<PAGE>
MERRILL LYNCH
MARYLAND
MUNICIPAL
BOND FUND
FUND LOGO
Semi-Annual Report
January 31, 1996
Officers and Trustees
Arthur Zeikel, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Fred K. Stuebe, Portfolio Manager
Gerald M. Richard, Treasurer
Jerry Weiss, Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
<PAGE>
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
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 Maryland
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
TO OUR SHAREHOLDERS
<PAGE>
Although the partial shutdown of the US Government curtailed the
release of most economic data in the latter part of the six-month
period ended January 31, 1996, it was nonetheless apparent that
gross domestic product (GDP) growth was losing momentum. Consumer
spending is barely growing, the industrial sector is at a virtual
standstill and, despite lower mortgage rates, there is little or no
pick-up in housing activity. With inflationary pressures subdued,
the Federal Reserve Board responded to the slowing economy by
continuing to modestly lower short-term interest rates.
Historically, it has taken some time for shifts in monetary policy
to have an impact on economic growth. Therefore, the Federal Reserve
Board's gradual shift to lowering interest rates, which began early
last year, may not be reflected in a pick-up in real economic growth
until later this year.
The impasse between the Clinton Administration and Congress over the
Federal budget continues, although both sides have made concessions
since the debate began. It appears that investors are currently
focusing on the progress that has been made rather than on the
differences that remain. Initially, President Clinton proposed
deficits of about $190 billion annually through fiscal year 2002,
but now proposes balanced budgets, as do the Republicans. Current
indications are that a piecemeal budget accord is the most likely
outcome. Even without the proposed policy changes, it appears that
the US Federal budget deficit would remain stable at about 2% of GDP
for the rest of the decade. This would be far better than is the
case for most Group of Seven industrial nations, and for the United
States would represent a great improvement over the last 15 years.
Although this may fall short of investors' best expectations, it
appears that the Federal budget debate over the past year has
resulted in a trend toward a more conservative fiscal policy.
The Municipal Market
The municipal bond market rallied strongly during the six months
ended January 31, 1996. Long-term, tax-exempt revenue bond yields,
as measured by the Bond Buyer Revenue Bond Index, declined over 65
basis points (0.65%) to end the January period at 5.69%. Continued
weak economic conditions coupled with low inflation fostered a very
positive environment for almost all fixed-income investments during
the last three months of 1995. Long-term US Treasury bond yields
also declined approximately 65 basis points to 6.00% by January 31,
1996. Both US Treasury and long-term tax-exempt bond yields are near
their lowest levels in the past two years.
The municipal bond market had to contend with a number of
difficulties for much of 1995. Various tax reform proposals have
made the future tax advantage of municipal bonds uncertain. This
has, at a minimum, reduced the overall demand for tax-exempt
securities. At the same time, as municipal bond yields declined, tax-
exempt authorities have rushed to issue debt at near historic low
yield levels. During the six-month period ended January 31, 1996,
approximately $90 billion in municipal securities were underwritten,
an increase of over 30% compared to the same period last year.
However, as early 1995 issuance was significantly reduced, the last
12 months issuance of approximately $160 billion remained the same
as that issued a year earlier. Tax-exempt bond yields declined
throughout the six months ended January 31, 1996, despite investor
uncertainty and increased supply pressures.
<PAGE>
It is likely that the municipal market will regain much of the
technical support it enjoyed earlier in 1995. 1995 issuance remained
significantly below levels underwritten in 1993, when over $290
billion in long-term tax-exempt securities were issued. Also,
municipal investors received over $25 billion in bond maturities,
coupon income and early redemptions on January 1, 1996. This $25
billion is almost twice the average monthly issuance for 1995. The
amount of outstanding municipal securities will continue to decline
throughout 1996 and into early 1997. As the uncertainties
surrounding proposed tax reforms are resolved in 1996, the tax-
exempt bond market's renewed technical position should provide
support to municipal bond prices.
Many of the features that made tax-exempt products attractive to
investors last year are still in place. Long-term, A-rated municipal
revenue bonds continue to yield well over 90% of comparable US
Treasury bond yields. Historically, analysts have considered yields
in excess of 82% attractive for long-term investors. For example,
currently available tax-exempt bond yields generate taxable
equivalent yields in excess of 8.50% for an investor in the 36%
Federal income tax bracket. While the uncertainties regarding
potential changes in current tax law remain, it appears that, at
current price levels, bond investors have discounted at least some
of the uncertainty.
Looking ahead, it may be unreasonable to expect to duplicate the
double-digit returns produced by most tax-exempt issues in 1995,
given current municipal bond yields. Municipal bond yields would
have to decline to levels not seen since the 1960s in order to
generate such significant returns in the coming years. While the
current economic environment may still justify additional declines
in interest rates, it may be prudent to expect some period of
consolidation before the interest rate decline resumes. Tax-exempt
bond market performance in 1996 is likely to be generated more by
enhancing current income and limiting credit risk than by
significant interest rate declines.
<PAGE>
Portfolio Strategy
During the six-month period ended January 31, 1996, the continued
decline of interest rates caused us to shift the Fund's portfolio
strategy from a neutral posture to one that is more constructive on
interest rates. Therefore, we extended the Fund's average portfolio
maturity in order to seek to enhance any capital appreciation. New-
issue volume in the Maryland tax-exempt market totaled just under
$200 million in bonds during the three months ended January 31,
1996. This represents a decline of approximately 55% compared to the
same period last year. With the decline of new issuance in the State
of Maryland and no significant increase on the horizon, we kept the
Fund's cash reserve position at approximately 1%--3% of net assets.
Looking ahead, our ongoing strategy will seek to maintain an
attractive level of income.
In Conclusion
We appreciate your ongoing interest in Merrill Lynch Maryland
Municipal Bond Fund, and we look forward to serving your investment
needs in the months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President
(Fred K. Stuebe)
Fred K. Stuebe
Portfolio Manager
March 12, 1996
<PAGE>
We are pleased to announce that Fred K. Stuebe is responsible for
the day-to-day management of Merrill Lynch Maryland Municipal Bond
Fund. Mr. Stuebe has been employed by Merrill Lynch Asset
Management, L.P. (an affiliate of the Fund's investment adviser)
since 1989 as Vice President.
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:
* Class A Shares incur a maximum initial sales charge (front-end load)
of 4% and bear no ongoing distribution or account maintenance fees.
Class A Shares are available only to eligible investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.25% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 10 years.
* Class C Shares are subject to a distribution fee of 0.35% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 4% and an
account maintenance fee of 0.10% (but no distribution fee).
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.
<PAGE>
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
1/31/96 10/31/95 1/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $9.52 $9.34 $8.83 + 7.81% + 1.93%
Class B Shares* 9.52 9.34 8.84 + 7.69 + 1.93
Class C Shares* 9.53 9.34 8.84 + 7.81 + 2.03
Class D Shares* 9.52 9.34 8.84 + 7.69 + 1.93
Class A Shares--Total Return* + 13.82(1) + 3.20(2)
Class B Shares--Total Return* + 13.11(3) + 3.07(4)
Class C Shares--Total Return* + 13.11(5) + 3.15(6)
Class D Shares--Total Return* + 13.58(7) + 3.17(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 4.04%
Class D Shares--Standardized 30-day Yield 4.37%
<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 $0.502 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.118 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.455 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.106 per share ordinary
income dividends.
(5)Percent change includes reinvestment of $0.445 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.103 per share ordinary
income dividends.
(7)Percent change includes reinvestment of $0.493 per share ordinary
income dividends.
(8)Percent change includes reinvestment of $0.116 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>
10/29/93--12/31/93 $10.00 $10.07 -- $0.077 + 1.48%
1994 10.07 8.58 -- 0.511 - 9.87
1995 8.58 9.52 -- 0.505 +17.22
1/1/96--1/31/96 9.52 9.52 -- 0.027 + 0.39
------
Total $1.120
<PAGE>
Cumulative total return as of 1/31/96: + 7.63%**
<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>
<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>
10/29/93--12/31/93 $10.00 $10.07 -- $0.068 + 1.38%
1994 10.07 8.58 -- 0.464 -10.33
1995 8.58 9.53 -- 0.459 +16.75
1/1/96--1/31/96 9.53 9.52 -- 0.024 + 0.26
------
Total $1.015
Cumulative total return as of 1/31/96: + 6.41%**
<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 $8.79 $8.58 -- $0.089 - 1.35%
1995 8.58 9.53 -- 0.449 +16.63
1/1/96--1/31/96 9.53 9.53 -- 0.024 + 0.36
------
Total $0.562
<PAGE>
Cumulative total return as of 1/31/96: +15.46%**
<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>
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 $8.79 $8.58 -- $0.098 - 1.25%
1995 8.58 9.52 -- 0.496 +17.11
1/1/96--1/31/96 9.52 9.52 -- 0.027 + 0.39
------
Total $0.621
Cumulative total return as of 1/31/96: +16.09%**
<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 12/31/95 +17.22% +12.53%
Inception (10/29/93)
through 12/31/95 + 3.26 + 1.33
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/95 +16.75% +12.75%
Inception (10/29/93)
through 12/31/95 + 2.78 + 1.92
[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 12/31/95 +16.63% +15.63%
Inception (10/21/94)
through 12/31/95 +12.45 +12.45
[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 12/31/95 +17.11% +12.42%
Inception (10/21/94)
through 12/31/95 +12.94 + 9.15
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
PORTFOLIO ABBREVIATIONS
<PAGE>
To simplify the listings of Merrill Lynch Maryland 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)
GO General Obligation Bonds
PCR Pollution Control Revenue Bonds
S/F Single-Family
STRIPES Short-Term Rate Inverse Payment Exempt Securities
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)
Maryland--90.0%
<S> <S> <C> <S> <C>
AA+ Aa $ 500 Anne Arundel County, Maryland, Consolidated Water and Sewer Refunding
Bonds, 5.25% due 4/15/2014 $ 504
A A2 500 Anne Arundel County, Maryland, PCR, Refunding (Baltimore Gas and Electric
Company Project), 6% due 4/01/2024 516
AAA Aaa 500 Baltimore County, Maryland, Refunding Bonds (County Pension Funding),
UT, 6.70% due 7/01/2016 535
AAA Aaa 500 Baltimore, Maryland, Consolidated Public Improvement Refunding Bonds,
UT, GO, Series D, 5.40% due 10/15/2012 (b) 520
AAA Aaa 500 Baltimore, Maryland, Revenue Refunding Bonds (Kidder Maryland Water Projects),
Series A, 5.65% due 7/01/2020 (e) 525
AAA Aaa 625 Baltimore, Maryland, Revenue Refunding Bonds (Water Projects), Series A,
5% due 7/01/2024 (a) 605
AA Aa 600 Carroll County, Maryland, Registered Revenue Bonds (Commissioners-
Consolidated Public Improvement), UT, 6.50% due 10/01/2024 667
Maryland Community Development Administration, S/F Program Revenue Bonds
(Department of Housing and Community Development):
NR* Aa 500 4th Series, 6.45% due 4/01/2014 521
NR* Aa 250 6th Series, 7.05% due 4/01/2017 267
NR* Aa 500 7th Series, AMT, 7.30% due 4/01/2025 530
<PAGE>
Maryland Health and Higher Educational Facilities Authority Revenue Bonds:
AAA Aaa 500 (Greater Baltimore Medical Center), 6.75% due 7/01/2001 (h) 570
AAA Aaa 500 (Francis Scott Key Medical Center), 6.75% due 7/01/2000 (a)(h) 562
AAA Aaa 1,000 (Frederick Memorial Hospital), 5% due 7/01/2018 (a) 947
NR* VMIG1++ 800 (Pooled Loan Program), VRDN, Series A, 3.05% due 4/01/2035 (i) 800
AAA Aaa 1,000 Refunding (Greater Baltimore Medical Center), 5% due 7/01/2019 (a) 945
A A 500 Refunding (Memorial Hospital of Cumberland), 6.50% due 7/01/2017 530
AAA Aaa 1,000 (University of Maryland Medical Systems), Series A, 6.50% due
7/01/2001 (a)(h) 1,112
AAA Aaa 625 (University of Maryland Medical Systems), Series B, 7% due
7/01/2022 (a) 785
AAA Aaa 1,000 Maryland State and Local Facilities, First Series, UT, 5.10% due
3/15/2002 1,051
AAA Aaa 500 Maryland Transportation Authority, Special Obligation Revenue Bonds
(Baltimore/Washington International Airport Project), AMT, Series A, 6.25%
due 7/01/2014 (a) 538
Maryland Water Quality Financing Administration, Revolving Loan Fund Revenue
Bonds, Series A:
AA Aa 300 6.375% due 9/01/2010 330
AA Aa 500 6.55% due 9/01/2014 552
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Maryland (concluded)
<S> <S> <C> <S> <C>
Montgomery County, Maryland, Consolidated Public Improvement Bonds:
AAA Aaa $ 500 Series A, UT, 5.90% due 10/01/2008 $ 551
AAA Aaa 500 Series B, 7.10% due 10/01/2000 (h) 573
NR* Aa 450 Montgomery County, Maryland, Housing Opportunities Community, S/F Mortgage
Revenue Bonds, Series B, 6.65% due 7/01/2017 471
AAA Aaa 500 Montgomery County, Maryland, Parking Revenue Refunding Bonds (Silver Spring
Parking Lot), Series A, 6.25% due 6/01/2009 (a) 545
NR* A 515 Northeast Maryland, Waste Disposal Authority, Solid Waste Revenue Bonds
(Montgomery County Resource Recovery Project), AMT, Series A, 6.30% due
7/01/2016 536
<PAGE>
AAA NR* 500 Prince Georges County, Maryland, Housing Authority, Mortgage Revenue
Refunding Bonds(Parker Apartments Project), Series A, 7.25% due 11/20/2016 (f) 541
AAA NR* 935 Prince Georges County, Maryland, Housing Authority, S/F Mortgage Revenue
Bonds, AMT, Series A, 6.60% due 12/01/2025 (g) 970
Prince Georges County, Maryland, PCR, Refunding (Potomac Electric Project):
A A1 1,000 5.75% due 3/15/2010 1,055
A A1 250 6.375% due 1/15/2023 267
Washington Suburban Sanitation District, Maryland, Registered, General
Construction Bonds, UT:
AA Aa1 500 6.625% due 6/01/2017 552
AAA Aaa 585 Refunding, UT, 6.40% due 11/01/2001 (h) 661
AA Aaa 400 Second Series, 6.90% due 6/01/2001 (h) 458
AA Aa1 1,500 Series A, 5.25% due 6/01/2019 1,490
Puerto Rico--8.7%
A Baa1 510 Puerto Rico Commonwealth, Highway and Transportation Authority, Highway
Revenue Bonds, Series T, 6.625% due 7/01/2018 550
Puerto Rico Electric Power Authority, Power Revenue Bonds:
A- Baa1 1,000 Series P, 7% due 7/01/2001 (h) 1,157
AAA Aaa 400 Series T, Registered, STRIPES, 7.571% due 7/01/2005 (c)(d) 463
Total Investments (Cost--$23,357)--98.7% 24,752
Other Assets Less Liabilities--1.3% 336
-------
Net Assets--100.0% $25,088
-------
<FN>
(a)FGIC Insured.
(b)AMBAC Insured.
(c)FSA Insured.
(d)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, 1996.
(e)MBIA Insured.
(f)GNMA Collateralized.
(g)FNMA/GNMA Collateralized.
(h)Prerefunded.
(i)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, 1996.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
<PAGE>
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of January 31, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$23,356,723) (Note 1a) $ 24,751,640
Cash 188,852
Receivables:
Interest $ 275,847
Beneficial interest sold 224,639
Investment adviser (Note 2) 19,628 520,114
------------
Deferred organization expenses (Note 1e) 51,951
Prepaid expenses (Note 1e) 10,376
------------
Total assets 25,522,933
------------
Liabilities: Payables:
Beneficial interest redeemed 340,273
Dividends to shareholders (Note 1f) 27,683
Distributor (Note 2) 9,604 377,560
------------
Accrued expenses 57,820
------------
Total liabilities 435,380
------------
Net Assets: Net assets $ 25,087,553
============
<PAGE>
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited
Consist of: number of shares authorized $ 13,542
Class B Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 225,645
Class C Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 17,056
Class D Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 7,199
Paid-in capital in excess of par 25,121,016
Accumulated realized capital losses on investments--net (Note 5) (1,691,822)
Unrealized appreciation on investments--net 1,394,917
------------
Net assets $ 25,087,553
============
Net Asset Value: Class A--Based on net assets of $1,289,319 and 135,415 shares
of beneficial interest outstanding $ 9.52
============
Class B--Based on net assets of $21,488,123 and 2,256,448 shares
of beneficial interest outstanding $ 9.52
============
Class C--Based on net assets of $1,624,752 and 170,564 shares
of beneficial interest outstanding $ 9.53
============
Class D--Based on net assets of $685,359 and 71,989 shares
of beneficial interest outstanding $ 9.52
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
Statement of Operations
For the Six Months Ended
January 31, 1996
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 643,709
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 64,590
Account maintenance and distribution fees--Class B (Note 2) 50,743
Professional fees 25,020
Accounting services (Note 2) 17,569
Printing and shareholder reports 16,674
Transfer agent fees--Class B (Note 2) 7,856
Amortization of organization expenses (Note 1e) 7,704
Account maintenance and distribution fees--Class C (Note 2) 3,951
Registration fees (Note 1e) 3,536
Pricing fees 2,354
Custodian fees 1,291
Trustees' fees and expenses 591
Transfer agent fees--Class C (Note 2) 563
Transfer agent fees--Class A (Note 2) 424
Account maintenance fees--Class D (Note 2) 278
Transfer agent fees--Class D (Note 2) 178
Other 625
------------
Total expenses before reimbursement 203,947
Reimbursement of expenses (Note 2) (106,807)
------------
Total expenses after reimbursement 97,140
<PAGE> ------------
Investment income--net 546,569
------------
Realized & Realized loss on investments--net (61,041)
Unrealized Change in unrealized appreciation on investments--net 980,142
Gain (Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 1,465,670
(Notes 1b, 1d & 3): ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the
Six Months For the
Ended Year Ended
Increase (Decrease) in Net Assets: Jan. 31, 1996 July 31, 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 546,569 $ 957,392
Realized loss on investments--net (61,041) (1,600,414)
Change in unrealized appreciation/depreciation on investments--net 980,142 1,578,565
------------ ------------
Net increase in net assets resulting from operations 1,465,670 935,543
------------ ------------
Dividends to Investment income--net:
Shareholders Class A (33,913) (88,115)
(Note 1f): Class B (469,090) (847,823)
Class C (29,628) (13,425)
Class D (13,938) (8,029)
------------ ------------
Net decrease in net assets resulting from dividends to shareholders (546,569) (957,392)
------------ ------------
Beneficial Interest Net increase in net assets derived from beneficial interest
Transactions transactions 2,904,976 5,212,416
(Note 4): ------------ ------------
Net Assets: Total increase in net assets 3,824,077 5,190,567
Beginning of period 21,263,476 16,072,909
------------ ------------
End of period $ 25,087,553 $ 21,263,476
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
Class A Class B
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. 29, Months Year Oct. 29,
from information provided in the financial statements. Ended Ended 1993++ to Ended Ended 1993++ to
Jan. 31, July 31, July 31, Jan. 31, July 31, July 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1994 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.15 $ 9.20 $ 10.00 $ 9.16 $ 9.20 $ 10.00
Operating ------- ------- ------- ------- ------- -------
Performance: Investment income--net .24 .52 .37 .22 .47 .33
Realized and unrealized gain (loss) on
investments--net .37 (.05) (.80) .36 (.04) (.80)
------- ------- ------- ------- ------- -------
Total from investment operations .61 .47 (.43) .58 .43 (.47)
------- ------- ------- ------- ------- -------
Less dividends from investment
income--net (.24) (.52) (.37) (.22) (.47) (.33)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 9.52 $ 9.15 $ 9.20 $ 9.52 $ 9.16 $ 9.20
======= ======= ======= ======= ======= =======
Total Investment Based on net asset value per share 6.74%+++ 5.39% (4.32%)+++ 6.35%+++ 4.96% (4.68%)+++
Return:** ======= ======= ======= ======= ======= =======
Ratios to Expenses, net of reimbursement .34%* .13% .03%* .86%* .65% .53%*
Average ======= ======= ======= ======= ======= =======
Net Assets: Expenses 1.25%* 1.57% 1.76%* 1.76%* 2.08% 2.27%*
======= ======= ======= ======= ======= =======
Investment income--net 5.13%* 5.80% 5.30%* 4.61%* 5.29% 4.74%*
======= ======= ======= ======= ======= =======
Supplemental Net assets, end of period
Data: (in thousands) $ 1,289 $ 1,362 $ 1,589 $21,488 $18,371 $14,484
======= ======= ======= ======= ======= =======
Portfolio turnover 46.08% 73.99% 29.40% 46.08% 73.99% 29.40%
======= ======= ======= ======= ======= =======
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class C Class D
For the For the For the For the
Six Period Six Period
The following per share data and ratios have been derived Months Oct. 21, Months Oct. 21,
from information provided in the financial statements. Ended 1994++ to Ended 1994++ to
Jan. 31, July 31, Jan. 31, July 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1996 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.16 $ 8.79 $ 9.16 $ 8.79
Operating -------- -------- -------- --------
Performance: Investment income--net .21 .36 .24 .40
Realized and unrealized gain on investments--net .37 .37 .36 .37
-------- -------- -------- --------
Total from investment operations .58 .73 .60 .77
-------- -------- -------- --------
Less dividends from investment income--net (.21) (.36) (.24) (.40)
-------- -------- -------- --------
Net asset value, end of period $ 9.53 $ 9.16 $ 9.52 $ 9.16
======== ======== ======== ========
Total Investment Based on net asset value per share 6.40%+++ 8.51%+++ 6.57%+++ 8.94%+++
Return:** ======== ======== ======== ========
Ratios to Expenses, net of reimbursement .97%* .82%* .45%* .31%*
Average ======== ======== ======== ========
Net Assets: Expenses 1.87%* 2.08%* 1.35%* 1.55%*
======== ======== ======== ========
Investment income--net 4.49%* 5.08%* 5.01%* 5.57%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 1,625 $ 1,013 $ 686 $ 517
Data: ======== ======== ======== ========
Portfolio turnover 46.08% 73.99% 46.08% 73.99%
======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Maryland 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.
(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.
<PAGE>
(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.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Deferred organization expenses and prepaid registration fees--
Deferred organization expenses are charged to expense on a straight-
line basis over a five-year period. Prepaid registration fees are
charged to expense as the related shares are issued.
(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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
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. For the six months ended January 31, 1996, FAM
earned fees of $64,590, all of which was voluntarily waived. FAM
also reimbursed the Fund additional expenses of $42,217.
Pursuant to the distribution plans (the "Distribution Plans")
adopted by the Fund in accordance with Rule 12b-1 under the
Investment Company Act of 1940, the Fund pays the Distributor
ongoing account maintenance and distribution fees. The fees are
accrued daily and paid monthly at annual rates based upon the
average daily net assets of the shares as follows:
Account
Maintenance Distribution
Fee Fee
Class B 0.25% 0.25%
Class C 0.25% 0.35%
Class D 0.10% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the six months ended January 31, 1996, 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
<PAGE>
Class A $167 $2,434
Class D $577 $5,324
For the six months ended January 31, 1996, MLPF&S received
contingent deferred sales charges of $38,243 and $100 relating to
transactions in Class B and Class C Shares, respectively.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, PSI, MLPF&S, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended January 31, 1996 were $12,858,882 and
$10,469,890, respectively.
Net realized and unrealized gains (losses) as of January 31, 1996
were as follows:
Realized Unrealized
Losses Gains
Long-term investments $(61,041) $1,394,917
-------- ----------
Total $(61,041) $1,394,917
-------- ----------
As of January 31, 1996, net unrealized appreciation for Federal
income tax purposes aggregated $1,394,917, of which $1,396,885
related to appreciated securities and $1,968 related to depreciated
securities. The aggregate cost of investments at January 31, 1996
for Federal income tax purposes was $23,356,723.
4. Beneficial Interest Transactions:
Net increase in net assets derived from beneficial interest
transactions was $2,904,976 and $5,212,416 for the six months ended
January 31, 1996 and for the year ended July 31, 1995, respectively.
Transactions in shares of beneficial interest for each class were as
follows:
Class A Shares for the Six Months Dollar
Ended January 31, 1996 Shares Amount
<PAGE>
Shares sold 26,051 $ 243,196
Shares issued to shareholders
in reinvestment of dividends 2,489 23,205
----------- -----------
Total issued 28,540 266,401
Shares redeemed (41,937) (389,903)
----------- -----------
Net decrease (13,397) $ (123,502)
=========== ===========
Class A Shares for the Year Dollar
Ended July 31, 1995 Shares Amount
Shares sold 42,092 $ 376,856
Shares issued to shareholders
in reinvestment of dividends 6,413 57,046
----------- -----------
Total issued 48,505 433,902
Shares redeemed (72,388) (638,705)
----------- -----------
Net decrease (23,883) $ (204,803)
=========== ===========
Class B Shares for the Six Months Dollar
Ended January 31, 1996 Shares Amount
Shares sold 445,997 $ 4,160,157
Shares issued to shareholders
in reinvestment of dividends 24,769 231,428
----------- -----------
Total issued 470,766 4,391,585
Shares redeemed (220,605) (2,070,674)
Automatic conversion of shares (24) (221)
----------- -----------
Net increase 250,137 $ 2,320,690
=========== ===========
<PAGE>
Class B Shares for the Year Dollar
Ended July 31, 1995 Shares Amount
Shares sold 835,712 $ 7,482,027
Shares issued to shareholders
in reinvestment of dividends 46,080 410,971
----------- -----------
Total issued 881,792 7,892,998
Shares redeemed (449,753) (3,996,258)
----------- -----------
Net increase 432,039 $ 3,896,740
=========== ===========
Class C Shares for the Six Months Dollar
Ended January 31, 1996 Shares Amount
Shares sold 59,712 $ 557,438
Shares issued to shareholders
in reinvestment of dividends 2,031 18,996
----------- -----------
Total issued 61,743 576,434
Shares redeemed (1,742) (16,353)
----------- -----------
Net increase 60,001 $ 560,081
=========== ===========
Class C Shares for the Period Dollar
Oct. 21, 1994++ to July 31, 1995 Shares Amount
Shares sold 123,204 $ 1,119,811
Shares issued to shareholders
in reinvestment of dividends 965 8,788
----------- -----------
Total issued 124,169 1,128,599
Shares redeemed (13,606) (123,782)
----------- -----------
Net increase 110,563 $ 1,004,817
=========== ===========
[FN]
++Commencement of Operations.
Class D Shares for the Six Months Dollar
Ended January 31, 1996 Shares Amount
Shares sold 26,072 $ 244,280
Automatic conversion of shares 24 221
Shares issued to shareholders
in reinvestment of dividends 775 7,269
----------- -----------
Total issued 26,871 251,770
Shares redeemed (11,382) (104,063)
----------- -----------
Net increase 15,489 $ 147,707
=========== ===========
<PAGE>
Class D Shares for the Period Dollar
Oct. 21, 1994++ to July 31, 1995 Shares Amount
Shares sold 56,794 $ 518,419
Shares issued to shareholders
in reinvestment of dividends 586 5,352
----------- -----------
Total issued 57,380 523,771
Shares redeemed (880) (8,109)
----------- -----------
Net increase 56,500 $ 515,662
=========== ===========
[FN]
++Commencement of Operations.
5. Capital Loss Carryforward:
At July 31, 1995, the Fund had a net capital loss carryforward of
approximately $899,000, all of which expires in 2003. This amount
will be available to offset like amounts of any future taxable
gains.
