UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-4375
Name of Fund: Merrill Lynch Florida Municipal Bond Fund
of Merrill Lynch Multi-State Municipal Series Trust
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Terry K. Glenn, President, Merrill Lynch
Florida Municipal Bond Fund, 800 Scudders Mill Road, Plainsboro, NJ
08536. Mailing address: P.O. Box 9011, Princeton, NJ 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 07/31/03
Date of reporting period: 08/01/02 - 07/31/03
Item 1 - Attach shareholder report
[LOGO] Merrill Lynch Investment Managers www.mlim.ml.com
Merrill Lynch
Florida Municipal
Bond Fund
Annual Report
July 31, 2003
[LOGO] Merrill Lynch Investment Managers
Merrill Lynch Florida Municipal Bond Fund
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, 2003 qualify
as tax-exempt interest dividends for Federal income tax purposes.
Please retain this information for your records.
Electronic Delivery
The Fund is now offering electronic delivery of communications to its
shareholders. In order to receive this service, you must register your account
and provide us with e-mail information. To sign up for this service, simply
access this website http://www.icsdelivery.com/live and follow the instructions.
When you visit this site, you will obtain a personal identification number
(PIN). You will need this PIN should you wish to update your e-mail address,
choose to discontinue this service and/or make any other changes to the service.
This service is not available for certain retirement accounts at this time.
2 MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003
A Letter From the President
Dear Shareholder
Now more than half behind us, 2003 has been a meaningful year in many respects.
Perhaps the most significant development was the conclusion of all-out war in
Iraq. Although not especially sensitive to geopolitical events, the municipal
market has not been exempt from the general market excitement we have seen since
fighting gave way to restructuring in Iraq.
Municipal bond yields rose and fell in response to war fears, equity market
uncertainty, sub par economic growth, unemployment and deflation. By the end of
July, long-term municipal revenue bond yields stood at 5.4%, as measured by the
Bond Buyer Revenue Bond Index. With many state deficits at record levels,
municipalities issued more than $200 billion in new long-term tax-exempt bonds
during the six-month period ended July 31, 2003, an increase of more than 20%
versus the same six months of 2002. The availability of bonds, together with
attractive yield ratios relative to U.S. Treasury issues, made municipal bonds a
popular fixed income investment alternative.
Against this backdrop, our portfolio managers continued to work diligently to
deliver on our commitment to provide superior performance within reasonable
expectations for risk and return. This included striving to outperform our peers
and the market indexes. With that said, remember also that the advice and
guidance of a skilled financial advisor can mean the difference between fruitful
and fruitless investing. A financial professional can help you choose those
investments that will best serve you as you plan for your financial future.
Finally, I am proud to premiere a new look to our shareholder communications.
Our portfolio manager commentaries have been trimmed and organized in such a way
that you can get the information you need at a glance, in plain language.
Today's markets are confusing enough. We want to help you put it all in
perspective. The report's new size also allows us certain mailing efficiencies.
The cost savings in both production and postage are passed on to the fund and,
ultimately, to fund shareholders.
We thank you for trusting Merrill Lynch Investment Managers with your investment
assets, and we look forward to serving you in the months and years ahead.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Trustee
MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003 3
[LOGO] Merrill Lynch Investment Managers
A Discussion With Your Fund's Portfolio Manager
We have been working to manage volatility and to take advantage of the
steep municipal yield curve, selling bonds maturing in 10 - 15 years and
purchasing larger-coupon bonds maturing in 20 - 30 years.
Discuss the recent market environment relative to municipal bonds.
Amid considerable interest rate volatility, U.S. Treasury bond yields were
higher at 5.35% at the end of July, 2003 than they had been six months earlier.
Volatile equity markets, concerns over the Iraqi conflict, and sub par economic
growth combined to generally push interest rates lower through June. Bond
yields, however, moved sharply higher in July in response to more positive
business activity, especially continued strong homes sales and improving
employment trends.
Long-term tax-exempt bond yields also rose over the six months ended July 31,
2003, although to a lesser extent than U.S. Treasury obligations. Yield
volatility was lower than that seen in U.S. Treasury issues, as municipal bond
prices typically are less sensitive to worldwide geopolitical pressures on a
daily and weekly basis. By the end of July, long-term municipal revenue bond
yields, as measured by the Bond Buyer Revenue Bond Index, stood at 5.4%.
The municipal market outperformed the U.S. Treasury market over the past six
months, despite a dramatic increase in new bond issuance. Recent semi-annual
issuance has, in fact, exceeded the annual issuance seen during much of the
mid-1990s. The monthly issuance for July 2003, at almost $30 billion,
represented the largest amount of tax-exempt bonds ever sold in the month of
July. Historically low interest rates over the past year have been used by state
and local governments as an opportunity to finance existing infrastructure needs
and refinance outstanding, higher-coupon issues. Current estimates for 2003
municipal bond new issuance are approximately $350 billion, similar to 2002's
record high issuance.
A number of factors continue to foster strong investor demand for municipal
bonds. Tax-exempt money market rates have remained below 1% for much of this
year, forcing investors to invest in longer maturities to generate desired
levels of coupon income. In July and August 2003, investors are expected to
receive approximately $60 billion in coupon income, bond maturities and the
proceeds from early redemptions. We believe much of these proceeds are likely to
be reinvested in the municipal market.
As an asset class, municipal bonds have remained an attractive investment
alternative, especially relative to U.S. Treasury issues. At the end of July
2003, tax-exempt bond yields were 85% - 93% of comparable U.S. Treasury issues,
well in excess of their historic average of 82% - 88%. Current yield ratios have
made municipal securities attractive to both retail and institutional investors.
We expect the tax-exempt market's favorable technical position to remain stable
in the near term, therefore, an increase in bond issuance during the remainder
of 2003 is not likely to significantly impact the municipal bond market's
performance.
While many investors are concerned about how economic growth might affect bond
prices and yield, we believe moderate economic growth, especially within a
context of negligible inflationary pressures, should not greatly endanger the
positive fixed income environments tax-exempt products have enjoyed.
How did conditions in the state of Florida affect the Fund during the period?
Conditions have been relatively favorable. The state of Florida maintains solid
credit ratings of Aa2, AA+ and AA, with a stable trend, from Moody's, Standard &
Poor's and Fitch, respectively. Florida continues to attract new residents
because of its climate, low cost of living and continued job growth. These
factors, along with a proactive state government, allow for greater flexibility
in responding to economic downturns than many other states. Having said that,
ongoing population increases have put some strain on the state's social services
programs, especially education, health care and mass transit. While most state
revenues have been below projections because of a sluggish domestic economy,
Florida General Fund revenues are projected to be up by 1.6% in fiscal year 2003
and 2.6% in fiscal year 2004. The state has enacted sizable budget cuts
consisting of a hiring freeze, a rollback of tax breaks and other expenditure
reductions. These actions, in our opinion, affirm the state's conservative
fiscal nature.
4 MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003
Despite generally weak economic conditions, the state has maintained a Budget
Stabilization Fund of $959 million for fiscal year 2003. However, Governor Jeb
Bush is facing considerable financial pressure from recently enacted
voter-approved measures for increased spending on education and a high-speed
rail system. Because the cost could total up to $27 billion, the governor is
expected to attempt to repeal these measures. The state's fiscal year 2004
budget was recently passed by shifting increased costs to local governments. In
order to finance these additional costs, local municipalities will have to
increase property taxes or local sales taxes through voter initiatives. As a
result, the Fund's strategy has been to purchase insured general obligation
bonds and their equivalents to avoid price volatility associated with any
reduction in credit quality due to increased spending and/or borrowing.
How did the Fund perform during the fiscal year?
For the 12-month period ended July 31, 2003, the Fund's Class A, Class B, Class
C and Class I Shares had total returns of +3.66%, +3.35%, +3.24% and +3.87%,
respectively, performing in line with the +3.60% return of the unmanaged
benchmark Lehman Brothers Municipal Bond Index and outperforming its Lipper peer
group of Florida Municipal Debt Funds, which had an average return of +2.89% for
the same period. (Fund results shown do not reflect sales charges and would be
lower if sales charges were included. Complete performance information can be
found on pages 6 - 8 of this report to shareholders.)
During the fiscal period, we maintained our neutral position toward the
municipal bond market and aimed to reduce the Fund's volatility. Taking
advantage of a very steep tax-exempt yield curve, we began to sell bonds
maturing in 10 years - 15 years, and purchased larger-coupon bonds maturing in
20 years - 30 years. This strategy worked well in recent months as the
intermediate sector of the Florida municipal market experienced considerable
volatility.
What changes were made to the portfolio during the period?
During the fiscal year, we made no significant changes to the portfolio or our
investment strategy. We continued to sell bonds in the 10-year - 15-year
maturity range. With the proceeds, we purchased premium-coupon bonds in the
20-year - 30-year maturity range, whenever they became available in the market.
How would you characterize the Fund's position at the close of the period?
We believe the municipal market will continue to be volatile over the next few
months. We intend to maintain our neutral posture. As long as the municipal
curve remains steep, we will continue to sell the intermediate part of the curve
and, with the proceeds, purchase premium coupon bonds in the 20-year - 30-year
maturity range. We expect that the Fund will remain fully invested in order to
seek to provide a high level of tax-exempt income to its shareholders.
Robert D. Sneeden
Vice President and Portfolio Manager
August 13, 2003
- --------------------------------------------------------------------------------
Effective April 14, 2003, the share class names for the Merrill Lynch family of
mutual funds were changed to be consistent with the standard share classes of
most other mutual fund families. As of that date, all Class A Shares were
redesignated Class I Shares. At the same time, Class D Shares were redesignated
Class A Shares. There are no changes to the Class B or Class C share class
labels. Trading symbols have not changed nor have current eligibility rules or
pricing structures. This redesignation of share classes does not impact your
investment in any way.
- --------------------------------------------------------------------------------
MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003 5
[LOGO] Merrill Lynch Investment Managers
Performance Data
About Fund Performance
Effective April 14, 2003, Class A Shares were redesignated Class I Shares and
Class D Shares were redesignated Class A Shares. Investors are able to purchase
shares of the Fund through multiple pricing alternatives:
o Class A Shares incur a maximum initial sales charge of 4% and an account
maintenance fee of 0.10% (but no distribution fee).
o Effective December 1, 2002, Class B Shares are subject to a maximum
contingent deferred sales charge of 4%, declining to 0% after six years.
All Class B Shares purchased prior to December 1, 2002 will maintain the
four-year schedule. 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 A Shares after approximately ten
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 I Shares incur a maximum initial sales charge (front-end load) of 4%
and bear no ongoing distribution or account maintenance fees. Class I
Shares are available only to eligible investors.
None of the past results shown should be considered a representation of future
performance. Performance results do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
Figures shown in each of the following tables assume reinvestment of all
dividends and capital gains distributions at net asset value on the payable
date. Investment return and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost.
Dividends paid to each class of shares will vary because of the different levels
of account maintenance, distribution and transfer agency fees applicable to each
class, which are deducted from the income available to be paid to shareholders.
Recent Performance Results
Ten Years/
6-Month 12-Month Since Inception Standardized
As of July 31, 2003 Total Return Total Return Total Return 30-Day Yield
======================================================================================================================
ML Florida Municipal Bond Fund Class A Shares* +0.49% +3.66% +65.22% 4.20%
- ----------------------------------------------------------------------------------------------------------------------
ML Florida Municipal Bond Fund Class B Shares* +0.39 +3.35 +54.88 3.96
- ----------------------------------------------------------------------------------------------------------------------
ML Florida Municipal Bond Fund Class C Shares* +0.24 +3.24 +58.05 3.85
- ----------------------------------------------------------------------------------------------------------------------
ML Florida Municipal Bond Fund Class I Shares* +0.64 +3.87 +62.92 4.30
- ----------------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index** +0.43 +3.60 +78.78/+80.70 --
- ----------------------------------------------------------------------------------------------------------------------
* 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 ten year/since inception dates are
ten years for Class B & Class I Shares and from 10/21/94 for Class A &
Class C Shares.
** This unmanaged Index consists of long-term revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds. Ten-year/since
inception total returns are for ten years and from 10/31/94, respectively.
6 MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003
Performance Data (continued)
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 C Shares compared to growth of an investment in the Lehman Brothers
Municipal Bond Index. Values are from October 21, 1994 to July 2003:
10/21/94** 7/95 7/96 7/97 7/98 7/99
ML Florida
Municipal Bond Fund+--
Class A Shares* $ 9,600 $10,401 $11,034 $12,125 $12,789 $12,978
ML Florida
Municipal Bond Fund+--
Class C Shares* $10,000 $10,791 $11,390 $12,453 $13,069 $13,195
7/00 7/01 7/02 7/03
ML Florida
Municipal Bond Fund+--
Class A Shares* $13,181 $14,462 $15,301 $15,861
ML Florida
Municipal Bond Fund+--
Class C Shares* $13,333 $14,556 $15,309 $15,805
10/31/94 7/95 7/96 7/97 7/98 7/99
Lehman Brothers Municipal
Bond Index++ $10,000 $11,107 $11,840 $13,054 $13,837 $14,235
7/00 7/01 7/02 7/03
Lehman Brothers Municipal
Bond Index++ $14,848 $16,345 $17,441 $18,070
* 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 A & Class C Shares' graph is from 10/31/94.
Past performance is not predictive of future performance.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
===============================================================================
Class A Shares*
===============================================================================
One Year Ended 7/31/03 +3.66% -0.49%
- -------------------------------------------------------------------------------
Five Years Ended 7/31/03 +4.39 +3.55
- -------------------------------------------------------------------------------
Inception (10/21/94)
through 7/31/03 +5.89 +5.40
- -------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
===============================================================================
Class C Shares*
===============================================================================
One Year Ended 7/31/03 +3.24% +2.25%
- -------------------------------------------------------------------------------
Five Years Ended 7/31/03 +3.87 +3.87
- -------------------------------------------------------------------------------
Inception (10/21/94)
through 7/31/03 +5.35 +5.35
- -------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after
one year.
** Assuming payment of applicable contingent deferred sales charge.
MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003 7
[LOGO] Merrill Lynch Investment Managers
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 B Shares
and Class I Shares compared to growth of an investment in the Lehman Brothers
Municipal Bond Index. Values are from July 1993 to July 2003:
7/93 7/94 7/95 7/96 7/97
ML Florida
Municipal Bond Fund+--
Class B Shares* $10,000 $9,989 $10,481 $11,085 $12,131
ML Florida
Municipal Bond Fund+--
Class I Shares* $ 9,600 $9,637 $10,164 $10,805 $11,884
7/98 7/99 7/00 7/01 7/02 7/03
ML Florida
Municipal Bond Fund+--
Class B Shares* $12,743 $12,880 $13,029 $14,222 $14,987 $15,488
ML Florida
Municipal Bond Fund+--
Class I Shares* $12,548 $12,746 $12,959 $14,218 $15,058 $15,641
7/93 7/94 7/95 7/96 7/97
Lehman Brothers Municipal
Bond Index++ $10,000 $10,187 $10,989 $11,714 $12,916
7/98 7/99 7/00 7/01 7/02 7/03
Lehman Brothers Municipal
Bond Index++ $13,690 $14,083 $14,691 $16,171 $17,256 $17,878
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
+ ML Florida Municipal Bond Fund invests primarily in long-term
investment-grade obligations issued by or on behalf of the state of
Florida, its political subdivisions, agencies and instrumentalities and
obligations of other qualifying issuers.
++ This unmanaged Index consists of long-term revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds.
Past performance is not predictive of future performance.
Average Annual Total Return
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
One Year Ended 7/31/03 +3.35% -0.60%
- --------------------------------------------------------------------------------
Five Years Ended 7/31/03 +3.97 +3.64
- --------------------------------------------------------------------------------
Ten Years Ended 7/31/03 +4.47 +4.47
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 4% and is reduced to 0% after
six years.
** Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class I Shares*
================================================================================
One Year Ended 7/31/03 +3.87% -0.28%
- --------------------------------------------------------------------------------
Five Years Ended 7/31/03 +4.50 +3.65
- --------------------------------------------------------------------------------
Ten Years Ended 7/31/03 +5.00 +4.57
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
8 MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003
Schedule of Investments (in Thousands)
S&P Moody's Face
State Ratings+ Ratings+ Amount Municipal Bonds Value
===================================================================================================================================
Florida--89.9% AAA Aaa $ 1,095 Altamonte Springs, Florida, Health Facilities Authority, Hospital
Revenue Bonds (Adventist Health Systems--Sunbelt), 7% due
10/01/2014 (e)(g) $ 1,364
--------------------------------------------------------------------------------------------------------------
NR* NR* 650 Arbor Greene, Florida, Community Development District, Special
Assessment Revenue Bonds, 6.50% due 5/01/2007 653
--------------------------------------------------------------------------------------------------------------
NR* NR* 700 Bonnet Creek Resort, Florida, Community Development District, Special
Assessment Revenue Bonds, 7.50% due 5/01/2034 724
--------------------------------------------------------------------------------------------------------------
NR* NR* 210 Brooks of Bonita Springs II, Florida, Community Development District,
Capital Improvement Revenue Bonds, Series B, 6.60% due 5/01/2007 211
--------------------------------------------------------------------------------------------------------------
Broward County, Florida, HFA, M/F Housing Revenue Refunding Bonds
(Lakeside Apartments Project) (d):
AAA NR* 1,100 6.90% due 8/01/2015 1,144
AAA NR* 1,100 7% due 2/01/2025 1,144
--------------------------------------------------------------------------------------------------------------
AA- A3 5,000 Broward County, Florida, Resource Recovery Revenue Refunding Bonds
(Wheelabrator South Broward), Series A, 5.375% due 12/01/2009 5,405
--------------------------------------------------------------------------------------------------------------
NR* Baa3 550 Capital Trust Agency, Florida, Air Cargo Revenue Bonds, AMT, 6.25%
due 1/01/2019 555
--------------------------------------------------------------------------------------------------------------
AAA Aaa 960 Celebration Community Development District, Florida (Special
Assessment), 6% due 5/01/2010 (b) 1,002
--------------------------------------------------------------------------------------------------------------
Citrus County, Florida, Hospital Board Revenue Refunding Bonds (Citrus
Memorial Hospital):
NR* Baa3 995 6.25% due 8/15/2023 986
NR* Baa3 1,500 6.375% due 8/15/2032 1,495
--------------------------------------------------------------------------------------------------------------
NR* Aaa 965 Clay County, Florida, HFA, S/F Mortgage Revenue Bonds (Multi-County),
AMT, 6.30% due 10/01/2020 (d)(f) 1,017
--------------------------------------------------------------------------------------------------------------
Clearwater, Florida, Spring Training Facility Revenue Bonds (b):
AAA Aaa 650 5.375% due 3/01/2017 704
AAA Aaa 655 5.375% due 3/01/2018 706
AAA Aaa 335 5.375% due 3/01/2019 359
--------------------------------------------------------------------------------------------------------------
NR* Aaa 2,100 Daytona Beach, Florida, Utility System Revenue Refunding Bonds,
Series A, 5% due 11/15/2032 (a) 2,049
--------------------------------------------------------------------------------------------------------------
NR* NR* 1,000 Double Branch Community, Florida, Development District, Special
Assessment Bonds, Series B-1, 5.60% due 5/01/2007 999
--------------------------------------------------------------------------------------------------------------
AAA Aaa 9,555 Escambia County, Florida, HFA, S/F Mortgage Revenue Refunding Bonds,
AMT, 7% due 4/01/2028 (d)(f) 9,937
--------------------------------------------------------------------------------------------------------------
NR* Aaa 3,645 Escambia County, Florida, Health Facilities Authority, Health Facility
Revenue Bonds (Florida Health Care Facility Loan), 5.95% due
7/01/2020 (a) 3,988
--------------------------------------------------------------------------------------------------------------
BBB Baa2 11,370 Escambia County, Florida, PCR (Champion International Corporation
Project), AMT, 6.90% due 8/01/2022 11,879
--------------------------------------------------------------------------------------------------------------
BBB Baa2 1,500 Escambia County, Florida, PCR, Refunding (Champion International
Corporation Project), 6.95% due 11/01/2007 1,535
--------------------------------------------------------------------------------------------------------------
NR* NR* 1,000 Fiddlers Creek, Florida, Community Development District Number 2,
Special Assessment Revenue Bonds, Series A, 6.375% due 5/01/2035 961
--------------------------------------------------------------------------------------------------------------
NR* NR* 1,000 Fishhawk, Florida, Community Development District II, Special
Assessment Revenue Bonds, Series B, 5% due 11/01/2007 995
--------------------------------------------------------------------------------------------------------------
NR* NR* 180 Fleming Island Plantation, Florida, Community Development District,
Special Assessment Bonds, Series A, 6.30% due 2/01/2005 181
--------------------------------------------------------------------------------------------------------------
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 at right.
AMT Alternative Minimum Tax (subject to)
DRIVERS Derivative Inverse Tax-Exempt Receipts
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
S/F Single-Family
MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003 9
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (continued) (in Thousands)
S&P Moody's Face
State Ratings+ Ratings+ Amount Municipal Bonds Value
===================================================================================================================================
Florida AAA Aaa $ 2,800 Florida HFA, Homeowner Mortgage Revenue Bonds, AMT, Series 3, 6.35%
(continued) due 7/01/2028 (b) $ 2,909
--------------------------------------------------------------------------------------------------------------
AAA NR* 5,210 Florida HFA, Revenue Bonds, DRIVERS, AMT, Series 189, 12.81%
due 2/01/2035 (a)(h) 5,591
--------------------------------------------------------------------------------------------------------------
AAA Aaa 860 Florida Housing Finance Corporation, Homeowner Mortgage Revenue Bonds,
Series 10, 5.50% due 7/01/2017 (g) 891
--------------------------------------------------------------------------------------------------------------
AAA Aaa 1,425 Florida Housing Finance Corporation, Homeowner Mortgage Revenue
Refunding Bonds, AMT, Series 4, 6.25% due 7/01/2022 (g) 1,483
--------------------------------------------------------------------------------------------------------------
AAA NR* 5,000 Florida State Board of Education, Lottery Revenue Bonds, DRIVERS,
Series 222, 11.32% due 7/01/2017 (c)(h) 6,430
--------------------------------------------------------------------------------------------------------------
AAA NR* 2,500 Florida State Turnpike Authority, Turnpike Revenue Bonds, DRIVERS,
Series 218, 11.32% due 7/01/2029 (c)(h) 3,017
--------------------------------------------------------------------------------------------------------------
NR* NR* 1,000 Harbor Bay, Florida, Community Development District, Capital
Improvement Special Assessment Revenue Bonds, Series A, 7%
due 5/01/2033 1,021
--------------------------------------------------------------------------------------------------------------
NR* NR* 720 Heritage Isles Community Development District, Florida, Special
Assessment Revenue Refunding Bonds, 5.90% due 11/01/2006 718
--------------------------------------------------------------------------------------------------------------
NR* NR* 590 Heritage Palms, Florida, Community Development District, Capital
Improvement Revenue Bonds, 6.25% due 11/01/2004 591
--------------------------------------------------------------------------------------------------------------
A A3 3,500 Highlands County, Florida, Health Facilities Authority Revenue Bonds
(Adventist Health System/Sunbelt Obligated Group), Series A, 6%
due 11/15/2031 3,630
--------------------------------------------------------------------------------------------------------------
Hillsborough County, Florida, IDA, Exempt Facilities Revenue Bonds
(National Gypsum), AMT:
NR* NR* 1,000 Series A, 7.125% due 4/01/2030 1,009
NR* NR* 1,750 Series B, 7.125% due 4/01/2030 1,765
--------------------------------------------------------------------------------------------------------------
NR* Baa1 1,000 Hillsborough County, Florida, IDA, Hospital Revenue Refunding Bonds
(Tampa General Hospital Project), Series B, 5.25% due 10/01/2028 920
--------------------------------------------------------------------------------------------------------------
BBB- Baa1 2,000 Hillsborough County, Florida, IDA, PCR, Refunding (Tampa Electric
Company Project), 5.10% due 10/01/2013 1,962
--------------------------------------------------------------------------------------------------------------
Jacksonville, Florida, Economic Development Commission, Health Care
Facilities Revenue Bonds (Mayo Clinic--Jacksonville):
AA Aa2 1,000 Series A, 5.50% due 11/15/2036 1,003
AA Aa2 2,000 Series B, 5.50% due 11/15/2036 2,009
AAA Aaa 410 Series B, 5.50% due 11/15/2036 (b) 423
--------------------------------------------------------------------------------------------------------------
AA Aa2 2,800 Jacksonville, Florida, Electric Authority, Electric System Revenue
Bonds, Series 3-C, 5.50% due 10/01/2030 2,848
--------------------------------------------------------------------------------------------------------------
AAA NR* 4,920 Jacksonville, Florida, Electric Authority, Electric System Revenue
Refunding Bonds, Series Three, 6% due 10/01/2025 (b) 5,238
--------------------------------------------------------------------------------------------------------------
AAA Aaa 1,200 Jacksonville, Florida, Guaranteed Entitlement Revenue Refunding and
Improvement Bonds, 5.25% due 10/01/2032 (c) 1,213
--------------------------------------------------------------------------------------------------------------
Jacksonville, Florida, Health Facilities Authority, IDR (National
Benevolent Association--Cypress Village Florida Project), Series A:
NR* Ba2 500 7.05% due 3/01/2024 313
NR* Ba2 1,000 7.10% due 3/01/2030 612
--------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Jea, Florida, Water and Sewer System Revenue Bonds, Sub-Series C, 5%
due 10/01/2043 966
--------------------------------------------------------------------------------------------------------------
NR* NR* 110 Lexington Oaks, Florida, Community Development District, Special
Assessment Revenue Bonds, Series B, 6.70% due 5/01/2007 110
--------------------------------------------------------------------------------------------------------------
BBB+ NR* 1,570 Martin County, Florida, Health Facilities Authority, Hospital Revenue
Bonds (Martin Memorial Medical Center), Series A, 5.875% due 11/15/2032 1,496
--------------------------------------------------------------------------------------------------------------
10 MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003
Schedule of Investments (continued) (in Thousands)
S&P Moody's Face
State Ratings+ Ratings+ Amount Municipal Bonds Value
===================================================================================================================================
Florida NR* NR* $ 1,000 Mediterra, Florida, South Community Development District, Capital
(concluded) Improvement Revenue Bonds, Series B, 5.50% due 5/01/2010 $ 983
--------------------------------------------------------------------------------------------------------------
AAA Aaa 4,000 Miami--Dade County, Florida, Aviation Revenue Bonds (Miami
International Airport), AMT, Series A, 5% due 10/01/2033 (c) 3,843
--------------------------------------------------------------------------------------------------------------
AAA Aaa 6,100 Miami--Dade County, Florida, Expressway Authority, Toll System
Revenue Bonds, 6.375% due 7/01/2010 (c)(i) 7,213
--------------------------------------------------------------------------------------------------------------
Orange County, Florida, Health Facilities Authority, Hospital Revenue
Bonds:
A A3 500 (Adventist Health System), 6.25% due 11/15/2024 523
A- A2 2,705 (Orlando Regional Healthcare), 6% due 12/01/2028 2,793
A- A2 700 (Orlando Regional Healthcare), 5.75% due 12/01/2032 704
--------------------------------------------------------------------------------------------------------------
AAA Aaa 6,500 Orange County, Florida, Tourist Development, Tax Revenue Bonds, 5.50%
due 10/01/2031 (a) 6,612
--------------------------------------------------------------------------------------------------------------
Orlando and Orange County, Florida, Expressway Authority Revenue
Bonds, Series B (a):
AAA Aaa 1,000 5% due 7/01/2030 978
AAA Aaa 1,500 5% due 7/01/2035 1,461
--------------------------------------------------------------------------------------------------------------
NR* NR* 1,000 Orlando, Florida, Urban Community Development District, Capital
Improvement Special Assessment Bonds, Series A, 6.95% due 5/01/2033 1,012
--------------------------------------------------------------------------------------------------------------
NR* Aaa 1,265 Osceola County, Florida, Infrastructure Sales Surplus Tax Revenue
Bonds, 5.25% due 10/01/2025 (a) 1,283
--------------------------------------------------------------------------------------------------------------
AAA Aaa 925 Osceola County, Florida, Tourist Development Tax Revenue Bonds,
Series A, 5.50% due 10/01/2027 (c) 962
--------------------------------------------------------------------------------------------------------------
NR* NR* 1,000 Palm Beach County, Florida, HFA, M/F Housing Revenue Bonds (Lake
Delray Apartment Project), AMT, Series A, 6.40% due 1/01/2031 911
--------------------------------------------------------------------------------------------------------------
BBB+ NR* 1,000 Palm Beach County, Florida, Health Facilities Authority, Retirement
Community Revenue Bonds (Acts Obligation Group), 5.625% due 11/15/2020 972
--------------------------------------------------------------------------------------------------------------
NR* NR* 790 Panther Trace, Florida, Community Development District, Special
Assessment Revenue Bonds, Series B, 6.50% due 5/01/2009 790
--------------------------------------------------------------------------------------------------------------
NR* NR* 500 Park Place Community Development District, Florida, Special Assessment
Revenue Bonds, 6.75% due 5/01/2032 501
--------------------------------------------------------------------------------------------------------------
AAA Aaa 2,080 Pasco County, Florida, Health Facilities Authority, Gross Revenue
Bonds (Adventist Health System--Sunbelt), 7% due 10/01/2014 (e) 2,571
--------------------------------------------------------------------------------------------------------------
NR* NR* 925 Reunion East Community Development District, Florida, Special
Assessment, Series B, 5.90% due 11/01/2007 923
--------------------------------------------------------------------------------------------------------------
AAA NR* 2,320 South Broward, Florida, Hospital District Revenue Bonds, DRIVERS,
Series 337, 10.06% due 5/01/2032 (b)(e)(h) 2,541
--------------------------------------------------------------------------------------------------------------
A- A2 1,000 South Lake County, Florida, Hospital District Revenue Bonds (South
Lake Hospital Inc.), 5.80% due 10/01/2034 1,003
--------------------------------------------------------------------------------------------------------------
NR* NR* 665 Stoneybrook West, Florida, Community Development District, Special
Assessment Revenue Bonds, Series B, 6.45% due 5/01/2010 670
--------------------------------------------------------------------------------------------------------------
NR* NR* 1,000 Verandah West, Florida, Community Development District, Capital
Improvement Revenue Bonds, Series B, 5.25% due 5/01/2008 989
--------------------------------------------------------------------------------------------------------------
NR* NR* 1,500 Vista Lakes Community Development District, Florida, Capital
Improvement Revenue Bonds, Series A, 6.75% due 5/01/2034 1,510
===================================================================================================================================
New Jersey--1.7% A- Baa2 2,950 Tobacco Settlement Financing Corporation of New Jersey Revenue Bonds,
6.75% due 6/01/2039 2,610
===================================================================================================================================
MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003 11
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (concluded) (in Thousands)
S&P Moody's Face
State Ratings+ Ratings+ Amount Municipal Bonds Value
===================================================================================================================================
Puerto Rico--5.3% A Baa1 $ 3,000 Puerto Rico Commonwealth, Highway and Transportation Authority,
Transportation Revenue Bonds, Series D, 5.75% due 7/01/2041 $ 3,099
--------------------------------------------------------------------------------------------------------------
NR* Baa2 1,000 Puerto Rico Industrial, Tourist, Educational, Medical and Environmental
Control Facilities Revenue Bonds (Cogeneration Facility--AES Puerto
Rico Project), AMT, 6.625% due 6/01/2026 1,034
--------------------------------------------------------------------------------------------------------------
BBB+ Baa3 4,000 Puerto Rico Public Finance Corporation, Commonwealth Appropriation
Revenue Bonds, Series E, 5.75% due 8/01/2030 4,123
--------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost--$147,694)--96.9% 150,775
==============================================================================================================
===================================================================================================================================
Shares
Held Short-Term Investments
===================================================================================================================================
1,013 Merrill Lynch Institutional Tax-Exempt Fund (j) 1,013
--------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (Cost--$1,013)--0.7% 1,013
===================================================================================================================================
Total Investments (Cost--$148,707)--97.6% 151,788
Other Assets Less Liabilities--2.4% 3,732
--------
Net Assets--100.0% $155,520
========
(a) AMBAC Insured.
(b) MBIA Insured.
(c) FGIC 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, 2003.
(i) Prerefunded.
(j) Investments in companies considered to be an affiliate of the Fund (such
companies are defined as "Affiliated Companies" in Section 2(a)(3) of the
Investment Company Act of 1940) are as follows:
(in Thousands)
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
Merrill Lynch Institutional
Tax-Exempt Fund 1,013 $28
--------------------------------------------------------------------------
* Not Rated.
+ Ratings of issues shown are unaudited.
See Notes to Financial Statements.
12 MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003
Statement of Assets and Liabilities
As of July 31, 2003
==========================================================================================================================
Assets
- --------------------------------------------------------------------------------------------------------------------------
Investments, at value (identified cost--$148,706,809) ................. $ 151,787,869
Cash .................................................................. 11,784
Receivables:
Securities sold .................................................... $ 5,204,281
Interest ........................................................... 2,723,028
Beneficial interest sold ........................................... 185,079
Dividends from affiliates .......................................... 21 8,112,409
-----------
Prepaid expenses ...................................................... 7,079
-------------
Total assets .......................................................... 159,919,141
-------------
==========================================================================================================================
Liabilities
- --------------------------------------------------------------------------------------------------------------------------
Payables:
Securities purchased ............................................... 3,886,592
Dividends to shareholders .......................................... 196,846
Beneficial interest redeemed ....................................... 164,982
Investment adviser ................................................. 76,875
Distributor ........................................................ 39,632
Other affiliates ................................................... 11,219 4,376,146
-----------
Accrued expenses ...................................................... 22,515
-------------
Total liabilities ..................................................... 4,398,661
-------------
==========================================================================================================================
Net Assets
- --------------------------------------------------------------------------------------------------------------------------
Net assets ............................................................ $ 155,520,480
=============
==========================================================================================================================
Net Assets Consist of
- --------------------------------------------------------------------------------------------------------------------------
Class A Shares of beneficial interest, $.10 par value, unlimited number
of shares authorized .................................................. $ 573,689
Class B Shares of beneficial interest, $.10 par value, unlimited number
of shares authorized .................................................. 607,363
Class C Shares of beneficial interest, $.10 par value, unlimited number
of shares authorized .................................................. 146,973
Class I Shares of beneficial interest, $.10 par value, unlimited number
of shares authorized .................................................. 219,232
Paid-in capital in excess of par ...................................... 159,373,090
Undistributed investment income--net .................................. $ 113,931
Accumulated realized capital losses on investments--net ............... (8,594,858)
Unrealized appreciation on investments--net ........................... 3,081,060
-----------
Total accumulated losses--net ......................................... (5,399,867)
-------------
Net assets ............................................................ $ 155,520,480
=============
==========================================================================================================================
Net Asset Value
- --------------------------------------------------------------------------------------------------------------------------
Class A--Based on net assets of $57,609,779 and 5,736,886 shares of
beneficial interest outstanding ....................................... $ 10.04
=============
Class B--Based on net assets of $61,097,859 and 6,073,631 shares of
beneficial interest outstanding ....................................... $ 10.06
=============
Class C--Based on net assets of $14,759,493 and 1,469,729 shares of
beneficial interest outstanding ....................................... $ 10.04
=============
Class I--Based on net assets of $22,053,349 and 2,192,320 shares of
beneficial interest outstanding ....................................... $ 10.06
=============
See Notes to Financial Statements.
MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003 13
[LOGO] Merrill Lynch Investment Managers
Statement of Operations
For the Year Ended July 31, 2003
==========================================================================================================================
Investment Income
- --------------------------------------------------------------------------------------------------------------------------
Interest .............................................................. $ 9,528,786
Dividends from affiliates ............................................. 27,941
-------------
Total income .......................................................... 9,556,727
-------------
==========================================================================================================================
Expenses
- --------------------------------------------------------------------------------------------------------------------------
Investment advisory fees .............................................. $ 882,661
Account maintenance and distribution fees--Class B .................... 342,035
Accounting services ................................................... 99,876
Account maintenance and distribution fees--Class C .................... 82,808
Professional fees ..................................................... 76,366
Account maintenance fees--Class A ..................................... 53,741
Printing and shareholder reports ...................................... 41,523
Registration fees ..................................................... 31,055
Transfer agent fees--Class B .......................................... 29,826
Transfer agent fees--Class A .......................................... 20,035
Trustees' fees and expenses ........................................... 19,764
Custodian fees ........................................................ 11,389
Pricing fees .......................................................... 9,879
Transfer agent fees--Class I .......................................... 9,087
Transfer agent fees--Class C .......................................... 5,991
Other ................................................................. 16,200
-----------
Total expenses before reimbursement ................................... 1,732,236
Reimbursement of expenses ............................................. (4,951)
-----------
Total expenses after reimbursement .................................... 1,727,285
-------------
Investment income--net ................................................ 7,829,442
-------------
==========================================================================================================================
Realized & Unrealized Gain (Loss) on Investments--Net
- --------------------------------------------------------------------------------------------------------------------------
Realized gain on investments--net ..................................... 1,750,211
Change in unrealized appreciation on investments--net ................. (3,989,228)
-------------
Total realized and unrealized loss on investments--net ................ (2,239,017)
-------------
Net Increase in Net Assets Resulting from Operations .................. $ 5,590,425
=============
See Notes to Financial Statements.
14 MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003
Statements of Changes in Net Assets
For the Year Ended
July 31,
-------------------------------
Increase (Decrease) in Net Assets: 2003 2002
=========================================================================================================================
Operations
- -------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................ $ 7,829,442 $ 7,682,408
Realized gain on investments--net ................................. 1,750,211 1,155,663
Change in unrealized appreciation on investments--net ............. (3,989,228) (336,243)
-------------------------------
Net increase in net assets resulting from operations .............. 5,590,425 8,501,828
-------------------------------
=========================================================================================================================
Dividends to Shareholders
- -------------------------------------------------------------------------------------------------------------------------
Investment income--net:
Class A ........................................................ (2,726,805) (2,117,956)
Class B ........................................................ (3,195,112) (3,725,318)
Class C ........................................................ (630,460) (412,106)
Class I ........................................................ (1,270,981) (1,417,464)
-------------------------------
Net decrease in net assets resulting from dividends to shareholders (7,823,358) (7,672,844)
-------------------------------
=========================================================================================================================
Beneficial Interest Transactions
- -------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets derived from beneficial
interest transactions ............................................. 4,435,091 (10,670,581)
-------------------------------
=========================================================================================================================
Net Assets
- -------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets ........................... 2,202,158 (9,841,597)
Beginning of year ................................................. 153,318,322 163,159,919
-------------------------------
End of year* ...................................................... $ 155,520,480 $ 153,318,322
===============================
* Undistributed investment income--net ......................... $ 113,931 $ 107,847
===============================
See Notes to Financial Statements.
MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003 15
[LOGO] Merrill Lynch Investment Managers
Financial Highlights
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: 2003 2002 2001 2000 1999
===================================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year .................... $ 10.19 $ 10.13 $ 9.71 $ 10.06 $ 10.39
---------------------------------------------------------------
Investment income--net ................................ .52+ .51 .49 .49 .49
Realized and unrealized gain (loss) on investments--net (.15) .06 .43 (.35) (.33)
---------------------------------------------------------------
Total from investment operations ...................... .37 .57 .92 .14 .16
---------------------------------------------------------------
Less dividends and distributions:
Investment income--net ............................. (.52) (.51) (.49) (.49) (.49)
In excess of realized gain on investments--net ..... -- -- (.01) -- --
---------------------------------------------------------------
Total dividends and distributions ..................... (.52) (.51) (.50) (.49) (.49)
---------------------------------------------------------------
Net asset value, end of year .......................... $ 10.04 $ 10.19 $ 10.13 $ 9.71 $ 10.06
===============================================================
===================================================================================================================================
Total Investment Return*
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share .................... 3.66% 5.81% 9.72% 1.55% 1.46%
===============================================================
===================================================================================================================================
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ........................ .88% .89% .86% .80% .82%
===============================================================
Expenses .............................................. .88% .89% .86% .80% .82%
===============================================================
Investment income--net ................................ 5.08% 5.07% 4.99% 5.07% 4.69%
===============================================================
===================================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ................ $ 57,610 $ 43,909 $ 38,564 $ 25,725 $ 37,713
===============================================================
Portfolio turnover .................................... 45.50% 41.29% 81.27% 79.33% 120.54%
===============================================================
* Total investment returns exclude the effects of sales charges.
+ Based on average shares outstanding.
++ Effective April 14, 2003, Class D Shares were redesignated Class A Shares.
See Notes to Financial Statements.
16 MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003
Financial Highlights (continued)
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: 2003 2002 2001 2000 1999
===================================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year .................... $ 10.20 $ 10.14 $ 9.73 $ 10.08 $ 10.41
---------------------------------------------------------------
Investment income--net ................................ .48+ .47 .46 .45 .45
Realized and unrealized gain (loss) on investments--net (.14) .06 .42 (.35) (.33)
---------------------------------------------------------------
Total from investment operations ...................... .34 .53 .88 .10 .12
---------------------------------------------------------------
Less dividends and distributions:
Investment income--net ............................. (.48) (.47) (.46) (.45) (.45)
In excess of realized gain on investments--net ..... -- -- (.01) -- --
---------------------------------------------------------------
Total dividends and distributions ..................... (.48) (.47) (.47) (.45) (.45)
---------------------------------------------------------------
Net asset value, end of year .......................... $ 10.06 $ 10.20 $ 10.14 $ 9.73 $ 10.08
===============================================================
===================================================================================================================================
Total Investment Return*
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share .................... 3.35% 5.38% 9.16% 1.14% 1.06%
===============================================================
===================================================================================================================================
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ........................ 1.28% 1.29% 1.26% 1.20% 1.23%
===============================================================
Expenses .............................................. 1.28% 1.29% 1.26% 1.20% 1.23%
===============================================================
Investment income--net ................................ 4.67% 4.65% 4.59% 4.66% 4.29%
===============================================================
===================================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ................ $ 61,098 $ 73,034 $ 86,433 $100,059 $133,276
===============================================================
Portfolio turnover .................................... 45.50% 41.29% 81.27% 79.33% 120.54%
===============================================================
* Total investment returns exclude the effects of sales charges.
+ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003 17
[LOGO] Merrill Lynch Investment Managers
Financial Highlights (continued)
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: 2003 2002 2001 2000 1999
===================================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year .................... $ 10.18 $ 10.13 $ 9.71 $ 10.06 $ 10.39
---------------------------------------------------------------
Investment income--net ................................ .47+ .46 .44 .44 .43
Realized and unrealized gain (loss) on investments--net (.14) .05 .43 (.35) (.33)
---------------------------------------------------------------
Total from investment operations ...................... .33 .51 .87 .09 .10
---------------------------------------------------------------
Less dividends and distributions:
Investment income--net ............................. (.47) (.46) (.44) (.44) (.43)
In excess of realized gain on investments--net ..... -- -- (.01) -- --
---------------------------------------------------------------
Total dividends and distributions ..................... (.47) (.46) (.45) (.44) (.43)
---------------------------------------------------------------
Net asset value, end of year .......................... $ 10.04 $ 10.18 $ 10.13 $ 9.71 $ 10.06
===============================================================
===================================================================================================================================
Total Investment Return*
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share .................... 3.24% 5.17% 9.17% 1.04% .95%
===============================================================
===================================================================================================================================
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ........................ 1.38% 1.39% 1.36% 1.30% 1.33%
===============================================================
Expenses .............................................. 1.39% 1.39% 1.36% 1.30% 1.33%
===============================================================
Investment income--net ................................ 4.57% 4.56% 4.49% 4.57% 4.19%
===============================================================
===================================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ................ $ 14,759 $ 10,489 $ 9,110 $ 8,497 $ 10,897
===============================================================
Portfolio turnover .................................... 45.50% 41.29% 81.27% 79.33% 120.54%
===============================================================
* Total investment returns exclude the effects of sales charges.
+ Based on average shares outstanding.
See Notes to Financial Statements.
18 MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003
Financial Highlights (concluded)
Class I++
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: 2003 2002 2001 2000 1999
===================================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year .................... $ 10.20 $ 10.14 $ 9.73 $ 10.08 $ 10.41
---------------------------------------------------------------
Investment income--net ................................ .53+ .52 .51 .50 .50
Realized and unrealized gain (loss) on investments--net (.14) .06 .42 (.35) (.33)
---------------------------------------------------------------
Total from investment operations ...................... .39 .58 .93 .15 .17
---------------------------------------------------------------
Less dividends and distributions:
Investment income--net ............................. (.53) (.52) (.51) (.50) (.50)
In excess of realized gain on investments--net ..... -- -- (.01) -- --
---------------------------------------------------------------
Total dividends and distributions ..................... (.53) (.52) (.52) (.50) (.50)
---------------------------------------------------------------
Net asset value, end of year .......................... $ 10.06 $ 10.20 $ 10.14 $ 9.73 $ 10.08
===============================================================
===================================================================================================================================
Total Investment Return*
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share .................... 3.87% 5.91% 9.71% 1.66% 1.57%
===============================================================
===================================================================================================================================
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ........................ .77% .79% .76% .70% .72%
===============================================================
Expenses .............................................. .78% .79% .76% .70% .72%
===============================================================
Investment income--net ................................ 5.18% 5.16% 5.10% 5.17% 4.80%
===============================================================
===================================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) ................ $ 22,053 $ 25,886 $ 29,053 $ 30,242 $ 38,214
===============================================================
Portfolio turnover .................................... 45.50% 41.29% 81.27% 79.33% 120.54%
===============================================================
* Total investment returns exclude the effects of sales charges.
+ Based on average shares outstanding.
++ Effective April 14, 2003, Class A Shares were redesignated Class I Shares.
See Notes to Financial Statements.
MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003 19
[LOGO] Merrill Lynch Investment Managers
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 amended, as a non-diversified, open-end
management investment company. The Fund's financial statements are prepared in
conformity with accounting principles generally accepted in the United States of
America, which may require the use of management accruals and estimates. The
Fund offers multiple classes of shares. Effective April 14, 2003, Class A Shares
were redesignated Class I Shares and Class D Shares were redesignated Class A
Shares. The Fund's financial statements and financial highlights contained
within this report reflect the new share class redesignation. Shares of Class A
and Class I 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 A, Class B and Class C 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. Income, expenses
(other than expenses attributable to a specific class) and realized and
unrealized gains and losses on investments are allocated daily to each class
based on its related net assets. 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 both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movement and movements in the securities
markets. Losses may arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
o Financial futures contracts--The Fund may purchase or sell financial
futures contracts and options on such futures contracts. 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.
20 MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003
Notes to Financial Statements (continued)
(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).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Fund amortizes all
premiums and discounts on debt securities.
(e) Dividends and distributions -- Dividends from net investment income are
declared daily and paid monthly. Distributions of capital gains are recorded on
the ex-dividend dates.
(f) Expenses -- Certain expenses have been allocated to the individual Funds in
the Trust on a pro rata basis based upon the respective aggregate net asset
value of each Fund included in the Trust.
(g) Reclassification -- Accounting principles generally accepted in the United
States of America require that certain components of net assets be adjusted to
reflect permanent differences between financial and tax reporting. Accordingly,
the current year's permanent book/tax difference of $6,469,079 has been
reclassified between paid-in capital in excess of par and accumulated realized
capital losses. This reclassification has no effect on net assets or net asset
value per share.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect, wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML
& Co."), which is the limited partner. The Fund has also entered into a
Distribution Agreement and Distribution Plans with 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. For the year ended July 31, 2003, FAM reimbursed the Fund in the amount
of $4,951.
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 A ................................. .10% --
Class B ................................. .25% .25%
Class C ................................. .25% .35%
- -------------------------------------------------------------------------------
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 A, Class B and Class C 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.
MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003 21
[LOGO] Merrill Lynch Investment Managers
Notes to Financial Statements (continued)
For the year ended July 31, 2003, FAMD earned underwriting discounts and MLPF&S
earned dealer concessions on sales of the Fund's Class A and Class I Shares as
follows:
- --------------------------------------------------------------------------------
FAMD MLPF&S
- --------------------------------------------------------------------------------
Class A ............................ $ 3,492 $35,237
Class I ............................ $ 266 $ 2,766
- --------------------------------------------------------------------------------
For the year ended July 31, 2003, MLPF&S received contingent deferred sales
charges of $60,347 and $4,563 relating to transactions in Class B and Class C
Shares, respectively.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co., is
the Fund's transfer agent.
For the year ended July 31, 2003, the Fund reimbursed FAM $3,683 for certain
accounting services.
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, 2003 were $82,105,950 and $70,632,847, respectively.
Net realized gains for the year ended July 31, 2003 and net unrealized gains as
of July 31, 2003 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains Gains
- --------------------------------------------------------------------------------
Long-term investments .................. $1,750,211 $3,081,060
------------------------------
Total .................................. $1,750,211 $3,081,060
==============================
As of July 31, 2003, net unrealized appreciation for Federal income tax purposes
aggregated $3,054,176, of which $4,534,846 related to appreciated securities and
$1,480,670 related to depreciated securities. The aggregate cost of investments
at July 31, 2003 for Federal income tax purposes was $148,733,693.
4. Beneficial Interest Transactions:
Net increase (decrease) in net assets derived from beneficial interest
transactions was $4,435,091 and $(10,670,581) for the years ended July 31, 2003
and July 31, 2002, respectively.
Transactions in shares of beneficial interest for each class were as follows:
- -------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended July 31, 2003+ Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 1,547,946 $ 15,889,188
Automatic conversion of shares ........... 821,171 8,470,978
Shares issued to shareholders in
reinvestment of dividends .............. 100,849 1,038,009
-------------------------------
Total issued ............................. 2,469,966 25,398,175
Shares redeemed .......................... (1,044,034) (10,756,232)
-------------------------------
Net increase ............................. 1,425,932 $ 14,641,943
===============================
+ Effective April 14, 2003, Class D Shares were redesignated Class A Shares.
- -------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended July 31, 2002+ Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 254,156 $ 2,558,043
Automatic conversion of shares ........... 1,038,328 10,510,916
Shares issued to shareholders in
reinvestment of dividends .............. 55,928 564,161
-------------------------------
Total issued ............................. 1,348,412 13,633,120
Shares redeemed .......................... (845,743) (8,534,026)
-------------------------------
Net increase ............................. 502,669 $ 5,099,094
===============================
+ Effective April 14, 2003, Class D Shares were redesignated Class A Shares.
- -------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended July 31, 2003 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 934,159 $ 9,639,968
Shares issued to shareholders in
reinvestment of dividends .............. 112,118 1,154,469
-------------------------------
Total issued ............................. 1,046,277 10,794,437
Automatic conversion of shares ........... (819,750) (8,470,978)
Shares redeemed .......................... (1,311,339) (13,502,533)
-------------------------------
Net decrease ............................. (1,084,812) $(11,179,074)
===============================
22 MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended July 31, 2002 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 1,037,222 $ 10,511,437
Shares issued to shareholders in
reinvestment of dividends .............. 140,201 1,417,079
-------------------------------
Total issued ............................. 1,177,423 11,928,516
Automatic conversion of shares ........... (1,036,517) (10,510,916)
Shares redeemed .......................... (1,503,799) (15,189,951)
-------------------------------
Net decrease ............................. (1,362,893) $(13,772,351)
===============================
- -------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended July 31, 2003 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 632,468 $ 6,510,644
Shares issued to shareholders in
reinvestment of dividends .............. 28,425 292,402
-------------------------------
Total issued ............................. 660,893 6,803,046
Shares redeemed .......................... (221,052) (2,269,789)
-------------------------------
Net increase ............................. 439,841 $ 4,533,257
===============================
- -------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended July 31, 2002 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 465,382 $ 4,701,880
Shares issued to shareholders in
reinvestment of dividends .............. 18,545 187,103
-------------------------------
Total issued ............................. 483,927 4,888,983
Shares redeemed .......................... (353,786) (3,578,123)
-------------------------------
Net increase ............................. 130,141 $ 1,310,860
===============================
- -------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended July 31, 2003+ Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 202,678 $ 2,091,809
Shares issued to shareholders in
reinvestment of dividends .............. 58,654 604,123
-------------------------------
Total issued ............................. 261,332 2,695,932
Shares redeemed .......................... (606,376) (6,256,967)
-------------------------------
Net decrease ............................. (345,044) $ (3,561,035)
===============================
+ Effective April 14, 2003, Class A Shares were redesignated Class I Shares.
- -------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended July 31, 2002+ Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 184,593 $ 1,866,094
Shares issued to shareholders in
reinvestment of dividends .............. 71,456 722,256
-------------------------------
Total issued ............................. 256,049 2,588,350
Shares redeemed .......................... (582,992) (5,896,534)
-------------------------------
Net decrease ............................. (326,943) $ (3,308,184)
===============================
+ Effective April 14, 2003, Class A Shares were redesignated Class I Shares.
5. Short-Term Borrowings:
The Fund, along with certain other funds managed by FAM and its affiliates, is a
party to a $500,000,000 credit agreement with Bank One, N.A. and certain other
lenders. The Fund may borrow under the credit agreement to fund shareholder
redemptions and for other lawful purposes other than for leverage. The 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 Fund pays a commitment fee of .09% per
annum based on the Fund's pro rata share of the unused portion of the credit
agreement. Amounts borrowed under the credit agreement bear interest at a rate
equal to, at each fund's election, the Federal Funds rate plus .50% or a base
rate as determined by Bank One, N.A. On November 29, 2002, the credit agreement
was renewed for one year under the same terms, except that the commitment was
reduced from $1,000,000,000 to $500,000,000. The Fund did not borrow under the
credit agreement during the year ended July 31, 2003.
MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003 23
[LOGO] Merrill Lynch Investment Managers
Notes to Financial Statements (concluded)
6. Distributions to Shareholders:
The tax character of distributions paid during the fiscal years ended July 31,
2003 and July 31, 2002 was as follows:
- -------------------------------------------------------------------------------
7/31/2003 7/31/2002
- -------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income ...................... $ 7,823,358 $ 7,672,844
-------------------------------
Total distributions ...................... $ 7,823,358 $ 7,672,844
===============================
As of July 31, 2003, the components of accumulated losses on a tax basis were as
follows:
- -----------------------------------------------------------------------------
Undistributed tax-exempt income--net .................... $ 85,510
Undistributed long term capital gain--net ............... --
-----------
Total undistributed earnings--net ....................... 85,510
Capital loss carryforward ............................... (7,525,890)*
Unrealized gains--net ................................... 2,040,513**
-----------
Total accumulated losses--net ........................... $(5,399,867)
===========
* On July 31, 2003, the Fund had a net capital loss carryforward of
$7,525,890, of which $2,275,703 expires in 2004; $4,131,859 expires in
2008 and $1,118,328 expires in 2009. This amount will be available to
offset like amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on wash sales, the
tax deferral of losses on straddles, and the difference between book and
tax amortization methods for premiums and discounts on fixed income
securities.
24 MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003
Independent Auditors' Report
To the Shareholders and Board of Trustees of
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, 2003, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and 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 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 as of July 31, 2003 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. 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, the financial statements and financial highlights referred to
above 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, 2003, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and its financial highlights for each of the five years in
the period then ended, in conformity with accounting principles generally
accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
September 19, 2003
MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003 25
[LOGO] Merrill Lynch Investment Managers
Officers and Trustees (unaudited)
Number of
Portfolios in Other Public
Position(s) Length Fund Complex Directorships
Held of Time Overseen by Held by
Name Address & Age with Fund Served Principal Occupation(s) During Past 5 Years Trustee Trustee
====================================================================================================================================
Interested Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Terry K. P.O. Box 9011 President 1999 to President and Chairman of Merrill Lynch Invest- 118 Funds None
Glenn* Princeton, NJ and present ment Managers, L.P. ("MLIM")/Fund Asset 163 Portfolios
08543-9011 Trustee and Management, L.P. ("FAM")--Advised Funds since
Age: 62 1992 to 1999; Chairman (Americas Region) of MLIM from
present 2000 to 2002; Executive Vice President of FAM
and MLIM (which terms as used herein include
their corporate predecessors) from 1983 to 2002;
President of FAM Distributors, Inc. ("FAMD")
from 1986 to 2002 and Director thereof from 1991
to 2002; Executive Vice President and Director of
Princeton Services, Inc. ("Princeton Services")
from 1993 to 2002; President of Princeton
Administrators, L.P. from 1989 to 2002; Director of
Financial Data Services, Inc. from 1985 to 2002.
----------------------------------------------------------------------------------------------------------------------
* Mr. Glenn is a director, trustee or member of an advisory board of certain other investment companies for which FAM
or MLIM acts as investment adviser. Mr. Glenn is an "interested person," as described in the Investment Company
Act, of the Trust based on his former positions with FAM, MLIM, FAMD, Princeton Services and Princeton
Administrators, L.P. The Trustee's term is unlimited. Trustees serve until their resignation, removal, or death, or
until December 31 of the year in which they turn 72. As Trust President, Mr. Glenn serves at the pleasure of the
Board of Trustees.
====================================================================================================================================
Independent Trustees*
- ------------------------------------------------------------------------------------------------------------------------------------
James H. P.O. Box 9095 Trustee 1995 to Director, The China Business Group, Inc. since 40 Funds None
Bodurtha Princeton, NJ present 1996 and Executive Vice President thereof from 59 Portfolios
08543-9095 1996 to 2003; Chairman, Berkshire Holding
Age: 59 Corporation since 1982.
- ------------------------------------------------------------------------------------------------------------------------------------
Joe Grills P.O. Box 9095 Trustee 2002 to Member of the Committee of Investment of 40 Funds Kimco Realty
Princeton, NJ present Employee Benefit Assets of the Association of 59 Portfolios Corporation
08543-9095 Financial Professionals ("CIEBA") since 1986 and
Age: 68 Chairman thereof from 1991 to 1992; Member of
the Investment Advisory Committees of the State
of New York Common Retirement Fund since 1989;
Member of the Investment Advisory Committee of
the Howard Hughes Medical Institute from 1997 to
2000; Director, Duke Management Company since
1992 and Vice Chairman thereof since 1998;
Director, LaSalle Street Fund from 1995 to 2001;
Director, Kimco Realty Corporation since 1997;
Member of the Investment Advisory Committee of
the Virginia Retirement System since 1998 and
Vice Chairman thereof since 2002; Director,
Montpelier Foundation since 1998 and Vice
Chairman thereof since 2000; Member of the
Investment Committee of the Woodberry Forest
School since 2000; Member of the Investment
Committee of the National Trust for Historic
Preservation since 2000.
- ------------------------------------------------------------------------------------------------------------------------------------
Herbert I. P.O. Box 9095 Trustee 1987 to John M. Olin Professor of Humanities, New York 40 Funds None
London Princeton, NJ present University since 1993 and Professor thereof 59 Portfolios
08543-9095 since 1980; President of Hudson Institute since
Age: 64 1997 and Trustee thereof since 1980.
- ------------------------------------------------------------------------------------------------------------------------------------
26 MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003
Officers and Trustees (unaudited) (concluded)
Number of
Portfolios in Other Public
Position(s) Length Fund Complex Directorships
Held of Time Overseen by Held by
Name Address & Age with Fund Served Principal Occupation(s) During Past 5 Years Trustee Trustee
====================================================================================================================================
Independent Trustees* (concluded)
- ------------------------------------------------------------------------------------------------------------------------------------
Andre F. P.O. Box 9095 Trustee 1985 to George Gund Professor of Finance and Banking, 40 Funds None
Perold Princeton, NJ present Harvard Business School since 2000 and a member 59 Portfolios
08543-9095 of the faculty since 1979; Director and Chairman
Age: 51 of the Board, UNX, Inc. since 2003; Director,
Stockback.com from 2002 to 2002; Director,
Sanlam Limited and Sanlam Life since 2001;
Director, Genbel Securities and Gensec Bank
since 1999; Director, Bulldogresearch.com from
2000 to 2001; Director, Sanlam Investment
Management from 1999 to 2001; Director, Quantec
Limited from 1991 to 1999.
- ------------------------------------------------------------------------------------------------------------------------------------
Roberta P.O. Box 9095 Trustee 2000 to Shareholder, Modrall, Sperling, Roehl, Harris & 40 Funds None
Cooper Ramo Princeton, NJ present Sisk, P.A. since 1993; Director of Cooper's, 59 Portfolios
08543-9095 Inc. since 1999 and Chairman of the Board
Age: 60 thereof since 2000; Director of ECMC, Inc.
since 2001.
- ------------------------------------------------------------------------------------------------------------------------------------
Robert S. P.O. Box 9095 Trustee 2002 to Principal of STI Management since 1994; Trustee 40 Funds None
Salomon, Jr. Princeton, NJ present of Commonfund from 1980 to 2002; Director of 59 Portfolios
08543-9095 Rye Country Day School since 2001.
Age: 66
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen B. P.O. Box 9095 Trustee 2002 to Chairman, Fernwood Advisors (investment adviser) 40 Funds None
Swensrud Princeton, NJ present since 1996; Principal of Fernwood Associates 59 Portfolios
08543-9095 (financial consultant) since 1975; Chairman of
Age: 70 RPP Corporation since 1978; Director,
International Mobile Communications, Inc. since
1998.
----------------------------------------------------------------------------------------------------------------------
* The Trustee's term is unlimited. Trustees serve until their resignation, removal or death, or until December 31 of
the year in which they turn 72.
- ------------------------------------------------------------------------------------------------------------------------------------
Position(s) Length
Held of Time
Name Address & Age with Fund Served* Principal Occupation(s) During Past 5 Years
====================================================================================================================================
Trust Officers
- ------------------------------------------------------------------------------------------------------------------------------------
Donald C. P.O. Box 9011 Vice 1993 to First Vice President of FAM and MLIM since 1997 and Treasurer thereof since
Burke Princeton, NJ President present 1999; Senior Vice President and Treasurer of Princeton Services since 1999;
08543-9011 and and 1999 Vice President of FAMD since 1999; Director of MLIM Taxation since 1990.
Age: 43 Treasurer to present
- ------------------------------------------------------------------------------------------------------------------------------------
Kenneth A. P.O. Box 9011 Senior Vice 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
Jacob Princeton, NJ President present Management) of MLIM from 1997 to 2000.
08543-9011
Age: 52
- ------------------------------------------------------------------------------------------------------------------------------------
John M. P.O. Box 9011 Senior Vice 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
Loffredo Princeton, NJ President present Management) of MLIM from 1998 to 2000.
08543-9011
Age: 39
- ------------------------------------------------------------------------------------------------------------------------------------
Robert D. P.O. Box 9011 Vice 1998 to Vice President of MLIM since 1998.
Sneeden Princeton, NJ President present
08543-9011
Age: 50
- ------------------------------------------------------------------------------------------------------------------------------------
Brian D. P.O. Box 9011 Secretary 2003 to Vice President of MLIM since 2002; Attorney with Reed Smith from 2001 to
Stewart Princeton, NJ present 2002; Attorney with Saul Ewing from 1999 to 2001.
08543-9011
Age: 34
----------------------------------------------------------------------------------------------------------------------
* Officers of the Trust serve at the pleasure of the Board of Trustees.
- ------------------------------------------------------------------------------------------------------------------------------------
Further information about the Trust's Officers and Trustees is available in the Trust's Statement of Additional
Information, which can be obtained without charge by calling 1-800-MER-FUND.
- ------------------------------------------------------------------------------------------------------------------------------------
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
MERRILL LYNCH FLORIDA MUNICIPAL BOND FUND JULY 31, 2003 27
[LOGO] Merrill Lynch Investment Managers www.mlim.ml.com
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.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free 1-800-MER-FUND (1-800-637-3863); (2)
on www.mutualfunds.ml.com; and (3) on the Securities and Exchange Commission's
website at http://www.sec.gov.
Merrill Lynch Florida Municipal Bond Fund of
Merrill Lynch Multi-State Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
#16031 -- 7/03
Item 2 - Did registrant adopt a code of ethics, as of the end of the period
covered by this report, that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party? If not, why not? Briefly describe any amendments or
waivers that occurred during the period. State here if code of
ethics/amendments/waivers are on website and give website address-.
State here if fund will send code of ethics to shareholders without
charge upon request--
The registrant has adopted a code of ethics, as of the end of the
period covered by this report, that applies to the registrant's
principal executive officer, principal financial officer and principal
accounting officer, or persons performing similar functions. A copy of
the code of ethics is available without charge upon request by calling
toll-free 1-800-MER-FUND (1-800-637-3863).
Item 3 - Did the registrant's board of directors determine that the registrant
either: (i) has at least one audit committee financial expert serving
on its audit committee; or (ii) does not have an audit committee
financial expert serving on its audit committee? If yes, disclose name
of financial expert and whether he/she is "independent," (fund may, but
is not required, to disclose name/independence of more than one
financial expert) If no, explain why not. -
The registrant's board of directors has determined that (i) the
registrant has the following audit committee financial experts serving
on its audit committee and (ii) each audit committee financial expert
is independent: (1) Joe Grills, (2) Andre Perold, (3) Robert S.
Salomon, Jr., and (4) Stephen B. Swensrud.
Item 4 - Disclose annually only (not answered until December 15, 2003)
(a) Audit Fees - Disclose aggregate fees billed for each of the last
two fiscal years for professional services rendered by
the principal accountant for the audit of the
registrant's annual financial statements or services
that are normally provided by the accountant in
connection with statutory and regulatory filings or
engagements for those fiscal years. N/A.
(b) Audit-Related Fees - Disclose aggregate fees billed in each of the
last two fiscal years for assurance and
related services by the principal accountant
that are reasonably related to the performance
of the audit of the registrant's financial
statements and are not reported under
paragraph (a) of this Item. Registrants shall
describe the nature of the services comprising
the fees disclosed under this category. N/A.
(c) Tax Fees - Disclose aggregate fees billed in each of the last two
fiscal years for professional services rendered by the
principal accountant for tax compliance, tax advice, and
tax planning. Registrants shall describe the nature of
the services comprising the fees disclosed under this
category. N/A.
(d) All Other Fees - Disclose aggregate fees billed in each of the last
two fiscal years for products and services
provided by the principal accountant, other than
the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the
nature of the services comprising the fees
disclosed under this category. N/A.
(e)(1) Disclose the audit committee's pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of
Regulation S-X. N/A.
(e)(2) Disclose the percentage of services described in each of
paragraphs (b) through (d) of this Item that were approved by
the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule
2-01 of Regulation S-X. N/A.
(f) If greater than 50%, disclose the percentage of hours expended on
the principal accountant's engagement to audit the registrant's
financial statements for the most recent fiscal year that were
attributed to work performed by persons other than the principal
accountant's full-time, permanent employees. N/A.
(g) Disclose the aggregate non-audit fees billed by the registrant's
accountant for services rendered to the registrant, and rendered to
the registrant's investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant for each
of the last two fiscal years of the registrant. N/A.
(h) Disclose whether the registrant's audit committee has considered
whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser
whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence. N/A.
Item 5 - If the registrant is a listed issuer as defined in Rule 10A-3 under the
Exchange Act, state whether or not the registrant has a
separately-designated standing audit committee established in
accordance with Section 3(a)(58)(A) of the Exchange Act. If the
registrant has such a committee, however designated, identify each
committee member. If the entire board of directors is acting as the
registrant's audit committee in Section 3(a)(58)(B) of the Exchange
Act, so state.
If applicable, provide the disclosure required by Rule 10A-3(d) under
the Exchange Act regarding an exemption from the listing standards for
audit committees. N/A
(Listed issuers must be in compliance with the new listing rules by the
earlier of their first annual shareholders meeting after January 2004,
or October 31, 2004 (annual requirement))
Item 6 - Reserved
Item 7 - For closed-end funds that contain voting securities in their portfolio,
describe the policies and procedures that it uses to determine how to
vote proxies relating to those portfolio securities. N/A
Item 8 -- Reserved
Item 9(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others
particularly during the period in which this report is being
prepared. The registrant's certifying officers have determined that
the registrant's disclosure controls and procedures are effective
based on our evaluation of these controls and procedures as of a
date within 90 days prior to the filing date of this report.
Item 9(b) -- There were no significant changes in the registrant's internal
controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.
Item 10 - Exhibits
10(a) - Attach code of ethics or amendments/waivers, unless code of ethics or
amendments/waivers is on website or offered to shareholders upon request
without charge. N/A.
10(b) - Attach certifications pursuant to Section 302 of the Sarbanes-Oxley Act.
Attached hereto.
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Merrill Lynch Florida Municipal Bond Fund
By: /s/ Terry K. Glenn
---------------------------
Terry K. Glenn,
President of
Merrill Lynch Florida Municipal Bond Fund
Date: September 23, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By: /s/ Terry K. Glenn
---------------------------
Terry K. Glenn,
President of
Merrill Lynch Florida Municipal Bond Fund
Date: September 23, 2003
By: /s/ Donald C. Burke
---------------------------
Donald C. Burke,
Chief Financial Officer of
Merrill Lynch Florida Municipal Bond Fund
Date: September 23, 2003
Attached hereto as a furnished exhibit are the certifications
pursuant to Section 906 of the Sarbanes-Oxley Act.