AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 1994
SECURITIES ACT FILE NO. 33-36472
INVESTMENT COMPANY ACT FILE NO. 811-6156
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934)
MERRILL LYNCH HIGH INCOME MUNICIPAL BOND FUND, INC.
(Name of Issuer)
MERRILL LYNCH HIGH INCOME MUNICIPAL BOND FUND, INC.
(Name of Person(s) Filing Statement)
SHARES OF COMMON STOCK, PAR VALUE $.10 PER SHARE
(Title of Class of Securities)
589945 10 4
(CUSIP Number of Class of Securities)
ARTHUR ZEIKEL
MERRILL LYNCH HIGH INCOME MUNICIPAL BOND FUND, INC.
800 SCUDDERS MILL ROAD
PLAINSBORO, NEW JERSEY 08536
(609) 282-2800
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Person(s) Filing Statement)
COPIES TO:
THOMAS R. SMITH, JR., ESQ. PHILIP L. KIRSTEIN, ESQ.
BROWN & WOOD MERRILL LYNCH ASSET MANAGEMENT
ONE WORLD TRADE CENTER BOX 9011
NEW YORK, NEW YORK 10048-0557 PRINCETON, N.J. 08543-9011
APRIL 15, 1994
(Date Tender Offer First Published,
Sent or Given to Security Holders)
CALCULATION OF FILING FEE
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TRANSACTION VALUATION: $16,185,000(A) AMOUNT OF FILING FEE: $3,237(B)
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(a) Calculated as the aggregate estimated maximum purchase price to be paid for
1,500,000 shares in the offer, based upon the net asset value per share
($10.79) at April 11, 1994.
(b) Calculated as 1/50th of 1% of the Transaction Valuation.
/ /
Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and
identify the filing with which the offsetting fee was previously paid. Identify
the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously
Paid: __________________________________________________________________________
Form or Registration
No.: ___________________________________________________________________________
Filing
Party: _________________________________________________________________________
Filing
Date: __________________________________________________________________________
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<PAGE>
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Merrill Lynch High Income Municipal Bond
Fund, Inc., a closed-end investment company organized as a Maryland corporation
(the "Fund"). The principal executive offices of the Fund are located at 800
Scudders Mill Road, Plainsboro, New Jersey 08536.
(b) The title of the securities being sought is shares of common stock, par
value $0.10 per share (the "Shares"). As of March 31, 1994 there were in excess
of 20.3 million Shares issued and outstanding.
The Fund is seeking tenders for 1,500,000 Shares (the "Offer"), at net
asset value per Share calculated on the day the tender offer terminates, less
any "Early Withdrawal Charge," upon the terms and subject to the conditions set
forth in the Offer to Purchase dated April 15, 1994 (the "Offer to Purchase"). A
copy of each of the Offer to Purchase and the related Letter of Transmittal is
attached hereto as Exhibit (a)(1)(ii) and Exhibit (a)(2), respectively.
Reference is hereby made to the Cover Page and Section 1 "Price; Number of
Shares" of the Offer to Purchase, which are incorporated herein by reference.
The Fund has been informed that no Directors, officers or affiliates of the Fund
intend to tender Shares pursuant to the Offer.
(c) The Shares are not currently traded on an established trading market.
(d) Not Applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) Reference is hereby made to Section 9 "Source and Amount of Funds"
of the Offer to Purchase, which is incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
Reference is hereby made to Section 7 "Purpose of the Offer," Section 8
"Certain Effects of the Offer" and Section 9 "Source and Amount of Funds" of the
Offer to Purchase, which are incorporated herein by reference. The Fund
currently is engaged in a continuous public offering of its Shares. The Fund
otherwise has no plans or proposals which relate to or would result in (a) the
acquisition by any person of additional securities of the Fund or the
disposition of securities of the Fund; (b) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Fund; (c) a sale or transfer of a material amount of assets of the Fund; (d) any
change in the present Board of Directors or management of the Fund, including,
but not limited to, any plans or proposals to change the number or the term of
Directors, or to fill any existing vacancy on the Board or to change any
material term of the employment contract of any executive officer; (e) any
material change in the present dividend rate or policy, or indebtedness or
capitalization of the Fund; (f) any other material change in the Fund's
corporate structure or business, including any plans or proposals to make any
changes in its investment policy for which a vote would be required by Section
13 of the Investment Company Act of 1940, as amended; or (g) changes in the
Fund's articles of incorporation, bylaws or instruments corresponding thereto or
other actions which may impede the acquisition of control of the Fund by any
person. Paragraphs (h) through (j) of this Item 3 are not applicable.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
There have not been any transactions involving the Shares of the Fund that
were effected during the past 40 business days by the Fund, any executive
officer or Director of the Fund, any person controlling the Fund, any executive
officer or Director of any corporation ultimately in control of the Fund or by
any associate or subsidiary of any of the foregoing including any executive
officer or Director of any such subsidiary, except that within the past 40
business days pursuant to a continuous public offering of its Shares the Fund
has sold approximately 451,000 Shares at a price equal to the net asset value
("NAV") of the Fund on the date of each such sale.
i
<PAGE>
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
The Fund does not know of any contract, arrangement, understanding or
relationship relating directly or indirectly, to the Offer (whether or not
legally enforceable) between the Fund, any of the Fund's executive officers or
Directors, any person controlling the Fund or any executive officer or Director
of any corporation ultimately in control of the Fund and any person with respect
to any securities of the Fund (including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any such securities, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss, or the giving or
withholding of proxies, consents or authorizations).
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
No persons have been employed, retained or are to be compensated by the
Fund to make solicitations or recommendations in connection with the Offer.
ITEM 7. FINANCIAL INFORMATION.
(a) Reference is hereby made to the financial statements attached hereto as
Exhibits (b)(1) and (b)(2), which are incorporated herein by reference.
(b) Not applicable.
ITEM 8. ADDITIONAL INFORMATION.
(a) None.
(b) Reference is made to Section 11 "Certain Information About the Fund" of
the Offer to Purchase, which is incorporated herein by reference.
(c) Not applicable.
(d) None.
(e) The Offer to Purchase, attached hereto as Exhibit (a)(1)(ii), is
incorporated herein by reference in its entirety.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C> <C>
(a)(1) (i) --Advertisement to be printed in The Wall Street Journal.
(ii) --Offer to Purchase.
(a)(2) --Form of Letter of Transmittal.
(a)(3) --Letter to Stockholders.
(b)(1) --Audited Financial Statements of the Fund for the fiscal year ended August 31, 1993.
(b)(2) --Audited Financial Statements of the Fund for the fiscal year ended August 31, 1992.
</TABLE>
ii
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
MERRILL LYNCH HIGH INCOME MUNICIPAL
BOND FUND, INC.
By /s/ TERRY K. GLENN
...................................
Terry K. Glenn,
Executive Vice President
Date: April 14, 1994
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C> <C>
EXHIBIT
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(a)(1)(i) Advertisement to be printed in The Wall Street Journal
(a)(1)(ii) Offer to Purchase
(a)(2) Form of Letter of Transmittal
(a)(3) Letter to Stockholders
(b)(1) Audited Financial Statements of the Fund for the fiscal year ended August 31, 1993
(b)(2) Audited Financial Statements of the Fund for the fiscal year ended August 31, 1992
</TABLE>
THIS ANNOUNCEMENT IS NOT AN OFFER TO PURCHASE OR A SOLICITATION OF AN OFFER TO
SELL SHARES. THE OFFER
IS MADE ONLY BY THE OFFER TO PURCHASE DATED APRIL 15, 1994, AND THE RELATED
LETTER OF TRANSMITTAL. THE
OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF,
HOLDERS OF SHARES
IN ANY JURISDICTION IN WHICH MAKING OR ACCEPTING THE OFFER WOULD VIOLATE THAT
JURISDICTION'S LAWS.
MERRILL LYNCH HIGH INCOME MUNICIPAL BOND FUND, INC.
NOTICE OF OFFER TO PURCHASE FOR CASH 1,500,000 OF ITS ISSUED
AND OUTSTANDING SHARES AT NET ASSET VALUE PER SHARE
THE EXPIRATION DATE AND THE WITHDRAWAL DEADLINE IS 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, MAY 12, 1994, UNLESS EXTENDED.
Merrill Lynch High Income Municipal Bond Fund, Inc. (the "Fund") is offering
to purchase 1,500,000 of its issued and outstanding shares of common stock par
value $.10 per share (the "Shares") at a price equal to their net asset value
("NAV") less any applicable early withdrawal charge as of the close of the New
York Stock Exchange on the Expiration Date, May 12, 1994, unless extended upon
the terms and conditions set forth in the Offer to Purchase dated April 15, 1994
(the "Offer"). The NAV on April 11, 1994, was $10.79 per share. The purpose of
the Offer is to provide liquidity to stockholders since the Fund is unaware of
any secondary market which exists for the Shares. The Offer is not conditioned
upon the tender of any minimum number of Shares.
If more than 1,500,000 Shares are duly tendered prior to the expiration of
the Offer, the Fund will, assuming no changes in the factors originally
considered by the Board of Directors when it determined to make the Offer,
extend the Offer period if necessary, and increase the number of Shares that the
Fund is offering to purchase to an amount which it believes will be sufficient
to accommodate the excess Shares tendered, as well as any Shares tendered during
the extended Offer period. In no event will the Fund purchase Shares tendered on
a pro rata basis.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
12:00 midnight, New York City time, on Thursday, May 12, 1994, unless the offer
is extended, and, if not yet accepted for payment by the Fund, Shares may also
be withdrawn after June 10, 1994.
The information required to be disclosed by paragraph (d)(1) of Rule 13e-4
under the Securities Exchange Act of 1934, as amended, is contained in the Offer
to Purchase and is incorporated herein by reference.
The Offer to Purchase and the related Letter of Transmittal contain
important information that should be read carefully before any decision is made
with respect to the Offer.
Questions and requests for assistance, for current NAV quotations or for
copies of the Offer to Purchase, Letter of Transmittal, and any other tender
offer documents may be directed to the Merrill Lynch Response Center at the
address and telephone number below. Copies will be furnished promptly at no
expense to you and also may be obtained by completing and returning the coupon
below to the Merrill Lynch Response Center. Stockholders who do not own Shares
directly should effect a tender through their broker, dealer, or nominee. For
example, stockholders who purchased shares through Merrill Lynch, Pierce, Fenner
& Smith Incorporated should effect tenders through their Financial Consultant.
The difference is Merrill Lynch.
1-800-MERRILL, EXT. 7866
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
MAIL TO: MERRILL LYNCH RESPONSE CENTER
P.O. BOX 30200, NEW BRUNSWICK, NJ 08989-0200
/ / PLEASE SEND ME MERRILL LYNCH HIGH INCOME MUNICIPAL BOND FUND, INC. TENDER
OFFER MATERIALS.
NAME________________________________________ ADDRESS___________________________
BUSINESS PHONE ()___________________________ CITY______________________________
HOME PHONE ()_______________________________ STATE_________________ ZIP________
PLEASE GIVE THE NAME AND OFFICE ADDRESS OF YOUR MERRILL LYNCH FINANCIAL
CONSULTANT:
________________________________________________________________________________
7866
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(C) COPYRIGHT 1994. MERRILL LYNCH, PIERCE, FENNER & SMITH
INC. MEMBER SIPC. APRIL 15, 1994
MERRILL LYNCH HIGH INCOME MUNICIPAL BOND FUND, INC.
800 SCUDDERS MILL ROAD
PLAINSBORO, NEW JERSEY 08536
OFFER TO PURCHASE FOR CASH 1,500,000
OF ITS ISSUED AND OUTSTANDING SHARES
AT NET ASSET VALUE PER SHARE
THE EXPIRATION DATE AND THE WITHDRAWAL DEADLINE IS 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MAY 12, 1994, UNLESS EXTENDED.
To the Holders of Shares of
MERRILL LYNCH HIGH INCOME MUNICIPAL BOND FUND, INC.:
The Fund is offering to purchase up to 1,500,000 of its shares of common
stock, par value $.10 per share (the "Shares"), for cash at a price equal to
their net asset value ("NAV"), less any applicable Early Withdrawal Charge, as
of the close of the New York Stock Exchange on May 12, 1994, the expiration
date, unless extended, upon the terms and conditions set forth in this Offer to
Purchase (the "Offer") and the related Letter of Transmittal. The Shares are not
currently traded on an established secondary market. The NAV on April 11, 1994
was $10.79 per Share. You can obtain current NAV quotations from your Merrill
Lynch Financial Consultant or the Merrill Lynch, Pierce, Fenner & Smith
Incorporated Response Center (the "Merrill Lynch Response Center") (see Section
1). The Fund presently intends each quarter to consider making a tender offer
for its Shares at a price equal to their then current NAV.
If more than 1,500,000 Shares are duly tendered prior to the expiration of
the Offer, the Fund will, assuming no changes in the factors originally
considered by the Board of Directors when it determined to make the Offer,
extend the Offer period, if necessary, and increase the number of Shares that
the Fund is offering to purchase to an amount which it believes will be
sufficient to accommodate the excess Shares tendered as well as any Shares
tendered during the extended Offer period. IN NO EVENT WILL THE FUND PURCHASE
SHARES TENDERED ON A PRO RATA BASIS.
THIS OFFER IS BEING MADE TO ALL STOCKHOLDERS OF THE FUND AND IS NOT
CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
IMPORTANT
If you desire to tender all or any portion of your Shares, you should
either (1) request your broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for you or (2) if you own your Shares
directly, complete and sign the Letter of Transmittal and mail or deliver it
along with any Share certificate(s) and any other required documents to the
Fund's transfer agent, Financial Data Services, Inc. (the "Transfer Agent"). If
your Shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee, you must contact such broker, dealer, commercial
bank, trust company or other nominee if you desire to tender your Shares. Shares
held in your Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch") brokerage account are registered in the name of Merrill Lynch and are
not held by you directly. Merrill Lynch may charge its customers a $4.85
processing fee to confirm a repurchase of Shares from such customers pursuant to
the Offer.
NEITHER THE FUND NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY
STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. EACH
STOCKHOLDER MUST MAKE HIS OWN DECISION WHETHER TO TENDER SHARES, AND IF SO, HOW
MANY SHARES TO TENDER.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
FUND AS TO WHETHER STOCKHOLDERS SHOULD TENDER SHARES PURSUANT TO THE OFFER. NO
PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUND.
<PAGE>
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
Questions and requests for assistance may be directed to your Merrill Lynch
Financial Consultant or other nominee, or to the Transfer Agent at the address
and telephone number set forth below. Requests for additional copies of this
Offer to Purchase and the Letter of Transmittal should be directed to the
Merrill Lynch Response Center.
April 15, 1994 MERRILL LYNCH HIGH INCOME
MUNICIPAL BOND FUND, INC.
<TABLE>
<S> <C>
Merrill Lynch Response Center Transfer Agent: Financial Data Services, Inc.
P.O. Box 30200 Attn: Merrill Lynch High Income
New Brunswick, New Jersey 08989-0200 Municipal Bond Fund, Inc.
Attn: Merrill Lynch High Income Transfer Agency Operations Department
Municipal Bond Fund, Inc. P.O. Box 45289
(800) 637-7455 ext. 7866 Jacksonville, Florida 32232-5289
(904) 928-5510
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TABLE OF CONTENTS
</TABLE>
<TABLE>
<S> <C> <C>
SECTIONS PAGE
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1. Price; Number of Shares.......................................................................... 3
2. Procedure for Tendering Shares................................................................... 3
3. Early Withdrawal Charge.......................................................................... 4
4. Withdrawal Rights................................................................................ 5
5. Payment for Shares............................................................................... 5
6. Certain Conditions of the Offer.................................................................. 6
7. Purpose of the Offer............................................................................. 6
8. Certain Effects of the Offer..................................................................... 6
9. Source and Amount of Funds....................................................................... 6
10. Summary of Selected Financial Information........................................................ 7
11. Certain Information About the Fund............................................................... 8
12. Additional Information........................................................................... 8
13. Certain Federal Income Tax Consequences.......................................................... 8
14. Extension of Tender Period; Termination; Amendments.............................................. 9
15. Miscellaneous.................................................................................... 10
</TABLE>
2
<PAGE>
1. PRICE; NUMBER OF SHARES. The Fund will, upon the terms and subject to
the conditions of the Offer, purchase up to 1,500,000 of its issued and
outstanding Shares which are tendered and not withdrawn prior to 12:00 MIDNIGHT,
New York City time, on May 12, 1994 (such time and date being hereinafter called
the "Initial Expiration Date"), unless it determines to accept none of them. The
purchase price of the Shares will be their NAV as of the close of the New York
Stock Exchange on the Expiration Date. An Early Withdrawal Charge to recover
distribution expenses will be assessed on most Shares accepted for purchase
which have been held for less than three years (see Section 3). The Fund
reserves the right to extend the Offer (see Section 14). The later of the
Initial Expiration Date or the latest time and date to which the Offer is
extended is herein referred to as the "Expiration Date."
The Offer is being made to all stockholders of the Fund and is not
conditioned upon any number of Shares being tendered. The Fund will not purchase
Shares on a pro rata basis. If more than 1,500,000 Shares are duly tendered
prior to the Initial Expiration Date, the Fund will, assuming no changes in the
factors originally considered by the Board of Directors when it initially
determined to make the Offer, extend the Offer period, if necessary, and
increase the number of Shares that the Fund is offering to purchase to an amount
which it believes will be sufficient to accommodate the excess Shares tendered
as well as any Shares tendered during the extended Offer period.
As of March 31, 1994, there were in excess of 20.3 million Shares issued
and outstanding and there were approximately 304 holders of record of Shares (in
addition, Merrill Lynch maintains accounts for 7,261 beneficial owners of
Shares). The Fund has been informed that none of the Directors, officers or
affiliates of the Fund intends to tender any Shares pursuant to the Offer. The
Shares currently are not traded on any established secondary market. The
following table sets forth information relating to the Fund's NAV for the
indicated periods:
<TABLE>
<S> <C> <C>
NET ASSET VALUE
--------------------
HIGH LOW
--------- ---------
Quarter ended:
June 30, 1992................................................... $ 10.62 $ 10.33
September 30, 1992.............................................. 10.97 10.44
December 31, 1992............................................... 10.77 10.42
March 31, 1993.................................................. 11.19 10.65
June 30, 1993................................................... 11.27 10.95
September 30, 1993.............................................. 11.54 11.20
December 31, 1993............................................... 11.60 11.40
March 31, 1994.................................................. 11.56 10.82
</TABLE>
Current NAV quotations for the Shares can be obtained from your Merrill Lynch
Financial Consultant or from the Merrill Lynch Response Center at (800)
637-7455, ext. 7866.
2. PROCEDURE FOR TENDERING SHARES. In order for you to tender any of your
Shares pursuant to the Offer, you may either: (a) request your broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
you, in which case a Letter of Transmittal is not required or (b) if the Shares
are registered in your name, send to the Transfer Agent, at the address set
forth on page 2, any certificates for such Shares, a properly completed and
executed Letter of Transmittal and any other documents required therein. Please
contact the Merrill Lynch Response Center at (800) 637-7455, ext. 7866 as to any
additional documents which may be required.
A. Procedures for Beneficial Owners Holding Shares Through Merrill Lynch or
Other Brokers or Nominees.
If your Shares are registered in the name of a broker, dealer, commercial
bank, trust company or other nominee, you must contact such broker, dealer,
commercial bank, trust company or other nominee if you desire to tender your
Shares. You should contact such broker or other nominee in sufficient time to
permit notification of your desire to tender to reach the Transfer Agent by the
Expiration Date. No brokerage commission will be charged on the purchase of
Shares by the Fund pursuant to the Offer.
3
<PAGE>
However, a broker or dealer may charge a fee for processing the transaction on
your behalf. Merrill Lynch may charge its customers a $4.85 processing fee to
confirm a purchase of Shares pursuant to the Offer.
B. Procedures for Registered Stockholders.
If you will be mailing or delivering the Letter of Transmittal and any
other required documents to the Transfer Agent in order to tender your Shares,
they must be received on or prior to the Expiration Date by the Transfer Agent
at its address set forth on page 2 of this Offer to Purchase.
Signatures on the Letter of Transmittal must be guaranteed by a member firm
of a national securities exchange or a commercial bank or trust company having
an office, branch or agency in the United States ("Eligible Institution").
Notarized signatures are not sufficient.
Payment for Shares tendered and purchased will be made only after receipt
by the Transfer Agent on or before the Expiration Date of a properly completed
and duly executed Letter of Transmittal and any other required documents. If
your Shares are evidenced by certificates, those certificates must also be
received by the Transfer Agent on or prior to the Expiration Date.
THE METHOD OF DELIVERY OF ANY DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE ELECTION AND RISK OF THE PARTY TENDERING THE SHARES. IF DOCUMENTS ARE
SENT BY MAIL, IT IS RECOMMENDED THAT THEY BE SENT BY REGISTERED MAIL, PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED.
C. Determinations of Validity.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tenders will be determined by the Fund, in its sole
discretion, whose determination shall be final and binding. The Fund reserves
the absolute right to reject any or all tenders determined by it not to be in
appropriate form or the acceptance of or payment for which would, in the opinion
of counsel for the Fund, be unlawful. The Fund also reserves the absolute right
to waive any of the conditions of the Offer or any defect in any tender with
respect to any particular Shares or any particular stockholder, and the Fund's
interpretations of the terms and conditions of the Offer will be final and
binding. Unless waived, any defects or irregularities in connection with tenders
must be cured within such times as the Fund shall determine. Tenders will not be
deemed to have been made until the defects or irregularities have been cured or
waived. Neither the Fund, its investment adviser and administrator, Merrill
Lynch Asset Management ("MLAM"), nor the Transfer Agent, nor any other person
shall be obligated to give notice of any defects or irregularities in tenders,
nor shall any of them incur any liability for failure to give such notice.
D. Tender Constitutes an Agreement.
A tender of Shares made pursuant to any one of the procedures set forth
above will constitute an agreement between the tendering stockholder and the
Fund in accordance with the terms and subject to the conditions of the Offer.
3. EARLY WITHDRAWAL CHARGE. The Fund will assess an Early Withdrawal Charge
on Shares accepted for purchase which have been held for less than three years.
The charge will be paid to Merrill Lynch Funds Distributor, Inc., an affiliate
of MLAM and the distributor of the Shares, to recover distribution expenses. The
Early Withdrawal Charge will be imposed on those Shares accepted for tender
based on an amount equal to the lesser of the NAV of the Shares on the
Expiration Date or the cost of the Shares being tendered. Accordingly, the Early
Withdrawal Charge is not imposed on increases in the net asset value above the
initial purchase price. In addition, the Early Withdrawal Charge is not imposed
on Shares derived from reinvestments of dividends or capital gains
distributions. The Early Withdrawal Charge imposed will vary depending on the
length of time the Shares have been
4
<PAGE>
owned since purchase (separate purchases shall not be aggregated for these
purposes), as set forth in the following table:
<TABLE>
<S> <C>
EARLY
YEAR OF TENDER AFTER PURCHASE WITHDRAWAL CHARGE
- ---------------------------------------------------------------------- -----------------------
First................................................................. 3.0%
Second................................................................ 2.0%
Third................................................................. 1.0%
Fourth and following.................................................. 0%
</TABLE>
In determining whether an Early Withdrawal Charge is applicable to a tender
of Shares, the calculation will be determined in the manner that results in the
lowest possible amount being charged. Therefore, it will be assumed that the
tender is first of Shares acquired through dividend reinvestment and of Shares
held for over three years and then of Shares held longest during the three-year
period. The Early Withdrawal Charge will not be applied to dollar amounts
representing an increase in the net asset value since the time of purchase.
4. WITHDRAWAL RIGHTS. You may withdraw Shares tendered at any time prior to
the Expiration Date and, if the Shares have not yet been accepted for payment by
the Fund, at any time after June 10, 1994.
Stockholders whose accounts are maintained through Merrill Lynch should
notify their Financial Consultant prior to the Expiration Date if they wish to
withdraw Shares. Stockholders whose accounts are maintained through another
broker, dealer, commercial bank, trust company or other nominee should notify
such nominee prior to the Expiration Date. Stockholders whose accounts are
maintained directly through the Transfer Agent should submit written notice to
the Transfer Agent.
To be effective, any notice of withdrawal must be timely received by the
Transfer Agent at the address set forth on page 2 of this Offer to Purchase. Any
notice of withdrawal must specify the name of the person having deposited the
Shares to be withdrawn, the number of Shares to be withdrawn, and, if the
certificates representing such Shares have been delivered or otherwise
identified to the Transfer Agent, the name of the registered holder(s) of such
Shares as set forth in such certificates and the number of Shares to be
withdrawn. If the certificates have been delivered to the Transfer Agent, then,
prior to the release of such certificates, you must also submit the certificate
numbers shown on the particular certificates evidencing such Shares and the
signature on the notice of the withdrawal must be guaranteed by an Eligible
Institution. All questions as to the form and validity (including time of
receipt) of notices of withdrawal will be determined by the Fund in its sole
discretion, whose determination shall be final and binding. Shares properly
withdrawn shall not thereafter be deemed to be tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by following one of the
procedures described in Section 2 prior to the Expiration Date.
5. PAYMENT FOR SHARES. For purposes of the Offer, the Fund will be deemed
to have accepted for payment (and thereby purchased) Shares which are tendered
as, if and when it gives oral or written notice to the Transfer Agent of its
election to purchase such Shares.
Payment for Shares will be made promptly by the Transfer Agent to tendering
stockholders as directed by the Fund. Certificates for Shares not purchased (see
Sections 1 and 6), or for Shares not tendered included in certificates forwarded
to the Transfer Agent, will be returned promptly following the termination,
expiration or withdrawal of the Offer, without expense to the tendering
stockholder.
The Fund will pay all transfer taxes, if any, payable on the transfer to it
of Shares purchased pursuant to the Offer. If tendered certificates are
registered in the name of any person other than the person signing the Letter of
Transmittal, the amount of any such transfer taxes (whether imposed on the
registered holder or such other person) payable on account of the transfer to
such person of such Shares will be deducted from the purchase price unless
satisfactory evidence of the payment of such
5
<PAGE>
taxes, or exemption therefrom, is submitted. The Fund will not pay any interest
on the purchase price under any circumstances.
As noted above, Merrill Lynch may charge its customers a $4.85 processing
fee to confirm a purchase of Shares from such customers pursuant to the Offer.
6. CERTAIN CONDITIONS OF THE OFFER. The Fund shall not be required to
accept for payment or pay for any Shares tendered, and may terminate or amend
the Offer or may postpone the acceptance for payment of or payment for Shares
tendered, if: (1) such purchases would impair the Fund's status as a regulated
investment company under the Internal Revenue Code (which would make the Fund a
taxable entity, causing the Fund's income to be taxed at the corporate level in
addition to the taxation of stockholders who receive dividends from the Fund);
(2) the Fund would not be able to liquidate portfolio securities in a manner
which is orderly and consistent with the Fund's investment objective and
policies in order to purchase Shares tendered pursuant to the Offer; or (3)
there is, in the Board of Directors' judgment, any (a) legal action or
proceeding instituted or threatened challenging the Offer or otherwise
materially adversely affecting the Fund, (b) declaration of a banking moratorium
by Federal or state authorities or any suspension of payment by banks in the
United States or New York State, which is material to the Fund, (c) limitation
imposed by Federal or state authorities on the extension of credit by lending
institutions, (d) commencement of war, armed hostilities or other international
or national calamity directly or indirectly involving the United States which is
material to the Fund, or (e) other event or condition which would have a
material adverse effect on the Fund or its stockholders if Shares tendered
pursuant to the Offer were purchased.
If the Fund determines to amend the Offer or to postpone the acceptance for
payment of or payment for Shares tendered, it will, to the extent necessary,
extend the period of time during which the Offer is open as provided in Section
14. Moreover, in the event any of the foregoing conditions are modified or
waived in whole or in part at any time, the Fund will promptly make a public
announcement of such waiver and may, depending on the materiality of the
modification or waiver, extend the Offer period as provided in Section 14.
7. PURPOSE OF THE OFFER. The Fund does not currently believe there will be
an active secondary market for its Shares. The Board of Directors has determined
that it would be in the best interest of stockholders for the Fund to take
action to attempt to provide liquidity to stockholders. To that end, the
Directors presently intend each quarter to consider the making of a tender offer
to purchase the Shares at NAV. The Fund will at no time be required to make any
such tender offer.
8. CERTAIN EFFECTS OF THE OFFER. The purchase of Shares pursuant to the
Offer will have the effect of increasing the proportionate interest in the Fund
of stockholders who do not tender their Shares. If you retain your Shares,
however, you will be subject to any increased risks that may result from the
reduction in the Fund's aggregate assets resulting from payment for the Shares,
including, for example, the potential for greater volatility due to decreased
diversification and higher expenses. However, the Fund believes that those risks
will be reduced to the extent new Shares of the Fund are sold. All Shares
purchased by the Fund pursuant to the Offer will be retired by the Board of
Directors of the Fund.
9. SOURCE AND AMOUNT OF FUNDS. The price to be paid by the Fund for shares
tendered in the Offer will equal their NAV as of the close of the New York Stock
Exchange on the Expiration Date, less any applicable Early Withdrawal Charge.
Based on the NAV on April 11, 1994, the aggregate purchase price if 1,500,000
Shares are tendered and accepted for payment pursuant to the Offer would be
approximately $16,185,000. The Fund anticipates that the purchase price for any
Shares acquired pursuant to the Offer will first be derived from cash on hand,
and then from the proceeds from the sale of cash equivalents held by the Fund.
Although the Fund is authorized to borrow money to finance the purchase of
Shares pursuant to tender offers, the Board of Directors believes that the Fund
currently has sufficient liquidity to repurchase the Shares without such
borrowing. However, if, in the judgment
6
<PAGE>
of the Directors, there is not sufficient liquidity of the assets of the Fund to
pay for tendered Shares, the Fund may, within the limits set forth in the
Prospectus, borrow money as described above or may terminate the Offer.
10. SUMMARY OF SELECTED FINANCIAL INFORMATION. Set forth below is a summary
of selected financial information for the Fund for the fiscal years ended August
31, 1992 and 1993. This information has been excerpted from the Fund's audited
financial statements contained in its Annual Reports to Stockholders for the
indicated periods. More comprehensive financial information is included in such
financial statements (copies of which have been filed as exhibits to the
Schedule 13E-4 filed with the Securities and Exchange Commission (the
"Commission") and may be obtained from the Transfer Agent) and the summary of
selected financial information set forth below is qualified in its entirety by
reference to such documents and the financial information, the notes thereto and
related matter contained therein.
SUMMARY OF SELECTED FINANCIAL INFORMATION
(IN 000'S EXCEPT PER SHARE DATA)
<TABLE><CAPTION>
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1992 1993
----------- -----------
INCOME STATEMENT
<S> <C> <C>
Investment income.................................................................... $ 11,591 $ 14,223
Expenses............................................................................. 1,850 2,591
----------- -----------
Investment income--net............................................................... $ 9,741 $ 11,632
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Realized gain on investments--net.................................................... 679 1,138
Change in unrealized appreciation on investments--net................................ 6,517 12,041
FINANCIAL HIGHLIGHTS (AT END OF PERIOD)
Total assets......................................................................... $ 174,903 $ 222,600
Total liabilities.................................................................... 4,168 5,678
----------- -----------
Net assets........................................................................... $ 170,735 $ 216,922
Net asset value per share............................................................ $ 10.74 $ 11.44
Shares of common stock outstanding................................................... 15,893 18,966
PER SHARE
Investment income--net............................................................... $ .71 $ .68
Dividends from net investment income to common stockholders.......................... $ .71 $ .68
Distributions from net realized gain on investments to common stockholders........... $ .05 $ .05
RATIOS
Total expenses, net of reimbursement, to average net assets.......................... 1.30% 1.37%
Total expenses to average net assets................................................. 1.55% 1.47%
Investment income--net, to average net assets........................................ 6.85% 6.17%
</TABLE>
7
<PAGE>
11. CERTAIN INFORMATION ABOUT THE FUND. The Fund was incorporated under the
laws of the State of Maryland on August 16, 1990 and is a non-diversified,
closed-end, management investment company registered under the Investment
Company Act of 1940, as amended. The investment objective of the Fund is to
provide stockholders with high current income exempt from Federal income taxes
by investing primarily in a portfolio of medium to lower grade or unrated
municipal obligations the interest on which is exempt from Federal income taxes
in the opinion of bond counsel to the issuer. The Fund will seek to achieve its
objective by investing at least 80% of its assets, except during temporary
defensive periods, in a portfolio of obligations issued by or on behalf of
states, territories and possessions of the United States and their political
subdivisions, agencies or instrumentalities paying interest which, in the
opinion of bond counsel to the issuer, is exempt from Federal income taxes
("Municipal Bonds"). MLAM, an affiliate of Merrill Lynch, acts as investment
adviser and administrator for the Fund.
There have not been any transactions involving the Shares of the Fund that
were effected during the past 40 business days by the Fund, any executive
officer or Director of the Fund, any person controlling the Fund, any executive
officer or Director of any corporation ultimately in control of the Fund or by
any associate or subsidiary of any of the foregoing including any executive
officer or Director of any such subsidiary, except that within the past 40
business days pursuant to a continuous public offering of its Shares, the Fund
has sold approximately 451,000 Shares at the NAV per Share on the date of each
such sale.
The Fund has been granted an exemption by the Commission relating to tender
offers which is based on representations by the Fund that no secondary market
for the Fund's Shares is expected to develop. The exemption is conditioned on
(1) the absence of a secondary market, (2) the Fund suspending the offering of
its Shares during the five business days preceding the termination of a tender
offer and (3) the Fund refraining from purchasing non-investment grade and
unrated Municipal Bonds in secondary market transactions during such five
business day period.
The principal executive offices of the Fund are located at 800 Scudders
Mill Road, Plainsboro, New Jersey 08536.
12. ADDITIONAL INFORMATION. The Fund has filed a statement on Schedule
13E-4 with the Commission which includes certain additional information relating
to the Offer. Such material may be inspected and copied at prescribed rates at
the Commission's public reference facilities at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549; Seven World Trade Center, New York, New
York 10048; and 230 South Dearborn Street, Chicago, Illinois 60604. Copies of
such material may also be obtained by mail at prescribed rates from the Public
Reference Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549.
13. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following discussion is a
general summary of the Federal income tax consequences of a sale of Shares
pursuant to the Offer. You should consult your own tax adviser for a complete
description of the tax consequences to you of a sale of Shares pursuant to the
Offer.
The sale of Shares pursuant to the Offer will be a taxable transaction for
Federal income tax purposes, either as a "sale or exchange," or under certain
circumstances, as a "dividend." In general, the transaction should be treated as
a sale or exchange of the Shares under Section 302 of the Internal Revenue Code
of 1986, as amended (the "Code"), if the receipt of cash: (a) is "substantially
disproportionate" with respect to the stockholder, (b) results in a "complete
redemption" of the stockholder's interest in the Fund, or (c) is "not
essentially equivalent to a dividend" with respect to the stockholder. A
"complete redemption" of a stockholder's interest generally requires that the
stockholder dispose of all Shares directly owned or attributed to the
stockholder under Section 318 of the Code. A "substantially disproportionate"
distribution generally requires a reduction of at least 20% in the stockholder's
proportionate interest in the Fund after all Shares are tendered. A distribution
"not
8
<PAGE>
essentially equivalent to a dividend" requires that there be a "meaningful
reduction" in the stockholder's interest, which should be the case if the
stockholder has a minimal interest in the Fund, exercises no control over Fund
affairs and suffers a reduction in proportionate interest in the Fund.
If any of these three tests for "sale or exchange" treatment is met, you
will recognize gain or loss equal to the difference between the amount of cash
received pursuant to the Offer and the adjusted tax basis of the Shares sold.
Such gain or loss will be a capital gain or loss if the Shares sold have been
held by you as a capital asset. In general, capital gain or loss with respect to
Shares sold will be long-term capital gain or loss if the holding period for
such Shares is more than one year.
If none of the Code Section 302 tests are met, you may be treated as having
received, in whole or in part, a dividend, return of capital or capital gain,
depending (i) on whether the Fund has sufficient earnings and profits to support
a dividend and (ii) on your tax basis in the Shares. The tax basis in the Shares
tendered to the Fund will be transferred to any remaining Shares held by you. In
addition, if the sale of Shares pursuant to the Offer is treated as a "dividend"
to a tendering stockholder, a Code Section 305(c) constructive dividend may
result to a non-tendering stockholder whose proportionate interest in the
earnings and assets of the Fund has been increased as a result of such tender.
Accordingly, the differentiation between "dividend" and "sale or exchange"
treatment is important with respect to the amount and character of income that
tendering stockholders are deemed to receive. In addition, while the marginal
tax rates for dividends and capital gains are the same for corporate
stockholders, currently under the Code, the top income tax rate for individuals
(39.6%) exceeds the maximum marginal tax rate on long-term capital gains (28%).
The Transfer Agent will be required to withhold 31% of the gross proceeds
paid to a stockholder or other payee pursuant to the Offer unless either: (a)
the stockholder has provided the stockholder's taxpayer identification
number/social security number and certifies under penalties of perjury: (i) that
such number is correct, and (ii) either that (A) the stockholder is not
otherwise subject to backup withholding as a result of a failure to report all
interest or dividends, or (B) the Internal Revenue Service has notified the
stockholder that the stockholder is no longer subject to backup withholding; or
(b) an exception applies under applicable law and Treasury regulations. Foreign
stockholders may be required to provide the Transfer Agent with a completed Form
W-8, available from the Transfer Agent, in order to avoid 31% backup
withholding.
Unless a reduced rate of withholding or a withholding exemption is
available under an applicable tax treaty, a stockholder who is a nonresident
alien or a foreign entity may be subject to a 30% United States withholding tax
on the gross proceeds received by such stockholder, if the proceeds are treated
as a "dividend" under the rules described above. Foreign stockholders should
consult their tax advisers regarding application of these withholding rules.
14. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS. The Fund reserves
the right, at any time and from time to time, to extend the period of time
during which the Offer is pending by making a public announcement thereof. In
the event that the Fund so elects to extend the tender period, the NAV for the
Shares tendered will be determined as of the close of the New York Stock
Exchange on the Expiration Date, as extended. During any such extension, all
Shares previously tendered and not purchased or withdrawn will remain subject to
the Offer. The Fund also reserves the right, at any time and from time to time
up to and including the Expiration Date, to (a) terminate the Offer and not to
purchase or pay for any Shares, and (b) amend the Offer in any respect by making
a public announcement. Such public announcement will be issued no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date and will disclose the approximate number of Shares
tendered as of that date. Without limiting the manner in which the Fund may
choose to make a public announcement of extension, termination or amendment,
except as provided by applicable law (including Rule 13e-4(e)(2)), the Fund
shall have no obligation to publish, advertise or
9
<PAGE>
otherwise communicate any such public announcement, other than by making a
release to the Dow Jones News Service.
15. MISCELLANEOUS. The Offer is not being made to, nor will tenders be
accepted from, stockholders in any jurisdiction in which the Offer or its
acceptance would not comply with the securities or Blue Sky laws of such
jurisdiction. The Fund is not aware of any jurisdiction in which the Offer or
tenders pursuant thereto would not be in compliance with the laws of such
jurisdiction. However, the Fund reserves the right to exclude stockholders from
the Offer in any jurisdiction in which it is asserted that the Offer cannot
lawfully be made. The Fund believes such exclusion is permissible under
applicable tender offer rules, provided the Fund makes a good faith effort to
comply with any state law deemed applicable to the Offer. In any jurisdiction
the securities or Blue Sky laws of which require the Offer to be made by a
licensed broker or dealer the Offer shall be deemed to be made on the Fund's
behalf by Merrill Lynch.
MERRILL LYNCH HIGH INCOME
MUNICIPAL BOND FUND, INC.
April 15, 1994
10
LETTER OF TRANSMITTAL
TO BE USED TO TENDER SHARES OF
MERRILL LYNCH HIGH INCOME MUNICIPAL BOND FUND, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED APRIL 15, 1994
------------------------
THE EXPIRATION DATE AND THE WITHDRAWAL DEADLINE IS 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, MAY 12, 1994, UNLESS EXTENDED
------------------------
Transfer Agent:
FINANCIAL DATA SERVICES, INC.
ATTENTION: MERRILL LYNCH HIGH INCOME MUNICIPAL BOND FUND, INC.
TRANSFER AGENCY OPERATIONS DEPARTMENT
P.O. BOX 45289
JACKSONVILLE, FLORIDA 32232-5289
TELEPHONE INFORMATION NUMBER: (904) 928-5510
DELIVERY TO AN ADDRESS OTHER THAN THAT SHOWN ABOVE DOES NOT CONSTITUTE VALID
DELIVERY.
THIS LETTER OF TRANSMITTAL IS TO BE USED ONLY IF THE STOCKHOLDER IS A
RECORD OWNER OF SHARES WHO DESIRES TO EFFECT THE TENDER OFFER TRANSACTION
HIMSELF BY TRANSMITTING THE NECESSARY DOCUMENTS TO THE FUND'S TRANSFER AGENT AND
DOES NOT INTEND TO REQUEST HIS BROKER OR DEALER TO EFFECT THE TRANSACTION FOR
HIM. A STOCKHOLDER WHO HOLDS SHARES IN A MERRILL LYNCH ACCOUNT OR THROUGH
ANOTHER BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE IS NOT
THE RECORD OWNER AND SHOULD INSTRUCT HIS FINANCIAL CONSULTANT OR SUCH OTHER
NOMINEE TO EFFECT THE TENDER ON HIS BEHALF.
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Gentlemen:
The undersigned hereby tenders to the Merrill Lynch High Income Municipal
Bond Fund, Inc., a closed-end investment company incorporated under the laws of
the State of Maryland (the "Fund"), the shares described below of its common
stock, par value $.10 per share (the "Shares"), at a price equal to the net
asset value per Share ("NAV") calculated on the Expiration Date (as defined in
the Offer to Purchase), in cash, less any applicable Early Withdrawal Charge,
upon the terms and conditions set forth in the Offer to Purchase dated April 15,
1994, receipt of which is hereby acknowledged, and in this Letter of Transmittal
(which together constitute the "Offer").
The undersigned hereby sells to the Fund all Shares tendered hereby that
are purchased pursuant to the Offer and hereby irrevocably constitutes and
appoints the Transfer Agent as attorney in fact of the undersigned, with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to present such Shares and any Share
certificates for cancellation of such Shares on the Fund's books. The
undersigned hereby warrants that the undersigned has full authority to sell the
Shares tendered hereby and that the Fund will acquire good title thereto, free
and clear of all liens, charges, encumbrances, conditional sales agreements or
other obligations relating to the sale thereof, and not subject to any adverse
claim, when and to the extent the same are purchased by it. Upon request, the
undersigned will execute and deliver any additional documents necessary to
complete the sale in accordance with the terms of the Offer.
The undersigned recognizes that under certain circumstances set forth in
the Offer to Purchase, the Fund may not be required to purchase any of the
Shares tendered hereby. In that event, the undersigned understands that, in the
case of Shares evidenced by certificates, the certificate(s) for any Shares not
purchased will be returned to the undersigned at the address indicated below. In
the case of Shares not evidenced by certificates and held in an Investment
Account, the Transfer Agent will cancel the tender order and no Shares will be
withdrawn from the Account.
The check for the purchase price for the tendered Shares purchased will be
issued to the order of the undersigned and mailed to the address indicated in
the "Description of Shares Tendered" table below.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and the obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Offer, this tender is
irrevocable.
<PAGE>
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 3 AND 4)
<TABLE>
<S> <C> <C> <C>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES TENDERED
(PLEASE FILL IN EXACTLY THE NAME(S) IN WHICH SHARES ARE REGISTERED) (ATTACH ADDITIONAL SCHEDULE IF NECESSARY)
NO. OF SHARES
CERTIFICATE LISTED NO. OF SHARES
NO.(S)* ON CERTIFICATE* TENDERED**
Account No. Total Shares Tendered.................
</TABLE>
* Need not be completed by stockholders whose Shares are not evidenced by
certificates.
** To be completed by all tendering stockholders, whether or not your Shares
are evidenced by certificates. If you desire to tender fewer than all
Shares held in your account or evidenced by a certificate listed above,
please indicate in this column the number you wish to tender. Otherwise all
Shares evidenced by such certificate or held in your account will be deemed
to have been tendered.
SIGNATURE FORM
--SIGN HERE--
(SEE INSTRUCTIONS 1, 5 AND 8)
Social Security No.
or Taxpayer Identification No. ................
Under penalty of perjury, I certify (1) that the number set forth above is
my correct Social Security No. or Taxpayer Identification No. and (2) that
I am not subject to backup withholding either because I have not been
notified that I am subject thereto as a result of failure to report all
interest or dividends, or the Internal Revenue Service ("IRS") has
notified me that I am no longer subject thereto. INSTRUCTION: You must
strike out the language in (2) above if you have been notified that you
are subject to backup withholding due to underreporting and you have not
received a notice from the IRS that backup withholding has been
terminated.
..........................................................................
..........................................................................
(SIGNATURE(S) OF OWNER(S) EXACTLY AS REGISTERED)
Date ................ , 1994
Name(s) ..................................................................
..........................................................................
(PLEASE PRINT)
Telephone Number ( ) ................
Signature(s) Guaranteed ..................................................
..................................................
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a member firm of a registered national securities
exchange, or a commercial bank or trust company having an office, branch or
agency in the United States. This Letter of Transmittal is to be used only if
you may effect the tender offer transaction yourself and do not intend to
request your broker or dealer to effect the transaction for you.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. Certificates for all
tendered Shares, together with a properly completed and duly executed Letter of
Transmittal, should be mailed or delivered to the Transfer Agent on or prior to
the Expiration Date at the appropriate address set forth herein and must be
received by the Transfer Agent prior to the Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER.
3. INADEQUATE SPACE. If the space provided is inadequate, the certificate
numbers and number of Shares should be listed on a separate signed schedule
attached hereto.
4. PARTIAL TENDERS. If fewer than all of the Shares in your Investment
Account or evidenced by any certificate submitted are to be tendered, fill in
the number of Shares which are to be tendered in the column entitled "No. of
Shares Tendered." If applicable, a new certificate for the remainder of the
Shares evidenced by your old certificate(s) will be sent to you as soon as
practicable after the Expiration Date of the Offer. All Shares represented by
each certificate listed or in your Investment Account are deemed to have been
tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, AUTHORIZATION AND ENDORSEMENTS.
(a) If the Letter of Transmittal is signed by the registered holder(s) of
the Shares tendered hereby, the signature(s) must correspond with the name(s) in
which the Shares are registered.
(b) If the Shares are held of record by two or more joint holders, all such
holders must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names it will be
necessary to complete, sign and submit as many separate Letters of Transmittal
as there are different registrations of Shares.
(d) When this Letter of Transmittal is signed by the registered holder(s)
of the Shares listed and, if applicable, of the certificates transmitted hereby,
no endorsements of certificates or separate authorizations are required.
(e) If this Letter of Transmittal or any certificates or authorizations are
signed by trustees, executors, administrators, guardians, attorneys in fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and must submit proper
evidence satisfactory to the Fund of their authority so to act.
6. TRANSFER TAXES. The Fund will pay all the taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer. If tendered
certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any transfer taxes (whether
imposed on the registered holder or such other person) payable on account of the
transfer to such person of such Shares will be deducted from the purchase price
unless satisfactory evidence of the payment of such taxes, or exemption
therefrom, is submitted.
7. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of any tender of Shares will be
determined by the Fund, whose determinations shall be final and binding. The
Fund reserves the absolute right to reject any or all tenders determined by it
not to be in appropriate form or the acceptance of or payment for which would,
in the opinion of counsel for the Fund, be unlawful. The Fund also reserves the
absolute right to waive any of the conditions of the Offer or any defect in any
tender with respect to any particular Shares or any particular stockholder, and
the Fund's interpretations of the terms and conditions of the Offer (including
these instructions) will be final and binding. Unless waived, any defects or
irregularities in connection with tenders must be cured within such time as the
Fund shall determine. Tenders will not be deemed to have been made until all
defects and irregularities have been cured or waived. Neither the Fund, Merrill
Lynch Asset Management, L.P. nor the Transfer Agent, nor any other person shall
be obligated to give notice of defects or irregularities in tenders, nor shall
any of them incur any liability for failure to give any such notice.
8. IMPORTANT TAX INFORMATION. Under Federal income tax law, a stockholder
whose tendered Shares are accepted for payment is required by law to provide the
Transfer Agent (as payer) with his correct taxpayer identification number, which
is accomplished by completing and signing the Signature Form.
EXHIBIT (A)(3)
[LOGO]
Dear Stockholder:
As you requested, we are enclosing a copy of the Merrill Lynch High Income
Municipal Bond Fund, Inc. (the "Fund") Offer to Purchase (the "Offer to
Purchase") 1,500,000 issued and outstanding shares (the "Shares"). The Offer to
Purchase is for cash at Net Asset Value ("NAV") per Share as of the expiration
date of the Offer, less any Early Withdrawal Charge. Together with the Offer to
Purchase we are sending you a Letter of Transmittal (the "Letter") for use by
holders of record of Shares which you should read carefully. Certain selected
financial information with respect to the Fund is set forth in the Offer to
Purchase.
If, after reviewing the information set forth in the Offer to Purchase and
Letter, you wish to tender Shares for purchase by the Fund, please either
contact your Merrill Lynch Financial Consultant or other broker, dealer or
nominee to effect the tender for you or, if you are the record owner of the
Shares, you may follow the instructions contained in the Offer to Purchase and
Letter.
Neither the Fund nor its Board of Directors is making any recommendation to
any holder of Shares as to whether to tender Shares. Each stockholder is urged
to consult his or her broker or tax adviser before deciding whether to tender
any Shares.
The Fund's distribution rate for the period February 18, 1994 through March
17, 1994, based on the amounts actually distributed by the Fund, was 5.88% based
on the March 17, 1994 NAV of $11.13. For the quarter ended March 31, 1994, the
Fund's highest NAV was $11.56 and its lowest NAV was $10.82. The Fund's NAV on
April 11, 1994 was $10.79 per share. The Fund publishes its NAV each week in
Barron's. It appears in the "Investment Company Institute List" under the
sub-heading "Closed-End Bond Funds" within the listings of mutual funds and
closed-end funds.
Requests for current NAV quotations or for additional copies of the Offer
to Purchase, the Letter and any other tender offer documents may be directed to
the Merrill Lynch Response Center at (800) 637-7455, ext. 7866.
Should you have any other questions on the enclosed material, please do not
hesitate to contact your Merrill Lynch Financial Consultant or other broker or
dealer or call the Fund's Transfer Agent, Financial Data Services, Inc., at
(904) 928-5510. We appreciate your continued interest in Merrill Lynch High
Income Municipal Bond Fund, Inc.
Yours truly,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch High Income Municipal
Bond Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of Merrill
Lynch High Income Municipal Bond Fund, Inc. as of August 31, 1993,
the related statements of operations for the year then ended and
changes in net assets for each of the years in the two-year period
then ended, and the financial highlights for each of the years in
the two-year period then ended and the period November 2, 1990
(commencement of operations) to August 31, 1991. These financial
statements and the financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion
on these financial statements and the financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned at August 31, 1993 by
correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, such financial statements and financial
highlights present fairly, in all material respects, the
financial position of Merrill Lynch High Income Municipal Bond
Fund, Inc. as of August 31, 1993, the results of its operations,
the changes in its net assets, and the financial highlights for
the respective stated periods in conformity with generally accepted
accounting principles.
Deloitte & Touche
Princeton, New Jersey
September 30, 1993
<PAGE>
PORTFOLIO ABBREVIATIONS
To simplify the listing of Merrill Lynch High Income Muni-
cipal Bond Fund, Inc.'s portfolio holdings in the Schedule
of Investments, we have abbreviated the names of many of
the securites according to the list below and at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
DATES Daily Adjustable Tax-Exempt Securities
GO General Obligation Bonds
HFA Housing Finance Authority
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
INFLOS Inverse Floating Rate Municipal Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
S/F Single-Family
VRDN Variable Rate Demand Notes
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <S> <C> <S> <C>
State
Arizona--2.1%
NR Ba $3,000 Arizona Health Facilities Authority, Hospital Systems Revenue
Refunding Bonds (Saint Luke's Health Systems), 7.25% due
11/01/2014 $ 3,151
NR NR 1,490 Pima County, Arizona, IDA, Revenue Bonds (La Hacienda
Project), 9.50% due 12/01/2016 1,509
California--2.4%
NR NR 2,000 Los Angeles County, California, COP, Marina Del Rey, Series A,
6.25% due 7/01/2003 2,080
NR NR 3,000 Orange County, California, Community Facilities Special Tax
Bonds (Aliso Viejo No 88-1), Series A, 7.35% due 8/15/2018 3,152
Colorado--6.1%
BBB Baa 2,000 Colorado Health Facilities Authority, Hospital Revenue Bonds
(Healthcare Systems Project), 6.87% due 2/15/2023 2,111
BBB NR 1,000 Colorado Health Facilities Financial Authority, Revenue
Refunding Bonds (National Jewish Center Immunization
Project), 6.875% due 2/15/2012 1,068
Denver, Colorado, City and County Airport Revenue Bonds:
BBB Baa1 900 AMT, Series A, 8% due 11/15/2025 1,011
BBB Baa1 2,000 AMT, Series B, 7.50% due 11/15/2025 2,133
BBB Baa1 2,000 AMT, Series D, 7.75% due 11/15/2013 2,396
BBB Baa1 2,000 Series A, 7.25% due 11/15/2025 2,195
NR NR 2,000 Mountain Village Metropolitan District, Colorado, Refunding
Bonds (San Miguel County), 8.10% due 12/01/2011(h) 2,236
Connecticut--3.1%
BBB- NR 4,000 Connecticut State Health and Educational Facilities Authority
Revenue Bonds (New Britain Memorial Hospital), Series A,
7.75% due 7/01/2022 4,519
NR NR 1,975 New Haven, Connecticut, Facilities Revenue Bonds (Hill Health
Corporation Project), 9.25% due 5/01/2017 2,143
<PAGE>
District of Columbia--1.5%
BBB NR 3,000 District of Columbia, COP, 7.30% due 1/01/2013 3,328
Florida--1.8%
A1+ VMG1 500 Hillsborough County, Florida, IDA, PCR, Refunding (Tampa
Electric Company), VRDN, 2.30% due 5/15/2018 (a) 500
A- NR 3,000 Palm Beach County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Good Samaritan Health Systems),
6.30% due 10/01/2022 3,153
A-3 VMG2 200 Sarasota County, Florida, Health Facilities Authority Revenue
Bonds (Venice Hospital Project), VRDN, 2.50% due 12/01/2015 (a) 200
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <S> <C> <S> <C>
State
Georgia--2.1%
NR NR $2,550 Atlanta, Georgia, Urban Residential Finance Authority, College
Facilities Revenue Bonds (Morris Brown College Project),
9.50% due 6/01/2011 $ 2,499
NR NR 2,000 Atlanta, Georgia, Urban Residential Finance Authority, M/F
Mortgage Revenue Bonds (Northside Plaza Apartments Project),
9.75% due 11/01/2020 2,060
Hawaii--1.0%
AAA NR 1,750 Hawaii State Department of Budget and Finance, Special
Purpose Mortgage Revenue Bonds (Citizens Utility Company),
RIB, Series 91-B, 10.379% due 11/01/2021 (g) 2,126
<PAGE>
Illinois--2.7%
BBB- Baa1 490 Chicago, Illinois, O'Hare International Airport, Special Facilities
Revenue Bonds (United Airlines), AMT, Series B, 8.95% due
5/01/2018 567
BBB+ NR 2,000 Illinois Educational Facilities Authority Revenue Bonds
(Chicago Osteopathic Health System), 7.25% due 5/15/2022 2,134
BBB+ NR 2,000 Illinois Health Facilities Authority Revenue Bonds (Morris
Hospital), 6.125% due 12/01/2023 1,985
BBB NR 1,000 Lansing, Illinois, Tax Increment Revenue Refunding Bonds,
7% due 12/01/2008 1,087
Indiana--0.8%
A NR 1,500 Indiana Bond Bank, Special Hospital Program Revenue Bonds
(Hendricks), Series A, 7.125% due 4/01/2013 1,677
Kentucky--2.3%
AAA Aaa 4,000 Louisville, Kentucky, Hospital Revenue Bonds, INFLOS, 10.196%
due 10/01/2014 (b)(g) 4,890
Louisiana--6.3%
NR Ba1 3,500 Lake Charles, Louisiana, Harbor and Terminal District Refunding
Bonds (Trunkline LNG Company Project), 7.75% due 8/15/2022 4,032
BBB+ Baa1 1,000 Louisiana Public Facilities Authority, Hospital Revenue Bonds
(Woman's Hospital Foundation Project), 7.25% due 10/01/2022 1,097
NR A 2,770 Louisiana Public Facilities Authority, Student Loan Revenue
Bonds, AMT, Series A-3, 7% due 9/01/2006 2,998
BB- NR 3,000 Port New Orleans, Louisiana, IDA, Revenue Refunding Bonds
(Continental Grain Company Project), 7.50% due 7/01/2013 3,148
BBB- NR 2,000 West Feliciana Parish, Lousiana, PCR (Gulf States Utilities),
Series II, 7.70% due 12/01/2014 2,282
Maryland--1.0%
NR Baa1 2,000 Prince George's County, Maryland, Hospital Revenue Bonds
(Dimensions Health Corporation), 7% due 7/01/2022 2,167
Massachusetts--7.0%
NR NR 1,200 Boston, Massachusetts, Industrial Development Financing
Authority, Solid Waste Disposal Facility Revenue Bonds
(Jet-A-Way Project), AMT, 10.50% due 1/01/2011 1,311
NR Ba 1,850 Lawrence, Massachusetts, GO, 9.875% due 12/15/1998 2,243
AAA Aaa 3,500 Massachusetts Health and Educational Facilities Authority
Revenue Bonds, INFLOS (Beth Israel Hospital), 9.09% due
7/01/2025 (e)(g) 3,942
NR NR 1,505 Massachusetts Health and Educational Facilities Authority
Revenue Bonds (North Adams Regional Hospital), Series B,
8% due 7/01/1998 1,586
NR NR 3,000 Massachusetts Port Authority Revenue Bonds (Harborside Hyatt
Project), AMT, 10% due 3/01/2026 3,255
A- A 3,135 Massachusetts Water Resources Authority, Revenue Refunding
Bonds, Series B, 5% due 3/01/2022 2,869
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<PAGE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <S> <C> <S> <C>
State
Michigan--1.6%
BBB Ba1 $2,900 Detroit, Michigan, GO, Series A, 8.70% due 4/01/2010 $ 3,438
Minnesota--2.7%
BBB- Baa 4,865 Saint Paul, Minnesota, Housing and Redevelopment Authority,
Hospital Revenue Bonds (Healtheast Project), Series D,
9.75% due 11/01/2017 5,799
Mississippi--0.5%
NR Baa 1,000 Mississippi Hospital Equipment and Authority Revenue
Bonds (Riley Memorial Hospital), Series B, 7.125% due
5/01/2022 1,086
Missouri--5.2%
BBB- NR 3,000 Joplin, Missouri, IDA, Hospital Facilities Revenue Refunding
and Improvement Bonds (Tri-State Osteopathic Project), 8.25%
due 12/15/2014 3,445
Missouri Health and Educational Facilities Authority Revenue
Bonds (Southwest Baptist University Project):
BB NR 905 9.50% due 10/01/2001 1,055
BB NR 3,690 9.50% due 10/01/2011 4,363
AAA Aaa 2,000 Phelps County, Missouri, Hospital Revenue Bonds (Phelps
County Regional Medical Center), 8.30% due 3/01/2020 (d) 2,467
Montana--0.9%
NR NR 2,000 Montana State Investment Board, Resource Recovery Revenue
Bonds (Yellowstone Energy Light & Power Project), AMT, 7%
due 12/31/2019 2,046
New Hampshire--2.7%
BBB+ Baa1 1,845 New Hampshire Higher Educational and Health Facilities
Authority Revenue Bonds (Saint Joseph Hospital), 7.50% due
1/01/2016 2,037
BBB- Baa3 3,450 New Hampshire, IDA, PCR (Public Service Company New
Hampshire Project), Series B, 7.50% due 5/01/2021 3,876
New Jersey--6.0%
BBB+ Baa1 2,000 Camden County, New Jersey, Pollution Control Financing
Authority, Solid Waste Resource Recovery Revenue Bonds,
Series D, 7.25% due 12/01/2010 2,228
New Jersey Health Care Facilities, Financing Authority Revenue Bonds:
BBB- Baa 4,700 (Saint Elizabeth Hospital), Series B, 8.25% due 7/01/2020 5,345
NR NR 5,000 (Shoreline Behavioral), Series A, 9.90% due 7/01/2021 5,000
AAA Aaa 480 New Jersey Housing and Mortgage Finance Agency Revenue
Bonds (Home Buyer), AMT, Series F, 7.95% due 4/01/2025 (b) 504
New Mexico--1.8%
BB+ Ba2 2,000 Farmington, New Mexico, PCR, Refunding (Public Service
Company-San Juan Project), Series A, 6.40% due 8/15/2023 2,025
A- A3 1,750 Lordsburg, New Mexico, PCR, Refunding (Phelps Dodge
Corporate Project), 6.50% due 4/01/2013 1,875
<PAGE>
New York--5.7%
New York City, New York, GO:
A- Aaa 4,000 Series B, 8.25% due 6/01/2017 (d)(h) 5,043
A- Baa1 5,260 Series C, 7.50% due 8/01/2021 6,086
A- Aaa 995 Series F, 8.25% due 11/15/2019 (d) 1,266
A- Baa1 5 Series F, 8.25% due 11/15/2019(h) 6
Ohio--2.0%
NR NR 1,900 Cincinnati, Ohio, Student Loan Funding Corporation, Revenue
Refunding Bonds, AMT, Series B, 6.75% due 1/01/2007 2,041
AAA Aaa 2,000 Ohio, HFA, S/F Mortgage Revenue Bonds, Series A-2, AMT, RIB,
10.886% due 3/24/2031 (c)(g) 2,285
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <S> <C> <S> <C>
State
Oregon--0.3%
A1+ VMG1 $ 700 Medford, Oregon, Hospital Facilities Authority Revenue Bonds
(Gross Rogue Valley Health Services), DATES, 2.70% due
10/01/2016 (a) $ 700
Pennsylvania--7.7%
BBB- NR 5,000 McKean County, Pennsylvania, Hospital Authority Revenue
Bonds (Bradford Hospital Project), 8.875% due 10/01/2020 5,923
BBB NR 1,710 Montgomery County, Pennsylvania, Higher Education and Health
Authority, Hospital Revenue Bonds (Jeanes Health System
Project), 8.625% due 7/01/2007 (d) 2,163
NR NR 1,500 Montgomery County, Pennsylvania, IDA, Revenue Refunding
Bonds (1st Mortgage--Meadowood Corporation Project),
Series A, 10.25% due 12/01/2020 1,575
NR NR 2,000 Pennsylvania Economic Development Financing Authority, IDR
(GEHL Company Inc. Project), AMT, Series F, 9% due 9/01/2010 1,920
BBB- Baa1 2,000 Philadelphia, Pennsylvania, Hospitals and Higher Education
Facilities Authority, Hospital Revenue Bonds (Frankford
Hospital), Series A, 6% due 6/01/2023 2,003
NR NR 3,000 Washington County, Pennsylvania, Hospital Authority Revenue
Bonds (Canonsburg General Hospital Project), 7.35% due
6/01/2013 2,992
Rhode Island--2.2%
BBB+ NR 1,500 Rhode Island Health and Educational Building Corporation,
Hospital Revenue Bonds (South County Hospital), 7.25% due
11/01/2011 1,641
A NR 1,080 Rhode Island Housing and Mortgage Finance Corporation
Revenue Bonds (Rental Housing Program), Series A, 7.95% due
10/01/2010 1,175
NR Ba 2,000 West Warkwick, Rhode Island, GO, Series A, 6.80%
due 7/15/1998 (h) 2,049
South Carolina--0.7%
NR Baa1 1,500 Horry County, South Carolina, Hospital Facilities Revenue
Refunding Bonds (Conway Hospital), 6.75% due 7/01/2012 1,598
<PAGE>
South Dakota--0.5%
BBB Baa 1,000 South Dakota Health and Educational Facilities Authority,
Revenue Refunding Bonds (Prairie Lakes Health Care),
7.25% due 4/01/2022 1,103
Tennessee--3.4%
NR NR 4,265 Knox County, Tennessee, Health, Educational and Housing
Facilities Board, Hospital Facilities Revenue Bonds (Baptist
Health System of East Tennessee), 8.60% due 4/15/2016 4,654
BBB Baa1 2,500 McMinn County, Tennessee, Industrial Development Board Solid
Waste Disposal Revenue Bonds, (Calhoun Newsprint) AMT,
7.40% due 12/01/2022 2,782
Texas--12.2%
NR A1 2,000 Abilene, Texas, Higher Education Authority, Student Loan
Revenue Bonds, AMT, Series C, 6.10% due 7/01/2008 2,057
BBB Baa2 5,750 Brazos River Authority, Texas, PCR (Texas Utilities Electric
Company), AMT, Series A, 8.125% due 2/01/2020 6,651
BB+ Baa2 3,000 Dallas-Fort Worth, Texas, International Airport Facilities
Improvement Corporation Revenue Bonds (American Airlines),
AMT, 7.25% due 11/01/2030 3,184
BBB Baa1 1,500 Ector County, Texas, Hospital Revenue Bonds (Medical Center
Hospital), 7.30% due 4/15/2012 1,633
BBB Baa1 1,500 Gulf Coast, Texas, Waste Disposal Authority Revenue Bonds
(Champion International), AMT, Series A, 6.875% due 12/01/2028 1,611
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <S> <C> <S> <C>
State
Texas (concluded)
NR NR $1,000 Gulf Coast, Texas, Waste Disposal Authority Revenue Bonds,
PCR and Solid Waste Disposal (Diamond Shamrock Corporation
Project), 6.75% due 6/01/2009 $ 1,013
A- Baa1 1,500 Harris County, Texas, Industrial Development Corporation,
Marine Terminal Revenue Refunding Bonds (GATX Terminals
Corporation Project), 6.95% due 2/01/2022 1,641
BBB- Baa 4,960 Jefferson County, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Baptist Healthcare
Systems Project), 8.875% due 6/01/2021 5,791
BBB NR 1,500 Midland County, Texas, Hospital District Revenue Bonds
(Midland Memorial Hospital), 7.50% due 6/01/2016 1,660
NR NR 1,845 Swisher County, Texas, Jail Facilities Financing Corporation
Revenue Bonds (Criminal Detention Center), 9.75% due
8/01/2009 (f) 0
BBB Baa2 1,000 West Side Calhoun County, Texas, Navigation District, Solid
Waste Revenue Bonds (Union Carbide Chemical and Plastics),
AMT, 8.20% due 3/15/2021 1,162
<PAGE>
Utah--1.7%
AAA Aaa 3,000 Salt Lake City, Utah, Hospital Revenue Refunding
Bonds (IHC Hospitals, Inc.), INFLOS, 10.661% due
5/15/2020 (e)(g) 3,645
Virginia--0.7%
NR Baa1 500 Rockingham County, Virginia, IDA, Educational Facilities
Revenue Bonds (Bridgewater College), 6% due 10/01/2023 504
A+ Aa 1,000 Virginia Housing Development Authority, Commonwealth
Mortgage Bonds, Series A, 7.15% due 1/01/2033 1,084
Wisconsin--1.1%
NR B2 2,350 Walworth, Wisconsin, IDA, Refunding (US Gypsum Corporation
Project), 7.25% due 5/01/2010 2,376
Total Investments (Cost--$195,594)--99.8% 216,446
Other Assets Less Liabilities--0.2% 476
--------
Net Assets--100.0% $216,922
========
<FN>
(a)The interest rate is subject to change periodically based
upon the prevailing market rate. The interest rate shown is
the rate in effect at August 31, 1993.
(b)MBIA Insured.
(c)GNMA Collateralized.
(d)Pre-refunded.
(e)AMBAC Insured.
(f)Non-income producing security.
(g)The interest rate is subject to change periodically and inversely to
the prevailing market rate. The interest rate shown is the rate in
effect at August 31, 1993.
(h)Unlimited Tax.
Ratings of issues shown have not been audited by Deloitte & Touche.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Statement of Assets and Liabilities as of August 31, 1993
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$195,594,193) (Note 1a) $216,445,618
Receivables:
Interest $ 3,847,146
Capital shares sold 1,163,638
Securities sold 902,396
Other 116,667 6,029,847
-------------
Deferred organization expenses (Note 1e) 94,739
Prepaid registration fees and other assets (Note 1e) 30,341
------------
Total assets 222,600,545
<PAGE> ------------
Liabilities: Payables:
Securities purchased 4,473,635
Dividends to shareholders (Note 1g) 406,013
Investment adviser (Note 2) 192,204 5,071,852
-------------
Accrued expenses and other liabilities 606,275
------------
Total liabilities 5,678,127
------------
Net Assets: Net assets $216,922,418
============
Net Assets Common stock, $.10 par value, 200,000,000 shares authorized $ 1,896,580
Consist of: Paid-in capital in excess of par 193,583,005
Undistributed realized capital gains--net 591,408
Unrealized appreciation on investments--net 20,851,425
------------
Net assets--Equivalent to $11.44 per share based on 18,965,803 shares
of capital outstanding $216,922,418
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended
August 31, 1993
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 14,223,312
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 1,791,108
Administrative fees (Note 2) 471,341
Transfer agent fees (Note 2) 98,551
Professional fees 79,157
Printing and shareholder reports 72,269
Accounting services (Note 2) 53,421
Registration fees 44,800
Amortization of organization expenses (Note 1e) 43,665
Advertising 41,673
Directors' fees and expenses 33,789
Custodian fees 19,102
Listing 13,500
Pricing fees 10,790
Other 6,086
<PAGE> ------------
Total expenses before reimbursement 2,779,252
Reimbursement of expenses (Note 2) (188,538)
------------
Total expenses after reimbursement 2,590,714
------------
Investment income--net 11,632,598
------------
Realized & Realized gain on investments--net 1,137,534
Unrealized Gain on Change in unrealized appreciation on investments--net 12,041,409
Investments--Net ------------
(Notes 1d & 3): Net Increase in Net Assets Resulting from Operations $ 24,811,541
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended August 31,
Increase (Decrease) in Net Assets: 1993 1992
<S> <S> <C> <C>
Operations: Investment income--net $ 11,632,598 $ 9,741,567
Realized gain on investments--net 1,137,534 678,548
Change in unrealized appreciation on investments--net 12,041,409 6,517,301
------------ ------------
Net increase in net assets resulting from operations 24,811,541 16,937,416
------------ ------------
Dividends & Investment income--net (11,632,598) (9,741,567)
Distributions Realized gain on investment--net (851,810) (638,209)
to Shareholders ------------ ------------
(Note 1g): Net decrease in net assets resulting from dividends and distributions
to shareholders (12,484,408) (10,379,776)
------------ ------------
Capital Share Net increase in net assets derived from capital share transactions 33,860,084 49,549,801
Transactions ------------ ------------
(Note 4):
Net Assets: Total increase in net assets 46,187,217 56,107,441
Beginning of year 170,735,201 114,627,760
------------ ------------
End of year $216,922,418 $170,735,201
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
For the
Period
The following per share data and ratios have been derived November 2,
from information provided in the financial statements. For the Year Ended 1990++ to
<PAGE> August 31, August 31,
Increase (Decrease) in Net Asset Value: 1993 1992 1991
<S> <S> <C> <C> <C>
Per Share Net asset value beginning of period $ 10.74 $ 10.29 $ 10.00
Operating -------- -------- --------
Performance: Investment income--net .68 .71 .63
Realized and unrealized gain on investments--net .75 .50 .29
-------- -------- --------
Total from investment operations 1.43 1.21 .92
-------- -------- --------
Less Dividends Investment income--net (.68) (.71) (.63)
& Distributions: Realized gain on investments--net (.05) (.05) --
-------- -------- --------
Total dividends and distributions (.73) (.76) (.63)
-------- -------- --------
Net asset value, end of period $ 11.44 $ 10.74 $ 10.29
======== ======== ========
Total Investment Based on net asset value per share 13.83% 12.29% 9.43%++++
Return:** ======== ======== ========
Ratios to Average Expenses, net of reimbursement 1.37% 1.30% .84%*
Net Assets: ======== ======== ========
Expenses 1.47% 1.55% 1.76%*
======== ======== ========
Investment income--net 6.17% 6.85% 7.43%*
======== ======== ========
Supplemental Net assets, end of period (in thousands) $216,922 $170,735 $114,628
Data: ======== ======== ========
Portfolio turnover 28.74% 31.74% 75.92%
======== ======== ========
<FN>
++Commencement of Operations.
++++Aggregate total investment return.
*Annualized.
**Total investment returns exclude the effects of sales loads.
The Fund is a continuously offered closed-end fund, the shares
of which are offered at net asset value. Therefore, no separate
market exists.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch High Income Municipal Bond Fund, Inc. (the "Fund")
is registered under the Investment Company Act of 1940 as a continuously
offered, non-diversified, closed-end management investment company. The
following is a summary of significant accounting policies
followed by the Fund.
<PAGE>
(a) Valuation of investments--Municipal bonds are traded
primarily in the over-the-counter markets and are valued at the
most recent bid price or yield equivalent as obtained by the
Fund's pricing service from dealers that make markets in such
securities. Financial futures contracts, which are traded on
exchanges, are valued at their closing prices as of the close of
such exchanges. Options, which are traded on exchanges, are
valued at their last sale price as of the close of such exchanges
or, lacking any sales, at the last available bid price.
Securities with remaining maturities of 60 days or less are
valued at amortized cost which approximates market. Securities
for which market quotations are not readily available are valued
at fair value as determined in good faith by or under the direction
of the Board of Directors of the Fund.
(b) Financial futures contracts--The Fund may purchase or sell
certain financial futures contracts and options thereon for the
purpose of hedging the market risk on existing securities or the
intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and
at a specific price or yield. Upon entering into a contract, the
Fund deposits and maintains as collateral such initial margin as
required by the exchange on which the transaction is effected.
Pursuant to the contract, the Fund agrees to receive from or pay
to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as
variation margin and are recorded by the Fund as unrealized gains
or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value
of the contract at the time it was opened and the value at the
time it was closed.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income
tax provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are
entered into (the trade dates). Interest income is recognized on
the accrual basis. Original issue discounts and market premiums
are amortized into interest income. Realized gains and losses on
security transactions are determined on the identified cost
basis.
(e) Deferred organization expenses and prepaid registration fees
- --Deferred organization expenses are amortized on a straight-
line basis over a five-year period. Prepaid registration fees are
charged to expense as the related shares are issued.
<PAGE>
(f) Non-income producing investments--Written and purchased
options are non-income producing investments.
(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.
2. Investment Advisory and Administrative Services Agreements and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management ("MLAM"). MLAM is the name under
which Merrill Lynch Investment Management, Inc. ("MLIM") does
business. MLIM is an indirect wholly-owned subsidiary of Merrill
Lynch & Co., Inc. The Fund has also entered into a Distribution
Agreement with Merrill Lynch Funds Distributor, Inc. ("MLFD"), a
wholly-owned subsidiary of MLIM.
MLAM is responsible for the management of the Fund's portfolio
and provides the necessary personnel, facilities, equipment and
certain other services necessary to the operations of the Fund.
For such services, the Fund pays a monthly fee
at an annual rate of 0.95% of the Fund's average daily net
assets.
The Fund also has an Administrative Services Agreement with MLAM
whereby MLAM will receive a fee equal to an annual rate of 0.25%
of the Fund's average daily net assets, in return for the
performance of administrative services (other than investment
advice and related portfolio activities) necessary for the
operation of the Fund. The Investment Advisory Agreement
obligates MLAM to reimburse the Fund to the extent the Fund's expenses
(excluding interest, taxes, brokerage fees and commissions, and
extraordinary items) exceed (a) 2.0% of the Fund's average daily
net assets or (b) 2.5% of the Fund's first $30 million of average
daily net assets, 2.0% of the next $70 million of average daily
net assets and 1.5% of the average daily net assets in excess
thereof. MLAM's obligation to reimburse the Fund is limited to
the amount of the investment advisory fee. No fee payment will
be made to the Investment Adviser during any fiscal year which
will cause such expenses to exceed the most restrictive expense
limitation applicable at the time of such payment. MLAM has
voluntarily agreed to waive a portion of the combined investment
advisory and administrative fees. For the year ended August 31, 1993,
MLAM earned fees of $2,262,449, of which $188,538 was waived.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary
of Merrill Lynch & Co., Inc., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
<PAGE>
Certain officers and/or directors of the Fund are officers and/or
directors of MLIM, MLFD, FDS, Merrill Lynch, Pierce, Fenner &
Smith Inc., and/or Merrill Lynch & Co., Inc.
3. Investments:
Purchases and sales of investments, excluding short-term
securities, for the year ended August 31, 1993 were $88,377,760
and $52,497,096, respectively.
Net realized and unrealized gains as of August 31, 1993 were as
follows:
Realized Unrealized
Gains Gains
Long-term investments $ 1,137,447 $20,851,425
Short-term investments 87 --
----------- -----------
Total $ 1,137,534 $20,851,425
=========== ===========
As of August 31, 1993, net unrealized appreciation for Federal
income tax purposes aggregated $20,851,425, of which $22,110,638
related to appreciated securities and $1,259,213 related to
depreciated securities. The aggregate cost of investments at
August 31, 1993 for Federal income tax purposes was $195,594,193.
4. Capital Share Transactions:
Transactions in capital shares were as follows:
For the Year Ended Dollar
August 31, 1993 Shares Amount
Shares sold 4,347,002 $48,160,844
Shares issued to share-
holders in reinvest-
ment of dividends and
distributions 465,531 4,748,066
----------- -----------
Total issued 4,812,533 52,908,910
Shares tendered (1,739,446) (19,048,826)
----------- -----------
Net increase 3,073,087 $33,860,084
=========== ===========
<PAGE>
For the Year Ended Dollar
August 31, 1992 Shares Amount
Shares sold 5,583,700 $58,364,181
Shares issued to share-
holders in reinvest-
ment of dividends and
distributions 373,343 3,908,208
----------- -----------
Total issued 5,957,043 62,272,389
Shares tendered (1,207,745) (12,722,588)
----------- -----------
Net increase 4,749,298 $49,549,801
=========== ===========
INDEPENDENT AUDITORS' REPORT
The Board of Directors and misstatement. An audit
Shareholders, Merrill Lynch includes examining, on a test
High Income Municipal Bond basis, evidence supporting the
Fund, Inc.: amounts and disclosures in the
financial statements. Our
We have audited the procedures included
accompanying statement of confirmation of securities
assets and liabilities, owned at August 31, 1992 by
including the schedule of correspondence with the
investments, of Merrill Lynch custodian and brokers. An
High Income Municipal Bond audit also includes assessing
Fund, Inc. as of August 31, the accounting principles used
1992, the related statements and significant estimates,
of operations for the year made by management, as well as
then ended and changes in net evaluating the overall
assets and the supplementary financial statement
financial information for the presentation. We believe that
year ended August 31, 1992 and our audits provide a
the period November 2, 1990 reasonable basis for our
(commencement of operations) opinion.
to August 31, 1991. These In our opinion, such financial
financial statements and the statements and supplementary
supplementary financial financial information present
information are the fairly, in all material
responsibility of the Fund's respects, the financial
management. Our position of Merrill Lynch High
responsibility is to express Income Municipal Bond Fund,
an opinion on these financial Inc. as of August 31, 1992,
statements and the the results of its operations,
supplementary financial the changes in its net assets,
information based on our and the supplementary
audits. financial information for the
respective stated periods in
We conducted our audits in conformity with generally
accordance with generally accepted accounting
accepted auditing standards. principles.
Those standards require that
we plan and perform the audit
to obtain reasonable assurance Deloitte & Touche
about whether the financial Princeton, New Jersey
statements and the September 30, 1992
supplementary financial
information are free of
material
<PAGE>
SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Arizona - NR NR $1,490 Pima County, Arizona,
0.9% IDA, Revenue Bonds
(La Hacienda
Project), 9.50% due
12/01/2016 $1,490
California NR VMG1 300 California Health
2.5% Facilities Financing
Authority Revenue
Refunding Bonds
(Saint Joseph's
Health System), VRDN,
Series A, 2.65% due
7/01/2013 (a) 300
A1+ VMG1 1,000 Irvine, California,
Apartment Revenue
Bonds (San Rafael
Apartments Project),
VRDN, Series A, 2.85%
due 4/01/2022(a) 1,000
NR NR 3,000 Orange County,
California, Community
Facilities Special
Tax Bonds (Aliso
Viejo No. 88-1),
Series A, 7.35% due
8/15/2018 3,016
2
<PAGE>
Colorado BBB- NR 1,000 Colorado Health
4.9% Facilities Financial
Authority Revenue
Refunding Bonds
(National Jewish
Center Immunization
Project), 6.875% due
2/15/2012 995
Denver, Colorado,
City and County
Airport Revenue
Bonds:
BBB Baa1 900 AMT, Series A, 8%
due 11/15/2025 963
BBB Baa1 AMT, Series D,
BBB Baa1 2,000 7.75% due 11/15/2013 2,202
NR NR 2,000 Series A, 7.25% due
11/15/2025 2,065
Mountain Village
Metropolitan
District, Colorado,
Revenue Refunding
Bonds (San Miguel
County), 8.10% due
2,000 12/0/2011 2,099
Connecticut BBB- NR 4,000 Connecticut State
3.6% Health and
Educational
Facilities Authority
Revenue Bonds (New
Britain Memorial
Hospital), Series A,
NR NR 2,000 7.75% due 7/01/2022 4,228
New Haven,
Connecticut,
Facilities Revenue
Bonds (Hill Health
Corporation Project),
9.25% due 5/01/2017 2,000
3
<PAGE>
Florida - BBB Baa 3,000 Cape Coral, Florida,
2.0% Health Facilities
Authority Revenue
Bonds (Cape Coral
Medical Center),
A1 VGM1 200 7.50% due 11/15/2021 3,191
Pinellas County,
Florida, Health
Facilities Revenue
Refunding Bonds
(Pooled Hospital Loan
Program), DATES, 200
2.70% due
12/01/2015(a)
PORTFOLIO ABBREVIATIONS
To simplify the listing of AMT Alternative Minimum Tax
Merrill Lynch High Income (subject to)
Municipal Bond Fund, DATES Daily Adjustable Tax-
Inc.'s portfolio holdings Exempt Securities
in the Schedule of EDA Economic Development
Investments, we have Authority
abbreviated the names of GO General Obligation
many of the securities Bonds
according to the list at HFA Housing Finance Agency
right. IDA Industrial Development
Authority
IDR Industrial Development
Revenue Bonds
M/F Multi-Family
PARS/INFLOS Periodic Auction Reset
Securities/
Inverse Floating Rate
Municipal Bonds
PCR Pollution Control
Revenue Bonds
RIB Residual Interest Bonds
S/F Single-Family
VRDN Variable Rate Demand
Notes
4
<PAGE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Georgia - NR NR $2,570 Atlanta, Georgia Urban
3.8% Residential Finance
Authority, College
Facilities Revenue Bonds
(Morris Brown College
Project), 9.50% due
6/01/2011 $2,665
NR NR 2,000 Atlanta, Georgia, Urban
Residential Finance
Authority, M/F Mortgage
Revenue Bonds (Northside
Plaza Apartments
Project), 9.75% due
11/01/2020 $1,990
BBB+ NR 1,785 White County, Georgia,
IDR (Clark Schwebel
Fiberglass), 6.85% due
6/01/2010 $1,796
Hawaii - AAA NR 1,750 Hawaii Department of
1.1% Budget and Finance,
Special Purpose Mortgage
Revenue Bonds.
(Citizens Utility
Company), RIB, Series
91-B, 10.349% due
11/01/2021(a) 1,851
5
<PAGE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Illinois BBB- Baa1 500 Chicago, Illinois O'Hare
3.5% International Airport,
Special Facilities
Revenue Bonds (United
Airlines), AMT, Series
B, 8.95% due 5/01/2018 570
BBB+ NR 2,000 Illinois Educational
Facilities Authority
Revenue Bonds (Chicago
Osteopathic Health
System), 7.25% due
AAA Aa 5/15/2022 2,075
BBB NR 2,175 Illinois State Sales Tax
Revenue Bonds, Series I,
7.25% due 6/15/2014 2,320
1,000 Lansing, Illinois, Tax
Increment Revenue
Refunding Bonds, 7% due
12/01/2008 998
Indiana - A NR 1,500 Indiana Bond Bank
0.9% Special Hospital Program
Bonds (Hendricks),
Series A, 7.125% due
4/01/2013 1,559
Kentucky BBB Baa2 2,350 Kenton County, Kentucky,
3.8% Airport Revenue Bonds
(Special Facilities -
Delta Airlines Project),
Series B, 7.25% due
2/01/2022 2,410
AAA Aaa 4,000 Louisville, Kentucky,
Hospital Revenue Bonds,
PARS/INFLOS, 10.413% due
10/01/2014 (a)(b) 4,160
6
<PAGE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Louisiana NR Ba2 3,500 Lake Charles, Louisiana,
4.5% Harbor and Terminal
District Refunding Bonds
(Trunkline Company
Project), 7.75% due
8/15/2022 3,500
BBB+ Baa1 1,000 Louisiana Public
Facilities Authority,
Hospital Revenue Bonds
(Woman's Hospital
Foundation Project),
7.25% due 10/01/2022 1,032
AAA Aaa 905 New Orleans, Louisiana,
Home Mortgage Authority,
S/F Mortgage Revenue
Bonds, AMT, Series A,
8.40% due 12/01/2014(c) 969
NR NR 2,000 West Feliciana Parish,
Louisiana, PCR (Gulf
States Utilities),
Series II, 7.70% due
12/01/2014 2,214
Maryland NR Baa1 2,000 Prince George County,
1.2% Maryland Hospital
Revenue Bonds
(Dimensions Health
Corporation), 7% due
7/01/2022 2,038
7
<PAGE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Massachusetts NR NR $1,200 Boston, Massachusetts,
4.7% Industrial Development
Financing Authority,
Solid Revenue Bonds
(Jet-A-Way Project),
AMT, Waste Disposal
Facility 10.50% due
1/01/2011 $1,224
NR Ba 2,380 Lawrence, Massachusetts,
GO, 9.875% due
12/15/1998(e) 2,606
NR NR 3,000 Massachusetts Port
Authority Revenue Bonds
(Harborside Hyatt
Project), AMT, 10% due
3/01/2026 3,066
AAA Aaa 1,000 Massachusetts State
Health and Educational
Facilities Authority
Revenue Refunding Bonds,
RIB (Boston University),
Series L, 10.45% due
10/01/2031(a)(b) 1,068
Michigan BBB Baa1 2,900 Detroit, Michigan, GO,
2.3% Series A, 8.70% due
4/01/2010 3,262
A1 VMG1 100 Michigan State Hospital
Finance Authority Bonds
(Hospital Equipment Loan
Program), VRDN, 2.70%
due 6/01/2001(a) 100
NR P1 500 Monroe County, Michigan,
Economic Development
Revenue Refunding Bonds
(Detroit Edison), VRDN,
Series CC, 2.75% due
10/01/2024(a) 500
Minnesota BB+ Baa 4,920 Saint Paul, Minnesota,
3.3% Housing and
Redevelopment Authority,
Hospital Revenue Bonds
(Healtheast Project),
Series D, 9.75% due
11/01/2017) 5,615
8
<PAGE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Mississippi NR Baa 1,000 Mississippi Hospital
0.6% Equipment and Authority
Revenue Bonds (Riley
Memorial Hospital),
Series B, 7.125% due
5/01/2022 1,015
Missouri BBB- NR 3,000 Joplin, Missouri, IDA,
6.1% Hospital Facilities
Revenue Refunding and
Improvement Bonds (Tri-
State Osteopathic
Project), 8.25% due
12/15/2014 3,288
Missouri State Health
and Educational
Facilities Authority7
Revenue Bonds (Southwest
Baptist University
Project):
NR NR 950 9.50% due 10/01/2001 932
NR NR 3,690 9.50% due 10/01/2011 3,967
BBB+ Baal 2,000 Phelps County, Missouri,
Hospital Revenue Bonds
(Phelps County Regional
Medical Center), 8.30%
due 3/01/2020 2,195
New Hampshire BBB+ Baal $1,845 New Hampshire Higher
3.3% Educational and Health
Facilities Authority
Revenue Bonds (Saint
Joseph's Hospital),
7.50% due 1/01/2016 $1,926
BBB- Baa3 3,450 New Hampshire, IDA, PCR
(Public Service
Company - New Hampshire
Project), Series B,
7.50% due 5/01/2021 3,703
9
<PAGE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
New Jersey BBB+ Baal 2,000 Camden County, New
9.8% Jersey, Pollution
Control Financing
Authority, Solid Waste
Resource Recovery
Revenue Bonds, Series D,
7.25% due 12/01/2010 2,112
NR P1 300 New Jersey, EDA, Revenue
Refunding Bonds (Dow
Chemical El Dorado
Terminal), VRDN, Series
A, 2.50% due
5/01/2001(a) New Jersey
Health Care Facilities
Financing Authority
Revenue Bonds: 300
5,000 (Riverwood Center),
Series A, 9.90% due
7/01/2021 5,032
NR NR 4,700 (Saint Elizabeth
Hospital), Series B,
8.25% due 7/01/2020 5,036
BBB- Baa 1,515 New Jersey Housing and
Mortgage Finance Agency
Revenue Bonds: (Home
Buyer), AMT, Series F,
7.95% due 4/01/2025(b) 1,602
AAA Aaa 1,000 (Statewide Mortgage
Purchase), Series 1,
10.125% due 10/01/2002 1,070
A+ A1 1,600 New Jersey Turnpike
Authority Revenue
Refunding Bonds, VRDN,
Series D, 2.40% due
A VMG1 1/01/2018(a)(g) 1,600
New York New York City, New York, GO:
6.8% A- Baal 4,000 Series B, 8.25% due
6/01/2017 4,793
A- Baal 5,260 Series C, 7.50% due
8/01/2021 5,597
A- Baal 1,000 Series F, 8.25% due
11/15/2019 1,175
10
<PAGE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Ohio - NR NR 1,900 Cincinnati, Ohio,
3.1% Student Loan Funding
Corporation Revenue
Refunding Bonds, AMT,
Series B, 6.75% due
1/01/2007 1,901
NR VMG1 200 Cuyahoga County, Ohio,
Hospital Revenue
Improvement Bonds
(University Hospital
Cleveland), VRDN, 2.75%
due 1/01/2016(a) 200
AAA Aaa 3,000 Ohio HFA, S/F Mortgage
Revenue Bonds, AMT, RIB,
Series A2, 10.957% due
3/24/2031(a)(c) 3,158
Pennsylvania BBB NR $5,000 McKean County,
6.9% Pennsylvania, Hospital
Authority Revenue Bonds
(Bradford Hospital
Project), 8.875% due
10/01/2020 $5,546
BBB NR 1,710 Montgomery County,
Pennsylvania, Higher
Education and Health
Authority, Hospital
Revenue Bonds (Jeanes
Health System Project),
8.625% due 7/01/2007 1,910
NR NR 1,500 Montgomery County,
Pennsylvania, IDA,
Revenue Refunding Bonds
(1st Mortgage --
Meadowood Corporation
Project), Series A,
10.25% due 12/01/2020 1,494
11
<PAGE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
NR NR 2,000 Pennsylvania Economic
Development Financing 1,780
Authority, IDR (GEHL
Company Inc. Project),
AMT, Series F, 9% due
9/01/2010
A+ NR 1,000 Pennsylvania State
Higher Educational
Facilities Authority,
College and University
Revenue Bonds (Carnegie
University), 9% due
11/01/2009 1,129
Rhode Island A NR 1,080 Rhode Island Housing and 1,139
1.6% Mortgage Finance
Corporation (Rental
Housing Program), Series
A, 7.95% due 10/01/2010
BBB+ NR 1,500 Rhode Island State
Health and Educational
Building Corporation,
Hospital Revenue Bonds
(South County Hospital),
7.25% due 11/01/2011 1,550
South Carolina AAA Aaa 1,180 Charleston, South
0.8% Carolina, Waterworks and
Sewer Revenue Bonds,
9.625% due 1/01/2016(d) 1,388
South Dakota BBB Baa 1,000 South Dakota Health and
0.6% Educational Facilities
Authority Revenue
Refunding Bonds (Prairie
Lakes Health Care),
7.25% due 4/01/2022 1,012
Tennessee NR NR 2,765 Knox County, Tennessee,
1.6% Health, Educational and
Housing Facilities
Board, Hospital
Facilities Revenue Bonds
(Baptist Health System
of East Tennessee),
8.60% due 4/15/2016 2,832
12
<PAGE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Texas - BBB Baa2 $5,750 Brazos River Authority,
11.2% Texas, PCR (Texas
Utilities Electric
Company), AMT, Series A,
8.125% due 2/01/2020 $6,525
BBB Baal 1,500 Ector County, Texas,
Hospital Revenue Bonds
(Medical Center
Hospital), 7.30% due
4/15/2012 1,547
BBB- Baa 5,000 Jefferson County, Texas,
Health Facilities
Development Corporation,
Hospital Revenue Bonds
(Baptist Healthcare
Systems Project), 8.875%
due 6/01/2021 5,620
BBB NR 1,500 Midland County, Texas,
Hospital District
Revenue Bonds (Midland
Memorial Hospital),
7.50% due 6/01/2016 1,575
AAA Aaa 1,000 San Antonio, Texas,
Electric and Gas Revenue
Bonds, Series B, 9% due
2/01/2014(d) 1,156
NR NR 3,185 Swisher County, Texas,
Jail Facilities
Financing Corporation
Revenue Bonds (Criminal
Detention Center), 9.75%
due 8/01/2009(h) 1,561
BBB Baa2 1,000 West Side Calhoun
County, Texas,
Navigation District,
Solid Waste Disposal
Revenue Bonds (Union
Carbide Chemical and
Plastics), AMT 8.20% due
3/15/2021 1,112
13
<PAGE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Utah - AAA Aaa 3,000 Salt Lake City, Utah,
1.9% Hospital Revenue
Refunding Bonds (IHC
Hospitals, Inc.),
PARS/INFLOS, 10.681% due
5/15/2020(a)(f) 3,188
Virginia AAA Aaa 1,500 Fredericksburg,
1.5% Virginia, IDA, Hospital
Facilities Revenue
Bonds, PARS/INFLAS,
10.432% due
8/15/2023(a)(g) 1,590
A+ Aa 1,000 Virginia Housing
Development Authority,
Commonwealth Mortgage
Bonds, Series A, 7.15%
due 1/01/2033 1,048
Wisconsin AA Aa 2,000 Wisconsin Housing and
1.2% EDA, Homeownership
Revenue Bonds, RIB, AMT,
11.223% due
10/25/2022(a) 2,123
Total Investments $170,764
(Cost -$161,954)- (29)
100.0% -------
$170,735
Liabilities in
Excess of Other
Assets -
(0.0%)
Net Assets -
100.0%
(a) The interest rate is subject to change periodically based
upon
the prevailing market rate. The interest rate shown is the
rate
in effect at August 31, 1992.
(b) MBIA Insured.
(c) GNMA Collateralized.
(d) Pre-refunded.
(e) Mandatory put.
(f) AMBAC Insured.
(g) FGIC Insured.
(h) Non-income producing security. Ratings of issues shown have
not been audited by Deloitte & Touche.
See Notes to Financial Statements.
14
<PAGE>
<TABLE> <CAPTION>
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of August 31, 1992
<S> <C> <C> <C>
Assets: Investments, at value (identified cost - $161,953,576)
(Note 1a) . . . . . . . . . . . . . . . . . . . . . $170,763,592
Cash . . . . . . . . . . . . . . . . . . . . . . . . 155,069
Receivables:
Interest . . . . . . . . . . . . . . . . . . . . $3,264,910
Capital shares sold . . . . . . . . . . . . . . . 553,963 3,818,873
----------
Deferred organization expenses (Note 1e) . . . . . 148,443
Prepaid registration fees and other assets (Note 1e) 17,378
-----------
Total assets . . . . . . . . . . . . . . . . . . . 174,903,355
-----------
Liabilities: Payables:
Securities purchased . . . . . . . . . . . . . . . . 3,518,837
Dividends to shareholders (Note 1g) . . . . . . . . . 326,064
Investment adviser (Note 2) . . . . . . . . . . . . . 143,575 3,988,476
---------
Accrued expenses and other liabilities . . . . . . . . 179,678
----------
Total liabilities . . . . . . . . . . . . . . . . . . . 4,168,154
----------
Net Assets: Net assets . . . . . . . . . . . . . . . . . . . . . . $170,735,201
============
Net Assets Common stock, $.10 par value, 200,000,000 shares
Consist of: authorized . . . . . . . . . . . . . . . . . . . . . $ 1,589,272
Paid-in capital in excess of par . . . . . . . . . . . 160,030,229
Undistributed realized capital gains - net . . . . . . 305,684
Unrealized appreciation on investments - net . . . . . 8,810,016
------------
Net assets - Equivalent to $10.74 per share based on
15,892,716 shares of capital outstanding . . . . . . $170,735,201
============
</TABLE>
15
<PAGE>
<TABLE> <CAPTION>
FINANCIAL INFORMATION
Statement of Operations
For the Year Ended August 31, 1992
----------------------------------
<S> <C> <C> <C>
Interest Income Interest and amortization of premium and discount earned $ 11,591,209
(Note 1d):
Expenses: Investment advisory fees (Note 2) . . . . . . . . . . . $1,347,792
Administrative fees (Note 2) . . . . . . . . . . . . . 354,682
Transfer agent fees (Note 2) . . . . . . . . . . . . . 96,260
Printing and shareholder reports . . . . . . . . . . . 88,518
Professional fees . . . . . . . . . . . . . . . . . . . 54,970
Registration fees . . . . . . . . . . . . . . . . . . . 50,643
Amortization of organization expenses (Note 1e) . . . . 43,665
Accounting services (Note 2) . . . . . . . . . . . . . 36,233
Directors' fees and expenses . . . . . . . . . . . . . 30,040
Custodian fees . . . . . . . . . . . . . . . . . . . . 17,565
Pricing fees . . . . . . . . . . . . . . . . . . . . . 9,287
Other . . . . . . . . . . . . . . . . . . . . . . . . . 71,819
----------
Total expenses before reimbursement . . . . . . . . . . 2,201,474
Reimbursement of expenses (Note 2) . . . . . . . . . . (351,832)
----------
Total expenses 1,849,642
------------
Investment income - net . . . . . . . . . . . . . . . . 9,741,567
------------
Realized & Realized gain on investments - net . . . . . . . . . . 678,548
Unrealized Change in unrealized appreciation on investments - net 6,517,301
------------
Gain on Net Increase in Net Assets Resulting from Operations . $ 16,937,416
============
Investments - Net
(Notes 1d & 3):
</TABLE>
16
<PAGE>
<TABLE> <CAPTION>
FINANCIAL INFORMATION
Statements of Changes in Net Assets
For the Year Ended August 31,
Increase (Decrease) in Net Asset Value: 1992 1991+
<S> <C> <C> <C>
Operations: Investment income - net . . . . . . . . . . . . . . . . $ 9,741,567 $ 5,427,175
Realized gain on investments - net . . . . . . . . . . 678,548 265,345
Change in unrealized appreciation on investments - net 6,517,301 2,292,715
------------ ------------
Net increase in net assets resulting from operations . 16,937,416 7,985,235
------------ ------------
Dividends & Investment income - net . . . . . . . . . . . . . . . . (9,741,567) (5,427,175)
Distributions Realized gain on investments - net . . . . . . . . . . (638,209) -
------------ ------------
to Net decrease in net assets resulting from dividends and
Shareholders distributions to shareholders . . . . . . . . . . . . (10,379,776) (5,427,175)
------------ ------------
(Note 1g):
Capital Share Net Increase in net assets derived from capital share 49,549,801 111,969,700
transactions ------------ ------------
Transactions
(Note 4):
Net Assets: Total increase in net assets . . . . . . . . . . . . . 56,107,441 114,527,760
Beginning of period . . . . . . . . . . . . . . . . . . 114,627,760 100,000
----------- ----------
End of period . . . . . . . . . . . . . . . . . . . . . $170,735,201 $114,627,760
============ ============
Supplementary Financial Information
Selected Data for a Share of Capital
Outstanding Throughout Each Period:
For the Year Ended August 31,
Increase (Decrease) in Net Asset Value: 1992 1991+
Operations: Investment income . . . . . . . . . . . . . . . . . . . $ .85 $ .70
Total expenses . . . . . . . . . . . . . . . . . . . . (.16) (.15)
Reimbursement of expenses . . . . . . . . . . . . . . . .02 .08
-------- -------
Investment income - net . . . . . . . . . . . . . . . . .71 .63
Realized and unrealized gain on investments - net . . . .50 .29
--------- --------
Net increase in net asset value resulting from
operations . . . . . . . . . . . . . . . . . . . . . . 1.21 .92
--------- --------
</TABLE>
17
<PAGE>
FINANCIAL INFORMATION
<TABLE>
<S> <C> <C> <C>
Dividends & Investment income - net . . . . . . . . . . . . . . . . (.71) (.63)
Distributions Realized gain on investments - net . . . . . . . . . . (.05) -
---------- --------
to Net decrease in net asset value resulting from dividends
Shareholders: and distributions to shareholders . . . . . . . . . . . . (.76) (.63)
---------- ---------
Net Asset Total increase in net asset value . . . . . . . . . . . .45 .29
Value: Beginning of period . . . . . . . . . . . . . . . . . . 10.29 10.00
----------- ---------
End of period . . . . . . . . . . . . . . . . . . . . . $ 10.74 $ 10.29
=========== =========
Number of shares outstanding at end of period (in
thousands) . . . . . . . . . . . . . . . . . . . . . . 15,893 11,143
---------- ---------
Significant Total expenses, net of reimbursement, to average net
Ratios: assets . . . . . . . . . . . . . . . . . . . . . . . . 1.30% .84%*
===== ======
Total expenses to average net assets . . . . . . . . . 1.55% 1.76%*
===== =======
Investment income - net, to average net assets . . . . 6.85% 7.43%*
===== ======
Portfolio turnover . . . . . . . . . . . . . . . . . . 31.74% 75.92%
========== ==========
+The Fund commenced operations on November 2, 1990.
*Annualized.
</TABLE>
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch High Income Municipal Bond Fund, Inc. (the "Fund")
is registered under the Investment Company Act of 1940 as a
continuously offered, non-diversified, closed-end management
investment company. The following is a summary of significant
accounting policies followed by the Fund.
(a) Valuation of investments - Municipal bonds are traded
primarily in the over-the-counter markets and are valued at the most
recent bid price or yield equivalent as obtained by the Fund's
pricing service from dealers that make markets in such securities.
Financial futures contracts, which are traded on exchanges, are
valued at their closing prices as of the close of such exchanges.
Options, which are traded on exchanges, are valued at their last
sale price as of the close of such exchanges or, lacking any sales,
at the last available bid price. Securities with remaining
maturities of 60 days or less are valued at amortized cost which
approximates market value. Securities for which market quotations
are not readily available are valued at fair value as determined in
good faith by or under the direction of the Board of Directors of
the Fund.
(b) Financial futures contracts - The Fund may purchase or
sell certain financial futures contracts and options thereon for the
purpose of hedging the market risk on existing securities or the
intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When
the contract is closed, the Fund records a realized gain or loss
equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
(c) Income taxes - It is the Fund's policy to comply with
the requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute substantially all
of its taxable income to its shareholders. Therefore, no Federal
income tax provision is required.
19
<PAGE>
(d) Security transactions and investment income - Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the
accrual basis. Original issue discounts are amortized and market
premiums are accreted into interest income. Realized gains and
losses on security transactions are determined on the identified
cost basis.
(e) Deferred organization expenses and prepaid registration
fees - Deferred organization expenses are amortized on a straight-
line basis over a five-year period. Prepaid registration fees are
charged to expense as the related shares are issued.
(f) Non-income producing investments -- Written and purchased
options are non-income producing investments.
(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.
2. Investment Advisory and Administrative Services Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management ("MLAM"). MLAM is the name under
which Merrill Lynch Investment Management, Inc. ("MLIM") does
business. MLIM is an indirect wholly-owned subsidiary of Merrill
Lynch & Co., Inc. The Fund has also entered into a Distribution
Agreement with Merrill Lynch Funds Distributor, Inc. ("MLFD"), a
wholly-owned subsidiary of MLIM.
MLAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of 0.95% of
the Fund's average daily net assets.
The Fund also has an Administrative Services Agreement with MLAM
whereby MLAM will receive a fee equal to an annual rate of 0.25% of
the Fund's average daily net assets, in return for the performance
of administrative services (other than investment advice and related
portfolio activities) necessary for the operation of the Fund. The
Investment Advisory Agreement obligates MLAM to reimburse the Fund
to the extent the Fund's expenses (excluding interest, taxes,
brokerage fees and commissions, and extraordinary items) exceed a)
2.0% of the Fund's average daily net assets or b) 2.5% of the Fund's
first $30 million of average daily net assets, 2.0% of the next $70
million of average daily net assets, and 1.5% of the average daily
net assets in excess thereof. MLAM's obligation to reimburse the
Fund is limited to the amount of the investment advisory fee. No
20
<PAGE>
fee payment will be made to the Investment Adviser during any fiscal
year which will cause such expenses to exceed the most restrictive
expense limitation applicable at the time of such payment. MLAM has
voluntarily agreed to waive a portion of the combined investment
advisory and administrative fees. For the year ended August 31,
1992, MLAM earned fees of $1,702,474, of which $351,832 was waived.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary
of Merrill Lynch & Co., Inc., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of MLIM, MLFD, FDS, and/or Merrill Lynch, Pierce, Fenner &
Smith Incorporated.
3. Investments:
Purchases and sales of investments, excluding short-term
securities, for the year ended August 31, 1992, were $89,204,878 and
$42,956,665, respectively.
Net realized and unrealized gains as of August 31, 1992 were as
follows:
Realized Unrealized
Gains Gains
Short-term investments . . $ 1,590 $ 885,625
Long-term investments . . . 676,958 7,924,391
-------- ----------
Total . . . . . . . . . . . $678,548 $8,810,016
======== ==========
As of August 31, 1992, net unrealized depreciation for financial
reporting and Federal income tax purposes aggregated $8,810,016, of
which $10,443,518 related to appreciated securities and $1,633,502
related to depreciated securities. The aggregate cost of
investments at August 31, 1992 for Federal income tax purposes was
$161,953,576.
21
<PAGE>
4. Capital Share Transactions:
Transactions in capital shares were as follows:
For the Year Ended Dollar
August 31, 1992 Shares Amount
Shares sold . . . . . . . . . 5,583,700 $ 58,364,181
Shares issued to shareholders
in reinvestment of
dividends & distributions . . 373,343 3,908,208
---------- ------------
Total issued . . . . . . . . 5,957,043 62,272,389
Shares tendered . . . . . . . (1,207,745) (12,722,588)
---------- ------------
Net increase . . . . . . . . 4,749,298 $ 49,549,801
========== ============
For the Period
November 2, 1990+ to Dollar
August 31, 1991 Shares Amount
Shares sold . . . . . . . . . . 11,159,166 $112,245,228
Shares issued to shareholders
in reinvestment of
dividends . . . . . . . . . . . 203,318 2,063,568
---------- ------------
Total issued . . . . . . . . . 11,362,484 114,308,796
Share tendered . . . . . . . . (229,066) (2,339,096)
---------- ------------
Net increase . . . . . . . . . 11,133,418 $111,969,700
========== ============
+Prior to November 2, 1990 (commencement of operations), the Fund issued
10,000 shares to MLAM for $100,000.
22
