UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-02688
Name of Fund: Merrill Lynch Municipal Bond Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, Merrill Lynch Municipal Bond Fund, Inc., 800 Scudders Mill
Road, Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011,
Princeton, NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 06/30/06
Date of reporting period: 07/01/05 - 06/30/06
Item 1 - Report to Stockholders
Annual Report
June 30, 2006
Merrill Lynch
Municipal Bond Fund, Inc.
(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 1-800-637-3863; (2) at
www.mutualfunds.ml.com; and (3) on the Securities and Exchange Commission's
Web site at http://www.sec.gov. Information about how the Fund voted proxies
relating to securities held in the Fund's portfolio during the most recent
12-month period ended June 30 is available (1) at www.mutualfunds.ml.com and
(2) on the Securities and Exchange Commission's Web site at http://www.sec.gov.
Merrill Lynch Municipal Bond Fund, Inc.
Box 9011
Princeton, NJ 08543-9011
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A Letter From the President
Dear Shareholder
By now, you have probably heard of the important changes unfolding at
Merrill Lynch Investment Managers ("MLIM"). We have been communicating with
shareholders, via letters like this and in a detailed proxy mailing, about
MLIM's impending union with another highly regarded investment manager -
BlackRock, Inc. ("BlackRock"). This transaction marks the next chapter in
MLIM's growth story and, we believe, will be a benefit to our investors.
MLIM, a division of Merrill Lynch with over $583 billion in assets under
management, is a leading investment manager offering more than 100 investment
strategies in vehicles ranging from mutual funds to institutional portfolios.
BlackRock, with $464.1 billion in assets under management, is one of the
largest publicly traded investment management firms in the United States
managing assets on behalf of institutional and individual investors worldwide
through a variety of equity, fixed income, liquidity and alternative
investment products. At the completion of the transaction, which is expected
by the end of third quarter 2006, the resultant firm will be a top-10
investment manager worldwide with over $1 trillion in assets under
management.*
The combined company, to be known as BlackRock, will provide a wide selection
of high-quality investment solutions across a range of asset classes and
investment styles. The organization will have over 4,500 employees in 18
countries and a major presence in key markets worldwide. MLIM and BlackRock
possess complementary capabilities that together create a well-rounded
organization uniting some of the finest money managers in the industry. The
firms share similar values and beliefs - each strives for excellence in all
areas, and both make investment performance their single most important
mission. As such, our combination only reinforces our commitment to
shareholders.
Most of MLIM's investment products - including mutual funds, separately
managed accounts, annuities and variable insurance funds - eventually will
carry the "BlackRock" name. This will be reflected in newspaper and online
information sources beginning in October. Your account statements will reflect
the BlackRock name beginning with the October month-end reporting period.
Unless otherwise communicated via a proxy statement, your funds will maintain
the same investment objectives that they do today. Importantly, the MLIM/
BlackRock union will not affect your brokerage account or your relationship
with your financial advisor. If you are a client of Merrill Lynch, you will
remain a client of Merrill Lynch.
As always, we thank you for entrusting us with your investment assets. We look
forward to continuing to serve your investment needs with even greater
strength and scale as the new BlackRock.
Sincerely,
(Robert C. Doll, Jr.)
Robert C. Doll, Jr.
President and Chief Investment Officer
Merrill Lynch Investment Managers
* $1.047 trillion in assets under management as of June 30, 2006.
Data, including assets under management, are as of June 30, 2006.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
We are pleased to present to you the management teams of
Merrill Lynch Municipal Bond Fund, Inc.
Short-Term Portfolio
Peter Hayes, who joined Merrill Lynch Investment Managers in 1987, is the
Senior Portfolio Manager of Merrill Lynch Municipal Bond Fund, Inc. - Short-
Term Portfolio. Mr. Hayes received a bachelor's degree from the College of the
Holy Cross. Mr. Hayes' team includes Thomas Steffens. Mr. Steffens received a
bachelor's degree from Villanova University.
Peter J. Hayes
Senior Portfolio Manager
Table of Contents
A Letter From the President 2
A Discussion With Your Fund's Portfolio Managers 5
Announcement to Shareholders 8
Performance Data 9
Portfolio Information 14
Disclosure of Expenses 15
Schedule of Investments--Short-Term Portfolio 17
Schedule of Investments--Insured Portfolio 19
Schedule of Investments--National Portfolio 22
Financial Statements 32
Financial Highlights 38
Notes to Financial Statements 44
Report of Independent Registered Public Accounting Firm 51
Important Tax Information 51
Disclosure of New Investment Advisory Agreement 52
Officers and Directors 57
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Insured Portfolio
Robert DiMella, who joined Merrill Lynch Investment Managers in 1993, is the
Senior Portfolio Manager of Merrill Lynch Municipal Bond Fund, Inc. - Insured
Portfolio. Mr. DiMella received a bachelor's degree from the University of
Connecticut and an MBA from Rutgers University. He is a CFA (R) charterholder
and a member of the CFA Institute. Mr. DiMella's team includes Portfolio
Assistant Janine Bianchino and Analysts Jeff Moore, Mary Ezzo and Timothy
Milway. Mr. Moore and Mr. Milway are CFA charterholders and members of the CFA
Institute.
Robert A. DiMella
Senior Portfolio Manager
National Portfolio
Walter O'Connor, who joined Merrill Lynch Investment Managers in 1991, is the
Senior Portfolio Manager of Merrill Lynch Municipal Bond Fund, Inc. - National
Portfolio. Mr. O'Connor received a bachelor's degree from the University of
Notre Dame. He is a CFA charterholder and a member of the CFA Institute as
well as a member of the New York Society of Security Analysts. Mr. O'Connor's
team includes Jim Schwartz and Greg Bennett. Mr. Schwartz earned a bachelor's
degree from Rutgers College and an MBA from Monmouth University. He is a CFA
charterholder. Mr. Bennett earned a bachelor's degree from West Chester
University.
Walter C. O'Connor
Senior Portfolio Manager
CFA (R) and Chartered Financial Analyst (R) are
trademarks owned by the CFA Institute.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
A Discussion With Your Funds' Portfolio Managers
Municipal bond market fundamentals appear positive going forward, and we
expect the combination of high credit quality and fairly neutral interest rate
positioning to serve the Portfolios well.
Describe the recent market environment relative to municipal bonds.
Long-term bond yields rose sharply during the 12-month period, with much of
the increase occurring in the final three months. Bond prices, which move
opposite of yields, declined as investors focused on solid economic growth,
both globally and in the United States, and renewed inflationary pressures
deriving from rising commodity prices.
The Federal Reserve Board (the Fed) increased short-term interest rates at
each of its meetings during the year, bringing the federal funds target rate
to 5.25% at period-end. The yield curve continued to flatten as short-term
interest rates rose more than longer-term rates. Over the past 12 months,
30-year U.S. Treasury bond yields rose 100 basis points (1.00%) to 5.19% and
10-year U.S. Treasury note yields rose 121 basis points to 5.15%, the highest
level since May 2002. At the short end, two-year Treasury yields rose 150
basis points to 5.16%.
While municipal bond yields also rose in recent months, the market's strong
technical position provided significant price support and allowed municipal
bond prices to decline much less than taxable bond prices. As measured by
Municipal Market Data, yields on AAA-rated issues maturing in 30 years rose 37
basis points to 4.63%, while yields on AAA-rated issues maturing in 10 years
rose 69 basis points to 4.14%. Two-year, AAA-rated issues saw their yields
rise 110 basis points to 3.73%.
The municipal market has been supported by increased retail investor demand
and declining supply. Year-to-date, over $179 billion in new long-term tax-
exempt bonds was underwritten, a decline of 14% compared to the first half of
2005 and the lowest initial semi-annual volume in the past four years. The
decline largely has been the result of a 52% drop in refunding activity so far
this year. Rising bond yields have made the refinancing of existing higher-
couponed debt less attractive, as the potential savings have rapidly
diminished. In addition, the improved fiscal conditions of many state and
local governments have resulted in lower borrowing trends, as many new
municipal capital projects have been financed from existing budget surpluses.
At the same time, municipal bond fund flows have remained positive. As
reported by the Investment Company Institute, open-end tax-exempt bond funds
received net new cash inflows of more than $6.2 billion in the first five
months of 2006, compared to $1.4 billion during the same period in 2005.
Looking ahead, the fundamentals for the municipal market appear positive.
Demand is expected to be sustained as investors receive cash flow from coupon
income and the proceeds of bond maturities and calls. In addition, new
issuance should be manageable. The favorable supply/demand dynamic, coupled
with attractive yields relative to comparable U.S. Treasury bonds, should
continue to support the municipal market in the coming months.
Short-Term Portfolio
How did the Portfolio perform during the period in light of the existing
market conditions?
For the 12-month period ended June 30, 2006, Short-Term Portfolio's Class A,
Class B, Class C and Class I Shares had total returns of +1.47%, +1.11%,
+1.21% and +1.57%, respectively. (Portfolio results shown do not reflect
sales charges and would be lower if sales charges were included. Complete
performance information can be found on pages 9 - 13 of this report to
shareholders.) For the same period, the Portfolio's unmanaged benchmarks, the
Lehman Brothers Municipal Bond 3-Year General Obligation Index and the Lehman
Brothers Municipal Bond Index, had respective returns of +0.95% and +0.89%.
The Portfolio's comparable Lipper category of Short Municipal Debt Funds
posted an average return of +1.96% for the 12-month period. (Funds in the
Short Municipal Debt Funds category invest primarily in municipal debt issues
with dollar-weighted average maturities of less than three years.)
As mentioned earlier, the Fed continued to tighten monetary policy during
the year by raising the federal funds rate 25 basis points at each of its
meetings, as it had done since June 2004 when the target interest rate stood
at 1.00%. The last interest rate increase on June 29 brought the funds rate to
5.25%, which has exacerbated the flat yield curve environment. Since the Fed's
actions have had the most impact on the short end of the yield curve, where
the Portfolio operates, we continued to maintain a defensive investment stance
for most of the 12-month period in an effort to cushion the Portfolio's
underlying value. Specifically, we kept the portfolio's average maturity
shorter than that of our peer group, as we sought to avoid locking in to
longer maturities as the Fed continued to raise interest rates. The Portfolio's
cash reserves also were generally kept higher than they would be in a more
stable rate environment. Although the Portfolio's net asset value fell due
to the impact of the Fed tightening, the fall was minimized through our
investment approach.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
A Discussion With Your Funds' Portfolio Managers (continued)
What changes were made to the Portfolio during the period?
The most significant change reflected our decision to maintain a higher cash
position in the rising interest rate environment. Rates on cash equivalent
securities change at either daily or weekly intervals to reflect current
yields, thereby providing the Portfolio with principal protection in rising
rate markets. At times when cash equivalent yields were expected to fall due
to high demand in the market, we drew down cash to purchase bonds with very
short maturities, thus enhancing the yield of the Portfolio. However, any
market strength was generally viewed as a selling opportunity and provided us
with a means to sell at temporarily inflated prices and reestablish our cash
position.
The Portfolio continues to be heavily weighted in securities rated AA or
better, which tend to outperform lower-rated issues in periods of rising
interest rates.
How would you characterize the Portfolio's position at the close of the
period?
We continue to maintain a high-quality Portfolio that we believe is well
positioned for the prevailing environment. This includes a healthy cash
position, which provides us with the means to take advantage of higher yields
once the end of the Fed's tightening cycle becomes evident.
We will continue to assess the economic data in an effort to gauge the
strength of the overall economy and the inflation picture in the United
States. The Fed has indicated it is "data-dependent" in determining monetary
policy, and we believe these will be key components in the central bank's
decision on when to pause in its interest rate-hiking cycle. Should the cycle
appear to be drawing to a close, we will reduce our cash position and extend
the Portfolio's duration to a neutral posture. Given the recent outlook, we
expect that this change may come in the third quarter.
Peter J. Hayes
Vice President and Senior Portfolio Manager
Insured Portfolio
How did the Portfolio perform during the period in light of the existing
market conditions?
For the 12-month period ended June 30, 2006, Insured Portfolio's Class A,
Class B, Class C and Class I Shares had total returns of +0.44%, +0.05%, -0.12%
and +0.82%, respectively. (Portfolio results shown do not reflect sales charges
and would be lower if sales charges were included. Complete performance
information can be found on pages 9 - 13 of this report to shareholders.) For
the same period, the broad-market Lehman Brothers Municipal Bond Index
returned +0.89%. Notably, the index measures the performance of insured and
uninsured municipal bonds throughout the nation, while the Portfolio focuses
on higher-quality insured issues.
The Portfolio outperformed its comparable Lipper category of Insured Municipal
Debt Funds, which had an average return of -0.08% for the 12-month period.
(Funds in this Lipper category invest primarily in municipal debt issues
insured as to timely payment.) For the most part, we attribute the Portfolio's
relative outperformance to our yield curve positioning and our strategy of
favoring refundable issues. We were overweight in bonds with maturities
greater than 20 years for most of the period, which helped the Portfolio's
relative performance as interest rates on bonds with maturities greater than
20 years increased at a slower rate than bonds with shorter maturities (that
is, the municipal yield curve flattened). In addition, the Portfolio benefited
from the advance refunding of several large holdings during the period. When
municipal bonds are advance refunded, or refinanced ahead of their maturity
dates, their prices generally increase sharply.
What changes were made to the Portfolio during the period?
Throughout the period, we continued to focus on securities that we felt
represented the best relative value in the insured municipal marketplace. With
yield spreads at relatively narrow levels, we increased our exposure to
municipal bonds from high-tax states in which demand for tax-exempt securities
is strong, such as New Jersey, California and Massachusetts. We believe bonds
issued in these states should outperform when spreads widen in the future.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
In addition, we increased our exposure to bonds insured by newer entrants to
the municipal insurance arena, such as XLCA and CIFG. We were able to book
some incremental yield on these securities because of their insurers' short
histories, but we expect their spreads to narrow over time as the insurers
establish a track record in the market. We believe this will ultimately
generate positive relative performance for the Fund.
How would you characterize the Portfolio's position at the close of the
period?
At period-end, the Portfolio was fully invested and positioned neutrally
relative to the market with respect to interest rate risk. We are also looking
to shift our yield-curve strategy to a more neutral positioning because of the
possibility that the curve's trend toward flattening may be nearing its
conclusion. We continue to emphasize the Portfolio's competitive yield versus
its peers, as well as the preservation of net asset value.
Robert A. DiMella, CFA
Vice President and Senior Portfolio Manager
National Portfolio
How did the Portfolio perform during the period in light of the existing
market conditions?
For the 12-month period ended June 30, 2006, National Portfolio's Class A,
Class B, Class C and Class I Shares had total returns of +1.77%, +1.25%,
+1.20% and +2.02%, respectively. (Portfolio results shown do not reflect sales
charges and would be lower if sales charges were included. Complete performance
information can be found on pages 9 - 13 of this report to shareholders.) For
the same period, the Portfolio's benchmark, the Lehman Brothers Municipal Bond
Index, returned +0.89% and the Lipper General Municipal Debt Funds category had
an average return of +0.71%. (Funds in this Lipper category invest primarily
in municipal debt issues in the top four credit-rating categories.)
The Portfolio's significant outperformance versus the benchmark and its Lipper
group average is attributable to a number of factors. First, we have
consistently focused on a strategy that maximizes the Portfolio's current
yield. This means distributions to shareholders are regularly near the top of
the Lipper group and, over time, serve to enhance total return. Over the past
12 months, we also saw a continued tightening of credit spreads, which allowed
lower-quality, higher-yielding credits to outperform higher-quality issues of
comparable maturity. As such, a portion of the Portfolio's higher-yielding
credits experienced above-average price appreciation. Lastly, we maintained a
below-market duration (a measure of sensitivity to interest rates) in order to
protect the Portfolio's underlying value in the rising interest rate
environment of the past year.
What changes were made to the Portfolio during the period?
In a period of Fed tightening and rising long-term interest rates, our
strategy over the 12 months was aimed at protecting the Portfolio's net asset
value and delivering as high a current return as possible given the Portfolio's
relatively conservative credit parameters. Municipal issuers, meanwhile, have
been refinancing their existing, higher-couponed debt as interest rates have
fallen over the past several years. While some of the Portfolio's higher-
couponed bonds were called during the period as a result of this refinancing
boom, we were rewarded for our patient approach to reinvesting the proceeds.
In keeping with our overall strategy, we allowed call proceeds to build as
cash reserves during periods when interest rates were inopportune, and then
recommitted the funds whenever rates rose to more advantageous levels. This
approach helped to maintain our current income distribution, while also
protecting the Portfolio's net asset value.
Toward the end of the period, as 10-year Treasury issues and the federal funds
rate both approached 5.25%, rates on the long end of the municipal yield curve
moved higher. We viewed this as an opportunity to begin purchasing longer-
dated bonds in pursuit of a more neutral duration posture. Although issuance
of new municipal bonds declined year-over-year, we were still able to
accomplish our restructuring efforts through the new-issue market as well as
significant growth in the secondary market that resulted due to selling by
insurance companies and trading accounts.
How would you characterize the Portfolio's position at the close of the
period?
Interest rates rose during the past 12 months and restored better valuation at
the long end of the fixed income markets. We used this opportunity to achieve
a fully invested position and a neutral duration stance by period-end. New
purchases have been concentrated in higher-grade securities, reflecting our
ongoing commitment to a high-quality portfolio and also the fact that credit
spreads are at historically tight levels. The tight spreads mean there is
little yield advantage to be realized from investment in lower-quality issues
and, therefore, we are not inclined to take on the additional risk.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
A Discussion With Your Funds' Portfolio Managers (concluded)
Going forward, should we see any additional rise in long-term rates, we will
look to take on a more aggressive duration position and increase our use of
inverse floaters in an effort to augment the Portfolio's yield. To make such
moves, however, we would need to see a higher average coupon than is currently
available in the market. In the meantime, we continue our efforts to protect
the Portfolio's value while also providing our shareholders with an above-
average yield.
Walter C. O'Connor, CFA
Vice President and Senior Portfolio Manager
July 21, 2006
Announcement to Shareholders
On February 15, 2006, BlackRock, Inc. ("BlackRock") and Merrill Lynch & Co.,
Inc. ("Merrill Lynch") entered into an agreement to contribute Merrill Lynch's
investment management business, Merrill Lynch Investment Managers, L.P. and
certain affiliates (including Fund Asset Management, L.P. and Merrill Lynch
Investment Managers International Limited), to BlackRock to create a new
independent company ("New BlackRock") that will be one of the world's largest
asset management firms with over $1 trillion in assets under management (based
on combined assets under management as of June 30, 2006) (the "Transaction").
The Transaction is expected to close at the end of the third quarter of 2006,
at which time the new company will operate under the BlackRock name. The
Fund's Board of Directors has approved a new investment advisory agreement
with BlackRock Advisors, Inc. or its successor on substantially the same terms
and for the same advisory fee as the current investment advisory agreement
with the Investment Adviser. If the new agreement is approved by the Fund's
shareholders, BlackRock Advisors, Inc. or its successor is expected to become
the investment adviser of the Fund upon the closing of the Transaction.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Performance Data
About Fund Performance
Investors are able to purchase shares of the Fund through multiple pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end load) of 4%
and an account maintenance fee of 0.25% per year (but no distribution fee) for
Insured and National Portfolios. Short-Term Portfolio incurs a maximum initial
sales charge (front-end load) of 1% and an account maintenance fee of 0.10%
per year (but no distribution fee).
* Class B Shares are subject to a maximum contingent deferred sales charge of
4%, declining to 0% after six years for Insured and National Portfolios. Short-
Term Portfolio is subject to a maximum contingent deferred sales charge of 1%
if redeemed within three years of purchase. All Class B Shares purchased prior
to December 1, 2002 will maintain the four-year schedule and one-year schedule,
respectively. In addition, Insured and National Portfolios are subject to a
distribution fee of 0.50% per year and an account maintenance fee of 0.25% per
year. Short-Term Portfolio is subject to a distribution fee of 0.20% per year
and an account maintenance fee of 0.15% per year. All three classes of shares
automatically convert to Class A Shares after approximately 10 years. (There
is no initial sales charge for automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.55% per year and an
account maintenance fee of 0.25% per year for Insured and National Portfolios.
Short-Term Portfolio is subject to a distribution fee of 0.20% per year and an
account maintenance fee of 0.15% per year. In addition, Class C Shares for all
three Portfolios are subject to a 1% contingent deferred sales charge if
redeemed within one year of purchase.
* Effective December 28, 2005, Class I Shares for all Portfolios are no longer
subject to any front-end sales charge. Class I Shares bear no ongoing
distribution or account maintenance fees and are available only to eligible
investors. Had the sales charge been included, each Portfolio's Class I
Shares' performance would have been lower.
None of the past results shown should be considered a representation of future
performance. Current performance may be lower or higher than the performance
data quoted. Refer to www.mlim.ml.com to obtain performance data current to
the most recent month-end. Performance results do not reflect the deduction of
taxes that a shareholder would pay on fund distributions or the redemption of
fund shares. Figures shown in each of the following tables assume reinvestment
of all dividends and capital gain distributions, if any, at net asset value on
the payable date. Investment return and principal value of shares will
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost. Dividends paid to each class of shares will vary because of the
different levels of account maintenance, distribution and transfer agency fees
applicable to each class, which are deducted from the income available to be
paid to shareholders. The Fund's Investment Adviser reimbursed a portion of
its management fee. Without such reimbursement, performance would have been
lower.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Performance Data (continued)
Recent Performance Results*
6-Month 12-Month 10-Year Standardized
As of June 30, 2006 Total Return Total Return Total Return 30-day Yield
Short-Term Portfolio Class A Shares +0.87% +1.47% +35.45% 3.13%
Short-Term Portfolio Class B Shares +0.63 +1.11 +31.88 2.91
Short-Term Portfolio Class C Shares +0.73 +1.21 +31.68 2.90
Short-Term Portfolio Class I Shares +0.81 +1.57 +36.66 3.26
Insured Portfolio Class A Shares -0.14 +0.44 +64.41 3.42
Insured Portfolio Class B Shares -0.39 +0.05 +56.29 3.05
Insured Portfolio Class C Shares -0.42 -0.12 +55.51 3.00
Insured Portfolio Class I Shares -0.02 +0.82 +68.75 3.81
National Portfolio Class A Shares +0.84 +1.77 +71.27 3.80
National Portfolio Class B Shares +0.59 +1.25 +62.80 3.45
National Portfolio Class C Shares +0.47 +1.20 +62.00 3.40
National Portfolio Class I Shares +0.87 +2.02 +75.56 4.22
Lehman Brothers 3-Year General Obligation Bond Index++ +0.53 +0.95 +48.93 --
Lehman Brothers Municipal Bond Index++++ +0.28 +0.89 +75.57 --
* Investment results shown do not reflect sales charges; results shown would be lower if a sales charge was
included. Cumulative total investment returns are based on changes in net asset values for the periods shown,
and assume reinvestment of all dividends and capital gains distributions at net asset value on the payable date.
++ This unmanaged Index consists of state and local government obligation bonds that mature in 3 - 4 years,
rated Baa or better.
++++ This unmanaged Index consists of revenue bonds, prerefunded bonds, general obligation bonds and insured bonds,
all of which mature within 30 years.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Performance Data (continued) Short-Term Portfolio
Total Return Based on a $10,000 Investment
A line graph illustrating the growth of a $10,000 investment in Short-Term
Portfolio++ Class A, Class B, Class C and Class I Shares* compared to a
similar investment in the Lehman Brothers Municipal Bond Index++++ and Lehman
Brothers 3-Year General Obligation Bond Index++++++. Values illustrated are
as follows:
Short-Term Portfolio++
Class A Shares*
Date Value
June 1996 $ 9,900.00
June 1997 $10,335.00
June 1998 $10,765.00
June 1999 $11,117.00
June 2000 $11,471.00
June 2001 $12,156.00
June 2002 $12,643.00
June 2003 $12,993.00
June 2004 $13,058.00
June 2005 $13,215.00
June 2006 $13,409.00
Short-Term Portfolio++
Class B Shares*
Date Value
June 1996 $10,000.00
June 1997 $10,413.00
June 1998 $10,818.00
June 1999 $11,143.00
June 2000 $11,468.00
June 2001 $12,122.00
June 2002 $12,563.00
June 2003 $12,878.00
June 2004 $12,909.00
June 2005 $13,043.00
June 2006 $13,188.00
Short-Term Portfolio++
Class C Shares*
Date Value
June 1996 $10,000.00
June 1997 $10,411.00
June 1998 $10,815.00
June 1999 $11,128.00
June 2000 $11,451.00
June 2001 $12,093.00
June 2002 $12,544.00
June 2003 $12,860.00
June 2004 $12,890.00
June 2005 $13,011.00
June 2006 $13,168.00
Short-Term Portfolio++
Class I Shares*
Date Value
June 1996 $10,000.00
June 1997 $10,440.00
June 1998 $10,884.00
June 1999 $11,252.00
June 2000 $11,621.00
June 2001 $12,328.00
June 2002 $12,834.00
June 2003 $13,203.00
June 2004 $13,281.00
June 2005 $13,454.00
June 2006 $13,666.00
Lehman Brothers Municipal Bond Index++++
Date Value
June 1996 $10,000.00
June 1997 $10,825.00
June 1998 $11,762.00
June 1999 $12,087.00
June 2000 $12,480.00
June 2001 $13,726.00
June 2002 $14,675.00
June 2003 $15,958.00
June 2004 $16,079.00
June 2005 $17,403.00
June 2006 $17,557.00
Lehman Brothers 3-Year General Obligation Bond Index++++++
Date Value
June 1996 $10,000.00
June 1997 $10,530.00
June 1998 $11,095.00
June 1999 $11,504.00
June 2000 $11,925.00
June 2001 $12,838.00
June 2002 $13,619.00
June 2003 $14,294.00
June 2004 $14,382.00
June 2005 $14,753.00
June 2006 $14,893.00
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
++ Short-Term Portfolio invests primarily in investment grade municipal
bonds (bonds rated Baa or better) with a maximum maturity not to exceed
4 years.
++++ This unmanaged Index consists of revenue bonds, prerefunded bonds,
general obligation bonds and insured bonds, all of which mature
within 30 years.
++++++ This unmanaged Index consists of state and local government obligation
bonds that mature in 3 - 4 years, rated Baa or better.
Past performance is not indicative of future results.
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge**
Class A Shares*
One Year Ended 6/30/06 +1.47% +0.46%
Five Years Ended 6/30/06 +1.98 +1.78
Ten Years Ended 6/30/06 +3.08 +2.98
Return Return
Without CDSC With CDSC++++++
Class B Shares++
One Year Ended 6/30/06 +1.11% +0.12%
Five Years Ended 6/30/06 +1.70 +1.70
Ten Years Ended 6/30/06 +2.81 +2.81
Return Return
Without CDSC With CDSC++++++
Class C Shares++++
One Year Ended 6/30/06 +1.21% +0.22%
Five Years Ended 6/30/06 +1.72 +1.72
Ten Years Ended 6/30/06 +2.79 +2.79
Class I Shares Return
One Year Ended 6/30/06 +1.57%
Five Years Ended 6/30/06 +2.08
Ten Years Ended 6/30/06 +3.17
* 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.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Performance Data (continued) Insured Portfolio
Total Return Based on a $10,000 Investment
A line graph illustrating the growth of a $10,000 investment in Insured
Portfolio++ Class A, Class B, Class C and Class I Shares* compared to a
similar investment in the Lehman Brothers Municipal Bond Index++++. Values
illustrated are as follows:
Insured Portfolio++
Class A Shares*
Date Value
June 1996 $ 9,600.00
June 1997 $10,316.00
June 1998 $11,105.00
June 1999 $11,263.00
June 2000 $11,368.00
June 2001 $12,477.00
June 2002 $13,306.00
June 2003 $14,472.00
June 2004 $14,488.00
June 2005 $15,715.00
June 2006 $15,784.00
Insured Portfolio++
Class B Shares*
Date Value
June 1996 $10,000.00
June 1997 $10,678.00
June 1998 $11,451.00
June 1999 $11,541.00
June 2000 $11,604.00
June 2001 $12,655.00
June 2002 $13,445.00
June 2003 $14,550.00
June 2004 $14,473.00
June 2005 $15,621.00
June 2006 $15,629.00
Insured Portfolio++
Class C Shares*
Date Value
June 1996 $10,000.00
June 1997 $10,686.00
June 1998 $11,439.00
June 1999 $11,524.00
June 2000 $11,581.00
June 2001 $12,624.00
June 2002 $13,405.00
June 2003 $14,499.00
June 2004 $14,415.00
June 2005 $15,570.00
June 2006 $15,551.00
Insured Portfolio++
Class I Shares*
Date Value
June 1996 $10,000.00
June 1997 $10,772.00
June 1998 $11,639.00
June 1999 $11,821.00
June 2000 $11,960.00
June 2001 $13,159.00
June 2002 $14,087.00
June 2003 $15,338.00
June 2004 $15,392.00
June 2005 $16,738.00
June 2006 $16,875.00
Lehman Brothers Municipal Bond Index++++
Date Value
June 1996 $10,000.00
June 1997 $10,825.00
June 1998 $11,762.00
June 1999 $12,087.00
June 2000 $12,480.00
June 2001 $13,726.00
June 2002 $14,675.00
June 2003 $15,958.00
June 2004 $16,079.00
June 2005 $17,403.00
June 2006 $17,557.00
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
++ Insured Portfolio invests primarily in long-term, investment grade
municipal bonds (bonds rated Baa or better) covered by portfolio
insurance guaranteeing the timely payment of principal at maturity
and interest.
++++ This unmanaged Index consists of revenue bonds, prerefunded bonds,
general obligation bonds and insured bonds, all of which mature
within 30 years.
Past performance is not indicative of future results.
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge**
Class A Shares*
One Year Ended 6/30/06 +0.44% -3.58%
Five Years Ended 6/30/06 +4.81 +3.96
Ten Years Ended 6/30/06 +5.10 +4.67
Return Return
Without CDSC With CDSC++++++
Class B Shares++
One Year Ended 6/30/06 +0.05% -3.79%
Five Years Ended 6/30/06 +4.31 +3.97
Ten Years Ended 6/30/06 +4.57 +4.57
Return Return
Without CDSC With CDSC++++++
Class C Shares++++
One Year Ended 6/30/06 -0.12% -1.08%
Five Years Ended 6/30/06 +4.26 +4.26
Ten Years Ended 6/30/06 +4.51 +4.51
Class I Shares Return
One Year Ended 6/30/06 +0.82%
Five Years Ended 6/30/06 +5.10
Ten Years Ended 6/30/06 +5.37
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
++ Maximum contingent deferred sales charge is 4% and is reduced
to 0% after six years.
++++ Maximum contingent deferred sales charge is 1% and is reduced
to 0% after one year.
++++++ Assuming payment of applicable contingent deferred sales
charge.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Performance Data (concluded) National Portfolio
Total Return Based on a $10,000 Investment
A line graph illustrating the growth of a $10,000 investment in National
Portfolio++ Class A, Class B, Class C and Class I Shares* compared to a
similar investment in the Lehman Brothers Municipal Bond Index++++. Values
illustrated are as follows:
National Portfolio++
Class A Shares*
Date Value
June 1996 $ 9,600.00
June 1997 $10,423.00
June 1998 $11,255.00
June 1999 $11,371.00
June 2000 $11,416.00
June 2001 $12,564.00
June 2002 $13,410.00
June 2003 $14,480.00
June 2004 $14,860.00
June 2005 $16,157.00
June 2006 $16,442.00
National Portfolio++
Class B Shares*
Date Value
June 1996 $10,000.00
June 1997 $10,792.00
June 1998 $11,606.00
June 1999 $11,666.00
June 2000 $11,652.00
June 2001 $12,760.00
June 2002 $13,550.00
June 2003 $14,557.00
June 2004 $14,864.00
June 2005 $16,079.00
June 2006 $16,280.00
National Portfolio++
Class C Shares*
Date Value
June 1996 $10,000.00
June 1997 $10,797.00
June 1998 $11,606.00
June 1999 $11,660.00
June 2000 $11,641.00
June 2001 $12,729.00
June 2002 $13,510.00
June 2003 $14,521.00
June 2004 $14,820.00
June 2005 $16,008.00
June 2006 $16,200.00
National Portfolio++
Class I Shares*
Date Value
June 1996 $10,000.00
June 1997 $10,884.00
June 1998 $11,794.00
June 1999 $11,945.00
June 2000 $12,010.00
June 2001 $13,252.00
June 2002 $14,179.00
June 2003 $15,361.00
June 2004 $15,803.00
June 2005 $17,208.00
June 2006 $17,556.00
Lehman Brothers Municipal Bond Index++++
Date Value
June 1996 $10,000.00
June 1997 $10,825.00
June 1998 $11,762.00
June 1999 $12,087.00
June 2000 $12,480.00
June 2001 $13,726.00
June 2002 $14,675.00
June 2003 $15,958.00
June 2004 $16,079.00
June 2005 $17,403.00
June 2006 $17,557.00
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
++ National Portfolio invests primarily in long-term municipal bonds rated
in any rating category.
++++ This unmanaged Index consists of revenue bonds, prerefunded bonds,
general obligation bonds and insured bonds, all of which mature
within 30 years.
Past performance is not indicative of future results.
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge**
Class A Shares*
One Year Ended 6/30/06 +1.77% -2.30%
Five Years Ended 6/30/06 +5.53 +4.67
Ten Years Ended 6/30/06 +5.53 +5.10
Return Return
Without CDSC With CDSC++++++
Class B Shares++
One Year Ended 6/30/06 +1.25% -2.64%
Five Years Ended 6/30/06 +4.99 +4.66
Ten Years Ended 6/30/06 +4.99 +4.99
Return Return
Without CDSC With CDSC++++++
Class C Shares++++
One Year Ended 6/30/06 +1.20% +0.23%
Five Years Ended 6/30/06 +4.94 +4.94
Ten Years Ended 6/30/06 +4.94 +4.94
Class I Shares Return
One Year Ended 6/30/06 +2.02%
Five Years Ended 6/30/06 +5.79
Ten Years Ended 6/30/06 +5.79
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
++ Maximum contingent deferred sales charge is 4% and is reduced
to 0% after six years.
++++ Maximum contingent deferred sales charge is 1% and is reduced
to 0% after one year.
++++++ Assuming payment of applicable contingent deferred sales
charge.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Portfolio Information as of June 30, 2006
Distribution by Market Sector
Percent of
Total
Short-Term Portfolio Investments
Other Revenue Bonds 50.3%
General Obligation & Tax Revenue Bonds 34.9
Prerefunded Bonds 14.8
Percent of
Total
Insured Portfolio Investments
Other Revenue Bonds 54.8%
General Obligation & Tax Revenue Bonds 32.7
Prerefunded Bonds 12.5
Percent of
Total
National Portfolio Investments
Other Revenue Bonds 67.9%
General Obligation & Tax Revenue Bonds 20.3
Prerefunded Bonds 11.8
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Disclosure of Expenses
Shareholders of this Fund may incur the following charges: (a) expenses
related to transactions, including sales charges, redemption fees and exchange
fees; and (b) operating expenses including advisory fees, distribution fees
including 12b-1 fees, and other Fund expenses. The following example (which is
based on a hypothetical investment of $1,000 invested on January 1, 2006 and
held through June 30, 2006) is intended to assist shareholders both in
calculating expenses based on an investment in the Fund and in comparing these
expenses with similar costs of investing in other mutual funds.
The first table of each Portfolio provides information about actual account
values and actual expenses. In order to estimate the expenses a shareholder
paid during the period covered by this report, shareholders can divide their
account value by $1,000 and then multiply the result by the number in the
first line under the heading entitled "Expenses Paid During the Period."
The second table of each Portfolio provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses. In order
to assist shareholders in comparing the ongoing expenses of investing in this
Fund and other funds, compare the 5% hypothetical example with the 5%
hypothetical examples that appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders'
ongoing costs only and do not reflect any transactional expenses, such as
sales charges, redemption fees or exchange fees. Therefore, the second table
is useful in comparing ongoing expenses only, and will not help shareholders
determine the relative total expenses of owning different funds. If these
transactional expenses were included, shareholder expenses would have been
higher.
Short-Term Portfolio
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value January 1, 2006
January 1, June 30, to June 30,
2006 2006 2006
Actual
Class A $1,000 $1,008.70 $2.69
Class B $1,000 $1,006.30 $3.98
Class C $1,000 $1,007.30 $3.98
Class I $1,000 $1,008.10 $2.19
Hypothetical (5% annual return before expenses)**
Class A $1,000 $1,022.12 $2.71
Class B $1,000 $1,020.83 $4.01
Class C $1,000 $1,020.83 $4.01
Class I $1,000 $1,022.62 $2.21
* For each class of the Fund, expenses are equal to the annualized expense ratio for the class
(.54% for Class A, .80% for Class B, .80% for Class C and .44% for Class I), multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the one-half year
period shown).
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the
most recent fiscal half year divided by 365.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Disclosure of Expenses (concluded)
Insured Portfolio
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value January 1, 2006
January 1, June 30, to June 30,
2006 2006 2006
Actual
Class A $1,000 $ 998.60 $3.47
Class B $1,000 $ 996.10 $5.99
Class C $1,000 $ 995.80 $6.24
Class I $1,000 $ 999.80 $2.23
Hypothetical (5% annual return before expenses)**
Class A $1,000 $1,021.33 $3.51
Class B $1,000 $1,018.80 $6.06
Class C $1,000 $1,018.55 $6.31
Class I $1,000 $1,022.57 $2.26
* For each class of the Fund, expenses are equal to the annualized expense ratio for the class
(.70% for Class A, 1.21% for Class B, 1.26% for Class C and .45% for Class I), multiplied by the
average account value over the period, multiplied by 181/365 (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.
National Portfolio
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value January 1, 2006
January 1, June 30, to June 30,
2006 2006 2006
Actual
Class A $1,000 $1,008.40 $4.13
Class B $1,000 $1,005.90 $6.66
Class C $1,000 $1,004.70 $6.91
Class I $1,000 $1,008.70 $2.89
Hypothetical (5% annual return before expenses)**
Class A $1,000 $1,020.68 $4.16
Class B $1,000 $1,018.16 $6.71
Class C $1,000 $1,017.91 $6.95
Class I $1,000 $1,021.92 $2.91
* For each class of the Fund, expenses are equal to the annualized expense ratio for the class
(.83% for Class A, 1.34% for Class B, 1.39% for Class C and .58% for Class I), multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the one-half year
period shown).
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the
most recent fiscal half year divided by 365.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Schedule of Investments Short-Term Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
Alaska--1.5%
$ 5,000 Alaska State Housing Financing Corporation,
Collateralized Revenue Bonds (Veterans
Mortgage Program), AMT, 3.43%
due 12/01/2006 (f) $ 4,990
Arkansas--3.0%
10,000 Arkansas State, Federal Highway Grant
Anticipation and Tax Revenue Bonds, GO,
Series A, 5.25% due 8/01/2007 10,156
California--1.1%
3,650 Contra Costa County, California, M/F Housing
Revenue Bonds (Pleasant Hill--Bart Transit),
AMT, Series A, 3.95% due 12/05/2007 3,641
Colorado--2.2%
7,500 Colorado State, General Fund Revenue Bonds,
RAN, 4.50% due 6/27/2007 7,553
Connecticut--2.1%
6,925 Connecticut State, Special Tax Obligation,
Revenue Refunding Bonds (Transportation
Infrastructure), Series B, 5% due 10/01/2007 (g) 7,027
Georgia--2.6%
Georgia Municipal Electric Authority, Power
Revenue Refunding Bonds, Series DD (i):
220 7% due 1/01/2008 (d) 230
6,005 7% due 1/01/2008 6,272
2,000 Georgia State, GO, Series B, 6.25%
due 4/01/2008 2,081
Illinois--4.8%
12,500 Chicago, Illinois, O'Hare International Airport,
Revenue Refunding Bonds, Third Lien, Series A,
5% due 1/01/2008 (i) 12,690
3,275 Illinois State, GO, First Series, 5.50%
due 8/01/2007 3,333
Indiana--3.0%
10,000 Indiana Health Facilities Financing Authority,
Subordinate Credit Group Revenue Bonds
(Ascension Health), Series A, 5% due 5/01/2008 10,178
Iowa--1.2%
4,000 Iowa Finance Authority, State Revolving Fund,
Revenue Refunding Bonds, 5% due 8/01/2008 4,094
Kansas--1.7%
5,380 Kansas State Department of Transportation,
Highway Revenue Bonds, 5.75%
due 9/01/2009 (a) 5,674
Face
Amount Municipal Bonds Value
Louisiana--3.7%
$ 4,200 Louisiana HFA, S/F Mortgage Revenue Bonds,
VRDN, AMT, 3.87% due 11/28/2008 (b) $ 4,200
8,400 Louisiana HFA, S/F Mortgage Revenue
Refunding Bonds, VRDN, AMT, 4.844%
due 4/30/2007 (b) 8,400
Massachusetts--6.2%
12,000 Massachusetts Municipal Wholesale Electric
Company, Power Supply System Revenue
Refunding Bonds (Nuclear Project Number 4
Issue), Series A, 5% due 7/01/2007 (i) 12,136
8,505 Massachusetts State, Consolidated Loan, GO,
Series C, 5% due 5/01/2008 (l) 8,676
Michigan--0.9%
3,000 Michigan State, GO, Series A, 4.50%
due 9/29/2006 3,005
Minnesota--5.1%
2,500 Lakeville, Minnesota, Independent School
District Number 194, GO, Refunding, Series B,
4% due 2/01/2007 (j) 2,504
7,000 Minnesota Public Facilities Authority, Water, PCR,
Refunding, Series C, 5% due 3/01/2008 7,132
7,385 Minnesota State, GO, Refunding, 5% due 8/01/2007 7,484
Missouri--1.2%
3,980 Kansas City, Missouri, Passenger Facility Charge
Revenue Bonds, AMT, 5% due 4/01/2007 (c) 4,013
Nebraska--4.5%
14,730 Nebraska Public Power District, General
Revenue Refunding Bonds, Series A, 5.25%
due 1/01/2008 (a)(i) 15,176
Nevada--0.7%
2,430 Nevada State, Capital Improvement, GO,
Refunding, Series A, 5% due 2/01/2009 2,495
New Jersey--4.3%
New Jersey State Educational Facilities Authority,
Revenue Refunding Bonds (Higher Education Trust
Fund), Sub-Series A-1:
4,000 5% due 9/01/2007 4,052
5,000 5% due 9/01/2008 5,111
5,000 New Jersey State Transportation Trust Fund
Authority, Transportation System Revenue
Bonds, Series A, 5.125% due 12/15/2006 (a)(i) 5,130
New Mexico--1.7%
5,685 New Mexico State, Severance Tax Bonds, Series A,
5% due 7/01/2008 (i) 5,811
Portfolio Abbreviations
To simplify the listings of Merrill Lynch Municipal Bond Fund, Inc.'s
portfolio holdings in the Schedule of Investments, we have abbreviated the
names of many of the securities according to the list at right.
AMT Alternative Minimum Tax (subject to)
BAN Bond Anticipation Notes
CARS Complementary Auction Rate Securities
COP Certificates of Participation
DRIVERS Derivative Inverse Tax-Exempt Receipts
EDA Economic Development Authority
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue Bond
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RAN Revenue Anticipation Notes
RIB Residual Interest Bonds
S/F Single-Family
VRDN Variable Rate Demand Notes
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Schedule of Investments (concluded) Short-Term Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
New York--4.6%
$11,025 Metropolitan Transportation Authority, New York,
Commuter Facilities Revenue Bonds, Series C-1,
5.30% due 7/01/2009 (a)(e) $ 11,484
3,910 New York City, New York, GO, Series J, 5%
due 3/01/2008 3,980
North Carolina--5.5%
7,725 North Carolina Eastern Municipal Power Agency,
Power System Revenue Bonds, Series B, 5.875%
due 1/01/2007 (a)(i) 7,958
10,500 North Carolina State, Public Improvements, GO,
Series A, 5% due 3/01/2007 10,589
Oklahoma--1.0%
3,300 Tulsa, Oklahoma, Public Facilities Authority,
Capital Improvement Revenue Bonds, Series A,
4.375% due 6/01/2008 (c) 3,332
Pennsylvania--1.6%
5,415 Pennsylvania State, GO, Refunding, Second
Series, 5% due 7/01/2006 5,415
Tennessee--4.4%
9,725 Shelby County, Tennessee, Public Improvement
and Schools, GO, Series A, 5% due 3/01/2008 (g) 9,906
5,000 Tennessee State Local Development Authority
Revenue Bonds (Student Loan Programs), BAN,
Series A, 5% due 5/17/2007 5,052
Texas--13.8%
4,500 El Paso, Texas, GO, 5.75% due 8/15/2007 (a)(g) 4,596
14,000 Matagorda County, Texas, Navigation District
Number 1, PCR (Central Power and Light Company),
Refunding, Series A, 4.55% due 11/01/2006 14,018
4,920 San Antonio, Texas, Electric and Gas Revenue
Refunding Bonds, 5.25% due 2/01/2007 4,961
2,500 San Antonio, Texas, Electric and Gas
System, Junior Lien Revenue Bonds, 3.55%
due 12/01/2007 2,488
7,995 Texas State Public Finance Authority, GO,
Refunding, Series A, 5.25% due 10/01/2007 8,133
5,455 Texas State Transportation Commission, First
Tier Revenue Bonds, 5% due 4/01/2008 5,559
Face
Amount Municipal Bonds Value
Texas (concluded)
$ 6,490 University of Texas, Financing System
Revenue Refunding Bonds, Series D, 5%
due 8/15/2007 $ 6,574
Virginia--1.7%
5,560 Virginia State Public Building Authority,
Public Facilities Revenue Bonds, Series B, 5%
due 8/01/2008 5,686
Washington--4.1%
Energy Northwest, Washington, Electric Revenue
Refunding Bonds (Columbia Generating Station),
Series A:
445 5.25% due 7/01/2008 457
6,055 5.25% due 7/01/2008 (d) 6,212
6,810 Washington State, GO, Series A, 5%
due 7/01/2008 (e) 6,960
Wisconsin--2.9%
2,635 Wisconsin State, GO, Series E, 4.50%
due 5/01/2008 2,664
6,890 Wisconsin State, Transportation
Revenue Bonds, Series B, 4.50%
due 7/01/2009 (c) 7,006
Puerto Rico--2.1%
7,000 Government Development Bank of
Puerto Rico Revenue Bonds, TECP, 5%
due 10/10/2006 7,000
Total Municipal Bonds
(Cost--$315,566)--93.2% 313,274
Shares
Held Short-Term Securities
24,644 Merrill Lynch Institutional Tax-Exempt Fund,
3.72% (h)(k) 24,644
Total Short-Term Securities
(Cost--$24,644)--7.3% 24,644
Total Investments (Cost--$340,210*)--100.5% 337,918
Liabilities in Excess of Other Assets--(0.5%) (1,655)
----------
Net Assets--100.0% $ 336,263
==========
* The cost and unrealized appreciation (depreciation) of investments
as of June 30, 2006, as computed for federal income tax purposes,
were as follows:
Aggregate cost $ 340,210
===============
Gross unrealized appreciation $ 2
Gross unrealized depreciation (2,294)
---------------
Net unrealized depreciation $ (2,292)
===============
(a) Prerefunded.
(b) Security may have a maturity of more than one year at time of issuance,
but has variable rate and demand features that qualify it as a short-term
security. The rate disclosed is that currently in effect. This rate
changes periodically based upon prevailing market rates.
(c) AMBAC Insured.
(d) Escrowed to maturity.
(e) FGIC Insured.
(f) FNMA/GNMA Collateralized.
(g) FSA Insured.
(h) Investments in companies considered to be an affiliate of the Fund,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
were as follows:
Net Dividend
Affiliate Activity Income
Merrill Lynch Institutional Tax-Exempt Fund 24,640 $768
(i) MBIA Insured.
(j) XL Capital Insured.
(k) Represents the current yield as of 6/30/2006.
(l) CIFG Insured.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Schedule of Investments Insured Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
Alabama--2.3%
$ 3,020 Alabama Water Pollution Control Authority Revenue
Bonds, 5.75% due 8/15/2018 (a) $ 3,213
10,000 Lauderdale County and Florence, Alabama, Health
Care Authority Revenue Refunding Bonds (Coffee
Health Group), Series A, 6% due 7/01/2029 (b) 10,826
7,000 University of Alabama, University Revenue Bonds
(Birmingham), 6% due 10/01/2009 (d)(g) 7,442
Arkansas--0.5%
5,000 University of Arkansas, University Revenue Bonds
(Various Facilities-Fayetteville Campus), 5%
due 12/01/2027 (d) 5,090
California--18.4%
10,680 California Pollution Control Financing Authority, PCR,
Refunding, DRIVERS, AMT, Series 878Z, 6.387%
due 12/01/2009 (b)(j) 11,726
2,075 California State Department of Veteran Affairs, Home
Purpose Revenue Refunding Bonds, Series A, 5.35%
due 12/01/2027 (a) 2,171
East Side Union High School District, California, Santa
Clara County, GO (Election of 2002), Series D (i):
2,795 5% due 8/01/2017 2,939
3,480 5% due 8/01/2022 3,590
5,170 Fresno, California, Unified School District, GO
(Election of 2001), Series D, 5% due 8/01/2027 (b) 5,306
5,000 Golden State Tobacco Securitization Corporation of
California, Tobacco Settlement Revenue Bonds,
Series B, 5.50% due 6/01/2013 (d)(g) 5,419
5,000 Los Angeles, California, GO, Series A, 5%
due 9/01/2019 (b) 5,171
Los Angeles, California, Unified School District, GO:
24,465 (Election of 1997), Series F, 5% due 1/01/2028 (d) 25,001
13,780 Series A, 5% due 1/01/2028 (b) 14,082
6,680 Los Angeles County, California, Metropolitan
Transportation Authority, Sales Tax Revenue Refunding
Bonds, Proposition A, First Tier Senior Series A, 5%
due 7/01/2021 (a) 6,935
8,965 Modesto, California, Schools Infrastructure Financing
Agency, Special Tax Bonds, 5.50% due 9/01/2036 (a) 9,528
12,040 Mount Diablo, California, Unified School District, GO
(Election of 2002), 5% due 7/01/2027 (d) 12,297
6,440 Palm Springs, California, Financing Authority, Lease
Revenue Refunding Bonds (Convention Center
Project), Series A, 5.50% due 11/01/2035 (b) 6,918
11,685 Rialto, California, Unified School District, GO, Series A,
6.24% due 6/01/2025 (d)(l) 4,582
5,000 Roseville, California, Joint Union High School District,
GO (Election of 2004), Series A, 5% due 8/01/2029 (d) 5,110
5,075 Sacramento, California, Unified School District, GO
(Election of 1999), Series B, 5% due 7/01/2026 (d) 5,175
San Diego, California, Unified School District, GO
(Election of 1998), Series G (f):
3,000 5% due 7/01/2028 3,072
4,645 5% due 7/01/2029 4,757
3,495 San Diego County, California, COP (Edgemoor
Project and Regional System), Refunding, 5%
due 2/01/2027 (a) 3,558
3,700 San Jose, California, GO (Libraries, Parks and Public
Safety Projects), 5% due 9/01/2030 (b) 3,776
10,055 Sequoia, California, Unified High School District, GO,
Refunding, Series B, 5.50% due 7/01/2035 (f) 10,858
Face
Amount Municipal Bonds Value
California (concluded)
$ 2,755 Tahoe Truckee, California, Unified School District, GO
(School Facilities Improvement District Number 2),
Series A, 5.25% due 8/01/2029 (b) $ 2,871
Tustin, California, Unified School District, Senior Lien
Special Tax Bonds (Community Facilities District
Number 97-1), Series A (f):
7,980 5% due 9/01/2032 8,089
9,330 5% due 9/01/2038 9,438
Colorado--2.7%
19,250 Aurora, Colorado, COP, 6% due 12/01/2010 (a)(g) 20,789
4,000 Logan County, Colorado, Justice Center Finance
Corporation, COP, 5.50% due 12/01/2020 (b) 4,256
Florida--0.8%
5,500 Miami-Dade County, Florida, Water and Sewer
System Revenue Bonds, 5.25% due 10/01/2026 (d) 5,619
1,955 West Coast Regional Water Supply Authority, Florida,
Capital Improvement Revenue Bonds, 10.40%
due 10/01/2010 (a)(g) 2,189
Georgia--3.8%
Georgia Municipal Electric Authority, Power Revenue
Refunding Bonds (a):
20,000 Series EE, 7% due 1/01/2025 25,760
90 Series Y, 6.40% due 1/01/2011 (g) 99
490 Series Y, 6.40% due 1/01/2013 (h) 544
8,420 Series Y, 6.40% due 1/01/2013 9,295
Illinois--2.3%
8,845 Chicago, Illinois, O'Hare International Airport
Revenue Bonds, DRIVERS, AMT, Series 845-Z, 7.666%
due 1/01/2012 (b)(i)(j) 10,486
6,800 Illinois State, GO, 5.75% due 9/01/2006 (b)(g) 6,957
3,500 Kendall and Kane Counties, Illinois, Community
School District Number 115 (Yorkville), GO, Refunding,
5.25% due 1/01/2026 (f) 3,679
Kansas--0.6%
5,145 Manhattan, Kansas, Hospital Revenue Bonds (Mercy
Health Center), 5.50% due 8/15/2020 (f) 5,445
Louisiana--1.1%
2,500 Louisiana State Citizens Property Insurance
Corporation, Assessment Revenue Bonds, Series B,
5% due 6/01/2022 (a) 2,573
2,990 Louisiana State, Gas and Fuels Tax Revenue Bonds,
Series A, 5% due 5/01/2030 (d) 3,041
5,000 New Orleans, Louisiana, GO (Public Improvements),
5.25% due 12/01/2029 (a) 5,161
Maryland--1.8%
10,820 Baltimore, Maryland, Convention Center Hotel
Revenue Bonds, RIB, Series 1252X, 6.27%
due 9/01/2039 (i)(j) 11,630
4,400 Maryland State Health and Higher Educational
Facilities Authority Revenue Bonds (University
of Maryland Medical System), Series B, 7%
due 7/01/2022 (d) 5,518
Massachusetts--5.0%
4,000 Massachusetts State, HFA, Rental Housing
Mortgage Revenue Bonds, AMT, Series C, 5.60%
due 1/01/2045 (f) 4,163
18,740 Massachusetts State School Building Authority,
Dedicated Sales Tax Revenue Bonds, Series A, 5%
due 8/15/2030 (f) 19,152
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Schedule of Investments (continued) Insured Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
Massachusetts (concluded)
$22,250 Massachusetts State Special Obligation Dedicated
Tax Revenue Bonds, 5.25% due 1/01/2014 (d)(g) $ 23,799
Michigan--0.7%
6,170 Michigan State Strategic Fund, Limited Obligation
Revenue Refunding Bonds, DRIVERS, AMT,
Series 858Z, 6.667% due 12/01/2011 (i)(j) 6,758
Minnesota--1.6%
5,860 Delano, Minnesota, Independent School District
Number 879, GO, Series A, 5.875% due 2/01/2025 (f) 6,308
Sauk Rapids, Minnesota, Independent School District
Number 047, GO, Series A (b):
3,735 5.65% due 2/01/2020 3,998
4,440 5.70% due 2/01/2021 4,762
Mississippi--1.3%
1,320 Harrison County, Mississippi, Wastewater
Management District Revenue Refunding Bonds
(Wastewater Treatment Facilities), Series A, 8.50%
due 2/01/2013 (d) 1,625
10,000 Mississippi Hospital Equipment and Facilities
Authority Revenue Bonds (Forrest County General
Hospital Project), 6% due 1/01/2030 (f) 10,708
Missouri--2.4%
Kansas City, Missouri, Airport Revenue Refunding and
Improvement Bonds, Series A (b):
12,990 5.50% due 9/01/2013 13,398
9,000 5.50% due 9/01/2014 9,282
Nevada--5.6%
10,690 Clark County, Nevada, School District, GO, Series D,
5% due 6/15/2017 (b) 11,147
40,000 Washoe County, Nevada, Water Facility Revenue
Bonds (Sierra Pacific Power Company), AMT, 6.65%
due 6/01/2017 (b) 41,212
New Jersey--10.8%
6,810 Cape May County, New Jersey, Industrial Pollution
Control Financing Authority, Revenue Refunding
Bonds (Atlantic City Electric Company Project),
Series A, 6.80% due 3/01/2021 (b) 8,451
Garden State Preservation Trust of New Jersey, Open
Space and Farmland Preservation Revenue Bonds,
Series A (f):
3,125 5.80% due 11/01/2021 3,486
8,310 5.80% due 11/01/2022 9,272
4,340 5.80% due 11/01/2023 4,846
New Jersey EDA, Motor Vehicle Surcharge Revenue
Bonds, Series A (b):
5,000 5% due 7/01/2027 5,116
23,000 5.25% due 7/01/2033 24,007
New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds, Series D:
5,760 5% due 6/15/2015 (a)(g) 6,123
9,570 5% due 6/15/2015 (f)(g) 10,173
4,240 5% due 6/15/2018 (a) 4,404
11,530 5% due 6/15/2019 (f) 11,942
13,500 New Jersey State Turnpike Authority, Turnpike
Revenue Bonds, Series C, 5% due 1/01/2030 (f) 13,819
Face
Amount Municipal Bonds Value
New Mexico--1.2%
$10,400 New Mexico Finance Authority, Senior Lien, State
Transportation Revenue Bonds, Series A, 5.125%
due 6/15/2018 (b) $ 10,959
New York--14.6%
New York City, New York, GO:
11,500 Series C, 5.625% due 3/15/2018 (i) 12,317
10,000 Series E, 5% due 11/01/2017 (f) 10,457
18,000 Series I, 6% due 4/15/2012 (f) 18,460
145 New York City, New York, GO, Refunding, Series G,
5.75% due 2/01/2017 (f) 147
New York City, New York, Sales Tax Asset Receivable
Corporation Revenue Bonds:
6,965 DRIVERS, Series 1133Z, 6.208%
due 10/15/2012 (a)(j) 7,730
16,905 Series A, 5% due 10/15/2020 (b) 17,602
15,650 Series A, 5% due 10/15/2032 (a) 16,033
9,190 New York State Dormitory Authority Revenue Bonds
(School Districts Financing Program), Series D, 5.25%
due 10/01/2023 (b) 9,682
9,110 New York State Urban Development Corporation,
Personal Income Tax Revenue Bonds (State Facilities),
Series A-1, 5.25% due 3/15/2034 (d) 9,475
5 Niagara Falls, New York, GO, Public Improvement,
6.90% due 3/01/2024 (b) 5
Tobacco Settlement Financing Corporation of New
York Revenue Bonds:
22,500 Series A-1, 5.25% due 6/01/2022 (a) 23,563
10,755 Series C-1, 5.50% due 6/01/2020 (d) 11,494
North Carolina--0.3%
3,120 North Carolina HFA, Home Ownership Revenue
Bonds, AMT, Series 14-A, 5.35% due 1/01/2022 (a) 3,189
North Dakota--0.3%
2,880 North Dakota State HFA, Revenue Bonds (Housing
Finance Program), Series C, 5.30% due 7/01/2022 (a) 2,929
Oklahoma--0.7%
Oklahoma State Industries Authority, Health System
Revenue Refunding Bonds (Integris Obligated Group),
Series A (b):
2,680 6.25% due 8/15/2009 (g) 2,879
3,705 6.25% due 8/15/2016 3,969
Oregon--1.5%
8,700 Oregon State Department, Administrative Services,
COP, Series A, 6.25% due 5/01/2010 (a)(g) 9,489
3,865 Port of Portland, Oregon, Airport Revenue Refunding
Bonds (Portland International Airport), AMT,
Series 7-B, 7.10% due 1/01/2012 (b)(g) 4,394
Pennsylvania--2.6%
5,765 Philadelphia, Pennsylvania, Gas Works Revenue
Bonds, 12th Series B, 7% due 5/15/2020 (b)(h) 6,789
4,420 Philadelphia, Pennsylvania, Redevelopment Authority
Revenue Bonds (Neighborhood Transformation),
Series A, 5.50% due 4/15/2020 (d) 4,703
12,010 Pittsburgh, Pennsylvania, GO, Series C, 5.25%
due 9/01/2018 (f) 12,809
Rhode Island--0.8%
6,815 Rhode Island State Economic Development
Corporation, Airport Revenue Bonds, Series B, 6%
due 7/01/2010 (d)(g) 7,391
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Schedule of Investments (concluded) Insured Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
Texas--5.0%
$17,975 Dallas-Fort Worth, Texas, International Airport
Revenue Bonds, DRIVERS, AMT, Series 202, 7.672%
due 11/01/2028 (d)(j) $ 19,853
Harris County, Texas, Revenue Refunding Bonds,
DRIVERS (f)(j):
10,500 Series 1111, 6.197% due 8/15/2009 11,174
7,025 Series 1172-Z, 6.208% due 8/15/2009 7,454
3,500 Houston, Texas, Water Conveyance System Contract,
COP, Series J, 6.25% due 12/15/2013 (a) 3,934
Texas State Department of Housing and Community
Affairs, S/F Mortgage Revenue Bonds, AMT,
Series A (b)(e):
2,085 5.45% due 9/01/2023 2,139
2,725 5.50% due 3/01/2026 2,790
Utah--1.8%
9,535 Utah Transit Authority, Sales Tax and Transportation
Revenue Bonds (Salt Lake County Light Rail Transit
Project), 5.375% due 12/15/2007 (f)(g) 9,836
Utah Water Finance Agency Revenue Bonds (Pooled
Loan Financing Program), Series A (a):
2,515 5.75% due 10/01/2015 2,683
3,770 6% due 10/01/2020 4,054
Washington--0.8%
7,225 Chelan County, Washington, Public Utility District
Number 001, Consolidated Revenue Bonds
(Chelan Hydro System), AMT, Series A, 5.45%
due 7/01/2037 (a) 7,481
West Virginia--1.3%
12,250 Pleasants County, West Virginia, PCR, Refunding
(Potomac-Pleasants), Series C, 6.15%
due 5/01/2015 (a) 12,301
Face
Amount Municipal Bonds Value
Wisconsin--1.3%
$ 9,000 Superior, Wisconsin, Limited Obligation Revenue
Refunding Bonds (Midwest Energy Resources),
Series E, 6.90% due 8/01/2021 (d) $ 11,249
670 Wisconsin State, GO, AMT, Series B, 6.50%
due 5/01/2025 (b) 671
Puerto Rico--2.7%
Puerto Rico Electric Power Authority, Power Revenue
Bonds, Series RR:
10,150 5% due 7/01/2027 (i) 10,416
14,400 5% due 7/01/2028 (c) 14,757
Total Municipal Bonds
(Cost--$883,619)--96.6% 907,190
Shares
Held Mutual Funds
300 BlackRock California Insured Municipal 2008
Term Trust, Inc. 4,572
810 BlackRock Insured Municipal 2008 Term Trust, Inc. 12,280
205 BlackRock Insured Municipal Term Trust, Inc. 1,923
Total Mutual Funds
(Cost--$21,126)--2.0% 18,775
Short-Term Securities
1,730 Merrill Lynch Institutional Tax-Exempt Fund,
5.22% (k)(m) 1,730
Total Short-Term Securities
(Cost--$1,730)--0.2% 1,730
Total Investments (Cost--$906,475*)--98.8% 927,695
Other Assets Less Liabilities--1.2% 11,598
----------
Net Assets--100.0% $ 939,293
==========
* The cost and unrealized appreciation (depreciation) of investments
as of June 30, 2006, as computed for federal income tax purposes,
were as follows:
Aggregate cost $ 906,473
===============
Gross unrealized appreciation $ 30,662
Gross unrealized depreciation (9,440)
---------------
Net unrealized appreciation $ 21,222
===============
(a) AMBAC Insured.
(b) MBIA Insured.
(c) CIFG Insured.
(d) FGIC Insured.
(e) FNMA/GNMA Collateralized.
(f) FSA Insured.
(g) Prerefunded.
(h) Escrowed to maturity.
(i) XL Capital Insured.
(j) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(k) Investments in companies considered to be an affiliate of the Fund,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
were as follows:
Net Dividend
Affiliate Activity Income
Merrill Lynch Institutional Tax-Exempt Fund (9,287) $280
(l) Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(m) Represents the current yield as of 6/30/2006.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Schedule of Investments National Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
Alabama--0.7%
$ 3,820 Alabama Incentives Financing Authority, Special
Obligation Revenue Refunding Bonds, Series A, 6%
due 10/01/2029 (c) $ 4,113
500 Mobile, Alabama, Industrial Development Board,
Environmental Improvement Revenue Refunding
Bonds (International Paper Company Project), AMT,
Series A, 6.35% due 5/15/2016 532
2,500 Selma, Alabama, IDB, Environmental Improvement
Revenue Refunding Bonds (International
Paper Company Project), AMT, Series A, 6.70%
due 2/01/2018 2,687
3,400 Tuscaloosa, Alabama, Special Care Facilities Financing
Authority, Residential Care Facility Revenue Bonds
(Capstone Village, Inc. Project), Series A, 5.875%
due 8/01/2036 3,428
Alaska--0.4%
1,150 Alaska State Housing Financial Corporation, General
Mortgage Revenue Refunding, Series A, 6%
due 6/01/2027 (f) 1,176
3,860 Anchorage, Alaska, School, GO, Series B, 5.875%
due 12/01/2010 (e)(j) 4,158
Arizona--5.4%
4,000 Arizona Health Facilities Authority Revenue Bonds
(Catholic Healthcare West), Series A, 6.625%
due 7/01/2020 4,400
Maricopa County, Arizona, Hospital Revenue
Refunding Bonds (Sun Health Corporation):
730 6.125% due 4/01/2007 (j) 756
270 6.125% due 4/01/2018 278
3,100 Maricopa County, Arizona, IDA, Education Revenue
Bonds (Arizona Charter Schools Project 1), Series A,
6.75% due 7/01/2029 3,068
1,625 Maricopa County, Arizona, IDA, Health Facilities
Revenue Refunding Bonds (Catholic Healthcare West
Project), Series A, 5% due 7/01/2021 1,625
1,000 Maricopa County, Arizona, Pollution Control
Corporation, PCR, Refunding (Public Service
Company of New Mexico Project), Series A, 6.30%
due 12/01/2026 1,033
Peoria, Arizona, Improvement District Number 8401,
Special Assessment Bonds Number 8802:
430 7.20% due 1/01/2010 440
510 7.20% due 1/01/2013 522
Peoria, Arizona, Improvement District, Special
Assessment Bonds Number 8801:
190 7.30% due 1/01/2009 195
395 7.30% due 1/01/2011 405
7,500 Phoenix, Arizona, Civic Improvement Corporation,
Excise Tax Revenue Bonds (Civic Plaza Expansion
Project), Sub-Series A, 5% due 7/01/2030 (e) 7,675
2,330 Phoenix, Arizona, Civic Improvement Corporation,
Municipal Facilities, Excise Tax Revenue Bonds, 5.75%
due 7/01/2016 (e) 2,499
4,575 Phoenix, Arizona, IDA, Airport Facility, Revenue
Refunding Bonds (America West Airlines Inc. Project),
AMT, 6.30% due 4/01/2023 4,511
500 Pinal County, Arizona, IDA, Wastewater Revenue
Bonds (San Manuel Facilities Project), AMT, 6.25%
due 6/01/2026 531
Face
Amount Municipal Bonds Value
Arizona (concluded)
$ 432 Prescott Valley, Arizona, Improvement District,
Special Assessment Bonds (Sewer Collection System
Roadway Repair), 7.90% due 1/01/2012 $ 447
35,000 Salt River Project, Arizona, Agriculture Improvement
and Power District, Electric System Revenue Bonds,
Series A, 5% due 1/01/2037 35,797
3,515 Tucson, Arizona, IDA, Senior Living Facilities Revenue
Bonds (Christian Care Tucson Inc. Project), Series A,
6.125% due 7/01/2024 (m) 3,774
3,180 University of Arizona, COP, Refunding, Series A,
5.50% due 6/01/2018 (c) 3,391
1,000 University of Arizona, COP (University of
Arizona Parking and Student Housing), 5.75%
due 6/01/2009 (c)(j) 1,051
Vistancia Community Facilities District, Arizona, GO:
3,000 6.75% due 7/15/2022 3,196
2,125 5.75% due 7/15/2024 2,156
Arkansas--0.5%
30 Arkansas State Development Finance Authority,
S/F Mortgage Revenue Bonds (Mortgage-
Backed Securities Program), Series H, 6.15%
due 7/01/2016 (i) 31
250 Arkansas State Student Loan Authority Revenue
Bonds, AMT, Sub-Series B, 7.25% due 6/01/2009 262
200 Jonesboro, Arkansas, Residential Housing and Health
Care Facilities Board, Hospital Revenue Refunding
Bonds (Saint Bernards Regional Medical Center),
Series B, 5.90% due 7/01/2016 (c) 204
250 North Little Rock, Arkansas, Health Facilities Board,
Health Care Revenue Bonds (Baptist Health), 5.50%
due 7/01/2016 257
500 Pine Bluff, Arkansas, Environmental Improvement
Revenue Refunding Bonds (International
Paper Company Project), AMT, Series A, 6.70%
due 8/01/2020 535
4,940 University of Arkansas, University Revenue
Bonds (Various Facilities-UAMS Campus), 5%
due 3/01/2030 (e) 5,062
250 University of Central Arkansas, Housing System
Revenue Bonds, 6.50% due 1/01/2010 (h)(j) 275
California--14.0%
2,500 Agua Caliente Band of Cahuilla Indians, California,
Casino Revenue Bonds, 6% due 7/01/2018 2,697
8,840 Alameda County, California, COP (Financing Project),
6% due 9/01/2006 (f)(j) 9,047
19,200 Bay Area Toll Authority, California, Toll Bridge
Revenue Refunding Bonds (San Francisco Bay Area),
Series F, 5% due 4/01/2031 19,600
9,065 California Pollution Control Financing Authority, Solid
Waste Disposal Revenue Refunding Bonds (Waste
Management Inc. Project), AMT, Series A, 5%
due 1/01/2022 9,017
40 California Rural Home Mortgage Finance Authority,
S/F Mortgage Revenue Bonds (Mortgage-Backed
Securities Program), AMT, Series D, Class 5, 6.70%
due 5/01/2029 (i)(l) 41
155 California Rural Home Mortgage Finance Authority,
S/F Mortgage Revenue Refunding Bonds (Mortgage-
Backed Securities Program), AMT, Series A-2, 7%
due 9/01/2029 (i)(l) 157
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
California (continued)
$ 5,000 California State, GO, 5.25% due 4/01/2029 $ 5,180
405 California State, GO, Refunding, 5.75%
due 5/01/2030 431
California State, Various Purpose, GO:
10,000 5.25% due 11/01/2027 10,369
14,100 5.50% due 11/01/2033 14,969
9,880 California Statewide Communities Development
Authority, Health Facility Revenue Bonds (Memorial
Health Services), Series A, 6% due 10/01/2023 10,646
Chula Vista, California, Community Facilities District,
Special Tax Bonds (Number 06-1, Eastlake Woods
Area), Series A:
1,080 6.05% due 9/01/2020 1,150
2,965 6.15% due 9/01/2026 3,142
Contra Costa County, California, Special Tax Bonds,
(Community Facilities District Number 2001-01):
1,585 6% due 9/01/2026 1,664
1,200 6.10% due 9/01/2031 1,261
3,100 Elk Grove, California, Poppy Ridge Community
Facilities Number 3 Special Tax, Series 1, 6%
due 9/01/2008 (j) 3,246
10,000 Fremont, California, Unified School District, Alameda
County, GO (Election of 2002), Series B, 5%
due 8/01/2028 (h) 10,242
12,730 Los Angeles County, California, Metropolitan
Transportation Authority, Sales Tax Revenue Refunding
Bonds, Proposition A, First Tier Senior-Series A, 5%
due 7/01/2035 (c) 13,017
2,740 Pomona, California, Public Financing Authority
Revenue Refunding Bonds (Merged Redevelopment
Project), Series A1, 5.75% due 2/01/2034 2,842
Poway, California, Unified School District, Special
Tax Bonds:
1,100 (Community District Number 6), Series A, 6.05%
due 9/01/2025 1,143
1,320 (Community District Number 14), 5.25%
due 9/01/2036 1,298
2,695 Riverside, California, Improvement Bond Act of 1915,
Special Assessment (Riverwalk Assessment District),
6.375% due 9/02/2026 2,864
Roseville, California, Special Tax (Stoneridge
Community Facilities Number 1):
1,250 6.20% due 9/01/2021 1,332
1,125 6% due 9/01/2025 1,193
2,500 6.30% due 9/01/2031 2,683
Sacramento, California, Special Tax (North Natomas
Community Facilities):
2,200 Series 01-03, 6% due 9/01/2028 2,298
2,270 Series 4-C, 6% due 9/01/2028 2,397
20,075 Sacramento County, California, Sanitation District
Financing Authority, Revenue Bonds, Series A, 5%
due 12/01/2035 (c) 20,503
5,000 San Diego, California, Community College District,
GO (Election of 2002), 5% due 5/01/2030 (h) 5,111
10,000 San Diego, California, Public Facilities Financing
Authority, Subordinated Water Revenue Refunding
Bonds, 5% due 8/01/2032 (f) 10,136
5,400 San Diego, California, Unified Port District,
Revenue Refunding Bonds, AMT, Series A, 5.25%
due 9/01/2019 (f) 5,651
11,520 San Diego, California, Unified School District, GO
(Election of 1998), Series F, 5% due 7/01/2028 (h) 11,771
Face
Amount Municipal Bonds Value
California (concluded)
San Francisco, California, City and County
Redevelopment Agency Revenue Bonds (Community
Facilities District Number 6-Mission):
$ 5,000 6% due 8/01/2021 $ 5,199
2,500 GO, Series A, 6% due 8/01/2025 2,596
1,075 San Francisco, California, Uptown Parking
Corporation, Parking Revenue Bonds (Union Square),
6% due 7/01/2020 (f) 1,178
Santa Margarita, California, Water District, Special
Tax Refunding Bonds, (Community Facilities District
Number 99), Series 1:
3,680 6.20% due 9/01/2020 3,921
2,990 6.25% due 9/01/2029 3,186
Colorado--2.9%
11,590 Arkansas River Power Authority, Colorado,
Power Improvement Revenue Bonds, 5.25%
due 10/01/2032 (k) 12,103
500 Boulder County, Colorado, Hospital Development
Revenue Bonds (Longmont United Hospital Project),
6% due 12/01/2010 (j)(m) 539
410 Colorado HFA, Revenue Bonds (S/F Program),
Series B-3, 6.55% due 10/01/2016 413
Colorado HFA Revenue Refunding Bonds
(S/F Program):
400 AMT, Senior Series A-2, 7.50% due 4/01/2031 412
140 AMT, Senior Series B-2, 7.10% due 4/01/2017 144
950 AMT, Senior Series B-2, 7.25% due 10/01/2031 973
50 AMT, Senior Series B-3, 6.80% due 11/01/2028 51
400 AMT, Senior Series C-2, 7.25%
due 10/01/2031 (b) 419
130 Senior Series A-3, 7.35% due 10/01/2030 135
570 Senior Series C-3, 6.75% due 10/01/2021 (b) 573
145 Senior Series C-3, 7.15% due 10/01/2030 (b) 146
2,500 Colorado Health Facilities Authority, Revenue
Refunding Bonds (Catholic Health Initiatives), 5.50%
due 9/01/2017 2,620
550 Colorado Water Resource and Power Development
Authority, Small Water Resource Revenue Bonds,
Series A, 5.80% due 11/01/2020 (e) 588
Elk Valley, Colorado, Public Improvement Revenue
Bonds (Public Improvement Fee):
7,560 Series A, 7.35% due 9/01/2031 7,966
1,200 Series B, 7% due 9/01/2031 1,223
3,685 Larimer County, Colorado, Poudre School District
Number R-1, GO, 6% due 12/15/2010 (e)(j) 3,990
Plaza Metropolitan District Number 1, Colorado, Tax
Allocation Revenue Bonds (Public Improvement Fees):
7,700 8% due 12/01/2025 8,407
1,910 8.125% due 12/01/2025 1,904
Connecticut--1.9%
4,000 Bridgeport, Connecticut, Senior Living Facilities
Revenue Bonds (3030 Park Retirement Community
Project), 7.25% due 4/01/2035 3,356
1,000 Connecticut State Development Authority,
Governmental Lease Revenue Bonds, 6.60%
due 6/15/2014 (f) 1,002
1,250 Connecticut State Development Authority, Water
Facility Revenue Bonds (Bridgeport Hydraulic
Company), AMT, 6.15% due 4/01/2035 (c) 1,294
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
Connecticut (concluded)
$ 1,200 Connecticut State, HFA, Revenue Refunding Bonds
(Housing Mortgage Finance Program), Series C-1,
6.30% due 11/15/2017 $ 1,227
Connecticut State Health and Educational Facilities
Authority Revenue Bonds:
1,000 (Bridgeport Hospital), Series A, 6.625%
due 7/01/2018 (f) 1,003
1,500 (Waterbury Hospital Issue), Series C, 5.75%
due 7/01/2020 (m) 1,573
1,000 (Westover School), Series A, 5.70%
due 7/01/2030 (m) 1,055
Connecticut State Health and Educational Facilities
Authority Revenue Refunding Bonds (m):
5,025 DRIVERS, Series 215, 8.698%
due 6/01/2030 (n) 5,911
1,885 (Eastern Connecticut Health Network), Series A,
6.50% due 7/01/2010 (j) 2,075
115 (Eastern Connecticut Health Network), Series A,
6.50% due 7/01/2030 125
640 (Sacred Heart University), 6.625%
due 7/01/2026 654
5,710 (University of Hartford), Series E, 5.50%
due 7/01/2022 6,074
680 Connecticut State Higher Education Supplemental
Loan Authority, Revenue Bonds (Family
Education Loan Program), AMT, Series A, 5.50%
due 11/15/2020 (f) 684
860 Waterbury, Connecticut, GO, 6% due 2/01/2009 (j)(m) 912
Delaware--0.1%
1,685 New Castle County, Delaware, PCR (General
Motors Corporation Project), VRDN, 7.875%
due 10/01/2008 (g) 1,685
District of Columbia--0.6%
3,000 District of Columbia, COP, 5.25% due 1/01/2017 (e) 3,184
5,000 District of Columbia, GO, Refunding, DRIVERS, VRDN,
Series 214, 7.691% due 6/01/2026 (f)(g)(n) 5,392
Florida--10.5%
2,000 Anthem Park Community Development District,
Florida, Capital Improvement Revenue Bonds, 5.80%
due 5/01/2036 2,037
1,670 Ballantrae, Florida, Community Development
District, Capital Improvement Revenue Bonds, 6%
due 5/01/2035 1,727
4,440 Baywinds Community Development District, Florida,
Special Assessment Bonds, Series B, 4.90%
due 5/01/2012 4,440
1,825 Beacon Tradeport Community, Florida, Development
District, Special Assessment Revenue Refunding
Bonds (Commercial Project), Series A, 5.25%
due 5/01/2016 (m) 1,924
2,500 CFM Community Development District, Florida,
Capital Improvement Revenue Bonds, Series B,
5.875% due 5/01/2014 2,559
2,725 Duval County, Florida, School Board, COP, 5.75%
due 7/01/2017 (h) 2,858
East Homestead Community Development District,
Florida, Special Assessment Revenue Bonds:
1,000 5.375% due 5/01/2036 979
1,500 5.45% due 5/01/2036 1,493
1,500 Series B, 5% due 5/01/2011 1,500
Face
Amount Municipal Bonds Value
Florida (continued)
Fiddlers Creek, Florida, Community Development
District Number 2, Special Assessment Revenue Bonds:
$ 5,350 Series A, 6.375% due 5/01/2035 $ 5,632
1,250 Series B, 5.75% due 5/01/2013 1,293
20,000 Gainesville, Florida, Utilities System Revenue
Refunding Bonds, Series A, 5% due 10/01/2035 (h) 20,414
7,000 Halifax Hospital Medical Center, Florida, Hospital
Revenue Refunding and Improvement Bonds,
Series A, 5.25% due 6/01/2026 7,091
400 Heritage Isles Community Development District,
Florida, Special Assessment Revenue Refunding
Bonds, 5.90% due 11/01/2006 402
5,000 Hillsborough County, Florida, IDA, Exempt Facilities
Revenue Bonds (National Gypsum Company), AMT,
Series A, 7.125% due 4/01/2030 5,487
7,000 Lee County, Florida, Airport Revenue Bonds, RIB,
AMT, Series 580X, 7.73% due 10/01/2029 (h)(n) 8,015
1,200 Lexington Oaks, Florida, Community Development
District, Special Assessment Revenue Bonds, Series A,
6.70% due 5/01/2033 1,277
1,030 Mediterra, Florida, South Community Development
District, Capital Improvement Revenue Bonds, 6.85%
due 5/01/2031 1,098
2,500 Middle Village Community Development District,
Florida, Special Assessment Bonds, Series A, 6%
due 5/01/2035 2,589
6,625 Midtown Miami, Florida, Community Development
District, Special Assessment Revenue Bonds, Series A,
6.25% due 5/01/2037 7,138
1,990 Old Palm Community Development District, Florida,
Special Assessment Bonds (Palm Beach Gardens),
Series B, 5.375% due 5/01/2014 2,017
3,500 Orange County, Florida, HFA, M/F Housing Revenue
Bonds (Loma Vista Project), Series G, 5.50%
due 3/01/2032 3,551
1,000 Orange County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Orlando Regional
Healthcare), 5.70% due 7/01/2026 989
Panther Trace Community Development District II,
Florida, Special Assessment Revenue Bonds:
5,000 5.125% due 11/01/2013 4,988
5,000 Series A, 5.60% due 5/01/2035 5,041
Park Place Community Development District, Florida,
Special Assessment Revenue Bonds:
1,000 6.75% due 5/01/2032 1,058
2,405 6.375% due 5/01/2034 2,505
10,000 Peace River/Manasota Regional Water Supply
Authority, Florida, Utility System Revenue Bonds,
Series A, 5% due 10/01/2035 (h) 10,207
20,115 Port St. Lucie, Florida, Utility Revenue Bonds, 5.125%
due 9/01/2036 (f) 20,782
2,000 Saint Lucie, Florida, West Services District, Utility
Revenue Refunding Bonds, Senior Lien, 6%
due 10/01/2022 (f) 2,185
2,875 Somerset Community Development District,
Florida, Capital Improvement Revenue Bonds, 5%
due 5/01/2015 2,859
645 Sterling Hill, Florida, Community Development
District, Capital Improvement Revenue Refunding
Bonds, Series B, 5.50% due 11/01/2010 648
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
Florida (concluded)
$ 380 Stoneybrook West, Florida, Community Development
District, Special Assessment Revenue Bonds, Series B,
6.45% due 5/01/2010 $ 382
1,275 Tern Bay Community Development District, Florida,
Capital Improvement Revenue Refunding Bonds,
Series B, 5% due 5/01/2015 1,267
2,185 Tuscany Reserve Community Development District,
Florida, Capital Improvement Revenue Bonds,
Series B, 5.25% due 5/01/2016 2,204
3,520 University of South Florida Financing Corporation,
COP (Master Lease Program), Refunding, Series A,
5.375% due 7/01/2022 (c) 3,751
15 Verandah West, Florida, Community Development
District, Capital Improvement Revenue Bonds,
Series B, 5.25% due 5/01/2008 15
2,060 Watergrass Community Development District, Florida,
Special Assessment Revenue Bonds, Series B, 4.875%
due 11/01/2010 2,051
6,000 West Villages Improvement District, Florida, Special
Assessment Revenue Refunding Bonds (Unit of
Development Number 2), 5.80% due 5/01/2036 6,098
Georgia--1.8%
5,000 Atlanta, Georgia, Tax Allocation Bonds (Atlantic
Station Project), 7.90% due 12/01/2024 5,505
Brunswick & Glynn County, Georgia, Development
Authority, First Mortgage Revenue Bonds (Coastal
Community Retirement Corporation Project), Series A:
2,285 7.125% due 1/01/2025 2,239
3,304 7.25% due 1/01/2035 3,230
5,210 College Park, Georgia, Business and IDA
Revenue Bonds (Civic Center Project), 5.75%
due 9/01/2010 (c)(j) 5,658
1,940 Fulton County, Georgia, Development Authority, PCR
(General Motors Corporation), Refunding, VRDN, 8%
due 4/01/2010 (g) 1,940
3,450 Fulton County, Georgia, Development Authority
Revenue Bonds (Morehouse College Project), 5.875%
due 12/01/2030 (c) 3,724
2,250 Fulton County, Georgia, Residential Care Facilities,
Revenue Refunding Bonds (Canterbury Court Project),
Series A, 6% due 2/15/2022 2,276
1,500 Milledgeville-Baldwin County, Georgia, Development
Authority Revenue Bonds (Georgia College and State
University Foundation), 6% due 9/01/2033 1,598
Illinois--7.6%
1,000 Bolingbrook, Illinois, Special Services Area Number 1,
Special Tax Bonds (Forest City Project), 5.90%
due 9/01/2007 (p) 931
10,620 Chicago, Illinois, Board of Education, GO, DRIVERS,
Series 199, 7.191% due 12/01/2020 (c)(n) 11,590
26,800 Chicago, Illinois, O'Hare International Airport
Revenue Bonds, Third Lien, AMT, Series B-2, 6%
due 1/01/2029 (k) 29,265
6,915 Chicago, Illinois, O'Hare International Airport,
Special Facility Revenue Refunding Bonds (American
Airlines Inc. Project), 8.20% due 12/01/2024 7,122
350 Chicago, Illinois, Park District, GO, Refunding,
Series B, 5.75% due 1/01/2015 (e) 374
230 Chicago, Illinois, Park District, Limited Tax, GO,
Series A, 5.75% due 1/01/2016 (e) 246
Face
Amount Municipal Bonds Value
Illinois (concluded)
$ 395 Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT,
Series A, 7.15% due 9/01/2031 (i)(l) $ 405
2,000 Chicago, Illinois, Special Assessment Bonds (Lake
Shore East), 6.75% due 12/01/2032 2,136
3,210 Cicero, Illinois, GO, Refunding (Corporate Purpose),
6% due 12/01/2028 (f) 3,463
7,000 Decatur, Illinois, GO, Refunding, 6%
due 3/01/2008 (e)(j) 7,243
10,000 Hodgkins, Illinois, Environmental Improvement
Revenue Bonds (Metro Biosolids Management LLC
Project), AMT, 6% due 11/01/2023 10,447
Illinois Development Finance Authority Revenue Bonds:
3,140 (Community Rehabilitation Providers Facilities),
Series A, 6.50% due 7/01/2022 3,351
660 Series B, 6.40% due 9/01/2031 (h) 676
Illinois State Finance Authority Revenue Bonds,
Series A:
1,750 (Friendship Village of Schaumburg), 5.625%
due 2/15/2037 1,753
2,155 (Landing At Plymouth Place Project), 6%
due 5/15/2037 2,201
Illinois State, GO, 1st Series (f):
8,890 5.75% due 12/01/2015 9,500
3,745 5.75% due 12/01/2016 3,999
4,000 5.75% due 12/01/2017 4,264
3,000 Illinois State, Sales Tax Revenue Bonds, 6%
due 6/15/2020 3,205
3,000 Illinois State, Sales Tax Revenue Refunding Bonds,
Series Q, 6% due 6/15/2009 3,097
2,000 Lake County, Illinois, Forest Preservation District,
GO (Land Acquisition and Development), 5.75%
due 12/15/2016 2,146
625 Naperville, Illinois, IDR (General Motors Corporation),
Refunding, VRDN, 8% due 12/01/2012 (g) 625
1,585 Village of Wheeling, Illinois, Revenue Bonds (North
Milwaukee/Lake-Cook Tax Increment Financing (TIF)
Redevelopment Project), 6% due 1/01/2025 1,517
Iowa--0.6%
1,000 Iowa City, Iowa, Sewer Revenue Bonds, 5.75%
due 7/01/2021 (f) 1,001
6,780 Iowa Finance Authority, Health Care Facilities,
Revenue Refunding Bonds (Care Initiatives Project),
9.25% due 7/01/2025 8,031
Kansas--0.4%
1,000 Kansas State Development Financing Authority,
Revenue Bonds (Department of Administration--
Comprehensive Transportation Program), Series A,
5% due 11/01/2025 (e) 1,033
1,740 Sedgwick and Shawnee Counties, Kansas,
S/F Revenue Bonds, AMT, Series A-1, 6.95%
due 6/01/2029 (d) 1,801
2,500 Wichita, Kansas, Hospital Facilities Revenue
Refunding and Improvement Bonds, Series III, 6.25%
due 11/15/2019 2,705
Louisiana--1.0%
485 Louisiana HFA, S/F Mortgage Revenue Bonds, AMT,
Series D-2, 5.80% due 6/01/2020 (i) 490
9,500 Louisiana Local Government, Environmental Facilities,
Community Development Authority Revenue Bonds
(Capital Projects and Equipment Acquisition), Series A,
6.30% due 7/01/2030 (c) 10,656
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
Louisiana (concluded)
$ 955 Louisiana State, HFA, S/F Revenue Refunding
Bonds (Home Ownership Program), Series B-2,
AMT, 6.20% due 12/01/2029 (b)(i) $ 973
2,000 Rapides Finance Authority, Louisiana, Environmental
Improvement Revenue Bonds (International
Paper Company Project), AMT, Series A, 6.55%
due 11/15/2023 2,123
Maine--0.7%
8,635 Maine Finance Authority, Solid Waste Recycling
Facilities Revenue Bonds (Great Northern Paper
Project-Bowater), AMT, 7.75% due 10/01/2022 8,658
1,595 Maine State Housing Authority, Mortgage Purpose
Revenue Bonds, DRIVERS, AMT, Series 170, 7.667%
due 11/15/2028 (n) 1,674
Maryland--0.3%
500 Anne Arundel County, Maryland, Special Obligation
Revenue Bonds (Arundel Mills Project), 7.10%
due 7/01/2009 (j) 553
1,000 Maryland State Community Development
Administration, Department of Housing and
Community Development, Housing Revenue Bonds,
AMT, Series B, 6.15% due 1/01/2021 1,036
355 Maryland State Community Development
Administration, Department of Housing and
Community Development, Residential Revenue
Refunding Bonds, Series A, 5.60% due 3/01/2017 (b) 363
1,000 Maryland State Community Development
Administration, Department of Housing and
Community Development Revenue Bonds (Waters
Landing II Apartments), AMT, Series A, 5.875%
due 8/01/2033 1,038
1,000 Maryland State Energy Financing Administration,
Solid Waste Disposal Revenue Bonds, Limited
Obligation (Wheelabrator Water Projects), AMT,
6.45% due 12/01/2016 1,027
Massachusetts--0.6%
320 Massachusetts Educational Financing Authority,
Education Loan Revenue Refunding Bonds, AMT,
Issue E, 5.85% due 7/01/2014 (c) 323
4,450 Massachusetts State Health and Educational
Facilities Authority Revenue Bonds (Medical Center
of Central Massachusetts), CARS, Series B, 8.06%
due 6/23/2022 (c)(n) 4,838
1,000 Massachusetts State Industrial Finance Agency, Higher
Education Revenue Refunding Bonds (Hampshire
College Project), 5.625% due 10/01/2007 (j) 1,040
130 Massachusetts State Water Pollution Abatement Trust,
Water Abatement Revenue Bonds, Series A, 6.375%
due 2/01/2015 130
1,600 Montachusett, Massachusetts, Regional Vocational
Technical School District, GO, 5.95% due 1/15/2020 (f) 1,717
Michigan--1.7%
7,500 Delta County, Michigan, Economic Development
Corporation, Environmental Improvement Revenue
Refunding Bonds (Mead Westvaco-Escanaba),
Series A, 6.25% due 4/15/2012 (j) 8,351
Face
Amount Municipal Bonds Value
Michigan (concluded)
$ 500 Dickinson County, Michigan, Economic Development
Corporation, Environmental Improvement Revenue
Refunding Bonds (International Paper Company
Project), Series A, 5.75% due 6/01/2016 $ 529
Eastern Michigan University, General Revenue
Refunding Bonds (c):
585 6% due 6/01/2010 (j) 633
415 6% due 6/01/2024 448
3,000 Flint, Michigan, Hospital Building Authority, Revenue
Refunding Bonds (Hurley Medical Center), 6%
due 7/01/2020 3,130
6,750 Hartland, Michigan, Consolidated School
District, GO, Refunding, RIB, Series 1204, 6.02%
due 5/01/2029 (n) 7,014
3,325 Macomb County, Michigan, Hospital Finance
Authority, Hospital Revenue Bonds (Mount Clemens
General Hospital), Series B, 5.875% due 11/15/2034 3,494
1,500 Michigan State Hospital Finance Authority, Revenue
Refunding Bonds (Mercy-Mount Clemens), Series A,
6% due 5/15/2014 (f) 1,587
Minnesota--0.9%
765 Anoka County, Minnesota, Solid Waste Disposal
Revenue Bonds (Natural Rural Utilities), AMT,
Series A, 6.95% due 12/01/2008 772
1,000 Eden Prairie, Minnesota, M/F Housing Revenue
Bonds (Rolling Hills Project), Series A, 6.15%
due 8/20/2031 (d) 1,075
Minneapolis and Saint Paul, Minnesota, Metropolitan
Airports Commission, Airport Revenue Bonds, AMT,
Sub-Series D (e):
470 5.75% due 1/01/2012 497
470 5.75% due 1/01/2014 496
2,060 5.75% due 1/01/2015 2,178
575 Minneapolis, Minnesota, Community Development
Agency, Supported Development Revenue Bonds
(Common Bond Fund), AMT, Series 2, 6.20%
due 6/01/2017 582
Minneapolis, Minnesota, Health Care System
Revenue Bonds (Allina Health System), Series A:
1,500 5.70% due 11/15/2022 1,580
2,665 5.75% due 11/15/2032 2,804
1,110 Ramsey County, Minnesota, Housing and
Redevelopment Authority, M/F Housing Revenue
Bonds (Hanover Townhouses Project), AMT, 6%
due 7/01/2031 1,134
1,000 Saint Cloud, Minnesota, Health Care Revenue
Refunding Bonds (Saint Cloud Hospital Obligation
Group), Series A, 6.25% due 5/01/2020 (h) 1,086
1,500 Waconia, Minnesota, Health Care Facilities Revenue
Bonds (Ridgeview Medical Center Project), Series A,
6.125% due 1/01/2029 (m) 1,593
Mississippi--0.1%
1,700 Warren County, Mississippi, Environmental
Improvement Revenue Refunding Bonds (International
Paper Company Project), AMT, Series B, 6.75%
due 8/01/2021 1,823
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
Missouri--0.2%
$ 1,000 Fenton, Missouri, Tax Increment Revenue
Refunding and Improvement Bonds (Gravois Bluffs
Redevelopment Project), 5% due 4/01/2014 $ 1,024
1,500 Kansas City, Missouri, IDA, First Mortgage Health
Facilities Revenue Bonds (Bishop Spencer Place),
Series A, 6.50% due 1/01/2035 1,562
Montana--0.4%
6,000 Montana State Higher Education, Student Assistance
Corporation, Student Loan Revenue Refunding Bonds,
AMT, Sub-Series B, 6.40% due 12/01/2032 6,282
Nevada--1.9%
3,500 Clark County, Nevada, Airport Revenue Bonds
(Jet Aviation Fuel Tax), AMT, Series C, 5.375%
due 7/01/2020 (c) 3,631
1,550 Clark County, Nevada, Improvement District
Number 142, Special Assessment Bonds, 6.375%
due 8/01/2023 1,599
Elko, Nevada, GO (Airport Improvement), AMT,
Series B (f):
165 6.10% due 10/01/2014 170
245 6.30% due 10/01/2019 254
320 6.75% due 10/01/2024 334
225 7% due 10/01/2029 236
2,845 Henderson, Nevada, Local Improvement Districts,
Special Assessment, Series NO T-14, 5.80%
due 3/01/2023 2,936
Las Vegas, Nevada, Local Improvement Bonds, Special
Assessment, Special Improvement District Number
808, Summerlin:
1,750 5.875% due 6/01/2009 1,811
2,010 6.125% due 6/01/2012 2,083
2,245 6.25% due 6/01/2013 2,328
55 Nevada Housing Division, S/F Program, AMT, Senior
Series E, 7.05% due 4/01/2027 (b) 55
1,960 Reno, Nevada, Special Assessment District Number 4
(Somerset Parkway), 6.625% due 12/01/2022 2,022
Sparks, Nevada, Redevelopment Agency, Tax
Allocation Revenue Refunding Bonds, Series A (m):
3,110 6% due 1/15/2015 3,304
6,315 6% due 1/15/2023 6,697
New Hampshire--0.1%
1,750 New Hampshire Health and Education Facilities
Authority, Revenue Refunding Bonds (Elliot Hospital),
Series B, 5.60% due 10/01/2022 1,827
New Jersey--4.1%
440 Camden County, New Jersey, Pollution Control
Financing Authority, Solid Waste Resource Recovery,
Revenue Refunding Bonds, AMT, Series B, 7.50%
due 12/01/2009 446
3,300 New Jersey EDA, Retirement Community Revenue
Bonds (Cedar Crest Village Inc. Facility), Series A,
7.25% due 11/15/2031 3,561
11,000 New Jersey EDA, Revenue Bonds, RIB, Series 1187,
6.18% due 3/01/2024 (n) 12,011
3,680 New Jersey EDA, State Lease Revenue Bonds (State
Office Buildings Projects), 6% due 6/15/2010 (c)(j) 3,957
Face
Amount Municipal Bonds Value
New Jersey (concluded)
$ 3,130 New Jersey Health Care Facilities Financing Authority
Revenue Bonds (South Jersey Hospital), 6%
due 7/01/2026 $ 3,287
2,250 New Jersey Health Care Facilities Financing Authority,
Revenue Refunding Bonds (Capital Health System
Inc.), Series A, 5.75% due 7/01/2023 2,355
1,090 New Jersey State Housing and Mortgage Finance
Agency, M/F Housing Revenue Refunding Bonds,
Series B, 6.25% due 11/01/2026 (h) 1,135
New Jersey State Turnpike Authority, Turnpike
Revenue Refunding Bonds (f):
10,000 DRIVERS, VRDN, Series 155, 7.197%
due 1/01/2018 (a)(n) 11,107
7,025 Series A, 5.75% due 1/01/2010 (j) 7,447
2,975 Series A, 5.75% due 1/01/2018 3,140
9,500 Tobacco Settlement Financing Corporation of
New Jersey, Asset-Backed Revenue Bonds, 7%
due 6/01/2041 10,771
New Mexico--0.9%
8,000 Farmington, New Mexico, PCR, Refunding (Public
Service Company of New Mexico--San Juan Project),
Series B, 6.30% due 12/01/2016 8,221
110 New Mexico Mortgage Finance Authority Revenue
Refunding Bonds, Mortgage-Backed Securities,
Series F, 7% due 1/01/2026 (i) 113
4,260 New Mexico Mortgage Financing Authority,
S/F Mortgage Program Revenue Bonds, AMT, Series D,
6.15% due 7/01/2035 (i)(l) 4,498
250 Santa Fe County, New Mexico, Correctional System
Revenue Bonds, 6% due 2/01/2027 (h) 285
New York--6.8%
4,500 Metropolitan Transportation Authority, New York,
Commuter Facilities, Service Contract Revenue
Refunding Bonds, Series 8, 5.50% due 7/01/2013 (h)(j) 4,903
10,000 Metropolitan Transportation Authority, New York,
Transit Facilities Revenue Bonds, Series A, 5.625%
due 7/01/2007 (f)(j) 10,329
3,230 New York City, New York, City IDA, Civic Facility
Revenue Bonds (Special Needs Facilities Pooled
Program), Series C-1, 6% due 7/01/2012 3,320
4,050 New York City, New York, City IDA, Special Facility
Revenue Bonds (British Airways Plc Project), AMT,
7.625% due 12/01/2032 4,551
New York City, New York, GO, Refunding:
6,540 Series A, 6% due 5/15/2010 (j) 7,094
2,205 Series A, 6.25% due 5/15/2010 (j)(k) 2,411
60 Series A, 6% due 5/15/2021 (k) 65
4,000 Series C, 5.875% due 2/01/2016 (e) 4,066
675 Series H, 6% due 8/01/2007 (j)(k) 698
325 Series H, 6% due 8/01/2017 (k) 336
New York City, New York, GO, Series B (f):
6,600 5.875% due 8/01/2010 (j) 7,152
1,340 5.875% due 8/01/2015 1,445
19,000 New York City, New York, Sales Tax Asset Receivable
Corporation Revenue Bonds, Series A, 5%
due 10/15/2032 (c) 19,465
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
New York (concluded)
New York State Dormitory Authority, Revenue
Refunding Bonds:
$ 2,945 (Concord Nursing Home Inc.), 6.25%
due 7/01/2016 $ 3,119
2,500 (Concord Nursing Home Inc.), 6.50%
due 7/01/2029 2,661
3,000 (Mount Sinai Health), Series A, 6.50%
due 7/01/2016 3,214
3,950 (Mount Sinai Health), Series A, 6.50%
due 7/01/2025 4,203
3,000 (State University Educational Facilities), Series A,
7.50% due 5/15/2013 3,563
1,360 New York State Environmental Facilities Corporation,
State Clean Water and Drinking Revenue Bonds
(Revolving Funds), Series B, 5.875% due 1/15/2019 1,448
2,285 Oneida County, New York, IDA Revenue Bonds
(Civic Facility-Faxton Hospital), Series C, 6.625%
due 1/01/2015 (m) 2,470
3,000 Port Authority of New York and New Jersey,
Consolidated Revenue Bonds, AMT, Thirty-Seventh
Series, 5.50% due 7/15/2018 (h) 3,205
95 Suffolk County, New York, IDA, Civic Facility Revenue
Bonds (Special Needs Facilities Pooled Program),
Series D-1, 6% due 7/01/2012 97
705 Westchester County, New York, IDA, Civic Facilities
Revenue Bonds (Special Needs Facilities Pooled
Program), Series E-1, 6% due 7/01/2012 723
8,095 Westchester County, New York, IDA, Continuing Care
Retirement, Mortgage Revenue Bonds (Kendal on
Hudson Project), Series A, 6.50% due 1/01/2034 8,561
North Carolina--2.9%
920 Brunswick County, North Carolina, COP, 6%
due 6/01/2010 (h)(j) 997
1,500 Haywood County, North Carolina, Industrial Facilities
and Pollution Control Financing Authority Revenue
Bonds (Champion International Corporation Project),
AMT, 6.25% due 9/01/2025 1,524
North Carolina Eastern Municipal Power Agency,
Power System Revenue Bonds:
1,500 Series B, 5.875% due 1/01/2007 (f)(j) 1,545
4,000 Series D, 6.75% due 1/01/2026 4,328
4,440 North Carolina Eastern Municipal Power Agency,
Power System Revenue Refunding Bonds, Series D,
6.70% due 1/01/2019 (o) 4,812
4,840 North Carolina HFA, Home Ownership Revenue
Bonds, AMT, Series 9-A, 5.80% due 1/01/2020 5,021
45 North Carolina HFA, S/F Revenue Bonds, Series W,
6.50% due 3/01/2018 45
North Carolina Medical Care Commission, Health
Care Facilities, First Mortgage Revenue Bonds
(Presbyterian Homes Project):
2,500 6.875% due 10/01/2021 2,650
3,000 5.50% due 10/01/2031 2,988
North Carolina Medical Care Commission, Retirement
Facilities, First Mortgage Revenue Bonds:
1,625 (Forest at Duke Project), 6.375% due 9/01/2032 1,690
2,500 (Givens Estates Project), Series A, 6.50%
due 7/01/2032 2,660
Face
Amount Municipal Bonds Value
North Carolina (concluded)
North Carolina Municipal Power Agency Number 1,
Catawba Electric Revenue Refunding Bonds, Series B:
$ 500 6.375% due 1/01/2013 $ 536
1,080 6.375% due 1/01/2013 (o) 1,160
5,000 6.50% due 1/01/2020 5,394
2,500 6.50% due 1/01/2020 (o) 2,697
1,175 North Carolina State Educational Assistance Authority
Revenue Bonds (Guaranteed Student Loan), AMT,
Sub-Lien, Series C, 6.35% due 7/01/2016 1,200
Piedmont Triad Airport Authority, North Carolina,
Airport Revenue Refunding Bonds, Series A (h)(j):
1,000 6% due 7/01/2009 1,068
1,000 6.375% due 7/01/2009 1,079
Ohio--0.4%
365 Ohio HFA, Mortgage Revenue Bonds, AMT, Series A-1,
6.15% due 3/01/2029 (d) 374
1,470 Port of Greater Cincinnati Development Authority,
Ohio, Special Assessment Revenue Bonds (Cooperative
Public Parking Infrastructure Project), 6.40%
due 2/15/2034 1,567
3,005 Toledo-Lucas County, Ohio, Lodging Tax Revenue
Refunding Bonds (Convention Center Project), 5.70%
due 10/01/2015 (f) 3,077
Oregon--0.4%
Forest Grove, Oregon, Campus Improvement Revenue
Refunding Bonds (Pacific University) (j)(m):
250 6% due 5/01/2010 268
250 6.20% due 5/01/2010 270
Oregon State Housing and Community Services
Department, Mortgage Revenue Refunding Bonds
(S/F Mortgage Program), Series A:
60 6.40% due 7/01/2018 60
45 AMT, 6.20% due 7/01/2027 46
500 Portland, Oregon, M/F Housing Authority Revenue
Bonds (Lovejoy Station Apartments Project), AMT,
5.90% due 7/01/2023 (f) 516
Portland, Oregon, Urban Renewal and Redevelopment
Revenue Refunding Bonds, Series A (c):
1,000 (Downtown Waterfront), 5.75% due 6/15/2018 1,072
3,190 (South Park Blocks), 5.75% due 6/15/2018 3,420
Pennsylvania--2.7%
3,640 Allegheny County, Pennsylvania, IDA, Environmental
Improvement Revenue Refunding Bonds, 5.50%
due 11/01/2016 3,758
2,220 Allegheny County, Pennsylvania, Sanitation Authority,
Sewer Revenue Bonds, 5.75% due 12/01/2010 (f)(j) 2,386
1,760 Bucks County, Pennsylvania, IDA, Retirement
Community Revenue Bonds (Ann's Choice Inc.),
Series A, 6.125% due 1/01/2025 1,817
4,000 Pennsylvania State Higher Educational Facilities
Authority Revenue Bonds (University of Pennsylvania
Medical Center Health System), Series A, 6%
due 1/15/2031 4,307
1,265 Philadelphia, Pennsylvania, Authority for IDR,
Commercial Development, 7.75% due 12/01/2017 1,278
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
Pennsylvania (concluded)
$18,105 Philadelphia, Pennsylvania, Redevelopment Authority
Revenue Bonds, ROLS, Series RR-II-432X, 6.507%
due 10/15/2010 (e)(n) $ 19,710
5,000 Sayre, Pennsylvania, Health Care Facilities Authority,
Revenue Refunding Bonds (Guthrie Healthcare
System), Series A, 5.875% due 12/01/2031 5,291
Rhode Island--0.6%
6,815 Rhode Island State Economic Development
Corporation, Airport Revenue Bonds, Series B, 6%
due 7/01/2010 (e)(j) 7,391
1,000 Rhode Island State Economic Development
Corporation Revenue Bonds (Providence Place Mall),
6.125% due 7/01/2020 (m) 1,090
South Carolina--1.7%
Medical University Hospital Authority, South Carolina,
Hospital Facilities Revenue Refunding Bonds (j):
2,450 6.50% due 8/15/2012 2,778
5,400 Series A, 6.375% due 8/15/2012 6,086
5,000 South Carolina Jobs EDA, Residential Care Facilities
Revenue Bonds (South Carolina Episcopal--
Still Hopes Residence Project), Series A, 6.375%
due 5/15/2032 5,110
10,608 South Carolina State Ports Authority, Ports
Revenue Bonds, RIB, AMT, Series 1390X, 6.34%
due 7/01/2026 (h)(n) 11,082
South Dakota--0.4%
3,750 Pierre, South Dakota, School District Number 32-2,
GO, 5.75% due 8/01/2010 (h)(j) 4,005
1,740 South Dakota Housing Development Authority,
Homeownership Revenue Bonds, AMT, Series C,
5.375% due 5/01/2018 1,770
Tennessee--1.6%
Chattanooga, Tennessee, IDB, Lease Rent Revenue
Bonds (Southside Redevelopment Corporation) (c):
4,485 5.75% due 10/01/2017 4,772
3,740 5.75% due 10/01/2018 3,979
1,000 Johnson City, Tennessee, Health and Educational
Facilities Board, Retirement Facility Revenue Bonds
(Appalachian Christian Village Project), Series A,
6.25% due 2/15/2032 1,025
4,950 McMinn County, Tennessee, IDB, Solid Waste
Revenue Bonds (Recycling Facility-Calhoun
Newsprint), AMT, 7.40% due 12/01/2022 5,023
7,300 Shelby County, Tennessee, Health, Educational
and Housing Facility Board, Hospital Revenue
Refunding Bonds (Methodist Healthcare), 6.50%
due 9/01/2012 (j) 8,282
Texas--13.2%
Austin, Texas, Convention Center Revenue Bonds
(Convention Enterprises Inc.), First Tier, Series A:
5,300 6.60% due 1/01/2021 5,566
2,300 6.70% due 1/01/2028 2,437
10,630 Austin, Texas, Revenue Bonds (Town Lake Community
Events Center Venue), 6.20% due 11/15/2009 (e)(j) 11,387
Face
Amount Municipal Bonds Value
Texas (continued)
Bexar County, Texas, Health Facilities Development
Corporation Revenue Refunding Bonds (Army
Retirement Residence Project):
$ 600 6.125% due 7/01/2022 $ 631
1,750 6.30% due 7/01/2032 1,842
2,280 Brazos River Authority, Texas, PCR, Refunding
(Texas Utility Company), AMT, Series A, 7.70%
due 4/01/2033 2,647
4,250 Brazos River Authority, Texas, Revenue Refunding
Bonds (Reliant Energy Inc. Project), Series B, 7.75%
due 12/01/2018 4,548
3,700 Brazos River, Texas, Harbor Navigation District,
Brazoria County Environmental Revenue Refunding
Bonds (Dow Chemical Company Project), AMT,
Series A-7, 6.625% due 5/15/2033 4,126
885 Central Texas Housing Finance Corporation,
S/F Mortgage Revenue Bonds (GNMA Mortgage
Program), AMT, 8.20% due 6/28/2017 (b)(d) 892
8,110 Cypress-Fairbanks, Texas, Independent School District,
GO, 5.25% due 2/15/2027 8,465
3,620 Dallas-Fort Worth, Texas, International Airport Facility
Improvement Corporation, Revenue Bonds (Learjet
Inc.), AMT, Series A-1, 6.15% due 1/01/2016 3,668
18,250 Dallas-Fort Worth, Texas, International Airport
Revenue Bonds, DRIVERS, AMT, Series 201, 7.672%
due 11/01/2024 (e)(n) 20,157
1,260 Fort Bend County, Texas, Municipal Utility District
Number 23, GO, 6.625% due 9/01/2007 (j)(m) 1,301
Gregg County, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Good Shepherd
Medical Center Project) (m):
1,000 6.875% due 10/01/2020 1,105
3,500 6.375% due 10/01/2025 3,801
5,465 Gulf Coast, Texas, Waste Disposal Authority Revenue
Refunding Bonds (International Paper Company),
AMT, Series A, 6.10% due 8/01/2024 5,812
9,430 Houston, Texas, Airport System Revenue Refunding
Bonds, RIB, Series 1382X, 6.41% due 7/01/2018 (e)(n) 9,760
10,000 Houston, Texas, Utility System Revenue Refunding
Bonds, DRIVERS, Series 1076, 5.958%
due 5/15/2012 (f)(n) 10,517
4,000 Kerrville, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Sid Peterson
Memorial Hospital Project), 5.25% due 8/15/2021 4,035
8,080 Matagorda County, Texas, Navigation District
Number 1, Revenue Refunding Bonds (Reliant Energy
Inc.), Series C, 8% due 5/01/2029 8,638
7,350 Matagorda County, Texas, Port of Bay City Authority
Revenue Bonds (Hoechst Celanese Corp. Project),
AMT, 6.50% due 5/01/2026 7,519
4,825 Port Corpus Christi, Texas, Individual Development
Corporation, Environmental Facilities Revenue Bonds
(Citgo Petroleum Corporation Project), AMT, 8.25%
due 11/01/2031 5,027
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Schedule of Investments (continued) National Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
Texas (concluded)
$ 1,000 Red River, Texas, Education Finance Revenue
Bonds (Saint Mark's School-Texas Project), 6%
due 8/15/2019 $ 1,060
1,095 South Plains, Texas, Housing Finance Corporation,
S/F Mortgage Revenue Bonds, AMT, Series A, 7.30%
due 9/01/2031 (i) 1,099
Southeast Texas Housing Finance Corporation,
Revenue Bonds, AMT (d)(l):
85 Series A, 8% due 11/01/2025 86
155 Series B, 8.50% due 11/01/2025 157
Tarrant County, Texas, Cultural Education Facilities
Financing Corporation, Retirement Facilities Revenue
Refunding Bonds (Northwest Senior Housing--
Edgemere Project), Series A:
2,200 6% due 11/15/2026 2,304
3,000 6% due 11/15/2036 3,098
Texas State Public Finance Authority, Building
Revenue Bonds (h)(j):
2,100 (General Services Commission Project), Series A,
6% due 2/01/2010 2,244
1,000 (State Preservation Project), Series B, 6%
due 8/01/2009 1,060
45,000 Texas State Turnpike Authority, Central Texas Turnpike
System Revenue Bonds, First Tier, Series A, 5.75%
due 8/15/2038 (c) 48,564
4,930 Upper Trinity Regional Water District, Texas, Water
Revenue Bonds (Regional Treated Water Supply
System), Series A, 6% due 8/01/2010 (e)(j) 5,307
Webster, Texas, GO, COP, Series A (h):
1,500 6% due 3/01/2010 (j) 1,605
805 6% due 3/01/2021 858
Utah--0.1%
880 Utah State, HFA, S/F Mortgage Revenue Refunding
Bonds, AMT, Series C, Class III, 5.50% due 1/01/2018 893
Virginia--0.6%
2,425 Chesterfield County, Virginia, IDA, PCR, Refunding
(Virginia Electric and Power Company), Series B,
5.875% due 6/01/2017 2,608
Norfolk, Virginia, Redevelopment and Housing
Authority, First Mortgage Revenue Bonds (Retirement
Community), Series A:
500 6% due 1/01/2025 513
1,100 6.125% due 1/01/2035 1,125
3,825 Pocahontas Parkway Association, Virginia, Toll
Road Revenue Bonds, Senior-Series A, 5.50%
due 8/15/2008 (j) 4,014
Face
Amount Municipal Bonds Value
Washington--1.5%
$ 3,000 Port of Seattle, Washington, Special Facilities
Revenue Bonds, Series A, 6% due 3/01/2010 (f)(j) $ 3,236
3,010 Seattle, Washington, Drain and Wastewater Utility
Revenue Bonds, 5.75% due 11/01/2022 (f) 3,195
Seattle, Washington, Housing Authority Revenue
Bonds:
2,750 (Newholly Project), AMT, 6.25% due 12/01/2035 2,795
4,800 (Replacement Housing Project), 6.125%
due 12/01/2032 4,852
7,750 Tacoma, Washington, Electric System
Revenue Refunding Bonds, Series A, 5.75%
due 1/01/2011 (h)(j) 8,385
Wisconsin--0.7%
1,000 Wisconsin Housing and Economic Development
Authority, Home Ownership Revenue Bonds, AMT,
Series C, 6% due 9/01/2036 1,059
1,960 Wisconsin State, GO, AMT, Series B, 6.20%
due 11/01/2026 (f) 1,982
Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (Synergyhealth Inc.):
3,250 6% due 11/15/2023 3,460
3,700 6% due 11/15/2032 3,925
Wyoming--0.6%
8,400 Sweetwater County, Wyoming, PCR, Refunding
(Idaho Power Company Project), Series A, 6.05%
due 7/15/2026 (f) 8,581
Guam--0.0%
115 Guam Housing Corporation, S/F Mortgage Revenue
Bonds, AMT, Series A, 5.75% due 9/01/2031 (l) 125
Puerto Rico--2.4%
8,045 Puerto Rico Commonwealth Highway and
Transportation Authority, Transportation Revenue
Bonds, 5.75% due 7/01/2022 8,544
30,000 Puerto Rico Commonwealth Infrastructure Financing
Authority, Special Tax and Capital Appreciation
Revenue Bonds, Series A, 4.64% due 7/01/2032 (e)(p) 8,313
785 Puerto Rico Commonwealth, Public Improvement,
GO, Refunding, 5.70% due 7/01/2020 (f) 835
15,000 Puerto Rico Electric Power Authority, Power Revenue
Bonds, Series NN, 5.125% due 7/01/2029 15,225
2,000 Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control Facilities Revenue
Bonds (Ascension Health), RIB, Series 377, 8%
due 11/15/2030 (n) 2,328
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Schedule of Investments (concluded) National Portfolio (In Thousands)
Face
Amount Municipal Bonds Value
U.S. Virgin Islands--0.6%
$ 8,000 Virgin Islands Government Refinery
Facilities, Revenue Refunding Bonds
(Hovensa Coker Project), AMT, 6.50%
due 7/01/2021 $ 8,936
Total Municipal Bonds
(Cost--$1,367,296)--97.5% 1,412,597
Shares
Held Short-Term Securities Value
53,524 Merrill Lynch Institutional Tax-Exempt Fund,
3.72% (q)(r) $ 53,524
Total Short-Term Securities
(Cost--$53,524)--3.7% 53,524
Total Investments (Cost--$1,420,820*)--101.2% 1,466,121
Liabilities in Excess of Other Assets--(1.2%) (17,700)
----------
Net Assets--100.0% $1,448,421
==========
* The cost and unrealized appreciation (depreciation) of investments
as of June 30, 2006, as computed for federal income tax purposes,
were as follows:
Aggregate cost $ 1,420,686
===============
Gross unrealized appreciation $ 53,242
Gross unrealized depreciation (7,807)
---------------
Net unrealized appreciation $ 45,435
===============
(a) Escrowed to maturity.
(b) FHA Insured.
(c) AMBAC Insured.
(d) GNMA Collateralized.
(e) FGIC Insured.
(f) MBIA Insured.
(g) Security may have a maturity of more than one year at time of issuance,
but has variable rate and demand features that qualify it as a short-term
security. The rate disclosed is that currently in effect. This rate
changes periodically based upon prevailing market rates.
(h) FSA Insured.
(i) FNMA/GNMA Collateralized.
(j) Prerefunded.
(k) XL Capital Insured.
(l) FHLMC Collateralized.
(m) Radian Insured.
(n) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(o) ACA Insured.
(p) Represents a zero coupon bond; the interest rate shown reflects
the effective yield at the time of purchase.
(q) Represents the current yield as of 6/30/2006.
(r) Investments in companies considered to be an affiliate of the Fund,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
were as follows:
Net Dividend
Affiliate Activity Income
Merrill Lynch Institutional Tax-Exempt Fund 51,601 $958
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Statements of Assets and Liabilities
Short-Term Insured National
As of June 30, 2006 Portfolio Portfolio Portfolio
Assets
Investments in unaffiliated securities, at value* $ 313,274,165 $ 925,964,993 $ 1,412,597,547
Investments in affiliated securities, at value** 24,643,702 1,730,187 53,523,712
Cash 1,487,065 116,946 17,042
Receivables:
Securities sold 1,845 200,000 15,723,925
Interest 5,473,260 14,951,628 23,409,393
Capital shares sold 17,650 1,093,986 6,507,769
Dividends -- 79,204 --
Prepaid expenses and other assets 44,313 784,731 75,693
--------------- --------------- ---------------
Total assets 344,942,000 944,921,675 1,511,855,081
--------------- --------------- ---------------
Liabilities
Payables:
Securities purchased 7,550,775 2,592,714 59,498,838
Capital shares redeemed 663,536 1,396,044 1,053,023
Dividends to shareholders 263,135 1,069,216 1,831,670
Investment adviser 83,694 266,001 519,880
Distributor 36,157 126,068 247,205
Other affiliates 13,039 30,841 70,351
Accrued expenses and other liabilities 68,475 147,535 212,991
--------------- --------------- ---------------
Total liabilities 8,678,811 5,628,419 63,433,958
--------------- --------------- ---------------
Net Assets
Net assets $ 336,263,189 $ 939,293,256 $ 1,448,421,123
=============== =============== ===============
Net Assets Consist of
Undistributed investment income--net 484,004 1,209,976 946,947
Accumulated realized capital gains (losses)--net (7,674,452) 3,713,414 (48,606,905)
Unrealized appreciation/depreciation--net (2,292,136) 21,220,388 45,301,474
--------------- --------------- ---------------
Total accumulated earnings (losses)--net (9,482,584) 26,143,778 (2,358,484)
--------------- --------------- ---------------
Class A Common Stock, $.10 par value++ 1,003,847 2,239,872 2,737,851
Class B Common Stock, $.10 par value++++ 240,493 865,614 1,295,487
Class C Common Stock, $.10 par value++++++ 648,984 794,670 1,345,637
Class I Common Stock, $.10 par value++++++++ 1,511,078 8,323,342 8,599,072
Paid-in capital in excess of par 342,341,371 900,925,980 1,436,801,560
--------------- --------------- ---------------
Net Assets $ 336,263,189 $ 939,293,256 $ 1,448,421,123
=============== =============== ===============
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Statements of Assets and Liabilities (concluded)
Short-Term Insured National
As of June 30, 2006 Portfolio Portfolio Portfolio
Net Asset Value
Class A:
Net assets $ 99,293,080 $ 172,082,773 $ 283,813,966
=============== =============== ===============
Shares outstanding 10,038,473 22,398,724 27,378,514
=============== =============== ===============
Net asset value and redemption price per share $ 9.89 $ 7.68 $ 10.37
=============== =============== ===============
Class B:
Net assets $ 23,769,145 $ 66,477,437 $ 134,177,061
=============== =============== ===============
Shares outstanding 2,404,927 8,656,137 12,954,871
=============== =============== ===============
Net asset value and redemption price per share $ 9.88 $ 7.68 $ 10.36
=============== =============== ===============
Class C:
Net assets $ 63,867,991 $ 61,046,215 $ 139,446,596
=============== =============== ===============
Shares outstanding 6,489,837 7,946,703 13,456,368
=============== =============== ===============
Net asset value and redemption price per share $ 9.84 $ 7.68 $ 10.36
=============== =============== ===============
Class I:
Net assets $ 149,332,973 $ 639,686,831 $ 890,983,500
=============== =============== ===============
Shares outstanding 15,110,784 83,233,423 85,990,721
=============== =============== ===============
Net asset value and redemption price per share $ 9.88 $ 7.69 $ 10.36
=============== =============== ===============
* Identified cost $ 315,566,301 $ 904,744,605 $ 1,367,296,073
=============== =============== ===============
** Identified cost for affiliated securities $ 24,643,702 $ 1,730,187 $ 53,523,712
=============== =============== ===============
++ Authorized shares--Class A 150,000,000 500,000,000 375,000,000
=============== =============== ===============
++++ Authorized shares--Class B 150,000,000 375,000,000 375,000,000
=============== =============== ===============
++++++ Authorized shares--Class C 150,000,000 375,000,000 375,000,000
=============== =============== ===============
++++++++ Authorized shares--Class I 150,000,000 500,000,000 375,000,000
=============== =============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Statements of Operations
Short-Term Insured National
For the Year Ended June 30, 2006 Portfolio Portfolio Portfolio
Investment Income
Interest $ 11,460,839 $ 47,295,129 $ 77,504,312
Dividends* 767,668 1,287,310 958,049
Other -- 88,524 --
--------------- --------------- ---------------
Total income 12,228,507 48,670,963 78,462,361
--------------- --------------- ---------------
Expenses
Investment advisory fees 1,326,737 3,666,253 6,872,089
Account maintenance and distribution fees--Class B 106,713 593,490 1,182,588
Account maintenance and distribution fees--Class C 267,585 507,578 985,685
Account maintenance fees--Class A 120,784 454,456 645,823
Accounting services 136,494 296,614 408,496
Transfer agent fees--Class I 60,614 219,323 140,091
Transfer agent fees--Class A 43,693 58,722 489,694
Custodian fees 34,997 59,696 87,169
Registration fees 52,964 50,958 58,792
Transfer agent fees--Class B 13,614 32,008 100,126
Professional fees 39,409 59,514 73,647
Printing and shareholder reports 18,566 44,668 61,897
Transfer agent fees--Class C 34,193 25,234 78,363
Pricing services 11,552 22,435 55,698
Directors' fees and expenses 9,713 20,718 28,283
Other 23,069 35,190 39,806
--------------- --------------- ---------------
Total expenses before waiver 2,300,697 6,146,857 11,308,247
Waiver of expenses (54,478) (21,069) (63,071)
--------------- --------------- ---------------
Total expenses after waiver 2,246,219 6,125,788 11,245,176
--------------- --------------- ---------------
Investment income--net 9,982,288 42,545,175 67,217,185
--------------- --------------- ---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain (loss) on:
Investments--net (2,592,944) 6,488,312 12,459,289
Forward interest rate swaps--net -- 774,863 --
--------------- --------------- ---------------
Total realized gain (loss)--net (2,592,944) 7,263,175 12,459,289
--------------- --------------- ---------------
Change in unrealized appreciation/depreciation on:
Investments--net (1,927,943) (43,885,400) (53,403,444)
Forward interest rate swaps--net -- 296,964 --
--------------- --------------- ---------------
Total change in unrealized depreciation--net (1,927,943) (43,588,436) (53,403,444)
--------------- --------------- ---------------
Total realized and unrealized loss--net (4,520,887) (36,325,261) (40,944,155)
--------------- --------------- ---------------
Net Increase in Net Assets Resulting from Operations $ 5,461,401 $ 6,219,914 $ 26,273,030
=============== =============== ===============
* Dividends from affiliates $ 767,668 $ 280,283 $ 958,049
=============== =============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Statements of Changes in Net Assets Short-Term Portfolio
For the Year Ended
June 30,
Increase (Decrease) in Net Assets: 2006 2005
Operations
Investment income--net $ 9,982,288 $ 10,048,780
Realized loss--net (2,592,944) (3,447,006)
Change in unrealized depreciation--net (1,927,943) 505,798
--------------- ---------------
Net increase in net assets resulting from operations 5,461,401 7,107,572
--------------- ---------------
Dividends to Shareholders
Investment income--net:
Class A (3,080,084) (3,411,719)
Class B (696,530) (770,673)
Class C (1,751,261) (1,822,838)
Class I (4,454,151) (4,042,560)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (9,982,026) (10,047,790)
--------------- ---------------
Capital Share Transactions
Net decrease in net assets derived from capital share transactions (118,737,525) (233,513,320)
--------------- ---------------
Net Assets
Total decrease in net assets (123,258,150) (236,453,538)
Beginning of year 459,521,339 695,974,877
--------------- ---------------
End of year* $ 336,263,189 $ 459,521,339
=============== ===============
* Undistributed investment income--net $ 484,004 $ 483,742
=============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Statements of Changes in Net Assets (continued) Insured Portfolio
For the Year Ended
June 30,
Increase (Decrease) in Net Assets: 2006 2005
Operations
Investment income--net $ 42,545,175 $ 47,460,598
Realized gain--net 7,263,175 16,055,264
Change in unrealized appreciation/depreciation--net (43,588,436) 25,687,582
--------------- ---------------
Net increase in net assets resulting from operations 6,219,914 89,203,444
--------------- ---------------
Dividends & Distributions to Shareholders
Investment income--net:
Class A (7,533,857) (7,853,231)
Class B (2,879,619) (3,953,506)
Class C (2,276,067) (2,393,785)
Class I (29,830,404) (33,236,480)
Realized gain--net:
Class A (682,505) --
Class B (295,880) --
Class C (235,289) --
Class I (2,535,229) --
--------------- ---------------
Net decrease in net assets resulting from dividends and distributions to shareholders (46,268,850) (47,437,002)
--------------- ---------------
Capital Share Transactions
Net decrease in net assets derived from capital share transactions (66,044,701) (86,014,174)
--------------- ---------------
Net Assets
Total decrease in net assets (106,093,637) (44,247,732)
Beginning of year 1,045,386,893 1,089,634,625
--------------- ---------------
End of year* $ 939,293,256 $ 1,045,386,893
=============== ===============
* Undistributed investment income--net $ 1,209,976 $ 1,184,748
=============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Statements of Changes in Net Assets (concluded) National Portfolio
For the Year Ended
June 30,
Increase (Decrease) in Net Assets: 2006 2005
Operations
Investment income--net $ 67,217,185 $ 68,690,786
Realized gain--net 12,459,289 11,191,578
Change in unrealized appreciation--net (53,403,444) 39,336,379
--------------- ---------------
Net increase in net assets resulting from operations 26,273,030 119,218,743
--------------- ---------------
Dividends to Shareholders
Investment income--net:
Class A (11,906,520) (10,680,106)
Class B (6,469,017) (8,386,163)
Class C (4,988,554) (3,829,101)
Class I (43,778,940) (45,655,416)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (67,143,031) (68,550,786)
--------------- ---------------
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions 46,489,740 (15,324,652)
--------------- ---------------
Net Assets
Total increase in net assets 5,619,739 35,343,305
Beginning of year 1,442,801,384 1,407,458,079
--------------- ---------------
End of year* $ 1,448,421,123 $ 1,442,801,384
=============== ===============
* Undistributed investment income--net $ 946,947 $ 872,793
=============== ===============
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Financial Highlights Short-Term Portfolio
The following per share data Class A Class B
and ratios have been derived
from information provided in For the Year Ended June 30, For the Year Ended June 30,
the financial statements. 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning
of year $ 10.00 $ 10.06 $ 10.18 $ 10.14 $ 10.06 $ 10.00 $ 10.05 $ 10.17 $ 10.13 $ 10.06
---------------------------------------------- ----------------------------------------------
Investment income--net .26++ .18++ .17++ .24++ .32 .23++ .15++ .14++ .21++ .29
Realized and unrealized gain
(loss)--net (.11) (.06) (.12) .04 .08 (.12) (.05) (.12) .04 .07
---------------------------------------------- ----------------------------------------------
Total from investment operations .15 .12 .05 .28 .40 .11 .10 .02 .25 .36
---------------------------------------------- ----------------------------------------------
Less dividends from investment
income--net (.26) (.18) (.17) (.24) (.32) (.23) (.15) (.14) (.21) (.29)
---------------------------------------------- ----------------------------------------------
Net asset value, end of year $ 9.89 $ 10.00 $ 10.06 $ 10.18 $ 10.14 $ 9.88 $ 10.00 $ 10.05 $ 10.17 $ 10.13
============================================== ==============================================
Total Investment Return*
Based on net asset value
per share 1.47% 1.20% .50% 2.77% 3.99% 1.11% 1.04% .24% 2.51% 3.62%
============================================== ==============================================
Ratios to Average Net Assets
Expenses, net of waiver .54% .53% .52% .52% .56% .80% .79% .77% .78% .82%
============================================== ==============================================
Expenses .55% .54% .53% .53% .56% .81% .80% .78% .79% .82%
============================================== ==============================================
Investment income--net 2.55% 1.76% 1.68% 2.31% 3.13% 2.28% 1.50% 1.43% 2.10% 2.87%
============================================== ==============================================
Supplemental Data
Net assets, end of year
(in thousands) $ 99,293 $141,172 $244,741 $248,454 $140,744 $ 23,769 $ 38,565 $ 63,135 $ 83,886 $ 81,967
============================================== ==============================================
Portfolio turnover 82.77% 87.42% 69.08% 44.61% 74.74% 82.77% 87.42% 69.08% 44.61% 74.74%
============================================== ==============================================
* Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Financial Highlights (continued) Short-Term Portfolio
The following per share data Class C Class I
and ratios have been derived
from information provided in For the Year Ended June 30, For the Year Ended June 30,
the financial statements. 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning
of year $ 9.95 $ 10.01 $ 10.13 $ 10.09 $ 10.01 $ 9.99 $ 10.05 $ 10.17 $ 10.13 $ 10.05
---------------------------------------------- ----------------------------------------------
Investment income--net .23++ .15++ .14++ .19++ .29 .27++ .19++ .18++ .27++ .34
Realized and unrealized gain
(loss)--net (.11) (.06) (.12) .06 .08 (.11) (.06) (.12) .02 .08
---------------------------------------------- ----------------------------------------------
Total from investment operations .12 .09 .02 .25 .37 .16 .13 .06 .29 .42
---------------------------------------------- ----------------------------------------------
Less dividends from investment
income--net (.23) (.15) (.14) (.21) (.29) (.27) (.19) (.18) (.25) (.34)
---------------------------------------------- ----------------------------------------------
Net asset value, end of year $ 9.84 $ 9.95 $ 10.01 $ 10.13 $ 10.09 $ 9.88 $ 9.99 $ 10.05 $ 10.17 $ 10.13
============================================== ==============================================
Total Investment Return*
Based on net asset value
per share 1.21% .94% .23% 2.52% 3.72% 1.57% 1.30% .59% 2.87% 4.10%
============================================== ==============================================
Ratios to Average Net Assets
Expenses, net of waiver .80% .79% .77% .78% .82% .44% .43% .42% .42% .46%
============================================== ==============================================
Expenses .81% .80% .78% .79% .82% .45% .44% .43% .43% .46%
============================================== ==============================================
Investment income--net 2.29% 1.51% 1.42% 1.92% 2.91% 2.66% 1.88% 1.78% 2.44% 3.30%
============================================== ==============================================
Supplemental Data
Net assets, end of year
(in thousands) $ 63,868 $ 92,907 $144,656 $135,782 $ 1,596 $149,333 $186,877 $243,443 $251,137 $204,936
============================================== ==============================================
Portfolio turnover 82.77% 87.42% 69.08% 44.61% 74.74% 82.77% 87.42% 69.08% 44.61% 74.74%
============================================== ==============================================
* Total investment returns exclude the effects of sales charges. Effective December 28, 2005,
Class I Shares are no longer subject to any front-end sales charge.
++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Financial Highlights (continued) Insured Portfolio
The following per share data Class A Class B
and ratios have been derived
from information provided in For the Year Ended June 30, For the Year Ended June 30,
the financial statements. 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning
of year $ 8.00 $ 7.70 $ 8.07 $ 7.79 $ 7.69 $ 7.99 $ 7.69 $ 8.07 $ 7.79 $ 7.68
---------------------------------------------- ----------------------------------------------
Investment income--net .33++++ .34++++ .38++++ .39++++ .39 .29++++ .30++++ .34++++ .35++++ .36
Realized and unrealized gain
(loss)--net (.29) .30 (.37) .28 .10 (.28) .30 (.38) .28 .11
---------------------------------------------- ----------------------------------------------
Total from investment operations .04 .64 .01 .67 .49 .01 .60 (.04) .63 .47
---------------------------------------------- ----------------------------------------------
Less dividends and distributions:
Investment income--net (.33) (.34) (.38) (.39) (.39) (.29) (.30) (.34) (.35) (.36)
Realized gain--net (.03) -- -- -- --++ (.03) -- -- -- --++
---------------------------------------------- ----------------------------------------------
Total dividends and distributions (.36) (.34) (.38) (.39) (.39) (.32) (.30) (.34) (.35) (.36)
---------------------------------------------- ----------------------------------------------
Net asset value, end of year $ 7.68 $ 8.00 $ 7.70 $ 8.07 $ 7.79 $ 7.68 $ 7.99 $ 7.69 $ 8.07 $ 7.79
============================================== ==============================================
Total Investment Return*
Based on net asset value
per share .44% 8.47% .10% 8.77% 6.63% .05% 7.93% (.53%) 8.21% 6.23%
============================================== ==============================================
Ratios to Average Net Assets
Expenses, net of waiver .70% .71% .71% .71% .72% 1.21% 1.21% 1.21% 1.22% 1.23%
============================================== ==============================================
Expenses .71% .71% .71% .71% .72% 1.21% 1.22% 1.22% 1.22% 1.23%
============================================== ==============================================
Investment income--net 4.15% 4.33% 4.79% 4.88% 5.10% 3.64% 3.83% 4.29% 4.38% 4.58%
============================================== ==============================================
Supplemental Data
Net assets, end of year
(in thousands) $ 172,083 $182,216 $183,007 $187,805 $161,110 $ 66,477 $ 91,355 $111,524 $160,177 $182,241
============================================== ==============================================
Portfolio turnover 48.96% 55.00% 49.27% 38.17% 32.78% 48.96% 55.00% 49.27% 38.17% 32.78%
============================================== ==============================================
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
++++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Financial Highlights (continued) Insured Portfolio
The following per share data Class C Class I
and ratios have been derived
from information provided in For the Year Ended June 30, For the Year Ended June 30,
the financial statements. 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning
of year $ 8.00 $ 7.69 $ 8.07 $ 7.79 $ 7.68 $ 8.00 $ 7.70 $ 8.07 $ 7.80 $ 7.69
---------------------------------------------- ----------------------------------------------
Investment income--net .28++++ .30++++ .33++++ .34++++ .35 .35++++ .36++++ .40++++ .41++++ .41
Realized and unrealized gain
(loss)--net (.29) .31 (.38) .28 .11 (.28) .30 (.37) .27 .11
---------------------------------------------- ----------------------------------------------
Total from investment operations (.01) .61 (.05) .62 .46 .07 .66 .03 .68 .52
---------------------------------------------- ----------------------------------------------
Less dividends and distributions:
Investment income--net (.28) (.30) (.33) (.34) (.35) (.35) (.36) (.40) (.41) (.41)
Realized gain--net (.03) -- -- -- --++ (.03) -- -- -- --++
---------------------------------------------- ----------------------------------------------
Total dividends and distributions (.31) (.30) (.33) (.34) (.35) (.38) (.36) (.40) (.41) (.41)
---------------------------------------------- ----------------------------------------------
Net asset value, end of year $ 7.68 $ 8.00 $ 7.69 $ 8.07 $ 7.79 $ 7.69 $ 8.00 $ 7.70 $ 8.07 $ 7.80
============================================== ==============================================
Total Investment Return*
Based on net asset value
per share (.12%) 8.01% (.58%) 8.16% 6.18% .82% 8.74% .35% 8.88% 7.03%
============================================== ==============================================
Ratios to Average Net Assets
Expenses, net of waiver 1.26% 1.26% 1.26% 1.27% 1.28% .45% .46% .46% .46% .47%
============================================== ==============================================
Expenses 1.26% 1.27% 1.27% 1.27% 1.28% .46% .46% .46% .46% .47%
============================================== ==============================================
Investment income--net 3.59% 3.77% 4.23% 4.31% 4.56% 4.40% 4.58% 5.04% 5.13% 5.35%
============================================== ==============================================
Supplemental Data
Net assets, end of year
(in thousands) $ 61,046 $ 64,682 $ 61,794 $ 66,089 $ 34,541 $639,687 $707,134 $733,310 $855,757 $878,018
============================================== ==============================================
Portfolio turnover 48.96% 55.00% 49.27% 38.17% 32.78% 48.96% 55.00% 49.27% 38.17% 32.78%
============================================== ==============================================
* Total investment returns exclude the effects of sales charges. Effective December 28, 2005,
Class I Shares are no longer subject to any front-end sales charge.
++ Amount is less than $(.01) per share.
++++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Financial Highlights (continued) National Portfolio
The following per share data Class A Class B
and ratios have been derived
from information provided in For the Year Ended June 30, For the Year Ended June 30,
the financial statements. 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning
of year $ 10.67 $ 10.29 $ 10.54 $ 10.27 $ 10.15 $ 10.66 $ 10.28 $ 10.53 $ 10.26 $ 10.14
---------------------------------------------- ----------------------------------------------
Investment income--net .49+++ .50+++ .52+++ .53+++ .53 .43+++ .45+++ .47+++ .48+++ .53
Realized and unrealized gain
(loss)--net (.30) .38 (.25) .27 .12 (.30) .38 (.26) .27 .12
---------------------------------------------- ----------------------------------------------
Total from investment operations .19 .88 .27 .80 .65 .13 .83 .21 .75 .65
---------------------------------------------- ----------------------------------------------
Less dividends and distributions:
Investment income--net (.49) (.50) (.52) (.53) (.53) (.43) (.45) (.46) (.48) (.53)
Realized gain--net -- -- -- -- --++ -- -- -- -- --++
---------------------------------------------- ----------------------------------------------
Total dividends and distributions (.49) (.50) (.52) (.53) (.53) (.43) (.45) (.46) (.48) (.53)
---------------------------------------------- ----------------------------------------------
Net asset value, end of year $ 10.37 $ 10.67 $ 10.29 $ 10.54 $ 10.27 $ 10.36 $ 10.66 $ 10.28 $ 10.53 $ 10.26
============================================== ==============================================
Total Investment Return*
Based on net asset value
per share 1.77% 8.73% 2.62% 7.98% 6.72% 1.25% 8.18% 2.10% 7.43% 6.18%
============================================== ==============================================
Ratios to Average Net Assets
Expenses, net of waiver .83% .84% .85% .84% .87% 1.34% 1.35% 1.35% 1.34% 1.38%
============================================== ==============================================
Expenses .84% .85% .85% .84% .87% 1.35% 1.36% 1.36% 1.35% 1.38%
============================================== ==============================================
Investment income--net 4.61% 4.76% 4.97% 5.10% 5.30% 4.11% 4.27% 4.47% 4.59% 4.80%
============================================== ==============================================
Supplemental Data
Net assets, end of year
(in thousands) $ 283,814 $248,231 $207,376 $200,108 $137,225 $134,177 $177,553 $217,814 $321,477 $295,827
============================================== ==============================================
Portfolio turnover 65.46% 35.28% 22.46% 37.75% 35.75% 65.46% 35.28% 22.46% 37.75% 35.75%
============================================== ==============================================
* Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Financial Highlights (concluded) National Portfolio
The following per share data Class C Class I
and ratios have been derived
from information provided in For the Year Ended June 30, For the Year Ended June 30,
the financial statements. 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning
of year $ 10.66 $ 10.29 $ 10.54 $ 10.26 $ 10.14 $ 10.66 $ 10.29 $ 10.54 $ 10.26 $ 10.14
---------------------------------------------- ----------------------------------------------
Investment income--net .43+++ .44+++ .46+++ .47+++ .53 .51+++ .53+++ .55+++ .56+++ .62
Realized and unrealized gain
(loss)--net (.29) .37 (.25) .28 .12 (.30) .37 (.25) .28 .12
---------------------------------------------- ----------------------------------------------
Total from investment operations .14 .81 .21 .75 .65 .21 .90 .30 .84 .74
---------------------------------------------- ----------------------------------------------
Less dividends and distributions:
Investment income--net (.44) (.44) (.46) (.47) (.53) (.51) (.53) (.55) (.56) (.62)
Realized gain--net -- -- -- -- --++ -- -- -- -- --++
---------------------------------------------- ----------------------------------------------
Total dividends and distributions (.44) (.44) (.46) (.47) (.53) (.51) (.53) (.55) (.56) (.62)
---------------------------------------------- ----------------------------------------------
Net asset value, end of year $ 10.36 $ 10.66 $ 10.29 $ 10.54 $ 10.26 $ 10.36 $ 10.66 $ 10.29 $ 10.54 $ 10.26
============================================== ==============================================
Total Investment Return*
Based on net asset value
per share 1.20% 8.02% 2.05% 7.48% 6.13% 2.02% 8.89% 2.88% 8.34% 6.98%
============================================== ==============================================
Ratios to Average Net Assets
Expenses, net of waiver 1.39% 1.40% 1.40% 1.39% 1.43% .58% .59% .60% .59% .62%
============================================== ==============================================
Expenses 1.40% 1.41% 1.41% 1.40% 1.43% .59% .60% .60% .59% .62%
============================================== ==============================================
Investment income--net 4.05% 4.20% 4.42% 4.54% 4.76% 4.87% 5.02% 5.23% 5.35% 5.55%
============================================== ==============================================
Supplemental Data
Net assets, end of year
(in thousands) $ 139,447 $107,893 $ 74,849 $ 77,906 $ 52,822 $890,984 $909,125 $907,419 $624,192 $626,935
============================================== ==============================================
Portfolio turnover 65.46% 35.28% 22.46% 37.75% 35.75% 65.46% 35.28% 22.46% 37.75% 35.75%
============================================== ==============================================
* Total investment returns exclude the effects of sales charges. Effective December 28, 2005,
Class I Shares are no longer subject to any front-end sales charge.
++ Amount is less than $(.01) per share.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Notes to Financial Statements
1. Significant Accounting Policies:
Merrill Lynch Municipal Bond Fund, Inc. ("the Fund") (consisting of Merrill
Lynch Short-Term Portfolio, Merrill Lynch Insured Portfolio and Merrill Lynch
National Portfolio) is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The Fund's
financial statements are prepared in conformity with U.S. generally accepted
accounting principles, which may require the use of management accruals and
estimates. Actual results may differ from these estimates. The Fund's
Portfolios offer multiple classes of shares. Effective December 28, 2005,
Class I Shares are no longer subject to any front-end sales charge. Class A
Shares 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 I Shares are sold
only to certain eligible investors. All classes of shares have identical
voting, dividend, liquidation and other rights and the same terms and
conditions, except that Class A, Class B and Class C Shares bear certain
expenses related to the account maintenance of such shares, and Class B and
Class C Shares also bear certain expenses related to the distribution of such
shares. Each class has exclusive voting rights with respect to matters
relating to its account maintenance and distribution expenditures (except that
Class B shareholders may vote on certain changes to the Class A distribution
plan). Income, expenses (other than expenses attributable to a specific class)
and realized and unrealized gains and losses are allocated daily to each class
based on its relative net assets. The following is a summary of significant
accounting policies followed by the Fund.
(a) Valuation of investments--Municipal bonds are traded primarily in the over-
the-counter ("OTC") markets and are valued at the last available bid price in
the OTC market or on the basis of values as obtained by a pricing service.
Pricing services use valuation matrixes that incorporate both dealer-supplied
valuations and valuation models. The procedures of the pricing service and its
valuations are reviewed by the officers of the Fund under the general
direction of the Board of Directors. Such valuations and procedures are
reviewed periodically by the Board of Directors of the Fund. Financial futures
contracts and options thereon, which are traded on exchanges, are valued at
their closing prices as of the close of such exchanges. Options written or
purchased are valued at the last sale price in the case of exchange-traded
options. In the case of options traded in the OTC market, valuation is the
last asked price (options written) or the last bid price (options purchased).
Swap agreements are valued based upon quoted fair valuations received daily by
the Fund from a pricing service. Short-term investments with a remaining
maturity of 60 days or less are valued at amortized cost which approximates
market value, under which method the investment is valued at cost and any
premium or discount is amortized on a straight line basis to maturity.
Investments in open-end investment companies are valued at their net asset
value each business day. Securities and other assets for which market
quotations are not readily available are valued at fair value as determined in
good faith by or under the direction of the Board of Directors of the Fund.
(b) Derivative financial instruments--The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect its exposure to interest rate movements and movements in the
securities markets. Losses may arise due to changes in the value of the
contract or if the counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell financial futures
contracts and options on such futures contracts. Futures contracts are
contracts for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the Portfolios
deposit and maintain as collateral such initial margin as required by the
exchange on which the transaction is effected. Pursuant to the contract, the
Portfolios agree to receive from or pay to the broker an amount of cash equal
to the daily fluctuation in value of the contract. Such receipts or payments
are known as variation margin and are recorded by the Portfolios as unrealized
gains or losses. When the contract is closed, the Portfolios record a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
* Forward interest rate swaps--The Fund may enter into forward interest rate
swaps. In a forward interest rate swap, the Fund and the counterparty agree to
pay or receive interest on a specified notional contract amount, commencing on
a specified future effective date, unless terminated earlier. The value of the
agreement is determined by quoted fair values received daily by the Fund from
the counterparty. When the agreement is closed, the Fund records a realized
gain or loss in an amount equal to the value of the agreement.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Notes to Financial Statements (continued)
(c) Income taxes--It is the Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
(d) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Portfolios amortize
all premiums and discounts on debt securities.
(e) Prepaid registration fees--Prepaid registration fees are charged to
expense as the related shares are issued.
(f) Dividends and distributions--Dividends from net investment income are
declared daily and paid monthly. Distributions of capital gains are recorded
on the ex-dividend dates.
(g) Expenses--Certain expenses have been allocated to the individual
Portfolios in the Fund on a pro rata basis based upon the respective aggregate
net asset value of each Portfolio included in the Fund.
(h) Insurance--Insured Portfolio: Where bonds in the Portfolio have not been
insured pursuant to policies obtained by the issuer, the Fund has obtained
insurance with respect to the payment of interest and principal of each bond.
Such insurance is valid as long as the bonds are held by the Portfolio.
(i) Reclassification--U.S. generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, during the
current year, with respect to the National Portfolio, $5,213,815 has been
reclassified between paid-in capital in excess of par and accumulated realized
net capital losses as a result of a permanent difference attributable to
expired capital loss carryforwards. 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 Plan with FAM Distributors,
Inc. ("FAMD" or the "Distributor"), which is a wholly-owned subsidiary of
Merrill Lynch Group, Inc.
FAM is responsible for the management of the Fund's portfolios and provides
the necessary personnel, facilities, equipment and certain other services
necessary to the operation of the Fund. For such services, FAM receives at the
end of each month a fee with respect to each Portfolio at the annual rates set
forth below which are based upon the average daily value of the Fund's net
assets.
Rate of Advisory Fee
Aggregate of Average Daily
Net Assets of the Three Short-Term Insured National
Combined Portfolios Portfolio Portfolio Portfolio
Not exceeding $250 million .40 % .40 % .50 %
In excess of $250 million but
not exceeding $400 million .375 .375 .475
In excess of $400 million but
not exceeding $550 million .35 .375 .475
In excess of $550 million but
not exceeding $1.5 billion .325 .375 .475
In excess of $1.5 billion .325 .35 .475
FAM has agreed to waive its advisory fee for each Portfolio by the amount of
advisory fee each Portfolio pays to FAM indirectly through each Portfolio's
investment in the Merrill Lynch Institutional Tax-Exempt Fund. For the year
ended June 30, 2006, FAM waived Short-Term Portfolio, Insured Portfolio and
National Portfolio in the amounts of $54,478, $21,069 and $63,071,
respectively.
Pursuant to the Distribution Plans adopted by the Fund in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Fund pays the Distributor
ongoing account maintenance and distribution fees. The fees are accrued daily
and paid monthly at annual rates based upon the average daily net assets of
the shares as follows:
Account Maintenance Fees
Class A Class B Class C
Short-Term Portfolio .10% .15% .15%
Insured Portfolio .25% .25% .25%
National Portfolio .25% .25% .25%
Distribution Fees
Class A Class B Class C
Short-Term Portfolio -- .20% .20%
Insured Portfolio -- .50% .55%
National Portfolio -- .50% .55%
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
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 and Class C shareholders. The ongoing
distribution fee compensates the Distributor and MLPF&S for providing
shareholder and distribution-related services to Class B and Class C
shareholders.
For the year ended June 30, 2006, FAMD earned underwriting discounts and
direct commissions and MLPF&S earned dealer concessions on sales of the Fund's
Class A and Class I Shares follows:
FAMD MLPF&S
Class A Class I Class A Class I
Short-Term Portfolio $ 674 $ 1,179 $ 8,156 $ 13,664
Insured Portfolio $ 6,382 $ 6,036 $ 54,940 $ 28,261
National Portfolio $ 24,853 $ 12,519 $ 196,084 $ 35,347
For the year ended June 30, 2006, MLPF&S received contingent deferred sales
charges of $197,335 relating to transactions in Class B Shares, amounting
to $36,726, $65,081 and $95,528 in the Short-Term, Insured and National
Portfolios, respectively, and $39,046 relating to transactions in Class C
Shares, amounting to $8,865, $4,633 and $25,548 in the Short-Term, Insured and
National Portfolios, respectively.
Furthermore, MLPF&S received contingent deferred sales charges relating to
transactions subject to front-end sales charge waivers as follows:
Class A Class I
Short-Term Portfolio $ 8 --
National Portfolio $22,586 $58
In addition, MLPF&S received $642 and $1,775 in commissions on the execution
of portfolio security transactions for the Insured Portfolio and National
Portfolio, respectively, for the year ended June 30, 2006.
For the year ended June 30, 2006, the Fund reimbursed FAM $8,751, $22,357 and
$31,827 in the Short-Term, Insured and National Portfolios, respectively, for
certain accounting services.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co.,
is the Fund's transfer agent.
Certain officers and/or directors of the Fund are officers and/or directors of
FAM, PSI, FAMD, FDS, and/or ML & Co.
In February 2006, ML & Co. and BlackRock, Inc. entered into an agreement to
contribute ML & Co.'s investment management business, including FAM, to the
investment management business of BlackRock, Inc. The transaction is expected
to close at the end of the third quarter of 2006.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended June 30, 2006 were as follows:
Purchases Sales
Short-Term Portfolio $287,270,083 $343,448,147
Insured Portfolio $483,371,701 $561,332,214
National Portfolio $954,193,667 $907,474,997
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share transactions
for the years ended June 30, 2006 and June 30, 2005 were $(118,737,525) and
$(233,513,320), respectively, for the Short-Term Portfolio; $(66,044,701) and
$(86,014,174), respectively, for the Insured Portfolio; and $46,489,740 and
$(15,324,652), respectively, for the National Portfolio.
Transactions in capital shares for each class were as follows:
Short-Term Portfolio
Class A Shares for the Year Dollar
Ended June 30, 2006 Shares Amount
Shares sold 821,123 $ 8,169,499
Automatic conversion of shares 145,897 1,206,454
Shares issued to shareholders in
reinvestment of dividends 121,345 1,449,949
-------------- --------------
Total issued 1,088,365 10,825,902
Shares redeemed (5,163,012) (51,318,356)
-------------- --------------
Net decrease (4,074,647) $ (40,492,454)
============== ==============
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Notes to Financial Statements (continued)
Class A Shares for the Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 3,374,057 $ 33,962,460
Automatic conversion of shares 146,594 1,473,218
Shares issued to shareholders in
reinvestment of dividends 184,448 1,850,964
-------------- --------------
Total issued 3,705,099 37,286,642
Shares redeemed (13,930,419) (139,907,342)
-------------- --------------
Net decrease (10,225,320) $(102,620,700)
============== ==============
Class B Shares for the Year Dollar
Ended June 30, 2006 Shares Amount
Shares sold 38,884 $ 386,427
Shares issued to shareholders in
reinvestment of dividends 44,426 441,220
-------------- --------------
Total issued 83,310 827,647
-------------- --------------
Automatic conversion of shares (121,450) (1,206,454)
Shares redeemed (1,415,324) (14,064,507)
-------------- --------------
Total redeemed (1,536,774) (15,270,961)
-------------- --------------
Net decrease (1,453,464) $ (14,443,314)
============== ==============
Class B Shares for the Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 269,378 $ 2,707,532
Shares issued to shareholders in
reinvestment of dividends 48,450 485,847
-------------- --------------
Total issued 317,828 3,193,379
-------------- --------------
Automatic conversion of shares (146,687) (1,473,218)
Shares redeemed (2,595,792) (26,034,176)
-------------- --------------
Total redeemed (2,742,479) (27,507,394)
-------------- --------------
Net decrease (2,424,651) $ (24,314,015)
============== ==============
Class C Shares for the Year Dollar
Ended June 30, 2006 Shares Amount
Shares sold 611,352 $ 6,048,208
Shares issued to shareholders in
reinvestment of dividends 115,698 1,143,935
-------------- --------------
Total issued 727,050 7,192,143
Shares redeemed (3,572,643) (35,353,144)
-------------- --------------
Net decrease (2,845,593) $ (28,161,001)
============== ==============
Class C Shares for the Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 1,680,127 $ 16,793,553
Shares issued to shareholders in
reinvestment of dividends 117,775 1,175,754
-------------- --------------
Total issued 1,797,902 17,969,307
Shares redeemed (6,920,737) (69,093,002)
-------------- --------------
Net decrease (5,122,835) $ (51,123,695)
============== ==============
Class I Shares for the Year Dollar
Ended June 30, 2006 Shares Amount
Shares sold 1,502,926 $ 14,921,923
Shares issued to shareholders in
reinvestment of dividends 260,966 2,590,922
-------------- --------------
Total issued 1,763,892 17,512,845
Shares redeemed (5,351,695) (53,153,601)
-------------- --------------
Net decrease (3,587,803) $ (35,640,756)
============== ==============
Class I Shares for the Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 2,389,803 $ 23,968,954
Shares issued to shareholders in
reinvestment of dividends 246,614 2,472,327
-------------- --------------
Total issued 2,636,417 26,441,281
Shares redeemed (8,166,900) (81,896,191)
-------------- --------------
Net decrease (5,530,483) $ (55,454,910)
============== ==============
Insured Portfolio
Class A Shares for the Year Dollar
Ended June 30, 2006 Shares Amount
Shares sold 1,348,298 $ 10,584,431
Automatic conversion of shares 981,047 7,688,689
Shares issued to shareholders in
reinvestment of dividends and
distributions 509,243 3,992,856
-------------- --------------
Total issued 2,838,588 22,265,976
Shares redeemed (3,222,764) (25,174,807)
-------------- --------------
Net decrease (384,176) $ (2,908,831)
============== ==============
Class A Shares for the Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 1,066,208 $ 8,437,549
Automatic conversion of shares 1,094,647 8,649,488
Shares issued to shareholders in
reinvestment of dividends 495,949 3,921,138
-------------- --------------
Total issued 2,656,804 21,008,175
Shares redeemed (3,656,199) (28,860,424)
-------------- --------------
Net decrease (999,395) $ (7,852,249)
============== ==============
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Notes to Financial Statements (continued)
Class B Shares for the Year Dollar
Ended June 30, 2006 Shares Amount
Shares sold 236,379 $ 1,852,684
Shares issued to shareholders in
reinvestment of dividends and
distributions 174,687 1,370,101
-------------- --------------
Total issued 411,066 3,222,785
--------------- ---------------
Automatic conversion of shares (981,283) (7,688,689)
Shares redeemed (2,200,222) (17,243,259)
-------------- --------------
Total redeemed (3,181,505) (24,931,948)
-------------- --------------
Net decrease (2,770,439) $ (21,709,163)
============== ==============
Class B Shares for the Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 283,542 $ 2,237,673
Shares issued to shareholders in
reinvestment of dividends 218,648 1,727,424
-------------- --------------
Total issued 502,190 3,965,097
-------------- --------------
Automatic conversion of shares (1,094,676) (8,649,488)
Shares redeemed (2,479,128) (19,581,853)
-------------- --------------
Total redeemed (3,573,804) (28,231,341)
-------------- --------------
Net decrease (3,071,614) $ (24,266,244)
============== ==============
Class C Shares for the Year Dollar
Ended June 30, 2006 Shares Amount
Shares sold 1,343,228 $ 10,538,215
Shares issued to shareholders in
reinvestment of dividends and
distributions 162,002 1,270,193
-------------- --------------
Total issued 1,505,230 11,808,408
Shares redeemed (1,646,563) (12,894,237)
-------------- --------------
Net decrease (141,333) $ (1,085,829)
============== ==============
Class C Shares for the Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 1,281,216 $ 10,135,537
Shares issued to shareholders in
reinvestment of dividends 162,591 1,285,374
-------------- --------------
Total issued 1,443,807 11,420,911
Shares redeemed (1,386,798) (10,955,958)
-------------- --------------
Net increase 57,009 $ 464,953
============== ==============
Class I Shares for the Year Dollar
Ended June 30, 2006 Shares Amount
Shares sold 1,459,336 $ 11,434,123
Shares issued to shareholders in
reinvestment of dividends and
distributions 1,775,119 13,924,940
-------------- --------------
Total issued 3,234,455 25,359,063
Shares redeemed (8,382,862) (65,699,941)
-------------- --------------
Net decrease (5,148,407) $ (40,340,878)
============== ==============
Class I Shares for the Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 1,160,854 $ 9,184,822
Shares issued to shareholders in
reinvestment of dividends 1,785,849 14,124,090
-------------- --------------
Total issued 2,946,703 23,308,912
Shares redeemed (9,826,814) (77,669,546)
-------------- --------------
Net decrease (6,880,111) $ (54,360,634)
============== ==============
National Portfolio
Class A Shares for the Year Dollar
Ended June 30, 2006 Shares Amount
Shares sold 5,809,040 $ 60,821,050
Automatic conversion of shares 1,794,525 18,842,536
Shares issued to shareholders in
reinvestment of dividends 547,471 5,750,522
-------------- --------------
Total issued 8,151,036 85,414,108
Shares redeemed (4,046,647) (42,487,976)
-------------- --------------
Net increase 4,104,389 $ 42,926,132
============== ==============
Class A Shares for the Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 5,528,841 $ 58,067,896
Automatic conversion of shares 1,765,411 18,581,047
Shares issued to shareholders in
reinvestment of dividends 477,278 5,031,328
-------------- --------------
Total issued 7,771,530 81,680,271
Shares redeemed (4,647,158) (48,641,136)
-------------- --------------
Net increase 3,124,372 $ 33,039,135
============== ==============
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Notes to Financial Statements (continued)
Class B Shares for the Year Dollar
Ended June 30, 2006 Shares Amount
Shares sold 738,406 $ 7,749,159
Shares issued to shareholders in
reinvestment of dividends 254,982 2,677,936
-------------- --------------
Total issued 993,388 10,427,095
-------------- --------------
Automatic conversion of shares (1,796,012) (18,842,536)
Shares redeemed (2,903,855) (30,484,753)
-------------- --------------
Total redeemed (4,699,867) (49,327,289)
-------------- --------------
Net decrease (3,706,479) $ (38,900,194)
============== ==============
Class B Shares for the Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 628,757 $ 6,605,915
Shares issued to shareholders in
reinvestment of dividends 330,341 3,477,776
-------------- --------------
Total issued 959,098 10,083,691
-------------- --------------
Automatic conversion of shares (1,766,807) (18,581,047)
Shares redeemed (3,712,735) (39,022,894)
-------------- --------------
Total redeemed (5,479,542) (57,603,941)
-------------- --------------
Net decrease (4,520,444) $ (47,520,250)
============== ==============
Class C Shares for the Year Dollar
Ended June 30, 2006 Shares Amount
Shares sold 4,865,773 $ 51,061,570
Shares issued to shareholders in
reinvestment of dividends 296,743 3,115,813
-------------- --------------
Total issued 5,162,516 54,177,383
-------------- --------------
Shares redeemed (1,825,533) (19,143,539)
-------------- --------------
Net increase 3,336,983 $ 35,033,844
============== ==============
Class C Shares for the Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 4,140,886 $ 43,609,428
Shares issued to shareholders in
reinvestment of dividends 217,764 2,295,644
-------------- --------------
Total issued 4,358,650 45,905,072
Shares redeemed (1,514,374) (15,959,537)
-------------- --------------
Net increase 2,844,276 $ 29,945,535
============== ==============
Class I Shares for the Year Dollar
Ended June 30, 2006 Shares Amount
Shares sold 5,928,015 $ 62,151,396
Shares issued to shareholders in
reinvestment of dividends 2,713,665 28,501,117
-------------- --------------
Total issued 8,641,680 90,652,513
Shares redeemed (7,929,485) (83,222,555)
-------------- --------------
Net increase 712,195 $ 7,429,958
============== ==============
Class I Shares for the Year Dollar
Ended June 30, 2005 Shares Amount
Shares sold 2,524,187 $ 26,563,911
Shares issued to shareholders in
reinvestment of dividends 2,816,177 29,669,505
-------------- --------------
Total issued 5,340,364 56,233,416
Shares redeemed (8,272,425) (87,022,488)
-------------- --------------
Net decrease (2,932,061) $ (30,789,072)
============== ==============
5. Short-Term Borrowings:
The Fund, on behalf of the Portfolios, along with certain other funds managed
by FAM and its affiliates, is a party to a $500,000,000 credit agreement with
a group of lenders, which expires November 2006. The Fund may borrow under the
credit agreement to fund shareholder redemptions and for other lawful purposes
other than for leverage. The Fund may borrow up to the maximum amount
allowable under the Fund's current prospectus and statement of additional
information, subject to various other legal, regulatory or contractual limits.
The Fund pays a commitment fee of .07% per annum based on the Fund's pro rata
share of the unused portion of the credit agreement. Amounts borrowed under
the credit agreement bear interest at a rate equal to, at each Fund's
election, the federal funds rate plus .50% or a base rate as defined in the
credit agreement. The Fund did not borrow under the credit agreement during
the year ended June 30, 2006.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Notes to Financial Statements (concluded)
6. Distributions to Shareholders:
Short-Term Portfolio
The tax character of distributions paid during the fiscal years ended June 30,
2006 and June 30, 2005 was as follows:
6/30/2006 6/30/2005
Distributions paid from:
Tax-exempt income $ 9,982,026 $ 10,047,790
-------------- --------------
Total distributions $ 9,982,026 $ 10,047,790
============== ==============
As of June 30, 2006, the components of accumulated losses on a tax basis were
as follows:
Undistributed tax-exempt income--net $ 484,004
Undistributed long-term capital gains--net --
--------------
Total undistributed earnings--net 484,004
Capital loss carryforward (6,069,000)*
Unrealized losses--net (3,897,588)**
--------------
Total accumulated losses--net $ (9,482,584)
==============
* On June 30, 2006, the Fund had a net capital loss carryforward of
$6,069,000, of which $119,413 expires in 2008, $426,094 expires
in 2009, $331,374 expires in 2012, $1,101,799 expires in 2013 and
$4,090,320 expires in 2014. This amount will be available to offset
like amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized
gains is attributable primarily to the deferral of post-October capital
losses for tax purposes.
Insured Portfolio
The tax character of distributions paid during the fiscal years ended
June 30, 2006 and June 30, 2005 was as follows:
6/30/2006 6/30/2005
Distributions paid from:
Tax-exempt income $ 42,519,947 $ 47,437,002
Net long-term capital gain 3,748,903 --
-------------- --------------
Total distributions $ 46,268,850 $ 47,437,002
============== ==============
As of June 30, 2006, the components of accumulated earnings on a tax basis
were as follows:
Undistributed tax-exempt income--net $ 1,071,111
Undistributed long-term capital gains--net 4,937,511
--------------
Total undistributed earnings--net 6,008,622
Capital loss carryforward --
Unrealized gains_net 20,135,156*
--------------
Total accumulated earnings--net $ 26,143,778
==============
* The difference between book-basis and tax-basis net unrealized
gains is attributable primarily to the tax deferral of losses on wash
sales, the difference between book and tax amortization methods
for premiums and discounts on fixed income securities and the tax
deferral of losses on straddles.
National Portfolio
The tax character of distributions paid during the fiscal years ended
June 30, 2006 and June 30, 2005 was as follows:
6/30/2006 6/30/2005
Distributions paid from:
Tax-exempt income $ 67,143,031 $ 68,550,786
-------------- --------------
Total distributions $ 67,143,031 $ 68,550,786
============== ==============
As of June 30, 2006, the components of accumulated losses on a tax
basis were as follows:
Undistributed tax-exempt income--net $ 813,769
Undistributed long-term capital gains--net --
--------------
Total undistributed earnings--net 813,769
Capital loss carryforward (47,456,586)*
Unrealized gains--net 44,284,333**
--------------
Total accumulated losses--net $ (2,358,484)
==============
* On June 30, 2006, the Fund had a net capital loss carryforward of
$47,456,586, of which $18,431,171 expires in 2007, $26,046,752
expires in 2009, $444,566 expires in 2010, $942,957 expires
in 2011 and $1,591,140 expires in 2012. This amount will be
available to offset like amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized
gains is attributable primarily to the tax deferral of losses on
straddles and the difference between book and tax amortization
methods for premiums and discounts on fixed income securities.
7. Plan of Reorganization:
On May 12, 2006, the Board of Directors of Short-Term Portfolio of Merrill
Lynch Municipal Bond Fund, Inc. (the "Portfolio") approved a plan of
reorganization, subject to shareholder approval and certain other conditions,
whereby the Portfolio will acquire substantially all of the assets and assume
substantially all of the liabilities of BlackRock Ultra Short Municipal
Portfolio in exchange for newly issued shares of the Portfolio.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
Merrill Lynch Municipal Bond Fund, Inc.:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of Merrill Lynch Municipal Bond Fund,
Inc. (the "Funds") comprising the Short-Term, Insured and National Portfolios
as of June 30, 2006, and the related statements of operations for the year
then ended, the statements of changes in net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. The Funds are not required to have, nor were we engaged to
perform, an audit of their internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. Our procedures included confirmation of securities owned as of
June 30, 2006, by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting the Merrill Lynch Municipal Bond
Fund, Inc. as of June 30, 2006, the results of their operations for the year
then ended, the changes in their net assets for each of the two years in the
period then ended, and their financial highlights for each of the five years
in the period then ended, in conformity with U.S. generally accepted
accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
August 23, 2006
Important Tax Information (unaudited)
All of the net investment income distributions paid monthly by Merrill Lynch
Municipal Bond Fund, Inc. during the taxable year ended June 30, 2006 qualify
as tax-exempt interest dividends for federal income tax purposes.
Additionally, Insured Portfolio of Merrill Lynch Municipal Bond Fund, Inc.
distributed long-term capital gains of $.029443 per share to shareholders of
record on December 19, 2005.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Disclosure of New Investment Advisory Agreement
New BlackRock Investment Advisory Agreement - Matters Considered by the Board
In connection with the Transaction between Merrill Lynch and BlackRock, the
Fund's Board of Directors considered a new investment advisory agreement (the
"New Investment Advisory Agreement") between the Fund on behalf of each
Portfolio and BlackRock Advisors, Inc. or its successor ("BlackRock Advisors").
If the New Investment Advisory Agreement is approved by each Portfolio's
shareholders, it will become effective upon the closing of the Transaction,
which is expected in the third quarter of 2006.
The Board discussed the New Investment Advisory Agreement at telephonic and
in-person meetings held during April and May 2006. The Board, including the
independent directors, approved the New Investment Advisory Agreement at a
meeting held on May 12, 2006. The Board also approved the issuance of new
classes of shares and new distribution arrangements with respect to these new
share classes, including higher distribution fees for certain new share
classes, to take effect after the closing of the Transaction. The Board also
approved revised front-end sales charge schedules with respect to certain
classes of shares of the Fund.
To assist the Board in its consideration of the New Investment Advisory
Agreement, BlackRock provided materials and information about BlackRock,
including its financial condition and asset management capabilities and
organization, and Merrill Lynch provided materials and information about the
Transaction. The independent directors, through their independent legal
counsel, also requested and received additional information from Merrill Lynch
and BlackRock in connection with their consideration of the New Investment
Advisory Agreement. The additional information was provided in advance of the
May 12, 2006 meeting. In addition, the independent directors consulted with
their counsel and Fund counsel on numerous occasions, discussing, among other
things, the legal standards and certain other considerations relevant to the
directors' deliberations.
At the Board meetings, the directors discussed with Merrill Lynch management
and certain BlackRock representatives the Transaction, its strategic rationale
and BlackRock's general plans and intentions regarding each Portfolio. At
these Board meetings, representatives of Merrill Lynch and BlackRock made
presentations to and responded to questions from the Board. The directors also
inquired about the plans for and anticipated roles and responsibilities of
certain employees and officers of the Investment Adviser and certain
affiliates being transferred to BlackRock in connection with the Transaction.
The independent directors of the Board also conferred separately and with
their counsel about the Transaction and other matters related to the
Transaction, including a proposed reorganization in which Short-Term Portfolio
would acquire the assets and liabilities of BlackRock UltraShort Municipal
Portfolio, a portfolio of BlackRock Funds, on a number of occasions, including
in connection with the April and May 2006 meetings. After the presentations
and after reviewing the written materials provided, the independent directors
met in executive sessions with their counsel to consider the New Investment
Advisory Agreement.
In connection with the Board's review of the New Investment Advisory
Agreement, Merrill Lynch and/or BlackRock advised the directors about a
variety of matters. The advice included the following, among other matters:
* that there is not expected to be any diminution in the nature, quality and
extent of services provided to each Portfolio and its shareholders by
BlackRock Advisors, including compliance services;
* that operation of New BlackRock as an independent investment management
firm will enhance its ability to attract and retain talented professionals;
* that each Portfolio should benefit from having access to BlackRock's state
of the art technology and risk management analytic tools, including
investment tools, provided under the BlackRock Solutions (R) brand name;
* that BlackRock has no present intention to alter any applicable expense
waivers or reimbursements currently in effect and, while it reserves the
right to do so in the future, it would seek the approval of the Board
before making any changes;
* that BlackRock and Merrill Lynch will enter into an agreement, for an
initial three-year period and automatically renewable from year to year
thereafter, in connection with the Transaction under which Merrill Lynch-
affiliated broker-dealers will continue to offer the Portfolios as
investment products;
* that BlackRock Advisors will have substantially the same access to the
Merrill Lynch sales force when distributing shares of the Fund as is
currently provided to the Investment Adviser and that other arrangements
between the Investment Adviser and Merrill Lynch sales channels will be
preserved;
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
* that the Fund will have access to BlackRock's network of third party
brokers, retirement plan platforms and registered investment advisers;
* that in connection with the Transaction, Merrill Lynch and BlackRock have
agreed to conduct, and use reasonable best efforts to cause their
respective affiliates to conduct, their respective businesses in compliance
with the conditions of Section 15(f) of the Investment Company Act of 1940
(the "1940 Act") in relation to any public funds advised by BlackRock or
the Investment Adviser (or its affiliates), respectively; and
* that Merrill Lynch and BlackRock would derive benefits from the Transaction
and that, as a result, they have a different financial interest in the
matters that were being considered than do Fund shareholders.
The directors considered the information provided by Merrill Lynch and
BlackRock above, and, among other factors, the following:
* the potential benefits to Fund shareholders from being part of a combined
fund family with BlackRock-sponsored funds, including possible economies of
scale and access to investment opportunities;
* the potential for expanding distribution of Fund shares through improved
access to third party distribution;
* the reputation, financial strength and resources of BlackRock and its
investment advisory subsidiaries and the anticipated financial strength and
resources of New BlackRock;
* the compliance policies and procedures of BlackRock Advisors;
* the terms and conditions of the New Investment Advisory Agreement,
including the fact that the schedule of each Portfolio's total advisory
fees will not increase by virtue of the New Investment Advisory Agreement,
but will remain the same;
* that in November 2005, the Board performed, on behalf of each Portfolio, a
full annual review of the investment advisory agreement currently in effect
for the Fund (the "Current Investment Advisory Agreement") as required by
the 1940 Act and has determined that the Investment Adviser has the
capabilities, resources and personnel necessary to provide the advisory and
administrative services currently provided to each Portfolio; and that the
advisory and/or management fees paid by each Portfolio, taking into account
any applicable agreed-upon fee waivers and breakpoints, represent
reasonable compensation to the Investment Adviser in light of the services
provided, the costs to the Investment Adviser of providing those services,
economies of scale, the fees and other expenses paid by similar funds
(including information provided by Lipper Inc. ["Lipper"]), and such other
matters as the directors have considered relevant in the exercise of their
reasonable judgment; and
* that Merrill Lynch agreed to pay all expenses of the Fund in connection
with the Board's consideration of the New Investment Advisory Agreement and
related agreements and all costs of shareholder approval of the New
Investment Advisory Agreement and as a result no Portfolio would bear any
costs in obtaining shareholder approval of the New Investment Advisory
Agreement.
Certain of these considerations are discussed in more detail below.
In its review of the New Investment Advisory Agreement, the Board assessed
the nature, scope and quality of the services to be provided to each
Portfolio by the personnel of BlackRock Advisors and its affiliates,
including administrative services, shareholder services, oversight of fund
accounting, marketing services and assistance in meeting legal and
regulatory requirements. In its review of the New Investment Advisory
Agreement, the Board also considered a range of information in connection
with its oversight of the services to be provided by BlackRock Advisors and
its affiliates. Among the matters considered for each Portfolio were: (a)
fees (in addition to management fees) to be paid to BlackRock Advisors and
its affiliates by the Portfolio; (b) operating expenses paid to third
parties; (c) the resources devoted to and compliance reports relating to the
Portfolio's investment objective, policies and restrictions, and its
compliance with its Code of Ethics and BlackRock Advisors' compliance
policies and procedures; and (d) the nature, cost and character of non-
investment management services to be provided by BlackRock Advisors and its
affiliates.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Disclosure of New Investment Advisory Agreement (continued)
In the period prior to the Board meetings to consider renewal of the Current
Investment Advisory Agreement, the Board had requested and received materials
specifically relating to the agreement. These materials were prepared
separately for each Portfolio, and included (a) information compiled by Lipper
on the fees and expenses and the investment performance of the Portfolio as
compared to a comparable group of funds as classified by Lipper; (b) a
discussion by the Portfolio's portfolio management team on investment
strategies used by the Portfolio during its most recent fiscal year; (c)
information on the profitability to the Investment Adviser of the Current
Investment Advisory Agreement and other payments received by the Investment
Adviser and its affiliates from the Fund/Portfolio; and (d) information
provided by the Investment Adviser concerning services related to the valuation
and pricing of portfolio holdings, portfolio turnover statistics, and direct
and indirect benefits to the Investment Adviser and its affiliates from their
relationship with the Fund and the Portfolio.
In their deliberations, the directors considered information received in
connection with their most recent continuation of the Current Investment
Advisory Agreement, in addition to information provided by BlackRock and
BlackRock Advisors in connection with their evaluation of the terms and
conditions of the New Investment Advisory Agreement. The directors did not
identify any particular information that was all-important or controlling, and
each director attributed different weights to the various factors. The
directors, including a majority of the independent directors, concluded that
the terms of the New Investment Advisory Agreement are appropriate, that the
fees to be paid are reasonable in light of the services to be provided to each
Portfolio, and that the New Investment Advisory Agreement should be approved
and recommended to shareholders.
Nature, Quality and Extent of Services Provided--The Board reviewed the
nature, extent and quality of services provided by the Investment Adviser,
including the investment advisory services and the resulting performance of
each Portfolio, as well as the nature, quality and extent of services expected
to be provided by BlackRock Advisors. The Board focused primarily on the
Investment Adviser's investment advisory services and each Portfolio's
investment performance, but also considered certain areas in which both the
Investment Adviser and each Portfolio receive services as part of the Merrill
Lynch complex. The Board compared each Portfolio's performance - both
including and excluding the effects of fees and expenses - to the performance
of a comparable group of mutual funds, and the performance of a relevant index
or combination of indexes. While the Board reviews performance data at least
quarterly, consistent with the Investment Adviser's investment goals, the
Board attaches more importance to performance over relatively long periods of
time, typically three to five years.
In evaluating the nature, quality and extent of the services to be provided by
BlackRock Advisors under the New Investment Advisory Agreement, the directors
considered, among other things, the expected impact of the Transaction on the
operations, facilities, organization and personnel of New BlackRock and how it
would affect each Portfolio; the ability of BlackRock Advisors to perform its
duties after the Transaction; and any anticipated changes to the current
investment and other practices of the Portfolio. The directors considered the
fact that it was being proposed that Short-Term Portfolio acquire the assets
and liabilities of BlackRock UltraShort Municipal Portfolio, a portfolio of
BlackRock Funds, as part of a reorganization.
The directors were given information with respect to the potential benefits to
each Portfolio and its shareholders from having access to BlackRock's state of
the art technology and risk management analytic tools, including the
investment tools provided under the BlackRock Solutions brand name.
The directors were advised that, as a result of Merrill Lynch's equity
interest in BlackRock after the Transaction, the Fund will continue to be
subject to restrictions concerning certain transactions involving Merrill
Lynch affiliates (for example, transactions with a Merrill Lynch broker-dealer
acting as principal) absent revised or new regulatory relief. The directors
were advised that a revision of existing regulatory relief with respect to
these restrictions was being sought from the Securities and Exchange
Commission and were advised of the possibility of receipt of such revised
regulatory relief. There can be no assurance that such relief will be
obtained.
Based on their review of the materials provided and the assurances they had
received from the management of Merrill Lynch and of BlackRock, the directors
determined that the nature and quality of services to be provided to each
Portfolio under the New Investment Advisory Agreement were expected to be as
good or better than that provided under the Current Investment Advisory
Agreement. It was noted, however, that it is expected that there will be
changes in personnel following the Transaction and the combination of the
operations of the Investment Adviser and its affiliates with those of
BlackRock. The directors noted that if current portfolio managers or other
personnel cease to be available, the Board would consider all available
options, which could include seeking the investment advisory or other services
of BlackRock affiliates. Accordingly, the directors concluded that, overall,
they were satisfied at the present time with assurances from BlackRock and
BlackRock Advisors as to the expected nature, extent and quality of the
services to be provided to each Portfolio under the New Investment Advisory
Agreement.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Costs of Services Provided and Profitability--It was noted that, in conjunction
with the recent review of the Current Investment Advisory Agreement, the
directors had received, among other things, a report from Lipper comparing each
Portfolio's fees, expenses and performance to those of a peer group selected
by Lipper, and information as to the fees charged by the Investment Adviser or
its affiliates to other registered investment company clients for investment
management services. The Board reviewed each Portfolio's contractual management
fee rate and actual management fee rate as a percentage of total assets at
common asset levels - the actual rate includes advisory fees and the effects
of any fee waivers - compared to the other funds in its Lipper category. They
also compared each Portfolio's total expenses to those of other comparable
funds. The information showed that each Portfolio had fees and expenses within
the range of fees and expenses of comparable funds. The Board considered the
services to be provided by and the fees to be charged by BlackRock Advisors to
other funds with similar investment mandates and noted that the fees charged
by BlackRock Advisors in those cases, including fee waivers and expense
reimbursements, were generally comparable to those being charged to each
Portfolio. The Board also noted that, as a general matter, according to the
information provided by BlackRock, fees charged to institutional clients were
lower than the fees charged to each Portfolio, but BlackRock Advisors provided
less extensive services to such clients. The Board concluded that each
Portfolio's management fee and fee rate and overall expense ratio are
reasonable compared to those of other comparable funds.
In evaluating the costs of the services to be provided by BlackRock Advisors
under the New Investment Advisory Agreement, the directors considered, among
other things, whether advisory fees or other expenses would change as a result
of the Transaction. Based on their review of the materials provided and the
fact that the New Investment Advisory Agreement is substantially similar to the
Current Investment Advisory Agreement in all material respects, including the
rate of compensation, the directors determined that the Transaction should not
increase the total fees payable, including any fee waivers and expense
reimbursements, for advisory and administrative services. The directors noted
that it was not possible to predict how the Transaction would affect BlackRock
Advisors' profitability from its relationship with the Fund and each Portfolio.
The directors discussed with BlackRock Advisors its general methodology to be
used in determining its profitability with respect to its relationship with
the Fund and each Portfolio. The directors noted that they expect to receive
profitability information from BlackRock Advisors on at least an annual basis
and thus be in a position to evaluate whether any adjustments in each
Portfolio's fees and/or fee breakpoints would be appropriate.
Fees and Economies of Scale--The Board considered the extent to which
economies of scale might be realized as the assets of each Portfolio increase
and whether there should be changes in the management fee rate or structure in
order to enable the Fund/Portfolio to participate in these economies of scale.
The Board determined that changes were not currently necessary and that the
Fund/Portfolios appropriately participated in these economies of scale.
In reviewing the Transaction, the directors considered, among other things,
whether advisory fees or other expenses would change as a result of the
Transaction. Based on the fact that the New Investment Advisory Agreement is
substantially similar to the Current Investment Advisory Agreement in all
material respects, including the rate of compensation, the directors
determined that as a result of the Transaction, each Portfolio's total
advisory fees would be no higher than its fees under the Current Investment
Advisory Agreement. The directors noted that in conjunction with their most
recent deliberations concerning the Current Investment Advisory Agreement, the
directors had determined that the total fees for advisory and administrative
services for each Portfolio were reasonable in light of the services provided.
It was noted that in conjunction with the recent review of the Current
Investment Advisory Agreement, the directors had received, among other things,
a report from Lipper comparing each Portfolio's fees, expenses and performance
to those of a peer group selected by Lipper, and information as to the fees
charged by the Investment Adviser to other registered investment company
clients for investment management services. The directors concluded that,
because the rates for advisory fees for each Portfolio would be no higher than
its current fee rates, the proposed management fee structure, including any
fee waivers, was reasonable and that no additional changes were currently
necessary.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Disclosure of New Investment Advisory Agreement (continued)
Fall-Out Benefits--In evaluating the fall-out benefits to be received by
BlackRock Advisors under the New Investment Advisory Agreement, the directors
considered whether the Transaction would have an impact on the fall-out
benefits received by the Investment Adviser by virtue of the Current
Investment Advisory Agreement. Based on their review of the materials
provided, including materials received in connection with their most recent
approval or continuance of the Current Investment Advisory Agreement, and
their discussions with management of the Investment Adviser and BlackRock, the
directors determined that those benefits could include increased ability for
BlackRock to distribute shares of its funds and other investment products. The
directors noted that any such benefits were difficult to quantify with
certainty at this time, and indicated that they would continue to evaluate
them going forward.
Investment Performance--The directors considered investment performance for
each Portfolio. The directors compared each Portfolio's performance - both
including and excluding the effects of fees and expenses - to the performance
of a comparable group of mutual funds, and the performance of a relevant index
or combination of indexes. The comparative information received from Lipper
showed each Portfolio's performance at various levels within the range of
performance of comparable funds over different time periods. While the Board
reviews performance data at least quarterly, consistent with the Investment
Adviser's investment goals, the Board attaches more importance over relatively
long periods of time, typically three to five years. The directors believed
each Portfolio's performance was satisfactory. Also, the directors took into
account the investment performance of funds currently advised by BlackRock
Advisors. The Board considered comparative information from Lipper which showed
that the performance of the funds advised by BlackRock Advisors was within the
range of performance of comparable funds over different time periods. The
Board noted BlackRock's considerable investment management experience and
capabilities, but was unable to predict what effect, if any, consummation of
the Transaction would have on the future performance of each Portfolio.
Conclusion--After the independent directors of the Fund deliberated in
executive session, the entire Board, including the independent directors,
approved the New Investment Advisory Agreement, concluding that for each
Portfolio the advisory fee rate was reasonable in relation to the services
provided and that the New Investment Advisory Agreement was in the best
interests of the shareholders. In approving the New Investment Advisory
Agreement, the Board noted that it anticipated reviewing the continuance of
the agreement in advance of the expiration of the initial two-year period.
Contingent BlackRock Subadvisory Agreement--Matters Considered by the Board
At the telephonic and in-person meetings held during April and May 2006 at
which the Board of Directors discussed and approved the New Investment
Advisory Agreement, the Board, including the independent directors, also
discussed and approved a contingent subadvisory agreement (the "Contingent
Subadvisory Agreement") between the Investment Adviser and BlackRock
Advisors (the "BlackRock Subadviser"). The Contingent Subadvisory Agreement
is intended to ensure that each Portfolio operate with efficient portfolio
management services until the closing of the Transaction, in the event that
the Board deems it necessary and in the best interests of the Fund and its
shareholders that the BlackRock Subadviser assist in managing the operations
of a Portfolio during the interim period until the closing of the Transaction.
If shareholders approve the Contingent Subadvisory Agreement, it will take
effect only upon recommendation from the Investment Adviser and upon subsequent
approval of the Board in the period up to the closing of the Transaction. The
effectiveness of the Contingent Subadvisory Agreement, therefore, would be
contingent on further Board approval after shareholders approve it. Pursuant
to the Contingent Subadvisory Agreement, the BlackRock Subadviser would receive
a monthly fee from the Investment Adviser equal to 50% of the advisory fee
received by the Investment Adviser or any Portfolio. The Investment Adviser
would pay the BlackRock Subadviser out of its own resources. There would be no
increase in any Portfolio's expenses as a result of the Contingent Subadvisory
Agreement.
In making its approval at the May in-person meeting, the Board considered the
Contingent Subadvisory Agreement in conjunction with the New Investment
Advisory Agreement and reviewed the same information and factors discussed
above, and came to the same conclusions. The Board also considered in
conjunction with the Contingent Subadvisory Agreement the necessity of
ensuring that each Portfolio operates with effective management services until
the closing of the Transaction. In reviewing the subadvisory fee rate provided
in the Contingent Subadvisory Agreement, the Board took note of the fact that
both the Investment
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Disclosure of New Investment Advisory Agreement (concluded)
Adviser and the BlackRock Subadviser would have significant responsibilities
under their respective advisory agreements. The Investment Adviser would
remain responsible for oversight of a Portfolio's operations and
administration and the BlackRock Subadviser would provide advisory services to
the Portfolio under the Contingent Subadvisory Agreement. The Board also took
into account the expected short duration of the term of any Contingent
Subadvisory Agreement and the fact that no Portfolio's total advisory fees
would increase as a result of the Contingent Subadvisory Agreement. Under all
of the circumstances, the Board concluded that it was a reasonable allocation
of fees for the BlackRock Subadviser to receive 50% of the advisory fee paid
by each Portfolio to the Investment Adviser.
After the independent directors deliberated in executive session, the entire
Board, including the independent directors, approved the Contingent
Subadvisory Agreement, concluding that the advisory fee was reasonable in
relation to the services provided and that the Contingent Subadvisory
Agreement was in the best interests of shareholders.
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 131 Funds None
P.O. Box 9011 and present since 2005; President and Chief Investment 178 Portfolios
Princeton, Director Officer of MLIM and FAM since 2001; Co-Head
NJ 08543-9011 (Americas Region) thereof from 2000 to 2001
Age: 51 and Senior Vice President from 1999 to 2001;
President and Director of Princeton Services,
Inc. ("Princeton Services") since 2001;
President of Princeton Administrators, L.P.
("Princeton Administrators") since 2001; Chief
Investment Officer of 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 defined in the Investment Company Act, of the Fund based
on his positions with MLIM, FAM, Princeton Services and Princeton Administrators.
Directors serve until their resignation, removal or death, or until December 31
of the year in which they turn 72. As Fund President, Mr. Doll serves at the
pleasure of the Board of Directors.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Officers and Directors (continued)
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
Independent Directors*
Ronald W. Forbes** Director 1997 to Professor Emeritus of Finance, School of 49 Funds None
P.O. Box 9095 present Business, State University of New York at 51 Portfolios
Princeton, Albany since 2000 and Professor thereof
NJ 08543-9095 from 1989 to 2000; International Consultant,
Age: 65 Urban Institute, Washington D.C. from 1995
to 1999.
Cynthia A. Montgomery Director 1994 to Professor, Harvard Business School since 49 Funds Newell
P.O. Box 9095 present 1989; Associate Professor, J.L. Kellogg 51 Portfolios Rubbermaid, Inc.
Princeton, Graduate School of Management, Northwestern (manufacturing)
NJ 08543-9095 University from 1985 to 1989; Associate
Age: 53 Professor, Graduate School of Business
Administration, University of Michigan
from 1979 to 1985; Director, Harvard
Business School Publishing since 2005;
Director, McLean Hospital since 2005.
Jean Margo Reid Director 2004 to Self-employed consultant since 2001; 49 Funds None
P.O. Box 9095 present Counsel of Alliance Capital Management 51 Portfolios
Princeton, (investment adviser) in 2000; General
NJ 08543-9095 Counsel, Director and Secretary of Sanford
Age: 60 C. Bernstein & Co., Inc. (investment
adviser/broker-dealer) from 1997 to
2000; Secretary, Sanford C. Bernstein Fund,
Inc. from 1994 to 2000; Director and Secretary
of SCB, Inc. since 1998; Director and Secretary
of SCB Partners, Inc. since 2000; and Director
of Covenant House from 2001 to 2004.
Roscoe S. Suddarth Director 2000 to President, Middle East Institute, from 49 Funds None
P.O. Box 9095 present 1995 to 2001; Foreign Service Officer, 51 Portfolios
Princeton, United States Foreign Service, from 1961
NJ 08543-9095 to 1995 and Career Minister from 1989 to
Age: 70 1995; Deputy Inspector General, U.S.
Department of State, from 1991 to 1994;
U.S. Ambassador to the Hashemite Kingdom
of Jordan from 1987 to 1990.
Richard R. West Director 1981 to Professor of Finance from 1984 to 1995, 49 Funds Bowne & Co.,
P.O. Box 9095 present Dean from 1984 to 1993 and since 1995 51 Portfolios Inc. (financial
Princeton, Dean Emeritus of New York University's printers);
NJ 08543-9095 Leonard N. Stern School of Business Vornado Realty
Age: 68 Administration. Trust (real
estate
company);
Alexander's,
Inc.
(real estate
company)
Edward D. Zinbarg Director 2000 to Self-employed financial consultant 49 Funds None
P.O. Box 9095 present since 1994; Executive Vice President of 51 Portfolios
Princeton, the Prudential Insurance Company of America
NJ 08543-9095 from 1988 to 1994; Former Director of
Age: 71 Prudential Reinsurance Company and former
Trustee of the Prudential Foundation.
* Directors serve until their resignation, removal or death, or until December 31
of the year in which they turn 72.
** Chairman of the Board of Directors and the Audit Committee.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Officers and Directors (concluded)
Position(s) Length of
Held with Time
Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years
Fund Officers*
Donald C. Burke Vice 1993 to Managing Director of MLIM and FAM since 2006 and Treasurer thereof since
P.O. Box 9011 President present 1999; First Vice President of MLIM and FAM from 1997 to 2005; Senior Vice
Princeton, and and President and Treasurer of Princeton Services since 1999 and Director since
NJ 08543-9011 Treasurer 1999 to 2004; Vice President of FAM Distributors, Inc. ("FAMD") since 1999 and
Age: 46 present Director since 2004; Vice President of MLIM and FAM from 1990 to 1997;
Director of Taxation of MLIM from 1990 to 2001; Vice President, Treasurer
and Secretary of the IQ Funds since 2004.
Kenneth A. Jacob Senior 2002 to Managing Director (Municipal Tax-Exempt Fund Management) of MLIM since 2000;
P.O. Box 9011 Vice present Director of MLIM from 1997 to 2000.
Princeton, President
NJ 08543-9011
Age: 55
John M. Loffredo Senior 2002 to Managing Director (Municipal Tax-Exempt Fund Management) of MLIM since 2000;
P.O. Box 9011 Vice present Director of MLIM from 1997 to 2000.
Princeton, President
NJ 08543-9011
Age: 42
Robert A. DiMella Vice 1999 to Managing Director (Municipal Tax-Exempt Fund Management) of MLIM since 2004;
P.O. Box 9011 President present Director of MLIM from 2002 to 2004; Vice President of MLIM from 1996 to
Princeton, 2001.
NJ 08543-9011
Age: 39
Peter J. Hayes Vice 1996 to Managing Director (Municipal Tax-Exempt Fund Management) of MLIM since 2000;
P.O. Box 9011 President present Director of MLIM from 1997 to 2000; Vice President of MLIM from 1988 to
Princeton, 1997.
NJ 08543-9011
Age: 47
Walter C. O'Connor Vice 1996 to Managing Director (Municipal Tax-Exempt Fund Management) of MLIM since 2003;
P.O. Box 9011 President present Director of MLIM from 2000 to 2003; Vice President of MLIM from 1993 to
Princeton, 2000.
NJ 08543-9011
Age: 44
Jeffrey Hiller Chief 2004 to Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice
P.O. Box 9011 Compliance present President and Chief Compliance Officer of MLIM (Americas Region) since 2004;
Princeton, Officer Chief Compliance Officer of the IQ Funds since 2004; Global Director of
NJ 08543-9011 Compliance at Morgan Stanley Investment Management from 2002 to 2004;
Age: 54 Managing Director and 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 Securities and Exchange 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
P.O. Box 9011 present 1999 to 2002; Attorney associated with MLIM since 1997; Secretary of MLIM,
Princeton, FAM, FAMD and Princeton Services since 2004.
NJ 08543-9011
Age: 46
* 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 1-800-637-3863.
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
800-637-3863
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at
http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the
SEC's Public Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
MERRILL LYNCH MUNICIPAL BOND FUND, INC. JUNE 30, 2006
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as of
the end of the period covered by this report, that applies to the
registrant's principal executive officer, principal financial
officer and principal accounting officer, or persons performing
similar functions. A copy of the code of ethics is available
without charge upon request by calling toll-free 1-800-MER-FUND
(1-800-637-3863).
Item 3 - Audit Committee Financial Expert - The registrant's board of
directors has determined that (i) the registrant has the following
audit committee financial experts serving on its audit committee and
(ii) each audit committee financial expert is independent: (1)
Ronald W. Forbes, (2) Richard R. West, and (3) Edward D. Zinbarg.
Item 4 - Principal Accountant Fees and Services
Short Term Portfolio of Merrill Lynch Municipal Bond Fund, Inc.
(formerly Limited Maturity Portfolio)
(a) Audit Fees - Fiscal Year Ending June 30, 2006 - $27,500
Fiscal Year Ending June 30, 2005 - $27,000
(b) Audit-Related Fees - Fiscal Year Ending June 30, 2006 - $15,400
Fiscal Year Ending June 30, 2005 - $0
The nature of the services include assurance and related services
reasonably related to the performance of the audit of financial
statements not included in Audit Fees.
(c) Tax Fees - Fiscal Year Ending June 30, 2006 - $6,000
Fiscal Year Ending June 30, 2005 - $5,700
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ending June 30, 2006 - $0
Fiscal Year Ending June 30, 2005 - $0
National Portfolio of Merrill Lynch Municipal Bond Fund, Inc.
(a) Audit Fees - Fiscal Year Ending June 30, 2006 - $31,600
Fiscal Year Ending June 30, 2005 - $35,700
(b) Audit-Related Fees - Fiscal Year Ending June 30, 2006 - $0
Fiscal Year Ending June 30, 2005 - $10,500
The nature of the services include assurance and related services
reasonably related to the performance of the audit of financial
statements not included in Audit Fees.
(c) Tax Fees - Fiscal Year Ending June 30, 2006 - $6,000
Fiscal Year Ending June 30, 2005 - $5,700
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ending June 30, 2006 - $0
Fiscal Year Ending June 30, 2005 - $0
Insured Portfolio of Merrill Lynch Municipal Bond Fund, Inc.
(a) Audit Fees - Fiscal Year Ending June 30, 2006 - $31,600
Fiscal Year Ending June 30, 2005 - $31,000
(b) Audit-Related Fees - Fiscal Year Ending June 30, 2006 - $0
Fiscal Year Ending June 30, 2005 - $0
(c) Tax Fees - Fiscal Year Ending June 30, 2006 - $6,000
Fiscal Year Ending June 30, 2005 - $5,700
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ending June 30, 2006 - $0
Fiscal Year Ending June 30, 2005 - $0
(e)(1) The registrant's audit committee (the "Committee") has
adopted policies and procedures with regard to the pre-approval of
services. Audit, audit-related and tax compliance services provided
to the registrant on an annual basis require specific pre-approval
by the Committee. The Committee also must approve other non-audit
services provided to the registrant and those non-audit services
provided to the registrant's affiliated service providers that
relate directly to the operations and the financial reporting of the
registrant. Certain of these non-audit services that the Committee
believes are a) consistent with the SEC's auditor independence rules
and b) routine and recurring services that will not impair the
independence of the independent accountants may be approved by the
Committee without consideration on a specific case-by-case basis
("general pre-approval"). However, such services will only be
deemed pre-approved provided that any individual project does not
exceed $5,000 attributable to the registrant or $50,000 for all of
the registrants the Committee oversees. Any proposed services
exceeding the pre-approved cost levels will require specific pre-
approval by the Committee, as will any other services not subject to
general pre-approval (e.g., unanticipated but permissible services).
The Committee is informed of each service approved subject to
general pre-approval at the next regularly scheduled in-person board
meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ending June 30, 2006 - $2,909,800
Fiscal Year Ending June 30, 2005 - $8,181,305
(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.
Merrill Lynch Municipal Bond Fund, Inc.
By: /s/ Robert C. Doll, Jr.
----------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
Merrill Lynch Municipal Bond Fund, Inc.
Date: August 23, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated.
By: /s/ Robert C. Doll, Jr.
----------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
Merrill Lynch Municipal Bond Fund, Inc.
Date: August 23, 2006
By: /s/ Donald C. Burke
----------------------------
Donald C. Burke,
Chief Financial Officer of
Merrill Lynch Municipal Bond Fund, Inc.
Date: August 23, 2006