MERRILL LYNCH
NEW JERSEY
MUNICIPAL
BOND FUND
FUND LOGO
Annual Report
July 31, 1995
<PAGE>
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Merrill Lynch New Jersey
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
<PAGE>
TO OUR SHAREHOLDERS
In the July quarter, economic data generally showed evidence of
slowing activity. Gross domestic product growth for the first three
months of 1995 was reported at 2.7%, the weakest showing in the past
18 months. Other signs of a sluggish economy included lackluster
durable goods orders, slowing growth in the manufacturing sector,
and three consecutive months of declines in the Index of Leading
Economic Indicators, an occurrence which has often (but not always)
forecast recessions. As a result, concerns arose that the economic
"soft landing" could turn into an actual recession. However, at the
same time there were also expectations that a few months of very
slow or zero growth would be followed by a pick-up in economic
activity later in the year. This view was supported by the stronger-
than-expected employment data for June and an upward revision in
May's employment figures, as well as improving housing activity
measures and consumer confidence surveys.
Thus far in 1995, economic developments have been very positive for
the US stock and bond markets, and most US stock market averages
recently have attained record levels. In contrast, the US dollar has
been persistently weak, especially relative to the yen. Following
the Federal Reserve Board's cut in short-term interest rates in
early July, continued signs of a moderating expansion and well-
contained inflationary pressures could provide further assurance
that the peak in US interest rates is behind us, creating a stronger
foundation for higher stock and bond prices. On the other hand,
indications of reaccelerating growth and increasing inflationary
pressures would likely suggest that higher interest rates are on the
horizon, a negative development for the US financial markets. The
outcome of the current deliberations on reducing the Federal budget
deficit will also play a role in the investment outlook for the US
capital markets.
The Municipal Market
Tax-exempt bond yields exhibited considerable volatility during the
three months ended July 31, 1995. Municipal bond yields initially
fell throughout May into early June as evidence of a slowing
domestic economy and moderate inflationary pressures accumulated. As
measured by the Bond Buyer Revenue Bond Index, yields of A-rated,
uninsured tax-exempt revenue bonds declined 35 basis points (0.35%)
to 5.94%. By late June, however, amid signs of a potentially
resurgent economy, particularly in the rebounding housing sector,
bond yields returned to their April quarter's levels of
approximately 6.30%. The lowering of short-term interest rates by
the Federal Reserve Board in early July temporarily restored
investor confidence and tax-exempt bond yields fell to 6.05%. As
additional economic indicators were released during July, investors
again saw signs that the economy was regaining momentum and that the
Federal Reserve Board action had been premature. Fears that an
expanding economy would have negative inflationary consequences
pushed municipal bond yields higher, ending the July 31, 1995
quarter essentially unchanged at 6.27%. US Treasury bond yields
exhibited a similar pattern of volatility during the July quarter.
However, US Treasury bond yields continued to decline, falling
approximately 50 basis points to 6.85%.
<PAGE>
Municipal bonds have underperformed US Treasury securities for a
number of reasons. The record highs of the US equity market have
continued to attract retail investors seeking further capital gains.
Investor demand has also been diminished in recent months by the
"sticker shock" effect that periodically affects the municipal bond
market. Investors who had become accustomed to purchasing tax-exempt
securities in the 6.50%--7.00% range six to seven months ago have
demonstrated understandable reluctance to purchase similar
securities at current levels. The strong fundamental structure of
the municipal bond market, however, suggests that such hesitancy may
prove costly.
However, the major reason by far for the tax-exempt market's recent
underperformance has been concerns regarding the implication for
municipal bonds' tax advantage resulting from various proposed tax
law changes (for example, flat tax, value-added tax or national
sales tax) that have reduced investor demand for tax-exempt
products. Such concerns are likely to quickly recede as investors
realize that such, if any, changes are unlikely to be enacted before
late 1996 at the earliest. Long-term investors will also recall 1986
when similar tax proposals were made, municipal bond yields
initially rose, in some instances, to over 100% of taxable yields.
Tax-exempt bond yields quickly declined as investors' fears proved
to be unfounded.
The municipal bond market's strong technical position has diminished
somewhat in recent months. New-issue supply over the last six months
has totaled approximately $71 billion, or a decline of over 20%
compared to the corresponding period in 1994. In recent months,
however, municipalities issued approximately $41 billion in new
securities, which represents only a 6% decline versus the same
period a year earlier. Investor demand has remained muted in recent
months despite significant funds available to investors. By the end
of July investors, both individual and institutional, are expected
to have received as much as $80 billion from tax-exempt bond
maturities, coupon payments and the proceeds of early bond
redemptions. Little new money has entered the municipal market in
recent months, largely in response to the factors mentioned above.
Consequently, much of the technical support the municipal market
enjoyed earlier this year has evaporated, causing municipal bond
yields to decline at a slower rate than their taxable counterparts.
However, the recent relative underperformance of municipal bonds has
made them particularly attractive to long-term investors. Tax-exempt
bonds currently yield well over 90% of US Treasury securities. In
some instances, A-rated, long-term revenue bonds have yielded almost
95% of US Treasury bonds. Analysts usually consider municipal bonds
yielding over 82% of US Treasury securities to be historically
attractive. With inflation-adjusted, "real" after-tax equivalent tax-
exempt yields of over 6.50%, municipal securities appear to
represent considerable value.
<PAGE>
Current tax-exempt yield levels appear to be overcompensating for
any proposed changes in tax law that can reasonably be expected to
be enacted. As Congressional hearings on this matter would continue
into 1996, and the revenue losses resultant from such changes become
more apparent, the likelihood of any significant changes to tax
codes and the resultant decline of municipal bonds' inherent tax
advantage should decline. Under such a scenario, tax-exempt bond
yields would quickly decline and currently available municipal bond
yields would return to their normal historic relationship.
Fiscal Year in Review
During the fiscal year ended July 31, 1995, the bond market was very
volatile. As measured by the Bond Buyer Revenue Bond Index, long-
term tax-exempt bond yields ranged from a high of 7.37% on November
17, 1994 to a low of 5.94% on June 8, 1995. At July 31, 1995, the
Index was near the low for the period, yielding 6.27%. After rising
sharply for most of 1994, long-term interest rates rallied
significantly during the first half of 1995 as the US economy nearly
slowed to a halt. This slowdown in economic growth initially caused
the Federal Reserve Board to stop tightening monetary policy early
in 1995. Once the magnitude of the slowdown became apparent in July,
the Federal Reserve Board decreased the Federal Funds rate by 0.25%
to 5.75%.
We altered the portfolio strategy for Merrill Lynch New Jersey
Municipal Bond Fund during the past 12 months as investor psychology
changed. The Fund entered the year defensively postured and
maintained that outlook through early 1995. This enabled the Fund to
limit the decline in total returns which all long-term municipal
bond funds experienced during this very difficult period. (Complete
performance information, including average annual total returns, can
be found on pages 3-5 of this report to shareholders.) However, as
evidence of a stagnant economy emerged early in 1995, we started to
become constructive on the market. Therefore, our strategy centered
on reducing cash reserves to a minimum and restructuring the
holdings to extend the average life and lower the average coupon of
the portfolio. This entailed selling par bonds which have little
upside potential, and buying discount coupon bonds. Recently, the
economy improved and we responded by raising cash reserves and
shortening the average life of the portfolio as a precautionary
measure. Because of our strategy, the Fund was able to generate a
positive total return and an attractive current yield to our
shareholders.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
September 5, 1995
PERFORMANCE DATA
About Fund Performance
Since October 21, 1994, investors have been able to purchase shares
of the Fund through the Merrill Lynch Select Pricing SM System,
which offers four pricing alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 4% and bear no ongoing distribution or account maintenance
fees. Class A Shares are available only to eligible investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.25% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 10 years.
* Class C Shares are subject to a distribution fee of 0.35% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 4% and an
account maintenance fee of 0.10% (but no distribution fee).
<PAGE>
Performance data for all of the Fund's shares are presented in the
"Total Return Based on a $10,000 Investment" graphs on page 4 and
the "Recent Performance Results" table below. Data for the Fund's
Class A and Class B Shares are presented in the "Performance
Summary" and "Average Annual Total Return" tables on page 5. Data
for Class C and Class D Shares are also presented in the "Aggregate
Total Return" tables on page 5.
The "Recent Performance Results" table shows investment results
before the deduction of any sales charges for Class A and Class B
Shares for the 12-month and 3-month periods ended July 31, 1995 and
for Class C and Class D Shares for the since inception and 3-month
periods ended July 31, 1995. All data in this table assume
imposition of the actual total expenses incurred by each class of
shares during the relevant period.
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
7/31/95 4/30/95 7/31/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C.
Class A Shares* $10.71 $10.55 $10.63 +0.75% +1.52%
Class B Shares* 10.71 10.55 10.63 +0.75 +1.52
Class C Shares* 10.71 10.55 10.34 +3.58 +1.52
Class D Shares* 10.71 10.55 10.34 +3.58 +1.52
Class A Shares--Total Return* +6.51(1) +2.89(2)
Class B Shares--Total Return* +5.97(3) +2.75(4)
Class C Shares--Total Return* +7.62(5) +2.72(6)
Class D Shares--Total Return* +8.05(7) +2.85(8)
Class A Shares--Standardized 30-day Yield 4.79%
Class B Shares--Standardized 30-day Yield 4.48%
Class C Shares--Standardized 30-day Yield 4.37%
Class D Shares--Standardized 30-day Yield 4.69%
<PAGE>
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
++Investment results shown for Class C and Class D Shares are since
inception (10/21/94).
(1)Percent change includes reinvestment of $0.581 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.144 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.528 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.130 per share ordinary
income dividends.
(5)Percent change includes reinvestment of $0.391 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.127 per share ordinary
income dividends.
(7)Percent change includes reinvestment of $0.432 per share ordinary
income dividends.
(8)Percent change includes reinvestment of $0.141 per share ordinary
income dividends.
</TABLE>
PERFORMANCE DATA (continued)
Total Return Based on a $10,000 Investment--Class A Shares and Class B Shares
A line graph depicting the growth of an investment in the Fund's
Class A Shares and Class B Shares compared to growth of an
investment in the Lehman Brothers Municipal Bond Index. Beginning
and ending values are:
8/31/90** 7/95
ML New Jersey Municipal
Bond Fund++--Class A Shares* $ 9,600 $13,876
ML New Jersey Municipal
Bond Fund++--Class B Shares* $10,000 $14,101
Lehman Brother Municipal
Bond Index++++ $10,000 $15,010
<PAGE>
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of Operations.
++ML New Jersey Municipal Bond Fund invests primarily in long-term
investment-grade obligations issued by or on the behalf of the
State of New Jersey, 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.
Total Return Based on a $10,000 Investment--Class C Shares and Class D Shares
A line graph depicting the growth of an investment in the Fund's
Class C Shares and Class D Shares compared to growth of an
investment in the Lehman Brothers Municipal Bond Index. Beginning
and ending values are:
10/21/94** 7/95
ML New Jersey Municipal
Bond Fund++--Class C Shares* $10,000 $10,662
ML New Jersey Municipal
Bond Fund++--Class D Shares* $ 9,600 $10,372
Lehman Brother Municipal
Bond Index++++ $10,000 $11,107
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of Operations.
++ML New Jersey Municipal Bond Fund invests primarily in long-term
investment-grade obligations issued by or on the behalf of the
State of New Jersey, 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.
<PAGE>
Past performance is not predictive of future performance.
PERFORMANCE DATA (concluded)
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/95 +7.74% +3.43%
Inception (8/31/90)
through 6/30/95 +7.79 +6.88
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/95 +7.28% +3.28%
Inception (8/31/90)
through 6/30/95 +7.25 +7.25
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced
to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
Aggregate Total Return
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94)
through 6/30/95 +7.03% +6.03%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced
to 0% after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Inception (10/21/94)
through 6/30/95 +7.41% +3.11%
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <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 + 8.73
1993 10.78 11.39 0.015 0.635 +11.94
1994 11.39 10.15 -- 0.579 - 5.86
1/1/95-7/31/95 10.15 10.71 -- 0.325 + 8.90
------ ------
Total $0.058 Total $3.128
Cumulative total return as of 7/31/95: +44.54%**
<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.
</TABLE>
<PAGE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
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 + 8.28
1993 10.79 11.39 0.015 0.579 +11.27
1994 11.39 10.15 -- 0.526 - 6.33
1/1/95-7/31/95 10.15 10.71 -- 0.295 + 8.58
------ ------
Total $0.058 Total $2.865
Cumulative total return as of 7/31/95: +41.00%**
<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>
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 at right.
AMT Alternative Minimum Tax
(subject to)
EDA Economic Development Authority
GO General Obligation Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New Jersey--89.1%
<S> <S> <C> <S> <C>
A- NR* $ 1,000 Atlantic City, New Jersey, Municipal Utilities Authority, Water
Systems Revenue Bonds, 7.75% due 5/01/2000 (g) $ 1,151
Atlantic County, New Jersey, Utilities Authority, Solid Waste
Revenue Bonds:
NR* Ba 2,800 7% due 3/01/2008 2,797
NR* Ba 1,400 7.125% due 3/01/2016 1,406
BBB+ Ba 4,750 Camden County, New Jersey, Pollution Control Financing Authority, Solid
Waste Resource Recovery Revenue Bonds, Series D, 7.25% due 12/01/2010 4,814
Cape May County, New Jersey, Industrial Pollution Control Financing
Authority Revenue Bonds (Atlantic City Electric Company Project),
Series A (d):
AAA Aaa 6,000 AMT, 7.20% due 11/01/2029 6,951
AAA Aaa 4,500 Refunding, 6.80% due 3/01/2021 5,070
NR* A 500 Delaware River Joint Toll Bridge Commission, Pennsylvania, Bridge
Revenue Bonds, 7.875% due 7/01/1998 (g) 558
AAA Aaa 4,000 Essex County, New Jersey, Improvement Authority Revenue Bonds (Irvington
Township School District), 6.625% due 10/01/2002 (g) (h) 4,526
AA A 3,200 Jersey City, New Jersey, School GO, UT, 6.65% due 2/15/2017 3,377
NR* Ba 1,250 Mercer County, New Jersey, Improvement Authority, Revenue Refunding Bonds
(Solid Waste), AMT, Series B, 6.80% due 4/01/2005 1,247
NR* NR* 5,750 Middlesex County, New Jersey, Pollution Control Authority, Revenue
Refunding Bonds (Amerada Hess), 6.875% due 12/01/2022 5,874
AAA Aaa 1,100 Middlesex County, New Jersey, Utilities Authority, Sewer Revenue Bonds,
Series A, 6.50% due 9/15/2011 (f) 1,170
AAA Aaa 2,000 Monmouth County, New Jersey, Improvement Authority, Sewer Facilities
Revenue Refunding Bonds, 6.75% due 2/01/2001 (d) (g) 2,239
AAA Aaa 5,000 New Jersey Building Authority, State Building Revenue Refunding Bonds,
Custodial Receipts/Certificates, 5% due 6/15/2010 (d) 4,743
<PAGE>
AAA Aaa 5,000 New Jersey, EDA, Educational Testing Services Revenue Bonds, Series A,
6% due 5/15/2025 (d) 4,999
A A1 4,500 New Jersey, EDA, Lease Rental Revenue Bonds (Liberty State Park Project),
6.80% due 3/15/2022 4,776
New Jersey, EDA, Natural Gas Facilities Revenue Bonds, Series A:
BBB A3 1,260 (Elizabethtown Gas Company Project), AMT, 6.75% due 10/01/2021 1,301
AAA Aaa 8,750 Refunding (NUI Corp.), 6.35% due 10/01/2022 (c) 8,981
BB+ Baa2 2,000 New Jersey, EDA, Revenue Bonds (American Airlines Inc. Project),
AMT, 7.10% due 11/01/2031 2,070
AAA Aaa 2,500 New Jersey, EDA, Revenue Refunding Bonds (RWJ Health Care Corporation),
6.50% due 7/01/2024 (h) 2,642
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New Jersey (continued)
<S> <S> <C> <S> <C>
New Jersey Health Care Facilities Financing Authority Revenue Bonds:
NR* Baa1 $ 2,225 (Deborah Heart and Lung Center), 6.30% due 7/01/2023 $ 2,203
AAA Aaa 2,450 (JFK Health Systems Obligation Group), 5.625% due 7/01/2020 (f) 2,323
A- NR* 665 (Pascack Valley Hospital Association), 6.90% due 7/01/2021 688
A- A 2,000 Refunding (Atlantic City Medical Center), Series C, 6.80% due 7/01/2011 2,081
BBB Baa 4,980 Refunding (Englewood Hospital & Medical Center), 6.75% due 7/01/2024 4,961
AAA Aaa 2,000 Refunding (Hackensack Medical Center), 6.625% due 7/01/2017 (f) 2,106
AAA Aaa 7,745 Refunding (Jersey Shore Medical Center), 6.75% due 7/01/2019 (c) 8,399
BBB- Baa 2,950 (Saint Elizabeth Hospital), Series B, 8.25% due 7/01/2020 3,172
AAA Aaa 670 (Saint Peter's Medical Center), Series C, 8.60% due 7/01/1997 (d) (g) 740
AAA Aaa 130 (Saint Peter's Medical Center), Series C, 8.60% due 7/01/2017 (d) 142
A1 VMIG1++ 1,600 New Jersey Sports and Exposition Authority Revenue Bonds (State
Contract), VRDN, Series C, 3.70% due 9/01/2024 (a) (d) 1,600
New Jersey State Educational Facilities Authority Revenue Bonds (Seton
Hall University Project):
AAA Aaa 2,000 Series C, 6.85% due 7/01/2019 (e) 2,161
BBB Baa1 500 Series D, 7% due 7/01/2021 527
<PAGE>
AA- Aaa 1,000 New Jersey State Highway Authority, General Revenue Bonds (Garden State
Parkway), 7.25% due 1/01/1999 (g) 1,109
New Jersey State Housing and Mortgage Finance Agency, Home Buyer
Revenue Bonds (d):
AAA Aaa 845 AMT, Series B, 7.90% due 10/01/2022 904
AAA Aaa 5,000 AMT, Series M, 7% due 10/01/2026 5,348
AAA Aaa 725 Series A, 7.50% due 4/01/2015 781
A+ NR* 1,120 New Jersey State Housing and Mortgage Finance Agency, M/F Housing Revenue
Bonds (Mont Clarion Project), AMT, Series J, 7.70% due 11/01/2029 1,193
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) 10,982
New Jersey State Turnpike Authority, Turnpike Revenue Refunding Bonds:
A A 2,365 Series C, 6.50% due 1/01/2016 2,539
AAA Aaa 3,000 Series C, 6.50% due 1/01/2016 (d) 3,276
AAA VMIG1++ 2,300 VRDN, Series D, 3.40% due 1/01/2018 (a) (f) 2,300
New Jersey State Various Purpose Revenue Bonds (b):
AA+ Aa1 500 9.40% due 4/01/2000 604
AA+ Aa1 1,500 7.25% due 4/15/2000 1,642
A A 1,000 New Jersey Wastewater Treatment Revenue Bonds, 7.90% due 9/01/2007 1,088
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) 3,358
AAA Aaa 2,120 Passaic Valley, New Jersey, Water Commission Water Supply Bonds,
Series A, 6.40% due 12/15/2002 (f) (g) 2,375
Port Authority of New York and New Jersey, Consolidated Bonds:
AA- A1 6,800 69th Series, 7.125% due 6/01/2025 7,357
AA- A1 5,250 72nd Series, 7.35% due 10/01/2027 5,895
AA- A1 2,000 78th Series, 6.50% due 4/15/2011 2,103
AA- A1 2,000 83rd Series, 6.375% due 10/15/2017 2,062
AAA Aaa 3,300 96th Series, AMT, 6.60% due 10/01/2023 (f) 3,424
AA- A1 6,000 100th Series, 5.75% due 6/15/2030 5,723
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New Jersey (concluded)
<S> <S> <C> <S> <C>
Port Authority of New York and New Jersey, Versatile Structure
Special Obligation Revenue Bonds, VRDN (a):
A1+ VMIG1++ $ 2,100 Series 1, 3.80% due 8/01/2028 $ 2,100
A1+ VMIG1++ 900 Series 3, 3.75% due 6/01/2020 900
Rutgers State University, New Jersey, University Revenue Bonds:
AAA Aaa 1,675 Series O, 7.90% due 5/01/1998 (g) 1,866
AA A1 1,000 Series P, 6.85% due 5/01/2021 1,081
South Brunswick, New Jersey, Board of Education Revenue Bonds, UT (f):
AAA Aaa 1,215 6.40% due 8/01/2015 1,266
AAA Aaa 1,000 6.40% due 8/01/2016 1,040
AAA Aaa 2,500 Trenton, New Jersey, GO, UT, 6.55% due 8/15/2009 (d) 2,701
A1+ P1 2,700 Union County, New Jersey, Industrial Pollution Control Financing
Authority, PCR, Refunding Bonds (Exxon Project), VRDN, 3.95% due
7/01/2033 (a) 2,700
University of Medicine and Dentistry, New Jersey, Revenue Bonds:
AA A 1,170 Refunding, Series D, 6.50% due 12/01/2005 1,277
AA A 2,750 Series E, 6.50% due 12/01/2018 2,892
AAA Aaa 3,905 West New York, New Jersey, Municipal Utilities Authority, Sewer Revenue
Refunding Bonds, 6.10%** due 12/15/2019 (f) 931
Puerto Rico--9.7%
A Baa1 2,760 Puerto Rico Commonwealth, Aqueduct and Sewer Authority Revenue Bonds,
Series A, 7.875% due 7/01/2017 3,070
Puerto Rico Commonwealth, Highway and Transportation Authority,
Highway Revenue Bonds:
A Baa1 5,530 Refunding, Series X, 5% due 7/01/2022 4,666
A Baa1 2,400 Series W, 5.50% due 7/01/2017 2,205
AAA NR* 1,000 Puerto Rico Commonwealth, Highway Authority, Highway Revenue Bonds,
Series Q, 7.75% due 7/01/2000 (g) 1,164
BBB+ Baa1 1,195 Puerto Rico Commonwealth, Infrastructure Special Financing Authority
Revenue Bonds, Series A, 7.75% due 7/01/2008 1,320
AAA NR* 2,055 Puerto Rico Commonwealth, Public Improvement, GO, 7.70% due 7/01/2000 (g) 2,387
<PAGE>
A- Baa1 2,250 Puerto Rico Electric Power Authority, Power Revenue Refunding Bonds,
Series S, 7% due 7/01/2006 2,464
AA Aa3 1,500 Puerto Rico Industrial, Medical and Environmental Pollution Control
Facilities' Financing Authority, Revenue Bonds (Motorola Inc. Project),
Series A, 6.75% due 1/01/2014 1,623
A+ A 1,335 Puerto Rico Telephone Authority Revenue Bonds, Series N, 5.50% due
1/01/2022 1,247
Total Investments (Cost--$195,582)--98.8% 204,758
Other Assets Less Liabilities--1.2% 2,472
--------
Net Assets--100.0% $207,230
========
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at July 31, 1995.
(b)Interest secured by escrow.
(c)AMBAC Insured.
(d)MBIA Insured.
(e)BIG Insured.
(f)FGIC Insured.
(g)Prerefunded.
(h)FSA Insured.
(i)FHA Collateralized.
*Not Rated.
**Represents a zero coupon bond; the interest rate shown is the
effective yield at the time of purchase by the Fund.
++Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche
LLP.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of July 31, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$195,582,367) (Note 1a) $204,758,228
Cash 6,761
Receivables:
Interest $ 2,889,686
Beneficial interest sold 229,217 3,118,903
------------
Deferred organization expenses (Note 1e) 1,286
Prepaid expenses and other assets (Note 1e) 25,995
------------
Total assets 207,911,173
------------
<PAGE>
Liabilities: Payables:
Beneficial interest redeemed 261,431
Dividends to shareholders (Note 1f) 194,978
Investment adviser (Note 2) 91,198
Distributor (Note 2) 66,396 614,003
------------
Accrued expenses and other liabilities 67,105
------------
Total liabilities 681,108
------------
Net Assets: Net assets $207,230,065
============
Net Assets Class A Shares of beneficial interest, $.10 par value,
Consist of: unlimited number of shares authorized $ 368,720
Class B Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 1,531,547
Class C Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 12,487
Class D Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 22,316
Paid-in capital in excess of par 203,084,037
Accumulated realized capital losses on investments--net (Note 5) (5,997,745)
Accumulated distributions in excess of realized capital
gains--net (967,158)
Unrealized appreciation on investments--net 9,175,861
------------
Net assets $207,230,065
============
Net Asset Value: Class A--Based on net assets of $39,482,462 and 3,687,197
shares of beneficial interest outstanding $ 10.71
============
Class B--Based on net assets of $164,020,150 and 15,315,471
shares of beneficial interest outstanding $ 10.71
============
Class C--Based on net assets of $1,337,151 and 124,869
shares of beneficial interest outstanding $ 10.71
============
Class D--Based on net assets of $2,390,302 and 223,160
shares of beneficial interest outstanding $ 10.71
============
<PAGE>
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended
July 31, 1995
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 13,233,148
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 1,152,673
Account maintenance and distribution fees--Class B (Note 2) 832,299
Printing and shareholder reports 103,158
Transfer agent fees--Class B (Note 2) 101,490
Professional fees 70,376
Accounting services (Note 2) 58,278
Transfer agent fees--Class A (Note 2) 21,312
Amortization of organization expenses (Note 1e) 15,448
Custodian fees 14,334
Trustees' fees and expenses 10,523
Pricing fees 9,996
Registration fees (Note 1e) 3,717
Account maintenance and distribution fees--Class C (Note 2) 2,884
Account maintenance fees--Class D (Note 2) 1,324
Transfer agent fees--Class D (Note 2) 744
Transfer agent fees--Class C (Note 2) 365
Other 7,736
------------
Total expenses 2,406,657
------------
Investment income--net 10,826,491
------------
Realized & Realized loss on investments--net (2,749,284)
Unrealized Gain Change in unrealized appreciation on investments--net 3,708,463
(Loss) on ------------
Investments Net Increase in Net Assets Resulting from Operations $ 11,785,670
--Net (Notes ============
1b, 1d & 3):
<PAGE>
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended July 31,
Increase (Decrease) in Net Assets: 1995 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 10,826,491 $ 11,280,577
Realized loss on investments--net (2,749,284) (3,460,520)
Change in unrealized appreciation (depreciation) on
investments--net 3,708,463 (9,190,582)
------------ ------------
Net increase (decrease) in net assets resulting from
operations 11,785,670 (1,370,525)
------------ ------------
Dividends & Investment income--net:
Distributions to Class A (2,302,263) (2,525,082)
Shareholders Class B (8,428,820) (8,755,495)
(Note 1f): Class C (23,237) --
Class D (72,171) --
In excess of realized gain on investments--net:
Class A -- (197,825)
Class B -- (769,333)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (10,826,491) (12,247,735)
------------ ------------
Beneficial Interest Net increase (decrease) in net assets derived from beneficial
Transactions interest transactions (18,720,933) 20,934,073
(Note 4): ------------ ------------
Net Assets: Total increase (decrease) in net assets (17,761,754) 7,315,813
Beginning of year 224,991,819 217,676,006
------------ ------------
End of year $207,230,065 $224,991,819
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
Class A
For the
Period
The following per share data and ratios have been derived Aug. 31,
from information provided in the financial statements. 1990++ to
For the Year Ended July 31, July 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.63 $ 11.23 $ 11.03 $ 10.37 $ 10.00
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .58 .58 .62 .66 .61
Realized and unrealized gain (loss) on
investments--net .08 (.55) .24 .70 .37
-------- -------- -------- -------- --------
Total from investment operations .66 .03 .86 1.36 .98
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.58) (.58) (.62) (.66) (.61)
Realized gain on investments--net -- -- (.04) (.04) --
In excess of realized gain on
investments--net -- (.05) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.58) (.63) (.66) (.70) (.61)
-------- -------- -------- -------- --------
Net asset value, end of period $ 10.71 $ 10.63 $ 11.23 $ 11.03 $ 10.37
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 6.51% .19% 8.15% 13.57% 10.28%+++
Return:** ======== ======== ======== ======== ========
Ratios to Expenses, net of reimbursement .74% .69% .71% .60% .46%*
Average ======== ======== ======== ======== ========
Net Assets: Expenses .74% .69% .72% .77% 1.09%*
======== ======== ======== ======== ========
Investment income--net 5.57% 5.28% 5.62% 6.15% 6.63%*
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 39,482 $ 46,669 $ 47,024 $ 35,042 $ 18,368
Data: ======== ======== ======== ======== ========
Portfolio turnover 57.17% 65.97% 16.28% 29.58% 15.81%
======== ======== ======== ======== ========
<PAGE>
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class B
For the
Period
The following per share data and ratios have been derived Aug 31,
from information provided in the financial statements. 1990++ to
For the Year Ended July 31, July 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.63 $ 11.23 $ 11.03 $ 10.37 $ 10.00
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .53 .53 .56 .61 .56
Realized and unrealized gain (loss) on
investments--net .08 (.55) .24 .70 .37
-------- -------- -------- -------- --------
Total from investment operations .61 (.02) .80 1.31 .93
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.53) (.53) (.56) (.61) (.56)
Realized gain on investments--net -- -- (.04) (.04) --
In excess of realized gain on
investments--net -- (.05) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.53) (.58) (.60) (.65) (.56)
-------- -------- -------- -------- --------
Net asset value, end of period $ 10.71 $ 10.63 $ 11.23 $ 11.03 $ 10.37
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 5.97% (.31%) 7.61% 13.10% 9.68%+++
Return:** ======== ======== ======== ======== ========
<PAGE>
Ratios to Expenses, excluding account maintenance and
Average distribution fees and net of reimbursement .75% .70% .71% .60% .50%*
Net Assets: ======== ======== ======== ======== ========
Expenses, net of reimbursement 1.25% 1.20% 1.21% 1.10% 1.00%*
======== ======== ======== ======== ========
Expenses 1.25% 1.20% 1.22% 1.28% 1.58%*
======== ======== ======== ======== ========
Investment income--net 5.06% 4.77% 5.11% 5.67% 6.08%*
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands). $164,020 $178,322 $170,652 $129,475 $ 77,165
Data: ======== ======== ======== ======== ========
Portfolio turnover 57.17% 65.97% 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>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
The following per share data and ratios have been derived For the Period
from information provided in the financial statements. October 21, 1994++ to
July 31, 1995
Increase (Decrease) in Net Asset Value: Class C Class D
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 10.34 $ 10.34
Operating ------------ ------------
Performance: Investment income--net .40 .44
Realized and unrealized gain on investments--net .37 .37
------------ ------------
Total from investment operations .77 .81
------------ ------------
Less dividends from investment income--net (.40) (.44)
------------ ------------
Net asset value, end of period $ 10.71 $ 10.71
============ ============
<PAGE>
Total Investment Based on net asset value per share 7.62%+++ 8.05%+++
Return:** ============ ============
Ratios to Expenses, excluding account maintenance and distribution
Average fees and net of reimbursement .79%* .76%*
Net Assets: ============ ============
Expenses, net of reimbursement 1.39%* .86%*
============ ============
Expenses 1.39%* .86%*
============ ============
Investment income--net 4.83%* 5.45%*
============ ============
Supplemental Net assets, end of period (in thousands) $ 1,337 $ 2,390
Data: ============ ============
Portfolio turnover 57.17% 57.17%
============ ============
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch 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
four classes of shares under the Merrill Lynch Select Pricing SM
System. Shares of Class A and Class D are sold with a front-end
sales charge. Shares of Class B and Class C may be subject to a
contingent deferred sales charge. All classes of shares have
identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class B, Class C and Class D
Shares bear certain expenses related to the account maintenance of
such shares, and Class B and Class C Shares also bear certain
expenses related to the distribution of such shares. Each class has
exclusive voting rights with respect to matters relating to its
account maintenance and distribution expenditures. The following is
a summary of significant accounting policies followed by the Fund.
<PAGE>
(a) Valuation of investments--Municipal bonds and other portfolio
securities in which the Fund invests are traded primarily in the
over-the-counter municipal bond and money markets and are valued at
the last available bid price in the over-the-counter market or on
the basis of yield equivalents as obtained from one or more dealers
that make markets in the securities. Financial futures contracts and
options thereon, which are traded on exchanges, are valued at their
settlement prices as of the close of such exchanges. Short-term
investments with remaining maturities of sixty days or less are
valued at amortized cost, which approximates market value.
Securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or
under the direction of the Board of Trustees of the Trust, including
valuations furnished by a pricing service retained by the Trust,
which may utilize a matrix system for valuations. The procedures of
the pricing service and its valuations are reviewed by the officers
of the Trust under the general supervision of the Trustees.
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures
contracts for the purpose of hedging the market risk on existing
securities or the intended purchase of securities. Futures contracts
are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a
contract, the Fund deposits and maintains as collateral such initial
margin as required by the exchange on which the transaction is
effected. Pursuant to the contract, the Fund agrees to receive from
or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unrealized
gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
<PAGE>
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Deferred organization expenses and prepaid registration fees--
Deferred organization expenses are charged to expense on a straight-
line basis over a five-year period. Prepaid registration fees are
charged to expense as the related shares are issued.
NOTES TO FINANCIAL STATEMENTS (concluded)
(f) Dividends and distributions--Dividends from net investment
income are declared daily and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates. Distributions in excess
of realized capital gains are due primarily to differing tax
treatments for futures transactions and post-October losses.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee based upon the average daily
value of the Fund's net assets at the following annual rates: 0.55%
of the Fund's average daily net assets not exceeding $500 million;
0.525% of average daily net assets in excess of $500 million but not
exceeding $1 billion; and 0.50% of average daily net assets in
excess of $1 billion. The Investment Advisory Agreement obligates
FAM to reimburse the Fund to the extent the Fund's expenses
(excluding interest, taxes, distribution fees, brokerage fees and
commissions, and extraordinary items) exceed 2.5% of the Fund's
first $30 million of average daily net assets, 2.0% of the next $70
million of average daily net assets, and 1.5% of the average daily
net assets in excess thereof. FAM's obligation to reimburse the Fund
is limited to the amount of the management fee. No fee payment will
be made to the Investment Adviser during any fiscal year which will
cause such expenses to exceed expense limitations at the time of
payment.
<PAGE>
Pursuant to the distribution plans ("the Distribution Plans")
adopted by the Fund in accordance with Rule 12b-1 under the
Investment Company Act of 1940, the Fund pays the Distributor
ongoing account maintenance and distribution fees. The fees are
accrued daily and paid monthly at annual rates based upon the
average daily net assets of the shares as follows:
Account
Maintenance Distribution
Fee Fee
Class B 0.25% 0.25%
Class C 0.25% 0.35%
Class D 0.10% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the year ended July 31, 1995, MLFD earned underwriting discounts
and MLPF&S earned dealer concessions on sales of the Fund's Class A
and Class D Shares as follows:
MLFD MLPF&S
Class A $1,953 $22,177
Class D $2,114 $22,130
For the year ended July 31, 1995, MLPF&S received contingent
deferred sales charges of $481,103 and $351 relating to transactions
in Class B and Class C Shares, respectively.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, PSI, MLPF&S, FDS, MLFD, MLFDS, and/or ML & Co.
<PAGE>
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended July 31, 1995 were $113,497,990 and $131,654,527,
respectively.
Net realized and unrealized gains (losses) as of July 31, 1995 were
as follows:
Realized Unrealized
Losses Gains
Long-term investments $ (1,936,856) $ 9,175,861
Short-term investments (267) --
Financial futures contracts (812,161) --
------------ ------------
Total $ (2,749,284) $ 9,175,861
============ ============
As of July 31, 1995, net unrealized appreciation for Federal income
tax purposes aggregated $9,171,829, of which $9,315,822 related to
appreciated securities and $143,993 related to depreciated
securities. The aggregate cost of investments at July 31, 1995 for
Federal income tax purposes was $195,586,399.
4. Beneficial Interest Transactions:
Net increase (decrease) in net assets derived from beneficial
interest transactions was $(18,720,933) and $20,934,073 for the
years ended July 31, 1995 and July 31, 1994, respectively.
Transactions in shares of beneficial interest for each class were as
follows:
Class A Shares for the Year Dollar
Ended July 31, 1995 Shares Amount
Shares sold 285,352 $ 2,994,554
Shares issued to shareholders
in reinvestment of dividends 107,747 1,124,074
----------- ------------
Total issued 393,099 4,118,628
Shares redeemed (1,096,857) (11,448,312)
----------- ------------
Net decrease (703,758) $ (7,329,684)
=========== ============
<PAGE>
Class A Shares for the Year Dollar
Ended July 31, 1994 Shares Amount
Shares sold 1,095,757 $ 12,136,853
Shares issued to shareholders
in reinvestment of dividends
and distributions 120,076 1,329,884
----------- ------------
Total issued 1,215,833 13,466,737
Shares redeemed (1,011,632) (11,085,681)
----------- ------------
Net increase 204,201 $ 2,381,056
=========== ============
Class B Shares for the Year Dollar
Ended July 31, 1995 Shares Amount
Shares sold 2,388,253 $ 24,978,371
Shares issued to shareholders
in reinvestment of dividends 432,890 4,516,904
----------- ------------
Total issued 2,821,143 29,495,275
Shares redeemed (4,280,646) (44,462,443)
Conversion of shares (534) (5,764)
----------- ------------
Net decrease (1,460,037) $(14,972,932)
=========== ============
Class B Shares for the Year Dollar
Ended July 31, 1994 Shares Amount
Shares sold 4,388,673 $ 49,079,880
Shares issued to shareholders
in reinvestment of dividends
and distributions 468,309 5,185,597
----------- ------------
Total issued 4,856,982 54,265,477
Shares redeemed (3,273,476) (35,712,460)
----------- ------------
Net increase 1,583,506 $ 18,553,017
=========== ============
<PAGE>
Class C Shares for the Period Dollar
Oct. 21, 1994++ to July 31, 1995 Shares Amount
Shares sold 133,835 $ 1,406,245
Shares issued to shareholders
in reinvestment of dividends 1,527 16,223
----------- ------------
Total issued 135,362 1,422,468
Shares redeemed (10,493) (112,724)
----------- ------------
Net increase 124,869 $ 1,309,744
=========== ============
[FN]
++Commencement of Operations.
Class D Shares for the Period Dollar
Oct. 21, 1994++ to July 31, 1995 Shares Amount
Shares sold 254,777 $ 2,604,492
Conversion of shares 534 5,764
Shares issued to shareholders
in reinvestment of dividends 1,732 18,389
----------- ------------
Total issued 257,043 2,628,645
Shares redeemed (33,883) (356,706)
----------- ------------
Net increase 223,160 $ 2,271,939
=========== ============
[FN]
++Commencement of Operations.
5. Capital Loss Carryforward:
At July 31, 1995, the Fund had a net capital loss carryforward of
approximately $5,019,000, all of which expires in 2003. This amount
will be available to offset like amounts of any future taxable
gains.
<PAGE>
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
Merrill Lynch New Jersey 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
New Jersey Municipal Bond Fund of Merrill Lynch Multi-State
Municipal Series Trust as of July 31, 1995, the related statements
of operations for the year then ended and changes in net assets for
each of the years in the two-year period then ended, and the
financial highlights for each of the years in the four-year period
then ended and for the period August 31, 1990 (commencement of
operations) to July 31, 1991. These financial statements and the
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at July
31, 1995 by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch New Jersey Municipal Bond Fund of Merrill Lynch Multi-
State Municipal Series Trust as of July 31, 1995, the results of its
operations, the changes in its net assets, and the financial
highlights for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
September 5, 1995
</AUDIT-REPORT>
<PAGE>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly by
Merrill Lynch New Jersey Municipal Bond Fund during its taxable year
ended July 31, 1995 qualify as tax-exempt interest dividends for
Federal income tax purposes.
Additionally, there were no capital gains distributed during the
year.
Please retain this information for your records.
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Jerry Weiss, Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
