MERRILL
LYNCH
NEW YORK
MUNICIPAL
BOND FUND
FUND LOGO
Quarterly Report June 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
The expectation of increasing inflationary pressures and higher
interest rates initially heightened investor concerns and
increased financial market volatility during the June quarter.
However, by the quarter's close, it was the weakness of the US
dollar in foreign exchange markets that dominated the financial
news and prolonged stock and bond market declines.
The US dollar's weakness relative to other major currencies
reflects the deteriorating US trade deficit and widening net
long-term capital outflows. In 1993, an expanding US economy and
recession in other industrial countries led to a higher level of
imports and weaker export growth, widening the US trade deficit
further. In addition, global investors favored non-US dollar
denominated assets throughout 1993, which further depressed the
dollar's value. This trend has not improved significantly thus
far in 1994 since foreign inflows into US capital markets
continue to decline, although US investors are investing outside
of the United States to a lesser degree.
Over the long term, if the economies of the United States' major
trading partners expand (improving the prospects for US export
growth), the outlook for the US dollar is likely to improve. In
the near term, central banks have attempted to reverse the
dollar's decline through currency market intervention. These
efforts have met with limited success thus far, giving rise to
concern that the Federal Reserve Board will be forced to continue
to raise short-term interest rates to attract investment capital
back to the United States and bolster the dollar's value.
However, further interest rate increases may jeopardize the US
economic expansion. In the weeks ahead, investors will continue
to assess economic data and inflationary trends as they focus on
the US dollar in order to gauge whether further increases in
short-term interest rates are imminent.
The Municipal Market
During the three months ended June 30, 1994, tax-exempt bond
yields exhibited moderate volatility as yields fluctuated between
6.20% and 6.60%, as measured by the Bond Buyer Revenue Index. The
yield on newly issued municipal bonds maturing in 30 years began
at 6.39% on March 31 and ended approximately 17 basis points
(0.17%) higher at 6.56% by the end of June. Yields on seasoned
municipal revenue issues rose by over 20 basis points in sympathy
with the rise in US Treasury bond yields. By the end of June,
yields on US Treasury securities had risen by over 53 basis
points to 7.61%.
<PAGE>
Long-term tax-exempt interest rates moved within a moderate
interest rate range throughout the June quarter. On a weekly
basis, municipal bond yields fluctuated by as much as 15 basis
points as investors shifted their focus between the rapid
economic growth in the first quarter of 1994 and the relatively
low inflation numbers released by the US Treasury Department.
Following the Federal Reserve Board's interest rate increases in
February, municipal bond prices eroded in concert with taxable
bond prices as investors began to sell securities in anticipation
of further interest rate increases. As the Federal Reserve Board
continued to raise short-term interest rates in subsequent
months, municipal bond yields continued to rise throughout the
quarter to 6.60% in mid-May. For the remainder of the second
quarter, rates meandered in a narrow range as the Federal Reserve
Board sat on the sidelines and waited for more data to determine
if the economy was indeed slowing because of the recent rise in
interest rates.
The magnitude of the rise in tax-exempt bond yields during the
past six months has not been seen since 1987 when municipal bond
yields rose 250 basis points from March to October of that year.
It is very important to note that the municipal bond price
declines during the last six months were much different than the
1987 episode. Recent price declines have largely been the result
of consistent and insistent selling pressures over the past four
months. In the 1987 period, the tax-exempt bond market was much
more volatile as investors sought to liquidate positions without
much concern for fundamental value. The recent price deterioration
has been orderly and the municipal bond market's liquidity and
integrity have not been challenged or jeopardized.
To a large extent, the municipal bond market has continued to be
supported by its strong technical position. New-issue volume for
the past six months has been approximately $89 billion. This
represents a decline of approximately 40% versus the comparable
period a year earlier. This decline has been even more pronounced
over the past three months when only $38 billion in long-term
securities were issued, representing over a 53% decline from the
issuance level a year ago. This decline has been expected and
discussed in earlier shareholder reports. This reduced issuance
has minimized potential selling pressures in recent months as
institutional investors have been wary of selling appreciable
amounts of securities that they may be unable to replace later
this year at any price level. We expect this decline in new bond
issuance to continue this year and into 1995.
<PAGE>
Despite recent price declines, tax-exempt securities remain an
attractive investment. After the recent yield increases, longer-
term municipal securities yielded approximately 86% of comparable
US Treasury issues. Purchasers of these municipal bonds also
accrue substantial after-tax yield advantages. With prevailing
estimates of 1994 inflation at no more than 3%--4%, real after-
tax rates easily compensate longer-term investors for much of the
price volatility recently experienced.
We continue to look for municipal bond yields to decline later
this year and into 1995 as inflationary pressures remain low and
the domestic economy is further slowed by the impact of higher
interest rates. If this scenario unfolds, currently available
tax-exempt products should generate attractive returns for long-
term investors.
Portfolio Strategy
Going into the second half of 1994, we view the municipal bond
market, including the New York sector, constructively because of
both the predicted economic slowdown of the US economy and the
predicted reduction of supply of New York municipal bonds as
compared to the same period of 1993. The decline in New York
municipal bond issuance has been quite dramatic. During the first
six months of 1994 new issuance was $2.9 billion, compared to
$7.6 billion during the same period in 1993.
Our strategy in the early part of the June quarter was to raise
the Fund's cash levels while the New York State Legislature
deliberated over its budget. When the New York State budget was
finally passed on June 8, the supply of New York municipal bond
issuance increased. We believe the increase in supply of new
issues should continue into July 1994 and then slow toward the
end of the third quarter. This window of opportunity has
presented the Fund with a chance to invest its cash at attractive
levels. We have targeted purchasing bonds in the 15-year--25-year
maturity range to enhance the Fund's yield as well as to improve
the performance of the Fund should interest rates decline later
this year.
We appreciate your ongoing interest in Merrill Lynch New York
Municipal Bond Fund, and we look forward to assisting you with
your financial needs 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
July 25, 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
1/1/94--6/30/94 12.08 11.01 -- 0.297 - 6.30
------ ------
Total $0.351 Total $4.141
Cumulative total return as of 6/30/94: +51.00%**
<PAGE>
<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--6/30/94 12.09 11.02 -- 0.270 - 6.51
------ ------
Total $0.424 Total $5.928
Cumulative total return as of 6/30/94: +95.29%**
<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>
Recent Performance Results*
<CAPTION>
12 Month 3 Month
6/30/94 3/31/94 6/30/93 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $11.01 $11.13 $12.22 -8.10%(1) -1.08%
Class B Shares 11.02 11.13 12.22 -8.02(1) -0.99
Class A Shares--Total Return -2.16(2) +0.35(3)
Class B Shares--Total Return -2.56(4) +0.31(5)
Class A Shares--Standardized 30-day Yield 5.06%
Class B Shares--Standardized 30-day Yield 4.76%
<PAGE>
<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 $0.749 per share ordinary income dividends
and $0.241 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.159 per share ordinary income dividends.
(4)Percent change includes reinvestment of $0.689 per share ordinary income dividends
and $0.241 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.145 per share ordinary income dividends.
</TABLE>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/94 -2.16% -6.07%
Five Years Ended 6/30/94 +7.15 +6.28
Inception (10/25/88)
through 6/30/94 +7.52 +6.75
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/94 -2.56% -6.14%
Five Years Ended 6/30/94 +6.63 +6.63
Inception (11/1/85)
through 6/30/94 +8.03 +8.03
[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>
PORTFOLIO COMPOSITION
For the Quarter Ended June 30, 1994
Distribution by Market Sector*
General Obligation & Tax Revenue Bonds 43.7%
Other Revenue Bonds 37.6
Utility Revenue Bonds 12.4
Prerefunded Bonds** 6.3
------
Total 100.0%
======
Net assets as of June 30, 1993 were $698,272,823.
[FN]
*Based on total market value of the portfolio as of June 30, 1994.
**Backed by an escrow fund.
++Temporary investments in short-term municipal securities.
GRAPHIC MATERIAL APPEARS HERE. SEE APPENDIX,
GRAPHIC AND IMAGE MATERIAL: ITEM 1.
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
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
<PAGE>
APPENDIX: GRAPHIC AND IMAGE MATERIAL.
Item 1:
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart illustrating the following percentages:
AAA/Aaa 19%
AA/Aa 19%
A/A 19%
BBB/Baa 37%
Other++ 6%
[FN]
*Based on total market value of the portfolio as of June 30, 1994.
++Temporary investments in short-term municipal securities.
