UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-02688
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., Chief Executive
Officer, 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 - 06/30/05
Item 1 - Report to Stockholders
Merrill Lynch
Municipal Bond Fund, Inc.
Annual Report
June 30, 2005
(BULL LOGO) Merrill Lynch Investment Managers
www.mlim.ml.com
Mercury Advisors
A Division of Merrill Lynch Investment Managers
www.mercury.ml.com
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.
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A Letter From the President
Dear Shareholder
The financial markets continued to face a number of crosscurrents over the
past several months. On June 30, 2005, the Federal Reserve Board (the Fed)
increased the federal funds rate for the ninth consecutive time since June
2004, bringing the target short-term interest rate to 3.25%. During the same
week, first quarter 2005 U.S. gross domestic product growth was revised upward
to 3.8% - behind the 4.4% annualized growth rate recorded for all of 2004 but
ahead of many economists' expectations. Signs of a slowing economy, coupled
with easing inflationary fears, have prompted some observers to believe that
the Fed may soon end its monetary tightening campaign.
After ending 2004 in a strong rally, U.S. equity markets have struggled to
record meaningful gains in 2005. Continued high oil prices and Fed interest
rate hikes have exerted downward pressure on stocks. Offsetting this somewhat
have been surprisingly strong corporate earnings and lower long-term bond
yields. Outside U.S. borders, results have been mixed. Several European
markets have been performing well despite ongoing economic problems. In Asia,
many markets have benefited from higher economic growth rates and relatively
attractive valuations, although Japanese stocks have struggled as a result of
slowing exports and high oil prices.
In the bond markets, the yield curve flattening "conundrum" continued. As
short-term yields increased in concert with Fed interest rate hikes, yields on
longer-term bonds declined (as their prices, which move opposite yields,
increased). Over the past year, the two-year Treasury yield rose 96 basis
points (.96%) while the 10-year Treasury yield declined 68 basis points. At
period-end, the spread between two-year and 10-year Treasury yields was just
28 basis points.
Amid these conditions, the major market benchmarks posted six-month and
12-month returns as follows:
Total Returns as of June 30, 2005 6-month 12-month
U.S. equities (Standard & Poor's 500 Index) -0.81% + 6.32%
Small-cap U.S. equities (Russell 2000 Index) -1.25% + 9.45%
International equities (MSCI Europe Australasia Far East Index) -1.17% +13.65%
Fixed income (Lehman Brothers Aggregate Bond Index) +2.51% + 6.80%
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +2.89% + 8.24%
High yield bonds (Credit Suisse First Boston High Yield Index) +0.77% +10.10%
Entering the second half of 2005, we expect more of the same type of "muddle
through" environment that has befallen financial markets in the first half of
the year. Nevertheless, opportunities do exist and we encourage you to work
with your financial advisor to diversify your portfolio among a variety of
asset types. This can help to diffuse risk while also tapping into the
potential benefits of a broader range of investment alternatives. We thank you
for trusting Merrill Lynch Investment Managers with your investment assets,
and we look forward to serving you in the months and years ahead.
Sincerely,
(Robert C. Doll, Jr.)
Robert C. Doll, Jr.
President and Director
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
We are pleased to present to you the management teams of
Merrill Lynch Municipal Bond Fund, Inc.
Short Term Portfolio
Peter Hayes, who joined Merrill Lynch Investment Managers in 1987, is the
Senior Portfolio Manager of Merrill Lynch Municipal Bond Fund, Inc. - Short
Term Portfolio. Mr. Hayes received a bachelor's degree from the College of the
Holy Cross. Mr. Hayes' team includes Thomas Steffens. Mr. Steffens received a
bachelor's degree from Villanova University.
Peter J. Hayes
Senior Portfolio Manager
Table of Contents
A Letter From the President 2
A Discussion With Your Fund's Portfolio Managers 5
Performance Data 9
Portfolio Information 17
Disclosure of Expenses 18
Schedule of Investments--Short Term Portfolio 20
Schedule of Investments--Insured Portfolio 23
Schedule of Investments--National Portfolio 27
Financial Statements 38
Financial Highlights 44
Notes to Financial Statements 56
Report of Independent Registered Public Accounting Firm 63
Important Tax Information 63
Officers and Directors 64
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Insured Portfolio
Robert DiMella, who joined Merrill Lynch Investment Managers in 1993, is the
Senior Portfolio Manager of Merrill Lynch Municipal Bond Fund, Inc. - Insured
Portfolio. 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. Mr. DiMella's 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.
Robert A. DiMella
Senior Portfolio Manager
National Portfolio
Walter O'Connor, who joined Merrill Lynch Investment Managers in 1991, is the
Senior Portfolio Manager of Merrill Lynch Municipal Bond Fund, Inc. - National
Portfolio. Mr. O'Connor 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. Mr. O'Connor's
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. Bennett earned a bachelor's degree from West Chester
University.
Walter C. O'Connor
Senior Portfolio Manager
CFA (R) and Chartered Financial Analyst (R)
are trademarks owned by the Association for
Investment Management and Research.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
A Discussion With Your Fund's Portfolio Managers
As the yield curve flattened and long-term bond yields remained lower than
expected, we took advantage of opportunities to extend duration in an effort
to achieve the greatest relative value for our shareholders.
Describe the recent market environment relative to municipal bonds.
Over the past year, long-term bond yields declined as their prices, which move
in the opposite direction, increased. In the meantime, the Federal Reserve
Board (the Fed) raised short-term interest rates at each of its meetings
during the past year, lifting the federal funds target from 1% in June 2004 to
3.25% by period-end. As longer-term bond yields declined and short-term yields
moved upward in unison with the Fed interest rate hikes, the yield curve
flattened considerably. Over the 12 months ended June 30, 2005, 30-year U.S.
Treasury bond yields declined 113 basis points (1.13%) to 4.16% and yields on
the 10-year Treasury note fell 68 basis points to 3.94%. The two-year Treasury
yield, in the meantime, increased 96 basis points to 3.66%.
In the tax-exempt market, yields on 30-year revenue bonds, as measured by the
Bond Buyer Revenue Bond Index, fell 57 basis points during the year to 4.77%
at June 30, 2005. According to Municipal Market Data, yields on AAA-rated
issues maturing in 30 years declined 76 basis points to 4.26%, while AAA-rated
bonds maturing in 10 years saw their yields decline 50 basis points to 3.45%.
Conversely, yields on two-year, AAA-rated municipal securities rose 53 basis
points over the course of the year.
The declining tax-exempt bond yields have prompted municipalities to both
issue new debt and refund outstanding, higher-couponed issues. Over the past
year, more than $377 billion in new long-term tax-exempt bonds was issued, a
slight increase versus last year's total of $372 billion. In recent months,
the pace of new bond issuance has strengthened. During the first six months of
2005, more than $206 billion in new municipal bonds was underwritten, an
increase of 8.6% compared to the same six months in 2004. The new issuance was
boosted by a greater than 55% increase in refunding issues, which have been
heavily weighted in the 10-year - 20-year maturity range to lower the overall
interest cost of the refunding issue. This concentration has put pressure on
intermediate tax-exempt bond yields while supporting longer-term bond prices.
Investor demand for municipal product generally has remained positive.
According to statistics from the Investment Company Institute, through May 31,
2005, year-to-date net new cash flows into long-term municipal bond funds have
exceeded $1.35 billion. This represents a significant improvement from the
$7.86 billion net outflow seen during the same period in 2004. Recent June
weekly figures from AMG Data Service have also shown continued positive flows.
Throughout much of the past six months, high yield tax-exempt bond funds have
been the principal target for these new cash inflows. During June, these lower-
rated/non-rated bond funds received an average of $150 million per week. The
need to invest these cash flows has led to very strong demand for lower-rated
issues and a consequent narrowing of credit spreads. Additionally, thus far in
2005, the percentage of new issues bearing an insurer's guarantee has risen to
nearly 60%, up from 53.6% during the same period a year ago. The increasing
percentage of insured issuance has further reduced the availability of lower-
rated municipal securities, lending more support to higher prices for these
issues.
Looking forward, the tax-exempt market's technical position remains generally
favorable. Municipal bond issues have underperformed in recent months as U.S.
Treasury bonds have enjoyed increased demand from foreign governments, which
are unable to benefit from the tax advantage inherent in tax-exempt products.
However, this underperformance has resulted in attractive tax-exempt bond
yield ratios, which should continue to attract both traditional and
nontraditional investors to the marketplace, especially if new municipal bond
issuance should remain modest.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
A Discussion With Your Fund's Portfolio Managers (continued)
Short Term Portfolio
How did the Portfolio perform during the fiscal year?
For the 12-month period ended June 30, 2005, Short Term Portfolio's Class A,
Class B, Class C and Class I Shares had total returns of +1.20%, +1.04%, +.94%
and +1.30%, 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 - 16 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 +2.58% and +8.24%. The
Portfolio's comparable Lipper category of Short Municipal Debt Funds recorded
an average return of +1.82% for the 12-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.)
During the first half of the period, our management strategy was shaped by our
belief that short-term interest rates would rise in line with the Fed's
monetary tightening policy. Accordingly, we kept the Portfolio's average
maturity below the market average and maintained some cash reserves to limit
the negative effect that rising rates would have on the Portfolio's net asset
value.
As short-term interest rates increased and the Fed continued to raise the
federal funds rate at a "measured" pace, we sought to take advantage of higher
yields by extending the Portfolio's average maturity. Although the Portfolio
was well positioned for higher short-term interest rates, performance relative
to our benchmarks and Lipper peers suffered as long-term bond yields fell
unexpectedly (and their prices increased accordingly). Unlike the benchmarks
and the majority of the funds in our peer group - both of which can own longer-
dated bonds - we are restricted to owning securities with maturities of less
than four years. This limitation hindered the Portfolio's relative performance
as longer-term bonds outperformed short-term securities.
What changes were made to the Portfolio during the period?
Most notably, we extended the Portfolio's average maturity from a below-market
stance to a neutral or even slightly above-average posture. With the Fed
having raised interest rates by 2.25% since June 2004, we believed that the
current interest rate tightening cycle was nearing an end. As the yield curve
flattened, with short rates rising more than longer rates, we sought to lock
in higher yields by adding to our weighting in the three-year - four-year part
of the curve - an area that was previously under-represented in the portfolio.
We also swapped out of bonds with one-year - two-year maturities, which we
bought when yields were lower. These strategies benefited performance as the
period continued and helped to increase the Portfolio's yield.
How would you characterize the Portfolio's position at the close of the
period?
We expect to maintain an approximately neutral duration stance with limited
cash reserves, as we believe the Fed is nearing the end of its program of
interest rate hikes. We also anticipate continuing to overweight higher-
quality bonds. Credit spreads (the difference in yield between lower-rated and
higher-rated bonds of comparable maturity) are currently very tight, leading
us to expect an eventual widening. In our view, this would make high-grade
issues the better relative value over their lower-rated counterparts. High-
quality bonds also are more liquid and historically have tended to outperform
in periods of market volatility.
We will continue to monitor the economy's progress, analyzing new data in the
coming months and evaluating the Fed's future interest rate policy. As market
and economic conditions evolve, we will adjust our investment strategy
accordingly.
Peter J. Hayes
Vice President and Senior Portfolio Manager
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Insured Portfolio
How did the Portfolio perform during the fiscal year?
For the 12-month period ended June 30, 2005, Insured Portfolio's Class A,
Class B, Class C and Class I Shares had total returns of +8.47%, +7.93%,
+8.01% and +8.74%, 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 - 16 of this report to shareholders.)
Portfolio returns were highly competitive with the +8.24% return of the
benchmark Lehman Brothers Municipal Bond Index.
The Portfolio outperformed its comparable Lipper category of Insured Municipal
Debt Funds, which had an average return of +7.27% for the 12-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
positive performance to our yield curve positioning and the competitive yield
we have been able to achieve. Although the Portfolio was defensively
structured with respect to its interest rate sensitivity, we also were
overweighted in bonds with maturities greater than 20 years for most of the
period. This strategy benefited the Portfolio's relative performance as the
yield curve flattened, with interest rates on 20-year and longer bonds
declining faster than rates on shorter bonds.
What changes were made to the Portfolio during the period?
Throughout the period, we continued to focus on securities that we felt
offered our shareholders the best relative value in the insured municipal
marketplace. In light of the yield curve flattening phenomenon, we continued
to shift our emphasis further out on the curve, favoring bonds with maturity
dates of 20 years and longer while reducing our exposure to 15-year - 20-year
bonds.
The Portfolio purchased bonds recently issued by Puerto Rico Electric Power
Authority. These bonds were insured by XL Capital Assurance (XLCA) and CIFG
Services, Inc., relatively new AAA-rated insurers in the municipal marketplace.
In anticipation that they would outperform over time, these bonds came with
yields at a generous spread above those offered by bonds backed by traditional
insurers, such as Financial Guaranty Insurance Company (FGIC), Financial
Security Assurance (FSA) and Ambac Financial Group, Inc. (Bonds issued by
U.S. territories generally are fully income tax-exempt for residents of all
50 states.)
Other new purchases have focused on issuers that we believed were more likely
to defease existing debt to help close budget deficits. (When bonds are
defeased, the securities are retired at their first call date, generally
resulting in substantial price appreciation.) Massachusetts, California and
New Jersey all have been aggressive in employing this strategy, and offered a
number of investment opportunities during the period.
How would you characterize the Portfolio's position at the close of the
period?
At period-end, the Portfolio was fully invested and, in anticipation of higher
long-term interest rates, defensively positioned. We continue to emphasize
competitive yield and preservation of the Portfolio's net asset value. While
we have begun to restructure the Portfolio with bonds offering slightly longer
maturity dates, those securities added in recent months have tended to be
premium-coupon bonds with defensive characteristics. Such a defensive posture
has enabled the Portfolio to increase its yield generation potential while
helping to insulate it from the volatility expected to accompany a rising
interest rate environment.
Robert A. DiMella
Vice President and Senior Portfolio Manager
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
A Discussion With Your Fund's Portfolio Managers (concluded)
National Portfolio
How did the Portfolio perform during the fiscal year?
For the 12-month period ended June 30, 2005, National Portfolio's Class A,
Class B, Class C and Class I Shares had total returns of +8.73%, +8.18%,
+8.02% and +8.89%, 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 - 16 of this report to
shareholders.) For the same period, the Portfolio's benchmark, the Lehman
Brothers Municipal Bond Index, returned +8.24% and the Lipper General
Municipal Debt Funds category posted an average return of +7.30%. (Funds in
this Lipper category invest primarily in municipal debt issues in the top four
credit-rating categories.)
With the Fed on an interest rate hiking campaign, we expected volatility all
along the yield curve and positioned the Portfolio defensively in an effort to
protect its underlying value. However, to the surprise of many observers and
the Fed, a rise in rates did not materialize on the long end of the curve (in
fact, long-term rates declined), and our defensive positioning hampered the
Portfolio's performance potential to some extent. Despite this, our above-
average yield accrual throughout the period more than offset this, allowing
the Portfolio to deliver returns consistent with the broad market and superior
to its Lipper peers.
What changes were made to the Portfolio during the period?
Throughout the past 12 months, we focused on maintaining a high level of tax-
exempt income for our shareholders by enhancing current return and maintaining
our above-average coupon structure. In fact, the Portfolio's average coupon of
6.25% far exceeded the market average for long-term municipal bonds of less
than 4.50% (based on the Municipal Market Data scale).
Early in the period, we expected the municipal market to be quite volatile as
the Fed embarked on its measured program of interest rate increases. This
prompted us to establish our defensive interest rate posture in order to
cushion the portfolio from volatility and preserve its net asset value. Later,
as long-term interest rates began to rise somewhat, we started to reposition
the Portfolio's duration to be closer to neutral. To that end, we purchased
zero-coupon securities as well as longer-maturity revenue bonds with rate-
sensitive structures.
Finally, throughout the year, we worked closely with our in-house Municipal
Research Group to increase the Portfolio's exposure to lower-rated credits
offering a yield advantage over higher-grade paper.
How would you characterize the Portfolio's position at the close of the
period?
The Portfolio remained defensively positioned at period-end but closer to a
neutral duration posture than when the period began. We would emphasize that
this is a gradual transition to neutral, as we are not targeting an aggressive
duration stance.
Overall, we remain focused on maintaining the Portfolio's superior yield and
high coupon structure relative to the broad market. At period-end, the
Portfolio was essentially fully invested, with limited cash reserves.
Walter C. O'Connor
Vice President and Senior Portfolio Manager
July 27, 2005
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
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. Short Term 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. Short
Term Portfolio is subject to a maximum contingent deferred sales charge of 1%
if redeemed within three years of purchase. All Class B Shares purchased prior
to December 1, 2002 will maintain the four-year schedule and one-year
schedule, respectively. In addition, Insured and National Portfolios are
subject to a distribution fee of 0.50% per year and an account maintenance fee
of 0.25% per year. Short Term 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.
Short Term 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. Short Term 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. JUNE 30, 2005
Performance Data (continued)
Recent Performance Results*
6-Month 12-Month 10-Year Standardized
As of June 30, 2005 Total Return Total Return Total Return 30-day Yield
Short Term Portfolio Class A Shares +0.59% +1.20% +38.21% 2.35%
Short Term Portfolio Class B Shares +0.56 +1.04 +34.83 2.13
Short Term Portfolio Class C Shares +0.46 +0.94 +33.97 2.12
Short Term Portfolio Class I Shares +0.63 +1.30 +39.59 2.45
Insured Portfolio Class A Shares +3.10 +8.47 +72.29 3.47
Insured Portfolio Class B Shares +2.71 +7.93 +63.57 3.12
Insured Portfolio Class C Shares +2.82 +8.01 +62.94 3.06
Insured Portfolio Class I Shares +3.09 +8.74 +76.61 3.72
National Portfolio Class A Shares +3.47 +8.73 +79.60 3.57
National Portfolio Class B Shares +3.21 +8.18 +70.71 3.22
National Portfolio Class C Shares +3.18 +8.02 +69.71 3.17
National Portfolio Class I Shares +3.59 +8.89 +84.10 3.82
Lehman Brothers 3-Year General Obligation Bond Index++ +0.42 +2.58 +55.15 --
Lehman Brothers Municipal Bond Index++++ +2.89 +8.24 +85.59 --
* Investment results shown do not reflect sales charges; results shown would be lower if a sales charge was
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. JUNE 30, 2005
Performance Data (continued) Short Term Portfolio
TOTAL RETURN BASED ON A $10,000 INVESTMENT
Class A & Class B Shares
A line graph illustrating the growth of a $10,000 investment in Short Term
Portfolio++ Class A and Class B Shares* compared to a similar investment in
the Lehman Brothers Municipal Bond Index++++ and Lehman Brothers 3-Year
General Obligation Bond Index++++++. Values illustrated are as follows:
Short Term Portfolio++
Class A Shares*
Date Value
June 1995 $ 9,900.00
June 1996 $10,251.00
June 1997 $10,702.00
June 1998 $11,147.00
June 1999 $11,511.00
June 2000 $11,877.00
June 2001 $12,587.00
June 2002 $13,091.00
June 2003 $13,454.00
June 2004 $13,521.00
June 2005 $13,683.00
Short Term Portfolio++
Class B Shares*
Date Value
June 1995 $10,000.00
June 1996 $10,337.00
June 1997 $10,764.00
June 1998 $11,183.00
June 1999 $11,519.00
June 2000 $11,855.00
June 2001 $12,531.00
June 2002 $12,987.00
June 2003 $13,313.00
June 2004 $13,344.00
June 2005 $13,483.00
Lehman Brothers Municipal Bond Index++++
Date Value
June 1995 $10,000.00
June 1996 $10,664.00
June 1997 $11,544.00
June 1998 $12,544.00
June 1999 $12,890.00
June 2000 $13,309.00
June 2001 $14,638.00
June 2002 $15,650.00
June 2003 $17,018.00
June 2004 $17,147.00
June 2005 $18,559.00
Lehman Brothers 3-Year General Obligation Bond Index++++++
Date Value
June 1995 $10,000.00
June 1996 $10,517.00
June 1997 $11,074.00
June 1998 $11,669.00
June 1999 $12,098.00
June 2000 $12,541.00
June 2001 $13,501.00
June 2002 $14,322.00
June 2003 $15,032.00
June 2004 $15,125.00
June 2005 $15,515.00
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
++ Short Term Portfolio invests primarily in investment grade municipal
bonds (bonds rated Baa or better) with a maximum maturity not to exceed
4 years.
++++ This unmanaged Index consists of revenue bonds, prerefunded bonds,
general obligation bonds and insured bonds, all of which mature
within 30 years.
++++++ This unmanaged Index consists of state and local government obligation
bonds that mature in 3 - 4 years, rated Baa or better.
Past performance is not predictive of future results.
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge**
Class A Shares*
One Year Ended 6/30/05 +1.20% +0.19%
Five Years Ended 6/30/05 +2.87 +2.66
Ten Years Ended 6/30/05 +3.29 +3.19
* Maximum sales charge is 1%.
** Assuming maximum sales charge.
Return Return
Without CDSC With CDSC**
Class B Shares*
One Year Ended 6/30/05 +1.04% +0.05%
Five Years Ended 6/30/05 +2.60 +2.60
Ten Years Ended 6/30/05 +3.03 +3.03
* Maximum contingent deferred sales charge is 1% and is reduced
to 0% after three years.
** Assuming payment of applicable contingent deferred sales
charge.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Performance Data (continued) Short Term Portfolio
TOTAL RETURN BASED ON A $10,000 INVESTMENT
Class C & Class I Shares
A line graph illustrating the growth of a $10,000 investment in Short Term
Portfolio++ Class C and Class I Shares* compared to a similar investment in
the Lehman Brothers Municipal Bond Index++++ and Lehman Brothers 3-Year
General Obligation Bond Index++++++. Values illustrated are as follows:
Short Term Portfolio++
Class C Shares*
Date Value
June 1995 $10,000.00
June 1996 $10,297.00
June 1997 $10,720.00
June 1998 $11,136.00
June 1999 $11,458.00
June 2000 $11,791.00
June 2001 $12,451.00
June 2002 $12,916.00
June 2003 $13,241.00
June 2004 $13,272.00
June 2005 $13,397.00
Short Term Portfolio++
Class I Shares*
Date Value
June 1995 $ 9,900.00
June 1996 $10,271.00
June 1997 $10,723.00
June 1998 $11,180.00
June 1999 $11,557.00
June 2000 $11,937.00
June 2001 $12,663.00
June 2002 $13,183.00
June 2003 $13,561.00
June 2004 $13,642.00
June 2005 $13,820.00
Lehman Brothers Municipal Bond Index++++
Date Value
June 1995 $10,000.00
June 1996 $10,664.00
June 1997 $11,544.00
June 1998 $12,544.00
June 1999 $12,890.00
June 2000 $13,309.00
June 2001 $14,638.00
June 2002 $15,650.00
June 2003 $17,018.00
June 2004 $17,147.00
June 2005 $18,559.00
Lehman Brothers 3-Year General Obligation Bond Index++++++
Date Value
June 1995 $10,000.00
June 1996 $10,517.00
June 1997 $11,074.00
June 1998 $11,669.00
June 1999 $12,098.00
June 2000 $12,541.00
June 2001 $13,501.00
June 2002 $14,322.00
June 2003 $15,032.00
June 2004 $15,125.00
June 2005 $15,515.00
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
++ Short Term Portfolio invests primarily in investment grade municipal
bonds (bonds rated Baa or better) with a maximum maturity not to exceed
4 years.
++++ This unmanaged Index consists of revenue bonds, prerefunded bonds,
general obligation bonds and insured bonds, all of which mature
within 30 years.
++++++ This unmanaged Index consists of state and local government obligation
bonds that mature in 3 - 4 years, rated Baa or better.
Past performance is not predictive of future results.
Average Annual Total Return
Return Return
Without CDSC With CDSC**
Class C Shares*
One Year Ended 6/30/05 +0.94% -0.05%
Five Years Ended 6/30/05 +2.58 +2.58
Ten Years Ended 6/30/05 +2.97 +2.97
* 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 6/30/05 +1.30% +0.29%
Five Years Ended 6/30/05 +2.97 +2.76
Ten Years Ended 6/30/05 +3.39 +3.29
* Maximum sales charge is 1%.
** Assuming maximum sales charge.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Performance Data (continued) Insured Portfolio
TOTAL RETURN BASED ON A $10,000 INVESTMENT
Class A & Class B Shares
A line graph illustrating the growth of a $10,000 investment in Insured
Portfolio++ Class A and Class B Shares* compared to a similar investment in
the Lehman Brothers Municipal Bond Index++++. Values illustrated are as
follows:
Insured Portfolio++
Class A Shares*
Date Value
June 1995 $ 9,600.00
June 1996 $10,104.00
June 1997 $10,857.00
June 1998 $11,688.00
June 1999 $11,855.00
June 2000 $11,965.00
June 2001 $13,132.00
June 2002 $14,005.00
June 2003 $15,232.00
June 2004 $15,248.00
June 2005 $16,540.00
Insured Portfolio++
Class B Shares*
Date Value
June 1995 $10,000.00
June 1996 $10,471.00
June 1997 $11,181.00
June 1998 $11,990.00
June 1999 $12,085.00
June 2000 $12,151.00
June 2001 $13,251.00
June 2002 $14,079.00
June 2003 $15,235.00
June 2004 $15,155.00
June 2005 $16,357.00
Lehman Brothers Municipal Bond Index++++
Date Value
June 1995 $10,000.00
June 1996 $10,664.00
June 1997 $11,544.00
June 1998 $12,544.00
June 1999 $12,890.00
June 2000 $13,309.00
June 2001 $14,638.00
June 2002 $15,650.00
June 2003 $17,018.00
June 2004 $17,147.00
June 2005 $18,559.00
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
++ Insured Portfolio invests primarily in long-term, investment grade
municipal bonds (bonds rated Baa or better) covered by portfolio
insurance guaranteeing the timely payment of principal at maturity
and interest.
++++ This unmanaged Index consists of revenue bonds, prerefunded bonds,
general obligation bonds and insured bonds, all of which mature
within 30 years.
Past performance is not predictive of future results.
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge**
Class A Shares*
One Year Ended 6/30/05 +8.47% +4.13%
Five Years Ended 6/30/05 +6.68 +5.82
Ten Years Ended 6/30/05 +5.59 +5.16
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
Return Return
Without CDSC With CDSC**
Class B Shares*
One Year Ended 6/30/05 +7.93% +3.93%
Five Years Ended 6/30/05 +6.12 +5.80
Ten Years Ended 6/30/05 +5.04 +5.04
* Maximum contingent deferred sales charge is 4% and is reduced
to 0% after six years.
** Assuming payment of applicable contingent deferred sales
charge.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Performance Data (continued) Insured Portfolio
TOTAL RETURN BASED ON A $10,000 INVESTMENT
Class C & Class I Shares
A line graph illustrating the growth of a $10,000 investment in Insured
Portfolio++ Class C and Class I Shares* compared to a similar investment in
the Lehman Brothers Municipal Bond Index++++. Values illustrated are as
follows:
Insured Portfolio++
Class C Shares*
Date Value
June 1995 $10,000.00
June 1996 $10,465.00
June 1997 $11,183.00
June 1998 $11,971.00
June 1999 $12,060.00
June 2000 $12,120.00
June 2001 $13,211.00
June 2002 $14,029.00
June 2003 $15,174.00
June 2004 $15,086.00
June 2005 $16,294.00
Insured Portfolio++
Class I Shares*
Date Value
June 1995 $ 9,600.00
June 1996 $10,129.00
June 1997 $10,912.00
June 1998 $11,790.00
June 1999 $11,973.00
June 2000 $12,115.00
June 2001 $13,329.00
June 2002 $14,269.00
June 2003 $15,536.00
June 2004 $15,591.00
June 2005 $16,954.00
Lehman Brothers Municipal Bond Index++++
Date Value
June 1995 $10,000.00
June 1996 $10,664.00
June 1997 $11,544.00
June 1998 $12,544.00
June 1999 $12,890.00
June 2000 $13,309.00
June 2001 $14,638.00
June 2002 $15,650.00
June 2003 $17,018.00
June 2004 $17,147.00
June 2005 $18,559.00
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
++ Insured Portfolio invests primarily in long-term, investment grade
municipal bonds (bonds rated Baa or better) covered by portfolio
insurance guaranteeing the timely payment of principal at maturity
and interest.
++++ This unmanaged Index consists of revenue bonds, prerefunded bonds,
general obligation bonds and insured bonds, all of which mature
within 30 years.
Past performance is not predictive of future results.
Average Annual Total Return
Return Return
Without CDSC With CDSC**
Class C Shares*
One Year Ended 6/30/05 +8.01% +7.01%
Five Years Ended 6/30/05 +6.09 +6.09
Ten Years Ended 6/30/05 +5.00 +5.00
* 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 6/30/05 +8.74% +4.39%
Five Years Ended 6/30/05 +6.95 +6.08
Ten Years Ended 6/30/05 +5.85 +5.42
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Performance Data (continued) National Portfolio
TOTAL RETURN BASED ON A $10,000 INVESTMENT
Class A & Class B Shares
A line graph illustrating the growth of a $10,000 investment in National
Portfolio++ Class A and Class B Shares* compared to a similar investment in
the Lehman Brothers Municipal Bond Index++++. Values illustrated are as
follows:
National Portfolio++
Class A Shares*
Date Value
June 1995 $ 9,600.00
June 1996 $10,245.00
June 1997 $11,122.00
June 1998 $12,011.00
June 1999 $12,134.00
June 2000 $12,183.00
June 2001 $13,408.00
June 2002 $14,311.00
June 2003 $15,452.00
June 2004 $15,858.00
June 2005 $17,241.00
National Portfolio++
Class B Shares*
Date Value
June 1995 $10,000.00
June 1996 $10,617.00
June 1997 $11,458.00
June 1998 $12,322.00
June 1999 $12,386.00
June 2000 $12,371.00
June 2001 $13,547.00
June 2002 $14,386.00
June 2003 $15,455.00
June 2004 $15,781.00
June 2005 $17,071.00
Lehman Brothers Municipal Bond Index++++
Date Value
June 1995 $10,000.00
June 1996 $10,664.00
June 1997 $11,544.00
June 1998 $12,544.00
June 1999 $12,890.00
June 2000 $13,309.00
June 2001 $14,638.00
June 2002 $15,650.00
June 2003 $17,018.00
June 2004 $17,147.00
June 2005 $18,559.00
* Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
++ National Portfolio invests primarily in long-term municipal bonds
rated in any rating category.
++++ This unmanaged Index consists of revenue bonds, prerefunded bonds,
general obligation bonds and insured bonds, all of which mature
within 30 years.
Past performance is not predictive of future results.
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge**
Class A Shares*
One Year Ended 6/30/05 +8.73% +4.38%
Five Years Ended 6/30/05 +7.19 +6.32
Ten Years Ended 6/30/05 +6.03 +5.60
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
Return Return
Without CDSC With CDSC**
Class B Shares*
One Year Ended 6/30/05 +8.18% +4.18%
Five Years Ended 6/30/05 +6.65 +6.34
Ten Years Ended 6/30/05 +5.49 +5.49
* Maximum contingent deferred sales charge is 4% and is reduced
to 0% after six years.
** Assuming payment of applicable contingent deferred sales
charge.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Performance Data (concluded) National Portfolio
TOTAL RETURN BASED ON A $10,000 INVESTMENT
Class C & Class I Shares
A line graph illustrating the growth of a $10,000 investment in National
Portfolio++ Class C and Class I Shares* compared to a similar investment in
the Lehman Brothers Municipal Bond Index++++. Values illustrated are as
follows:
National Portfolio++
Class C Shares*
Date Value
June 1995 $10,000.00
June 1996 $10,601.00
June 1997 $11,446.00
June 1998 $12,303.00
June 1999 $12,361.00
June 2000 $12,341.00
June 2001 $13,494.00
June 2002 $14,323.00
June 2003 $15,394.00
June 2004 $15,711.00
June 2005 $16,971.00
National Portfolio++
Class I Shares*
Date Value
June 1995 $ 9,600.00
June 1996 $10,271.00
June 1997 $11,178.00
June 1998 $12,113.00
June 1999 $12,268.00
June 2000 $12,335.00
June 2001 $13,610.00
June 2002 $14,562.00
June 2003 $15,776.00
June 2004 $16,230.00
June 2005 $17,674.00
Lehman Brothers Municipal Bond Index++++
Date Value
June 1995 $10,000.00
June 1996 $10,664.00
June 1997 $11,544.00
June 1998 $12,544.00
June 1999 $12,890.00
June 2000 $13,309.00
June 2001 $14,638.00
June 2002 $15,650.00
June 2003 $17,018.00
June 2004 $17,147.00
June 2005 $18,559.00
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
++ National Portfolio invests primarily in long-term municipal bonds rated
in any rating category.
++++ This unmanaged Index consists of revenue bonds, prerefunded bonds,
general obligation bonds and insured bonds, all of which mature
within 30 years.
Past performance is not predictive of future results.
Average Annual Total Return
Return Return
Without CDSC With CDSC**
Class C Shares*
One Year Ended 6/30/05 +8.02% +7.02%
Five Years Ended 6/30/05 +6.57 +6.57
Ten Years Ended 6/30/05 +5.43 +5.43
* 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 6/30/05 +8.89% +4.54%
Five Years Ended 6/30/05 +7.45 +6.58
Ten Years Ended 6/30/05 +6.29 +5.86
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Portfolio Information as of June 30, 2005
Distribution by Market Sector
Percent of
Total
Short Term Portfolio Investments
Other Revenue Bonds 57.6%
General Obligation Bonds 39.1
Prerefunded Bonds 3.3
Percent of
Total
Insured Portfolio Investments
Other Revenue Bonds 66.1%
General Obligation Bonds 25.7
Prerefunded Bonds 8.2
Percent of
Total
National Portfolio Investments
Other Revenue Bonds 60.8%
General Obligation Bonds 22.8
Prerefunded Bonds 16.4
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
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 January 1, 2005
and held through June 30, 2005) 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
Beginning Ending During the Period*
Account Value Account Value January 1, 2005
January 1, June 30, to June 30,
Short Term Portfolio 2005 2005 2005
Actual
Class A $1,000 $1,005.90 $2.61
Class B $1,000 $1,005.60 $3.89
Class C $1,000 $1,004.60 $3.83
Class I $1,000 $1,006.30 $2.12
Hypothetical (5% annual return before expenses)**
Class A $1,000 $1,021.92 $2.63
Class B $1,000 $1,020.65 $3.91
Class C $1,000 $1,020.70 $3.86
Class I $1,000 $1,022.41 $2.13
* For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class
(.53% for Class A, .79% for Class B, .78% for Class C and .43% for Class I), multiplied by the average
account value over the period, multiplied by 179/365.
** 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. JUNE 30, 2005
Disclosure of Expenses (concluded)
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value January 1, 2005
January 1, June 30, to June 30,
Insured Portfolio 2005 2005 2005
Actual
Class A $1,000 $1,031.00 $3.54
Class B $1,000 $1,027.10 $6.06
Class C $1,000 $1,028.20 $6.32
Class I $1,000 $1,030.90 $2.29
Hypothetical (5% annual return before expenses)**
Class A $1,000 $1,021.04 $3.52
Class B $1,000 $1,018.54 $6.04
Class C $1,000 $1,018.29 $6.29
Class I $1,000 $1,022.26 $2.28
* For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class
(.71% for Class A, 1.22% for Class B, 1.27% for Class C and .46% for Class I), multiplied by the average
account value over the period, multiplied by 179/365.
** 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
Beginning Ending During the Period*
Account Value Account Value January 1, 2005
January 1, June 30, to June 30,
National Portfolio 2005 2005 2005
Actual
Class A $1,000 $1,034.70 $4.19
Class B $1,000 $1,032.10 $6.68
Class C $1,000 $1,031.80 $6.97
Class I $1,000 $1,035.90 $2.95
Hypothetical (5% annual return before expenses)**
Class A $1,000 $1,020.40 $4.16
Class B $1,000 $1,017.95 $6.63
Class C $1,000 $1,017.65 $6.93
Class I $1,000 $1,021.63 $2.92
* For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class
(.84% for Class A, 1.34% for Class B, 1.40% for Class C and .59% for Class I), multiplied by the average
account value over the period, multiplied by 179/365.
** 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. JUNE 30, 2005
Schedule of Investments Short Term Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Alaska--0.5% $ 2,150 Alaska Student Loan Corporation, Capital Project Revenue Bonds, Series A,
5% due 1/01/2008 (e) $ 2,259
Arizona--2.3% 10,070 Salt River Project, Arizona, Agriculture Improvement and Power District,
Electric System Revenue Refunding Bonds (Salt River Project), Series D, 5%
due 1/01/2007 10,409
Arkansas--0.5% 2,115 Fayetteville, Arkansas, Sales and Use Tax Capital Improvement, Special
Assessment Bonds, 4% due 12/01/2006 2,154
Connecticut--1.7% 2,700 Connecticut State, GO, Refunding, Series C, 4% due 12/15/2005 2,717
5,000 Connecticut State, Special Tax Obligation Revenue Bonds (Transportation
Infrastructure), Series A, 5.75% due 6/01/2006 (a)(f) 5,192
Delaware--2.1% Delaware State, GO, Series A:
4,125 5% due 1/01/2006 4,175
5,190 5% due 1/01/2008 5,474
Florida--5.4% 3,690 Collier County, Florida, Limited, GO (Conservation Collier Program), Series A,
5% due 1/01/2007 (c) 3,814
10,000 Florida State Board of Education, GO (Public Education Capital Outlay),
Refunding, Series B, 5% due 6/01/2007 10,421
2,500 Florida State Board of Education, Lottery Revenue Bonds, Series B, 5.25% due
7/01/2005 (f) 2,500
2,860 Florida State Turnpike Authority, Turnpike Revenue Refunding Bonds (Department
of Transportation), Series A, 5.25% due 7/01/2008 (e) 3,056
400 Hillsborough County, Florida, Aviation Authority Revenue Refunding Bonds (Tampa
International Airport), AMT, Series A, 5% due 10/01/2005 (c) 402
4,365 Saint John's River Management District, Florida, Land Acquisition Revenue
Refunding Bonds, 4.50% due 7/01/2007 (e) 4,511
Georgia--4.4% 5,000 Cobb County, Georgia, GO, TAN, 3.50% due 12/30/2005 5,021
5,000 Coweta County, Georgia, School District, GO, Sales Tax, 4.50% due 8/01/2005 5,008
6,225 Georgia Municipal Electric Authority, Power Revenue Refunding Bonds, Series
DD, 7% due 1/01/2008 (d)(g) 6,830
2,550 Georgia State, GO, Refunding, Series A, 6.25% due 3/01/2006 2,611
1,000 Gwinnett County, Georgia, School District, GO, Refunding, 4.50% due 2/01/2006 1,011
Illinois--6.0% 12,500 Chicago, Illinois, O'Hare International Airport, Revenue Refunding Bonds,
Third Lien, Series A, 5% due 1/01/2008 (d) 13,123
4,950 Illinois State, GO, Series A, 5% due 3/01/2009 5,294
3,740 Metropolitan Pier and Exposition Authority, Illinois, Dedicated State Tax
Revenue Refunding Bonds, Series A, 6% due 12/15/2006 (c) 3,914
5,000 Naperville, Illinois, IDR (General Motors Corporation), Refunding, VRDN, 4.35%
due 12/01/2012 (b) 5,000
Indiana--3.2% 10,000 Indiana Health Facilities Financing Authority, Subordinate Credit Group Revenue
Bonds (Ascension Health), Series A, 5% due 5/01/2008 10,513
4,300 Indiana State Development Finance Authority, PCR, Refunding (Southern Indiana
Gas & Electric), AMT, Series C, 5% due 3/01/2030 4,342
Iowa--0.9% 4,000 Iowa Finance Authority, State Revolving Fund, Revenue Refunding Bonds, 5% due
8/01/2008 4,255
Louisiana--2.2% 10,000 Louisiana HFA, S/F Mortgage Revenue Refunding Bonds, VRDN, AMT, 3.864% due
4/30/2007 (b) 10,000
Michigan--0.9% Michigan State Hospital Finance Authority, Revenue Refunding Bonds (Oakwood
Obligated Group):
2,000 5% due 11/01/2005 2,014
2,000 5% due 11/01/2006 2,051
Minnesota--2.6% 5,195 Minneapolis, Minnesota, GO, Refunding, Series A, 5% due 3/01/2009 5,578
3,235 Minneapolis-St. Paul Metropolitan Area Council, Minnesota, Transit, GO,
Refunding, Series B, 5% due 2/01/2007 3,351
2,890 Minneapolis-St. Paul Metropolitan Area Council, Minnesota, Waste Water, GO,
Refunding, Series B, 5% due 5/01/2008 3,061
Portfolio Abbreviations
To simplify the listings of Merrill Lynch Municipal Bond Fund, Inc.'s
portfolio holdings in the Schedule of Investments, we have abbreviated the
names of many of the securities according to the list at right.
AMT Alternative Minimum Tax (subject to)
BAN Bond Anticipation Notes
CARS Complementary Auction Rate Securities
COP Certificates of Participation
DRIVERS Derivative Inverse Tax-Exempt Receipts
EDA Economic Development Authority
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDB Industrial Development Boards
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RAW Revenue Anticipation Warrants
RIB Residual Interest Bonds
S/F Single-Family
TAN Tax Anticipation Notes
TRAN Tax Revenue Anticipation Notes
VRDN Variable Rate Demand Notes
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Schedule of Investments (continued) Short Term Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Missouri--2.9% $ 3,980 Kansas City, Missouri, Passenger Facility Charge Revenue Bonds, AMT, 5% due
4/01/2007 (c) $ 4,117
4,000 Kansas City, Missouri, School District, Building Revenue Refunding Bonds,
Series A, 5% due 2/01/2006 (f) 4,055
5,000 Missouri State Public Utilities Commission, Interim Construction Notes,
2.75% due 10/01/2005 5,002
Nebraska--1.6% 7,000 Nebraska Public Power District, General Revenue Refunding Bonds, Series B-2,
5% due 1/01/2009 (f) 7,477
Nevada--1.9% 5,825 Las Vegas Valley Water District, Nevada, GO, Refunding, Series B, 4% due
6/01/2007 5,958
2,430 Nevada State, Capital Improvement, GO, Refunding, Series A, 5% due 2/01/2009 2,595
New Jersey--5.2% 14,000 New Jersey EDA, Market Transition Facility, Senior Lien Revenue Refunding
Bonds, Series A, 6% due 7/01/2007 (d) 14,869
3,375 New Jersey State, GO, Refunding, Series M, 5% due 7/15/2007 (c) 3,523
5,000 New Jersey State Transit Corporation, COP, 6.50% due 4/01/2007 (a)(e) 5,370
New Mexico--2.2% 10,000 San Juan County, New Mexico, Gross Receipts Tax Revenue Bonds, Subordinate
Series A, 2.50% due 8/15/2005 9,997
New York--7.2% 9,800 Long Island Power Authority, New York, Electric System Revenue Refunding
Bonds, Series A, 6% due 12/01/2007 (c) 10,527
7,500 Monroe County, New York, BAN, 4% due 7/28/2005 7,504
New York City, New York, GO:
3,910 Series J, 5% due 3/01/2008 4,112
3,645 Series M, 4% due 4/01/2008 3,743
New York City, New York, GO, Refunding, Series G:
2,375 5% due 8/01/2005 (g) 2,380
4,625 5% due 8/01/2005 4,634
North Carolina--1.1% 5,000 North Carolina State, Public School Building, GO, 4.60% due 4/01/2006 5,075
Ohio--1.0% 4,500 Ohio State Water Development Authority, Water Pollution Control, Revenue
Refunding Bonds, Series A, 3.35% due 6/01/2033 4,502
Oklahoma--1.2% 3,040 Oklahoma City, Oklahoma, Airport Trust Revenue Refunding Bonds, Junior Lien,
AMT, 28th Series, 4% due 7/01/2005 (d) 3,040
2,500 Oklahoma Development Finance Authority Revenue Bonds (Conoco Project), VRDN,
AMT, Series B, 2.45% due 8/01/2037 (b) 2,500
Oregon--0.5% 2,385 Tri-County, Oregon, Metropolitan Transportation District Revenue Bonds, Series
A, 5.25% due 8/01/2005 (g) 2,391
Pennsylvania--3.2% 9,620 Allegheny County, Pennsylvania, Port Authority, Subordinate Lien Special
Revenue Transportation Bonds, 5.375% due 6/01/2006 (d) 9,857
3,000 Midway Sewerage Authority, Pennsylvania, Revenue Notes, 2% due 12/01/2005 2,989
2,000 Pennsylvania State, GO, First Series, 5% due 1/01/2008 (d) 2,107
Rhode Island--0.5% 2,500 Rhode Island Housing and Mortgage Finance Corporation, Homeowner Opportunity
Revenue Bonds, AMT, Series 41-C, 3.375% due 11/01/2005 2,503
Tennessee--2.1% 3,815 Hamilton County, Tennessee, GO, Refunding, 4% due 10/01/2005 (f) 3,828
5,830 Metropolitan Government of Nashville and Davidson County, Tennessee, GO,
Refunding, Series B, 4% due 1/01/2007 5,941
Texas--19.0% 9,080 Brazos River Authority, Texas, PCR, Refunding (Utilities Electric Company),
AMT, Series B, 5.05% due 6/19/2006 9,228
3,205 Corpus Christi, Texas, GO (General Improvement), Refunding, Series A, 5% due
3/01/2006 (e) 3,254
1,250 Dallas County, Texas, Community College District, GO (Maintenance Tax Notes),
5% due 2/15/2008 1,316
4,500 El Paso, Texas, GO, 5.75% due 8/15/2007 (a)(e) 4,777
8,180 Gulf Coast Waste Disposal Authority, Texas, PCR (Amoco Oil Company Project),
2% due 10/01/2006 8,081
5,000 Lower Colorado River Authority, Texas, Revenue Refunding Bonds, Series B, 6%
due 5/15/2007 (e) 5,291
14,000 Matagorda County, Texas, Navigation District No. 1, PCR (Central Power and
Light Company), Refunding, Series A, 4.55% due 11/01/2006 14,250
3,885 Tarrant Regional Water District, Texas, Water Improvement Revenue Refunding
Bonds, 5% due 3/01/2009 (e) 4,153
10,025 Texas Public Finance Authority, Capital Appreciation Building Revenue Refunding
Bonds, 2.45%* due 8/01/2006 (d)(g) 9,733
4,300 Texas State, GO, Refunding, Series A, 8% due 10/01/2007 4,783
12,000 Texas State Turnpike Authority, Central Texas Turnpike System Revenue Bonds,
Second Tier, BAN, 5% due 6/01/2008 12,696
10,000 Weatherford, Texas, Independent School District, GO, Series A, 2.50% due
2/01/2035 9,999
Utah--1.6% 7,000 Intermountain Power Agency, Utah, Power Supply Revenue Refunding Bonds, Series
A, 5% due 7/01/2007 (d) 7,301
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Schedule of Investments (concluded) Short Term Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Virginia--5.7% $ 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 $ 6,738
4,490 Virginia Beach, Virginia, Development Authority, Public Facility Revenue
Refunding Bonds, Series A, 5% due 5/01/2007 4,673
3,900 Virginia State Public School Authority, School Financing, GO, Series B, 4%
due 8/01/2005 3,905
Virginia State Public School Authority, School Financing Revenue Bonds:
5,660 Series C, 5% due 8/01/2007 5,921
4,635 Series D, 5% due 2/01/2008 4,888
Washington--8.4% 11,500 Energy Northwest, Washington, Electric Revenue Refunding Bonds (Columbia
Generating Station), Series A, 5.25% due 7/01/2008 12,258
3,345 King County, Washington, GO, Refunding, 5% due 12/01/2005 3,378
5,000 Washington State, GO (Motor Vehicle Fuel Tax), Refunding, Series R, 4.50%
due 1/01/2009 (d) 5,254
5,075 Washington State, GO (Motor Vehicle Fuel Tax), Series B, 5% due 7/01/2007 (f) 5,294
7,195 Washington State, GO, Series B and AT-7, 6.10% due 6/01/2006 7,416
5,000 Washington State Public Power Supply System, Revenue Refunding Bonds (Nuclear
Project Number 1), Series A, 6% due 7/01/2005 (c) 5,000
Wisconsin--0.9% 4,250 Franklin, Wisconsin, Solid Waste Disposal, Revenue Bonds, 3.625% due 5/01/2006 4,247
Puerto Rico--1.1% 5,000 Puerto Rico Commonwealth Highway and Transportation Authority, Highway Revenue
Refunding Bonds, Series AA, 5% due 7/01/2006 5,106
Total Municipal Bonds (Cost--$459,961)--100.0% 459,597
Shares
Held Short-Term Securities
4 Merrill Lynch Institutional Tax-Exempt Fund (h) 4
Total Short-Term Securities (Cost--$4)--0.0% 4
Total Investments (Cost--$459,965**)--100.0% 459,601
Liabilities in Excess of Other Assets--0.0% (80)
---------
Net Assets--100.0% $ 459,521
=========
* 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 June 30, 2005, as computed for federal income tax purposes, were
as follows:
(in Thousands)
Aggregate cost $ 459,965
==============
Gross unrealized appreciation $ 516
Gross unrealized depreciation (880)
--------------
Net unrealized depreciation $ (364)
==============
(a) Prerefunded.
(b) Security may have a maturity of more than one year at time of
issuance, but has variable rate and demand features that qualify it
as a short-term security. The rate disclosed is that currently in effect.
This rate changes periodically based upon prevailing market rates.
(c) AMBAC Insured.
(d) MBIA Insured.
(e) FSA Insured.
(f) FGIC Insured.
(g) Escrowed to maturity.
(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 (16,810) $435
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
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 $ 3,354
1,585 Revolving Fund Loan, Series A, 6.75% due 8/15/2005 (a) 1,593
10,000 Lauderdale County and Florence, Alabama, Health Care Authority, Revenue
Refunding Bonds (Coffee Health Group), Series A, 6% due 7/01/2029 (e) 11,262
7,000 University of Alabama, University Revenue Bonds (Birmingham), 6% due
10/01/2020 (g) 7,758
Arkansas--1.2% University of Arkansas, University Revenue Bonds (Various Facility, Fayetteville
Campus) (g):
6,060 5.50% due 12/01/2012 (a) 6,912
5,000 5% due 12/01/2027 5,285
California--19.8% 10,680 California Pollution Control Financing Authority, PCR, Refunding, DRIVERS, AMT,
Series 878Z, 7.566% due 12/01/2009 (e)(j) 12,754
2,075 California State Department of Veteran Affairs, Home Purpose Revenue Refunding
Bonds, Series A, 5.35% due 12/01/2027 (b) 2,207
California State, Department of Water Resources, Power Supply Revenue Bonds,
Series A:
12,000 5.375% due 5/01/2017 (k) 13,305
10,250 5.375% due 5/01/2021 (e) 11,450
6,385 5.375% due 5/01/2022 (e) 7,133
East Side Union High School District, California, Santa Clara County, GO
(Election of 2002), Series D (k):
1,375 5% due 8/01/2016 1,517
2,795 5% due 8/01/2017 3,068
3,480 5% due 8/01/2022 3,746
Golden State Tobacco Securitization Corporation of California, Tobacco
Settlement Revenue Bonds, Series B (g):
23,200 5.375% due 6/01/2028 24,868
5,000 5.50% due 6/01/2033 5,544
Industry, California, Urban Development Agency, Tax Allocation Bonds,
Series 1-B (e):
5,645 5% due 5/01/2020 5,962
6,000 5% due 5/01/2021 6,344
5,000 Los Angeles, California, GO, Series A, 5% due 9/01/2019 (e) 5,427
Los Angeles, California, Unified School District, GO:
24,465 (Election of 1997), Series F, 5% due 1/01/2028 (g) 26,126
13,780 Series A, 5% due 1/01/2028 (e) 14,716
8,965 Modesto, California, Schools Infrastructure Financing Agency, Special Tax
Bonds, 5.50% due 9/01/2036 (b) 10,030
12,040 Mount Diablo, California, Unified School District, GO (Election of 2002), 5%
due 7/01/2027 (g) 12,824
6,440 Palm Springs, California, Financing Authority, Lease Revenue Refunding Bonds
(Convention Center Project), Series A, 5.50% due 11/01/2035 (e) 7,276
11,685 Rialto, California, Unified School District, GO, Series A, 6.24%* due 6/01/2025 (g) 4,704
5,000 Roseville, California, Joint Union High School District, GO (Election of 2004),
Series A, 5% due 8/01/2029 (g) 5,354
5,075 Sacramento, California, Unified School District, GO (Election of 1999), Series B,
5% due 7/01/2026 (g) 5,366
3,700 San Jose, California, GO (Libraries, Parks and Public Safety Projects), 5% due
9/01/2030 (e) 3,940
2,755 Tahoe Truckee, California, Unified School District, GO (School Facilities
Improvement District Number 2), Series A, 5.25% due 8/01/2029 (e) 2,999
9,330 Tustin, California, Unified School District, Senior Lien Special Tax Bonds
(Community Facilities District No. 97-1), Series A, 5% due 9/01/2038 (i) 9,764
Colorado--5.6% 19,250 Aurora, Colorado, COP, 6% due 12/01/2025 (b) 21,556
31,160 Denver, Colorado, City and County Airport Revenue Refunding Bonds, RIB, Series
153, 8.811% due 11/15/2025 (e)(j) 32,974
4,000 Logan County, Colorado, Justice Center Finance Corporation, COP, 5.50% due
12/01/2020 (e) 4,425
Connecticut--0.7% Hartford, Connecticut, GO, Refunding, Series D (e):
1,300 5% due 9/01/2017 1,447
1,105 5% due 9/01/2018 1,224
1,700 5% due 9/01/2021 1,855
2,670 New Haven, Connecticut, GO, Refunding, Series A, 5% due 9/01/2015 (e) 2,996
Florida--1.9% 5,500 Dade County, Florida, Water and Sewer System Revenue Bonds, 5.25% due
10/01/2026 (g) 5,793
1,605 Escambia County, Florida, Health Facilities Authority, Health Facility Revenue
Bonds (Florida Health Care Facility Loan), 5.95% due 7/01/2020 (b) 1,619
9,425 Jacksonville Electric Authority, Florida, Water and Sewer System Revenue Bonds,
Series C, 5% due 10/01/2039 (i) 9,711
2,240 West Coast Regional Water Supply Authority, Florida, Capital Improvement Revenue
Bonds, 10.40% due 10/01/2010 (a)(b) 2,698
Georgia--3.7% Georgia Municipal Electric Authority, Power Revenue Refunding Bonds (b):
20,000 Series EE, 7% due 1/01/2025 27,669
90 Series Y, 6.40% due 1/01/2011 (a) 105
490 Series Y, 6.40% due 1/01/2013 (c) 572
8,420 Series Y, 6.40% due 1/01/2013 9,860
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Schedule of Investments (continued) Insured Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Hawaii--1.0% $ 9,630 Honolulu, Hawaii, City and County GO, Refunding, Series A, 5% due 7/01/2022 (e) $ 10,426
Illinois--1.8% 8,845 Chicago, Illinois, O'Hare International Airport Revenue Bonds, DRIVERS, AMT,
Series 845-Z, 9.108% due 1/01/2012 (e)(j)(k) 11,333
6,800 Illinois State, GO, 5.75% due 5/01/2021 (e) 7,095
Kansas--0.5% 5,145 Manhattan, Kansas, Hospital Revenue Bonds (Mercy Health Center), 5.50% due
8/15/2020 (i) 5,663
Louisiana--0.3% 2,535 Louisiana Public Facilities Authority, Mortgage Revenue Refunding Bonds (Baton
Rouge General Medical Center Project), 5.25% due 7/01/2033 (d)(e) 2,705
Maryland--0.6% 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) 5,880
Massachusetts--4.0% 7,250 Massachusetts State Development Finance Agency, Revenue Bonds (Williston Northampton
School Project), 5% due 10/01/2037 (k) 7,691
4,000 Massachusetts State, HFA, Rental Housing Mortgage Revenue Bonds, AMT, Series C,
5.60% due 1/01/2045 (i) 4,273
27,000 Massachusetts State Special Obligation Dedicated Tax Revenue Bonds, 5.25% due
1/01/2014 (a)(g) 30,259
Michigan--2.1% 4,305 Michigan State, HDA, Rental Housing Revenue Refunding Bonds, Series B, 6.15%
due 10/01/2015 (e) 4,397
Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds:
6,170 DRIVERS, AMT, Series 858Z, 7.867% due 12/01/2011 (j)(k) 7,252
10,000 (Detroit Edison Company), Series AA, 6.40% due 9/01/2025 (e) 10,256
Minnesota--1.5% 5,860 Delano, Minnesota, Independent School District Number 879, GO, Series A, 5.875%
due 2/01/2025 (i) 6,538
Sauk Rapids, Minnesota, Independent School District Number 047, GO, Series A (e):
3,735 5.65% due 2/01/2020 4,129
4,440 5.70% due 2/01/2021 4,924
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) 1,754
10,000 Mississippi Hospital Equipment and Facilities Authority Revenue Bonds (Forrest
County General Hospital Project), 6% due 1/01/2030 (i) 11,207
Missouri--2.2% Kansas City, Missouri, Airport Revenue Refunding and Improvement Bonds,
Series A (e):
12,990 5.50% due 9/01/2013 13,874
9,000 5.50% due 9/01/2014 9,613
Nevada--6.4% Clark County, Nevada, IDR, AMT, Series A:
10,000 (Power Company Project), Series A, 6.70% due 6/01/2022 (g) 10,163
9,575 (Southwest Gas Corporation Project), Series A, 5.25% due 7/01/2034 (b) 10,195
45,000 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra Pacific Power Company),
AMT, 6.65% due 6/01/2017 (e) 46,664
New Jersey--6.1% 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) 9,031
Garden State Preservation Trust of New Jersey, Open Space and Farmland Preservation
Revenue Bonds, Series A (i)(m):
3,125 5.80% due 11/01/2021 3,599
8,310 5.80% due 11/01/2022 9,525
4,340 5.80% due 11/01/2023 4,957
16,500 Garden State Preservation Trust of New Jersey, Revenue Bonds, Series B, 5.17%*
due 11/01/2024 (i) 7,019
23,000 New Jersey EDA, Motor Vehicle Surcharge Revenue Bonds, Series A, 5.25% due
7/01/2033 (e) 25,137
4,000 New Jersey EDA, School Facility Construction, Revenue Refunding Bonds, Series K,
5.25% due 12/15/2017 (g) 4,522
New York--15.6% Metropolitan Transportation Authority, New York, Revenue Bonds, Series B:
10,000 5% due 11/15/2030 (b) 10,780
13,500 5% due 11/15/2035 (e) 14,530
8,415 New York City, New York, City Municipal Water Finance Authority, Water and Sewer
System Revenue Bonds, Series B, 5.75% due 6/15/2006 (a)(e) 8,752
15,735 New York City, New York, City Municipal Water Finance Authority, Water and Sewer
System, Revenue Refunding Bonds, Series B, 5.75% due 6/15/2026 (e) 16,347
New York City, New York, GO:
11,500 Series C, 5.625% due 3/15/2018 (k) 12,891
21,000 Series I, 6% due 4/15/2007 (i) 22,345
5,155 New York City, New York, GO, Refunding, Series G, 5.75% due 2/01/2006 (i) 5,319
11,600 New York City, New York, Sales Tax Asset Receivable Corporation Revenue Bonds,
Series A, 5.25% due 10/15/2027 (b) 12,829
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Schedule of Investments (continued) Insured Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
New York New York State Dormitory Authority, Mental Health Revenue Refunding Bonds,
(concluded) Series A (e):
$ 245 5.75% due 2/15/2007 (a) $ 262
120 5.75% due 8/15/2022 127
New York State Dormitory Authority, Non-State Supported Debt, Revenue Refunding
Bonds (School Districts Bond Financing Program), Series B (e):
3,665 5% due 10/01/2025 3,955
3,925 5% due 10/01/2034 4,218
9,190 New York State Dormitory Authority Revenue Bonds (School Districts Financing
Program), Series D, 5.25% due 10/01/2023 (e) 10,082
9,110 New York State Urban Development Corporation, Personal Income Tax Revenue Bonds
(State Facilities), Series A-1, 5.25% due 3/15/2034 (g) 9,919
5 Niagara Falls, New York, GO, Public Improvement, 6.90% due 3/01/2024 (a)(e) 5
22,500 Tobacco Settlement Financing Corporation of New York Revenue Bonds, Series A-1,
5.25% due 6/01/2022 (b) 24,568
West Islip, New York, Union Free School District, GO, Refunding (i):
1,535 5% due 10/01/2015 1,721
4,120 5% due 10/01/2016 4,599
North Carolina--0.3% 3,370 North Carolina HFA, Home Ownership Revenue Bonds, AMT, Series 14-A, 5.35% due
1/01/2022 (b) 3,519
North Dakota--0.8% 3,480 North Dakota State, HFA, Revenue Bonds (Housing Finance Program), Series C,
5.30% due 7/01/2022 (b) 3,612
4,370 Oliver County, North Dakota, PCR, Refunding (Square Butte Electric Cooperative),
Series A, 5.30% due 1/01/2027 (b) 4,668
Oklahoma--0.7% Oklahoma State Industries Authority, Health System Revenue Refunding Bonds
(Integris Obligated Group), Series A (e):
2,680 6.25% due 8/15/2009 (a) 3,041
3,705 6.25% due 8/15/2016 4,163
Oregon--1.4% 8,700 Oregon State Department, Administrative Services, COP, Series A, 6.25% due
5/01/2010 (a)(b) 10,019
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) 4,643
Pennsylvania--3.6% 11,500 Lehigh County, Pennsylvania, IDA, PCR, Refunding (Pennsylvania Power and Light
Utilities Corporation Project), 4.75% due 2/15/2027 (g) 11,886
5,000 Pennsylvania HFA, S/F Revenue Bonds, AMT, Series 72A, 5.25% due 4/01/2021 (e) 5,181
2,035 Pennsylvania State Higher Educational Facilities Authority, Revenue Bonds
(Slippery Rock University Foundation, Inc.), Series A, 5% due 7/01/2019 (k) 2,217
5,000 Pennsylvania State Turnpike Commission, Turnpike Revenue Refunding Bonds,
Series T, 5.50% due 12/01/2013 (g) 5,749
6,000 Philadelphia, Pennsylvania, Gas Works Revenue Bonds, 12th Series B, 7% due
5/15/2020 (c)(e) 7,421
4,420 Philadelphia, Pennsylvania, Redevelopment Authority Revenue Bonds (Neighborhood
Transformation), Series A, 5.50% due 4/15/2020 (g) 4,888
Rhode Island--0.8% 6,815 Rhode Island State Economic Development Corporation, Airport Revenue Bonds,
Series B, 6% due 7/01/2010 (a)(g) 7,796
South Carolina--0.4% 4,200 South Carolina State Public Service Authority Revenue Refunding Bonds, Series A,
6.25% due 1/01/2006 (b) 4,359
Texas--3.9% 17,975 Dallas-Fort Worth, Texas, International Airport Revenue Bonds, DRIVERS, AMT,
Series 202, 9.113% due 11/01/2028 (g)(j) 21,272
El Paso, Texas, Water and Sewer Revenue Refunding and Improvement Bonds,
Series A (i):
8,620 6% due 3/01/2012 (a) 10,010
195 6% due 3/01/2018 225
205 6% due 3/01/2019 236
3,500 Houston, Texas, Water Conveyance System Contract, COP, Series J, 6.25% due
12/15/2013 (b) 4,147
Texas State Department of Housing and Community Affairs, S/F Mortgage Revenue
Bonds, AMT, Series A (e)(f):
2,085 5.45% due 9/01/2023 2,187
2,735 5.50% due 3/01/2026 2,862
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) 10,107
Utah Water Finance Agency Revenue Bonds (Pooled Loan Financing Program),
Series A (b):
2,515 5.75% due 10/01/2015 2,812
3,770 6% due 10/01/2020 4,242
Virginia--0.2% 2,560 Virginia State HDA, Commonwealth Mortgage Revenue Bonds, Series J, Sub-Series
J-1, 5.20% due 7/01/2019 (e) 2,582
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) 7,725
West Virginia--1.2% 12,250 Pleasants County, West Virginia, PCR, Refunding (Potomac-Pleasants), Series C,
6.15% due 5/01/2015 (b) 12,496
Wisconsin--1.3% 9,000 Superior, Wisconsin, Limited Obligation Revenue Refunding Bonds (Midwest Energy
Resources), Series E, 6.90% due 8/01/2021 (g) 11,990
1,075 Wisconsin State, GO, AMT, Series B, 6.50% due 5/01/2025 (e) 1,078
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Schedule of Investments (concluded) Insured Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
Puerto Rico--2.5% $ 1,750 Puerto Rico Commonwealth, Highway and Transportation Authority, Transportation
Revenue Bonds, Series G, 5.25% due 7/01/2017 (g) $ 1,952
Puerto Rico Electric Power Authority, Power Revenue Bonds, Series RR:
8,200 5% due 7/01/2027 (k) 8,836
14,400 5% due 7/01/2028 (l) 15,491
Total Municipal Bonds (Cost--$957,836)--97.9% 1,023,834
Shares
Held Mutual Funds
300 BlackRock California Insured Municipal 2008 Term Trust, Inc. 4,851
810 BlackRock Insured Municipal 2008 Term Trust, Inc. 13,057
281 BlackRock Insured Municipal Term Trust, Inc. 3,143
Total Mutual Funds (Cost--$21,943)--2.0% 21,051
Short-Term Securities
11,017 Merrill Lynch Institutional Tax-Exempt Fund (h) 11,017
Total Short-Term Securities (Cost--$11,017)--1.1% 11,017
Total Investments (Cost--$990,796**)--101.0% 1,055,902
Liabilities in Excess of Other Assets--(1.0%) (10,515)
----------
Net Assets--100.0% $1,045,387
==========
* 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 June 30, 2005, as computed for federal income tax purposes, were
as follows:
(in Thousands)
Aggregate cost $ 990,682
==============
Gross unrealized appreciation $ 66,389
Gross unrealized depreciation (1,169)
--------------
Net unrealized appreciation $ 65,220
==============
(a) Prerefunded.
(b) AMBAC Insured.
(c) Escrowed to maturity.
(d) FHA Insured.
(e) MBIA Insured.
(f) FNMA/GNMA Collateralized.
(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 8,000 $347
(i) FSA Insured.
(j) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(k) XL Capital Insured.
(l) CIFG Insured.
(m) When-issued security.
Forward interest rate swaps outstanding as of June 30, 2005 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 3.82%
Broker, JPMorgan Chase Bank
Expires November 2018 $11,500 $(297)
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
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) $ 4,281
500 Mobile, Alabama, Industrial Development Board, Environmental Improvement
Revenue Refunding Bonds (International Paper Company Project), AMT, Series A,
6.35% due 5/15/2016 540
2,500 Selma, Alabama, IDB, Environmental Improvement Revenue Refunding Bonds
(International Paper Company Project), AMT, Series A, 6.70% due 2/01/2018 2,758
Alaska--0.5% 2,065 Alaska State Housing Financial Corporation, General Mortgage Revenue Refunding,
Series A, 6% due 6/01/2027 (f) 2,182
3,860 Anchorage, Alaska, School, GO, Series B, 5.875% due 12/01/2010 (e)(j) 4,394
Arizona--2.5% 4,000 Arizona Health Facilities Authority Revenue Bonds (Catholic Healthcare West),
Series A, 6.625% due 7/01/2020 4,474
Maricopa County, Arizona, Hospital Revenue Refunding Bonds (Sun Health Corporation):
730 6.125% due 4/01/2007 (j) 783
270 6.125% due 4/01/2018 284
3,600 Maricopa County, Arizona, IDA, Education Revenue Bonds (Arizona Charter Schools
Project 1), Series A, 6.75% due 7/01/2029 3,583
1,625 Maricopa County, Arizona, IDA, Health Facilities Revenue Refunding Bonds (Catholic
Healthcare West Project), Series A, 5% due 7/01/2021 1,664
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 1,204
1,000 (Public Service Company of New Mexico Project), 6.30% due 12/01/2026 1,065
New Peoria, Arizona, Improvement District No. 8401, Special Assessment Bonds
No. 8802:
430 7.20% due 1/01/2010 443
510 7.20% due 1/01/2013 525
Peoria, Arizona, Improvement District, Special Assessment Bonds No. 8801:
190 7.30% due 1/01/2009 196
395 7.30% due 1/01/2011 407
2,330 Phoenix, Arizona, Civic Improvement Corporation, Municipal Facilities, Excise
Tax Revenue Bonds, 5.75% due 7/01/2016 (e) 2,612
5,000 Phoenix, Arizona, IDA, Airport Facility, Revenue Refunding Bonds (America West
Airlines Inc. Project), AMT, 6.30% due 4/01/2023 3,703
545 Prescott Valley, Arizona, Improvement District, Special Assessment Bonds (Sewer
Collection System Roadway Repair), 7.90% due 1/01/2012 568
3,515 Tucson, Arizona, IDA, Senior Living Facilities Revenue Bonds (Christian Care
Tucson Inc. Project), Series A, 6.125% due 7/01/2024 (m) 3,930
3,180 University of Arizona, COP, Refunding, Series A, 5.50% due 6/01/2018 (c) 3,547
1,000 University of Arizona, COP (University of Arizona Parking and Student Housing),
5.75% due 6/01/2009 (c)(j) 1,105
Vistancia Community Facilities District, Arizona, GO:
3,000 6.75% due 7/15/2022 3,257
2,125 5.75% due 7/15/2024 2,174
Arkansas--0.1% 50 Arkansas State Development Finance Authority, S/F Mortgage Revenue Bonds
(Mortgage-Backed Securities Program), Series H, 6.15% due 7/01/2016 (i) 52
250 Arkansas State Student Loan Authority Revenue Bonds, AMT, Sub-Series B,
7.25% due 6/01/2009 273
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) 209
250 North Little Rock, Arkansas, Health Facilities Board, Health Care Revenue Bonds
(Baptist Health), 5.50% due 7/01/2016 264
500 Pine Bluff, Arkansas, Environmental Improvement Revenue Refunding Bonds
(International Paper Company Project), AMT, Series A, 6.70% due 8/01/2020 549
250 University of Central Arkansas, Housing System Revenue Bonds, 6.50% due 1/01/2031 (h) 286
California--12.0% 2,500 Agua Caliente Band of Cahuilla Indians, California, Casino Revenue Bonds, 6%
due 7/01/2018 2,643
9,145 Alameda County, California, COP (Financing Project), 6% due 9/01/2006 (f)(j) 9,657
California Rural Home Mortgage Finance Authority, S/F Mortgage Revenue Bonds
(Mortgage-Backed Securities Program), AMT, Class 5 (i)(l):
260 Series C, 6.75% due 3/01/2029 261
190 Series D, 6.70% due 5/01/2029 192
260 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) 261
7,500 California State Department of Water Resources, Power Supply Revenue Bonds,
Series A, 5.75% due 5/01/2017 8,450
5,000 California State, GO, 5.25% due 4/01/2029 5,400
2,000 California State, GO, Refunding, 5.75% due 5/01/2030 2,220
14,100 California State, Various Purpose, GO, 5.50% due 11/01/2033 15,713
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
California $ 9,880 California Statewide Communities Development Authority, Health Facility Revenue
(concluded) Bonds (Memorial Health Services), Series A, 6% due 10/01/2023 $ 11,080
2,880 Capistrano, California, Unified School District, Community Facility District,
Special Tax Bonds (No. 90-2 Talega), 6% due 9/01/2032 3,115
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 1,167
2,965 6.15% due 9/01/2026 3,182
13,000 Clovis, California, Unified School District, Capital Appreciation, GO
(Election of 2004), Series A, 5.05%* due 8/01/2029 (e) 4,167
Contra Costa County, California, Special Tax Bonds (Community Facilities District
No. 2001-01):
1,585 6% due 9/01/2026 1,668
1,200 6.10% due 9/01/2031 1,262
3,100 Elk Grove, California, Poppy Ridge Community Facilities Number 3 Special Tax,
Series 1, 6% due 9/01/2028 3,247
Golden State Tobacco Securitization Corporation of California, Tobacco Settlement
Revenue Bonds:
2,000 Series A-4, 7.80% due 6/01/2042 2,399
2,785 Series A-5, 7.875% due 6/01/2042 3,351
8,000 Lancaster, California, Redevelopment Agency, Subordinate Tax Allocation Refunding
Bonds (Combined Redevelopment Project Areas--Housing Programs), Series B, 5% due
8/01/2034 (e) 8,440
6,795 Midpeninsula Regional Open Space District Financing Authority, California, Revenue
Refunding Bonds, 5% due 9/01/2034 (c) 7,210
2,740 Pomona, California, Public Financing Authority Revenue Refunding Bonds (Merged
Redevelopment Project), Series A1, 5.75% due 2/01/2034 2,863
1,100 Poway, California, Unified School District, Special Tax Bonds (Community District
No. 6), Series A, 6.05% due 9/01/2025 1,169
2,695 Riverside, California, Improvement Bond Act of 1915, Special Assessment (Riverwalk
Assessment District), 6.375% due 9/02/2026 2,948
Roseville, California, Special Tax (Stoneridge Community Facilities No. 1):
1,250 6.20% due 9/01/2021 1,343
1,125 6% due 9/01/2025 1,206
2,500 6.30% due 9/01/2031 2,695
Sacramento, California, Special Tax (North Natomas Community Facilities):
2,200 Series 01-03, 6% due 9/01/2028 2,335
2,270 Series 4-C, 6% due 9/01/2028 2,440
20,075 Sacramento County, California, Sanitation District Financing Authority Revenue
Bonds, Series A, 5% due 12/01/2035 (c) 21,507
10,000 San Diego, California, Public Facilities Financing Authority, Subordinated Water
Revenue Refunding Bonds, 5% due 8/01/2032 (f) 10,556
11,520 San Diego, California, Unified School District, GO (Election of 1998), Series F,
5% due 7/01/2028 (h) 12,348
San Francisco California, City and County Redevelopment Agency Revenue Bonds
(Community Facilities District No. 6-Mission):
5,000 6% due 8/01/2021 5,287
2,500 GO, Series A, 6% due 8/01/2025 2,649
1,075 San Francisco, California, Uptown Parking Corporation, Parking Revenue Bonds
(Union Square), 6% due 7/01/2020 (f) 1,223
Santa Margarita, California, Water District, Special Tax Refunding Bonds (Community
Facilities District No. 99), Series 1:
3,680 6.20% due 9/01/2020 4,021
3,000 6.25% due 9/01/2029 3,210
Colorado--2.1% 500 Boulder County, Colorado, Hospital Development Revenue Bonds (Longmont United
Hospital Project), 6% due 12/01/2030 (m) 559
560 Colorado HFA, Revenue Bonds (S/F Program), Series B-3, 6.55% due 10/01/2016 586
Colorado HFA, Revenue Refunding Bonds (S/F Program):
465 AMT, Senior Series A-2, 7.50% due 4/01/2031 488
190 AMT, Senior Series B-2, 7.10% due 4/01/2017 192
1,270 AMT, Senior Series B-2, 7.25% due 10/01/2031 1,306
75 AMT, Senior Series B-3, 6.80% due 11/01/2028 76
600 AMT, Senior Series C-2, 7.25% due 10/01/2031 (b) 617
160 Senior Series A-3, 7.35% due 10/01/2030 164
810 Senior Series C-3, 6.75% due 10/01/2021 (b) 830
240 Senior Series C-3, 7.15% due 10/01/2030 (b) 251
2,500 Colorado Health Facilities Authority, Revenue Refunding Bonds (Catholic Health
Initiatives), 5.50% due 9/01/2017 2,705
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Colorado $ 550 Colorado Water Resource and Power Development Authority, Small Water Resource
(concluded) Revenue Bonds, Series A, 5.80% due 11/01/2020 (e) $ 615
Elk Valley, Colorado, Public Improvement Revenue Bonds (Public Improvement Fee):
7,560 Series A, 7.35% due 9/01/2031 8,103
1,400 Series B, 7% due 9/01/2031 1,448
3,685 Larimer County, Colorado, Poudre School District Number R-1, GO, 6% due
12/15/2010 (e)(j) 4,215
7,700 Plaza Metropolitan District No. 1, Colorado, Tax Allocation Revenue Bonds
(Public Improvement Fees), 8% due 12/01/2025 8,576
Connecticut--2.2% 4,000 Bridgeport, Connecticut, Senior Living Facilities Revenue Bonds (3030 Park
Retirement Community Project), 7.25% due 4/01/2035 4,150
1,000 Connecticut State Development Authority, Governmental Lease Revenue Bonds, 6.60%
due 6/15/2014 (f) 1,013
1,250 Connecticut State Development Authority, Water Facility Revenue Bonds (Bridgeport
Hydraulic Company), AMT, 6.15% due 4/01/2035 (c) 1,338
1,200 Connecticut State HFA Revenue Refunding Bonds (Housing Mortgage Finance Program),
Series C-1, 6.30% due 11/15/2017 1,240
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) 1,629
1,000 (Westover School), Series A, 5.70% due 7/01/2030 (m) 1,092
Connecticut State Health and Educational Facilities Authority, Revenue Refunding
Bonds:
5,025 DRIVERS, Series 215,10.149% due 6/01/2030 (m)(n) 6,393
2,000 (Eastern Connecticut Health Network), Series A, 6.50% due 7/01/2030 (m) 2,272
640 (Sacred Heart University), 6.625% due 7/01/2026 (m) 675
5,710 (University of Hartford), Series E, 5.50% due 7/01/2022 (m) 6,347
1,000 (Yale--New Haven Hospital Issue), Series H, 5.70% due 7/01/2025 (f) 1,044
855 Connecticut State Higher Education Supplemental Loan Authority Revenue Bonds
(Family Education Loan Program), AMT, Series A, 5.50% due 11/15/2020 (f) 871
1,000 Connecticut State Regional Learning Educational Service Center Revenue Bonds
(Office/Education Center Facility), 7.75% due 2/01/2006 (j) 1,047
860 Waterbury, Connecticut, GO, 6% due 2/01/2009 (j)(m) 957
District of Columbia-- 5,000 District of Columbia, GO, Refunding, DRIVERS, Series 214, 9.144% due
0.4% 6/01/2026 (f)(n) 5,800
Florida--5.9% 2,000 Anthem Park Community Development District, Florida, Capital Improvement Revenue
Bonds, 5.80% due 5/01/2036 2,035
1,700 Ballantrae, Florida, Community Development District, Capital Improvement Revenue
Bonds, 6% due 5/01/2035 1,777
1,870 Beacon Tradeport Community, Florida, Development District, Special Assessment
Revenue Refunding Bonds (Commercial Project), Series A, 5.25% due 5/01/2016 (m) 2,038
2,500 CFM Community Development District, Florida, Capital Improvement Revenue Bonds,
Series B, 5.875% due 5/01/2014 2,582
2,725 Duval County, Florida, School Board, COP, 5.75% due 7/01/2017 (h) 2,982
1,500 East Homestead Community Development District, Florida, Special Assessment
Revenue Bonds, 5.45% due 5/01/2036 1,523
Fiddlers Creek, Florida, Community Development District Number 2, Special
Assessment Revenue Bonds:
5,350 Series A, 6.375% due 5/01/2035 5,704
1,250 Series B, 5.75% due 5/01/2013 1,307
600 Heritage Isles Community Development District, Florida, Special Assessment Revenue
Refunding Bonds, 5.90% due 11/01/2006 607
5,000 Hillsborough County, Florida, IDA, Exempt Facilities Revenue Bonds (National
Gypsum Company), AMT, Series A, 7.125% due 4/01/2030 5,637
7,000 Lee County, Florida, Airport Revenue Bonds, RIB, AMT, Series 580X, 9.41% due
10/01/2029 (h)(n) 8,603
4,500 Lee County, Florida, Transportation Facilities Revenue Bonds, 5.75% due
10/01/2005 (f)(j) 4,626
1,200 Lexington Oaks, Florida, Community Development District, Special Assessment
Revenue Bonds, Series A, 6.70% due 5/01/2033 1,291
1,040 Mediterra, Florida, South Community Development District, Capital Improvement
Revenue Bonds, 6.85% due 5/01/2031 1,115
2,500 Middle Village Community Development District, Florida, Special Assessment
Bonds, Series A, 6% due 5/01/2035 2,583
6,095 Midtown Miami, Florida, Community Development District, Special Assessment
Revenue Bonds, Series A, 6.25% due 5/01/2037 6,464
2,500 Old Palm Community Development District, Florida, Special Assessment Bonds
(Palm Beach Gardens), Series B, 5.375% due 5/01/2014 2,555
Orange County, Florida, HFA, M/F Housing Revenue Bonds:
3,500 (Loma Vista Project), Series G, 5.50% due 3/01/2032 3,554
2,375 Series A, 6.40% due 1/01/2031 (f) 2,479
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Florida $ 135 Orange County, Florida, HFA, Mortgage Revenue Bonds, AMT, Series A, 8.375%
(concluded) due 3/01/2021 (b)(d) $ 135
1,000 Orange County, Florida, Health Facilities Authority, Hospital Revenue Bonds
(Orlando Regional Healthcare), 5.70% due 7/01/2026 1,018
5,000 Orange County, Florida, Tourist Development, Tax Revenue Bonds, 5.50% due
10/01/2009 (c)(j) 5,497
Panther Trace, Florida, Community Development, Special Assessment Revenue Bonds:
45 District, Series B, 6.50% due 5/01/2009 46
5,000 District II, Series A, 5.60% due 5/01/2035 5,083
Park Place Community Development District, Florida, Special Assessment Revenue
Bonds:
1,000 6.75% due 5/01/2032 1,070
2,500 6.375% due 5/01/2034 2,633
2,000 Saint Lucie, Florida, West Services District, Utility Revenue Refunding Bonds,
Senior Lien, 6% due 10/01/2022 (f) 2,284
2,875 Somerset Community Development District, Florida, Capital Improvement Revenue
Bonds, 5% due 5/01/2015 2,879
990 Sterling Hill, Florida, Community Development District, Capital Improvement
Revenue Refunding Bonds, Series B, 5.50% due 11/01/2010 999
770 Stoneybrook West, Florida, Community Development District, Special Assessment
Revenue Bonds, Series B, 6.45% due 5/01/2010 780
565 Verandah West, Florida, Community Development District, Capital Improvement
Revenue Bonds, Series B, 5.25% due 5/01/2008 570
1,950 Vista Lakes Community, Florida, Development District, Capital Improvement Revenue
Bonds, Series B, 5.80% due 5/01/2008 1,972
Georgia--1.8% 5,000 Atlanta, Georgia, Tax Allocation Bonds (Atlantic Station Project), 7.90% due
12/01/2024 5,474
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 2,416
3,305 7.25% due 1/01/2035 3,531
5,210 College Park, Georgia, Business and IDA Revenue Bonds (Civic Center Project),
5.75% due 9/01/2026 (c) 5,831
1,075 Fulton County, Georgia, Development Authority, PCR (General Motors Corporation),
Refunding, VRDN, 4.35% due 4/01/2010 (g) 1,075
3,450 Fulton County, Georgia, Development Authority Revenue Bonds (Morehouse College
Project), 5.875% due 12/01/2030 (c) 3,874
2,250 Fulton County, Georgia, Residential Care Facilities, Revenue Refunding Bonds
(Canterbury Court Project), Series A, 6% due 2/15/2022 2,283
1,500 Milledgeville-Baldwin County, Georgia, Development Authority Revenue Bonds
(Georgia College and State University Foundation), 6% due 9/01/2033 1,638
Hawaii--0.3% Kuakini, Hawaii, Health System, Special Purpose Revenue Bonds, Series A:
1,410 6.30% due 7/01/2022 1,526
3,000 6.375% due 7/01/2032 3,247
Illinois--7.4% 10,620 Chicago, Illinois, Board of Education, GO, DRIVERS, Series 199, 8.642% due
12/01/2020 (c)(n) 12,494
1,400 Chicago, Illinois, GO (Neighborhoods Alive 21 Program), 5.875% due 7/01/2010 (e)(j) 1,592
26,800 Chicago, Illinois, O'Hare International Airport Revenue Bonds, 3rd Lien, AMT,
Series B-2, 6% due 1/01/2029 (k) 30,507
3,000 Chicago, Illinois, O'Hare International Airport, Special Facility Revenue
Refunding Bonds (American Airlines Inc. Project), 8.20% due 12/01/2024 2,847
2,265 Chicago, Illinois, Park District, GO, Refunding, Series B, 5.75% due 1/01/2015 (e) 2,520
Chicago, Illinois, Park District, Limited Tax, GO, Series A (e):
1,270 5.75% due 1/01/2011 (j) 1,435
230 5.75% due 1/01/2016 256
535 Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT, Series A, 7.15% due
9/01/2031 (i)(l) 547
2,000 Chicago, Illinois, Special Assessment Bonds (Lake Shore East), 6.75% due 12/01/2032 2,086
3,210 Cicero, Illinois, GO, Refunding (Corporate Purpose), 6% due 12/01/2028 (f) 3,598
7,000 Decatur, Illinois, GO, Refunding, 6% due 3/01/2008 (e)(j) 7,563
10,000 Hodgkins, Illinois, Environmental Improvement Revenue Bonds (Metro Biosolids
Management LLC Project), AMT, 6% due 11/01/2023 10,675
Illinois Development Finance Authority Revenue Bonds:
3,140 (Community Rehabilitation Providers Facilities), Series A, 6.50% due 7/01/2022 3,399
660 Series B, 6.40% due 9/01/2031 (h) 698
1,750 Illinois State Finance Authority Revenue Bonds (Friendship Village of Schaumburg),
Series A, 5.625% due 2/15/2037 1,736
Illinois State, GO, 1st Series (f):
8,890 5.75% due 12/01/2015 9,935
3,745 5.75% due 12/01/2016 4,183
4,000 5.75% due 12/01/2017 4,462
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Illinois $ 3,000 Illinois State, Sales Tax Revenue Bonds, 6% due 6/15/2020 $ 3,353
(concluded) 2,000 Lake County, Illinois, Forest Preservation District, GO (Land Acquisition and
Development), 5.75% due 12/15/2016 2,252
780 Naperville, Illinois, IDR (General Motors Corporation), Refunding, VRDN, 4.35%
due 12/01/2012 (g) 780
Indiana--0.8% 5,000 Indiana Transportation Finance Authority, Highway Revenue Bonds, Series A,
5.25% due 6/01/2025 (e) 5,457
6,000 MSD Warren Township, Indiana, Vision 2005, School Building Corporation Revenue
Bonds, First Mortgage, 5.50% due 1/15/2011 (e)(j) 6,714
Iowa--0.7% 1,000 Iowa City, Iowa, Sewer Revenue Bonds, 5.75% due 7/01/2021 (f) 1,029
6,780 Iowa Finance Authority, Health Care Facilities, Revenue Refunding Bonds (Care
Initiatives Project), 9.25% due 7/01/2025 8,310
Kansas--0.4% 2,420 Sedgwick and Shawnee Counties, Kansas, S/F Revenue Bonds, AMT, Series A-1, 6.95%
due 6/01/2029 (d) 2,451
2,500 Wichita, Kansas, Hospital Facilities Revenue Refunding and Improvement Bonds,
Series III, 6.25% due 11/15/2019 2,803
Louisiana--4.4% 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) 10,408
30,000 Louisiana State, Gas and Fuels Tax Revenue Bonds, Series A, 5% due 5/01/2035 (e) 32,116
1,770 Louisiana State, HFA, Single Family Revenue Refunding Bonds (Home Ownership
Program), Series B-2, AMT, 6.20% due 12/01/2029 (b)(i) 1,835
2,900 New Orleans, Louisiana, GO, Refunding, 6.125% due 10/01/2005 (c)(j) 2,955
13,000 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain Company Project),
7.50% due 7/01/2013 13,443
2,000 Rapides Finance Authority, Louisiana, Environmental Improvement Revenue Bonds
(International Paper Company Project), AMT, Series A, 6.55% due 11/15/2023 2,170
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 8,680
6,045 Maine State Housing Authority, Mortgage Purpose Revenue Bonds, DRIVERS, AMT,
Series 170, 9.101% due 11/15/2028 (n) 6,586
Maryland--0.7% 500 Anne Arundel County, Maryland, Special Obligation Revenue Bonds (Arundel Mills
Project), 7.10% due 7/01/2009 (j) 585
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 1,060
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) 1,218
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 1,064
125 Maryland State Economic Development Corporation Revenue Bonds (Health and Mental
Hygiene Program), Series A, 7.125% due 3/01/2006 127
1,000 Maryland State Energy Financing Administration, Solid Waste Disposal Revenue Bonds,
Limited Obligation (Wheelabrator Water Projects), AMT, 6.45% due 12/01/2016 1,049
2,400 Maryland State Health and Higher Education Facilities Authority (Union Hospital--
Cecil County), Issue, 5% due 7/01/2040 2,467
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 4/01/2010 (j) 1,120
Massachusetts--0.8% 400 Massachusetts Educational Financing Authority, Education Loan Revenue Refunding
Bonds, AMT, Issue E, 5.85% due 7/01/2014 (c) 401
1,000 Massachusetts State Development Finance Agency, Revenue Refunding Bonds (Eastern
Nazarene College), 5.625% due 4/01/2029 1,005
1,605 Massachusetts State, HFA, Housing Revenue Refunding Bonds, Series B, 6.05% due
12/01/2009 (f) 1,639
4,850 Massachusetts State Health and Educational Facilities Authority Revenue Bonds
(Medical Center of Central Massachusetts), CARS, Series B,10.12% due
6/23/2022 (c)(n) 5,675
1,000 Massachusetts State Industrial Finance Agency, Higher Education Revenue Refunding
Bonds (Hampshire College Project), 5.625% due 10/01/2007 (j) 1,076
130 Massachusetts State Water Pollution Abatement Trust, Water Abatement Revenue Bonds,
Series A, 6.375% due 2/01/2015 132
1,600 Montachusett, Massachusetts, Regional Vocational Technical School District, GO,
5.95% due 1/15/2020 (f) 1,794
Michigan--1.4% 7,500 Delta County, Michigan, Economic Development Corporation, Environmental
Improvement Revenue Refunding Bonds (Mead Westvaco--Escanaba), Series A, 6.25%
due 4/15/2012 (j) 8,839
500 Dickinson County, Michigan, Economic Development Corporation, Environmental
Improvement Revenue Refunding Bonds (International Paper Company Project),
Series A, 5.75% due 6/01/2016 553
1,000 Eastern Michigan University Revenue Refunding Bonds, 6% due 6/01/2024 (c) 1,126
3,000 Flint, Michigan, Hospital Building Authority, Revenue Refunding Bonds (Hurley
Medical Center), 6% due 7/01/2020 3,118
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Michigan $ 3,325 Macomb County, Michigan, Hospital Finance Authority, Hospital Revenue Bonds
(concluded) (Mount Clemens General Hospital), Series B, 5.875% due 11/15/2034 $ 3,381
1,500 Michigan State Hospital Finance Authority, Revenue Refunding Bonds (Mercy--
Mount Clemens), Series A, 6% due 5/15/2014 (f) 1,660
1,060 Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds
(Detroit Edison Company), Series AA, 6.40% due 9/01/2025 (f) 1,087
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 1,086
1,000 Eden Prairie, Minnesota, M/F Housing Revenue Bonds (Rolling Hills Project),
Series A, 6.15% due 8/20/2031 (d) 1,095
Minneapolis and Saint Paul, Minnesota, Metropolitan Airports Commission, Airport
Revenue Bonds, AMT, Sub-Series D (e):
470 5.75% due 1/01/2012 521
470 5.75% due 1/01/2014 517
2,060 5.75% due 1/01/2015 2,262
635 Minneapolis, Minnesota, Community Development Agency, Supported Development
Revenue Bonds (Common Bond Fund), AMT, Series 2, 6.20% due 6/01/2017 657
Minneapolis, Minnesota, Health Care System Revenue Bonds (Allina Health System),
Series A:
1,500 5.70% due 11/15/2022 1,625
2,665 5.75% due 11/15/2032 2,875
1,110 Ramsey County, Minnesota, Housing and Redevelopment Authority, M/F Housing Revenue
Bonds (Hanover Townhouses Project), AMT, 6% due 7/01/2031 1,159
1,000 Saint Cloud, Minnesota, Health Care Revenue Refunding Bonds (Saint Cloud Hospital
Obligation Group), Series A, 6.25% due 5/01/2020 (h) 1,134
1,000 Saint Francis, Minnesota, Independent School District No. 015, GO, Series A,
6.35% due 2/01/2013 (h) 1,021
1,500 Waconia, Minnesota, Health Care Facilities Revenue Bonds (Ridgeview Medical Center
Project), Series A, 6.125% due 1/01/2029 (m) 1,657
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 1,878
Missouri--0.6% Fenton, Missouri, Tax Increment Revenue Refunding and Improvement Bonds (Gravois
Bluffs):
610 6.75% due 10/01/2015 616
4,000 7% due 10/01/2021 4,331
1,500 Kansas City, Missouri, IDA, First Mortgage Health Facilities Revenue Bonds
(Bishop Spencer Place), Series A, 6.50% due 1/01/2035 1,576
2,200 Saint Louis, Missouri, Airport Revenue Bonds (Airport Development Program),
Series A, 5.625% due 7/01/2011 (f)(j) 2,449
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 6,346
Nevada--2.1% 5,000 Clark County, Nevada, IDR (Power Company Project), AMT, Series A, 6.70% due
6/01/2022 (e) 5,082
1,550 Clark County, Nevada, Improvement District No. 142 Special Assessment, 6.375%
due 8/01/2023 1,598
Elko, Nevada, GO (Airport Improvement), AMT, Series B (f):
165 6.10% due 10/01/2014 177
245 6.30% due 10/01/2019 264
320 6.75% due 10/01/2024 349
225 7% due 10/01/2029 247
2,970 Henderson, Nevada, Local Improvement Districts, Special Assessment, Series
NO T-14, 5.80% due 3/01/2023 3,062
Las Vegas, Nevada, Local Improvement Bonds, Special Assessment, Special
Improvement District Number 808, Summerlin:
1,760 5.875% due 6/01/2009 1,826
2,025 6.125% due 6/01/2012 2,100
2,265 6.25% due 6/01/2013 2,349
145 Nevada Housing Division, S/F Program, AMT, Senior Series E, 7.05% due 4/01/2027 (b) 147
1,970 Reno, Nevada, Special Assessment District No. 4 (Somerset Parkway), 6.625% due
12/01/2022 2,031
Sparks, Nevada, Redevelopment Agency, Tax Allocation Revenue Refunding Bonds,
Series A (m):
3,110 6% due 1/15/2015 3,433
6,315 6% due 1/15/2023 6,956
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 1,875
New Jersey--3.7% 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 573
3,300 New Jersey EDA, Retirement Community Revenue Bonds (Cedar Crest Village Inc.
Facility), Series A, 7.25% due 11/15/2031 3,574
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
New Jersey $ 2,000 New Jersey EDA, Special Facility Revenue Bonds (Continental Airlines Inc.
(concluded) Project), AMT, 6.25% due 9/15/2029 $ 1,738
3,680 New Jersey EDA, State Lease Revenue Bonds (State Office Buildings Projects),
6% due 6/15/2010 (c)(j) 4,179
New Jersey Health Care Facilities Financing Authority Revenue Bonds:
2,740 (Pascack Valley Hospital Association), 6% due 7/01/2013 2,615
3,130 (South Jersey Hospital), 6% due 7/01/2026 3,411
2,250 New Jersey Health Care Facilities Financing Authority, Revenue Refunding Bonds
(Capital Health System Inc.), Series A, 5.75% due 7/01/2023 2,445
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) 1,160
New Jersey State Turnpike Authority, Turnpike Revenue Refunding Bonds (f):
10,000 DRIVERS, Series 155, 8.659% due 1/01/2018 (a)(n) 12,017
7,025 Series A, 5.75% due 1/01/2010 (j) 7,839
2,975 Series A, 5.75% due 1/01/2018 3,275
9,500 Tobacco Settlement Financing Corporation of New Jersey Revenue Bonds, 7% due
6/01/2041 10,853
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 8,359
160 New Mexico Mortgage Finance Authority, Revenue Refunding Bonds, Mortgage-Backed
Securities, Series F, 7% due 1/01/2026 (i) 171
250 Santa Fe County, New Mexico, Correctional System Revenue Bonds, 6% due 2/01/2027 (h) 317
New York--11.6% 9,500 Metropolitan Transportation Authority, New York, Commuter Facilities, Service
Contract Revenue Refunding Bonds, Series 8, 5.50% due 7/01/2013 (h)(j) 10,923
10,000 Metropolitan Transportation Authority, New York, Transit Facilities Revenue Bonds,
Series A, 5.625% due 7/01/2007 (f)(j) 10,717
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 3,356
2,000 New York City, New York, City, IDA Revenue Bonds (Visy Paper Inc. Project), AMT,
7.95% due 1/01/2028 2,094
4,050 New York City, New York, City, IDA, Special Facility Revenue Bonds (British
Airways Plc Project), AMT, 7.625% due 12/01/2032 4,522
New York City, New York, City Municipal Water Finance Authority, Water and Sewer
System Revenue Bonds, Series B (j):
3,500 5.75% due 6/15/2006 (f) 3,640
10,000 5.875% due 6/15/2026 (h) 10,383
6,500 New York City, New York, City Municipal Water Finance Authority, Water and Sewer
System, Revenue Refunding Bonds, Series B, 5.75% due 6/15/2026 (f) 6,753
3,000 New York City, New York, City Transit Authority, Triborough Metropolitan
Transportation Authority, COP, 5.75% due 1/01/2010 (c)(j) 3,377
6,000 New York City, New York, City Transitional Finance Authority Revenue Bonds,
Future Tax Secured, Series B, 6% due 5/15/2010 (j) 6,870
New York City, New York, City Transitional Finance Authority Revenue Refunding
Bonds, Series C (j):
12,015 5.875% due 5/01/2010 13,669
8,000 Future Tax Secured, 5.875% due 5/01/2010 9,101
New York City, New York, GO, Refunding:
5,870 Series A, 6% due 5/15/2010 (j) 6,715
730 Series A, 6% due 5/15/2021 (k) 821
2,210 Series A, 6.25% due 5/15/2026 (k) 2,505
4,000 Series B, 8.25% due 6/01/2006 (a)(k) 4,204
4,000 Series C, 5.875% due 8/01/2006 (e)(j) 4,190
15,000 Series G, 5.75% due 2/01/2006 (f)(j) 15,503
25 Series H, 6% due 8/01/2007 (j)(k) 27
975 Series H, 6% due 8/01/2017 (k) 1,046
New York City, New York, GO, Series B (f):
2,060 5.875% due 8/01/2010 (j) 2,353
7,940 5.875% due 8/01/2015 9,013
New York State Dormitory Authority Revenue Bonds (Catholic Health Services--
Long Island):
1,175 5% due 7/01/2012 1,258
1,775 5% due 7/01/2013 1,896
1,935 5% due 7/01/2014 2,071
New York State Dormitory Authority, Revenue Refunding Bonds:
3,165 (Concord Nursing Home Inc.), 6.25% due 7/01/2016 3,476
2,500 (Concord Nursing Home Inc.), 6.50% due 7/01/2029 2,759
3,000 (Mount Sinai Health), Series A, 6.50% due 7/01/2016 3,201
3,950 (Mount Sinai Health), Series A, 6.50% due 7/01/2025 4,221
3,000 (State University Educational Facilities), Series A, 7.50% due 5/15/2013 3,803
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
New York $ 1,360 New York State Environmental Facilities Corporation, State Clean Water and
(concluded) Drinking Revenue Bonds (Revolving Funds), Series B, 5.875% due 1/15/2019 $ 1,518
2,285 Oneida County, New York, IDA, Revenue Bonds (Civic Facility--Faxton Hospital),
Series C, 6.625% due 1/01/2015 (m) 2,579
95 Suffolk County, New York, IDA, Civic Facility Revenue Bonds (Special Needs
Facilities Pooled Program), Series D-1, 6% due 7/01/2012 99
705 Westchester County, New York, IDA, Civic Facilities Revenue Bonds (Special
Needs Facilities Pooled Program), Series E-1, 6% due 7/01/2012 733
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 8,623
North Carolina--2.5% 920 Brunswick County, North Carolina, COP, 6% due 6/01/2010 (h)(j) 1,051
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 1,534
North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds:
1,500 Series B, 5.875% due 1/01/2021 (f) 1,591
4,000 Series D, 6.75% due 1/01/2026 (o) 4,490
4,440 North Carolina Eastern Municipal Power Agency, Power System Revenue Refunding
Bonds, Series D, 6.70% due 1/01/2019 (o) 4,980
190 North Carolina HFA, S/F Revenue Bonds, Series W, 6.50% due 3/01/2018 191
2,500 North Carolina Medical Care Commission, Health Care Facilities, First Mortgage
Revenue Bonds (Presbyterian Homes Project), 6.875% due 10/01/2021 2,687
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 2,043
North Carolina Medical Care Commission, Retirement Facilities, First Mortgage
Revenue Bonds:
1,625 (Forest at Duke Project), 6.375% due 9/01/2032 1,744
2,500 (Givens Estates Project), Series A, 6.50% due 7/01/2032 2,681
North Carolina Municipal Power Agency No. 1, Catawba Electric Revenue Refunding
Bonds, Series B:
500 6.375% due 1/01/2013 559
1,080 6.375% due 1/01/2013 (o) 1,211
5,000 6.50% due 1/01/2020 5,605
2,500 6.50% due 1/01/2020 (o) 2,802
1,175 North Carolina State Educational Assistance Authority Revenue Bonds (Guaranteed
Student Loan), AMT, Sub-Lien, Series C, 6.35% due 7/01/2016 1,222
Piedmont, North Carolina, Triad Airport Authority, Airport Revenue Refunding
Bonds, Series A (h):
1,000 6.375% due 7/01/2016 1,128
1,000 6% due 7/01/2024 1,107
Ohio--1.2% 1,000 Cuyahoga County, Ohio, Health Care Facilities Revenue Refunding Bonds (Benjamin
Rose Institute Project), 5.50% due 12/01/2028 1,004
1,200 Huron County, Ohio, GO, Human Services Building, 7.25% due 12/01/2005 (f)(j) 1,247
510 Ohio HFA, Mortgage Revenue Bonds, AMT, Series A-1, 6.15% due 3/01/2029 (d) 523
8,000 Ohio State Air Quality Development Authority, Revenue Refunding Bonds (Dayton
Power & Light Company), Series B, 6.40% due 8/15/2027 (f) 8,022
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 1,569
3,005 Toledo-Lucas County, Ohio, Lodging Tax Revenue Refunding Bonds (Convention
Center Project), 5.70% due 10/01/2015 (f) 3,167
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 277
2,485 Jackson County, Oregon, Central Point School District No. 006, GO, 5.75% due
6/15/2010 (e)(j) 2,791
Oregon State Housing and Community Services Department, Mortgage Revenue Refunding
Bonds (S/F Mortgage Program), Series A:
90 6.40% due 7/01/2018 91
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) 528
1,000 Portland, Oregon, Sewer System Revenue Bonds, Series A, 5.75% due 8/01/2010 (e)(j) 1,126
Portland, Oregon, Urban Renewal and Redevelopment Revenue Refunding Bonds,
Series A (c):
1,000 (Downtown Waterfront), 5.75% due 6/15/2018 1,121
3,190 (South Park Blocks), 5.75% due 6/15/2018 3,577
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Pennsylvania--1.0% $ 2,220 Allegheny County, Pennsylvania, Sanitation Authority, Sewer Revenue Bonds,
5.75% due 12/01/2010 (f)(j) $ 2,518
4,000 Pennsylvania State Higher Educational Facilities Authority Revenue Bonds
(University of Pennsylvania Medical Center Health System), Series A, 6% due
1/15/2031 4,445
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 Healthcare System), Series A, 5.875% due 12/01/2031 5,388
Rhode Island--0.6% 6,815 Rhode Island State Economic Development Corporation, Airport Revenue Bonds,
Series B, 6% due 7/01/2010 (e)(j) 7,796
1,000 Rhode Island State Economic Development Corporation Revenue Bonds (Providence
Place Mall), 6.125% due 7/01/2020 (m) 1,135
South Carolina--1.3% Medical University Hospital Authority, South Carolina, Hospital Facilities
Revenue Refunding Bonds (j):
2,450 6.50% due 8/15/2012 2,942
5,400 Series A, 6.375% due 8/15/2012 6,443
Piedmont Municipal Power Agency, South Carolina, Electric Revenue Refunding
Bonds (e):
1,745 6.75% due 1/01/2019 2,238
1,255 6.75% due 1/01/2019 (a) 1,642
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 5,278
South Dakota--0.3% 3,750 Pierre, South Dakota, School District Number 32-2, GO, 5.75% due 8/01/2010 (h)(j) 4,221
Tennessee--2.0% Chattanooga, Tennessee, Industrial Development Board, Lease Rent Revenue Bonds
(Southside Redevelopment Corporation) (c):
4,485 5.75% due 10/01/2017 4,997
3,740 5.75% due 10/01/2018 4,167
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 1,018
4,950 McMinn County, Tennessee, IDB, Solid Waste Revenue Bonds (Recycling Facility--
Calhoun Newsprint), AMT, 7.40% due 12/01/2022 4,976
5,000 Metropolitan Government of Nashville and Davidson County, Tennessee, GO, 5.875%
due 5/15/2026 5,167
Shelby County, Tennessee, Health, Educational and Housing Facility Board,
Hospital Revenue Refunding Bonds (Methodist Healthcare):
4,380 6.50% due 9/01/2012 (j) 5,247
2,920 6.50% due 9/01/2026 (a) 3,485
Texas--13.4% Austin, Texas, Convention Center Revenue Bonds (Convention Enterprises Inc.):
5,300 First Tier, Series A, 6.60% due 1/01/2021 5,671
2,300 First Tier, Series A, 6.70% due 1/01/2028 2,487
6,740 Trust Certificates, Second Tier, Series B, 6% due 1/01/2023 7,287
10,630 Austin, Texas, Revenue Bonds (Town Lake Community Events Center Venue), 6.20%
due 11/15/2009 (e)(j) 12,008
Bexar County, Texas, Health Facilities Development Corporation, Revenue
Refunding Bonds (Army Retirement Residence Project):
600 6.125% due 7/01/2022 651
1,750 6.30% due 7/01/2032 1,903
2,280 Brazos River Authority, Texas, PCR, Refunding (Texas Utility Company), AMT,
Series A, 7.70% due 4/01/2033 2,711
4,250 Brazos River Authority, Texas, Revenue Refunding Bonds (Reliant Energy Inc.
Project), Series B, 7.75% due 12/01/2018 4,715
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 4,120
885 Central Texas Housing Finance Corporation, S/F Mortgage Revenue Bonds (GNMA
Mortgage Program), AMT, 8.20% due 6/28/2017 (b)(d) 929
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 3,655
18,250 Dallas-Fort Worth, Texas, International Airport Revenue Bonds, DRIVERS, AMT,
Series 201, 9.113% due 11/01/2024 (e)(n) 21,598
1,260 Fort Bend County, Texas, Municipal Utility District No. 23, GO, 6.625% due
9/01/2007 (j)(m) 1,363
Gregg County, Texas, Health Facilities Development Corporation, Hospital
Revenue Bonds (Good Shepherd Medical Center Project) (m):
1,000 6.875% due 10/01/2020 1,156
3,500 6.375% due 10/01/2025 3,965
2,465 Gulf Coast, Texas, Waste Disposal Authority, Revenue Refunding Bonds
(International Paper Company), AMT, Series A, 6.10% due 8/01/2024 2,654
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 2,709
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
State Amount Municipal Bonds Value
Texas $ 3,000 Houston, Texas, Airport System, Special Facilities Revenue Bonds (Continental
(concluded) Airlines Terminal Improvement), AMT, Series B, 6.125% due 7/15/2027 $ 2,489
20,000 Houston, Texas, Combined Utility System, First Lien Revenue Refunding Bonds,
Series A, 5.125% due 5/15/2028 (f) 21,516
2,750 La Joya, Texas, Independent School District, GO, 5% due 2/15/2029 2,908
8,080 Matagorda County, Texas, Navigation District No. 1, Revenue Refunding Bonds
(Reliant Energy Inc.), Series C, 8% due 5/01/2029 8,898
7,350 Matagorda County, Texas, Port of Bay City Authority Revenue Bonds (Hoechst
Celanese Corp. Project), AMT, 6.50% due 5/01/2026 7,526
4,825 Port Corpus Christi, Texas, Individual Development Corporation, Environmental
Facilities Revenue Bonds (Citgo Petroleum Corporation Project), AMT, 8.25% due
11/01/2031 5,172
1,000 Red River, Texas, Education Finance Revenue Bonds (Saint Mark's School--Texas
Project), 6% due 8/15/2019 1,101
1,815 South Plains, Texas, Housing Finance Corporation, S/F Mortgage Revenue Bonds,
AMT, Series A, 7.30% due 9/01/2031 (i) 1,825
Southeast Texas, Housing Finance Corporation Revenue Bonds, AMT (d)(l):
100 Series A, 8% due 11/01/2025 105
225 Series B, 8.50% due 11/01/2025 238
Texas State Public Finance Authority, Building Revenue Bonds (h)(j):
2,100 (General Services Commission Project), Series A, 6% due 2/01/2010 2,363
1,000 (State Preservation Project), Series B, 6% due 8/01/2009 1,115
45,000 Texas State Turnpike Authority, Central Texas Turnpike System Revenue Bonds,
First Tier, Series A, 5.75% due 8/15/2038 (c) 50,609
4,930 Upper Trinity Regional Water District, Texas, Water Revenue Bonds (Regional
Treated Water Supply System), Series A, 6% due 8/01/2020 (e) 5,517
2,305 Webster, Texas, GO, COP, Series A, 6% due 3/01/2021 (h) 2,558
Utah--0.1% 995 Utah State HFA, S/F Mortgage Revenue Refunding Bonds, AMT, Series C, Class III,
5.50% due 1/01/2018 1,037
Virginia--0.6% 2,425 Chesterfield County, Virginia, IDA, PCR, Refunding (Virginia Electric and Power
Company), Series B, 5.875% due 6/01/2017 2,671
Norfolk, Virginia, Redevelopment and Housing Authority, First Mortgage Revenue
Bonds (Retirement Community), Series A:
500 6% due 1/01/2025 512
1,100 6.125% due 1/01/2035 1,121
3,825 Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds, Senior Series
A, 5.50% due 8/15/2028 3,981
Washington--1.9% 2,065 Kitsap County, Washington, GO, 5.875% due 7/01/2010 (c)(j) 2,330
3,000 Port of Seattle, Washington, Special Facilities Revenue Bonds, Series A, 6% due
9/01/2029 (f) 3,339
3,010 Seattle, Washington, Drain and Wastewater Utility Revenue Bonds, 5.75% due
11/01/2022 (f) 3,329
Seattle, Washington, Housing Authority Revenue Bonds:
2,750 (Newholly Project), AMT, 6.25% due 12/01/2035 2,800
4,875 (Replacement Housing Project), 6.125% due 12/01/2032 4,879
7,750 Tacoma, Washington, Electric System Revenue Refunding Bonds, Series A, 5.75%
due 1/01/2017 (h) 8,680
1,625 University of Washington, University Revenue Bonds (Student Facilities Fee),
5.875% due 6/01/2010 (h)(j) 1,840
Wisconsin--0.7% Wisconsin State Health and Educational Facilities Authority Revenue Bonds
(Synergyhealth Inc.):
3,250 6% due 11/15/2023 3,563
3,700 6% due 11/15/2032 4,023
2,725 Wisconsin State, GO, AMT, Series B, 6.20% due 11/01/2026 (f) 2,732
Wyoming--1.2% 8,400 Sweetwater County, Wyoming, PCR, Refunding (Idaho Power Company Project), Series
A, 6.05% due 7/15/2026 (f) 8,824
9,000 Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds (FMC Corporation
Project), AMT, Series A, 7% due 6/01/2024 9,100
Guam--0.0% 115 Guam Housing Corporation, S/F Mortgage Revenue Bonds, AMT, Series A, 5.75% due
9/01/2031 (l) 132
Puerto Rico--3.2% Puerto Rico Commonwealth, Highway and Transportation Authority, Transportation
Revenue Bonds:
8,045 5.75% due 7/01/2022 9,019
2,000 Series B, 5.875% due 7/01/2021 (f) 2,252
Puerto Rico Commonwealth, Infrastructure Financing Authority, Special Tax
and Capital Appreciation Revenue Bonds, Series A:
30,000 4.640%* due 7/01/2032 (e) 8,791
11,785 4.670%* due 7/01/2036 (c) 2,867
5,000 4.772%* due 7/01/2044 (c) 811
14,285 4.769%* due 7/01/2045 (e) 2,208
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Schedule of Investments (concluded) National Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
Puerto Rico $ 785 Puerto Rico Commonwealth, Public Improvement, GO, Refunding, 5.70% due
(concluded) 7/01/2020 (f) $ 868
15,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series NN, 5.125%
due 7/01/2029 15,902
2,000 Puerto Rico Industrial Tourist Educational, Medical and Environmental Control
Facilities Revenue Bonds (Ascension Health), RIB, Series 377, 9.69% due
11/15/2030 (n) 2,516
960 Puerto Rico Public Finance Corporation, Commonwealth Appropriation Revenue
Bonds, Series E, 5.50% due 8/01/2029 1,035
U.S. Virgin Islands--0.6% 8,000 Virgin Islands Government Refinery Facilities, Revenue Refunding Bonds (Hovensa
Coker Project), AMT, 6.50% due 7/01/2021 9,140
Total Municipal Bonds (Cost--$1,308,853)--97.6% 1,407,558
Shares
Held Short-Term Securities
1,923 Merrill Lynch Institutional Tax-Exempt Fund** 1,923
Total Short-Term Securities (Cost--$1,923)--0.1% 1,923
Total Investments (Cost--$1,310,776***)--97.7% 1,409,481
Other Assets Less Liabilities--2.3% 33,320
----------
Net Assets--100.0% $1,442,801
==========
* Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase by the Fund.
** 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 (15,500) $565
*** The cost and unrealized appreciation (depreciation) of investments as
of June 30, 2005, as computed for federal income tax purposes, were
as follows:
(in Thousands)
Aggregate cost $ 1,310,591
=============
Gross unrealized appreciation $ 100,930
Gross unrealized depreciation (2,040)
-------------
Net unrealized appreciaton $ 98,890
=============
(a) Escrowed to maturity.
(b) FHA Insured.
(c) AMBAC Insured.
(d) GNMA Collateralized.
(e) FGIC Insured.
(f) MBIA Insured.
(g) Security may have a maturity of more than one year at time of
issuance, but has variable rate and demand features that qualify it
as a short-term security. The rate disclosed is that currently in effect.
This rate changes periodically based upon prevailing market rates.
(h) FSA Insured.
(i) FNMA/GNMA Collateralized.
(j) Prerefunded.
(k) XL Capital Insured.
(l) FHLMC Collateralized.
(m) Radian Insured.
(n) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(o) ACA Insured.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Statements of Assets and Liabilities
Short Term Insured National
As of June 30, 2005 Portfolio Portfolio Portfolio
Assets
Investments in unaffiliated securities, at value* $ 459,597,444 $ 1,044,885,076 $ 1,407,558,332
Investments in affiliated securities, at value** 3,784 11,016,723 1,923,245
Cash 110,600 62,674 35,616
Receivables:
Interest 6,030,281 14,092,105 23,583,253
Securities sold 6,019,504 18,746,120 27,522,658
Capital shares sold 351,504 175,549 1,240,221
Dividends*** -- 88,196 123
Prepaid expenses and other assets 48,511 775,649 609,200
--------------- --------------- ---------------
Total assets 472,161,628 1,089,842,092 1,462,472,648
--------------- --------------- ---------------
Liabilities
Unrealized depreciation on forward interest rate swaps -- 296,964 --
Payables:
Securities purchased 10,552,464 41,462,917 15,184,605
Dividends to shareholders 229,330 798,925 1,482,928
Capital shares redeemed 1,614,169 1,332,709 2,020,387
Distributor 51,027 136,145 230,894
Investment adviser 106,086 258,508 468,320
Other affiliates 32,189 70,548 150,402
Accrued expenses and other liabilities 55,024 98,483 133,728
--------------- --------------- ---------------
Total liabilities 12,640,289 44,455,199 19,671,264
--------------- --------------- ---------------
Net Assets
Net assets $ 459,521,339 $ 1,045,386,893 $ 1,442,801,384
=============== =============== ===============
Net Assets Consist of
Undistributed investment income--net $ 483,742 $ 1,184,748 $ 872,793
Accumulated realized capital gains (losses)--net (5,081,508) 199,142 (66,280,009)
Unrealized appreciation (depreciation)--net (364,193) 64,808,824 98,704,918
--------------- --------------- ---------------
Total accumulated earnings (losses)--net (4,961,959) 66,192,714 33,297,702
--------------- --------------- ---------------
Class A Common Stock, $.10 par value++ 1,411,312 2,278,290 2,327,413
Class B Common Stock, $.10 par value++++ 385,839 1,142,658 1,666,135
Class C Common Stock, $.10 par value++++++ 933,543 808,804 1,011,939
Class I Common Stock, $.10 par value++++++++ 1,869,859 8,838,183 8,527,853
Paid-in capital in excess of par 459,882,745 966,126,244 1,395,970,342
--------------- --------------- ---------------
Net Assets $ 459,521,339 $ 1,045,386,893 $ 1,442,801,384
=============== =============== ===============
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Statements of Assets and Liabilities (concluded)
Short Term Insured National
As of June 30, 2005 Portfolio Portfolio Portfolio
Net Asset Value
Class A:
Net assets $ 141,172,038 $ 182,215,679 $ 248,230,825
=============== =============== ===============
Shares outstanding 14,113,120 22,782,900 23,274,126
=============== =============== ===============
Net asset value and redemption price per share $ 10.00 $ 8.00 $ 10.67
=============== =============== ===============
Class B:
Net assets $ 38,564,865 $ 91,355,062 $ 177,552,509
=============== =============== ===============
Shares outstanding 3,858,391 11,426,576 16,661,350
=============== =============== ===============
Net asset value and redemption price per share $ 10.00 $ 7.99 $ 10.66
=============== =============== ===============
Class C:
Net assets $ 92,907,491 $ 64,682,117 $ 107,893,027
=============== =============== ===============
Shares outstanding 9,335,430 8,088,036 10,119,385
=============== =============== ===============
Net asset value and redemption price per share $ 9.95 $ 8.00 $ 10.66
=============== =============== ===============
Class I:
Net assets $ 186,876,945 $ 707,134,035 $ 909,125,023
=============== =============== ===============
Shares outstanding 18,698,587 88,381,830 85,278,526
=============== =============== ===============
Net asset value and redemption price per share $ 9.99 $ 8.00 $ 10.66
=============== =============== ===============
* Identified cost $ 459,961,637 $ 979,779,288 $ 1,308,853,414
=============== =============== ===============
** Identified cost for affiliated securities $ 3,784 $ 11,016,723 $ 1,923,245
=============== =============== ===============
*** Dividends from affiliates -- $ 26 $ 123
=============== =============== ===============
++ Authorized shares--Class A 150,000,000 500,000,000 375,000,000
=============== =============== ===============
++++ Authorized shares--Class B 150,000,000 375,000,000 375,000,000
=============== =============== ===============
++++++ Authorized shares--Class C 150,000,000 375,000,000 375,000,000
=============== =============== ===============
++++++++ Authorized shares--Class I 150,000,000 500,000,000 375,000,000
=============== =============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Statements of Operations
Short Term Insured National
For the Year Ended June 30, 2005 Portfolio Portfolio Portfolio
Investment Income
Interest $ 12,951,469 $ 52,387,620 $ 79,360,121
Dividends* 434,603 1,640,437 565,221
Other -- 88,042 --
--------------- --------------- ---------------
Total income 13,386,072 54,116,099 79,925,342
--------------- --------------- ---------------
Expenses
Investment advisory fees 1,948,338 3,912,421 6,798,398
Account maintenance and distribution fees--Class B 179,363 773,990 1,478,014
Account maintenance and distribution fees--Class C 423,459 508,491 731,864
Account maintenance fees--Class A 194,346 453,808 562,010
Accounting services 194,880 321,112 411,321
Transfer agent fees--Class I 65,010 267,309 595,334
Transfer agent fees--Class A 58,960 66,825 146,727
Transfer agent fees--Class B 19,542 46,163 145,788
Registration fees 66,513 56,253 68,715
Professional fees 44,921 55,214 59,661
Custodian fees 38,003 57,606 80,178
Printing and shareholder reports 35,757 58,521 77,539
Transfer agent fees--Class C 44,086 28,339 67,966
Pricing services 16,679 21,975 54,188
Directors' fees and expenses 13,118 20,500 26,383
Other 44,023 55,241 --
--------------- --------------- ---------------
Total expenses before waiver 3,386,998 6,703,768 11,304,086
Waiver of expenses (49,706) (48,267) (69,530)
--------------- --------------- ---------------
Total expenses after waiver 3,337,292 6,655,501 11,234,556
--------------- --------------- ---------------
Investment income--net 10,048,780 47,460,598 68,690,786
--------------- --------------- ---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain (loss) on:
Investments--net (3,447,006) 16,217,910 11,191,578
Futures contracts and forward interest rate swaps--net -- (162,646) --
--------------- --------------- ---------------
Total realized and unrealized gain (loss)--net (3,447,006) 16,055,264 11,191,578
--------------- --------------- ---------------
Change in unrealized appreciation/depreciation on:
Investments--net 505,798 25,702,681 39,336,379
Forward interest rate swaps--net -- (15,099) --
--------------- --------------- ---------------
Total unrealized appreciation--net 505,798 25,687,582 39,336,379
--------------- --------------- ---------------
Total realized and unrealized gain (loss)--net (2,941,208) 41,742,846 50,527,957
--------------- --------------- ---------------
Net Increase in Net Assets Resulting from Operations $ 7,107,572 $ 89,203,444 $ 119,218,743
=============== =============== ===============
* Dividends from affiliates $ 434,603 $ 347,170 $ 565,221
=============== =============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Statements of Changes in Net Assets Short Term Portfolio
For the Year Ended
June 30,
Increase (Decrease) in Net Assets: 2005 2004
Operations
Investment income--net $ 10,048,780 $ 12,246,871
Realized loss--net (3,447,006) (1,056,145)
Change in unrealized depreciation--net 505,798 (8,070,447)
--------------- ---------------
Net increase in net assets resulting from operations 7,107,572 3,120,279
--------------- ---------------
Dividends to Shareholders
Investment income--net:
Class A (3,411,719) (4,538,777)
Class B (770,673) (1,050,664)
Class C (1,822,838) (2,160,826)
Class I (4,042,560) (4,488,624)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (10,047,790) (12,238,891)
--------------- ---------------
Capital Share Transactions
Net decrease in net assets derived from capital share transactions (233,513,320) (14,166,003)
--------------- ---------------
Net Assets
Total decrease in net assets (236,453,538) (23,284,615)
Beginning of year 695,974,877 719,259,492
--------------- ---------------
End of year* $ 459,521,339 $ 695,974,877
=============== ===============
* Undistributed investment income--net $ 483,742 $ 482,491
=============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Statements of Changes in Net Assets (continued) Insured Portfolio
For the Year Ended
June 30,
Increase (Decrease) in Net Assets: 2005 2004
Operations
Investment income--net $ 47,460,598 $ 57,675,729
Realized gain--net 16,055,264 5,207,367
Change in unrealized appreciation--net 25,687,582 (62,104,593)
--------------- ---------------
Net increase in net assets resulting from operations 89,203,444 778,503
--------------- ---------------
Dividends to Shareholders
Investment income--net:
Class A (7,853,231) (8,990,802)
Class B (3,953,506) (5,785,538)
Class C (2,393,785) (2,766,852)
Class I (33,236,480) (40,101,428)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (47,437,002) (57,644,620)
--------------- ---------------
Capital Share Transactions
Net decrease in net assets derived from capital share transactions (86,014,174) (123,327,160)
--------------- ---------------
Net Assets
Total decrease in net assets (44,247,732) (180,193,277)
Beginning of year 1,089,634,625 1,269,827,902
--------------- ---------------
End of year* $ 1,045,386,893 $ 1,089,634,625
=============== ===============
* Undistributed investment income--net $ 1,184,748 $ 1,161,152
=============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Statements of Changes in Net Assets (concluded) National Portfolio
For the Year Ended
June 30,
Increase (Decrease) in Net Assets: 2005 2004
Operations
Investment income--net $ 68,690,786 $ 61,264,642
Realized gain (loss)--net 11,191,578 (1,437,730)
Change in unrealized appreciation--net 39,336,379 (32,654,407)
--------------- ---------------
Net increase in net assets resulting from operations 119,218,743 27,172,505
--------------- ---------------
Dividends to Shareholders
Investment income--net:
Class A (10,680,106) (10,513,482)
Class B (8,386,163) (12,045,994)
Class C (3,829,101) (3,332,550)
Class I (45,655,416) (35,485,746)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (68,550,786) (61,377,772)
--------------- ---------------
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions (15,324,652) 217,980,200
--------------- ---------------
Net Assets
Total increase in net assets 35,343,305 183,774,933
Beginning of year 1,407,458,079 1,223,683,146
--------------- ---------------
End of year* $ 1,442,801,384 $ 1,407,458,079
=============== ===============
* Undistributed investment income--net $ 872,793 $ 806,143
=============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Financial Highlights Short Term Portfolio
Class A
The following per share data and ratios have been derived For the Year Ended June 30,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of year $ 10.06 $ 10.18 $ 10.14 $ 10.06 $ 9.86
---------- ---------- ---------- ---------- ----------
Investment income--net .18++ .17++ .24++ .32 .38
Realized and unrealized gain (loss)--net (.06) (.12) .04 .08 .20
---------- ---------- ---------- ---------- ----------
Total from investment operations .12 .05 .28 .40 .58
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.18) (.17) (.24) (.32) (.38)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.00 $ 10.06 $ 10.18 $ 10.14 $ 10.06
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 1.20% .50% 2.77% 3.99% 5.96%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver .53% .52% .52% .56% .54%
========== ========== ========== ========== ==========
Expenses .54% .53% .53% .56% .54%
========== ========== ========== ========== ==========
Investment income--net 1.76% 1.68% 2.31% 3.13% 3.80%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 141,172 $ 244,741 $ 248,454 $ 140,744 $ 42,619
========== ========== ========== ========== ==========
Portfolio turnover 87.42% 69.08% 44.61% 74.74% 51.94%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Financial Highlights (continued) Short Term Portfolio
Class B
The following per share data and ratios have been derived For the Year Ended June 30,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of year $ 10.05 $ 10.17 $ 10.13 $ 10.06 $ 9.86
---------- ---------- ---------- ---------- ----------
Investment income--net .15++ .14++ .21++ .29 .35
Realized and unrealized gain (loss)--net (.05) (.12) .04 .07 .20
---------- ---------- ---------- ---------- ----------
Total from investment operations .10 .02 .25 .36 .55
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.15) (.14) (.21) (.29) (.35)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.00 $ 10.05 $ 10.17 $ 10.13 $ 10.06
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 1.04% .24% 2.51% 3.62% 5.69%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver .79% .77% .78% .82% .80%
========== ========== ========== ========== ==========
Expenses .80% .78% .79% .82% .80%
========== ========== ========== ========== ==========
Investment income--net 1.50% 1.43% 2.10% 2.87% 3.55%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 38,565 $ 63,135 $ 83,886 $ 81,967 $ 31,480
========== ========== ========== ========== ==========
Portfolio turnover 87.42% 69.08% 44.61% 74.74% 51.94%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Financial Highlights (continued) Short Term Portfolio
Class C
The following per share data and ratios have been derived For the Year Ended June 30,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of year $ 10.01 $ 10.13 $ 10.09 $ 10.01 $ 9.82
---------- ---------- ---------- ---------- ----------
Investment income--net .15++ .14++ .19++ .29 .35
Realized and unrealized gain (loss)--net (.06) (.12) .06 .08 .19
---------- ---------- ---------- ---------- ----------
Total from investment operations .09 .02 .25 .37 .54
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.15) (.14) (.21) (.29) (.35)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 9.95 $ 10.01 $ 10.13 $ 10.09 $ 10.01
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share .94% .23% 2.52% 3.72% 5.59%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver .79% .77% .78% .82% .81%
========== ========== ========== ========== ==========
Expenses .80% .78% .79% .82% .81%
========== ========== ========== ========== ==========
Investment income--net 1.51% 1.42% 1.92% 2.91% 3.53%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 92,907 $ 144,656 $ 135,782 $ 1,596 $ 602
========== ========== ========== ========== ==========
Portfolio turnover 87.42% 69.08% 44.61% 74.74% 51.94%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Financial Highlights (continued) Short Term Portfolio
Class I
The following per share data and ratios have been derived For the Year Ended June 30,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of year $ 10.05 $ 10.17 $ 10.13 $ 10.05 $ 9.85
---------- ---------- ---------- ---------- ----------
Investment income--net .19++ .18++ .27++ .34 .39
Realized and unrealized gain (loss)--net (.06) (.12) .02 .08 .20
---------- ---------- ---------- ---------- ----------
Total from investment operations .13 .06 .29 .42 .59
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.19) (.18) (.25) (.34) (.39)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 9.99 $ 10.05 $ 10.17 $ 10.13 $ 10.05
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 1.30% .59% 2.87% 4.10% 6.07%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver .43% .42% .42% .46% .44%
========== ========== ========== ========== ==========
Expenses .44% .43% .43% .46% .44%
========== ========== ========== ========== ==========
Investment income--net 1.88% 1.78% 2.44% 3.30% 3.91%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 186,877 $ 243,443 $ 251,137 $ 204,936 $ 191,481
========== ========== ========== ========== ==========
Portfolio turnover 87.42% 69.08% 44.61% 74.74% 51.94%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Financial Highlights (continued) Insured Portfolio
Class A
The following per share data and ratios have been derived For the Year Ended June 30,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of year $ 7.70 $ 8.07 $ 7.79 $ 7.69 $ 7.36
---------- ---------- ---------- ---------- ----------
Investment income--net .34++++ .38++++ .39++++ .39 .37
Realized and unrealized gain (loss)--net .30 (.37) .28 .10 .33
---------- ---------- ---------- ---------- ----------
Total from investment operations .64 .01 .67 .49 .70
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.34) (.38) (.39) (.39) (.37)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.34) (.38) (.39) (.39) (.37)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 8.00 $ 7.70 $ 8.07 $ 7.79 $ 7.69
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 8.47% .10% 8.77% 6.63% 9.74%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver .71% .71% .71% .72% .70%
========== ========== ========== ========== ==========
Expenses .71% .71% .71% .72% .70%
========== ========== ========== ========== ==========
Investment income--net 4.33% 4.79% 4.88% 5.10% 4.94%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 182,216 $ 183,007 $ 187,805 $ 161,110 $ 145,688
========== ========== ========== ========== ==========
Portfolio turnover 55.00% 49.27% 38.17% 32.78% 64.39%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
++++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Financial Highlights (continued) Insured Portfolio
Class B
The following per share data and ratios have been derived For the Year Ended June 30,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of year $ 7.69 $ 8.07 $ 7.79 $ 7.68 $ 7.36
---------- ---------- ---------- ---------- ----------
Investment income--net .30++++ .34++++ .35++++ .36 .34
Realized and unrealized gain (loss)--net .30 (.38) .28 .11 .32
---------- ---------- ---------- ---------- ----------
Total from investment operations .60 (.04) .63 .47 .66
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.30) (.34) (.35) (.36) (.34)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.30) (.34) (.35) (.36) (.34)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 7.99 $ 7.69 $ 8.07 $ 7.79 $ 7.68
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 7.93% (.53%) 8.21% 6.23% 9.04%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver 1.21% 1.21% 1.22% 1.23% 1.21%
========== ========== ========== ========== ==========
Expenses 1.22% 1.22% 1.22% 1.23% 1.21%
========== ========== ========== ========== ==========
Investment income--net 3.83% 4.29% 4.38% 4.58% 4.43%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 91,355 $ 111,524 $ 160,177 $ 182,241 $ 223,710
========== ========== ========== ========== ==========
Portfolio turnover 55.00% 49.27% 38.17% 32.78% 64.39%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
++++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Financial Highlights (continued) Insured Portfolio
Class C
The following per share data and ratios have been derived For the Year Ended June 30,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of year $ 7.69 $ 8.07 $ 7.79 $ 7.68 $ 7.36
---------- ---------- ---------- ---------- ----------
Investment income--net .30++++ .33++++ .34++++ .35 .33
Realized and unrealized gain (loss)--net .31 (.38) .28 .11 .32
---------- ---------- ---------- ---------- ----------
Total from investment operations .61 (.05) .62 .46 .65
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.30) (.33) (.34) (.35) (.33)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.30) (.33) (.34) (.35) (.33)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 8.00 $ 7.69 $ 8.07 $ 7.79 $ 7.68
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 8.01% (.58%) 8.16% 6.18% 8.99%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver 1.26% 1.26% 1.27% 1.28% 1.26%
========== ========== ========== ========== ==========
Expenses 1.27% 1.27% 1.27% 1.28% 1.26%
========== ========== ========== ========== ==========
Investment income--net 3.77% 4.23% 4.31% 4.56% 4.38%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 64,682 $ 61,794 $ 66,089 $ 34,541 $ 14,392
========== ========== ========== ========== ==========
Portfolio turnover 55.00% 49.27% 38.17% 32.78% 64.39%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
++++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Financial Highlights (continued) Insured Portfolio
Class I
The following per share data and ratios have been derived For the Year Ended June 30,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of year $ 7.70 $ 8.07 $ 7.80 $ 7.69 $ 7.36
---------- ---------- ---------- ---------- ----------
Investment income--net .36++++ .40++++ .41++++ .41 .39
Realized and unrealized gain (loss)--net .30 (.37) .27 .11 .33
---------- ---------- ---------- ---------- ----------
Total from investment operations .66 .03 .68 .52 .72
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.36) (.40) (.41) (.41) (.39)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.36) (.40) (.41) (.41) (.39)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 8.00 $ 7.70 $ 8.07 $ 7.80 $ 7.69
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 8.74% .35% 8.88% 7.03% 10.01%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver .46% .46% .46% .47% .45%
========== ========== ========== ========== ==========
Expenses .46% .46% .46% .47% .45%
========== ========== ========== ========== ==========
Investment income--net 4.58% 5.04% 5.13% 5.35% 5.19%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 707,134 $ 733,310 $ 855,757 $ 878,018 $ 920,597
========== ========== ========== ========== ==========
Portfolio turnover 55.00% 49.27% 38.17% 32.78% 64.39%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
++++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Financial Highlights (continued) National Portfolio
Class A
The following per share data and ratios have been derived For the Year Ended June 30,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of year $ 10.29 $ 10.54 $ 10.27 $ 10.15 $ 9.71
---------- ---------- ---------- ---------- ----------
Investment income--net .50+++ .52+++ .53+++ .53 .52
Realized and unrealized gain (loss)--net .38 (.25) .27 .12 .44
---------- ---------- ---------- ---------- ----------
Total from investment operations .88 .27 .80 .65 .96
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.50) (.52) (.53) (.53) (.52)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.50) (.52) (.53) (.53) (.52)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.67 $ 10.29 $ 10.54 $ 10.27 $ 10.15
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 8.73% 2.62% 7.98% 6.72% 10.04%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver .84% .85% .84% .87% .83%
========== ========== ========== ========== ==========
Expenses .85% .85% .84% .87% .83%
========== ========== ========== ========== ==========
Investment income--net 4.76% 4.97% 5.10% 5.30% 5.16%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 248,231 $ 207,376 $ 200,108 $ 137,225 $ 124,082
========== ========== ========== ========== ==========
Portfolio turnover 35.28% 22.46% 37.75% 35.75% 80.88%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Financial Highlights (continued) National Portfolio
Class B
The following per share data and ratios have been derived For the Year Ended June 30,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of year $ 10.28 $ 10.53 $ 10.26 $ 10.14 $ 9.70
---------- ---------- ---------- ---------- ----------
Investment income--net .45+++ .47+++ .48+++ .53 .46
Realized and unrealized gain (loss)--net .38 (.26) .27 .12 .44
---------- ---------- ---------- ---------- ----------
Total from investment operations .83 .21 .75 .65 .90
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.45) (.46) (.48) (.53) (.46)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.45) (.46) (.48) (.53) (.46)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.66 $ 10.28 $ 10.53 $ 10.26 $ 10.14
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 8.18% 2.10% 7.43% 6.18% 9.49%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver 1.35% 1.35% 1.34% 1.38% 1.34%
========== ========== ========== ========== ==========
Expenses 1.36% 1.36% 1.35% 1.38% 1.34%
========== ========== ========== ========== ==========
Investment income--net 4.27% 4.47% 4.59% 4.80% 4.67%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 177,553 $ 217,814 $ 321,477 $ 295,827 $ 227,592
========== ========== ========== ========== ==========
Portfolio turnover 35.28% 22.46% 37.75% 35.75% 80.88%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Financial Highlights (continued) National Portfolio
Class C
The following per share data and ratios have been derived For the Year Ended June 30,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of year $ 10.29 $ 10.54 $ 10.26 $ 10.14 $ 9.71
---------- ---------- ---------- ---------- ----------
Investment income--net .44+++ .46+++ .47+++ .53 .46
Realized and unrealized gain (loss)--net .37 (.25) .28 .12 .43
---------- ---------- ---------- ---------- ----------
Total from investment operations .81 .21 .75 .65 .89
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.44) (.46) (.47) (.53) (.46)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.44) (.46) (.47) (.53) (.46)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.66 $ 10.29 $ 10.54 $ 10.26 $ 10.14
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 8.02% 2.05% 7.48% 6.13% 9.33%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver 1.40% 1.40% 1.39% 1.43% 1.39%
========== ========== ========== ========== ==========
Expenses 1.41% 1.41% 1.40% 1.43% 1.39%
========== ========== ========== ========== ==========
Investment income--net 4.20% 4.42% 4.54% 4.76% 4.61%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 107,893 $ 74,849 $ 77,906 $ 52,822 $ 31,880
========== ========== ========== ========== ==========
Portfolio turnover 35.28% 22.46% 37.75% 35.75% 80.88%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Financial Highlights (concluded) National Portfolio
Class I
The following per share data and ratios have been derived For the Year Ended June 30,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of year $ 10.29 $ 10.54 $ 10.26 $ 10.14 $ 9.70
---------- ---------- ---------- ---------- ----------
Investment income--net .53+++ .55+++ .56+++ .62 .54
Realized and unrealized gain (loss)--net .37 (.25) .28 .12 .44
---------- ---------- ---------- ---------- ----------
Total from investment operations .90 .30 .84 .74 .98
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.53) (.55) (.56) (.62) (.54)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.53) (.55) (.56) (.62) (.54)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.66 $ 10.29 $ 10.54 $ 10.26 $ 10.14
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 8.89% 2.88% 8.34% 6.98% 10.32%
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, net of waiver .59% .60% .59% .62% .58%
========== ========== ========== ========== ==========
Expenses .60% .60% .59% .62% .58%
========== ========== ========== ========== ==========
Investment income--net 5.02% 5.23% 5.35% 5.55% 5.42%
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of year (in thousands) $ 909,125 $ 907,419 $ 624,192 $ 626,935 $ 653,685
========== ========== ========== ========== ==========
Portfolio turnover 35.28% 22.46% 37.75% 35.75% 80.88%
========== ========== ========== ========== ==========
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Notes to Financial Statements
1. Significant Accounting Policies:
Merrill Lynch Municipal Bond Fund, Inc. ("the Fund") (consisting of Merrill
Lynch Short Term Portfolio (formerly Merrill Lynch Limited Portfolio), Merrill
Lynch Insured Portfolio and Merrill Lynch National Portfolio) is registered
under the Investment Company Act of 1940, as amended, as a diversified, open-
end management investment company. The Fund's financial statements are
prepared in conformity with U.S. generally accepted accounting principles,
which may require the use of management accruals and estimates. Actual results
may differ from these estimates. The Fund's Portfolios offer 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 that 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 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--Municipal bonds are traded primarily in the over-
the-counter ("OTC") markets and are valued at the last available bid price in
the OTC market or on the basis of values as obtained by a pricing service.
Pricing services use valuation matrixes that incorporate both dealer-supplied
valuations and valuation models. The procedures of the pricing service and its
valuations are reviewed by the officers of the 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 OTC 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. Losses may arise due to changes in the value of the
contract or if the counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell financial futures
contracts and options on such futures contracts. Futures contracts are
contracts for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the Portfolios
deposit and maintain as collateral such initial margin as required by the
exchange on which the transaction is effected. Pursuant to the contract, the
Portfolios agree to receive from or pay to the broker an amount of cash equal
to the daily fluctuation in value of the contract. Such receipts or payments
are known as variation margin and are recorded by the Portfolios as unrealized
gains or losses. When the contract is closed, the Portfolios record a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
* Forward interest rate swaps--The Fund may enter into forward interest rate
swaps. In a forward interest rate swap, the Fund and the counterparty agree to
pay or receive interest on a specified notional contract amount, commencing on
a specified future effective date, unless terminated earlier. The value of the
agreement is determined by quoted fair values received daily by the Fund from
the counterparty. When the agreement is closed, the Fund records a realized
gain or loss in an amount equal to the value of the agreement.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Notes to Financial Statements (continued)
(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
expense as the related shares are issued.
(f) Dividends and distributions--Dividends from net investment income are
declared daily and paid monthly. Distributions of capital gains are recorded
on the ex-dividend dates.
(g) Expenses--Certain expenses have been allocated to the individual
Portfolios in the Fund on a pro rata basis based upon the respective aggregate
net asset value of each Portfolio included in the Fund.
(h) Insurance--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.
(i) Reclassification--U.S. generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, during the
current year, with respect to the Short Term Portfolio, $261 has been
reclassified between paid-in capital in excess of par and undistributed net
investment income as a result of a permanent difference attributable to non-
deductible expenses.
In addition, with respect to the National Portfolio, $71,687 has been
reclassified between undistributed net investment income and paid-in capital
in excess of par and $1,663 has been reclassified between undistributed net
investment income and accumulated net realized capital gains as a result of
permanent differences attributable to the payment of reorganization expenses
and amortization methods for premiums and discounts on fixed income
securities. These reclassifications have no effect on net assets or net asset
values per share.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services,
Inc. ("PSI"), an indirect, wholly-owned subsidiary of Merrill Lynch & Co.,
Inc. ("ML & Co."), which is the limited partner. The Fund has also entered
into a Distribution Agreement and Distribution Plans with FAM Distributors,
Inc. ("FAMD" or the "Distributor"), which is a wholly-owned subsidiary of
Merrill Lynch Group, Inc.
FAM is responsible for the management of the Fund's portfolios and provides
the necessary personnel, facilities, equipment and certain other services
necessary to the operation of the Fund. For such services, FAM receives at the
end of each month a fee with respect to each Portfolio at the annual rates set
forth below which are based upon the average daily value of the Fund's net
assets.
Rate of Advisory Fee
Aggregate of Average Daily Short
Net Assets of the Three Term 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 waive 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 year
ended June 30, 2005, FAM waived Short Term Portfolio, Insured Portfolio and
National Portfolio in the amounts of $49,706, $48,267 and $69,530,
respectively.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
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
Short Term .10% .15% .15%
Insured .25% .25% .25%
National .25% .25% .25%
Distribution Fees
Portfolio Class A Class B Class C
Short Term -- .20% .20%
Insured -- .50% .55%
National -- .50% .55%
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S"), an affiliate of FAM, also provides
account maintenance and distribution services to the Fund. The ongoing account
maintenance fee compensates the Distributor and MLPF&S for providing account
maintenance services to Class A, Class B and Class C shareholders. The ongoing
distribution fee compensates the Distributor and MLPF&S for providing
shareholder and distribution-related services to Class B and Class C
shareholders.
For the year ended June 30, 2005, 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
Short Term $ 1,379 $ 221 $ 13,706 $ 1,436
Insured $ 7,601 $ 7,751 $ 72,966 $ 44,421
National $ 21,441 $ 18,289 $ 178,552 $ 77,861
For the year ended June 30, 2005, MLPF&S received contingent deferred sales
charges of $314,970 relating to transactions in Class B Shares, amounting to
$53,013, $89,195 and $172,762 in the Short Term, Insured and National
Portfolios, respectively, and $47,556 relating to transactions in Class C
Shares, amounting to $24,829, $3,140 and $19,587 in the Short Term, Insured
and National Portfolios, respectively. Furthermore, MLPF&S received deferred
sales charges of $26 relating to transactions subject to front-end sales
charge waivers in Class A Shares for the Short Term Portfolio.
In addition, MLPF&S received $1,000 in commissions on the execution of
portfolio transactions in the Insured Portfolio for the year ended June 30,
2005.
For the year ended June 30, 2005, the Fund reimbursed FAM $14,851, $24,126 and
$30,232 in the Short Term, 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
year ended June 30, 2005 were as follows:
Purchases Sales
Short Term Portfolio $422,756,347 $474,079,321
Insured Portfolio $581,147,883 $659,868,484
National Portfolio $497,476,736 $483,540,681
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share transactions
for the years ended June 30, 2005 and June 30, 2004 were $(233,513,320) and
$(14,166,003), respectively, for the Short Term Portfolio; $(86,014,174) and
$(123,327,160), respectively, for the Insured Portfolio; and $(15,324,652) and
$217,980,200, respectively, for the National Portfolio.
Transactions in capital shares for each class were as follows:
Short Term Portfolio
Class A Shares for the Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 3,374,057 $ 33,962,460
Automatic conversion of shares 146,594 1,473,218
Shares issued to shareholders in
reinvestment of dividends 184,448 1,850,964
--------------- ---------------
Total issued 3,705,099 37,286,642
Shares redeemed (13,930,419) (139,907,342)
--------------- ---------------
Net decrease (10,225,320) $ (102,620,700)
=============== ===============
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Notes to Financial Statements (continued)
Short Term 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)
=============== ===============
Short Term Portfolio
Class B Shares for the Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 269,378 $ 2,707,532
Shares issued to shareholders in
reinvestment of dividends 48,450 485,847
--------------- ---------------
Total issued 317,828 3,193,379
--------------- ---------------
Automatic conversion of shares (146,687) (1,473,218)
Shares redeemed (2,595,792) (26,034,176)
--------------- ---------------
Total redeemed (2,742,479) (27,507,394)
--------------- ---------------
Net decrease (2,424,651) $ (24,314,015)
=============== ===============
Short Term 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)
=============== ===============
Short Term Portfolio
Class C Shares for the Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 1,680,127 $ 16,793,553
Shares issued to shareholders in
reinvestment of dividends 117,775 1,175,754
--------------- ---------------
Total issued 1,797,902 17,969,307
Shares redeemed (6,920,737) (69,093,002)
--------------- ---------------
Net decrease (5,122,835) $ (51,123,695)
=============== ===============
Short Term 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
=============== ===============
Short Term Portfolio
Class I Shares for the Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 2,389,803 $ 23,968,954
Shares issued to shareholders in
reinvestment of dividends 246,614 2,472,327
--------------- ---------------
Total issued 2,636,417 26,441,281
Shares redeemed (8,166,900) (81,896,191)
--------------- ---------------
Net decrease (5,530,483) $ (55,454,910)
=============== ===============
Short Term 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 Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 1,066,208 $ 8,437,549
Automatic conversion of shares 1,094,647 8,649,488
Shares issued to shareholders in
reinvestment of dividends 495,949 3,921,138
--------------- ---------------
Total issued 2,656,804 21,008,175
Shares redeemed (3,656,199) (28,860,424)
--------------- ---------------
Net decrease (999,395) $ (7,852,249)
=============== ===============
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Notes to Financial Statements (continued)
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 Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 283,542 $ 2,237,673
Shares issued to shareholders in
reinvestment of dividends 218,648 1,727,424
--------------- ---------------
Total issued 502,190 3,965,097
--------------- ---------------
Automatic conversion of shares (1,094,676) (8,649,488)
Shares redeemed (2,479,128) (19,581,853)
--------------- ---------------
Total redeemed (3,573,804) (28,231,341)
--------------- ---------------
Net decrease (3,071,614) $ (24,266,244)
=============== ===============
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 Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 1,281,216 $ 10,135,537
Shares issued to shareholders in
reinvestment of dividends 162,591 1,285,374
--------------- ---------------
Total issued 1,443,807 11,420,911
Shares redeemed (1,386,798) (10,955,958)
--------------- ---------------
Net increase 57,009 $ 464,953
=============== ===============
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 Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 1,160,854 $ 9,184,822
Shares issued to shareholders in
reinvestment of dividends 1,785,849 14,124,090
--------------- ---------------
Total issued 2,946,703 23,308,912
Shares redeemed (9,826,814) (77,669,546)
--------------- ---------------
Net decrease (6,880,111) $ (54,360,634)
=============== ===============
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 Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 5,528,841 $ 58,067,896
Automatic conversion of shares 1,765,411 18,581,047
Shares issued to shareholders in
reinvestment of dividends 477,278 5,031,328
--------------- ---------------
Total issued 7,771,530 81,680,271
Shares redeemed (4,647,158) (48,641,136)
--------------- ---------------
Net increase 3,124,372 $ 33,039,135
=============== ===============
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Notes to Financial Statements (continued)
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 Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 628,757 $ 6,605,915
Shares issued to shareholders in
reinvestment of dividends 330,341 3,477,776
--------------- ---------------
Total issued 959,098 10,083,691
--------------- ---------------
Automatic conversion of shares (1,766,807) (18,581,047)
Shares redeemed (3,712,735) (39,022,894)
--------------- ---------------
Total redeemed (5,479,542) (57,603,941)
--------------- ---------------
Net decrease (4,520,444) $ (47,520,250)
=============== ===============
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 Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 4,140,886 $ 43,609,428
Shares issued to shareholders in
reinvestment of dividends 217,764 2,295,644
--------------- ---------------
Total issued 4,358,650 45,905,072
Shares redeemed (1,514,374) (15,959,537)
--------------- ---------------
Net increase 2,844,276 $ 29,945,535
=============== ===============
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 Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 2,524,187 $ 26,563,911
Shares issued to shareholders in
reinvestment of dividends 2,816,177 29,669,505
--------------- ---------------
Total issued 5,340,364 56,233,416
Shares redeemed (8,272,425) (87,022,488)
--------------- ---------------
Net decrease (2,932,061) $ (30,789,072)
=============== ===============
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, which expires November 2005. 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 year ended June 30, 2005.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Notes to Financial Statements (concluded)
6. Distributions to Shareholders:
The tax character of distributions paid by the Short Term Portfolio during the
fiscal years ended June 30, 2005 and June 30, 2004 was as follows:
6/30/2005 6/30/2004
Distributions paid from:
Tax-exempt income $ 10,047,790 $ 12,238,891
--------------- ---------------
Total distributions $ 10,047,790 $ 12,238,891
=============== ===============
The tax character of distributions paid by the Insured Portfolio during the
fiscal years ended June 30, 2005 and June 30, 2004 was as follows:
6/30/2005 6/30/2004
Distributions paid from:
Tax-exempt income $ 47,437,002 $ 57,644,620
--------------- ---------------
Total distributions $ 47,437,002 $ 57,644,620
=============== ===============
The tax character of distributions paid by the National Portfolio during the
fiscal years ended June 30, 2005 and June 30, 2004 was as follows:
6/30/2005 6/30/2004
Distributions paid from:
Tax-exempt income $ 68,550,786 $ 61,377,772
--------------- ---------------
Total distributions $ 68,550,786 $ 61,377,772
=============== ===============
As of June 30, 2005, the components of accumulated earnings (losses) on a
tax basis were as follows:
Short Term Portfolio
Undistributed tax-exempt income--net $ 483,742
Undistributed long-term capital gains--net --
---------------
Total undistributed earnings--net 483,742
Capital loss carryforward (1,978,680)*
Unrealized losses--net (3,467,021)**
---------------
Total accumulated losses--net $ (4,961,959)
===============
Insured Portfolio
Undistributed tax-exempt income--net $ 1,071,110
Undistributed long-term capital gains--net 1,334,587
---------------
Total undistributed earnings--net 2,405,697
Capital loss carryforward --
Unrealized gains--net 63,787,017**
---------------
Total accumulated earnings--net $ 66,192,714
===============
National Portfolio
Undistributed tax-exempt income--net $ 687,354
Undistributed long-term capital gains--net --
---------------
Total undistributed earnings--net 687,354
Capital loss carryforward (63,982,664)*
Unrealized gains--net 96,593,012**
---------------
Total accumulated earnings--net $ 33,297,702
===============
* At June 30, 2005, the Short Term Portfolio had a net capital loss
carryforward of approximately $1,978,680, of which $119,413
expires in 2008, $426,094 expires in 2009, $331,374 expires
in 2012 and $1,101,799 expires in 2013; the National Portfolio
had a net capital loss carryforward of approximately $63,982,664,
of which $5,081,800 expires in 2006, $18,502,015 expires in
2007, $10,488,608 expires in 2008, $26,931,578 expires in
2009, $444,566 expires in 2010, $942,957 expires in 2011 and
$1,591,140 expires in 2012. These amounts will be available
to offset like amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized
gains (losses) is attributable primarily to the tax deferral of losses
on straddles, the difference between book and tax amortization
methods for premiums and discounts on fixed income securities
and the deferral of post-October capital losses for tax purposes.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
Merrill Lynch Municipal Bond Fund, Inc.:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of Merrill Lynch Municipal Bond Fund,
Inc. (the "Funds") comprising the Short Term (formerly Limited Maturity),
Insured and National Portfolios as of June 30, 2005, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. The Funds are not required to have, nor were we engaged to
perform, an audit of their internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. Our procedures included confirmation of securities owned as of
June 30, 2005, by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting the Merrill Lynch Municipal Bond
Fund, Inc. as of June 30, 2005, the results of their operations for the year
then ended, the changes in their net assets for each of the two years in the
period then ended, and their financial highlights for each of the five years
in the period then ended, in conformity with U.S. generally accepted
accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
August 23, 2005
Important Tax Information (unaudited)
All of the net investment income distributions paid monthly by Merrill Lynch
Municipal Bond Fund, Inc. during the taxable year ended June 30, 2005 qualify
as tax-exempt interest dividends for federal income tax purposes.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Officers and Directors
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
Interested Director
Robert C. Doll, Jr.* President 2005 to President of the MLIM/FAM-advised funds since 125 Funds None
P.O. Box 9011 and present 2005; President of MLIM and FAM since 2001; 169 Portfolios
Princeton, Director Co-Head (Americas Region) thereof from 2000
NJ 08543-9011 to 2001 and Senior Vice President from 1999
Age: 50 to 2001; President and Director of Princeton
Services, Inc. ("Princeton Services") since 2001;
President of Princeton Administrators, L.P.
("Princeton Administrators") since 2001; Chief
Investment Officer of Oppenheimer Funds, Inc.
in 1999 and Executive Vice President thereof
from 1991 to 1999.
* Mr. Doll is a director, trustee or member of an advisory board of certain other
investment companies for which MLIM or FAM acts as investment adviser. Mr. Doll
is an "interested person," as defined in the Investment Company Act, of the Fund
based on his current positions with MLIM, FAM, Princeton Services and Princeton
Administrators. Directors serve until their resignation, removal or death, or
until December 31 of the year in which they turn 72. As Fund President, Mr. Doll
serves at the pleasure of the Board of Directors.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Officers and Directors (continued)
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
Independent Directors*
Ronald W. Forbes** Director 1977 to Professor Emeritus of Finance, School of 48 Funds None
P.O. Box 9095 present Business, State University of New York at 51 Portfolios
Princeton, Albany since 2000 and Professor thereof from
NJ 08543-9095 1989 to 2000; International Consultant, Urban
Age: 64 Institute, Washington D.C. from 1995 to 1999.
Cynthia A. Montgomery Director 1994 to Professor, Harvard Business School since 48 Funds Newell
P.O. Box 9095 present 1989; Associate Professor, J.L. Kellogg 51 Portfolios Rubbermaid, Inc.
Princeton, Graduate School of Management, Northwestern (manufacturing)
NJ 08543-9095 University from 1985 to 1989; Associate
Age: 52 Professor, Graduate School of Business
Administration, University of Michigan from
1979 to 1985; Director, Harvard Business School
of Publishing since 2005.
Jean Margo Reid Director 2004 to Self-employed consultant since 2001; Counsel 48 Funds None
P.O. Box 9095 present of Alliance Capital Management (investment 51 Portfolios
Princeton, adviser) in 2000; General Counsel, Director
NJ 08543-9095 and Secretary of Sanford C. Bernstein & Co.,
Age: 59 Inc. (investment adviser/broker-dealer) from
1997 to 2000; Secretary, Sanford C. Bernstein
Fund, Inc. from 1994 to 2000; Director and
Secretary of SCB, Inc. since 1998; Director and
Secretary of SCB Partners, Inc. since 2000;
Director of Covenant House from 2001 to 2004.
Roscoe S. Suddarth Director 2000 to President, Middle East Institute from 1995 48 Funds None
P.O. Box 9095 present to 2001; Foreign Service Officer, United 51 Portfolios
Princeton, States Foreign Service from 1961 to 1995;
NJ 08543-9095 Career Minister from 1989 to 1995; Deputy
Age: 69 Inspector General, U.S. Department of State
from 1991 to 1994; U.S. Ambassador to The
Hashemite Kingdom of Jordan from 1987 to 1990.
Richard R. West Director 1981 to Professor of Finance from 1984 to 1995, 48 Funds Bowne & Co.,
P.O. Box 9095 present Dean from 1984 to 1993 and since 1995 51 Portfolios Inc. (financial
Princeton, Dean Emeritus of New York University Leonard printers);
NJ 08543-9095 N. Stern School of Business Administration. Vornado Realty
Age: 67 Trust (real estate
company);
Alexander's, Inc.
(real estate
company)
Edward D. Zinbarg Director 2000 to Self-employed financial consultant since 48 Funds None
P.O. Box 9095 present 1994; Executive Vice President of The 51 Portfolios
Princeton, Prudential Insurance Company of America from
NJ 08543-9095 1988 to 1994; former Director of Prudential
Age: 70 Reinsurance Company and former Trustee of the
Prudential Foundation.
* Directors serve until their resignation, removal or death, or until December 31
of the year in which they turn 72.
** Chairman of the Board and the Audit Committee.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
Officers and Directors (concluded)
Position(s) Length of
Held with Time
Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years
Fund Officers*
Donald C. Burke Vice 1993 to First Vice President of MLIM and FAM since 1997 and Treasurer thereof since 1999;
P.O. Box 9011 President present Senior Vice President and Treasurer of Princeton Services since 1999 and Director
Princeton, and and since 2004; Vice President of FAM Distributors, Inc. ("FAMD") since 1999; Vice
NJ 08543-9011 Treasurer 1999 to President of MLIM and FAM from 1990 to 1997; Director of Taxation of MLIM from
Age: 45 present 1990 to 2001; Vice President, Treasurer and Secretary of the IQ Funds since 2004.
Kenneth A. Jacob Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 Vice present Management) of MLIM from 1997 to 2000.
Princeton, President
NJ 08543-9011
Age: 54
John M. Loffredo Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 Vice present Management) of MLIM from 1997 to 2000.
Princeton, President
NJ 08543-9011
Age: 41
Robert A. DiMella Vice 1999 to Managing Director of MLIM since 2004; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 President present Management) of MLIM from 2002 to 2004; Vice President of MLIM from 1996
Princeton, to 2001.
NJ 08543-9011
Age: 38
Peter J. Hayes Vice 1996 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 President present Management) of MLIM from 1997 to 2000.
Princeton,
NJ 08543-9011
Age: 46
Walter C. O'Connor Vice 1996 to Managing Director of MLIM since 2003; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 President present Management) of MLIM from 2000 to 2003; Vice President of MLIM from 1993
Princeton, to 2000.
NJ 08543-9011
Age: 43
Jeffrey Hiller Chief 2004 to Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice President and
P.O. Box 9011 Compliance present Chief Compliance Officer of MLIM (Americas Region) since 2004; Chief Compliance
Princeton, Officer Officer of the IQ Funds since 2004; Global Director of Compliance at Morgan Stanley
NJ 08543-9011 Investment Management from 2002 to 2004; Managing Director and Global Director of
Age: 53 Compliance at Citigroup Asset Management from 2000 to 2002; Chief Compliance Officer
at Soros Fund Management in 2000; Chief Compliance Officer at Prudential Financial
from 1995 to 2000; Senior Counsel in the Commission's Division of Enforcement in
Washington, D.C. from 1990 to 1995.
Alice A. Pellegrino Secretary 2004 to Director (Legal Advisory) of MLIM since 2002; Vice President of MLIM from 1999 to
P.O. Box 9011 present 2002; Attorney associated with MLIM since 1997; Secretary of MLIM, FAM, FAMD
Princeton, and Princeton Services since 2004.
NJ 08543-9011
Age: 45
* Officers of the Fund serve at the pleasure of the Board of Directors.
Further information about the Fund's Officers and Directors is available in
the Fund's Statement of Additional Information, which can be obtained without
charge by calling 1-800-MER-FUND.
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
800-637-3863
Fund Address
Box 9011
Princeton, NJ 08543-9011
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2005
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.
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. JUNE 30, 2005
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as of
the end of the period covered by this report, that applies to the
registrant's principal executive officer, principal financial
officer and principal accounting officer, or persons performing
similar functions. A copy of the code of ethics is available
without charge upon request by calling toll-free 1-800-MER-FUND
(1-800-637-3863).
Item 3 - Audit Committee Financial Expert - The registrant's board of
directors has determined that (i) the registrant has the following
audit committee financial experts serving on its audit committee and
(ii) each audit committee financial expert is independent: (1)
Ronald W. Forbes, (2) Richard R. West, and (3) Edward D. Zinbarg.
Item 4 - Principal Accountant Fees and Services
Short Term Portfolio of Merrill Lynch Municipal Bond Fund, Inc.
(a) Audit Fees - Fiscal Year Ending June 30, 2005 - $27,000
Fiscal Year Ending June 30, 2004 - $30,200
(b) Audit-Related Fees - Fiscal Year Ending June 30, 2005 - $0
Fiscal Year Ending June 30, 2004 - $0
(c) Tax Fees - Fiscal Year Ending June 30, 2005 - $5,700
Fiscal Year Ending June 30, 2004 - $5,610
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ending June 30, 2005 - $0
Fiscal Year Ending June 30, 2004 - $0
National Portfolio of Merrill Lynch Municipal Bond Fund, Inc.
(a) Audit Fees - Fiscal Year Ending June 30, 2005 - $35,700
Fiscal Year Ending June 30, 2004 - $34,200
(b) Audit-Related Fees - Fiscal Year Ending June 30, 2005 - $10,500
Fiscal Year Ending June 30, 2004 - $0
The nature of the services include assurance and related services
reasonably related to the performance of the audit of financial
statements not included in Audit Fees.
(c) Tax Fees - Fiscal Year Ending June 30, 2005 - $5,700
Fiscal Year Ending June 30, 2004 - $15,210
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ending June 30, 2005 - $0
Fiscal Year Ending June 30, 2004 - $0
Insured Portfolio of Merrill Lynch Municipal Bond Fund, Inc.
(a) Audit Fees - Fiscal Year Ending June 30, 2005 - $31,000
Fiscal Year Ending June 30, 2004 - $34,200
(b) Audit-Related Fees - Fiscal Year Ending June 30, 2005 - $0
Fiscal Year Ending June 30, 2004 - $0
(c) Tax Fees - Fiscal Year Ending June 30, 2005 - $5,700
Fiscal Year Ending June 30, 2004 - $5,610
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ending June 30, 2005 - $0
Fiscal Year Ending June 30, 2004 - $0
(e)(1) The registrant's audit committee (the "Committee") has
adopted policies and procedures with regard to the pre-approval of
services. Audit, audit-related and tax compliance services provided
to the registrant on an annual basis require specific pre-approval
by the Committee. The Committee also must approve other non-audit
services provided to the registrant and those non-audit services
provided to the registrant's affiliated service providers that
relate directly to the operations and the financial reporting of the
registrant. Certain of these non-audit services that the Committee
believes are a) consistent with the SEC's auditor independence rules
and b) routine and recurring services that will not impair the
independence of the independent accountants may be approved by the
Committee without consideration on a specific case-by-case basis
("general pre-approval"). However, such services will only be
deemed pre-approved provided that any individual project does not
exceed $5,000 attributable to the registrant or $50,000 for all of
the registrants the Committee oversees. Any proposed services
exceeding the pre-approved cost levels will require specific pre-
approval by the Committee, as will any other services not subject to
general pre-approval (e.g., unanticipated but permissible services).
The Committee is informed of each service approved subject to
general pre-approval at the next regularly scheduled in-person board
meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ending June 30, 2005 - $8,181,305
Fiscal Year Ending June 30, 2004 - $16,114,216
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser and any entity controlling,
controlled by, or under common control with the investment adviser
that provides ongoing services to the registrant that were not pre-
approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation
S-X is compatible with maintaining the principal accountant's
independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $945,000, 0%
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8 - 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 second fiscal half-
year of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
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.,
Chief Executive Officer of
Merrill Lynch Municipal Bond Fund, Inc.
Date: August 19, 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.,
Chief Executive Officer of
Merrill Lynch Municipal Bond Fund, Inc.
Date: August 19, 2005
By: /s/ Donald C. Burke
-------------------------------
Donald C. Burke,
Chief Financial Officer of
Merrill Lynch Municipal Bond Fund, Inc.
Date: August 19, 2005