MERRILL
LYNCH
NEW YORK
MUNICIPAL
BOND FUND
FUND LOGO
Annual Report September 30, 1994
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Merrill Lynch New York
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, New Jersey
08543-9011
<PAGE>
TO OUR SHAREHOLDERS
Concerns of increasing inflationary pressures continued to prompt
volatility in the US stock and bond markets during the September
quarter. In addition, the weakness of the US dollar in foreign
exchange markets prolonged stock and bond market declines during
July. While the immediate concerns regarding the US dollar had
diminished by late July, the possibility of continued tightening by
the Federal Reserve Board persisted for most of the period. However,
a lower-than-expected rate of growth reported for the US economy
during the second calendar quarter allayed inflationary concerns to
some degree, despite the fifth increase this year in short-term
interest rates made by the central bank in mid-August. Inflationary
expectations surfaced again with the announcement of significant
upward revisions in industrial production and capacity utilization
for the May--July period. When the central bank did not raise short-
term interest rates at the late September Federal Open Market
Committee meeting, financial markets rallied on the expectation that
the US economy was not overheating and therefore significant further
monetary policy tightening would not be necessary.
Despite the stronger-than-expected industrial production results,
other economic data suggest that while the economic recovery is
continuing, it is losing some momentum. Consumer spending is
increasing, but at a relatively slow pace, and existing home sales
may have peaked. Inflation remains subdued at the retail level. In
the industrial sector, the sharp increase in manufacturing
production in August was largely the result of a strong increase in
motor vehicle assemblies, which may level off in the weeks ahead. On
balance, it appears that the growth in US industry is progressing at
a steady, modest rate.
Despite evidence of a moderating trend in the US economy, Chairman
Greenspan indicated in his July Humphrey-Hawkins testimony that the
central bank would prefer to err on the side of too much monetary
tightening rather than too little. In the weeks ahead, investors
will continue to assess economic data and inflationary trends in
order to gauge whether further increases in short-term interest
rates are imminent. Continued indications of moderate and
sustainable levels of economic growth would be positive for the US
capital markets.
The Municipal Market
During the September quarter, long-term municipal bond yields rose
slightly amid continued weekly volatility. Tax-exempt revenue bond
yields, as measured by the Bond Buyer Revenue Bond Index, rose 11
basis points (0.11%) to 6.70% during the three months ended
September 30, 1994. However, as in recent quarters, yields continued
to fluctuate by as much as 15 basis points from week to week. US
Treasury bond yields rose 14 basis points to end the September
quarter at 7.85%.
<PAGE>
The fixed-income markets, including the municipal bond market, were
largely without conviction during the September quarter. Investors
were faced with mixed economic signals throughout the quarter, with
modest economic growth coupled with moderate inflationary pressures
being the dominant theme. Yields fluctuated as economic indicators
either supported or undermined this theme. The principal stabilizing
factor within the tax-exempt market has been the dramatic reduction
in new-issue supply. During the September quarter, less than $35
billion in long-term securities were issued, a decline of more than
50% versus the September 1993 quarter. As discussed in earlier
reports, this reduction in new-issue supply has helped minimize
selling pressures from institutional investors supporting the
municipal market at current levels for most of the last six months.
The overall attractiveness of municipal securities has continued
throughout the September quarter. For example, long-term tax-exempt
issues yielding 6.70% represent an after-tax equivalent of more than
10.95%. Current long-term municipal bonds also yield over 85% of
comparable US Treasury securities. This level is at the upper end of
the trading range seen thus far in 1994. Municipal bonds have traded
as high as approximately 80% of US Treasury bonds. Given their
strong after-tax yield advantage and attractive yield relationship
to taxable securities, currently available municipal bond yields
should prove attractive to long-term investors.
Fiscal Year in Review
At the beginning of the Fund's fiscal year, as long-term interest
rates declined to cyclical lows, we increased the Fund's cash
position to take advantage of the potential for a reversal in the
event of a stronger-than-anticipated economic recovery. As the
fiscal year progressed, it appeared that this scenario would unfold.
In fact, tax-exempt bond yields increased from 5.60% at year-end to
6.40% by the end of March. During this period, we continued to raise
cash by selling discounted holdings and purchasing higher-coupon,
shorter-term bonds. As we approached the mid-point of the fiscal
year, the municipal market was relatively stable, although a brief
decline in interest rates in May gave us an opportunity to continue
our strategy of switching to higher-coupon, shorter-term bonds. We
increased the Fund's cash position at the end of June in
anticipation of a surge in issuance pending the state legislature's
delayed passage of the annual budget. Issuance did surge at the
beginning of July, but the increase was short lived.
<PAGE>
Recently we have maintained the Fund's cash position at a low of
about 7% for two reasons. First, the decline in new issuance has
been dramatic for both the overall municipal market and especially
for the New York market. Nationally, new-issuance volume has
declined by 43% compared to 1993. In the New York market, new
issuance has also declined by 43%. As anticipated, there was a surge
of volume when the state legislature passed the annual budget on
June 8 of this year. We also anticipated a more severe decline in
issuance during the third quarter of 1994. For the three-month
period ended September 30, volume had declined over 50% from the
prior year.
The other reason for the Fund's relatively low cash position is the
steepness of the yield curve. With short-term interest rates at
3.00% for one-month commercial paper and long-term interest rates in
excess of 6.50%, we believed it is more beneficial to maintain
longer-term investments for income purposes. To offset market
volatility, we have added holdings in the 15-year maturity range.
These bonds are likely to be less volatile than the typical 30-year
maturity issues purchased in the past.
During the past year, our focus has been maintaining an attractive
tax-exempt yield for the portfolio. By keeping our cash position at
lower levels and by purchasing higher-coupon, shorter-term issues,
we have been able to provide attractive tax-exempt yields while
limiting declines in net asset value to some degree.
In Conclusion
We appreciate your ongoing interest in Merrill Lynch New York
Municipal Bond Fund, and we look forward to serving your investment
needs and objectives in the months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
October 27, 1994
<PAGE>
PERFORMANCE DATA
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
Class A and Class B Shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
GRAPHIC MATERIAL APEARS HERE. SEE APPENDIX: GRAPHIC AND IMAGE
MATERIAL, Item 1.
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 9/30/94 -5.17% -8.96%
Five Years Ended 9/30/94 +7.33 +6.45
Inception (10/25/88)
through 9/30/94 +7.23 +6.50
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/94 -5.66% -9.13%
Five Years Ended 9/30/94 +6.79 +6.79
Inception (11/1/85)
through 9/30/94 +7.79 +7.79
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
PERFORMANCE DATA (continued)
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/25/88--12/31/88 $10.85 $10.76 -- $0.138 + 0.44%
1989 10.76 11.00 -- 0.742 + 9.43
1990 11.00 10.76 -- 0.734 + 4.71
1991 10.76 11.43 -- 0.728 +13.44
1992 11.43 11.74 $0.110 0.727 +10.38
1993 11.74 12.08 0.241 0.775 +11.81
1/1/94--9/30/94 12.08 10.88 -- 0.462 -6.09
------ ------
Total $0.351 Total $4.306
Cumulative total return as of 9/30/94: +51.34%**
<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**
<C> <C> <C> <C> <C> <C>
11/1/85--12/31/85 $10.00 $10.34 -- $0.098 + 4.60%
1986 10.34 11.24 $0.073 0.732 +16.95
1987 11.24 10.44 -- 0.722 -0.79
1988 10.44 10.76 -- 0.685 + 9.92
1989 10.76 11.00 -- 0.687 + 8.89
1990 11.00 10.77 -- 0.680 + 4.29
1991 10.77 11.43 -- 0.672 +12.76
1992 11.43 11.74 0.110 0.668 + 9.82
1993 11.74 12.09 0.241 0.714 +11.34
1/1/94--9/30/94 12.09 10.88 -- 0.420 -6.51
------ ------
Total $0.424 Total $6.078
Cumulative total return as of 9/30/94: +95.28%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<PAGE>
PERFORMANCE DATA (concluded)
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
9/30/94 6/30/94 9/30/93 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $10.88 $11.01 $12.46 -10.94%(1) -1.18%
Class B Shares* 10.88 11.02 12.46 -10.94(1) -1.27
Class A Shares--Total Return* -5.17(2) +0.22(3)
Class B Shares--Total Return* -5.66(4) +0.00(5)
Class A Shares--Standardized 30-day Yield 5.19%
Class B Shares--Standardized 30-day Yield 4.89%
<FN>
*Investment results shown do not reflect sales charges; results
shown would lower if a sales charge was included.
(1)Percent change includes reinvestment of $0.241 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.741 per share ordinary
income dividends and $0.241 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.166 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.681 per share ordinary
income dividends and $0.241 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.151 per share ordinary
income dividends.
</TABLE>
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Kenneth S. Axelson, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Jerry Weiss, Secretary
<PAGE>
Custodian
National Westminster Bank NJ
10 Exchange Place
Jersey City, New Jersey 07302
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
PORTFOLIO ABBREVIATIONS
To simplify the listings of Merrill Lynch New York 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)
COP Certificates of Participation
GO General Obligation Bonds
HFA Housing Finance Authority
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
LEVRRS Leveraged Reverse Rate Securities
M/F Multi-Family
PCR Pollution Control Revenue Bonds
TRAN Tax Revenue Anticipation Notes
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New York--96.1%
<S> <S> <C> <S> <C>
BBB+ Baa1 $ 2,955 Babylon, New York, IDA, Resource Recovery Revenue Bonds (Ogden Martin Systems),
Series C, 8.50% due 1/01/2019 $ 3,205
NR Baa1 14,750 Babylon, New York, IDA, Waste Facilities Revenue Bonds (Babylon Community Waste
Management), Series A, 7.875% due 7/01/1999(d)(j) 16,750
<PAGE>
Buffalo, New York, Sewer Authority Revenue Bonds:
AAA Aaa 2,000 Refunding, Series G, 5% due 7/01/2012(b) 1,686
AAA Aaa 2,250 Series E, 7.75% due 7/01/1997(a)(d) 2,459
AAA Aaa 4,000 Series F, 6% due 7/01/2013(b) 3,899
Clifton Park, New York, Water Authority, Water System Revenue Bonds (b):
AAA Aaa 2,000 Refunding, 5% due 10/01/2026 1,585
AAA Aaa 1,000 Series A, 6.375% due 10/01/2002(d) 1,082
AAA Aaa 1,210 Erie County, New York, Water Authority, Water Revenue Refunding Bonds
(Fourth Resolution), 7.30% due 12/01/2017(a)(g) 227
Grand Central District Management Association Inc., New York, Business Improvement
District, Capital Improvement Revenue Bonds:
AAA Aaa 2,170 6.50% due 1/01/2002(d) 2,337
A A1 2,300 Refunding, 5.125% due 1/01/2014 1,907
A A1 4,750 Refunding, 5.25% due 1/01/2022 3,822
NR Aa1 6,200 Hornell, New York, IDA, IDR (Crowley Foods, Inc.), 7.75% due 12/01/2016 6,580
Metropolitan Transportation Authority, New York, Service Contract Revenue Bonds
(Commuter Facilities):
BBB Baa1 8,475 Refunding, Series 5, 7% due 7/01/2012 8,742
BBB Baa1 1,195 Series 3, 9.25% due 7/01/1999 1,382
BBB Baa1 1,300 Series 3, 9.25% due 7/01/2000 1,536
BBB Baa1 4,370 Series O, 5.75% due 7/01/2013 3,947
BBB Baa1 2,000 Series O, 5.50% due 7/01/2017 1,717
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New York (continued)
<S> <S> <C> <S> <C>
Metropolitan Transportation Authority, New York, Service Contract Revenue Bonds
(Transit Facilities):
BBB Baa1 $ 4,350 Series 3, 9.25% due 7/01/1999 $ 5,069
BBB Baa1 4,755 Series 3, 9.25% due 7/01/2000 5,619
BBB Baa1 1,845 Series O, 5.75% due 7/01/2013 1,666
BBB Baa1 2,585 Series O, 5.50% due 7/01/2017 2,220
AAA Aaa 1,210 Metropolitan Transportation Authority, New York, Transportation Facilities Revenue
Refunding Bonds, Series N, 6.60% due 7/01/2014(b)(g) 336
AAA Aaa 2,950 Monroe County, New York, Airport Authority Revenue Bonds (Greater Rochester
International), AMT, 7.25% due 1/01/2009(c) 3,221
<PAGE>
Monroe County, New York, COP:
BBB+ Baa 510 7.375% due 1/01/1996 528
BBB+ Baa 9,770 8.05% due 1/01/2011 10,747
NR A 6,125 Monroe County, New York, IDA, Civic Facilities Revenue Bonds (Genesee Hospital),
Series A, 7% due 11/01/2018 6,290
A1+ NR 500 Nassau County, New York, IDA, Research Facilities Revenue Bonds (Cold Spring
Harbor Lab Project), VRDN, 3.80% due 7/01/2019(e) 500
NR Aa 1,500 New Castle, New York, Refunding Bonds, UT, 4.50% due 6/01/2006 1,297
New York City, New York, GO, UT:
A- Baa1 4,500 Refunding, Series C, 6.50% due 8/01/2006 4,525
A- Baa1 15,400 Series D, 9.50% due 8/01/2002 18,723
A- Baa1 1,000 Series H, 7.20% due 2/01/2014 1,032
A- Baa1 3,135 Series I, 7.75% due 8/15/1999(d) 3,539
A- Baa1 1,865 Series I, 7.75% due 8/15/2018 2,021
AA Aa 8,475 New York City, New York, Housing Development Corporation, M/F Housing Revenue
Bonds, Series B, 5.70% due 11/01/2013(f) 7,782
New York City, New York, IDA, Civic Facilities Revenue Bonds:
BBB NR 2,000 (New York Blood Center), 7.20% due 5/01/2012 2,054
BBB NR 3,250 (New York Blood Center), 7.25% due 5/01/2022 3,354
AAA Aaa 9,100 (Rockefeller Foundation Project), 5.375% due 7/01/2023 7,848
A1+ NR 1,100 New York City, New York, IDA, IDR (Japan Airlines Company Ltd. Project), AMT,
VRDN, 3.90% due 11/01/2015(e) 1,100
BB+ Baa2 2,030 New York City, New York, IDA, Special Facilities Revenue Bonds (American
Airlines Inc., Project), AMT, 7.75% due 7/01/2019 2,079
New York City, New York, IDA, Special Facilities Revenue Bonds (Terminal One
Group Association Project), AMT:
A A 5,500 6% due 1/01/2015 5,110
A A 16,000 6.125% due 1/01/2024 14,824
New York City, New York, Municipal Water Finance Authority Water and Sewer
System Revenue Bonds:
AAA Aaa 20,000 5.35% due 6/15/2012(c) 17,774
AAA Aaa 10,000 LEVRRS, 7.828% due 6/15/2019(c)(h) 7,875
A- A 7,000 Series A, 6.75% due 6/15/2017 7,091
AAA VMIG1 1,000 Series G, VRDN, 3.60% due 6/15/2024(b)(e) 1,000
AAA Aaa 3,750 New York City, New York, Trust for Cultural Resources Revenue Bonds (American
Museum of Natural History), Series A, 6.90% due 4/01/2001(c)(d) 4,150
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New York (continued)
<S> <S> <C> <S> <C>
New York State Dormitory Authority Revenue Bonds:
BBB Baa1 $ 9,635 (City University System), Refunding, Series B, 6% due 7/01/2014 $ 8,961
BBB Baa1 3,500 (City University System), Series A, 9.25% due 7/01/2000 4,143
BBB Baa1 7,030 (City University System), Series C, 9.25% due 7/01/2000 8,322
A NR 1,065 (Community Memorial Hospital, Hamilton), 9% due 7/01/2005 1,121
A1+ VMIG1 600 (Cornell University), Series B, VRDN, 3.80% due 7/01/2025(e) 600
BBB+ Baa1 2,500 (Court Facilities Lease Bonds), Series A, 5.50% due 5/15/2010 2,221
BBB+ Baa1 1,500 (Court Facilities Lease Bonds), Series A, 5.25% due 5/15/2021 1,202
BBB+ Baa1 3,000 (Court Facilities Lease Bonds), Series A, 5.50% due 5/15/2023 2,491
AAA Aaa 2,900 (Insured-Colgate University), 5.625% due 7/01/2023(b) 2,595
AA Aa 3,130 (Rochester General Hospital), 8.75% due 8/01/1995(d)(f) 3,306
NR VMIGl 600 (Saint Francis Center), VRDN, 3.75% due 7/01/2023(e) 600
BBB+ Baa1 9,410 (State University Educational Facilities), Refunding, Series B, 7.50% due 5/15/2011 10,347
BBB- Baa1 5,000 (Upstate Community College), Series A, 5.70% due 7/01/2021 4,304
New York State Energy Research and Development Authority, Electric Facilities
Revenue Bonds (Consolidated Edison Company), AMT:
A+ Aa3 9,610 Refunding, Series C, 5.375% due 9/15/2022 7,927
A+ Aa3 4,000 Series A, 6.75% due 1/15/2027 3,999
AAA Aaa 1,000 Series B, 6.375% due 12/01/2027(c) 966
A A1 8,400 New York State Energy Research and Development Authority, Gas Facilities Revenue
Bonds (Brooklyn Union Gas Co. Project), Series II, 7% due 12/01/2020 8,810
BBB Baa1 4,510 New York State Energy Research and Development Authority, PCR (New York State
Electric & Gas Corp.), AMT, Series A, 5.95% due 12/01/2027 3,902
A1+ NR 200 New York State Energy Research and Development Authority, PCR (Niagara Power
Corporation Project), VRDN, AMT, Series B, 3.80% due 7/01/2027 (e) 200
AAA Aaa 2,300 New York State Energy Research and Development Authority, PCR, Refunding (Rochester
Gas and Electric Project), AMT, Series B, 6.50% due 5/15/2032 2,252
New York State Environmental Facilities Corporation, PCR (Water-Revolving Fund):
A Aa 2,450 Series A, 7.25% due 6/15/2010 2,634
A Aa 1,250 Series A, 7% due 6/15/2012 1,321
A Aa 5,000 Series A, 7.50% due 6/15/2012 5,461
A Aa 16,350 Series E, 6.875% due 6/15/2010 17,138
A Aa 5,000 Series E, 6.50% due 6/15/2014 5,016
New York State Environmental Facilities Corporation, Solid Waste Disposal Revenue
Bonds (Occidental Petroleum Corp.), AMT:
BBB Baa 2,000 Sub-Series A, 5.70% due 9/01/2028 1,685
BBB Baa 1,500 Sub-Series B, 5.50% due 9/01/2003 1,481
<PAGE>
New York State Environmental Facilities Corporation, Special Obligation Bonds
(Riverbank State Park):
BBB NR 1,485 7.25% due 4/01/2007 1,568
BBB NR 3,000 7.25% due 4/01/2012 3,185
BBB NR 8,400 7.375% due 4/01/2022 8,854
AAA Aaa 6,225 New York State Environmental Facilities Corporation, Water Facilities Revenue
Refunding Bonds (Spring Valley Water Company), Series B, 6.15% due 8/01/2024(a) 5,978
AAA Aaa 7,190 New York State, GO, UT, 6% due 6/15/2011(a) 7,041
New York State, HFA, Service Contract Obligation Revenue Bonds:
BBB Baa1 5,100 Refunding, Series C, 5.875% due 9/15/2014 4,651
BBB Baa1 18,585 Series A, 5.50% due 9/15/2022 15,479
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New York (continued)
<S> <S> <C> <S> <C>
New York State Local Government Assistance Corporation Revenue Bonds:
A A $ 1,600 Series A, 7.125% due 4/01/2011 $ 1,689
A A 5,500 Series A, 6.875% due 4/01/2019 5,648
A A 5,000 Series A, 6.50% due 4/01/2020 4,969
A A 1,740 Series B, 6.25% due 4/01/2021 1,675
A1+ VMIG1 7,800 Series B, VRDN, 3.50% due 4/01/2023(e) 7,800
A A 10,000 Series C, 6.25% due 4/01/2018 9,689
New York State Medical Care Facilities Finance Agency Revenue Bonds:
AAA Aaa 6,820 (Health Insurance Plan of Greater New York), Series B, 8.50% due 12/01/1997(a)(d) 7,585
AAA NR 4,000 (Hospital & Nursing Home Mortgage), Refunding, Series C, 5.75% due 8/15/2019(f) 3,596
AAA NR 1,000 (Hospital & Nursing Home Mortgage), Series A, 8.30% due 2/15/1998(d)(f) 1,121
AA Aa 2,700 (Hospital & Nursing Home Mortgage), Series B, 8.10% due 2/15/1998(d)(f) 3,006
AAA NR 6,375 (Hospital & Nursing Home Mortgage), Series C, 6.40% due 8/15/2014(f) 6,327
AAA Aaa 4,000 (Long Term Health Care Capital Guaranty Insured), Series D, 6.50% due 11/01/2015 4,029
AAA Aaa 1,050 (Mental Health Services), Series A, 5.25% due 8/15/2023(b) 870
BBB+ Baa1 2,200 (Mental Health Services), Series B, 6% due 2/15/2011 2,079
BBB+ Baa1 1,215 (Mental Health Services), Series B, 7.625% due 8/15/2017 1,305
AAA Aaa 3,240 (Mental Health Services), Series C, 7.30% due 8/15/2001(d) 3,672
AAA Aaa 5,000 (Mental Health Services), Series C, 5.25% due 8/15/2014(b) 4,298
BBB+ Baa1 1,075 (Mental Health Services), Series C, 7.30% due 2/15/2021 1,141
BBB+ Baa1 2,455 (Mental Health Services), Series D, 7.40% due 2/15/2018 2,606
BBB+ Baa1 4,655 (Mental Health Services), Series E, 6.50% due 8/15/2015 4,618
AAA Aaa 2,000 (Mental Health Services), Series F, 5.375% due 2/15/2014(i) 1,778
BBB+ Baa1 3,425 (Mental Health Services), Series F, 6.50% due 2/15/2019 3,323
AAA Aaa 6,140 (Saint Francis Hospital Project), Series A, 7.625% due 11/01/2021(b) 6,755
BBB Baa 7,750 (Security Hospital), Series A, 7.40% due 8/15/2021 8,225
<PAGE>
New York State Mortgage Agency, Homeowner Mortgage Revenue Bonds:
NR Aa 525 10th Series A, 8.10% due 4/01/2014 561
NR Aa 1,500 Series 40--B, AMT, 6.60% due 4/01/2025 1,462
NR Aa 12,570 Series BB--2, 7.95% due 10/01/2015 13,278
NR Aa 1,750 Series EE--3, 7.75% due 4/01/2016 1,835
NR Aa 2,375 Series FF, 7.95% due 10/01/2014 2,568
NR Aa 1,640 Series GG, AMT, 8.125% due 4/01/2020 1,754
New York State Power Authority, General Purpose and Revenue Bonds:
AA- Aa 5,000 6.25% due 1/01/2023 4,857
AA- Aa 5,000 Refunding, Series Z, 6.50% due 1/01/2019 5,013
AA- Aa 21,715 Series Y, 6.75% due 1/01/2018 22,376
AAA Aaa 2,500 New York State Thruway Authority, General Revenue Bonds, Series A, 5.75% due
1/01/2019(b) 2,292
A- A 6,790 New York State Thruway Authority, Highway and Bridge Trust Fund, Series A, 6%
due 4/01/2014 6,490
New York State Thruway Authority, Service Contract Revenue Bonds
(Local Highway and Bridge):
BBB Baa1 3,700 6% due 1/01/2011 3,487
BBB Baa1 7,125 5.25% due 4/01/2013 5,992
New York State Urban Development Corporation Revenue Bonds:
BBB Baa1 1,500 (Alfred Technology Resource Income Project), 7.875% due 1/01/2020 1,622
BBB Baa1 2,800 (Correctional Capital Facilities), Refunding, 5.50% due 1/01/2015 2,411
BBB Baa1 11,325 (Correctional Capital Facilities), Refunding, Series A, 5.25% due 1/01/2021 9,118
AAA Aaa 5,000 Niagara Falls, New York, Bridge Commission, Toll Revenue Refunding Bonds, Series B,
5.25% due 10/01/2021(b) 4,149
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New York (concluded)
<S> <S> <C> <S> <C>
BBB Baa $ 10,550 Oneida-Herkimer, New York, Solid Waste Management Authority, Revenue Refunding
Bonds, 6.75% due 4/01/2014 $ 10,382
AAA Aaa 4,000 Onondaga County, New York, IDA, Sewer Facilities Revenue Bonds (Bristol-Myers
Squibb Co. Project), AMT, 5.75% due 3/01/2024 3,623
<PAGE>
Port Authority of New York and New Jersey, Consolidated Revenue Bonds, AMT:
AA- A1 2,000 Seventy-Third Series, 6.75% due 4/15/2026 2,022
AA- A1 8,345 Seventy-Sixth Series, 6.50% due 11/01/2026 8,255
A1+ VMIG1 5,100 Suffolk County, New York, IDA, IDR, Refunding (Nissequogue Cogeneration Partners),
VRDN, 3.50% due 12/15/2023(e) 5,100
Triborough Bridge and Tunnel Authority, New York, Revenue Bonds (General Purpose):
A+ Aa 6,270 Refunding, Series Q, 6.75% due 1/01/2009 6,635
A+ Aa 9,500 Refunding, Series Y, 6.125% due 1/01/2021 9,122
A+ Aa 14,055 Series X, 6.625% due 1/01/2012 14,575
A+ Aa 5,000 Series X, 6.50% due 1/01/2019 5,013
BBB Baa 7,220 Ulster County, New York, Resource Recovery Agency Revenue Bonds (Solid Waste
Systems), 6% due 3/01/2014 6,646
United Nations Development Corp., New York, Revenue Refunding Bonds:
NR A 14,425 Senior-Lien, Series A, 6% due 7/01/2026 13,314
NR A 2,250 Sub-Lien, Series B, 6.25% due 7/01/2026 2,151
AA- Aa3 1,720 Westchester County, New York, Westchester, IDA, Airport Facility Revenue Bonds
(West Chester Airport Association), AMT, Series A, 5.95% due 8/01/2024 1,573
Puerto Rico--1.7%
A Baa1 2,500 Puerto Rico Commonwealth, GO, UT, 6.45% due 7/01/2017 2,497
A Baa1 4,415 Puerto Rico Commonwealth Highway and Transportation Authority, Highway Revenue
Refunding Bonds, Series X, 5.25% due 7/01/2021 3,618
AA Aa3 2,500 Puerto Rico, Industrial, Medical and Environmental Pollution Control Facilities,
Financing Authority Revenue Bonds (Motorola Inc. Project), Series A, 6.75% due
1/01/2014 2,625
A Baa1 3,000 Puerto Rico Public Buildings Authority, Guaranteed Public Education and Health
Facilities, Revenue Refunding Bonds, Series M, 5.50% due 7/01/2021 2,558
Total Investments (Cost--$659,204)--97.8% $ 658,776
Variation Margin on Futures Contracts*--0.0% (45)
Other Assets Less Liabilities--2.2% 14,910
---------
Net Assets--100.0% $ 673,641
=========
<PAGE>
<FN>
(a)AMBAC Insured.
(b)FGIC Insured.
(c)MBIA Insured.
(d)Prerefunded.
(e)The interest rate is subject to change periodically based upon
the prevailing market rate. The interest rate shown is the rate in
effect at September 30, 1994.
(f)FHA Insured.
(g)Represents the yield to maturity on this zero coupon issue.
(h)The interest rate is subject to change periodically and inversely
based upon the prevailing market rate. The interest rate shown is
the rate in effect at September 30, 1994.
(i)FSA Insured.
(j)As of September 30, 1994, $3 million of this issue was held in
connection with open futures contracts.
*Futures contracts sold as of September 30, 1994 were as follows:
Value
Number of Expiration (Note 1a)
Contracts Issue Date (in Thousands)
1,442 United States Treasury Bonds Dec. 1994 ($147,377)
Total Futures Contracts
(Total Contract Price--$148,111) ($147,377)
=========
NR--Not Rated.
Ratings of issues shown have not been audited by Deloitte & Touche
LLP.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of September 30, 1994
<CAPTION>
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$659,204,146)(Note 1a) $658,776,306
Receivables:
Securities sold $ 29,859,210
Interest 12,465,918
Beneficial interest sold 703,291 43,028,419
------------
Prepaid registration fees and other assets (Note 1e) 109,688
------------
Total assets 701,914,413
------------
<PAGE>
Liabilities: Payables:
Securities purchased 17,415,690
Beneficial shares redeemed 2,466,115
Dividends to shareholders (Note 1f) 601,589
Investment adviser (Note 2) 326,987
Distributor (Note 2) 288,403
Variation margin (Note 1b) 45,063 21,143,847
------------
Accrued expenses and other liabilities 7,129,101
------------
Total liabilities 28,272,948
------------
Net Assets: Net assets $673,641,465
============
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited
Consist of: number of shares authorized $ 260,214
Class B Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 5,932,641
Paid-in capital in excess of par 680,736,439
Accumulated distributions in excess of realized capital gains
on investments--net (13,593,958)
Unrealized appreciation on investments--net 306,129
------------
Net assets $673,641,465
============
Net Asset Class A--Based on net assets of $28,300,768 and 2,602,140
Value: shares of beneficial interest outstanding $ 10.88
============
Class B--Based on net assets of $645,340,697 and 59,326,415
shares of beneficial interest outstanding $ 10.88
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Year Ended September 30, 1994
<CAPTION>
<S> <S> <C>
Investment Interest and amortization of premium and discount earned $ 45,400,834
Income ------------
(Note 1d): Other 1,646
------------
45,402,480
<PAGE>
Expenses: Investment advisory fees (Note 2) 3,999,719
Distribution fees--Class B (Note 2) 3,530,348
Transfer agent fees--Class B (Note 2) 280,053
Printing and shareholder reports 119,755
Accounting services (Note 2) 81,833
Professional fees 68,879
Custodian fees 55,244
Trustees' fees and expenses 35,701
Registration fees (Note 1e) 19,243
Pricing fees 17,727
Transfer agent fees--Class A (Note 2) 10,890
Amortization of organization expenses (Note 1e) 712
Other 10,014
------------
Total expenses 8,230,118
------------
Investment income--net 37,172,362
------------
Realized & Realized loss on investments (5,792,148)
Unrealized Loss on Change in unrealized appreciation on investments--net (74,453,611)
Investments--Net ------------
(Notes 1d & 3): Net Decrease in Net Assets Resulting from Operations $(43,073,397)
============
See Notes to Financial Statements
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended
September 30,
Increase (Decrease) in Net Assets: 1994 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 37,172,362 $ 36,795,050
Realized gain (loss) on investments--net (5,792,148) 15,506,899
Change in unrealized appreciation on investments--net (74,453,611) 30,754,959
------------ ------------
Net increase (decrease) in net assets resulting from operations (43,073,397) 83,056,908
------------ ------------
<PAGE>
Dividends & Investment income--net:
Distributions to Class A (1,758,497) (1,475,206)
Shareholders Class B (35,413,865) (35,319,844)
(Note 1f): Realized gain on investments--net:
Class A (299,209) (194,989)
Class B (6,828,149) (5,828,788)
In excess of realized gain on investments--net:
Class A (570,678) --
Class B (13,023,280) --
------------ ------------
Net decrease in net assets resulting from dividends
and distributions to shareholders (57,893,678) (42,818,827)
------------ ------------
Beneficial Net increase in net assets derived from beneficial interest
Interest transactions 8,652,057 90,154,954
Transactions ------------ ------------
(Note 4):
Net Assets: Total increase (decrease) in net assets (92,315,018) 130,393,035
Beginning of year 765,956,483 635,563,448
------------ ------------
End of year $673,641,465 $765,956,483
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived from
information provided in the financial statements. Class A
For the Year Ended September 30,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 12.46 $ 11.77 $ 11.22 $ 10.56 $ 10.81
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .64 .70 .72 .74 .73
Realized and unrealized gain
(loss) on investments--net (1.25) .80 .55 .66 (.25)
--------- --------- --------- --------- ---------
Total from investment operations (.61) 1.50 1.27 1.40 .48
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net (.64) (.70) (.72) (.74) (.73)
Realized gain on investments--net (.11) (.11) -- -- --
In excess of realized gain--net (.22) -- -- -- --
--------- --------- --------- --------- ---------
Total dividends and distributions (.97) (.81) (.72) (.74) (.73)
--------- --------- --------- --------- ---------
Net asset value, end of year $ 10.88 $ 12.46 $ 11.77 $ 11.22 $ 10.56
========= ========= ========= ========= =========
<PAGE>
Total Investment Based on net asset value per share (5.17%) 13.25% 11.77% 13.60% 4.42%
Return:* ========= ========= ========= ========= =========
Ratios to Average Expenses .63% .64% .65% .66% .67%
Net Assets: ========= ========= ========= ========= =========
Investment income--net 5.52% 5.80% 6.28% 6.72% 6.79%
========= ========= ========= ========= =========
Supplemental Net assets, end of year (in
Data: thousands) $ 28,301 $ 31,976 $ 18,973 $ 13,727 $ 8,905
========= ========= ========= ========= =========
Portfolio turnover 107.96% 38.31% 35.90% 49.78% 53.82%
========= ========= ========= ========= =========
<FN>
*Total investment returns exclude the effect of sales loads.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
The following per share data and ratios have been derived from
information provided in the financial statements. Class B
For the Year Ended September 30,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 12.46 $ 11.77 $ 11.23 $ 10.57 $ 10.81
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .58 .64 .67 .67 .68
Realized and unrealized gain
(loss) on investments--net (1.25) .80 .54 .66 (.24)
--------- --------- --------- --------- ---------
Total from investment operations (.67) 1.44 1.21 1.33 .44
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net (.58) (.64) (.67) (.67) (.68)
Realized gain on investments--net (.11) (.11) -- -- --
In excess of realized gain--net (.22) -- -- -- --
--------- --------- --------- --------- ---------
Total dividends and distributions (.91) (.75) (.67) (.67) (.68)
--------- --------- --------- --------- ---------
Net asset value, end of year $ 10.88 $ 12.46 $ 11.77 $ 11.23 $ 10.57
========= ========= ========= ========= =========
Total Investment Based on net asset value per share (5.66%) 12.68% 11.12% 13.03% 4.00%
Return:* ========= ========= ========= ========= =========
<PAGE>
Ratios to Average Expenses, excluding distribution
Net Assets: fees . 64% .64% .66% .67% .68%
========= ========= ========= ========= =========
Expenses 1.14% 1.14% 1.16% 1.17% 1.18%
========= ========= ========= ========= =========
Investment income--net 5.02% 5.32% 5.79% 6.23% 6.28%
========= ========= ========= ========= =========
Supplemental Net assets, end of year (in
Data: thousands) $ 645,341 $ 733,981 $ 616,590 $ 568,958 $ 566,095
========= ========= ========= ========= =========
Portfolio turnover 107.96% 38.31% 35.90% 49.78% 53.82%
========= ========= ========= ========= =========
<FN>
*Total investment returns exclude the effect of sales loads.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch New York Municipal Bond Fund (the "Fund") is part of
the Merrill Lynch Multi-State Municipal Series Trust (the "Trust").
The Fund is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The Fund offers
both Class A and Class B Shares. Class A Shares are sold with a
front-end sales charge. Class B Shares may be subject to a
contingent deferred sales charge. Both classes of shares have
identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class B Shares bear certain
expenses related to the distribution of such shares and have
exclusive voting rights with respect to matters relating to such
distribution expenditures. On September 27, 1994, shareholders
approved the implementation of the Merrill Lynch Select PricingSM
System, which will offer two new classes of shares, Class C and
Class D. The following is a summary of significant accounting
policies followed by the Fund.
<PAGE>
(a) Valuation of investments--Municipal bonds and other portfolio
securities are traded primarily in the over-the-counter municipal
bond and money markets and are valued at the last available bid
price or yield equivalents as obtained by the Fund's pricing service
from one or more dealers that make markets in such securities.
Financial futures contracts and options thereon, which are traded on
exchanges, are valued at their last sale price as of the close of
such exchanges. Options which are traded on exchanges are valued at
their last sale price as of the close of such exchanges or, lacking
any sales, at the last available bid price. Short-term investments
with a remaining maturity of sixty days or less are valued on an
amortized cost basis, 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.
(b) 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
portfolio holdings 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.
<PAGE>
(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. Distributions in excess
of realized capital gains are due primarily to differing tax
treatments for futures transactions and post October losses.
(g) Non-income producing investments--Written and purchased options
are non-income producing investments.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). Effective January 1, 1994, the
investment advisory business of FAM was reorganized from a
corporation to a limited partnership. Both prior to and after the
reorganization, ultimate control of FAM was vested with Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of ML & Co. The limited partners are ML & Co. and Fund
Asset Management, Inc. ("FAMI"), which is also an indirect wholly-
owned subsidiary of ML & Co.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee based upon the average daily
value of the Fund's net assets at the following annual rates: 0.55%
of the Fund's average daily net assets not exceeding $500 million;
0.525% of average daily net assets in excess of $500 million but not
exceeding $1 billion; and 0.50% of average daily net assets in
excess of $1 billion. The Investment Advisory Agreement obligates
FAM to reimburse the Fund to the extent the Fund's expenses
(excluding interest, taxes, distribution fees, brokerage fees and
commissions, and extraordinary items) exceed 2.5% of the Fund's
first $30 million of average daily net assets, 2.0% of the next $70
million of average daily net assets, and 1.5% of the average daily
net assets in excess thereof. FAM's obligation to reimburse the Fund
is limited to the amount of the management fee. No fee payment will
be made to FAM during any fiscal year which will cause such expenses
to exceed the expense limitation at the time of such payment.
<PAGE>
Pursuant to a distribution plan (the "Distribution Plan") adopted by
the Fund in accordance with Rule 12b-1 under the Investment Company
Act of 1940, the Fund pays Merrill Lynch Funds Distributor, Inc.
("MLFD" or "Distributor") an ongoing account maintenance and a
distribution fee, which are accrued daily and paid monthly at the
annual rates of 0.25% and 0.25%, respectively, of the average daily
net assets of the Class B Shares of the Fund. Pursuant to a sub-
agreement with the Distributor, Merrill Lynch, 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
shareholders. The ongoing distribution fee compensates the
Distributor and MLPF&S for providing shareholder and distribution
services and bearing certain distribution-related expenses of the
Fund.
For the year ended September 30, 1994, MLFD earned underwriting
discounts of $7,202, and MLPF&S earned dealer concessions of $65,972
on sales of the Fund's Class A Shares.
MLPF&S also received contingent deferred sales charges of $692,305
for the sale of the Fund's Class B Shares during the period.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, FAMI, PSI, MLFD, FDS, MLPF&S, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended September 30, 1994 were $750,400,277 and
$830,226,443, respectively.
NOTES TO FINANCIAL STATEMENTS (concluded)
Net realized and unrealized gains (losses) as of September 30, 1994
were as follows:
<PAGE>
Realized Unrealized
Gains Gains
(Losses) (Losses)
Long-term investments $(10,567,768) $ 3,923,160
Short-term investments (4,758) (4,351,000)
Financial futures contracts 4,780,378 733,969
------------ ------------
Total $ (5,792,148) $ 306,129
============ ============
As of September 30, 1994, net unrealized depreciation for Federal
income tax purposes aggregated $655,362, of which $19,275,967
related to appreciated securities and $19,931,329 related to
depreciated securities. The aggregate cost of investments at
September 30, 1994 for Federal income tax purposes was $659,431,668.
4. Beneficial Interest Transactions:
Net increase in net assets derived from beneficial interest
transactions was $8,652,057 and $90,154,954 for the years ended
September 30, 1994 and September 30, 1993, respectively.
Transactions in shares of beneficial interest for Class A and Class
B Shares were as follows:
Class A Shares for the Year Dollar
Ended September 30, 1994 Shares Amount
Shares sold 857,494 $ 10,076,116
Shares issued to share-
holders in reinvestment
of dividends and
distributions 145,242 1,703,433
------------ ------------
Total issued 1,002,736 11,779,549
Shares redeemed (967,073) (11,024,027)
------------ ------------
Net increase 35,663 $ 755,522
============ ============
Shares for the Year Dollar
Ended September 30, 1993 Shares Amount
Shares sold 1,289,097 $ 15,472,813
Shares issued to share-
holders in reinvestment
of dividends and
distributions 88,322 1,058,599
------------ ------------
Total issued 1,377,419 16,531,412
Shares redeemed (422,810) (5,082,345)
------------ ------------
Net increase 954,609 $ 11,449,067
============ ============
<PAGE>
Class B Shares for the Year Dollar
Ended September 30, 1994 Shares Amount
Shares sold 7,245,112 $ 85,135,787
Shares issued to share-
holders in reinvestment
of dividends and
distributions 2,392,697 28,072,759
------------ ------------
Total issued 9,637,809 113,208,546
Shares redeemed (9,213,059) (105,312,011)
------------ ------------
Net increase 424,750 $ 7,896,535
============ ============
Class B Shares for the Year Dollar
Ended September 30, 1993 Shares Amount
Shares sold 10,654,614 $128,316,771
Shares issued to share-
holders in reinvestment
of dividends and
distributions 1,620,494 19,382,347
------------ ------------
Total issued 12,275,108 147,699,118
Shares redeemed (5,746,964) (68,993,231)
------------ ------------
Net increase 6,528,144 $ 78,705,887
============ ============
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
Merrill Lynch New York Municipal Bond Fund of Merrill Lynch Multi-
State Municipal Series Trust:
<PAGE>
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of Merrill Lynch
New York Municipal Bond Fund of Merrill Lynch Multi-State Municipal
Series Trust as of September 30, 1994, the related statements of
operations for the year then ended and changes in net assets for
each of the years in the two-year period then ended, and the
financial highlights for each of the years in the five-year period
then ended. These financial statements and the financial highlights
are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at
September 30, 1994 by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch New York Municipal Bond Fund of Merrill Lynch Multi-
State Municipal Series Trust as of September 30, 1994, the results
of its operations, the changes in its net assets, and the financial
highlights for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
October 31, 1994
</AUDIT-REPORT>
<PAGE>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly by
Merrill Lynch New York Municipal Bond Fund ("the Fund") of Merrill
Lynch Multi-State Municipal Series Trust during its taxable year
ended September 30, 1994 qualify as tax-exempt interest dividends
for Federal income tax purposes. Additionally, the Fund distributed
short-term capital gains of $0.088896 per share and long-term
capital gains of $0.241336 per share to shareholders of record on
December 22, 1993.
Please retain this information for your records.
APPENDIX: GRAPHIC AND IMAGE MATERIAL.
Item 1:
Total Return Based on a $10,000 Investment--Class A Shares*
A line graph depicting the growth of an investment in the Fund's
Class A Shares compared to growth of an investment in the Lehman
Brothers Municipal Bond Index. Beginning and ending values are:
10/25/88** 9/30/94
ML New York Municipal
Bond Fund++ $ 9,600 $14,529
Lehman Brothers Municipal
Bond Index++++ $10,000 $15,683
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of Operations.
++ML New York Municipal Bond Fund invests primarily in long-term
investment-grade obligations issued by or on behalf of the State of
New York, its political subdivisions, agencies and instrumentalities
and obligations of other qualifying issuers.
++++This unmanaged Index consists of long-term revenue bonds,
prerefunded bonds, general obligation bonds and insured bonds.
Total Return Based on a $10,000 Investment--Class B Shares*
A line graph depicting the growth of an investment in the Fund's
Class B Shares compared to growth of an investment in the Lehman
Brothers Municipal Bond Index. Beginning and ending values are:
10/25/88** 9/30/94
ML New York Municipal
Bond Fund++ $10,000 $19,528
Lehman Brothers Municipal
Bond Index++++ $10,000 $21,843
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of Operations.
++ML New York Municipal Bond Fund invests primarily in long-term
investment-grade obligations issued by or on behalf of the State of
New York, its political subdivisions, agencies and instrumentalities
and obligations of other qualifying issuers.
++++This unmanaged Index consists of long-term revenue bonds,
prerefunded bonds, general obligation bonds and insured bonds.
<PAGE>
