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 811-02857
Name of Fund: Intermediate Term Portfolio of Merrill Lynch Bond Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, Intermediate Term Portfolio of Merrill Lynch Bond Fund, Inc.,
800 Scudders Mill Road, Plainsboro, NJ, 08536. Mailing address: P.O.
Box 9011, Princeton, NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 09/30/05
Date of reporting period: 10/01/04 - 09/30/05
Item 1 - Report to Stockholders
Intermediate Term Portfolio of
Merrill Lynch Bond Fund, Inc.
Annual Report
September 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.
Merrill Lynch Bond Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
(GO PAPERLESS LOGO)
It's Fast, Convenient, & Timely!
To sign up today, go to www.icsdelivery.com/live.
Intermediate Term Portfolio of Merrill Lynch Bond Fund, Inc.
Portfolio Information as of September 30, 2005
Percent of
Asset Mix Total Investments
Corporate Bonds 19.9%
Asset-Backed Securities 19.0
Government & Agency Obligations 15.0
Government Agency Mortgage-Backed
Obligations 12.7
Non-Government Agency Mortgage-Backed
Obligations 7.9
Foreign Government Obligations 1.2
Preferred Securities 1.1
Municipal Bonds 0.2
Other* 23.0
* Includes portfolio holdings in short-term investments and options.
Quality Ratings by Percent of
S&P/Moody's Total Investments
AAA/Aaa 48.3%
AA/Aa 5.3
A/A 5.9
BBB/Baa 11.1
BB/Ba 1.7
NR (Not Rated) 4.4
Other* 23.3
* Includes portfolio holdings in preferred stocks, options and
short-term investments.
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.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
A Letter From the President
Dear Shareholder
Amid what we've coined a "muddle through" year for the financial markets, the
major benchmark indexes managed to post positive results for the current
reporting period:
Total Returns as of September 30, 2005 6-month 12-month
U.S. equities (Standard & Poor's (S&P) 500 Index) +5.02% +12.25%
Small-cap U.S. equities (Russell 2000 Index) +9.21% +17.95%
International equities (MSCI Europe Australasia Far East Index) +9.26% +25.79%
Fixed income (Lehman Brothers Aggregate Bond Index) +2.31% + 2.80%
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +2.80% + 4.05%
High yield bonds (Credit Suisse First Boston High Yield Index) +2.82% + 6.31%
Since June 2004, the Federal Reserve Board (the Fed) has tirelessly advanced
its interest rate hiking program, raising the federal funds rate 11 times to
3.75% by period-end. The Fed admittedly remains more concerned about inflation
than slowing economic growth, causing some to worry that the central bank may
overreact to inflation and increase interest rates more than is necessary to
maintain a healthy economic balance. Recent disruptions to production and
spending from Hurricanes Katrina and Rita are likely to distort the economic
data in the short term, muddying the underlying trends. However, any hurricane-
induced slowdown is likely to be short lived, and the fiscal stimulus
associated with reconstruction efforts in the Gulf could add to gross domestic
product growth in 2006.
U.S. equities exhibited resilience over the past several months as investors
generally tended to proceed with caution. After a strong finish to 2004, the
S&P 500 Index remained largely range-bound in 2005, with the last three months
representing the best quarter of the year. Up to this point, strong corporate
earnings reports and low long-term bond yields have worked in favor of
equities. Looking ahead, high energy prices, continued interest rate hikes, a
potential consumer slowdown and/or disappointing earnings pose the greatest
risks to U.S. stocks. Internationally, many markets have benefited from strong
economic statistics, trade surpluses and solid finances.
In the bond market, the yield curve continued to flatten as short-term
interest rates moved in concert with the Fed rate hikes and longer-term
interest rates remained more constant or declined. The difference between
two-year and 10-year Treasury yields collapsed from 151 basis points (1.51%)
on September 30, 2004 to 70 basis points on March 31, 2005, to just 16 basis
points at period-end.
Financial markets are likely to face continued crosscurrents in the months
ahead. 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. As always, 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
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
A Discussion With Your Fund's Portfolio Managers
We continue to monitor the interest rate environment and the credit markets
for opportunities to become more aggressive and enhance the Portfolio's yield.
How did the Portfolio perform during the fiscal year in light of the existing
market conditions?
For the 12-month period ended September 30, 2005, Intermediate Term
Portfolio's Class A, Class B, Class C, Class I and Class R Shares had total
returns of +2.50%, +2.08%, +2.07%, +2.60% and +2.09%, respectively. For the
same period, the benchmark Lehman Brothers Aggregate Bond Index posted a
return of +2.80%. (Portfolio results shown do not reflect sales charges and
would be lower if sales charges were included. Complete performance
information can be found on pages 6 and 7 of this report to shareholders.)
In the first three months of the fiscal year, our ample exposure to spread
sectors (those areas of the market less correlated with U.S. Treasury issues)
contributed significantly to performance. At that time, our above-benchmark
commitment to credit product consisted of a 12% overweighting in investment
grade and crossover credits and a 2.5% overweighting in high yield issues.
These securities, as well as mortgage-backed securities, commercial mortgage-
backed securities and asset-backed securities, benefited in the fourth quarter
of 2004 as investors continued to grab for yield, prompting credit spreads on
these issues (versus U.S. Treasuries of comparable maturity) to narrow.
We reduced our exposure to credit products significantly in the first quarter
of 2005 given their relative outperformance and a much more cautious market
sentiment. From that point on, it was our duration profile and yield curve
positioning that most affected Portfolio performance. Specifically, we
maintained a short duration profile for much of the year in anticipation of
rising long-term interest rates. With the economy on solid footing and the
Federal Reserve Board (the Fed) in a monetary tightening mode, we expected
that long-term interest rates would follow short-term interest rates higher.
Surprisingly, the opposite occurred. As short-term interest rates rose, longer-
term bond yields declined year-over-year. For some context, the Fed increased
its target short-term interest rate 200 basis points (2.00%) during the fiscal
period - from 1.75% on September 30, 2004 to 3.75% by period-end. During that
same time, the two-year Treasury yield rose 155 basis points from 2.63% to
4.18% whereas the 10-year Treasury yield rose just 20 basis points from 4.14%
to 4.34% and the 30-year Treasury yield declined 32 basis points from 4.89% to
4.57%. Under these circumstances, our short duration hindered relative
performance.
However, the movement in interest rates also resulted in a pronounced
flattening of the yield curve, with the difference between the two-year and
10-year Treasury yield just 16 basis points at period-end. We had positioned
the Portfolio for this flattening phenomenon, and performance benefited as a
result. By overweighting the long end of the yield curve and underweighting
shorter-dated bonds, the Portfolio profited from the capital appreciation as
long-term bond prices rallied.
Finally, we reduced our position in the auto sector as earnings
disappointments in the industry began to have an effect on these credits. This
detracted slightly from performance for the year.
What changes were made to the Portfolio during the period?
As mentioned earlier, we significantly reduced our exposure to both investment
grade credit and high yield bonds, bringing our commitment to investment grade
credit from a 12% overweight relative to our benchmark to a 2% underweight,
and our exposure to high yield (which is not represented in the benchmark
index) from approximately 3% of net assets to less than 1%. At period-end,
21.7% of the Portfolio's net assets were invested in investment grade credit
and 0.4% in high yield bonds. While trimming our exposure, we improved the
overall credit quality of the corporate bonds we retained in the portfolio. We
believe this makes for a much less volatile product, and brings the Portfolio
closer in line with its benchmark.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
At the same time, we added exposure to commercial mortgage-backed securities
(CMBS) and asset-backed securities (ABS), creating overweight positions
relative to the benchmark of 2% and 4%, respectively. Our exposure to ABS
came mainly through the home equity loan sector. We believe CMBS and ABS
offer a good risk/reward profile at this time. These are high-quality (that is,
AAA-rated) sectors with the potential to generate additional yield for the
portfolio. While spreads on CMBS and ABS (compared to U.S. Treasury issues)
are tight by historical standards, we believe the prospect for spread widening
is substantially less than in other spread sectors. Also during the fiscal
year, we initiated a position in Treasury Inflation Protected Securities
(TIPS), which offer value versus U.S. Treasury securities in an environment of
rising inflation. TIPS represented 1% of the Portfolio's net assets at period-
end. Finally, we continued to use derivatives to manage interest rate risk.
At the end of August, Hurricane Katrina ravaged the Gulf Coast, causing mass
destruction and creating uncertainty in terms of the impact on the economy and
the markets, as well as Fed sentiment. This prompted us to remove our yield
curve flattening bias and add some exposure to the short end of the yield
curve, an area we had avoided since the Fed began raising interest rates in
2004. Specifically, we increased exposure to the two-year sector while
reducing our position in 30-year Treasury issues. We are less certain about
the near-term direction of the yield curve and, therefore, believe it is
prudent to reduce risk in this sector.
How would you characterize the Portfolio's position at the close of the
period?
We ended the period with a relatively conservative position in terms of both
interest rate risk and asset allocation, with an emphasis on higher-quality
issues. The Portfolio is focused primarily on asset-backed securities, with
limited exposure to corporate, high yield and mortgage-backed securities as we
await opportunities to re-enter riskier asset classes when valuations appear
more attractive.
Looking ahead, we believe economic growth will slow more than anticipated,
helping to calm some of the inflationary fears propagated by the Fed. The
consumer has supported the economy for some time. In our view, the resilience
of the consumer sector is likely to be tested now by higher energy prices,
higher interest rates and changes in the banking industry aimed at curtailing
"speculative borrowing," which would limit consumers' ability to continue
tapping into the equity of their homes. Amid this economic uncertainty, we
believe a relatively conservative approach is warranted. At the same time, we
will continue to look for opportunities to become more aggressive in an effort
to enhance the income provided to shareholders. These opportunities may
present themselves in the form of higher interest rates or a widening in
credit spreads.
John Burger
Vice President and Portfolio Manager
Patrick Maldari
Vice President and Portfolio Manager
James J. Pagano
Vice President and Portfolio Manager
Frank Viola
Vice President and Portfolio Manager
October 11, 2005
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Performance Data
About Fund Performance
Investors are able to purchase shares of the Portfolio through multiple
pricing alternatives:
* Class A Shares incur 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
1%, declining to 0% after three years. All Class B Shares purchased prior to
December 1, 2002 will maintain the four-year schedule. In addition, Class B
Shares are subject to a distribution fee of 0.25% per year and an account
maintenance fee of 0.25% per year. These shares automatically convert to Class
A Shares after approximately 10 years. (There is no initial sales charge for
automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.25% per year and an
account maintenance fee of 0.25% per year. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within one year
of purchase.
* Class I Shares incur a maximum initial sales charge (front-end load) of 1%
and bear no ongoing distribution or account maintenance fees. Class I Shares
are available only to eligible investors.
* Class R Shares do not incur a maximum sales charge (front-end load) or
deferred sales charge. These shares are subject to a distribution fee of 0.25%
per year and an account maintenance fee of 0.25% per year. Class R Shares are
available only to certain retirement plans. Prior to inception, Class R Share
performance results are those of the Class I Shares (which have no
distribution or account maintenance fees) restated for Class R Share 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.
Recent Performance Results
6-Month 12-Month 10-Year Standardized
As of September 30, 2005 Total Return Total Return Total Return 30-day Yield
Intermediate Term Portfolio Class A Shares* +1.78% +2.50% +73.87% 3.19%
Intermediate Term Portfolio Class B Shares* +1.57 +2.08 +66.82 2.81
Intermediate Term Portfolio Class C Shares* +1.56 +2.07 +66.65 2.80
Intermediate Term Portfolio Class I Shares* +1.91 +2.60 +75.60 3.29
Intermediate Term Portfolio Class R Shares* +1.66 +2.09 +67.92 2.82
Lehman Brothers Aggregate Bond Index** +2.31 +2.80 +88.52 --
* 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 market-weighted Index is comprised of investment grade corporate bonds (rated BBB or better),
mortgages and U.S. Treasury and government agency issues with at least one year to maturity.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Performance Data (concluded)
TOTAL RETURN BASED ON A $10,000 INVESTMENT
A line graph illustrating the growth of a $10,000 investment in ML Bond Fund,
Inc.'s Intermediate Term Portfolio++ Class A, Class B, Class C, Class I and
Class R Shares* compared to a similar investment in Lehman Brothers Aggregate
Bond Index++++. Values illustrated are as follows:
ML Bond Fund, Inc.'s Intermediate Term Portfolio++
Class A Shares*
Date Value
September 1995 $ 9,900.00
September 1996 $10,343.00
September 1997 $11,231.00
September 1998 $12,286.00
September 1999 $12,251.00
September 2000 $12,852.00
September 2001 $14,299.00
September 2002 $15,346.00
September 2003 $16,219.00
September 2004 $16,794.00
September 2005 $17,214.00
ML Bond Fund, Inc.'s Intermediate Term Portfolio++
Class B Shares*
Date Value
September 1995 $10,000.00
September 1996 $10,404.00
September 1997 $11,249.00
September 1998 $12,255.00
September 1999 $12,170.00
September 2000 $12,714.00
September 2001 $14,088.00
September 2002 $15,070.00
September 2003 $15,849.00
September 2004 $16,343.00
September 2005 $16,682.00
ML Bond Fund, Inc.'s Intermediate Term Portfolio++
Class C Shares*
Date Value
September 1995 $10,000.00
September 1996 $10,401.00
September 1997 $11,232.00
September 1998 $12,246.00
September 1999 $12,160.00
September 2000 $12,703.00
September 2001 $14,075.00
September 2002 $15,056.00
September 2003 $15,834.00
September 2004 $16,327.00
September 2005 $16,665.00
ML Bond Fund, Inc.'s Intermediate Term Portfolio++
Class I Shares*
Date Value
September 1995 $ 9,900.00
September 1996 $10,353.00
September 1997 $11,243.00
September 1998 $12,322.00
September 1999 $12,300.00
September 2000 $12,916.00
September 2001 $14,384.00
September 2002 $15,453.00
September 2003 $16,347.00
September 2004 $16,943.00
September 2005 $17,384.00
ML Bond Fund, Inc.'s Intermediate Term Portfolio++
Class R Shares*
Date Value
September 1995 $10,000.00
September 1996 $10,406.00
September 1997 $11,244.00
September 1998 $12,262.00
September 1999 $12,179.00
September 2000 $12,725.00
September 2001 $14,102.00
September 2002 $15,075.00
September 2003 $15,931.00
September 2004 $16,448.00
September 2005 $16,792.00
Lehman Brothers Aggregate Bond Index++++
Date Value
September 1995 $10,000.00
September 1996 $10,490.00
September 1997 $11,509.00
September 1998 $12,834.00
September 1999 $12,787.00
September 2000 $13,681.00
September 2001 $15,453.00
September 2002 $16,781.00
September 2003 $17,689.00
September 2004 $18,339.00
September 2005 $18,852.00
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
++ The Portfolio invests primarily in bonds rated in the four highest rating
categories (Baa or higher by Moody's Investors Service, Inc. or BBB or
higher by Standard & Poor's Corp.), with an average remaining maturity of
three to ten years, depending on market conditions.
++++ This unmanaged market-weighted Index is comprised of investment grade
corporate bonds (rated BBB or better), mortgages and U.S. Treasury and
government agency issues with at least one year to maturity.
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 9/30/05 +2.50% +1.47%
Five Years Ended 9/30/05 +6.02 +5.81
Ten Years Ended 9/30/05 +5.69 +5.58
Return Return
Without CDSC With CDSC++++++
Class B Shares++
One Year Ended 9/30/05 +2.08% +1.09%
Five Years Ended 9/30/05 +5.58 +5.58
Ten Years Ended 9/30/05 +5.25 +5.25
Return Return
Without CDSC With CDSC++++++
Class C Shares++++
One Year Ended 9/30/05 +2.07% +1.09%
Five Years Ended 9/30/05 +5.58 +5.58
Ten Years Ended 9/30/05 +5.24 +5.24
Return Without Return With
Sales Charge Sales Charge**
Class I Shares*
One Year Ended 9/30/05 +2.60% +1.58%
Five Years Ended 9/30/05 +6.12 +5.91
Ten Years Ended 9/30/05 +5.79 +5.69
Class R Shares Return
One Year Ended 9/30/05 +2.09%
Five Years Ended 9/30/05 +5.70
Ten Years Ended 9/30/05 +5.32
* Maximum sales charge is 1%.
** Assuming maximum sales charge.
++ Maximum contingent deferred sales charge is 1% and is reduced
to 0% after three years.
++++ Maximum contingent deferred sales charge is 1% and is reduced
to 0% after one year.
++++++ Assuming payment of applicable contingent deferred sales
charge.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Disclosure of Expenses
Shareholders of this Portfolio 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 Portfolio expenses. The following example
(which is based on a hypothetical investment of $1,000 invested on April 1,
2005 and held through September 30, 2005) is intended to assist shareholders
both in calculating expenses based on an investment in the Portfolio and in
comparing these expenses with similar costs of investing in other mutual
funds.
The first table below 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 below provides information about hypothetical account values
and hypothetical expenses based on the Portfolio'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 Portfolio
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 April 1, 2005 to
April 1, September 30, September 30,
2005 2005 2005
Actual
Class A $1,000 $1,017.80 $4.14
Class B $1,000 $1,015.70 $6.23
Class C $1,000 $1,015.60 $6.28
Class I $1,000 $1,019.10 $3.63
Class R $1,000 $1,016.60 $6.18
Hypothetical (5% annual return before expenses)**
Class A $1,000 $1,021.19 $4.15
Class B $1,000 $1,019.12 $6.24
Class C $1,000 $1,019.07 $6.29
Class I $1,000 $1,021.70 $3.64
Class R $1,000 $1,019.17 $6.19
* For each class of the Portfolio, expenses are equal to the annualized expense ratio for the class
(.81% for Class A, 1.22% for Class B, 1.23% for Class C, .71% for Class I and 1.21% for Class R),
multiplied by the average account value over the period, multiplied by 185/365 (to reflect the
one-half year period shown).
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the
most recent fiscal half-year divided by 365.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Schedule of Investments (in U.S. dollars)
Face
Amount Asset-Backed Securities++ Value
ACE Securities Corp. (b):
USD 1,387,428 Series 2003-OP1 Class A2, 4.19%
due 12/25/2033 $ 1,389,542
3,950,000 Series 2005-HE6 Class A2B, 3.999%
due 10/25/2035 3,950,000
73,440 Advanta Mortgage Loan Trust Series 1999-3
Class A4, 7.75% due 10/25/2026 73,882
1,568,298 Aegis Asset-Backed Securities Trust Series 2004-1
Class A, 4.18% due 4/25/2034 (b) 1,571,267
1,250,000 Ameriquest Mortgage Securities, Inc. Series 2004-R1
Class M2, 4.41% due 2/25/2034 (b) 1,252,397
2,811,958 Argent Securities, Inc. Series 2004-W11 Class A3,
4.19% due 11/25/2034 (b) 2,818,782
Bear Stearns Asset-Backed Securities, Inc.:
4,000,000 4.13% due 10/01/2008 4,000,000
1,747,365 Series 2004-HE9 Class 1A2, 4.20%
due 3/25/2032 (b) 1,749,753
1,550,000 Series 2005-SD1 Class 1A2, 4.13%
due 7/25/2027 (b) 1,553,488
1,296,534 CIT Equipment Collateral Series 2003-VT1
Class A3A, 3.93% due 4/20/2007 (b) 1,297,174
California Infrastructure Series 1997-1:
473,786 PG&E-1 Class A7, 6.42% due 9/25/2008 479,326
366,674 SCE-1 Class A6, 6.38% due 9/25/2008 371,205
Capital Auto Receivables Asset Trust:
444,877 Series 2003-2 Class B, 4.048%
due 1/15/2009 (b) 445,611
700,000 Series 2004-2 Class D, 5.82% due 5/15/2012 695,645
4,500,000 Capital One Master Trust Series 2000-4 Class C,
4.57% due 8/15/2008 (b) 4,504,743
Chase Credit Card Master Trust Class C (b):
2,850,000 Series 2000-3, 4.47% due 1/15/2008 2,850,671
5,200,000 Series 2003-1, 4.87% due 4/15/2008 5,212,979
Countrywide Asset-Backed Certificates (b):
1,600,000 Series 2003-2 Class M1, 4.53% due 6/26/2033 1,606,659
831,699 Series 2003-BC3 Class A2, 4.14%
due 9/25/2033 832,679
1,472,138 Series 2004-5 Class A, 4.28%
due 10/25/2034 1,479,410
1,200,000 Series 2004-5 Class M2, 4.50%
due 7/25/2034 1,206,175
1,350,000 Series 2004-13 Class AF4, 4.583%
due 1/25/2033 1,319,256
1,350,000 Series 2004-13 Class MF1, 5.071%
due 12/25/2034 1,324,832
1,500,000 Credit-Based Asset Servicing and Securitization
Series 2005-CB2 Class AV2, 4.03%
due 4/25/2036 (b) 1,500,510
2,050,000 Equifirst Mortgage Loan Trust Series 2004-2
Class M1, 4.38% due 7/25/2034 (b) 2,057,496
First Franklin Mortgage Loan Asset-Backed
Certificates Class A2 (b):
1,196,637 Series 2003-FF5, 2.82% due 3/25/2034 1,197,723
3,750,000 Series 2004-FF10, 4.23% due 12/25/2032 3,761,322
Face
Amount Asset-Backed Securities++ Value
USD 578,861 HFC Home Equity Loan Asset-Backed Certificates
Series 2002-2 Class A, 4.10% due 4/20/2032 (b) $ 579,032
Home Equity Asset Trust (b):
2,348,978 Series 2005-1 Class A2, 4.11%
due 5/25/2035 2,350,749
1,680,774 Series 2005-3 Class 1A2, 4.08%
due 8/25/2035 1,680,735
2,495,424 Irwin Home Equity Series 2005-C Class 1A1,
4.09% due 4/25/2030 (b) 2,495,365
Long Beach Mortgage Loan Trust (b):
531,354 Series 2002-4 Class 2A, 4.29%
due 11/26/2032 532,723
1,664,237 Series 2004-1 Class A3, 4.13%
due 2/25/2034 1,665,818
Morgan Stanley ABS Capital I, Inc. (b):
1,000,000 Series 2003-NC5 Class M2, 5.83%
due 4/25/2033 1,009,915
1,489,797 Series 2004-NC1 Class A2, 4.20%
due 12/27/2033 1,495,650
1,315,714 Series 2004-NC2 Class A2, 4.13%
due 12/25/2033 1,318,690
543,618 Series 2004-WMC1 Class A3, 4.08%
due 6/25/2034 543,704
3,320,823 Series 2005-HE1 Class A2MZ, 4.13%
due 12/25/2034 3,325,053
1,196,521 Series 2005-NC2 Class A1MZ, 4.08%
due 3/25/2035 1,196,250
1,195,935 Series 2005-NC2 Class A2MZ, 4.08%
due 3/25/2035 1,195,665
New Century Home Equity Loan Trust (b):
1,589,306 Series 2004-2 Class A3, 4.08% due 8/25/2034 1,589,542
2,990,821 Series 2004-3 Class A3, 4.22%
due 11/25/2034 2,999,077
2,960,657 Series 2005-2 Class A2MZ, 4.09%
due 6/25/2035 2,961,155
Option One Mortgage Loan Trust (b):
1,084,983 Series 2003-4 Class A2, 4.15% due 7/25/2033 1,086,334
500,000 Series 2005-1 Class M5, 5.08% due 2/25/2035 503,088
Park Place Securities, Inc. Series 2005-WCH1 (b):
1,515,731 Class A1B, 4.13% due 1/25/2035 1,518,022
1,195,447 Class A3D, 4.17% due 1/25/2035 1,197,268
550,000 Popular ABS Mortgage Pass-Through Trust Series
2005-1 Class M2, 5.51% due 5/25/2035 542,487
Residential Asset Mortgage Products, Inc. (b):
2,750,000 Series 2004-RS11 Class A2, 4.10%
due 12/25/2033 2,752,215
1,950,000 Series 2005-RS3 Class AI2, 4%
due 3/25/2035 1,953,852
1,503,385 Residential Asset Securities Corp. Series 2003-KS5
Class AIIB, 4.12% due 7/25/2033 (b) 1,506,007
81,305 Saxon Asset Securities Trust Series 2002-3 Class AV,
4.23% due 12/25/2032 (b) 81,307
3,400,000 Soundview Home Equity Loan Trust Series 2005-OPT3
Class A4, 4.13% due 11/25/2035 (b) 3,400,000
Structured Asset Investment Loan Trust (b):
2,300,000 Series 2003-BC6 Class M1, 4.58%
due 7/25/2033 2,310,975
840,000 Series 2004-8 Class M4, 4.83%
due 9/25/2034 843,048
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Schedule of Investments (continued) (in U.S. dollars)
Face
Amount Asset-Backed Securities++ Value
USD 1,155,697 Structured Asset Securities Corp. Series 2004-23XS
Class 2A1, 4.13% due 1/25/2035 (b) $ 1,156,525
4,900,000 Wells Fargo Home Equity Trust Series 2004-2
Class A32, 4.17% due 2/25/2032 (b) 4,914,265
418,907 Whole Auto Loan Trust Series 2004-1 Class D,
5.60% due 3/15/2011 419,846
Total Asset-Backed Securities
(Cost--$101,592,279)--22.4% 101,626,889
Government & Agency Obligations
3,900,000 Fannie Mae, 7.125% due 1/15/2030 5,065,991
2,400,000 Federal Home Loan Bank System, 2.75%
due 11/15/2006 2,357,623
U.S. Treasury Bonds:
1,870,000 7.50% due 11/15/2016 2,366,865
1,140,000 8.125% due 8/15/2019 (i) 1,556,411
3,980,000 7.25% due 8/15/2022 5,200,117
820,000 6.25% due 8/15/2023 980,508
820,000 6.625% due 2/15/2027 1,040,951
4,860,000 5.375% due 2/15/2031 5,444,716
U.S. Treasury Inflation Indexed Bonds:
2,706,588 3.875% due 1/15/2009 2,936,226
2,361,782 3.50% due 1/15/2011 2,601,189
4,911,216 1.625% due 1/15/2015 4,852,895
U.S. Treasury Notes:
7,980,000 7% due 7/15/2006 (i) 8,154,563
24,000,000 4% due 8/31/2007 (j) 23,918,448
650,000 3.75% due 5/15/2008 643,043
880,000 3.875% due 5/15/2010 867,247
1,690,000 3.625% due 6/15/2010 1,647,223
3,786,000 4.125% due 8/15/2010 3,768,993
325,000 5% due 2/15/2011 336,972
6,550,000 4.25% due 8/15/2015 (j) 6,509,063
Total Government & Agency Obligations
(Cost--$79,347,774)--17.7% 80,249,044
Government Agency
Mortgage-Backed Obligations++ Value
Fannie Mae Guaranteed Pass-Through
Certificates:
5,024,608 4.50% due 3/01/2020 4,923,789
2,391,928 5.00% due 11/15/2035 (k) 2,338,856
25,247,000 5.50% due 11/15/2035 (k) 25,199,662
2,622,562 6.00% due 11/01/2034 - 11/15/2035 (k) 2,664,550
758,045 6.50% due 6/01/2032 - 11/01/2032 781,063
Freddie Mac Mortgage Participation
Certificates:
17,442,639 5.00% due 10/15/2035 - 11/15/2035 (k) 17,061,689
1,128,991 5.50% due 7/01/2016 1,146,219
3,716,703 5.50% due 12/01/2034 - 3/01/2035 3,718,725
669,797 6.00% due 5/01/2016 - 4/01/2017 688,433
6,608,277 6.00% due 11/01/2033 - 3/01/2035 6,724,306
268,415 6.50% due 6/01/2016 277,146
569,767 6.50% due 10/01/2033 585,893
717,137 7.00% due 9/01/2031 - 4/01/2032 749,397
Face Government Agency
Amount Mortgage-Backed Obligations++ Value
USD 1,260,665 Ginnie Mae MBS Certificates 6.50%
due 6/15/2031-4/15/2032 $ 1,311,780
Total Government Agency Mortgage-Backed
Obligations (Cost--$68,715,903)--15.1% 68,171,508
Non-Government Agency
Mortgage-Backed Obligations++
Collateralized Mortgage Obligations--3.8%
2,683,000 Bear Stearns Adjustable Rate Mortgage Trust Series
2004-4 Class A4, 3.515% due 6/25/2034 (b) 2,613,530
1,650,000 Impac Secured Assets CMN Owner Trust Series
2004-3 Class M1, 4.43% due 11/25/2034 (b) 1,656,410
2,825,010 Impac Secured Assets Corp. Series 2004-3
Class 1A4, 4.23% due 11/25/2034 (b) 2,831,121
4,027,885 RMAC Plc Series 2003-NS2A Class A2C, 4.23%
due 9/12/2035 (b) 4,039,214
4,063,505 Residential Accredit Loans, Inc. Series 2005-QS12
Class A8, 4.18% due 8/25/2035 (b) 4,059,695
1,146,389 Structured Asset Securities Corp. Series 2005-GEL2
Class A, 4.11% due 4/25/2035 (b) 1,146,359
849,779 Washington Mutual Series 2005-AR2 Class B4,
4.73% due 1/25/2045 (b) 849,779
--------------
17,196,108
Commercial Mortgage-Backed Securities--5.5%
3,100,000 Banc of America Commercial Mortgage, Inc. Series
2005-4 Class A5A, 4.933% due 7/10/2045 3,078,688
3,700,000 Banc of America Large Loan Series 2003-BBA2
Class A3, 4.088% due 11/15/2015 (b) 3,703,269
Commercial Mortgage Pass-Through
Certificates (b):
1,013,792 Series 2003-FL8 Class A2, 3.968%
due 7/15/2015 1,013,778
1,715,533 Series 2003-FL9 Class A3, 3.968%
due 11/15/2015 1,717,915
1,950,000 GS Mortgage Securities Corp. II Series 2005-GG4
Class A2, 4.475% due 7/10/2039 1,920,589
3,400,000 Greenwich Capital Commercial Funding Corp.
Series 2004-GG1 Class A4, 4.755%
due 6/10/2036 3,382,675
JPMorgan Chase Commercial Mortgage
Securities Co.:
1,950,000 Series 2005-LDP2 Class A2, 4.575%
due 7/15/2042 1,925,659
4,800,000 Series 2005-LDP4 Class A4, 4.918%
due 10/15/2042 4,773,024
2,150,000 LB-UBS Commercial Mortgage Trust Series
2005-C3 Class A5, 4.739% due 7/15/2030 2,108,254
1,298,262 Nationslink Funding Corp. Series 1999-2 Class A3,
7.181% due 6/20/2031 1,313,091
--------------
24,936,942
Total Non-Government Agency
Mortgage-Backed Obligations
(Cost--$42,362,921)--9.3% 42,133,050
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Schedule of Investments (continued) (in U.S. dollars)
Face
Amount Corporate Bonds Value
Aerospace & Defense--1.0%
USD 1,515,000 BAE Systems Holdings, Inc., 4.75%
due 8/15/2010 (a) $ 1,496,105
1,335,000 Goodrich Corp., 6.60% due 5/15/2009 1,408,851
Raytheon Co:
1,130,000 8.30% due 3/01/2010 1,282,101
515,000 5.50% due 11/15/2012 529,907
--------------
4,716,964
Airlines--0.4%
479,964 American Airlines, Inc. Series 2003-1,
3.857% due 1/09/2012 462,931
475,000 Continental Airlines, Inc. Series 2002-1, 6.563%
due 8/15/2013 494,997
630,000 Southwest Airlines Co., 7.875% due 9/01/2007 663,725
--------------
1,621,653
Automobiles--0.2%
DaimlerChrysler NA Holding Corp.:
555,000 4.75% due 1/15/2008 552,076
455,000 7.75% due 1/18/2011 503,944
--------------
1,056,020
Biotechnology--0.6%
2,550,000 Abgenix, Inc., 3.50% due 3/15/2007 (e) 2,489,438
Capital Markets--1.8%
The Bear Stearns Cos., Inc.:
980,000 3.98% due 1/30/2009 (b) 984,786
155,000 5.70% due 11/15/2014 161,916
1,090,000 Credit Suisse First Boston USA, Inc., 4.70%
due 6/01/2009 1,088,253
Goldman Sachs Group, Inc.:
1,920,000 5.70% due 9/01/2012 1,991,389
1,030,000 5.25% due 10/15/2013 1,039,298
Lehman Brothers Holdings, Inc.:
1,190,000 3.50% due 8/07/2008 1,154,088
600,000 Series H, 4.50% due 7/26/2010 591,814
110,000 Mellon Funding Corp., 6.40% due 5/14/2011 118,518
1,030,000 Morgan Stanley, 5.30% due 3/01/2013 1,040,257
--------------
8,170,319
Chemicals--0.2%
935,000 Cytec Industries, Inc., 5.50% due 10/01/2010 933,598
Commercial Banks--2.3%
930,000 Bank of America Corp., 4.875% due 9/15/2012 929,768
460,000 Bank One Corp., 8% due 4/29/2027 585,129
970,000 Barclays Bank Plc, 8.55% (a)(b)(f) 1,136,889
690,000 Corporacion Andina de Fomento, 6.875%
due 3/15/2012 756,605
560,000 FirstBank Puerto Rico, 7.625% due 12/20/2005 561,516
HBOS Plc (a)(b)(f):
1,000,000 5.92% 1,002,436
1,000,000 6.413% 996,485
830,000 HSBC Bank USA NA, 5.875% due 11/01/2034 851,662
335,000 Hudson United Bancorp, 8.20% due 9/15/2006 345,461
520,000 PNC Bank NA, 5.25% due 1/15/2017 522,154
595,000 PNC Funding Corp., 6.125% due 2/15/2009 620,291
405,000 Popular North America, Inc., 3.875%
due 10/01/2008 394,992
1,160,000 Sovereign Bank, 5.125% due 3/15/2013 1,154,789
720,000 Wells Fargo & Co., 5% due 11/15/2014 721,593
--------------
10,579,770
Face
Amount Corporate Bonds Value
Commercial Services & Supplies--0.4%
Aramark Services, Inc.:
USD 690,000 6.375% due 2/15/2008 $ 711,722
435,000 5% due 6/01/2012 424,477
570,000 International Lease Finance Corp., 2.95%
due 5/23/2006 565,009
--------------
1,701,208
Communications Equipment--0.4%
Harris Corp.:
1,055,000 5% due 10/01/2015 1,040,289
850,000 6.35% due 2/01/2028 890,863
--------------
1,931,152
Consumer Finance--0.6%
HSBC Finance Corp.:
680,000 6.50% due 11/15/2008 714,054
515,000 5.875% due 2/01/2009 531,475
MBNA Corp.:
945,000 6.25% due 1/17/2007 962,751
200,000 5.625% due 11/30/2007 203,951
455,000 4.625% due 9/15/2008 454,668
--------------
2,866,899
Diversified Financial Services--3.4%
785,000 American Honda Finance Corp., 3.799%
due 10/03/2005 (b) 785,000
Citigroup, Inc.:
1,440,000 5.625% due 8/27/2012 1,496,886
405,000 5.85% due 12/11/2034 423,628
1,255,000 Ford Motor Credit Co., 7% due 10/01/2013 1,163,833
General Electric Capital Corp.:
1,120,000 6% due 6/15/2012 1,192,157
960,000 6.75% due 3/15/2032 1,129,179
JPMorgan Chase & Co.:
960,000 5.75% due 1/02/2013 998,311
770,000 4.75% due 3/01/2015 750,917
425,000 4.891% due 9/01/2015 (b) 424,010
Links Finance Corp. (b):
1,000,000 Series 54, 4.12% due 9/15/2010 999,248
1,000,000 Series 55, 4.04% due 9/15/2010 997,003
Sigma Finance Corp. (h):
3,400,000 6.29% due 8/15/2011 3,400,000
1,700,000 4.20% due 3/31/2014 (b) 1,717,738
--------------
15,477,910
Diversified Telecommunication Services--1.2%
485,000 BellSouth Corp., 6% due 11/15/2034 487,027
643,000 Deutsche Telekom International Finance BV,
5.25% due 7/22/2013 649,173
660,000 France Telecom SA, 7.75% due 3/01/2011 749,410
1,010,000 GTE Corp., 6.84% due 4/15/2018 1,123,781
790,000 SBC Communications, Inc., 6.45%
due 6/15/2034 835,042
865,000 TELUS Corp., 7.50% due 6/01/2007 903,278
675,000 Verizon Global Funding Corp., 5.85%
due 9/15/2035 663,827
--------------
5,411,538
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Schedule of Investments (continued) (in U.S. dollars)
Face
Amount Corporate Bonds Value
Electric Utilities--1.9%
USD 835,000 AEP Texas Central Co. Series D, 5.50%
due 2/15/2013 $ 854,303
995,000 FirstEnergy Corp. Series B, 6.45% due 11/15/2011 1,059,441
430,000 Florida Power & Light Co., 5.40% due 9/01/2035 425,632
2,550,000 PPL Capital Funding, 4.852% due 5/18/2006 (b) 2,552,917
465,000 Pacific Gas & Electric Co., 6.05% due 3/01/2034 483,782
525,000 Pepco Holdings, Inc., 4% due 5/15/2010 503,719
705,000 Public Service Co. of New Mexico, 4.40%
due 9/15/2008 693,818
445,000 Puget Energy, Inc., 5.483% due 6/01/2035 433,145
640,000 SPI Electricity & Gas Australia Holdings Pty Ltd.,
6.15% due 11/15/2013 (a) 687,308
170,000 Southern California Edison Co., 3.87%
due 1/13/2006 (b) 170,108
465,000 Westar Energy, Inc., 6% due 7/01/2014 494,913
--------------
8,359,086
Electronic Equipment & Instruments--0.3%
1,400,000 Tech Data Corp., 2% due 12/15/2021 (e) 1,365,000
Food Products--0.3%
945,000 Cadbury Schweppes US Finance LLC, 3.875%
due 10/01/2008 (a) 921,935
400,000 Sysco Corp., 5.375% due 9/21/2035 396,753
--------------
1,318,688
Gas Utilities--0.1%
660,000 Panhandle Eastern Pipe Line Series B, 2.75%
due 3/15/2007 641,458
Hotels, Restaurants & Leisure--0.1%
435,000 Harrah's Operating Co., Inc., 5.625%
due 6/01/2015 (a) 430,024
Household Durables--1.0%
1,300,000 American Greetings, 6.10% due 8/01/2028 1,327,625
DR Horton, Inc.:
1,100,000 5% due 1/15/2009 1,085,426
505,000 6.875% due 5/01/2013 529,107
710,000 5.625% due 9/15/2014 684,240
KB Home:
1,010,000 5.75% due 2/01/2014 956,948
50,000 5.875% due 1/15/2015 47,316
--------------
4,630,662
IT Services--0.1%
480,000 First Data Corp., 4.50% due 6/15/2010 476,554
Industrial Conglomerates--0.4%
Tyco International Group SA:
1,360,000 6.75% due 2/15/2011 1,468,946
375,000 6.875% due 1/15/2029 430,302
--------------
1,899,248
Insurance--1.3%
930,000 AON Corp., 6.95% due 1/15/2007 952,892
1,100,000 Marsh & McLennan Cos., Inc., 5.15%
due 9/15/2010 1,092,872
465,000 Montpelier Re Holdings Ltd., 6.125%
due 8/15/2013 467,873
1,090,000 NLV Financial Corp., 7.50% due 8/15/2033 (a) 1,190,648
Face
Amount Corporate Bonds Value
Insurance (concluded)
USD 330,000 North Front Pass-Through Trust, 5.81%
due 12/15/2024 (a)(b) $ 331,881
235,000 Prudential Financial, Inc., 4.104%
due 11/15/2006 233,376
780,000 Prudential Holdings LLC, 8.695%
due 12/18/2023 (a) 997,121
745,000 Willis Group North America, Inc., 5.625%
due 7/15/2015 740,207
--------------
6,006,870
Media--1.2%
430,000 Clear Channel Communications, Inc., 5.50%
due 9/15/2014 414,461
400,000 Comcast Cable Communications Holdings, Inc.,
8.375% due 3/15/2013 473,267
430,000 Cox Communications, Inc., 5.45% due 12/15/2014 427,203
1,355,000 Historic TW, Inc., 9.125% due 1/15/2013 1,654,519
1,250,000 Lenfest Communications, Inc.,10.50%
due 6/15/2006 1,293,940
420,000 Media General, Inc., 6.95% due 9/01/2006 425,831
435,000 News America, Inc., 6.75% due 1/09/2038 473,438
--------------
5,162,659
Metals & Mining--0.4%
430,000 Alcan, Inc., 5.75% due 6/01/2035 422,752
345,000 Teck Cominco Ltd., 6.125% due 10/01/2035 338,316
770,000 Textron Financial Corp., 2.75% due 6/01/2006 762,339
--------------
1,523,407
Multi-Utilities--0.2%
120,000 Ameren Corp., 4.263% due 5/15/2007 118,940
Dominion Resources, Inc.:
375,000 5.95% due 6/15/2035 366,333
615,000 Series B, 4.09% due 5/15/2006 (b) 615,812
--------------
1,101,085
Oil, Gas & Consumable Fuels--1.8%
465,000 Amerada Hess Corp., 7.125% due 3/15/2033 532,191
490,000 Consolidated Natural Gas Co., 5% due 12/01/2014 482,969
805,500 Kern River Funding Corp., 4.893%
due 4/30/2018 (a) 800,154
510,000 Kinder Morgan Energy Partners LP, 5.35%
due 8/15/2007 514,273
195,000 Midamerican Energy Holdings Co., 5.875%
due 10/01/2012 203,464
400,000 Motiva Enterprises LLC, 5.20% due 9/15/2012 (a) 401,903
2,500,000 Pemex Project Funding Master Trust, 5.17%
due 6/15/2010 (a)(b) 2,601,250
545,000 Tengizchevroil Finance Co. SARL, 6.124%
due 11/15/2014 (a) 557,263
310,000 Texaco Capital, Inc., 8.625% due 6/30/2010 362,704
1,665,000 Ultramar Diamond Shamrock Corp., 6.75%
due 10/15/2037 1,780,474
--------------
8,236,645
Paper & Forest Products--0.3%
1,040,000 Celulosa Arauco y Constitucion SA, 8.625%
due 8/15/2010 1,181,898
Face
Amount Corporate Bonds Value
Pharmaceuticals--0.3%
USD 1,380,000 Wyeth, 5.50% due 3/15/2013 $ 1,415,273
Real Estate--0.7%
410,000 Developers Diversified Realty Corp., 6.625%
due 1/15/2008 423,521
465,000 Health Care Property Investors, Inc., 6.50%
due 2/15/2006 468,578
550,000 Nationwide Health Properties, Inc., 6.59%
due 7/07/2038 576,099
855,000 Simon Property Group LP, 5.10% due 6/15/2015 838,062
780,000 Westfield Capital Corp. Ltd., 5.125%
due 11/15/2014 (a) 774,191
--------------
3,080,451
Road & Rail--0.3%
335,000 CSX Corp., 6.75% due 3/15/2011 362,992
325,000 Canadian National Railway Co., 6.90%
due 7/15/2028 384,171
480,000 Norfolk Southern Corp., 7.05% due 5/01/2037 573,652
--------------
1,320,815
Thrifts & Mortgage Finance--0.2%
695,000 Washington Mutual, Inc., 4.20% due 1/15/2010 678,248
Wireless Telecommunication Services--0.1%
427,000 AT&T Wireless Services, Inc., 8.75% due 3/01/2031 576,364
Total Corporate Bonds
(Cost--$105,736,165)--23.5% 106,360,904
Foreign Government Obligations
EUR 2,249,000 Bundesobligation Series 143, 3.50%
due 10/10/2008 2,789,022
USD 1,410,000 Italy Government International Bond, 4.50%
due 1/21/2015 1,385,955
Mexico Government International Bond:
1,330,000 9.875% due 2/01/2010 1,582,035
495,000 6.375% due 1/16/2013 526,680
395,000 5.875% due 1/15/2014 408,430
Total Foreign Government Obligations
(Cost--$6,464,326)--1.5% 6,692,122
Preferred Securities
Capital Trusts
Commercial Banks--0.1%
495,000 BAC Capital Trust VI, 5.625% due 3/08/2035 482,135
Electric Utilities--0.1%
420,000 Alabama Power Capital Trust V, 5.50%
due 10/01/2042 (b) 424,649
Oil, Gas & Consumable Fuels--0.1%
500,000 Pemex Project Funding Master Trust, 7.375%
due 12/15/2014 555,000
Total Capital Trusts
(Cost--$1,435,524)--0.3% 1,461,784
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Schedule of Investments (continued) (in U.S. dollars)
Shares
Held Preferred Stocks Value
Thrifts & Mortgage Finance--0.4%
30,400 Fannie Mae, 7% $ 1,666,300
Total Preferred Stocks
(Cost--$1,691,000)--0.4% 1,666,300
Face
Amount Trust Preferred
Aerospace & Defense--0.6%
USD 2,660,000 RC Trust I, 7% due 5/15/2006 2,670,628
Total Trust Preferred
(Cost--$2,713,059)--0.6% 2,670,628
Total Preferred Securities
(Cost--$5,839,583)--1.3% 5,798,712
Municipal Bonds
945,000 Dallas, Texas, General Obligation Bonds, Series C,
5.25% due 2/15/2024 944,915
Total Municipal Bonds
(Cost $945,000)--0.2% 944,915
Short-Term Securities
Certificate of Deposit--0.5%
720,000 Canadian Imperial Bank of Commerce, 3.46%
due 12/12/2005 719,352
720,000 Fortis Bank, 3.445% due 12/12/2005 719,280
720,000 HBOS Plc, 3.46% due 12/12/2005 719,280
--------------
2,157,912
Commercial Paper*--20.2%
6,900,000 Atlantic Asset Securitization Corp., 3.77%
due 10/04/2005 6,899,277
22,000,000 E.I. du Pont de Nemours & Co., 3.71%
due 10/14/2005 21,975,061
21,500,000 Edison Asset Securitization, LLC, 3.68%
due 10/13/2005 21,478,022
16,800,000 Merck & Co., Inc., 3.73% due 10/05/2005 16,796,519
4,800,000 Southern Company Funding Corp., 3.72%
due 10/04/2005 4,799,504
19,500,000 Swedbank (ForeningsSparbanken), 3.73%
due 10/17/2005 19,471,714
--------------
91,420,097
Beneficial
Interest
USD 29,616,500 Merrill Lynch Liquidity Series, LLC
Money Market Series (c)(d) 29,616,500
Total Short-Term Securities
(Cost--$123,196,630)--27.2% 123,194,509
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Schedule of Investments (continued) (in U.S. dollars)
Number of
Contracts Options Purchased Value
Call Options Purchased--0.0%
200 5-Year U.S. Treasury Note, expiring October 2005
at USD 107 $ 53,125
Total Options Purchased
(Premiums Paid--$88,248)--0.0% 53,125
Total Investments
(Cost--$534,288,829)--118.2% 535,224,778
Options Written
Call Options Written--0.0%
41++++ Swaption, expiring January 2006 at 4.25%,
Broker UBS Warburg (g) (20,500)
10++++ Swaption, expiring December 2005 at 4.21%,
Broker Credit Suisse First Boston (g) (46,920)
Number of
Contracts Options Written Value
Call Options Written (concluded)
400 5-Year U.S. Treasury Note, expiring October 2005
as USD 108 $ (12,500)
--------------
(79,920)
Put Options Written--0.1%
41++++ Swaption, expiring January 2006 at 4.25%,
Broker UBS Warburg (g) (184,500)
10++++ Swaption, expiring December 2005 at 5.11%,
Broker Credit Suisse First Boston (g) (9,680)
--------------
(194,180)
Total Options Written
(Premiums Received--$270,679)--(0.1%) (274,100)
Total Investments, Net of Options Written
(Cost--$534,018,150**)--118.1% 534,950,678
Liabilities in Excess of Other Assets--(18.1%) (81,965,965)
--------------
Net Assets--100.0% $ 452,984,713
==============
++ Asset-Backed and Mortgage-Backed Obligations are subject to principal
paydowns. As a result of prepayments or refinancings of the underlying
instruments, the average life may be substantially less than the original
maturity.
++++ One contract represents a notional amount of $1,000,000.
* Commercial Paper is traded on a discount basis; the interest rates shown
reflect the discount rates paid at the time of purchase.
** The cost and unrealized appreciation (depreciation) of investments, net
of options written, as of September 30, 2005, as computed for federal
income tax purposes, were as follows:
Aggregate cost $ 534,470,999
================
Gross unrealized appreciation $ 3,370,213
Gross unrealized depreciation (2,890,534)
----------------
Net unrealized appreciation $ 479,679
================
(a) The security may be offered and sold to "qualified institutional buyers"
under Rule 144A of the Securities Act of 1933.
(b) Floating rate security.
(c) Security was purchased with the cash proceeds from securities loans.
(d) Investments in companies considered to be an affiliate of the Portfolio,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
were as follows:
Interest/
Net Dividend
Affiliate Activity Income
Merrill Lynch Liquidity Series, LLC
Money Market Series $ 29,616,500 $30,934
Merrill Lynch Premier Institutional Fund (14,540,000) $ 4,856
(e) Convertible security.
(f) The security is a perpetual bond and has no stated maturity date.
(g) This European style swaption, which can be exercised only on the
expiration date, represents a standby commitment whereby the writer of
the option is obligated to enter into a predetermined interest rate swap
contract upon exercise of swaption.
(h) Restricted security as to resale, representing 1.1% of net assets were
as follows:
Acquisition
Issue Date Cost Value
Sigma Finance Corp.:
6.29% due 8/15/2011 2/13/2004 $ 3,400,000 $ 3,400,000
4.20% due 3/31/2014 3/26/2004 1,700,000 1,717,738
------------ ------------
Total $ 5,100,000 $ 5,117,738
============ ============
(i) All or a portion of security held as collateral in connection with open
financial futures contracts.
(j) Security, or a portion of security, is on loan.
(k) All or a portion of security represents a "to-be-announced" transaction,
with a commitment to purchase the security for which all specific
information is not available at this time.
For Portfolio compliance purposes, the Portfolio's industry classifications
refer to any one or more of the industry sub-classifications used by one
or more widely recognized market indexes or ratings group indexes, and/or
as defined by Portfolio management. This definition may not apply for
purposes of this report, which may combine industry sub-classifications
for reporting ease. Industries are shown as a percentage of net assets.
These industry classifications are unaudited.
Financial futures contracts purchased as of September 30, 2005 were
as follows:
Number of Expiration Face Unrealized
Contracts Issue Date Value Depreciation
178 5-Year U.S. December
Treasury Note 2005 $19,137,056 $ (116,087)
Financial futures contracts sold as of September 30, 2005 were
as follows:
Number of Expiration Face Unrealized
Contracts Issue Date Value Appreciation
273 10-Year U.S. December
Treasury Note 2005 $30,352,655 $ 343,983
Forward foreign exchange contracts as of September 30, 2005 were
as follows:
Foreign Settlement Unrealized
Currency Sold Date Appreciation
EUR 2,328,187 October 2005 $ 67,626
----------
Total Unrealized Appreciation on Forward Foreign
Exchange Contracts--Net (USD Commitment--$2,876,265) $ 67,626
==========
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Schedule of Investments (continued) (in U.S. dollars)
Swaps outstanding as of September 30, 2005 were as follows:
Unrealized
Notional Appreciation
Amount (Depreciation)
Receive (pay) a variable return
based on the change in the since
inception return of the Lehman
Brothers U.S. Treasury Index and
pay a floating rate based on
1-month LIBOR minus .15%
Broker, Lehman Brothers
Special Finance
Expires October 2005 $ 14,200,000 --
Receive (pay) a variable return
based on the change in the since
inception return of the Lehman
Brothers MBS Fixed Rate Index
and pay a floating rate based on
1-month LIBOR minus .12%
Broker, UBS Warburg
Expires October 2005 $ 3,925,000 --
Receive (pay) a variable return
based on the change in the since
inception return of the Lehman
Brothers MBS Fixed Rate Index
and pay a floating rate based on
1-month LIBOR minus .05%
Broker, UBS Warburg
Expires October 2005 $ 11,050,000 --
Receive (pay) a variable return
based on the change in the since
inception return of the Lehman
Brothers U.S. Treasury Index and
pay a floating rate based on
1-month LIBOR minus .15%
Broker, Lehman Brothers
Special Finance
Expires November 2005 $ 25,400,000 --
Receive (pay) a variable return
based on the change in the since
inception return of the Lehman
Brothers MBS Fixed Rate Index
and pay a floating rate based on
1-month LIBOR minus .03%
Broker, Lehman Brothers
Special Finance
Expires November 2005 $ 30,700,000 --
Receive (pay) a variable return
based on the change in the since
inception return of the Lehman
Brothers MBS Fixed Rate Index
and pay a floating rate based on
1-month LIBOR minus .01%
Broker, Lehman Brothers
Special Finance
Expires December 2005 $ 27,000,000 --
Unrealized
Notional Appreciation
Amount (Depreciation)
Receive (pay) a variable return
based on the change in the since
inception return of the Lehman
Brothers MBS Fixed Rate Index
and pay a floating rate based on
1-month LIBOR minus .01%
Broker, UBS Warburg
Expires December 2005 $ 11,750,000 --
Receive (pay) a variable return
based on the change in the since
inception return of the Lehman
Brothers U.S. Treasury Index and
pay a floating rate based on
1-month LIBOR minus .15%
Broker, Lehman Brothers
Special Finance
Expires February 2006 $ 19,200,000 --
Receive (pay) a variable return
based on the change in the since
inception return of the Lehman
Brothers CMBS Investment Grade
Index and pay a floating rate based
on 1-month LIBOR minus .05%
Broker, UBS Warburg
Expires February 2006 $ 5,900,000 --
Bought credit default protection on
Aon Corp., Inc. and pay .37%
Broker, Morgan Stanley
Capital Services, Inc.
Expires January 2007 $ 1,025,000 $ (4,169)
Pay a fixed rate of 2.8025% and
receive a floating rate based on
3-month LIBOR
Broker, JPMorgan Chase Bank
Expires January 2007 $ 1,025,000 22,486
Receive a fixed rate of 4.095%
and pay a floating rate based on
3-month LIBOR
Broker, Citibank N.A.
Expires September 2007 $ 25,000,000 (212,974)
Sold credit default protection on
Sprint Corporation and receive
1.50%
Broker, Morgan Stanley
Capital Services, Inc.
Expires September 2008 $ 1,625,000 63,339
Sold credit default protection on
Comcast Cable Communications,
Inc. and receive 1.15%
Broker, Morgan Stanley
Capital Services, Inc.
Expires September 2008 $ 1,625,000 40,597
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Schedule of Investments (continued) (in U.S. dollars)
Swaps outstanding as of September 30, 2005 were as follows (continued):
Unrealized
Notional Appreciation
Amount (Depreciation)
Receive a fixed rate of 3.401% and
pay 3.875% on Treasury Inflation
Protected Securities adjusted
principal
Broker, JPMorgan Chase Bank
Expires January 2009 $ 2,937,000 $ (88,203)
Sold credit default protection on
Raytheon Co. and receive .73%
Broker, JPMorgan Chase Bank
Expires March 2009 $ 550,000 9,071
Bought credit default protection
on Boeing Capital Corp. and
pay .48%
Broker, JPMorgan Chase Bank
Expires March 2009 $ 550,000 (6,318)
Sold credit default protection on
Nextel Communications, Inc. and
receive 1.72%
Broker, JPMorgan Chase Bank
Expires September 2009 $ 1,035,000 56,784
Sold credit default protection on
Dow Jones CDX North America
Investment Grade Series 2 and
receive .60%
Broker, Morgan Stanley
Capital Services, Inc.
Expires September 2009 $ 4,095,000 (4,901)
Bought credit default protection on
Hewlett-Packard Co. and pay .31%
Broker, Lehman Brothers
Special Finance
Expires December 2009 $ 1,050,000 (3,246)
Bought credit default protection
on Petroleos Mexicanos SA and
pay 1.09%
Broker, Lehman Brothers
Special Finance
Expires December 2009 $ 2,105,000 (25,245)
Sold credit default protection on
Mexico Government International
Bond and receive .92%
Broker, Lehman Brothers
Special Finance
Expires December 2009 $ 2,105,000 26,862
Sold credit default protection on
Computer Associates International,
Inc. and receive .83%
Broker, Lehman Brothers
Special Finance
Expires December 2009 $ 1,050,000 7,644
Unrealized
Notional Appreciation
Amount (Depreciation)
Bought credit default protection on
Morgan Stanley and pay .47%
Broker, HSBC Bank USA
Expires June 2010 $ 510,000 $ (4,719)
Bought credit default protection on
Valero Energy Corp. and pay 1.03%
Broker, Deutsche Bank AG
Expires June 2010 $ 510,000 (13,200)
Bought credit default protection on
Devon Energy Corp. and pay .48%
Broker, Deutsche Bank AG
Expires June 2010 $ 1,015,000 (5,870)
Sold credit default protection on
BellSouth Corp. and receive .26%
Broker, Lehman Brothers
Special Finance
Expires June 2010 $ 500,000 576
Bought credit default protection on
Devon Energy Corp. and pay .50%
Broker, Lehman Brothers
Special Finance
Expires June 2010 $ 1,015,000 (6,732)
Bought credit default protection on
Valero Energy Corp. and pay 1.00%
Broker, Lehman Brothers
Special Finance
Expires June 2010 $ 510,000 (13,200)
Bought credit default protection on
The Goldman Sachs Group, Inc. and
pay .45%
Broker, Lehman Brothers
Special Finance
Expires June 2010 $ 500,000 (4,220)
Bought credit default protection
on JPMorgan Chase & Co. and pay
.44%
Broker, Morgan Stanley
Capital Services, Inc.
Expires June 2010 $ 500,000 (4,218)
Sold credit default protection on
Wells Fargo & Co. and receive
.195%
Broker, Deutsche Bank AG
Expires June 2010 $ 500,000 1,561
Sold credit default protection on
Dow Jones CDX North America
Investment Grade Index Series 4
and receive .40%
Broker, Lehman Brothers
Special Finance
Expires June 2010 $ 5,000,000 24,589
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Schedule of Investments (continued) (in U.S. dollars)
Swaps outstanding as of September 30, 2005 were as follows (continued):
Unrealized
Notional Appreciation
Amount (Depreciation)
Sold credit default protection on
Dow Jones CDX North America
Investment Grade Index Series 4
and receive .40%
Broker, Lehman Brothers
Special Finance
Expires June 2010 $ 5,125,000 $ (1,346)
Sold credit default protection on
J. C. Penney Company, Inc. and
receive .86%
Broker, Lehman Brothers
Special Finance
Expires September 2010 $ 995,000 (10,809)
Bought credit default protection
on Ford Motor Credit Co. and pay
4.21%
Broker, UBS Warburg
Expires September 2010 $ 500,000 2,041
Bought credit default protection
on Ford Motor Credit Co. and pay
4.31%
Broker, UBS Warburg
Expires September 2010 $ 1,000,000 149
Sold credit default protection on
Royal Caribbean Cruises Ltd. and
receive 1.03%
Broker, Lehman Brothers
Special Finance
Expires September 2010 $ 995,000 (9,466)
Sold credit default protection on
J. C. Penney Company, Inc. and
receive .95%
Broker, UBS Warburg
Expires September 2010 $ 500,000 (3,470)
Sold credit default protection on
Royal Caribbean Cruises Ltd. and
receive 1.13%
Broker, UBS Warburg
Expires September 2010 $ 500,000 (2,592)
Sold credit default protection on
General Motors Acceptance Corp.
and receive 4.45%
Broker, UBS Warburg
Expires September 2010 $ 500,000 (12,770)
Sold credit default protection on
General Motors Acceptance Corp.
and receive 4.55%
Broker, UBS Warburg
Expires September 2010 $ 1,000,000 (21,724)
Unrealized
Notional Appreciation
Amount (Depreciation)
Bought credit default protection on
Alltel Corp. and pay .40%
Broker, Deutsche Bank AG
Expires December 2010 $ 2,050,000 $ (1,447)
Sold credit default protection on
CSX Corp. and receive .34%
Broker, JPMorgan Chase Bank
Expires December 2010 $ 1,025,000 (467)
Bought credit default protection
on Sara Lee Corp. and pay .57%
Broker, Lehman Brothers
Special Finance
Expires December 2010 $ 1,025,000 1,402
Bought credit default protection on
ConAgra Foods, Inc. and pay .57%
Broker, Lehman Brothers
Special Finance
Expires December 2010 $ 1,025,000 1,402
Bought credit default protection on
HJ Heinz Co. and pay .37%
Broker, UBS Warburg
Expires December 2010 $ 1,025,000 (10)
Sold credit default protection on
Goodrich Corp. and receive .44%
Broker, UBS Warburg
Expires December 2010 $ 1,025,000 (1,409)
Bought credit default protection on
Campbell Soup Co. and pay .26%
Broker, UBS Warburg
Expires December 2010 $ 1,025,000 947
Bought credit default protection on
General Mills, Inc. and pay .35%
Broker, UBS Warburg
Expires December 2010 $ 1,025,000 941
Bought credit default protection
on Ford Motor Credit Co. and pay
4.40%
Broker, UBS Warburg
Expires December 2010 $ 995,000 (111)
Bought credit default protection on
Albertson's, Inc. and pay 3.18%
Broker, Morgan Stanley
Capital Services, Inc.
Expires December 2010 $ 1,015,000 3,846
Sold credit default protection on
Tyco International Ltd. and
receive .43%
Broker, UBS Warburg
Expires December 2010 $ 1,025,000 (3,304)
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Schedule of Investments (concluded) (in U.S. dollars)
Swaps outstanding as of September 30, 2005 were as follows (concluded):
Unrealized
Notional Appreciation
Amount (Depreciation)
Sold credit default protection on
General Motors Acceptance Corp.
and receive 5.10%
Broker, UBS Warburg
Expires December 2010 $ 995,000 $ (3,786)
Sold credit default protection on
Lehman Brothers Holdings, Inc.
and receive .271%
Broker, UBS Warburg
Expires December 2010 $ 1,025,000 946
Sold credit default protection on
Computer Associates International,
Inc. and receive .74%
Broker, UBS Warburg
Expires December 2010 $ 1,025,000 (1,091)
Sold credit default protection on
Dow Jones CDX North America
Investment Grade Index Series 5
and receive .45%
Broker, Lehman Brothers
Special Finance
Expires December 2010 $ 5,470,000 7,039
Bought credit default protection
on Dow Jones CDX North America
Investment Grade Index Series 5
and pay .55%
Broker, Lehman Brothers
Special Finance
Expires December 2010 $ 5,125,000 (3,009)
Receive a fixed rate of 4.17% and
pay 3.50% on Treasury Inflation
Protected Securities adjusted
principal
Broker, Morgan Stanley
Capital Services, Inc.
Expires January 2011 $ 2,525,000 (115,158)
Receive a floating rate based on
1-month LIBOR plus .47%,
which is capped at a fixed
coupon of 6% and pay a
floating rate based on 1-month
LIBOR
Broker, Credit Suisse First Boston
Expires June 2011 $ 23,000,000 (20,903)
-----------
Total $ (337,865)
===========
Currency Abbreviations
EUR Euro
USD U.S. Dollar
See Notes to Financial Statements.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Statement of Assets and Liabilities
As of September 30, 2005
Assets
Investments in unaffiliated securities, at value (identified cost--$504,584,081)
(including securities loaned of $28,887,198) $ 505,555,153
Investments in affiliated securities, at value (identified cost--$29,616,500) 29,616,500
Options purchased, at value (premiums paid--$88,248) 53,125
Unrealized appreciation on forward foreign exchange contracts 67,626
Swap premiums paid 24,422
Cash 294,052
Receivables:
Securities sold $ 12,534,790
Interest 2,532,617
Capital shares sold 915,321
Variation margin 41,879
Securities lending 23,647 16,048,254
---------------
Prepaid expenses 36,458
---------------
Total assets 551,695,590
---------------
Liabilities
Collateral on securities loaned, at value 29,616,500
Options written, at value (premiums received--$270,679) 274,100
Unrealized depreciation on swaps 337,865
Swap premiums received 81,680
Payables:
Securities purchased 63,787,536
Capital shares redeemed 2,054,141
Swaps 1,751,409
Dividends and distributions to shareholders 333,499
Other affiliates 191,462
Investment adviser 123,132
Distributor 70,203 68,311,382
---------------
Accrued expenses and other liabilities 89,350
---------------
Total liabilities 98,710,877
---------------
Net Assets
Net assets $ 452,984,713
===============
Net Assets Consist of
Class A Shares of Common Stock, $.10 par value, 50,000,000 shares authorized $ 1,393,799
Class B Shares of Common Stock, $.10 par value, 50,000,000 shares authorized 801,008
Class C Shares of Common Stock, $.10 par value, 50,000,000 shares authorized 200,869
Class I Shares of Common Stock, $.10 par value, 100,000,000 shares authorized 1,373,123
Class R Shares of Common Stock, $.10 par value, 100,000,000 shares authorized 53,326
Paid-in capital in excess of par 446,808,156
Accumulated distributions in excess of investment income--net $ (249,064)
Undistributed realized capital gains--net 1,718,250
Unrealized appreciation--net 885,246
---------------
Total accumulated earnings--net 2,354,432
---------------
Net Assets $ 452,984,713
===============
Net Asset Value
Class A--Based on net assets of $165,191,677 and 13,937,993 shares outstanding $ 11.85
===============
Class B--Based on net assets of $94,934,196 and 8,010,083 shares outstanding $ 11.85
===============
Class C--Based on net assets of $23,811,292 and 2,008,690 shares outstanding $ 11.85
===============
Class I--Based on net assets of $162,728,863 and 13,731,227 shares outstanding $ 11.85
===============
Class R--Based on net assets of $6,318,685 and 533,262 shares outstanding $ 11.85
===============
See Notes to Financial Statements.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Statement of Operations
For the Year Ended September 30, 2005
Investment Income
Interest $ 17,981,633
Dividends 119,193
Securities lending 35,790
---------------
Total income 18,136,616
---------------
Expenses
Investment advisory fees $ 1,661,525
Account maintenance and distribution fees--Class B 510,564
Transfer agent fees--Class A 403,319
Transfer agent fees--Class I 389,678
Transfer agent fees--Class B 261,600
Accounting services 171,644
Account maintenance fees--Class A 165,086
Account maintenance and distribution fees--Class C 119,101
Registration fees 63,646
Transfer agent fees--Class C 62,551
Printing and shareholder reports 54,813
Professional fees 45,172
Custodian fees 42,858
Pricing fees 34,380
Account maintenance and distribution fees--Class R 23,396
Transfer agent fees--Class R 11,509
Directors' fees and expenses 5,813
Other 42,696
---------------
Total expenses 4,069,351
---------------
Investment income--net 14,067,265
---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain (loss) on:
Investments--net 1,578,463
Futures contracts and swaps--net 162,201
Options written--net 1,281,906
Foreign currency transactions--net (74,785) 2,947,785
---------------
Change in unrealized appreciation/depreciation on:
Investments--net (5,911,362)
Futures contracts and swaps--net (111,221)
Options written--net (3,421)
Foreign currency transactions--net 24,835 (6,001,169)
--------------- ---------------
Total realized and unrealized loss--net (3,053,384)
---------------
Net Increase in Net Assets Resulting from Operations $ 11,013,881
===============
See Notes to Financial Statements.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Statements of Changes in Net Assets
For the Year Ended
September 30,
Increase (Decrease) in Net Assets: 2005 2004
Operations
Investment income--net $ 14,067,265 $ 13,366,622
Realized gain--net 2,947,785 7,407,629
Change in unrealized appreciation/depreciation--net (6,001,169) (4,761,683)
--------------- ---------------
Net increase in net assets resulting from operations 11,013,881 16,012,568
--------------- ---------------
Dividends & Distributions to Shareholders
Investment income--net:
Class A (6,432,644) (5,096,602)
Class B (3,561,110) (3,528,478)
Class C (824,691) (728,784)
Class I (6,355,420) (6,064,171)
Class R (158,204) (46,399)
Realized gain--net:
Class A (299,540) --
Class B (187,720) --
Class C (42,023) --
Class I (283,716) --
Class R (6,523) --
--------------- ---------------
Net decrease in net assets resulting from dividends and distributions to shareholders (18,151,591) (15,464,434)
--------------- ---------------
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions 4,984,940 (91,067,891)
--------------- ---------------
Net Assets
Total decrease in net assets (2,152,770) (90,519,757)
Beginning of year 455,137,483 545,657,240
--------------- ---------------
End of year* $ 452,984,713 $ 455,137,483
=============== ===============
* Undistributed (accumulated distributions in excess of) investment income--net $ (249,064) $ 2,362,147
=============== ===============
See Notes to Financial Statements.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Financial Highlights
Class A
The following per share data and ratios have been derived For the Year Ended September 30,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of year $ 12.04 $ 12.01 $ 11.77 $ 11.47 $ 10.93
----------- ----------- ----------- ----------- -----------
Investment income--net .38++ .34++ .41++ .51 .66
Realized and unrealized gain (loss)--net (.05) .08 .25 .30 .54
----------- ----------- ----------- ----------- -----------
Total from investment operations .33 .42 .66 .81 1.20
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.50) (.39) (.42) (.51) (.66)
Realized gain--net (.02) -- -- -- --
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.52) (.39) (.42) (.51) (.66)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 11.85 $ 12.04 $ 12.01 $ 11.77 $ 11.47
=========== =========== =========== =========== ===========
Total Investment Return*
Based on net asset value per share 2.50% 3.54% 5.69% 7.32% 11.24%
=========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses .81% .81% .77% .76% .94%
=========== =========== =========== =========== ===========
Investment income--net 3.17% 2.83% 3.42% 4.47% 5.88%
=========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of year (in thousands) $ 165,192 $ 163,221 $ 157,128 $ 139,659 $ 130,116
=========== =========== =========== =========== ===========
Portfolio turnover 217.69% 239.14% 299.97% 314.59% 259.80%
=========== =========== =========== =========== ===========
* Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
See Notes to Financial Statements.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Financial Highlights (continued)
Class B
The following per share data and ratios have been derived For the Year Ended September 30,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of year $ 12.04 $ 12.01 $ 11.78 $ 11.47 $ 10.93
----------- ----------- ----------- ----------- -----------
Investment income--net .33++ .29++ .36++ .46 .61
Realized and unrealized gain (loss)--net (.05) .08 .24 .31 .54
----------- ----------- ----------- ----------- -----------
Total from investment operations .28 .37 .60 .77 1.15
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.45) (.34) (.37) (.46) (.61)
Realized gain--net (.02) -- -- -- --
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.47) (.34) (.37) (.46) (.61)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 11.85 $ 12.04 $ 12.01 $ 11.78 $ 11.47
=========== =========== =========== =========== ===========
Total Investment Return*
Based on net asset value per share 2.08% 3.12% 5.17% 6.97% 10.79%
=========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses 1.22% 1.22% 1.18% 1.17% 1.35%
=========== =========== =========== =========== ===========
Investment income--net 2.76% 2.42% 3.02% 4.06% 5.46%
=========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of year (in thousands) $ 94,934 $ 108,404 $ 142,522 $ 141,993 $ 129,162
=========== =========== =========== =========== ===========
Portfolio turnover 217.69% 239.14% 299.97% 314.59% 259.80%
=========== =========== =========== =========== ===========
* Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
See Notes to Financial Statements.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Financial Highlights (continued)
Class C
The following per share data and ratios have been derived For the Year Ended September 30,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of year $ 12.04 $ 12.01 $ 11.78 $ 11.47 $ 10.93
----------- ----------- ----------- ----------- -----------
Investment income--net .33++ .29++ .35++ .46 .61
Realized and unrealized gain (loss)--net (.05) .08 .25 .31 .54
----------- ----------- ----------- ----------- -----------
Total from investment operations .28 .37 .60 .77 1.15
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.45) (.34) (.37) (.46) (.61)
Realized gain--net (.02) -- -- -- --
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.47) (.34) (.37) (.46) (.61)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 11.85 $ 12.04 $ 12.01 $ 11.78 $ 11.47
=========== =========== =========== =========== ===========
Total Investment Return*
Based on net asset value per share 2.07% 3.11% 5.16% 6.97% 10.78%
=========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses 1.23% 1.23% 1.19% 1.16% 1.36%
=========== =========== =========== =========== ===========
Investment income--net 2.76% 2.41% 2.95% 4.02% 5.41%
=========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of year (in thousands) $ 23,811 $ 23,701 $ 27,605 $ 12,535 $ 4,600
=========== =========== =========== =========== ===========
Portfolio turnover 217.69% 239.14% 299.97% 314.59% 259.80%
=========== =========== =========== =========== ===========
* Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
See Notes to Financial Statements.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Financial Highlights (continued)
Class I
The following per share data and ratios have been derived For the Year Ended September 30,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of year $ 12.04 $ 12.01 $ 11.77 $ 11.47 $ 10.93
----------- ----------- ----------- ----------- -----------
Investment income--net .39++ .35++ .42++ .52 .67
Realized and unrealized gain (loss)--net (.04) .07 .25 .30 .54
----------- ----------- ----------- ----------- -----------
Total from investment operations .35 .42 .67 .82 1.21
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.52) (.39) (.43) (.52) (.67)
Realized gain--net (.02) -- -- -- --
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.54) (.39) (.43) (.52) (.67)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 11.85 $ 12.04 $ 12.01 $ 11.77 $ 11.47
=========== =========== =========== =========== ===========
Total Investment Return*
Based on net asset value per share 2.60% 3.65% 5.78% 7.43% 11.35%
=========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses .71% .71% .67% .66% .84%
=========== =========== =========== =========== ===========
Investment income--net 3.28% 2.93% 3.52% 4.57% 5.94%
=========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of year (in thousands) $ 162,729 $ 157,201 $ 218,281 $ 195,515 $ 176,589
=========== =========== =========== =========== ===========
Portfolio turnover 217.69% 239.14% 299.97% 314.59% 259.80%
=========== =========== =========== =========== ===========
* Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
See Notes to Financial Statements.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Financial Highlights (concluded)
Class R
For the Period
January 3,
For the Year Ended 2003++ to
The following per share data and ratios have been derived September 30, September 30,
from information provided in the financial statements. 2005 2004 2003
Per Share Operating Performance
Net asset value, beginning of period $ 12.04 $ 12.01 $ 11.75
----------- ----------- -----------
Investment income--net*** .34 .31 .20
Realized and unrealized gain (loss)--net (.06) .09 .37
----------- ----------- -----------
Total from investment operations .28 .40 .57
----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.45) (.37) (.31)
Realized gain--net (.02) -- --
----------- ----------- -----------
Total dividends and distributions (.47) (.37) (.31)
----------- ----------- -----------
Net asset value, end of period $ 11.85 $ 12.04 $ 12.01
=========== =========== ===========
Total Investment Return**
Based on net asset value per share 2.09% 3.25% 4.90%+++
=========== =========== ===========
Ratios to Average Net Assets
Expenses 1.21% 1.14% 1.23%*
=========== =========== ===========
Investment income--net 2.81% 2.49% 2.46%*
=========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 6,319 $ 2,611 $ 121
=========== =========== ===========
Portfolio turnover 217.69% 239.14% 299.97%
=========== =========== ===========
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Based on average shares outstanding.
++ Commencement of operations.
+++ Aggregate total investment return.
See Notes to Financial Statements.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Notes to Financial Statements
1. Significant Accounting Policies:
Intermediate Term Portfolio (the "Portfolio") is one of three portfolios in
Merrill Lynch Bond Fund, Inc. (the "Fund") which is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Portfolio's financial statements are
prepared in conformity with U.S. generally accepted accounting principles,
which may require the use of management accruals and estimates. Actual results
may differ from these estimates. The Portfolio offers multiple classes of
shares. Shares of Class A and Class I are sold with a front-end sales charge.
Shares of Class B and Class C may be subject to a contingent deferred sales
charge. Class R Shares are sold only to certain retirement plans. All classes
of shares have identical voting, dividend, liquidation and other rights and
the same terms and conditions, except that Class A, Class B, Class C and Class
R Shares bear certain expenses related to the account maintenance of such
shares, and Class B, Class C and Class R Shares also bear certain expenses
related to the distribution of such shares. Each class has exclusive voting
rights with respect to matters relating to its account maintenance and
distribution expenditures (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 Portfolio.
(a) Valuation of investments--Debt securities 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 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 will be 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 based upon quoted fair valuations received daily by the Fund from
a pricing service or counterparty. 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.
Repurchase agreements are valued at cost plus accrued interest. 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.
Equity securities that are held by the Portfolio, which are traded on stock
exchanges or the Nasdaq National Market, are valued at the last sale price or
official close price on the exchange, as of the close of business on the day
the securities are being valued or, lacking any sales, at the last available
bid price for long positions, and at the last available asked price for short
positions. In cases where equity securities are traded on more than one
exchange, the securities are valued on the exchange designated as the primary
market by or under the authority of the Board of Directors of the Fund. Long
positions traded in the OTC market, Nasdaq Small Cap or Bulletin Board are
valued at the last available bid price obtained from one or more dealers or
pricing services approved by the Board of Directors of the Fund. Short
positions traded in the OTC market are valued at the last available asked
price. Portfolio securities that are traded both in the OTC market and on a
stock exchange are valued according to the broadest and most representative
market.
Generally, trading in foreign securities is substantially completed each day at
various times prior to the close of business on the New York Stock Exchange
("NYSE"). The values of such securities used in computing the net asset value
of the Portfolio's shares are determined as of such times. Foreign currency
exchange rates also are generally determined prior to the close of business on
the NYSE. Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which they are determined and the
close of business on the NYSE that may not be reflected in the computation of
the Portfolio's net asset value. If events (for example, a company
announcement, market volatility or a natural disaster) occur during such
periods that are expected to materially affect the value of such securities,
those securities may be valued at their fair value as determined in good faith
by the Fund's Board of Directors or by the Investment Adviser using a pricing
service and/or procedures approved by the Fund's Board of Directors.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Notes to Financial Statements (continued)
(b) Derivative financial instruments--The Portfolio may engage in various
portfolio investment strategies both to increase the return of the Portfolio
and to hedge, or protect, its exposure to interest rate movements and
movements in the securities markets. Losses may arise due to changes in the
value of the contract or if the counterparty does not perform under the
contract.
* Financial futures contracts--The Portfolio may purchase or sell financial
futures contracts and options on such futures contracts. Futures contracts are
contracts for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the Portfolio
deposits and maintains as collateral such initial margin as required by the
exchange on which the transaction is effected. Pursuant to the contract, the
Portfolio agrees to receive from or pay to the broker an amount of cash equal
to the daily fluctuation in value of the contract. Such receipts or payments
are known as variation margin and are recorded by the Portfolio as unrealized
gains or losses. When the contract is closed, the Portfolio records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
* Options--The Portfolio may purchase and write call and put options. When the
Portfolio writes an option, an amount equal to the premium received by the
Portfolio is reflected as an asset and an equivalent liability. The amount of
the liability is subsequently marked-to-market to reflect the current market
value of the option written. When a security is purchased or sold through an
exercise of an option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from (or added
to) the proceeds of the security sold. When an option expires (or the
Portfolio enters into a closing transaction), the Portfolio realizes a gain or
loss on the option to the extent of the premiums received or paid (or loss or
gain to the extent the cost of the closing transaction exceeds the premium
paid or received).
Written and purchased options are non-income producing investments.
* Forward foreign exchange contracts--The Portfolio may enter into forward
foreign exchange contracts as a hedge against either specific transactions or
portfolio positions. The contract is marked-to-market daily and the change in
market value is recorded by the Portfolio as an unrealized gain or loss. When
the contract is closed, the Portfolio records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at
the time it was closed.
* Swaps--The Portfolio may enter into swap agreements, which are over-the-
counter contracts in which the Portfolio and a counterparty agree to make
periodic net payments on a specified notional amount. The net payments can be
made for a set period of time or may be triggered by a predetermined credit
event. The net periodic payments may be based on a fixed or variable interest
rate; the change in market value of a specified security, basket of
securities, or index; or the return generated by a security. These periodic
payments received or made by the Portfolio are recorded in the accompanying
Statement of Operations as realized gains or losses, respectively. Gains or
losses are also realized upon termination of the swap agreements. Swaps are
marked-to-market daily and changes in value are recorded as unrealized
appreciation (depreciation). Risks include changes in the returns of the
underlying instruments, failure of the counterparties to perform under the
contracts' terms and the possible lack of liquidity with respect to the swap
agreements.
(c) Income taxes--It is the Portfolio's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
(d) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Portfolio amortizes
all premiums and discounts on debt securities.
(e) Prepaid registration fees--Prepaid registration fees are charged to
expense as the related shares are issued.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Notes to Financial Statements (continued)
(f) Dividends and distributions--Dividends from net investment income are
declared daily and paid monthly. Distributions of capital gains are recorded
on the ex-dividend dates.
(g) Securities lending--The Portfolio may lend securities to financial
institutions that provide cash or securities issued or guaranteed by the U.S.
government as collateral, which will be maintained at all times in an amount
equal to at least 100% of the current market value of the loaned securities.
The market value of the loaned securities is determined at the close of
business of the Portfolio and any additional required collateral is delivered
to the Portfolio on the next business day. Where the Portfolio receives
securities as collateral for the loaned securities, it collects a fee from the
borrower. The Portfolio typically receives the income on the loaned securities
but does not receive the income on the collateral. Where the Portfolio
receives cash collateral, it may invest such collateral and retain the amount
earned on such investment, net of any amount rebated to the borrower. Loans
of securities are terminable at any time and the borrower, after notice, is
required to return borrowed securities within five business days. The Portfolio
may pay reasonable finder's, lending agent, administrative and custodial fees
in connection with its loans. In the event that the borrower defaults on its
obligation to return borrowed securities because of insolvency or for any
other reason, the Portfolio could experience delays and costs in gaining
access to the collateral. The Portfolio also could suffer a loss where
the value of the collateral falls below the market value of the borrowed
securities, in the event of borrower default or in the event of losses on
investments made with cash collateral.
(h) Expenses--Certain expenses have been allocated to the individual
portfolios in the Fund on a pro rata basis based upon the respective aggregate
net asset value of each portfolio included in the Fund.
(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, $653,593 has been reclassified between undistributed net realized
capital gains and accumulated distributions in excess of net investment
income. This reclassification is the result of permanent differences
attributable to notional principal contracts, amortization methods on
fixed income securities, and foreign currency transactions. This
reclassification has 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 has entered into a Sub-Advisory Agreement with
Merrill Lynch Asset Management U.K. Limited ("MLAM U.K."), an affiliate of
FAM, pursuant to which MLAM U.K. provides investment advisory services to FAM
with respect to the Fund. There is no increase in the aggregate fees paid by
the Fund for these services.
FAM is responsible for the management of the Fund's Portfolio and provides the
necessary personnel, facilities, equipment and certain other services
necessary to the operations of the Fund. For such services, the Fund pays a
monthly fee with respect to the Portfolio based upon the aggregate average
daily value of the Portfolio's net assets and the Fund's High Income
Portfolio's and Master Core Bond Portfolio of Master Bond Trust net assets at
the following annual rates: .50% of the Fund's average daily net assets not
exceeding $250 million; .45% of average daily net assets in excess of $250
million but not exceeding $500 million; .40% of average daily net assets in
excess of $500 million but not exceeding $750 million; and .35% of average
daily net assets in excess of $750 million. For the year ended September 30,
2005, the aggregate average daily net assets of the Portfolio, including the
Fund's High Income Portfolio and Master Core Bond Portfolio, was approximately
$4,985,377,000.
Pursuant to the Distribution Plans adopted by the Fund in accordance with Rule
12(b)-1 under the Investment Company Act of 1940, the Fund pays the
Distributor ongoing account maintenance and distribution fees. The fees are
accrued daily and paid monthly at annual rates based upon the average daily
net assets of the shares of the Portfolio as follows:
Account
Maintenance Distribution
Fee Fee
Class A .10% --
Class B .25% .25%
Class C .25% .25%
Class R .25% .25%
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Notes to Financial Statements (continued)
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, Class C and Class R shareholders.
The ongoing distribution fee compensates the Distributor and MLPF&S for
providing shareholder and distribution-related services to Class B, Class C
and Class R shareholders.
For the year ended September 30, 2005, FAMD earned underwriting discounts and
direct commissions and MLPF&S earned dealer concessions on sales of the
Portfolio's Class A and Class I Shares as follows:
FAMD MLPF&S
Class A $ 272 $ 4,255
Class I $ 392 $ 4,024
For the year ended September 30, 2005, MLPF&S received contingent deferred
sales charges of $18,938 and $1,952 relating to transactions in Class B and
Class C Shares, respectively. Furthermore, MLPF&S received contingent deferred
sales charges of $3 relating to transactions subject to front-end sales charge
waivers in Class A.
The Portfolio received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to MLPF&S or its
affiliates. Pursuant to that order, the Portfolio also has retained Merrill
Lynch Investment Managers, LLC ("MLIM, LLC"), an affiliate of FAM, as the
securities lending agent for a fee based on a share of the returns on
investment of cash collateral. MLIM, LLC may, on behalf of the Portfolio,
invest cash collateral received by the Portfolio for such loans, among other
things, in a private investment company managed by MLIM, LLC or in registered
money market funds advised by FAM or its affiliates. For the year ended
September 30, 2005, MLIM, LLC received $15,691 in securities lending agent
fees.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co.,
is the Fund's transfer agent.
For the year ended September 30, 2005, the Portfolio reimbursed FAM $10,275
for certain accounting services.
Certain officers and/or directors of the Fund are officers and/or directors of
FAM, PSI, MLAM U.K., FAMD, FDS, ML & Co., and/or MLIM LLC.
3. Investments:
Purchases and sales (including paydowns) of investments, excluding short-term
securities, for the year ended September 30, 2005 were $884,002,843 and
$930,163,490, respectively.
Transactions in options written for the year ended September 30, 2005 were as
follows:
Number of Premiums
Contracts Received
Outstanding call options written,
beginning of year -- --
Options written 70,910 $ 797,948
Options closed (69,510) (429,064)
Options expired (949) (252,130)
--------------- ---------------
Outstanding call options written,
end of year 451 $ 116,754
=============== ===============
Number of Premiums
Contracts Received
Outstanding put options written,
beginning of year -- --
Options written 1,140 $ 2,114,149
Options closed (366) (1,827,213)
Options exercised (406) (68,263)
Options expired (317) (64,748)
--------------- ---------------
Outstanding put options written,
end of year 51 $ 153,925
=============== ===============
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share transactions
was $4,984,940 and $(91,067,891) for the years ended September 30, 2005 and
September 30, 2004, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Year Dollar
Ended September 30, 2005 Shares Amount
Shares sold 4,535,049 $ 54,302,513
Automatic conversion of shares 623,716 7,463,174
Shares issued to shareholders in
reinvestment of dividends and
distributions 183,976 2,201,594
--------------- ---------------
Total issued 5,342,741 63,967,281
Shares redeemed (4,961,286) (59,409,642)
--------------- ---------------
Net increase 381,455 $ 4,557,639
=============== ===============
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Notes to Financial Statements (continued)
Class A Shares for the Year Dollar
Ended September 30, 2004 Shares Amount
Shares sold 4,224,134 $ 50,408,391
Automatic conversion of shares 1,059,393 12,641,537
Shares issued to shareholders in
reinvestment of dividends 128,598 1,535,928
--------------- ---------------
Total issued 5,412,125 64,585,856
Shares redeemed (4,939,629) (58,915,195)
--------------- ---------------
Net increase 472,496 $ 5,670,661
=============== ===============
Class B Shares for the Year Dollar
Ended September 30, 2005 Shares Amount
Shares sold 2,130,652 $ 25,509,010
Shares issued to shareholders in
reinvestment of dividends and
distributions 254,743 3,048,821
--------------- ---------------
Total issued 2,385,395 28,557,831
--------------- ---------------
Automatic conversion of shares (623,716) (7,463,174)
Shares redeemed (2,754,850) (32,987,080)
--------------- ---------------
Total redeemed (3,378,566) (40,450,254)
--------------- ---------------
Net decrease (993,171) $ (11,892,423)
=============== ===============
Class B Shares for the Year Dollar
Ended September 30, 2004 Shares Amount
Shares sold 2,688,246 $ 32,106,394
Shares issued to shareholders in
reinvestment of dividends 234,716 2,804,395
--------------- ---------------
Total issued 2,922,962 34,910,789
--------------- ---------------
Automatic conversion of shares (1,059,315) (12,641,537)
Shares redeemed (4,727,588) (56,418,719)
--------------- ---------------
Total redeemed (5,786,903) (69,060,256)
--------------- ---------------
Net decrease (2,863,941) $ (34,149,467)
=============== ===============
Class C Shares for the Year Dollar
Ended September 30, 2005 Shares Amount
Shares sold 687,259 $ 8,228,008
Shares issued to shareholders in
reinvestment of dividends and
distributions 53,322 638,192
--------------- ---------------
Total issued 740,581 8,866,200
Shares redeemed (699,990) (8,384,441)
--------------- ---------------
Net increase 40,591 $ 481,759
=============== ===============
Class C Shares for the Year Dollar
Ended September 30, 2004 Shares Amount
Shares sold 622,489 $ 7,445,109
Shares issued to shareholders in
reinvestment of dividends 42,717 510,392
--------------- ---------------
Total issued 665,206 7,955,501
Shares redeemed (995,352) (11,893,350)
--------------- ---------------
Net decrease (330,146) $ (3,937,849)
=============== ===============
Class I Shares for the Year Dollar
Ended September 30, 2005 Shares Amount
Shares sold 3,830,201 $ 45,826,919
Shares issued to shareholders in
reinvestment of dividends and
distributions 77,916 932,401
--------------- ---------------
Total issued 3,908,117 46,759,320
Shares redeemed (3,234,309) (38,706,228)
--------------- ---------------
Net increase 673,808 $ 8,053,092
=============== ===============
Class I Shares for the Year Dollar
Ended September 30, 2004 Shares Amount
Shares sold 3,315,475 $ 39,552,949
Shares issued to shareholders in
reinvestment of dividends 87,284 1,042,970
--------------- ---------------
Total issued 3,402,759 40,595,919
Shares redeemed (8,522,216) (101,724,165)
--------------- ---------------
Net decrease (5,119,457) $ (61,128,246)
=============== ===============
Class R Shares for the Year Dollar
Ended September 30, 2005 Shares Amount
Shares sold 388,856 $ 4,652,417
Shares issued to shareholders in
reinvestment of dividends and
distributions 13,568 162,217
--------------- ---------------
Total issued 402,424 4,814,634
Shares redeemed (86,138) (1,029,761)
--------------- ---------------
Net increase 316,286 $ 3,784,873
=============== ===============
Class R Shares for the Year Dollar
Ended September 30, 2004 Shares Amount
Shares sold 264,503 $ 3,162,255
Shares issued to shareholders in
reinvestment of dividends 3,719 44,349
--------------- ---------------
Total issued 268,222 3,206,604
Shares redeemed (61,319) (729,594)
--------------- ---------------
Net increase 206,903 $ 2,477,010
=============== ===============
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Notes to Financial Statements (concluded)
5. Short-Term Borrowings:
The Portfolio, along with certain other funds managed by FAM and its
affiliates, is a party to a $500,000,000 credit agreement with a group of
lenders, which expires November 2005. The Portfolio may borrow under the credit
agreement to fund shareholder redemptions and for other lawful purposes other
than for leverage. The Portfolio may borrow up to the maximum amount allowable
under the Portfolio's current prospectus and statement of additional
information, subject to various other legal, regulatory or contractual limits.
The Portfolio pays a commitment fee of .07% per annum based on the Portfolio's
pro rata share of the unused portion of the credit agreement. Amounts borrowed
under the credit agreement bear interest at a rate equal to, at each
Portfolio's election, the federal funds rate plus .50% or a base rate as
defined in the credit agreement. The Portfolio did not borrow under the credit
agreement during the year ended September 30, 2005.
6. Distributions to Shareholders:
The tax character of distributions paid during the fiscal years ended
September 30, 2005 and September 30, 2004 was as follows:
9/30/2005 9/30/2004
Distributions paid from:
Ordinary income $ 17,442,555 $ 15,464,434
Net long-term capital gains 709,036 --
--------------- ---------------
Total taxable distributions $ 18,151,591 $ 15,464,434
=============== ===============
As of September 30, 2005, the components of accumulated earnings on a tax
basis were as follows:
Undistributed ordinary income--net $ 215,467
Undistributed long-term capital gains--net 2,082,297
---------------
Total undistributed earnings--net 2,297,764
Capital loss carryforward --
Unrealized gains--net 56,668*
---------------
Total accumulated earnings--net $ 2,354,432
===============
* The difference between book-basis and tax-basis net unrealized
gains is attributable primarily to the tax deferral of losses on wash
sales, the tax deferral of losses on straddles, the realization for tax
purposes of unrealized gains (losses) on certain futures and forward
foreign currency contracts, the difference between book and tax
amortization methods for premiums and discounts on fixed income
securities and other book tax differences.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
Merrill Lynch Bond Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Intermediate Term Portfolio (one of
the portfolios constituting Merrill Lynch Bond Fund, Inc. (the "Fund")) as of
September 30, 2005 and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in
the period then ended, and the financial highlights for each of the five years
in the period then ended. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of material
misstatement. The Fund is not required to have, nor were we engaged to
perform, an audit of its 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 Fund's 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 September 30, 2005 by correspondence with the custodian and
brokers; where replies were not received, 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
Intermediate Term Portfolio as of September 30, 2005, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and its 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
November 23, 2005
Important Tax Information (unaudited)
Of the ordinary income distributions paid monthly by Intermediate Term
Portfolio of Merrill Lynch Bond Fund, Inc. during the taxable year ended
September 30, 2005, 8.93% was attributable to federal obligations.
The law varies in each state as to whether and what percentage of dividend
income attributable to federal obligations is exempt from state income tax. We
recommend that you consult your tax adviser to determine if any portion of the
dividends you received is exempt from state income tax.
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 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 130 Funds None
P.O. Box 9011 and present 2005; President of MLIM and FAM since 2001; 175 Portfolios
Princeton, Director Co-Head (Americas Region) thereof from 2000
NJ 08543-9011 to 2001 and Senior Vice President from 1999 to
Age: 51 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 OppenheimerFunds, 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 described 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.
Independent Directors*
Ronald W. Forbes** Director 1981 to Professor Emeritus of Finance, School of 49 Funds None
P.O. Box 9095 present Business, State University of New York at 49 Portfolios
Princeton, Albany since 2000 and Professor thereof from
NJ 08543-9095 1989 to 2000; International Consultant, Urban
Age: 65 Institute, Washington D.C. from 1995 to 1999.
Cynthia A. Montgomery Director 1994 to Professor, Harvard Business School since 1989; 49 Funds Newell
P.O. Box 9095 present Associate Professor, J.L. Kellogg Graduate 49 Portfolios Rubbermaid, Inc.
Princeton, School of Management, Northwestern University (manufacturing)
NJ 08543-9095 from 1985 to 1989; Associate Professor, Graduate
Age: 53 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 49 Funds None
P.O. Box 9095 present of Alliance Capital Management (investment 49 Portfolios
Princeton, adviser) in 2000; General Counsel, Director and
NJ 08543-9095 Secretary of Sanford C. Bernstein & Co., Inc.
Age: 60 (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; and Director of
Covenant House from 2001 to 2004.
Roscoe S. Suddarth Director 2000 to President, Middle East Institute, from 1995 49 Funds None
P.O. Box 9095 present to 2001; Foreign Service Officer, United States 49 Portfolios
Princeton, Foreign Service, from 1961 to 1995; Career
NJ 08543-9095 Minister from 1989 to 1995; Deputy Inspector
Age: 70 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 1980 to Professor of Finance from 1984 to 1995, Dean 49 Funds Bowne & Co.,
P.O. Box 9095 present from 1984 to 1993 and since 1995 Dean 49 Portfolios Inc. (financial
Princeton, Emeritus of New York University's Leonard N. printers);
NJ 08543-9095 Stern School of Business Administration. Vornado Realty
Age: 67 Trust (real estate
company);
Alexander's, Inc.
(real estate
company)
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 30, 2005
Officers and Directors (concluded)
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* (concluded)
Edward D. Zinbarg Director 2000 to Self-employed financial consultant since 1994; 49 Funds None
P.O. Box 9095 present Executive Vice President of the Prudential 49 Portfolios
Princeton, Insurance Company of America from 1988 to
NJ 08543-9095 1994; Former Director of Prudential Reinsurance
Age: 70 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.
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.
John D. Burger Vice 2005 to Managing Director (Global Fixed Income) of MLIM since 2004; Director of MLIM
P.O. Box 9011 President present from 1998 to 2004 and Vice President thereof from 1993 to 1998.
Princeton,
NJ 08543-9011
Age: 43
Patrick Maldari Vice 2002 to Managing Director (Global Fixed Income) of MLIM since 2000; Director of MLIM
P.O. Box 9011 President present from 1997 to 2000.
Princeton,
NJ 08543-9011
Age: 43
James Pagano Vice 2000 to Director (Global Fixed Income) of MLIM since 2004; Vice President of MLIM from
P.O. Box 9011 President present 1997 to 2004.
Princeton,
NJ 08543-9011
Age: 43
Frank Viola Vice 2005 to Managing Director (Global Fixed Income) of MLIM since 2002; Head of the Global
P.O. Box 9011 President present Fixed Income Structured Asset Team since 2002; Director of MLIM from 2000
Princeton, to 2001 and Vice President thereof from 1997 to 2000.
NJ 08543-9011
Age: 41
Jeffrey Hiller Chief 2004 to Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice President
P.O. Box 9011 Compliance present and Chief Compliance Officer of MLIM (Americas Region) since 2004; Chief
Princeton, Officer Compliance Officer of the IQ Funds since 2004; Global Director of Compliance at
NJ 08543-9011 Morgan Stanley Investment Management from 2002 to 2004; Managing Director and
Age: 54 Global Director of 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
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agents
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
800-637-3863
INTERMEDIATE TERM PORTFOLIO OF MERRILL LYNCH BOND FUND, INC.
SEPTEMBER 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
(a) Audit Fees - Fiscal Year Ending September 30, 2005 - $35,000
Fiscal Year Ending September 30, 2004 - $32,000
(b) Audit-Related Fees -
Fiscal Year Ending September 30, 2005 - $0
Fiscal Year Ending September 30, 2004 - $0
(c) Tax Fees - Fiscal Year Ending September 30, 2005 - $7,115
Fiscal Year Ending September 30, 2004 - $10,050
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees -
Fiscal Year Ending September 30, 2005 - $0
Fiscal Year Ending September 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 September 30, 2005 - $6,827,388
Fiscal Year Ending September 30, 2004 - $14,091,966
(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) - $1,227,000, 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.
Intermediate Term Portfolio of Merrill Lynch Bond Fund, Inc.
By: /s/ Robert C. Doll, Jr.
----------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
Intermediate Term Portfolio of Merrill Lynch Bond Fund, Inc.
Date: November 17, 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
Intermediate Term Portfolio of Merrill Lynch Bond Fund, Inc.
Date: November 17, 2005
By: /s/ Donald C. Burke
----------------------------
Donald C. Burke,
Chief Financial Officer of
Intermediate Term Portfolio of Merrill Lynch Bond Fund, Inc.
Date: November 17, 2005