MERRILL LYNCH
NEW JERSEY
MUNICIPAL
BOND FUND
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
January 31, 2000
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
TO OUR SHAREHOLDERS
The Municipal Market Environment
During the six months ended January 31, 2000, continued strong domestic growth,
gradual improvement in foreign economies and investor concerns regarding future
inflationary pressures pushed long-term fixed-income bond yields higher. The
Federal Reserve Board continued to raise short-term interest rates in August and
November 1999 as well as just after the period's close, seeking to moderate US
economic growth and maintain the existing benign inflationary environment. US
economic growth, in part intensified by Year 2000 preparations, grew 5.8% during
the last fiscal quarter of 1999 and had an annual rate of 4.1% for 1999. A
number of inflationary indicators have also begun to signal some increase in
price pressures.
However, most investors believe that the Federal Reserve Board will be extremely
vigilant in preventing such pressures from any material escalation. US Treasury
bond yields responded by rising approximately 60 basis points (0.60%) by
mid-January 2000. A strong rally, largely based upon an expected signi-ficant
reduction in the future supply of US Treasury 30-year maturity bonds, pushed
yields lower to 6.50% at January 31, 2000. Over the last six months, yields on
30-year US Treasury bonds rose approximately 40 basis points.
The tax-exempt bond market was also under pressure throughout the entire period.
Despite receiving more than $30 billion in coupon payments, bond maturi-ties and
proceeds from early redemptions in December and January, overall investor demand
has diminished. It is likely that the returns generated by the US equity market
have continued to attract investor attention and have left little demand for
competing investment alternatives. At January 31, 2000, the long-term tax-exempt
revenue bond yield, as measured by the Bond Buyer Revenue Index, was 6.34%, an
increase of nearly 70 basis points over the last six months.
Issuance by municipalities has significantly declined in recent months. Over the
last six months, less than $100 billion in long-term tax-exempt bonds were
issued, representing a decline of over 20% compared to the same period a year
ago. During the last three months, less than $45 billion in long-term bonds were
issued by various municipalities. This most recent quarterly issuance is 30%
below the level of the January 31, 1999 quarter. Additionally, during January
2000, less than $8 billion in municipal debt was underwritten, down more than
50% from January 1999 levels. This represents the lowest monthly issuance in
over five years. Toward the end of 1999, consensus estimates for 2000 annual
issuance were in the $210 billion-$215 billion range. January's underwritings,
as well as those expected to be issued in the near future, have led some
analysts to revise their forecasts to the $190 billion range.
We believe an overall reduction in bond supply in the coming year should help
support the municipal bond market's overall technical position. While tax-exempt
bond yields, which are at their highest level in over three years, have
attracted significant retail investor interest, institutional demand declined
sharply. Long-term municipal mutual funds have seen consistent outflows in
recent months as the yields of individual securities rose faster than those of
larger, more diverse mutual funds. During the six months ended January 31, 2000,
tax-exempt mutual funds have had net redemptions of approximately $9 billion.
Also, the demand from property and casualty insurance companies has weakened as
a result of the losses and anticipated losses incurred from a series of damaging
storms across much of the eastern United States. Additionally, many
institutional investors who have in recent years been attracted to the municipal
bond market by historically attractive tax-exempt bond yield ratios of over 90%,
found other asset classes even more attractive. Even with a reduced supply
position, tax-exempt issuers have been forced to repeatedly raise municipal bond
yields in an attempt to attract adequate demand. We believe a reduced bond
supply going forward is likely to promote a more closely balanced supply/demand
structure and foster a more stable tax-exempt interest rate environment.
Looking ahead, it appears to us that long-term tax-exempt bond yields will
remain under pressure, trading in a broad range centered around current levels.
1
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
Investors are also likely to remain concerned regarding future action by the
Federal Reserve Board in early 2000. Any improvement in bond prices may be
contingent upon weakening in both US employment growth and consumer spending.
The 100 basis point rise in US Treasury bond yields seen thus far could
negatively affect US economic growth. The US housing market is likely to be
among the first sectors to be affected, as some declines have already been
evidenced because of higher mortgage rates. We believe it is also unrealistic to
expect double-digit returns in US equity markets to continue indefinitely. Much
of the US consumer's wealth is tied to recent stock market appreciation. Any
slowing in these incredible growth rates may reduce consumer spending. We
believe that these factors suggest that the worst of the recent increase in bond
yields has passed and stable, if not slightly improving, bond prices may be
expected.
Portfolio Strategy
For the six months ended January 31, 2000, we managed the Fund with the intent
of sustaining an attractive level of tax-exempt income. Unfortunately, strong
economic activity and the fear of additional increases in short-term interest
rates by the Federal Reserve Board caused long-term interest rates to increase
significantly. Even though yields on US Treasury securities rose by about 40
basis points and yields on municipal bonds rose by about 70 basis points, we
believe there are reasons to be optimistic going forward.
A significant amount of negative news has been built into the market by
investors. Therefore, we believe interest rates are much higher than they should
be relative to the low inflationary environment. Also, the dramatic rise in
interest rates has allowed newly issued bonds to be created with a much higher
coupon structure than what was available when interest rates were at historic
lows. As a result, our strategy has been concentrated on selling the lower
coupon bonds that were purchased earlier in 1999 and purchasing higher coupon
bonds that enhance the tax-exempt income of the Fund. At the same time, this
strategy should serve to limit any additional interest rate volatility the Fund
may experience.
In Conclusion
We appreciate your ongoing interest in Merrill Lynch New Jersey Municipal Bond
Fund, and we look forward to assisting you with your financial needs in the
months and years ahead.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Roberto Roffo
Roberto Roffo
Vice President and Portfolio Manager
March 3, 2000
2
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the Merrill
Lynch Select PricingSM System, which offers four pricing alternatives:
o 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.
o 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.)
o Class C Shares are subject to a distribution fee of 0.35% and an account
maintenance fee of 0.25%. In addition, Class C Shares are subject to a 1%
contingent deferred sales charge if redeemed within one year of purchase.
o Class 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. Figures shown in the "Recent Performance Results" and
"Average Annual Total Return" tables assume reinvestment of all dividends
and capital gains distributions at net asset value on the payable date.
Investment return and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost.
Dividends paid to each class of shares will vary because of the different
levels of account maintenance, distribution and transfer agency fees
applicable to each class, which are deducted from the income available to
be paid to shareholders.
Recent Performance Results*
<TABLE>
<CAPTION>
6 Month 12 Month Since Inception Standardized
As of January 31, 2000 Total Return Total Return Total Return 30-Day Yield
====================================================================================================================================
<S> <C> <C> <C> <C>
ML New Jersey Municipal Bond Fund Class A Shares -6.12% -8.84% +68.27% 4.93%
- ------------------------------------------------------------------------------------------------------------------------------------
ML New Jersey Municipal Bond Fund Class B Shares -6.36 -9.30 +60.43 4.62
- ------------------------------------------------------------------------------------------------------------------------------------
ML New Jersey Municipal Bond Fund Class C Shares -6.50 -9.48 +21.77 4.53
- ------------------------------------------------------------------------------------------------------------------------------------
ML New Jersey Municipal Bond Fund Class D Shares -6.17 -8.93 +25.22 4.84
====================================================================================================================================
</TABLE>
* Investment results shown do not reflect sales charges; results would be
lower if a sales charge was included. Total investment returns are based
on changes in net asset values for the periods shown, and assume
reinvestment of all dividends and capital gains distributions at net asset
value on the payable date. The Fund's since inception dates are from
8/31/90 for Class A & Class B Shares and from 10/21/94 for Class C & Class
D Shares.
3
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
PERFORMANCE DATA (concluded)
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 12/31/99 -6.33% -10.08%
- --------------------------------------------------------------------------------
Five Years Ended 12/31/99 +5.16 + 4.31
- --------------------------------------------------------------------------------
Inception (8/31/90)
through 12/31/99 +5.90 + 5.44
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
================================================================================
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 12/31/99 -6.80% -10.29%
- --------------------------------------------------------------------------------
Five Years Ended 12/31/99 +4.63 + 4.63
- --------------------------------------------------------------------------------
Inception (8/31/90)
through 12/31/99 +5.36 + 5.36
- --------------------------------------------------------------------------------
* 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 12/31/99 -6.81% -7.68%
- --------------------------------------------------------------------------------
Five Years Ended 12/31/99 +4.53 +4.53
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 12/31/99 +4.19 +4.19
- --------------------------------------------------------------------------------
* 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 12/31/99 -6.33% -10.07%
- --------------------------------------------------------------------------------
Five Years Ended 12/31/99 +5.08 + 4.23
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 12/31/99 +4.74 + 3.92
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
4
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
Ratings Ratings Amount Issue Value
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey -- 99.3%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AAA Aaa $ 3,000 Cape May County, New Jersey, Industrial Pollution Control Financing Authority Revenue
Bonds (Atlantic City Electric Company Project), AMT, Series A, 7.20% due 11/01/2029 (e)(i) $ 3,236
- ------------------------------------------------------------------------------------------------------------------------------------
East Orange, New Jersey, Board of Education, COP (d)**:
AAA Aaa 2,845 5.216% due 8/01/2021 748
AAA Aaa 1,400 5.235% due 8/01/2023 324
AAA Aaa 2,850 5.38% due 2/01/2028 493
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 645 Edison Township, New Jersey, Board of Education, COP, 4.75% due 12/15/2018 (d) 545
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,685 Essex County, New Jersey, Improvement Authority Revenue Bonds (Riverbank Park Project),
4.625% due 9/01/2018 (e) 1,404
- ------------------------------------------------------------------------------------------------------------------------------------
AAA NR* 1,225 Essex County, New Jersey, Improvement Authority, Revenue Refunding Bonds, Senior Citizen
Housing (Jewish Federation Project), 5.10% due 6/01/2029 (c) 1,034
- ------------------------------------------------------------------------------------------------------------------------------------
NR* Aaa 2,500 Essex County, New Jersey, Utilities Authority, Solid Waste Revenue Refunding Bonds,
Series A, 4.875% due 4/01/2018 (d) 2,154
- ------------------------------------------------------------------------------------------------------------------------------------
Evesham, New Jersey, Municipal Utilities Authority, Revenue Refunding Bonds, Series A (e):
NR* Aaa 1,335 5.50% due 7/01/2004 1,370
NR* Aaa 1,340 5.50% due 7/01/2005 1,375
NR* Aaa 1,490 5.50% due 7/01/2007 1,525
NR* Aaa 1,575 5.50% due 7/01/2008 1,609
NR* Aaa 1,660 6% due 7/01/2009 1,751
NR* Aaa 1,155 6.125% due 7/01/2010 1,230
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 3,250 Landis, New Jersey, Sewer Authority, Sewer Revenue Refunding Bonds, CARS, 6.60%
due 9/19/2019 (b)(g) 3,059
- ------------------------------------------------------------------------------------------------------------------------------------
AA+ Aaa 1,000 Middlesex County, New Jersey, Improvement Authority, Revenue Refunding Bonds
(Educational Services Commission Projects), 4.875% due 9/15/2019 857
- ------------------------------------------------------------------------------------------------------------------------------------
NR* VMIG1+ 1,200 New Jersey EDA, Dock Facility Revenue Refunding Bonds (Bayonne/IMTT Project), VRDN,
Series C, 3.60% due 12/01/2027 (h) 1,200
- ------------------------------------------------------------------------------------------------------------------------------------
A+ NR* 450 New Jersey EDA, Economic Development Revenue Refunding Bonds (Health Village
96 Project), 6% due 5/01/2006 (f) 471
- ------------------------------------------------------------------------------------------------------------------------------------
A1+c VMIG1+ 1,400 New Jersey EDA, Natural Gas Facilities Revenue Bonds (New Jersey Natural Gas Co. Project),
VRDN, AMT, Series B, 3.50% due 8/01/2030 (a)(h) 1,400
- ------------------------------------------------------------------------------------------------------------------------------------
</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)
CARS Complementary Auction Rate Securities
COP Certificates of Participation
EDA Economic Development Authority
GO General Obligation Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
VRDN Variable Rate Demand Notes
5
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
Ratings Ratings Amount Issue Value
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A1+c VMIG1+ $ 2,600 New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds (New Jersey Natural
Gas Co. Project), VRDN, AMT, Series A, 3.65% due 8/01/2030 (a)(h) $ 2,600
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey EDA, Revenue Bonds (Transportation Project), Sub-Lease (d):
AAA Aaa 2,000 Series A, 6% due 5/01/2016 2,030
AAA Aaa 7,000 Series B, 5.75% due 5/01/2010 7,240
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,500 New Jersey EDA, Revenue Refunding Bonds (RWJ Health Care Corporation), 6.50%
due 7/01/2024 (d) 2,552
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey EDA, Special Facility Revenue Bonds (Continental Airlines Inc. Project), AMT:
BB Ba2 6,525 6.40% due 9/15/2023 5,922
BB Ba2 3,630 5.50% due 4/01/2028 2,811
BB Ba2 1,000 6.25% due 9/15/2029 878
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 New Jersey EDA, State Lease Revenue Bonds (State Office Buildings Projects), 6.25%
due 6/15/2020 (a) 5,122
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority, Revenue Refunding Bonds:
AAA Aaa 2,500 (Centrastate Medical Center Obligation Group), 4.50% due 7/01/2028 (a) 1,887
BBB- Baa2 4,980 (Englewood Hospital and Medical Center), 6.75% due 7/01/2024 4,518
AAA Aaa 2,500 (Hackensack University Medical Center), Series B, 5.20% due 1/01/2028 (e) 2,141
AAA Aaa 1,225 (Meridian Health System Obligation Group), 5.25% due 7/01/2029 (d) 1,055
BBB- Baa3 1,500 (Trinitas Hospital Obligation Group), 7.375% due 7/01/2015 1,471
BBB- Baa3 1,500 (Trinitas Hospital Obligation Group), 7.40% due 7/01/2020 1,453
AAA Aaa 3,750 (Virtua Health Issue), 4.50% due 7/01/2028 (d) 2,830
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority Revenue Bonds:
AA+ Aaa 2,000 (Institute for Advanced Study), Series G, 5% due 7/01/2028 1,683
AAA Aaa 2,875 (William Peterson University), Series D, 5.125% due 7/01/2019 (a) 2,564
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority, Revenue Refunding Bonds:
AA+ Aaa 230 (Institute of Advanced Study), Series F, 5% due 7/01/2021 197
AAA Aaa 1,000 (Seton Hall University Project), 5% due 7/01/2018 (a) 885
- ------------------------------------------------------------------------------------------------------------------------------------
AA+ Aa1 1,620 New Jersey State, GO, 4.50% due 2/01/2016 1,358
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 3,495 New Jersey State Housing and Mortgage Finance Agency, Home Buyer Revenue Bonds, AMT,
Series M, 7% due 10/01/2026 (e) 3,657
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 New Jersey State Housing and Mortgage Finance Agency, Home Buyer Revenue Refunding
Bonds, AMT, Series X, 5.25% due 10/01/2018 (e) 1,777
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 New Jersey State Transit Corporation, COP (Federal Transit Administration Grants), Series A,
6.125% due 9/15/2014 (a) 5,152
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey State Transportation Trust Fund Authority Revenue Bonds, Transportation
System, Series A:
AA- Aa2 1,000 5% due 6/15/2014 918
AA- Aa2 3,800 5% due 6/15/2017 3,382
AAA Aaa 2,500 5% due 6/15/2018 (d) 2,209
- ------------------------------------------------------------------------------------------------------------------------------------
NR* Aaa 14,700 New Jersey State Transportation Trust Fund Authority, Revenue Refunding Bonds, RITR,
Series RI, 7.995% due 6/15/2014 (e)(g) 14,820
- ------------------------------------------------------------------------------------------------------------------------------------
A1+c VMIG1+ 3,600 New Jersey State Turnpike Authority, Turnpike Revenue Refunding Bonds, VRDN, Series D,
3% due 1/01/2018 (b)(h) 3,600
- ------------------------------------------------------------------------------------------------------------------------------------
AAA NR* 1,950 Pleasantville, New Jersey, School District, GO, 5% due 2/15/2020 (e) 1,684
- ------------------------------------------------------------------------------------------------------------------------------------
South Brunswick Township, New Jersey, Board of Education, GO (b):
AAA Aaa 1,215 6.40% due 8/01/2005 (f) 1,296
AAA Aaa 1,820 5.625% due 12/01/2010 1,862
AAA Aaa 1,875 5.625% due 12/01/2011 1,905
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
Ratings Ratings Amount Issue Value
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey (concluded)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AAA Aaa $ 2,000 South Jersey Port Corporation, New Jersey, Revenue Refunding Bonds (Marine Terminal),
Series J, 5% due 1/01/2020 (e) $ 1,717
- ------------------------------------------------------------------------------------------------------------------------------------
BBB- NR* 1,040 South Jersey Transportation Authority, New Jersey, Lease Revenue Bonds (Raytheon Aircraft
Service, Inc. Project), AMT, 6.15% due 1/01/2022 931
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 3,705 South Jersey Transportation Authority, New Jersey, Transportation System Revenue Refunding
Bonds, 5% due 11/01/2018 (a) 3,268
- ------------------------------------------------------------------------------------------------------------------------------------
Union County, New Jersey, Utilities Authority Revenue Refunding Bonds:
AAA Aaa 2,000 County Deficiency, AMT, Series A-2, 5% due 6/15/2028 (a) 1,642
AA+ Aaa 500 County Deficiency, Series C-2, 5% due 6/15/2028 419
AAA Aaa 1,000 (Ogden Martin System of Union), Senior Lease, AMT, Series A, 5% due 6/01/2015 (a) 897
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,140 Wall Township, New Jersey, School District, GO, 4.50% due 7/15/2017 (d) 1,765
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
New York -- 3.4%
- ------------------------------------------------------------------------------------------------------------------------------------
AA- A1 3,250 Port Authority of New York and New Jersey, Consolidated Revenue Refunding Bonds,
72nd Series, 7.35% due 10/01/2027 3,477
- ------------------------------------------------------------------------------------------------------------------------------------
NR* Aaa 1,000 Port Authority of New York and New Jersey, Special Obligation Revenue Bonds
(JFK International Air Terminal LLC), RIB, AMT, Series 157, 7.97% due 12/01/2022 (e)(g) 902
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Pennsylvania -- 3.4%
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 4,500 Delaware River Port Authority of Pennsylvania and New Jersey Revenue Bonds, 5.75%
due 1/01/2015 (d) 4,507
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments (Cost -- $145,900) -- 106.1% 138,769
Variation Margin on Financial Futures Contracts*** -- 0.1% 146
Liabilities in Excess of Other Assets -- (6.2%) (8,143)
--------
Net Assets -- 100.0% $130,772
========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FHA Insured.
(d) FSA Insured.
(e) MBIA Insured.
(f) Prerefunded.
(g) 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, 2000.
(h) 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,
2000.
(i) All or a portion of security held as collateral in connection with open
financial futures contracts.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase by the Fund.
*** Financial futures contracts sold as of January 31, 2000 were as follows:
--------------------------------------------------------------------------
(in Thousands)
--------------------------------------------------------------------------
Number of Expiration
Contracts Issue Date Value
--------------------------------------------------------------------------
203 US Treasury Bonds March 2000 $18,720
--------------------------------------------------------------------------
Total Financial Futures Contracts Sold
(Total Contract Price -- $18,327) $18,720
--------------------------------------------------------------------------
+ Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
7
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of January 31, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Assets: Investments, at value (identified cost -- $145,900,127) ......................... $ 138,768,666
Receivables:
Securities sold ............................................................... $ 9,963,676
Interest ...................................................................... 1,680,824
Variation margin .............................................................. 145,906
Beneficial interest sold ...................................................... 77,008 11,867,414
-----------
Prepaid registration fees and other assets ...................................... 12,325
-------------
Total assets .................................................................... 150,648,405
-------------
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Securities purchased .......................................................... 19,194,353
Beneficial interest redeemed .................................................. 326,213
Dividends to shareholders ..................................................... 123,409
Investment adviser ............................................................ 58,125
Distributor ................................................................... 41,116 19,743,216
-----------
Accrued expenses and other liabilities .......................................... 133,665
-------------
Total liabilities ............................................................... 19,876,881
-------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets: Net assets ...................................................................... $ 130,771,524
=============
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited number of
Consist of: shares authorized ............................................................... $ 255,682
Class B Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized ............................................................... 943,725
Class C Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized ............................................................... 89,566
Class D Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized ............................................................... 84,975
Paid-in capital in excess of par ................................................ 144,271,955
Accumulated realized capital losses on investments -- net ....................... (7,349,762)
Unrealized depreciation on investments -- net ................................... (7,524,617)
-------------
Net assets ...................................................................... $ 130,771,524
=============
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value: Class A -- Based on net assets of $24,334,893 and 2,556,817 shares
of beneficial interest outstanding .............................................. $ 9.52
=============
Class B -- Based on net assets of $89,823,043 and 9,437,245 shares
of beneficial interest outstanding .............................................. $ 9.52
=============
Class C -- Based on net assets of $8,521,988 and 895,663 shares
of beneficial interest outstanding .............................................. $ 9.51
=============
Class D -- Based on net assets of $8,091,600 and 849,753 shares
of beneficial interest outstanding .............................................. $ 9.52
=============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
FINANCIAL INFORMATION (continued)
Statement of Operations
<TABLE>
<CAPTION>
For the Six Months Ended
January 31, 2000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income: Interest and amortization of premium and discount earned ........................ $ 4,267,926
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees ........................................................ $ 406,321
Account maintenance and distribution fees -- Class B ............................ 255,517
Professional fees ............................................................... 35,248
Account maintenance and distribution fees -- Class C ............................ 27,580
Printing and shareholder reports ................................................ 24,612
Transfer agent fees -- Class B .................................................. 23,782
Accounting services ............................................................. 18,186
Custodian fees .................................................................. 6,362
Transfer agent fees -- Class A .................................................. 5,081
Trustees' fees and expenses ..................................................... 4,980
Account maintenance fees -- Class D ............................................. 4,573
Pricing fees .................................................................... 4,355
Transfer agent fees -- Class C .................................................. 2,056
Transfer agent fees -- Class D .................................................. 1,707
Registration fees ............................................................... 1,545
Other ........................................................................... 2,134
---------
Total expenses .................................................................. 824,039
-----------
Investment income -- net ........................................................ 3,443,887
-----------
- ------------------------------------------------------------------------------------------------------------------------------------
Realized & Unreal- Realized loss on investments -- net ............................................. (5,391,331)
ized Loss on Change in unrealized appreciation/depreciation on investments -- net ............ (7,827,630)
Investments -- Net: -----------
Net Decrease in Net Assets Resulting from Operations ............................ $(9,775,074)
===========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
FINANCIAL INFORMATION (continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
January 31, July 31,
Increase (Decrease) in Net Assets: 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations: Investment income -- net .................................................... $ 3,443,887 $ 7,536,326
Realized gain (loss) on investments -- net .................................. (5,391,331) 5,241,434
Change in unrealized appreciation/depreciation on investments -- net ........ (7,827,630) (10,792,746)
------------ ------------
Net increase (decrease) in net assets resulting from operations ............. (9,775,074) 1,985,014
------------ ------------
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends & Investment income -- net:
Distributions to Class A ................................................................... (688,074) (1,502,506)
Shareholders: Class B ................................................................... (2,324,346) (5,223,571)
Class C ................................................................... (204,703) (374,099)
Class D ................................................................... (226,764) (436,150)
Realized gain on investments -- net:
Class A ................................................................... (485,989) (624,592)
Class B ................................................................... (1,793,327) (2,460,892)
Class C ................................................................... (168,955) (172,401)
Class D ................................................................... (160,686) (198,232)
------------ ------------
Net decrease in net assets resulting from dividends and distributions
to shareholders ............................................................. (6,052,844) (10,992,443)
------------ ------------
- ------------------------------------------------------------------------------------------------------------------------------------
Beneficial Interest Net decrease in net assets derived from beneficial
Transactions: interest transactions ....................................................... (17,155,324) (1,135,156)
------------ ------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets: Total decrease in net assets ................................................ (32,983,242) (10,142,585)
Beginning of period ......................................................... 163,754,766 173,897,351
------------ ------------
End of period ............................................................... $130,771,524 $163,754,766
============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
FINANCIAL INFORMATION (continued)
Financial Highlights
<TABLE>
<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 For the Year Ended July 31,
Jan. 31 ---------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period .............. $ 10.60 $ 11.16 $ 11.15 $ 10.69 $ 10.71
Operating ------- -------- -------- -------- --------
Performance: Investment income -- net .......................... .25 .52 .58 .57 .58
Realized and unrealized gain (loss) on
investments -- net ................................ (.90) (.34) .02 .46 (.02)
------- -------- -------- -------- --------
Total from investment operations .................. (.65) .18 .60 1.03 .56
------- -------- -------- -------- --------
Less dividends and distributions:
Investment income -- net ........................ (.25) (.52) (.58) (.57) (.58)
Realized gain on investments -- net ............. (.18) (.22) -- -- --
In excess of realized gain on
investments -- net .............................. -- -- (.01) -- --
------- -------- -------- -------- --------
Total dividends and distributions ................. (.43) (.74) (.59) (.57) (.58)
------- -------- -------- -------- --------
Net asset value, end of period .................... $ 9.52 $ 10.60 $ 11.16 $ 11.15 $ 10.69
======= ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ................ (6.12%)+ 1.50% 5.51% 9.95% 5.32%
Return:** ======= ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses .......................................... .72%* .75% .69% .70% .71%
Average ======= ======== ======== ======== ========
Net Assets: Investment income -- net .......................... 5.04%* 4.71% 5.17% 5.29% 5.36%
======= ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) .......... $24,335 $ 30,480 $ 32,571 $ 39,343 $ 38,173
Data: ======= ======== ======== ======== ========
Portfolio turnover ................................ 61.57% 120.46% 57.00% 54.02% 60.21%
======= ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales charges.
+ Aggregate total investment return.
See Notes to Financial Statements.
11
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
<TABLE>
<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 For the Year Ended July 31,
Jan. 31 ---------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ............. $ 10.60 $ 11.16 $ 11.15 $ 10.69 $ 10.71
Operating -------- -------- -------- -------- --------
Performance: Investment income -- net ......................... .23 .46 .52 .52 .52
Realized and unrealized gain (loss) on
investments -- net ............................... (.90) (.34) .02 .46 (.02)
-------- -------- -------- -------- --------
Total from investment operations ................. (.67) .12 .54 .98 .50
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income -- net ....................... (.23) (.46) (.52) (.52) (.52)
Realized gain on investments -- net ............ (.18) (.22) -- -- --
In excess of realized gain on
investments -- net ............................. -- -- (.01) -- --
-------- -------- -------- -------- --------
Total dividends and distributions ................ (.41) (.68) (.53) (.52) (.52)
-------- -------- -------- -------- --------
Net asset value, end of period ................... $ 9.52 $ 10.60 $ 11.16 $ 11.15 $ 10.69
======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ............... (6.36%)+ .99% 4.98% 9.39% 4.77%
Return:** ======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses ......................................... 1.22%* 1.26% 1.20% 1.21% 1.21%
Average ======== ======== ======== ======== ========
Net Assets: Investment income -- net ......................... 4.54%* 4.21% 4.66% 4.78% 4.85%
======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) ......... $ 89,823 $113,869 $126,606 $137,485 $149,455
Data: ======== ======== ======== ======== ========
Portfolio turnover ............................... 61.57% 120.46% 57.00% 54.02% 60.21%
======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales charges.
+ Aggregate total investment return.
See Notes to Financial Statements.
12
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class C
---------------------------------------------------------
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended For the Year Ended July 31,
Jan. 31 ---------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ............. $ 10.60 $ 11.16 $ 11.14 $ 10.69 $ 10.71
Operating ------- -------- ------- ------- -------
Performance: Investment income -- net ......................... .22 .45 .51 .50 .51
Realized and unrealized gain (loss) on
investments -- net ............................... (.91) (.34) .03 .45 (.02)
------- -------- ------- ------- -------
Total from investment operations ................. (.69) .11 .54 .95 .49
------- -------- ------- ------- -------
Less dividends and distributions:
Investment income--net ......................... (.22) (.45) (.51) (.50) (.51)
Realized gain on investments--net .............. (.18) (.22) -- -- --
In excess of realized gain on
investments -- net ............................. -- -- (.01) -- --
------- -------- ------- ------- -------
Total dividends and distributions ................ (.40) (.67) (.52) (.50) (.51)
------- -------- ------- ------- -------
Net asset value, end of period ................... $ 9.51 $ 10.60 $ 11.16 $ 11.14 $ 10.69
======= ======== ======= ======= =======
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ............... (6.50%)+ .89% 4.96% 9.18% 4.66%
Return:** ======= ======== ======= ======= =======
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses ......................................... 1.32%* 1.36% 1.30% 1.31% 1.32%
Average ======= ======== ======= ======= =======
Net Assets: Investment income -- net ......................... 4.44%* 4.09% 4.56% 4.68% 4.76%
======= ======== ======= ======= =======
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) ......... $ 8,522 $ 9,585 $ 7,252 $ 5,088 $ 4,179
Data: ======= ======== ======= ======= =======
Portfolio turnover ............................... 61.57% 120.46% 57.00% 54.02% 60.21%
======= ======== ======= ======= =======
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales charges.
+ Aggregate total investment return.
See Notes to Financial Statements.
13
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
FINANCIAL INFORMATION (concluded)
Financial Highlights (concluded)
<TABLE>
<CAPTION>
Class D
---------------------------------------------------------
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended For the Year Ended July 31,
Jan. 31 ---------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.60 $ 11.17 $ 11.15 $ 10.70 $ 10.71
Operating ------- -------- ------- ------- -------
Performance: Investment income -- net .25 .51 .57 .56 .57
Realized and unrealized gain (loss) on
investments -- net (.90) (.35) .03 .45 (.01)
------- -------- ------- ------- -------
Total from investment operations (.65) .16 .60 1.01 .56
------- -------- ------- ------- -------
Less dividends and distributions:
Investment income -- net (.25) (.51) (.57) (.56) (.57)
------- -------- ------- ------- -------
Realized gain on investments -- net (.18) (.22) -- -- --
------- -------- ------- ------- -------
In excess of realized gain on
investments -- net -- -- (.01) -- --
------- -------- ------- ------- -------
Total dividends and distributions (.43) (.73) (.58) (.56) (.57)
------- -------- ------- ------- -------
Net asset value, end of period $ 9.52 $ 10.60 $ 11.17 $ 11.15 $ 10.70
======= ======== ======= ======= =======
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share (6.17%)+ 1.31% 5.50% 9.73% 5.31%
Return:** ======= ======== ======= ======= =======
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses .82%* .85% .79% .80% .80%
Average ======= ======== ======= ======= =======
Net Assets: Investment income -- net 4.95%* 4.60% 5.07% 5.19% 5.27%
======= ======== ======= ======= =======
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $ 8,092 $ 9,821 $ 7,468 $ 4,625 $ 3,652
Data: ======= ======== ======= ======= =======
Portfolio turnover 61.57% 120.46% 57.00% 54.02% 60.21%
======= ======== ======= ======= =======
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales charges.
+ Aggregate total investment return.
See Notes to Financial Statements.
14
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
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's financial statements are prepared in
accordance with generally accepted accounting principles, which may require the
use of management accruals and estimates. 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 PricingSM System. Shares of Class A and
Class D are sold with a front-end sales charge. Shares of Class B and Class C
may be subject to a contingent deferred sales charge. All classes of shares have
identical voting, dividend, liquidation and other rights and the same terms and
conditions, except that Class B, Class C and Class D Shares bear certain
expenses related to the account maintenance of such shares, and Class B and
Class C Shares also bear certain expenses related to the distribution of such
shares. Each class has exclusive voting rights with respect to matters relating
to its account maintenance and distribution expenditures. The following is a
summary of significant accounting policies followed by the Fund.
(a) Valuation of investments--Municipal bonds and other portfolio securities in
which the Fund invests are traded primarily in the over-the-counter municipal
bond and money markets and are valued at the last available bid price in the
over-the-counter market or on the basis of yield equivalents as obtained from
one or more dealers that make markets in the securities. Financial futures
contracts and options thereon, which are traded on exchanges, are valued at
their settlement prices as of the close of such exchanges. Short-term
investments with remaining maturities of sixty days or less are valued 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.
o Financial futures contracts--The Fund may purchase or sell financial 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.
15
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
NOTES TO FINANCIAL STATEMENTS (continued)
(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) 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
Manage- ment, 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 ("MLFD" or the "Distributor"), a division of Princeton Funds
Distributor, Inc. ("PFD"), which is a wholly-owned subsidiary of Merrill Lynch
Group, Inc.
FAM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee
based upon the average daily value of the Fund's net assets at the following
annual rates: .55% of the Fund's average daily net assets not exceeding $500
million; .525% of average daily net assets in excess of $500 million but not
exceeding $1 billion; and .50% of average daily net assets in excess of $1
billion.
Pursuant to the Distribution Plans adopted by the Fund in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Fund pays the Distributor
ongoing account maintenance and distribution fees. The fees are accrued daily
and paid monthly at annual rates based upon the average daily net assets of the
shares as follows:
- --------------------------------------------------------------------------------
Account Distribution
Maintenance Fee Fee
- --------------------------------------------------------------------------------
Class B .................................. .25% .25%
Class C .................................. .25% .35%
Class D .................................. .10% --
- --------------------------------------------------------------------------------
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("MLPF&S"), a subsidiary of ML & Co., also provides account
maintenance and distribution services to the Fund. The ongoing account
maintenance fee compensates the Distributor and MLPF&S for providing account
maintenance services to Class 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, 2000, 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 ...................................... $ 33 $ 438
Class D ...................................... $1,298 $8,554
- --------------------------------------------------------------------------------
For the six months ended January 31, 2000, MLPF&S received contingent deferred
sales charges of $114,991 and $1,989 relating to transactions in Class B and
Class C Shares, respectively.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co., is
the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
16
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
Certain officers and/or trustees of the Fund are officers and/or directors of
FAM, PSI, FDS, PFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended January 31, 2000 were $88,484,213 and $105,677,420, respectively.
Net realized gains (losses) for the six months ended January 31, 2000 and net
unrealized losses as of January 31, 2000 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains (Losses) Losses
- --------------------------------------------------------------------------------
Long-term investments ..................... $(6,303,511) $(7,131,461)
Financial futures contracts ............... 912,180 (393,156)
----------- -----------
Total ..................................... $(5,391,331) $(7,524,617)
=========== ===========
- --------------------------------------------------------------------------------
As of January 31, 2000, net unrealized depreciation for Federal income tax
purposes aggregated $7,131,461, of which $711,721 related to appreciated
securities and $7,843,182 related to depreciated securities. The aggregate cost
of investments at January 31, 2000 for Federal income tax purposes was
$145,900,127.
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest transactions was
$17,155,324 and $1,135,156 for the six months ended January 31, 2000 and for the
year ended July 31, 1999, respectively.
Transactions in shares of beneficial interest for each class were as follows:
- --------------------------------------------------------------------------------
Class A Shares for the Six Months Dollar
Ended January 31, 2000 Shares Amount
- --------------------------------------------------------------------------------
Shares sold .................................... 33,203 $ 337,144
Shares issued to share-
holders in reinvestment of
dividends and distributions .................... 66,122 650,007
-------- -----------
Total issued ................................... 99,325 987,151
Shares redeemed ................................ (418,387) (4,212,363)
-------- -----------
Net decrease ................................... (319,062) $(3,225,212)
======== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ..................................... 240,370 $ 2,645,122
Shares issued to share-
holders in reinvestment of
dividends and distributions ..................... 101,677 1,125,507
-------- -----------
Total issued .................................... 342,047 3,770,629
Shares redeemed ................................. (384,364) (4,235,146)
-------- -----------
Net decrease .................................... (42,317) $ (464,517)
======== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the Six Months Dollar
Ended January 31, 2000 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................... 268,714 $ 2,712,856
Shares issued to share-
holders in reinvestment of
dividends and distributions ................... 209,763 2,063,854
---------- ------------
Total issued .................................. 478,477 4,776,710
Automatic conversion
of shares ..................................... (8,189) (82,919)
Shares redeemed ............................... (1,776,534) (17,787,324)
---------- ------------
Net decrease .................................. (1,306,246) $(13,093,533)
========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................... 2,027,650 $ 22,635,018
Shares issued to share-
holders in reinvestment of
dividends and distributions ................... 363,509 4,025,694
---------- ------------
Total issued .................................. 2,391,159 26,660,712
Automatic conversion
of shares ..................................... (28,941) (319,927)
Shares redeemed ............................... (2,961,623) (32,803,526)
---------- ------------
Net decrease .................................. (599,405) $ (6,462,741)
========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Shares for the Six Months Dollar
Ended January 31, 2000 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................... 84,786 $ 864,409
Shares issued to share-
holders in reinvestment of
dividends and distributions ................... 26,390 259,586
-------- -----------
Total issued .................................. 111,176 1,123,995
Shares redeemed ............................... (120,181) (1,201,050)
-------- -----------
Net decrease .................................. (9,005) $ (77,055)
======== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ..................................... 501,480 $ 5,578,896
Shares issued to share-
holders in reinvestment of
dividends and distributions ..................... 35,070 387,666
-------- -----------
Total issued .................................... 536,550 5,966,562
Shares redeemed ................................. (281,832) (3,090,534)
-------- -----------
Net increase .................................... 254,718 $ 2,876,028
======== ===========
- --------------------------------------------------------------------------------
17
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
- --------------------------------------------------------------------------------
Class D Shares for the Six Months Dollar
Ended January 31, 2000 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ..................................... 76,571 $ 772,848
Automatic conversion
of shares ....................................... 8,187 82,919
Shares issued to share-
holders in reinvestment of
dividends and distributions ..................... 17,743 174,932
-------- -----------
Total issued .................................... 102,501 1,030,699
Shares redeemed ................................. (178,907) (1,790,223)
-------- -----------
Net decrease .................................... (76,406) $ (759,524)
======== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold 342,639 $ 3,854,415
Automatic conversion of
shares 28,924 319,927
Shares issued to share-
holders in reinvestment of
dividends and distributions 28,371 313,589
-------- -----------
Total issued 399,934 4,487,931
Shares redeemed (142,577) (1,571,857)
-------- -----------
Net increase 257,357 $ 2,916,074
======== ===========
- --------------------------------------------------------------------------------
18
<PAGE>
Merrill Lynch New Jersey Municipal Bond Fund January 31, 2000
OFFICERS AND TRUSTEES
Terry K. Glenn, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Arthur Zeikel, Trustee
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Roberto Roffo, Vice President
Donald C. Burke, Vice President and Treasurer
Alice A. Pellegrino, Secretary
- --------------------------------------------------------------------------------
Robert R. Martin, Trustee of Merrill Lynch New Jersey Municipal Bond Fund has
recently retired. The Fund's Board of Trustees wishes Mr. Martin well in his
retirement.
- --------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
19
<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. Statements and other information
herein are as dated and are subject to change.
Merrill Lynch New Jersey
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011 #11298--1/00
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