UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-2688
Name of Fund: Merrill Lynch Municipal Bond Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Terry K. Glenn, President,
Merrill Lynch Municipal Bond Fund, Inc., 800 Scudders Mill Road,
Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011,
Princeton, NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 06/30/04
Date of reporting period: 07/01/03 - 06/30/04
Item 1 - Report to Stockholders
(BULL LOGO)
Merrill Lynch Investment Managers
www.mlim.ml.com
Merrill Lynch
Municipal Bond Fund, Inc.
Annual Report
June 30, 2004
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered
a representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change.
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities is
available (1) without charge, upon request, by calling toll-free
1-800-MER-FUND (1-800-637-3863); (2) at www.mutualfunds.ml.com;
and (3) on the Securities and Exchange Commission's Web site at
http://www.sec.gov. Information about how the Fund voted proxies
relating to securities held in the Fund's portfolio during the
most recent 12-month period ended June 30 is available (1) at
www.mutualfunds.ml.com and (2) on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
Merrill Lynch Municipal Bond Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
A Letter From the President
Dear Shareholder
As we ended the current period, all eyes were on the Federal Reserve
Board (the Fed). In a much-anticipated move, the Fed raised the
Federal Funds rate on June 30 for the first time in four years,
bringing the target rate to 1.25%, up from a 45-year low of 1%. The
25 basis point (.25%) increase was the first, but is not expected to
be the last, this year as the Fed moves to "normalize" interest
rates in the face of increasing inflation. The Fed has reiterated
its intention to take a "measured" approach to interest rate
increases in an effort to avoid upsetting the economy or the
financial markets. Still, in its very deliberate wording, the Fed
has stated that it may move more aggressively if inflation and
economic growth indicate the need.
In any case, interest rates are likely to remain low by historical
standards for some time, particularly if the Fed does maintain its
commitment to a gradual tightening. To provide some perspective, the
Federal Funds rate was at 6.5% before the current easing cycle began
in 2001 and had reached double-digits in the late 1970s and early
1980s.
The transition to higher interest rates can cause concern among
equity and fixed income investors alike. For bond investors, rising
interest rates means the value of older bonds declines because they
carry the former lower interest rates. However, because municipal
bonds offer the advantage of tax-exempt income, they continue to be
an attractive alternative for many fixed income investors. For the
12-month period ended June 30, 2004, municipal bonds outperformed
their taxable counterparts with a return of +.76% for the Lehman
Brothers Municipal Bond Index compared to +.32% for the Lehman
Brothers Aggregate Bond Index.
June month-end also brought the transfer of power in Iraq. Like
the Fed tightening, this was a pivotal event. However, the outcome
and the market repercussions are less easy to predict. We do know
that markets will always fluctuate and that there are many
uncertainties - including the possibility of geopolitical events -
that can translate into negative market movements. Still, the U.S.
economy is much stronger today than it was just one year ago. With
this in mind, 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. Importantly, you
should consult with your financial advisor, who can help you assess
the market and economic environment and then develop a strategy most
suitable for your circumstances and financial goals.
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
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
We are pleased to present to you the management teams of
Merrill Lynch Municipal Bond Fund, Inc.
Limited Maturity Portfolio
Senior Portfolio Manager Peter Hayes joined Merrill Lynch Investment
Managers in 1987 and heads the Merrill Lynch Municipal Bond Fund,
Inc. - Limited Maturity Portfolio team. He received a bachelor's
degree from the College of the Holy Cross. In addition to Mr. Hayes,
the investment team includes Thomas Steffens and Joseph Lu. Mr.
Steffens received a bachelor's degree from Villanova University. Mr.
Lu received a bachelor's degree from Colgate University. The team
has 37 years of investment experience.
Peter J. Hayes
Senior Portfoilo Manager
Table of Contents
A Letter From the President 2
A Discussion With Your Portfolio Managers 5
Performance Data 9
Schedule of Investments--Limited Maturity Portfolio 17
Schedule of Investments--Insured Portfolio 22
Schedule of Investments--National Portfolio 27
Financial Statements 40
Financial Highlights 46
Notes to Financial Statements 58
Report of Independent Registered Public Accounting Firm 66
Important Tax Information 66
Officers and Directors 67
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Insured Portfolio
Senior Portfolio Manager Robert DiMella joined Merrill Lynch
Investment Managers in 1993 and heads the Merrill Lynch Municipal
Bond Fund, Inc. - Insured Portfolio team. Mr. DiMella received a
bachelor's degree from the University of Connecticut and an MBA from
Rutgers University. He is a CFA R charterholder and a member of the
CFA Institute. In addition to Mr. DiMella, the investment team
includes Portfolio Assistant Janine Bianchino and Analysts Jeff
Moore, Mary Ezzo and Timothy Milway. Mr. Moore and Mr. Milway are
CFA R charterholders and members of the CFA Institute. Together, the
team has more than 78 years of investment experience.
Robert A. DiMella
Senior Portfolio Manager
National Portfolio
Senior Portfolio Manager Walter O'Connor joined Merrill Lynch
Investment Managers in 1991 and heads the Merrill Lynch Municipal
Bond Fund, Inc. - National Portfolio team. He received a bachelor's
degree from the University of Notre Dame. In addition to
Mr. O'Connor, the team includes Jim Schwartz and Greg Bennett.
Mr. Schwartz earned a bachelor's degree from Rutgers College
and an MBA from Monmouth University. He is a CFA R charterholder.
Mr. Bennet earned a bachelor's degree from West Chester University.
The team has a combined 28 years of investment experience.
Walter C. O'Connor
Senior Portfolio Manager
CFA R and Chartered Financial Analyst R are trademarks owned by the
Association for Investment Management and Research.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
A Discussion With Your Portfolio Managers
As interest rates began to rise from their historically low levels,
the Portfolios' defensive positioning helped to limit sensitivity to
yield volatility while also protecting net asset value.
Describe the recent market environment relative to municipal bonds.
Amid considerable volatility, long-term and short-term bond yields
ended the 12-month period considerably higher than where they began.
The increase in yields and corresponding fall in prices resulted
from concerns that a resurgent economy would lead to inflation,
which in turn would encourage the Federal Reserve Board (the Fed) to
raise short-term interest rates. In fact, the Fed did increase
interest rates 25 basis points (.25%) on June 30, 2004, but
suggested that its approach to future interest rate hikes would be
gradual.
As the period began, bond yields were on the rise as an increasing
amount of data indicated a fast-improving economy. By mid-August,
yields on U.S. Treasury bonds had risen to 5.45%. Over the next
several months, however, yields changed course and began to fall as
bond prices rose. Despite the strong economic growth, investors were
convinced that lackluster employment data and faltering consumer
confidence would cause the Fed to maintain rates at current low
levels for some time. By mid-March 2004, yields on long-term U.S.
Treasury bonds fell 80 basis points from their August high to 4.65%.
In early April, unexpected gains in job growth, improvements in
consumer confidence and rising consumer spending prompted yields to
rise again (as prices again declined). Investors reversed their
prior expectations and concluded that the Fed would indeed be forced
to raise interest rates to ward off potential inflation. By mid-May,
long-term U.S. Treasury bond yields had risen above 5.45%. Later, as
fears of inflation diminished somewhat, yields on the U.S. Treasury
benchmark bond fell once more, but - at 5.29% - still ended the
period 70 basis points above year-ago levels. The yield on the
10-year U.S. Treasury note stood at 4.58% on June 30, 2004, an
increase of more than 100 basis points over the 12-month period.
In the municipal bond market, tax-exempt issues also saw
considerable variability in yields, though the volatility was more
subdued than in the U.S. Treasury market. Yields on long-term
revenue bonds, as measured by the Bond Buyer Revenue Bond Index,
rose approximately 40 basis points during the year. Thirty-year
Aaa-rated bonds saw their yields rise more than 55 basis points
to 5.02%, as reported by Municipal Market Data, while yields on
Aaa-rated bonds with 10-year maturities rose more than 70 basis
points. The more marked increase in 10-year bond yields may be
attributed to the fact that several large issues have been heavily
concentrated in the 10-year - 20-year range. The resulting supply
imbalance prompted higher intermediate bond yields (and lower
prices). Yields on Aaa-rated two-year bonds increased even further,
rising more than 80 basis points over the past year. Longer-maturity
and lower-rated issues continued to benefit from more favorable
supply/demand factors and, therefore, experienced less price
depreciation.
Overall, more than $370 billion in new long-term tax-exempt bonds
were issued nationwide during the period, a 5% decline compared to
the prior 12 months. New-issue municipal volume is expected to be
manageable for the remainder of 2004 and should continue to support
the tax-exempt market's favorable technical position. This, in turn,
should allow the municipal market to outperform its taxable
counterparts in the coming months.
LIMITED MATURITY PORTFOLIO
How did the Portfolio perform during the period in light of the
existing market conditions?
For the 12-month period ended June 30, 2004, Limited Maturity
Portfolio's Class A, Class B, Class C and Class I Shares had total
returns of +.50%, +.24%, +.23% and +.59%, respectively. For the same
period, the Portfolio's unmanaged benchmarks, the Lehman Brothers
Municipal Bond 3-Year General Obligation Bond Index and the Lehman
Brothers Municipal Bond Index, had respective returns of +.62% and
+.76%. (Portfolio results shown do not reflect sales charges and
would be lower if sales charges were included. Complete performance
information can be found on pages 9 - 16 of this report to
shareholders.)
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
A Discussion With Your Portfolio Managers (continued)
In general, the Portfolio has more limited investment parameters
than its benchmarks. While the indexes, particularly the Lehman
Brothers Municipal Bond Index, measure the performance of longer-
dated, higher-yielding securities, the Portfolio is limited to a
maximum average maturity of two years. Given the low-interest-rate
environment during most of the past year, the longer end of the
yield curve offered more attractive yields, putting the Portfolio at
a relative disadvantage.
The Portfolio's performance relative to the Lipper Short Municipal
Debt Funds category was more favorable. For the 12-month period
ended June 30, 2004, the Lipper category had an average return of
+.41%. Much like our portfolio, Funds in the Short Municipal Debt
Funds category invest primarily in municipal debt issues with dollar-
weighted average maturities of less than three years. The Fund's
competitive returns during the period can be attributed to our
defensive positioning - maintaining a relatively short duration and
higher cash reserves. This stance tended to weaken relative
performance during the first half of the period, when interest rates
were generally falling. However, it had a positive effect on results
as the period progressed and rates began rising, as our Portfolio
was better prepared to weather the volatility than less-defensive
portfolios.
What changes were made to the Portfolio during the period?
Throughout the period, we kept the Portfolio's duration - its
sensitivity to interest rate fluctuations - below that of our
benchmark. With interest rates at historically low levels, we were
anticipating an eventual increase from the Federal Reserve Board
(the Fed) and believed the risk of extending the Portfolio's
maturity outweighed the potential short-term performance benefits of
such a move. As the period progressed, it appeared more likely that
the Fed would raise short-term rates to combat inflationary
pressures. Because the bond market had been anticipating this move
for some time, municipal bond yields were rising throughout much of
the reporting period, well before the Fed's official rate increase
on June 30, 2004.
In this environment, when making new purchases for the Portfolio, we
generally focused on higher-quality bonds, as well as on those
offering relatively high coupon payments--both of which tend to hold
their value better in rising-rate environments. In mid-May and early
June 2004, after bond yields had risen substantially, we saw a
temporary buying opportunity in bonds with two-year durations. We
took advantage of the opportunity to capture some incremental yield.
Finally, throughout the past 12 months, we continued to monitor the
limited-maturity municipal marketplace for occasional relative value
opportunities. When such opportunities presented themselves, we
looked to purchase these securities in an effort to enhance short-
term performance.
How would you characterize the Portfolio's position at the close of
the period?
As the period ended, the Portfolio was positioned for additional
interest rate increases from the Fed and generally rising tax-exempt
bond yields. Further Fed interest rate hikes would have a direct
impact on the Portfolio, as we focus our investments on municipal
securities with near-term maturities. In this environment, we
continue to focus on high-coupon and high-quality bonds to moderate
the effects of rising interest rates on the Portfolio. In addition,
because of the Portfolio's short-term nature, we have the
opportunity to reinvest maturing bonds at higher interest rates
as the Fed continues its tightening program - adding to yield and
performance.
We will continue to monitor economic data and their probable effects
on the Fed's monetary policy. As market conditions evolve, we will
serve our shareholders by tailoring the Portfolio's positioning to
reflect those changing conditions.
Peter J. Hayes
Vice President and Senior Portfolio Manager
June 9, 2004
INSURED PORTFOLIO
How did the Portfolio perform during the period in light of the
existing market conditions?
For the 12-month period ended June 30, 2004, Insured Portfolio's
Class A, Class B, Class C and Class I Shares had total returns of
+.10%, -.53%, -.58% and +.35%, respectively. For the same period,
the Portfolio's benchmark, the Lehman Brothers Municipal Bond Index,
returned +.76% (Portfolio results shown do not reflect sales charges
and would be lower if sales charges were included. Complete
performance information can be found on pages 9 - 16 of this
report to shareholders.)
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
The variance in returns compared to the benchmark is not surprising,
as the Portfolio is limited primarily to investments in insured
securities while the Index measures the broader municipal bond
market. During the past 12 months, the performance of insured
municipal bonds trailed uninsured securities, particularly non-
investment-grade credits, by a wide margin amid a market environment
in which investors were increasingly comfortable with assuming risk.
The Portfolio's performance was more in line with its comparable
Lipper category of Insured Municipal Debt Funds, which had an
average return of -.51% for the 12-month period. (Funds in this
Lipper category invest primarily in municipal debt issues in the top
four credit-rating categories.) Relative to the Lipper group, the
Portfolio's performance benefited from our emphasis on securities
offering an above-average current yield as well as from our
relatively defensive posture, which served to protect net asset
value against the risk of rising interest rates. In addition, an
emphasis on 20-year securities helped performance, as that
represented one of the strongest-performing segments of the yield
curve during the past 12 months.
What changes were made to the Portfolio during the period?
Throughout the period, we continued to focus on securities that we
felt represented the best relative value in the insured municipal
marketplace. In our view, tax-exempt California bonds provided one
such investment opportunity, as budget problems depressed the
state's municipal bond prices. Although California's financial
situation improved toward the end of the period, we still believe
that insured California bonds are attractively priced on a relative
basis and that they may continue to perform well in the near future.
In addition, we began to shift our focus further out on the
municipal yield curve during the period. As the curve steepened
significantly between 15 years - 30 years - indicating greater
amounts of income available to investors in longer bonds - we sought
to take advantage of the situation by investing in bonds with
slightly longer maturities. In particular, we emphasized bonds
with maturities between 23 years - 26 years, an area of the yield
curve we thought offered particular value. At the same time, we
de-emphasized shorter bonds, which we believed would encounter more
challenging performance ahead.
How would you characterize the Portfolio's position at the close of
the period?
At period-end, the Portfolio was fully invested and, in anticipation
of higher interest rates, defensively positioned. We continue to
emphasize competitive yield and preservation of the Portfolio's net
asset value. While we have begun efforts to restructure the
Portfolio with bonds offering slightly longer maturity dates, those
securities added in recent months have tended to be premium-coupon
bonds with defensive characteristics. Such a defensive posture has
enabled the Fund to increase its yield-generation potential while
helping insulate it from the volatility expected to accompany a
rising-interest-rate environment.
Robert A. DiMella
Vice President and Senior Portfolio Manager
June 14, 2004
NATIONAL PORTFOLIO
How did the Portfolio perform during the period in light of the
existing market conditions?
For the 12-month period ended June 30, 2004, National Portfolio's
Class A, Class B, Class C and Class I Shares had total returns of
+2.62%, +2.10%, +2.05% and +2.88%, respectively. For the same
period, the Portfolio's benchmark, the Lehman Brothers Municipal
Bond Index, returned +.76%. (Portfolio results shown do not reflect
sales charges and would be lower if sales charges were included.
Complete performance information can be found on pages 9 - 16 of
this report to shareholders.) The Portfolio's comparable Lipper
category of General Municipal Debt Funds had an average return of
+.32% for the same 12-month period. (Funds in this Lipper category
invest primarily in municipal debt issues in the top four credit-
rating categories.)
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
A Discussion With Your Portfolio Managers (concluded)
The Portfolio's performance during the period benefited from its
emphasis on securities offering higher-than-average current yields.
At the end of the period, the Portfolio maintained an average
coupon of 6.35%, well above the level of current general market
bonds trading at par value. In addition, Portfolio performance
benefited from our relatively defensive positioning. By keeping
the Portfolio's duration - its sensitivity to changes in interest
rates - lower than that of similar funds, the Portfolio was less
negatively influenced by rising rates, which lower the prices of
outstanding bonds.
What changes were made to the Portfolio during the period?
We adjusted the Portfolio's credit quality, especially in the final
three months of the period, by increasing our emphasis on lower-
rated credits. Working closely with our Municipal Research Group, we
identified selected value opportunities in certain lower-rated
sectors of the market, while still remaining within the credit
standards outlined in the Portfolio's prospectus. In addition to
providing the Portfolio with additional yield, these lower-rated
securities tend to have lower durations and, therefore, are not as
vulnerable to further increases in interest rates. Despite these
moves, the Portfolio still maintained a high degree of credit
quality as of the end of June 2004, with approximately 45% of net
assets invested in AAA-rated securities. The Fund's stake in below-
investment-grade credits stood at about 19% of total assets.
Toward the end of the period, bond yields rose significantly in
advance of an expected hike in short-term interest rates by the
Federal Reserve Board. As tax-exempt yields surpassed 5%, we began
to purchase some longer-maturity discount bonds to temporarily take
advantage of attractive yields (and correspondingly low prices).
These purchases represented only a small percentage of the
Portfolio's overall assets. We also kept a careful eye on movements
in the municipal marketplace, intending to sell some of these
positions if bond prices were to rise.
How would you characterize the Portfolio's position at the close of
the period?
Despite our recent purchase of more aggressively structured
securities, the Portfolio remains defensively positioned. We are
looking for a more sustained rise in interest rates before
committing to a more aggressive portfolio structure. At period-end,
the Portfolio was nearly fully invested, maintaining only a small
cash reserve of less than 1% of total assets to meet cash-flow
needs. Finally, we will continue to monitor credit spreads, which
have been tightening during the past year as investors have assumed
a greater degree of risk. If that tightening continues, we may look
to reduce exposure to some of the Portfolio's higher-yielding, lower-
rated securities.
Walter C. O'Connor
Vice President and Senior Portfolio Manager
June 12, 2004
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 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 4% and an
account maintenance fee of 0.25% (but no distribution fee) for
Insured and National Portfolios. Limited Maturity Portfolio incurs a
maximum initial sales charge of 1% and an account maintenance fee of
0.10% (but no distribution fee).
* Effective December 1, 2002, Class B Shares are subject to a
maximum contingent deferred sales charge of 4%, declining to 0%
after six years for Insured and National Portfolios. Limited
Maturity Portfolio is subject to a maximum contingent deferred sales
charge of 1% if redeemed within three years of purchase. All Class B
Shares purchased prior to December 1, 2002 will maintain the four-
year schedule and one-year schedule, respectively. In addition,
Insured and National Portfolios are subject to a distribution fee of
0.50% and an account maintenance fee of 0.25%. Limited Maturity
Portfolio is subject to a distribution fee of 0.20% and an account
maintenance fee of 0.15%. All three classes of shares automatically
convert to Class A Shares after approximately 10 years. (There is no
initial sales charge for automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.55% and an
account maintenance fee of 0.25% for Insured and National
Portfolios. Limited Maturity Portfolio is subject to a distribution
fee of 0.20% and an account maintenance fee of 0.15%. In addition,
Class C Shares for all three Portfolios are subject to a 1%
contingent deferred sales charge if redeemed within one year of
purchase.
* Class I Shares incur a maximum initial sales charge (front-end
load) of 4% and bear no ongoing distribution or account maintenance
fees for Insured and National Portfolios. Limited Maturity Portfolio
incurs a maximum initial sales charge (front-end load) of 1% and
bears no ongoing distribution or account maintenance fees.
None of the past results shown should be considered a representation
of future performance. Current performance may be lower or higher
than the performance data quoted. Refer to www.mlim.ml.com to obtain
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. The Fund's Investment Adviser waived a portion of its
management fee. Without such waiver, performance would have been
lower.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Performance Data (continued)
Recent Performance Results*
10-Year/
6-Month 12-Month Since Inception Standardized
As of June 30, 2004 Total Return Total Return Total Return 30-day Yield
Limited Maturity Portfolio Class A Shares** +0.01% +0.50% +41.67% 1.31%
Limited Maturity Portfolio Class B Shares** -0.11 +0.24 +38.97 1.07
Limited Maturity Portfolio Class C Shares** -0.02 +0.23 +37.39 1.08
Limited Maturity Portfolio Class I Shares** +0.06 +0.59 +44.03 1.41
Insured Portfolio Class A Shares** -0.84 +0.10 +73.51 4.25
Insured Portfolio Class B Shares** -1.22 -0.53 +63.53 3.92
Insured Portfolio Class C Shares** -1.24 -0.58 +64.18 3.88
Insured Portfolio Class I Shares** -0.72 +0.35 +76.38 4.49
National Portfolio Class A Shares** +0.24 +2.62 +79.01 4.23
National Portfolio Class B Shares** -0.01 +2.10 +69.30 3.91
National Portfolio Class C Shares** -0.04 +2.05 +69.63 3.85
National Portfolio Class I Shares** +0.36 +2.88 +82.41 4.47
Lehman Brothers 3-Year General Obligation Bond Index++ -0.22 +0.62 +60.44/+59.19 --
Lehman Brothers Municipal Bond Index++++ -0.68 +0.76 +86.60/+88.67 --
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge were 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
B & Class I Shares and from 10/21/94 for Class A & Class C Shares.
++This unmanaged Index consists of state and local government
obligation bonds that mature in 3 - 4 years, rated Baa or better.
Ten-year/since inception total returns are for 10 years and from
10/31/94.
++++This unmanaged Index consists of revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds, all of which
mature within 30 years. Ten-year/since inception total returns are
for 10 years and from 10/31/94.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Performance Data (continued)
Limited Maturity Portfolio
TOTAL RETURN BASED ON A $10,000 INVESTMENT
Class A & Class C Shares
A line graph illustrating the growth of a $10,000 investment in
Limited Maturity Portfolio++ Class A and Class C Shares* compared to
a similar investment in the Lehman Brothers Municipal Bond Index++++
and Lehman Brothers 3-Year General Obligation Bond Index++++++.
Values illustrated are as follows:
Limited Maturity Portfolio++
Class A Shares*
Date Value
10/21/1994** $ 9,900.00
June 1995 $10,269.00
June 1996 $10,633.00
June 1997 $11,101.00
June 1998 $11,562.00
June 1999 $11,941.00
June 2000 $12,321.00
June 2001 $13,057.00
June 2002 $13,579.00
June 2003 $13,956.00
June 2004 $14,025.00
Limited Maturity Portfolio++
Class C Shares*
Date Value
10/21/1994** $10,000.00
June 1995 $10,352.00
June 1996 $10,659.00
June 1997 $11,097.00
June 1998 $11,527.00
June 1999 $11,861.00
June 2000 $12,206.00
June 2001 $12,889.00
June 2002 $13,371.00
June 2003 $13,707.00
June 2004 $13,739.00
Lehman Brothers Municipal Bond Index++++
Date Value
10/21/1994** $10,000.00
June 1995 $11,003.00
June 1996 $11,734.00
June 1997 $12,702.00
June 1998 $13,802.00
June 1999 $14,183.00
June 2000 $14,645.00
June 2001 $16,106.00
June 2002 $17,220.00
June 2003 $18,725.00
June 2004 $18,867.00
Lehman Brothers 3-Year General Obligation Bond Index++++++
Date Value
10/21/1994** $10,000.00
June 1995 $10,525.00
June 1996 $11,069.00
June 1997 $11,656.00
June 1998 $12,281.00
June 1999 $12,733.00
June 2000 $13,199.00
June 2001 $14,210.00
June 2002 $15,074.00
June 2003 $15,821.00
June 2004 $15,919.00
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of operations.
++The Limited Maturity Portfolio invests primarily in investment
grade municipal bonds (bonds rated Baa or better) with a maximum
maturity not to exceed 4 years.
++++This unmanaged Index consists of revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds, all of which
mature within 30 years. The starting date for the Index is from
10/31/94.
++++++This unmanaged Index consists of state and local government
obligation bonds that mature in 3 - 4 years, rated Baa or better.
The starting date for the Index is from 10/31/94.
Past performance is not predictive of future results.
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge**
Class A Shares*
One Year Ended 6/30/04 +0.50% -0.51%
Five Years Ended 6/30/04 +3.27 +3.06
Inception (10/21/94)
through 6/30/04 +3.66 +3.55
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
Return Return
Without CDSC With CDSC**
Class C Shares*
One Year Ended 6/30/04 +0.23% -0.75%
Five Years Ended 6/30/04 +2.98 +2.98
Inception (10/21/94)
through 6/30/04 +3.33 +3.33
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after one year.
**Assuming payment of applicable contingent deferred sales charge.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Performance Data (continued)
Limited Maturity Portfolio
TOTAL RETURN BASED ON A $10,000 INVESTMENT
Class B & Class I Shares
A line graph illustrating the growth of a $10,000 investment in
Limited Maturity Portfolio++ Class B and Class I Shares* compared to
a similar investment in the Lehman Brothers Municipal Bond Index++++
and Lehman Brothers 3-Year General Obligation Bond Index++++++.
Values illustrated are as follows:
Limited Maturity Portfolio++
Class B Shares*
Date Value
June 1994 $10,000.00
June 1995 $10,414.00
June 1996 $10,766.00
June 1997 $11,210.00
June 1998 $11,646.00
June 1999 $11,996.00
June 2000 $12,346.00
June 2001 $13,050.00
June 2002 $13,524.00
June 2003 $13,864.00
June 2004 $13,897.00
Limited Maturity Portfolio++
Class I Shares*
Date Value
June 1994 $ 9,900.00
June 1995 $10,348.00
June 1996 $10,736.00
June 1997 $11,208.00
June 1998 $11,686.00
June 1999 $12,080.00
June 2000 $12,477.00
June 2001 $13,236.00
June 2002 $13,780.00
June 2003 $14,175.00
June 2004 $14,259.00
Lehman Brothers Municipal Bond Index++++
Date Value
June 1994 $10,000.00
June 1995 $10,882.00
June 1996 $11,605.00
June 1997 $12,563.00
June 1998 $13,650.00
June 1999 $14,027.00
June 2000 $14,483.00
June 2001 $15,929.00
June 2002 $17,030.00
June 2003 $18,519.00
June 2004 $18,660.00
Lehman Brothers 3-Year General Obligation Bond Index++++++
Date Value
June 1994 $10,000.00
June 1995 $10,607.00
June 1996 $11,156.00
June 1997 $11,747.00
June 1998 $12,378.00
June 1999 $12,833.00
June 2000 $13,302.00
June 2001 $14,321.00
June 2002 $15,192.00
June 2003 $15,945.00
June 2004 $16,044.00
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
++The Limited Maturity Portfolio invests primarily in investment
grade municipal bonds (bonds rated Baa or better) with a maximum
maturity not to exceed 4 years.
++++This unmanaged Index consists of revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds, all of which
mature within 30 years.
++++++This unmanaged Index consists of state and local government
obligation bonds that mature in 3 - 4 years, rated Baa or better.
Past performance is not predictive of future results.
Average Annual Total Return
Return Return
Without CDSC With CDSC**
Class B Shares*
One Year Ended 6/30/04 +0.24% -0.75%
Five Years Ended 6/30/04 +2.99 +2.99
Ten Years Ended 6/30/04 +3.35 +3.35
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after three years.
**Assuming payment of applicable contingent deferred sales charge.
Return Without Return With
Sales Charge Sales Charge**
Class I Shares*
One Year Ended 6/30/04 +0.59% -0.41%
Five Years Ended 6/30/04 +3.37 +3.16
Ten Years Ended 6/30/04 +3.72 +3.61
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Performance Data (continued)
Insured Portfolio
TOTAL RETURN BASED ON A $10,000 INVESTMENT
Class A & Class C Shares
A line graph illustrating the growth of a $10,000 investment in
Insured Portfolio++ Class A and Class C Shares* compared to a
similar investment in the Lehman Brothers Municipal Bond Index++++.
Values illustrated are as follows:
Insured Portfolio++
Class A Shares*
Date Value
10/21/1994** $ 9,600.00
June 1995 $10,487.00
June 1996 $11,038.00
June 1997 $11,861.00
June 1998 $12,767.00
June 1999 $12,950.00
June 2000 $13,071.00
June 2001 $14,345.00
June 2002 $15,299.00
June 2003 $16,639.00
June 2004 $16,657.00
Insured Portfolio++
Class C Shares*
Date Value
10/21/1994** $10,000.00
June 1995 $10,883.00
June 1996 $11,390.00
June 1997 $12,171.00
June 1998 $13,029.00
June 1999 $13,125.00
June 2000 $13,190.00
June 2001 $14,378.00
June 2002 $15,268.00
June 2003 $16,514.00
June 2004 $16,418.00
Lehman Brothers Municipal Bond Index++++
Date Value
10/21/1994** $10,000.00
June 1995 $11,003.00
June 1996 $11,734.00
June 1997 $12,702.00
June 1998 $13,802.00
June 1999 $14,183.00
June 2000 $14,645.00
June 2001 $16,106.00
June 2002 $17,220.00
June 2003 $18,725.00
June 2004 $18,867.00
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of operations.
++The Insured Portfolio invests primarily in long-term, investment
grade municipal bonds (bonds rated Baa or better) covered by
portfolio insurance guaranteeing the timely payment of principal at
maturity and interest.
++++This unmanaged Index consists of revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds, all of which
mature within 30 years. The starting date for the Index is from
10/31/94.
Past performance is not predictive of future results.
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge**
Class A Shares*
One Year Ended 6/30/04 +0.10% -3.90%
Five Years Ended 6/30/04 +5.16 +4.31
Inception (10/21/94)
through 6/30/04 +5.85 +5.41
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Return Return
Without CDSC With CDSC**
Class C Shares*
One Year Ended 6/30/04 -0.58% -1.53%
Five Years Ended 6/30/04 +4.58 +4.58
Inception (10/21/94)
through 6/30/04 +5.25 +5.25
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after one year.
**Assuming payment of applicable contingent deferred sales charge.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Performance Data (continued)
Insured Portfolio
TOTAL RETURN BASED ON A $10,000 INVESTMENT
Class B & Class I Shares
A line graph illustrating the growth of a $10,000 investment in
Insured Portfolio++ Class B and Class I Shares* compared to a
similar investment in the Lehman Brothers Municipal Bond Index++++.
Values illustrated are as follows:
Insured Portfolio++
Class B Shares*
Date Value
June 1994 $10,000.00
June 1995 $10,791.00
June 1996 $11,299.00
June 1997 $12,065.00
June 1998 $12,938.00
June 1999 $13,040.00
June 2000 $13,112.00
June 2001 $14,299.00
June 2002 $15,192.00
June 2003 $16,440.00
June 2004 $16,353.00
Insured Portfolio++
Class I Shares*
Date Value
June 1994 $ 9,600.00
June 1995 $10,425.00
June 1996 $11,000.00
June 1997 $11,850.00
June 1998 $12,803.00
June 1999 $13,003.00
June 2000 $13,156.00
June 2001 $14,475.00
June 2002 $15,496.00
June 2003 $16,872.00
June 2004 $16,932.00
Lehman Brothers Municipal Bond Index++++
Date Value
June 1994 $10,000.00
June 1995 $10,882.00
June 1996 $11,605.00
June 1997 $12,563.00
June 1998 $13,650.00
June 1999 $14,027.00
June 2000 $14,483.00
June 2001 $15,929.00
June 2002 $17,030.00
June 2003 $18,519.00
June 2004 $18,660.00
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
++The Insured Portfolio invests primarily in long-term, investment
grade municipal bonds (bonds rated Baa or better) covered by
portfolio insurance guaranteeing the timely payment of principal at
maturity and interest.
++++This unmanaged Index consists of revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds, all of which
mature within 30 years.
Past performance is not predictive of future results.
Average Annual Total Return
Return Return
Without CDSC With CDSC**
Class B Shares*
One Year Ended 6/30/04 -0.53% -4.34%
Five Years Ended 6/30/04 +4.63 +4.30
Ten Years Ended 6/30/04 +5.04 +5.04
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after six years.
**Assuming payment of applicable contingent deferred sales charge.
Return Without Return With
Sales Charge Sales Charge**
Class I Shares*
One Year Ended 6/30/04 +0.35% -3.66%
Five Years Ended 6/30/04 +5.42 +4.57
Ten Years Ended 6/30/04 +5.84 +5.41
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Performance Data (continued)
National Portfolio
TOTAL RETURN BASED ON A $10,000 INVESTMENT
Class A & Class C Shares
A line graph illustrating the growth of a $10,000 investment in
National Portfolio++ Class A and Class C Shares* compared to a
similar investment in the Lehman Brothers Municipal Bond Index++++.
Values illustrated are as follows:
National Portfolio++
Class A Shares*
Date Value
10/21/1994** $ 9,600.00
June 1995 $10,404.00
June 1996 $11,102.00
June 1997 $12,053.00
June 1998 $13,016.00
June 1999 $13,150.00
June 2000 $13,202.00
June 2001 $14,530.00
June 2002 $15,508.00
June 2003 $16,746.00
June 2004 $17,185.00
National Portfolio++
Class C Shares*
Date Value
10/21/1994** $10,000.00
June 1995 $10,797.00
June 1996 $11,446.00
June 1997 $12,358.00
June 1998 $13,284.00
June 1999 $13,346.00
June 2000 $13,325.00
June 2001 $14,570.00
June 2002 $15,465.00
June 2003 $16,622.00
June 2004 $16,963.00
Lehman Brothers Municipal Bond Index++++
Date Value
10/21/1994** $10,000.00
June 1995 $11,003.00
June 1996 $11,734.00
June 1997 $12,702.00
June 1998 $13,802.00
June 1999 $14,183.00
June 2000 $14,645.00
June 2001 $16,106.00
June 2002 $17,220.00
June 2003 $18,725.00
June 2004 $17,185.00
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of operations.
++The National Portfolio invests primarily in long-term municipal
bonds rated in any rating category.
++++This unmanaged Index consists of revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds, all of which
mature within 30 years. The starting date for the Index is from
10/31/94.
Past performance is not predictive of future results.
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge**
Class A Shares*
One Year Ended 6/30/04 +2.62% -1.48%
Five Years Ended 6/30/04 +5.50 +4.64
Inception (10/21/94)
through 6/30/04 +6.19 +5.75
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Return Return
Without CDSC With CDSC**
Class C Shares*
One Year Ended 6/30/04 +2.05% +1.08%
Five Years Ended 6/30/04 +4.91 +4.91
Inception (10/21/94)
through 6/30/04 +5.60 +5.60
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after one year.
**Assuming payment of applicable contingent deferred sales charge.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Performance Data (concluded)
National Portfolio
TOTAL RETURN BASED ON A $10,000 INVESTMENT
Class B & Class I Shares
A line graph illustrating the growth of a $10,000 investment in
National Portfolio++ Class B and Class I Shares* compared to a
similar investment in the Lehman Brothers Municipal Bond Index++++.
Values illustrated are as follows:
National Portfolio++
Class B Shares*
Date Value
June 1994 $10,000.00
June 1995 $10,728.00
June 1996 $11,390.00
June 1997 $12,292.00
June 1998 $13,220.00
June 1999 $13,287.00
June 2000 $13,272.00
June 2001 $14,534.00
June 2002 $15,434.00
June 2003 $16,581.00
June 2004 $16,930.00
National Portfolio++
Class I Shares*
Date Value
June 1994 $ 9,600.00
June 1995 $10,358.00
June 1996 $11,081.00
June 1997 $12,061.00
June 1998 $13,069.00
June 1999 $13,236.00
June 2000 $13,308.00
June 2001 $14,684.00
June 2002 $15,712.00
June 2003 $17,021.00
June 2004 $17,511.00
Lehman Brothers Municipal Bond Index++++
Date Value
June 1994 $10,000.00
June 1995 $10,882.00
June 1996 $11,605.00
June 1997 $12,563.00
June 1998 $13,650.00
June 1999 $14,027.00
June 2000 $14,483.00
June 2001 $15,929.00
June 2002 $17,030.00
June 2003 $18,519.00
June 2004 $18,660.00
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
++The National Portfolio invests primarily in long-term municipal
bonds rated in any rating category.
++++This unmanaged Index consists of revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds, all of which
mature within 30 years.
Past performance is not predictive of future results.
Average Annual Total Return
Return Return
Without CDSC With CDSC**
Class B Shares*
One Year Ended 6/30/04 +2.10% -1.80%
Five Years Ended 6/30/04 +4.96 +4.63
Ten Years Ended 6/30/04 +5.41 +5.41
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after six years.
**Assuming payment of applicable contingent deferred sales charge.
Return Without Return With
Sales Charge Sales Charge**
Class I Shares*
One Year Ended 6/30/04 +2.88% -1.24%
Five Years Ended 6/30/04 +5.76 +4.90
Ten Years Ended 6/30/04 +6.20 +5.76
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments Limited Maturity Portfolio (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
Alabama--0.4% AAA Aaa $ 2,400 Birmingham, Alabama, GO, Refunding and Improvement, Series B,
4% due 12/01/2004 (c) $ 2,426
Arizona--4.7% AAA Aaa 4,000 Arizona State University, COP, Refunding, VRDN, 4% due
7/01/2006 (b)(d) 4,140
AAA Aaa 3,000 Arizona Water Infrastructure Finance Authority, Water Quality
Revenue Refunding Bonds, Series A, 2% due 10/01/2006 2,984
AA- A1 4,000 Central Arizona, Water Conservation District, Contract Revenue
Refunding Bonds (Central Arizona Project), Series A, 5.40% due
11/01/2005 4,189
Maricopa County, Arizona, Pollution Control Corporation, PCR,
Refunding (Arizona Public Service Company), VRDN (b):
BBB A3 3,500 Series D, 1.75% due 3/01/2005 3,493
BBB A3 4,000 Series E, 1.75% due 3/01/2005 3,992
BBB Baa1 2,500 VRDN, Series C, 1.95% due 3/01/2005 (b) 2,499
AA Aaa 8,640 Phoenix, Arizona, Civic Improvement Corporation, Water System
Revenue Bonds, Junior Lien, 5.90% due 7/01/2006 (a) 9,272
Salt River Project, Arizona, Agriculture Improvement and Power
District, Electric System Revenue Refunding Bonds (Salt River
Project), Series B:
AA Aa2 890 7% due 1/01/2005 915
AAA Aa2 1,455 7% due 1/01/2005 (g) 1,495
Arkansas--0.2% AAA Aaa 1,500 Little Rock, Arkansas, GO, Refunding (Capital Improvement), 4%
due 4/01/2006 (e) 1,545
California-- BBB Baa2 3,165 California Pollution Control Financing Authority, PCR (Southern
2.8% California Edison Company), VRDN, Series B, 2% due 3/08/2005 (b) 3,126
BBB+ NR* 2,250 California Pollution Control Financing Authority, Solid Waste
Disposal Revenue Bonds (Republic Services Inc. Project), AMT,
VRDN, 2% due 12/01/2004 (b) 2,248
A A3 10,000 California Statewide Communities Development Authority Revenue
Bonds (Kaiser Permanente), VRDN, Series C, 3.70% due 6/01/2005 (b) 10,123
AAA Aaa 3,750 Natomas, California, Unified School District, COP (Natomas High
School Project), VRDN, 2.50% due 2/01/2005 (b)(c) 3,757
Colorado--1.3% Denver, Colorado, City and County Airport Revenue Refunding Bonds,
AMT, Series A:
AAA Aaa 3,175 5.50% due 11/15/2004 (c) 3,222
AAA Aaa 5,000 VRDN, 5.25% due 11/15/2006 (b)(f) 5,308
Connecticut-- Connecticut State, GO, Refunding:
1.5% AA Aa3 2,700 Series C, 4% due 12/15/2005 2,783
AAA Aaa 5,000 Series D, 5% due 8/01/2005 (e) 5,179
AAA Aaa 2,630 Waterbury, Connecticut, GO, Refunding, 4% due 2/01/2005 (h) 2,667
Delaware--0.6% AAA Aaa 4,125 Delaware State, GO, Series A, 5% due 1/01/2006 4,307
Florida--2.1% AA+ Aa2 1,000 Florida State Board of Education, Capital Outlay, GO (Public
Education), Series B, 5.625% due 6/01/2005 1,037
AAA Aaa 2,500 Florida State Board of Education, Lottery Revenue Bonds,
Series B, 5.25% due 7/01/2005 (f) 2,591
AAA Aaa 400 Hillsborough County, Florida, Aviation Authority Revenue Refunding
Bonds (Tampa International Airport), AMT, Series A, 5% due
10/01/2005 (c) 415
AAA Aaa 9,685 Orlando, Florida, Greater Orlando Aviation Authority, Airport
Facilities Revenue Refunding Bonds, Series C, 5% due 10/01/2004 (d) 9,772
AAA Aaa 500 Tallahassee, Florida, Energy System Revenue Bonds, Series B, 4%
due 10/01/2004 (e) 503
Portfolio Abbreviations
To simplify the listings of Merrill Lynch Municipal Bond Fund,
Inc.'s portfolio holdings in the Schedule of Investments, we have
abbreviated the names of many of the securities according to the
list at right.
AMT Alternative Minimum Tax (subject to)
BAN Bond Anticipation Notes
CARS Complementary Auction Rate Securities
COP Certificates of Participation
DRIVERS Derivative Inverse Tax-Exempt Receipts
EDA Economic Development Authority
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDB Industrial Development Boards
IDR Industrial Development Revenue Bonds
INFLOS Inverse Floating Rate Municipal Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (continued) Limited Maturity Portfolio (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
Georgia--2.8% NR* Aa2 $ 5,000 Coweta County, Georgia, School District, GO, Sales Tax, 4.50%
due 8/01/2005 $ 5,151
A+ Aa3 2,050 Dalton, Georgia, Building Authority Revenue Bonds, 5% due 7/01/2004 2,050
AAA Aaa 2,550 Georgia State, GO, Refunding, Series A, 6.25% due 3/01/2006 2,721
AAA Aaa 4,360 Georgia State, GO, Series B, 4.50% due 5/01/2006 4,546
Gwinnett County, Georgia, School District, GO, Refunding:
AA+ Aaa 4,000 4% due 2/01/2005 4,060
AA+ Aaa 1,000 4.50% due 2/01/2006 1,038
Hawaii--0.5% AAA Aa3 3,505 Hawaii State Highway Revenue Refunding Bonds, 3% due 7/01/2005 (e) 3,551
Illinois--3.0% AAA Aaa 17,000 Illinois Development Finance Authority, PCR, Refunding (Commonwealth
Edison Company Project), Series A, 4.40% due 12/01/2006 (c) 17,713
University of Illinois, COP (Utility Infrastructure Projects),
Refunding (c):
AAA Aaa 1,065 4% due 8/15/2005 1,092
AAA Aaa 2,000 5% due 8/15/2006 2,112
Indiana--0.6% BBB+ Baa1 4,300 Indiana State Development Finance Authority, PCR, Refunding
(Southern Indiana Gas & Electric), VRDN, AMT, Series C, 5% due
3/01/2006 (b) 4,433
Iowa--1.8% Ankeny, Iowa, GO, BAN:
NR* MIG1++ 6,920 Series C, 1.50% due 6/01/2005 6,931
NR* MIG1++ 5,775 Series D, 2% due 12/01/2005 5,781
Kansas--3.4% AAA Aaa 3,275 Johnson County, Kansas, Community College District, GO, 4% due
8/01/2006 3,399
SP1+ MIG1++ 20,228 Unified Government of Wyandotte Coounty and Kansas City, Kansas,
GO (Municipal Temporary Notes), Series I, 1.35% due 4/01/2005 20,173
Kentucky--0.8% NR* MIG1++ 5,500 Newport, Kentucky, GO, BAN, 2.41% due 12/01/2004 5,512
Louisiana--0.6% AAA Aaa 4,000 Orleans Parish, Louisiana, School Board, GO, 7.50% due 9/01/2005 (a)(f) 4,266
Maryland--1.3% A A3 1,050 Maryland State Health and Higher Educational Facilities Authority
Revenue Refunding Bonds (Lifebridge Health), Series A, 4% due 7/01/2006 1,081
AAA Aaa 7,730 Montgomery County, Maryland, GO (Consolidated Public Improvement)
Series A, 5% due 4/01/2006 8,120
Massachusetts-- AAA Aa2 2,000 Massachusetts Bay Transportation Authority, Sales Tax Revenue
4.9% Refunding Bonds, Senior Series C, 6% due 7/01/2006 2,148
A-1+ Baa2 3,000 Massachusetts State Development Finance Agency, IDR (The Mead
Corporation Project), VRDN, AMT, Series A, 2.25% due 11/01/2004 (b) 3,000
Massachusetts State, GO (Consolidated Loan) (a):
AAA Aaa 4,700 Series A, 5.25% due 1/01/2006 (d) 4,966
AAA Aaa 7,725 Series B, 5.75% due 6/01/2006 (f) 8,317
AA Aa2 15,070 New England Education Loan Marketing Corporation, Massachusetts,
Student Loan Revenue Refunding Bonds, AMT, Series A, 5.70% due
7/01/2005 15,665
Michigan--4.5% AAA Aaa 5,000 Detroit, Michigan, Economic Development Corporation, Resource
Recovery Revenue Refunding Bonds, AMT, Series A, 3.80% due
5/01/2005 (c) 5,088
AAA Aaa 25,750 Huron Valley, Michigan, School District, GO, 6.486%** due
5/01/2006 (a)(f) 9,081
Michigan Municipal Bond Authority Revenue Bonds:
AA+ Aa1 1,000 (Local Government Loan Program), Series C, 4% due 5/01/2006 1,032
AA+ Aaa 6,890 (Pooled Project), Series B, 5.625% due 4/01/2006 (a) 7,437
Michigan State Building Authority Revenue Refunding Bonds
(Facilities Program):
AA Aa2 1,500 Series I, 5% due 10/15/2005 1,561
AA Aa2 3,000 Series III, 5% due 10/15/2004 3,032
Michigan State Hospital Finance Authority, Revenue Refunding
Bonds (Oakwood Obligated Group):
A A2 2,000 5% due 11/01/2005 2,066
A A2 2,000 5% due 11/01/2006 2,086
Minnesota-- NR* NR* 7,915 Minneapolis, Minnesota, Revenue Bonds (Minneapolis Soceity of
2.0% Fine Arts), VRDN, 1.38% due 10/14/2015 (b) 7,910
AA+ Aa1 6,000 Minnesota State Housing Finance Agency Revenue Bonds (Residential
Housing Finance), VRDN, Series D, 1.40% due 7/21/2005 (b) 5,983
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (continued) Limited Maturity Portfolio (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
Missouri--1.2% AAA Aaa $ 3,980 Kansas City, Missouri, Passenger Facility Charge Revenue Bonds,
AMT, 5% due 4/01/2007 (c) $ 4,195
NR* Aaa 4,000 Kansas City, Missouri, School District, Building Revenue
Refunding Bonds, Series A, 5% due 2/01/2006 (f) 4,180
Nevada--1.7% BBB- Baa2 12,000 Clark County, Nevada, IDR (Southwest Gas Corporation Project),
VRDN, AMT, Series D, 3.35% due 9/01/2004 (b) 12,009
New Jersey-- SP1 MIG2++ 4,680 Jersey City, New Jersey, GO, Refunding (Real Property Tax Appeal),
1.9% Series A, 2.50% due 1/07/2005 4,694
AAA Aaa 3,000 New Jersey EDA, Market Transition Facility Revenue Refunding Bonds,
Senior Lien, Series A, 5% due 7/01/2006 (d) 3,164
AAA Aaa 5,000 New Jersey State Transit Corporation, COP, 6.50% due 4/01/2007 (a)(e) 5,571
New Mexico-- AA Aa2 5,000 New Mexico State Severance Tax Refunding Bonds, Series A, 5% due
2.7% 7/01/2005 5,165
AAA Aaa 3,595 Rio Rancho, New Mexico, Water and Wastewater System Revenue Bonds,
Series A, 6% due 5/15/2006 (a)(e) 3,847
NR* A2 10,000 San Juan County, New Mexico, Gross Receipts Tax Revenue Bonds,
Subordinate Series A, 2.50% due 8/15/2005 10,076
New York-- AA- A3 5,000 Metropolitan Transportation Authority, New York, Service Contract
7.1% Revenue Bonds, Series B, 5.25% due 7/01/2006 5,283
AA+ Aa2 8,000 New York City, New York, City Transitional Finance Authority
Revenue Refunding Bonds, Future Tax Secured, Sub-Series D-1, 4%
due 11/01/2006 8,294
A A2 7,000 New York City, New York, GO, Refunding, Series G, 5% due 8/01/2005 7,237
A A2 5,135 New York City, New York, GO, Series H, 4.50% due 8/01/2004 5,149
SP1+ MIG1++ 16,000 New York State Thruway Authority, General Revenue Bonds, BAN, VRDN,
Series A, 2.25% due 10/06/2005 (b) 16,085
Suffolk County, New York, IDA, Southwest Sewer System Revenue
Refunding Bonds (h):
AAA Aaa 3,000 4% due 2/01/2005 3,044
AAA Aaa 4,000 4% due 2/01/2006 4,111
North AAA Aa1 5,000 North Carolina State, Public School Building, GO, 4.60% due
Carolina--0.7% 4/01/2006 5,216
Ohio--4.4% AAA Aaa 3,250 Gateway Economic Development Corporation of Greater Cleveland,
Ohio, Senior Lien Excise Tax Revenue Refunding Bonds, VRDN, AMT,
5.125% due 9/01/2005 (b)(e) 3,372
NR* Aaa 375 Mason, Ohio, COP (Municipal Facilities Project), 3.50% due
12/01/2004 (d) 378
BBB- Baa1 4,000 Ohio State Air Quality, Development Authority, Revenue Refunding
Bonds (Ohio Edison Project), VRDN, Series B, 2.25% due 6/01/2005 (b) 4,000
AAA Aaa 5,000 Ohio State Building Authority, Adult Correctional Facilities
Revenue Bonds, 6% due 10/01/2004 (a)(d) 5,158
Ohio State, Highway Capital Improvement, GO:
AAA Aa1 5,375 Series C, 4.75% due 5/01/2005 5,519
AAA Aa1 4,850 Series F, 5% due 5/01/2005 4,990
BBB- Baa2 7,000 Ohio State Water Development Authority, Pollution Control Facilities
Revenue Refunding Bonds (Ohio Edison Company), VRDN, AMT, Series B,
4.40% due 12/01/2005 (b) 6,976
Oklahoma--4.2% NR* Aaa 630 Midwest City, Oklahoma, Municipal Authority, Capital Improvement
Revenue Bonds, 4.55% due 6/01/2005 (e)(g) 644
Oklahoma City, Oklahoma, Airport Trust Revenue Refunding Bonds,
Junior Lien, AMT, 28th Series (d):
AAA Aaa 1,000 4% due 7/01/2004 1,000
AAA Aaa 3,040 4% due 7/01/2005 3,106
AAA NR* 21,656 Oklahoma County, Oklahoma, HFA, Single Family Revenue Bonds, VRDN,
Series D, 1.155% due 1/02/2005 (b) 21,656
A2 VMIG2 2,500 Oklahoma Development Finance Authority Revenue Bonds (Conoco Project),
VRDN, AMT, Series B, 1.27% due 8/01/2037 (b) 2,500
Oregon--1.9% NR* Aa2 10,770 Portland, Oregon, Limited Tax, GO, Refunding, VRDN, Series B, 3% due
12/15/2004 (b) 10,855
AA+ Aa3 2,385 Tri-County, Oregon, Metropolitan Transportation District Revenue
Bonds, Series A, 5.25% due 8/01/2005 2,476
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (continued) Limited Maturity Portfolio (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
Pennsylvania-- AAA Aaa $ 9,620 Allegheny County, Pennsylvania, Port Authority, Subordinate Lien
2.5% Special Revenue Transportation Bonds, 5.375% due 6/01/2006 (d) $ 10,198
NR* MIG1++ 3,000 Midway Sewerage Authority, Pennsylvania, Revenue Notes, 2% due
12/01/2005 2,997
AAA Aaa 1,500 Pennsylvania Inter-Governmental Cooperative Authority, Special
Tax Revenue (Philadelphia Funding Program), 6.75% due
6/15/2005 (a)(f) 1,573
AAA Aaa 2,750 Pennsylvania State, GO, Refunding, 5.125% due 9/15/2006 (c) 2,922
Rhode Island-- A1+ MIG1++ 2,500 Rhode Island Housing and Mortgage Finance Corporation, Homeowner
1.9% Opportunity Revenue Bonds, AMT, Series 41-C, 3.375% due 11/01/2005 2,546
A+ Aa3 10,000 Rhode Island State Economic Development Corporation, Grant
Anticipation Bonds (Rhode Island Department of Transportation),
5% due 6/15/2006 10,519
South Carolina AAA Aaa 500 South Carolina State Highway, GO, Series B, 5.25% due 4/01/2005 514
- --0.1%
Tennessee-- NR* Aaa 3,815 Hamilton County, Tennessee, GO, Refunding, 4% due 10/01/2005 (f) 3,921
2.9% AAA Aaa 15,890 The Tennergy Corporation, Tennessee, Gas Revenue Bonds, 5% due
6/01/2005 (d) 16,383
Texas--11.0% AAA Aaa 3,310 Corpus Christi, Texas, GO (General Improvement), Refunding, Series A,
5% due 3/01/2006 (e) 3,463
AAA Aaa 1,000 El Paso, Texas, Airport Revenue Refunding Bonds (El Paso
International Airport), AMT, 4% due 8/15/2005 (e) 1,023
NR* Aa1 8,180 Gulf Coast Waste Disposal Authority, Texas, PCR (Amoco Oil Company
Project), VRDN, 2% due 10/01/2006 (b) 8,083
AAA Aaa 3,870 Harris County, Texas, Toll Road Revenue Bonds, Senior Lien, Series A,
6.25% due 8/15/2004 (a)(d) 3,971
AA Aa3 5,250 Houston, Texas, Independent School District, GO (Public Property
Finance Contractual Obligations), 3% due 7/15/2005 5,320
AAA Aaa 2,750 Houston, Texas, Water and Sewer System, Revenue Refunding Bonds,
Junior Lien, Series A, 6.2% due 12/01/2005 (a)(d) 2,917
A A1 1,000 Lower Colorado River Authority, Texas, Revenue Refunding Bonds, 5%
due 5/15/2005 1,029
A A2 2,750 Lower Colorado River Authority, Texas, Transmission Contract Revenue
Refunding Bonds (LCRA Transmission Services Corp. Project), Series C),
5% due 5/15/2005 2,830
Matagorda County, Texas, Navigation District No. 1, PCR, Refunding
(Central Power and Light Company Project), VRDN (b):
BBB Baa2 5,000 AMT, Series B, 2.35% due 11/01/2004 4,996
BBB Baa2 5,000 Series A, 2.15% due 11/01/2004 4,998
AA+ Aa1 4,000 Texas A & M University, Financing System Revenue Refunding Bonds,
4.65% due 5/15/2006 4,177
AAA Aaa 10,025 Texas Public Finance Authority, Capital Appreciation Building
Revenue Refunding Bonds, 2.45%** due 8/01/2006 (d)(g) 9,552
AA Aa1 5,750 Texas State, Texas Public Finance Authority, GO, Refunding, Series B,
6% due 10/01/2004 5,816
AAA Aaa 3,000 Trinity River Authority, Texas, Regional Wastewater System Revenue
Refunding Bonds, 5% due 8/01/2004 (d) 3,009
AAA Aaa 4,950 University of Houston, Texas, University Revenue Refunding Bonds,
Series B, 5% due 2/15/2005 (e) 5,058
A1 VMIG1++ 10,000 Weatherford, Texas, Independent School District, GO, VRDN, Series A,
2.50% due 8/01/2005 (b) 10,007
Utah--0.5% AAA Aaa 3,200 Utah State, GO, Refunding, Series A, 5% due 7/01/2004 3,200
Virginia--3.4% BBB NR* 7,000 Amelia County, Virginia, IDA, Solid Waste Disposal Revenue Refunding
Bonds (Waste Management Project), VRDN, AMT, 4.90% due 4/01/2005 (b) 7,116
AA Aa2 1,500 Chesapeake, Virginia, GO (Public Improvement), Refunding, 5% due
5/01/2006 1,577
AAA Aaa 4,000 Fairfax County, Virginia, GO (Public Improvements), Refunding,
Series A, 5% due 4/01/2006 4,200
BBB+ A3 6,875 Louisa, Virginia, IDA, Solid Waste and Sewer Disposal Revenue Bonds
(Virginia Electric and Power Company Project), VRDN, AMT, Series A,
3.15% due 4/01/2007 (b) 6,625
AA+ Aa1 3,900 Virginia State Public School Authority, School Financing, GO,
Series B, 4% due 8/01/2005 3,997
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (concluded) Limited Maturity Portfolio (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
Washington-- AA+ Aa1 $ 3,345 King County, Washington, GO, Refunding, 5% due 12/01/2005 $ 3,491
3.9% Seattle, Washington, GO, Refunding and Improvement:
AAA Aa1 5,000 4% due 8/01/2005 5,124
AAA Aa1 3,455 4% due 8/01/2006 3,580
AAA Aaa 2,180 Seattle, Washington, GO, Refunding, Series A, 5.25% due 3/01/2005 2,235
AA Aa1 7,195 Washington State, GO, Series B and AT-7, 6.10% due 6/01/2006 7,710
AAA Aaa 5,000 Washington State Public Power Supply System, Revenue Refunding
Bonds (Nuclear Project Number 1), Series A, 6% due 7/01/2005 (c) 5,213
Wisconsin-- SP1+ NR* 7,500 Racine, Wisconsin, Waterworks System, BAN, 2.125% due 9/01/2005 7,506
2.8% AA- Aa3 11,795 Wisconsin State, GO, Series C, 4% due 5/01/2006 12,175
Puerto Rico-- A- Baa1 900 Puerto Rico Commonwealth, GO, Refunding, 5.30% due 7/01/2004 900
2.9% Puerto Rico Commonwealth Highway and Transportation Authority,
Highway Revenue Refunding Bonds, Series AA:
A Baa1 13,505 5% due 7/01/2005 13,949
A Baa1 5,000 5% due 7/01/2006 5,262
Total Municipal Bonds (Cost--$679,592)--97.5% 678,722
Shares
Held Short-Term Securities
16,814 Merrill Lynch Institutional Tax-Exempt Fund (i) 16,814
Total Short-Term Securities (Cost--$16,814)--2.4% 16,814
Total Investments (Cost--$696,406)--99.9% 695,536
Other Assets Less Liabilities--0.1% 439
-----------
Net Assets--100.0% $ 695,975
===========
(a)Prerefunded.
(b)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at June 30, 2004.
(c)AMBAC Insured.
(d)MBIA Insured.
(e)FSA Insured.
(f)FGIC Insured.
(g)Escrowed to maturity.
(h)XL Capital Insured.
(i)Investments in companies considered to be an affiliate of the
Fund (such companies are defined as "Affiliated Companies" in
Section 2(a)(3) of the Investment Company Act of 1940) are as
follows:
(in Thousands)
Net Dividend
Affiliate Activity Income
Merrill Lynch Institutional
Tax-Exempt Fund (44,600) $394
*Not Rated.
**Represents a zero coupon bond; the interest rate shown reflects
the effective yield at the time of purchase by the Fund.
++Highest short-term rating issued by Moody's Investors Service,
Inc.
+++Ratings of issues shown are unaudited.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments Insured Portfolio (In Thousands)
S&P Moody's Face
State Ratings++ Ratings++ Amount Municipal Bonds Value
Alabama--2.2% Alabama Water Pollution Control Authority Revenue Bonds (b):
AAA Aaa $ 3,020 5.75% due 8/15/2018 $ 3,299
AAA Aaa 1,585 Revolving Fund Loan, Series A, 6.75% due 8/15/2005 (a) 1,674
AAA Aaa 10,000 Lauderdale County and Florence, Alabama, Health Care Authority,
Revenue Refunding Bonds (Coffee Health Group), Series A, 6% due
7/01/2029 (e) 10,732
AAA Aaa 7,000 University of Alabama, University Revenue Bonds (Birmingham), 6%
due 10/01/2020 (g) 7,689
Arkansas--0.6% NR* Aaa 6,060 University of Arkansas, University Revenue Bonds (Various Facility,
Fayetteville Campus), 5.50% due 12/01/2021 (g) 6,468
California-- AAA Aaa 13,000 California Infrastructure and Economic Development Bank Revenue
22.0% Bonds (Bay Area Toll Bridges), 1st Lien, Series A, 5.25% due
7/01/2021 (i) 13,569
AAA Aaa 27,250 California Pollution Control Financing Authority, PCR, Refunding
(Pacific Gas & Electric), AMT, Series A, 5.35% due 12/01/2016 (e) 28,627
AAA Aaa 2,075 California State Department of Veteran Affairs, Home Purpose
Revenue Refunding Bonds, Series A, 5.35% due 12/01/2027 (b) 2,117
California State, Department of Water Resources, Power Supply
Revenue Bonds, Series A:
AAA Aaa 12,000 5.375% due 5/01/2017 (f) 12,866
AAA Aaa 10,250 5.375% due 5/01/2021 (e) 10,760
AAA Aaa 6,385 5.375% due 5/01/2022 (e) 6,675
AAA Aaa 9,445 California Statewide Communities Development Authority, Water
Revenue Bonds (Pooled Financing Program), Series C, 5.25% due
10/01/2024 (i) 9,667
Carson, California, Redevelopment Agency, Tax Allocation Bonds
(Redevelopment Project Area 1), Series B (e):
AAA Aaa 3,520 5.25% due 10/01/2021 3,661
AAA Aaa 3,940 5.25% due 10/01/2022 4,080
AAA Aaa 4,285 Centinela Valley, California, Union High School District, GO
(Election of 2000), Series D, 5% due 8/01/2033 (c)(g) 4,233
AAA Aaa 23,200 Golden State Tobacco Securitization Corporation of California,
Tobacco Settlement Revenue Bonds, Series B, 5.375% due 6/01/2028 (g) 23,545
Industry, California, Urban Development Agency, Tax Allocation
Bonds, Series 1-B (e):
AAA Aaa 5,645 5% due 5/01/2020 5,778
AAA Aaa 6,000 5% due 5/01/2021 6,135
AAA Aaa 5,000 La Quinta, California, Financing Authority, Local Agency Revenue
Bonds, Series A, 5.25% due 9/01/2024 (b) 5,126
AAA Aaa 26,085 Los Angeles, California, Community College District, GO, Series A,
5.50% due 8/01/2019 (e) 28,086
AAA Aaa 7,830 Los Angeles, California, Community Redevelopment Agency, Community
Redevelopment Financing Authority Revenue Bonds (Bunker Hill Project),
Series A, 5% due 12/01/2024 (i) 7,780
AAA Aaa 5,000 Los Angeles, California, GO, Series A, 5% due 9/01/2019 (e) 5,142
Los Angeles, California, Unified School District, GO:
AAA Aaa 10,540 (Election of 1997), Series F, 5% due 7/01/2021 (g) 10,754
AAA Aaa 13,690 (Election of 1997), Series F, 5% due 1/01/2028 (g) 13,596
AAA Aaa 6,700 Series A, 5% due 1/01/2028 (e) 6,654
AAA Aaa 3,440 Palm Springs, California, Financing Authority, Lease Revenue
Refunding Bonds (Convention Center Project), Series A, 5.50% due
11/01/2035 (e) 3,603
AAA Aaa 11,685 Rialto, California, Unified School District, GO, Series A, 6.24%**
due 6/01/2025 (g) 3,657
AAA Aaa 5,075 Sacramento, California, Unified School District, GO (Election of 1999),
Series B, 5% due 7/01/2026 (g) 5,055
AAA Aaa 8,390 San Joanquin Hills, California, Transporation Corridor Agency, Toll
Road Revenue Refunding Bonds, Series A, 5.28%** due 1/15/2024 (e) 2,851
AAA Aaa 2,000 University of California, Revenue Refunding Bonds, Series A, 5.125%
due 5/15/2020 (b) 2,074
Walnut, California, Energy Center Authority Revenue Bonds,
Series A (b):
AAA Aaa 5,180 5% due 1/01/2021 5,266
AAA Aaa 2,810 5% due 1/01/2022 2,844
AAA Aaa 5,660 5% due 1/01/2023 5,698
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (continued) Insured Portfolio (In Thousands)
S&P Moody's Face
State Ratings++ Ratings++ Amount Municipal Bonds Value
Colorado--5.5% AAA Aaa $19,250 Aurora, Colorado, COP, 6% due 12/01/2025 (b) $ 21,093
NR* Aaa 31,160 Denver, Colorado, City and County Airport Revenue Refunding
Bonds, RIB, Series 153, 9.971% due 11/15/2025 (d)(e) 34,272
AAA Aaa 4,000 Logan County, Colorado, Justice Center Finance Corporation,
COP, 5.50% due 12/01/2020 (e) 4,268
Connecticut-- AAA NR* 2,680 Connecticut State, HFA, Housing Mortgage Finance Revenue Bonds, AMT,
0.2% Sub-Series B-2, 5.35% due 11/15/2032 (e) 2,710
Florida--2.2% AAA Aaa 5,500 Dade County, Florida, Water and Sewer System Revenue Bonds, 5.25%
due 10/01/2026 (g) 5,573
NR* Aaa 15,000 Escambia County, Florida, Health Facilities Authority, Health
Facility Revenue Bonds (Florida Health Care Facility Loan),
5.95% due 7/01/2020 (b) 15,558
AAA Aaa 2,240 West Coast Regional Water Supply Authority, Florida, Capital
Improvement Revenue Bonds, 10.40% due 10/01/2010 (a)(b) 2,906
Georgia--4.0% Georgia Municipal Electric Authority, Power Revenue Bonds,
Series Y (b):
AAA Aaa 8,510 6.40% due 1/01/2013 9,836
AAA Aaa 490 6.40% due 1/01/2013 (c) 572
AAA Aaa 20,000 Georgia Municipal Electric Authority, Power Revenue Refunding
Bonds, Series EE, 7% due 1/01/2025 (b) 25,213
AAA Aaa 7,500 Gwinnett County, Georgia, Development Authority, COP (Gwinnett
County Public Schools Project), 5.25% due 1/01/2025 (e) 7,663
Illinois--3.6% Chicago, Illinois, O'Hare International Airport Revenue Bonds,
3rd Lien, AMT, Series B-2:
AAA Aaa 3,200 5.75% due 1/01/2023 (i) 3,390
AAA Aaa 9,215 5.75% due 1/01/2024 (i) 9,733
AAA Aaa 17,690 6% due 1/01/2027 (e) 18,988
AAA Aaa 6,800 Illinois State, GO, 5.75% due 5/01/2021 (e) 7,248
Kansas--1.5% AAA Aaa 11,000 Kansas City, Kansas, Utility System Revenue Refunding and Improvement
Bonds, 6.25% due 9/01/2014 (g) 11,304
AAA Aaa 5,145 Manhattan, Kansas, Hospital Revenue Bonds (Mercy Health Center),
5.50% due 8/15/2020 (i) 5,462
Maryland--0.5% AAA Aaa 4,400 Maryland State Health and Higher Educational Facilities Authority
Revenue Bonds (University of Maryland Medical System), Series B,
7% due 7/01/2022 (g) 5,491
Massachusetts-- AAA Aaa 4,000 Massachusetts State HFA, Rental Housing Mortgage Revenue Bonds,
3.8% AMT, Series C, 5.60% due 1/01/2045 (i) 4,061
AAA Aaa 10,000 Massachusetts State Health and Educational Facilities Authority
Revenue Bonds (Beth Israel Deaconess Medical Center), INFLOS,
Series G-4, 10.653% due 7/01/2025 (b)(d) 10,052
Massachusetts State Special Obligation Dedicated Tax Revenue
Bonds (g):
AAA Aaa 4,750 5.25% due 1/01/2025 4,868
AAA Aaa 10,000 5.25% due 1/01/2026 10,195
AAA Aaa 12,250 5.25% due 1/01/2027 12,489
Michigan--2.7% AAA Aaa 4,910 Michigan State HDA, Rental Housing Revenue Refunding Bonds, Series B,
6.15% due 10/01/2015 (e) 5,063
Michigan State Strategic Fund, Limited Obligation Revenue Refunding
Bonds:
AAA Aaa 13,145 (Detroit Edison Company Project), AMT, Series A, 5.50% due
6/01/2030 (f) 13,396
AAA Aaa 10,000 (Detroit Edison Company), Series AA, 6.40% due 9/01/2025 (e) 10,641
Minnesota-- NR* Aaa 5,860 Delano, Minnesota, Independent School District Number 879, GO,
1.4% Series A, 5.875% due 2/01/2025 (i) 6,364
Sauk Rapids, Minnesota, Independent School District Number 047, GO,
Series A (e):
NR* Aaa 3,735 5.65% due 2/01/2020 4,068
NR* Aaa 4,440 5.70% due 2/01/2021 4,845
Mississippi-- AAA Aaa 1,320 Harrison County, Mississippi, Wastewater Management District,
1.1% Revenue Refunding Bonds (Wastewater Treatment Facilities), Series A,
8.50% due 2/01/2013 (g) 1,748
NR* Aaa 10,000 Mississippi Hospital Equipment and Facilities Authority Revenue
Bonds (Forrest County General Hospital Project), 6% due 1/01/2030 (i) 10,681
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (continued) Insured Portfolio (In Thousands)
S&P Moody's Face
State Ratings++ Ratings++ Amount Municipal Bonds Value
Missouri--2.2% Kansas City, Missouri, Airport Revenue Refunding and Improvement
Bonds, Series A (e):
AAA Aaa $12,990 5.50% due 9/01/2013 $ 14,190
AAA Aaa 9,000 5.50% due 9/01/2014 9,831
Nevada--5.2% AAA Aaa 10,000 Clark County, Nevada, IDR (Power Company Project), AMT, Series A,
6.70% due 6/01/2022 (g) 10,194
AAA Aaa 45,000 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra Pacific
Power Company), AMT, 6.65% due 6/01/2017 (e) 47,108
New Jersey-- AAA Aaa 6,810 Cape May County, New Jersey, Industrial Pollution Control Financing
6.4% Authority, Revenue Refunding Bonds (Atlantic City Electric Company
Project), Series A, 6.80% due 3/01/2021 (e) 8,509
Garden State Preservation Trust, New Jersey (I):
AAA Aa3 3,125 Open Space and Farmland Preservation Revenue Bonds, Series A,
5.80% due 11/01/2021 (k) 3,298
AAA Aa3 8,310 Open Space and Farmland Preservation Revenue Bonds, Series A,
5.80% due 11/01/2022 (k) 8,733
AAA Aa3 4,340 Open Space and Farmland Preservation Revenue Bonds, Series A,
5.80% due 11/01/2023 (k) 4,538
AAA Aaa 23,000 Revenue Bonds, Series B, 5.17%** due 11/01/2024 7,923
NR* Aaa 12,500 New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds
(NUI Corporation), RIB, Series 371, 11.32% due 10/01/2022 (b)(d) 13,267
Salem County, New Jersey, Industrial Pollution Control Financing
Authority Revenue Refunding Bonds (Public Service Electric & Gas),
RIB (d)(e):
AAA Aaa 10,000 Series 380, 11.14% due 6/01/2031 10,465
AAA Aaa 12,500 Series 381, 11.02% due 8/01/2030 13,082
New York--9.0% NR* Aaa 12,075 New York City, New York, City Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, RIB, Series 158, 10.167%
due 6/15/2026 (d)(e) 13,907
New York City, New York, GO:
AAA NR* 11,500 Series C, 5.625% due 3/15/2018 (f) 12,577
AAA Aaa 21,000 Series I, 6% due 4/15/2012 (i) 22,972
AAA Aaa 5,155 New York City, New York, GO, Refunding, Series G, 5.75% due
2/01/2017 (i) 5,468
AAA Aaa 7,210 New York State Dormitory Authority Revenue Bonds (School Districts
Financing Program), Series D, 5.25% due 10/01/2023 (e) 7,483
AAA A3 365 New York State Dormitory Authority, Revenue Refunding Bonds,
Series A, 5.75% due 8/15/2022 (e) 397
AAA Aaa 160 New York State Medical Care Facilities Finance Agency Revenue Bonds,
Series E, 6.25% due 8/15/2004 (a)(g) 164
AAA Aaa 5 Niagara Falls, New York, GO, Public Improvement, 6.90% due
3/01/2024 (e) 5
AAA Aaa 34,830 Tobacco Settlement Financing Corporation of New York Revenue Bonds,
Series A-1, 5.25% due 6/01/2022 (b) 35,726
North AAA Aaa 3,405 North Carolina HFA, Home Ownership Revenue Bonds, AMT, Series 14-A,
Carolina--0.3% 5.35% due 1/01/2022 (b) 3,468
North Dakota-- AAA NR* 4,290 North Dakota State HFA Revenue Bonds (Housing Finance Program),
0.4% Series C, 5.30% due 7/01/2022 (b) 4,341
Ohio--0.1% AAA Aaa 1,075 Ohio State Water Development Authority, Pollution Control Facilities
Revenue Bonds (Water Control Loan Fund--Water Quality Series), 5.50%
due 6/01/2014 (e) 1,173
Oklahoma--0.7% AAA Aaa 6,385 Oklahoma State IDR, Refunding (Health System), Series A, 6.25% due
8/15/2016 (e) 7,105
Oregon--1.4% AAA Aaa 8,700 Oregon State Department, Administrative Services, COP, Series A,
6.25% due 5/01/2010 (a)(b) 10,094
AAA Aaa 3,865 Port of Portland, Oregon, Airport Revenue Refunding Bonds (Portland
International Airport), AMT, Series 7-B, 7.10% due 1/01/2012 (a)(e) 4,621
Pennsylvania-- AAA NR* 5,000 Pennsylvania HFA, S/F Revenue Bonds, AMT, Series 72A, 5.25% due
1.6% 4/01/2021 (e) 5,077
AAA Aaa 6,000 Philadelphia, Pennsylvania, Gas Works Revenue Bonds, 12th Series B,
7% due 5/15/2020 (c)(e) 7,218
AAA Aaa 4,420 Philadelphia, Pennsylvania, Redevelopment Authority Revenue Bonds
(Neighborhood Transformation), Series A, 5.50% due 4/15/2020 (g) 4,729
Rhode Island-- AAA Aaa 6,815 Rhode Island State Economic Development Corporation, Airport Revenue
0.7% Bonds, Series B, 6% due 7/01/2028 (g) 7,314
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (continued) Insured Portfolio (In Thousands)
S&P Moody's Face
State Ratings++ Ratings++ Amount Municipal Bonds Value
South Carolina AAA Aaa $ 4,200 South Carolina State Public Service Authority Revenue Refunding
- --0.4% Bonds, Series A, 6.25% due 1/01/2022 (b) $ 4,511
Texas--6.0% AAA NR* 17,975 Dallas-Fort Worth, Texas, International Airport Revenue Bonds,
DRIVERS, AMT, Series 202, 10.596% due 11/01/2028 (d)(g) 20,018
El Paso, Texas, Water and Sewer Revenue Refunding and Improvement
Bonds, Series A (i):
AAA Aaa 4,375 6% due 3/01/2018 4,929
AAA Aaa 4,645 6% due 3/01/2019 5,216
AAA Aaa 25,000 Houston, Texas, Combined Utility System First Lien Revenue Refunding
Bonds, Series A, 5.25% due 5/15/2024 (g) 25,697
AAA Aaa 3,500 Houston, Texas, Water Conveyance System Contract, COP, Series J,
6.25% due 12/15/2013 (b) 4,065
Texas State Department of Housing and Community Affairs, S/F Mortgage
Revenue Bonds, AMT, Series A (e):
AAA Aaa 2,160 5.45% due 9/01/2023 (j) 2,200
AAA Aaa 2,790 5.50% due 3/01/2026 2,828
Utah--1.5% AAA NR* 9,535 Utah Transit Authority, Sales Tax and Transportation Revenue
Bonds (Salt Lake County Light Rail Transit Project), 5.375% due
12/15/2022 (i) 9,921
Utah Water Finance Agency Revenue Bonds (Pooled Loan Financing
Program), Series A (b)(e):
NR* Aaa 2,515 5.75% due 10/01/2015 2,775
NR* Aaa 3,770 6% due 10/01/2020 4,168
Virginia--3.3% AAA Aaa 19,755 Fairfax County, Virginia, EDA, Resource Recovery Revenue Refunding
Bonds, AMT, Series A, 6.10% due 2/01/2011 (b) 22,070
AAA Aaa 13,170 Virginia State HDA, Commonwealth Mortgage Revenue Bonds, Series J,
Sub-Series J-1, 5.20% due 7/01/2019 (e) 13,481
Washington-- AAA Aaa 4,960 Chelan County, Washington, Public Utility District Number 001,
0.5% Consolidated Revenue Bonds (Chelan Hydro System), AMT, Series A,
5.45% due 7/01/2037 (b) 5,024
West Virginia AAA Aaa 12,250 Pleasants County, West Virginia, PCR, Refunding (Potomac-Pleasants),
- --1.2% Series C, 6.15% due 5/01/2015 (b) 12,886
Wisconsin--2.5% AAA Aaa 9,000 Superior, Wisconsin, Limited Obligation Revenue Refunding Bonds
(Midwest Energy Resources), Series E, 6.90% due 8/01/2021 (g) 11,244
Wisconsin State, GO:
AAA Aaa 1,585 AMT, Series B, 6.50% due 5/01/2025 (e) 1,638
AAA Aaa 13,570 Series F, 5.50% due 5/01/2019 (i) 14,599
Puerto Rico-- Puerto Rico Commonwealth, Highway and Transportation Authority,
2.5% Transportation Revenue Bonds (g):
AAA Aaa 2,900 5.25% due 7/01/2017 3,124
AAA Aaa 3,100 5.25% due 7/01/2018 3,323
AAA Aaa 1,750 Series G, 5.25% due 7/01/2017 1,885
AAA Aaa 1,250 Series G, 5.25% due 7/01/2018 1,340
AAA Aaa 1,000 Series G, 5.25% due 7/01/2020 1,063
AAA Aaa 14,705 Puerto Rico Public Finance Corporation, Commonwealth Appropriation
Revenue Bonds, Series A, 5.375% due 8/01/2011 (a)(e) 16,374
Total Municipal Bonds (Cost--$1,018,232)--97.2% 1,058,868
Shares
Held Mutual Funds
300 BlackRock California Insured Municipal 2008 Term Trust, Inc. 4,758
810 BlackRock Insured Municipal 2008 Term Trust, Inc. 13,082
745 BlackRock Insured Municipal Term Trust, Inc. 8,037
Total Mutual Funds (Cost--$27,110)--2.4% 25,877
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (concluded) Insured Portfolio (In Thousands)
Shares
Held Short-Term Securities Value
3,017 Merrill Lynch Institutional Tax-Exempt Fund (h) $ 3,017
Total Short-Term Securities (Cost--$3,017)--0.2% 3,017
Total Investments (Cost--$1,048,359)--99.8% 1,087,762
Other Assets Less Liabilities--0.2% 1,873
-----------
Net Assets--100.0% $ 1,089,635
===========
(a)Prerefunded.
(b)AMBAC Insured.
(c)Escrowed to maturity.
(d)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at June 30, 2004.
(e)MBIA Insured.
(f)XL Capital Insured.
(g)FGIC Insured.
(h)Investments in companies considered to be an affiliate of the
Fund (such companies are defined as "Affiliated Companies" in
Section 2(a)(3) of the Investment Company Act of 1940) are as
follows:
(in Thousands)
Net Dividend
Affiliate Activity Income
Merrill Lynch Institutional
Tax-Exempt Fund 2,000 $217
(i)FSA Insured.
(j)FNMA/GNMA Collateralized.
(k)When-issued security.
++Ratings of issues shown are unaudited.
*Not Rated.
**Represents a zero coupon bond; the interest rate shown reflects
the effective yield at the time of purchase by the Fund.
Forward interest rate swaps outstanding as of June 30, 2004 were as
follows:
(in Thousands)
Notional Unrealized
Amount Depreciation
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and
pays a fixed rate of 4.385%
Broker, J.P. Morgan Chase Bank
Expires November 2018 $11,500 $ (282)
----------
Total $ (282)
==========
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments National Portfolio (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
Alabama--0.6% NR* Aaa $ 1,440 Alabama HFA, S/F Mortgage Revenue Refunding Bonds (College Home
Mortgage Bond Program), Series B-1, 6.65% due 10/01/2025 (i)(l) $ 1,472
AAA Aaa 3,820 Alabama Incentives Financing Authority, Special Obligation
Revenue Refunding Bonds, Series A, 6% due 10/01/2029 (c) 4,156
BBB Baa2 500 Mobile, Alabama, Industrial Development Board, Environmental
Improvement Revenue Refunding Bonds (International Paper Company
Project), AMT, Series A, 6.35% due 5/15/2016 531
BBB Baa2 2,500 Selma, Alabama, IDB, Environmental Improvement Revenue Refunding
Bonds (International Paper Company Project), AMT, Series A, 6.70%
due 2/01/2018 2,685
Alaska--0.5% AAA Aaa 3,000 Alaska State Housing Financial Corporation, General Mortgage
Revenue Refunding, Series A, 6% due 6/01/2027 (f) 3,099
Anchorage, Alaska, School, GO, Series B (e):
AAA Aaa 1,760 5.875% due 12/01/2016 1,969
AAA Aaa 2,100 5.875% due 12/01/2017 2,350
Arizona--2.7% BBB+ Baa1 4,000 Arizona Health Facilities Authority Revenue Bonds (Catholic
Healthcare West), Series A, 6.625% due 7/01/2020 4,346
NR* Aa1 2,000 Arizona Student Loan Acquisition Authority, Student Loan Revenue
Refunding Bonds, AMT, Senior Series B, 6.60% due 5/01/2010 2,048
AAA NR* 1,000 Glendale, Arizona, Development Authority, Educational Facilities
Revenue Refunding Bonds (American Graduate School International),
7.125% due 7/01/2005 (a)(j) 1,064
BBB Baa1 1,000 Maricopa County, Arizona, Hospital Revenue Refunding Bonds (Sun
Health Corporation), 6.125% due 4/01/2018 1,035
NR* Baa3 2,375 Maricopa County, Arizona, IDA, Education Revenue Bonds (Arizona
Charter Schools Project 1), Series A, 6.75% due 7/01/2029 2,369
BBB+ Baa1 1,625 Maricopa County, Arizona, IDA, Health Facilities Revenue Refunding
Bonds (Catholic Healthcare West Project), Series A, 5% due 7/01/2021 1,530
AAA Aaa 1,000 Maricopa County, Arizona, IDA, M/F Housing Revenue Bonds (Metro
Gardens--Mesa Ridge Project), Series A, 5.65% due 7/01/2019 (f) 1,023
Maricopa County, Arizona, Pollution Control Corporation, PCR,
Refunding:
BB+ Ba1 1,200 (El Paso Electric Company Project), Series A, 6.25% due 5/01/2037 1,239
BBB Baa2 1,000 (Public Service Company of New Mexico Project), Series A, 6.30%
due 12/01/2026 1,039
Peoria, Arizona, Improvement District No. 8401, Special Assessment
Bonds No. 8802:
BBB+ NR* 430 7.20% due 1/01/2010 445
BBB+ NR* 510 7.20% due 1/01/2013 529
Peoria, Arizona, Improvement District, Special Assessment Bonds
No. 8801:
BBB+ NR* 190 7.30% due 1/01/2009 197
BBB+ NR* 395 7.30% due 1/01/2011 409
AAA Aaa 2,330 Phoenix, Arizona, Civic Improvement Corporation, Municipal
Facilities, Excise Tax Revenue Bonds, 5.75% due 7/01/2016 (e) 2,581
NR* Caa2 5,000 Phoenix, Arizona, IDA, Airport Facility Revenue Refunding Bonds
(America West Airlines Inc. Project), AMT, 6.30% due 4/01/2023 3,751
NR* Aaa 2,720 Phoenix, Arizona, IDA Revenue Bonds (Camelback Crossing), 6.20%
due 9/20/2020 (d) 2,830
BBB- NR* 545 Prescott Valley, Arizona, Improvement District, Special Assessment
Bonds (Sewer Collection System Roadway Repair), 7.90% due 1/01/2012 570
AA NR* 3,515 Tucson, Arizona, IDA, Senior Living Facilities Revenue Bonds
(Christian Care Tucson Inc. Project), Series A, 6.125% due
7/01/2024 (m) 3,784
AAA Aaa 3,180 University of Arizona, COP, Refunding, Series A, 5.50% due
6/01/2018 (c) 3,434
AAA Aaa 1,000 University of Arizona, COP (University of Arizona Parking and
Student Housing), 5.75% due 6/01/2019 (c) 1,091
NR* NR* 3,000 Vistancia, Arizona, Community Facilities District, GO, 6.75% due
7/15/2022 3,050
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
Arkansas--0.2% AAA NR* $ 95 Arkansas State Development Finance Authority, S/F Mortgage
Revenue Bonds (Mortgage-Backed Securities Program), Series H,
6.15% due 7/01/2016 (i) $ 99
NR* A 250 Arkansas State Student Loan Authority Revenue Bonds, AMT,
Sub-Series B, 7.25% due 6/01/2009 276
BBB Baa2 625 Camden, Arkansas, Environmental Improvement Revenue Bonds
(International Paper Co. Project), AMT, Series A, 7.625% due
11/01/2018 647
AAA Aaa 200 Jonesboro, Arkansas, Residential Housing and Health Care Facilities
Board, Hospital Revenue Refunding Bonds (Saint Bernards Regional
Medical Center), Series B, 5.90% due 7/01/2016 (c) 216
A+ NR* 250 North Little Rock, Arkansas, Health Facilities Board, Health Care
Revenue Bonds (Baptist Health), 5.50% due 7/01/2016 259
BBB NR* 500 Pine Bluff, Arkansas, Environmental Improvement Revenue Refunding
Bonds (International Paper Company Project), AMT, Series A, 6.70%
due 8/01/2020 535
AAA Aaa 250 University of Central Arkansas, Housing System Revenue Bonds, 6.50%
due 1/01/2031 (h) 283
California-- NR* NR* 2,500 Agua Caliente Band of Cahuilla Indians, California, Casino Revenue
10.0% Bonds, 6% due 7/01/2018 2,465
AAA Aaa 9,465 Alameda County, California, COP (Financing Project), 6% due
9/01/2006 (f)(j) 10,372
California Rural Home Mortgage Finance Authority, S/F Mortgage
Revenue Bonds (Mortgage-Backed Securities Program), AMT (i)(l):
AAA NR* 865 Series C, Class 5, 6.75% due 3/01/2029 868
AAA NR* 525 Series D, Class 5, 6.70% due 5/01/2029 534
AAA NR* 625 California Rural Home Mortgage Finance Authority, S/F Mortgage
Revenue Refunding Bonds (Mortgage-Backed Securities Program), AMT,
Series A-2, 7% due 9/01/2029 (i)(l) 627
BBB+ A3 7,500 California State Department of Water Resources, Power Supply
Revenue Bonds, Series A, 5.75% due 5/01/2017 8,192
BBB A3 2,000 California State, GO, Refunding, 5.75% due 5/01/2030 2,085
BBB A3 14,100 California State, Various Purpose, GO, 5.50% due 11/01/2033 14,440
A A3 9,880 California Statewide Communities Development Authority, Health
Facility Revenue Bonds (Memorial Health Services), Series A, 6%
due 10/01/2023 10,365
NR* NR* 2,880 Capistrano, California, Unified School District, Community
Facility District, Special Tax Bonds (No. 90-2 Talega), 6%
due 9/01/2032 2,868
Chula Vista, California, Community Facilities District, Special
Tax Bonds (No 06-1, Eastlake Woods Area), Series A:
NR* NR* 1,080 6.05% due 9/01/2020 1,105
NR* NR* 2,965 6.15% due 9/01/2026 3,004
Contra Costa County, California, Special Tax Bonds (Community
Facilities District Number 2001-01):
NR* NR* 1,585 6% due 9/01/2026 1,587
NR* NR* 1,200 6.10% due 9/01/2031 1,207
NR* NR* 3,100 Elk Grove, California, Poppy Ridge Community Facilities Number 3
Special Tax, Series 1, 6% due 9/01/2028 2,985
Golden State Tobacco Securitization Corporation of California,
Tobacco Settlement Revenue Bonds:
BBB Baa3 4,200 Series A-4, 7.80% due 6/01/2042 4,240
BBB Baa3 2,785 Series A-5, 7.875% due 6/01/2042 2,825
NR* NR* 4,000 Long Beach, California, Special Tax Bonds (Community Facilities
District No. 3-Pine Ave.), 6.375% due 9/01/2023 4,121
Los Angeles, California, Department of Water and Power, Electric
Plant Revenue Refunding Bonds:
AA- Aaa 5,000 6% due 2/15/2005 (j) 5,191
NR* Aa3 5,160 RIB, Series 370, 10.64% due 2/15/2024 (g) 5,553
BBB- NR* 2,740 Pomona, California, Public Financing Authority, Revenue Refunding
Bonds (Merged Redevelopment Project), Series A1, 5.75% due 2/01/2034 2,635
NR* NR* 1,100 Poway, California, Unified School District, Special Tax Bonds
(Community District No. 6), Series A, 6.05% due 9/01/2025 1,100
NR* NR* 2,695 Riverside, California, Improvement Bond Act of 1915, Special
Assessment (Riverwalk Assessment District), 6.375% due 9/02/2026 2,735
Roseville, California, Special Tax (Stoneridge Community
Facilities Number 1):
NR* NR* 1,250 6.20% due 9/01/2021 1,270
NR* NR* 1,125 6% due 9/01/2025 1,118
NR* NR* 2,500 6.30% due 9/01/2031 2,518
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
California Sacramento, California, Special Tax (North Natomas Community
(concluded) Facilities):
NR* NR* $ 2,200 Series 01-03, 6% due 9/01/2028 $ 2,172
NR* NR* 2,270 Series 4-C, 6% due 9/01/2028 2,270
AAA Aaa 11,000 San Diego, California, Public Facilities Financing Authority,
Subordinated Water Revenue Refunding Bonds, 5% due 8/01/2032 (f) 10,843
San Francisco, California, City and County Redevelopment Agency
Revenue Bonds (Community Facilities District Number 6-Mission):
NR* NR* 5,000 6% due 8/01/2021 5,133
NR* NR* 2,500 GO, Series A, 6% due 8/01/2025 2,529
NR* Aaa 1,075 San Francisco, California, Uptown Parking Corporation, Parking
Revenue Bonds (Union Square), 6% due 7/01/2020 (f) 1,197
Santa Margarita, California, Water District, Special Tax Refunding
Bonds (Community Facilities District No. 99), Series 1:
NR* NR* 3,680 6.20% due 9/01/2020 3,766
NR* NR* 3,000 6.25% due 9/01/2029 3,029
AAA Aaa 13,665 Walnut, California, Energy Center Authority Revenue Bonds,
Series A, 5% due 1/01/2029 (c) 13,475
Colorado--2.5% AA Baa2 500 Boulder County, Colorado, Hospital Development Revenue Bonds
(Longmont United Hospital Project), 6% due 12/01/2030 (m) 525
AAA NR* 555 Boulder County, Colorado, M/F Mortgage Revenue Bonds (Sinton
Apartments Project), AMT, 6.625% due 7/01/2034 (b) 560
NR* Aa2 770 Colorado HFA Revenue Bonds (S/F Program), Series B-3, 6.55% due
10/01/2016 782
Colorado HFA Revenue Refunding Bonds (S/F Program):
NR* Aa2 640 AMT, Senior Series A-2, 7.50% due 4/01/2031 647
AA Aa2 250 AMT, Senior Series B-2, 7.10% due 4/01/2017 252
AAA Aa2 1,670 AMT, Senior Series B-2, 7.25% due 10/01/2031 1,688
NR* Aa2 130 AMT, Senior Series B-3, 6.80% due 11/01/2028 132
AA Aa2 1,010 AMT, Senior Series C-2, 7.25% due 10/01/2031 (b) 1,021
NR* Aa2 245 Senior Series A-3, 7.35% due 10/01/2030 248
NR* Aa2 1,245 Senior Series C-3, 6.75% due 10/01/2021 (b) 1,281
AA Aa2 420 Senior Series C-3, 7.15% due 10/01/2030 (b) 428
AA Aa2 2,500 Colorado Health Facilities Authority, Revenue Refunding Bonds
(Catholic Health Initiatives), 5.50% due 9/01/2017 2,620
AAA Aaa 550 Colorado Water Resource and Power Development Authority, Small
Water Resource Revenue Bonds, Series A, 5.80% due 11/01/2020 (e) 602
A Aaa 2,575 Denver, Colorado, City and County Airport Revenue Bonds, AMT,
Series A, 7.50% due 11/15/2023 2,672
Elk Valley, Colorado, Public Improvement Revenue Bonds (Public
Improvement Fee):
NR* NR* 7,560 Series A, 7.35% due 9/01/2031 7,824
NR* NR* 1,400 Series B, 7% due 9/01/2031 1,420
AAA Aaa 3,685 Larimer County, Colorado, Poudre School District Number R-1, GO,
6% due 12/15/2016 (e) 4,152
NR* Aa3 750 Pitkin County, Colorado, GO, Refunding and Improvement Bonds,
6.875% due 12/01/2004 (j) 782
NR* NR* 7,700 Plaza Metropolitan District No. 1, Colorado, Tax Allocation
Revenue Bonds (Public Improvement Fees), 8% due 12/01/2025 7,868
Connecticut-- AAA Aaa 1,000 Connecticut State Development Authority, Governmental Lease Revenue
2.2% Bonds, 6.60% due 6/15/2014 (f) 1,024
AA A1 2,000 Connecticut State Development Authority Revenue Bonds (General Fund),
Series A, 6.375% due 10/15/2024 2,065
AAA Aaa 1,500 Connecticut State Development Authority, Solid Waste Disposal
Facilities Revenue Bonds (Pfizer Inc. Project), AMT, 7% due 7/01/2025 1,597
AAA Aaa 1,250 Connecticut State Development Authority, Water Facility Revenue
Bonds (Bridgeport Hydraulic Company), AMT, 6.15% due 4/01/2035 (c) 1,358
AAA Aaa 1,200 Connecticut State, HFA, Revenue Refunding Bonds (Housing Mortgage
Finance Program), Series C-1, 6.30% due 11/15/2017 1,250
Connecticut State Health and Educational Facilities Authority
Revenue Bonds:
AAA Aaa 1,000 (Bridgeport Hospital), Series A, 6.625% due 7/01/2018 (f) 1,004
AA NR* 1,500 (Waterbury Hospital Issue), Series C, 5.75% due 7/01/2020 (m) 1,579
AA NR* 1,000 (Westover School), Series A, 5.70% due 7/01/2030 (m) 1,019
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
Connecticut Connecticut State Health and Educational Facilities Authority,
(concluded) Revenue Refunding Bonds:
AA NR* $ 5,025 DRIVERS, Series 215, 11.651% due 6/01/2030 (g)(m) $ 6,241
AA NR* 2,000 (Eastern Connecticut Health Network), Series A, 6.50%
due 7/01/2030 (m) 2,242
AA NR* 640 (Sacred Heart University), 6.625% due 7/01/2026 (m) 697
AA Baa3 5,710 (University of Hartford), Series E, 5.50% due 7/01/2022 (m) 5,937
AAA Aaa 1,000 (Yale--New Haven Hospital Issue), Series H, 5.70% due
7/01/2025 (f) 1,062
Connecticut State Higher Education, Supplemental Loan Authority
Revenue Bonds (Family Education Loan Program), AMT, Series A:
NR* Aa3 330 6.40% due 11/15/2014 331
NR* Aaa 1,030 5.50% due 11/15/2020 (f) 1,031
NR* NR* 1,000 Connecticut State Regional Learning Educational Service Center
Revenue Bonds (Office/Education Center Facility), 7.75% due
2/01/2006 (j) 1,101
AA Baa2 860 Waterbury, Connecticut, GO, 6% due 2/01/2017 (m) 930
District of AAA NR* 5,000 District of Columbia, GO, Refunding, DRIVERS, Series 214, 10.626%
Columbia--0.4% due 6/01/2026 (f)(g) 6,144
Florida--5.6% NR* NR* 1,700 Ballantrae, Florida, Community Development District, Capital
Improvement Revenue Bonds, 6% due 5/01/2035 1,669
AA NR* 1,895 Beacon Tradeport Community, Florida, Development District,
Special Assessment Revenue Refunding Bonds (Commercial Project),
Series A, 5.25% due 5/01/2016 1,978
NR* NR* 2,500 CFM Community Development Distict, Florida, Capital Improvement
Revenue Bonds, Series B, 5.875% due 5/01/2014 2,503
NR* Aaa 2,725 Duval County, Florida, School Board, COP, 5.75% due 7/01/2017 (h) 2,977
Fiddlers Creek, Florida, Community Development District Number 2,
Special Assessment Revenue Bonds:
NR* NR* 5,350 Series A, 6.375% due 5/01/2035 5,431
NR* NR* 1,250 Series B, 5.75% due 5/01/2013 1,252
AAA Aaa 6,330 Florida HFA, Revenue Bonds (Antigua Club Apartments), AMT,
Series A-1, 7% due 2/01/2035 (c) 6,499
NR* NR* 1,100 Heritage Isles Community Development District, Florida, Special
Assessment Revenue Refunding Bonds, 5.90% due 11/01/2006 1,097
NR* NR* 5,000 Hillsborough County, Florida, IDA, Exempt Facilities Revenue
Bonds (National Gypsum), AMT, Series A, 7.125% due 4/01/2030 5,239
AA- Aa3 9,500 Jacksonville, Florida, Electric Authority, Water and Sewer
Revenue Bonds, Series A, 6% due 10/01/2024 9,879
AAA NR* 7,000 Lee County, Florida, Airport Revenue Bonds, RIB, AMT, Series 580X,
10.56% due 10/01/2029 (g)(h) 7,968
AAA Aaa 4,500 Lee County, Florida, Transportation Facilities Revenue Bonds,
5.75% due 10/01/2005 (f)(j) 4,810
NR* NR* 1,200 Lexington Oaks, Florida, Community Development District, Special
Assessment Revenue Bonds, Series A, 6.70% due 5/01/2033 1,239
Mediterra, Florida, South Community Development District, Capital
Improvement Revenue Bonds:
NR* NR* 1,055 6.85% due 5/01/2031 1,106
NR* NR* 1,765 Series B, 5.50% due 5/01/2010 1,771
NR* NR* 2,500 Middle Village Community Development District, Florida, Special
Assessment Bonds, Series A, 6% due 5/01/2035 2,486
NR* Aaa 2,375 Orange County, Florida, HFA, M/F Housing Revenue Bonds, Series A,
6.40% due 1/01/2031 (f) 2,459
AAA NR* 305 Orange County, Florida, HFA, Mortgage Revenue Bonds, AMT, Series A,
8.375% due 3/01/2021 (b)(d) 305
AAA Aaa 5,000 Orange County, Florida, Tourist Development, Tax Revenue Bonds,
5.50% due 10/01/2020 (c) 5,326
NR* NR* 250 Panther Trace, Florida, Community Development District, Special
Assessment Revenue Bonds, Series B, 6.50% due 5/01/2009 250
Park Place Community Development District, Florida, Special
Assessment Revenue Bonds:
NR* NR* 2,500 6.375% due 5/01/2034 2,528
NR* NR* 1,000 6.75% due 5/01/2032 1,042
AAA Aaa 2,000 Saint Lucie, Florida, West Services District, Utility Revenue
Refunding Bonds, Senior Lien, 6% due 10/01/2022 (f) 2,225
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
Florida NR* NR* $ 1,000 Sterling Hill, Florida, Community Development District,
(concluded) Capital Improvement Revenue Refunding Bonds, Series B, 5.50%
due 11/01/2010 $ 1,000
NR* NR* 1,410 Stoneybrook West, Florida, Community Development District,
Special Assessment Revenue Bonds, Series B, 6.45% due 5/01/2010 1,419
NR* NR* 955 Verandah West, Florida, Community Development District, Capital
Improvement Revenue Bonds, Series B, 5.25% due 5/01/2008 953
NR* NR* 3,265 Vista Lakes Community, Florida, Development District, Capital
Improvement Revenue Bonds, Series B, 5.80% due 5/01/2008 3,264
Georgia--1.3% NR* NR* 5,000 Atlanta, Georgia, Tax Allocation Revenue Bonds (Atlantic Station
Project), 7.90% due 12/01/2024 5,186
AAA Aaa 5,210 College Park, Georgia, Business and IDA, Revenue Bonds (Civic
Center Project), 5.75% due 9/01/2026 (c) 5,541
AAA Aaa 3,450 Fulton County, Georgia, Development Authority Revenue Bonds
(Morehouse College Project), 5.875% due 12/01/2030 (c) 3,709
NR* NR* 2,250 Fulton County, Georgia, Residential Care Facilities Revenue
Refunding Bonds (Canterbury Court Project), Series A, 6% due
2/15/2022 2,219
BBB NR* 1,500 Milledgeville-Baldwin County, Georgia, Development Authority
Revenue Bonds (Georgia College and State University Foundation),
6% due 9/01/2033 1,534
Hawaii--0.3% Kuakini, Hawaii, Health System, Special Purpose Revenue Bonds,
Series A:
BBB Baa1 1,410 6.30% due 7/01/2022 1,431
BBB Baa1 3,000 6.375% due 7/01/2032 3,031
Idaho--0.4% BB+ Ba3 5,000 Power County, Idaho, Industrial Development Corporation, Solid
Waste Disposal Revenue Bonds (FMC Corporation Project), AMT,
6.45% due 8/01/2032 5,000
Illinois--7.3% AAA NR* 10,620 Chicago, Illinois, Board of Education, GO, DRIVERS, Series 199,
10.125% due 12/01/2020 (c)(g) 13,084
AAA Aaa 1,400 Chicago, Illinois, GO (Neighborhoods Alive 21 Program), 5.875%
due 1/01/2019 (e) 1,556
AAA Aaa 26,800 Chicago, Illinois, O'Hare International Airport Revenue Bonds,
3rd Lien, AMT, Series B-2, 6% due 1/01/2029 (k) 28,578
CCC Caa2 3,000 Chicago, Illinois, O'Hare International Airport, Special Facility
Revenue Refunding Bonds (American Airlines Inc. Project), 8.20%
due 12/01/2024 2,370
Chicago, Illinois, Park District, GO (e):
AAA Aaa 2,265 Refunding, Series B, 5.75% due 1/01/2015 2,482
AAA Aaa 1,500 Series A, 5.75% due 1/01/2016 1,644
AAA NR* 1,150 Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT, Series A,
7.15% due 9/01/2031 (i)(l) 1,158
NR* NR* 2,000 Chicago, Illinois, Special Assessment Bonds (Lake Shore East),
6.75% due 12/01/2032 2,041
AAA Aaa 3,210 Cicero, Illinois, GO, Refunding (Corporate Purpose), 6% due
12/01/2028 (f) 3,474
NR* Aaa 7,000 Decatur, Illinois, GO, Refunding, 6% due 3/01/2008 (e)(j) 7,753
BBB Baa1 10,000 Hodgkins, Illinois, Environmental Improvement Revenue Bonds
(Metro Biosolids Management LLC Project), AMT, 6% due 11/01/2023 10,052
Illinois Development Finance Authority Revenue Bonds:
BBB NR* 3,140 (Community Rehabilitation Providers Facility), Series A,
6.50% due 7/01/2022 3,239
AAA Aaa 660 Series B, 6.40% due 9/01/2031 (h) 720
Illinois State, GO, 1st Series (f):
AAA Aaa 8,890 5.75% due 12/01/2015 9,821
AAA Aaa 3,745 5.75% due 12/01/2016 4,137
AAA Aaa 4,000 5.75% due 12/01/2017 4,419
AAA Aa3 3,000 Illinois State, Sales Tax Revenue Bonds, 6% due 6/15/2020 3,300
AAA Aaa 2,000 Lake County, Illinois, Forest Preservation District, GO
(Land Acquisition and Development), 5.75% due 12/15/2016 2,224
Indiana--0.6% NR* NR* 2,595 Indiana State Educational Facilities Authority, Revenue Refunding
Bonds (Saint Joseph's College Project), 7% due 10/01/2029 2,695
AAA Aaa 6,000 MSD Warren Township, Indiana, Vision 2005, School Building
Corporation Revenue Bonds, First Mortgage, 5.50% due 7/15/2020 (e) 6,424
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
Iowa--0.6% AAA Aaa $ 1,000 Iowa City, Iowa, Sewer Revenue Bonds, 5.75% due 7/01/2021 (f) $ 1,051
NR* NR* 6,860 Iowa Finance Authority, Health Care Facilities Revenue Refunding
Bonds (Care Initiatives Project), 9.25% due 7/01/2025 8,027
Kansas--0.8% NR* Aaa 3,580 Sedgwick and Shawnee Counties, Kansas, S/F Revenue Bonds, AMT,
Series A-1, 6.95% due 6/01/2029 (d) 3,700
A+ NR* 2,500 Witchita, Kansas, Hospital Facilities Revenue Refunding and
Improvement Bonds, Series III, 6.25% due 11/15/2019 2,713
BBB NR* 4,500 Wyandotte County, Kansas, Kansas City Unified Government Revenue
Refunding Bonds (General Motors Corporation Project), 6% due
6/01/2025 4,623
Louisiana-- B NR* 2,290 Hodge, Louisiana, Utility Revenue Refunding Bonds (Stone Container
2.3% Corporation), AMT, 7.45% due 3/01/2024 2,309
AAA Aaa 9,500 Louisiana Local Government, Environmental Facilities, Community
Development Authority Revenue Bonds (Capital Projects and Equipment
Acquisition), Series A, 6.30% due 7/01/2030 (c) 10,925
AAA Aaa 2,900 New Orleans, Louisiana, GO, Refunding, 6.125% due 10/01/2016 (c) 3,065
BB- NR* 13,000 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain
Company Project), 7.50% due 7/01/2013 13,398
BBB Baa2 2,000 Rapides Finance Authority, Louisiana, Environmental Improvement
Revenue Bonds (International Paper Company Project), AMT, Series A,
6.55% due 11/15/2023 2,095
Maine--1.1% BB Ba2 8,635 Maine Finance Authority, Solid Waste Recycling Facilities Revenue
Bonds (Great Northern Paper Project--Bowater), AMT, 7.75% due
10/01/2022 8,660
AA+ NR* 6,045 Maine State Housing Authority, Mortgage Purpose Revenue Bonds,
DRIVERS, AMT, Series 170, 10.582% due 11/15/2028 (g) 6,404
Maryland--0.6% AAA NR* 500 Anne Arundel County, Maryland, Special Obligation Revenue Bonds
(Arundel Mills Project), 7.1% due 7/01/2009 (j) 595
AA Aa2 600 Carrol County, Maryland, Consolidated Public Improvement, GO,
6.50% due 10/01/2004 (j) 620
NR* Aa2 1,000 Maryland State Community Development Administration, Department
of Housing and Community Development, Housing Revenue Bonds, AMT,
Series B, 6.15% due 1/01/2021 1,049
NR* Aa2 1,175 Maryland State Community Development Administration, Department
of Housing and Community Development, Residential Revenue Refunding
Bonds, Series A, 5.60% due 3/01/2017 (b) 1,221
NR* Aaa 1,000 Maryland State Community Development Administration, Department of
Housing and Community Development Revenue Bonds (Waters Landing II
Apartments), AMT, Series A, 5.875% due 8/01/2033 1,043
NR* NR* 240 Maryland State Economic Development Corporation Revenue Bonds
(Health and Mental Hygiene Program), Series A, 7.125% due 3/01/2006 248
A- NR* 1,000 Maryland State Energy Financing Administration, Solid Waste Disposal
Revenue Bonds, Limited Obligation (Wheelabrator Water Projects),
AMT, 6.45% due 12/01/2016 1,045
Maryland Water Quality Financing Administration, Revolving Loan Fund
Revenue Bonds, Series A:
AA Aa2 300 6.375% due 9/01/2010 302
AA Aa2 470 6.55% due 9/01/2014 474
AAA NR* 500 Prince George's County, Maryland, Housing Authority, Mortgage
Revenue Refunding Bonds (Parker Apartments Project), Series A,
7.25% due 11/20/2016 (d) 504
AA Aa3 1,000 University of Maryland, System Auxiliary Facility and Tuition Revenue
Bonds, Series A, 5.75% due 10/01/2019 1,093
Massachusetts-- AAA Aaa 335 Massachusetts Education Loan Authority, Education Loan Revenue Bonds,
1.1% AMT, Issue E, Series A, 7.375% due 1/01/2012 (c) 336
AAA Aaa 470 Massachusetts Educational Financing Authority, Education Loan Revenue
Refunding Bonds, AMT, Issue E, 5.85% due 7/01/2014 (c) 489
BB+ NR* 1,000 Massachusetts State Development Finance Agency, Revenue Refunding
Bonds (Eastern Nazarene College), 5.625% due 4/01/2029 841
AAA Aaa 1,705 Massachusetts State, HFA, Housing Revenue Refunding Bonds, Series B,
6.05% due 12/01/2009 (f) 1,750
AAA Aaa 550 Massachusetts State, HFA, S/F Housing Revenue Bonds, AMT, Series 48,
6.35% due 6/01/2026 (f) 566
AA Aa2 550 Massachusetts State, HFA, S/F Housing Revenue Refunding Bonds, AMT,
Series 40, 6.65% due 12/01/2027 566
Massachusetts State Health and Educational Facilities Authority
Revenue Bonds:
BBB- NR* 1,500 (Jordan Hospital), Series E, 6.75% due 10/01/2033 1,523
AAA Aaa 4,950 (Medical Center of Central Massachusetts), CARS, Series B,
11.57% due 6/23/2022 (c)(g) 6,030
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
Massachusetts BBB NR* $ 1,000 Massachusetts State Industrial Finance Agency, Higher Education
(concluded) Revenue Refunding Bonds (Hampshire College Project), 5.625% due
10/01/2012 $ 1,041
AA+ Aaa 130 Massachusetts State Water Pollution Abatement Trust, Water
Abatement Revenue Bonds, Series A, 6.375% due 2/01/2015 133
NR* Aaa 1,600 Montachusett, Massachusetts, Regional Vocational Technical
School District, GO, 5.95% due 1/15/2020 (f) 1,766
Michigan--1.5% BBB Baa2 7,500 Delta County, Michigan, Economic Development Corporation,
Environmental Improvement Revenue Refunding Bonds (Mead
Westvaco-Escanaba), Series A, 6.25% due 4/15/2027 7,770
BBB Baa2 500 Dickinson County, Michigan, Economic Development Corporation,
Environmental Improvement Revenue Refunding Bonds (International
Paper Company Project), Series A, 5.75% due 6/01/2016 516
AAA Aaa 1,000 Eastern Michigan University Revenue Refunding Bonds, 6% due
6/01/2024 (c) 1,100
BBB- Baa3 3,000 Flint, Michigan, Hospital Building Authority, Revenue Refunding
Bonds (Hurley Medical Center), 6% due 7/01/2020 2,935
AAA Aaa 615 Kalamazoo, Michigan, Hospital Finance Authority, Hospital Facility
Revenue Refunding and Improvement Bonds (Bronson Methodist Hospital),
Series A, 6.375% due 5/15/2017 (f) 640
BBB- NR* 3,325 Macomb County, Michigan, Hospital Finance Authority, Hospital
Revenue Bonds (Mount Clemens General Hospital), Series B, 5.875%
due 11/15/2034 2,998
AAA Aaa 1,500 Michigan State Hospital Finance Authority, Revenue Refunding Bonds
(Mercy Mount Clemens), Series A, 6% due 5/15/2014 (f) 1,668
Michigan State Strategic Fund, Limited Obligation Revenue Refunding
Bonds (Detroit Edison Company):
AAA Aaa 1,060 Series AA, 6.40% due 9/01/2025 (f) 1,128
AAA Aaa 2,000 Series BB, 7% due 5/01/2021 (c) 2,507
Minnesota-- A Aa3 1,255 Anoka County, Minnesota, Solid Waste Disposal Revenue Bonds
1.1% (Natural Rural Utilities), AMT, Series A, 6.95% due 12/01/2008 1,279
NR* A1 1,000 Eden Prairie, Minnesota, M/F Housing Revenue Bonds (Rolling Hills
Project), Series A, 6.15% due 8/20/2031 (d) 1,069
A- NR* 680 Minneapolis, Minnesota, Community Development Agency, Supported
Development Revenue Bonds (Common Bond Fund), AMT, Series 2, 6.20%
due 6/01/2017 702
Minneapolis, Minnesota, Health Care System Revenue Bonds (Allina
Health System), Series A:
NR* A3 1,500 5.70% due 11/15/2022 1,552
NR* A3 2,665 5.75% due 11/15/2032 2,723
Minneapolis and Saint Paul, Minnesota, Metropolitan Airports
Commission, Airport Revenue Bonds, AMT, Sub-Series D (e):
AAA Aaa 470 5.75% due 1/01/2012 514
AAA Aaa 470 5.75% due 1/01/2014 505
AAA Aaa 2,060 5.75% due 1/01/2015 2,206
NR* Aa2 1,110 Ramsey County, Minnesota, Housing and Redevelopment Authority,
M/F Housing Revenue Bonds (Hanover Townhouses Project), AMT, 6%
due 7/01/2031 1,130
NR* Aaa 1,000 Saint Cloud, Minnesota, Health Care Revenue Refunding Bonds (Saint
Cloud Hospital Obligation Group), Series A, 6.25% due 5/01/2020 (h) 1,118
AAA Aaa 1,000 Saint Francis, Minnesota, Independent School District No. 015, GO,
Series A, 6.35% due 2/01/2013 (h) 1,063
AA NR* 1,500 Waconia, Minnesota, Health Care Facilities Revenue Bonds (Ridgeview
Medical Center Project), Series A, 6.125% due 1/01/2029 (m) 1,594
Mississippi-- BBB Baa2 1,700 Warren County, Mississippi, Environmental Improvement Revenue
0.1% Refunding Bonds (International Paper Company Project), AMT,
Series B, 6.75% due 8/01/2021 1,830
Missouri--0.5% Fenton, Missouri, Tax Increment Revenue Refunding and Improvement
Bonds (Gravois Bluffs):
NR* NR* 1,125 6.75% due 10/01/2015 1,144
NR* NR* 4,000 7% due 10/01/2021 4,280
AAA Aaa 2,200 Saint Louis, Missouri, Airport Revenue Bonds (Airport Development
Program), Series A, 5.625% due 7/01/2019 (f) 2,380
Montana--0.4% NR* A2 6,000 Montana State Higher Education, Student Assistance Corporation,
Student Loan Revenue Refunding Bonds, AMT, Sub-Series B, 6.40%
due 12/01/2032 6,204
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
Nevada--2.1% AAA Aaa $ 5,000 Clark County, Nevada, IDR (Power Company Project), AMT,
Series A, 6.70% due 6/01/2022 (e) $ 5,097
NR* NR* 1,550 Clark County, Nevada, Improvement District No. 142 Special
Assessment, 6.375% due 8/01/2023 1,567
Elko, Nevada, GO (Airport Improvement), AMT, Series B (f):
AAA Aaa 165 6.10% due 10/01/2014 181
AAA Aaa 245 6.30% due 10/01/2019 269
AAA Aaa 320 6.75% due 10/01/2024 357
AAA Aaa 225 7% due 10/01/2029 253
NR* NR* 2,995 Henderson, Nevada, Local Improvement Districts, Special
Assessment, Series NO T-14, 5.80% due 3/01/2023 3,046
Las Vegas, Nevada, Local Improvement Bonds, Special Assessment,
Special Improvement District Number 808, Summerlin:
NR* NR* 1,770 5.875% due 6/01/2009 1,835
NR* NR* 2,045 6.125% due 6/01/2012 2,118
NR* NR* 2,275 6.25% due 6/01/2013 2,356
AAA Aaa 290 Nevada Housing Division, S/F Program, AMT, Senior Series E,
7.05% due 4/01/2027 (b) 296
NR* NR* 2,000 Reno, Nevada, Special Assessment District Number 4 (Somerset Parkway),
6.625% due 12/01/2022 2,007
Sparks, Nevada, Redevelopment Agency, Tax Allocation Revenue
Refunding Bonds, Series A (m):
AA NR* 3,110 6% due 1/15/2015 3,379
AA NR* 6,315 6% due 1/15/2023 6,702
New Hampshire BBB+ Baa1 1,750 New Hampshire Health and Education Facilities Authority, Revenue
- --0.1% Refunding Bonds (Elliot Hospital), Series B, 5.60% due 10/01/2022 1,738
New Jersey-- CCC B2 670 Camden County, New Jersey, Pollution Control Financing Authority,
3.8% Solid Waste Resource Recovery Revenue Refunding Bonds, AMT,
Series B, 7.50% due 12/01/2009 656
NR* NR* 3,300 New Jersey EDA, Retirement Community Revenue Bonds (Cedar Crest
Village Inc. Facility), Series A, 7.25% due 11/15/2031 3,328
AAA Aaa 5,000 New Jersey EDA, Revenue Refunding Bonds (RWJ Health Care
Corporation), 6.50% due 7/01/2024 (h) 5,117
AAA Aaa 3,680 New Jersey EDA, State Lease Revenue Bonds (State Office Buildings
Projects), 6% due 6/15/2016 (c) 4,114
New Jersey Health Care Facilities Financing Authority Revenue Bonds:
B+ NR* 3,000 (Pascack Valley Hospital Association), 6% due 7/01/2013 2,783
NR* Baa1 3,130 (South Jersey Hospital), 6% due 7/01/2026 3,210
BBB Baa1 2,250 New Jersey Health Care Facilities Financing Authority, Revenue
Refunding Bonds (Capital Health System Inc.), Series A, 5.75% due
7/01/2023 2,288
AAA Aaa 1,090 New Jersey State Housing and Mortgage Finance Agency, M/F Housing
Revenue Refunding Bonds, Series B, 6.25% due 11/01/2026 (h) 1,144
New Jersey State Turnpike Authority, Turnpike Revenue Refunding
Bonds:
AAA Aaa 10,000 DRIVERS, Series 155, 10.152% due 1/01/2018 (f)(g) 11,848
AAA Aaa 10,000 Series A, 5.75% due 1/01/2018 (f) 10,924
BBB Baa3 9,500 Tobacco Settlement Financing Corporation of New Jersey Revenue
Bonds, 7% due 6/01/2041 8,742
New Mexico-- BBB Baa2 8,000 Farmington, New Mexico, PCR, Refunding (Public Service Company of
0.7% New Mexico--San Juan), Series B, 6.30% due 12/01/2016 8,474
AAA Aaa 300 Las Cruces, New Mexico, Health Facilities Revenue Refunding
Bonds (Evangelical Lutheran Project), 6.45% due 12/01/2017 (h) 304
AAA NR* 250 New Mexico Mortgage Finance Authority, Revenue Refunding Bonds,
Mortgage-Backed Securities, Series F, 7% due 1/01/2026 (i) 272
AAA Aaa 250 Santa Fe County, New Mexico, Correctional System Revenue Bonds,
6% due 2/01/2027 (h) 286
New York-- AAA Aaa 9,500 Metropolitan Transportation Authority, New York, Commuter Facilities,
11.0% Service Contract Revenue Refunding Bonds, Series 8, 5.50% due
7/01/2013 (h)(j) 10,687
AAA Aaa 10,000 Metropolitan Transportation Authority, New York, Transit Facilities
Revenue Bonds, Series A, 5.625% due 7/01/2007 (f)(j) 11,026
NR* NR* 3,230 New York City, New York, City IDA, Civic Facility Revenue Bonds
(Special Needs Facilities Pooled Program), Series C-1, 6% due
7/01/2012 3,208
NR* NR* 2,000 New York City, New York, City IDA Revenue Bonds (Visy Paper Inc.
Project), AMT, 7.95% due 1/01/2028 2,091
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
New York BB- Ba2 $ 4,050 New York City, New York, City IDA, Special Facility Revenue
(concluded) Bonds (British Airways PLC Project), AMT, 7.625% due 12/01/2032 $ 4,020
NR* Aaa 10,000 New York City, New York, City Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, RIB, Series 158, 10.167%
due 6/15/2026 (g) 11,517
AAA Aaa 3,000 New York City, New York, City Transit Authority, Triborough
Metropolitan Transportation Authority, COP, 5.75% due 1/01/2020 (c) 3,236
AA+ Aa2 6,000 New York City, New York, City Transitional Finance Authority
Revenue Bonds, Future Tax Secured, Series B, 6% due 11/15/2010 6,807
New York City, New York, City Transitional Finance Authority,
Revenue Refunding Bonds:
AA+ Aa2 8,000 Future Tax Secured, Series C, 5.875% due 11/01/2017 8,921
AA+ Aa2 12,015 Series C, 5.875% due 11/01/2015 13,398
New York City, New York, GO, Refunding:
AAA Aaa 6,600 Series A, 6% due 5/15/2021 (k) 7,297
AAA A2 2,210 Series A, 6.25% due 5/15/2026 (k) 2,474
AAA Aaa 4,000 Series C, 5.875% due 2/01/2016 (e) 4,314
AAA A2 7,290 Series G, 5.75% due 2/01/2006 (f)(j) 7,776
AAA A2 7,710 Series G, 5.75% due 2/01/2014 (f) 8,266
AAA Aaa 1,000 Series H, 6% due 8/01/2017 (k) 1,092
New York City, New York, GO, Series B:
AAA Aaa 4,000 8.25% due 6/01/2006 (k) 4,438
AAA Aaa 10,000 5.875% due 8/01/2015 (f) 11,199
New York State Dormitory Authority, Revenue Refunding Bonds:
NR* Aa1 3,370 (Concord Nursing Home Inc.), 6.25% due 7/01/2016 3,631
NR* Aa1 2,500 (Concord Nursing Home Inc.), 6.50% due 7/01/2029 2,666
BB Ba1 3,000 (Mount Sinai Health), Series A, 6.50% due 7/01/2016 3,017
BB Ba1 3,950 (Mount Sinai Health), Series A, 6.50% due 7/01/2025 3,961
AA- A3 5,000 (State University Educational Facilities), Series A, 7.50%
due 5/15/2013 6,271
AAA Aaa 1,360 New York State Environmental Facilities Corporation, State Clean
Water and Drinking Revenue Bonds (Revolving Funds), Series B,
5.875% due 1/15/2019 1,506
NR* VMIG1++ 500 New York State HFA, Housing Revenue Bonds (Liberty Street Realty LLC),
VRDN, 1.06% due 11/01/2035 (n) 500
AA NR* 2,285 Oneida County, New York, IDA Revenue Bonds (Civic Facility--Faxton
Hospital), Series C, 6.625% due 1/01/2015 (m) 2,561
NR* NR* 95 Suffolk County, New York, IDA, Civic Facility Revenue Bonds
(Special Needs Facilities Pooled Program), Series D-1, 6% due 7/01/2012 94
NR* NR* 705 Westchester County, New York, IDA, Civic Facilities Revenue Bonds
(Special Needs Facilities Pooled Program), Series E-1, 6% due 7/01/2012 700
NR* NR* 8,095 Westchester County, New York, IDA, Continuing Care Retirement,
Mortgage Revenue Bonds (Kendal on Hudson Project), Series A, 6.50%
due 1/01/2034 7,905
North Carolina AAA Aaa 920 Brunswick County, North Carolina, COP, 6% due 6/01/2016 (h) 1,034
- --2.6% AAA Aaa 1,000 Cumberland County, North Carolina, COP (Civic Center Project),
Series A, 6.40% due 12/01/2004 (c)(j) 1,041
NR* Baa1 1,500 Haywood County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Champion International
Corporation Project), AMT, 6.25% due 9/01/2025 1,542
BBB Baa2 2,000 Martin County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Solid Waste Disposal--
Weyerhaeuser Company), AMT, 6.80% due 5/01/2024 2,049
North Carolina Eastern Municipal Power Agency, Power System
Revenue Bonds:
AAA Aaa 1,500 Series B, 5.875% due 1/01/2021 (f) 1,613
BBB Baa2 4,000 Series D, 6.75% due 1/01/2026 4,356
A Baa2 4,440 North Carolina Eastern Municipal Power Agency, Power System Revenue
Refunding Bonds, Series D, 6.70% due 1/01/2019 4,895
AA Aa2 495 North Carolina HFA, S/F Revenue Bonds, Series W, 6.50% due 3/01/2018 499
NR* NR* 2,500 North Carolina Medical Care Commission, Health Care Facilities,
First Mortgage Revenue Bonds (Presbyterian Homes Project), 6.875%
due 10/01/2021 2,646
North Carolina Medical Care Commission, Retirement Facilities,
First Mortgage Revenue Bonds:
NR* NR* 1,625 (Forest at Duke Project), 6.375% due 9/01/2032 1,654
NR* NR* 2,500 (Givens Estates Project), Series A, 6.50% due 7/01/2032 2,507
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
North Carolina North Carolina Municipal Power Agency Number 1, Catawba Electric
(concluded) Revenue Refunding Bonds, Series B:
BBB+ Baa1 $ 500 6.375% due 1/01/2013 $ 556
A A 1,080 6.375% due 1/01/2013 1,201
BBB+ Baa1 5,000 6.50% due 1/01/2020 5,445
A A 2,500 6.50% due 1/01/2020 2,723
NR* A2 1,175 North Carolina State Educational Assistance Authority Revenue
Bonds (Guaranteed Student Loan), AMT, Sub-lien, Series C, 6.35%
due 7/01/2016 1,229
Piedmont, North Carolina, Triad Airport Authority, Airport
Revenue Refunding Bonds, Series A (h):
AAA Aaa 1,000 6.375% due 7/01/2016 1,129
AAA Aaa 1,000 6% due 7/01/2024 1,087
Ohio--1.7% NR* NR* 1,000 Cuyahoga County, Ohio, Health Care Facilities Revenue Refunding
Bonds (Benjamin Rose Institute Project), 5.50% due 12/01/2028 858
AAA Aaa 1,200 Huron County, Ohio, GO, Human Services Building, 7.25% due
12/01/2005 (f)(j) 1,311
NR* NR* 2,000 Lucas County, Ohio, Hospital Revenue Bonds (Flower Hospital),
6.125% due 12/01/2004 (j) 2,056
BBB Baa1 2,000 Moraine, Ohio, Solid Waste Disposal Revenue Bonds (General Motors
Corp. Project), AMT, 6.75% due 7/01/2014 2,182
AAA Aaa 3,000 North Canton, Ohio, City School District GO, 6.70% due
12/01/2004 (c)(j) 3,126
Ohio HFA, Mortgage Revenue Bonds, AMT (d):
AAA Aaa 725 Series A-1, 6.15% due 3/01/2029 751
AAA Aaa 155 Series B-2, 6.70% due 3/01/2025 158
NR* Aaa 370 Ohio HFA, Residential Mortgage Revenue Bonds, Series A-1, 6.35%
due 9/01/2031 (d) 372
AAA Aaa 8,000 Ohio State Air Quality Development Authority Revenue Refunding Bonds
(Dayton Power & Light Company), Series B, 6.40% due 8/15/2027 (f) 8,040
AAA Aaa 1,000 Ohio State Water Development Authority, Pollution Control Facilities
Revenue Refunding Bonds (Pennsylvania Power Co. Project), 6.15% due
8/01/2023 (c) 1,023
NR* NR* 1,470 Port of Greater Cincinnati Development Authority, Ohio, Special
Assessment Revenue Bonds (Cooperative Public Parking Infrastructure
Project), 6.40% due 2/15/2034 1,458
AAA Aaa 3,005 Toledo-Lucas County, Ohio, Lodging Tax Revenue Refunding Bonds
(Convention Center Project), 5.70% due 10/01/2015 (f) 3,255
Oregon--0.7% Forest Grove, Oregon, Campus Improvement Revenue Refunding Bonds
(Pacific University) (m):
AA NR* 250 6% due 5/01/2015 272
AA NR* 250 6.20% due 5/01/2020 274
AAA Aaa 2,485 Jackson County, Oregon, Central Point School District Number 006,
GO, 5.75% due 6/15/2017 (e) 2,731
Oregon State Housing and Community Services Department, Mortgage
Revenue Refunding Bonds (S/F Mortgage Program):
NR* Aa2 70 AMT, Series A, 6.20% due 7/01/2027 72
NR* Aa2 155 Series A, 6.40% due 7/01/2018 158
NR* Aaa 500 Portland, Oregon, M/F Housing Authority Revenue Bonds (Lovejoy
Station Apartments Project), AMT, 5.90% due 7/01/2023 (f) 518
AAA Aaa 1,000 Portland, Oregon, Sewer System Revenue Bonds, Series A, 5.75% due
8/01/2018 (e) 1,101
NR* Aaa 3,190 Portland, Oregon, Urban Renewal and Redevelopment Revenue Bonds
(South Park Blocks), Series A, 5.75% due 6/15/2018 (c) 3,532
NR* Aaa 1,000 Portland, Oregon, Urban Renewal and Redevelopment Revenue Refunding
Bonds (Downtown Waterfront), Series A, 5.75% due 6/15/2018 (c) 1,107
Pennsylvania-- AAA Aaa 2,220 Allegheny County, Pennsylvania, Sanitation Authority, Sewer Revenue
1.0% Bonds, 5.75% due 12/01/2017 (f) 2,473
A NR* 4,000 Pennsylvania State Higher Educational Facilities Authority Revenue
Bonds (University of Pennsylvania Medical Center Health System),
Series A, 6% due 1/15/2031 4,149
NR* NR* 1,265 Philadelphia, Pennsylvania, Authority for IDR, Commercial Development,
7.75% due 12/01/2017 1,292
A- NR* 5,750 Sayre, Pennsylvania, Health Care Facilities Authority Revenue
Refunding Bonds (Guthrie Health), Series A, 5.875% due 12/01/2031 5,824
Rhode Island-- AAA Aaa 6,815 Rhode Island State Economic Development Corporation, Airport Revenue
0.6% Bonds, Series B, 6% due 7/01/2028 (e) 7,314
AA NR* 1,000 Rhode Island State Economic Development Corporation Revenue Bonds
(Providence Place Mall), 6.125% due 7/01/2020 (m) 1,093
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
South Carolina Medical University, South Carolina, Hospital Authority, Hospital
- --1.2% Facilities Revenue Refunding Bonds:
BBB+ Baa2 $ 2,450 6.50% due 8/15/2032 $ 2,529
BBB+ Baa2 5,400 Series A, 6.375% due 8/15/2027 5,542
AAA Aaa 3,000 Piedmont Municipal Power Agency, South Carolina, Electric Revenue
Refunding Bonds, 6.75% due 1/01/2019 (e) 3,652
NR* NR* 5,000 South Carolina Jobs EDA, Residential Care Facilities Revenue
Bonds (South Carolina Episcopal--Still Hopes Residence Project),
Series A, 6.375% due 5/15/2032 4,908
South Dakota-- NR* Aaa 3,750 Pierre, South Dakota, School District Number 32-2, GO, 5.75% due
0.3% 8/01/2010 (h)(j) 4,225
Tennessee-- Chattanooga, Tennessee, Industrial Development Board, Lease Rent
2.1% Revenue Bonds (Southside Redevelopment Corporation) (c):
AAA Aaa 4,485 5.75% due 10/01/2017 4,949
AAA Aaa 3,740 5.75% due 10/01/2018 4,127
BB Ba2 4,950 McMinn County, Tennessee, IDB, Solid Waste Revenue Bonds (Recycling
Facility--Calhoun Newsprint), AMT, 7.40% due 12/01/2022 4,969
AA Aa2 5,000 Metropolitan Government of Nashville and Davidson County,
Tennessee, GO, 5.875% due 5/15/2026 5,282
NR* NR* 2,000 Metropolitan Knoxville, Tennessee, Airport Authority, Special
Purpose Revenue Bonds (Northwest Airlines Inc. Project), AMT, 8%
due 4/01/2032 1,833
A- A3 7,300 Shelby County, Tennessee, Health, Educational and Housing Facility
Board, Hospital Revenue Refunding Bonds (Methodist Healthcare),
6.50% due 9/01/2026 7,874
Texas--12.7% Austin, Texas, Convention Center Revenue Bonds (Convention
Enterprises Inc.):
BBB- Baa3 5,300 First Tier, Series A, 6.60% due 1/01/2021 5,497
BBB- Baa3 2,300 First Tier, Series A, 6.70% due 1/01/2028 2,385
BBB- Aa3 6,740 Trust Certificates, Second Tier, Series B, 6% due 1/01/2023 6,714
AAA Aaa 10,630 Austin, Texas, Revenue Bonds (Town Lake Community Events Center
Venue), 6.20% due 11/15/2029 (e) 11,735
Bexar County, Texas, Health Facilities Development Corporation,
Revenue Refunding Bonds (Army Retirement Residence Project):
BBB- NR* 600 6.125% due 7/01/2022 619
BBB- NR* 1,750 6.30% due 7/01/2032 1,791
Brazos River Authority, Texas, PCR, Refunding, AMT:
BBB Baa2 1,500 (TXU Energy Company Project), Series C, 5.75% due 5/01/2036 1,597
BBB Baa2 2,280 (Texas Utility Company), Series A, 7.70% due 4/01/2033 2,610
BBB- NR* 4,250 Brazos River Authority, Texas, Revenue Refunding Bonds
(Reliant Energy Inc. Project), Series B, 7.75% due 12/01/2018 4,641
A A3 3,700 Brazos River, Texas, Harbor Navigation District, Brazoria County
Environmental Revenue Refunding Bonds (Dow Chemical Company Project),
AMT, Series A-7, 6.625% due 5/15/2033 3,938
AAA NR* 1,155 Cameron County, Texas, Housing Finance Corporation, S/F Mortgage
Revenue Refunding Bonds, Series B-1, 6.75% due 9/01/2025 (i) 1,169
AAA NR* 1,145 Central Texas Housing Fianance Corporation, S/F Mortgage Revenue
Bonds (GNMA Mortgage Program), AMT, 8.20% due 6/28/2017 (d) 1,159
BBB- Baa3 4,620 Dallas-Fort Worth, Texas, International Airport Facility,
Improvement Corporation Revenue Bonds (Learjet Inc.), AMT,
Series 2001-A-1, 6.15% due 1/01/2016 4,568
AAA NR* 18,250 Dallas-Fort Worth, Texas, International Airport Revenue Bonds,
DRIVERS, AMT, Series 201, 10.596% due 11/01/2024 (e)(g) 20,883
AA NR* 1,260 Fort Bend County, Texas, Municipal Utility District Number 23,
GO, 6.625% due 9/01/2024 (m) 1,377
AA+ Aa1 1,400 Fort Worth, Texas, Certificates of Obligation, GO, 6.25% due
3/01/2005 (j) 1,444
Gregg County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds (Good Shepherd Medical Center Project) (m):
AA Baa2 1,000 6.875% due 10/01/2020 1,146
AA Baa2 3,500 6.375% due 10/01/2025 3,839
BBB Baa2 2,465 Gulf Coast, Texas, Waste Disposal Authority, Revenue Refunding
Bonds (International Paper Company), AMT, Series A, 6.10% due
8/01/2024 2,500
AA- NR* 2,500 Harris County, Texas, Health Facilities Development Corporation,
Revenue Refunding Bonds (Saint Luke's Episcopal Hospital), Series A,
5.625% due 2/15/2017 2,629
B- Caa2 3,000 Houston, Texas, Airport System, Special Facilities Revenue
Bonds (Continental Airlines Terminal Improvement), AMT, Series B,
6.125% due 7/15/2027 2,143
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
Texas Matagorda County, Texas, Navigation District Number 1, Revenue
(concluded) Refunding Bonds:
BBB Baa2 $ 2,500 (Centerpoint Energy Project), 5.60% due 3/01/2027 $ 2,464
BBB- Ba2 8,080 (Reliant Energy Inc.), Series C, 8% due 5/01/2029 8,891
B NR* 7,350 Matagorda County, Texas, Port of Bay City Authority Revenue
Bonds (Hoechst Celanese Corp. Project), AMT, 6.50% due 5/01/2026 6,957
AAA Aaa 1,000 Pflugerville, Texas, Independent Industrial School District,
GO, 5.75% due 8/15/2020 1,085
BB Ba3 4,825 Port Corpus Christi, Texas, Individual Development Corporation,
Environmental Facilities Revenue Bonds (Citgo Petroleum Corporation
Project), AMT, 8.25% due 11/01/2031 5,087
BBB Ba3 2,495 Red River Authority, Texas, PCR, Refunding (Celanese Project),
Series A, 6.45% due 11/01/2030 2,365
AA NR* 1,000 Red River, Texas, Education Finance Revenue Bonds (Saint Mark's
School-Texas Project), 6% due 8/15/2019 1,090
NR* Aaa 3,485 South Plains, Texas, Housing Finance Corporation, S/F Mortgage
Revenue Bonds, AMT, Series A, 7.30% due 9/01/2031 (i) 3,641
Southeast Texas, Housing Finance Corporation Revenue Bonds,
AMT (d)(l):
NR* Aaa 345 Series A, 8% due 11/01/2025 359
NR* Aaa 365 Series B, 8.50% due 11/01/2025 368
AA Aa1 2,590 Texas State, GO, Veterans' Housing Assistance Fund II, AMT,
Series A, 7% due 8/01/2004 2,653
Texas State Public Finance Authority, Building Revenue Bonds (h):
AAA Aaa 2,100 (General Services Commission Project), Series A, 6% due 2/01/2020 2,296
AAA Aaa 1,000 (State Preservation Project), Series B, 6% due 8/01/2015 1,110
AAA Aaa 45,000 Texas State Turnpike Authority, Central Texas Turnpike System
Revenue Bonds, First Tier, Series A, 5.75% due 8/15/2038 (c) 47,835
AAA Aaa 4,930 Upper Trinity Regional Water District, Texas, Water Revenue Bonds
(Regional Treated Water Supply System), Series A, 6% due 8/01/2020 (e) 5,427
AAA Aaa 2,305 Webster, Texas, GO, COP, Series A, 6% due 3/01/2021 (h) 2,523
Utah--0.9% AAA NR* 12,000 Weber County, Utah, Municipal Building Authority, Lease Revenue
Bonds, 7.50% due 12/15/2004 (j)(m) 12,571
Virginia--0.4% BBB+ A3 2,425 Chesterfield County, Virginia, IDA, PCR, Refunding (Virginia
Electric and Power Company), Series B, 5.875% due 6/01/2017 2,572
BB Ba2 4,250 Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds,
Senior Series A, 5.50% due 8/15/2028 3,564
Washington-- AAA Aaa 2,065 Kitsap County, Washington, GO, 5.875% due 7/01/2020 (c) 2,258
1.9% AAA Aaa 3,000 Port Seattle, Washington, Special Facilities Revenue Bonds,
Series A, 6% due 9/01/2029 (f) 3,246
AAA Aaa 3,010 Seattle, Washington, Drain and Wastewater Utility Revenue Bonds,
5.75% due 11/01/2022 (f) 3,237
Seattle, Washington, Housing Authority Revenue Bonds:
NR* NR* 2,750 (Newholly Project), AMT, 6.25% due 12/01/2035 2,595
NR* NR* 4,935 (Replacement Housing Project), 6.125% due 12/01/2032 4,752
AAA Aaa 7,750 Tacoma, Washington, Electric System Revenue Refunding Bonds,
Series A, 5.75% due 1/01/2017 (h) 8,533
AAA Aaa 1,625 University of Washington, University Revenue Bonds (Student
Facilities Fee), 5.875% due 6/01/2017 (h) 1,813
West Virginia-- BBB Baa2 7,500 Upshur County, West Virginia, Solid Waste Disposal Revenue Bonds
0.6% (TJ International Project), AMT, 7% due 7/15/2025 7,910
Wisconsin-- A1+ Aa2 635 Wisconsin Housing and EDA, Home Ownership Revenue Refunding Bonds,
0.6% RITR, AMT, Series 18, 10.532% due 9/01/2028 (g) 641
AAA Aaa 3,255 Wisconsin State, GO, AMT, Series B, 6.20% due 11/01/2026 (f) 3,396
Wisconsin State Health and Educational Facilities Authority Revenue
Bonds (Synergyhealth Inc.):
BBB+ NR* 3,250 6% due 11/15/2023 3,286
BBB+ NR* 1,700 6% due 11/15/2032 1,700
Wyoming--1.3% AAA Aaa 8,400 Sweetwater County, Wyoming, PCR, Refunding (Idaho Power Company
Project), Series A, 6.05% due 7/15/2026 (f) 9,048
BB+ Ba3 9,000 Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds
(FMC Corporation Project), AMT, Series A, 7% due 6/01/2024 9,068
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Schedule of Investments (concluded) National Portfolio (In Thousands)
S&P Moody's Face
Ratings+++ Ratings+++ Amount Municipal Bonds Value
Guam--0.0% AAA NR* $ 115 Guam Housing Corporation, S/F Mortgage Revenue Bonds, AMT,
Series A, 5.75% due 9/01/2031 (l) $ 121
Puerto Puerto Rico Commonwealth Highway and Transportation Authority,
Rico--3.9% Transportation Revenue Bonds:
A- Baa2 8,045 5.75% due 7/01/2022 8,617
A Baa1 1,000 Series B, 6% due 7/01/2005 (j) 1,054
AAA Aaa 2,000 Series B, 5.875% due 7/01/2021 (f) 2,190
AAA Aaa 785 Puerto Rico Commonwealth, Public Improvement, GO, Refunding,
5.70% due 7/01/2020 (f) 852
A- A3 15,000 Puerto Rico Electric Power Authority, Power Revenue Bonds,
Series NN, 5.125% due 7/01/2029 14,782
NR* Aa2 2,000 Puerto Rico Industrial Tourist Educational, Medical and
Environmental Control Facilities Revenue Bonds (Ascension Health),
RIB, Series 377, 10.89% due 11/15/2030 (g) 2,318
Puerto Rico Public Finance Corporation, Commonwealth Appropriation
Revenue Bonds:
AAA Aaa 15,545 Series A, 5.50% due 8/01/2011 (f)(j) 17,430
BBB+ Baa2 2,750 Series E, 5.70% due 2/01/2010 (j) 3,086
BBB+ Baa2 3,995 Series E, 5.50% due 8/01/2029 4,300
Virgin BBB- Baa3 8,000 Virgin Islands Government Refinery Facilities Revenue Refunding
Islands--0.6% Bonds (Hovensa Coker Project), AMT, 6.50% due 7/01/2021 8,465
Total Municipal Bonds (Cost--$1,285,175)--95.5% 1,344,544
Shares
Held Short-Term Securities
17,423 Merrill Lynch Institutional Tax-Exempt Fund** 17,423
Total Short-Term Securities (Cost--$17,423)--1.3% 17,423
Total Investments (Cost--$1,302,598)--96.8% 1,361,967
Other Assets Less Liabilities--3.2% 45,491
-----------
Net Assets--100.0% $ 1,407,458
===========
(a)Connie Lee Insured.
(b)FHA Insured.
(c)AMBAC Insured.
(d)GNMA Collateralized.
(e)FGIC Insured.
(f)MBIA Insured.
(g)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at June 30, 2004.
(h)FSA Insured.
(i)FNMA/GNMA Collateralized.
(j)Prerefunded.
(k)XL Capital Insured.
(l)FHLMC Collateralized.
(m)Radian Insured.
(n)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at June 30, 2004.
++Highest short-term rating by Moody's Investors Service, Inc.
+++Ratings of issues shown are unaudited.
*Not Rated.
**Investments in companies considered to be an affiliate of the Fund
(such companies are defined as "Affiliated Companies" in Section
2(a)(3) of the Investment Company Act of 1940) are as follows:
(in Thousands)
Net Dividend
Affiliate Activity Income
Merrill Lynch Institutional
Tax-Exempt Fund (6,000) $160
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Statements of Assets and Liabilities
Limited
Maturity Insured National
As of June 30, 2004 Portfolio Portfolio Portfolio
Assets
Investments in unaffiliated securities, at value* $ 678,722,201 $ 1,084,745,131 $ 1,344,543,567
Investments in affiliated securities, at value** 16,813,784 3,016,723 17,423,245
Cash 100,601 602,666 65,827
Receivables:
Interest 7,325,270 15,278,579 25,026,856
Securities sold 5,192,211 3,876,693 27,003,667
Capital shares sold 878,518 146,004 790,019
Dividends from affiliates 427 107,672 443
Prepaid expenses and other assets 61,555 782,653 28,262
--------------- --------------- ---------------
Total assets 709,094,567 1,108,556,121 1,414,881,886
--------------- --------------- ---------------
Liabilities
Unrealized depreciation on forward interest rate swaps -- 281,865 --
Payables:
Securities purchased 10,213,993 16,321,085 1,532,575
Dividends to shareholders 228,045 1,132,749 1,575,713
Capital shares redeemed 2,504,631 870,080 3,781,178
Distributor 80,549 147,633 227,461
Investment adviser 18,820 32,136 54,854
Reorganization costs -- -- 85,850
Other affiliates 34,383 71,603 91,772
Accrued expenses and other liabilities 39,269 64,345 74,404
--------------- --------------- ---------------
Total liabilities 13,119,690 18,921,496 7,423,807
--------------- --------------- ---------------
Net Assets
Net assets $ 695,974,877 $ 1,089,634,625 $ 1,407,458,079
=============== =============== ===============
Net Assets Consist of
Class A Common Stock, $.10 par value++ $ 2,433,844 $ 2,378,230 $ 2,014,975
Class B Common Stock, $.10 par value++++ 628,304 1,449,819 2,118,179
Class C Common Stock, $.10 par value++++++ 1,445,827 803,103 727,511
Class I Common Stock, $.10 par value++++++++ 2,422,907 9,526,194 8,821,059
Paid-in capital in excess of par 691,065,997 1,051,051,007 1,411,074,923
--------------- --------------- ---------------
Undistributed investment income--net 482,491 1,161,152 806,143
Accumulated realized capital losses on investments--net (1,634,502) (15,856,122) (77,473,250)
Unrealized appreciation/depreciation on investments--net (869,991) 39,121,242 59,368,539
--------------- --------------- ---------------
Total accumulated earnings (losses)--net (2,022,002) 24,426,272 (17,298,568)
--------------- --------------- ---------------
Net Assets $ 695,974,877 $ 1,089,634,625 $ 1,407,458,079
=============== =============== ===============
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Statements of Assets and Liabilities (concluded)
Limited
Maturity Insured National
As of June 30, 2004 Portfolio Portfolio Portfolio
Net Asset Value
Class A:
Net assets $ 244,740,563 $ 183,006,956 $ 207,375,848
=============== =============== ===============
Shares outstanding 24,338,440 23,782,295 20,149,754
=============== =============== ===============
Net asset value and redemption price per share $ 10.06 $ 7.70 $ 10.29
=============== =============== ===============
Class B:
Net assets $ 63,134,880 $ 111,524,168 $ 217,814,209
=============== =============== ===============
Shares outstanding 6,283,042 14,498,190 21,181,794
=============== =============== ===============
Net asset value and redemption price per share $ 10.05 $ 7.69 $ 10.28
=============== =============== ===============
Class C:
Net assets $ 144,656,247 $ 61,793,988 $ 74,848,929
=============== =============== ===============
Shares outstanding 14,458,265 8,031,027 7,275,109
=============== =============== ===============
Net asset value and redemption price per share $ 10.01 $ 7.69 $ 10.29
=============== =============== ===============
Class I:
Net assets $ 243,443,187 $ 733,309,513 $ 907,419,093
=============== =============== ===============
Shares outstanding 24,229,070 95,261,941 88,210,587
=============== =============== ===============
Net asset value and redemption price per share $ 10.05 $ 7.70 $ 10.29
=============== =============== ===============
* Identified cost $ 679,592,192 $ 1,045,342,024 $ 1,285,175,028
=============== =============== ===============
** Identified cost for affiliated securities 16,813,784 3,016,723 17,423,245
=============== =============== ===============
++ Authorized shares--Class A 150,000,000 500,000,000 375,000,000
=============== =============== ===============
++++ Authorized shares--Class B 150,000,000 375,000,000 375,000,000
=============== =============== ===============
++++++ Authorized shares--Class C 150,000,000 375,000,000 375,000,000
=============== =============== ===============
++++++++ Authorized shares--Class I 150,000,000 500,000,000 375,000,000
=============== =============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Statements of Operations
Limited
Maturity Insured National
For the Year Ended June 30, 2004 Portfolio Portfolio Portfolio
Investment Income
Interest $ 16,037,419 $ 64,371,676 $ 71,655,879
Dividends from affiliates 394,028 216,927 160,013
Dividends -- 501,824 --
--------------- --------------- ---------------
Total income 16,431,447 65,090,427 71,815,892
--------------- --------------- ---------------
Expenses
Investment advisory fees 2,500,813 4,295,090 5,864,979
Account maintenance and distribution fees--Class C 530,634 521,620 600,097
Account maintenance fees--Class A 270,365 468,042 526,204
Account maintenance and distribution fees--Class B 257,287 1,009,165 2,010,111
Accounting services 230,246 351,495 364,840
Registration fees 140,208 53,523 66,038
Transfer agent fees--Class A 62,602 77,705 109,626
Transfer agent fees--Class I 58,348 329,026 353,837
Transfer agent fees--Class C 42,109 32,506 45,029
Custodian fees 39,741 57,368 55,227
Professional fees 31,786 52,562 62,432
Printing and shareholder reports 30,432 50,688 49,362
Pricing services 21,674 22,248 51,697
Transfer agent fees--Class B 21,346 66,636 161,877
Directors' fees and expenses 11,687 20,591 20,137
Other 33,376 59,400 249,245
--------------- --------------- ---------------
Total expenses before waiver 4,282,654 7,467,665 10,590,738
Waiver of expenses (98,078) (52,967) (39,488)
--------------- --------------- ---------------
Total expenses after waiver 4,184,576 7,414,698 10,551,250
--------------- --------------- ---------------
Investment income--net 12,246,871 57,675,729 61,264,642
--------------- --------------- ---------------
Realized & Unrealized Gain (Loss) on Investments--Net
Realized gain (loss) on investments--net (1,056,145) 5,207,367 (1,437,730)
Change in unrealized appreciation/depreciation on
investments--net (8,070,447) (62,104,593) (32,654,407)
--------------- --------------- ---------------
Total realized and unrealized loss on investments--net (9,126,592) (56,897,226) (34,092,137)
--------------- --------------- ---------------
Net Increase in Net Assets Resulting from Operations $ 3,120,279 $ 778,503 $ 27,172,505
=============== =============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Statements of Changes in Net Assets Limited Maturity Portfolio
For the Year Ended
June 30,
Increase (Decrease) in Net Assets: 2004 2003
Operations
Investment income--net $ 12,246,871 $ 13,390,424
Realized gain (loss) on investments--net (1,056,145) 474,301
Change in unrealized appreciation/depreciation on investments--net (8,070,447) 1,115,437
--------------- ---------------
Net increase in net assets resulting from operations 3,120,279 14,980,162
--------------- ---------------
Dividends to Shareholders
Investment income--net:
Class A (4,538,777) (4,590,844)
Class B (1,050,664) (1,899,081)
Class C (2,160,826) (1,287,536)
Class I (4,488,624) (5,543,293)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (12,238,891) (13,320,754)
--------------- ---------------
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions (14,166,003) 288,357,426
--------------- ---------------
Net Assets
Total increase (decrease) in net assets (23,284,615) 290,016,834
Beginning of year 719,259,492 429,242,658
--------------- ---------------
End of year* $ 695,974,877 $ 719,259,492
=============== ===============
*Undistributed investment income--net $ 482,491 $ 474,511
=============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Statements of Changes in Net Assets (continued) Insured Portfolio
For the Year Ended
June 30,
Increase (Decrease) in Net Assets: 2004 2003
Operations
Investment income--net $ 57,675,729 $ 63,092,264
Realized gain on investments--net 5,207,367 18,978,718
Change in unrealized appreciation/depreciation on investments--net (62,104,593) 25,252,894
--------------- ---------------
Net increase in net assets resulting from operations 778,503 107,323,876
--------------- ---------------
Dividends to Shareholders
Investment income--net:
Class A (8,990,802) (8,594,352)
Class B (5,785,538) (7,434,794)
Class C (2,766,852) (2,290,564)
Class I (40,101,428) (44,741,184)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (57,644,620) (63,060,894)
--------------- ---------------
Capital Share Transactions
Net decrease in net assets derived from capital share transactions (123,327,160) (30,345,541)
--------------- ---------------
Net Assets
Total increase (decrease) in net assets (180,193,277) 13,917,441
Beginning of year 1,269,827,902 1,255,910,461
--------------- ---------------
End of year* $ 1,089,634,625 $ 1,269,827,902
=============== ===============
*Undistributed investment income--net $ 1,161,152 $ 1,129,449
=============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Statements of Changes in Net Assets (concluded) National Portfolio
For the Year Ended
June 30,
Increase (Decrease) in Net Assets: 2004 2003
Operations
Investment income--net $ 61,264,642 $ 62,500,439
Realized gain (loss) on investments--net (1,437,730) 23,064,897
Change in unrealized appreciation/depreciation on investments--net (32,654,407) 8,215,548
--------------- ---------------
Net increase in net assets resulting from operations 27,172,505 93,780,884
--------------- ---------------
Dividends to Shareholders
Investment income--net:
Class A (10,513,482) (9,204,187)
Class B (12,045,994) (16,020,155)
Class C (3,332,550) (3,170,397)
Class I (35,485,746) (33,985,291)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (61,377,772) (62,380,030)
--------------- ---------------
Capital Share Transactions
Net increase in net assets derived from capital share transactions 217,980,200 79,473,855
--------------- ---------------
Net Assets
Total increase in net assets 183,774,933 110,874,709
Beginning of year 1,223,683,146 1,112,808,437
--------------- ---------------
End of year* $ 1,407,458,079 $ 1,223,683,146
=============== ===============
*Undistributed investment income--net $ 806,143 $ 733,857
=============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Financial Highlights Limited Maturity Portfolio
The following per share data and ratios have been derived Class A
from information provided in the financial statements.
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2003++++ 2002++++ 2001++++ 2000++++
Per Share Operating Performance
Net asset value, beginning of year $ 10.18 $ 10.14 $ 10.06 $ 9.86 $ 9.92
---------- ---------- ---------- ---------- ----------
Investment income--net .17++ .24++ .32 .38 .37
Realized and unrealized gain (loss) on
investments--net (.12) .04 .08 .20 (.06)
---------- ---------- ---------- ---------- ----------
Total from investment operations .05 .28 .40 .58 .31
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.17) (.24) (.32) (.38) (.37)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.06 $ 10.18 $ 10.14 $ 10.06 $ 9.86
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share .50% 2.77% 3.99% 5.96% 3.20%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver .52% .52% .56% .54% .50%
========== ========== ========== ========== ==========
Expenses .53% .53% .56% .54% .50%
========== ========== ========== ========== ==========
Investment income--net 1.68% 2.31% 3.13% 3.80% 3.72%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 244,741 $ 248,454 $ 140,744 $ 42,619 $ 39,090
========== ========== ========== ========== ==========
Portfolio turnover 69.08% 44.61% 74.74% 51.94% 51.42%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
++++ Effective April 14, 2003, Class D Shares were redesignated Class A Shares.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Financial Highlights (continued) Limited Maturity Portfolio
The following per share data and ratios have been derived Class B
from information provided in the financial statements.
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001 2000
Per Share Operating Performance
Net asset value, beginning of year $ 10.17 $ 10.13 $ 10.06 $ 9.86 $ 9.92
---------- ---------- ---------- ---------- ----------
Investment income--net .14++ .21++ .29 .35 .35
Realized and unrealized gain (loss) on
investments--net (.12) .04 .07 .20 (.06)
---------- ---------- ---------- ---------- ----------
Total from investment operations .02 .25 .36 .55 .29
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.14) (.21) (.29) (.35) (.35)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.05 $ 10.17 $ 10.13 $ 10.06 $ 9.86
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share .24% 2.51% 3.62% 5.69% 2.94%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver .77% .78% .82% .80% .76%
========== ========== ========== ========== ==========
Expenses .78% .79% .82% .80% .76%
========== ========== ========== ========== ==========
Investment income--net 1.43% 2.10% 2.87% 3.55% 3.47%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 63,135 $ 83,886 $ 81,967 $ 31,480 $ 32,742
========== ========== ========== ========== ==========
Portfolio turnover 69.08% 44.61% 74.74% 51.94% 51.42%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Financial Highlights (continued) Limited Maturity Portfolio
The following per share data and ratios have been derived Class C
from information provided in the financial statements.
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001 2000
Per Share Operating Performance
Net asset value, beginning of year $ 10.13 $ 10.09 $ 10.01 $ 9.82 $ 9.88
---------- ---------- ---------- ---------- ----------
Investment income--net .14++ .19++ .29 .35 .34
Realized and unrealized gain (loss) on
investments--net (.12) .06 .08 .19 (.06)
---------- ---------- ---------- ---------- ----------
Total from investment operations .02 .25 .37 .54 .28
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.14) (.21) (.29) (.35) (.34)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.01 $ 10.13 $ 10.09 $ 10.01 $ 9.82
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share .23% 2.52% 3.72% 5.59% 2.93%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver .77% .78% .82% .81% .76%
========== ========== ========== ========== ==========
Expenses .78% .79% .82% .81% .76%
========== ========== ========== ========== ==========
Investment income--net 1.42% 1.92% 2.91% 3.53% 3.46%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 144,656 $ 135,782 $ 1,596 $ 602 $ 308
========== ========== ========== ========== ==========
Portfolio turnover 69.08% 44.61% 74.74% 51.94% 51.42%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Financial Highlights (continued) Limited Maturity Portfolio
The following per share data and ratios have been derived Class I
from information provided in the financial statements.
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2003++++ 2002++++ 2001++++ 2000++++
Per Share Operating Performance
Net asset value, beginning of year $ 10.17 $ 10.13 $ 10.05 $ 9.85 $ 9.91
---------- ---------- ---------- ---------- ----------
Investment income--net .18++ .27++ .34 .39 .38
Realized and unrealized gain (loss) on
investments--net (.12) .02 .08 .20 (.06)
---------- ---------- ---------- ---------- ----------
Total from investment operations .06 .29 .42 .59 .32
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.18) (.25) (.34) (.39) (.38)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.05 $ 10.17 $ 10.13 $ 10.05 $ 9.85
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share .59% 2.87% 4.10% 6.07% 3.31%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver .42% .42% .46% .44% .40%
========== ========== ========== ========== ==========
Expenses .43% .43% .46% .44% .40%
========== ========== ========== ========== ==========
Investment income--net 1.78% 2.44% 3.30% 3.91% 3.83%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 243,443 $ 251,137 $ 204,936 $ 191,481 $ 215,421
========== ========== ========== ========== ==========
Portfolio turnover 69.08% 44.61% 74.74% 51.94% 51.42%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
++++ Effective April 14, 2003, Class A Shares were redesignated Class I Shares.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Financial Highlights (continued) Insured Portfolio
The following per share data and ratios have been derived Class A
from information provided in the financial statements.
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2003++++ 2002++++ 2001++++ 2000++++
Per Share Operating Performance
Net asset value, beginning of year $ 8.07 $ 7.79 $ 7.69 $ 7.36 $ 7.79
---------- ---------- ---------- ---------- ----------
Investment income--net .38+++ .39+++ .39 .37 .38
Realized and unrealized gain (loss) on
investments--net (.37) .28 .10 .33 (.32)
---------- ---------- ---------- ---------- ----------
Total from investment operations .01 .67 .49 .70 .06
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.38) (.39) (.39) (.37) (.38)
Realized gain on investments--net -- -- --++ -- --
In excess of realized gain on investments--net -- -- -- -- (.11)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.38) (.39) (.39) (.37) (.49)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 7.70 $ 8.07 $ 7.79 $ 7.69 $ 7.36
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share .10% 8.77% 6.63% 9.74% .96%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver .71% .71% .72% .70% .68%
========== ========== ========== ========== ==========
Expenses .71% .71% .72% .70% .68%
========== ========== ========== ========== ==========
Investment income--net 4.79% 4.88% 5.10% 4.94% 5.10%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 183,007 $ 187,805 $ 161,110 $ 145,688 $ 99,326
========== ========== ========== ========== ==========
Portfolio turnover 49.27% 38.17% 32.78% 64.39% 94.08%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
++++ Effective April 14, 2003, Class D Shares were redesignated Class A Shares.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Financial Highlights (continued) Insured Portfolio
The following per share data and ratios have been derived Class B
from information provided in the financial statements.
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001 2000
Per Share Operating Performance
Net asset value, beginning of year $ 8.07 $ 7.79 $ 7.68 $ 7.36 $ 7.78
---------- ---------- ---------- ---------- ----------
Investment income--net .34+++ .35+++ .36 .34 .34
Realized and unrealized gain (loss) on
investments--net (.38) .28 .11 .32 (.31)
---------- ---------- ---------- ---------- ----------
Total from investment operations (.04) .63 .47 .66 .03
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.34) (.35) (.36) (.34) (.34)
Realized gain on investments--net -- -- --++ -- --
In excess of realized gain on investments--net -- -- -- -- (.11)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.34) (.35) (.36) (.34) (.45)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 7.69 $ 8.07 $ 7.79 $ 7.68 $ 7.36
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share (.53%) 8.21% 6.23% 9.04% .57%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver 1.21% 1.22% 1.23% 1.21% 1.19%
========== ========== ========== ========== ==========
Expenses 1.22% 1.22% 1.23% 1.21% 1.19%
========== ========== ========== ========== ==========
Investment income--net 4.29% 4.38% 4.58% 4.43% 4.56%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 111,524 $ 160,177 $ 182,241 $ 223,710 $ 276,154
========== ========== ========== ========== ==========
Portfolio turnover 49.27% 38.17% 32.78% 64.39% 94.08%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Financial Highlights (continued) Insured Portfolio
The following per share data and ratios have been derived Class C
from information provided in the financial statements.
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001 2000
Per Share Operating Performance
Net asset value, beginning of year $ 8.07 $ 7.79 $ 7.68 $ 7.36 $ 7.78
---------- ---------- ---------- ---------- ----------
Investment income--net .33+++ .34+++ .35 .33 .34
Realized and unrealized gain (loss) on
investments--net (.38) .28 .11 .32 (.31)
---------- ---------- ---------- ---------- ----------
Total from investment operations (.05) .62 .46 .65 .03
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.33) (.34) (.35) (.33) (.34)
Realized gain on investments--net -- -- --++ -- --
In excess of realized gain on investments--net -- -- -- -- (.11)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.33) (.34) (.35) (.33) (.45)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 7.69 $ 8.07 $ 7.79 $ 7.68 $ 7.36
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share (.58%) 8.16% 6.18% 8.99% .52%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver 1.26% 1.27% 1.28% 1.26% 1.24%
========== ========== ========== ========== ==========
Expenses 1.27% 1.27% 1.28% 1.26% 1.24%
========== ========== ========== ========== ==========
Investment income--net 4.23% 4.31% 4.56% 4.38% 4.52%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 61,794 $ 66,089 $ 34,541 $ 14,392 $ 12,856
========== ========== ========== ========== ==========
Portfolio turnover 49.27% 38.17% 32.78% 64.39% 94.08%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Financial Highlights (continued) Insured Portfolio
The following per share data and ratios have been derived Class I
from information provided in the financial statements.
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2003++++ 2002++++ 2001++++ 2000++++
Per Share Operating Performance
Net asset value, beginning of year $ 8.07 $ 7.80 $ 7.69 $ 7.36 $ 7.79
---------- ---------- ---------- ---------- ----------
Investment income--net .40+++ .41+++ .41 .39 .40
Realized and unrealized gain (loss) on
investments--net (.37) .27 .11 .33 (.32)
---------- ---------- ---------- ---------- ----------
Total from investment operations .03 .68 .52 .72 .08
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.40) (.41) (.41) (.39) (.40)
Realized gain on investments--net -- -- --++ -- --
In excess of realized gain on investments--net -- -- -- -- (.11)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.40) (.41) (.41) (.39) (.51)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 7.70 $ 8.07 $ 7.80 $ 7.69 $ 7.36
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share .35% 8.88% 7.03% 10.01% 1.21%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver .46% .46% .47% .45% .43%
========== ========== ========== ========== ==========
Expenses .46% .46% .47% .45% .43%
========== ========== ========== ========== ==========
Investment income--net 5.04% 5.13% 5.35% 5.19% 5.33%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 733,310 $ 855,757 $ 878,018 $ 920,597 $ 972,420
========== ========== ========== ========== ==========
Portfolio turnover 49.27% 38.17% 32.78% 64.39% 94.08%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
++++ Effective April 14, 2003, Class A Shares were redesignated Class I Shares.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Financial Highlights (continued) National Portfolio
The following per share data and ratios have been derived Class A
from information provided in the financial statements.
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2003++++ 2002++++ 2001++++ 2000++++
Per Share Operating Performance
Net asset value, beginning of year $ 10.54 $ 10.27 $ 10.15 $ 9.71 $ 10.22
---------- ---------- ---------- ---------- ----------
Investment income--net .52+++ .53+++ .53 .52 .54
Realized and unrealized gain (loss) on
investments--net (.25) .27 .12 .44 (.51)
---------- ---------- ---------- ---------- ----------
Total from investment operations .27 .80 .65 .96 .03
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.52) (.53) (.53) (.52) (.54)
Realized gain on investments--net -- -- --++ -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.52) (.53) (.53) (.52) (.54)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.29 $ 10.54 $ 10.27 $ 10.15 $ 9.71
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 2.62% 7.98% 6.72% 10.04% .43%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver .85% .84% .87% .83% .81%
========== ========== ========== ========== ==========
Expenses .85% .84% .87% .83% .81%
========== ========== ========== ========== ==========
Investment income--net 4.97% 5.10% 5.30% 5.16% 5.50%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 207,376 $ 200,108 $ 137,225 $ 124,082 $ 86,701
========== ========== ========== ========== ==========
Portfolio turnover 22.46% 37.75% 35.75% 80.88% 108.43%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
++++ Effective April 14, 2003, Class D Shares were redesignated Class A Shares.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Financial Highlights (continued) National Portfolio
The following per share data and ratios have been derived Class B
from information provided in the financial statements.
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001 2000
Per Share Operating Performance
Net asset value, beginning of year $ 10.53 $ 10.26 $ 10.14 $ 9.70 $ 10.21
---------- ---------- ---------- ---------- ----------
Investment income--net .47 .48+++ .53 .46 .49
Realized and unrealized gain (loss) on
investments--net (.26) .27 .12 .44 (.51)
---------- ---------- ---------- ---------- ----------
Total from investment operations .21 .75 .65 .90 (.02)
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.46) (.48) (.53) (.46) (.49)
Realized gain on investments--net -- -- --++ -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.46) (.48) (.53) (.46) (.49)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.28 $ 10.53 $ 10.26 $ 10.14 $ 9.70
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 2.10% 7.43% 6.18% 9.49% (.09%)
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver 1.35% 1.34% 1.38% 1.34% 1.32%
========== ========== ========== ========== ==========
Expenses 1.36% 1.35% 1.38% 1.34% 1.32%
========== ========== ========== ========== ==========
Investment income--net 4.47% 4.59% 4.80% 4.67% 4.98%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 217,814 $ 321,477 $ 295,827 $ 227,592 $ 254,860
========== ========== ========== ========== ==========
Portfolio turnover 22.46% 37.75% 35.75% 80.88% 108.43%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Financial Highlights (continued) National Portfolio
The following per share data and ratios have been derived Class C
from information provided in the financial statements.
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001 2000
Per Share Operating Performance
Net asset value, beginning of year $ 10.54 $ 10.26 $ 10.14 $ 9.71 $ 10.22
---------- ---------- ---------- ---------- ----------
Investment income--net .46+++ .47+++ .53 .46 .48
Realized and unrealized gain (loss) on
investments--net (.25) .28 .12 .43 (.51)
---------- ---------- ---------- ---------- ----------
Total from investment operations .21 .75 .65 .89 (.03)
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.46) (.47) (.53) (.46) (.48)
Realized gain on investments--net -- -- --++ -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.46) (.47) (.53) (.46) (.48)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.29 $ 10.54 $ 10.26 $ 10.14 $ 9.71
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 2.05% 7.48% 6.13% 9.33% (.13%)
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver 1.40% 1.39% 1.43% 1.39% 1.37%
========== ========== ========== ========== ==========
Expenses 1.41% 1.40% 1.43% 1.39% 1.37%
========== ========== ========== ========== ==========
Investment income--net 4.42% 4.54% 4.76% 4.61% 4.92%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 74,849 $ 77,906 $ 52,822 $ 31,880 $ 30,303
========== ========== ========== ========== ==========
Portfolio turnover 22.46% 37.75% 35.75% 80.88% 108.43%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Financial Highlights (concluded) National Portfolio
The following per share data and ratios have been derived Class I
from information provided in the financial statements.
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2003++++ 2002++++ 2001++++ 2000++++
Per Share Operating Performance
Net asset value, beginning of year $ 10.54 $ 10.26 $ 10.14 $ 9.70 $ 10.22
---------- ---------- ---------- ---------- ----------
Investment income--net .55+++ .56+++ .62 .54 .56
Realized and unrealized gain (loss) on
investments--net (.25) .28 .12 .44 (.52)
---------- ---------- ---------- ---------- ----------
Total from investment operations .30 .84 .74 .98 .04
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.55) (.56) (.62) (.54) (.56)
Realized gain on investments--net -- -- --++ -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.55) (.56) (.62) (.54) (.56)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.29 $ 10.54 $ 10.26 $ 10.14 $ 9.70
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 2.88% 8.34% 6.98% 10.32% .58%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver .60% .59% .62% .58% .56%
========== ========== ========== ========== ==========
Expenses .60% .59% .62% .58% .56%
========== ========== ========== ========== ==========
Investment income--net 5.23% 5.35% 5.55% 5.42% 5.74%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 907,419 $ 624,192 $ 626,935 $ 653,685 $ 682,553
========== ========== ========== ========== ==========
Portfolio turnover 22.46% 37.75% 35.75% 80.88% 108.43%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
++++ Effective April 14, 2003, Class A Shares were redesignated Class I Shares.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Notes to Financial Statements
1. Significant Accounting Policies:
Merrill Lynch Municipal Bond Fund, Inc. ("the Fund") is registered
under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Fund's
financial statements are prepared in conformity with U.S. generally
accepted accounting principles, which may require the use of
management accruals and estimates. Actual results may differ from
these estimates. The Fund's Portfolios offer four classes of shares.
Shares of Class A and Class I sold with a front-end sales charge.
Shares of Class B and Class C may be subject to a contingent
deferred sales charge. All classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and
conditions, except that Class A, Class B and Class C Shares bear
certain expenses related to the account maintenance of such shares,
and Class B and Class C Shares also bear certain expenses related to
the distribution of such shares. Each class has exclusive voting
rights with respect to matters relating to its account maintenance
and distribution expenditures. Income, expenses (other than expenses
attributable to a specific class) and realized and unrealized gains
and losses on investments and foreign currency transactions are
allocated daily to each class based on its relative net assets. The
following is a summary of significant accounting policies followed
by the Fund.
(a) Valuation of investments--Insured Portfolio: Where bonds in the
Portfolio have not been insured pursuant to policies obtained by the
issuer, the Fund has obtained insurance with respect to the payment
of interest and principal of each bond. Such insurance is valid as
long as the bonds are held by the Portfolio.
All Portfolios: Municipal bonds and money market securities are
traded primarily in the over-the-counter markets and are valued at
the most recent bid price or yield equivalent as obtained from
dealers that make markets in such securities. Positions in futures
contracts and options thereon, which are traded on exchanges, are
valued at closing prices as of the close of such exchanges. Assets
for which market quotations are not readily available are valued at
fair value on a consistent basis using methods determined in good
faith by the Fund's Board of Directors, including valuations
furnished by a pricing service retained by the Fund, which may
utilize a matrix system for valuations. The procedures of the
pricing service and its valuations are reviewed by the officers of
the Fund under the general supervision of the Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various
portfolio investment strategies both to increase the return of the
Fund and to hedge, or protect, its exposure to interest rate
movements and movements in the securities markets.
* Financial futures contracts--The Fund's Portfolios may purchase or
sell financial futures contracts and options on such futures
contracts. Futures contracts are contracts for delayed delivery of
securities at a specific future date and at a specific price or
yield. Upon entering into a contract, the Portfolios deposit and
maintain as collateral such initial margin as required by the
exchange on which the transaction is effected. Pursuant to the
contract, the Portfolios agree to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Portfolios as unrealized gains or losses.
When the contract is closed, the Portfolios record a realized gain
or loss equal to the difference between the value of the contract at
the time it was opened and the value at the time it was closed.
* Forward interest rate swaps--The Fund may enter into forward
interest rate swaps. In a forward interest rate swap, the Fund and
the counterparty agree to pay or receive interest on a specified
notional contract amount, commencing on a specified future effective
date, unless terminated earlier. The value of the agreement is
determined by quoted fair values received daily by the Fund from the
counterparty. When the agreement is closed, the Fund records a
realized gain or loss in an amount equal to the value of the
agreement.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Realized gains and losses on security
transactions are determined on the identified cost basis. Dividend
income is recorded on the ex-dividend dates. Interest income is
recognized on the accrual basis. The Portfolio's amortize all
premiums and discounts on debt securities.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Notes to Financial Statements (continued)
(e) Prepaid registration fees--Prepaid registration fees are charged
to expenses as the related shares are issued.
(f) Dividends and distributions--Dividends from net investment
income are declared daily and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates.
(g) Expenses--Certain expenses have been allocated to the individual
Portfolios in the Fund on a pro rata basis based upon the respective
aggregate net asset value of each Portfolio included in the Fund.
(h) Reclassification--U.S generally accepted accounting principles
require that certain components of net assets be adjusted to
reflect permanent differences between financial and tax reporting.
Accordingly, during the current year, with respect to the Insured
Portfolio, $594 has been reclassified between accumulated net
realized capital losses and undistributed net investment income as a
result of permanent differences attributable to amortization methods
for premiums and discounts on fixed income securities and taxable
ordinary income dividends received for tax purposes.
In addition, with respect to the National Portfolio, $3,468 has
been reclassified between accumulated net realized capital gains
and undistributed net investment income and $188,884 has been
reclassified between undistributed net investment income and paid-in
capital in excess of par as a result of permanent differences
attributable to amortization methods for premiums and discounts on
fixed income securities and non-deductible reorganization expenses.
These reclassifications have no effect on net assets or net asset
values per share.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect, wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with FAM Distributors, Inc. ("FAMD"
or the "Distributor"), which is a wholly-owned subsidiary of Merrill
Lynch Group, Inc.
FAM is responsible for the management of the Fund's portfolios and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operation of the Fund. For such
services, FAM receives at the end of each month a fee with respect
to each Portfolio at the annual rates set forth below which are
based upon the average daily value of the Fund's net assets.
Rate of Advisory Fee
Aggregate of Average Daily Limited
Net Assets of the Three Maturity Insured National
Combined Portfolios Portfolio Portfolio Portfolio
Not exceeding $250 million .40 % .40 % .50 %
In excess of $250 million but
not exceeding $400 million .375 .375 .475
In excess of $400 million but
not exceeding $550 million .35 .375 .475
In excess of $550 million but
not exceeding $1.5 billion .325 .375 .475
In excess of $1.5 billion .325 .35 .475
For the year ended June 30, 2004, FAM earned fees of $2,500,813,
$4,295,090 and $5,864,979, of which $98,078, $52,967 and $39,488
were waived for the Limited Maturity Portfolio, Insured Portfolio
and National Portfolio, respectively.
Pursuant to the Distribution Plans adopted by the Fund in accordance
with Rule 12b-1 under the Investment Company Act of 1940, the Fund
pays the Distributor ongoing account maintenance and distribution
fees. The fees are accrued daily and paid monthly at annual rates
based upon the average daily net assets of the shares as follows:
Account Maintenance Fees
Portfolio Class A Class B Class C
Limited Maturity .10% .15% .15%
Insured .25% .25% .25%
National .25% .25% .25%
Distribution Fees
Portfolio Class A Class B Class C
Limited Maturity -- .20% .20%
Insured -- .50% .55%
National -- .50% .55%
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 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, and Class C shareholders.
The ongoing distribution fee compensates the Distributor and MLPF&S
for providing shareholder and distribution-related services to
Class B and Class C shareholders.
For the year ended June 30, 2004, FAMD earned underwriting discounts
and direct commissions and MLPF&S earned dealer concessions on sales
of the Fund's Class A and Class I Shares follows:
FAMD MLPF&S
Portfolio Class A Class I Class A Class I
Limited Maturity $ 5,227 $ 441 $57,900 $ 5,152
Insured $ 6,896 $ 9,582 $51,663 $60,801
National $11,896 $11,109 $92,903 $80,527
For the year ended June 30, 2004, MLPF&S received contingent
deferred sales charges of $524,992 relating to transactions in
Class B Shares, amounting to $53,103, $164,789 and $307,100 in
the Limited Maturity, Insured and National Portfolios, respectively,
and $195,882 relating to transactions in Class C Shares, amounting
to $144,052, $17,678 and $34,152 in the Limited Maturity, Insured
and National Portfolios, respectively. Furthermore, MLPF&S received
contingent deferred sales charges of $31,021 relating to
transactions subject to front-end sales charge waivers in Class A
Shares amounting to $3,021 and $28,000 in the Insured and National
Portfolios and $7,021 relating to transactions subject to front-end
sales charge waivers in Class I Shares, amounting to $711 and $6,310
in the Insured and National Portfolios, respectively.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
For the year ended June 30, 2004, the Fund reimbursed FAM $16,575,
$24,049 and $25,878 in the Limited Maturity, Insured and National
Portfolios, respectively, for certain accounting services.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, FAMD, FDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended June 30, 2004 were as follows:
Purchases Sales
Limited Maturity Portfolio $ 395,298,576 $ 387,942,854
Insured Portfolio 566,988,727 674,666,357
National Portfolio 265,250,368 380,013,898
Net realized gains (losses) for the year ended June 30, 2004 and net
unrealized appreciation/depreciation as of June 30, 2004 were as
follows:
Realized
Gains Unrealized
Limited Maturity Portfolio (Losses) Depreciation
Long-term investments $ (1,073,433) $ (869,991)
Short-term investments 17,288 --
--------------- ---------------
Total $ (1,056,145) $ (869,991)
=============== ===============
Unrealized
Realized Appreciation/
Insured Portfolio Gains Depreciation
Long-term investments $ 5,207,367 $ 39,403,107
Forward interest rate swaps -- (281,865)
--------------- ---------------
Total $ 5,207,367 $ 39,121,242
=============== ===============
Realized Unrealized
National Portfolio Losses Appreciation
Long-term investments $ (1,437,730) $ 59,368,539
--------------- ---------------
Total $ (1,437,730) $ 59,368,539
=============== ===============
As of June 30, 2004, net unrealized appreciation/depreciation for
federal income tax purposes were as follows:
Net
Gross Gross Unrealized
Unrealized Unrealized Appreciation/
Appreciation Depreciation Depreciation
Limited Maturity Portfolio $ 1,897,589 $ 2,725,248 $ (827,659)
Insured Portfolio $47,491,907 $ 7,998,758 $39,493,149
National Portfolio $65,324,963 $ 5,794,629 $59,530,334
The aggregate cost of investments at June 30, 2004 for federal
income tax purposes was $696,363,644 for the Limited Maturity
Portfolio, $1,048,268,705 for the Insured Portfolio and
$1,302,436,478 for the National Portfolio.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Notes to Financial Statements (continued)
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share
transactions for the year ended June 30, 2004 and for the year ended
June 30, 2003 were $(14,166,003) and $288,357,426, respectively, for
the Limited Maturity Portfolio; $(123,327,160) and $(30,345,541),
respectively, for the Insured Portfolio; $217,980,200 and
$79,473,855, respectively, for the National Portfolio.
Transactions in capital shares for each class were as follows:
Limited Maturity Portfolio
Class A Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 16,779,060 $ 170,216,123
Automatic conversion of shares 774,841 7,859,627
Shares issued to shareholders
in reinvestment of dividends 259,274 2,627,508
-------------- ---------------
Total issued 17,813,175 180,703,258
Shares redeemed (17,884,341) (181,029,076)
-------------- ---------------
Net decrease (71,166) $ (325,818)
============== ===============
Limited Maturity Portfolio
Class A Shares for the Year Dollar
Ended June 30, 2003 Shares Amount
Shares sold 19,163,398 $ 195,049,800
Automatic conversion of shares 599,540 6,100,091
Shares issued to shareholders
in reinvestment of dividends 306,969 3,122,566
-------------- ---------------
Total issued 20,069,907 204,272,457
Shares redeemed (9,539,525) (97,085,514)
-------------- ---------------
Net increase 10,530,382 $ 107,186,943
============== ===============
Limited Maturity Portfolio
Class B Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 1,583,097 $ 16,032,729
Shares issued to shareholders
in reinvestment of dividends 66,270 671,027
-------------- ---------------
Total issued 1,649,367 16,703,756
Automatic conversion of shares (775,261) (7,859,627)
Shares redeemed (2,838,410) (28,733,527)
-------------- ---------------
Net decrease (1,964,304) $ (19,889,398)
============== ===============
Limited Maturity Portfolio
Class B Shares for the Year Dollar
Ended June 30, 2003 Shares Amount
Shares sold 3,419,780 $ 34,748,313
Shares issued to shareholders
in reinvestment of dividends 120,074 1,220,502
-------------- ---------------
Total issued 3,539,854 35,968,815
Automatic conversion of shares (599,877) (6,100,091)
Shares redeemed (2,781,128) (28,284,229)
-------------- ---------------
Net increase 158,849 $ 1,584,495
============== ===============
Limited Maturity Portfolio
Class C Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 7,434,781 $ 74,991,846
Shares issued to shareholders
in reinvestment of dividends 138,151 1,392,490
-------------- ---------------
Total issued 7,572,932 76,384,336
Shares redeemed (6,522,342) (65,705,019)
-------------- ---------------
Net increase 1,050,590 $ 10,679,317
============== ===============
Limited Maturity Portfolio
Class C Shares for the Year Dollar
Ended June 30, 2003 Shares Amount
Shares sold 14,075,218 $ 142,489,128
Shares issued to shareholders
in reinvestment of dividends 81,130 821,390
-------------- ---------------
Total issued 14,156,348 143,310,518
Shares redeemed (906,813) (9,187,709)
-------------- ---------------
Net increase 13,249,535 $ 134,122,809
============== ===============
Limited Maturity Portfolio
Class I Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 7,654,936 $ 77,520,808
Shares issued to shareholders
in reinvestment of dividends 279,125 2,825,785
-------------- ---------------
Total issued 7,934,061 80,346,593
Shares redeemed (8,397,998) (84,976,697)
-------------- ---------------
Net decrease (463,937) $ (4,630,104)
============== ===============
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Notes to Financial Statements (continued)
Limited Maturity Portfolio
Class I Shares for the Year Dollar
Ended June 30, 2003 Shares Amount
Shares sold 9,361,219 $ 95,197,425
Shares issued to shareholders
in reinvestment of dividends 334,427 3,399,346
-------------- ---------------
Total issued 9,695,646 98,596,771
Shares redeemed (5,228,193) (53,133,592)
-------------- ---------------
Net increase 4,467,453 $ 45,463,179
============== ===============
Insured Portfolio
Class A Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 1,293,482 $ 10,118,653
Automatic conversion of shares 2,938,903 23,195,012
Shares issued to shareholders
in reinvestment of dividends 542,688 4,271,669
-------------- ---------------
Total issued 4,775,073 37,585,334
Shares redeemed (4,263,021) (33,478,095)
-------------- ---------------
Net increase 512,052 $ 4,107,239
============== ===============
Insured Portfolio
Class A Shares for the Year Dollar
Ended June 30, 2003 Shares Amount
Shares sold 1,950,736 $ 15,635,023
Automatic conversion of shares 4,209,407 33,525,703
Shares issued to shareholders
in reinvestment of dividends 494,242 3,937,026
-------------- ---------------
Total issued 6,654,385 53,097,752
Shares redeemed (4,057,088) (32,406,400)
-------------- ---------------
Net increase 2,597,297 $ 20,691,352
============== ===============
Insured Portfolio
Class B Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 899,906 $ 7,113,726
Shares issued to shareholders
in reinvestment of dividends 325,764 2,563,893
-------------- ---------------
Total issued 1,225,670 9,677,619
Automatic conversion of shares (2,939,322) (23,195,012)
Shares redeemed (3,642,371) (28,526,319)
-------------- ---------------
Net decrease (5,356,023) $ (42,043,712)
============== ===============
Insured Portfolio
Class B Shares for the Year Dollar
Ended June 30, 2003 Shares Amount
Shares sold 4,003,377 $ 31,944,128
Shares issued to shareholders
in reinvestment of dividends 426,816 3,396,402
-------------- ---------------
Total issued 4,430,193 35,340,530
Automatic conversion of shares (4,210,678) (33,525,703)
Shares redeemed (3,757,787) (29,873,911)
-------------- ---------------
Net decrease (3,538,272) $ (28,059,084)
============== ===============
Insured Portfolio
Class C Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 1,599,948 $ 12,660,609
Shares issued to shareholders
in reinvestment of dividends 187,529 1,476,225
-------------- ---------------
Total issued 1,787,477 14,136,834
Shares redeemed (1,946,278) (15,252,191)
-------------- ---------------
Net decrease (158,801) $ (1,115,357)
============== ===============
Insured Portfolio
Class C Shares for the Year Dollar
Ended June 30, 2003 Shares Amount
Shares sold 4,603,403 $ 36,689,714
Shares issued to shareholders
in reinvestment of dividends 153,209 1,221,255
-------------- ---------------
Total issued 4,756,612 37,910,969
Shares redeemed (999,396) (7,980,994)
-------------- ---------------
Net increase 3,757,216 $ 29,929,975
============== ===============
Insured Portfolio
Class I Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 1,834,025 $ 14,548,109
Shares issued to shareholders
in reinvestment of dividends 2,141,518 16,867,743
-------------- ---------------
Total issued 3,975,543 31,415,852
Shares redeemed (14,710,762) (115,691,182)
-------------- ---------------
Net decrease (10,735,219) $ (84,275,330)
============== ===============
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Notes to Financial Statements (continued)
Insured Portfolio
Class I Shares for the Year Dollar
Ended June 30, 2003 Shares Amount
Shares sold 2,669,821 $ 21,281,651
Shares issued to shareholders
in reinvestment of dividends 2,353,883 18,745,764
-------------- ---------------
Total issued 5,023,704 40,027,415
Shares redeemed (11,649,682) (92,935,199)
-------------- ---------------
Net decrease (6,625,978) $ (52,907,784)
============== ===============
National Portfolio
Class A Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 3,242,405 $ 34,070,043
Automatic conversion of shares 3,679,692 38,392,291
Shares issued to shareholders
in reinvestment of dividends 468,701 4,887,876
-------------- ---------------
Total issued 7,390,798 77,350,210
Shares redeemed (6,225,568) (64,975,100)
-------------- ---------------
Net increase 1,165,230 $ 12,375,110
============== ===============
National Portfolio
Class A Shares for the Year Dollar
Ended June 30, 2003 Shares Amount
Shares sold 1,817,741 $ 18,919,074
Automatic conversion of shares 4,211,990 43,907,704
Shares issued resulting from
reorganization 2,781,396 28,790,872
Shares issued to shareholders
in reinvestment of dividends 419,512 4,367,054
-------------- ---------------
Total issued 9,230,639 95,984,704
Shares redeemed (3,612,689) (37,612,997)
-------------- ---------------
Net increase 5,617,950 $ 58,371,707
============== ===============
National Portfolio
Class B Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 1,044,188 $ 10,862,907
Shares issued to shareholders
in reinvestment of dividends 485,738 5,059,800
-------------- ---------------
Total issued 1,529,926 15,922,707
Automatic conversion of shares (3,682,766) (38,392,291)
Shares redeemed (7,189,222) (74,707,980)
-------------- ---------------
Net decrease (9,342,062) $ (97,177,564)
============== ===============
National Portfolio
Class B Shares for the Year Dollar
Ended June 30, 2003 Shares Amount
Shares sold 3,808,847 $ 39,620,050
Shares issued resulting from
reorganization 9,719,653 100,571,771
Shares issued to shareholders
in reinvestment of dividends 661,896 6,880,683
-------------- ---------------
Total issued 14,190,396 147,072,504
Automatic conversion of shares (4,215,216) (43,907,704)
Shares redeemed (8,289,076) (86,180,280)
-------------- ---------------
Net increase 1,686,104 $ 16,984,520
============== ===============
National Portfolio
Class C Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 1,945,227 $ 20,206,826
Shares issued to shareholders
in reinvestment of dividends 180,902 1,886,143
-------------- ---------------
Total issued 2,126,129 22,092,969
Shares redeemed (2,244,207) (23,326,697)
-------------- ---------------
Net decrease (118,078) $ (1,233,728)
============== ===============
National Portfolio
Class C Shares for the Year Dollar
Ended June 30, 2003 Shares Amount
Shares sold 2,368,509 $ 24,696,245
Shares issued resulting from
reorganization 1,042,309 10,790,909
Shares issued to shareholders
in reinvestment of dividends 172,937 1,799,753
-------------- ---------------
Total issued 3,583,755 37,286,907
Shares redeemed (1,337,070) (13,921,043)
-------------- ---------------
Net increase 2,246,685 $ 23,365,864
============== ===============
National Portfolio
Class I Shares for the Year Dollar
June Ended 30, 2004 Shares Amount
Shares sold 2,236,079 $ 23,176,738
Shares issued resulting from
reorganization 35,155,756 368,217,557
Shares issued to shareholders
in reinvestment of dividends 1,843,445 19,167,463
-------------- ---------------
Total issued 39,235,280 410,561,758
Shares redeemed (10,268,772) (106,545,376)
-------------- ---------------
Net increase 28,966,508 $ 304,016,382
============== ===============
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Notes to Financial Statements (continued)
National Portfolio
Class I Shares for the Year Dollar
Ended June 30, 2003 Shares Amount
Shares sold 1,981,190 $ 20,668,840
Shares issued resulting from
reorganization 2,488,551 25,766,020
Shares issued to shareholders
in reinvestment of dividends 1,624,924 16,902,499
-------------- ---------------
Total issued 6,094,665 63,337,359
Shares redeemed (7,943,755) (82,585,595)
-------------- ---------------
Net decrease (1,849,090) $ (19,248,236)
============== ===============
5. Short-Term Borrowings:
The Fund, along with certain other funds managed by MLIM and its
affiliates, is a party to a $500,000,000 credit agreement with Bank
One, N.A. and certain other lenders. The Fund may borrow under the
credit agreement to fund shareholder redemptions and for other
lawful purposes other than for leverage. The Fund may borrow up to
the maximum amount allowable under the Fund's current prospectus and
statement of additional information, subject to various other legal,
regulatory or contractual limits. The Fund pays a commitment fee of
..09% per annum based on the Fund's pro rata share of the unused
portion of the credit agreement. Amounts borrowed under the credit
agreement bear interest at a rate equal to, at each fund's election,
the Federal Funds rate plus .50% or a base rate as determined by
Bank One, N.A. On November 28, 2003, the credit agreement was
renewed for one year under the same terms. The Fund did not borrow
under the credit agreement during the year ended June 30, 2004.
6. Distributions to Shareholders:
The tax character of distributions paid by the Limited Maturity
Portfolio during the fiscal years ended June 30, 2004 and June 30,
2003 was as follows:
6/30/2004 6/30/2003
Distributions paid from:
Tax-exempt income $ 12,238,891 $ 13,320,754
-------------- ---------------
Total distributions $ 12,238,891 $ 13,320,754
============== ===============
The tax character of distributions paid by the Insured Portfolio
during the fiscal years ended June 30, 2004 and June 30, 2003 was as
follows:
6/30/2004 6/30/2003
Distributions paid from:
Tax-exempt income $ 57,644,620 $ 63,060,894
-------------- ---------------
Total distributions $ 57,644,620 $ 63,060,894
============== ===============
The tax character of distributions paid by the National Portfolio
during the fiscal years ended June 30, 2004 and June 30, 2003 was as
follows:
6/30/2004 6/30/2003
Distributions paid from:
Tax-exempt income $ 61,377,772 $ 62,380,030
-------------- ---------------
Total distributions $ 61,377,772 $ 62,380,030
============== ===============
As of June 30, 2004, the components of accumulated earnings on a tax
basis were as follows:
Limited Maturity Portfolio
Undistributed tax-exempt income--net $ 440,159
Undistributed long-term capital gains--net --
---------------
Total undistributed earnings--net 440,159
Capital loss carryforward (876,881)*
Unrealized losses--net (1,585,280)**
---------------
Total accumulated losses--net $ (2,022,002)
===============
Insured Portfolio
Undistributed tax-exempt income--net $ 1,071,110
Undistributed long-term capital gains--net --
---------------
Total undistributed earnings--net 1,071,110
Capital loss carryforward (14,666,460)*
Unrealized gains--net 38,021,622**
---------------
Total accumulated earnings--net $ 24,426,272
===============
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Notes to Financial Statements (concluded)
National Portfolio
Undistributed tax-exempt income--net $ 636,323
Undistributed long-term capital gains--net --
---------------
Total undistributed earnings--net 636,323
Capital loss carryforward (71,478,450)*
Unrealized gains--net 53,543,559**
---------------
Total accumulated losses--net $ (17,298,568)
===============
*At June 30, 2004, the Limited Maturity Portfolio had a net
capital loss carryforward of approximately $876,881, of which
$119,413 expires in 2008, $426,094 expires in 2009 and $331,374
expires in 2012, the Insured Portfolio had a net capital loss
carryforward of $14,666,460, all of which expires in 2009 and
the National Portfolio had a net capital loss carryforward of
approximately $71,478,450, of which $23,598 expires in 2005,
$12,553,988 expires in 2006, $18,502,015 expires in 2007,
$10,488,608 expires in 2008, $26,931,578 expires in 2009, $444,566
expires in 2010, $942,957 expires in 2011 and $1,591,140 expires in
2012. These amounts will be available to offset like amounts of any
future taxable gains.
**The difference between book-basis and tax-basis net unrealized
gains (losses) is attributable primarily to the tax deferral of
losses on wash sales, the tax deferral of losses on straddles, the
difference between book and tax amortization methods for premiums
and discounts on fixed income securities, and the deferral of post-
October capital losses for tax purposes.
7. Acquisition of The Municipal Fund Accumulation Program, Inc.
On April 5, 2004, pursuant to a plan of reorganization, the Fund's
National Portfolio acquired substantially all of the assets and the
liabilities of The Municipal Fund Accumulation Program, Inc. This
was accomplished by a tax-free exchange of 21,499,152 shares of
Common Stock of The Municipal Fund Accumulation Program, Inc. for
35,155,756 shares of Class I Shares of Common Stock of the Fund's
National Portfolio. The Municipal Fund Accumulation Program, Inc.'s
net assets on that date was $368,217,557, including $21,153,984 of
net unrealized appreciation and $34,805,024 of accumulated net
realized capital losses. These net assets were combined with those
of the Fund's National Portfolio. The aggregate net assets
immediately after the acquisition amounted to $1,490,931,658.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
Merrill Lynch Municipal Bond Fund, Inc.:
We have audited the accompanying statements of assets and
liabilities, including the schedules of investments, of Merrill
Lynch Municipal Bond Fund, Inc. (the "Fund") comprising the Insured,
National and Limited Maturity Portfolios as of June 30, 2004, and
the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in
the period then ended, and the financial highlights for each of
the five years in the period then ended. These financial statements
and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of June 30, 2004, by
correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of each of the respective portfolios constituting
the Merrill Lynch Municipal Bond Fund, Inc. as of June 30, 2004, the
results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended,
and their financial highlights for each of the five years in the
period then ended, in conformity with U.S. generally accepted
accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
August 19, 2004
Important Tax Information (unaudited)
All of the net investment income distributions paid monthly by
Merrill Lynch Municipal Bond Fund, Inc. during the taxable year
ended June 30, 2004 qualify as tax-exempt interest dividends for
federal income tax purposes.
Please retain this information for your records.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Officers and Directors (unaudited)
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
Interested Director
Terry K. Glenn* President 2000 to President of the Merrill Lynch Investment 125 Funds None
P.O. Box 9011 and present Managers, L.P. ("MLIM")/Fund Asset 160 Portfolios
Princeton, Director Management, L.P. ("FAM")--Advised Funds
NJ 08543-9011 since 1999; Chairman (Americas Region)
Age: 63 of MLIM from 2000 to 2002; Executive Vice
President of MLIM and FAM (which terms as
used herein include their corporate
predecessors) from 1983 to 2002; President
of FAM Distributors, Inc. ("FAMD") from
1986 to 2002 and Director thereof from 1991
to 2002; Executive Vice President and
Director of Princeton Services, Inc.
("Princeton Services") from 1993 to 2002;
President of Princeton Administrators, L.P.
from 1989 to 2002; Director of Financial
Data Services, Inc. since 1985.
*Mr. Glenn is a director, trustee or member of an advisory board of
certain other investment companies for which MLIM or FAM acts as
investment adviser. Mr. Glenn is an "interested person," as
described in the Investment Company Act, of the Fund based on his
present and former positions with MLIM, FAM, FAMD, Princeton
Services and Princeton Administrators, L.P. The Director's term is
unlimited. Directors serve until their resignation, removal or
death, or until December 31 of the year in which they turn 72. As
Fund President, Mr. Glenn serves at the pleasure of the Board of
Directors.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Officers and Directors (unaudited)(continued)
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
Independent Directors*
Ronald W. Forbes Director 1977 to Professor Emeritus of Finance, School of 49 Funds None
P.O. Box 9095 present Business, State University of New York at 49 Portfolios
Princeton, Albany since 2000 and Professor thereof
NJ 08543-9095 from 1989 to 2000; International Consultant,
Age: 63 Urban Institute, Washington, D.C. from 1995
to 1999.
Cynthia A. Montgomery Director 1994 to Professor, Harvard Business School since 49 Funds Newell
P.O. Box 9095 present 1989; Associate Professor, J.L. Kellogg 49 Portfolios Rubbermaid, Inc.
Princeton, Graduate School of Management, Northwestern
NJ 08543-9095 University from 1985 to 1989; Associate
Age: 51 Professor, Graduate School of Business
Administration, University of Michigan
from 1979 to 1985.
Kevin A. Ryan Director 1992 to Founder and currently Director Emeritus 49 Funds None
P.O. Box 9095 present of the Boston University Center for the 49 Portfolios
Princeton, Advancement of Ethics and Character and
NJ 08543-9095 Director thereof from 1989 to 1999;
Age: 71 Professor from 1982 to 1999 and currently
Professor Emeritus of Education of Boston
University; formerly taught on the faculties
of The University of Chicago, Stanford
University and Ohio State University.
Roscoe S. Suddarth Director 2000 to President of Middle East Institute from 49 Funds None
P.O. Box 9095 present 1995 to 2001; Foreign Service Officer of 49 Portfolios
Princeton, United States Foreign Service from 1961
NJ 08543-9095 to 1995 and Career Minister thereof from
Age: 68 1989 to 1995; Deputy Inspector General
of U.S. Department of State from 1991 to
1994; U.S. Ambassador to the Hashemite
Kingdom of Jordan from 1987 to 1990.
Richard R. West Director 1981 to Professor of Finance since 1984, Dean from 49 Funds Bowne & Co.,
P.O. Box 9095 present 1984 to 1993 and currently Dean Emeritus 49 Portfolios Inc.; Vornado
Princeton, of New York University, Leonard N. Stern Operating
NJ 08543-9095 School of Business Administration. Company;
Age: 66 Vornado Realty
Trust and
Alexander's, Inc.
Edward D. Zinbarg Director 2000 to Self-employed financial consultant since 49 Funds None
P.O. Box 9095 present 1994; Executive Vice President of the 49 Portfolios
Princeton, Prudential Insurance Company of America
NJ 08543-9095 from 1988 to 1994; Former Director of
Age: 69 Prudential Reinsurance Company and former
Trustee of the Prudential Foundation.
*The Director's term is unlimited. Directors serve until their
resignation, removal or death, or until December 31 of the year in
which they turn 72.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Officers and Directors (unaudited)(concluded)
Position(s) Length of
Held with Time
Name, Address & Age Fund Served* Principal Occupation(s) During Past 5 Years
Fund Officers
Donald C. Burke Vice 1993 to First Vice President of MLIM and FAM since 1997 and Treasurer thereof since
P.O. Box 9011 President present 1999; Senior Vice President and Treasurer of Princeton Services since 1999;
Princeton, and and Vice President of FAMD since 1999; Director of MLIM Taxation since 1990.
NJ 08543-9011 Treasurer 1999 to
Age: 44 present
Kenneth A. Jacob Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 Vice present Management) of MLIM from 1997 to 2000.
Princeton, President
NJ 08543-9011
Age: 53
John M. Loffredo Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 Vice present Management) of MLIM from 1998 to 2000.
Princeton, President
NJ 08543-9011
Age: 40
Peter J. Hayes Vice 1996 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 President present Management) of MLIM from 1997 to 2000.
Princeton,
NJ 08543-9011
Age: 45
Walter O'Connor Vice 1996 to Managing Director of MLIM since 2003; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 President present Management) of MLIM from 2000 to 2003; Vice President of MLIM from 1994
Princeton, to 2000.
NJ 08543-9011
Age: 42
Robert A. DiMella Vice 1999 to Managing Director of MLIM since 2004; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 President present Management) of MLIM from 2002 to 2004; Vice President of MLIM from 1996
Princeton, to 2002.
NJ 08543-9011
Age: 37
Phillip S. Gillespie Secretary 2004 to First Vice President of MLIM since 2001; Director (Legal Advisory) of MLIM from
P.O. Box 9011 present 2000 to 2001; Vice President of MLIM from 1999 to 2000 and Attorney associated
Princeton, with MLIM since 1998.
NJ 08543-9011
Age: 40
*Officers of the Fund serve at the pleasure of the Board of
Directors.
Further information about the Fund's Officers and Directors is
available in the Fund's Statement of Additional Information, which
can be obtained without charge by calling 1-800-MER-FUND.
Custodian
The Bank of New York
100 Church St.
New York, NY 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
800-637-3863
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Electronic Delivery
The Fund offers electronic delivery of communications to its
shareholders. In order to receive this service, you must
register your account and provide us with e-mail information.
To sign up for this service, simply access this Web site
http://www.icsdelivery.com/live and follow the instructions.
When you visit this site, you will obtain a personal identification
number (PIN). You will need this PIN should you wish to update your
e-mail address, choose to discontinue this service and/or make any
other changes to the service. This service is not available for
certain retirement accounts at this time.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., JUNE 30, 2004
Item 2 - Code of Ethics - The registrant has adopted a code of
ethics, as of the end of the period covered by this report, that
applies to the registrant's principal executive officer, principal
financial officer and principal accounting officer, or persons
performing similar functions. A copy of the code of ethics
is available without charge upon request by calling toll-free
1-800-MER-FUND (1-800-637-3863).
Item 3 - Audit Committee Financial Expert - The registrant's board
of directors has determined that (i) the registrant has the
following audit committee financial experts serving on its audit
committee and (ii) each audit committee financial expert is
independent: (1) Ronald W. Forbes, (2) Richard R. West, and (3)
Edward D. Zinbarg.
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ending June 30, 2004 - $98,600
Fiscal Year Ending June 30, 2003 - $64,700
(b) Audit-Related Fees - Fiscal Year Ending June 30, 2004 - $0
Fiscal Year Ending June 30, 2003 - $0
(c) Tax Fees - Fiscal Year Ending June 30, 2004 - $26,430
Fiscal Year Ending June 30, 2003 - $14,400
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ending June 30, 2004 - $0
Fiscal Year Ending June 30, 2003 - $0
(e)(1) The registrant's audit committee (the "Committee") has
adopted policies and procedures with regard to the pre-approval of
services. Audit, audit-related and tax compliance services provided
to the registrant on an annual basis require specific pre-approval
by the Committee. The Committee also must approve other non-audit
services provided to the registrant and those non-audit services
provided to the registrant's affiliated service providers that
relate directly to the operations and the financial reporting of the
registrant. Certain of these non-audit services that the Committee
believes are a) consistent with the SEC's auditor independence rules
and b) routine and recurring services that will not impair the
independence of the independent accountants may be approved by the
Committee without consideration on a specific case-by-case basis
("general pre-approval"). However, such services will only be
deemed pre-approved provided that any individual project does not
exceed $5,000 attributable to the registrant or $50,000 for all of
the registrants the Committee oversees. Any proposed services
exceeding the pre-approved cost levels will require specific pre-
approval by the Committee, as will any other services not subject to
general pre-approval (e.g., unanticipated but permissible services).
The Committee is informed of each service approved subject to
general pre-approval at the next regularly scheduled in-person board
meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ending June 30, 2004 - $16,114,216
Fiscal Year Ending June 30, 2003 - $17,689,695
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser and any entity controlling,
controlled by, or under common control with the investment adviser
that provides ongoing services to the registrant that were not pre-
approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation
S-X is compatible with maintaining the principal accountant's
independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $541,640, 0%
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for
Closed-End Management Investment Companies - Not Applicable
Item 8 - 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 second fiscal half-
year of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 11 - Exhibits attached hereto
11(a)(1) - Code of Ethics - See Item 2
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.
Merrill Lynch Municipal Bond Fund, Inc.
By: _/s/ Terry K. Glenn_______
Terry K. Glenn,
President of
Merrill Lynch Municipal Bond Fund, Inc.
Date: August 13, 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
Merrill Lynch Municipal Bond Fund, Inc.
Date: August 13, 2004
By: _/s/ Donald C. Burke________
Donald C. Burke,
Chief Financial Officer of
Merrill Lynch Municipal Bond Fund, Inc.
Date: August 13, 2004