MERRILL LYNCH
NEW JERSEY
MUNICIPAL
BOND FUND
FUND LOGO
Semi-Annual Report
January 31, 1997
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original
cost.Statements and other information herein are as dated and are
subject to change.
<PAGE>
Merrill Lynch New Jersey
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
TO OUR SHAREHOLDERS
The Municipal Market Environment
Long-term fixed-income bond yields generally declined over the six
months ended January 31, 1997. Initially, US Treasury bond yields
declined over 45 basis points (0.45%) to 6.45% by late November as
low employment growth and continued low inflation combined to
support lower bond yields. Concurrently, long-term municipal revenue
bond yields, as measured by the Bond Buyer Revenue Bond Index,
declined over 20 basis points to approximately 5.80%. However, signs
of increased economic activity and renewed inflation fears pushed
bond yields up for the remainder of the period. By the end of
January 1997, US Treasury bond yields rose 35 basis points to end
the period at approximately 6.80%. Similarly, long-term municipal
revenue bond yields rose approximately 20 basis points from their
lows in late November to approximately 6.00%. During the six months
ended January 31, 1997, US Treasury bond yields declined
approximately 10 basis points, while tax-exempt bond yields were
essentially unchanged.
<PAGE>
Recently, tax-exempt bond yields underperformed their taxable
counterparts despite a continued strong supply position. During the
six-month period ended January 31, 1997, over $88 billion in long-
term tax-exempt bonds was underwritten, essentially unchanged from
issuance a year ago. Approximately $50 billion in new municipal
bonds was issued during the three-month period ended January 31,
1997, representing a decline of over 5% compared to the same period
in 1996. This declining trend in bond issuance was even more
apparent recently. Slightly more than $10 billion in long-term bonds
was issued in January 1997, a decrease of over 15% compared to
January 1996 issuance.
The municipal bond market's recent underperformance relative to
Treasury issues was the result of a number of other factors. The
historic strength of the US equity market has attracted significant
investor interest. Additionally, as tax-exempt bond yields declined
again below 6%, some investors temporarily lost interest in the
municipal bond market. If interest rates continue to decline, as
they did at the end of 1994 and throughout 1995, investors, in
general, will quickly adjust to the new levels. The tax advantages
generated by municipal bonds quickly outweigh low nominal yields and
investor demand increases.
The Presidential and Congressional elections this past November
resurrected some investor concerns regarding continued Federal
deficit reduction and potential legislative restrictions upon the
municipal bond market. This situation was similar to that at the
beginning of 1996 when tax-exempt bond yields were negatively
impacted by fears that legislation reducing the tax advantage of
municipal bonds would be introduced to aid further deficit
reductions.
However, the US Treasury bond market's recent relatively strong
performance resulted in municipal bonds becoming a particularly
attractive investment alternative. At current levels, long-term tax-
exempt revenue bonds yield over 88% of comparable US Treasury bond
yields. Current levels make tax-advantaged products more attractive
than they were at mid-year when yield ratios declined to
approximately 85%. For example, to an investor in the 36% Federal
income tax bracket, a current tax-exempt bond yield of 6% represents
a taxable equivalent yield of approximately 9.37%.
Looking forward, the supply of new bond issuance for 1997 is
expected to be very similar to that of 1996, with most annual
estimates falling in the $170 billion--$175 billion range. Investor
demand is also expected to regain its former strength, with 1997
total municipal redemptions (refundings, maturities and coupon
payments) in the $175 billion--$185 billion range. This overall
balance suggests that the positive technical backdrop the municipal
bond market enjoyed in 1996 could continue in 1997. However, it is
likely that seasonal factors may temporarily distort this overall
balanced technical scenario. During periods of reduced bond
issuance, the ease and ability to purchase tax-advantaged products
at their current attractive levels may be greatly restricted.
<PAGE>
Portfolio Strategy
During the six-month period ended January 31, 1997, our strategy was
to remain flexible given the increased volatility in the bond
market. The everchanging perception on the state of the economy, and
the need for monetary tightening by the Federal Reserve Board,
caused large swings in interest rates over this time period.
Flexibility enabled us to take advantage of market fluctuations to
seek to enhance the Fund's total returns. The Fund's defensive
posture at the beginning of the six-month period provided some
protection from the increase in bond yields through early September.
At this time, we began purchasing interest rate-sensitive bonds
which helped the Fund perform well in the bond market rally through
the end of November.
During the six months ended January 31, 1997, long-term New Jersey
issuance decreased by nearly 17% compared to the same period a year
earlier. In addition to the decrease in supply, investor interest in
tax-exempt bonds helped push yields up on New Jersey tax-exempt
bonds to high levels. We maintained low cash reserves in the Fund in
order to benefit from such a strong technical market.
Looking forward, we expect to maintain a constructive posture for
the Fund until the economy shows signs of accelerating. We believe
the economy will moderate in the first half of 1997, with the
possibility of reaccelerating at the end of the year, at which time
the Federal Reserve Board may be forced to raise short-term interest
rates in an effort to control inflation.
In Conclusion
We appreciate your ongoing interest in Merrill Lynch New Jersey
Municipal Bond Fund, and we look forward to serving your investment
needs in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
<PAGE>
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Robert A. DiMella)
Robert A. DiMella
Portfolio Manager
March 10, 1997
We are pleased to announce that Robert A. DiMella, CFA is
responsible for the day-to-day management of Merrill Lynch New
Jersey Municipal Bond Fund. Mr. DiMella has been employed by Merrill
Lynch Asset Management, L.P. (an affiliate of the Fund's investment
adviser) since 1995 as Portfolio Manager and as Assistant Portfolio
Manager thereof from 1993 to 1995. Prior thereto, he was Assistant
Portfolio Manager with Prudential Investment Advisors from 1992 to
1993, and was a Research Assistant with Prudential Investment
Corporation from 1989 to 1992.
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
<PAGE>
* Class A Shares incur a maximum initial sales charge (front-end
load) of 4% and bear no ongoing distribution or account maintenance
fees. Class A Shares are available only to eligible investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.25% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 10 years. (There is no initial
sales charge for automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.35% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 4% and an
account maintenance fee of 0.10% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
1/31/97 10/31/96 1/31/96 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $10.80 $10.80 $11.10 -2.70% 0.00%
Class B Shares* 10.80 10.81 11.11 -2.79 -0.09
Class C Shares* 10.79 10.80 11.10 -2.79 -0.09
Class D Shares* 10.80 10.81 11.11 -2.79 -0.09
Class A Shares--Total Return* +2.66(1) +1.36(2)
Class B Shares--Total Return* +2.04(3) +1.13(4)
Class C Shares--Total Return* +1.94(5) +1.11(6)
Class D Shares--Total Return* +2.46(7) +1.24(8)
Class A Shares--Standardized 30-day Yield 4.47%
Class B Shares--Standardized 30-day Yield 4.15%
Class C Shares--Standardized 30-day Yield 4.05%
Class D Shares--Standardized 30-day Yield 4.37%
<PAGE>
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
(1)Percent change includes reinvestment of $0.582 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.153 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.527 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.138 per share ordinary
income dividends.
(5)Percent change includes reinvestment of $0.515 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.135 per share ordinary
income dividends.
(7)Percent change includes reinvestment of $0.571 per share ordinary
income dividends.
(8)Percent change includes reinvestment of $0.150 per share ordinary
income dividends.
</TABLE>
PERFORMANCE DATA (continued)
<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
1995 10.15 11.09 -- 0.579 +15.32
1996 11.09 10.85 -- 0.574 + 3.18
1/1/97--1/31/97 10.85 10.80 -- 0.041 + 0.01
------ ------
Total $0.058 Total $3.997
Cumulative total return as of 1/31/97: +57.94%**
<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
1995 10.15 11.09 -- 0.525 +14.73
1996 11.09 10.85 -- 0.519 + 2.66
1/1/97--1/31/97 10.85 10.80 -- 0.037 - 0.04
------ ------
Total $0.058 Total $3.651
Cumulative total return as of 1/31/97: +52.89%**
<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>
<TABLE>
Performance Summary--Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $10.34 $10.15 -- $0.103 - 0.83%
1995 10.15 11.09 -- 0.513 +14.61
1996 11.09 10.84 -- 0.508 + 2.46
1/1/97--1/31/97 10.84 10.79 -- 0.036 - 0.05
------
Total $1.160
Cumulative total return as of 1/31/97: +16.40%**
<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>
<PAGE>
PERFORMANCE DATA (concluded)
<TABLE>
Performance Summary--Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $10.34 $10.15 -- $0.113 - 0.72%
1995 10.15 11.09 -- 0.568 +15.20
1996 11.09 10.85 -- 0.563 + 3.08
1/1/97--1/31/97 10.85 10.80 -- 0.040 0.00
------
Total $1.284
Cumulative total return as of 1/31/97: +17.89%**
<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>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/96 +3.18% -0.95%
Five Years Ended 12/31/96 +6.40 +5.53
Inception (8/31/90)
through 12/31/96 +7.48 +6.79
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
<PAGE>
Class B Shares*
Year Ended 12/31/96 +2.66% -1.26%
Five Years Ended 12/31/96 +5.86 +5.86
Inception (8/31/90)
through 12/31/96 +6.94 +6.94
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 12/31/96 +2.46% +1.48%
Inception (10/21/94)
through 12/31/96 +7.19 +7.19
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 12/31/96 +3.08% -1.05%
Inception (10/21/94)
through 12/31/96 +7.79 +5.80
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
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.
<PAGE>
AMT Alternative Minimum Tax (subject to)
CARS Complementary Auction Rate Securities
EDA Economic Development Authority
GO General Obligation Bonds
M/F Multi-Family
RITR Residual Interest Trust Receipts
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New Jersey--95.7%
<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) $ 1,115
NR* Aaa 2,000 Bergen County, New Jersey, GO, UT, 5.05% due 6/15/2003 2,058
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 6,842
AAA Aaa 4,500 Refunding, 6.80% due 3/01/2021 (k) 5,235
AAA Aaa 1,500 Delaware River Joint Toll Bridge Commission, Pennsylvania Bridge Revenue
Refunding Bonds, 6% due 7/01/2018 (f) 1,525
Highland Park, New Jersey, School District Refunding Bonds, UT (d):
AAA Aaa 1,500 5.625% due 2/15/2017 1,499
AAA Aaa 4,000 5.125% due 2/15/2025 3,738
Jersey City, New Jersey, School GO, UT:
AA A 3,200 6.65% due 2/15/2002(g) 3,545
AA A 3,080 Refunding, Series A, 6.25% due 10/01/2012 3,375
AAA Aaa 3,250 Landis, New Jersey, Sewer Authority Revenue Bonds, CARS, 7.17% due
9/19/2019 (b)(f) 3,303
NR* NR* 5,750 Middlesex County, New Jersey, Pollution Control Financing Authority,
Revenue Refunding Bonds (Amerada Hess), 6.875% due 12/01/2022 6,061
AAA Aaa 1,100 Middlesex County, New Jersey, Utilities Authority, Sewer Revenue Bonds,
Series A, 6.50% due 3/15/2001(f)(g) 1,203
<PAGE>
AAA Aaa 2,000 Monmouth County, New Jersey, Improvement Authority, Sewer Facilities
Revenue Refunding Bonds, 6.75% due 2/01/2001(d)(g) 2,201
AAA Aaa 4,500 New Jersey EDA, Lease Rental Revenue Bonds (Liberty State Park Project),
6.80% due 3/15/2002 (g) 5,020
New Jersey EDA, Revenue Bonds:
NR* Aa1 600 (400 International Drive Partners), VRDN, 3.35% due 9/01/2005 (a) 600
BB+ Baa2 4,000 (American Airlines Inc. Project), AMT, 7.10% due 11/01/2031 4,277
AAA Aaa 5,000 (Clara Maass Health Systems), 5% due 7/01/2025 (h) 4,536
A+ NR* 2,000 (Community Movie Corp.--1996 Project), 5.875% due 11/01/2016 1,958
NR* Aaa 1,300 (Hoffman-La Roche, Inc. Project), VRDN, AMT, 3.45% due 11/01/2011 (a) 1,300
A+ NR* 3,000 Refunding (Health Village 1996 Project), 6% due 5/01/2016 3,030
AAA Aaa 2,500 Refunding (RWJ Health Care Corporation), 6.50% due 7/01/2024 (h) 2,680
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New Jersey (concluded)
<S> <S> <C> <S> <C>
New Jersey EDA, Water Facilities Revenue Bonds:
AAA Aaa $ 1,800 (NJ American Water Co., Inc. Project), AMT, 5.95% due 11/01/2029 (f) $ 1,818
A1 Aaa 5,200 Refunding (NJ Water Inc. Project ), VRDN, AMT, Series A, 3.45% due
11/01/2026 (a)(c) 5,200
New Jersey Health Care Facilities Financing Authority Revenue Bonds:
A- A3 2,000 Refunding (Atlantic City Medical Center), Series C, 6.80% due 7/01/2011 2,153
AAA Aaa 1,000 Refunding (Berkeley Heights Convalescent Center), 5% due 7/01/2026 (c) 907
BBB Baa2 4,980 Refunding (Englewood Hospital & Medical Center), 6.75% due 7/01/2024 5,209
AAA Aaa 2,000 Refunding (Hackensack Medical Center), 6.625% due 7/01/2017 (f) 2,145
AAA Aaa 7,745 Refunding (Jersey Shore Medical Center), 6.75% due 7/01/2019 (c) 8,586
BBB Baa2 4,000 Refunding (Saint Elizabeth Hospital Obligation Group), 6% due 7/01/2027 3,946
AAA NR* 1,000 Refunding (Saint Joseph's Hospital & Medical Center), Series A, 6% due
7/01/2026 (j) 1,012
NR* Baa2 2,950 (Saint Elizabeth Hospital), Series B, 8.25% due 7/01/2000 (g) 3,347
New Jersey State Educational Facilities Authority Revenue Bonds:
AA Aaa 5,620 Refunding (Institute for Advanced Study), Series B, 6.35% due 7/01/2021 5,887
AAA Aaa 1,150 (Seton Hall University Project), Series C, 6.85% due 7/01/1999 (e)(g) 1,242
AAA Aaa 850 (Seton Hall University Project), Series C, 6.85% due 7/01/2019 (e) 908
BBB Baa1 500 (Seton Hall University Project), Series D, 7% due 7/01/2021 525
AAA Aaa 5,985 (Trenton State College), Series A, 5.10% due 7/01/2021 (d) 5,612
AAA Aaa 5,000 New Jersey State Housing and Mortgage Finance Agency, Home Buyer
Revenue Bonds, AMT, Series M, 7% due 10/01/2026 (d) 5,313
New Jersey State Housing and Mortgage Finance Agency, M/F Housing
Revenue Bonds:
A+ NR* 1,105 (Mont Clarion Project), AMT, Series J, 7.70% due 11/01/2029 1,179
AAA NR* 9,000 Refunding (Presidential Plaza), 6.95% due 5/01/2013 (i) 9,669
<PAGE>
New Jersey State Transportation Trust Fund Authority:
A1 VMIG1++ 14,700 RITR, Series RI-1, 7.794% due 6/15/2014 (b) 15,527
AAA Aaa 2,000 Refunding (Transportation System), Series A, 5% due 6/15/2015 (d) 1,892
AAA VMIG1++ 1,300 New Jersey State Turnpike Authority, Revenue Refunding Bonds, VRDN,
Series D, 3.35% due 1/01/2018 (a)(f) 1,300
AAA Aaa 2,120 Passaic Valley, New Jersey, Water Commission, Water Supply Revenue Bonds,
Series A, 6.40% due 12/15/2002 (f)(g) 2,354
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 10/01/2002 (g) 6,006
AA- A1 2,000 78th Series, 6.50% due 4/15/2011 2,145
AAA Aaa 3,300 96th Series, AMT, 6.60% due 10/01/2023 (f) 3,587
AA A1 1,000 Rutgers State University, New Jersey, University Revenue Bonds, Series P,
6.85% due 5/01/2021 1,091
South Brunswick Township, New Jersey, Board of Education Revenue Bonds,
UT (f):
AAA Aaa 1,215 6.40% due 8/01/2015 1,295
AAA Aaa 1,000 6.40% due 8/01/2016 1,066
AAA Aaa 2,500 Trenton, New Jersey, GO, UT, 6.55% due 8/15/2009 (d) 2,723
University of Medicine and Dentistry, New Jersey, Revenue Bonds (g):
AA A3 1,170 Refunding, Series D, 6.50% due 12/01/2001 1,289
AA A3 2,750 Series E, 6.50% due 12/01/2001 3,031
AAA Aaa 3,705 West New York, New Jersey, Municipal Utilities Authority, Sewer Revenue
Refunding Bonds, 6.85%** due 12/15/2019 (f) 1,062
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Puerto Rico--5.2%
<S> <S> <C> <S> <C>
A Baa1 $ 4,000 Puerto Rico Commonwealth, Aqueduct and Sewer Authority Revenue
Refunding Bonds, 5% due 7/01/2019 $ 3,610
<PAGE>
AAA NR* 1,000 Puerto Rico Commonwealth, Highway Authority, Highway Revenue Bonds,
Series Q, 7.75% due 7/01/2000 (g) 1,129
BBB+ Baa1 1,195 Puerto Rico Commonwealth, Infrastructure Special Financing Authority
Revenue Bonds, Series A, 7.75% due 7/01/2008 1,275
AAA NR* 2,055 Puerto Rico Commonwealth, Public Improvement Bonds, GO, 7.70% due
7/01/2000 (g) 2,317
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 1,641
Total Investments (Cost--$181,893)--100.9% 191,456
Variation Margin on Financial Futures Contracts++++--0.1% 88
Liabilities in Excess of Other Assets--(1.0%) (1,877)
--------
Net Assets--100.0% $189,667
========
<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 January 31, 1997.
(b)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at January 31, 1997.
(c)AMBAC Insured.
(d)MBIA Insured.
(e)BIG Insured.
(f)FGIC Insured.
(g)Prerefunded.
(h)FSA Insured.
(i)FHA Collateralized.
(j)Insured by Connie Lee.
(k)All or portion of security held as collateral in connection with
open financial futures contracts.
*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.
++++Financial futures contracts purchased as of January 31, 1997
were as follows (in thousands):
Number of Expiration Value
Contracts Issue Date (Notes 1a & 1b)
100 US Treasury Bonds March 1997 $11,144
<PAGE>
Total Financial Futures Contracts Purchased
(Total Contract Price--$11,428) $11,144
=======
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of January 31, 1997
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$181,892,807) (Note 1a) $191,455,541
Cash 92,791
Receivables:
Interest $ 2,371,531
Beneficial interest sold 312,914
Variation margin (Note 1b) 87,500 2,771,945
------------
Prepaid expenses and other assets (Note 1e) 17,061
------------
Total assets 194,337,338
------------
Liabilities: Payables:
Securities purchased 3,918,667
Beneficial interest redeemed 365,352
Dividends to shareholders (Note 1f) 154,555
Investment adviser (Note 2) 91,289
Distributor (Note 2) 65,932 4,595,795
------------
Accrued expenses and other liabilities 74,720
------------
Total liabilities 4,670,515
------------
Net Assets: Net assets $189,666,823
============
<PAGE>
Net Assets Class A Shares of beneficial interest, $.10 par value,
Consist of: unlimited number of shares authorized $ 337,982
Class B Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 1,331,100
Class C Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 43,767
Class D Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 43,841
Paid-in capital in excess of par 183,952,576
Accumulated realized capital losses on investments--net (Note 5) (5,320,802)
Unrealized appreciation on investments--net 9,278,359
------------
Net assets $189,666,823
============
Net Asset Value: Class A--Based on net assets of $36,488,430 and 3,379,817
shares of beneficial interest outstanding $ 10.80
============
Class B--Based on net assets of $143,719,411 and 13,311,002
shares of beneficial interest outstanding $ 10.80
============
Class C--Based on net assets of $4,724,410 and 437,671
shares of beneficial interest outstanding $ 10.79
============
Class D--Based on net assets of $4,734,572 and 438,411
shares of beneficial interest outstanding $ 10.80
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended
January 31, 1997
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 5,812,344
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 538,159
Account maintenance and distribution fees--Class B (Note 2) 374,689
Transfer agent fees--Class B (Note 2) 37,391
Accounting services (Note 2) 31,020
Professional fees 31,019
Printing and shareholder reports 23,929
Account maintenance and distribution fees--Class C (Note 2) 13,455
Transfer agent fees--Class A (Note 2) 7,550
Custodian fees 5,621
Trustees' fees and expenses 5,046
Registration fees (Note 1e) 4,664
Pricing fees 3,574
Account maintenance fees--Class D (Note 2) 2,045
Transfer agent fees--Class C (Note 2) 1,170
Transfer agent fees--Class D (Note 2) 829
Other 2,690
------------
Total expenses 1,082,851
------------
Investment income--net 4,729,493
------------
<PAGE>
Realized & Realized gain on investments--net 641,277
Unrealized Gain on Change in unrealized appreciation on investments--net 1,215,750
Investments--Net ------------
(Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations $ 6,586,520
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the For the
Six Months Year
Ended Ended
January 31, July 31,
Increase (Decrease) in Net Assets: 1997 1996
<S> <S> <C> <C>
Operations: Investment income--net $ 4,729,493 $ 10,053,726
Realized gain on investments--net 641,277 1,002,823
Change in unrealized appreciation on investments--net 1,215,750 (1,113,252)
------------ ------------
Net increase in net assets resulting from operations 6,586,520 9,943,297
------------ ------------
Dividends to Investment income--net:
Shareholders Class A (975,708) (2,047,744)
(Note 1f): Class B (3,544,750) (7,720,083)
Class C (103,820) (136,121)
Class D (105,215) (149,778)
------------ ------------
Net decrease in net assets resulting from dividends to
shareholders (4,729,493) (10,053,726)
------------ ------------
Beneficial Interest Net decrease in net assets derived from beneficial interest
Transactions transactions (7,649,559) (11,660,281)
(Note 4): ------------ ------------
<PAGE>
Net Assets: Total decrease in net assets (5,792,532) (11,770,710)
Beginning of period 195,459,355 207,230,065
------------ ------------
End of period $189,666,823 $195,459,355
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
Class A
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended
Jan. 31, For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 1997 1996 1995 1994 1993
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.69 $ 10.71 $ 10.63 $ 11.23 $ 11.03
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .29 .58 .58 .58 .62
Realized and unrealized gain (loss) on
investments--net .11 (.02) .08 (.55) .24
-------- -------- -------- -------- --------
Total from investment operations .40 .56 .66 .03 .86
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.29) (.58) (.58) (.58) (.62)
Realized gain on investments--net -- -- -- -- (.04)
In excess of realized gain on
investments--net -- -- -- (.05) --
-------- -------- -------- -------- --------
Total dividends and distributions (.29) (.58) (.58) (.63) (.66)
-------- -------- -------- -------- --------
Net asset value, end of period $ 10.80 $ 10.69 $ 10.71 $ 10.63 $ 11.23
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 3.76%+++ 5.32% 6.51% .19% 8.15%
Return:** ======== ======== ======== ======== ========
Ratios to Expenses, net of reimbursement .70%* .71% .74% .69% .71%
Average ======== ======== ======== ======== ========
Expenses .70%* .71% .74% .69% .72%
======== ======== ======== ======== ========
Net Assets: Investment income--net 5.24%* 5.36% 5.57% 5.28% 5.62%
======== ======== ======== ======== ========
<PAGE>
Supplemental Net assets, end of period (in thousands) $ 36,489 $ 38,173 $ 39,482 $ 46,669 $ 47,024
Data: ======== ======== ======== ======== ========
Portfolio turnover 22.91% 60.21% 57.17% 65.97% 16.28%
======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class B
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended
Jan. 31, For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 1997 1996 1995 1994 1993
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.69 $ 10.71 $ 10.63 $ 11.23 $ 11.03
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .26 .52 .53 .53 .56
Realized and unrealized gain (loss) on
investments--net .11 (.02) .08 (.55) .24
-------- -------- -------- -------- --------
Total from investment operations .37 .50 .61 (.02) .80
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.26) (.52) (.53) (.53) (.56)
Realized gain on investments--net -- -- -- -- (.04)
In excess of realized gain on
investments--net -- -- -- (.05) --
-------- -------- -------- -------- --------
Total dividends and distributions (.26) (.52) (.53) (.58) (.60)
-------- -------- -------- -------- --------
Net asset value, end of period $ 10.80 $ 10.69 $ 10.71 $ 10.63 $ 11.23
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 3.49%+++ 4.77% 5.97% (.31%) 7.61%
Return:** ======== ======== ======== ======== ========
<PAGE>
Ratios to Expenses, net of reimbursement 1.21%* 1.21% 1.25% 1.20% 1.21%
Average ======== ======== ======== ======== ========
Net Assets: Expenses 1.21%* 1.21% 1.25% 1.20% 1.22%
======== ======== ======== ======== ========
Investment income--net 4.73%* 4.85% 5.06% 4.77% 5.11%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands). $143,719 $149,455 $164,020 $178,322 $170,652
Data: ======== ======== ======== ======== ========
Portfolio turnover 22.91% 60.21% 57.17% 65.97% 16.28%
======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class C Class D
For the For the For the For the
Six For the Period Six For the Period
The following per share data and ratios have been derived Months Year Oct. 21, Months Year Oct. 21,
from information provided in the financial statements. Ended Ended 1994++ to Ended Ended 1994++ to
Jan. 31, July 31, July 31, Jan. 31, July 31, July 31,
Increase (Decrease) in Net Asset Value: 1997 1996 1995 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.69 $ 10.71 $ 10.34 $ 10.70 $ 10.71 $ 10.34
Operating -------- -------- -------- -------- -------- --------
Performance:
Investment income--net .25 .51 .40 .28 .57 .44
Realized and unrealized gain (loss)
on investments--net .10 (.02) .37 .10 (.01) .37
-------- -------- -------- -------- -------- --------
Total from investment operations .35 .49 .77 .38 .56 .81
-------- -------- -------- -------- -------- --------
Less dividends from investment
income--net (.25) (.51) (.40) (.28) (.57) (.44)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 10.79 $ 10.69 $ 10.71 $ 10.80 $ 10.70 $ 10.71
======== ======== ======== ======== ======== ========
<PAGE>
Total Investment Based on net asset value per share 3.34%+++ 4.66% 7.62%+++ 3.61%+++ 5.31% 8.05%+++
Return:** ======== ======== ======== ======== ======== ========
Ratios to Expenses 1.31%* 1.32% 1.39%* .80%* .80% .86%*
Average ======== ======== ======== ======== ======== ========
Net Assets: Investment income--net 4.63%* 4.76% 4.83%* 5.14%* 5.27% 5.45%*
======== ======== ======== ======== ======== ========
Supplemental Net assets, end of period
Data: (in thousands) $ 4,724 $ 4,179 $ 1,337 $ 4,735 $ 3,652 $ 2,390
======== ======== ======== ======== ======== ========
Portfolio turnover 22.91% 60.21% 57.17% 22.91% 60.21% 57.17%
======== ======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effect 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. These unaudited
financial statements reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of the results
for the interim period presented. All such adjustments are of a
normal recurring nature. 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.
NOTES TO FINANCIAL STATEMENTS (continued)
(e) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(f) Dividends and distributions--Dividends from net investment
income are declared daily and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with 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.
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% --
<PAGE>
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the six months ended January 31, 1997, 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 $132 $1,283
Class D $298 $3,834
For the six months ended January 31, 1997, MLPF&S received
contingent deferred sales charges of $113,391 and $5,152 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, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended January 31, 1997 were $41,886,231 and
$42,891,955, respectively.
Net realized and unrealized gains (losses) as of January 31, 1997
were as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $ 1,219,093 $ 9,562,734
Financial futures contracts (577,816) (284,375)
----------- ------------
Total $ 641,277 $ 9,278,359
=========== ============
<PAGE>
As of January 31, 1997, net unrealized appreciation for Federal
income tax purposes aggregated $9,562,734, of which $10,393,836
related to appreciated securities and $831,102 related to
depreciated securities. The aggregate cost of investments at January
31, 1997 for Federal income tax purposes was $181,892,807.
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest
transactions was $7,649,559 and $11,660,281 for the six months ended
January 31, 1997 and for the year ended July 31, 1996, respectively.
Transactions in shares of beneficial interest for each class were as
follows:
Class A Shares for the Six Months Dollar
Ended January 31, 1997 Shares Amount
Shares sold 131,453 $ 1,418,538
Shares issued to share-
holders in reinvestment of
dividends 44,156 475,441
------------ ------------
Total issued 175,609 1,893,979
Shares redeemed (365,691) (3,938,920)
------------ ------------
Net decrease (190,082) $ (2,044,941)
============ ============
Class A Shares for the Year Dollar
Ended July 31, 1996 Shares Amount
Shares sold 364,984 $ 3,916,668
Shares issued to share-
holders in reinvestment of
dividends 90,119 973,226
------------ ------------
Total issued 455,103 4,889,894
Shares redeemed (572,401) (6,216,536)
------------ ------------
Net decrease (117,298) $ (1,326,642)
============ ============
Class B Shares for the Six Months Dollar
Ended January 31, 1997 Shares Amount
<PAGE>
Shares sold 922,198 $ 9,937,728
Shares issued to share-
holders in reinvestment of
dividends 174,429 1,878,028
------------ ------------
Total issued 1,096,627 11,815,756
Automatic conversion of
shares (27,157) (292,157)
Shares redeemed (1,733,727) (18,681,008)
------------ ------------
Net decrease (664,257) $ (7,157,409)
============ ============
Class B Shares for the Year Dollar
Ended July 31, 1996 Shares Amount
Shares sold 1,810,139 $ 19,580,526
Shares issued to share-
holders in reinvestment of
dividends 380,144 4,105,914
------------ ------------
Total issued 2,190,283 23,686,440
Automatic conversion of
shares (42,313) (450,828)
Shares redeemed (3,488,182) (37,742,338)
------------ ------------
Net decrease (1,340,212) $(14,506,726)
============ ============
Class C Shares for the
Six Months Ended Dollar
January 31, 1997 Shares Amount
Shares sold 130,218 $ 1,402,262
Shares issued to share-
holders in reinvestment of
dividends 6,329 68,165
------------ ------------
Total issued 136,547 1,470,427
Shares redeemed (89,693) (967,305)
------------ ------------
Net increase 46,854 $ 503,122
============ ============
Class C Shares for the Year Dollar
Ended July 31, 1996 Shares Amount
<PAGE>
Shares sold 328,308 $ 3,577,687
Shares issued to share-
holders in reinvestment of
dividends 7,789 83,871
------------ ------------
Total issued 336,097 3,661,558
Shares redeemed (70,149) (764,576)
------------ ------------
Net increase 265,948 $ 2,896,982
============ ============
Class D Shares for the
Six Months Ended Dollar
January 31, 1997 Shares Amount
Shares sold 86,407 $ 936,615
Automatic conversion of
shares 27,157 292,157
Shares issued to share-
holders in reinvestment of
dividends 5,008 53,942
------------ ------------
Total issued 118,572 1,282,714
Shares redeemed (21,620) (233,045)
------------ ------------
Net increase 96,952 $ 1,049,669
============ ============
NOTES TO FINANCIAL STATEMENTS (concluded)
Class D Shares for the Year Dollar
Ended July 31, 1996 Shares Amount
Shares sold 148,809 $ 1,613,998
Automatic conversion of
shares 42,313 450,828
Shares issued to share-
holders in reinvestment of
dividends 5,398 58,224
------------ ------------
Total issued 196,520 2,123,050
Shares redeemed (78,221) (846,945)
------------ ------------
Net increase 118,299 $ 1,276,105
============ ============
<PAGE>
5. Capital Loss Carryforward:
At July 31, 1996, the Fund had a net capital loss carryforward of
approximately $3,382,000, all of which expires in 2003. This amount
will be available to offset like amounts of any future taxable
gains.
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
William M. Petty, 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
