MERRILL LYNCH
NEW YORK
MUNICIPAL
BOND FUND
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
March 31, 2000
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 2000
TO OUR SHAREHOLDERS
The Municipal Market Environment
Since October 1, 1999 through mid-January 2000, fixed-income bond yields rose
steadily higher. US economic growth, in part intensified by Year 2000
preparations, grew at a 7.3% rate in the fourth quarter of 1999 and at a 4.2%
annual rate for all of 1999. Current estimates for first quarter 2000 economic
growth are in the 4.5%-5.5% range. However, despite these significant growth
rates, no price measure indicator has shown any considerable signs of future
price pressure at either the consumer level or from labor, despite the lowest
unemployment rates since January 1970. Given no signs of an economic slowdown,
the Federal Reserve Board continued to raise short-term interest rates in
November 1999 and again in February and March 2000. In each instance the Federal
Reserve Board cited both the continued growth of US employment and the
impressive strength of the US equity markets as reasons for attempting to
moderate US economic growth before inflationary price increases are realized. By
mid-January 2000, US Treasury bond yields had risen almost 70 basis points
(0.70%) to 6.75%. Similarly, as measured by the Bond Buyer Revenue Bond Index,
long-term tax-exempt bond yields rose nearly 40 basis points to 6.35%.
Since mid-January, fixed-income markets have largely ignored continued strong
economic fundamentals and concentrated on very positive technical supply
factors. Declining bond issuance, both current and, more importantly, expected
future issuance, helped push bond yields lower in February and March 2000. In
late January and early February 2000, the US Treasury announced it intended to
reduce the number of issues to be auctioned in the quarterly Treasury note and
bond auctions. Furthermore, budgetary surpluses would also allow the US Treasury
to repurchase outstanding, higher-couponed Treasury issues, primarily in the
15-year and longer-term maturity sector. Both these actions would result in a
significant reduction in the outstanding supply of long-term US Treasury debt.
Domestic and international investors quickly began to accumulate what was
expected to become a scarce commodity, and bond prices quickly rose. By March
31, 2000, US Treasury bond yields had declined 60 basis points to 5.83%. The
dramatic decline in long-term US Treasury bond yields resulted in an inverted
taxable yield curve as short-term and intermediate-term interest rates have not
fallen proportionately since the Federal Reserve Board is expected to continue
to raise short-term interest rates. The current inversion has had more to do
with debt reduction and Treasury buybacks than with investor expectations of
slower economic growth. Over the last six months, long-term US Treasury bond
yields have fallen more than 20 basis points.
Tax-exempt bond yields have also declined in recent months. The decline has
largely been in response to the rally in US Treasury securities, as well as a
continued positive technical supply environment. States such as California and
Maryland have announced that their large current and anticipated future budget
surpluses will permit the cancellation or postponement of expected bond
issuance. Additionally, some issuers have also initiated tenders to repurchase
existing debt, reducing the supply of tax-exempt bonds in the secondary market
as well. Since their recent peak in January 2000, long-term municipal bond
yields declined over 30 basis points to finish the six-month period ended March
31, 2000 at 6.03%. During the last six months, municipal bond yields declined
overall less than 10 basis points.
The relative underperformance of the municipal bond market in recent months has
been especially disappointing given the strong technical position the tax-exempt
bond market has enjoyed. The issuance of long-term tax-exempt securities has
dramatically declined. Over the last year, $206 billion in new long-term
municipal securities was issued, a decline of almost 25% compared to the same
period a year earlier. For the three months ended March 31, 2000, approximately
$40 billion in new tax-exempt bonds was underwritten, a decline of more than 30%
1
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 2000
compared to the March 31, 1999 quarter. Although investors received over $30
billion in coupon payments, bond maturities and the proceeds from early bond
redemptions, coupled with the highest municipal bond yields in three years,
overall investor demand has diminished. Long-term municipal bond mutual funds
have seen consistent outflows in recent months as the yields of individual
securities have risen faster than those of larger, more diverse mutual funds.
Over the last three months, tax-exempt mutual funds have had net redemptions of
approximately $6 billion. Also, the demand from property and casualty insurance
companies has weakened as a result of the losses and anticipated losses incurred
from a series of damaging storms across much of the eastern United States.
Additionally, many institutional investors who have in recent years been
attracted to the municipal bond market by historically attractive tax-exempt
bond yield ratios of over 90% found other asset classes even more attractive.
Even with a favorable supply position, tax-exempt municipal bond yields have
underperformed their taxable counterparts.
Any significantly lower municipal bond yields are still likely to require weaker
US employment growth and consumer spending. The actions taken in recent months
by the Federal Reserve Board, as well as those expected in May and perhaps June
2000, should eventually slow US economic growth. The recent decline in US home
sales is perhaps the first sign that consumer spending is being slowed by higher
interest rates. Until further signs develop, it is likely that the municipal
bond market's current favorable technical position will dampen significant
tax-exempt interest rate volatility and provide a stable environment for an
eventual improvement in municipal bond prices.
Portfolio Strategy
For the six months ended March 31, 2000, we managed the Fund with the intent of
sustaining an attractive level of tax-exempt income while simultaneously
achieving an above-average total return. During the six-month period, we
purchased a significant amount of high-couponed intermediate-term bonds in an
effort to increase income and because they were undervalued at the time. This
strategy proved correct as yields on municipal bonds declined by about 10 basis
points during the period and the yields on intermediate-term bonds declined by
20 basis points. We financed these purchases by selling lower-couponed bonds
with longer maturity dates, which tend to be more volatile.
Currently, we plan to maintain the Fund's positions 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
April 27, 2000
2
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 2000
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/
6 Month 12 Month Since Inception Standardized
As of March 31, 2000 Total Return Total Return Total Return 30-Day Yield
================================================================================================================
<S> <C> <C> <C> <C>
ML New York Municipal Bond Fund Class A Shares +1.17% -4.60% +80.11% 4.71%
- ----------------------------------------------------------------------------------------------------------------
ML New York Municipal Bond Fund Class B Shares +0.91 -5.09 +71.22 4.41
- ----------------------------------------------------------------------------------------------------------------
ML New York Municipal Bond Fund Class C Shares +0.77 -5.19 +26.72 4.31
- ----------------------------------------------------------------------------------------------------------------
ML New York Municipal Bond Fund Class D Shares +1.02 -4.71 +30.16 4.62
================================================================================================================
</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
ten years for Class A & Class B Shares and from 10/21/94 for Class C &
Class D Shares.
3
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 2000
PERFORMANCE DATA (concluded)
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 3/31/00 -4.60% -8.42%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/00 +4.64 +3.78
- --------------------------------------------------------------------------------
Ten Years Ended 3/31/00 +6.06 +5.63
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class C Shares*
================================================================================
Year Ended 3/31/00 -5.19% -6.09%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/00 +3.98 +3.98
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 3/31/00 +4.45 +4.45
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after
1 year.
** Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 3/31/00 -5.09% -8.72%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/00 +4.10 +4.10
- --------------------------------------------------------------------------------
Ten Years Ended 3/31/00 +5.52 +5.52
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 4% and is reduced to 0% after
4 years.
** Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class D Shares*
================================================================================
Year Ended 3/31/00 -4.71% -8.52%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/00 +4.51 +3.66
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 3/31/00 +4.96 +4.18
- --------------------------------------------------------------------------------
* 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
DATES Daily Adjustable Tax-Exempt Securities
GO General Obligation Bonds
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
VRDN Variable Rate Demand Notes
4
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 2000
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
Ratings Ratings Amount Issue Value
- ----------------------------------------------------------------------------------------------------------------------
New York--99.1%
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AA NR* $ 1,175 Albany, New York, IDA, Civic Facility Revenue Bonds
(University Heights-Albany Law School), Series A, 6.75% due 12/01/2019 $ 1,267
- ----------------------------------------------------------------------------------------------------------------------
A+ A2 4,000 Battery Park City Authority, New York, Revenue Refunding Bonds,
Junior Series A, 5.80% due 11/01/2022 3,940
- ----------------------------------------------------------------------------------------------------------------------
Buffalo, New York, GO, General Improvement, Series D (g):
AAA Aaa 2,245 5.50% due 12/01/2008 2,309
AAA Aaa 1,905 5.625% due 12/01/2010 1,975
- ----------------------------------------------------------------------------------------------------------------------
Hempstead Town, New York, IDA, Civic Facilities
Revenue Refunding Bonds (Adelphi University Civic Facility):
A- NR* 1,000 5.25% due 2/01/2011 974
A- NR* 1,540 5.25% due 2/01/2012 1,489
A- NR* 625 5.25% due 2/01/2013 600
- ----------------------------------------------------------------------------------------------------------------------
NR* Aa2 5,400 Hornell, New York, IDA, IDR (Crowley Foods, Inc. Facility),
7.75% due 12/01/2016 5,729
- ----------------------------------------------------------------------------------------------------------------------
Long Island Power Authority, New York, Electric System
Revenue Bonds, VRDN (a):
A1+ VMIG1+ 200 Sub-Series 5, 3.80% due 5/01/2033 200
A1+ VMIG1+ 1,600 Sub-Series 6, 2.95% due 5/01/2033 1,600
- ----------------------------------------------------------------------------------------------------------------------
Long Island Power Authority, New York, Electric System
Revenue Refunding Bonds, Series A:
AAA Aaa 3,500 5.125% due 12/01/2016 (g) 3,321
AAA Aaa 10,000 5.50% due 12/01/2029 (c) 9,495
- ----------------------------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority, New York, Dedicated
Tax Fund Revenue Bonds, Series A (b):
AAA Aaa 1,000 6.125% due 4/01/2014 1,061
AAA Aaa 1,000 6.125% due 4/01/2015 1,056
AAA Aaa 2,000 6.125% due 4/01/2017 2,097
- ----------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 Metropolitan Transportation Authority, New York, Transportation
Facilities Revenue Bonds, Series C-1, 5.50% due 7/01/2022 (b) 1,923
- ----------------------------------------------------------------------------------------------------------------------
AA Aa2 5,000 Municipal Assistance Corporation for the City of New York,
Revenue Refunding Bonds, Series L, 6% due 7/01/2007 5,291
- ----------------------------------------------------------------------------------------------------------------------
A Aa3 10,000 New York City, New York, City Municipal Water Finance
Authority, Water and Sewer System Revenue Bonds,
Series B, 5.75% due 6/15/2029 9,778
- ----------------------------------------------------------------------------------------------------------------------
AAA Aaa 6,120 New York City, New York, City Transit Authority, Metropolitan Transportation
Authority, COP (Triborough), Series A, 5.625% due 1/01/2013 (e) 6,281
- ----------------------------------------------------------------------------------------------------------------------
New York City, New York, City Transitional Finance
Authority Revenue Bonds, Future Tax Secured:
AA Aa3 10,000 Series A, 6% due 8/15/2017 10,409
AA Aa3 4,000 Series B, 5.125% due 11/01/2014 3,858
AAA Aaa 10,000 Series B, 4.50% due 11/15/2027 (b) 8,052
AAA Aaa 6,000 Series C, 5.50% due 5/01/2025 (b) 5,763
AA Aa3 2,250 Series C, 5% due 5/01/2026 1,977
NR* VMIG1+ 3,300 VRDN, Series C, 3.80% due 5/01/2028 (a) 3,300
- ----------------------------------------------------------------------------------------------------------------------
New York City, New York, GO:
A- A3 5,000 Refunding, Series F, 5.25% due 8/01/2017 4,707
A1+ VMIG1+ 4,300 VRDN, Series B, Sub-Series B-5, 3.80% due 8/15/2022 (a)(c) 4,300
A1+ VMIG1+ 2,850 VRDN, Series B, Sub-Series B-6, 3.75% due 8/15/2005 (a)(c) 2,850
A1+ VMIG1+ 300 VRDN, Sub-Series A-10, 4.10% due 8/01/2017 (a) 300
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 2000
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
Ratings Ratings Amount Issue Value
- ----------------------------------------------------------------------------------------------------------------------
New York (continued)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York City, New York, IDA, Civic Facilities Revenue Bonds:
BBB NR* $ 1,000 (College of Aeronautics Project), 5.45% due 5/01/2018 $ 909
BBB NR* 3,200 (College of Aeronautics Project), 5.50% due 5/01/2028 2,815
NR* NR* 6,895 (New York Blood Center Inc. Project), 7.25% due 5/01/2004 (d) 7,480
AAA Aaa 4,690 (USTA National Tennis Center Project), 6.60% due 11/15/2011 (g) 5,048
- ----------------------------------------------------------------------------------------------------------------------
A A3 10,000 New York City, New York, IDA, Special Facilities Revenue Bonds
(Terminal One Group Association Project), AMT, 6.125% due 1/01/2024 10,059
- ----------------------------------------------------------------------------------------------------------------------
AA Aaa 4,000 New York State Dormitory Authority, Hospital Revenue Refunding Bonds
(Montefiore Medical Center), 5.50% due 8/01/2038 (e)(f) 3,729
- ----------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,755 New York State Dormitory Authority, Lease Revenue Bonds (Office
Facilities of Audit and Control), 4.90% due 4/01/2017 (c) 1,598
- ----------------------------------------------------------------------------------------------------------------------
New York State Dormitory Authority, Revenue Refunding Bonds:
AAA NR* 6,500 (City University System--Consolidated), Series A, 5.625% due 7/01/2016 (g) 6,681
AAA Aaa 13,750 (City University System--Consolidated Second Generation),
Series A, 6.125% due 7/01/2011 (e) 14,889
AAA Aaa 1,000 (Hospital for Special Surgery), 5% due 2/01/2028 (c)(f) 866
AA NR* 1,500 (Long Island University), 5.125% due 9/01/2019 1,367
AA NR* 1,800 (Long Island University), 5.125% due 9/01/2023 1,597
AA NR* 1,400 (Long Island University), 5.25% due 9/01/2028 1,258
AAA Aaa 2,810 (State University Athletic Facility), 5.25% due 7/01/2018 (c) 2,683
AAA NR* 3,700 (State University Educational Facilities), 5% due 5/15/2015 (c) 3,508
AAA NR* 7,500 (State University Educational Facilities), Series 1989, 6% due 5/15/2015 (c) 7,891
AAA NR* 5,000 (State University Educational Facilities), Series 1989, 6% due 5/15/2016 (c) 5,240
- ----------------------------------------------------------------------------------------------------------------------
A- Baa3 500 New York State Energy Research and Development Authority, Electric
Facilities Revenue Bonds (LILCO Project), AMT, Series B, 5.30% due 11/01/2023 449
- ----------------------------------------------------------------------------------------------------------------------
NR* Aaa 3,200 New York State Energy Research and Development Authority, Facilities
Revenue Refunding Bonds, RITR, Series 19, 7.87% due 8/15/2020 (e)(h) 3,361
- ----------------------------------------------------------------------------------------------------------------------
AAA Aaa 8,910 New York State Energy Research and Development Authority, Gas
Facilities Revenue Bonds (Brooklyn Union Gas Company Project),
Series A, 5.50% due 1/01/2021 (c) 8,610
- ----------------------------------------------------------------------------------------------------------------------
A1+ NR* 3,100 New York State Energy Research and Development Authority, PCR
(Niagara Mohawk Power Corporation Project), DATES,
Series A, 3.90% due 7/01/2015 (a) 3,100
- ----------------------------------------------------------------------------------------------------------------------
AAA Aaa 3,500 New York State Energy Research and Development Authority, PCR,
Refunding (Central Hudson Gas and Electric), Series A, 5.45% due 8/01/2027 (e) 3,330
- ----------------------------------------------------------------------------------------------------------------------
AAA Aaa 3,000 New York State Environmental Facilities Corporation, Special Obligation
Revenue Refunding Bonds (Riverbank State Park), 6.25% due 4/01/2012 (e) 3,295
- ----------------------------------------------------------------------------------------------------------------------
NR* Aa1 5,000 New York State Mortgage Agency, Homeowner Mortgage Revenue Bonds,
AMT, Series 90, 6.35% due 10/01/2030 5,132
- ----------------------------------------------------------------------------------------------------------------------
NR* Aa1 4,000 New York State Mortgage Agency, Homeowner Mortgage Revenue Refunding
Bonds, AMT, Series 67, 5.80% due 10/01/2028 3,881
- ----------------------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 3,000 New York State Thruway Authority Revenue Bonds, VRDN, 3.85%
due 1/01/2024 (a)(b) 3,000
- ----------------------------------------------------------------------------------------------------------------------
AA- Aa3 4,000 New York State Thruway Authority, Revenue Refunding Bonds,
Series E, 5% due 1/01/2025 3,525
- ----------------------------------------------------------------------------------------------------------------------
New York State Urban Development Corporation Revenue Bonds, Series B:
AAA Aaa 10,000 (Correctional Facilities Service Contract), 4.75% due 1/01/2028 (e) 8,402
A NR* 305 (Youth Facilities Services Contract), 6% due 4/01/2015 315
A NR* 665 (Youth Facilities Services Contract), 6% due 4/01/2016 683
A NR* 705 (Youth Facilities Services Contract), 6% due 4/01/2017 720
A NR* 750 (Youth Facilities Services Contract), 6.125% due 4/01/2018 771
A NR* 615 (Youth Facilities Services Contract), 6.25% due 4/01/2020 636
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 2000
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
Ratings Ratings Amount Issue Value
- ----------------------------------------------------------------------------------------------------------------------
New York (concluded)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York State Urban Development Corporation, Revenue Refunding Bonds:
A Baa1 $ 1,685 (Clarkson Center Advance Materials), 5.50% due 1/01/2020 $ 1,628
AAA Aaa 10,955 (Correctional Capital Facilities), Series A, 6.50% due 1/01/2010 (g) 12,076
AAA Aaa 4,470 (Correctional Facilities), Series A, 5.50% due 1/01/2014 (e) 4,552
A Baa1 3,500 (University Facility Grants), 5.50% due 1/01/2019 3,420
- ----------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 North Country, New York, Development Authority, Solid Waste
Management System Revenue Refunding Bonds, 6% due 5/15/2015 (g) 1,062
- ----------------------------------------------------------------------------------------------------------------------
AAA NR* 1,850 Otsego County, New York, IDA, Civic Facility Revenue Refunding Bonds
(Aurelia Osborn Fox Memorial Hospital), Series A, 5.35% due 10/01/2017 (g) 1,785
- ----------------------------------------------------------------------------------------------------------------------
AAA Aaa 5,085 Port Authority of New York and New Jersey, Consolidated Revenue
Bonds, 116th Series, 4.50% due 10/01/2018 (b) 4,372
- ----------------------------------------------------------------------------------------------------------------------
NR* Aaa 4,000 Port Authority of New York and New Jersey, RITR, AMT, 108th
Series, 7.285% due 1/15/2017 (g)(h) 4,134
- ----------------------------------------------------------------------------------------------------------------------
Port Authority of New York and New Jersey,
Special Obligation Revenue Bonds, AMT (c):
AAA Aaa 5 (JFK International Air Terminal Project), Series 6, 5.75% due 12/01/2022 5
NR* Aaa 6,000 RIB, Series 243, 8.31% due 12/01/2010 (h) 7,053
- ----------------------------------------------------------------------------------------------------------------------
Port Authority of New York and New Jersey, Special Obligation Revenue Refunding Bonds
(Versatile Structure Obligation), VRDN (a):
NR* VMIG1+ 3,450 AMT, Series 6, 3.85% due 12/01/2017 3,450
A1+ VMIG1+ 2,600 Series 5, 3.80% due 8/01/2024 2,600
- ----------------------------------------------------------------------------------------------------------------------
NR* NR* 3,000 Suffolk County, New York, IDA, IDR, Refunding (Nissequogue
Cogeneration Partners Facility), AMT, 5.50% due 1/01/2023 2,571
- ----------------------------------------------------------------------------------------------------------------------
AAA Aaa 7,155 Suffolk County, New York, IDA, Solid Waste Disposal Facility Revenue
Refunding Bonds (Ogden Martin System--Huntington), AMT, 6.25% due 10/01/2012 (e) 7,730
- ----------------------------------------------------------------------------------------------------------------------
NR* NR* 2,005 Utica, New York, IDA, Civic Facility Revenue Bonds (Utica College
Project), Series A, 5.75% due 8/01/2028 1,762
- ----------------------------------------------------------------------------------------------------------------------
NR* NR* 3,500 Westchester County, New York, IDA, Civic Facility Revenue Bonds
(Rippowam-Cisqua School Project), 5.75% due 6/01/2029 3,271
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Puerto Rico--1.6%
- ----------------------------------------------------------------------------------------------------------------------
AAAr Aaa 4,750 Puerto Rico Commonwealth, GO, Refunding, RITR, Class R, Series 3,
5.75% due 7/01/2016 (c)(h) 4,927
- ----------------------------------------------------------------------------------------------------------------------
Total Investments (Cost--$296,942)--100.7% 299,128
Liabilities in Excess of Other Assets--(0.7%) (2,150)
--------
Net Assets--100.0% $296,978
========
- ----------------------------------------------------------------------------------------------------------------------
</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,
2000.
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, 2000.
* Not Rated.
+ Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
7
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 2000
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of March 31, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$296,941,920) ............ $ 299,127,943
Receivables:
Securities sold ................................................ $ 26,804,057
Interest ....................................................... 4,544,918
Beneficial interest sold ....................................... 13,348 31,362,323
-------------
Prepaid registration fees and other assets ....................... 66,411
-------------
Total assets ..................................................... 330,556,677
-------------
- ----------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Securities purchased ........................................... 32,294,420
Beneficial interest redeemed ................................... 664,194
Dividends to shareholders ...................................... 219,401
Investment adviser ............................................. 124,155
Distributor .................................................... 82,134 33,384,304
-------------
Accrued expenses and other liabilities ........................... 194,532
-------------
Total liabilities ................................................ 33,578,836
-------------
- ----------------------------------------------------------------------------------------------------------------
Net Assets: Net assets ....................................................... $ 296,977,841
=============
- ----------------------------------------------------------------------------------------------------------------
Net Assets Class A Shares of beneficial interest, $.10 par value,
Consist of: unlimited number of shares authorized ............................ $ 128,817
Class BShares of beneficial interest, $.10 par value,
unlimited number of shares authorized ............................ 1,449,755
Class CShares of beneficial interest, $.10 par value,
unlimited number of shares authorized ............................ 63,886
Class DShares of beneficial interest, $.10 par value,
unlimited number of shares authorized ............................ 1,230,968
Paid-in capital in excess of par ................................. 317,211,648
Accumulated realized capital losses on investments--net .......... (24,167,528)
Accumulated distributions in excess of realized
capital gains on investments--net ................................ (1,125,728)
Unrealized appreciation on investments--net ...................... 2,186,023
-------------
Net assets ....................................................... $ 296,977,841
=============
- ----------------------------------------------------------------------------------------------------------------
Net Asset Class A--Based on net assets of $13,314,263 and
Value 1,288,165 shares of beneficial interest outstanding .............. $ 10.34
=============
Class B--Based on net assets of $149,878,369 and 14,497,552 shares
of beneficial interest outstanding ............................... $ 10.34
=============
Class C--Based on net assets of $6,606,558 and 638,858 shares
of beneficial interest outstanding ............................... $ 10.34
=============
Class D--Based on net assets of $127,178,651
and 12,309,679 shares of beneficial interest outstanding ......... $ 10.33
=============
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 2000
FINANCIAL INFORMATION (continued)
Statement of Operations
<TABLE>
<CAPTION>
For the Six Months Ended
March 31, 2000
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment
Income: Interest and amortization of premium and discount earned...... $ 8,890,654
- ----------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees ..................................... $ 859,505
Account maintenance and distribution fees--Class B ........... 406,695
Account maintenance fees--Class D ............................ 64,476
Transfer agent fees--Class B ................................. 42,403
Accounting services .......................................... 37,572
Registration fees ............................................ 37,320
Professional fees ............................................ 32,148
Printing and shareholder reports ............................. 31,698
Transfer agent fees--Class D ................................. 27,598
Account maintenance and distribution fees--Class C ........... 20,974
Custodian fees ............................................... 11,518
Trustees' fees and expenses .................................. 11,393
Pricing fees ................................................. 6,907
Transfer agent fees--Class A ................................. 2,975
Transfer agent fees--Class C ................................. 1,803
Other ........................................................ 4,320
------------
Total expenses ............................................... 1,599,305
------------
Investment income--net ....................................... 7,291,349
------------
- ----------------------------------------------------------------------------------------------------------------
Realized & Realized loss on investments--net ............................ (23,899,932)
Unrealized Change in unrealized appreciation/
Gain (Loss) on depreciation on investments--net ............................. 18,703,008
Investments--Net ------------
Net Increase in Net Assets Resulting
from Operations .............................................. $ 2,094,425
============
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 2000
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: 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations: Investment income--net ..................................................... $ 7,291,349 $ 16,415,213
Realized gain (loss) on investments--net ................................... (23,899,932) 3,896,726
Change in unrealized appreciation/depreciation on investments--net ......... 18,703,008 (42,817,466)
------------- -------------
Net increase (decrease) in net assets resulting from operations ............ 2,094,425 (22,505,527)
------------- -------------
- --------------------------------------------------------------------------------------------------------------------------------
Dividends & Investment income--net:
Distributions to Class A .................................................................. (347,281) (774,757)
Shareholders: Class B .................................................................. (3,642,403) (8,769,481)
Class C .................................................................. (153,034) (343,304)
Class D .................................................................. (3,148,631) (6,527,671)
Realized gain on investments--net:
Class A .................................................................. (11,932) (465,772)
Class B .................................................................. (139,749) (6,256,850)
Class C .................................................................. (5,949) (227,365)
Class D .................................................................. (109,966) (3,896,418)
In excess of realized gain on investments--net:
Class A .................................................................. -- (48,342)
Class B .................................................................. -- (649,386)
Class C .................................................................. -- (23,598)
Class D .................................................................. -- (404,402)
------------- -------------
Net decrease in net assets resulting from dividends
and distributions to shareholders ............................... (7,558,945) (28,387,346)
------------- -------------
- --------------------------------------------------------------------------------------------------------------------------------
Beneficial Net decrease in net assets derived from beneficial
Interest interest transactions ...................................................... (34,309,501) (34,154,005)
Transactions: ------------- -------------
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets: Total decrease in net assets ............................................... (39,774,021) (85,046,878)
Beginning of period ........................................................ 336,751,862 421,798,740
------------- -------------
End of period .............................................................. $ 296,977,841 $ 336,751,862
============= =============
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 2000
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: 2000 1999 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ... $ 10.49 $ 12.00 $ 11.46 $ 11.12 $ 11.04
Operating ---------- --------- ---------- ---------- ---------
Performance: Investment income--net ................. .26 .51 .57 .60 .59
Realized and unrealized gain (loss) on
investments--net ....................... (.14) (1.16) .54 .34 .08
---------- --------- ---------- ---------- ---------
Total from investment operations ....... .12 (.65) 1.11 .94 .67
---------- --------- ---------- ---------- ---------
Less dividends and distributions:
Investment income--net ............... (.26) (.51) (.57) (.60) (.59)
Realized gain on investments--net .... (.01) (.32) -- --+ --
In excess of realized gain on
investments--net ..................... -- (.03) -- -- --
---------- --------- ---------- ---------- ---------
Total dividends and distributions ...... (.27) (.86) (.57) (.60) (.59)
---------- --------- ---------- ---------- ---------
Net asset value, end of period ......... $ 10.34 $ 10.49 $ 12.00 $ 11.46 $ 11.12
========== ========= ========== ========== =========
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ..... 1.17%++ (5.70%) 9.94% 8.69% 6.19%
Return:** ========== ========= ========== ========== =========
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses ............................... .70%* .70% .67% .65% .66%
Average ========== ========= ========== ========== =========
Net Assets: Investment income--net ................. 4.97%* 4.59% 4.92% 5.30% 5.31%
========== ========= ========== ========== =========
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $ 13,314 $ 15,522 $ 17,727 $ 22,301 $ 21,762
Data: ========== ========= ========== ========== =========
Portfolio turnover ..................... 99.49% 135.17% 163.12% 97.22% 114.78%
========== ========= ========== ========== =========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of
sales charges.
+ 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, 2000
FINANCIAL INFORMATION (concluded)
Financial Highlights (concluded)
<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: 2000 1999 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period .. $ 10.49 $ 12.00 $ 11.46 $ 11.12 $ 11.04
Operating -------- -------- -------- -------- --------
Performance: Investment income--net ................ .23 .46 .51 .54 .54
Realized and unrealized gain (loss) on
investments--net....................... (.14) (1.16) .54 .34 .08
-------- -------- -------- -------- --------
Total from investment operations ...... .09 (.70) 1.05 .88 .62
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net ................ (.23) (.46) (.51) (.54) (.54)
Realized gain on investments--net ..... (.01) (.32) -- --+ --
In excess of realized gain on
investments--net....................... -- (.03) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions ..... (.24) (.81) (.51) (.54) (.54)
-------- -------- -------- -------- --------
Net asset value, end of period ........ $ 10.34 $ 10.49 $ 12.00 $ 11.46 $ 11.12
======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share .... .91%++ (6.18%) 9.38% 8.14% 5.66%
Return:** ======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses .............................. 1.21%* 1.21 1.18% 1.16% 1.16%
Average ======== ======== ======== ======== ========
Net Assets: Investment income--net ................ 4.47%* 4.07 4.40% 4.79% 4.80%
======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $149,878 $179,583 $242,811 $279,754 $403,403
Data: ======== ======== ======== ======== ========
Portfolio turnover .................... 99.49% 135.17% 163.12% 97.22% 114.78%
======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of
sales charges.
+ 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, 2000
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class C
-------------------------------------------------------------------
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: 2000 1999 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ... $ 10.50 $ 12.01 $ 11.47 $ 11.12 $ 11.04
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net ................. .23 .45 .50 .53 .52
Realized and unrealized gain (loss) on
investments--net ....................... (.15) (1.16) .54 .35 .08
--------- --------- --------- --------- ---------
Total from investment operations ....... .08 (.71) 1.04 .88 .60
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net ............... (.23) (.45) (.50) (.53) (.52)
Realized gain on investments--net .... (.01) (.32) -- --+ --
In excess of realized gain on
investments--net ..................... -- (.03) -- -- --
--------- --------- --------- --------- ---------
Total dividends and distributions ...... (.24) (.80) (.50) (.53) (.52)
--------- --------- --------- --------- ---------
Net asset value, end of period ......... $ 10.34 $ 10.50 $ 12.01 $ 11.47 $ 11.12
========= ========= ========= ========= =========
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ..... .77%++ (6.26%) 9.27% 8.13% 5.55%
Return:** ========= ========= ========= ========= =========
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses ............................... 1.31%* 1.31% 1.28% 1.26% 1.27%
Average ========= ========= ========= ========= =========
Net Assets: Investment income--net ................. 4.37%* 3.98% 4.27% 4.69% 4.70%
========= ========= ========= ========= =========
- ----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $ 6,607 $ 8,051 $ 8,229 $ 5,034 $ 4,175
Data: ========= ========= ========= ========= =========
Portfolio turnover ..................... 99.49% 135.17% 163.12% 97.22% 114.78%
========= ========= ========= ========= =========
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales
charges.
+ 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, 2000
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class D
-------------------------------------------------------------------
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: 2000 1999 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ... $ 10.49 $ 12.00 $ 11.46 $ 11.11 $ 11.03
Operating -------- -------- -------- -------- -------
Performance: Investment income--net ................. .25 .50 .56 .58 .58
Realized and unrealized gain (loss) on
investments--net ....................... (.15) (1.16) .54 .35 .08
-------- -------- -------- -------- -------
Total from investment operations ....... .10 (.66) 1.10 .93 .66
-------- -------- -------- -------- -------
Less dividends and distributions:
Investment income--net ............... (.25) (.50) (.56) (.58) (.58)
Realized gain on investments--net .... (.01) (.32) -- --+ --
In excess of realized gain on
investments--net ..................... -- (.03) -- -- --
-------- -------- -------- -------- -------
Total dividends and distributions ...... (.26) (.85) (.56) (.58) (.58)
-------- -------- -------- -------- -------
Net asset value, end of period ......... $ 10.33 $ 10.49 $ 12.00 $ 11.46 $ 11.11
======== ======== ======== ======== =======
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ..... 1.02%++ (5.79%) 9.83% 8.68% 6.09%
Return:** ======== ======== ======== ======== =======
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to Expenses ............................... .80%* .80% .77% .75% .76%
Average ======== ======== ======== ======== =======
Net Assets: Investment income--net ................. 4.87%* 4.49% 4.79% 5.20% 5.21%
======== ======== ======== ======== =======
- ----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $127,179 $133,596 $153,032 $139,511 $94,297
Data: ======== ======== ======== ======== =======
Portfolio turnover ..................... 99.49% 135.17% 163.12% 97.22% 114.78%
======== ======== ======== ======== =======
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales
charges.
+ 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, 2000
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 accounting principles generally accepted in the United States of America,
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 follow
ing 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
investment strate gies to increase or decrease the level of risk to which the
Fund is exposed more quickly and efficiently than transactions in other types of
instruments. Losses may arise due to changes in the value of the contract 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
15
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 2000
NOTES TO FINANCIAL STATEMENTS (continued)
security transactions are determined on the identified cost basis.
(e) Prepaid registration fees--Prepaid registration fees are charged to expense
as the related shares are issued.
(f) Dividends and distributions--Dividends from net investment income are
declared daily and paid monthly. Distributions of capital gains are recorded on
the ex-dividend dates. Distributions in excess of realized capital gains are due
primarily to differing tax treatments for futures transactions and post-October
losses.
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: .55% of the Fund's average daily net assets not exceeding $500
million; .525% of average daily net assets in excess of $500 million but not
exceeding $1 billion; and .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 ..................................... .25% .25%
Class C ..................................... .25% .35%
Class D ..................................... .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, 2000, MLFD earned underwriting discounts and
MLPF&S earned dealer concessions on the sales of the Fund's Class A and Class D
Shares as follows:
- --------------------------------------------------------------------------------
MLFD MLPF&S
- --------------------------------------------------------------------------------
Class A ............................ $ 15 $ 164
Class D ............................ $ 436 $4,887
- --------------------------------------------------------------------------------
For the six months ended March 31, 2000, MLPF&S received contingent deferred
sales charges of $3,485 and $126,390 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, 2000
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended March 31, 2000 were $287,007,340 and $330,122,475, respectively.
Net realized losses for the six months ended March 31, 2000 and net unrealized
gains as of March 31, 2000 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Losses Gains
- --------------------------------------------------------------------------------
Long-term investments ............. $(23,731,492) $ 2,186,023
Financial futures
contracts ......................... (168,440) --
------------ ------------
Total ............................. $(23,899,932) $ 2,186,023
============ ============
- --------------------------------------------------------------------------------
As of March 31, 2000, net unrealized appreciation for Federal income tax
purposes aggregated $2,186,023, of which $6,411,719 related to appreciated
securities and $4,225,696 related to depreciated securities. The aggregate cost
of investments at March 31, 2000 for Federal income tax purposes was
$296,941,920.
4. Beneficial Interest Transactions:
Net decrease in net assets derived from benefi cial interest transactions was
$34,309,501 and $34,154,005 for the six months ended March 31, 2000 and for the
year ended September 30, 1999, respectively.
Transactions in shares of beneficial interest for each class were as follows:
- --------------------------------------------------------------------------------
Class A Shares for the Six Months Dollar
Ended March 31, 2000 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 97,816 $ 999,349
Shares issued to share-
holders in reinvestment of
dividends & distributions .............. 17,300 175,652
----------- -----------
Total issued ........................... 115,116 1,175,001
Shares redeemed ........................ (306,559) (3,118,933)
----------- -----------
Net decrease ........................... (191,443) $(1,943,932)
=========== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended September 30, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 266,858 $ 2,960,766
Shares issued to share-
holders in reinvestment of
dividends & distributions .............. 66,382 732,222
----------- -----------
Total issued ........................... 333,240 3,692,988
Shares redeemed ........................ (330,583) (3,661,101)
----------- -----------
Net increase ........................... 2,657 $ 31,887
=========== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the Six Months Dollar
Ended March 31, 2000 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 579,527 $ 5,927,008
Shares issued to share-
holders in reinvestment of
dividends & distributions .............. 188,395 1,913,192
----------- -----------
Total issued ........................... 767,922 7,840,200
Automatic conversion
of shares .............................. (562,880) (5,743,482)
Shares redeemed ........................ (2,822,511) (28,741,090)
----------- -----------
Net decrease ........................... (2,617,469) $(26,644,372)
=========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended September 30, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 2,081,274 $23,838,859
Shares issued to share-
holders in reinvestment of
dividends & distributions .............. 710,911 8,070,009
----------- -----------
Total issued ........................... 2,792,185 31,908,868
Automatic conversion
of shares .............................. (1,448,707) (16,390,769)
Shares redeemed ........................ (4,454,592) (50,357,335)
----------- -----------
Net decrease ........................... (3,111,114) $(34,839,236)
=========== ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Shares for the Six Months Dollar
Ended March 31, 2000 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 76,468 $ 777,889
Shares issued to share-
holders in reinvestment of
dividends & distributions .............. 11,622 118,070
----------- -----------
Total issued ........................... 88,090 895,959
Shares redeemed ........................ (216,293) (2,201,395)
----------- -----------
Net decrease ........................... (128,203) $(1,305,436)
=========== ===========
- --------------------------------------------------------------------------------
17
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended September 30, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 159,427 $ 1,841,554
Shares issued to share-
holders in reinvestment of
dividends & distributions .............. 42,473 481,711
----------- -----------
Total issued ........................... 201,900 2,323,265
Shares redeemed ........................ (120,073) (1,342,314)
----------- -----------
Net increase ........................... 81,827 $ 980,951
=========== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Six Months Dollar
Ended March 31, 2000 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 265,558 $ 2,662,226
Automatic conversion
of shares .............................. 563,326 5,743,482
Shares issued to share-
holders in reinvestment of
dividends & distributions .............. 151,683 1,539,854
----------- -----------
Total issued ........................... 980,567 9,945,562
Shares redeemed ........................ (1,411,279) (14,361,323)
----------- -----------
Net decrease ........................... (430,712) $(4,415,761)
=========== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended September 30, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ............................ 7,373,462 $84,923,122
Automatic conversion
of shares .............................. 1,449,776 16,390,769
Shares issued to share-
holders in reinvestment of
dividends & distributions .............. 419,954 4,758,904
----------- -----------
Total issued ........................... 9,243,192 106,072,795
Shares redeemed ........................ (9,258,453) (106,400,402)
----------- -----------
Net decrease ........................... (15,261) $ (327,607)
=========== ===========
- --------------------------------------------------------------------------------
18
<PAGE>
Merrill Lynch New York Municipal Bond Fund March 31, 2000
OFFICERS AND TRUSTEES
Terry K. Glenn, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, 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
Robert R. Martin, Trustee of Merrill Lynch New York Municipal Bond Fund has
recently retired. The Fund's Board of Trustees wishes Mr. Martin 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--3/00
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