MERRILL LYNCH
FLORIDA MUNICIPAL
BOND FUND
FUND LOGO
Annual Report
July 31, 1996
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.
Statements and other information herein are as dated and are subject
to change.
<PAGE>
Merrill Lynch Florida
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
TO OUR SHAREHOLDERS
The Municipal Market Environment
Municipal bond yields rose dramatically during the six-month period
ended July 31, 1996. Investors became increasingly alarmed that
earlier forecasts of continued moderate growth were overly
optimistic. As indications of stronger growth were released,
particularly the strong employment reports released beginning in
March, fears of associated inflationary pressures mounted and yields
rose in response. By May and June, long-term municipal bond yields
rose into the 6.25%--6.30% range.
However, in early July the combination of the Federal Reserve Board
suggesting that growth was expected to slow later in 1996 and a
temporary stock market correction allowed municipal bond yields to
fall as investors scrambled to purchase relatively scarce
securities. As measured by the Bond Buyer Revenue Bond Index, long-
term, A-rated uninsured tax-exempt bonds yielded 6.02% at July 31,
1996, an increase of over 30 basis points (0.30%) in the last six
months. Long-term US Treasury bond yields rose significantly over
the same period. By July 31, 1996, yields on US Treasury bonds
increased almost 100 basis points to end the six-month period at
6.97%.
The municipal bond market's recent outperformance as compared to its
taxable counterpart was largely the result of two principal factors.
First, much of the concern in the tax-exempt market regarding the
potential loss of the inherent tax-advantage of the municipal bonds
dissipated. For much of 1995, various tax proposals, such as the
flat tax or national sales tax, were put forward either to reduce
the national debt or reform the current tax system. Most of these
proposals would have severely limited the tax advantages enjoyed by
the municipal bond market. However, in February 1996, the Kemp
Commission released its findings regarding various tax reform
proposals. While noting that numerous changes should be made, no
mention of curtailing or stopping municipal bonds' current favored
tax status was made.
<PAGE>
The second major factor leading to the municipal bond market's
recent outperformance was the return of a more favorable technical
environment. The rate of increase in new bond issuance recently
slowed. Over the last 12 months, approximately $175 billion in long-
term municipal securities were issued, an increase of over 27% as
compared to the same period a year earlier. Much of this increase
was the result of issuers seeking to refinance their existing higher-
couponed debt as interest rates declined in 1995 and early 1996. As
interest rates rose, these financings became increasingly
economically impractical and issuance declined. Over the last six
months, less than $70 billion in long-term tax-exempt securities
were underwritten, an increase of 20% versus the comparable period a
year earlier. Only $43 billion in tax-exempt securities were issued
in the last three months, a total essentially unchanged from the
comparable quarter in 1995. In July 1996, less than $10 billion in
long-term municipal bonds were issued, representing the lowest
issuance for the month of July since 1990.
At the same time investor demand remained consistently strong. With
nominal new-issue yields above 6%, retail investor interest was
steady. Additionally, investors received over $50 billion this June
and July in assets derived from coupon income, bond maturities and
proceeds from early redemptions. Annual new bond issuance has
declined in recent years and is expected to remain below levels seen
in the early 1990s. Consequently, as the higher-coupon bonds issued
in the early-to-mid 1980s were redeemed at their first optional call
dates, the total number of outstanding tax-exempt bonds has
declined. This combination of a declining net supply and significant
amounts of assets helped maintain investor demand in recent months.
It is unlikely that the municipal bond market will continue to
significantly outperform US Treasury securities in the near future.
The tax-exempt bond market's recent performance led to the yield
ratio between long-term taxable and tax-exempt securities falling
from in excess of 90% to approximately 85%. While historically still
very attractive, some institutional investors, particularly short-
term traders, began to view the tax-exempt bond market's recent
outperformance as an opportunity to sell a relatively expensive
asset. However, to the long-term investor, such a sale would
represent the loss of an attractively priced asset which may not be
easily replaced given the relative scarcity of municipal bonds under
present supply conditions.
<PAGE>
Looking ahead, no clear consensus for the direction of interest
rates currently exists. Perhaps, the primary focus going forward
will be the extent to which the increase in interest rates seen thus
far in 1996 will negatively impact future economic growth. Should
growth slow in the interest rate-sensitive sectors of the economy,
like housing, auto, and consumer spending, as many economists assert
is likely, then bond yields are likely to decline. Under such a
scenario, the municipal bond market's performance is likely to
closely mirror that of the US Treasury bond market.
Fiscal Year in Review
Merrill Lynch Florida Municipal Bond Fund began its fiscal year
ended July 31, 1996, with a neutral stance toward interest rates.
The economy seemed to be turning around, the housing market began
showing strength, retail sales exhibited strong momentum, and the
Federal Reserve Board began easing monetary policy to spur the
economy. We focused on generating as high a level of tax-exempt
income as possible while limiting interest rate risk exposure. This
strategy helped protect the Fund from increased volatility while
maintaining a competitive yield.
At September 30, 1995, our interest rate outlook became more
constructive because of indications that the resurgent economy was
weakening and inflationary pressures were subsiding. The strength in
housing and retail sales proved to be temporary and began slipping
at the beginning of fourth-quarter 1995. Perception at this time was
that the easing of short-term interest rates by the Federal Reserve
Board was not aggressive enough to stimulate the economy, and
further easing would allow for significant price appreciation. We
began extending the Fund's duration by purchasing bonds with greater
price sensitivity to declining interest rates in order to seek to
enhance total return to shareholders.
Our investment strategy remained constructive, and the Fund
participated in the bond rally through January 1996. The
surprisingly strong economy and impressive job growth during the
first two quarters of 1996 caused interest rates to increase
dramatically, forcing us to shift to a defensive position to protect
the Fund's net asset values. This strategy helped protect the Fund
from the increase in interest rate volatility year-to-date.
Looking ahead, we will maintain the Fund's defensive posture until
there is a clear sign of which direction interest rates will follow.
This strategy, although limiting significant price appreciation from
a bond market rally, is expected to provide some protection to much
of the Fund's principal while seeking to provide an attractive yield
to its shareholders.
Sincerely,
<PAGE>
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Robert A. DiMella)
Robert A. DiMella
Vice President and Portfolio Manager
September 4, 1996
We are pleased to announce that Robert A. DiMella, CFA is
responsible for the day-to-day management of Merrill Lynch Florida
Municipal Bond Fund. Mr. DiMella has been employed by Merrill Lynch
Asset Management, L.P. (an affiliate of the Fund's Investment
Adviser) since 1995 as Portfolio Manager and was Assistant Portfolio
Manager thereof from 1993 to 1995. Prior thereto, he was an
Assistant Portfolio Manager with Prudential Investment Advisors from
1992 to 1993, and was a Research Assistant with Prudential
Investment Corporation from 1989 to 1992.
PERFORMANCE DATA
<PAGE>
About Fund Performance
Investors are able to purchase shares of the Fund 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 4% 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 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.25% and an account
maintenance fee of 0.25%. 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 0.35% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 4% 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. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
7/31/96 4/30/96 7/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $9.94 $9.87 $9.86 +0.81% +0.71%
Class B Shares* 9.94 9.87 9.86 +0.81 +0.71
Class C Shares* 9.92 9.86 9.85 +0.71 +0.61
Class D Shares* 9.92 9.86 9.85 +0.71 +0.61
Class A Shares--Total Return* +6.30(1) +2.08(2)
Class B Shares--Total Return* +5.76(3) +1.95(4)
Class C Shares--Total Return* +5.54(5) +1.82(6)
Class D Shares--Total Return* +6.09(7) +1.95(8)
Class A Shares--Standardized 30-day Yield 5.10%
Class B Shares--Standardized 30-day Yield 4.80%
Class C Shares--Standardized 30-day Yield 4.70%
Class D Shares--Standardized 30-day Yield 5.00%
<PAGE>
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
(1)Percent change includes reinvestment of $0.528 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.131 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.477 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.119 per share ordinary
income dividends.
(5)Percent change includes reinvestment of $0.466 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.116 per share ordinary
income dividends.
(7)Percent change includes reinvestment of $0.517 per share ordinary
income dividends.
(8)Percent change includes reinvestment of $0.129 per share ordinary
income dividends.
</TABLE>
PERFORMANCE DATA (continued)
Total Return Based on a $10,000 Investment--Class A Shares and Class B Shares
A line graph depicting the growth of an investment in the Fund's
Class A Shares and Class B Shares compared to growth of an
investment in the Lehman Brothers Municipal Bond Index. Beginning
and ending values are:
5/31/90** 7/96
ML Florida Municipal Bond Fund++--
Class A Shares* $ 9,600 $13,066
ML Florida Municipal Bond Fund++--
Class B Shares* $10,000 $13,631
Lehman Brothers Municipal Bond Index++++ $10,000 $14,664
<PAGE>
Total Return Based on a $10,000 Investment--Class C Shares and Class D Shares
A line graph depicting the growth of an investment in the Fund's
Class B Shares and Class D Shares compared to growth of an
investment in the Lehman Brothers Municipal Bond Index. Beginning
and ending values are:
10/21/94** 7/96
ML Florida Municipal Bond Fund++--
Class C Shares* $10,000 $11,390
ML Florida Municipal Bond Fund++--
Class D Shares* $ 9,600 $11,034
Lehman Brothers Municipal Bond Index++++ $10,000 $11,840
[FN]
*Assuming maximum sales charge, transaction costs and other
operation 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.
Past performance is not predictive of future performance.
PERFORMANCE DATA (continued)
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/96 +5.61% +1.39%
Five Years Ended 6/30/96 +6.86 +5.99
Inception (5/31/91)
through 6/30/96 +6.63 +5.77
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/96 +5.07% +1.07%
Five Years Ended 6/30/96 +6.32 +6.32
Inception (5/31/91)
through 6/30/96 +6.09 +6.09
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/96 +4.96% +3.96%
Inception (10/21/94)
through 6/30/96 +7.47 +7.47
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/96 +5.50% +1.28%
Inception (10/21/94)
through 6/30/96 +8.02 +5.44
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<PAGE>
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <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 + 8.20
1993 10.37 10.67 $0.157 0.831 +12.69
1994 10.67 9.31 -- 0.538 - 7.81
1995 9.31 10.28 -- 0.533 +16.50
1/1/96-7/31/96 10.28 9.94 -- 0.294 - 0.28
------ ------
Total $0.157 Total $3.338
Cumulative total return as of 7/31/96: +39.91%**
<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>
PERFORMANCE DATA (concluded)
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <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
1994 10.67 9.31 -- 0.488 - 8.27
1995 9.31 10.28 -- 0.483 +15.92
1/1/96-7/31/96 10.28 9.94 -- 0.266 - 0.57
------ ------
Total $0.157 Total $3.074
Cumulative total return as of 7/31/96: +36.31%**
<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>
Performance Summary--Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94-12/31/94 $ 9.48 $ 9.30 -- $0.091 - 0.92%
1995 9.30 10.27 -- 0.472 +15.80
1/1/96-7/31/96 10.27 9.92 -- 0.259 - 0.74
------
Total $0.822
Cumulative total return as of 7/31/96: +13.90%**
<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>
<TABLE>
Performance Summary--Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94-12/31/94 $ 9.48 $ 9.29 -- $0.101 - 0.92%
1995 9.29 10.27 -- 0.522 +16.52
1/1/96-7/31/96 10.27 9.92 -- 0.288 - 0.44
------
Total $0.911
Cumulative total return as of 7/31/96: +14.94%**
<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>
PORTFOLIO ABBREVIATIONS
<PAGE>
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)
COP Certificates of Participation
DATES Daily Adjustable Tax-Exempt Securities
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
INFLOS Inverse Floating Rate Municipal Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITES Residential Interest Tax-Exempt Securities
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Florida--89.7%
<S> <S> <C> <C> <C>
AAA Aaa $ 1,095 Altamonte Springs, Florida, Health Facilities Authority, Hospital Revenue
Bonds (Adventist Health Systems-Sunbelt), 7% due 10/01/2014 (k) $ 1,257
Brevard County, Florida, Health Facilities Authority Revenue Bonds
(Wuesthoff Memorial Hospital), Series B (c):
AAA Aaa 10,750 7.20% due 4/01/2002 (j) 12,272
AAA Aaa 1,375 Refunding, 6.90% due 4/01/2002 (k) 1,518
NR* Aaa 5,000 Brevard County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT, 6.70% due
9/01/2027 (f) 5,089
AAA Aaa 2,000 Brevard County, Florida, School Board Refunding Bonds, COP, Series A,
5.40% due 7/01/2010 (b) 2,005
Broward County, Florida, HFA, M/F Housing Revenue Refunding and Improvement
Bonds (Lakeside Apartments Project) (i):
AAA NR* 1,100 6.90% due 8/01/2015 1,167
AAA NR* 1,100 7% due 2/01/2025 1,166
<PAGE>
AAA Aaa 1,750 Canaveral, Florida, Port Authority Revenue Refunding and Improvement Bonds,
Series B, 5.625% due 6/01/2021 (e) 1,714
AAA Aaa 25,300 Charlotte County, Florida, Health Care Facilities Revenue Bonds
(Bon Secour Health System), 5.857% due 8/26/2027 (g) 25,158
A+ A1 6,215 Citrus County, Florida, PCR, Refunding (Florida Power Corporation-Crystal
River), Series A, 6.625% due 1/01/2027 6,582
Dade County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT:
NR* Aaa 170 Series B, 7.25% due 9/01/2023 (d) 177
NR* Aaa 3,895 Series C, 7.75% due 9/01/2022 (f) 4,104
AA- VMIG1++ 3,000 Dade County, Florida, IDA, Exempt Facilities Revenue Refunding Bonds
(Florida Power and Light Co.), VRDN, 3.60% due 6/01/2021 (a) 3,000
A1+ VMIG1++ 100 Dade County, Florida, IDA, PCR, Refunding (Florida Power & Light Company
Project), VRDN, AMT, 3.50% due 4/01/2020 (a) 100
AAA Aaa 10,000 Dade County, Florida, Seaport, GO, UT, 6.50% due 10/01/2001 (b)(j) 10,977
Dade County, Florida, Water and Sewer System Revenue Bonds (e):
AAA Aaa 5,000 Refunding, 5% due 10/01/2013 4,651
A1+ VMIG1++ 700 VRDN, 3.65% due 10/05/2022 (a) 700
</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> <C> <C>
AAA Aaa $12,000 Escambia County, Florida, HFA, S/F Mortgage Revenue Refunding Bonds
(Multi-County Program), AMT, 7% due 4/01/2028 (d) $12,692
Escambia County, Florida, PCR (Champion International Corporation Project):
BBB Baa1 11,620 AMT, 6.90% due 8/01/2022 12,107
BBB Baa1 2,500 Refunding, 6.95% due 11/01/2007 2,641
NR* Aaa 1,955 Florida HFA, Home Ownership Revenue Bonds, AMT, Series G-1, 7.90% due
3/01/2022 (f) 2,065
AAA Aaa 10,420 Florida HFA (Maitland Club Apartments), AMT, Series B-1, 7% due 2/01/2035 (b) 11,007
Florida State Board of Education, Capital Outlay, Public Education:
AA Aa 9,595 Refunding, Series A, 7.25% due 6/01/2023 10,543
AA Aaa 4,465 Series 91-C, 6.625% due 6/01/2002 (j) 4,950
AAA Aaa 5,000 Series B, 6.70% due 6/01/2001 (j) 5,502
<PAGE>
AAA Aaa 4,750 Florida State Division, Bond Finance Department, General Services Revenue
Bonds (Department of Natural Resource Preservation), Series 2000-A, 6.75%
due 7/01/2013 (b) 5,172
A A 10,505 Hillsborough County, Florida, Capital Improvement Revenue Bonds (County
Center Project), Second Series, 6.75% due 7/01/2002 (j)(l) 11,771
AA Aa3 2,250 Hillsborough County, Florida, IDA, PCR, Refunding (Tampa Electric Company
Project), Series 91, 7.875% due 8/01/2021 2,591
AAA Aaa 2,750 Hillsborough County, Florida, Utility Revenue Refunding Bonds, Series B,
6.50% due 8/01/2016 (c) 2,922
AAA Aaa 6,000 Indian River County, Florida, Water and Sewer Revenue Bonds, 5.50% due
9/01/2026 (e) 5,761
AA Aa1 1,375 Jacksonville, Florida, Electric Authority, Crossover Revenue Refunding Bonds
(Saint John's River), Issue 2, Series 5, 7% due 10/01/2009 1,481
NR* VMIG1++ 1,400 Jacksonville, Florida, Health Facilities Authority, Hospital Revenue Refunding
Bonds (Genesis Rehabilitation Hospital), VRDN, 3.65% due 5/01/2021 (a) 1,400
AAA Aaa 2,000 Lee County, Florida, Hospital Board of Directors, Hospital Revenue INFLOS,
9.467% due 4/01/2020 (c)(h) 2,160
Leesburg, Florida, Hospital Revenue Refunding Bonds (Leesburg Regional
Medical Center Project):
A- A 6,110 Series A, 6.125% due 7/01/2018 6,118
A- A 1,515 Series B, 5.625% due 7/01/2013 1,446
A- A 1,000 Series B, 5.70% due 7/01/2018 946
A1+ VMIG1++ 3,100 Manatee County, Florida, PCR, Refunding (Florida Power & Light Company Project),
VRDN, 3.60% due 9/01/2024 (a) 3,100
AAA Aaa 3,500 Okeechobee, Florida, Utility Authority, Utility System Acquisition and
Improvement Revenue Refunding Bonds, 5.60% due 10/01/2025 (c) 3,411
AAA Aaa 2,080 Pasco County, Florida, Health Facilities Authority, Revenue Refunding Bonds
(Gross Adventist Health System-Sunbelt), 7% due 10/01/2014 (k) 2,365
A1 VMIG1++ 3,600 Pinellas County, Florida, Health Facilities Authority, Revenue Refunding Bonds
(Pooled Hospital Loan Program), DATES, 3.70% due 12/01/2015 (a) 3,600
NR* Aaa 350 Polk County, Florida, HFA, Refunding, Series A, 7.15% due 9/01/2023 (f) 366
AAA Aaa 10,055 Port Saint Lucie, Florida, Utility Revenue Bonds, Series A, 6.30%** due
9/01/2021 (e) 2,155
</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> <C> <C>
A1+ VMIG1++ $ 1,100 Putnam County, Florida, Development Authority, PCR, Refunding (Florida
Power & Light Company Project), VRDN, 3.60% due 9/01/2024 (a) $ 1,100
A1+ VMIG1++ 10,600 Saint Lucie County, Florida, PCR, Refunding (Florida Power & Light
Company Project), VRDN, 3.60% due 1/01/2026 (a) 10,600
AAA Aaa 2,500 Saint Petersburg, Florida, Health Facilities Authority Revenue Bonds
(Allegheny Health System), Series A, 7% due 12/01/2015 (c) 2,754
AAA Aaa 6,025 Sarasota County, Florida, Utility System Revenue Refunding Bonds, Series
A, 5.25% due 10/01/2025 (e) 5,577
South Broward, Florida, Hospital District, Hospital Revenue Bonds:
AAA Aaa 10,000 Refunding, 5.25% due 5/01/2021 (c) 9,232
AAA Aaa 2,800 RIB, Series C, 9.359% due 5/01/2001 (b)(h)(j) 3,353
AAA Aaa 1,475 Tampa, Florida, Allegany Health System Revenue Bonds (Saint Joseph),
6.75% due 12/01/2017 (c) 1,604
AAA Aaa 1,500 Tampa, Florida, Water and Sewer Revenue Refunding Bonds (Sub-Lien), Series
A, 7.75% due 10/01/2014 (b) 1,631
Puerto Rico--6.6%
Puerto Rico Commonwealth, Highway and Transportation Authority, Highway
Revenue Bonds, RITES, Series X (h):
A1+ Baa1 7,600 5.95% due 7/01/2004 7,515
A1+ Baa1 10,000 6.10% due 7/01/2005 9,812
Total Investments (Cost--$241,404)--96.3% 253,087
Variation Margin on Financial Futures Contracts***--(0.1%) (179)
Other Assets Less Liabilities--3.8% 9,923
--------
Net Assets--100.0% $262,831
========
<PAGE>
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at July 31, 1996.
(b)AMBAC Insured.
(c)MBIA Insured.
(d)FNMA/GNMA Collateralized.
(e)FGIC Insured.
(f)GNMA Collateralized.
(g)FSA Insured.
(h)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at July 31, 1996.
(i)FNMA Collateralized.
(j)Prerefunded.
(k)Escrowed to Maturity.
(l)Security held as collateral in connection with open financial
futures contracts.
*Not Rated.
**Represents a zero coupon bond; the interest rate shown is the
effective yield at the time of purchase by the Fund.
***Financial futures contracts sold as of July 31, 1996 (in
thousands) were as follows:
Number of Expiration Value
Contracts Issue Date (Notes 1a & 1b)
260 US Treasury Bonds September 1996 $28,373
Total Financial Futures Contracts Sold
(Total Contract Price--$28,332) $28,373
=======
++Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL INFORMATION
<CAPTION>
Statement of Assets and Liabilities as of July 31, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$241,403,729) (Note 1a) $253,086,763
Cash 77,557
Receivables:
Securities sold $ 13,077,965
Interest 3,516,911
Beneficial interest sold 134,991 16,729,867
------------
Prepaid registration fees and other assets (Note 1e) 9,374
------------
Total assets 269,903,561
------------
<PAGE>
Liabilities: Payables:
Securities purchased 5,179,773
Beneficial interest redeemed 1,025,875
Dividends to shareholders (Note 1f) 362,504
Variation margin (Note 1b) 178,750
Investment adviser (Note 2) 123,064
Distributor (Note 2) 87,350 6,957,316
------------
Accrued expenses and other liabilities 115,332
------------
Total liabilities 7,072,648
------------
Net Assets: Net assets $262,830,913
============
Net Assets Class A Shares of beneficial interest, $.10 par value,
Consist of: unlimited number of shares authorized $ 470,574
Class B Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 1,963,279
Class C Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 57,830
Class D Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 153,497
Paid-in capital in excess of par 272,151,675
Accumulated realized capital losses on investments--net (Note 5) (13,990,623)
Accumulated distributions in excess of realized capital gains--
net (Note 1f) (9,617,728)
Unrealized appreciation on investments--net 11,642,409
------------
Net assets $262,830,913
============
Net Asset Value: Class A--Based on net assets of $46,764,877 and 4,705,736
shares of beneficial interest outstanding $ 9.94
============
Class B--Based on net assets of $195,097,456 and 19,632,789
shares of beneficial interest outstanding $ 9.94
============
Class C--Based on net assets of $5,737,846 and 578,303
shares of beneficial interest outstanding $ 9.92
============
Class D--Based on net assets of $15,230,734 and 1,534,972
shares of beneficial interest outstanding $ 9.92
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended
July 31, 1996
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 16,381,979
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 1,502,648
Account maintenance and distribution fees--Class B (Note 2) 1,029,180
Transfer agent fees--Class B (Note 2) 94,195
Professional fees 77,448
Accounting services (Note 2) 67,090
Printing and shareholder reports 46,655
Account maintenance and distribution fees--Class C (Note 2) 23,068
Transfer agent fees--Class A (Note 2) 18,951
Custodian fees 17,760
Account maintenance fees--Class D (Note 2) 13,186
Trustees' fees and expenses 12,738
Amortization of organization expenses (Note 1e) 11,292
Pricing fees 7,811
Registration fees (Note 1e) 6,238
Transfer agent fees--Class D (Note 2) 4,891
Transfer agent fees--Class C (Note 2) 1,874
Other 5,340
------------
Total expenses 2,940,365
------------
Investment income--net 13,441,614
------------
Realized & Realized loss on investments--net (2,079,595)
Unrealized Change in unrealized appreciation on investments--net 4,041,591
Gain (Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 15,403,610
(Notes 1b, 1d & 3): ============
</TABLE>
<PAGE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended July 31,
Increase (Decrease) in Net Assets: 1996 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 13,441,614 $ 14,215,189
Realized loss on investments--net (2,079,595) (11,911,145)
Change in unrealized appreciation on investments--net 4,041,591 10,368,332
------------ ------------
Net increase in net assets resulting from operations 15,403,610 12,672,376
------------ ------------
Dividends to Investment income--net:
Shareholders Class A (2,676,299) (3,309,230)
(Note 1f): Class B (9,896,005) (10,622,460)
Class C (181,287) (32,884)
Class D (688,023) (250,615)
------------ ------------
Net decrease in net assets resulting from dividends to
shareholders (13,441,614) (14,215,189)
------------ ------------
Beneficial Interest Net decrease in net assets derived from beneficial interest
Transactions transactions (7,430,883) (24,480,728)
(Note 4): ------------ ------------
Net Assets: Total decrease in net assets (5,468,887) (26,023,541)
Beginning of year 268,299,800 294,323,341
------------ ------------
End of year $262,830,913 $268,299,800
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived Class A
from information provided in the financial statements.
For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 9.86 $ 9.88 $ 10.78 $ 10.66 $ 9.99
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .53 .53 .55 .59 .66
Realized and unrealized gain (loss) on
investments--net .08 (.02) (.48) .22 .68
--------- --------- --------- --------- ---------
Total from investment operations .61 .51 .07 .81 1.34
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net (.53) (.53) (.55) (.59) (.66)
Realized gain on investments--net -- -- -- (.10) (.01)
In excess of realized gain on
investments--net -- -- (.42) -- --
--------- --------- --------- --------- ---------
Total dividends and distributions (.53) (.53) (.97) (.69) (.67)
--------- --------- --------- --------- ---------
Net asset value, end of year $ 9.94 $ 9.86 $ 9.88 $ 10.78 $ 10.66
========= ========= ========= ========= =========
<PAGE>
Total Investment Based on net asset value per share 6.30% 5.47% .39% 7.98% 13.91%
Return:* ========= ========= ========= ========= =========
Ratios to Expenses, net of reimbursement .68% .70% .68% .66% .43%
Average ========= ========= ========= ========= =========
Net Assets: Expenses .68% .70% .68% .69% .76%
========= ========= ========= ========= =========
Investment income--net 5.30% 5.54% 5.23% 5.58% 6.39%
========= ========= ========= ========= =========
Supplemental Net assets, end of year (in thousands) $ 46,765 $ 51,805 $ 69,409 $ 70,610 $ 49,806
Data: ========= ========= ========= ========= =========
Portfolio turnover 162.83% 178.62% 205.94% 142.59% 102.36%
========= ========= ========= ========= =========
<FN>
*Total investment returns exclude the effect of sales loads.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
The following per share data and ratios have been derived Class B
from information provided in the financial statements.
For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 9.86 $ 9.88 $ 10.78 $ 10.66 $ 9.99
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .48 .49 .49 .54 .61
Realized and unrealized gain (loss) on
investments--net .08 (.02) (.48) .22 .68
--------- --------- --------- --------- ---------
Total from investment operations .56 .47 .01 .76 1.29
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net (.48) (.49) (.49) (.54) (.61)
Realized gain on investments--net -- -- -- (.10) (.01)
In excess of realized gain on
investments--net -- -- (.42) -- --
--------- --------- --------- --------- ---------
Total dividends and distributions (.48) (.49) (.91) (.64) (.62)
--------- --------- --------- --------- ---------
Net asset value, end of year $ 9.94 $ 9.86 $ 9.88 $ 10.78 $ 10.66
========= ========= ========= ========= =========
<PAGE>
Total Investment Based on net asset value per share 5.76% 4.93% (.11%) 7.44% 13.33%
Return:* ========= ========= ========= ========= =========
Ratios to Expenses, net of reimbursement 1.18% 1.21% 1.18% 1.16% .94%
Average ========= ========= ========= ========= =========
Net Assets: Expenses 1.18% 1.21% 1.18% 1.20% 1.26%
========= ========= ========= ========= =========
Investment income--net 4.79% 5.03% 4.73% 5.07% 5.87%
========= ========= ========= ========= =========
Supplemental Net assets, end of year (in thousands). $ 195,097 $ 205,362 $ 224,915 $ 213,840 $ 147,743
Data: ========= ========= ========= ========= =========
Portfolio turnover 162.83% 178.62% 205.94% 142.59% 102.36%
========= ========= ========= ========= =========
<FN>
*Total investment returns exclude the effect of sales loads.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class C Class D
For the For the
For the Period For the Period
The following per share data and ratios have been derived Year Oct. 21, Year Oct. 21,
from information provided in the financial statements. Ended 1994++ to Ended 1994++ to
July 31, July 31, July 31, July 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1996 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.85 $ 9.48 $ 9.85 $ 9.48
Operating --------- --------- --------- ---------
Performance: Investment income--net .47 .37 .52 .40
Realized and unrealized gain on investments--net .07 .37 .07 .37
--------- --------- --------- ---------
Total from investment operations .54 .74 .59 .77
--------- --------- --------- ---------
Less dividends from investment income--net (.47) (.37) (.52) (.40)
--------- --------- --------- ---------
Net asset value, end of period $ 9.92 $ 9.85 $ 9.92 $ 9.85
========= ========= ========= =========
<PAGE>
Total Investment Based on net asset value per share 5.54% 7.92%+++ 6.09% 8.34%+++
Return:** ========= ========= ========= =========
Ratios to Average Expenses 1.28% 1.33%* .78% .81%*
Net Assets: ========= ========= ========= =========
Investment income--net 4.70% 4.84%* 5.20% 5.39%*
========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $ 5,738 $ 1,954 $ 15,231 $ 9,179
Data: ========= ========= ========= =========
Portfolio turnover 162.83% 178.62% 162.83% 178.62%
========= ========= ========= =========
<FN>
*Annualized.
**Total investment returns exclude the effect 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
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 Fund.
<PAGE>
(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. 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--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The 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 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 Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
(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.
<PAGE>
(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 different tax
treatments for futures transactions and post-October losses.
NOTES TO FINANCIAL STATEMENTS (continued)
(g) Reclassification--Generally accepted accounting principles
require that certain components of net assets be reclassified to
reflect permanent differences between financial reporting and tax
purposes. Accordingly, current year's permanent book/tax differences
of $117 have been reclassified from paid-in capital in excess of par
to accumulated net realized capital losses. These reclassifications
have no effect on net assets or net asset values per share.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund 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 Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
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 in excess of $500 million but not
exceeding $1 billion; and 0.50% of average daily net assets in
excess of $1 billion.
Pursuant to distribution plans (the "Distribution Plans") adopted by
the Fund in accordance with Rule 12b-1 under the Investment Company
Act of 1940, the Fund pays the Distributor ongoing account
maintenance and distribution fees. The fees are accrued daily and
paid monthly at annual rates based upon the average daily net assets
of the shares as follows:
<PAGE>
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.25%
Class C 0.25% 0.35%
Class D 0.10% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. 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, 1996, MLFD earned underwriting discounts
and MLPF&S earned dealer concessions on sales of the Fund's Class A
and Class D Shares as follows:
MLFD MLPF&S
Class A $1,672 $16,886
Class D $3,402 $27,121
For the year ended July 31, 1996, MLPF&S received contingent
deferred sales charges of $286,394 and $2,519 relating to
transactions in Class B and Class C Shares, respectively.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), 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, PSI, MLPF&S, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended July 31, 1996 were $416,851,405 and $507,560,785,
respectively.
Net realized and unrealized gains (losses) as of July 31, 1996 were
as follows:
<PAGE>
Realized Unrealized
Gains Gains
(Losses) (Losses)
Long-term investments $(3,099,976) $11,683,034
Short-term investments (8,509) --
Financial futures contracts 1,028,890 (40,625)
----------- -----------
Total $(2,079,595) $11,642,409
=========== ===========
As of July 31, 1996, net unrealized appreciation for Federal income
tax purposes aggregated $11,639,817, of which $12,313,438 related to
appreciated securities and $673,621 related to depreciated
securities. The aggregate cost of investments at July 31, 1996 for
Federal income tax purposes was $241,446,946.
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest
transactions was $7,430,883 and $24,480,728 for the years ended July
31, 1996 and July 31, 1995, respectively.
Transactions in shares of beneficial interest for each class were as
follows:
Class A Shares for the
Year Ended Dollar
July 31, 1996 Shares Amount
Shares sold 430,815 $ 4,316,851
Shares issued to shareholders
in reinvestment of dividends 104,910 1,050,031
------------ ------------
Total issued 535,725 5,366,882
Shares redeemed (1,082,446) (10,807,359)
------------ ------------
Net decrease (546,721) $ (5,440,477)
============ ============
Class A Shares for the
Year Ended Dollar
July 31, 1995 Shares Amount
Shares sold 540,960 $ 5,182,662
Shares issued to shareholders
in reinvestment of dividends 123,647 1,190,042
------------ ------------
Total issued 664,607 6,372,704
Shares redeemed (2,436,216) (23,406,816)
------------ ------------
Net decrease (1,771,609) $(17,034,112)
============ ============
<PAGE>
Class B Shares for the Year Dollar
Ended July 31, 1996 Shares Amount
Shares sold 3,570,813 $ 35,905,936
Shares issued to shareholders
in reinvestment of dividends 353,333 3,535,438
------------ ------------
Total issued 3,924,146 39,441,374
Automatic conversion
of shares (94,686) (1,282,755)
Shares redeemed (5,018,931) (49,984,983)
------------ ------------
Net decrease (1,189,471) $(11,826,364)
============ ============
Class B Shares for the
Year Ended Dollar
July 31, 1995 Shares Amount
Shares sold 5,042,475 $ 48,506,180
Shares issued to shareholders
in reinvestment of dividends 400,758 3,861,073
------------ ------------
Total issued 5,443,233 52,367,253
Automatic conversion
of shares (1,549) (15,028)
Shares redeemed (7,380,937) (70,478,198)
------------ ------------
Net decrease (1,939,253) $(18,125,973)
============ ============
Class C Shares for the
Year Ended Dollar
July 31, 1996 Shares Amount
Shares sold 484,696 $ 4,860,354
Shares issued to shareholders
in reinvestment of dividends 11,753 117,319
------------ ------------
Total issued 496,449 4,977,673
Shares redeemed (116,573) (1,161,018)
------------ ------------
Net increase 379,876 $ 3,816,655
============ ============
<PAGE>
Class C Shares for the Period
October 21, 1994++ to Dollar
July 31, 1995 Shares Amount
Shares sold 289,304 $ 2,806,834
Shares issued to shareholders
in reinvestment of dividends 2,202 21,704
------------ ------------
Total issued 291,506 2,828,538
Shares redeemed (93,079) (901,207)
------------ ------------
Net increase 198,427 $ 1,927,331
============ ============
[FN]
++Commencement of Operations.
Class D Shares for the
Year Ended Dollar
July 31, 1996 Shares Amount
Shares sold 808,887 $ 7,797,601
Automatic conversion
of shares 94,852 1,282,755
Shares issued to shareholders
in reinvestment of dividends 32,096 320,506
------------ ------------
Total issued 935,835 9,400,862
Shares redeemed (332,993) (3,381,559)
------------ ------------
Net increase 602,842 $ 6,019,303
============ ============
NOTES TO FINANCIAL STATEMENTS (concluded)
Class D Shares for the Period Dollar
Oct. 21, 1994++ to July 31, 1995 Shares Amount
Shares sold 1,094,228 $ 10,298,028
Automatic conversion
of shares 1,552 15,028
Shares issued to shareholders
in reinvestment of dividends 12,922 127,107
------------ ------------
Total issued 1,108,702 10,440,163
Shares redeemed (176,572) (1,688,137)
------------ ------------
Net increase 932,130 $ 8,752,026
============ ============
<PAGE>
[FN]
++Commencement of Operations.
5. Capital Loss Carryforward:
At July 31, 1996, the Fund had a capital loss carry-forward of
approximately $21,109,000, of which $18,833,000 expires in 2003 and
$2,276,000 expires in 2004. This amount 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 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, 1996, 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 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, 1996 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.
<PAGE>
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, 1996, 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
September 4, 1996
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly by
Merrill Lynch Florida Municipal Bond Fund during its taxable year
ended July 31, 1996 qualify as tax-exempt interest dividends for
Federal income tax purposes.
Additionally, there were no capital gains distributions by the Fund
during the year.
Please retain this information for your records.
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Robert A. DiMella, Vice President
Gerald M. Richard, Treasurer
Jerry Weiss, Secretary
<PAGE>
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
