MERRILL LYNCH
NEW YORK
MUNICIPAL
BOND FUND
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
March 31, 1999
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
TO OUR SHAREHOLDERS
The Municipal Market Environment
During the six-month period ended March 31, 1999, long-term tax-exempt revenue
bond yields rose slightly. However, long-term US Treasury bond yields were under
significant pressure throughout the March period. Investors became increasingly
concerned that the strong growth the US economy displayed during the fourth
quarter in 1998 would continue into the first half of 1999. Continued strong US
equity market performance also reduced investor interest in long-term
fixed-income products. Furthermore, foreign economic growth, while clearly not
expanding, appears to have stabilized. This reduced much of the strong "flight
to quality" benefit the US Treasury market had enjoyed in recent quarters. These
factors helped push US Treasury bond yields higher throughout the period. US
Treasury bond yields rose 65 basis points (0.65%) to end the March period at
5.625%. Long-term municipal revenue bond yields rose slightly more than 10 basis
points to end the March period at 5.29% as measured by the Bond Buyer Revenue
Bond Index.
The relative stability of the municipal bond market in recent months was largely
the result of a return to a strong technical position within the tax-exempt
market. For much of 1998, new long-term municipal bond issuance was
significantly above recent historic trends. Additionally, the strong demand
exerted by world equity markets also sapped much of the demand for
tax-advantaged products. However, in recent months, a much stronger
supply/demand relationship has developed.
Over the last 12 months, nearly $275 billion in new long-term municipal bonds
was issued, an increase of approximately 10% compared to the same period a year
ago. As interest rates declined in the recent quarters, it has become
increasingly difficult for municipalities to generate the economic savings
necessary for additional tax-free financings. Consequently, the pace of new bond
issuance slowed in recent quarters. During the six months ended March 31, 1999,
more than $125 billion in new long-term municipal securities was underwritten, a
decrease of 6% compared to the same six-month period a year ago. During the
quarter ended March 31, 1999, approximately $60 billion in new long-term
tax-exempt bonds was issued, a decline of almost 20% compared to the quarter
ended March 31, 1998.
Additionally, in January and February, tax-exempt bond holders received over $40
billion from coupon payments, bond maturities and proceeds from early bond
redemptions. Consequently, retail investor demand has been strong in recent
months, easily matching, if not at times exceeding, available supply. We will
monitor this trend closely in the coming months to determine if the supply
pressures exerted in 1998 are abating and fostering a more balanced
supply/demand environment for 1999.
The recent relative outperformance of the municipal bond market has resulted in
a decline in their recent historic high yield ratios. As recently as the end of
1998, long-term, A-rated municipal revenue bond yields were in excess of 100% of
comparable US Treas ury bond yields. At March 31, 1999, municipal bond yield
ratios were approximately 95% of their taxable counterparts, still well above
their recent historic average. During 1997, tax-exempt bond yield ratios
averaged 84%. Should the current positive technical environment in municipal
securities continue to improve, it is likely that tax-exempt bond yield ratios
will return to more historic levels.
Looking ahead, the direction and intensity of the next move in interest rates is
difficult to predict. In recent years, US bond yields tended to reach their
annual peak sometime in April and move downward for the remainder of the year.
However, such trends have
1
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
been predicated on subsequent declines in US economic activity. Currently, there
appears to be little indication of significant economic weakness going forward.
On the other hand, by nearly every measure, inflation is well contained. Future
indicators of inflation, such as the prices of gold and other commodities, are
giving little evidence of any significant inflationary increase. Additionally,
inflation-adjusted real rates of return are historically attractive to long-term
investors. These factors suggest that fixed-income bond yields may trade in a
relatively narrow range, centered around current levels, for a protracted period
of time. Should the US economy weaken later this year, it is likely that bond
yields will decline as they have in recent years.
Portfolio Strategy
For the six months ended March 31, 1999, we managed the Fund with the intention
of sustaining an attractive level of tax-exempt income while achieving an
above-average total return. During the prior six-month period, we had structured
the Fund aggressively to seek to take advantage of a declining interest rate
environment. These strategies proved correct as interest rates declined to
historic lows. Late in the period, we shifted our strategy because we believed
interest rates had declined excessively relative to the strength of the US
economy. Therefore, we sold longer maturity bonds and bought intermediate
maturity bonds with similar coupons in an effort to offset any volatility
associated with a rising interest rate environment while keeping the Fund's
income stream relatively constant. This strategy benefited the Fund as interest
rates rose. We expect to maintain the Fund's position in intermediate-term bonds
until there are signs of a sustained slowdown in economic conditions or interest
rates rise to a point where they are considered undervalued relative to economic
conditions.
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/ Terry K. Glenn
Terry K. Glenn
President and Trustee
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Roberto Roffo
Roberto Roffo
Vice President and Portfolio Manager
May 13, 1999
================================================================================
After more than 20 years of service, Arthur Zeikel recently retired as Chairman
of Merrill Lynch Asset Management, L.P. (MLAM). Mr. Zeikel served as President
of MLAM from 1977 to 1997 and as Chairman since December 1997. Mr. Zeikel is one
of the country's most respected leaders in asset management and presided over
the growth of Merrill Lynch's asset management business. During his tenure,
client assets under management grew from $300 million to over $500 billion. Mr.
Zeikel will remain on Merrill Lynch New York Municipal Bond Fund's Board of
Trustees. We are pleased to announce that Terry K. Glenn has been elected
President and Trustee of the Fund. Mr. Glenn has held the position of Executive
Vice President of MLAM since 1983.
Mr. Zeikel's colleagues at MLAM join the Fund's Board of Trustees in wishing him
well in his retirement from Merrill Lynch and are pleased that he will continue
as a member of the Fund's Board of Trustees.
================================================================================
2
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
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:
o 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.
o 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 automati cally convert to Class D Shares after
approximately 10 years. (There is no initial sales charge for automatic
share conversions.)
o 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.
o 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 "Recent Performance Results" and
"Average Annual Total Return" tables assume reinvestment of all dividends
and capital gains dis tributions 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 share holders.
Recent Performance Results*
<TABLE>
<CAPTION>
Ten Years/ Standardized
12 Month 3 Month Since Inception 30-Day Yield
Total Return Total Return Total Return As of 3/31/99
=============================================================================================================
<S> <C> <C> <C> <C>
ML New York Municipal Bond Fund Class A Shares +5.28% +0.56% +104.49% 4.11%
- -------------------------------------------------------------------------------------------------------------
ML New York Municipal Bond Fund Class B Shares +4.74 +0.35 + 94.41 3.77
- -------------------------------------------------------------------------------------------------------------
ML New York Municipal Bond Fund Class C Shares +4.64 +0.33 + 33.66 3.67
- -------------------------------------------------------------------------------------------------------------
ML New York Municipal Bond Fund Class D Shares +5.17 +0.45 + 36.59 4.01
=============================================================================================================
</TABLE>
* 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/since inception periods are
Class A & Class B Shares, for the ten years ended 3/31/99 and Class C &
Class D Shares, from 10/21/94 to 3/31/99.
3
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
PERFORMANCE DATA (concluded)
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 3/31/99 +5.28% +1.06%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/99 +6.51 +5.64
- --------------------------------------------------------------------------------
Ten Years Ended 3/31/99 +7.42 +6.98
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 3/31/99 +4.74% +0.84%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/99 +5.97 +5.97
- --------------------------------------------------------------------------------
Ten Years Ended 3/31/99 +6.87 +6.87
- --------------------------------------------------------------------------------
* 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 3/31/99 +4.64% +3.66%
- --------------------------------------------------------------------------------
Inception (10/21/94) through 3/31/99 +6.75 +6.75
- --------------------------------------------------------------------------------
* 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 3/31/99 +5.17% +0.96%
- --------------------------------------------------------------------------------
Inception (10/21/94) through 3/31/99 +7.27 +6.29
- --------------------------------------------------------------------------------
* 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)
GO General Obligation Bonds
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
RITR Residual Interest Trust Receipts
VRDN Variable Rate Demand Notes
4
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- -----------------------------------------------------------------------------------------------------
New York--96.2%
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A A2 $10,000 Battery Park City Authority, New York, Revenue Refunding
Bonds, Junior-Lien, Series A, 5.80% due 11/01/2022 $ 10,640
- -----------------------------------------------------------------------------------------------------
AAA Aaa 1,300 Buffalo, New York, Sewer Authority, Revenue Refunding Bonds,
Series F, 6% due 7/01/2013 (b) 1,475
- -----------------------------------------------------------------------------------------------------
Hempstead Town, New York, IDA, Civic Facilities Revenue Bonds
(Adelphi University Civic Facility):
A- NR* 1,395 5.25% due 2/01/2010 1,453
A- NR* 1,000 5.25% due 2/01/2011 1,037
A- NR* 1,540 5.25% due 2/01/2012 1,591
A- NR* 625 5.25% due 2/01/2013 642
- -----------------------------------------------------------------------------------------------------
NR* Aa2 5,700 Hornell, New York, IDA, IDR (Crowley Foods, Inc. Facility),
7.75% due 12/01/2016 6,039
- -----------------------------------------------------------------------------------------------------
Long Island Power Authority, New York, Electric System
Revenue Bonds, Series A:
AAA Aaa 5,000 5.50% due 12/01/2023 (c) 5,255
A- Baa1 5,000 5.50% due 12/01/2029 5,137
AAA Aaa 17,300 5.50% due 12/01/2029 (c) 17,847
- -----------------------------------------------------------------------------------------------------
Long Island Power Authority, New York, Electric System
Revenue Bonds, VRDN (a):
A1+ VMIG1+ 5,700 Sub-Series 5, 3% due 5/01/2033 5,700
A1+ VMIG1 + 300 Sub-Series 7, 3.05% due 4/01/2025 (c) 300
- -----------------------------------------------------------------------------------------------------
AAA Aaa 10,000 Metropolitan Transportation Authority, New York, Commuter
Facilities Revenue Bonds, Series C-1, 5.375% due 7/01/2027(b) 10,313
- -----------------------------------------------------------------------------------------------------
AAA Aaa 6,250 Metropolitan Transportation Authority, New York, Commuter
Facilities Revenue Refunding Bonds, Series B, 4.75% due
7/01/2026 (b) 5,894
- -----------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority, New York, Transit
Facilities Revenue Bonds:
AAA Aaa 1,900 Series A, 6.10% due 7/01/2006 (d)(g) 2,170
AAA Aaa 2,000 Series C-1, 5.50% due 7/01/2022 (b) 2,095
- -----------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority, New York, Transit
Facilities Revenue Refunding Bonds:
AAA Aaa 1,000 Series A, 4.75% due 7/01/2021 (c) 951
AAA Aaa 10,000 Series B, 4.75% due 7/01/2026 (b) 9,431
AAA Aaa 11,000 Series C, 4.75% due 7/01/2016 (g) 10,734
- -----------------------------------------------------------------------------------------------------
AA Aa2 7,500 Municipal Assistance Corporation for New York City, New York,
Revenue Refunding Bonds, Series O, 5.25% due 7/01/2007 8,011
- -----------------------------------------------------------------------------------------------------
New York City, New York, GO, Refunding:
A- A3 3,300 Series B, 5.375% due 8/01/2022 3,353
A- A3 5,000 Series F, 5.25% due 8/01/2017 5,053
- -----------------------------------------------------------------------------------------------------
A- A3 10,190 New York City, New York, GO, Series H, 5.25% due 3/15/2011 10,584
- -----------------------------------------------------------------------------------------------------
New York City, New York, Health and Hospital
Corporation, Revenue Refunding Bonds (Health System),
Series A (e):
AAA Aaa 3,900 5% due 2/15/2008 4,079
AAA Aaa 4,000 5.125% due 2/15/2014 4,092
- -----------------------------------------------------------------------------------------------------
New York City, New York, IDA, Civic Facilities Revenue Bonds:
BBB NR* 1,000 (College of Aeronautics Project), 5.45% due 5/01/2018 1,021
BBB NR* 3,200 (College of Aeronautics Project), 5.50% due 5/01/2028 3,242
NR* NR* 6,895 (New York Blood Center Inc. Project), 7.25%
due 5/01/2004 (d) 7,879
AAA Aaa 4,690 (USTA National Tennis Center Project), 6.60% due
1/15/2011 (g)(j) 5,322
- -----------------------------------------------------------------------------------------------------
New York City, New York, IDA, Special Facilities Revenue
Bonds (1990 American Airlines Inc. Project), AMT:
BBB- Baa1 2,000 5.40% due 7/01/2019 2,019
BBB- Baa1 1,500 5.40% due 7/01/2020 1,514
- -----------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- -------------------------------------------------------------------------------------------------------
New York (continued)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NR* A $ 5,000 New York City, New York, IDA, Special Facilities Revenue
Bonds, RITR, Series RI-6, 8.495% due 1/01/2024 (h) $ 5,614
- -------------------------------------------------------------------------------------------------------
NR* A1 4,960 New York City, New York, Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, RITR, Series 21, 7.87%
due 6/15/2029 (h) 5,684
- -------------------------------------------------------------------------------------------------------
New York City, New York, Municipal Water Finance
Authority, Water and Sewer System Revenue Refunding
Bonds:
AAA Aaa 10,000 Series A, 6% due 6/15/2005 (d) 11,173
AAA Aaa 3,000 Series B, 5.25% due 6/15/2029 (e) 3,039
- -------------------------------------------------------------------------------------------------------
New York City, New York, Transitional Finance Authority
Revenue Bonds (Future Tax Secured), Series B:
AAA Aaa 2,500 5% due 11/01/2008 (b) 2,636
AA Aa3 4,000 5.125% due 11/01/2014 4,107
AA Aa3 10,000 4.75% due 11/15/2023 9,445
AAA Aaa 6,250 4.75% due 11/15/2023 (b) 5,936
AA Aa3 17,000 4.50% due 11/15/2027 15,354
- -------------------------------------------------------------------------------------------------------
NR* VMIG1+ 900 New York City, New York, Transitional Finance Authority
Revenue Bonds (Future Tax Secured), VRDN, Series C, 2.95%
due 5/01/2028 (a) 900
- -------------------------------------------------------------------------------------------------------
New York State Dormitory Authority Revenue Bonds:
AAA NR* 6,500 (City University System--Consolidated), Series A, 5.625% due
7/01/2016 (g) 7,108
AAA Aaa 7,000 (Memorial Sloan Kettering Cancer Center), 5.50% due
7/01/2023 (c) 7,498
AAA Aaa 3,000 (New York University), Series A, 5.75% due 7/01/2027 (c) 3,333
AA NR* 2,565 (Saint James Mercy Hospital), 5.40% due 2/01/2038 (f) 2,615
- -------------------------------------------------------------------------------------------------------
NR* Aaa 15,000 New York State Dormitory Authority Revenue Bonds, RITR,
Series 1, 8.115% due 7/01/2027 (c)(h) 18,401
- -------------------------------------------------------------------------------------------------------
New York State Dormitory Authority Revenue Refunding Bonds:
AAA Aaa 1,000 (Hospital for Special Surgery), 5% due 2/01/2028 (c)(f) 979
AAA Aaa 2,810 (State University Athletic Facility), 5.25% due
7/01/2018 (c) 2,875
AAA NR* 3,500 (State University Educational Facilities), Series A, 5.50%
due 5/15/2019 (g) 3,743
- -------------------------------------------------------------------------------------------------------
A- Baa3 5,000 New York State Energy Research and Development Authority,
Electric Facilities Revenue Bonds (LILCO Project), AMT,
Series B, 5.30% due 11/01/2023 4,981
- -------------------------------------------------------------------------------------------------------
NR* Aaa 3,200 New York State Energy Research and Development Authority,
Facilities Revenue Bonds, RITR, Series 19, 8.82% due
8/15/2020 (h) 3,835
- -------------------------------------------------------------------------------------------------------
NR* NR* 4,455 New York State Energy Research and Development Authority, Gas
Facilities Revenue Bonds, RITR, Series 9, 7.62% due
1/01/2021 (h) 4,837
- -------------------------------------------------------------------------------------------------------
New York State Energy Research and Development Authority,
PCR, AMT:
AAA NR* 3,000 (New York State Electric and Gas Co. Project), Series A,
6.15% due 7/01/2026 (c) 3,263
A1+ NR* 300 (Niagara Power Corporation Project), VRDN, Series B, 3.15%
due 7/01/2027 (a) 300
- -------------------------------------------------------------------------------------------------------
AA- Aa1 1,705 New York State Environmental Facilities Corporation, PCR
(State Water Revolving), Series E, 6.875% due 6/15/2014 1,926
- -------------------------------------------------------------------------------------------------------
AAA Aaa 10,000 New York State Local Government Assistance Corporation,
Revenue Refunding Bonds, Series E, 5% due 4/01/2021 (c) 10,027
- -------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 5,195 New York State Local Government Assistance Corporation, VRDN,
Series D, 2.85% due 4/01/2025 (a) 5,195
- -------------------------------------------------------------------------------------------------------
New York State Medical Care Facilities, Finance Agency
Revenue Bonds, Series B:
A- A3 365 (Mental Health), 7.625% due 8/15/2017 400
AAA NR* 2,000 (Hospitals & Nursing), 6.25% due 2/15/2025 (f) 2,181
- -------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- -----------------------------------------------------------------------------------------------------
New York (concluded)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NR* A3 $ 375 New York State Medical Care Facilities, Finance Agency
Revenue Refunding Bonds, 7.30% due 2/15/2021 $ 408
- -----------------------------------------------------------------------------------------------------
NR* Aa2 995 New York State Mortgage Agency Revenue Bonds, Homeowner
Mortgage, AMT, Series 67, 5.80% due 10/01/2028 1,059
- -----------------------------------------------------------------------------------------------------
NR* NR* 2,000 New York State Mortgage Agency Revenue Bonds, RITR, Series
24, 8.12% due 10/01/2028 (h) 2,257
- -----------------------------------------------------------------------------------------------------
New York State Thruway Authority, Highway and Bridge
Trust Fund Revenue Bonds, Series A (b):
AAA Aaa 7,750 5% due 4/01/2009 8,110
AAA Aaa 3,200 5% due 4/01/2010 3,329
- -----------------------------------------------------------------------------------------------------
New York State Urban Development Corporation, Revenue
Refunding Bonds:
BBB+ Baa1 1,685 (Clarkson Center Advance Materials), 5.50% due 1/01/2020 1,773
AAA NR* 2,250 (Correctional Capital Facilities), 5% due 1/01/2009 (c) 2,334
AAA Aaa 8,470 (Correctional Facilities), Series A, 5.50% due 1/01/2014 (e) 9,138
BBB+ Baa1 9,475 (State Facilities), 5.70% due 4/01/2020 10,139
BBB+ Baa1 3,500 (University Facility Grants), 5.50% due 1/01/2019 3,682
- -----------------------------------------------------------------------------------------------------
AAA Aaa 1,000 North Country, New York, Development Authority, Solid Waste
Management System, Revenue Refunding Bonds, 6% due
5/15/2015 (g) 1,126
- -----------------------------------------------------------------------------------------------------
AAA NR* 3,850 Otsego County, New York, IDA, Civic Facility Revenue
Refunding Bonds (Aurelia Osborn Fox Memorial Hospital),
Series A, 5.35% due 10/01/2017 (g) 3,961
- -----------------------------------------------------------------------------------------------------
NR* Aaa 4,000 Port Authority of New York and New Jersey, RITR, 108th
Series, 8.435% due 1/15/2017 (h) 4,602
- -----------------------------------------------------------------------------------------------------
AAA Aaa 6,190 Port Authority of New York and New Jersey, Special Obligation
Revenue Bonds (JFK International Air Terminal Project), AMT,
Series 6, 5.75% due 12/01/2025 (c) 6,557
- -----------------------------------------------------------------------------------------------------
NR* NR* 2,000 Suffolk County, New York, IDA, IDR, Refunding
(Nissequogue Cogen Partners Facility), AMT, 5.50% due
1/01/2023 2,005
- -----------------------------------------------------------------------------------------------------
A+ Aa3 4,450 Triborough Bridge and Tunnel Authority, New York, General
Purpose Revenue Bonds, Series B, 5.20% due 1/01/2027 4,470
- -----------------------------------------------------------------------------------------------------
Triborough Bridge and Tunnel Authority, New York,
General Purpose Revenue Refunding Bonds, Series Y:
A+ Aa3 4,000 6.125% due 1/01/2021 4,604
AAA Aaa 6,000 6.125% due 1/01/2021 (i) 6,906
- -----------------------------------------------------------------------------------------------------
NR* NR* 2,005 Utica, New York, IDA, Civic Facility Revenue Bonds (Utica
College Project), Series A, 5.75% due 8/01/2028 2,048
- -----------------------------------------------------------------------------------------------------
Total Investments (Cost--$369,556)--96.2% 380,766
Variation Margin on Financial Futures Contracts**--0.0% 93
Other Assets Less Liabilities--3.8% 15,111
--------
Net Assets--100.0% $395,970
========
- -----------------------------------------------------------------------------------------------------
</TABLE>
(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,
1999.
(b) FGIC Insured.
(c) MBIA Insured.
(d) Prerefunded.
(e) AMBAC Insured.
(f) FHA 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, 1999.
(i) CAPMAC Insured.
(j) All or a portion of security held as collateral in connection with open
financial futures contracts.
* Not Rated.
** Financial futures contracts sold as of March 31, 1999 were as follows:
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
(in Thousands)
- --------------------------------------------------------------------------------
Number of Expiration Value
Contracts Issue Date (Notes 1a & 1b)
- --------------------------------------------------------------------------------
175 US Treasury Bonds June 1999 $21,098
- --------------------------------------------------------------------------------
Total Financial Futures Contracts Sold
(Total Contract Price--$21,091) $21,098
=======
- --------------------------------------------------------------------------------
+ Highest short-term rating by Moody's Investors Service, Inc.
7
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities as of March 31, 1999
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$369,556,485)
(Note 1a) ..................................................... $380,765,799
Receivables:
Securities sold ............................................. $ 32,852,240
Beneficial interest sold .................................... 7,198,825
Interest .................................................... 5,682,409
Variation margin (Note 1b) .................................. 92,969 45,826,443
------------
Prepaid registration fees and other assets (Note 1e) .......... 94,304
------------
Total assets .................................................. 426,686,546
------------
- ------------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Securities purchased ........................................ 21,933,628
Custodian bank (Note 1g) .................................... 6,845,948
Beneficial interest redeemed ................................ 1,104,377
Dividends to shareholders (Note 1f) ......................... 404,038
Investment adviser (Note 2) ................................. 185,394
Distributor (Note 2) ........................................ 110,522 30,583,907
------------
Accrued expenses and other liabilities ........................ 132,750
------------
Total liabilities ............................................. 30,716,657
------------
- ------------------------------------------------------------------------------------------------------------------
Net Assets: Net assets .................................................... $395,969,889
============
- ------------------------------------------------------------------------------------------------------------------
Net Assets Class A Shares of beneficial interest, $.10 par
Consist of: value, unlimited number of shares authorized .................. $ 150,869
Class B Shares of beneficial interest, $.10 par
value, unlimited number of shares authorized .................. 1,900,067
Class C Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized ........................ 77,621
Class D Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized ........................ 1,348,868
Paid-in capital in excess of par .............................. 380,400,984
Undistributed realized capital gains on investments--net ...... 889,197
Unrealized appreciation on investments--net ................... 11,202,283
------------
Net assets .................................................... $395,969,889
============
- ------------------------------------------------------------------------------------------------------------------
Net Asset Class A--Based on net assets of $17,180,508 and 1,508,694
Value: shares of beneficial interest outstanding .............. $ 11.39
============
Class B--Based on net assets of $216,415,771 and 19,000,668
shares of beneficial interest outstanding .................... $ 11.39
============
Class C--Based on net assets of $8,843,520 and 776,212
shares of beneficial interest outstanding .................... $ 11.39
============
Class D--Based on net assets of $153,530,090 and 13,488,682
shares of beneficial interest outstanding ..................... $ 11.38
============
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
FINANCIAL INFORMATION (continued)
Statement of Operations
<TABLE>
<CAPTION>
For the Six Months Ended
March 31, 1999
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income Interest and amortization of premium and discount earned ...... $ 10,571,928
(Note 1d):
- -----------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees (Note 2) ............................. $ 1,116,727
Account maintenance and distribution fees--Class B(Note 2) .... 578,339
Account maintenance fees--Class D(Note 2) ..................... 74,388
Transfer agent fees--Class B(Note 2) .......................... 55,898
Registration fees (Note 1e) ................................... 55,823
Accounting services (Note 2) .................................. 45,231
Professional fees ............................................. 41,083
Printing and shareholder reports .............................. 38,020
Transfer agent fees--Class D(Note 2) .......................... 29,723
Account maintenance and distribution fees--Class C(Note 2) .... 25,496
Custodian fees ................................................ 11,799
Trustees' fees and expenses ................................... 11,640
Pricing fees .................................................. 6,433
Transfer agent fees--Class A(Note 2) .......................... 3,491
Transfer agent fees--Class C(Note 2) .......................... 2,049
Other ......................................................... 4,581
-----------
Total expenses ................................................ 2,100,721
-----------
Investment income--net ........................................ 8,471,207
-----------
- -----------------------------------------------------------------------------------------------------------------
Realized & Unreal- Realized gain on investments--net ............................. 5,911,651
ized Gain (Loss) on Change in unrealized appreciation on investments--net ......... (15,098,198)
Investments--Net -----------
(Notes 1b, 1d & 3): Net Decrease in Net Assets Resulting from Operations .......... $ (715,340)
===========
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
FINANCIAL INFORMATION (continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
March 31, September 30,
Increase (Decrease) in Net Assets: 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations: Investment income--net ................................................. $ 8,471,207 $ 19,506,165
Realized gain on investments--net ...................................... 5,911,651 18,921,395
Change in unrealized appreciation on investments--net .................. (15,098,198) 946,799
Net increase (decrease) in net assets resulting from ------------- -------------
operations ............................................................. (715,340) 39,374,359
------------- -------------
- ------------------------------------------------------------------------------------------------------------------------------
Dividends & Investment income--net:
Distributions to Class A .............................................................. (394,249) (976,856)
Shareholders Class B .............................................................. (4,629,778) (11,274,157)
(Note 1f): Class C .............................................................. (165,982) (249,953)
Class D .............................................................. (3,281,198) (7,005,199)
Realized gain on investments--net:
Class A .............................................................. (514,114) --
Class B .............................................................. (6,906,236) --
Class C .............................................................. (250,963) --
Class D .............................................................. (4,300,820) --
------------- -------------
Net decrease in net assets resulting from dividends
and distributions to shareholders ..................................... (20,443,340) (19,506,165)
------------- -------------
- ------------------------------------------------------------------------------------------------------------------------------
Beneficial Interest Net decrease in net assets derived from beneficial interest transactions (4,670,171) (44,668,971)
Transactions ------------- -------------
(Note 4):
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets: Total decrease in net assets ........................................... (25,828,851) (24,800,777)
Beginning of period .................................................... 421,798,740 446,599,517
------------- -------------
End of period .......................................................... $ 395,969,889 $ 421,798,740
============= =============
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
FINANCIAL INFORMATION (continued)
Financial Highlights
<TABLE>
<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 For the Year Ended September 30,
March 31, ---------------------------------------------------------
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ... $ 12.00 $ 11.46 $ 11.12 $ 11.04 $ 10.88
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net ................. .26 .57 .60 .59 .61
Realized and unrealized gain (loss)
on investments--net .................... (.26) .54 .34 .08 .16
---------- ---------- ---------- ---------- ----------
Total from investment operations ....... -- 1.11 .94 .67 .77
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net ............... (.26) (.57) (.60) (.59) (.61)
Realized gain on investments--net .... (.35) -- --+ -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions ...... (.61) (.57) (.60) (.59) (.61)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ......... $ 11.39 $ 12.00 $ 11.46 $ 11.12 $ 11.04
========== ========== ========== ========== ==========
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ... .01%++ 9.94% 8.69% 6.19% 7.37%
Return:** ========== ========== ========== ========== ==========
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses ............................... .70%* .67% .65% .66% .67%
Average ========== ========== ========== ========== ==========
Net Assets: Investment income--net ................. 4.51%* 4.92% 5.30% 5.31% 5.67%
========== ========== ========== ========== ==========
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $ 17,180 $ 17,727 $ 22,301 $ 21,762 $ 23,304
Data: ========== ========== ========== ========== ==========
Portfolio turnover ..................... 78.72% 163.12% 97.22% 114.78% 181.21%
========== ========== ========== ========== ==========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Amount is less than $.01 per share.
++ Aggregate total investment return.
See Notes to Financial Statements.
11
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
<TABLE>
<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 For the Year Ended September 30,
March 31, ---------------------------------------------------------
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ... $ 12.00 $ 11.46 $ 11.12 $ 11.04 $ 10.88
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net ................. .23 .51 .54 .54 .56
Realized and unrealized gain (loss)
on investments--net .................... (.26) .54 .34 .08 .16
----------- ----------- ----------- ----------- -----------
Total from investment operations ....... (.03) 1.05 .88 .62 .72
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net ................ (.23) (.51) (.54) (.54) (.56)
Realized gain on investments--net ..... (.35) -- --+ -- --
----------- ----------- ----------- ----------- -----------
Total dividends and distributions ...... (.58) (.51) (.54) (.54) (.56)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ......... $ 11.39 $ 12.00 $ 11.46 $ 11.12 $ 11.04
=========== =========== =========== =========== ===========
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share .... (.24%)++ 9.38% 8.14% 5.66% 6.82%
Return:** =========== =========== =========== =========== ===========
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses ............................... 1.20%* 1.18% 1.16% 1.16% 1.18%
Average =========== =========== =========== =========== ===========
Net Assets: Investment income--net ................. 4.00%* 4.40% 4.79% 4.80% 5.16%
=========== =========== =========== =========== ===========
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $ 216,416 $ 242,811 $ 279,754 $ 403,403 $ 564,963
Data: =========== =========== =========== =========== ===========
Portfolio turnover ..................... 78.72% 163.12% 97.22% 114.78% 181.21%
=========== =========== =========== =========== ===========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Amount is less than $.01 per share.
++ Aggregate total investment return.
See Notes to Financial Statements.
12
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
<TABLE>
<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 September 30, 1994++ to
March 31, -------------------------------------------- Sept. 30,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ... $ 12.01 $ 11.47 $ 11.12 $ 11.04 $ 10.76
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net ................. .22 .50 .53 .52 .51
Realized and unrealized gain (loss)
on investments--net ................... (.27) .54 .35 .08 .28
--------- --------- --------- --------- ---------
Total from investment operations ....... (.05) 1.04 .88 .60 .79
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net ................ (.22) (.50) (.53) (.52) (.51)
Realized gain on investments--net ..... (.35) -- --++ -- --
--------- --------- --------- --------- ---------
Total dividends and distributions ...... (.57) (.50) (.53) (.52) (.51)
--------- --------- --------- --------- ---------
Net asset value, end of period ......... $ 11.39 $ 12.01 $ 11.47 $ 11.12 $ 11.04
========= ========= ========= ========= =========
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ..... (.37%)++ 9.27% 8.13% 5.55% 7.57
Return:** ========= ========= ========= ========= =========
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses ............................... 1.30%* 1.28% 1.26% 1.27% 1.27%*
Average ========= ========= ========= ========= =========
Net Assets: Investment income==net ................. 3.91%* 4.27% 4.69% 4.70% 4.91%*
========= ========= ========= ========= =========
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $ 8,844 $ 8,229 $ 5,034 $ 4,175 $ 3,556
Data: ========= ========= ========= ========= =========
Portfolio turnover ..................... 78.72% 163.12% 97.22% 114.78% 181.21%
========= ========= ========= ========= =========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* 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.
13
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
FINANCIAL INFORMATION (concluded)
Financial Highlights (concluded)
<TABLE>
<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 September 30, 1994++ to
March 31, -------------------------------------------- Sept. 30,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ... $ 12.00 $ 11.46 $ 11.11 $ 11.03 $ 10.76
Operating ----------- --------- ----------- ----------- ---------
Performance: Investment income--net ................. .25 .56 .58 .58 .56
Realized and unrealized gain (loss)
on investments--net .................... (.27) .54 .35 .08 .27
----------- --------- ----------- ----------- ---------
Total from investment operations ....... (.02) 1.10 .93 .66 .83
----------- --------- ----------- ----------- ---------
Less dividends and distributions:
Investment income--net ................ (.25) (.56) (.58) (.58) (.56)
Realized gain on investments--net ..... (.35) -- --++ -- --
----------- --------- ----------- ----------- ---------
Total dividends and distributions ...... (.60) (.56) (.58) (.58) (.56)
----------- --------- ----------- ----------- ---------
Net asset value, end of period ......... $ 11.38 $ 12.00 $ 11.46 $ 11.11 $ 11.03
=========== ========= =========== =========== =========
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ..... (.12%)++ 9.83% 8.68% 6.09% 7.99%++
Return:** =========== ========= =========== =========== =========
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses ............................... .80%* .77% .75% .76% .76%*
Average =========== ========= =========== =========== =========
Net Assets: Investment income--net ................. 4.41%* 4.79% 5.20% 5.21% 5.46%*
=========== ========= =========== =========== =========
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $ 153,530 $ 153,032 $ 139,511 $ 94,297 $ 2,572
Data: =========== ========= =========== =========== =========
Portfolio turnover ..................... 78.72% 163.12% 97.22% 114.78% 181.21%
=========== ========= =========== =========== =========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* 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.
14
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
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's financial statements are prepared in accordance
with generally accepted accounting principles which may require the use of
management accruals and estimates. 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 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 con- tract or if the counterparty does not perform under the
contract.
o 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.
15
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
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.
(g) Custodian bank--The Fund recorded an amount payable to the Custodian Bank
reflecting an overnight overdraft which resulted from a failed trade which
settled the next day.
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 entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds Distributor ("MLFD" or
the "Distributor"), a division of Princeton Funds Distributor, Inc. ("PFD"),
which is 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
& 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, 1999, 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 .............................. $ 75 $ 1,889
Class D .............................. $ 1,107 $36,183
- --------------------------------------------------------------------------------
For the six months ended March 31, 1999, MLPF&S received contingent deferred
sales charges of $102,292 and $679 relating to transactions in Class B and Class
C Shares, respectively.
Financial Data Services, Inc. ("FDS"), 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, FDS, PFD, and/or ML & Co.
16
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
NOTES TO FINANCIAL STATEMENTS (continued)
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended March 31, 1999 were $305,157,258 and $325,251,011, respectively.
Net realized gains for the six months ended March 31, 1999 and net unrealized
gains (losses) as of March 31, 1999 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains Gains (Losses)
- --------------------------------------------------------------------------------
Long-term investments ................... $ 5,273,476 $ 11,209,314
Financial futures contracts ............. 638,175 (7,031)
------------ ------------
Total ................................... $ 5,911,651 $ 11,202,283
============ ============
- --------------------------------------------------------------------------------
As of March 31, 1999, net unrealized appreciation for Federal income tax
purposes aggregated $11,209,314, of which $11,942,706 related to appre-ciated
securities and $733,392 related to depreciated securities. The aggregate cost of
investments at March 31, 1999 for Federal income tax purposes was $369,556,485.
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest transactions was
$4,670,171 and $44,668,971 for the six months ended March 31, 1999 and for the
year ended September 30, 1998, respectively.
Transactions in shares of beneficial interest for each class were as follows:
- --------------------------------------------------------------------------------
Class A Shares for the Six Months Dollar
Ended March 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................. 90,941 $ 1,052,637
Shares issued to shareholders
in reinvestment of
dividends and distributions ............. 46,726 537,865
------- ------------
Total issued ............................ 137,667 1,590,502
Shares redeemed ......................... (105,924) (1,221,882)
------- ------------
Net increase ............................ 31,743 $ 368,620
======= ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended September 30, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................. 251,370 $ 2,928,526
Shares issued to shareholders
in reinvestment of dividends ............ 53,497 624,368
-------- ------------
Total issued ............................ 304,867 3,552,894
Shares redeemed ......................... (773,614) (9,022,698)
-------- ------------
Net decrease ............................ (468,747) $ (5,469,804)
======== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the Six Months Dollar
Ended March 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................. 1,335,832 $ 15,624,113
Shares issued to shareholders
in reinvestment of
dividends and distributions ............. 520,283 5,979,890
--------- ------------
Total issued ............................ 1,856,115 21,604,003
Automatic conversion of shares .......... (850,138) (9,806,614)
Shares redeemed ......................... (2,231,444) (25,942,183)
--------- ------------
Net decrease ............................ (1,225,467) $(14,144,794)
========= ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended September 30, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................. 2,086,550 $ 24,426,414
Shares issued to shareholders
in reinvestment of dividends ............ 506,565 5,919,940
---------- ------------
Total issued ............................ 2,593,115 30,346,354
Automatic conversion of shares .......... (1,517,785) (17,683,070)
Shares redeemed ......................... (5,254,351) (61,333,845)
---------- ------------
Net decrease ............................ (4,179,021) $(48,670,561)
========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Shares for the Six Months Dollar
Ended March 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................. 97,586 $ 1,140,359
Shares issued to shareholders
in reinvestment of
dividends and distributions ............. 30,104 345,952
------ ------------
Total issued ............................ 127,690 1,486,311
Shares redeemed ......................... (36,712) (428,382)
------ ------------
Net increase ............................ 90,978 $ 1,057,929
====== ============
- --------------------------------------------------------------------------------
17
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended September 30, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................. 371,611 $ 4,358,246
Shares issued to shareholders
in reinvestment of dividends ............ 18,797 220,005
------- ------------
Total issued ............................ 390,408 4,578,251
Shares redeemed ......................... (144,268) (1,680,882)
------- ------------
Net increase ............................ 246,140 $ 2,897,369
======= ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Six Months Dollar
Ended March 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................. 5,280,778 $ 61,225,849
Automatic conversion
of shares ............................... 850,662 9,806,614
hares issued to share
holders in reinvestment of
dividends and distributions ............. 287,799 3,311,514
---------- -----------
Total issued ............................ 6,419,239 74,343,977
Shares redeemed ......................... (5,686,209) (66,295,903)
---------- -----------
Net increase ............................ 733,030 $ 8,048,074
========== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended September 30, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................. 6,327,245 $ 73,822,777
Automatic conversion of shares .......... 1,518,544 17,683,070
Shares issued to shareholders
in reinvestment of dividends ............ 254,369 2,969,158
--------- ------------
Total issued ............................ 8,100,158 94,475,005
Shares redeemed ......................... (7,522,615) (87,900,980)
--------- ------------
Net increase ............................ 577,543 $ 6,574,025
========= ============
- --------------------------------------------------------------------------------
18
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 1999
OFFICERS AND TRUSTEES
Terry K. Glenn, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Arthur Zeikel, Trustee
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Roberto Roffo, Vice President
Donald C. Burke, Vice President and Treasurer
Alice A. Pellegrino, Secretary
- --------------------------------------------------------------------------------
Gerald M. Richard, Treasurer of Merrill Lynch New York Municipal Bond Fund has
recently retired. His colleagues at Merrill Lynch Asset Management, L.P. join
the Fund's Board of Trustees in wishing Mr. Richard well in his retirement.
- --------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
19
<PAGE>
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 #10344--3/99
[RECYCLE LOGO] Printed on post-consumer recycled paper
