MERRILL LYNCH
MULTI-STATE
LIMITED MATURITY
MUNICIPAL
SERIES TRUST
FUND LOGO
Quarterly Report
October 31, 1999
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
Officers and
Trustees
Terry K. Glenn, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Arthur Zeikel, Trustee
Vincent R. Giordano, Senior Vice President
Edward J. Andrews, Vice President
Donald C. Burke, Vice President and Treasurer
Alice A. Pellegrino, 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
Merrill Lynch Multi-State Limited Maturity Municipal Series Trust,
October 31, 1999
TO OUR SHAREHOLDERS
The combination of steady strong domestic economic growth,
improvement in foreign economies (most notably in Japan) and
increasing investor concerns regarding potential increases in US
inflation put upward pressure on bond yields throughout the three-
month period ended October 31, 1999. Continued strong US employment
growth was among the reasons the Federal Reserve Board cited for
raising short-term interest rates in late August. US Treasury bond
yields reacted by climbing above 6.375% by late October. However, at
October month-end, economic indicators were released suggesting
that, despite strong economic and employment growth in the third
quarter, inflationary pressures have remained extremely well-
contained. This resulted in a significant rally in the US Treasury
bond market, pushing US Treasury bond yields downward to end the
three-month period at approximately 6.15%. During the period, yields
on 30-year US Treasury bonds increased over 10 basis points (0.10%).
Long-term tax-exempt bond yields also rose during the three months
ended October 31, 1999. Investor concerns of additional moves by the
Federal Reserve Board to moderate US economic growth and, more
importantly, the loss of the strong technical support that the tax-
exempt market enjoyed in early 1999 helped push municipal bond
yields significantly higher for the remainder of the period. The
yields on long-term tax-exempt revenue bonds rose over 50 basis
points to 6.18% by October 31, 1999, as measured by the Bond Buyer
Revenue Bond Index.
In recent months, the significant decline in new tax-exempt bond
issuance has remained a positive factor within the municipal bond
market, as it had been for much of the past year. During the last
six months, more than $110 billion in long-term municipal bonds was
issued, a decline of nearly 20% compared to the same period a year
ago. During the past three months, $55 billion in municipal bonds
was underwritten, representing a decline of nearly 10% compared to
the corresponding period in 1998. Additionally, in June and July,
investors received more than $40 billion in coupon income and
proceeds from bond maturities and early bond redemptions. These
proceeds have generated considerable retail investor interest, which
has helped absorb the recent diminished supply.
Although tax-exempt bond yields are at their highest level in over
two years and have attracted significant retail investor interest,
institutional demand has declined sharply. Long-term municipal
mutual funds have seen consistent outflows in recent months as the
yields of individual securities have risen faster than those of
larger, more diverse mutual funds. In addition, the demand from
property/casualty insurance companies has weakened as a result of
the losses, and anticipated losses, incurred as a result of the
series of damaging storms across much of the eastern United States.
Additionally, many institutional investors who were attracted to the
municipal bond market in recent years by historically attractive tax-
exempt bond yield ratios of over 90% have found other asset classes
even more attractive. Even with a reduced supply position, tax-
exempt issuers have been forced to repeatedly raise municipal bond
yields in the attempt to attract adequate demand.
The recent relative underperformance of the municipal bond market
has resulted in an opportunity for long-term investors to purchase
tax-exempt issues whose yields are nearly identical with taxable US
Treasury securities. At October 31, 1999, long-term uninsured
municipal revenue bond yields were 100% of comparable US Treasury
securities. In recent months, many taxable asset classes, such as
corporate bonds, mortgage-backed securities and US agency debt, have
all accelerated debt issuance. This acceleration was initiated
largely to avoid issuing securities at year-end and to minimize any
associated Year 2000 (Y2K) problems that may develop. However, this
increased issuance has also resulted in higher yield levels in the
various asset classes as lower bond prices became necessary to
attract sufficient investor demand. Going forward, it is believed
that the pace of non-US government debt issuance is likely to slow
significantly. As the supply of this debt declines, we would expect
many institutional investors to return to the municipal bond market
and the attractive yield ratios available.
Looking ahead, it appears to us that long-term tax-exempt bond
yields will remain under pressure, trading in a broad range centered
near current levels. Investors are likely to remain concerned about
future action by the Federal Reserve Board in November. Y2K
considerations may prohibit any further Federal Reserve Board moves
through the end of the year and the beginning of 2000. Any
improvement in bond prices will probably be contingent upon
weakening in both US employment growth and consumer spending. The
100 basis point rise in US Treasury bond yields seen thus far this
year may negatively impact US economic growth. The US housing market
will be among the first sectors likely to be affected, as some
declines have already been evidenced in response to higher mortgage
rates. We believe that it is also unrealistic to expect double-digit
returns in US equity markets to continue indefinitely. Much of the
US consumer's wealth is tied to recent stock market appreciation.
Any slowing in these incredible growth rates is likely to reduce
consumer spending. We believe that these factors suggest that the
worst of the recent increase in bond yields has passed and stable,
if not slightly improving, bond prices may be expected.
Portfolio Strategy
Merrill Lynch California Limited
Maturity Municipal Bond Fund
During the quarter ended October 31, 1999, the state of California
continued to exhibit strong economic growth as foreign trade, retail
sales and computer technology services continued to expand. Rather
than slowing as many had expected, the state's economic expansion
regained strength. Both employment and personal income are showing
good growth coming off increases of 3.5% and 6.1%, respectively, in
1998. Similar gains are expected this fiscal year with some moderate
slowing in 2000. The state's September 1999 seasonally adjusted
unemployment rate stood at 5.2%, well above the national average,
although almost 13% higher than the state's pre-recession level. On
June 30, 1999, the General Fund had a balance of $2.4 billion,
including $1.9 billion in the state's Reserve Fund. Revenues for
1999--2000 are expected to increase about 8.7%, with personal income
tax revenue expected to rise 7.9%. A surplus balance of $1.7 billion
is projected for year-end, including $880 million in the state's
Reserve Fund. Revenues in the first quarter of 1999--2000 were up
11.2% over the comparable period a year earlier and about 2
percentage points above the August estimate, led by personal income
tax growth 3.2% above estimates. The state's debt position continues
to be favorable, with net tax supported debt of about $25.1 billion,
or $795 per capita and 2.8% of personal income, both very moderate
ratios.
At October 31, 1999, net assets of Merrill Lynch California Limited
Maturity Municipal Bond Fund stood at approximately $7.9 million, a
decrease of approximately 5% from the July quarter-end. We plan to
maintain a neutral investment strategy until US economic growth
moderates from the strong growth of the first two quarters of 1999.
During the October quarter, we maintained a cash position of above
10% of net assets. For most of the period, approximately 82% of the
Fund's net assets were rated AA or better by at least one of the
major rating agencies. Higher-rated issues tend to outperform lesser-
rated securities in a rising interest rate environment. This
strategy enhanced Fund performance considerably as the Federal
Reserve Board once again increased the Federal Funds rate 25 basis
points in August and expectations were for at least one more
tightening in the near future (which occurred on November 16) as the
economy continues to expand and inflation concerns are increasing.
We expect to continue to maintain this neutral stance into the next
few months or until US growth moderates and the Federal Reserve
Board is perceived to be ahead of the inflation curve.
Merrill Lynch Multi-State Limited Maturity Municipal Series Trust,
October 31, 1999
Merrill Lynch Florida Limited
Maturity Municipal Bond Fund
During the quarter ended October 31, 1999, the state of Florida
continued to exhibit strong economic growth. The state's economic
performance was fueled by nationwide personal income gains, low
inflation and surging consumer confidence, which led the state's
surging tourism industry, revitalized housing gains and bolstered
the state's expanding services industry. The state's September
seasonally adjusted unemployment rate stood at 3.8%, below the
national average of 4.2%. Financial operations continued the better-
than-expected trend of the past few years, with the state's Budget
Stabilization Fund at $787 million, or 4.4% of 1998--1999 revenues.
Additionally, 1998--1999 closed with $573.8 million in combined
general and working capital fund balances, the equivalent of a
further 3.2% in increased revenues. While the balance is expected to
be reduced to $416 million by the end of this year, the Budget
Stabilization Fund is expected to increase to $847 million by fiscal
year-end as tax revenues continue to outperform estimates and
increase the state's rainy day cushion. State tax-supported debt has
remained moderate over a long period and at $12.5 billion is equal
to $888 per capita and 3.3% of personal income. The state has
initiated a debt affordability study to deal with its rapidly
growing educational system and the structure of debt issuance in the
years ahead.
At October 31, 1999, net assets of Merrill Lynch Florida Limited
Maturity Municipal Bond Fund stood at approximately $13.3 million, a
decrease of approximately 8% from the July quarter-end. We plan to
maintain a neutral investment strategy until US economic growth
moderates from the strong growth of the first two quarters of 1999.
During the October quarter, we maintained a cash position of above
5% of net assets. For most of the period, approximately 88% of the
Fund's net assets were rated AA or better by at least one of the
major rating agencies. Higher-rated issues tend to outperform lesser-
rated securities in a rising interest rate environment. This
strategy enhanced Fund performance considerably as the Federal
Reserve Board once again increased the Federal Funds rate 25 basis
points in August and expectations were for at least one more
tightening in the future (which occurred on November 16) as the
economy continues to expand and inflation concerns are increasing.
We expect to continue to maintain this neutral stance into the next
few months or until US growth moderates and the Federal Reserve
Board is perceived to be ahead of the inflation curve.
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,
(Terry K. Glenn)
Terry K. Glenn
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Edward J. Andrews)
Edward J. Andrews
Vice President and Portfolio Manager
November 29, 1999
To reduce shareholders' expenses, Merrill Lynch Multi-State Limited
Maturity Municipal Series Trust will no longer be printing and
mailing quarterly reports to shareholders. We will continue to
provide you with reports on a semi-annual and annual basis.
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 C Shares are available only through the
exchange privilege.
* 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
3 Month 12 Month Inception Standardized
As of October 31, 1999 Total Return Total Return Total Return 30-day Yield
<S> <C> <C> <C> <C>
California Limited Maturity Fund Class A Shares -0.12% -0.04% +24.02% 2.47%
California Limited Maturity Fund Class B Shares -0.31 -0.49 +21.31 2.14
California Limited Maturity Fund Class C Shares -0.16 -0.21 +21.59 2.33
California Limited Maturity Fund Class D Shares -0.24 -0.23 +22.28 2.38
Florida Limited Maturity Fund Class A Shares -0.07 -0.05 +22.74 2.80
Florida Limited Maturity Fund Class B Shares -0.06 -0.40 +20.19 2.48
Florida Limited Maturity Fund Class C Shares -0.23 -0.39 +18.31 2.66
Florida Limited Maturity Fund Class D Shares -0.10 -0.25 +20.88 2.71
<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 since
inception periods for each of the Funds within Merrill Lynch Multi-
State Limited Maturity Municipal Series Trust are from 11/26/93 for
Class A & Class B Shares and from 10/21/94 for Class C & Class D
Shares.
</TABLE>
Merrill Lynch Multi-State Limited Maturity Municipal Series Trust,
October 31, 1999
PERFORMANCE DATA (concluded)
Average Annual
Total Returns
California Limited Maturity Fund
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 9/30/99 +0.39% -0.61%
Five Years Ended 9/30/99 +4.23 +4.02
Inception (11/26/93) through 9/30/99 +3.83 +3.65
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 9/30/99 +0.03% -0.94%
Five Years Ended 9/30/99 +3.84 +3.84
Inception (11/26/93) through 9/30/99 +3.44 +3.44
[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 9/30/99 +0.32% -0.66%
Inception (10/21/94) through 9/30/99 +4.13 +4.13
[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 9/30/99 +0.29% -0.71%
Inception (10/21/94) through 9/30/99 +4.25 +4.04
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
Florida Limited Maturity Fund
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 9/30/99 +0.28% -0.72%
Five Years Ended 9/30/99 +3.95 +3.74
Inception (11/26/93) through 9/30/99 +3.59 +3.41
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 9/30/99 -0.08% -1.05%
Five Years Ended 9/30/99 +3.58 +3.58
Inception (11/26/93) through 9/30/99 +3.22 +3.22
[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 9/30/99 +0.01% -0.96%
Inception (10/21/94) through 9/30/99 +3.51 +3.51
[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 9/30/99 +0.18% -0.83%
Inception (10/21/94) through 9/30/99 +3.94 +3.73
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
PORTFOLIO COMPOSITION
California
Limited Maturity
Municipal
Bond Fund
For the Quarter Ended October 31, 1999
Distribution by Market Sector*
General Obligations & Tax Revenue Bonds 20.2%
Prerefunded Bonds** 5.4
Other Revenue Bonds 74.4
------
Total 100.0%
======
Net assets as of October 31, 1999 were $7,894,585.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
AAA/Aaa 47%
AA/Aa 35%
A/A 11%
Other++ 7%
[FN]
*Based on total market value of the portfolio as of October 31,
1999.
**Backed by a fund holding US Treasury or other high-quality
securities.
++Temporary investments in short-term municipal securities.
Florida
Limited Maturity
Municipal
Bond Fund
For the Quarter Ended October 31, 1999
Distribution by Market Sector*
Prerefunded Bonds** 64.4%
General Obligations & Tax Revenue Bonds 23.7
Utility Revenue Bonds 2.1
Other Revenue Bonds 9.8
------
Total 100.0%
======
Net assets as of October 31, 1999 were $13,345,522.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
AAA/Aaa 59%
AA/Aa 29%
A/A 5%
Other++ 7%
[FN]
*Based on total market value of the portfolio as of October 31,
1999.
**Backed by a fund holding US Treasury or other high-quality
securities.
++Temporary investments in short-term municipal securities.
