UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04802
Name of Fund: BlackRock Intermediate Municipal Fund of BlackRock Municipal
Series Trust
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, BlackRock Intermediate Municipal Fund of BlackRock Municipal
Series Trust, 800 Scudders Mill Road, Plainsboro, NJ, 08536. Mailing
address: P.O. Box 9011, Princeton, NJ, 08543-9011
Registrant's telephone number, including area code: (800) 441-7762
Date of fiscal year end: 10/31/07
Date of reporting period: 11/01/06 - 04/30/07
Item 1 - Report to Stockholders
ALTERNATIVES BLACKROCK SOLUTIONS EQUITIES
FIXED INCOME LIQUIDITY REAL ESTATE
BlackRock Intermediate BLACKROCK
Municipal Fund
OF BLACKROCK MUNICIPAL SERIES TRUST
SEMI-ANNUAL REPORT
APRIL 30, 2007 | (UNAUDITED)
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
BlackRock Intermediate Municipal Fund
Portfolio Information as of April 30, 2007
Quality Ratings by Percent of
S&P/Moody's Total Investments
- --------------------------------------------------------------------------------
AAA/Aaa ...................................................... 69.1%
AA/Aa ........................................................ 9.5
A/A .......................................................... 2.9
BBB/Baa ...................................................... 9.0
BB/Ba ........................................................ 0.6
NR (Not Rated) ............................................... 3.7
Other* ....................................................... 5.2
- --------------------------------------------------------------------------------
* Includes portfolio holdings in mutual funds, variable rate demand notes
and short-term investments.
Percent of
Distribution by Market Sector Total Investments
- --------------------------------------------------------------------------------
Other Revenue Bonds .......................................... 65.3%
General Obligation Bonds ..................................... 29.5
Other* ....................................................... 5.2
- --------------------------------------------------------------------------------
* Includes portfolio holdings in mutual funds, variable rate demand notes
and short-term investments.
Officers and Trustees
Robert C. Doll, Jr., Fund President and Trustee
Ronald W. Forbes, Trustee
Cynthia A. Montgomery, Trustee
Jean Margo Reid, Trustee
Roscoe S. Suddarth, Trustee
Richard R. West, Trustee
Donald C. Burke, Vice President and Treasurer
John M. Loffredo, Senior Vice President
Karen Clark, Fund Chief Compliance Officer
Alice A. Pellegrino, Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
PFPC Inc.
Wilmington, DE 19809
- --------------------------------------------------------------------------------
Effective January 1, 2007, Edward D. Zinbarg retired as a Trustee of BlackRock
Intermediate Municipal Fund of BlackRock Municipal Series Trust. The Fund's
Board of Trustees wishes Mr. Zinbarg well in his retirement.
- --------------------------------------------------------------------------------
2 BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007
A Letter to Shareholders
Dear Shareholder
In its first four months, 2007 could already be termed an eventful year for
investors. For most financial markets, 2007 opened just as 2006 ended -- on a
positive trajectory. Then, at the end of February and into March, global equity
markets registered their first significant decline since last summer. The market
jitters were triggered by a significant setback in the Chinese market and were
exacerbated by worries of a weakening economy, escalating geopolitical concerns
and rising delinquencies in the subprime mortgage market. Still, underlying
stock market fundamentals appeared quite sound, supported by a generally
favorable global economic backdrop, tame inflation, slowing but still positive
earnings growth, relatively low interest rates and attractive valuations. These
conditions prevailed later, and the Dow Jones Industrial Average crossed the
13,000 mark for the first time in its history in late April.
Not unlike the equity market, the bond market also experienced volatility as
observers attempted to interpret mixed economic signals. A bond market rally
(falling yields and rising prices) late last year reversed itself early in 2007
amid some transitory signs of economic strength. Overall, yields have fluctuated
month to month but ended April little changed from the beginning of the year.
However, compared to one year ago, yields on 30-year Treasury bonds fell 36
basis points (.36%) and 10-year yields fell 44 basis points, while prices
correspondingly rose.
For its part, the Federal Reserve Board (the Fed) has left the target short-term
interest rate on hold at 5.25% since first pausing in its interest rate-hiking
campaign on August 8, 2006. The central bankers continue to express concern
about potential inflationary pressures, but also acknowledge signs of economic
weakness. Given this relatively "balanced" assessment, most observers believe
the Fed will keep interest rates on hold for now.
Against this backdrop, most major market indexes posted positive returns for the
annual and semi-annual reporting periods ended April 30, 2007:
Total Returns as of April 30, 2007 6-month 12-month
===================================================================================================================
U.S. equities (Standard & Poor's 500 Index) + 8.60% +15.24%
- -------------------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) + 6.86 + 7.83
- -------------------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +15.46 +19.81
- -------------------------------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers Aggregate Bond Index) + 2.64 + 7.36
- -------------------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 1.59 + 5.78
- -------------------------------------------------------------------------------------------------------------------
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index) + 6.96 +11.72
- -------------------------------------------------------------------------------------------------------------------
If the first four months are any guide, 2007 could be a year of enhanced market
volatility. As you navigate the uncertainties, we encourage you to review your
investment goals with your financial professional and to make portfolio changes,
as needed. For more insight, we invite you to view "What's Ahead in 2007: An
Investment Perspective" and "Are You Prepared for Volatility?" at
www.blackrock.com/funds. We thank you for entrusting BlackRock with your
investment assets, and we look forward to continuing to serve you in the months
and years ahead.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
Fund President and Trustee
BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007 3
A Discussion With Your Fund's Portfolio Managers
We made strides in restructuring the portfolio in an effort to balance
total return and current income for our shareholders.
Describe the recent market environment relative to municipal bonds.
Long-term bond yields traded in a fairly broad and volatile range over the past
six months, only to end the period little changed. Overall, financial conditions
have remained relatively balanced, with moderate economic activity and
well-contained inflationary pressures. Recent commentary from the Federal
Reserve Board (the Fed) has supported this trading range. The Fed is expected to
maintain its "balanced" economic assessment at least into mid-year.
During the six-month period ended April 30, 2007, 30-year U.S. Treasury bond
yields rose nine basis points (.09%) to 4.81%, while 10-year Treasury note
yields rose two basis points to 4.63%. Similarly, movements were fairly muted in
the tax-exempt market. As measured by Municipal Market Data, yields on AAA-rated
municipal bonds maturing in 30 years declined three basis points to 4.10%, and
yields on AAA-rated municipal bonds maturing in 10 years rose 12 basis points to
3.76%.
Investor demand for municipal product continued to strengthen throughout the
six-month period. The Investment Company Institute reports that long-term
municipal bond funds received over $8.7 billion in net new cash flows during the
first three months of 2007, a 42% increase compared to the first three months of
2006. Weekly fund flows, as reported by AMG Data, also have risen. Weekly
inflows during the April 2007 quarter averaged over $489 million, up from a
weekly average of $400 million in fourth quarter 2006. The improving demand
among retail investors reflects, in large part, increased acceptance of lower
nominal yields and bond coupon structure. Throughout much of last year,
retail-oriented municipal bond broker/dealers noted significant individual
investor resistance to purchasing tax-exempt issues with yields below 4.50%
and/or issues bearing nominal coupons below 5%. As tax-exempt bond yields have
stabilized in recent months, it appears retail investors have become
increasingly comfortable purchasing tax-exempt bonds with those characteristics,
which has served to support the market's performance.
In terms of supply, issuance of long-term municipal bonds has increased over the
past six months. More than $225 billion in new bonds was issued during the April
reporting period, an increase of over 30% compared to the same six months one
year ago. Over the past three months, municipalities issued more than $106
billion in new long-term tax-exempt bonds, an increase of more than 32% compared
to the same period a year ago. So far this year, greater than $135 billion in
long-term municipal bonds has been underwritten, putting 2007 annual issuance
some 4% ahead of 2005's record pace. Issuers have continued to take advantage of
historically low interest rates to refinance outstanding issues. In the first
four months of 2007, we have seen 10 underwritings exceeding $1 billion in size.
These "mega-deals" have continued to be relatively easily absorbed by market
participants, especially non-traditional and foreign buyers who find the
liquidity afforded by these deals to be particularly attractive.
Looking ahead, we believe investor demand will be critical in maintaining the
tax-exempt market's strong technical position. The increase in new bond supply
seen this year is unlikely to abate significantly, leading to record or
near-record annual issuance. Relatively stable yield ratios compared to taxable
bonds, coupled with a comparatively steep municipal yield curve, should help to
sustain traditional and non-traditional investor interest in tax-exempt bonds
and support the market's performance into mid-2007.
How did the Fund perform during the period in light of the existing market
conditions?
For the six-month period ended April 30, 2007, BlackRock Intermediate Municipal
Fund's Institutional, Investor A, Investor A1, Investor B and Investor C Shares
had total returns of +1.28%, +1.15%, +1.13%, +1.12% and +.68%, 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 6
and 7 of this report to shareholders.) For the same period, the broader
municipal market, as measured by the Lehman Brothers Municipal Bond Index,
returned +1.59% and the Lipper Intermediate Municipal Debt Funds category had an
average return of +1.11%. (Funds in this Lipper category invest primarily in
municipal debt issues with dollar-weighted average maturities in the area of
five to 10 years.)
Given its investment mandate, the Fund's performance will necessarily differ
from that of the Lehman index. The portfolio concentrates its investments in the
intermediate part of the municipal yield curve, whereas the Lehman index focuses
on
4 BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007
longer-dated securities, which continued to outperform short- and
intermediate-maturity bonds during this period as the yield curve flattened. The
Fund's performance versus its comparable Lipper group was more favorable. Our
long duration bias within the intermediate spectrum (specifically, 10 years - 12
years) proved advantageous on a relative basis. The Fund's attractive coupon
structure also served the portfolio well in a period of stable to slightly
rising interest rates. The Fund's average coupon is nearly 5.25%, compared to a
market average of roughly 3.85% at period-end (as measured by the Municipal
Market Data 10-year scale).
What changes were made to the portfolio during the period?
We made strides in restructuring the portfolio to align its holdings closer to
that of the broader intermediate tax-exempt market. This involved a greater
emphasis on current yield and lower-duration securities. As part of our
restructuring efforts, we committed cash reserves held in the portfolio to the
intermediate sector of the municipal market as opportunities presented
themselves. This move is in keeping with the recommendation of our internal
Municipal Investment Strategy Group, which has identified 10-year to 15-year
municipal securities as having the greatest relative value on the curve. Here,
we are able to capture decent yields without having to lock into longer
maturities.
In making these changes, we are targeting a more competitive current yield for
our shareholders with limited fluctuation in the Fund's underlying net asset
value. Having said that, the low absolute level of interest rates in the present
market, combined with tight credit spreads and a historically flat yield curve,
requires us to exercise patience in our efforts. The Fund began operations in a
higher-rate environment; as such, current yields do little to improve on
existing positions. In addition, the sale of older-dated positions usually
requires the realization of a capital gain, something we try to avoid. Capital
gains must be distributed to shareholders at fiscal year-end, resulting in a
taxable event. Our goal is to manage the Fund in the most tax efficient manner.
How would you characterize the Fund's position at the close of the period?
The Fund ended the period with 4% of assets in cash equivalent reserves, monies
that we will look to deploy in the municipal marketplace as opportunities arise
to improve the portfolio's income distribution capacity. We maintain our focus
on bonds with higher average coupons and structures that help to mute price
volatility. We also intend to emphasize a high degree of credit quality in
making new purchases. Given the tightness of credit spreads, we find that there
is little additional yield to be gained from investing in lower-rated bonds. We
are looking to accomplish all of this in an effort to deliver an efficient
balance between total return and current income for our shareholders.
Walter C. O'Connor, CFA
Portfolio Manager
Theodore R. Jaeckel Jr., CFA
Portfolio Manager
May 11, 2007
BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007 5
Performance Data
About Fund Performance
Effective October 2, 2006, the Fund's Class A, Class B and Class I Shares were
redesignated Investor A1, Investor B and Institutional Shares, respectively. All
Class C Shares converted to Class A (now Investor A1) Shares on August 25, 2006.
As previously communicated to shareholders, new sales charge schedules came into
effect at the same time for certain of these classes.
The Fund has multiple classes of shares:
o Institutional Shares are not subject to any sales charge. Institutional
Shares bear no ongoing distribution or service fees and are available only
to eligible investors.
o Investor A Shares incur a maximum initial sales charge (front-end load) of
4.25% and a service fee of 0.25% per year (but no distribution fee).
Investor A Shares commenced operations on October 2, 2006. Prior to
Investor A Shares' inception, the returns for Investor A Shares were based
upon the performance of the Fund's Institutional Shares. The returns for
Investor A Shares, however, are adjusted to reflect the service (12b-1)
fees applicable to Investor A Shares.
o Investor A1 Shares incur a maximum initial sales charge (front-end load)
of 1% and a service fee of 0.10% per year (but no distribution fee).
o Investor B Shares are subject to a maximum contingent deferred sales
charge of 1%, declining to 0% after three years. In addition, Investor B
Shares are subject to a distribution fee of 0.10% per year and a service
fee of 0.20% per year. These shares automatically convert to Investor A1
Shares after approximately 10 years. (There is no initial sales charge for
automatic share conversions.)
o Investor C Shares are subject to a distribution fee of 0.75% per year and
a service fee of 0.25% per year. In addition, Investor C Shares are
subject to a 1% contingent deferred sales charge if redeemed within one
year of purchase. Investor C Shares commenced operations on October 2,
2006. Prior to Investor C Shares' inception, the returns for Investor C
Shares were based upon the performance of the Fund's Institutional Shares.
The returns for Investor C Shares, however, are adjusted to reflect the
distribution and service (12b-1) fees applicable to Investor C Shares.
Performance information reflects past performance and does not guarantee future
results. Current performance may be lower or higher than the performance data
quoted. Refer to www.blackrock.com to obtain performance data current to the
most recent month-end. Performance results do not reflect the deduction of taxes
that a shareholder would pay on fund distributions or the redemption of fund
shares. Figures shown in each of the following tables assume reinvestment of all
dividends and capital gain distributions, if any, at net asset value on the
payable date. The Fund's investment adviser reimbursed a portion of the Fund's
expenses. Without such reimbursement, the Fund's performance would have been
lower. Investment return and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost.
Dividends paid to each class of shares will vary because of the different levels
of service, distribution and transfer agency fees applicable to each class,
which are deducted from the income available to be paid to shareholders.
Recent Performance Results
6-Month 12-Month 10-Year Standardized
As of April 30, 2007 Total Return Total Return Total Return 30-Day Yield
==========================================================================================================================
Institutional Shares* +1.28% +4.98% +63.22% 3.47%
- --------------------------------------------------------------------------------------------------------------------------
Investor A Shares* +1.15 +4.71 +59.21 3.10
- --------------------------------------------------------------------------------------------------------------------------
Investor A1 Shares* +1.13 +4.87 +61.47 3.34
- --------------------------------------------------------------------------------------------------------------------------
Investor B Shares* +1.12 +4.65 +58.22 3.15
- --------------------------------------------------------------------------------------------------------------------------
Investor C Shares* +0.68 +3.93 +47.73 2.47
- --------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index** +1.59 +5.78 +75.88 --
- --------------------------------------------------------------------------------------------------------------------------
* Investment results shown do not reflect sales charges; results shown would
be lower if a sales charge was included. Cumulative total investment
returns are based on changes in net asset values for the periods shown,
and assume reinvestment of all dividends and capital gains distributions
at net asset value on the payable date.
** This unmanaged Index consists of revenue bonds, prerefunded bonds, general
obligation bonds and insured bonds.
6 BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007
Performance Data (concluded)
Intermediate Municipal Fund
BlackRock Intermediate Municipal Fund -- Edgar
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's Institutional,
Investor A, Investor A1, Investor B & Investor C Shares compared to growth of an
investment in the Lehman Brothers Municipal Bond Index. Values are from April
1997 to April 2007:
Lehman Brothers
Institutional Investor A Investor A1 Investor B Investor C Municipal Bond
Shares*+ Shares*+ Shares*+ Shares*+ Shares*+ Index++
4/97 $10,000 $9,575 $9,900 $10,000 $10,000 $10,000
4/98 $10,838 $10,352 $10,719 $10,804 $10,731 $10,930
4/99 $11,566 $11,019 $11,416 $11,482 $11,338 $11,689
4/00 $11,456 $10,888 $11,308 $11,349 $11,119 $11,582
4/01 $12,435 $11,789 $12,262 $12,280 $11,949 $12,783
4/02 $13,319 $12,596 $13,121 $13,112 $12,672 $13,678
4/03 $14,412 $13,595 $14,185 $14,145 $13,576 $14,840
4/04 $14,670 $13,804 $14,410 $14,353 $13,681 $15,237
4/05 $15,398 $14,453 $15,125 $15,019 $14,218 $16,276
4/06 $15,549 $14,558 $15,242 $15,119 $14,214 $16,627
4/07 $16,322 $15,244 $15,985 $15,822 $14,773 $17,588
* Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including advisory fees.
+ The Fund invests primarily in a diversified portfolio of investment grade
obligations whose interest is exempt from federal income taxes, with a
dollar-weighted average maturity from five to 12 years.
++ This unmanaged Index consists of revenue bonds, prerefunded bonds, general
obligation bonds and insured bonds.
Past performance is not indicative of future results.
Average Annual Total Return
Return
================================================================================
Institutional Shares
================================================================================
One Year Ended 4/30/07 +4.98%
- --------------------------------------------------------------------------------
Five Years Ended 4/30/07 +4.15
- --------------------------------------------------------------------------------
Ten Years Ended 4/30/07 +5.02
- --------------------------------------------------------------------------------
Return Without Return With
Sales Charge Sales Charge*
================================================================================
Investor A Shares
================================================================================
One Year Ended 4/30/07 +4.71% +0.26%
- --------------------------------------------------------------------------------
Five Years Ended 4/30/07 +3.89 +2.99
- --------------------------------------------------------------------------------
Ten Years Ended 4/30/07 +4.76 +4.31
- --------------------------------------------------------------------------------
Return Without Return With
Sales Charge Sales Charge**
================================================================================
Investor A1 Shares
================================================================================
One Year Ended 4/30/07 +4.87% +3.82%
- --------------------------------------------------------------------------------
Five Years Ended 4/30/07 +4.03 +3.82
- --------------------------------------------------------------------------------
Ten Years Ended 4/30/07 +4.91 +4.80
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC++
================================================================================
Investor B Shares+
================================================================================
One Year Ended 4/30/07 +4.65% +3.65%
- --------------------------------------------------------------------------------
Five Years Ended 4/30/07 +3.83 +3.83
- --------------------------------------------------------------------------------
Ten Years Ended 4/30/07 +4.69 +4.69
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC++
================================================================================
Investor C Shares+++
================================================================================
One Year Ended 4/30/07 +3.93% +2.93%
- --------------------------------------------------------------------------------
Five Years Ended 4/30/07 +3.12 +3.12
- --------------------------------------------------------------------------------
Ten Years Ended 4/30/07 +3.98 +3.98
- --------------------------------------------------------------------------------
* Assuming maximum sales charge of 4.25%.
** Assuming maximum sales charge of 1%.
+ Maximum contingent deferred sales charge is 1% and is reduced to 0% after
three years.
++ Assuming payment of applicable contingent deferred sales charge.
+++ Maximum contingent deferred sales charge is 1% and is reduced to 0% after
one year.
BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007 7
Disclosure of Expenses
Shareholders of this Fund may incur the following charges: (a) expenses related
to transactions, including sales charges, redemption fees and exchange fees; and
(b) operating expenses including advisory fees, distribution fees including
12b-1 fees, and other Fund expenses. The following example (which is based on a
hypothetical investment of $1,000 invested on November 1, 2006 and held through
April 30, 2007) is intended to assist shareholders both in calculating expenses
based on an investment in the Fund and in comparing these expenses with similar
costs of investing in other mutual funds.
The first table below provides information about actual account values and
actual expenses. In order to estimate the expenses a shareholder paid during the
period covered by this report, shareholders can divide their account value by
$1,000 and then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During the Period."
The second table below provides information about hypothetical account values
and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses. In order to assist
shareholders in comparing the ongoing expenses of investing in this Fund and
other funds, compare the 5% hypothetical example with the 5% hypothetical
examples that appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders' ongoing
costs only and do not reflect any transactional expenses, such as sales charges,
redemption fees or exchange fees. Therefore, the second table is useful in
comparing ongoing expenses only, and will not help shareholders determine the
relative total expenses of owning different funds. If these transactional
expenses were included, shareholder expenses would have been higher.
Including Interest Expense and Fees
Expenses Paid
During the Period*
Beginning Ending November 1,
Account Value Account Value 2006 to
November 1, 2006 April 30, 2007 April 30, 2007
============================================================================================================================
Actual
============================================================================================================================
Institutional $1,000 $1,012.80 $4.89
- ----------------------------------------------------------------------------------------------------------------------------
Investor A $1,000 $1,011.50 $6.13
- ----------------------------------------------------------------------------------------------------------------------------
Investor A1 $1,000 $1,011.30 $5.39
- ----------------------------------------------------------------------------------------------------------------------------
Investor B $1,000 $1,011.20 $6.38
- ----------------------------------------------------------------------------------------------------------------------------
Investor C $1,000 $1,006.80 $9.90
============================================================================================================================
Hypothetical (5% annual return before expenses)**
============================================================================================================================
Institutional $1,000 $1,019.94 $4.91
- ----------------------------------------------------------------------------------------------------------------------------
Investor A $1,000 $1,018.70 $6.16
- ----------------------------------------------------------------------------------------------------------------------------
Investor A1 $1,000 $1,019.44 $5.41
- ----------------------------------------------------------------------------------------------------------------------------
Investor B $1,000 $1,018.45 $6.41
- ----------------------------------------------------------------------------------------------------------------------------
Investor C $1,000 $1,014.93 $9.94
- ----------------------------------------------------------------------------------------------------------------------------
* For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (.98% for Institutional, 1.23% for Investor A, 1.08%
for Investor A1, 1.28% for Investor B and 1.99% for Investor C),
multiplied by the average account value over the period, multiplied by
181/365 (to reflect the one-half year period shown).
** Hypothetical 5% return before expenses is calculated by pro-rating the
number of days in the most recent fiscal half year divided by 365.
8 BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007
Disclosure of Expenses (concluded)
Excluding Interest Expense and Fees
Expenses Paid
During the Period*
Beginning Ending November 1,
Account Value Account Value 2006 to
November 1, 2006 April 30, 2007 April 30, 2007
=========================================================================================================================
Actual
=========================================================================================================================
Institutional $1,000 $1,012.80 $3.64
- -------------------------------------------------------------------------------------------------------------------------
Investor A $1,000 $1,011.50 $4.94
- -------------------------------------------------------------------------------------------------------------------------
Investor A1 $1,000 $1,011.30 $4.19
- -------------------------------------------------------------------------------------------------------------------------
Investor B $1,000 $1,011.20 $5.19
- -------------------------------------------------------------------------------------------------------------------------
Investor C $1,000 $1,006.80 $8.71
=========================================================================================================================
Hypothetical (5% annual return before expenses)**
=========================================================================================================================
Institutional $1,000 $1,021.18 $3.66
- -------------------------------------------------------------------------------------------------------------------------
Investor A $1,000 $1,019.89 $3.66
- -------------------------------------------------------------------------------------------------------------------------
Investor A1 $1,000 $1,020.63 $4.21
- -------------------------------------------------------------------------------------------------------------------------
Investor B $1,000 $1,019.64 $5.21
- -------------------------------------------------------------------------------------------------------------------------
Investor C $1,000 $1,016.12 $8.75
- -------------------------------------------------------------------------------------------------------------------------
* For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (.73% for Institutional, .99% for Investor A, .84% for
Investor A1, 1.04% for Investor B and 1.75% for Investor C), multiplied by
the average account value over the period, multiplied by 181/365 (to
reflect the one-half year period shown).
** Hypothetical 5% return before expenses is calculated by pro-rating the
number of days in the most recent fiscal half year divided by 365.
BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007 9
Schedule of Investments as of April 30, 2007 (Unaudited) (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
Alabama -- 0.3%
$ 500 Tuscaloosa, Alabama, Special Care Facilities Financing
Authority, Residential Care Facility Revenue Bonds
(Capstone Village, Inc. Project), Series A, 5.125%
due 8/01/2015 $ 494
================================================================================
Alaska -- 1.2%
2,250 Alaska Student Loan Corporation, Student Loan
Revenue Bonds, AMT, Series A, 5.65%
due 7/01/2012 (a) 2,256
================================================================================
Arizona -- 2.9%
5,000 Arizona State Transportation Board, Highway Revenue
Bonds, Series B, 5% due 7/01/2017 5,416
================================================================================
California -- 22.9%
875 Agua Caliente Band of Cahuilla Indians, California,
Casino Revenue Bonds, 5.60% due 7/01/2013 911
2,000 Antelope Valley, California, Health Care District
Revenue Bonds, VRDN, Series A, 5.25%
due 9/01/2017 (g) 2,072
5,035 Bay Area Toll Authority, California, Toll Bridge Revenue
Refunding Bonds (San Francisco Bay Area), Series F,
5% due 4/01/2017 5,470
5,225 California County Tobacco Securitization Agency,
California, Tobacco Revenue Bonds (Los Angeles
County Securitization Corporation), 5.25%
due 6/01/2021 (i) 4,584
10,000 California State Department of Water Resources, Power
Supply Revenue Bonds, Series A, 5.50%
due 5/01/2014 (a) 10,911
California State, GO, Refunding:
5,000 5% due 3/01/2018 5,357
1,000 (Veterans Bonds), Series BG, 5.05% due 12/01/2011 1,030
5,000 Coast Community College District, California, GO
(Election of 2002), Series B, 5% due 8/01/2018 (c) 5,429
3,000 Golden State Tobacco Securitization Corporation of
California, Tobacco Settlement Revenue Refunding
Bonds, Senior Series A-1, 5% due 6/01/2016 3,111
3,000 Los Angeles, California, Harbor Department Revenue
Refunding Bonds, AMT, Series C, 5% due 8/01/2017 (e) 3,237
================================================================================
Colorado -- 3.0%
5,000 Denver, Colorado, City and County Airport Revenue
Bonds, AMT, Series D, 7.75% due 11/15/2013 (a) 5,602
================================================================================
Florida -- 5.5%
2,720 Broward County, Florida, Airport System Revenue Bonds,
AMT, Series L, 5% due 10/01/2018 (a) 2,883
4,000 Florida Hurricane Catastrophe Fund Financing
Corporation Revenue Bonds, Series A, 5.25%
due 7/01/2012 4,270
1,200 Martin County, Florida, PCR, Refunding (Florida
Power & Light Company Project), VRDN, 4.05%
due 7/15/2022 (g) 1,200
310 Middle Village Community Development District, Florida,
Special Assessment Bonds, Series C, 5.125%
due 5/01/2009 310
1,090 Panther Trace Community Development District II,
Florida, Special Assessment Revenue Bonds, Series A,
5% due 11/01/2010 1,087
45 Reunion East Community Development District, Florida,
Special Assessment, Series B, 5.90% due 11/01/2007 45
310 Sterling Hill, Florida, Community Development District,
Capital Improvement Revenue Refunding Bonds,
Series B, 5.50% due 11/01/2010 310
================================================================================
Georgia -- 0.6%
1,050 Fulton County, Georgia, Residential Care Facilities,
Revenue Refunding Bonds (Canterbury Court Project),
Series A, 5% due 2/15/2014 1,053
================================================================================
Idaho -- 2.9%
5,000 Ada and Canyon Counties, Idaho, Joint School District
Number 2 (Meridian), GO, 5% due 8/15/2017 5,406
================================================================================
Illinois -- 0.9%
1,000 Chicago, Illinois, Tax Allocation Bonds (Kingsbury
Redevelopment Project), Series A, 6.57%
due 2/15/2013 1,031
715 Illinois State Finance Authority Revenue Bonds (Primary
Health Care Centers Program), 5.90% due 7/01/2014 731
================================================================================
Massachusetts -- 5.6%
3,300 Massachusetts State Industrial Finance Agency,
Resource Recovery Revenue Refunding Bonds
(Ogden Haverhill Project), AMT, Series A, 5.30%
due 12/01/2009 3,379
Massachusetts State Port Authority, Special Facilities
Revenue Bonds (Delta Air Lines Inc. Project),
AMT, Series A (a):
2,500 5.50% due 1/01/2014 2,646
4,000 5.50% due 1/01/2015 4,229
================================================================================
Michigan -- 0.8%
1,555 Michigan State Strategic Fund, PCR (General Motors
Corporation Project), VRDN, 7% due 12/01/2008 (g) 1,555
================================================================================
Minnesota -- 3.0%
5,000 Minnesota State, GO, 5% due 6/01/2018 5,429
================================================================================
Missouri -- 5.3%
4,000 Jackson County, Missouri, Special Obligation Revenue
Bonds (Harry S. Truman Sports Complex Project),
5% due 12/01/2019 (a) 4,316
5,000 Missouri State Highways and Transportation
Commission, First Lien State Road Revenue Bonds,
Series A, 5% due 5/01/2017 5,423
================================================================================
Portfolio Abbreviations
To simplify the listings of BlackRock Intermediate Municipal Fund of BlackRock
Municipal Series Trust's portfolio holdings in the Schedule of Investments, we
have abbreviated the names of many of the securities according to the list at
right.
AMT Alternative Minimum Tax (subject to)
GAN Grant Anticipation Notes
GO General Obligation Bonds
HDA Housing Development Authority
IDA Industrial Development Authority
PCR Pollution Control Revenue Bonds
VRDN Variable Rate Demand Notes
10 BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Montana -- 2.1%
$ 3,500 Montana State Department of Transportation Revenue
Bonds (Highway 93 Advance Construction Project),
GAN, 5.25% due 6/01/2016 (e) $ 3,848
===============================================================================
New York -- 1.2%
1,140 New York State Dormitory Authority, Non-State
Supported Debt, Revenue Refunding Bonds
(New York University Hospital Center), Series A,
5% due 7/01/2016 1,192
1,000 Westchester County, New York, IDA, Continuing Care
Retirement, Mortgage Revenue Bonds (Kendal on the
Hudson Project), Series A, 5.625% due 1/01/2013 1,038
===============================================================================
North Carolina -- 3.0%
5,000 North Carolina State, GO, Refunding, Series B,
5% due 4/01/2017 5,495
===============================================================================
Oregon -- 2.9%
5,000 Oregon State Department of Transportation, Highway
User Tax Revenue Bonds, Series A, 5%
due 11/15/2017 5,440
===============================================================================
Pennsylvania -- 2.9%
5,000 Pennsylvania State Higher Educational Facilities
Authority, Revenue Refunding Bonds (University
Pennsylvania Health System), Series A, 5%
due 8/15/2016 (a) 5,374
===============================================================================
South Carolina -- 2.8%
5,000 South Carolina State, Highway GO, Series A, 4.60%
due 5/01/2014 5,171
===============================================================================
Tennessee -- 2.2%
300 Sevier County, Tennessee, Public Building Authority,
Local Government Improvement Revenue
Refunding Bonds, VRDN, Series IV-H-1, 4.12%
due 6/01/2025 (a)(g) 300
Sevier County, Tennessee, Public Building Authority,
Local Government Public Improvement Revenue
Bonds, VRDN (g):
1,255 Series IV-A-2, 4.03% due 6/01/2025 (c) 1,255
850 Series IV-E-1, 4.03% due 6/01/2030 (a) 850
1,600 Tennessee HDA, Revenue Bonds (Homeownership
Program), AMT, Series 2-C, 5.85% due 7/01/2009 1,612
===============================================================================
Texas -- 6.2%
2,000 Brazos River Authority, Texas, Revenue Refunding Bonds
(Reliant Energy, Inc. Project), Series B, 7.75%
due 12/01/2018 2,098
5,000 Dallas-Fort Worth, Texas, International Airport Revenue
Refunding and Improvement Bonds, AMT, Series A,
5.75% due 11/01/2014 (b) 5,356
3,640 University of Texas, Financing System Revenue Refunding
Bonds, Series B, 5% due 8/15/2018 3,924
===============================================================================
Virginia -- 2.9%
5,000 Virginia State Public School Authority Revenue Bonds,
Series A, 5% due 8/01/2017 5,435
===============================================================================
Washington -- 6.1%
5,400 Energy Northwest, Washington, Electric Revenue
Refunding Bonds (Columbia Generating), Series A,
5.50% due 7/01/2017 (c) 5,800
5,000 Pierce County, Washington, School District Number 3
(Puyallup), GO, 5% due 12/01/2017 (e) 5,388
===============================================================================
Puerto Rico -- 0.9%
1,500 Puerto Rico Commonwealth Government Development
Bank, Senior Revenue Bonds, Series B, 5%
due 12/01/2017 1,603
- -------------------------------------------------------------------------------
Total Municipal Bonds
(Cost -- $159,272) -- 88.1% 162,362
===============================================================================
===============================================================================
Municipal Bonds Held in Trust (h)
===============================================================================
Illinois -- 5.8%
5,000 Chicago, Illinois, O'Hare International Airport,
General Airport Revenue Refunding Bonds, Third Lien,
AMT, Series A-2, 5.25% due 1/01/2013 (c) 5,325
5,000 Chicago, Illinois, O'Hare International Airport
Revenue Refunding Bonds, 3rd Lien, AMT, Series A-2,
5.25% due 1/01/2014 (c) 5,325
===============================================================================
New Jersey -- 5.5%
Port Authority of New York and New Jersey, Revenue
Refunding Bonds, AMT, 120th Series (e):
5,000 5.75% due 10/15/2013 5,091
5,000 5.75% due 10/15/2014 5,091
- -------------------------------------------------------------------------------
Total Municipal Bonds Held in Trust
(Cost -- $20,671) -- 11.3% 20,832
===============================================================================
===============================================================================
Shares
Held Mutual Funds
===============================================================================
244 BlackRock Insured Municipal 2008 Term Trust, Inc. (d) 3,692
100 BlackRock Insured Municipal Term Trust, Inc. (d) 983
- -------------------------------------------------------------------------------
Total Mutual Funds (Cost -- $5,249) -- 2.6% 4,675
===============================================================================
===============================================================================
Short-Term Securities
===============================================================================
19 Merrill Lynch Institutional Tax-Exempt Fund,
3.70% (d)(f) 19
- -------------------------------------------------------------------------------
Total Short-Term Securities (Cost -- $19) -- 0.0% 19
===============================================================================
Total Investments (Cost -- $185,211*) -- 102.0% 187,888
Other Assets Less Liabilities -- 3.5% 6,374
Liability for Trust Certificates,
Including Interest Expense Payable -- (5.5%) (10,070)
--------
Net Assets -- 100.0% $184,192
========
BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007 11
Schedule of Investments (concluded) (in Thousands)
* The cost and unrealized appreciation (depreciation) of investments as of
April 30, 2007, as computed for federal income tax purposes, were as
follows:
Aggregate cost ............................................ $ 175,754
=========
Gross unrealized appreciation ............................. $ 3,359
Gross unrealized depreciation ............................. (1,225)
---------
Net unrealized appreciation ............................... $ 2,134
=========
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FSA Insured.
(d) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund -- $ -- +
BlackRock Insured Municipal 2008 Term Trust, Inc. -- $ 95
BlackRock Insured Municipal Term Trust, Inc. -- $ 18
BlackRock Municipal Target Term Trust (344) $156
--------------------------------------------------------------------------
+ Income was less than $1,000.
(e) MBIA Insured.
(f) Represents the current yield as of April 30, 2007.
(g) Security may have a maturity of more than one year at time of issuance,
but has variable rate and demand features that qualify it as a short-term
security. The rate disclosed is that currently in effect. This rate
changes periodically based upon prevailing market rates.
(h) Securities represent underlying bonds transferred to a separate
securitization trust established in a tender option bond transaction in
which the Fund may have acquired the residual interest certificates. These
securities serve as collateral in a financing transaction. See note 1(c)
to Financial Statements for details of Municipal Bonds Held in Trust.
(i) Represents a zero coupon bond; the interest rate shown reflects the
effective yield.
o Forward interest rate swaps outstanding as of April 30, 2007 were as
follows:
--------------------------------------------------------------------------
Notional Unrealized
Amount Depreciation
--------------------------------------------------------------------------
Pay a fixed rate of 3.70% and receive a floating
rate based on a 1-week Bond Market Association rate
Broker, Citibank N.A.
Expires July 2017 $15,000 $(50)
--------------------------------------------------------------------------
See Notes to Financial Statements.
12 BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007
Statement of Assets and Liabilities
As of April 30, 2007 (Unaudited)
==================================================================================================================================
Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified cost -- $179,941,772) .. $ 183,194,042
Investments in affiliated securities, at value (identified cost -- $5,268,993) ...... 4,694,130
Cash ................................................................................ 7,747
Receivables:
Securities sold ................................................................. $ 5,981,539
Interest ........................................................................ 2,802,247
Beneficial interests sold ....................................................... 776,496
Dividends ....................................................................... 17,917 9,578,199
-------------
Prepaid expenses and other assets ................................................... 32,851
-------------
Total assets ........................................................................ 197,506,969
-------------
==================================================================================================================================
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------------
Trust certificates .................................................................. 10,000,000
Unrealized depreciation on forward interest rate swaps .............................. 49,875
Payables:
Securities purchased ............................................................ 2,087,345
Dividends to shareholders ....................................................... 532,633
Beneficial interest redeemed .................................................... 429,622
Investment adviser .............................................................. 75,249
Interest expense payable ........................................................ 69,625
Distributor ..................................................................... 8,662
Other affiliates ................................................................ 3,214 3,206,350
-------------
Accrued expenses .................................................................... 59,190
-------------
Total liabilities ................................................................... 13,315,415
-------------
==================================================================================================================================
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets .......................................................................... $ 184,191,554
=============
==================================================================================================================================
Net Assets Consist of
- ----------------------------------------------------------------------------------------------------------------------------------
Institutional Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized ................................................................. $ 1,063,799
Investor A Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized ................................................................. 18,302
Investor A1 Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized ................................................................. 624,879
Investor B Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized ................................................................. 79,974
Investor C Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized ................................................................. 15,857
Paid-in capital in excess of par .................................................... 182,037,296
Accumulated distributions in excess of investment income -- net ..................... $ (107,350)
Accumulated realized capital losses -- net .......................................... (2,168,735)
Unrealized appreciation -- net ...................................................... 2,627,532
-------------
Total accumulated earnings -- net ................................................... 351,447
-------------
Net Assets .......................................................................... $ 184,191,554
=============
==================================================================================================================================
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------------
Institutional -- Based on net assets of $108,706,965 and 10,637,991 shares of
beneficial interest outstanding ................................................... $ 10.22
=============
Investor A -- Based on net assets of $1,868,808 and 183,024 shares of beneficial
interest outstanding .............................................................. $ 10.21
=============
Investor A1 -- Based on net assets of $63,824,801 and 6,248,791 shares of beneficial
interest outstanding .............................................................. $ 10.21
=============
Investor B -- Based on net assets of $8,171,241 and 799,744 shares of beneficial
interest outstanding .............................................................. $ 10.22
=============
Investor C -- Based on net assets of $1,619,739 and 158,574 shares of beneficial
interest outstanding .............................................................. $ 10.21
=============
See Notes to Financial Statements.
BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007 13
Statement of Operations
For the Six Months Ended April 30, 2007 (Unaudited)
==================================================================================================================================
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------------
Interest ............................................................................ $ 3,847,197
Dividends from affiliates ........................................................... 268,571
-------------
Total income ........................................................................ 4,115,768
-------------
==================================================================================================================================
Expenses
- ----------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ............................................................ $ 496,092
Interest expense and fees ........................................................... 218,400
Accounting services ................................................................. 55,530
Printing and shareholder reports .................................................... 37,814
Service fees -- Investor A1 ......................................................... 33,348
Professional fees ................................................................... 30,261
Registration fees ................................................................... 22,430
Transfer agent fees -- Institutional ................................................ 14,297
Service and distribution fees -- Investor B ......................................... 13,227
Trustees' fees and expenses ......................................................... 12,253
Transfer agent fees -- Investor A1 .................................................. 8,814
Custodian fees ...................................................................... 7,154
Pricing fees ........................................................................ 4,507
Service and distribution fees -- Investor C ......................................... 3,820
Transfer agent fees -- Investor B ................................................... 1,589
Service fees -- Investor A .......................................................... 1,555
Transfer agent fees -- Investor A ................................................... 172
Transfer agent fees -- Investor C ................................................... 131
Other ............................................................................... 16,770
-------------
Total expenses before waiver and reimbursement ...................................... 978,164
Waiver and reimbursement of expenses ................................................ (45,119)
-------------
Total expenses after waiver and reimbursement ....................................... 933,045
-------------
Investment income -- net ............................................................ 3,182,723
-------------
==================================================================================================================================
Realized & Unrealized Gain (Loss) -- Net
- ----------------------------------------------------------------------------------------------------------------------------------
Realized loss on:
Investments -- net .............................................................. (4,585)
Forward interest rate swaps -- net .............................................. (198,200) (202,785)
-------------
Change in unrealized appreciation/depreciation on:
Investments -- net .............................................................. (1,001,119)
Forward interest rate swaps -- net .............................................. 202,107 (799,012)
------------------------------
Total realized and unrealized loss -- net ........................................... (1,001,797)
-------------
Net Increase in Net Assets Resulting from Operations ................................ $ 2,180,926
=============
See Notes to Financial Statements.
14 BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007
Statements of Changes in Net Assets
For the Six
Months Ended For the
April 30, Year Ended
2007 October 31,
Increase (Decrease) in Net Assets: (Unaudited) 2006
==================================================================================================================================
Operations
- ----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ............................................................ $ 3,182,723 $ 6,463,395
Realized loss -- net ................................................................ (202,785) (1,688,727)
Change in unrealized appreciation/depreciation -- net ............................... (799,012) 4,081,586
------------------------------
Net increase in net assets resulting from operations ................................ 2,180,926 8,856,254
------------------------------
==================================================================================================================================
Dividends & Distributions to Shareholders
- ----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net:
Institutional ................................................................... (1,925,203) (3,600,332)
Investor A ...................................................................... (21,304) (243)
Investor A1 ..................................................................... (1,218,422) (1,810,323)
Investor B ...................................................................... (151,983) (405,591)
Investor C ...................................................................... (10,095) (206)
Class C ......................................................................... -- (646,700)
Realized gain -- net:
Institutional ................................................................... -- (2,007,396)
Investor A1 ..................................................................... -- (969,703)
Investor B ...................................................................... -- (284,047)
Class C ......................................................................... -- (491,006)
------------------------------
Net decrease in net assets resulting from dividends and distributions to shareholders (3,327,007) (10,215,547)
------------------------------
==================================================================================================================================
Beneficial Interest Transactions
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets derived from beneficial interest transactions . 4,205,170 (8,046,361)
------------------------------
==================================================================================================================================
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets ............................................. 3,059,089 (9,405,654)
Beginning of period ................................................................. 181,132,465 190,538,119
------------------------------
End of period* ...................................................................... $ 184,191,554 $ 181,132,465
------------------------------
* Undistributed (accumulated distributions in excess of) investment income -- net $ (107,350) $ 36,934
==============================
See Notes to Financial Statements.
BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007 15
Financial Highlights
Institutional Investor A
------------------------------------------------------------ --------------------------
For the Six For the Six
Months Months For the
Ended Ended Period
The following per share data and April 30, For the Year Ended October 31, April 30, Oct. 2, 2006++
ratios have been derived from information 2007 ------------------------------------------------ 2007 to Oct. 31,
provided in the financial statements. (Unaudited) 2006 2005 2004 2003 2002 (Unaudited) 2006
====================================================================================================================================
Per Share Operating Performance
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ..... $ 10.28 $ 10.36 $ 10.76 $ 10.71 $ 10.69 $ 10.60 $ 10.27 $ 10.26
------------------------------------------------------------ ------------------------
Investment income -- net ................. .18+ .37+ .38+ .40+ .40+ .40 .17+ .02+
Realized and unrealized gain (loss) -- net (.05) .13 (.34) .08 .10 .13 (.05) .02
------------------------------------------------------------ ------------------------
Total from investment operations ......... .13 .50 .04 .48 .50 .53 .12 .04
------------------------------------------------------------ ------------------------
Less dividends and distributions:
Investment income -- net ............. (.19) (.37) (.38) (.40) (.41) (.40) (.18) (.03)
Realized gain -- net ................. -- (.21) (.06) (.03) (.07) (.04) -- --
------------------------------------------------------------ ------------------------
Total dividends and distributions ........ (.19) (.58) (.44) (.43) (.48) (.44) (.18) (.03)
------------------------------------------------------------ ------------------------
Net asset value, end of period ........... $ 10.22 $ 10.28 $ 10.36 $ 10.76 $ 10.71 $ 10.69 $ 10.21 $ 10.27
============================================================ ========================
====================================================================================================================================
Total Investment Return**
- ------------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ....... 1.28%@ 4.96% .40% 4.57% 4.77% 5.16% 1.15%@ .36%@
============================================================ ========================
====================================================================================================================================
Ratios to Average Net Assets Applicable to Common Stock
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, net of waiver and reimbursement
and excluding interest expense and fees .73%* .73% .74% .79% .85% .89% .99%* .97%*
============================================================ ========================
Expenses, net of waiver and reimbursement .98%* 1.11% 1.00% .91% .94% 1.02% 1.23%* 1.34%*
============================================================ ========================
Expenses ................................. 1.03%* 1.16% 1.05% .94% .96% 1.02% 1.28%* 1.39%*
============================================================ ========================
Investment income -- net ................. 3.59%* 3.61% 3.63% 3.76% 3.80% 3.84% 3.30%* 3.08%*
============================================================ ========================
====================================================================================================================================
Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) . $108,707 $99,678 $100,831 $78,777 $44,372 $34,066 $ 1,869 $ 160
============================================================ ========================
Portfolio turnover ....................... 14% 102% 162% 176% 179% 181% 14% 102%
============================================================ ========================
* Annualized.
** Total investment returns exclude the effects of any sales charges.
+ Based on average shares outstanding.
++ Commencement of operations.
@ Aggregate total investment return.
See Notes to Financial Statements.
16 BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007
Financial Highlights (continued)
Investor A1
---------------------------------------------------------------------------------
For the Six
Months Ended
The following per share data and April 30, For the Year Ended October 31,
ratios have been derived from information 2007 ----------------------------------------------------------------
provided in the financial statements. (Unaudited) 2006 2005 2004 2003 2002
=============================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period . $ 10.28 $ 10.35 $ 10.76 $ 10.71 $ 10.69 $ 10.60
-------------------------------------------------------------------------------
Investment income -- net ............. .18+ .35+ .38+ .39+ .40+ .39
Realized and unrealized gain
(loss) -- net ...................... (.06) .15 (.36) .08 .09 .13
-------------------------------------------------------------------------------
Total from investment operations ..... .12 .50 .02 .47 .49 .52
-------------------------------------------------------------------------------
Less dividends and distributions:
Investment income -- net ......... (.19) (.36) (.37) (.39) (.40) (.39)
Realized gain -- net ............. -- (.21) (.06) (.03) (.07) (.04)
-------------------------------------------------------------------------------
Total dividends and distributions .... (.19) (.57) (.43) (.42) (.47) (.43)
-------------------------------------------------------------------------------
Net asset value, end of period ....... $ 10.21 $ 10.28 $ 10.35 $ 10.76 $ 10.71 $ 10.69
===============================================================================
=============================================================================================================================
Total Investment Return**
- -----------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ... 1.13%@ 4.96% .20% 4.47% 4.68% 5.05%
===============================================================================
=============================================================================================================================
Ratios to Average Net Assets Applicable to Common Stock
- -----------------------------------------------------------------------------------------------------------------------------
Expenses, net of waiver and
reimbursement and excluding interest
expense and fees ................... .84%* .83% .84% .89% .95% .99%
===============================================================================
Expenses, net of waiver and
reimbursement ...................... 1.08%* 1.20% 1.11% 1.01% 1.04% 1.12%
===============================================================================
Expenses ............................. 1.13%* 1.25% 1.16% 1.04% 1.06% 1.12%
===============================================================================
Investment income -- net ............. 3.49%* 3.50% 3.54% 3.66% 3.70% 3.73%
===============================================================================
=============================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) ..................... $ 63,825 $ 71,327 $ 48,524 $ 55,128 $ 51,786 $ 45,563
===============================================================================
Portfolio turnover ................... 14% 102% 162% 176% 179% 181%
===============================================================================
* Annualized.
** Total investment returns exclude the effects of sales charges.
+ Based on average shares outstanding.
@ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007 17
Financial Highlights (continued)
Investor B
---------------------------------------------------------------------------------
For the Six
Months Ended
The following per share data and April 30, For the Year Ended October 31,
ratios have been derived from information 2007 ----------------------------------------------------------------
provided in the financial statements. (Unaudited) 2006 2005 2004 2003 2002
=============================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period . $ 10.28 $ 10.36 $ 10.76 $ 10.71 $ 10.69 $ 10.60
-------------------------------------------------------------------------------
Investment income -- net ............. .17+ .34+ .35+ .37+ .38+ .37
Realized and unrealized gain
(loss) -- net ...................... (.06) .15 (.34) .08 .09 .13
-------------------------------------------------------------------------------
Total from investment operations ..... .11 .49 .01 .45 .47 .50
-------------------------------------------------------------------------------
Less dividends and distributions:
Investment income -- net ......... (.17) (.36) (.35) (.37) (.38) (.37)
Realized gain -- net ............. -- (.21) (.06) (.03) (.07) (.04)
-------------------------------------------------------------------------------
Total dividends and distributions .... (.17) (.57) (.41) (.40) (.45) (.41)
-------------------------------------------------------------------------------
Net asset value, end of period ....... $ 10.22 $ 10.28 $ 10.36 $ 10.76 $ 10.71 $ 10.69
===============================================================================
=============================================================================================================================
Total Investment Return**
- -----------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ... 1.12%@ 4.64% .08% 4.24% 4.46% 4.83%
===============================================================================
=============================================================================================================================
Ratios to Average Net Assets Applicable to Common Stock
- -----------------------------------------------------------------------------------------------------------------------------
Expenses, net of waiver and
reimbursement and excluding interest
expense and fees ................... 1.04%* 1.05% 1.05% 1.10% 1.17% 1.21%
===============================================================================
Expenses, net of waiver and
reimbursement ...................... 1.28%* 1.42% 1.32% 1.22% 1.26% 1.33%
===============================================================================
Expenses ............................. 1.33%* 1.47% 1.37% 1.25% 1.27% 1.34%
===============================================================================
Investment income -- net ............. 3.28%* 3.30% 3.34% 3.45% 3.48% 3.53%
===============================================================================
=============================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in
thousands) ......................... $ 8,171 $ 9,760 $ 14,982 $ 21,623 $ 28,678 $ 37,155
===============================================================================
Portfolio turnover ................... 14% 102% 162% 176% 179% 181%
===============================================================================
* Annualized.
** Total investment returns exclude the effects of sales charges.
+ Based on average shares outstanding.
@ Aggregate total investment return.
See Notes to Financial Statements.
18 BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007
Financial Highlights (concluded)
Investor C
-----------------------------
For the Six
Months For the
Ended Period
April 30, Oct. 2, 2006+
The following per share data and ratios have been derived 2007 to Oct. 31,
from information provided in the financial statements. (Unaudited) 2006
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............................................ $ 10.28 $ 10.26
----------------------------
Investment income -- net*** ..................................................... .11 .01
Realized and unrealized gain (loss) -- net ...................................... (.04) .03
----------------------------
Total from investment operations ................................................ .07 .04
----------------------------
Less dividends from investment income -- net .................................... (.14) (.02)
----------------------------
Net asset value, end of period .................................................. $ 10.21 $ 10.28
============================
==================================================================================================================================
Total Investment Return**
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share .............................................. .68%@ .40%@
============================
==================================================================================================================================
Ratios to Average Net Assets Applicable to Common Stock
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of waiver and reimbursement and excluding interest expense and fees 1.75%* 1.73%*
============================
Expenses, net of waiver and reimbursement ....................................... 1.99%* 2.09%*
============================
Expenses ........................................................................ 2.04%* 2.14%*
============================
Investment income -- net ........................................................ 2.51%* 2.36%*
============================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ........................................ $ 1,620 $ 207
============================
Portfolio turnover .............................................................. 14% 102%
============================
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Based on average shares outstanding.
+ Commencement of operations.
@ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007 19
Notes to Financial Statements (Unaudited)
1. Significant Accounting Policies:
BlackRock Intermediate Municipal Fund (the "Fund") is presently the only series
of BlackRock Municipal Series Trust (the "Trust"). The Fund is registered under
the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's financial statements are prepared in
conformity with U.S. generally accepted accounting principles, which may require
the use of management accruals and estimates. Actual results may differ from
these estimates. These unaudited financial statements reflect all adjustments,
which are, in the opinion of management, necessary to present a fair statement
of the results for the interim period. All such adjustments are of a normal,
recurring nature. The Fund offers multiple classes of shares. Institutional
Shares are sold only to certain eligible investors. Investor A Shares are sold
with a front-end sales charge. Investor A1 Shares are not generally available
except for dividend and capital gains investment. Shares of Investor B and
Investor C may be subject to a contingent deferred sales charge. All classes of
shares have identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Investor A, Investor A1, Investor B and
Investor C Shares bear certain expenses related to the shareholder servicing of
such shares, and Investor B and Investor 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 shareholder servicing and
distribution expenditures (except that Investor B shareholders may vote on
material changes to the Investor A1 distribution plan). Income, expenses (other
than expenses attributable to a specific class) and realized and unrealized
gains and losses are allocated daily to each class based on its relative net
assets. The following is a summary of significant accounting policies followed
by the Fund.
(a) Valuation of investments -- Municipal bonds are traded primarily in the
over-the-counter ("OTC") markets and are valued at the last available bid price
in the OTC market or on the basis of values as obtained by a pricing service.
Pricing services use valuation matrixes that incorporate both dealer-supplied
valuations and valuation models. The procedures of the pricing service and its
valuations are reviewed by the officers of the Fund under the general direction
of the Board of Trustees. Such valuations and procedures are reviewed
periodically by the Board of Trustees of the Fund. Financial futures contracts
and options thereon, which are traded on exchanges, are valued at their closing
prices as of the close of such exchanges. Options written or purchased are
valued at the last sale price in the case of exchange-traded options. Options
traded in the OTC market are valued at the last asked price (options written) or
the last bid price (options purchased). Swap agreements are valued by quoted
fair values received daily by the Fund's pricing service. 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 Fund.
(b) Derivative financial instruments -- The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movements and movements in the securities
markets. Losses may arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
o Financial futures contracts -- The Fund may purchase or sell financial
futures contracts and options on such financial futures contracts.
Financial futures contracts are contracts for delayed delivery of
securities at a specific future date and at a specific price or yield.
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 -- The Fund may enter into forward interest
rate swaps. In a forward interest rate swap, the Fund and the counterparty
agree to make periodic net payments 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.
o Swaps -- The Fund may enter into swap agreements, which are OTC contracts
in which the Fund and a counterparty agree to make periodic net payments
on a specified notional amount. The net payments can be made for a set
period of time or may be triggered by a predetermined credit event. The
net periodic payments may be based on a fixed or variable interest rate;
the change in market value of a specified security, basket of securities
or index; or the return generated by a security.
20 BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007
Notes to Financial Statements (continued)
These periodic payments received or made by the Fund are recorded in the
accompanying Statement of Operations as realized gains or losses,
respectively. Gains or losses are also realized upon termination of the
swap agreements. Swaps are marked-to-market daily and changes in value are
recorded as unrealized appreciation (depreciation). Risks include changes
in the returns of the underlying instruments, failure of the
counterparties to perform under the contracts' terms and the possible lack
of liquidity with respect to the swap agreements.
(c) Municipal bonds held in trust -- The Fund invests in leveraged residual
certificates ("TOB Residuals") issued by tender option bond trusts ("TOBs"). A
TOB is established by a third party sponsor forming a special purpose entity,
into which the Fund, or an agent on behalf of the Fund, transfers municipal
securities. A TOB typically issues two classes of beneficial interests:
short-term floating rate certificates, which are sold to third party investors,
and residual certificates, which are generally issued to the Fund which made the
transfer or to affiliates of the Fund. The Fund's transfers of the municipal
securities to a TOB do not qualify for sale treatment under Statement of
Financial Accounting Standards No. 140 "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities," therefore the municipal
securities deposited into a TOB are presented in the Fund's schedule of
investments and the proceeds from the transaction are reported as a liability
for trust certificates of the Fund. Similarly, proceeds from residual
certificates issued to affiliates, if any, from the transaction are included in
the liability for trust certificates. Interest income from the underlying
security is recorded by the Fund on an accrual basis. Interest expense incurred
on the secured borrowing and other expenses related to remarketing,
administration and trustee services to a TOB are reported as expenses of the
Fund. The floating rate certificates have interest rates that generally reset
weekly and their holders have the option to tender certificates to the TOB for
redemption at par at each reset date. The residual interests held by the Fund
include the right of the Fund (1) to cause the holders of a proportional share
of floating rate certificates to tender their certificates at par, and (2) to
transfer a corresponding share of the municipal securities from the TOB to the
Fund. At April 30, 2007, the aggregate value of the underlying municipal
securities transferred to TOBs was approximately $20,832,000, the related
liability for trust certificates was $10,000,000 and the range of interest rates
was 3.45% to 4.02%.
Financial transactions executed through TOBs generally will underperform the
market for fixed rate municipal bonds in a rising interest rate environment, but
tend to outperform the market for fixed rate bonds when interest rates decline
or remain relatively stable. Should short-term interest rates rise, the Fund's
investments in TOB Residuals likely will adversely affect the Fund's investment
income -- net and distributions to shareholders. Fluctuations in the market
value of municipal securities deposited into the TOB may adversely affect the
Fund's net asset value per share.
While the Fund's investment policies and restrictions expressly permit
investments in inverse floating rate securities such as TOB Residuals, they
generally do not allow the Fund to borrow money for purposes of making
investments. The Fund's management believes that the Fund's restrictions on
borrowings do not apply to the secured borrowings deemed to have occurred for
accounting purposes.
(d) Income taxes -- It is the Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
(e) Security transactions and investment income -- Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Fund amortizes all
premiums and discounts on debt securities.
(f) Prepaid registration fees -- Prepaid registration fees are charged to
expense as the related shares are issued.
(g) Dividends and distributions -- Dividends from net investment income are
declared daily and paid monthly. Distributions of capital gains are recorded on
the ex-dividend dates.
(h) Recent accounting pronouncements -- In July 2006, the Financial Accounting
Standards Board ("FASB") issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes -- an interpretation of FASB Statement No. 109."
FIN 48 prescribes the minimum recognition threshold a tax position must meet in
connection with accounting for uncertainties in income tax positions taken or
expected to be taken by an entity, including mutual funds, before being measured
and recognized in the financial statements. Adoption of FIN 48 is required for
the last net asset value calculation in the first required financial statement
reporting period for fiscal years beginning after December 15, 2006. The impact
on the Funds' financial statements, if any, is currently being assessed.
BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007 21
Notes to Financial Statements (continued)
In September 2006, "Statement of Financial Accounting Standards No. 157, Fair
Value Measurements" ("FAS 157"), was issued and is effective for fiscal years
beginning after November 15, 2007. FAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. At this time, management is evaluating the implications of FAS 157
and its impact on the Funds financial statements, if any, has not been
determined.
In addition, in February 2007, FASB issued "Statement of Financial Accounting
Standards No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities" ("FAS 159"), which is effective for fiscal years beginning after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the provisions of FAS 157. FAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value. FAS 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. At this time, management is evaluating
the implications of FAS 159 and its impact on the Fund's financial statements,
if any, has not been determined.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Investment Advisory Agreement between the Fund and BlackRock Advisors, LLC
(the "Manager"), an indirect, wholly owned subsidiary of BlackRock, Inc., became
effective on September 29, 2006. Prior to September 29, 2006, Merrill Lynch
Investment Managers, L.P. ("MLIM") was the Fund's manager. The general partner
of MLIM is Princeton Services, Inc. ("PSI"), an indirect, wholly owned
subsidiary of Merrill Lynch & Co., Inc. ("Merrill Lynch"), which is the limited
partner. The Fund has also entered into separate Distribution Agreements and
Distribution Plans with FAM Distributors, Inc. ("FAMD") and BlackRock
Distributors, Inc. and its affiliates ("BDI") (collectively, the "Distributor").
FAMD is a wholly owned subsidiary of Merrill Lynch Group, Inc., and BDI is an
affiliate of BlackRock, Inc. Merrill Lynch and The PNC Financial Services Group,
Inc. ("PNC") are the principal owners of BlackRock, Inc.
The Manager is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Fund. For such services, the Fund
pays a monthly fee of .55% of the average daily value of the Fund's net assets.
The Manager has agreed to waive .05% of its fee resulting in an annual fee equal
to .50% of the average daily net assets of the Fund. For the six months ended
April 30, 2007, the Manager earned fees of $496,092, of which $45,099 was
waived.
In addition, the Manager has entered into a sub-advisory agreement with
BlackRock Investment Management, LLC ("BIM"), an affiliate of the Manager, under
which the Manager pays BIM for services it provides a fee at an annual rate
equal to a percentage of the management fee paid by the Fund to the Manager. In
addition, the Manager has agreed to reimburse its management fee by the amount
of management fees the Fund pays to the Manager indirectly through its
investment in Merrill Lynch Institutional Tax-Exempt Fund. For the six months
ended April 30, 2007, the Manager reimbursed the Fund in the amount of $20.
Pursuant to the Distribution Plans adopted by the Fund in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Fund pays the Distributor
ongoing service and distribution fees. The fees are accrued daily and paid
monthly at annual rates based upon the average daily net assets of the shares as
follows:
- --------------------------------------------------------------------------------
Service Distribution
Fee Fee
- --------------------------------------------------------------------------------
Investor A ....................................... .25% --
Investor A1 ...................................... .10% --
Investor B ....................................... .20% .10%
Investor C ....................................... .25% .75%
- --------------------------------------------------------------------------------
Pursuant to sub-agreements with each Distributor, broker dealers, including
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a wholly owned
subsidiary of Merrill Lynch and an affiliate of each Distributor, provide
shareholder servicing and distribution services to the Fund. The ongoing service
fee compensates the Distributor and each broker-dealer (including MLPF&S) for
providing shareholder servicing to Investor A, Investor A1, Investor B and
Investor C shareholders. The ongoing distribution fee compensates each
Distributor and MLPF&S for providing shareholder and distribution-related
services to Investor B and Investor C shareholders.
22 BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007
Notes to Financial Statements (continued)
For the six months ended April 30, 2007, FAMD and BDI earned underwriting
discounts and direct commissions, and MLPF&S and BDI earned dealer concessions
on sales of the Fund's Investor A and Investor A1 Shares as follows:
- --------------------------------------------------------------------------------
FAMD MLPF&S BDI
- --------------------------------------------------------------------------------
Investor A .................................... $ 551 $5,996 --
Investor A1 ................................... -- -- $ 59
- --------------------------------------------------------------------------------
For the six months ended April 30, 2007, MLPF&S received contingent deferred
sales charges of $1,080 and $1 relating to transactions in Investor B and Class
C Shares, respectively. In addition, MLPF&S received contingent deferred sales
charges of $3,145 relating to transactions subject to front-end sales charge
waivers in Investor A1 Shares.
The Manager maintains a call center, which is responsible for providing certain
shareholder services to the Fund, such as responding to shareholder inquiries
and processing transactions based upon instructions from shareholders with
respect to the subscription and redemption of Fund shares. During the six months
ended April 30, 2007, the following amounts have been accrued by the Fund to
reimburse the Manager for costs incurred running the call center, which are a
component of the transfer agent fees in the accompanying Statement of
Operations.
- --------------------------------------------------------------------------------
Call Center Fees
- --------------------------------------------------------------------------------
Institutional ................................................... $416
Investor A ...................................................... $ 11
Investor A1 ..................................................... $463
Investor B ...................................................... $131
Investor C ...................................................... $ 18
- --------------------------------------------------------------------------------
PFPC Inc., an indirect, wholly owned subsidiary of PNC and an affiliate of the
Manager, became the Fund's transfer agent.
For the six months ended April 30, 2007, the Fund reimbursed the Manager $1,805
for certain accounting services.
Certain officers and/or trustees of the Fund are officers and/or directors of
BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended April 30, 2007 were $35,727,857 and $24,861,745, respectively.
4. Beneficial Interest Transactions:
Net increase (decrease) in net assets derived from beneficial interest
transactions was $4,205,170 and $(8,046,361) for the six months ended April 30,
2007 and the year ended October 31, 2006, respectively.
Transactions in beneficial interest for each class were as follows:
- -------------------------------------------------------------------------------
Institutional Shares for the Six Dollar
Months Ended April 30, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ................................ 2,193,453 $ 22,468,329
Shares issued to shareholders
in reinvestment of dividends ............. 23,156 237,147
----------------------------
Total issued ............................... 2,216,609 22,705,476
Shares redeemed ............................ (1,271,224) (13,024,984)
----------------------------
Net increase ............................... 945,385 $ 9,680,492
============================
- -------------------------------------------------------------------------------
Institutional Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ................................ 4,020,988 $ 40,960,524
Shares issued to shareholders
in reinvestment of dividends
and distributions ........................ 99,237 1,011,100
----------------------------
Total issued ............................... 4,120,225 41,971,624
Shares redeemed ............................ (4,163,299) (42,438,080)
----------------------------
Net decrease ............................... (43,074) $ (466,456)
============================
- -------------------------------------------------------------------------------
Investor A Shares for the Six Dollar
Months Ended April 30, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .................................. 168,354 $ 1,726,394
Shares issued to shareholders
in reinvestment of dividends ............... 1,029 10,517
----------------------------
Total issued ................................. 169,383 1,736,911
Shares redeemed .............................. (1,956) (20,067)
----------------------------
Net increase ................................. 167,427 $ 1,716,844
============================
- -------------------------------------------------------------------------------
Investor A Shares for the Period Dollar
Oct. 2, 2006+ to Oct. 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ...................................... 15,604 $ 159,487
Shares redeemed .................................. (7) (67)
----------------------------
Net increase ..................................... 15,597 $ 159,420
============================
+ Commencement of operations.
- -------------------------------------------------------------------------------
Investor A1 Shares for the Six Dollar
Months Ended April 30, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .................................. 52,643 $ 538,934
Shares issued to shareholders
in reinvestment of dividends ............... 69,535 711,786
----------------------------
Total issued ................................. 122,178 1,250,720
Shares redeemed .............................. (812,469) (8,326,431)
----------------------------
Net decrease ................................. (690,291) $(7,075,711)
============================
BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007 23
Notes to Financial Statements (concluded)
- -------------------------------------------------------------------------------
Investor A1 Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ................................ 428,799 $ 4,375,953
Automatic conversion of shares ............. 125,138 1,275,870
Shares issued to shareholders
in reinvestment of dividends
and distributions .......................... 152,300 1,551,857
Shares issued resulting
from conversion of shares ................ 2,403,412 24,544,146
----------------------------
Total issued ............................... 3,109,649 31,747,826
Shares redeemed ............................ (858,199) (8,752,391)
----------------------------
Net increase ............................... 2,251,450 $ 22,995,435
============================
- -------------------------------------------------------------------------------
Investor B Shares for the Six Dollar
Months Ended April 30, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .................................. 2,247 $ 23,060
Shares issued to shareholders
in reinvestment of dividends ............... 8,128 83,242
----------------------------
Total issued ................................. 10,375 106,302
Shares redeemed .............................. (159,784) (1,637,158)
----------------------------
Net decrease ................................. (149,409) $(1,530,856)
============================
- -------------------------------------------------------------------------------
Investor B Shares for the Year Dollar
Ended October 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .................................. 51,287 $ 524,293
Shares issued to shareholders
in reinvestment of dividends
and distributions ............................ 36,382 370,767
----------------------------
Total issued ................................. 87,669 895,060
----------------------------
Automatic conversion of shares ............... (125,110) (1,275,870)
Shares redeemed .............................. (460,278) (4,695,757)
----------------------------
Total redeemed ............................... (585,388) (5,971,627)
----------------------------
Net decrease ................................. (497,719) $(5,076,567)
============================
- -------------------------------------------------------------------------------
Investor C Shares for the Six Dollar
Months Ended April 30, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .................................. 142,958 $ 1,460,644
Shares issued to shareholders
in reinvestment of dividends ............... 878 8,977
----------------------------
Total issued ................................. 143,836 1,469,621
Shares redeemed .............................. (5,382) (55,220)
----------------------------
Net increase ................................. 138,454 $ 1,414,401
============================
- -------------------------------------------------------------------------------
Investor C Shares for the Period Dollar
Oct. 2, 2006+ to Oct. 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold ...................................... 20,126 $ 205,721
Shares redeemed .................................. (6) (69)
----------------------------
Net increase ..................................... 20,120 $ 205,652
============================
+ Commencement of operations.
- -------------------------------------------------------------------------------
Class C Shares for the Period Dollar
Nov. 1, 2005 to Aug. 25, 2006+ Shares Amount
- -------------------------------------------------------------------------------
Shares sold ................................ 511,348 $ 5,215,735
Shares issued to shareholders
in reinvestment of dividends
and distributions .......................... 69,597 708,846
----------------------------
Total issued ............................... 580,945 5,924,581
----------------------------
Shares redeemed ............................ (708,517) (7,244,280)
Shares redeemed resulting
from conversion to Investor A1 ........... (2,403,368) (24,544,146)
----------------------------
Total redeemed ............................. (3,111,885) (31,788,426)
----------------------------
Net decrease ............................... (2,530,940) $(25,863,845)
============================
+ On August 25, 2006, Class C Shares were converted to Class A Shares (now
Investor A1 Shares).
5. Short-Term Borrowings:
The Fund, along with certain other funds managed by the Manager and its
affiliates, is a party to a $500,000,000 credit agreement with a group of
lenders. The Fund may borrow under the credit agreement to fund shareholder
redemptions and for other lawful purposes other than for leverage. The Fund may
borrow up to the maximum amount allowable under the Fund's current prospectus
and statement of additional information, subject to various other legal,
regulatory or contractual limits. On November 22, 2006, the credit agreement was
renewed for one year under substantially the same terms. The Fund pays a
commitment fee of .06% per annum based on the Fund's pro rata share of the
unused portion of the credit agreement. Amounts borrowed under the credit
agreement bear interest at a rate equal to, at each fund's election, the federal
funds rate plus .35% or a base rate as defined in the credit agreement. The Fund
did not borrow under the credit agreement during the six months ended April 30,
2007.
6. Capital Loss Carryfoward:
On October 31, 2006, the Fund had a net capital loss carryforward of $1,822,627,
all of which expires in 2014. This amount will be available to offset like
amounts of any future taxable gains.
24 BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007
BlackRock Funds
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former fund
investors and individual clients (collectively, "Clients") and to safeguarding
their non-public personal information. The following information is provided to
help you understand what personal information BlackRock collects, how we protect
that information and why in certain cases we share such information with select
parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you
from different sources, including the following: (i) information we receive from
you or, if applicable, your financial intermediary, on applications, forms or
other documents; (ii) information about your transactions with us, our
affiliates, or others; (iii) information we receive from a consumer reporting
agency; and (iv) from visits to our Web sites.
BlackRock does not sell or disclose to non-affiliated third parties any
non-public personal information about its Clients, except as permitted by law or
as is necessary to respond to regulatory requests or to service Client accounts.
These non-affiliated third parties are required to protect the confidentiality
and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that may
be of interest to you. In addition, BlackRock restricts access to non-public
personal information about its Clients to those BlackRock employees with a
legitimate business need for the information. BlackRock maintains physical,
electronic and procedural safeguards that are designed to protect the non-public
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
Availability of Additional Information
Electronic copies of most financial reports and prospectuses are available on
the Fund's Web site or shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Fund's electronic delivery program.
To enroll:
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor. Please note that not all investment
advisers, banks or brokerages may offer this service.
Shareholders Who Hold Accounts Directly with BlackRock:
1) Access the BlackRock Web site at http://www.blackrock.com/edelivery
2) Select eDelivery under the More Information section
3) Log into your account
The Fund will mail only one copy of shareholder documents, including
prospectuses, annual and semi-annual reports and proxy statements, to
shareholders with multiple accounts at the same address. This practice is
commonly called "householding" and it is intended to reduce expenses and
eliminate duplicate mailings of shareholder documents. Mailings of your
shareholder documents may be householded indefinitely unless you instruct us
otherwise. If you do not want the mailing of these documents to be combined with
those for other members of your household, please contact the Fund at (800)
441-7762.
BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007 25
BlackRock Funds (concluded)
Availability of Additional Information (concluded)
Availability of Proxy Voting Policies and Procedures
The Fund has delegated proxy voting responsibilities to BlackRock and its
affiliates, subject to the general oversight of the Fund's Board of Trustees. A
description of the policies and procedures that BlackRock and its affiliates use
to determine how to vote proxies relating to portfolio securities is available
without charge, upon request, on our Web site at www.blackrock.com, by calling
(800) 441-7762, or on the Web site of the Securities and Exchange Commission
(the "Commission") at http://www.sec.gov.
Availability of Proxy Voting Record
Information on how proxies relating to the Fund's voting securities were voted
(if any) by the Fund's previous manager during the most recent 12-month period
ended June 30 is available, upon request and without charge, on our Web site at
www.blackrock.com, by calling (800) 441-7762 or on the Web site of the
Commission at http://www.sec.gov.
Availability of Quarterly Portfolio Schedule
The Fund files its complete schedule of portfolio holdings for the first and
third quarters of its fiscal year with the Commission on Form N-Q. The Fund's
Forms N-Q are available on the Commission's Web site at http://www.sec.gov and
may be reviewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330. The Fund's Forms N-Q may also be
obtained upon request, without charge, by calling (800) 441-7762.
Shareholder Privileges
Account Information
Call us at (800) 441-7762 8:00 AM - 6:00 PM EST to get information about your
account balances, recent transactions and share prices. You can also reach us on
the Web at www.blackrock.com.
Automatic Investment Plans
Investor Class shareholders who want to invest regularly can arrange to have $50
or more automatically deducted from their checking or savings account and
invested in any of the BlackRock portfolios.
Systematic Withdrawal Plans
Investor Class shareholders can establish a systematic withdrawal plan and
receive periodic payments of $50 or more from their BlackRock portfolios, as
long as their account is at least $10,000.
Retirement Plans
Shareholders may make investments in conjunction with Traditional, Rollover,
Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans.
26 BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007
A World-Class Mutual Fund Family
BlackRock offers a diverse lineup of open-end mutual funds crossing all
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BlackRock EuroFund
BlackRock Focus Twenty Fund
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BlackRock Fundamental Growth Fund
BlackRock Global Allocation Fund+
BlackRock Global Dynamic Equity Fund
BlackRock Global Financial Services Fund
BlackRock Global Growth Fund
BlackRock Global Opportunities Portfolio
BlackRock Global Resources Portfolio*
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BlackRock Healthcare Fund
BlackRock Health Sciences Opportunities Portfolio
BlackRock Index Equity Portfolio*
BlackRock International Fund
BlackRock International Index Fund
BlackRock International Opportunities Portfolio*
BlackRock International Value Fund
BlackRock Investment Trust
BlackRock Large Cap Core Fund
BlackRock Large Cap Growth Fund
BlackRock Large Cap Value Fund
BlackRock Latin America Fund
BlackRock Mid-Cap Growth Equity Portfolio
BlackRock Mid-Cap Value Equity Portfolio
BlackRock Mid Cap Value Opportunities Fund
BlackRock Natural Resources Trust
BlackRock Pacific Fund
BlackRock Small Cap Core Equity Portfolio
BlackRock Small Cap Growth Equity Portfolio
BlackRock Small Cap Growth Fund II
BlackRock Small Cap Index Fund
BlackRock Small Cap Value Equity Portfolio*
BlackRock Small/Mid-Cap Growth Portfolio
BlackRock S&P 500 Index Fund
BlackRock U.S. Opportunities Portfolio
BlackRock Utilities and Telecommunications Fund
BlackRock Value Opportunities Fund
Fixed Income Funds
BlackRock Bond Fund
BlackRock Commodity Strategies Fund
BlackRock Enhanced Income Portfolio
BlackRock GNMA Portfolio
BlackRock Government Income Portfolio
BlackRock High Income Fund
BlackRock High Yield Bond Portfolio
BlackRock Inflation Protected Bond Portfolio
BlackRock Intermediate Bond Portfolio II
BlackRock Intermediate Government Bond Portfolio
BlackRock International Bond Portfolio
BlackRock Low Duration Bond Portfolio
BlackRock Managed Income Portfolio
BlackRock Short-Term Bond Fund
BlackRock Total Return Portfolio
BlackRock Total Return Portfolio II
BlackRock World Income Fund
Municipal Bond Funds
BlackRock AMT-Free Municipal Bond Portfolio
BlackRock California Insured Municipal Bond Fund
BlackRock Delaware Municipal Bond Portfolio
BlackRock Florida Municipal Bond Fund
BlackRock High Yield Municipal Fund
BlackRock Intermediate Municipal Fund
BlackRock Kentucky Municipal Bond Portfolio
BlackRock Municipal Insured Fund
BlackRock National Municipal Fund
BlackRock New Jersey Municipal Bond Fund
BlackRock New York Municipal Bond Fund
BlackRock Ohio Municipal Bond Portfolio
BlackRock Pennsylvania Municipal Bond Fund
BlackRock Short-Term Municipal Fund
Target Risk & Target Date Funds
BlackRock Prepared Portfolios
Conservative Prepared Portfolio
Moderate Prepared Portfolio
Growth Prepared Portfolio
Aggressive Growth Prepared Portfolio
BlackRock Lifecycle Prepared Portfolios
Prepared Portfolio 2010
Prepared Portfolio 2015
Prepared Portfolio 2020
Prepared Portfolio 2025
Prepared Portfolio 2030
Prepared Portfolio 2035
Prepared Portfolio 2040
Prepared Portfolio 2045
Prepared Portfolio 2050
* See the prospectus for information on specific limitations on investments
in the fund.
+ Mixed asset fund.
BlackRock mutual funds are distributed by BlackRock Distributors, Inc. and
certain funds are also distributed by FAM Distributors, Inc. You should consider
the investment objectives, risks, charges and expenses of the funds under
consideration carefully before investing. Each fund's prospectus contains this
and other information and is available at www.blackrock.com or by calling
800-882-0052 or from your financial advisor. The prospectus should be read
carefully before investing.
BLACKROCK INTERMEDIATE MUNICIPAL FUND APRIL 30, 2007 27
This report is transmitted to shareholders only. It is not authorized for use as
an offer of sale or a solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past performance
results shown in this report should not be considered a representation of future
performance. Investment returns 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.
BlackRock Intermediate Municipal Fund
Of BlackRock Municipal Series Trust
P.O. Box 9011
Princeton, NJ 08543-9011
BLACKROCK
#10437-4/07
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this semi-annual
report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - The registrant's Schedule of Investments is
included as part of the Report to Stockholders filed under Item 1 of
this form.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating Committee will consider nominees to the Board
recommended by shareholders when a vacancy becomes available.
Shareholders who wish to recommend a nominee should send nominations
which include biographical information and set forth the
qualifications of the proposed nominee to the registrant's Secretary.
There have been no material changes to these procedures.
Item 11 - Controls and Procedures
11(a) - The registrant's principal executive and principal financial officers
or persons performing similar functions have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act")) are effective as of a date within 90 days of the filing
of this report based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act and Rule
15d-15(b) under the Securities and Exchange Act of 1934, as amended.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act (17
CFR 270.30a-3(d)) that occurred during the second fiscal quarter of
the period covered by this report that have materially affected, or
are reasonably likely to materially affect, the registrant's internal
control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock Intermediate Municipal Fund of BlackRock Municipal Series Trust
By: /s/ Robert C. Doll, Jr.
-----------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock Intermediate Municipal Fund of BlackRock Municipal Series Trust
Date: June 19, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Robert C. Doll, Jr.
-----------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock Intermediate Municipal Fund of BlackRock Municipal Series Trust
Date: June 19, 2007
By: /s/ Donald C. Burke
-----------------------------------
Donald C. Burke,
Chief Financial Officer of
BlackRock Intermediate Municipal Fund of BlackRock Municipal Series Trust
Date: June 19, 2007