MERRILL LYNCH
FLORIDA MUNICIPAL
BOND FUND
[FUND LOGO]
STRATEGIC
Performance
Semi-Annual Report
January 31, 1998
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the 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.
Merrill Lynch Florida
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011 #16031 -- 1/98
[RECYCLE LOGO]
Printed on post-consumer recycled paper
Merrill Lynch Florida Municipal Bond Fund January 31, 1998
TO OUR SHAREHOLDERS
The Municipal Market Environment
During the six months ended January 31, 1998, long-term bond yields
declined to recent historic lows. Prior to late October, the ongoing
positive combination of moderate economic growth and low inflation had
allowed interest rates to gradually move lower. During the last three
months, however, the decline in interest rates was driven more by the
continued turmoil in Asian equity markets than by fundamental
concerns. A significant "flight to quality" has benefited the US
Treasury bond market, particularly longer-maturity US Treasury bonds,
as foreign investors have sought safe haven in the relative stability
of US financial markets. Over the six months ended January 31, 1998,
US Treasury bond yields declined approximately 50 basis points (0.50%)
to 5.81%.
Without the ability to benefit from the tax advantage inherent in
municipal bonds, foreign investors have not participated in the tax-
exempt market. Consequently, municipal bond yields have not declined
dramatically as have taxable US Treasury securities. Long-term
municipal revenue bond yields, as measured by the Bond Buyer Revenue
Index, declined only 15 basis points to end the six-month period ended
January 31, 1998 at 5.33%. Nevertheless, tax-exempt bond yields have
not reached these levels since the mid-1970s.
The increase in new municipal bond issuance over the past six months
has also prevented the tax-exempt bond market from more closely
mirroring the yield declines exhibited by its taxable counterpart.
During the last six months, over $120 billion in new long-term
municipal bonds were underwritten, an increase of over 30% compared to
the same six-month period one year ago. As interest rates have
continued to decline in recent months, new tax-exempt bond issuance
has remained strong. Over $60 million in new long-term municipal
securities were issued during the last three months, an increase of
over 20% compared to the same three-month period ended January 31,
1997. During the past month, over $16 billion in new long-term
municipal securities were underwritten, representing an increase of
over 40% compared to the January 1997 level.
In our opinion, the recent correction in world equity markets has
enhanced the near-term prospects for continued low, if not declining,
interest rates in the United States. It is likely that the recent
correction will result in slower US domestic growth in the coming
months. This decline should be generated in part by reduced US export
growth. Additionally, some decline in consumer spending can also be
expected because of reduced consumer confidence. Perhaps more
importantly, it is likely that, barring a dramatic and unexpected
resurgence in domestic growth, the Federal Reserve Board will be
unwilling to raise interest rates until the full impact of the equity
market's corrections can be established.
All of these factors suggest that over the near term, interest rates,
including tax-exempt bond yields, are unlikely to rise by any
appreciable amount. It is probable that municipal bond yields will
remain under some relative pressure because of continued strong new-
issue supply. However, the recent pace of municipal bond issuance is
likely to be unsustainable. Continued increases in bond issuance will
require lower and lower tax-exempt bond yields to generate the
economic savings necessary for additional municipal bond refinancings.
Preliminary estimates of 1998 total municipal bond issuance are
presently in the $195 billion -- $220 billion range. These estimates
suggest that recent supply pressures are likely to abate somewhat next
year, or at least exert only minimal technical pressure during 1998.
Additionally, municipal bond investors received approximately
$23 billion in January coupon payments, bond maturities and proceeds
from early redemptions, which should serve to intensify investor
demand in the near future. With tax-exempt bond yields at already
attractive yield ratios relative to US Treasury bonds (approximately
90% at the end of December 1997), any further pressure on the
municipal market may well represent an attractive investment
opportunity.
Portfolio Strategy
During the six months ended January 31, 1998, we adopted a more
constructive investment outlook. We began the period with a neutral
view on interest rates, since we believed that the Federal Reserve
Board would raise short-term interest rates in an effort to slow the
US economy and keep inflation under control. The economy remained
strong as fourth quarter 1997 gross domestic product growth registered
above 4%. However, inflation actually declined as the quarter went on,
keeping the Federal Reserve Board policy on hold. In addition, turmoil
in Asian financial markets caused a flight to quality, increasing the
demand for US dollar-denominated assets. Global financial market
turmoil forced us to adopt a more aggressive investment strategy,
based on our revised outlook for slower economic growth in the future.
The Fund remained fully invested, allowing us to enhance the tax-
exempt dividends paid to shareholders. Our purchases were concentrated
in interest ratesensitive bonds providing price appreciation potential
with attractive tax-exempt yields. This strategy enabled the Fund to
realize attractive total returns during the six months ended January
31, 1998.
Looking ahead, we anticipate that we will maintain a constructive
investment strategy. We believe the US economy will moderate with
inflation and interest rates declining, based on the Asian financial
market turmoil.
In Conclusion
We appreciate your ongoing interest in Merrill Lynch Florida Municipal
Bond Fund, and we look forward to serving your investment needs in the
months and years to come.
Sincerely,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/VINCENT R. GIORDANO
Vincent R. Giordano
Senior Vice President
/S/ROBERT A. DIMELLA
Robert A. DiMella
Vice President and Portfolio Manager
March 3, 1998
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the Merrill
Lynch Select PricingSM System, which offers four pricing alternatives:
[bullet] 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.
[bullet] 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.)
[bullet] 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.
[bullet] 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. Figures shown in the "Average Annual Total
Return" tables as well as the total returns and cumulative total
returns in the "Performance Summary" tables assume reinvestment of all
dividends and capital gains distributions at net asset value on the
payable date. Investment return and principal value of shares will
fluctuate so that shares, when redeemed, may be worth more or less
than their original cost. Dividends paid to each class of shares will
vary because of the different levels of account maintenance,
distribution and transfer agency fees applicable to each class, which
are deducted from the income available to be paid to shareholders.
<TABLE>
<CAPTION>
Recent Performance Results
12 Month 3 Month
1/31/98 10/31/97 1/31/97 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $10.48 $10.31 $10.05 +4.28% +1.65%
Class B Shares* 10.48 10.31 10.05 +4.28 +1.65
Class C Shares* 10.46 10.29 10.04 +4.18 +1.65
Class D Shares* 10.46 10.29 10.04 +4.18 +1.65
Class A Shares -- Total Return* +9.82(1) +2.93(2)
Class B Shares -- Total Return* +9.27(3) +2.80(4)
Class C Shares -- Total Return* +9.07(5) +2.78(6)
Class D Shares -- Total Return* +9.62(7) +2.91(8)
Class A Shares -- Standardized 30-day Yield 4.15%
Class B Shares -- Standardized 30-day Yield 3.82%
Class C Shares -- Standardized 30-day Yield 3.72%
Class D Shares -- Standardized 30-day Yield 4.06%
* 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 $0.531 per share ordinary income dividends.
(2) Percent change includes reinvestment of $0.131 per share ordinary income dividends.
(3) Percent change includes reinvestment of $0.479 per share ordinary income dividends.
(4) Percent change includes reinvestment of $0.118 per share ordinary income dividends.
(5) Percent change includes reinvestment of $0.468 per share ordinary income dividends.
(6) Percent change includes reinvestment of $0.115 per share ordinary income dividends.
(7) Percent change includes reinvestment of $0.520 per share ordinary income dividends.
(8) Percent change includes reinvestment of $0.129 per share ordinary income dividends.
</TABLE>
<TABLE>
<CAPTION>
Performance Summary -- Class A Shares
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
1996 10.28 10.11 -- 0.531 + 3.69
1997 10.11 10.43 -- 0.533 + 8.70
1/1/98 -- 1/31/98 10.43 10.48 -- 0.036 + 0.91
Total $0.157 Total $4.144
Cumulative total return as of 1/31/98: +59.58%**
* Figures may include short-term capital gains distributions.
** Figures do not include sales charge; results would be lower if sales charge was included.
</TABLE>
<TABLE>
<CAPTION>
Performance Summary -- Class B Shares
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
1996 10.28 10.11 -- 0.480 + 3.17
1997 10.11 10.43 -- 0.481 + 8.15
1/1/98 -- 1/31/98 10.43 10.48 -- 0.033 + 0.87
Total $0.157 Total $3.802
Cumulative total return as of 1/31/98: +54.30%**
* Figures may include short-term capital gains distributions.
** Figures do not reflect deduction of any sales charge; results would be lower if sales charge was deducted.
</TABLE>
<TABLE>
<CAPTION>
Performance Summary -- Class C Shares
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
1996 10.27 10.09 -- 0.469 + 2.96
1997 10.09 10.41 -- 0.470 + 8.05
1/1/98 -- 1/31/98 10.41 10.46 -- 0.032 + 0.86
Total $1.534
Cumulative total return as of 1/31/98: +28.75%**
* Figures may include short-term capital gains distributions.
** Figures do not reflect deduction of any sales charge; results would be lower if sales charge was deducted.
</TABLE>
<TABLE>
<CAPTION>
Performance Summary -- Class D Shares
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
1996 10.27 10.10 -- 0.520 + 3.58
1997 10.10 10.41 -- 0.522 + 8.49
1/1/98 -- 1/31/98 10.41 10.46 -- 0.036 + 0.90
Total $1.701
Cumulative total return as of 1/31/98: +30.91%**
* Figures may include short-term capital gains distributions.
** Figures do not include sales charge; results would be lower if sales charge was included.
</TABLE>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/97 +8.70% +4.35%
Five Years Ended 12/31/97 +6.41 +5.54
Inception (5/31/91)
through 12/31/97 +7.21 +6.54
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/97 +8.15% +4.15%
Five Years Ended 12/31/97 +5.87 +5.87
Inception (5/31/91)
through 12/31/97 +6.67 +6.67
* 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 12/31/97 +8.05% +7.05%
Inception (10/21/94)
through 12/31/97 +7.94 +7.94
* 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 12/31/97 +8.49% +4.15%
Inception (10/21/94)
through 12/31/97 +8.49 +7.12
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
<TABLE>
<CAPTION>
Merrill Lynch Florida Municipal Bond Fund January 31, 1998
SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <C>
Florida -- 84.3%
AAA Aaa $1,095 Altamonte Springs, Florida, Health Facilities Authority, Hospital
Revenue Bonds (Adventist Health Systems -- Sunbelt), 7% due
10/01/2014 (e) $1,360
NR* Aaa 4,140 Brevard County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT,
6.70% due 9/01/2027 (f) 4,424
Brevard County, Florida, Health Facilities Authority Revenue Bonds
(Wuesthoff Memorial Hospital), Series B (c):
AAA Aaa 8,000 7.20% due 4/01/2002 (j) 9,086
AAA Aaa 1,375 Refunding, 6.90% due 4/01/2002 (e) 1,521
NR* VMIG1+ 100 Broward County, Florida, HFA, M/F Housing Revenue Bonds (Landings
Inverrary Apartments), VRDN, 3.55% due 6/01/2008 (a) 100
Broward County, Florida, HFA, M/F Housing Revenue Refunding Bonds
(Lakeside Apartments Project) (i):
AAA NR* 1,100 6.90% due 8/01/2015 1,197
AAA NR* 1,100 7% due 2/01/2025 1,196
AAA Aaa 4,000 Celebration Community Development District, Florida (Special
Assessment), 6% due 5/01/2010 (c) 4,363
AAA Aaa 7,650 Charlotte County, Florida, Health Care Facilities Revenue Bonds
(Bon Secours Health System), RIB, 8.076% due 8/26/2027 (g)(h) 8,836
A+ A1 11,215 Citrus County, Florida, PCR, Refunding (Florida Power Corporation
-- Crystal River), Series A, 6.625% due 1/01/2027 12,229
AAA Aaa 10,000 Collier County, Florida, School Board, COP, 5% due 2/15/2016 (g) 10,021
AAA Aaa 5,500 Dade County, Florida, Aviation Revenue Bonds (Miami International
Airport), Series C, 5.125% due 10/01/2027 (g) 5,470
Dade County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT:
NR* Aaa 170 Series B, 7.25% due 9/01/2023 (d) 180
NR* Aaa 3,435 Series C, 7.75% due 9/01/2022 (f) 3,624
AAA Aaa 5,000 Dade County, Florida, Seaport, GO, UT, 6.50% due 10/01/2001 (b)(j) 5,473
AAA Aaa 12,000 Escambia County, Florida, HFA, S/F Mortgage Revenue Refunding Bonds
(Multi-County Program), AMT, 7% due 4/01/2028 (d) 13,216
Escambia County, Florida, PCR (Champion International Corporation
Project):
BBB Baa1 11,620 AMT, 6.90% due 8/01/2022 13,050
BBB Baa1 2,500 Refunding, 6.95% due 11/01/2007 2,760
NR* Aaa 1,570 Florida HFA, Home Ownership Revenue Bonds, AMT, Series G-1, 7.90% due
3/01/2022 (f) 1,668
AAA Aaa 10,420 Florida HFA (Maitland Club Apartments), AMT, Series B-1, 7% due
2/01/2035 (b) 11,365
AA+ Aa2 3,000 Florida State Board of Education, Capital Outlay, Public Education,
Refunding, Series A, 7.25% due 6/01/2023 3,251
Florida State Mid-Bay Bridge Authority, Revenue Bonds, Series A (b):
NR* Aaa 5,000 5.50%** due 10/01/2025 1,180
NR* Aaa 2,885 5.50%** due 10/01/2026 645
A A3 10,505 Hillsborough County, Florida, Capital Improvement Revenue Bonds
(County Center Project), Second Series, 6.75% due 7/01/2002 (j) 11,804
AA Aa3 2,250 Hillsborough County, Florida, IDA, PCR, Refunding (Tampa Electric
Company Project), Series 91, 7.875% due 8/01/2021 2,565
AAA Aaa 2,750 Hillsborough County, Florida, Utility Revenue Refunding Bonds,
Series B, 6.50% due 8/01/2016 (c) 2,995
NR* Aaa 5,000 Indian Trace Community, Development District, Florida, Water
Management (Special Benefit Assessment), 5% due 5/01/2027 (c) 4,917
AAA Aaa 4,000 Lakeland, Florida, Electric and Water Revenue Bonds, 4.47%** due
10/01/2009 (b) 2,382
Leesburg, Florida, Hospital Revenue Refunding Bonds
(Leesburg Regional Medical Center Project):
A- A3 6,110 Series A, 6.125% due 7/01/2018 6,503
A- A3 1,515 Series B, 5.625% due 7/01/2013 1,571
AAA Aaa 6,650 Miami Beach, Florida, Parking Revenue Bonds, 5% due 9/01/2015 (g) 6,677
AAA Aaa 24,385 Miami -- Dade County, Florida, Special Obligation Revenue Refunding
Bonds, Series A, 5.59%** due 10/01/2023 (c) 6,206
AAA Aaa 2,080 Pasco County, Florida, Health Facilities Authority, Revenue Refunding
Bonds (Gross Adventist Health System -- Sunbelt), 7% due 10/01/2014 (e) 2,563
Pinellas County, Florida, HFA, S/F Mortgage Revenue Bonds
(Multi-County Program), AMT, Series C (d):
NR* Aaa 1,750 5.70% due 9/01/2018 1,783
NR* Aaa 2,000 5.80% due 3/01/2029 2,054
A1+ VMIG1+ 1,200 Saint Lucie County, Florida, PCR, Refunding (Florida Power & Light
Company Project), VRDN, 3.65% due 1/01/2026 (a) 1,200
AAA Aaa 3,250 Saint Petersburg, Florida, Health Facilities Authority Revenue Bonds
(Allegheny Health System), Series A, 7% due 12/01/2001 (c)(j) 3,648
AAA Aaa 2,800 South Broward, Florida, Hospital District, Hospital Revenue Bonds,
RIB, Series C, 9.237% due 5/01/2001 (b)(h)(j) 3,346
AAA Aaa 1,475 Tampa, Florida, Allegheny Health System Revenue Bonds (Saint Joseph),
6.75% due 12/01/2001 (c)(j) 1,644
AAA Aaa 10,000 Tampa--Hillsborough County, Florida, Expressway Authority, Revenue
Refunding Bonds, 5% due 7/01/2027 (b) 9,833
AAA Aaa 5,000 Village Center Community Development District, Florida, Recreational
Revenue Refunding Bonds, Series A, 5% due 11/01/2021 (c) 4,918
Puerto Rico -- 12.9%
Puerto Rico Commonwealth, Highway and Transportation Authority,
Highway Revenue Bonds, RITES, Series X (h):
A1+ Baa1 $7,600 6.291% due 7/01/2004 $8,379
A1+ Baa1 10,000 6.391% due 7/01/2005 11,112
AAA Aaa 10,000 Puerto Rico Commonwealth, Infrastructure Financing Authority, Special
Tax Revenue Bonds, Series A, 5% due 7/01/2021 (b) 9,918
----------
Total Investments (Cost -- $205,102 ) -- 97.2% 222,233
Other Assets Less Liabilities -- 2.8% 6,442
----------
Net Assets -- 100.0% $228,675
==========
(a) The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate
in effect at January 31, 1998.
(b) AMBAC Insured.
(c) MBIA Insured.
(d) FNMA/GNMA Collateralized.
(e) Escrowed to Maturity.
(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 January 31, 1998.
(i) FNMA Collateralized.
(j) Prerefunded.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown is the
effective yield at the time of purchase by the Fund.
+ Highest short-term rating by Moody's Investors Service, Inc.
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)
COP Certificates of Participation
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITES Residual Interest Tax-Exempt Securities
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of January 31, 1998
<S> <C> <C> <C>
Assets: Investments, at value (identified cost -- $205,101,538) (Note 1a) $222,232,532
Cash 32,792
Receivables:
Securities sold $11,107,567
Interest 3,479,495
Beneficial interest sold 2,776,169 17,363,231
-------------
Prepaid registration fees and other assets (Note 1e) 4,273
-------------
Total assets 239,632,828
-------------
Liabilities: Payables:
Securities purchased 10,275,645
Beneficial interest redeemed 236,855
Dividends to shareholders (Note 1f) 171,011
Investment adviser (Note 2) 106,521
Distributor (Note 2) 70,441 10,860,473
-------------
Accrued expenses and other liabilities 97,776
-------------
Total liabilities 10,958,249
-------------
Net Assets: Net assets $228,674,579
=============
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited number of
Consist of: shares authorized $435,119
Class B Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized 1,444,286
Class C Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized 72,192
Class D Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized 231,259
Paid-in capital in excess of par 226,085,567
Accumulated realized capital losses on investments -- net (Note 5) (12,030,729)
Accumulated distributions in excess of realized capital gains --
net (Note 1f) (4,694,109)
Unrealized appreciation on investments -- net 17,130,994
-------------
Net assets $228,674,579
=============
Net Asset Value: Class A -- Based on net assets of $45,594,642 and 4,351,193 shares
of beneficial interest outstanding $10.48
=============
Class B -- Based on net assets of $151,335,799 and 14,442,857 shares
of beneficial interest outstanding $10.48
=============
Class C -- Based on net assets of $7,551,846 and 721,921 shares
of beneficial interest outstanding $10.46
=============
Class D -- Based on net assets of $24,192,292 and 2,312,587 shares
of beneficial interest outstanding $10.46
=============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the Six Months Ended
January 31, 1998
<S> <C> <C> <C>
Investment Income Interest and amortization of premium and discount earned $6,625,841
(Note 1d):
Expenses: Investment advisory fees (Note 2) $628,798
Account maintenance and distribution fees -- Class B (Note 2) 388,184
Accounting services (Note 2) 52,114
Transfer agent fees -- Class B (Note 2) 32,838
Professional fees 28,121
Printing and shareholder reports 24,034
Account maintenance and distribution fees -- Class C (Note 2) 19,831
Account maintenance fees -- Class D (Note 2) 10,125
Transfer agent fees -- Class A (Note 2) 8,060
Custodian fees 6,752
Trustees' fees and expenses 6,113
Transfer agent fees -- Class D (Note 2) 3,516
Registration fees (Note 1e) 3,490
Pricing fees 3,003
Transfer agent fees -- Class C (Note 2) 1,405
Other 2,485
----------
Total expenses 1,218,869
----------
Investment income -- net 5,406,972
----------
Realized & Realized gain on investments -- net 1,959,896
Unrealized Gain on Change in unrealized appreciation on investments -- net 380,450
Investments -- Net ----------
(Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations $7,747,318
==========
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: Jan. 31, 1998 July 31, 1997
<S> <C> <C> <C>
Operations: Investment income -- net $5,406,972 $12,272,696
Realized gain on investments -- net 1,959,896 4,923,619
Change in unrealized appreciation on investments -- net 380,450 5,108,135
------------- -------------
Net increase in net assets resulting from operations 7,747,318 22,304,450
------------- -------------
Dividends to Investment income -- net:
Shareholders Class A (1,186,504) (2,498,485)
(Note 1f): Class B (3,566,085) (8,512,919)
Class C (148,358) (284,124)
Class D (506,025) (977,168)
------------- -------------
Net decrease in net assets resulting from dividends to shareholders (5,406,972) (12,272,696)
------------- -------------
Beneficial Interest Net decrease in net assets derived from beneficial interest
Transactions transactions (7,313,183) (39,215,251)
(Note 4): ------------- -------------
Net Assets: Total decrease in net assets (4,972,837) (29,183,497)
Beginning of period 233,647,416 262,830,913
------------- -------------
End of period $228,674,579 $233,647,416
============= =============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Class A
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended For the Year Ended July 31,
Jan. 31, 1998 1997 1996 1995 1994
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $10.37 $9.94 $9.86 $9.88 $10.78
Operating --------- --------- --------- --------- ---------
Performance: Investment income -- net .27 .53 .53 .53 .55
Realized and unrealized gain (loss) on
investments -- net .11 .43 .08 (.02) (.48)
--------- --------- --------- --------- ---------
Total from investment operations .38 .96 .61 .51 .07
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income -- net (.27) (.53) (.53) (.53) (.55)
In excess of realized gain on
investments -- net -- -- -- -- (.42)
--------- --------- --------- --------- ---------
Total dividends and distributions (.27) (.53) (.53) (.53) (.97)
--------- --------- --------- --------- ---------
Net asset value, end of period $10.48 $10.37 $9.94 $9.86 $9.88
========= ========= ========= ========= =========
Total Investment Based on net asset value per share 3.70%++++ 9.99% 6.30% 5.47% .39%
Return:** ========= ========= ========= ========= =========
Ratios to Average Expenses .69%* .69% .68% .70% .68%
Net Assets: ========= ========= ========= ========= =========
Investment income -- net 5.10%* 5.31% 5.30% 5.54% 5.23%
========= ========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $45,595 $47,598 $46,765 $51,805 $69,409
Data: ========= ========= ========= ========= =========
Portfolio turnover 49.43% 84.69% 162.83% 178.62% 205.94%
========= ========= ========= ========= =========
* Annualized.
** Total investment returns exclude the effects of sales loads.
++++ Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Class B
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended For the Year Ended July 31,
Jan. 31, 1998 1997 1996 1995 1994
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $10.37 $9.94 $9.86 $9.88 $10.78
Operating --------- --------- --------- --------- ---------
Performance: Investment income -- net .24 .48 .48 .49 .49
Realized and unrealized gain (loss) on
investments -- net .11 .43 .08 (.02) (.48)
--------- --------- --------- --------- ---------
Total from investment operations .35 .91 .56 .47 .01
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income -- net (.24) (.48) (.48) (.49) (.49)
In excess of realized gain on
investments -- net -- -- -- -- (.42)
--------- --------- --------- --------- ---------
Total dividends and distributions (.24) (.48) (.48) (.49) (.91)
--------- --------- --------- --------- ---------
Net asset value, end of period $10.48 $10.37 $9.94 $9.86 $9.88
========= ========= ========= ========= =========
Total Investment Based on net asset value per share 3.44%++++ 9.43% 5.76% 4.93% (.11%)
Return:** ========= ========= ========= ========= =========
Ratios to Average Expenses 1.20%* 1.20% 1.18% 1.21% 1.18%
Net Assets: ========= ========= ========= ========= =========
Investment income -- net 4.59%* 4.80% 4.79% 5.03% 4.73%
========= ========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $151,336 $160,562 $195,097 $205,362 $224,915
Data: ========= ========= ========= ========= =========
Portfolio turnover 49.43% 84.69% 162.83% 178.62% 205.94%
========= ========= ========= ========= =========
* Annualized.
** Total investment returns exclude the effects of sales loads.
++++ Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Class C
For For the
the Six Period
The following per share data and ratios have been derived Months For the Year Oct. 21,
from information provided in the financial statements. Ended Ended 1994+ to
Jan. 31, July 31, July 31,
1998 1997 1996 1995
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $10.35 $9.92 $9.85 $9.48
Operating --------- --------- --------- ---------
Performance: Investment income -- net .23 .47 .47 .37
Realized and unrealized gain on investments -- net .11 .43 .07 .37
--------- --------- --------- ---------
Total from investment operations .34 .90 .54 .74
--------- --------- --------- ---------
Less dividends from investment income -- net (.23) (.47) (.47) (.37)
--------- --------- --------- ---------
Net asset value, end of period $10.46 $10.35 $9.92 $9.85
========= ========= ========= =========
Total Investment Based on net asset value per share 3.39%++++ 9.33% 5.54% 7.92%++++
Return:** ========= ========= ========= =========
Ratios to Average Expenses 1.30%* 1.30% 1.28% 1.33%*
Net Assets: ========= ========= ========= =========
Investment income -- net 4.49%* 4.70% 4.70% 4.84%*
========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $7,552 $5,976 $5,738 $1,954
Data: ========= ========= ========= =========
Portfolio turnover 49.43% 84.69% 162.83% 178.62%
========= ========= ========= =========
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++++ Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Class D
For For the
the Six Period
The following per share data and ratios have been derived Months For the Year Oct. 21,
from information provided in the financial statements. Ended Ended 1994+ to
Jan. 31, July 31, July 31,
1998 1997 1996 1995
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $10.35 $9.92 $9.85 $9.48
Operating --------- --------- --------- ---------
Performance: Investment income -- net .26 .52 .52 .40
Realized and unrealized gain on investments -- net .11 .43 .07 .37
--------- --------- --------- ---------
Total from investment operations .37 .95 .59 .77
--------- --------- --------- ---------
Less dividends from investment income -- net (.26) (.52) (.52) (.40)
--------- --------- --------- ---------
Net asset value, end of period $10.46 $10.35 $9.92 $9.85
========= ========= ========= =========
Total Investment Based on net asset value per share 3.65%++++ 9.89% 6.09% 8.34%++++
Return:** ========= ========= ========= =========
Ratios to Average Expenses .80%* .79% .78% .81%*
Net Assets: ========= ========= ========= =========
Investment income -- net 5.00%* 5.21% 5.20% 5.39%*
========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $24,192 $19,511 $15,231 $9,179
Data: ========= ========= ========= =========
Portfolio turnover 49.43% 84.69% 162.83% 178.62%
========= ========= ========= =========
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++++ Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Florida Municipal Bond Fund January 31, 1998
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. These unaudited
financial statements reflect all adjustments which are, in the opinion
of management, necessary to a fair statement of the results for the
interim period presented. All such adjustments are of a normal
recurring nature. The Fund offers four classes of shares under the
Merrill Lynch Select PricingSM 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.
(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.
[bullet] 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.
(e) Prepaid registration fees -- Prepaid registration fees are charged
to expense as the related shares are issued.
(f) Dividends and distributions -- Dividends from net investment
income are declared daily and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates. 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"). 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 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:
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 six months ended January 31, 1998, 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 $300 $2,876
Class D $1,283 $10,988
For the six months ended January 31, 1998, MLPF&S received contingent
deferred sales charges of $69,659 and $442 relating to transactions in
Class B and Class C Shares, respectively. Furthermore, MLPF&S received
contingent deferred sales charges of $10,000 relating to transactions
subject to front-end sales charge waivers in Class D Shares.
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, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended January 31, 1998 were $108,678,999 and
$112,976,399, respectively.
Net realized and unrealized gains (losses) as of January 31, 1998 were
as follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $2,408,511 $17,130,994
Financial futures contracts (448,615) --
------------ ------------
Total $1,959,896 $17,130,994
============ ============
As of January 31, 1998, net unrealized appreciation for Federal income
tax purposes aggregated $17,130,994, of which $17,159,069 related to
appreciated securities and $28,075 related to depreciated securities.
The aggregate cost of investments at January 31, 1998 for Federal
income tax purposes was $205,101,538.
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest
transactions was $7,313,183 and $39,215,251 for the six months ended
January 31, 1998 and for the year ended July 31, 1997, respectively.
Transactions in shares of beneficial interest for each class were as
follows:
Class A Shares for the Six Dollar
Months Ended Jan. 31, 1998 Shares Amount
Shares sold 272,346 $2,814,844
Shares issued to shareholders
in reinvestment of dividends 52,657 544,085
------------ ------------
Total issued 325,003 3,358,929
Shares redeemed (564,979) (5,832,411)
------------ ------------
Net decrease (239,976) $(2,473,482)
============ ============
Class A Shares for the Dollar
Year Ended July 31, 1997 Shares Amount
Shares sold 1,198,024 $12,044,059
Shares issued to shareholders
in reinvestment of dividends 102,957 1,034,308
------------ ------------
Total issued 1,300,981 13,078,367
Shares redeemed (1,415,548) (14,209,728)
------------ ------------
Net decrease (114,567) $(1,131,361)
============ ============
Class B Shares for the Six Dollar
Months Ended Jan. 31, 1998 Shares Amount
Shares sold 877,844 $9,083,247
Shares issued to shareholders
in reinvestment of dividends 125,717 1,298,817
------------ ------------
Total issued 1,003,561 10,382,064
Automatic conversion
of shares (8,478) (87,217)
Shares redeemed (2,040,418) (21,068,574)
------------ ------------
Net decrease (1,045,335) $(10,773,727)
============ ============
Class B Shares for the Dollar
Year Ended July 31, 1997 Shares Amount
Shares sold 1,862,462 $18,706,803
Shares issued to shareholders
in reinvestment of dividends 314,901 3,162,398
------------ ------------
Total issued 2,177,363 21,869,201
Automatic conversion
of shares (88,402) (887,789)
Shares redeemed (6,233,558) (62,569,290)
------------ ------------
Net decrease (4,144,597) $(41,587,878)
============ ============
Class C Shares for the Six Dollar
Months Ended Jan. 31, 1998 Shares Amount
Shares sold 183,203 $1,891,009
Shares issued to shareholders
in reinvestment of dividends 8,538 88,048
------------ ------------
Total issued 191,741 1,979,057
Shares redeemed (47,226) (490,185)
------------ ------------
Net increase 144,515 $1,488,872
============ ============
Class C Shares for the Dollar
Year Ended July 31, 1997 Shares Amount
Shares sold 325,779 $3,269,654
Shares issued to shareholders
in reinvestment of dividends 17,881 179,309
------------ ------------
Total issued 343,660 3,448,963
Shares redeemed (344,557) (3,461,143)
------------ ------------
Net decrease (897) $(12,180)
============ ============
Class D Shares for the Six Dollar
Months Ended Jan. 31, 1998 Shares Amount
Shares sold 555,612 $5,771,066
Automatic conversion
of shares 8,494 87,217
Shares issued to shareholders
in reinvestment of dividends 21,205 218,512
------------ ------------
Total issued 585,311 6,076,795
Shares redeemed (157,856) (1,631,641)
------------ ------------
Net increase 427,455 $4,445,154
============ ============
Class D Shares for the Dollar
Year Ended July 31, 1997 Shares Amount
Shares sold 873,825 $8,795,859
Automatic conversion
of shares 88,522 887,789
Shares issued to shareholders
in reinvestment of dividends 36,575 366,988
------------ ------------
Total issued 998,922 10,050,636
Shares redeemed (648,762) (6,534,468)
------------ ------------
Net increase 350,160 $3,516,168
============ ============
5. Capital Loss Carryforward:
At July 31, 1997, the Fund had a capital loss carry-forward of
approximately $16,579,000, of which $14,303,000 expires in 2003 and
$2,276,000 expires in 2004. This amount will be available to offset
like amounts of any future taxable gains.
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
Robert A. DiMella, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Robert E. Putney, III, Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
