SC TO-I

As filed with the Securities and Exchange Commission on July 23, 2001

Securities Act File No. 333-39839
Investment Company Act File No. 811-6156

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE TO

ISSUER TENDER OFFER STATEMENT

(Pursuant to Section 13(e)(1) of the
Securities Exchange Act of 1934)
(Amendment No.     )

Merrill Lynch High Income Municipal Bond Fund, Inc.
(Name of Issuer)

Merrill Lynch High Income Municipal Bond Fund, Inc.
(Names of Person(s) Filing Statement)

Shares of Common Stock, Par Value $.10 per share
(Title of Class of Securities)

589945 10 4
(CUSIP Number of Class of Securities)

Terry K. Glenn
Merrill Lynch High Income Municipal Bond Fund, Inc.
800 Scudders Mill Road
Plainsboro, New Jersey 08536
(609) 282-2800

(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Person(s) Filing Statement)

Copies to:

Thomas R. Smith, Jr., Esq.
Sidley Austin Brown & Wood LLP
One World Trade Center
New York, New York 10048-0557
     Michael J. Hennewinkel, Esq.
Merrill Lynch Invesment Managers, L.P.
P.O. Box 9011
Princeton, New Jersey 08543-9011

CALCULATION OF FILING FEE
Transaction Valuation: $47,200,000*	Amount of Filing Fee: $9,440**

*	Calculated as the aggregate maximum purchase price to be paid for 5,000,000 shares in the offer, based upon the net asset value per share ($9.44) at July 19, 2001.
**	Calculated as 1/50th of 1% of the Transaction Valuation.
|   |	Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
	Amount Previously Paid: _______________	Filing Party:__________________
	Form or Registration No.:_______________	Date Filed:___________________
|   |	Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.
	Check the appropriate boxes below to designate any transactions to which the statement relates:

|   |	third-party tender offer subject to Rule 14d-1.
|X|	issuer tender offer subject to Rule 13e-4.
|   |	going-private transaction subject to Rule 13e-3.
|   |	amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results of the tender offer: |   |

Item 1.   Summary Term Sheet.

     Reference is made to the Summary Term Sheet of the Offer to Purchase that is attached as Exhibit (a)(1)(ii) and is incorporated herein by reference.

Item 2.   Subject Company Information.

     (a) The name of the issuer is Merrill Lynch High Income Municipal Bond Fund, Inc., a closed-end investment company organized as a Maryland corporation (the “Fund”). The principal executive offices of the Fund are located at 800 Scudders Mill Road, Plainsboro, New Jersey 08536. The Fund’s telephone number is (609) 282-2800.

     (b) The title of the securities being sought is shares of common stock, par value $0.10 per share of the Fund (the “Shares”). As of June 30, 2001 there were approximately 14 million Shares issued and outstanding. The Fund has been informed that no Director, officer or affiliate of the Fund intends to tender Shares pursuant to the Offer (defined below).

     (c) The Shares are not currently traded on an established secondary trading market.

Item 3.   Identity and Background of Filing Person.

     (a) The Fund is tendering for its own shares. The information required by this Item is set forth in Item 2(a) above.

     (b)-(d) Not applicable.

Item 4.  Terms of the Transaction.

(a)(1)  (i)  The Fund is seeking tenders for 5,000,000 Shares (the “Offer”).

(ii) For each Share tendered, the security holder will receive a cash amount equal to the net asset value per Share (the “NAV”) calculated on the day the tender offer terminates, less any “Early Withdrawal Charge,” upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 23, 2001 (the “Offer to Purchase”). A copy of each of the Offer to Purchase and the related Letter of Transmittal is attached hereto as Exhibit (a)(1)(ii) and Exhibit (a)(1)(iii), respectively. Reference is hereby made to the Cover Page and Section 1 “Price; Number of Shares” of the Offer to Purchase, which are incorporated herein by reference.

(iii) The Offer is scheduled to expire on August 20, 2001, unless extended. Reference is hereby made to the Cover Page, Section 1 “Price; Number of Shares,” Section 4 “Withdrawal Rights” and Section 14 “Extension of Tender Period; Termination; Amendments” of the Offer to Purchase, which are incorporated herein by reference.

(iv) Not applicable.

(v) Reference is hereby made to Section 1 “Price; Number of Shares” and Section 14 “Extension of Tender Period; Termination; Amendments” of the Offer to Purchase, which are incorporated herein by reference.

(vi) Reference is hereby made to Section 4 “Withdrawal Rights” of the Offer to Purchase, which is incorporated herein by reference.

(vii) Reference is hereby made to the Cover Page, Section 2 “Procedure for Tendering Shares” and Section 4 “Withdrawal Rights” of the Offer to Purchase, which are incorporated herein by reference.

(viii) Reference is hereby made to Section 2 “Procedure for Tendering Shares” of the Offer to Purchase, which is incorporated herein by reference.

(ix) Reference is hereby made to the Cover Page and Section 1 “Price; Number of Shares” of the Offer to Purchase, which are incorporated herein by reference.

(x) Reference is hereby made to Section 8 “Certain Effects of the Offer” of the Offer to Purchase, which is incorporated herein by reference.

(xi) Reference is hereby made to Section 2 “Procedure for Tendering Shares” and Section 13 “Certain Federal Income Tax Consequences” of the Offer to Purchase, which are incorporated herein by reference.

(xii) Reference is hereby made to Section 13 “Certain Federal Income Tax Consequences” of the Offer to Purchase, which is incorporated herein by reference.

 

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(a)(2) Not applicable.

(b) The Fund has been informed that no Directors, officers or affiliates of the Fund intend to tender Shares pursuant to the Offer.

(c)-(f) Not applicable.

Item 5.   Past Contracts, Transactions, Negotiations and Agreements.

     (a)-(d) Not applicable.

     (e) Except as described in the following paragraph, the Fund does not know of any contract, agreement, arrangement, understanding or relationship, whether contingent or otherwise or whether or not legally enforceable, between the Fund, any of the Fund’s executive officers or directors, any person controlling the Fund or any executive officer or director of any corporation ultimately in control of the Fund and any person with respect to any securities of the Fund (including, but not limited to, any contract, agreement, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss, or the giving or withholding of proxies, consents or authorizations).

     On June 7, 2001, the Fund’s Board of Directors approved a transaction whereby the Fund will be acquired by MuniAssets Fund, Inc., an exchange listed closed-end municipal bond fund (the “Acquiring Fund”) (the “Reorganization”). The Reorganization is subject to approval by stockholders of the Fund. In the Reorganization, the Fund’s stockholders will receive newly issued shares of common stock of the Acquiring Fund having an aggregate net asset value equal to the aggregate net asset value of the Fund’s common stock in exchange for the Acquiring Fund’s acquisition of substantially all of the Fund’s assets and the assumption of substantially all of the Fund’s liabilities. If the Fund’s stockholders approve the Reorganization, it is anticipated that this Offer will be the Fund’s final tender offer for its shares of common stock. MuniAssets Fund, Inc. does not make tender offers for its shares.

Item 6.  Purposes of the Transaction and Plans and Proposals.

     (a) Reference is hereby made in Section 7 “Purpose of the Offer” of the Offer to Purchase, which is incorporated herein by reference.

     (b) Reference is hereby made to Section 8 “Certain Effects of the Offer” of the Offer to Purchase, which is incorporated herein by reference.

     (c) Reference is hereby made to Section 9 “Source and Amount of Funds” of the Offer to Purchase, which is incorporated herein by reference. The Fund is currently engaged in a public offering, from time to time, of its Shares. Except as discussed above in response to Item 5, the Fund otherwise has no plans, proposals or negotiations that relate to or would result in (1) an extraordinary transaction, such as a merger, reorganization or liquidation, involving the Fund; (2) a purchase, sale or transfer of a material amount of assets of the Fund; (3) any material change in the present dividend rate or policy, or indebtedness or capitalization of the Fund; (4) any change in the present board of directors or management of the subject company, including but not limited to, any plans or proposal to change the number or the term of directors or to fill any existing vacancies on the board or to change any material term of the employment contract of any executive officer; (5) any other material change in the Fund’s corporate structure or business, including any plans or proposals to make any changes in its investment policy for which a vote would be required by Section 13 of the Investment Company Act of 1940, as amended; (6) any class of equity securities of the Fund to be delisted from a national securities exchange or cease to be authorized to be quoted in an automated quotation system operated by a national securities association; (7) any class of equity securities of the Fund becoming eligible for termination of registration under Section 12(g)(4) of the Securities Exchange Act of 1934 (the “1934 Act”); (8) the suspension of the Fund’s obligation to file reports under 15(d) of the 1934 Act; (9) the acquisition by any person of additional securities of the Fund or the disposition of securities of the Fund; or (10) any changes in the Fund’s charter, bylaws or other governing instruments or other actions that could impede the acquisition of control of the Fund.

Item 7.   Source and Amount of Funds or Other Considerations.

     (a)-(d) Reference is hereby made to Section 9 “Source and Amount of Funds” of the Offer to Purchase, which is incorporated herein by reference.

 

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Item 8.   Interest in Securities of the Subject Company.

     (a) To the knowledge of the Fund, information regarding share ownership as of July 19, 2001 by Directors, Officers and Associates of the Fund follow:

Name	Address	No. of Shares	Percentage of Fund
Terry K. Glen Director and President of the Fund	P.O. Box 9011 Princeton, New Jersey 08536-9011	11,304	.0805%*
Ronald W. Forbes Director of the Fund	1400 Washington Ave. Albany, New York 12222	584.56	.0042%*

  * Amount is less than 1.0% of the Fund’s outstanding shares.

     (b) Reference is made to Section 11 “Certain Information about the Fund” of the Offer to Purchase, which is incorporated herein by reference. Except as set forth therein, there have not been any transactions involving the Shares that were effected during the past 60 days by the Fund, any executive officer or director of the Fund, any person controlling the Fund, any executive or director of any corporation ultimately in control of the Fund or by any associate or subsidiary of any of the foregoing, including any executive officer or director of any such subsidiary. Within the last 60 business days pursuant to the offering of its Shares, the Fund has sold approximately 128,900 Shares at a price equal to the NAV on the date of each such sale.

Item 9.   Persons/Assets, Retained, Employed, Compensated or Used.

     (a) No persons have been directly or indirectly employed, retained, or are to be compensated by or on behalf of the Fund to make solicitations or recommendations in connection with the Offer.

     (b) Not applicable.

Item 10.   Financial Statements.

     This information has been audited by Deloitte & Touche LLP, whose reports, along with the Fund’s financial statements, are included in the Fund’s Annual Reports, which are incorporated herein by reference for the fiscal year ended August 31, 1999 and the fiscal year ended August 31, 2000. Unaudited financial statements for the six-month period ended February 28, 2001 are incorporated herein by reference.

     (b) Not applicable.

     (c) Reference is hereby made to Section 10 “Summary of Selected Financial Information” of the Offer to Purchase, which is incorporated herein by reference.

Item 11.   Additional Information.

(a)	(1)	None.
	(2)	None.
	(3)	Not applicable.
	(4)	Not applicable.
	(5)	None.
(b)		The Offer to Purchase, attached hereto as Exhibit (a)(1)(ii), is incorporated herein by reference in its entirety.

Item 12.   Exhibits.

(a)(1)	(i)	Advertisement to be printed in The Wall Street Journal.
	(ii)	Offer to Purchase.
	(iii)	Form of Letter of Transmittal.
	(iv)	Letter to Stockholders.
(a)(2)-(4)		Not applicable.
(a)(5)	(i)	Audited financial statements of the Fund for the fiscal year ended August 31, 1999.*
	(ii)	Audited financial statements of the Fund for the fiscal year ended August 31, 2000.**

 

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	(iii)	Unaudited financial statements for the six-month period ended February 28, 2001.***
	(iv)	Consent of Deloitte & Touche LLP.
(b)		Not applicable.

(d) Not applicable.

(g) Not applicable.

(h) Not applicable.

*	Previously filed as an exhibit to the Fund’s Issuer Tender Offer Statement on Schedule 13E-4 as filed with the Securities and Exchange Commission (the “SEC”) via EDGAR on January 18, 2000.
**	Previously filed as an exhibit to the Fund’s Issuer Tender Offer Statement on Schedule TO as filed with the SEC via EDGAR on January 12, 2001.
***	Previously filed as an exhibit to the Fund’s Issuer Tender Offer Statement on Schedule TO as filed with the SEC via EDGAR on April 16, 2001.

Item 13.   Information Required by Schedule 13E-3.

     Not applicable.

 

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SIGNATURE

     After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

MERRILL LYNCH HIGH INCOME MUNICIPAL
	BOND FUND, INC.
By	/s/ TERRY K. GLENN
	(Terry K. Glenn, President)

July 23, 2001

 

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EXHIBIT INDEX

Exhibit
	(a)(1)(i)	Advertisement to be printed in The Wall Street Journal.
	(a)(1)(ii)	Offer to Purchase.
	(a)(1)(iii)	Form of Letter of Transmittal.
	(a)(1)(iv)	Letter to Stockholders.
	(a)(5)(iv)	Consent of Deloitte & Touche LLP.

  EX-99.(A)(1)(I) 2 file002.htm ADVERTISEMENT PRINTED IN THE WALL STREET JOURNAL

EXHIBIT (a)(1)(i)

EXHIBIT (a)(1)(i)

This announcement is not an offer to purchase or a solicitation of an offer to sell shares. The Offer is made
only by the Offer to Purchase dated July 23, 2001, and the related Letter of Transmittal. The Offer is
not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any
jurisdiction in which making or accepting the Offer would violate that jurisdiction’s laws.

Merrill Lynch High Income Municipal Bond Fund, Inc.

Notice of Offer to Purchase for Cash 5,000,000
of its Issued and Outstanding Shares
at Net Asset Value Per Share

THE EXPIRATION DATE AND THE WITHDRAWAL DEADLINE ARE 4:00 P.M.,
EASTERN TIME, ON MONDAY, AUGUST 20, 2001, UNLESS EXTENDED.

     Merrill Lynch High Income Municipal Bond Fund, Inc. (the “Fund”) is offering to purchase 5,000,000 of its issued and outstanding shares of common stock par value $.10 per share (the “Shares”) at a price equal to their net asset value (“NAV”) less any applicable early withdrawal charge as of the close of the New York Stock Exchange on the Expiration Date, August 20, 2001, unless extended, upon the terms and conditions set forth in the Offer to Purchase dated July 23, 2001 (the “Offer”). The NAV on July 19, 2001, was $9.44 per Share. The purpose of the Offer is to provide liquidity to stockholders since the Fund is unaware of any secondary market that exists for the Shares. The Offer is not conditioned upon the tender of any minimum number of Shares.

     If more than 5,000,000 Shares are duly tendered prior to the expiration of the Offer, assuming no changes in the factors originally considered by the Board of Directors when it determined to make the Offer, the Fund will either (1) extend the Offer period, if necessary, and increase the number of Shares that the Fund is offering to purchase to an amount that it believes will be sufficient to accommodate the excess Shares tendered, as well as any Shares tendered during the extended Offer period, or (2) purchase 5,000,000 Shares (or such larger number of Shares sought) on a pro rata basis.

     Shares tendered pursuant to the Offer may be withdrawn at any time prior to 4:00 p.m., Eastern time, on Monday, August 20, 2001, unless the Offer is extended, and, if not yet accepted for payment by the Fund, Shares may also be withdrawn after September 17, 2001.

     On June 7, 2001, the Fund’s Board of Directors approved a transaction whereby the Fund will be acquired by MuniAssets Fund, Inc., an exchange listed closed-end municipal bond fund (the “Reorganization”). If the Fund’s stockholders approve the Reorganization, it is anticipated that this Offer will be the Fund’s final tender offer for its shares of common stock. MuniAssets Fund, Inc. does not make tender offers for its shares.

     The information required to be disclosed by paragraph (d)(1) of Rule 13e-4 under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference.

     The Offer to Purchase and the related Letter of Transmittal contain important information that should be read carefully before any decision is made with respect to the Offer.

     Questions and requests for assistance, for current NAV quotations or for copies of the Offer to Purchase, Letter of Transmittal, and any other tender offer documents, may be directed to Financial Data Services, Inc. at the address and telephone number below. Copies will be furnished promptly at no expense to you and also may be obtained by completing and returning the coupon below to Financial Data Services, Inc. Stockholders who do not own Shares directly should effect a tender through their broker, dealer or nominee. For example, stockholders who purchased Shares through Merrill Lynch, Pierce, Fenner & Smith Incorporated should effect tenders through their Financial Advisor.

1-800-MER-FUND
1-800-637-3863

Mail to: Financial Data Services, Inc.
P.O. Box 45289, Jacksonville, FL 32232-5289

[  ] Please send me Merrill Lynch High Income Municipal Bond Fund, Inc. Tender Offer Materials

Name:___________________________	Address:_____________________________________
Business Phone:___________________	City: ________________________________________
Home Phone:_____________________	State:_________________________	Zip: _________

Merrill Lynch clients, please give the name and office address of  your Financial Advisor:
____________________________________________________________________________________

[LOGO]   Merrill Lynch Investment Managers

July 23, 2001

EX-99.(A)(1)(I)

 Exhibit (a)(1)(i)

EX-99.(A)(1)(II)

EXHIBIT (a)(1)(ii)

EXHIBIT (a)(1)(ii)

MERRILL LYNCH HIGH INCOME MUNICIPAL BOND FUND, INC.

800 Scudders Mill Road
Plainsboro, New Jersey 08536

OFFER TO PURCHASE FOR CASH 5,000,000
OF ITS ISSUED AND OUTSTANDING SHARES
AT NET ASSET VALUE PER SHARE

SUMMARY TERM SHEET

THIS SUMMARY HIGHLIGHTS CERTAIN INFORMATION IN THIS OFFER TO PURCHASE. TO UNDERSTAND THE OFFER FULLY AND FOR A MORE COMPLETE DESCRIPTION OF THE TERMS OF THE OFFER, YOU SHOULD READ CAREFULLY THIS ENTIRE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL. WE HAVE INCLUDED SECTION REFERENCES TO DIRECT YOU TO A MORE COMPLETE DESCRIPTION OF THE TOPICS IN THIS SUMMARY.

• WHAT SECURITIES IS MERRILL LYNCH HIGH INCOME MUNICIPAL BOND FUND, INC. OFFERING TO PURCHASE? The Fund is offering to purchase up to 5,000,000 Shares of its common stock from you and other stockholders. If more than 5,000,000 Shares are surrendered (or “tendered”) by stockholders in response to this Offer, the Fund expects either to extend the Offer period and increase the number of Shares it is offering to purchase or to purchase the Shares tendered on a pro rata basis. This Offer is not conditioned upon the tender of any minimum number of Shares. See Section 1 “Price; Number of Shares.”

• HOW DO I TENDER MY SHARES? See Section 2 “Procedure for Tendering Shares.”

• If your Shares are registered in the name of your broker, dealer, commercial bank, trust company or other nominee, you must contact that entity and request that your shares be tendered to the Fund.

• If you wish to tender your Shares and your Shares are registered in your name, you may send your Share certificates, a properly completed and executed Letter of Transmittal and any additional documents required by the Letter of Transmittal to the Transfer Agent. The Transfer Agent must receive these documents prior to the expiration date of the offer (currently Monday, August 20, 2001).

• HOW MUCH IS THE FUND OFFERING TO PAY ME FOR MY SHARES? The Fund will pay you cash in an amount equal to the Fund’s net asset value per Share (“NAV”) as of the close of business of the New York Stock Exchange, less any applicable early withdrawal charge, on the expiration date (currently Monday, August 20, 2001). As of July 19, 2001, the Fund’s NAV, which fluctuates on a daily basis, was $9.44 per Share. See Section 1 “Price; Number of Shares” and Section 3 “Early Withdrawal Charge.”

• WILL I HAVE TO PAY ANY FEES OR COMMISSIONS IF I TENDER MY SHARES? The Fund will assess an early withdrawal charge on your Shares if you have held your Shares for less than three years when the tender offer begins. The maximum charge is 3% of the value of the tendered Shares, scaled down for each year you held your Shares, reaching zero after three years. The charge is not imposed on Shares you may have acquired through reinvestment of dividends nor on the value of your Shares attributable to capital appreciation. If you are a Merrill Lynch customer, Merrill Lynch may charge you a $5.35 processing fee to confirm the Fund’s purchase of your Shares. If you tender your Shares through a broker, dealer or other nominee, that broker, dealer or other nominee may charge you a fee for processing the transaction on your behalf. See Section 2 “Procedure for Tendering Shares” and Section 3 “Early Withdrawal Charge.”

• WILL THERE BE ANY TAX CONSEQUENCES TO ME IF I TENDER MY SHARES? If your tendered Shares are accepted, it will be a taxable transaction either in the form of a “sale or exchange” or under certain circumstances as a “dividend.” You should consult your tax advisor regarding the tax consequences to you of tendering your Shares. See Section 13 “Certain Federal Income Tax Consequences.”

• WHEN WILL THE OFFER EXPIRE? HOW WILL I KNOW IF THE OFFERING PERIOD IS EXTENDED OR IF THE OFFER IS TERMINATED? The Offer expires Monday, August 20, 2001 unless the Fund makes a public announcement either extending or terminating the Offer. If the Offer period is extended, the Fund’s

public announcement will be made no later than 9:00 a.m. on the next business day after the previously scheduled expiration date. See Section 1 “Price; Number of Shares” and Section 14 “Extension of Tender Period; Termination; Amendments.”

• MAY I WITHDRAW MY TENDERED SHARES? You may withdraw your tendered Shares at any time prior to the expiration date, which, unless extended, is currently Monday, August 20, 2001. Additionally, if the Fund has not yet accepted your tendered Shares for payment, you may withdraw your tendered Shares at any time after September 17, 2001. To withdraw your tendered Shares, you should contact your Merrill Lynch Financial Advisor or other nominee, or you should submit proper written notice to the Fund’s Transfer Agent. See Section 4 “Withdrawal Rights.”

• DOES THE FUND HAVE THE FINANCIAL RESOURCES TO PAY ME FOR MY SHARES? Assuming that the Fund purchases 5,000,000 Shares at the July 19, 2001 NAV of $9.44 per Share, the Fund’s total cost, not including fees and expenses incurred in connection with the Offer, will be approximately $47.2 million. The Fund believes that it will not need to borrow money to finance the purchase of the tendered Shares, although the Fund has the authority to do so if necessary. See Section 9 “Source and Amount of Funds.”

• MIGHT THIS BE MY LAST OPPORTUNITY TO TENDER SHARES TO THE FUND? Yes. On June 7, 2001, the Fund’s Board of Directors approved a transaction whereby the Fund will be acquired by MuniAssets Fund, Inc., an exchange listed closed-end municipal bond fund (the “Reorganization”). If the Fund’s stockholders approve the Reorganization, it is anticipated that this Offer will be the Fund’s final tender offer for its Shares. MuniAssets Fund, Inc. does not make tender offers for its shares, which are purchased and sold at market price on each day that the New York Stock Exchange is open for trading. If the Reorganization is not consummated, the Fund’s Board of Directors currently intends to resume its practice of considering whether to make similar tender offers each quarter. However, in such event, the Fund cannot assure you that you will be provided with sufficient liquidity, or that the Fund will make a similar tender offer in the future. Neither the Fund nor its Board of Directors makes any recommendation as to whether or not you should tender your Shares. See Section 7 “Purpose of the Offer” and Section 8 “Certain Effects of the Offer.”

• WHY IS THE FUND MAKING AN OFFER TO PURCHASE SHARES OF ITS COMMON STOCK? No established secondary trading market currently exists for the Fund’s Shares. As a result, the Fund’s Board of Directors decided to provide liquidity for stockholders by making this Offer. Neither the Fund nor its Board of Directors makes any recommendation as to whether or not you should tender your Shares. See Section 7 “Purpose of the Offer.”

• WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER? This Offer is not conditioned upon the tender of any minimum number of Shares. The Fund is not required to accept or pay for any Shares tendered. Under certain circumstances, the Fund may terminate or amend the Offer or postpone the acceptance of Shares for payment. See Section 6 “Certain Conditions of the Offer.”

• IF I DECIDE NOT TO TENDER MY SHARES, HOW WILL THE OFFER AFFECT MY SHARES? If you do not tender your Shares, you may be subject to certain risks resulting from the Fund reducing its assets to pay for tendered Shares. These risks include increased volatility in the Fund’s NAV and higher expenses. See Section 8 “Certain Effects of the Offer.”

• WHO SHOULD I CALL IF I NEED MORE INFORMATION? Questions and requests for assistance may be directed to your Merrill Lynch Financial Advisor or other nominee, or to the Transfer Agent at the address and telephone number set forth below. Requests for additional copies of this Offer to Purchase and the Letter of Transmittal should be directed to Financial Data Services, Inc.

Transfer Agent:
	Financial Data Services, Inc.
	P.O. Box 45289
	Jacksonville, Florida 32232-5289
	Attn: Merrill Lynch Municipal Strategy            Fund, Inc.
	(800) 637-3863

 

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MERRILL LYNCH HIGH INCOME MUNICIPAL BOND FUND, INC.

800 Scudders Mill Road
Plainsboro, New Jersey 08536

OFFER TO PURCHASE FOR CASH 5,000,000
OF ITS ISSUED AND OUTSTANDING SHARES
AT NET ASSET VALUE PER SHARE

THE EXPIRATION DATE AND THE WITHDRAWAL DEADLINE IS 4:00 P.M.,
EASTERN TIME, ON MONDAY, AUGUST 20, 2001, UNLESS EXTENDED.

To the Holders of Shares of
MERRILL LYNCH HIGH INCOME MUNICIPAL BOND FUND, INC.:

     The Fund is offering to purchase up to 5,000,000 of its shares of common stock, par value $.10 per share (the “Shares”), for cash at a price equal to their net asset value (“NAV”), less any applicable Early Withdrawal Charge, as of the close of business of the New York Stock Exchange on Monday, August 20, 2001, the Expiration Date, unless extended, upon the terms and conditions set forth in this Offer to Purchase (the “Offer”) and the related Letter of Transmittal. The Shares are not currently traded on an established secondary market. The NAV on July 19, 2001 was $9.44 per Share. You can obtain current NAV quotations from your Merrill Lynch Financial Advisor or Financial Data Services, Inc. (“FDS” or the “Transfer Agent”). See Section 1 “Price; Number of Shares.” The Fund presently intends each quarter to consider making a tender offer for its Shares at a price equal to their then current NAV.

     If more than 5,000,000 Shares are duly tendered prior to the expiration of the Offer, assuming no changes in the factors originally considered by the Board of Directors when it determined to make the Offer, the Fund will either (1) extend the Offer period, if necessary, and increase the number of Shares that the Fund is offering to purchase to an amount which it believes will be sufficient to accommodate the excess Shares tendered as well as any Shares tendered during the extended Offer period, or (2) purchase 5,000,000 Shares (or such greater number of Shares sought) on a pro rata basis.

THIS OFFER IS BEING MADE TO ALL STOCKHOLDERS OF THE FUND AND IS NOT
CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.

IMPORTANT

     On June 7, 2001, the Fund’s Board of Directors approved a transaction whereby the Fund will be acquired by MuniAssets Fund, Inc., an exchange listed closed-end municipal bond fund (the “Reorganization”). If the Fund’s stockholders approve the Reorganization, it is anticipated that this Offer will be the Fund’s final tender offer for its Shares. MuniAssets Fund, Inc. does not make tender offers for its shares. If the Reorganization is not consummated, the Fund’s Board of Directors currently intends to resume its practice of considering whether to make similar tender offers each quarter. However, in such event, the Fund cannot assure you that you will be provided with sufficient liquidity, or that the Fund will make a similar tender offer in the future.

     If you desire to tender all or any portion of your Shares, you should either (1) request your broker, dealer, commercial bank, trust company or other nominee to effect the transaction for you, or (2) if you own your Shares directly, complete and sign the Letter of Transmittal and mail or deliver it along with any Share certificate(s) and any other required documents to the Fund’s Transfer Agent. If your Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you must contact such broker, dealer, commercial bank, trust company or other nominee if you desire to tender your Shares. Shares held in your Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) brokerage account are registered in the name of Merrill Lynch and are not held by you directly. Merrill Lynch may charge its customers a $5.35 processing fee to confirm a repurchase of Shares from such customers pursuant to the Offer.

 

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     NEITHER THE FUND NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. EACH STOCKHOLDER MUST MAKE HIS OR HER OWN DECISION WHETHER TO TENDER SHARES, AND IF SO, HOW MANY SHARES TO TENDER.

     NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE FUND AS TO WHETHER STOCKHOLDERS SHOULD TENDER SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

     Questions and requests for assistance may be directed to your Merrill Lynch Financial Advisor or other nominee, or to the Transfer Agent at the address and telephone number set forth below. Requests for additional copies of this Offer to Purchase and the Letter of Transmittal should be directed to FDS.

July 23, 2001	MERRILL LYNCH HIGH INCOME
		MUNICIPAL BOND FUND, INC.

Transfer Agent:
	Financial Data Services, Inc.
	P.O. Box 45289
	Jacksonville, Florida 32232-5289
	Attn: Merrill Lynch Municipal Strategy            Fund, Inc.
	(800) 637-3863

TABLE OF CONTENTS

Section		Page
1.	Price; Number of Shares		3
2.	Procedure for Tendering Shares		3
3.	Early Withdrawal Charge		4
4.	Withdrawal Rights		4
5.	Payment for Shares		5
6.	Certain Conditions of the Offer		5
7.	Purpose of the Offer		6
8.	Certain Effects of the Offer		6
9.	Source and Amount of Funds		6
10.	Summary of Selected Financial Information		6
11.	Certain Information About the Fund		7
12.	Additional Information		8
13.	Certain Federal Income Tax Consequences		8
14.	Extension of Tender Period; Termination; Amendments		9
15.	Miscellaneous		9

 

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     1.   Price; Number of Shares.  The Fund will, upon the terms and subject to the conditions of the Offer, purchase up to 5,000,000 of its issued and outstanding Shares which are tendered and not withdrawn prior to 4:00 p.m., Eastern time, on August 20, 2001 (such time and date being hereinafter called the “Initial Expiration Date”), unless it determines to accept none of them. The Fund reserves the right to extend the Offer. See Section 14 “Extension of Tender Period; Termination; Amendments”. The later of the Initial Expiration Date or the latest time and date to which the Offer is extended is hereinafter called the “Expiration Date”. The purchase price of the Shares will be their NAV as of the close of the New York Stock Exchange on the Expiration Date. An Early Withdrawal Charge to recover distribution expenses will be assessed on Shares accepted for purchase which have been held for less than the applicable holding period. See Section 3 “Early Withdrawal Charge.”

     The Offer is being made to all stockholders of the Fund and is not conditioned upon any number of Shares being tendered. If more than 5,000,000 Shares are duly tendered prior to the expiration of the Offer, assuming no changes in the factors originally considered by the Board of Directors when it initially determined to make the Offer, the Fund will either (1) extend the Offer period, if necessary, and increase the number of Shares that the Fund is offering to purchase to an amount which it believes will be sufficient to accommodate the excess Shares tendered as well as any Shares tendered during the extended Offer period, or (2) purchase 5,000,000 Shares (or greater number of Shares sought) on a pro rata basis.

     As of June 30, 2001, there were approximately 14 million Shares issued and outstanding and there were 325 holders of record of Shares (in addition, Merrill Lynch maintains accounts for 4,302 beneficial owners of Shares). The Fund has been informed that none of the Directors, officers or affiliates of the Fund intends to tender any Shares pursuant to the Offer. The Shares currently are not traded on any established secondary market. Current NAV quotations for the Shares can be obtained from your Merrill Lynch Financial Advisor or FDS at (800) 637-3863.

     2.   Procedure for Tendering Shares.   In order for you to tender any of your Shares pursuant to the Offer, you may either: (a) request your broker, dealer, commercial bank, trust company or other nominee to effect the transaction for you, in which case a Letter of Transmittal is not required, or (b) if the Shares are registered in your name, send to the Transfer Agent, at the address set forth on page 2, any certificate(s) for such Shares, a properly completed and executed Letter of Transmittal and any other documents required therein. Please contact FDS at (800) 637-3863 as to any additional documents which may be required.

A.    Procedures for Beneficial Owners Holding Shares Through Merrill Lynch or Other Brokers or Nominees.

     If your Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you must contact such broker, dealer, commercial bank, trust company or other nominee if you desire to tender your Shares. You should contact such broker, dealer, commercial bank, trust company or other nominee in sufficient time to permit notification of your desire to tender to reach the Transfer Agent by the Expiration Date. No brokerage commission will be charged on the purchase of Shares by the Fund pursuant to the Offer. However, a broker or dealer may charge a fee for processing the transaction on your behalf. Merrill Lynch may charge its customers a $5.35 processing fee to confirm a purchase of Shares pursuant to the Offer.

B.    Procedures for Registered Stockholders.

     If you will be mailing or delivering the Letter of Transmittal and any other required documents to the Transfer Agent in order to tender your Shares, they must be received on or prior to the Expiration Date by the Transfer Agent at its address set forth on page 2 of this Offer to Purchase.

     Signatures on the Letter of Transmittal MUST be guaranteed by a member firm of a registered national securities exchange, or a commercial bank or trust company having an office, branch or agency in the United States, the existence and validity of which may be verified by the Transfer Agent through the use of industry publications. Notarized signatures are not sufficient.

     Payment for Shares tendered and purchased will be made only after receipt by the Transfer Agent on or before the Expiration Date of a properly completed and duly executed Letter of Transmittal and any other required documents. If your Shares are evidenced by certificates, those certificates also must be received by the Transfer Agent on or prior to the Expiration Date.

 

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     The method of delivery of any documents, including certificates for shares, is at the election and risk of the party tendering the shares. If documents are sent by mail, it is recommended that they be sent by registered mail, properly insured, with return receipt requested.

C.    Determinations of Validity.

     All questions as to the validity, form, eligibility (including time of receipt) and acceptance of tenders will be determined by the Fund, in its sole discretion, whose determination shall be final and binding. The Fund reserves the absolute right to reject any or all tenders determined by it not to be in appropriate form or the acceptance of or payment for which would, in the opinion of counsel for the Fund, be unlawful. The Fund also reserves the absolute right to waive any of the conditions of the Offer or any defect in any tender with respect to any particular Shares or any particular stockholder, and the Fund’s interpretations of the terms and conditions of the Offer will be final and binding. Unless waived, any defects or irregularities in connection with tenders must be cured within such times as the Fund shall determine. Tenders will not be deemed to have been made until the defects or irregularities have been cured or waived. Neither the Fund, its investment adviser and administrator, Merrill Lynch Investment Managers, L.P. (“MLIM”), nor the Transfer Agent, nor any other person shall be obligated to give notice of any defects or irregularities in tenders, nor shall any of them incur any liability for failure to give such notice.

D.    Tender Constitutes an Agreement.

     A tender of Shares made pursuant to any one of the procedures set forth above will constitute an agreement between the tendering stockholder and the Fund in accordance with the terms and subject to the conditions of the Offer.

     3.   Early Withdrawal Charge.  The Fund will assess an Early Withdrawal Charge on Shares accepted for purchase which have been held for less than three years. The charge will be paid to FAM Distributors, Inc. (the “Distributor”), an affiliate of MLIM and the distributor of the Shares, to recover distribution expenses. The Early Withdrawal Charge will be imposed on those Shares accepted for tender based on an amount equal to the lesser of the then current net asset value of the Shares or the cost of the Shares being tendered. Accordingly, the Early Withdrawal Charge is not imposed on increases in the net asset value above the initial purchase price. In addition, the Early Withdrawal Charge is not imposed on Shares derived from reinvestments of ordinary income or capital gain dividends. The Early Withdrawal Charge imposed will vary depending on the length of time the Shares have been owned since purchase (separate purchases shall not be aggregated for these purposes), as set forth in the following table:

Year of Tender After Purchase	Early Withdrawal Charge
First	3.0%
Second	2.0%
Third	1.0%
Fourth and following	0.0%

     In determining whether an Early Withdrawal Charge is applicable to a tender of Shares, the calculation will be determined in the manner that results in the lowest possible amount being charged. Therefore, it will be assumed that the tender is first of Shares acquired through dividend reinvestment and of Shares held for over three years and then of Shares held longest during the three-year period. The Early Withdrawal Charge may be waived on Shares tendered following the death of all beneficial owners of such Shares, provided the Shares are tendered within one year of death (a death certificate and other applicable documents may be required) or if later, reasonably promptly following completion of probate, or in connection with involuntary termination of an account in which Fund Shares are held. At the time of acceptance of the Offer, the record or succeeding beneficial owner must notify the Transfer Agent either directly or indirectly through the Distributor that the Early Withdrawal Charge should be waived. Upon confirmation of the owner’s entitlement, the waiver will be granted; otherwise, the waiver will be lost.

     4.   Withdrawal Rights.  You may withdraw Shares tendered at any time prior to the Expiration Date and, if the Shares have not yet been accepted for payment by the Fund, at any time after September 17, 2001.

 

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     Stockholders whose accounts are maintained through Merrill Lynch should notify their Merrill Lynch Financial Advisor prior to the Expiration Date if they wish to withdraw Shares. Stockholders whose accounts are maintained through another broker, dealer, commercial bank, trust company or other nominee should notify such nominee prior to the Expiration Date. Stockholders whose accounts are maintained directly through the Transfer Agent should submit written notice to the Transfer Agent.

     To be effective, any notice of withdrawal must be timely received by the Transfer Agent at the address set forth on page 2 of this Offer to Purchase. Any notice of withdrawal must specify the name of the person having deposited the Shares to be withdrawn, the number of Shares to be withdrawn, and, if the certificates representing such Shares have been delivered or otherwise identified to the Transfer Agent, the name of the registered holder(s) of such Shares as set forth in such certificates and the number of Shares to be withdrawn. If the certificates have been delivered to the Transfer Agent, then, prior to the release of such certificate, you must also submit the certificate numbers shown on the particular certificates evidencing such Shares and the signature on the notice of the withdrawal must be guaranteed by an Eligible Institution. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Fund in its sole discretion, whose determination shall be final and binding. Shares properly withdrawn shall not thereafter be deemed to be tendered for purposes of the Offer. However, withdrawn Shares may be retendered by following one of the procedures described in Section 2 “Procedure for Tendering Shares.”

     5.   Payment for Shares.  For purposes of the Offer, the Fund will be deemed to have accepted for payment (and thereby purchased) Shares which are tendered as, if and when it gives oral or written notice to the Transfer Agent of its election to purchase such Shares.

     Payment for Shares will be made promptly by the Transfer Agent to tendering stockholders as directed by the Fund. Certificates for Shares not purchased (see Section 1 “Price; Number of Shares” and Section 6 “Certain Conditions of the Offer”), or for Shares not tendered included in certificates forwarded to the Transfer Agent, will be returned promptly following the termination, expiration or withdrawal of the Offer, without expense to the tendering stockholder.

     The Fund will pay all transfer taxes, if any, payable on the transfer to it of Shares purchased pursuant to the Offer. If tendered certificates are registered in the name of any person other than the person signing the Letter of Transmittal, the amount of any such transfer taxes (whether imposed on the registered holder or such other person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted. The Fund will not pay any interest on the purchase price under any circumstances.

     As noted above, Merrill Lynch may charge its customers a $5.35 processing fee to confirm a purchase of Shares from such customers pursuant to the Offer.

     6.   Certain Conditions of the Offer.  The Fund shall not be required to accept for payment or pay for any Shares tendered, and may terminate or amend the Offer or may postpone the acceptance for payment of or payment for Shares tendered, if: (1) such purchases would impair the Fund’s status as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”) (which would cause the Fund’s income to be taxed at the corporate level in addition to the taxation of stockholders who receive dividends from the Fund); (2) the Fund would not be able to liquidate portfolio securities in a manner which is orderly and consistent with the Fund’s investment objective and policies in order to purchase Shares tendered pursuant to the Offer; or (3) there is, in the Board of Directors’ judgment, any (a) legal action or proceeding instituted or threatened challenging the Offer or otherwise materially adversely affecting the Fund, (b) declaration of a banking moratorium by Federal or state authorities or any suspension of payment by banks in the United States or New York State, which is material to the Fund, (c) limitation imposed by Federal or state authorities on the extension of credit by lending institutions, (d) commencement of war, armed hostilities or other international or national calamity directly or indirectly involving the United States, which is material to the Fund, or (e) other event or condition which would have a material adverse effect on the Fund or its stockholders if Shares tendered pursuant to the Offer were purchased.

     If the Fund determines to amend the Offer or to postpone the acceptance for payment of or payment for Shares tendered, it will, to the extent necessary, extend the period of time during which the Offer is open.

 

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Moreover, in the event any of the foregoing conditions are modified or waived in whole or in part at any time, the Fund will promptly make a public announcement of such waiver and may, depending on the materiality of the modification or waiver, extend the Offer period. See Section 14 “Extension of Tender Period; Terminating; Amendments”.

     7.   Purpose of the Offer.  The Fund does not currently believe there will be an active secondary market for its Shares. The Board of Directors has determined that it would be in the best interest of stockholders for the Fund to take action to attempt to provide liquidity to stockholders. To that end, the Directors decided to provide liquidity for stockholders by making this Offer. However, if the Fund’s stockholders approve the Reorganization as described above, it is anticipated that this Offer will be the Fund’s final tender offer for its Shares. MuniAssets Fund, Inc. does not make tender offers for its shares. Rather, shareholders may purchase and sell shares of MuniAssets Fund, Inc. at market price on each day that the New York Stock Exchange is open for trading. If the Reorganization is not consummated, the Fund’s Board of Directors currently intends to resume its practice of considering whether to make similar tender offers each quarter. However, in such event, the Fund cannot assure you that you will be provided with sufficient liquidity, or that the Fund will make a similar tender offer in the future.

     8.   Certain Effects of the Offer.  The purchase of Shares pursuant to the Offer will have the effect of increasing the proportionate interest in the Fund of stockholders who do not tender their Shares. If you retain your Shares, however, you will be subject to any increased risks that may result from the reduction in the Fund’s aggregate assets resulting from payment for the Shares, including, for example, the potential for greater volatility due to decreased diversification and higher expenses. All Shares purchased by the Fund pursuant to the Offer will be retired by the Fund’s Board of Directors. If the Fund’s stockholders approve the Reorganization, it is anticipated that this Offer will be the Fund’s final tender offer for its shares of common stock, and stockholders who do not tender their Shares will not be able to liquidate their share holdings in the Fund until after the Reorganization is completed. At that time, stockholders may sell the newly issued shares of common stock of MuniAssets Fund, Inc. that they received in the Reorganization in exchange for their Shares at market price on each day that the New York Stock Exchange is open for trading. However, the market price may be at a discount from or premium above the net asset value of the shares and transactions in shares of MuniAssets Fund, Inc. may be subject to brokerage commissions.

     9.   Source and Amount of Funds.  The price to be paid by the Fund for shares tendered in the Offer will equal their NAV as of the close of the New York Stock Exchange on the Expiration Date, less any applicable Early Withdrawal Charge. Based on the NAV on July 19, 2001 the aggregate purchase price if 5,000,000 Shares are tendered and accepted for payment pursuant to the Offer would be approximately $47.2 million. The Fund anticipates that the purchase price for any Shares acquired pursuant to the Offer will first be derived from cash on hand, and then from the proceeds from the sale of cash equivalents held by the Fund. Although the Fund is authorized to borrow money to finance the purchase of Shares pursuant to tender offers, the Board of Directors believes that the Fund currently has sufficient liquidity to repurchase the Shares without such borrowing. However, if, in the judgment of the Directors, there is not sufficient liquidity of the assets of the Fund to pay for tendered Shares, the Fund may, within the limits set forth in the Prospectus, borrow money as described above or may terminate the Offer.

     10.   Summary of Selected Financial Information. Set forth on the next page is a summary of selected financial information for the Fund for the fiscal years ended August 31, 1999 and August 31, 2000 and unaudited financial information for the six-month period ended February 28, 2001. The financial information with respect to the fiscal years ended August 31, 1999 and August 31, 2000 is excerpted from the Fund’s audited financial statements. The Fund’s audited financial statements for the years ended August 31, 1999 and August 31, 2000 are included in the Fund’s 1999 and 2000 Annual Reports, which are incorporated by reference into this Offer to Purchase. The financial information with respect to the six-month period ended February 28, 2001 is excerpted from the Fund’s unaudited financial statements, which are included in the Fund’s 2001 Semi-Annual Report. The Fund’s 2001 Semi-Annual Report is incorporated by reference into this Offer to Purchase. More comprehensive financial information is included in such audited and unaudited financial statements (copies of which have been filed with the Securities and Exchange Commission (the “SEC”). You may request a copy of either or both Annual Reports or the Fund’s 2001 Semi-Annual Report at no charge by calling 1-800-637-3863 between 8:00 a.m. and 8:00 p.m., Eastern time, on any business day. The summary of selected financial information set forth on the next page is qualified in its entirety by reference to such Annual Reports and the Fund’s 2001 Semi-Annual Report and the financial information, the notes thereto and related material contained therein.

 

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SUMMARY OF SELECTED FINANCIAL INFORMATION
(in 000’s except per share data and ratios)

	For the Six Months Ended February 28, 2001			For the Year Ended August 31, 2000			For the Year Ended August 31, 1999
	(unaudited)
INCOME STATEMENT
Investment income	$	5,145		$	12,535		$	14,701
Total expenses		1,105			2,568			3,282
Investment income—net	$	4,040		$	9,967		$	11,419
REALIZED AND UNREALIZED GAIN (LOSS) ON     INVESTMENTS—NET
Realized loss on investments—net	$	(1,187	)	$	(4,607	)	$	(569	)
Change in unrealized appreciation/depreciation on        investments—net	$	(1,942	)	$	(10,598	)	$	(17,755	)
ASSETS AND LIABILITIES
Total assets	$	134,781		$	150,109		$	210,967
Total liabilities		3,657			715			9,393
Net assets	$	131,124		$	149,394		$	201,574
Net asset value per share	$	9.26		$	9.45		$	10.24
Shares of common stock outstanding		14,164			15,804			19,683
FINANCIAL HIGHLIGHTS
Per Share Operating Performance:
Investment income—net	$	.26		$	.55		$	.55
Dividends from investment income—net	$	(26	)	$	(.55	)	$	(.55	)
Distributions from realized gain on investments—net	$	—		$	—		$	(.18	)
Distributions in excess of realized gain on investments—net	$	—		$	—		$	(.15	)
Ratios to Average Net Assets:
Expenses		1.57	%*		1.46	%		1.46	%
Investment income—net		5.74	%*		5.68	%		5.07	%

* Annualized

     11.   Certain Information About the Fund.  The Fund was incorporated under the laws of the State of Maryland on August 16, 1990 and is a non-diversified, continuously offered, closed-end, management investment company registered under the 1940 Act. The Fund seeks to provide stockholders with high current income exempt from Federal income taxes by investing primarily in a portfolio of medium to lower grade or unrated municipal obligations with remaining maturities of greater than one year, the interest on which, in the opinion of bond counsel to the issuer, is exempt from Federal income taxes. The Fund seeks to achieve its objective by investing at least 80% of its assets, except during temporary defensive periods, in a portfolio of obligations issued by or on behalf of states, territories and possessions of the United States and their political subdivisions, agencies or instrumentalities paying interest that, in the opinion of bond counsel to the issuer, is exempt from Federal income taxes. MLIM, an affiliate of Merrill Lynch, acts as investment adviser and administrator for the Fund.

     There have not been any transactions involving the Shares of the Fund that were effected during the past 60 business days by the Fund, any executive officer or Director of the Fund, any person controlling the Fund, any executive officer or director of any corporation ultimately in control of the Fund or by any associate or subsidiary of any of the foregoing including any executive officer or director of any such subsidiary, except that within the past 60 business days pursuant to the public offering of its shares the Fund has sold approximately 128,900  Shares at a price equal to NAV on the date of each such sale.

     The principal executive offices of the Fund are located at 800 Scudders Mill Road, Plainsboro, New Jersey 08536.

 

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     12.   Additional Information.  The Fund has filed an issuer tender offer statement on Schedule TO with the SEC which includes certain additional information relating to the Offer. Such material may be inspected and copied at prescribed rates at the SEC’s public reference facilities at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; Seven World Trade Center, New York, New York 10048; and Room 3190, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may also be obtained by mail at prescribed rates from the Public Reference Branch of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC maintains a web site (http://www.sec.gov) that contains the Fund’s Schedule TO and other information regarding the Fund.

     13.   Certain Federal Income Tax Consequences.  The following discussion is a general summary of the Federal income tax consequences of a sale of Shares pursuant to the Offer. You should consult your own tax adviser for a complete description of the tax consequences to you of a sale of Shares pursuant to the Offer.

     The sale of Shares pursuant to the Offer will be a taxable transaction for Federal income tax purposes, either as a “sale or exchange”, or under certain circumstances, as a “dividend”. In general, the transaction should be treated as a sale or exchange of the Shares under Section 302 of the Code, if the receipt of cash (a) is “substantially disproportionate” with respect to the stockholder, (b) results in a “complete redemption” of the stockholder’s interest in the Fund, or (c) is “not essentially equivalent to a dividend” with respect to the stockholder. A “substantially disproportionate” distribution generally requires a reduction of at least 20% in the stockholder’s proportionate interest in the Fund after all shares are tendered. A “complete redemption” of a stockholder’s interest generally requires that all Shares directly owned or attributed to such stockholder under Section 318 of the Code be disposed of. A distribution “not essentially equivalent to a dividend” requires that there be a “meaningful reduction” in the stockholder’s interest, which should be the case if the stockholder has a minimal interest in the Fund, exercises no control over Fund affairs and suffers a reduction in his proportionate interest in the Fund.

     If the sale of your Shares meets any of these three tests for “sale or exchange” treatment, you will recognize gain or loss equal to the difference between the amount of cash received pursuant to the Offer and the adjusted tax basis of the Shares sold. Such gain or loss will be a capital gain or loss if the Shares sold have been held by you as a capital asset. In general, capital gain or loss with respect to Shares sold will be long-term capital gain or loss if the holding period for such Shares is more than one year. The maximum capital gains rate applicable to such a sale of Shares would be 20%.

     If none of the Code Section 302 tests described above is met, you may be treated as having received, in whole or in part, a dividend, return of capital or capital gain, depending on (i) whether the Fund has sufficient earnings and profits to support a dividend and (ii) your tax basis in the Shares. The tax basis in the Shares tendered to the Fund will be transferred to any remaining Shares held by you. In addition, if the sale of Shares pursuant to the Offer is treated as a “dividend” to a tendering stockholder, a constructive dividend under Code Section 305(c) may result to a non-tendering stockholder whose proportionate interest in the earnings and assets of the Fund has been increased as a result of such tender.

     Accordingly, the differentiation between “dividend” and “sale or exchange” treatment is important with respect to the amount and character of income that tendering stockholders are deemed to receive. In addition, while the marginal tax rates for dividends and capital gains remain the same for corporate stockholders, under the Code the top income tax rate on ordinary income of individuals (39.1%) will exceed the maximum tax rate on capital gains (20%).

     In the event that the sale of Shares by a corporate stockholder pursuant to the Offer is treated as a dividend, the corporate stockholder may be entitled to claim a “dividends received deduction” on the cash received, which ordinarily would be 70% of such dividend. However, corporate stockholders should consult their tax advisers about certain provisions of the Code that may affect the dividends received deduction.

     The gross proceeds paid to a stockholder or other payee pursuant to the Offer will be subject to a withholding tax unless either: (a) the stockholder has provided the stockholder’s taxpayer identification number/social security number, and certifies under penalties of perjury: (i) that such number is correct, and (ii) either that (A) the stockholder is exempt from backup withholding, (B) the stockholder is not otherwise subject to backup withholding as a result of a failure to report all interest or dividends, or (C) the Internal Revenue Service has notified the stockholder that the stockholder is no longer subject to backup withholding; or (b) an exception

 

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applies under applicable law and Treasury regulations. Foreign stockholders may be required to provide the Transfer Agent with a completed Form W-8BEN, available from the Transfer Agent, in order to avoid backup withholding.

     Unless a reduced rate of withholding or a withholding exemption is available under an applicable tax treaty, a stockholder who is a nonresident alien or a foreign entity may be subject to a 30% United States withholding tax on the gross proceeds received by such stockholder, if the proceeds are treated as a “dividend” under the rules described above. Foreign stockholders should consult their tax advisers regarding application of these withholding rules.

     14.   Extension of Tender Period; Termination; Amendments.  The Fund reserves the right, at any time and from time to time, to extend the period of time during which the Offer is pending by making a public announcement thereof. In the event that the Fund so elects to extend the tender period, the NAV for the Shares tendered will be determined as of the close of business of the New York Stock Exchange on the Expiration Date, as extended. During any such extension, all Shares previously tendered and not purchased or withdrawn will remain subject to the Offer. The Fund also reserves the right, at any time and from time to time up to and including the Expiration Date, to (a) terminate the Offer and not to purchase or pay for any Shares, and (b) amend the Offer in any respect by making a public announcement. Such public announcement will be issued no later than 9:00 a.m., Eastern time, on the next business day after the previously scheduled Expiration Date and will disclose the approximate number of Shares tendered as of that date. Without limiting the manner in which the Fund may choose to make a public announcement of extension, termination or amendment, except as provided by applicable law (including Rule 13e-4(e)(2) under the 1934 Act), the Fund shall have no obligation to publish, advertise or otherwise communicate any such public announcement, other than by making a press release to the Dow Jones News Service.

     15.   Miscellaneous.  The Offer is not being made to, nor will tenders be accepted from, stockholders in any jurisdiction in which the Offer or its acceptance would not comply with the securities laws of such jurisdiction. The Fund is not aware of any jurisdiction in which the Offer or tenders pursuant thereto would not be in compliance with the laws of such jurisdiction. However, the Fund reserves the right to exclude stockholders from the Offer in any jurisdiction in which it is asserted that the Offer cannot lawfully be made. The Fund believes such exclusion is permissible under applicable tender offer rules, provided the Fund makes a good faith effort to comply with any state law deemed applicable to the Offer. In any jurisdiction the securities laws of which require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on the Fund’s behalf by Merrill Lynch.

MERRILL LYNCH HIGH INCOME
MUNICIPAL BOND FUND, INC.

July 23, 2001

 

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  EX-99.(A)(1)(III) 4 file004.htm FORM OF LETTER OF TRANSMITTAL

EXHIBIT (a)(1)(iii)

EXHIBIT (a)(1)(iii)

LETTER OF TRANSMITTAL

to be Used to Tender Shares of

MERRILL LYNCH HIGH INCOME MUNICIPAL BOND FUND, INC.

Pursuant to the Offer to Purchase

Dated July 23, 2001

THE EXPIRATION DATE AND THE WITHDRAWAL DEADLINE IS 4:00 P.M.,
EASTERN TIME, ON MONDAY, AUGUST 20, 2001, UNLESS EXTENDED

Transfer Agent:
Financial Data Services, Inc.
Attention: Merrill Lynch High Income Municipal Bond Fund, Inc.
P.O. Box 45289
Jacksonville, Florida 32232-5289
Telephone Information Number: (800) 637-3863

Delivery to an address other than that shown above does not constitute valid delivery.

     This Letter of Transmittal is to be used only if the stockholder is a record owner of Shares who desires to effect the tender offer transaction himself or herself by transmitting the necessary documents to the Fund’s Transfer Agent and does not intend to request his or her broker or dealer to effect the transaction for him or her. A stockholder who holds Shares in a Merrill Lynch account or through another broker, dealer, commercial bank, trust company or other nominee is not the record owner and should instruct his or her Merrill Lynch Financial Advisor or such other nominee to effect the tender on his or her behalf.

PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

     The undersigned hereby tenders to Merrill Lynch High Income Municipal Bond Fund, Inc., a closed-end investment company incorporated under the laws of the State of Maryland (the “Fund”), the shares described below of its common stock, par value $.10 per share (the “Shares”), at a price equal to the net asset value per Share (“NAV”) calculated on the Expiration Date (as defined in the Offer to Purchase), in cash, less any applicable Early Withdrawal Charge, upon the terms and conditions set forth in the Offer to Purchase dated July 23, 2001 receipt of which is hereby acknowledged, and in this Letter of Transmittal (which together constitute the “Offer”).

     The undersigned hereby sells to the Fund all Shares tendered hereby that are purchased pursuant to the Offer and hereby irrevocably constitutes and appoints the Transfer Agent as attorney in fact of the undersigned, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to present such Shares and any Share certificates for cancellation of such Shares on the Fund’s books. The undersigned hereby warrants that the undersigned has full authority to sell the Shares tendered hereby and that the Fund will acquire good title thereto, free and clear of all liens, charges, encumbrances, conditional sales agreements or other obligations relating to the sale thereof, and not subject to any adverse claim, when and to the extent the same are purchased by it. Upon request, the undersigned will execute and deliver any additional documents necessary to complete the sale in accordance with the terms of the Offer.

     The undersigned recognizes that under certain circumstances set forth in the Offer to Purchase, the Fund may not be required to purchase any of the Shares tendered hereby. In that event, the undersigned understands that, in the case of Shares evidenced by certificates, certificate(s) for any Shares not purchased will be returned to the undersigned at the address indicated above. In the case of Shares not evidenced by certificates and held in an Investment Account, the Transfer Agent will cancel the tender order and no Shares will be withdrawn from the Account.

     The check for the purchase price for the tendered Shares purchased will be issued to the order of the undersigned and mailed to the address indicated in the “Description of Shares Tendered” table below.

     All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and the obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer, this tender is irrevocable.

INSTRUCTIONS

Forming Part of the Terms and Conditions of the Offer

     1.   Guarantee of Signatures. All signatures on this Letter of Transmittal must be guaranteed by a member firm of a registered national securities exchange, or a commercial bank or trust company having an office, branch or agency in the United States. This Letter of Transmittal is to be used only if you may effect the tender offer transaction yourself and do not intend to request your broker or dealer to effect the transaction for you.

     2.   Delivery of Letter of Transmittal and Certificates.  Certificates for all tendered Shares, together with a properly completed and duly executed Letter of Transmittal, should be mailed or delivered to the Transfer Agent on or prior to the Expiration Date at the appropriate address set forth herein and must be received by the Transfer Agent prior to the Expiration Date.

     The method of delivery of all documents, including certificates for Shares, is at the election and risk of the tendering stockholder.

     3.   Inadequate Space.  If the space provided is inadequate, the certificate numbers and number of Shares should be listed on a separate signed schedule attached hereto.

     4.   Partial Tenders.  If fewer than all of the Shares in your Investment Account or evidenced by any certificate submitted are to be tendered, fill in the number of Shares which are to be tendered in the column entitled “No. of Shares Tendered”. If applicable, a new certificate for the remainder of the Shares evidenced by your old certificate(s) will be sent to you as soon as practicable after the Expiration Date of the Offer. All Shares represented by certificate(s) listed or in your Investment Account are deemed to have been tendered unless otherwise indicated.

     5.   Signatures on Letter of Transmittal, Authorization and Endorsements.

     (a) If the Letter of Transmittal is signed by the registered holder of the Shares tendered hereby, the
signature(s) must correspond with the name(s) in which the Shares are registered.

     (b) If the Shares are held of record by two or more joint holders, all such holders must sign this Letter of Transmittal.

     (c) If any tendered Shares are registered in different names it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of Shares.

     (d) When this Letter of Transmittal is signed by the registered holder(s) of the Shares listed and, if applicable, of the certificates transmitted hereby, no endorsements of certificates or separate authorizations are required.

     (e) If this Letter of Transmittal or any certificates or authorizations are signed by trustees, executors, administrators, guardians, attorneys in fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and must submit proper evidence satisfactory to the Fund of their authority so to act.

     6.   Transfer Taxes.  The Fund will pay all the taxes, if any, payable on the transfer to it of Shares purchased pursuant to the Offer. If tendered certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any transfer taxes (whether imposed on the registered holder or such other person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted.

     7.   Irregularities. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of any tender of Shares will be determined by the Fund in its sole discretion, whose determination shall be final and binding. The Fund reserves the absolute right to reject any or all tenders determined by it not to be in appropriate form or the acceptance of or payment for which would, in the opinion of counsel for the Fund, be unlawful. The Fund also reserves the absolute right to waive any of the conditions of the Offer or any defect in any tender with respect to any particular Shares or any particular stockholder, and the Fund’s interpretations of the terms and conditions of the Offer (including these instructions) will be final and binding. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as the Fund shall determine. Tenders will not be deemed to have been made until all defects and irregularities have been cured or waived. Neither the Fund, Merrill Lynch Investment Managers, L.P. nor the Transfer Agent, nor any other person shall be obligated to give notice of defects or irregularities in tenders, nor shall any of them incur any liability for failure to give any such notice.

     8.   Important Tax Information.  Under Federal income tax law, a stockholder whose tendered Shares are accepted for payment is required by law to provide the Transfer Agent (as payer) with his correct taxpayer identification number, which is accomplished by completing and signing the Signature Form.

DESCRIPTION OF SHARES TENDERED
(See Instructions 3 and 4)

Name(s) and Address(es) of Registered Holder(s) (Please Fill in Exactly the Name(s) in Which Shares Are Registered)	Shares Tendered (Attach Additional Schedules if Necessary)
	Certificate No.(s)*	No. of Shares listed on Certificate*	No. of Shares Tendered**
Account No.	Total Shares Tendered..............

* Need not be completed by stockholders whose Shares are not evidenced by certificates.

** To be completed by all tendering stockholders, whether or not your Shares are evidenced by certificates. If you desire to tender fewer than all Shares held in your account or evidenced by a certificate listed above, please indicate in this column the number of Shares you wish to tender. Otherwise all Shares evidenced by such certificate or held in your account will be deemed to have been tendered.

SIGNATURE FORM
—SIGN HERE—
(See Instructions 1, 5 and 8)

Social Security No.
or Taxpayer Identification No. . . . . . . . . . . .

Under penalty of perjury, I certify (1) that the number set forth above is my correct Social Security No. or Taxpayer Identification No. and (2) that I am not subject to backup withholding either because (a) I am exempt from backup withholding, (b) I have not been notified by the Internal Revenue Service (the “IRS”) that I am subject thereto as a result of failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject thereto.
Instruction: You must strike out the language in (2) above if you have been notified that you are subject to backup withholding due to underreporting and you have not received a notice from the IRS that backup withholding has been terminated.

...................................................................................................................................................

...................................................................................................................................................

(Signature(s) of Owner(s) Exactly as Registered)

Date  ......................................, 2001

Name(s)  ......................................................................................................................................

Address(es)  .................................................................................................................................

...................................................................................................................................................
(Please Print)

Telephone Number (    )  ......................................

Signature(s) Guaranteed  ................................................................................................................

                                  .......................... .....................................................................................

EX-99.(A)(1)(III)

 Exhibit (a)(1)(iii)

EX-99.(A)(1)(IV)

EXHIBIT (a)(1)(iv)

EXHIBIT (a)(1)(iv)

Financial Data Services, Inc.
P.O. Box 45289
Jacksonville, FL 32232-5289

[LOGO]   Merrill Lynch Investment Managers

Dear Stockholder:

     As you requested, we are enclosing a copy of the Merrill Lynch High Income Municipal Bond Fund, Inc. (the “Fund”) Offer to Purchase dated July 23, 2001 (the “Offer to Purchase”) 5,000,000 issued and outstanding Shares (the “Shares”). The Offer to Purchase is for cash at net asset value (“NAV”) per share as of the expiration date of the Offer, less any Early Withdrawal Charge. Together with the Offer to Purchase we are sending you a form Letter of Transmittal (the “Letter”) for use by holders of record of Shares which you should read carefully. Certain selected financial information with respect to the Fund is set forth in the Offer to Purchase.

     If, after reviewing the information set forth in the Offer to Purchase and Letter, you wish to tender Shares for purchase by the Fund, please either contact your Merrill Lynch Financial Advisor or other broker, dealer or nominee to effect the tender for you or, if you are the record owner of the Shares, you may follow the instructions contained in the Offer to Purchase and Letter.

     On June 7, 2001, the Fund’s Board of Directors approved a transaction whereby the Fund will be acquired by MuniAssets Fund, Inc., an exchange listed closed-end municipal bond fund (the “Reorganization”). If the Fund’s stockholders approve the Reorganization, it is anticipated that this Offer will be the Fund’s final tender offer for its Shares and stockholders who do not tender their Shares will not be able to liquidate their Share holdings in the Fund until after the Reorganization is completed. At that time, stockholders may sell the newly issued shares of common stock of MuniAssets Fund, Inc. that they receive in the Reorganization at market price on each day that the New York Stock Exchange is open for trading. The market price of MuniAssets Fund, Inc.’s common stock may be at a discount from or a premium above the net asset value of such shares, and transactions in such shares may be subject to brokerage commissions.

     Neither the Fund nor its Board of Directors makes any recommendation to any holder of Shares as to whether or not to tender Shares. Each stockholder is urged to consult his or her broker or tax advisor before deciding whether to tender any Shares.

     The Fund’s annualized distribution rate for the period May 18, 2001 through June 21, 2001, based on the amounts actually distributed by the Fund, was 5.84%, based on the June 21, 2001 NAV of $9.41 per Share. For the Fund’s fiscal quarter ended May 31, 2001, the Fund’s highest NAV was $9.35 per Share and its lowest NAV was $9.26 per Share. The Fund’s NAV on July 19, 2001 was $9.44 per Share. The Fund publishes its NAV each week in Barron’s. It appears in the “Investment Company Institute List” under the sub-heading “Closed-End Bond Funds” within the listings of mutual funds and closed-end funds.

     Requests for current NAV quotations or for additional copies of the Offer to Purchase, the Letter and any other tender offer documents may be directed to Financial Data Services, Inc. at (800) 637-3863.

     Should you have any other questions on the enclosed material, please do not hesitate to contact your Merrill Lynch Financial Advisor or other broker or dealer or call the Fund’s Transfer Agent, Financial Data Services, Inc., at (800) 637-3863. We appreciate your continued interest in Merrill Lynch High Income Municipal Bond Fund, Inc.

Yours truly,

MERRILL LYNCH, PIERCE, FENNER & SMITH
       INCORPORATED

  EX-99.(A)(5)(IV) 6 file006.htm CONSENT OF DELOITTE & TOUCHE LLP

EXHIBIT (a)(5)(iv)

EXHIBIT (a)(5)(iv)

INDEPENDENT AUDITORS’ CONSENT

We consent to the incorporation by reference in Schedule TO Issuer Tender Offer Statement to Registration Statement No. 333-39839 of Merrill Lynch High Income Municipal Bond Fund, Inc. of our reports dated October 5, 1999 and October 5, 2000 appearing in the August 31, 1999 and 2000 Annual Reports of the Fund, respectively.

/s/ Deloitte & Touche LLP

New York, New York
July 23, 2001

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EX-99.(A)(5)(IV)

 Exhibit (a)(5)(iv)