MERRILL LYNCH
FLORIDA MUNICIPAL
BOND FUND
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
July 31, 1999
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
TO OUR SHAREHOLDERS
The Municipal Market Environment
During the six months ended July 31, 1999, long- term bond yields rose
significantly. Steady US economic growth combined with improvement in foreign
economies, most notably Japan and Brazil, as well as an inflation scare in early
May put upward pressure on bond yields throughout the period. Continued strong
US employment growth, particularly the decline in the US unemployment rate to
4.2% in early June, was among the reasons the Federal Reserve Board cited for
raising short-term interest rates in late June. US Treasury bond yields reacted
by climbing above 6.15% by late June before improving somewhat to 6.10% by July
31, 1999. During the six-month period ended July 31, 1999, yields on long-term
US Treasury bonds increased approximately 100 basis points (1.00%).
Long-term tax-exempt bond yields also rose during the last six months. Until
early May, the municipal bond market had been able to withstand much of the
upward pressure on bond yields. However, investor concerns regarding ongoing US
economic strength and the fear of additional moves by the Federal Reserve Board
eventually pushed municipal bond yields higher throughout June and July. The
yields on long-term tax-exempt revenue bonds rose almost 50 basis points to
5.65%, as measured by the Bond Buyer Revenue Bond Index.
The ability of the tax-exempt bond market to withstand much of the recent upward
pressure on long-term fixed-income bond yields has been a reflection of the
continued strong technical position the municipal bond market has enjoyed in
recent quarters. During the last six months, more than $120 billion in long-term
municipal bonds was underwritten, a decrease of more than 20% compared to the
same period a year ago. During the past three months, more than $60 billion in
municipal bonds was underwritten. This quarterly issuance represents a decline
of nearly 25% compared to the same three-month period in 1998.
Recently, the municipal supply position deteriorated even further. Total
issuance in July 1999 of $16.5 billion was more than 30% lower than July 1998
levels. Additionally, in June and July, investors received more than $40 billion
in coupon income and proceeds from bond maturities and early bond redemptions.
These proceeds have generated significant retail investor interest, easily
absorbing the recent diminished supply. This very favorable supply/demand
position allowed the tax-exempt bond market to outperform its taxable
counterpart in recent months.
However, the recent relative outperformance of the municipal bond market has
somewhat reduced the very attractive tax-exempt bond yield ratios that were
available at the end of 1998. In December 1998, long-term, uninsured municipal
bond yields were higher than those of their taxable counterparts. Historically,
long-term tax-exempt bond yields have been approximately 82%-85% of long-term US
Treasury bond yields. Municipal bond yields rose at a lower rate in recent
months than US Treasury bond yields, causing the yield ratio to decline. At July
31, 1999, long-term municipal bond yields were approximately 92% of their
taxable counterparts. Current ratios, while lower than those available at the
end of 1998, still represent historically attractive levels. We expect the
municipal bond market to maintain its strong technical position for the
remainder of 1999. Consequently, there appears to be little reason for the
tax-exempt bond market to underperform the taxable US Treasury bond market. This
suggests that the present bond yield ratio is likely to be stable in the coming
months and a return to a ratio in excess of 100% of taxable Treasury securities
is improbable.
Looking ahead, it appears that long-term municipal bond yields will trade in a
relatively tight range near current levels. Strong US economic performance is
being balanced by nearly negligible inflation data, as well as improvements in
productivity in both manufacturing and service industries. We believe that
future moves by the Federal Reserve Board have largely been discounted by bond
markets and are to a great extent reflected in present bond yields.
Any improvement in bond prices is likely to be contingent upon weakening in both
US employment growth and consumer spending. The 100 basis point rise in US
Treasury bond yields seen thus far this year is likely to negatively affect US
economic growth. The US housing market will be among the first sectors
1
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
likely to be affected, as some declines have already been evidenced because of
higher mortgage rates. We believe it is also unrealistic to expect double-digit
returns in US equity markets to continue indefinitely. Much of the US consumer's
wealth is tied to recent stock market appreciation. Any slowing in these
incredible growth rates is likely to reduce consumer spending. We believe that
these factors suggest that the worst of the recent increase in bond yields has
passed and stable, if not slightly improving, bond prices may be expected.
Fiscal Year in Review
At the start of the fiscal year ended July 31, 1999, the US economy was strong
and inflation was low. We opted to maintain a fully invested position going into
the second half of the year and sought to maintain a high level of tax-exempt
income. We believed that in the absence of any material inflationary pressures
and given the enhanced productivity of US companies, any increases in US
economic strength would not result in significant increases in interest rates.
However, the Federal Reserve Board raised interest rates in May. Modest
improvements in foreign economies also played a factor in the Federal Reserve
Board's decision to raise short-term interest rates, which pushed long-term
interest rates higher as well. We remained fully invested, believing that the
recent spike in bond yields would be temporary. Unfortunately, concerns lingered
that the Federal Reserve Board would continue to tighten monetary policy, which
occurred after the close of the period at the end of August. These concerns
pushed long-term bond yields higher and faster than we expected, negatively
affecting Fund performance for the latter half of the fiscal year. However, the
positive performance of the first half of the year more than offset the negative
returns of the second half. Therefore, for the 12 months ended July 31, 1999,
the Fund achieved competitive total returns relative to other Florida municipal
bonds funds, as measured by Lipper Analytical Services. (Complete performance
information can be found on pages 3 and 4 of this report to shareholders.)
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/ Terry K. Glenn
Terry K. Glenn
President
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Robert A. DiMella
Robert A. DiMella
Vice President and Co-Portfolio Manager
/s/ Robert D. Sneeden
Robert D. Sneeden
Vice President and Co-Portfolio Manager
September 13, 1999
2
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
PERFORMANCE DATA
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:
o 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.
o Class B Shares are subject to a maximum contingent deferred sales charge
of 4% if redeemed during the first year, decreasing to 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.)
o 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.
o 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 "Recent Performance Results" and
"Average Annual Total Return" tables assume reinvestment of all dividends
and capital gains distributions at net asset value on the payable date.
Investment return and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost.
Dividends paid to each class of shares will vary because of the different
levels of account maintenance, distribution and transfer agency fees
applicable to each class, which are deducted from the income available to
be paid to shareholders.
Recent Performance Results*
<TABLE>
<CAPTION>
Standardized
12 Month 3 Month Since Inception 30-Day Yield
Total Return Total Return Total Return As of 7/31/99
=============================================================================================================
<S> <C> <C> <C> <C>
ML Florida Municipal Bond Fund Class A Shares +1.57% -2.16% +65.08% 4.62%
- -------------------------------------------------------------------------------------------------------------
ML Florida Municipal Bond Fund Class B Shares +1.06 -2.28 +58.40 4.30
- -------------------------------------------------------------------------------------------------------------
ML Florida Municipal Bond Fund Class C Shares +0.95 -2.41 +31.97 4.20
- -------------------------------------------------------------------------------------------------------------
ML Florida Municipal Bond Fund Class D Shares +1.46 -2.28 +35.21 4.52
=============================================================================================================
</TABLE>
* Investment results shown do not reflect sales charges; results would be
lower if a sales charge was included. Total investment returns are based
on changes in net asset values for the periods shown, and assume
reinvestment of all dividends and capital gains distributions at net asset
value on the payable date. The Fund's since inception dates are from
5/31/91 for Class A & Class B Shares and from 10/21/94 for Class C & Class
D Shares.
3
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
PERFORMANCE DATA (concluded)
Total Return Based on a $10,000 Investment
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:
5/31/91** 7/99
ML Florida Municipal Bond Fund+--
Class A Shares* $9,600 $15,848
ML Florida Municipal Bond Fund+--
Class B Shares* $10,000 $15,840
Lehman Brothers Municipal Bond
Index++ $10,000 $17,629
A line graph depicting the growth of an investment in the Fund's Class C 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** 7/99
ML Florida Municipal Bond Fund+--
Class C Shares* $10,000 $13,197
ML Florida Municipal Bond Fund+--
Class D Shares* $9,600 $12,980
Lehman Brothers Municipal Bond
Index++ $10,000 $14,235
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
** Commencement of operations.
+ ML Florida Municipal Bond Fund invests primarily in long-term
investment-grade obligations issued by or on behalf of the state of
Florida, its political subdivisions, agencies and instrumentalities and
obligations of other qualifying issuers.
++ This unmanaged Index consists of long-term revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds. The starting date for
the Index in the Class C & Class D Shares' graph is 10/31/94. Past
performance is not predictive of future performance.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 6/30/99 +1.69% -2.37%
- --------------------------------------------------------------------------------
Five Years Ended 6/30/99 +6.14 +5.28
- --------------------------------------------------------------------------------
Inception (5/31/91)
through 6/30/99 +6.38 +5.84
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 6/30/99 +1.18% -2.69%
- --------------------------------------------------------------------------------
Five Years Ended 6/30/99 +5.62 +5.62
- --------------------------------------------------------------------------------
Inception (5/31/91)
through 6/30/99 +5.84 +5.84
- --------------------------------------------------------------------------------
* 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 6/30/99 +1.18% +0.21%
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 6/30/99 +6.10 +6.10
- --------------------------------------------------------------------------------
* 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 6/30/99 +1.69% -2.38%
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 6/30/99 +6.64 +5.71
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
4
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- -------------------------------------------------------------------------------
Florida--85.2%
- -------------------------------------------------------------------------------
AAA Aaa $ 1,095 Altamonte Springs, Florida, Health
Facilities Authority, Hospital
Revenue Bonds (Adventist Health
Systems--Sunbelt), 7% due 10/01/2014 (e) $ 1,300
- -------------------------------------------------------------------------------
NR* Aaa 4,140 Brevard County, Florida, HFA, S/F
Mortgage Revenue Bonds, AMT, 6.70%
due 9/01/2027 (f) 4,361
- -------------------------------------------------------------------------------
Broward County, Florida, HFA, M/F
Housing Revenue Refunding Bonds
(Lakeside Apartments Project) (d):
AAA NR* 1,100 6.90% due 8/01/2015 1,196
AAA NR* 1,100 7% due 2/01/2025 1,204
- -------------------------------------------------------------------------------
AAA Aaa 2,820 Celebration Community Development
District, Florida (Special Assessment),
6% due 5/01/2010 (c) 2,999
- -------------------------------------------------------------------------------
AAA Aaa 7,650 Charlotte County, Florida, Health Care
Facilities Revenue Refunding Bonds
(Bon Secours Health System), RIB,
7.863% due 8/26/2027 (g)(h) 8,396
- -------------------------------------------------------------------------------
A+ A1 7,715 Citrus County, Florida, PCR, Refunding
(Florida Power Corporation--Crystal
River), Series A, 6.625% due 1/01/2027 8,161
- -------------------------------------------------------------------------------
Dade County, Florida, HFA, S/F Mortgage
Revenue Bonds, AMT (f):
NR* Aaa 155 Series B, 7.25% due 9/01/2023 (d) 161
NR* Aaa 2,790 Series C, 7.75% due 9/01/2022 2,886
- -------------------------------------------------------------------------------
A1+ VMIG1+ 100 Dade County, Florida, IDA, Exempt
Facilities Revenue Refunding Bonds
(Florida Power & Light Co.), VRDN,
3.30% due 6/01/2021 (a) 100
- -------------------------------------------------------------------------------
NR* Aaa 12,000 Escambia County, Florida, HFA, S/F
Mortgage Revenue Refunding Bonds, AMT,
7% due 4/01/2028 (d)(f) 12,987
- -------------------------------------------------------------------------------
BBB Baa1 11,620 Escambia County, Florida, PCR (Champion
International Corporation Project), AMT,
6.90% due 8/01/2022 12,553
- -------------------------------------------------------------------------------
BBB Baa1 1,500 Escambia County, Florida, PCR, Refunding
(Champion International Corporation
Project), 6.95% due 11/01/2007 1,605
- -------------------------------------------------------------------------------
NR* Aaa 1,105 Florida HFA, Home Ownership Revenue
Refunding Bonds, AMT, Series G-1,
7.90% due 3/01/2022 (f) 1,152
- -------------------------------------------------------------------------------
AAA Aaa 10,420 Florida HFA, Revenue Bonds (Maitland
Club Apartments), AMT, Series B-1,
7% due 2/01/2035 (b) 11,293
- -------------------------------------------------------------------------------
AAA Aaa 10,000 Florida State Board of Education,
Capital Outlay, GO (Public Education),
Series B, 4.50% due 6/01/2023 (c) 8,585
- -------------------------------------------------------------------------------
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
DATES Daily Adjustable Tax-Exempt Securities
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
VRDN Variable Rate Demand Notes
5
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- -------------------------------------------------------------------------------
Florida (continued)
- -------------------------------------------------------------------------------
AAA Aaa $ 2,885 Florida State Mid-Bay Bridge Authority
Revenue Bonds, Series A, 5.50%**
due 10/01/2026 (b) $ 616
- -------------------------------------------------------------------------------
AAA Aaa 11,595 Florida State Turnpike Authority,
Turnpike Revenue Bonds (Department
of Transportation), Series A,
4.50% due 7/01/2027 (i) 9,935
- -------------------------------------------------------------------------------
AA Aa3 2,250 Hillsborough County, Florida, IDA, PCR,
Refunding (Tampa Electric Company
Project), 7.875% due 8/01/2021 2,455
- -------------------------------------------------------------------------------
NR* VMIG1+ 100 Hillsborough County, Florida, IDA, PCR
(Tampa Electric Company Project), VRDN,
3.25% due 9/01/2025 (a) 100
- -------------------------------------------------------------------------------
AAA Aaa 2,750 Hillsborough County, Florida, Utility
Revenue Refunding Bonds, Series B,
6.50% due 8/01/2016 (c) 2,916
- -------------------------------------------------------------------------------
AAA Aaa 18,940 Jacksonville, Florida, Capital
Improvement Revenue Refunding Bonds
(Stadium Project), 4.75% due
10/01/2025 (b) 16,908
- -------------------------------------------------------------------------------
NR* VMIG1+ 700 Jacksonville, Florida, Health Facilities
Authority, Hospital Revenue Refunding
Bonds (Genesis Rehabilitation Hospital),
VRDN, 3.35% due 5/01/2021 (a) 700
- -------------------------------------------------------------------------------
AAA Aaa 6,000 Lee County, Florida, Water and Sewer
Revenue Bonds, Series A, 5% due
10/01/2029 (b) 5,568
- -------------------------------------------------------------------------------
Leesburg, Florida, Hospital Revenue
Refunding Bonds (Leesburg Regional
Medical Center Project):
A- A3 6,110 Series A, 6.125% due 7/01/2018 6,285
A- A3 1,515 Series B, 5.625% due 7/01/2013 (j) 1,516
- -------------------------------------------------------------------------------
A1+ VMIG1+ 100 Martin County, Florida, PCR, Refunding
(Florida Power & Light Co. Project),
VRDN, 3.35% due 9/01/2024 (a) 100
- -------------------------------------------------------------------------------
NR* Aaa 4,075 Miami--Dade County, Florida, Public
Service Tax Revenue Bonds (UMSA Public
Improvements), 5% due 10/01/2023 (g) 3,820
- -------------------------------------------------------------------------------
AAA Aaa 8,500 Miami--Dade County, Florida, Special
Obligation Revenue Refunding Bonds,
Sub-Series A, 5.61%** due 10/01/2019 (c) 2,736
- -------------------------------------------------------------------------------
AAA Aaa 9,220 Miami--Dade County, Florida, Water and
Sewer Revenue Bonds, Series A,
5% due 10/01/2029 (i) 8,557
- -------------------------------------------------------------------------------
NR* Aaa 1,630 Orange County, Florida, School Board,
COP, Series A, 5% due 8/01/2024 (c) 1,522
- -------------------------------------------------------------------------------
Orlando and Orange County Expressway
Authority, Florida, Expressway Revenue
Refunding Bonds (Junior Lien) (i):
AAA Aaa 10,000 5% due 7/01/2021 9,416
AAA Aaa 5,000 5% due 7/01/2028 4,654
- -------------------------------------------------------------------------------
Osceola County, Florida, Sales Tax
Revenue Bonds (g):
NR* Aaa 3,100 5% due 4/01/2019 2,954
NR* Aaa 1,940 5% due 4/01/2024 1,815
- -------------------------------------------------------------------------------
AAA Aaa 2,080 Pasco County, Florida, Health Facilities
Authority, Gross Revenue Bonds (Adventist
Health System--Sunbelt), 7%
due 10/01/2014 (e) 2,475
- -------------------------------------------------------------------------------
A1+ VMIG1+ 1,900 Pinellas County, Florida, Health Facilities
Authority, Revenue Refunding Bonds
(Pooled Hospital Loan Program), DATES,
3.50% due 12/01/2015 (a)(b) 1,900
- -------------------------------------------------------------------------------
6
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- -------------------------------------------------------------------------------
Florida (concluded)
- -------------------------------------------------------------------------------
AAA Aaa $ 5,000 Polk County, Florida, School Board,
COP, Series A, 5% due 1/01/2020 (g) $ 4,742
- -------------------------------------------------------------------------------
NR* Aaa 10,000 Saint Petersburg, Florida, Public
Utilities Revenue Bonds, Series A,
5% due 10/01/2028 (g) 9,291
- -------------------------------------------------------------------------------
AAA NR* 5,600 Tampa, Florida, Utility Tax Improvement
Revenue Bonds, 5% due 10/01/2019 (g) 5,333
- -------------------------------------------------------------------------------
AAA Aaa 2,500 Winter Haven, Florida, Utility System
Revenue Refunding and Improvement Bonds,
4.75% due 10/01/2028 (c) 2,219
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Illinois--2.0%
- -------------------------------------------------------------------------------
AAA Aaa 4,650 Chicago, Illinois, Water Revenue
Refunding Bonds, 5.25% due
11/01/2027 (i) 4,414
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Puerto Rico--8.5%
- -------------------------------------------------------------------------------
Puerto Rico Commonwealth Highway and
Transportation Authority, Highway Revenue
Refunding Bonds, RITES, Series X (h):
A1+ Baa1 7,600 6.47% due 7/01/2004 8,075
A1+ Baa1 10,000 6.57% due 7/01/2005 10,687
- -------------------------------------------------------------------------------
Total Investments (Cost--$206,110)--95.7% 210,648
Variation Margin on Financial Futures Contracts***--0.0% 101
Other Assets Less Liabilities--4.3% 9,351
--------
Net Assets--100.0% $220,100
========
- -------------------------------------------------------------------------------
(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,
1999.
(b) AMBAC Insured.
(c) MBIA Insured.
(d) FNMA 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 July 31, 1999.
(i) FGIC Insured.
(j) All or a portion of 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, 1999 were as follows:
- --------------------------------------------------------------------------------
(in Thousands)
- --------------------------------------------------------------------------------
Number of Expiration Value
Contracts Issue Date (Notes 1a & 1b)
- --------------------------------------------------------------------------------
295 US Treasury Bonds September 1999 $33,916
- --------------------------------------------------------------------------------
Total Financial Futures Contracts Sold
(Total Contract Price--$34,478) $33,916
=======
- --------------------------------------------------------------------------------
+ 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.
7
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of July 31, 1999
<TABLE>
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$206,109,925)
(Note 1a) ................................................... $210,648,248
Cash .......................................................... 1,453,222
Receivables:
Securities sold ............................................. $ 4,634,103
Interest .................................................... 3,215,153
Beneficial interest sold .................................... 133,313
Variation margin (Note 1b) .................................. 101,406 8,083,975
-----------
Prepaid expenses and other assets ............................. 575,149
------------
Total assets .................................................. 220,760,594
------------
- ---------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Beneficial interest redeemed ................................ 166,416
Dividends to shareholders (Note 1f) ......................... 165,936
Investment adviser (Note 2) ................................. 107,622
Distributor (Note 2) ........................................ 68,382 508,356
-----------
Accrued expenses and other liabilities ........................ 151,925
------------
Total liabilities ............................................. 660,281
------------
- ---------------------------------------------------------------------------------------------------------------
Net Assets: Net assets .................................................... $220,100,313
============
- ---------------------------------------------------------------------------------------------------------------
Net Assets Class A Shares of beneficial interest, $.10 par value,
Consist of: unlimited number of shares authorized ......................... $ 379,181
Class B Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized ......................... 1,322,440
Class C Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized ......................... 108,314
Class D Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized ......................... 374,857
Paid-in capital in excess of par .............................. 226,770,785
Accumulated realized capital losses on investments--net
(Note 5) ...................................................... (13,955,931)
Unrealized appreciation on investments--net ................... 5,100,667
------------
Net assets .................................................... $220,100,313
============
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value: Class A--Based on net assets of $38,214,465 and 3,791,812
shares of beneficial interest outstanding ..................... $ 10.08
============
Class B--Based on net assets of $133,275,689 and 13,224,401
shares of beneficial interest outstanding ..................... $ 10.08
============
Class C--Based on net assets of $10,897,356 and 1,083,139
shares of beneficial interest outstanding ..................... $ 10.06
============
Class D--Based on net assets of $37,712,803 and 3,748,569
shares of beneficial interest outstanding ..................... $ 10.06
============
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
FINANCIAL INFORMATION (continued)
Statement of Operations
<TABLE>
<CAPTION>
For the Year Ended
July 31, 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income Interest and amortization of premium and discount earned ...... $ 12,889,652
(Note 1d):
- ---------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees (Note 2) ............................. $ 1,286,002
Account maintenance fees--Class B(Note 2) ..................... 730,121
Professional fees ............................................. 97,934
Accounting services (Note 2) .................................. 93,289
Printing and shareholder reports .............................. 91,157
Account maintenance and distribution fees--Class C(Note 2) .... 64,309
Transfer agent fees--Class B(Note 2) .......................... 52,957
Account maintenance and distribution fees--Class D(Note 2) .... 34,267
Custodian fees ................................................ 16,006
Trustees' fees and expenses ................................... 12,983
Transfer agent fees--Class A(Note 2) .......................... 12,518
Transfer agent fees--Class D(Note 2) .......................... 10,024
Pricing fees .................................................. 7,823
Transfer agent fees--Class C(Note 2) .......................... 3,807
Registration fees (Note 1e) ................................... 3,000
Other ......................................................... 4,767
-----------
Total expenses ................................................ 2,520,964
------------
Investment income--net ........................................ 10,368,688
------------
- ---------------------------------------------------------------------------------------------------------------
Realized & Realized gain on investments--net ............................. 817,507
Unrealized Gain Change in unrealized appreciation on investments--net ......... (8,567,351)
(Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations .......... $ 2,618,844
(Notes 1b, 1d & 3): ============
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
FINANCIAL INFORMATION (continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Year Ended July 31,
----------------------------
Increase (Decrease) in Net Assets: 1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations: Investment income--net ....................................... $ 10,368,688 $ 10,551,320
Realized gain on investments--net ............................ 817,507 3,911,295
Change in unrealized appreciation on investments--net ........ (8,567,351) (3,082,526)
------------ ------------
Net increase in net assets resulting from operations ......... 2,618,844 11,380,089
------------ ------------
- ---------------------------------------------------------------------------------------------------------------
Dividends to Investment income--net:
Shareholders Class A .................................................... (2,053,636) (2,285,733)
(Note 1f): Class B .................................................... (6,258,095) (6,855,902)
Class C .................................................... (448,971) (325,426)
Class D .................................................... (1,607,986) (1,084,259)
------------ ------------
Net decrease in net assets from dividends to shareholders .... (10,368,688) (10,551,320)
------------ ------------
- ---------------------------------------------------------------------------------------------------------------
Beneficial Net increase (decrease) in net assets derived
Interest from beneficial interest transactions ...................... 7,013,123 (13,639,151)
Transactions ------------ ------------
(Note 4):
- ---------------------------------------------------------------------------------------------------------------
Net Assets: Total decrease in net assets ................................. (736,721) (12,810,382)
Beginning of year ............................................ 220,837,034 233,647,416
------------ ------------
End of year .................................................. $220,100,313 $220,837,034
============ ============
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
FINANCIAL INFORMATION (continued)
Financial Highlights
<TABLE>
<CAPTION>
Class A
The following per share data and ratios have been derived -------------------------------------------------------
from information provided in the financial statements. For the Year Ended July 31,
-------------------------------------------------------
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year .................. $ 10.41 $ 10.37 $ 9.94 $ 9.86 $ 9.88
Operating ------- ------- ------- ------- -------
Performance: Investment income--net .............................. .50 .53 .53 .53 .53
Realized and unrealized gain (loss) on
investments--net .................................... (.33) .04 .43 .08 (.02)
------- ------- ------- ------- -------
Total from investment operations .................... .17 .57 .96 .61 .51
------- ------- ------- ------- -------
Less dividends from investment income--net .......... (.50) (.53) (.53) (.53) (.53)
------- ------- ------- ------- -------
Net asset value, end of year ........................ $ 10.08 $ 10.41 $ 10.37 $ 9.94 $ 9.86
======= ======= ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share .................. 1.57% 5.61% 9.99% 6.30% 5.47%
Return:* ======= ======= ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses ............................................ .72% .69% .69% .68% .70%
Net Assets: ======= ======= ======= ======= =======
Investment income--net .............................. 4.80% 5.06% 5.31% 5.30% 5.54%
======= ======= ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of year (in thousands) .............. $38,214 $44,173 $47,598 $46,765 $51,805
Data: ======= ======= ======= ======= =======
Portfolio turnover .................................. 120.54% 101.75% 84.69% 162.83% 178.62%
======= ======= ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Total investment returns exclude the effects of sales
charges.
See Notes to Financial Statements.
11
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class B
The following per share data and ratios have been derived --------------------------------------------------------
from information provided in the financial statements. For the Year Ended July 31,
--------------------------------------------------------
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year .................. $ 10.41 $ 10.37 $ 9.94 $ 9.86 $ 9.88
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .............................. .45 .47 .48 .48 .49
Realized and unrealized gain (loss) on
investments--net .................................... (.33) .04 .43 .08 (.02)
-------- -------- -------- -------- --------
Total from investment operations .................... .12 .51 .91 .56 .47
-------- -------- -------- -------- --------
Less dividends from investment income--net .......... (.45) (.47) (.48) (.48) (.49)
-------- -------- -------- -------- --------
Net asset value, end of year ........................ $ 10.08 $ 10.41 $ 10.37 $ 9.94 $ 9.86
======== ======== ======== ======== ========
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share .................. 1.06% 5.07% 9.43% 5.76% 4.93%
Return:* ======== ======== ======== ======== ========
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses ............................................ 1.23% 1.20% 1.20% 1.18% 1.21%
Net Assets: ======== ======== ======== ======== ========
Investment income--net .............................. 4.29% 4.55% 4.80% 4.79% 5.03%
======== ======== ======== ======== ========
- ----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of year (in thousands) .............. $133,276 $143,496 $160,562 $195,097 $205,362
Data: ======== ======== ======== ======== ========
Portfolio turnover .................................. 120.54% 101.75% 84.69% 162.83% 178.62%
======== ======== ======== ======== ========
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Total investment returns exclude the effects of sales
charges.
See Notes to Financial Statements.
12
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class C
--------------------------------------------------------
For the
Period
The following per share data and ratios have been derived Oct. 21,
from information provided in the financial statements. For the Year Ended July 31, 1994+ to
-------------------------------------------- July 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ................ $ 10.39 $ 10.35 $ 9.92 $ 9.85 $ 9.48
Operating ------- ------- ------- ------- -------
Performance: Investment income--net .............................. .43 .46 .47 .47 .37
Realized and unrealized gain (loss) on
investments--net .................................... (.33) .04 .43 .07 .37
------- ------- ------- ------- -------
Total from investment operations .................... .10 .50 .90 .54 .74
------- ------- ------- ------- -------
Less dividends from investment income--net .......... (.43) (.46) (.47) (.47) (.37)
------- ------- ------- ------- -------
Net asset value, end of period ...................... $ 10.06 $ 10.39 $ 10.35 $ 9.92 $ 9.85
======= ======= ======= ======= =======
- ---------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share .................. .95% 4.97% 9.33% 5.54% 7.92%++
Return:** ======= ======= ======= ======= =======
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses ............................................ 1.33% 1.30% 1.30% 1.28% 1.33%*
Net Assets: ======= ======= ======= ======= =======
Investment income--net .............................. 4.19% 4.44% 4.70% 4.70% 4.84%*
======= ======= ======= ======= =======
- ---------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) ............ $10,897 $ 8,900 $ 5,976 $ 5,738 $ 1,954
Data: ======= ======= ======= ======= =======
Portfolio turnover .................................. 120.54% 101.75% 84.69% 162.83% 178.62%
======= ======= ======= ======= =======
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Annualized.
**Total investment returns exclude the effects of sales
charges.
+Commencement of operations.
++Aggregate total investment return.
See Notes to Financial Statements.
13
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
FINANCIAL INFORMATION (concluded)
Financial Highlights (concluded)
<TABLE>
<CAPTION>
Class D
--------------------------------------------------------
For the
Period
The following per share data and ratios have been derived Oct. 21,
from information provided in the financial statements. For the Year Ended July 31, 1994+ to
------------------------------------------- July 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ................ $ 10.39 $ 10.35 $ 9.92 $ 9.85 $ 9.48
Operating ------- ------- ------- ------ ------
Performance: Investment income--net .............................. .49 .52 .52 .52 .40
Realized and unrealized gain (loss) on
investments--net .................................... (.33) .04 .43 .07 .37
------- ------- ------- ------ ------
Total from investment operations .................... .16 .56 .95 .59 .77
------- ------- ------- ------ ------
Less dividends from investment income--net .......... .49) (.52) (.52) (.52) (.40)
------- ------- ------- ------ ------
Net asset value, end of period ...................... $ 10.06 $ 10.39 $ 10.35 $ 9.92 $ 9.85
======= ======= ======= ====== ======
- ---------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share .................. 1.46% 5.51% 9.89% 6.09% 8.34%++
Return:** ======= ======= ======= ====== ======
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses ............................................ .82% .79% .79% .78% .81%*
Net Assets: ======= ======= ======= ====== ======
Investment income--net .............................. 4.69% 4.95% 5.21% 5.20% 5.39%*
======= ======= ======= ====== ======
- ---------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) ............ $37,713 $24,268 $19,511 $15,231 $ 9,179
Data: ======= ======= ======= ====== ======
Portfolio turnover .................................. 120.54% 101.75% 84.69% 162.83% 178.62%
======= ======= ======= ====== ======
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Annualized.
**Total investment returns exclude the effects of sales
charges.
+Commencement of operations.
++Aggregate total investment return.
See Notes to Financial Statements.
14
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
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's financial statements are prepared in accordance
with generally accepted accounting principles, which may require the use of
management accruals and estimates. 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.
(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.
o Financial futures contracts--The Fund may purchase or sell financial futures
contracts and options on such futures contracts for the purpose of hedging the
market risk on existing securities or the intended purchase of securities.
Futures contracts are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a contract, the
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.
15
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
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 ("MLFD" or the "Distributor"), a division of Princeton Funds
Distributor, Inc. ("PFD"), which is 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: .55% of the Fund's average daily net assets not exceeding $500
million; .525% of average daily net assets in excess of $500 million but not
exceeding $1 billion; and .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 ....................................... .25% .25%
Class C ....................................... .25% .35%
Class D ....................................... .10% --
- --------------------------------------------------------------------------------
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("MLPF&S"), a subsidiary of ML & Co., also provides account
maintenance and distribution services to the 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, 1999, 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 ................................................ $ 512 $ 6,097
Class D ................................................ $3,354 $85,416
- --------------------------------------------------------------------------------
For the year ended July 31, 1999, MLPF&S received contingent deferred sales
charges of $164,622 and $3,967 relating to transactions in Class B and Class C
Shares, respectively. Furthermore, MLPF&S received contingent deferred sales
charges of $10,372 relating to transactions subject to front-end sales charge
waivers in Class D Shares.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co., is
the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or directors of
FAM, PSI, FDS, PFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended July 31, 1999 were $274,087,520 and $273,390,295, respectively.
Net realized gains for the year ended July 31, 1999 and net unrealized gains as
of July 31, 1999 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains Gains
- --------------------------------------------------------------------------------
Long-term investments .............................. $ 817,507 $ 4,538,323
Financial futures contracts ........................ -- 562,344
--------- -----------
Total .............................................. $ 817,507 $ 5,100,667
========= ===========
- --------------------------------------------------------------------------------
As of July 31, 1999, net unrealized appreciation for Federal income tax purposes
aggregated $4,538,323, of which $7,973,434 related to appreciated securities and
$3,435,111 related to depreciated securities. The aggregate cost of investments
at July 31, 1999 for Federal income tax purposes was $206,109,925.
4. Beneficial Interest Transactions:
Net increase (decrease) in net assets derived from beneficial interest
transactions was $7,013,123 and
16
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
$(13,639,151) for the years ended July 31, 1999 and July 31, 1998, respectively.
Transactions in shares of beneficial interest for each class were as follows:
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ...................................... 623,802 $ 6,549,823
Shares issued to share-holders in reinvestment
of dividends ..................................... 93,638 977,452
---------- ------------
Total issued ..................................... 717,440 7,527,275
Shares redeemed .................................. (1,169,568) (12,154,623)
---------- ------------
Net decrease ..................................... (452,128) $ (4,627,348)
========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ...................................... 648,986 $ 6,738,638
Shares issued to share-holders in reinvestment
of dividends ..................................... 102,167 1,060,119
---------- ------------
Total issued ..................................... 751,153 7,798,757
Shares redeemed .................................. (1,098,382) (11,394,663)
---------- ------------
Net decrease ..................................... (347,229) $ (3,595,906)
========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ...................................... 2,641,615 $ 27,704,661
Shares issued to share-holders in reinvestment
of dividends ..................................... 223,635 2,334,238
---------- ------------
Total issued ..................................... 2,865,250 30,038,899
Automatic conversion of shares ................... (45,399) (472,868)
Shares redeemed .................................. (3,382,327) (35,227,043)
---------- ------------
Net decrease ..................................... (562,476) $ (5,661,012)
========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ...................................... 1,857,210 $ 19,281,640
Shares issued to share-holders in reinvestment
of dividends ..................................... 241,773 2,508,474
---------- ------------
Total issued ..................................... 2,098,983 21,790,114
Automatic conversion of shares ................... (44,185) (459,536)
Shares redeemed .................................. (3,756,113) (38,946,230)
---------- ------------
Net decrease ..................................... (1,701,315) $(17,615,652)
========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ...................................... 452,873 $ 4,749,589
Shares issued to shareholders in reinvestment
of dividends ..................................... 22,394 233,145
---------- ------------
Total issued ..................................... 475,267 4,982,734
Shares redeemed .................................. (248,663) (2,576,188)
---------- ------------
Net increase ..................................... 226,604 $ 2,406,546
========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ...................................... 367,401 $ 3,807,777
Shares issued to shareholders in reinvestment
of dividends ..................................... 17,062 176,743
---------- ------------
Total issued ..................................... 384,463 3,984,520
Shares redeemed .................................. (105,334) (1,094,008)
---------- ------------
Net increase ..................................... 279,129 $ 2,890,512
========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ...................................... 2,718,041 $ 28,457,813
Automatic conversion of shares ................... 45,482 472,868
Shares issued to shareholders in reinvestment
of dividends ..................................... 59,085 615,511
---------- ------------
Total issued ..................................... 2,822,608 29,546,192
Shares redeemed .................................. (1,409,467) (14,651,255)
---------- ------------
Net increase ..................................... 1,413,141 $ 14,894,937
========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ...................................... 762,178 $ 7,918,934
Automatic conversion of shares ................... 44,259 459,536
Shares issued to shareholders in reinvestment
of dividends ..................................... 43,073 446,045
---------- ------------
Total issued ..................................... 849,510 8,824,515
Shares redeemed .................................. (399,214) (4,142,620)
---------- ------------
Net increase ..................................... 450,296 $ 4,681,895
========== ============
- --------------------------------------------------------------------------------
5. Capital Loss Carryforward:
At July 31, 1999, the Fund had a capital loss carryforward of approximately
$11,654,000, of which $9,378,000 expires in 2003 and $2,276,000 expires in 2004.
This amount will be available to offset like amounts of any future taxable
gains.
17
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
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, 1999, 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,
1999 by correspondence with the custodian and broker. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Merrill Lynch
Florida Municipal Bond Fund of Merrill Lynch Multi-State Municipal Series Trust
as of July 31, 1999, 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 15, 1999
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, 1999 qualify
as tax-exempt interest dividends for Federal income tax purposes.
Additionally, there were no capital gains distributions made by the Fund during
the year.
Please retain this information for your records.
18
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 1999
OFFICERS AND TRUSTEES
Terry K. Glenn, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Arthur Zeikel, Trustee
Vincent R. Giordano, Senior Vice President
Robert A. DiMella, Vice President
Kenneth A. Jacob, Vice President
Robert D. Sneeden, Vice President
Donald C. Burke, Vice President and Treasurer
Alice A. Pellegrino, Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
19
<PAGE>
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--7/99
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