MERRILL LYNCH
CALIFORNIA
INSURED
MUNICIPAL
BOND FUND
FUND LOGO
Annual Report
August 31, 1996
Officers and Trustees
Arthur Zeikel, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Walter C. O'Connor, Vice President
Gerald M. Richard, Treasurer
Jerry Weiss, Secretary
<PAGE>
Custodian
The Bank of New York
90 Washington Street, 12th Floor
New York, NY 10286
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
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
California Insured
Municipal Bond Fund
Merrill Lynch California
Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
<PAGE>
TO OUR SHAREHOLDERS
The Municipal Market Environment
Municipal bond yields rose over the six-month period ended August
31, 1996. Investors became increasingly alarmed that earlier
forecasts of continued moderate growth were overly optimistic. As
indications of stronger growth were released, particularly the
strong employment reports released beginning in March, fears of
associated inflationary pressures mounted and yields rose in
response. By May and June, long-term municipal bond yields rose into
the 6.25%--6.30% range.
However, in early July the combination of the Federal Reserve Board
suggesting that growth was expected to slow later in 1996 and a
temporary stock market correction allowed municipal bond yields to
fall as investors scrambled to purchase relatively scarce
securities. As measured by the Bond Buyer Revenue Bond Index, long-
term, A-rated uninsured tax-exempt bonds yielded 6.09% at August 31,
1996, an increase of over 20 basis points (0.20%) in the last six
months. Long-term US Treasury bond yields rose significantly higher
over the same period. By August 31, 1996, yields on US Treasury
bonds increased almost 65 basis points to end the six-month period
at 7.11%.
The municipal bond market's recent outperformance as compared to its
taxable counterpart was largely the result of two principal factors.
First, much of the concern in the tax-exempt market regarding the
potential loss of the inherent tax-advantage of the municipal bonds
dissipated. For much of 1995, various tax proposals, such as the
flat tax or national sales tax, were put forward either to reduce
the national debt or reform the current tax system. Most of these
proposals would have severely limited the tax advantages enjoyed by
the municipal bond market. However, in February 1996, the Kemp
Commission released its findings regarding various tax reform
proposals. While noting that numerous changes should be made, no
mention of curtailing or stopping municipal bonds' current favored
tax status was made.
The second major factor leading to the municipal bond market's
recent outperformance was the return of a more favorable technical
environment. The rate of increase in new bond issuance recently
slowed. Over the last 12 months, approximately $175 billion in long-
term municipal securities were issued, an increase of over 25% as
compared to the same period a year earlier. Much of this increase
was the result of issuers seeking to refinance their existing higher-
coupon debt as interest rates declined in 1995 and early 1996. As
interest rates rose, these financings became increasingly
economically impractical, and issuance declined. Over the last six
months, less than $90 billion in long-term tax-exempt securities
were underwritten, an increase of 12% versus the comparable period a
year earlier. Only $43 billion in tax-exempt securities were issued
in the last three months, a 6% decline in issuance compared to the
August 31, 1995 quarter.
<PAGE>
At the same time investor demand remained consistently strong. With
nominal new-issue yields above 6%, retail investor interest was
steady. Additionally, investors received over $50 billion this June
and July in assets derived from coupon income, bond maturities, and
proceeds from early redemptions. Annual new bond issuance declined
in recent years and is expected to remain below levels seen in the
early 1990s. Consequently, as the higher-coupon bonds issued in the
early-to-mid 1980s were redeemed at their first optional call dates,
the total number of outstanding tax-exempt bonds has declined. This
combination of a declining net supply and significant amounts of
assets available for investment helped maintain investor demand in
recent months.
It is unlikely that the municipal bond market will continue to
significantly outperform US Treasury securities in the near future.
The tax-exempt bond market's recent performance led to the yield
ratio between long-term taxable and tax-exempt securities falling
from in excess of 90% to approximately 85%. While historically still
very attractive, some institutional investors, particularly
short-term traders, began to view the tax-exempt bond market's
recent outperformance as an opportunity to sell a relatively
expensive asset. However, to the long-term investor, such a sale
would represent the loss of an attractively priced asset which may
not be easily replaced given the relative scarcity of municipal
bonds under present supply conditions.
Looking ahead, no clear consensus for the direction of interest
rates currently exists. Perhaps, the primary focus going forward
will be the extent to which the increase in interest rates seen thus
far in 1996 will negatively impact future economic growth.
Should growth slow in the interest rate-sensitive sectors of the
economy, like housing, auto, and consumer spending, as many
economists assert is likely, then bond yields are likely to decline.
Under such a scenario, the municipal bond market's performance is
likely to closely mirror that of the US Treasury bond market.
Fiscal Year in Review
Our investment strategy for Merrill Lynch California Insured
Municipal Bond Fund focuses on seeking to provide current yield
while being mindful of capital appreciation. The portfolio has a
core position of securities that provide an attractive current yield
because they originate in a higher interest rate environment. In our
ongoing attempt to bolster the Fund's total return, we follow a
research-intensive investment process in order to identify new
municipal issues that could be purchased to achieve a greater
current yield within the quality parameters set forth by the Fund's
prospectus and our internal policies.
<PAGE>
During the 12-month period ended August 31, 1996, the municipal bond
market was characterized by tremendous price volatility as slow
growth and low inflation forecasts gave way to fears of an
accelerating economy. We negotiated these turbulent market swings by
initiating a defensively oriented investment strategy earlier in the
year seeking to stress an above-average industry current yield while
maintaining a lower level of sensitivity to the general rising
direction of interest rates. Cash equivalent reserves in the
portfolio fluctuated between 8% and 12% of total assets. A large
portion of assets committed to longer maturities currently have
coupons structured for income rather than price appreciation. This
strategy served the portfolio well during this particularly volatile
period for the fixed-income markets. However, the market's recent
volatility creates opportunities. Therefore, we are monitoring the
US economic backdrop and the overall valuation of municipal rates,
to find a re-entry point at which time we would take a more
aggressive approach. We are seeking higher-yielding investment
opportunities for the Fund within the credit limits detailed by the
prospectus.
In Conclusion
We appreciate your investment in Merrill Lynch California Insured
Municipal Bond Fund, and we look forward to assisting you with your
financial needs in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
<PAGE>
(Walter C. O'Connor)
Walter C. O'Connor
Vice President and Portfolio Manager
September 30, 1996
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:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 4% and bear no ongoing distribution or account maintenance
fees. Class A Shares are available only to eligible investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.25% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 10 years. (There is no initial
sales charge for automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.35% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 4% and an
account maintenance fee of 0.10% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<PAGE>
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
8/31/96 5/31/96 8/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $9.84 $9.68 $9.65 +1.97% +1.65%
Class B Shares* 9.84 9.68 9.65 +1.97 +1.65
Class C Shares* 9.84 9.67 9.64 +2.07 +1.76
Class D Shares* 9.85 9.68 9.65 +2.07 +1.76
Class A Shares--Total Return* +7.44(1) +2.97(2)
Class B Shares--Total Return* +6.89(3) +2.84(4)
Class C Shares--Total Return* +6.90(5) +2.92(6)
Class D Shares--Total Return* +7.44(7) +3.05(8)
Class A Shares--Standardized 30-day Yield 4.94%
Class B Shares--Standardized 30-day Yield 4.64%
Class C Shares--Standardized 30-day Yield 4.54%
Class D Shares--Standardized 30-day Yield 4.85%
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
(1)Percent change includes reinvestment of $0.521 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.124 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.471 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.112 per share ordinary
income dividends.
(5)Percent change includes reinvestment of $0.461 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.109 per share ordinary
income dividends.
(7)Percent change includes reinvestment of $0.512 per share ordinary
income dividends.
(8)Percent change includes reinvestment of $0.122 per share ordinary
income dividends.
</TABLE>
PERFORMANCE DATA (continued)
Total Return Based on a $10,000 Investment--Class A Shares and Class
B Shares
<PAGE>
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:
2/26/93** 8/96
ML California Insured Municipal Bond
Fund++--Class A Shares* $ 9,600 $11,394
ML California Insured Municipal Bond
Fund++--Class B Shares* $10,000 $11,561
Lehman Brothers Municipal Bond Index++++ $10,000 $11,984
Total Return Based on a $10,000 Investment--Class C Shares and Class
D Shares
A line graph depicting the growth of an investment in the Fund's
Class 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** 8/96
ML California Insured Municipal Bond
Fund++--Class C Shares* $10,000 $11,693
ML California Insured Municipal Bond
Fund++--Class D Shares* $ 9,600 $11,345
Lehman Brothers Municipal Bond Index++++ $10,000 $11,837
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of Operations.
++ML California Insured Municipal Bond Fund invests primarily in
long-term investment-grade obligations issued by or on behalf
of the State of California, its political subdivisions, agencies
and instrumentalities and obligations of other qualifying issuers.
++++This unmanaged Index consists of long-term revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds.
Past performance is not predictive of future performance.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/96 +7.33% +3.04%
Inception (2/26/93)
through 6/30/96 +4.66 +3.39
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/96 +6.78% +2.78%
Inception (2/26/93)
through 6/30/96 +4.14 +3.87
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/96 +6.68% +5.68%
Inception (10/21/94)
through 6/30/96 +8.45 +8.45
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/96 +7.11% +2.83%
Inception (10/21/94)
through 6/30/96 +9.07 +6.47
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<TABLE>
PERFORMANCE DATA (concluded)
<CAPTION>
Performance Summary--Class A Shares
<PAGE>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
2/26/93--12/31/93 $10.00 $10.25 -- $0.450 + 7.18%
1994 10.25 8.97 -- 0.518 - 7.54
1995 8.97 10.10 -- 0.514 +18.73
1/1/96--8/31/96 10.10 9.84 -- 0.333 + 0.87
------
Total $1.815
Cumulative total return as of 8/31/96: +18.69%**
</TABLE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change***
<S> <C> <C> <C> <C> <C>
2/26/93--12/31/93 $10.00 $10.26 -- $0.407 + 6.83%
1994 10.26 8.98 -- 0.471 - 7.99
1995 8.98 10.11 -- 0.465 +18.12
1/1/96--8/31/96 10.11 9.84 -- 0.301 + 0.43
------
Total $1.644
Cumulative total return as of 8/31/96: +16.60%***
</TABLE>
<TABLE>
Performance Summary--Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change***
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $9.19 $ 8.97 -- $0.091 - 1.38%
1995 8.97 10.09 -- 0.455 +17.90
1/1/96--8/31/96 10.09 9.84 -- 0.294 + 0.56
------
Total $0.840
Cumulative total return as of 8/31/96: +16.93%***
</TABLE>
<TABLE>
Performance Summary--Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $9.19 $ 8.98 -- $0.101 - 1.16%
1995 8.98 10.11 -- 0.505 +18.60
1/1/96--8/31/96 10.11 9.85 -- 0.327 + 0.81
------
Total $0.933
Cumulative total return as of 8/31/96: +18.17%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
include sales charge; results would be lower if sales charge was
included.
***Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
PORTFOLIO ABBREVIATIONS
To simplify the listings of Merrill Lynch California Insured
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
INFLOS Inverse Floating Rate Municipal Bonds
RITES Residual Interest Tax-Exempt Securities
RITR Residual Interest Trust Receipts
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<PAGE>
California--97.9%
<S> <S> <C> <S> <C>
AAA Aaa $1,000 Anaheim, California, Public Financing Authority, Tax Allocation Revenue
Bonds, RITES, 9.03% due 12/28/2018 (d)(e) $ 1,117
AAA Aaa 1,000 Brea, California, Redevelopment Agency, Tax Allocation Bonds (Redevelopment
Project A-B), 6.125% due 8/01/2013 (d) 1,034
AAA Aaa 1,290 California Fairs Financing Authority Revenue Bonds, 6.50% due 7/01/2011 (f) 1,376
AA- Aa 1,965 California HFA, Home Mortgage Revenue Bonds, AMT, Series F-1, 7% due 8/01/2026 2,064
California Health Facilities Financing Authority Revenue Bonds, Series A:
A1+ VMIG1++ 1,200 Refunding (Catholic West), VRDN, Series D, 3.25% due 7/01/2018 (a)(d) 1,200
BB Aaa 2,000 Refunding (Good Samaritan Health System), 7.50% due 5/01/2000 (g) 2,235
AAA Aaa 1,050 Refunding (Kaiser), 6.25% due 3/01/2021 (b) 1,071
AAA Aaa 2,000 (Scripps Memorial Hospital), 6.375% due 10/01/2022 (d) 2,090
A1+ VMIG1++ 1,300 (Scripps Memorial Hospital), VRDN, 3.35% due 12/01/2005 (a)(d) 1,300
California Pollution Control Financing Authority, Resource Recovery Revenue
Bonds, VRDN, AMT (a):
NR* NR* 600 (Delano Project), 3.50% due 8/01/2019 600
NR* P1 1,100 (Delano Project), Series 1991, 3.50% due 8/01/2019 1,100
NR* Aa3 100 (Honey Lake Power Project), 3.50% due 9/01/2018 100
NR* P1 100 Refunding (Ultra Power Malaga Project), Series B, 3.55% due 4/01/2017 100
A1+ VMIG1++ 100 California Pollution Control Financing Authority, Solid Waste Disposal
Revenue Bonds (Shell Oil Co.-Martinez Project), VRDN, AMT, Series B, 3.50%
due 12/01/2024 (a) 100
California State Public Works Board, Lease Revenue Bonds, Series A:
A A 2,000 (Department of Corrections-Monterey County Soledad II), 7% due 11/01/2019 2,199
AAA Aaa 4,000 (Various University of California Projects), 6.40% due 12/01/2016 (b) 4,236
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
California (continued)
<S> <S> <C> <S> <C>
AAA Aaa $3,500 California State, Veterans' Bonds, AMT, UT, Series BD, BE and BF, 6.375%
due 2/01/2027(b) $ 3,540
Central Coast Water Authority, California, Revenue Bonds (State Water
Project Regional Facilities) (b):
AAA Aaa 4,090 6.35% due 10/01/2007 4,399
AAA Aaa 2,360 6.50% due 10/01/2014 2,535
AAA Aaa 1,200 Cucamonga County, California, Water District Facilities Refinancing Bonds,
COP, 6.50% due 9/01/2022 (c) 1,279
<PAGE>
AAA Aaa 4,000 El Cajon, California, Redevelopment Agency, Tax Allocation Bonds (El Cajon
Redevelopment Project), 6.60% due 10/01/2022 (b) 4,279
AAA Aaa 2,500 Fresno, California, Sewer Revenue Bonds (Fowler Avenue Project), Series A,
6.25% due 8/01/2011 (b) 2,611
AAA Aaa 2,500 Industry, California, Urban Development Agency Refunding Bonds
(Transportation District Industrial Redevelopment Project 2), 6.50% due
11/01/2016 (d) 2,718
AA- Aa 2,000 Los Angeles, California, Department of Water and Power, Electric Plant
Revenue Bonds, Registered RITR, 8.327% due 2/01/2020 (e) 2,137
AAA Aaa 2,000 Los Angeles, California, Harbor Department Revenue Bonds, AMT, Series B,
6.625% due 8/01/2019 (b) 2,107
AAA Aaa 1,000 Los Angeles County, California, COP (Correctional Facilities Project),
6.50% due 9/01/2000 (d)(g) 1,091
AAA Aaa 3,000 Los Angeles County, California, Public Works Financing Authority, Lease
Revenue Refunding Bonds, Series A, 6% due 9/01/2006 (d) 3,200
AAA Aaa 1,000 Mesa, California, Consolidated Water District, COP (Water Project),
6.375% due 3/15/2012 (c) 1,051
AAA Aaa 2,140 Mount Diablo, California, Unified School District, Community Facilities-
Special District Tax No. 1 Bonds, 6.30% due 8/01/2022 (b) 2,222
AAA Aaa 2,500 Mountain View, California, Capital Improvements Financing Authority
Revenue Bonds (City Hall Community Theatre), 6.50% due 8/01/2016 (d) 2,662
AAA Aaa 3,500 Northern California Public Power Agency, Revenue Refunding Bonds
(Hydroelectric Project No. 1), Series A, 6.25% due 7/01/2012 (d) 3,658
AAA Aaa 2,000 Oakland, California, Joint Powers Financing Authority, Lease Revenue Bonds
(Oakland Administration Buildings), 5.90% due 8/01/2016 (b) 2,000
AAA Aaa 3,000 Orchard, California, School District, GO, UT, Series A, 6.50% due
8/01/2019 (c) 3,198
AAA Aaa 1,500 Rancho, California, Water District Financing Authority, Revenue Refunding
Bonds, 6.25% due 8/01/2012 (c) 1,565
Sacramento, California, Municipal Utility District, Electric Revenue Bonds:
AAA Aaa 2,000 INFLOS, 8.717% due 8/15/2018 (c)(e) 2,095
AAA Aaa 3,000 Series B, 6.375% due 8/15/2022 (d) 3,138
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
California (concluded)
<S> <S> <C> <S> <C>
San Francisco, California, City and County Airport Commission,
International Airport, Revenue Refunding Bonds, Second Series:
AAA Aaa $3,750 First Issue, 6.50% due 5/01/2013 (b) $ 4,019
AAA Aaa 2,500 Second Issue, 6.75% due 5/01/2020 (d) 2,728
Southern California Public Power Authority Revenue Bonds (b):
AAA Aaa 2,500 (Mead Phoenix Project), Series A, 5% due 7/01/2017 2,246
A1+ VMIG1++ 600 (Southern Transmission Project),VRDN, 3.20% due 7/01/2019 (a) 600
Stockton, California, COP, Revenue Bonds (Wastewater Treatment Plant
Expansion), Series A (c):
AAA Aaa 2,500 6.70% due 9/01/2014 2,721
AAA Aaa 2,500 6.80% due 9/01/2024 2,739
University of California Revenue Bonds (Multiple Purpose Projects),
Series D (d):
AAA Aaa 3,685 6.30% due 9/01/2015 3,862
AAA Aaa 2,250 6.375% due 9/01/2019 2,354
Total Investments(Cost--$92,348)--97.9% 94,676
Other Assets Less Liabilities--2.1% 2,004
-------
Net Assets--100.0% $96,680
=======
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at August 31, 1996.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)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 August 31, 1996.
(f)FSA Insured.
(g)Prerefunded.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of August 31, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$92,348,094) (Note 1a) $ 94,676,333
Cash 14,286
Receivables:
Interest $ 1,467,803
Beneficial interest sold 862,963 2,330,766
------------
Deferred organization expenses (Note 1e) 17,023
Prepaid registered fees and other assets (Note 1e) 33,605
------------
Total assets 97,072,013
------------
Liabilities: Payables:
Beneficial interest redeemed 142,056
Dividends to shareholders (Note 1f) 86,436
Distributor (Note 2) 36,096
Investment adviser (Note 2) 21,883 286,471
------------
Accrued expenses and other liabilities 105,899
------------
Total liabilities 392,370
------------
Net Assets: Net assets $ 96,679,643
============
Net Assets Class A Shares of beneficial interest, $.10 par value,
Consist of: unlimited number of shares authorized $ 144,141
Class B Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 744,817
Class C Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 49,831
Class D Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 43,707
Paid-in capital in excess of par 97,533,770
Accumulated realized capital losses on investments--net (Note 5) (4,164,862)
Unrealized appreciation on investments--net 2,328,239
------------
Net assets $ 96,679,643
============
<PAGE>
Net Asset Value: Class A--Based on net assets of $14,182,528 and 1,441,410
shares of beneficial interest outstanding $ 9.84
============
Class B--Based on net assets of $73,292,287 and 7,448,173
shares of beneficial interest outstanding $ 9.84
============
Class C--Based on net assets of $4,901,025 and 498,310
shares of beneficial interest outstanding $ 9.84
============
Class D--Based on net assets of $4,303,803 and 437,072
shares of beneficial interest outstanding $ 9.85
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Statement of Operations
For the Year Ended
August 31, 1996
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 5,365,221
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 517,728
Account maintenance and distribution fees--Class B (Note 2) 365,327
Registration fees (Note 1e) 70,662
Professional fees 51,077
Printing and shareholder reports 47,501
Accounting services (Note 2) 46,382
Transfer agent fees--Class B (Note 2) 29,916
Account maintenance and distribution fees--Class C (Note 2) 21,063
Custodian fees 14,925
Amortization of organization expenses (Note 1e) 11,474
Trustees' fees and expenses 8,879
Transfer agent fees--Class A (Note 2) 4,856
Pricing fees 4,836
Account maintenance fees--Class D (Note 2) 3,122
Transfer agent fees--Class C (Note 2) 1,406
Transfer agent fees--Class D (Note 2) 1,039
------------
Total expenses before reimbursement 1,200,193
Reimbursement of expenses (Note 2) (346,114)
------------
Total expenses after reimbursement 854,079
------------
Investment income--net 4,511,142
------------
<PAGE>
Realized & Realized gain on investments--net 605,747
Unrealized Change in unrealized appreciation on investments--net 1,181,849
Gain on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 6,298,738
(Notes 1b, 1d & 3): ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended August 31,
Increase (Decrease) in Net Assets: 1996 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 4,511,142 $ 4,444,002
Realized gain (loss) on investments--net 605,747 (2,217,617)
Change in unrealized appreciation/depreciation on investments--net 1,181,849 2,985,447
------------ ------------
Net increase in net assets resulting from operations 6,298,738 5,211,832
------------ ------------
Dividends to Investment income--net:
Shareholders Class A (752,385) (814,541)
(Note 1f): Class B (3,437,910) (3,562,702)
Class C (161,469) (29,658)
Class D (159,378) (37,101)
------------ ------------
Net decrease in net assets resulting from dividends to
shareholders (4,511,142) (4,444,002)
------------ ------------
Beneficial Interest Net increase (decrease) in net assets derived from beneficial
Transactions interest transactions 5,394,929 (2,198,874)
(Note 4): ------------ ------------
Net Assets: Total increase (decrease) in net assets 7,182,525 (1,431,044)
Beginning of year 89,497,118 90,928,162
------------ ------------
End of year $ 96,679,643 $ 89,497,118
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<PAGE>
<TABLE>
Financial Highlights
<CAPTION>
Class A
For the
Period
The following per share data and ratios have been derived Feb. 26,
from information provided in the financial statements. 1993++ to
For the Year Ended August 31, Aug. 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1994 1993
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.65 $ 9.54 $ 10.23 $ 10.00
Operating -------- -------- -------- --------
Performance: Investment income--net .52 .52 .51 .24
Realized and unrealized gain (loss) on investments
--net .19 .11 (.65) .23
-------- -------- -------- --------
Total from investment operations .71 .63 (.14) .47
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.52) (.52) (.51) (.24)
In excess of realized gain on investments--net -- -- (.04) --
-------- -------- -------- --------
Total dividends and distributions (.52) (.52) (.55) (.24)
-------- -------- -------- --------
Net asset value, end of period $ 9.84 $ 9.65 $ 9.54 $ 10.23
======== ======== ======== ========
Total Investment Based on net asset value per share 7.44% 6.89% (1.44%) 4.81%+++
Return:** ======== ======== ======== ========
Ratios to Expenses, net of reimbursement .49% .47% .33% .14%*
Average ======== ======== ======== ========
Net Assets: Expenses .85% .87% .96% 1.06%*
======== ======== ======== ========
Investment income--net 5.20% 5.53% 5.16% 4.80%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 14,183 $ 14,204 $ 15,946 $ 17,105
Data: ======== ======== ======== ========
Portfolio turnover 87.77% 61.53% 93.04% 74.26%
======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class B
For the
Period
The following per share data and ratios have been derived Feb. 26,
from information provided in the financial statements. 1993++ to
For the Year Ended August 31, Aug. 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1994 1993
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.65 $ 9.54 $ 10.23 $ 10.00
Operating -------- -------- -------- --------
Performance: Investment income--net .47 .48 .46 .22
Realized and unrealized gain (loss) on investments
--net .19 .11 (.65) .23
-------- -------- -------- --------
Total from investment operations .66 .59 (.19) .45
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.47) (.48) (.46) (.22)
In excess of realized gain on investments--net -- -- (.04) --
-------- -------- -------- --------
Total dividends and distributions (.47) (.48) (.50) (.22)
-------- -------- -------- --------
Net asset value, end of period $ 9.84 $ 9.65 $ 9.54 $ 10.23
======== ======== ======== ========
Total Investment Based on net asset value per share 6.89% 6.35% (1.93%) 4.56%+++
Return:** ======== ======== ======== ========
Ratios to Expenses, net of reimbursement .99% .97% .83% .64%*
Average ======== ======== ======== ========
Net Assets: Expenses 1.36% 1.38% 1.48% 1.56%*
======== ======== ======== ========
Investment income--net 4.69% 5.02% 4.67% 4.31%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands). $ 73,292 $ 71,670 $ 74,982 $ 72,861
Data: ======== ======== ======== ========
Portfolio turnover 87.77% 61.53% 93.04% 74.26%
======== ======== ======== ========
<PAGE>
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class C Class D
For the For the
For the Period For the Period
The following per share data and ratios have been derived Year Oct. 21, Year Oct. 21,
from information provided in the financial statements. Ended 1994++ to Ended 1994++ to
Aug. 31, Aug. 31, Aug. 31, Aug. 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1996 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.64 $ 9.19 $ 9.65 $ 9.19
Operating -------- -------- -------- --------
Performance: Investment income--net .46 .39 .51 .44
Realized and unrealized gain on investments--net .20 .45 .20 .46
-------- -------- -------- --------
Total from investment operations .66 .84 .71 .90
-------- -------- -------- --------
Less dividends from investment income--net (.46) (.39) (.51) (.44)
-------- -------- -------- --------
Net asset value, end of period $ 9.84 $ 9.64 $ 9.85 $ 9.65
======== ======== ======== ========
Total Investment Based on net asset value per share 6.90% 9.35%+++ 7.44% 9.94%+++
Return:** ======== ======== ======== ========
Ratios to Expenses, net of reimbursement 1.10% 1.09%* .59% .57%*
Average Net ======== ======== ======== ========
Assets: Expenses 1.46% 1.49%* .95% .97%*
======== ======== ======== ========
Investment income--net 4.59% 4.76%* 5.09% 5.33%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 4,901 $ 1,778 $ 4,304 $ 1,845
Data: ======== ======== ======== ========
Portfolio turnover 87.77% 61.53% 87.77% 61.53%
======== ======== ======== ========
<PAGE>
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch California Insured Municipal Bond Fund (the "Fund") is
part of Merrill Lynch California Municipal Series Trust (the
"Trust"). The Fund is registered under the Investment Company Act of
1940 as a non-diversified, open-end management investment company.
The Fund offers four classes of shares under the Merrill Lynch
Select Pricing SM System. Shares of Class A and Class D are sold
with a front-end sales charge. Shares of Class B and Class C may be
subject to a contingent deferred sales charge. All classes of shares
have identical voting, dividend, liquidation and other rights and
the same terms and conditions, except that Class B, Class C and
Class D Shares bear certain expenses related to the account
maintenance of such shares, and Class B and Class C Shares also bear
certain expenses related to the distribution of such shares. Each
class has exclusive voting rights with respect to matters relating
to its account maintenance and distribution expenditures. The
following is a summary of significant accounting policies followed
by the Fund.
(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 on an amortized cost basis, 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.
<PAGE>
(b) Derivative financial instruments-The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts-The Fund may purchase or sell interest
rate futures contracts and options on such futures contracts for the
purpose of hedging the market risk on existing securities or the
intended purchase of securities. Futures contracts are contracts for
delayed delivery of securities at a specific future date and at a
specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
(c) Income taxes-It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income-Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Deferred organization expenses and prepaid registration fees-
Deferred organization expenses are charged to expense on a straight-
line basis over a five-year period. Prepaid registration fees are
charged to expense as the related shares are issued.
(f) Dividends and distributions-Dividends from net investment income
are declared daily and paid monthly. Distributions of capital gains
are recorded on the ex-dividend date.
NOTES TO FINANCIAL STATEMENTS (continued)
<PAGE>
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee based upon the average daily
value of the Fund's net assets at the following annual rates: 0.55%
of the Fund's average daily net assets not exceeding $500 million;
0.525% of average daily net assets in excess of $500 million but not
exceeding $1 billion; and 0.50% of average daily net assets in
excess of $1 billion. The Investment Advisory Agreement obligates
FAM to reimburse the Fund to the extent the Fund's expenses
(excluding interest, taxes, distribution fees, brokerage fees and
commissions, and extraordinary items) exceed 2.5% of the Fund's
first $30 million of average daily net assets, 2.0% of the next $70
million of average daily net assets and 1.5% of the average daily
net assets in excess thereof. FAM's obligation to reimburse the Fund
is limited to the amount of the management fee. No fee payment will
be made to FAM during any fiscal year which will cause such expenses
to exceed expense limitations at the time of such payment. For the
year ended August 31, 1996, FAM earned fees of $517,728, of which
$346,114 was voluntarily waived.
Pursuant to the distribution plans (the "Distribution Plans")
adopted by the Fund in accordance with Rule 12b-1 under the
Investment Company Act of 1940, the Fund pays the Distributor
ongoing account maintenance and distribution fees. The fees are
accrued daily and paid monthly at annual rates based upon the
average daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.25%
Class C 0.25% 0.35%
Class D 0.10% --
<PAGE>
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C shareholders.
For the year ended August 31, 1996, MLFD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of the
Fund's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $1,410 $ 8,259
Class D $ 912 $10,096
For the year ended August 31, 1996, MLPF&S received contingent
deferred sales charges of $157,396 and $2,319 relating to
transactions in Class B and Class C Shares, respectively.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, PSI, MLPF&S, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended August 31, 1996 were $75,954,351 and $75,054,038,
respectively.
Net realized and unrealized gains (losses) as of August 31, 1996
were as follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $ 766,884 $ 2,328,239
Financial futures
contracts (161,137) --
------------ ------------
Total $ 605,747 $ 2,328,239
============ ============
As of August 31, 1996, net unrealized appreciation for Federal
income tax purposes aggregated $2,328,239, of which $2,578,107
related to appreciated securities and $249,868 related to
depreciated securities. The aggregate cost of investments at August
31, 1996 for Federal income tax purposes was $92,348,094.
<PAGE>
4. Beneficial Interest Transactions:
Net increase (decrease) in net assets derived from beneficial
interest transactions was $5,394,929 and $(2,198,874) for the years
ended August 31, 1996 and August 31, 1995, respectively.
Transactions in shares of beneficial interest for each class were as
follows:
Class A Shares for the Year Dollar
Ended August 31, 1996 Shares Amount
Shares sold 192,761 $ 1,890,855
Shares issued to share-
holders in reinvestment
of dividends 28,926 285,031
----------- -----------
Total issued 221,687 2,175,886
Shares redeemed (252,553) (2,492,063)
----------- -----------
Net decrease (30,866) $ (316,177)
=========== ===========
Class A Shares for the Year Dollar
Ended August 31, 1995 Shares Amount
Shares sold 182,796 $ 1,683,426
Shares issued to share-
holders in reinvestment
of dividends 33,346 310,570
----------- -----------
Total issued 216,142 1,993,996
Shares redeemed (415,410) (3,820,473)
----------- -----------
Net decrease (199,268) $(1,826,477)
=========== ===========
Class B Shares for the Year Dollar
Ended August 31, 1996 Shares Amount
<PAGE>
Shares sold 1,369,886 $13,477,417
Shares issued to share-
holders in reinvestment
of dividends 155,360 1,531,776
----------- -----------
Total issued 1,525,246 15,009,193
Shares redeemed (1,469,919) (14,486,720)
Automatic conversion
of shares (35,131) (353,395)
----------- -----------
Net increase 20,196 $ 169,078
=========== ===========
Class B Shares for the Year Dollar
Ended August 31, 1995 Shares Amount
Shares sold 1,704,924 $15,799,247
Shares issued to share-
holders in reinvestment
of dividends 174,843 1,629,535
----------- -----------
Total issued 1,879,767 17,428,782
Shares redeemed (2,311,348) (21,348,197)
----------- -----------
Net decrease (431,581) $(3,919,415)
=========== ===========
Class C Shares for the Year Dollar
Ended August 31, 1996 Shares Amount
Shares sold 424,343 $ 4,215,073
Shares issued to share-
holders in reinvestment
of dividends 11,412 112,281
----------- -----------
Total issued 435,755 4,327,354
Shares redeemed (121,901) (1,209,318)
----------- -----------
Net increase 313,854 $ 3,118,036
=========== ===========
NOTES TO FINANCIAL STATEMENTS (concluded)
Class C Shares for the Period
October 21, 1994++ to Dollar
August 31, 1995 Shares Amount
<PAGE>
Shares sold 247,131 $ 2,347,801
Shares issued to share-
holders in reinvestment
of dividends 1,481 14,182
----------- -----------
Total issued 248,612 2,361,983
Shares redeemed (64,156) (608,073)
----------- -----------
Net increase 184,456 $ 1,753,910
=========== ===========
[FN]
++Commencement of Operations.
Class D Shares for the Dollar
Year Ended August 31, 1996 Shares Amount
Shares sold 263,889 $ 2,602,675
Automatic conversion
of shares 35,107 353,395
Shares issued to share-
holders in reinvestment
of dividends 10,947 107,791
----------- -----------
Total issued 309,943 3,063,861
Shares redeemed (63,998) (639,869)
----------- -----------
Net increase 245,945 $ 2,423,992
=========== ===========
Class D Shares for the Period
October 21, 1994++ to Dollar
August 31, 1995 Shares Amount
Shares sold 308,159 $ 2,879,606
Shares issued to share-
holders in reinvestment
of dividends 1,745 16,707
----------- -----------
Total issued 309,904 2,896,313
Shares redeemed (118,777) (1,103,205)
----------- -----------
Net increase 191,127 $ 1,793,108
=========== ===========
[FN]
++Commencement of Operations.
<PAGE>
5. Capital Loss Carryforward:
At August 31, 1996, the Fund had a net capital loss carryforward of
approximately $3,966,000, of which $2,950,000 expires in 2003 and
$1,016,000 expires in 2004. This amount will be available to offset
like amounts of any future taxable gains.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
Merrill Lynch California Insured Municipal
Bond Fund of Merrill Lynch California
Municipal Series Trust:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of Merrill Lynch
California Insured Municipal Bond Fund of Merrill Lynch California
Municipal Series Trust as of August 31, 1996, the related statements
of operations for the year then ended and changes in net assets for
each of the years in the two-year period then ended, and the
financial highlights for each of the years in the three-year period
then ended and for the period February 26, 1993 (commencement of
operations) to August 31, 1993. 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 August
31, 1996 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 California Insured Municipal Bond Fund of Merrill
Lynch California Municipal Series Trust as of August 31, 1996, the
results of its operations, the changes in its net assets, and the
financial highlights for the respective stated periods in conformity
with generally accepted accounting principles.
<PAGE>
Deloitte & Touche LLP
Princeton, New Jersey
September 30, 1996
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly by
Merrill Lynch California Insured Municipal Bond Fund of Merrill
Lynch California Municipal Series Trust during its taxable year
ended August 31, 1996 qualify as tax-exempt interest dividends for
Federal income tax purposes.
Additionally, there were no capital gains distributed by the Fund
during the year.
Please retain this information for your records.
