MERRILL LYNCH
NEW YORK
MUNICIPAL
BOND FUND
Merrill Lynch Multi-State
Municipal Series Trust
FUND LOGO
Quarterly Report
June 30, 1995
Officers and Trustees
Arthur Zeikel, President and 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
State Street Bank & Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Merrill Lynch New York
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
TO OUR SHAREHOLDERS
In the June quarter as economic data showed evidence of slowing
activity, gross domestic product growth for the first three months
of 1995 was reported at 2.7%, the weakest showing in the past 18
months. Other signs of a sluggish economy included slowing growth in
the manufacturing sector in May and June as well as three
consecutive months of declines in the Index of Leading Economic
Indicators, an occurrence which has often (but not always) forecast
recessions. As a result, by the end of the June quarter concerns had
arisen that the economic "soft landing" could turn into an actual
recession. However, at the same time there were also expectations
that a few months of very slow or zero growth could be followed by a
pickup in economic activity later in the year. This view was
supported by the stronger-than-expected employment data for June and
an upward revision in May's employment figures.
<PAGE>
Thus far in 1995, economic developments have been very positive for
the US stock and bond markets, and most US stock market averages
recently have attained record levels. In contrast, the US dollar has
been persistently weak, especially relative to the yen. Following
the Federal Reserve Board's cut in short-term interest rates in
early July, continued signs of a moderating expansion and well-
contained inflationary pressures would provide further assurance
that the peak in US interest rates is behind us, creating a stronger
foundation for higher stock and bond prices. On the other hand,
indications of reaccelerating growth and increasing inflationary
pressures would likely suggest that higher interest rates are on the
horizon, a negative development for the US financial markets.
The Municipal Market
Tax-exempt bond yields were essentially unchanged during the three
months ended June 30, 1995. Initially, municipal bond yields had
continued their earlier decline, falling to 5.94% in early June,
before investor concerns caused yields to rise to end the June
quarter at 6.28%. However, US Treasury bond yields have continued to
decline, falling approximately 80 basis points (0.80%) to 6.62% at
June quarter-end.
Municipal bonds have underperformed US Treasury securities for a
number of reasons. The record highs of the US equity market have
continued to attract retail investors seeking further capital gains.
Investor demand has also been diminished in recent months by the
"sticker shock" effect that periodically affects the municipal bond
market. Investors who had become accustomed to purchasing tax-exempt
securities yielding in the 6.50%--7.00% range six or seven months
ago have demonstrated understandable reluctance to purchase similar
securities at current levels. The strong fundamental structure of
the municipal bond market, however, suggests that such hesitancy may
prove costly.
The major reason for the tax-exempt bond market's recent
underperformance was the concern regarding the implication for
municipal bonds' tax advantage resulting from various proposed tax-
law changes (for example, flat tax, value-added tax and national
sales tax) that have reduced investor demand for tax-exempt
products. Such concerns are likely to quickly recede as investors
realize that such, if any, changes are unlikely to be enacted before
late 1996 at the earliest. Also, long-term investors will recall in
1986 when similar tax proposals were made and municipal bond yields
initially rose to at least 100% of taxable yields. Tax-exempt bond
yields quickly declined as investors' fears proved to be unfounded.
<PAGE>
The municipal bond market's strong technical position has diminished
somewhat in recent months. New-issue supply over the last six months
has totaled approximately $69 billion, for a decline of over 25%
versus the comparable period in 1994. In recent months, however,
municipalities have issued approximately $40 billion in new
securities, which represents only a 3% decline versus the same
period a year earlier. Investor demand has remained muted despite
significant funds available to investors in recent months. By the
end of July investors, both individual and institutional, are
expected to have received as much as $80 billion from tax-exempt
bond maturities, coupon payments and the proceeds of early bond
redemptions. Little new money has entered the municipal market in
recent months, largely in response to the factors mentioned above.
Consequently, much of the technical support the municipal market
enjoyed earlier this year has evaporated, causing municipal bond
yields to decline at a slower rate than their taxable counterparts.
Their recent relative underperformance has made municipal bonds
particularly attractive to long-term investors. Tax-exempt bonds
currently yield well over 90% of US Treasury securities. In some
instances, A-rated, long-term revenue bonds have yielded almost 95%
of US Treasury bonds. Analysts usually consider municipal bonds
yielding over 82% of US Treasury securities to be historically
attractive. With inflation-adjusted, "real" after-tax equivalent tax-
exempt yields of over 6.50%, municipal securities appear
to represent considerable value.
Current tax-exempt yield levels appear to be overcompensating for
any proposed changes in tax law that can be reasonably expected to
be enacted. As Congressional hearings continue into 1996, and the
revenue losses resultant from such changes become more apparent, the
likelihood of any significant changes to tax codes and the resultant
decline of municipal bonds' inherent tax advantage should quickly
diminish. Under such a scenario, tax-exempt bond yields would be
likely to quickly decline and currently available municipal bond
yields would be expected to return to their normal historic
relationship.
Portfolio Strategy
Signs of a weaker economy became evident during the June quarter.
While the exact severity of an economic slowdown cannot be
ascertained at this time, it is not likely that the growth levels
maintained in previous quarters will be duplicated in the second and
third quarters of 1995.
We have maintained our portfolio strategy of holding longer-term
bonds to seek to enhance price appreciation in the event of further
reductions in interest rates by the Federal Reserve Board. If the
economy does show signs of slowing too rapidly, we expect the
Federal Reserve Board will continue to lower short-term interest
rates as it did on July 6, 1995.
<PAGE>
On the local front, the New York State budget stalemate lasted much
longer than anticipated, with the budget not being finalized until
after June 1, 1995. The agreement will result in somewhat increased
financing activity as issuers were not able to issue bonds during
the stalemate. There appears to be an orderly process of this
issuance and since demand has remained fairly strong for New York
State paper, we expect no adverse impact.
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
July 20, 1995
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.
<PAGE>
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.25% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 10 years.
* Class C Shares are subject to a distribution fee of 0.35% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 4% and an
account maintenance fee of 0.10% (but no distribution fee).
Performance data for the Fund's Class A and Class B Shares are
presented in the "Average Annual Total Return" and "Performance
Summary" tables below and on page 4. "Aggregate Total Return" tables
for Class C and Class D Shares are also presented below. Data for
all of the Fund's shares are presented in the "Recent Performance
Results" table on page 5.
The "Recent Performance Results" table 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 June 30, 1995 and
for Class C and Class D Shares for the since inception and 3-month
periods ended June 30, 1995. 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. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/95 +5.30% +1.09%
Five Years Ended 6/30/95 +7.28 +6.41
Inception (10/25/88)
through 6/30/95 +7.19 +6.53
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/95 +4.66% +0.69%
Five Years Ended 6/30/95 +6.74 +6.74
Inception (11/1/85)
through 6/30/95 +7.68 +7.68
[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 6/30/95 +5.43% +4.43%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced
to 0% after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Inception (10/21/94)
through 6/30/95 +5.70% +1.47%
[FN]
*Maximum sales charge is 4%.
**Assuming maximum 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**
<S> <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
1/1/95--6/30/95 10.43 10.95 -- 0.296 + 7.96
------ ------
Total $0.351 Total $4.769
Cumulative total return as of 6/30/95: + 58.99%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
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
1/1/95--6/30/95 10.43 10.95 -- 0.270 + 7.70
------ ------
Total $0.424 Total $6.501
Cumulative total return as of 6/30/95: + 104.38%**
<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
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
PERFORMANCE DATA (concluded)
</TABLE>
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
6/30/95 3/31/95 6/30/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $10.95 $10.95 $11.01 - 0.54% 0.00%
Class B Shares* 10.95 10.95 11.02 - 0.64 0.00
Class C Shares* 10.95 10.96 10.76 + 1.77 - 0.09
Class D Shares* 10.94 10.95 10.76 + 1.67 - 0.09
Class A Shares--Total Return* + 5.30(1) + 1.37(2)
Class B Shares--Total Return* + 4.66(3) + 1.24(4)
Class C Shares--Total Return* + 5.43(5) + 1.12(6)
Class D Shares--Total Return* + 5.70(7) + 1.25(8)
Class A Shares--Standardized 30-day Yield 4.82%
Class B Shares--Standardized 30-day Yield 4.50%
Class C Shares--Standardized 30-day Yield 4.40%
Class D Shares--Standardized 30-day Yield 4.72%
<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 $0.151 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.573 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.137 per share ordinary
income dividends.
(5)Percent change includes reinvestment of $0.372 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.134 per share ordinary
income dividends.
(7)Percent change includes reinvestment of $0.409 per share ordinary
income dividends.
(8)Percent change includes reinvestment of $0.148 per share ordinary
income dividends.
</TABLE>
<PAGE>
PORTFOLIO COMPOSITION
For the Quarter Ended June 30, 1995
Distribution by Market Sector*
General Obligation & Tax Revenue Bonds 50.1%
Other Revenue Bonds 36.8
Utility Revenue Bonds 7.7
Prerefunded Bonds** 5.4
------
Total 100.0%
======
Net assets as of June 30, 1995 were $603,921,948.
<PAGE>
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart illustrating the following percentages:
AAA/Aaa 25%
AA/Aa 22%
A/A 12%
BBB/Baa 39%
Other++ 2%
[FN]
*Based on total market value of the portfolio as of June 30, 1995.
**Backed by an escrow fund.
++Temporary investments in short-term municipal securities.
