UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-02688
Name of Fund: BlackRock 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, BlackRock 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: 06/30/07
Date of reporting period: 07/01/06 - 12/31/06
Item 1 - Report to Stockholders
ALTERNATIVES BLACKROCK SOLUTIONS EQUITIES FIXED INCOME LIQUIDITY
REAL ESTATE
BlackRock Municipal Bond
Fund, Inc.
SEMI-ANNUAL REPORT DECEMBER 31, 2006
(BLACKROCK logo)
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
This report is transmitted to shareholders only. It 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.
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BlackRock Municipal Bond Fund, Inc.
Portfolio Information as of December 31, 2006
Percent of
Total
BlackRock Short-Term Municipal Fund Investments
General Obligation & Tax Revenue Bonds 72.2%
Prerefunded Bonds 18.1
Other Revenue Bonds 9.7
Percent of
Total
BlackRock National Municipal Fund Investments
Other Revenue Bonds 68.6%
General Obligation & Tax Revenue Bonds 20.0
Prerefunded Bonds 11.4
Percent of
Total
BlackRock Municipal Insured Fund Investments
Other Revenue Bonds 57.9%
General Obligation & Tax Revenue Bonds 31.7
Prerefunded Bonds 10.4
Percent of
Total
BlackRock High Yield Municipal Fund Investments
Other Revenue Bonds 88.9%
General Obligation & Tax Revenue Bonds 11.1
Officers and Directors
Robert C. Doll, Jr., President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Jean Margo Reid, Director
Roscoe S. Suddarth, Director
Richard R. West, Director
Donald C. Burke, Vice President and Treasurer
John M. Loffredo, Senior Vice President
Peter J. Hayes, Vice President
Robert A. DiMella, Vice President
Theodore R. Jaeckel, Jr., Vice President
Walter C. O'Connor, Vice President
Jeffrey Hiller, Fund Chief Compliance Officer
Alice A. Pellegrino, Secretary
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent
PFPC Inc.
Wilmington, DE 19809
Fund Address
BlackRock Municipal Bond Fund, Inc.
P.O. Box 9011
Princeton, NJ 08543-9011
Effective January 1, 2007, Edward D. Zinbarg retired as a Director of
BlackRock Municipal Bond Fund, Inc. The Fund's Board of Directors wishes
Mr. Zinbarg well in his retirement.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
A Letter to Shareholders
Dear Shareholder
As 2007 begins, we are able to look back on 2006 as a volatile, but ultimately,
a positive year for most major markets. Returns for the annual and semi-annual
periods ended December 31, 2006 were as follows:
Total Returns as of December 31, 2006 6-month 12-month
U.S. equities (Standard & Poor's 500 Index) +12.74% +15.79%
Small cap U.S. equities (Russell 2000 Index) + 9.38 +18.37
International equities (MSCI Europe, Australasia, Far East Index) +14.69 +26.34
Fixed income (Lehman Brothers Aggregate Bond Index) + 5.09 + 4.33
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 4.55 + 4.84
High yield bonds (Credit Suisse High Yield Index) + 8.14 +11.92
After raising the target short-term interest rate 17 times between June 2004
and June 2006, the Federal Reserve Board (the Fed) finally opted to pause on
August 8, 2006. This left the federal funds rate at 5.25%, where it remained
through year-end. In interrupting its two-year interest rate-hiking campaign,
the Fed acknowledged that economic growth is slowing, led by a downturn in the
housing market, but has maintained a cautionary view on inflation.
Overall, it was a good 12 months for U.S. equities, despite a significant
correction in the middle of the year that was largely triggered by rising
interest rates, inflation fears, elevated oil prices and geopolitical
uncertainties. Nevertheless, strong corporate earnings, abundant liquidity and
record merger-and-acquisition activity provided a solid backdrop for stocks.
Many international equity markets (with the notable exception of Japan)
performed even better, outpacing U.S. stocks for the fifth consecutive year.
Strength was especially notable in European equities and select emerging
markets.
Bonds experienced a more modest annual return than stocks. Interest rates and
bond yields moved higher for much of the year as bond prices, which move
opposite of yields, declined. Prices began to improve in the summer as the
economy showed signs of weakening and the Fed paused. Notably, the Treasury
curve remained inverted for much of 2006. The 10-year Treasury yield ended
December at 4.71%, well below the federal funds rate.
As we begin a new year, investors are left with a few key questions: Will the
U.S. economy achieve a soft landing, will the Fed reverse its prior policy and
cut interest rates and how might these outcomes impact the investment climate.
As you navigate the uncertainties inherent in the financial markets, we
encourage you to start the year by reviewing your investment goals with your
financial professional and making portfolio changes, as needed. For more
reflection on 2006 and our thoughts on the year ahead, please ask your
financial professional for a copy of "What's Ahead in 2007: An Investment
Perspective," or view it online at www.blackrock.com/funds. We thank you for
trusting BlackRock with your investment assets, and we look forward to
continuing to serve you in the new year and beyond.
Sincerely,
(Robert C. Doll, Jr.)
Robert C. Doll, Jr.
President and Director
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
A Discussion With Your Funds' Portfolio Managers
The tax-exempt market's strong technical position allowed municipal bonds to
outperform their taxable counterparts during the six-month period.
Describe the recent market environment relative to municipal bonds.
Long-term bond yields generally moved lower during the past six months as
their prices, which move in the opposite direction, increased. The municipal
market's strong technical position allowed municipal bond yields to decline
more than taxable yields.
The strength in bond prices came amid a slowdown in U.S. economic growth and
the Federal Reserve Board's (the Fed) decision at its August 8 meeting to
refrain from raising its target interest rate after 17 consecutive increases
since June 2004. Bond prices found additional support in moderating oil
prices. Between June 30 and November 30, 30-year Treasury bond yields had
declined 73 basis points (.73%) to 4.56%. However, stronger-than-expected
economic releases and year-end profit taking pushed yields higher during
December. For the six-month period overall, 30-year U.S. Treasury bond yields
fell 38 basis points to 4.81% and 10-year Treasury note yields declined 44
basis points to 4.71%.
The tax-exempt bond market outperformed the U.S. Treasury market as investor
demand outstripped a resurgent new-issue calendar. For the six-month period
ended December 31, 2006, as reported by Municipal Market Data, yields on 30-
year, AAA-rated municipal issues declined 56 basis points to 4.07%. Yields on
10-year, AAA-rated tax-exempt bonds declined 44 basis points to 3.68%.
Investor demand for municipal product remained strong throughout the period.
The latest available statistics from the Investment Company Institute note
that, through November, long-term municipal bond funds had net new cash flows
of nearly $14 billion, an increase of more than 120% versus the same 11 months
of 2005. As reported by AMG Data, weekly average cash flows exceeded $400
million throughout the fourth quarter of 2006, representing a solid increase
from the $241 million weekly average seen for the full year. The fourth
quarter increase is especially impressive, as holiday spending often results
in reduced cash flows into mutual funds at year-end.
New-issue municipal volume surged in the fourth quarter as municipalities
rushed to take advantage of low market yields and solid investor demand. More
than $121 billion in new long-term tax-exempt bonds was issued over the last
three months of 2006, a 23.4% increase compared to fourth quarter 2005.
Issuance in December, which totaled over $43 billion, was the highest December
monthly volume since 1985. That year, municipalities scurried to issue bonds
in anticipation of a more stringent underwriting environment resulting from
the Tax Reform Act of 1986. The increased issuance in the final quarter of the
year pushed 2006's annual total volume to over $383 billion, just 6% off last
year's record issuance and close to initial annual issuance estimates. The
recent increase in issuance has made the municipal market's outperformance
even more impressive.
Looking ahead, the tax-exempt bond market's technical position is expected to
remain supportive of continued strong performance. Attractive yield ratios,
combined with a relatively steep municipal bond yield curve and manageable new
issuance, should help to sustain investor demand for municipal product.
BlackRock Short-Term Municipal Fund
How did the Fund perform during the period in light of the existing market
conditions?
For the six-month period ended December 31, 2006, BlackRock Municipal Bond
Fund, Inc. - BlackRock Short-Term Fund's (formerly Merrill Lynch Municipal
Bond Fund, Inc. - Short-Term Portfolio) BlackRock, Institutional, Investor A,
Investor A1, Investor B and Investor C Shares had total returns of +2.02%,
+2.02%, +1.89%, +1.97%, +1.84% and +1.51%, respectively. (Fund 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 - 15 of
this report to share-holders.) For the same period, the Fund's unmanaged
benchmarks, the Lehman Brothers Municipal Bond 3-Year General Obligation Index
and the Lehman Brothers Municipal Bond Index, had respective returns of +2.51%
and +4.55%. The Fund's comparable Lipper category of Short Municipal Debt
Funds posted an average return of +1.97% for the six-month period. (Funds in
the Short Municipal Debt Funds category invest primarily in municipal debt
issues with dollar-weighted average maturities of less than three years.)
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
During the six-month reporting period, the Fed moved from a policy of raising
short-term interest rates to one of leaving rates unchanged. After one final
rate hike on June 30, 2006 the central bankers paused on August 8 and at every
meeting thereafter, preferring to wait and monitor its policy's effect on the
domestic economy. Against this backdrop, market rates rose initially, then
stabilized somewhat later in the period as the Fed moved to a stable monetary
policy. Economic data and inflation readings were mixed throughout the period,
with some indicating growth and rising prices and others showing slower growth
with weak pricing power. Although this led to some volatility in the fixed
income markets throughout the period, the short-term municipal market remained
fairly stable. As a result, we maintained a relatively neutral approach to the
market, with a portfolio duration of 1.42 years and minimal cash reserves.
This was done with an eye toward our main strategy of maintaining a stable net
asset value, while also seeking a yield advantage over traditional tax-exempt
money market funds. Because of our positioning and belief that the market
would remain stable, our neutral investment stance benefited performance for
the recent period relative to our short-term municipal debt fund peers.
What changes were made to the portfolio during the period?
The most significant portfolio activity during the period involved drawing
down our cash reserves and remaining fully invested. Most of our new
investments were made in the two-year portion of the municipal yield curve,
again based on our belief that the market would remain relatively stable given
the Fed's stance. In addition, the municipal yield curve was extremely flat,
with investments in the three-year and four-year range offering little or no
yield advantage over those with one-year and two-year maturities.
In terms of credit quality, the Fund continues to maintain an average rating
of AA.
How would you characterize the Fund'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. 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 that it is
"data dependent" in determining monetary policy, and we believe that this will
cause a prolonged period of unchanged monetary policy.
Peter J. Hayes
Vice President and Portfolio Manager
January 18, 2007
BlackRock Municipal Insured Fund
How did the Fund perform during the period in light of the existing market
conditions?
For the six-month period ended December 31, 2006, BlackRock Municipal Bond
Fund, Inc. - BlackRock Municipal Insured Fund's (formerly Merrill Lynch
Municipal Bond Fund, Inc. - Insured Portfolio) Institutional, Investor A,
Investor B, Investor C and Investor C1 Shares had total returns of +4.60%,
+4.60%, +4.34%, +4.22% and +4.31%, respectively. (Fund 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 - 15 of this report
to shareholders.) For the same period, the broad-market Lehman Brothers
Municipal Bond Index returned +4.55%. Notably, the Index measures the
performance of insured and uninsured municipal bonds throughout the nation,
while the Fund focuses on higher-quality insured issues.
The Fund outperformed its comparable Lipper category of Insured Municipal Debt
Funds, which had an average return of +4.19% for the six-month period. (Funds
in this Lipper category invest primarily in municipal debt issues insured as
to timely payment.) For the most part, we attribute the portfolio's relative
outperformance to our above-average income stream, yield curve positioning and
our strategy of favoring refundable issues. We were overweight in bonds with
maturities greater than 20 years for much of the period, which helped the
Fund's relative performance as the prices on longer-maturity bonds increased
sharply during the market's rally. That is, interest rates on bonds with
maturities greater than 20 years decreased at a faster rate than bonds with
shorter maturities (that is, the municipal yield curve flattened). In
addition, the Fund benefited from the advance refunding of several 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?
We continued to focus our efforts on capturing the best relative value in the
insured municipal market. We maintained emphasis on bonds from high-tax
states, where demand for tax-exempt securities is strong. These states
included New Jersey, California and Massachusetts. Yield spreads in the
municipal market are at relatively narrow levels, and we believe these states'
bonds are well positioned to outperform when spreads widen in the future.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
A Discussion With Your Funds' Portfolio Managers (continued)
Given the recent strength in the municipal market, we took select opportunities
to sell some of our longer-maturity and pre-refunded bonds. The more seasoned
bonds in the portfolio were purchased in higher-rate environments and, as such,
they were difficult to replace in the prevailing low-rate environment. In
general, we only sold bonds with book yields that were not significantly higher
than current market yields, allowing us to take proceeds from our sales and
invest in bonds with relatively high current yields. To that end, we primarily
looked to premium-coupon, high-quality bonds in the 15-year to 20-year maturity
range, as we were not sufficiently compensated for extending much further out.
Although new issuance in the municipal market increased sharply late in 2006,
the new supply was readily absorbed by the market, thereby limiting potential
reinvestment opportunities. We also looked to reinvest the proceeds from a
significant portfolio holding that was redeemed in the fourth quarter of
the year.
Overall, we maintained a very high credit-quality portfolio, with all of the
Fund's holdings insured by AAA-rated insurers. During the past six months, we
continued to look to newer insurers in the market, such as XLCA and CIFG. We
are still able to book some incremental yield on these securities given the
insurers' shorter histories, and we expect their spreads to narrow over time
as the companies establish track records in the market.
How would you characterize the Fund's position at the close of the period?
The Fund was fully invested at period-end and positioned neutrally with
respect to interest rate risk. We will look for a steepening of the yield
curve to provide attractive investment opportunities for the portfolio. In the
meantime, we maintain our focus on providing shareholders with a competitive
yield and preservation of net asset value within the context of a high-quality
portfolio.
Michael A. Kalinoski
Portfolio Manager
Robert A. DiMella, CFA
Vice President and Portfolio Manager
Theodore R. Jaeckel Jr., CFA
Portfolio Manager
Walter O'Connor
Portfolio Manager
January 30, 2007
BlackRock National Municipal Fund
How did the Fund perform during the period in light of the existing market
conditions?
For the six-month period ended December 31, 2006, BlackRock Municipal Bond
Fund, Inc. - BlackRock National Municipal Fund's (formerly Merrill Lynch
Municipal Bond Fund, Inc. - National Portfolio) Institutional, Investor A,
Investor B, Investor C and Investor C1 Shares had total returns of +4.47%,
+4.34%, +4.07%, +3.95% and +4.05%, respectively. (Fund 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 - 15 of this report
to shareholders.) For the same period, the Fund's broad market benchmark, the
Lehman Brothers Municipal Bond Index, returned +4.55% and the Lipper General
Municipal Debt Funds category had an average return of +4.26%. (Funds in this
Lipper category invest primarily in municipal debt issues in the top four
credit-rating categories.)
Fund performance benefited from our ongoing strategy of maximizing the
portfolio's current yield. Over time, these above-average income distributions
to shareholders serve to enhance total return. The Fund also benefited from
the continued tightening of credit spreads in the municipal market, which
allowed lower-quality, higher-yielding credits to outperform higher-quality
issues of comparable maturity. As such, that portion of the Fund invested in
higher-yielding credits experienced above-average price appreciation. Overall,
we maintained a duration exposure (a measure of sensitivity to interest rates)
consistent with our peers, thereby minimizing interest rate timing and the
risk inherent in that, and instead focusing on maintaining a competitive
income accrual.
What changes were made to the portfolio during the period?
We did not alter our mainline strategy. We continued to focus our efforts on
protecting the Fund's net asset value and delivering as high a current return
as possible given the portfolio's relatively conservative credit parameters.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
During the past year, municipal issuers continued to refinance their existing,
higher-couponed debt amid the historically low interest rate environment.
Although some of the portfolio's higher-couponed bonds were called as a result
of this refinancing boom, we were rewarded for our patient approach to
reinvesting the proceeds. We were content to allow call proceeds to build as
cash reserves during periods when interest rates were inopportune, and then
recommitted the funds when rates rose to more advantageous levels. This
approach helped to maintain the Fund's current income distribution, while also
protecting the underlying net asset value.
Early in 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. Heavy new issuance
and secondary market selling by insurance companies and trading accounts
provided us with ample opportunity to make these purchases.
How would you characterize the Fund's position at the close of the period?
The Fund ended the period with a neutral duration stance and 4% of assets in
cash reserves. Whereas we sought to maintain a fully invested portfolio in
prior periods, we believe a moderate position in cash is an acceptable
alternative now given the flatness of the yield curve and the availability of
relatively attractive short-term yields. We intend to keep the portfolio in
its current posture until market technicals (supply/demand) become less
supportive for long-term rates and investment rates rise.
We continue to exercise patience in recommitting the proceeds realized from
bond calls. We believe this is a prudent approach given the low absolute level
of long-term rates, the flatness of the yield curve and historically tight
credit spreads. Generally speaking, new purchases have been concentrated in
higher-grade securities, reflecting our ongoing commitment to maintaining 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.
Walter C. O'Connor
Vice President and Portfolio Manager
Theodore R. Jaeckel Jr., CFA
Portfolio Manager
January 10, 2007
BlackRock High Yield Municipal Fund
How has the Fund performed since its inception?
Since inception (August 1, 2006), through December 31, 2006, BlackRock
Municipal Bond Fund, Inc. - BlackRock High Yield Municipal Fund's (formerly
Merrill Lynch Municipal Bond Fund, Inc. - High Yield Portfolio) Institutional,
Investor A and Investor C Shares had total returns of +3.58%, +3.29% and
+3.16%, respectively. (Fund 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 - 15 of this report to shareholders.) For
the same period, the Fund's broad market benchmark, the Lehman Brothers
Municipal Bond Index, returned +3.25%. The Lipper High Yield Municipal Debt
Funds category posted an average return of +3.84%. (Funds in this Lipper
category invest at least 50% of their assets in lower-rated municipal debt
issues.)
After a fairly brief ramp-up period in which we invested the initial cash in
the portfolio, the Fund remained fully invested and with a duration higher
than that of its peers. Both factors contributed to relative performance.
How have you managed the Fund since its inception?
The Fund was introduced on August 1, and since our initial efforts to put
money to work, our focus has been on pursuing attractive high yield investment
opportunities. This works hand-in-hand with our more general strategy of
achieving sustainable yield targets.
Despite a challenging environment characterized by strong investor demand and
narrow credit spreads, we were able to make reasonable progress in terms of
both security selection and sector allocation. From a sector perspective,
areas of emphasis have included health care and housing. This reflects recent
issuance trends, but also our recognition that credit spreads, being at
historically tight levels, do not offer tremendous value. At period-end, 31.8%
of the Fund's assets were invested in health care-related bonds, comprised of
16.5% long-term care and 15.3% hospitals. Housing, which was one of only a few
sectors that had increased issuance in 2006, comprised 14.5% of net assets at
period-end. Because housing bonds are generally higher rated, this has
contributed to the Fund having a more conservative credit profile than many of
its peers. Finally, corporate-related debt represented 16.6% of the Fund's
assets at period-end, with the biggest component of that being airlines at
roughly 7.7%. Relatively strong cash flows have continued since the Fund's
inception, providing a steady source of reserves available for deployment as
new opportunities arise.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
A Discussion With Your Funds' Portfolio Managers (concluded)
At period-end, the Fund's credit-quality profile was broken down as follows:
13.7% of assets rated AAA, 9.2% rated AA, 12.1% rated A, 16.7% rated BBB, 5.1%
rated BB, 4.2% rated B, 10% rated CCC (consisting primarily of airlines) and
29% non-rated. The greatest difference versus our peer group is that the Fund
has greater concentrations in the AA and AAA categories offset by a lower
weighting in non-rated issues. Ultimately, we would look to move down the
credit spectrum as credit spreads widen.
How would you characterize the Fund's position at the close of the period?
At December 31, 2006, the Fund was positioned somewhat more aggressively than
its peers in terms of duration, partly reflecting the less seasoned nature of
the portfolio's current holdings. Yields have declined in recent years,
generating a more conservative interest rate risk profile for more seasoned
issues commonly held by the Fund's peers.
As mentioned previously, however, our credit profile at period-end was somewhat
more conservative than that of our peers. We anticipate that this posture will
evolve gradually as valuation improves and opportunities present themselves.
Theodore R. Jaeckel Jr., CFA
Vice President and Portfolio Manager
Walter O'Connor
Portfolio Manager
January 12, 2007
Insured Fund is managed by a team of investment professionals comprised of
Michael A. Kalinoski, Director at BlackRock, Robert A. DiMella, Managing
Director at BlackRock, Theodore R. Jaeckel, Jr., CFA, Managing Director at
BlackRock, and Walter O'Connor, Managing Director at BlackRock. Mr. Kalinoski
is the Fund's lead portfolio manager and is responsible for the day-to-day
management of the Fund's portfolio.
National Fund is managed by a team of investment professionals comprised of
Theodore R. Jaeckel, Jr., CFA, Managing Director at BlackRock, and Walter
O'Connor, Managing Director at BlackRock. Mr. O'Connor is the Fund's lead
portfolio manager and is responsible for the day-to-day management of the
Fund's portfolio.
High Yield Fund is managed by a team of investment professionals comprised of
Theodore R. Jaeckel, Jr., CFA, Managing Director at BlackRock and Walter
O'Connor, Managing Director at BlackRock. Mr. Jaeckel is the Fund's lead
portfolio manager and is responsible for the day-to-day management of the
Fund's portfolio.
Mr. Kalinoski joined BlackRock in 2006. Prior to joining BlackRock, he was a
Director (Municipal Tax-Exempt Fund Management) of Merrill Lynch Investment
Managers, L.P. ("MLIM") since 2006 and was a Vice President of MLIM from 1999
to 2006. He has been a portfolio manager with BlackRock or MLIM since 1999.
Mr. Jaeckel joined BlackRock in 2006. Prior to joining BlackRock, he was a
Managing Director (Municipal Tax-Exempt Fund Management) of MLIM from 2005 to
2006 and a Director of MLIM from 1997 to 2005. He has been a portfolio manager
with BlackRock or MLIM since 1991.
Mr. O'Connor joined BlackRock in 2006. Prior to joining BlackRock, he was a
Managing Director (Municipal Tax-Exempt Fund Management) of MLIM from 2003 to
2006 and was a Director of MLIM from 1997 to 2002. He has been a portfolio
manager with BlackRock or MLIM since 1991.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Performance Data
About Fund Performance
Effective, October 2, 2006, BlackRock Short-Term Municipal Fund's Class A,
Class B and Class I Shares were redesignated Investor A1, Investor B and
Institutional Shares, respectively. All Class C Shares of the BlackRock Short-
Term Municipal Fund converted to Class A (now Investor A1) shares on August
25, 2006 and are no longer outstanding. BlackRock Municipal Insured Fund's and
BlackRock National Municipal Fund's Class A, Class B, Class C and Class I
Shares were redesignated Investor A, Investor B, Investor C1 and Institutional
Shares, respectively. BlackRock High Yield Municipal Fund's Class A, Class C
and Class I Shares were redesignated Investor A, Investor C and Institutional
Shares, respectively. Also, effective October 2, 2006 BlackRock Short-Term
Municipal Fund's BlackRock Shares, Investor A Shares and Investor C Shares
commenced operations and BlackRock Municipal Insured Fund's and BlackRock
National Municipal Fund's Investor C Shares commenced operations. As
previously communicated to shareholders, new sales charge schedules came into
effect at the same time for certain of these shares.
BlackRock Short-Term Municipal Fund
* BlackRock Shares are not subject to any front-end sales charge. BlackRock
Shares bear no ongoing distribution or service fees and are available only to
eligible investors. Prior to October 2, 2006, BlackRock Share performance
results are those of the Institutional Shares (which have no distribution or
service fees) restated to reflect BlackRock Share fees.
* Institutional Shares are not subject to any front-end sales charge.
Institutional Shares bear no ongoing distribution or service fees and are
available only to eligible investors.
* Investor A Shares incur a maximum initial sales charge (front-end load) of
3% and a service fee of 0.25% per year (but no distribution fee). Prior to
October 2, 2006, Investor A Share performance results are those of the
Institutional Shares (which have no distribution or service fees) restated to
reflect Investor A Share fees.
* Investor A1 Shares incur a maximum initial sales charge (front-end load) of
1% and a service fee of 0.10% per year (but no distribution fee).
* Investor B Shares are subject to a maximum contingent deferred sales charge
of 1% declining to 0% after three years. In addition, Investor B Shares are
subject to a distribution fee of 0.20% per year and a service fee of 0.15% per
year. These shares automatically convert to Investor A Shares after
approximately 10 years. (There is no initial sales charge for automatic share
conversions.)
* Investor C Shares are subject to a distribution fee of 0.75% per year and a
service fee of 0.25% per year. In addition, Investor C shares are subject to a
1% contingent deferred sales charge if redeemed within one year of purchase.
Prior to October 2, 2006, Investor C Share performance results are those of
the Institutional Shares (which have no distribution or service fees) restated
to reflect Investor C Share fees.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Performance Data (continued)
BlackRock Municipal Insured Fund and BlackRock National Municipal Fund
* Institutional Shares are not subject to any front-end sales charge.
Institutional Shares bear no ongoing distribution or service fees and are
available only to eligible investors.
* Investor A Shares incur a maximum initial sales charge (front-end load) of
4.25% and a service fee of 0.25% per year (but no distribution fee).
* Investor B Shares are subject to a maximum contingent deferred sales charge
of 4% declining to 0% after six years. In addition, Investor B Shares are
subject to a distribution fee of 0.50% per year and a service fee of 0.25% per
year. These shares automatically convert to Investor A Shares after
approximately 10 years. (There is no initial sales charge for automatic share
conversions.) All returns for periods greater than 10 years reflect this
conversion.
* Investor C Shares are subject to a distribution fee of 0.75% per year and a
service fee of 0.25% per year. In addition, Investor C shares are subject to a
1% contingent deferred sales charge if redeemed within one year of purchase.
Prior to October 2, 2006, Investor C Share performance results are those of
the Institutional Shares (which have no distribution or service fees) restated
to reflect Investor C Share fees.
* Investor C1 Shares are subject to a distribution fee of 0.55% per year and a
service fee of 0.25% per year. In addition, Investor C1 shares are subject to
a 1% contingent deferred sales charge if redeemed within one year of purchase.
BlackRock High Yield Municipal Fund
* Institutional Shares are not subject to any front-end sales charge.
Institutional Shares bear no ongoing distribution or service fees and are
available only to eligible investors.
* Investor A Shares incur a maximum initial sales charge (front-end load) of
4.25% and a service fee of 0.25% per year (but no distribution fee).
* Investor C Shares are subject to a distribution fee of 0.75% per year and a
service fee of 0.25% per year. In addition, Investor C shares are subject to a
1% contingent deferred sales charge if redeemed within one year of purchase.
Performance information reflects past performance and does not guarantee
future results. Current performance may be lower or higher than the
performance data quoted. Refer to www.blackrock.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
service, distribution and transfer agency fees applicable to each class, which
are deducted from the income available to be paid to shareholders. The Fund's
Manager and FAM, the Fund's previous manager, reimbursed a portion of its
management fee. Without such reimbursement, performance would have been lower.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Performance Data (continued)
Recent Performance Results*
10-Year/
Since
6-Month 12-Month Inception Standardized
As of December 31, 2006 Total Return Total Return Total Return 30-day Yield
Short-Term Municipal Fund BlackRock Shares +2.02% +2.85% +36.06% 3.28%
Short-Term Municipal Fund Institutional Shares +2.02 +2.85 +36.06 3.28
Short-Term Municipal Fund Investor A Shares +1.89 +2.59 +32.71 2.94
Short-Term Municipal Fund Investor A1 Shares +1.97 +2.85 +34.86 3.15
Short-Term Municipal Fund Investor B Shares +1.84 +2.48 +31.31 2.93
Short-Term Municipal Fund Investor C Shares +1.51 +1.83 +23.14 2.28
Municipal Insured Fund Institutional Shares +4.60 +4.58 +68.21 3.57
Municipal Insured Fund Investor A Shares +4.60 +4.45 +64.10 3.18
Municipal Insured Fund Investor B Shares +4.34 +3.92 +56.00 2.81
Municipal Insured Fund Investor C Shares +4.22 +3.69 +52.47 2.72
Municipal Insured Fund Investor C1 Shares +4.31 +3.87 +55.23 2.76
National Municipal Fund Institutional Shares +4.47 +5.38 +74.26 3.92
National Municipal Fund Investor A Shares +4.34 +5.22 +70.01 3.51
National Municipal Fund Investor B Shares +4.07 +4.69 +61.60 3.16
National Municipal Fund Investor C Shares +3.95 +4.33 +57.74 2.92
National Municipal Fund Investor C1 Shares +4.05 +4.53 +60.81 3.11
High Yield Municipal Fund Institutional Shares -- -- + 3.58 4.38
High Yield Municipal Fund Investor A Shares -- -- + 3.29 3.95
High Yield Municipal Fund Investor C Shares -- -- + 3.16 3.37
Lehman Brothers 3-Year General Obligation
Bond Index++ +2.51 +3.06 +48.11 --
Lehman Brothers Municipal Bond Index++++ +4.55 +4.84 +74.99/+3.25 --
* 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.
All of the Funds' 10-year/since inception returns are for the 10-year period except for High Yield Municipal
Fund's 10-year/since inception returns, which are from 8/01/06.
++ This unmanaged Index consists of state and local government obligation bonds that mature in three - four years,
rated Baa or better. The 10-year/since inception total return is for the 10-year period.
++++ This unmanaged Index consists of revenue bonds, prerefunded bonds, general obligation bonds and insured
bonds, all of which mature within 30 years. 10-Year/Since Inception total returns are for 10 years and
from 8/01/06, respectively.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Performance Data (continued) BlackRock Short-Term Municipal Fund
Total Return Based on a $10,000 Investment
A line graph illustrating the growth of a $10,000 investment in BlackRock
Shares*++, Institutional Shares*++, Investor A Shares*++, Investor A1
Shares*++, Investor B Shares*++ and Investor C Shares*++ compared to a similar
investment in Lehman Brothers Municipal Bond Index++++ and Lehman Brothers
3-Year General Obligation Bond Index++++++. Values illustrated are as follows:
BlackRock Shares*++
Date Value
December 1996 $10,000.00
December 1997 $10,421.00
December 1998 $10,901.00
December 1999 $11,124.00
December 2000 $11,686.00
December 2001 $12,294.00
December 2002 $12,760.00
December 2003 $12,953.00
December 2004 $13,046.00
December 2005 $13,229.00
December 2006 $13,606.00
Institutional Shares*++
Date Value
December 1996 $10,000.00
December 1997 $10,421.00
December 1998 $10,901.00
December 1999 $11,124.00
December 2000 $11,686.00
December 2001 $12,294.00
December 2002 $12,760.00
December 2003 $12,953.00
December 2004 $13,046.00
December 2005 $13,229.00
December 2006 $13,606.00
Investor A Shares*++
Date Value
December 1996 $ 9,700.00
December 1997 $10,084.00
December 1998 $10,521.00
December 1999 $10,710.00
December 2000 $11,223.00
December 2001 $11,777.00
December 2002 $12,194.00
December 2003 $12,347.00
December 2004 $12,405.00
December 2005 $12,548.00
December 2006 $12,873.00
Investor A1 Shares*++
Date Value
December 1996 $ 9,700.00
December 1997 $10,317.00
December 1998 $10,770.00
December 1999 $10,980.00
December 2000 $11,534.00
December 2001 $12,122.00
December 2002 $12,570.00
December 2003 $12,747.00
December 2004 $12,827.00
December 2005 $12,981.00
December 2006 $13,351.00
Investor B Shares*++
Date Value
December 1996 $10,000.00
December 1997 $10,395.00
December 1998 $10,823.00
December 1999 $11,006.00
December 2000 $11,520.00
December 2001 $12,076.00
December 2002 $12,490.00
December 2003 $12,635.00
December 2004 $12,681.00
December 2005 $12,813.00
December 2006 $13,131.00
Investor C Shares*++
Date Value
December 1996 $10,000.00
December 1997 $10,318.00
December 1998 $10,686.00
December 1999 $10,796.00
December 2000 $11,229.00
December 2001 $11,696.00
December 2002 $12,019.00
December 2003 $12,079.00
December 2004 $12,046.00
December 2005 $12,093.00
December 2006 $12,314.00
Lehman Brothers Municipal Bond Index++++
Date Value
December 1996 $10,000.00
December 1997 $10,919.00
December 1998 $11,627.00
December 1999 $11,388.00
December 2000 $12,718.00
December 2001 $13,370.00
December 2002 $14,654.00
December 2003 $15,433.00
December 2004 $16,124.00
December 2005 $16,691.00
December 2006 $17,499.00
Lehman Brothers 3-Year General Obligation Bond Index++++++
Date Value
December 1996 $10,000.00
December 1997 $10,541.00
December 1998 $11,085.00
December 1999 $11,298.00
December 2000 $12,004.00
December 2001 $12,764.00
December 2002 $13,612.00
December 2003 $13,983.00
December 2004 $14,252.00
December 2005 $14,372.00
December 2006 $14,811.00
* Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including advisory fees.
++ The Fund invests primarily in investment grade municipal bonds (bonds
rated Baa or better) with a maximum maturity not to exceed four 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 three - four years, rated Baa or better.
Past performance is not indicative of future results.
Average Annual Total Return
Return
BlackRock Shares
One Year Ended 12/31/06 +2.85%
Five Years Ended 12/31/06 +2.05
Ten Years Ended 12/31/06 +3.13
Return
Institutional Shares
One Year Ended 12/31/06 +2.85%
Five Years Ended 12/31/06 +2.05
Ten Years Ended 12/31/06 +3.13
Return Without Return With
Sales Charge Sales Charge*
Investor A Shares
One Year Ended 12/31/06 +2.59% -0.48%
Five Years Ended 12/31/06 +1.80 +1.18
Ten Years Ended 12/31/06 +2.87 +2.56
Return Without Return With
Sales Charge Sales Charge**
Investor A1 Shares
One Year Ended 12/31/06 +2.85% +1.82%
Five Years Ended 12/31/06 +1.95 +1.74
Ten Years Ended 12/31/06 +3.04 +2.93
Return Return
Without CDSC With CDSC++++++
Investor B Shares++
One Year Ended 12/31/06 +2.48% +1.49%
Five Years Ended 12/31/06 +1.69 +1.69
Ten Years Ended 12/31/06 +2.76 +2.76
Return Return
Without CDSC With CDSC++++++
Investor C Shares++++
One Year Ended 12/31/06 +1.83% +0.83%
Five Years Ended 12/31/06 +1.04 +1.04
Ten Years Ended 12/31/06 +2.10 +2.10
* Assuming maximum sales charge of 3%.
** Assuming maximum sales charge of 1%.
++ 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.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Performance Data (continued) BlackRock Municipal Insured Fund
Total Return Based on a $10,000 Investment
A line graph illustrating the growth of a $10,000 investment in Institutional
Shares*++, Investor A Shares*++, Investor B Shares*++, Investor C Shares*++
and Investor C1 Shares*++ compared to a similar investment in Lehman Brothers
Municipal Bond Index++++. Values illustrated are as follows:
Institutional Shares*++
Date Value
December 1996 $10,000.00
December 1997 $10,876.00
December 1998 $11,499.00
December 1999 $10,899.00
December 2000 $12,239.00
December 2001 $12,836.00
December 2002 $14,117.00
December 2003 $14,773.00
December 2004 $15,469.00
December 2005 $16,084.00
December 2006 $16,821.00
Investor A Shares*++
Date Value
December 1996 $ 9,600.00
December 1997 $10,415.00
December 1998 $10,984.00
December 1999 $10,372.00
December 2000 $11,634.00
December 2001 $12,171.00
December 2002 $13,351.00
December 2003 $13,940.00
December 2004 $14,541.00
December 2005 $15,082.00
December 2006 $15,713.00
Investor B Shares*++
Date Value
December 1996 $10,000.00
December 1997 $10,794.00
December 1998 $11,326.00
December 1999 $10,641.00
December 2000 $11,875.00
December 2001 $12,361.00
December 2002 $13,491.00
December 2003 $14,015.00
December 2004 $14,546.00
December 2005 $15,011.00
December 2006 $15,600.00
Investor C Shares*++
Date Value
December 1996 $10,000.00
December 1997 $10,768.00
December 1998 $11,272.00
December 1999 $10,578.00
December 2000 $11,761.00
December 2001 $12,213.00
December 2002 $13,298.00
December 2003 $13,779.00
December 2004 $14,284.00
December 2005 $14,705.00
December 2006 $15,247.00
Investor C1 Shares*++
Date Value
December 1996 $10,000.00
December 1997 $10,789.00
December 1998 $11,315.00
December 1999 $10,625.00
December 2000 $11,852.00
December 2001 $12,330.00
December 2002 $13,451.00
December 2003 $13,966.00
December 2004 $14,488.00
December 2005 $14,944.00
December 2006 $15,523.00
Lehman Brothers Municipal Bond Index++++
Date Value
December 1996 $10,000.00
December 1997 $10,919.00
December 1998 $11,627.00
December 1999 $11,388.00
December 2000 $12,718.00
December 2001 $13,370.00
December 2002 $14,654.00
December 2003 $15,433.00
December 2004 $16,124.00
December 2005 $16,691.00
December 2006 $17,499.00
* Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including advisory fees.
++ The Fund 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
Institutional Shares
One Year Ended 12/31/06 +4.58%
Five Years Ended 12/31/06 +5.56
Ten Years Ended 12/31/06 +5.34
Return Without Return With
Sales Charge Sales Charge*
Investor A Shares
One Year Ended 12/31/06 +4.45% +0.01%
Five Years Ended 12/31/06 +5.30 +4.39
Ten Years Ended 12/31/06 +5.08 +4.62
Return Return
Without CDSC With CDSC++++++
Investor B Shares++
One Year Ended 12/31/06 +3.92% -0.06%
Five Years Ended 12/31/06 +4.76 +4.43
Ten Years Ended 12/31/06 +4.55 +4.55
Return Return
Without CDSC With CDSC++++++
Investor C Shares++++
One Year Ended 12/31/06 +3.69% +2.69%
Five Years Ended 12/31/06 +4.54 +4.54
Ten Years Ended 12/31/06 +4.31 +4.31
Return Return
Without CDSC With CDSC++++++
Investor C1 Shares++++
One Year Ended 12/31/06 +3.87% +2.88%
Five Years Ended 12/31/06 +4.71 +4.71
Ten Years Ended 12/31/06 +4.50 +4.50
* Assuming maximum sales charge of 4.25%.
++ 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.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Performance Data (continued) BlackRock National Municipal Fund
Total Return Based on a $10,000 Investment
A line graph illustrating the growth of a $10,000 investment in Institutional
Share*s++, Investor A Shares*++, Investor B Shares*++, Investor C Shares*++
and Investor C1 Shares*++ compared to a similar investment in Lehman Brothers
Municipal Bond Index++++. Values illustrated are as follows:
Institutional Shares*++
Date Value
December 1996 $10,000.00
December 1997 $10,935.00
December 1998 $11,514.00
December 1999 $10,892.00
December 2000 $12,242.00
December 2001 $12,857.00
December 2002 $14,069.00
December 2003 $14,959.00
December 2004 $15,779.00
December 2005 $16,536.00
December 2006 $17,426.00
Investor A Shares*++
Date Value
December 1996 $ 9,600.00
December 1997 $10,462.00
December 1998 $10,998.00
December 1999 $10,379.00
December 2000 $11,624.00
December 2001 $12,191.00
December 2002 $13,293.00
December 2003 $14,101.00
December 2004 $14,852.00
December 2005 $15,512.00
December 2006 $16,278.00
Investor B Shares*++
Date Value
December 1996 $10,000.00
December 1997 $10,853.00
December 1998 $11,341.00
December 1999 $10,647.00
December 2000 $11,865.00
December 2001 $12,380.00
December 2002 $13,432.00
December 2003 $14,177.00
December 2004 $14,856.00
December 2005 $15,437.00
December 2006 $16,160.00
Investor C Shares*++
Date Value
December 1996 $10,000.00
December 1997 $10,827.00
December 1998 $11,287.00
December 1999 $10,571.00
December 2000 $11,764.00
December 2001 $12,233.00
December 2002 $13,253.00
December 2003 $13,952.00
December 2004 $14,571.00
December 2005 $15,119.00
December 2006 $15,774.00
Investor C1 Shares*++
Date Value
December 1996 $10,000.00
December 1997 $10,847.00
December 1998 $11,341.00
December 1999 $10,632.00
December 2000 $11,854.00
December 2001 $12,350.00
December 2002 $13,405.00
December 2003 $14,142.00
December 2004 $14,798.00
December 2005 $15,384.00
December 2006 $16,081.00
Lehman Brothers Municipal Bond Index++++
Date Value
December 1996 $10,000.00
December 1997 $10,919.00
December 1998 $11,627.00
December 1999 $11,388.00
December 2000 $12,718.00
December 2001 $13,370.00
December 2002 $14,654.00
December 2003 $15,433.00
December 2004 $16,124.00
December 2005 $16,691.00
December 2006 $17,499.00
* Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including advisory fees.
++ The Fund 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
Institutional Shares
One Year Ended 12/31/06 +5.38%
Five Years Ended 12/31/06 +6.27
Ten Years Ended 12/31/06 +5.71
Return Without Return With
Sales Charge Sales Charge*
Investor A Shares
One Year Ended 12/31/06 +5.22% +0.74%
Five Years Ended 12/31/06 +6.01 +5.09
Ten Years Ended 12/31/06 +5.45 +4.99
Return Return
Without CDSC With CDSC++++++
Investor B Shares++
One Year Ended 12/31/06 +4.69% +0.69%
Five Years Ended 12/31/06 +5.47 +5.15
Ten Years Ended 12/31/06 +4.92 +4.92
Return Return
Without CDSC With CDSC++++++
Investor C Shares++++
One Year Ended 12/31/06 +4.33% +3.33%
Five Years Ended 12/31/06 +5.22 +5.22
Ten Years Ended 12/31/06 +4.66 +4.66
Return Return
Without CDSC With CDSC++++++
Investor C1 Shares++++
One Year Ended 12/31/06 +4.53% +3.53%
Five Years Ended 12/31/06 +5.42 +5.42
Ten Years Ended 12/31/06 +4.87 +4.87
* Assuming maximum sales charge of 4.25%.
++ 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.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Performance Data (concluded) BlackRock High Yield Municipal Fund
Aggregate Total Return
Return
Institutional Shares
Inception (8/01/06)
to 12/31/06 +3.58%
Return Without Return With
Sales Charge Sales Charge*
Investor A Shares
Inception (8/01/06)
to 12/31/06 +3.29% -1.10%
Return Return
Without CDSC With CDSC++++
Class C Shares++
Inception (8/01/06)
to 12/31/06 +3.16% +2.16%
* Assuming maximum sales charge of 4.25%.
++ Maximum contingent deferred sales charge is 1% and is reduced
to 0% after one year.
++++ Assuming payment of applicable contingent deferred sales
charge.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Disclosure of Expenses
Shareholders of these Funds 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 July 1, 2006 and held
through December 31, 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 Fund 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 Fund 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.
BlackRock Short-Term Municipal Fund
Expenses Paid
Ending During the Period
Account Value Ended++++
Beginning December 31, December 31,
Account Value++ 2006 2006*
Actual
BlackRock Shares $1,000 $1,020.20 $2.08
Institutional $1,000 $1,020.20 $1.99
Investor A $1,000 $1,018.90 $1.55
Investor A1 $1,000 $1,019.70 $2.58
Investor B $1,000 $1,018.40 $3.95
Investor C $1,000 $1,015.10 $3.43
Hypothetical (5% annual return before expenses)**
BlackRock Shares $1,000 $1,023.01 $2.08
Institutional $1,000 $1,010.64 $1.98
Investor A $1,000 $1,011.07 $1.55
Investor A1 $1,000 $1,022.51 $2.59
Investor B $1,000 $1,021.16 $3.95
Investor C $1,000 $1,009.20 $3.42
* For each class of the Fund, expenses are equal to the annualized expense ratio for the class
(.35% for BlackRock, .41% for Institutional, .61% for Investor A, .51% for Investor A1, .78%
for Investor B and 1.35% for Investor C), multiplied by the average account value over the
period, multiplied by 183/365 for Institutional, Investor A1 and Investor B Shares and 92/365
for BlackRock, Investor A and Investor C Shares (to reflect the one-half year period for
Institutional, Investor A1 and Investor B Shares and the actual days since inception for
BlackRock, Investor A and Investor C Shares.)
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days
in the most recent fiscal half year for Institutional, Investor A1 and Investor B Shares and
the actual days since inception for BlackRock, Investor A and Investor C Shares divided by 365.
++ July 1, 2006 for Institutional, Investor A1 and Investor B Shares and October 2, 2006
(commencement of operations) for BlackRock, Investor A and Investor C Shares.
++++ The period represents the six months ended for Institutional, Investor A1 and Investor B Shares
and from October 2, 2006 (commencement of operations) to December 31, 2006 for BlackRock, Investor A
and Investor C Shares.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Disclosure of Expenses (continued) BlackRock Municipal Insured Fund
Including Interest Expense and Fees
Expenses Paid
Ending During the Period
Account Value Ended++++
Beginning December 31, December 31,
Account Value++ 2006 2006*
Actual
Institutional $1,000 $1,046.00 $4.36
Investor A $1,000 $1,046.00 $5.64
Investor B $1,000 $1,043.40 $8.25
Investor C $1,000 $1,042.20 $4.61
Investor C1 $1,000 $1,043.10 $8.55
Hypothetical (5% annual return before expenses)**
Institutional $1,000 $1,020.84 $4.31
Investor A $1,000 $1,019.58 $5.57
Investor B $1,000 $1,017.03 $8.14
Investor C $1,000 $1,008.09 $4.53
Investor C1 $1,000 $1,016.73 $8.44
* For each class of the Fund, expenses are equal to the annualized expense ratio for the class
(.85% for Institutional, 1.10% for Investor A, 1.61% for Investor B, 1.79% for Investor C and 1.67%
for Investor C1), multiplied by the average account value over the period, multiplied by 183/365 for
Institutional, Investor A, Investor B and Investor C1 Shares and 92/365 for Investor C Shares (to
reflect the one-half year period for Institutional, Investor A, Investor B and Investor C1 Shares
and the actual days since inception for Investor C Shares.)
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the
most recent fiscal half year for Institutional, Investor A, Investor B and Investor C1 Shares and the
actual days since inception for Investor C Shares divided by 365.
++ July 1, 2006 for Institutional, Investor A, Investor B and Investor C1 Shares and October 2, 2006
(commencement of operations) for Investor C Shares.
++++ The period represents the six months ended for Institutional, Investor A, Investor B and Investor C1
Shares and from October 2, 2006 (commencement of operations) to December 31, 2006 for Investor C Shares.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Disclosure of Expenses (continued) BlackRock Municipal Insured Fund
Excluding Interest Expense and Fees
Expenses Paid
Ending During the Period
Account Value Ended++++
Beginning December 31, December 31,
Account Value++ 2006 2006*
Actual
Institutional $1,000 $1,046.00 $2.31
Investor A $1,000 $1,046.00 $3.59
Investor B $1,000 $1,043.40 $6.20
Investor C $1,000 $1,042.20 $3.58
Investor C1 $1,000 $1,043.10 $6.50
Hypothetical (5% annual return before expenses)**
Institutional $1,000 $1,022.81 $2.28
Investor A $1,000 $1,021.56 $3.55
Investor B $1,000 $1,019.00 $6.12
Investor C $1,000 $1,009.10 $3.52
Investor C1 $1,000 $1,018.73 $6.43
* For each class of the Fund, expenses are equal to the annualized expense ratio for the class
(.45% for Institutional, .70% for Investor A, 1.21% for Investor B, 1.39% for Investor C and
1.27% for Investor C1), multiplied by the average account value over the period, multiplied by
183/365 for Institutional, Investor A, Investor B and Investor C1 Shares and 92/365 for Investor
C Shares (to reflect the one-half year period for Institutional, Investor A, Investor B and Investor
C1 Shares and the actual days since inception for Investor C Shares.)
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in
the most recent fiscal half year for Institutional, Investor A, Investor B and Investor C1 Shares
and the actual days since inception for Investor C Shares divided by 365.
++ July 1, 2006 for Institutional, Investor A, Investor B and Investor C1 Shares and October 2, 2006
(commencement of operations) for Investor C Shares.
++++ The period represents the six months ended for Institutional, Investor A, Investor B and Investor C1
Shares and from October 2, 2006 (commencement of operations) to December 31, 2006 for Investor C Shares.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Disclosure of Expenses (continued) BlackRock National Municipal Fund
Including Interest Expense and Fees
Expenses Paid
Ending During the Period
Account Value Ended++++
Beginning December 31, December 31,
Account Value++ 2006 2006*
Actual
Institutional $1,000 $1,044.70 $5.02
Investor A $1,000 $1,043.40 $6.30
Investor B $1,000 $1,040.70 $8.90
Investor C $1,000 $1,039.50 $5.14
Investor C1 $1,000 $1,040.50 $9.21
Hypothetical (5% annual return before expenses)**
Institutional $1,000 $1,020.19 $4.96
Investor A $1,000 $1,018.93 $6.23
Investor B $1,000 $1,016.38 $8.80
Investor C $1,000 $1,007.56 $5.06
Investor C1 $1,000 $1,016.08 $9.10
* For each class of the Fund, expenses are equal to the annualized expense ratio for the class
(.98% for Institutional, 1.23% for Investor A, 1.74% for Investor B, 2.00% for Investor C and
1.80% for Investor C1), multiplied by the average account value over the period, multiplied by
183/365 for Institutional, Investor A, Investor B and Investor C1 Shares and 92/365 for Investor
C Shares (to reflect the one-half year period for Institutional, Investor A, Investor B and Investor
C1 Shares and the actual days since inception for Investor C Shares.)
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the
most recent fiscal half year for Institutional, Investor A, Investor B and Investor C1 Shares and the
actual days since inception for Investor C Shares divided by 365.
++ July 1, 2006 for Institutional, Investor A, Investor B and Investor C1 Shares and October 2, 2006
(commencement of operations) for Investor C Shares.
++++ The period represents the six months ended for Institutional, Investor A, Investor B and Investor C1
Shares and from October 2, 2006 (commencement of operations) to December 31, 2006 for Investor C Shares.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Disclosure of Expenses (continued) BlackRock National Municipal Fund
Excluding Interest Expense and Fees
Expenses Paid
Ending During the Period
Account Value Ended++++
Beginning December 31, December 31,
Account Value++ 2006 2006*
Actual
Institutional $1,000 $1,044.70 $2.87
Investor A $1,000 $1,043.40 $4.15
Investor B $1,000 $1,040.70 $6.75
Investor C $1,000 $1,039.50 $4.06
Investor C1 $1,000 $1,040.50 $7.06
Hypothetical (5% annual return before expenses)**
Institutional $1,000 $1,022.29 $2.84
Investor A $1,000 $1,021.04 $4.15
Investor B $1,000 $1,018.48 $6.75
Investor C $1,000 $1,008.62 $4.00
Investor C1 $1,000 $1,018.18 $7.06
* For each class of the Fund, expenses are equal to the annualized expense ratio for the class
(.56% for Institutional, .81% for Investor A, 1.32% for Investor B, 1.58% for Investor C and
1.38% for Investor C1), multiplied by the average account value over the period, multiplied by
183/365 for Institutional, Investor A, Investor B and Investor C1 Shares and 92/365 for Investor
C Shares (to reflect the one-half year period for Institutional, Investor A, Investor B and Investor
C1 Shares and the actual days since inception for Investor C Shares.)
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the
most recent fiscal half year for Institutional, Investor A, Investor B and Investor C1 Shares and the
actual days since inception for Investor C Shares divided by 365.
++ July 1, 2006 for Institutional, Investor A, Investor B and Investor C1 Shares and October 2, 2006
(commencement of operations) for Investor C Shares.
++++ The period represents the six months ended for Institutional, Investor A, Investor B and Investor C1
Shares and from October 2, 2006 (commencement of operations) to December 31, 2006 for Investor C Shares.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Disclosure of Expenses (concluded) BlackRock High Yield Municipal Fund
Expenses Paid
Beginning Ending During the Period
Account Value Account Value Ended++++
August 1, December 31, December 31,
2006++ 2006 2006*
Actual
Institutional $1,000 $1,035.80 $2.79
Investor A $1,000 $1,032.90 $3.82
Investor C $1,000 $1,031.60 $7.03
Hypothetical (5% annual return before expenses)**
Institutional $1,000 $1,018.35 $2.77
Investor A $1,000 $1,017.34 $3.79
Investor C $1,000 $1,014.18 $6.97
* For each class of the Fund, expenses are equal to the annualized expense ratio for the class
(.64% for Institutional, .89% for Investor A and 1.64% for Investor C), multiplied by the average
account value over the period, multiplied by 154/365 (to reflect the actual days since inception).
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days since
inception divided by 365.
++ Commencement of operations.
++++ The period represents August 1, 2006 (commencement of operations) to December 31, 2006.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments as of December 31, 2006 (In Thousands)
BlackRock Short-Term Municipal Fund
Face
Amount Municipal Bonds Value
Alabama--4.7%
$ 6,075 Birmingham, Alabama, Special Care Facilities
Financing Authority Revenue Bonds (Ascension
Health Subordinate Credit Group), Series A, 5%
due 10/01/2008 $ 6,212
8,095 Huntsville, Alabama, GO, Refunding, Series A,
5.25% due 2/01/2009 (f) 8,356
Alaska--0.4%
1,250 Valdez, Alaska, Marine Terminal Revenue Refunding
Bonds (ConocoPhillips Company Project), VRDN,
3.77% due 5/01/2007 (b) 1,250
Arizona--0.4%
1,378 Tierra Antigua, Arizona, Revenue Bonds, VRDN, AMT,
Series A, 3.76% due 12/01/2034 (b) 1,378
California--1.4%
750 California Pollution Control Financing Authority,
Solid Waste Disposal Revenue Bonds (Republic
Services, Inc. Project), VRDN, AMT, 4.15%
due 3/01/2028 (b) 750
3,650 Contra Costa County, California, M/F Housing Revenue
Bonds (Pleasant Hill Bart Transit Station Project), VRDN,
AMT, Series A, 3.95% due 12/05/2007 (b) 3,652
Colorado--2.4%
7,500 Colorado State, General Fund Revenue Bonds, RAN,
4.50% due 6/27/2007 7,532
Florida--8.2%
10,000 Florida Hurricane Catastrophe Fund Financing
Corporation Revenue Bonds, Series A, 5%
due 7/01/2008 10,205
14,195 Orange County, Florida, Tourist Development, Tax
Revenue Bonds, 5.50% due 10/01/2009 (a)(c) 14,911
250 Putnam County, Florida, Development Authority,
PCR (Seminole Electric Cooperative, Inc. Project),
VRDN, Series H-4, 3.55% due 3/15/2007 (b) 250
Georgia--7.7%
5,600 Catoosa County, Georgia, School District, GO,
4.25% due 8/01/2008 (g) 5,656
6,005 Georgia Municipal Electric Authority, Power Revenue
Refunding Bonds, Series DD, 7% due 1/01/2008 (g) 6,201
11,905 Georgia State, GO, Series B, 5% due 3/01/2008 12,102
Illinois--1.8%
5,390 Du Page County, Illinois, Transportation Revenue
Refunding Bonds, 4.50% due 1/01/2009 (f) 5,481
Face
Amount Municipal Bonds Value
Indiana--0.3%
$ 1,000 Indiana State Development Finance Authority, IDR
(Republic Services, Inc. Project), VRDN, AMT, 4.27%
due 11/01/2035 (b) $ 1,000
Kansas--0.6%
2,000 Junction City, Kansas, Temporary Notes, GO, Series D,
5% due 8/01/2007 2,011
Louisiana--3.2%
3,700 Louisiana HFA, S/F Mortgage Revenue Bonds, VRDN,
AMT, 4.71% due 11/28/2008 (b) 3,700
6,200 Louisiana HFA, S/F Mortgage Revenue Refunding
Bonds, VRDN, AMT, 4.784% due 4/30/2007 (b) 6,200
Maryland--0.3%
1,000 Maryland State Community Development
Administration, Department of Housing and
Community Development, Residential Revenue
Refunding Bonds, AMT, Series D, 3.40%
due 3/07/2007 999
Massachusetts--5.1%
6,830 Massachusetts Municipal Wholesale Electric
Company, Power Supply System Revenue Refunding
Bonds (Nuclear Mix Number 1 Issue), Series A, 5%
due 7/01/2008 (g) 6,966
8,505 Massachusetts State, Consolidated Loan, GO,
Series C, 5% due 5/01/2008 (h) 8,660
Michigan--0.1%
280 Michigan State Strategic Fund, Limited Obligation
Revenue Bonds (Kay Screen Printing, Inc. Project),
VRDN, AMT, 4.20% due 5/01/2020 (b) 280
Minnesota--2.6%
500 Minneapolis and Saint Paul, Minnesota, Metropolitan
Airports Commission, Airport Revenue Bonds, AMT,
Series B, 5.50% due 1/01/2010 (d) 522
7,385 Minnesota State, GO, Refunding, 5% due 8/01/2007 7,446
Nevada--4.7%
6,500 Clark County, Nevada, Airport System Subordinate
Lien Revenue Bonds, AMT, Series B-1, 5%
due 7/01/2008 6,621
7,500 Clark County, Nevada, EDR (Alexander Dawson
School of Nevada Project), 5.50% due 5/15/2009 (c) 7,887
Portfolio Abbreviations
To simplify the listings of BlackRock 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
CP Commercial Paper
DRIVERS Derivative Inverse Tax-Exempt Receipts
EDA Economic Development Authority
EDR Economic Development Revenue Bonds
GO General Obligation Bonds
HDA Housing Development Agency
HFA Housing Finance Agency
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
PILOT Payment in Lieu of Taxes
RAN Revenue Anticipation Notes
RIB Residual Interest Bonds
ROLS Reset Option Long Securities
S/F Single-Family
TRAN Tax Revenue Anticipation Notes
VRDN Variable Rate Demand Notes
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments (continued) (In Thousands)
BlackRock Short-Term Municipal Fund
Face
Amount Municipal Bonds Value
New Mexico--1.9%
$ 5,685 New Mexico State, Severance Tax Bonds, Series A,
5% due 7/01/2008 (g) $ 5,802
New York--3.8%
11,565 Long Island Power Authority, New York, Electric
System Revenue Bonds, Series C, 5.50%
due 9/01/2013 (c) 11,825
Ohio--2.7%
3,505 Ohio State, Infrastructure Improvement, GO,
Refunding, Series A, 5% due 8/01/2010 3,664
4,400 Ohio State Building Authority, State Facilities
Revenue Bonds (Administrative Building Fund
Projects), Series A, 5.375% due 10/01/2008 (c) 4,577
Oklahoma--2.5%
4,150 Tulsa County, Oklahoma, Industrial Authority, Capital
Improvements Revenue Bonds, Series D, 5%
due 7/01/2009 (f) 4,283
3,300 Tulsa Oklahoma, Public Facilities Authority, Capital
Improvement Revenue Bonds, Series A, 4.375%
due 6/01/2008 (a) 3,336
Pennsylvania--5.5%
10,250 Allegheny County, Pennsylvania, Port Authority,
Special Revenue Transportation Bonds, 6.375%
due 3/01/2009 (c)(g) 10,937
1,000 Pennsylvania State Higher Educational Facilities
Authority, Revenue Refunding Bonds (University of
Scranton Project), VRDN, Series C, 3.50%
due 5/01/2007 (b)(e) 999
5,000 Pennsylvania State, GO, Refunding, Third Series, 5%
due 7/01/2009 5,166
South Carolina--3.0%
4,590 Aiken County, South Carolina, Consolidated School
District, GO, Refunding, 5% due 3/01/2009 4,724
Hilton Head Island, South Carolina, Public Facility
Corporation, COP (Beach Preservation Fee Pledge) (g):
2,160 5% due 8/01/2008 2,206
2,240 5% due 8/01/2009 2,315
Tennessee--6.7%
11,500 Metropolitan Government of Nashville and Davidson
County, Tennessee, Health and Education Facilities
Board Revenue Refunding Bonds (Ascension Health
Credit), VRDN, Series B-1, 3.72% due 8/03/2007 (b) 11,505
4,000 Tennessee Energy Acquisition Corporation, Gas
Revenue Bonds, Series A, 5% due 9/01/2009 4,129
5,000 Tennessee State Local Development Authority
Revenue Bonds (Student Loan Programs), BAN,
Series A, 5% due 5/17/2007 5,025
Texas--7.6%
5,000 Harris County, Texas, Toll Road Revenue Refunding
Bonds, VRDN, Series B-2, 5% due 8/15/2009 (b)(d) 5,146
5,120 Houston, Texas, Public Improvement, GO, Refunding,
Series A, 5% due 3/01/2010 (g) 5,323
Face
Amount Municipal Bonds Value
Texas (concluded)
$ 2,200 Montgomery County, Texas, Unlimited Tax
Adjustable Rate Road, GO, VRDN, Series B, 5%
due 9/01/2008 (b)(f) $ 2,247
2,790 North Texas Thruway Authority, Dallas North
Thruway System, Revenue Refunding Bonds, VRDN,
Series B, 5% due 7/01/2008 (a)(b) 2,844
2,500 San Antonio, Texas, Electric and Gas System,
Junior Lien Revenue Bonds, VRDN, 3.55%
due 12/01/2007 (b) 2,500
5,455 Texas State Transportation Commission, First Tier
Revenue Bonds, 5% due 4/01/2008 5,547
Virginia--4.0%
7,050 Virginia State Public Building Authority, Public
Facilities Revenue Bonds, Series A, 5%
due 8/01/2009 7,292
4,885 Virginia State Public School Authority, School
Financing Revenue Bonds, Series B, 5%
due 8/01/2008 (c) 5,041
Washington--7.5%
9,940 Energy Northwest, Washington, Electric Revenue
Refunding Bonds (Columbia Generating Station),
Series A, 5.25% due 7/01/2009 (a) 10,322
5,000 Washington State Public Power Supply System,
Revenue Refunding Bonds (Nuclear Project
Number 1), Series C, 6% due 7/01/2009 (a) 5,276
7,500 Washington State, Various Purpose, GO, Refunding,
Series R-A, 5% due 1/01/2009 (a) 7,698
West Virginia--0.3%
1,000 West Virginia State Housing Development Fund,
Housing Finance Revenue Bonds, VRDN, AMT,
Series B, 3.67% due 4/09/2007 (b) 999
Wisconsin--4.4%
6,500 Madison, Wisconsin, Metropolitan School District,
TRAN, 4% due 9/07/2007 6,519
6,890 Wisconsin State, Transportation Revenue Bonds,
Series B, 4.50% due 7/01/2009 (a) 7,034
Puerto Rico--2.7%
8,225 Government Development Bank of Puerto Rico, CP,
3.90% due 1/10/2007 8,225
Total Municipal Bonds
(Cost--$298,478)--96.5% 298,734
Shares
Held Short-Term Securities
6,716 Merrill Lynch Institutional Tax-Exempt Fund,
5.19% (i)(j) 6,716
Total Short-Term Securities
(Cost--$6,716)--2.2% 6,716
Total Investments (Cost--$305,194*)--98.7% 305,450
Other Assets Less Liabilities--1.3% 3,900
----------
Net Assets--100.0% $ 309,350
==========
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments (concluded) BlackRock Short-Term Municipal Fund
(In Thousands)
* The cost and unrealized appreciation (depreciation) of investments
as of December 31, 2006, as computed for federal income tax purposes,
were as follows:
Aggregate cost $ 305,194
===============
Gross unrealized appreciation $ 368
Gross unrealized depreciation (112)
---------------
Net unrealized appreciation $ 256
===============
(a) AMBAC Insured.
(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) Prerefunded.
(d) FGIC Insured.
(e) XL Capital Insured.
(f) FSA Insured.
(g) MBIA Insured.
(h) CIFG Insured.
(i) 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 (17,928) $196
(j) Represents the current yield as of December 31, 2006.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments as of December 31, 2006 (In Thousands)
BlackRock Municipal Insured Fund
Face
Amount Municipal Bonds Value
Alabama--2.0%
$10,000 Lauderdale County and Florence, Alabama, Health
Care Authority Revenue Refunding Bonds (Coffee
Health Group), Series A, 6% due 7/01/2029 (b) $ 10,867
7,000 University of Alabama, University Revenue Bonds
(Birmingham), 6% due 10/01/2009 (d)(f) 7,435
Arkansas--0.5%
4,000 University of Arkansas, University Revenue Bonds
(Various Facilities-Fayetteville Campus), 5%
due 12/01/2027 (d) 4,205
California--18.6%
2,075 California State Department of Veteran Affairs, Home
Purpose Revenue Refunding Bonds, Series A, 5.35%
due 12/01/2027 (a) 2,216
3,480 East Side Union High School District, California,
Santa Clara County, GO (Election of 2002), Series D,
5% due 8/01/2022 (i) 3,720
5,170 Fresno, California, Unified School District, GO
(Election of 2001), Series D, 5% due 8/01/2027 (b) 5,522
5,000 Golden State Tobacco Securitization Corporation of
California, Tobacco Settlement Revenue Bonds,
Series B, 5.50% due 6/01/2013 (d)(f) 5,516
5,000 Los Angeles, California, GO, Series A, 5%
due 9/01/2019 (b) 5,263
Los Angeles, California, Unified School District, GO:
24,465 (Election of 1997), Series F, 5% due 1/01/2028 (d) 25,811
21,130 Series A, 5% due 1/01/2028 (b) 22,293
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) 7,183
8,965 Modesto, California, Schools Infrastructure Financing
Agency, Special Tax Bonds, 5.50% due 9/01/2036 (a) 9,833
12,040 Mount Diablo, California, Unified School District, GO
(Election of 2002), 5% due 7/01/2027 (d) 12,688
5,565 Oakland, California, Alameda County Unified School
District, GO (Election of 2006), 5% due 8/01/2024 (c) 5,981
6,440 Palm Springs, California, Financing Authority, Lease
Revenue Refunding Bonds (Convention Center
Project), Series A, 5.50% due 11/01/2035 (b) 7,160
11,685 Rialto, California, Unified School District, GO,
Series A, 6.24% due 6/01/2025 (d)(l) 5,250
5,000 Roseville, California, Joint Union High School District,
GO (Election of 2004), Series A, 5% due 8/01/2029 (d) 5,284
5,075 Sacramento, California, Unified School District, GO
(Election of 1999), Series B, 5% due 7/01/2026 (d) 5,329
2,685 San Diego, California, Community College District,
GO (Election of 2002), 5% due 5/01/2030 (c) 2,850
3,495 San Diego County, California, COP (Edgemoor
Project and Regional System), Refunding, 5%
due 2/01/2027 (a) 3,678
3,700 San Jose, California, GO (Libraries, Parks and Public
Safety Projects), 5% due 9/01/2030 (b) 3,895
10,055 Sequoia, California, Unified High School District, GO,
Refunding, Series B, 5.50% due 7/01/2035 (c) 11,280
2,755 Tahoe Truckee, California, Unified School District, GO
(School Facilities Improvement District Number 2),
Series A, 5.25% due 8/01/2029 (b) 2,946
Face
Amount Municipal Bonds Value
California (concluded)
Tustin, California, Unified School District, Senior Lien
Special Tax Bonds (Community Facilities District
Number 97-1), Series A (c):
$ 7,980 5% due 9/01/2032 $ 8,311
9,330 5% due 9/01/2038 9,698
Colorado--2.7%
19,250 Aurora, Colorado, COP, 6% due 12/01/2010 (a)(f) 20,845
4,000 Logan County, Colorado, Justice Center Finance
Corporation, COP, 5.50% due 12/01/2020 (b) 4,293
Florida--0.8%
5,500 Dade County, Florida, Water and Sewer System
Revenue Bonds, 5.25% due 10/01/2026 (d) 5,608
1,600 West Coast Regional Water Supply Authority, Florida,
Capital Improvement Revenue Bonds, 10.40%
due 10/01/2010 (a)(f) 1,752
Georgia--4.0%
Georgia Municipal Electric Authority, Power Revenue
Refunding Bonds (a):
20,000 Series EE, 7% due 1/01/2025 27,210
90 Series Y, 6.40% due 1/01/2011 (f) 99
490 Series Y, 6.40% due 1/01/2013 (h) 547
8,420 Series Y, 6.40% due 1/01/2013 9,348
Illinois--0.8%
6,600 Chicago, Illinois, O'Hare International Airport,
Revenue Refunding Bonds, Third Lien, AMT, Series C-2,
5.25% due 1/01/2034 (i) 6,955
Kansas--0.6%
5,145 Manhattan, Kansas, Hospital Revenue Bonds (Mercy
Health Center), 5.50% due 8/15/2020 (c) 5,488
Louisiana--2.2%
2,500 Louisiana State Citizens Property Insurance
Corporation, Assessment Revenue Bonds, Series B,
5% due 6/01/2022 (a) 2,672
5,750 Louisiana State, Gas and Fuels Tax Revenue Bonds,
Series A, 4.75% due 5/01/2039 (c) 5,894
5,000 New Orleans, Louisiana, GO (Public Improvements),
5.25% due 12/01/2029 (a) 5,361
6,800 Rapides Financing Authority, Louisiana, Revenue
Bonds (Cleco Power LLC Project), AMT, 4.70%
due 11/01/2036 (a) 6,757
Maryland--0.6%
4,400 Maryland State Health and Higher Educational
Facilities Authority Revenue Bonds (University
of Maryland Medical System), Series B, 7%
due 7/01/2022 (d) 5,776
Massachusetts--4.8%
4,000 Massachusetts State HFA, Rental Housing
Mortgage Revenue Bonds, AMT, Series C, 5.60%
due 1/01/2045 (c) 4,266
15,000 Massachusetts State School Building Authority,
Dedicated Sales Tax Revenue Bonds, Series A, 5%
due 8/15/2030 (c) 15,938
22,250 Massachusetts State Special Obligation Dedicated
Tax Revenue Bonds, 5.25% due 1/01/2014 (d)(f) 24,347
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments (continued) (In Thousands)
BlackRock Municipal Insured Fund
Face
Amount Municipal Bonds Value
Minnesota--1.6%
$ 5,860 Delano, Minnesota, Independent School District
Number 879, GO, Series A, 5.875%
due 2/01/2025 (c) $ 6,335
Sauk Rapids, Minnesota, Independent School
District Number 047, GO, Series A (b):
3,735 5.65% due 2/01/2020 4,006
4,440 5.70% due 2/01/2021 4,771
Mississippi--1.4%
1,320 Harrison County, Mississippi, Wastewater
Management District, Revenue Refunding Bonds
(Wastewater Treatment Facilities), Series A, 8.50%
due 2/01/2013 (d)(h) 1,657
10,000 Mississippi Hospital Equipment and Facilities
Authority Revenue Bonds (Forrest County General
Hospital Project), 6% due 1/01/2030 (c) 10,788
Missouri--2.4%
Kansas City, Missouri, Airport Revenue Refunding and
Improvement Bonds, Series A (b):
12,990 5.50% due 9/01/2013 13,334
9,000 5.50% due 9/01/2014 9,238
Nevada--1.4%
1,300 Clark County, Nevada, IDR (Southwest Gas Corp.
Project), AMT, Series A, 4.75% due 9/01/2036 (d) 1,308
10,690 Clark County, Nevada, School District, GO, Series D,
5% due 6/15/2017 (b) 11,496
New Jersey--9.5%
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) 8,838
Garden State Preservation Trust of New Jersey, Open
Space and Farmland Preservation Revenue Bonds,
Series A (c):
3,125 5.80% due 11/01/2021 3,595
8,310 5.80% due 11/01/2022 9,564
4,340 5.80% due 11/01/2023 4,995
New Jersey EDA, Motor Vehicle Surcharge Revenue
Bonds, Series A (b):
5,000 5% due 7/01/2027 5,278
23,000 5.25% due 7/01/2033 24,740
New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds, Series D:
4,240 5% due 6/15/2018 (a) 4,562
11,530 5% due 6/15/2019 (c) 12,381
13,500 New Jersey State Turnpike Authority, Turnpike
Revenue Bonds, Series C, 5% due 1/01/2030 (c) 14,284
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) 11,274
New York--15.0%
4,200 Hudson Yards Infrastructure Corporation, New York,
Revenue Bonds, Series A, 5% due 2/15/2047 (d) 4,467
New York City, New York, GO:
11,495 Series C, 5.625% due 3/15/2012 (f)(i) 12,586
5 Series C, 5.625% due 3/15/2018 (i) 6
10,000 Series E, 5% due 11/01/2017 (c) 10,778
18,000 Series I, 6% due 4/15/2012 (c) 18,296
Face
Amount Municipal Bonds Value
New York (concluded)
New York City, New York, Sales Tax Asset Receivable
Corporation Revenue Bonds:
$ 2 DRIVERS, Series 1133Z, 6.289%
due 10/15/2012 (a)(j) $ 2
16,905 Series A, 5% due 10/15/2020 (b) 18,120
15,650 Series A, 5% due 10/15/2032 (a) 16,581
11,795 New York State Dormitory Authority Revenue Bonds
(School Districts Financing Program), Series D, 5.25%
due 10/01/2023 (b) 12,677
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) 9,785
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) 24,091
10,755 Series C-1, 5.50% due 6/01/2020 (d) 11,705
North Carolina--0.3%
3,030 North Carolina HFA, Home Ownership Revenue
Bonds, AMT, Series 14-A, 5.35% due 1/01/2022 (a) 3,131
North Dakota--0.3%
2,740 North Dakota State HFA, Revenue Bonds (Housing
Finance Program), Series C, 5.30% due 7/01/2022 (a) 2,820
Ohio--0.9%
8,000 Ohio State Air Quality, Development Authority
Revenue Bonds (Dayton Power and Light Company
Project), 4.80% due 9/01/2036 (d) 8,121
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 (f) 2,882
3,705 6.25% due 8/15/2016 3,958
Oregon--1.5%
8,700 Oregon State Department, Administrative Services,
COP, Series A, 6.25% due 5/01/2010 (a)(f) 9,479
3,865 Port of Portland, Oregon, Airport Revenue Refunding
Bonds (Portland International Airport), AMT,
Series 7-B, 7.10% due 1/01/2012 (b)(f) 4,413
Pennsylvania--2.7%
5,765 Philadelphia, Pennsylvania, Gas Works Revenue
Bonds, 12th Series B, 7% due 5/15/2020 (b)(h) 6,886
4,420 Philadelphia, Pennsylvania, Redevelopment Authority
Revenue Bonds (Neighborhood Transformation),
Series A, 5.50% due 4/15/2020 (d) 4,766
12,010 Pittsburgh, Pennsylvania, GO, Series C, 5.25%
due 9/01/2018 (c) 13,268
Rhode Island--0.8%
6,815 Rhode Island State Economic Development
Corporation, Airport Revenue Bonds, Series B, 6%
due 7/01/2010 (d)(f) 7,395
Texas--3.7%
21,230 Dallas-Fort Worth, Texas, International Airport Joint
Revenue Refunding and Improvement Bonds, AMT,
Series A, 5% due 11/01/2025 (b) 21,594
3,500 Houston, Texas, Water Conveyance System Contract,
COP, Series J, 6.25% due 12/15/2013 (a) 4,000
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments (continued) (In Thousands)
BlackRock Municipal Insured Fund
Face
Amount Municipal Bonds Value
Texas (concluded)
$ 8,110 Lewisville, Texas, Independent School District, Capital
Appreciation and School Building, GO, Refunding,
4.67% due 8/15/2024 (d)(l) $ 3,584
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 2,166
2,725 5.50% due 3/01/2026 2,833
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 (c)(f) 9,788
Utah Water Finance Agency Revenue Bonds (Pooled
Loan Financing Program), Series A (a):
2,515 5.75% due 10/01/2015 2,690
3,770 6% due 10/01/2020 4,062
Virginia--0.2%
2,200 Virginia Port Authority, Port Facilities Revenue Bonds,
AMT, 4.75% due 7/01/2031 (d) 2,222
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) 7,715
West Virginia--1.4%
12,250 Pleasants County, West Virginia, PCR, Refunding
(Potomac-Pleasants), Series C, 6.15%
due 5/01/2015 (a) 12,466
Wisconsin--1.4%
9,000 Superior, Wisconsin, Limited Obligation Revenue
Refunding Bonds (Midwest Energy Resources),
Series E, 6.90% due 8/01/2021 (d) 11,739
670 Wisconsin State, GO, AMT, Series B, 6.50%
due 5/01/2025 (b) 672
Total Municipal Bonds
(Cost--$757,436)--86.6% 801,563
Municipal Bonds Held in Trust (m)
California--3.8%
21,360 California Pollution Control Financing Authority,
PCR, Refunding (Pacific Gas and Electric), AMT,
Series A, 5.35% due 12/01/2016 (b) 22,909
5,000 California State, Veterans, GO, Refunding, AMT,
Series BZ, 5.35% due 12/01/2021 (b) 5,117
7,500 San Jose, California, Financing Authority, Lease
Revenue Refunding Bonds (Civic Center Project),
Series B, 5% due 6/01/2032 (a) 7,599
Face
Amount Municipal Bonds Held in Trust (m) Value
Maryland--2.5%
$21,640 Baltimore, Maryland, Convention Center Hotel Revenue
Bonds, Senior Series A, 5.25% due 9/01/2039 (i) $ 23,519
Michigan--1.5%
13,145 Michigan State Strategic Fund, Limited Obligation
Revenue Refunding Bonds (Detroit Edison Company
Pollution Control Project), AMT, Series A, 5.50%,
due 6/01/2030 (i) 14,195
Illinois--2.2%
17,690 Chicago, Illinois, O'Hare International Airport
Revenue Bonds, Third Lien, AMT, Series B-2, 6%
due 1/01/2027 (b) 19,831
New York--1.6%
13,925 New York City, New York, Sales Tax Asset Receivable
Corporation Revenue Bonds, Series A, 5.25%
due 10/15/2027 (a) 15,119
Texas--8.1%
35,950 Dallas-Fort Worth, Texas, International Airport Revenue
Bonds, AMT, Series A, 6% due 11/01/2028 (d) 37,928
35,050 Harris County, Texas, Toll Road Revenue Refunding
Bonds, Senior Lien, Series A, 5.25% due 8/15/2035 (c) 36,657
Total Municipal Bonds Held in Trust
(Cost--$178,282)--19.7% 182,874
Shares
Held Mutual Funds (k)
300 BlackRock California Insured Municipal 2008
Term Trust, Inc. 4,602
810 BlackRock Insured Municipal 2008 Term Trust, Inc. 12,579
205 BlackRock Insured Municipal Term Trust, Inc. 2,001
Total Mutual Funds
(Cost--$21,127)--2.1% 19,182
Short-Term Securities
4,850 Merrill Lynch Institutional Tax-Exempt Fund,
5.19% (g)(k) 4,850
Total Short-Term Securities
(Cost--$4,850)--0.5% 4,850
Total Investments (Cost--$961,695*)--108.9% 1,008,469
Other Assets Less Liabilities--1.1% 10,361
Liability for Trust Certificates, Including Interest
Expense Payable--(10.0%) (93,152)
----------
Net Assets--100.0% $ 925,678
==========
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments (concluded) (In Thousands)
BlackRock Municipal Insured Fund
* The cost and unrealized appreciation (depreciation) of investments
as of December 31, 2006, as computed for federal income tax purposes,
were as follows:
Aggregate cost $ 873,860
===============
Gross unrealized appreciation $ 44,354
Gross unrealized depreciation (2,308)
---------------
Net unrealized appreciation $ 42,046
===============
(a) AMBAC Insured.
(b) MBIA Insured.
(c) FSA Insured.
(d) FGIC Insured.
(e) FNMA/GNMA Collateralized.
(f) Prerefunded.
(g) Represents the current yield as of December 31, 2006.
(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
BlackRock California Insured Municipal 2008
Term Trust, Inc. -- $116
BlackRock Insured Municipal 2008 Term Trust, Inc. -- 322
BlackRock Insured Municipal Term Trust, Inc. -- 38
Merrill Lynch Institutional Tax-Exempt Fund 3,120 144
(l) Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(m) Securities represent underlying bonds transferred to a separate
securitization trust established in a tender option bond transaction in
which the Fund may have acquired the residual interest certificates. These
securities serve as collateral in a financing transaction. See Note 1(c)
to Financial Statements for details of Municipal Bonds Held in Trust.
o Forward interest rate swaps outstanding as of December 31, 2006
were as follows:
Notional Unrealized
Amount Appreciation
Receive a fixed rate of 3.547% and pay a
floating rate based on 3-month LIBOR
Broker, JPMorgan Chase
Expires March 2017 $47,300,000 $629,894
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments as of December 31, 2006 (In Thousands)
BlackRock National Municipal Fund
Face
Amount Municipal Bonds Value
Alabama--0.9%
$ 3,820 Alabama Incentives Financing Authority, Special
Obligation Revenue Refunding Bonds, Series A, 6%
due 10/01/2029 (c) $ 4,112
3,525 Jefferson County, Alabama, Public Building Authority,
Lease Revenue Bonds, 5.125% due 4/01/2021 (c) 3,807
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 2,688
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 3,484
Alaska--0.3%
1,150 Alaska State Housing Financial Corporation, General
Mortgage Revenue Refunding, Series A, 6%
due 6/01/2027 (f) 1,169
3860 Anchorage, Alaska, School, GO, Series B, 5.875%
due 12/01/2010 (e)(j) 4,169
Arizona--3.0%
4,000 Arizona Health Facilities Authority Revenue Bonds
(Catholic Healthcare West), Series A, 6.625%
due 7/01/2020 4,407
Maricopa County, Arizona, Hospital Revenue
Refunding Bonds (Sun Health Corporation):
730 6.125% due 4/01/2007 (j) 749
270 6.125% due 4/01/2018 277
3,100 Maricopa County, Arizona, IDA, Education Revenue
Bonds (Arizona Charter Schools Project 1), Series A,
6.75% due 7/01/2029 3,158
1,625 Maricopa County, Arizona, IDA, Health Facilities
Revenue Refunding Bonds (Catholic Healthcare West
Project), Series A, 5% due 7/01/2021 1,651
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 1,023
Peoria, Arizona, Improvement District Number 8401,
Special Assessment Bonds Number 8802:
430 7.20% due 1/01/2010 441
510 7.20% due 1/01/2013 523
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
5,000 Phoenix and Pima County, Arizona, IDA,
S/F Mortgage Revenue Bonds, AMT, Series 3-A,
5.25% due 8/01/2038 (i)(l) 5,220
2,330 Phoenix, Arizona, Civic Improvement Corporation,
Municipal Facilities, Excise Tax Revenue Bonds,
5.75% due 7/01/2016 (e) 2,505
3,685 Phoenix, Arizona, IDA, Airport Facility, Revenue
Refunding Bonds (America West Airlines Inc. Project),
AMT, 6.30% due 4/01/2023 3,761
Face
Amount Municipal Bonds Value
Arizona (concluded)
$ 500 Pinal County, Arizona, IDA, Wastewater Revenue
Bonds (San Manuel Facilities Project), AMT, 6.25%
due 6/01/2026 $ 552
391 Prescott Valley, Arizona, Improvement District, Special
Assessment Bonds (Sewer Collection System
Roadway Repair), 7.90% due 1/01/2012 405
1,500 Queen Creek Improvement District Number 001,
Arizona, Special Assessment Bonds, 5%
due 1/01/2032 1,528
6,000 Salt River Project, Arizona, Agriculture Improvement
and Power District, Electric System Revenue
Refunding Bonds, Series A, 5.125% due 1/01/2023 6,370
3,515 Tucson, Arizona, IDA, Senior Living Facilities Revenue
Bonds (Christian Care Tucson Inc. Project), Series A,
6.125% due 7/01/2010 (j)(m) 3,822
3,180 University of Arizona, COP, Refunding, Series A,
5.50% due 6/01/2018 (c) 3,434
1,000 University of Arizona, COP (University of
Arizona Parking and Student Housing), 5.75%
due 6/01/2009 (c)(j) 1,050
Vistancia Community Facilities District, Arizona, GO:
3,000 6.75% due 7/15/2022 3,339
2,125 5.75% due 7/15/2024 2,304
Arkansas--0.1%
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 259
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 259
500 Pine Bluff, Arkansas, Environmental Improvement
Revenue Refunding Bonds (International Paper
Company Project), AMT, Series A, 6.70%
due 8/01/2020 537
250 University of Central Arkansas, Housing System
Revenue Bonds, 6.50% due 1/01/2010 (h)(j) 274
California--13.2%
2,500 Agua Caliente Band of Cahuilla Indians, California,
Casino Revenue Bonds, 6% due 7/01/2018 2,713
23,000 Bay Area Toll Authority, California, Toll Bridge
Revenue Refunding Bonds (San Francisco Bay Area),
Series F, 5% due 4/01/2031 24,525
5,000 California Pollution Control Financing Authority,
Solid Waste Disposal Revenue Refunding Bonds
(Waste Management Inc. Project), AMT, Series A,
5% due 1/01/2022 5,215
35 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) 35
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments (continued) (In Thousands)
BlackRock National Municipal Fund
Face
Amount Municipal Bonds Value
California (continued)
$ 75 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) $ 76
5,000 California State, GO, 5.25% due 4/01/2029 5,361
130 California State, GO, Refunding, 5.75%
due 5/01/2030 139
California State, Various Purpose, GO:
10,000 5.25% due 11/01/2027 10,698
14,100 5.50% due 11/01/2033 15,442
9,880 California Statewide Communities Development
Authority, Health Facility Revenue Bonds (Memorial
Health Services), Series A, 6% due 10/01/2023 10,969
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 1,158
2,965 6.15% due 9/01/2026 3,170
10,000 Chula Vista, California, IDR, Refunding (San
Diego Gas & Electric Co.), AMT, Series C, 5.25%
due 12/01/2027 10,675
Contra Costa County, California, Special Tax Bonds
(Community Facilities District Number 2001-01):
1,585 6% due 9/01/2026 1,683
1,200 6.10% due 9/01/2031 1,277
3,100 Elk Grove, California, Poppy Ridge Community
Facilities Number 3 Special Tax, Series 1, 6%
due 9/01/2008 (j) 3,237
10,000 Fremont, California, Unified School District, Alameda
County, GO (Election of 2002), Series B, 5%
due 8/01/2028 (h) 10,623
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) 13,527
2,740 Pomona, California, Public Financing Authority,
Revenue Refunding Bonds (Merged Redevelopment
Project), Series A1, 5.75% due 2/01/2034 2,880
1,100 Poway, California, Unified School District, Special Tax
Bonds (Community District Number 6), Series A, 6.05%
due 9/01/2025 1,154
2,695 Riverside, California, Improvement Bond Act of 1915,
Special Assessment (Riverwalk Assessment District),
6.375% due 9/02/2026 2,906
3,915 Roseville, California, Special Tax Bonds (Fiddyment
Ranch Community Facilities Number 1), 5.125%
due 9/01/2026 3,967
Roseville, California, Special Tax (Stoneridge
Community Facilities Number 1):
1,250 6.20% due 9/01/2021 1,344
1,125 6% due 9/01/2025 1,195
2,500 6.30% due 9/01/2031 2,707
Sacramento, California, Special Tax (North Natomas
Community Facilities):
2,200 Series 01-03, 6% due 9/01/2028 2,316
2,270 Series 4-C, 6% due 9/01/2028 2,426
30,075 Sacramento County, California, Sanitation District
Financing Authority, Revenue Bonds, Series A, 5%
due 12/01/2035 (c) 31,848
10,000 San Diego, California, Public Facilities Financing
Authority, Subordinated Water Revenue Refunding
Bonds, 5% due 8/01/2032 (f) 10,410
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 $ 5,233
2,500 GO, Series A, 6% due 8/01/2025 2,615
1,075 San Francisco, California, Uptown Parking
Corporation, Parking Revenue Bonds (Union Square),
6% due 7/01/2020 (f) 1,189
5,460 San Mateo County, California, Community College
District, GO (Election of 2001), Series C, 5%
due 3/01/2031 5,806
Santa Margarita, California, Water District, Special
Tax Refunding Bonds (Community Facilities District
Number 99), Series 1:
3,680 6.20% due 9/01/2020 3,926
2,970 6.25% due 9/01/2029 3,164
Colorado--2.6%
5,000 Arkansas River Power Authority, Colorado,
Power Improvement Revenue Bonds, 5.25%
due 10/01/2032 (k) 5,433
500 Boulder County, Colorado, Hospital Development
Revenue Bonds (Longmont United Hospital Project),
6% due 12/01/2010 (j)(m) 541
390 Colorado HFA, Revenue Bonds (S/F Program),
Series B-3, 6.55% due 10/01/2016 394
4,000 Colorado HFA, Revenue Refunding Bonds (Adventist
Health System/Sunbelt Obligor Group), Series D,
5.25% due 11/15/2035 4,247
Colorado HFA, Revenue Refunding Bonds
(S/F Program):
330 AMT, Senior Series A-2, 7.50% due 4/01/2031 336
125 AMT, Senior Series B-2, 7.10% due 4/01/2017 129
855 AMT, Senior Series B-2, 7.25% due 10/01/2031 865
35 AMT, Senior Series B-3, 6.80% due 11/01/2028 35
350 AMT, Senior Series C-2, 7.25%
due 10/01/2031 (b) 363
115 Senior Series A-3, 7.35% due 10/01/2030 118
525 Senior Series C-3, 6.75% due 10/01/2021 (b) 545
125 Senior Series C-3, 7.15% due 10/01/2030 (b) 127
Colorado Health Facilities Authority Revenue
Refunding Bonds:
2,500 (Catholic Health Initiatives), 5.50%
due 9/01/2011 (j) 2,689
1,000 (Christian Living Communities Project), Series A,
5.75% due 1/01/2037 1,049
550 Colorado Water Resource and Power Development
Authority, Small Water Resources Revenue Bonds,
Series A, 5.80% due 11/01/2010 (e)(j) 590
Elk Valley, Colorado, Public Improvement Revenue
Bonds (Public Improvement Fee):
7,560 Series A, 7.35% due 9/01/2031 8,023
1,100 Series B, 7.45% due 9/01/2031 1,171
3,685 Larimer County, Colorado, Poudre School District
Number R-1, GO, 6% due 12/15/2010 (e)(j) 4,000
Plaza Metropolitan District Number 1, Colorado, Tax
Allocation Revenue Bonds (Public Improvement Fees):
7,700 8% due 12/01/2025 8,539
1,910 8.125% due 12/01/2025 1,925
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments (continued) (In Thousands)
BlackRock National Municipal Fund
Face
Amount Municipal Bonds Value
Connecticut--1.1%
$ 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) 1,282
960 Connecticut State HFA, Revenue Refunding Bonds
(Housing Mortgage Finance Program), Series C-1,
6.30% due 11/15/2017 984
Connecticut State Health and Educational Facilities
Authority Revenue Bonds:
1,000 (Bridgeport Hospital), Series A, 6.625%
due 7/01/2018 (f) 1,002
1,500 (Waterbury Hospital Issue), Series C, 5.75%
due 7/01/2020 (m) 1,577
1,000 (Westover School), Series A, 5.70%
due 7/01/2030 (m) 1,063
Connecticut State Health and Educational Facilities
Authority, Revenue Refunding Bonds (m):
2 DRIVERS, Series 215, 8.779% due 6/01/2030 (n) 2
1,885 (Eastern Connecticut Health Network), Series A,
6.50% due 7/01/2010 (j) 2,073
115 (Eastern Connecticut Health Network), Series A,
6.50% due 7/01/2030 126
640 (Sacred Heart University), 6.625% due 7/01/2026 654
5,710 (University of Hartford), Series E, 5.50%
due 7/01/2022 6,196
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) 910
Delaware--0.1%
1,685 New Castle County, Delaware, PCR (General Motors
Corporation Project), VRDN, 7% due 10/01/2008 (g) 1,685
Florida--9.2%
2,000 Anthem Park Community Development District,
Florida, Capital Improvement Revenue Bonds, 5.80%
due 5/01/2036 2,085
2,000 Ave Maria Stewardship Community District, Florida,
Capital Improvement Revenue Bonds, Series A,
5.125% due 5/01/2038 1,980
1,500 Ave Maria Stewardship Community District, Florida,
Revenue Bonds, 4.80% due 11/01/2012 1,495
1,670 Ballantrae, Florida, Community Development
District, Capital Improvement Revenue Bonds, 6%
due 5/01/2035 1,762
5,000 Bartram Springs Community Development District,
Florida, Special Assessment Refunding Bonds, 4.75%
due 5/01/2034 4,947
4,440 Baywinds Community Development District, Florida,
Special Assessment Bonds, Series B, 4.90%
due 5/01/2012 4,419
1,825 Beacon Tradeport Community, Florida, Development
District, Special Assessment Revenue Refunding
Bonds (Commercial Project), Series A, 5.25%
due 5/01/2016 (m) 1,958
4,000 Broward County, Florida, Airport System Revenue
Refunding Bonds, AMT, Series E, 5.25%
due 10/01/2012 (f) 4,140
Face
Amount Municipal Bonds Value
Florida (continued)
$ 2,500 CFM Community Development District, Florida,
Capital Improvement Revenue Bonds, Series B,
5.875% due 5/01/2014 $ 2,600
2,725 Duval County, Florida, School Board, COP, 5.75%
due 7/01/2017 (h) 2,857
East Homestead Community Development District,
Florida, Special Assessment Revenue Bonds:
1,000 5.375% due 5/01/2036 1,010
1,500 5.45% due 5/01/2036 1,518
1,500 Series B, 5% due 5/01/2011 1,514
Fiddlers Creek, Florida, Community Development
District Number 2, Special Assessment Revenue Bonds:
5,350 Series A, 6.375% due 5/01/2035 5,733
1,050 Series B, 5.75% due 5/01/2013 1,095
2,000 Greater Lakes/Sawgrass Bay Community Development
District, Florida, Special Assessment Bonds, Series A,
5.50% due 5/01/2038 2,039
7,000 Halifax Hospital Medical Center, Florida, Hospital
Revenue Refunding and Improvement Bonds,
Series A, 5.25% due 6/01/2026 7,388
1,145 Highland Meadows Community Development District,
Florida, Special Assessment Bonds, Series A, 5.50%
due 5/01/2036 1,165
21,000 Highlands County, Florida, Health Facilities Authority,
Hospital Revenue Refunding Bonds (Adventist Health
System), Series G, 5.125% due 11/15/2032 22,053
5,000 Hillsborough County, Florida, IDA, Exempt Facilities
Revenue Bonds (National Gypsum Company), AMT,
Series A, 7.125% due 4/01/2030 5,488
1,200 Lexington Oaks, Florida, Community Development
District, Special Assessment Revenue Bonds, Series A,
6.70% due 5/01/2033 1,301
1,030 Mediterra, Florida, South Community Development
District, Capital Improvement Revenue Bonds, 6.85%
due 5/01/2031 1,107
2,500 Middle Village Community Development District,
Florida, Special Assessment Bonds, Series A, 6%
due 5/01/2035 2,622
6,625 Midtown Miami, Florida, Community Development
District, Special Assessment Revenue Bonds, Series A,
6.25% due 5/01/2037 7,204
1,000 New River Community Development District, Florida,
Capital Improvement Revenue Bonds, Series B, 5%
due 5/01/2013 993
1,825 Old Palm Community Development District, Florida,
Special Assessment Bonds (Palm Beach Gardens),
Series B, 5.375% due 5/01/2014 1,881
3,500 Orange County, Florida, HFA, M/F Housing Revenue
Bonds (Loma Vista Project), Series G, 5.50%
due 3/01/2032 3,599
1,000 Orange County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Orlando Regional
Healthcare), 5.70% due 7/01/2026 1,033
Panther Trace Community Development District II,
Florida, Special Assessment Revenue Bonds:
5,000 5.125% due 11/01/2013 5,050
5,000 Series A, 5.60% due 5/01/2035 5,120
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments (continued) (In Thousands)
BlackRock National Municipal Fund
Face
Amount Municipal Bonds Value
Florida (concluded)
$10,000 Orlando, Florida, Greater Orlando Aviation Authority,
Airport Facilities Revenue Bonds, AMT, Series A,
5.25% due 10/01/2018 (e) $ 10,415
Park Place Community Development District, Florida,
Special Assessment Revenue Bonds:
1,000 6.75% due 5/01/2032 1,069
2,400 6.375% due 5/01/2034 2,566
2,000 Saint Lucie, Florida, West Services District, Utility
Revenue Refunding Bonds, Senior Lien, 6%
due 10/01/2022 (f) 2,191
2,875 Somerset Community Development District,
Florida, Capital Improvement Revenue Bonds, 5%
due 5/01/2015 2,918
430 Sterling Hill, Florida, Community Development District,
Capital Improvement Revenue Refunding Bonds,
Series B, 5.50% due 11/01/2010 431
380 Stoneybrook West, Florida, Community Development
District, Special Assessment Revenue Bonds, Series B,
6.45% due 5/01/2010 383
1,190 Tern Bay Community Development District, Florida,
Capital Improvement Revenue Refunding Bonds,
Series B, 5% due 5/01/2015 1,207
2,185 Tuscany Reserve Community Development District,
Florida, Capital Improvement Revenue Bonds,
Series B, 5.25% due 5/01/2016 2,253
3,520 University of South Florida Financing Corporation,
COP (Master Lease Program), Refunding, Series A,
5.375% due 7/01/2022 (c) 3,858
2,060 Watergrass Community Development District, Florida,
Special Assessment Revenue Bonds, Series B, 4.875%
due 11/01/2010 2,056
6,000 West Villages Improvement District, Florida, Special
Assessment Revenue Refunding Bonds (Unit of
Development Number 2), 5.80% due 5/01/2036 6,259
Georgia--1.8%
5,000 Atlanta, Georgia, Tax Allocation Bonds (Atlantic
Station Project), 7.90% due 12/01/2024 5,548
Brunswick and Glynn County, Georgia, Development
Authority, First Mortgage Revenue Bonds (Coastal
Community Retirement Corporation Project), Series A:
2,285 7.125% due 1/01/2025 2,267
4,555 7.25% due 1/01/2035 4,539
5,210 College Park, Georgia, Business and IDA
Revenue Bonds (Civic Center Project), 5.75%
due 9/01/2010 (c)(j) 5,666
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) 3,742
2,250 Fulton County, Georgia, Residential Care Facilities,
Revenue Refunding Bonds (Canterbury Court Project),
Series A, 6% due 2/15/2022 2,289
1,500 Milledgeville-Baldwin County, Georgia, Development
Authority Revenue Bonds (Georgia College and State
University Foundation), 6% due 9/01/2033 1,650
Face
Amount Municipal Bonds Value
Illinois--7.5%
$ 1,000 Bolingbrook, Illinois, Special Services Area Number 1,
Special Tax Bonds (Forest City Project), 5.90%
due 9/01/2007 (p) $ 1,021
2 Chicago, Illinois, Board of Education, GO, DRIVERS,
Series 199, 7.251% due 12/01/2020 (c)(n) 2
26,800 Chicago, Illinois, O'Hare International Airport
Revenue Bonds, Third Lien, AMT, Series B-2, 6%
due 1/01/2029 (k) 30,064
6,915 Chicago, Illinois, O'Hare International Airport, Special
Facility Revenue Refunding Bonds (American Airlines
Inc. Project), 8.20% due 12/01/2024 7,124
350 Chicago, Illinois, Park District, GO, Refunding,
Series B, 5.75% due 1/01/2015 (e) 376
230 Chicago, Illinois, Park District, Limited Tax, GO,
Series A, 5.75% due 1/01/2016 (e) 247
365 Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT,
Series A, 7.15% due 9/01/2031 (i)(l) 375
2,000 Chicago, Illinois, Special Assessment Bonds (Lake
Shore East), 6.75% due 12/01/2032 2,169
3,210 Cicero, Illinois, GO, Refunding (Corporate Purpose),
6% due 12/01/2028 (f) 3,464
7,000 Decatur, Illinois, GO, Refunding, 6%
due 3/01/2008 (e)(j) 7,195
10,000 Hodgkins, Illinois, Environmental Improvement
Revenue Bonds (Metro Biosolids Management LLC
Project), AMT, 6% due 11/01/2023 10,415
3,140 Illinois Development Finance Authority Revenue
Bonds (Community Rehabilitation Providers Facilities),
Series A, 6.50% due 7/01/2022 3,421
Illinois State Finance Authority Revenue Bonds, Series A:
1,750 (Friendship Village of Schaumburg), 5.625%
due 2/15/2037 1,806
2,155 (Landing At Plymouth Place Project), 6%
due 5/15/2037 2,296
Illinois State, GO, 1st Series (f):
8,890 5.75% due 12/01/2015 9,533
3,745 5.75% due 12/01/2016 4,019
4,000 5.75% due 12/01/2017 4,285
3,000 Illinois State, Sales Tax Revenue Bonds, 6%
due 6/15/2020 3,211
3,000 Illinois State, Sales Tax Revenue Refunding Bonds,
Series Q, 6% due 6/15/2009 3,079
2,000 Lake County, Illinois, Forest Preservation District,
GO (Land Acquisition and Development), 5.75%
due 12/15/2016 2,150
16,160 Metropolitan Pier and Exposition Authority, Illinois,
Dedicated State Tax Revenue Bonds (McCormick
Place Expansion), Series A, 5.25% due 6/15/2042 (f) 17,288
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 1,613
Iowa--0.4%
1,000 Iowa City, Iowa, Sewer Revenue Bonds, 5.75%
due 7/01/2021 (f) 1,002
4,000 Iowa Finance Authority, Health Care Facilities,
Revenue Refunding Bonds (Care Initiatives Project),
9.25% due 7/01/2011 (j) 4,924
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments (continued) (In Thousands)
BlackRock National Municipal Fund
Face
Amount Municipal Bonds Value
Kansas--0.8%
$ 7,000 Sedgwick and Shawnee Counties, Kansas, S/F
Mortgage Revenue Bonds (Mortgage-Backed
Securities Program), AMT, Series B-2, 5.25%
due 12/01/2038 (i)(l) $ 7,396
1,555 Sedgwick and Shawnee Counties, Kansas, S/F
Revenue Bonds, AMT, Series A-1, 6.95%
due 6/01/2029 (d) 1,595
2,500 Wichita, Kansas, Hospital Facilities Revenue
Refunding and Improvement Bonds, Series III, 6.25%
due 11/15/2019 2,742
Louisiana--1.3%
400 Louisiana HFA, S/F Mortgage Revenue Bonds, AMT,
Series D-2, 5.80% due 6/01/2020 (i) 402
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) 11,332
5,000 Louisiana Public Facilities Authority Revenue Bonds
(University of New Orleans Research and Technology
Foundation, Inc.--Student Housing Project),
5.25% due 3/01/2037 (f) 5,426
610 Louisiana State, HFA, Single Family Revenue
Refunding Bonds (Home Ownership Program),
Series B-2, AMT, 6.20% due 12/01/2029 (b)(i) 615
2,000 Rapides Finance Authority, Louisiana, Environmental
Improvement Revenue Bonds (International
Paper Company Project), AMT, Series A, 6.55%
due 11/15/2023 2,130
Maine--0.6%
8,635 Maine Finance Authority, Solid Waste Recycling
Facilities Revenue Bonds (Great Northern Paper
Project-Bowater), AMT, 7.75% due 10/01/2022 8,705
Maryland--0.4%
500 Anne Arundel County, Maryland, Special Obligation
Revenue Bonds (Arundel Mills Project), 7.10%
due 7/01/2009 (j) 549
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 1,041
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 1,050
1,000 Maryland State Energy Financing Administration,
Solid Waste Disposal Revenue Bonds, Limited
Obligation (Wheelabrator Water Projects), AMT,
6.45% due 12/01/2016 1,022
3,200 Maryland State Health and Higher Educational
Facilities Authority Revenue Bonds (King Farm
Presbyterian Community), Series B, 5%
due 1/01/2017 3,202
Massachusetts--0.5%
275 Massachusetts Educational Financing Authority,
Education Loan Revenue Refunding Bonds, AMT,
Issue E, 5.85% due 7/01/2014 (c) 277
4,450 Massachusetts State Health and Educational
Facilities Authority Revenue Bonds (Medical Center
of Central Massachusetts), CARS, Series B, 9.717%
due 6/23/2022 (c)(n) 4,743
Face
Amount Municipal Bonds Value
Massachusetts (concluded)
$ 1,000 Massachusetts State Industrial Finance Agency,
Higher Education Revenue Refunding Bonds
(Hampshire College Project), 5.625%
due 10/01/2007 (j) $ 1,034
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) 1,716
Michigan--1.5%
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) 8,423
500 Dickinson County, Michigan, Economic Development
Corporation, Environmental Improvement Revenue
Refunding Bonds (International Paper Company
Project), Series A, 5.75% due 6/01/2016 535
Eastern Michigan University, General Revenue
Refunding Bonds (c):
585 6% due 6/01/2010 (j) 634
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 3,158
3,325 Macomb County, Michigan, Hospital Finance
Authority, Hospital Revenue Bonds (Mount Clemens
General Hospital), Series B, 5.875% due 11/15/2034 3,530
1,500 Michigan State Hospital Finance Authority, Revenue
Refunding Bonds (Mercy-Mount Clemens), Series A,
6% due 5/15/2014 (f) 1,584
5,000 Wayne Charter County, Michigan, Airport Revenue
Bonds (Detroit Metropolitan Wayne County), AMT,
Series A, 5% due 12/01/2019 (f) 5,128
Minnesota--0.9%
520 Anoka County, Minnesota, Solid Waste Disposal
Revenue Bonds (Natural Rural Utilities), AMT,
Series A, 6.95% due 12/01/2008 535
1,000 Eden Prairie, Minnesota, M/F Housing Revenue
Bonds (Rolling Hills Project), Series A, 6.15%
due 8/20/2031 (d) 1,088
Minneapolis and Saint Paul, Minnesota, Metropolitan
Airports Commission, Airport Revenue Bonds, AMT,
Sub-Series D (e):
470 5.75% due 1/01/2012 500
470 5.75% due 1/01/2014 499
2,060 5.75% due 1/01/2015 2,198
575 Minneapolis, Minnesota, Community Development
Agency, Supported Development Revenue Bonds
(Common Bond Fund), AMT, Series 2, 6.20%
due 6/01/2017 579
Minneapolis, Minnesota, Health Care System
Revenue Bonds (Allina Health System), Series A:
1,500 5.70% due 11/15/2022 1,626
2,665 5.75% due 11/15/2032 2,881
1,110 Ramsey County, Minnesota, Housing and
Redevelopment Authority, M/F Housing Revenue
Bonds (Hanover Townhouses Project), AMT, 6%
due 7/01/2031 1,148
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments (continued) (In Thousands)
BlackRock National Municipal Fund
Face
Amount Municipal Bonds Value
Minnesota (concluded)
$ 1,000 Saint Cloud, Minnesota, Health Care Revenue
Refunding Bonds (Saint Cloud Hospital Obligation
Group), Series A, 6.25% due 5/01/2020 (h) $ 1,085
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 1,830
Missouri--0.6%
1,000 Fenton, Missouri, Tax Increment Revenue
Refunding and Improvement Bonds (Gravois Bluffs
Redevelopment Project), 5% due 4/01/2014 1,048
1,500 Kansas City, Missouri, IDA, First Mortgage Health
Facilities Revenue Bonds (Bishop Spencer Place),
Series A, 6.50% due 1/01/2035 1,592
6,500 Missouri State Housing Development Commission,
S/F Mortgage Revenue Bonds (Homeownership Loan
Program), AMT, Series E-1, 5.60% due 3/01/2037 (i) 7,017
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 6,329
Nevada--1.8%
3,500 Clark County, Nevada, Airport Revenue Bonds
(Jet Aviation Fuel Tax), AMT, Series C, 5.375%
due 7/01/2020 (c) 3,732
1,550 Clark County, Nevada, Improvement District
Number 142, Special Assessment Bonds, 6.375%
due 8/01/2023 1,598
Elko, Nevada, GO (Airport Improvement), AMT,
Series B (f):
165 6.10% due 10/01/2014 169
245 6.30% due 10/01/2019 252
320 6.75% due 10/01/2024 330
225 7% due 10/01/2029 233
2,650 Henderson, Nevada, Local Improvement Districts,
Special Assessment, Series NO T-14, 5.80%
due 3/01/2023 2,733
Las Vegas, Nevada, Local Improvement Bonds,
Special Assessment, Special Improvement District
Number 808, Summerlin:
1,740 5.875% due 6/01/2009 1,797
2,005 6.125% due 6/01/2012 2,077
2,235 6.25% due 6/01/2013 2,317
1,905 Reno, Nevada, Special Assessment District Number 4
(Somerset Parkway), 6.625% due 12/01/2022 1,966
Sparks, Nevada, Redevelopment Agency, Tax
Allocation Revenue Refunding Bonds, Series A (m):
3,110 6% due 1/15/2015 3,317
6,315 6% due 1/15/2023 6,724
Face
Amount Municipal Bonds Value
New Hampshire--0.2%
New Hampshire Health and Education Facilities
Authority, Revenue Refunding Bonds:
$ 1,750 (Elliot Hospital), Series B, 5.60% due 10/01/2022 $ 1,887
590 (Havenwood-Heritage Heights Retirement
Community), Series A, 5% due 1/01/2016 592
1,035 (Havenwood-Heritage Heights Retirement
Community), Series A, 5.35% due 1/01/2026 1,047
New Jersey--2.4%
310 Camden County, New Jersey, Pollution Control
Financing Authority, Solid Waste Resource Recovery,
Revenue Refunding Bonds, AMT, Series B, 7.50%
due 12/01/2009 314
3,300 New Jersey EDA, Retirement Community Revenue
Bonds (Cedar Crest Village, Inc. Facility), Series A,
7.25% due 11/15/2011 (j) 3,785
3,680 New Jersey EDA, State Lease Revenue Bonds (State
Office Buildings Projects), 6% due 6/15/2010 (c)(j) 3,959
3,130 New Jersey Health Care Facilities Financing Authority
Revenue Bonds (South Jersey Hospital), 6%
due 7/01/2012 (j) 3,466
2,250 New Jersey Health Care Facilities Financing Authority,
Revenue Refunding Bonds (Capital Health System
Inc.), Series A, 5.75% due 7/01/2023 2,420
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) 1,140
New Jersey State Turnpike Authority, Turnpike
Revenue Refunding Bonds (f):
7,025 Series A, 5.75% due 1/01/2010 (j) 7,443
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 11,016
New Mexico--0.8%
8,000 Farmington, New Mexico, PCR, Refunding (Public
Service Company of New Mexico--San Juan
Project), Series B, 6.30% due 12/01/2016 8,172
75 New Mexico Mortgage Finance Authority, Revenue
Refunding Bonds, Mortgage-Backed Securities,
Series F, 7% due 1/01/2026 (i) 76
3,835 New Mexico Mortgage Financing Authority,
S/F Mortgage Program Revenue Bonds, AMT,
Series D, 6.15% due 7/01/2035 (i)(l) 4,098
250 Santa Fe County, New Mexico, Correctional System
Revenue Bonds, 6% due 2/01/2027 (h) 302
New York--4.8%
10,000 Metropolitan Transportation Authority, New York,
Transit Facilities Revenue Bonds, Series A, 5.625%
due 7/01/2007 (f)(j) 10,248
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 3,357
4,050 New York City, New York, City IDA, Special Facility
Revenue Bonds (British Airways Plc Project), AMT,
7.625% due 12/01/2032 4,547
New York City, New York, GO, Refunding:
6,540 Series A, 6% due 5/15/2010 (j) 7,088
2,205 Series A, 6.25% due 5/15/2010 (j)(k) 2,407
60 Series A, 6% due 5/15/2021 (k) 65
675 Series H, 6% due 8/01/2007 (j)(k) 691
325 Series H, 6% due 8/01/2017 (k) 333
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments (continued) (In Thousands)
BlackRock National Municipal Fund
Face
Amount Municipal Bonds Value
New York (concluded)
New York City, New York, GO, Series B (f):
$ 6,640 5.875% due 8/01/2010 (j) $ 7,198
1,300 5.875% due 8/01/2015 1,404
New York State Dormitory Authority, Non-State
Supported Debt, Revenue Refunding Bonds (Mount
Sinai-NYU Medical Center Health System), Series A:
590 6.50% due 7/01/2010 (j) 647
2,410 6.50% due 7/01/2016 2,598
4,000 New York State Dormitory Authority Revenue
Bonds (Saint Barnabas Hospital), Series A, 5.125%
due 2/01/2022 (b)(c) 4,236
New York State Dormitory Authority Revenue
Refunding Bonds:
2,500 (Concord Nursing Home Inc.), 6.50%
due 7/01/2029 2,505
1,680 (Mount Sinai Health), Series A, 6.50%
due 7/01/2025 1,807
3,000 (State University Educational Facilities), Series A,
7.50% due 5/15/2013 3,608
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 1,447
2,285 Oneida County, New York, IDA Revenue Bonds
(Civic Facility-Faxton Hospital), Series C, 6.625%
due 1/01/2015 (m) 2,480
3,000 Port Authority of New York and New Jersey,
Consolidated Revenue Bonds, AMT, 37th
Series, 5.50% due 7/15/2018 (h) 3,286
95 Suffolk County, New York, IDA, Civic Facility Revenue
Bonds (Special Needs Facilities Pooled Program),
Series D-1, 6% due 7/01/2012 99
5,000 Triborough Bridge and Tunnel Authority, New
York, Subordinate Revenue Bonds, 5.125%
due 11/15/2026 (c) 5,338
705 Westchester County, New York, IDA, Civic Facilities
Revenue Bonds (Special Needs Facilities Pooled
Program), Series E-1, 6% due 7/01/2012 732
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 8,702
North Carolina--2.6%
920 Brunswick County, North Carolina, COP, 6%
due 6/01/2010 (h)(j) 997
4,000 North Carolina Eastern Municipal Power Agency,
Power System Revenue Bonds, Series D, 6.75%
due 1/01/2026 4,329
4,440 North Carolina Eastern Municipal Power Agency,
Power System Revenue Refunding Bonds, Series D,
6.70% due 1/01/2019 (o) 4,812
4,390 North Carolina HFA, Home Ownership Revenue
Bonds, AMT, Series 9-A, 5.80% due 1/01/2020 4,559
North Carolina Medical Care Commission, Health
Care Facilities, First Mortgage Revenue Bonds
(Presbyterian Homes Project):
2,500 6.875% due 10/01/2010 (j) 2,766
3,000 5.50% due 10/01/2031 3,124
Face
Amount Municipal Bonds Value
North Carolina (concluded)
North Carolina Medical Care Commission,
Health Care Facilities, First Mortgage Revenue
Refunding Bonds:
$ 2,500 (Presbyterian Homes Project), Series B, 5.20%
due 10/01/2021 $ 2,574
1,100 (Salemtowne Project), 5.10% due 10/01/2030 1,110
North Carolina Medical Care Commission,
Retirement Facilities, First Mortgage Revenue Bonds:
1,625 (Forest at Duke Project), 6.375% due 9/01/2032 1,737
2,500 (Givens Estates Project), Series A, 6.50%
due 7/01/2032 2,709
North Carolina Municipal Power Agency Number 1,
Catawba Electric Revenue Refunding Bonds, Series B:
500 6.375% due 1/01/2013 537
1,080 6.375% due 1/01/2013 (o) 1,162
5,000 6.50% due 1/01/2020 5,404
2,500 6.50% due 1/01/2020 (o) 2,702
Piedmont Triad Airport Authority, North Carolina,
Airport Revenue Refunding Bonds, Series A (h)(j):
1,000 6% due 7/01/2009 1,067
1,000 6.375% due 7/01/2009 1,076
Ohio--0.8%
325 Ohio HFA, Mortgage Revenue Bonds, AMT, Series A-1,
6.15% due 3/01/2029 (d) 334
7,125 Ohio HFA, Mortgage Revenue Refunding Bonds, AMT,
Series C, 5.90% due 9/01/2035 (i) 7,419
1,470 Port of Greater Cincinnati Development Authority,
Ohio, Special Assessment Revenue Bonds
(Cooperative Public Parking Infrastructure Project),
6.40% due 2/15/2034 1,585
3,005 Toledo-Lucas County, Ohio, Lodging Tax Revenue
Refunding Bonds (Convention Center Project), 5.70%
due 10/01/2015 (f) 3,070
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):
40 AMT, Series A, 6.20% due 7/01/2027 41
55 Series A, 6.40% due 7/01/2018 56
500 Portland, Oregon, M/F Housing Authority Revenue
Bonds (Lovejoy Station Apartments Project), AMT,
5.90% due 7/01/2023 (f) 520
Portland, Oregon, Urban Renewal and
Redevelopment Revenue Refunding Bonds (c):
1,000 (Downtown Waterfront), Series A, 5.75%
due 6/15/2018 1,074
3,190 (South Park Blocks), Series A, 5.75%
due 6/15/2018 3,425
Pennsylvania--1.9%
3,640 Allegheny County, Pennsylvania, IDA, Environmental
Improvement Revenue Refunding Bonds, 5.50%
due 11/01/2016 3,846
2,220 Allegheny County, Pennsylvania, Sanitation Authority,
Sewer Revenue Bonds, 5.75% due 12/01/2010 (f)(j) 2,407
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments (continued) (In Thousands)
BlackRock National Municipal Fund
Face
Amount Municipal Bonds Value
Pennsylvania (concluded)
$ 1,760 Bucks County, Pennsylvania, IDA, Retirement
Community Revenue Bonds (Ann's Choice, Inc.),
Series A, 6.125% due 1/01/2025 $ 1,875
6,500 Delaware County, Pennsylvania, IDA, Revenue
Refunding Bonds (Resource Recovery Facility),
Series A, 6.10% due 7/01/2013 6,746
Harrisburg, Pennsylvania, Authority, University
Revenue Bonds (Harrisburg University of Science):
1,000 Series A, 5.40% due 9/01/2016 1,009
2,000 Series B, 6% due 9/01/2036 2,035
4,000 Pennsylvania State Higher Educational Facilities
Authority Revenue Bonds (University of Pennsylvania
Medical Center Health System), Series A, 6%
due 1/15/2031 4,347
1,265 Philadelphia, Pennsylvania, Authority for IDR,
Commercial Development, 7.75% due 12/01/2017 1,268
5,000 Sayre, Pennsylvania, Health Care Facilities Authority,
Revenue Refunding Bonds (Guthrie Healthcare
System), Series A, 5.875% due 12/01/2031 5,412
Rhode Island--0.6%
6,815 Rhode Island State Economic Development
Corporation, Airport Revenue Bonds, Series B, 6%
due 7/01/2010 (e)(j) 7,395
1,000 Rhode Island State Economic Development
Corporation Revenue Bonds (Providence Place Mall),
6.125% due 7/01/2020 (m) 1,109
South Carolina--0.9%
Medical University Hospital Authority, South Carolina,
Hospital Facilities Revenue Refunding Bonds (j):
2,450 6.50% due 8/15/2012 2,800
5,400 Series A, 6.375% due 8/15/2012 6,136
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 5,296
South Dakota--0.4%
3,750 Pierre, South Dakota, School District Number 32-2,
GO, 5.75% due 8/01/2010 (h)(j) 4,011
1,680 South Dakota Housing Development Authority,
Homeownership Revenue Bonds, AMT, Series C,
5.375% due 5/01/2018 1,726
Tennessee--1.5%
Chattanooga, Tennessee, Industrial Development
Board, Lease Rent Revenue Bonds (Southside
Redevelopment Corporation) (c):
4,485 5.75% due 10/01/2017 4,788
3,740 5.75% due 10/01/2018 3,990
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 1,050
4,950 McMinn County, Tennessee, IDB, Solid Waste Revenue
Bonds (Recycling Facility-Calhoun Newsprint), AMT,
7.40% due 12/01/2022 5,022
7,300 Shelby County, Tennessee, Health, Educational and
Housing Facility Board, Hospital Revenue Refunding
Bonds (Methodist Healthcare), 6.50% due 9/01/2012 (j) 8,349
Face
Amount Municipal Bonds Value
Texas--11.5%
$ 4,000 Alliance Airport Authority, Inc., Texas, Special
Facilities Revenue Bonds (American Airlines Inc.
Project), AMT, 7.50% due 12/01/2029 $ 4,080
Austin, Texas, Convention Center Revenue Bonds
(Convention Enterprises Inc.), First Tier, Series A (j):
5,300 6.60% due 1/01/2011 5,858
2,300 6.70% due 1/01/2011 2,550
10,630 Austin, Texas, Revenue Bonds (Town Lake Community
Events Center Venue), 6.20% due 11/15/2009 (e)(j) 11,375
Bexar County, Texas, Health Facilities Development
Corporation, Revenue Refunding Bonds (Army
Retirement Residence Project) (j):
600 6.125% due 7/01/2012 674
1,750 6.30% due 7/01/2012 1,982
2,280 Brazos River Authority, Texas, PCR, Refunding
(Texas Utility Company), AMT, Series A, 7.70%
due 4/01/2033 2,677
4,250 Brazos River Authority, Texas, Revenue Refunding
Bonds (Reliant Energy, Inc. Project), Series B, 7.75%
due 12/01/2018 4,502
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 4,116
525 Central Texas Housing Finance Corporation,
S/F Mortgage Revenue Bonds (GNMA Mortgage
Program), AMT, 8.20% due 6/28/2017 (b)(d) 543
600 Dallas, Texas, Industrial Development Corporation,
IDR (CR/PL Inc. Project), VRDN, AMT, 7.50%
due 8/01/2017 (g) 603
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 3,645
4,825 Dawson County, Texas, Hospital District, GO, 5.125%
due 2/15/2031 (c) 5,092
1,260 Fort Bend County, Texas, Municipal Utility District
Number 23, GO, 6.625% due 9/01/2007 (j)(m) 1,285
Gregg County, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Good
Shepherd Medical Center Project) (j)(m):
3,500 6.375% due 10/01/2010 3,849
1,000 6.875% due 10/01/2010 1,116
5,465 Gulf Coast Waste Disposal Authority, Texas, Revenue
Refunding Bonds (International Paper Company),
AMT, Series A, 6.10% due 8/01/2024 5,884
HFDC of Central Texas, Inc., Retirement Facilities
Revenue Bonds:
2,255 Series A, 5.75% due 11/01/2036 2,316
1,850 (Village at Gleannloch Farms), Series A, 5.50%
due 2/15/2037 1,898
15,000 Houston, Texas, Airport System Revenue Refunding
Bonds, Sub-Lien, AMT, Series A, 5.50%
due 7/01/2023 (h) 15,714
6,000 Houston, Texas, Airport System, Special Facilities
Revenue Bonds (Continental Airlines), AMT, Series E,
7% due 7/01/2029 6,481
4,000 Kerrville, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Sid Peterson
Memorial Hospital Project), 5.25% due 8/15/2021 4,192
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments (continued) (In Thousands)
BlackRock National Municipal Fund
Face
Amount Municipal Bonds Value
Texas (concluded)
$ 8,080 Matagorda County, Texas, Navigation District
Number 1, Revenue Refunding Bonds (Reliant
Energy Inc.), Series C, 8% due 5/01/2029 $ 8,554
7,350 Matagorda County, Texas, Port of Bay City Authority
Revenue Bonds (Hoechst Celanese Corp. Project),
AMT, 6.50% due 5/01/2026 7,507
4,825 Port Corpus Christi, Texas, Individual Development
Corporation, Environmental Facilities Revenue Bonds
(Citgo Petroleum Corporation Project), AMT, 8.25%
due 11/01/2031 4,969
1,000 Red River, Texas, Education Finance Revenue
Bonds (Saint Mark's School-Texas Project), 6%
due 8/15/2019 1,062
1,000 South Plains, Texas, Housing Finance Corporation,
S/F Mortgage Revenue Bonds, AMT, Series A, 7.30%
due 9/01/2031 (i) 1,014
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 158
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 2,370
3,000 6% due 11/15/2036 3,212
Texas State Public Finance Authority, Building
Revenue Bonds (h)(j):
2,100 (General Services Commission Project), Series A,
6% due 2/01/2010 2,241
1,000 (State Preservation Project), Series B, 6%
due 8/01/2009 1,059
45,000 Texas State Turnpike Authority, Central Texas Turnpike
System Revenue Bonds, First Tier, Series A, 5.75%
due 8/15/2038 (c) 49,192
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) 5,309
Webster, Texas, GO, COP, Series A (h):
1,500 6% due 3/01/2010 (j) 1,603
805 6% due 3/01/2021 858
Utah--0.1%
815 Utah State HFA, S/F Mortgage Revenue Refunding
Bonds, AMT, Series C, Class III, 5.50% due 1/01/2018 831
Virginia--0.6%
2,425 Chesterfield County, Virginia, IDA, PCR, Refunding
(Virginia Electric and Power Company), Series B,
5.875% due 6/01/2017 2,627
4,590 Montgomery County, Virginia, IDA, Lease Revenue
Bonds, Series B, 5.125% due 1/15/2019 (f) 4,793
Norfolk, Virginia, Redevelopment and Housing
Authority, First Mortgage Revenue Bonds (Retirement
Community), Series A:
500 6% due 1/01/2025 527
1,100 6.125% due 1/01/2035 1,160
Face
Amount Municipal Bonds Value
Washington--1.8%
$ 5,000 Energy Northwest, Washington, Electric Revenue
Refunding Bonds (Project Number 3), Series A,
5.50% due 7/01/2017 (h) $ 5,389
3,000 Port of Seattle, Washington, Special Facilities
Revenue Bonds, Series A, 6% due 3/01/2010 (f)(j) 3,235
3,010 Seattle, Washington, Drain and Wastewater Utility
Revenue Bonds, 5.75% due 11/01/2009 (f)(j) 3,212
Seattle, Washington, Housing Authority Revenue
Bonds:
2,750 (Newholly Project), AMT, 6.25% due 12/01/2035 2,842
4,710 (Replacement Housing Project), 6.125%
due 12/01/2032 4,833
7,750 Tacoma, Washington, Electric System
Revenue Refunding Bonds, Series A, 5.75%
due 1/01/2011 (h)(j) 8,415
Wisconsin--0.7%
1,000 Wisconsin Housing and Economic Development
Authority, Home Ownership Revenue Bonds, AMT,
Series C, 6% due 9/01/2036 1,061
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.):
3,155 6% due 11/15/2023 3,456
3,700 6% due 11/15/2032 4,029
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 8,883
20,000 Puerto Rico Commonwealth Infrastructure Financing
Authority, Special Tax and Capital Appreciation
Revenue Bonds, Series A, 4.64% due 7/01/2032 (e)(p) 6,488
Puerto Rico Commonwealth, Public Improvement,
GO, Refunding:
785 5.70% due 7/01/2020 (f)(p) 836
5,500 Series B, 5.25% due 7/01/2032 5,920
15,000 Puerto Rico Electric Power Authority, Power Revenue
Bonds, Series NN, 5.125% due 7/01/2029 15,748
U.S. Virgin Islands--0.6%
8,000 Virgin Islands Government Refinery Facilities,
Revenue Refunding Bonds (Hovensa Coker Project),
AMT, 6.50% due 7/01/2021 9,022
Total Municipal Bonds
(Cost--$1,240,921)--84.1% 1,306,123
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments (concluded) (In Thousands)
BlackRock National Municipal Fund
Face
Amount Municipal Bonds Held in Trust (s) Value
California--1.9%
$ 28,500 Los Angeles, California, Unified School District, GO,
Series A, 5% due 1/01/2028 (f) $ 30,068
Connecticut--0.7%
10,045 Connecticut State Health and Educational Facilities
Authority Revenue Refunding Bonds (Eastern
Connecticut Health Network), Series A, 6.50%
due 7/01/2030 (m) 11,047
District of Columbia--0.6%
10,000 Distrtict of Columbia, GO, Refunding, Series A, 6%
due 6/01/2007 (f)(j) 10,296
Florida--2.4%
14,000 Lee County, Florida, Airport Revenue Bonds, AMT,
Series A, 6% due 10/01/2029 (h) 15,118
20,115 Port St. Lucie, Florida, Utility Revenue Bonds, 5.125%
due 9/01/2036 (f) 21,663
Illinois--1.4%
21,235 Chicago, Illinois, Board of Education, GO (Chicago
School Reform), 5.75% due 12/01/2007 (c)(j) 22,059
Michigan--0.9%
13,500 Hartland, Michigan, Consolidated School District,
GO, Refunding, 5.125% due 5/01/2029 14,035
New Jersey--2.9%
22,000 New Jersey EDA, School Facilities Construction Revenue
Bonds, Series O, 5.25% due 3/01/2024 23,804
20,000 New Jersey State Turnpike Authority, Turnpike
Revenue Refunding Bonds, Series A, 5.75%
due 1/01/2018 (f) 21,110
Pennsylvania--2.5%
36,210 Philadelphia, Pennsylvania, Redevelopment Authority
Revenue Bonds (Neighborhood Transformation), Series A,
5.3% due 4/15/2026 (e) 38,526
Face
Amount Municipal Bonds Held in Trust (s) Value
South Carolina--1.4%
$21,215 South Carolina State Ports Authority, Ports Revenue
Bonds, AMT, 5.30% due 7/01/2026 (h) $ 21,778
Texas--5.1%
36,500 Dallas-Fort Worth, Texas, International Airport
Revenue Bonds, AMT, Series A, 6% due 11/01/2024 (e) 38,509
18,860 Houston, Texas, Airport System Revenue Refunding
Bonds, Sub-Lien, Series B, 5.20% due 7/01/2018 (e) 19,346
20,000 Houston, Texas, Combined Utility System, First Lien
Revenue Refunding Bonds, Series A, 5.125%
due 5/15/2028 (f) 21,244
Puerto Rico--0.6%
Puerto Rico Industrial Tourist Educational, Medical and
Environmental Control Facilities Revenue Bonds
(Hospital de la Concepcion), Series A:
4,000 6.125% due 11/15/2025 4,347
4,220 6.125%, due 11/15/2030 4,615
Total Municipal Bonds Held in Trust
(Cost--$312,581)--20.4% 317,565
Shares
Held Short-Term Securities
51,864 Merrill Lynch Institutional Tax-Exempt Fund,
5.19% (q)(r) 51,864
Total Short-Term Securities
(Cost--$51,864)--3.3% 51,864
Total Investments (Cost--$1,605,366*)--107.8% 1,675,552
Other Assets Less Liabilities--2.1% 31,881
Liability for Trust Certificates, Including Interest
Expense Payable--(9.9%) (153,286)
----------
Net Assets--100.0% $1,554,147
==========
* The cost and unrealized appreciation (depreciation) of investments
as of December 31, 2006, as computed for federal income tax purposes,
were as follows:
Aggregate cost $ 1,456,813
===============
Gross unrealized appreciation $ 67,220
Gross unrealized depreciation (1,186)
---------------
Net unrealized appreciation $ 66,034
===============
(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 December 31, 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 (1,660) $827
(s) Securities represent underlying bonds transferred to a separate
securitizaion trust established in a tender option bond transaction in
which the Fund may have acquired the residual interest certificates. These
securities serve as collateral in a financing transaction. See Note 1(c)
to Financial Statements for details of Municipal Bonds Held in Trust.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments as of December 31, 2006 (In Thousands)
BlackRock High Yield Municipal Fund
Face
Amount Municipal Bonds Value
Alabama--1.0%
$ 500 Tuscaloosa, Alabama, Special Care Facilities Financing
Authority, Residential Care Facility Revenue Bonds
(Capstone Village, Inc. Project), Series A, 5.875%
due 8/01/2036 $ 512
Arizona--3.6%
300 Maricopa County, Arizona, IDA, Education Revenue
Bonds (Arizona Charter Schools Project 1), Series A,
6.75% due 7/01/2029 306
1,000 Phoenix, Arizona, IDA, Airport Facility, Revenue
Refunding Bonds (America West Airlines Inc. Project),
AMT, 6.30% due 4/01/2023 1,021
500 Queen Creek Improvement District Number 001,
Arizona, Special Assessment Bonds, 5%
due 1/01/2032 509
California--4.1%
500 Lammersville, California, School District, Special Tax
Bonds (Community Facilities District Number 2002--
Mountain House), 5.125% due 9/01/2035 505
500 Roseville, California, Special Tax Bonds (Fiddyment
Ranch Community Facilities Number 1), 5.25%
due 9/01/2036 509
500 Temecula, California, Public Financing Authority,
Community Facilities District Number 01-2, Special
Tax Refunding Bonds, Sub-Series B, 5.10%
due 9/01/2036 504
565 Temecula Valley, California, Unified School District,
Community Facilities District Number 2005-1, Special
Tax Bonds, 5% due 9/01/2036 565
Colorado--4.0%
1,000 Colorado HFA, Revenue Refunding Bonds (Adventist
Health System/Sunbelt Obligor Group), Series D,
5.25% due 11/15/2035 1,062
450 Colorado Health Facilities Authority, Revenue
Refunding Bonds (Christian Living Communities
Project), Series A, 5.75% due 1/01/2037 472
500 Sorrel Ranch Metropolitan District, Colorado, Limited
Tax, GO, 5.75% due 12/01/2036 511
Connecticut--2.1%
1,000 Connecticut State Health and Educational Facilities
Authority Revenue Bonds (University of Hartford),
Series G, 5.25% due 7/01/2036 (h) 1,077
Florida--9.2%
500 Greater Lakes/Sawgrass Bay Community Development
District, Florida, Special Assessment Bonds, Series A,
5.50% due 5/01/2038 510
500 Highland Meadows Community Development District,
Florida, Special Assessment Bonds, Series A, 5.50%
due 5/01/2036 509
1,000 Hillsborough County, Florida, IDA, Hospital Revenue
Bonds (Tampa General Hospital Project), 5.25%
due 10/01/2041 1,052
600 Lee County, Florida, IDA, Health Care Facilities,
Revenue Refunding Bonds (Shell Point/Alliance
Obligor Group), 5% due 11/15/2032 606
Face
Amount Municipal Bonds Value
Florida (concluded)
$ 500 New River Community Development District, Florida,
Capital Improvement Revenue Bonds, Series B, 5%
due 5/01/2013 $ 496
1,000 Pine Ridge Plantation Community Development
District, Florida, Capital Improvement and Special
Assessment Bonds, Series B, 5% due 5/01/2011 1,005
500 Santa Rosa Bay Bridge Authority, Florida, Revenue
Bonds, 6.25% due 7/01/2028 506
Georgia--4.0%
500 Brunswick and Glynn County, Georgia, Development
Authority, First Mortgage Revenue Bonds (Coastal
Community Retirement Corporation Project), Series A,
7.25% due 1/01/2035 498
1,000 Richmond County, Georgia, Development Authority,
Environmental Improvement Revenue Bonds
(International Paper Co. Projects), AMT, Series A, 5%
due 8/01/2030 1,005
555 Savannah, Georgia, EDA, First Mortgage Revenue
Bonds (Marshes of Skidaway), Series B, 6%
due 1/01/2034 550
Illinois--1.0%
500 Illinois State Finance Authority Revenue Bonds (Three
Crowns Park Plaza), Series A, 5.875% due 2/15/2038 526
Iowa--1.0%
500 Iowa Financing Authority, Health Facilities Revenue
Refunding Bonds (Care Initiatives Project), Series A,
5% due 7/01/2019 506
Kansas--3.0%
1,000 Sedgwick and Shawnee Counties, Kansas,
S/F Mortgage Revenue Bonds (Mortgage-Backed
Securities Program), AMT, Series B-2, 5.25%
due 12/01/2038 (b)(c) 1,057
450 Wyandotte County, Kansas, Kansas City Unified
Government Revenue Refunding Bonds (General
Motors Corporation Project), 6% due 6/01/2025 454
Maryland--6.5%
540 Baltimore, Maryland, Convention Center
Hotel Revenue Bonds, Sub-Series B, 5.875%
due 9/01/2039 572
1,000 Maryland State Community Development
Administration, Department of Housing and
Community Development, Residential Revenue
Refunding Bonds, AMT, Series L, 4.80%
due 9/01/2021 1,021
1,000 Maryland State Energy Financing Administration,
Limited Obligation Revenue Bonds (Cogeneration-
AES Warrior Run), AMT, 7.40% due 9/01/2019 1,006
Maryland State Health and Higher Educational
Facilities Authority Revenue Bonds:
500 (King Farm Presbyterian Community), Series A,
5.30% due 1/01/2037 493
250 (Washington Christian Academy), 5.25%
due 7/01/2018 250
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments (continued) (In Thousands)
BlackRock High Yield Municipal Fund
Face
Amount Municipal Bonds Value
Massachusetts--2.1%
$ 390 Massachusetts State Development Finance Agency
Revenue Bonds (Curry College), Series A, 5.25%
due 3/01/2026 (e) $ 414
650 Massachusetts State Health and Educational
Facilities Authority, Revenue Refunding Bonds
(Bay Cove Human Services Issue), Series A, 5.90%
due 4/01/2028 662
Nevada--2.0%
1,000 Clark County, Nevada, IDR (Southwest Gas Corp.
Project), AMT, Series A, 4.75% due 9/01/2036 (f) 1,006
New Hampshire--4.0%
New Hampshire Health and Education Facilities
Authority, Revenue Refunding Bonds:
950 (Havenwood-Heritage Heights Retirement
Community), Series A, 5.40% due 1/01/2030 959
1,015 (Southern New Hampshire University), 5%
due 1/01/2027 (e) 1,060
New Jersey--9.2%
1,000 New Jersey EDA, Retirement Community Revenue
Refunding Bonds (Seabrook Village, Inc.), 5.25%
due 11/15/2036 1,011
490 New Jersey EDA, Special Facility Revenue Bonds
(Continental Airlines Inc. Project), AMT, 6.625%
due 9/15/2012 525
650 New Jersey Health Care Facilities Financing Authority
Revenue Bonds (Pascack Valley Hospital Association),
6.625% due 7/01/2036 712
1,000 New Jersey Health Care Facilities Financing Authority,
Revenue Refunding Bonds (South Jersey Hospital
System), 5% due 7/01/2046 1,030
1,420 New Jersey State Housing and Mortgage Finance
Agency, S/F Revenue Refunding Bonds, AMT,
Series M, 4.875% due 10/01/2026 1,452
New York--10.6%
500 Erie County, New York, IDA, Revenue Bonds
(Orchard Park CCRC, Inc. Project), Series A, 6%
due 11/15/2036 535
1,000 Nassau County, New York, Tobacco Settlement
Corporation, Senior Asset-Backed Revenue Refunding
Bonds, Series A-3, 5% due 6/01/2035 1,023
500 New York City, New York, City IDA, PILOT Revenue
Bonds (Queens Baseball Stadium Project), 5%
due 1/01/2036 (a) 534
750 New York City, New York, City IDA, Special Facility
Revenue Bonds (JetBlue Airways Corporation Project),
AMT, 5.125% due 5/15/2030 743
1,000 New York Liberty Development Corporation Revenue
Bonds (National Sports Museum Project), Series A,
6.125% due 2/15/2019 1,058
1,000 New York State Dormitory Authority, Non-State
Supported Debt, Revenue Refunding Bonds (New
York University Hospital Center), Series A, 5%
due 7/01/2026 1,025
500 Onondaga County, New York, IDA, PCR (Anheuser-
Busch Companies, Inc. Project), Refunding, Series A,
4.875% due 7/01/2041 510
Face
Amount Municipal Bonds Value
North Carolina--1.0%
$ 500 North Carolina Medical Care Commission,
Health Care Facilities, First Mortgage Revenue
Refunding Bonds (Salemtowne Project), 5.10%
due 10/01/2030 $ 504
North Dakota--2.0%
1,000 Ward County, North Dakota, Health Care Facility
Revenue Refunding Bonds (Trinity Health Obligated
Group), 5.125% due 7/01/2029 1,041
Ohio--1.8%
875 Richland County, Ohio, Hospital Facilities Revenue
Refunding Bonds (MedCentral Health System),
5.25% due 11/15/2036 927
Pennsylvania--1.0%
500 Harrisburg, Pennsylvania, Authority, University
Revenue Bonds (Harrisburg University of Science),
Series B, 6% due 9/01/2036 509
Rhode Island--2.0%
1,000 Rhode Island Housing and Mortgage Finance
Corporation, Homeownership Opportunity Revenue
Bonds, AMT, Series 53-B, 5% due 10/01/2046 1,019
South Carolina--2.0%
1,000 Connector 2000 Association, Inc., South Carolina,
Toll Road and Capital Appreciation Revenue Bonds,
Senior Series B, 7.97% due 1/01/2015 (j) 535
500 Myrtle Beach, South Carolina, Tax Increment
Revenue Bonds (Myrtle Beach Air Force Base),
Series A, 5.25% due 11/01/2026 508
Tennessee--1.4%
700 Sullivan County, Tennessee, Health, Educational &
Housing Facilities Board, Hospital Revenue Bonds
(Wellmont Health System Project), Series C, 5.25%
due 9/01/2036 735
Texas--11.3%
1,000 Alliance Airport Authority, Inc., Texas, Special
Facilities Revenue Bonds (American Airlines Inc.
Project), AMT, 7.50% due 12/01/2029 1,020
500 Alliance Airport Authority, Inc., Texas, Special
Facilities Revenue Refunding Bonds (FedEx Corp.
Project), AMT, 4.85% due 4/01/2021 509
500 Brazos River Authority, Texas, PCR (TXU Energy
Company LLC Project), AMT, 5% due 3/01/2041 502
500 Dallas, Texas, Industrial Development Corporation,
IDR (CR/PL Inc. Project), VRDN, AMT, 7.50%
due 8/01/2017 (k) 503
655 HFDC of Central Texas, Inc., Retirement Facilities
Revenue Bonds, Series A, 5.75% due 11/01/2036 673
1,000 Harlandale, Texas, Independent School District,
School Building, GO, 4.75% due 8/15/2040 1,020
500 Houston, Texas, Airport System, Special Facilities
Revenue Bonds (Continental Airlines), AMT, Series E,
7.375% due 7/01/2022 548
1,000 Texas State Public Financing Authority, Charter
School Financing Corporation, Revenue Refunding
Bonds (KIPP, Inc.), Series A, 5% due 2/15/2036 (e) 1,021
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Schedule of Investments (concluded) (In Thousands)
BlackRock High Yield Municipal Fund
Face
Amount Municipal Bonds Value
Utah--3.3%
$ 1,640 Utah Housing Corporation, S/F Mortgage
Revenue Bonds, AMT, Series A-1, Class I, 5%
due 7/01/2037 $ 1,677
Virginia--4.9%
500 Fairfax County, Virginia, EDA, Retirement Revenue
Refunding Bonds (Greenspring Village Inc.), Series A,
4.875% due 10/01/2036 508
500 Farms of New Kent, Virginia, Community
Development Authority, Special Assessment Bonds,
Series C, 5.80% due 3/01/2036 502
450 Henrico County, Virginia, EDA, Residential Care
Facility, Mortgage Revenue Refunding Bonds
(Westminster-Canterbury Of Winchester, Inc.), 5%
due 10/01/2027 463
Face
Amount Municipal Bonds Value
Virginia (concluded)
$ 1,000 Virginia State HDA, Commonwealth Mortgage
Revenue Bonds, Series H, Sub-Series H-1, 5.35%
due 7/01/2031 (g) $ 1,036
Total Municipal Bonds
(Cost--$49,552)--98.1% 50,194
Shares
Held Short-Term Securities
901 Merrill Lynch Institutional Tax-Exempt Fund, 5.19% (d)(i) 901
Total Short-Term Securities
(Cost--$901)--1.7% 901
Total Investments (Cost--$50,453*)--99.8% 51,095
Other Assets Less Liabilities--0.2% 79
----------
Net Assets--100.0% $ 51,174
==========
* The cost and unrealized appreciation (depreciation) of investments
as of December 31, 2006, as computed for federal income tax purposes,
were as follows:
Aggregate cost $ 50,453
===============
Gross unrealized appreciation $ 683
Gross unrealized depreciation (41)
---------------
Net unrealized appreciation $ 642
===============
(a) AMBAC Insured.
(b) FHLMC Collateralized.
(c) FNMA/GNMA Collateralized.
(d) 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 901 $30
(e) ACA Insured.
(f) FGIC Insured.
(g) MBIA Insured.
(h) Radian Insured.
(i) Represents the current yield as of December 31, 2006.
(j) Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(k) Security may have a maturity date 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 on prevailing market rates.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Statements of Assets and Liabilities
BlackRock BlackRock BlackRock BlackRock
Short-Term Municipal National High Yield
Municipal Insured Municipal Municipal
As of December 31, 2006 Fund Fund Fund Fund
Assets
Investments in unaffiliated securities, at value* $ 298,733,933 $ 984,437,114 $ 1,623,688,142 $ 50,194,362
Investments in affiliated securities, at value** 6,716,153 24,032,239 51,864,136 901,074
Unrealized appreciation on forward interest rate swaps -- 629,894 -- --
Cash 76,694 78,887 47,664 95,074
Receivables:
Securities sold -- 230,000 15,838,423 --
Interest 4,931,041 14,606,847 25,067,429 727,858
Capital shares sold 740,027 1,129,259 3,847,327 426,241
Dividends from affiliates -- 79,204 -- --
Prepaid expenses and other assets 45,517 786,555 76,146 32,529
--------------- --------------- --------------- ---------------
Total assets 311,243,365 1,026,009,999 1,720,429,267 52,377,138
--------------- --------------- --------------- ---------------
Liabilities
Trust certificates -- 92,563,129 152,705,330 --
Payables:
Securities purchased -- 3,602,948 6,202,912 996,275
Capital shares redeemed 925,744 188,210 745,069 --
Dividends to shareholders 819,840 2,849,184 4,933,776 192,170
Interest expense -- 588,405 581,062 --
Investment adviser 40,311 296,573 640,589 8,751
Distributor 18,286 117,563 270,406 4,813
Other affiliates 55,968 84,582 203,256 1,464
Distributions to shareholders -- 1,005 -- --
Accrued expenses and other liabilities 32,848 40,882 145 --
--------------- --------------- --------------- ---------------
Total liabilities 1,892,997 100,332,481 166,282,545 1,203,473
--------------- --------------- --------------- ---------------
Net Assets
Net assets $ 309,350,368 $ 925,677,518 $ 1,554,146,722 $ 51,173,665
=============== =============== =============== ===============
Net Assets Consist of
Undistributed investment income--net 484,005 1,223,119 957,407 --
Accumulated realized capital gains (losses)--net (9,106,526) (4,672,904) (43,820,792) 49,841
Unrealized appreciation--net 255,962 47,404,556 70,186,209 642,622
--------------- --------------- --------------- ---------------
Total accumulated earnings (losses)--net (8,366,559) 43,954,771 27,322,824 692,463
--------------- --------------- --------------- ---------------
BlackRock Common Stock, $.10 par value++ 104,298 -- -- --
Institutional Common Stock, $.10 par value++++ 1,427,629 8,112,882 8,903,078 461,070
Investor A Common Stock, $.10 par value++++++ 9,641 2,245,599 3,044,086 19,812
Investor A1 Common Stock, $.10 par value++++++++ 1,398,205 -- -- --
Investor B Common Stock, $.10 par value++++++++++ 172,885 709,540 1,137,867 --
Investor C Common Stock, $.10 par value++++++++++++ 5,503 15,413 143,744 21,987
Investor C1 Common Stock, $.10 par value++++++++++++++ -- 738,985 1,470,760 --
Paid-in capital in excess of par 314,598,766 869,900,328 1,512,124,363 49,978,333
--------------- --------------- --------------- ---------------
Net Assets $ 309,350,368 $ 925,677,518 $ 1,554,146,722 $ 51,173,665
=============== =============== =============== ===============
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Statements of Assets and Liabilities (concluded)
BlackRock BlackRock BlackRock BlackRock
Short-Term Municipal National High Yield
Municipal Insured Municipal Municipal
As of December 31, 2006 Fund Fund Fund Fund
Net Asset Value
BlackRock:
Net assets $ 10,347,384 -- -- --
=============== =============== =============== ===============
Shares outstanding 1,042,979 -- -- --
=============== =============== =============== ===============
Net asset value and redemption price per share $ 9.92 -- -- --
=============== =============== =============== ===============
Institutional:
Net assets $ 141,576,404 $ 635,311,750 $ 941,220,449 $ 46,922,237
=============== =============== =============== ===============
Shares outstanding 14,276,290 81,128,819 89,030,783 4,610,700
=============== =============== =============== ===============
Net asset value and redemption price per share $ 9.92 $ 7.83 $ 10.57 $ 10.18
=============== =============== =============== ===============
Investor A:
Net assets $ 956,391 $ 175,791,450 $ 321,965,117 $ 2,013,713
=============== =============== =============== ===============
Shares outstanding 96,408 22,455,989 30,440,858 198,122
=============== =============== =============== ===============
Net asset value and redemption price per share $ 9.92 $ 7.83 $ 10.58 $ 10.16
=============== =============== =============== ===============
Investor A1:
Net assets $ 138,777,992 -- -- --
=============== =============== =============== ===============
Shares outstanding 13,982,047 -- -- --
=============== =============== =============== ===============
Net asset value and redemption price per share $ 9.93 -- -- --
=============== =============== =============== ===============
Investor B:
Net assets $ 17,146,403 $ 55,523,427 $ 120,246,881 --
=============== =============== =============== ===============
Shares outstanding 1,728,847 7,095,397 11,378,673 --
=============== =============== =============== ===============
Net asset value and redemption price per share $ 9.92 $ 7.83 $ 10.57 --
=============== =============== =============== ===============
Investor C:
Net assets $ 545,794 $ 1,207,788 $ 15,205,228 $ 2,237,715
=============== =============== =============== ===============
Shares outstanding 55,025 154,131 1,437,435 219,866
=============== =============== =============== ===============
Net asset value and redemption price per share $ 9.92 $ 7.84 $ 10.58 $ 10.18
=============== =============== =============== ===============
Investor C1:
Net assets -- $ 57,843,103 $ 155,509,047 --
=============== =============== =============== ===============
Shares outstanding -- 7,389,849 14,707,603 --
=============== =============== =============== ===============
Net asset value and redemption price per share -- $ 7.83 $ 10.57 --
=============== =============== =============== ===============
* Identified cost for unaffiliated securities $ 298,477,971 $ 935,717,984 $ 1,553,501,933 $ 49,551,740
=============== =============== =============== ===============
** Identified cost for affiliated securities $ 6,716,153 $ 25,976,707 $ 51,864,136 $ 901,074
=============== =============== =============== ===============
++ Authorized shares--BlackRock 150,000,000 -- -- --
=============== =============== =============== ===============
++++ Authorized shares--Institutional 150,000,000 500,000,000 375,000,000 100,000,000
=============== =============== =============== ===============
++++++ Authorized shares--Investor A 150,000,000 500,000,000 375,000,000 100,000,000
=============== =============== =============== ===============
++++++++ Authorized shares--Investor A1 150,000,000 -- -- --
=============== =============== =============== ===============
++++++++++ Authorized shares--Investor B 150,000,000 375,000,000 375,000,000 --
=============== =============== =============== ===============
++++++++++++ Authorized shares--Investor C 150,000,000 -- 375,000,000 100,000,000
=============== =============== =============== ===============
++++++++++++++ Authorized shares--Investor C1 -- 375,000,000 375,000,000 --
=============== =============== =============== ===============
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Statements of Operations
BlackRock BlackRock BlackRock BlackRock
Short-Term Municipal National High Yield
Municipal Insured Municipal Municipal
For the Six Months Ended December 31, 2006 Fund Fund Fund Fund
Investment Income
Interest $ 5,607,365 $ 23,620,482 $ 42,185,974 $ 828,770
Dividends from affiliates 196,458 619,564 826,771 30,179
Other -- 44,141 -- --
--------------- --------------- --------------- ---------------
Total income 5,803,823 24,284,187 43,012,745 858,949
--------------- --------------- --------------- ---------------
Expenses
Investment advisory fees 543,152 1,703,266 3,478,626 97,458
Interest expense and fees -- 1,881,768 3,148,445 --
Service and distribution fees--Class C 33,491 -- -- --
Service and distribution fees--Investor B 35,793 229,297 478,552 --
Service and distribution fees--Investor C 718 1,677 19,066 5,918
Service fees--Investor A 193 219,563 380,978 882
Service fees--Investor A1 66,137 -- -- --
Accounting services 59,838 138,396 207,387 262
Transfer agent fees--Investor C1 -- 12,101 38,242 --
Transfer agent fees--Institutional 32,213 105,791 229,711 2,365
Transfer agent fees--Investor A 34 28,795 76,095 45
Transfer agent fees--Investor A1 29,983 -- -- --
Custodian fees 15,565 27,635 43,551 2,707
Registration fees 21,209 23,851 41,795 22
Transfer agent fees--Investor B 6,591 12,656 37,931 --
Transfer agent fees--Class C 10,352 -- -- --
Professional fees 19,119 26,472 33,550 15,891
Printing and shareholder reports 8,617 27,924 42,227 1,942
Transfer agent fees--Investor C 938 59 7,625 80
Transfer agent fees--BlackRock 570 -- -- --
Service and distribution fees--Investor C1 -- 240,345 612,823 --
Pricing services 4,748 10,487 27,868 1,182
Directors' fees and expenses 3,618 9,561 14,137 717
Offering costs -- -- -- 57,338
Other 16,731 30,771 38,987 6,863
--------------- --------------- --------------- ---------------
Total expenses before waiver 909,610 4,730,415 8,957,596 193,672
Waiver of expenses (101,635) (8,640) (48,597) (72,994)
--------------- --------------- --------------- ---------------
Total expenses after waiver 807,975 4,721,775 8,908,999 120,678
--------------- --------------- --------------- ---------------
Investment income--net 4,995,848 19,562,412 34,103,746 738,271
--------------- --------------- --------------- ---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain (loss) on:
Investments--net (1,432,074) 993,882 7,631,916 60,146
Forward interest rate swaps--net -- (1,234,061) -- --
--------------- --------------- --------------- ---------------
Total realized gain (loss)--net (1,432,074) (240,179) 7,631,916 60,146
--------------- --------------- --------------- ---------------
Change in unrealized appreciation/depreciation on:
Investments--net 2,548,098 22,391,960 22,038,932 642,622
Forward interest rate swaps--net -- 629,894 -- --
--------------- --------------- --------------- ---------------
Total change in unrealized appreciation/
depreciation--net 2,548,098 23,021,854 22,038,932 642,622
--------------- --------------- --------------- ---------------
Total realized and unrealized gain--net 1,116,024 22,781,675 29,670,848 702,768
--------------- --------------- --------------- ---------------
Net Increase in Net Assets Resulting from Operations $ 6,111,872 $ 42,344,087 $ 63,774,594 $ 1,441,039
=============== =============== =============== ===============
* Fund commenced operations on August 1, 2006.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Statements of Changes in Net Assets BlackRock Short-Term Municipal Fund
For the Six For the
Months Ended Year Ended
December 31, June 30,
Increase (Decrease) in Net Assets: 2006 2006
Operations
Investment income--net $ 4,995,848 $ 9,982,288
Realized loss--net (1,432,074) (2,592,944)
Change in unrealized appreciation/depreciation--net 2,548,098 (1,927,943)
--------------- ---------------
Net increase in net assets resulting from operations 6,111,872 5,461,401
--------------- ---------------
Dividends to Shareholders
Investment income--net:
BlackRock (74,449) --
Institutional (2,330,470) (4,454,151)
Investor A (2,353) --
Investor A1 (2,042,236) (3,080,084)
Investor B (286,990) (696,530)
Investor C (1,654) --
Class C (257,695) (1,751,261)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (4,995,847) (9,982,026)
--------------- ---------------
Capital Share Transactions
Net decrease in net assets derived from capital share transactions (28,028,846) (118,737,525)
--------------- ---------------
Net Assets
Total decrease in net assets (26,912,821) (123,258,150)
Beginning of period 336,263,189 459,521,339
--------------- ---------------
End of period* $ 309,350,368 $ 336,263,189
=============== ===============
* Undistributed investment income--net $ 484,005 $ 484,004
=============== ===============
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Statements of Changes in Net Assets BlackRock Municipal Insured Fund
(As Restated for the Year Ended 2006. See Note 8)
For the Six For the
Months Ended Year Ended
December 31, June 30,
Increase (Decrease) in Net Assets: 2006 2006
Operations
Investment income--net $ 19,562,412 $ 42,545,175
Realized gain (loss)--net (240,179) 6,736,805
Change in unrealized appreciation/depreciation--net 23,021,854 (43,062,066)
--------------- ---------------
Net increase in net assets resulting from operations 42,344,087 6,219,914
--------------- ---------------
Dividends & Distributions to Shareholders
Investment income--net:
Institutional (13,860,466) (29,830,404)
Investor A (3,552,259) (7,533,857)
Investor B (1,082,457) (2,879,619)
Investor C (5,952) --
Investor C1 (1,048,135) (2,276,067)
Realized gain--net:
Institutional (3,420,293) (2,535,229)
Investor A (945,702) (682,505)
Investor B (299,415) (295,880)
Investor C (6,273) --
Investor C1 (312,142) (235,289)
--------------- ---------------
Net decrease in net assets resulting from dividends and distributions to shareholders (24,533,094) (46,268,850)
--------------- ---------------
Capital Share Transactions
Net decrease in net assets derived from capital share transactions (31,426,731) (66,044,701)
--------------- ---------------
Net Assets
Total decrease in net assets (13,615,738) (106,093,637)
Beginning of period 939,293,256 1,045,386,893
--------------- ---------------
End of period* $ 925,677,518 $ 939,293,256
=============== ===============
* Undistributed investment income--net $ 1,223,119 $ 1,209,976
=============== ===============
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Statements of Changes in Net Assets BlackRock National Municipal Fund
(As Restated for the Year Ended 2006. See Note 8)
For the Six For the
Months Ended Year Ended
December 31, June 30,
Increase (Decrease) in Net Assets: 2006 2006
Operations
Investment income--net $ 34,103,746 $ 67,217,185
Realized gain--net 7,631,916 12,238,185
Change in unrealized appreciation--net 22,038,932 (53,182,340)
--------------- ---------------
Net increase in net assets resulting from operations 63,774,594 26,273,030
--------------- ---------------
Dividends to Shareholders
Investment income--net:
Institutional (21,700,258) (43,778,940)
Investor A (6,803,950) (11,906,520)
Investor B (2,526,866) (6,469,017)
Investor C (69,531) --
Investor C1 (2,992,681) (4,988,554)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (34,093,286) (67,143,031)
--------------- ---------------
Capital Share Transactions
Net increase in net assets derived from capital share transactions 76,044,291 46,489,740
--------------- ---------------
Net Assets
Total increase in net assets 105,725,599 5,619,739
Beginning of period 1,448,421,123 1,442,801,384
--------------- ---------------
End of period* $ 1,554,146,722 $ 1,448,421,123
=============== ===============
* Undistributed investment income--net $ 957,407 $ 946,947
=============== ===============
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Statement of Changes in Net Assets BlackRock High Yield Municipal Fund
For the Period
August 1, 2006++
to December 31,
Increase (Decrease) in Net Assets: 2006
Operations
Investment income--net $ 738,271
Realized gain--net 60,146
Change in unrealized appreciation--net 642,622
---------------
Net increase in net assets resulting from operations 1,441,039
---------------
Dividends & Distributions to Shareholders
Investment income--net:
Institutional (704,104)
Investor A (14,543)
Investor C (19,624)
Realized gain--net:
Institutional (9,444)
Investor A (407)
Investor C (454)
---------------
Net decrease in net assets resulting from dividends and distributions to shareholders (748,576)
---------------
Capital Share Transactions
Net increase in net assets derived from capital share transactions 50,480,452
---------------
Net Assets
Total increase in net assets 51,172,915
Beginning of period 750
---------------
End of period $ 51,173,665
===============
++ Commencement of operations.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Financial Highlights BlackRock Short-Term Municipal Fund
BlackRock
Shares
For the Period
October 2, 2006++
The following per share data and ratios have been derived to December 31,
from information provided in the financial statements. 2006
Per Share Operating Performance
Net asset value, beginning of period $ 9.93
---------------
Investment income--net** .07
Realized and unrealized gain--net --
---------------
Total from investment operations .07
---------------
Less dividends from investment income--net (.08)
---------------
Net asset value, end of period $ 9.92
===============
Total Investment Return
Based on net asset value per share .71%+++
===============
Ratios to Average Net Assets
Expenses, net of waiver .35%*
===============
Expenses .44%*
===============
Investment income--net 3.30%*
===============
Supplemental Data
Net assets, end of period (in thousands) $ 10,347
===============
Portfolio turnover 75.80%
===============
* Annualized.
** Based on average shares outstanding.
++ Commencement of operations.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock Short-Term Municipal Fund
Institutional
For the Six
The following per share data and ratios Months Ended
have been derived from information December 31, For the Year Ended June 30,
provided in the financial statements. 2006 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 9.88 $ 9.99 $ 10.05 $ 10.17 $ 10.13 $ 10.05
----------- ----------- ----------- ----------- ----------- -----------
Investment income--net .16++ .27++ .19++ .18++ .27++ .34
Realized and unrealized gain (loss)--net .08 (.11) (.06) (.12) .02 .08
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .24 .16 .13 .06 .29 .42
----------- ----------- ----------- ----------- ----------- -----------
Less dividends from investment income--net (.20) (.27) (.19) (.18) (.25) (.34)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 9.92 $ 9.88 $ 9.99 $ 10.05 $ 10.17 $ 10.13
=========== =========== =========== =========== =========== ===========
Total Investment Return
Based on net asset value per share 2.02%+++ 1.57% 1.30% .59% 2.87% 4.10%
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses, net of waiver .41%* .44% .43% .42% .42% .46%
=========== =========== =========== =========== =========== ===========
Expenses .48%* .45% .44% .43% .43% .46%
=========== =========== =========== =========== =========== ===========
Investment income--net 3.18%* 2.66% 1.88% 1.78% 2.44% 3.30%
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 141,576 $ 149,333 $ 186,877 $ 243,443 $ 251,137 $ 204,936
=========== =========== =========== =========== =========== ===========
Portfolio turnover 75.80% 82.77% 87.42% 69.08% 44.61% 74.74%
=========== =========== =========== =========== =========== ===========
* Annualized.
++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock Short-Term Municipal Fund
Investor A
For the Period
October 2, 2006++
The following per share data and ratios have been derived to December 31,
from information provided in the financial statements. 2006
Per Share Operating Performance
Net asset value, beginning of period $ 9.93
---------------
Investment income--net*** .05
Realized and unrealized gain--net .01
---------------
Total from investment operations .06
---------------
Less dividends from investment income--net (.07)
---------------
Net asset value, end of period $ 9.92
===============
Total Investment Return**
Based on net asset value per share .65%+++
===============
Ratios to Average Net Assets
Expenses, net of waiver .61%*
===============
Expenses .71%*
===============
Investment income--net 3.05%*
===============
Supplemental Data
Net assets, end of period (in thousands) $ 956
===============
Portfolio turnover 75.80%
===============
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Based on average shares outstanding.
++ Commencement of operations.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock Short-Term Municipal Fund
Investor A1
For the Six
The following per share data and ratios Months Ended
have been derived from information December 31, For the Year Ended June 30,
provided in the financial statements. 2006 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 9.89 $ 10.00 $ 10.06 $ 10.18 $ 10.14 $ 10.06
----------- ----------- ----------- ----------- ----------- -----------
Investment income--net .15++ .26++ .18++ .17++ .24++ .32
Realized and unrealized gain (loss)--net .03 (.11) (.06) (.12) .04 .08
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .18 .15 .12 .05 .28 .40
----------- ----------- ----------- ----------- ----------- -----------
Less dividends from investment income--net (.14) (.26) (.18) (.17) (.24) (.32)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 9.93 $ 9.89 $ 10.00 $ 10.06 $ 10.18 $ 10.14
=========== =========== =========== =========== =========== ===========
Total Investment Return**
Based on net asset value per share 1.97%+++ 1.47% 1.20% .50% 2.77% 3.99%
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses, net of waiver .51%* .54% .53% .52% .52% .56%
=========== =========== =========== =========== =========== ===========
Expenses .58%* .55% .54% .53% .53% .56%
=========== =========== =========== =========== =========== ===========
Investment income--net 3.09%* 2.55% 1.76% 1.68% 2.31% 3.13%
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 138,778 $ 99,293 $ 141,172 $ 244,741 $ 248,454 $ 140,744
=========== =========== =========== =========== =========== ===========
Portfolio turnover 75.80% 82.77% 87.42% 69.08% 44.61% 74.74%
=========== =========== =========== =========== =========== ===========
* Annualized.
** Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock Short-Term Municipal Fund
Investor B
For the Six
The following per share data and ratios Months Ended
have been derived from information December 31, For the Year Ended June 30,
provided in the financial statements. 2006 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 9.88 $ 10.00 $ 10.05 $ 10.17 $ 10.13 $ 10.06
----------- ----------- ----------- ----------- ----------- -----------
Investment income--net .14++ .23++ .15++ .14++ .21++ .29
Realized and unrealized gain (loss)--net .26 (.12) (.05) (.12) .04 .07
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .40 .11 .10 .02 .25 .36
----------- ----------- ----------- ----------- ----------- -----------
Less dividends from investment income--net (.36) (.23) (.15) (.14) (.21) (.29)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 9.92 $ 9.88 $ 10.00 $ 10.05 $ 10.17 $ 10.13
=========== =========== =========== =========== =========== ===========
Total Investment Return**
Based on net asset value per share 1.84%+++ 1.11% 1.04% .24% 2.51% 3.62%
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses, net of waiver .78%* .80% .79% .77% .78% .82%
=========== =========== =========== =========== =========== ===========
Expenses .85%* .81% .80% .78% .79% .82%
=========== =========== =========== =========== =========== ===========
Investment income--net 2.81%* 2.28% 1.50% 1.43% 2.10% 2.87%
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 17,146 $ 23,769 $ 38,565 $ 63,135 $ 83,886 $ 81,967
=========== =========== =========== =========== =========== ===========
Portfolio turnover 75.80% 82.77% 87.42% 69.08% 44.61% 74.74%
=========== =========== =========== =========== =========== ===========
* Annualized.
** Total investment returns exclude the effects of sales charges.
++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock Short-Term Municipal Fund
Investor C
For the Period
October 2, 2006++
The following per share data and ratios have been derived to December 31,
from information provided in the financial statements. 2006
Per Share Operating Performance
Net asset value, beginning of period $ 9.93
---------------
Investment income--net*** .04
Realized and unrealized gain--net .01
---------------
Total from investment operations .05
---------------
Less dividends from investment income--net (.06)
---------------
Net asset value, end of period $ 9.92
===============
Total Investment Return**
Based on net asset value per share .46%+++
===============
Ratios to Average Net Assets
Expenses, net of waiver 1.35%*
===============
Expenses 1.44%*
===============
Investment income--net 2.30%*
===============
Supplemental Data
Net assets, end of period (in thousands) $ 546
===============
Portfolio turnover 75.80%
===============
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Based on average shares outstanding.
++ Commencement of operations.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock Municipal Insured Fund
(As Restated for the Years Ended 2006, 2005, 2004, 2003 and 2002. See Note 8)
Institutional
For the Six
The following per share data and ratios Months Ended
have been derived from information December 31, For the Year Ended June 30,
provided in the financial statements. 2006 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 7.69 $ 8.00 $ 7.70 $ 8.07 $ 7.80 $ 7.69
----------- ----------- ----------- ----------- ----------- -----------
Investment income--net .17++++ .35++++ .36++++ .40++++ .41++++ .41
Realized and unrealized gain (loss)--net .18 (.28) .30 (.37) .27 .11
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .35 .07 .66 .03 .68 .52
----------- ----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.17) (.35) (.36) (.40) (.41) (.41)
Realized gain--net (.04) (.03) -- -- -- --++
----------- ----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.21) (.38) (.36) (.40) (.41) (.41)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 7.83 $ 7.69 $ 8.00 $ 7.70 $ 8.07 $ 7.80
=========== =========== =========== =========== =========== ===========
Total Investment Return
Based on net asset value per share 4.60%+++ .82% 8.74% .35% 8.88% 7.03%
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses, net of waiver and excluding interest
expense .45%* .45% .46% .46% .46% .47%
=========== =========== =========== =========== =========== ===========
Expenses, net of waiver .85%* .74% .63% .66% .71% .78%
=========== =========== =========== =========== =========== ===========
Expenses .86%* .74% .64% .67% .71% .78%
=========== =========== =========== =========== =========== ===========
Investment income--net 4.30%* 4.40% 4.58% 5.04% 5.13% 5.35%
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 635,312 $ 639,687 $ 707,134 $ 733,310 $ 855,757 $ 878,018
=========== =========== =========== =========== =========== ===========
Portfolio turnover 10% 41% 47% 44% 33% 28%
=========== =========== =========== =========== =========== ===========
* Annualized.
++ Amount is less than $(.01) per share.
++++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock Municipal Insured Fund
(As Restated for the Years Ended 2006, 2005, 2004, 2003 and 2002. See Note 8)
Investor A
For the Six
The following per share data and ratios Months Ended
have been derived from information December 31, For the Year Ended June 30,
provided in the financial statements. 2006 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 7.68 $ 8.00 $ 7.70 $ 8.07 $ 7.79 $ 7.69
----------- ----------- ----------- ----------- ----------- -----------
Investment income--net .16++++ .33++++ .34++++ .38++++ .39++++ .39
Realized and unrealized gain (loss)--net .19 (.29) .30 (.37) .28 .10
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .35 .04 .64 .01 .67 .49
----------- ----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.16) (.33) (.34) (.38) (.39) (.39)
Realized gain--net (.04) (.03) -- -- -- --++
----------- ----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.20) (.36) (.34) (.38) (.39) (.39)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 7.83 $ 7.68 $ 8.00 $ 7.70 $ 8.07 $ 7.79
=========== =========== =========== =========== =========== ===========
Total Investment Return**
Based on net asset value per share 4.60%+++ .44% 8.47% .10% 8.77% 6.63%
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses, net of waiver and excluding interest
expense .70%* .70% .71% .71% .71% .72%
=========== =========== =========== =========== =========== ===========
Expenses, net of waiver 1.10%* .99% .88% .91% .96% 1.03%
=========== =========== =========== =========== =========== ===========
Expenses 1.11%* .99% .89% .91% .96% 1.03%
=========== =========== =========== =========== =========== ===========
Investment income--net 4.05%* 4.15% 4.33% 4.79% 4.88% 5.10%
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 175,791 $ 172,083 $ 182,216 $ 183,007 $ 187,805 $ 161,110
=========== =========== =========== =========== =========== ===========
Portfolio turnover 10% 41% 47% 44% 33% 28%
=========== =========== =========== =========== =========== ===========
* Annualized.
** Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
++++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock Municipal Insured Fund
(As Restated for the Years Ended 2006, 2005, 2004, 2003 and 2002. See Note 8)
Investor B
For the Six
The following per share data and ratios Months Ended
have been derived from information December 31, For the Year Ended June 30,
provided in the financial statements. 2006 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 7.68 $ 7.99 $ 7.69 $ 8.07 $ 7.79 $ 7.68
----------- ----------- ----------- ----------- ----------- -----------
Investment income--net .14++++ .29++++ .30++++ .34++++ .35++++ .36
Realized and unrealized gain (loss)--net .19 (.28) .30 (.38) .28 .11
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .33 .01 .60 (.04) .63 .47
----------- ----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.14) (.29) (.30) (.34) (.35) (.36)
Realized gain--net (.04) (.03) -- -- -- --++
----------- ----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.18) (.32) (.30) (.34) (.35) (.36)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 7.83 $ 7.68 $ 7.99 $ 7.69 $ 8.07 $ 7.79
=========== =========== =========== =========== =========== ===========
Total Investment Return**
Based on net asset value per share 4.34%+++ .05% 7.93% (.53%) 8.21% 6.23%
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses, net of waiver and excluding interest
expense 1.21%* 1.21% 1.21% 1.21% 1.22% 1.23%
=========== =========== =========== =========== =========== ===========
Expenses, net of waiver 1.61%* 1.50% 1.39% 1.42% 1.47% 1.53%
=========== =========== =========== =========== =========== ===========
Expenses 1.61%* 1.50% 1.40% 1.42% 1.47% 1.53%
=========== =========== =========== =========== =========== ===========
Investment income--net 3.54%* 3.64% 3.83% 4.29% 4.38% 4.58%
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 55,523 $ 66,477 $ 91,355 $ 111,524 $ 160,177 $ 182,241
=========== =========== =========== =========== =========== ===========
Portfolio turnover 10% 41% 47% 44% 33% 28%
=========== =========== =========== =========== =========== ===========
* Annualized.
** Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
++++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock Municipal Insured Fund
Investor C
For the Period
October 2, 2006++
The following per share data and ratios have been derived to December 31,
from information provided in the financial statements. 2006
Per Share Operating Performance
Net asset value, beginning of period $ 7.88
---------------
Investment income--net*** .05
Realized and unrealized gain--net .02
---------------
Total from investment operations .07
---------------
Less dividends and distributions:
Investment income--net (.07)
Realized gain--net (.04)
---------------
Total dividends and distributions (.11)
---------------
Net asset value, end of period $ 7.84
===============
Total Investment Return**
Based on net asset value per share .85%+++
===============
Ratios to Average Net Assets
Expenses, net of waiver and excluding interest expense 1.39%*
===============
Expenses, net of waiver 1.79%*
===============
Expenses 1.79%*
===============
Investment income--net 3.31%*
===============
Supplemental Data
Net assets, end of period (in thousands) $ 1,208
===============
Portfolio turnover 10%
===============
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Based on average shares outstanding.
++ Commencement of operations.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock Municipal Insured Fund
(As Restated for the Years Ended 2006, 2005, 2004, 2003 and 2002. See Note 8)
Investor C1
For the Six
The following per share data and ratios Months Ended
have been derived from information December 31, For the Year Ended June 30,
provided in the financial statements. 2006 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 7.68 $ 8.00 $ 7.69 $ 8.07 $ 7.79 $ 7.68
----------- ----------- ----------- ----------- ----------- -----------
Investment income--net .14++++ .28++++ .30++++ .33++++ .34++++ .35
Realized and unrealized gain (loss)--net .19 (.29) .31 (.38) .28 .11
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .33 (.01) .61 (.05) .62 .46
----------- ----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.14) (.28) (.30) (.33) (.34) (.35)
Realized gain--net (.04) (.03) -- -- -- --++
----------- ----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.18) (.31) (.30) (.33) (.34) (.35)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 7.83 $ 7.68 $ 8.00 $ 7.69 $ 8.07 $ 7.79
=========== =========== =========== =========== =========== ===========
Total Investment Return**
Based on net asset value per share 4.31%+++ (.12%) 8.01% (.58%) 8.16% 6.18%
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses, net of waiver and excluding interest
expense 1.27%* 1.26% 1.26% 1.26% 1.27% 1.28%
=========== =========== =========== =========== =========== ===========
Expenses, net of waiver 1.67%* 1.55% 1.44% 1.47% 1.52% 1.58%
=========== =========== =========== =========== =========== ===========
Expenses 1.67%* 1.55% 1.45% 1.47% 1.52% 1.58%
=========== =========== =========== =========== =========== ===========
Investment income--net 3.51%* 3.59% 3.77% 4.23% 4.31% 4.56%
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 57,843 $ 61,046 $ 64,682 $ 61,794 $ 66,089 $ 34,541
=========== =========== =========== =========== =========== ===========
Portfolio turnover 10% 41% 47% 44% 33% 28%
=========== =========== =========== =========== =========== ===========
* Annualized.
** Total investment returns exclude the effects of sales charges.
++ Amount is less than $(.01) per share.
++++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock National Municipal Fund
(As Restated for the Years Ended 2006, 2005, 2004, 2003 and 2002. See Note 8)
Institutional
For the Six
The following per share data and ratios Months Ended
have been derived from information December 31, For the Year Ended June 30,
provided in the financial statements. 2006 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 10.36 $ 10.66 $ 10.29 $ 10.54 $ 10.26 $ 10.14
----------- ----------- ----------- ----------- ----------- -----------
Investment income--net .25+++ .51+++ .53+++ .55+++ .56+++ .62
Realized and unrealized gain (loss)--net .23 (.30) .37 (.25) .28 .12
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .48 .21 .90 .30 .84 .74
----------- ----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.27) (.51) (.53) (.55) (.56) (.62)
Realized gain--net -- -- -- -- -- --++
----------- ----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.27) (.51) (.53) (.55) (.56) (.62)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 10.57 $ 10.36 $ 10.66 $ 10.29 $ 10.54 $ 10.26
=========== =========== =========== =========== =========== ===========
Total Investment Return
Based on net asset value per share 4.47%++++ 2.02% 8.89% 2.88% 8.34% 6.98%
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses, net of waiver and excluding interest
expense .56%* .58% .59% .60% .59% .62%
=========== =========== =========== =========== =========== ===========
Expenses, net of waiver .98%* .83% .72% .71% .75% .96%
=========== =========== =========== =========== =========== ===========
Expenses .99%* .83% .72% .71% .76% .96%
=========== =========== =========== =========== =========== ===========
Investment income--net 4.72%* 4.87% 5.02% 5.23% 5.35% 5.55%
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 941,220 $ 890,984 $ 909,125 $ 907,419 $ 624,192 $ 626,935
=========== =========== =========== =========== =========== ===========
Portfolio turnover 46% 56% 33% 20% 34% 27%
=========== =========== =========== =========== =========== ===========
* Annualized.
+++ Based on average shares outstanding.
++ Amount is less than $(.01) per share.
++++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock National Municipal Fund
(As Restated for the Years Ended 2006, 2005, 2004, 2003 and 2002. See Note 8)
Investor A
For the Six
The following per share data and ratios Months Ended
have been derived from information December 31, For the Year Ended June 30,
provided in the financial statements. 2006 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 10.37 $ 10.67 $ 10.29 $ 10.54 $ 10.27 $ 10.15
----------- ----------- ----------- ----------- ----------- -----------
Investment income--net .24+++ .49+++ .50+++ .52+++ .53+++ .53
Realized and unrealized gain (loss)--net .21 (.30) .38 (.25) .27 .12
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .45 .19 .88 .27 .80 .65
----------- ----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.24) (.49) (.50) (.52) (.53) (.53)
Realized gain--net -- -- -- -- -- --++
----------- ----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.24) (.49) (.50) (.52) (.53) (.53)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 10.58 $ 10.37 $ 10.67 $ 10.29 $ 10.54 $ 10.27
=========== =========== =========== =========== =========== ===========
Total Investment Return*
Based on net asset value per share 4.34%++++ 1.77% 8.73% 2.62% 7.98% 6.72%
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses, net of waiver and excluding interest
expense .81%** .83% .84% .85% .84% .87%
=========== =========== =========== =========== =========== ===========
Expenses, net of waiver 1.23%** 1.08% .97% .95% 1.00% 1.20%
=========== =========== =========== =========== =========== ===========
Expenses 1.24%** 1.08% .97% .96% 1.01% 1.20%
=========== =========== =========== =========== =========== ===========
Investment income--net 4.47%** 4.61% 4.76% 4.97% 5.10% 5.30%
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 321,965 $ 283,814 $ 248,231 $ 207,376 $ 200,108 $ 137,225
=========== =========== =========== =========== =========== ===========
Portfolio turnover 46% 56% 33% 20% 34% 27%
=========== =========== =========== =========== =========== ===========
* Total investment returns exclude the effects of sales charges.
** Annualized.
+++ Based on average shares outstanding.
++ Amount is less than $(.01) per share.
++++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock National Municipal Fund
(As Restated for the Years Ended 2006, 2005, 2004, 2003 and 2002. See Note 8)
Investor B
For the Six
The following per share data and ratios Months Ended
have been derived from information December 31, For the Year Ended June 30,
provided in the financial statements. 2006 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 10.36 $ 10.66 $ 10.28 $ 10.53 $ 10.26 $ 10.14
----------- ----------- ----------- ----------- ----------- -----------
Investment income--net .21+++ .43+++ .45+++ .47+++ .48+++ .53
Realized and unrealized gain (loss)--net .21 (.30) .38 (.26) .27 .12
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .42 .13 .83 .21 .75 .65
----------- ----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.21) (.43) (.45) (.46) (.48) (.53)
Realized gain--net -- -- -- -- -- --++
----------- ----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.21) (.43) (.45) (.46) (.48) (.53)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 10.57 $ 10.36 $ 10.66 $ 10.28 $ 10.53 $ 10.26
=========== =========== =========== =========== =========== ===========
Total Investment Return*
Based on net asset value per share 4.07%++++ 1.25% 8.18% 2.10% 7.43% 6.18%
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses, net of waiver and excluding interest
expense 1.32%** 1.34% 1.35% 1.35% 1.34% 1.38%
=========== =========== =========== =========== =========== ===========
Expenses, net of waiver 1.74%** 1.59% 1.48% 1.46% 1.51% 1.71%
=========== =========== =========== =========== =========== ===========
Expenses 1.75%** 1.59% 1.48% 1.46% 1.52% 1.71%
=========== =========== =========== =========== =========== ===========
Investment income--net 3.96%** 4.11% 4.27% 4.47% 4.59% 4.80%
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 120,247 $ 134,177 $ 177,553 $ 217,814 $ 321,477 $ 295,827
=========== =========== =========== =========== =========== ===========
Portfolio turnover 46% 56% 33% 20% 34% 27%
=========== =========== =========== =========== =========== ===========
* Total investment returns exclude the effects of sales charges.
** Annualized.
+++ Based on average shares outstanding.
++ Amount is less than $(.01) per share.
++++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock National Municipal Fund
Investor C
For the Period
October 2, 2006++
The following per share data and ratios have been derived to December 31,
from information provided in the financial statements. 2006
Per Share Operating Performance
Net asset value, beginning of period $ 10.57
---------------
Investment income--net*** .07
Realized and unrealized gain--net .03
---------------
Total from investment operations .10
---------------
Less dividends and distributions investment income--net (.09)
---------------
Net asset value, end of period $ 10.58
===============
Total Investment Return*
Based on net asset value per share 1.00%++++
===============
Ratios to Average Net Assets
Expenses, net of waiver and excluding interest expense 1.58%**
===============
Expenses, net of waiver 2.00%**
===============
Expenses 2.01%**
===============
Investment income--net 3.65%**
===============
Supplemental Data
Net assets, end of period (in thousands) $ 15,205
===============
Portfolio turnover 46%
===============
* Total investment returns exclude the effects of sales charges.
** Annualized.
*** Based on average shares outstanding.
++ Commencement of operations.
++++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock National Municipal Fund
(As Restated for the Years Ended 2006, 2005, 2004, 2003 and 2002. See Note 8)
Investor C1
For the Six
The following per share data and ratios Months Ended
have been derived from information December 31, For the Year Ended June 30,
provided in the financial statements. 2006 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 10.36 $ 10.66 $ 10.29 $ 10.54 $ 10.26 $ 10.14
----------- ----------- ----------- ----------- ----------- -----------
Investment income--net .21+++ .43+++ .44+++ .46+++ .47+++ .53
Realized and unrealized gain (loss)--net .22 (.29) .37 (.25) .28 .12
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .43 .14 .81 .21 .75 .65
----------- ----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.22) (.44) (.44) (.46) (.47) (.53)
Realized gain--net -- -- -- -- -- --++
----------- ----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.22) (.44) (.44) (.46) (.47) (.53)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 10.57 $ 10.36 $ 10.66 $ 10.29 $ 10.54 $ 10.26
=========== =========== =========== =========== =========== ===========
Total Investment Return*
Based on net asset value per share 4.05%++++ 1.20% 8.02% 2.05% 7.48% 6.13%
=========== =========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses, net of waiver and excluding interest
expense 1.38%** 1.39% 1.40% 1.40% 1.39% 1.43%
=========== =========== =========== =========== =========== ===========
Expenses, net of waiver 1.80%** 1.63% 1.53% 1.51% 1.56% 1.76%
=========== =========== =========== =========== =========== ===========
Expenses 1.80%** 1.63% 1.53% 1.51% 1.57% 1.76%
=========== =========== =========== =========== =========== ===========
Investment income--net 3.93%** 4.05% 4.20% 4.42% 4.54% 4.76%
=========== =========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 155,509 $ 139,447 $ 107,893 $ 74,849 $ 77,906 $ 52,822
=========== =========== =========== =========== =========== ===========
Portfolio turnover 46% 56% 33% 20% 34% 27%
=========== =========== =========== =========== =========== ===========
* Total investment returns exclude the effects of sales charges.
** Annualized.
+++ Based on average shares outstanding.
++ Amount is less than $(.01) per share.
++++ Aggregate total investment income.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Financial Highlights (continued) BlackRock High Yield Municipal Fund
For the Period
August 1, 2006++
The following per share data and ratios have been derived to December 31, 2006
from information provided in the financial statements. Institutional Investor A Investor C
Per Share Operating Performance
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00
----------- ----------- -----------
Investment income--net*** .17 .14 .12
Realized and unrealized gain--net .19 .19 .19
----------- ----------- -----------
Total from investment operations .36 .33 .31
----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.18) (.17) (.13)
Realized gain--net --++++ --++++ --++++
----------- ----------- -----------
Total dividends and distributions (.18) (.17) (.13)
----------- ----------- -----------
Net asset value, end of period $ 10.18 $ 10.16 $ 10.18
=========== =========== ===========
Total Investment Return**
Based on net asset value per share 3.58%+++ 3.29%+++ 3.16%+++
=========== =========== ===========
Ratios to Average Net Assets
Expenses, net of waiver .64%* .89%* 1.64%*
=========== =========== ===========
Expenses 1.06%* 1.26%* 2.04%*
=========== =========== ===========
Investment income--net 4.20%* 4.12%* 3.32%*
=========== =========== ===========
Supplemental Data
Net assets, end of period (in thousands) $ 46,922 $ 2,014 $ 2,238
=========== =========== ===========
Portfolio turnover 5.67% 5.67% 5.67%
=========== =========== ===========
* Annualized.
** Total investment returns exclude the effects of sales charges for Investor A and Investor C Shares.
*** Based on average shares outstanding.
++ Commencement of operations.
++++ Amount is less than $(.01) per share.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements
1. Significant Accounting Policies:
On September 29, 2006, Merrill Lynch Municipal Bond Fund, Inc. (consisting of
Merrill Lynch Short-Term Portfolio, Merrill Lynch Insured Portfolio, Merrill
Lynch National Portfolio and Merrill Lynch High Yield Portfolio) was renamed
BlackRock Municipal Bond Fund, Inc. (the "Bond Fund"), consisting of BlackRock
Short-Term Municipal Fund, BlackRock Municipal Insured Fund, BlackRock
National Municipal Fund and BlackRock High Yield Municipal Fund (the "Funds"
or individually as the "Fund"), respectively. The Bond Fund is registered
under the Investment Company Act of 1940, as amended, as a diversified, open-
end management investment company. For the BlackRock High Yield Municipal
Fund, prior to the commencement of operations on August 1, 2006, the Fund had
no operations other than those relating to organizational matters and the
issue of the 75 shares of common stock of the Fund to Fund Asset Management,
L.P. ("FAM") for $750. The Bond Fund's financial statements are prepared in
conformity with U.S. generally accepted accounting principles, which may
require the use of management accruals and estimates. Actual results may
differ from these estimates. These unaudited financial statements reflect all
adjustments, which are, in the opinion of management, necessary to present a
fair statement of the results for the interim period. All such adjustments are
of a normal, recurring nature. The Bond Fund's Funds offer multiple classes of
shares. Effective October 2, 2006, Class I, Class A, Class B and Class C
Shares were redesignated Institutional, Investor A, Investor B and Investor C1
Shares, respectively. BlackRock High Yield Municipal Fund's Class C Shares
were redesignated Investor C and BlackRock Short-Term Municipal Fund's Class A
Shares were redesignated Investor A1. Newly created BlackRock, Investor A and
Investor C Shares commenced operations on October 2, 2006, with the exception
of BlackRock High Yield Municipal Fund, which commenced on August 1, 2006.
BlackRock and Institutional Shares are sold without a sales charge and only to
certain eligible investors. Investor A and Investor A1 Shares are sold with a
front-end sales charge. Shares of Investor B, Investor C and Investor C1 may
be subject to a contingent deferred sales charge. All classes of shares have
identical voting, dividend, liquidation and other rights and the same terms
and conditions, except that Investor A, Investor A1, Investor B, Investor C
and Investor C1 Shares bear certain expenses related to the account
maintenance of such shares, and Investor B, Investor C and Investor C1 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 Investor B
shareholders may vote on certain changes to the Investor A and Investor A1
distribution plan, as applicable). 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 Bond
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 Bond Fund under the general
direction of the Board of Directors. Such valuations and procedures are
reviewed periodically by the Board of Directors of the Bond 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. Options traded in the OTC market are valued at 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
Bond 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 Bond
Fund.
(b) Derivative financial instruments--The Funds may engage in various
portfolio investment strategies both to increase their returns and to hedge,
or protect, their 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 Funds may purchase or sell financial
futures contracts and options on such financial futures contracts. Financial
futures contracts are contracts for delayed delivery of securities at a
specific future date and at a specific price or yield.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements (continued)
Upon entering into a contract, the Funds deposit and maintain as collateral
such initial margin as required by the exchange on which the transaction is
effected. Pursuant to the contract, the Funds 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 Funds as unrealized gains or losses. When the contract is
closed, the Funds 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 Funds may enter into forward interest rate
swaps. In a forward interest rate swap, the Funds 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 Funds
from the counterparty. When the agreement is closed, the Funds record a
realized gain or loss in an amount equal to the value of the agreement.
* Swaps--Each Fund may enter into swap agreements, which are OTC contracts in
which each Fund and a counterparty agree to make periodic net payments on a
specified notional amount. The net payments can be made for a set period of
time or may be triggered by a pre-determined credit event. The net periodic
payments may be based on a fixed or variable interest rate; the change in
market value of a specified security, basket of securities or index; or the
return generated by a security. These periodic payments received or made by
each Fund are recorded in the accompanying Statement of Operations as realized
gains or losses, respectively. Gains or losses are also realized upon
termination of the swap agreements. Swaps are marked-to-market daily and
changes in value are recorded as unrealized appreciation (depreciation). Risks
include changes in the returns of the underlying instruments, failure of the
counterparties to perform under the contracts' terms and the possible lack of
liquidity with respect to the swap agreements.
(c) Municipal bonds held in trust--The BlackRock Municipal Insured Fund and
BlackRock National Municipal Fund invest in leveraged residual certificates
("TOB Residuals") issued by tender option bond trusts ("TOBs"). A TOB is
established by a third party sponsor forming a special purpose entity, into
which a fund, or an agent on behalf of the fund, transfers municipal
securities. A TOB typically issues two classes of beneficial interests: short-
term floating rate certificates, which are sold to third party investors, and
residual certificates, which are generally issued to the fund which made the
transfer or to affiliates of the fund. Each of these Funds' transfers of the
municipal securities to a TOB do not qualify for sale treatment under
Statement of Financial Accounting Standards No. 140 "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities,"
therefore the municipal securities deposited into a TOB are presented in each
of these Funds' schedules of investments and the proceeds from the
transactions are reported as a liability for trust certificates of each of
these Funds. Interest income from the underlying security is recorded by these
Funds on an accrual basis. Interest expense incurred on the secured borrowing
and other expenses related to remarketing, administration and trustee services
to a TOB are reported as expenses of a fund. The floating rate certificates
have interest rates that generally reset weekly and their holders have the
option to tender certificates to the TOB for redemption at par at each reset
date. The residual interests held by these Funds include the right of the
Funds (1) to cause the holders of a proportional share of floating rate
certificates to tender their certificates at par, and (2) to transfer a
corresponding share of the municipal securities from the TOB to the Funds. At
December 31, 2006, the aggregate value of the underlying municipal securities
transferred to TOBs and the related liability for trust certificates were:
Range of
Interest Underlying
Rates on Municipal
Liability for the Liability Bonds
Trust for Trust Transferred
Certificates Certificates to TOBs
BlackRock
Municipal Insured 3.42% -
Fund $ 92,563,129 3.98% $182,874,071
BlackRock National 3.56%-
Municipal Fund $152,705,330 3.69% $317,564,900
Financial transactions executed through TOBs generally will underperform the
market for fixed rate municipal bonds in a rising interest rate environment,
but tend to outperform the market for fixed rate bonds when interest rates
decline or remain relatively stable. Should short-term interest rates rise,
the Funds' investments in TOB Residuals likely will adversely affect the
Funds' investment income-net and distributions to shareholders. Fluctuations
in the market value of municipal securities deposited into the TOB may
adversely affect these Funds' net asset value per share.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements (continued)
While the Funds' investment policies and restrictions expressly permit
investments in inverse floating rate securities such as TOB Residuals, they
generally do not allow the Funds to borrow money for purposes of making
investments. The Funds' management believes that the Funds' restrictions on
borrowings do not apply to the secured borrowings deemed to have occurred for
accounting purposes.
(d) Income taxes--It is the Bond 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.
(e) 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 Funds amortize all
premiums and discounts on debt securities.
(f) Prepaid registration fees--Prepaid registration fees are charged to
expense as the related shares are issued.
(g) 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.
(h) Expenses--Certain expenses have been allocated to the individual Funds in
the Bond Fund on a pro rata basis based upon the respective aggregate net
asset value of each Fund included in the Bond Fund.
(i) Insurance--BlackRock Municipal Insured Fund: Where bonds in the Fund 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 Fund.
(j) Offering costs--BlackRock Municipal High Yield Fund: Offering costs are
amortized over a 12-month period beginning with the commencement of operations
of the Fund.
(k) Recent accounting pronouncements--In July 2006, the Financial Accounting
Standards Board ("FASB") issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes - an interpretation of FASB Statement No.
109." FIN 48 prescribes the minimum recognition threshold a tax position must
meet in connection with accounting for uncertainties in income tax positions
taken or expected to be taken by an entity including mutual funds before being
measured and recognized in the financial statements. Adoption of FIN 48 is
required for the last net asset value calculation in the first required
financial statement reporting period for fiscal years beginning after December
15, 2006. The impact on the Funds' financial statements, if any, is currently
being assessed.
In addition, in September 2006, Statement of Financial Accounting Standards
No. 157, "Fair Value Measurements" ("FAS 157"), was issued and is effective
for fiscal years beginning after November 15, 2007. FAS 157 defines fair
value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements. Management is currently evaluating
the implications of FAS 157. At this time, its impact on the Funds' financial
statements has not been determined.
2. Investment Advisory Agreement and Transactions with Affiliates:
On September 29, 2006, BlackRock, Inc. and Merrill Lynch & Co., Inc. ("Merrill
Lynch") combined Merrill Lynch's investment management business, Merrill Lynch
Investment Managers, L.P., ("MLIM"), and its affiliates, including FAM, with
BlackRock, Inc. to create a new independent company. Merrill Lynch has a 49.8%
economic interest and a 45% voting interest in the combined company and The
PNC Financial Services Group, Inc. ("PNC"), has approximately a 34% economic
and voting interest. The new company operates under the BlackRock name and is
governed by a board of directors with a majority of independent members.
On August 15, 2006, shareholders of each of the Funds approved a new
Investment Advisory Agreement with BlackRock Advisors, Inc. (the "Manager"),
an indirect, wholly owned subsidiary of BlackRock, Inc. BlackRock Advisors,
Inc. was recently reorganized into a limited liability company and renamed
BlackRock Advisors, LLC. The new Investment Advisory Agreement between each
Fund and the Manager became effective on September 29, 2006 and was revised on
October 27, 2006. Prior to September 29, 2006, FAM was the Fund's Manager. The
general partner of FAM is Princeton Services, Inc. ("PSI"), an indirect,
wholly owned subsidiary of Merrill Lynch, which is the limited partner. The
Funds have also entered into separate Distribution Agreements and Distribution
Plans with FAM Distributors, Inc. ("FAMD") and BlackRock Distributors, Inc.
("BDI") (collectively, the "Distributor"). FAMD is a wholly owned subsidiary
of Merrill Lynch Group, Inc. and BDI is an affiliate of BlackRock, Inc.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements (continued)
The Manager is responsible for the management of each of the Funds' portfolios
and provides the necessary personnel, facilities, equipment and certain other
services necessary to the operation of the Bond Fund. For such services, the
Manager receives at the end of each month a fee with respect to each Fund 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
BlackRock BlackRock BlackRock
Aggregate of Average Short-Term Municipal National
Daily Net Assets of the Municipal Insured Municipal
Three Combined Funds Fund Fund Fund
Not exceeding $250 million .40 % .40 % .50 %
In excess of $250 million but
not exceeding $400 million .375 .375 .475
In excess of $400 million but
not exceeding $550 million .35 .375 .475
In excess of $550 million but
not exceeding $1.5 billion .325 .375 .475
In excess of $1.5 billion .325 .35 .475
For the period September 29, 2006 to October 27, 2006, a different and lower
fee schedule was in effect for BlackRock Municipal Insured Fund and BlackRock
National Municipal Fund.
For the BlackRock High Yield Municipal Fund, the Manager has voluntarily
agreed to waive the management fee where the Fund will pay .20% of average
daily net assets. This waiver can be discontinued at any time. For the period
July 1, 2006 to September 29, 2006, FAM earned fees of $31,960, of which
$26,149 was waived. For the period September 30, 2006 to December 31, 2006,
the Manager earned fees of $65,498, of which $45,248 was waived.
The BlackRock High Yield Municipal Fund's rates are as follows: .55% of the
Fund's average daily net assets not exceeding $250 million; .525% of average
daily net assets in excess of $250 million but not exceeding $500 million; and
..50% of average daily net assets in excess of $500 million. For the BlackRock
Short-Term Municipal Fund effective October 16, 2006, the Manager has
contractually agreed to waive expenses in order to limit expenses as a
percentage of average daily net assets allocated to each class as follows:
..35% for BlackRock Shares, .45% for Institutional Shares and .80% for Investor
A Shares, until February 1, 2007. In addition to this contractual waiver, the
Manager has voluntarily agreed to waive fees or expenses in order to limit
expenses as follows: .35% for Institutional Shares, .60% for Investor A
Shares, .45% for Investor A1 Shares, .70% for Investor B Shares and 1.35% for
Investor C Shares. For the six months ended December 31, 2006, the Manager
earned fees of $543,153, of which $90,051 was waived.
In addition, the Manager has entered into a sub-advisory agreement with
BlackRock Investment Management, LLC ("BIM"), an affiliate of the Manager,
under which the Manager pays the Sub-Adviser for services it provides a
monthly fee that is a percentage of the management fee paid by each Fund to
the Manager.
The Manager (and previously FAM) has agreed to waive its advisory fee for each
Fund by the amount of advisory fee each Fund pays to the Manager (and
previously FAM) indirectly through each Fund's investment in the Merrill Lynch
Institutional Tax-Exempt Fund. For the six months ended December 31, 2006, the
waivers were as follows:
For the Period For the Period
July 1, September 30,
2006 to 2006 to
September 29, December 31,
2006 Waived 2006 Waived by
by FAM* the Manager
BlackRock Short-Term
Municipal Fund $ 8,247 $ 3,337
BlackRock Municipal
Insured Fund $ 3,580 $ 5,060
BlackRock National
Municipal Fund $ 20,279 $ 28,318
BlackRock High Yield
Municipal Fund $ 758 $ 839
* BlackRock High Yield Municipal Fund commenced operations on
August 1, 2006
Pursuant to the Distribution Plans adopted by the Bond Fund on behalf of the
Funds in accordance with Rule 12b-1 under the Investment Company Act of 1940,
each Fund pays the Distributor ongoing account maintenance ("service fees")
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:
Service Fees
BlackRock BlackRock BlackRock BlackRock
Short-Term Municipal National High Yield
Municipal Insured Municipal Municipal
Fund Fund Fund Fund
Investor A .25% .25% .25% .25%
Investor A1 .10% -- -- --
Investor B .15% .25% .25% --
Investor C .25% .25% .25% .25%
Investor C1 -- .25% .25% --
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements (continued)
Distribution Fees
BlackRock BlackRock BlackRock BlackRock
Short-Term Municipal National High Yield
Municipal Insured Municipal Municipal
Fund Fund Fund Fund
Investor B .20% .50% .50% --
Investor C .75% .75% .75% .75%
Investor C1 -- .55% .55% --
Pursuant to a sub-agreement with the Distributor, broker-dealers, including
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a wholly owned
subsidiary of Merrill Lynch, and an affiliate of the Manager, also provides
account maintenance and distribution services to the Bond Fund. The ongoing
service fee compensates the Distributor and each broker-dealer (including
MLPF&S) for providing account maintenance services to Investor A, Investor A1,
Investor B, Investor C and Investor C1 shareholders. The ongoing distribution
fee compensates the Distributor and the broker-dealers for providing
shareholder and distribution-related services to Investor B, Investor C and
Investor C1 shareholders.
For the six months ended December 31, 2006, FAMD, the Fund's sole Distributor
until September 29, 2006, and BDI earned underwriting discounts and direct
commissions and MLPF&S earned dealer concessions on sales of the Fund's
Institutional and Investor A Shares as follows:
Service Fees
BlackRock BlackRock BlackRock BlackRock
Short-Term Municipal National High Yield
Municipal Insured Municipal Municipal
Fund Fund Fund Fund
Institutional Shares:
FAMD -- $ 750 $ 337 --
MLPF&S -- $ 750 $ 337 --
Investor A Shares:
FAMD $ 425 $ 2,449 $ 939 --
MLPF&S $4,467 $24,605 $8,704 --
BDI -- $ 2 -- --
For the six months ended December 31, 2006, MLPF&S received contingent
deferred sales charges relating to Investor B, Investor C and Investor C1
Shares as follows:
Investor B Investor C Investor C1
BlackRock Short-Term
Municipal Fund $ 3,506 $ 1 --
BlackRock Municipal
Insured Fund $ 6,433 $ 1 $ 610
BlackRock National
Municipal Fund $11,000 $700 $6,458
BlackRock High Yield
Municipal Fund -- $ 1 --
Furthermore, MLPF&S received contingent deferred sales charges relating to
transactions subject to front-end sales charge waivers as follows:
Investor A Investor A1
BlackRock Short-Term
Municipal Fund -- $546
BlackRock National
Municipal Fund $ 80 --
BlackRock maintains a call center, which is responsible for providing certain
shareholder services to the Bond Fund, such as responding to shareholder
inquiries and processing transactions based upon instructions from
shareholders with respect to the subscription and redemption of fund shares.
During the period September 29, 2006 to December 31, 2006, the following
amounts have been accrued by each Fund to reimburse BlackRock for costs
incurred running the call center, which are a component of the transfer agent
fees in the accompanying Statements of Operations.
Call Center Fees
BlackRock BlackRock BlackRock BlackRock
Short-Term Municipal National High Yield
Municipal Insured Municipal Municipal
Fund Fund Fund Fund
Institutional $ 638 $ 4,226 $12,222 $ 4,367
Investor A -- $ 847 $ 1,298 $ 260
Investor A1 $ 344 -- -- --
Investor B $ 109 $ 391 $ 764 --
Investor C -- -- -- $ 276
Investor C1 -- $ 266 $ 620 --
For the six months ended December 31, 2006, each Fund reimbursed FAM and the
Manager for certain accounting services. The reimbursements were as follows:
For the Period For the Period
July 1, 2006 September 30, 2006
to September 29, to December 31,
2006 Reimbursed 2006 Reimbursed
to FAM* to the Manager
BlackRock Short-Term
Municipal Fund $1,671 $1,671
BlackRock Municipal
Insured Fund $4,736 $4,736
BlackRock National
Municipal Fund $7,370 $7,370
BlackRock High Yield
Municipal Fund $ 131 $ 131
* BlackRock High Yield Municipal Fund commenced operations on
August 1, 2006.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements (continued)
Effective September 29, 2006, PFPC Inc., an indirect, wholly owned subsidiary
of PNC and an affiliate of the Manager, became each Fund's transfer agent.
Prior to September 29, 2006, each Fund's transfer agent was Financial Data
Services, Inc. ("FDS"), a wholly owned subsidiary of Merrill Lynch.
Prior to September 29, 2006, certain officers and/or directors of the Bond
Fund were officers and/or directors of MLIM, FAM, PSI, FAMD, FDS, Merrill
Lynch, and/or MLIM, LLC.
Commencing September 29, 2006, certain officers and/or directors of the Bond
Fund are officers and/or directors of BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
six months ended December 31, 2006 were as follows:
Purchases Sales
BlackRock Short-Term
Municipal Fund $205,186,121 $225,907,200
BlackRock Municipal
Insured Fund $ 97,128,195 $133,569,853
BlackRock National
Municipal Fund $487,841,454 $432,966,146
BlackRock High Yield
Municipal Fund $ 51,850,132 $ 2,347,125
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share transactions
for the six months ended December 31, 2006 and the year ended June 30, 2006
were $(28,028,846) and $(118,737,525), respectively, for the BlackRock Short-
Term Municipal Fund; $(31,426,731) and $(66,044,701), respectively, for the
BlackRock Municipal Insured Fund; and $76,044,291 and $46,489,740,
respectively, for the BlackRock National Municipal Fund; and for the period
August 1, 2006 (commencement of operations) to December 31, 2006, $50,480,452
for the BlackRock High Yield Municipal Fund.
Transactions in capital shares for each class were as follows:
BlackRock Short-Term Municipal Fund
BlackRock Shares for the
Period October 2, 2006* Dollar
to December 31, 2006 Shares Amount
Shares sold 2,015 $ 20,003
Shares issued resulting from
reorganization 1,094,165 10,856,031
Shares issued to shareholders in
reinvestment of dividends 7,391 73,364
-------------- ---------------
Total issued 1,103,571 10,949,398
Shares redeemed (60,592) (601,149)
-------------- ---------------
Net increase 1,042,979 $ 10,348,249
============== ===============
* Commencement of operations.
Institutional Shares for the
Six Months Ended Dollar
December 31, 2006 Shares Amount
Shares sold 756,138 $ 7,526,056
Shares issued resulting from
reorganization 721,266 7,153,239
Shares issued to shareholders in
reinvestment of dividends 132,070 1,309,174
-------------- ---------------
Total issued 1,609,474 15,988,469
Shares redeemed (2,443,968) (24,231,839)
-------------- ---------------
Net decrease (834,494) $ (8,243,370)
============== ===============
Institutional 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)
============== ===============
Investor A Shares for the
Period October 2, 2006* Dollar
to December 31, 2006 Shares Amount
Shares sold 98,358 $ 976,154
Shares issued resulting from
reorganization 2,042 20,254
Shares issued to shareholders in
reinvestment of dividends 168 1,672
-------------- ---------------
Total issued 100,568 998,080
Shares redeemed (4,160) (41,271)
-------------- ---------------
Net increase 96,408 $ 956,809
============== ===============
* Commencement of operations.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements (continued)
Investor A1 Shares for the
Six Months Ended Dollar
December 31, 2006 Shares Amount
Shares sold 552,544 $ 5,482,055
Automatic conversion of shares 41,150 407,926
Shares issued to shareholders in
reinvestment of dividends 111,945 1,111,488
Shares issued resulting from
conversion of Class C 6,091,469 60,465,669
-------------- ---------------
Total issued 6,797,108 67,467,138
Shares redeemed (2,853,534) (28,310,654)
-------------- ---------------
Net increase 3,943,574 $ 39,156,484
============== ===============
Investor A1 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)
============== ===============
Investor B Shares for the
Six Months Ended Dollar
December 31, 2006 Shares Amount
Shares sold 25,043 $ 248,135
Shares issued to shareholders in
reinvestment of dividends 19,373 192,128
-------------- ---------------
Total issued 44,416 440,263
-------------- ---------------
Automatic conversion of shares (41,162) (407,926)
Shares redeemed (679,334) (6,737,569)
-------------- ---------------
Total redeemed (720,496) (7,145,495)
-------------- ---------------
Net decrease (676,080) $ (6,705,232)
============== ===============
Investor 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)
============== ===============
Investor C Shares for the
Period October 2, 2006* Dollar
to December 31, 2006 Shares Amount
Shares sold 57,219 $ 567,910
Shares issued to shareholders in
reinvestment of dividends 129 1,279
-------------- ---------------
Total issued 57,348 569,189
Shares redeemed (2,323) (23,046)
-------------- ---------------
Net increase 55,025 $ 546,143
============== ===============
* Commencement of operations.
Class C Shares for the
Period July 1, 2006 Dollar
to August 25, 2006* Shares Amount
Shares sold 62,189 $ 613,069
Shares issued to shareholders in
reinvestment of dividends 18,853 185,978
-------------- ---------------
Total issued 81,042 799,047
-------------- ---------------
Shares redeemed (448,474) (4,421,307)
Shares redeemed resulting from
conversion to Investor A1 (6,122,405) (60,465,669)
-------------- ---------------
Total redeemed (6,570,879) (64,886,976)
-------------- ---------------
Net decrease (6,489,837) $ (64,087,929)
============== ===============
* On August 25, 2006, Class C was converted to Class A
(Investor A1).
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)
============== ===============
BlackRock Municipal Insured Fund
Institutional Shares for the
Six Months Ended Dollar
December 31, 2006 Shares Amount
Shares sold 958,057 $ 7,503,455
Shares issued to shareholders in
reinvestment of dividends and
distributions 1,035,388 8,128,337
-------------- ---------------
Total issued 1,993,445 15,631,792
Shares redeemed (4,098,049) (32,160,626)
-------------- ---------------
Net decrease (2,104,604) $ (16,528,834)
============== ===============
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements (continued)
Institutional 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)
============== ===============
Investor A Shares for the
Six Months Ended Dollar
December 31, 2006 Shares Amount
Shares sold 1,082,954 $ 8,510,769
Automatic conversion of shares 200,920 1,560,842
Shares issued to shareholders in
reinvestment of dividends and
distributions 293,852 2,305,853
-------------- ---------------
Total issued 1,577,726 12,377,464
Shares redeemed (1,520,461) (11,915,528)
-------------- ---------------
Net increase 57,265 $ 461,936
============== ===============
Investor 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)
============== ===============
Investor B Shares for the
Six Months Ended Dollar
December 31, 2006 Shares Amount
Shares sold 44,948 $ 351,277
Shares issued to shareholders in
reinvestment of dividends and
distributions 81,249 637,305
-------------- ---------------
Total issued 126,197 988,582
-------------- ---------------
Automatic conversion of shares (200,919) (1,560,842)
Shares redeemed (1,486,018) (11,639,433)
-------------- ---------------
Total redeemed (1,686,937) (13,200,275)
-------------- ---------------
Net decrease (1,560,740) $ (12,211,693)
============== ===============
Investor 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)
============== ===============
Investor C Shares for the
Period October 2, 2006* Dollar
to December 31, 2006 Shares Amount
Shares sold 159,780 $ 1,259,184
Shares issued to shareholders in
reinvestment of dividends and
distributions 695 5,469
-------------- ---------------
Total issued 160,475 1,264,653
Shares redeemed (6,344) (50,026)
-------------- ---------------
Net increase 154,131 $ 1,214,627
============== ===============
* Commencement of operations.
Investor C1 Shares for the
Six Months Ended Dollar
December 31, 2006 Shares Amount
Shares sold 247,930 $ 1,936,256
Shares issued to shareholders in
reinvestment of dividends and
distributions 91,315 716,487
-------------- ---------------
Total issued 339,245 2,652,743
Shares redeemed (896,099) (7,015,510)
-------------- ---------------
Net decrease (556,854) $ (4,362,767)
============== ===============
Investor C1 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)
============== ===============
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements (continued)
BlackRock National Municipal Fund
Institutional Shares for the
Six Months Ended Dollar
December 31, 2006 Shares Amount
Shares sold 5,781,835 $ 60,845,023
Shares issued to shareholders in
reinvestment of dividends 1,447,307 15,271,564
-------------- ---------------
Total issued 7,229,142 76,116,587
Shares redeemed (4,189,080) (44,087,429)
-------------- ---------------
Net increase 3,040,062 $ 32,029,158
============== ===============
Institutional 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
============== ===============
Investor A Shares for the
Six Months Ended Dollar
December 31, 2006 Shares Amount
Shares sold 4,444,624 $ 46,859,492
Automatic conversion of shares 262,676 2,748,322
Shares issued to shareholders in
reinvestment of dividends 353,358 3,730,200
-------------- ---------------
Total issued 5,060,658 53,338,014
Shares redeemed (1,998,314) (21,072,787)
-------------- ---------------
Net increase 3,062,344 $ 32,265,227
============== ===============
Investor 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
============== ===============
Investor B Shares for the
Six Months Ended Dollar
December 31, 2006 Shares Amount
Shares sold 484,953 $ 5,117,113
Shares issued to shareholders in
reinvestment of dividends 110,015 1,159,708
-------------- ---------------
Total issued 594,968 6,276,821
-------------- ---------------
Automatic conversion of shares (262,928) (2,748,322)
Shares redeemed (1,908,238) (20,098,739)
-------------- ---------------
Total redeemed (2,171,166) (22,847,061)
-------------- ---------------
Net decrease (1,576,198) $ (16,570,240)
============== ===============
Investor 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)
============== ===============
Investor C Shares for the
Period October 2, 2006* Dollar
to December 31, 2006 Shares Amount
Shares sold 1,457,456 $ 15,431,424
Shares issued to shareholders in
reinvestment of dividends 3,995 42,372
-------------- ---------------
Total issued 1,461,451 15,473,796
Shares redeemed (24,016) (254,875)
-------------- ---------------
Net increase 1,437,435 $ 15,218,921
============== ===============
* Commencement of operations.
Investor C1 Shares for the
Six Months Ended Dollar
December 31, 2006 Shares Amount
Shares sold 2,071,633 $ 21,732,498
Shares issued to shareholders in
reinvestment of dividends 234,355 2,474,792
-------------- ---------------
Total issued 2,305,988 24,207,290
Shares redeemed (1,054,753) (11,106,065)
-------------- ---------------
Net increase 1,251,235 $ 13,101,225
============== ===============
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements (continued)
Investor C1 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
============== ===============
BlackRock High Yield Municipal Fund
Institutional Shares for the
Period August 1, 2006* Dollar
to December 31, 2006 Shares Amount
Shares sold 4,707,582 $ 47,234,990
Shares issued to shareholders in
reinvestment of dividends and
distributions 705 7,176
-------------- ---------------
Total issued 4,708,287 47,242,166
Shares redeemed (97,612) (987,561)
-------------- ---------------
Net increase 4,610,675 $ 46,254,605
============== ===============
* Prior to August 1, 2006 (commencement of operations), the Fund
issued 25 shares to the Manager for $250.
Investor A Shares for the
Period August 1, 2006* Dollar
to December 31, 2006 Shares Amount
Shares sold 262,095 $ 2,653,071
Shares issued to shareholders in
reinvestment of dividends and
distributions 782 7,960
-------------- ---------------
Total issued 262,877 2,661,031
Shares redeemed (64,780) (651,589)
-------------- ---------------
Net increase 198,097 $ 2,009,442
============== ===============
* Prior to August 1, 2006 (commencement of operations), the Fund
issued 25 shares to the Manager for $250.
Investor C Shares for the
Period August 1, 2006* to Dollar
December 31, 2006 Shares Amount
Shares sold 239,546 $ 2,414,767
Shares issued to shareholders in
reinvestment of dividends and
distributions 1,082 10,982
-------------- ---------------
Total issued 240,628 2,425,749
Shares redeemed (20,787) (209,344)
-------------- ---------------
Net increase 219,841 $ 2,216,405
============== ===============
* Prior to August 1, 2006 (commencement of operations), the Fund
issued 25 shares to the Manager for $250.
5. Short-Term Borrowings:
The Bond Fund, on behalf of the Funds, along with certain other funds managed
by the Manager and its affiliates (or MLIM and its affiliates), is a party to
a $500,000,000 credit agreement with a group of lenders. The Bond Fund may
borrow under the credit agreement to fund shareholder redemptions and for
other lawful purposes other than for leverage. The Bond Fund may borrow up to
the maximum amount allowable under the Bond Fund's current prospectus and
statement of additional information, subject to various other legal,
regulatory or contractual limits. On November 22, 2006 the credit agreement
was renewed for one year under substantially the same terms. The Bond Fund
pays a commitment fee of .06% per annum based on the Bond 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 .35% or a base rate as defined in the
credit agreement. The Bond Fund did not borrow under the credit agreement
during the six months ended December 31, 2006.
6. Capital Loss Carryforward:
BlackRock Short-Term Municipal Fund
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.
BlackRock National Municipal Fund
On June 30, 2006, the Fund had a net capital loss carryforward of $48,879,487,
of which $18,431,171 expires in 2007, $27,469,653 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.
7. Acquisition of BlackRock Ultra Short Municipal Portfolio:
On October 16, 2006, BlackRock Short-Term Municipal Fund of the Bond Fund (the
"Fund") acquired all of the net assets of BlackRock Ultra Short Municipal
Portfolio ("Ultra Short"), pursuant to a plan of reorganization. The
acquisition was accomplished by a tax-free exchange of 722,400 shares of
common stock of Ultra Short for 1,817,473 shares of the Fund. Ultra Short's
net assets on that date of $18,029,524, including $130,269 of accumulated net
realized losses and $28,132 of net unrealized depreciation were combined with
those of the Fund.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements (continued)
8. Restatement Information for BlackRock Municipal Insured Fund and BlackRock
National Municipal Fund:
During the six months ended December 31, 2006, BlackRock Municipal Insured
Fund and BlackRock National Municipal Fund determined that the criteria for
sale accounting in Statement of Financial Accounting Standards No. 140 had not
been met for certain transfers of municipal bonds and that these transfers
should have been accounted for as secured borrowings rather than as sales.
Accordingly, the Funds have restated the statement of changes in net assets
for the year ended June 30, 2006 and the financial highlights for the years
ended June 30, 2006, 2005, 2004, 2003 and 2002. The effects of the restatement
were to record the transfers of the municipal bonds as secured borrowings, to
give effect to offsetting changes in realized gain--net and in the change in
unrealized appreciation/ depreciation--net on the transferred municipal
securities and to give effect to interest on the bonds as interest income and
interest on the secured borrowings as interest expense.
Restatement Information for Insured Portfolio
Statement of Changes in Net Assets for the
Year Ended June 30, 2006
Previously
Reported Restated
Realized gain--net $ 7,263,175 $ 6,736,805
Change in unrealized appreciation/
depreciation--net $(45,588,436) $(43,062,066)
Financial Highlights for the Years Ended June 30, 2006, 2005, 2004, 2003 and 2002
2006 2005 2004 2003 2002
Previously Previously Previously Previously Previously
Institutional Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated
Expenses, net
of waiver .45% .74% .46% .63% .46% .66% .46% .71% .47% .78%
Expenses .46% .74% .46% .64% .46% .67% .46% .71% .47% .78%
Portfolio turnover 48.96% 41% 55% 47% 49.27% 44% 38.17% 33% 32.78% 28%
2006 2005 2004 2003 2002
Previously Previously Previously Previously Previously
Investor A Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated
Expenses, net
of waiver .70% .99% .71% .88% .71% .91% .71% .96% .72% 1.03%
Expenses .71% .99% .71% .89% .71% .91% .71% .96% .72% 1.03%
Portfolio turnover 48.96% 41% 55% 47% 49.27% 44% 38.17% 33% 32.78% 28%
2006 2005 2004 2003 2002
Previously Previously Previously Previously Previously
Investor B Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated
Expenses, net
of waiver 1.21% 1.50% 1.21% 1.39% 1.21% 1.42% 1.22% 1.47% 1.23% 1.53%
Expenses 1.21% 1.50% 1.22% 1.40% 1.22% 1.42% 1.22% 1.47% 1.23% 1.53%
Portfolio turnover 48.96% 41% 55% 47% 49.27% 44% 38.17% 33% 32.78% 28%
2006 2005 2004 2003 2002
Previously Previously Previously Previously Previously
Investor C1 Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated
Expenses, net
of waiver 1.26% 1.55% 1.26% 1.44% 1.26% 1.47% 1.27% 1.52% 1.28% 1.58%
Expenses 1.26% 1.55% 1.27% 1.45% 1.27% 1.47% 1.27% 1.52% 1.28% 1.58%
Portfolio turnover 48.96% 41% 55% 47% 49.27% 44% 38.17% 33% 32.78% 28%
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Notes to Financial Statements (concluded)
Restatement Information for National Portfolio
Statement of Changes in Net Assets for the
Year Ended June 30, 2006
Previously
Reported Restated
Realized gain--net $ 12,459,289 $ 12,238,185
Change in unrealized appreciation/
depreciation--net $(53,403,444) $(53,182,340)
Financial Highlights for the Years Ended June 30, 2006, 2005, 2004, 2003 and 2002
2006 2005 2004 2003 2002
Previously Previously Previously Previously Previously
Institutional Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated
Expenses, net
of waiver .58% .83% .59% .72% .60% .71% .59% .75% .62% .96%
Expenses .59% .83% .60% .72% .60% .71% .59% .76% .62% .96%
Portfolio turnover 65.46% 56% 35.28% 33% 22.46% 20% 37.75% 34% 35.75% 27%
2006 2005 2004 2003 2002
Previously Previously Previously Previously Previously
Investor A Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated
Expenses, net
of waiver .83% 1.08% .84% .97% .85% .95% .84% 1.00% .87% 1.20%
Expenses .84% 1.08% .85% .97% .85% .96% .84% 1.01% .87% 1.20%
Portfolio turnover 65.46% 56% 35.28% 33% 22.46% 20% 37.75% 34% 35.75% 27%
2006 2005 2004 2003 2002
Previously Previously Previously Previously Previously
Investor B Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated
Expenses, net
of waiver 1.34% 1.59% 1.35% 1.48% 1.35% 1.46% 1.34% 1.51% 1.38% 1.71%
Expenses 1.35% 1.59% 1.36% 1.48% 1.36% 1.46% 1.35% 1.52% 1.38% 1.71%
Portfolio turnover 65.46% 56% 35.28% 33% 22.46% 20% 37.75% 34% 35.75% 27%
2006 2005 2004 2003 2002
Previously Previously Previously Previously Previously
Investor C1 Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated
Expenses, net
of waiver 1.39% 1.63% 1.40% 1.53% 1.40% 1.51% 1.39% 1.56% 1.43% 1.76%
Expenses 1.40% 1.63% 1.41% 1.53% 1.41% 1.51% 1.40% 1.57% 1.43% 1.76%
Portfolio turnover 65.46% 56% 35.28% 33% 22.46% 20% 37.75% 34% 35.75% 27%
While the Statements of Assets and Liabilities for these Funds as of June 30,
2006, 2005, 2004, 2003 and 2002, not presented herein, have not been reissued
to give effect to the restatement, the principal effects of the restatement
would be to increase investments and payable for floating rate certificates by
corresponding amounts at each year, with no effect on previously reported net
assets.
The Statements of Operations for each of these Funds for the years ended June
30, 2006, 2005, 2004, 2003 and 2002, not presented herein, have not been
reissued to give effect to the restatement. However, the principal effects of
the restatement would be to increase interest income and interest expense and
fees by corresponding amounts each year, and where applicable, to revise
realized gain (loss) on investments--net, and the change in unrealized
appreciation/depreciation on investments--net, by corresponding and offsetting
amounts.
The Statements of Changes in Net Assets for each of these Funds for the years
ended June 30, 2005, 2004, 2003 and 2002, not presented herein, have not been
reissued to give effect to the restatement, but the principal effects of a
restatement, where applicable, would be to revise previously reported realized
gain (loss) on investments - net, and change in unrealized appreciation/
depreciation - net, by corresponding and offsetting amounts.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Proxy Results
BlackRock Short-Term Municipal Fund
During the six-month period ended December 31, 2006, BlackRock Short-Term
Municipal Fund of BlackRock Municipal Bond Fund, Inc.'s shareholders voted on
the following proposals, which were approved at a special shareholders'
meeting on August 15, 2006. A description of the proposals and number of
shares voted are as follows:
Shares Voted Shares Voted Shares Voted
For Against Abstain
To approve a contingent sub-advisory agreement with
BlackRock Advisors, Inc. 18,947,479 844,841 264,729
To approve a new investment advisory agreement with
BlackRock Advisors, Inc. 19,005,277 798,348 253,423
BlackRock Municipal Insured Fund
During the six-month period ended December 31, 2006, BlackRock Municipal
Insured Fund of BlackRock Municipal Bond Fund, Inc.'s shareholders voted on
the following proposals, which were approved at a special shareholders'
meeting on August 15 and October 27, 2006, respectively. A description of the
proposals and number of shares voted are as follows:
Shares Voted Shares Voted Shares Voted
For Against Abstain
To approve a contingent sub-advisory agreement with
BlackRock Advisors, Inc. 73,500,914 4,038,959 2,272,584
To approve a new investment advisory agreement with
BlackRock Advisors, Inc. 62,043,486 3,772,568 2,642,246
BlackRock National Municipal Fund
During the six-month period ended December 31, 2006, BlackRock National
Municipal Fund of BlackRock Municipal Bond Fund, Inc.'s shareholders voted on
the following proposals, which were approved at a special shareholders'
meeting on August 15 and October 27, 2006, respectively. A description of the
proposals and number of shares voted are as follows:
Shares Voted Shares Voted Shares Voted
For Against Abstain
To approve a contingent sub-advisory agreement with
BlackRock Advisors, Inc. 75,885,639 4,039,397 2,651,492
To approve a new investment advisory agreement with
BlackRock Advisors, Inc. 68,480,862 3,924,908 3,813,916
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Disclosure of Investment Advisory Agreement
BlackRock Investment Advisory Agreement--Matters Considered by the Board
The following disclosure with respect to National Municipal Fund (formerly
National Portfolio), Municipal Insured Fund (formerly Insured Portfolio) and
Short-Term Municipal Fund (formerly Short-Term Portfolio) (in this section,
each a "Portfolio") appeared in the June 30, 2006 Annual Report of the
Corporation (in this section, the "Fund") and is the discussion referred to in
"New BlackRock Sub-Advisory Agreement - Matters Considered by the Board,"
"Approvals to Correct Fee Schedules" and "Disclosure of Investment Advisory
Agreements - High Yield Municipal Bond Fund" below. The term "Investment
Adviser" as used herein refers to Fund Asset Management, L.P.
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;
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Disclosure of Investment Advisory Agreement (continued)
* 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;
* 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.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
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.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Disclosure of Investment Advisory Agreement (continued)
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.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
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 Sub-Advisory 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 sub-advisory agreement (the "Contingent
Sub-Advisory Agreement") between the Investment Adviser and BlackRock Advisors
(the "BlackRock Sub-Adviser"). The Contingent Sub-Advisory 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 Sub-Adviser assist in managing the operations
of a Portfolio during the interim period until the closing of the Transaction.
If shareholders approve the Contingent Sub-Advisory 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 Sub-Advisory Agreement,
therefore, would be contingent on further Board approval after shareholders
approve it. Pursuant to the Contingent Sub-Advisory Agreement, the BlackRock
Sub-Adviser 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 Sub-Adviser out of its own
resources. There would be no increase in any Portfolio's expenses as a result
of the Contingent Sub-Advisory Agreement.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Disclosure of Investment Advisory Agreement (concluded)
In making its approval at the May in-person meeting, the Board considered the
Contingent Sub-Advisory 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 Sub-Advisory Agreement the necessity of
ensuring that each Portfolio operates with effective management services until
the closing of the Transaction. In reviewing the sub-advisory fee rate
provided in the Contingent Sub-Advisory Agreement, the Board took note of the
fact that both the Investment Adviser and the BlackRock Sub-Adviser 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 Sub-Adviser would provide
advisory services to the Portfolio under the Contingent Sub-Advisory
Agreement. The Board also took into account the expected short duration of the
term of any Contingent Sub-Advisory Agreement and the fact that no Portfolio's
total advisory fees would increase as a result of the Contingent Sub-Advisory
Agreement. Under all of the circumstances, the Board concluded that it was a
reasonable allocation of fees for the BlackRock Sub-Adviser 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 Sub-
Advisory Agreement, concluding that the advisory fee was reasonable in
relation to the services provided and that the Contingent Sub-Advisory
Agreement was in the best interests of shareholders.
Disclosure of Sub-Advisory Agreement
BlackRock Sub-Advisory Agreement--Matters Considered by the Board
At an in-person meeting held on August 14 - 16, 2006, the Board of Directors,
including the independent directors, discussed and approved the sub-advisory
agreement between BlackRock Advisors and its affiliate, BlackRock Investment
Management, LLC (the "Sub-Adviser") with respect to National Municipal Fund,
Municipal Insured Fund and Short-Term Municipal Fund (each, a "Fund") (the
"BlackRock Sub-Advisory Agreement"). The BlackRock Sub-Advisory Agreement
became effective on September 29, 2006, at the same time a new investment
advisory agreement between the Corporation and BlackRock Advisors (which had
been approved by the Funds' shareholders) became effective.
Pursuant to the BlackRock Sub-Advisory Agreement, the Sub-Adviser receives a
monthly fee from BlackRock Advisors at an annual rate equal to 59% of the
advisory fee received by BlackRock Advisors from the Funds. BlackRock Advisors
pays the Sub-Adviser out of its own resources, and there is no increase in the
expenses of any of the Funds as a result of the BlackRock Sub-Advisory
Agreement.
In approving the BlackRock Sub-Advisory Agreement at the August in-person
meeting, the Board reviewed their considerations in-connection with their
approval of the New Investment Advisory Agreement in May 2006. The Board
relied on the same information and considered the same factors as those
discussed above in connection with the approval of the New Investment Advisory
Agreement, and came to the same conclusions. In reviewing the sub-advisory fee
rate provided for in the BlackRock Sub-Advisory Agreement, the Board noted the
fact that both BlackRock Advisors and the Sub-Adviser have significant
responsibilities under their respective advisory agreements. Under the New
Investment Advisory Agreement, BlackRock Advisors remains responsible for the
overall management of each Fund and for oversight of each Fund's operations
and administration. Under the BlackRock Sub-Advisory Agreement, the Sub-
Adviser provides advisory services to each Fund and is responsible for the day-
to-day management of each Fund's portfolio. The Board also took into account
the fact that there is no increase in total advisory fees paid by any of the
Funds as a result of the BlackRock Sub-Advisory Agreement. Based on its
considerations, the Board concluded that it was a reasonable allocation of
fees for the Sub-Adviser to receive a fee at an annual rate equal to 59% of
the advisory fee paid by the Funds to BlackRock Advisors.
After the independent directors deliberated in executive session, the entire
Board, including the independent directors, approved the BlackRock Sub-
Advisory Agreement, concluding that the sub-advisory fee was reasonable in
relation to the services provided and that the BlackRock Sub-Advisory
Agreement was in the best interests of each Fund's shareholders.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Approvals to Correct Fee Schedules
As discussed above, at a meeting on May 12, 2006 the Board, including the
independent directors, approved the New Investment Advisory Agreement between
the Corporation on behalf the National Portfolio, the Insured Portfolio and
the Short-Term Portfolio (each, a "Portfolio") and BlackRock Advisors. The New
Investment Advisory Agreement as approved by the Board contained an advisory
fee schedule for each Portfolio that was the same as the fee schedule set
forth in the Corporation's investment advisory agreement in effect at that
time (the "Current Investment Advisory Agreement"). At a shareholder meeting
on August 15, 2006, the shareholders of each Portfolio approved a new
investment advisory agreement between the Corporation and BlackRock Advisors.
The proxy statement sent to Portfolio shareholders in connection with the
shareholder meeting (the "Proxy Statement") stated in several places that the
advisory fees payable under the New Investment Advisory Agreement would be the
same as the fees payable under the Current Investment Advisory Agreement.
However, subsequent to the Shareholder Meeting, it was discovered that the
advisory fee rates for each Portfolio were incorrectly stated in an appendix
in the Proxy Statement. The appendix incorrectly presented advisory fee rates
for each of the Insured Portfolio and the National Portfolio that were lower,
and for the Short-Term Portfolio that were higher, than the fees then in
effect.
At a September 11, 2006 meeting, the Board considered ratification and
approval of an investment advisory agreement between the Corporation on behalf
of each Portfolio and BlackRock Advisors in the form approved by shareholders.
The Board was informed that BlackRock Advisors had agreed to contractually
reduce the advisory fee payable by the Short-Term Portfolio under that
agreement as necessary to reduce the fee to the fee level approved for the
Short-Term Portfolio by the Board at the May 2006 meeting. All the Directors
who were present at the September 11, 2006 meeting, constituting a majority of
the directors and a majority of the non-interested directors, then ratified
and approved an investment advisory agreement in the form approved by
shareholders, subject to the contractual fee reduction by BlackRock Advisors
with respect to the Short-Term Portfolio. The Board also ratified and approved
the payment of fees to BlackRock Advisors based upon the lower fee schedules
for the National Portfolio and the Insured Portfolio under the investment
advisory agreement in the form approved by shareholders, until shareholders of
the National Portfolio and the Insured Portfolio approve the New Investment
Advisory Agreement with the correct fee schedules.
The Board reviewed and reaffirmed their considerations in connection with
their approval of the New Investment Advisory Agreement at the May 2006
meeting. All the Directors who were present at the September 11, 2006 meeting,
constituting a majority of the directors and a majority of the non-interested
directors, then ratified and approved their prior action taken with respect to
the New Investment Advisory Agreement at the May 2006 meeting and reapproved
the New Investment Advisory Agreement and the correct fee schedules for each
Portfolio contained therein. In reapproving the New Investment Advisory
Agreement and the correct fee schedules, the Board considered of primary
importance the fact that it was always intended to maintain the advisory fee
rates at their existing level without any change. The Board also noted that it
was only due to the errors in the Proxy Statement that BlackRock Advisors will
be paid, with respect to the National Portfolio and the Insured Portfolio, at
the lower fee schedules contained in the investment advisory agreement in the
form approved at the Shareholder Meeting until shareholders of those
Portfolios approve the New Investment Advisory Agreement with the correct fee
schedules. The Board also authorized resubmission of the New Investment
Advisory Agreement to shareholders of the National Portfolio and the Insured
Portfolio for their approval. With respect to the Short Term Portfolio, the
Board noted that upon the closing of the Transaction BlackRock Advisors will
be paid fees based upon the correct, lower fee schedule contained in the New
Investment Advisory Agreement and not the higher fee schedule erroneously
included in the Proxy Statement.
The Directors also discussed the BlackRock Sub-Advisory Agreement and reviewed
and reaffirmed their considerations in connection with their approval of the
BlackRock Sub-Advisory Agreement at the August 14 - 16, 2006 meeting. All the
Directors who were present at the September 11, 2006 meeting, constituting a
majority of the directors and a majority of the non-interested directors, then
ratified and approved the BlackRock Sub-Advisory Agreement previously approved
at the August 14 - 16, 2006 meeting, in connection with the investment
advisory agreement in the form approved by shareholders and in the form of the
New Investment Advisory Agreement as reapproved by the Directors.
Dislcosure of Investment Advisory Agreement--High Yield Municipal Fund
At an in-person Board meeting on May 23, 2006, the Board of Directors
considered approval of (a) a proposed investment advisory agreement (the "FAM
Investment Advisory Agreement") between the Corporation, on behalf of the High
Yield Portfolio, and Fund Asset Management, L.P. ("FAM") and (b) a proposed
investment advisory agreement (the "BlackRock Investment Advisory Agreement")
between the Corporation, on behalf of the High Yield Portfolio (now High Yield
Municipal Fund), and BlackRock Advisors. The High Yield Portfolio commenced
operations on August 1, 2006. The FAM Investment Advisory Agreement discussed
below remained in effect until September 29, 2006, at which time it was
superseded by the BlackRock Investment Advisory Agreement and the sub-advisory
agreement discussed below.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Disclosure of Sub-Advisory Agreement (continued)
Approval of FAM Investment Advisory Agreement
In connection with its consideration of the FAM Investment Advisory Agreement,
the Board assessed the nature, scope and quality of the services to be
provided to the Corporation and the High Yield Portfolio by the personnel of
FAM and its affiliates, including administrative services, shareholder
services, oversight of fund accounting, marketing services and assistance in
meeting legal and regulatory requirements. The Board also received and
assessed information regarding the services to be provided to the Corporation
and the High Yield Portfolio by certain unaffiliated service providers.
The Board noted its view of FAM as one of the most experienced global asset
management firms and considered the overall services provided by FAM to be of
high quality. The Board also noted its view of FAM as financially sound and
well managed and noted FAM's affiliation with one of America's largest
financial firms.
In considering whether to approve the FAM Investment Advisory Agreement, the
Board reviewed an organizational meeting book and other materials from counsel
to the Corporation and the High Yield Portfolio and from FAM which: (a)
included information concerning the services that will be rendered to the
Corporation and the High Yield Portfolio by FAM and its affiliates and the
fees that will be paid by the Corporation and the High Yield Portfolio to FAM
and its affiliates and (b) outlined the legal duties of the Board under the
Investment Company Act of 1940, as amended (the "Investment Company Act"),
with respect to the consideration and approval of the FAM Investment Advisory
Agreement. The Board also received information from Lipper Inc. ("Lipper")
comparing the High Yield Portfolio's fee rate for advisory and administrative
services to those of other comparable funds included within the high yield
municipal debt fund group, as defined by Lipper. In particular, the Board
considered the following:
Services to be Provided by FAM--The Board reviewed the nature, extent and
quality of the services that FAM would provide to the High Yield Portfolio. In
connection with the investment advisory services to be provided to the High
Yield Portfolio, the Board discussed in detail with officers of FAM the
management of the High Yield Portfolio's investments in accordance with the
High Yield Portfolio's stated investment objective and policies and the types
of transactions that would be entered into on behalf of the High Yield
Portfolio. In addition to the investment advisory services to be provided to
the High Yield Portfolio, FAM and its affiliates also will provide
administrative services, shareholder services, oversight of fund accounting,
marketing services, assistance in meeting legal and regulatory requirements
and other services necessary for the operation of the High Yield Portfolio. In
particular, the Board reviewed the compliance and administrative services to
be provided to the High Yield Portfolio by FAM, including its oversight of the
High Yield Portfolio's day-to-day operations and its oversight of fund
accounting. The Board noted that FAM has an administrative, legal and
compliance staff to ensure a high level of quality in the compliance and
administrative services to be provided to the High Yield Portfolio.
Finally, the Board took into consideration the history, reputation and
background of FAM and the portfolio management team. The Board included in
this review the nature, extent and quality of services provided to the three
other portfolios of the Corporation by FAM and considered in their review the
performance of the three other portfolios. Since the High Yield Portfolio is
newly formed, the Board did not consider portfolio performance. Based on its
review, the Board concluded that FAM should provide a satisfactory level of
services to the High Yield Portfolio. The Board concluded, based in part on
their experience with the three other portfolios of the Corporation and as
Board members for other MLIM/FAM-advised funds, that the services to be
provided to the High Yield Portfolio by FAM under the FAM Investment Advisory
Agreement were likely to be of a high quality and would benefit the High Yield
Portfolio.
FAM's Personnel and Investment Process--The Board reviewed the High Yield
Portfolio's investment objectives and strategies and discussed with FAM's
senior management responsible for investment operations and the senior
management of FAM's municipal investing group the strategies to be used to
achieve the stated objectives. Among other things, the Board considered the
size, education and experience of FAM's investment staff, its use of
technology, and FAM's approach to training and retaining portfolio managers
and other research, advisory and management personnel. The Board also
considered the experience of Mr. Jaeckel, the High Yield Portfolio's portfolio
manager. The Board concluded that FAM and its investment staff have extensive
experience in analyzing and managing the types of investments to be used by
the High Yield Portfolio, that the High Yield Portfolio would benefit from
that experience and that FAM would be an appropriate investment adviser for
the High Yield Portfolio.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Management Fees and Other Expenses--The Board compared both the services to be
rendered and the fees to be paid under the FAM Investment Advisory Agreement
to other contracts of FAM and its affiliates and to other contracts of other
investment advisers with respect to non-MLIM/FAM-advised comparable open-end
funds as classified by Lipper. In particular, the Board evaluated the High
Yield Portfolio's proposed contractual fee rate for advisory and
administrative services as compared to the contractual fee rate of comparable
municipal funds. In particular, the Board noted that the High Yield
Portfolio's contractual advisory fee rate at a common asset level placed it in
the first quartile for the Lipper group.
The Board then considered the potential direct and indirect benefits to FAM
and its affiliates from FAM's relationship with the Fund, including the
distribution arrangements relating to the High Yield Portfolio's shares. Based
in part on their experience with the three other portfolios of the Fund as a
directors or trustees of other MLIM/FAM-advised funds, the Board concluded
that the High Yield Portfolio would benefit from those services.
Profitability--The Board also considered the anticipated cost of the services
to be provided by FAM and the profits of FAM and its affiliates profits in
relation to the management and distribution of the High Yield Portfolio and
other funds advised by FAM and its affiliates. Because the High Yield
Portfolio had not commenced operations as of the date of the meeting, FAM was
not able to provide the Directors with specific information concerning the
cost of services to be provided to the High Yield Portfolio and the expected
profits to be realized by FAM and its affiliates from their relationships with
the High Yield Portfolio. The Directors, however, discussed with FAM its
general level of profitability and noted that the Directors would be provided
with profitability information after the High Yield Portfolio commences
operations in connection with any future renewals of the investment advisory
arrangements.
Economies of Scale--Since the High Yield Portfolio is newly formed, FAM was
not able to provide the Directors with specific information concerning the
extent to which economies of scale would be realized as the High Yield
Portfolio grows and whether fee levels would reflect such economies of scale,
if any. The Directors did note that there were breakpoints in the proposed
advisory fee schedule so that it was anticipated that shareholders would
realize certain economies of scale as the High Yield Portfolio assets grow.
Conclusion--Based on the foregoing and such other matters as were deemed
relevant, a majority of the Directors, including all of the non-interested
directors, concluded that the proposed advisory fee rate is reasonable in
relation to the services to be provided by FAM to the High Yield Portfolio as
well as the costs to be incurred and benefits to be gained by FAM and its
affiliates in providing such services, including the investment advisory and
administrative components. The Board also found the proposed investment
advisory fee to be reasonable in comparison to the fees charged by advisers to
comparable funds of similar actual or anticipated size. As a result, all of
the Directors who were present at the May 23, 2006 meeting, constituting a
majority of the directors and all of the directors who are non-interested
directors, approved the FAM Investment Advisory Agreement.
BlackRock Investment Advisory Agreement--Matters Considered by the Board
In connection with the Transaction between Merrill Lynch and BlackRock, the
Board considered approval of the proposed BlackRock Investment Advisory
Agreement that would take effect upon the closing of the Transaction and
replace the FAM Investment Advisory Agreement.
As discussed above in "Disclosure of New Investment Advisory Agreements -
National Municipal Fund, Municipal Insured Fund and Short-Term Municipal
Fund - BlackRock Investment Advisory Agreement - Matters Considered by
the Board," the Board of the Corporation, including the independent
directors, approved a new investment advisory agreement (the "New Investment
Advisory Agreement") between the Corporation on behalf of each of the
Corporation's other three portfolios and BlackRock Advisors at a meeting held
on May 12, 2006.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Disclosure of Sub-Advisory Agreement (concluded)
In considering whether to approve the BlackRock Investment Advisory Agreement,
the Board reviewed material from counsel to the Corporation and the High Yield
Portfolio and from FAM prepared for the May 23, 2006 meeting and additional
information previously provided about BlackRock Advisors in connection with
the Directors' approvals relating to the BlackRock Transaction in connection
with other MLIM/FAM-advised funds, including the Corporation's three other
portfolios. These materials included information concerning the services that
will be rendered to the Corporation by BlackRock Advisors and affiliates of
BlackRock Advisors and the fees that will be paid by the Corporation and the
High Yield Portfolio to BlackRock Advisors and affiliates of BlackRock
Advisors. The Board also received, as noted above, information from Lipper
comparing the High Yield Portfolio's proposed fee rate for advisory and
administrative services to those of other comparable funds included within the
high yield municipal debt funds group, as defined by Lipper. The Directors
noted that the proposed fee schedule under the BlackRock Investment Advisory
Agreement was identical to the fee schedule under the FAM Investment Advisory
Agreement and that the nature of the services provided under the agreements is
identical.
In considering whether to approve the BlackRock Investment Advisory Agreement,
the Directors reviewed their considerations in connection with their approval
of the New Investment Advisory Agreement on behalf of the Corporation's three
other portfolios. The Board relied on the same information and considered the
same factors, as pertinent to the High Yield Portfolio, as those discussed
above in connection with the May 12, 2006 approval of the New Investment
Advisory Agreement. The Directors considered, among other matters, the nature,
extent and quality of the services that BlackRock Advisors would provide to
the High Yield Portfolio; the anticipated cost of the services to be provided
by BlackRock Advisors and the profits of BlackRock Advisors and its affiliates
in relation to the management and distribution of the High Yield Portfolio;
the fees to be paid under the BlackRock Investment Advisory Agreement; and
fall-out benefits to be received by BlackRock Advisors under the BlackRock
Investment Advisory Agreement.
Conclusion--Based on the foregoing and such other matters as were deemed
relevant, all of the Directors present at the meeting, constituting a majority
of the directors and all of the non-interested directors, approved the
BlackRock Investment Advisory Agreement, concluding that the advisory fee rate
was reasonable in relation to the services provided and that the BlackRock
Investment Advisory Agreement was in the best interests of the High Yield
Portfolio's shareholders. In approving the BlackRock 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.
New BlackRock Sub-Advisory Agreement--Matters Considered by the Board
At an in-person meeting held on August 14 - 16, 2006, the Board of Directors,
including the independent directors, discussed and approved the sub-advisory
agreement between BlackRock Advisors and its affiliate, BlackRock Investment
Management, LLC (the "Sub-Adviser") with respect to the High Yield Portfolio
(the "Sub-Advisory Agreement"). The Sub-Advisory Agreement became effective on
September 29, 2006, at the same time the BlackRock Investment Advisory
Agreement with BlackRock Advisors (which had been approved by the High Yield
Portfolio's shareholders) became effective.
Pursuant to the Sub-Advisory Agreement, the Sub-Adviser receives a monthly fee
from BlackRock Advisors at an annual rate equal to 59% of the advisory fee
received by BlackRock Advisors from the High Yield Portfolio. BlackRock
Advisors pays the Sub-Adviser out of its own resources, and there is no
increase in the High Yield Portfolio's expenses as a result of the Sub-
Advisory Agreement.
In approving the Sub-Advisory Agreement at the August in-person meeting, the
Board reviewed their considerations in connection with their approval of the
BlackRock Investment Advisory Agreement in May 2006. The Board relied on the
same information and considered the same factors as those discussed above in
connection with the approval of the BlackRock Investment Advisory Agreement,
and came to the same conclusions. In reviewing the sub-advisory fee rate
provided for in the Sub-Advisory Agreement, the Board noted the fact that both
BlackRock Advisors and the Sub-Adviser have significant responsibilities under
their respective advisory agreements. Under the BlackRock Investment Advisory
Agreement, BlackRock Advisors remains responsible for the overall management
of the High Yield Portfolio and for oversight of the High Yield Portfolio's
operations and administration. Under the Sub-Advisory Agreement, the Sub-
Adviser provides advisory services to the High Yield Portfolio and is
responsible for the day-to-day management of the High Yield Portfolio's
portfolio. The Board also took into account the fact that there is no increase
in total advisory fees paid by the High Yield Portfolio as a result of the Sub-
Advisory Agreement. Based on its considerations, the Board concluded that it
was a reasonable allocation of fees for the Sub-Adviser to receive a fee at an
annual rate equal to 59% of the advisory fee paid by the High Yield Portfolio
to BlackRock Advisors.
After the independent directors deliberated in executive session, the entire
Board, including the independent directors, approved the Sub-Advisory
Agreement, concluding that the sub-advisory fee was reasonable in relation to
the services provided and that the Sub-Advisory Agreement was in the best
interests of the High Yield Portfolio's shareholders.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
BlackRock Funds
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former
fund investors and individual clients (collectively, "Clients") and to
safeguarding their nonpublic personal information. The following information
is provided to help you understand what personal information BlackRock
collects, how we protect that information and why in certain cases we share
such information with select parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal nonpublic information from and about
you from different sources, including the following: (i) information we
receive from you or, if applicable, your financial intermediary, on
applications, forms or other documents; (ii) information about your
transactions with us, our affiliates, or others; (iii) information we receive
from a consumer reporting agency; and (iv) from visits to our Web sites.
BlackRock does not sell or disclose to nonaffiliated third parties any
nonpublic personal information about its Clients, except as permitted by law
or as is necessary to service Client accounts. These nonaffiliated third
parties are required to protect the confidentiality and security of this
information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that
may be of interest to you. In addition, BlackRock restricts access to
nonpublic personal information about its Clients to those BlackRock employees
with a legitimate business need for the information. BlackRock maintains
physical, electronic and procedural safeguards that are designed to protect
the nonpublic personal information of its Clients, including procedures
relating to the proper storage and disposal of such information.
Availability of Additional Information
Electronic copies of most financial reports and prospectuses are available on
the Fund's Web site or shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Fund's electronic delivery program.
To enroll:
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor. Please note that not all investment
advisers, banks or brokerages may offer this service.
Shareholders Who Hold Accounts Directly with BlackRock:
1) Access the BlackRock Web site at
http://www.blackrock.com/edelivery
2) Select eDelivery under the More Information section
3) Log into your account
The Fund will mail only one copy of shareholder documents, including
prospectuses, annual and semi-annual reports and proxy statements, to
shareholders with multiple accounts at the same address. This practice is
commonly called "householding" and it is intended to reduce expenses and
eliminate duplicate mailings of shareholder documents. Mailings of your
shareholder documents may be householded indefinitely unless you instruct us
otherwise. If you do not want the mailing of these documents to be combined
with those for other members of your household, please contact the Fund at
(800) 441-7762.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
BlackRock Funds (concluded)
Availability of Additional Information (concluded)
Availability of Proxy Voting Policies and Procedures
The Fund has delegated proxy voting responsibilities to BlackRock and its
affiliates, subject to the general oversight of the Fund's Board of Directors.
A description of the policies and procedures that BlackRock and its affiliates
use to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, on our Web site at www.blackrock.com,
by calling (800) 441-7762, or on the Web site of the Securities and Exchange
Commission (the "Commission") at http://www.sec.gov.
Availability of Proxy Voting Record
Information on how proxies relating to the Fund's voting securities were
voted (if any) by BlackRock during the most recent 12-month period ended
June 30 is available, upon request and without charge, on our Web site at
www.blackrock.com, by calling (800) 441-7762 or on the Web site of the
Commission at http://www.sec.gov.
Availability of Quarterly Portfolio Schedule
The Fund files its complete schedule of portfolio holdings for the first and
third quarters of its fiscal year with the Commission on Form N-Q. The Fund's
Forms N-Q are available on the Commission's Web site at http://www.sec.gov and
may be reviewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330. The Fund's Forms N-Q may also
be obtained upon request, without charge, by calling (800) 441-7762.
Shareholder Privileges
Account Information
Call us at (800) 441-7762 8:00 AM - 6:00 PM EST to get information about your
account balances, recent transactions and share prices. You can also reach us
on the Web at www.blackrock.com.
Automatic Investment Plans
Investor Class shareholders who want to invest regularly can arrange to have
$50 or more automatically deducted from their checking or savings account and
invested in any of the BlackRock portfolios.
Systematic Withdrawal Plans
Investor Class shareholders can establish a systematic withdrawal plan and
receive periodic payments of $50 or more from their BlackRock portfolios, as
long as their account is at least $10,000.
Retirement Plans
Shareholders may make investments in conjunction with Traditional, Rollover,
Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
A World-Class Mutual Fund Family
BlackRock now offers an expanded lineup of open-end mutual funds. Our range
includes more than 85 funds crossing all investment styles and managed by
experts in equity, fixed income and tax-exempt investing.
Equity Portfolios
BlackRock All-Cap Global Resources Portfolio
BlackRock Aurora Portfolio
BlackRock Asset Allocation Portfolio++
BlackRock Balanced Capital Fund++
BlackRock Basic Value Fund
BlackRock Developing Capital Markets Fund
BlackRock Equity Dividend Fund
BlackRock EuroFund
BlackRock Focus Twenty Fund
BlackRock Focus Value Fund
BlackRock Fundamental Growth Fund
BlackRock Global Allocation Fund++
BlackRock Global Dynamic Equity Fund
BlackRock Global Financial Services Fund
BlackRock Global Growth Fund
BlackRock Global Opportunities Portfolio
BlackRock Global Resources Portfolio*
BlackRock Global Science & Technology
Opportunities Portfolio
BlackRock Global SmallCap Fund
BlackRock Global Technology Fund
BlackRock Global Value Fund
BlackRock Healthcare Fund
BlackRock Health Sciences Opportunities Portfolio
BlackRock Index Equity Portfolio*
BlackRock International Fund
BlackRock International Index Fund
BlackRock International Opportunities Portfolio*
BlackRock International Value Fund
BlackRock Investment Trust
BlackRock Large Cap Core Fund
BlackRock Large Cap Growth Fund
BlackRock Large Cap Value Fund
BlackRock Latin America Fund
BlackRock Capital Appreciation Portfolio
BlackRock Mid-Cap Growth Equity Portfolio
BlackRock Mid-Cap Value Equity Portfolio
BlackRock Mid Cap Value Opportunities Fund
BlackRock Natural Resources Trust
BlackRock Pacific Fund
BlackRock Small Cap Core Equity Portfolio
BlackRock Small Cap Growth Equity Portfolio
BlackRock Small Cap Growth Fund II
BlackRock Small Cap Index Fund
BlackRock Small Cap Value Equity Portfolio*
BlackRock Small/Mid-Cap Growth Portfolio
BlackRock S&P 500 Index Fund
BlackRock U.S. Opportunities Portfolio
BlackRock Utilities and Telecommunications Fund
BlackRock Value Opportunities Fund
Fixed Income Portfolios
BlackRock Bond Fund
BlackRock Enhanced Income Portfolio
BlackRock GNMA Portfolio
BlackRock Government Income Portfolio
BlackRock High Income Fund
BlackRock High Yield Bond Portfolio
BlackRock Inflation Protected Bond Portfolio
BlackRock Intermediate Bond Portfolio
BlackRock Intermediate Bond Portfolio II
BlackRock Intermediate Government
Bond Portfolio
BlackRock International Bond Portfolio
BlackRock Low Duration Bond Portfolio
BlackRock Managed Income Portfolio
BlackRock Real Investment Fund
BlackRock Short-Term Bond Fund
BlackRock Total Return Portfolio
BlackRock Total Return Portfolio II
BlackRock World Income Fund
Municipal Bond Portfolios
BlackRock AMT-Free Municipal Bond Portfolio
BlackRock California Insured Municipal Bond Fund
BlackRock Delaware Municipal Bond Portfolio
BlackRock Florida Municipal Bond Fund
BlackRock High Yield Municipal Fund
BlackRock Intermediate Municipal Fund
BlackRock Kentucky Municipal Bond Portfolio
BlackRock Municipal Insured Fund
BlackRock National Municipal Fund
BlackRock New Jersey Municipal Bond Fund
BlackRock New York Municipal Bond Fund
BlackRock Ohio Municipal Bond Portfolio
BlackRock Pennsylvania Municipal Bond Fund
BlackRock Short-Term Municipal Fund
Money Market Portfolios
BlackRock Money Market Portfolio
BlackRock Municipal Money Market Portfolio+++
BlackRock NC Municipal MM Portfolio+++
BlackRock NJ Municipal MM Portfolio+++
BlackRock OH Municipal MM Portfolio+++
BlackRock PA Municipal MM Portfolio+++
BlackRock Summit Cash Reserves Fund*
BlackRock U.S. Treasury MM Portfolio
BlackRock VA Municipal MM Portfolio+++
* See the prospectus for information on specific
limitations on investments in the fund.
++ Mixed asset fund.
+++ Tax-exempt fund.
BlackRock mutual funds are distributed by BlackRock Distributors, Inc. and
certain funds are also distributed by FAM Distributors, Inc. You should
consider the investment objectives, risks, charges and expenses of the funds
under consideration carefully before investing. Each fund's prospectus
contains this and other information and is available at www.blackrock.com or
by calling 800-882-0052 or from your financial advisor. The prospectus should
be read carefully before investing.
BLACKROCK MUNICIPAL BOND FUND, INC. DECEMBER 31, 2006
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this semi-
annual report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 11 - Controls and Procedures
11(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others
particularly during the period in which this report is being
prepared. The registrant's certifying officers have determined that
the registrant's disclosure controls and procedures are effective
based on our evaluation of these controls and procedures as of a
date within 90 days prior to the filing date of this report.
11(b) - As of September 29, 2006, with the conclusion of the combination of
Merrill Lynch's asset management business with BlackRock, the
registrant was migrated to BlackRock's trading and compliance
monitoring systems, and various personnel changes occurred. In
conjunction with these business improvements, there were no changes
in the registrants internal control over financial reporting (as
defined in Rule 30a-3(d) under Act (17 CFR 270.30a-3(d)) that
occurred during the last fiscal half-year of the period covered by
this report that has materially affected, or is reasonably likely to
affect, the registrant's internal control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock Municipal Bond Fund, Inc.
By: /s/ Robert C. Doll, Jr.
-----------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock Municipal Bond Fund, Inc.
Date: February 20, 2007
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
BlackRock Municipal Bond Fund, Inc.
Date: February 20, 2007
By: /s/ Donald C. Burke
--------------------
Donald C. Burke,
Chief Financial Officer of
BlackRock Municipal Bond Fund, Inc.
Date: February 20, 2007