UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-02688
Name of Fund: Merrill Lynch Municipal Bond Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr.,
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: 06/30/05
Date of reporting period: 07/01/04 - 12/31/04
Item 1 - Report to Stockholders
(BULL LOGO)
Merrill Lynch Investment Managers
www.mlim.ml.com
Merrill Lynch
Municipal Bond Fund, Inc.
Semi-Annual Report
December 31, 2004
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered
a representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are
subject to change.
A description of the policies and procedures that the Fund uses
to determine how to vote proxies relating to portfolio securities
is available (1) without charge, upon request, by calling toll-free
1-800-MER-FUND (1-800-637-3863); (2) 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 and Chief Investment Officer
Dear Shareholder
The U.S. equity market ended 2004 in positive territory, although
not without some suspense along the way. Fixed income markets also
performed well, with high yield bond investors enjoying some of the
greatest returns.
Over the past year, the equity market generally found support from a
healthy economic environment, above-average corporate earnings,
increased capital spending and still-low interest rates. Stalling
the momentum somewhat throughout the year was a contentious
election, negligible inflation amid a rising federal funds interest
rate, record-high oil prices and the seemingly ever-present worries
over terrorism and the war in Iraq.
Still, the Standard & Poor's 500 Index posted a 12-month return of
+10.88% and a six-month return of +7.19% as of December 31, 2004.
The fourth quarter of the year proved to be the most telling, as the
S&P 500 Index was up only 1.51% year-to-date as of September 30,
2004. As the price of oil relaxed and election uncertainties
subsided, the market headed more convincingly upward in the last
quarter of the year.
Given the relatively positive environment for equities, the
favorable performance of the bond market came as somewhat of a
surprise. The Lehman Brothers Aggregate Bond Index posted a 12-month
return of +4.34% and a six-month return of +4.18% as of December 31,
2004. The tax-exempt market performed just as well, with a 12-month
return of +4.48% and a six-month return of +5.19%, as measured by
the Lehman Brothers Municipal Bond Index. Those comfortable with a
higher degree of risk benefited this past year, as the Credit Suisse
First Boston High Yield Index posted a 12-month return of +11.95%
and a six-month return of +9.26%. Interestingly, as the Federal
Reserve Board began raising its target short-term interest rate,
long-term bond yields were little changed. In fact, the yield on the
10-year Treasury was 4.24% at year-end compared to 4.27% at December
31, 2003. The yield on the two-year Treasury climbed to 3.08% at
year-end 2004 from 1.84% a year earlier.
As always, our investment professionals are closely monitoring the
markets, the economy and the overall environment in an effort to
make well-informed decisions for the portfolios they manage. For the
individual investor, the key to investment success - particularly
during uncertain times - is to maintain a long-term perspective and
adhere to the disciplines of asset allocation, diversification and
rebalancing. We encourage you to work with your financial advisor to
ensure these time-tested techniques are incorporated into your
investment plan.
We thank you for trusting Merrill Lynch Investment Managers with
your investment assets, and we look forward to serving you in the
new year and beyond.
Sincerely,
(Robert C. Doll, Jr.)
Robert C. Doll, Jr.
President and Chief Investment Officer
Merrill Lynch Investment Managers
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 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. Mr. Steffens received
a bachelor's degree from Villanova University. The team has 28 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
Portfolio Information 13
Disclosure of Expenses 14
Schedule of Investments--Limited Maturity Portfolio 16
Schedule of Investments--Insured Portfolio 20
Schedule of Investments--National Portfolio 24
Financial Statements 36
Financial Highlights 42
Notes to Financial Statements 54
Officers and Directors 61
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 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 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. He is a CFA R
charterholder and a member of the CFA Institute as well as a
member of the New York Society of Security Analysts. 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 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., DECEMBER 31, 2004
A Discussion With Your Portfolio Managers
As the Federal Reserve Board embarked on a series of interest rate
increases, the Portfolios continued to focus on preserving net asset
value and enhancing the yield provided to shareholders.
Describe the recent market environment relative to municipal bonds.
Over the past six months, the Federal Reserve Board (the Fed)
embarked on a monetary tightening policy that culminated in a 2.25%
federal funds rate at December 31, 2004. As short-term bond yields
rose in concert with the Fed interest rate hikes, long-term bond
yields actually declined as their prices, which move in the opposite
direction, increased.
The rise in long-term bond prices came as somewhat of a surprise, as
the economy generally continued to improve over the past six months.
Gross domestic product growth was recently reported at 4% for the
third quarter of 2004, up from 3.4% in the second quarter.
Nevertheless, improvements in domestic business activity were offset
by inflationary measures remaining in the 1.5% - 2% range.
The first of five Fed interest rate hikes came on June 30. Although
investors believed the Fed would continue to increase its short-term
interest rate target, the Fed clearly articulated its intention to
take a "measured" approach to monetary tightening. This removed much
of the earlier concern that the Fed might embark on a dramatic
series of interest rate increases, and the prospect for a more
moderate tightening sequence helped support higher long-term bond
prices. The four subsequent Fed interest rate increases had limited
market impact, as monthly U.S. employment gains remained modest. In
addition, strong currency-related demand for U.S. Treasury issues
from many foreign governments helped bolster fixed income bond
prices. By the end of December 2004, long-term U.S. Treasury bond
yields stood at 4.85%, a decline of 46 basis points over the past
six months. The yield on the 10-year U.S. Treasury note fell 36
basis points to 4.24%. In contrast, the two-year Treasury yield
increased 38 basis points to 3.08% at December 31, 2004.
While tax-exempt bond yields generally followed the same pattern as
their taxable counterparts, yield volatility was more subdued than
that seen in the U.S. Treasury market. Long-term revenue bond
yields, as measured by the Bond Buyer Revenue Bond Index, fell 30
basis points over the six months. As reported by Municipal Market
Data, AAA-rated issues maturing in 30 years saw their yields decline
41 basis points to 4.61%, while yields on 10-year AAA-rated issues
declined 43 basis points to 3.52%. At the shorter end, yields on two-
year AAA-rated municipal bonds rose 12 basis points, while yields on
three-year AAA-rated issues actually fell 17 basis points, resulting
in a flatter yield curve in this area.
During the period, more than $170 billion in new long-term tax-
exempt bonds was underwritten, a decline of nearly 7.5% versus the
same six months a year ago. Supply of short-term municipal
securities was limited during the period as well. The declining
supply trend allowed tax-exempt bond prices to register significant
gains over the period, performing similar to their taxable
counterparts. New-issue municipal volume should be easily manageable
in early 2005, continuing to support the tax-exempt market's
favorable technical position.
LIMITED MATURITY PORTFOLIO
How did the Portfolio perform during the period in light of the
existing market conditions?
For the six-month period ended December 31, 2004, Limited
Portfolio's Class A, Class B, Class C and Class I Shares had total
returns of +.61%, +.48%, +.48% and +.66%, respectively. (Portfolio
results shown do not reflect sales charges and would be lower if
sales charges were included. Complete performance information can
be found on pages 9 - 12 of this report to shareholders.) For the
same period, the Portfolio's unmanaged benchmarks, the Lehman
Brothers Municipal Bond 3-Year General Obligation Index and the
Lehman Brothers Municipal Bond Index, had respective returns of
+2.15% and +5.19%. The Portfolio's comparable Lipper category of
Short Municipal Debt Funds recorded an average return of +1.26% for
the six-month period. (Funds in the Short Municipal Debt Funds
category invest primarily in municipal debt issues with dollar-
weighted average maturities of less than three years.)
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 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. As short-term interest rates
remained near their historic lows, bonds on the longer end of the
yield curve offered more attractive yields, putting the Portfolio at
a relative disadvantage. Compared to its Lipper peers, the
Portfolio's underweight exposure to three-year and four-year bonds
detracted from performance as the yields on these bonds fell and the
short end of the yield curve flattened.
The Fed's monetary tightening initiative has had the most
significant impact on the short portion of the municipal yield
curve, where the Portfolio invests. Overall, our strategy has been
consistent during the past several periods, in anticipation of the
upward trend in interest rates. Relative performance during the
period reflected our defensive management strategy, as we remained
focused on maintaining net asset value stability in the rising
interest rate environment. Accordingly, we kept the Portfolio's
duration - or sensitivity to changes in interest rates - at slightly
above one year, shorter than the market average. At the same time,
we kept the Portfolio's cash reserve position low in an effort to
enhance yields for our shareholders.
What changes were made to the Portfolio during the period?
We did not make significant changes to the Portfolio or our strategy
over the past six months. Based on our belief that short-term
interest rates will continue to rise, we have been comfortable in
allowing the Portfolio's duration to drift lower. This affords us
the liquidity to reinvest at the most attractive levels. Having said
that, we did take advantage of occasional opportunities to enhance
short-term performance when bonds with attractive relative values
became available.
Throughout the period, we maintained the Portfolio's underweighting
in bonds with three-year and four-year maturities. This portion of
the yield curve has flattened considerably, giving us little
incentive to assume additional market risk for only an incremental
pickup in yield. Finally, we continued to emphasize securities
offering higher coupon income, as these have generally outperformed
lower-coupon bonds in rising interest rate environments.
How would you characterize the Portfolio's position at the close of
the period?
We believe the Portfolio is well positioned for rising interest
rates. If it appears the Fed will take a more aggressive approach to
future rate hikes than is currently expected, we would consider
positioning the Portfolio even more defensively. This might entail
increasing our cash position, among other steps. Such a strategy
would enable us to reinvest proceeds in a higher-rate environment in
addition to making the Portfolio more interest rate-sensitive at a
more opportune time.
Peter J. Hayes
Vice President and Senior Portfolio Manager
January 18, 2005
Effective January 3, 2005, Merrill Lynch Municipal Bond Fund,
Inc. - Limited Maturity Portfolio changed its name to Merrill Lynch
Municipal Bond Fund, Inc. - Short-Term Portfolio. The name change
does not affect the Portfolio's investment objective or your
individual holding. The Portfolio's management team, investment
process and fund symbols remain the same.
We believe the new name better reflects the Portfolio's strategy of
investing primarily in investment grade municipal bonds that have a
maturity of less than four years or in municipal notes.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
INSURED PORTFOLIO
How did the Portfolio perform during the period in light of the
existing market conditions?
For the six-month period ended December 31, 2004, Insured
Portfolio's Class A, Class B, Class C and Class I Shares had
total returns of +5.21%, +5.08%, +5.05% and +5.48%, respectively.
(Portfolio results shown do not reflect sales charges and would
be lower if sales charges were included. Complete performance
information can be found on pages 9 - 12 of this report to
shareholders.) The Portfolio performed in line with its unmanaged
benchmark, the Lehman Brothers Municipal Bond Index, which returned
+5.19% for the same period.
The Portfolio outperformed its comparable Lipper category of Insured
Municipal Debt Funds, which had an average return of +4.72% for the
six-month period. (Funds in this Lipper category invest primarily in
municipal debt issues insured as to timely payment.) For the most
part, we attribute the Portfolio's relative outperformance to our
yield curve positioning and the competitive yield we have been able
to achieve. Although the Portfolio was defensively structured with
respect to interest rate sensitivity, we were underweight in bonds
with maturities of less than 10 years. This contributed to relative
performance as the yield curve flattened substantially during the
period, causing shorter bonds to lose value while longer bonds
increased in price.
What changes were made to the Portfolio during the period?
We maintained a focus on securities that we believed could offer our
shareholders the best relative value in the insured municipal
marketplace. To that end, we reduced the Portfolio's exposure to
California tax-exempt bonds as their yields continued to approach
their historical averages, making them less compelling investments.
Profits were achieved from these sales. We added to our holdings in
New Jersey and New York tax-exempt bonds, as increased supply served
to weaken bond prices in both states, presenting an attractive
buying opportunity.
In addition, we continued to shift our focus further out on the
yield curve. Our observations revealed that the yield curve had
steepened significantly between 15 years and 30 years, causing
spreads to approach their historical highs. We sought to take
advantage of this phenomenon by investing in bonds with slightly
longer maturities, specifically between 23 years and 26 years.
How would you characterize the Portfolio's position at the close of
the period?
The Portfolio is fully invested and defensively positioned in
anticipation of higher long-term interest rates. We will continue to
emphasize a competitive yield and the preservation of the
Portfolio's net asset value. Although our recent restructuring
activity has involved bonds with slightly longer maturities, our
focus has been on premium-coupon bonds exhibiting defensive
characteristics. We believe this approach should help insulate the
Portfolio from the market volatility that may accompany a rise in
interest rates.
Robert A. DiMella
Vice President and Senior Portfolio Manager
January 18, 2005
NATIONAL PORTFOLIO
How did the Portfolio perform during the period in light of the
existing market conditions?
For the six-month period ended December 31, 2004, National
Portfolio's Class A, Class B, Class C and Class I Shares had total
returns of +5.08%, +4.82%, +4.69% and +5.12%, respectively.
(Portfolio results shown do not reflect sales charges and would be
lower if sales charges were included. Complete performance
information can be found on pages 9 - 12 of this report to
shareholders.) Portfolio results for the period were in line with
the +5.19% return of the benchmark Lehman Brothers Municipal Bond
Index. Notably, the Portfolio outperformed its comparable Lipper
category of General Municipal Debt Funds, which had an average
return of +4.72% for the six-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., DECEMBER 31, 2004
A Discussion With Your Portfolio Managers (concluded)
We maintained a defensive market posture throughout the period in
anticipation of rising long-term interest rates. Although that
defensive positioning, including a shorter-than-average duration,
results in slight underperformance during periods when interest
rates fall, we believe it is the appropriate approach as the Fed
continues on its mission to move short-term and long-term interest
rates higher. Nevertheless, the Portfolio was able to provide
competitive returns, in fact, outperforming its Lipper category
average because of an above-average current yield.
What changes were made to the Portfolio during the period?
Throughout the past six months, we continued to emphasize a high
level of tax-exempt income. We did not make any significant changes
to the Portfolio's overall structure. We sought to maintain an above-
average level of coupon income, with the average coupon in the
Portfolio at 6.25%. The Portfolio remained fully invested throughout
most of the six-month period. Given the strong demand for tax-exempt
securities over the past several months, the yield penalty for
holding cash reserves would have been far too severe.
Because we were concerned about the potential for interest rate
volatility, we sought to protect the Fund's net asset value by
keeping its duration below the industry average and investing only
in bonds meeting our strict standards for credit quality. In
general, purchasing and selling activity was minimal, a strategy
that was more tax-efficient for our shareholders. The trades we did
make tended to focus on swap transactions designed to improve the
Portfolio's current yield.
How would you characterize the Portfolio's position at the close of
the period?
We maintained our defensive positioning with respect to interest
rates at period-end. Despite recent improvements in bond prices, we
continue to believe that the prudent strategy is to protect the
Portfolio's net asset value. Thus, we are not looking to "chase" the
current market rally by purchasing more interest rate-sensitive
securities.
With interest rates still near their historic lows, a number of
municipalities have called back debt issued in higher interest rate
environments. For the Portfolio, this has resulted in a year-end
cash position of 3.5% of net assets. The challenge in the period
ahead is to reinvest these assets on the long end of the tax-exempt
yield curve while avoiding sectors of lower-rated securities where
credit spread tightening has removed value. As we pursue this goal,
we also want to avoid extending the Portfolio's duration, given our
concerns about the future direction of interest rates.
Walter C. O'Connor
Vice President and Senior Portfolio Manager
January 18, 2005
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Performance Data
About Fund Performance
Investors are able to purchase shares of the Fund through multiple
pricing alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 4% and an account maintenance fee of 0.25% per year (but no
distribution fee) for Insured and National Portfolios. Limited
Maturity Portfolio incurs a maximum initial sales charge (front-end
load) of 1% and an account maintenance fee of 0.10% per year (but no
distribution fee).
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4%, declining to 0% after six years for Insured and
National Portfolios. Limited Maturity Portfolio is subject to a
maximum contingent deferred sales charge of 1% if redeemed within
three years of purchase. AllClass B Shares purchased prior to
December 1, 2002 will maintain the four-year schedule and one-year
schedule, respectively. In addition, Insured and National Portfolios
are subject to a distribution fee of 0.50% per year and an account
maintenance fee of 0.25% per year. Limited Maturity Portfolio is
subject to a distribution fee of 0.20% per year and an account
maintenance fee of 0.15% per year. All three classes of shares
automatically convert to Class A Shares after approximately 10
years. (There is no initial sales charge for automatic share
conversions.)
* Class C Shares are subject to a distribution fee of 0.55% per year
and an account maintenance fee of 0.25% per year for Insured and
National Portfolios. Limited Maturity Portfolio is subject to a
distribution fee of 0.20% per year and an account maintenance fee of
0.15% per year. In addition, Class C Shares for all three Portfolios
are subject to a 1% contingent deferred sales charge if redeemed
within one year of purchase.
* Class I Shares incur a maximum initial sales charge (front-end
load) of 4% and bear no ongoing distribution or account maintenance
fees for Insured and National Portfolios. 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
performance data current to the most recent month-end. Performance
results do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
Figures shown in each of the following tables assume reinvestment of
all dividends and capital gain distributions, if any, at net asset
value on the payable date. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders. The Fund's Investment Adviser reimbursed a portion
of its management fee. Without such reimbursement, performance would
have been lower.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Performance Data (continued)
Recent Performance Results*
6-Month 12-Month 10-Year Standardized
As of December 31, 2004 Total Return Total Return Total Return 30-day Yield
Limited Maturity Portfolio Class A Shares +0.61% +0.63% +42.36% 1.72%
Limited Maturity Portfolio Class B Shares +0.48 +0.37 +38.60 1.48
Limited Maturity Portfolio Class C Shares +0.48 +0.46 +37.90 1.48
Limited Maturity Portfolio Class I Shares +0.66 +0.73 +43.63 1.82
Insured Portfolio Class A Shares +5.21 +4.33 +83.11 3.69
Insured Portfolio Class B Shares +5.08 +3.80 +74.06 3.34
Insured Portfolio Class C Shares +5.05 +3.75 +73.19 3.29
Insured Portfolio Class I Shares +5.48 +4.72 +87.92 3.93
National Portfolio Class A Shares +5.08 +5.34 +90.57 3.79
National Portfolio Class B Shares +4.82 +4.80 +81.16 3.45
National Portfolio Class C Shares +4.69 +4.65 +80.09 3.40
National Portfolio Class I Shares +5.12 +5.50 +95.15 4.04
Lehman Brothers 3-Year General Obligation Bond Index++ +2.15 +1.92 +62.25 --
Lehman Brothers Municipal Bond Index++++ +5.19 +4.48 +97.78 --
* Investment results shown do not reflect sales charges; results shown would be lower if a sales charge
were included. Cumulative total investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital gains distributions at net asset
value on the payable date.
++ This unmanaged Index consists of state and local government obligation bonds that mature in 3 - 4 years,
rated Baa or better.
++++ This unmanaged Index consists of revenue bonds, prerefunded bonds, general obligation bonds and insured
bonds, all of which mature within 30 years.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Performance Data (continued)
Average Annual Total Return--Limited Maturity Portfolio
Return Without Return With
Sales Charge Sales Charge**
Class A Shares*
One Year Ended 12/31/04 +0.63% -0.38%
Five Years Ended 12/31/04 +3.16 +2.95
Ten Years Ended 12/31/04 +3.59 +3.49
* Maximum sales charge is 1%.
** Assuming maximum sales charge.
Return Return
Without CDSC With CDSC**
Class B Shares*
One Year Ended 12/31/04 +0.37% -0.62%
Five Years Ended 12/31/04 +2.87 +2.87
Ten Years Ended 12/31/04 +3.32 +3.32
* Maximum contingent deferred sales charge is 1% and is reduced
to 0% after three years.
** Assuming payment of applicable contingent deferred sales charge.
Return Return
Without CDSC With CDSC**
Class C Shares*
One Year Ended 12/31/04 +0.46% -0.53%
Five Years Ended 12/31/04 +2.87 +2.87
Ten Years Ended 12/31/04 +3.27 +3.27
* Maximum contingent deferred sales charge is 1% and is reduced
to 0% after one year.
** Assuming payment of applicable contingent deferred sales charge.
Return Without Return With
Sales Charge Sales Charge**
Class I Shares*
One Year Ended 12/31/04 +0.73% -0.28%
Five Years Ended 12/31/04 +3.24 +3.03
Ten Years Ended 12/31/04 +3.69 +3.58
* Maximum sales charge is 1%.
** Assuming maximum sales charge.
Average Annual Total Return--Insured Portfolio
Return Without Return With
Sales Charge Sales Charge**
Class A Shares*
One Year Ended 12/31/04 +4.33% +0.15%
Five Years Ended 12/31/04 +6.99 +6.12
Ten Years Ended 12/31/04 +6.24 +5.80
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
Return Return
Without CDSC With CDSC**
Class B Shares*
One Year Ended 12/31/04 +3.80% -0.19%
Five Years Ended 12/31/04 +6.45 +6.14
Ten Years Ended 12/31/04 +5.70 +5.70
* Maximum contingent deferred sales charge is 4% and is reduced
to 0% after six years.
** Assuming payment of applicable contingent deferred sales charge.
Return Return
Without CDSC With CDSC**
Class C Shares*
One Year Ended 12/31/04 +3.75% +2.75%
Five Years Ended 12/31/04 +6.40 +6.40
Ten Years Ended 12/31/04 +5.65 +5.65
* Maximum contingent deferred sales charge is 1% and is reduced
to 0% after one year.
** Assuming payment of applicable contingent deferred sales charge.
Return Without Return With
Sales Charge Sales Charge**
Class I Shares*
One Year Ended 12/31/04 +4.72% +0.53%
Five Years Ended 12/31/04 +7.26 +6.38
Ten Years Ended 12/31/04 +6.51 +6.08
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Performance Data (concluded)
Average Annual Total Return--National Portfolio
Return Without Return With
Sales Charge Sales Charge**
Class A Shares*
One Year Ended 12/31/04 +5.34% +1.12%
Five Years Ended 12/31/04 +7.43 +6.56
Ten Years Ended 12/31/04 +6.66 +6.23
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
Return Return
Without CDSC With CDSC**
Class B Shares*
One Year Ended 12/31/04 +4.80% +0.80%
Five Years Ended 12/31/04 +6.89 +6.58
Ten Years Ended 12/31/04 +6.12 +6.12
* Maximum contingent deferred sales charge is 4% and is reduced
to 0% after six years.
** Assuming payment of applicable contingent deferred sales charge.
Return Return
Without CDSC With CDSC**
Class C Shares*
One Year Ended 12/31/04 +4.65% +3.65%
Five Years Ended 12/31/04 +6.84 +6.84
Ten Years Ended 12/31/04 +6.06 +6.06
* Maximum contingent deferred sales charge is 1% and is reduced
to 0% after one year.
** Assuming payment of applicable contingent deferred sales charge.
Return Without Return With
Sales Charge Sales Charge**
Class I Shares*
One Year Ended 12/31/04 +5.50% +1.28%
Five Years Ended 12/31/04 +7.70 +6.82
Ten Years Ended 12/31/04 +6.91 +6.48
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Portfolio Information as of December 31, 2004
Distribution by Market Sector
Percent of
Total
Limited Maturity Portfolio Investments
Other Revenue Bonds 50.2%
General Obligation and Tax Revenue Bonds 42.5
Prerefunded Bonds 7.3
Percent of
Total
Insured Portfolio Investments
Other Revenue Bonds 71.0%
General Obligation & Tax Revenue Bonds 26.7
Prerefunded Bonds* 2.3
* Backed by escrow fund.
Percent of
Total
National Portfolio Investments
Other Revenue Bonds 74.8%
General Obligation Bonds 16.6
Prerefunded Bonds 8.6
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Disclosure of Expenses
Shareholders of this Fund may incur the following charges:
(a) expenses related to transactions, including sales charges,
redemption fees and exchange fees; and (b) operating expenses
including advisory fees, distribution fees including 12(b)-1 fees,
and other Fund expenses. The following example (which is based on a
hypothetical investment of $1,000 invested on July 1, 2004 and held
through December 31, 2004) is intended to assist shareholders both
in calculating expenses based on an investment in the Fund and in
comparing these expenses with similar costs of investing in other
mutual funds.
The first table of each Portfolio provides information about actual
account values and actual expenses. In order to estimate the
expenses a shareholder paid during the period covered by this
report, shareholders can divide their account value by $1,000 and
then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During the Period."
The second table of each Portfolio provides information about
hypothetical account values and hypothetical expenses based on the
Fund's actual expense ratio and an assumed rate of return of 5% per
year before expenses. In order to assist shareholders in comparing
the ongoing expenses of investing in this Fund and other funds,
compare the 5% hypothetical example with the 5% hypothetical
examples that appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight
shareholders ongoing costs only and do not reflect any transactional
expenses, such as sales charges, redemption fees or exchange fees.
Therefore, the second table is useful in comparing ongoing expenses
only, and will not help shareholders determine the relative total
expenses of owning different funds. If these transactional expenses
were included, shareholder expenses would have been higher.
Expenses Paid
Ending During the Period*
Beginning Account Value July 1, 2004 to
Account Value December 31, December 31,
Limited Maturity Portfolio July 1, 2004 2004 2004
Actual
Class A $1,000 $1,006.10 $2.76
Class B $1,000 $1,004.80 $4.09
Class C $1,000 $1,004.80 $4.09
Class I $1,000 $1,006.60 $2.25
Hypothetical (5% annual return before expenses)**
Class A $1,000 $1,022.73 $2.78
Class B $1,000 $1,021.40 $4.12
Class C $1,000 $1,021.40 $4.12
Class I $1,000 $1,023.24 $2.27
* For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class
(.54% for Class A, .80% for Class B, .80% for Class C and .44% for Class I), multiplied by the average
account value over the period, multiplied by 186/365 (to reflect the one-half year period shown).
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the
most recent fiscal half-year divided by 365.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Disclosure of Expenses (concluded)
Expenses Paid
Ending During the Period*
Beginning Account Value July 1, 2004 to
Account Value December 31, December 31,
Insured Portfolio July 1, 2004 2004 2004
Actual
Class A $1,000 $1,052.10 $3.66
Class B $1,000 $1,050.80 $6.32
Class C $1,000 $1,050.50 $6.58
Class I $1,000 $1,054.80 $2.36
Hypothetical (5% annual return before expenses)**
Class A $1,000 $1,021.91 $3.61
Class B $1,000 $1,019.31 $6.23
Class C $1,000 $1,019.06 $6.48
Class I $1,000 $1,023.19 $2.32
* For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class
(.70% for Class A, 1.21% for Class B, 1.26% for Class C and .45% for Class I), multiplied by the average
account value over the period, multiplied by 186/365 (to reflect the one-half year period shown).
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the
most recent fiscal half-year divided by 365.
Expenses Paid
Ending During the Period*
Beginning Account Value July 1, 2004 to
Account Value December 31, December 31,
National Portfolio July 1, 2004 2004 2004
Actual
Class A $1,000 $1,050.80 $4.44
Class B $1,000 $1,048.20 $7.10
Class C $1,000 $1,046.90 $7.35
Class I $1,000 $1,051.20 $3.14
Hypothetical (5% annual return before expenses)**
Class A $1,000 $1,021.15 $4.38
Class B $1,000 $1,018.55 $6.99
Class C $1,000 $1,018.29 $7.25
Class I $1,000 $1,022.42 $3.09
* For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class
(.85% for Class A, 1.36% for Class B, 1.41% for Class C and .60% for Class I), multiplied by the average
account value over the period, multiplied by 186/365 (to reflect the one-half year period shown).
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the
most recent fiscal half-year divided by 365.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments Limited Maturity Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Arizona--5.8% $ 4,000 Arizona State University, COP, Refunding, 4% due 7/01/2006 (d) $ 4,103
4,000 Central Arizona, Water Conservation District, Contract Revenue Refunding
Bonds (Central Arizona Project), Series A, 5.40% due 11/01/2005 4,111
Maricopa County, Arizona, Pollution Control Corporation, PCR, VRDN, Refunding
(Arizona Public Service Company) (b):
2,500 Series C, 1.95% due 3/01/2005 2,498
4,000 Series E, 1.875% due 3/01/2005 3,994
8,640 Phoenix, Arizona, Civic Improvement Corporation, Water System Revenue Bonds,
Junior Lien, 5.90% due 7/01/2006 (a) 9,112
Salt River Project, Arizona, Agriculture Improvement and Power District,
Electric System Revenue Refunding Bonds (Salt River Project):
6,710 Series A, 5.25% due 1/01/2006 6,915
890 Series B, 7% due 1/01/2005 890
1,455 Series B, 7% due 1/01/2005 (g) 1,455
Arkansas--1.0% Fayetteville, Arkansas, Sales and Use Tax Capital Improvement, Special
Assessment Bonds:
1,970 4% due 12/01/2005 2,005
2,115 4% due 12/01/2006 2,182
1,500 Little Rock, Arkansas, GO, Refunding (Capital Improvement), 4% due 4/01/2006 (e) 1,532
California--3.0% 3,165 California Pollution Control Financing Authority, PCR (Southern California
Edison Company), VRDN, Series B, 2% due 3/01/2006 (b) 3,133
10,000 California Statewide Communities Development Authority Revenue Bonds
(Kaiser Permanente), VRDN, Series C, 3.70% due 6/01/2005 (b) 10,067
3,750 Natomas, California, Unified School District, COP (Natomas High School
Project), 2.50% due 2/01/2028 (c) 3,752
Colorado--0.9% 5,000 Denver, Colorado, City and County Airport Revenue Refunding Bonds, AMT,
Series A, 5.25% due 11/15/2006 (f) 5,257
Connecticut--1.0% 2,700 Connecticut State, GO, Refunding, Series C, 4% due 12/15/2005 2,751
2,630 Waterbury, Connecticut, GO, Refunding, 4% due 2/01/2005 (h) 2,634
Delaware--0.7% 4,125 Delaware State, GO, Series A, 5% due 1/01/2006 4,246
Florida--0.7% 1,000 Florida State Board of Education, Capital Outlay, GO (Public Education),
Series B, 5.625% due 6/01/2005 1,015
2,500 Florida State Board of Education, Lottery Revenue Bonds, Series B, 5.25%
due 7/01/2005 (f) 2,541
400 Hillsborough County, Florida, Aviation Authority, Revenue Refunding Bonds
(Tampa International Airport), AMT, Series A, 5% due 10/01/2005 (c) 409
Georgia--4.8% 5,000 Coweta County, Georgia, School District, GO, Sales Tax, 4.50% due 8/01/2005 5,073
2,550 Georgia State, GO, Refunding, Series A, 6.25% due 3/01/2006 2,670
4,360 Georgia State, GO, Series B, 4.50% due 5/01/2006 4,496
Gwinnett County, Georgia, School District, GO, Refunding:
4,000 4% due 2/01/2005 4,007
1,000 4.50% due 2/01/2006 1,026
4,680 Henry County, Georgia, GO, 4% due 7/01/2006 4,804
5,000 Henry County, Georgia, School District, GO, 5% due 4/01/2007 (f) 5,299
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
FHA Federal Housing Authority
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDB Industrial Development Boards
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
S/F Single-Family
TRAN Tax Revenue Anticipation Notes
VRDN Variable Rate Demand Notes
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments (continued) Limited Maturity Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Hawaii--0.6% $ 3,505 Hawaii State Highway, Revenue Refunding Bonds, 3% due 7/01/2005 (e) $ 3,522
Illinois--3.2% 4,000 Chicago, Illinois, Transit Authority, Capital Grant Receipts Revenue Bonds
(Federal Transit Administration Section 5307 Formula Funds), Series A, 4%
due 6/01/2006 (c) 4,097
7,000 Illinois Development Finance Authority, PCR, Refunding (Commonwealth Edison
Company Project), Series A, 4.40% due 12/01/2006 (c) 7,248
3,740 Metropolitan Pier and Exposition Authority, Illinois, Dedicated State Tax
Revenue Refunding Bonds, Series A, 6% due 12/15/2006 (c) 4,002
University of Illinois, COP (Utility Infrastructure Projects), Refunding (c):
1,065 4% due 8/15/2005 1,078
2,000 5% due 8/15/2006 2,086
Indiana--0.8% 4,300 Indiana State Development Finance Authority, PCR, Refunding (Southern Indiana
Gas & Electric), AMT, Series C, 5% due 3/01/2006 (c) 4,392
Iowa--2.2% Ankeny, Iowa, GO, BAN:
6,920 Series C, 1.50% due 6/01/2005 6,925
5,775 Series D, 2% due 12/01/2005 5,773
Kansas--3.5% 20,229 Unified Government of Wyandotte County and Kansas City, Kansas, GO
(Municipal Temporary Notes), Series I, 1.35% due 4/01/2005 20,183
Louisiana--0.7% 4,000 Orleans Parish, Louisiana, School Board, GO, 7.50% due 9/01/2005 (a)(f) 4,144
Maryland--2.0% 10,000 Maryland State, GO, Refunding, 5% due 2/01/2007 10,574
1,050 Maryland State Health and Higher Educational Facilities Authority, Revenue
Refunding Bonds (Lifebridge Health), Series A, 4% due 7/01/2006 1,075
Massachusetts--2.7% 15,070 New England Education Loan Marketing Corporation, Massachusetts, Student Loan
Revenue Refunding Bonds, AMT, Series A, 5.70% due 7/01/2005 15,335
Michigan--5.1% 5,000 Detroit, Michigan, Economic Development Corporation, Resource Recovery
Revenue Refunding Bonds, AMT, Series A, 3.80% due 5/01/2005 (c) 5,030
32,750 Huron Valley, Michigan, School District, GO, 6.535%* due 5/01/2006 (a)(f) 11,668
Michigan Municipal Bond Authority Revenue Bonds:
1,000 (Local Government Loan Program), Series C, 4% due 5/01/2006 1,023
6,890 (Pooled Project), Series B, 5.625% due 4/01/2006 (a) 7,314
Michigan State Hospital Finance Authority, Revenue Refunding Bonds (Oakwood
Obligated Group):
2,000 5% due 11/01/2005 2,039
2,000 5% due 11/01/2006 2,081
Minnesota--2.5% 8,315 Minneapolis, Minnesota, Revenue Bonds (Minneapolis Society of Fine Arts),
VRDN, 1.75% due 10/14/2015 (b) 8,306
6,000 Minnesota State Housing Finance Agency Revenue Bonds (Residential Housing
Finance), Series D, 1.40% due 7/21/2005 5,978
Missouri--2.3% 3,980 Kansas City, Missouri, Passenger Facility Charge Revenue Bonds, AMT, 5%
due 4/01/2007 (c) 4,191
4,000 Kansas City, Missouri, School District, Building Revenue Refunding Bonds,
Series A, 5% due 2/01/2006 (f) 4,121
5,000 Missouri State Public Utilities Commission, Interim Construction Notes, 2.75%
due 10/01/2005 5,019
New Jersey--3.2% Jersey City, New Jersey, GO, Refunding:
4,550 (Public Improvement), Series A, 4% due 9/01/2007 (d) 4,741
4,680 (Real Property Tax Appeal), Series A, 2.50% due 1/07/2005 4,680
3,000 New Jersey EDA, Market Transition Facility, Revenue Refunding Bonds, Senior
Lien, Series A, 5% due 7/01/2006 (d) 3,122
5,000 New Jersey State Transit Corporation, COP, 6.50% due 4/01/2007 (a)(e) 5,506
New Mexico--4.5% 6,645 New Mexico Finance Authority, Public Project Revolving Fund Revenue Bonds,
Series C, 4% due 6/01/2006 (c) 6,810
5,000 New Mexico State Severance Tax Refunding Bonds, Series A, 5% due 7/01/2005 5,075
3,595 Rio Rancho, New Mexico, Water and Wastewater System Revenue Bonds, Series A,
6% due 5/15/2006 (a)(e) 3,779
10,000 San Juan County, New Mexico, Gross Receipts Tax Revenue Bonds, Subordinate
Series A, 2.50% due 8/15/2005 10,026
New York--5.6% 5,000 Metropolitan Transportation Authority, New York, Service Contract Revenue
Bonds, Series B, 5.25% due 7/01/2006 5,214
7,500 Monroe County, New York, BAN, 4% due 7/28/2005 7,558
7,000 New York City, New York, GO, Refunding, Series G, 5% due 8/01/2005 7,119
7,805 New York State Dormitory Authority, City University System Consolidated
Revenue Refunding Bonds (Fourth General Resolution), Series A, 5% due 7/01/2006 8,099
4,000 Suffolk County, New York, IDA, Southwest Sewer System Revenue Refunding
Bonds, 4% due 2/01/2006 (h) 4,074
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments (continued) Limited Maturity Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
North Carolina--5.0% $ 6,100 North Carolina State, GO, Refunding, 4% due 3/01/2007 $ 6,330
10,900 North Carolina State, Highway Improvements, GO, 3% due 5/01/2006 11,027
5,000 North Carolina State, Public School Building, GO, 4.60% due 4/01/2006 5,154
6,085 Wake County, North Carolina, GO, Refunding, 4% due 3/01/2007 6,315
Ohio--1.8% Ohio State, Highway Capital Improvement, GO:
5,375 Series C, 4.75% due 5/01/2005 5,426
4,850 Series F, 5% due 5/01/2005 4,900
Oklahoma--1.1% 630 Midwest City, Oklahoma, Municipal Authority, Capital Improvement Revenue Bonds,
4.55% due 6/01/2005 (e)(g) 637
3,040 Oklahoma City, Oklahoma, Airport Trust Revenue Refunding Bonds, Junior Lien,
AMT, 28th Series, 4% due 7/01/2005 (d) 3,069
2,500 Oklahoma Development Finance Authority Revenue Bonds (Conoco Project), VRDN,
AMT, Series B, 2.17% due 8/01/2037 (b) 2,500
Oregon--0.4% 2,385 Tri-County, Oregon, Metropolitan Transportation District Revenue Bonds,
Series A, 5.25% due 8/01/2005 2,430
Pennsylvania--2.3% 9,620 Allegheny County, Pennsylvania, Port Authority, Subordinate Lien Special
Revenue Transportation Bonds, 5.375% due 6/01/2006 (d) 10,045
3,000 Midway Sewerage Authority, Pennsylvania, Revenue Notes, 2% due 12/01/2005 2,991
Rhode Island--2.3% 2,500 Rhode Island Housing and Mortgage Finance Corporation, Homeowner Opportunity
Revenue Bonds, AMT, Series 41-C, 3.375% due 11/01/2005 2,521
10,000 Rhode Island State Economic Development Corporation, Grant Anticipation Bonds
(Rhode Island Department of Transportation), 5% due 6/15/2006 10,386
South Carolina--0.8% 3,565 Beaufort County, South Carolina, School District, GO, Refunding, Series C, 5%
due 4/01/2007 3,780
500 South Carolina State Highway, GO, Series B, 5.25% due 4/01/2005 504
Tennessee--0.7% 3,815 Hamilton County, Tennessee, GO, Refunding, 4% due 10/01/2005 (f) 3,872
Texas--12.4% 3,310 Corpus Christi, Texas, GO (General Improvement), Refunding, Series A, 5% due
3/01/2006 (e) 3,412
1,250 Dallas County, Texas, Community College District, GO (Maintenance Tax Notes),
5% due 2/15/2008 1,343
6,000 Dallas, Texas, Airport Revenue Bonds, 5% due 4/01/2007 (c) 6,335
1,000 El Paso, Texas, Airport Revenue Refunding Bonds (El Paso International Airport),
AMT, 4% due 8/15/2005 (e) 1,012
8,180 Gulf Coast Waste Disposal Authority, Texas, PCR (Amoco Oil Company Project),
2% due 10/01/2006 8,130
14,000 Matagorda County, Texas, Navigation District No. 1, PCR (Central Power and
Light Company), Refunding, Series A, 4.55% due 11/01/2006 14,425
4,000 Texas A & M University, Financing System Revenue Refunding Bonds, 4.65% due
5/15/2006 4,128
10,025 Texas Public Finance Authority, Capital Appreciation Building Revenue Refunding
Bonds, 2.45%* due 8/01/2006 (d)(g) 9,662
3,000 Texas Water Development Board Revenue Bonds (State Revolving Fund), Senior Lien,
Series A, 6% due 7/15/2006 3,168
4,000 Trinity River Authority, Texas, Regional Wastewater System Revenue Refunding
Bonds, 5% due 8/01/2006 (d) 4,169
4,950 University of Houston, Texas, University Revenue Refunding Bonds, Series B,
5% due 2/15/2005 (e) 4,968
10,000 Weatherford, Texas, Independent School District, GO, Series A, 2.50% due
8/01/2005 10,003
Virginia--3.1% 7,000 Amelia County, Virginia, IDA, Solid Waste Disposal Revenue Refunding Bonds
(Waste Management Project), AMT, 4.90% due 4/01/2005 7,035
6,875 Louisa, Virginia, IDA, Solid Waste and Sewer Disposal Revenue Bonds (Virginia
Electric and Power Company Project), AMT, Series A, 2.35% due 4/01/2007 6,760
3,900 Virginia State Public School Authority, School Financing, GO, Series B, 4%
due 8/01/2005 3,946
Washington--5.1% 3,345 King County, Washington, GO, Refunding, 5% due 12/01/2005 3,434
2,180 Seattle, Washington, GO, 5% due 8/01/2006 2,274
Seattle, Washington, GO, Refunding and Improvement:
5,000 4% due 8/01/2005 5,059
3,455 4% due 8/01/2006 3,550
2,180 Seattle, Washington, GO, Refunding, Series A, 5.25% due 3/01/2005 2,192
7,195 Washington State, GO, Series B and AT-7, 6.10% due 6/01/2006 7,576
5,000 Washington State Public Power Supply System, Revenue Refunding Bonds
(Nuclear Project Number 1), Series A, 6% due 7/01/2005 (c) 5,098
West Virginia--0.4% 2,230 West Virginia State Building Commission Revenue Bonds, Series A, 5.50% due
7/01/2006 (d) 2,336
Wisconsin--3.0% 4,800 Racine, Wisconsin, Waterworks System, BAN, 2.125% due 9/01/2005 4,801
11,795 Wisconsin State, GO, Series C, 4% due 5/01/2006 12,066
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments (concluded) Limited Maturity Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
Puerto Rico--3.3% Puerto Rico Commonwealth Highway and Transportation Authority, Highway
Revenue Refunding Bonds, Series AA:
$13,505 5% due 7/01/2005 $ 13,704
5,000 5% due 7/01/2006 5,196
Total Municipal Bonds (Cost--$563,672)--98.5% 562,653
Shares
Held Short-Term Securities
7,204 Merrill Lynch Institutional Tax-Exempt Fund (i) 7,204
Total Short-Term Securities (Cost--$7,204)--1.3% 7,204
Total Investments (Cost--$570,876**)--99.8% 569,857
Other Assets Less Liabilities--0.2% 1,205
---------
Net Assets--100.0% $ 571,062
=========
(a) Prerefunded.
(b) Security has a maturity of more than one year, but has variable
rate and demand features that qualify it as a short-term security.
The rate disclosed is that currently in effect. This rate changes
periodically based upon prevailing market rates.
(c) AMBAC Insured.
(d) MBIA Insured.
(e) FSA Insured.
(f) FGIC Insured.
(g) Escrowed to maturity.
(h) 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) were as follows:
(in Thousands)
Net Dividend
Affiliate Activity Income
Merrill Lynch Institutional
Tax-Exempt Fund (9,610) $127
* Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase by the Fund.
** The cost and unrealized appreciation/depreciation of investments as of
December 31, 2004, as computed for federal income tax purposes,
were as follows:
(in Thousands)
Aggregate cost $ 570,876
==============
Gross unrealized appreciation $ 895
Gross unrealized depreciation (1,914)
--------------
Net unrealized depreciation $ (1,019)
==============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments Insured Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Alabama--2.3% Alabama Water Pollution Control Authority Revenue Bonds (b):
$ 3,020 5.75% due 8/15/2018 $ 3,393
1,585 Revolving Fund Loan, Series A, 6.75% due 8/15/2005 (a) 1,631
10,000 Lauderdale County and Florence, Alabama, Health Care Authority, Revenue
Refunding Bonds (Coffee Health Group), Series A, 6% due 7/01/2029 (e) 11,373
7,000 University of Alabama, University Revenue Bonds (Birmingham), 6% due
10/01/2020 (g) 7,880
Arkansas--1.1% University of Arkansas, University Revenue Bonds (Various Facilities,
Fayetteville Campus) (g):
6,060 5.50% due 12/01/2021 6,795
5,000 5% due 12/01/2027 5,155
California--19.8% 19,000 California Pollution Control Financing Authority, PCR, Refunding
(Pacific Gas & Electric), AMT, Series A, 5.35% due 12/01/2016 (e) 20,534
2,075 California State Department of Veteran Affairs, Home Purpose Revenue
Refunding Bonds, Series A, 5.35% due 12/01/2027 (b) 2,161
California State Department of Water Resources, Power Supply Revenue Bonds,
Series A:
12,000 5.375% due 5/01/2017 (f) 13,306
10,250 5.375% due 5/01/2021 (e) 11,235
6,385 5.375% due 5/01/2022 (e) 6,981
3,500 California State Economic Recovery Bonds, GO, Series A, 5.25% due 7/01/2014 (g) 3,976
Golden State Tobacco Securitization Corporation of California, Tobacco
Settlement Revenue Bonds, Series B (g):
23,200 5.375% due 6/01/2028 24,450
5,000 5.50% due 6/01/2033 5,431
Industry, California, Urban Development Agency, Tax Allocation Bonds,
Series 1-B (e):
5,645 5% due 5/01/2020 6,039
6,000 5% due 5/01/2021 6,380
26,085 Los Angeles, California, Community College District, GO, Series A, 5.50%
due 8/01/2019 (e) 29,177
5,000 Los Angeles, California, GO, Series A, 5% due 9/01/2019 (e) 5,366
Los Angeles, California, Unified School District, GO:
24,465 (Election of 1997), Series F, 5% due 1/01/2028 (g) 25,374
13,800 Series A, 5% due 1/01/2028 (e) 14,312
8,965 Modesto, California, Schools Infrastructure Financing Agency, Special Tax
Bonds, 5.50% due 9/01/2036 (b) 9,743
6,440 Palm Springs, California, Financing Authority, Lease Revenue Refunding Bonds
(Convention Center Project), Series A, 5.50% due 11/01/2035 (e) 7,071
11,685 Rialto, California, Unified School District, GO, Series A, 6.24%* due
6/01/2025 (g) 4,162
5,075 Sacramento, California, Unified School District, GO (Election of 1999),
Series B, 5% due 7/01/2026 (g) 5,268
8,390 San Joanquin Hills, California, Transportation Corridor Agency, Toll Road
Revenue Refunding Bonds, Series A, 5.28%* due 1/15/2024 (e) 3,228
2,755 Tahoe Truckee, California, Unified School District, GO (School Facilities
Improvement District Number 2), Series A, 5.25% due 8/01/2029 (e) 2,923
5,400 Tamalpais, California, Union High School District, GO (Election of 2001),
5% due 8/01/2028 (i) 5,583
Colorado--5.6% 19,250 Aurora, Colorado, COP, 6% due 12/01/2025 (b) 21,834
31,160 Denver, Colorado, City and County Airport Revenue Refunding Bonds, RIB,
Series 153, 9.971% due 11/15/2025 (d)(e) 33,915
4,000 Logan County, Colorado, Justice Center Finance Corporation, COP, 5.50%
due 12/01/2020 (e) 4,475
Florida--2.2% 5,500 Dade County, Florida, Water and Sewer System Revenue Bonds, 5.25% due
10/01/2026 (g) 5,807
15,000 Escambia County, Florida, Health Facilities Authority, Health Facility
Revenue Bonds (Florida Health Care Facility Loan), 5.95% due 7/01/2020 (b) 15,272
2,240 West Coast Regional Water Supply Authority, Florida, Capital Improvement
Revenue Bonds, 10.40% due 10/01/2010 (a)(b) 2,910
Georgia--3.5% Georgia Municipal Electric Authority, Power Revenue Bonds, Series Y (b):
8,510 6.40% due 1/01/2013 10,016
490 6.40% due 1/01/2013 (c) 583
20,000 Georgia Municipal Electric Authority, Power Revenue Refunding Bonds,
Series EE, 7% due 1/01/2025 (b) 26,934
Hawaii--1.0% 10,170 Honolulu, Hawaii, City and County GO, Refunding, Series B, 5% due 7/01/2009 (e) 11,137
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments (continued) Insured Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Illinois--3.5% Chicago, Illinois, O'Hare International Airport Revenue Bonds, 3rd Lien,
AMT, Series B-2:
$ 9,215 5.75% due 1/01/2024 (i) $ 10,117
17,690 6% due 1/01/2027 (e) 19,747
6,800 Illinois State, GO, 5.75% due 5/01/2021 (e) 7,212
Kansas--0.5% 5,145 Manhattan, Kansas, Hospital Revenue Bonds (Mercy Health Center), 5.50% due
8/15/2020 (i) 5,724
Kentucky--0.3% 2,490 Knox County, Kentucky, GO, Series B, 5.625% due 6/01/2036 (f) 2,756
Louisiana--1.0% 10,250 Louisiana Public Facilities Authority, FHA-Insured Mortgage Revenue Refunding
Bonds (Baton Rouge General Medical Center Project), 5.25% due 7/01/2033 (e) 10,718
Maryland--0.5% 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) 5,799
Massachusetts--3.1% 4,000 Massachusetts State HFA, Rental Housing Mortgage Revenue Bonds, AMT,
Series C, 5.60% due 1/01/2045 (i) 4,130
Massachusetts State Special Obligation Dedicated Tax Revenue Bonds (g):
4,750 5.25% due 1/01/2025 5,128
10,000 5.25% due 1/01/2026 10,749
12,250 5.25% due 1/01/2027 13,111
Michigan--2.7% 4,305 Michigan State, HDA, Rental Housing Revenue Refunding Bonds, Series B, 6.15%
due 10/01/2015 (e) 4,423
Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds:
13,145 (Detroit Edison Company Project), AMT, Series A, 5.50% due 6/01/2030 (f) 13,893
10,000 (Detroit Edison Company), Series AA, 6.40% due 9/01/2025 (e) 10,453
Minnesota--1.5% 5,860 Delano, Minnesota, Independent School District Number 879, GO, Series A,
5.875% due 2/01/2025 (i) 6,661
Sauk Rapids, Minnesota, Independent School District Number 047, GO, Series A (e):
3,735 5.65% due 2/01/2020 4,193
4,440 5.70% due 2/01/2021 5,000
Mississippi--1.2% 1,320 Harrison County, Mississippi, Wastewater Management District Revenue Refunding
Bonds (Wastewater Treatment Facilities), Series A, 8.50% due 2/01/2013 (g) 1,775
10,000 Mississippi Hospital Equipment and Facilities Authority Revenue Bonds (Forrest
County General Hospital Project), 6% due 1/01/2030 (i) 11,188
Missouri--2.2% Kansas City, Missouri, Airport Revenue Refunding and Improvement Bonds,
Series A (e):
12,990 5.50% due 9/01/2013 14,158
9,000 5.50% due 9/01/2014 9,809
Nevada--6.2% Clark County, Nevada, IDR, AMT, Series A:
10,000 (Power Company Project), 6.70% due 6/01/2022 (g) 10,259
9,575 (Southwest Gas Corporation Project), 5.25% due 7/01/2034 (b) 9,875
45,000 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra Pacific Power
Company), AMT, 6.65% due 6/01/2017 (e) 46,688
New Jersey--6.8% 6,810 Cape May County, New Jersey, Industrial Pollution Control Financing Authority
Revenue Refunding Bonds (Atlantic City Electric Company Project), Series A,
6.80% due 3/01/2021 (e) 8,916
Garden State Preservation Trust of New Jersey (i):
3,125 Open Space and Farmland Preservation Revenue Bonds, Series A, 5.80% due
11/01/2021 (k) 3,500
8,310 Open Space and Farmland Preservation Revenue Bonds, Series A, 5.80% due
11/01/2022 (k) 9,289
4,340 Open Space and Farmland Preservation Revenue Bonds, Series A, 5.80% due
11/01/2023 (k) 4,830
23,000 Revenue Bonds, Series B, 5.17%* due 11/01/2024 8,874
23,000 New Jersey EDA, Motor Vehicle Surcharge Revenue Bonds, Series A, 5.25% due
7/01/2033 (e) 24,505
12,500 New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds (NUI Corporation),
RIB, Series 371, 10.43% due 10/01/2022 (b)(d) 13,083
New York--11.2% 10,000 Metropolitan Transportation Authority, New York, Service Contract Revenue
Bonds, Series B, 5.50% due 1/01/2013 (e) 11,438
12,075 New York City, New York, City Municipal Water Finance Authority, Water and
Sewer System Revenue Bonds, RIB, Series 158, 9.267% due 6/15/2026 (d)(e) 13,540
New York City, New York, GO:
11,500 Series C, 5.625% due 3/15/2018 (f) 12,981
21,000 Series I, 6% due 4/15/2007 (a)(i) 22,774
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments (continued) Insured Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
New York $ 5,155 New York City, New York, GO, Refunding, Series G, 5.75% due 2/01/2006 (a)(i) $ 5,420
(concluded) 11,600 New York City, New York, Sales Tax Asset Receivable Corporation Revenue
Bonds, Series A, 5.25% due 10/15/2027 (b) 12,472
9,190 New York State Dormitory Authority Revenue Bonds (School Districts Financing
Program), Series D, 5.25% due 10/01/2023 (e) 10,007
365 New York State Dormitory Authority, Revenue Refunding Bonds, Series A,
5.75% due 8/15/2022 (e) 395
4,110 New York State Urban Development Corporation, Personal Income Tax Revenue
Bonds (State Facilities), Series A-1, 5.25% due 3/15/2034 (g) 4,358
5 Niagara Falls, New York, GO, Public Improvement, 6.90% due 3/01/2024 (e) 5
25,000 Tobacco Settlement Financing Corporation of New York Revenue Bonds,
Series A-1, 5.25% due 6/01/2022 (b) 26,890
North Carolina--0.3% 3,370 North Carolina HFA, Home Ownership Revenue Bonds, AMT, Series 14-A, 5.35%
due 1/01/2022 (b) 3,514
North Dakota--0.4% 3,810 North Dakota State, HFA, Revenue Bonds (Housing Finance Program), Series C,
5.30% due 7/01/2022 (b) 3,948
Ohio--0.1% 1,075 Ohio State Water Development Authority, Pollution Control Facilities
Revenue Bonds (Water Control Loan Fund--Water Quality Series), 5.50% due
12/01/2007 (a)(e) 1,180
Oklahoma--0.7% 6,385 Oklahoma State IDR, Refunding (Health System), Series A, 6.25% due 8/15/2016 (e) 7,262
Oregon--1.4% 8,700 Oregon State Department, Administrative Services, COP, Series A, 6.25% due
5/01/2010 (a)(b) 10,202
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) 4,706
Pennsylvania--3.1% 5,000 Pennsylvania HFA, S/F Revenue Bonds, AMT, Series 72A, 5.25% due 4/01/2021 (e) 5,188
8,350 Pennsylvania State, GO, Second Series, 5.25% due 6/01/2015 (i) 9,394
5,000 Pennsylvania State Turnpike Commission, Turnpike Revenue Refunding Bonds,
Series T, 5.50% due 12/01/2013 (g) 5,759
6,000 Philadelphia, Pennsylvania, Gas Works Revenue Bonds, 12th Series B, 7% due
5/15/2020 (c)(e) 7,472
4,420 Philadelphia, Pennsylvania, Redevelopment Authority Revenue Bonds (Neighborhood
Transformation), Series A, 5.50% due 4/15/2020 (g) 4,936
Rhode Island--0.7% 6,815 Rhode Island State Economic Development Corporation, Airport Revenue Bonds,
Series B, 6% due 7/01/2028 (g) 7,699
South Carolina--0.6% 2,200 Medical University Hospital Authority, South Carolina, FHA-Insured Mortgage
Hospital Facilities, Revenue Refunding Bonds, Series A, 5% due 8/15/2031 (e) 2,230
4,200 South Carolina State Public Service Authority, Revenue Refunding Bonds,
Series A, 6.25% due 1/01/2006 (a)(b) 4,450
Texas--3.8% 17,975 Dallas-Fort Worth, Texas, International Airport Revenue Bonds, DRIVERS, AMT,
Series 202, 9.739% due 11/01/2028 (d)(g) 21,510
El Paso, Texas, Water and Sewer Revenue Refunding and Improvement Bonds,
Series A (i):
4,375 6% due 3/01/2018 5,024
4,645 6% due 3/01/2019 5,334
3,500 Houston, Texas, Water Conveyance System Contract, COP, Series J, 6.25% due
12/15/2013 (b) 4,176
Texas State Department of Housing and Community Affairs, S/F Mortgage Revenue
Bonds, AMT, Series A (e)(j):
2,110 5.45% due 9/01/2023 2,203
2,750 5.50% due 3/01/2026 2,847
Utah--1.6% 9,535 Utah Transit Authority, Sales Tax and Transportation Revenue Bonds (Salt Lake
County Light Rail Transit Project), 5.375% due 12/15/2022 (i) 10,241
Utah Water Finance Agency Revenue Bonds (Pooled Loan Financing Program),
Series A (b):
2,515 5.75% due 10/01/2015 2,837
3,770 6% due 10/01/2020 4,284
Virginia--3.0% 19,755 Fairfax County, Virginia, EDA, Resource Recovery Revenue Refunding Bonds, AMT,
Series A, 6.10% due 2/01/2011 (b) 22,519
9,690 Virginia State HDA, Commonwealth Mortgage Revenue Bonds, Series J,
Sub-Series J-1, 5.20% due 7/01/2019 (e) 9,895
Washington--0.7% 7,225 Chelan County, Washington, Public Utility District Number 001, Consolidated
Revenue Bonds (Chelan Hydro System), AMT, Series A, 5.45% due 7/01/2037 (b) 7,525
West Virginia--1.2% 12,250 Pleasants County, West Virginia, PCR, Refunding (Potomac-Pleasants),
Series C, 6.15% due 5/01/2015 (b) 12,758
Wisconsin--1.2% 9,000 Superior, Wisconsin, Limited Obligation Revenue Refunding Bonds (Midwest
Energy Resources), Series E, 6.90% due 8/01/2021 (g) 11,828
1,075 Wisconsin State, GO, AMT, Series B, 6.50% due 5/01/2025 (e) 1,090
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments (concluded) Insured Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
Puerto Rico--0.2% $ 1,750 Puerto Rico Commonwealth, Highway and Transportation Authority,
Transportation Revenue Bonds, Series G, 5.25% due 7/01/2017 (g) $ 1,949
Total Municipal Bonds (Cost--$955,726)--95.2% 1,022,613
Shares
Held Mutual Funds
300 BlackRock California Insured Municipal 2008 Term Trust, Inc. 4,884
810 BlackRock Insured Municipal 2008 Term Trust, Inc. 13,211
775 BlackRock Insured Municipal Term Trust, Inc. 8,757
Total Mutual Funds (Cost--$27,440)--2.5% 26,852
Short-Term Securities
24,317 Merrill Lynch Institutional Tax-Exempt Fund (h) 24,317
Total Short-Term Securities (Cost--$24,317)--2.3% 24,317
Total Investments (Cost--$1,007,483**)--100.0% 1,073,782
Other Assets Less Liabilities--0.0% 351
-----------
Net Assets--100.0% $ 1,074,133
===========
(a) Prerefunded.
(b) AMBAC Insured.
(c) Escrowed to maturity.
(d) The rate disclosed is that currently in effect. The rate changes
periodically and inversely based upon prevailing market rates.
(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) were as follows:
(in Thousands)
Net Dividend
Affiliate Activity Income
Merrill Lynch Institutional
Tax-Exempt Fund 21,300 $203
(i) FSA Insured.
(j) FNMA/GNMA Collateralized.
(k) When-issued security.
* Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase by the Fund.
** The cost and unrealized appreciation/depreciation of investments as of
December 31, 2004, as computed for federal income tax purposes,
were as follows:
(in Thousands)
Aggregate cost $ 1,007,381
==============
Gross unrealized appreciation $ 68,705
Gross unrealized depreciation (2,304)
--------------
Net unrealized appreciation $ 66,401
==============
Forward interest rate swaps outstanding as of December 31, 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 3.837% interest
Broker, JPMorgan Chase Bank
Expires November 2018 $11,500 $ (23)
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Alabama--0.5% $ 3,820 Alabama Incentives Financing Authority, Special Obligation Revenue Refunding
Bonds, Series A, 6% due 10/01/2029 (c) $ 4,328
500 Mobile, Alabama, Industrial Development Board, Environmental Improvement
Revenue Refunding Bonds (International Paper Company Project), AMT, Series A,
6.35% due 5/15/2016 538
2,500 Selma, Alabama, IDB, Environmental Improvement Revenue Refunding Bonds
(International Paper Company Project), AMT, Series A, 6.70% due 2/01/2018 2,733
Alaska--0.5% 3,000 Alaska State Housing Financial Corporation, General Mortgage Revenue Refunding,
Series A, 6% due 6/01/2027 (f) 3,129
3,860 Anchorage, Alaska, School, GO, Series B, 5.875% due 12/01/2010 (e)(j) 4,463
Arizona--3.1% 4,000 Arizona Health Facilities Authority Revenue Bonds (Catholic Healthcare West
Project), Series A, 6.625% due 7/01/2020 4,468
1,000 Glendale, Arizona, Development Authority, Educational Facilities Revenue
Refunding Bonds (American Graduate School International), 7.125% due
7/01/2005 (a)(j) 1,035
1,000 Maricopa County, Arizona, Hospital Revenue Refunding Bonds (Sun Health
Corporation), 6.125% due 4/01/2018 1,055
3,600 Maricopa County, Arizona, IDA, Education Revenue Bonds (Arizona Charter
Schools Project 1), Series A, 6.75% due 7/01/2029 3,570
1,625 Maricopa County, Arizona, IDA, Health Facilities Revenue Refunding Bonds
(Catholic Healthcare West Project), Series A, 5% due 7/01/2021 1,628
1,000 Maricopa County, Arizona, IDA, M/F Housing Revenue Bonds (Metro Gardens--Mesa
Ridge Project), Series A, 5.65% due 7/01/2019 (f) 1,020
Maricopa County, Arizona, Pollution Control Corporation, PCR, Refunding,
Series A:
1,200 (El Paso Electric Company Project), 6.25% due 5/01/2037 1,223
1,000 (Public Service Company of New Mexico Project), 6.30% due 12/01/2026 1,058
Peoria, Arizona, Improvement District No. 8401, Special Assessment
Bonds No. 8802:
430 7.20% due 1/01/2010 444
510 7.20% due 1/01/2013 527
Peoria, Arizona, Improvement District, Special Assessment Bonds No. 8801:
190 7.30% due 1/01/2009 196
395 7.30% due 1/01/2011 408
2,330 Phoenix, Arizona, Civic Improvement Corporation, Municipal Facilities, Excise
Tax Revenue Bonds, 5.75% due 7/01/2016 (e) 2,634
5,000 Phoenix, Arizona, IDA, Airport Facility Revenue Refunding Bonds (America West
Airlines Inc. Project), AMT, 6.30% due 4/01/2023 3,782
2,720 Phoenix, Arizona, IDA, Revenue Bonds (Camelback Crossing), 6.20% due
9/20/2020 (d) 2,869
5,800 Pinal County, Arizona, COP, 5% due 12/01/2029 5,804
545 Prescott Valley, Arizona, Improvement District, Special Assessment Bonds
(Sewer Collection System Roadway Repair), 7.90% due 1/01/2012 569
3,515 Tucson, Arizona, IDA, Senior Living Facilities Revenue Bonds (Christian Care
Tucson Inc. Project), Series A, 6.125% due 7/01/2024 (m) 3,934
3,180 University of Arizona, COP, Refunding, Series A, 5.50% due 6/01/2018 (c) 3,550
1,000 University of Arizona, COP (University of Arizona Parking and Student Housing),
5.75% due 6/01/2019 (c) 1,108
3,000 Vistancia, Arizona, Community Facilities District, GO, 6.75% due 7/15/2022 3,085
Arkansas--0.1% 75 Arkansas State Development Finance Authority, S/F Mortgage Revenue Bonds
(Mortgage-Backed Securities Program), Series H, 6.15% due 7/01/2016 (i) 78
250 Arkansas State Student Loan Authority Revenue Bonds, AMT, Sub-Series B, 7.25%
due 6/01/2009 279
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) 214
250 North Little Rock, Arkansas, Health Facilities Board, Health Care Revenue
Bonds (Baptist Health), 5.50% due 7/01/2016 263
500 Pine Bluff, Arkansas, Environmental Improvement Revenue Refunding Bonds
(International Paper Company Project), AMT, Series A, 6.70% due 8/01/2020 546
250 University of Central Arkansas, Housing System Revenue Bonds, 6.50% due
1/01/2031 (h) 289
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
California--10.2% $ 2,500 Agua Caliente Band of Cahuilla Indians, California, Casino Revenue Bonds,
6% due 7/01/2018 $ 2,585
9,145 Alameda County, California, COP (Financing Project), 6% due 9/01/2006 (f)(j) 9,867
2,805 American Canyon, California, Finance Authority, Reassessment Revenue Bonds,
Series A, 5% due 9/02/2031 (m) 2,822
California Rural Home Mortgage Finance Authority, S/F Mortgage Revenue Bonds
(Mortgage-Backed Securities Program), AMT, Class 5 (i)(l):
515 Series C, 6.75% due 3/01/2029 518
355 Series D, 6.70% due 5/01/2029 356
415 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) 417
7,500 California State Department of Water Resources, Power Supply Revenue Bonds,
Series A, 5.75% due 5/01/2017 8,439
2,000 California State, GO, Refunding, 5.75% due 5/01/2030 2,190
14,100 California State, Various Purpose, GO, 5.50% due 11/01/2033 15,054
9,880 California Statewide Communities Development Authority, Health Facility
Revenue Bonds (Memorial Health Services), Series A, 6% due 10/01/2023 10,716
2,880 Capistrano, California, Unified School District, Community Facility District,
Special Tax Bonds (No. 90-2 Talega), 6% due 9/01/2032 2,964
Chula Vista, California, Community Facilities District, Special Tax Bonds
(No 06-1, Eastlake Woods Area), Series A:
1,080 6.05% due 9/01/2020 1,149
2,965 6.15% due 9/01/2026 3,104
Contra Costa County, California, Special Tax Bonds (Community Facilities
District Number 2001-01):
1,585 6% due 9/01/2026 1,641
1,200 6.10% due 9/01/2031 1,244
11,300 Desert, California, Community College District, GO, Series A, 5% due
8/01/2029 (f) 11,691
3,100 Elk Grove, California, Poppy Ridge Community Facilities Number 3 Special Tax,
Series 1, 6% due 9/01/2028 3,163
Golden State Tobacco Securitization Corporation of California, Tobacco
Settlement Revenue Bonds:
3,200 Series A-4, 7.80% due 6/01/2042 3,497
2,785 Series A-5, 7.875% due 6/01/2042 3,057
5,160 Los Angeles, California, Department of Water and Power, Electric Plant
Revenue Refunding Bonds, RIB, Series 370, 9.71% due 2/15/2024 (g) 5,314
2,740 Pomona, California, Public Financing Authority, Revenue Refunding Bonds
(Merged Redevelopment Project), Series A1, 5.75% due 2/01/2034 2,824
1,100 Poway, California, Unified School District, Special Tax Bonds (Community
District No. 6), Series A, 6.05% due 9/01/2025 1,159
2,695 Riverside, California, Improvement Bond Act of 1915, Special Assessment
(Riverwalk Assessment District), 6.375% due 9/02/2026 2,817
Roseville, California, Special Tax (Stoneridge Community Facilities Number 1):
1,250 6.20% due 9/01/2021 1,320
1,125 6% due 9/01/2025 1,164
2,500 6.30% due 9/01/2031 2,595
Sacramento, California, Special Tax (North Natomas Community Facilities):
2,200 Series 01-03, 6% due 9/01/2028 2,271
2,270 Series 4-C, 6% due 9/01/2028 2,357
10,000 San Diego, California, Public Facilities Financing Authority, Subordinated
Water Revenue Refunding Bonds, 5% due 8/01/2032 (f) 10,249
11,520 San Diego, California, Unified School District, GO (Election of 1998),
Series F, 5% due 7/01/2028 (h) 11,943
San Francisco California, City and County Redevelopment Agency Revenue Bonds
(Community Facilities District Number 6-Mission):
5,000 6% due 8/01/2021 5,289
2,500 GO, Series A, 6% due 8/01/2025 2,605
1,075 San Francisco, California, Uptown Parking Corporation, Parking Revenue Bonds
(Union Square), 6% due 7/01/2020 (f) 1,244
Santa Margarita, California, Water District, Special Tax Refunding Bonds
(Community Facilities District No. 99), Series 1:
3,680 6.20% due 9/01/2020 3,884
3,000 6.25% due 9/01/2029 3,104
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Colorado--2.2% $ 500 Boulder County, Colorado, Hospital Development Revenue Bonds (Longmont
United Hospital Project), 6% due 12/01/2030 (m) $ 549
660 Colorado HFA, Revenue Bonds (S/F Program), Series B-3, 6.55% due 10/01/2016 665
Colorado HFA, Revenue Refunding Bonds (S/F Program):
545 AMT, Senior Series A-2, 7.50% due 4/01/2031 560
210 AMT, Senior Series B-2, 7.10% due 4/01/2017 215
1,415 AMT, Senior Series B-2, 7.25% due 10/01/2031 1,452
95 AMT, Senior Series B-3, 6.80% due 11/01/2028 96
725 AMT, Senior Series C-2, 7.25% due 10/01/2031 (b) 745
190 Senior Series A-3, 7.35% due 10/01/2030 195
1,020 Senior Series C-3, 6.75% due 10/01/2021 (b) 1,065
305 Senior Series C-3, 7.15% due 10/01/2030 (b) 308
2,500 Colorado Health Facilities Authority, Revenue Refunding Bonds (Catholic
Health Initiatives), 5.50% due 9/01/2017 2,693
550 Colorado Water Resource and Power Development Authority, Small Water Resource
Revenue Bonds, Series A, 5.80% due 11/01/2020 (e) 619
Elk Valley, Colorado, Public Improvement Revenue Bonds (Public Improvement Fee):
7,560 Series A, 7.35% due 9/01/2031 8,074
1,400 Series B, 7% due 9/01/2031 1,437
3,685 Larimer County, Colorado, Poudre School District Number R-1, GO, 6% due
12/15/2010 (e)(j) 4,288
7,700 Plaza Metropolitan District No. 1, Colorado, Tax Allocation Revenue Bonds
(Public Improvement Fees), 8% due 12/01/2025 8,035
Connecticut--2.0% 1,000 Connecticut State Development Authority, Governmental Lease Revenue Bonds,
6.60% due 6/15/2014 (f) 1,024
1,500 Connecticut State Development Authority, Solid Waste Disposal Facilities
Revenue Bonds (Pfizer Inc. Project), AMT, 7% due 7/01/2025 1,564
1,250 Connecticut State Development Authority, Water Facility Revenue Bonds
(Bridgeport Hydraulic Company), AMT, 6.15% due 4/01/2035 (c) 1,361
1,200 Connecticut State, HFA, Revenue Refunding Bonds (Housing Mortgage Finance
Program), Series C-1, 6.30% due 11/15/2017 1,251
Connecticut State Health and Educational Facilities Authority Revenue Bonds:
1,000 (Bridgeport Hospital), Series A, 6.625% due 7/01/2018 (f) 1,003
1,500 (Waterbury Hospital Issue), Series C, 5.75% due 7/01/2020 (m) 1,633
1,000 (Westover School), Series A, 5.70% due 7/01/2030 (m) 1,066
Connecticut State Health and Educational Facilities Authority, Revenue
Refunding Bonds:
5,025 DRIVERS, Series 215, 10.734% due 6/01/2030 (g)(m) 6,472
2,000 (Eastern Connecticut Health Network), Series A, 6.50% due 7/01/2030 (m) 2,288
640 (Sacred Heart University), 6.625% due 7/01/2026 (m) 689
5,710 (University of Hartford), Series E, 5.50% due 7/01/2022 (m) 6,214
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:
295 6.40% due 11/15/2014 295
930 5.50% due 11/15/2020 (f) 931
1,000 Connecticut State Regional Learning Educational Service Center Revenue Bonds
(Office/Education Center Facility), 7.75% due 2/01/2006 (j) 1,074
860 Waterbury, Connecticut, GO, 6% due 02/01/2009 (j)(m) 982
District of 5,000 District of Columbia, GO, Refunding, DRIVERS, Series 214, 9.709% due
Columbia--0.4% 6/01/2026 (f)(g) 6,053
Florida--6.3% 2,000 Anthem Park Community Development District, Florida, Capital Improvement
Revenue Bonds, 5.80% due 5/01/2036 2,003
1,700 Ballantrae, Florida, Community Development District, Capital Improvement
Revenue Bonds, 6% due 5/01/2035 1,722
1,895 Beacon Tradeport Community, Florida, Development District, Special Assessment
Revenue Refunding Bonds (Commercial Project), Series A, 5.25% due 5/01/2016 (m) 2,059
2,500 CFM Community Development District, Florida, Capital Improvement Revenue Bonds,
Series B, 5.875% due 5/01/2014 2,549
2,725 Duval County, Florida, School Board, COP, 5.75% due 7/01/2017 (h) 3,027
Fiddlers Creek, Florida, Community Development District Number 2, Special
Assessment Revenue Bonds:
5,350 Series A, 6.375% due 5/01/2035 5,511
1,250 Series B, 5.75% due 5/01/2013 1,272
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Florida $ 6,330 Florida HFA Revenue Bonds (Antigua Club Apartments), AMT, Series A-1, 7%
(concluded) due 2/01/2035 (c) $ 6,464
1,100 Heritage Isles Community Development District, Florida, Special Assessment
Revenue Refunding Bonds, 5.90% due 11/01/2006 1,102
5,000 Hillsborough County, Florida, IDA, Exempt Facilities Revenue Bonds
(National Gypsum), AMT, Series A, 7.125% due 4/01/2030 5,512
9,500 Jacksonville, Florida, Electric Authority, Water and Sewer Revenue Bonds,
Series A, 6% due 10/01/2024 9,681
7,000 Lee County, Florida, Airport Revenue Bonds, RIB, AMT, Series 580X, 9.65%
due 10/01/2029 (g)(h) 8,423
4,500 Lee County, Florida, Transportation Facilities Revenue Bonds, 5.75% due
10/01/2005 (f)(j) 4,712
1,200 Lexington Oaks, Florida, Community Development District, Special Assessment
Revenue Bonds, Series A, 6.70% due 5/01/2033 1,256
Mediterra, Florida, South Community Development District, Capital Improvement
Revenue Bonds:
1,055 6.85% due 5/01/2031 1,118
1,765 Series B, 5.50% due 5/01/2010 1,790
2,500 Middle Village Community Development District, Florida, Special Assessment
Bonds, Series A, 6% due 5/01/2035 2,532
6,095 Midtown Miami, Florida, Community Development District, Special Assessment
Revenue Bonds, Series A, 6.25% due 5/01/2037 6,310
2,500 Old Palm Community Development District, Florida, Special Assessment Bonds
(Palm Beach Gardens), Series B, 5.375% due 5/01/2014 2,497
2,375 Orange County, Florida, HFA, M/F Housing Revenue Bonds, Series A, 6.40% due
1/01/2031 (f) 2,480
185 Orange County, Florida, HFA, Mortgage Revenue Bonds, AMT, Series A, 8.375%
due 3/01/2021 (b)(d) 185
5,000 Orange County, Florida, Tourist Development, Tax Revenue Bonds, 5.50% due
10/01/2020 (c) 5,484
180 Panther Trace, Florida, Community Development District, Special Assessment
Revenue Bonds, Series B, 6.50% due 5/01/2009 182
Park Place Community Development District, Florida, Special Assessment
Revenue Bonds:
1,000 6.75% due 5/01/2032 1,054
2,500 6.375% due 5/01/2034 2,570
2,000 Saint Lucie, Florida, West Services District, Utility Revenue Refunding Bonds,
Senior Lien, 6% due 10/01/2022 (f) 2,306
1,000 Sterling Hill, Florida, Community Development District, Capital Improvement
Revenue Refunding Bonds, Series B, 5.50% due 11/01/2010 1,017
945 Stoneybrook West, Florida, Community Development District, Special Assessment
Revenue Bonds, Series B, 6.45% due 5/01/2010 962
730 Verandah West, Florida, Community Development District, Capital Improvement
Revenue Bonds, Series B, 5.25% due 5/01/2008 734
2,705 Vista Lakes Community, Florida, Development District, Capital Improvement
Revenue Bonds, Series B, 5.80% due 5/01/2008 2,723
Georgia--1.7% 5,000 Atlanta, Georgia, Tax Allocation Revenue Bonds (Atlantic Station Project),
7.90% due 12/01/2024 5,446
Brunswick & Glynn County, Georgia, Development Authority, First Mortgage
Revenue Bonds (Coastal Community Retirement Corporation Project), Series A:
2,285 7.125% due 1/01/2025 2,272
3,305 7.25% due 1/01/2035 3,301
5,210 College Park, Georgia, Business and IDA Revenue Bonds (Civic Center Project),
5.75% due 9/01/2026 (c) 5,887
3,450 Fulton County, Georgia, Development Authority Revenue Bonds (Morehouse
College Project), 5.875% due 12/01/2030 (c) 3,914
2,250 Fulton County, Georgia, Residential Care Facilities Revenue Refunding Bonds
(Canterbury Court Project), Series A, 6% due 2/15/2022 2,267
1,500 Milledgeville-Baldwin County, Georgia, Development Authority Revenue Bonds
(Georgia College and State University Foundation), 6% due 9/01/2033 1,598
Hawaii--0.3% Kuakini, Hawaii, Health System, Special Purpose Revenue Bonds, Series A:
1,410 6.30% due 7/01/2022 1,478
3,000 6.375% due 7/01/2032 3,123
Illinois--7.3% 10,620 Chicago, Illinois, Board of Education, GO, DRIVERS, Series 199, 9.268%
due 12/01/2020 (c)(g) 13,060
1,400 Chicago, Illinois, GO (Neighborhoods Alive 21 Program), 5.875% due 1/01/2019 (e) 1,587
26,800 Chicago, Illinois, O'Hare International Airport Revenue Bonds, 3rd Lien, AMT,
Series B-2, 6% due 1/01/2029 (k) 29,749
3,000 Chicago, Illinois, O'Hare International Airport, Special Facility Revenue
Refunding Bonds (American Airlines Inc. Project), 8.20% due 12/01/2024 2,585
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Illinois Chicago, Illinois, Park District, GO (e):
(concluded) $ 2,265 Refunding, Series B, 5.75% due 1/01/2015 $ 2,558
1,500 Series A, 5.75% due 1/01/2016 1,691
840 Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT, Series A, 7.15% due
9/01/2031 (i)(l) 845
2,000 Chicago, Illinois, Special Assessment Bonds (Lake Shore East), 6.75% due
12/01/2032 2,068
3,210 Cicero, Illinois, GO, Refunding (Corporate Purpose), 6% due 12/01/2028 (f) 3,646
7,000 Decatur, Illinois, GO, Refunding, 6% due 3/01/2008 (e)(j) 7,761
10,000 Hodgkins, Illinois, Environmental Improvement Revenue Bonds (Metro Biosolids
Management LLC Project), AMT, 6% due 11/01/2023 10,160
Illinois Development Finance Authority Revenue Bonds:
3,140 (Community Rehabilitation Providers Facility), Series A, 6.50% due 7/01/2022 3,340
660 Series B, 6.40% due 9/01/2031 (h) 712
Illinois State, GO, 1st Series (f):
8,890 5.75% due 12/01/2015 10,047
3,745 5.75% due 12/01/2016 4,230
4,000 5.75% due 12/01/2017 4,509
3,000 Illinois State, Sales Tax Revenue Bonds, 6% due 6/15/2020 3,387
2,000 Lake County, Illinois, Forest Preservation District, GO (Land Acquisition and
Development), 5.75% due 12/15/2016 2,275
Indiana--0.9% 5,000 Indiana Transportation Finance Authority, Highway Revenue Bonds, Series A,
5.25% due 6/01/2025 (e) 5,405
6,000 MSD Warren Township, Indiana, Vision 2005, School Building Corporation Revenue
Bonds, First Mortgage, 5.50% due 7/15/2020 (e) 6,645
Iowa--0.7% 1,000 Iowa City, Iowa, Sewer Revenue Bonds, 5.75% due 7/01/2021 (f) 1,046
6,860 Iowa Finance Authority, Health Care Facilities Revenue Refunding Bonds
(Care Initiatives Project), 9.25% due 7/01/2025 8,319
Kansas--0.7% 2,810 Sedgwick and Shawnee Counties, Kansas, S/F Revenue Bonds, AMT, Series A-1,
6.95% due 6/01/2029 (d) 2,848
2,500 Witchita, Kansas, Hospital Facilities Revenue Refunding and Improvement Bonds,
Series III, 6.25% due 11/15/2019 2,793
4,500 Wyandotte County, Kansas, Kansas City Unified Government, Revenue Refunding
Bonds (General Motors Corporation Project), 6% due 6/01/2025 4,749
Louisiana--2.0% 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) 10,422
2,900 New Orleans, Louisiana, GO, Refunding, 6.125% due 10/01/2016 (c) 3,010
13,000 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain Company Project),
7.50% due 7/01/2013 13,468
2,000 Rapides Finance Authority, Louisiana, Environmental Improvement Revenue Bonds
(International Paper Company Project), AMT, Series A, 6.55% due 11/15/2023 2,169
Maine--1.1% 8,635 Maine Finance Authority, Solid Waste Recycling Facilities Revenue Bonds
(Great Northern Paper Project--Bowater), AMT, 7.75% due 10/01/2022 8,647
6,045 Maine State Housing Authority, Mortgage Purpose Revenue Bonds, DRIVERS, AMT,
Series 170, 9.726% due 11/15/2028 (g) 6,519
Maryland--0.5% 500 Anne Arundel County, Maryland, Special Obligation Revenue Bonds (Arundel Mills
Project), 7.10% due 7/01/2009 (j) 601
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 1,065
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) 1,228
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 1,055
240 Maryland State Economic Development Corporation Revenue Bonds (Health and
Mental Hygiene Program), Series A, 7.125% due 3/01/2006 247
1,000 Maryland State Energy Financing Administration, Solid Waste Disposal Revenue
Bonds, Limited Obligation (Wheelabrator Water Projects), AMT, 6.45% due
12/01/2016 1,050
Maryland Water Quality Financing Administration, Revolving Loan Fund Revenue
Bonds, Series A:
300 6.375% due 9/01/2010 301
465 6.55% due 9/01/2014 467
500 Prince George's County, Maryland, Housing Authority, Mortgage Revenue Refunding
Bonds (Parker Apartments Project), Series A, 7.25% due 11/20/2016 (d) 501
1,000 University of Maryland, System Auxiliary Facility and Tuition Revenue Bonds,
Series A, 5.75% due 10/01/2019 1,112
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Massachusetts--0.9% $ 435 Massachusetts Educational Financing Authority, Education Loan Revenue
Refunding Bonds, AMT, Issue E, 5.85% due 7/01/2014 (c) $ 443
1,000 Massachusetts State Development Finance Agency, Revenue Refunding Bonds
(Eastern Nazarene College), 5.625% due 4/01/2029 895
1,705 Massachusetts State, HFA, Housing Revenue Refunding Bonds, Series B, 6.05%
due 12/01/2009 (f) 1,748
550 Massachusetts State, HFA, S/F Housing Revenue Bonds, AMT, Series 48, 6.35%
due 6/01/2026 (f) 556
4,950 Massachusetts State Health and Educational Facilities Authority Revenue
Bonds (Medical Center of Central Massachusetts), CARS, Series B, 11.425%
due 6/23/2022 (c)(g) 6,017
1,000 Massachusetts State Industrial Finance Agency, Higher Education Revenue
Refunding Bonds (Hampshire College Project), 5.625% due 10/01/2007 (j) 1,100
130 Massachusetts State Water Pollution Abatement Trust, Water Abatement
Revenue Bonds, Series A, 6.375% due 2/01/2015 133
1,600 Montachusett, Massachusetts, Regional Vocational Technical School District,
GO, 5.95% due 1/15/2020 (f) 1,808
Michigan--1.4% 7,500 Delta County, Michigan, Economic Development Corporation, Environmental
Improvement Revenue Refunding Bonds (Mead Westvaco--Escanaba), Series A,
6.25% due 4/15/2027 8,021
500 Dickinson County, Michigan, Economic Development Corporation, Environmental
Improvement Revenue Refunding Bonds (International Paper Company Project),
Series A, 5.75% due 6/01/2016 541
1,000 Eastern Michigan University Revenue Refunding Bonds, 6% due 6/01/2024 (c) 1,138
3,000 Flint, Michigan, Hospital Building Authority, Revenue Refunding Bonds
(Hurley Medical Center), 6% due 7/01/2020 3,064
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) 625
3,325 Macomb County, Michigan, Hospital Finance Authority, Hospital Revenue Bonds
(Mount Clemens General Hospital), Series B, 5.875% due 11/15/2034 3,205
1,500 Michigan State Hospital Finance Authority, Revenue Refunding Bonds (Mercy
Mount Clemens), Series A, 6% due 5/15/2014 (f) 1,684
1,060 Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds
(Detroit Edison Company), Series AA, 6.40% due 9/01/2025 (f) 1,108
Minnesota--1.1% 1,070 Anoka County, Minnesota, Solid Waste Disposal Revenue Bonds (Natural Rural
Utilities), AMT, Series A, 6.95% due 12/01/2008 1,088
1,000 Eden Prairie, Minnesota, M/F Housing Revenue Bonds (Rolling Hills Project),
Series A, 6.15% due 8/20/2031 (d) 1,087
680 Minneapolis, Minnesota, Community Development Agency, Supported Development
Revenue Bonds (Common Bond Fund), AMT, Series 2, 6.20% due 6/01/2017 706
Minneapolis, Minnesota, Health Care System Revenue Bonds (Allina Health System),
Series A:
1,500 5.70% due 11/15/2022 1,604
2,665 5.75% due 11/15/2032 2,820
Minneapolis and Saint Paul, Minnesota, Metropolitan Airports Commission,
Airport Revenue Bonds, AMT, Sub-Series D (e):
470 5.75% due 1/01/2012 522
470 5.75% due 1/01/2014 518
2,060 5.75% due 1/01/2015 2,268
1,110 Ramsey County, Minnesota, Housing and Redevelopment Authority, M/F Housing
Revenue Bonds (Hanover Townhouses Project), AMT, 6% due 7/01/2031 1,147
1,000 Saint Cloud, Minnesota, Health Care Revenue Refunding Bonds (Saint Cloud
Hospital Obligation Group), Series A, 6.25% due 5/01/2020 (h) 1,146
1,000 Saint Francis, Minnesota, Independent School District No. 015, GO, Series A,
6.35% due 2/01/2013 (h) 1,043
1,500 Waconia, Minnesota, Health Care Facilities Revenue Bonds (Ridgeview Medical
Center Project), Series A, 6.125% due 1/01/2029 (m) 1,656
Mississippi--0.1% 1,700 Warren County, Mississippi, Environmental Improvement Revenue Refunding Bonds
(International Paper Company Project), AMT, Series B, 6.75% due 8/01/2021 1,862
Missouri--0.7% Fenton, Missouri, Tax Increment Revenue Refunding and Improvement Bonds
(Gravois Bluffs):
1,050 6.75% due 10/01/2015 1,069
4,000 7% due 10/01/2021 4,317
1,500 Kansas City, Missouri, IDA, First Mortgage Health Facilities Revenue Bonds
(Bishop Spencer Place), Series A, 6.50% due 1/01/2035 1,533
2,200 Saint Louis, Missouri, Airport Revenue Bonds (Airport Development Program),
Series A, 5.625% due 7/01/2019 (f) 2,468
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Montana--0.4% $ 6,000 Montana State Higher Education, Student Assistance Corporation, Student
Loan Revenue Refunding Bonds, AMT, Sub-Series B, 6.40% due 12/01/2032 $ 6,295
Nevada--2.1% 5,000 Clark County, Nevada, IDR (Power Company Project), AMT, Series A, 6.70%
due 6/01/2022 (e) 5,129
1,550 Clark County, Nevada, Improvement District No. 142 Special Assessment,
6.375% due 8/01/2023 1,597
Elko, Nevada, GO (Airport Improvement), AMT, Series B (f):
165 6.10% due 10/01/2014 180
245 6.30% due 10/01/2019 269
320 6.75% due 10/01/2024 357
225 7% due 10/01/2029 252
2,990 Henderson, Nevada, Local Improvement Districts, Special Assessment,
Series NO T-14, 5.80% due 3/01/2023 3,078
Las Vegas, Nevada, Local Improvement Bonds, Special Assessment, Special
Improvement District Number 808, Summerlin:
1,765 5.875% due 6/01/2009 1,833
2,040 6.125% due 6/01/2012 2,118
2,270 6.25% due 6/01/2013 2,356
175 Nevada Housing Division, S/F Program, AMT, Senior Series E, 7.05% due
4/01/2027 (b) 178
2,000 Reno, Nevada, Special Assessment District Number 4 (Somerset Parkway), 6.625%
due 12/01/2022 2,040
Sparks, Nevada, Redevelopment Agency, Tax Allocation Revenue Refunding Bonds,
Series A (m):
3,110 6% due 1/15/2015 3,435
6,315 6% due 1/15/2023 6,958
New Hampshire--0.1% 1,750 New Hampshire Health and Education Facilities Authority, Revenue Refunding
Bonds (Elliot Hospital), Series B, 5.60% due 10/01/2022 1,822
New Jersey--4.1% 570 Camden County, New Jersey, Pollution Control Financing Authority, Solid Waste
Resource Recovery Revenue Refunding Bonds, AMT, Series B, 7.50% due 12/01/2009 570
3,300 New Jersey EDA, Retirement Community Revenue Bonds (Cedar Crest Village Inc.
Facility), Series A, 7.25% due 11/15/2031 3,475
5,000 New Jersey EDA, Revenue Refunding Bonds (RWJ Health Care Corporation), 6.50%
due 7/01/2024 (h) 5,116
2,000 New Jersey EDA, Special Facility Revenue Bonds (Continental Airlines Inc.
Project), AMT, 6.25% due 9/15/2029 1,625
3,680 New Jersey EDA, State Lease Revenue Bonds (State Office Buildings Projects),
6% due 6/15/2010 (c)(j) 4,238
New Jersey Health Care Facilities Financing Authority Revenue Bonds:
3,000 (Pascack Valley Hospital Association), 6% due 7/01/2013 2,838
3,130 (South Jersey Hospital), 6% due 7/01/2026 3,347
2,250 New Jersey Health Care Facilities Financing Authority, Revenue Refunding
Bonds (Capital Health System Inc.), Series A, 5.75% due 7/01/2023 2,405
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) 1,156
New Jersey State Turnpike Authority, Turnpike Revenue Refunding Bonds (f):
10,000 DRIVERS, Series 155, 9.224% due 1/01/2018 (g) 12,203
10,000 Series A, 5.75% due 1/01/2018 11,101
9,500 Tobacco Settlement Financing Corporation of New Jersey Revenue Bonds, 7% due
6/01/2041 9,595
New Mexico--0.6% 8,000 Farmington, New Mexico, PCR, Refunding (Public Service Company of New
Mexico - San Juan), Series B, 6.30% due 12/01/2016 8,625
190 New Mexico Mortgage Finance Authority, Revenue Refunding Bonds, Mortgage-Backed
Securities, Series F, 7% due 1/01/2026 (i) 206
250 Santa Fe County, New Mexico, Correctional System Revenue Bonds, 6% due
2/01/2027 (h) 304
New York--11.1% 9,500 Metropolitan Transportation Authority, New York, Commuter Facilities,
Service Contract Revenue Refunding Bonds, Series 8, 5.50% due 7/01/2013 (h)(j) 10,985
10,000 Metropolitan Transportation Authority, New York, Transit Facilities Revenue
Bonds, Series A, 5.625% due 7/01/2007 (f)(j) 10,963
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 3,313
2,000 New York City, New York, City IDA Revenue Bonds (Visy Paper Inc. Project),
AMT, 7.95% due 1/01/2028 2,096
4,050 New York City, New York, City IDA, Special Facility Revenue Bonds (British
Airways PLC Project), AMT, 7.625% due 12/01/2032 4,198
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
New York $10,000 New York City, New York, City Municipal Water Finance Authority, Water
(concluded) and Sewer System Revenue Bonds, RIB, Series 158, 9.267% due 6/15/2026 (g) $ 11,214
3,000 New York City, New York, City Transit Authority, Triborough Metropolitan
Transportation Authority, COP, 5.75% due 01/01/2010 (c)(j) 3,453
6,000 New York City, New York, City Transitional Finance Authority Revenue
Bonds, Future Tax Secured, Series B, 6% due 11/15/2010 6,909
New York City, New York, City Transitional Finance Authority, Revenue
Refunding Bonds, Series C:
12,015 5.875% due 11/01/2015 13,630
8,000 Future Tax Secured, 5.875% due 11/01/2017 9,054
New York City, New York, GO, Refunding:
6,600 Series A, 6% due 5/15/2010 (j)(k) 7,501
2,210 Series A, 6.25% due 5/15/2026 (k) 2,535
4,000 Series B, 8.25% due 6/01/2006 (k)(n) 4,337
4,000 Series C, 5.875% due 08/01/2006 (e)(j) 4,278
8,885 Series G, 5.75% due 02/01/2006 (f)(j) 9,360
6,115 Series G, 5.75% due 2/01/2014 (f)(j) 6,425
1,000 Series H, 6% due 8/01/2007 (j)(k) 1,097
10,000 New York City, New York, GO, Series B, 5.875% due 8/01/2015 (f) 11,419
New York State Dormitory Authority Revenue Bonds (Catholic Health
Services--Long Island):
1,175 5% due 7/01/2012 1,250
1,775 5% due 7/01/2013 1,880
1,935 5% due 7/01/2014 2,038
New York State Dormitory Authority, Revenue Refunding Bonds:
3,370 (Concord Nursing Home Inc.), 6.25% due 7/01/2016 3,707
2,500 (Concord Nursing Home Inc.), 6.50% due 7/01/2029 2,729
3,000 (Mount Sinai Health), Series A, 6.50% due 7/01/2016 3,190
3,950 (Mount Sinai Health), Series A, 6.50% due 7/01/2025 4,131
3,000 (State University Educational Facilities), Series A, 7.50% due 5/15/2013 3,832
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 1,534
2,285 Oneida County, New York, IDA Revenue Bonds (Civic Facility-Faxton Hospital),
Series C, 6.625% due 1/01/2015 (m) 2,592
95 Suffolk County, New York, IDA, Civic Facility Revenue Bonds (Special Needs
Facilities Pooled Program), Series D-1, 6% due 7/01/2012 97
705 Westchester County, New York, IDA, Civic Facilities Revenue Bonds (Special
Needs Facilities Pooled Program), Series E-1, 6% due 7/01/2012 723
8,095 Westchester County, New York, IDA, Continuing Care Retirement, Mortgage Revenue
Bonds (Kendal on Hudson Project), Series A, 6.50% due 1/01/2034 8,251
North Carolina--2.7% 920 Brunswick County, North Carolina, COP, 6% due 6/01/2016 (h) 1,048
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 1,544
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:
1,500 Series B, 5.875% due 1/01/2021 (f) 1,618
4,000 Series D, 6.75% due 1/01/2026 (o) 4,444
4,440 North Carolina Eastern Municipal Power Agency, Power System Revenue Refunding
Bonds, Series D, 6.70% due 1/01/2019 4,984
290 North Carolina HFA, S/F Revenue Bonds, Series W, 6.50% due 3/01/2018 292
2,500 North Carolina Medical Care Commission, Health Care Facilities, First Mortgage
Revenue Bonds (Presbyterian Homes Project), 6.875% due 10/01/2021 2,678
2,000 North Carolina Medical Care Commission, Health Care Housing Revenue Bonds
(The ARC of North Carolina Projects), Series A, 5.80% due 10/01/2034 2,015
North Carolina Medical Care Commission, Retirement Facilities, First Mortgage
Revenue Bonds:
1,625 (Forest at Duke Project), 6.375% due 9/01/2032 1,705
2,500 (Givens Estates Project), Series A, 6.50% due 7/01/2032 2,566
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
North Carolina North Carolina Municipal Power Agency Number 1, Catawba Electric Revenue
(concluded) Refunding Bonds, Series B:
$ 1,580 6.375% due 1/01/2013 $ 1,776
7,500 6.50% due 1/01/2020 8,451
1,175 North Carolina State Educational Assistance Authority Revenue Bonds
(Guaranteed Student Loan), AMT, Sub-lien, Series C, 6.35% due 7/01/2016 1,230
Piedmont, North Carolina, Triad Airport Authority, Airport Revenue Refunding
Bonds, Series A (h):
1,000 6.375% due 7/01/2016 1,143
1,000 6% due 7/01/2024 1,124
Ohio--1.2% 1,000 Cuyahoga County, Ohio, Health Care Facilities Revenue Refunding Bonds
(Benjamin Rose Institute Project), 5.50% due 12/01/2028 943
1,200 Huron County, Ohio, GO, Human Services Building, 7.25% due 12/01/2005 (f)(j) 1,277
630 Ohio HFA, Mortgage Revenue Bonds, AMT, Series A-1, 6.15% due 3/01/2029 (d) 657
8,000 Ohio State Air Quality Development Authority, Revenue Refunding Bonds
(Dayton Power & Light Company), Series B, 6.40% due 8/15/2027 (f) 8,025
1,000 Ohio State Water Development Authority, Pollution Control Facilities Revenue
Refunding Bonds (Pennsylvania Power Co. Project), 6.15% due 8/01/2023 (c) 1,023
1,470 Port of Greater Cincinnati Development Authority, Ohio, Special Assessment
Revenue Bonds (Cooperative Public Parking Infrastructure Project), 6.40%
due 2/15/2034 1,516
3,005 Toledo-Lucas County, Ohio, Lodging Tax Revenue Refunding Bonds (Convention
Center Project), 5.70% due 10/01/2015 (f) 3,230
Oregon--0.7% Forest Grove, Oregon, Campus Improvement Revenue Refunding Bonds (Pacific
University) (m):
250 6% due 5/01/2015 275
250 6.20% due 5/01/2020 278
2,485 Jackson County, Oregon, Central Point School District Number 006, GO, 5.75%
due 6/15/2010 (e)(j) 2,837
Oregon State Housing and Community Services Department, Mortgage Revenue
Refunding Bonds (S/F Mortgage Program), Series A:
95 6.40% due 7/01/2018 97
60 AMT, 6.20% due 7/01/2027 63
500 Portland, Oregon, M/F Housing Authority Revenue Bonds (Lovejoy Station
Apartments Project), AMT, 5.90% due 7/01/2023 (f) 527
1,000 Portland, Oregon, Sewer System Revenue Bonds, Series A, 5.75% due 8/01/2018 (e) 1,122
Portland, Oregon, Urban Renewal and Redevelopment Revenue Refunding Bonds,
Series A (c):
1,000 (Downtown Waterfront), 5.75% due 6/15/2018 1,128
3,190 (South Park Blocks), 5.75% due 6/15/2018 3,597
Pennsylvania--0.9% 2,220 Allegheny County, Pennsylvania, Sanitation Authority, Sewer Revenue Bonds,
5.75% due 12/01/2017 (f) 2,523
4,000 Pennsylvania State Higher Educational Facilities Authority Revenue Bonds
(University of Pennsylvania Medical Center Health System), Series A, 6%
due 1/15/2031 4,286
1,265 Philadelphia, Pennsylvania, Authority for IDR, Commercial Development, 7.75%
due 12/01/2017 1,293
5,000 Sayre, Pennsylvania, Health Care Facilities Authority, Revenue Refunding
Bonds (Guthrie Health), Series A, 5.875% due 12/01/2031 5,287
Rhode Island--0.6% 6,815 Rhode Island State Economic Development Corporation, Airport Revenue Bonds,
Series B, 6% due 7/01/2028 (e) 7,699
1,000 Rhode Island State Economic Development Corporation Revenue Bonds (Providence
Place Mall), 6.125% due 7/01/2020 (m) 1,128
South Carolina--1.3% Medical University Hospital Authority, South Carolina, Hospital Facilities
Revenue Refunding Bonds (j):
2,450 6.50% due 8/15/2012 2,928
5,400 Series A, 6.375% due 8/15/2012 6,409
Piedmont Municipal Power Agency, South Carolina, Electric Revenue Refunding
Bonds (e):
1,745 6.75% due 1/01/2019 2,221
1,255 6.75% due 1/01/2019 (n) 1,629
5,000 South Carolina Jobs EDA, Residential Care Facilities Revenue Bonds (South
Carolina Episcopal--Still Hopes Residence Project), Series A, 6.375% due
5/15/2032 5,040
South Dakota--0.3% 3,750 Pierre, South Dakota, School District Number 32-2, GO, 5.75% due
08/01/2010 (h)(j) 4,288
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Tennessee--2.1% Chattanooga, Tennessee, Industrial Development Board, Lease Rent Revenue
Bonds (Southside Redevelopment Corporation) (c):
$ 4,485 5.75% due 10/01/2017 $ 5,046
3,740 5.75% due 10/01/2018 4,208
1,000 Johnson City, Tennessee, Health and Educational Facilities Board, Retirement
Facility Revenue Bonds (Appalachian Christian Village Project), Series A,
6.25% due 2/15/2032 995
4,950 McMinn County, Tennessee, IDB, Solid Waste Revenue Bonds (Recycling Facility--
Calhoun Newsprint), AMT, 7.40% due 12/01/2022 4,975
5,000 Metropolitan Government of Nashville and Davidson County, Tennessee, GO,
5.875% due 5/15/2026 5,256
Shelby County, Tennessee, Health, Educational and Housing Facility Board,
Hospital Revenue Refunding Bonds (Methodist Healthcare):
4,380 6.50% due 09/01/2012 (j) 5,285
2,920 6.50% due 9/01/2026 (n) 3,513
Texas--13.8% Austin, Texas, Convention Center Revenue Bonds (Convention Enterprises Inc.):
5,300 First Tier, Series A, 6.60% due 1/01/2021 5,640
2,300 First Tier, Series A, 6.70% due 1/01/2028 2,459
6,740 Trust Certificates, Second Tier, Series B, 6% due 1/01/2023 7,145
10,630 Austin, Texas, Revenue Bonds (Town Lake Community Events Center Venue), 6.20%
due 11/15/2029 (e) 12,000
Bexar County, Texas, Health Facilities Development Corporation, Revenue
Refunding Bonds (Army Retirement Residence Project):
600 6.125% due 7/01/2022 641
1,750 6.30% due 7/01/2032 1,851
2,280 Brazos River Authority, Texas, PCR, Refunding (Texas Utility Company), AMT,
Series A, 7.70% due 4/01/2033 2,706
4,250 Brazos River Authority, Texas, Revenue Refunding Bonds (Reliant Energy Inc.
Project), Series B, 7.75% due 12/01/2018 4,689
3,700 Brazos River, Texas, Harbor Navigation District, Brazoria County Environmental
Revenue Refunding Bonds (Dow Chemical Company Project), AMT, Series A-7, 6.625%
due 5/15/2033 4,080
1,045 Central Texas Housing Finance Corporation, S/F Mortgage Revenue Bonds (GNMA
Mortgage Program), AMT, 8.20% due 6/28/2017 (b)(d) 1,056
3,620 Dallas-Fort Worth, Texas, International Airport Facility, Improvement
Corporation Revenue Bonds (Learjet Inc.), AMT, Series 2001-A-1, 6.15%
due 1/01/2016 3,651
18,250 Dallas-Fort Worth, Texas, International Airport Revenue Bonds, DRIVERS, AMT,
Series 201, 9.739% due 11/01/2024 (e)(g) 21,955
1,260 Fort Bend County, Texas, Municipal Utility District Number 23, GO, 6.625%
due 9/01/2007 (j)(m) 1,400
1,400 Fort Worth, Texas, Certificates of Obligation, GO, 6.25% due 3/01/2005 (j) 1,410
Gregg County, Texas, Health Facilities Development Corporation, Hospital
Revenue Bonds (Good Shepherd Medical Center Project) (m):
1,000 6.875% due 10/01/2020 1,164
3,500 6.375% due 10/01/2025 3,983
2,465 Gulf Coast, Texas, Waste Disposal Authority, Revenue Refunding Bonds
(International Paper Company), AMT, Series A, 6.10% due 8/01/2024 2,604
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 2,695
3,000 Houston, Texas, Airport System, Special Facilities Revenue Bonds (Continental
Airlines Terminal Improvement), AMT, Series B, 6.125% due 7/15/2027 2,327
22,000 Houston, Texas, Combined Utility System, First Lien Revenue Refunding Bonds,
Series A, 5.125% due 5/15/2028 (f) 22,913
8,080 Matagorda County, Texas, Navigation District Number 1 Revenue Refunding Bonds
(Reliant Energy Inc.), Series C, 8% due 5/01/2029 8,955
7,350 Matagorda County, Texas, Port of Bay City Authority Revenue Bonds (Hoechst
Celanese Corp. Project), AMT, 6.50% due 5/01/2026 7,331
1,000 Pflugerville, Texas, Independent Industrial School District, GO, 5.75% due
8/15/2020 1,116
4,825 Port Corpus Christi, Texas, Individual Development Corporation, Environmental
Facilities Revenue Bonds (Citgo Petroleum Corporation Project), AMT, 8.25% due
11/01/2031 5,155
2,495 Red River Authority, Texas, PCR, Refunding (Celanese Project), Series A, 6.45%
due 11/01/2030 2,528
1,000 Red River, Texas, Education Finance Revenue Bonds (Saint Mark's School--Texas
Project), 6% due 8/15/2019 1,106
2,025 South Plains, Texas, Housing Finance Corporation, S/F Mortgage Revenue Bonds,
AMT, Series A, 7.30% due 9/01/2031 (i) 2,072
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Texas Southeast Texas, Housing Finance Corporation Revenue Bonds, AMT (d)(l):
(concluded) $ 225 Series A, 8% due 11/01/2025 $ 229
245 Series B, 8.50% due 11/01/2025 247
Texas State Public Finance Authority, Building Revenue Bonds (h)(j):
2,100 (General Services Commission Project), Series A, 6% due 2/01/2010 2,410
1,000 (State Preservation Project), Series B, 6% due 8/01/2009 1,141
45,000 Texas State Turnpike Authority, Central Texas Turnpike System Revenue
Bonds, First Tier, Series A, 5.75% due 8/15/2038 (c) 50,202
4,930 Upper Trinity Regional Water District, Texas, Water Revenue Bonds (Regional
Treated Water Supply System), Series A, 6% due 8/01/2020 (e) 5,579
2,305 Webster, Texas, GO, COP, Series A, 6% due 3/01/2021 (h) 2,588
Virginia--0.6% 2,425 Chesterfield County, Virginia, IDA, PCR, Refunding (Virginia Electric and
Power Company), Series B, 5.875% due 6/01/2017 2,667
Norfolk, Virginia, Redevelopment and Housing Authority, First Mortgage
Revenue Bonds (Retirement Community), Series A:
500 6% due 1/01/2025 501
1,100 6.125% due 1/01/2035 1,101
4,250 Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds, Senior
Series A, 5.50% due 8/15/2028 3,937
Washington--1.9% 2,065 Kitsap County, Washington, GO, 5.875% due 7/01/2020 (c) 2,322
3,000 Port Seattle, Washington, Special Facilities Revenue Bonds, Series A, 6%
due 9/01/2029 (f) 3,381
3,010 Seattle, Washington, Drain and Wastewater Utility Revenue Bonds, 5.75%
due 11/01/2022 (f) 3,376
Seattle, Washington, Housing Authority Revenue Bonds:
2,750 (Newholly Project), AMT, 6.25% due 12/01/2035 2,784
4,875 (Replacement Housing Project), 6.125% due 12/01/2032 4,820
7,750 Tacoma, Washington, Electric System Revenue Refunding Bonds, Series A,
5.75% due 1/01/2017 (h) 8,768
1,625 University of Washington, University Revenue Bonds (Student Facilities Fee),
5.875% due 6/01/2017 (h) 1,838
West Virginia--0.5% 7,500 Upshur County, West Virginia, Solid Waste Disposal Revenue Bonds (TJ
International Project), AMT, 7% due 7/15/2025 7,800
Wisconsin--0.6% 2,725 Wisconsin State, GO, AMT, Series B, 6.20% due 11/01/2026 (f) 2,784
Wisconsin State Health and Educational Facilities Authority Revenue Bonds
(Synergyhealth Inc.):
3,250 6% due 11/15/2023 3,442
1,700 6% due 11/15/2032 1,765
Wyoming--1.3% 8,400 Sweetwater County, Wyoming, PCR, Refunding (Idaho Power Company Project),
Series A, 6.05% due 7/15/2026 (f) 8,986
9,000 Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds (FMC
Corporation Project), AMT, Series A, 7% due 6/01/2024 9,162
Guam--0.0% 115 Guam Housing Corporation, S/F Mortgage Revenue Bonds, AMT, Series A, 5.75%
due 9/01/2031 (l) 126
Puerto Rico--2.3% Puerto Rico Commonwealth Highway and Transportation Authority, Transportation
Revenue Bonds:
8,045 5.75% due 7/01/2022 8,977
1,000 Series B, 6% due 07/01/2005 (j) 1,030
2,000 Series B, 5.875% due 7/01/2021 (f) 2,268
785 Puerto Rico Commonwealth, Public Improvement, GO, Refunding, 5.70% due
7/01/2020 (f) 874
15,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series NN, 5.125%
due 7/01/2029 15,517
2,000 Puerto Rico Industrial Tourist Educational, Medical and Environmental Control
Facilities Revenue Bonds (Ascension Health), RIB, Series 377, 9.96% due
11/15/2030 (g) 2,503
960 Puerto Rico Public Finance Corporation, Commonwealth Appropriation Revenue
Bonds, Series E, 5.50% due 8/01/2029 1,015
U.S. Virgin 8,000 Virgin Islands Government Refinery Facilities Revenue Refunding Bonds
Islands--0.6% (Hovensa Coker Project), AMT, 6.50% due 7/01/2021 8,750
Total Municipal Bonds (Cost--$1,260,569)--94.5% 1,346,953
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Schedule of Investments (concluded) National Portfolio (In Thousands)
Shares
Held Short-Term Securities Value
40,623 Merrill Lynch Institutional Tax-Exempt Fund* $ 40,623
Total Short-Term Securities (Cost--$40,623)--2.9% 40,623
Total Investments (Cost--$1,301,192**)--97.4% 1,387,576
Other Assets Less Liabilities--2.6% 36,869
-----------
Net Assets--100.0% $ 1,424,445
===========
(a) Connie Lee Insured.
(b) FHA Insured.
(c) AMBAC Insured.
(d) GNMA Collateralized.
(e) FGIC Insured.
(f) MBIA Insured.
(g) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(h) FSA Insured.
(i) FNMA/GNMA Collateralized.
(j) Prerefunded.
(k) XL Capital Insured.
(l) FHLMC Collateralized.
(m) Radian Insured.
(n) Escrowed to maturity.
(o) ACA Insured.
* Investments in companies considered to be an affiliate of the Fund
(such companies are defined as "Affiliated Companies" in Section
2(a)(3) of the Investment Company Act of 1940) were as follows:
(in Thousands)
Net Dividend
Affiliate Activity Income
Merrill Lynch Institutional
Tax-Exempt Fund 23,200 $206
** The cost and unrealized appreciation/depreciation of investments, as
of December 31, 2004, as computed for federal income tax purposes,
were as follows:
(in Thousands)
Aggregate cost $ 1,301,037
==============
Gross unrealized appreciation $ 89,461
Gross unrealized depreciation (2,922)
--------------
Net unrealized appreciation $ 86,539
==============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Statements of Assets and Liabilities
Limited
Maturity Insured National
As of December 31, 2004 Portfolio Portfolio Portfolio
Assets
Investments in unaffiliated securities, at value* $ 562,653,134 $ 1,049,465,571 $ 1,346,952,957
Investments in affiliated securities, at value** 7,203,784 24,316,723 40,623,245
Cash 93,064 51,579 61,166
Receivables:
Interest 6,949,329 15,645,168 23,846,447
Securities sold -- 3,700,000 17,795,706
Capital shares sold 86,153 79,975 1,241,987
Dividends from affiliates 347 1,173 1,959
Prepaid expenses and other assets 61,555 783,733 438,095
--------------- --------------- ---------------
Total assets 577,047,366 1,094,043,922 1,430,961,562
--------------- --------------- ---------------
Liabilities
Unrealized depreciation on forward interest rate swaps -- 22,793 --
Payables:
Securities purchased -- 16,321,085 --
Dividends to shareholders 305,455 1,538,277 2,236,706
Capital shares redeemed 5,293,103 1,313,244 3,033,412
Distributor 73,097 157,610 249,762
Investment adviser 185,620 370,393 642,093
Other affiliates 35,127 67,692 146,838
Accrued expenses and other liabilities 93,203 119,624 208,051
--------------- --------------- ---------------
Total liabilities 5,985,605 19,910,718 6,516,862
--------------- --------------- ---------------
Net Assets
Net assets $ 571,061,761 $ 1,074,133,204 $ 1,424,444,700
=============== =============== ===============
Net Assets Consist of
Class A Common Stock, $.10 par value++ $ 1,871,513 $ 2,261,308 $ 2,097,969
Class B Common Stock, $.10 par value++++ 506,933 1,313,548 1,867,304
Class C Common Stock, $.10 par value++++++ 1,194,923 803,685 870,034
Class I Common Stock, $.10 par value++++++++ 2,123,397 9,176,784 8,676,025
Paid-in capital in excess of par 568,269,841 1,004,290,205 1,393,545,427
--------------- --------------- ---------------
Undistributed investment income--net 441,211 1,172,969 840,783
Accumulated realized capital losses--net (2,326,589) (11,161,616) (69,836,716)
Unrealized appreciation/depreciation--net (1,019,468) 66,276,321 86,383,874
--------------- --------------- ---------------
Total accumulated earnings (losses)--net (2,904,846) 56,287,674 17,387,941
--------------- --------------- ---------------
Net Assets $ 571,061,761 $ 1,074,133,204 $ 1,424,444,700
=============== =============== ===============
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Statements of Assets and Liabilities (concluded)
Limited
Maturity Insured National
As of December 31, 2004 Portfolio Portfolio Portfolio
Net Asset Value
Class A:
Net assets $ 187,878,460 $ 179,151,058 $ 221,276,990
=============== =============== ===============
Shares outstanding 18,715,131 22,613,084 20,979,692
=============== =============== ===============
Net asset value and redemption price per share $ 10.04 $ 7.92 $ 10.55
=============== =============== ===============
Class B:
Net assets $ 50,851,285 $ 104,026,133 $ 196,782,048
=============== =============== ===============
Shares outstanding 5,069,330 13,135,476 18,673,040
=============== =============== ===============
Net asset value and redemption price per share $ 10.03 $ 7.92 $ 10.54
=============== =============== ===============
Class C:
Net assets $ 119,348,060 $ 63,665,895 $ 91,733,109
=============== =============== ===============
Shares outstanding 11,949,231 8,036,854 8,700,343
=============== =============== ===============
Net asset value and redemption price per share $ 9.99 $ 7.92 $ 10.54
=============== =============== ===============
Class I:
Net assets $ 212,983,956 $ 727,290,118 $ 914,652,553
=============== =============== ===============
Shares outstanding 21,233,965 91,767,836 86,760,253
=============== =============== ===============
Net asset value and redemption price per share $ 10.03 $ 7.93 $ 10.54
=============== =============== ===============
* Identified cost $ 563,672,602 $ 983,166,457 $ 1,260,569,083
=============== =============== ===============
** Identified cost for affiliated securities $ 7,203,784 $ 24,316,723 $ 40,623,245
=============== =============== ===============
++ 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., DECEMBER 31, 2004
Statements of Operations
Limited
Maturity Insured National
For the Six Months Ended December 31, 2004 Portfolio Portfolio Portfolio
Investment Income
Interest $ 6,854,261 $ 27,879,521 $ 41,153,006
Dividends from affiliates 127,475 203,359 205,706
Dividends -- 735,749 --
--------------- --------------- ---------------
Total income 6,981,736 28,818,629 41,358,712
--------------- --------------- ---------------
Expenses
Investment advisory fees 1,103,214 2,025,988 3,454,283
Account maintenance and distribution fees--Class C 241,381 258,538 342,013
Accounting services 115,978 166,279 214,051
Account maintenance fees--Class A 113,914 234,264 275,010
Account maintenance and distribution fees--Class B 102,792 414,706 791,109
Registration fees 44,615 30,555 35,351
Transfer agent fees--Class I 36,564 134,859 306,859
Transfer agent fees--Class A 35,492 33,649 72,338
Transfer agent fees--Class C 25,361 14,163 31,715
Professional fees 23,407 28,189 33,109
Printing and shareholder reports 22,006 32,619 41,222
Custodian fees 16,933 26,443 35,301
Transfer agent fees--Class B 11,466 24,242 78,764
Pricing services 10,792 11,186 28,447
Directors' fees and expenses 7,124 10,400 13,709
Other 22,631 29,187 31,586
--------------- --------------- ---------------
Total expenses before waiver 1,933,670 3,475,267 5,784,867
Waiver of expenses (19,385) (32,198) (31,953)
--------------- --------------- ---------------
Total expenses after waiver 1,914,285 3,443,069 5,752,914
--------------- --------------- ---------------
Investment income--net 5,067,451 25,375,560 35,605,798
--------------- --------------- ---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain (loss) on:
Investments--net (692,087) 5,543,490 7,636,534
Forward interest rate swaps--net -- (848,984) --
--------------- --------------- ---------------
Total realized gain (loss)--net (692,087) 4,694,506 7,636,534
--------------- --------------- ---------------
Change in unrealized appreciation/depreciation on:
Investments--net (149,477) 26,896,007 27,015,335
Forward interest rate swaps--net -- 259,072 --
--------------- --------------- ---------------
Total unrealized appreciation/depreciation--net (149,477) 27,155,079 27,015,335
--------------- --------------- ---------------
Total realized and unrealized gain (loss)--net (841,564) 31,849,585 34,651,869
--------------- --------------- ---------------
Net Increase in Net Assets Resulting from Operations $ 4,225,887 $ 57,225,145 $ 70,257,667
=============== =============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Statements of Changes in Net Assets Limited Maturity Portfolio
For the Six For the
Months Ended Year Ended
December 31, June 30,
Increase (Decrease) in Net Assets: 2004 2004
Operations
Investment income--net $ 5,067,451 $ 12,246,871
Realized loss--net (692,087) (1,056,145)
Change in unrealized depreciation--net (149,477) (8,070,447)
--------------- ---------------
Net increase in net assets resulting from operations 4,225,887 3,120,279
--------------- ---------------
Dividends to Shareholders
Investment income--net:
Class A (1,810,547) (4,538,777)
Class B (391,074) (1,050,664)
Class C (920,019) (2,160,826)
Class I (1,987,091) (4,488,624)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (5,108,731) (12,238,891)
--------------- ---------------
Capital Share Transactions
Net decrease in net assets derived from capital share transactions (124,030,272) (14,166,003)
--------------- ---------------
Net Assets
Total decrease in net assets (124,913,116) (23,284,615)
Beginning of period 695,974,877 719,259,492
--------------- ---------------
End of period* $ 571,061,761 $ 695,974,877
=============== ===============
* Undistributed investment income--net $ 441,211 $ 482,491
=============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Statements of Changes in Net Assets (continued) Insured Portfolio
For the Six For the
Months Ended Year Ended
December 31, June 30,
Increase (Decrease) in Net Assets: 2004 2004
Operations
Investment income--net $ 25,375,560 $ 57,675,729
Realized gain--net 4,694,506 5,207,367
Change in unrealized appreciation--net 27,155,079 (62,104,593)
--------------- ---------------
Net increase in net assets resulting from operations 57,225,145 778,503
--------------- ---------------
Dividends to Shareholders
Investment income--net:
Class A (4,187,587) (8,990,802)
Class B (2,191,442) (5,785,538)
Class C (1,263,449) (2,766,852)
Class I (17,721,265) (40,101,428)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (25,363,743) (57,644,620)
--------------- ---------------
Capital Share Transactions
Net decrease in net assets derived from capital share transactions (47,362,823) (123,327,160)
--------------- ---------------
Net Assets
Total decrease in net assets (15,501,421) (180,193,277)
Beginning of period 1,089,634,625 1,269,827,902
--------------- ---------------
End of period* $ 1,074,133,204 $ 1,089,634,625
=============== ===============
* Undistributed investment income--net $ 1,172,969 $ 1,161,152
=============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Statements of Changes in Net Assets (concluded) National Portfolio
For the Six For the
Months Ended Year Ended
December 31, June 30,
Increase (Decrease) in Net Assets: 2004 2004
Operations
Investment income--net $ 35,605,798 $ 61,264,642
Realized gain (loss)--net 7,636,534 (1,437,730)
Change in unrealized appreciation--net 27,015,335 (32,654,407)
--------------- ---------------
Net increase in net assets resulting from operations 70,257,667 27,172,505
--------------- ---------------
Dividends to Shareholders
Investment income--net:
Class A (5,342,608) (10,513,482)
Class B (4,589,899) (12,045,994)
Class C (1,836,540) (3,332,550)
Class I (23,802,111) (35,485,746)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (35,571,158) (61,377,772)
--------------- ---------------
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions (17,699,888) 217,980,200
--------------- ---------------
Net Assets
Total increase in net assets 16,986,621 183,774,933
Beginning of period 1,407,458,079 1,223,683,146
--------------- ---------------
End of period* $ 1,424,444,700 $ 1,407,458,079
=============== ===============
* Undistributed investment income--net $ 840,783 $ 806,143
=============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Financial Highlights Limited Maturity Portfolio
Class A
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
December 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of period $ 10.06 $ 10.18 $ 10.14 $ 10.06 $ 9.86
---------- ---------- ---------- ---------- ----------
Investment income--net .08++ .17++ .24++ .32 .38
Realized and unrealized gain (loss)--net (.02) (.12) .04 .08 .20
---------- ---------- ---------- ---------- ----------
Total from investment operations .06 .05 .28 .40 .58
---------- ---------- ---------- ---------- ----------
Less dividends from investment income (.08) (.17) (.24) (.32) (.38)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 10.04 $ 10.06 $ 10.18 $ 10.14 $ 10.06
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share .61%+++ .50% 2.77% 3.99% 5.96%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of reimbursement .54%* .52% .52% .56% .54%
========== ========== ========== ========== ==========
Expenses .55%* .53% .53% .56% .54%
========== ========== ========== ========== ==========
Investment income--net 1.58%* 1.68% 2.31% 3.13% 3.80%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 187,878 $ 244,741 $ 248,454 $ 140,744 $ 42,619
========== ========== ========== ========== ==========
Portfolio turnover 28.38% 69.08% 44.61% 74.74% 51.94%
========== ========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Financial Highlights (continued) Limited Maturity Portfolio
Class B
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
December 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of period $ 10.05 $ 10.17 $ 10.13 $ 10.06 $ 9.86
---------- ---------- ---------- ---------- ----------
Investment income--net .07++ .14++ .21++ .29 .35
Realized and unrealized gain (loss)--net (.02) (.12) .04 .07 .20
---------- ---------- ---------- ---------- ----------
Total from investment operations .05 .02 .25 .36 .55
---------- ---------- ---------- ---------- ----------
Less dividends from investment income (.07) (.14) (.21) (.29) (.35)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 10.03 $ 10.05 $ 10.17 $ 10.13 $ 10.06
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share .48%+++ .24% 2.51% 3.62% 5.69%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of reimbursement .80%* .77% .78% .82% .80%
========== ========== ========== ========== ==========
Expenses .80%* .78% .79% .82% .80%
========== ========== ========== ========== ==========
Investment income--net 1.32%* 1.43% 2.10% 2.87% 3.55%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 50,851 $ 63,135 $ 83,886 $ 81,967 $ 31,480
========== ========== ========== ========== ==========
Portfolio turnover 28.38% 69.08% 44.61% 74.74% 51.94%
========== ========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Financial Highlights (continued) Limited Maturity Portfolio
Class C
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
December 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of period $ 10.01 $ 10.13 $ 10.09 $ 10.01 $ 9.82
---------- ---------- ---------- ---------- ----------
Investment income--net .07++ .14++ .19++ .29 .35
Realized and unrealized gain (loss)--net (.02) (.12) .06 .08 .19
---------- ---------- ---------- ---------- ----------
Total from investment operations .05 .02 .25 .37 .54
---------- ---------- ---------- ---------- ----------
Less dividends from investment income (.07) (.14) (.21) (.29) (.35)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 9.99 $ 10.01 $ 10.13 $ 10.09 $ 10.01
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share .48%+++ .23% 2.52% 3.72% 5.59%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of reimbursement .80%* .77% .78% .82% .81%
========== ========== ========== ========== ==========
Expenses .80%* .78% .79% .82% .81%
========== ========== ========== ========== ==========
Investment income--net 1.32%* 1.42% 1.92% 2.91% 3.53%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 119,348 $ 144,656 $ 135,782 $ 1,596 $ 602
========== ========== ========== ========== ==========
Portfolio turnover 28.38% 69.08% 44.61% 74.74% 51.94%
========== ========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Financial Highlights (continued) Limited Maturity Portfolio
Class I
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
December 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of period $ 10.05 $ 10.17 $ 10.13 $ 10.05 $ 9.85
---------- ---------- ---------- ---------- ----------
Investment income--net .09++ .18++ .27++ .34 .39
Realized and unrealized gain (loss)--net (.02) (.12) .02 .08 .20
---------- ---------- ---------- ---------- ----------
Total from investment operations .07 .06 .29 .42 .59
---------- ---------- ---------- ---------- ----------
Less dividends from investment income (.09) (.18) (.25) (.34) (.39)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 10.03 $ 10.05 $ 10.17 $ 10.13 $ 10.05
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share .66%+++ .59% 2.87% 4.10% 6.07%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of reimbursement .44%* .42% .42% .46% .44%
========== ========== ========== ========== ==========
Expenses .45%* .43% .43% .46% .44%
========== ========== ========== ========== ==========
Investment income--net 1.68%* 1.78% 2.44% 3.30% 3.91%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 212,984 $ 243,443 $ 251,137 $ 204,936 $ 191,481
========== ========== ========== ========== ==========
Portfolio turnover 28.38% 69.08% 44.61% 74.74% 51.94%
========== ========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Financial Highlights (continued) Insured Portfolio
Class A
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
December 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of period $ 7.70 $ 8.07 $ 7.79 $ 7.69 $ 7.36
---------- ---------- ---------- ---------- ----------
Investment income--net .18++++ .38++++ .39++++ .39 .37
Realized and unrealized gain (loss)--net .22 (.37) .28 .10 .33
---------- ---------- ---------- ---------- ----------
Total from investment operations .40 .01 .67 .49 .70
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.18) (.38) (.39) (.39) (.37)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.18) (.38) (.39) (.39) (.37)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 7.92 $ 7.70 $ 8.07 $ 7.79 $ 7.69
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share 5.21%+++ .10% 8.77% 6.63% 9.74%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of reimbursement .70%* .71% .71% .72% .70%
========== ========== ========== ========== ==========
Expenses .71%* .71% .71% .72% .70%
========== ========== ========== ========== ==========
Investment income--net 4.47%* 4.79% 4.88% 5.10% 4.94%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 179,151 $ 183,007 $ 187,805 $ 161,110 $ 145,688
========== ========== ========== ========== ==========
Portfolio turnover 23.57% 49.27% 38.17% 32.78% 64.39%
========== ========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
++++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Financial Highlights (continued) Insured Portfolio
Class B
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
December 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of period $ 7.69 $ 8.07 $ 7.79 $ 7.68 $ 7.36
---------- ---------- ---------- ---------- ----------
Investment income--net .16++++ .34++++ .35++++ .36 .34
Realized and unrealized gain (loss)--net .23 (.38) .28 .11 .32
---------- ---------- ---------- ---------- ----------
Total from investment operations .39 (.04) .63 .47 .66
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.16) (.34) (.35) (.36) (.34)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.16) (.34) (.35) (.36) (.34)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 7.92 $ 7.69 $ 8.07 $ 7.79 $ 7.68
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share 5.08%+++ (.53%) 8.21% 6.23% 9.04%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of reimbursement 1.21%* 1.21% 1.22% 1.23% 1.21%
========== ========== ========== ========== ==========
Expenses 1.22%* 1.22% 1.22% 1.23% 1.21%
========== ========== ========== ========== ==========
Investment income--net 3.97%* 4.29% 4.38% 4.58% 4.43%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 104,026 $ 111,524 $ 160,177 $ 182,241 $ 223,710
========== ========== ========== ========== ==========
Portfolio turnover 23.57% 49.27% 38.17% 32.78% 64.39%
========== ========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
++++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Financial Highlights (continued) Insured Portfolio
Class C
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
December 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of period $ 7.69 $ 8.07 $ 7.79 $ 7.68 $ 7.36
---------- ---------- ---------- ---------- ----------
Investment income--net .16++++ .33++++ .34++++ .35 .33
Realized and unrealized gain (loss)--net .23 (.38) .28 .11 .32
---------- ---------- ---------- ---------- ----------
Total from investment operations .39 (.05) .62 .46 .65
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.16) (.33) (.34) (.35) (.33)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.16) (.33) (.34) (.35) (.33)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 7.92 $ 7.69 $ 8.07 $ 7.79 $ 7.68
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share 5.05%+++ (.58%) 8.16% 6.18% 8.99%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of reimbursement 1.26%* 1.26% 1.27% 1.28% 1.26%
========== ========== ========== ========== ==========
Expenses 1.27%* 1.27% 1.27% 1.28% 1.26%
========== ========== ========== ========== ==========
Investment income--net 3.91%* 4.23% 4.31% 4.56% 4.38%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 63,666 $ 61,794 $ 66,089 $ 34,541 $ 14,392
========== ========== ========== ========== ==========
Portfolio turnover 23.57% 49.27% 38.17% 32.78% 64.39%
========== ========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
++++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Financial Highlights (continued) Insured Portfolio
Class I
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
December 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of period $ 7.70 $ 8.07 $ 7.80 $ 7.69 $ 7.36
---------- ---------- ---------- ---------- ----------
Investment income--net .19++++ .40++++ .41++++ .41 .39
Realized and unrealized gain (loss)--net .23 (.37) .27 .11 .33
---------- ---------- ---------- ---------- ----------
Total from investment operations .42 .03 .68 .52 .72
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.19) (.40) (.41) (.41) (.39)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.19) (.40) (.41) (.41) (.39)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 7.93 $ 7.70 $ 8.07 $ 7.80 $ 7.69
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share 5.48%+++ .35% 8.88% 7.03% 10.01%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of reimbursement .45%* .46% .46% .47% .45%
========== ========== ========== ========== ==========
Expenses .46%* .46% .46% .47% .45%
========== ========== ========== ========== ==========
Investment income--net 4.72%* 5.04% 5.13% 5.35% 5.19%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 727,290 $ 733,310 $ 855,757 $ 878,018 $ 920,597
========== ========== ========== ========== ==========
Portfolio turnover 23.57% 49.27% 38.17% 32.78% 64.39%
========== ========== ========== ========== ==========
* Annualized.
** Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
++++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Financial Highlights (continued) National Portfolio
Class A
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
December 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of period $ 10.29 $ 10.54 $ 10.27 $ 10.15 $ 9.71
---------- ---------- ---------- ---------- ----------
Investment income--net .26+++ .52+++ .53+++ .53 .52
Realized and unrealized gain (loss)--net .26 (.25) .27 .12 .44
---------- ---------- ---------- ---------- ----------
Total from investment operations .52 .27 .80 .65 .96
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.26) (.52) (.53) (.53) (.52)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.26) (.52) (.53) (.53) (.52)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 10.55 $ 10.29 $ 10.54 $ 10.27 $ 10.15
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 5.08%++++ 2.62% 7.98% 6.72% 10.04%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of reimbursement .85%** .85% .84% .87% .83%
========== ========== ========== ========== ==========
Expenses .85%** .85% .84% .87% .83%
========== ========== ========== ========== ==========
Investment income--net 4.86%** 4.97% 5.10% 5.30% 5.16%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 221,277 $ 207,376 $ 200,108 $ 137,225 $ 124,082
========== ========== ========== ========== ==========
Portfolio turnover 13.97% 22.46% 37.75% 35.75% 80.88%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
** Annualized.
++ Amount is less than $(.01) per share.
++++ Aggregate total investment return.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Financial Highlights (continued) National Portfolio
Class B
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
December 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of period $ 10.28 $ 10.53 $ 10.26 $ 10.14 $ 9.70
---------- ---------- ---------- ---------- ----------
Investment income--net .23+++ .47+++ .48+++ .53 .46
Realized and unrealized gain (loss)--net .26 (.26) .27 .12 .44
---------- ---------- ---------- ---------- ----------
Total from investment operations .49 .21 .75 .65 .90
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.23) (.46) (.48) (.53) (.46)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.23) (.46) (.48) (.53) (.46)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 10.54 $ 10.28 $ 10.53 $ 10.26 $ 10.14
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 4.82%++++ 2.10% 7.43% 6.18% 9.49%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of reimbursement 1.36%** 1.35% 1.34% 1.38% 1.34%
========== ========== ========== ========== ==========
Expenses 1.36%** 1.36% 1.35% 1.38% 1.34%
========== ========== ========== ========== ==========
Investment income--net 4.36%** 4.47% 4.59% 4.80% 4.67%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 196,782 $ 217,814 $ 321,477 $ 295,827 $ 227,592
========== ========== ========== ========== ==========
Portfolio turnover 13.97% 22.46% 37.75% 35.75% 80.88%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
** Annualized.
++ Amount is less than $(.01) per share.
++++ Aggregate total investment return.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Financial Highlights (continued) National Portfolio
Class C
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
December 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of period $ 10.29 $ 10.54 $ 10.26 $ 10.14 $ 9.71
---------- ---------- ---------- ---------- ----------
Investment income--net .23+++ .46+++ .47+++ .53 .46
Realized and unrealized gain (loss)--net .25 (.25) .28 .12 .43
---------- ---------- ---------- ---------- ----------
Total from investment operations .48 .21 .75 .65 .89
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.23) (.46) (.47) (.53) (.46)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.23) (.46) (.47) (.53) (.46)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 10.54 $ 10.29 $ 10.54 $ 10.26 $ 10.14
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 4.69%++++ 2.05% 7.48% 6.13% 9.33%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of reimbursement 1.41%** 1.40% 1.39% 1.43% 1.39%
========== ========== ========== ========== ==========
Expenses 1.41%** 1.41% 1.40% 1.43% 1.39%
========== ========== ========== ========== ==========
Investment income--net 4.30%** 4.42% 4.54% 4.76% 4.61%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 91,733 $ 74,849 $ 77,906 $ 52,822 $ 31,880
========== ========== ========== ========== ==========
Portfolio turnover 13.97% 22.46% 37.75% 35.75% 80.88%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
** Annualized.
++ Amount is less than $(.01) per share.
++++ Aggregate total investment return.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Financial Highlights (concluded) National Portfolio
Class I
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
December 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 2004 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of period $ 10.29 $ 10.54 $ 10.26 $ 10.14 $ 9.70
---------- ---------- ---------- ---------- ----------
Investment income--net .27+++ .55+++ .56+++ .62 .54
Realized and unrealized gain (loss)--net .25 (.25) .28 .12 .44
---------- ---------- ---------- ---------- ----------
Total from investment operations .52 .30 .84 .74 .98
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.27) (.55) (.56) (.62) (.54)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.27) (.55) (.56) (.62) (.54)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 10.54 $ 10.29 $ 10.54 $ 10.26 $ 10.14
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 5.12%++++ 2.88% 8.34% 6.98% 10.32%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of reimbursement .60%** .60% .59% .62% .58%
========== ========== ========== ========== ==========
Expenses .60%** .60% .59% .62% .58%
========== ========== ========== ========== ==========
Investment income--net 5.11%** 5.23% 5.35% 5.55% 5.42%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $ 914,653 $ 907,419 $ 624,192 $ 626,935 $ 653,685
========== ========== ========== ========== ==========
Portfolio turnover 13.97% 22.46% 37.75% 35.75% 80.88%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
** Annualized.
++ Amount is less than $(.01) per share.
++++ Aggregate total investment return.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 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. On January 3,
2005, the Limited Maturity Portfolio changed its name to the Short-
Term Portfolio. 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. These unaudited financial
statements reflect all adjustments, which are, in the opinion of
management, necessary to present a fair statement of the results for
the interim period. All such adjustments are of a normal, recurring
nature. The Fund's Portfolios offer multiple classes of shares.
Shares of Class A and Class I are sold with a front-end sales
charge. Shares of Class B and Class C may be subject to a contingent
deferred sales charge. All classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and
conditions, except that Class A, Class B and Class C Shares bear
certain expenses related to the account maintenance of such shares,
and Class B and Class C Shares also bear certain expenses related to
the distribution of such shares. Each class has exclusive voting
rights with respect to matters relating to its account maintenance
and distribution expenditures (except Class B shareholders may vote
on certain changes to the Class A distribution plan). Income,
expenses (other than expenses attributable to a specific class) and
realized and unrealized gains and losses 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 are traded primarily in the over-the-
counter markets and are valued at the last available bid price in
the over-the-counter market or on the basis of values as obtained by
a pricing service. Pricing services use valuation matrixes that
incorporate both dealer-supplied valuations and valuation models.
The procedures of the pricing service and its valuations are
reviewed by the officers of the Fund under the general direction of
the Board of Directors. Such valuations and procedures are reviewed
periodically by the Board of Directors of the Fund. Financial
futures contracts and options thereon, which are traded on
exchanges, are valued at their closing prices as of the close of
such exchanges. Options written or purchased are valued at the last
sale price in the case of exchange-traded options. In the case of
options traded in the over-the-counter market, valuation is the last
asked price (options written) or the last bid price (options
purchased). Swap agreements are valued by quoted fair values
received daily by the Fund's pricing service. Short-term investments
with a remaining maturity of 60 days or less are valued at amortized
cost which approximates market value, under which method the
investment is valued at cost and any premium or discount is
amortized on a straight line basis to maturity. Investments in open-
end investment companies are valued at their net asset value each
business day. Securities and other assets for which market
quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of
Directors of the Fund.
(b) Derivative financial instruments--The Fund may engage in various
portfolio investment strategies both to increase the return of the
Fund and to hedge, or protect, its exposure to interest rate
movements and movements in the securities markets.
* 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.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Notes to Financial Statements (continued)
* 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 Portfolios' amortize all
premiums and discounts on debt securities.
(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.
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
FAM has agreed to reimburse its advisory fee for each Portfolio
by the amount of advisory fee each Portfolio pays to FAM
indirectly through each Portfolio's investment in the Merrill
Lynch Institutional Tax-Exempt Fund. For the six months ended
December 31, 2004, FAM reimbursed Limited Maturity Portfolio,
Insured Portfolio and National Portfolio in the amounts of
$19,385, $32,198 and $31,953, respectively.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Notes to Financial Statements (continued)
Pursuant to the Distribution Plans adopted by the Fund in accordance
with Rule 12b-1 under the Investment Company Act of 1940, the Fund
pays the Distributor ongoing account maintenance and distribution
fees. The fees are accrued daily and paid monthly at annual rates
based upon the average daily net assets of the shares as follows:
Account Maintenance Fees
Portfolio Class A Class B Class C
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%
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 six months ended December 31, 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 $ 949 $ 150 $ 9,337 $ 1,235
Insured $ 2,831 $ 2,845 $ 31,184 $ 17,223
National $ 10,292 $ 7,087 $ 74,821 $ 34,648
For the six months ended December 31, 2004, MLPF&S received
contingent deferred sales charges of $189,077 relating to
transactions in Class B Shares, amounting to $34,826, $42,281 and
$111,970 in the Limited Maturity, Insured and National Portfolios,
respectively, and $30,398 relating to transactions in Class C
Shares, amounting to $18,894, $2,483 and $9,021 in the Limited
Maturity, Insured and National Portfolios, respectively.
In addition, MLPF&S received $1,000 in commissions on the execution
of portfolio transactions in the Insured Portfolio for the six
months ended December 31, 2004.
For the six months ended December 31, 2004, the Fund reimbursed FAM
$7,746, $11,913 and $15,771 in the Limited Maturity, Insured and
National Portfolios, respectively, for certain accounting services.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, FAMD, FDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended December 31, 2004 were as follows:
Purchases Sales
Limited Maturity Portfolio $ 150,903,790 $ 214,685,640
Insured Portfolio $ 251,197,002 $ 297,956,915
National Portfolio $ 190,485,927 $ 221,330,994
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share
transactions for the six months ended December 31, 2004 and for the
year ended June 30, 2004 were $(124,030,272) and $(14,166,003),
respectively, for the Limited Maturity Portfolio; $(47,362,823) and
$(123,327,160), respectively, for the Insured Portfolio;
$(17,699,888) and $217,980,200, respectively, for the National
Portfolio.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Notes to Financial Statements (continued)
Transactions in capital shares for each class were as follows:
Limited Maturity Portfolio
Class A Shares for the
Six Months Ended Dollar
December 31, 2004 Shares Amount
Shares sold 3,047,057 $ 30,688,399
Automatic conversion of shares 101,101 1,018,183
Shares issued to shareholders
in reinvestment of dividends 92,035 926,841
-------------- ---------------
Total issued 3,240,193 32,633,423
Shares redeemed (8,863,502) (89,223,050)
-------------- ---------------
Net decrease (5,623,309) $ (56,589,627)
============== ===============
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 B Shares for the
Six Months Ended Dollar
December 31, 2004 Shares Amount
Shares sold 233,504 $ 2,348,901
Shares issued to shareholders
in reinvestment of dividends 24,241 243,890
-------------- ---------------
Total issued 257,745 2,592,791
-------------- ---------------
Automatic conversion of shares (101,151) (1,018,183)
Shares redeemed (1,370,306) (13,782,897)
-------------- ---------------
Total redeemed (1,471,457) (14,801,080)
-------------- ---------------
Net decrease (1,213,712) $ (12,208,289)
============== ===============
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)
-------------- ---------------
Total redeemed (3,613,671) (36,593,154)
-------------- ---------------
Net decrease (1,964,304) $ (19,889,398)
============== ===============
Limited Maturity Portfolio
Class C Shares for the
Six Months Ended Dollar
December 31, 2004 Shares Amount
Shares sold 1,041,542 $ 10,434,755
Shares issued to shareholders
in reinvestment of dividends 58,137 582,494
-------------- ---------------
Total issued 1,099,679 11,017,249
Shares redeemed (3,608,713) (36,130,568)
-------------- ---------------
Net decrease (2,509,034) $ (25,113,319)
============== ===============
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 I Shares for the
Six Months Ended Dollar
December 31, 2004 Shares Amount
Shares sold 1,285,265 $ 12,926,374
Shares issued to shareholders
in reinvestment of dividends 119,938 1,206,662
-------------- ---------------
Total issued 1,405,203 14,133,036
Shares redeemed (4,400,308) (44,252,073)
-------------- ---------------
Net decrease (2,995,105) $ (30,119,037)
============== ===============
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Notes to Financial Statements (continued)
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)
============== ===============
Insured Portfolio
Class A Shares for the
Six Months Ended Dollar
December 31, 2004 Shares Amount
Shares sold 430,968 $ 3,386,481
Automatic conversion of shares 505,789 3,987,719
Shares issued to shareholders
in reinvestment of dividends 257,972 2,034,857
-------------- ---------------
Total issued 1,194,729 9,409,057
Shares redeemed (2,363,940) (18,609,609)
-------------- ---------------
Net decrease (1,169,211) $ (9,200,552)
============== ===============
Insured Portfolio
Class A Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 1,293,482 $ 10,118,653
Automatic conversion of shares 2,938,903 23,195,012
Shares issued to shareholders
in reinvestment of dividends 542,688 4,271,669
-------------- ---------------
Total issued 4,775,073 37,585,334
Shares redeemed (4,263,021) (33,478,095)
-------------- ---------------
Net increase 512,052 $ 4,107,239
============== ===============
Insured Portfolio
Class B Shares for the
Six Months Ended Dollar
December 31, 2004 Shares Amount
Shares sold 170,002 $ 1,337,806
Shares issued to shareholders
in reinvestment of dividends 119,473 941,549
-------------- ---------------
Total issued 289,475 2,279,355
-------------- ---------------
Automatic conversion of shares (505,789) (3,987,719)
Shares redeemed (1,146,400) (9,014,211)
-------------- ---------------
Total redeemed (1,652,189) (13,001,930)
-------------- ---------------
Net decrease (1,362,714) $ (10,722,575)
============== ===============
Insured Portfolio
Class B Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 899,906 $ 7,113,726
Shares issued to shareholders
in reinvestment of dividends 325,764 2,563,893
-------------- ---------------
Total issued 1,225,670 9,677,619
-------------- ---------------
Automatic conversion of shares (2,939,322) (23,195,012)
Shares redeemed (3,642,371) (28,526,319)
-------------- ---------------
Total redeemed (6,581,693) (51,721,331)
-------------- ---------------
Net decrease (5,356,023) $ (42,043,712)
============== ===============
Insured Portfolio
Class C Shares for the
Six Months Ended Dollar
December 31, 2004 Shares Amount
Shares sold 607,883 $ 4,789,662
Shares issued to shareholders
in reinvestment of dividends 84,583 667,091
-------------- ---------------
Total issued 692,466 5,456,753
Shares redeemed (686,639) (5,402,299)
-------------- ---------------
Net increase 5,827 $ 54,454
============== ===============
Insured Portfolio
Class C Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 1,599,948 $ 12,660,609
Shares issued to shareholders
in reinvestment of dividends 187,529 1,476,225
-------------- ---------------
Total issued 1,787,477 14,136,834
Shares redeemed (1,946,278) (15,252,191)
-------------- ---------------
Net decrease (158,801) $ (1,115,357)
============== ===============
Insured Portfolio
Class I Shares for the
Six Months Ended Dollar
December 31, 2004 Shares Amount
Shares sold 460,793 $ 3,623,487
Shares issued to shareholders
in reinvestment of dividends 927,479 7,316,174
-------------- ---------------
Total issued 1,388,272 10,939,661
Shares redeemed (4,882,377) (38,433,811)
-------------- ---------------
Net decrease (3,494,105) $ (27,494,150)
============== ===============
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Notes to Financial Statements (continued)
Insured Portfolio
Class I Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 1,834,025 $ 14,548,109
Shares issued to shareholders
in reinvestment of dividends 2,141,518 16,867,743
-------------- ---------------
Total issued 3,975,543 31,415,852
Shares redeemed (14,710,762) (115,691,182)
-------------- ---------------
Net decrease (10,735,219) $ (84,275,330)
============== ===============
National Portfolio
Class A Shares for the
Six Months Ended Dollar
December 31, 2004 Shares Amount
Shares sold 3,093,108 $ 32,271,346
Automatic conversion of shares 905,283 9,486,854
Shares issued to shareholders
in reinvestment of dividends 228,946 2,404,002
-------------- ---------------
Total issued 4,227,337 44,162,202
Shares redeemed (3,397,399) (35,426,536)
-------------- ---------------
Net increase 829,938 $ 8,735,666
============== ===============
National Portfolio
Class A Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 3,242,405 $ 34,070,043
Automatic conversion of shares 3,679,692 38,392,291
Shares issued to shareholders
in reinvestment of dividends 468,701 4,887,876
-------------- ---------------
Total issued 7,390,798 77,350,210
Shares redeemed (6,225,568) (64,975,100)
-------------- ---------------
Net increase 1,165,230 $ 12,375,110
============== ===============
National Portfolio
Class B Shares for the
Six Months Ended Dollar
December 31, 2004 Shares Amount
Shares sold 367,195 $ 3,842,257
Shares issued to shareholders
in reinvestment of dividends 178,322 1,870,732
-------------- ---------------
Total issued 545,517 5,712,989
-------------- ---------------
Automatic conversion of shares (905,995) (9,486,854)
Shares redeemed (2,148,276) (22,472,877)
-------------- ---------------
Total redeemed (3,054,271) (31,959,731)
-------------- ---------------
Net decrease (2,508,754) $ (26,246,742)
============== ===============
National Portfolio
Class B Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 1,044,188 $ 10,862,907
Shares issued to shareholders
in reinvestment of dividends 485,738 5,059,800
-------------- ---------------
Total issued 1,529,926 15,922,707
-------------- ---------------
Automatic conversion of shares (3,682,766) (38,392,291)
Shares redeemed (7,189,222) (74,707,980)
-------------- ---------------
Total redeemed (10,871,988) (113,100,271)
-------------- ---------------
Net decrease (9,342,062) $ (97,177,564)
============== ===============
National Portfolio
Class C Shares for the
Six Months Ended Dollar
December 31, 2004 Shares Amount
Shares sold 2,064,425 $ 21,637,778
Shares issued to shareholders
in reinvestment of dividends 100,058 1,050,369
-------------- ---------------
Total issued 2,164,483 22,688,147
Shares redeemed (739,249) (7,756,773)
-------------- ---------------
Net increase 1,425,234 $ 14,931,374
============== ===============
National Portfolio
Class C Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 1,945,227 $ 20,206,826
Shares issued to shareholders
in reinvestment of dividends 180,902 1,886,143
-------------- ---------------
Total issued 2,126,129 22,092,969
Shares redeemed (2,244,207) (23,326,697)
-------------- ---------------
Net decrease (118,078) $ (1,233,728)
============== ===============
National Portfolio
Class I Shares for the
Six Months Ended Dollar
December 31, 2004 Shares Amount
Shares sold 1,395,767 $ 14,630,089
Shares issued to shareholders
in reinvestment of dividends 1,442,328 15,135,951
-------------- ---------------
Total issued 2,838,095 29,766,040
Shares redeemed (4,288,429) (44,886,226)
-------------- ---------------
Net decrease (1,450,334) $ (15,120,186)
============== ===============
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Notes to Financial Statements (concluded)
National Portfolio
Class I Shares for the Year Dollar
Ended June 30, 2004 Shares Amount
Shares sold 2,236,079 $ 23,176,738
Shares issued resulting from
reorganization 35,155,756 368,217,557
Shares issued to shareholders
in reinvestment of dividends 1,843,445 19,167,463
-------------- ---------------
Total issued 39,235,280 410,561,758
Shares redeemed (10,268,772) (106,545,376)
-------------- ---------------
Net increase 28,966,508 $ 304,016,382
============== ===============
5. Short-Term Borrowings:
The Fund, on behalf of the Portfolios, along with certain other
funds managed by FAM and its affiliates, is a party to a
$500,000,000 credit agreement with a group of lenders. The Fund may
borrow under the credit agreement to fund shareholder redemptions
and for other lawful purposes other than for leverage. The Fund may
borrow up to the maximum amount allowable under the Fund's current
prospectus and statement of additional information, subject to
various other legal, regulatory or contractual limits. The Fund pays
a commitment fee of .07% per annum based on the Fund's pro rata
share of the unused portion of the credit agreement. Amounts
borrowed under the credit agreement bear interest at a rate equal
to, at each Fund's election, the federal funds rate plus .50% or a
base rate as defined in the credit agreement. The Fund did not
borrow under the credit agreement during the six months ended
December 31, 2004. On November 26, 2004, the credit agreement was
renewed for one year under substantially the same terms.
6. Capital Loss Carryforward:
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.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Officers and Directors
Terry K. Glenn, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Jean Margo Reid, Director
Kevin A. Ryan, Director
Roscoe S. Suddarth, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Kenneth A. Jacob, Senior Vice President
John M. Loffredo, Senior Vice President
Robert A. DiMella, Vice President
Peter J. Hayes, Vice President
Walter C. O'Connor, Vice President
Donald C. Burke, Vice President and Treasurer
Jeffrey Hiller, Chief Compliance Officer
Alice A. Pellegrino, Secretary
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
800-637-3863
Effective January 1, 2005, Terry K. Glenn, President and Director
and Kevin A. Ryan, Director of Merrill Lynch Municipal Bond Fund,
Inc. retired. The Fund's Board of Directors wishes Messrs. Glenn and
Ryan well in their retirements.
Effective January 1, 2005, Robert C. Doll, Jr. became President and
Director of the Fund.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission ("SEC") for the first and third
quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are
available on the SEC's Web site at http://www.sec.gov. The Fund's
Forms N-Q may also be reviewed and copied at the SEC's Public
Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Electronic Delivery
The Fund offers electronic delivery of communications to its
shareholders. In order to receive this service, you must
register your account and provide us with e-mail information.
To sign up for this service, simply access this Web site at
http://www.icsdelivery.com/live and follow the instructions.
When you visit this site, you will obtain a personal identification
number (PIN). You will need this PIN should you wish to update your
e-mail address, choose to discontinue this service and/or make any
other changes to the service. This service is not available for
certain retirement accounts at this time.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2004
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this
semi-annual report
Item 4 - Principal Accountant Fees and Services - Not Applicable to
this semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for
Closed-End Management Investment Companies - Not Applicable
Item 8 - Portfolio Managers of Closed-End Management Investment
Companies - Not Applicable
Item 9 - Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - Not
Applicable
Item 11 - Controls and Procedures
11(a) - The registrant's certifying officers have reasonably
designed such disclosure controls and procedures to ensure material
information relating to the registrant is made known to us by others
particularly during the period in which this report is being
prepared. The registrant's certifying officers have determined that
the registrant's disclosure controls and procedures are effective
based on our evaluation of these controls and procedures as of a
date within 90 days prior to the filing date of this report.
11(b) - There were no changes in the registrant's internal control
over financial reporting (as defined in Rule 30a-3(d) under the Act
(17 CFR 270.30a-3(d)) that occurred during the last fiscal half-year
of the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual
report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Merrill Lynch Municipal Bond Fund, Inc.
By: _/s/ Robert C. Doll, Jr._______
Robert C. Doll, Jr.,
President of
Merrill Lynch Municipal Bond Fund, Inc.
Date: February 24, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By: _/s/ Robert C. Doll, Jr.________
Robert C. Doll, Jr.,
President of
Merrill Lynch Municipal Bond Fund, Inc.
Date: February 24, 2005
By: _/s/ Donald C. Burke________
Donald C. Burke,
Chief Financial Officer of
Merrill Lynch Municipal Bond Fund, Inc.
Date: February 24, 2005