N-CSRS 1 final.htm MUNICIPAL BOND FUND munibond -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

     UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-02688

Name of Fund: BlackRock Municipal Bond Fund, Inc.

  BlackRock High Yield Municipal Fund
BlackRock Municipal Insured Fund
BlackRock National Municipal Fund
BlackRock Short-Term Municipal Fund

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809 
Name and address of agent for service: Donald C. Burke, Chief Executive Officer, BlackRock 
                   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: (800) 441-7762 
Date of fiscal year end: 06/30/2008 
Date of reporting period: 07/01/2007 – 12/31/2007 
Item 1 – Report to Stockholders 

EQUITIES FIXED INCOME REAL ESTATE LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS

 

 

BlackRock Municipal Bond

Fund, Inc.


  SEMI-ANNUAL REPORT

DECEMBER 31, 2007 | (UNAUDITED)

BlackRock Short-Term Municipal Fund

BlackRock Municipal Insured Fund

BlackRock National Municipal Fund

BlackRock High Yield Municipal Fund

NOT FDIC INSURED

MAY LOSE VALUE

NO BANK GUARANTEE

Table of Contents     
 
 
    Page 
 
 
A Letter to Shareholders    3 
Semi-Annual Report:     
Fund Summaries    4 
About Fund Performance    12 
Disclosure of Expenses    14 
Financial Statements:     
       Schedules of Investments    18 
       Statements of Assets and Liabilities    38 
       Statements of Operations    40 
       Statements of Changes in Net Assets    41 
Financial Highlights    45 
Notes to Financial Statements    64 
Proxy Results    74 
Officers and Directors    76 
Swap Agreements    76 
BlackRock Fund Information    77 
Mutual Fund Family    79 

2 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

A Letter to Shareholders

Dear Shareholder

Financial markets endured heightened volatility during 2007, culminating in mixed results for some of the major benchmark indexes:

Total Returns as of December 31, 2007    6-month    12-month 
 
 
U.S. equities (S&P 500 Index)    –1.37%    + 5.49% 
 
 
Small cap U.S. equities (Russell 2000 Index)    –7.53    – 1.57 
 
 
International equities (MSCI Europe, Australasia, Far East Index)    +0.39    +11.17 
 
 
Fixed income (Lehman Brothers U.S. Aggregate Bond Index)    +5.93    + 6.97 
 
 
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index)    +3.22    + 3.36 
 
 
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index)    –0.67    + 2.27 
 
 

Past performance is no guarantee of future results. Index performance shown for illustrative purposes only. You cannot invest directly in an index.

Subprime mortgage woes dominated headlines for much of 2007, spawning a widespread liquidity and credit crisis with ramifications across global markets. The Federal Reserve Board (the “Fed”) stepped in to inject liquidity into the markets and bolster investor confidence, cutting the federal funds rate by 0.50% in September, 0.25% in October and 0.25% in December, which brought the target short-term interest rate to 4.25% . In taking action, the central bankers, who had long deemed themselves inflation fighters, were seeking to stem the fallout from the credit crunch and forestall a wider economic unraveling.

Amid the volatility, equity markets displayed surprising resilience. Market fundamentals generally held firm, dividend payouts and share buybacks continued, and valuations remained attractive. To some extent, the credit turmoil dampened corporate merger-and-acquisition (M&A) activity, a key source of strength for equity markets, but 2007 remained a record year for global M&A nonetheless. As the returns indicate, the most recent six months were more trying, reflecting the slowing U.S. economy, a troubled housing market and a more difficult corporate earnings backdrop. Overall, large cap stocks outperformed small caps as investors grew increasingly risk averse. International markets fared better than their U.S. counterparts, benefiting from generally stronger economies.

In fixed income markets, mixed economic signals and subprime fallout resulted in a flight to quality. Investors shunned bonds associated with the housing and credit markets in favor of higher-quality Treasury issues. The yield on 10-year Treasury issues, which touched 5.30% in June (its highest level in five years), fell to 4.04% by year-end, while prices correspondingly rose. The tax-exempt bond market waffled amid the economic uncertainty and concerns around the credit worthiness of bond insurers, but set a new-issuance record in 2007. A drop in municipal bond prices created buying opportunities, and the heightened supply was generally well absorbed.

As you navigate the uncertainties inherent in the financial markets, we encourage you to start the year by reviewing your investment goals with your financial professional and making portfolio changes, as needed. For more reflection on 2007 and our 10 predictions for 2008, please ask your financial professional for a copy of “What’s Ahead in 2008: An Investment Perspective,” or view it online at www.blackrock.com/funds. As always, we thank you for entrusting BlackRock with your investment assets, and we look forward to continuing to serve you in the new year and beyond.

Sincerely,


THIS PAGE NOT PART OF YOUR FUND REPORT

3

Fund Summary    BlackRock Short-Term Municipal Fund 
 
     Portfolio Management Commentary     
 

    How did the Fund perform?
  • The Fund’s total return lagged its broad market benchmark, but exceeded its comparable Lipper category average for the six months ended December 31, 2007.
    What factors influenced performance?
  • Interest rates rose early in 2007 until the U.S. housing slowdown and subprime turmoil caused asset-backed securities to decline in value, putting pressure on financial markets and the overall economy. This eventually led the Federal Reserve Board (the “Fed”) to cut interest rates. Yields generally declined in the fourth quarter, with municipals largely underperforming. Mortgage-related losses in the monoline muni- cipal insurers also hindered price improvement in tax-exempt issues.Municipal bonds rated AAA and AA, and maturing inside 10 years,performed the best. Credit spreads generally continued to widen, leading to poor performance among lower-quality issues.
  • New municipal issuance for 2007 totaled $427.5 billion, a new annual record. Volume was up 11.5% versus 2006 and 5% versus 2005, the previous record year. Issuance slowed late in 2007 as market volatility and potential downgrades for the municipal insurance companies led to the postponement of several larger deals.
  • The Fund’s conservative investment strategy and overweight in the front part of the yield curve were the main factors behind the outperformance of the Lipper group. Much of this occurred later in 2007 as the turmoil in the credit markets caused a flight to quality and to shorter maturities. Additionally, the Fed began easing monetary policy in September, whichfurther aided performance as the front end of the curve benefited mostfrom this action. Interest rates on one-year general obligation bonds fell 60 basis points (.60%) for the year, while rates on 20-year bonds rose approximately 20 basis points (as their prices correspondingly fell). This outperformance in shorter-dated issues benefited the Fund, which was more heavily weighted in the one- to two-year part of the curve.
  • The main detractor from performance was the portfolio’s small position in lower-rated issues, which suffered as credit spreads generally widened amid the market turmoil.
    Describe recent portfolio activity.
  • We drew the Fund’s cash reserves down to a minimum in the belief that Fed easing would have the greatest beneficial impact on very short- maturity bonds. Also, given the negative outlook for some monoline insurers, we generally focused purchases on high-quality general obli- gation bonds and prerefunded bonds. The portfolio’s duration was extended modestly to approximately 1.5 years as a result of spending cash reserves.
    Describe Fund positioning at period-end.
  • The Fund is positioned for additional Fed interest rate cuts, which would benefit performance as the curve continues to steepen. We believe the portfolio’s average credit quality of AA also bodes well given the contin- ued uncertainty in the economy and the impact this has already had on lower-quality issues.
Fund Profile as of December 31, 2007     
 
 
    Percent of 
    Long Term 
    Investments 
 
Other Revenue Bonds            44.3% 
General Obligation & Tax Revenue Bonds    32.6 
Prerefunded Bonds    23.1 

4 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

BlackRock Short-Term Municipal Fund

  Total Return Based on a $10,000 Investment

* Assuming maximum sales charge, if any, transaction costs and other operating expenses, including advisory fees.
                    † The Fund invests primarily in investment grade municipal bonds (bonds rated Baa or better) with a maximum maturity not to exceed four 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 three – four years, rated Baa or better.

     Performance Summary for the Period Ended December 31, 2007                         
 
 
 
 
 
 
 
                    Average Annual Total Returns*         
           
 
 
 
 
                           1 Year                               5 Years        10 Years 
           
 
 
 
 
    Standardized       6-Month    w/o sales    w/sales    w/o sales    w/sales    w/o sales    w/sales 
    30-Day Yields    Total Returns    charge    charge    charge    charge    charge    charge 
 
 
 
 
 
 
 
 
BlackRock       3.02%       +2.62%     +4.04%    —               +2.10%    —          +3.11%    — 
Institutional    3.13       +2.65    +3.97    —    +2.08    —    +3.10    — 
Investor A    2.79       +2.62    +3.81    +0.70%    +1.85    +1.23%    +2.86        +2.54% 
Investor A1    3.00       +2.60    +3.87    +2.83    +1.98    +1.78    +3.00    +2.90 
Investor B    2.78       +2.47    +3.61    +2.61    +1.72    +1.72    +2.73    +2.73 
Investor C    2.13       +2.14    +2.93    +1.93    +1.07    +1.07    +2.08    +2.08 
Lehman Brothers 3-Year                                 
   General Obligation                                 
   Bond Index    —       +3.73    +4.99    —    +2.70    —    +3.96    — 
Lehman Brothers Municipal                                 
   Bond Index    —       +3.22    +3.36    —    +4.30    —    +5.18    — 
 
 
 
 
 
 
 
 

* Assuming maximum sales charges. See “About Fund Performance” on pages 12–13 for a detailed description of share classes, including any related sales charges and fees.
  Past performance is not indicative of future results.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

5

Fund Summary    BlackRock Municipal Insured Fund 
 
     Portfolio Management Commentary     
 

How did the Fund perform?

  • The Fund performed in line with its comparable Lipper category average for the six-month period ended December 31, 2007, but underperformed the Lehman Brothers Municipal Bond Index.
  • Conversely, the Fund’s yield curve position detracted from performance. The curve steepened significantly during the period, leading shorter maturities to outperform longer maturities. The Fund was early in extending out on the yield curve in the previous reporting period, there- by missing some of the relative outperformance at the short end.

What factors influenced performance?

  • Interest rates rose early in 2007 until the U.S. housing slowdown and subprime turmoil caused asset-backed securities to decline in value, putting pressure on financial markets and the overall economy. This eventually led the Federal Reserve Board to cut interest rates in September, October and December. Yields generally declined in the fourth quarter, with municipals largely underperforming. Mortgage- related losses in the monoline municipal insurers also hindered price improvement in tax-exempt issues. Municipal bonds rated AAA and AA, and maturing inside 10 years, performed the best. Credit spreads generally widened, leading to poor performance among lower-quality issues.
  • New municipal issuance for 2007 totaled $427.5 billion, a new annual record. Volume increased 11.5% versus 2006 and 5% versus 2005, the previous record year. Issuance slowed late in 2007 as market volatility and potential downgrades for the municipal insurance companies led to the postponement of several larger deals.
  • During this period of high volatility, the Fund remained essentially fully invested, which helped maintain a strong income accrual and aided performance as yields fell toward period-end. Our efforts to lengthen call protections also contributed to performance as yields fell.

  Describe recent portfolio activity.

  • During the fourth quarter of 2007, the monoline insurers of municipal bonds experienced significant stress. The exact nature of each insurer’s problems (if any) and the extent thereof evolved throughout the period, but was largely unresolved at the end. Working with our Municipal Research Group, we combed through the Fund’s holdings to identify sale candidates based on our underlying issuer rating and insurer profile. At the same time, we looked to purchase strong underlying credits with favored insurers, particularly Financial Security Assurance Inc.
  • Generally speaking, the municipal market experienced significant volatility and certain sectors, despite high credit quality, came under pressure. We sought to add to positions in these areas, such as airports and certain callable zero-coupon bonds, as spreads had widened significantly.

Describe Fund positioning at period-end.

  • The Fund ended the period fully invested with a modestly constructive view of the market and a bias toward the longer end of the yield curve.
    The yield curve steepened significantly in the past six months. We willlook to add bonds that can be advance refunded, premium-coupon bonds with favored insurers, and strong underlying credits in the 20-to 25-year area of the curve.
Fund Profile as of December 31, 2007     
 
    Percent of 
    Long Term 
    Investments 
 
Other Revenue Bonds            77.8% 
General Obligation & Tax Revenue Bonds    11.6 
Prerefunded Bonds    10.6 

6 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

BlackRock Municipal Insured Fund

  Total Return Based on a $10,000 Investment

* Assuming maximum sales charge, if any, transaction costs and other operating expenses, including advisory fees.
† The Fund 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.

     Performance Summary for the Period Ended December 31, 2007                         
 
 
 
 
 
 
 
                    Average Annual Total Returns*         
           
 
 
 
 
                           1 Year                               5 Years                       10 Years 
           
 
 
 
 
    Standardized       6-Month    w/o sales    w/sales    w/o sales    w/sales    w/o sales    w/sales 
    30-Day Yields    Total Returns    charge    charge    charge    charge    charge    charge 
 
 
 
 
 
 
 
 
Institutional      3.95%       +2.31%     +2.34%    —                +4.05%    —     +4.70%    — 
Investor A    3.53       +2.18    +2.07    –2.26%    +3.79    +2.89%    +4.44    +3.99% 
Investor B    3.18       +1.92    +1.56    –2.36    +3.27    +2.93    +3.91    +3.91 
Investor C    2.94       +1.80    +1.31    +0.33    +3.04    +3.04    +3.67    +3.67 
Investor C1    3.14       +1.90    +1.52    +0.54    +3.22    +3.22    +3.86    +3.86 
Lehman Brothers Municipal                                 
   Bond Index    —       +3.22    +3.36    —    +4.30    —    +5.18    — 
 
 
 
 
 
 
 
 

* Assuming maximum sales charges. See “About Fund Performance” on pages 12–13 for a detailed description of share classes, including any related sales charges and fees.
Past performance is not indicative of future results.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

7

Fund Summary    BlackRock National Municipal Fund 
 
     Portfolio Management Commentary     
 

How did the Fund perform?

  • The Fund’s total return lagged the broad-market benchmark and its comparable Lipper category average for the six months ended December 31, 2007.

What factors influenced performance?

  • Interest rates rose early in 2007 until the U.S. housing slowdown and subprime turmoil caused asset-backed securities to decline in value, putting pressure on financial markets and the overall economy. This eventually led the Federal Reserve Board to cut interest rates in September, October and December. Yields generally declined in the fourth quarter, with municipals largely underperforming. Mortgage- related losses in the monoline municipal insurers also hindered price improvement in tax-exempt issues. Municipal bonds rated AAA and AA, and maturing inside 10 years, performed the best. Credit spreads generally widened, leading to poor performance among lower- quality issues.
  • New municipal issuance for 2007 totaled $427.5 billion, a new annual record. Volume increased 11.5% versus 2006 and 5% versus 2005, the previous record year.
  • Against the underlying backdrop, Fund performance was hindered by our relatively short duration stance (a measure of interest rate sensitivity); longer yield curve position at a time when shorter-term securities outperformed; and exposure, albeit limited, to lower-rated municipal credits, which underperformed as spreads widened.
  • We have consistently focused our efforts on achieving a steady, high level of income for shareholders. This contributes to the Fund’s above- average accrual rate and current yield advantage. However, the flight to quality experienced in the fixed income markets left the Fund in a defensive interest rate posture, which caused it to trail on a price appreciation basis amid the dramatic fall in interest rates.

  Describe recent portfolio activity.

  • We purchased and sold securities in keeping with our aim to maximize the Fund’s coupon structure and optimize current income for share- holders. This involved swapping into more attractive opportunities in the secondary market — in one case, we sold a lower-coupon bond (5%) to purchase a 5.50% coupon bond from the same issuer. With the dramatic widening in credit spreads, we also participated in some primary issuance in the high yield sector.
  • We continued to use inverse floating-rate product as the steepening of the tax-exempt yield curve resulted in lower borrowing rates, thereby improving the execution on these products.

Describe Fund positioning at period-end.

  • With respect to interest rate sensitivity, the Fund entered 2008 with a continued low duration posture. Long-term tax-exempt bonds currently yield less than when the 10-year Treasury yielded 3.10% and the federal funds target rate was 1%. As such, we see little value in the current level of high-grade municipal securities.
  • In terms of lower-rated municipal debt, we are working closely with our Municipal Research Group to review each sector and the Fund’s exposures therein. We have ample cash to take advantage of appro- priate opportunities as they present themselves.
Fund Profile as of December 31, 2007     
 
    Percent of 
    Long Term 
    Investments 
 
Other Revenue Bonds      78.7% 
General Obligation & Tax Revenue Bonds    7.9 
Prerefunded Bonds    13.4 

8

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

BlackRock National Municipal Fund

  Total Return Based on a $10,000 Investment

* Assuming maximum sales charge, if any, transaction costs and other operating expenses, including advisory fees.
† The Fund 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.

     Performance Summary for the Period Ended December 31, 2007                         
 
 
 
 
 
 
 
                    Average Annual Total Returns*         
           
 
 
 
 
                           1 Year                               5 Years                       10 Years 
           
 
 
 
 
    Standardized       6-Month    w/o sales    w/sales    w/o sales    w/sales    w/o sales    w/sales 
    30-Day Yields    Total Returns    charge    charge    charge    charge    charge    charge 
 
 
 
 
 
 
 
 
Institutional       4.20%       +0.97%     +1.57%    —      +4.70%    —     +4.93%    — 
Investor A    3.80       +0.96    +1.34    –2.97%    +4.47    +3.56%    +4.69    +4.23% 
Investor B    3.45       +0.70    +0.82    –3.06    +3.94    +3.60    +4.15    +4.15 
Investor C    3.17       +0.56    +0.54    –0.43    +3.66    +3.66    +3.89    +3.89 
Investor C1    3.41       +0.58    +0.77    –0.20    +3.87    +3.87    +4.10    +4.10 
Lehman Brothers Municipal                                 
   Bond Index    —       +3.22    +3.36    —    +4.30    —    +5.18    — 
 
 
 
 
 
 
 
 

  * Assuming maximum sales charges. See “About Fund Performance” on pages 12–13 for a detailed description of share classes, including any related sales charges and fees.
Past performance is not indicative of future results.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

9

Fund Summary    BlackRock High Yield Municipal Fund 
 
     Portfolio Management Commentary     
 

How did the Fund perform?

  • The Fund’s total return lagged its benchmark and comparable Lipper category average for the six months ended December 31, 2007.

What factors influenced performance?

  • Interest rates rose early in 2007 until the U.S. housing slowdown and subprime turmoil caused asset-backed securities to decline in value, putting pressure on financial markets and the overall economy. This eventually led the Federal Reserve Board to cut interest rates in September, October and December. Yields generally declined in the fourth quarter, with municipals largely underperforming. Mortgage- related losses in the monoline municipal insurers also hindered price improvement in tax-exempt issues. Municipal bonds rated AAA and AA, and maturing inside 10 years, performed the best. Credit spreads generally widened, leading to poor performance among lower-quality issues.
  • New municipal issuance for 2007 totaled $427.5 billion, a new annual record. Volume increased 11.5% versus 2006 and 5% versus 2005, the previous record year. Issuance slowed late in 2007 as market volatility and potential downgrades for the municipal insurance companies led to the postponement of several larger deals.
  • Fund results suffered as credit spreads widened appreciably amid heightened investor risk aversion and deteriorating liquidity. The Fund’s exposure at the lower end of the credit spectrum suffered dispropor- tionately due to a prevalence of discounted securities exhibiting relatively high duration profiles. These had been purchased during the Fund’s first year of operations, when the supply of attractively structured low duration, high yield securities was quite sparse.
  • The Fund’s yield curve exposure also proved detrimental. The municipal curve continued to steepen, with the best performance occurring on the short end. However, much of our focus has been on the long end in an effort to generate a more competitive distribution yield.
  • An increasing bias toward higher-quality bonds helped to insulate the portfolio from some of the widening in credit spreads. However, these high-quality investments failed to perform as well as expected given the mounting uncertainty surrounding the monoline insurers.

  Describe recent portfolio activity.

• We continued to seek opportunities to boost the Fund’s distribution yield. Some progress was made amid the volatility and associated widening of credit spreads during the fourth quarter.

• Also, given the change in the yield curve, market conditions have grown more favorable for the creation of tender option bond trusts, which are a leveraged form of income enhancement. We established a modest position, but expect to add to it as opportunities present themselves.

Describe Fund positioning at period-end.

  • The portfolio remains positioned for lower interest rates. However, given the low absolute level of market yields, we have tempered somewhat the Fund’s above-market duration. Of more interest to us are the evolving opportunities in the high yield municipal space as spreads have widened. Given the swift return to more attractive valuations, we expect to selectively add credit exposure in the coming months.
Fund Profile as of December 31, 2007     
 
    Percent of 
    Long Term 
    Investments 
 
Other Revenue Bonds    98.5% 
General Obligation & Tax Revenue Bonds    1.5 

10 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

BlackRock High Yield Municipal Fund

  Total Return Based on a $10,000 Investment

* Assuming maximum sales charge, if any, transaction costs and other operating expenses, including advisory fees.
** Commencement of Operations.
† The Fund invests primarily in municipal bonds rated in any rating category or in unrated municipal bonds.
††This unmanaged Index consists of revenue bonds, prerefunded bonds, general obligation bonds and insured bonds, all of which mature
within 30 years.

     Performance Summary for the Period Ended December 31, 2007                     
 
 
 
 
 
 
                     Average Annual Total Returns*     
           
 
 
            1 Year    Since Inception** 
           
 
    Standardized       6-Month    w/o sales    w/sales    w/o sales    w/sales 
    30-Day Yields    Total Returns    charge    charge    charge    charge 
 
 
 
 
 
 
Institutional      4.95%         –5.91%     –5.88%    —     –1.77%    — 
Investor A    4.49       –6.03    –6.04    –10.04%    –2.09      –5.05% 
Investor C    3.94       –6.49    –6.76    – 7.65    –2.71    –2.71 
Lehman Brothers Municipal Bond Index    —       +3.22    +3.36    —    +4.70    — 
 
 
 
 
 
 

 
* Assuming maximum sales charges. See “About Fund Performance” on pages 12–13 for a detailed description of share classes, including any related sales charges and fees.
** The Portfolio commenced operations on 8/1/06.
Past performance is not indicative of future results.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

11

About Fund Performance

For BlackRock Short-Term Municipal Fund

  • BlackRock Shares are not subject to any sales charge. BlackRock Shares bear no ongoing distribution or service fees and are available only to eligible investors. Prior to October 2, 2006, BlackRock Share performance results are those of the Institutional Shares (which have no distribution or service fees).
  • Institutional Shares are not subject to any sales charge. Institutional Shares bear no ongoing distribution or service fees and are available only to eligible investors.
  • Investor A Shares incur a maximum initial sales charge (front-end load) of 3% and a service fee of 0.25% per year (but no distribution fee).
    Prior to October 2, 2006, Investor A Share performance results are thoseof the Institutional Shares (which have no distribution or service fees)restated to reflect Investor A Share fees.
  • Investor A1 Shares incur a maximum initial sales charge (front-end load) of 1% and a service fee of 0.10% per year (but no distribution fee).
  • Investor B Shares are subject to a maximum contingent deferred sales charge of 1% declining to 0% after three years. In addition, Investor B
    Shares are subject to a distribution fee of 0.20% per year and a servicefee of 0.15% per year. These shares automatically convert to Investor A1 Shares after approximately 10 years. (There is no initial sales charge forautomatic share conversions.)
  • Investor C Shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. In addition, Investor C shares are subject to a 1% contingent deferred sales charge if redeemed within one year of purchase. Prior to October 2, 2006, Investor C Share perform- ance results are those of the Institutional Shares (which have no distri- bution or service fees) restated to reflect Investor C Share fees.

For BlackRock Municipal Insured Fund and BlackRock National Municipal Fund

  • Institutional Shares are not subject to any sales charge. Institutional Shares bear no ongoing distribution or service fees and are available only to eligible investors.
  • Investor A Shares incur a maximum initial sales charge (front-end load) of 4.25% and a service fee of 0.25% per year (but no distribution fee).
  • Investor B Shares are subject to a maximum contingent deferred sales charge of 4% declining to 0% after six years. In addition, Investor B
    Shares are subject to a distribution fee of 0.50% per year and a servicefee of 0.25% per year. These shares automatically convert to Investor AShares after approximately 10 years. (There is no initial sales charge forautomatic share conversions.).
  • Investor C Shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. In addition, Investor C shares are subject to a 1% contingent deferred sales charge if redeemed within one year of purchase. Prior to October 2, 2006, Investor C Share performance results are those of the Institutional Shares (which have no distribution or service fees) restated to reflect Investor C Share fees.
  • Investor C1 Shares are subject to a distribution fee of 0.55% per year and a service fee of 0.25% per year. In addition, Investor C1 shares are subject to a 1% contingent deferred sales charge if redeemed within one year of purchase.

12 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

About Fund Performance (concluded)

For BlackRock High Yield Municipal Fund

  • Institutional Shares are not subject to any sales charge. Institutional Shares bear no ongoing distribution or service fees and are available only to eligible investors.
  • Investor A Shares incur a maximum initial sales charge (front-end load) of 4.25% and a service fee of 0.25% per year (but no distribution fee).
  • Investor C Shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. In addition, Investor C shares are subject to a 1% contingent deferred sales charge if redeemed within one year of purchase.

For All Funds

Performance information reflects past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Refer to www.blackrock.com/funds 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 performance tables on pages 5, 7, 9 and 11 assume reinvestment of all dividends and capital gain distributions, if any, at net asset value on the payable date. The Fund’s investment adviser reimbursed a portion of the Fund’s expenses. Without such reimbursement, the Fund’s performance would have been lower. 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 service, distribution and transfer agency fees applicable to each class, which are deducted from the income available to be paid to shareholders.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

13

Disclosure of Expenses

Shareholders of these Funds 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 12b-1 fees, and other Fund expenses. The
expense examples on pages 14 – 17 (which are based on a hypothetical
investment of $1,000 invested on July 1, 2007 and held through
December 31, 2007) is intended to assist shareholders both in calculat-
ing expenses based on an investment in the Fund and in comparing
these expenses with similar costs of investing in other mutual funds.

The tables provide 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 correspon-
ding to their share class under the heading entitled “Expenses Paid During
the Period.”

The tables also provide 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 these
Funds 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 tables 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 hypotheti-
cal tables are useful in comparing ongoing expenses only, and will not
help shareholders determine the relative total expenses of owning differ-
ent funds. If these transactional expenses were included, shareholder
expenses would have been higher.

     BlackRock Short-Term Municipal Fund                         
 
 
 
 
 
 
 
        Actual            Hypothetical**     
   
 
 
 
 
 
    Beginning    Ending        Beginning             Ending     
    Account Value    Account Value    Expenses Paid    Account Value    Account Value    Expenses Paid 
    July 1, 2007    December 31, 2007 During the Period*    July 1, 2007    December 31, 2007 During the Period* 
 
 
 
 
BlackRock    $1,000    $1,026.20    $2.09    $1,000           $1,023.14    $2.09 
Institutional    $1,000    $1,026.50    $1.79    $1,000           $1,023.44    $1.79 
Investor A    $1,000    $1,026.20    $3.06    $1,000           $1,022.18    $3.06 
Investor A1    $1,000    $1,026.00    $2.30    $1,000           $1,022.94    $2.29 
Investor B    $1,000    $1,024.70    $3.57    $1,000           $1,021.68    $3.57 
Investor C    $1,000    $1,021.40    $6.88    $1,000           $1,018.40    $6.87 
 
 
 
 
 
 

  * For each class of the Fund, expenses are equal to the annualized expense ratio for the class (.41% for BlackRock, .35% for Institutional, .60% for Investor A, .45% for
Investor A1, .70% for Investor B and 1.35% for Investor C), multiplied by the average account value over the period, multiplied by 184/365 to reflect the one-half year
period shown.
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the most recent fiscal half year divided by 365.

14 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Disclosure of Expenses (continued)                 
 
 
 
 
 
 
     BlackRock Municipal Insured Fund (Including Interest Expense and Fees)                 
 
 
 
 
 
        Actual            Hypothetical**     
   
 
 
 
 
 
    Beginning    Ending        Beginning             Ending     
    Account Value    Account Value    Expenses Paid    Account Value    Account Value    Expenses Paid 
    July 1, 2007    December 31, 2007 During the Period*    July 1, 2007    December 31, 2007 During the Period* 
 
 
 
 
Institutional    $1,000    $1,023.10    $ 5.00    $1,000           $1,020.27    $ 4.99 
Investor A    $1,000    $1,021.80    $ 6.32    $1,000           $1,018.95    $ 6.31 
Investor B    $1,000    $1,019.20    $ 8.96    $1,000           $1,016.33    $ 8.94 
Investor C    $1,000    $1,018.00    $10.12    $1,000           $1,015.17    $10.11 
Investor C1    $1,000    $1,019.00    $ 9.11    $1,000           $1,016.18    $ 9.10 
 
 
 
 
 
 

  * For each class of the Fund, expenses are equal to the annualized expense ratio for the class (.98% for Institutional, 1.24% for Investor A, 1.76% for Investor B, 1.99% for
Investor C and 1.79% for Investor C1), multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period shown).
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the most recent fiscal half year divided by 365.

     BlackRock Municipal Insured Fund (Excluding Interest Expense and Fees)                 
 
 
 
 
 
        Actual            Hypothetical**     
   
 
 
 
 
 
    Beginning    Ending        Beginning             Ending     
    Account Value    Account Value    Expenses Paid    Account Value    Account Value    Expenses Paid 
    July 1, 2007    December 31, 2007 During the Period*    July 1, 2007    December 31, 2007 During the Period* 
 
 
 
 
Institutional    $1,000    $1,023.10    $2.40    $1,000           $1,022.84    $2.40 
Investor A    $1,000    $1,021.80    $3.72    $1,000           $1,021.53    $3.72 
Investor B    $1,000    $1,019.20    $6.31    $1,000           $1,018.95    $6.31 
Investor C    $1,000    $1,018.00    $7.48    $1,000           $1,017.80    $7.48 
Investor C1    $1,000    $1,019.00    $6.51    $1,000           $1,018.75    $6.51 
 
 
 
 
 
 

* For each class of the Fund, expenses are equal to the annualized expense ratio for the class (.47% for Institutional, .73% for Investor A, 1.24% for Investor B, 1.47% for
Investor C and 1.28% for Investor C1), multiplied by the average account value over the period, multiplied by 184/365 to reflect the one-half year period shown.
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the most recent fiscal half year divided by 365.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

15

Disclosure of Expenses (continued)                 
 
 
 
 
 
 
     BlackRock National Municipal Fund (Including Interest Expense and Fees)                 
 
 
 
 
 
        Actual            Hypothetical**     
   
 
 
 
 
 
    Beginning    Ending        Beginning             Ending     
    Account Value    Account Value    Expenses Paid    Account Value    Account Value    Expenses Paid 
    July 1, 2007    December 31, 2007 During the Period*    July 1, 2007    December 31, 2007 During the Period* 
 
 
 
 
Institutional    $1,000    $1,009.70    $4.61    $1,000           $1,020.62    $4.63 
Investor A    $1,000    $1,009.60    $5.72    $1,000           $1,019.51    $5.75 
Investor B    $1,000    $1,007.00    $8.40    $1,000           $1,016.84    $8.44 
Investor C    $1,000    $1,005.60    $9.81    $1,000           $1,015.43    $9.86 
Investor C1    $1,000    $1,005.80    $8.54    $1,000           $1,016.69    $8.59 
 
 
 
 
 
 

* For each class of the Fund, expenses are equal to the annualized expense ratio for the class (.91% for Institutional, 1.13% for Investor A, 1.66% for Investor B, 1.94% for
Investor C and 1.69% for Investor C1), multiplied by the average account value over the period, multiplied by 184/365 to reflect the one-half year period shown.
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the most recent fiscal half year divided by 365.

     BlackRock National Municipal Fund (Excluding Interest Expense and Fees)                 
 
 
 
 
 
        Actual            Hypothetical**     
   
 
 
 
 
 
    Beginning    Ending        Beginning             Ending     
    Account Value    Account Value    Expenses Paid    Account Value    Account Value    Expenses Paid 
    July 1, 2007    December 31, 2007 During the Period*    July 1, 2007    December 31, 2007 During the Period* 
 
 
 
 
Institutional    $1,000    $1,009.70    $3.04    $1,000           $1,022.18    $3.06 
Investor A    $1,000    $1,009.60    $4.15    $1,000           $1,021.07    $4.18 
Investor B    $1,000    $1,007.00    $6.83    $1,000           $1,018.40    $6.87 
Investor C    $1,000    $1,000.50    $8.24    $1,000           $1,016.99    $8.29 
Investor C1    $1,000    $1,005.80    $7.03    $1,000           $1,018.20    $7.07 
 
 
 
 
 
 

  * For each class of the Fund, expenses are equal to the annualized expense ratio for the class (.60% for Institutional, .82% for Investor A, 1.35% for Investor B, 1.63% for
Investor C and 1.39% for Investor C1), multiplied by the average account value over the period, multiplied by 184/365 to reflect the one-half year period shown.
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the most recent fiscal half year divided by 365.

16 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Disclosure of Expenses (concluded)                 
 
 
 
 
 
 
     BlackRock High Yield Municipal Fund (Including Interest Expense and Fees)                 
 
 
 
 
 
        Actual            Hypothetical**     
   
 
 
 
 
 
    Beginning    Ending        Beginning             Ending     
    Account Value    Account Value    Expenses Paid    Account Value    Account Value    Expenses Paid 
    July 1, 2007    December 31, 2007 During the Period*    July 1, 2007    December 31, 2007 During the Period* 
 
 
 
 
Institutional    $1,000    $940.90    $3.77    $1,000           $1,021.32    $3.92 
Investor A    $1,000    $939.70    $4.94    $1,000           $1,020.11    $5.14 
Investor C    $1,000    $935.10    $8.73    $1,000           $1,016.18    $9.10 
 
 
 
 
 
 

* For each class of the Fund, expenses are equal to the annualized expense ratio for the class (.77% for Institutional, 1.01% for Investor A and 1.79% for Investor C),
multiplied by the average account value over the period, multiplied by 184/365 to reflect the one-half year period shown.
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the most recent fiscal half year divided by 365.

     BlackRock High Yield Municipal Fund (Excluding Interest Expense and Fees)                 
 
 
 
 
 
        Actual            Hypothetical**     
   
 
 
 
 
 
    Beginning    Ending        Beginning             Ending     
    Account Value    Account Value    Expenses Paid    Account Value    Account Value    Expenses Paid 
    July 1, 2007    December 31, 2007 During the Period*    July 1, 2007    December 31, 2007 During the Period* 
 
 
 
 
Institutional    $1,000    $940.90    $3.72    $1,000           $1,021.37    $3.87 
Investor A    $1,000    $939.70    $4.94    $1,000           $1,020.11    $5.14 
Investor C    $1,000    $935.10    $8.68    $1,000           $1,016.23    $9.05 
 
 
 
 
 
 

* For each class of the Fund, expenses are equal to the annualized expense ratio for the class (.76% for Institutional, 1.01% for Investor A and 1.78% for Investor C),
multiplied by the average account value over the period, multiplied by 184/365 to reflect the one-half year period shown.
** Hypothetical 5% annual return before expenses is calculated by pro-rating the actual days in the most recent fiscal half year divided by 365.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

17

Schedule of Investments as of December 31, 2007 BlackRock Short-Term Municipal Fund (In Thousands)
(Unaudited)

Face         
Amount    Municipal Bonds    Value 
 
 
 
Alabama — 3.1%         
$ 8,095    Huntsville, Alabama, GO, Refunding, Series A, 5.25%     
    due 2/01/2009 (j)    $ 8,286 
 
 
Arizona — 2.6%         
7,000    Yavapai County, Arizona, IDA, Solid Waste Disposal     
Revenue Bonds (Waste Management Inc. Project),
    AMT, 4% due 6/01/2027    6,909 
 
 
California — 0.3%     
750    California Pollution Control Financing Authority,     
Solid Waste Disposal Revenue Bonds (Republic
    Services, Inc. Project), VRDN, AMT, 4.15%     
    due 3/01/2028 (b)    750 
 
 
District of Columbia — 1.8%     
4,665    Metropolitan Washington Airports Authority, D.C.,     
Airport System Revenue Refunding Bonds, AMT,
    Series A, 5% due 10/01/2010 (a)    4,843 
 
 
Florida — 9.0%         
7,000    Florida Hurricane Catastrophe Fund Financing     
    Corporation Revenue Bonds, Series A, 5%     
    due 7/01/2010    7,285 
2,020    Miami-Dade County, Florida, Educational Facilities     
Authority Revenue Bonds (University of Miami),
    Series A, 5.75% due 4/01/2010 (a)(c)    2,154 
14,195    Orange County, Florida, Tourist Development, Tax     
    Revenue Bonds, 5.50% due 10/01/2009 (a)(c)    14,795 
 
 
Georgia — 8.7%         
5,600    Catoosa County, Georgia, School District, GO, 4.25%     
    due 8/01/2008 (h)    5,642 
6,005    Georgia Municipal Electric Authority, Power Revenue     
    Refunding Bonds, Series DD, 7% due 1/01/2008 (h)    6,005 
11,905    Georgia State, GO, Series B, 5% due 3/01/2008    11,945 
 
 
Illinois — 2.0%         
5,000    Illinois Educational Facilities Authority, Revenue     
    Refunding Bonds (University of Chicago),     
    Series A, 5.25% due 7/01/2011 (c)    5,390 
 
 
Indiana — 2.2%         
4,750    Indiana Bond Bank Revenue Bonds (State Revolving     
    Fund), Series B, 5.30% due 8/01/2010 (c)    5,049 
1,000    Indiana State Development Finance Authority, IDR     
    (Republic Services, Inc. Project), VRDN, AMT, 3.79%     
    due 11/01/2035 (b)    1,000 
 
 
Massachusetts — 3.2%     
8,505    Massachusetts State Consolidated Loan, GO,     
    Series C, 5% due 5/01/2008 (f)    8,561 
 
 

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Michigan — 3.7%             
$ 5,000    Detroit, Michigan, Water Supply System Revenue         
    Bonds, Second Lien, Series B, 5.50%         
    due 7/01/2011 (c)(g)    $ 5,428 
280    Michigan State Strategic Fund, Limited Obligation         
Revenue Bonds (Kay Screen Printing, Inc. Project),
    VRDN, AMT, 3.70% due 5/01/2020 (b)        280 
4,120    Michigan State Trunk Line Fund, Revenue Refunding     
    Bonds, Series B, 5% due 9/01/2010 (j)        4,317 
 
 
 
Minnesota — 1.0%         
2,620    Minneapolis and Saint Paul, Minnesota, Metropolitan     
Airports Commission, Airport Revenue Bonds, AMT,
    Series B, 5.50% due 1/01/2010 (g)        2,691 
 
 
 
Nebraska — 0.9%             
2,500    Central Plains Energy Project, Nebraska, Revenue         
Bonds (Gas Project Number 1), VRDN, 3.908%
    due 12/01/2010 (b)        2,453 
 
 
 
Nevada — 5.3%             
6,500    Clark County, Nevada, Airport System Subordinate         
    Lien Revenue Bonds, AMT, Series B-1, 5%         
    due 7/01/2008        6,559 
7,500    Clark County, Nevada, EDR (Alexander Dawson         
    School of Nevada Project), 5.50% due 5/15/2009 (c)    7,814 
 
 
New Jersey — 1.9%         
4,790    New Jersey Building Authority, State Building         
    Revenue Refunding Bonds, Series B, 5.25%         
    due 12/15/2010 (a)        5,077 
 
 
 
New Mexico — 2.1%         
5,685    New Mexico State, Severance Tax Bonds,         
    Series A, 5% due 7/01/2008 (h)        5,742 
 
 
 
New York — 4.9%             
5,000    Metropolitan Transportation Authority, New York,         
Dedicated Tax Fund Revenue Bonds, Series A,
    5.875% due 4/01/2010 (c)(g)        5,304 
7,705    New York State Urban Development Corporation,         
Personal Income Tax Revenue Bonds, Series C, 5%
    due 3/15/2010        8,009 
 
 
 
Ohio — 3.2%             
4,400    Ohio State Building Authority, State Facilities Revenue     
Bonds (Administrative Building Fund Projects),
    Series A, 5.375% due 10/01/2008 (c)        4,521 
3,875    Ohio State, Common Schools, GO, Series A, 5%         
    due 3/15/2011        4,090 
 
 
 

     Portfolio Abbreviations                 
 
 
 
 
 
To simplify the listings of BlackRock Municipal Bond    CARS    Complementary Auction Rate Securities    IDA    Industrial Development Authority 
Fund, Inc.’s portfolio holdings in the Schedules of    COP    Certificates of Participation    IDB    Industrial Development Board 
Investments, we have abbreviated the names of    CP    Commercial Paper    IDR    Industrial Development Revenue Bonds 
many of the securities according to the list below    DRIVERS    Derivative Inverse Tax-Exempt Receipts    M/F    Multi-Family 
and at right.        EDA    Economic Development Authority    PCR    Pollution Control Revenue Bonds 
        EDR    Economic Development Revenue Bonds    S/F    Single-Family 
AMT    Alternative Minimum Tax (subject to)    GO    General Obligation Bonds    SAVRS    Select Auction Variable Rate Securities 
ARS    Auction Rate Securities    HDA    Housing Development Agency    TRAN    Tax Revenue Anticipation Notes 
BAN    Bond Anticipation Notes    HFA    Housing Finance Agency    VRDN    Variable Rate Demand Notes 

18 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Schedule of Investments (concluded) BlackRock Short-Term Municipal Fund (In Thousands)

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Pennsylvania — 5.4%         
$ 4,000    Bethlehem, Pennsylvania, Area School District, GO,     
    Refunding, Series A, 5% due 9/01/2010 (h)    $ 4,191 
5,000    Pennsylvania State, GO, Refunding, Third Series, 5%     
    due 7/01/2009           5,144 
5,000    University of Pittsburgh, Pennsylvania, The         
    Commonwealth System of Higher Education,         
    Revenue Refunding Bonds (Pittsburgh Asset Notes —     
    Panthers), 5% due 8/01/2010           5,206 
 
 
 
South Carolina — 3.4%         
4,590    Aiken County, South Carolina, Consolidated School     
    District, GO, Refunding, 5% due 3/01/2009           4,695 
Hilton Head Island, South Carolina, Public Facility
    Corporation, COP (Beach Preservation Fee Pledge) (h):     
2,160         5% due 8/01/2008           2,184 
2,240         5% due 8/01/2009           2,303 
 
 
 
Tennessee — 1.5%         
4,000    Tennessee Energy Acquisition Corporation, Gas         
    Revenue Bonds, Series A, 5% due 9/01/2009           4,078 
 
 
 
Texas — 15.2%             
3,980    Austin, Texas, Independent School District, GO,         
    Refunding, 5.25% due 8/01/2009           4,115 
5,000    Harris County, Texas, Toll Road Revenue Refunding         
    Bonds, Series B-2, 5% due 8/15/2021 (b)(g)           5,135 
2,200    Montgomery County, Texas, Unlimited Tax Adjustable     
    Rate Road, GO, Series B, 5% due 3/01/2028 (b)(j)       2,228 
2,790    North Texas Thruway Authority, Dallas North Thruway     
System, Revenue Refunding Bonds, Series B, 5%
    due 1/01/2038 (a)(b)           2,812 
7,000    North Texas Thruway Authority Revenue Bonds,         
    BAN, 4.125% due 11/19/2008           7,010 
5,000    San Antonio, Texas, Electric and Gas Revenue Bonds,     
    Junior Lien, VRDN, 3.625% due 12/01/2027 (b)           5,021 
4,275    Tarrant County, Texas, Cultural Education Facilities         
    Financing Corporation, Revenue Refunding         
Bonds (Texas Health Resources), Series A, 5%
    due 2/15/2011           4,457 

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Texas (concluded)         
$ 5,000    Texas State, GO, TRAN, 4.50% due 8/28/2008    $ 5,049 
5,000    University of Texas, Financing System Revenue         
    Refunding Bonds, Series B, 5% due 8/15/2010        5,236 
 
 
 
Virginia — 1.8%             
4,885    Virginia State Public School Authority, School         
    Financing Revenue Bonds, Series B, 5%         
    due 8/01/2008 (c)        4,990 
 
 
 
Washington — 4.9%         
9,940    Energy Northwest, Washington, Electric Revenue         
Refunding Bonds (Columbia Generating Station),
    Series A, 5.25% due 7/01/2009 (a)        10,257 
2,900    Tacoma, Washington, Electric System Revenue         
    Refunding Bonds, Series A, 5.625%         
    due 1/01/2011 (c)(j)        3,130 
 
 
 
Wisconsin — 2.7%         
7,070    Wisconsin Public Power Inc., Power Supply System,         
    Revenue Refunding Bonds, Series A, 5.25%         
    due 7/01/2010 (h)        7,407 
 
 
 
Puerto Rico — 3.1%         
8,400    Government Development Bank of Puerto Rico,         
    CP, 4.25% due 1/09/2008        8,400 
 
 
 
    Total Municipal Bonds         
    (Cost — $252,023) — 93.9%        253,947 
 
 
 
 
 
Shares             
Held    Short-Term Securities         
 
 
 
12,521    Merrill Lynch Institutional Tax-Exempt Fund, 3.35% (d)(e)    12,521 
 
 
    Total Short-Term Securities         
    (Cost — $12,521) — 4.6%        12,521 
 
 
 
Total Investments (Cost — $264,544*) — 98.5%        266,468 
Other Assets Less Liabilities — 1.5%        4,151 
   
 
Net Assets — 100.0%    $ 270,619 
   

*      The cost and unrealized appreciation (depreciation) of investments as of December 31, 2007, as computed for federal income tax purposes, were as follows:
 
Aggregate cost    $ 264,544 
   
Gross unrealized appreciation    $ 2,046 
Gross unrealized depreciation    (122) 
   
Net unrealized appreciation    $ 1,924 
   

(a)      AMBAC Insured.
 
(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.
 
  See Notes to Financial Statements.
 

(c) Prerefunded.

(d) Investments in companies considered to be an affiliate of the Fund, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as follows:

    Net    Dividend 
Affiliate    Activity    Income 
 
 
     Merrill Lynch Institutional Tax-Exempt Fund    5,918    $236 
 
 
(e) Represents the current yield as of December 31, 2007.         
(f) CIFG Insured.         
(g) FGIC Insured.         
(h) MBIA Insured.         
(j) FSA Insured.         

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

19

Schedule of Investments as of December 31, 2007 BlackRock Municipal Insured Fund (In Thousands)
(Unaudited)

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Alabama — 3.1%             
$10,000    Lauderdale County and Florence, Alabama, Health         
Care Authority Revenue Refunding Bonds (Coffee
    Health Group), Series A, 6% due 7/01/2029 (g)    $ 10,693 
7,840    University of Alabama, General Revenue Bonds,         
    Series A, 5% due 7/01/2034 (g)        8,028 
7,000    University of Alabama, University Revenue Bonds         
    (Birmingham), 6% due 10/01/2009 (c)(h)        7,354 
 
 
 
Arizona — 0.7%             
5,000    Downtown Phoenix Hotel Corporation, Arizona,         
    Revenue Bonds, Senior Series A, 5%         
    due 7/01/2040 (c)        5,030 
1,250    Salt Verde Financial Corporation, Arizona, Senior Gas     
    Revenue Bonds, 5% due 12/01/2037        1,169 
 
 
 
Arkansas — 0.5%             
4,000    University of Arkansas, University Revenue Bonds         
(Various Facilities — Fayetteville Campus), 5%
    due 12/01/2027 (c)        4,117 
 
 
 
California — 15.0%         
1,050    Antelope Valley, California, Community College         
District, GO (Election of 2004), Series B, 5.25%
    due 8/01/2039 (g)        1,123 
2,800    Arcadia, California, Unified School District, Capital         
    Appreciation, GO (Election of 2006), Series A, 4.96%     
    due 8/01/2039 (e)(m)        508 
4,100    Cabrillo, California, Community College District,         
    GO (Election of 2004), Series B, 5.20%         
    due 8/01/2037 (g)(m)        830 
2,075    California State Department of Veteran Affairs, Home     
    Purchase Revenue Refunding Bonds, Series A, 5.35%     
    due 12/01/2027 (a)        2,170 
5,800    Coast Community College District, California, GO         
    (Election of 2002), Series C, 5.392%         
    due 8/01/2036 (e)(m)        1,267 
2,000    Corona-Norco, California, Unified School District, GO     
    (Election of 2006), Series A, 5% due 8/01/2031 (e)    2,098 
Fresno, California, Unified School District, GO
    (Election of 2001):         
5,170    Series D, 5% due 8/01/2027 (g)        5,402 
1,500    Series E, 5% due 8/01/2030 (e)        1,568 
5,595    Grossmont-Cuyamaca Community College District,         
California, GO (Election of 2002), Series B, 5%
    due 8/01/2029 (c)        5,813 
15,000    Los Angeles, California, Municipal Improvement         
    Corporation, Lease Revenue Bonds, Series B1, 4.75%     
    due 8/01/2037 (c)        14,882 
8,965    Modesto, California, Schools Infrastructure         
    Financing Agency, Special Tax Bonds, 5.50%         
    due 9/01/2036 (a)        9,413 
1,380    Orange County, California, Sanitation District, COP,         
    Series B, 5% due 2/01/2031 (e)        1,424 
6,440    Palm Springs, California, Financing Authority, Lease     
Revenue Refunding Bonds (Convention Center
    Project), Series A, 5.50% due 11/01/2035 (g)        6,949 
10,500    Ramona, California, Unified School District,         
Convertible Capital Appreciation Refunding Bonds,
    COP, 5.106% due 5/01/2032 (c)(m)        8,658 
675    Rancho Cucamonga, California, Redevelopment         
Agency, Tax Allocation Refunding Bonds (Rancho
    Redevelopment Project), Series A, 5%         
    due 9/01/2034 (g)        690 
3,900    Redlands, California, Unified School District, GO         
    (Election of 2002), 5% due 7/01/2025 (e)        4,091 
     
   

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
California (concluded)         
$11,685    Rialto, California, Unified School District, GO,         
    Series A, 6.24% due 6/01/2025 (c)(m)    $ 4,927 
5,000    Roseville, California, Joint Union High School         
    District, GO (Election of 2004), Series A, 5%         
    due 8/01/2029 (c)        5,173 
5,075    Sacramento, California, Unified School District, GO     
    (Election of 1999), Series B, 5% due 7/01/2026 (c)    5,236 
2,685    San Diego, California, Community College District,         
    GO (Election of 2002), 5% due 5/01/2030 (e)        2,794 
6,600    San Jose, California, Airport Revenue Refunding         
    Bonds, AMT, Series A, 5.50% due 3/01/2032 (a)        6,889 
3,700    San Jose, California, GO (Libraries, Parks and Public     
    Safety Projects), 5% due 9/01/2030 (g)        3,820 
10,055    Sequoia, California, Unified High School District, GO,     
    Refunding, Series B, 5.50% due 7/01/2035 (e)        10,959 
2,755    Tahoe Truckee, California, Unified School District, GO     
(School Facilities Improvement District Number 2),
    Series A, 5.25% due 8/01/2029 (g)        2,885 
    Tustin, California, Unified School District, Senior Lien     
Special Tax Bonds (Community Facilities District
    Number 97-1), Series A (e):         
7,980         5% due 9/01/2032        8,100 
9,330         5% due 9/01/2038        9,461 
 
 
 
Colorado — 2.5%             
19,250    Aurora, Colorado, COP, 6% due 12/01/2010 (a)(h)    20,767 
 
 
Connecticut — 0.7%         
6,035    Connecticut State, HFA, Housing Mortgage Finance     
    Program Revenue Bonds, AMT, Sub-Series B-2, 5.10%     
    due 11/15/2038 (a)        5,870 
 
 
 
Florida — 0.8%             
3,800    Duval County, Florida, School Board, COP (Master         
    Lease Program), 5% due 7/01/2033 (e)        3,887 
1,350    Miami, Florida, Special Obligation Revenue Bonds         
(Street and Sidewalk Improvement Program), 5%
    due 1/01/2037 (g)        1,365 
1,260    West Coast Regional Water Supply Authority, Florida,     
Capital Improvement Revenue Bonds, 10.40%
    due 10/01/2010 (a)(h)        1,410 
 
 
 
Georgia — 4.3%             
Georgia Municipal Electric Authority, Power Revenue
    Refunding Bonds:         
20,000         Series EE, 7% due 1/01/2025 (a)        26,264 
90         Series Y, 6.40% due 1/01/2011 (h)        98 
490         Series Y, 6.40% due 1/01/2013 (a)(b)        544 
8,420         Series Y, 6.40% due 1/01/2013 (a)        9,271 
 
 
 
Illinois — 1.0%             
8,640    Chicago, Illinois, O'Hare International Airport,         
    Revenue Refunding Bonds, Third Lien, AMT,         
    Series C-2, 5.25% due 1/01/2034 (k)        8,675 
 
 
 
Indiana — 0.4%             
3,530    Indiana Municipal Power Agency, Power Supply System     
    Revenue Bonds, Series A, 5% due 1/01/2037 (g)        3,615 
 
 
 
Kansas — 0.6%             
5,145    Manhattan, Kansas, Hospital Revenue Bonds (Mercy     
    Health Center), 5.50% due 8/15/2020 (e)        5,463 
 
 
 
Louisiana — 1.8%             
2,500    Louisiana State Citizens Property Insurance         
    Corporation, Assessment Revenue Bonds,         
    Series B, 5% due 6/01/2022 (a)        2,590 

20

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Schedule of Investments (continued) BlackRock Municipal Insured Fund (In Thousands)

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Louisiana (concluded)         
$ 2,400    Louisiana State, Gas and Fuels Tax Revenue Bonds,     
    Series A, 4.75% due 5/01/2039 (e)    $ 2,365 
2,800    New Orleans, Louisiana, Aviation Board Revenue         
    Bonds, AMT, Series A, 5% due 1/01/2038 (e)        2,774 
5,000    New Orleans, Louisiana, GO (Public Improve-         
    ments), 5.25% due 12/01/2029 (a)        5,266 
2,800    Rapides Financing Authority, Louisiana, Revenue         
Bonds (Cleco Power LLC Project), AMT, 4.70%
    due 11/01/2036 (a)        2,616 
 
 
 
Maryland — 0.7%             
4,400    Maryland State Health and Higher Educational         
Facilities Authority Revenue Bonds (University of
    Maryland Medical System), Series B, 7%         
    due 7/01/2022 (c)        5,644 
 
 
 
Massachusetts — 5.7%         
15,000    Massachusetts State School Building Authority,         
Dedicated Sales Tax Revenue Bonds, Series A, 5%
    due 8/15/2030 (e)        15,616 
4,000    Massachusetts State, HFA, Rental Housing         
Mortgage Revenue Bonds, AMT, Series C, 5.60%
    due 1/01/2045 (e)        4,119 
Massachusetts State, HFA, S/F Housing Revenue
    Bonds, AMT(e):         
2,845         Series 128, 4.80% due 12/01/2027        2,715 
7,000         Series 128, 4.875% due 12/01/2038        6,500 
17,500    Massachusetts State Special Obligation Dedicated     
    Tax Revenue Bonds, 5.25% due 1/01/2014 (c)(h)    19,214 
 
 
Michigan — 0.2%             
1,500    Detroit, Michigan, Water Supply System Revenue         
    Bonds, Senior Lien, Series A, 5% due 7/01/2030 (c)    1,522 
 
 
Minnesota — 1.8%         
5,860    Delano, Minnesota, Independent School         
    District Number 879, GO, Series A, 5.875%         
    due 2/01/2025 (e)        6,295 
Sauk Rapids, Minnesota, Independent School
    District Number 047, GO, Series A (g):         
3,735         5.65% due 2/01/2020        3,988 
4,440         5.70% due 2/01/2021        4,747 
 
 
 
Mississippi — 1.5%         
1,320    Harrison County, Mississippi, Wastewater         
Management District, Revenue Refunding Bonds
(Wastewater Treatment Facilities), Series A, 8.50%
    due 2/01/2013 (b)(c)        1,631 
10,000    Mississippi Hospital Equipment and Facilities         
Authority Revenue Bonds (Forrest County General
    Hospital Project), 6% due 1/01/2011 (e)(h)        10,895 
 
 
 
Missouri — 4.3%             
    Kansas City, Missouri, Airport Revenue Refunding and     
    Improvement Bonds, Series A (g):         
12,990         5.50% due 9/01/2013        13,209 
9,000         5.50% due 9/01/2014        9,152 
    Missouri Joint Municipal Electric Utility Commission,     
Power Project Revenue Bonds (Latan 2 Project),
    Series A (a):         
5,595         5% due 1/01/2027        5,755 
8,325         5% due 1/01/2028        8,540 
 
 
 
Nebraska — 0.6%             
5,000    Public Power Generation Agency, Nebraska, Revenue     
    Bonds (Whelan Energy Center Unit 2), Series A, 5%     
    due 1/01/2032 (a)        5,168 
 
 
 

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Nevada — 0.4%             
    Clark County, Nevada, IDR (Southwest Gas         
    Corporation Project), AMT (c):         
$ 1,300         Series A, 4.75% due 9/01/2036    $ 1,221 
2,200         Series D, 5.25% due 3/01/2038        2,223 
 
 
 
New Jersey — 8.6%         
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 (g)        8,685 
    Garden State Preservation Trust of New Jersey, Open     
Space and Farmland Preservation Revenue Bonds,
    Series A (e):         
3,125         5.80% due 11/01/2021        3,568 
8,310         5.80% due 11/01/2022        9,469 
4,340         5.80% due 11/01/2023        4,937 
New Jersey EDA, Motor Vehicle Surcharge Revenue
    Bonds, Series A (g):         
5,000         5% due 7/01/2027        5,191 
23,000         5.25% due 7/01/2033        24,174 
    New Jersey State Transportation Trust Fund Authority,     
Transportation System Revenue Bonds, Series D:
4,240         5% due 6/15/2018 (a)        4,539 
11,530         5% due 6/15/2019 (e)        12,297 
 
 
 
New Mexico — 0.6%         
5,000    New Mexico Finance Authority, Senior Lien State         
Transportation Revenue Bonds, Series A, 5.125%
    due 6/15/2018 (g)        5,382 
 
 
 
New York — 11.7%         
    New York City, New York, GO:         
11,495         Series C, 5.625% due 3/15/2012 (h)(k)        12,583 
5         Series C, 5.625% due 3/15/2018 (k)        5 
6,155         Series I, 6% due 4/15/2012 (e)        6,224 
3    New York City, New York, Sales Tax Asset Receivable     
    Corporation Revenue Bonds, DRIVERS, Series 1133Z,     
    6.753% due 10/15/2012 (a)(j)        3 
New York City, New York, Sales Tax Asset Receivable
    Corporation Revenue Bonds, Series A:         
16,905         5% due 10/15/2020 (g)        17,990 
15,650         5% due 10/15/2032 (a)        16,269 
11,795    New York State Dormitory Authority Revenue Bonds     
    (School Districts Financing Program), Series D, 5.25%     
    due 10/01/2023 (g)        12,558 
9,110    New York State Urban Development Corporation,         
    Personal Income Tax Revenue Bonds (State         
    Facilities), Series A-1, 5.25% due 3/15/2034 (c)        9,552 
5    Niagara Falls, New York, GO, Public Improvement, 6.90%     
    due 3/01/2024 (g)        5 
22,500    Tobacco Settlement Financing Corporation of         
    New York Revenue Bonds, Series A-1, 5.25%         
    due 6/01/2022 (a)        23,879 
 
 
 
North Carolina — 0.3%         
2,880    North Carolina HFA, Home Ownership Revenue         
    Bonds, AMT, Series 14-A, 5.35% due 1/01/2022 (a)    2,913 
 
 
North Dakota — 0.3%         
2,630    North Dakota State, HFA, Revenue Bonds         
(Housing Finance Program), Series C, 5.30%
    due 7/01/2022 (a)        2,656 
 
 
 
Oklahoma — 0.8%         
6,385    Oklahoma State Industries Authority, Health System     
    Revenue Refunding Bonds (Integris Obligated Group),     
    Series A, 6.25% due 8/15/2009 (g)(h)        6,768 
 
 
 

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

21

Schedule of Investments (continued) BlackRock Municipal Insured Fund (In Thousands)

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Oregon — 1.6%             
$ 8,700    Oregon State Department, Administrative Services,     
    COP, Series A, 6.25% due 5/01/2010 (a)(h)    $ 9,393 
3,865    Port of Portland, Oregon, Airport Revenue Refunding     
    Bonds (Portland International Airport), AMT,         
    Series 7-B, 7.10% due 1/01/2012 (g)(h)        4,388 
 
 
 
Pennsylvania — 2.3%         
5,510    Philadelphia, Pennsylvania, Gas Works Revenue         
    Bonds, 12th Series B, 7% due 5/15/2020 (b)(g)        6,606 
4,420    Philadelphia, Pennsylvania, Redevelopment Authority     
Revenue Bonds (Neighborhood Transformation),
    Series A, 5.50% due 4/15/2020 (c)        4,742 
7,010    Pittsburgh, Pennsylvania, GO, Series C, 5.25%         
    due 9/01/2018 (e)        7,756 
 
 
 
Rhode Island — 0.9%         
6,815    Rhode Island State Economic Development         
Corporation, Airport Revenue Bonds, Series B, 6%
    due 7/01/2010 (c)(h)        7,347 
 
 
 
Texas — 4.8%             
25,950    Dallas-Fort Worth, Texas, International Airport Revenue     
    Bonds, AMT, Series A, 6% due 11/01/2028 (c)        26,750 
3,500    Houston, Texas, Water Conveyance System Contract,     
    COP, Series J, 6.25% due 12/15/2013 (a)        3,999 
8,110    Lewisville, Texas, Independent School District,         
Capital Appreciation and School Building, GO,
    Refunding, 4.67% due 8/15/2024 (c)(m)        3,482 
1,500    North Texas Thruway Authority, Dallas North         
Thruway System Revenue Bonds, Series A, 5%
    due 1/01/2035 (e)        1,547 
    Texas State Department of Housing and Community     
    Affairs, S/F Mortgage Revenue Bonds, AMT,         
    Series A (d)(g):         
2,065         5.45% due 9/01/2023        2,099 
2,700         5.50% due 3/01/2026        2,736 
 
 
 
Utah — 1.1%             
11,930    Utah Transit Authority, Sales Tax Revenue Refunding     
    Bonds, Sub-Series A, 5.30% due 6/15/2036 (g)(m)    2,634 
    Utah Water Finance Agency Revenue Bonds (Pooled     
    Loan Financing Program), Series A (a):         
2,515         5.75% due 10/01/2015        2,678 
3,770         6% due 10/01/2020        4,018 
 
 
 
Vermont — 0.2%             
1,300    Vermont HFA, Revenue Refunding Bonds, AMT,         
    Series C, 5.50% due 11/01/2038 (e)        1,315 
 
 
 
Washington — 0.9%         
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 (a)        7,377 
 
 
 
Wisconsin — 1.4%         
9,000    Superior, Wisconsin, Limited Obligation Revenue         
Refunding Bonds (Midwest Energy Resources),
    Series E, 6.90% due 8/01/2021 (c)        11,509 
670    Wisconsin State, GO, AMT, Series B, 6.50%         
    due 5/01/2025 (g)        671 
2    Wisconsin State Health and Educational Facilities         
Authority Revenue Bonds, DRIVERS, Series 2310Z,
    6.151% due 10/01/2015 (j)(k)        2 
 
 
 
    Total Municipal Bonds         
    (Cost — $663,174) — 82.1%        695,211 
 
 
 

Face    Municipal Bonds Transferred to         
Amount    Tender Option Bond Trusts (l)        Value 
 
 
 
 
California — 4.8%         
$ 7,500    San Jose, California, Financing Authority, Lease         
Revenue Refunding Bonds (Civic Center Project),
    Series B, 5% due 6/1/2032 (a)    $ 7,681 
10,000    Hesperia, California, Public Financing Authority         
    Revenue Bonds, Series 2126, 6.86%         
    due 9/01/2017 (j)(k)        10,736 
12,040    Mount Diablo, California, Unified School District, GO     
    (Election of 2002), 5% due 7/01/2007 (c)        12,404 
10,000    Washington, California, Unified School         
    District, 5.125% due 8/01/2037 (a)        10,224 
 
 
 
Florida — 5.8%             
Miami-Dade County, Florida, Aviation Revenue
    Refunding Bonds (Miami International Airport), AMT,     
    Series A:         
15,000    5% due 10/01/2039 (g)        14,776 
9,980    5% due 10/01/2040 (k)        9,661 
14,600    5% due 10/01/2040 (k)        14,133 
10,000    Tallahassee, Florida, Energy System Revenue Bonds,     
    5% due 10/01/2037 (g)        10,295 
 
 
 
Maryland — 2.6%             
21,640    Baltimore, Maryland, Convention Center Hotel Revenue     
    Bonds, Senior Series A, 5.25% due 9/01/2039 (k)    22,091 
 
 
Michigan — 1.6%             
13,145    Michigan State Strategic Fund, Limited Obligation         
    Revenue Refunding Bonds (Detroit Edison Company     
Pollution Control Project), AMT, Series A, 5.50%
    due 6/1/2030 (k)        13,505 
 
 
 
Illinois — 3.4%             
17,690    Chicago, Illinois, O'Hare International Airport         
Revenue Bonds, Third Lien, AMT, Series B-2, 6%
    due 1/1/2027 (g)        18,869 
10,000    Illinois Municipal Electric Agency, Power Supply         
    Revenue Bonds, Series A, 0.05% due 2/01/2035 (c)    10,219 
 
 
Nebraska — 1.4%             
11,300    Public Power Generation Agency, Nebraska Revenue     
    Bonds (Whelan Energy Center Unit 2-A), 5%         
    due 1/01/2025 (a)        11,791 
 
 
 
New York — 3.8%             
13,925    New York City, New York, Sales Tax Asset Receivable     
Corporation Revenue Bonds, Series A, 5.25%
    due 10/15/2027 (a)        14,788 
16,830    New York State Thruway Authority, General Revenue     
    Refunding Bonds, Series G, 5% due 1/01/2032 (e)    17,524 
 
 
New Jersey — 1.7%         
13,500    New Jersey State Turnpike Authority, Turnpike Revenue     
    Bonds, Series C, 5% due 1/01/2030 (e)        14,008 
 
 
 
Texas — 0.6%             
5,000    Dallas-Fort Worth, Texas, International Airport Revenue     
    Bonds, AMT, Series A, 5.50% due 11/1/2033 (g)        5,105 
 
 
 
Wisconsin — 1.7%         
13,675    Wisconsin State Health and Educational         
    Facilities Authority Revenue Bonds,VRDN,         
    Series 2310Z, 6.151% due 10/01/2015 (j)(k)        14,078 
 
 
 
Total Municipal Bonds Transferred to Tender
    Option Bond Trusts (Cost — $237,233) — 27.4%        231,888 
 
 
 

22 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Schedule of Investments (concluded) BlackRock Municipal Insured Fund (In Thousands)

Shares         
Held    Mutual Funds (f)    Value 
 
 
 
300    BlackRock California Insured Municipal 2008 Term     
    Trust, Inc.    $ 4,527 
810    BlackRock Insured Municipal 2008 Term Trust, Inc.    12,175 
205    BlackRock Insured Municipal Term Trust, Inc.    2,017 
 
 
    Total Mutual Funds     
    (Cost — $21,127) — 2.2%    18,719 
 
 

Shares         
Held    Short-Term Securities       Value 
 
 
 
16,454    Merrill Lynch Institutional Tax-Exempt     
    Fund, 3.35% (f)(i)    $ 16,454 
 
 
    Total Short-Term Securities     
    (Cost — $16,454) — 1.9%    16,454 
 
 
Total Investments (Cost — $937,988*) — 113.6%    962,272 
Other Assets Less Liabilities — 0.4%    3,606 
Liability for Trust Certificates, Including Interest     
   Expense Payable — (14.0%)    (118,498) 
   
Net Assets — 100.0%    $ 847,380 
   

*      The cost and unrealized appreciation (depreciation) of investments as of December 31, 2007, as computed for federal income tax purposes, were as follows:
 
Aggregate cost    $ 820,953 
   
Gross unrealized appreciation    $ 32,496 
Gross unrealized depreciation    (8,445) 
   
Net unrealized appreciation    $ 24,051 
   

(a)      AMBAC Insured.
 
(b)      Escrowed to maturity.
 
(c)      FGIC Insured.
 
(d)      FNMA/GNMA Collateralized.
 
(e)      FSA Insured.
 
(f)      Investments in companies considered to be an affiliate of the Fund, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as follows:
 
    Purchase    Sales    Realized    Dividend 
Affiliate    Cost    Cost    Gain    Income 
 
 
 
 
 
BlackRock California Insured                 
   Municipal 2008                 
   Term Trust, Inc.    —    —    —    $ 96 
BlackRock Insured Municipal                 
   2008 Term Trust, Inc.    —    —    —    $313 
BlackRock Insured Municipal                 
   Term Trust, Inc.    —    —    —    $ 39 
Merrill Lynch Institutional                 
   Tax-Exempt Fund    $13,217†    —    —    $162 
 
 
 
 

† Represents net purchase cost.

See Notes to Financial Statements.

(g)      MBIA Insured.
 
(h)      Prerefunded.
 
(i)      Represents the current yield as of December 31, 2007.
 
(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)      Securities represent underlying bonds transferred to a separate securitization trust established in a tender option bond transaction in which the Fund may have acquired the residual interest certificates. These securities serve as collateral in a financing transaction. See Note 1(c) of the Notes to Financial Statements for details of munici- pal bonds transferred to tender option bond trusts.
 
(m)      Represents a zero coupon or step bond; the interest rate shown reflects the effective yield at the time of purchase.
 

• Forward interest rate swaps outstanding as of December 31,2007 were as follows:

    Notional    Unrealized 
    Amount    Depreciation 
 
 
 
Pay a fixed rate of 3.878% and receive         
a floating rate based on 1-week SIFMA         
Municipal Swap Index         
Broker, JPMorgan Chase         
Expires February 2028    $20,000    $(313) 
 
 

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

23

Schedule of Investments as of December 31, 2007 BlackRock National Municipal Fund (In Thousands)
(Unaudited)

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Alabama — 0.8%             
$ 3,820    Alabama Incentives Financing Authority, Special         
Obligation Revenue Refunding Bonds, Series A, 6%
    due 10/01/2029 (c)    $ 4,039 
3,525    Jefferson County, Alabama, Public Building Authority,     
    Lease Revenue Bonds, 5.125% due 4/01/2021 (c)    3,773 
500    Mobile, Alabama, Industrial Development Board,         
Environmental Improvement Revenue Refunding
Bonds (International Paper Company Project), AMT,
    Series A, 6.35% due 5/15/2016        516 
2,500    Selma, Alabama, IDB, Environmental Improvement         
Revenue Refunding Bonds (International Paper
    Company Project), AMT, Series A, 6.70%         
    due 2/01/2018        2,601 
3,400    Tuscaloosa, Alabama, Special Care Facilities Financing     
Authority, Residential Care Facility Revenue Bonds
(Capstone Village, Inc. Project), Series A, 5.875%
    due 8/01/2036        3,139 
 
 
 
Alaska — 0.3%             
3,860    Anchorage, Alaska, School, GO, Series B, 5.875%         
    due 12/01/2010 (d)(n)        4,151 
 
 
 
Arizona — 3.0%             
4,000    Arizona Health Facilities Authority Revenue Bonds         
(Catholic Healthcare West), Series A, 6.625%
    due 7/01/2020        4,362 
7,750    Maricopa County and Phoenix, Arizona, IDA,         
S/F Mortgage Revenue Bonds, AMT, Series A-2,
    5.80% due 7/01/2040 (g)        8,252 
3,100    Maricopa County, Arizona, IDA, Education Revenue         
    Bonds (Arizona Charter Schools Project 1),         
    Series A, 6.75% due 7/01/2029        2,929 
1,625    Maricopa County, Arizona, IDA, Health Facilities         
Revenue Refunding Bonds (Catholic Healthcare
    West Project), Series A, 5% due 7/01/2021        1,630 
1,000    Maricopa County, Arizona, Pollution Control         
    Corporation, PCR, Refunding (Public Service         
Company of New Mexico Project), Series A, 6.30%
    due 12/01/2026        1,005 
    Peoria, Arizona, Improvement District Number 8801,     
    Special Assessment Bonds:         
190         7.30% due 1/01/2009        195 
430         7.20% due 1/01/2010        442 
395         7.30% due 1/01/2011        406 
510         7.20% due 1/01/2013        524 
3,685    Phoenix, Arizona, IDA, Airport Facility, Revenue         
    Refunding Bonds (America West Airlines Inc. Project),     
    AMT, 6.30% due 4/01/2023        3,508 
500    Pinal County, Arizona, IDA, Wastewater Revenue         
Bonds (San Manuel Facilities Project), AMT, 6.25%
    due 6/01/2026        521 
323    Prescott Valley, Arizona, Improvement District, Special     
Assessment Bonds (Sewer Collection System
    Roadway Repair), 7.90% due 1/01/2012        336 
12,900    Salt Verde Financial Corporation, Arizona, Senior Gas     
    Revenue Bonds, 5.50% due 12/01/2029        13,147 
3,515    Tucson, Arizona, IDA, Senior Living Facilities Revenue     
    Bonds (Christian Care Tucson Inc. Project),         
    Series A, 6.125% due 7/01/2010 (k)(n)        3,797 

Face         
Amount    Municipal Bonds    Value 
 
 
 
Arizona (concluded)     
$ 1,000    University of Arizona, COP (University of     
Arizona Parking and Student Housing), 5.75%
    due 6/01/2009 (c)(n)    $ 1,038 
    University of Arizona, COP (University of     
    Arizona Projects), Refunding, Series A (c):     
2,915         5.50% due 6/01/2012 (n)    3,184 
265         5.50% due 6/01/2018    285 
Vistancia Community Facilities District, Arizona, GO:
3,000         6.75% due 7/15/2022    3,180 
2,125         5.75% due 7/15/2024    2,168 
 
 
Arkansas — 0.1%         
250    Arkansas State Student Loan Authority Revenue     
    Bonds, AMT, Sub-Series B, 7.25% due 6/01/2009    253 
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)    202 
250    North Little Rock, Arkansas, Health Facilities Board,     
    Health Care Revenue Bonds (Baptist Health), 5.50%     
    due 7/01/2016    256 
500    Pine Bluff, Arkansas, Environmental Improvement     
Revenue Refunding Bonds (International Paper
    Company Project), AMT, Series A, 6.70%     
    due 8/01/2020    518 
250    University of Central Arkansas, Housing System     
    Revenue Bonds, 6.50% due 1/01/2010 (h)(n)    271 
 
 
California — 17.7%     
2,500    Agua Caliente Band of Cahuilla Indians, California,     
    Casino Revenue Bonds, 6% due 7/01/2018    2,537 
12,000    Antelope Valley, California, Health Care District     
    Revenue Bonds, VRDN, Series A, 5.25%     
    due 9/01/2017 (r)    12,093 
    Bay Area Toll Authority, California, Toll Bridge Revenue     
    Refunding Bonds (San Francisco Bay Area), Series F:     
20,000         5% due 4/01/2031    20,878 
10,000         5% due 4/01/2031    10,482 
California Pollution Control Financing Authority,
Solid Waste Disposal Revenue Bonds (Waste
    Management Inc. Project), AMT:     
6,000         Series A-2, 5.40% due 4/01/2025    5,900 
6,750         Series C, 5.125% due 11/01/2023    6,547 
4,150    California Pollution Control Financing Authority,     
Solid Waste Disposal Revenue Refunding Bonds
    (Republic Services Inc. Project), AMT Series C, 5.25%     
    due 6/01/2023    4,299 
4,970    California Rural Home Mortgage Finance Authority,     
S/F Mortgage Revenue Bonds (Mortgage-Backed
Securities Program), AMT, Sub-Series FH-1, 5.50%
    due 8/01/2047    5,158 
45    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 (f)(g)    46 
5    California State, GO, 5.25% due 4/01/2029    5 
    California State, GO, Refunding:     
15         5.75% due 5/01/2010 (n)    16 
115         5.75% due 5/01/2030    121 
18,330         5% due 6/01/2032    18,517 

24 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Schedule of Investments (continued) BlackRock National Municipal Fund (In Thousands)

Face         
Amount    Municipal Bonds    Value 
 
 
 
California (continued)     
    California State, Various Purpose, GO:     
$10,000         5.25% due 11/01/2027    $ 10,427 
14,100         5.50% due 11/01/2033    14,967 
9,880    California Statewide Communities Development     
Authority, Health Facility Revenue Bonds (Memorial
    Health Services), Series A, 6% due 10/01/2023    10,452 
12,895    Chabot-Las Positas, California, Community College     
    District, GO (Election of 2004), Series B, 5%     
    due 8/01/2031 (c)    13,433 
    Chula Vista, California, Community Facilities District     
Number 06-1, Special Tax Bonds (Eastlake Woods
    Area), Series A:     
1,080         6.05% due 9/01/2020    1,111 
2,965         6.15% due 9/01/2026    3,006 
10,000    Chula Vista, California, IDR, Refunding (San Diego     
    Gas & Electric Co.), AMT, Series C, 5.25%     
    due 12/01/2027    10,019 
Contra Costa County, California, Special Tax Bonds
(Community Facilities District Number 2001-01):
1,585         6% due 9/01/2026    1,593 
1,200         6.10% due 9/01/2031    1,205 
3,100    Elk Grove, California, Poppy Ridge Community     
Facilities Number 3 Special Tax, Series 1, 6%
    due 9/01/2008 (n)    3,185 
10,000    Fremont, California, Unified School District, Alameda     
    County, GO (Election of 2002), Series B, 5%     
    due 8/01/2028 (h)    10,429 
12,730    Los Angeles County, California, Metropolitan     
    Transportation Authority, Sales Tax Revenue Refunding     
Bonds, Proposition A, First Tier Senior-Series A, 5%
    due 7/01/2035 (c)    13,189 
20,000    Metropolitan Water District of Southern California,     
    Waterworks Revenue Bonds, Series A, 5%     
    due 7/01/2037    20,987 
10,000    Metropolitan Water District of Southern California,     
    Waterworks Revenue Refunding Bonds, Series B, 5%     
    due 7/01/2035    10,458 
23,200    Palomar Pomerado Health Care District, California,     
    GO (Election of 2004), Series A, 5.125%     
    due 8/01/2037 (j)    24,208 
1,100    Poway, California, Unified School District, Special Tax     
Bonds (Community Facilities District Number 6),
    Series A, 6.05% due 9/01/2025    1,122 
8,000    Rancho Mirage, California, Joint Powers Financing     
Authority Revenue Bonds (Eisenhower Medical
    Center), Series A, 5% due 7/01/2038    7,727 
2,695    Riverside, California, Improvement Bond Act of     
1915, Special Assessment (Riverwalk Assessment
    District), 6.375% due 9/02/2026    2,754 
    Roseville, California, Special Tax Bonds:     
3,915         (Fiddyment Ranch Community Facilities     
         Number 1), 5.125% due 9/01/2026    3,570 
1,125         (Stoneridge Community Facilities Number 1),     
         6% due 9/01/2011 (n)    1,257 
1,250         (Stoneridge Community Facilities Number 1),     
         6.20% due 9/01/2011 (n)    1,405 
2,500         (Stoneridge Community Facilities Number 1),     
         6.30% due 9/01/2011 (n)    2,819 
    Sacramento, California, Special Tax (North     
    Natomas Community Facilities):     
2,200         Series 01-03, 6% due 9/01/2028    2,202 
2,270         Series 4-C, 6% due 9/01/2028    2,272 

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
California (concluded)         
$10,000    San Diego, California, Public Facilities Financing     
Authority, Subordinated Water Revenue Refunding
    Bonds, 5% due 8/01/2032 (j)    $ 10,223 
5,865    San Francisco, California, Bay Area Rapid Transit     
District, Sales Tax Revenue Refunding Bonds,
    Series A, 4.25% due 7/01/2036 (h)        5,465 
    San Francisco, California, City and County     
    Redevelopment Agency, Community Facilities District     
Number 6, Special Tax Bonds (Mission Bay South
    Public Improvements Project):         
5,000         6% due 8/01/2021        5,085 
2,500         Series A, 6% due 8/01/2025        2,527 
1,075    San Francisco, California, Uptown Parking     
    Corporation, Parking Revenue Bonds         
    (Union Square), 6% due 7/01/2020 (j)    1,178 
Santa Margarita, California, Water District, Special
Tax Refunding Bonds (Community Facilities District
    Number 99), Series 1:         
1,030         6.20% due 9/01/2009 (n)        1,102 
2,950         6.25% due 9/01/2009 (n)        3,150 
2,650         6.20% due 9/01/2020        2,735 
4,500    Southern California HFA, S/F Mortgage Revenue     
    Bonds, AMT, Series A, 5.80% due 12/01/2049 (f)(g)    4,791 
2,000    Tustin, California, Community Facilities District     
Number 07-1, Special Tax Bonds (Tustin Legacy),
    6% due 9/01/2037        1,981 
 
 
 
Colorado — 1.6%             
500    Boulder County, Colorado, Hospital Development     
    Revenue Bonds (Longmont United Hospital Project),     
    6% due 12/01/2010 (k)(n)        539 
225    Colorado HFA, Revenue Bonds (S/F Program),     
    Series B-3 6.55% due 10/01/2016        231 
    Colorado HFA, Revenue Redunding Bonds     
    (S/F Program):         
255         AMT, Senior Series A-2, 7.50% due 4/01/2031    264 
100         AMT Senior Series B-2, 7.10% due 4/01/2017    103 
760         AMT Senior Series B-2, 7.25% due 10/01/2031    817 
20         AMT, Senior Series B-3, 6.80% due 11/01/2028    21 
275         AMT, Senior Series C-2, 7.25% due 10/01/2031 (e)    277 
90         Senior Series A-3, 7.35% due 10/01/2030    93 
475         Senior Series C-3, 6.75% due 10/01/2021 (e)    519 
100         Senior Series C-3, 7.15% due 10/01/2030 (e)    102 
1,000    Colorado Health Facilities Authority, Revenue     
Refunding Bonds (Christian Living Communities
    Project), Series A, 5.75% due 1/01/2037    926 
Colorado Water Resource and Power Development
Authority, Small Water Resources Revenue Bonds
    Series A (d):         
350         5.80% due 11/01/2010 (n)        375 
200         5.80% due 11/01/2020        212 
Elk Valley, Colorado, Public Improvement Revenue
    Bonds (Public Improvement Fee):         
7,560         Series A, 7.35% due 9/01/2031        7,812 
880         Series B, 7.45% due 9/01/2031        911 
3,685    Larimer County, Colorado, Poudre School District     
    Number R-1, GO, 6% due 12/15/2010 (d)(n)    3,982 
Plaza Metropolitan District Number 1, Colorado, Tax
    Allocation Revenue Bonds (Public Improvement Fees):     
7,700         8% due 12/01/2025        8,207 
1,910         8.125% due 12/01/2025        1,903 
 
 
 

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

25

Schedule of Investments (continued) BlackRock National Municipal Fund (In Thousands)

Face         
Amount    Municipal Bonds    Value 
 
 
 
Connecticut — 1.8%     
$ 1,000    Connecticut State Development Authority,     
    Governmental Lease Revenue Bonds, 6.60%     
    due 6/15/2014 (j)    $ 1,003 
Connecticut State Development Authority, Water
    Facility Revenue Bonds:     
2,750         (Aquarion Water Company Project), AMT, 5.10%     
         due 9/01/2037 (l)    2,704 
1,250         (Bridgeport Hydraulic Company), AMT, 6.15%     
         due 4/01/2035 (c)    1,277 
960    Connecticut State, HFA, Revenue Refunding     
Bonds (Housing Mortgage Finance Program),
    Series C-1, 6.30% due 11/15/2017    990 
Connecticut State Health and Educational Facilities
    Authority Revenue Bonds:     
1,000         (Bridgeport Hospital), (Series A, 6.625%     
         due 7/01/2018 (j)    1,004 
1,500         (Waterbury Hospital Issue), Series C, 5.75%     
         due 7/01/2020 (k)    1,537 
1,000         (Westover School) Series A, 5.70%     
         due 7/01/2010 (k)(n)    1,071 
Connecticut State Health and Educational Facilities
    Authority, Revenue Refunding Bonds (k):     
12,045         (Eastern Connecticut Health Network),     
         Series A, 6.50% due 7/01/2010 (n)    13,129 
640         (Sacred Heart University), 6.625%     
         due 7/01/2026    648 
5,710         (University of Hartford), Series E, 5.50%     
         due 7/01/2022    5,935 
460    Connecticut State Higher Education Supplemental     
    Loan Authority, Revenue Bonds (Family     
Education Loan Program), AMT, Series A, 5.50%
    due 11/15/2020 (j)    463 
860    Waterbury, Connecticut, GO, 6%     
    due 2/01/2009 (k)(n)    896 
 
 
Delaware — 0.1%         
1,685    New Castle County, Delaware, PCR (General Motors     
    Corporation Project), VRDN, 7% due 10/01/2008 (r)    1,685 
 
 
Florida — 6.7%         
5,500    Alachua County, Florida, IDR (North Florida     
    Retirement Village), Refunding, 5.875%     
    due 11/15/2036    5,123 
1,975    Anthem Park Community Development District,     
    Florida, Capital Improvement Revenue Bonds, 5.80%     
    due 5/01/2036    1,737 
2,000    Ave Maria Stewardship Community District, Florida,     
Capital Improvement Revenue Bonds, Series A,
    5.125% due 5/01/2038    1,555 
1,500    Ave Maria Stewardship Community District, Florida,     
    Revenue Bonds, 4.80% due 11/01/2012    1,379 
1,640    Ballantrae, Florida, Community Development     
District, Capital Improvement Revenue Bonds, 6%
    due 5/01/2035    1,627 
4,900    Bartram Springs Community Development     
District, Florida, Special Assessment Refunding
    Bonds, 4.75% due 5/01/2034    3,994 
1,755    Beacon Tradeport Community, Florida, Development     
District, Special Assessment Revenue Refunding
Bonds (Commercial Project), Series A, 5.25%
    due 5/01/2016 (k)    1,811 

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Florida (continued)         
$ 2,500    CFM Community Development District, Florida,     
    Capital Improvement Revenue Bonds,         
    Series B, 5.875% due 5/01/2014    $ 2,295 
2,725    Duval County, Florida, School Board, COP, 5.75%     
    due 7/01/2017 (h)        2,822 
7,005    Escambia County, Florida, Health Facilities     
Authority, Health Facility Revenue Refunding Bonds
    (Azalea Trace Inc.), VRDN, Series A, 5.10%     
    due 11/15/2015 (k)(r)        7,005 
Fiddlers Creek, Florida, Community Development
District Number 2, Special Assessment Revenue
    Bonds:         
5,350         Series A, 6.375% due 5/01/2035        5,178 
600         Series B, 5.75% due 5/01/2013        597 
7,000    Halifax Hospital Medical Center, Florida, Hospital     
Revenue Refunding and Improvement Bonds,
    Series A, 5.25% due 6/01/2026        6,894 
1,135    Highland Meadows Community Development District,     
    Florida, Special Assessment Bonds, Series A, 5.50%     
    due 5/01/2036        905 
5,000    Hillsborough County, Florida, IDA, Exempt Facilities     
Revenue Bonds (National Gypsum Company), AMT,
    Series A, 7.125% due 4/01/2030        5,132 
16,845    Hillsborough County, Florida, IDA, Hospital Revenue     
Bonds (Tampa General Hospital Project), 5.25%
    due 10/01/2041        16,201 
2,000    Lee County, Florida, IDA, Health Care Facilities,     
Revenue Refunding Bonds (Shell Point/Alliance
    Obligor Group), 5% due 11/15/2029        1,765 
1,140    Lexington Oaks, Florida, Community Development     
District, Special Assessment Revenue Bonds,
    Series A, 6.70% due 5/01/2033        1,183 
945    Mediterra, Florida, South Community Development     
    District, Capital Improvement Revenue Bonds, 6.85%     
    due 5/01/2031        980 
2,500    Middle Village Community Development District,     
Florida, Special Assessment Bonds, Series A, 6%
    due 5/01/2035        2,480 
6,625    Midtown Miami, Florida, Community Development     
District, Special Assessment Revenue Bonds,
    Series A, 6.25% due 5/01/2037        6,408 
1,000    New River Community Development District, Florida,     
Capital Improvement Revenue Bonds, Series B, 5%
    due 5/01/2013        922 
1,490    Old Palm Community Development District, Florida,     
Special Assessment Bonds (Palm Beach Gardens),
    Series B, 5.375% due 5/01/2014        1,332 
3,500    Orange County, Florida, HFA, M/F Housing Revenue     
Bonds (Loma Vista Project), Series G, 5.50%
    due 3/01/2032        3,510 
1,000    Orange County, Florida, Health Facilities Authority,     
    Hospital Revenue Bonds (Orlando Regional     
    Healthcare), 5.70% due 7/01/2026        935 
Panther Trace Community Development District II,
Florida, Special Assessment Revenue Bonds:
5,000         5.125% due 11/01/2013        4,606 
5,000         Series A, 5.60% due 5/01/2035        4,216 
    Park Place Community Development District, Florida,     
    Special Assessment Revenue Bonds:         
960         6.75% due 5/01/2032        999 
2,300         6.375% due 5/01/2034        2,328 

26 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Schedule of Investments (continued) BlackRock National Municipal Fund (In Thousands)

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Florida (concluded)         
$ 2,000    Saint Lucie, Florida, West Services District, Utility         
    Revenue Refunding Bonds, Senior Lien, 6%         
    due 10/01/2022 (j)    $ 2,157 
Sarasota County, Florida, Health Facilities Authority,
    Retirement Facility Revenue Refunding Bonds (Village     
    on the Isle Project):         
780         5.50% due 1/01/2027        720 
1,645         5.50% due 1/01/2032        1,463 
2,875    Somerset Community Development District, Florida,     
    Capital Improvement Revenue Bonds, 5%         
    due 5/01/2015        2,583 
210    Sterling Hill, Florida, Community Development District,     
Capital Improvement Revenue Refunding Bonds,
    Series B, 5.50% due 11/01/2010        209 
80    Stoneybrook West, Florida, Community Development     
District, Special Assessment Revenue Bonds,
    Series B, 6.45% due 5/01/2010        80 
1,190    Tern Bay Community Development District, Florida,         
Capital Improvement Revenue Refunding Bonds,
    Series B, 5% due 5/01/2015        997 
3,000    Tolomato Community Development District, Florida,     
    Special Assessment Bonds, 6.45% due 5/01/2023    2,928 
3,520    University of South Florida Financing Corporation,         
    COP (Master Lease Program), Refunding,         
    Series A, 5.375% due 7/01/2022 (c)        3,770 
1,455    Watergrass Community Development District, Florida,     
Special Assessment Revenue Bonds, Series B,
    4.875% due 11/01/2010        1,388 
 
 
 
Georgia — 2.1%             
5,000    Atlanta, Georgia, Tax Allocation Bonds (Atlantic         
    Station Project), 7.90% due 12/01/2011 (n)        5,903 
    Brunswick and Glynn County, Georgia, Development     
Authority, First Mortgage Revenue Bonds (Coastal
    Community Retirement Corporation Project),         
    Series A (p)(s):         
2,285         7.125% due 1/01/2025        1,320 
4,555         7.25% due 1/01/2035        2,631 
5,210    College Park, Georgia, Business and IDA         
Revenue Bonds (Civic Center Project), 5.75%
    due 9/01/2010 (c)(n)        5,649 
1,940    Fulton County, Georgia, Development Authority,         
PCR, Refunding (General Motors Corporation),
    VRDN, 6.50% due 4/01/2010 (r)        1,940 
3,450    Fulton County, Georgia, Development Authority         
    Revenue Bonds (Morehouse College Project), 5.875%     
    due 12/01/2010 (c)(n)        3,744 
2,250    Fulton County, Georgia, Residential Care Facilities,         
    Revenue Refunding Bonds (Canterbury Court Project),     
    Series A, 6% due 2/15/2022        2,225 
Gainesville, Georgia, Redevelopment Authority,
    Educational Facilities Revenue Refunding         
    Bonds (Riverside Military Academy):         
4,350         5.125% due 3/01/2027        4,097 
1,800         5.125% due 3/01/2037        1,639 
1,500    Milledgeville-Baldwin County, Georgia, Development     
    Authority Revenue Bonds (Georgia College and State     
    University Foundation), 6% due 9/01/2014 (n)        1,739 
5,000    Rockdale County, Georgia, Development Authority         
    Revenue Bonds (Visy Paper Project), AMT,         
    Series A, 6.125% due 1/01/2034        4,786 
 
 
 

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Illinois — 6.3%             
$ 1,000    Bolingbrook, Illinois, Special Services Area Number 1,     
Special Tax Bonds (Forest City Project), 5.90%
    due 3/01/2027    $ 1,059 
26,800    Chicago, Illinois, O'Hare International Airport         
Revenue Bonds, Third Lien, AMT, Series B-2, 6%
    due 1/01/2029 (l)        28,474 
350    Chicago, Illinois, Park District, GO, Refunding,         
    Series B, 5.75% due 1/01/2015 (d)        374 
230    Chicago, Illinois, Park District, Limited Tax, GO,         
    Series A, 5.75% due 1/01/2016 (d)        246 
315    Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT,     
    Series A, 7.15% due 9/01/2031 (f)(g)        325 
2,000    Chicago, Illinois, Special Assessment Bonds (Lake         
    Shore East), 6.75% due 12/01/2032        2,080 
3,210    Cicero, Illinois, GO, Refunding (Corporate         
    Purpose), 6% due 12/01/2028 (j)        3,403 
7,000    Decatur, Illinois, GO, Refunding, 6%         
    due 3/01/2008 (d)(n)        7,035 
10,000    Hodgkins, Illinois, Environmental Improvement         
Revenue Bonds (Metro Biosolids Management LLC
    Project), AMT, 6% due 11/01/2023        10,039 
3,140    Illinois Development Finance Authority Revenue         
    Bonds (Community Rehabilitation Providers Facilities),     
    Series A, 6.50% due 7/01/2022        3,331 
Illinois State Finance Authority Revenue Bonds,
    Series A:         
1,750         (Friendship Village of Schaumburg),         
         5.625% due 2/15/2037        1,597 
2,155         (Landing at Plymouth Place Project),         
         6% due 5/15/2037        2,040 
3,500    Illinois State Finance Authority, Revenue Refunding     
    Bonds (Sherman Health System Project),         
    Series A, 5.50% due 8/01/2037        3,352 
    Illinois State, GO, 1st Series (j):         
8,890         5.75% due 12/01/2015        9,501 
3,745         5.75% due 12/01/2016        4,003 
4,000         5.75% due 12/01/2017        4,276 
3,000    Illinois State, Sales Tax Revenue Bonds, 6%         
    due 6/15/2020        3,174 
2,000    Illinois State, Sales Tax Revenue Refunding Bonds,         
    Series Q, 6% due 6/15/2009        2,039 
16,160    Metropolitan Pier and Exposition Authority, Illinois,         
Dedicated State Tax Revenue Bonds (McCormick
    Place Expansion), Series A, 5.25% due 6/15/2042 (j)    16,717 
625    Naperville, Illinois, IDR (General Motors Corporation),     
    Refunding, VRDN, 6.50% due 12/01/2012 (r)        625 
1,585    Village of Wheeling, Illinois, Revenue Bonds (North         
    Milwaukee/Lake-Cook Tax Increment Financing (TIF)     
    Redevelopment Project), 6% due 1/01/2025        1,526 
 
 
 
Indiana — 1.7%             
7,350    Indiana Bond Bank, Special Program Revenue         
    Bonds (Town of Westfield and West Central         
Conservancy District Projects), Series A, 5.125%
    due 10/01/2022 (j)        7,733 
20,825    Indiana Health Facilities Financing Authority, Revenue     
Refunding Bonds (Ascension Health Credit Group),
    ARS, VRDN, Series E-6, 6% due 11/15/2039 (r)        20,825 
 
 
 

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

27

Schedule of Investments (continued) BlackRock National Municipal Fund (In Thousands)

Face         
Amount    Municipal Bonds    Value 
 
 
 
Iowa — 0.3%         
$ 1,000    Iowa City, Iowa, Sewer Revenue Bonds, 5.75%     
    due 7/01/2021 (j)    $ 1,002 
3,905    Iowa Finance Authority, Health Care Facilities,     
    Revenue Refunding Bonds (Care Initiatives     
    Project), 9.25% due 7/01/2011 (n)    4,718 
 
 
Kansas — 0.7%         
6,605    Sedgwick and Shawnee Counties, Kansas,     
S/F Mortgage Revenue Bonds (Mortgage-Backed
    Securities Program), AMT, Series B-2, 5.25%     
    due 12/01/2038 (f)(g)    6,848 
1,300    Sedgwick and Shawnee Counties, Kansas,     
    S/F Revenue Bonds, AMT, Series A-1, 6.95%     
    due 6/01/2029 (i)    1,368 
2,500    Wichita, Kansas, Hospital Facilities Revenue     
    Refunding and Improvement Bonds, Series III, 6.25%     
    due 11/15/2019    2,682 
 
 
Louisiana — 1.6%         
5,000    Jefferson Parish, Louisiana, Finance Authority,     
S/F Mortgage Revenue Bonds, Series B, 5.70%
    due 12/01/2048 (f)(g)    5,272 
275    Louisiana HFA, S/F Mortgage Revenue Bonds, AMT,     
    Series D-2, 5.80% due 6/01/2020 (g)    278 
    Louisiana Local Government Environmental Facilities     
and Community Development Authority Revenue
    Bonds:     
7,000         (Capital Projects and Equipment Acquisition),     
         Series A, 6.30% due 7/01/2030 (c)    8,318 
5,000         (Westlake Chemical Corporation), 6.75%     
         due 11/01/2032    4,957 
5,000    Louisiana Public Facilities Authority Revenue Bonds     
    (University of New Orleans Research and Technology     
    Foundation, Inc. — Student Housing Project), 5.25%     
    due 3/01/2037 (j)    5,292 
2,000    Rapides Finance Authority, Louisiana, Environmental     
    Improvement Revenue Bonds (International     
Paper Company Project), AMT, Series A, 6.55%
    due 11/15/2023    2,054 
 
 
Maryland — 0.4%         
500    Anne Arundel County, Maryland, Special Obligation     
Revenue Bonds (Arundel Mills Project), 7.10%
    due 7/01/2009 (n)    538 
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    1,022 
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    1,030 
1,000    Maryland State Energy Financing Administration,     
Solid Waste Disposal Revenue Bonds, Limited
    Obligation (Wheelabrator Water Projects), AMT, 6.45%     
    due 12/01/2016    1,012 
3,200    Maryland State Health and Higher Educational     
    Facilities Authority Revenue Bonds (King     
Farm Presbyterian Community), Series B, 5%
    due 1/01/2017    3,154 
 
 

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Massachusetts — 0.5%         
$ 240    Massachusetts Educational Financing Authority,         
Education Loan Revenue Refunding Bonds, AMT,
    Issue E, 5.85% due 7/01/2014 (c)    $ 242 
3,000    Massachusetts State Development Finance Agency     
    Revenue Bonds (Linden Ponds, Inc. Facility), Series A,     
    5.75% due 11/15/2035        2,721 
3,850    Massachusetts State Health and Educational Facilities     
    Authority Revenue Bonds (Medical Center of         
Central Massachusetts), CARS, Series B, 8.72%
    due 6/23/2022 (c)(m)        4,018 
130    Massachusetts State Water Pollution Abatement Trust,     
    Water Abatement Revenue Bonds, Series A, 6.375%     
    due 2/01/2015        130 
1,600    Montachusett, Massachusetts, Regional         
Vocational Technical School District, GO, 5.95%
    due 1/15/2010 (j)(n)        1,694 
 
 
 
Michigan — 1.6%             
7,500    Delta County, Michigan, Economic Development         
Corporation, Environmental Improvement Revenue
Refunding Bonds (Mead Westvaco-Escanaba),
    Series A, 6.25% due 4/15/2012 (n)        8,368 
500    Dickinson County, Michigan, Economic Development     
Corporation, Environmental Improvement Revenue
Refunding Bonds (International Paper Company
    Project), Series A, 5.75% due 6/01/2016        517 
Eastern Michigan University, General Revenue
    Refunding Bonds (c):         
585         6% due 6/01/2010 (n)        629 
415         6% due 6/01/2024        441 
3,000    Flint, Michigan, Hospital Building Authority, Revenue     
Refunding Bonds (Hurley Medical Center), 6%
    due 7/01/2020        3,024 
3,325    Macomb County, Michigan, Hospital Finance Authority,     
Hospital Revenue Bonds (Mount Clemens General
    Hospital), Series B, 5.875% due 11/15/2034        3,262 
1,500    Michigan State Hospital Finance Authority, Revenue     
    Refunding Bonds (Mercy-Mount Clemens), Series A,     
    6% due 5/15/2009 (j)(n)        1,574 
10,000    Michigan Tobacco Settlement Financing Authority,         
Tobacco Settlement Asset-Backed Revenue Bonds,
    Senior Series A, 6% due 6/01/2048        9,733 
 
 
 
Minnesota — 0.8%         
240    Anoka County, Minnesota, Solid Waste Disposal         
    Revenue Bonds (Natural Rural Utilities), AMT, Series A,     
    6.95% due 12/01/2008        242 
1,000    Eden Prairie, Minnesota, M/F Housing Revenue         
Bonds (Rolling Hills Project), Series A, 6.15%
    due 8/20/2031 (i)        1,076 
    Minneapolis and Saint Paul, Minnesota, Metropolitan     
Airports Commission, Airport Revenue Bonds, AMT,
    Sub-Series D (d):         
470         5.75% due 1/01/2012        498 
470         5.75% due 1/01/2014        497 
2,060         5.75% due 1/01/2015        2,153 
    Minneapolis, Minnesota, Health Care System Revenue     
    Bonds (Allina Health System), Series A (n):         
1,500         5.70% due 11/15/2012        1,661 
2,665         5.75% due 11/15/2012        2,957 

28 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Schedule of Investments (continued) BlackRock National Municipal Fund (In Thousands)

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Minnesota (concluded)         
$ 1,110    Ramsey County, Minnesota, Housing and         
Redevelopment Authority, M/F Housing Revenue
Bonds (Hanover Townhouses Project), AMT, 6%
    due 7/01/2031    $ 1,123 
1,000    Saint Cloud, Minnesota, Health Care Revenue         
Refunding Bonds (Saint Cloud Hospital Obligation
    Group), Series A, 6.25% due 5/01/2020 (h)        1,070 
1,500    Waconia, Minnesota, Health Care Facilities Revenue     
    Bonds (Ridgeview Medical Center Project),         
    Series A, 6.125% due 1/01/2010 (k)(n)        1,586 
 
 
 
Mississippi — 0.4%         
3,935    Mississippi Home Corporation, S/F Mortgage Revenue     
    Bonds, Series A-1, 5.50% due 6/01/2038 (f)(g)        4,213 
1,700    Warren County, Mississippi, Environmental         
    Improvement Revenue Refunding Bonds (International     
Paper Company Project), AMT, Series B, 6.75%
    due 8/01/2021        1,758 
 
 
 
Missouri — 0.6%             
1,000    Fenton, Missouri, Tax Increment Revenue         
Refunding and Improvement Bonds (Gravois Bluffs
    Redevelopment Project), 5% due 4/01/2014        1,045 
1,500    Kansas City, Missouri, IDA, First Mortgage Health         
Facilities Revenue Bonds (Bishop Spencer Place),
    Series A, 6.50% due 1/01/2035        1,508 
6,435    Missouri State Housing Development Commission,         
    S/F Mortgage Revenue Bonds (Homeownership Loan     
    Program), AMT, Series E-1, 5.60% due 3/01/2037 (g)    6,763 
 
 
Montana — 1.1%             
2,925    Montana State Board of Housing, S/F Mortgage         
Revenue Refunding Bonds, AMT, Series A-2, 5.50%
    due 6/01/2037        3,081 
    Montana State Higher Education Student Assistance     
Corporation, Student Loan Revenue Refunding
    Bonds, AMT:         
10,000    ARS, VRDN, Series A, 6.40% due 12/01/2033 (r)    10,000 
6,000         Sub-Series B, 6.40% due 12/01/2032        6,113 
 
 
 
Nevada — 3.0%             
3,500    Clark County, Nevada, Airport Revenue Bonds         
(Jet Aviation Fuel Tax), AMT, Series C, 5.375%
    due 7/01/2020 (c)        3,639 
1,525    Clark County, Nevada, Improvement District         
Number 142, Special Assessment Bonds, 6.375%
    due 8/01/2023        1,570 
Elko, Nevada, GO (Airport Improvement), AMT,
    Series B (j):         
165         6.10% due 10/01/2014        167 
245         6.30% due 10/01/2019        248 
320         6.75% due 10/01/2024        324 
225         7% due 10/01/2029        228 
20,000    Henderson, Nevada, Health Care Facilities, Revenue     
Refunding Bonds (Catholic Healthcare West),
    Series B, 5.25% due 7/01/2031        20,074 
10,000    Reno, Nevada, Health Revenue Refunding Bonds         
    (Catholic Healthcare West), Series A, 5.25%         
    due 7/01/2031        10,037 
1,850    Reno, Nevada, Special Assessment District Number 4     
    (Somerset Parkway), 6.625% due 12/01/2022        1,906 
    Sparks, Nevada, Redevelopment Agency, Tax         
Allocation Revenue Refunding Bonds, Series A (k):
3,110         6% due 1/15/2015        3,260 
6,315         6% due 1/15/2023        6,528 
 
 
 

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
New Hampshire — 0.2%         
New Hampshire Health and Education Facilities
    Authority, Revenue Refunding Bonds:         
$ 1,750         (Elliot Hospital), Series B, 5.60%         
         due 10/01/2022    $ 1,808 
540         (Havenwood-Heritage Heights Retirement         
         Community), Series A, 5% due 1/01/2016        502 
1,035         (Havenwood-Heritage Heights Retirement         
         Community), Series A, 5.35% due 1/01/2026    928 
 
 
New Jersey — 2.0%         
195    Camden County, New Jersey, Pollution Control         
    Financing Authority, Solid Waste Resource Recovery,     
Revenue Refunding Bonds, AMT, Series B, 7.50%
    due 12/01/2009        195 
3,300    New Jersey EDA, Retirement Community Revenue         
    Bonds (Cedar Crest Village Inc. Facility),         
    Series A, 7.25% due 11/15/2011 (n)        3,794 
3,680    New Jersey EDA, State Lease Revenue Bonds (State     
    Office Buildings Projects), 6% due 6/15/2010 (c)(n)    3,930 
3,130    New Jersey Health Care Facilities Financing Authority     
    Revenue Bonds (South Jersey Hospital), 6%         
    due 7/01/2012 (n)        3,471 
2,250    New Jersey Health Care Facilities Financing Authority,     
Revenue Refunding Bonds (Capital Health System
    Inc.), Series A, 5.75% due 7/01/2023        2,310 
640    New Jersey State Housing and Mortgage Finance         
Agency, M/F Housing Revenue Refunding Bonds,
    Series B, 6.25% due 11/01/2026 (h)        659 
    New Jersey State Turnpike Authority, Turnpike         
    Revenue Refunding Bonds, Series A (j):         
7,025         5.75% due 1/01/2010 (n)        7,382 
2,975         5.75% due 1/01/2018        3,104 
7,000    Tobacco Settlement Financing Corporation of         
New Jersey, Asset-Backed Revenue Bonds, 7%
    due 6/01/2013 (n)        8,219 
 
 
 
New Mexico — 0.7%         
8,000    Farmington, New Mexico, PCR, Refunding (Public         
    Service Company of New Mexico — San Juan Project),     
    Series B, 6.30% due 12/01/2016        8,019 
40    New Mexico Mortgage Finance Authority, Revenue         
Refunding Bonds, Mortgage-Backed Securities,
    Series F, 7% due 1/01/2026 (g)        41 
2,865    New Mexico Mortgage Financing Authority,         
S/F Mortgage Program Revenue Bonds, AMT,
    Series D, 6.15% due 7/01/2035 (f)(g)        3,053 
250    Santa Fe County, New Mexico, Correctional System     
    Revenue Bonds, 6% due 2/01/2027 (h)        294 
 
 
 
New York — 4.8%             
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        3,253 
4,050    New York City, New York, City IDA, Special Facility         
    Revenue Bonds (British Airways Plc Project),         
    AMT, 7.625% due 12/01/2032        4,254 
New York City, New York, GO, Refunding, Series A:
6,540         6% due 5/15/2010 (n)        7,040 
2,205         6.25% due 5/15/2010 (l)(n)        2,386 
60         6% due 5/15/2021 (l)        64 

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

29

Schedule of Investments (continued) BlackRock National Municipal Fund (In Thousands)

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
New York (concluded)         
    New York City, New York, GO, Series B (j):         
$ 6,640         5.875% due 8/01/2010 (n)    $ 7,166 
1,300         5.875% due 8/01/2015        1,396 
25,000    New York State, HFA, Revenue Bonds (125 West 31st     
Street Housing), ARS, VRDN, AMT, Series A, 6.25%
    due 5/15/2038 (r)(t)        25,000 
New York State Dormitory Authority, Non-State
Supported Debt, Revenue Refunding Bonds (Mount
    Sinai-NYU Medical Center Health System), Series A:     
590         6.50% due 7/01/2010 (n)        644 
2,410         6.50% due 7/01/2016        2,534 
    New York State Dormitory Authority, Revenue         
    Refunding Bonds, Series A:         
1,680         (Mount Sinai Health), 6.50% due 7/01/2025        1,750 
3,000         (State University Educational Facilities), 7.50%     
         due 5/15/2013        3,571 
1,360    New York State Environmental Facilities Corporation,     
State Clean Water and Drinking Revenue Bonds
    (Revolving Funds), Series B, 5.875% due 1/15/2019    1,425 
2,285    Oneida County, New York, IDA Revenue Bonds         
(Civic Facility-Faxton Hospital), Series C, 6.625%
    due 1/01/2015 (k)        2,423 
3,000    Port Authority of New York and New Jersey,         
Consolidated Revenue Bonds, AMT, Thirty-Seventh
    Series, 5.50% due 7/15/2018 (h)        3,228 
95    Suffolk County, New York, IDA, Civic Facility Revenue     
Bonds (Special Needs Facilities Pooled Program),
    Series D-1, 6% due 7/01/2012        96 
5,000    Triborough Bridge and Tunnel Authority, New York,         
    Subordinate Revenue Bonds, 5.125%         
    due 11/15/2026 (c)        5,232 
705    Westchester County, New York, IDA, Civic Facilities         
Revenue Bonds (Special Needs Facilities Pooled
    Program), Series E-1, 6% due 7/01/2012        709 
8,095    Westchester County, New York, IDA, Continuing Care     
Retirement, Mortgage Revenue Bonds (Kendal on
    Hudson Project), Series A, 6.50% due 1/01/2013 (n)    9,156 
 
 
North Carolina — 2.7%         
920    Brunswick County, North Carolina, COP, 6%         
    due 6/01/2010 (h)(n)        990 
4,000    North Carolina Eastern Municipal Power Agency,         
Power System Revenue Bonds, Series D, 6.75%
    due 1/01/2026        4,219 
4,440    North Carolina Eastern Municipal Power Agency,         
    Power System Revenue Refunding Bonds,         
    Series D, 6.70% due 1/01/2019 (b)        4,679 
3,930    North Carolina HFA, Home Ownership Revenue Bonds,     
    AMT, Series 9-A, 5.80% due 1/01/2020        4,066 
    North Carolina Medical Care Commission, Health Care     
    Facilities, First Mortgage Revenue Bonds (Presbyterian     
    Homes Project):         
2,500         6.875% due 10/01/2010 (n)        2,744 
3,000         5.50% due 10/01/2031        2,888 
    North Carolina Medical Care Commission, Health Care     
    Facilities, First Mortgage Revenue Refunding Bonds:     
2,500         (Presbyterian Homes Project), Series B, 5.20%     
         due 10/01/2021        2,433 
1,100    (Salemtowne Project), 5.10% due 10/01/2030    946 

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
North Carolina (concluded)         
    North Carolina Medical Care Commission, Retirement     
    Facilities, First Mortgage Revenue Bonds:         
$ 1,625         (Forest at Duke Project), 6.375%         
         due 9/01/2012 (n)    $ 1,819 
2,500         (Givens Estates Project), Series A, 6.50%         
         due 7/01/2013 (n)        2,907 
    North Carolina Medical Care Commission, Retirement     
    Facilities, First Mortgage Revenue Refunding Bonds:     
5,000         (Forest at Duke Project), 5.125% due 9/01/2032    4,742 
1,000         (Givens Estates Project), 5% due 7/01/2033        881 
North Carolina Municipal Power Agency Number 1,
    Catawba Electric Revenue Refunding Bonds, Series B:     
500         6.375% due 1/01/2013        530 
1,080         6.375% due 1/01/2013 (b)        1,145 
5,000         6.50% due 1/01/2020        5,279 
2,500         6.50% due 1/01/2020 (b)        2,640 
Piedmont Triad Airport Authority, North Carolina,
Airport Revenue Refunding Bonds, Series A (h)(n):
1,000         6% due 7/01/2009        1,053 
1,000         6.375% due 7/01/2009        1,059 
 
 
 
Ohio — 3.4%             
23,000    Buckeye Tobacco Settlement Financing Authority,         
Ohio, Tobacco Settlement Asset-Backed Bonds,
    Series A-2, 6.50% due 6/01/2047        23,617 
6,685    Ohio HFA, Mortgage Revenue Refunding Bonds, AMT,     
    Series C, 5.90% due 9/01/2035 (g)        6,977 
1,470    Port of Greater Cincinnati Development Authority,         
    Ohio, Special Assessment Revenue Bonds         
    (Cooperative Public Parking Infrastructure         
    Project), 6.40% due 2/15/2034        1,493 
22,600    Student Loan Funding Corporation, Cincinnati, Ohio,     
Student Loan Revenue Bonds, ARS, VRDN, AMT,
    Series B-5, 6.40% due 6/01/2025 (r)(c)        22,600 
3,005    Toledo-Lucas County, Ohio, Lodging Tax Revenue         
    Refunding Bonds (Convention Center Project), 5.70%     
    due 10/01/2015 (j)        3,041 
 
 
 
Oklahoma — 0.6%         
10,000    Tulsa County, Oklahoma, Industrial Authority, Health     
    Care Revenue Refunding Bonds (Saint Francis Health     
    System), 5% due 12/15/2036        9,909 
 
 
 
Oregon — 0.3%             
    Forest Grove, Oregon, Campus Improvement         
    Revenue Refunding Bonds (Pacific University) (k)(n):     
250         6% due 5/01/2010        266 
250         6.20% due 5/01/2010 (k)(n)        267 
Oregon State Housing and Community Services
Department, Mortgage Revenue Refunding Bonds
    (S/F Mortgage Program), Series A:         
35         AMT, 6.20% due 7/01/2027        36 
55         6.40% due 7/01/2018        56 
500    Portland, Oregon, M/F Housing Authority Revenue         
    Bonds (Lovejoy Station Apartments Project),         
    AMT, 5.90% due 7/01/2023 (j)        510 
    Portland, Oregon, Urban Renewal and Redevelopment     
    Revenue Refunding Bonds, Series A (c):         
1,000         (Downtown Waterfront), 5.75% due 6/15/2018    1,063 
3,190         (South Park Blocks), 5.75% due 6/15/2018        3,390 
 
 
 

30 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Schedule of Investments (continued) BlackRock National Municipal Fund (In Thousands)

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Pennsylvania — 1.9%         
$ 3,640    Allegheny County, Pennsylvania, IDA, Environmental     
Improvement Revenue Refunding Bonds, 5.50%
    due 11/01/2016    $ 3,689 
2,220    Allegheny County, Pennsylvania, Sanitation Authority,     
    Sewer Revenue Bonds, 5.75% due 12/01/2010 (j)(n)    2,397 
1,760    Bucks County, Pennsylvania, IDA, Retirement         
Community Revenue Bonds (Ann's Choice Inc.),
    Series A, 6.125% due 1/01/2025        1,764 
7,750    Delaware County, Pennsylvania, IDA, Revenue         
Refunding Bonds (Resource Recovery Facility),
    Series A, 6.10% due 7/01/2013        7,876 
Lancaster County, Pennsylvania, Hospital Authority
Revenue Bonds (Brethren Village Project), Series A:
1,160         6.25% due 7/01/2026        1,152 
1,000         6.50% due 7/01/2040        1,002 
3,200    Langhorne Manor Boro, Pennsylvania, Higher         
    Education and Health Authority, Retirement Revenue     
Refunding Bonds (Wesley Enhanced Living), VRDN,
    Series B, 5.10% due 10/01/2032 (k)(r)        3,200 
4,000    Pennsylvania State Higher Educational Facilities         
    Authority Revenue Bonds (University of Pennsylvania     
Medical Center Health System), Series A, 6%
    due 1/15/2031        4,276 
1,265    Philadelphia, Pennsylvania, Authority for IDR,         
    Commercial Development, 7.75% due 12/01/2017    1,267 
    Sayre, Pennsylvania, Health Care Facilities Authority,     
Revenue Refunding Bonds (Guthrie Healthcare
    System), Series A:         
3,915         5.875% due 12/01/2011 (n)        4,331 
1,085         5.875% due 12/01/2031        1,120 
 
 
 
Rhode Island — 0.5%         
    Rhode Island State Economic Development         
    Corporation Revenue Bonds:         
1,000         (Providence Place Mall), 6.125%         
         due 7/01/2020 (k)        1,061 
6,815         Series B, 6% due 7/01/2010 (d)(n)        7,347 
 
 
 
South Carolina — 2.1%         
    Medical University Hospital Authority, South Carolina,     
Hospital Facilities Revenue Refunding Bonds (n):
2,450         6.50% due 8/15/2012        2,783 
5,400         Series A, 6.375% due 8/15/2012        6,106 
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        5,003 
21,215    South Carolina State Ports Authority, Ports Revenue     
    Bonds, AMT, 5.30% due 7/01/2026        21,326 
 
 
 
South Dakota — 0.2%         
3,750    Pierre, South Dakota, School District Number 32-2,     
    GO, 5.75% due 8/01/2010 (h)(n)        3,993 
 
 
 
Tennessee — 1.1%         
Chattanooga, Tennessee, IDB, Lease Rent Revenue
Bonds (Southside Redevelopment Corporation) (c):
4,485         5.75% due 10/01/2017        4,777 
3,740         5.75% due 10/01/2018        3,958 
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        980 

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Tennessee (concluded)         
$ 7,300    Shelby County, Tennessee, Health, Educational         
and Housing Facility Board, Hospital Revenue
Refunding Bonds (Methodist Healthcare), 6.50%
    due 9/01/2012 (n)    $ 8,320 
 
 
Texas — 13.2%             
5,000    Alliance Airport Authority, Inc., Texas, Special Facilities     
Revenue Refunding Bonds (American Airlines Inc.
    Project), AMT, 5.25% due 12/01/2029        3,935 
Austin, Texas, Convention Center Revenue Bonds
    (Convention Enterprises Inc.), First Tier, Series A (n):     
5,300         6.60% due 1/01/2011        5,820 
2,300         6.70% due 1/01/2011        2,532 
10,630    Austin, Texas, Revenue Bonds (Town Lake Community     
    Events Center Venue), 6.20% due 11/15/2009 (d)(n)    11,240 
Bexar County, Texas, Health Facilities Development
Corporation, Revenue Refunding Bonds (Army
    Retirement Residence Project) (n):         
600         6.125% due 7/01/2012        676 
1,750         6.30% due 7/01/2012        1,983 
11,450    Brazos River Authority, Texas, PCR, Refunding (TXU         
Energy Company Project), AMT, Series C, 5.75%
    due 5/01/2036        10,964 
4,250    Brazos River Authority, Texas, Revenue Refunding         
    Bonds (Reliant Energy Inc. Project), Series B, 7.75%     
    due 12/01/2018        4,352 
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        3,881 
370    Central Texas Housing Finance Corporation,         
S/F Mortgage Revenue Bonds (GNMA Mortgage
    Program), AMT, 8.20% due 6/28/2017 (i)        384 
3,620    Dallas-Fort Worth, Texas, International Airport Facility     
Improvement Corporation, Revenue Bonds (Learjet
    Inc.), AMT, Series A-1, 6.15% due 1/01/2016        3,520 
    Dallas-Fort Worth, Texas, International Airport         
    Revenue Bonds, AMT, Series A:         
36,500         6% due 11/01/2024 (d)        37,626 
11,250         5.50% due 11/01/2033 (j)        11,485 
Gregg County, Texas, Health Facilities Development
    Corporation, Hospital Revenue Bonds (Good         
    Shepherd Medical Center Project) (k)(n):         
3,500         6.375% due 10/01/2010        3,827 
1,000         6.875% due 10/01/2010        1,106 
5,465    Gulf Coast Waste Disposal Authority, Texas, Revenue     
Refunding Bonds (International Paper Company),
    AMT, Series A, 6.10% due 8/01/2024        5,556 
HFDC of Central Texas, Inc., Retirement Facilities
    Revenue Bonds, Series A:         
2,255         5.75% due 11/01/2036        2,013 
1,850         (Village at Gleannloch Farms), 5.50%         
         due 2/15/2037        1,590 
6,000    Houston, Texas, Airport System, Special Facilities         
    Revenue Bonds (Continental Airlines), AMT,         
    Series E, 7% due 7/01/2029        6,120 
4,000    Kerrville, Texas, Health Facilities Development         
    Corporation, Hospital Revenue Bonds (Sid Peterson     
    Memorial Hospital Project), 5.25% due 8/15/2021    3,936 
8,080    Matagorda County, Texas, Navigation District         
Number 1, Revenue Refunding Bonds (Reliant
    Energy Inc.), Series C, 8% due 5/01/2029        8,280 

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

31

Schedule of Investments (continued) BlackRock National Municipal Fund (In Thousands)

Face         
Amount    Municipal Bonds    Value 
 
 
 
Texas (concluded)     
$ 7,350    Matagorda County, Texas, Port of Bay City Authority     
Revenue Bonds (Hoechst Celanese Corp. Project),
    AMT, 6.50% due 5/01/2026    $ 7,124 
1,000    Red River, Texas, Education Finance Revenue     
Bonds (Saint Mark’s School — Texas Project), 6%
    due 2/15/2010 (n)    1,038 
5,000    SA Energy Acquisition Public Facilities Corporation,     
    Texas, Gas Supply Revenue Bonds, 5.50%     
    due 8/01/2027    5,133 
780    South Plains, Texas, Housing Finance Corporation,     
    S/F Mortgage Revenue Bonds, AMT, Series A, 7.30%     
    due 9/01/2031 (g)    792 
120    Southeast Texas Housing Finance Corporation,     
    Revenue Bonds, AMT, Series B, 8.50%     
    due 11/01/2025 (f)(i)    122 
Tarrant County, Texas, Cultural Education Facilities
    Financing Corporation, Retirement Facilities Revenue     
Refunding Bonds (Northwest Senior Housing —
    Edgemere Project), Series A:     
2,200         6% due 11/15/2026    2,158 
3,000         6% due 11/15/2036    2,896 
    Texas State Affordable Housing Corporation,     
    S/F Mortgage Revenue Bonds. AMT (f)(g):     
4,973         (Fire Fighter and Law Enforcement or Security     
Officer Home Loan Program), Series C,
         5.45% due 12/01/2039    5,115 
6,225         (Professional Educators Home Loan Program),     
         Series A-1, 5.50% due 12/01/2039    6,427 
Texas State Public Finance Authority, Building
    Revenue Bonds (h)(n):     
2,100         (General Services Commission Project), Series A,     
         6% due 2/01/2010    2,221 
1,000         (State Preservation Project), Series B,     
         6% due 8/01/2009    1,046 
45,000    Texas State Turnpike Authority, Central Texas Turnpike     
System Revenue Bonds, First Tier, Series A, 5.75%
    due 8/15/2038 (c)    48,448 
4,930    Upper Trinity Regional Water District, Texas, Water     
Revenue Bonds (Regional Treated Water Supply
    System), Series A, 6% due 8/01/2010 (d)(n)    5,280 
1,500    Webster, Texas, GO, COP, Series A (h):     
         6% due 3/01/2010 (n)    1,590 
805         6% due 3/01/2021    847 
1,250    West Central Texas Regional Housing Finance     
    Corporation, S/F Mortgage Revenue Bonds     
    (Mortgage-Backed Securities Program), AMT,     
    Series A, 5.35% due 12/01/2039 (f)(g)    1,274 
 
 
Utah — 0.0%         
700    Utah State, HFA, S/F Mortgage Revenue     
Refunding Bonds, AMT, Series C, Class III, 5.50%
    due 1/01/2018    714 
 
 
Vermont — 1.5%         
25,850    Vermont State Student Assistance Corporation,     
    Education Loan Revenue Bonds, SAVRS, VRDN, AMT,     
    Series N, 5.50% due 12/15/2032 (r)(c)    25,850 
 
 

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Virginia — 0.7%             
Albemarle County, Virginia, IDA, Residential Care
Facilities, Mortgage Revenue Refunding Bonds
    (Westminster-Canterbury):         
$ 1,750         5% due 1/01/2024    $ 1,602 
1,100         5% due 1/01/2031        966 
2,425    Chesterfield County, Virginia, IDA, PCR, Refunding         
    (Virginia Electric and Power Company),         
    Series B, 5.875% due 6/01/2017        2,572 
3,250    Fairfax County, Virginia, EDA, Residential Care         
Facilities, Mortgage Revenue Refunding Bonds
    (Goodwin House, Inc.), 5.125% due 10/01/2037        2,979 
Norfolk, Virginia, Redevelopment and Housing
    Authority, First Mortgage Revenue Bonds (Retirement         
    Community), Series A:         
500         6% due 1/01/2025        487 
1,100         6.125% due 1/01/2035        1,063 
2,500    Watkins Centre Community Development Authority,         
    Virginia, Revenue Bonds, 5.40% due 3/01/2020        2,411 
 
 
 
Washington — 0.8%         
3,000    Port of Seattle, Washington, Special Facilities Revenue         
    Bonds, Series A, 6% due 3/01/2010 (j)(n)        3,208 
3,010    Seattle, Washington, Drain and Wastewater Utility         
    Revenue Bonds, 5.75% due 11/01/2009 (j)(n)        3,184 
    Seattle, Washington, Housing Authority Revenue Bonds:     
2,750         (Newholly Project), AMT, 6.25% due 12/01/2035        2,802 
4,620         (Replacement Housing Project), 6.125%         
         due 12/01/2032        4,675 
 
 
 
Wisconsin — 0.7%         
950    Wisconsin Housing and EDA, Home Ownership         
    Revenue Bonds, AMT, Series C, 6% due 9/01/2036        1,011 
1,960    Wisconsin State, GO, AMT, Series B, 6.20%         
    due 11/01/2026 (j)        1,983 
Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (SynergyHealth Inc.):
5,655         6% due 11/15/2023        5,724 
3,700         6% due 11/15/2032        3,653 
 
 
 
Guam — 0.0%             
115    Guam Housing Corporation S/F Mortgage Revenue         
    Bonds, AMT Series A, 5.75% due 9/01/2031 (f)        121 
 
 
 
Puerto Rico — 1.2%         
8,045    Puerto Rico Commonwealth Highway and         
Transportation Authority, Transportation Revenue
    Bonds, 5.75% due 7/01/2022        8,450 
    Puerto Rico Commonwealth Infrastructure         
    Financing Authority, Special Tax and Capital         
    Appreciation Revenue Bonds, Series A (p):         
20,000         4.915% due 7/01/2030 (d)        6,240 
12,605         4.96% due 7/01/2035 (c)        3,068 
785    Puerto Rico Commonwealth, Public Improvement, GO,         
    Refunding, 5.70% due 7/01/2020 (j)        828 
15,000    Puerto Rico Sales Tax Financing Corporation, Sales         
Tax Revenue Refunding Bonds, Series A, 5.04%
    due 8/01/2045 (j)(p)        2,190 
 
 
 
U.S. Virgin Islands — 0.5%         
8,000    Virgin Islands Government Refinery Facilities, Revenue         
    Refunding Bonds (Hovensa Coker Project) AMT, 6.50%         
    due 7/01/2021        8,317 
 
 
 
    Total Municipal Bonds         
    (Cost — $1,531,556) — 92.3%    1,553,225 
 
 

32 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Schedule of Investments (concluded) BlackRock National Municipal Fund (In Thousands)

Face    Municipal Bonds Transferred to         
Amount    Tender Option Bond Trusts (a)        Value 
 
 
 
 
Florida — 2.1%             
$14,000    Lee County, Florida, Airport Revenue Bonds, AMT,         
    Series A, 6% due 10/01/2029 (h)    $ 14,787 
20,115    Port St. Lucie, Florida, Utility Revenue         
    Bonds, 5.125% due 9/01/2036 (j)        20,910 
 
 
 
Michigan — 0.8%             
13,500    Hartland, Michigan, Consolidated School District, GO,     
    Refunding, 5.125% due 5/01/2029        13,805 
 
 
 
New Jersey — 2.6%         
22,000    New Jersey EDA, School Facilities Construction         
    Revenue Bonds, Series O, 5.25% due 3/01/2024        23,584 
20,000    New Jersey State Turnpike Authority, Turnpike Revenue     
    Refunding Bonds, Series A, 5.75% due 1/01/2018 (j)    20,893 
 
 
Pennsylvania — 2.3%         
36,210    Philadelphia, Pennsylvania, Redevelopment Authority     
Revenue Bonds (Neighborhood Transformation),
    Series A, 5.30% due 4/15/2026 (d)        38,163 
 
 
 
South Carolina — 1.3%         
21,215    South Carolina State Ports Authority, Ports Revenue     
    Bonds, AMT, 5.30% due 7/01/2026 (h)        21,326 
 
 
 
Texas — 3.3%             
    Houston, Texas, Airport System Revenue         
    Refunding Bonds, Sub-Lien:         
15,000    AMT, Series A, 5.50% due 7/01/2023 (h)        15,354 
18,860    Series B, 5.20% due 7/01/2018 (d)        19,109 

Face    Municipal Bonds Transferred to     
Amount    Tender Option Bond Trusts (a)    Value 
 
 
 
Texas (concluded)     
$20,000    Houston, Texas, Combined Utility System, First Lien     
    Revenue Refunding Bonds, Series A, 5.125%     
    due 5/15/2028 (j)    $ 20,789 
 
 
Puerto Rico — 0.5%     
Puerto Rico Industrial Tourist Educational, Medical
and Environmental Control Facilities Revenue Bonds
    (Hospital de la Concepcion), Series A:     
4,000    6.125% due 11/15/2025    4,247 
4,220    6.125% due 11/15/2030    4,444 
 
 
    Total Municipal Bonds Transferred to Tender     
    Option Bond Trusts (Cost — $216,925) — 12.9%    217,411 
 
 
 
 
 
Shares         
Held    Short-Term Securities     
 
 
440    Merrill Lynch Institutional Tax-Exempt     
    Fund, 3.35% (o)(q)    440 
 
 
    Total Short-Term Securities     
    (Cost — $440) — 0.0%    440 
 
 
Total Investments (Cost — $1,748,921*) — 105.2%    1,771,076 
Other Assets Less Liabilities — 1.2%    19,616 
Liability for Trust Certificates, Including Interest     
   Expense Payable — (6.4%)    (108,053) 
   
Net Assets — 100.0%    $1,682,639 
   

*      The cost and unrealized appreciation (depreciation) of investments as of December 31, 2007, as computed for federal income tax purposes, were as follows:
 
Aggregate cost    $ 1,644,556 
   
Gross unrealized appreciation    $ 40,741 
Gross unrealized depreciation    (21,115) 
   
Net unrealized appreciation    $ 19,626 
   

(a)      Securities represent underlying bonds transferred to a separate securitization trust established in a tender option bond transaction in which the Fund may have acquired the residual interest certificates. These securities serve as collateral in a financing transaction. See Note 1(c) of the Notes to Financial Statements for details of munici- pal bonds transferred to tender option bond trusts.
 
(b)      ACA Insured.
 
(c)      AMBAC Insured.
 
(d)      FGIC Insured.
 
(e)      FHA Insured.
 
(f)      FHLMC Collateralized.
 
(g)      FNMA/GNMA Collateralized.
 
(h)      FSA Insured.
 
(i)      GNMA Collateralized.
 
(j)      MBIA Insured.
 
(k)      Radian Insured.
 
(l)      XL Capital Insured.
 
(m)      The rate disclosed is that currently in effect. This rate changes periodically and inversely based upon prevailing market rates.
 
(n)      Prerefunded.
 
(o)      Investments in companies considered to be an affiliate of the Fund, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as follows:
 
    Net    Dividend 
Affiliate    Activity    Income 
 
 
 
Merrill Lynch Institutional Tax-Exempt Fund    (28,166)    $647 
 
 

(p)      Represents a zero coupon bond; the interest rate shown reflects the effective yield at the time of purchase.
 
(q)      Represents the current yield as of December 31, 2007.
 
(r)      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.
 
(s)      Non-income producing security; issuer filed for bankruptcy or is in default of interest payments.
 
(t)      FNMA Collateralized.
 

  See Notes to Financial Statements.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

33

Schedule of Investments as of December 31, 2007 BlackRock High Yield Municipal Fund (In Thousands)
(Unaudited)

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Alabama — 0.7%             
$ 500    Tuscaloosa, Alabama, Special Care Facilities Financing     
Authority, Residential Care Facility Revenue Bonds
(Capstone Village, Inc. Project), Series A, 5.875%
    due 8/01/2036    $ 462 
 
 
Arizona — 6.4%             
300    Maricopa County, Arizona, IDA, Education Revenue         
    Bonds (Arizona Charter Schools Project 1), Series A,     
    6.75% due 7/01/2029        284 
1,000    Phoenix, Arizona, IDA, Airport Facility, Revenue         
    Refunding Bonds (America West Airlines Inc. Project),     
    AMT, 6.30% due 4/01/2023        952 
685    Pima County, Arizona, IDA, Education Revenue         
Bonds (American Charter Schools Foundation),
    Series A, 5.625% due 7/01/2038        640 
285    Pima County, Arizona, IDA, Education Revenue         
    Refunding Bonds (Arizona Charter Schools Project),     
    Series O, 5.25% due 7/01/2031        259 
100    Pima County, Arizona, IDA, S/F Mortgage         
Revenue Refunding Bonds, VRDN, AMT, 4.89%
    due 4/25/2008 (k)        100 
500    Queen Creek Improvement District Number 001,         
    Arizona, Special Assessment Bonds, 5%         
    due 1/01/2032        457 
    Salt Verde Financial Corporation, Arizona, Senior Gas     
    Revenue Bonds:         
750    5% due 12/01/2032        709 
1,045    5% due 12/01/2037        977 
 
 
 
California — 4.7%         
750    California Pollution Control Financing Authority, Solid     
    Waste Disposal Revenue Bonds (Waste Management     
    Inc. Project), AMT, Series C, 5.125% due 11/01/2023    727 
500    Lammersville, California, School District, Special Tax     
    Bonds (Community Facilities District Number 2002 —     
    Mountain House), 5.125% due 9/01/2035        452 
500    Roseville, California, Special Tax Bonds (Fiddyment     
Ranch Community Facilities Number 1), 5.25%
    due 9/01/2036        453 
630    Southern California Public Power Authority, Natural         
    Gas Project Number 1 Revenue Bonds, Series A, 5%     
    due 11/01/2029        618 
565    Temecula Valley, California, Unified School District,         
Community Facilities District Number 2005-1,
    Special Tax Bonds, 5% due 9/01/2036        489 
500    Temecula, California, Public Financing Authority,         
    Community Facilities District Number 01-2,         
Special Tax Refunding Bonds, Sub-Series B, 5.10%
    due 9/01/2036        442 
 
 
 
Colorado — 2.1%             
1,000    Colorado HFA, Revenue Refunding Bonds (Adventist     
    Health System/Sunbelt Obligor Group), Series D, 5.25%     
    due 11/15/2035        1,001 
450    Colorado Health Facilities Authority, Revenue         
Refunding Bonds (Christian Living Communities
    Project), Series A, 5.75% due 1/01/2037        417 
 
 
 
Connecticut — 1.4%         
1,000    Connecticut State Health and Educational Facilities     
Authority Revenue Bonds (University of Hartford),
    Series G, 5.25% due 7/01/2036 (h)        997 
 
 
 

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Florida — 10.2%             
$ 605    Easton Park Community Development District, Florida,     
Capital Improvement Revenue Bonds, 5.20%
    due 5/01/2037    $ 478 
490    Highland Meadows Community Development District,     
    Florida, Special Assessment Bonds, Series A, 5.50%     
    due 5/01/2036             391 
1,000    Hillsborough County, Florida, IDA, Hospital Revenue     
Bonds (Tampa General Hospital Project), 5.25%
    due 10/01/2041             962 
300    Jacksonville, Florida, Economic Development         
Commission, IDR (Gerdau Ameristeel US, Inc.),
    AMT, 5.30% due 5/01/2037             257 
Lee County, Florida, IDA, Health Care Facilities,
Revenue Refunding Bonds (Shell Point/Alliance
    Obligor Group):         
500         5% due 11/15/2029             441 
600         5% due 11/15/2032             519 
570    Lee County, Florida, IDA, IDR (Lee Charter         
    Foundation), Series A, 5.375% due 6/15/2037             486 
500    New River Community Development District, Florida,     
Capital Improvement Revenue Bonds, Series B, 5%
    due 5/01/2013             461 
1,000    Pine Ridge Plantation Community Development         
District, Florida, Capital Improvement and Special
    Assessment Bonds, Series B, 5% due 5/01/2011             948 
500    Santa Rosa Bay Bridge Authority, Florida, Revenue         
    Bonds, 6.25% due 7/01/2028             469 
Sarasota County, Florida, Health Facilities Authority,
    Retirement Facility Revenue Refunding Bonds (Village     
    on the Isle Project):         
210         5.50% due 1/01/2027             194 
190         5.50% due 1/01/2032             169 
700    Tolomato Community Development District, Florida,     
    Special Assessment Bonds, 6.65% due 5/01/2040         677 
650    Watergrass Community Development District, Florida,     
    Special Assessment Revenue Bonds, Series A, 5.375%     
    due 5/01/2039             523 
 
 
 
Georgia — 2.6%             
500    Brunswick and Glynn County, Georgia, Development     
Authority, First Mortgage Revenue Bonds (Coastal
    Community Retirement Corporation Project),         
    Series A, 7.25% due 1/01/2035 (i)             289 
1,000    Richmond County, Georgia, Development Authority,         
    Environmental Improvement Revenue Bonds         
    (International Paper Co. Projects), AMT, Series A, 5%     
    due 8/01/2030             887 
600    Rockdale County, Georgia, Development Authority         
    Revenue Bonds (Visy Paper Project), AMT,         
    Series A, 6.125% due 1/01/2034             574 
 
 
 
Illinois — 2.6%             
1,000    Chicago, Illinois, O'Hare International Airport, Special     
    Facility Revenue Refunding Bonds (American Airlines     
    Inc. Project), 5.50% due 12/01/2030             856 
Illinois State Finance Authority Revenue Bonds,
    Series A:         
430         (Monarch Landing, Inc. Project), 7%         
         due 12/01/2037             429 
500         (Three Crowns Park Plaza), 5.875%         
         due 2/15/2038             460 
 
 
 

34 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Schedule of Investments (continued) BlackRock High Yield Municipal Fund (In Thousands)

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Indiana — 2.4%             
$ 700    Indiana Health and Educational Facilities Financing     
Authority, Hospital Revenue Bonds (Community
    Foundation of Northwest Indiana), 5.50%         
    due 3/01/2037    $ 643 
    Indiana Health Facilities Financing Authority, Hospital     
    Revenue Refunding Bonds (Methodist Hospital, Inc.):     
185         5.375% due 9/15/2022        185 
525         5.50% due 9/15/2031        509 
Vigo County, Indiana, Hospital Authority Revenue
    Bonds (Union Hospital, Inc.):         
155         5.70% due 9/01/2037        144 
190         5.75% due 9/01/2042        174 
 
 
 
Iowa — 0.7%             
500    Iowa Financing Authority, Health Facilities Revenue         
    Refunding Bonds (Care Initiatives Project),         
    Series A, 5% due 7/01/2019        487 
 
 
 
Kansas — 4.7%             
1,350    Lenexa, Kansas, Health Care Facility, Revenue         
    Refunding Bonds, 5.50% due 5/15/2039        1,195 
650    Manhattan, Kansas, Health Care Facilities Revenue     
    Bonds (Meadowlark Hills Retirement), Series B, 5.125%     
    due 5/15/2042        535 
970    Sedgwick and Shawnee Counties, Kansas,         
S/F Mortgage Revenue Bonds (Mortgage-Backed
    Securities Program), AMT, Series B-2, 5.25%         
    due 12/01/2038 (b)(c)        1,006 
450    Wyandotte County, Kansas, Kansas City Unified         
Government Revenue Refunding Bonds (General
    Motors Corporation Project), 6% due 6/01/2025        424 
 
 
 
Kentucky — 2.5%             
1,725    Trimble County, Kentucky, Environmental         
    Facilities Revenue Refunding Bonds, 4.60%         
    due 6/01/2033 (a)        1,686 
 
 
 
Louisiana — 1.5%             
1,000    Louisiana Local Government Environmental         
Facilities and Community Development Authority
    Revenue Bonds (Westlake Chemical Corporation), 6.75%     
    due 11/01/2032        991 
 
 
 
Maine — 1.1%             
750    Jay, Maine, Solid Waste Disposal, Revenue Refunding     
Bonds (International Paper Company Project), AMT,
    Series A, 4.90% due 11/01/2017        717 
 
 
 
Maryland — 3.9%             
540    Baltimore, Maryland, Convention Center         
Hotel Revenue Bonds, Sub-Series B, 5.875%
    due 9/01/2039        539 
500    Howard County, Maryland, Retirement Community         
    Revenue Refunding Bonds (Columbia Vantage House     
    Corporation), Series A, 5.25% due 4/01/2033        436 
1,000    Maryland State Energy Financing Administration,         
Limited Obligation Revenue Bonds (Cogeneration-
    AES Warrior Run), AMT, 7.40% due 9/01/2019        1,002 
Maryland State Health and Higher Educational
    Facilities Authority Revenue Bonds:         
500         (King Farm Presbyterian Community),         
         Series A, 5.30% due 1/01/2037        434 
250         (Washington Christian Academy), 5.25%         
         due 7/01/2018        242 
 
 
 

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Massachusetts — 2.8%         
Massachusetts State Development Finance Agency
    Revenue Bonds, Series A:         
$ 390         (Curry College), 5.25% due 3/01/2026 (e)    $ 369 
1,000         (Linden Ponds, Inc. Facility), 5.75%         
         due 11/15/2042        896 
645    Massachusetts State Health and Educational         
Facilities Authority, Revenue Refunding Bonds
(Bay Cove Human Services Issue), Series A, 5.90%
    due 4/01/2028        637 
 
 
 
Michigan — 0.4%             
310    Garden City, Michigan, Hospital Finance Authority,         
Hospital Revenue Refunding Bonds (Garden City
    Hospital Obligation), Series A, 5% due 8/15/2038    248 
 
 
Mississippi — 0.6%         
500    Mississippi Business Finance Corporation Revenue     
Bonds (Northrop Grumman Ship System), 4.55%
    due 12/01/2028        440 
 
 
 
Missouri — 0.9%             
600    Kansas City, Missouri, Tax Increment Financing         
    Commission, Tax Allocation Revenue Bonds         
(Kansas City MainCor Project), Series A, 5.25%
    due 3/01/2018        586 
 
 
 
Nevada — 1.4%             
1,000    Clark County, Nevada, IDR (Southwest Gas Corp.         
    Project), AMT, Series A, 4.75% due 9/01/2036 (f)    939 
 
 
New Hampshire — 2.6%         
New Hampshire Health and Education Facilities
    Authority, Revenue Refunding Bonds:         
950         (Havenwood-Heritage Heights Retirement         
    Community), Series A, 5.40% due 1/01/2030    837 
1,015         (Southern New Hampshire University), 5%         
         due 1/01/2027 (e)        902 
 
 
 
New Jersey — 7.0%         
750    Burlington County, New Jersey, Bridge Commission,     
EDR, Refunding (The Evergreens Project), 5.625%
    due 1/01/2038        692 
1,140    New Jersey EDA, Cigarette Tax Revenue Bonds, 5.50%     
    due 6/15/2024        1,103 
1,000    New Jersey EDA, Retirement Community Revenue         
Refunding Bonds (Seabrook Village, Inc.), 5.25%
    due 11/15/2036        851 
490    New Jersey EDA, Special Facility Revenue Bonds         
(Continental Airlines Inc. Project), AMT, 6.625%
    due 9/15/2012        488 
650    New Jersey Health Care Facilities Financing Authority,     
    Revenue Bonds (Pascack Valley Hospital Association),     
    6.625% due 7/01/2036        351 
1,000    New Jersey Health Care Facilities Financing Authority     
Revenue Refunding Bonds (South Jersey Hospital
    System), 5% due 7/01/2046        962 
385    Tobacco Settlement Financing Corporation of New         
Jersey, Asset-Backed Revenue Refunding Bonds,
    Series 1A, 5% due 6/01/2041        321 
 
 
 

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

35

Schedule of Investments (continued) BlackRock High Yield Municipal Fund (In Thousands)

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
New York — 4.3%             
$ 500    Genesee County, New York, IDA, Civic Facility Revenue     
Refunding Bonds (United Memorial Medical Center
    Project), 5% due 12/01/2032    $ 428 
750    New York City, New York, City IDA, Special Facility         
    Revenue Bonds (JetBlue Airways Corporation Project),     
    AMT, 5.125% due 5/15/2030             601 
1,000    New York Liberty Development Corporation Revenue     
    Bonds (National Sports Museum Project),         
    Series A, 6.125% due 2/15/2019             993 
1,000    New York State Dormitory Authority, Non-State         
    Supported Debt, Revenue Refunding Bonds         
(New York University Hospital Center), Series A, 5%
    due 7/01/2026             928 
 
 
 
North Carolina — 1.4%         
1,000    Ward County, North Dakota, Health Care Facility         
Revenue Refunding Bonds (Trinity Health Obligated
    Group), 5.125% due 7/01/2029             955 
 
 
 
Ohio — 3.4%             
800    Buckeye Tobacco Settlement Financing Authority,         
Ohio, Tobacco Settlement Asset-Backed Bonds,
    Series A-2, 6.50% due 6/01/2047             822 
875    Richland County, Ohio, Hospital Facilities Revenue         
    Refunding Bonds (MedCentral Health System), 5.25%     
    due 11/15/2036             858 
600    Trumbull County, Ohio, Health Care Facilities Revenue     
Bonds (Shepherd of the Valley), VRDN, 3.63%
    due 10/01/2031 (h)(k)             600 
 
 
 
Pennsylvania — 1.7%         
735    Allegheny County, Pennsylvania, Hospital Development     
Authority, Health System Revenue Refunding Bonds
    (West Penn Allegheny Health System), Series A, 5.375%     
    due 11/15/2040             636 
500    Harrisburg, Pennsylvania, Authority, University Revenue     
    Bonds (Harrisburg University of Science), Series B, 6%     
    due 9/01/2036             495 
 
 
 
Rhode Island — 1.3%         
1,000    Rhode Island Housing and Mortgage Finance         
Corporation, Homeownership Opportunity Revenue
    Bonds, AMT, Series 53-B, 5% due 10/01/2046             915 
 
 
 
South Carolina — 2.2%         
1,000    Connector 2000 Association, Inc., South Carolina,         
    Toll Road and Capital Appreciation Revenue Bonds,     
    Senior-Series B, 7.97% due 1/01/2015 (j)             526 
500    Myrtle Beach, South Carolina, Tax Increment Revenue     
    Bonds (Myrtle Beach Air Force Base), Series A, 5.25%     
    due 11/01/2026             447 
600    South Carolina Jobs, EDA, Health Care Facilities, First     
Mortgage Revenue Refunding Bonds (Lutheran
    Homes), 5.50% due 5/01/2028             542 
 
 
 
Tennessee — 1.0%         
700    Sullivan County, Tennessee, Health, Educational &         
Housing Facilities Board, Hospital Revenue Bonds
(Wellmont Health System Project), Series C, 5.25%
    due 9/01/2036             660 
 
 
 

Face             
Amount    Municipal Bonds        Value 
 
 
 
 
Texas — 7.4%             
$ 1,000    Alliance Airport Authority, Inc., Texas, Special Facilities     
Revenue Refunding Bonds (American Airlines Inc.
    Project), AMT, 5.75% due 12/01/2029    $ 829 
500    Brazos River Authority, Texas, PCR (TXU Energy         
    Company LLC Project), AMT, 5% due 3/01/2041        361 
655    HFDC of Central Texas, Inc., Retirement Facilities         
    Revenue Bonds, Series A, 5.75% due 11/01/2036    585 
1,000    Harlandale, Texas, Independent School District,         
    School Building, GO (Permanent School Fund Bond     
    Guarantee Program), 4.75% due 8/15/2040        993 
500    Houston, Texas, Airport System, Special Facilities         
    Revenue Bonds (Continental Airlines), AMT,         
    Series E, 7.375% due 7/01/2022        517 
1,000    Mission, Texas, Economic Development Corporation,     
Solid Waste Disposal Revenue Bonds (Allied Waste
    N.A. Inc Project), Series A, 5.20% due 4/01/2018    909 
1,000    Texas State Public Financing Authority, Charter School     
Financing Corporation, Revenue Refunding Bonds
    (KIPP, Inc.), Series A, 5% due 2/15/2036 (e)        838 
 
 
 
Utah — 0.0%             
15    Utah Housing Corporation, S/F Mortgage Revenue         
    Bonds, AMT, Series A-1, Class I, 5% due 7/01/2037    14 
 
 
Virginia — 8.2%             
1,150    Albemarle County, Virginia, IDA, Residential Care         
Facilities, Mortgage Revenue Refunding Bonds
    (Westminster-Canterbury), 5% due 1/01/2031        1,010 
300    Fairfax County, Virginia, EDA, Residential Care         
Facilities, Mortgage Revenue Refunding Bonds
    (Goodwin House, Inc.), 5.125% due 10/01/2042        271 
500    Fairfax County, Virginia, EDA, Retirement Revenue         
    Refunding Bonds (Greenspring Village Inc.),         
    Series A, 4.875% due 10/01/2036        448 
500    Farms of New Kent Community Development         
Authority, Virginia, Special Assessment Bonds,
    Series C, 5.80% due 3/01/2036        450 
450    Henrico County, Virginia, EDA, Residential Care         
    Facility, Mortgage Revenue Refunding Bonds         
(Westminster-Canterbury Of Winchester, Inc.), 5%
    due 10/01/2027        424 
210    Lexington, Virginia, IDA, Residential Care Facility,         
Mortgage Revenue Refunding Bonds (Kendal at
    Lexington), Series A, 5.375% due 1/01/2028        191 
750    Lynchburg, Virginia, IDA, Residential Care Facility,         
Mortgage Revenue Refunding Bonds (Westminster-
    Canterbury), 5% due 7/01/2031        635 
500    Tobacco Settlement Financing Corporation of Virginia,     
Revenue Refunding Bonds, Senior Series B-1, 5%
    due 6/01/2047        415 
1,000    Virginia State, HDA, Commonwealth Mortgage         
Revenue Bonds, Series H, Sub-Series H-1, 5.35%
    due 7/01/2031 (g)        1,018 
750    Watkins Centre Community Development Authority,     
    Virginia, Revenue Bonds, 5.40% due 3/01/2020        723 
 
 
 
Washington — 0.7%         
550    Washington State Housing Financing Commission,         
Nonprofit Revenue Bonds (Skyline at First Hill
    Project), Series A, 5.625% due 1/01/2038        495 
 
 
 

36 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Schedule of Investments (concluded) BlackRock High Yield Municipal Fund (In Thousands)

Face         
Amount    Municipal Bonds    Value 
 
 
 
West Virginia — 1.4%     
$ 1,000    Pleasants County, West Virginia, PCR, Refunding     
    (Allegheny Energy Supply Company, LLC),     
    Series F, 5.25% due 10/15/2037    $ 968 
 
 
Wisconsin — 0.7%     
500    Wisconsin State Health and Educational Facilities     
Authority, Revenue Refunding Bonds (Franciscan
    Sisters Healthcare), 5% due 9/01/2026    456 
 
 
    Total Municipal Bonds     
    (Cost — $72,040) — 96.9%    65,833 
 
 

Face    Municipal Bonds Transferred to     
Amount    Tender Options Bond Trusts (d)    Value 
 
 
 
Virginia — 3.6%         
$ 2,410    Virginia State, HDA, Commonwealth Mortgage     
Revenue Bonds, Series H Sub-Series H-1, 5.375%
    due 7/01/2036 (g)    $ 2,446 
 
 
    Total Municipal Bonds Transferred to Tender     
    Option Bond Trusts (Cost — $2,454) — %    2,446 
 
 
Total Investments (Cost — $74,494*) — 100.5%    68,279 
Other Assets Less Liabilities — 1.3%    857 
Liability for Trust Certifiates, Including Interest     
   Expense Payable — (1.8%)    (1,206) 
   
Net Assets — 100.0%    $ 67,930 
   

*      The cost and unrealized appreciation (depreciation) of investments as of December 31, 2007, as computed for federal income tax purposes, were as follows:
 
Aggregate cost    $ 73,290 
   
Gross unrealized appreciation    $ 8 
Gross unrealized depreciation    (6,224) 
   
Net unrealized depreciation    $ (6,216) 
   

(a)      AMBAC Insured.
 
(b)      FHLMC Collateralized.
 
(c)      FNMA/GNMA Collateralized.
 
(d)      Securities represent underlying bonds transferred to a separate securitization trust established in a tender option bond transaction in which the Fund may have acquired the residual interest certificates. These securities serve as collateral in a financing transaction. See Note 1(c) of the Notes to Financial Statements for details of muni- cipal bonds transferred to tender option bond trusts.
 
(e)      ACA Insured.
 
(f)      FGIC Insured.
 
(g)      MBIA Insured.
 
(h)      Radian Insured.
 
(i)      Non-income producing security; issuer filed for bankruptcy or is in default of interest payments.
 
(j)      Represents a zero coupon bond; the interest rate shown reflects the effective yield at the time of purchase.
 
(k)      Security may have a maturity of more than one year at time of issuance, but has vari- able rate and demand features that qualify it as a short-term security. The rate dis- closed is that currently in effect. This rate changes periodically based upon prevailing market rates.
 

• Forward interest rate swaps outstanding as of December 31,2007 were as follows:

    Notional    Unrealized 
    Amount    Depreciation 
 
 
 
Pay a fixed rate of 3.9765% and receive         
a floating rate based on 1-week (SIFMA)         
Municipal Swap Index rate         
Broker, JPMorganChase         
Expires January 2023    $3,100    ($117) 
 
 

• Financial futures contracts sold as of December 31,2007 were as follows:

Number of        Expiration    Face    Unrealized 
Contracts    issue    Date    Value    Depreciation 
 
 
 
 
 
    10-Year             
    U.S. Treasury    March         
75    Bond    2008    $8,455    $(49) 
 
 
 
 

See Notes to Financial Statements.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

37

Statements of Assets and Liabilities                 
 
    BlackRock    BlackRock    BlackRock    BlackRock 
    Short-Term         Municipal    National    High Yield 
    Municipal           Insured    Municipal    Municipal 
As of December 31, 2007 (Unaudited)    Fund    Fund    Fund    Fund 
 
 
 
 
 
     Assets                 
 
 
 
 
 
Investments in unaffiliated securities, at value*    $ 253,947,276    $ 927,099,142    $1,770,635,960    $ 68,278,557 
Investments in affiliated securities, at value**    12,520,981    35,172,840    439,643    — 
Cash    92,203    66,482    39,628    6,421 
Receivables:                 
   Interest    4,188,103    14,769,876    28,324,029    1,104,634 
   Securities sold    —    —    26,968,990    — 
   Capital shares sold    918,157    2,559,701    19,347,702    294,294 
   Variation margin    —    —    —    82,031 
Prepaid expenses and other assets    32,357    854,636    136,573    28,289 
   
 
 
 
Total assets    271,699,077    980,522,677    1,845,892,525    69,794,226 
 
 
 
 
 
 
     Liabilities                 
 
 
 
 
 
Trust certificates‡    —    117,268,292    106,893,871    1,205,000 
Unrealized depreciation on forward interest rate swaps    —    313,420    —    117,481 
Payables:                 
   Securities purchased    —    10,071,372    44,423,986    — 
   Dividends to shareholders    712,724    2,722,256    5,256,659    292,070 
   Capital shares redeemed    259,150    985,638    4,165,322    165,494 
   Interest expense    —    1,230,069    1,158,836    1,229 
   Investment adviser    43,386    268,937    683,997    34,901 
   Distributor    18,331    104,217    287,110    4,157 
   Other affiliates    25,467    75,495    262,478    2,677 
Accrued expenses and other liabilities    20,913    103,060    121,454    40,787 
   
 
 
 
Total liabilities    1,079,971    133,142,756    163,253,713    1,863,796 
 
 
 
 
 
 
     Net Assets                 
 
 
 
 
 
Net assets    $ 270,619,106    $ 847,379,921    $1,682,638,812    $ 67,930,430 
 
 
 
 
 
 
     Net Assets Consist of                 
 
 
 
 
 
BlackRock Common Stock, $.10 par value†    $ 22,953    —    —    — 
Institutional Common Stock, $.10 par value††    1,331,531    $ 7,573,284    $ 9,685,704    $ 653,475 
Investor A Common Stock, $.10 par value†††    83,690    2,223,429    4,004,890    48,716 
Investor A1 Common Stock, $.10 par value††††    1,104,007    —    —    — 
Investor B Common Stock, $.10 par value†††††    124,088    531,066    825,116    — 
Investor C Common Stock, $.10 par value††††††    46,643    114,909    648,073    40,973 
Investor C1 Common Stock, $.10 par value†††††††    —    615,693    1,249,454    — 
Paid-in capital in excess of par    275,008,807    811,650,713    1,676,655,054    74,331,678 
Undistributed investment income — net    484,004    2,688,996    768,438    101,874 
Accumulated realized capital losses — net    (9,510,991)    (1,988,911)    (33,352,407)    (863,493) 
Unrealized appreciation (depreciation) — net    1,924,374    23,970,742    22,154,490    (6,382,793) 
   
 
 
 
Net Assets    $ 270,619,106    $ 847,379,921    $1,682,638,812    $ 67,930,430 
   
 
 
 

38 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Statements of Assets and Liabilities (concluded)                 
 
    BlackRock    BlackRock    BlackRock    BlackRock 
    Short-Term    Municipal    National    High Yield 
    Municipal    Insured    Municipal    Municipal 
As of December 31, 2007 (Unaudited)    Fund    Fund    Fund    Fund 
 
 
 
 
     Net Asset Value                 
 
 
 
 
BlackRock:                 
     Net assets    $ 2,290,362    —    —    — 
   
 
 
 
     Shares outstanding    229,532    —    —    — 
   
 
 
 
     Net asset value and redemption price per share    $ 9.98    —    —    — 
   
 
 
 
Institutional:                 
     Net assets    $ 132,769,175    $ 580,393,822    $ 992,826,912    $ 59,737,524 
   
 
 
 
     Shares outstanding    13,315,305    75,732,842    96,857,043    6,534,748 
   
 
 
 
     Net asset value and redemption price per share    $ 9.97    $ 7.66    $ 10.25    $ 9.14 
   
 
 
 
Investor A:                 
     Net assets    $ 8,349,491    $ 170,340,098    $ 410,710,033    $ 4,447,028 
   
 
 
 
     Shares outstanding    836,902    22,234,290    40,048,902    487,156 
   
 
 
 
     Net asset value and redemption price per share    $ 9.98    $ 7.66    $ 10.26    $ 9.13 
   
 
 
 
Investor A1:                 
     Net assets    $ 110,182,666    —    —    — 
   
 
 
 
     Shares outstanding    11,040,075    —    —    — 
   
 
 
 
     Net asset value and redemption price per share    $ 9.98    —    —    — 
   
 
 
 
Investor B:                 
     Net assets    $ 12,375,069    $ 40,670,050    $ 84,544,731    — 
   
 
 
 
     Shares outstanding    1,240,885    5,310,661    8,251,156    — 
   
 
 
 
     Net asset value and redemption price per share    $ 9.97    $ 7.66    $ 10.25    — 
   
 
 
 
Investor C:                 
     Net assets    $ 4,652,343    $ 8,812,448    $ 66,465,892    $ 3,745,878 
   
 
 
 
     Shares outstanding    466,425    1,149,091    6,480,731    409,726 
   
 
 
 
     Net asset value and redemption price per share    $ 9.97    $ 7.67    $ 10.26    $ 9.14 
   
 
 
 
Investor C1:                 
     Net assets    —    $ 47,163,503    $ 128,091,244    — 
   
 
 
 
     Shares outstanding    —    6,156,926    12,494,537    — 
   
 
 
 
     Net asset value and redemption price per share    —    $ 7.66    $ 10.25    — 
   
 
 
 
 * Identified cost for unaffiliated securities    $ 252,022,902    $ 900,406,896    $1,748,481,470    $ 74,494,486 
   
 
 
 
 ** Identified cost for affiliated securities    $ 12,520,981    $ 37,580,924    $ 439,643    — 
   
 
 
 
 † Authorized shares — BlackRock    150,000,000    —    —    — 
   
 
 
 
†† Authorized shares — Institutional    150,000,000    500,000,000    375,000,000    100,000,000 
   
 
 
 
††† Authorized shares — Investor A    150,000,000    500,000,000    375,000,000    100,000,000 
   
 
 
 
†††† Authorized shares — Investor A1    150,000,000    —    —    — 
   
 
 
 
††††† Authorized shares — Investor B    150,000,000    375,000,000    375,000,000    — 
   
 
 
 
†††††† Authorized shares — Investor C    150,000,000    375,000,000    375,000,000    100,000,000 
   
 
 
 
††††††† Authorized shares — Investor C1    —    375,000,000    375,000,000    — 
   
 
 
 
                ‡ Represents short-term floating rate certificates issued by tender option bond trusts.                 
See Notes to Financial Statements.                 

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

39

Statements of Operations                 
 
 
    BlackRock    BlackRock    BlackRock    BlackRock 
    Short-Term    Municipal       National    High Yield 
    Municipal       Insured       Municipal    Municipal 
For the Six Months Ended December 31, 2007 (Unaudited)         Fund         Fund           Fund           Fund 
 
 
 
 
 
     Investment Income                 
 
 
 
 
 
Interest    $ 4,838,068    $ 22,876,095    $ 44,687,115    $ 1,977,054 
Dividends from affiliates    235,638    610,467    647,209    — 
   
 
 
 
Total income    5,073,706    23,486,562    45,334,324    1,977,054 
 
 
 
 
 
 
     Expenses                 
 
 
 
 
 
Investment advisory fees    452,032    1,582,395    3,899,742    204,156 
Interest expense and fees    —    2,235,950    2,517,219    2,309 
Service and distribution fees — Investor C1    —    199,129    541,226    — 
Service and distribution fees — Investor B    23,887    159,494    350,722    — 
Service fees — Investor A    5,366    214,953    454,596    7,241 
Transfer agent fees — Institutional    30,812    104,476    328,869    3,439 
Accounting services    50,421    132,419    237,063    18,409 
Registration fees    23,708    28,673    50,727    20,918 
Transfer agent fees — Investor A    2,697    38,272    73,851    264 
Printing and shareholder reports    10,366    26,390    57,266    1,305 
Professional fees    24,283    28,173    33,727    23,434 
Service and distribution fees — Investor C    15,757    29,352    274,116    17,578 
Custodian fees    13,218    28,848    49,039    5,201 
Service fees — Investor A1    57,884    —    —    — 
Transfer agent fees — Investor C1    —    11,592    36,447    — 
Transfer agent fees — Investor B    4,066    12,864    31,440    — 
Pricing services    4,897    12,271    32,096    10,548 
Directors’ fees and expenses    8,847    16,419    14,507    7,229 
Transfer agent fees — Investor A1    22,972    —    —    — 
Transfer agent fees — Investor C    6,531    1,275    25,260    738 
Transfer agent fees — BlackRock    146    —    —    — 
Other    11,788    22,235    34,333    7,511 
   
 
 
 
Total expenses before waiver    769,678    4,885,180    9,042,246    330,280 
Waiver of expenses    (195,278)    (9,305)    (37,643)    (20,094) 
   
 
 
 
Total expenses after waiver    574,400    4,875,875    9,004,603    310,186 
   
 
 
 
Investment income — net    4,499,306    18,610,687    36,329,721    1,666,868 
 
 
 
 
 
 
     Realized & Unrealized Gain (Loss) — Net                 
 
 
 
 
 
Realized gain (loss) on:                 
     Investments — net    7,524    3,415,930    (2,632,448)    (772,541) 
     Forward interest rate swaps — net    —    (655,000)    —    (90,947) 
   
 
 
 
Total realized gain (loss) — net    7,524    2,760,930    (2,632,448)    (863,488) 
   
 
 
 
Change in unrealized appreciation/depreciation on:                 
     Investments — net    2,440,378    (1,525,096)    (18,679,154)    (5,282,655) 
     Financial futures contracts and forward interest rate swaps — net    —    (603,820)    —    (154,632) 
   
 
 
 
Total change in unrealized appreciation/depreciation — net    2,440,378    (2,128,916)    (18,679,154)    (5,437,287) 
   
 
 
 
Total realized and unrealized gain (loss) — net    2,447,902    632,014    (21,311,602)    (6,300,775) 
   
 
 
 
Net Increase (Decrease) in Net Assets Resulting from Operations    $ 6,947,208    $ 19,242,701    $ 15,018,119    $ (4,633,907) 
   
 
 
 
See Notes to Financial Statements.                 

40 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Statements of Changes in Net Assets    BlackRock Short-Term Municipal Fund 
 
 
                         For the           For the 
    Six Months Ended    Year Ended 
    December 31, 2007         June 30, 
Increase (Decrease) in Net Assets:    (Unaudited)           2007 
 
 
 
     Operations         
 
 
 
Investment income — net    $ 4,499,306    $ 9,759,232 
Realized gain (loss) — net    7,524    (1,713,793) 
Change in unrealized appreciation/depreciation — net    2,440,378    1,804,264 
   
 
Net increase in net assets resulting from operations    6,947,208    9,849,703 
 
 
 
     Dividends to Shareholders         
 
 
 
Investment income — net:         
     BlackRock    (39,660)    (140,524) 
     Institutional    (2,225,059)    (4,626,244) 
     Investor A    (67,851)    (19,319) 
     Investor A1    (1,919,517)    (4,174,606) 
     Investor B    (209,331)    (522,656) 
     Investor C    (37,888)    (18,188) 
     Class C†    —    (257,695) 
   
 
Net decrease in net assets resulting from dividends to shareholders    (4,499,306)    (9,759,232) 
 
 
 
     Capital Share Transactions         
 
 
 
Net decrease in net assets derived from capital share transactions    (5,547,646)    (62,634,810) 
 
 
 
     Net Assets         
 
 
 
Total decrease in net assets    (3,099,744)    (62,544,339) 
Beginning of period    273,718,850    336,263,189 
   
 
End of period*    $ 270,619,106    $ 273,718,850 
   
 
   * Undistributed investment income — net    $ 484,004    $ 484,004 
   
 

†On August 25, 2006, Class C was converted to Class A (Investor A1).

See Notes to Financial Statements.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

41

Statements of Changes in Net Assets    BlackRock Municipal Insured Fund 
 
    For the         For the 
    Six Months Ended    Year Ended 
    December 31, 2007         June 30, 
Increase (Decrease) in Net Assets:    (Unaudited)           2007 
 
 
 
     Operations         
 
 
 
Investment income — net    $ 18,610,687    $ 39,380,614 
Realized gain — net    2,760,930    1,216,879 
Change in unrealized appreciation — net    (2,128,916)    1,716,956 
   
 
Net increase in net assets resulting from operations    19,242,701    42,314,449 
 
 
 
 
     Dividends & Distributions to Shareholders         
 
 
 
Investment income — net:         
     Institutional    (13,353,030)    (26,786,243) 
     Investor A    (3,628,651)    (6,958,170) 
     Investor B    (789,383)    (1,954,906) 
     Investor C    (101,703)    (53,001) 
     Investor C1    (913,489)    (1,973,504) 
Realized gain — net:         
     Institutional    (1,052,942)    (3,420,292) 
     Investor A    (306,404)    (945,702) 
     Investor B    (73,110)    (299,416) 
     Investor C    (15,328)    (6,273) 
     Investor C1    (86,569)    (312,142) 
   
 
Net decrease in net assets resulting from dividends and distributions to shareholders    (20,320,609)    (42,709,649) 
 
 
 
 
     Capital Share Transactions         
 
 
 
Net decrease in net assets derived from capital share transactions    (29,995,250)    (60,444,977) 
 
 
 
 
     Net Assets         
 
 
 
Total decrease in net assets    (31,073,158)    (60,840,177) 
Beginning of period    878,453,079    939,293,256 
   
 
End of period*    $ 847,379,921    $ 878,453,079 
   
 
* Undistributed investment income — net    $ 2,688,996    $ 2,864,565 
   
 
       See Notes to Financial Statements.         

42 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Statements of Changes in Net Assets    BlackRock National Municipal Fund 
 
    For the    For the 
    Six Months Ended    Year Ended 
    December 31, 2007         June 30, 
Increase (Decrease) in Net Assets:    (Unaudited)    2007 
 
 
     Operations         
 
 
Investment income — net    $ 36,329,721    $ 68,679,752 
Realized gain (loss) — net    (2,632,448)    8,716,953 
Change in unrealized depreciation — net    (18,679,154)    (7,313,633) 
   
 
Net increase in net assets resulting from operations    15,018,119    70,083,072 
 
 
 
     Dividends to Shareholders         
 
 
Investment income — net:         
     Institutional    (23,044,309)    (43,499,106) 
     Investor A    (8,063,224)    (14,096,416) 
     Investor B    (1,829,822)    (4,665,176) 
     Investor C    (989,886)    (572,654) 
     Investor C1    (2,618,241)    (5,809,148) 
   
 
Net decrease in net assets resulting from dividends to shareholders    (36,545,482)    (68,642,500) 
 
 
 
     Capital Share Transactions         
 
 
Net increase in net assets derived from capital share transactions    95,199,573    159,104,907 
 
 
 
     Net Assets         
 
 
Total increase in net assets    73,672,210    160,545,479 
Beginning of period    1,608,966,602    1,448,421,123 
   
 
End of period*    $1,682,638,812    $1,608,966,602 
   
 
* Undistributed investment income — net    $ 768,438    $ 984,199 
   
 
       See Notes to Financial Statements.         

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

43

Statement of Changes in Net Assets    BlackRock High Yield Municipal Fund 
 
 
 
 
                       For the    For the Period 
    Six Months Ended    August 1, 2006† 
    December 31, 2007    to June 30, 
Increase (Decrease) in Net Assets:    (Unaudited)    2007 
 
 
 
     Operations         
 
 
 
Investment income — net    $ 1,666,868    $ 2,089,925 
Realized gain — net    (863,488)    162,355 
Change in unrealized appreciation/depreciation — net    (5,437,287)    (945,506) 
   
 
Net increase in net assets resulting from operations    (4,633,907)    1,306,774 
 
 
 
     Dividends & Distributions to Shareholders         
 
 
 
Investment income — net:         
     Institutional    (1,482,999)    (1,933,439) 
     Investor A    (123,771)    (73,543) 
     Investor C    (61,944)    (82,943) 
Realized gain — net:         
     Institutional    (135,095)    (9,444) 
     Investor A    (9,128)    (407) 
     Investor C    (7,832)    (454) 
   
 
Net decrease in net assets resulting from dividends and distributions to shareholders    (1,820,769)    (2,100,230) 
 
 
 
     Capital Share Transactions         
 
 
 
Net increase in net assets derived from capital share transactions    1,650,939    73,526,873 
 
 
 
     Net Assets         
 
 
 
Total increase in net assets    (4,803,737)    72,733,417 
Beginning of period    72,734,167    750 
   
 
End of period*    $ 67,930,430    $ 72,734,167 
   
 
   * Undistributed investment income — net    $ 101,874    $ 103,720 
   
 

†Commencement of operations.

See Notes to Financial Statements.

44

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Financial Highlights    BlackRock Short-Term Municipal Fund 
 
    BlackRock 
   
    For the Six         
    Months Ended        For the Period 
    December 31,    October 2, 2006†† 
The following per share data and ratios have been derived    2007        to June 30, 
from information provided in the financial statements.    (Unaudited)        2007 
 
 
 
     Per Share Operating Performance             
 
 
 
Net asset value, beginning of period    $ 9.89    $ 9.93 
   
 
Investment income — net†    .17        .25 
Realized and unrealized gain (loss) — net    .09        (.04) 
   
 
 
Total from investment operations    .26        .21 
   
 
 
Less dividends from investment income — net    (.17)        (.25) 
   
 
 
Net asset value, end of period    $ 9.98    $ 9.89 
 
 
 
     Total Investment Return             
 
 
 
Based on net asset value per share    2.62%**           2.09%** 
 
 
 
     Ratios to Average Net Assets             
 
 
 
Expenses, net of waiver    .41%*        .35%* 
   
 
 
Expenses    .46%*        .45%* 
   
 
 
Investment income — net    3.35%*        3.34%* 
 
 
 
 
     Supplemental Data             
 
 
 
Net assets, end of period (in thousands)    $ 2,290    $ 2,457 
   
 
Portfolio turnover    17%        110% 
   
 
 

*      Annualized.
 
**      Aggregate total investment return.
 

  † Based on average shares outstanding.

††Commencement of operations.

See Notes to Financial Statements.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

45

Financial Highlights (continued)                    BlackRock Short-Term Municipal Fund 
 
 
                Institutional         
    For the Six                         
    Months Ended                         
The following per share data and ratios have been derived    December 31, 2007                   For the Year Ended June 30,     
from information provided in the financial statements.    (Unaudited)        2007    2006    2005    2004    2003 
 
 
 
 
 
 
 
     Per Share Operating Performance                             
 
 
 
 
 
 
 
Net asset value, beginning of period    $ 9.88    $ 9.88 $    9.99    $ 10.05    $ 10.17    $ 10.13 
   
 
 
 
 
 
Investment income — net†    .17        .32    .27    .19    .18    .27 
Realized and unrealized gain (loss) — net    .09        —††    (.11)    (.06)    (.12)    .02 
   
 
 
 
 
 
 
Total from investment operations    .26        .32    .16    .13    .06    .29 
   
 
 
 
 
 
 
Less dividends from investment income — net    (.17)        (.32)    (.27)    (.19)    (.18)    (.25) 
   
 
 
 
 
 
 
Net asset value, end of period    $ 9.97    $ 9.88 $    9.88    $ 9.99    $ 10.05    $ 10.17 
 
 
 
 
 
 
 
     Total Investment Return**                             
 
 
 
 
 
 
 
 
Based on net asset value per share    2.65%‡        3.32%    1.57%    1.30%    .59%    2.87% 
 
 
 
 
 
 
 
 
     Ratios to Average Net Assets                             
 
 
 
 
 
 
 
 
Expenses, net of waiver    .35%*        .38%    .44%    .43%    .42%    .42% 
   
 
 
 
 
 
 
Expenses    .49%*        .48%    .45%    .44%    .43%    .43% 
   
 
 
 
 
 
 
Investment income — net    3.41%*        3.27%    2.66%    1.88%    1.78%    2.44% 
 
 
 
 
 
 
 
 
     Supplemental Data                             
 
 
 
 
 
 
 
 
Net assets, end of period (in thousands)    $ 132,769        $ 131,061    $ 149,333    $ 186,877    $ 243,443    $ 251,137 
   
 
 
 
 
 
 
Portfolio turnover    17%        110%    83%    87%    69%    45% 
   
 
 
 
 
 
 

*      Annualized.
 
**      Total investment returns exclude the effects of any sales charges.
 

  † Based on average shares outstanding.

††Amount is less than $.01 per share.

 ‡ Aggregate total investment return.


See Notes to Financial Statements.

46

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Financial Highlights (continued)    BlackRock Short-Term Municipal Fund 
 
    Investor A 
   
    For the Six     
    Months Ended    For the Period 
    December 31, October 2, 2006†† 
The following per share data and ratios have been derived    2007    to June 30, 
from information provided in the financial statements.    (Unaudited)    2007 
 
 
     Per Share Operating Performance         
 
 
Net asset value, beginning of period    $ 9.88    $ 9.93 
   
 
Investment income — net†    .15    .23 
Realized and unrealized gain (loss) — net    .11    (.05) 
   
 
Total from investment operations    .26    .18 
   
 
Less dividends from investment income — net    (.16)    (.23) 
   
 
Net asset value, end of period    $ 9.98    $ 9.88 
 
 
 
     Total Investment Return**         
 
 
Based on net asset value per share    2.62%‡    1.79%‡ 
 
 
 
     Ratios to Average Net Assets         
 
 
Expenses, net of waiver    .60%*    .61%* 
   
 
Expenses    .82%*    1.06%* 
   
 
Investment income — net    3.16%*    3.12%* 
 
 
 
     Supplemental Data         
 
 
Net assets, end of period (in thousands)    $ 8,349    $ 1,456 
   
 
Portfolio turnover    17%    110% 
   
 

*      Annualized.
 
**      Total investment returns exclude the effects of sales charges.
 

  † Based on average shares outstanding.

††Commencement of operations.

‡ Aggregate total investment return.See Notes to Financial Statements.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

47

Financial Highlights (continued)                    BlackRock Short-Term Municipal Fund 
 
                Investor A1         
    For the Six                         
    Months Ended                         
The following per share data and ratios have been derived    December 31, 2007                       For the Year Ended June 30,     
from information provided in the financial statements.    (Unaudited)        2007    2006             2005    2004    2003 
 
 
 
 
 
 
 
     Per Share Operating Performance                             
 
 
 
 
 
 
 
Net asset value, beginning of period    $ 9.89    $ 9.89    $ 10.00    $ 10.06    $ 10.18    $ 10.14 
   
 
 
 
 
 
Investment income — net†    .17        .32    .26    .18    .17    .24 
Realized and unrealized gain (loss) — net    .08        (.01)    (.11)    (.06)    (.12)    .04 
   
 
 
 
 
 
 
Total from investment operations    .25        .31    .15    .12    .05    .28 
   
 
 
 
 
 
 
Less dividends from investment income — net    (.16)        (.31)    (.26)    (.18)    (.17)    (.24) 
   
 
 
 
 
 
 
Net asset value, end of period    $ 9.98    $ 9.89    $ 9.89    $ 10.00    $ 10.06    $ 10.18 
 
 
 
 
 
 
 
     Total Investment Return*                             
 
 
 
 
 
 
 
 
Based on net asset value per share    2.60%‡        3.21%    1.47%    1.20%    .50%    2.77% 
 
 
 
 
 
 
 
 
     Ratios to Average Net Assets                             
 
 
 
 
 
 
 
 
Expenses, net of waiver    .45%**    .48%    .54%    .53%    .52%    .52% 
   
 
 
 
 
 
Expenses    .58%**    .58%    .55%    .54%    .53%    .53% 
   
 
 
 
 
 
Investment income — net    3.31%**    3.18%    2.55%    1.76%    1.68%    2.31% 
 
 
 
 
 
 
 
     Supplemental Data                             
 
 
 
 
 
 
 
 
Net assets, end of period (in thousands)    $ 110,183    $ 122,281    $ 99,293    $ 141,172    $ 244,741    $ 248,454 
   
 
 
 
 
 
Portfolio turnover    17%        110%    83%    87%    69%    45% 
   
 
 
 
 
 
 

*      Total investment returns exclude the effects of sales charges.
 
**      Annualized.
 

  † Based on average shares outstanding.

††Aggregate total investment return.

 See Notes to Financial Statements.

48

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Financial Highlights (continued)                        BlackRock Short-Term Municipal Fund 
 
                    Investor B         
    For the Six                             
    Months Ended                             
The following per share data and ratios have been derived    December 31, 2007                 For the Year Ended June 30,     
from information provided in the financial statements.    (Unaudited)        2007        2006             2005    2004    2003 
 
 
 
 
 
 
 
 
     Per Share Operating Performance                                 
 
 
 
 
 
 
 
 
Net asset value, beginning of period    $ 9.88    $ 9.88    $ 10.00    $ 10.05    $ 10.17    $ 10.13 
   
 
 
 
 
 
Investment income — net†    .15        .29        .23    .15    .14    .21 
Realized and unrealized gain (loss) — net    .09                 —††    (.12)    (.05)    (.12)    .04 
   
 
 
 
 
 
 
Total from investment operations    .24        .29        .11    .10    .02    .25 
   
 
 
 
 
 
 
 
Less dividends from investment income — net    (.15)        (.29)        (.23)    (.15)    (.14)    (.21) 
   
 
 
 
 
 
 
 
Net asset value, end of period    $ 9.97    $ 9.88    $ 9.88    $ 10.00    $ 10.05    $ 10.17 
 
 
 
 
 
 
 
     Total Investment Return*                                 
 
 
 
 
 
 
 
 
 
Based on net asset value per share    2.47%‡        2.95%        1.11%    1.04%    .24%    2.51% 
 
 
 
 
 
 
 
 
 
     Ratios to Average Net Assets                                 
 
 
 
 
 
 
 
 
 
Expenses, net of waiver    .70%**    .74%        .80%    .79%    .77%    .78% 
   
 
 
 
 
 
 
Expenses    .85%**    .85%        .81%    .80%    .78%    .79% 
   
 
 
 
 
 
 
Investment income — net    3.06%**    2.90%        2.28%    1.50%    1.43%    2.10% 
 
 
 
 
 
 
 
 
     Supplemental Data                                 
 
 
 
 
 
 
 
 
 
Net assets, end of period (in thousands)    $ 12,375    $ 14,380    $ 23,769    $ 38,565    $ 63,135    $ 83,886 
   
 
 
 
 
 
Portfolio turnover    17%        110%        83%    87%    69%    45% 
   
 
 
 
 
 
 
 

*      Total investment returns exclude the effects of sales charges.
 
**      Annualized.
 

  † Based on average shares outstanding.

††Amount is less than $(.01) per share.

‡ Aggregate total investment return.


See Notes to Financial Statements.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

49

Financial Highlights (continued)    BlackRock Short-Term Municipal Fund 
 
    Investor C 
   
    For the Six     
    Months Ended    For the Period 
    December 31, October 2, 2006†† 
The following per share data and ratios have been derived    2007    to June 30, 
from information provided in the financial statements.    (Unaudited)    2007 
 
 
     Per Share Operating Performance         
 
 
Net asset value, beginning of period    $ 9.88    $ 9.93 
   
 
Investment income — net†    .12    .17 
Realized and unrealized gain (loss) — net    .09    (.05) 
   
 
Total from investment operations    .21    .12 
   
 
Less dividends from investment income — net    (.12)    (.17) 
   
 
Net asset value, end of period    $ 9.97    $ 9.88 
 
 
 
     Total Investment Return**         
 
 
Based on net asset value per share    2.14%‡    1.23%‡ 
 
 
 
     Ratios to Average Net Assets         
 
 
Expenses, net of waiver    1.35%*    1.36%* 
   
 
Expenses    1.86%*    2.06%* 
   
 
Investment income — net    2.41%*    2.37%* 
 
 
 
     Supplemental Data         
 
 
Net assets, end of period (in thousands)    $ 4,652    $ 2,084 
   
 
Portfolio turnover    17%    110% 
   
 

*      Annualized.
 
**      Total investment returns exclude the effects of sales charges.
 

  † Based on average shares outstanding.

††Commencement of operations.


‡ Aggregate total investment return.

See Notes to Financial Statements.

50

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Financial Highlights (continued)                BlackRock Municipal Insured Fund 
 
 
            Institutional         
   
 
 
 
 
    For the Six                     
    Months Ended                     
The following per share data and ratios have been derived    December 31, 2007                       For the Year Ended June 30,     
from information provided in the financial statements.    (Unaudited)    2007    2006    2005    2004    2003 
 
 
 
 
 
 
     Per Share Operating Performance                         
 
 
 
 
 
 
Net asset value, beginning of period    $ 7.67     $7.69    $ 8.00    $ 7.70    $ 8.07    $ 7.80 
   
 
 
 
 
 
Investment income — net**    .17    .32    .35    .36    .40    .41 
Realized and unrealized gain (loss) — net    —‡‡    .03    (.28)    .30    (.37)    .27 
   
 
 
 
 
 
Total from investment operations    .17    .35    .07    .66    .03    .68 
   
 
 
 
 
 
Less dividends and distributions:                         
Investment income — net    (.17)    (.33)    (.35)    (.36)    (.40)    (.41) 
Realized gain — net    (.01)    (.04)    (.03)    —    —    — 
   
 
 
 
 
 
Total dividends and distributions    (.18)    (.37)    (.38)    (.36)    (.40)    (.41) 
   
 
 
 
 
 
Net asset value, end of period    $ 7.66     $7.67    $ 7.69    $ 8.00    $ 7.70    $ 8.07 
 
 
 
 
 
 
 
     Total Investment Return*                         
 
 
 
 
 
 
 
Based on net asset value per share    2.31%‡    4.60%    .82%    8.74%    .35%    8.88% 
 
 
 
 
 
 
 
     Ratios to Average Net Assets                         
 
 
 
 
 
 
 
Expenses, net of waiver and excluding interest expense and fees†    .47%††    .47%    .45%    .46%    .46%    .46% 
   
 
 
 
 
 
Expenses, net of waiver    .98%††    .87%    .74%    .63%    .66%    .71% 
   
 
 
 
 
 
Expenses    .98%††    .87%    .74%    .64%    .67%    .71% 
   
 
 
 
 
 
Investment income — net    4.43%††    4.42%    4.40%    4.58%    5.04%    5.13% 
 
 
 
 
 
 
 
     Supplemental Data                         
 
 
 
 
 
 
 
Net assets, end of period (in thousands)    $ 580,394     $604,691    $ 639,687    $ 707,134    $ 733,310    $ 855,757 
   
 
 
 
 
 
Portfolio turnover                     22%    36%    41%    47%    44%    33% 
   
 
 
 
 
 

*      Total investment returns exclude the effects of any sales charges.
 
**      Based on average shares outstanding.
 

† Interest expense and fees primarily from the trust certificates liability related to tender option bond trusts.

††Annualized.

‡ Aggregate total investment return.

‡‡Amount is less than $.01 per share.

See Notes to Financial Statements.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

51

Financial Highlights (continued)                BlackRock Municipal Insured Fund 
 
            Investor A         
    For the Six                     
    Months Ended                     
The following per share data and ratios have been derived    December 31, 2007                       For the Year Ended June 30,     
from information provided in the financial statements.    (Unaudited)    2007    2006    2005    2004    2003 
 
 
 
 
 
 
     Per Share Operating Performance                         
 
 
 
 
 
 
Net asset value, beginning of period    $ 7.67     $7.68    $ 8.00    $ 7.70    $ 8.07    $ 7.79 
   
 
 
 
 
 
Investment income — net**    .16    .33    .33    .34    .38    .39 
Realized and unrealized gain (loss) — net    —‡‡    .01    (.29)    .30    (.37)    .28 
   
 
 
 
 
 
Total from investment operations    .16    .34    .04    .64    .01    .67 
   
 
 
 
 
 
Less dividends and distributions:                         
Investment income — net    (.16)    (.31)    (.33)    (.34)    (.38)    (.39) 
Realized gain — net    (.01)    (.04)    (.03)    —    —    — 
   
 
 
 
 
 
Total dividends and distributions    (.17)    (.35)    (.36)    (.34)    (.38)    (.39) 
   
 
 
 
 
 
Net asset value, end of period    $ 7.66     $7.67    $ 7.68    $ 8.00    $ 7.70    $ 8.07 
 
 
 
 
 
 
 
     Total Investment Return*                         
 
 
 
 
 
 
 
Based on net asset value per share    2.18%‡    4.47%    .44%    8.47%    .10%    8.77% 
 
 
 
 
 
 
 
     Ratios to Average Net Assets                         
 
 
 
 
 
 
 
Expenses, net of waiver and excluding interest expense and fees†    .73%††    .72%    .70%    .71%    .71%    .71% 
   
 
 
 
 
 
Expenses, net of waiver    1.24%††    1.12%    .99%    .88%    .91%    .96% 
   
 
 
 
 
 
Expenses    1.24%††    1.13%    .99%    .89%    .91%    .96% 
   
 
 
 
 
 
Investment income — net    4.18%††    4.17%    4.15%    4.33%    4.79%    4.88% 
 
 
 
 
 
 
 
     Supplemental Data                         
 
 
 
 
 
 
 
Net assets, end of period (in thousands)    $ 170,340    $ 172,236    $ 172,083    $ 182,216    $ 183,007    $ 187,805 
   
 
 
 
 
 
Portfolio turnover                     22%    36%    41%    47%    44%    33% 
   
 
 
 
 
 

*      Total investment returns exclude the effects of sales charges.
 
**      Based on average shares outstanding.
 

† Interest expense and fees primarily from the trust certificates liability related to tender option bond trusts.

††Annualized.


‡ Aggregate total investment return.

‡‡Amount is less than $.01 per share.

See Notes to Financial Statements.

52

 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Financial Highlights (continued)                BlackRock Municipal Insured Fund 
 
            Investor B         
    For the Six                     
    Months Ended                     
The following per share data and ratios have been derived    December 31, 2007                       For the Year Ended June 30,     
from information provided in the financial statements.    (Unaudited)    2007    2006    2005    2004    2003 
 
 
 
 
 
 
     Per Share Operating Performance                         
 
 
 
 
 
 
Net asset value, beginning of period    $ 7.67     $7.68    $ 7.99    $ 7.69    $ 8.07    $ 7.79 
   
 
 
 
 
 
Investment income — net**    .14    .29    .29    .30    .34    .35 
Realized and unrealized gain (loss) — net    —‡‡    .01    (.28)    .30    (.38)    .28 
   
 
 
 
 
 
Total from investment operations    .14    .30    .01    .60    (.04)    .63 
   
 
 
 
 
 
Less dividends and distributions:                         
Investment income — net    (.14)    (.27)    (.29)    (.30)    (.34)    (.35) 
Realized gain — net    (.01)    (.04)    (.03)    —    —    — 
   
 
 
 
 
 
Total dividends and distributions    (.15)    (.31)    (.32)    (.30)    (.34)    (.35) 
   
 
 
 
 
 
Net asset value, end of period    $ 7.66    $ 7.67    $ 7.68    $ 7.99    $ 7.69    $ 8.07 
 
 
 
 
 
 
 
     Total Investment Return*                         
 
 
 
 
 
 
 
Based on net asset value per share    1.92%‡    3.95%    .05%    7.93%    (.53%)    8.21% 
 
 
 
 
 
 
 
     Ratios to Average Net Assets                         
 
 
 
 
 
 
 
Expenses, net of waiver and excluding interest expense and fees†    1.24%††    1.23%    1.21%    1.21%    1.21%    1.22% 
   
 
 
 
 
 
Expenses, net of waiver    1.76%††    1.63%    1.50%    1.39%    1.42%    1.47% 
   
 
 
 
 
 
Expenses    1.76%††    1.63%    1.50%    1.40%    1.42%    1.47% 
   
 
 
 
 
 
Investment income — net    3.66%††    3.67%    3.64%    3.83%    4.29%    4.38% 
 
 
 
 
 
 
 
     Supplemental Data                         
 
 
 
 
 
 
 
Net assets, end of period (in thousands)    $ 40,670     $45,533    $ 66,477    $ 91,355    $ 111,524    $ 160,177 
   
 
 
 
 
 
Portfolio turnover    22%    36%    41%    47%    44%    33% 
   
 
 
 
 
 

*      Total investment returns exclude the effects of sales charges.
 
**      Based on average shares outstanding.
 

† Interest expense and fees primarily from the trust certificates liability related to tender option bond trusts.

††Annualized.


‡ Aggregate total investment return.

‡‡ Amount is less than $.01 per share. See Notes to Financial Statements.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

53

Financial Highlights (continued)    BlackRock Municipal Insured Fund 
 
    Investor C 
   
    For the Six         
    Months Ended        For the Period 
    December 31,    October 2, 2006† 
The following per share data and ratios have been derived    2007        to June 30, 
from information provided in the financial statements.    (Unaudited)        2007 
 
 
 
     Per Share Operating Performance             
 
 
 
Net asset value, beginning of period    $ 7.68    $ 7.88 
   
 
Investment income — net††    .13        .17 
Realized and unrealized gain (loss) — net                                 —‡‡‡    (.14) 
   
 
Total from investment operations    .13        .03 
   
 
 
Less dividends and distributions:             
Investment income — net    (.13)        (.19) 
Realized gain — net    (.01)        (.04) 
   
 
 
Total dividends and distributions    (.14)        (.23) 
   
 
 
Net asset value, end of period    $ 7.67    $ 7.68 
 
 
 
     Total Investment Return**             
 
 
 
Based on net asset value per share    1.80%‡        .34%‡ 
 
 
 
 
     Ratios to Average Net Assets             
 
 
 
Expenses, net of waiver and excluding interest expense and fees‡‡    1.47%*        1.51%* 
   
 
 
Expenses, net of waiver    1.99%*        1.90%* 
   
 
 
Expenses    1.99%*        1.90%* 
   
 
 
Investment income — net    3.42%*        3.37%* 
 
 
 
 
     Supplemental Data             
 
 
 
Net assets, end of period (in thousands)    $ 8,812    $ 4,542 
   
 
Portfolio turnover    22%        36% 
   
 
 

*      Annualized.
 
**      Total investment returns exclude the effects of sales charges.
 

  † Commencement of operations.

††Based on average shares outstanding. ‡ Aggregate total investment return.

‡‡ Interest expense and fees primarily from the trust certificates liability related to tender option bond trusts.

‡‡‡Amount is less than $.01 per share.

See Notes to Financial Statements.

54

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Financial Highlights (continued)                BlackRock Municipal Insured Fund 
 
 
            Investor C1         
    For the Six                     
    Months Ended                     
The following per share data and ratios have been derived    December 31, 2007                       For the Year Ended June 30,     
from information provided in the financial statements.    (Unaudited)    2007    2006    2005    2004    2003 
 
 
 
 
 
 
     Per Share Operating Performance                         
 
 
 
 
 
 
Net asset value, beginning of period    $ 7.67     $7.68    $ 8.00    $ 7.69    $ 8.07    $ 7.79 
   
 
 
 
 
 
Investment income — net**    .14    .28    .28    .30    .33    .34 
Realized and unrealized gain (loss) — net    —‡‡    .02    (.29)    .31    (.38)    .28 
   
 
 
 
 
 
Total from investment operations    .14    .30    (.01)    .61    (.05)    .62 
   
 
 
 
 
 
Less dividends and distributions:                         
Investment income — net    (.14)    (.27)    (.28)    (.30)    (.33)    (.34) 
Realized gain — net    (.01)    (.04)    (.03)    —    —    — 
   
 
 
 
 
 
Total dividends and distributions    (.15)    (.31)    (.31)    (.30)    (.33)    (.34) 
   
 
 
 
 
 
Net asset value, end of period    $ 7.66    $ 7.67    $ 7.68    $ 8.00    $ 7.69    $ 8.07 
 
 
 
 
 
 
 
     Total Investment Return*                         
 
 
 
 
 
 
 
Based on net asset value per share    1.90%‡    3.90%    (.12%)    8.01%    (.58%)    8.16% 
 
 
 
 
 
 
 
     Ratios to Average Net Assets                         
 
 
 
 
 
 
 
Expenses, net of waiver and excluding interest expense and fees†    1.28%††    1.28%    1.26%    1.26%    1.26%    1.27% 
   
 
 
 
 
 
Expenses, net of waiver    1.79%††    1.68%    1.55%    1.44%    1.47%    1.52% 
   
 
 
 
 
 
Expenses    1.79%††    1.68%    1.55%    1.45%    1.47%    1.52% 
   
 
 
 
 
 
Investment income — net    3.62%††    3.63%    3.59%    3.77%    4.23%    4.31% 
 
 
 
 
 
 
 
     Supplemental Data                         
 
 
 
 
 
 
 
Net assets, end of period (in thousands)    $ 47,164     $51,452    $ 61,046    $ 64,682    $ 61,794    $ 66,089 
   
 
 
 
 
 
Portfolio turnover    22%    36%    41%    47%    44%    33% 
   
 
 
 
 
 

*      Total investment returns exclude the effects of sales charges.
 
**      Based on average shares outstanding.
 

† Interest expense and fees primarily from the trust certificates liability related to tender option bond trusts.

††Annualized.


‡ Aggregate total investment return.

‡‡Amount is less than $.01 per share.

See Notes to Financial Statements.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

55

Financial Highlights (continued)                    BlackRock National Municipal Fund 
 
                Institutional         
    For the Six                         
    Months Ended                         
The following per share data and ratios have been derived    December 31, 2007                       For the Year Ended June 30,     
from information provided in the financial statements.    (Unaudited)        2007    2006    2005    2004    2003 
 
 
 
 
 
 
 
     Per Share Operating Performance                             
 
 
 
 
 
 
 
Net asset value, beginning of period    $ 10.39    $ 10.36    $ 10.66    $ 10.29    $ 10.54    $ 10.26 
   
 
 
 
 
 
Investment income — net**    .24        .49    .51    .53    .55    .56 
Realized and unrealized gain (loss) — net    (.14)        .05    (.30)    .37    (.25)    .28 
   
 
 
 
 
 
 
Total from investment operations    .10        .54    .21    .90    .30    .84 
   
 
 
 
 
 
 
Less dividends from investment income — net    (.24)        (.51)    (.51)    (.53)    (.55)    (.56) 
   
 
 
 
 
 
 
Net asset value, end of period    $ 10.25    $ 10.39    $ 10.36    $ 10.66    $ 10.29    $ 10.54 
 
 
 
 
 
 
 
     Total Investment Return*                             
 
 
 
 
 
 
 
 
Based on net asset value per share    .97%‡        5.06%    2.02%    8.89%    2.88%    8.34% 
 
 
 
 
 
 
 
 
     Ratios to Average Net Assets                             
 
 
 
 
 
 
 
 
Expenses, net of waiver and excluding interest expense and fees†    .60%‡‡    .59%    .58%    .59%    .60%    .59% 
   
 
 
 
 
 
Expenses, net of waiver    .91%‡‡    .99%    .84%    .72%    .70%    .75% 
   
 
 
 
 
 
Expenses    .91%‡‡    1.00%    .85%    .72%    .70%    .75% 
   
 
 
 
 
 
Investment income — net    4.63%‡‡    4.66%    4.87%    5.02%    5.23%    5.35% 
 
 
 
 
 
 
 
     Supplemental Data                             
 
 
 
 
 
 
 
 
Net assets, end of period (in thousands)    $ 992,827    $ 976,153    $ 890,984    $ 909,125    $ 907,419    $ 624,192 
   
 
 
 
 
 
Portfolio turnover    25%        46%    56%    33%    20%    34% 
   
 
 
 
 
 
 

*      Total investment returns exclude the effects of any sales charges.
 
**      Based on average shares outstanding.
 

† Interest expense and fees primarily from the trust certificates liability related to tender option bond trusts.

 ‡ Aggregate total investment return.

‡‡Annualized.

See Notes to Financial Statements.

56

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Financial Highlights (continued)                    BlackRock National Municipal Fund 
 
                Investor A         
    For the Six                         
    Months Ended                         
The following per share data and ratios have been derived    December 31, 2007                       For the Year Ended June 30,     
from information provided in the financial statements.    (Unaudited)        2007    2006    2005    2004    2003 
 
 
 
 
 
 
 
     Per Share Operating Performance                             
 
 
 
 
 
 
 
Net asset value, beginning of period    $ 10.39    $ 10.37    $ 10.67    $ 10.29    $ 10.54    $ 10.27 
   
 
 
 
 
 
Investment income — net**    .23        .46    .49    .50    .52    .53 
Realized and unrealized gain (loss) — net    (.13)        .03    (.30)    .38    (.25)    .27 
   
 
 
 
 
 
 
Total from investment operations    .10        .49    .19    .88    .27    .80 
   
 
 
 
 
 
 
Less dividends from investment income — net    (.23)        (.47)    (.49)    (.50)    (.52)    (.53) 
   
 
 
 
 
 
 
Net asset value, end of period    $ 10.26    $ 10.39    $ 10.37    $ 10.67    $ 10.29    $ 10.54 
 
 
 
 
 
 
 
     Total Investment Return*                             
 
 
 
 
 
 
 
 
Based on net asset value per share    .96%‡        4.71%    1.77%    8.73%    2.62%    7.98% 
 
 
 
 
 
 
 
 
     Ratios to Average Net Assets                             
 
 
 
 
 
 
 
 
Expenses, net of waiver and excluding interest expense and fees†    .82%‡‡    .84%    .83%    .84%    .85%    .84% 
   
 
 
 
 
 
Expenses, net of waiver    1.13%‡‡    1.24%    1.09%    .97%    .95%    1.00% 
   
 
 
 
 
 
Expenses    1.14%‡‡    1.24%    1.10%    .97%    .95%    1.00% 
   
 
 
 
 
 
Investment income — net    4.40%‡‡    4.43%    4.61%    4.76%    4.97%    5.10% 
 
 
 
 
 
 
 
     Supplemental Data                             
 
 
 
 
 
 
 
 
Net assets, end of period (in thousands)    $ 410,710    $ 349,225    $ 283,814    $ 248,231    $ 207,376    $ 200,108 
   
 
 
 
 
 
Portfolio turnover    25%        46%    56%    33%    20%    34% 
   
 
 
 
 
 
 

*      Total investment returns exclude the effects of sales charges.
 
**      Based on average shares outstanding.
 

† Interest expense and fees primarily from the trust certificates liability related to tender option bond trusts.

‡ Aggregate total investment return.

‡‡Annualized.


See Notes to Financial Statements.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

57

Financial Highlights (continued)                    BlackRock National Municipal Fund 
 
 
                Investor B         
    For the Six                         
    Months Ended                         
The following per share data and ratios have been derived    December 31, 2007                       For the Year Ended June 30,     
from information provided in the financial statements.    (Unaudited)        2007    2006    2005    2004    2003 
 
 
 
 
 
 
 
     Per Share Operating Performance                             
 
 
 
 
 
 
 
Net asset value, beginning of period    $ 10.38    $ 10.36    $ 10.66    $ 10.28    $ 10.53    $ 10.26 
   
 
 
 
 
 
Investment income — net**    .20        .41    .43    .45    .47    .48 
Realized and unrealized gain (loss) — net    (.13)        .02    (.30)    .38    (.26)    .27 
   
 
 
 
 
 
 
Total from investment operations    .07        .43    .13    .83    .21    .75 
   
 
 
 
 
 
 
Less dividends from investment income — net    (.20)        (.41)    (.43)    (.45)    (.46)    (.48) 
   
 
 
 
 
 
 
Net asset value, end of period    $ 10.25    $ 10.38    $ 10.36    $ 10.66    $ 10.28    $ 10.53 
 
 
 
 
 
 
 
     Total Investment Return*                             
 
 
 
 
 
 
 
Based on net asset value per share    .70%‡        4.18%    1.25%    8.18%    2.10%    7.43% 
 
 
 
 
 
 
 
 
     Ratios to Average Net Assets                             
 
 
 
 
 
 
 
Expenses, net of waiver and excluding interest expense and fees†    1.35%‡‡    1.34%    1.34%    1.35%    1.35%    1.34% 
   
 
 
 
 
 
Expenses, net of waiver    1.66%‡‡    1.75%    1.60%    1.48%    1.45%    1.50% 
   
 
 
 
 
 
Expenses    1.66%‡‡    1.75%    1.61%    1.48%    1.46%    1.51% 
   
 
 
 
 
 
Investment income — net    3.88%‡‡    3.92%    4.11%    4.27%    4.47%    4.59% 
 
 
 
 
 
 
 
     Supplemental Data                             
 
 
 
 
 
 
 
Net assets, end of period (in thousands)    $ 84,545    $ 101,260    $ 134,177    $ 177,553    $ 217,814    $ 321,477 
   
 
 
 
 
 
Portfolio turnover    25%        46%    56%    33%    20%    34% 
   
 
 
 
 
 
 

*      Total investment returns exclude the effects of sales charges.
 
**      Based on average shares outstanding.
 

† Interest expense and fees primarily from the trust certificates liability related to tender option bond trusts.

‡ Aggregate total investment return.

‡‡Annualized.


See Notes to Financial Statements.

58

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Financial Highlights (continued)    BlackRock National Municipal Fund 
 
    Investor C 
   
    For the Six         
    Months Ended        For the Period 
    December 31,    October 2, 2006† 
The following per share data and ratios have been derived    2007        to June 30, 
from information provided in the financial statements.    (Unaudited)        2007 
 
 
 
     Per Share Operating Performance             
 
 
 
Net asset value, beginning of period    $ 10.39    $ 10.57 
   
 
Investment income — net**    .19        .25 
Realized and unrealized gain (loss) — net    (.13)        (.16) 
   
 
 
Total from investment operations    .06        .09 
   
 
 
Less dividends from investment income — net    (.19)        (.27) 
   
 
 
Net asset value, end of period    $ 10.26    $ 10.39 
 
 
 
     Total Investment Return‡             
 
 
 
Based on net asset value per share    .56%††    .96%†† 
 
 
 
     Ratios to Average Net Assets             
 
 
 
Expenses, net of waiver and excluding interest expense and fees†††    1.63%*        1.65%* 
   
 
 
Expenses, net of waiver    1.94%*        2.05%* 
   
 
 
Expenses    1.94%*        2.05%* 
   
 
 
Investment income — net    3.60%*        3.59%* 
 
 
 
 
     Supplemental Data             
 
 
 
Net assets, end of period (in thousands)    $ 66,466    $ 41,676 
   
 
Portfolio turnover    25%        46% 
   
 
 

*      Annualized.
 
**      Based on average shares outstanding.
 

† Commencement of operations.

††Aggregate total investment return.

†††Interest expense and fees primarily from the trust certificates liability related to tender option bond trusts.

‡Total investment returns exclude the effects of sales charges. See Notes to Financial Statements.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

59

Financial Highlights (continued)                    BlackRock National Municipal Fund 
 
 
                Investor C1         
    For the Six                         
    Months Ended                         
The following per share data and ratios have been derived    December 31, 2007                       For the Year Ended June 30,     
from information provided in the financial statements.    (Unaudited)        2007    2006    2005    2004    2003 
 
 
 
 
 
 
 
     Per Share Operating Performance                             
 
 
 
 
 
 
 
Net asset value, beginning of period    $ 10.39    $ 10.36    $ 10.66    $ 10.29    $ 10.54    $ 10.26 
   
 
 
 
 
 
Investment income — net**    .20        .41    .43    .44    .46    .47 
Realized and unrealized gain (loss) — net    (.14)        .04    (.29)    .37    (.25)    .28 
   
 
 
 
 
 
 
Total from investment operations    .06        .45    .14    .81    .21    .75 
   
 
 
 
 
 
 
Less dividends from investment income — net    (.20)        (.42)    (.44)    (.44)    (.46)    (.47) 
   
 
 
 
 
 
 
Net asset value, end of period    $ 10.25    $ 10.39    $ 10.36    $ 10.66    $ 10.29    $ 10.54 
 
 
 
 
 
 
 
     Total Investment Return*                             
 
 
 
 
 
 
 
Based on net asset value per share    .58%‡        4.23%    1.20%    8.02%    2.05%    7.48% 
 
 
 
 
 
 
 
 
     Ratios to Average Net Assets                             
 
 
 
 
 
 
 
Expenses, net of waiver and excluding interest expense and fees†    1.39%‡‡    1.39%    1.39%    1.40%    1.40%    1.39% 
   
 
 
 
 
 
Expenses, net of waiver    1.69%‡‡    1.80%    1.65%    1.53%    1.50%    1.55% 
   
 
 
 
 
 
Expenses    1.70%‡‡    1.80%    1.65%    1.53%    1.51%    1.56% 
   
 
 
 
 
 
Investment income — net    3.84%‡‡    3.88%    4.05%    4.20%    4.42%    4.54% 
 
 
 
 
 
 
 
     Supplemental Data                             
 
 
 
 
 
 
 
Net assets, end of period (in thousands)    $ 128,091    $ 140,653    $ 139,447    $ 107,893    $ 74,849    $ 77,906 
   
 
 
 
 
 
Portfolio turnover    25%        46%    56%    33%    20%    34% 
   
 
 
 
 
 
 

*      Total investment returns exclude the effects of sales charges.
 
**      Based on average shares outstanding.
 

† Interest expense and fees primarily from the trust certificates liability related to tender option bond trusts.

‡ Aggregate total investment return.

‡‡Annualized.


See Notes to Financial Statements.

60

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Financial Highlights (continued)    BlackRock High Yield Municipal Fund 
 
                                     Institutional 
   
    For the Six         
    Months Ended        For the Period 
    December 31,    August 1, 2006†† 
The following per share data and ratios have been derived    2007        to June 30, 
from information provided in the financial statements.    (Unaudited)        2007 
 
 
 
     Per Share Operating Performance             
 
 
 
Net asset value, beginning of period    $ 9.96    $ 10.00 
   
 
Investment income — net†    .22        .39 
Realized and unrealized loss — net    (.80)        (.03) 
   
 
 
Total from investment operations    (.58)        .36 
   
 
 
Less dividends and distributions:             
Investment income — net    (.22)        (.40) 
Realized gain — net    (.02)        —‡‡ 
   
 
 
Total dividends and distributions    (.24)        (.40) 
   
 
 
Net asset value, end of period    $ 9.14    $ 9.96 
 
 
 
     Total Investment Return             
 
 
 
Based on net asset value per share    (5.91%)‡    3.59%‡ 
 
 
 
     Ratios to Average Net Assets             
 
 
 
Expenses, net of waiver and excluding interest expense and fees‡‡‡    .76%*    .62%* 
   
 
Expenses, net of waiver    .77%*    .62%* 
   
 
Expenses    .82%*    .96%* 
   
 
Investment income — net    4.55%*    4.35%* 
 
 
 
     Supplemental Data             
 
 
 
Net assets, end of period (in thousands)    $ 59,738    $ 62,464 
   
 
Portfolio turnover    18%        16% 
   
 
 

 

* Annualized.

† Based on average shares outstanding.

† † Commencement of operations.

‡ Aggregate total investment return.

  ‡‡ Amount is less than $(.01) per share.

‡‡‡ Interest expense and fees primarily from the trust certificates liability related to tender option bond trusts.

See Notes to Financial Statements.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

61

Financial Highlights (continued)    BlackRock High Yield Municipal Fund 
 
    Investor A 
   
    For the Six         
    Months Ended        For the Period 
    December 31,    August 1, 2006†† 
The following per share data and ratios have been derived    2007        to June 30, 
from information provided in the financial statements.    (Unaudited)        2007 
 
 
 
     Per Share Operating Performance             
 
 
 
Net asset value, beginning of period    $ 9.95    $ 10.00 
   
 
Investment income — net†    .21        .32 
Realized and unrealized gain (loss) — net    (.80)        .01 
   
 
 
Total from investment operations    (.59)        .33 
   
 
 
Less dividends and distributions:             
Investment income — net    (.21)        (.38) 
Realized gain — net    (.02)        —‡‡ 
   
 
 
Total dividends and distributions    (.23)        (.38) 
   
 
 
Net asset value, end of period    $ 9.13    $ 9.95 
 
 
 
     Total Investment Return**             
 
 
 
Based on net asset value per share    (6.03%)‡    3.26%‡ 
 
 
 
     Ratios to Average Net Assets             
 
 
 
Expenses, net of waiver, and excluding interest expense and fees‡‡‡    1.01%*    .89%* 
   
 
Expenses, net of waiver    1.01%*    .89%* 
   
 
Expenses    1.07%*    1.19%* 
   
 
Investment income — net    4.29%*    4.16%* 
 
 
 
     Supplemental Data             
 
 
 
Net assets, end of period (in thousands)    $ 4,447    $ 5,892 
   
 
Portfolio turnover    18%        16% 
   
 
 

*      Annualized.
 
**      Total investment returns exclude the effects of sales charges.
 

  † Based on average shares outstanding.

††Commencement of operations.


‡ Aggregate total investment return.

  ‡‡ Amount is less than $(.01) per share.

‡‡‡Interest expense and fees primarily from the trust certificates liability related to tender option bond trusts.

See Notes to Financial Statements.

62

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Financial Highlights (concluded)    BlackRock High Yield Municipal Fund 
 
                                       Investor C 
   
    For the Six         
    Months Ended        For the Period 
    December 31,    August 1, 2006†† 
The following per share data and ratios have been derived    2007        to June 30, 
from information provided in the financial statements.    (Unaudited)        2007 
 
 
 
     Per Share Operating Performance             
 
 
 
Net asset value, beginning of period    $ 9.97    $ 10.00 
   
 
Investment income — net†    .17        .30 
Realized and unrealized loss — net    (.81)        (.02) 
   
 
 
Total from investment operations    (.64)        .28 
   
 
 
Less dividends and distributions:             
Investment income — net    (.17)        (.31) 
Realized gain — net    (.02)        —‡‡ 
   
 
 
Total dividends and distributions    (.19)        (.31) 
   
 
 
Net asset value, end of period    $ 9.14    $ 9.97 
 
 
 
     Total Investment Return**             
 
 
 
Based on net asset value per share    (6.49%)‡    2.84%‡ 
 
 
 
     Ratios to Average Net Assets             
 
 
 
Expenses, net of waiver, and excluding interest expense and fees‡‡‡    1.78%*    1.53%* 
   
 
Expenses, net of waiver    1.79%*    1.53%* 
   
 
Expenses    1.85%*    1.84%* 
   
 
Investment income — net    3.51%*    3.50%* 
 
 
 
     Supplemental Data             
 
 
 
Net assets, end of period (in thousands)    $ 3,746    $ 4,378 
   
 
Portfolio turnover    18%        16% 
   
 
 

*      Annualized.
 
**      Total investment returns exclude the effects of sales charges.
 

  † Based on average shares outstanding.

††Commencement of operations.


‡ Aggregate total investment return.

  ‡‡ Amount is less than $(.01) per share.

‡‡‡Interest expense and fees primarily from the trust certificates liability related to tender option bond trusts.

See Notes to Financial Statements.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

63

Notes to Financial Statements (Unaudited)

1. Significant Accounting Policies:

BlackRock Municipal Bond Fund, Inc. (the “Bond Fund”), consisting of BlackRock Short-Term Municipal Fund, BlackRock Municipal Insured Fund, BlackRock National Municipal Fund and BlackRock High Yield Municipal Fund (the “Funds” or individually as the “Fund”) is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The Bond Fund’s financial statements are prepared in conformity with U.S. generally accepted accounting principles, which may require the use of management accruals and estimates. Actual results may differ from these estimates. These unaudited financial statements reflect all adjustments, which are, in the opinion of management, necessary to present a fair statement of the results for the interim period. All such adjustments are of a normal, recurring nature. The Funds offer multiple classes of shares. BlackRock and Institutional Shares are sold only to certain eligible investors. Investor A and Investor A1 Shares are sold with a front-end sales charge. Shares of Investor B, Investor C and Investor C1 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 Investor A, Investor A1, Investor B, Investor C and Investor C1 Shares bear certain expenses related to the shareholder servicing of such shares, and Investor B, Investor C and Investor C1 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 shareholder servicing and distribution expenditures (except that Investor B share-holders may vote on certain changes to the Investor A and Investor A1 distribution plan, as applicable). 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 Bond 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 Bond Fund under the general direction of the Board of Directors. Such valuations and procedures are reviewed periodically by the Board of Directors of the Bond 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. Effective September 4, 2007, exchange-traded options are valued at the mean between the last bid and ask prices at the close of the options market in which the options trade and previously were valued at the last sales price as of the close of options trading on applicable exchanges. Options traded in the OTC market are valued at the last asked price (options written) or the last bid price (options purchased). Swap agreements are valued based upon quoted fair valuations received daily by the Bond Fund from a pricing service. Short-term investments are valued at amortized cost, which approximates market value. 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 Bond Fund.

(b) Derivative financial instruments — The Funds may engage in various portfolio investment strategies both to increase their returns and to hedge, or protect, their exposure to interest rate movements and movements in the securities markets. Losses may arise due to changes in the value of the contract due to an unfavorable change in the price of the underlying security, or index, or if the counterparty does not perform under the contract. The counterparty, for certain instruments, may pledge cash or securities as collateral.

  • Financial futures contracts — The Funds may purchase or sell finan- cial futures contracts and options on such financial futures contracts.
    Financial futures contracts are contracts for delayed delivery ofsecurities at a specific future date and at a specific price or yields.Upon entering into a contract, the Funds deposit and maintains ascollateral such initial margin as required by the exchange on whichthe transaction is effected. Pursuant to the contract, the Funds agreeto receive from or pay to the broker an amount of cash equal to thedaily fluctuation in value of the contract. Such receipts or paymentsare known as variation margin and are recorded by the Funds asunrealized gains or losses. When the contract is closed, the Fundsrecord a realized gain or loss equal to the difference between thevalue of the contract at the time it was opened and the value at thetime it was closed.
  • Forward interest rate swaps — The Funds may enter into forward interest rate swaps. In a forward interest rate swap, the Funds 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 deter- mined by quoted fair values received daily by the Funds from the counterparty. When the agreement is closed, the Funds record a real- ized gain or loss in an amount equal to the value of the agreement.
  • Swaps — Each Fund may enter into swap agreements, which are OTC contracts in which each Fund and a counterparty agree to make peri- odic net payments on a specified notional amount. The net payments can be made for a set period of time or may be triggered by a pre- determined credit event. The net periodic payments may be based on a fixed or variable interest rate; the change in market value of a specified security, basket of securities or index; or the return generat- ed by a security. These periodic payments received or made by each Fund are recorded in the accompanying Statement of Operations as

64

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Notes to Financial Statements (continued)

realized gains or losses, respectively. Gains or losses are also realized upon termination of the swap agreements. Swaps are marked-to-market daily and changes in value are recorded as unrealized appreciation (depreciation). Risks include changes in the returns of the underlying instruments, failure of the counterparties to perform under the contracts’ terms and the possible lack of liquidity with respect to the swap agreements.

(c) Municipal bonds transferred to tender option bond trusts — The BlackRock Municipal Insured Fund, BlackRock National Municipal Fund and BlackRock High Yield Municipal Fund invest in leveraged residual certificates (“TOB Residuals”) issued by tender option bond trusts (“TOBs”). A TOB is established by a third party sponsor forming a special purpose entity, into which a fund, or an agent on behalf of the fund, transfers municipal securities. A TOB typically issues two classes of beneficial interests: short-term floating rate certificates, which are sold to third party investors, and residual certificates, which are generally issued to the fund which made the transfer or to affiliates of the fund. Each of these Funds’ transfers of the municipal securities to a TOB do not qualify for sale treatment under Statement of Financial Accounting Standards No. 140 “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” therefore the municipal securities deposited into a TOB are presented in each of these Funds’ schedules of investments and the proceeds from the transactions are reported as a liability for trust certificates of each of these Funds. Interest income from the underlying security is recorded by these Funds on an accrual basis. Interest expense incurred on the secured borrowing and other expenses related to remarketing, administration and trustee services to a TOB are reported as expenses of a Fund. The floating rate certificates have interest rates that generally reset weekly and their holders have the option to tender certificates to the TOB for redemption at par at each reset date. The residual interests held by these Funds include the right of the Funds (1) to cause the holders of a proportional share of floating rate certificates to tender their certificates at par, and (2) to transfer a corresponding share of the municipal securities from the TOB to the Funds. At December 31, 2007, the aggregate value of the underlying municipal securities transferred to TOBs and the related liability for trust certificates were:

        Range of     
        Interest    Underlying 
        Rates on    Municipal 
    Liability for    the Liability    Bonds 
    Trust    for Trust    Transferred 
    Certificates    Certificates    to TOBs 
 
 
 
BlackRock Municipal        3.45% –     
Insured Fund    $117,268,292    3.696%    $231,888,278 
BlackRock National        3.472% –     
Municipal Fund    $106,893,871    3.690%    $217,410,844 
BlackRock High Yield             
Municipal Fund    $ 1,205,000    3.42%    $ 2,446,415 
 
 
 

Financial transactions executed through TOBs generally will underperform the market for fixed rate municipal bonds in a rising interest rate environment, but tend to outperform the market for fixed rate bonds when interest rates decline or remain relatively stable. Should short-term interest rates rise, the Funds’ investments in TOB Residuals likely will adversely affect the Funds’ investment income-net and distributions to shareholders. Fluctuations in the market value of municipal securities deposited into the TOB may adversely affect these Funds’ net asset value per share.

While the Funds’ investment policies and restrictions expressly permit investments in inverse floating rate securities such as TOB Residuals, they generally do not allow the Funds to borrow money for purposes of making investments. The Funds’ management believes that the Funds’ restrictions on borrowings do not apply to the secured borrowings deemed to have occurred for accounting purposes.

(d) Income taxes — It is the Bond 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.

(e) 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 Funds amortize all premiums and discounts on debt securities.

(f) Prepaid registration fees — Prepaid registration fees are charged to expense as the related shares are issued.

(g) 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.

(h) Expenses — Certain expenses have been allocated to the individual Funds in the Bond Fund on a pro rata basis based upon the respective aggregate net asset value of each Fund included in the Bond Fund.

(i) Insurance — BlackRock Municipal Insured Fund: Where bonds in the Fund have not been insured pursuant to policies obtained by the issuer, the Fund has obtained insurance with respect to the payment of interest and principal of each bond. Such insurance is valid as long as the bonds are held by the Fund.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

65

Notes to Financial Statements (continued)

(j) Offering costs — BlackRock Municipal High Yield Fund: Offering costs are amortized over a 12-month period beginning with the commencement of operations of the Fund.

(k) Recent accounting pronouncements — Effective June 29, 2007, the Funds implemented Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 prescribes the minimum recognition threshold a tax position must meet in connection with accounting for uncertainties in income tax positions taken or expected to be taken by an entity, including investment companies, before being measured and recognized in the financial statements. Management has evaluated the application of FIN 48 to the Funds, and has determined that the adoption of FIN 48 does not have a material impact on the Funds’ financial statements. The Funds file U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Funds’ U.S. federal tax returns remains open for the years ended June 30, 2004 through June 30, 2007. The statute of limitations on the Funds’ state and local tax returns may remain open for an additional year depending upon the jurisdiction.

In September 2006, Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”), was issued and is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. At this time, management is currently evaluating the implications of FAS 157 and its impact on the Funds’ financial statements, if any, has not been determined.

In addition, in February 2007, Statement of Financial Accounting Standard No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“FAS 159”), was issued and is effective for fiscal years beginning after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of FAS 157. FAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. FAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. At this time, management is evaluating the implications of FAS 159 and its impact on the Funds’ financial statements, if any, has not been determined.

2. Investment Advisory Agreement and Transactions with Affiliates:

Each Fund has entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), an indirect, wholly owned subsidiary of BlackRock, Inc. The Funds have also entered into separate Distribution Agreements with FAM Distributors, Inc. (“FAMD”) and BlackRock Distributors, Inc. and its affiliates (“BDI”) (collectively, the “Distributor”) and has adopted separate Distribution Plans with respect to its Investor A, Investor A1, Investor B, Investor C and Investor C1 Shares. FAMD is a wholly owned subsidiary of Merrill Lynch Group, Inc. and BDI is an affiliate of BlackRock, Inc. Merrill Lynch & Co., Inc. (“Merrill Lynch”) and The PNC Financial Services Group, Inc. (“PNC”) are the principal owners of BlackRock, Inc.

The Manager is responsible for the management of each Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operation of the Bond Fund. For such services, the Manager receives at the end of each month a fee with respect to each Fund 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 
   
    BlackRock    BlackRock        BlackRock 
Aggregate of Average    Short-Term    Municipal     National 
Daily Net Assets of the    Municipal    Insured    Municipal 
Three Combined Funds*             Fund           Fund           Fund 
 
 
 
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% 
 
 
 

*      The portion of the assets of a Fund to which the rate at each breakpoint level applies will be determined on a “uniform percentage” basis. The uniform percentage applicable to a breakpoint level is determined by dividing the amount of the aggregate average daily net assets of the three combined Funds that falls within that breakpoint level by the aggregate average daily net assets of the three combined Funds. The amount of the fee for a Fund at each breakpoint level is determined by multiplying the average daily net assets of that Fund by the uniform percentage applicable to that breakpoint level and multiplying the product by the advisory fee rate.
 

The BlackRock High Yield Municipal Fund’s rates are as follows: .55% of the Fund’s average daily net assets not exceeding $250 million; .525% of average daily net assets in excess of $250 million but not exceeding $500 million; and .50% of average daily net assets in excess of $500 million. In addition, for the BlackRock High Yield Municipal Fund, the Manager has voluntarily agreed to waive a portion of the management fee. The amount of the waiver is determined monthly and can be discontinued at any time. For the six months ended December 31, 2007, the Manager earned fees of $204,156, of which $18,171 was waived.

For the BlackRock Short-Term Municipal Fund, the Manager has voluntarily agreed to waive fees or expenses in order to limit expenses as follows: .35% for Institutional Shares, .60% for Investor A Shares, .45% for Investor A1 Shares, .70% for Investor B Shares and 1.35% for Investor C Shares. For the six months ended December 31, 2007, the Manager earned fees of $452,032 of which $182,087 was waived.

66

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Notes to Financial Statements (continued)

In addition, the Manager has entered into sub-advisory agreements with BlackRock Investment Management, LLC, an affiliate of the Manager, under which the Manager pays the sub-adviser for services it provides to each Fund, a monthly fee that is a percentage of the management fee paid by each Fund to the Manager.

The Manager has agreed to waive its advisory fee for each Fund by the amount of advisory fee each Fund pays to the Manager indirectly through each Fund’s investment in the Merrill Lynch Institutional Tax-Exempt Fund. For the six months ended December 31, 2007, the waivers were as follows:

BlackRock Short-Term Municipal Fund    $ 13,191 
BlackRock Municipal Insured Fund    $ 9,305 
BlackRock National Municipal Fund    $ 37,643 
BlackRock High Yield Municipal Fund    $ 1,923 
 

Pursuant to the Distribution Plans adopted by the Bond Fund on behalf of the Funds in accordance with Rule 12b-1 under the Investment Company Act of 1940, each Fund pays the Distributor ongoing service 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:

        Service Fees     
   
 
 
 
    BlackRock    BlackRock    BlackRock    BlackRock 
    Short-Term    Municipal    National    High Yield 
    Municipal    Insured    Municipal    Municipal 
    Fund    Fund    Fund    Fund 
 
 
 
 
Investor A    .25%    .25%    .25%    .25% 
Investor A1    .10%    —    —    — 
Investor B    .15%    .25%    .25%    — 
Investor C    .25%    .25%    .25%    .25% 
Investor C1    —    .25%    .25%    — 
 
 
 
 
 
 
                 Distribution Fees     
   
 
 
 
    BlackRock    BlackRock    BlackRock    BlackRock 
    Short-Term    Municipal    National    High Yield 
    Municipal    Insured    Municipal    Municipal 
    Fund    Fund    Fund    Fund 
 
 
 
 
Investor B    .20%    .50%    .50%    — 
Investor C    .75%    .75%    .75%    .75% 
Investor C1    —    .55%    .55%    — 
 
 
 
 

Pursuant to sub-agreements with each Distributor, broker-dealers, including Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”), a wholly owned subsidiary of Merrill Lynch and the Distributor, provide shareholder servicing and distribution services to the Bond Fund. The ongoing service fee compensates the Distributor and each broker-dealer (including MLPF&S) for providing shareholder servicing to Investor A, Investor A1, Investor B, Investor C and Investor C1 shareholders. The ongoing distribution fee compensates each Distributor and the broker-dealers for providing distribution-related services to Investor B, Investor C and Investor C1 shareholders.

For the six months ended December 31, 2007, FAMD and BDI earned underwriting discounts and direct commissions and MLPF&S earned dealer concessions on sales of the Funds’ Investor A Shares as follows:

    BlackRock    BlackRock    BlackRock    BlackRock 
    Short-Term    Municipal    National    High Yield 
    Municipal    Insured    Municipal    Municipal 
    Fund    Fund    Fund    Fund 
 
 
 
 
Investor A Shares    $33,820    $60,920    $198,917    $9,700 
 
 
 
 

For the six months ended December 31, 2007, affiliates received contingent deferred sales charges relating to Investor B, Investor C and Investor C1 Shares as follows:

    Investor B    Investor C    Investor C1 
 
 
 
BlackRock Short-Term             
Municipal Fund    $  2,699    $   2,106    $      — 
BlackRock Municipal             
   Insured Fund    $17,638    $     712    $   642 
BlackRock National             
Municipal Fund    $28,442    $22,963    $1,701 
BlackRock High Yield             
Municipal Fund    $       —    $  1,199    $      — 
 
 
 

Furthermore, MLPF&S received contingent deferred sales charges relat- 
ing to transactions subject to front-end sales charge waivers as follows: 
 
    Investor A 
 
BlackRock Short-Term Municipal Fund    $       9 
BlackRock National Municipal Fund    $2,537 
 

The Manager maintains a call center, which is responsible for providing certain shareholder services to the Bond Fund, such as responding to shareholder inquiries and processing transactions based upon instructions from shareholders with respect to the subscription and redemption of fund shares.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

67

Notes to Financial Statements (continued)

During the six months ended December 31, 2007, the following amounts have been accrued by each Fund to reimburse the Manager for costs incurred running the call center, which are a component of the transfer agent fees in the accompanying Statements of Operations.

        Call Center Fees     
   
 
 
 
    BlackRock    BlackRock    BlackRock    BlackRock 
    Short-Term    Municipal    National    High Yield 
    Municipal    Insured    Municipal    Municipal 
    Fund    Fund    Fund    Fund 
 
 
 
 
BlackRock    $ 30    —    —    — 
Institutional    $ 2,810    $19,226    $57,994    $ 472 
Investor A    $ 72    $ 5,537    $11,071    $ 113 
Investor A1    $ 2,166    —    —    — 
Investor B    $ 348    $ 1,195    $ 2,890    — 
Investor C    $ 86    $ 94    $ 929    $ 78 
Investor C1    —    $ 1,076    $ 2,654    — 
 
 
 
 

For the six months ended December 31, 2007, each Fund reimbursed the Manager for certain accounting services. The reimbursements were as follows:

BlackRock Short-Term Municipal Fund    $ 2,164 
BlackRock Municipal Insured Fund    $ 7,752 
BlackRock National Municipal Fund    $14,462 
BlackRock High Yield Municipal Fund    $ 611 
 

PFPC Inc., an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager is the Fund’s transfer agent.

Certain officers and/or directors of the Bond Fund are officers and/or directors of BlackRock, Inc. or its affiliates.

3. Investments:

Purchases and sales of investments, excluding short-term securities, for the six months ended December 31, 2007 were as follows:

    Purchases    Sales 
 
 
BlackRock Short-Term Municipal Fund    $ 39,156,618    $ 51,745,101 
BlackRock Municipal Insured Fund    $209,553,633    $220,943,809 
BlackRock National Municipal Fund    $438,125,236    $423,613,396 
BlackRock High Yield Municipal Fund    $ 18,467,318    $ 13,045,496 
 
 

4. Capital Share Transactions:

Net increase (decrease) in net assets derived from capital share transactions for the six months ended December 31, 2007 and the year ended June 30, 2007 were as follows:

    For the    For the 
    Six Months Ended    Year Ended 
    December 31, 2007    June 30, 2007 
 
 
BlackRock Short-Term Municipal Fund    $ (5,547,646)    $ (62,634,810) 
BlackRock Municipal Insured Fund    $(29,995,250)    $ (60,444,977) 
BlackRock National Municipal Fund    $ 95,199,573    $159,104,907 
BlackRock High Yield Municipal Fund    $ 1,650,939    $ 73,526,873 
 
 

68

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Notes to Financial Statements (continued)                 
 
Transactions in capital shares for each class were as follows:                     
     For the Six Months Ended    For the Period October 2, 2006* 
           December 31, 2007        to June 30, 2007 
 
 
 
    Shares       Amount    Shares         Amount 
 
 
 
 
BlackRock Short-Term Municipal Fund                     
 
 
 
 
 
BlackRock Shares                     
 
 
 
 
 
Shares sold    —†    $ 1    2,874    28,519 
Shares issued resulting from reorganization    —        —    1,094,165    10,856,031 
Shares issued to shareholders in reinvestment of dividends    3,995        39,689    13,277    131,697 
   
 
 
 
 
Total issued    3,995        39,690    1,110,316    11,016,247 
Shares redeemed    (22,917)        (227,245)    (861,862)    (8,542,264) 
   
 
 
 
 
Net increase (decrease)    (18,922)        (187,555)    248,454    2,473,983 
   
 
 
 
 
   † Less than 1 share.                     
   * Commencement of operations.                     
 
 
 
 
 
 
Institutional Shares                For the Year Ended June 30, 2007 
 
 
 
 
Shares sold    1,048,050    $ 10,414,747    2,062,719    $ 20,427,498 
Shares issued resulting from reorganization    —        —    721,266    7,153,239 
Shares issued to shareholders in reinvestment of dividends    112,748        1,116,218    247,581    2,449,491 
   
 
 
 
 
Total issued    1,160,798    11,530,965    3,031,566    30,030,228 
Shares redeemed    (1,110,399)    (11,009,659)    (4,877,444)    (48,321,661) 
   
 
 
 
Net increase (decrease)    50,399    $ 521,306    (1,845,878)    $ (18,291,433) 
 
 
 
 
 
                For the Period October 2, 2006* 
Investor A Shares                to June 30, 2007 
 
 
 
 
Shares sold and automatic conversion of shares    803,666    $ 7,988,479    185,469    $ 1,838,827 
Shares issued resulting from reorganization    —        —    2,042    20,254 
Shares issued to shareholders in reinvestment of dividends    4,323        42,989    1,586    15,703 
   
 
 
 
 
Total issued    807,989        8,031,468    189,097    1,874,784 
Shares redeemed    (118,410)    (1,178,868)    (41,774)    (414,043) 
   
 
 
 
Net increase    689,579    $ 6,852,600    147,323    $ 1,460,741 
   
 
 
 
   * Commencement of operations.                     
 
 
 
 
 
 
Investor A1 Shares                For the Year Ended June 30, 2007 
 
 
 
 
Shares sold and automatic conversion of shares    89,375    $ 889,068    678,506    $ 6,730,670 
Shares issued resulting from conversion of Class C    —        —    6,091,469    60,465,669 
Shares issued to shareholders in reinvestment of dividends    99,717        990,718    226,609    2,247,647 
   
 
 
 
 
Total issued    189,092        1,879,786    6,996,584    69,443,986 
Shares redeemed    (1,514,369)    (15,022,746)    (4,669,705)    (46,309,628) 
   
 
 
 
Net increase (decrease)    (1,325,277)    $ (13,142,960)    2,326,879    $ 23,134,358 
 
 
 
 
 
Investor B Shares                For the Year Ended June 30, 2007 
 
 
 
 
Shares sold    34,513    $ 341,385    37,626    $ 372,718 
Shares issued to shareholders in reinvestment of dividends    12,231        121,416    33,215    329,149 
   
 
 
 
 
Total issued    46,744        462,801    70,841    701,867 
Shares redeemed and automatic conversion of shares    (261,107)    (2,591,650)    (1,020,520)    (10,116,602) 
   
 
 
 
Net decrease    (214,363)    $ (2,128,849)    (949,679)    $ (9,414,735) 
   
 
 
 

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

69

Notes to Financial Statements (continued)                 
 
     For the Six Months Ended    For the Period October 2, 2006* 
       December 31, 2007   to June 30, 2007 
   
 
 
    Shares         Amount    Shares         Amount 
 
 
 
 
Investor C Shares                     
 
 
 
 
 
Shares sold    351,051    $ 3,486,675    231,602    $ 2,295,349 
Shares issued to shareholders in reinvestment of dividends    3,043        30,224    1,443    14,283 
   
 
 
 
 
Total issued    354,094        3,516,899    233,045    2,309,632 
Shares redeemed    (98,576)        (979,087)    (22,138)    (219,427) 
   
 
 
 
 
Net increase    255,518    $ 2,537,812    210,907    $ 2,090,205 
   
 
 
 
   * Commencement of operations.                     
 
 
 
 
 
 
                     For the Period July 1, 2006 
Class C Shares                to August 25, 2006* 
 
 
 
 
Shares sold                62,189    $ 613,069 
Shares issued to shareholders in reinvestment of dividends                18,853    185,978 
               
 
Total issued                81,042    799,047 
               
 
Shares redeemed                (448,474)    (4,421,307) 
Shares redeemed resulting from conversion to Investor A1                (6,122,405)    (60,465,669) 
               
 
Total redeemed                (6,570,879)    (64,886,976) 
               
 
Net decrease                (6,489,837)    $ (64,087,929) 
               
 
   * On August 25, 2006, Class C was converted to Class A (Investor A1).                 
 
 
 
 
 
BlackRock Municipal Insured Fund                     
 
 
 
 
 
Institutional Shares                For the Year Ended June 30, 2007 
 
 
 
 
Shares sold    772,058    $ 5,910,514    1,615,547    $ 12,595,757 
Shares issued to shareholders in reinvestment of dividends                     
   and distributions    859,007        6,598,101    1,793,351    14,025,199 
   
 
 
 
 
Total issued    1,631,065    12,508,615    3,408,898    26,620,956 
Shares redeemed    (4,703,930)    (36,069,145)    (7,836,614)    (61,267,411) 
   
 
 
 
Net decrease    (3,072,865)    $ (23,560,530)    (4,427,716)    $ (34,646,455) 
 
 
 
 
 
Investor A Shares                     
 
 
 
 
 
Shares sold and automatic conversion of shares    1,704,056    $ 13,071,875    2,710,670    $ 21,170,114 
Shares issued to shareholders in reinvestment of dividends                     
   and distributions    259,098        1,990,148    511,923    4,001,861 
   
 
 
 
 
Total issued    1,963,154    15,062,023    3,222,593    25,171,975 
Shares redeemed    (2,182,969)    (16,744,129)    (3,167,212)    (24,734,287) 
   
 
 
 
Net increase (decrease)    (219,815)    $ (1,682,106)    55,381    $ 437,688 
 
 
 
 
 
Investor B Shares                     
 
 
 
 
 
Shares sold    179,929    $ 1,378,884    70,027    $ 547,519 
Shares issued to shareholders in reinvestment of dividends                     
   and distributions    48,898        375,408    127,963    1,000,612 
   
 
 
 
 
Total issued    228,827    1,754,292    197,990    1,548,131 
Shares redeemed and automatic conversion of shares    (856,382)    (6,565,280)    (2,915,911)    ( 22,747,070) 
   
 
 
 
Net decrease    (627,555)    $ (4,810,988)    (2,717,921)    $ (21,198,939) 
   
 
 
 

70

 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Notes to Financial Statements (continued)                 
 
     For the Six Months Ended    For the Period October 2, 2006* 
           December 31, 2007   to June 30, 2007 
   
 
 
    Shares       Amount    Shares    Amount 
 
 
 
 
Investor C Shares                     
 
 
 
 
 
Shares sold    594,755    $ 4,567,905    595,100    $ 4,659,402 
Shares issued to shareholders in reinvestment of dividends                     
   and distributions    8,959        68,898    4,158    32,362 
   
 
 
 
 
Total issued    603,714    4,636,803    599,258    4,691,764 
Shares redeemed    (46,096)        (353,920)    (7,785)    (61,282) 
   
 
 
 
 
Net increase    557,618    $ 4,282,883    591,473    $ 4,630,482 
   
 
 
 
   * Commencement of operations.                     
 
 
 
 
 
 
Investor C1 Shares                For the Year Ended June 30, 2007 
 
 
 
 
Shares sold    94    $ 723    252,508    $ 1,971,349 
Shares issued to shareholders in reinvestment of dividends                     
   and distributions    66,475        510,525    150,681    1,178,188 
   
 
 
 
 
Total issued    66,569        511,248    403,189    3,149,537 
Shares redeemed    (618,044)    (4,735,757)    (1,641,491)    (12,817,290) 
   
 
 
 
Net decrease    (551,475)    $ (4,224,509)    (1,238,302)    $ (9,667,753) 
 
 
 
 
 
BlackRock National Municipal Fund                     
 
 
 
 
 
Institutional Shares                     
 
 
 
 
 
Shares sold    7,174,686    $ 73,905,998    13,585,783    $ 142,980,852 
Shares issued to shareholders in reinvestment of dividends    1,466,612    15,131,879    2,842,429    29,937,810 
   
 
 
 
Total issued    8,641,298    89,037,877    16,428,212    172,918,662 
Shares redeemed    (5,763,495)    (59,347,538)    (8,439,693)    (88,795,553) 
   
 
 
 
Net increase    2,877,803    $ 29,690,339    7,988,519    $ 84,123,109 
 
 
 
 
 
Investor A Shares                     
 
 
 
 
 
Shares sold and automatic conversion of shares    9,266,101    $ 95,347,730    10,447,588    $ 109,935,783 
Shares issued to shareholders in reinvestment of dividends    397,612        4,103,637    716,831    7,552,056 
   
 
 
 
 
Total issued    9,663,713    99,451,367    11,164,419    117,487,839 
Shares redeemed    (3,221,128)    (33,185,490)    (4,936,616)    (51,956,483) 
   
 
 
 
Net increase    6,442,585    $ 66,265,877    6,227,803    $ 65,531,356 
 
 
 
 
 
Investor B Shares                     
 
 
 
 
 
Shares sold    92,066    $ 949,346    638,307    $ 6,734,106 
Shares issued to shareholders in reinvestment of dividends    78,580        810,347    200,896    2,114,751 
   
 
 
 
 
Total issued    170,646        1,759,693    839,203    8,848,857 
Shares redeemed and automatic conversion of shares    (1,672,175)    (17,237,795)    (4,041,389)    (42,518,597) 
   
 
 
 
Net decrease    (1,501,529)    $ (15,478,102)    (3,202,186)    $ (33,669,740) 
   
 
 
 

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

71

Notes to Financial Statements (continued)                 
 
     For the Six Months Ended    For the Period October 2, 2006* 
       December 31, 2007   to June 30, 2007 
   
 
 
    Shares       Amount    Shares         Amount 
 
 
 
 
Investor C Shares                     
 
 
 
 
 
Shares sold    2,991,677    $ 30,862,380    4,176,661    $ 44,069,366 
Shares issued to shareholders in reinvestment of dividends    65,970        680,633    35,768    375,990 
   
 
 
 
 
Total issued    3,057,647    31,543,013    4,212,429    44,445,356 
Shares redeemed    (587,008)    (6,044,867)    (202,337)    (2,132,581) 
   
 
 
 
Net increase    2,470,639    $ 25,498,146    4,010,092    $ 42,312,775 
   
 
 
 
   * Commencement of operations.                     
 
 
 
 
 
 
Investor CI Shares                For the Year Ended June 30, 2007 
 
 
 
 
Shares sold    28,383    $ 292,972    2,120,136    $ 22,245,747 
Shares issued to shareholders in reinvestment of dividends    167,407        1,727,403    371,250    3,911,253 
   
 
 
 
 
Total issued    195,790        2,020,375    2,491,386    26,157,000 
Shares redeemed    (1,240,843)    (12,797,062)    (2,408,164)    (25,349,593) 
   
 
 
 
Net increase (decrease)    (1,045,053)    $ (10,776,687)    83,222    $ 807,407 
 
 
 
 
 
BlackRock High Yield Municipal Fund                     
 
 
 
 
 
Institutional Shares                     
 
 
 
 
 
Shares sold    2,066,063    $ 19,649,586    6,785,278    $ 68,322,908 
Shares issued to shareholders in reinvestment of dividends                     
   and distributions    2,152        20,401    2,198    22,293 
   
 
 
 
 
Total issued    2,068,215    19,669,987    6,787,476    68,345,201 
Shares redeemed    (1,802,035)    (16,771,773)    (518,933)    (5,228,829) 
   
 
 
 
Net increase    266,180    $ 2,898,214    6,268,543    $ 63,116,372 
   
 
 
 
   * Commencement of operations.                     
 
 
 
 
 
 
                 For the Period August 1, 2006* 
Investor A Shares                to June 30, 2007 
 
 
 
 
Shares sold    124,224    $ 1,162,122    691,133    $ 6,961,080 
Shares issued to shareholders in reinvestment of dividends                     
   and distributions    10,385        98,572    3,655    36,897 
   
 
 
 
 
Total issued    134,609        1,260,694    694,788    6,997,977 
Shares redeemed    (239,663)    (2,223,439)    (102,603)    (1,035,823) 
   
 
 
 
Net increase (decrease)    (105,054)    $ (962,745)    592,185    $ 5,962,154 
   
 
 
 
   * Commencement of operations.                     
 
 
 
 
 
 
Investor C Shares                     
 
 
 
 
 
Shares sold    136,629    $ 1,281,246    456,486    $ 4,621,438 
Shares issued to shareholders in reinvestment of dividends                     
   and distributions    5,304        50,199    5,243    53,125 
   
 
 
 
 
Total issued    141,933        1,331,445    461,729    4,674,563 
Shares redeemed    (171,528)    (1,615,975)    (22,433)    (226,216) 
   
 
 
 
Net increase (decrease)    (29,595)    $ (284,530)    439,296    $ 4,448,347 
   
 
 
 
   * Commencement of operations.                     

72

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

Notes to Financial Statements (concluded)

5. Short-Term Borrowings:

The Bond Fund, on behalf of the Funds, along with certain other funds managed by the Manager and its affiliates is a party to a $500,000,000 credit agreement with a group of lenders. The Bond Fund may borrow under the credit agreement to fund shareholder redemptions and for other lawful purposes other than for leverage. The Bond Fund may borrow up to the maximum amount allowable under the Bond Fund’s current prospectus and statement of additional information, subject to various other legal, regulatory or contractual limits. On November 21, 2007 the credit agreement was renewed for one year under substantially the same terms. The Bond Fund pays a commitment fee of .06% per annum based on the Bond 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 .35% or a base rate as defined in the credit agreement. The Bond Fund did not borrow under the credit agreement during the six months ended December 31, 2007.

6. Capital Loss Carryforward

BlackRock Short-Term Municipal Fund

On June 30, 2007, the Fund had a net capital loss carryforward of $9,187,219, of which $119,413 expires in 2008, $426,094 expires in 2009, $32,641 expires in 2011, $331,374 expires in 2012, $1,178,808 expires in 2013, $4,110,940 expires in 2014 and $2,987,949 expires in 2015. This amount will be available to offset like amounts of any future taxable gains.

BlackRock National Municipal Fund

On June 30, 2007, the Fund had a net capital loss carryforward of $26,847,836, of which $23,869,173 expires in 2009, $444,566 expires in 2010, $942,957 expires in 2011 and $1,591,140 expires in 2012. This amount will be available to offset like amounts of any future taxable gains.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

73

Proxy Results

During the six-month period ended December 31, 2007, the shareholders in each Fund of BlackRock Municipal Bond Fund, Inc. voted on the following proposal, which was approved at a special shareholders’ meeting on September 7, 2007. This proposal was a part of the reorganization of the Fund’s Board of Directors that took effect on November 1, 2007. A description of the proposal and number of shares voted are as follows:

        BlackRock Short-Term Municipal Fund 
       
        Shares Voted    Shares Withheld 
        For    From Voting 
 
 
 
To elect the Fund’s Board of Directors:    James H. Bodurtha    26,381,725    205,092 
    Bruce R. Bond    26,381,725    205,092 
    Donald W. Burton    26,381,725    205,092 
    Richard S. Davis    26,381,725    205,092 
    Stuart E. Eizenstat    26,381,725    205,092 
    Laurence D. Fink    26,373,848    212,969 
    Kenneth A. Froot    26,373,848    212,969 
    Henry Gabbay    26,373,848    212,969 
    Robert M. Hernandez    26,373,848    212,969 
    John F. O’Brien    26,373,848    212,969 
    Roberta Cooper Ramo    26,381,725    205,092 
    Jean Margo Reid    26,381,725    205,092 
    David H. Walsh    26,381,725    205,092 
    Fred G. Weiss    26,381,725    205,092 
    Richard R. West    26,381,725    205,092 
 
 
 

74 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

       BlackRock Municipal Insured Fund         BlackRock National Municipal Fund    BlackRock High Yield Municipal Fund 
 
 
Shares Voted    Shares Withheld    Shares Voted    Shares Withheld    Shares Voted    Shares Withheld 
For           From Voting    For    From Voting    For    From Voting 
 
 
 
 
 
96,113,669    1,985,856    123,052,859    2,091,359    6,995,336    0 
96,118,510    1,981,015    123,012,123    2,132,095    6,995,336    0 
96,118,301    1,981,224    122,992,108    2,152,110    6,995,336    0 
96,054,356    2,045,169    122,998,742    2,145,476    6,995,336    0 
96,106,371    1,993,154    123,046,950    2,097,268    6,995,336    0 
96,105,925    1,993,600    123,010,764    2,133,454    6,995,336    0 
96,054,379    2,045,146    123,005,066    2,139,152    6,995,336    0 
96,049,788    2,049,737    122,988,848    2,155,370    6,995,336    0 
96,093,291    2,006,234    122,985,110    2,159,108    6,995,336    0 
96,100,506    1,999,019    123,005,761    2,138,457    6,995,336    0 
96,077,576    2,021,949    123,072,000    2,072,218    6,995,336    0 
96,078,976    2,020,549    123,076,386    2,067,832    6,995,336    0 
96,132,723    1,966,802    123,007,357    2,136,861    6,995,336    0 
96,132,753    1,966,772    123,066,050    2,078,168    6,995,336    0 
96,132,723    1,966,802    123,048,112    2,096,106    6,995,336    0 
 
 
 
 
 

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

75

Officers and Directors

James H. Bodurtha, Director
Bruce R. Bond, Director
Donald W. Burton, Director
Richard S. Davis, Director
Stuart E. Eizenstat, Director
Laurence D. Fink, Director
Kenneth A. Froot, Director
Henry Gabbay, Director
Robert M. Hernandez, Director
John F. O’Brien, Director
Roberta Cooper Ramo, Director
Jean Margo Reid, Director
David H. Walsh, Director
Fred G. Weiss, Director
Richard R. West, Director
Joe Grills, Advisory Board Member*
Donald C. Burke, Fund President and Chief Executive Officer
Anne F. Ackerley, Vice President
Neal J. Andrews, Chief Financial Officer
Jay M. Fife, Treasurer
Brian . Kindelan, Chief Compliance Officer
Howard Surloff, Secretary
* Joe Grills resigned from the Advisory Board of the Fund, effective
December 31, 2007.

  Custodian
The Bank of New York Mellon
New York, NY 10286

Transfer Agent
PFPC Inc.
Wilmington, DE 19809

Accounting Agent
State Street Bank and Trust Company
Princeton, NJ 08540

Independent Registered Public
Accounting Firm
Deloitte & Touche LLP
Princeton, NJ 08540

Legal Counsel
Willkie Farr & Gallagher LLP
New York, NY 10019

Fund Address
BlackRock Municipal Bond Fund, Inc.
100 Bellevue Parkway
Wilmington, DE 19809

Swap Agreements

BlackRock Municipal Insured Fund, BlackRock National Municipal Fund and BlackRock High Yield Municipal Fund of BlackRock Municipal Bond Fund, Inc. may invest in swap agreements, which are over-the-counter contracts in which one party agrees to make periodic payments based on the change in market value of a specified bond, basket of bonds or index in return for periodic payments based on a fixed or variable interest rate or the change in market value of a different bond, basket of bonds or index. Swap agreements may be used to obtain exposure to a bond or market without owning or taking physical custody of securities. Swap agreements involve the risk that the party with whom the Fund has entered into a swap will default on its obligation to pay the Fund and the risk that the Fund will not be able to meet its obligations to pay the other party to the agreement. The swap agreements in which the Fund may invest includes credit default swap agreements.

76

 BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

BlackRock Fund Information

BlackRock Privacy Principles

BlackRock is committed to maintaining the privacy of its current and
former fund investors and individual clients (collectively, “Clients”) and
to safeguarding their nonpublic personal information. The following infor-
mation is provided to help you understand what personal information
BlackRock collects, how we protect that information and why in certain
cases we share such information with select parties.

If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with
those specific laws, rules or regulations.

BlackRock obtains or verifies personal nonpublic information from and
about you from different sources, including the following: (i) information
we receive from you or, if applicable, your financial intermediary, on appli-
cations, forms or other documents; (ii) information about your trans-
actions with us, our affiliates, or others; (iii) information we receive from
a consumer reporting agency; and (iv) from visits to our websites.

BlackRock does not sell or disclose to nonaffiliated third parties any non-
public personal information about its Clients, except as permitted by law
or as is necessary to respond to regulatory requests or to service Client
accounts. These nonaffiliated third parties are required to protect the
confidentiality and security of this information and to use it only for its
intended purpose.

We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services
that may be of interest to you. In addition, BlackRock restricts access
to nonpublic personal information about its Clients to those BlackRock
employees with a legitimate business need for the information. BlackRock
maintains physical, electronic and procedural safeguards that are designed
to protect the nonpublic personal information of its Clients, including proce-
dures relating to the proper storage and disposal of such information.

Availability of Additional Information

Electronic copies of most financial reports and prospectuses are available
on the Fund’s website or shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Fund’s electronic delivery program.

To enroll:

Shareholders Who Hold Accounts with Investment Advisers, Banks
or Brokerages:

Please contact your financial advisor. Please note that not all investment
advisers, banks or brokerages may offer this service.

Shareholders Who Hold Accounts Directly with BlackRock:

1) Access the BlackRock website at
http://www.blackrock.com/edelivery

2) Select “eDelivery” under the “More Information” section

3) Log into your account

The Fund will mail only one copy of shareholder documents, including
prospectuses, annual and semi-annual reports and proxy statements, to
shareholders with multiple accounts at the same address. This practice is
commonly called “householding” and it is intended to reduce expenses
and eliminate duplicate mailings of shareholder documents. Mailings of
your shareholder documents may be householded indefinitely unless you
instruct us otherwise. If you do not want the mailing of these documents
to be combined with those for other members of your household, please
contact the Fund at (800) 441-7762.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

77

BlackRock Fund Information (concluded)

Availability of Additional Information (concluded)

Availability of Proxy Voting Policies and Procedures

The Fund has delegated proxy voting responsibilities to BlackRock and
its affiliates, subject to the general oversight of the Fund’s Board of
Directors. A description of the policies and procedures that BlackRock and
its affiliates use to determine how to vote proxies relating to portfolio
securities is available without charge, upon request, on our website at
www.blackrock.com, by calling (800) 441-7762, or on the website of
the Securities and Exchange Commission (the “Commission”) at
http://www.sec.gov.

Availability of Proxy Voting Record

Information on how proxies relating to the Fund’s voting securities were
voted (if any) by BlackRock during the most recent 12-month period ended
June 30 is available, upon request and without charge, on our website at
www.blackrock.com, by calling (800) 441-7762 or on the website of the
Commission at http://www.sec.gov.

Availability of Quarterly Portfolio Schedule

The Fund files its complete schedule of portfolio holdings for the first
and third quarters of its fiscal year with the Commission on Form N-Q.
The Fund’s Forms N-Q are available on the Commission’s website at
http://www.sec.gov and may be reviewed and copied at the Commission’s
Public Reference Room in Washington, D.C. Information regarding the
operation of the Public Reference Room may be obtained by calling
(800) SEC-0330. The Fund’s Forms N-Q may also be obtained upon
request, without charge, by calling (800) 441-7762.

Shareholder Privileges

Account Information

Call us at (800) 441-7762 8:00 AM – 6:00 PM EST to get information
about your account balances, recent transactions and share prices. You
can also reach us on the Web at www.blackrock.com/funds.

Automatic Investment Plans

Investor Class shareholders who want to invest regularly can arrange to
have $50 or more automatically deducted from their checking or savings
account and invested in any of the BlackRock funds.

Systematic Withdrawal Plans

Investor Class shareholders can establish a systematic withdrawal plan
and receive periodic payments of $50 or more from their BlackRock
funds, as long as their account is at least $10,000.

Retirement Plans

Shareholders may make investments in conjunction with Traditional,
Rollover, Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans.

78

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

A World-Class Mutual Fund Family

BlackRock offers a diverse lineup of open-end mutual funds crossing all investment styles and managed by experts in equity, fixed income and tax-exempt investing.

     Equity Funds         
 
 
 
BlackRock All-Cap Global Resources Portfolio    BlackRock Global Opportunities Portfolio    BlackRock Mid-Cap Growth Equity Portfolio 
BlackRock Aurora Portfolio    BlackRock Global Resources Portfolio    BlackRock Mid-Cap Value Equity Portfolio 
BlackRock Asset Allocation Portfolio†    BlackRock Global Science & Technology    BlackRock Mid Cap Value Opportunities Fund 
BlackRock Balanced Capital Fund†       Opportunities Portfolio    BlackRock Natural Resources Trust 
BlackRock Basic Value Fund    BlackRock Global SmallCap Fund    BlackRock Pacific Fund 
BlackRock Capital Appreciation Portfolio    BlackRock Healthcare Fund    BlackRock Small Cap Core Equity Portfolio 
BlackRock Developing Capital Markets Fund    BlackRock Health Sciences Opportunities Portfolio*    BlackRock Small Cap Growth Equity Portfolio 
BlackRock Equity Dividend Fund    BlackRock Index Equity Portfolio*    BlackRock Small Cap Growth Fund II 
BlackRock EuroFund    BlackRock International Fund    BlackRock Small Cap Index Fund 
BlackRock Focus Growth Fund    BlackRock International Index Fund    BlackRock Small Cap Value Equity Portfolio* 
BlackRock Focus Value Fund    BlackRock International Opportunities Portfolio*    BlackRock Small/Mid-Cap Growth Portfolio 
BlackRock Fundamental Growth Fund    BlackRock International Value Fund    BlackRock S&P 500 Index Fund 
BlackRock Global Allocation Fund†    BlackRock Large Cap Core Fund    BlackRock Technology Fund 
BlackRock Global Dynamic Equity Fund    BlackRock Large Cap Growth Fund    BlackRock U.S. Opportunities Portfolio 
BlackRock Global Financial Services Fund    BlackRock Large Cap Value Fund    BlackRock Utilities and Telecommunications Fund 
BlackRock Global Growth Fund    BlackRock Latin America Fund    BlackRock Value Opportunities Fund 
 
 
 
     Fixed Income Funds         
 
 
 
BlackRock Commodity Strategies Fund    BlackRock Inflation Protected Bond Portfolio    BlackRock Managed Income Portfolio 
BlackRock Enhanced Income Portfolio    BlackRock Intermediate Bond Portfolio II    BlackRock Short-Term Bond Fund 
BlackRock GNMA Portfolio    BlackRock Intermediate Government    BlackRock Total Return Fund 
BlackRock Government Income Portfolio       Bond Portfolio    BlackRock Total Return Portfolio II 
BlackRock High Income Fund    BlackRock International Bond Portfolio    BlackRock World Income Fund 
BlackRock High Yield Bond Portfolio    BlackRock Low Duration Bond Portfolio     
 
 
 
     Municipal Bond Funds         
 
 
 
BlackRock AMT-Free Municipal Bond Portfolio    BlackRock Intermediate Municipal Fund    BlackRock New York Municipal Bond Fund 
BlackRock California Insured Municipal Bond Fund    BlackRock Kentucky Municipal Bond Portfolio    BlackRock Ohio Municipal Bond Portfolio 
BlackRock Delaware Municipal Bond Portfolio    BlackRock Municipal Insured Fund    BlackRock Pennsylvania Municipal Bond Fund 
BlackRock Florida Municipal Bond Fund    BlackRock National Municipal Fund    BlackRock Short-Term Municipal Fund 
BlackRock High Yield Municipal Fund    BlackRock New Jersey Municipal Bond Fund     
 
 
 
     Target Risk & Target Date Funds         
 
 
 
BlackRock Prepared Portfolios    BlackRock Lifecycle Prepared Portfolios     
   Conservative Prepared Portfolio       Prepared Portfolio 2010       Prepared Portfolio 2030 
   Moderate Prepared Portfolio       Prepared Portfolio 2015       Prepared Portfolio 2035 
   Growth Prepared Portfolio       Prepared Portfolio 2020       Prepared Portfolio 2040 
   Aggressive Growth Prepared Portfolio       Prepared Portfolio 2025       Prepared Portfolio 2045 
           Prepared Portfolio 2050 
 * See the prospectus for information on specific limitations on investments in the fund.     
 † Mixed asset fund.         

BlackRock mutual funds are distributed by BlackRock Distributors, Inc. and certain funds are also distributed by FAM Distributors, Inc. You should consider the investment objectives, risks, charges and expenses of the funds under consideration carefully before investing. Each fund’s prospectus contains this and other information and is available at www.blackrock.com or by calling 800-882-0052 or from your financial advisor. The prospectus should be read carefully before investing.

BLACKROCK MUNICIPAL BOND FUND, INC.

DECEMBER 31, 2007

79

This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Funds 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.



#10249-12/07

Item 2 – Code of Ethics – Not Applicable to this semi-annual report

Item 3 – Audit Committee Financial Expert – Not Applicable to this semi-annual report

Item 4 – Principal Accountant Fees and Services – Not Applicable to this semi-annual report

Item 5 – Audit Committee of Listed Registrants – Not Applicable

Item 6 – Schedule of Investments – The registrant’s Schedule of Investments is included as part of
the Report to Stockholders filed under Item 1 of this form.

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 – The registrant’s Nominating and
Governance Committee will consider nominees to the Board recommended by shareholders
when a vacancy becomes available. Shareholders who wish to recommend a nominee
should send nominations which include biographical information and set forth the
qualifications of the proposed nominee to the registrant’s Secretary. There have been no
material changes to these procedures.

Item 11 – Controls and Procedures

11(a) – The registrant’s principal executive and principal financial officers or persons performing
similar functions have concluded that the registrant’s disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the
“1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the
evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act
and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended.

11(b) – There were no changes in the registrant’s internal control over financial reporting (as

defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12 – Exhibits attached hereto

12(a)(1) – Code of Ethics – Not Applicable to this semi-annual report

12(a)(2) – Certifications – Attached hereto

12(a)(3) – Not Applicable

12(b) – Certifications – Attached hereto

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BlackRock Municipal Bond Fund, Inc.

By:    /s/ Donald C. Burke 
    Donald C. Burke 
    Chief Executive Officer of 
    BlackRock Municipal Bond Fund, Inc. 

Date: February 21, 2008

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/ Donald C. Burke

Donald C. Burke

Chief Executive Officer (principal executive officer) of BlackRock Municipal Bond Fund, Inc.

Date: February 21, 2008

By: /s/ Neal J. Andrews

Neal J. Andrews

Chief Financial Officer (principal financial officer) of BlackRock Municipal Bond Fund, Inc.

Date: February 21, 2008