UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4375
Name of Fund: Merrill Lynch New York Municipal Bond Fund of Merrill Lynch
Multi-State Municipal Series Trust
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Terry K. Glenn, President, Merrill Lynch
New York Municipal Bond Fund of Merrill Lynch Multi-State Municipal Series
Trust, 800 Scudders Mill Road, Plainsboro, NJ, 08536. Mailing address:
P.O. Box 9011, Princeton NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 09/30/04
Date of reporting period: 10/01/03 - 09/30/04
Item 1 - Report to Stockholders
[LOGO] Merrill Lynch Investment Managers www.mlim.ml.com
Merrill Lynch
New York
Municipal
Bond Fund
Annual Report
September 30, 2004
[LOGO] Merrill Lynch Investment Managers
Merrill Lynch New York Municipal Bond Fund
Distribution by Market Sector (unaudited)
Percent of Total
As of September 30, 2004 Investments
- --------------------------------------------------------------------------------
Other Revenue Bonds ....................................... 77.9%
General Obligation Bonds .................................. 17.2
Prerefunded Bonds+ ........................................ 4.9
-----
Total ..................................................... 100.0%
=====
+ Backed by an escrow fund.
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at
http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the
SEC's Public Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
2 MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004
A Letter From the President
Dear Shareholder
As we ended the current reporting period, the financial markets were facing a
number of uncertainties. At the top of investors' minds were questions about
economic expansion, corporate earnings, interest rates and inflation, politics,
oil prices and terrorism.
After benefiting from aggressive monetary and fiscal policy stimulus, some fear
the U.S. economy has hit a "soft patch." In fact, economic expansion has slowed
somewhat in recent months, but we believe it is easing into a pace of growth
that is sustainable and healthy. The favorable economic environment has served
to benefit American corporations, which have continued to post strong earnings.
Although the most impressive results were seen earlier in the year, solid
productivity, improved revenue growth and cost discipline all point to a vital
corporate sector.
In terms of inflation and interest rates, the Federal Reserve Board (the Fed)
has signaled its confidence in the economic recovery by increasing the Federal
Funds target rate three times in the past several months, from 1% to 1.75%.
Inflation, for its part, has remained in check. Investors and economists are
focused on how quickly Fed policy will move from here, anxiously absorbing every
bit of economic data and Fed innuendo.
While any market jitters associated with the presidential election should
subside after November, the effect of oil prices is more difficult to predict.
At around $50 per barrel, the price of oil is clearly a concern. However, on an
inflation-adjusted basis and considering modern usage levels, the situation is
far from the crisis proportions we saw in the 1980s. Finally, although terrorism
and geopolitical crises are realities we are forced to live with today, history
has shown us that the financial effects of any single event tend to be
short-lived.
Amid the uncertainty, the Lehman Brothers Municipal Bond Index posted a 12-month
return of +4.60% as of September 30, 2004. Yields, although volatile, were not
dramatically changed year over year. As always, our investment professionals are
closely monitoring the markets, the economy and the overall environment in an
effort to make well-informed decisions for the portfolios they manage. For the
individual investor, the key during uncertain times is to remain focused on the
big picture. Investment success comes not from reacting to short-term
volatility, but from maintaining a long-term perspective and adhering to the
disciplines of asset allocation, diversification and rebalancing. We encourage
you to work with your financial advisor to ensure these time-tested techniques
are incorporated into your investment plan.
We thank you for trusting Merrill Lynch Investment Managers with your investment
assets, and we look forward to serving you in the months and years ahead.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Trustee
MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004 3
[LOGO] Merrill Lynch Investment Managers
A Discussion With Your Fund's Portfolio Manager
We continued to focus on increasing the Fund's yield while also looking to
improve credit and coupon diversification, allowing the Fund flexibility to take
advantage of various market opportunities.
Describe the recent market environment relative to municipal bonds.
Despite considerable monthly volatility, long-term U.S. Treasury bond yields
ended the 12-month period little changed from year-ago levels. Tax-exempt bonds
were not as volatile as their taxable counterparts and registered modest gains
for the year.
Early in the period, U.S. Treasury bond yields declined while their prices,
which move in the opposite direction, rose. Somewhat surprisingly, this increase
in bond prices came as the U.S. economy continued to improve. However, solid job
creation remained elusive, producing a drag on consumer confidence. Against this
backdrop, investors became convinced that the Federal Reserve Board (the Fed)
would hold short-term interest rates near their historic lows. By mid-March
2004, yields on 30-year U.S. Treasury bonds had declined to 4.65%.
In early April, however, monthly employment reports began to reveal unexpectedly
large gains in job growth. Consumer confidence increased, and investors started
to anticipate that the Fed would soon be forced to raise short-term interest
rates to ward off potential inflation. Yields rose in response, with long-term
Treasury bond yields surpassing 5.50% early in June 2004.
For the rest of the period, bond yields generally fell as payroll growth began
to wane and inflation appeared negligible. Although the Fed embarked on a
tightening cycle with a 25 basis point (.25%) interest rate hike in June, it
also telegraphed its intention to continue raising interest rates at a measured
pace, removing earlier concerns about the potential for more dramatic increases.
Despite additional Fed interest rate hikes in August and September, the prospect
for a moderate tightening helped support higher bond prices, and lower yields,
for the remainder of the Fund's fiscal year.
By September 30, 2004, the 30-year Treasury bond yield stood at 4.89%,
essentially unchanged from a year earlier. The yield on the 10-year U.S.
Treasury note increased more than 15 basis points, ending the period at 4.12%.
Yields on long-term revenue bonds, as measured by the Bond Buyer Revenue Bond
Index, fell approximately 20 basis points during the past 12 months. According
to Municipal Market Data, yields on AAA-rated issues maturing in 30 years
declined 5 basis points to 4.68%, while yields on 10-year AAA-rated issues
remained essentially unchanged at 3.47%.
More than $360 billion in new long-term tax-exempt bonds was issued in the past
12 months, a drop of approximately 8% compared to the previous year. During the
third quarter of 2004, approximately $78 billion in long-term tax-exempt bonds
was issued, a decline of nearly 12% compared to the same three months in 2003.
The trend of declining municipal bond issuance allowed tax-exempt bond prices to
register moderate gains and outperform the taxable market.
Describe conditions in the State of New York.
New York maintains credit ratings of A2 from Moody's, AA from Standard & Poor's
and AA- from Fitch. Moody's recently assigned a positive outlook to the state's
credit rating, while Fitch carries a stable trend and Standard & Poor's applies
a negative outlook. New issuance of New York municipal bonds has slowed in the
past year and, year-to-date as of September 30, is down about 18% versus the
same period a year ago. The limited availability of new bonds has kept portfolio
turnover relatively muted.
The weakened economy continued to put pressure on New York's budget. Despite
spending cuts and significant increases in personal and sales tax rates, the
state relied on one-time revenue sources, particularly $4.2 billion in proceeds
from tobacco settlement revenue bonds, to close its budget gap in fiscal year
2004 (which ended March 31, 2004).
The state's 2005 fiscal year opened without an adopted budget. The governor's
executive budget totals $99 billion and recommends closing a $5 billion gap
through $2.6 billion in spending cuts and $1.5 billion in non-recurring sources,
significantly less than the prior two fiscal years. Adopting and maintaining a
balanced budget has been complicated by political resistance to additional tax
hikes and cuts in popular programs, as well as pressures from local governments
for pension and Medicaid relief, and a lack of readily available one-time
revenue sources. The proposed budget also does not address a lawsuit recently
won by the Campaign for Fiscal Equity that could require up to $2 billion in
annual state education spending.
4 MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004
How did the Fund perform during the fiscal year in light of the existing market
conditions?
For the 12-month period ended September 30, 2004, the Fund's Class A, Class B,
Class C and Class I Shares had total returns of +3.05%, +2.72%, +2.53% and
+3.15%, respectively. (Fund results shown do not reflect sales charges and would
be lower if sales charges were included. Complete performance information can be
found on pages 6 - 8 of this report to shareholders.) The unmanaged Lehman
Brothers Municipal Bond Index, which measures the performance of municipal bonds
throughout the nation, returned +4.60% for the same period while the Lipper New
York Municipal Debt Funds category had an average return of +3.94%. (Funds in
this Lipper category invest in securities that are exempt from New York State or
City taxes.)
In the past year, we found ourselves in an unusual market situation -- one
without historical precedent. The Fed had begun increasing interest rates, yet
longer-dated bond prices rallied as their yields declined. We had positioned the
Fund for interest rate hikes by maintaining a relatively short duration. This
normally would be a prudent approach in a rising interest rate environment, as a
shorter duration helps to limit an investment's sensitivity to rate increases
while also providing a level of protection to its underlying net asset value.
Our shorter, defensive positioning hampered performance as the market rallied
this summer, but we believe this is the appropriate posture for the anticipated
higher interest rate environment ahead. Also detracting from Fund performance
during the year was the default of the bonds of Cicero, New York. These revenue
bonds, issued to finance a recreation facility in Cicero, were sold out of the
portfolio in mid-summer.
During the year, we continued to focus on enhancing shareholder value through an
emphasis on providing attractive tax-exempt income and reducing the level of
portfolio volatility. The Fund benefited from strong couponing and a higher
accrual than many of its peers, making its yield quite favorable.
What changes were made to the portfolio during the year?
We looked to purchase bonds in the 20-year - 30-year maturity range as
compelling opportunities arose. Our observations and research revealed that the
longer end of the yield curve has held firm, while the 10-year - 15-year sector
has continued to be more volatile.
We consistently looked for opportunities to pick up yield and actively added new
credits with yields exceeding 5% whenever possible. Most recently, however, we
have seen a decline in new issuance, making it difficult to significantly
restructure the portfolio. We also sought to enhance the Fund's flexibility in
responding to the markets. Our goal is to build a more diversified portfolio
that incorporates a variety of credits and coupons. For example, we added some
discounted bonds with 4.5% coupons as well as attractive retail names in an
effort to capitalize on market opportunities not necessarily associated with
interest rate movements.
Finally, as our research turned negative on tobacco bonds, we reduced our
exposure from over 1% of net assets to less than 0.5%. While underweight in the
tobacco sector, the positions we did maintain contributed to the Fund's
above-average yield. Overall, we maintained our focus on increasing the income
provided to shareholders while seeking to mute the Fund's net asset value
volatility.
How would you characterize the Fund's position at the close of the period?
We ended the period on course for higher interest rates. That is, we maintained
a defensive position with relatively short duration vis-a-vis our benchmarks. We
expect the Fed to continue its measured program of interest rate increases,
which should force long-term bond yields higher. While the duration and
magnitude of the Fed tightening is unknown, we believe we are not yet at the end
of the cycle. For that reason, we find it prudent to maintain a defensive
stance. The benefit of this approach is that it should lessen the Fund's net
asset value volatility, while also continuing to generate an attractive yield
for our shareholders.
Finally, we expect New York municipal bond issuance to increase as the state and
its municipalities capitalize on the still low short-term interest rates to
lower their financing costs. Several large issues that had been held up pending
the required approval look to take advantage of legislation resulting from the
events of 9/11. The legislation allowed for additional refunding and provided
for certain projects that would benefit New York City rebuilding efforts. We
expect that the increased issuance should provide the Fund with more attractive
trading opportunities.
Timothy T. Browse, CFA
Vice President and Portfolio Manager
October 11, 2004
MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004 5
[LOGO] Merrill Lynch Investment Managers
Performance Data
About Fund Performance
Investors are able to purchase shares of the Fund through multiple pricing
alternatives:
o Class A Shares incur a maximum initial sales charge (front-end load) of 4%
and an account maintenance fee of 0.10% per year (but no distribution
fee).
o Class B Shares are subject to a maximum contingent deferred sales charge
of 4%, declining to 0% after six years. All Class B Shares purchased prior
to December 1, 2002 will maintain the four-year schedule. In addition,
Class B Shares are subject to a distribution fee of 0.25% per year and an
account maintenance fee of 0.25% per year. These shares automatically
convert to Class A Shares after approximately ten years. (There is no
initial sales charge for automatic share conversions.)
o Class C Shares are subject to a distribution fee of 0.35% per year and an
account maintenance fee of 0.25% per year. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within one
year of purchase.
o Class I Shares incur a maximum initial sales charge (front-end load) of 4%
and bear no ongoing distribution or account maintenance fees. Class I
Shares are available only to eligible investors.
None of the past results shown should be considered a representation of future
performance. Current performance may be lower or higher than the performance
data quoted. Refer to www.mlim.ml.com to obtain performance data current to the
most recent month-end. Performance results do not reflect the deduction of taxes
that a shareholder would pay on fund distributions or the redemption of fund
shares. Figures shown in each of the following tables assume reinvestment of all
dividends and capital gain distributions, if any, at net asset value on the
payable date. Investment return and principal value of shares will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Dividends paid to each class of shares will vary because of the different levels
of account maintenance, distribution and transfer agency fees applicable to each
class, which are deducted from the income available to be paid to shareholders.
The Fund's Investment Adviser voluntarily waived a portion of its fee. Without
such waiver, the Fund's performance would have been lower.
Recent Performance Results
Ten-Year/
6-Month 12-Month Since Inception Standardized
As of September 30, 2004 Total Return Total Return Total Return 30-Day Yield
===================================================================================================================
ML New York Municipal Bond Fund Class A Shares* +1.25% +3.05% +71.69% 4.07%
- -------------------------------------------------------------------------------------------------------------------
ML New York Municipal Bond Fund Class B Shares* +1.04 +2.72 +63.71 3.83
- -------------------------------------------------------------------------------------------------------------------
ML New York Municipal Bond Fund Class C Shares* +0.99 +2.53 +63.39 3.74
- -------------------------------------------------------------------------------------------------------------------
ML New York Municipal Bond Fund Class I Shares* +1.30 +3.15 +72.04 4.17
- -------------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index** +1.43 +4.60 +92.54/+96.02 --
- -------------------------------------------------------------------------------------------------------------------
* 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 10-year/since inception periods are
10 years for Class B & Class I Shares and from 10/21/94 for Class A &
Class C Shares.
** This unmanaged Index consists of long-term revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds. Ten-year/since
inception total returns are for 10 years and from 10/31/94.
6 MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004
Performance Data (continued)
ML New York Municipal Bond Fund's Class A and Class C Shares--Total Return Based
on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's Class A and
Class C Shares compared to growth of an investment in the Lehman Brothers
Municipal Bond Index. Values are from October 21, 1994 to September 2004:
10/21/94** 9/95 9/96 9/97 9/98 9/99
ML New York
Municipal Bond Fund+--
Class A Shares* $ 9,600 $10,366 $10,999 $11,954 $13,129 $12,369
ML New York
Municipal Bond Fund+--
Class C Shares* $10,000 $10,756 $11,355 $12,277 $13,416 $12,577
9/00 9/01 9/02 9/03 9/04
ML New York
Municipal Bond Fund+--
Class A Shares* $12,996 $14,429 $15,545 $15,995 $16,482
ML New York
Municipal Bond Fund+--
Class C Shares* $13,148 $14,522 $15,566 $15,936 $16,339
10/31/94 9/95 9/96 9/97 9/98 9/99
Lehman Brothers Municipal
Bond Index++ $10,000 $11,319 $12,003 $13,085 $14,225 $14,126
9/00 9/01 9/02 9/03 9/04
Lehman Brothers Municipal
Bond Index++ $14,999 $16,558 $18,038 $18,740 $19,602
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
** Commencement of operations.
+ ML New York Municipal Bond Fund invests primarily in long-term
investment-grade obligations issued by or on behalf of the state of New
York, 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. The starting date for
the Index is from 10/31/94.
Past performance is not predictive of future results.
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
One Year Ended 9/30/04 +3.05% -1.08%
- --------------------------------------------------------------------------------
Five Years Ended 9/30/04 +5.91 +5.05
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 9/30/04 +5.59 +5.15
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
Return Return
Without CDSC With CDSC**
================================================================================
Class C Shares*
================================================================================
One Year Ended 9/30/04 +2.53% +1.54%
- --------------------------------------------------------------------------------
Five Years Ended 9/30/04 +5.37 +5.37
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 9/30/04 +5.06 +5.06
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after
one year.
** Assuming payment of applicable contingent deferred sales charge.
MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004 7
[LOGO] Merrill Lynch Investment Managers
Performance Data (concluded)
ML New York Municipal Bond Fund's Class B and Class I Shares--Total Return Based
on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's Class B Shares
and Class I Shares compared to growth of an investment in the Lehman Brothers
Municipal Bond Index. Values are from September 1994 to September 2004:
9/94 9/95 9/96 9/97 9/98
ML New York
Municipal Bond Fund+--
Class B Shares* $10,000 $10,681 $11,287 $12,206 $13,351
ML New York
Municipal Bond Fund+--
Class I Shares* $ 9,600 $10,306 $10,946 $11,898 $13,080
Lehman Brothers Municipal
Bond Index++ $10,000 $11,118 $11,790 $12,853 $13,973
9/99 9/00 9/01 9/02 9/03 9/04
ML New York
Municipal Bond Fund+--
Class B Shares* $12,527 $13,121 $14,508 $15,566 $15,937 $16,371
ML New York
Municipal Bond Fund+--
Class I Shares* $12,335 $12,974 $14,418 $15,562 $16,012 $16,516
Lehman Brothers Municipal
Bond Index++ $13,876 $14,732 $16,264 $17,717 $18,407 $19,254
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
+ ML New York Municipal Bond Fund invests primarily in long-term
investment-grade obligations issued by or on behalf of the state of New
York, 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.
Past performance is not predictive of future results.
Average Annual Total Return
Return Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
One Year Ended 9/30/04 +2.72% -1.21%
- --------------------------------------------------------------------------------
Five Years Ended 9/30/04 +5.50 +5.17
- --------------------------------------------------------------------------------
Ten Years Ended 9/30/04 +5.05 +5.05
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 4% and is reduced to 0% after
six years.
** Assuming payment of applicable contingent deferred sales charge.
Return Without Return With
Sales Charge Sales Charge**
================================================================================
Class I Shares*
================================================================================
One Year Ended 9/30/04 +3.15% -0.98%
- --------------------------------------------------------------------------------
Five Years Ended 9/30/04 +6.01 +5.15
- --------------------------------------------------------------------------------
Ten Years Ended 9/30/04 +5.58 +5.15
- --------------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
8 MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004
Disclosure of Expenses
Shareholders of this Fund may incur the following charges: (a) expenses related
to transactions, including sales charges, redemption fees and exchange fees; and
(b) operating expenses, including advisory fees, distribution fees including
12(b)-1 fees, and other Fund expenses. The following example (which is based on
a hypothetical investment of $1,000 invested on April 1, 2004 and held through
September 30, 2004) is intended to assist shareholders both in calculating
expenses based on an investment in the Fund and in comparing these expenses with
similar costs of investing in other mutual funds.
The first table below provides information about actual account values and
actual expenses. In order to estimate the expenses a shareholder paid during the
period covered by this report, shareholders can divide their account value by
$1,000 and then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During the Period."
The second table below provides information about hypothetical account values
and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses. In order to assist
shareholders in comparing the ongoing expenses of investing in this Fund and
other funds, compare the 5% hypothetical example with the 5% hypothetical
examples that appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders ongoing
costs only and do not reflect any transactional expenses, such as sales charges,
redemption fees, or exchange fees. Therefore, the second table is useful in
comparing ongoing expenses only, and will not help shareholders determine the
relative total expenses of owning different funds. If these transactional
expenses were included, shareholder expenses would have been higher.
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value April 1, 2004 to
April 1, 2004 September 30, 2004 September 30, 2004
============================================================================================================
Actual
============================================================================================================
Class A $1,000 $1,012.50 $4.28
- ------------------------------------------------------------------------------------------------------------
Class B $1,000 $1,010.40 $6.33
- ------------------------------------------------------------------------------------------------------------
Class C $1,000 $1,009.90 $6.78
- ------------------------------------------------------------------------------------------------------------
Class I $1,000 $1,013.00 $3.77
============================================================================================================
Hypothetical (5% annual return before expenses)**
============================================================================================================
Class A $1,000 $1,020.75 $4.29
- ------------------------------------------------------------------------------------------------------------
Class B $1,000 $1,018.70 $6.36
- ------------------------------------------------------------------------------------------------------------
Class C $1,000 $1,018.25 $6.81
- ------------------------------------------------------------------------------------------------------------
Class I $1,000 $1,021.25 $3.79
- ------------------------------------------------------------------------------------------------------------
* For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (.85% for Class A, 1.26% for Class B, 1.35% for Class
C and .75% for Class I), multiplied by the average account value over the
period, multiplied by 183/366 (to reflect the one-half year period shown).
** Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half year divided by 366.
MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004 9
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (in Thousands)
S&P Moody's Face
Ratings+ Ratings+ Amount Municipal Bonds Value
==================================================================================================================================
New York--86.7%
- ----------------------------------------------------------------------------------------------------------------------------------
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 (i) $ 1,383
--------------------------------------------------------------------------------------------------------------
NR* NR* 1,250 Dutchess County, New York, IDA, Civic Facility Revenue Bonds (Saint
Francis Hospital), Series B, 7.25% due 3/01/2019 1,253
--------------------------------------------------------------------------------------------------------------
Erie County, New York, IDA, Life Care Community Revenue Bonds
(Episcopal Church Home), Series A:
NR* NR* 1,500 5.875% due 2/01/2018 1,534
NR* NR* 3,000 6% due 2/01/2028 3,039
--------------------------------------------------------------------------------------------------------------
Erie County, New York, IDA, School Facility Revenue Bonds (City of
Buffalo Project) (c):
AAA Aaa 1,755 5.75% due 5/01/2021 2,014
AAA Aaa 1,775 5.75% due 5/01/2024 1,988
--------------------------------------------------------------------------------------------------------------
Hempstead Town, New York, IDA, Civic Facility Revenue Bonds (Adelphi
University Civic Facility):
A- NR* 1,700 5.75% due 6/01/2022 1,875
A- NR* 2,500 5.50% due 6/01/2032 2,649
--------------------------------------------------------------------------------------------------------------
NR* Aaa 130 Manhasset, New York, Union Free School District, GO, 4.50% due
9/15/2028 (b) 128
--------------------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority, New York, Commuter Facilities
Revenue Refunding Bonds (h):
AAA Aaa 100 Series B, 5.125% due 7/01/2024 (a) 108
AAA Aaa 2,750 Series D, 5% due 7/01/2016 (d) 2,970
--------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Metropolitan Transportation Authority, New York, Dedicated Tax Fund
Revenue Bonds, Series A, 6.125% due 4/01/2010 (b)(e) 1,166
--------------------------------------------------------------------------------------------------------------
NR* Aaa 2,100 Metropolitan Transportation Authority, New York, Revenue Refunding
Bonds, RIB, Series 724X, 9.56% due 11/15/2032 (c)(g) 2,607
--------------------------------------------------------------------------------------------------------------
AAA Aaa 800 Metropolitan Transportation Authority, New York, Transportation
Revenue Refunding Bonds, Series E, 5.125% due 11/15/2024 (d) 841
--------------------------------------------------------------------------------------------------------------
NR* Baa3 445 Monroe County, New York, IDA, Student Housing Revenue Bonds
(Collegiate), Series A, 5.375% due 4/01/2029 434
--------------------------------------------------------------------------------------------------------------
AA Aa2 2,500 New York City, New York, City Housing Development Corporation,
M/F Housing Revenue Bonds, AMT, Series A, 5.50% due 11/01/2034 2,565
--------------------------------------------------------------------------------------------------------------
NR* Aa3 2,485 New York City, New York, City Housing Development Corporation,
Presidential Revenue Bonds (The Animal Medical Center), Series A,
5.50% due 12/01/2033 2,589
--------------------------------------------------------------------------------------------------------------
New York City, New York, City IDA, Civic Facility Revenue Bonds:
NR* NR* 700 (A Very Special Place Inc. Project), Series A, 6.125%
due 1/01/2013 707
NR* NR* 1,600 (A Very Special Place Inc. Project), Series A, 7% due 1/01/2033 1,669
BBB- NR* 6,000 (PSCH Inc. Project), 6.375% due 7/01/2033 6,313
NR* NR* 2,500 Series C, 6.80% due 6/01/2028 2,589
NR* NR* 1,000 (Special Needs Facility Pooled Program), Series A-1, 6.50%
due 7/01/2017 1,032
NR* NR* 2,540 (Special Needs Facility Pooled Program), Series C-1, 6.50%
due 7/01/2017 2,622
--------------------------------------------------------------------------------------------------------------
NR* NR* 2,000 New York City, New York, City IDA, Revenue Bonds (Visy Paper Inc.
Project), AMT, 7.95% due 1/01/2028 2,087
--------------------------------------------------------------------------------------------------------------
New York City, New York, City IDA, Special Facilities Revenue
Bonds, AMT:
BB- Ba2 1,000 (British Airways PLC Project), 5.25% due 12/01/2032 734
CCC+ NR* 1,045 (Continental Airlines Inc.), 7.25% due 11/01/2008 935
CCC+ NR* 1,250 (Continental Airlines Inc.), 8% due 11/01/2012 1,083
CCC+ NR* 250 (Continental Airlines Inc. Project), 8.375% due 11/01/2016 213
B- Caa1 1,965 (Northwest Airlines Inc.), 6% due 6/01/2027 1,346
BBB+ A3 3,250 (Terminal One Group Association Project), 6.125% due 1/01/2024 3,349
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)
DRIVERS Derivative Inverse Tax-Exempt Receipts
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
TAN Tax Anticipation Notes
10 MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004
Schedule of Investments (continued) (in Thousands)
S&P Moody's Face
Ratings+ Ratings+ Amount Municipal Bonds Value
==================================================================================================================================
New York (continued)
- ----------------------------------------------------------------------------------------------------------------------------------
AA+ Aa2 $ 990 New York City, New York, City Transitional Finance Authority,
Future Tax Secured Revenue Bonds, Series C, 5.50% due 5/01/2025 $ 1,069
--------------------------------------------------------------------------------------------------------------
New York City, New York, GO, Refunding:
AAA Aaa 1,280 Series B, 6.375% due 8/15/2005 (e) 1,346
A A2 1,695 Series G, 5.75% due 2/01/2006 (e) 1,811
A A2 1,005 Series G, 5.75% due 2/01/2020 1,059
A A2 1,085 Series J, 6% due 8/01/2007 (e) 1,214
A A2 2,415 Series J, 6% due 8/01/2017 2,628
--------------------------------------------------------------------------------------------------------------
A A2 2,000 New York City, New York, GO, Series J, 5% due 5/15/2023 2,065
--------------------------------------------------------------------------------------------------------------
CCC Caa2 3,500 New York City, New York, IDA, Special Facilities Revenue Bonds (1990
American Airlines Inc. Project), AMT, 5.40% due 7/01/2020 1,960
--------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 New York State Dormitory Authority, Hospital Revenue Refunding Bonds
(The New York-Presbyterian Hospital), Series A, 5.25% due
8/15/2019 (c) 1,098
--------------------------------------------------------------------------------------------------------------
AAA NR* 750 New York State Dormitory Authority, Lease Revenue Bonds (State
University Dormitory Facilities), Series A, 4.50% due 7/01/2034 (d) 721
--------------------------------------------------------------------------------------------------------------
New York State Dormitory Authority Revenue Bonds:
AAA NR* 1,000 (Jewish Board of Family and Children), 5% due 7/01/2023 (a) 1,040
A+ A1 1,500 (Rochester University), Series A, 5.125% due 7/01/2039 1,527
AAA Aaa 1,090 (School Districts Bond Financing Program), Series J, 5.125%
due 10/01/2023 (d) 1,157
AAA Aaa 1,145 (School Districts Bond Financing Program), Series J, 5.125%
due 10/01/2024 (d) 1,210
AAA Aaa 1,180 (School Districts Financing Program), Series E, 5.75% due
10/01/2030 (d) 1,321
AAA NR* 3,000 (White Plains Hospital), 5.375% due 2/15/2043 3,120
AAA NR* 2,500 (Willow Towers Inc. Project), 5.40% due 2/01/2034 (f) 2,631
--------------------------------------------------------------------------------------------------------------
BB Ba1 4,850 New York State Dormitory Authority, Revenue Refunding Bonds (Mount
Sinai Health), Series A, 6.625% due 7/01/2018 4,995
--------------------------------------------------------------------------------------------------------------
AA- A3 1,565 New York State Dormitory Authority, Upstate Community Colleges
Revenue Refunding Bonds, Series B, 5.25% due 7/01/2021 1,673
--------------------------------------------------------------------------------------------------------------
AAA Aaa 6,400 New York State Energy Research and Development Authority, Facilities
Revenue Refunding Bonds (Consolidated Edison Co. of New York),
Series A, 6.10% due 8/15/2020 (a) 6,728
--------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 New York State Energy Research and Development Authority, PCR,
Refunding (Central Hudson Gas and Electric), Series A, 5.45%
due 8/01/2027 (a) 2,147
--------------------------------------------------------------------------------------------------------------
AAA Aaa 3,000 New York State Environmental Facilities Corporation, Special
Obligation Revenue Refunding Bonds (Riverbank State Park), 6.25%
due 4/01/2012 (a) 3,582
--------------------------------------------------------------------------------------------------------------
AAA Aaa 3,550 New York State, HFA, Revenue Refunding Bonds (Housing Mortgage
Project), Series A, 6.10% due 11/01/2015 (c) 3,681
--------------------------------------------------------------------------------------------------------------
NR* Aa1 2,980 New York State Mortgage Agency Revenue Bonds, AMT, Series 101, 5.40%
due 4/01/2032 3,052
--------------------------------------------------------------------------------------------------------------
NR* Aaa 2,800 New York State Mortgage Agency Revenue Bonds, DRIVERS, AMT,
Series 191, 9.75% due 4/01/2030 (g) 3,172
--------------------------------------------------------------------------------------------------------------
New York State Municipal Bond Bank Agency, Special School Purpose
Revenue Bonds, Series C:
A+ NR* 1,000 5.25% due 6/01/2021 1,063
A+ NR* 1,700 5.25% due 12/01/2021 1,807
A+ NR* 1,000 5.25% due 6/01/2022 1,059
A+ NR* 1,000 5.25% due 12/01/2022 1,059
--------------------------------------------------------------------------------------------------------------
AA- Aa3 2,320 New York State Thruway Authority, General Revenue Bonds, Series D,
5.50% due 1/01/2017 2,492
MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004 11
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (continued) (in Thousands)
S&P Moody's Face
Ratings+ Ratings+ Amount Municipal Bonds Value
==================================================================================================================================
New York (continued)
- ----------------------------------------------------------------------------------------------------------------------------------
AA A1 $2,000 New York State Urban Development Corporation, Personal Income Tax
Revenue Bonds (State Facilities), Series A, 5.50% due 3/15/2032 $ 2,135
--------------------------------------------------------------------------------------------------------------
New York State Urban Development Corporation Revenue Bonds (Youth
Facilities Services Contract), Series B (e):
AA- NR* 1,675 6% due 4/01/2010 1,956
AA- NR* 750 6.125% due 4/01/2010 881
AA- NR* 615 6.25% due 4/01/2010 726
--------------------------------------------------------------------------------------------------------------
New York State Urban Development Corporation, Revenue Refunding
Bonds:
AA- A3 1,685 (Clarkson Center Advance Materials), 5.50% due 1/01/2020 1,932
AA- A3 3,500 (University Facility Grants), 5.50% due 1/01/2019 4,017
--------------------------------------------------------------------------------------------------------------
BBB Baa1 3,975 Niagara County, New York, IDA, Solid Waste Disposal Revenue
Refunding Bonds, AMT, Series A, 5.45% due 11/15/2026 4,287
--------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 North Country, New York, Development Authority, Solid Waste
Management System Revenue Refunding Bonds, 6% due 5/15/2015 (c) 1,173
--------------------------------------------------------------------------------------------------------------
Onondaga County, New York, IDA Revenue Bonds (Air Cargo), AMT:
NR* Baa3 3,975 6.125% due 1/01/2032 4,025
NR* Ba1 1,365 7.25% due 1/01/2032 1,392
--------------------------------------------------------------------------------------------------------------
NR* Aaa 4,075 Port Authority of New York and New Jersey, Revenue Bonds, Trust
Receipts, AMT, Class R, Series 10, 9.724% due 1/15/2017 (c)(g) 4,651
--------------------------------------------------------------------------------------------------------------
NR* Aaa 6,000 Port Authority of New York and New Jersey, Special Obligation
Revenue Bonds, RIB, AMT, Series 243, 10.50% due 12/01/2010 (d)(g) 7,737
--------------------------------------------------------------------------------------------------------------
Sachem Central School District (Holbrook), New York, GO,
Series B (d):
AAA Aaa 1,000 5% due 10/15/2025 1,043
AAA Aaa 1,800 5% due 10/15/2029 1,851
--------------------------------------------------------------------------------------------------------------
NR* NR* 1,000 Schenectady, New York, GO, TAN, 6.25% due 12/30/2004 999
--------------------------------------------------------------------------------------------------------------
AAA Aaa 1,200 Schenectady, New York, Metroplex Development Authority Revenue
Bonds, 4.50% due 9/15/2024 (b) 1,194
--------------------------------------------------------------------------------------------------------------
Suffolk County, New York, IDA, Civic Facility Revenue Bonds:
BBB Baa1 2,000 (Huntington Hospital Project), Series B, 5.875% due 11/01/2032 2,059
NR* NR* 135 (Special Needs Facilities Pooled Program), Series D-1, 6.50%
due 7/01/2017 139
--------------------------------------------------------------------------------------------------------------
A A3 1,360 Suffolk County, New York, IDA, IDR (Keyspan-Port Jefferson), AMT,
5.25% due 6/01/2027 1,381
--------------------------------------------------------------------------------------------------------------
NR* NR* 5,000 Suffolk County, New York, IDA, IDR, Refunding (Nissequogue
Cogeneration Partners Facility), AMT, 5.50% due 1/01/2023 4,748
--------------------------------------------------------------------------------------------------------------
AAA Aaa 7,155 Suffolk County, New York, IDA, Solid Waste Disposal Facility,
Revenue Refunding Bonds (Ogden Martin System Huntington Project),
AMT, 6.25% due 10/01/2012 (a) 8,469
--------------------------------------------------------------------------------------------------------------
Tobacco Settlement Financing Corporation of New York Revenue Bonds:
AAA Aaa 1,455 Series A-1, 5.25% due 6/01/2020 (a) 1,576
AA- A3 1,100 Series C-1, 5.50% due 6/01/2022 1,190
--------------------------------------------------------------------------------------------------------------
Tompkins County, New York, IDA, Care Community Revenue Refunding
Bonds (Kendal at Ithaca) Series A-2:
BBB NR* 900 5.75% due 7/01/2018 932
BBB NR* 1,000 6% due 7/01/2024 1,039
--------------------------------------------------------------------------------------------------------------
Triborough Bridge and Tunnel Authority, New York, Revenue Refunding
Bonds (d):
AAA Aaa 1,500 5.25% due 11/15/2023 1,605
AAA Aaa 2,290 Series B, 5% due 11/15/2032 2,336
12 MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004
Schedule of Investments (continued) (in Thousands)
S&P Moody's Face
Ratings+ Ratings+ Amount Municipal Bonds Value
==================================================================================================================================
New York (concluded)
- ----------------------------------------------------------------------------------------------------------------------------------
Troy, New York, City School District, GO, Refunding (c):
AAA Aaa $ 765 5.75% due 7/15/2017 $ 880
AAA Aaa 805 5.75% due 7/15/2018 926
AAA Aaa 850 5.75% due 7/15/2019 978
--------------------------------------------------------------------------------------------------------------
Utica, New York, IDA, Civic Facility Revenue Bonds:
NR* A1 1,000 (Munson, Williams, Proctor Institute), 5.375% due 7/15/2020 1,103
NR* A1 1,210 (Munson, Williams, Proctor Institute), 5.40% due 7/15/2030 1,281
NR* NR* 2,505 (Utica College Project), Series A, 5.75% due 8/01/2028 2,485
--------------------------------------------------------------------------------------------------------------
NR* Aaa 1,000 Webster, New York, Central School District, GO, Refunding, 5%
due 6/15/2023 (c) 1,053
--------------------------------------------------------------------------------------------------------------
NR* NR* 5,200 Westchester County, New York, IDA, Continuing Care Retirement,
Mortgage Revenue Bonds (Kendal on Hudson Project), Series A, 6.50%
due 1/01/2034 5,282
--------------------------------------------------------------------------------------------------------------
Willsboro, New York, Central School District, GO, Refunding (b):
NR* Aaa 655 5.75% due 6/15/2026 735
NR* Aaa 690 5.75% due 6/15/2027 773
NR* Aaa 730 5.75% due 6/15/2028 816
NR* Aaa 770 5.75% due 6/15/2029 861
==================================================================================================================================
Puerto Rico--9.8%
- ----------------------------------------------------------------------------------------------------------------------------------
BBB Baa3 1,000 Children's Trust Fund Project of Puerto Rico, Tobacco Settlement
Revenue Refunding Bonds, 5.625% due 5/15/2043 877
--------------------------------------------------------------------------------------------------------------
AAA Aaa 4,750 Puerto Rico Commonwealth, GO, Refunding, RITR, Class R, Series 3,
9.475% due 7/01/2016 (d)(g) 6,071
--------------------------------------------------------------------------------------------------------------
A Baa1 3,250 Puerto Rico Commonwealth, Highway and Transportation Authority,
Transportation Revenue Refunding Bonds, Series D, 5.75%
due 7/01/2041 3,563
--------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Trust
Receipts, Class R, Series 16 HH, 9.428% due 7/01/2013 (c)(g) 1,303
--------------------------------------------------------------------------------------------------------------
CCC Caa2 1,000 Puerto Rico Industrial, Medical and Environmental Pollution Control
Facilities Financing Authority, Special Facilities Revenue Bonds
(American Airlines Inc.), Series A, 6.45% due 12/01/2025 638
--------------------------------------------------------------------------------------------------------------
NR* Baa3 1,420 Puerto Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Revenue Bonds (Cogeneration
Facility--AES Puerto Rico Project), AMT, 6.625% due 6/01/2026 1,519
--------------------------------------------------------------------------------------------------------------
A- Baa1 3,000 Puerto Rico Public Buildings Authority, Government Facilities
Revenue Refunding Bonds, Series I, 5.25% due 7/01/2033 3,116
--------------------------------------------------------------------------------------------------------------
Puerto Rico Public Finance Corporation, Commonwealth Appropriation
Revenue Bonds, Series E:
BBB+ Baa2 1,495 5.50% due 2/01/2012 (e) 1,694
BBB+ Baa2 505 5.50% due 8/01/2029 532
--------------------------------------------------------------------------------------------------------------
BBB+ Baa2 1,000 Puerto Rico Public Finance Corporation Revenue Bonds, Commonwealth
Appropriation, Series E, 5.70% due 2/01/2010 (e) 1,135
--------------------------------------------------------------------------------------------------------------
AAA NR* 1,800 Puerto Rico Public Finance Corporation Revenue Bonds, DRIVERS,
Series 272, 9.37% due 8/01/2030 (g) 2,111
==================================================================================================================================
U.S. Virgin Islands--2.1%
- ----------------------------------------------------------------------------------------------------------------------------------
BBB- Baa3 4,500 Virgin Islands Government Refinery Facilities, Revenue Refunding
Bonds (Hovensa Coker Project), AMT, 6.50% due 7/01/2021 4,897
--------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost--$212,846)--98.6% 227,411
==============================================================================================================
MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004 13
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (concluded) (in Thousands)
Shares
Held Short-Term Securities Value
==============================================================================================================
42 CMA New York Municipal Money Fund (j) $ 42
--------------------------------------------------------------------------------------------------------------
Total Short-Term Securities (Cost--$42)--0.0% 42
==============================================================================================================
Total Investments (Cost--$212,888**)--98.6% 227,453
Other Assets Less Liabilities--1.4% 3,130
--------
Net Assets--100.0% $230,583
========
+ Ratings of issues shown are unaudited.
* Not Rated.
** The cost and unrealized appreciation/depreciation of investments as of
September 30, 2004, as computed for federal income tax purposes, were as
follows:
(in Thousands)
-------------------------------------------------------------------------
Aggregate cost ........................................... $212,857
========
Gross unrealized appreciation ............................ $ 15,307
Gross unrealized depreciation ............................ (711)
--------
Net unrealized appreciation .............................. $ 14,596
========
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FSA Insured.
(d) MBIA Insured.
(e) Prerefunded.
(f) GNMA Collateralized.
(g) 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 September 30, 2004.
(h) Escrowed to maturity.
(i) Radian Insured.
(j) Investments in companies considered to be an affiliate of the Fund (such
companies are defined as "Affiliated Companies" in Section 2(a)(3) of the
Investment Company Act of 1940) were as follows:
(in Thousands)
-------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
-------------------------------------------------------------------------
CMA New York Municipal Money Fund (381) $15
-------------------------------------------------------------------------
Forward interest rate swaps outstanding as of September 30, 2004 were as
follows:
(in Thousands)
-------------------------------------------------------------------------
Notional Unrealized
Amount Depreciation
-------------------------------------------------------------------------
Receive a variable rate equal to 7-Day
Bond Market Association Municipal
Swap Index Rate and pay a fixed
rate equal to 3.679%
Broker, Morgan Stanley Capital
Services, Inc., Expires December 2014 $25,000 $ (295)
-------------------------------------------------------------------------
Financial futures contracts sold as of September 30, 2004 were as follows:
(in Thousands)
-------------------------------------------------------------------------
Number of Expiration Face Unrealized
Contracts Issue Date Value Depreciation
-------------------------------------------------------------------------
115 10-Year U.S. December
Treasury Bond 20 04 $12,939 $ (13)
-------------------------------------------------------------------------
See Notes to Financial Statements.
14 MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004
Statement of Assets and Liabilities
As of September 30, 2004
===============================================================================================================================
Assets
- -------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value
(identified cost--$212,846,353) .................................... $ 227,411,097
Investments in affiliated securities, at value
(identified cost--$41,661) ......................................... 41,661
Cash ................................................................ 15,718
Receivables:
Interest ......................................................... $ 4,052,791
Beneficial interest sold ......................................... 835,644
Variation margin ................................................. 17,969
Dividends from affiliates ........................................ 257 4,906,661
-------------
Prepaid expenses .................................................... 43,607
-------------
Total assets ........................................................ 232,418,744
-------------
===============================================================================================================================
Liabilities
- -------------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward interest rate swaps .............. 295,175
Payables:
Securities purchased ............................................. 730,755
Beneficial interest redeemed ..................................... 429,154
Dividends to shareholders ........................................ 261,188
Distributor ...................................................... 44,470
Other affiliates ................................................. 19,658
Investment adviser ............................................... 13,880 1,499,105
-------------
Accrued expenses .................................................... 41,854
-------------
Total liabilities ................................................... 1,836,134
-------------
===============================================================================================================================
Net Assets
- -------------------------------------------------------------------------------------------------------------------------------
Net assets .......................................................... $ 230,582,610
=============
===============================================================================================================================
Net Assets Consist of
- -------------------------------------------------------------------------------------------------------------------------------
Class A Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized ........................................ $ 1,319,570
Class B Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized ........................................ 520,218
Class C Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized ........................................ 156,807
Class I Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized ........................................ 93,658
Paid-in capital in excess of par .................................... 233,074,088
Undistributed investment income--net ................................ $ 372,435
Accumulated realized capital losses--net ............................ (19,210,725)
Unrealized appreciation--net ........................................ 14,256,559
-------------
Total accumulated losses--net ....................................... (4,581,731)
-------------
Net Assets .......................................................... $ 230,582,610
=============
===============================================================================================================================
Net Asset Value
- -------------------------------------------------------------------------------------------------------------------------------
Class A--Based on net assets of $145,532,288 and 13,195,702 shares
of beneficial interest outstanding ................................. $ 11.03
=============
Class B--Based on net assets of $57,408,692 and 5,202,180 shares
of beneficial interest outstanding ................................. $ 11.04
=============
Class C--Based on net assets of $17,309,235 and 1,568,069 shares
of beneficial interest outstanding ................................. $ 11.04
=============
Class I--Based on net assets of $10,332,395 and 936,583 shares
of beneficial interest outstanding ................................. $ 11.03
=============
See Notes to Financial Statements.
MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004 15
[LOGO] Merrill Lynch Investment Managers
Statement of Operations
For the Year Ended September 30, 2004
===============================================================================================================================
Investment Income
- -------------------------------------------------------------------------------------------------------------------------------
Interest ............................................................ $ 13,704,003
Dividends from affiliates ........................................... 15,051
-------------
Total income ........................................................ 13,719,054
-------------
===============================================================================================================================
Expenses
- -------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ............................................ $ 1,336,830
Account maintenance and distribution fees--Class B .................. 336,046
Account maintenance fees--Class A ................................... 147,997
Accounting services ................................................. 123,298
Account maintenance and distribution fees--Class C .................. 105,380
Transfer agent fees--Class A ........................................ 73,863
Printing and shareholder reports .................................... 53,878
Professional fees ................................................... 57,574
Registration fees ................................................... 43,823
Transfer agent fees--Class B ........................................ 39,045
Trustees' fees and expenses ......................................... 16,936
Custodian fees ...................................................... 16,016
Pricing fees ........................................................ 14,799
Transfer agent fees--Class C ........................................ 9,973
Transfer agent fees--Class I ........................................ 5,125
Other ............................................................... 34,187
-------------
Total expenses before reimbursement ................................. 2,414,770
Reimbursement of expenses ........................................... (12,204)
-------------
Total expenses after reimbursement .................................. 2,402,566
-------------
Investment income--net .............................................. 11,316,488
-------------
===============================================================================================================================
Realized & Unrealized Gain (Loss)--Net
- -------------------------------------------------------------------------------------------------------------------------------
Realized loss on:
Investments--net ................................................. (4,632,257)
Futures contracts and forward interest rate swaps--net ........... (2,392,938) (7,025,195)
-------------
Change in unrealized appreciation/depreciation on:
Investments--net ................................................. 1,304,618
Futures contracts and forward interest rate swaps--net ........... 1,223,615 2,528,233
-------------------------------
Total realized and unrealized loss--net ............................. (4,496,962)
-------------
Net Increase in Net Assets Resulting from Operations ................ $ 6,819,526
=============
See Notes to Financial Statements.
16 MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004
Statements of Changes in Net Assets
For the Year Ended
September 30,
-------------------------------
Increase (Decrease) in Net Assets: 2004 2003
===============================================================================================================================
Operations
- -------------------------------------------------------------------------------------------------------------------------------
Investment income--net .............................................. $ 11,316,488 $ 12,231,014
Realized gain (loss)--net ........................................... (7,025,195) 5,692,407
Change in unrealized appreciation/depreciation--net ................. 2,528,233 (11,288,852)
-------------------------------
Net increase in net assets resulting from operations ................ 6,819,526 6,634,569
-------------------------------
===============================================================================================================================
Dividends & Distributions to Shareholders
- -------------------------------------------------------------------------------------------------------------------------------
Investment income--net:
Class A .......................................................... (7,065,053) (7,015,807)
Class B .......................................................... (2,932,447) (3,930,531)
Class C .......................................................... (749,487) (674,336)
Class I .......................................................... (499,877) (524,923)
Realized gain--net:
Class A .......................................................... (37,165) --
Class B .......................................................... (17,832) --
Class C .......................................................... (4,364) --
Class I .......................................................... (2,397) --
-------------------------------
Net decrease in net assets resulting from dividends and distributions
to shareholders .................................................... (11,308,622) (12,145,597)
-------------------------------
===============================================================================================================================
Beneficial Interest Transactions
- -------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets derived from beneficial interest
transactions ....................................................... (20,837,404) (13,394,701)
-------------------------------
===============================================================================================================================
Net Assets
- -------------------------------------------------------------------------------------------------------------------------------
Total decrease in net assets ........................................ (25,326,500) (18,905,729)
Beginning of year ................................................... 255,909,110 274,814,839
-------------------------------
End of year* ........................................................ $ 230,582,610 $ 255,909,110
===============================
* Undistributed investment income--net ........................... $ 372,435 $ 364,569
===============================
See Notes to Financial Statements.
MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004 17
[LOGO] Merrill Lynch Investment Managers
Financial Highlights
Class A
The following per share data and ratios have been derived ----------------------------------------------------------------------
from information provided in the financial statements. For the Year Ended September 30,
----------------------------------------------------------------------
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001 2000
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 11.23 $ 11.45 $ 11.14 $ 10.49 $ 10.49
----------------------------------------------------------------------
Investment income--net ........... .53++ .54++ .51 .50 .50
Realized and unrealized gain
(loss)--net ..................... (.20) (.22) .32 .64 .01
----------------------------------------------------------------------
Total from investment operations . .33 .32 .83 1.14 .51
----------------------------------------------------------------------
Less dividends and distributions:
Investment income--net ........ (.53) (.54) (.52) (.49) (.50)
Realized gain--net ............ --+ -- --+ -- --
In excess of realized gain--net -- -- -- -- (.01)
----------------------------------------------------------------------
Total dividends and distributions (.53) (.54) (.52) (.49) (.51)
----------------------------------------------------------------------
Net asset value, end of year ..... $ 11.03 $ 11.23 $ 11.45 $ 11.14 $ 10.49
======================================================================
==================================================================================================================================
Total Investment Return*
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share 3.05% 2.89% 7.73% 11.01% 5.08%
======================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ... .84% .84% .80% .69% .79%
======================================================================
Expenses ......................... .85% .84% .80% .69% .79%
======================================================================
Investment income--net ........... 4.79% 4.83% 4.60% 4.56% 4.85%
======================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year
(in thousands) .................. $145,532 $150,395 $145,267 $134,563 $126,138
======================================================================
Portfolio turnover ............... 21.68% 55.91% 53.86% 76.22% 149.47%
======================================================================
* Total investment returns exclude the effects of sales charges.
+ Amount is less than $(.01) per share.
++ Based on average shares outstanding.
See Notes to Financial Statements.
18 MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004
Financial Highlights (continued)
Class B
The following per share data and ratios have been derived ----------------------------------------------------------------------
from information provided in the financial statements. For the Year Ended September 30,
----------------------------------------------------------------------
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001 2000
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 11.23 $ 11.46 $ 11.15 $ 10.50 $ 10.49
----------------------------------------------------------------------
Investment income--net ........... .49++ .50++ .47 .45 .46
Realized and unrealized gain
(loss)--net ..................... (.20) (.24) .32 .64 .02
----------------------------------------------------------------------
Total from investment operations . .29 .26 .79 1.09 .48
----------------------------------------------------------------------
Less dividends and distributions:
Investment income--net ........ (.48) (.49) (.48) (.44) (.46)
Realized gain--net ............ --+ -- --+ -- --
In excess of realized gain--net -- -- -- -- (.01)
----------------------------------------------------------------------
Total dividends and distributions (.48) (.49) (.48) (.44) (.47)
----------------------------------------------------------------------
Net asset value, end of year ..... $ 11.04 $ 11.23 $ 11.46 $ 11.15 $ 10.50
======================================================================
==================================================================================================================================
Total Investment Return*
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share 2.72% 2.38% 7.29% 10.56% 4.75%
======================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ... 1.25% 1.25% 1.21% 1.10% 1.20%
======================================================================
Expenses ......................... 1.25% 1.25% 1.21% 1.10% 1.20%
======================================================================
Investment income--net ........... 4.39% 4.41% 4.19% 4.16% 4.44%
======================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year
(in thousands) .................. $ 57,409 $ 78,510 $102,847 $123,173 $133,180
======================================================================
Portfolio turnover ............... 21.68% 55.91% 53.86% 76.22% 149.47%
======================================================================
* Total investment returns exclude the effects of sales charges.
+ Amount is less than $(.01) per share.
++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004 19
[LOGO] Merrill Lynch Investment Managers
Financial Highlights (continued)
Class C
The following per share data and ratios have been derived ----------------------------------------------------------------------
from information provided in the financial statements. For the Year Ended September 30,
----------------------------------------------------------------------
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001 2000
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 11.24 $ 11.46 $ 11.15 $ 10.50 $ 10.50
----------------------------------------------------------------------
Investment income--net ........... .48++ .48++ .45 .44 .45
Realized and unrealized gain
(loss)--net ..................... (.21) (.22) .32 .64 .01
----------------------------------------------------------------------
Total from investment operations . .27 .26 .77 1.08 .46
----------------------------------------------------------------------
Less dividends and distributions:
Investment income--net ........ (.47) (.48) (.46) (.43) (.45)
Realized gain--net ............ --+ -- --+ -- --
In excess of realized gain--net -- -- -- -- (.01)
----------------------------------------------------------------------
Total dividends and distributions (.47) (.48) (.46) (.43) (.46)
----------------------------------------------------------------------
Net asset value, end of year ..... $ 11.04 $ 11.24 $ 11.46 $ 11.15 $ 10.50
======================================================================
==================================================================================================================================
Total Investment Return*
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share 2.53% 2.38% 7.19% 10.45% 4.55%
======================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ... 1.35% 1.34% 1.31% 1.19% 1.30%
======================================================================
Expenses ......................... 1.35% 1.35% 1.31% 1.19% 1.30%
======================================================================
Investment income--net ........... 4.29% 4.32% 4.10% 4.05% 4.34%
======================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year
(in thousands) ................... $ 17,309 $ 16,729 $ 14,773 $ 8,730 $ 6,777
======================================================================
Portfolio turnover ............... 21.68% 55.91% 53.86% 76.22% 149.47%
======================================================================
* Total investment returns exclude the effects of sales charges.
+ Amount is less than $(.01) per share.
++ Based on average shares outstanding.
See Notes to Financial Statements.
20 MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004
Financial Highlights (concluded)
Class I
The following per share data and ratios have been derived ----------------------------------------------------------------------
from information provided in the financial statements. For the Year Ended September 30,
----------------------------------------------------------------------
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001 2000
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 11.23 $ 11.46 $ 11.14 $ 10.49 $ 10.49
----------------------------------------------------------------------
Investment income--net ........... .54++ .55++ .52 .51 .51
Realized and unrealized gain
(loss)--net ..................... (.20) (.23) .33 .64 .01
----------------------------------------------------------------------
Total from investment operations . .34 .32 .85 1.15 .52
----------------------------------------------------------------------
Less dividends and distributions:
Investment income--net ........ (.54) (.55) (.53) (.50) (.51)
Realized gain--net ............ --+ -- --+ -- --
In excess of realized gain--net -- -- -- -- (.01)
----------------------------------------------------------------------
Total dividends and distributions (.54) (.55) (.53) (.50) (.52)
----------------------------------------------------------------------
Net asset value, end of year ..... $ 11.03 $ 11.23 $ 11.46 $ 11.14 $ 10.49
======================================================================
==================================================================================================================================
Total Investment Return*
- ----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share 3.15% 2.89% 7.93% 11.12% 5.19%
======================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement ... .74% .74% .71% .59% .70%
======================================================================
Expenses ......................... .75% .74% .71% .59% .70%
======================================================================
Investment income--net ........... 4.90% 4.92% 4.69% 4.66% 4.95%
======================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year
(in thousands) ................... $ 10,332 $ 10,275 $ 11,928 $ 17,553 $ 12,579
======================================================================
Portfolio turnover ............... 21.68% 55.91% 53.86% 76.22% 149.47%
======================================================================
* Total investment returns exclude the effects of sales charges.
+ Amount is less than $(.01) per share.
++ Based on average shares outstanding.
See Notes to Financial Statements.
MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004 21
[LOGO] Merrill Lynch Investment Managers
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 amended, as a diversified, open-end
management investment company. The Fund's financial statements are prepared in
conformity with U.S. generally accepted accounting principles, which may require
the use of management accruals and estimates. Actual results may differ from
these estimates. The Fund offers multiple classes of shares. Class A and Class I
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 A, Class B and Class C 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. Income, expenses
(other than expenses attributable to a specific class) and realized and
unrealized gains and losses are allocated daily to each class based on its
relative net assets. The following is a summary of significant accounting
policies followed by the Fund.
(a) Valuation of investments -- Municipal bonds are traded primarily in the
over-the-counter markets and are valued at the last available bid price in the
over-the-counter market or on the basis of values as obtained by a pricing
service. Pricing services use valuation matrixes that incorporate both
dealer-supplied valuations and valuation models. The procedures of the pricing
service and its valuations are reviewed by the officers of the Fund under the
general direction of the Board of Trustees. Such valuations and procedures will
be reviewed periodically by the Board of Trustees of the Trust. Financial
futures contracts and options thereon, which are traded on exchanges, are valued
at their closing prices as of the close of such exchanges. Options written or
purchased are valued at the last sale price in the case of exchange-traded
options. In the case of options traded in the over-the-counter market, valuation
is the last asked price (options written) or the last bid price (options
purchased). Swap agreements are valued by quoted fair values received daily by
the Fund's pricing service. Short-term investments with a remaining maturity of
60 days or less are valued at amortized cost which approximates market value,
under which method the investment is valued at cost and any premium or discount
is amortized on a straight line basis to maturity. Investments in open-end
investment companies are valued at their net asset value each business day.
Securities and other 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.
(b) Derivative financial instruments -- The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movements and movements in the securities
markets. 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. 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.
o Forward interest rate swaps -- The Fund may enter into forward interest
rate swaps. In a forward interest rate swap, the Fund and the counterparty
agree to make periodic net payments on a specified notional contract
amount, commencing on a specified future effective date, unless terminated
earlier. When the agreement is closed, the Fund records a realized gain or
loss in an amount equal to the value of the agreement.
(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
22 MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004
Notes to Financial Statements (continued)
entered into (the trade dates). Realized gains and losses on security
transactions are determined on the identified cost basis. Dividend income is
recorded on the ex-dividend dates. Interest income is recognized on the accrual
basis. The Fund amortizes all premiums and discounts on debt securities.
(e) Prepaid registration fees -- Prepaid registration fees are charged to
expense as the related shares are issued.
(f) Dividends and distributions -- Dividends from net investment income are
declared daily and paid monthly. Distributions of capital gains are recorded on
the ex-dividend dates.
(g) Expenses -- Certain expenses have been allocated to the individual funds in
the Trust on a pro rata basis based upon the respective aggregate net asset
value of each fund included in the Trust.
(h) Reclassifications -- U.S. generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, during the current
year, $61,758 has been reclassified between undistributed net investment income
and accumulated realized capital losses as a result of permanent differences
attributable to the characterization of distributions. This reclassification has
no effect on net assets or net asset values per share.
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 FAM Distributors, Inc. ("FAMD" or the
"Distributor"), 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. The Investment Adviser has agreed to waive its management fee by the
amount of management fees the Fund pays to FAM indirectly through its investment
in CMA New York Municipal Money Fund. For the year ended September 30, 2004, FAM
reimbursed the Fund in the amount of $12,204.
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 A .................................. .10% --
Class B .................................. .25% .25%
Class C .................................. .25% .35%
- --------------------------------------------------------------------------------
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 A, Class B and Class C 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 year ended September 30, 2004, FAMD earned underwriting discounts and
direct commissions and MLPF&S earned dealer concessions on the sales of the
Fund's Class A and Class I Shares as follows:
- --------------------------------------------------------------------------------
FAMD MLPF&S
- --------------------------------------------------------------------------------
Class A .............................. $ 3,733 $29,039
Class I .............................. $ 137 $ 1,500
- --------------------------------------------------------------------------------
For the year ended September 30, 2004, MLPF&S received contingent deferred sales
charges of $58,101 and $5,661 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.
For the year ended September 30, 2004, the Fund reimbursed FAM $5,943 for
certain accounting services.
MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004 23
[LOGO] Merrill Lynch Investment Managers
Notes to Financial Statements (continued)
Certain officers and/or trustees of the Fund are officers and/or directors of
FAM, PSI, FDS, FAMD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended September 30, 2004 were $50,720,487 and $69,269,864, respectively.
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest transactions was
$20,837,404 and $13,394,701 for the years ended September 30, 2004 and September
30, 2003, respectively.
Transactions in shares of beneficial interest for each class were as follows:
- -------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended September 30, 2004 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 274,163 $ 3,038,027
Automatic conversion of shares ........... 917,135 10,169,201
Shares issued to shareholders in
reinvestment of dividends
and distributions ..................... 296,432 3,278,791
------------------------------
Total issued ............................. 1,487,730 16,486,019
Shares redeemed .......................... (1,689,197) (18,685,677)
------------------------------
Net decrease ............................. (201,467) $ (2,199,658)
==============================
- -------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended September 30, 2003 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 352,853 $ 3,982,923
Automatic conversion of shares ........... 1,289,920 14,510,769
Shares issued to shareholders in
reinvestment of dividends ............. 294,948 3,301,906
------------------------------
Total issued ............................. 1,937,721 21,795,598
Shares redeemed .......................... (1,225,504) (13,734,324)
------------------------------
Net increase ............................. 712,217 $ 8,061,274
==============================
- -------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended September 30, 2004 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 168,284 $ 1,861,893
Shares issued to shareholders in
reinvestment of dividends
and distributions ..................... 139,792 1,548,385
------------------------------
Total issued ............................. 308,076 3,410,278
Automatic conversion of shares ........... (916,671) (10,169,201)
Shares redeemed .......................... (1,178,642) (13,010,193)
------------------------------
Net decrease ............................. (1,787,237) $(19,769,116)
==============================
- -------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended September 30, 2003 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 671,466 $ 7,542,923
Shares issued to shareholders in
reinvestment of dividends ............. 181,399 2,032,183
------------------------------
Total issued ............................. 852,865 9,575,106
Automatic conversion of shares ........... (1,289,016) (14,510,769)
Shares redeemed .......................... (1,549,730) (17,375,274)
------------------------------
Net decrease ............................. (1,985,881) $(22,310,937)
==============================
- -------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended September 30, 2004 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 340,507 $ 3,787,570
Shares issued to shareholders in
reinvestment of dividends
and distributions ..................... 42,864 474,337
------------------------------
Total issued ............................. 383,371 4,261,907
Shares redeemed .......................... (304,205) (3,363,887)
------------------------------
Net increase ............................. 79,166 $ 898,020
==============================
- -------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended September 30, 2003 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 394,417 $ 4,440,527
Shares issued to shareholders in
reinvestment of dividends ............. 38,176 427,880
------------------------------
Total issued ............................. 432,593 4,868,407
Shares redeemed .......................... (232,488) (2,601,567)
------------------------------
Net increase ............................. 200,105 $ 2,266,840
==============================
24 MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004
Notes to Financial Statements (concluded)
- -------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended September 30, 2004 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 143,648 $ 1,584,671
Shares issued to shareholders in
reinvestment of dividends
and distributions ..................... 25,013 276,621
------------------------------
Total issued ............................. 168,661 1,861,292
Shares redeemed .......................... (147,034) (1,627,942)
------------------------------
Net increase ............................. 21,627 $ 233,350
==============================
- -------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended September 30, 2003 Shares Amount
- -------------------------------------------------------------------------------
Shares sold .............................. 81,095 $ 903,589
Shares issued to shareholders in
reinvestment of dividends ............. 23,782 266,391
------------------------------
Total issued ............................. 104,877 1,169,980
Shares redeemed .......................... (231,116) (2,581,858)
------------------------------
Net decrease ............................. (126,239) $ (1,411,878)
==============================
5. Short-Term Borrowings:
The Fund, along with certain other funds managed by FAM and its affiliates, is a
party to a $500,000,000 credit agreement with Bank One, N.A. and certain other
lenders. The Fund may borrow under the credit agreement to fund shareholder
redemptions and for other lawful purposes other than for leverage. The Fund may
borrow up to the maximum amount allowable under the Fund's current prospectus
and statement of additional information, subject to various other legal,
regulatory or contractual limits. The Fund pays a commitment fee of .09% per
annum based on the Fund's pro rata share of the unused portion of the credit
agreement. Amounts borrowed under the credit agreement bear interest at a rate
equal to, at each fund's election, the Federal Funds rate plus .50% or a base
rate as determined by Bank One, N.A. On November 28, 2003, the credit agreement
was renewed for one year under the same terms. The Fund did not borrow under the
credit agreement during the year ended September 30, 2004.
6. Distributions to Shareholders:
The tax character of distributions paid during the fiscal years ended September
30, 2004 and September 30, 2003 was as follows:
- -------------------------------------------------------------------------------
9/30/2004 9/30/2003
- -------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income ..................... $ 11,246,864 $ 12,145,597
Ordinary income ....................... 61,758 --
-------------------------------
Total distributions ...................... $ 11,308,622 $ 12,145,597
===============================
As of September 30, 2004, the components of accumulated losses on a tax basis
were as follows:
- -----------------------------------------------------------------------------
Undistributed tax-exempt income--net .................... $ 223,361
Undistributed long-term capital gains--net .............. --
-----------
Total undistributed earnings--net ....................... 223,361
Capital loss carryforward ............................... (8,612,548)*
Unrealized gains--net ................................... 3,807,456**
-----------
Total accumulated losses--net ........................... $(4,581,731)
===========
* On September 30, 2004, the Fund had a net capital loss carryforward of
$8,612,548, all of which expires in 2009. This amount will be available to
offset like amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on wash sales, the
tax deferral of losses on straddles, the realization for tax purposes of
unrealized losses on certain futures contracts, the difference between
book and tax amortization methods for premiums and discounts on fixed
income securities and the deferral of post-October capital losses for tax
purposes.
MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004 25
[LOGO] Merrill Lynch Investment Managers
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees
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 New York Municipal Bond Fund of
Merrill Lynch Multi-State Municipal Series Trust (the "Trust") as of September
30, 2004, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and 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 as of September 30, 2004, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Merrill Lynch New York Municipal Bond Fund of Merrill Lynch Multi-State
Municipal Series Trust as of September 30, 2004, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and its financial highlights for each of the five
years in the period then ended, in conformity with U.S. generally accepted
accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
November 12, 2004
26 MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004
Officers and Trustees (unaudited)
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years Trustee Trustee
====================================================================================================================================
Interested Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Terry K. P.O. Box 9011 President 1999 to President of the Merrill Lynch Investment Managers, 124 Funds None
Glenn* Princeton, NJ and present L.P. ("MLIM")/Fund Asset Management, L.P. 157 Portfolios
08543-9011 Trustee ("FAM")-advised funds since 1999; Chairman
Age: 64 (Americas Region) of MLIM from 2000 to 2002;
Executive Vice President of MLIM and FAM (which
terms as used herein include their corporate
predecessors) from 1983 to 2002; President of FAM
Distributors, Inc. ("FAMD") from 1986 to 2002 and
Director thereof from 1991 to 2002; Executive Vice
President and Director of Princeton Services, Inc.
("Princeton Services") from 1993 to 2002; President
of Princeton Administrators, L.P. from 1989 to 2002;
Director of Financial Data Services, Inc. since 1985.
------------------------------------------------------------------------------------------------------------------------
* Mr. Glenn is a director, trustee or member of an advisory board of certain other investment companies for which MLIM
or FAM acts as investment adviser. Mr. Glenn is an "interested person" as described in the Investment Company Act, of
the Fund based on his present and former positions with MLIM, FAM, FAMD, Princeton Services and Princeton
Administrators, L.P. The Trustee's term is unlimited. Trustees serve until their resignation, removal, or death, or
until December 31 of the year in which they turn 72. As Fund President, Mr. Glenn serves at the pleasure of the Board
of Trustees.
====================================================================================================================================
Independent Trustees*
- ------------------------------------------------------------------------------------------------------------------------------------
James H. P.O. Box 9095 Trustee 1995 to Director, The China Business Group, Inc. since 1996 38 Funds None
Bodurtha Princeton, NJ present and Executive Vice President thereof from 1996 to 55 Portfolios
08543-9095 2003; Chairman of the Board, Berkshire Holding
Age: 60 Corporation since 1980; Partner, Squire, Sanders &
Dempsey from 1980 to 1993.
- ------------------------------------------------------------------------------------------------------------------------------------
Joe Grills P.O. Box 9095 Trustee 2002 to Member of the Committee of Investment of Employee 38 Funds Kimco Realty
Princeton, NJ present Benefit Assets of the Association of Financial 55 Portfolios Corporation
08543-9095 Professionals ("CIEBA") since 1986; Member of
Age: 69 CIEBA's Executive Committee since 1988 and its
Chairman from 1991 to 1992; Assistant Treasurer
of International Business Machines Corporation
("IBM") and Chief Investment Officer of IBM
Retirement Funds from 1986 to 1993; Member of
the Investment Advisory Committee of the State of
New York Common Retirement Fund since 1989;
Member of the Investment Advisory Committee of
the Howard Hughes Medical Institute from 1997 to
2000; Director, Duke University Management Company
from 1992 to 2004, Vice Chairman thereof from1998
to 2004 and Director Emeritus thereof since 2004;
Director, LaSalle Street Fund from 1995 to 2001;
Director, Kimco Realty Corporation since 1997;
Member of the Investment Advisory Committee of
the Virginia Retirement System since 1998 and Vice
Chairman thereof since 2002; Director, Montpelier
Foundation since 1998 and its Vice Chairman since
2000; Member of the Investment Committee of the
Woodberry Forest School since 2000; Member of the
Investment Committee of the National Trust for
Historic Preservation since 2000.
MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004 27
[LOGO] Merrill Lynch Investment Managers
Officers and Trustees (unaudited) (continued)
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years Trustee Trustee
====================================================================================================================================
Independent Trustees* (concluded)
- ------------------------------------------------------------------------------------------------------------------------------------
Herbert I. P.O. Box 9095 Trustee 1987 to John M. Olin Professor of Humanities, New York 38 Funds None
London Princeton, NJ present University since 1993 and Professor thereof since 55 Portfolios
08543-9095 1980; President, Hudson Institute since 1997 and
Age: 65 Trustee thereof since 1980; Dean, Gallatin Division
of New York University from 1976 to 1993;
Distinguished Fellow, Herman Kahn Chair, Hudson
Institute from 1984 to 1985; Director, Damon Corp.
from 1991 to 1995; Overseer, Center for Naval
Analyses from 1983 to 1993; Director, Level Playing
Field (education) from 2000 to 2003.
- ------------------------------------------------------------------------------------------------------------------------------------
Andre F. P.O. Box 9095 Trustee 1985 to Harvard Business School: George Gund Professor of 38 Funds None
Perold Princeton, NJ present Finance and Banking since 2000; Senior Associate 55 Portfolios
08543-9095 Dean, Director of Faculty Recruiting since 2001;
Age: 52 Finance Area Chair from 1996 to 2001; Sylvan C.
Coleman Professor of Financial Management from
1993 to 2000; Director, Genbel Securities Limited and
Gensec Bank from 1999 to 2003; Director, Stockback,
Inc. from 2000 to 2002; Director, Sanlam Limited from
2001 to 2003; Trustee, Commonfund from 1989 to
2001; Director, Sanlam Investment Management from
1999 to 2001; Director, Bulldogresearch.com from
2000 to 2001; Director, Quantec Limited from 1991
to 1999; Director and Chairman of the Board of
UNX Inc. since 2003.
- ------------------------------------------------------------------------------------------------------------------------------------
Roberta P.O. Box 9095 Trustee 2000 to Shareholder of Modrall, Sperling, Roehl, Harris & 38 Funds None
Cooper Princeton, NJ present Sisk, P.A. since 1993; President, American Bar 55 Portfolios
Ramo 08543-9095 Association from 1995 to 1996 and Member of
Age: 62 the Board of Governors thereof from 1994 to 1997;
Shareholder of Poole, Kelly & Ramo, Attorneys at Law,
P.C. from 1977 to 1993; Director, Coopers, Inc. since
1999; Director of ECMC Group (service provider to
students, schools and lenders) since 2001; Director,
United New Mexico Bank (now Wells Fargo) from
1983 to 1988; Director, First National Bank of New
Mexico (now Wells Fargo) from 1975 to 1976.
- ------------------------------------------------------------------------------------------------------------------------------------
Robert S. P.O. Box 9095 Trustee 2002 to Principal of STI Management (investment adviser) 38 Funds None
Salomon, Princeton, NJ present since 1994; Chairman and CEO of Salomon Brothers 55 Portfolios
Jr. 08543-9095 Asset Management from 1992 to 1995; Chairman
Age: 67 of Salomon Brothers equity mutual funds from 1992
to 1995; regular columnist with Forbes Magazine
from 1992 to 2002; Director of Stock Research and
U.S. Equity Strategist at Salomon Brothers from 1975
to 1991; Trustee, Commonfund from 1980 to 2001.
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen B. P.O. Box 9095 Trustee 2002 to Chairman of Fernwood Advisors, Inc. (investment 39 Funds None
Swensrud Princeton, NJ present adviser) since 1996; Principal, Fernwood Associates 56 Portfolios
08543-9095 (financial consultants) since 1975; Chairman of R.P.P.
Age: 71 Corporation (manufacturing) since 1978; Director of
International Mobile Communications, Incorporated
(telecommunications) since 1998.
------------------------------------------------------------------------------------------------------------------------
* The Trustee's term is unlimited. Trustees serve until their resignation, removal or death, or until December 31 of the
year in which they turn 72.
28 MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004
Officers and Trustees (unaudited) (concluded)
Position(s) Length of
Held with Time
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years
====================================================================================================================================
Fund Officers*
- ------------------------------------------------------------------------------------------------------------------------------------
Donald C. P.O. Box 9011 Vice 1993 to First Vice President of MLIM and FAM since 1997 and Treasurer thereof since 1999;
Burke Princeton, NJ President present Senior Vice President and Treasurer of Princeton Services since 1999 and Director
08543-9011 and and since 2004; Vice President of FAMD since 1999; Director of MLIM Taxation since
Age: 44 Treasurer 1999 to 1990.
present
- ------------------------------------------------------------------------------------------------------------------------------------
Kenneth A. P.O. Box 9011 Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
Jacob Princeton, NJ Vice present Management) of MLIM from 1997 to 2000.
08543-9011 President
Age: 53
- ------------------------------------------------------------------------------------------------------------------------------------
John M. P.O. Box 9011 Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
Loffredo Princeton, NJ Vice present Management) of MLIM from 1998 to 2000.
08543-9011 President
Age: 40
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey P.O. Box 9011 Chief 2004 to Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice President and
Hiller Princeton, NJ Compliance present Chief Compliance Officer of MLIM since 2004; Global Director of Compliance at
08543-9011 Officer Morgan Stanley Investment Management from 2002 to 2004; Managing Director and
Age: 53 Global Director of Compliance at Citigroup Asset Management from 2000 to 2002;
Chief Compliance Officer at Soros Fund Management in 2000; Chief Compliance Officer
at Prudential Financial from 1995 to 2000.
- ------------------------------------------------------------------------------------------------------------------------------------
Alice A. P.O. Box 9011 Secretary 2004 to Director (Legal Advisory) of MLIM since 2002; Vice President of MLIM from 1999 to
Pellegrino Princeton, NJ present 2002; Attorney associated with MLIM since 1997.
08543-9011
Age: 44
------------------------------------------------------------------------------------------------------------------------
* Officers of the Fund serve at the pleasure of the Board of Trustees.
- ------------------------------------------------------------------------------------------------------------------------------------
Further information about the Fund's Officers and Trustees is available in the Fund's Statement of Additional
Information, which can be obtained without charge by calling 1-800-MER-FUND.
- ------------------------------------------------------------------------------------------------------------------------------------
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
-----------------------------------------------------------------------------
Andre F. Perold resigned as a Director of the Fund effective October 1, 2004.
-----------------------------------------------------------------------------
MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004 29
[LOGO] Merrill Lynch Investment Managers
Important Tax Information (unaudited)
All of the net investment income distributions paid monthly by Merrill Lynch New
York Municipal Bond Fund of Merrill Lynch Multi-State Municipal Series Trust
during the taxable year ended September 30, 2004 qualify as tax-exempt interest
dividends for federal income tax purposes.
Additionally, the Fund paid a taxable ordinary income distribution of $.002743
per share to shareholders of record on December 22, 2003.
Please retain this information for your records.
30 MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004
Electronic Delivery
The Fund is now offering electronic delivery of communications to its
shareholders. In order to receive this service, you must register your account
and provide us with e-mail information. To sign up for this service, simply
access this Web site http://www.icsdelivery.com/live and follow the
instructions. When you visit this site, you will obtain a personal
identification number (PIN). You will need this PIN should you wish to update
your e-mail address, choose to discontinue this service and/or make any other
changes to the service. This service is not available for certain retirement
accounts at this time.
MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND SEPTEMBER 30, 2004 31
[LOGO] Merrill Lynch Investment Managers www.mlim.ml.com
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.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free 1-800-MER-FUND (1-800-637-3863); (2)
at www.mutualfunds.ml.com; and (3) on the Securities and Exchange Commission's
Web site at http://www.sec.gov. Information about how the Fund voted proxies
relating to securities held in the Fund's portfolio during the most recent
12-month period ended June 30 is available (1) at www.mutualfunds.ml.com and (2)
on the Securities and Exchange Commission's Web site at http://www.sec.gov.
Merrill Lynch New York Municipal Bond Fund of
Merrill Lynch Multi-State Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
#10344 -- 9/04
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as of the
end of the period covered by this report, that applies to the
registrant's principal executive officer, principal financial officer
and principal accounting officer, or persons performing similar
functions. A copy of the code of ethics is available without charge
upon request by calling toll-free 1-800-MER-FUND (1-800-637-3863).
Item 3 - Audit Committee Financial Expert - The registrant's board of directors
has determined that (i) the registrant has the following audit
committee financial experts serving on its audit committee and (ii)
each audit committee financial expert is independent: (1) Joe Grills,
(2) Andre F. Perold, (3) Robert S. Salomon, Jr., and (4) Stephen B.
Swensrud.
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ending September 30, 2004 - $26,000
Fiscal Year Ending September 30, 2003 - $26,000
(b) Audit-Related Fees - Fiscal Year Ending September 30, 2004 - $0
Fiscal Year Ending September 30, 2003 - $0
(c) Tax Fees - Fiscal Year Ending September 30, 2004 - $5,610
Fiscal Year Ending September 30, 2003 - $4,800
The nature of the services include tax compliance, tax advice and tax
planning.
(d) All Other Fees - Fiscal Year Ending September 30, 2004 - $0
Fiscal Year Ending September 30, 2003 - $0
(e)(1) The registrant's audit committee (the "Committee") has adopted
policies and procedures with regard to the pre-approval of services.
Audit, audit-related and tax compliance services provided to the
registrant on an annual basis require specific pre-approval by the
Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to the
registrant's affiliated service providers that relate directly to the
operations and the financial reporting of the registrant. Certain of
these non-audit services that the Committee believes are a) consistent
with the SEC's auditor independence rules and b) routine and recurring
services that will not impair the independence of the independent
accountants may be approved by the Committee without consideration on a
specific case-by-case basis ("general pre-approval"). However, such
services will only be deemed pre-approved provided that any individual
project does not exceed $5,000 attributable to the registrant or
$50,000 for all of the registrants the Committee oversees. Any proposed
services exceeding the pre-approved cost levels will require specific
pre-approval by the Committee, as will any other services not subject
to general pre-approval (e.g., unanticipated but permissible services).
The Committee is informed of each service approved subject to general
pre-approval at the next regularly scheduled in-person board meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ending September 30, 2004 - $14,091,966
Fiscal Year Ending September 30, 2003 - $18,527,998
(h) The registrant's audit committee has considered and determined that
the provision of non-audit services that were rendered to the
registrant's investment adviser and any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the registrant that were not pre-approved pursuant
to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible
with maintaining the principal accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $945,000, 0%
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 9 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 10 - Controls and Procedures
10(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others particularly
during the period in which this report is being prepared. The
registrant's certifying officers have determined that the registrant's
disclosure controls and procedures are effective based on our evaluation
of these controls and procedures as of a date within 90 days prior to
the filing date of this report.
10(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR
270.30a-3(d)) that occurred during the second fiscal half-year of the
period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
Item 11 - Exhibits attached hereto
11(a)(1) - Code of Ethics - See Item 2
11(a)(2) - Certifications - Attached hereto
11(a)(3) - Not Applicable
11(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Merrill Lynch New York Municipal Bond Fund of Merrill Lynch Multi-State
Municipal Series Trust
By: /s/ Terry K. Glenn
---------------------------
Terry K. Glenn,
President of
Merrill Lynch New York Municipal Bond Fund of
Merrill Lynch Multi-State Municipal Series Trust
Date: November 19, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Terry K. Glenn
---------------------------
Terry K. Glenn,
President of
Merrill Lynch New York Municipal Bond Fund of
Merrill Lynch Multi-State Municipal Series Trust
Date: November 19, 2004
By: /s/ Donald C. Burke
---------------------------
Donald C. Burke,
Chief Financial Officer of
Merrill Lynch New York Municipal Bond Fund of
Merrill Lynch Multi-State Municipal Series Trust
Date: November 19, 2004