MERRILL
LYNCH
NEW JERSEY
MUNICIPAL
BOND FUND
Semi-Annual Report January 31, 1994
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.
Merrill Lynch New Jersey
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, New Jersey
08543-9011
TO OUR SHAREHOLDERS
As 1993 drew to a close, the US economy showed signs of strong
improvement. The initial estimate for gross domestic product
(GDP) growth in the final quarter of 1993 was +5.9% in real
terms, the strongest quarterly performance since the fourth
quarter of 1987. GDP growth was led by interest rate-sensitive
sectors, such as housing, durable goods orders and business
investment in capital equipment. Consumer confidence also
improved after remaining lackluster throughout most of 1993.
While the exceptionally robust rate of growth may not be
sustainable in the first quarter of 1994 (especially considering
the harsh winter weather experienced by virtually half of the
country in January), this strong showing suggests that the US
economy may at last be gaining momentum. This was supported by
the December increase in the Index of Leading Economic
Indicators, the fifth monthly rise in this indicator of future
economic activity.
<PAGE>
At the same time, the rate of inflation remains in check.
Nevertheless, concerns arose late in 1993 that the rate of
business activity might increase inflationary pressures, which
were reflected in an upturn of longer-term interest rates. In
January, Federal Reserve Board Chairman Alan Greenspan indicated
in Congressional testimony that continued strong expansion of
economic activity would lead the central bank to tighten monetary
policy in an effort to contain inflation. On February 4, 1994,
the central bank broke with tradition and publicly announced an
increase in short-term interest rates. In the weeks ahead,
investors will continue to gauge the pace of the economic
expansion and watch for signs of an overheating economy that
could prompt successive Federal Reserve Board actions to raise
short-term interest rates.
The Municipal Market
Yields on tax-exempt securities generally declined over the three
months ended January 31, 1994. Long-term revenue bond yields, as
measured by the Bond Buyer Revenue Bond Index, declined an
additional six basis points (0.06%) to end the quarter at 5.50%.
US Treasury bond yields, however, rose approximately 25 basis
points to end the period at approximately 6.20%. This
outperformance by municipal securities is likely to be the
dominant theme for much of 1994.
During the January quarter, taxable yields remained volatile in
reaction to the inherent conflicts between the extremely strong
economic recovery seen during the last quarter of 1993 and
continued low inflationary pressures. Tax-exempt bond yields,
however, reflected very positive technical factors. During the 12
months ended January 31, 1994, municipalities issued more than
$288 billion in securities, an increase of more than 21% versus
one year ago. As we have discussed in earlier reports to
shareholders, much of this increase has been the result of
municipalities refinancing existing higher-couponed debt. At
current yield levels, few of these issues remain to be refunded.
This has led to estimates of municipal bond issuance declining to
approximately $175 billion for all of 1994. More than $290
billion in long-term tax-exempt securities was issued in 1993.
In addition to this dramatic decline in issuance, investor demand
is expected to increase in the coming year. Greater demand should
be generated by a number of factors, with the recent increases in
marginal Federal income tax rates the most important. Also, bond
calls and early redemptions are expected to increase
significantly in the coming quarters and last into early 1995, at
least. The combination of declining new-issue volume and
increasing numbers of bonds redeemed prior to their stated
maturities will eventually lead to a net decline in the number of
bonds outstanding. In such a scenario, investor demand rises as
bondholders are forced to continually purchase new municipal
bonds to replace their previous holdings.
<PAGE>
The outlook for the municipal bond market is very favorable.
While the historic declines in yields seen over the last year are
unlikely to be repeated, the strong technical framework within
the tax-exempt market would support further modest declines in
tax-exempt yields. At the very least, should interest rates rise
in response to continued strong economic growth and a resurgence
in inflationary pressures, we believe that municipal bond price
deterioration will be limited in comparison to taxable investment
alternatives.
Portfolio Strategy
The New Jersey sector of the tax-exempt bond market outperformed
the general municipal bond market during much of the quarter
ended January 31, 1994. This can be attributed to the extremely
favorable supply/demand balance experienced by the New Jersey
market over the past year. While national issuance of tax-exempt
debt increased by 3% as compared to the same period last year,
New Jersey tax-exempt issuance recorded a dramatic 60.4%
decrease. The decrease in supply coupled with a seemingly
insatiable appetite for tax-exempt income created a scenario in
which New Jersey municipal bonds were among the tax-exempt
market's most-valued and best-performing securities.
With such a positive environment in place, our portfolio
decisions during the January quarter were guided by a decidedly
constructive investment outlook. We kept the Fund's cash reserves
at minimal levels and directed assets toward issues offering
attractive levels of income. We also emphasized those securities
offering the potential for significant price appreciation as the
cyclical trend toward lower long-term interest rates continues.
We appreciate your ongoing interest in Merrill Lynch New Jersey
Municipal Bond Fund, and we look forward to assisting you with
your financial needs in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
March 7, 1994
PERFORMANCE DATA
<PAGE>
None of the past results shown should be considered a representation of future
performance. Investment return and principal value of Class A and Class B
Shares will fluctuate so that shares, when redeemed, may be worth more or less
than their original cost.
<TABLE>
Recent Performance Results*
<CAPTION>
12 Month 3 Month
1/31/94 10/31/93 1/31/93 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $11.49 $11.45 $10.84 + 6.13%(1) +0.48%(1)
Class B Shares 11.49 11.45 10.84 + 6.13(1) +0.48(1)
Class A Shares--Total Return +12.24(2) +2.05(3)
Class B Shares--Total Return +11.68(4) +1.93(5)
Class A Shares--Standardized 30-day Yield 4.30%
Class B Shares--Standardized 30-day Yield 3.98%
<FN>
*Investment results shown for the 3-month and 12-month periods are before the
deduction of any sales charges.
(1)Percent change includes reinvestment of $0.015 per share capital gains distributions.
(2)Percent change includes reinvestment of $0.633 per share ordinary income dividends
and $0.015 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.177 per share ordinary income dividends
and $0.015 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.576 per share ordinary income dividends
and $0.015 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.163 per share ordinary income dividends
and $0.015 per share capital gains distributions.
</TABLE>
PERFORMANCE DATA (concluded)
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
8/31/90--12/31/90 $10.00 $10.17 -- $0.236 + 4.10%
1991 10.17 10.57 $0.007 0.704 +11.27
1992 10.57 10.78 0.036 0.649 + 8.74
1993 10.78 11.39 0.015 0.635 +11.94
1/1/94--1/31/94 11.39 11.49 -- 0.036 + 1.28
------ ------
Total $0.058 Total $2.260
Cumulative total return as of 1/31/94: +42.80%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains distributions
at net asset value on the payable date, and do not include sales charge; results
would be lower if sales charge was included.
<PAGE>
<CAPTION>
Performance Summary--Class B Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
8/31/90--12/31/90 $10.00 $10.17 -- $0.219 + 3.92%
1991 10.17 10.57 $0.007 0.651 +10.72
1992 10.57 10.79 0.036 0.595 + 8.29
1993 10.79 11.39 0.015 0.579 +11.27
1/1/94--1/31/94 11.39 11.49 -- 0.032 + 1.25
------ ------
Total $0.058 Total $2.076
Cumulative total return as of 1/31/94: +40.37%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains distributions
at net asset value on the payable date, and do not reflect deduction of any sales
charge; results would be lower if sales charge was deducted.
</TABLE>
Average Annual Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 12/31/93 +11.94% +7.46%
Inception (8/31/90)
through 12/31/93 +10.84 +9.50
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 12/31/93 +11.27% + 7.27%
Inception (8/31/90)
through 12/31/93 +10.29 +10.05
[FN]
*Maximum contingent deferred sales charge is 4% and is
reduced to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales
charge.
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <S> <C> <S> <C>
New Jersey--93.2%
A- NR $ 1,000 Atlantic City, New Jersey, Municipal Utilities Authority, Water Systems Revenue
Bonds, 7.75% due 5/01/2000 (g) $ 1,213
Atlantic County, New Jersey, Utilities Authority, Solid Waste Revenue Bonds:
NR Baa 4,000 7% due 3/01/2008 4,387
NR Baa 3,000 7.125% due 3/01/2016 3,227
AAA Aaa 1,500 Camden County, New Jersey, Municipal Utilities Authority, Sewer Revenue Bonds,
8.125% due 12/01/2007 (f) 1,750
BBB+ Baa1 4,750 Camden County, New Jersey, Pollution Control Financing Authority, Solid Waste
Resource Recovery Revenue Bonds, Series D, 7.25% due 12/01/2010 5,167
AAA Aaa 4,500 Cape May County, New Jersey, Industrial Pollution Control Financing Authority, Revenue
Refunding Bonds (Atlantic City Electric Company), Series A, 6.80% due 3/01/2021 (d) 5,695
Delaware River and Bay Development Authority, Revenue Refunding Bonds (d):
AAA Aaa 2,500 5% due 1/01/2017 2,493
AAA Aaa 8,475 4.75% due 1/01/2024 8,148
A A 500 Delaware River Joint Toll Bridge Commission, Pennsylvania, Bridge Revenue Bonds,
7.875% due 7/01/1998 (g) 591
AAA Aaa 1,430 Egg Harbor Township, New Jersey, School District Revenue Bonds, 4.75% due 2/15/2009 (h) 1,404
AAA Aaa 4,140 Evesham, New Jersey, Municipal Utilities Authority, Revenue Refunding Bonds,
Series A, 5.60% due 7/01/2012 (d) 4,361
AAA Aaa 8,750 Hoboken, Union City, Weehawken, New Jersey, Sewer Authority, Sewer Revenue
Refunding Bonds, 6.20% due 8/01/2019 (d) 9,585
AAA Aaa 2,500 Hudson County, New Jersey, COP (Correctional Facilities), Revenue Refunding Bonds,
6.60% due 12/01/2021 (d) 2,809
AAA Aaa 12,025 Jersey City, New Jersey, Sewer Authority, Sewer Revenue Refunding Bonds,
4.50% due 1/01/2019 (f) 11,173
NR Baa1 3,000 Mercer County, New Jersey, Improvement Authority, Revenue Refunding Bonds
(Solid Waste Resource Recovery Project), Series B, AMT, 6.80% due 4/01/2005 3,180
NR NR 5,750 Middlesex County, New Jersey, Pollution Control Authority, Revenue Refunding Bonds
(Amerada Hess), 6.875% due 12/01/2022 6,315
AAA Aaa 1,100 Middlesex County, New Jersey, Utilities Authority, Sewer Revenue Bonds, Series A,
6.50% due 9/15/2011 (f) 1,225
<PAGE>
AAA Aaa 2,000 Monmouth County, New Jersey, Improvement Authority, Sewer Facilities
Revenue Refunding Bonds, 6.75% due 2/01/2013 (d) 2,275
</TABLE>
PORTFOLIO ABBREVIATIONS
To simplify the listings of Merrill Lynch New Jersey Municipal Bond Fund's
portfolio holdings in the Schedule of Investments, we have abbreviated the
names of many of the securities according to the list below and at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
EDA Economic Development Authority
GO General Obligation Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
S/F Single-Family
TRAN Tax and Revenue Anticipation Notes
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <S> <C> <S> <C>
New Jersey (continued)
AAA Aaa $ 1,300 Newark, New Jersey, Board of Education, GO, UT, 6% due 10/15/2010 (c) $ 1,425
AA- Aa 5,585 New Jersey Building Authority, State Building Revenue Bonds, 5% due 6/15/2019 5,421
New Jersey, EDA, Dock Facility Revenue Refunding Bonds (Bayonne International Matex
Tank Terminal Project), Series A, VRDN (a):
NR VMIG1 1,200 2.10% due 12/01/2027 1,200
NR VMIG1 1,600 2.15% due 12/01/2027 1,600
New Jersey, EDA, Economic Development Revenue Bonds:
BB+ Baa2 2,000 (American Airlines Inc. Project), AMT, 7.10% due 11/01/2031 2,195
NR Aaa 600 (Hoffman-LaRoche Inc. Project), AMT, VRDN, 2.25% due 11/01/2011 (a) 600
AAA Aaa 5,170 (Saint Barnabas Realty Project), 5.25% due 7/01/2020 (d) 5,225
A A1 4,500 New Jersey, EDA, Lease Rental Revenue Bonds (Liberty State Park Project), 6.80%
due 3/15/2022 5,051
A A2 2,000 New Jersey EDA, Natural Gas Facilities, Revenue Refunding Bonds (New Jersey
Natural Gas Company Project), Series A, 5.375% due 8/01/2023 2,011
AAA Aaa 7,400 New Jersey Educational Facilities Financing Authority Revenue Bonds (Jersey City
State College), Series D, 6.125% due 7/01/2022 (d) 8,112
<PAGE>
New Jersey Educational Facilities Financing Authority Revenue Bonds (Seton Hall
University Project):
AAA Aaa 2,000 Series C, 6.85% due 7/01/2019 (e) 2,257
BBB Baa 500 Series D, 7% due 7/01/2021 559
New Jersey State Health Care Facilities Financing Authority Revenue Bonds:
NR Baa1 2,725 (Deborah Heart and Lung Center), 6.30% due 7/01/2023 2,845
BBB+ NR 1,000 (East Orange General Hospital), Series B, 7.75% due 7/01/2020 1,140
AAA Aaa 3,040 (Mercer Medical Center), 6.50% due 7/01/2021 (d) 3,402
A- NR 1,750 (Pascack Valley Hospital Association), 6.90% due 7/01/2021 1,943
AAA Aaa 4,000 Refunding (Allegany Health-Our Lady of Lourdes Hospital), 5.125% due 7/01/2013 (d) 4,029
A- A 2,000 Refunding (Atlantic City Medical Center), Series C, 6.80% due 7/01/2011 2,235
AAA Aaa 5,000 Refunding (West Jersey Health Systems), 6.125% due 7/01/2012 (d) 5,494
BBB- Baa 2,950 (Saint Elizabeth's Hospital), Series B, 8.25% due 7/01/2020 3,396
BBB Baa 3,150 (Saint Mary Hospital), 5.875% due 7/01/2012 3,150
AAA Aaa 800 (Saint Peter's Medical Center), Series C, 8.60% due 7/01/2017 (d) 942
NR Baa 1,000 (Southern Ocean County Hospital), Series A, 6.125% due 7/01/2013 1,040
AA- Aaa 1,000 New Jersey State Highway Authority, General Revenue Bonds (Garden State Parkway),
7.25% due 1/01/1999 (g) 1,166
New Jersey State Housing and Mortgage Finance Agency, Home Buyer Revenue Bonds (d):
AAA Aaa 725 Series A, 7.50% due 4/01/2015 776
AAA Aaa 955 Series B, AMT, 7.90% due 10/01/2022 1,027
AAA Aaa 3,300 Series F-2, AMT, 6.30% due 4/01/2025 3,506
New Jersey State Housing and Mortgage Finance Agency, Home Mortgage
Revenue Bonds (d):
AAA Aaa 600 Series A, 7.875% due 10/01/2016 638
AAA Aaa 255 Series C, 8.375% due 4/01/2017 272
A+ NR 5,000 New Jersey State Housing and Mortgage Finance Agency, Housing Revenue Refunding
Bonds, Series A, 6.95% due 11/01/2013 5,462
A+ NR 1,125 New Jersey State Housing and Mortgage Finance Agency, M/F Housing Revenue Bonds
(Mont Clarion Project), Series J, AMT, 7.70% due 11/01/2029 1,201
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <S> <C> <S> <C>
New Jersey (concluded)
AAA NR $10,410 New Jersey State Housing and Mortgage Finance Agency, M/F Housing Revenue
Refunding Bonds (Presidential Plaza), 6.95% due 5/01/2013 (i) $11,593
<PAGE>
New Jersey State Sports and Exposition Authority Revenue Bonds, Series A:
NR Aa 2,445 Refunding (Sports Complex), 5.125% due 1/01/2016 2,452
A+ Aa 3,000 (State Contract), 6.50% due 3/01/2019 3,347
SP1+ MIG1++ 2,500 New Jersey State, TRAN, Series A, 3% due 6/15/1994 2,507
AAA Aaa 200 New Jersey State Turnpike Authority, Turnpike Revenue Bonds, VRDN, 2.45%
due 1/01/2000 (a)(d) 200
New Jersey State Turnpike Authority, Turnpike Revenue Refunding Bonds:
A A 3,000 Series C, 6.50% due 1/01/2016 3,539
NR VMIG1 1,000 Series D, VRDN, 2.35% due 1/01/2018 (a)(f) 1,000
New Jersey State Various Purpose Revenue Bonds (k):
AA+ Aa1 500 9.40% due 4/01/2000 643
AA+ Aa1 1,500 7.25% due 4/15/2000 1,728
New Jersey Wastewater Treatment Revenue Bonds:
A A 1,000 7.90% due 9/01/2007 1,148
AAA Aaa 4,535 4.80% due 3/01/2010 (c) 4,445
AAA Aaa 3,000 New Jersey Water Supply Authority Revenue Bonds (Delaware and Raritan System),
Custodial Receipts/Certificates, AMT, 7.875% due 11/01/2013 (d) 3,527
AAA Aaa 3,000 North Bergen Township, New Jersey, Municipal Utilities Authority, Sewer Revenue Bonds,
7.625% due 12/15/1997 (f)(g) 3,482
AAA Aaa 2,500 Passaic Valley, New Jersey, Sewer Commission, Sewer Systems Refunding Bonds,
Series D, 5.875% due 12/01/2022 (c) 2,666
Passaic Valley, New Jersey, Water Commission Water Supply Bonds (f):
AAA Aaa 3,500 Refunding, Series A, 5% due 12/15/2022 3,468
AAA Aaa 2,325 Series A, 6.40% due 12/15/2022 2,631
Port Authority of New York and New Jersey, Consolidated Bonds:
A1- A1 3,000 69th Series, 7.125% due 6/01/2025 3,469
AA- A1 3,000 74th Series, 6.75% due 8/01/2013 (j) 1,049
AA- A1 1,000 85th Series, 5.375% due 3/01/2028 1,036
AA- A1 5,000 91st Series, 5.20% due 11/15/2015 5,039
AA- A1 5,905 Refunding, 87th Series, 5.25% due 7/15/2017 5,955
A1+ VMIG1 800 Port Authority of New York and New Jersey, Versatile Structure Special Obligation
Revenue Bonds, VRDN, 2.25% due 8/01/2028 (a) 800
Rutgers State University, New Jersey, University Bonds:
AA A1 1,000 Refunding, Series A, 6.50% due 5/01/2018 1,116
AAA Aaa 1,675 Revenue, Series O, 7.90% due 5/01/1998 (g) 1,974
AA A1 1,000 Revenue, Series P, 6.85% due 5/01/2021 1,137
A+ NR 1,750 South Jersey Port Corporation, New Jersey, Revenue Refunding Bonds (Marine Terminal),
Series G, 5.60% due 1/01/2023 1,796
<PAGE>
University of Medicine and Dentistry, New Jersey, Bonds:
AA A 1,170 Refunding, Series D, 6.50% due 12/01/2005 1,345
AA A 2,750 Series E, 6.50% due 12/01/2018 3,071
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <S> <C> <S> <C>
Puerto Rico--5.6%
A1+ VMIG1 $ 300 Puerto Rico Government Development Bank, Revenue Refunding Bonds,
VRDN, 1.75% due 12/01/2015 (a) $ 300
AAA NR 1,000 Puerto Rico Highway Authority, Highway Revenue Bonds, Series Q, 7.75% due 7/01/2000 (g) 1,225
Puerto Rico Housing Finance Corporation, S/F Mortgage Revenue Bonds (b):
AAA Aaa 2,500 AMT, RIB, 10.407% due 8/04/2025 (l) 2,784
AAA Aaa 755 (Portfolio 1), Series B, 7.65% due 10/15/2022 813
Puerto Rico Industrial, Medical and Environmental Pollution Control Facilities,
Financing Authority Revenue Bonds, Series A:
NR Aaa 3,000 5.10% due 12/01/2018 2,989
AA- Aa3 1,500 (Motorola Inc. Project), 6.75% due 1/01/2014 1,716
BBB+ Baa1 1,195 Puerto Rico Infrastructure Financing Authority Revenue Bonds, Series A, 7.75%
due 7/01/2008 1,371
AAA NR 2,055 Puerto Rico Public Improvement Revenue Bonds, 7.70% due 7/01/2000 (g) 2,513
Total Investments (Cost--$225,125)--98.8% 244,192
Other Assets Less Liabilities--1.2% 3,008
---------
Net Assets--100.0% $ 247,200
=========
<PAGE>
<FN>
(a) The interest rate is subject to change periodically based upon the prevailing market rate.
The interest rates shown are those in effect at January 31, 1994.
(b) GNMA Collateralized.
(c) AMBAC Insured.
(d) MBIA Insured.
(e) BIG Insured.
(f) FGIC Insured.
(g) Prerefunded.
(h) FSA Insured.
(i) FHA Collateralized.
(j) Represents the yield to maturity on this zero coupon issue.
(k) Interest secured by escrow.
(l) The interest rate is subject to change periodically and inversely based upon the prevailing
market rate. The interest rates shown are those in effect at January 31, 1994.
++ Highest short-term rating by Moody's Investors Service, Inc.
</TABLE>
See Notes to Financial Statements.
<TABLE>
FINANCIAL INFORMATION
<CAPTION>
Statement of Assets and Liabilities as of January 31, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$225,124,537) (Note 1a) $244,191,532
Cash 95,057
Receivables:
Interest $ 2,886,878
Securities sold 1,474,750
Beneficial interest sold 1,303,263 5,664,891
------------
Deferred organization expenses (Note 1d) 32,182
Prepaid registration fees and other assets (Note 1d) 25,839
------------
Total assets 250,009,501
------------
Liabilities: Payables:
Securities purchased 1,416,741
Beneficial interest redeemed 889,561
Dividends to shareholders (Note 1e) 219,014
Investment adviser (Note 2) 105,952
Distributor (Note 2) 76,617 2,707,885
------------
Accrued expenses and other liabilities 101,258
------------
Total liabilities 2,809,143
------------
<PAGE>
Net Assets: Net assets $247,200,358
============
Net Assets Class A Shares of beneficial interest, $.10 par value,
Consist of: unlimited number of shares authorized $ 434,957
Class B Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 1,715,913
Paid-in capital in excess of par 224,951,288
Undistributed realized capital gains--net 1,031,205
Unrealized appreciation on investments--net 19,066,995
------------
Net assets $247,200,358
============
Net Asset Value: Class A--Based on net assets of $49,984,683 and 4,349,568 shares
of beneficial interest outstanding $ 11.49
============
Class B--Based on net assets of $197,215,675 and 17,159,129 shares
of beneficial interest outstanding $ 11.49
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended
January 31, 1994
<S> <S> <C>
Investment Income Interest and amortization of premium and discount earned $ 6,871,043
(Note 1c):
Expenses: Investment advisory fees (Note 2) 642,142
Distribution fees--Class B (Note 2) 461,549
Transfer agent fees--Class B (Note 2) 37,786
Professional fees 32,434
Accounting services (Note 2) 28,411
Printing and shareholder reports 22,725
Custodian fees 11,155
Transfer agent fees--Class A (Note 2) 8,628
Amortization of organization expenses (Note 1d) 7,481
Registration fees (Note 1d) 6,766
Pricing fees 5,519
Trustees' fees and expenses 4,771
Other 565
------------
Total expenses 1,269,932
------------
Investment income--net 5,601,111
------------
<PAGE>
Realized & Realized gain on investments--net 1,786,335
Unrealized Change in unrealized appreciation on investments--net 4,409,014
Gain on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 11,796,460
(Notes 1c & 3): ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the Year
Months Ended Ended
Increase (Decrease) in Net Assets: Jan. 31, 1994 July 31,1993
<S> <S> <C> <C>
Operations: Investment income--net $ 5,601,111 $ 9,638,126
Realized gain on investments--net 1,786,335 493,380
Change in unrealized appreciation on investments--net 4,409,014 4,325,705
------------ ------------
Net increase in net assets resulting from operations 11,796,460 14,457,211
------------ ------------
Dividends & Investment income--net:
Distributions to Class A (1,270,720) (2,223,253)
Shareholders Class B (4,330,391) (7,414,873)
(Note 1e): Realized gain on investments--net:
Class A (197,825) (153,506)
Class B (769,333) (580,052)
------------ ------------
Net decrease in net assets resulting from dividends and distributions to
shareholders (6,568,269) (10,371,684)
------------ ------------
Beneficial Interest Net increase in net assets derived from beneficial interest transactions 24,296,161 49,072,852
Transactions ------------ ------------
(Note 4):
Net Assets: Total increase in net assets 29,524,352 53,158,379
Beginning of period 217,676,006 164,517,627
------------ ------------
End of period $247,200,358 $217,676,006
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
Class A
--------------------------------------------
For the
For the Period
The following per share data and ratios have been derived Six Months For the Year August 31,
from information provided in the financial statements. Ended Ended 1990++ to
January 31, July 31, July 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.23 $ 11.03 $ 10.37 $ 10.00
Operating ------- ------- ------- -------
Performance: Investment income--net .30 .62 .66 .61
Realized and unrealized gain on investments--net .31 .24 .70 .37
------- ------- ------- -------
Total from investment operations .61 .86 1.36 .98
------- ------- ------- -------
Less dividends and distributions:
Investment income--net (.30) (.62) (.66) (.61)
Realized gain on investments--net (.05) (.04) (.04) --
------- ------- ------- -------
Total dividends and distributions (.35) (.66) (.70) (.61)
------- ------- ------- -------
Net asset value, end of period $ 11.49 $ 11.23 $ 11.03 $ 10.37
======= ======= ======= =======
Total Investment Based on net asset value per share 5.43%+++ 8.16% 13.57% 10.28%+++
Return:** ======= ======= ======= =======
Ratios to Expenses, net of reimbursement .69%* .71% .60% .46%*
Average ======= ======= ======= =======
Net Assets: Expenses .69%* .72% .77% 1.09%*
======= ======= ======= =======
Investment income--net 5.20%* 5.62% 6.15% 6.63%*
======= ======= ======= =======
Supplemental Net assets, end of period (in thousands) $49,985 $47,024 $35,042 $18,368
Data: ======= ======= ======= =======
Portfolio turnover 23.83% 16.28% 29.58% 15.81%
======= ======= ======= =======
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class B
--------------------------------------------
For the
For the Period
The following per share data and ratios have been derived Six Months For the Year August 31,
from information provided in the financial statements. Ended Ended 1990++ to
January 31, July 31, July 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.23 $ 11.03 $ 10.37 $ 10.00
Operating -------- -------- -------- --------
Performance: Investment income--net .27 .56 .61 .56
Realized and unrealized gain on investments--net .31 .24 .70 .37
-------- -------- -------- --------
Total from investment operations .58 .80 1.31 .93
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.27) (.56) (.61) (.56)
Realized gain on investments--net (.05) (.04) (.04) --
-------- -------- -------- --------
Total dividends and distributions (.32) (.60) (.65) (.56)
-------- -------- -------- --------
Net asset value, end of period $ 11.49 $ 11.23 $ 11.03 $ 10.37
======== ======== ======== ========
Total Investment Based on net asset value per share 5.16%+++ 7.61% 13.10% 9.68%+++
Return:** ======== ======== ======== ========
Ratios to Expenses, excluding distribution fees and net of
Average reimbursement .69%* .71% .60% .50%*
Net Assets: ======== ======== ======== ========
Expenses, net of reimbursement 1.19%* 1.21% 1.10% 1.00%*
======== ======== ======== ========
Expenses 1.19%* 1.22% 1.28% 1.58%*
======== ======== ======== ========
Investment income--net 4.69%* 5.11% 5.67% 6.08%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands). $197,216 $170,652 $129,475 $ 77,165
Data: ======== ======== ======== ========
Portfolio turnover 23.83% 16.28% 29.58% 15.81%
======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch New Jersey Municipal Bond Fund (the "Fund") is part
of Merrill Lynch Multi-State Municipal Series Trust (the
"Trust"). The Fund is registered under the Investment Company Act
of 1940 as a non-diversified, open-end management investment
company. The Fund offers both Class A and Class B Shares. Class A
Shares are sold with a front-end sales charge. Class B Shares may
be subject to a contingent deferred sales charge. Both classes of
shares have identical voting, dividend, liquidation and other
rights and the same terms and conditions, except that Class B
Shares bear certain expenses related to the distribution of such
shares and have exclusive voting rights with respect to matters
relating to such distribution expenditures. The following is a
summary of significant accounting policies followed by the Fund.
(a) Valuation of investments--Municipal bonds and other portfolio
securities in which the Fund invests are traded primarily in the
over-the-counter municipal bond and money markets and are valued
at the last available bid price in the over-the-counter market or
on the basis of yield equivalents as obtained from one or more
dealers that make markets in the securities. Financial futures
contracts and options thereon, which are traded on exchanges, are
valued at their settlement prices as of the close of such
exchanges. Short-term investments with a remaining maturity of
sixty days or less are valued on an amortized cost basis, which
approximates market value. Options, which are traded on
exchanges, are valued at their last sale price as of the close of
such exchanges or, lacking any sales, at the last available bid
price. 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) 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.
(c) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are
entered into (the trade dates). Interest income is recognized on
the accrual basis. Original issue discounts and market premiums
are amortized into interest income. Realized gains and losses on
security transactions are determined on the identified cost
basis.
<PAGE>
(d) Deferred organization expenses and prepaid registration
fees--Deferred organization expenses are charged to expense on a
straight-line basis over a five-year period. Prepaid registration
fees are charged to expense as the related shares are issued.
(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.
2. Investment Advisory Agreement and Transactions with
Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Fund Asset Management, L.P. ("FAM"). Effective January 1, 1994,
the investment advisory business of FAM was reorganized from a
corporation to a limited partnership. Both prior to and after the
reorganization, ultimate control of FAM was vested with Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of FAM is
Princeton Services, Inc., an indirect wholly-owned subsidiary of
ML & Co. The limited partners are ML & Co. and Merrill Lynch
Investment Management, Inc. ("MLIM"), which is also an indirect
wholly-owned subsidiary of ML & Co. The Fund has also entered
into Distribution Agreements and a Distribution Plan with Merrill
Lynch Funds Distributor, Inc. ("MLFD" or "Distributor"), a
wholly-owned subsidiary of MLIM.
NOTES TO FINANCIAL STATEMENTS (concluded)
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and
certain other services necessary to the operations of the Fund.
For such services, the Fund pays a monthly fee based upon the
average daily value of the Fund's net assets at the following
annual rates: 0.55% of the Fund's average daily net assets not
exceeding $500 million; 0.525% of average daily net assets in
excess of $500 million but not exceeding $1 billion; and 0.50% of
average daily net assets in excess of $1 billion. The Investment
Advisory Agreement obligates FAM to reimburse the Fund to the
extent the Fund's expenses (excluding interest, taxes,
distribution fees, brokerage fees and commissions, and
extraordinary items) exceed 2.5% of the Fund's first $30 million
of average daily net assets, 2.0% of the next $70 million of
average daily net assets and 1.5% of the average daily net assets
in excess thereof. FAM's obligation to reimburse the Fund is
limited to the amount of the management fee. No fee payment will
be made to the Investment Advisor during any fiscal year which
will cause such expenses to exceed expense limitations at the
time of such payment.
<PAGE>
Pursuant to a distribution plan (the "Distribution Plan") adopted
by the Fund under Rule 12b-1 under the Investment Company Act of
1940, the Fund pays the Distributor ongoing account maintenance
and distribution fees which are accrued daily and paid monthly,
at the annual rates of 0.25% and 0.25%, respectively, of the
average daily net assets of the Class B Shares of the Fund.
Pursuant to a sub-agreement with the Distributor, Merrill Lynch
also provides account maintenance and distribution services to
the Fund. The ongoing account maintenance fee compensates the
Distributor and Merrill Lynch for providing account maintenance
services to Class B shareholders. The ongoing distribution fee
compensates the Distributor and Merrill Lynch for providing
distribution services and bearing certain distribution-related
expenses of the Fund, including payments to financial consultants
for selling Class B Shares of the Fund. As authorized by the Plan,
the Distributor has entered into an agreement with Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), an affiliate of FAM,
which provides for the compensation of MLPF&S for providing
distribution-related services to the Fund.
For the six months ended January 31, 1994, MLFD earned
underwriting discounts of $6,430, and MLPF&S earned dealer
concessions of $60,584 on sales of the Fund's Class A Shares.
MLPF&S also received contingent deferred sales charges of
$144,930 for the sale of Class B Shares during the period.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary
of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, MLIM, MLFD, FDS, MLPF&S, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term
securities, for the six months ended January 31, 1994 were
$79,658,694 and $53,190,218, respectively.
Net realized and unrealized gains (losses) as of January 31, 1994
were as follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Long-term investments $ 1,845,703 $19,067,335
Short-term investments -- (340)
Financial futures contracts (59,368) --
----------- -----------
Total $ 1,786,335 $19,066,995
=========== ===========
<PAGE>
As of January 31, 1994, net unrealized appreciation for Federal
income tax purposes aggregated $19,066,995, of which $19,098,252
related to appreciated securities and $31,257 related to
depreciated securities. The aggregate cost of investments at
January 31, 1994 for Federal income tax purposes was
$225,124,537.
4. Beneficial Interest Transactions:
Net increase in net assets derived from beneficial interest
transactions was $24,296,161 and $49,072,852 for the six months
ended January 31, 1994 and the year ended July 31, 1993,
respectively.
Transactions in shares of beneficial interest for Class A and
Class B Shares were as follows:
Class A Shares for the Six Months Dollar
Ended January 31, 1994 Shares Amount
Shares sold 523,315 $ 5,971,765
Shares issued to shareholders
in reinvestment of dividends
and distributions 63,014 718,431
----------- -----------
Total issued 586,329 6,690,196
Shares redeemed (423,515) (4,842,701)
----------- -----------
Net increase 162,814 $ 1,847,495
=========== ===========
Class A Shares for the Year Dollar
Ended July 31, 1993 Shares Amount
Shares sold 1,665,944 $18,267,413
Shares issued to shareholders
in reinvestment of dividends
and distributions 103,657 1,133,213
----------- -----------
Total issued 1,769,601 19,400,626
Shares redeemed (760,681) (8,310,908)
----------- -----------
Net increase 1,008,920 $11,089,718
=========== ===========
<PAGE>
Class B Shares for the Six Months Dollar
Ended January 31, 1994 Shares Amount
Shares sold 2,671,708 $30,502,580
Shares issued to shareholders
in reinvestment of dividends
and distributions 242,677 2,766,773
----------- -----------
Total issued 2,914,385 33,269,353
Shares redeemed (947,258) (10,820,687)
----------- -----------
Net increase 1,967,127 $22,448,666
=========== ===========
Class B Shares for the Year Dollar
Ended July 31, 1993 Shares Amount
Shares sold 5,267,606 $57,919,146
Shares issued to shareholders
in reinvestment of dividends
and distributions 394,724 4,316,350
----------- -----------
Total issued 5,662,330 62,235,496
Shares redeemed (2,210,388) (24,252,362)
----------- -----------
Net increase 3,451,942 $37,983,134
=========== ===========
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Kenneth S. Axelson, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Jerry Weiss, Secretary
Custodian
National Westminster Bank NJ
10 Exchange Place
Jersey City, New Jersey 07302
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
