MERRILL LYNCH
MULTI-STATE
LIMITED MATURITY
MUNICIPAL
SERIES TRUST
FUND LOGO
Annual Report
July 31, 1998
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Trust unless
accompanied or preceded by the Trust's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change.
Merrill Lynch Multi-State
Limited Maturity
Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
Merrill Lynch Multi-State Limited Maturity Municipal Series Trust,
July 31, 1998
TO OUR SHAREHOLDERS
The Municipal Market Environment
During the three months ended July 31, 1998, long-term tax-exempt
revenue bond yields moderately declined. Thus far this year, the
near absence of inflationary pressures continued to support low
interest rates. However, consistently strong domestic economic
growth has caused some investors to fear that the Federal Reserve
Board will be forced eventually to raise short-term interest rates.
Such action would be taken to ensure that the US economy's present
rate of growth would decelerate before any inflationary pressures
could develop.
However, the weakening financial conditions in many Asian countries
subsequently calmed investor fears of Federal Reserve Board
intervention, and fixed-income prices again moved higher. As
measured by the Bond Buyer Revenue Bond Index, long-term uninsured
municipal bond yields fell approximately 15 basis points (0.15%) to
end the July quarter at 5.36%. As in late 1997 and early 1998, US
Treasury bond yields benefited from a "flight to quality" as foreign
investors were drawn to the relative safe haven of US Government
securities. Long-term US Treasury bond yields declined approximately
40 basis points to end the July quarter at 5.71%.
Thus far in 1998, the municipal bond market has experienced
unexpectedly strong supply pressures. These supply pressures have
prevented tax-exempt bond yields from declining as much as US
Treasury bond yields. During the first seven months of 1998, almost
$153 billion in new tax-exempt bonds were underwritten, an increase
of almost 50% compared to the same period a year ago. During the
quarter ended July 31, 1998, municipalities issued over $75 billion
in new securities, an increase of nearly 35% compared to the same
three-month period in 1997. Additionally, corporate issuers have
also viewed current interest rate levels as an opportunity to issue
significant amounts of taxable securities. For the first half of
1998, over $500 billion in investment-grade corporate bonds have
been underwritten, an increase of more than 70% compared to the same
period a year ago. This sizeable corporate bond issuance has tended
to both support generally higher fixed-income yields and reduce the
demand for tax-exempt bonds.
However, the recent pace of new municipal bond issuance is unlikely
to be maintained. Continued increases in bond issuance will require
lower and lower municipal bond yields to generate the economic
savings necessary for additional tax-exempt bond refinancings.
Preliminary estimates for 1998 total municipal bond issuance are in
the $200 billion--$225 billion range. These estimates suggest that
recent supply pressures are likely to abate later in the year.
Recently, municipal bond investors received approximately $30
billion in June and July in coupon payments, bond maturities and
proceeds from early redemptions. The demand generated by these
assets has helped to offset the increase in supply seen thus far
this year.
The continued impact of the Asian financial crisis on the US
domestic economy's future growth remains unclear. Current Asian
economic conditions continue to reflect ongoing weakness. Recent
trade data indicated that reduced US exports to these countries
might have lowered US economic growth by as much as 2% in the first
half of 1998. Since further trade deterioration is possible in the
coming months, we do not believe the Federal Reserve Board will be
willing to raise interest rates, barring a dramatic and unexpected
resurgence of domestic inflation.
These factors suggest that over the near term, interest rates in
general are unlikely to rise by any appreciable amount. Recent
supply pressures have caused municipal bond yield ratios to rise
relative to US Treasury bond yields. At July 31, 1998, long-term tax-
exempt bond yields were at attractive yield ratios relative to US
Treasury securities of comparable maturities (over 90%), well in
excess of their expected range of 85%--88%. Tax-exempt bond yield
ratios rarely exceeded 90% in the 1980s and 1990s. Previous
instances have usually been associated with potential changes in
Federal tax codes that would have adversely affected the tax-favored
status of municipal bonds. The present situation has developed
largely because of a temporary supply imbalance. These imbalances
should soon be corrected as tax-exempt bond issuance slows from its
current rapid pace later this year. Any further pressure on the
municipal market may well represent a very attractive investment
opportunity.
Merrill Lynch Multi-State Limited Maturity Municipal Series Trust,
July 31, 1998
Fiscal Year in Review
Merrill Lynch California Limited
Maturity Municipal Bond Fund
For the majority of the Fund's fiscal year, we maintained an
aggressive investment posture. The Fund's average maturity was
longer than 4.4 years (with a maximum of five years) for most of the
year. During the past 12 months, California intermediate-term paper
traded in a very tight range because of increased demand and flat
supply. We maintained a minimum cash position throughout the year as
the spread between California money market instruments and
intermediate-term bonds widened considerably. This strategy,
combined with an approximately 60 basis point drop in five-year
Treasury note interest rates, led to good general performance for
the year and enhanced the Fund's total returns.
During the quarter ended July 31, 1998, Governor Wilson offered an
updated $75.9 billion budget proposal to the state legislature. The
amount of the budget was up $2 billion from estimates early in the
year. The proposal included the largest tax cut in state history,
which would be achieved by reducing the state's car license fee by
50% in 1999 and by 75% in 2002. The proposal also calls for an
additional $581 million for schools; $247 million for environmental
protection; $280 million for higher education, including $170
million for the University of California and California State
University for equipment and maintenance upgrades; $172 million for
flood control projects; and an $88 million increase for health and
welfare programs, including $60 million for a 2.8% cost of living
increase in benefits for the aged, blind and disabled. The
Governor's spending increases were made possible by the expectation
of an almost $4.4 billion surplus in revenues, which grew by nearly
11% as compared to the year before. The State Treasurer is expecting
a revenue increase in 1999 of approximately 5.9%. The California
economy continued to outperform the national averages during the
July quarter led by strong gains in entertainment, tourism and
computer services. The state's strong growth prospects continue to
be tempered by concerns over the Asian economic crisis and its
effect on the state's large export business. At June 31, 1998,
California's legislature and Governor Wilson approved a $19 billion
temporary budget until the two parties can reach an agreement on the
outright budget for the coming fiscal year.
At the close of the July quarter, net assets of Merrill Lynch
California Limited Maturity Municipal Bond Fund stood at
approximately $9.1 million, basically unchanged from April quarter-
end. As we discussed in our April shareholder letter, we had adopted
a more neutral posture in late April until the economy's strength,
inflation's path and the direction of interest rates could be more
clearly ascertained. We maintained this posture for a very limited
time as the spread between money market instruments and issues in
the five-year--ten-year maturity range widened. We extended the
Fund's average maturity in May to a more aggressive 4.7 years and
have maintained this stance because inflation has remained low
despite continued strong economic growth. The Federal Reserve Board
appears willing to let the crisis in Asia play out before addressing
interest rates. We look to maintain this aggressive investment
strategy into the October quarter with the expectation that
inflation will remain subdued and economic growth will slow as the
crisis in Asia becomes more evident in the nation's manufacturing
sector.
Merrill Lynch Florida Limited
Maturity Municipal Bond Fund
For the majority of the Fund's fiscal year, we maintained an
aggressive investment strategy. The Fund's average maturity was
longer than 4.5 years (with a maximum of five years) for most of the
year. This strategy enhanced Fund performance because Florida paper
traded in a very tight range despite an increase in supply. We
maintained a zero cash position for the majority of the Fund's
fiscal year in order to seek to enhance after-tax return. This
strategy, combined with an approximately 60 basis point drop in five-
year Treasury note interest rates, led to good general performance
for the year.
During the quarter ended July 31, 1998, the state of Florida
continued to exhibit strong economic growth. Nationwide personal
income gains and high levels of consumer confidence have
specifically benefited the state's tourism sector, as evidenced by
the Orlando-Orange County Convention and Visitor Bureaus reporting
record hotel booking percentages as well as increased ticket prices
for the state's major theme parks. The state's diversifying service-
based economy continues to experience strong growth relative to the
region and the nation. The state ended the 1997 fiscal year with a
combined reserve of more than $1 billion as a result of strong
revenue fund performance. The state expects to end fiscal year 1998
with a Budget Stabilization Reserve Fund of $686 million and a
working capital fund of $355 million. Fiscal 1997 and 1998 reserve
levels are the highest the state has recorded in more than a decade.
The state's record of budget control coupled with a large budget
stabilization fund is likely to provide the state with significant
flexibility to manage its fiscal position in the future, despite
significant growth pressures and school funding needs. Florida's
fiscal 1999 budget anticipates 3.3% growth in spending over fiscal
1998 and no new revenue measures. Overall, state debt levels are
manageable at $633 per capita and 2.6% of personal income despite
accelerated debt issuance during the past couple of years. Also, the
fires that plagued the eastern region of the state during the July
quarter, largely damaging timber, have not had any significant
adverse impact on the state's economic activity or financial
operations.
At the close of the July quarter, net assets of Merrill Lynch
Florida Limited Maturity Municipal Bond Fund stood at approximately
$18.7 million, a decrease of approximately 10% from April quarter-
end. As we discussed in our April shareholder letter, we had adopted
a more neutral posture in late April until the economy's strength,
inflation's path and the direction of interest rates could be more
clearly ascertained. We maintained this posture into early May when
we extended the Fund's average maturity to a more aggressive 4.7
years with a zero cash position. We have maintained this stance
because inflation has remained low despite continued strong economic
growth. The Federal Reserve Board appears willing to let the crisis
in Asia play out before addressing interest rates. We look to
maintain this aggressive investment stance into the October quarter
with the expectation that inflation will remain subdued and economic
growth will slow as the crisis in Asia becomes more evident in the
nation's manufacturing sector.
In Conclusion
We thank you for your support of Merrill Lynch Multi-State Limited
Maturity Municipal Series Trust, and we look forward to serving your
investment needs in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Edward J. Andrews)
Edward J. Andrews
Vice President and Portfolio Manager
September 9, 1998
Merrill Lynch Multi-State Limited Maturity Municipal Series Trust,
July 31, 1998
PERFORMANCE DATA
About Fund
Performance
Investors are able to purchase shares of the Trust through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 1% and bear no ongoing distribution or account maintenance
fees. Class A Shares are available only to eligible investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 1% if redeemed during the first year, decreasing 1% the
next year to 0%. In addition, Class B Shares are subject to a
distribution fee of 0.20% and an account maintenance fee of 0.15%.
These shares automatically convert to Class D Shares after
approximately 10 years. (There is no initial sales charge for
automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.20% and an
account maintenance fee of 0.15%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 1% and an
account maintenance fee of 0.10% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Recent Performance
Results" and "Average Annual Total Return" tables assume
reinvestment of all dividends and capital gains distributions at net
asset value on the payable date. Investment return and principal
value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Dividends paid to each
class of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<TABLE>
Recent
Performance
Results*
<CAPTION>
Since Standardized
12 Month 3 Month Inception 30-day Yield
Total Total Total As of
Return Return Return 7/31/98
<S> <C> <C> <C> <C>
California Limited Maturity Fund Class A Shares +2.96% +1.52% +21.50% 2.65%
California Limited Maturity Fund Class B Shares +2.59 +1.33 +19.38 2.33
California Limited Maturity Fund Class C Shares +2.68 +1.38 +19.26 2.51
California Limited Maturity Fund Class D Shares +2.86 +1.39 +19.95 2.56
Florida Limited Maturity Fund Class A Shares +3.17 +1.43 +20.42 2.85
Florida Limited Maturity Fund Class B Shares +2.80 +1.34 +18.43 2.52
Florida Limited Maturity Fund Class C Shares +2.65 +1.29 +16.61 2.33
Florida Limited Maturity Fund Class D Shares +3.17 +1.51 +18.86 2.74
<FN>
*Investment results shown do not reflect sales charges; results
would be lower if a sales charge was included. 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. The inception
dates for each of the Funds within Merrill Lynch Maturity Municipal
Series Trust are Class A and Class B Shares, 11/26/93 and Class C
and Class D Shares, 10/21/94.
</TABLE>
California Limited
Maturity Fund
Total Return
Based on a $10,000
Investment
A line graph depicting the growth of an investment in the Fund's
Class A Shares and Class B Shares compared to growth of an
investment in the ML U1AO Index. Beginning and ending values are:
11/26/93** 7/98
California Limited Maturity++--
Class A Shares* $ 9,900 $12,028
California Limited Maturity++--
Class B Shares* $10,000 $11,938
Merrill Lynch U1AO Index++++ $10,000 $12,231
A line graph depicting the growth of an investment in the Fund's
Class C Shares and Class D Shares compared to growth of an
investment in the ML U1AO Index. Beginning and ending values are:
10/21/94** 7/98
California Limited Maturity++--
Class C Shares* $10,000 $11,926
California Limited Maturity++--
Class D Shares* $ 9,900 $11,875
Merrill Lynch U1AO Index++++ $10,000 $11,977
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of Operations.
++California Limited Maturity invests in a portfolio of securities
consisting primarily of intermediate-term investment-grade
obligations issued by or on the behalf of the state of California or
its political subdivisions, agencies or instrumentalities, and
obligations of other qualifying issuers.
++++This unmanaged Index is comprised of AAA-rated bonds maturing
within three years.
Past performance is not predictive of future performance.
California Limited
Maturity Fund
Average Annual
Total Return
California Limited Maturity Fund
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 6/30/98 +4.09% +3.05%
Inception (11/26/93) through 6/30/98 +4.26 +4.03
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 6/30/98 +3.72% +2.72%
Inception (11/26/93) through 6/30/98 +3.87 +3.87
[FN]
*Maximum contingent deferred sales charge is 1% and reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Class C Shares* Without CDSC With CDSC**
Year Ended 6/30/98 +3.81% +2.81%
Inception (10/21/94) through 6/30/98 +4.80 +4.80
[FN]
*Maximum contingent deferred sales charge is 1% and reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Class D Shares* Sales Charge Sales Charge**
Year Ended 6/30/98 +3.99% +2.95%
Inception (10/21/94) through 6/30/98 +4.96 +4.68
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
Merrill Lynch Multi-State Limited Maturity Municipal Series Trust,
July 31, 1998
PERFORMANCE DATA (concluded)
Florida Limited
Maturity Fund
Total Return
Based on a $10,000
Investment
A line graph depicting the growth of an investment in the Fund's
Class A Shares and Class B Shares compared to growth of an
investment in the ML U1AO Index. Beginning and ending values are:
11/26/93** 7/98
Florida Limited Maturity++--
Class A Shares* $ 9,900 $11,920
Florida Limited Maturity++--
Class B Shares* $10,000 $11,843
Merrill Lynch U1AO Index++++ $10,000 $12,231
A line graph depicting the growth of an investment in the Fund's
Class C Shares and Class D Shares compared to growth of an
investment in the ML U1AO Index. Beginning and ending values are:
10/21/94** 7/98
Florida Limited Maturity++--
Class C Shares* $10,000 $11,661
Florida Limited Maturity++--
Class D Shares* $ 9,900 $11,768
Merrill Lynch U1AO Index++++ $10,000 $11,977
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of operations.
++Florida Limited Maturity invests in a portfolio of securities
consisting primarily of intermediate-term investment-grade
obligations issued by or on the behalf of the state of Florida or
its political subdivisions, agencies or instrumentalities, and
obligations of other qualifying issuers.
++++This unmanaged Index is comprised of AAA-rated bonds maturing
within three years.
Past performance is not predictive of future performance.
Florida Limited
Maturity Fund
Average Annual
Total Return
Florida Limited Maturity Fund
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 6/30/98 +4.32% +3.27%
Inception (11/26/93) through 6/30/98 +4.10 +3.87
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 6/30/98 +3.84% +2.84%
Inception (11/26/93) through 6/30/98 +3.71 +3.71
[FN]
*Maximum contingent deferred sales charge is 1% and reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Class C Shares* Without CDSC With CDSC**
Year Ended 6/30/98 +3.63% +2.63%
Inception (10/21/94) through 6/30/98 +4.21 +4.21
[FN]
*Maximum contingent deferred sales charge is 1% and reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Class D Shares* Sales Charge Sales Charge**
Year Ended 6/30/98 +4.11% +3.07%
Inception (10/21/94) through 6/30/98 +4.73 +4.45
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
Portfolio
Abbreviations
To simplify the listings of Merrill Lynch Multi-State Limited
Maturity 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)
GO General Obligation Bonds
PCR Pollution Control Revenue Bonds
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
California Limited Maturity Municipal Bond Fund
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
California--98.3% NR* A1 $ 400 California Educational Facilities Authority, Revenue Refunding
Bonds (Loyola Marymount University), 5.70% due 10/01/2002 $ 425
AAA Aaa 500 California Health Facilities Financing Authority, Revenue
Refunding Bonds (Catholic Healthcare West), Series A, 5.30%
due 7/01/2003 (d) 526
A1+ NR* 400 California Pollution Control Financing Authority, PCR, Refunding
(Pacific Gas and Electric Company), VRDN, Series A, 3.40% due
12/01/2018 (a) 400
California Pollution Control Financing Authority, Solid Waste
Disposal Revenue Bonds (Shell Oil Co.--Martinez Project),
VRDN, AMT (a):
A1+ VMIG1++ 300 Series A, 3.40% due 10/01/2024 300
A1+ NR* 100 Series B, 3.40% due 10/01/2031 100
California State, GO, UT:
A+ A1 750 6.75% due 10/01/2003 842
AAA Aaa 750 6.35% due 11/01/2004 (b) 840
</TABLE>
Merrill Lynch Multi-State Limited Maturity Municipal Series Trust,
July 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
California Limited Maturity Municipal Bond Fund (concluded)
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
California AAA Aaa $ 600 California State Public Works Board, Lease Revenue Bonds
(concluded) (Department of Corrections--State Prison/Central California
Women's Facility, Madera County), Series A, 7% due 9/01/2000 (e) $ 649
AAA Aaa 500 California Statewide Communities Development Authority, Lease
Revenue Refunding Bonds (Oakland Convention Center Project),
5.70% due 10/01/2002 (d) 531
NR* Aa2 100 California Statewide Communities Development Authority, Solid
Waste Facilities Revenue Bonds (Chevron U.S.A. Inc. Project),
VRDN, AMT, 3.45% due 12/15/2024 (a) 100
A+ NR* 400 East Bay, California, Municipal Utility District, Water System
Revenue Bonds, Sub-Series, 7.40% due 6/01/2000 (e) 432
AAA Aaa 200 Los Angeles, California, Department of Airports, Airport
Revenue Refunding Bonds, Series A, 6% due 5/15/2005 (b) 221
A+ Aa3 650 Los Angeles, California, Department of Water and Power,
Electric Plant Revenue Bonds, 6% due 4/01/2002 692
Los Angeles, California, Harbor Department Revenue Bonds,
AMT, Series B:
AA Aa3 295 6% due 8/01/2001 311
AA Aa3 500 6% due 8/01/2004 538
AA- Aa1 1,000 Los Angeles County, California, Public Works Financing
Authority, Revenue Refunding Bonds (Capital Construction),
4.80% due 3/01/2004 1,029
AAA Aaa 400 Southern California, Public Power Authority Revenue Refunding
Bonds (Southern Transmission Project), Series A, 4.40% due
7/01/2007 (c) 400
AAA Aaa 500 University of California, Revenue Refunding Bonds (Multi-
Purpose Projects), Series C, 10% due 9/01/2001 (d) 586
Total Investments (Cost--$8,402)--98.3% 8,922
Other Assets Less Liabilities--1.7% 158
-------
Net Assets--100.0% $ 9,080
=======
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at July 31, 1998.
(b)FGIC Insured.
(c)MBIA Insured.
(d)AMBAC Insured.
(e)Prerefunded.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<TABLE>
Florida Limited Maturity Municipal Bond Fund
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Florida--93.5% NR* Aaa $1,000 Bay County, Florida, Hospital System Revenue Refunding Bonds
(Bay Medical Center Project), 8% due 10/01/2004 (e) $ 1,216
AAA Aaa 300 Dade County, Florida, Aviation Revenue Refunding Bonds,
Series A, 5.60% due 10/01/2004 (a) 323
AAA Aaa 1,000 Dade County, Florida, GO, UT, Series I, 6.90% due 7/01/2003 (a) 1,120
AAA Aaa 835 Dunedin, Florida, Hospital Revenue Bonds (Mease Health Care),
6.75% due 11/15/2001 (c)(e) 920
Florida State Board of Education, Capital Outlay (Public
Education):
AAA Aaa 1,000 Refunding, Series A, 7.25% due 6/01/2000 (e) 1,079
AA+ Aa2 850 Refunding, Series A, 5.50% due 6/01/2001 885
AA+ Aa2 1,000 Series B, 5.625% due 6/01/2005 1,080
Florida State Division, Bond Finance Department, General
Services Revenue Bonds (Department of Natural Resources),
Series A:
AAA Aaa 1,900 (Preservation 2000), 6.40% due 7/01/2002 (a) 2,055
AAA Aaa 1,730 (Save Our Coast), 6.30% due 7/01/2004 (c) 1,848
A A3 100 Hillsborough County, Florida, Capital Improvement Revenue
Bonds (County Center Project), Second Series, 6.75% due
7/01/2002 (e) 111
Jacksonville, Florida, Electric Authority, Revenue Refunding
Bonds (Saint John's River), Issue 2:
AA Aa1 1,000 Series 6-C, 6.50% due 10/01/2001 1,066
AA Aa2 1,000 (Special Obligation), Series 6-B, 6.65% due 10/01/2002 1,068
AAA Aaa 1,000 Jacksonville, Florida, Health Facilities Authority, Hospital
Revenue Bonds (Charity Obligation Group), Series A, 5.50%
due 8/15/2006 (c) 1,074
AAA Aaa 250 Kissimmee, Florida, Water and Sewer Revenue Refunding
Bonds, 5.40% due 10/01/2002 (a) 263
AAA Aaa 850 North Miami, Florida, Health Facilities Authority, Health
Facility Revenue Bonds (Bon Secours Health System Project),
6% due 8/15/2002 (d)(e) 924
AA- Aaa 850 Orlando, Florida, Utilities Commission, Water and Electric
Revenue Bonds, Series A, 6.50% due 10/01/2001 (e) 929
AAA Aaa 1,000 Palm Bay, Florida, Utility Revenue Bonds (Palm Bay Utility
Corporation Project), Series B, 6.20% due 10/01/2002 (c)(e) 1,098
AAA Aaa 400 Tampa, Florida, Water and Sewer Revenue Bonds, Series A, 6%
due 10/01/2002 (b)(e) 433
Puerto Rico--5.0% A Baa1 900 Puerto Rico Commonwealth, Improvement Bonds, Refunding, UT,
5.30% due 7/01/2004 942
Total Investments (Cost--$17,886)--98.5% 18,434
Other Assets Less Liabilities--1.5% 274
-------
Net Assets--100.0% $18,708
=======
<FN>
(a)AMBAC Insured.
(b)FGIC Insured.
(c)MBIA Insured.
(d)FSA Insured.
(e)Prerefunded.
*Not Rated.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Multi-State Limited Maturity Municipal Series Trust, July 31, 1998
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
<CAPTION>
California Florida
Limited Limited
Maturity Maturity
As of July 31, 1998 Fund Fund
<S> <S> <C> <C>
Assets: Investments, at value* (Note 1a) $ 8,921,893 $ 18,433,764
Cash 30,963 90,979
Interest receivable 159,913 253,500
Deferred organization expenses (Note 1e) 1,168 3,855
Prepaid registration fees and other assets (Note 1e) 523 7,996
----------- -----------
Total assets 9,114,460 18,790,094
----------- -----------
Liabilities: Payables:
Beneficial interest redeemed -- 20,000
Dividends to shareholders (Note 1f) 4,937 10,249
Investment adviser (Note 2) 1,226 5,994
Distributor (Note 2) 1,774 3,095
Accrued expenses and other liabilities 26,063 43,203
----------- -----------
Total liabilities 34,000 82,541
----------- -----------
Net Assets: Net assets $ 9,080,460 $18,707,553
=========== ===========
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited
Consist of: shares authorized $ 14,412 $ 53,285
Class B Shares of beneficial interest, $.10 par value, unlimited
shares authorized 47,535 80,111
Class C Shares of beneficial interest, $.10 par value, unlimited
shares authorized 944 13
Class D Shares of beneficial interest, $.10 par value, unlimited
shares authorized 26,782 53,621
Paid-in capital in excess of par 8,807,994 18,681,327
Accumulated realized capital losses on investments--net (Note 5). (336,902) (708,556)
Unrealized appreciation on investments--net 519,695 547,752
----------- -----------
Net assets $ 9,080,460 $18,707,553
=========== ===========
Net Asset Value: Class A: Net assets $ 1,459,687 $ 5,331,094
=========== ===========
Shares outstanding 144,120 532,849
=========== ===========
Net asset value $ 10.13 $ 10.00
=========== ===========
Class B: Net assets $ 4,812,408 $ 8,014,082
=========== ===========
Shares outstanding 475,349 801,111
=========== ===========
Net asset value $ 10.12 $ 10.00
=========== ===========
Class C: Net assets $ 95,572 $ 1,251
=========== ===========
Shares outstanding 9,440 126
=========== ===========
Net asset value $ 10.12 $ 9.93
=========== ===========
Class D: Net assets $ 2,712,793 $ 5,361,126
=========== ===========
Shares outstanding 267,818 536,205
=========== ===========
Net asset value $ 10.13 $ 10.00
=========== ===========
<FN>
*Identified cost $ 8,402,198 $17,886,012
=========== ===========
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF OPERATIONS
<CAPTION>
California Florida
Limited Limited
Maturity Maturity
For the Year Ended July 31, 1998 Fund Fund
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 602,598 $ 1,140,730
(Note 1d): =========== ===========
Expenses: Investment advisory fees (Note 2) $ 42,624 $ 79,912
Accounting services (Note 2) 34,024 66,965
Professional fees 33,916 29,927
Account maintenance and distribution fees--Class B (Note 2) 21,353 35,389
Printing and shareholder reports 14,499 36,339
Registration fees (Note 1e) 16,280 16,050
Trustees' fees and expenses 8,994 15,342
Amortization of organization expenses (Note 1e) 3,642 12,130
Account maintenance fees--Class D (Note 2) 3,371 6,715
Custodian fees 3,242 4,092
Pricing fees 3,617 3,042
Transfer agent fees--Class B (Note 2) 1,702 2,502
Transfer agent fees--Class D (Note 2) 718 1,249
Transfer agent fees--Class A (Note 2) 547 1,117
Account maintenance and distribution fees--Class C (Note 2) 110 25
Transfer agent fees--Class C (Note 2) 32 9
Other -- 2,242
----------- -----------
Total expenses before reimbursement 188,671 313,047
Reimbursement of expenses (Note 2) (24,356) --
----------- -----------
Total expenses after reimbursement 164,315 313,047
----------- -----------
Investment income--net 438,283 827,683
----------- -----------
Realized & Realized gain on investments--net 135,816 69,426
Unrealized Change in unrealized appreciation on investments--net (244,868) (229,527)
Gain (Loss) on ----------- -----------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 329,231 $ 667,582
(Notes 1b, 1d & 3): =========== ===========
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Multi-State Limited Maturity Municipal Series Trust,
July 31, 1998
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
California Limited Florida Limited
Maturity Fund Maturity Fund
For the Year For the Year
Ended July 31, Ended July 31,
Increase (Decrease) in Net Assets: 1998 1997 1998 1997
<S> <S> <C> <C> <C> <C>
Operations: Investment income--net $ 438,283 $ 513,497 $ 827,683 $ 980,347
Realized gain on investments--net 135,816 57,005 69,426 101,611
Change in unrealized appreciation on
investments--net (244,868) 206,716 (229,527) 180,208
----------- ----------- ----------- -----------
Net increase in net assets resulting
from operations 329,231 777,218 667,582 1,262,166
----------- ----------- ----------- -----------
Dividends to Investment income--net:
Shareholders Class A (100,638) (117,926) (228,224) (295,532)
(Note 1f): Class B (210,256) (295,984) (349,950) (441,468)
Class C (2,663) (1,999) (615) (2,960)
Class D (124,726) (97,588) (248,894) (240,387)
----------- ----------- ----------- -----------
Net decrease in net assets resulting from
dividends to shareholders (438,283) (513,497) (827,683) (980,347)
----------- ----------- ----------- -----------
Beneficial Net decrease in net assets derived from
Interest beneficial interest transactions (4,939,204) (1,455,816) (6,762,222) (2,674,028)
Transactions ----------- ----------- ----------- -----------
(Note 4):
Net Assets: Total decrease in net assets (5,048,256) (1,192,095) (6,922,323) (2,392,209)
Beginning of year 14,128,716 15,320,811 25,629,876 28,022,085
----------- ----------- ----------- -----------
End of year $ 9,080,460 $14,128,716 $18,707,553 $25,629,876
=========== =========== =========== ===========
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
California Limited Maturity Fund
Class A
The following per share data and ratios have For the
been derived from information provided in the Period
financial statements. Nov. 26, 1993++
For the Year Ended July 31, to July 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.22 $ 10.05 $ 9.99 $ 9.88 $ 10.00
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .39 .38 .39 .42 .24
Realized and unrealized gain (loss) on
investments--net (.09) .17 .06 .11 (.12)
--------- --------- --------- --------- ---------
Total from investment operations .30 .55 .45 .53 .12
--------- --------- --------- --------- ---------
Less dividends from investment income--net (.39) (.38) (.39) (.42) (.24)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 10.13 $ 10.22 $ 10.05 $ 9.99 $ 9.88
========= ========= ========= ========= =========
Total Investment Based on net asset value per share 2.96% 5.57% 4.56% 5.60% 1.23%+++
Return:** ========= ========= ========= ========= =========
Ratios to Average Expenses, net of reimbursement 1.12% 1.08% .94% .40% .02%*
Net Assets: ========= ========= ========= ========= =========
Expenses 1.32% 1.28% 1.30% 1.44% 1.16%*
========= ========= ========= ========= =========
Investment income--net 3.82% 3.75% 3.89% 4.36% 3.54%*
========= ========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $ 1,460 $ 3,152 $ 3,162 $ 3,527 $ 3,804
Data: ========= ========= ========= ========= =========
Portfolio turnover 24.65% 26.86% 11.09% 124.72% 130.10%
========= ========= ========= ========= =========
<CAPTION>
California Limited Maturity Fund
Class B
The following per share data and ratios For the
have been derived from information provided Period
in the financial statements. Nov. 26, 1993++
For the Year Ended July 31, to July 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.21 $ 10.04 $ 9.99 $ 9.88 $ 10.00
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .35 .34 .36 .39 .21
Realized and unrealized gain (loss) on
investments--net (.09) .17 .05 .11 (.12)
--------- --------- --------- --------- ---------
Total from investment operations .26 .51 .41 .50 .09
--------- --------- --------- --------- ---------
Less dividends from investment income--net (.35) (.34) (.36) (.39) (.21)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 10.12 $ 10.21 $ 10.04 $ 9.99 $ 9.88
========= ========= ========= ========= =========
Total Investment Based on net asset value per share 2.59% 5.20% 4.08% 5.23% .99%+++
Return:** ========= ========= ========= ========= =========
Ratios to Average Expenses, net of reimbursement 1.51% 1.44% 1.30% .76% .38%*
Net Assets: ========= ========= ========= ========= =========
Expenses 1.71% 1.64% 1.66% 1.80% 1.52%*
========= ========= ========= ========= =========
Investment income--net 3.45% 3.39% 3.53% 4.00% 3.19%*
========= ========= ========= ========= =========
Supplemental Net assets, end of period
Data: (in thousands) $ 4,812 $ 6,877 $ 9,919 $ 10,363 $ 11,430
========= ========= ========= ========= =========
Portfolio turnover 24.65% 26.86% 11.09% 124.72% 130.10%
========= ========= ========= ========= =========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Multi-State Limited Maturity Municipal Series Trust,
July 31, 1998
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
California Limited Maturity Fund
Class C
The following per share data and ratios For the
have been derived from information provided Period
in the financial statements. Oct. 21, 1994++
For the Year Ended July 31, to July 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.22 $ 10.05 $ 9.99 $ 9.76
Operating --------- --------- --------- ---------
Performance: Investment income--net .37 .36 .37 .31
Realized and unrealized gain (loss) on
investments--net (.10) .17 .06 .23
--------- --------- --------- ---------
Total from investment operations .27 .53 .43 .54
--------- --------- --------- ---------
Less dividends from investment income--net (.37) (.36) (.37) (.31)
--------- --------- --------- ---------
Net asset value, end of period $ 10.12 $ 10.22 $ 10.05 $ 9.99
========= ========= ========= =========
Total Investment Based on net asset value per share 2.68% 5.39% 4.35% 5.60%+++
Return:** ========= ========= ========= =========
Ratios to Average Expenses, net of reimbursement 1.36% 1.25% 1.14% .82%*
Net Assets: ========= ========= ========= =========
Expenses 1.56% 1.45% 1.50% 1.98%*
========= ========= ========= =========
Investment income--net 3.61% 3.58% 3.69% 4.04%*
========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $ 95 $ 57 $ 55 $ 64
Data: ========= ========= ========= =========
Portfolio turnover 24.65% 26.86% 11.09% 124.72%
========= ========= ========= =========
<CAPTION>
California Limited Maturity Fund
Class D
The following per share data and ratios have For the
been derived from information provided Period
in the financial statements. Oct. 21, 1994++
For the Year Ended July 31, to July 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.22 $ 10.05 $ 9.99 $ 9.76
Operating --------- --------- --------- ---------
Performance: Investment income--net .38 .37 .38 .33
Realized and unrealized gain (loss) on
investments--net (.09) .17 .06 .23
--------- --------- --------- ---------
Total from investment operations .29 .54 .44 .56
--------- --------- --------- ---------
Less dividends from investment income--net (.38) (.37) (.38) (.33)
--------- --------- --------- ---------
Net asset value, end of period $ 10.13 $ 10.22 $ 10.05 $ 9.99
========= ========= ========= =========
Total Investment Based on net asset value per share 2.86% 5.47% 4.46% 5.85%+++
Return:** ========= ========= ========= =========
Ratios to Average Expenses, net of reimbursement 1.25% 1.15% 1.06% .66%*
Net Assets: ========= ========= ========= =========
Expenses 1.45% 1.35% 1.40% 1.81%*
========= ========= ========= =========
Investment income--net 3.70% 3.69% 3.77% 4.28%*
========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $ 2,713 $ 4,043 $ 2,185 $ 1,771
Data: ========= ========= ========= =========
Portfolio turnover 24.65% 26.86% 11.09% 124.72%
========= ========= ========= =========
<CAPTION>
Florida Limited Maturity Fund
Class A
The following per share data and ratios For the
have been derived from information provided Period
in the financial statements. Nov. 26, 1993++
For the Year Ended July 31, to July 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.07 $ 9.96 $ 10.02 $ 9.87 $ 10.00
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .38 .40 .40 .43 .24
Realized and unrealized gain (loss) on
investments--net (.07) .11 (.06) .15 (.13)
--------- --------- --------- --------- ---------
Total from investment operations .31 .51 .34 .58 .11
--------- --------- --------- --------- ---------
Less dividends from investment income--net (.38) (.40) (.40) (.43) (.24)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 10.00 $ 10.07 $ 9.96 $ 10.02 $ 9.87
========= ========= ========= ========= =========
Total Investment Based on net asset value per share 3.17% 5.20% 3.45% 6.05% 1.12%+++
Return:** ========= ========= ========= ========= =========
Ratios to Average Expenses, net of reimbursement 1.19% 1.09% .89% .39% .02%*
Net Assets: ========= ========= ========= ========= =========
Expenses 1.19% 1.09% .97% 1.03% .86%*
========= ========= ========= ========= =========
Investment income--net 3.81% 3.98% 4.01% 4.39% 3.54%*
========= ========= ========= ========= =========
Supplemental Net assets, end of period
Data: (in thousands) $ 5,331 $ 6,376 $ 7,874 $ 9,849 $ 14,868
========= ========= ========= ========= =========
Portfolio turnover 39.52% 35.67% 39.90% 138.97% 136.71%
========= ========= ========= ========= =========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Multi-State Limited Maturity Municipal Series Trust,
July 31, 1998
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Florida Limited Maturity Fund
Class B
The following per share data and ratios For the
have been derived from information provided Period
in the financial statements. Nov. 26, 1993++
For the Year Ended July 31, to July 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.07 $ 9.96 $ 10.02 $ 9.88 $ 10.00
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .35 .36 .37 .40 .21
Realized and unrealized gain (loss)
on investments--net (.07) .11 (.06) .14 (.12)
--------- --------- --------- --------- ---------
Total from investment operations .28 .47 .31 .54 .09
--------- --------- --------- --------- ---------
Less dividends from investment
income--net (.35) (.36) (.37) (.40) (.21)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 10.00 $ 10.07 $ 9.96 $ 10.02 $ 9.88
========= ========= ========= ========= =========
Total Investment Based on net asset value per share 2.80% 4.83% 3.08% 5.57% .99%+++
Return:** ========= ========= ========= ========= =========
Ratios to Average Expenses, net of reimbursement 1.54% 1.45% 1.24% .75% .38%*
Net Assets: ========= ========= ========= ========= =========
Expenses 1.54% 1.45% 1.32% 1.38% 1.23%*
========= ========= ========= ========= =========
Investment income--net 3.46% 3.63% 3.66% 4.05% 3.19%*
========= ========= ========= ========= =========
Supplemental Net assets, end of period
Data: (in thousands) $ 8,014 $ 11,461 $ 13,690 $ 16,213 $ 18,179
========= ========= ========= ========= =========
Portfolio turnover 39.52% 35.67% 39.90% 138.97% 136.71%
========= ========= ========= ========= =========
<CAPTION>
Florida Limited Maturity Fund
Class C
The following per share data and ratios have For the
been derived from information provided in Period
the financial statements. Oct. 21, 1994++
For the Year Ended July 31, to July 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.00 $ 9.90 $ 10.01 $ 9.76
Operating --------- --------- --------- ---------
Performance: Investment income--net .33 .38 .36 .29
Realized and unrealized gain (loss) on
investments--net (.07) .10 (.11) .25
--------- --------- --------- ---------
Total from investment operations .26 .48 .25 .54
--------- --------- --------- ---------
Less dividends from investment income--net (.33) (.38) (.36) (.29)
--------- --------- --------- ---------
Net asset value, end of period $ 9.93 $ 10.00 $ 9.90 $ 10.01
========= ========= ========= =========
Total Investment Based on net asset value per share 2.65% 4.93% 2.48% 5.65%+++
Return:** ========= ========= ========= =========
Ratios to Average Expenses, net of reimbursement 1.29% 1.26% 1.21% 1.09%*
Net Assets: ========= ========= ========= =========
Expenses 1.29% 1.26% 1.23% 1.67%*
========= ========= ========= =========
Investment income--net 3.78% 3.83% 3.75% 3.83%*
========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $ 1 $ 60 $ 52 $ 1
Data: ========= ========= ========= =========
Portfolio turnover 39.52% 35.67% 39.90% 138.97%
========= ========= ========= =========
<CAPTION>
Florida Limited Maturity Fund
Class D
The following per share data and ratios have For the
been derived from information provided in Period
the financial statements. Oct. 21, 1994++
For the Year Ended July 31, to July 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.06 $ 9.95 $ 10.01 $ 9.76
Operating --------- --------- --------- ---------
Performance: Investment income--net .37 .39 .39 .33
Realized and unrealized gain (loss) on
investments--net (.06) .11 (.06) .25
--------- --------- --------- ---------
Total from investment operations .31 .50 .33 .58
--------- --------- --------- ---------
Less dividends from investment income--net (.37) (.39) (.39) (.33)
--------- --------- --------- ---------
Net asset value, end of period $ 10.00 $ 10.06 $ 9.95 $ 10.01
========= ========= ========= =========
Total Investment Based on net asset value per share 3.17% 5.10% 3.35% 6.07%+++
Return:** ========= ========= ========= =========
Ratios to Average Expenses, net of reimbursement 1.29% 1.19% .99% .67%*
Net Assets: ========= ========= ========= =========
Expenses 1.29% 1.19% 1.07% 1.19%*
========= ========= ========= =========
Investment income--net 3.71% 3.88% 3.91% 4.23%*
========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $ 5,362 $ 7,733 $ 6,406 $ 7,210
Data: ========= ========= ========= =========
Portfolio turnover 39.52% 35.67% 39.90% 138.97%
========= ========= ========= =========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Multi-State Limited Maturity Municipal Series Trust,
July 31, 1998
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Multi-State Limited Maturity Municipal Series Trust
(the "Trust") is registered under the Investment Company Act of 1940
as a non-diversified, open-end management investment company
consisting of two separate series: Merrill Lynch California Limited
Maturity Municipal Bond Fund and Merrill Lynch Florida Limited
Maturity Municipal Bond Fund. Each series of the Trust is referred
to herein as a "Fund". The Trust offers four classes of shares under
the Merrill Lynch Select Pricing SM System. Shares of Class A and
Class D are sold with a front-end sales charge. Shares of Class B
and Class 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
Class B, Class C and Class D Shares bear certain expenses related to
the account maintenance of such shares, and Class B and Class C
Shares also bear certain expenses related to the distribution of
such shares. Each class has exclusive voting rights with respect to
matters relating to its account maintenance and distribution
expenditures. The following is a summary of significant accounting
policies followed by the Trust.
(a) Valuation of investments--Municipal bonds and other portfolio
securities in which the Funds invest are traded primarily in the
over-the-counter municipal bond and money markets and are valued at
the last available bid price in the over-the-counter market or on
the basis of yield equivalents as obtained from one or more dealers
that make markets in the securities. Financial futures contracts and
options thereon, which are traded on exchanges, are valued at their
settlement prices as of the close of such exchanges. Short-term
investments with remaining maturities of sixty days or less are
valued at amortized cost, which approximates market value.
Securities and 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 Trust, including
valuations furnished by a pricing service retained by the Trust,
which may utilize a matrix system for valuations. The procedures of
the pricing service and its valuations are reviewed by the officers
of the Trust under the general supervision of the Trustees.
(b) Derivative financial instruments--Each Fund may engage in
various portfolio strategies to seek to increase its return by
hedging its portfolio against adverse movements in the debt markets.
Losses may arise due to changes in the value of the contract or if
the counterparty does not perform under the contract.
* Financial futures contracts--The Funds may purchase or sell
financial futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the Funds
deposit and maintain as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Funds agree to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Funds as unrealized gains or losses. When
the contract is closed, the Funds record a realized gain or loss
equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
(c) Income taxes--It is each Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Deferred organization expenses and prepaid registration fees--
Deferred organization expenses are charged to expense on a straight-
line basis over a period not exceeding five years. Prepaid
registration fees are charged to expense as the related shares are
issued.
(f) Dividends and distributions--Dividends from net investment
income are declared daily and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Trust has entered into an Investment Advisory Agreement with
Fund Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner. The Trust has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor ("MLFD" or "Distributor"), a division of Princeton Funds
Distributor, Inc. ("PFD"), which is a wholly-owned subsidiary of
Merrill Lynch Group, Inc.
FAM is responsible for the management of each Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of each Fund. For such
services, each Fund pays a monthly fee at the annual rate of 0.35%
of that Fund's average daily net assets.
For the year ended July 31, 1998, FAM earned fees of $42,624 from
California Limited Maturity Fund, of which $24,356 was voluntarily
waived.
Pursuant to the Distribution Plans adopted by the Trust in
accordance with Rule 12b-1 under the Investment Company Act of 1940,
the Funds pay the Distributor ongoing account maintenance and
distribution fees. The Distributor voluntarily did not collect any
Class C distribution fees for the year ended July 31, 1998. The fees
are accrued daily and paid monthly at annual rates based upon the
average daily net assets of the shares as follows:
Account
Maintenance Distribution
Fee Fee
Class B 0.15% 0.20%
Class C 0.15% 0.20%
Class D 0.10% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Trust. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the year ended July 31, 1998, MLFD earned underwriting discounts
and MLPF&S earned dealer concessions on sales of the Funds' Class A
and Class D Shares as follows:
California Florida
Limited Limited
Maturity Maturity
Fund Fund
Class A:
MLFD -- $100
MLPF&S -- $950
Class D:
MLFD $ 7 $ 13
MLPF&S $235 $324
MLPF&S received contingent deferred sales charges relating to
transactions in Class B and Class C Shares as follows:
Class B Class C
Shares Shares
California Limited Maturity Fund $3,550 $63
Florida Limited Maturity Fund $5,922 --
Furthermore, MLPF&S received contingent deferred sales charges of
$7,988 relating to transactions subject to front end sales charge
waivers in Class D Shares in Florida Limited Maturity Fund.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Trust's transfer agent.
Accounting services are provided to the Trust by FAM at cost.
Certain officers and/or trustees of the Trust are officers and/or
directors of FAM, PSI, PFD, FDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended July 31, 1998 were as follows:
Purchases Sales
California Limited Maturity Fund $2,682,590 $ 7,069,041
Florida Limited Maturity Fund 8,382,077 13,668,513
Net realized gains for the year ended July 31, 1998 and net
unrealized gains as of July 31, 1998 were as follows:
Realized Unrealized
California Limited Maturity Fund Gains Gains
Long-term investments $ 135,030 $ 519,695
Short-term investments 786 --
--------- ---------
Total $ 135,816 $ 519,695
========= =========
Realized Unrealized
Florida Limited Maturity Fund Gains Gains
Long-term investments $ 69,426 $ 547,752
--------- ---------
Total $ 69,426 $ 547,752
========= =========
As of July 31, 1998, net unrealized appreciation and the aggregate
cost of investments for Federal income tax purposes were as follows:
Limited Gross Gross Net Aggregate
Maturity Unrealized Unrealized Unrealized Cost of
Fund Appreciation Depreciation Appreciation Investments
California $497,052 -- $497,052 $ 8,424,841
Florida 589,373 $(41,621) 547,752 17,886,012
Merrill Lynch Multi-State Limited Maturity Municipal Series Trust,
July 31, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest
transactions for the years ended July 31, 1998 and July 31, 1997,
respectively, were as follows:
For the For the
Year Ended Year Ended
July 31, 1998 July 31, 1997
California Limited Maturity Fund $(4,939,204) $(1,455,816)
Florida Limited Maturity Fund (6,762,222) (2,674,028)
Transactions in shares of beneficial interest for each class were as
follows:
California Limited Maturity Fund
Class A Shares for the Year Dollar
Ended July 31, 1998 Shares Amount
Shares sold 12,475 $ 126,814
Shares issued to shareholders in
reinvestment of dividends 2,996 30,433
----------- -----------
Total issued 15,471 157,247
Shares redeemed (179,897) (1,826,328)
----------- -----------
Net decrease (164,426) $(1,669,081)
=========== ===========
California Limited Maturity Fund
Class A Shares for the Year Dollar
Ended July 31, 1997 Shares Amount
Shares sold 1,377 $ 13,897
Shares issued to shareholders in
reinvestment of dividends 3,031 30,528
----------- -----------
Total issued 4,408 44,425
Shares redeemed (10,568) (106,294)
----------- -----------
Net decrease (6,160) $ (61,869)
=========== ===========
California Limited Maturity Fund
Class B Shares for the Year Dollar
Ended July 31, 1998 Shares Amount
Shares sold 124,239 $ 1,261,328
Shares issued to shareholders in
reinvestment of dividends 12,571 127,693
----------- -----------
Total issued 136,810 1,389,021
Shares redeemed (334,719) (3,399,548)
----------- -----------
Net decrease (197,909) $(2,010,527)
=========== ===========
California Limited Maturity Fund
Class B Shares for the Year Dollar
Ended July 31, 1997 Shares Amount
Shares sold 204,154 $ 2,058,619
Shares issued to shareholders in
reinvestment of dividends 13,782 138,778
----------- -----------
Total issued 217,936 2,197,397
Automatic conversion of shares (28,044) (284,252)
Shares redeemed (504,135) (5,083,745)
----------- -----------
Net decrease (314,243) $(3,170,600)
=========== ===========
California Limited Maturity Fund
Class C Shares for the Year Dollar
Ended July 31, 1998 Shares Amount
Shares sold 4,442 $ 45,039
Shares issued to shareholders in
reinvestment of dividends 20 197
----------- -----------
Total issued 4,462 45,236
Shares redeemed (629) (6,347)
----------- -----------
Net increase 3,833 $ 38,889
=========== ===========
California Limited Maturity Fund
Class C Shares for the Year Dollar
Ended July 31, 1997 Shares Amount
Shares sold 115 $ 1,152
Shares issued to shareholders in
reinvestment of dividends 6 62
----------- -----------
Net increase 121 $ $1,214
=========== ===========
California Limited Maturity Fund
Class D Shares for the Year Dollar
Ended July 31, 1998 Shares Amount
Shares sold 7,329 $ 74,243
Shares issued to shareholders in
reinvestment of dividends 8,631 87,687
----------- -----------
Total issued 15,960 161,930
Shares redeemed (143,748) (1,460,415)
----------- -----------
Net decrease (127,788) $(1,298,485)
=========== ===========
California Limited Maturity Fund
Class D Shares for the Year Dollar
Ended July 31, 1997 Shares Amount
Shares sold 285,173 $ 2,849,538
Automatic conversion of shares 3,978 284,252
Shares issued to shareholders in
reinvestment of dividends 28,044 40,114
----------- -----------
Total issued 317,195 3,173,904
Shares redeemed (139,121) (1,398,465)
----------- -----------
Net increase 178,074 $ 1,775,439
=========== ===========
Florida Limited Maturity Fund
Class A Shares for the Year Dollar
Ended July 31, 1998 Shares Amount
Shares sold 41,661 $ 418,928
Shares issued to shareholders in
reinvestment of dividends 5,340 53,529
----------- -----------
Total issued 47,001 472,457
Shares redeemed (147,389) (1,479,291)
----------- -----------
Net decrease (100,388) $(1,006,834)
=========== ===========
Florida Limited Maturity Fund
Class A Shares for the Year Dollar
Ended July 31, 1997 Shares Amount
Shares sold 70,813 $ 705,043
Shares issued to shareholders in
reinvestment of dividends 6,542 65,182
----------- -----------
Total issued 77,355 770,225
Shares redeemed (235,028) (2,340,687)
----------- -----------
Net decrease (157,673) $(1,570,462)
=========== ===========
Florida Limited Maturity Fund
Class B Shares for the Year Dollar
Ended July 31, 1998 Shares Amount
Shares sold 72,227 $ 724,926
Shares issued to shareholders in
reinvestment of dividends 18,097 181,362
----------- -----------
Total issued 90,324 906,288
Automatic conversion of shares (2,048) (20,567)
Shares redeemed (425,682) (4,270,272)
----------- -----------
Net decrease (337,406) $(3,384,551)
=========== ===========
Florida Limited Maturity Fund
Class B Shares for the Year Dollar
Ended July 31, 1997 Shares Amount
Shares sold 344,717 $ 3,439,385
Shares issued to shareholders in
reinvestment of dividends 20,341 202,648
----------- -----------
Total issued 365,058 3,642,033
Automatic conversion of shares (3,635) (36,364)
Shares redeemed (598,033) (5,967,067)
----------- -----------
Net decrease (236,610) $(2,361,398)
=========== ===========
Florida Limited Maturity Fund
Class C Shares for the Year Dollar
Ended July 31, 1998 Shares Amount
Shares issued to shareholders in
reinvestment of dividends 64 $ 640
Shares redeemed (5,907) (58,841)
----------- -----------
Net decrease (5,843) $ (58,201)
=========== ===========
Florida Limited Maturity Fund
Class C Shares for the Year Dollar
Ended July 31, 1997 Shares Amount
Shares sold 5,712 $ 56,834
Shares issued to shareholders in
reinvestment of dividends 140 1,387
----------- -----------
Total issued 5,852 58,221
Shares redeemed (5,087) (50,009)
----------- -----------
Net increase 765 $ 8,212
=========== ===========
Florida Limited Maturity Fund
Class D Shares for the Year Dollar
Ended July 31, 1998 Shares Amount
Shares sold 221,619 $ 2,218,964
Automatic conversion of shares 2,050 20,567
Shares issued to shareholders in
reinvestment of dividends 4,288 42,965
----------- -----------
Total issued 227,957 2,282,496
Shares redeemed (460,166) (4,595,132)
----------- -----------
Net decrease (232,209) $(2,312,636)
=========== ===========
Florida Limited Maturity Fund
Class D Shares for the Year Dollar
Ended July 31, 1997 Shares Amount
Shares sold 362,564 $ 3,617,894
Automatic conversion of shares 3,635 36,364
Shares issued to shareholders in
reinvestment of dividends 5,285 52,650
----------- -----------
Total issued 371,484 3,706,908
Shares redeemed (246,834) (2,457,288)
----------- -----------
Net increase 124,650 $ 1,249,620
=========== ===========
5. Capital Loss Carryforward:
At July 31, 1998, each Fund of the Trust had an approximate net
capital loss carryforward as follows: $287,000 in the California
Limited Maturity Fund, of which $8,000 expires in 2003 and $279,000
expires in 2004; and $631,000 in the Florida Limited Maturity Fund,
of which $431,000 expires in 2003 and $200,000 expires in 2004.
These amounts will be available to offset like amounts of any future
taxable gains.
Merrill Lynch Multi-State Limited Maturity Municipal Series Trust,
July 31, 1998
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
Merrill Lynch Multi-State Limited Maturity
Municipal Series Trust:
We have audited the accompanying statements of assets and
liabilities, including the schedules of investments, of Merrill
Lynch Limited Maturity Municipal Bond Funds for California and
Florida of the Merrill Lynch Multi-State Limited Maturity Municipal
Series Trust (the "Trust") as of July 31, 1998, the related
statements of operations for the year then ended and changes in net
assets for each of the years in the two-year period then ended, and
the financial highlights for each of the years in the four-year
period then ended and the period November 26, 1993 (commencement of
operations) to July 31, 1994. These financial statements and the
financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at July 31,
1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Limited Maturity Municipal Bond Funds for California
and Florida of the Merrill Lynch Multi-State Limited Maturity
Municipal Series Trust as of July 31, 1998, the results of their
operations, the changes in their net assets, and the financial
highlights for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
September 10, 1998
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly by
Merrill Lynch Multi-State Limited Maturity Municipal Series Trust
during its taxable year ended July 31, 1998 qualify as tax-exempt
interest dividends for Federal income tax purposes.
Additionally, there were no capital gains distributions made by the
California Limited Maturity Fund and the Florida Limited Maturity
Fund during the year.
Please retain this information for your records.
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Edward J. Andrews, Vice President
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Lawrence A. Rogers, Secretary
Custodian
The Bank of New York
90 Washington Street, 12th Floor
New York, NY 10005
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
