MERRILL LYNCH MARYLAND
MUNICIPAL BOND FUND
Quarterly Report * April 30, 1995
TO OUR SHAREHOLDERS
During the three months ended April 30, 1995, the municipal bond
market continued the improvement begun in late 1994. Signs of a
weakening domestic economy and ongoing moderate inflationary
pressures have fostered an environment of declining interest rates.
Since October 31, 1994, A-rated uninsured municipal revenue bond
yields, as measured by the Bond Buyer Revenue Bond Index, declined
an additional 50 basis points (0.50%) to end the April 30, 1995
quarter at 6.29%. Tax-exempt bond yields have fallen over 100 basis
points since the highs experienced in November 1994 and are now
lower than they were a year ago. US Treasury bonds experienced a
similar, but less dramatic improvement during the April quarter,
while the 30-year US Treasury bond yields declined approximately 35
basis points to end the April quarter at 7.33%.
<PAGE>
Tax-exempt bond yields declined more than their taxable counterparts
in recent months, largely because of the significant decline in new
bond issuance in recent quarters. During the April 30, 1995 quarter,
less than $30 billion in new long-term municipal securities were
underwritten. This represents a decline in issuance of nearly 40%
versus the April 30, 1994 quarter levels. Over the last six months,
less than $60 billion in municipal bonds were issued, a decline of
approximately 45% versus the comparable period a year ago. Both
institutional and individual investors saw significant cash inflows
in recent months. These assets were derived from regular coupon
payment, bond maturities and the proceeds from early bond calls and
redemptions. It was estimated that investors received over $20
billion in principal redemptions and coupon income in January 1995
alone. With monthly issuance in the $10 billion range thus far this
year, the current supply/demand imbalance has dominated the
municipal market and bond prices have risen accordingly. The
tax-exempt bond market's technical position is likely to remain very
strong throughout most of this year. Investors are expected to
receive almost $40 billion in principal and coupon payments on July
1, 1995. Investor proceeds from all sources have been estimated to
exceed $200 billion for all of 1995. Estimates of total new bond
issuance for 1995 have continued to be lowered with most estimates
now in the $125 billion range. Investors should find it increasingly
difficult to replace existing holdings as they mature and to
reinvest coupon income in such an environment.
The municipal bond market's outperformance thus far this year caused
the tax-exempt market to become temporarily expensive relative to
its taxable counterpart in late April. Investor concerns regarding
the international currency situation and the future impact of
proposed revisions to US taxation policies upon the tax advantage
inherent to municipal bonds have combined to cause tax-exempt bond
yields to increase marginally in recent weeks. Municipal bond yields
rose approximately 15 basis points by April 30, 1995 from their lows
in mid-April 1995. Long-term US Treasury bond yields remained
essentially stable. Such an underperformance by the tax-exempt bond
market is likely to be limited in duration. The recent increase in
tax-exempt bond yields has already begun to attract institutional
investors since municipal bonds yielding in excess of 85% of US
Treasury bond yields are again available. Also, concerns regarding
the implication for municipal bonds' tax advantage resulting from
various proposed tax law changes (for example, flat tax, value-added
tax, or national sales tax) are all likely to quickly recede as
investors realize that such, if any, changes are unlikely to be
enacted before late 1996 at the earliest. Long-term investors will
also recall 1986 when similar tax proposals were made and tax-exempt
bond yields initially rose then quickly fell. Investors are likely
to view the current situation as an opportunity to purchase very
attractively priced tax-advantaged products causing municipal bond
yields to quickly return to their more historic relationship.
<PAGE>
Portfolio Strategy
During the quarter ended April 30, 1995, the continued decline of
interest rates caused us to change our portfolio strategy from a
neutral posture to one that is more constructive on interest rates.
We achieved this by extending the Fund's portfolio maturity in order
to enhance any capital appreciation. New-issue volume in the
Maryland tax-exempt market was just under $700 million in bonds
during the April 30, 1995 quarter. This represents a decline of
approximately 25% versus the same period last year. With the decline
of new issuance in Maryland and no significant increase on the
horizon, we kept the cash reserve position at approximately 1%--3%
of net assets. Looking forward, our near-term strategy will continue
to keep the Fund fully invested, while emphasizing total return and
current yield.
In Conclusion
We appreciate your ongoing interest in Merrill Lynch Maryland
Municipal Bond Fund, and we look forward to serving your investment
needs in the months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
May 18, 1995
<PAGE>
PERFORMANCE DATA
About Fund Performance
Since October 21, 1994, investors have been able to purchase shares
of the Fund through the Merrill Lynch Select Pricing SM System, which
offers four pricing alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 4% and bear no ongoing distribution or account maintenance
fees. Class A Shares are available only to eligible investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.25% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 10 years.
* Class C Shares are subject to a distribution fee of 0.35% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 4% and an
account maintenance fee of 0.10% (but no distribution fee).
Performance data for the Fund's Class A and Class B Shares are
presented in the "Average Annual Total Return" tables below. Data
for Class C and Class D Shares are also presented below in the
"Aggregate Total Return" tables. Data for all of the Fund's shares,
including Class C and Class D Shares, are presented in the "Recent
Performance Results" table on page 3. The "Recent Performance
Results" table shows investment results before the deduction of any
sales charges for Class A and Class B Shares for the 12-month and 3-
month periods ended April 30, 1995 and for Class C and Class D
Shares for the period since inception and the 3-month period ended
April 30, 1995. All data in this table assume imposition of the
actual total expenses incurred by each class of shares during the
relevant period.
None of the past results shown should 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. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<PAGE>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/95 +5.60% +1.38%
Inception (10/29/93)
through 3/31/95 -1.32% -4.12%
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/95 +5.05% +1.07%
Inception (10/29/93)
through 3/31/95 -1.82% -3.91%
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
Aggregate Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94)
through 3/31/95 +5.69% +4.69%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Inception (10/21/94)
through 3/31/95 +5.93% +1.69%
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
PERFORMANCE DATA (concluded)
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
4/30/95 1/31/95 4/30/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $9.03 $8.83 $9.12 -0.99% +2.27%
Class B Shares* 9.03 8.84 9.11 -0.88 +2.15
Class C Shares* 9.03 8.84 8.79 +2.73 +2.15
Class D Shares* 9.03 8.84 8.79 +2.73 +2.15
Class A Shares--Total Return* +4.93(1) +3.78(2)
Class B Shares--Total Return* +4.51(3) +3.53(4)
Class C Shares--Total Return* +5.65(5) +3.50(6)
Class D Shares--Total Return* +5.93(7) +3.64(8)
Class A Shares--Standardized 30-day Yield 5.74%
Class B Shares--Standardized 30-day Yield 5.46%
Class C Shares--Standardized 30-day Yield 5.36%
Class D Shares--Standardized 30-day Yield 5.64%
<PAGE>
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
++Investment results shown for Class C and Class D Shares are since
inception (10/21/94).
(1)Percent change includes reinvestment of $0.518 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.134 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.472 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.122 per share ordinary
income dividends.
(5)Percent change includes reinvestment of $0.237 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.120 per share ordinary
income dividends.
(7)Percent change includes reinvestment of $0.260 per share ordinary
income dividends.
(8)Percent change includes reinvestment of $0.132 per share ordinary
income dividends.
</TABLE>
PORTFOLIO COMPOSITION
For the Quarter Ended April 30, 1995
Distribution by Market Sector*
Utility Revenue Bonds 66.3%
General Obligation & Tax Revenue Bonds 29.1
Other Revenue Bonds 4.6
------
Total 100.0%
======
Net assets as of April 30, 1995 were $19,218,140.
<PAGE>
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart illustrating the following percentages:
AAA/Aaa 31%
AA/Aa 34%
A/A 28%
BBB/Baa 4%
Other++ 3%
[FN]
*Based on total market value of the portfolio as of April 30, 1995.
++Temporary investments in short-term municipal securities.
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.
<PAGE>
Officers and Trustees
Arthur Zeikel, President and 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
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
Transfer Agent
Merrill Lynch
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
Merrill Lynch Maryland Municipal Bond Fund
Merrill Lynch Multi-State Municipal Series Trust
Box 9011
Princeton, New Jersey 08543-9011
