MERRILL
LYNCH
PENNSYLVANIA
MUNICIPAL
BOND FUND
Annual Report July 31, 1994
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Merrill Lynch Pennsylvania
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, New Jersey
08543-9011
TO OUR SHAREHOLDERS
<PAGE>
The expectation of increasing inflationary pressures and higher
interest rates initially heightened investor concerns and increased
financial market volatility during the July quarter. However, as the
quarter progressed, it was the weakness of the US dollar in foreign
exchange markets that dominated the financial news and prolonged
stock and bond market declines. Although the US dollar had
strengthened slightly by July quarter-end, which may have improved
investor confidence in the stock and bond markets, the possibility
of continued tightening by the Federal Reserve Board resurfaced
following Chairman Alan Greenspan's recent congressional testimony.
Nevertheless, as the quarter drew to a close, a lower-than-expected
rate of growth reported for the US economy during the second
calendar quarter allayed investor concerns and led to stock and bond
market rallies.
During the July quarter, the US dollar's weakness relative to other
major currencies reflected the deteriorating US trade deficit and
widening net long-term capital outflows. In 1993, an expanding US
economy and recession in other industrial countries led to a higher
level of imports and weaker export growth, widening the US trade
deficit further. In addition, global investors favored non-US dollar
denominated assets throughout 1993, which has further depressed the
dollar's value. This trend is not improving significantly thus far
in 1994 since foreign inflows into US capital markets continue to
decline, although US investors are investing outside of the United
States to a lesser degree.
Over the longer term, if the economies of the United States' major
trading partners expand (improving the prospects for US export
growth), the outlook for the US dollar is likely to improve. In the
near term, central banks have attempted to reverse the dollar's
decline through currency market intervention. These efforts have met
with limited success thus far, giving rise to the concern that the
Federal Reserve Board will be forced to continue to raise short-term
interest rates to attract investment capital back to the United
States and bolster the dollar's value. However, further interest
rate increases may jeopardize the US economic expansion. Despite
evidence of a moderating trend in the US economy, Federal Reserve
Board Chairman Alan Greenspan indicated in his July Humphrey-Hawkins
testimony that the central bank would prefer to err on the side of
too much monetary tightening rather than too little. In the weeks
ahead, investors will continue to assess economic data and
inflationary trends as they focus on the US dollar in order to gauge
whether further increases in short-term interest rates are imminent.
Continued indications of moderate and sustainable levels of economic
growth would be positive for the US capital markets.
<PAGE>
The Municipal Market
Long-term tax-exempt bond yields ended the July quarter essentially
unchanged. The Bond Buyer Revenue Bond Index rose five basis points
(0.05%) to 6.47%. The Index, however, failed to capture the dramatic
bond rally on July 29, 1994, when municipal bond yields had their
largest one-day decline thus far this year. Responding to reports of
a continued mild inflationary outlook and a potentially weakening
economy, municipal bond yields declined by approximately 10 basis
points. US Treasury bonds displayed a similar pattern over the last
three months, ending with an equally dramatic rally on July 29,
1994. Long-term US Treasury bonds ended the quarter yielding
approximately 7.40%.
The tax-exempt bond market has continued to be very volatile with
yields fluctuating by as much as 15 basis points from week to week.
This continued volatility is largely a reflection of the same lack
of conviction regarding the near-term direction of interest rates
that has prevailed for much of 1994. Throughout this past quarter,
the municipal bond market had been unable to maintain a consensus
regarding either the potential strength of the current economic
recovery or the resultant response by the Federal Reserve Board.
However, a number of economic indicators released in late July began
to suggest that the robust pace of recent economic growth was
slowing. This promoted a more positive market environment,
culminating in the market rally on July 29, 1994.
The municipal bond market's technical position has remained
supportive. Approximately $40 billion in long-term securities were
issued during the three months ended July 31, 1994. This represents
a decline of over 50% versus the July quarter from the previous
year. As discussed in earlier reports, this reduction in new-issue
supply has minimized the selling pressure by larger institutional
investors who fear being unable to purchase sizable amounts of
securities in the future. Such a significant decline in issuance
would normally be expected to trigger a decline in yields as
investors chase a commodity in scarce supply. Investor demand,
however, has also diminished somewhat in recent months as net flows
into long-term municipal bond funds have dramatically slowed or, in
some instances, reversed. Consequently, the supply/demand
relationship within the municipal bond market has remained in
balance, promoting the overall stability in yield levels seen in the
past months.
<PAGE>
With after-tax equivalents in excess of 10%, long-term tax-exempt
bonds continue to represent considerable value relative to other
investment alternatives. We continue to anticipate that municipal
bond yields will decline further in late 1994 and into 1995. The
economic impact of the significant interest rate increases
experienced since early February have yet to be totally realized.
The resultant drag on the economy should provide the foundation for
further interest rate declines. Under such a scenario, current tax-
exempt bond yields may prove to represent considerable value.
Fiscal Year In Review
During the past twelve months, the municipal bond market has been
extremely volatile. As measured by the Bond Buyer Revenue Bond
Index, long-term tax-exempt bond yields ranged from a low of 5.41%
on October 14, 1993 to a high of 6.60% on May 12, 1994. At year-end
July 31, 1994, the Index was near the peak for the period, yielding
6.47%. The change in direction of long-term interest rates occurred
as a result of the US economy heating up during the fourth quarter
of 1993 and generating momentum which carried forward into 1994.
This led the Federal Reserve Board to tighten monetary policy in
February in an attempt to prevent an increase in inflationary
pressures on the economy. In response to the rapidly changing
investment climate, prices of long-term fixed income securities fell
sharply.
Merrill Lynch Pennsylvania Municipal Bond Fund altered its portfolio
strategy during the past twelve months as market psychology changed.
Entering the year fully invested, the Fund took advantage of the
decline in interest rates through the fall of 1993. However, as
evidence of a booming economy emerged early in 1994, we became
cautious on the market. Strategy centered on raising the Fund's cash
reserves to approximately 10% of net assets and restructuring the
portfolio's holdings to include a greater percentage of defensive
bonds. This entailed selling discount coupons and buying higher-
coupon bonds which are priced to call. As a result, we were able to
mute some of the volatility that occurred and, in effect, limit the
decline in total returns of the Fund's Class A and Class B Shares
that the Fund experienced during this very difficult period in 1994.
In Conclusion
We appreciate your ongoing interest in Merrill Lynch Pennsylvania
Municipal Bond Fund, and we look forward to assisting you with your
financial needs in the months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
<PAGE>
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
August 25, 1994
PERFORMANCE DATA
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
Class A and Class B Shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Average Annual Total Return--Class A Shares*
% Return Without % Return With
Sales Charge Sales Charge**
Year Ended 6/30/94 +0.36% -3.65%
Inception (8/31/90)
through 6/30/94 +8.65 +7.50
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
GRAPHIC MATERIAL APPEARS HERE. SEE APPENDIX,
GRAPHIC AND IMAGE MATERIAL: Item 1.
Average Annual Total Return--Class B Shares*
% Return % Return
Without CDSC With CDSC**
Year Ended 6/30/94 -0.15% -3.92%
Inception (8/31/90)
through 6/30/94 +8.08 +7.87
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced
to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
GRAPHIC MATERIAL APPEARS HERE. SEE APPENDIX,
GRAPHIC AND IMAGE MATERIAL: Item 2.
PERFORMANCE DATA (concluded)
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
8/31/90--12/31/90 $10.00 $10.05 -- $0.237 + 2.90%
1991 10.05 10.61 -- 0.678 +12.75
1992 10.61 10.90 $0.005 0.660 + 9.31
1993 10.90 11.65 0.040 0.638 +13.39
1/1/94--7/31/94 11.65 11.00 -- 0.336 - 2.60
------ ------
Total $0.045 Total $2.549
Cumulative total return as of 7/31/94: +40.06%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
8/31/90--12/31/90 $10.00 $10.05 -- $0.219 + 2.73%
1991 10.05 10.61 -- 0.626 +12.18
1992 10.61 10.90 $0.005 0.605 + 8.76
1993 10.90 11.65 0.040 0.580 +12.82
1/1/94--7/31/94 11.65 11.00 -- 0.304 - 2.87
------ ------
Total $0.045 Total $2.334
Cumulative total return as of 7/31/94: +37.33%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<PAGE>
<TABLE>
Recent Performance Results*
<CAPTION>
12 Month 3 Month
7/31/94 4/30/94 7/31/93 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $11.00 $10.89 $11.39 -3.09%(1) +1.01%
Class B Shares 11.00 10.89 11.39 -3.09(1) +1.01
Class A Shares--Total Return +2.37(2) +2.40(3)
Class B Shares--Total Return +1.86(4) +2.27(5)
Class A Shares--Standardized 30-day Yield 5.08%
Class B Shares--Standardized 30-day Yield 4.78%
<FN>
*Investment results shown for the 3-month and 12-month periods are
before the deduction of any sales charges.
(1)Percent change includes reinvestment of $0.040 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.624 per share ordinary
income dividends and $0.040 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.149 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.567 per share ordinary
income dividends and $0.040 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.136 per share ordinary
income dividends.
</TABLE>
<PAGE>
PORTFOLIO ABBREVIATIONS
To simplify the listing of Merrill Lynch Pennsylvania
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 below and at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
GO General Obligation Bonds
HFA Housing Finance Authority
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
LT Limited Tax
M/F Multi-Family
MVRICS Municipal Variable Rate Inverse Class Securities
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Pennsylvania--93.4%
<S> <S> <C> <S> <C>
AAA Aaa $ 500 Allegheny County, Pennsylvania, Airport Revenue Bonds (Greater Pittsburgh
International Airport), AMT, Series C, 8.25% due 1/01/2016 (c)(k) $ 558
NR A 1,575 Allegheny County, Pennsylvania, Higher Education Building Authority Revenue
Bonds (Community College of Allegheny County), Series A, 5.80% due 6/01/2013 1,502
BBB NR 500 Allegheny County, Pennsylvania, Hospital Development Authority, Health and
Education Revenue Bonds (Rehabilitation Institute of Pittsburgh), 7% due
6/01/2022 502
<PAGE>
Allegheny County, Pennsylvania, Hospital Development Authority, Presbyterian
Health Center Revenue Bonds, VRDN (a)(c):
A1+ VMIG1 700 Series A, 2.85% due 3/01/2020 700
A1+ VMIG1 1,400 Series C, 2.85% due 3/01/2020 1,400
A1+ VMIG1 100 Series D, 2.85% due 3/01/2020 100
AAA Aaa 475 Allegheny County, Pennsylvania, Institutional District Bonds, UT, Series 18,
7.30% due 4/20/2009 (c) 515
NR Aaa 575 Allegheny County, Pennsylvania, Residential Finance Authority, S/F Mortgage
Revenue Bonds, Series L, 7.50% due 6/01/2015 (e) 590
Allegheny County, Pennsylvania, Sanitation Authority, Sewer Revenue Bonds:
AAA Aaa 5,265 Refunding, 5.85% due 12/01/2016 (d)(j) 1,286
AAA Aaa 3,000 Series B, 6% due 12/01/2011 (c) 3,013
AAA Aaa 750 Series C, 6.50% due 12/01/2001 (d)(f) 815
AAA Aaa 1,250 Beaver County, Pennsylvania, Hospital Authority Revenue Bonds (Medical
Center of Beaver, Pennsylvania, Inc.), Series A, 6.25% due 7/01/2022 (b) 1,250
AAA Aaa 500 Beaver County, Pennsylvania, IDA, PCR, Refunding (Ohio Edison Project),
Series A, 7.75% due 9/01/2024 (d) 562
AAA Aaa 2,000 Bristol Township, Pennsylvania, School District, GO, Series A, 6.625% due
2/15/2002 (c)(f) 2,203
AAA Aaa 1,000 Bucks County, Pennsylvania, IDA, Revenue Bonds (Grand View Hospital Project),
7% due 7/01/2001 (b)(f) 1,124
NR A1 750 Central Bucks County, Pennsylvania, School District, GO, 6.90% due 2/01/2008 798
AAA Aaa 815 Danville, Pennsylvania, Area School District, GO, 6% due 5/01/2007 (c) 819
NR Baa 500 Dauphin County, Pennsylvania, IDA, Water Development Revenue Bonds (Dauphin
Consolidated Water Supply), AMT, Series A, 6.90% due 6/01/2024 536
AAA Aaa 575 Delaware County, Pennsylvania, College Authority Revenue Bonds (Haverford College),
7.375% due 11/15/2000 (c)(f) 657
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Pennsylvania (continued)
<S> <S> <C> <S> <C>
A- NR $ 2,600 Delaware County, Pennsylvania, Hospital Authority Revenue Bonds (Riddle
Memorial Hospital), 6.50% due 1/01/2022 $ 2,519
A+ Aa3 1,000 Delaware County, Pennsylvania, IDA, Revenue Refunding Bonds (Resources Recovery
Project), Series A, 8.10% due 12/01/2013 1,064
NR NR 500 Delaware County, Pennsylvania, University Authority Revenue Bonds (Villanova
University), 7.75% due 8/01/1998 (f) 561
AAA Aaa 2,450 Derry, Pennsylvania, Area School District, GO, 6.50% due 2/01/2001 (c)(f) 2,634
Erie County, Pennsylvania, IDA, PCR, Refunding (International Paper Co.):
A- A3 1,000 7.15% due 9/01/2013 1,046
A- A3 425 Series A, 7.60% due 9/01/2010 457
AAA Aaa 1,155 Exeter Township, Pennsylvania, School District, GO, UT, 6.65% due 5/15/2010 (d) 1,212
A- NR 4,990 Gettysburg, Pennsylvania, Municipal Authority, College Revenue Refunding Bonds
(Gettysburg College Project), 6.60% due 2/15/2012 5,082
AAA Aaa 705 Gettysburg, Pennsylvania, Municipal Authority, Water Revenue Refunding Bonds,
6.25% due 10/01/2009 (c)(l) 715
AAA Aaa 2,000 Lancaster County, Pennsylvania, Hospital Authority Revenue Refunding Bonds
(Health Center--Masonic Homes Project), 5.50% due 11/15/2014 (b) 1,850
NR Baa1 1,500 Latrobe, Pennsylvania, IDA, College Revenue Bonds (Saint Vincent College Project),
6.75% due 5/01/2024 1,492
BBB+ NR 2,000 Lebanon County, Pennsylvania, Good Samaritan Hospital Authority, Revenue
Refunding Bonds (Good Samaritan Hospital Project), 6% due 11/15/2018 1,802
AAA Aaa 1,250 Lehigh County, Pennsylvania, GO, UT, Series A, 6% due 10/15/1999 (b)(f) 1,311
AAA Aaa 1,000 Lewisburg, Pennsylvania, Area School District, GO, UT, 6.25% due 6/01/2018 (c) 1,006
Luzerne County, Pennsylvania, IDA, Exempt Facilities Revenue Bonds (Pennsylvania
Gas & Water Co. Project):
BBB- Baa3 2,100 Refunding, Series A, 6.05% due 1/01/2019 1,951
BBB- Baa3 1,500 Series B, AMT, 7.125% due 12/01/2022 1,526
<PAGE>
NR Baa1 2,000 McKeesport, Pennsylvania, Hospital Authority Revenue Bonds (McKeesport
Hospital Project), 6.50% due 7/01/2008 2,019
Montgomery County, Pennsylvania, Higher Education and Health Authority, Hospital
Revenue Bonds:
AAA Aaa 2,500 (Abington Hospital), MVRICS, Series A, 10.045% due 6/01/2011 (b)(m) 2,703
BBB NR 225 (Jeanes Health System Project), 8.625% due 7/01/2000 (f) 270
BBB NR 575 (Jeanes Health System Project), 8.75% due 7/01/2000 (f) 692
BBB+ NR 1,250 (Pottstown Memorial Medical Center Project), 7.35% due 11/15/2005 1,313
BBB+ NR 475 Moon Transportation Authority, Pennsylvania, Highway Improvement Revenue Bonds,
9.50% due 2/01/2016 (l) 527
BBB NR 1,435 Montgomery County, Pennsylvania, Higher Educational and Health Authority
Revenue Bonds (Northwestern Corp.), 7% due 6/01/2012 1,454
A A2 3,000 New Morgan, Pennsylvania, IDA, Solid Waste Disposal Revenue Bonds (New Morgan
Landfill Company Inc. Project), AMT, 6.50% due 4/01/2019 2,974
BBB- NR 2,095 Northampton County, Pennsylvania, Higher Education Authority Revenue Bonds
(Moravian College), 8.20% due 6/01/2011 2,376
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Pennsylvania (continued)
<S> <S> <C> <S> <C>
BBB NR $ 1,500 Northeastern Pennsylvania Hospital and Educational Authority, University
Revenue Refunding Bonds (Wilkes University), 5.625% due 10/01/2018 $ 1,336
AAA Aaa 2,000 Pennsylvania, HFA, Refunding, Rental Housing Bonds, 6.50% due 7/01/2023 (h) 2,004
AA Aa 2,000 Pennsylvania, HFA, RIB, AMT, 8.73% due 4/01/2025 (m) 1,800
AA Aa 1,000 Pennsylvania, HFA, RIB, Refunding, Series 1991-31C, AMT, 10.674% due
10/01/2023 (m) 1,039
AA NR 500 Pennsylvania Infrastructure Investment Authority Revenue Bonds, Pennvest Sub-
Series B, 6.80% due 9/01/2010 529
Pennsylvania Intergovernmental Cooperative Authority, City of Philadelphia
Funding Program, Special Tax Revenue Bonds:
NR Baa 2,000 6.80% due 6/15/2002 (f) 2,203
AAA Aaa 2,570 5.625% due 6/15/2023 (c) 2,369
A NR 2,000 Pennsylvania State Finance Authority, Revenue Refunding Bonds (Municipal
Capital Improvements Program), 6.60% due 11/01/2009 2,067
<PAGE>
AA- NR 1,300 Pennsylvania State, GO, Series A, 7% due 5/01/2000 (f) 1,441
Pennsylvania State, HFA, S/F Mortgage Revenue Bonds, AMT:
AA Aa 1,730 Series 27, 8.15% due 10/01/2021 1,850
AA Aa 1,145 Series 28, 7.65% due 10/01/2023 1,183
A-1+ VMIG1 3,300 Pennsylvania State Higher Education Assistance Agency, Student Loan Revenue
Bonds, Series B, AMT, VRDN, 2.35% due 7/01/2018 (a) 3,300
Pennsylvania State Higher Educational Facilities Authority, College and
University Revenue Bonds:
A+ NR 1,000 (Carnegie Mellon University), 9% due 11/01/2009 1,082
NR Baa 2,295 (Delaware Valley College of Science & Agriculture), 7% due 4/01/2022 2,295
AAA Aaa 270 (Drexel University), 1st Series, 7.70% due 5/01/2012 (c) 287
NR NR 1,030 (Pennsylvania College Podiatric Medicine), 8.50% due 10/01/2014 1,093
BBB+ NR 1,250 Refunding (Allegheny College Project), Series B, 6% due 11/01/2022 1,153
Pennsylvania State Higher Educational Facilities Authority, Revenue Refunding
Bonds:
BBB+ NR 2,300 (Drexel University), 6.375% due 5/01/2017 2,258
A+ Aa 2,000 (Thomas Jefferson University), Series A, 6.625% due 8/15/2009 2,092
Pennsylvania State, IDA, Economic Development Revenue Bonds:
AAA Aaa 3,440 6% due 1/01/2012 (b) 3,440
A- A 1,225 Series A, 7% due 7/01/2001 (f) 1,373
Pennsylvania State Turnpike Commission, Turnpike Revenue Bonds (f):
AAA Aaa 250 Series H, 7.40% due 12/01/2000 (d) 285
AAA Aaa 1,500 Series J, 7.20% due 12/01/2001 (d) 1,709
AAA Aaa 700 Series K, Custodian Receipts/Certificates, 7.50% due 12/01/1999 796
Philadelphia, Pennsylvania, Authority for IDR:
A-1 VMIG1 200 (Commercial-Development-Philadelphia Airport Hotel), AMT, VRDN,
3.05% due 12/01/2017 (a) 200
AAA Aaa 375 (Conversion Project-PGH Development Corp.), 7% due 7/01/1999 (b)(f) 414
A+ NR 1,895 (National Board of Medical Examiners Project), 6.75% due 5/01/2012 2,030
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Pennsylvania (continued)
<S> <S> <C> <S> <C>
Philadelphia, Pennsylvania, Gas Works Revenue Bonds:
AAA Aaa $ 370 11th Series A, 7.875% due 7/01/1997 (f) $ 409
AAA Aaa 750 13th Series, 7.70% due 6/15/2001 (f) 872
AAA Aaa 500 12th Series B, 7% due 5/15/2020 (c)(n) 578
BBB Baa1 2,925 Refunding, 14th Series A, 6.375% due 7/01/2014 2,925
BBB Baa1 5,250 Refunding, 14th Series A, 6.375% due 7/01/2026 5,134
<PAGE>
Philadelphia, Pennsylvania, Hospitals and Higher Education Facilities Authority
Revenue Bonds:
NR Aaa 1,400 (Children's Hospital Philadelphia Project), Series A, 6.50% due 2/15/2002 (f) 1,533
A- NR 1,015 (Children's Seashore House), Series A, 7% due 8/15/2017 1,050
A- NR 1,355 (Children's Seashore House), Series B, 7% due 8/15/2022 1,394
BBB NR 3,100 (Northern Corp.), 7.125% due 6/01/2018 3,164
AAA Aaa 500 Refunding (Magee Rehabilitation Hospital), 7% due 12/01/2005 (b) 546
AAA Aaa 1,000 Refunding (Magee Rehabilitation Hospital), 7% due 12/01/2010 (b) 1,091
A A 420 Refunding (Pennsylvania Hospital), 7.25% due 7/01/2014 441
BBB+ NR 1,000 Refunding (Philadelphia MR Project), 6.20% due 8/01/2011 960
A- NR 3,000 Refunding (Presbyterian Medical Center), 6.65% due 12/01/2019 2,978
BBB+ Baa1 2,500 Refunding (Temple University Hospital), Series A, 6.625% due 11/15/2023 2,387
Philadelphia, Pennsylvania, Municipal Authority, Revenue Refunding Bonds (d):
AAA Aaa 40 7.80% due 4/01/1998 (f) 45
AAA Aaa 360 7.80% due 4/01/2000 (f) 409
AAA Aaa 1,000 (Lease), Series C, 5.25% due 4/01/2018 877
NR Aaa 990 Philadelphia, Pennsylvania, Redevelopment Authority, M/F Housing Revenue
Refunding Bonds (Washington Square West), Series C, 6.95% due 11/15/2024 (h)(i) 1,020
Philadelphia, Pennsylvania, Water and Sewer Revenue Bonds:
AAA Baa 745 11th Series, Sub-Series B, 9.10% due 10/01/1995 (f) 801
BBB Baa 1,000 16th Series, 7.50% due 8/01/2010 1,086
BBB Baa 2,000 Philadelphia, Pennsylvania, Water and Wastewater Revenue Refunding Bonds,
5.75% due 6/15/2013 1,840
AAA Aaa 2,000 Pittsburgh, Pennsylvania, Revenue Bonds, Series B, 6.25% due 9/01/2016 (c) 2,022
AAA Aaa 1,000 Reading, Pennsylvania, Refunding Bonds, GO, UT, 6.50% due 11/15/2002 (b)(f) 1,089
Sayre, Pennsylvania, Health Care Facilities Authority Revenue Bonds, VHA
(Pennsylvania Capital Financing Project), VRDN (a)(b):
A-1 Aaa 2,200 Series B, 2.85% due 12/01/2020 2,200
A-2 Aaa 1,000 Series I, 2.85% due 12/01/2020 1,000
A-1 NR 500 Schuylkill County, Pennsylvania, IDA, Resource Recovery Revenue Bonds (North-
eastern Power Company), VRDN, 2.75% due 12/01/2011 (a) 500
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Pennsylvania (concluded)
<S> <S> <C> <S> <C>
Scranton-Lackawanna, Pennsylvania, Health and Welfare Authority Revenue Bonds
(University of Scranton Project):
A- NR $ 1,750 Refunding, Series A, 6.50% due 3/01/2013 $ 1,771
NR NR 460 Series C, 7.50% due 6/15/2000 (f) 525
AAA Aaa 1,000 York County, Pennsylvania, Hospital Authority Revenue Bonds (York Hospital),
7% due 7/01/2001 (b)(f) 1,116
A1+ P1 3,200 York County, Pennsylvania, IDA, PCR, Refunding (Philadelphia Electric Company),
VRDN, Series A, 2.80% due 8/01/2016 (a) 3,200
AAA Aaa 2,000 York County, Pennsylvania, GO, LT, South Western School District, 6.40% due
6/15/2012 (d) 2,080
Puerto Rico--5.8%
Puerto Rico Commonwealth, Aqueduct and Sewer Authority Revenue Bonds, Series A:
BB Baa 2,150 7.875% due 7/01/2017 2,337
BB Baa 310 7% due 7/01/2019 323
A Baa1 800 Puerto Rico Commonwealth, Highway Authority, Highway Revenue Refunding Bonds,
Series R, 6.75% due 7/01/2005 870
AAA NR 740 Puerto Rico Commonwealth, Public Improvement GO, 7.70% due 7/01/2000 (f) 857
Puerto Rico Electric Power Authority, Power Revenue Refunding Bonds:
AAA Baa1 100 Refunding, Series M, 8% due 7/01/1998 (f) 113
A- Baa1 335 Series O, 7.125% due 7/01/1999 (f) 373
A- Baa1 190 Series O, 7.125% due 7/01/2014 203
A- Baa1 2,000 Series R, 6.25% due 7/01/2017 2,010
A Baa1 2,365 Puerto Rico Public Buildings Authority, Guaranteed Public Education and
Health Facilities, Refunding Bonds, Series M, 5.50% due 7/01/2021 2,124
<PAGE>
Total Investments (Cost--$153,720)--99.2% 157,367
Other Assets Less Liabilities--0.8% 1,290
--------
Net Assets--100.0% $158,657
========
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at July 31, 1994.
(b)AMBAC Insured.
(c)MBIA Insured.
(d)FGIC Insured.
(e)GNMA Collateralized.
(f)Prerefunded.
(g)FSA Insured.
(h)FNMA Collateralized.
(i)FHA Insured.
(j)Represents the yield to maturity on this zero coupon issue.
(k)Partial Prerefunded.
(l)Bank Qualified.
(m) 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 July 31, 1994.
(n)Escrowed to Maturity.
Ratings of issues shown have not been audited by Deloitte & Touche
LLP.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of July 31, 1994
<CAPTION>
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$153,720,472) (Note 1a) $157,366,771
Cash 60,215
Receivables:
Interest $ 2,151,508
Beneficial interest sold 276,985 2,428,493
------------
Deferred organization expenses (Note 1e) 17,452
Prepaid registration fees and other assets (Note 1e) 29,305
------------
Total assets 159,902,236
------------
<PAGE>
Liabilities: Payables:
Beneficial interest redeemed 907,979
Dividends to shareholders (Note 1f) 132,136
Investment adviser (Note 2) 73,842
Distributor (Note 2) 55,154 1,169,111
------------
Accrued expenses and other liabilities 76,132
------------
Total liabilities 1,245,243
------------
Net Assets: Net assets $158,656,993
============
Net Assets Class A--Shares of beneficial interest, $.10 par value, unlimited
Consist of: number of shares authorized $ 256,812
Class B--Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 1,186,088
Paid-in capital in excess of par 153,830,099
Accumulated distribution in excess of realized capital gains--net (262,305)
Unrealized appreciation on investments--net 3,646,299
------------
Net assets $158,656,993
============
Net Asset Class A--Based on net assets of $28,239,285 and 2,568,115 shares of
Value: beneficial interest outstanding $ 11.00
============
Class B--Based on net assets of $130,417,708 and 11,860,884 shares of
beneficial interest outstanding $ 11.00
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended
July 31, 1994
<S> <S> <C>
Investment Interest and amortization of premium and discount earned $ 9,378,981
Income
(Note 1d):
<PAGE>
Expenses: Investment advisory fees (Note 2) 852,481
Distribution fees--Class B (Note 2) 629,787
Transfer agent fees--Class B (Note 2) 58,820
Accounting services (Note 2) 58,164
Professional fees 51,515
Printing and shareholder reports 50,057
Registration fees (Note 1e) 21,316
Custodian fees 19,820
Amortization of organization expenses (Note 1e) 16,208
Pricing fees 14,615
Transfer agent fees--Class A (Note 2) 11,686
Trustees' fees and expenses 6,324
Other 2,739
------------
Total expenses 1,793,532
------------
Investment income--net 7,585,449
------------
Realized & Realized gain on investments--net 96,923
Unrealized Change in unrealized appreciation on investments--net (5,481,887)
Gain on ------------
Investments Net Increase in Net Assets Resulting from Operations $ 2,200,485
- --Net (Notes ============
1d & 3):
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended July 31,
Increase (Decrease) in Net Assets: 1994 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 7,585,449 $ 5,696,106
Realized gain on investments--net 96,923 495,162
Change in unrealized appreciation on investments--net (5,481,887) 3,612,233
------------ ------------
Net increase in net assets resulting from operations 2,200,485 9,803,501
------------ ------------
<PAGE>
Dividends & Investment income--net:
Distribu- Class A (1,539,524) (1,219,822)
tions to Class B (6,045,925) (4,476,284)
Shareholders Realized gain on investments--net:
(Note 1f): Class A (111,974) (10,105)
Class B (480,111) (44,305)
In excess of realized gain on investments--net:
Class A (49,607) --
Class B (212,698) --
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (8,439,839) (5,750,516)
------------ ------------
Beneficial Net increase in net assets derived from beneficial interest
Interest transactions 27,793,932 50,306,502
Transactions ------------ ------------
(Note 4):
Net Assets: Net increase in net assets 21,554,578 54,359,487
Beginning of year 137,102,415 82,742,928
------------ ------------
End of year $158,656,993 $137,102,415
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<PAGE>
<TABLE>
Financial Highlights
<CAPTION>
Class A
For the
Period
The following per share data and ratios have been derived Aug. 31,
from information provided in the financial statements. 1990++ to
For the Year Ended July 31, July 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C>
Per Share Net asset value beginning of period $ 11.39 $ 11.04 $ 10.27 $ 10.00
Operating --------- --------- --------- ---------
Performance: Investment income--net .60 .63 .67 .61
Realized and unrealized gain (loss)
on investments--net (.33) .36 .77 .27
--------- --------- --------- ---------
Total from investment operations .27 .99 1.44 .88
--------- --------- --------- ---------
Less dividends and distributions:
Investment income--net (.60) (.63) (.67) (.61)
Realized gain on investments--net (.04) (.01) -- --
In excess of realized gain on investments--net (.02) -- -- --
--------- --------- --------- ---------
Total dividends and distributions (.66) (.64) (.67) (.61)
--------- --------- --------- ---------
Net asset value, end of period $ 11.00 $ 11.39 $ 11.04 $ 10.27
========= ========= ========= =========
Total Based on net asset value per share 2.37% 9.30% 14.53% 9.30%+++
Investment ========= ========= ========= =========
Return:**
Ratios to Expenses, net of reimbursement .75% .69% .55% .39%*
Average ========= ========= ========= =========
Net Assets: Expenses .75% .81% .97% 1.57%*
========= ========= ========= =========
Investment income--net 5.30% 5.70% 6.33% 6.71%*
========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $ 28,239 $ 27,639 $ 17,144 $ 9,402
Data: ========= ========= ========= =========
Portfolio turnover 37.73% 9.69% 4.14% --
========= ========= ========= =========
<FN>
++Commencement of Operations.
+++Aggregate total investment return.
*Annualized.
**Total investment returns exclude the effects of sales loads.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class B
For the
Period
The following per share data and ratios have been derived Aug. 31,
from information provided in the financial statements. 1990++ to
For the Year Ended July 31, July 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C>
Per Share Net asset value beginning of period $ 11.39 $ 11.04 $ 10.27 $ 10.00
Operating --------- --------- --------- ---------
Performance: Investment income--net .54 .58 .62 .57
Realized and unrealized gain (loss)
on investments--net (.33) .36 .77 .27
--------- --------- --------- ---------
Total from investment operations .21 .94 1.39 .84
--------- --------- --------- ---------
Less dividends and distributions:
Investment income--net (.54) (.58) (.62) (.57)
Realized gain on investments--net (.04) (.01) -- --
In excess of realized capital gain on
investments--net (.02) -- -- --
--------- --------- --------- ---------
Total dividends and distributions (.60) (.59) (.62) (.57)
--------- --------- --------- ---------
Net asset value, end of period $ 11.00 $ 11.39 $ 11.04 $ 10.27
========= ========= ========= =========
Total Based on net asset value per share 1.86% 8.75% 13.94% 8.81%+++
Investment ========= ========= ========= =========
Return:**
Ratios to Expenses, excluding distribution fees
Average and net of reimbursement .75% .69% .56% .40%*
Net Assets: ========= ========= ========= =========
Expenses, net of reimbursement 1.25% 1.19% 1.06% .90%*
========= ========= ========= =========
Expenses 1.25% 1.32% 1.48% 2.07%*
========= ========= ========= =========
Investment income--net 4.80% 5.19% 5.81% 6.21%*
========= ========= ========= =========
<PAGE>
Supplemental Net assets, end of period (in thousands) $ 130,418 $ 109,463 $ 65,599 $ 30,435
Data: ========= ========= ========= =========
Portfolio turnover 37.73% 9.69% 4.14% --
========= ========= ========= =========
<FN>
++Commencement of Operations.
+++Aggregate total investment return.
*Annualized.
**Total investment returns exclude the effects of sales loads.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Pennsylvania Municipal Bond Fund (the "Fund") is part
of Merrill Lynch Multi-State Municipal Series Trust (the "Trust").
The Fund is registered under the Investment Company Act of 1940 as a
non-diversified, open-end management investment company. The Fund
offers both Class A and Class B Shares. Class A Shares are sold with
a front-end sales charge. Class B Shares may be subject to a
contingent deferred sales charge. Both classes of shares have
identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class B Shares bear certain
expenses related to the distribution of such shares and have
exclusive voting rights with respect to matters relating to such
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 in which the Fund invests are traded primarily in the
over-the-counter municipal bond and money markets and are valued at
the last available bid price in the over-the-counter market or on
the basis of 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 on an amortized cost basis, which approximates market value.
Options, which are traded on exchanges, are valued at their last
sale price as of the close of such exchanges or, lacking any sales,
at the last available bid price. 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.
<PAGE>
(b) Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures
contracts for the purpose of hedging the market risk on existing
securities or the intended purchase of securities. Futures contracts
are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a
contract, the Fund deposits and maintains as collateral such initial
margin as required by the exchange on which the transaction is
effected. Pursuant to the contract, the Fund agrees to receive from
or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unrealized
gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Original issue discounts and market premiums are amortized
into interest income. Realized gains and losses on security
transactions are determined on the identified cost basis.
(e) Deferred organization expenses and prepaid registration fees--
Deferred organization expenses are charged to expense on a straight-
line basis over a five-year period. 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.
NOTES TO FINANCIAL STATEMENTS (concluded)
<PAGE>
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). Effective January 1, 1994, the
investment advisory business of FAM was reorganized from a
corporation to a limited partnership. Both prior to and after the
reorganization, ultimate control of FAM was vested with Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of ML & Co. The limited partners are ML & Co. and Fund
Asset Management, Inc. ("FAMI"), which is also an indirect wholly-
owned subsidiary of ML & Co. The Fund has also entered into
Distribution Agreements and a Distribution Plan with Merrill Lynch
Funds Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Investment Management, Inc. ("MLIM"),
which is also a wholly-owned subsidiary of ML & Co.
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. The Investment Advisory Agreement
obligates FAM to reimburse the Fund to the extent the Fund's
expenses (excluding interest, taxes, distribution fees, brokerage
fees and commissions, and extraordinary items) exceed 2.5% of the
Fund's first $30 million of average daily net assets, 2.0% of the
next $70 million of average daily net assets, and 1.5% of the
average daily net assets in excess thereof. FAM's obligation to
reimburse the Fund is limited to the amount of the management fee.
No fee payment will be made to the Investment Adviser during any
fiscal year which will cause such expenses to exceed expense
limitations at the time of payment.
Pursuant to a distribution plan (the "Distribution Plan") adopted by
the Fund in accordance with Rule 12b-1 under the Investment Company
Act of 1940, the Fund pays the Distributor ongoing account
maintenance and distribution fees which are accrued daily and paid
monthly at the annual rate of 0.25% and 0.25%, respectively, of the
average daily net assets of the Class B Shares of the Fund. Pursuant
to a sub-agreement with the Distributor, Merrill Lynch, Pierce,
Fenner & Smith Inc. ("MLPF&S") also provides account maintenance and
distribution services to the Fund. As authorized by the Plan, the
Distributor has entered into an agreement with MLPF&S, an affiliate
of FAM, which provides for the compensation of MLPF&S for providing
distribution-related services to the Fund.
<PAGE>
For the year ended July 31, 1994, MLFD earned underwriting discounts
of $8,083, and MLPF&S earned dealer concessions of $85,614 on sales
of the Fund's Class A Shares.
MLPF&S also received contingent deferred sales charges of $204,747,
relating to Class B Share transactions during the period.
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, FAMI, PSI, MLIM, MLFD, FDS, MLPF&S, and/or ML &
Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended July 31, 1994 were $70,956,944 and $54,703,999,
respectively.
Net realized and unrealized gains (losses) as of July 31, 1994 were
as follows:
Realized Unrealized
Total Gains (Losses) Gains
Long-term investments $(1,077,165) $ 3,646,299
Financial futures contracts 1,174,088 --
----------- -----------
Total $ 96,923 $ 3,646,299
=========== ===========
As of July 31, 1994, net unrealized appreciation for Federal income
tax purposes aggregated at $3,646,299, of which $5,827,047 related
to appreciated securities and $2,180,748 related to depreciated
securities. The aggregate cost of investments at July 31, 1994 for
Federal income tax purposes was $153,720,472.
4. Beneficial Interest Transactions:
Net increase in net assets derived from beneficial interest
transactions was $27,793,932 and $50,306,502 for the years ended
July 31, 1994 and July 31, 1993, respectively.
Transactions in shares of beneficial interest for Class A and Class
B Shares were as follows:
<PAGE>
Class A Shares for the Dollar
Year Ended July 31, 1994 Shares Amount
Shares sold 550,023 $ 6,297,702
Shares issued to shareholders
in reinvestment of dividends
and distributions 80,433 915,022
----------- -----------
Total issued 630,456 7,212,724
Shares redeemed (489,751) (5,530,577)
----------- -----------
Net increase 140,705 $ 1,682,147
=========== ===========
Class A Shares for the Dollar
Year Ended July 31, 1993 Shares Amount
Shares sold 979,613 $10,925,850
Shares issued to shareholders
in reinvestment of dividends
and distributions 55,368 613,668
----------- -----------
Total issued 1,034,981 11,539,518
Shares redeemed (161,016) (1,774,961)
----------- -----------
Net increase 873,965 $ 9,764,557
=========== ===========
Class B Shares for the Dollar
Year Ended July 31, 1994 Shares Amount
Shares sold 3,466,071 $39,679,393
Shares issued to shareholders
in reinvestment of dividends
and distributions 296,534 3,370,692
----------- -----------
Total issued 3,762,605 43,050,085
Shares redeemed (1,515,856) (16,938,300)
----------- -----------
Net increase 2,246,749 $26,111,785
=========== ===========
<PAGE>
Class B Shares for the Dollar
Year Ended July 31, 1993 Shares Amount
Shares sold 4,193,436 $46,355,142
Shares issued to shareholders
in reinvestment of dividends
and distributions 209,463 2,317,534
----------- -----------
Total issued 4,402,899 48,672,676
Shares redeemed (732,907) (8,130,731)
----------- -----------
Net increase 3,669,992 $40,541,945
=========== ===========
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
Merrill Lynch Pennsylvania Municipal Bond Fund of Merrill Lynch
Multi-State Municipal Series Trust:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of Merrill Lynch
Pennsylvania Municipal Bond Fund of Merrill Lynch Multi-State
Municipal Series Trust as of July 31, 1994, the related statements
of operations for the year then ended and changes in net assets for
each of the years in the two-year period then ended, and the
financial highlights for the three-year period then ended and for the
period August 31, 1990 (commencement of operations) to July 31,
1991. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at July 31,
1994 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Pennsylvania Municipal Bond Fund of Merrill Lynch
Multi-State Municipal Series Trust as of July 31, 1994, the results
of its operations, the changes in its net assets, and the financial
highlights for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
August 29, 1994
</AUDIT-REPORT>
<PAGE>
IMPORTANT TAX INFORMATION
All of the net investment income distributions paid monthly by
Merrill Lynch Pennsylvania Municipal Bond Fund during its taxable
year ended July 31, 1994 qualify as tax-exempt interest dividends
for Federal income tax purposes.
Additionally, the Fund distributed short-term capital gains of
$.022840 per share and long-term capital gains of $.040293 per share
to shareholders of record on December 22, 1993.
Please retain this information for your records.
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Kenneth S. Axelson, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Jerry Weiss, Secretary
Custodian
National Westminster Bank NJ
10 Exchange Place
Jersey City, New Jersey 07302
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
<PAGE>
APPENDIX: GRAPHIC AND IMAGE MATERIAL.
Item 1:
Total Return Based on a $10,000 Investment--Class A Shares*
A line graph depicting the growth of an investment in the Fund's Class A
Shares compared to growth of an investment in the Lehman Brothers Municipal
Bond Index. Beginning and ending values are:
<PAGE>
8/31/90** 7/94
ML Pennsylvania Municipal
Bond Fund++ $ 9,600 $13,446
Lehman Brothers
Municipal Bond Index++++ $10,000 $13,915
[FN]
*Assuming maximum sales charge, transaction costs and other operating
expenses including advisory fees.
**Commencement of Operations.
++ML Pennsylvania Municipal Bond Fund invests primarily in long-term
investment-grade obligations issued by or on behalf of the Commonwealth
of Pennsylvania, its political subdivisions, agencies and instrumentalities
and obligations of other qualifying issuers.
++++This unmanaged Index consists of long-term revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds.
<PAGE>
Item 2:
Total Return Based on a $10,000 Investment--Class B Shares*
A line graph depicting the growth of an investment in the Fund's Class B Shares
compared to growth of an investment in the Lehman Brothers Municipal Bond
Index. Beginning and ending values are:
8/31/90** 7/94
ML Pennsylvania Municipal
Bond Fund++ $10,000 $13,633
Lehman Brothers
Municipal Bond Index++++ $10,000 $13,915
[FN]
*Assuming maximum sales charge, transaction costs and other operating
expenses including advisory fees.
**Commencement of Operations.
++ML Pennsylvania Municipal Bond Fund invests primarily in long-term invest-
ment-grade obligations issued by or on behalf of the Commonwealth of
Pennsylvania, its political subdivisions, agencies and instrumentalities
and obligations of other qualifying issuers.
++++This unmanaged Index consists of long-term revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds.
