MERRILL LYNCH
NEW YORK
MUNICIPAL
BOND FUND
[FUND LOGO]
STRATEGIC
Performance
Annual Report
September 30, 1997
Officers and Trustees
Arthur Zeikel, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Roberto Roffo, Vice President
Gerald M. Richard, Treasurer
Robert E. Putney, III, Secretary
Custodian
State Street Bank and 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. Statements and other information
herein are as dated and are subject to change.
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011 #10344 -- 9/97
[RECYCLE LOGO]
Printed on post-consumer recycled paper
Merrill Lynch New York Municipal Bond Fund September 30, 1997
TO OUR SHAREHOLDERS
The Municipal Market Environment
Long-term interest rates declined significantly during the six months
ended September 30, 1997. On both a weekly and monthly basis, bond
yields were buffeted by alternating strong and weak economic
indicators. However, the general financial environment has remained
one of moderate economic growth with little or no price inflation.
Through July 1997, bond yields had declined as economic growth
appeared to weaken and the Federal Reserve Board (FRB) held interest
rates steady. By the end of July, US Treasury bond yields had declined
by approximately 80 basis points (0.80%) to 6.30%. Long-term municipal
revenue bond yields, as measured by the Bond Buyer Revenue Bond Index,
declined by approximately 60 basis points to 5.50%. Interest rates
generally rose during August and September as investors reacted to
signs of potential economic recovery and concerns that the FRB would
raise interest rates before the end of 1997. At the end of September
1997, US Treasury bond yields had risen to approximately 6.50% while
long-term municipal bond yields had increased to approximately 5.60%.
During the six-month period ended September 30, 1997, US Treasury bond
yields declined a total of 70 basis points, and long-term tax-exempt
bond yields fell 50 basis points.
The tax-exempt bond market's continued underperformance as compared to
its taxable counterpart has been largely in response to its ongoing
weakening technical position. As municipal bond yields have declined,
municipalities have hurriedly rushed to refinance outstanding higher-
couponed debt with new issues financed at present low rates. During
the last six months, over $112 billion in new long-term tax-exempt
issues were underwritten, an increase of over 25% versus the
comparable period a year ago. As interest rates have continued to
decline, these refinancings have intensified municipal bond issuance.
During the past three months, over $55 billion in new long-term
municipal securities were underwritten, an increase of over 45% as
compared to the September 30, 1996 quarter.
Additionally, there has been a recent trend toward larger bond issues.
These recent "mega-deals" have included $625 million in Massachusetts
general obligation bonds, $650 million in New York City transitional
finance authority notes, $660 million in Texas health resources
securities, $780 million in Colorado-E470 public highway issues, $1.4
billion in San Joaquin Hills, California transportation issues and
$1.5 billion in Massachusetts Turnpike Authority issues. However,
issues of such magnitude usually must be attractively priced to ensure
adequate investor interest. Obviously, the yields of other municipal
bond issues are impacted by the yield premiums such large issuers have
been required to pay. Much of the municipal bond market's recent
underperformance can be traced to the market pressures such mega-deals
have exerted.
The present economic situation remains ideal. The combination of
moderate economic growth and minimal inflation have fostered an
extremely positive environment for low interest rates. Continued
economic growth has generated significant tax revenues thus far this
year. Increased revenues, when combined with reduced Federal
outlays, have resulted in a steadily declining Federal budget deficit.
Any material declines in the Federal budget positively impact the size
of future Federal debt issuance. This prospect for reduced Federal
debt issuance has further enhanced the prospects for a continued low
interest rate environment. Thus far this year any significant increase
in tax-exempt bond yields has been viewed as an opportunity to
purchase attractively priced municipal issues. Despite a greater-than-
expected supply of new tax-exempt bond issuance, overall favorable
market conditions have allowed municipal bond yields to decline over
30 basis points thus far in 1997. More importantly, in our opinion, it
can be expected that the current environment will limit the potential
for a significant interest rate correction in the near future.
Fiscal Year in Review
For the 12 months ended September 30, 1997, we managed the Fund with
the intention of seeking to sustain an appealing level of tax-exempt
income in addition to providing an attractive total return. We began
the 12-month period optimistic that interest rates would decline in
response to the historically attractive 7% yield on the US Treasury
bond and the correspondingly high yields on municipal bonds. This
optimism on interest rates proved correct as interest rates declined
about 40 basis points from September to December 1996 on the belief
that inflation was not a threat. From December to January, we slowly
shifted from the aggressive posture we had adopted with interest rates
at 7% to a more neutral posture. This was largely in response to the
belief that the significant decline in yields was not justified
relative to the lingering strength in the economy. At this point the
market became extremely volatile as a result of the conflicting
economic statistics that showed robust growth with little or no
inflation. This volatility still existed as of September 30, 1997 in
response to the indecision of investors on the direction of interest
rates and the economy. As a result of our strategy, the Fund had total
returns above the industry average of similar New York tax-exempt bond
funds. While it is our opinion that interest rates are not in danger
of rising substantially, they probably will not decline substantially
any time soon either. To that end, we expect to concentrate on seeking
to enhance tax-exempt income for our shareholders while trying to
limit volatility.
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,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/VINCENT R. GIORDANO
Vincent R. Giordano
Senior Vice President
/S/ROBERTO ROFFO
Roberto Roffo
Vice President and Portfolio Manager
November 3, 1997
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the Merrill
Lynch Select PricingSM System, which offers four pricing alternatives:
[bullet] 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.
[bullet] 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. (There is no initial sales
charge for automatic share conversions.)
[bullet] 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.
[bullet] Class D Shares incur a maximum initial sales charge of
4% and an account maintenance fee of 0.10% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Average Annual Total
Return" tables as well as the total returns and cumulative total
returns in the "Performance Summary" tables assume reinvestment of all
dividends and capital gains distributions at net asset value on the
payable date. 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.
<TABLE>
<CAPTION>
Recent Performance Results
12 Month 3 Month
9/30/97 6/30/97 9/30/96 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $11.46 $11.27 $11.12 +3.06% +1.69%
Class B Shares* 11.46 11.27 11.12 +3.06 +1.69
Class C Shares* 11.47 11.28 11.12 +3.15 +1.68
Class D Shares* 11.46 11.27 11.11 +3.15 +1.69
Class A Shares -- Total Return* +8.69(1) +3.02(2)
Class B Shares -- Total Return* +8.14(3) +2.89(4)
Class C Shares -- Total Return* +8.13(5) +2.86(6)
Class D Shares -- Total Return* +8.68(7) +2.99(8)
Class A Shares -- Standardized 30-day Yield 4.40%
Class B Shares -- Standardized 30-day Yield 4.07%
Class C Shares -- Standardized 30-day Yield 3.97%
Class D Shares -- Standardized 30-day Yield 4.30%
* Investment results shown do not reflect sales charges; results shown would be lower if a sales charge was included.
(1) Percent change includes reinvestment of $0.599 per share ordinary income dividends.
(2) Percent change includes reinvestment of $0.148 per share ordinary income dividends.
(3) Percent change includes reinvestment of $0.542 per share ordinary income dividends.
(4) Percent change includes reinvestment of $0.133 per share ordinary income dividends.
(5) Percent change includes reinvestment of $0.531 per share ordinary income dividends.
(6) Percent change includes reinvestment of $0.130 per share ordinary income dividends.
(7) Percent change includes reinvestment of $0.588 per share ordinary income dividends.
(8) Percent change includes reinvestment of $0.145 per share ordinary income dividends.
</TABLE>
[GRAPHIC WORM CHART OMITTED: TOTAL RETURN BASED ON A $10,000 INVESTMENT
- -- CLASS A SHARES]
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** 9/97
ML New York Municipal Bond Fund+--
Class A Shares* $9,600 $18,003
Lehman Brothers Municipal Bond
Index++ $10,000 $20,158
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** 9/97
ML New York Municipal Bond Fund+--
Class B Shares* $10,000 $20,778
Lehman Brothers Municipal Bond
Index++ $10,000 $23,176
Total Return Based on a $10,000 Investment--Class C and Class D Shares
A line graph depicting the growth of an investment in the Fund's Class C
and Class D Shares compared to growth of an investment in the Lehman
Brothers Municipal Bond Index. Beginning and ending values are:
10/21/94** 9/96
ML New York Municipal Bond Fund+--
Class C Shares* $10,000 $12,277
ML New York Municipal Bond Fund+--
Class D Shares* $9,600 $11,953
Lehman Brothers Municipal Bond
Index++ $10,000 $13,085
* 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.
Past performance is not predictive of future performance.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 9/30/97 +8.69% +4.35%
Five Years Ended 9/30/97 +5.88 +5.02
Inception (10/25/88)
through 9/30/97 +7.29 +6.81
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/97 +8.14% +4.14%
Five Years Ended 9/30/97 +5.35 +5.35
Ten Years Ended 9/30/97 +7.59 +7.59
* Maximum contingent deferred sales charge is 4% and is reduced
to 0% after 4 years.
** Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 9/30/97 +8.13% +7.13%
Inception (10/21/94)
through 9/30/97 +7.22 +7.22
* 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*
Year Ended 9/30/97 +8.68% +4.34%
Inception (10/21/94)
through 9/30/97 +7.74 +6.25
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
<TABLE>
<CAPTION>
Performance Summary -- Class A Shares
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 +10.37
1993 11.74 12.08 0.241 0.775 +11.81
1994 12.08 10.43 -- 0.629 - 8.60
1995 10.43 11.48 -- 0.605 +16.25
1996 11.48 11.24 -- 0.596 + 3.28
1/1/97 -- 9/30/97 11.24 11.46 -- 0.432 + 6.07
Total $0.351 Total $6.106
Cumulative total return as of 9/30/97: + 87.55%**
* Figures may include short-term capital gains distributions.
** Figures do not include sales charge; results would be lower if sales charge was included.
</TABLE>
<TABLE>
<CAPTION>
Performance Summary -- Class B Shares
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
1995 10.43 11.48 -- 0.549 +15.67
1996 11.48 11.25 -- 0.540 + 2.85
1/1/97 -- 9/30/97 11.25 11.46 -- 0.391 + 5.57
Total $0.424 Total $7.711
Cumulative total return as of 9/30/97: +138.34%**
* Figures may include short-term capital gains distributions.
** Figures do not reflect deduction of any sales charge; results would be lower if sales charge was deducted.
</TABLE>
<TABLE>
<CAPTION>
Performance Summary -- Class C Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94 -- 12/31/94 $10.76 $10.43 -- $0.107 - 2.05%
1995 10.43 11.48 -- 0.538 +15.55
1996 11.48 11.25 -- 0.528 + 2.74
1/1/97 -- 9/30/97 11.25 11.47 -- 0.383 + 5.58
Total $1.556
Cumulative total return as of 9/30/97 +22.77%**
* Figures may include short-term capital gains distributions.
** Figures do not reflect deduction of any sales charge; results would be lower if sales charge was deducted.
</TABLE>
<TABLE>
<CAPTION>
Performance Summary -- Class D Shares
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94 -- 12/31/94 $10.76 $10.42 -- $0.118 - 2.05%
1995 10.42 11.47 -- 0.594 +16.15
1996 11.47 11.24 -- 0.585 + 3.27
1/1/97 -- 9/30/97 11.24 11.46 -- 0.424 + 5.99
Total $1.721
Cumulative total return as of 9/30/97: +24.52%**
* Figures may include short-term capital gains distributions.
** Figures do not include sales charge; results would be lower if sales charge was included.
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <C>
New York -- 98.6%
AAA Aaa $4,205 Albany County, New York, Airport Authority, Airport Revenue Bonds,
RITR, AMT, Series RI-97-7, 7.42% due 12/15/2023 (g)(h) $4,647
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) 15,995
AAA Aaa 2,000 Buffalo, New York, Municipal Water Finance Authority, Water System
Revenue Bonds, 5% due 7/01/2025 (b) 1,891
AAA Aaa 4,000 Buffalo, New York, Sewer Authority Revenue Bonds, Series F, 6% due
7/01/2013 (b) 4,423
AA+ Aa1 6,000 Hornell, New York, IDA, IDR (Crowley Foods, Inc.), 7.75% due
12/01/2016 6,307
Metropolitan Transportation Authority, New York, Commuter Facilities
Revenue Bonds:
AAA Aaa 5,235 RITR, Series 9, 7.72% due 7/01/2026 (h) 6,001
NR* NR* 3,000 RITR, Series 20, 5% due 7/01/2017 (c)(h) 3,611
AAA Aaa 5,200 Series B, 5.125% due 7/01/2024 (a) 4,998
AAA Aaa 13,325 Metropolitan Transportation Authority, New York, Dedicated Tax Fund,
Series A, 5.25% due 4/01/2026 (c) 13,036
AAA Aaa 2,950 Monroe County, New York, Airport Authority Revenue Bonds (Greater
Rochester International Airport), AMT, 7.25% due 1/01/2009 (c) 3,171
BBB+ Baa 9,225 Monroe County, New York, COP, 8.05% due 1/01/2011 9,895
Municipal Assistance Corporation, New York City, New York, VRDN (e):
A1+ NR* 300 Sub-Series K-1, 4.05% due 7/01/2008 300
A1+ NR* 5,800 Sub-Series K-2, 3.65% due 7/01/2008 5,800
New York City, New York, GO, UT:
BBB+ Baa1 3,295 Refunding, Series A, 6.25% due 8/01/2020 3,474
BBB+ Aaa 2,725 Series B, 7% due 6/01/2001 (d) 3,022
BBB+ Baa1 275 Series B, 7% due 6/01/2016 298
BBB+ Aaa 1,440 Series C, 7.25% due 8/15/2001 (d) 1,598
BBB+ Baa1 3,870 Series C, 7.25% due 8/15/2024 4,210
A1+ Aa2 5,800 New York City, New York, Health and Hospital Corporation, Health
System Revenue Bonds, VRDN, Series A, 4% due 2/15/2026 (e) 5,800
New York City, New York, IDA, Civic Facilities Revenue Bonds:
NR* NR* 2,000 (New York Blood Center Inc. Project), 7.20% due 5/01/2004 (d) 2,304
NR* NR* 6,895 (New York Blood Center Inc. Project), 7.25% due 5/01/2004 (d) 7,962
AAA Aaa 4,690 (USTA National Tennis Center Project), 6.60% due 11/15/2011 (g) 5,288
New York City, New York, IDA, Special Facilities Revenue Bonds, AMT:
BBB- Baa2 2,030 (1990 AMR/American Airlines Inc. Project), 7.75% due 7/01/2019 2,135
BB Ba2 5,300 (Northwest Airlines Inc.), 6% due 6/01/2027 5,413
A A 5,000 RITR, Series RI-5, 7.395% due 1/01/2024 (h) 5,463
New York City, New York, Municipal Water Finance Authority, Water and
Sewer System Revenue Bonds:
A- A2 6,960 RITR, Series 21, 7.12% due 6/15/2029 (h) 7,264
A-1 VMIG1+ 14,600 RITR, Series RI-2, 7.125% due 6/15/2025 (h) 15,932
A- A2 5,000 Refunding, Series A, 5.125% due 6/15/2021 4,759
AAA Aaa 1,000 Series A-1994, 7% due 6/15/2015 (b) 1,096
A1+ VMIG1+ 300 VRDN, Series G, 4% due 6/15/2024 (b)(e) 300
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) 4,146
A1+ VMIG1+ 800 New York City, New York, VRDN, UT, Series B, Sub-Series B-5, 4% due
8/15/2022 (c)(e) 800
New York State Dormitory Authority Revenue Bonds:
AAA Aaa 6,500 (Consolidated City University System), Series A, 5.625% due 7/01/2016
(g) 6,876
AAA Aaa 18,200 (Mental Health Services Facilities), Series B, 5.125% due 8/15/2021 (c) 17,650
AAA Aaa 11,200 (Mental Health Services Facilities), Series B, 5.375% due 2/15/2026 (g) 11,079
AAA Aaa 2,825 (Mental Health Services Facilities), Series C, 5.125% due 2/15/2021 (c) 2,741
BBB+ Baa1 12,000 Refunding (State University Educational Facilities), Series B, 7% due
5/15/2016 12,938
AA Aa 10,150 Refunding (Vassar College), 5% due 7/01/2025 9,709
BBB+ Baa1 6,750 (State University Educational Facilities), 5.50% due 5/15/2026 6,663
AAA Aaa 3,500 (State University Educational Facilities), Series A, 5.50% due
5/15/2019 (g) 3,635
New York State Energy Research and Development Authority, Facilities
Revenue Bonds:
AAA Aaa 7,820 (Consolidated Edison Company Inc.), AMT, Series A, 6.75% due 1/15/2027
(c) 8,363
AAA Aaa 3,200 RITR, Series 19, 8.07% due 8/15/2020 (h) 3,608
AAA Aaa 4,750 New York State Energy Research and Development Authority, Gas
Facilities Revenue Refunding Bonds (Brooklyn Union Gas Company),
Series A, 5.50% due 1/01/2021 (c) 4,764
A- Aa2 4,250 New York State Environmental Facilities Corporation, PCR, State Water
Revolving Fund (New York City Municipal Water Financing Authority
Project), AMT, Series E, 6.875% due 6/15/2014 4,847
AAA Aaa 2,750 New York State Environmental Facilities Corporation, Special Obligation
Revenue Bonds (Riverbank State Park), 7.25% due 4/01/2002 (d) 3,133
New York State Local Government Assistance Corporation:
AAA Aaa 10,000 Refunding, Series E, 5% due 4/01/2021 (c) 9,638
A1+ VMIG1+ 2,400 VRDN, Series B, 3.90% due 4/01/2025 (e) 2,400
New York State Medical Care Facilities Finance Agency Revenue Bonds:
A- Baa1 825 (Mental Health Services), Series B, 7.625% due 8/15/2001 (d) 937
A- Baa1 365 (Mental Health Services), Series B, 7.625% due 8/15/2017 409
AAA Aaa 695 (Mental Health Services), Series C, 7.30% due 8/15/2001 (d) 784
A- Baa1 375 (Mental Health Services), Series C, 7.30% due 2/15/2021 416
A- Baa1 3,665 (Mental Health Services), Series D, 7.40% due 2/15/2002 (d) 4,170
A- Baa1 1,405 (Mental Health Services), Series D, 7.40% due 2/15/2018 1,574
AAA Aaa 6,140 (Saint Francis Hospital Project), Series A, 7.625% due 11/01/2021 (b) 6,489
BBB+ Baa 12,200 (Security Hospital), Series A, 7.40% due 8/15/2021 13,553
New York State Mortgage Agency Revenue Bonds:
NR* Aaa 3,000 RITR, AMT, Series 24, 6.97% due 10/01/2028 (h) 3,049
NR* Aa2 4,900 Series 41-A, 6.45% due 10/01/2014 5,265
AA- Aa2 17,705 New York State Power Authority, Revenue and General Purpose Bonds,
Series Y, 6.75% due 1/01/2018 19,231
AAA VMIG1+ 600 New York State Thruway Authority, General Revenue Bonds, VRDN, 3.95%
due 1/01/2024 (b)(e) 600
BBB+ Baa1 7,840 New York State Thruway Authority, Service Contract, Local Highway and
Bridge Revenue Refunding Bonds, 5% due 4/01/2017 7,428
New York State Urban Development Corporation Revenue Bonds:
BBB+ Baa1 1,500 (Alfred Technology Resource Inc. Project), 7.875% due 1/01/2000 (d) 1,647
BBB+ Baa1 1,685 Refunding (Clarkson Center Advance Materials), 5.50% due 1/01/2020 1,700
AAA Aaa 8,470 Refunding (Correctional Facilities), Series A, 5.50% due 1/01/2014 (a) 8,869
BBB+ Baa1 9,475 Refunding (State Facilities), 5.70% due 4/01/2020 9,805
BBB+ Baa1 3,500 Refunding (University Facility Grant), 5.50% due 1/01/2019 3,535
BBB+ Aaa 4,000 (State Facilities), 7.50% due 4/01/2001 (d) 4,503
Orange County, New York, GO, UT, Series A:
NR* Aa2 1,365 5.125% due 9/01/2019 1,329
NR* Aa2 2,750 5.125% due 9/01/2020 2,668
NR* Aa2 2,890 5.125% due 9/01/2021 2,795
NR* Aa2 3,355 5.125% due 9/01/2024 3,238
Port Authority of New York and New Jersey, Consolidated Bonds:
AA- A1 8,000 69th Series, 7.125% due 6/01/2025 8,639
AA- A1 9,000 73rd Series, AMT, 6.75% due 4/15/2026 9,662
AA- A1 7,995 76th Series, AMT, 6.50% due 11/01/2026 8,572
AAA Aaa 4,000 Port Authority of New York and New Jersey, RITR, AMT, Series FR-108,
7.135% due 1/15/2017 (g)(h) 4,355
Triborough Bridge and Tunnel Authority, New York, General Purpose
Revenue Bonds:
A+ Aa 4,000 Refunding, Series Y, 6.125% due 1/01/2021 4,472
AAA Aaa 6,000 Refunding, Series Y, 6.125% due 1/01/2021 (f) 6,682
A+ Aa 5,000 Series X, 6.50% due 1/01/2019 5,457
A- A1 13,050 Triborough Bridge and Tunnel Authority, New York, Special Obligation
Refunding Bonds, Series B, 6.875% due 1/01/2015 14,199
NR* A3 2,795 United Nations Development Corporation of New York, Revenue Refunding
Bonds, Series C, 5.50% due 7/01/2017 2,795
AAA Aaa 2,000 Upper Mohawk Valley, New York, Regional Water Finance Authority, Water
Systems Revenue Refunding Bonds, Series A, 5.125% due 10/01/2026 (g) 1,923
---------
Total Investments (Cost -- $414,780) -- 98.6% 440,133
Other Assets Less Liabilities -- 1.4% 6,467
---------
Net Assets -- 100.0% $446,600
=========
(a) AMBAC Insured.
(b) FGIC Insured.
(c) MBIA Insured.
(d) Prerefunded.
(e) The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at September 30, 1997.
(f) CAPMAC Insured.
(g) FSA Insured.
(h) The interest rate is subject to change periodically and inversely based
upon prevailing market rates. The interest rate shown is the rate in
effect at September 30, 1997.
* Not Rated.
+ Highest short-term rating by Moody's Investors Service, Inc
Ratings of issues have not been audited by Deloitte & Touche LLP.
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
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
RITR Residual Interest Trust Receipts
UT Unlimited Tax
VRDN Variable Rate Demand Notes
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of September 30, 1997
<S> <C> <C> <C>
Assets: Investments, at value (identified cost -- $414,779,695) (Note 1a) $440,133,377
Cash 2,295
Receivables:
Interest $7,647,474
Securities sold 502,759
Beneficial interest sold 85,933 8,236,166
------------
Prepaid registration fees and other assets (Note 1e) 96,889
------------
Total assets 448,468,727
------------
Liabilities: Payables:
Beneficial interest redeemed 916,215
Dividends to shareholders (Note 1f) 481,196
Investment adviser (Note 2) 200,187
Distributor (Note 2) 128,212 1,725,810
------------
Accrued expenses and other liabilities 143,400
------------
Total liabilities 1,869,210
------------
Net Assets: Net assets $446,599,517
============
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited
Consist of: number of shares authorized $194,570
Class B Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 2,440,515
Class C Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 43,909
Class D Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 1,217,811
Paid-in capital in excess of par 429,320,746
Accumulated realized capital losses on investments -- net (Note 5) (11,971,716)
Unrealized appreciation on investments -- net 25,353,682
------------
Net assets $446,599,517
============
Net Asset Value: Class A -- Based on net assets of $22,300,544 and 1,945,698 shares
of beneficial interest outstanding $11.46
============
Class B -- Based on net assets of $279,753,850 and 24,405,156 shares
of beneficial interest outstanding $11.46
============
Class C -- Based on net assets of $5,034,327 and 439,094 shares
of beneficial interest outstanding $11.47
============
Class D -- Based on net assets of $139,510,796 and 12,178,109 shares
of beneficial interest outstanding $11.46
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the Year Ended
September 30, 1997
<S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $29,214,080
(Note 1d): Other 851
------------
Total income 29,214,931
------------
Expenses: Investment advisory fees (Note 2) 2,697,119
Account maintenance and distribution fees -- Class B (Note 2) 1,693,589
Transfer agent fees -- Class B (Note 2) 171,534
Account maintenance fees -- Class D (Note 2) 124,649
Registration fees (Note 1e) 70,089
Accounting services (Note 2) 64,284
Professional fees 52,494
Transfer agent fees -- Class D (Note 2) 50,869
Printing and shareholder reports 48,289
Account maintenance and distribution fees -- Class C (Note 2) 26,560
Trustees' fees and expenses 26,357
Custodian fees 24,999
Pricing fees 10,100
Transfer agent fees -- Class A (Note 2) 9,369
Transfer agent fees -- Class C (Note 2) 2,326
Other 8,219
------------
Total expenses 5,080,846
------------
Investment income -- net 24,134,085
------------
Realized & Realized gain on investments -- net 10,472,445
Unrealized Change in unrealized appreciation on investments -- net 4,297,287
Gain on ------------
Investments -- Net Net Increase in Net Assets Resulting from Operations $38,903,817
(Notes 1b, 1d & 3): ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
For the Year Ended
September 30,
Increase (Decrease) in Net Assets: 1997 1996
<S> <C> <C> <C>
Operations: Investment income -- net $24,134,085 $27,863,197
Realized gain on investments -- net 10,472,445 3,915,290
Change in unrealized appreciation on investments -- net 4,297,287 338,186
-------------- --------------
Net increase in net assets resulting from operations 38,903,817 32,116,673
-------------- --------------
Dividends & Investment income -- net:
Distributions to Class A (1,209,169) (1,204,108)
Shareholders Class B (16,235,504) (23,330,565)
(Note 1f): Class C (207,495) (202,740)
Class D (6,481,917) (3,125,784)
Realized gain on investments -- net:
Class A (8,764) --
Class B (155,517) --
Class C (1,632) --
Class D (46,847) --
-------------- --------------
Net decrease in net assets resulting from dividends and distributions
to shareholders (24,346,845) (27,863,197)
-------------- --------------
Beneficial Interest Net decrease in net assets derived from beneficial interest transactions (91,594,619) (75,010,943)
Transactions -------------- --------------
(Note 4):
Net Assets: Total decrease in net assets (77,037,647) (70,757,467)
Beginning of year 523,637,164 594,394,631
-------------- --------------
End of year $446,599,517 $523,637,164
============== ==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
The following per share data and ratios have been derived Class A
from information provided in the financial statements.
For the Year Ended September 30,
1997 1996 1995 1994 1993
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $11.12 $11.04 $10.88 $12.46 $11.77
Operating --------- --------- --------- --------- ---------
Performance: Investment income -- net .60 .59 .61 .64 .70
Realized and unrealized gain (loss) on
investments -- net .34 .08 .16 (1.25) .80
--------- --------- --------- --------- ---------
Total from investment operations .94 .67 .77 (.61) 1.50
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income -- net (.60) (.59) (.61) (.64) (.70)
Realized gain on investments -- net --** -- -- (.11) (.11)
In excess of realized gain
on investments -- net -- -- -- (.22) --
--------- --------- --------- --------- ---------
Total dividends and distributions (.60) (.59) (.61) (.97) (.81)
--------- --------- --------- --------- ---------
Net asset value, end of year $11.46 $11.12 $11.04 $10.88 $12.46
========= ========= ========= ========= =========
Total Investment Based on net asset value per share 8.69% 6.19% 7.37% (5.17%) 13.24%
Return:* ========= ========= ========= ========= =========
Ratios to Average Expenses .65% .66% .67% .63% .64%
Net Assets: ========= ========= ========= ========= =========
Investment income -- net 5.30% 5.31% 5.67% 5.52% 5.80%
========= ========= ========= ========= =========
Supplemental Net assets, end of year (in thousands) $22,301 $21,762 $23,304 $28,301 $31,976
Data: ========= ========= ========= ========= =========
Portfolio turnover 97.22% 114.78% 181.21% 107.96% 38.31%
========= ========= ========= ========= =========
* Total investment returns exclude the effects of sales loads.
** Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
The following per share data and ratios have been derived Class B
from information provided in the financial statements.
For the Year Ended September 30,
1997 1996 1995 1994 1993
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $11.12 $11.04 $10.88 $12.46 $11.77
Operating --------- --------- --------- --------- ---------
Performance: Investment income -- net .54 .54 .56 .58 .64
Realized and unrealized gain (loss) on
investments -- net .34 .08 .16 (1.25) .80
--------- --------- --------- --------- ---------
Total from investment operations .88 .62 .72 (.67) 1.44
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income -- net (.54) (.54) (.56) (.58) (.64)
Realized gain on investments -- net --** -- -- (.11) (.11)
In excess of realized gain on
investments -- net -- -- -- (.22) --
--------- --------- --------- --------- ---------
Total dividends and distributions (.54) (.54) (.56) (.91) (.75)
--------- --------- --------- --------- ---------
Net asset value, end of year $11.46 $11.12 $11.04 $10.88 $12.46
========= ========= ========= ========= =========
Total Investment Based on net asset value per share 8.14% 5.66% 6.82% (5.66%) 12.67%
Return:* ========= ========= ========= ========= =========
Ratios to Average Expenses 1.16% 1.16% 1.18% 1.14% 1.14%
Net Assets: ========= ========= ========= ========= =========
Investment income -- net 4.79% 4.80% 5.16% 5.02% 5.32%
========= ========= ========= ========= =========
Supplemental Net assets, end of year (in thousands) $279,754 $403,403 $564,963 $645,341 $733,981
Data: ========= ========= ========= ========= =========
Portfolio turnover 97.22% 114.78% 181.21% 107.96% 38.31%
========= ========= ========= ========= =========
* Total investment returns exclude the effects of sales loads.
** Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Class C Class D
For the For the
Period Period
For the Oct. 21, For the Oct. 21,
The following per share data and ratios have been derived Year Ended 1994+ to Year Ended 1994+ to
from information provided in the financial statements. September 30, Sept. 30, September 30, Sept. 30,
1997 1996 1995 1997 1996 1995
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $11.12 $11.04 $10.76 $11.11 $11.03 $10.76
Operating --------- --------- --------- --------- --------- ---------
Performance:
Investment income -- net .53 .52 .51 .58 .58 .56
Realized and unrealized gain on
investments -- net .35 .08 .28 .35 .08 .27
--------- --------- --------- --------- --------- ---------
Total from investment operations .88 .60 .79 .93 .66 .83
--------- --------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income -- net (.53) (.52) (.51) (.58) (.58) (.56)
Realized gain on investments -- net --++ -- -- --++ -- --
--------- --------- --------- --------- --------- ---------
Total dividends and distributions (.53) (.52) (.51) (.58) (.58) (.56)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period $11.47 $11.12 $11.04 $11.46 $11.11 $11.03
========= ========= ========= ========= ========= =========
Total Investment Based on net asset value per share 8.13% 5.55% 7.57%++++ 8.68% 6.09% 7.99%++++
Return:** ========= ========= ========= ========= ========= =========
Ratios to Average Expenses 1.26% 1.27% 1.27%* .75% .76% .76%*
Net Assets: ========= ========= ========= ========= ========= =========
Investment income -- net 4.69% 4.70% 4.91%* 5.20% 5.21% 5.46%*
========= ========= ========= ========= ========= =========
Supplemental Net assets, end of period
Data: (in thousands) $5,034 $4,175 $3,556 $139,511 $94,297 $2,572
========= ========= ========= ========= ========= =========
Portfolio turnover 97.22% 114.78% 181.21% 97.22% 114.78% 181.21%
========= ========= ========= ========= ========= =========
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of Operations.
++ Amount is less than $.01 per share.
++++ Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch New York Municipal Bond Fund September 30, 1997
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
four classes of shares under the Merrill Lynch Select Pricingsm
System. Class A and Class D Shares are sold with a front-end sales
charge. Class B and Class C Shares may be subject to a contingent
deferred sales charge. All classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and
conditions, except that Class B, Class C and Class D Shares bear
certain expenses related to the account maintenance of such shares,
and Class B and Class C Shares also bear certain expenses related to
the distribution of such shares. Each class has exclusive voting
rights with respect to matters relating to its account maintenance and
distribution expenditures. The following is a summary of significant
accounting policies followed by the Fund.
(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 from one or more dealers that make
markets in the securities. Financial futures contracts and options
thereon, which are traded on exchanges, are valued at their settlement
prices as of the close of such exchanges. Short-term investments with
a remaining maturity of sixty days or less are valued at amortized
cost, 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, including valuations furnished by a pricing
service retained by the Trust, which may utilize a matrix system for
valuations. The procedures of the pricing service and its valuations
are reviewed by the officers of the Trust under the general
supervision of the Trustees.
(b) Derivative financial instruments -- The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
[bullet] 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 securities 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.
(e) Prepaid registration fees -- 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.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned subsidiary
of Merrill Lynch & Co., Inc. ("ML & Co."), which is the limited
partner. The Fund has also entered into a Distribution Agreement and
Distribution Plans with Merrill Lynch Funds Distributor, Inc. ("MLFD"
or "Distributor"), a wholly-owned subsidiary of Merrill Lynch Group,
Inc.
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.
Pursuant to the Distribution Plans adopted by the Fund in accordance
with Rule 12b-1 under the Investment Company Act of 1940, the Fund
pays the Distributor an ongoing account maintenance fee and a
distribution fee. These fees are accrued daily and paid monthly, at
the annual rates based upon the average daily net assets of the shares
as follows:
Account
Maintenance Distribution
Fee Fee
Class B 0.25% 0.25%
Class C 0.25% 0.35%
Class D 0.10% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner, and Smith Incorporated ("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, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C shareholders.
For the year ended September 30, 1997, MLFD earned underwriting
discounts and MLPF&S earned dealer concessions on the sales of the
Fund's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $946 $7,764
Class D $2,411 $20,275
For the year ended September 30, 1997, MLPF&S received contingent
deferred sales charges of $474,062 and $1,035 relating to transactions
in Class B and Class C Shares, respectively.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), 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, PSI, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended September 30, 1997 were $453,725,623 and
$554,248,850, respectively.
Net realized and unrealized gains (losses) as of September 30, 1997
were as follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $12,368,349 $25,353,682
Financial futures contracts (1,895,904) --
------------ ------------
Total $10,472,445 $25,353,682
============ ============
As of September 30, 1997, net unrealized appreciation for Federal
income tax purposes aggregated $25,340,298, all of which was related
to appreciated securities. The aggregate cost of investments at
September 30, 1997 for Federal income tax purposes was $414,793,079.
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest
transactions was $91,594,619 and $75,010,943 for the years ended
September 30, 1997 and September 30, 1996, respectively.
Transactions in shares of beneficial interest for each class were as
follows:
Class A Shares for the Year Dollar
Ended September 30, 1997 Shares Amount
Shares sold 723,895 $8,125,178
Shares issued to share-
holders in reinvestment of
dividends and distributions 69,712 784,169
-------------- --------------
Total issued 793,607 8,909,347
Shares redeemed (805,206) (9,082,759)
-------------- --------------
Net decrease (11,599) $(173,412)
============== ==============
Class A Shares for the Year Dollar
Ended September 30, 1996 Shares Amount
Shares sold 128,499 $1,441,274
Shares issued to share-
holders in reinvestment
of dividends 67,175 749,799
-------------- --------------
Total issued 195,674 2,191,073
Shares redeemed (349,477) (3,907,947)
-------------- --------------
Net decrease (153,803) $(1,716,874)
============== ==============
Class B Shares for the Year Dollar
Ended September 30, 1997 Shares Amount
Shares sold 2,299,603 $25,854,529
Shares issued to share-
holders in reinvestment of
dividends and distributions 716,880 8,060,157
-------------- --------------
Total issued 3,016,483 33,914,686
Automatic conversion
of shares (5,665,372) (63,552,853)
Shares redeemed (9,222,928) (103,822,066)
-------------- --------------
Net decrease (11,871,817) $(133,460,233)
============== ==============
Class B Shares for the Year Dollar
Ended September 30, 1996 Shares Amount
Shares sold 3,354,839 $37,442,180
Shares issued to share-
holders in reinvestment
of dividends 996,711 11,135,115
-------------- --------------
Total issued 4,351,550 48,577,295
Automatic conversion
of shares (9,079,555) (101,502,036)
Shares redeemed (10,168,261) (113,251,056)
-------------- --------------
Net decrease (14,896,266) $(166,175,797)
============== ==============
Class C Shares for the Year Dollar
Ended September 30, 1997 Shares Amount
Shares sold 273,731 $3,075,432
Shares issued to share-
holders in reinvestment of
dividends and distributions 15,508 174,536
-------------- --------------
Total issued 289,239 3,249,968
Shares redeemed (225,581) (2,531,885)
-------------- --------------
Net increase 63,658 $718,083
============== ==============
Class C Shares for the Year Dollar
Ended September 30, 1996 Shares Amount
Shares sold 273,667 $3,058,759
Shares issued to shareholders
in reinvestment of dividends 12,253 136,646
-------------- --------------
Total issued 285,920 3,195,405
Shares redeemed (232,545) (2,583,517)
-------------- --------------
Net increase 53,375 $611,888
============== ==============
Class D Shares for the Year Dollar
Ended September 30, 1997 Shares Amount
Shares sold 156,140 $1,754,784
Automatic conversion
of shares 5,668,755 63,552,853
Shares issued to share-
holders in reinvestment of
dividends and distributions 235,665 2,650,220
-------------- --------------
Total issued 6,060,560 67,957,857
Shares redeemed (2,367,253) (26,636,914)
-------------- --------------
Net increase 3,693,307 $41,320,943
============== ==============
Class D Shares for the Year Dollar
Ended September 30, 1996 Shares Amount
Shares sold 225,462 $2,508,549
Automatic conversion
of shares 9,085,219 101,502,036
Shares issued to shareholders
in reinvestment of dividends 105,564 1,172,385
-------------- --------------
Total issued 9,416,245 105,182,970
Shares redeemed (1,164,545) (12,913,130)
-------------- --------------
Net increase 8,251,700 $92,269,840
============== ==============
5. Capital Loss Carryforward:
At September 30, 1997, the Fund had a net capital loss carryforward of
approximately $7,502,000, all of which expires in 2003. This amount
will be available to offset like amounts of any future taxable gains.
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
Merrill Lynch New York Municipal Bond Fund of Merrill Lynch Multi-
State Municipal Series Trust:
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, 1997, 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, 1997 by
correspondence with the custodian. 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, 1997, 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
November 7, 1997
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly by Merrill
Lynch New York Municipal Bond Fund of Merrill Lynch Multi-State
Municipal Series Trust during its taxable year ended September 30,
1997 qualify as tax-exempt interest dividends for Federal income tax
purposes.
Additionally, the Fund distributed ordinary income dividends of
$.004681 per share to shareholders of record on December 17, 1996.
Please retain this information for your records.
