MERRILL LYNCH
NEW YORK
MUNICIPAL
BOND FUND
FUND LOGO
Semi-Annual Report
March 31, 1998
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.
Merrill Lynch New York
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
Merrill Lynch New York Municipal Bond Fund
March 31, 1998
TO OUR SHAREHOLDERS
The Municipal Market Environment
During the six months ended March 31, 1998, bond yields declined to
recent historic lows. While the positive combination of moderate
economic growth and low inflation has continued to support lower
interest rates, much of the recent decline in bond yields has been
driven more by the continued turmoil in Asian financial markets than
by fundamental concerns. A significant "flight-to-quality" has
benefited US assets, particularly longer maturity US Treasury bonds,
as foreign investors have sought safe haven in the relative
stability of US financial markets. Over the six months ended March
31, 1998, US Treasury bond yields declined approximately 55 basis
points (0.55%) to 5.93%. Long-term municipal revenue bonds, as
measured by the Bond Buyer Revenue Bond Index, declined over 15
basis points to end the March period at 5.43%. Tax-exempt bond
yields have not been at these levels since the mid-1970s.
Without the ability to benefit from the tax advantage inherent in
municipal bonds, foreign investors have not participated in the tax-
exempt market. Consequently, municipal bond yields have not declined
as dramatically as have taxable US Treasury securities. The increase
in new municipal bond issuance over the past six months has also
prevented the tax-exempt bond market from more closely mirroring the
yield declines exhibited by its taxable counterpart. Over the last
six months, more than $130 billion in new long-term municipal bonds
were underwritten, an increase of over 40% compared to the same
period a year earlier. As interest rates have continued to decline
in recent months, new tax-exempt bond issuance has dramatically
increased. Over $65 billion in long-term municipal securities were
issued during the last three months, an increase of over 70%
compared to the same three-month period a year earlier. During the
past month, almost $30 billion in new long-term municipal securities
were underwritten, representing an increase of nearly 70% compared
to the March 1997 level and the largest March issuance ever.
In our opinion, the recent correction in Asian financial markets has
enhanced the near-term prospects for continued low interest rates in
the United States. It is likely that the recent corrections will
result in slower US economic growth in the coming months. This
decline in growth should be generated in part by reduced US export
growth to these troubled economies. Additionally, US inflation
should be positively impacted by lower import prices as Asian
producers lower the cost of their goods in order to accelerate their
struggling economies. More important, it is likely that, barring a
dramatic and unexpected resurgence of domestic inflation, the
Federal Reserve Board will be unwilling to raise interest rates
until the full impact of the Asian situation can be established. It
is also likely that at least some of the recent economic strength
seen in the United States will be reversed in the coming months. A
particularly mild winter has been partially responsible for a strong
housing sector, as well as for other parts of the construction
industry. This past winter's economic strength may have borrowed
from future quarters' growth. This recent strong trend may not be
sustainable and may lead to weaker construction growth later in the
year. Additionally, strong economic growth in 1997 and the increased
use of electronic tax filings has resulted in larger and earlier
Federal and state income tax refunds to many individuals. These
refunds appear to have supported strong consumer spending in recent
months which again may be borrowing against weaker consumer spending
later this year.
All these factors suggest that over the near term, interest rates,
including tax-exempt bond yields, are unlikely to rise by any
appreciable amount. It is probable that municipal bond yields will
remain under some relative pressure because of continued strong new-
issue supply. However, the recent pace of municipal bond issuance is
unlikely to escalate. Continued increases in bond issuance will
require lower and lower tax-exempt bond yields to generate the
economic savings necessary for additional municipal bond
refinancings. Preliminary estimates of 1998 total municipal bond
issuance are presently in the $195 billion--$220 billion range.
These estimates suggest that recent supply pressures are likely to
abate somewhat next year, or at least exert only minimal technical
pressures during 1998. Additionally, municipal bond investors
received approximately $30 billion during the March quarter in
coupon payments, bond maturities and proceeds from early
redemptions, which should serve to intensify investor demand in the
near future. With tax-exempt bond yields at already attractive yield
ratios relative to US Treasury bonds (approximately 90% at the end
of March) any further pressure on the municipal bond market may well
represent an attractive investment opportunity.
Merrill Lynch New York Municipal Bond Fund
March 31, 1998
Portfolio Strategy
For the six months ended March 31, 1998, we strived to maintain an
attractive level of tax-exempt income and, at the same time, to
achieve an above-average total return. During the period, our
portfolio strategy was to remain fully invested. We also took
advantage of changes in the market to restructure the Fund to a more
aggressive position, as well as using market rallies to sell our
more aggressively structured bonds. While the overall trend in
interest rates for the period was down, market volatility created a
trading range. Interest rates fluctuated rapidly for the six-month
period as opinions changed on inflationary trends and whether the
Federal Reserve Board was going to raise interest rates. Overall,
the Fund was positioned to benefit from a decline in interest rates,
since we believed that inflation was not a problem. As a result of
this strategy, the Fund had an above-average total return and yield
relative to the industry average of similar tax-exempt funds for the
six-month period ended March 31, 1998.
Looking ahead, we believe that interest rates will continue to
fluctuate until a sustained slowdown in the US economy drives
interest rates lower. Therefore, we will seek to take advantage of
any market setbacks in an effort to enhance the Fund's total return
and extend its duration.
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
Senior Vice President
(Roberto Roffo)
Roberto Roffo
Vice President and Portfolio Manager
May 5, 1998
Merrill Lynch New York Municipal Bond Fund
March 31, 1998
PERFORMANCE DATA
About Fund Performance
Investors are 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. (There is no initial
sales charge for automatic share conversions.)
* 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).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Average Annual Total
Return" 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>
Recent Performance Results*
<CAPTION>
Ten Years/ Standardized
12 Month 3 Month Since Inception 30-Day Yield
Total Return Total Return Total Return As of 3/31/98
<S> <C> <C> <C> <C>
ML New York Municipal Bond Fund Class A Shares +11.62% +1.07% + 95.89% 4.20%
ML New York Municipal Bond Fund Class B Shares +11.06 +0.94 +100.35 3.87
ML New York Municipal Bond Fund Class C Shares +10.94 +0.83 + 27.73 3.77
ML New York Municipal Bond Fund Class D Shares +11.51 +0.95 + 29.88 4.11
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the payable date. The
Fund's ten-year/inception dates are: Class A Shares, 10/25/88; Class
B Shares, ten years ended 3/31/98; and Class C and Class D Shares,
10/21/94.
</TABLE>
Merrill Lynch New York Municipal Bond Fund
March 31, 1998
PERFORMANCE DATA (concluded)
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/98 +11.62% +7.15%
Five Years Ended 3/31/98 + 5.60 +4.74
Inception (10/25/88)
through 3/31/98 + 7.39 +6.93
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/98 +11.06% +7.06%
Five Years Ended 3/31/98 + 5.07 +5.07
Ten Years Ended 3/31/98 + 7.20 +7.20
[FN]
*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 3/31/98 +10.94% +9.94%
Inception (10/21/94)
through 3/31/98 + 7.37 +7.37
[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*
Year Ended 3/31/98 +11.51% +7.05%
Inception (10/21/94)
through 3/31/98 + 7.89 +6.62
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
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
RAN Revenue Anticipation Notes
RITR Residual Interest Trust Receipts
UT Unlimited Tax
VRDN Variable Rate Demand Notes
Merrill Lynch New York Municipal Bond Fund
March 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <S> <C> <S> <C>
New York--99.0%
AAA Aaa $ 4,205 Albany County, New York, Airport Authority, Airport Revenue Bonds, RITR, AMT,
Series RI-97-7, 7.77% due 12/15/2023 (g)(h) $ 4,909
A A2 10,000 Battery Park City Authority, New York, Revenue Refunding Bonds,
Junior--Series A, 5.80% due 11/01/2022 10,512
AAA Aaa 1,300 Buffalo, New York, Sewer Authority Revenue Bonds, Series F, 6% due 7/01/2013 (b) 1,461
AA+ Aa1 5,700 Hornell, New York, IDA, IDR (Crowley Foods, Inc.), 7.75% due 12/01/2016 6,091
Metropolitan Transportation Authority, New York, Commuter Facilities Revenue
Bonds, RITR (h):
AAA Aaa 5,235 Series 9, 8.07% due 7/01/2026 6,249
AAA Aaa 3,000 Series 20, 8.37% due 7/01/2017 (c) 3,611
Metropolitan Transportation Authority, New York, Transportation Facilities
Revenue Refunding Bonds, Series A (c):
AAA Aaa 1,000 4.75% due 7/01/2021 940
AAA Aaa 7,500 4.75% due 7/01/2024 7,019
AAA Aaa 2,950 Monroe County, New York, Airport Authority Revenue Bonds (Greater Rochester
International Airport), AMT, 7.25% due 1/01/2009 (c) 3,149
BBB+ Baa2 9,030 Monroe County, New York, COP, 8.05% due 1/01/2011 9,610
A1 NR* 2,800 New York City, New York, City Housing Development Corporation, Residential
Mortgage Revenue Bonds (East 17th Street), VRDN, Series A, 3.70% due
1/01/2023 (a) 2,800
New York City, New York, IDA, Civic Facilities Revenue Bonds:
A1+ NR* 900 (National Audobon Society), VRDN, 3.65% due 12/01/2014 (a) 900
NR* NR* 2,000 (New York Blood Center Inc. Project), 7.20% due 5/01/2004 (d) 2,298
NR* NR* 6,895 (New York Blood Center Inc. Project), 7.25% due 5/01/2004 (d) 7,941
AAA Aaa 4,690 (USTA National Tennis Center Project), 6.60% due 11/15/2011 (g) 5,310
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 2,124
BB Ba2 5,300 (Northwest Airlines Inc.), 6% due 6/01/2027 5,555
A A 5,000 RITR, Series RI-5, 7.645% due 1/01/2024 (h) 5,663
New York City, New York, Municipal Water Finance Authority, Water and
Sewer System Revenue Bonds:
A- A2 6,960 RITR, Series 21, 7.17% due 6/15/2029 (h) 7,630
A1 VMIG1++ 14,600 RITR, Series RI-2, 7.575% due 6/15/2025 (h) 17,940
A1+ VMIG1++ 3,000 VRDN, Series C, 3.70% due 6/15/2023 (a)(b) 3,000
</TABLE>
Merrill Lynch New York Municipal Bond Fund
March 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <S> <C> <S> <C>
New York (continued)
SP1+ MIG1++ $ 600 New York City, New York, RAN, UT, Series A, 4.50% due 6/30/1998 $ 601
BBB+ A3 28,250 New York City, New York, Refunding, UT, Series F, 5% due 8/01/2023 26,998
New York City, New York, Transitional Finance Authority, Future Tax Revenue
Bonds, Second Series B:
AA Aa3 13,000 4.75% due 11/15/2023 12,141
AA Aa3 14,000 4.50% due 11/15/2027 12,488
New York State Dormitory Authority Revenue Bonds:
AAA Aaa 6,500 (Consolidated City University System), Series A, 5.625% due 7/01/2016 (g) 7,039
A1+ VMIG1++ 1,500 (Cornell University), VRDN, Series B, 3.65% due 7/01/2025 (a) 1,500
AAA Aaa 5,000 (Mental Health Services Facilities), Series B, 5% due 2/15/2028 (g) 4,812
AAA Aaa 30,000 (New York University), Series A, 5.75% due 7/01/2027 (c) 33,337
AAA Aaa 10,000 Refunding (New York and Presbyterian Hospitals), 4.75% due 8/01/2027 (e) 9,312
AAA Aaa 67,000 Refunding, Series A, 5.50% due 8/15/2036 (e) 8,794
A- A3 9,000 Refunding (State University Educational Facilities), Series B, 7%
due 5/15/2016 9,623
AA Aa 5,150 Refunding (Vassar College), 5% due 7/01/2025 5,008
AAA Aaa 7,000 (Sloan Kettering Memorial Cancer Center), 5.50% due 7/01/2023 (c) 7,425
AAA Aaa 3,500 (State University Educational Facilities), Series A, 5.50% due 5/15/2019 (g) 3,722
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) 8,317
AAA Aaa 3,200 RITR, Series 19, 8.07% due 8/15/2020 (h) 3,752
AAA Aaa 4,455 New York State Energy Research and Development Authority, Gas Facilities
Revenue Bonds, RITR, Series 9, 6.87% due 1/01/2021 (c)(h) 4,717
NR* NR* 500 New York State Energy Research and Development Authority, PCR (Niagara Mohawk
Corporation Project), VRDN, Series A, 3.65% due 3/01/2027 (a) 500
New York State Environmental Facilities Corporation, PCR (State Water
Revolving Fund), Series E:
A+ Aa2 2,545 6.875% due 6/15/2004 (d) 2,931
A+ Aa2 1,705 6.875% due 6/15/2014 1,932
A A2 5,585 New York State, GO, 5% due 10/15/2027 5,425
New York State Local Government Assistance Corporation, Refunding (c):
AAA Aaa 3,965 Series B, 4.875% due 4/01/2020 3,802
AAA Aaa 10,000 Series E, 5% due 4/01/2021 10,000
New York State Medical Care Facilities Finance Agency Revenue Bonds
(Mental Health Services Facilities):
A- A3 825 Series B, 7.625% due 8/15/2001 (d) 929
A- A3 365 Series B, 7.625% due 8/15/2017 408
AAA Aaa 695 Series C, 7.30% due 8/15/2001 (d) 776
A- A3 375 Series C, 7.30% due 2/15/2021 415
A- A3 1,405 Series D, 7.40% due 2/15/2018 1,574
NR* Aaa 3,000 New York State Mortgage Agency Revenue Bonds, RITR, AMT, Series 24,
7.32% due 10/01/2028 (h) 3,165
</TABLE>
Merrill Lynch New York Municipal Bond Fund
March 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <S> <C> <S> <C>
New York (concluded)
NR* Aa2 $17,705 New York State Power Authority, Revenue and General Purpose Bonds,
Series Y, 6.75% due 1/01/2018 $ 19,060
BBB+ Baa1 7,840 New York State Thruway Authority, Service Contract, Local Highway and
Bridge Revenue Refunding Bonds, 5% due 4/01/2017 7,533
New York State Urban Development Corporation Revenue Bonds:
BBB+ Baa1 6,000 (Correctional Facilities--Service Contract), Series A, 5% due 1/01/2028 5,697
BBB+ Baa1 1,685 Refunding (Clarkson Center Advanced Materials), 5.50% due 1/01/2020 1,753
AAA Aaa 8,470 Refunding (Correctional Facilities), Series A, 5.50% due 1/01/2014 (e) 9,013
BBB+ Baa1 9,475 Refunding (State Facilities), 5.70% due 4/01/2020 10,066
BBB+ Baa1 3,500 Refunding (University Facility Grant), 5.50% due 1/01/2019 3,637
AAA Aaa 1,000 North Country, New York, Development Authority, Solid Waste Management System
Revenue Refunding Bonds, 6% due 5/15/2015 (g) 1,115
Port Authority of New York and New Jersey, Consolidated Bonds:
AA- A1 7,995 76th Series, AMT, 6.50% due 11/01/2026 8,592
AA- A1 9,000 111th Series, 5% due 10/01/2027 8,743
AA- A1 6,000 111th Series, 5% due 10/01/2032 5,799
AAA Aaa 4,000 Port Authority of New York and New Jersey, RITR, AMT, Series FR-108, 7.485% due
1/15/2017 (g)(h) 4,540
Port Authority of New York and New Jersey, Special Obligation Revenue Bonds
(Versatile Structure Obligation), VRDN (a):
A1+ VMIG1++ 2,700 Series 3, 3.65% due 6/01/2020 2,700
A1+ VMIG1++ 3,500 Series 5, 3.65% due 8/01/2024 3,500
Suffolk County, New York, Public Improvement, Refunding, UT, Series D (b):
AAA Aaa 1,055 4.75% due 11/01/2019 991
AAA Aaa 915 4.75% due 11/01/2020 858
Triborough Bridge and Tunnel Authority, New York, General Purpose Revenue Bonds:
A+ Aa3 4,000 Refunding, Series Y, 6.125% due 1/01/2021 4,583
AAA Aaa 6,000 Refunding, Series Y, 6.125% due 1/01/2021 (f) 6,946
A+ Aa3 5,000 Series X, 6.50% due 1/01/2019 5,432
Total Investments (Cost--$396,082)--99.0% 416,713
Other Assets Less Liabilities--1.0% 4,067
--------
Net Assets--100.0% $420,780
========
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at March 31, 1998.
(b)FGIC Insured.
(c)MBIA Insured.
(d)Prerefunded.
See Notes to Financial Statements.
(e)AMBAC Insured.
(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 March 31, 1998.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
</TABLE>
Merrill Lynch New York Municipal Bond Fund
March 31, 1998
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of March 31, 1998
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$396,081,717) (Note 1a) $416,713,396
Cash 96,641
Receivables:
Securities sold $ 39,454,173
Interest 6,357,952
Beneficial interest sold 163,546 45,975,671
------------
Prepaid registration fees and other assets (Note 1e) 96,889
------------
Total assets 462,882,597
------------
Liabilities: Payables:
Securities purchased 40,653,025
Beneficial interest redeemed 584,819
Dividends to shareholders (Note 1f) 420,047
Investment adviser (Note 2) 193,316
Distributor (Note 2) 119,731 41,970,938
------------
Accrued expenses and other liabilities 132,145
------------
Total liabilities 42,103,083
------------
Net Assets: Net assets $420,779,514
============
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited
Consist of: number of shares authorized $ 150,721
Class B Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 2,177,896
Class C Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 48,920
Class D Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 1,228,647
Paid-in capital in excess of par 395,767,187
Undistributed realized capital gains on investments--net (Note 5) 774,464
Unrealized appreciation on investments--net 20,631,679
------------
Net assets $420,779,514
============
Net Asset Class A--Based on net assets of $17,586,822 and 1,507,212 shares
Value: of beneficial interest outstanding $ 11.67
============
Class B--Based on net assets of $254,174,514 and 21,778,960 shares
of beneficial interest outstanding $ 11.67
============
Class C--Based on net assets of $5,710,741 and 489,203 shares
of beneficial interest outstanding $ 11.67
============
Class D--Based on net assets of $143,307,437 and 12,286,467 shares
of beneficial interest outstanding $ 11.66
============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch New York Municipal Bond Fund
March 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended
March 31, 1998
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 12,657,803
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 1,205,689
Account maintenance and distribution fees--Class B (Note 2) 668,540
Transfer agent fees--Class B (Note 2) 73,994
Account maintenance fees--Class D (Note 2) 71,689
Accounting services (Note 2) 42,545
Transfer agent fees--Class D (Note 2) 33,320
Professional fees 30,495
Registration fees (Note 1e) 29,969
Printing and shareholder reports 22,111
Account maintenance and distribution fees--Class C (Note 2) 16,591
Custodian fees 13,923
Trustees' fees and expenses 12,776
Transfer agent fees--Class A (Note 2) 5,136
Pricing fees 4,916
Transfer agent fees--Class C (Note 2) 1,555
Other 5,956
------------
Total expenses 2,239,205
------------
Investment income--net 10,418,598
------------
Realized & Realized gain on investments--net 12,746,180
Unrealized Change in unrealized appreciation on investments--net (4,722,003)
Gain (Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 18,442,775
(Notes 1b, 1d & 3): ============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch New York Municipal Bond Fund
March 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
March 31, September 30,
Increase (Decrease) in Net Assets: 1998 1997
<S> <S> <C> <C>
Operations: Investment income--net $ 10,418,598 $ 24,134,085
Realized gain on investments--net 12,746,180 10,472,445
Change in unrealized appreciation on investments--net (4,722,003) 4,297,287
------------ ------------
Net increase in net assets resulting from operations 18,442,775 38,903,817
------------ ------------
Dividends & Investment income--net:
Distributions to Class A (564,406) (1,209,169)
Shareholders Class B (6,144,650) (16,235,504)
(Note 1f): Class C (124,165) (207,495)
Class D (3,585,377) (6,481,917)
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 (10,418,598) (24,346,845)
------------ ------------
Beneficial Net decrease in net assets derived from beneficial
Interest interest transactions (33,844,180) (91,594,619)
Transactions ------------ ------------
(Note 4):
Net Assets: Total decrease in net assets (25,820,003) (77,037,647)
Beginning of period 446,599,517 523,637,164
------------ ------------
End of period $420,779,514 $446,599,517
============ ============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch New York Municipal Bond Fund
March 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
Class A
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
March 31, For the Year Ended September 30,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.46 $ 11.12 $ 11.04 $ 10.88 $ 12.46
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .30 .60 .59 .61 .64
Realized and unrealized gain (loss) on
investments--net .21 .34 .08 .16 (1.25)
--------- --------- --------- --------- ---------
Total from investment operations .51 .94 .67 .77 (.61)
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net (.30) (.60) (.59) (.61) (.64)
Realized gain on investments--net -- --++ -- -- (.11)
In excess of realized gain on
investments--net -- -- -- -- (.22)
--------- --------- --------- --------- ---------
Total dividends and distributions (.30) (.60) (.59) (.61) (.97)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 11.67 $ 11.46 $ 11.12 $ 11.04 $ 10.88
========= ========= ========= ========= =========
Total Investment Based on net asset value per share 4.45%+++ 8.69% 6.19% 7.37% (5.17%)
Return:** ========= ========= ========= ========= =========
Ratios to Average Expenses .67%* .65% .66% .67% .63%
Net Assets: ========= ========= ========= ========= =========
Investment income--net 5.11%* 5.30% 5.31% 5.67% 5.52%
========= ========= ========= ========= =========
Supplemental Net assets, end of period
Data: (in thousands) $ 17,587 $ 22,301 $ 21,762 $ 23,304 $ 28,301
========= ========= ========= ========= =========
Portfolio turnover 76.31% 97.22% 114.78% 181.21% 107.96%
========= ========= ========= ========= =========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
+++Aggregate total investment return.
++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch New York Municipal Bond Fund
March 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class B
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
March 31, For the Year Ended September 30,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.46 $ 11.12 $ 11.04 $ 10.88 $ 12.46
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .27 .54 .54 .56 .58
Realized and unrealized gain (loss) on
investments--net .21 .34 .08 .16 (1.25)
-------- -------- -------- -------- --------
Total from investment operations .48 .88 .62 .72 (.67)
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.27) (.54) (.54) (.56) (.58)
Realized gain on investments--net -- --++ -- -- (.11)
In excess of realized gain on
investments--net -- -- -- -- (.22)
-------- -------- -------- -------- --------
Total dividends and distributions (.27) (.54) (.54) (.56) (.91)
-------- -------- -------- -------- --------
Net asset value, end of period $ 11.67 $ 11.46 $ 11.12 $ 11.04 $ 10.88
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 4.18%+++ 8.14% 5.66% 6.82% (5.66%)
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses 1.18%* 1.16% 1.16% 1.18% 1.14%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 4.60%* 4.79% 4.80% 5.16% 5.02%
======== ======== ======== ======== ========
Supplemental Net assets, end of period
Data: (in thousands) $254,175 $279,754 $403,403 $564,963 $645,341
======== ======== ======== ======== ========
Portfolio turnover 76.31% 97.22% 114.78% 181.21% 107.96%
======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
+++Aggregate total investment return.
++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch New York Municipal Bond Fund
March 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class C
For the For the
Six Period
The following per share data and ratios have been derived Months Oct. 21,
from information provided in the financial statements. Ended For the Year Ended 1994++ to
March 31, September 30, Sept. 30,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.47 $ 11.12 $ 11.04 $ 10.76
Operating -------- -------- -------- --------
Performance: Investment income--net .26 .53 .52 .51
Realized and unrealized gain on investments--net .20 .35 .08 .28
-------- -------- -------- --------
Total from investment operations .46 .88 .60 .79
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.26) (.53) (.52) (.51)
Realized gain on investments--net -- --++++ -- --
-------- -------- -------- --------
Total dividends and distributions (.26) (.53) (.52) (.51)
-------- -------- -------- --------
Net asset value, end of period $ 11.67 $ 11.47 $ 11.12 $ 11.04
======== ======== ======== ========
Total Investment Based on net asset value per share 4.04%+++ 8.13% 5.55% 7.57%+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses 1.28%* 1.26% 1.27% 1.27%*
Net Assets: ======== ======== ======== ========
Investment income--net 4.49%* 4.69% 4.70% 4.91%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 5,711 $ 5,034 $ 4,175 $ 3,556
Data: ======== ======== ======== ========
Portfolio turnover 76.31% 97.22% 114.78% 181.21%
======== ======== ======== ========
<FN>
*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
March 31, 1998
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class D
For the For the
Six Period
The following per share data and ratios have been derived Months Oct. 21,
from information provided in the financial statements. Ended For the Year Ended 1994++ to
March 31, September 30, Sept. 30,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.46 $ 11.11 $ 11.03 $ 10.76
Operating -------- -------- -------- --------
Performance: Investment income--net .29 .58 .58 .56
Realized and unrealized gain on investments--net .20 .35 .08 .27
-------- -------- -------- --------
Total from investment operations .49 .93 .66 .83
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.29) (.58) (.58) (.56)
Realized gain on investments--net -- --++++ -- --
-------- -------- -------- --------
Total dividends and distributions (.29) (.58) (.58) (.56)
-------- -------- -------- --------
Net asset value, end of period $ 11.66 $ 11.46 $ 11.11 $ 11.03
======== ======== ======== ========
Total Investment Based on net asset value per share 4.30%+++ 8.68% 6.09% 7.99%+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses .77%* .75% .76% .76%*
Net Assets: ======== ======== ======== ========
Investment income--net 5.00%* 5.20% 5.21% 5.46%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $143,307 $139,511 $ 94,297 $ 2,572
Data: ======== ======== ======== ========
Portfolio turnover 76.31% 97.22% 114.78% 181.21%
======== ======== ======== ========
<FN>
*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
March 31, 1998
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. These unaudited
financial statements reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of the results
for the interim period presented. All such adjustments are of a
normal recurring nature. The Fund offers four classes of shares
under the Merrill Lynch Select Pricing SM 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.
* Financial futures contracts--The Fund may purchase or sell
financial 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.
Merrill Lynch New York Municipal Bond Fund
March 31, 1998
NOTES TO FINANCIAL STATEMENTS (continued)
(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 Distribution
Maintenance 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 six months ended March 31, 1998, MLFD earned underwriting
discounts and direct commissions 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 $199 $1,816
Class D $413 $5,177
For the six months ended March 31, 1998, MLPF&S received contingent
deferred sales charges of $162,207 and $130 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 six months ended March 31, 1998 were $321,839,111 and
$372,808,717, respectively.
Net realized gains for the six months ended March 31, 1998 and net
unrealized gains as of March 31, 1998 were as follows:
Merrill Lynch New York Municipal Bond Fund
March 31, 1998
NOTES TO FINANCIAL STATEMENTS (continued)
Realized Unrealized
Gains Gains
Long-term investments $12,746,180 $20,631,679
----------- -----------
Total $12,746,180 $20,631,679
=========== ===========
As of March 31, 1998, net unrealized appreciation for Federal income
tax purposes aggregated $20,631,679, of which $21,351,565 related to
appreciated securities and $719,886 related to depreciated
securities. The aggregate cost of investments at March 31, 1998 for
Federal income tax purposes was $396,081,717.
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest
transactions was $33,844,180 and $91,594,619 for the six months
ended March 31, 1998 and for the year ended September 30, 1997,
respectively.
Transactions in shares of beneficial interest for each class were as
follows:
Class A Shares for the
Six Months Ended Dollar
March 31, 1998 Shares Amount
Shares sold 162,691 $ 1,894,665
Shares issued to share-
holders in reinvestment
of dividends 31,792 370,193
------------- -------------
Total issued 194,483 2,264,858
Shares redeemed (632,969) (7,380,404)
------------- -------------
Net decrease (438,486) $ (5,115,546)
============= =============
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 B Shares for the Six Months Dollar
Ended March 31, 1998 Shares Amount
Shares sold 768,780 $ 8,975,525
Shares issued to share-
holders in reinvestment
of dividends 266,575 3,104,182
------------- -------------
Total issued 1,035,355 12,079,707
Automatic conversion of
shares (814,091) (9,484,019)
Shares redeemed (2,847,460) (33,135,931)
------------- -------------
Net decrease (2,626,196) $ (30,540,243)
============= =============
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 C Shares for the Six Months Dollar
Ended March 31, 1998 Shares Amount
Shares sold 118,088 $ 1,375,192
Shares issued to share-
holders in reinvestment
of dividends 8,942 104,206
------------- -------------
Total issued 127,030 1,479,398
Shares redeemed (76,921) (895,223)
------------- -------------
Net increase 50,109 $ 584,175
============= =============
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
============= =============
Merrill Lynch New York Municipal Bond Fund
March 31, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
Class D Shares for the Six Months Dollar
Ended March 31, 1998 Shares Amount
Shares sold 1,775,724 $ 20,809,716
Automatic conversion of
shares 814,296 9,484,019
Shares issued to share-
holders in reinvestment
of dividends 127,444 1,483,655
------------- -------------
Total issued 2,717,464 31,777,390
Shares redeemed (2,609,106) (30,549,956)
------------- -------------
Net increase 108,358 $ 1,227,434
============= =============
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
============= =============
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.
Merrill Lynch New York Municipal Bond Fund
March 31, 1998
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 & 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
