MERRILL
LYNCH
FLORIDA
MUNICIPAL
BOND FUND
Annual Report July 31, 1994
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Custodian
National Westminster
Bank NJ
Exchange Place Centre
10 Exchange Place
Jersey City, NJ 07302
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
<PAGE>
Merrill Lynch Florida
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, New Jersey
08543-9011
TO OUR SHAREHOLDERS
The expectation of increasing inflationary pressures and higher
interest rates initially heightened investor concerns and increased
financial market volatility during the July quarter. However, as the
quarter progressed, it was the weakness of the US dollar in foreign
exchange markets that dominated the financial news and prolonged
stock and bond market declines. Although the US dollar had
strengthened slightly by July quarter-end, which may have improved
investor confidence in the stock and bond markets, the possibility
of continued tightening by the Federal Reserve Board resurfaced
following Chairman Alan Greenspan's recent Congressional testimony.
Nevertheless, as the quarter drew to a close, a lower-than-expected
rate of growth reported for the US economy during the second
calendar quarter allayed investor concerns and led to stock and bond
market rallies.
<PAGE>
During the July quarter, the US dollar's weakness relative to other
major currencies reflected the deteriorating US trade deficit and
widening net long-term capital outflows. In 1993, an expanding US
economy and recession in other industrial countries led to a higher
level of imports and weaker export growth, widening the US trade
deficit further. In addition, global investors favored non-US dollar
denominated assets throughout 1993, which has further depressed the
dollar's value. This trend is not improving significantly thus far
in 1994 since foreign inflows into US capital markets continue to
decline, although US investors are investing outside of the United
States to a lesser degree.
Over the longer term, if the economies of the United States' major
trading partners expand (improving the prospects for US export
growth), the outlook for the US dollar is likely to improve. In the
near term, central banks have attempted to reverse the dollar's
decline through currency market intervention. These efforts have met
with limited success thus far, giving rise to the concern that the
Federal Reserve Board will be forced to continue to raise short-term
interest rates to attract investment capital back to the United
States and bolster the dollar's value. However, further interest
rate increases may jeopardize the US economic expansion. Despite
evidence of a moderating trend in the US economy, Federal Reserve
Board Chairman Alan Greenspan indicated in his July Humphrey-Hawkins
testimony that the central bank would prefer to err on the side of
too much monetary tightening rather than too little. In the weeks
ahead, investors will continue to assess economic data and
inflationary trends as they focus on the US dollar in order to gauge
whether further increases in short-term interest rates are imminent.
Continued indications of moderate and sustainable levels of economic
growth would be positive for the US capital markets.
The Municipal Market
Long-term tax-exempt bond yields ended the July quarter essentially
unchanged. The Bond Buyer Revenue Bond Index rose five basis points
(0.05%) to 6.47%. The Index, however, failed to capture the dramatic
bond rally on July 29, 1994, when municipal bond yields experienced
their largest one-day decline thus far this year. Responding to
reports of a continued mild inflationary outlook and a potentially
weakening economy, municipal bond yields declined by approximately
10 basis points. US Treasury bonds displayed a similar pattern over
the last three months, ending with an equally dramatic rally on July
29, 1994. Long-term US Treasury bonds ended the quarter yielding
approximately 7.40%.
<PAGE>
The tax-exempt bond market has continued to be very volatile with
yields fluctuating by as much as 15 basis points from week to week.
This continued volatility is largely a reflection of the same lack
of conviction regarding the near-term direction of interest rates
that has prevailed for much of 1994. Throughout this past quarter,
the municipal bond market had been unable to maintain a consensus
regarding either the potential strength of current economic recovery
or the resultant response by the Federal Reserve Board. However, a
number of economic indicators released in late July began to suggest
that the robust pace of recent economic growth was slowing. This
promoted a more positive market environment, culminating in the
market rally on July 29.
The municipal bond market's technical position has remained
supportive. Approximately $40 billion in long-term securities were
issued during the three months ended July 31, 1994. This represents
a decline of over 50% versus the July quarter from the previous
year. As discussed in earlier reports, this reduction in new-issue
supply minimized the selling pressure by larger institutional
investors who fear being unable to purchase sizable amounts of
securities in the future. Such a significant decline in issuance
would normally be expected to trigger a decline in yields as
investors chase a commodity in scarce supply. Investor demand,
however, has also diminished somewhat in recent months as net flows
into long-term municipal bond funds have dramatically slowed or, in
some instances, reversed. Consequently, the supply/demand
relationship within the municipal bond market has remained in
balance, promoting the overall stability in yield levels seen in the
past months.
With after-tax equivalents in excess of 10%, long-term tax-exempt
bonds continue to represent considerable value relative to other
investment alternatives. We continue to anticipate that municipal
bond yields will decline further in late 1994 and into 1995. The
economic impact of the significant interest rate increases
experienced since early February have yet to be totally realized.
The resultant drag on the economy should provide the foundation for
further interest rate declines. Under such a scenario, current tax-
exempt bond yields may prove to represent considerable value.
Fiscal Year in Review
Municipal bond prices declined during the fiscal year ended July 31,
1994, with the yield on the Bond Buyer Revenue Index rising from
5.87% on July 31, 1993 to 6.47% on July 29, 1994. Price declines for
Florida municipal bonds were muted by a combination of strong demand
by Florida retail investors and a 20% reduction in new-issue supply
of long-term Florida bonds from the previous year.
<PAGE>
Over the course of the fiscal year, as the change in bond market
psychology became clearly evident, we became more cautious regarding
the direction of interest rates. With the yield curve flattening
substantially, we were able to sell longer-term bonds (that is,
those with maturities beyond 25 years) and replace them with bonds
with maturities in the 20-year--25-year range, without sacrificing
yield. By shortening the average maturity and raising the average
coupon of our holdings, we were able to enhance the Fund's total
return and maintain an attractive yield during the fiscal year.
Additionally, increasing the Fund's cash position over the 12-month
period to approximately 5% of net assets permitted the Fund to
accumulate positions of long-term Florida municipal bonds during
periods of temporary weakness in the market. These holdings are
expected to provide attractive returns well into the future. Merrill
Lynch Florida Municipal Bond Fund continues to attract new
investors, with total net assets increasing $10 million to $294
million, a 4% increase.
We appreciate your ongoing interest in Merrill Lynch Florida
Municipal Bond Fund, and we look forward to serving your investment
needs and objectives in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
August 24, 1994
IMPORTANT TAX INFORMATION
All of the net investment income distributions paid monthly by
Merrill Lynch Florida Municipal Bond Fund during its taxable year
ended July 31, 1994 qualify as tax-exempt interest dividends for
Federal income tax purposes.
Additionally, the Fund distributed short-term capital gains of
$.266204 per share and long-term capital gains of $.156952 per
share to shareholders of record on December 22, 1993.
Please retain this information for your records.
<PAGE>
PERFORMANCE DATA
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
Class A and Class B Shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Average Annual Total Return--Class A Shares*
% Return Without % Return With
Sales Charge Sales Charge**
Year Ended 6/30/94 -1.96% -5.88%
Inception (5/31/91)
through 6/30/94 +6.77 +5.36
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Total Return Based on a $10,000 Investment--Class A Shares*
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX GRAPHIC AND IMAGE MATERIALS ITEM 1.
Average Annual Total Return--Class B Shares*
% Return % Return
Without CDSC With CDSC**
Year Ended 6/30/94 -2.55% -6.10%
Inception (5/31/91)
through 6/30/94 +6.20 +5.92
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced
to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
Total Return Based on a $10,000 Investment--Class B Shares*
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX GRAPHIC AND IMAGE MATERIALS ITEM 2.
PERFORMANCE DATA (concluded)
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
5/31/91--12/31/91 $10.00 $10.29 -- $0.408 + 7.14%
1992 10.29 10.37 -- 0.734 + 8.21
1993 10.37 10.67 $0.157 0.831 +12.69
1/1/94--7/31/94 10.67 9.88 -- 0.304 - 4.47
------ ------
Total $0.157 Total $2.277
Cumulative total return as of 7/31/94: +24.80%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
5/31/91--12/31/91 $10.00 $10.29 -- $0.378 + 6.82%
1992 10.29 10.37 -- 0.682 + 7.66
1993 10.37 10.67 $0.157 0.777 +12.12
1/1/94--7/31/94 10.67 9.88 -- 0.275 - 4.75
------ ------
Total $0.157 Total $2.112
Cumulative total return as of 7/31/94: +22.83%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<PAGE>
<TABLE>
Recent Performance Results*
<CAPTION>
12 Month 3 Month
7/31/94 4/30/94 7/31/93 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $9.88 $9.80 $10.78 -7.00%(1) +0.82%
Class B Shares 9.88 9.80 10.78 -7.00(1) +0.82
Class A Shares--Total Return +0.39(2) +2.22(3)
Class B Shares--Total Return -0.12(4) +2.08(5)
Class A Shares--Standardized 30-day Yield 5.23%
Class B Shares--Standardized 30-day Yield 4.94%
<FN>
*Investment results shown for the 3-month and 12-month periods are
before the deduction of any sales charges.
(1)Percent change includes reinvestment of $0.157 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.813 per share ordinary
income dividends and $0.157 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.136 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.760 per share ordinary
income dividends and $0.157 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.124 per share ordinary
income dividends.
</TABLE>
PORTFOLIO ABBREVIATIONS
To simplify the listings of Merrill Lynch Florida Municipal Bond
Fund's portfolio holdings in the Schedule of Investments, we have
abbreviated the names of many of the securities according to the
list below and at right.
AMT Alternative Minimum Tax (subject to)
DATES Daily Adjustable Tax-Exempt Securities
GO General Obligation Bonds
HFA Housing Finance Authority
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
INFLOS Inverse Floating Rate Municipal Bonds
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Florida--98.5%
<S> <S> <C> <S> <C>
BBB+ Baa1 $ 1,600 Alachua County, Florida, Health Facilities Authority, Health Facilities Revenue
Refunding Bonds (Santa Fe Healthcare Facilities Project), 6.05% due 11/15/2016 $ 1,484
BBB+ Baa1 2,000 Bradford County, Florida, Health Facilities Authority, Health Facilities Revenue
Refunding Bonds (Santa Fe Healthcare Facilities Project), 6% due 11/15/2009 1,930
NR A1 4,750 Brevard County, Florida, Health Facilities Authority, Revenue Refunding Bonds
(Holmes-Regional Medical Center Hospital Project), 5.75% due 10/01/2013 4,411
Brevard County, Florida, Health Facilities Authority, Revenue Refunding Bonds
(Wuesthoff Memorial Hospital), Series B:
NR Baa1 1,375 6.90% due 4/01/2002 1,475
NR Baa1 3,500 7.20% due 4/01/2013 3,640
Broward County, Florida, Educational Facilities Authority, Revenue Refunding
Bonds (Nova Southeastern University Project) (j):
AAA NR l,000 6% due 4/01/2013 993
AAA NR 2,125 6.125% due 4/01/2017 2,111
AAA Aaa 2,500 Broward County, Florida, School District Refunding Bonds, UT, 6.55%* due
2/15/2008 (b) 1,149
Citrus County, Florida, Power Corporation PCR, Refunding (Crystal River):
A+ A1 9,250 Series A, 6.625% due l/01/2027 9,540
A+ A1 4,040 Series B, 6.35% due 2/01/2022 4,076
Dade County, Florida, Aviation Revenue Bonds, AMT (c):
AAA Aaa 1,000 Series B, 6.55% due 10/01/2013 1,043
AAA Aaa 5,925 Series B, 6.60% due 10/01/2022 6,178
AAA Aaa 4,000 Series C, 6.20% due 10/01/2024 3,950
NR Aaa 170 Dade County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT, Series B, 7.25% due
9/01/2023 (d) 175
AAA Aaa 5,000 Dade County, Florida, Seaport, GO, UT, 6.50% due 10/01/2026 (b) 5,191
Dade County, Florida, Solid Waste, IDR (Montenay-Dade Ltd. Project), VRDN (a):
A1 VMIG1 1,070 AMT, 2.45% due 12/01/2010 1,070
A1 VMIG1 800 Series A, 3.05% due 12/01/2013 800
A1+ VMIG1 4,000 Dade County, Florida, Water and Sewer Revenue Bonds, VRDN, 2.25% due 10/05/2022
(a)(e) 4,000
A+ A3 3,250 Dunes, Florida, Community Development District, Revenue Refunding Bonds
(Intracoastal Waterway Bridge), 5.50% due 10/01/2007 3,135
NR Aaa 3,000 Escambia County, Florida, HFA, S/F Mortgage Revenue Bonds (Multi-County
Program), Series A, AMT, 6.90% due 4/01/2020 (f) 3,061
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Florida (continued)
<S> <S> <C> <S> <C>
Escambia County, Florida, PCR (Champion International Corporation Project):
BBB Baa1 $ 3,850 AMT, 5.875% due 6/01/2022 $ 3,451
BBB Baa1 2,500 Refunding, 6.95% due 11/01/2007 2,573
Florida State Board of Education, Capital Outlay, Public Education Revenue
Bonds:
AA Aa 5,000 Series A, 6.75% due 6/01/2021 5,263
AA Aa 10,000 Series B, 6% due 6/01/2022 9,866
AA Aa 5,000 Series B, 6.70% due 6/01/2022 5,248
AA Aa 2,500 Series E, 5.10% due 6/01/2015 2,215
AAA Aaa 1,250 Florida State Division, Board of Finance Department, General Services Revenue
Bonds (Department of Natural Resources Preservation), Series 2000-A, 6.75% due
7/01/2013 (b) 1,324
AA Aa 5,600 Florida State, Jacksonville Transportation Revenue Bonds, 6.40% due 7/01/2022 5,718
NR NR 3,495 Florida State, Mid-Bay Bridge Authority Revenue Bonds, Series A, 7.50% due
10/01/2017 3,861
BBB NR 5,700 Florida State, Mid-Bay Bridge Authority, Revenue Refunding Bonds, Series A,
6.10% due 10/01/2022 5,639
AAA Aaa 1,500 Florida State, Municipal Power Agency Revenue Bonds (Power Supply Project),
5.10% due 10/01/2025 (b) 1,275
Florida State, Turnpike Authority, Turnpike Revenue Refunding Bonds,
Series A (e):
AAA Aaa 5,000 5% due 7/01/2014 4,370
AAA Aaa 2,000 5% due 7/01/2019 1,702
AAA Aaa 1,895 Fort Myers, Florida, Utility Revenue Refunding Bonds, Series B, 5% due
10/01/2019 (e) 1,611
Gainesville, Florida, Guaranteed Entitlement Revenue Refunding Bonds (b):
AAA Aaa 1,095 6.10%* due 8/01/2020 221
AAA Aaa 1,095 6.10%* due 8/01/2021 208
AAA Aaa 1,095 6.10%* due 8/01/2022 195
AAA Aaa 1,095 6.10%* due 8/01/2023 181
AAA Aaa 1,095 6.10%* due 8/01/2024 173
<PAGE>
AA Aa 2,000 Gainesville, Florida, Utilities System Revenue Bonds, Series A, 6.50% due
10/01/2022 2,055
Greater Orlando Aviation Authority Revenue Bonds (Orlando Florida Airport
Facilities), AMT:
AAA Aaa 190 8.125% due 10/01/1998 (e)(g) 217
A- A1 495 8.375% due 10/01/1998 (g) 569
AAA Aaa 1,810 8.125% due 10/01/2013 (e) 2,050
A- A1 4,505 8.375% due 10/01/2016 5,097
A A 9,310 Hillsborough County, Florida, Capital Improvement Revenue Bonds (County Center
Project), Second Series, 6.75% due 7/01/2022 9,685
Hillsborough County, Florida, IDA, PCR, Refunding (Tampa Electric Company Project):
AA- Aa2 2,250 Series 91, 7.875% due 8/01/2021 2,526
A-1+ VMIG1 700 VRDN, 2.95% due 5/15/2018 (a) 700
Jacksonville, Florida, Electric Authority Revenue Bonds:
AA Aa1 3,000 (Electric System), Series 3-B, 5.25% due 10/01/2019 2,649
AAA Aaa 5,000 (Saint John's River Power Park System), Series 6, 9.50% due 10/01/1995 (g) 5,406
Jacksonville, Florida, Electric Authority, Revenue Refunding Bonds:
AA Aa1 1,375 (Saint John's River Power Park Systems), 7% due 10/01/2009 1,464
AA Aa1 2,650 (Saint John's River Power-2), Series 7, 5.50% due 10/01/2014 2,464
AA Aa1 2,850 Series 3-A, 5.25% due 10/01/2028 2,456
AAA Aaa 5,000 Jacksonville, Florida, Excise Taxes Revenue Refunding Bonds, 6.50% due
10/01/2013 (b) 5,203
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Florida (continued)
<S> <S> <C> <S> <C>
NR Aa $ 2,500 Jacksonville, Florida, Health Facilities Authority, Hospital Revenue Refunding
Bonds (Daughters of Charity), Series A, 5% due 11/15/2015 $ 2,137
BBB- NR 5,000 Largo, Florida, Sun Coast Health Systems, Hospital Revenue Refunding Bonds, GO,
6.30% due 3/01/2020 4,630
AAA Aaa 2,000 Lee County, Florida, Hospital Board of Directors, Hospital Revenue Bonds, INFLOS,
10.33% due 4/01/2020 (c)(i) 2,115
Leesburg, Florida, Hospital Revenue Refunding Bonds (Leesburg Regional Medical
Center Project):
BBB+ Baa1 2,475 Series A, 6.125% due 7/01/2018 2,298
BBB+ Baa1 2,700 Series B, 5.70% due 7/01/2018 2,371
<PAGE>
AAA Aaa 1,725 Marion County, Florida, Utilities System Revenue Bonds, 5.25% due 12/01/2023 (h) 1,509
Miami Beach, Florida, Redevelopment Agency, Tax Increment Revenue Bonds (City
Center Historic Convention Village), AMT:
BBB Baa 2,700 5.80% due 12/01/2013 2,567
BBB Baa 1,000 5.875% due 12/01/2022 938
AAA Aaa 4,940 Orange County, Florida, Health Facilities Authority, Revenue Refunding Bonds
(Pooled Hospital Loan), Series A, 7.875% due 12/01/2025 (e) 5,236
AAA Aaa 4,000 Orange County, Florida, Sales Tax Revenue Bonds, Series B, 5.375% due 1/01/2024 (e) 3,581
AAA Aaa 1,000 Orange County, Florida, Tourist Development, Tax Revenue Refunding Bonds, Series A,
6.50% due 10/01/2010 (b) 1,044
Orlando and Orange County, Florida, Expressway Authority, Revenue Refunding Bonds,
Junior-Lien, Series A (e):
AAA Aaa 3,500 5.25% due 7/01/2019 3,097
AAA Aaa 10,455 5.125% due 7/01/2020 9,038
Orlando, Florida, Utilities Commission, Water and Electric Revenue Refunding Bonds:
AA- NR 10,950 RIB, 7.30% due 10/01/2026 (i) 8,541
AAA Aaa 1,000 Sub-series D, 5.50% due 10/01/2020 (c) 915
AA- Aa 500 Sub-series D, 5% due 10/01/2023 417
Palm Beach County, Florida, Health Facilities Authority, Hospital Revenue Bonds
(Good Samaritan Health Systems):
A- NR 1,000 6.10% due 10/01/2005 990
A- NR 2,500 6.20% due 10/01/2011 2,463
A- NR 1,000 6.30% due 10/01/2022 988
NR VMIG1 2,000 Palm Beach County, Florida, Water and Sewer Revenue Bonds, VRDN, 2.90% due
10/01/2011 (a) 2,000
A-1 VMIG1 8,700 Pinellas County, Florida, Health Facilities Authority, Revenue Refunding Bonds
(Pooled Hospital Loan Project), DATES, VRDN, 2.90% due 12/01/2015 (a) 8,700
AAA Aaa 2,500 Pinellas County, Florida, Sewer Revenue Bonds, 6% due 10/01/2024 (e) 2,496
AAA Aaa 2,500 Polk County, Florida, Capital Improvement Revenue Refunding Bonds, 5% due
12/01/2011 (e) 2,230
NR Aaa 350 Polk County, Florida, HFA, Revenue Refunding Bonds, Series A, 7.15% due 9/01/2023 (f) 358
BBB NR 23,000 Port Everglades Authority, Florida, Port Improvement Revenue Refunding Bonds,
Series A, 5% due 9/01/2016 19,678
A-1 VMIG1 200 Putnam County, Florida, Development Authority, PCR, Refunding (Florida Power &
Light Company Project), VRDN, 3% due 9/01/2024 (a) 200
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Florida (concluded)
<S> <S> <C> <S> <C>
Reedy Creek, Florida, Improvement District, Utilities Revenue Refunding Bonds,
Series 1 (c):
AAA Aaa $ 7,000 5% due 10/01/2014 $ 6,094
AAA Aaa 7,060 5% due 10/01/2019 6,011
BBB+ A 3,500 Saint John's County, Florida, IDA, Hospital Revenue Bonds (Flagler Hospital
Project), 6% due 8/01/2022 3,229
AAA Aaa 1,000 Saint John's County, Florida, Water and Sewer Revenue Bonds, Series A, 7%* due
6/01/2015 (c) 284
A-1 VMIG1 200 Saint Lucie County, Florida, PCR, Refunding (Florida Power and Light Company
Project), VRDN, 2.80% due 1/01/2026 (a) 200
Saint Petersburg, Florida, Health Facilities Authority, Hospital Revenue Bonds
(Allegheny Health System) (c):
AAA Aaa 3,500 (Saint Anthony's), 6.75% due 12/01/2021 3,675
AAA Aaa 2,500 Series A, 7% due 12/01/2015 2,711
AA- Aa 2,160 Saint Petersburg, Florida, Public Utility Revenue Bonds, 5.60% due 10/01/2018 2,001
A A 1,000 Sarasota County, Florida, Solid Waste System, Revenue Refunding Bonds, 5.625%
due 10/01/2013 909
AAA Aaa 3,000 Sarasota County, Florida, Utilities System, Revenue Refunding Bonds, 5.75% due
10/01/2012 (e) 2,927
South Broward Hospital District, Florida, Hospital Revenue Bonds:
A+ A1 3,500 Refunding, 5.50% due 5/01/2028 2,990
AAA Aaa 2,500 RIB, Series C, 10.15% due 5/13/2021(b)(i) 2,672
AAA Aaa 1,250 Tampa, Florida, Allegheny Health System Revenue Bonds (Saint Joseph), 6.75%
due 12/01/2017 (c) 1,312
Tampa, Florida, Water and Sewer Revenue Bonds, Series A:
AAA Aaa 2,000 Refunding, 5% due 10/01/2014(e) 1,741
AAA Aaa 1,500 (Sub-Lien), 7.75% due 10/01/2014 (b) 1,678
<PAGE>
A+ A1 1,300 Turtle Run, Florida, Community Development District, Revenue Refunding Bonds,
6.40% due 5/01/2011 1,333
AAA Aaa 2,750 West Palm Beach, Florida, Utilities System Revenue Bonds, Series B, 5.40% due
10/01/2023 (e) 2,478
Total Investments (Cost--$292,596)--98.5% 289,829
Other Assets Less Liabilities--1.5% 4,494
--------
Net Assets--100.0% $294,323
========
<FN>
(a)The interest rate is subject to change periodically based upon
the prevailing market rate. The interest rates shown are the rates
in effect at July 31, 1994.
(b)AMBAC Insured.
(c)MBIA Insured.
(d)FNMA and GNMA Collateralized.
(e)FGIC Insured.
(f)GNMA Collateralized.
(g)Prerefunded.
(h)FSA Insured.
(i)The interest rate is subject to change periodically and inversely
based upon the prevailing market rate. The interest rates shown are
the rates in effect at July 31, 1994.
(j)Insured by Connie Lee.
*Represents the yield to maturity on this zero coupon issue.
NR--Not Rated.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Statement of Assets and Liabilities as of July 31, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$292,596,214) (Note 1a) $289,828,700
Cash 301,897
Receivables:
Securities sold $ 7,595,239
Interest 4,531,149
Beneficial interest sold 441,301 12,567,689
------------
Deferred organization expenses (Note 1e) 24,927
Prepaid registration fees and other assets (Note 1e) 15,470
------------
Total assets 302,738,683
------------
Liabilities: Payables:
Securities purchased 6,442,728
Beneficial interest redeemed 1,415,522
Dividends to shareholders (Note 1f) 242,661
Investment adviser (Note 2) 136,401
Distributor (Note 2) 94,949 8,332,261
------------
Accrued expenses and other liabilities 83,081
------------
Total liabilities 8,415,342
------------
Net Assets: Net assets $294,323,341
============
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited number
Consist of: of shares authorized $ 702,407
Class B Shares of beneficial interest, $.10 par value, unlimited number
of shares authorized 2,276,151
Paid-in capital in excess of par 303,730,025
Accumulated distributions in excess of realized capital gains--net (9,617,728)
Unrealized depreciation on investments--net (2,767,514)
------------
Net assets $294,323,341
============
Net Asset Class A--Based on net assets of $69,408,669 and 7,024,066 shares of
Value: beneficial interest outstanding $ 9.88
============
Class B--Based on net assets of $224,914,672 and 22,761,513 shares of
beneficial interest outstanding $ 9.88
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended July 31, 1994
<S> <S> <C>
Investment Interest and amortization of premium and discount earned $ 17,744,468
Income
(Note 1d):
Expenses: Investment advisory fees (Note 2) 1,652,299
Distribution fees--Class B (Note 2) 1,141,057
Transfer agent fees--Class B (Note 2) 88,612
Accounting services (Note 2) 65,954
Printing and shareholder reports 58,417
Professional fees 55,645
Custodian fees 33,727
Transfer agent fees--Class A (Note 2) 24,142
Registration fees (Note 1e) 19,022
Amortization of organization expenses (Note 1e) 13,635
Pricing fees 13,414
Trustees' fees and expenses 13,063
Other 6,006
------------
Total expenses 3,184,993
------------
Investment income--net 14,559,475
------------
Realized & Realized loss on investments--net (3,975,907)
Unrealized Change in unrealized appreciation/depreciation on investments--net (11,405,552)
Loss on ------------
Investments Net Decrease in Net Assets Resulting from Operations $ (821,984)
- --Net (Notes ============
1d & 3):
</TABLE>
<PAGE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended July 31,
Increase (Decrease) in Net Assets: 1994 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 14,559,475 $ 12,450,382
Realized gain (loss) on investments--net (3,975,907) 6,702,070
Change in unrealized appreciation/depreciation on investments--net (11,405,552) (417,064)
------------ ------------
Net increase (decrease) in net assets resulting from operations (821,984) 18,735,388
------------ ------------
Dividends & Investment income--net:
Distributions Class A (3,774,328) (3,367,062)
to Share- Class B (10,785,147) (9,083,320)
holders Realized gain on investments--net:
(Note 1f): Class A -- (539,575)
Class B -- (1,587,560)
In excess of realized gain on investments--net:
Class A (3,051,271) --
Class B (9,237,630) --
------------ ------------
Net decrease in net assets resulting from dividends and distributions
to shareholders (26,848,376) (14,577,517)
------------ ------------
Beneficial Net increase in net assets derived from beneficial interest
Interest transactions 37,543,280 82,743,558
Transactions ------------ ------------
(Note 4):
Net Assets: Total increase in net assets 9,872,920 86,901,429
Beginning of year 284,450,421 197,548,992
------------ ------------
End of year $294,323,341 $284,450,421
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
Class A
For the
Period
The following per share data and ratios have been derived May 31,
from information provided in the financial statements. 1991++ to
For the Year Ended July 31, July 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.78 $ 10.66 $ 9.99 $ 10.00
Operating -------- -------- -------- --------
Performance: Investment income--net .55 .59 .66 .10
Realized and unrealized gain (loss) on
investments--net (.48) .22 .68 (.01)
-------- -------- -------- --------
Total from investment operations .07 .81 1.34 .09
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.55) (.59) (.66) (.10)
Realized gain on investments--net -- (.10) (.01) --
In excess of realized gain on
investments--net (.42) -- -- --
-------- -------- -------- --------
Total dividends and distributions (.97) (.69) (.67) (.10)
-------- -------- -------- --------
Net asset value, end of period $ 9.88 $ 10.78 $ 10.66 $ 9.99
======== ======== ======== ========
Total Based on net asset value per share 0.39% 7.99% 13.91% 1.07%+++
Investment ======== ======== ======== ========
Return:**
Ratios to Expenses, net of reimbursement .68% .66% .43% .28%*
Average ======== ======== ======== ========
Net Assets: Expenses .68% .69% .76% .83%*
======== ======== ======== ========
Investment income--net 5.23% 5.58% 6.39% 6.69%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 69,409 $ 70,610 $ 49,806 $ 27,961
Data: ======== ======== ======== ========
Portfolio turnover 205.94% 142.59% 102.36% 16.96%
======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class B
For the
Period
The following per share data and ratios have been derived May 31,
from information provided in the financial statements. 1991++ to
For the Year Ended July 31, July 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.78 $ 10.66 $ 9.99 $ 10.00
Operating -------- -------- -------- --------
Performance: Investment income--net .49 .54 .61 .09
Realized and unrealized gain (loss) on
investments--net (.48) .22 .68 (.01)
-------- -------- -------- --------
Total from investment operations .01 .76 1.29 .08
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.49) (.54) (.61) (.09)
Realized gain on investments--net -- (.10) (.01) --
In excess of realized gain on
investments--net (.42) -- -- --
-------- -------- -------- --------
Total dividends and distributions (.91) (.64) (.62) (.09)
-------- -------- -------- --------
Net asset value, end of period $ 9.88 $ 10.78 $ 10.66 $ 9.99
======== ======== ======== ========
Total Based on net asset value per share (0.12%) 7.45% 13.33% 0.99%+++
Investment ======== ======== ======== ========
Return:**
Ratios to Expenses, excluding distribution fees and net of
Average reimbursement .68% .66% .44% .29%*
Net Assets: ======== ======== ======== ========
Expenses, net of reimbursement 1.18% 1.16% .94% .79%*
======== ======== ======== ========
Expenses 1.18% 1.20% 1.26% 1.34%*
======== ======== ======== ========
Investment income--net 4.73% 5.07% 5.87% 6.19%*
======== ======== ======== ========
<PAGE>
Supplemental Net assets, end of period (in thousands) $224,915 $213,840 $147,743 $ 71,831
Data: ======== ======== ======== ========
Portfolio turnover 205.94% 142.59% 102.36% 16.96%
======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Florida Municipal Bond Fund (the "Fund") is part of
Merrill Lynch Multi-State Municipal Series Trust (the "Trust"). The
Fund is registered under the Investment Company Act of 1940 as a
non-diversified, open-end management investment company. The Fund
offers both Class A and Class B Shares. Class A Shares are sold with
a front-end sales charge. Class B Shares may be subject to a
contingent deferred sales charge. Both classes of shares have
identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class B Shares bear certain
expenses related to the distribution of such shares and have
exclusive voting rights with respect to matters relating to such
distribution expenditures. The following is a summary of significant
accounting policies followed by the Fund.
(a) Valuation of investments--Municipal bonds and other portfolio
securities in which the Fund invests 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. Options, which
are traded on exchanges, are valued at their last sale price as of
the close of such exchanges or, lacking any sales, at the last
available bid price. 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.
<PAGE>
(b) Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures
contracts for the purpose of hedging the market risk on existing 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 Fund
agrees to receive from or pay to the broker an amount of cash equal
to the daily fluctuation in value of the contract. Such receipts or
payments are known as variation margin and are recorded by the Fund
as unrealized gains or losses. When the contract is closed, the
Fund records a realized gain or loss equal to the difference between
the value of the contract at the time it was opened and the value at
the time it was closed.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(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 five-year period. 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. Distributions in excess
of realized capital gains are due primarily to differing tax
treatments for futures transactions and post October losses.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). Effective January 1, 1994, the
investment advisory business of FAM was reorganized from a
corporation to a limited partnership. Both prior to and after the
reorganization, ultimate control of FAM was vested with Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of FAM is Princeton
Services, Inc. ("PSI"), an indirect wholly-owned subsidiary of ML &
Co. The limited partners are ML & Co. and Fund Asset Management,
Inc. ("FAMI"), which is also an indirect wholly-owned subsidiary of
ML & Co. The Fund has also entered into Distribution Agreements and
a Distribution Plan with Merrill Lynch Funds Distributor, Inc.
("MLFD" or "Distributor"), a wholly-owned subsidiary of Merrill
Lynch Investment Management, Inc. ("MLIM"), which is also an
indirect wholly-owned subsidiary of ML & Co.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee based upon the average daily
value of the Fund's net assets at the following annual rates: 0.55%
of the Fund's average daily net assets not exceeding $500 million;
0.525% of average daily net assets exceeding $500 million but not
exceeding $1 billion; and 0.50% of average daily net assets in
excess of $1 billion.
The Fund has adopted a Plan of Distribution (the "Plan") in
accordance with Rule 12b-1 under the Investment Company Act of 1940,
pursuant to which the Fund pays the Distributor ongoing account
maintenance and distribution fees relating to Class B Shares, which
are accrued daily and paid monthly at the annual rates of 0.25% and
0.25%, respectively, of the average daily net assets of the Class B
Shares of the Fund. Pursuant to a sub-agreement with the
Distributor, Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"),
an affiliate of FAM, also provides account maintenance and
distribution services to the Fund. The ongoing distribution account
maintenance fees compensate the Distributor and MLPF&S for
providing distribution and account maintenance services to Class B
shareholders. As authorized by the Plan, the Distributor has entered
into an agreement with MLPF&S which provides for the compensation of
MLPF&S for providing distribution-related services to the Fund. For
the year ended July 31, 1994, MLFD earned underwriting discounts of
$21,938, and MLPF&S earned dealer concessions of $199,208 on sales
of the Fund's Class A Shares.
MLPF&S also received contingent deferred sales charges of $525,275
relating to Class B Share transactions during the period.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, FAMI, PSI, MLIM, MLFD, FDS, MLPF&S, and/or ML &
Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended July 31, 1994 were $610,004,997 and $602,995,912,
respectively.
<PAGE>
Net realized and unrealized gains (losses) as of July 31, 1994 were
as follows:
Realized Unrealized
Gains (Losses) Losses
Long-term investments $(7,078,366) $(2,767,514)
Financial futures contracts 3,102,459 --
----------- -----------
Total $(3,975,907) $(2,767,514)
=========== ===========
As of July 31, 1994, net unrealized depreciation for Federal income
tax purposes aggregated $3,086,315, of which $4,570,977 related to
appreciated securities and $7,657,292 related to depreciated
securities. The aggregate cost of investments at July 31, 1994 for
Federal income tax purposes was $292,915,015.
4. Beneficial Interest Transactions:
Net increase in net assets derived from beneficial interest
transactions was $37,543,280 and $82,743,558 for the years ended
July 31, 1994 and July 31, 1993, respectively.
Transactions in shares of beneficial interest for Class A and Class
B Shares were as follows:
Class A Shares for the Year Dollar
Ended July 31, 1994 Shares Amount
Shares sold 3,108,779 $33,087,792
Shares issued to shareholders
in reinvestment of dividends
and distributions 250,285 2,640,347
----------- -----------
Total issued 3,359,064 35,728,139
Shares redeemed (2,883,654) (30,309,691)
----------- -----------
Net increase 475,410 $ 5,418,448
=========== ===========
<PAGE>
Class A Shares for the Year Dollar
Ended July 31, 1993 Shares Amount
Shares sold 2,894,021 $30,466,332
Shares issued to shareholders
in reinvestment of dividends
and distributions 159,155 1,673,278
----------- -----------
Total issued 3,053,176 32,139,610
Shares redeemed (1,175,062) (12,411,646)
----------- -----------
Net increase 1,878,114 $19,727,964
----------- ===========
Class B Shares for the Dollar
Year Ended July 31, 1994 Shares Amount
Shares sold 6,365,675 $67,466,612
Shares issued to shareholders
in reinvestment of dividends
and distributions 768,754 8,098,720
----------- -----------
Total issued 7,134,429 75,565,332
Shares redeemed (4,205,459) (43,440,500)
----------- -----------
Net increase 2,928,970 $32,124,832
=========== ===========
Class B Shares for the Dollar
Year Ended July 31, 1993 Shares Amount
Shares sold 7,844,895 $82,892,920
Shares issued to shareholders
in reinvestment of dividends
and distributions 376,281 3,954,896
----------- -----------
Total issued 8,221,176 86,847,816
Shares redeemed (2,243,468) (23,832,222)
----------- -----------
Net increase 5,977,708 $63,015,594
=========== ===========
<PAGE>
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
Merrill Lynch Florida Municipal Bond Fund of Merrill Lynch Multi-
State Municipal Series Trust:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of Merrill Lynch
Florida Municipal Bond Fund of Merrill Lynch Multi-State Municipal
Series Trust as of July 31, 1994, 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 three-year period
then ended and for the period May 31, 1991 (commencement of
operations) to July 31, 1991. These financial statements and the
financial highlights are the responsibility of the Fund'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,
1994 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 Florida Municipal Bond Fund of Merrill Lynch Multi-
State Municipal Series Trust as of July 31, 1994, the results of its
operations, the changes in its net assets, and the financial
highlights for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
August 29, 1994
</AUDIT-REPORT>
<PAGE>
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Kenneth S. Axelson, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Jerry Weiss, Secretary
APPENDIX: GRAPHIC AND IMAGE MATERIAL.
Item 1:
Total Return Based on a $10,000 Investment--Class A Shares*
A line graph depicting the growth of an investment in the Fund's
Class A Shares compared to growth of an investment in the Lehman
Brothers Municipal Bond Index. Beginning and ending values are:
<PAGE>
5/31/91** 7/94
ML Florida Municipal
Bond Fund++ $ 9,600 $11,981
Lehman Brothers Municipal
Bond Index++++ $10,000 $12,752
<PAGE>
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses including advisory fees.
**Commencement of Operations.
++ML Florida Municipal Bond Fund invests primarily in
long-term investment-grade obligations issued by or on behalf of
the State of Florida, its political subdivisions,
agencies and instrumentalities and obligations of other qualifying issuers.
++++This unmanaged Index consists of long-term revenue bonds,
prerefunded bonds, general obligation bonds and insured bonds.
<PAGE>
Item 2:
Total Return Based on a $10,000 Investment--Class B Shares*
A line graph depicting the growth of an investment in the Fund's
Class B Shares compared to growth of an investment in the Lehman
Brothers Municipal Bond Index. Beginning and ending values are:
5/31/91** 7/94
ML Florida Municipal
Bond Fund++ $10,000 $12,185
Lehman Brothers Municipal
Bond Index++++ $10,000 $12,752
<PAGE>
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses including advisory fees.
**Commencement of Operations.
++ML Florida Municipal Bond Fund invests primarily in
long-term investment-grade obligations issued by or on behalf of
the State of Florida, its political subdivisions,
agencies and instrumentalities and obligations of other qualifying
issuers.
++++This unmanaged Index consists of long-term revenue bonds,
prerefunded bonds, general obligation bonds and insured bonds.
