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 811-2857
Name of Fund: Intermediate Term Portfolio of Merrill Lynch Bond
Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Terry K. Glenn, President,
Intermediate Term Portfolio of Merrill Lynch Bond Fund, Inc., 800
Scudders Mill Road, Plainsboro, NJ, 08536. Mailing address: P.O.
Box 9011, Princeton, NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 09/30/04
Date of reporting period: 10/01/03 - 03/31/04
Item 1 - Report to Stockholders
(BULL LOGO)
Merrill Lynch Investment Managers
www.mlim.ml.com
Intermediate Term Portfolio of
Merrill Lynch Bond Fund, Inc.
Semi-Annual Report
March 31, 2004
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change.
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities is
available (1) without charge, upon request, by calling toll-free
1-800-MER-FUND (1-800-637-3863); (2) on www.mutualfunds.ml.com;
and (3) on the Securities and Exchange Commission's website at
http://www.sec.gov.
Merrill Lynch Bond Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
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Intermediate Term Portfolio of Merrill Lynch Bond Fund, Inc.
Officers and Directors
Terry K. Glenn, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Kevin A. Ryan, Director
Roscoe S. Suddarth, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Patrick Maldari, Vice President
James J. Pagano, Vice President
Donald C. Burke, Vice President and Treasurer
Phillip S. Gillespie, Secretary
Charles C. Reilly, Director of Merrill Lynch Bond Fund, Inc., has
recently retired. The Fund's Board of Directors wishes Mr. Reilly
well in his retirement.
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
800-637-3863
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
A Letter From the President
Dear Shareholder
Index returns during the most recent six-month and 12-month
reporting periods indicate that fixed income markets - both taxable
and tax-exempt - continued to reward those investors who were
willing to accept greater risk. The high yield market, as measured
by the Credit Suisse First Boston High Yield Index, provided a
six-month return of +8.65% and a 12-month return of +22.86% as of
March 31, 2004. By comparison, the Lehman Brothers Aggregate Bond
Index returned +2.98% and +5.40% and the Lehman Brothers Municipal
Bond Index returned +3.12% and +5.86% for the six-month and 12-month
periods ended March 31, 2004, respectively.
As of March month-end, the Federal Reserve Board maintained its
accommodative policy stance. As a result, short-term interest rates
remained at historic lows and kept the short end of the yield curve
relatively flat, making it increasingly difficult to find attractive
income opportunities. Market watchers continue to monitor the
economic data and Federal Reserve Board language for indications of
interest rate direction. Having said that, if the economy continues
to grow at its recent pace, many believe it is just a matter of time
before rates move upward.
Equity markets, in the meantime, continued to provide attractive
returns. For the six-month and 12-month periods ended March 31,
2004, the Standard & Poor's 500 Index returned +14.08% and
+35.12%, respectively. Much of the boost came from improving
economic conditions throughout the past year. Significant fiscal
and monetary stimulus, including the low interest rates and tax
cuts, has opened the door to consumer spending, capital spending,
increases in exports and long-awaited job growth. As expected, these
positive developments have led the way to improvements in corporate
earnings - a positive for stock markets.
The events and efforts of the past year leave us with a much
stronger economy today. With all of this in mind, we believe it is
time for investors to consider what can go right in 2004. We
encourage you to revisit your portfolio and your asset allocation
strategy to ensure you are well positioned to take advantage of the
opportunities that lie ahead. Your financial advisor can help you
develop a strategy designed to perform through all types of market
and economic cycles.
We thank you for trusting Merrill Lynch Investment Managers with
your investment assets, and we look forward to serving you in the
months and years ahead.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
A Discussion With Your Fund's Portfolio Managers
We maintained our emphasis on higher-beta sectors throughout the
period in an effort to limit the Portfolio's sensitivity to interest
rate volatility while also enhancing income and total return
potential.
How did the Portfolio perform during the period in light of the
existing market conditions?
For the six-month period ended March 31, 2004, the Portfolio's Class
A, Class B, Class C, Class I and Class R Shares had total returns of
+2.92%, +2.71%, +2.80%, +2.98% and +2.83%, respectively. For the
same period, the unmanaged benchmark Lehman Brothers Aggregate Bond
Index posted a return of +2.98%. (Portfolio results shown do not
reflect sales charges and would be lower if sales charges were
included. Complete performance information can be found on pages
6 - 8 of this report to shareholders.)
Portfolio returns were generally competitive with the benchmark. We
attribute this primarily to our focus on higher-beta credits, such
as BBB-rated corporate bonds and high yield securities that have
greater sensitivity to the overall economy, which continued to
perform well throughout the period. By maintaining our focus on
spread sectors - those areas of the market with a lower correlation
to Treasury issues - we were able to avoid a great deal of interest
rate volatility while also achieving more attractive total returns.
(The yield on the 10-year Treasury note hit a high of 4.49% and a
low of 3.73% during the six-month period.)
In general, we maintained a 13% - 15% overweight to spread sectors
throughout the period. This included overweight positions in both
investment grade and high yield corporate bonds and in commercial
mortgage-backed securities (CMBS).
Throughout the past six months, investors continued to be rewarded
for taking on credit risk. During this particular period, for
example, spreads on high yield securities tightened by more than
100 basis points (1%) relative to Treasury issues. Spreads on lower-
quality investment grade corporate bonds, such as BBB-rated issues,
tightened by 30 basis points. Overall, the environment continued to
be ideal for corporate performance, which was supported by improving
free cash flows, deleveraging, light supply and continued investor
appetite for "reaching for yield."
What changes were made to the Portfolio during the period?
In general, the themes we had in place at the end of September
remained. Changes made during the period were generally tactical.
First, although the Portfolio remained overweight in spread sectors,
we reduced our overweighting from 15% - 17% above the benchmark to
approximately 13% - 15% above benchmark. We maintained an aggressive
overweight to the BBB-rated corporate sector during the period and
consistently maintained an overweight of about 5% to investment
grade corporates. In the high yield area, we reduced our exposure
from 5% of net assets to 3%. Although we trimmed our high yield
allocation overall, we did make some purchases, primarily moving
from broad market exposure to the asset class to individual security
selection in crossover credits. As their name implies, these credits
have a split rating - half investment grade and half non-investment
grade. In our view, the easy money had already been extracted from
the high yield market. Rather than benefiting from the general
outperformance of the high yield asset class, we began to focus more
on individual bond selection. Companies that we purchased during the
period include MGM Mirage Inc., American Greetings Corporation and
Abitibi-Consolidated Inc.
The second broad change involved a shift in the Portfolio's duration
profile. During the first half of the period, our duration was
neutral to that of the benchmark. In mid-February, we moved to a
duration profile shorter than our benchmark. This was based on our
belief that several important factors would fuel economic growth in
the first half of the 2004. These included tax refunds, stimulus
from mortgage refinancings, increased capital expenditures,
relatively low interest rates, a weaker dollar and accelerating
commodity prices. With the economy on solid footing, we would expect
interest rates to move higher. Consequently, we positioned the
Portfolio short, ending the period with a duration profile one-third
of a year shorter than the Lehman Brothers Aggregate Bond Index.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
The third significant change also had to do with our view on
interest rates. We expected that interest rates would be less
volatile than was priced into the market and, for that reason,
we set out to sell volatility. This was accomplished by selling
options on the 10-year Treasury note. We executed these types of
transactions on two occasions during the period at a profit to the
Portfolio.
How was the Portfolio positioned at the close of the period?
We maintained a 13% overweight to spread sectors, broken down as
follows: 5% in corporate bonds, 5% in CMBS and 3% in high yield. In
general, we believe improving economic conditions should continue to
support the high yield and investment grade corporate bond sectors.
We believe the overall economic environment is still conducive to
corporate profitability, corporate deleveraging and improving free
cash flows, all of which should continue to benefit corporate bonds.
In the high yield area, we are at the higher end of the quality
spectrum - BB and BBB.
Broadly speaking, we would look to reduce exposure to higher-beta
sectors and to spread sectors in general as spreads (versus 10-year
Treasury notes) continue to contract. Having said that, we believe
there is still opportunity to extract value out of those sectors
that we find to be inexpensive relative to their underlying
fundamentals. As far as duration is concerned, we believe the bond
market starts to represent value when the 10-year Treasury yield
approaches 5%. At that point, we would look to reduce our duration-
short profile.
Right now, we are not expecting the Federal Reserve Board to
aggressively raise interest rates in 2004. In our opinion, the
Federal Reserve Board seems more inclined to be slow in adjusting
monetary policy so as to avoid derailing the sustainability of the
current economic recovery.
Patrick Maldari
Vice President and Senior Portfolio Manager
James J. Pagano
Vice President and Senior Portfolio Manager
April 5, 2004
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Performance Data
About Fund Performance
Investors are able to purchase shares of the Fund through multiple
pricing alternatives:
* Class A Shares incur a maximum initial sales charge of 1% and an
account maintenance fee of 0.10% (but no distribution fee).
* Class B Shares are subject to a maximum contingent deferred sales
charge of 1%, declining to 0% after three years. All Class B Shares
purchased prior to December 1, 2002 will maintain the four-year
schedule. In addition, Class B Shares are subject to a 0.25%
distribution fee and a 0.25% account maintenance fee. These shares
automatically convert to Class A Shares after approximately 10
years. (There is no initial sales charge for automatic share
conversions.)
* Class C Shares are subject to a distribution fee of 0.25% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class I Shares incur a maximum initial sales charge (front-end
load) of 1% and bears no ongoing distribution or account maintenance
fees. Class I Shares are available only to eligible investors.
* Class R Shares do not incur a maximum sales charge (front-end
load) or deferred sales charge. These shares are subject to a
distribution fee of 0.25% and an account maintenance fee of 0.25%.
Class R Shares are available only to certain retirement plans.
None of the past results shown should be considered a representation
of future performance. Current performance may be lower or higher
than the performance data quoted. Refer to www.mlim.ml.com to obtain
more current performance information. Performance results do not
reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. Figures shown in
each of the following tables assume reinvestment of all dividends
and capital gain distributions, if any, at net asset value on the
payable date. Investment return and principal value of shares will
fluctuate so that shares, when redeemed, may be worth more or less
than their original cost. Dividends paid to each class of shares
will vary because of the different levels of account maintenance,
distribution and transfer agency fees applicable to each class,
which are deducted from the income available to be paid to
shareholders.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Performance Data (continued)
Recent Performance Results
10-Year/
6-Month 12-Month Since Inception Standardized
As of March 31, 2004 Total Return Total Return Total Return 30-day Yield
Intermediate Portfolio Class A Shares* +2.92% +5.62% +91.60% 2.24%
Intermediate Portfolio Class B Shares* +2.71 +5.18 +82.45 1.85
Intermediate Portfolio Class C Shares* +2.80 +5.27 +84.30 1.85
Intermediate Portfolio Class I Shares* +2.98 +5.71 +92.03 2.34
Intermediate Portfolio Class R Shares* +2.83 +5.64 + 7.87 2.11
Lehman Brothers Aggregate Bond Index** +2.98 +5.40 +106.89/+108.48/+7.59 --
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the payable date. The
Fund's 10-year/since inception periods are 10 years for Class I &
Class B Shares, from 10/21/94 for Class A & Class C Shares and from
1/03/03 for Class R Shares.
**This unmanaged market-weighted Index is comprised of investment-
grade corporate bonds (rated BBB or better), mortgages and U.S.
Treasury and government agency issues with at least one year to
maturity. Ten-year/since inception total returns are for 10 years,
from 10/21/94 and from 1/03/03.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Performance Data (concluded)
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge**
Class A Shares*
One Year Ended 3/31/04 +5.62% +4.56%
Five Years Ended 3/31/04 +6.32 +6.11
Inception (10/21/94)
through 3/31/04 +7.13 +7.02
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
Return Return
Without CDSC With CDSC**
Class B Shares*
One Year Ended 3/31/04 +5.18% +4.18%
Five Years Ended 3/31/04 +5.88 +5.88
Ten Years Ended 3/31/04 +6.20 +6.20
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after three years.
**Assuming payment of applicable contingent deferred sales charge.
Return Return
Without CDSC With CDSC**
Class C Shares*
One Year Ended 3/31/04 +5.27% +4.27%
Five Years Ended 3/31/04 +5.90 +5.90
Inception (10/21/94)
through 3/31/04 +6.69 +6.69
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after one year.
**Assuming payment of applicable contingent deferred sales charge.
Return Without Return With
Sales Charge Sales Charge**
Class I Shares*
One Year Ended 3/31/04 +5.71% +4.66%
Five Years Ended 3/31/04 +6.43 +6.21
Ten Years Ended 3/31/04 +6.74 +6.64
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
Return Without
Sales Charge
Class R Shares
One Year Ended 3/31/04 +5.64%
Inception (1/03/03) through 3/31/04 +6.31
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Schedule of Investments
S&P Moody's Face Value
Ratings Ratings Amount Asset-Backed Securities++ (in U.S. dollars)
AAA Aaa $ 3,654,864 Ace Securities Corp., Series 2003-OP1, Class A2,
1.45% due 12/25/2033 (b) $ 3,666,481
AAA Aaa 2,090,699 Advanta Mortgage Loan Trust, Series 1999-3, Class A4,
7.75% due 10/25/2026 2,194,454
AAA Aaa 4,851,610 Aegis Asset Backed Securities Trust, Series 2004-1,
Class A, 1.44% due 4/25/2034 (b) 4,857,006
AAA Aaa 3,700,000 Banc of America Large Loan, Series 2003-BBA2, Class A3,
1.42% due 11/15/2015 (b) 3,704,625
AAA Aaa 4,000,000 CIT Equipment Collateral, Series 2003-VT1, Class A3A,
1.23% due 4/20/2007 (b) 4,006,546
AAA Aaa 4,750,000 CIT Group Home Equity Loan Trust, Series 2003-1, Class A2,
2.35% due 4/20/2027 4,767,628
California Infrastructure, Series 1997-1:
AAA Aaa 1,266,914 PG&E-1, Class A7, 6.42% due 9/25/2008 1,346,165
AAA Aaa 903,888 SCE-1, Class A6, 6.38% due 9/25/2008 961,741
A+ Aa3 1,257,605 Capital Auto Receivables Asset Trust, Series 2003-2,
Class B1, 1.37% due 1/15/2009 (b) 1,257,227
NR* NR* 4,500,000 Capital One Master Trust, Series 2000-4, Class C, 1.89%
due 8/15/2008 (a)(b) 4,521,797
AAA Aaa 4,060,152 Centex Home Equity, Series 2003-B, Class AV, 1.37% due
6/25/2033 (b) 4,065,534
Chase Credit Card Master Trust, Class C (b):
BBB Baa2 2,850,000 Series 2000-3, 1.794% due 1/15/2008 2,866,356
BBB Baa2 5,200,000 Series 2003-1, 2.19% due 4/15/2008 5,254,201
AAA NR* 4,200,000 CountryWide Asset-Backed Certificates, Series 2003-BC3,
Class A2, 1.40% due 9/25/2033 (b) 4,208,703
BBB Baa2 1,700,000 First Bankcard Master Credit Card Trust, Series 2001-1A,
Class C, 2.244% due 11/15/2006 (b) 1,701,610
AAA Aaa 2,759,073 First Franklin Mortgage Loan Trust, Series 2003-FF5,
Class A2, 2.82% due 3/25/2034 (b) 2,815,332
AAA NR* 3,596,779 GMAC Mortgage Corporation Loan Trust, Series 2003-J7,
Class A10, 5.50% due 11/25/2033 3,749,970
AAA Aaa 2,300,000 Household Automotive Trust, Series 2002-3, Class A3A,
2.75% due 6/18/2007 2,325,238
AAA Aaa 1,267,660 Household Home Equity Loan Trust, Series 2002-2, Class A,
1.39% due 4/20/2032 (b) 1,271,097
Long Beach Mortgage Loan Trust (b):
AAA Aaa 2,330,565 Series 2002-4, Class 2A, 1.55% due 11/26/2032 2,344,309
AAA Aaa 5,650,062 Series 2004-1, Class A3, 1.39% due 2/25/2034 5,659,142
AAA Aaa 2,908,828 MASTR Asset Securitization Trust, Series 2003-10, Class 3A1,
5.50% due 11/25/2033 2,961,405
NR* A2 1,515,955 MBNA Master Credit Card Trust, Series 1999-F, Class B,
1.51% due 1/16/2007 (b) 1,515,914
AAA Aaa 4,321,698 Morgan Stanley ABS Capital I, Series 2004-NC2, Class A2,
1.39% due 12/25/2033 (b) 4,325,751
Option One Mortgage Loan Trust (b):
AAA Aaa 1,480,863 Series 2002-4, Class A, 1.35% due 7/25/2032 1,482,359
AAA Aaa 4,630,412 Series 2003-4, Class A2, 1.41% due 7/25/2033 4,640,675
AAA Aaa 2,898,801 Residential Asset Mortgage Products, Inc., Series 2003-RS7,
Class AI1, 1.22% due 6/25/2018 (b) 2,899,410
Residential Asset Securities Corporation (b):
AAA Aaa 3,548,525 Series 2002-KS8, Class A2, 3.04% due 5/25/2023 3,564,909
AAA Aaa 5,238,189 Series 2003-KS5, Class AIIB, 1.38% due 7/25/2033 5,246,605
AAA Aaa 4,231,303 Saxon Asset Securities Trust, Series 2002-3, Class AV,
1.49% due 12/25/2032 (b) 4,242,550
NR* A2 3,025,000 Superior Wholesale Inventory Financing Trust, Series 2001,
Class A7, 1.563% due 6/15/2006 (b) 3,020,795
Total Asset-Backed Securities (Cost--$100,870,796)--21.0% 101,445,535
Government & Agency Obligations
Fannie Mae:
AAA Aaa 3,390,000 6.375% due 6/15/2009 3,906,294
AAA Aaa 2,360,000 6% due 5/15/2011 2,687,655
AAA Aaa 3,900,000 7.125% due 1/15/2030 4,900,455
AAA Aaa 4,430,000 Freddie Mac, 6.625% due 9/15/2009 5,163,351
U.S. Treasury Bonds & Notes:
AAA Aaa 10,380,000 7% due 7/15/2006 (g) 11,611,006
AAA Aaa 1,150,000 6.50% due 2/15/2010 1,363,379
AAA Aaa 1,870,000 7.50% due 11/15/2016 2,465,331
AAA Aaa 1,140,000 8.125% due 8/15/2019 (g) 1,599,251
AAA Aaa 3,980,000 7.25% due 8/15/2022 5,228,725
AAA Aaa 820,000 6.25% due 8/15/2023 974,999
AAA Aaa 820,000 6.625% due 2/15/2027 1,023,558
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Schedule of Investments (continued)
S&P Moody's Face Value
Ratings Ratings Amount Government & Agency Obligations (in U.S. dollars)
U.S. Treasury Inflation Indexed Notes:
AAA Aaa $ 2,565,292 3.875% due 1/15/2009 $ 2,980,049
AAA Aaa 2,238,488 3.50% due 1/15/2011 2,610,636
Total Government & Agency Obligations
(Cost--$44,318,489)--9.6% 46,514,689
Government Agency Mortgage-Backed Securities++
Fannie Mae:
AAA Aaa 3,596,837 2.01% due 11/25/2033 3,587,496
AAA Aaa 4,563,955 5% due 4/15/2019 4,690,888
AAA Aaa 586,011 6% due 5/01/2016 - 6/01/2016 617,584
AAA Aaa 11,380,340 6.50% due 11/01/2031 - 4/15/2034 11,955,623
AAA Aaa 4,187,002 7% due 2/01/2031 - 4/01/2032 4,443,390
AAA Aaa 5,206,688 7.50% due 11/01/2027 - 5/01/2033 5,580,302
AAA Aaa 150,785 8% due 9/01/2030 163,230
Freddie Mac:
AAA Aaa 2,578,759 4.50% due 4/01/2018 - 9/01/2018 2,619,730
AAA Aaa 5,521,600 5% due 4/15/2019 - 5/15/2019 5,670,334
AAA Aaa 8,650,000 5% due 4/15/2034 8,690,551
AAA Aaa 4,264,479 5.50% due 7/01/2016 - 4/15/2019 4,445,136
AAA Aaa 21,350,000 5.50% due 4/15/2034 21,877,089
AAA Aaa 6,202,200 6% due 5/01/2016 - 5/15/2019 6,533,294
AAA Aaa 31,060,000 6% due 4/15/2034 - 5/15/2034 32,263,894
AAA Aaa 1,707,011 6.50% due 5/01/2016 - 6/01/2016 1,815,393
AAA Aaa 4,000,000 6.50% due 5/15/2034 4,198,752
AAA Aaa 3,782,913 7% due 10/01/2031 - 5/15/2034 4,011,747
Government National Mortgage Association:
AAA Aaa 3,750,000 4.66% due 7/16/2033 3,850,877
AAA Aaa 3,600,000 5% due 4/15/2019 3,721,500
AAA Aaa 2,794,078 6.50% due 4/15/2032 2,950,152
Total Government Agency Mortgage-Backed Securities
(Cost--$132,933,851)--27.6% 133,686,962
Non-Government Agency Mortgage-Backed Securities++
Collateralized AAA Aaa 4,747,044 Countrywide Home Loans, Inc., Series 2003-R4, Class 1A1A,
Mortgage 2.216% due 7/25/2019 4,745,754
Obligations--3.2% AAA NR* 1,421,629 Deutsche Mortgage Securities, Inc., Series 2003-1,
Class 1A1, 4.50% due 4/25/2033 1,429,470
AAA Aaa 5,600,000 RMAC, Series 2003-NS2A, Class A2C, 1.51% due 9/12/2035 (b) 5,622,750
AAA Aaa 1,641,653 Structured Asset Securities Corporation, Series 2002-9,
Class A2, 1.39% due 10/25/2027 (b) 1,640,351
AAA Aaa 1,919,944 Washington Mutual Inc., Series 2002-AR4, Class A7, 5.502%
due 4/26/2032 (b) 1,943,133
--------------
15,381,458
Commercial Commercial Mortgage Pass-Through Certificates (b):
Mortgage-Backed AAA Aaa 3,250,000 Series 2003-FL8, Class A2, 1.30% due 7/15/2015 (a) 3,248,837
Securities--5.3% AAA Aaa 5,300,000 Series 2003-FL9, Class A3, 1.42% due 11/15/2015 5,300,000
NR* Aaa 5,147,956 Greenwich Capital Commercial Funding Corporation,
Series 2003-FL1, Class A, 1.41% due 1/05/2006 (b) 5,146,942
AAA Aaa 3,100,000 LB-UBS Commercial Mortgage Trust, Series 2002-C1,
Class A3, 6.226% due 3/15/2026 3,490,261
AAA Aaa 2,500,000 Nationslink Funding Corporation, Series 1999-2, Class A3,
7.181% due 6/20/2031 2,725,452
AAA Aaa 6,000,000 Wachovia Bank Commercial Mortgage Trust, Series 2003-WHL2,
Class A3, 1.42% due 6/15/2013 (b) 5,998,289
--------------
25,909,781
Total Non-Government Agency Mortgage-Backed Securities
(Cost--$40,679,897)--8.5% 41,291,239
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Schedule of Investments (continued)
S&P Moody's Face Value
Industry+++ Ratings Ratings Amount Corporate Bonds & Notes (in U.S. dollars)
Building BB+ Ba1 $ 1,100,000 D.R. Horton, Inc., 5% due 1/15/2009 $ 1,138,500
Products--0.4% BBB+ Baa1 600,000 Hanson PLC, 7.875% due 9/27/2010 727,135
--------------
1,865,635
Cable--U.S.--0.2% BB- Ba3 1,140,000 Echostar DBS Corporation, 5.75% due 10/01/2008 (a) 1,177,050
Canadian BB Ba2 150,000 Abitibi-Consolidated Inc., 8.55% due 8/01/2010 (3) 163,968
Corporates**-- BBB+ Baa2 485,000 Potash Corporation of Saskatchewan, Inc., 7.75%
0.2% due 5/31/2011 (3) 585,757
--------------
749,725
Chemicals--0.3% B+ B1 1,310,000 IMC Global Inc., 10.875% due 8/01/2013 1,640,775
Commercial BBB Baa3 505,000 Waste Management, Inc., 7.375% due 8/01/2010 595,000
Services
& Supplies--0.1%
Containers--0.2% Sealed Air Corporation:
BBB Baa3 415,000 5.375% due 4/15/2008 444,314
BBB Baa3 450,000 6.95% due 5/15/2009 (a) 518,407
--------------
962,721
Diversified-- A- Baa3 570,000 Brascan Corporation, 5.75% due 3/01/2010 616,472
0.1%
Finance--1.8% Household Finance Corporation:
A A1 680,000 6.50% due 11/15/2008 769,720
A A1 515,000 5.875% due 2/01/2009 570,726
A A1 1,120,000 6.75% due 5/15/2011 1,293,671
Sigma Finance Incorporated:
AAA Aaa 3,400,000 1.12% due 8/15/2011 3,400,000
AAA Aaa 1,700,000 2.38% due 3/31/2014 (b) 1,700,000
AA Aa3 310,000 Texaco Capital Inc., 8.625% due 6/30/2010 398,213
A- A3 770,000 Textron Financial Corporation, 2.75% due 6/01/2006 777,703
--------------
8,910,033
Finance-- A Aa3 450,000 Bank of America Corporation, 7.40% due 1/15/2011 540,148
Banks--1.8% A- A1 460,000 Bank One Corporation, 8% due 4/29/2027 591,990
BBB- Baa2 765,000 Capital One Bank, 4.875% due 5/15/2008 806,133
Citigroup Inc.:
A+ Aa2 1,600,000 7.25% due 10/01/2010 1,905,539
A+ Aa2 460,000 6.625% due 6/15/2032 517,188
BB+ Baa3 560,000 FirstBank Puerto Rico, 7.625% due 12/20/2005 600,423
FleetBoston Financial Corporation:
A+ Aa2 120,000 3.85% due 2/15/2008 124,051
A Aa3 285,000 6.375% due 5/15/2008 320,484
BB+ NR* 335,000 Hudson United Bancorp Inc., 8.20% due 9/15/2006 377,496
BBB+ A3 595,000 PNC Funding Corporation, 6.125% due 2/15/2009 666,207
BBB+ A3 405,000 Popular North America, Inc., 3.875% due 10/01/2008 413,362
A- A3 215,000 Saint George Bank Limited, 5.30% due 10/15/2015 (a) 223,463
A- A3 245,000 Synovus Financial Corp., 4.875% due 2/15/2013 251,503
A+ Aa3 325,000 U.S. Bancorp, 1.26% due 9/16/2005 (b) 325,390
BBB+ A3 800,000 Washington Mutual, Inc., 7.50% due 8/15/2006 896,326
AA- Aa1 370,000 Wells Fargo & Company, 5.125% due 2/15/2007 397,884
--------------
8,957,587
Finance-- A+ A1 785,000 American Honda Finance Corporation, 1.38% due
Other--6.4% 10/03/2005 (a)(b) 787,892
The Bear Stearns Companies Inc.:
A A1 980,000 1.42% due 1/30/2009 (b) 978,940
A A1 650,000 5.70% due 11/15/2014 700,332
BBB Baa2 770,000 Certegy Inc., 4.75% due 9/15/2008 808,967
A A3 1,025,000 Countrywide Home Loans, Inc., 5.625% due 7/15/2009 1,122,283
Deutsche Telekom International Finance BV:
BBB+ Baa2 735,000 8.50% due 6/15/2010 902,362
BBB+ Baa2 505,000 8.75% due 6/15/2030 662,071
BBB- A3 3,005,000 Ford Motor Credit Company, 7% due 10/01/2013 3,171,065
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Schedule of Investments (continued)
S&P Moody's Face Value
Industry+++ Ratings Ratings Amount Corporate Bonds & Notes (in U.S. dollars)
Finance--Other General Motors Acceptance Corporation:
(concluded) BBB A3 $ 2,500,000 2.41% due 10/20/2005 (b) $ 2,518,073
BBB A3 2,500,000 2.02% due 1/16/2007 (b) 2,480,030
BBB A3 1,354,000 8% due 11/01/2031 1,498,680
A+ A1 225,000 Golden West Financial Corporation, 4.75% due 10/01/2012 232,862
A+ Aa3 2,525,000 The Goldman Sachs Group, Inc., 6.875% due 1/15/2011 2,933,744
AA- A1 570,000 International Lease Finance Corporation, 2.95% due 5/23/2006 579,305
J.P. Morgan Chase & Co.:
A+ A1 1,425,000 3.50% due 3/15/2009 1,434,187
A+ A1 960,000 4.50% due 11/15/2010 990,250
A A1 1,190,000 Lehman Brothers Holdings, Inc., 3.50% due 8/07/2008 1,205,820
BBB Baa2 310,000 MBNA America Bank NA, 7.125% due 11/15/2012 365,602
MBNA Corporation:
BBB Baa2 945,000 6.25% due 1/17/2007 1,035,041
BBB Baa2 200,000 5.625% due 11/30/2007 217,023
BBB Baa2 455,000 4.625% due 9/15/2008 475,510
A A2 110,000 Mellon Funding Corporation, 6.40% due 5/14/2011 126,124
A+ Aa3 700,000 Morgan Stanley, 6.75% due 4/15/2011 808,578
AA Aa3 760,000 Principal Life Global Funding I, 6.25% due 2/15/2012 (a) 862,130
A A3 2,165,000 Prudential Holdings LLC, 8.695% due 12/18/2023 (a) 2,845,546
A- A2 70,000 Regions Financial Corporation, 6.375% due 5/15/2012 79,342
Verizon Global Funding Corporation:
A+ A2 860,000 7.25% due 12/01/2010 (a) 1,013,319
A+ A2 215,000 7.375% due 9/01/2012 256,539
--------------
31,091,617
Foreign NR* NR* 510,100,000 International Bank for Reconstruction & Development,
Obligations**-- 4.75% due 12/20/2004 (1) 5,064,006
1.0%
Gaming--0.3% BB+ Ba1 1,360,000 MGM Mirage Inc., 6% due 10/01/2009 1,428,000
Industrial-- BBB- Ba1 1,300,000 American Greetings Corporation, 6.10% due 8/01/2028 1,404,000
Consumer BBB Baa2 945,000 Cadbury Schweppes US Finance LLC, 3.875% due 10/01/2008 (a) 962,355
Goods--2.1% A A3 700,000 Coca-Cola HBC Finance BV, 5.125% due 9/17/2013 728,436
BBB+ Baa3 545,000 The Dial Corporation, 6.50% due 9/15/2008 613,415
AA Aa2 700,000 GlaxoSmithKline Capital Inc., 5.375% due 4/15/2034 692,265
BBB+ Baa1 1,020,000 Miller Brewing Company, 5.50% due 8/15/2013 (a) 1,084,340
B NR* 2,550,000 Valeant Pharmaceuticals International, 6.50% due 7/15/2008
(Convertible) 2,680,688
A Baa1 755,000 Wyeth, 5.50% due 2/01/2014 791,648
BB+ Baa3 880,000 Yum! Brands, Inc., 8.875% due 4/15/2011 1,098,900
--------------
10,056,047
Industrial-- Anadarko Finance Company:
Energy--1.4% BBB+ Baa1 285,000 6.75% due 5/01/2011 332,445
BBB+ Baa1 170,000 7.50% due 5/01/2031 205,745
BBB Baa2 880,000 Halliburton Company, 5.50% due 10/15/2010 (a) 932,041
A- A3 870,686 Kern River Funding Corporation, 4.893% due 4/30/2018 (a) 889,440
BBB+ Baa1 510,000 Kinder Morgan Energy Partners, L.P., 5.35% due 8/15/2007 552,673
BBB- Baa3 195,000 MidAmerican Energy Holdings Company, 5.875% due 10/01/2012 210,758
A+ A1 400,000 Motiva Enterprises LLC, 5.20% due 9/15/2012 (a) 421,382
BBB Baa3 660,000 Panhandle Eastern Pipe Line Company, LLC, 2.75% due
3/15/2007 (a) 659,405
BBB- Ba1 1,485,000 Plains All American Pipeline LP, 5.625% due 12/15/2013 (a) 1,546,256
BBB- Baa3 1,010,000 XTO Energy, Inc., 7.50% due 4/15/2012 1,201,002
--------------
6,951,147
Industrial-- A- A2 775,000 Alcoa Inc., 1.40% due 12/06/2004 (b) 776,330
Manufacturing-- B+ Ba2 2,050,000 Celestica Inc., 3.691% due 8/01/2020 (Convertible) (f) 1,112,125
3.4% BBB- Baa3 1,175,000 Cia Brasileira de Bebida, 8.75% due 9/15/2013 (a) 1,289,562
DaimlerChrysler NA Holding Corporation:
BBB A3 5,000,000 1.91% due 9/26/2005 (b) 5,032,165
BBB A3 555,000 4.75% due 1/15/2008 578,684
BBB A3 455,000 7.75% due 1/18/2011 531,445
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Schedule of Investments (continued)
S&P Moody's Face Value
Industry+++ Ratings Ratings Amount Corporate Bonds & Notes (in U.S. dollars)
Industrial-- BBB Baa1 $ 340,000 General Motors Corporation, 7.125% due 7/15/2013 $ 371,422
Manufacturing A- A3 540,000 Hutchison Whampoa International Ltd., 5.45% due 11/24/2010 557,977
(concluded) BB+ Ba1 550,000 Hyundai Motor Manufacturing Alabama, LLC, 5.30% due
12/19/2008 (a) 569,708
BB+ Baa3 615,000 Jabil Circuit, Inc., 5.875% due 7/15/2010 659,781
BB+ Ba1 935,000 Lear Corporation, 8.11% due 5/15/2009 1,105,638
Raytheon Company:
BBB- Baa3 1,130,000 8.30% due 3/01/2010 1,387,997
BBB- Baa3 760,000 6.55% due 3/15/2010 864,678
BBB- Ba2 1,360,000 Tyco International Group SA, 6.75% due 2/15/2011 1,514,470
--------------
16,351,982
Industrial-- BBB+ Baa1 2,238,000 AOL Time Warner Inc., 6.875% due 5/01/2012 2,560,303
Services--4.0% ARAMARK Services, Inc.:
BBB- Baa3 825,000 6.75% due 8/01/2004 837,969
BBB- Baa3 690,000 6.375% due 2/15/2008 756,397
Cendant Corporation:
BBB Baa1 675,000 6.875% due 8/15/2006 743,301
BBB Baa1 700,000 6.25% due 1/15/2008 775,573
HCA Inc.:
BBB- Ba1 345,000 6.95% due 5/01/2012 376,299
BBB- Ba1 940,000 6.30% due 10/01/2012 985,261
BBB- Ba1 300,000 5.75% due 3/15/2014 299,755
BBB- Baa3 540,000 InterActiveCorp, 7% due 1/15/2013 614,277
BBB Ba1 1,250,000 Lenfest Communications, Inc., 10.50% due 6/15/2006 1,443,966
BBB- Baa3 6,050,000 Liberty Media Corporation, 2.61% due 9/17/2006 (b) 6,121,777
Manor Care, Inc.:
BBB Ba1 850,000 7.50% due 6/15/2006 930,750
BBB Ba1 300,000 6.25% due 5/01/2013 320,625
News America Incorporated:
BBB- Baa3 230,000 6.55% due 3/15/2033 243,975
BBB- Baa3 435,000 6.75% due 1/09/2038 505,518
BBB+ Baa1 555,000 PHH Corporation, 6% due 3/01/2008 607,743
BBB Baa3 185,000 SUPERVALU Inc., 7.50% due 5/15/2012 217,508
BBB Baa3 735,000 Tele-Communications Inc., 9.80% due 2/01/2012 975,657
--------------
19,316,654
Industrial-- AAA Aaa 576,402 American Airlines, Inc., 3.857% due 7/09/2010 578,671
Transportation-- BBB+ Baa2 345,000 Burlington Northern Santa Fe Corporation, 7.95% due
1.3% 8/15/2030 445,644
Continental Airlines, Inc.:
AAA Aaa 475,000 6.563% due 2/15/2012 519,567
BBB Ba3 890,000 7.875% due 7/02/2018 886,387
A- Baa3 721,134 Delta Air Lines, Inc., 7.379% due 5/18/2010 715,982
BBB Baa1 1,215,000 Norfolk Southern Corporation, 7.25% due 2/15/2031 1,438,500
Southwest Airlines Co.:
A Baa1 110,000 8% due 3/01/2005 115,552
A Baa1 630,000 7.875% due 9/01/2007 726,835
Union Pacific Corporation:
BBB Baa2 400,000 7.25% due 11/01/2008 462,082
NR* Aa3 275,000 4.698% due 1/02/2024 271,040
--------------
6,160,260
Insurance--1.5% A- Baa2 930,000 Aon Corporation, 6.70% due 1/15/2007 1,029,625
BBB+ Baa2 705,000 Berkley (WR) Corporation, 5.125% due 9/30/2010 741,078
BBB Baa3 630,000 Infinity Property and Casualty Corporation, 5.50% due
2/18/2014 (a) 638,717
BBB- NR* 525,000 Kingsway America, Inc., 7.50% due 2/01/2014 (a) 531,684
AA- A2 280,000 Marsh & McLennan Companies, Inc., 3.625% due 2/15/2008 287,074
BBB+ Baa3 1,090,000 NLV Financial Corporation, 7.50% due 8/15/2033 (a) 1,173,701
BBB+ Baa3 815,000 RLI Corp., 5.95% due 1/15/2014 839,731
A- Baa1 1,570,000 Security Benefit Life Insurance Company, 7.45% due
10/01/2033 (a) 1,662,329
BBB+ A3 545,000 Travelers Property Casualty Corp., 6.375% due 3/15/2033 578,338
--------------
7,482,277
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Schedule of Investments (continued)
S&P Moody's Face Value
Industry+++ Ratings Ratings Amount Corporate Bonds & Notes (in U.S. dollars)
Oil Refineries-- A- Baa1 $ 390,000 EnCana Corporation, 4.75% due 10/15/2013 $ 396,907
0.5% BBB Baa3 1,665,000 Ultramar Diamond Shamrock Corporation, 6.75% due
10/15/2037 1,869,605
--------------
2,266,512
Paper--1.4% BB+ Ba2 1,855,000 Boise Cascade Corporation, 7.66% due 5/27/2005 1,928,517
BBB+ Baa2 1,040,000 Celulosa Arauco y Constitucion SA, 8.625% due 8/15/2010 1,269,077
BBB Baa2 1,740,000 Champion International Corporation, 6.65% due 12/15/2037 2,005,830
A- Baa2 545,000 Inversiones CMPC SA, 4.875% due 6/18/2013 (a) 540,777
BBB- Baa3 550,000 Rock-Tenn Company, 5.625% due 3/15/2013 570,914
BBB Baa2 485,000 Sappi Papier Holding AG, 6.75% due 6/15/2012 (a) 547,043
--------------
6,862,158
Paper & Forest BBB Baa2 1,705,000 Weyerhaeuser Company, 6.75% due 3/15/2012 1,926,053
Products--0.4%
Real Estate BBB Baa2 890,000 Camden Property Trust, 5.375% due 12/15/2013 921,682
Investment BBB Baa2 490,000 CarrAmerica Realty Corporation, 3.625% due 4/01/2009 486,116
Trust--1.9% BBB- Baa3 290,000 Colonial Realty LP, 4.80% due 4/01/2011 289,693
BBB Baa3 410,000 Developers Diversified Realty Corporation, 6.625% due
1/15/2008 456,443
BBB+ Baa1 1,260,000 Duke Realty Limited Partnership, 5.25% due 1/15/2010 1,361,339
BBB Baa2 750,000 HRPT Properties Trust, 5.75% due 2/15/2014 779,132
Health Care Property Investors, Inc.:
NR* NR* 195,000 7.48% due 4/05/2004 195,000
BBB+ Baa2 465,000 6.50% due 2/15/2006 496,227
BBB- Baa3 505,000 Health Care REIT, Inc., 6% due 11/15/2013 533,455
BB+ Ba1 1,530,000 iStar Financial Inc., 5.125% due 4/01/2011 (a) 1,514,700
BBB- Baa3 550,000 Nationwide Health Properties, Inc., 6.59% due 7/07/2038 549,185
BBB Baa3 555,000 United Dominion Realty Trust, Inc., 6.50% due 6/15/2009 624,070
A- Baa1 825,000 Washington Real Estate Investment Trust, 5.25% due
1/15/2014 854,237
--------------
9,061,279
Retail--Stores-- BBB+ Baa1 195,000 Limited Brands, Inc., 6.125% due 12/01/2012 216,463
0.0%
Supranational-- A A2 690,000 Corporacion Andina de Fomento, 6.875% due 3/15/2012 792,166
0.2%
Utilities-- BBB Baa2 365,000 AT&T Corporation, 8.05% due 11/15/2011 426,694
Communications-- BBB Baa2 427,000 AT&T Wireless Services Inc., 8.75% due 3/01/2031 553,820
1.7% BBB- Baa1 395,000 America Movil SA de CV, 5.50% due 3/01/2014 (a) 393,785
A+ A3 1,010,000 GTE Corporation, 6.84% due 4/15/2018 1,140,143
BBB Baa2 850,000 Harris Corporation, 6.35% due 2/01/2028 926,514
BBB+ Baa3 440,000 Intelsat, Ltd., 6.50% due 11/01/2013 473,743
B- Ba3 776,000 Qwest Corporation, 7.20% due 11/01/2004 795,400
BBB- Baa3 795,000 Sprint Capital Corporation, 6.90% due 5/01/2019 868,846
BBB Baa3 865,000 TELUS Corporation, 7.50% due 6/01/2007 983,917
A+ A2 1,300,000 Verizon New York Inc., 6.875% due 4/01/2012 1,479,184
--------------
8,042,046
Utilities-- NR* Baa2 840,000 AEP Texas Central Company, 6.65% due 2/15/2033 920,547
Electric BBB+ A3 420,000 Alabama Power Capital Trust V, 5.50% due 10/01/2042 (b) 454,359
& Gas--4.1% A A2 390,000 Australian Gas Light Company, 5.30% due 9/25/2015 (a) 408,481
BBB Baa1 785,000 Cincinnati Gas & Electric Company, 5.70% due 9/15/2012 846,604
Consumers Energy Company:
BBB- Baa3 370,000 4.25% due 4/15/2008 381,025
BBB- Baa3 450,000 4% due 5/15/2010 445,010
Dominion Resources, Inc.:
BBB+ Baa1 740,000 7.625% due 7/15/2005 794,012
BBB+ Baa1 615,000 1.394% due 5/15/2006 (b) 615,841
A- Baa1 1,090,000 Exelon Generation Company, LLC, 5.35% due 1/15/2014 (a) 1,123,472
A- A2 1,285,000 FPL Group Capital Inc., 1.41% due 3/30/2005 (b) 1,285,631
BBB Baa1 620,000 PSE&G Power LLC, 6.95% due 6/01/2012 714,050
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Schedule of Investments (continued)
S&P Moody's Face Value
Industry+++ Ratings Ratings Amount Corporate Bonds & Notes (in U.S. dollars)
Utilities-- Pacific Gas & Electric Company:
Electric BBB Baa2 $ 2,200,000 1.81% due 4/03/2006 (b) $ 2,200,957
& Gas BBB Baa2 325,000 4.20% due 3/01/2011 325,414
(concluded) BBB Baa2 2,340,000 6.05% due 3/01/2034 2,366,781
BBB Baa2 525,000 Pepco Holdings, Inc., 4% due 5/15/2010 520,015
BBB Baa2 705,000 Public Service Company of New Mexico, 4.40% due 9/15/2008 730,013
Southern California Edison Company:
NR* Baa2 170,000 1.42% due 1/13/2006 (b) 170,221
BB Baa2 950,000 8% due 2/15/2007 1,089,841
NR* Baa2 365,000 6% due 1/15/2034 374,886
BBB+ Baa1 740,000 Southern Power Company, 6.25% due 7/15/2012 818,966
BBB Baa2 640,000 TXU Australia Holdings Partnership LP, 6.15% due
11/15/2013 (a) 690,531
A- Baa1 850,000 Vectren Utility Holdings, Inc., 5.25% due 8/01/2013 882,690
BB- Ba2 1,265,000 Western Resources, Inc., 9.75% due 5/01/2007 1,462,656
--------------
19,622,003
Yankee Corporacion Nacional del Cobre de Chile (Codelco) (3)(a):
Corporates**-- A A2 850,000 6.375% due 11/30/2012 949,434
1.4% A A2 550,000 5.50% due 10/15/2013 579,499
France Telecom (4):
BBB+ Baa2 1,415,000 8.75% due 3/01/2011 1,728,149
BBB+ Baa2 300,000 9.75% due 3/01/2031 405,509
A- Baa1 620,000 Koninklijke (KPN) NV, 8% due 10/01/2010 (3) 755,160
Pemex Project Funding Master Trust (1):
BBB- Baa1 780,000 2.64% due 1/07/2005 (a)(b) 783,072
BBB- Baa1 835,000 9.125% due 10/13/2010 1,022,875
A A1 330,000 Santander Central Hispano Issuances Ltd., 7.625% due
9/14/2010 (1) 398,300
--------------
6,621,998
Yankee NR* NR* 2,249,000 Bundesobligation, 3.50% due 10/10/2008 (2) 2,827,120
Sovereigns**-- A Baa1 530,000 Republic of Chile, 5.50% due 1/15/2013 (2) 560,104
1.2% United Mexican States (2):
BBB- Baa2 1,330,000 9.875% due 2/01/2010 1,710,380
BBB- Baa2 495,000 6.375% due 1/16/2013 536,085
--------------
5,633,689
Total Corporate Bonds & Notes (Cost--$182,320,746)--39.3% 190,421,355
State Municipal Bonds
Texas--0.1% A A1 365,000 Harris County, Texas, Industrial Development Corporation,
Solid Waste Disposal Revenue Bonds (Deer Park Refining LP),
5.683% due 3/01/2023 (b) 378,432
Total Municipal Bonds (Cost--$365,000)--0.1% 378,432
Preferred Securities
Industry+++ Capital Trusts
Finance-- A- Aa3 1,865,000 BankAmerica Capital III, 1.69% due 1/15/2027 (b) 1,792,651
Banks--1.4% A- A2 1,235,000 Chase Capital II, 1.631% due 2/01/2027 (b) 1,171,033
A- A2 1,055,000 Chase Capital III, 1.67% due 3/01/2027 (b) 1,006,175
BBB+ A1 1,295,000 First Chicago NBD Capital I, 1.681% due 2/01/2027 (b) 1,237,571
A- Aa3 1,455,000 Nationsbank Capital Trust III, 1.67% due 1/15/2027 (b) 1,395,805
Total Capital Trusts (Cost--$6,536,180)--1.4% 6,603,235
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Schedule of Investments (continued)
Shares Value
Industry+++ Held Preferred Stocks (in U.S. dollars)
Finance-- 125 DG Funding Trust (a) $ 1,361,250
Other--0.3%
Total Preferred Stocks (Cost--$1,375,450)--0.3% 1,361,250
Face
Amount Trust Preferred
Aerospace $ 2,660,000 RC Trust I, 7% due 5/15/2006 (Convertible) 2,871,140
& Defense--0.6%
Total Trust Preferred (Cost--$2,837,014)--0.6% 2,871,140
Total Preferred Securities (Cost--$10,748,644)--2.3% 10,835,625
Short-Term Investments
Commercial Paper*** 20,000,000 Amsterdam Funding Corporation, 1.02% due 4/23/2004 19,987,533
4,900,000 Ford Motor Credit Company, 1.93% due 9/03/2004 (b) 4,863,250
9,700,000 Polonius Inc., 1.03% due 4/16/2004 9,695,837
--------------
34,546,620
U.S. Government Agency 11,000,000 Federal Home Loan Bank, 0.90% due 4/01/2004 11,000,000
Obligations***
Beneficial Interest/
Shares Held
$ 1,629,999 Merrill Lynch Liquidity Series, LLC Money Market
Series (d)(e) 1,629,999
14,670,001 Merrill Lynch Premier Institutional Fund (d)(e) 14,670,001
--------------
16,300,000
Total Short-Term Investments (Cost--$61,886,761)--12.8% 61,846,620
Number of
Contracts Options Purchased
Put Options 105 U.S Treasury Notes, expiring April 2004 at USD 114,
Purchased--0.0% Broker HSBC Securities 52,894
Total Options Purchased (Premiums Paid--$52,894)--0.0% 52,894
Total Investments (Cost--$574,177,078)--121.2% 586,473,351
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Schedule of Investments (continued)
Number of Value
Contracts Options Written (in U.S. dollars)
Call Options Written-- 5,800 Federal Home Loan Mortgage Corporation, expiring
0.0% May 2004 at USD 103.73, Broker JP Morgan Chase Bank $ (12,691)
Put Options Written-- 105 U.S Treasury Notes, expiring April 2004 at USD 112,
0.0% Broker HSBC Securities (17,653)
Total Options Written (Premiums Received--$31,247)--0.0% (30,344)
Total Investments, Net of Options Written (Cost--$574,145,831)--121.2% 586,443,007
Unrealized Depreciation on Forward Foreign Exchange Contracts (c)--0.0% (141,807)
Unrealized Appreciation on Swaps (i)--0.0% 39,615
Variation Margin on Financial Futures Contracts (h)--0.0% (86,877)
Liabilities in Excess of Other Assets--(21.2%) (102,270,380)
--------------
Net Assets--100.0% $ 483,983,558
==============
*Not Rated.
**Corresponding industry groups for foreign securities:
(1) Financial Institution.
(2) Government Entity.
(3) Industrial.
(4) Telecommunications.
***Commercial Paper and certain U.S. Government Agency Obligations
are traded on a discount basis; the interest rates shown reflect the
discount rates paid at the time of purchase by the Portfolio.
++Asset-Backed and Mortgage-Backed Obligations are subject to
principal paydowns as a result of the prepayments or refinancings of
the underlying mortgage instruments. As a result, the average life
may be substantially less than the original maturity.
+++For Portfolio compliance purposes, "Industry" means any one or
more of the industry sub-classifications used by one or more widely
recognized market indexes or ratings group indexes, and/or as
defined by Portfolio management. This definition may not apply for
purposes of this report, which may combine such industry sub-
classifications for reporting ease.
(a)The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
(b)Floating rate note.
(c)Forward foreign exchange contracts as of March 31, 2004 were as
follows:
Foreign Settlement Unrealized
Currency Sold Date Depreciation
YEN 533,964,081 April 2004 $ (141,807)
------------
Total Unrealized Depreciation on Forward
Foreign Exchange Contracts
(US$ Commitment--$4,995,323) $ (141,807)
============
(d)Investments in companies considered to be an affiliate of the
Portfolio (such companies are defined as "Affiliated Companies" in
Section 2(a)(3) of the Investment Company Act of 1940) are as
follows:
Net Dividend
Affiliate Activity Income
Merrill Lynch Liquidity Series, LLC
Money Market Series $ 1,629,999 $ 262
Merrill Lynch Premier Institutional Fund (8,592,499) $ 19,422
(e)Security was purchased with the cash proceeds from securities
loans.
(f)Represents a zero coupon bond; the interest rate shown reflects
the effective yield at the time of purchase by the Portfolio.
(g)All or a portion of security held as collateral in connection
with open financial futures contracts.
(h)Financial futures contracts sold as of March 31, 2004 were as
follows:
Number of Expiration Face Unrealized
Contracts Issue Date Value Loss
89 Ten-Year
U.S Treasury June
Note 2004 $10,210,305 $ (60,851)
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Schedule of Investments (continued)
(i)Swap contracts entered into as of March 31, 2004 were as follows:
Unrealized
Notional Appreciation
Amount (Depreciation)
Sold credit default protection on
Sprint Capital Corp. and receive
1.50%
Broker, Morgan Stanley
Capital Services Inc.
Expires September 2008 $ 1,625,000 $ 38,110
Sold credit default protection on
Comcast Cable Communications
and receive 1.15%
Broker, Morgan Stanley
Capital Services Inc.
Expires September 2008 $ 1,625,000 26,250
Bought credit default protection
on Tyson Foods Inc. and pay 1.36%
Broker, Morgan Stanley
Capital Services Inc.
Expires September 2008 $ 1,625,000 (12,740)
Bought credit default protection
on Weyerhaeuser Co. and pay .73%
Broker, Morgan Stanley
Capital Services Inc.
Expires September 2008 $ 1,625,000 (7,818)
Receive a variable rate based on
3-month USD LIBOR, plus .42%,
which is capped at a fixed coupon
of 8% and callable quarterly
beginning September 2004 and
pay floating rate based on
3-month USD LIBOR
Broker, JP Morgan Chase Bank
Expires March 2010 $10,400,000 (14,054)
Pay 3.50% on TIPS adjusted
principal and receive a fixed
rate 4.17%
Broker, Morgan Stanley
Capital Services, Inc.
Expires January 2011 $ 2,525,000 16,707
Pay 3.875% on TIPS adjusted
principal and receive a fixed
rate 3.401%
Broker, JP Morgan Chase Bank
Expires January 2009 $ 2,937,000 9,126
Unrealized
Notional Appreciation
Amount (Depreciation)
Receive a variable return equal
to CMBS Investment Grade Index
Total Return and pay floating rate
based on 1-month USD LIBOR,
minus .55%
Broker, Deutsche Bank AG, London
Expires June 2004 $ 5,900,000 $ --
Bought credit default protection
on AON Corp. and pay .37%
Broker, Morgan Stanley
Capital Services, Inc.
Expires January 2007 $ 1,025,000 (106)
Bought credit default protection
on AON Corp. and pay 2.8025%
on fixed rate swap
Broker, JP Morgan Chase Bank
Expires January 2007 $ 1,025,000 (14,404)
Bought credit default protection
on Boeing Capital Corp. and
pay .48%
Broker, JP Morgan Chase Bank
Expires March 2009 $ 550,000 (1,093)
Sold credit default protection
on Raytheon Company and
receive .73%
Broker, JP Morgan Chase Bank
Expires March 2009 $ 550,000 (363)
Receive a variable return equal
to U.S. Treasury Index Total Return
and pay floating rate based on
1-month USD LIBOR, minus .20%
Broker, Lehman Brothers
Special Finance
Expires March 2005 $19,200,000 --
Receive a variable return equal
to CMBS Investment Grade Index
Total Return and pay floating rate
based on 1-month USD LIBOR,
minus .60%
Broker, Morgan Stanley
Capital Services, Inc.
Expires September 2004 $17,300,000 --
Receive a variable rate equal to
MBS Fixed Rate Index Total Return
and pay floating rate based on
1-month USD LIBOR, minus .16%
Broker, UBS Warburg
Expires August 2004 $22,800,000 --
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Schedule of Investments (concluded)
Unrealized
Notional Appreciation
Amount (Depreciation)
Receive a variable rate equal to
MBS Fixed Rate Index Total Return
and pay floating rate based on
1-month USD LIBOR, minus .15%
Broker, Lehman Brothers
Special Finance
Expires September 2004 $ 4,200,000 $ --
Receive a variable return equal to
Lehman Brothers U.S. High Yield
Index Total Return and pay floating
rate based on 1-month USD LIBOR,
minus .40%
Broker, Lehman Brothers
Special Finance
Expires July 2004 $ 5,200,000 --
Receive a variable rate equal to
JP Morgan U.S. Mortgage Index
Total Return and pay floating rate
based on 1-month USD LIBOR,
minus .30%
Broker, JP Morgan Chase Bank
Expires April 2004 $ 5,500,000 --
Receive a variable return equal to
U.S. Treasury Index Total Return and
pay floating rate based on 1-month
USD LIBOR, minus .20%
Broker, Lehman Brothers
Special Finance
Expires December 2004 $25,400,000 --
---------
Total $ 39,615
=========
See Notes to Financial Statements.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Statement of Assets and Liabilities
As of March 31, 2004
Assets
Investments in unaffiliated securities, at value
(including securities loaned of $15,848,060)
(identified cost--$557,824,184) $ 570,120,457
Investments in affiliated securities, at value
(identified cost--$16,300,000) 16,300,000
Options purchased, at value (premiums paid--$52,894) 52,894
Unrealized appreciation on swaps 60,403
Cash 772,271
Foreign cash (cost--$114,653) 116,450
Receivables:
Securities sold $ 7,671,146
Interest 3,672,965
Swaps 798,932
Capital shares sold 636,195
Options written 17,653
Securities lending--net 3,541
Principal paydowns 1,000 12,801,432
---------------
Prepaid expenses and other assets 54,835
---------------
Total assets 600,278,742
---------------
Liabilities
Collateral on securities loaned, at value 16,300,000
Options written, at value (premiums received--$31,247) 30,344
Unrealized depreciation on swaps 20,788
Unrealized depreciation on forward foreign exchange contracts 141,807
Payables:
Securities purchased 97,269,018
Capital shares redeemed 1,706,428
Dividends to shareholders 283,102
Other affiliates 197,469
Variation margin 86,877
Distributor 78,558
Options purchased 52,894
Investment adviser 14,461 99,688,807
---------------
Accrued expenses and other liabilities 113,438
---------------
Total liabilities 116,295,184
---------------
Net Assets
Net assets $ 483,983,558
===============
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Statement of Assets and Liabilities (concluded)
As of March 31, 2004
Net Assets Consist of
Class A Shares of Common Stock, $.10 par value, 50,000,000 shares
authorized $ 1,326,058
Class B Shares of Common Stock, $.10 par value, 50,000,000 shares
authorized 1,022,965
Class C Shares of Common Stock, $.10 par value, 50,000,000 shares
authorized 213,073
Class I Shares of Common Stock, $.10 par value, 100,000,000 shares
authorized 1,404,649
Class R Shares of Common Stock, $.10 par value, 100,000,000 shares
authorized 18,708
Paid-in capital in excess of par 465,852,009
Accumulated distributions in excess of investment income--net $ (746,060)
Undistributed realized capital gains on investments and foreign currency
transactions--net 2,754,390
Unrealized appreciation on investments and foreign currency
transactions--net 12,137,766
---------------
Total accumulated earnings--net 14,146,096
---------------
Net Assets $ 483,983,558
===============
Net Asset Value
Class A--Based on net assets of $161,034,315 and 13,260,584 shares
outstanding $ 12.14
===============
Class B--Based on net assets of $124,232,905 and 10,229,650 shares
outstanding $ 12.14
===============
Class C--Based on net assets of $25,880,894 and 2,130,727 shares
outstanding $ 12.15
===============
Class I--Based on net assets of $170,564,549 and 14,046,491 shares
outstanding $ 12.14
===============
Class R--Based on net assets of $2,270,895 and 187,076 shares outstanding $ 12.14
===============
See Notes to Financial Statements.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Statement of Operations
For the Six Months Ended March 31, 2004
Investment Income
Interest $ 9,368,907
Securities lending--net 19,684
Dividends 10,754
---------------
Total income 9,399,345
---------------
Expenses
Investment advisory fees $ 935,126
Account maintenance and distribution fees--Class B 332,392
Transfer agent fees--Class I 240,462
Transfer agent fees--Class A 190,695
Transfer agent fees--Class B 170,933
Accounting services 92,638
Account maintenance fees--Class A 77,951
Account maintenance and distribution fees--Class C 67,586
Registration fees 41,097
Transfer agent fees--Class C 35,283
Custodian fees 26,009
Printing and shareholder reports 22,061
Pricing fees 17,942
Professional fees 16,496
Directors' fees and expenses 3,287
Account maintenance and distribution fees--Class R 1,169
Transfer agent fees--Class R 1,146
Other 18,459
---------------
Total expenses 2,290,732
---------------
Investment income--net 7,108,613
---------------
Realized & Unrealized Gain (Loss) on Investments & Foreign Currency Transactions--Net
Realized gain (loss) from:
Investments--net 6,875,815
Foreign currency transactions--net (137,536) 6,738,279
---------------
Change in unrealized appreciation/depreciation on:
Investments--net 627,842
Foreign currency transactions--net (138,174) 489,668
--------------- ---------------
Total realized and unrealized gain on investments and foreign currency
transactions--net 7,227,947
---------------
Net Increase in Net Assets Resulting from Operations $ 14,336,560
===============
See Notes to Financial Statements.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
March 31, September 30,
Increase (Decrease) in Net Assets: 2004 2003
Operations
Investment income--net $ 7,108,613 $ 17,827,277
Realized gain on investments and foreign currency transactions--net 6,738,279 15,168,083
Change in unrealized appreciation/depreciation on investments and
foreign currency transactions--net 489,668 (4,254,042)
--------------- ---------------
Net increase in net assets resulting from operations 14,336,560 28,741,318
--------------- ---------------
Dividends to Shareholders
Investment income--net:
Class A (2,822,445) (5,287,413)
Class B (2,144,932) (4,642,386)
Class C (436,050) (695,153)
Class I (3,713,139) (7,701,842)
Class R (15,038) (777)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (9,131,604) (18,327,571)
--------------- ---------------
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share
transactions (66,878,638) 45,541,811
--------------- ---------------
Net Assets
Total increase (decrease) in net assets (61,673,682) 55,955,558
Beginning of period 545,657,240 489,701,682
--------------- ---------------
End of period* $ 483,983,558 $ 545,657,240
=============== ===============
*Undistributed (accumulated distributions in excess of) investment
income--net $ (746,060) $ 1,276,931
=============== ===============
See Notes to Financial Statements.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Financial Highlights
Class A
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
March 31, For the Year Ended September 30,+++++
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001 2000
Per Share Operating Performance
Net asset value, beginning of period $ 12.01 $ 11.77 $ 11.47 $ 10.93 $ 11.11
---------- ---------- ---------- ---------- ----------
Investment income--net .17++ .41++ .51 .66 .70
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net .18 .25 .30 .54 (.18)
---------- ---------- ---------- ---------- ----------
Total from investment operations .35 .66 .81 1.20 .52
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.22) (.42) (.51) (.66) (.70)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 12.14 $ 12.01 $ 11.77 $ 11.47 $ 10.93
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share 2.92%+++ 5.69% 7.32% 11.24% 4.92%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses .80%* .77% .76% .94% .88%
========== ========== ========== ========== ==========
Investment income--net 2.85%* 3.42% 4.47% 5.88% 6.41%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 161,034 $ 157,128 $ 139,659 $ 130,116 $ 128,490
========== ========== ========== ========== ==========
Portfolio turnover 131.27% 299.97% 314.59% 259.80% 143.77%
========== ========== ========== ========== ==========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
+++Aggregate total investment return.
+++++Effective April 14, 2003, Class D Shares were redesignated
Class A Shares.
See Notes to Financial Statements.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Financial Highlights (continued)
Class B
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
March 31, For the Year Ended September 30,
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001 2000
Per Share Operating Performance
Net asset value, beginning of period $ 12.01 $ 11.78 $ 11.47 $ 10.93 $ 11.11
---------- ---------- ---------- ---------- ----------
Investment income--net .15++ .36++ .46 .61 .66
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net .17 .24 .31 .54 (.18)
---------- ---------- ---------- ---------- ----------
Total from investment operations .32 .60 .77 1.15 .48
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.19) (.37) (.46) (.61) (.66)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 12.14 $ 12.01 $ 11.78 $ 11.47 $ 10.93
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share 2.71%+++ 5.17% 6.97% 10.79% 4.49%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses 1.21%* 1.18% 1.17% 1.35% 1.30%
========== ========== ========== ========== ==========
Investment income--net 2.44%* 3.02% 4.06% 5.46% 5.98%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 124,233 $ 142,522 $ 141,993 $ 129,162 $ 120,250
========== ========== ========== ========== ==========
Portfolio turnover 131.27% 299.97% 314.59% 259.80% 143.77%
========== ========== ========== ========== ==========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Financial Highlights (continued)
Class C
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
March 31, For the Year Ended September 30,
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001 2000
Per Share Operating Performance
Net asset value, beginning of period $ 12.01 $ 11.78 $ 11.47 $ 10.93 $ 11.11
---------- ---------- ---------- ---------- ----------
Investment income--net .15++ .35++ .46 .61 .65
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net .18 .25 .31 .54 (.18)
---------- ---------- ---------- ---------- ----------
Total from investment operations .33 .60 .77 1.15 .47
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.19) (.37) (.46) (.61) (.65)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 12.15 $ 12.01 $ 11.78 $ 11.47 $ 10.93
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share 2.80%+++ 5.16% 6.97% 10.78% 4.48%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses 1.21%* 1.19% 1.16% 1.36% 1.30%
========== ========== ========== ========== ==========
Investment income--net 2.43%* 2.95% 4.02% 5.41% 5.97%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 25,881 $ 27,605 $ 12,535 $ 4,600 $ 2,859
========== ========== ========== ========== ==========
Portfolio turnover 131.27% 299.97% 314.59% 259.80% 143.77%
========== ========== ========== ========== ==========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
+++Aggregate total investment return.
See Notes to Financial Statements.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Financial Highlights (continued)
Class I
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
March 31, For the Year Ended September 30,+++++
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001 2000
Per Share Operating Performance
Net asset value, beginning of period $ 12.01 $ 11.77 $ 11.47 $ 10.93 $ 11.11
---------- ---------- ---------- ---------- ----------
Investment income--net .18++ .42++ .52 .67 .71
Realized and unrealized gain (loss)
on investments and foreign currency
transactions--net .17 .25 .30 .54 (.18)
---------- ---------- ---------- ---------- ----------
Total from investment operations .35 .67 .82 1.21 .53
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.22) (.43) (.52) (.67) (.71)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 12.14 $ 12.01 $ 11.77 $ 11.47 $ 10.93
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share 2.98%+++ 5.78% 7.43% 11.35% 5.02%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses .70%* .67% .66% .84% .78%
========== ========== ========== ========== ==========
Investment income--net 2.95%* 3.52% 4.57% 5.94% 6.51%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 170,565 $ 218,281 $ 195,515 $ 176,589 $ 144,352
========== ========== ========== ========== ==========
Portfolio turnover 131.27% 299.97% 314.59% 259.80% 143.77%
========== ========== ========== ========== ==========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
+++Aggregate total investment return.
+++++Effective April 14, 2003, Class A Shares were redesignated
Class I Shares.
See Notes to Financial Statements.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Financial Highlights (concluded)
Class R
The following per share data and ratios have been derived For the Six For the Period
from information provided in the financial statements. Months Ended January 3, 2003++
March 31, to September 30,
Increase (Decrease) in Net Asset Value: 2004 2003
Per Share Operating Performance
Net asset value, beginning of period $ 12.01 $ 11.75
------------ ------------
Investment income--net*** .17 .20
Realized and unrealized gain on investments and foreign currency
transactions--net .19 .37
------------ ------------
Total from investment operations .36 .57
------------ ------------
Less dividends from investment income--net (.23) (.31)
------------ ------------
Net asset value, end of period $ 12.14 $ 12.01
============ ============
Total Investment Return**
Based on net asset value per share 2.83%+++ 4.90%+++
============ ============
Ratios to Average Net Assets
Expenses 1.20%* 1.23%*
============ ============
Investment income--net 2.45%* 2.46%*
============ ============
Supplemental Data
Net assets, end of period (in thousands) $ 2,271 $ 121
============ ============
Portfolio turnover 131.27% 299.97%
============ ============
*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.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Notes to Financial Statements
1. Significant Accounting Policies:
Intermediate Term Portfolio (the "Portfolio") is one of three
portfolios in Merrill Lynch Bond Fund, Inc. (the "Fund"), which is
registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company. The
Portfolio's financial statements are prepared in conformity with
accounting principles generally accepted in the United States of
America, which may require the use of management accruals and
estimates. These unaudited financial statements reflect all
adjustments, which are, in the opinion of management, necessary to a
fair statement of the results for the interim period presented. All
such adjustments are of a normal, recurring nature. The Portfolio
offers multiple classes of shares. Shares of Class A and Class I are
sold with a front-end sales charge. Shares of Class B and Class C
may be subject to a contingent deferred sales charge. Class R Shares
are sold only to certain retirement plans. All classes of shares
have identical voting, dividend, liquidation and other rights and
the same terms and conditions, except that Class A, Class B, Class C
and Class R Shares bear certain expenses related to the account
maintenance of such shares, and Class B, Class C and Class R Shares
also bear certain expenses related to the distribution of such
shares. Each class has exclusive voting rights with respect to
matters relating to its account maintenance and distribution
expenditures. Income, expenses (other than expenses attributable to
a specific class) and realized and unrealized gains and losses on
investments are allocated daily to each class based on its relative
net assets. The following is a summary of significant accounting
policies followed by the Portfolio.
(a) Valuation of investments--Equity securities that are held by the
Portfolio that are traded on stock exchanges or the Nasdaq National
Market are valued at the last sale price or official close price on
the exchange, as of the close of business on the day the securities
are being valued or, lacking any sales, at the last available bid
price for long positions, and at the last available ask price for
short positions. In cases where equity securities are traded on more
than one exchange, the securities are valued on the exchange
designated as the primary market by or under the authority of the
Board of Directors of the Fund. Long positions traded in the over-
the-counter ("OTC") market, Nasdaq Small Cap or Bulletin Board are
valued at the last available bid price or yield equivalent obtained
from one or more dealers or pricing services approved by the Board
of Directors of the Fund. Short positions traded in the OTC market
are valued at the last available ask price. Portfolio securities
that are traded both in the OTC market and on a stock exchange are
valued according to the broadest and most representative market.
Options written are valued at the last sale price in the case of
exchange-traded options or, in the case of options traded in the OTC
market, the last ask price. Options purchased are valued at their
last sale price in the case of exchange-traded options or, in the
case of options traded in the OTC market, the last bid price. Swap
agreements are valued daily based upon quotations from market
makers. Financial futures contracts and options thereon, which are
traded on exchanges, are valued at their last sale price as of the
close of such exchanges. Obligations with remaining maturities of 60
days or less are valued at amortized cost unless the Investment
Adviser believes that this method no longer produces fair
valuations.
Repurchase agreements are valued at cost plus accrued interest. The
Portfolio employs pricing services to provide certain securities
prices for the Portfolio. Securities and assets for which market
quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of
Directors of the Fund, including valuations furnished by the pricing
services retained by the Portfolio, which may use a matrix system
for valuations. The procedures of a pricing service and its
valuations are reviewed by the officers of the Fund under the
general supervision of the Fund's Board of Directors. Such
valuations and procedures will be reviewed periodically by the Board
of Directors of the Fund.
Generally, trading in foreign securities, as well as U.S. government
securities and money market instruments, is substantially completed
each day at various times prior to the close of business on the New
York Stock Exchange ("NYSE"). The values of such securities used in
computing the net asset value of the Fund's shares are determined as
of such times. Foreign currency exchange rates also are generally
determined prior to the close of business on the NYSE. Occasionally,
events affecting the values of such securities and such exchange
rates may occur between the times at which they are determined and
the close of business on the NYSE that may not be reflected in the
computation of the Portfolio's net asset value. If events (for
example, a company announcement, market volatility or a natural
disaster) occur during such periods that are expected to materially
affect the value of such securities, those securities may be valued
at their fair value as determined in good faith by the Fund's Board
of Directors or by the Investment Adviser using a pricing service
and/or procedures approved by the Fund's Board of Directors.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Notes to Financial Statements (continued)
(b) Derivative financial instruments--The Portfolio may engage in
various portfolio investment strategies both to increase the return
of the Portfolio and to hedge, or protect, its exposure to interest
rate movements and movements in the securities markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The Portfolio may purchase or sell
financial futures contracts and options on such futures contracts.
Futures contracts are contracts for delayed delivery of securities
at a specific future date and at a specific price or yield. Upon
entering into a contract, the Portfolio deposits and maintains as
collateral such initial margin as required by the exchange on which
the transaction is effected. Pursuant to the contract, the Portfolio
agrees to receive from or pay to the broker an amount of cash equal
to the daily fluctuation in value of the contract. Such receipts or
payments are known as variation margin and are recorded by the
Portfolio as unrealized gains or losses. When the contract is
closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was
opened and the value at the time it was closed.
* Options--The Portfolio may purchase and write call and put
options. When the Portfolio writes an option, an amount equal to the
premium received by the Portfolio is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently
marked to market to reflect the current market value of the option
written.
When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Portfolio enters into a closing transaction), the
Portfolio realizes a gain or loss on the option to the extent of the
premiums received or paid (or loss or gain to the extent the cost of
the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
* Forward foreign exchange contracts--The Portfolio may enter into
forward foreign exchange contracts as a hedge against either
specific transactions or portfolio positions. The contract is marked
to market daily and the change in market value is recorded by the
Portfolio as an unrealized gain or loss. When the contract is
closed, the Portfolio records a realized gain or loss equal to the
difference between the value at the time it was opended and the
value at the time it was closed.
* Swaps--The Portfolio may enter into swap agreements, which are
over-the-counter contracts in which the Portfolio and a counterparty
agree to make periodic 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 predetermined 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 generated by a security.
(c) Income taxes--It is the Portfolio's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Realized gains and losses on security
transactions are determined on the identified cost basis. Dividend
income is recorded on the ex-dividend dates. Interest income is
recognized on the accrual basis. The Portfolio amortizes all
premiums and discounts on debt securities.
(e) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Notes to Financial Statements (continued)
(f) Dividends and distributions--Dividends from net investment
income are declared daily and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates.
(g) Securities lending--The Portfolio may lend securities to
financial institutions that provide cash or securities issued or
guaranteed by the U.S. government as collateral, which will be
maintained at all times in an amount equal to at least 100% of the
current market value of the loaned ecurities. The market value of
the loaned securities is determined at the close of business of the
Portfolio and any additional required collateral is delivered to the
Portfolio on the next business day. Where the Portfolio receives
securities as collateral for the loaned securities, it collects a
fee from the borrower. The Portfolio typically receives the income
on the loaned securities but does not receive the income on the
collateral. Where the Portfolio receives cash collateral, it may
invest such collateral and retain the amount earned on such
investment, net of any amount rebated to the borrower. Loans of
securities are terminable at any time and the borrower, after
notice, is required to return borrowed securities within five
business days. The Portfolio may pay reasonable finder's, lending
agent, administrative and custodial fees in connection with its
loans. In the event that the borrower defaults on its obligation to
return borrowed securities because of insolvency or for any other
reason, the Portfolio could experience delays and costs in gaining
access to the collateral. The Portfolio also could suffer a loss
where the value of the collateral falls below the market value of
the borrowed securities, in the event of borrower default or in the
event of losses on investments made with cash collateral.
(h) Expenses--Certain expenses have been allocated to the individual
portfolios in the Fund on a pro rata basis based upon the respective
aggregate net asset value of each portfolio included in the Fund.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect, wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with FAM Distributors, Inc. ("FAMD"
or the "Distributor"), which is a wholly-owned subsidiary of Merrill
Lynch Group, Inc. FAM has entered into a Sub-Advisory Agreement with
Merrill Lynch Asset Management U.K. Limited ("MLAM U.K."), an
affiliate of FAM, pursuant to which MLAM U.K. provides investment
advisory services to FAM with respect to the Fund. There is no
increase in the aggregate fees paid by the Fund for these services.
FAM is responsible for the management of the Fund's Portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee with respect to the Portfolio
based upon the aggregate average daily value of the Fund's net
assets at the following annual rates: .50% of the Fund's average
daily net assets not exceeding $250 million; .45% of average daily
net assets in excess of $250 million but not exceeding $500 million;
..40% of average daily net assets in excess of $500 million but not
exceeding $750 million; and .35% of average daily net assets in
excess of $750 million. For the six months ended March 31, 2004, the
aggregate average daily net assets of the Fund, including the Fund's
Core Bond Portfolio and High Income Portfolio, was approximately
$5,381,556,000.
Pursuant to the Distribution Plans adopted by the Fund in accordance
with Rule 12b-1 under the Investment Company Act of 1940, the Fund
pays the Distributor ongoing account maintenance and distribution
fees. The fees are accrued daily and paid monthly at annual rates
based upon the average daily net assets of the shares of the
Portfolio as follows:
Account
Maintenance Distribution
Fee Fee
Class A .10% --
Class B .25% .25%
Class C .25% .25%
Class R .25% .25%
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Notes to Financial Statements (continued)
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("MLPF&S"), a subsidiary of
ML & Co., also provides account maintenance and distribution
services to the Fund. The ongoing account maintenance fee
compensates the Distributor and MLPF&S for providing account
maintenance services to Class A, Class B, Class C and Class R
shareholders. The ongoing distribution fee compensates the
Distributor and MLPF&S for providing shareholder and distribution-
related services to Class B, Class C and Class R shareholders.
For the six months ended March 31, 2004, FAMD earned underwriting
discounts and direct commissions and MLPF&S earned dealer
concessions on sales of the Portfolio's Class A and Class I Shares
as follows:
FAMD MLPF&S
Class A $341 $ 3,477
Class I $ 9 $ 159
For the six months ended March 31, 2004, MLPF&S received contingent
deferred sales charges of $31,157 and $8,180 relating to
transactions in Class B and Class C Shares, respectively.
The Portfolio has received an exemptive order from the Securities
and Exchange Commission permitting it to lend portfolio securities
to MLPF&S or its affiliates. Pursuant to that order, the Portfolio
also has retained Merrill Lynch Investment Managers, LLC ("MLIM,
LLC"), an affiliate of FAM, as the securities lending agent for a
fee based on a share of the returns on investment of cash
collateral. MLIM, LLC may, on behalf of the Portfolio, invest cash
collateral received by the Portfolio for such loans, among other
things, in a private investment company managed by MLIM, LLC or in
registered money market funds advised by FAM or its affiliates. For
the six months ended March 31, 2004, MLIM, LLC received $8,295 in
securities lending agent fees.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
For the six months ended March 31, 2004, the Portfolio reimbursed
FAM $5,432 for certain accounting services.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, MLAM U.K., FAMD, FDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended March 31, 2004 were $716,174,614 and
$744,217,333, respectively.
Net realized gains (losses) for the six months ended March 31, 2004
and net unrealized gains (losses) as of March 31, 2004 were as
follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $ 6,082,226 $ 12,336,414
Short-term investments (146) (40,141)
Options purchased (6,273) --
Options written 57,803 903
Swaps 3,030,211 39,615
Financial futures contracts (2,288,006) (60,851)
Foreign currency transactions (8,179) 3,633
Forward foreign exchange
contracts (129,357) (141,807)
-------------- ---------------
Total $ 6,738,279 $ 12,137,766
============== ===============
As of March 31, 2004, net unrealized appreciation for Federal income
tax purposes aggregated $12,145,286, of which $12,460,958 related to
appreciated securities and $315,672 related to depreciated
securities. The aggregate cost of investments, including options, at
March 31, 2004 for Federal income tax purposes was $574,297,721.
Transactions in options written for the six months ended March 31,
2004 were as follows:
Number of Premiums
Contracts Received
Outstanding call options written,
beginning of period 96 $ 11,568
Options written 5,990 239,221
Options closed (9) (179,244)
Options expired (277) (57,951)
------------- ---------------
Outstanding call options written,
end of period 5,800 $ 13,594
============= ===============
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Notes to Financial Statements (continued)
Number of Premiums
Contracts Received
Outstanding put options written,
beginning of period 96 $ 69,168
Options written 212 54,033
Options closed (96) (69,168)
Options expired (107) (36,380)
------------- ---------------
Outstanding put options written,
end of period 105 $ 17,653
============= ===============
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share
transactions was $(66,878,638) and $45,541,811 for the six months
ended March 31, 2004 and the year ended September 30, 2003,
respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the
Six Months Ended Dollar
March 31, 2004 Shares Amount
Shares sold 2,302,322 $ 27,616,724
Automatic conversion of shares 690,627 8,275,365
Shares issued to shareholders
in reinvestment of dividends 69,463 833,363
------------- ---------------
Total issued 3,062,412 36,725,452
Shares redeemed (2,885,870) (34,567,547)
------------- ---------------
Net increase 176,542 $ 2,157,905
============= ===============
Class A Shares for the Year Dollar
Ended September 30, 2003 Shares Amount
Shares sold 6,896,182 $ 81,711,781
Automatic conversion of shares 838,209 10,000,519
Shares issued to shareholders
in reinvestment of dividends 122,274 1,448,691
------------- ---------------
Total issued 7,856,665 93,160,991
Shares redeemed (6,633,671) (78,603,345)
------------- ---------------
Net increase 1,222,994 $ 14,557,646
============= ===============
Class B Shares for the
Six Months Ended Dollar
March 31, 2004 Shares Amount
Shares sold 1,710,834 $ 20,514,414
Shares issued to shareholders
in reinvestment of dividends 142,627 1,710,703
------------- ---------------
Total issued 1,853,461 22,225,117
Automatic conversion of shares (690,548) (8,275,365)
Shares redeemed (2,800,458) (33,574,401)
------------- ---------------
Net decrease (1,637,545) $ (19,624,649)
============= ===============
Class B Shares for the Year Dollar
Ended September 30, 2003 Shares Amount
Shares sold 5,617,902 $ 66,571,670
Shares issued to shareholders
in reinvestment of dividends 301,421 3,573,147
------------- ---------------
Total issued 5,919,323 70,144,817
Automatic conversion of shares (838,117) (10,000,519)
Shares redeemed (5,272,744) (62,541,037)
------------- ---------------
Net decrease (191,538) $ (2,396,739)
============= ===============
Class C Shares for the
Six Months Ended Dollar
March 31, 2004 Shares Amount
Shares sold 397,266 $ 4,769,316
Shares issued to shareholders
in reinvestment of dividends 24,895 298,642
------------- ---------------
Total issued 422,161 5,067,958
Shares redeemed (589,679) (7,083,439)
------------- ---------------
Net decrease (167,518) $ (2,015,481)
============= ===============
Class C Shares for the Year Dollar
Ended September 30, 2003 Shares Amount
Shares sold 1,903,339 $ 22,546,145
Shares issued to shareholders
in reinvestment of dividends 38,767 460,550
------------- ---------------
Total issued 1,942,106 23,006,695
Shares redeemed (708,282) (8,412,561)
------------- ---------------
Net increase 1,233,824 $ 14,594,134
============= ===============
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Notes to Financial Statements (concluded)
Class I Shares for the
Six Months Ended Dollar
March 31, 2004 Shares Amount
Shares sold 1,885,540 $ 22,598,243
Shares issued to shareholders
in reinvestment of dividends 55,459 665,010
------------- ---------------
Total issued 1,940,999 23,263,253
Shares redeemed (6,071,384) (72,779,938)
------------- ---------------
Net decrease (4,130,385) $ (49,516,685)
============= ===============
Class I Shares for the Year Dollar
Ended September 30, 2003 Shares Amount
Shares sold 7,120,178 $ 84,424,244
Shares issued to shareholders
in reinvestment of dividends 116,959 1,385,531
------------- ---------------
Total issued 7,237,137 85,809,775
Shares redeemed (5,665,608) (67,144,341)
------------- ---------------
Net increase 1,571,529 $ 18,665,434
============= ===============
Class R Shares for the
Six Months Ended Dollar
March 31, 2004 Shares Amount
Shares sold 191,388 $ 2,293,768
Shares issued to shareholders
in reinvestment of dividends 1,142 13,747
------------- ---------------
Total issued 192,530 2,307,515
Shares redeemed (15,527) (187,243)
------------- ---------------
Net increase 177,003 $ 2,120,272
============= ===============
Class R Shares for the
Period January 3, 2003++ Dollar
to September 30, 2003 Shares Amount
Shares sold 10,428 $ 125,506
Shares issued to shareholders
in reinvestment of dividends 60 708
------------- ---------------
Total issued 10,488 126,214
Shares redeemed (415) (4,878)
------------- ---------------
Net increase 10,073 $ 121,336
============= ===============
++Commencement of operations.
5. Short-Term Borrowings:
The Portfolio, along with certain other funds managed by FAM and its
affiliates, is a party to a $500,000,000 credit agreement with Bank
One, N.A. and certain other lenders. The Portfolio may borrow under
the credit agreement to fund shareholder redemptions and for other
lawful purposes other than for leverage. The Portfolio may borrow up
to the maximum amount allowable under the Portfolio's current
prospectus and statement of additional information, subject to
various other legal, regulatory or contractual limits. The Portfolio
pays a commitment fee of .09% per annum based on the Portfolio's pro
rata share of the unused portion of the credit agreement. Amounts
borrowed under the credit agreement bear interest at a rate equal
to, at each fund's election, the Federal Funds rate plus .50% or a
base rate as determined by Bank One, N.A. On November 28, 2003, the
credit agreement was renewed for one year under the same terms. The
Portfolio did not borrow under the credit agreement during the six
months ended March 31, 2004.
6. Capital Loss Carryforward:
On September 30, 2003, the Portfolio had a net capital loss
carryforward of $4,855,241, all of which expires in 2009. This
amount will be available to offset like amounts of any future
taxable gains.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Electronic Delivery
The Fund offers electronic delivery of communications to its
shareholders. In order to receive this service, you must
register your account and provide us with e-mail information.
To sign up for this service, simply access this website
http://www.icsdelivery.com/live and follow the instructions.
When you visit this site, you will obtain a personal identification
number (PIN). You will need this PIN should you wish to update your
e-mail address, choose to discontinue this service and/or make any
other changes to the service. This service is not available for
certain retirement accounts at this time.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
MARCH 31, 2004
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this
semi-annual report
Item 4 - Principal Accountant Fees and Services - Not Applicable to
this semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for
Closed-End Management Investment Companies - Not Applicable
Item 8 - Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers - Not Applicable
Item 9 - Submission of Matters to a Vote of Security Holders - Not
Applicable
Item 10 - Controls and Procedures
10(a) - The registrant's certifying officers have reasonably
designed such disclosure controls and procedures to ensure material
information relating to the registrant is made known to us by others
particularly during the period in which this report is being
prepared. The registrant's certifying officers have determined that
the registrant's disclosure controls and procedures are effective
based on our evaluation of these controls and procedures as of a
date within 90 days prior to the filing date of this report.
10(b) - There were no changes in the registrant's internal control
over financial reporting (as defined in Rule 30a-3(d) under the Act
(17 CFR 270.30a-3(d)) that occurred during the last fiscal half-year
of the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
Item 11 - Exhibits attached hereto
11(a)(1) - Code of Ethics - Not Applicable to this semi-annual
report
11(a)(2) - Certifications - Attached hereto
11(a)(3) - Not Applicable
11(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.
Intermediate Term Portfolio of Merrill Lynch Bond Fund, Inc.
By: _/s/ Terry K. Glenn_______
Terry K. Glenn,
President of
Intermediate Term Portfolio of Merrill Lynch Bond Fund, Inc.
Date: May 21, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By: _/s/ Terry K. Glenn________
Terry K. Glenn,
President of
Intermediate Term Portfolio of Merrill Lynch Bond Fund, Inc.
Date: May 21, 2004
By: _/s/ Donald C. Burke________
Donald C. Burke,
Chief Financial Officer of
Intermediate Term Portfolio of Merrill Lynch Bond Fund, Inc.
Date: May 21, 2004