MERRILL LYNCH
FLORIDA MUNICIPAL
BOND FUND
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
July 31, 2000
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 2000
TO OUR SHAREHOLDERS
The Municipal Market Environment
During the six months ended July 31, 2000, US domestic economic growth remained
robust. After growing at a 4.2% annual rate in 1999, US domestic economic growth
expanded at a 4.8% rate during the first quarter of 2000 and at a 5.2% rate
during the second quarter. However, despite these significant growth rates, few
price measure indicators have shown any meaningful signs of future price
pressures at the consumer level, despite the lowest unemployment rates since
1970. With few signs of any economic slowdown, the Federal Reserve Board
continued to raise short-term interest rates in February, March and May 2000.
The Federal Reserve Board cited both the continued growth of US employment and
the continued strength of US equity markets as reasons for attempting to
moderate US economic growth before inflationary price pressures can occur.
However, since then fixed-income markets have largely ignored strong economic
fundamentals and concentrated upon very positive technical supply factors.
Declining bond issuance--both current, and more importantly, expected future
issuance--helped push bond yields lower into mid-April 2000. In late January and
early February 2000, the US Treasury announced its intention to reduce the
amounts to be auctioned in the quarterly Treasury note and bond auctions.
Furthermore, budgetary surpluses allowed the US Treasury to repurchase
outstanding, higher-couponed Treasury issues, primarily in the 15-year and
longer maturity sector. Both these actions resulted in significant reduction in
the outstanding supply of longer-dated maturity US Treasury debt. Domestic and
international investors quickly began to accumulate what was expected to become
a scarce commodity and bond prices quickly rose.
By mid-April 2000, US Treasury bond yields had declined more than 80 basis
points (0.80%) to 5.67%. During the remainder of the period, US Treasury bond
prices were volatile as strong economic reports and investors' concerns of
additional moves by the Federal Reserve Board occasionally overshadowed the
positive technical position of the long-term US Treasury bond market.
Recently, a number of economic indicators have begun to suggest that the actions
taken by the Federal Reserve Board in 1999 and early 2000 have started to affect
US economic growth. Both new home sales and consumer spending have slowed,
suggesting that economic growth may subside into a 4%-4.5% range by late 2000.
In our opinion, this range of growth was targeted by the Federal Reserve Board
as being sustainable, given current productivity measures, without endangering
the present benign inflationary environment.
By June, investor focus returned to the dwindling supply of long-term US
Treasury securities and bond prices generally rose for the remainder of the
period. The decline in long-term US Treasury bond yields resulted in an inverted
yield curve as short-term and intermediate-term interest rates did not fall
proportionately to long-term interest rates as the Federal Reserve Board was
expected to continue to raise short-term interest rates. The current inversion
has had as much to do with debt reduction and US Treasury buybacks as with
investor expectations of slower economic growth. During the last six months, US
Treasury bond yields have declined more than 70 basis points to end the period
at 5.78%, their lowest monthly closing level since May 1999.
Tax-exempt bond yields also have declined in recent months. The decline has
largely been in response to the rally in US Treasury securities, as well as a
continued positive technical supply environment. States such as California and
Maryland have announced that their large current and anticipated future budget
surpluses will permit the cancellation or postponement of expected bond
issuance. Additionally, some issuers have also initiated tenders to repurchase
existing debt, reducing the supply of tax-exempt bonds in the secondary market
as well. Given the decline in available long-term US Treasury securities, some
investors who need longer maturity investment vehicles have begun to consider
long-term municipal bonds as potential substitutes. This has further
strengthened the overall positive technical position of the tax-exempt market.
During the last six months, long-term municipal revenue bond yields have
declined nearly 50 basis points to 5.85%, their lowest level since late August
1999, as measured by the Bond Buyer Revenue Bond Index.
The relative underperformance of the municipal bond market in recent months has
been especially disappointing given the strong technical position the
1
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 2000
tax-exempt bond market has enjoyed. The issuance of long-term tax-exempt
securities has dramatically declined. During the last year, almost $200 billion
in new long-term municipal securities was issued, a decline of almost 20%
compared to the same period a year earlier. For the six months ended July 31,
2000, approximately $100 billion in new tax-exempt bonds was underwritten, a
decline of 17% compared to the same period in 1999.
Although investors received more than $45 billion in coupon payments, bond
maturities and the proceeds from early bond redemptions during June and July,
overall investor demand has diminished. Long-term municipal bond mutual funds
have seen consistent outflows in recent months as the yields of individual
securities have risen faster than those of larger, more diverse mutual funds.
Thus far this year, tax-exempt mutual funds have had net redemptions of more
than $12 billion.
However, the rate at which these redemptions have been occurring has slowed in
recent months. Recent US equity market volatility, especially in the NASDAQ, has
reduced some investor interest in the stock market. This investor interest,
especially earlier this year, had been siphoning away demand for municipal bonds
by retail investors. Also, the demand from property and casualty companies is
expected to increase in the coming months. These firms are becoming more
profitable after experiencing losses in the past few years resulting from a
series of weather-related natural disasters. Yet as positive as the tax-exempt
bond market's technical environment has been for much of this year, investor
response to the reduction in both current and future supply of US Treasury bonds
has been overwhelmingly positive and municipal bond yields have underperformed
their taxable counterparts.
Significantly lower municipal bond yields are still likely to require weaker US
employment growth and consumer spending. The actions taken in recent months by
the Federal Reserve Board should eventually slow US economic growth. Recent
declines in US new home sales are perhaps the first sign that consumer spending
is being slowed by higher interest rates. Until further signs develop, it is
likely that the municipal bond market's current favorable technical position
will dampen significant tax-exempt interest rate volatility and provide a stable
environment for eventual improvement in municipal bond prices.
Portfolio Strategy
During the six months ended July 31, 2000, we continued our strategy of seeking
to limit the Fund's volatility. We maintained a strategy of selling interest
rate-sensitive issues and purchasing bonds with a 6% higher coupon structure
whenever they became available. We were able to increase the Fund's assets that
are rated A or better from 79% of net assets to 84% over the period.
Fiscal Year in Review
At the start of the fiscal year ended July 31, 2000, the municipal bond market
was volatile, resulting from strong economic growth and tightening of monetary
policy by the Federal Reserve Board. By October 1999, we initiated a strategy in
which we sold interest rate-sensitive issues, which had been negatively
affecting the Fund's total returns. As a replacement, we structured premium
coupon bonds (6% or larger) in the new-issue Florida market. These bonds
enhanced the Fund's dividend and helped lessen its volatility. The Fund also
remained fully invested in an effort to enhance shareholder income.
At the end of January 2000, the US Treasury had announced that it would reduce
the amount of Treasury notes and bonds to be auctioned. This helped the Florida
municipal market, as well as all fixed-income markets, to rally. We continued
our strategy of selling interest rate-sensitive issues and purchasing premium
bonds whenever available. New-issue supply in Florida in the first half of 2000
was down 11% compared to the same period a year ago. This hampered our ability
to reduce the Fund's volatility. For the 12 months ended July 31, 2000, the
Fund's total returns for Class A, Class B, Class C and Class D Shares were
+1.66%, +1.14%, +1.04% and +1.55%, respectively, compared to the industry
average of +2.08%, as measured by Lipper Analytical Services, Inc.'s Florida
Municipal Debt Funds Average. (Investment results shown do not reflect sales
charges and would be lower if sales charges were included. Complete performance
information can be found on pages 4 and 5 of this report to shareholders.)
2
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 2000
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 ahead.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Trustee
/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 1, 2000
3
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 2000
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.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
One Year Ended 6/30/00 +0.33% -3.68%
--------------------------------------------------------------------------------
Five Years Ended 6/30/00 +4.74 +3.89
--------------------------------------------------------------------------------
Inception (5/31/91)
through 6/30/00 +5.70 +5.22
--------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
One Year Ended 6/30/00 -0.18% -3.99%
--------------------------------------------------------------------------------
Five Years Ended 6/30/00 +4.21 +4.21
--------------------------------------------------------------------------------
Inception (5/31/91)
through 6/30/00 +5.16 +5.16
--------------------------------------------------------------------------------
* 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*
================================================================================
One Year Ended 6/30/00 -0.28% -1.24%
--------------------------------------------------------------------------------
Five Years Ended 6/30/00 +4.10 +4.10
--------------------------------------------------------------------------------
Inception (10/21/94)
through 6/30/00 +4.94 +4.94
--------------------------------------------------------------------------------
* 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*
================================================================================
One Year Ended 6/30/00 +0.22% -3.78%
--------------------------------------------------------------------------------
Five Years Ended 6/30/00 +4.64 +3.78
--------------------------------------------------------------------------------
Inception (10/21/94)
through 6/30/00 +5.48 +4.72
--------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
4
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 2000
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** 7/00
ML Florida Municipal Bond Fund+--
Class A Shares* $ 9,600 $16,111
ML Florida Municipal Bond Fund+--
Class B Shares* $10,000 $16,021
Lehman Brothers Municipal Bond
Index++ $10,000 $18,390
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** 7/00
ML Florida Municipal Bond Fund+--
Class C Shares* $10,000 $13,333
ML Florida Municipal Bond Fund+--
Class D Shares* $ 9,600 $13,181
Lehman Brothers Municipal Bond
Index++ $10,000 $14,849
* 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 from 10/31/94. Past
performance is not predictive of future performance.
Recent Performance Results*
<TABLE>
<CAPTION>
6 Month 12 Month Since Inception Standardized
As of July 31, 2000 Total Return Total Return Total Return 30-Day Yield
===========================================================================================================
<S> <C> <C> <C> <C>
ML Florida Municipal Bond Fund Class A Shares +6.47% +1.66% +67.81% 4.96%
-----------------------------------------------------------------------------------------------------------
ML Florida Municipal Bond Fund Class B Shares +6.20 +1.14 +60.21 4.66
-----------------------------------------------------------------------------------------------------------
ML Florida Municipal Bond Fund Class C Shares +6.16 +1.04 +33.33 4.57
-----------------------------------------------------------------------------------------------------------
ML Florida Municipal Bond Fund Class D Shares +6.42 +1.55 +37.30 4.87
===========================================================================================================
</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.
5
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 2000
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
Ratings Ratings Amount Issue Value
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alabama--0.6%
----------------------------------------------------------------------------------------------------------------------------------
A1 VMIG1+ $ 1,000 Columbia, Alabama, IDB, PCR, Refunding (Alabama Power
Company Project), VRDN, Series E, 4.25% due 10/01/2022 (a) $ 1,000
----------------------------------------------------------------------------------------------------------------------------------
Florida--96.2%
----------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,095 Altamonte Springs, Florida, Health Facilities Authority, Hospital Revenue Bonds
(Adventist Health Systems--Sunbelt), 7% due 10/01/2014 (e)(g) 1,286
----------------------------------------------------------------------------------------------------------------------------------
NR* NR* 2,000 Arbor Greene, Florida, Community Development District, Special Assessment Revenue
Bonds, 6.50% due 5/01/2007 2,001
----------------------------------------------------------------------------------------------------------------------------------
NR* Aaa 4,140 Brevard County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT, 6.70% due 9/01/2027 (f) 4,290
----------------------------------------------------------------------------------------------------------------------------------
NR* NR* 1,500 Brooks of Bonita Springs II, Florida, Community Development District, Capital
Improvement Revenue Bonds, Series B, 6.60% due 5/01/2007 1,501
----------------------------------------------------------------------------------------------------------------------------------
Broward County, Florida, HFA, M/F Housing Revenue Refunding Bonds
(Lakeside Apartments Project) (d):
AAA NR* 1,100 6.90% due 8/01/2015 1,166
AAA NR* 1,100 7% due 2/01/2025 1,173
----------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,750 Celebration Community Development District, Florida (Special Assessment),
6% due 5/01/2010 (c) 2,877
----------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 7,000 Charlotte County, Florida, Health Care Facilities Revenue Refunding Bonds (Bon Secours
Health System), RIB, 7.366% due 8/26/2027 (g)(h) 7,131
----------------------------------------------------------------------------------------------------------------------------------
AAA NR* 3,000 Charlotte County, Florida, Utility Revenue Refunding Bonds, 5% due 10/01/2023 (i) 2,768
----------------------------------------------------------------------------------------------------------------------------------
A+ A1 7,715 Citrus County, Florida, PCR, Refunding (Florida Power Company--Crystal River), Series A,
6.625% due 1/01/2027 8,036
----------------------------------------------------------------------------------------------------------------------------------
NR* Aaa 1,915 Clay County, Florida, HFA, S/F Mortgage Revenue Bonds (Multi-County), AMT,
6.30% due 10/01/2020 (d)(f) 1,976
----------------------------------------------------------------------------------------------------------------------------------
NR* Aaa 2,420 Dade County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT, Series C,
7.75% due 9/01/2022 (f)(j) 2,470
----------------------------------------------------------------------------------------------------------------------------------
NR* Aaa 130 Dade County, Florida, HFA, S/F Mortgage Revenue Refunding Bonds, AMT, Series B,
7.25% due 9/01/2023 (d)(f) 133
----------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 7,165 Dade County, Florida, Water and Sewer System Revenue Bonds, 5.25% due 10/01/2026 (i) 6,813
----------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 12,000 Escambia County, Florida, HFA, S/F Mortgage Revenue Refunding Bonds, AMT,
7% due 4/01/2028 (d)(f) 12,663
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PORTFOLIO ABBREVIATIONS
To simplify the listings of Merrill Lynch Florida Municipal Bond Fund's
portfolio holdings in the Schedule of Investments, we have abbreviated the names
of many of the securities according to the list below and at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
GO General Obligation Bonds
HFA Housing Finance Agency
IDB Industrial Development Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
S/F Single-Family
VRDN Variable Rate Demand Notes
6
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 2000
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
Ratings Ratings Amount Issue Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Florida (continued)
------------------------------------------------------------------------------------------------------------------------------------
BBB+ Baa1 $11,620 Escambia County, Florida, PCR (Champion International Corporation Project), AMT,
6.90% due 8/01/2022 $ 11,917
------------------------------------------------------------------------------------------------------------------------------------
BBB+ Baa1 1,500 Escambia County, Florida, PCR, Refunding (Champion International Corporation Project),
6.95% due 11/01/2007 1,567
------------------------------------------------------------------------------------------------------------------------------------
NR* NR* 1,000 Fleming Is Plantation, Florida, Community Development District, Special Assessment
Bonds, Series A, 6.30% due 2/01/2005 999
------------------------------------------------------------------------------------------------------------------------------------
NR* Aaa 845 Florida HFA, Home Ownership Revenue Refunding Bonds, AMT, Series G1,
7.90% due 3/01/2022 (f) 864
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 4,020 Florida HFA, Homeowner Mortgage Revenue Bonds, AMT, Series 3, 6.35% due 7/01/2028 (c) 4,144
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 10,420 Florida HFA, Revenue Bonds (Maitland Club Apartments), AMT, Series B-1,
7% due 2/01/2035 (b) 11,049
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 Florida Housing Finance Corporation, Homeowner Mortgage Revenue Refunding Bonds,
AMT, Series 4, 6.25% due 7/01/2022 (g) 2,050
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 7,235 Florida State Board of Education, Lottery Revenue Bonds, Series B, 6.25% due 7/01/2017 (i) 7,855
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 3,600 Florida State Department of General Services, Division of Facilities Management Revenue
Bonds (Florida Facilities Pool), Series A, 5.375% due 9/01/2029 (b) 3,474
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 Florida State Turnpike Authority, Turnpike Revenue Bonds (Department of Transportation),
Series A, 6.25% due 7/01/2029 (i) 5,390
------------------------------------------------------------------------------------------------------------------------------------
NR* NR* 1,000 Heritage Palms, Florida, Community Development District, Capital Improvement Revenue
Bonds, 6.25% due 11/01/2004 997
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,400 Hillsborough County, Florida, School Board, COP, 6% due 7/01/2025 (c) 2,504
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,750 Hillsborough County, Florida, Utility Revenue Refunding Bonds, Series B,
6.50% due 8/01/2016 (c) 2,854
------------------------------------------------------------------------------------------------------------------------------------
NR* NR* 1,000 Indigo, Florida, Community Development District, Capital Improvement Revenue
Refunding Bonds, Series B, 6.40% due 5/01/2006 996
------------------------------------------------------------------------------------------------------------------------------------
AAA NR* 4,920 Jacksonville, Florida, Electric Authority, Electric System Revenue Refunding Bonds,
Series Three, 6% due 10/01/2025 (c) 5,055
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 3,500 Lee County, Florida, Water and Sewer Revenue Bonds, Series A, 5% due 10/01/2024 (b) 3,219
------------------------------------------------------------------------------------------------------------------------------------
NR* NR* 2,000 Lexington Oaks, Florida, Community Development District, Special Assessment Revenue
Bonds, Series B, 6.70% due 5/01/2007 2,016
------------------------------------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 300 Martin County, Florida, PCR, Refunding (Florida Power & Light Company Project), VRDN,
4.30% due 7/15/2022 (a) 300
------------------------------------------------------------------------------------------------------------------------------------
NR* NR* 1,000 Mediterra, Florida, South Community Development District, Capital Improvement
Revenue Bonds, Series B, 6.25% due 5/01/2004 1,000
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,295 Miami Beach, Florida, Parking Revenue Bonds, 5.125% due 9/01/2022 (g) 2,166
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 9,500 Miami--Dade County, Florida, Expressway Authority, Toll System Revenue Bonds,
6.375% due 7/01/2029 (i) 10,351
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 2000
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
Ratings Ratings Amount Issue Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Florida (concluded)
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa $ 5,465 Miami--Dade County, Florida, Special Obligation Revenue Refunding Bonds, Sub-Series A,
5.61%** due 10/01/2019 (c) $ 1,767
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,500 Miami--Dade County, Florida, Water and Sewer Revenue Bonds, Series A,
5% due 10/01/2029 (i) 1,363
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,050 Palm Beach County, Florida, School Board COP, Series A, 6% due 8/01/2023 (i) 2,153
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,080 Pasco County, Florida, Health Facilities Authority, Gross Revenue Bonds (Adventist Health
System--Sunbelt), 7% due 10/01/2014 (e) 2,434
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 3,220 Polk County, Florida, School Board, COP, Series A, 5% due 1/01/2020 (g) 3,000
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 7,500 Sunrise, Florida, Utility System Revenue Refunding Bonds, 5% due 10/01/2028 (b) 6,908
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 4,000 Tampa--Hillsborough County, Florida, Expressway Authority Revenue Refunding Bonds,
5% due 7/01/2022 (b) 3,704
------------------------------------------------------------------------------------------------------------------------------------
Georgia--0.4%
------------------------------------------------------------------------------------------------------------------------------------
A1 VMIG1+ 600 Appling County, Georgia, Development Authority, PCR, Refunding (Georgia Power
Company Plant--Hatch Project), VRDN, 4.30% due 9/01/2029 (a) 600
------------------------------------------------------------------------------------------------------------------------------------
Puerto Rico--1.3%
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 Puerto Rico Commonwealth, GO, Public Improvement, 6% due 7/01/2029 (c) 2,090
------------------------------------------------------------------------------------------------------------------------------------
Texas--0.1%
------------------------------------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 100 Gulf Coast, Texas, Waste Disposal Authority, PCR, Refunding (Amoco Oil Company Project),
VRDN, 4.25% due 10/01/2017 (a) 100
------------------------------------------------------------------------------------------------------------------------------------
Total Investments (Cost--$156,531)--98.6% 162,170
Other Assets Less Liabilities--1.4% 2,353
--------
Net Assets--100.0% $164,523
========
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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,
2000.
(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, 2000.
(i) FGIC Insured.
(j) FHA Insured.
*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.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
8
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 2000
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of July 31, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$156,531,167) .................... $ 162,170,145
Cash ..................................................................... 86,041
Receivables:
Interest ............................................................... $ 2,898,829
Beneficial interest sold ............................................... 94,528 2,993,357
-----------
Prepaid expenses and other assets ........................................ 4,761
-------------
Total assets ............................................................. 165,254,304
-------------
---------------------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Beneficial interest redeemed ........................................... 364,117
Dividends to shareholders .............................................. 154,624
Investment adviser ..................................................... 72,077
Distributor ............................................................ 46,047 636,865
-----------
Accrued expenses and other liabilities ................................... 94,340
-------------
Total liabilities ........................................................ 731,205
-------------
---------------------------------------------------------------------------------------------------------------------------
Net Assets: Net assets ............................................................... $ 164,523,099
=============
---------------------------------------------------------------------------------------------------------------------------
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited number of
Consist of: shares authorized ........................................................ $ 310,867
Class B Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized ........................................................ 1,028,537
Class C Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized ........................................................ 87,491
Class D Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized ........................................................ 264,882
Paid-in capital in excess of par ......................................... 179,974,462
Accumulated realized capital losses on investments--net .................. (22,782,118)
Unrealized appreciation on investments--net .............................. 5,638,978
-------------
Net assets ............................................................... $ 164,523,099
=============
---------------------------------------------------------------------------------------------------------------------------
Net Asset Value: Class A--Based on net assets of $30,242,586 and 3,108,667 shares
of beneficial interest outstanding ....................................... $ 9.73
=============
Class B--Based on net assets of $100,058,740 and 10,285,372 shares
of beneficial interest outstanding ....................................... $ 9.73
=============
Class C--Based on net assets of $8,496,630 and 874,906 shares
of beneficial interest outstanding ....................................... $ 9.71
=============
Class D--Based on net assets of $25,725,143 and 2,648,818 shares
of beneficial interest outstanding ....................................... $ 9.71
=============
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 2000
FINANCIAL INFORMATION (continued)
Statement of Operations
<TABLE>
<CAPTION>
For the Year Ended
July 31, 2000
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income: Interest and amortization of premium and discount earned $ 10,783,222
---------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees ............................... $1,008,399
Account maintenance and distribution fees--Class B ..... 565,894
Professional fees ...................................... 82,284
Accounting services .................................... 77,888
Account maintenance and distribution fees--Class C ..... 54,089
Transfer agent fees--Class B ........................... 45,823
Account maintenance fees--Class D ...................... 28,505
Trustees' fees and expenses ............................ 13,245
Custodian fees ......................................... 12,570
Transfer agent fees--Class A ........................... 10,770
Printing and shareholder reports ....................... 9,942
Transfer agent fees--Class D ........................... 9,384
Pricing fees ........................................... 5,335
Transfer agent fees--Class C ........................... 3,548
Registration fees ...................................... 1,550
Other .................................................. 6,920
----------
Total expenses ......................................... 1,936,146
------------
Investment income--net ................................. 8,847,076
------------
---------------------------------------------------------------------------------------------------------
Realized & Realized loss on investments--net ...................... (8,826,187)
Unrealized Gain Change in unrealized appreciation on investments--net .. 538,311
(Loss) on ------------
Investments--Net: Net Increase in Net Assets Resulting from Operations ... $ 559,200
============
---------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Year Ended July 31,
-------------------------------
Increase (Decrease) in Net Assets: 2000 1999
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations: Investment income--net ............................................ $ 8,847,076 $ 10,368,688
Realized gain (loss) on investments--net .......................... (8,826,187) 817,507
Change in unrealized appreciation on investments--net ............. 538,311 (8,567,351)
------------- -------------
Net increase in net assets resulting from operations .............. 559,200 2,618,844
------------- -------------
--------------------------------------------------------------------------------------------------------------------------
Dividends to Investment income--net:
Shareholders: Class A ......................................................... (1,692,792) (2,053,636)
Class B ......................................................... (5,292,915) (6,258,095)
Class C ......................................................... (412,755) (448,971)
Class D ......................................................... (1,448,614) (1,607,986)
------------- -------------
Net decrease in net assets resulting from dividends to shareholders (8,847,076) (10,368,688)
------------- -------------
--------------------------------------------------------------------------------------------------------------------------
Beneficial Interest Net increase (decrease) in net assets derived from beneficial
Transactions: interest transactions ............................................. (47,289,338) 7,013,123
------------- -------------
--------------------------------------------------------------------------------------------------------------------------
Net Assets: Total decrease in net assets ...................................... (55,577,214) (736,721)
Beginning of year ................................................. 220,100,313 220,837,034
------------- -------------
End of year ....................................................... $ 164,523,099 $ 220,100,313
============= =============
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 2000
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: 2000 1999 1998 1997 1996
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year ....... $ 10.08 $ 10.41 $ 10.37 $ 9.94 $ 9.86
Operating ------- ------- ------- ------- -------
Performance: Investment income--net ................... .50 .50 .53 .53 .53
Realized and unrealized gain (loss) on
investments--net ......................... (.35) (.33) .04 .43 .08
------- ------- ------- ------- -------
Total from investment operations ......... .15 .17 .57 .96 .61
------- ------- ------- ------- -------
Less dividends from investment income--net (.50) (.50) (.53) (.53) (.53)
------- ------- ------- ------- -------
Net asset value, end of year ............. $ 9.73 $ 10.08 $ 10.41 $ 10.37 $ 9.94
======= ======= ======= ======= =======
--------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ....... 1.66% 1.57% 5.61% 9.99% 6.30%
Return:* ======= ======= ======= ======= =======
--------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses ................................. .70% .72% .69% .69% .68%
Net Assets: ======= ======= ======= ======= =======
Investment income--net ................... 5.17% 4.80% 5.06% 5.31% 5.30%
======= ======= ======= ======= =======
--------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of year (in thousands) ... $30,242 $38,214 $44,173 $47,598 $46,765
Data: ======= ======= ======= ======= =======
Portfolio turnover ....................... 79.33% 120.54% 101.75% 84.69% 162.83%
======= ======= ======= ======= =======
--------------------------------------------------------------------------------------------------------------------------
</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, 2000
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: 2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year ....... $ 10.08 $ 10.41 $ 10.37 $ 9.94 $ 9.86
Operating -------- -------- -------- -------- --------
Performance: Investment income--net ................... .45 .45 .47 .48 .48
Realized and unrealized gain (loss) on
investments--net ......................... (.35) (.33) .04 .43 .08
-------- -------- -------- -------- --------
Total from investment operations ......... .10 .12 .51 .91 .56
-------- -------- -------- -------- --------
Less dividends from investment income--net (.45) (.45) (.47) (.48) (.48)
-------- -------- -------- -------- --------
Net asset value, end of year ............. $ 9.73 $ 10.08 $ 10.41 $ 10.37 $ 9.94
======== ======== ======== ======== ========
----------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ....... 1.14% 1.06% 5.07% 9.43% 5.76%
Return:* ======== ======== ======== ======== ========
----------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses ................................. 1.20% 1.23% 1.20% 1.20% 1.18%
Net Assets: ======== ======== ======== ======== ========
Investment income--net ................... 4.66% 4.29% 4.55% 4.80% 4.79%
======== ======== ======== ======== ========
----------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of year (in thousands) ... $100,059 $133,276 $143,496 $160,562 $195,097
Data: ======== ======== ======== ======== ========
Portfolio turnover ....................... 79.33% 120.54% 101.75% 84.69% 162.83%
======== ======== ======== ======== ========
----------------------------------------------------------------------------------------------------------------------------
</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, 2000
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class C
The following per share data and ratios have been derived --------------------------------------------------------------------
from information provided in the financial statements. For the Year Ended July 31,
--------------------------------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year ....... $ 10.06 $ 10.39 $ 10.35 $ 9.92 $ 9.85
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net ................... .44 .43 .46 .47 .47
Realized and unrealized gain (loss) on
investments--net ......................... (.35) (.33) .04 .43 .07
---------- ---------- ---------- ---------- ----------
Total from investment operations ......... .09 .10 .50 .90 .54
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.44) (.43) (.46) (.47) (.47)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ............. $ 9.71 $ 10.06 $ 10.39 $ 10.35 $ 9.92
========== ========== ========== ========== ==========
------------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ....... 1.04% .95% 4.97% 9.33% 5.54%
Return:* ========== ========== ========== ========== ==========
------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses ................................. 1.30% 1.33% 1.30% 1.30% 1.28%
Net Assets: ========== ========== ========== ========== ==========
Investment income--net ................... 4.57% 4.19% 4.44% 4.70% 4.70%
========== ========== ========== ========== ==========
------------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of year (in thousands) ... $ 8,497 $ 10,897 $ 8,900 $ 5,976 $ 5,738
Data: ========== ========== ========== ========== ==========
Portfolio turnover ....................... 79.33% 120.54% 101.75% 84.69% 162.83%
========== ========== ========== ========== ==========
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Total investment returns exclude the effects of sales
charges.
See Notes to Financial Statements.
13
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 2000
FINANCIAL INFORMATION (concluded)
Financial Highlights (concluded)
<TABLE>
<CAPTION>
Class D
The following per share data and ratios have been derived -------------------------------------------------------
from information provided in the financial statements. For the Year Ended July 31,
-------------------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year ....... $ 10.06 $ 10.39 $ 10.35 $ 9.92 $ 9.85
Operating ------- ------- ------- ------- -------
Performance: Investment income--net ................... .49 .49 .52 .52 .52
Realized and unrealized gain (loss) on
investments--net ......................... (.35) (.33) .04 .43 .07
------- ------- ------- ------- -------
Total from investment operations ......... .14 .16 .56 .95 .59
------- ------- ------- ------- -------
Less dividends from investment income--net (.49) (.49) (.52) (.52) (.52)
------- ------- ------- ------- -------
Net asset value, end of year ............. $ 9.71 $ 10.06 $ 10.39 $ 10.35 $ 9.92
======= ======= ======= ======= =======
-----------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ....... 1.55% 1.46% 5.51% 9.89% 6.09%
Return:* ======= ======= ======= ======= =======
-----------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses ................................. .80% .82% .79% .79% .78%
Net Assets: ======= ======= ======= ======= =======
Investment income--net ................... 5.07% 4.69% 4.95% 5.21% 5.20%
======= ======= ======= ======= =======
-----------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of year (in thousands) ... $25,725 $37,713 $24,268 $19,511 $15,231
Data: ======= ======= ======= ======= =======
Portfolio turnover ....................... 79.33% 120.54% 101.75% 84.69% 162.83%
======= ======= ======= ======= =======
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Total investment returns exclude the effects of sales
charges.
See Notes to Financial Statements.
14
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 2000
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 accounting principles generally accepted in the United States of America,
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
investment strategies to increase or decrease the level of risk to which the
Fund is exposed more quickly and efficiently than transactions in other types of
instruments. Losses may arise due to changes in the value of the contract or if
the counterparty does not perform under the contract.
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) Dividends and distributions--Dividends from net investment income are
declared daily and paid
15
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 2000
NOTES TO FINANCIAL STATEMENTS (continued)
monthly. Distributions of capital gains are recorded on the ex-dividend dates.
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 FAM Distributors, Inc.
("FAMD" or the "Distributor"), which is a wholly-owned subsidiary of Merrill
Lynch Group, Inc.
FAM is responsible for the management of 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, 2000, FAMD earned underwriting discounts and MLPF&S
earned dealer concessions on sales of the Fund's Class A and Class D Shares as
follows:
--------------------------------------------------------------------------------
FAMD MLPF&S
--------------------------------------------------------------------------------
Class A .................................... $387 $2,707
Class D .................................... $654 $6,355
--------------------------------------------------------------------------------
For the year ended July 31, 2000, MLPF&S received contingent deferred sales
charges of $201,454 and $6,830 relating to transactions in Class B and Class C
Shares, respectively. Furthermore, MLPF&S received contingent deferred sales
charges of $368 and $38,457 relating to transactions subject to front-end sales
charge waivers in Class A and D Shares, respectively.
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, FAMD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended July 31, 2000 were $139,764,057 and $179,349,255, respectively.
Net realized gains (losses) for the year ended July 31, 2000 and net unrealized
gains as of July 31, 2000 were as follows:
--------------------------------------------------------------------------------
Realized Unrealized
Gains (Losses) Gains
--------------------------------------------------------------------------------
Long-term investments ................... $(9,147,642) $ 5,638,978
Financial futures contracts ............. 321,455 --
----------- -----------
Total ................................... $(8,826,187) $ 5,638,978
=========== ===========
--------------------------------------------------------------------------------
As of July 31, 2000, net unrealized appreciation for Federal income tax purposes
aggregated $5,638,978, of which $5,808,913 related to appreciated securities and
$169,935 related to depreciated securities. The aggregate cost of investments at
July 31, 2000 for Federal income tax purposes was $156,531,167.
16
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 2000
4. Beneficial Interest Transactions:
Net increase (decrease) in net assets derived from beneficial interest
transactions was $(47,289,338) and $7,013,123 for the years ended July 31, 2000
and July 31, 1999, respectively.
Transactions in shares of beneficial interest for each class were as follows:
--------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended July 31, 2000 Shares Amount
--------------------------------------------------------------------------------
Shares sold ............................ 451,226 $ 4,305,231
Shares issued to shareholders
in reinvestment of dividends ........... 81,237 778,771
---------- ------------
Total issued ........................... 532,463 5,084,002
Shares redeemed ........................ (1,215,608) (11,631,184)
---------- ------------
Net decrease ........................... (683,145) $ (6,547,182)
========== ============
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
--------------------------------------------------------------------------------
Shares sold ............................ 623,802 $ 6,549,823
Shares issued to shareholders
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 B Shares for the Year Dollar
Ended July 31, 2000 Shares Amount
--------------------------------------------------------------------------------
Shares sold ............................ 1,324,873 $ 12,720,091
Shares issued to shareholders
in reinvestment of dividends ........... 195,149 1,870,590
---------- ------------
Total issued ........................... 1,520,022 14,590,681
Automatic conversion
of shares .............................. (46,645) (447,013)
Shares redeemed ........................ (4,412,406) (42,262,911)
---------- ------------
Net decrease ........................... (2,939,029) $(28,119,243)
========== ============
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
--------------------------------------------------------------------------------
Shares sold ............................ 2,641,615 $ 27,704,661
Shares issued to shareholders
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 C Shares for the Year Dollar
Ended July 31, 2000 Shares Amount
--------------------------------------------------------------------------------
Shares sold .............................. 171,374 $ 1,646,717
Shares issued to shareholders
in reinvestment of dividends ............. 20,001 191,440
-------- -----------
Total issued ............................. 191,375 1,838,157
Shares redeemed .......................... (399,608) (3,841,682)
-------- -----------
Net decrease ............................. (208,233) $(2,003,525)
======== ============
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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 D Shares for the Year Dollar
Ended July 31, 2000 Shares Amount
--------------------------------------------------------------------------------
Shares sold ............................ 828,617 $ 7,936,635
Automatic conversion
of shares .............................. 46,718 447,013
Shares issued to shareholders
in reinvestment of dividends ........... 46,670 446,604
---------- ------------
Total issued ........................... 922,005 8,830,252
Shares redeemed ........................ (2,021,756) (19,449,640)
---------- ------------
Net decrease ........................... (1,099,751) $(10,619,388)
========== ============
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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
========== ============
--------------------------------------------------------------------------------
5. Short-Term Borrowings:
On December 3, 1999, the Fund, along with certain other funds managed by FAM and
its affiliates, entered into a one-year, unsecured $1,000,000,000
17
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
credit agreement with The Bank of New York and other lenders. The funds may
borrow money for temporary or emergency purposes to meet shareholder
redemptions. Each fund may borrow up to the maximum amount allowable under the
fund's current prospectus and statement of additional information, subject to
various other legal, regulatory or contractual limits. The funds collectively
pay a commitment fee of .09% per annum on the available portion of the facility.
Amounts borrowed under the facility bear interest at the Federal Funds rate plus
.50%. The Fund did not borrow from the facility during the year ended July 31,
2000.
6. Capital Loss Carryforward:
At July 31, 2000, the Fund had a capital loss carryforward of approximately
$15,786,000, of which $9,378,000 expires in 2003, $2,276,000 expires in 2004 and
$4,132,000 expires in 2003. This amount will be available to offset like amounts
of any future taxable gains.
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, 2000, the
related statements of operations for the year then ended and changes in net
assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years in the five-year period then ended.
These financial statements and the financial highlights are the responsibility
of the 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned at July 31, 2000 by correspondence with the custodian. 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, 2000, the results of its operations, the changes in its net
assets, and the financial highlights for the respective stated periods in
conformity with accounting principles generally accepted in the United States of
America.
Deloitte & Touche LLP
Princeton, New Jersey
September 5, 2000
18
<PAGE>
Merrill Lynch Florida Municipal Bond Fund July 31, 2000
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, 2000 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.
OFFICERS AND TRUSTEES
Terry K. Glenn, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Arthur Zeikel, Trustee
Vincent R. Giordano, Senior Vice President
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--7/00
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