MERRILL LYNCH
MULTI-STATE
LIMITED MATURITY
MUNICIPAL
SERIES TRUST
FUND LOGO
Annual Report
July 31, 2000
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
TO OUR SHAREHOLDERS
The Municipal Market Environment
During the six months ended July 31, 2000, US domestic economic
growth remained robust. After growing at a 4.2% annual rate in 1999,
US domestic economic growth expanded at a 4.8% rate during the first
quarter of 2000 and a 5.2% rate during the second quarter. However,
despite these significant growth rates and the lowest unemployment
rates since 1970, few price measure indicators have shown any
meaningful signs of future price pressures at the consumer level.
With few signs of any economic slowdown, the Federal Reserve Board
continued to raise short-term interest rates in February, March and
May 2000. The Federal Reserve Board cited both the continued growth
of US employment and the continued strength of US equity markets as
reasons for attempting to moderate US economic growth before
inflationary price pressures can occur.
However, since then, fixed-income markets have largely ignored
strong economic fundamentals and have concentrated on very positive
technical supply factors. Declining bond issuance - both current,
and more importantly, expected future issuance - helped push bond
yields lower into mid-April 2000. In late January and early February
2000, the US Treasury announced its intention to reduce the amounts
to be auctioned in quarterly Treasury note and bond auctions.
Furthermore, budgetary surpluses allowed the US Treasury to
repurchase outstanding, higher-couponed Treasury issues, primarily
in the 15-year and longer maturity sector. Both of these actions
resulted in a significant reduction in the outstanding supply of
longer-dated maturity US Treasury debt. Domestic and international
investors quickly began to accumulate what was expected to become a
scarce commodity and bond prices quickly rose.
By mid-April 2000, US Treasury bond yields had declined more than 80
basis points (0.80%) to 5.67%. During the remainder of the period,
US Treasury bond prices were volatile as strong economic reports and
investors' concerns of additional moves by the Federal Reserve Board
occasionally overshadowed the positive technical position of the
long-term US Treasury bond market.
However, a number of economic indicators recently have begun to
suggest that the actions taken by the Federal Reserve Board in 1999
and early 2000 have started to affect US economic growth. Both new
home sales and consumer spending have slowed, suggesting that
economic growth may subside into a 4%--4.5% range by late 2000. In
our opinion, this range of growth was targeted by the Federal
Reserve Board as being sustainable, given current productivity
measures, without endangering the present benign inflationary
environment.
By June, investor focus returned to the dwindling supply of long-
term US Treasury securities and bond prices generally rose for the
remainder of the period. The decline in long-term US Treasury bond
yields resulted in an inverted yield curve as short-term and
intermediate-term interest rates have been more negatively impacted
by Federal Reserve Board moves than have long-term interest rates.
The current inversion has had more to do with debt reduction and
Treasury buybacks than with investor expectations of slower economic
growth. During the last six months, US Treasury bond yields have
declined more than 70 basis points to end the period at 5.78%, their
lowest monthly closing level since May 1999.
Tax-exempt bond yields have also declined in recent months. The
decline has largely been in response to the rally in US Treasury
securities, as well as a continued positive technical supply
environment. States like California and Maryland have announced that
their large current and anticipated future budget surpluses will
permit the cancellation or postponement of expected bond issuance.
Additionally, some issuers have also initiated tenders to repurchase
existing debt, reducing the supply of tax-exempt bonds in the
secondary market as well. Given the decline in available long-term
Treasury securities, some investors who need longer maturity
investment vehicles have begun to consider long-term municipal bonds
as potential substitutes. This has further strengthened the overall
positive technical position of the tax-exempt market. During the
last six months, long-term municipal revenue bond yields have
declined nearly 50 basis points to 5.85%, their lowest level since
late August 1999, as measured by the Bond Buyer Revenue Bond Index.
The relative underperformance of the municipal bond market in recent
months has been especially disappointing given the strong technical
position the tax-exempt bond market has enjoyed. The issuance of
long-term, tax-exempt securities has dramatically declined. During
the last year, nearly $200 billion in new long-term municipal
securities was issued, a decline of almost 20% compared to the same
period a year earlier. For the six months ended July 31, 2000,
approximately $100 billion in new tax-exempt bonds was underwritten,
a decline of 17% compared to the same period in 1999.
Although investors received more than $45 billion in coupon
payments, bond maturities and the proceeds from early bond
redemptions during June and July, overall investor demand has
diminished. Long-term municipal bond mutual funds have seen
consistent outflows in recent months as the yields of individual
securities have risen faster than those larger, more diverse mutual
funds. Thus far this year, tax-exempt mutual funds have had net
redemptions of more than $12 billion.
However, the rate at which these redemptions have been occurring has
slowed in recent months. Recent US equity market volatility,
especially in the NASDAQ, has reduced some investor interest in the
stock market. This investor interest, especially earlier this year,
had been siphoning away demand for municipal bonds by retail
investors. Also, the demand from property and casualty companies is
expected to increase in the coming months. These firms are becoming
more profitable after experiencing losses in the past few years
resulting from a series of weather-related natural disasters. Yet as
positive as the tax-exempt bond market's technical environment has
been for much of this year, investor response to the reduction in
both current and future supply of US Treasury bonds has been
overwhelmingly positive and municipal bond yields have
underperformed their taxable counterparts.
Significantly lower municipal bond yields are likely to require
additional evidence of weaker economic growth, especially in
employment and consumer spending. The actions taken in recent months
by the Federal Reserve Board should eventually slow US economic
growth. Recent declines in new US home sales are perhaps the first
sign that consumer spending is being slowed by higher interest
rates. Until further signs develop, it is likely that the municipal
bond market's current favorable technical position will dampen
significant tax-exempt interest rate volatility and provide a stable
environment for eventual improvement in municipal bond prices.
Merrill Lynch California Limited
Maturity Municipal Bond Fund
Fiscal Year in Review
During the fiscal year ended July 31, 2000, we maintained a bearish-
to-neutral position for Merrill Lynch California Limited Maturity
Municipal Bond Fund as the Federal Reserve Board embarked on a
tightening cycle that saw the Federal Funds rate rise 200 basis
points and long-term and short-term interest rates rise as well.
This strategy benefited performance during the first three quarters
of the fiscal year ended July 31, 2000 but hindered Fund performance
for the most recent three months as interest rates started to
decline from their May 2000 highs. We plan to continue to maintain
our neutral strategy until inflationary risks are more moderate.
Merrill Lynch California Limited Maturity Municipal Bond Fund's
Class A, Class B, Class C and Class D Shares had total returns of
+2.00%, +1.64%, +1.82% and +1.80%, respectively, for the fiscal year
ended July 31, 2000. (Fund results do not reflect sales charges and
would be lower if sales charges were included. Complete performance
information can be found on pages 4--7 of this report to
shareholders.)
Portfolio Matters
During the six-month period ended July 31, 2000, the state of
California continued to show strong economic growth led by retail
sales, technology and a booming housing and construction sector.
Building permits are 13% above year-ago levels and multiple family
home starts are 42% ahead of last year's pace. State job growth
jumped sharply in the first six months of 2000, rising more than 3%
above year-ago levels. The state's seasonally adjusted unemployment
rate stood at 4.7% in April 2000, a new record low. Personal income
tax receipts, the largest single source of revenue to the California
General Fund, jumped 10.6% for the state's fiscal year ended June
30, 1999. Initial figures for the current fiscal year indicate that
personal income tax receipts will exceed 1999 record levels. The
state's export business, which had been hurt by the Asian financial
crisis, rebounded sharply in the second half of 1999 and rose 12%
during the first three months of 2000 as that region stabilized. The
state's current economic outlook looks solid. High productivity in
the technology sector, as well as continued growth in the state's
complex and diverse industries and their link to the global economy,
should provide long-term potential for growth. The state's defense-
related industries, such as aerospace manufacturing, might also get
a boost over the next several years with rising Federal defense
expenditures.
At July 31, 2000, net assets of Merrill Lynch California Limited
Maturity Municipal Bond Fund stood at approximately $6.1 million, a
decrease of approximately 12% from April 30, 2000. As we discussed
in our most recent shareholder letter, we had decided to maintain a
neutral investment posture in the six-month period ended July 31,
2000 until US economic growth moderated and the Federal Reserve
Board was perceived to be ahead of the inflation curve. We
maintained a minimal cash position and held the Fund's duration
between 2.8 years--3.1 years. We continue to maintain approximately
80% of the Fund's assets invested in securities 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 in January,
April and May 2000 but caused the Fund to underperform in February,
March, June and July 2000. During this time, interest rate
volatility was the norm and not the exception as investors attempted
to ascertain the Federal Reserve Board's position on future interest
rates and inflation risk. We expect to continue to maintain a
neutral posture in the coming months, assuming that the Federal
Reserve Board has completed at least the majority of its interest
rate increases and that a moderating economy with balanced
inflationary risks is soon to be close at hand.
Merrill Lynch Florida Limited
Maturity Municipal Bond Fund
Fiscal Year in Review
During the fiscal year ended July 31, 2000, we maintained a bearish-
to-neutral position for Merrill Lynch Florida Limited Maturity
Municipal Bond Fund as the Federal Reserve Board embarked on a
tightening cycle that saw the Federal Funds rate rise 200 basis
points and long-term and short-term interest rates rise as well.
This strategy benefited Fund performance during the first three
quarters of the fiscal year but hindered Fund performance for the
most recent three months as interest rates have started to decline
from their May 2000 highs. We plan to continue to maintain our
neutral strategy until inflationary risks are more moderate. Merrill
Lynch Florida Limited Maturity Municipal Bond Fund's Class A, Class
B, Class C and Class D Shares had total returns of +2.54%, +2.29%,
+1.49% and +2.44%, respectively, for the fiscal year ended July 31,
2000. (Fund results do not reflect sales charges and would be lower
if sales charges were included. Complete performance information can
be found on pages 4--7 of this report to shareholders.)
Portfolio Matters
During the six months ended July 31, 2000, the state of Florida
continued to exhibit strong economic growth. The state's economic
performance continues to be fueled by in-state as well as nationwide
personal income tax gains, low inflation and surging consumer
confidence, which led its strong tourism industry, revitalized
housing gains and bolstered the state's diversifying services
industry. The state's 2000 seasonally adjusted unemployment rate
stood at 3.4%, below the national average of 4.0%. Financial
operations continue to be stable, reflecting a continuation of the
better-than-expected economic growth trend. Once again, state
revenues have been upwardly revised for fiscal year 2000 and 2001,
largely reflecting the strength in the sales tax. Fiscal 2000
revenues exceeded estimates by $146.5 million, and the state closed
the year with $948 million in combined general and working capital
funds, equal to 5.1 % of general revenues. The state's Budget
Stabilization Fund was at $847 million at the end of fiscal 2000 and
was expected to increase to $894 million by the end of fiscal 2001.
The fiscal 2001 budget continues the two-year phase out of the
intangibles tax, as well as providing offsetting funds to counties
for their expected revenue losses. The state's rapid population and
economic growth have brought pressure for more infrastructure,
education and capital spending plans but general debt has remained
moderate over an extended period. At $14.8 billion, the general debt
is currently equal to $1,048 per capita and 3.5% of personal income.
Merrill Lynch Multi-State Limited Maturity
Municipal Series Trust, July 31, 2000
At July 31, 2000, net assets of Merrill Lynch Florida Limited
Maturity Municipal Bond Fund stood at approximately $12.2 million, a
decrease of approximately 6% from April 30, 2000. As we discussed in
our last shareholder letter, we had decided to maintain our neutral
investment posture in the six-month period ended July 31, 2000 until
US economic growth moderated and the Federal Reserve Board was
perceived to be ahead of the inflation curve. We maintained a
minimal cash position and held the Fund's duration between 2.8 years
--3.1 years. We continue to maintain approximately 85% of the Fund's
assets invested in securities 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 performance in January, April and May 2000 when
interest rates rose but caused the Fund to underperform in February,
March, June and July 2000 when interest rates fell. During this
time, interest rate volatility was the norm and not the exception as
investors attempted to ascertain the Federal Reserve Board's posture
on future interest rates and inflationary risk. We expect to
continue to maintain a neutral posture in the upcoming months,
assuming that the Federal Reserve Board has completed at least the
majority of its interest rate increases and that a moderating
economy with balanced inflationary risks is soon to be close at
hand.
In Conclusion
We appreciate your support of Merrill Lynch Multi-State Limited
Maturity Municipal Series Trust, and we look forward to assisting
you with your financial needs in the months and years ahead.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Trustee
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Edward J. Andrews)
Edward J. Andrews
Vice President and Portfolio Manager
September 5, 2000
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. The Fund's Investment Advisor voluntarily waived a
portion of its management fee. Without such waiver, the Fund's
performance would have been lower.
California Limited
Maturity Fund
Total Return
Based on a $10,000
Investment
A line graph depicting the total return based on a $10,000
investment of California Limited Maturity Fund's Class A and Class B
Shares compared to growth of the Merrill Lynch U1AO Index++++.
Beginning and ending values are:
11/26/93** 7/00
California Limited Maturity++--
Class A Shares* $ 9,600 $12,538
California Limited Maturity++--
Class B Shares $10,000 $12,369
Merrill Lynch U1AO Index++++ $10,000 $13,227
A line graph depicting the total return based on a $10,000
investment of California Limited Maturity Fund's Class C and Class D
Shares compared to growth of the Merrill Lynch U1AO Index++++.
Beginning and ending values are:
10/21/94** 7/00
California Limited Maturity++--
Class C Shares* $10,000 $12,400
California Limited Maturity++--
Class D Shares $10,000 $12,355
Merrill Lynch U1AO Index++++ $10,000 $12,953
California Limited
Maturity Fund
Average Annual Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
One Year Ended 6/30/00 +1.84% +0.82%
Five Years Ended 6/30/00 +3.49 +3.28
Inception (11/26/93) through 6/30/00 +3.57 +3.41
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
One Year Ended 6/30/00 +1.48% +0.49%
Five Years Ended 6/30/00 +3.12 +3.12
Inception (11/26/93) through 6/30/00 +3.20 +3.20
*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**
One Year Ended 6/30/00 +1.66% +0.67%
Five Years Ended 6/30/00 +3.30 +3.30
Inception (10/21/94) through 6/30/00 +3.76 +3.76
*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**
One Year Ended 6/30/00 +1.64% +0.62%
Five Years Ended 6/30/00 +3.39 +3.18
Inception (10/21/94) through 6/30/00 +3.87 +3.69
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
Merrill Lynch Multi-State Limited Maturity
Municipal Series Trust, July 31, 2000
PERFORMANCE DATA (concluded)
Florida Limited
Maturity Fund
Total Return
Based on a $10,000
Investment
A line graph depicting the total return based on a $10,000
investment of Florida Limited Maturity Fund's Class A and Class B
Shares compared to growth of the Merrill Lynch U1AO Index++++.
Beginning and ending values are:
11/26/93** 7/00
Florida Limited Maturity++--
Class A Shares* $10,000 $12,469
Florida Limited Maturity++--
Class B Shares $10,000 $12,301
Merrill Lynch U1AO Index++++ $10,000 $13,227
A line graph depicting the total return based on a $10,000
investment of Florida Limited Maturity Fund's Class C and Class D
Shares compared to growth of the Merrill Lynch U1AO Index++++.
Beginning and ennding values are:
10/21/94** 7/00
Florida Limited Maturity++--
Class C Shares* $10,000 $12,035
Florida Limited Maturity++--
Class D Shares $10,000 $12,272
Merrill Lynch U1AO Index++++ $10,000 $12,953
Florida Limited
Maturity Fund
Average Annual Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
One Year Ended 6/30/00 +2.23% +1.21%
Five Years Ended 6/30/00 +3.27 +3.07
Inception (11/26/93) through 6/30/00 +3.44 +3.28
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
One Year Ended 6/30/00 +1.87% +0.88%
Five Years Ended 6/30/00 +2.91 +2.91
Inception (11/26/93) through 6/30/00 +3.07 +3.07
*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**
One Year Ended 6/30/00 +1.18% +0.20%
Five Years Ended 6/30/00 +2.64 +2.64
Inception (10/21/94) through 6/30/00 +3.16 +3.16
*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**
One Year Ended 6/30/00 +2.23% +1.21%
Five Years Ended 6/30/00 +3.19 +2.98
Inception (10/21/94) through 6/30/00 +3.72 +3.54
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
<TABLE>
Recent
Performance
Results*
<CAPTION>
Since
6 Month 12 Month Inception Standardized
As of July 31, 2000 Total Return Total Return Total Return 30-day Yield
<S> <C> <C> <C> <C>
California Limited Maturity Fund Class A Shares +2.03% +2.00% +26.66% 2.14%
California Limited Maturity Fund Class B Shares +1.95 +1.64 +23.69 1.80
California Limited Maturity Fund Class C Shares +1.93 +1.82 +24.00 1.97
California Limited Maturity Fund Class D Shares +1.98 +1.80 +24.79 2.04
Florida Limited Maturity Fund Class A Shares +2.69 +2.54 +25.96 3.24
Florida Limited Maturity Fund Class B Shares +2.51 +2.29 +23.01 2.92
Florida Limited Maturity Fund Class C Shares +1.75 +1.49 +20.35 3.05
Florida Limited Maturity Fund Class D Shares +2.64 +2.44 +23.96 3.15
*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, July 31, 2000
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.
COP Certificates of Participation
GO General Obligation Bonds
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
California Limited Maturity Municipal Bond Fund
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <C> <C> <C> <S> <C>
California NR* A2 $ 400 California Educational Facilities Authority, Revenue Refunding Bonds
--99.6% (Loyola Marymount University), 5.70% due 10/01/2002 $ 412
AAA Aaa 500 California Health Facilities Finance Authority, Revenue Refunding
Bonds (De Las Companas), Series A, 5.30% due 7/01/2003 (a) 515
California State, GO:
AA- Aa3 500 6.75% due 10/01/2003 537
AAA Aaa 750 6.35% due 11/01/2004 (b) 812
AAA Aaa 500 California Statewide Communities Development Authority, Lease Revenue
Refunding Bonds (Oakland Convention Center Projects), 5.70% due 10/01/2002 (a) 515
NR* NR* 400 Coachella Valley, California, Water Improvement District Number 71, Storm
Water District, COP (Flood Control Project), 6.60% due 10/01/2002 (c) 427
AAA Aaa 350 Foothill/Eastern Corridor Agency, California, Toll Road Revenue Refunding
Bonds, Senior Lien, Series A, 6% due 1/01/2007 (c) 383
AAA Aaa 200 Los Angeles, California, Department of Airports, Airport Revenue
Refunding Bonds, Series A, 6% due 5/15/2005 (b) 215
A+ Aa3 550 Los Angeles, California, Department of Water and Power, Electric Plant
Revenue Bonds, 6% due 4/01/2002 565
AA- Aa1 1,000 Los Angeles County, California, Public Works Financing Authority, Revenue
Refunding Bonds (Capital Construction), 4.80% due 3/01/2004 1,015
AAA Aaa 300 San Jose, California, Financing Authority, Lease Revenue Refunding Bonds
(Tuers-Capitol/Camden Park), Series B, 4.70% due 8/15/2009 (a) 304
AAA Aaa 500 University of California, Revenue Refunding Bonds (Multi-Purpose Projects),
Series C, 10% due 9/01/2001 (a) 530
Total Investments (Cost--$5,940)--99.6% 6,230
Other Assets Less Liabilities--0.4% 24
-------
Net Assets--100.0% $ 6,254
=======
(a)AMBAC Insured.
(b)FGIC Insured.
(c)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, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Florida Limited Maturity Municipal Bond Fund
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <C> <C> <C> <S> <C>
Florida AAA Aaa $1,000 Dade County, Florida, GO, Series I, 6.90% due 7/01/2003 (a) $ 1,063
--96.0% AAA Aaa 700 Dunedin, Florida, Hospital Revenue Bonds (Mease Health Care), 6.75% due
11/15/2001 (d)(e) 734
AA+ Aa2 1,000 Florida State Board of Education, Capital Outlay, GO (Public Education),
Series B, 5.625% due 6/01/2005 1,043
AAA Aaa 1,730 Florida State Bond Finance Division, Department of General Services Revenue
Refunding Bonds (Save Our Coast-Department of Natural Resources
Preservation), 6.30% due 7/01/2001 (d)(e) 1,778
AAA Aaa 500 Florida State Turnpike Authority, Turnpike Revenue Refunding Bonds
(Department of Transportation), Series A, 5.50% due 7/01/2007 (b) 524
AA Aa2 900 Jacksonville, Florida, Electric Authority, Revenue Refunding Bonds (Saint
John's River), Issue 2, Series 6-C, 6.50% due 10/01/2001 916
AA- A1 650 Lakeland, Florida, Electric and Water Revenue Refunding and Improvement
Bonds, Series B, 5.625% due 10/01/2006 (e) 688
AAA Aaa 250 Lee County, Florida, Water and Sewer Revenue Bonds, Series A, 4.10%
due 10/01/2008 (a) 235
AAA Aaa 500 North Miami, Florida, Health Facilities Authority, Health Facility Revenue
Refunding Bonds (Bon Secours Health System Project), 6% due 8/15/2002 (c)(e) 525
AAA Aaa 500 Orange County, Florida, Tourist Development Tax Revenue Bonds, 5% due
10/01/2009 (a) 508
AAA Aaa 500 Orlando and Orange County, Florida, Expressway Authority, Expressway
Revenue Refunding Bonds, Senior Lien, 5.375% due 7/01/2009 (a) 512
AAA Aaa 1,000 Palm Bay, Florida, Utility Revenue Bonds (Palm Bay Utility Corporation
Project), Series B, 6.20% due 10/01/2002 (d)(e) 1,055
AAA Aaa 300 Port Orange, Florida, Water and Sewer Revenue Refunding Bonds, 5% due
10/01/2003 (a) 304
AAA Aaa 800 Sunrise, Florida, Utility System Revenue Bonds, Series A, 5.75% due
10/01/2006 (a)(e) 853
AAA Aaa 500 Tallahassee, Florida, Energy System Revenue Bonds, Series B, 4% due
10/01/2004 (c) 483
AAA Aaa 400 Tampa, Florida, Water and Sewer Revenue Refunding Bonds, Series A, 6%
due 10/01/2002 (b)(e) 417
Puerto A Baa1 900 Puerto Rico Commonwealth, GO, Refunding, 5.30% due 7/01/2004 928
Rico--7.6%
Total Investments (Cost--$12,455)--103.6% 12,566
Liabilities in Excess of Other Assets--(3.6%) (438)
-------
Net Assets--100.0% $12,128
=======
(a)AMBAC Insured.
(b)FGIC Insured.
(c)FSA Insured.
(d)MBIA Insured.
(e)Prerefunded.
Ratings of issues shown have not been audited by Deloitte & Touche
LLP.
See Notes to Financial Statements.
Merrill Lynch Multi-State Limited Maturity
Municipal Series Trust, July 31, 2000
</TABLE>
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
<CAPTION>
California Florida
Limited Limited
Maturity Maturity
As of July 31, 2000 Fund Fund
<S> <S> <C> <C>
Assets: Investments, at value* $ 6,230,419 $ 12,565,823
Cash 76,158 74,180
Receivables:
Interest 107,463 148,850
Beneficial interest sold 173,994 --
Prepaid registration fees and other assets 614 1,149
----------- ------------
Total assets 6,588,648 12,790,002
----------- ------------
Liabilities: Payables:
Securities purchased 302,308 508,560
Beneficial interest redeemed -- 75,609
Dividends to shareholders 2,981 7,836
Investment adviser 723 3,395
Distributor 903 2,002
Accrued expenses and other liabilities 28,211 64,103
----------- ------------
Total liabilities 335,126 661,505
----------- ------------
Net Assets: Net assets $ 6,253,522 $ 12,128,497
=========== ============
Net Assets Class A Shares of beneficial interest, $.10 par value,
Consist of: unlimited shares authorized $ 10,022 $ 32,594
Class B Shares of beneficial interest, $.10 par value,
unlimited shares authorized 26,943 65,808
Class C Shares of beneficial interest, $.10 par value,
unlimited shares authorized 283 152
Class D Shares of beneficial interest, $.10 par value,
unlimited shares authorized 25,733 25,453
Paid-in capital in excess of par 6,180,361 12,537,112
Accumulated realized capital losses on investments--net (280,565) (643,628)
Unrealized appreciation on investments--net 290,745 111,006
----------- ------------
Net assets $ 6,253,522 $ 12,128,497
=========== ============
Net Asset Value: Class A: Net assets $ 995,160 $ 3,188,534
=========== ============
Shares outstanding 100,223 325,944
=========== ============
Net asset value $ 9.93 $ 9.78
=========== ============
Class B: Net assets $ 2,674,310 $ 6,437,360
=========== ============
Shares outstanding 269,432 658,077
=========== ============
Net asset value $ 9.93 $ 9.78
=========== ============
Class C: Net assets $ 28,082 $ 14,609
=========== ============
Shares outstanding 2,828 1,517
=========== ============
Net asset value $ 9.93 $ 9.63
=========== ============
Class D: Net assets $ 2,555,970 $ 2,487,994
=========== ============
Shares outstanding 257,329 254,534
=========== ============
Net asset value $ 9.93 $ 9.77
=========== ============
*Identified cost $ 5,939,674 $ 12,454,817
=========== ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF OPERATIONS
<CAPTION>
California Florida
Limited Limited
Maturity Maturity
For the Year Ended July 31, 2000 Fund Fund
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 347,723 $ 671,146
Income: ----------- ------------
Expenses: Professional fees 51,682 52,324
Investment advisory fees 24,595 47,620
Accounting services 26,170 44,877
Printing and shareholder reports 24,191 24,219
Account maintenance and distribution fees--Class B 10,657 24,846
Trustees' fees and expenses 11,998 18,285
Registration fees 3,975 3,300
Custodian fees 2,148 3,650
Account maintenance fees--Class D 2,719 2,680
Pricing fees 1,529 2,406
Transfer agent fees--Class B 1,032 2,038
Transfer agent fees--Class D 696 596
Transfer agent fees--Class A 306 826
Account maintenance and distribution fees--Class C 93 196
Transfer agent fees--Class C 32 42
Other 1,940 3,216
----------- ------------
Total expenses before reimbursement 163,763 231,121
Reimbursement of expenses (14,054) --
----------- ------------
Total expenses after reimbursement 149,709 231,121
----------- ------------
Investment income--net 198,014 440,025
----------- ------------
Realized & Realized gain on investments--net 17,471 15,704
Unrealized Change in unrealized appreciation on investments--net (112,370) (154,484)
Gain (Loss) on ----------- ------------
Investments--Net: Net Increase in Net Assets Resulting from Operations $ 103,115 $ 301,245
=========== ============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Multi-State Limited Maturity
Municipal Series Trust, July 31, 2000
<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: 2000 1999 2000 1999
<S> <S> <C> <C> <C> <C>
Operations: Investment income--net $ 198,014 $ 291,247 $ 440,025 $ 574,753
Realized gain on investments--net 17,471 38,866 15,704 49,224
Change in unrealized appreciation on
investments--net (112,370) (116,580) (154,484) (282,262)
------------ ------------ ------------ ------------
Net increase in net assets resulting
from operations 103,115 213,533 301,245 341,715
------------ ------------ ------------ ------------
Dividends to Investment income--net:
Shareholders: Class A (36,227) (46,359) (127,117) (156,605)
Class B (80,962) (125,870) (218,881) (247,981)
Class C (1,806) (3,446) (4,347) (1,739)
Class D (79,019) (115,572) (89,680) (168,428)
------------ ------------ ------------ ------------
Net decrease in net assets resulting from
dividends to shareholders (198,014) (291,247) (440,025) (574,753)
------------ ------------ ------------ ------------
Beneficial Net decrease in net assets derived from
Interest beneficial interest transactions (1,913,323) (741,002) (2,160,939) (4,046,299)
Transactions: ------------ ------------ ------------ ------------
Net Assets: Total decrease in net assets (2,008,222) (818,716) (2,299,719) (4,279,337)
Beginning of year 8,261,744 9,080,460 14,428,216 18,707,553
------------ ------------ ------------ ------------
End of year $ 6,253,522 $ 8,261,744 $ 12,128,497 $ 14,428,216
============ ============ ============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
California Limited Maturity Fund
Class A
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 10.03 $ 10.13 $ 10.22 $ 10.05 $ 9.99
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .30 .32 .39 .38 .39
Realized and unrealized gain (loss)
on investments--net (.10) (.10) (.09) .17 .06
----------- ----------- ----------- ----------- -----------
Total from investment operations .20 .22 .30 .55 .45
----------- ----------- ----------- ----------- -----------
Less dividends from investment
income--net (.30) (.32) (.39) (.38) (.39)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 9.93 $ 10.03 $ 10.13 $ 10.22 $ 10.05
=========== =========== =========== =========== ===========
Total Investment Based on net asset value per share 2.00% 2.20% 2.96% 5.57% 4.56%
Return:* =========== =========== =========== =========== ===========
Ratios to Average Expenses, net of reimbursement 1.93% 1.59% 1.12% 1.08% .94%
Net Assets: =========== =========== =========== =========== ===========
Expenses 2.13% 1.79% 1.32% 1.28% 1.30%
=========== =========== =========== =========== ===========
Investment income--net 3.01% 3.18% 3.82% 3.75% 3.89%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year (in thousands) $ 995 $ 1,294 $ 1,460 $ 3,152 $ 3,162
Data: =========== =========== =========== =========== ===========
Portfolio turnover 19.25% 44.37% 24.65% 26.86% 11.09%
=========== =========== =========== =========== ===========
<CAPTION>
California Limited Maturity Fund
Class B
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 10.03 $ 10.12 $ 10.21 $ 10.04 $ 9.99
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .26 .29 .35 .34 .36
Realized and unrealized gain
(loss) on investments--net (.10) (.09) (.09) .17 .05
----------- ----------- ----------- ----------- -----------
Total from investment operations .16 .20 .26 .51 .41
----------- ----------- ----------- ----------- -----------
Less dividends from investment
income--net (.26) (.29) (.35) (.34) (.36)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 9.93 $ 10.03 $ 10.12 $ 10.21 $ 10.04
=========== =========== =========== =========== ===========
Total Investment Based on net asset value per share 1.64% 1.93% 2.59% 5.20% 4.08%
Return:* =========== =========== =========== =========== ===========
Ratios to Average Expenses, net of reimbursement 2.28% 1.94% 1.51% 1.44% 1.30%
Net Assets: =========== =========== =========== =========== ===========
Expenses 2.48% 2.14% 1.71% 1.64% 1.66%
=========== =========== =========== =========== ===========
Investment income--net 2.65% 2.83% 3.45% 3.39% 3.53%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year (in thousands) $ 2,675 $ 3,718 $ 4,812 $ 6,877 $ 9,919
Data: =========== =========== =========== =========== ===========
Portfolio turnover 19.25% 44.37% 24.65% 26.86% 11.09%
=========== =========== =========== =========== ===========
*Total investment returns exclude the effects of sales charges.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Multi-State Limited Maturity
Municipal Series Trust, July 31, 2000
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
California Limited Maturity Fund
Class C
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 10.03 $ 10.12 $ 10.22 $ 10.05 $ 9.99
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .28 .31 .37 .36 .37
Realized and unrealized gain
(loss) on investments--net (.10) (.09) (.10) .17 .06
----------- ----------- ----------- ----------- -----------
Total from investment operations .18 .22 .27 .53 .43
----------- ----------- ----------- ----------- -----------
Less dividends from investment
income--net (.28) (.31) (.37) (.36) (.37)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 9.93 $ 10.03 $ 10.12 $ 10.22 $ 10.05
=========== =========== =========== =========== ===========
Total Investment Based on net asset value per share 1.82% 2.12% 2.68% 5.39% 4.35%
Return:* =========== =========== =========== =========== ===========
Ratios to Average Expenses, net of reimbursement 2.00% 1.76% 1.36% 1.25% 1.14%
Net Assets: =========== =========== =========== =========== ===========
Expenses 2.20% 1.96% 1.56% 1.45% 1.50%
=========== =========== =========== =========== ===========
Investment income--net 2.89% 3.00% 3.61% 3.58% 3.69%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year (in thousands) $ 28 $ 114 $ 95 $ 57 $ 55
Data: =========== =========== =========== =========== ===========
Portfolio turnover 19.25% 44.37% 24.65% 26.86% 11.09%
=========== =========== =========== =========== ===========
<CAPTION>
California Limited Maturity Fund
Class D
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 10.04 $ 10.13 $ 10.22 $ 10.05 $ 9.99
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .29 .31 .38 .37 .38
Realized and unrealized gain
(loss) on investments--net (.11) (.09) (.09) .17 .06
----------- ----------- ----------- ----------- -----------
Total from investment operations .18 .22 .29 .54 .44
----------- ----------- ----------- ----------- -----------
Less dividends from investment
income--net (.29) (.31) (.38) (.37) (.38)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 9.93 $ 10.04 $ 10.13 $ 10.22 $ 10.05
=========== =========== =========== =========== ===========
Total Investment Based on net asset value per share 1.80% 2.20% 2.86% 5.47% 4.46%
Return:* =========== =========== =========== =========== ===========
Ratios to Average Expenses, net of reimbursement 2.04% 1.67% 1.25% 1.15% 1.06%
Net Assets: =========== =========== =========== =========== ===========
Expenses 2.24% 1.87% 1.45% 1.35% 1.40%
=========== =========== =========== =========== ===========
Investment income--net 2.90% 3.09% 3.70% 3.69% 3.77%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year (in
Data: thousands) $ 2,556 $ 3,136 $ 2,713 $ 4,043 $ 2,185
=========== =========== =========== =========== ===========
Portfolio turnover 19.25% 44.37% 24.65% 26.86% 11.09%
=========== =========== =========== =========== ===========
<CAPTION>
Florida Limited Maturity Fund
Class A
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 9.87 $ 10.00 $ 10.07 $ 9.96 $ 10.02
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .33 .33 .38 .40 .40
Realized and unrealized gain (loss) on
investments--net (.09) (.13) (.07) .11 (.06)
----------- ----------- ----------- ----------- -----------
Total from investment operations .24 .20 .31 .51 .34
----------- ----------- ----------- ----------- -----------
Less dividends from investment
income--net (.33) (.33) (.38) (.40) (.40)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 9.78 $ 9.87 $ 10.00 $ 10.07 $ 9.96
=========== =========== =========== =========== ===========
Total Investment Based on net asset value per share 2.54% 2.01% 3.17% 5.20% 3.45%
Return:* =========== =========== =========== =========== ===========
Ratios to Average Expenses, net of reimbursement 1.49% 1.48% 1.19% 1.09% .89%
Net Assets: =========== =========== =========== =========== ===========
Expenses 1.49% 1.48% 1.19% 1.09% .97%
=========== =========== =========== =========== ===========
Investment income--net 3.43% 3.31% 3.81% 3.98% 4.01%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year (in thousands) $ 3,188 $ 4,055 $ 5,331 $ 6,376 $ 7,874
Data: =========== =========== =========== =========== ===========
Portfolio turnover 29.34% 18.60% 39.52% 35.67% 39.90%
=========== =========== =========== =========== ===========
*Total investment returns exclude the effects of sales charges.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Multi-State Limited Maturity
Municipal Series Trust, July 31, 2000
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Florida Limited Maturity Fund
Class B
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 9.86 $ 10.00 $ 10.07 $ 9.96 $ 10.02
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .30 .30 .35 .36 .37
Realized and unrealized gain
(loss) on investments--net (.08) (.14) (.07) .11 (.06)
----------- ----------- ----------- ----------- -----------
Total from investment operations .22 .16 .28 .47 .31
----------- ----------- ----------- ----------- -----------
Less dividends from investment
income--net (.30) (.30) (.35) (.36) (.37)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 9.78 $ 9.86 $ 10.00 $ 10.07 $ 9.96
=========== =========== =========== =========== ===========
Total Investment Based on net asset value per share 2.29% 1.54% 2.80% 4.83% 3.08%
Return:* =========== =========== =========== =========== ===========
Ratios to Average Expenses, net of reimbursement 1.84% 1.84% 1.54% 1.45% 1.24%
Net Assets: =========== =========== =========== =========== ===========
Expenses 1.84% 1.84% 1.54% 1.45% 1.32%
=========== =========== =========== =========== ===========
Investment income--net 3.07% 2.95% 3.46% 3.63% 3.66%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year (in
Data: thousands) $ 6,437 $ 7,787 $ 8,014 $ 11,461 $ 13,690
=========== =========== =========== =========== ===========
Portfolio turnover 29.34% 18.60% 39.52% 35.67% 39.90%
=========== =========== =========== =========== ===========
<CAPTION>
Florida Limited Maturity Fund
Class C
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 9.80 $ 9.93 $ 10.00 $ 9.90 $ 10.01
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .31 .30 .33 .38 .36
Realized and unrealized gain
(loss) on investments--net (.17) (.13) (.07) .10 (.11)
----------- ----------- ----------- ----------- -----------
Total from investment operations .14 .17 .26 .48 .25
----------- ----------- ----------- ----------- -----------
Less dividends from investment
income--net (.31) (.30) (.33) (.38) (.36)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 9.63 $ 9.80 $ 9.93 $ 10.00 $ 9.90
=========== =========== =========== =========== ===========
Total Investment Based on net asset value per share 1.49% 1.68% 2.65% 4.93% 2.48%
Return:* =========== =========== =========== =========== ===========
Ratios to Average Expenses, net of reimbursement 1.61% 1.66% 1.29% 1.26% 1.21%
Net Assets: =========== =========== =========== =========== ===========
Expenses 1.61% 1.66% 1.29% 1.26% 1.23%
=========== =========== =========== =========== ===========
Investment income--net 3.33% 3.06% 3.78% 3.83% 3.75%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year (in
Data: thousands) $ 15 $ 64 $ 1 $ 60 $ 52
=========== =========== =========== =========== ===========
Portfolio turnover 29.34% 18.60% 39.52% 35.67% 39.90%
=========== =========== =========== =========== ===========
<CAPTION>
Florida Limited Maturity Fund
Class D
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 9.86 $ 10.00 $ 10.06 $ 9.95 $ 10.01
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .32 .32 .37 .39 .39
Realized and unrealized gain (loss)
on investments--net (.09) (.14) (.06) .11 (.06)
----------- ----------- ----------- ----------- -----------
Total from investment operations .23 .18 .31 .50 .33
----------- ----------- ----------- ----------- -----------
Less dividends from investment
income--net (.32) (.32) (.37) (.39) (.39)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 9.77 $ 9.86 $ 10.00 $ 10.06 $ 9.95
=========== =========== =========== =========== ===========
Total Investment Based on net asset value per share 2.44% 1.80% 3.17% 5.10% 3.35%
Return:* =========== =========== =========== =========== ===========
Ratios to Average Expenses, net of reimbursement 1.58% 1.57% 1.29% 1.19% .99%
Net Assets: =========== =========== =========== =========== ===========
Expenses 1.58% 1.57% 1.29% 1.19% 1.07%
=========== =========== =========== =========== ===========
Investment income--net 3.34% 3.21% 3.71% 3.88% 3.91%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year (in thousands) $ 2,488 $ 2,522 $ 5,362 $ 7,733 $ 6,406
Data: =========== =========== =========== =========== ===========
Portfolio turnover 29.34% 18.60% 39.52% 35.67% 39.90%
=========== =========== =========== =========== ===========
*Total investment returns exclude the effects of sales charges.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Multi-State Limited Maturity
Municipal Series Trust, July 31, 2000
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 ("California Limited Maturity Fund")
and Merrill Lynch Florida Limited Maturity Municipal Bond Fund
("Florida Limited Maturity Fund"). Each Fund's financial statements
are prepared in accordance with accounting principles generally
accepted in the United States of America, which may require the use
of management accruals and estimates. 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 investment strategies to increase or decrease the
level of risk to which the Fund is exposed more quickly and
efficiently than transactions in other types of instruments. 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) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(f) Dividends and distributions--Dividends from net investment
income are declared daily and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates.
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 Distribution
Agreements and Distribution Plans with FAM Distributors, Inc.
("FAMD" or the "Distributor"), which is a wholly-owned subsidiary of
Merrill Lynch Group, Inc.
FAM is responsible for the management of 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 .35% of
that Fund's average daily net assets.
For the year ended July 31, 2000, FAM earned fees of $24,595 from
California Limited Maturity Fund, of which $14,054 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, 2000. 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 .15% .20%
Class C .15% .20%
Class D .10% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("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, 2000, FAMD earned underwriting discounts
and MLPF&S earned dealer concessions on sales of each Fund's Class D
Shares as follows:
California Florida
Limited Limited
Maturity Maturity
Fund Fund
Class D:
FAMD $ 20 $ 3
MLPF&S $380 $47
MLPF&S received contingent deferred sales charges relating to
transactions in Class B Shares as follows:
Class B
California Limited Maturity Fund $ 371
Florida Limited Maturity Fund $2,913
Furthermore, MLPF&S received contingent deferred sales charges of
$2,976 relating to transactions subject to front-end sales charge
waivers in Class D Shares in the California 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, FAMD, FDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended July 31, 2000 were as follows:
Purchases Sales
California Limited Maturity Fund $1,307,915 $2,808,099
Florida Limited Maturity Fund $3,855,565 $5,299,777
Net realized gains (losses) for the year ended July 31, 2000 and net
unrealized gains as of July 31, 2000 were as follows:
Realized Unrealized
California Limited Maturity Fund Gains Gains
Long-term investments $ 17,471 $ 290,745
--------- ----------
Total $ 17,471 $ 290,745
========= ==========
Realized Unrealized
Florida Limited Maturity Fund Gains (Losses) Gains
Long-term investments $ 17,285 $ 111,006
Short-term investments (1,581) --
--------- ----------
Total $ 15,704 $ 111,006
========= ==========
As of July 31, 2000, 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 $274,009 $ 5,907 $268,102 $ 5,962,317
Florida $159,203 $48,197 $111,006 $12,454,817
Merrill Lynch Multi-State Limited Maturity
Municipal Series Trust, July 31, 2000
NOTES TO FINANCIAL STATEMENTS (continued)
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest
transactions were as follows:
For the For the
Year Ended Year Ended
July 31, July 31,
2000 1999
California Limited Maturity Fund $(1,913,323) $ (741,002)
Florida Limited Maturity Fund $(2,160,939) $(4,046,299)
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, 2000 Shares Amount
Shares sold 13,774 $ 136,933
Shares issued to shareholders in
reinvestment of dividends 1,702 16,862
--------- -----------
Total issued 15,476 153,795
Shares redeemed (44,157) (435,757)
--------- -----------
Net decrease (28,681) $ (281,962)
========= ===========
California Limited Maturity Fund
Class A Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
Shares sold 7,460 $ 76,225
Shares issued to shareholders in
reinvestment of dividends 2,442 24,887
--------- -----------
Total issued 9,902 101,112
Shares redeemed (25,118) (253,933)
--------- -----------
Net decrease (15,216) $ (152,821)
========= ===========
California Limited Maturity Fund
Class B Shares for the Year Dollar
Ended July 31, 2000 Shares Amount
Shares sold 25,779 $ 255,734
Shares issued to shareholders in
reinvestment of dividends 5,615 55,576
--------- -----------
Total issued 31,394 311,310
Automatic conversion of shares (7,045) (69,457)
Shares redeemed (125,671) (1,243,195)
--------- -----------
Net decrease (101,322) $(1,001,342)
========= ===========
California Limited Maturity Fund
Class B Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
Shares sold 101,369 $ 1,035,278
Shares issued to shareholders in
reinvestment of dividends 8,529 86,934
--------- -----------
Total issued 109,898 1,122,212
Shares redeemed (214,493) (2,187,382)
--------- -----------
Net decrease (104,595) $(1,065,170)
========= ===========
California Limited Maturity Fund
Class C Shares for the Year Dollar
Ended July 31, 2000 Shares Amount
Shares issued to shareholders in
reinvestment of dividends 93 $ 920
Shares redeemed (8,631) (85,449)
--------- -----------
Net decrease (8,538) $ (84,529)
========= ===========
California Limited Maturity Fund
Class C Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
Shares sold 3,433 $ 35,335
Shares issued to shareholders in
reinvestment of dividends 136 1,384
--------- -----------
Total issued 3,569 36,719
Shares redeemed (1,643) (16,810)
--------- -----------
Net increase 1,926 $ 19,909
========= ===========
California Limited Maturity Fund
Class D Shares for the Year Dollar
Ended July 31, 2000 Shares Amount
Shares sold 4,005 $ 39,614
Automatic conversion of shares 7,038 69,457
Shares issued to shareholders in
reinvestment of dividends 7,500 74,292
--------- -----------
Total issued 18,543 183,363
Shares redeemed (73,603) (728,853)
--------- -----------
Net decrease (55,060) $ (545,490)
========= ===========
California Limited Maturity Fund
Class D Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
Shares sold 417,306 $ 4,272,631
Shares issued to shareholders in
reinvestment of dividends 10,109 103,130
--------- -----------
Total issued 427,415 4,375,761
Shares redeemed (382,844) (3,918,681)
--------- -----------
Net increase 44,571 $ 457,080
========= ===========
Florida Limited Maturity Fund
Class A Shares for the Year Dollar
Ended July 31, 2000 Shares Amount
Shares sold 22,107 $ 216,101
Shares issued to shareholders in
reinvestment of dividends 2,137 20,798
--------- -----------
Total issued 24,244 236,899
Shares redeemed (109,371) (1,064,787)
--------- -----------
Net decrease (85,127) $ (827,888)
========= ===========
Florida Limited Maturity Fund
Class A Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
Shares sold 28,676 $ 289,114
Shares issued to shareholders in
reinvestment of dividends 3,544 35,627
--------- -----------
Total issued 32,220 324,741
Shares redeemed (153,998) (1,547,761)
--------- -----------
Net decrease (121,778) $(1,223,020)
========= ===========
Florida Limited Maturity Fund
Class B Shares for the Year Dollar
Ended July 31, 2000 Shares Amount
Shares sold 107,553 $ 1,047,476
Shares issued to shareholders in
reinvestment of dividends 10,470 101,941
--------- -----------
Total issued 118,023 1,149,417
Shares redeemed (249,274) (2,427,180)
--------- -----------
Net decrease (131,251) $(1,277,763)
========= ===========
Florida Limited Maturity Fund
Class B Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
Shares sold 359,650 $ 3,629,639
Shares issued to shareholders in
reinvestment of dividends 11,689 117,363
--------- -----------
Total issued 371,339 3,747,002
Shares redeemed (383,122) (3,862,896)
--------- -----------
Net decrease (11,783) $ (115,894)
========= ===========
Florida Limited Maturity Fund
Class C Shares for the Year Dollar
Ended July 31, 2000 Shares Amount
Shares sold 46,401 $ 447,792
Shares issued to shareholders in
reinvestment of dividends 135 1,306
--------- -----------
Total issued 46,536 449,098
Shares redeemed (51,525) (496,979)
--------- -----------
Net decrease (4,989) $ (47,881)
========= ===========
Florida Limited Maturity Fund
Class C Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
Shares sold 14,831 $ 148,588
Shares issued to shareholders in
reinvestment of dividends 114 1,132
--------- -----------
Total issued 14,945 149,720
Shares redeemed (8,565) (85,527)
--------- -----------
Net increase 6,380 $ 64,193
========= ===========
Florida Limited Maturity Fund
Class D Shares for the Year Dollar
Ended July 31, 2000 Shares Amount
Shares sold 187,487 $ 1,824,528
Shares issued to shareholders in
reinvestment of dividends 2,345 22,809
--------- -----------
Total issued 189,832 1,847,337
Shares redeemed (191,161) (1,854,744)
--------- -----------
Net decrease (1,329) $ (7,407)
========= ===========
Merrill Lynch Multi-State Limited Maturity
Municipal Series Trust, July 31, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
Florida Limited Maturity Fund
Class D Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
Shares sold 84,836 $ 854,705
Shares issued to shareholders in
reinvestment of dividends 3,256 32,702
--------- -----------
Total issued 88,092 887,407
Shares redeemed (368,434) (3,658,985)
--------- -----------
Net decrease (280,342) $(2,771,578)
========= ===========
5. Short-Term Borrowings:
On December 3, 1999, the Funds, along with certain other funds
managed by FAM and its affiliates, entered into a one-year,
unsecured $1,000,000,000 credit agreement with The Bank of New York
and other lenders. The funds may borrow money for temporary or
emergency purposes to meet shareholder redemptions. Each 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. The funds
collectively pay a commitment fee of .09% per annum on the available
portion of the facility. Amounts borrowed under the facility bear
interest at the Federal Funds rate plus .50%. The Funds did not
borrow from the facility during the year ended July 31, 2000.
6. Capital Loss Carryforward:
At July 31, 2000, each Fund of the Trust had an approximate net
capital loss carryforward as follows: $232,000 in the California
Limited Maturity Fund, all of which expires in 2004; and $620,000 in
the Florida Limited Maturity Fund, of which $420,000 expires in 2003
and $200,000 expires in 2004. These amounts will be available to
offset like amounts of any future taxable gains.
<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, 2000, 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 five-year
period then ended. 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 auditing standards
generally accepted in the United States of America. 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, 2000 by correspondence
with the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Limited Maturity Municipal Bond Funds for California
and Florida of the Merrill Lynch Multi-State Limited Maturity
Municipal Series Trust as of July 31, 2000, the results of their
operations, the changes in their net assets, and the financial
highlights for the respective stated periods in conformity with
accounting principles generally accepted in the United States of
America.
Deloitte & Touche LLP
Princeton, New Jersey
September 8, 2000
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, 2000 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
Terry K. Glenn, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, 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
