiscal Year Ending June 30, 2005 - $31,000 Fiscal Year Ending June 30, 2004 - $34,200 (b) Audit-Related Fees - Fiscal Year Ending June 30, 2005 - $0 Fiscal Year Ending June 30, 2004 - $0 (c) Tax Fees - Fiscal Year Ending June 30, 2005 - $5,700 Fiscal Year Ending June 30, 2004 - $5,610 The nature of the services include tax compliance, tax advice and tax planning. (d) All Other Fees - Fiscal Year Ending June 30, 2005 - $0 Fiscal Year Ending June 30, 2004 - $0 (e)(1) The registrant's audit committee (the "Committee") has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the registrant's affiliated service providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are a) consistent with the SEC's auditor independence rules and b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis ("general pre-approval"). However, such services will only be deemed pre-approved provided that any individual project does not exceed $5,000 attributable to the registrant or $50,000 for all of the registrants the Committee oversees. Any proposed services exceeding the pre-approved cost levels will require specific pre- approval by the Committee, as will any other services not subject to general pre-approval (e.g., unanticipated but permissible services). The Committee is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting. (e)(2) 0% (f) Not Applicable (g) Fiscal Year Ending June 30, 2005 - $8,181,305 Fiscal Year Ending June 30, 2004 - $16,114,216 (h) The registrant's audit committee has considered and determined that the provision of non-audit services that were rendered to the registrant's investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre- approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. Regulation S-X Rule 2-01(c)(7)(ii) - $945,000, 0% 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 second 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 - See Item 2 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., Chief Executive Officer of Merrill Lynch Municipal Bond Fund, Inc. Date: August 19, 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., Chief Executive Officer of Merrill Lynch Municipal Bond Fund, Inc. Date: August 19, 2005 By: /s/ Donald C. Burke ------------------------------- Donald C. Burke, Chief Financial Officer of Merrill Lynch Municipal Bond Fund, Inc. Date: August 19, 2005 EX-99.CERT 2 ex99cert.txt SECTION 302 EX-99. CERT CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Robert C. Doll, Jr., Chief Executive 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.; 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 registrant as of, and for, the periods presented in this report; 4. The registrant'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 registrant 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 registrant, 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) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant'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 d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter 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; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control over financial reporting. Date: August 19, 2005 /s/ Robert C. Doll, Jr. ----------------------- Robert C. Doll, Jr., Chief Executive Officer 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.; 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 registrant as of, and for, the periods presented in this report; 4. The registrant'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 registrant 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 registrant, 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) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant'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 d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter 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; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control over financial reporting. Date: August 19, 2005 /s/ Donald C. Burke ------------------- Donald C. Burke, Chief Financial Officer of Merrill Lynch Municipal Bond Fund, Inc. EX-99.1350CERT 3 section906.txt SECTION 906 Exhibit 99.1350CERT Certification Pursuant to Section 906 of the Sarbanes Oxley Act I, Robert C. Doll, Jr., Chief Executive 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: August 19, 2005 /s/ Robert C. Doll, Jr. ----------------------- Robert C. Doll, Jr., Chief Executive 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. 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: August 19, 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-----