MERRILL LYNCH
NEW YORK
MUNICIPAL
BOND FUND
Merrill Lynch Multi-State
Municipal Series Trust
FUND LOGO
Quarterly Report
December 31, 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, NJ
08543-9011
<PAGE>
TO OUR SHAREHOLDERS
Volatility in the US financial markets continued during the December
quarter, largely prompted by concerns of increasing inflationary
pressures. The possibility of continued monetary policy tightening
by the Federal Reserve Board was predominant in the minds of
investors throughout most of the period. Therefore, there was little
surprise in mid-November when the central bank announced the sixth
increase in short-term interest rates in 1994. Early in the period,
the weakness of the US dollar in foreign exchange markets prompted
declines in US stock and bond prices, but some strengthening of the
US currency has occurred recently.
The manufacturing sector was the driving force behind the US economy
through the final quarter of the year, making an important
contribution to the substantial increase in corporate earnings. US
companies have been successful at containing labor costs, which are
an important component of the inflation outlook. Although consumer
spending grew at a slower pace than in previous economic recoveries,
purchases of vehicles and household durable goods rose in the latter
months of 1994. Despite the relatively modest rise in consumer
spending, the personal savings rate fell to an all-time annual low
in 1994.
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 likely. The core inflation rate
rose less than 3% in 1994 following a 3% increase in 1993, the best
sustained inflation performance in 30 years. It is not likely that
such positive inflation results will be duplicated in 1995. In
addition, investor interest in the new year will also be focused on
the progress that the new Congress makes on both reducing spending
and the Federal budget deficit and passing tax cuts that promote
savings and investment. Legislative progress, combined with
continued indications of moderate and sustainable levels of economic
growth, would be positive for the US capital markets. However, the
lagged effects of higher interest rates could slow the economy
sharply and with it, the growth of corporate profits.
<PAGE>
The Municipal Market
During the three months ended December 31, 1994, the tax-exempt bond
market continued to deteriorate amid signs of a continuing strong
domestic economy and a restrictive Federal Reserve Board monetary
policy. By the end of the December quarter, municipal revenue bond
yields had increased over 25 basis points (0.25%) to 6.97%. Interest
rate volatility remained significant, with yields fluctuating by as
much as 10 basis points--15 basis points on a weekly basis. Long-
term US Treasury bonds also remained very volatile during the
December quarter. For example, by mid-November, US Treasury yields
had risen over 35 basis points to 8.15% before declining to end the
quarter at 7.875%.
Tax-exempt bonds remained attractive throughout the quarter. Over
the last three months, long-term municipal bonds have yielded as
much as 90% of comparable US Treasury bonds. Yield ratios in excess
of 85% are considered historically attractive to long-term
investors. Additionally, with taxable equivalent yields in excess of
10% throughout the quarter, municipal bonds continued to represent
considerable value relative to other investment alternatives.
The technical position of the municipal bond market remained very
positive throughout the December quarter. Approximately $36 billion
in long-term municipal securities were issued during the three
months ended December 31, 1994. This represents a decline of over
48% versus the December 31, 1993 quarter. Similarly, for all of
1994, $164 billion in long-term tax-exempt bonds were issued, a 44%
decline from 1993 annual issuance levels. Also, estimates of net
cash available for reinvestment in early 1995, based on maturities,
coupon income, and advanced refunded maturities, have been in excess
of $25 billion. This combination of reduced supply and sizable
future demand, however, has yet to generate lower interest rates as
would normally be expected. However, once current uncertainties
regarding the strength and volatility of the current economic
expansion have been resolved, and, more importantly, when no further
interest rate increases by the Federal Reserve Board can be
expected, the municipal bond market appears poised to quickly
respond to its present favorable fundamental position and quickly
recoup much of the price deterioration it has suffered over the last
several quarters.
Portfolio Strategy
Economic growth continued in a strong pattern at the beginning of
the fourth quarter. Employment reached a high for the year, and
inflation showed no signs of increasing. This scenario led us to
believe that another increase in short-term interest rates by the
Federal Reserve Board would take place at the November Federal Open
Market Committee meeting.
<PAGE>
In anticipation of a further increase in interest rates based on the
economy's strength and the Federal Reserve Board's desire to control
inflation that might be generated by that strength, we continued to
seek to limit the Fund's exposure to further price declines by
increasing our cash position, lowering duration, shortening the
average maturity and hedging in the futures markets. When the
Federal Reserve Board did increase interest rates in mid-November,
its aggressiveness to contain inflation became immediately apparent.
The 75 basis point increase in the Federal Funds rate and the
discount rate were well accepted by the credit markets as the
markets rebounded from their lows. We removed the Fund's hedge
position and continued to invest in 15-year--20-year maturity
issues.
In Conclusion
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.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
January 20, 1995
<PAGE>
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
State Street Bank & Trust Co.
P.O. Box 351
Boston, Massachusetts 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
PERFORMANCE DATA
About Fund Performance
Since October 21, 1994, investors have been 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.
<PAGE>
* Class D Shares incur a maximum initial sales charge of 4% and an
account maintenance fee of 0.10% (but no distribution fee).
Performance data for the Fund's Class A and Class B Shares are
presented in the "Performance Summary" and "Average Annual Total
Return" tables on pages 3 and 4. Data for all of the Fund's shares,
including Class C and Class D Shares, are presented in the "Recent
Performance Results" table. "Aggregate Total Return" tables for
Class C and Class D Shares are also presented below.
The "Recent Performance Results" table on page 5 shows investment
results before the deduction of any sales charges for Class A and
Class B Shares for the 12-month and 3-month periods ended December
31, 1994 and for Class C and Class D Shares for the period since
inception through December 31, 1994. All data in this table assume
imposition of the actual total expenses incurred by each class of
shares during the relevant period.
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.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/94 -8.60% -12.26%
Five Years Ended 12/31/94 +6.03 +5.16
Inception (10/25/88)
through 12/31/94 +6.46 +5.76
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/94 -9.14% -12.58%
Five Years Ended 12/31/94 +5.49 +5.49
Inception (11/1/85)
through 12/31/94 +7.24 +7.24
<PAGE>
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
Aggregate Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94)
through 12/31/94 -2.05% -3.02%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after one year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Inception (10/21/94)
through 12/31/94 -2.05% -5.97%
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
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
1994 12.08 10.43 -- 0.629 - 8.60
------ ------
Total $0.351 Total $4.473
Cumulative total return as of 12/31/94: -47.28%**
<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
1994 12.09 10.43 -- 0.573 - 9.14
------ ------
Total $0.424 Total $6.231
Cumulative total return as of 12/31/94: -89.79%**
<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
12/31/94 9/30/94++ 12/31/93 % Change % Change++
<S> <C> <C> <C> <C> <C>
Class A Shares* $10.43 $10.88 $12.08 -13.66% -4.14%
Class B Shares* 10.43 10.88 12.09 -13.73 -4.14
Class C Shares* 10.43 10.76 -- -- -3.07
Class D Shares* 10.42 10.76 -- -- -3.16
Class A Shares--Total Return* - 8.60(1) -2.68(2)
Class B Shares--Total Return* - 9.14(3) -2.81(4)
Class C Shares--Total Return* -- -2.05(5)
Class D Shares--Total Return* -- -2.05(6)
Class A Shares--Standardized 30-day Yield 5.48%
Class B Shares--Standardized 30-day Yield 5.25%
Class C Shares--Standardized 30-day Yield 5.12%
Class D Shares--Standardized 30-day Yield 5.29%
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
++Investment results shown for Class C and Class D Shares are since
inception (10/21/94).
(1)Percent change includes reinvestment of $0.629 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.167 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.573 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.153 per share ordinary
income dividends.
(5)Percent change includes reinvestment of $0.107 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.118 per share ordinary
income dividends.
</TABLE>
PORTFOLIO COMPOSITION
For the Quarter Ended December 31, 1994
<PAGE>
Distribution by Market Sector*
General Obligation & Tax Revenue Bonds 43.3%
Other Revenue Bonds 36.7
Utility Revenue Bonds 13.0
Prerefunded Bonds** 7.0
------
Total 100.0%
======
Net assets as of December 31, 1994 were $607,628,422.
[FN]
*Based on total market value of the portfolio as of December 31,
1994.
**Backed by an escrow fund.
++Temporary investments in short-term municipal securities.
Quality Ratings*
GRAPHIC MATERIAL APPEARS HERE. SEE APPENDIX,
GRAPHIC AND IMAGE MATERIAL, ITEM 1.
APPENDIX, GRAPHIC AND IMAGE MATERIAL.
ITEM 1:
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart illustrating the following percentages:
AAA/Aaa 15%
AA/Aa 19%
A/A 19%
BBB/Baa 36%
Other++ 11%
[FN]
*Based on total market value of the portfolio as of December 31,
1994.
**Backed by an escrow fund.
++Temporary investments in short-term municipal securities.
<PAGE>