Exhibit 17(d)
Merrill Lynch Florida Municipal Bond Fund
Merrill Lynch New Jersey Municipal Bond Fund
Merrill Lynch Pennsylvania Municipal Bond Fund
Of Merrill Lynch Multi-State Municipal Series Trust
Semi-Annual Reports
January 31, 2006
Merrill Lynch Florida Municipal Bond Fund
Merrill Lynch New Jersey Municipal Bond Fund
Merrill Lynch Pennsylvania Municipal Bond Fund
Announcement to Shareholders
On February 15, 2006, BlackRock, Inc. ("BlackRock") and Merrill Lynch & Co.,
Inc. ("Merrill Lynch") entered into an agreement to merge Merrill Lynch's
investment management business, Merrill Lynch Investment Managers, L.P. and
certain affiliates (including Fund Asset Management, L.P. and Merrill Lynch
Investment Managers International Limited), and BlackRock to create a new
independent company that will be one of the world's largest asset management
firms with nearly $1 trillion in assets under management (based on combined
assets under management as of December 31, 2005). The transaction is expected to
close in the third quarter of 2006, at which time the new company will operate
under the BlackRock name. As a result of the above transaction, the combined
company is expected to become the investment adviser of the Funds contingent
upon the approval of the Funds' Board of Trustees and Fund shareholders.
Officers and Trustees
Robert C. Doll, Jr., President and Trustee
James H. Bodurtha, Trustee
Kenneth A. Froot, Trustee
Joe Grills, Trustee
Herbert I. London, Trustee
Roberta Cooper Ramo, Trustee
Robert S. Salomon, Jr., Trustee
Donald C. Burke, Vice President and Treasurer
Kenneth A. Jacob, Senior Vice President
John M. Loffredo, Senior Vice President
William R. Bock, Vice President
Theodore R. Jaeckel Jr., Vice President
Robert D. Sneeden, Vice President
Jeffrey Hiller, Chief Compliance Officer
Alice A. Pellegrino, Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
800-637-3863
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Effective January 1, 2006, Stephen B. Swensrud retired as Trustee of Merrill
Lynch Multi-State Municipal Series Trust. The Trust's Board of Trustees wishes
Mr. Swensrud well in his retirement.
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2 SEMI-ANNUAL REPORTS JANUARY 31, 2006
A Letter From the President
Dear Shareholder
After "muddling through" most of 2005, the financial markets saw increased
volatility in January that resulted in a roller coaster of highs and lows for
stocks and a similar ride for bonds. In the end, the major market indexes
managed to post positive returns for the current reporting period:
Total Returns as of January 31, 2006 6-month 12-month
===============================================================================================
U.S. equities (Standard & Poor's 500 Index) + 4.68% +10.38%
- -----------------------------------------------------------------------------------------------
Small-cap U.S. equities (Russell 2000 Index) + 8.50 +18.89
- -----------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +18.31 +22.76
- -----------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers Aggregate Bond Index) + 0.84 + 1.80
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Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 1.33 + 2.83
- -----------------------------------------------------------------------------------------------
High yield bonds (Credit Suisse High Yield Index) + 1.40 + 3.59
- -----------------------------------------------------------------------------------------------
The Federal Reserve Board (the Fed) advanced its monetary tightening campaign
with eight quarter-point interest rate hikes in 2005 and another on January 31,
2006. This brought the federal funds rate to 4.5%. Notably, Ben Bernanke
replaced Alan Greenspan as Fed chairman in January, a month after the central
bank removed the critical word "measured" from the description of its interest
rate-hiking program. Still, most observers expect another rate increase in
March.
Stocks recorded their third straight year of positive performance in 2005
despite struggling amid rising interest rates, record-high oil prices and a
devastating hurricane season. U.S. equities found support in strong corporate
earnings, low core inflation and healthy company balance sheets. Strength in the
global economy and non-U.S. equity markets helped, as did robust
dividend-distribution, share-buyback and merger-and-acquisition activity.
International markets, in the meantime, continued to benefit from strong
economic statistics, trade surpluses and solid finances.
In the U.S. bond market, short-term interest rates continued to move higher as
longer-term rates advanced more moderately, resulting in a flattening yield
curve. We saw the curve invert temporarily at the end of December and again at
the end of January into early February, with the two-year Treasury note offering
a slightly higher yield than the 10-year note.
Looking ahead, the largest questions center on the Fed's future moves, the
consumer's ability (or inability) to continue spending, the direction of the
U.S. dollar following a year of appreciation and the potential for continued
strong economic and corporate earnings growth. As you consider how these factors
might impact your investments in 2006, we encourage you to review your goals
with your financial advisor and to make portfolio changes, as needed. For
additional insight and timely "food for thought" for investors, we also invite
you to visit Shareholder magazine at www.mlim.ml.com/shareholdermagazine. As
always, we thank you for trusting Merrill Lynch Investment Managers with your
investment assets, and we look forward to continuing to serve your investment
needs.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
President and Trustee
SEMI-ANNUAL REPORTS JANUARY 31, 2006 3
A Discussion With Your Funds' Portfolio Managers
We maintained our focus on the longer end of the municipal yield curve,
which remained steep compared to the shorter end and provided opportunities for
enhanced yield with additional limited volatility.
Discuss the recent market environment relative to municipal bonds.
During the six-month period, long-term bond yields generally rose as their
prices, which move in the opposite direction, fell. The decline in bond prices
came as commodity prices, especially oil and gold, remained elevated and
investors continued to focus on potential inflationary pressures. Recently, a
rise in national average hourly wage levels has led some economic analysts to
suggest that declines in the U.S. employment rate may result in escalating wage
inflation. These concerns, coupled with moderate economic activity throughout
the six-month period, helped push bond yields higher. At the end of January,
30-year U.S. Treasury bond yields stood at 4.68% -- 21 basis points higher than
six months ago.
The Federal Reserve Board (the Fed) continued to raise short-term interest rates
at each of its meetings during the period, lifting the federal funds target rate
to 4.5% on January 31. Given no indications that the monetary tightening cycle
would be curtailed in early 2006, the yield curve continued to flatten, with
short-term interest rates rising more than longer-term interest rates. Over the
past six months, 10-year U.S. Treasury note yields rose 25 basis points (.25%)
to 4.53% and two-year Treasury yields rose 52 basis points to 4.54%.
Tax-exempt bond yields generally mirrored the movement of their taxable
counterparts throughout most of the six-month period. According to Municipal
Market Data, the yield on AAA-rated issues maturing in 30 years increased 10
basis points to 4.45%, while the yield on AAA-rated issues maturing in 10 years
rose 12 basis points to 3.78%. Notably, however, the municipal yield curve
remained steep compared to the Treasury curve.
Over the past six months, $181 billion in new long-term municipal bonds was
underwritten, an 8.8% increase compared to the same period a year ago. Refunding
issues were a prominent component of municipal volume in 2005 as issuers took
advantage of low bond yields and a flattening yield curve to refinance their
outstanding higher-couponed debt. In 2005, refunding activity of $130.3 billion
exceeded 2004 refunding volume by more than 47%. However, January 2006 brought a
dramatic reversal in this trend, with refunding activity declining to
approximately $3.5 billion, down more than 50% from January 2005. It remains to
be seen if this is the beginning of a sustained decline in refunding issuance.
This is important, as analyst estimates for new-issue supply in 2006, currently
in the $340 billion to $370 billion range, factor in only modest declines in
refunding activity. Should January's trend continue, new-issue supply in the
coming months could be significantly lower.
Investor demand for municipal product remained strong in recent quarters.
According to information from the Investment Company Institute, long-term
tax-exempt bond funds received $5.04 billion in net new monies during 2005. This
represented a sharp reversal from the $13.67 billion outflow experienced in
2004. Net new cash flows remained strong in the first month of 2006. Recent
statistics from AMG Data Services indicate that average weekly cash inflows have
risen to approximately $300 million, a significant improvement from the weekly
average of $65 million in December.
Looking ahead, the fundamentals for the tax-exempt bond market appear favorable,
and continued positive cash flows are anticipated. Given their attractive yields
relative to comparable U.S. Treasury bonds, and the prospects for reduced annual
issuance in 2006, we expect municipal bonds could enjoy solid results in the
coming months.
4 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Merrill Lynch Florida Municipal Bond Fund
Describe conditions in the State of Florida.
Florida's economy has outperformed that of both the nation and other southern
states, and appears likely to continue this trend in the foreseeable future. The
state's mix of solid demographics and increasing job growth among diversified
industries is expected to continue to encourage migration into the state.
Although national economic trends have put pressure on the state, we believe
Florida is well positioned given its record of proactive management and
financial flexibility.
The state's enacted fiscal year 2005 - 2006 budget is $64.7 billion, an increase
of 12% from the prior year. The budget reflects a combination of spending
constraints, with spending below anticipated personal income growth, and
increased revenue growth. Of the increased revenue, not all is expected to be
permanent, as some stems primarily from the reconstruction and replacement of
property destroyed by hurricanes and, therefore, is not recurring.
Fiscal discipline has afforded the state the opportunity to provide tax relief
in the form of tax-free shopping days, reduced sales tax on equipment, tax
credits and a phaseout of the intangible tax. Three areas of the budget account
for 93% of the total expenditures -- education at 52%, health and human services
at 26% and public safety at 15%. Revenues for the first four months of the
fiscal year were $602 million, 14% higher than in the prior fiscal year.
How did the Fund perform during the period?
For the six-month period ended January 31, 2006, Merrill Lynch Florida Municipal
Bond Fund's Class A, Class B, Class C and Class I Shares had total returns of
+1.23%, +1.02%, +.97% and +1.28%, respectively. (Fund results shown do not
reflect sales charges and would be lower if sales charges were included.
Complete performance information can be found on pages 10 - 12 of this report to
shareholders.) For the same period, the Lehman Brothers Municipal Bond Index
returned +1.33% and the Lipper Florida Municipal Debt Funds category posted an
average return of +1.28%. The Lehman Index measures the performance of municipal
bonds in all 50 states whereas the Lipper category tracks funds that limit their
investment to those securities exempt from taxation in the State of Florida.
The Fund provided competitive returns for the six-month period. Performance was
driven by our positions in land-secured bonds, an area of the market we have
favored for several years. These issues outperformed as credit spreads (versus
higher-quality issues of comparable maturity) narrowed over the past six months.
In addition, most of our holdings in this sector are in the long end of the
yield curve, which continued to outperform the rest of the curve as it
flattened. These land-secured bonds also have an attractive yield component.
This complements our long-term commitment to providing shareholders with an
above-average yield, and continued to provide an incremental advantage to the
portfolio during the period.
What changes were made to the portfolio during the period?
We did not alter our strategy or make meaningful changes to the portfolio's
composition during the six-month period. We continued to focus on increasing the
income provided to shareholders and muting the Fund's net asset value
volatility. To that end, we remained fully invested throughout the period in
order to augment yield and cautiously took advantage of the Fund's uninsured
basket in adding higher-yielding credits to the portfolio.
In making new purchases, we generally focused on premium coupon bonds in the
20-year - 25-year maturity range whenever they became available. We observed the
greatest value in this area, meaning we were able to capture most of the yield
available on the curve without taking on the additional risk of extending into
the 30-year range. Notably, we did begin to see some opportunity in the 15-year
area of the curve and continue to explore opportunities there.
Issuance of Florida municipal bonds increased approximately 50% during the
period compared to the same six months a year ago. However, as has been the case
for some time, few new issues met our desired investment characteristics. Much
of the supply came in the form of refinancings, and the majority of the new
issues offered relatively short maturities and yields below 5%. We were not
inclined to give up bonds booked in the portfolio at higher yields in order to
take advantage of the new-issue calendar.
SEMI-ANNUAL REPORTS JANUARY 31, 2006 5
A Discussion With Your Funds' Portfolio Managers (continued)
How would you characterize the Fund's position at the close of the period?
We would characterize the Fund's position as fairly neutral in terms of interest
rate risk. Currently, we favor bonds with 20-year - 25-year maturities and will
also look to increase exposure to 15-year maturities. In the current low-yield
environment, we are targeting bonds with 5% coupons, but will look for an
increase in long-term rates as an opportunity to pursue higher-coupon bonds
(5.25% and above) in the 20-year - 30-year maturity range.
We expect the U.S. equity and bond markets to remain volatile as investors
continue to anticipate and react to economic data and Fed actions. Many believe
the Fed is nearing the end of its rate-hiking campaign. However, the central
bank has indicated that it will become more "data dependent" in determining
monetary policy, which leaves room for interpretation. Against this backdrop, we
will continue to maintain a fully invested portfolio and intend to use periods
of volatility to pursue higher-coupon bonds whenever they are attractively
priced.
Merrill Lynch New Jersey Municipal Bond Fund
Describe conditions in the State of New Jersey.
Issuance of long-term municipal bonds in New Jersey totaled approximately $3.9
billion in the fourth quarter of 2005, a 2.8% decline compared to the fourth
quarter of 2004. For all of 2005, New Jersey municipal volume rose 7.1% to just
over $16 billion on a year-over-year basis, trailing the 13.8% increase realized
in the national municipal market.
New Jersey's economy continued to show signs of recovery, as revenues through
the first half of fiscal year 2006 (that is, the six months ended December 31,
2005), were reported to be favorable to budget. However, the fiscal year 2007
budget, at $28 billion, projects a shortfall of $5 billion - $6 billion. New
Jersey's financial challenges include the adequate funding of the public pension
system, replenishment of the Transportation Trust Fund and compliance with
court-mandated school construction spending. The pension system requires a
minimum $1 billion next year, and a state advisory panel has recommended an
infusion of $12 billion to fix that system. In the meantime, former Governor
Codey's Benefits Review Task Force released its report in December outlining
recommendations for reductions in pension and health-care costs.
On the political front, New Jersey's November elections resulted in Democrats
retaining control over both the state Senate and Assembly. The Democrats'
gubernatorial candidate, Senator Jon Corzine, also claimed victory as the
state's 54th governor.
How did the Fund perform during the period?
For the six-month period ended January 31, 2006, Merrill Lynch New Jersey
Municipal Bond Fund's Class A, Class B, Class C and Class I Shares had total
returns of +1.28%, +.98%, +.93% and +1.24%, respectively. (Fund results shown do
not reflect sales charges and would be lower if sales charges were included.
Complete performance information can be found on pages 10 - 12 of this report to
shareholders.) For the same period, the Lehman Brothers Municipal Bond Index
returned +1.33% and the Fund's comparable Lipper category of New Jersey
Municipal Debt Funds posted an average return of +.95%. Unlike the Lehman Index,
which measures the performance of municipal bonds nationally, the Lipper
category consists of funds that limit their investment to those securities
exempt from taxation in the State of New Jersey.
6 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Fund performance was driven primarily by our commitment to lower-quality,
higher-yielding bonds and, secondarily, by our yield curve flattening bias. A
central theme throughout the period has been the persistent narrowing of credit
spreads as investors demonstrated increased risk tolerance in pursuit of higher
yields and total return potential. This allowed lower-quality issues to
outperform the broader municipal market. In this environment, our above-market
weighting in high yield, lower-rated and unrated municipal securities,
particularly those issued on behalf of airlines, aided performance. The Fund had
positions in bonds issued by Continental Airlines, Inc. and American Airlines,
Inc. which experienced a meaningful boost in the last three months of the
period. Second, our yield curve strategy, which involved significant exposure to
longer-dated securities, continued to benefit performance as the curve flattened
and the longer end outperformed.
What changes were made to the portfolio during the period?
We continued to position the Fund for a flattening yield curve. For most of the
period, this involved moving our exposure further out toward the 20-year -
30-year maturity range. New purchases in this area of the curve were funded
primarily through the sale of bonds with 10-year and 30-year maturities, as well
as some prerefunded bonds in the portfolio. When a security is prerefunded, it
tends to exhibit risk characteristics more reflective of a 5-year - 10-year
bond, which is not necessarily our preferred maturity range given the flattening
trend. So, we generally took opportunities to sell those bonds, particularly
those with lower relative yields, and reallocated the proceeds further out. In
executing our restructuring efforts, we were committed to maintaining a balance
between the income generated by our more seasoned, higher-couponed holdings and
the total return we were trying to achieve with our new investments.
Toward the end of the period, given the degree of flattening that had been
realized in the municipal yield curve, we began to focus our investments more in
the 15-year - 17-year maturity range. We found that we could capture 90% - 93%
of the yield available on the longest bonds (25 years - 30 years) without the
additional risk of extending that far. So, this is really a continuation of our
earlier flattening strategy, with purchases in the 15-year - 17-year range and
still with some concentration in prerefunded bonds for their higher acquisition
yields.
The Fund's overall credit profile remained essentially unchanged. Credit spreads
remain quite narrow and, we believe, are likely to stay that way for the
foreseeable future, supporting continued strong performance from lower-quality,
higher-yielding issues.
How would you characterize the Fund's position at the close of the period?
The municipal bond market had rallied toward period-end. In light of that, we
chose to take a more conservative market posture, including a duration somewhat
shorter than that of our Lipper peers. We believe investors are struggling to
interpret the significance of changes in statements released by the Fed as well
as the uncertainty that accompanies the appointment of a new Fed chairman. We
believe, and the Fed has indicated, that monetary policy will become
increasingly "data dependent" now that the federal funds rate, at 4.5%, is
generally perceived to be in the "neutral" range. Under these circumstances, we
expect to maintain a duration fairly close to that of the Lipper average (biased
toward the short side), at least until rates rise to more attractive levels.
Looking ahead, with the federal funds rate now in the neutral range, it appears
we are fairly close to an inflection point, which could result in a resteepening
of the yield curve. To the extent that we do reach that inflection point, we
would likely reconsider our long-standing yield curve flattening strategy,
looking for opportunities to reduce some of the longer-dated holdings that have
outperformed and perhaps positioning the portfolio for more of a steepening
environment. Having said that, we believe our neutral posture is prudent as we
wait for the market to dictate the near-term direction of interest rates, which
could provide opportunities to lock in gains.
SEMI-ANNUAL REPORTS JANUARY 31, 2006 7
A Discussion With Your Funds' Portfolio Managers (concluded)
Merrill Lynch Pennsylvania Municipal Bond Fund
Describe conditions in the Commonwealth of Pennsylvania.
Pennsylvania continued to protect its Aa2/AA/AA credit profile, as assigned by
the three major credit-rating agencies, through conservative budgeting
practices, a more diversified service economy and maintenance of a relatively
low debt burden. Importantly, Governor Rendell's economic stimulus plans over
the next several years include $2 billion in debt issuance to fund programs
ranging from venture capital guarantees and real estate development to
strengthening the tourism and agricultural bases. While planned debt issuance is
substantial and appropriation-backed financing is a departure from historical
practice, the Commonwealth's policy is to keep debt service to no more than 4%
of revenues. Under failed Act 72 tax reform, the Commonwealth's subsidized share
of local public school costs was to increase with local property tax reductions
funded through $1 billion in new legalized gaming revenues (slot machines).
However, local school district "opt in" response was an underwhelming 22%,
mainly due to a controversial back-ended referendum that limited school
districts' future taxing power.
The General Assembly currently has two competing bills aimed at property tax
reform. The first, known as the Scavello/Benninghoff bill, would increase the
personal income tax rate from 3.1% to 3.3% and expand some sales taxes. This,
combined with gaming revenues, would be exchanged for property tax relief. The
second proposal, Senate Bill 30, would give voters the option of swapping an
increase in personal income tax rates, combined with the new gaming funding, for
a reduction in property taxes. Given that 2006 is a gubernatorial election year,
it is difficult to envision Governor Rendell supporting a second round of
personal income tax increases without the more tangible benefits of property tax
reform.
From a fiscal perspective through December 2005, fiscal year 2006 revenue
collections were $170.5 million, or 1.6% above original estimates. This was
primarily led by strength in corporate and personal income tax collections. On
the employment front, broad-based job growth continues to be a favorable trend
in Pennsylvania. The state unemployment rate was 4.9% in December 2005, down
from 5.7% in December 2004. Personal income growth of 1.4% just trailed the U.S.
average growth rate (ranking 34th in the second quarter of 2005), and overall
reflects a wealth level on par with the nation.
How did the Fund perform during the period?
For the six-month period ended January 31, 2006, Merrill Lynch Pennsylvania
Municipal Bond Fund's Class A, Class B, Class C and Class I Shares had total
returns of +.85%, +.73%, +.68% and +.99%, respectively. (Fund results shown do
not reflect sales charges and would be lower if sales charges were included.
Complete performance information can be found on pages 10 - 12 of this report to
shareholders.) For the same period, the benchmark Lehman Brothers Municipal Bond
Index, which measures the performance of municipal bonds nationwide, returned
+1.33%. The Lipper Pennsylvania Municipal Debt Funds category had an average
return of +1.04% for the six-month period. Unlike the Lehman Index, the Lipper
category consists of funds that limit their investment to those securities
exempt from taxation in Pennsylvania.
Fund performance was driven by our focus on the long end of the yield curve,
which outperformed the shorter end as the curve flattened significantly.
Detracting from performance was the early call of a large position representing
4% of the portfolio and with an average coupon of 6.87%. Such yields are not
available in the current environment, forcing us to reinvest the proceeds in
issues with average coupons of about 5%.
What changes were made to the portfolio during the period?
There were few changes to the portfolio during the six-month period. We focused
primarily on protecting the Fund's net asset value and providing shareholders
with above-average income. We continued to focus on longer-dated bonds,
typically in the 25-year - 30-year maturity range, as the yield curve flattened.
The long end of the curve remained fairly steep and also has been less subject
to bouts of volatility, allowing us the opportunity to add incremental yield
while also muting the Fund's price volatility.
For the most part, new issues in Pennsylvania consisted of shorter-dated,
high-quality bonds, which did not meet our desired investment characteristics.
However, we did maintain ample exposure to tax-exempt bonds issued by the
Commonwealth of Puerto Rico. These issues had declined in price on the back of
some fiscal challenges, but rebounded nicely in the last month of the period. We
believe the case for continued investment in Puerto Rico bonds remains strong.
8 SEMI-ANNUAL REPORTS JANUARY 31, 2006
How would you characterize the Fund's position at the close of the period?
We believe the Fed is near the end of its monetary tightening campaign, although
the timing of the eventual cessation is somewhat problematic. It appears the Fed
will need to see continued evidence of softening inflationary pressures and
economic activity before stopping its rate-hiking program. Until the Fed signals
its intention more clearly, the taxable and tax-exempt yield curves are expected
to continue their flattening trend. The U.S. Treasury curve, in fact, has
already toyed with bouts of inversion.
Against this backdrop, we believe the municipal bond market is well positioned
for strong performance, given the relative steepness of the tax-exempt curve
(compared to the taxable curve) and an expected decline in the supply of
long-term bonds in 2006. Demand on the part of retail investors has been
positive in recent months, suggesting that investors are becoming comfortable
with the prevailing low yields. The buildup of cash that has occurred in retail
accounts likely will be deployed into the market as the Fed tightening comes to
an end. Looking ahead, we would expect to adopt a duration slightly longer than
that of our peers in an effort to take advantage of the anticipated market
improvement.
Robert D. Sneeden
Vice President and Portfolio Manager
Merrill Lynch Florida Municipal Bond Fund
Theodore R. Jaeckel Jr., CFA
Vice President and Portfolio Manager
Merrill Lynch New Jersey Municipal Bond Fund
William R. Bock
Vice President and Portfolio Manager
Merrill Lynch Pennsylvania Municipal Bond Fund
February 21, 2006
SEMI-ANNUAL REPORTS JANUARY 31, 2006 9
Performance Data
About Fund Performance
Investors are able to purchase shares of the Funds through multiple pricing
alternatives:
o Class A Shares incur a maximum initial sales charge (front-end load) of 4%
and an account maintenance fee of 0.10% per year (but no distribution
fee).
o Class B Shares are subject to a maximum contingent deferred sales charge
of 4%, declining to 0% after six years. In addition, Class B Shares are
subject to a distribution fee of 0.25% per year and an account maintenance
fee of 0.25% per year. These shares automatically convert to Class A
Shares after approximately ten years. (There is no initial sales charge
for automatic share conversions.)
o Class C Shares are subject to a distribution fee of 0.35% per year and an
account maintenance fee of 0.25% per year. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within one
year of purchase.
o Effective December 28, 2005, Class I Shares are no longer subject to any
front-end sales charge. Class I Shares bear no ongoing distribution or
account maintenance fees and are available only to eligible investors. Had
the sales charge been included, each Fund's Class I Shares' performance
would have been lower.
None of the past results shown should be considered a representation of future
performance. Current performance may be lower or higher than the performance
data quoted. Refer to www.mlim.ml.com to obtain performance data current to the
most recent month-end. Performance results do not reflect the deduction of taxes
that a shareholder would pay on fund distributions or the redemption of fund
shares. Figures shown in each of the following tables assume reinvestment of all
dividends and capital gain distributions, if any, at net asset value on the
payable date. Investment return and principal value of shares will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Dividends paid to each class of shares will vary because of the different levels
of account maintenance, distribution and transfer agency fees applicable to each
class, which are deducted from the income available to be paid to shareholders.
The Funds' Investment Adviser agreed to reimburse a portion of its fee. Without
such reimbursement, the Funds' performance may have been lower.
Recent Performance Results
6-Month 12-Month 10-Year Standardized
As of January 31, 2006 Total Return Total Return Total Return 30-Day Yield
=====================================================================================================================
ML Florida Municipal Bond Fund Class A Shares* +1.23% +3.98% +64.84% 3.82%
- ---------------------------------------------------------------------------------------------------------------------
ML Florida Municipal Bond Fund Class B Shares* +1.02 +3.56 +58.44 3.57
- ---------------------------------------------------------------------------------------------------------------------
ML Florida Municipal Bond Fund Class C Shares* +0.97 +3.46 +56.72 3.47
- ---------------------------------------------------------------------------------------------------------------------
ML Florida Municipal Bond Fund Class I Shares* +1.28 +4.09 +66.65 4.08
- ---------------------------------------------------------------------------------------------------------------------
ML New Jersey Municipal Bond Fund Class A Shares* +1.28 +4.09 +60.39 3.58
- ---------------------------------------------------------------------------------------------------------------------
ML New Jersey Municipal Bond Fund Class B Shares* +0.98 +3.66 +53.85 3.32
- ---------------------------------------------------------------------------------------------------------------------
ML New Jersey Municipal Bond Fund Class C Shares* +0.93 +3.56 +52.48 3.22
- ---------------------------------------------------------------------------------------------------------------------
ML New Jersey Municipal Bond Fund Class I Shares* +1.24 +4.19 +61.97 3.83
- ---------------------------------------------------------------------------------------------------------------------
ML Pennsylvania Municipal Bond Fund Class A Shares* +0.85 +2.86 +64.26 3.86
- ---------------------------------------------------------------------------------------------------------------------
ML Pennsylvania Municipal Bond Fund Class B Shares* +0.73 +2.44 +57.71 3.62
- ---------------------------------------------------------------------------------------------------------------------
ML Pennsylvania Municipal Bond Fund Class C Shares* +0.68 +2.34 +56.00 3.52
- ---------------------------------------------------------------------------------------------------------------------
ML Pennsylvania Municipal Bond Fund Class I Shares* +0.99 +2.96 +65.89 4.13
- ---------------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index** +1.33 +2.83 +73.46 --
- ---------------------------------------------------------------------------------------------------------------------
* Investment results shown do not reflect sales charges; results would be
lower if a sales charge was included. Cumulative total investment returns
are based on changes in net asset values for the periods shown, and assume
reinvestment of all dividends and capital gains distributions at net asset
value on the payable date.
** This unmanaged Index consists of revenue bonds, prerefunded bonds, general
obligation bonds and insured bonds, all of which mature within 30 years.
10 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Performance Data (continued)
Average Annual Total Return -- Merrill Lynch Florida Municipal Bond Fund
Return Without Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
One Year Ended 1/31/06 +3.98% -0.18%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/06 +5.76 +4.90
- --------------------------------------------------------------------------------
Ten Years Ended 1/31/06 +5.12 +4.70
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
Return Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
One Year Ended 1/31/06 +3.56% -0.42%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/06 +5.33 +5.00
- --------------------------------------------------------------------------------
Ten Years Ended 1/31/06 +4.71 +4.71
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 4% and is reduced to 0% after
six years.
** Assuming payment of applicable contingent deferred sales charge.
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC**
================================================================================
Class C Shares*
================================================================================
One Year Ended 1/31/06 +3.46% +2.46%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/06 +5.23 +5.23
- --------------------------------------------------------------------------------
Ten Years Ended 1/31/06 +4.60 +4.60
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after
one year.
** Assuming payment of applicable contingent deferred sales charge.
- --------------------------------------------------------------------------------
Class I Shares Return
================================================================================
One Year Ended 1/31/06 +4.09%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/06 +5.86
- --------------------------------------------------------------------------------
Ten Years Ended 1/31/06 +5.24
- --------------------------------------------------------------------------------
Average Annual Total Return -- Merrill Lynch New Jersey Municipal Bond Fund
Return Without Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
One Year Ended 1/31/06 +4.09% -0.08%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/06 +5.26 +4.40
- --------------------------------------------------------------------------------
Ten Years Ended 1/31/06 +4.84 +4.41
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
Return Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
One Year Ended 1/31/06 +3.66% -0.33%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/06 +4.83 +4.50
- --------------------------------------------------------------------------------
Ten Years Ended 1/31/06 +4.40 +4.40
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 4% and is reduced to 0% after
six years.
** Assuming payment of applicable contingent deferred sales charge.
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC**
================================================================================
Class C Shares*
================================================================================
One Year Ended 1/31/06 +3.56% +2.56%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/06 +4.73 +4.73
- --------------------------------------------------------------------------------
Ten Years Ended 1/31/06 +4.31 +4.31
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after
one year.
** Assuming payment of applicable contingent deferred sales charge.
- --------------------------------------------------------------------------------
Class I Shares Return
================================================================================
One Year Ended 1/31/06 +4.19%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/06 +5.36
- --------------------------------------------------------------------------------
Ten Years Ended 1/31/06 +4.94
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORTS JANUARY 31, 2006 11
Performance Data (concluded)
Average Annual Total Return -- Merrill Lynch Pennsylvania Municipal Bond Fund
Return Without Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
One Year Ended 1/31/06 +2.86% -1.25%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/06 +5.38 +4.52
- --------------------------------------------------------------------------------
Ten Years Ended 1/31/06 +5.09 +4.66
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
Return Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
One Year Ended 1/31/06 +2.44% -1.50%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/06 +4.97 +4.64
- --------------------------------------------------------------------------------
Ten Years Ended 1/31/06 +4.66 +4.66
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 4% and is reduced to 0% after
six years.
** Assuming payment of applicable contingent deferred sales charge.
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC**
================================================================================
Class C Shares*
================================================================================
One Year Ended 1/31/06 +2.34% +1.36%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/06 +4.85 +4.85
- --------------------------------------------------------------------------------
Ten Years Ended 1/31/06 +4.55 +4.55
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after
one year.
** Assuming payment of applicable contingent deferred sales charge.
- --------------------------------------------------------------------------------
Class I Shares Return
================================================================================
One Year Ended 1/31/06 +2.96%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/06 +5.48
- --------------------------------------------------------------------------------
Ten Years Ended 1/31/06 +5.19
- --------------------------------------------------------------------------------
12 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Disclosure of Expenses
Shareholders of each Fund may incur the following charges: (a) expenses related
to transactions, including sales charges, redemption fees and exchange fees; and
(b) operating expenses including advisory fees, distribution fees including
12b-1 fees, and other Fund expenses. The following example (which is based on a
hypothetical investment of $1,000 invested on August 1, 2005 and held through
January 31, 2006) is intended to assist shareholders both in calculating
expenses based on an investment in each Fund and in comparing these expenses
with similar costs of investing in other mutual funds.
The first table below provides information about actual account values and
actual expenses. In order to estimate the expenses a shareholder paid during the
period covered by this report, shareholders can divide their account value by
$1,000 and then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During the Period."
The second table below provides information about hypothetical account values
and hypothetical expenses based on each Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses. In order to assist
shareholders in comparing the ongoing expenses of investing in these Funds and
other funds, compare the 5% hypothetical example with the 5% hypothetical
examples that appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders' ongoing
costs only and do not reflect any transactional expenses, such as sales charges,
redemption fees or exchange fees. Therefore, the second table is useful in
comparing ongoing expenses only, and will not help shareholders determine the
relative total expenses of owning different funds. If these transactional
expenses were included, shareholder expenses would have been higher.
Merrill Lynch Florida Municipal Bond Fund
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value August 1, 2005 to
August 1, 2005 January 31, 2006 January 31, 2006
==================================================================================================================
Actual
==================================================================================================================
Class A $1,000 $1,012.30 $4.46
- ------------------------------------------------------------------------------------------------------------------
Class B $1,000 $1,010.20 $6.55
- ------------------------------------------------------------------------------------------------------------------
Class C $1,000 $1,009.70 $7.05
- ------------------------------------------------------------------------------------------------------------------
Class I $1,000 $1,012.80 $3.96
==================================================================================================================
Hypothetical (5% annual return before expenses)**
==================================================================================================================
Class A $1,000 $1,020.77 $4.48
- ------------------------------------------------------------------------------------------------------------------
Class B $1,000 $1,018.69 $6.58
- ------------------------------------------------------------------------------------------------------------------
Class C $1,000 $1,018.19 $7.08
- ------------------------------------------------------------------------------------------------------------------
Class I $1,000 $1,021.27 $3.97
- ------------------------------------------------------------------------------------------------------------------
* For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (.88% for Class A, 1.29% for Class B, 1.39% for Class
C and .78% for Class I), multiplied by the average account value over the
period, multiplied by 184/365.
** Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half year divided by 365.
SEMI-ANNUAL REPORTS JANUARY 31, 2006 13
Disclosure of Expenses (concluded)
Merrill Lynch New Jersey Municipal Bond Fund
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value August 1, 2005 to
August 1, 2005 January 31, 2006 January 31, 2006
=========================================================================================================
Actual
=========================================================================================================
Class A $1,000 $1,012.80 $4.77
- ---------------------------------------------------------------------------------------------------------
Class B $1,000 $1,009.80 $6.84
- ---------------------------------------------------------------------------------------------------------
Class C $1,000 $1,009.30 $7.29
- ---------------------------------------------------------------------------------------------------------
Class I $1,000 $1,012.40 $4.26
=========================================================================================================
Hypothetical (5% annual return before expenses)**
=========================================================================================================
Class A $1,000 $1,020.47 $4.79
- ---------------------------------------------------------------------------------------------------------
Class B $1,000 $1,018.40 $6.87
- ---------------------------------------------------------------------------------------------------------
Class C $1,000 $1,017.95 $7.32
- ---------------------------------------------------------------------------------------------------------
Class I $1,000 $1,020.97 $4.28
- ---------------------------------------------------------------------------------------------------------
* For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (.94% for Class A, 1.35% for Class B, 1.44% for Class
C and .84% for Class I), multiplied by the average account value over the
period, multiplied by 184/365.
** Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half year divided by 365.
Merrill Lynch Pennsylvania Municipal Bond Fund
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value August 1, 2005 to
August 1, 2005 January 31, 2006 January 31, 2006
=========================================================================================================
Actual
=========================================================================================================
Class A $1,000 $1,019.90 $5.04
- ---------------------------------------------------------------------------------------------------------
Class B $1,000 $1,017.00 $7.12
- ---------------------------------------------------------------------------------------------------------
Class C $1,000 $1,016.50 $7.62
- ---------------------------------------------------------------------------------------------------------
Class I $1,000 $1,019.50 $4.53
=========================================================================================================
Hypothetical (5% annual return before expenses)**
=========================================================================================================
Class A $1,000 $1,020.21 $5.04
- ---------------------------------------------------------------------------------------------------------
Class B $1,000 $1,018.15 $7.12
- ---------------------------------------------------------------------------------------------------------
Class C $1,000 $1,017.64 $7.63
- ---------------------------------------------------------------------------------------------------------
Class I $1,000 $1,020.72 $4.53
- ---------------------------------------------------------------------------------------------------------
* For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (.99% for Class A, 1.40% for Class B, 1.50% for Class
C and .89% for Class I), multiplied by the average account value over the
period, multiplied by 184/365.
** Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half year divided by 365.
14 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Portfolio Information as of January 31, 2006
Merrill Lynch Florida Municipal Bond Fund
Percent of Total
Distribution by Market Sector Investments
- --------------------------------------------------------------------------------
Other Revenue Bonds ........................................ 85.0%
General Obligation Bonds ................................... 9.3
Prerefunded Bonds* ......................................... 2.4
Other** .................................................... 3.3
- --------------------------------------------------------------------------------
* Backed by an escrow fund.
** Includes portfolio holdings in mutual funds, variable rate demand notes
and short-term investments.
Quality Ratings by Percent of Total
S&P/Moody's Investments
- --------------------------------------------------------------------------------
AAA/Aaa .................................................... 56.8%
AA/Aa ...................................................... 2.4
A/A ........................................................ 9.8
BBB/Baa .................................................... 9.2
NR (Not Rated) ............................................. 18.5
Other* ..................................................... 3.3
- --------------------------------------------------------------------------------
* Includes portfolio holdings in mutual funds, variable rate demand notes
and short-term investments.
Merrill Lynch New Jersey Municipal Bond Fund
Percent of Total
Distribution by Market Sector Investments
- --------------------------------------------------------------------------------
Other Revenue Bonds ........................................ 75.6%
General Obligation Bonds ................................... 15.0
Prerefunded Bonds* ......................................... 3.7
Other** .................................................... 5.7
- --------------------------------------------------------------------------------
* Backed by an escrow fund.
** Includes portfolio holdings in variable rate demand notes and short-term
investments.
Quality Ratings by Percent of Total
S&P/Moody's Investments
- --------------------------------------------------------------------------------
AAA/Aaa .................................................... 47.1%
AA/Aa ...................................................... 9.1
A/A ........................................................ 10.2
BBB/Baa .................................................... 13.1
BB/Ba ...................................................... 3.0
B/B ........................................................ 3.8
CCC/Caa .................................................... 1.8
NR (Not Rated) ............................................. 6.2
Other* ..................................................... 5.7
- --------------------------------------------------------------------------------
* Includes portfolio holdings in variable rate demand notes and short-term
investments.
Merrill Lynch Pennsylvania Municipal Bond Fund
Percent of Total
Distribution by Market Sector Investments
- --------------------------------------------------------------------------------
Other Revenue Bonds ........................................ 78.3%
General Obligation Bonds ................................... 19.3
Other* ..................................................... 2.4
- --------------------------------------------------------------------------------
* Includes portfolio holdings in short-term investments.
Quality Ratings by Percent of Total
S&P/Moody's Investments
- --------------------------------------------------------------------------------
AAA/Aaa .................................................... 33.5%
AA/Aa ...................................................... 12.4
A/A ........................................................ 3.5
BBB/Baa .................................................... 34.9
BB/Ba ...................................................... 3.7
CCC/Caa .................................................... 0.8
NR (Not Rated) ............................................. 8.8
Other* ..................................................... 2.4
- --------------------------------------------------------------------------------
* Includes portfolio holdings in short-term investments.
SEMI-ANNUAL REPORTS JANUARY 31, 2006 15
Schedule of Investments
Merrill Lynch Florida Municipal Bond Fund (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
Florida--88.5%
- --------------------------------------------------------------------------------
$1,096 Altamonte Springs, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Adventist Health
Systems--Sunbelt), 7% due 10/01/2014 (e) $ 1,344
- --------------------------------------------------------------------------------
1,245 Ballantrae, Florida, Community Development District,
Capital Improvement Revenue Bonds, 6% due 5/01/2035 1,291
- --------------------------------------------------------------------------------
550 Capital Trust Agency, Florida, Air Cargo Revenue Bonds,
AMT, 6.25% due 1/01/2019 569
- --------------------------------------------------------------------------------
Citrus County, Florida, Hospital Board Revenue
Refunding Bonds (Citrus Memorial Hospital):
960 6.25% due 8/15/2023 1,049
1,500 6.375% due 8/15/2032 1,628
- --------------------------------------------------------------------------------
1,000 Cypress Lakes, Florida, Community Development
District, Special Assessment Bonds, Series A, 6%
due 5/01/2034 1,036
- --------------------------------------------------------------------------------
25 Double Branch Community, Florida, Development
District, Special Assessment Bonds, Series B-1, 5.60%
due 5/01/2007 25
- --------------------------------------------------------------------------------
1,500 Fiddlers Creek, Florida, Community Development
District Number 2, Special Assessment Revenue Bonds,
Series A, 6.375% due 5/01/2035 1,586
- --------------------------------------------------------------------------------
1,000 Flagler County, Florida, School Board, COP, Series A,
5% due 8/01/2024 (g) 1,048
- --------------------------------------------------------------------------------
1,330 Florida HFA, Homeowner Mortgage Revenue Bonds,
AMT, Series 3, 6.35% due 7/01/2028 (b)(j) 1,371
- --------------------------------------------------------------------------------
590 Florida Housing Finance Corporation, Homeowner
Mortgage Revenue Refunding Bonds, AMT, Series 4,
6.25% due 7/01/2022 (g) 607
- --------------------------------------------------------------------------------
1,265 Florida State Board of Education, GO (Public Education
Capital Outlay), Series J, 5% due 6/01/2031 1,315
- --------------------------------------------------------------------------------
5,000 Florida State Board of Education, Lottery Revenue Bonds,
DRIVERS, Series 222, 9.158% due 7/01/2017 (h)(i) 6,206
- --------------------------------------------------------------------------------
2,500 Florida State Turnpike Authority, Turnpike Revenue Bonds,
DRIVERS, Series 218, 9.148% due 7/01/2029 (h)(i) 3,103
- --------------------------------------------------------------------------------
975 Harbor Bay, Florida, Community Development District,
Capital Improvement Special Assessment Revenue
Bonds, Series A, 7% due 5/01/2033 1,053
- --------------------------------------------------------------------------------
185 Heritage Isles Community Development District, Florida,
Special Assessment Revenue Refunding Bonds, 5.90%
due 11/01/2006 187
- --------------------------------------------------------------------------------
30 Heritage Palms, Florida, Community Development
District, Capital Improvement Revenue Bonds, 6.25%
due 11/01/2007 30
- --------------------------------------------------------------------------------
2,000 Hernando County, Florida, School Board, COP, 5%
due 7/01/2035 (b) 2,076
- --------------------------------------------------------------------------------
3,500 Highlands County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Adventist Health System),
Series A, 6% due 11/15/2031 3,753
- --------------------------------------------------------------------------------
Hillsborough County, Florida, IDA, Exempt Facilities
Revenue Bonds (National Gypsum Company), AMT:
1,000 Series A, 7.125% due 4/01/2030 1,110
1,750 Series B, 7.125% due 4/01/2030 1,943
- --------------------------------------------------------------------------------
Jacksonville, Florida, Economic Development
Commission, Health Care Facilities Revenue Bonds
(Mayo Clinic--Jacksonville):
1,000 Series A, 5.50% due 11/15/2036 1,052
1,000 Series A, 5.50% due 11/15/2036 (b) 1,083
2,000 Series B, 5.50% due 11/15/2036 2,106
410 Series B, 5.50% due 11/15/2036 (b) 444
- --------------------------------------------------------------------------------
2,050 Jacksonville, Florida, Economic Development
Commission, IDR (Metropolitan Parking Solutions
Project), AMT, 5.875% due 6/01/2031 (k) 2,212
- --------------------------------------------------------------------------------
1,200 Jacksonville, Florida, Guaranteed Entitlement Revenue
Refunding and Improvement Bonds, 5.25%
due 10/01/2032 (h) 1,268
- --------------------------------------------------------------------------------
1,000 Marco Island, Florida, Utility System Revenue Bonds,
5% due 10/01/2033 (b) 1,035
- --------------------------------------------------------------------------------
2,320 Martin County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Martin Memorial Medical
Center), Series A, 5.875% due 11/15/2032 2,485
- --------------------------------------------------------------------------------
4,435 Miami-Dade County, Florida, Aviation Revenue Bonds,
AMT, Series A, 5% due 10/01/2033 (g) 4,500
- --------------------------------------------------------------------------------
2,850 Miami-Dade County, Florida, Aviation Revenue
Refunding Bonds (Miami International Airport), AMT,
Series A, 5% due 10/01/2038 (c) 2,889
- --------------------------------------------------------------------------------
Miami-Dade County, Florida, Expressway Authority, Toll
System Revenue Bonds, Series B (h):
2,495 5.25% due 7/01/2026 2,694
2,450 5% due 7/01/2033 2,538
- --------------------------------------------------------------------------------
1,250 Miami-Dade County, Florida, Solid Waste System
Revenue Bonds, 5.25% due 10/01/2030 (b) 1,345
- --------------------------------------------------------------------------------
Portfolio Abbreviations
To simplify the listings of portfolio holdings in the Schedules of Investments,
we have abbreviated the names of many of the securities according to the list at
right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
DATES Daily Adjustable Tax-Exempt Securities
DRIVERS Derivative Inverse Tax-Exempt Receipts
EDA Economic Development Authority
EDR Economic Development Revenue Bonds
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
16 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Schedule of Investments (continued)
Merrill Lynch Florida Municipal Bond Fund (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
Florida (continued)
- --------------------------------------------------------------------------------
$4,225 Miami-Dade County, Florida, Subordinate Special
Obligation Revenue Bonds, Series A, 5.20%**
due 10/01/2032 (b) $ 1,084
- --------------------------------------------------------------------------------
1,000 Middle Village Community Development District,
Florida, Special Assessment Bonds, Series A, 6%
due 5/01/2035 1,039
- --------------------------------------------------------------------------------
2,000 Midtown Miami, Florida, Community Development
District, Special Assessment Revenue Bonds, Series A,
6.25% due 5/01/2037 2,119
- --------------------------------------------------------------------------------
1,000 Oak Creek, Florida, Community Development District,
Special Assessment Bonds, 5.80% due 5/01/2035 1,030
- --------------------------------------------------------------------------------
1,000 Old Palm Community Development District, Florida,
Special Assessment Bonds (Palm Beach Gardens),
Series A, 5.90% due 5/01/2035 1,038
- --------------------------------------------------------------------------------
Orange County, Florida, Health Facilities Authority,
Hospital Revenue Bonds:
500 (Adventist Health System), 6.25% due 11/15/2024 554
2,705 (Orlando Regional Healthcare), 6%
due 12/01/2012 (m) 3,073
- --------------------------------------------------------------------------------
1,500 Orlando and Orange County, Florida, Expressway
Authority Revenue Bonds, Series B, 5%
due 7/01/2035 (a) 1,548
- --------------------------------------------------------------------------------
1,000 Orlando, Florida, Greater Orlando Aviation Authority,
Airport Facilities Revenue Bonds (JetBlue Airways Corp.),
AMT, 6.375% due 11/15/2026 998
- --------------------------------------------------------------------------------
Orlando, Florida, Urban Community Development
District, Capital Improvement Special Assessment Bonds:
1,000 6.25% due 5/01/2034 1,064
980 Series A, 6.95% due 5/01/2033 1,058
- --------------------------------------------------------------------------------
1,265 Osceola County, Florida, Infrastructure Sales Surplus Tax
Revenue Bonds, 5.25% due 10/01/2025 (a) 1,350
- --------------------------------------------------------------------------------
2,000 Osceola County, Florida, School Board, COP, Series A,
5.25% due 6/01/2027 (a) 2,126
- --------------------------------------------------------------------------------
925 Osceola County, Florida, Tourist Development Tax
Revenue Bonds, Series A, 5.50% due 10/01/2027 (h) 1,001
- --------------------------------------------------------------------------------
1,000 Palm Bay, Florida, Utility System Improvement Revenue
Bonds, Series A, 5% due 10/01/2025 (h) 1,056
- --------------------------------------------------------------------------------
1,000 Palm Coast, Florida, Utility System Revenue Bonds, 5%
due 10/01/2027 (b) 1,040
- --------------------------------------------------------------------------------
10 Panther Trace, Florida, Community Development District,
Special Assessment Revenue Bonds, Series B, 6.50%
due 5/01/2009 10
- --------------------------------------------------------------------------------
Park Place Community Development District, Florida,
Special Assessment Revenue Bonds:
500 6.75% due 5/01/2032 531
985 6.375% due 5/01/2034 1,029
- --------------------------------------------------------------------------------
2,080 Pasco County, Florida, Health Facilities Authority, Gross
Revenue Bonds (Adventist Health System--Sunbelt),
7% due 10/01/2014 (e) 2,536
- --------------------------------------------------------------------------------
1,000 Pasco County, Florida, School Board, COP, Series A, 5%
due 8/01/2030 (a) 1,038
- --------------------------------------------------------------------------------
Peace River/Manasota Regional Water Supply Authority,
Florida, Utility System Revenue Bonds, Series A (g):
1,000 5% due 10/01/2030 1,046
1,000 5% due 10/01/2035 1,041
- --------------------------------------------------------------------------------
2,000 Pinellas County, Florida, Health Facilities Authority
Revenue Bonds (BayCare Health System Inc.), 5.75%
due 11/15/2029 2,137
- --------------------------------------------------------------------------------
800 Pinellas County, Florida, Health Facilities Authority,
Revenue Refunding Bonds (Pooled Hospital Loan
Program), DATES, 3.04% due 12/01/2015 (a)(f) 800
- --------------------------------------------------------------------------------
Polk County, Florida, Public Facilities Revenue Bonds (b):
1,000 5% due 12/01/2025 1,055
1,300 5% due 12/01/2033 1,353
- --------------------------------------------------------------------------------
245 Reunion East Community Development District, Florida,
Special Assessment, Series B, 5.90% due 11/01/2007 247
- --------------------------------------------------------------------------------
1,000 Saint Johns County, Florida, Sales Tax Revenue Bonds,
GO, Series A, 5.25% due 10/01/2028 (a) 1,072
- --------------------------------------------------------------------------------
1,080 Sandy Creek Community Development District, Florida,
Special Assessment Bonds, Series B, 5%
due 11/01/2010 1,080
- --------------------------------------------------------------------------------
2,320 South Broward, Florida, Hospital District Revenue Bonds,
DRIVERS, Series 337, 7.915% due 5/01/2032 (b)(i) 2,750
- --------------------------------------------------------------------------------
1,000 South Kendall, Florida, Community Development
District, Special Assessment Bonds, Series A, 5.90%
due 5/01/2035 1,037
- --------------------------------------------------------------------------------
South Lake County, Florida, Hospital District Revenue
Bonds (South Lake Hospital Inc.):
1,000 5.80% due 10/01/2034 1,040
995 6.375% due 10/01/2034 1,073
- --------------------------------------------------------------------------------
875 Sterling Hill, Florida, Community Development District,
Capital Improvement Revenue Refunding Bonds,
Series B, 5.50% due 11/01/2010 878
- --------------------------------------------------------------------------------
145 Stoneybrook West, Florida, Community Development
District, Special Assessment Revenue Bonds, Series B,
6.45% due 5/01/2010 145
- --------------------------------------------------------------------------------
1,200 Tallahassee, Florida, Energy System Revenue Bonds, 5%
due 10/01/2035 (b) 1,249
- --------------------------------------------------------------------------------
1,000 Tamarac, Florida, Capital Improvement Revenue Bonds,
5% due 10/01/2030 (b) 1,042
- --------------------------------------------------------------------------------
150 University of Central Florida, COP (UCF Convocation
Center), Series A, 5% due 10/01/2035 (h) 155
- --------------------------------------------------------------------------------
2,860 University of Central Florida (UCF) Athletics Association
Inc., COP, Series A, 5.25% due 10/01/2034 (h) 3,032
- --------------------------------------------------------------------------------
1,000 Village Center Community Development District, Florida,
Utility Revenue Bonds, 5.125% due 10/01/2028 (b) 1,052
- --------------------------------------------------------------------------------
1,460 Vista Lakes Community Development District, Florida,
Capital Improvement Revenue Bonds, Series A, 6.75%
due 5/01/2034 1,572
- --------------------------------------------------------------------------------
1,000 Volusia County, Florida, IDA, Student Housing Revenue
Bonds (Stetson University Project), Series A, 5%
due 6/01/2035 (c) 1,040
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORTS JANUARY 31, 2006 17
Schedule of Investments (concluded)
Merrill Lynch Florida Municipal Bond Fund (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
Florida (concluded)
- --------------------------------------------------------------------------------
$1,000 West Villages Improvement District, Florida, Special
Assessment Revenue Refunding Bonds (Unit of
Development Number 2), 5.35% due 5/01/2015 $ 1,010
- --------------------------------------------------------------------------------
4,050 Winter Haven, Florida, Utility System Revenue
Refunding and Improvement Bonds, 5%
due 10/01/2035 (b) 4,217
================================================================================
Maryland--0.8%
- --------------------------------------------------------------------------------
1,000 Baltimore, Maryland, Convention Center Hotel Revenue
Bonds, Senior Series A, 5.25% due 9/01/2039 (d) 1,069
================================================================================
New Jersey--5.9%
- --------------------------------------------------------------------------------
New Jersey EDA, Cigarette Tax Revenue Bonds:
1,500 5.50% due 6/15/2024 1,563
4,650 5.75% due 6/15/2029 (l) 5,096
1,020 5.75% due 6/15/2034 1,072
================================================================================
Puerto Rico-- 1.9%
- --------------------------------------------------------------------------------
1,365 Puerto Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Revenue Bonds
(Cogeneration Facility--AES Puerto Rico Project), AMT,
6.625% due 6/01/2026 1,484
- --------------------------------------------------------------------------------
1,000 Puerto Rico Public Buildings Authority, Government
Facilities Revenue Refunding Bonds, Series I, 5%
due 7/01/2036 1,013
- --------------------------------------------------------------------------------
Total Municipal Bonds
(Cost--$121,533)--97.1% 126,723
================================================================================
================================================================================
Shares
Held Mutual Funds
================================================================================
211 BlackRock Florida Insured Municipal 2008 Term Trust 3,233
- --------------------------------------------------------------------------------
Total Mutual Funds (Cost--$3,496)--2.5% 3,233
================================================================================
================================================================================
Short-Term Securities
================================================================================
302 CMA Florida Municipal Money Fund (n) 302
13 Merrill Lynch Institutional Tax-Exempt Fund (n) 13
- --------------------------------------------------------------------------------
Total Short-Term Securities (Cost--$315)--0.2% 315
================================================================================
Total Investments (Cost--$125,344*)--99.8% 130,271
Other Assets Less Liabilities--0.2% 251
--------
Net Assets--100.0% $130,522
========
- --------------------------------------------------------------------------------
* The cost and unrealized appreciation (depreciation) of investments as of
January 31, 2006, as computed for federal income tax purposes, were as
follows:
Aggregate cost ................................. $ 125,344
=========
Gross unrealized appreciation .................. $ 5,289
Gross unrealized depreciation .................. (362)
---------
Net unrealized appreciation .................... $ 4,927
=========
** Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(a) AMBAC Insured.
(b) MBIA Insured.
(c) CIFG Insured.
(d) XL Capital Insured.
(e) Escrowed to maturity.
(f) Security may have a maturity of more than one year at time of issuance,
but has variable rate and demand features that qualify it as a short-term
security. The rate disclosed is that currently in effect. This rate
changes periodically based upon prevailing market rates.
(g) FSA Insured.
(h) FGIC Insured.
(i) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(j) FHA Insured.
(k) ACA Insured.
(l) AGC Insured.
(m) Prerefunded.
(n) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
CMA Florida Municipal Money Fund 302 $ 2
Merrill Lynch Institutional Tax-Exempt Fund -- $ --@
--------------------------------------------------------------------------
@ Amount is less than $1,000.
See Notes to Financial Statements.
18 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Schedule of Investments
Merrill Lynch New Jersey Municipal Bond Fund (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
New Jersey--91.2%
- --------------------------------------------------------------------------------
$2,000 Bergen County, New Jersey, Improvement Authority,
School District, GO (Wyckoff Township Board of
Education Project), 5% due 4/01/2032 $ 2,087
- --------------------------------------------------------------------------------
Camden County, New Jersey, Pollution Control
Financing Authority, Solid Waste Resource Recovery,
Revenue Refunding Bonds, AMT:
340 Series A, 7.50% due 12/01/2010 344
190 Series B, 7.50% due 12/01/2009 192
- --------------------------------------------------------------------------------
1,100 Cape May Point, New Jersey, GO, 5.70%
due 3/15/2013 1,153
- --------------------------------------------------------------------------------
2,450 Delaware River Joint Toll Bridge Commission,
Pennsylvania and New Jersey, Bridge Revenue Refunding
Bonds, 5% due 7/01/2024 2,539
- --------------------------------------------------------------------------------
4,135 Garden State Preservation Trust of New Jersey, Capital
Appreciation Revenue Bonds, Series B, 5.24%*
due 11/01/2027 (d) 1,521
- --------------------------------------------------------------------------------
Garden State Preservation Trust of New Jersey, Open
Space and Farmland Preservation Revenue Bonds,
Series A (d)(n):
1,640 5.80% due 11/01/2022 1,891
2,080 5.75% due 11/01/2028 2,505
- --------------------------------------------------------------------------------
1,705 Middlesex County, New Jersey, Improvement Authority,
County--Guaranteed Revenue Bonds (Golf Course
Projects), 5.25% due 6/01/2026 1,831
- --------------------------------------------------------------------------------
1,000 Middlesex County, New Jersey, Pollution Control
Financing Authority, Revenue Refunding Bonds
(Amerada Hess Corporation), 6.05% due 9/15/2034 1,072
- --------------------------------------------------------------------------------
New Jersey EDA, Cigarette Tax Revenue Bonds:
520 5.625% due 6/15/2019 551
590 5.75% due 6/15/2029 622
125 5.50% due 6/15/2031 129
230 5.75% due 6/15/2034 242
- --------------------------------------------------------------------------------
New Jersey EDA, EDR (Masonic Charity Foundation of
New Jersey):
600 5.25% due 6/01/2024 635
500 5.25% due 6/01/2032 527
- --------------------------------------------------------------------------------
2,100 New Jersey EDA, Economic Development Revenue
Refunding Bonds (Lawrenceville School Project), VRDN,
Series B, 2.81% due 7/01/2026 (k) 2,100
- --------------------------------------------------------------------------------
New Jersey EDA, First Mortgage Revenue Bonds:
1,000 (Lions Gate Project), Series A, 5.875%
due 1/01/2037 1,022
1,330 (The Presbyterian Home), Series A, 6.375%
due 11/01/2031 1,386
1,630 (The Presbyterian Home), Series B, 5.75%
due 11/01/2031 1,633
- --------------------------------------------------------------------------------
1,500 New Jersey EDA, First Mortgage Revenue Refunding
Bonds (The Winchester Gardens at Ward Homestead
Project), Series A, 5.80% due 11/01/2031 1,559
- --------------------------------------------------------------------------------
1,250 New Jersey EDA, IDR, Refunding (Newark Airport
Marriott Hotel), 7% due 10/01/2014 1,281
- --------------------------------------------------------------------------------
New Jersey EDA, Motor Vehicle Surcharge Revenue
Bonds, Series A (e):
1,675 4.95%* due 7/01/2021 850
2,100 5% due 7/01/2029 2,186
880 5% due 7/01/2034 912
- --------------------------------------------------------------------------------
425 New Jersey EDA, Retirement Community Revenue Bonds
(Cedar Crest Village Inc. Facility), Series A, 7.25%
due 11/15/2031 460
- --------------------------------------------------------------------------------
1,075 New Jersey EDA, Revenue Bonds (American Airlines Inc.
Project), AMT, 7.10% due 11/01/2031 875
- --------------------------------------------------------------------------------
New Jersey EDA, School Facilities Construction
Revenue Bonds:
1,700 Series L, 5% due 3/01/2030 (d) 1,767
1,590 Series O, 5.25% due 3/01/2023 1,700
- --------------------------------------------------------------------------------
1,000 New Jersey EDA, Solid Waste Disposal Facilities Revenue
Bonds (Waste Management Inc.), AMT, Series A, 5.30%
due 6/01/2015 1,051
- --------------------------------------------------------------------------------
3,000 New Jersey EDA, Special Facility Revenue Bonds
(Continental Airlines Inc. Project), AMT, 6.25%
due 9/15/2019 2,827
- --------------------------------------------------------------------------------
2,000 New Jersey EDA, State Contract Revenue Refunding
Bonds (Economic Fund), Series A, 5.25%*
due 3/15/2021 (e) 1,028
- --------------------------------------------------------------------------------
3,500 New Jersey EDA, State Lease Revenue Bonds (State
Office Buildings Projects), 6.25% due 6/15/2010 (a)(f) 3,889
- --------------------------------------------------------------------------------
2,100 New Jersey EDA, Water Facilities Revenue Refunding
Bonds (United Water of New Jersey Inc. Project), VRDN,
Series A, 2.88% due 11/01/2026 (a)(k) 2,100
- --------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority
Revenue Bonds:
500 (Avalon at Hillsborough), AMT, Series A, 6.625%
due 7/01/2035 504
460 (Children's Specialized Hospital), Series A, 5.50%
due 7/01/2036 478
750 (Hunterdon Medical Center), Series A, 5.25%
due 7/01/2025 786
1,000 (Hunterdon Medical Center), Series A, 5.125%
due 7/01/2035 1,017
1,150 (Pascack Valley Hospital Association), 6.625%
due 7/01/2036 1,148
1,040 (RWJ Healthcare Corporation), Series B, 5%
due 7/01/2035 (i) 1,063
2,500 (Robert Wood Johnson University Hospital), 5.75%
due 7/01/2025 (m) 2,657
1,500 (South Jersey Hospital), 6% due 7/01/2026 1,602
- --------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority,
Revenue Refunding Bonds:
910 (Atlantic City Medical Center), 6.25%
due 7/01/2017 1,017
1,500 (Bayshore Community Hospital), 5.125%
due 7/01/2032 (i) 1,538
600 (Capital Health System Inc.), Series A, 5.75%
due 7/01/2023 643
400 (Trinitas Hospital Obligation Group), 7.40%
due 7/01/2020 449
- --------------------------------------------------------------------------------
800 New Jersey State Educational Facilities Authority,
Higher Education, Capital Improvement Revenue Bonds,
Series A, 5.125% due 9/01/2022 (a) 852
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORTS JANUARY 31, 2006 19
Schedule of Investments (continued)
Merrill Lynch New Jersey Municipal Bond Fund (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
New Jersey (continued)
- --------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority
Revenue Bonds:
$ 750 (Georgian Court College Project), Series C, 6.50%
due 7/01/2033 $ 838
1,000 (New Jersey Institute of Technology), Series G,
5.25% due 7/01/2019 (e) 1,071
1,120 (Public Library Project Grant Issue), Series A, 5.50%
due 9/01/2019 (a) 1,227
1,000 (Rider University), Series A, 5.125%
due 7/01/2028 (i) 1,045
715 (Rowan University), Series C, 5.125%
due 7/01/2028 (e) 755
650 (Rowan University), Series C, 5% due 7/01/2034 (e) 674
- --------------------------------------------------------------------------------
2,175 New Jersey State Housing and Mortgage Financing
Agency, Capital Fund Program Revenue Bonds,
Series A, 4.70% due 11/01/2025 (d) 2,198
- --------------------------------------------------------------------------------
2,770 New Jersey State Housing and Mortgage Financing
Agency, M/F Revenue Bonds, RIB, AMT, Series 1012,
6.40% due 11/01/2035 (b)(c) 2,762
- --------------------------------------------------------------------------------
1,880 New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds, Series D, 5%
due 6/15/2020 1,984
- --------------------------------------------------------------------------------
New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Refunding Bonds,
Series B (e):
1,560 6.50% due 6/15/2010 1,742
940 6.50% due 6/15/2010 (g) 1,054
1,800 5.50% due 12/15/2021 2,071
- --------------------------------------------------------------------------------
New Jersey State Turnpike Authority, Turnpike
Revenue Bonds:
1,510 Series B, 5.15%* due 1/01/2035 (a) 994
2,500 Series C, 5% due 1/01/2030 (d) 2,604
- --------------------------------------------------------------------------------
1,000 New Jersey State Turnpike Authority, Turnpike Revenue
Refunding Bonds, Series A, 5% due 1/01/2027 (b) 1,041
- --------------------------------------------------------------------------------
960 Newark, New Jersey, Health Care Facility Revenue
Refunding Bonds (New Community Urban Renewal),
Series A, 5.20% due 6/01/2030 (h)(j) 1,011
- --------------------------------------------------------------------------------
Port Authority of New York and New Jersey,
Consolidated Revenue Bonds:
1,000 85th Series, 5.20% due 9/01/2018 1,097
1,000 93rd Series, 6.125% due 6/01/2094 1,190
- --------------------------------------------------------------------------------
Port Authority of New York and New Jersey, Special
Obligation Revenue Bonds (JFK International Air
Terminal LLC), AMT (e):
1,000 RIB, Series 157, 8.15% due 12/01/2022 (c) 1,107
1,750 Series 6, 6.25% due 12/01/2011 1,939
- --------------------------------------------------------------------------------
600 Port Authority of New York and New Jersey, Special
Obligation Revenue Refunding Bonds (Versatile
Structure Obligation), VRDN, Series 3, 3.03%
due 6/01/2020 (k) 600
- --------------------------------------------------------------------------------
1,500 South Jersey Port Corporation of New Jersey, Revenue
Refunding Bonds, AMT, 5.20% due 1/01/2023 1,544
- --------------------------------------------------------------------------------
1,195 Tobacco Settlement Financing Corporation of New
Jersey, Asset-Backed Revenue Bonds, 7% due 6/01/2041 1,365
- --------------------------------------------------------------------------------
2,000 Union County, New Jersey, Utilities Authority, Senior
Lease Revenue Refunding Bonds (Ogden Martin System
of Union, Inc.), AMT, Series A, 5.50% due 6/01/2010 (a) 2,136
- --------------------------------------------------------------------------------
University of Medicine and Dentistry, New Jersey,
Revenue Bonds, Series A (a):
1,030 5.50% due 12/01/2027 1,119
1,500 5% due 12/01/2031 1,549
================================================================================
Guam--1.8%
- --------------------------------------------------------------------------------
750 Commonwealth of the Northern Mariana Islands,
Guam, GO, Series A, 6.75% due 10/01/2033 817
- --------------------------------------------------------------------------------
1,000 Guam Government Waterworks Authority, Water and
Wastewater System, Revenue Refunding Bonds, 5.875%
due 7/01/2035 1,051
================================================================================
Puerto Rico--2.8%
- --------------------------------------------------------------------------------
660 Puerto Rico Commonwealth Highway and Transportation
Authority, Transportation Revenue Refunding Bonds,
Series K, 5% due 7/01/2045 667
- --------------------------------------------------------------------------------
1,170 Puerto Rico Electric Power Authority, Power Revenue
Bonds, Series HH, 5.25% due 7/01/2029 (d) 1,247
- --------------------------------------------------------------------------------
1,345 Puerto Rico Industrial, Medical and Environmental
Pollution Control Facilities Financing Authority, Special
Facilities Revenue Bonds (American Airlines Inc.),
Series A, 6.45% due 12/01/2025 1,067
================================================================================
U.S. Virgin Islands--2.2%
- --------------------------------------------------------------------------------
1,400 Virgin Islands Government Refinery Facilities, Revenue
Refunding Bonds (Hovensa Coker Project), AMT, 6.50%
due 7/01/2021 1,582
- --------------------------------------------------------------------------------
750 Virgin Islands Public Finance Authority, Refinery
Facilities Revenue Bonds (Hovensa Refinery), AMT,
5.875% due 7/01/2022 810
- --------------------------------------------------------------------------------
Total Municipal Bonds
(Cost--$98,860)--98.0% 104,179
================================================================================
================================================================================
Shares
Held Short-Term Securities
================================================================================
1,241 CMA New Jersey Municipal Money Fund (l) 1,241
- --------------------------------------------------------------------------------
Total Short-Term Securities
(Cost--$1,241)--1.2% 1,241
================================================================================
Total Investments (Cost--$100,101**)--99.2% 105,420
Other Assets Less Liabilities--0.8% 873
--------
Net Assets--100.0% $106,293
========
20 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Schedule of Investments (concluded)
Merrill Lynch New Jersey Municipal Bond Fund (in Thousands)
* Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
** The cost and unrealized appreciation (depreciation) of investments as of
January 31, 2006, as computed for federal income tax purposes, were as
follows:
Aggregate cost .................................. $ 99,987
========
Gross unrealized appreciation ................... $ 5,538
Gross unrealized depreciation ................... (105)
--------
Net unrealized appreciation ..................... $ 5,433
========
(a) AMBAC Insured.
(b) FGIC Insured.
(c) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(d) FSA Insured.
(e) MBIA Insured.
(f) Prerefunded.
(g) Escrowed to maturity.
(h) GNMA Collateralized.
(i) Radian Insured.
(j) FHA Insured.
(k) Security may have a maturity of more than one year at time of issuance,
but has variable rate and demand features that qualify it as a short-term
security. The rate disclosed is that currently in effect. This rate
changes periodically based upon prevailing market rates.
(l) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
CMA New Jersey Municipal Money Fund 1,117 $ 8
--------------------------------------------------------------------------
(m) All or a portion of security held as collateral in connection with open
financial futures contracts.
(n) When-issued security.
o Financial futures contracts sold as of January 31, 2006 were as follows:
--------------------------------------------------------------------------
Number of Expiration Face Unrealized
Contracts Issue Date Value Appreciation
--------------------------------------------------------------------------
170 Ten-Year March 2006 $18,564 $ 130
U.S. Treasury Note
--------------------------------------------------------------------------
See Notes to Financial Statements.
SEMI-ANNUAL REPORTS JANUARY 31, 2006 21
Schedule of Investments
Merrill Lynch Pennsylvania Municipal Bond Fund (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
Pennsylvania--68.2%
- --------------------------------------------------------------------------------
$4,395 Allegheny County, Pennsylvania, IDA, Commercial
Development Revenue Refunding Bonds (MPB
Associates Project), 7.70% due 12/01/2013 (d) $ 5,114
- --------------------------------------------------------------------------------
Allegheny County, Pennsylvania, IDA, Environmental
Improvement Revenue Refunding Bonds:
1,000 5.50% due 11/01/2016 1,023
1,500 (USX Corporation), 6.10% due 7/15/2020 1,558
- --------------------------------------------------------------------------------
1,000 Allegheny County, Pennsylvania, Redevelopment
Authority, Tax Increment Revenue Bonds (Waterfront
Project), Series A, 6.30% due 12/15/2018 1,088
- --------------------------------------------------------------------------------
1,000 Bradford County, Pennsylvania, IDA, Solid Waste
Disposal Revenue Refunding Bonds (International
Paper Company Project), AMT, Series B, 5.20%
due 12/01/2019 1,005
- --------------------------------------------------------------------------------
770 Bucks County, Pennsylvania, IDA, Retirement
Community Revenue Bonds (Ann's Choice Inc.), Series A,
5.90% due 1/01/2027 777
- --------------------------------------------------------------------------------
1,000 Bucks County, Pennsylvania, IDA, Revenue Refunding
Bonds (Pennswood Village Project), Series A, 6%
due 10/01/2027 1,059
- --------------------------------------------------------------------------------
1,000 Delaware County, Pennsylvania, Hospital Authority
Revenue Bonds, GO (Crozer-Chester Medical Center),
6.25% due 12/15/2022 1,082
- --------------------------------------------------------------------------------
1,000 Delaware Valley, Pennsylvania, Regional Finance
Authority, Local Government Revenue Bonds, 5.75%
due 7/01/2032 1,148
- --------------------------------------------------------------------------------
920 Erie-Western Pennsylvania Port Authority Revenue
Bonds, 6.875% due 6/15/2016 947
- --------------------------------------------------------------------------------
1,000 Lancaster County, Pennsylvania, Hospital Authority
Revenue Bonds (Lancaster General Hospital Project),
5.50% due 3/15/2026 1,045
- --------------------------------------------------------------------------------
1,000 Lebanon County, Pennsylvania, Health Facilities
Authority, Health Center Revenue Bonds (Pleasant View
Retirement Project), Series A, 5.30% due 12/15/2026 996
- --------------------------------------------------------------------------------
2,250 Lehigh County, Pennsylvania, General Purpose Authority,
Hospital Revenue Refunding Bonds (Saint Lukes
Hospital of Bethlehem), 5.375% due 8/15/2033 2,315
- --------------------------------------------------------------------------------
1,500 Luzerne County, Pennsylvania, IDA, Water Facility
Revenue Refunding Bonds, RIB, AMT, Series 1170,
6.89% due 9/01/2034 (a)(g) 1,580
- --------------------------------------------------------------------------------
Mifflin County, Pennsylvania, Hospital Authority,
Revenue Refunding Bonds (Lewiston Hospital) (f):
2,550 6.40% due 7/01/2020 2,804
1,000 6.20% due 7/01/2030 1,091
- --------------------------------------------------------------------------------
2,500 Northumberland County, Pennsylvania, IDA, Water
Facilities Revenue Refunding Bonds (Aqua Pennsylvania
Inc. Project), AMT, 5.05% due 10/01/2039 (c) 2,555
- --------------------------------------------------------------------------------
300 Pennsylvania Economic Development Financing
Authority, Solid Waste Disposal Revenue Bonds (Waste
Management Inc. Project), AMT, Series A, 5.10%
due 10/01/2027 300
- --------------------------------------------------------------------------------
955 Pennsylvania HFA, S/F Mortgage Revenue Refunding
Bonds, AMT, Series 59A, 5.80% due 10/01/2029 980
- --------------------------------------------------------------------------------
2,000 Pennsylvania HFA, S/F Revenue Refunding Bonds, AMT,
Series 73A, 5.45% due 10/01/2032 2,052
- --------------------------------------------------------------------------------
500 Pennsylvania State Higher Educational Facilities
Authority, Revenue Refunding Bonds (Widener
University), 5.375% due 7/15/2029 524
- --------------------------------------------------------------------------------
2,500 Pennsylvania State Public School Building Authority,
School Revenue Bonds, DRIVERS, Series 371, 7.155%
due 6/01/2011 (d)(g) 2,822
- --------------------------------------------------------------------------------
2,500 Pennsylvania State Turnpike Commission, Oil Franchise
Tax Revenue Bonds, DRIVERS, Series 366, 7.654%
due 6/01/2011 (b)(g) 2,979
- --------------------------------------------------------------------------------
800 Pennsylvania State Turnpike Commission, Turnpike
Revenue Bonds, DRIVERS, Series 460-Z, 7.654%
due 6/01/2012 (a)(g) 957
- --------------------------------------------------------------------------------
2,000 Philadelphia, Pennsylvania, Airport Revenue Bonds,
Series A, AMT, 4.75% due 6/15/2035 (b) 1,953
- --------------------------------------------------------------------------------
Philadelphia, Pennsylvania, Authority for Industrial
Development, Senior Living Revenue Bonds:
500 (Rieder House Project), Series A, 6.10%
due 7/01/2033 522
500 (Saligman House Project), Series C, 6.10%
due 7/01/2033 522
- --------------------------------------------------------------------------------
2,000 Philadelphia, Pennsylvania, Gas Works Revenue Bonds,
12th Series B, 7% due 5/15/2020 (b)(e) 2,407
- --------------------------------------------------------------------------------
3,000 Philadelphia, Pennsylvania, Hospitals and Higher
Education Facilities Authority, Hospital Revenue
Refunding Bonds (Presbyterian Medical Center), 6.65%
due 12/01/2019 (e) 3,651
- --------------------------------------------------------------------------------
415 Philadelphia, Pennsylvania, Qualified Redevelopment
Authority Revenue Bonds, AMT, Series B, 5%
due 4/15/2027 (c) 424
- --------------------------------------------------------------------------------
1,400 Sayre, Pennsylvania, Health Care Facilities Authority,
Revenue Refunding Bonds (Guthrie Healthcare System),
Series A, 5.875% due 12/01/2031 1,494
- --------------------------------------------------------------------------------
500 Southcentral General Authority, Pennsylvania, Hospital
Revenue Bonds (Hanover Hospital, Inc.), 5%
due 12/01/2030 (f) 512
- --------------------------------------------------------------------------------
315 Southcentral General Authority, Pennsylvania, Revenue
Refunding Bonds (Wellspan Health Obligated), 5.625%
due 5/15/2026 (e) 344
================================================================================
Guam--2.2%
- --------------------------------------------------------------------------------
500 Commonwealth of the Northern Mariana Islands,
Guam, GO, Series A, 6.75% due 10/01/2033 544
- --------------------------------------------------------------------------------
1,000 Guam Government Waterworks Authority, Water and
Wastewater System, Revenue Refunding Bonds, 6%
due 7/01/2025 1,070
22 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Schedule of Investments (concluded)
Merrill Lynch Pennsylvania Municipal Bond Fund (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
Puerto Rico--24.1%
- --------------------------------------------------------------------------------
$1,270 Children's Trust Fund Project of Puerto Rico, Tobacco
Settlement Revenue Refunding Bonds, 5.375% due 5/15/2033 $ 1,293
- --------------------------------------------------------------------------------
2,000 Puerto Rico Commonwealth, GO, Refunding, RITR,
Class R, Series 3, 8.183% due 7/01/2016 (b)(g) 2,364
- --------------------------------------------------------------------------------
2,000 Puerto Rico Commonwealth Highway and
Transportation Authority, Transportation Revenue
Bonds, Series G, 5% due 7/01/2033 2,025
- --------------------------------------------------------------------------------
5,060 Puerto Rico Commonwealth, Public Improvement, GO,
Series A, 5% due 7/01/2034 5,129
- --------------------------------------------------------------------------------
1,000 Puerto Rico Municipal Finance Agency, GO, Series A,
5.25% due 8/01/2025 1,061
- --------------------------------------------------------------------------------
750 Puerto Rico Ports Authority, Special Facilities Revenue
Bonds (American Airlines, Inc.), AMT, Series A, 6.25%
due 6/01/2026 586
- --------------------------------------------------------------------------------
2,940 Puerto Rico Public Buildings Authority, Government
Facilities Revenue Refunding Bonds, Series D, 5.375%
due 7/01/2033 3,060
- --------------------------------------------------------------------------------
1,950 Puerto Rico Public Finance Corporation, Commonwealth
Appropriation Revenue Bonds, Series E, 5.50%
due 8/01/2029 2,054
================================================================================
U.S. Virgin Islands--2.3%
- --------------------------------------------------------------------------------
1,000 Virgin Islands Government Refinery Facilities, Revenue
Refunding Bonds (Hovensa Coker Project), AMT, 6.50%
due 7/01/2021 1,131
- --------------------------------------------------------------------------------
500 Virgin Islands Public Finance Authority, Refinery
Facilities Revenue Bonds (Hovensa Refinery), AMT,
6.125% due 7/01/2022 548
- --------------------------------------------------------------------------------
Total Municipal Bonds (Cost--$66,475)--96.8% 70,495
================================================================================
================================================================================
Shares
Held Short-Term Securities
================================================================================
1,731 CMA Pennsylvania Municipal Money Fund (h) 1,731
- --------------------------------------------------------------------------------
Total Short-Term Securities (Cost--$1,731)--2.4% 1,731
================================================================================
Total Investments (Cost--$68,206*)--99.2% 72,226
Other Assets Less Liabilities--0.8% 583
--------
Net Assets--100.0% $ 72,809
========
- --------------------------------------------------------------------------------
* The cost and unrealized appreciation (depreciation) of investments as of
January 31, 2006, as computed for federal income tax purposes, were as
follows:
Aggregate cost .............................................. $68,195
=======
Gross unrealized appreciation ............................... $ 4,152
Gross unrealized depreciation ............................... (121)
-------
Net unrealized appreciation ................................. $ 4,031
=======
(a) AMBAC Insured.
(b) MBIA Insured.
(c) FGIC Insured.
(d) FSA Insured.
(e) Escrowed to maturity.
(f) Radian Insured.
(g) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(h) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
CMA Pennsylvania Municipal Money Fund 1,422 $21
--------------------------------------------------------------------------
o Forward interest rate swaps outstanding as of January 31, 2006 were as
follows:
--------------------------------------------------------------------------
Notional Unrealized
Amount Appreciation
--------------------------------------------------------------------------
Pay a fixed rate of 3.999% and receive a
floating rate based on 1-week Bond Market
Association rate
Broker, JPMorgan Chase Bank
Expires August 2026 $8,000 $40
--------------------------------------------------------------------------
See Notes to Financial Statements.
SEMI-ANNUAL REPORTS JANUARY 31, 2006 23
Statements of Assets and Liabilities
Merrill Lynch Merrill Lynch Merrill Lynch
Florida New Jersey Pennsylvania
Municipal Municipal Municipal
As of January 31, 2006 Bond Fund Bond Fund Bond Fund
================================================================================================================================
Assets
- --------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value* .............. $ 129,955,973 $ 104,179,244 $ 70,494,868
Investments in affiliated securities, at value** ............... 315,510 1,240,729 1,731,038
Cash ........................................................... 126,501 87,886 46,785
Unrealized appreciation on forward interest rate swaps ......... -- -- 39,968
Interest receivable ............................................ 1,510,935 944,358 743,727
Receivable for beneficial interest sold ........................ 113,066 77,416 78,216
Dividends receivable ........................................... 13,187 -- --
Receivable for variation margin ................................ -- 7,970 --
Prepaid expenses ............................................... 8,106 12,626 10,489
-------------------------------------------------
Total assets ................................................... 132,043,278 106,550,229 73,145,091
-------------------------------------------------
================================================================================================================================
Liabilities
- --------------------------------------------------------------------------------------------------------------------------------
Payable for securities purchased ............................... 1,063,340 -- --
Payable for beneficial interest redeemed ....................... 217,045 60,667 187,382
Dividends payable to shareholders .............................. 132,124 99,704 74,359
Payable to investment adviser .................................. 57,450 44,028 30,797
Payable to distributor ......................................... 25,119 20,323 17,601
Payable for other affiliates ................................... 9,411 15,231 7,522
Accrued expenses ............................................... 16,521 17,196 18,768
-------------------------------------------------
Total liabilities .............................................. 1,521,010 257,149 336,429
-------------------------------------------------
================================================================================================================================
Net Assets
- --------------------------------------------------------------------------------------------------------------------------------
Net assets ..................................................... $ 130,522,268 $ 106,293,080 $ 72,808,662
=================================================
================================================================================================================================
Net Assets Consist of
- --------------------------------------------------------------------------------------------------------------------------------
Class A Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized ................................... $ 583,753 $ 325,019 $ 235,718
Class B Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized ................................... 295,213 221,308 190,043
Class C Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized ................................... 164,832 162,321 131,169
Class I Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized ................................... 216,417 291,137 89,889
Paid-in capital in excess of par ............................... 128,963,811 107,371,607 68,674,936
-------------------------------------------------
Undistributed investment income--net ........................... 123,585 209,455 70,295
Accumulated realized capital losses--net ....................... (4,752,588) (7,736,390) (643,646)
Unrealized appreciation--net ................................... 4,927,245 5,448,623 4,060,258
-------------------------------------------------
Total accumulated earnings (losses)--net ....................... 298,242 (2,078,312) 3,486,907
-------------------------------------------------
Net Assets ..................................................... $ 130,522,268 $ 106,293,080 $ 72,808,662
=================================================
24 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Statements of Assets and Liabilities (concluded)
Merrill Lynch Merrill Lynch Merrill Lynch
Florida New Jersey Pennsylvania
Municipal Municipal Municipal
As of January 31, 2006 Bond Fund Bond Fund Bond Fund
================================================================================================================================
Net Asset Value
- --------------------------------------------------------------------------------------------------------------------------------
Class A:
Net assets .................................................. $ 60,418,231 $ 34,569,958 $ 26,552,904
=================================================
Shares of beneficial interest outstanding ................... 5,837,532 3,250,193 2,357,180
=================================================
Net asset value ............................................. $ 10.35 $ 10.64 $ 11.26
=================================================
Class B:
Net assets .................................................. $ 30,607,429 $ 23,526,210 $ 21,382,486
=================================================
Shares of beneficial interest outstanding ................... 2,952,134 2,213,078 1,900,434
=================================================
Net asset value ............................................. $ 10.37 $ 10.63 $ 11.25
=================================================
Class C:
Net assets .................................................. $ 17,058,257 $ 17,251,485 $ 14,759,426
=================================================
Shares of beneficial interest outstanding ................... 1,648,316 1,623,213 1,311,693
=================================================
Net asset value ............................................. $ 10.35 $ 10.63 $ 11.25
=================================================
Class I:
Net assets .................................................. $ 22,438,351 $ 30,945,427 $ 10,113,846
=================================================
Shares of beneficial interest outstanding ................... 2,164,173 2,911,366 898,887
=================================================
Net asset value ............................................. $ 10.37 $ 10.63 $ 11.25
=================================================
* Identified cost ........................................... $ 125,028,728 $ 98,860,278 $ 66,474,578
=================================================
** Identified cost for affiliated securities ................. $ 315,510 $ 1,240,729 $ 1,731,038
=================================================
See Notes to Financial Statements.
SEMI-ANNUAL REPORTS JANUARY 31, 2006 25
Statements of Operations
Merrill Lynch Merrill Lynch Merrill Lynch
Florida New Jersey Pennsylvania
Municipal Municipal Municipal
For the Six Months Ended January 31, 2006 Bond Fund Bond Fund Bond Fund
================================================================================================================================
Investment Income
- --------------------------------------------------------------------------------------------------------------------------------
Interest ....................................................... $ 3,351,141 $ 2,607,362 $ 1,929,261
Dividends* ..................................................... 79,125 7,907 20,913
-------------------------------------------------
Total income ................................................... 3,430,266 2,615,269 1,950,174
-------------------------------------------------
================================================================================================================================
Expenses
- --------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ....................................... 361,896 280,856 201,681
Account maintenance and distribution fees--Class B ............. 82,289 63,409 57,316
Account maintenance and distribution fees--Class C ............. 47,623 48,914 42,355
Accounting services ............................................ 46,752 44,759 40,505
Account maintenance fees--Class A .............................. 30,116 17,331 13,155
Professional fees .............................................. 27,393 27,100 26,278
Printing and shareholder reports ............................... 19,228 16,825 12,760
Transfer agent fees--Class A ................................... 10,241 7,224 7,122
Registration fees .............................................. 8,786 8,213 6,147
Trustees' fees and expenses .................................... 7,797 7,668 7,266
Transfer agent fees--Class B ................................... 6,549 6,360 7,150
Pricing fees ................................................... 5,591 6,532 4,031
Custodian fees ................................................. 5,030 5,313 3,562
Transfer agent fees--Class I ................................... 3,842 5,376 2,703
Transfer agent fees--Class C ................................... 3,124 3,931 4,378
Other .......................................................... 9,780 10,962 8,876
-------------------------------------------------
Total expenses before reimbursement ............................ 676,037 560,773 445,285
Reimbursement of expenses ...................................... (458) (1,650) (4,866)
-------------------------------------------------
Total expenses after reimbursement ............................. 675,579 559,123 440,419
-------------------------------------------------
Investment income--net ......................................... 2,754,687 2,056,146 1,509,755
================================================================================================================================
Realized & Unrealized Gain (Loss)--Net
- --------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on:
Investments--net ............................................ (49,666) 62,398 150,523
Futures contracts and swaps--net ............................ -- 170,834 79,750
-------------------------------------------------
Total realized gain (loss)--net ................................ (49,666) 233,232 230,273
-------------------------------------------------
Change in unrealized appreciation/depreciation on:
Investments--net ............................................ (1,178,530) (1,193,138) (1,192,303)
Futures contracts and swaps--net ............................ -- 21,126 35,336
-------------------------------------------------
Total change in unrealized appreciation/depreciation--net ...... (1,178,530) (1,172,012) (1,156,967)
-------------------------------------------------
Total realized and unrealized loss--net ........................ (1,228,196) (938,780) (926,694)
-------------------------------------------------
Net Increase in Net Assets Resulting from Operations ........... $ 1,526,491 $ 1,117,366 $ 583,061
=================================================
* Dividends from affiliates ................................. $ 2,296 $ 7,907 $ 20,913
=================================================
See Notes to Financial Statements.
26 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Statements of Changes in Net Assets Merrill Lynch Florida Municipal Bond Fund
For the Six For the
Months Ended Year Ended
January 31, July 31,
Increase (Decrease) in Net Assets: 2006 2005
=========================================================================================================================
Operations
- -------------------------------------------------------------------------------------------------------------------------
Investment income--net ................................................. $ 2,754,687 $ 5,980,015
Realized gain (loss)--net .............................................. (49,666) 1,354,628
Change in unrealized appreciation/depreciation--net .................... (1,178,530) 2,619,496
-------------------------------
Net increase in net assets resulting from operations ................... 1,526,491 9,954,139
-------------------------------
=========================================================================================================================
Dividends to Shareholders
- -------------------------------------------------------------------------------------------------------------------------
Investment income--net:
Class A ............................................................. (1,304,590) (2,778,903)
Class B ............................................................. (646,058) (1,636,155)
Class C ............................................................. (303,722) (600,865)
Class I ............................................................. (500,317) (962,289)
-------------------------------
Net decrease in net assets resulting from dividends to shareholders .... (2,754,687) (5,978,212)
-------------------------------
=========================================================================================================================
Beneficial Interest Transactions
- -------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets derived from beneficial interest transactions (52,159) (4,460,831)
-------------------------------
=========================================================================================================================
Net Assets
- -------------------------------------------------------------------------------------------------------------------------
Total decrease in net assets ........................................... (1,280,355) (484,904)
Beginning of period .................................................... 131,802,623 132,287,527
-------------------------------
End of period* ......................................................... $ 130,522,268 $ 131,802,623
===============================
* Undistributed investment income--net .............................. $ 123,585 $ 123,585
===============================
See Notes to Financial Statements.
SEMI-ANNUAL REPORTS JANUARY 31, 2006 27
Statements of Changes in Net Assets
Merrill Lynch New Jersey Municipal Bond Fund
For the Six For the
Months Ended Year Ended
January 31, July 31,
Increase (Decrease) in Net Assets: 2006 2005
=========================================================================================================================
Operations
- -------------------------------------------------------------------------------------------------------------------------
Investment income--net ................................................. $ 2,056,146 $ 4,389,634
Realized gain--net ..................................................... 233,232 1,989,997
Change in unrealized appreciation/depreciation--net .................... (1,172,012) 2,691,716
-------------------------------
Net increase in net assets resulting from operations ................... 1,117,366 9,071,347
-------------------------------
=========================================================================================================================
Dividends & Distributions to Shareholders
- -------------------------------------------------------------------------------------------------------------------------
Investment income--net:
Class A ............................................................. (717,454) (1,490,173)
Class B ............................................................. (473,086) (1,205,519)
Class C ............................................................. (296,193) (603,550)
Class I ............................................................. (546,890) (1,038,240)
Realized gain--net:
Class A ............................................................. (12,456) --
Class B ............................................................. (8,754) --
Class C ............................................................. (6,080) --
Class I ............................................................. (9,352) --
-------------------------------
Net decrease in net assets resulting from dividends and distributions to
shareholders .......................................................... (2,070,265) (4,337,482)
-------------------------------
=========================================================================================================================
Beneficial Interest Transactions
- -------------------------------------------------------------------------------------------------------------------------
Net increase in net assets derived from beneficial interest transactions 4,369,977 3,429,108
-------------------------------
=========================================================================================================================
Net Assets
- -------------------------------------------------------------------------------------------------------------------------
Total increase in net assets ........................................... 3,417,078 8,162,973
Beginning of period .................................................... 102,876,002 94,713,029
-------------------------------
End of period* ......................................................... $ 106,293,080 $ 102,876,002
===============================
* Undistributed investment income--net .............................. $ 209,455 $ 186,932
===============================
See Notes to Financial Statements.
28 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Statements of Changes in Net Assets
Merrill Lynch Pennsylvania Municipal Bond Fund
For the Six For the
Months Ended Year Ended
January 31, July 31,
Increase (Decrease) in Net Assets: 2006 2005
=========================================================================================================================
Operations
- -------------------------------------------------------------------------------------------------------------------------
Investment income--net ................................................. $ 1,509,755 $ 3,189,482
Realized gain--net ..................................................... 230,273 606,108
Change in unrealized appreciation/depreciation--net .................... (1,156,967) 1,256,272
-------------------------------
Net increase in net assets resulting from operations ................... 583,061 5,051,862
-------------------------------
=========================================================================================================================
Dividends to Shareholders
- -------------------------------------------------------------------------------------------------------------------------
Investment income--net:
Class A ............................................................. (568,388) (1,149,528)
Class B ............................................................. (448,532) (1,052,997)
Class C ............................................................. (269,165) (524,250)
Class I ............................................................. (220,708) (457,845)
-------------------------------
Net decrease in net assets resulting from dividends to shareholders .... (1,506,793) (3,184,620)
-------------------------------
=========================================================================================================================
Beneficial Interest Transactions
- -------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets derived from beneficial interest
transactions .......................................................... 177,489 (6,288,632)
-------------------------------
=========================================================================================================================
Net Assets
- -------------------------------------------------------------------------------------------------------------------------
Total decrease in net assets ........................................... (746,243) (4,421,390)
Beginning of period .................................................... 73,554,905 77,976,295
-------------------------------
End of period* ......................................................... $ 72,808,662 $ 73,554,905
===============================
* Undistributed investment income--net .............................. $ 70,295 $ 67,333
===============================
See Notes to Financial Statements.
SEMI-ANNUAL REPORTS JANUARY 31, 2006 29
Financial Highlights Class A
Merrill Lynch Florida Municipal Bond Fund
----------------------------------------------------------------------
For the Six
Months Ended For the Year Ended July 31,
The following per share data and ratios have been derived January 31, -----------------------------------------------------
from information provided in the financial statements. 2006 2005 2004 2003 2002
===================================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ... $ 10.45 $ 10.14 $ 10.04 $ 10.19 $ 10.13
---------------------------------------------------------------------
Investment income--net ................. .23+ .48+ .52+ .52+ .51
Realized and unrealized gain (loss)--net (.10) .31 .10 (.15) .06
---------------------------------------------------------------------
Total from investment operations ....... .13 .79 .62 .37 .57
---------------------------------------------------------------------
Less dividends and distributions:
Investment income--net .............. (.23) (.48) (.52) (.52) (.51)
Realized gain--net .................. -- -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions ...... (.23) (.48) (.52) (.52) (.51)
---------------------------------------------------------------------
Net asset value, end of period ......... $ 10.35 $ 10.45 $ 10.14 $ 10.04 $ 10.19
=====================================================================
===================================================================================================================================
Total Investment Return**
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ..... 1.23%@@ 7.98% 6.24% 3.66% 5.81%
=====================================================================
===================================================================================================================================
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ......... .88%* .89% .87% .88% .89%
=====================================================================
Expenses ............................... .88%* .89% .88% .88% .89%
=====================================================================
Investment income--net ................. 4.33%* 4.68% 5.05% 5.08% 5.07%
=====================================================================
===================================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 60,418 $ 59,586 $ 57,521 $ 57,610 $ 43,909
=====================================================================
Portfolio turnover ..................... 29.67% 54.26% 31.83% 45.50% 41.29%
=====================================================================
* Annualized.
** Total investment returns exclude the effect of sales charges.
+ Based on average shares outstanding.
@ Amount is less than $(.01) per share.
@@ Aggregate total investment return.
See Notes to Financial Statements.
30 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Merrill Lynch New Jersey Municipal Bond Fund Merrill Lynch Pennsylvania Municipal Bond Fund
- --------------------------------------------------------------- -------------------------------------------------------------
For the Six For the Six
Months Ended For the Year Ended July 31, Months Ended For the Year Ended July 31,
January 31, ----------------------------------------------- January 31, -----------------------------------------------
2006 2005 2004 2003 2002 2006 2005 2004 2003 2002
=================================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
$ 10.73 $ 10.24 $ 10.22 $ 10.43 $ 10.48 $ 11.41 $ 11.13 $ 11.05 $ 11.17 $ 11.00
- ---------------------------------------------------------------------------------------------------------------------------------
.22+ .47+ .51+ .50+ .48 .25+ .50+ .51+ .53+ .53
(.09) .48 .01 (.21) (.05) (.15) .28 .08 (.12) .17
- ---------------------------------------------------------------------------------------------------------------------------------
.13 .95 .52 .29 .43 .10 .78 .59 .41 .70
- ---------------------------------------------------------------------------------------------------------------------------------
(.22) (.46) (.50) (.50) (.48) (.25) (.50) (.51) (.53) (.53)
--@ -- -- -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
(.22) (.46) (.50) (.50) (.48) (.25) (.50) (.51) (.53) (.53)
- ---------------------------------------------------------------------------------------------------------------------------------
$ 10.64 $ 10.73 $ 10.24 $ 10.22 $ 10.43 $ 11.26 $ 11.41 $ 11.13 $ 11.05 $ 11.17
=================================================================================================================================
=================================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
1.28%@@ 9.49% 5.14% 2.76% 4.22% .85%@@ 7.16% 5.37% 3.69% 6.50%
=================================================================================================================================
=================================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
.94%* .93% .91% .93% .94% .99%* 1.01% .98% .98% 1.00%
=================================================================================================================================
.94%* .94% .92% .93% .94% 1.00%* 1.02% 1.00% .99% 1.00%
=================================================================================================================================
4.18%* 4.45% 4.85% 4.79% 4.63% 4.33%* 4.45% 4.50% 4.69% 4.78%
=================================================================================================================================
=================================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
$ 34,570 $ 34,618 $ 32,863 $ 27,868 $ 22,745 $ 26,553 $ 26,024 $ 25,432 $ 23,460 $ 16,295
=================================================================================================================================
12.26% 69.66% 30.76% 39.93% 41.39% 23.24% 36.25% 66.08% 34.92% 30.23%
=================================================================================================================================
SEMI-ANNUAL REPORTS JANUARY 31, 2006 31
Financial Highlights (continued) Class B
Merrill Lynch Florida Municipal Bond Fund
----------------------------------------------------------------------
For the Six
Months Ended For the Year Ended July 31,
The following per share data and ratios have been derived January 31, -----------------------------------------------------
from information provided in the financial statements. 2006 2005 2004 2003 2002
===================================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ... $ 10.47 $ 10.15 $ 10.06 $ 10.20 $ 10.14
---------------------------------------------------------------------
Investment income--net ................. .18+ .44+ .48+ .48+ .47
Realized and unrealized gain (loss)--net (.07) .32 .09 (.14) .06
---------------------------------------------------------------------
Total from investment operations ....... .11 .76 .57 .34 .53
---------------------------------------------------------------------
Less dividends and distributions:
Investment income--net .............. (.21) (.44) (.48) (.48) (.47)
Realized gain--net .................. -- -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions ...... (.21) (.44) (.48) (.48) (.47)
---------------------------------------------------------------------
Net asset value, end of period ......... $ 10.37 $ 10.47 $ 10.15 $ 10.06 $ 10.20
=====================================================================
===================================================================================================================================
Total Investment Return**
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ..... 1.02%@@ 7.65% 5.70% 3.35% 5.38%
=====================================================================
===================================================================================================================================
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ......... 1.29%* 1.30% 1.28% 1.28% 1.29%
=====================================================================
Expenses ............................... 1.29%* 1.30% 1.28% 1.28% 1.29%
=====================================================================
Investment income--net ................. 3.93%* 4.29% 4.64% 4.67% 4.65%
=====================================================================
===================================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 30,607 $ 35,340 $ 41,705 $ 61,098 $ 73,034
=====================================================================
Portfolio turnover ..................... 29.67% 54.26% 31.83% 45.50% 41.29%
=====================================================================
* Annualized.
** Total investment returns exclude the effect of sales charges.
+ Based on average shares outstanding.
@ Amount is less than $(.01) per share.
@@ Aggregate total investment return.
See Notes to Financial Statements.
32 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Merrill Lynch New Jersey Municipal Bond Fund Merrill Lynch Pennsylvania Municipal Bond Fund
- --------------------------------------------------------------- --------------------------------------------------------------
For the Six For the Six
Months Ended For the Year Ended July 31, Months Ended For the Year Ended July 31,
January 31, ----------------------------------------------- January 31, -----------------------------------------------
2006 2005 2004 2003 2002 2006 2005 2004 2003 2002
=================================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
$ 10.73 $ 10.24 $ 10.22 $ 10.43 $ 10.48 $ 11.39 $ 11.12 $ 11.03 $ 11.16 $ 10.99
- ---------------------------------------------------------------------------------------------------------------------------------
.20+ .43+ .46+ .46+ .44 .22+ .46+ .46+ .49+ .48
(.10) .48 .02 (.22) (.05) (.14) .27 .09 (.14) .17
- ---------------------------------------------------------------------------------------------------------------------------------
.10 .91 .48 .24 .39 .08 .73 .55 .35 .65
- ---------------------------------------------------------------------------------------------------------------------------------
(.20) (.42) (.46) (.45) (.44) (.22) (.46) (.46) (.48) (.48)
--@ -- -- -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
(.20) (.42) (.46) (.45) (.44) (.22) (.46) (.46) (.48) (.48)
- ---------------------------------------------------------------------------------------------------------------------------------
$ 10.63 $ 10.73 $ 10.24 $ 10.22 $ 10.43 $ 11.25 $ 11.39 $ 11.12 $ 11.03 $ 11.16
=================================================================================================================================
=================================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
.98%@@ 9.04% 4.71% 2.34% 3.80% .73%@@ 6.63% 5.04% 3.18% 6.07%
=================================================================================================================================
=================================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
1.35%* 1.34% 1.32% 1.34% 1.35% 1.40%* 1.42% 1.38% 1.39% 1.40%
=================================================================================================================================
1.35%* 1.35% 1.33% 1.34% 1.35% 1.41%* 1.43% 1.40% 1.40% 1.40%
=================================================================================================================================
3.77%* 4.06% 4.44% 4.37% 4.21% 3.92%* 4.05% 4.09% 4.31% 4.36%
=================================================================================================================================
=================================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
$ 23,526 $ 26,893 $ 31,781 $ 44,968 $ 62,716 $ 21,382 $ 23,965 $ 28,749 $ 43,099 $ 54,421
=================================================================================================================================
12.26% 69.66% 30.76% 39.93% 41.39% 23.24% 36.25% 66.08% 34.92% 30.23%
=================================================================================================================================
SEMI-ANNUAL REPORTS JANUARY 31, 2006 33
Financial Highlights (continued) Class C
Merrill Lynch Florida Municipal Bond Fund
----------------------------------------------------------------------
For the Six
Months Ended For the Year Ended July 31,
The following per share data and ratios have been derived January 31, -----------------------------------------------------
from information provided in the financial statements. 2006 2005 2004 2003 2002
===================================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ... $ 10.45 $ 10.14 $ 10.04 $ 10.18 $ 10.13
---------------------------------------------------------------------
Investment income--net ................. .21+ .43+ .47+ .47+ .46
Realized and unrealized gain (loss)--net (.11) .31 .10 (.14) .05
---------------------------------------------------------------------
Total from investment operations ....... .10 .74 .57 .33 .51
---------------------------------------------------------------------
Less dividends and distributions:
Investment income--net .............. (.20) (.43) (.47) (.47) (.46)
Realized gain--net .................. -- -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions ...... (.20) (.43) (.47) (.47) (.46)
---------------------------------------------------------------------
Net asset value, end of period ......... $ 10.35 $ 10.45 $ 10.14 $ 10.04 $ 10.18
=====================================================================
===================================================================================================================================
Total Investment Return**
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ..... .97%@@ 7.44% 5.70% 3.24% 5.17%
=====================================================================
===================================================================================================================================
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ......... 1.39%* 1.40% 1.38% 1.38% 1.39%
=====================================================================
Expenses ............................... 1.39%* 1.40% 1.38% 1.39% 1.39%
=====================================================================
Investment income--net ................. 3.83%* 4.17% 4.54% 4.57% 4.56%
=====================================================================
===================================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 17,058 $ 16,229 $ 13,381 $ 14,759 $ 10,489
=====================================================================
Portfolio turnover ..................... 29.67% 54.26% 31.83% 45.50% 41.29%
=====================================================================
* Annualized.
** Total investment returns exclude the effect of sales charges.
+ Based on average shares outstanding.
@ Amount is less than $(.01) per share.
@@ Aggregate total investment return.
See Notes to Financial Statements.
34 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Merrill Lynch New Jersey Municipal Bond Fund Merrill Lynch Pennsylvania Municipal Bond Fund
- --------------------------------------------------------------- -------------------------------------------------------------
For the Six For the Six
Months Ended For the Year Ended July 31, Months Ended For the Year Ended July 31,
January 31, ----------------------------------------------- January 31, ----------------------------------------------
2006 2005 2004 2003 2002 2006 2005 2004 2003 2002
=================================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
$ 10.73 $ 10.24 $ 10.21 $ 10.42 $ 10.47 $ 11.39 $ 11.12 $ 11.03 $ 11.16 $ 10.99
- ---------------------------------------------------------------------------------------------------------------------------------
.20+ .41+ .45+ .45+ .43 .22+ .45+ .45+ .47+ .47
(.11) .49 .02 (.22) (.05) (.14) .26 .09 (.13) .17
- ---------------------------------------------------------------------------------------------------------------------------------
.09 .90 .47 .23 .38 .08 .71 .54 .34 .64
- ---------------------------------------------------------------------------------------------------------------------------------
(.19) (.41) (.44) (.44) (.43) (.22) (.44) (.45) (.47) (.47)
--@ -- -- -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
(.19) (.41) (.44) (.44) (.43) (.22) (.44) (.45) (.47) (.47)
- ---------------------------------------------------------------------------------------------------------------------------------
$ 10.63 $ 10.73 $ 10.24 $ 10.21 $ 10.42 $ 11.25 $ 11.39 $ 11.12 $ 11.03 $ 11.16
=================================================================================================================================
=================================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
.93%@@ 8.94% 4.71% 2.24% 3.70% .68%@@ 6.53% 4.93% 3.07% 5.96%
=================================================================================================================================
=================================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
1.44%* 1.44% 1.42% 1.44% 1.45% 1.50%* 1.52% 1.49% 1.49% 1.51%
=================================================================================================================================
1.45%* 1.45% 1.43% 1.44% 1.45% 1.51%* 1.53% 1.50% 1.49% 1.51%
=================================================================================================================================
3.68%* 3.94% 4.34% 4.28% 4.12% 3.82%* 3.94% 3.99% 4.18% 4.27%
=================================================================================================================================
=================================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
$ 17,251 $ 16,040 $ 14,903 $ 15,505 $ 13,375 $ 14,759 $ 13,626 $ 13,260 $ 13,309 $ 9,309
=================================================================================================================================
12.26% 69.66% 30.76% 39.93% 41.39% 23.24% 36.25% 66.08% 34.92% 30.23%
=================================================================================================================================
SEMI-ANNUAL REPORTS JANUARY 31, 2006 35
Financial Highlights (concluded) Class I
Merrill Lynch Florida Municipal Bond Fund
----------------------------------------------------------------------
For the Six
Months Ended For the Year Ended July 31,
The following per share data and ratios have been derived January 31, -----------------------------------------------------
from information provided in the financial statements. 2006 2005 2004 2003 2002
===================================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ... $ 10.47 $ 10.15 $ 10.06 $ 10.20 $ 10.14
---------------------------------------------------------------------
Investment income--net ................. .25+ .49+ .53+ .53+ .52
Realized and unrealized gain (loss)--net (.12) .32 .09 (.14) .06
---------------------------------------------------------------------
Total from investment operations ....... .13 .81 .62 .39 .58
---------------------------------------------------------------------
Less dividends and distributions:
Investment income--net .............. (.23) (.49) (.53) (.53) (.52)
Realized gain--net .................. -- -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions ...... (.23) (.49) (.53) (.53) (.52)
---------------------------------------------------------------------
Net asset value, end of period ......... $ 10.37 $ 10.47 $ 10.15 $ 10.06 $ 10.20
=====================================================================
===================================================================================================================================
Total Investment Return**
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ..... 1.28%@@ 8.19% 6.24% 3.87% 5.91%
=====================================================================
===================================================================================================================================
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ......... .78%* .79% .78% .77% .79%
=====================================================================
Expenses ............................... .78%* .79% .78% .78% .79%
=====================================================================
Investment income--net ................. 4.43%* 4.78% 5.15% 5.18% 5.16%
=====================================================================
===================================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 22,438 $ 20,647 $ 19,681 $ 22,053 $ 25,886
=====================================================================
Portfolio turnover ..................... 29.67% 54.26% 31.83% 45.50% 41.29%
=====================================================================
* Annualized.
** Total investment returns exclude the effect of sales charges. Effective
December 28, 2005, Class I Shares are no longer subject to any front-end
sales charge.
+ Based on average shares outstanding.
@ Amount is less than $(.01) per share.
@@ Aggregate total investment return.
See Notes to Financial Statements.
36 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Merrill Lynch New Jersey Municipal Bond Fund Merrill Lynch Pennsylvania Municipal Bond Fund
- -------------------------------------------------------------- ---------------------------------------------------------------
For the Six For the Six
Months Ended For the Year Ended July 31, Months Ended For the Year Ended July 31,
January 31, ---------------------------------------------- January 31, -----------------------------------------------
2006 2005 2004 2003 2002 2006 2005 2004 2003 2002
===================================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
$ 10.73 $ 10.24 $ 10.21 $ 10.43 $ 10.48 $ 11.39 $ 11.12 $ 11.03 $ 11.16 $ 10.99
- ---------------------------------------------------------------------------------------------------------------------------------
.22+ .48+ .52+ .50+ .49 .25+ .51+ .52+ .54+ .54
(.09) .48 .02 (.21) (.05) (.14) .27 .08 (.13) .17
- ---------------------------------------------------------------------------------------------------------------------------------
.13 .96 .54 .29 .44 .11 .78 .60 .41 .71
- ---------------------------------------------------------------------------------------------------------------------------------
(.23) (.47) (.51) (.51) (.49) (.25) (.51) (.51) (.54) (.54)
--@ -- -- -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
(.23) (.47) (.51) (.51) (.49) (.25) (.51) (.51) (.54) (.54)
- ---------------------------------------------------------------------------------------------------------------------------------
$ 10.63 $ 10.73 $ 10.24 $ 10.21 $ 10.43 $ 11.25 $ 11.39 $ 11.12 $ 11.03 $ 11.16
===================================================================================================================================
===================================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
1.24%@@ 9.60% 5.35% 2.75% 4.33% .99%@@ 7.17% 5.57% 3.69% 6.61%
===================================================================================================================================
===================================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
.84%* .83% .81% .83% .84% .89%* .91% .88% .88% .90%
===================================================================================================================================
.84%* .84% .82% .83% .84% .90%* .92% .89% .89% .90%
===================================================================================================================================
4.28%* 4.54% 4.93% 4.88% 4.72% 4.43%* 4.55% 4.60% 4.81% 4.88%
===================================================================================================================================
===================================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
$ 30,945 $ 25,325 $ 15,166 $ 23,582 $ 20,723 $ 10,114 $ 9,939 $ 10,536 $ 11,296 $ 12,104
===================================================================================================================================
12.26% 69.66% 30.76% 39.93% 41.39% 23.24% 36.25% 66.08% 34.92% 30.23%
===================================================================================================================================
SEMI-ANNUAL REPORTS JANUARY 31, 2006 37
Notes to Financial Statements
1. Significant Accounting Policies:
Merrill Lynch Florida Municipal Bond Fund, Merrill Lynch New Jersey Municipal
Bond Fund and Merrill Lynch Pennsylvania Municipal Bond Fund (the "Funds" or
individually as the "Fund") are part of Merrill Lynch Multi-State Municipal
Series Trust (the "Trust"). The Funds are registered under the Investment
Company Act of 1940, as amended, as non-diversified, open-end management
investment companies. The Funds' financial statements are prepared in conformity
with U.S. generally accepted accounting principles, which may require the use of
management accruals and estimates. Actual results may differ from these
estimates. These unaudited financial statements reflect all adjustments, which
are, in the opinion of management, necessary to present a fair statement of the
results for the interim period. All such adjustments are of a normal, recurring
nature. Each Fund offers multiple classes of shares. Effective December 28,
2005, Class I Shares are no longer subject to any front-end sales charge. Class
A Shares are sold with a front-end sales charge. Shares of Class B and Class C
may be subject to a contingent deferred sales charge. Class I Shares are sold
only to certain eligible investors. All classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
that Class A, Class B and Class C Shares bear certain expenses related to the
account maintenance of such shares, and Class B and Class C Shares also bear
certain expenses related to the distribution of such shares. Each class has
exclusive voting rights with respect to matters relating to its account
maintenance and distribution expenditures (except that Class B shareholders may
vote on certain changes to the Class A distribution plan). Income, expenses
(other than expenses attributable to a specific class) and realized and
unrealized gains and losses are allocated daily to each class based on its
relative net assets. The following is a summary of significant accounting
policies followed by the Funds.
(a) Valuation of investments -- Municipal bonds are traded primarily in the
over-the-counter ("OTC") markets and are valued at the last available bid price
in the OTC market or on the basis of values as obtained by a pricing service.
Pricing services use valuation matrixes that incorporate both dealer-supplied
valuations and valuation models. The procedures of the pricing service and its
valuations are reviewed by the officers of the Funds under the general direction
of the Board of Trustees. Such valuations and procedures are reviewed
periodically by the Board of Trustees of the Funds. Financial futures contracts
and options thereon, which are traded on exchanges, are valued at their closing
prices as of the close of such exchanges. Options written or purchased are
valued at the last sale price in the case of exchange-traded options. In the
case of options traded in the OTC market, valuation is the last asked price
(options written) or the last bid price (options purchased). Swap agreements are
valued by quoted fair values received daily by the Funds' pricing service.
Short-term investments with a remaining maturity of 60 days or less are valued
at amortized cost, which approximates market value, under which method the
investment is valued at cost and any premium or discount is amortized on a
straight line basis to maturity. Investments in open-end investment companies
are valued at their net asset value each business day. Securities and other
assets for which market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the Board of
Trustees of the Funds.
(b) Derivative financial instruments -- Each Fund may engage in various
portfolio investment strategies both to increase the return of the Fund and to
hedge, or protect its exposure to interest rate movements and movements in the
securities markets. Losses may arise due to changes in the value of the contract
or if the counterparty does not perform under the contract.
o Financial futures contracts -- Each Fund may purchase or sell financial
futures contracts and options on such futures contracts. Futures contracts
are contracts for delayed delivery of securities at a specific future date
and at a specific price or yield. Upon entering into a contract, the 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.
o Forward interest rate swaps -- Each Fund may enter into forward interest
rate swaps. In a forward interest rate swap, the Fund and the counterparty
agree to pay or receive interest on a specified notional contract amount,
commencing on a specified future effective date, unless terminated
earlier. When the agreement is closed, the Fund records a realized gain or
loss in an amount equal to the value of the agreement.
38 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Notes to Financial Statements (continued)
(c) Income taxes -- It is each Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
(d) Security transactions and investment income -- Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Funds amortize all
premiums and discounts on debt securities.
(e) Prepaid registration fees -- Prepaid registration fees are charged to
expense as the related shares are issued.
(f) Dividends and distributions -- Dividends from net investment income are
declared daily and paid monthly. Distributions of capital gains are recorded on
the ex-dividend dates.
(g) Expenses -- Certain expenses have been allocated to the individual funds in
the Trust on a pro rata basis based upon the respective aggregate net asset
value of each fund included in the Trust.
2. Investment Advisory Agreement and Transactions with Affiliates:
Each Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect, wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML
& Co."), which is the limited partner. Each Fund has also entered into a
Distribution Agreement and Distribution Plans with FAM Distributors, Inc.
("FAMD" or the "Distributor"), which is a wholly-owned subsidiary of Merrill
Lynch Group, Inc.
FAM is responsible for the management of the Funds' portfolios and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operation of the Funds. For such services, each Fund pays a monthly fee
based upon the average daily value of the Fund's net assets at the following
annual rates: .55% of the Fund's average daily net assets not exceeding $500
million; .525% of average daily net assets in excess of $500 million but not
exceeding $1 billion; and .50% of average daily net assets in excess of $1
billion. For the six months ended January 31, 2006, the Investment Adviser
agreed to reimburse its management fee by the amount of management fees each
Fund pays to FAM indirectly through its investment described below:
- --------------------------------------------------------------------------------
Investment Reimbursement
- --------------------------------------------------------------------------------
Merrill Lynch Florida CMA Florida Municipal
Municipal Bond Fund Money Fund $ 445
Merrill Lynch Institutional
Tax-Exempt Fund $ 13
- --------------------------------------------------------------------------------
Merrill Lynch New Jersey CMA New Jersey Municipal
Municipal Bond Fund Money Fund $1,650
- --------------------------------------------------------------------------------
Merrill Lynch Pennsylvania CMA Pennsylvania Municipal
Municipal Bond Fund Money Fund $4,866
- --------------------------------------------------------------------------------
Pursuant to the Distribution Plans adopted by each Fund in accordance with Rule
12b-1 under the Investment Company Act of 1940, each Fund pays the Distributor
ongoing account maintenance and distribution fees. The fees are accrued daily
and paid monthly at annual rates based upon the average daily net assets of the
shares as follows:
- --------------------------------------------------------------------------------
Account Distribution
Maintenance Fee Fee
- --------------------------------------------------------------------------------
Class A ........................................ .10% --
Class B ........................................ .25% .25%
Class C ........................................ .25% .35%
- --------------------------------------------------------------------------------
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("MLPF&S"), an affiliate of FAM, also provides account
maintenance and distribution services to each Fund. The ongoing account
maintenance fee compensates the Distributor and MLPF&S for providing account
maintenance services to Class A, Class B and Class C shareholders. The ongoing
distribution fee compensates the Distributor and MLPF&S for providing
shareholder and distribution-related services to Class B and Class C
shareholders.
For the six months ended January 31, 2006, FAMD earned underwriting discounts
and direct commissions and MLPF&S earned dealer concessions on sales of each of
the Funds' Class A and Class I Shares as follows:
- --------------------------------------------------------------------------------
Merrill Lynch Merrill Lynch Merrill Lynch
Florida New Jersey Pennsylvania
Municipal Municipal Municipal
Bond Fund Bond Fund Bond Fund
- --------------------------------------------------------------------------------
Class A:
FAMD ............................. $ 3,129 $ 644 $ 1,233
MLPF&S ........................... $25,407 $ 5,343 $11,647
- --------------------------------------------------------------------------------
Class I:
FAMD ............................. $ 2,539 $ 1,417 $ 1,051
MLPF&S ........................... $30,919 $12,295 $11,197
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORTS JANUARY 31, 2006 39
Notes to Financial Statements (continued)
For the six months ended January 31, 2006, MLPF&S received contingent deferred
sales charges of each of the Funds' Class B and Class C Shares as follows:
- --------------------------------------------------------------------------------
Merrill Lynch Merrill Lynch Merrill Lynch
Florida New Jersey Pennsylvania
Municipal Municipal Municipal
Bond Fund Bond Fund Bond Fund
- --------------------------------------------------------------------------------
Class B ....................... $16,080 $7,887 $4,692
Class C ....................... $12,169 $ 523 $ 30
- --------------------------------------------------------------------------------
Furthermore, MLPF&S received contingent deferred sales charges relating to
transactions subject to front-end sales charge waivers in Class A Shares as
follows:
- --------------------------------------------------------------------------------
Merrill Lynch Florida Municipal Bond Fund ......................... $833
Merrill Lynch New Jersey Municipal Bond Fund ...................... $ 9
Merrill Lynch Pennsylvania Municipal Bond Fund .................... --
- --------------------------------------------------------------------------------
For the six months ended January 31, 2006, the Funds reimbursed FAM for certain
accounting services as follows:
- --------------------------------------------------------------------------------
Reimbursement
- --------------------------------------------------------------------------------
Merrill Lynch Florida Municipal Bond Fund ........................ $1,374
Merrill Lynch New Jersey Municipal Bond Fund ..................... $1,095
Merrill Lynch Pennsylvania Municipal Bond Fund ................... $ 795
- --------------------------------------------------------------------------------
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co., is
each Fund's transfer agent.
Certain officers and/or trustees of the Funds are officers and/or directors of
FAM, PSI, FAMD, FDS, and/or ML & Co.
In February 2006, ML & Co. and BlackRock, Inc. entered into an agreement to
merge ML & Co.'s investment management business, including FAM, with the
investment management business of BlackRock, Inc. The transaction is expected to
close in the third quarter of 2006.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended January 31, 2006 were as follows:
- --------------------------------------------------------------------------------
Purchases Sales
- --------------------------------------------------------------------------------
Merrill Lynch Florida Municipal
Bond Fund ...................................... $39,025,030 $38,116,218
Merrill Lynch New Jersey Municipal
Bond Fund ...................................... $12,545,725 $17,687,614
Merrill Lynch Pennsylvania Municipal
Bond Fund ...................................... $16,505,910 $16,305,845
- --------------------------------------------------------------------------------
4. Beneficial Interest Transactions:
Net increase (decrease) in net assets derived from beneficial interest
transactions for the six months ended January 31, 2006 and the year ended July
31, 2005 were as follows:
- --------------------------------------------------------------------------------
For the Six For the Year
Months Ended Ended
January 31, July 31,
2006 2005
- --------------------------------------------------------------------------------
Merrill Lynch Florida Municipal
Bond Fund ..................................... $ (52,159) $(4,460,831)
Merrill Lynch New Jersey Municipal
Bond Fund ..................................... $ 4,369,977 $ 3,429,108
Merrill Lynch Pennsylvania Municipal
Bond Fund ..................................... $ 177,489 $(6,288,632)
- --------------------------------------------------------------------------------
Transactions in shares of beneficial interest for each class were as follows:
- -------------------------------------------------------------------------------
Merrill Lynch Florida Municipal Bond Fund
- -------------------------------------------------------------------------------
Class A Shares for the Six Months Dollar
Ended January 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 273,524 $ 2,838,414
Automatic conversion of shares ........... 121,980 1,263,078
Shares issued to shareholders in
reinvestment of dividends .............. 44,945 466,455
-----------------------------
Total issued ............................. 440,449 4,567,947
Shares redeemed .......................... (305,382) (3,171,043)
-----------------------------
Net increase ............................. 135,067 $ 1,396,904
=============================
- -------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended July 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 853,541 $ 8,841,929
Automatic conversion of shares ........... 229,334 2,370,126
Shares issued to shareholders in
reinvestment of dividends .............. 97,373 1,008,003
-----------------------------
Total issued ............................. 1,180,248 12,220,058
Shares redeemed .......................... (1,152,029) (11,915,967)
-----------------------------
Net increase ............................. 28,219 $ 304,091
=============================
- -------------------------------------------------------------------------------
Class B Shares for the Six Months Dollar
Ended January 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 37,430 $ 388,350
Shares issued to shareholders in
reinvestment of dividends .............. 17,746 184,565
-----------------------------
Total issued ............................. 55,176 572,915
-----------------------------
Automatic conversion of shares ........... (121,744) (1,263,078)
Shares redeemed .......................... (357,531) (3,721,501)
-----------------------------
Total redeemed ........................... (479,275) (4,984,579)
-----------------------------
Net decrease ............................. (424,099) $ (4,411,664)
=============================
40 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------------
Merrill Lynch Florida Municipal Bond Fund (concluded)
- -------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended July 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 94,359 $ 976,357
Shares issued to shareholders in
reinvestment of dividends .............. 49,607 514,120
-----------------------------
Total issued ............................. 143,966 1,490,477
-----------------------------
Automatic conversion of shares ........... (228,947) (2,370,126)
Shares redeemed .......................... (645,659) (6,679,715)
-----------------------------
Total redeemed ........................... (874,606) (9,049,841)
-----------------------------
Net decrease ............................. (730,640) $ (7,559,364)
=============================
- -------------------------------------------------------------------------------
Class C Shares for the Six Months Dollar
Ended January 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 323,592 $ 3,354,103
Shares issued to shareholders in
reinvestment of dividends .............. 11,591 120,280
-----------------------------
Total issued ............................. 335,183 3,474,383
Shares redeemed .......................... (240,082) (2,493,324)
-----------------------------
Net increase ............................. 95,101 $ 981,059
=============================
- -------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended July 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 529,289 $ 5,500,348
Shares issued to shareholders in
reinvestment of dividends .............. 21,406 221,728
-----------------------------
Total issued ............................. 550,695 5,722,076
Shares redeemed .......................... (317,402) (3,288,227)
-----------------------------
Net increase ............................. 233,293 $ 2,433,849
=============================
- -------------------------------------------------------------------------------
Class I Shares for the Six Months Dollar
Ended January 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 446,756 $ 4,635,062
Shares issued to shareholders in
reinvestment of dividends .............. 16,839 175,098
-----------------------------
Total issued ............................. 463,595 4,810,160
Shares redeemed .......................... (272,022) (2,828,618)
-----------------------------
Net increase ............................. 191,573 $ 1,981,542
=============================
- -------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended July 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 280,520 $ 2,901,857
Shares issued to shareholders in
reinvestment of dividends .............. 38,167 395,769
-----------------------------
Total issued ............................. 318,687 3,297,626
Shares redeemed .......................... (284,189) (2,937,033)
-----------------------------
Net increase ............................. 34,498 $ 360,593
=============================
- -------------------------------------------------------------------------------
Merrill Lynch New Jersey Municipal Bond Fund
- -------------------------------------------------------------------------------
Class A Shares for the Six Months Dollar
Ended January 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 64,387 $ 685,385
Automatic conversion of shares ........... 62,794 666,506
Shares issued to shareholders in
reinvestment of dividends
and distributions ...................... 35,710 379,578
-----------------------------
Total issued ............................. 162,891 1,731,469
Shares redeemed .......................... (137,646) (1,464,001)
-----------------------------
Net increase ............................. 25,245 $ 267,468
=============================
- -------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended July 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 110,260 $ 1,168,660
Automatic conversion of shares ........... 209,325 2,210,673
Shares issued to shareholders in
reinvestment of dividends .............. 74,157 783,996
-----------------------------
Total issued ............................. 393,742 4,163,329
Shares redeemed .......................... (376,540) (3,979,586)
-----------------------------
Net increase ............................. 17,202 $ 183,743
=============================
- -------------------------------------------------------------------------------
Class B Shares for the Six Months Dollar
Ended January 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 30,841 $ 327,378
Shares issued to shareholders in
reinvestment of dividends
and distributions ...................... 19,298 205,087
-----------------------------
Total issued ............................. 50,139 532,465
-----------------------------
Automatic conversion of shares ........... (62,837) (666,506)
Shares redeemed .......................... (280,891) (2,976,286)
-----------------------------
Total redeemed ........................... (343,728) (3,642,792)
-----------------------------
Net decrease ............................. (293,589) $ (3,110,327)
=============================
- -------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended July 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 132,994 $ 1,398,646
Shares issued to shareholders in
reinvestment of dividends .............. 50,657 534,714
-----------------------------
Total issued ............................. 183,651 1,933,360
-----------------------------
Automatic conversion of shares ........... (209,415) (2,210,673)
Shares redeemed .......................... (571,445) (6,060,405)
-----------------------------
Total redeemed ........................... (780,860) (8,271,078)
-----------------------------
Net decrease ............................. (597,209) $ (6,337,718)
=============================
- -------------------------------------------------------------------------------
Class C Shares for the Six Months Dollar
Ended January 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 215,123 $ 2,280,393
Shares issued to shareholders in
reinvestment of dividends
and distributions ...................... 13,857 147,210
-----------------------------
Total issued ............................. 228,980 2,427,603
Shares redeemed .......................... (101,199) (1,078,483)
-----------------------------
Net increase ............................. 127,781 $ 1,349,120
=============================
SEMI-ANNUAL REPORTS JANUARY 31, 2006 41
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------------
Merrill Lynch New Jersey Municipal Bond Fund (concluded)
- -------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended July 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 236,223 $ 2,498,568
Shares issued to shareholders in
reinvestment of dividends .............. 28,197 297,822
-----------------------------
Total issued ............................. 264,420 2,796,390
Shares redeemed .......................... (224,867) (2,374,940)
-----------------------------
Net increase ............................. 39,553 $ 421,450
=============================
- -------------------------------------------------------------------------------
Class I Shares for the Six Months Dollar
Ended January 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 627,585 $ 6,681,463
Shares issued to shareholders in
reinvestment of dividends
and distributions ...................... 17,442 185,311
-----------------------------
Total issued ............................. 645,027 6,866,774
Shares redeemed .......................... (94,437) (1,003,058)
-----------------------------
Net increase ............................. 550,590 $ 5,863,716
=============================
- -------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended July 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 1,133,504 $ 11,842,792
Shares issued to shareholders in
reinvestment of dividends .............. 35,848 378,574
-----------------------------
Total issued ............................. 1,169,352 12,221,366
Shares redeemed .......................... (289,843) (3,059,733)
-----------------------------
Net increase ............................. 879,509 $ 9,161,633
=============================
- -------------------------------------------------------------------------------
Merrill Lynch Pennsylvania Municipal Bond Fund
- -------------------------------------------------------------------------------
Class A Shares for the Six Months Dollar
Ended January 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 102,976 $ 1,164,135
Automatic conversion of shares ........... 67,295 758,223
Shares issued to shareholders in
reinvestment of dividends .............. 25,559 288,843
-----------------------------
Total issued ............................. 195,830 2,211,201
Shares redeemed .......................... (120,241) (1,358,984)
-----------------------------
Net increase ............................. 75,589 $ 852,217
=============================
- -------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended July 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 111,903 $ 1,274,747
Automatic conversion of shares ........... 189,494 2,148,323
Shares issued to shareholders in
reinvestment of dividends .............. 50,337 571,748
-----------------------------
Total issued ............................. 351,734 3,994,818
Shares redeemed .......................... (354,711) (4,024,918)
-----------------------------
Net decrease ............................. (2,977) $ (30,100)
=============================
- -------------------------------------------------------------------------------
Class B Shares for the Six Months Dollar
Ended January 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 18,962 $ 215,523
Shares issued to shareholders in
reinvestment of dividends .............. 20,375 230,042
-----------------------------
Total issued ............................. 39,337 445,565
-----------------------------
Automatic conversion of shares ........... (67,382) (758,223)
Shares redeemed .......................... (175,060) (1,972,318)
-----------------------------
Total redeemed ........................... (242,442) (2,730,541)
-----------------------------
Net decrease ............................. (203,105) $ (2,284,976)
=============================
- -------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended July 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 75,859 $ 864,464
Shares issued to shareholders in
reinvestment of dividends .............. 47,174 535,066
-----------------------------
Total issued ............................. 123,033 1,399,530
-----------------------------
Automatic conversion of shares ........... (189,706) (2,148,323)
Shares redeemed .......................... (415,338) (4,706,022)
-----------------------------
Total redeemed ........................... (605,044) (6,854,345)
-----------------------------
Net decrease ............................. (482,011) $ (5,454,815)
=============================
- -------------------------------------------------------------------------------
Class C Shares for the Six Months Dollar
Ended January 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 156,313 $ 1,765,420
Shares issued to shareholders in
reinvestment of dividends .............. 13,444 151,786
-----------------------------
Total issued ............................. 169,757 1,917,206
Shares redeemed .......................... (54,030) (609,128)
-----------------------------
Net increase ............................. 115,727 $ 1,308,078
=============================
- -------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended July 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 157,442 $ 1,789,381
Shares issued to shareholders in
reinvestment of dividends .............. 27,240 309,029
-----------------------------
Total issued ............................. 184,682 2,098,410
Shares redeemed .......................... (181,224) (2,057,437)
-----------------------------
Net increase ............................. 3,458 $ 40,973
=============================
- -------------------------------------------------------------------------------
Class I Shares for the Six Months Dollar
Ended January 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 112,703 $ 1,271,392
Shares issued to shareholders in
reinvestment of dividends .............. 9,123 103,008
-----------------------------
Total issued ............................. 121,826 1,374,400
Shares redeemed .......................... (95,334) (1,072,230)
-----------------------------
Net increase ............................. 26,492 $ 302,170
=============================
42 SEMI-ANNUAL REPORTS JANUARY 31, 2006
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------------
Merrill Lynch Pennsylvania Municipal Bond Fund (concluded)
- -------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended July 31, 2005 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 112,623 $ 1,276,736
Shares issued to shareholders in
reinvestment of dividends .............. 19,901 225,744
-----------------------------
Total issued ............................. 132,524 1,502,480
Shares redeemed .......................... (207,663) (2,347,170)
-----------------------------
Net decrease ............................. (75,139) $ (844,690)
=============================
5. Short-Term Borrowings:
The Trust, on behalf of the Funds, along with certain other funds managed by FAM
and its affiliates, is a party to a $500,000,000 credit agreement with a group
of lenders. The Funds may borrow under the credit agreement to fund shareholder
redemptions and for other lawful purposes other than for leverage. The Funds may
borrow up to the maximum amount allowable under the Funds' current prospectus
and statement of additional information, subject to various other legal,
regulatory or contractual limits. The Funds pay a commitment fee of .07% per
annum based on the Funds' pro rata share of the unused portion of the credit
agreement. Amounts borrowed under the credit agreement bear interest at a rate
equal to, at the Funds' election, the federal funds rate plus .50% or a base
rate as defined in the credit agreement. The Funds did not borrow under the
credit agreement during the six months ended January 31, 2006. On November 23,
2005, the credit agreement was renewed for one year under substantially the same
terms.
6. Capital Loss Carryforward:
Florida Municipal Bond Fund
On July 31, 2005, the Fund had a net capital loss carryforward of $4,273,409, of
which $3,155,081 expires in 2008 and $1,118,328 expires in 2009. This amount
will be available to offset like amounts of any future taxable gains.
New Jersey Municipal Bond Fund
On July 31, 2005, the Fund had a net capital loss carryforward of $7,479,347, of
which $5,668,985 expires in 2009 and $1,810,362 expires in 2011. This amount
will be available to offset like amounts of any future taxable gains.
Pennsylvania Municipal Bond Fund
On July 31, 2005, the Fund had a net capital loss carryforward of $595,592, all
of which expires in 2009. This amount will be available to offset like amounts
of any future taxable gains.
Availability of Quarterly Schedule of Investments
The Funds file their complete schedules of portfolio holdings with the
Securities and Exchange Commission ("SEC") for the first and third quarters of
each fiscal year on Form N-Q. The Funds' Forms N-Q are available on the SEC's
Web site at http://www.sec.gov. The Funds' Forms N-Q may also be reviewed and
copied at the SEC's Public Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Electronic Delivery
The Funds offer electronic delivery of communications to their shareholders. In
order to receive this service, you must register your account and provide us
with e-mail information. To sign up for this service, simply access this Web
site at http://www.icsdelivery.com/live and follow the instructions. When you
visit this site, you will obtain a personal identification number (PIN). You
will need this PIN should you wish to update your e-mail address, choose to
discontinue this service and/or make any other changes to the service. This
service is not available for certain retirement accounts at this time.
SEMI-ANNUAL REPORTS JANUARY 31, 2006 43
[LOGO] Merrill Lynch Investment Managers
www.mlim.ml.com
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Mercury Advisors
A Division of Merrill Lynch Investment Managers
www.mercury.ml.com
These reports are not authorized for use as an offer of sale or a solicitation
of an offer to buy shares of the Funds unless accompanied or preceded by the
Funds' current prospectus. Past performance results shown in this report should
not be considered a representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Statements and other information
herein are as dated and are subject to change.
A description of the policies and procedures that the Funds use to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free 1-800-637-3863; (2) at
www.mutualfunds.ml.com; and (3) on the Securities and Exchange Commission's Web
site at http://www.sec.gov. Information about how the Funds voted proxies
relating to securities held in the Funds' portfolio during the most recent
12-month period ended June 30 is available (1) at www.mutualfunds.ml.com and (2)
on the Securities and Exchange Commission's Web site at http://www.sec.gov.
Merrill Lynch Florida Municipal Bond Fund
Merrill Lynch New Jersey Municipal Bond Fund
Merrill Lynch Pennsylvania Municipal Bond Fund
Of Merrill Lynch Multi-State Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
#MBFLNJPA -- 1/06