MERRILL
LYNCH
NEW YORK
MUNICIPAL
BOND FUND
FUND LOGO
Quarterly Report December 31, 1993
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
TO OUR SHAREHOLDERS
As 1993 drew to a close the US economy began to show some signs
of improvement with little evidence of an appreciable increase in
the rate of inflation. Interest rate-sensitive sectors of the US
economy are expanding, such as capital goods, consumer durables
and residential construction. However, excluding the interest
rate-sensitive sectors, the US economy grew only marginally
during 1993. Growth was hampered by declining Government
spending, a deteriorating trade balance, and sluggishness in
other sectors of the economy. Despite the areas of economic
weakness that persist, concerns arose late in 1993 that the rate
of business activity might increase inflationary pressures which
were reflected in an upturn of long-term interest rates.
<PAGE>
Other developments late in the year had significant long-term
implications for the US financial markets. The outline for
proposed healthcare reform is very important for the US economy.
As the various healthcare reform proposals are debated, investors
will focus on their potential effects on the Federal budget, the
US economy and the quality of healthcare delivery in the United
States. In addition, the ratification of the North American Free
Trade Agreement by the US Congress was important not only for the
prospect of expanding trade with Canada and Mexico, but also as a
positive influence on the recently concluded round of
negotiations on the General Agreement on Tariffs and Trade.
Further economic integration and growth through trade
liberalization would be positive for the capital markets in the
United States and around the world.
The Municipal Market
Long-term municipal bonds were essentially unchanged during the
three months ended December 31, 1993. However, during the
quarter, tax-exempt bond yields fluctuated in a relatively wide
range in reaction to vacillating investor concerns regarding the
current economic recovery's strength and associated inflationary
pressures going forward into 1994. Initially, long-term municipal
bond yields, as measured by the Bond Buyer Revenue Bond Index,
declined to another record low level of 5.41% in mid-October
1993. Renewed investor concerns, however, triggered yields to
rise into late November by over 30 basis points (0.30%) to 5.74%.
Amid signs of a slowing economic expansion and reduced inflationary
expectations, municipal bond yields were able to resume their decline,
ending the quarter at 5.52%.
During the December quarter, long-term US Treasury bond yields
rose approximately 30 basis points to end the quarter at 6.35%.
The municipal bond market's ability to outperform its taxable
counterpart was aided in large part by a reduction in the pace of
tax-exempt bond issuance during the third quarter. Long-term
municipal bond issuance for the December quarter was
approximately $66 billion, an increase of slightly more than 5%
versus the same period last year. However, bond issuance
throughout earlier 1993 had been increasing at nearly a 25% rate.
For all of 1993, municipalities issued a record $290 billion in
long-term securities, an increase of approximately 25% compared
to the previous record year of 1992. Yet despite this record
issuance, long-term municipal bond yields still declined over 90
basis points during 1993.
<PAGE>
The projected strong technical position of the municipal bond
market in 1994 was also responsible for the strong performance of
municipal bonds during the December quarter. The overall
supply/demand structure of the tax-exempt bond market is expected
to be very positive throughout 1994, particularly in the first
quarter. An estimated $30 billion in municipal bond coupon
payments, bond maturities and bond calls is expected to be
available for reinvestment on January 1, 1994. While not all of
this amount will be immediately invested in long-term municipal
bonds, the enactment of the increased marginal Federal income tax
rates on January 1, 1994 should help ensure that much of that
amount will find its way into the tax-exempt market early in
1994. Coupled with this increased demand, total bond issuance for
1994 has been projected to decline to approximately $175 billion.
Much of the record amount of bond issuance over the last two
years has been the result of municipalities refinancing their
existing higher-couponed debt. At current yield levels, however,
not many of these refundings remain to be done. Consequently,
bond issuance is expected to decline dramatically. The combination
of increased Federal income tax rates and the anticipated reduction
in supply in 1994 served to lower tax-exempt bond yields during
most of the December quarter. This combination should continue to
be the dominant factor affecting municipal bond yields in 1994.
Portfolio Strategy
Merrill Lynch New York Municipal Bond Fund has benefited from the
general decline in long-term interest rates. The basic strategy
for the Fund's composition over the past quarter involved the
sale of certain higher coupon holdings that have limited
capabilities for further price appreciation because they were
prerefunded or contained short call provisions. These holdings,
along with some serial maturity positions, were sold with the
proceeds temporarily kept in short-term reserves.
The Fund raised its cash reserve position to 6% during the
December quarter to purchase discount new-issue bonds that are
expected to increase the performance of the Fund in the declining
interest rate environment. We also took advantage of a seasonally
high primary calendar of new issuance to invest these proceeds in
New York municipal bonds that will participate more fully if
yields should decline again into the next year. We have also paid
close attention to a general widening of credit yield spreads for
lower-rated New York bonds. In conjunction with our municipal
research group, some purchases of lower-rated credits were made
to enhance the current return to the shareholder. However, we do
not intend to significantly alter the Fund's credit make-up.
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.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
January 18, 1994
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.
<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
------ ------
Total $0.351 Total $3.844
Cumulative total return as of 12/31/93: +61.15%
%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains distributions at net asset value on the payable date, and do
not include sales charge; results would be lower if sales charge was included.
</TABLE>
<PAGE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
*
<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
------ ------
Total $0.424 Total $5.658
Cumulative total return as of 12/31/93: +108.88%
%**
<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.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/93 +11.81% +7.34%
Five Years Ended 12/31/93 +9.92 +9.02
Inception (10/25/88)
through 12/31/93 +9.64 +8.78
<FN>
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/93 +11.34% +7.34%
Five Years Ended 12/31/93 +9.38 +9.38
Inception (11/1/85)
through 12/31/93 +9.43 +9.43
<FN>
*Maximum contingent deferred sales charge is 4% and is reduced
to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
PERFORMANCE DATA (concluded)
</TABLE>
<TABLE>
Recent Performance Results*
<CAPTION>
12 Month 3 Mo
onth
12/31/93 9/30/93 12/31/92 % Change % Cha
ange
<S> <C> <C> <C> <C> <C>
Class A Shares $12.08 $12.46 $11.74 + 4.95%(1) -1.11
1%(1)
Class B Shares 12.09 12.46 11.74 + 5.04(1) -1.03
3(1)
Class A Shares--Total Return +11.81(2) +0.98
8(3)
Class B Shares--Total Return +11.34(4) +0.91
1(5)
Class A Shares--Standardized 30-day Yield 4.69%
Class B Shares--Standardized 30-day Yield 4.42%
<FN>
*Investment results shown for the 3-month and 12-month periods are before the deduction of any sales charges.
(1)Percent change includes reinvestment of $0.241 per share capital gains distributions.
(2)Percent change includes reinvestment of $0.775 per share ordinary income dividends and $0.241 per share capital gains
distributions.
(3)Percent change includes reinvestment of $0.279 per share ordinary income dividends and $0.241 per share capital gains
distributions.
(4)Percent change includes reinvestment of $0.714 per share ordinary income dividends and $0.241 per share capital gains
distributions.
(5)Percent change includes reinvestment of $0.261 per share ordinary income dividends and $0.241 per share capital gains
distributions.
</TABLE>
<PAGE>
PORTFOLIO COMPOSITION
For the Quarter Ended December 31, 1993
Distribution by Market Sector*
General Obligation & Tax Revenue Bonds 47.8%
Other Revenue Bonds 33.5
Utility Revenue Bonds 12.8
Prerefunded Bonds** 5.9
------
Total 100.0%
======
Net assets as of December 31, 1993 were $759,247,969.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX GRAPHIC & IMAGE MATERIAL ITEM 1.
[FN]
*Based on total market value of the portfolio as of December 31, 1993.
**Backed by an escrow fund.
+Temporary investments in short-term municipal securities.
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
Custodian
National Westminster Bank NJ
10 Exchange Place
Jersey City, New Jersey 07303
<PAGE>
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
APPENDIX GRAPHIC & IMAGE MATERIAL.
ITEM 1.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart illustrating the following percentages:
AAA/Aaa 17%
AA/Aa 23%
A/A 14%
BBB/Baa 40%
Other++ 5%
NR 1%
[FN]>
* Based on total market value of the portfolio as of December 31, 1993.
**Backed by an escrow fund.
++Temporary investments in short-term municipal securities.
