MERRILL
LYNCH
OHIO
MUNICIPAL
BOND FUND
Annual Report July 31, 1994
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Merrill Lynch Ohio
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, New Jersey
08543-9011
<PAGE>
TO OUR SHAREHOLDERS
The expectation of increasing inflationary pressures and higher
interest rates initially heightened investor concerns and increased
financial market volatility during the July quarter. However, as the
quarter progressed, it was the weakness of the US dollar in foreign
exchange markets that dominated the financial news and prolonged
stock and bond market declines. Although the US dollar had
strengthened slightly by July quarter-end, which may have improved
investor confidence in the stock and bond markets, the possibility
of continued tightening by the Federal Reserve Board resurfaced
following Chairman Alan Greenspan's recent congressional testimony.
Nevertheless, as the quarter drew to a close, a lower-than-expected
rate of growth reported for the US economy during the second
calendar quarter allayed investor concerns and led to stock and bond
market rallies.
During the July quarter, the US dollar's weakness relative to other
major currencies reflected the deteriorating US trade deficit and
widening net long-term capital outflows. In 1993, an expanding US
economy and recession in other industrial countries led to a higher
level of imports and weaker export growth, widening the US trade
deficit further. In addition, global investors favored non-US dollar
denominated assets throughout 1993, which has further depressed the
dollar's value. This trend is not improving significantly thus far
in 1994 since foreign inflows into US capital markets continue to
decline, although US investors are investing outside of the United
States to a lesser degree.
Over the longer term, if the economies of the United States' major
trading partners expand (improving the prospects for US export
growth), the outlook for the US dollar is likely to improve. In the
near term, central banks have attempted to reverse the dollar's
decline through currency market intervention. These efforts have met
with limited success thus far, giving rise to the concern that the
Federal Reserve Board will be forced to continue to raise short-term
interest rates to attract investment capital back to the United
States and bolster the dollar's value. However, further interest
rate increases may jeopardize the US economic expansion. Despite
evidence of a moderating trend in the US economy, Federal Reserve
Board Chairman Alan Greenspan indicated in his July Humphrey-Hawkins
testimony that the central bank would prefer to err on the side of
too much monetary tightening rather than too little. In the weeks
ahead, investors will continue to assess economic data and
inflationary trends as they focus on the US dollar in order to gauge
whether further increases in short-term interest rates are imminent.
Continued indications of moderate and sustainable levels of economic
growth would be positive for the US capital markets.
<PAGE>
The Municipal Market
Long-term tax-exempt bond yields ended the July quarter essentially
unchanged. The Bond Buyer Revenue Bond Index rose five basis points
(0.05%) to 6.47%. The Index, however, failed to capture the dramatic
bond rally on July 29, 1994, when municipal bond yields had their
largest one-day decline thus far this year. Responding to reports of
a continued mild inflationary outlook and a potentially weakening
economy, municipal bond yields declined by approximately 10 basis
points. US Treasury bonds displayed a similar pattern over the last
three months, ending with an equally dramatic rally on July 29,
1994. Long-term US Treasury bonds ended the quarter yielding
approximately 7.40%.
The tax-exempt bond market has continued to be very volatile with
yields fluctuating by as much as 15 basis points from week to week.
This continued volatility is largely a reflection of the same lack
of conviction regarding the near-term direction of interest rates
that has prevailed for much of 1994. Throughout this past quarter,
the municipal bond market had been unable to maintain a consensus
regarding either the potential strength of the current economic
recovery or the resultant response by the Federal Reserve Board.
However, a number of economic indicators released in late July began
to suggest that the robust pace of recent economic growth was
slowing. This promoted a more positive market environment,
culminating in the market rally on July 29.
The municipal bond market's technical position has remained
supportive. Approximately $40 billion in long-term securities were
issued during the three months ended July 31, 1994. This represents
a decline of over 50% versus the July quarter from the previous
year. As discussed in earlier reports, this reduction in new-issue
supply has minimized the selling pressure by larger institutional
investors who fear being unable to purchase sizable amounts of
securities in the future. Such a significant decline in issuance
would normally be expected to trigger a decline in yields as
investors chase a commodity in scarce supply. Investor demand,
however, has also diminished somewhat in recent months as net flows
into long-term municipal bond funds have dramatically slowed or, in
some instances, reversed. Consequently, the supply/demand
relationship within the municipal bond market has remained in
balance, promoting the overall stability in yield levels seen in the
past months.
With after-tax equivalents in excess of 10%, long-term tax-exempt
bonds continue to represent considerable value relative to other
investment alternatives. We continue to anticipate that municipal
bond yields will decline further in late 1994 and into 1995. The
economic impact of the significant interest rate increases
experienced since early February have yet to be totally realized.
The resultant drag on the economy should provide the foundation for
further interest rate declines. Under such a scenario, current tax-
exempt bond yields should prove to represent considerable value.
<PAGE>
Fiscal Year in Review
Municipal bond prices declined during the fiscal year ended July 31,
1994, with the yield on the Bond Buyer Revenue Index rising from
5.87% on July 31, 1993, to 6.47% on July 29, 1994. Price declines
for Ohio municipal bonds were somewhat muted by a combination of
strong demand by Ohio retail investors and a 40% reduction in new-
issue supply of long-term Ohio bonds from the previous year.
Over the course of the fiscal year, as the change in bond market
psychology became clearly evident, we became more cautious regarding
the direction of interest rates. With the yield curve flattening
substantially, we were able to sell longer-term bonds (that is,
those with maturities beyond 25 years) and replace them with bonds
with maturities in the 20-year--25-year range, without sacrificing
yield. By shortening the average maturity and raising the average
coupon of our holdings, we were able to enhance the Fund's Class A
and Class B Shares' total returns and maintain an attractive yield
during the fiscal year. Additionally, increasing the cash position
over the 12-month period to approximately 5% permitted the Fund to
accumulate positions of long-term Ohio municipal bonds during
periods of temporary weakness in the market. We believe these
holdings should provide attractive returns well into the future.
Merrill Lynch Ohio Municipal Bond Fund continues to attract new
investors. For the year ended July 31, 1994, total net assets have
increased from $61.8 million to $75.0 million, representing a 21%
increase.
We appreciate your ongoing interest in Merrill Lynch Ohio Municipal
Bond Fund, and we look forward to assisting you with your financial
needs in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
August 23, 1994
<PAGE>
IMPORTANT TAX INFORMATION
All of the net investment income distributions paid monthly by
Merrill Lynch Ohio Municipal Bond Fund during its taxable year ended
July 31, 1994 qualify as tax-exempt interest dividends for Federal
tax purposes.
Additionally, the Fund distributed short-term capital gains of
$.079727 per share and long-term capital gains of $.012991 per share
to shareholders of record on December 22, 1993.
Please retain this information for your records.
PERFORMANCE DATA
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
Class A and Class B Shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Average Annual Total Return--Class A Shares*
% Return Without % Return With
Sales Charge Sales Charge**
Year Ended 6/30/94 -0.98% -4.94%
Inception (2/28/92)
through 6/30/94 +7.52 +5.66
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Total Return Based on a $10,000 Investment--Class A Shares*
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX GRAPHIC AND IMAGE MATERIAL ITEM 1.
<PAGE>
Average Annual Total Return--Class B Shares*
% Return % Return
Without CDSC With CDSC**
Year Ended 6/30/94 -1.48% -5.20%
Inception (2/28/92)
through 6/30/94 +6.99 +6.20
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced
to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
Total Return Based on a $10,000 Investment--Class B Shares*
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX GRAPHIC AND IMAGE MATERIAL ITEM 2.
PERFORMANCE DATA (concluded)
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
2/28/92--12/31/92 $10.00 $10.40 -- $0.525 + 9.46%
1993 10.40 11.22 $0.013 0.648 +14.53
1/1/94--7/31/94 11.22 10.50 -- 0.310 - 3.56
------ ------
Total $0.013 Total $1.483
Cumulative total return as of 7/31/94: +20.89%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
include sales charge; results would be lower if sales charge was included.
</TABLE>
<PAGE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
2/28/92--12/31/92 $10.00 $10.40 -- $0.481 + 8.99%
1993 10.40 11.22 $0.013 0.592 +13.95
1/1/94--7/31/94 11.22 10.50 -- 0.279 - 3.84
------ ------
Total $0.013 Total $1.352
Cumulative total return as of 7/31/94: +19.43%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
<TABLE>
Recent Performance Results*
<CAPTION>
12 Month 3 Month
7/31/94 4/30/94 7/31/93 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $10.50 $10.37 $11.02 -4.61%(1) +1.25%
Class B Shares 10.50 10.37 11.02 -4.61(1) +1.25
Class A Shares--Total Return +1.10(2) +2.57(3)
Class B Shares--Total Return +0.59(4) +2.44(5)
Class A Shares--Standardized 30-day Yield 4.89%
Class B Shares--Standardized 30-day Yield 4.60%
<FN>
*Investment results shown for the 3-month and 12-month periods are
before the deduction of any sales charges.
(1)Percent change includes reinvestment of $0.013 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.637 per share ordinary
income dividends and $0.013 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.135 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.582 per share ordinary
income dividends and $0.013 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.122 per share ordinary
income dividends.
</TABLE>
<PAGE>
PORTFOLIO ABBREVIATIONS
To simplify the listings of Merrill Lynch Ohio Municipal Bond Fund's
portfolio holdings in the Schedule of Investments, we have
abbreviated the names of many of the securities according to the
list at right.
AMT Alternative Minimum Tax (subject to)
GO General Obligation Bonds
IDR Industrial Development Revenue Bonds
LEVRRS Leveraged Reverse Rate Securities
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Ohio--95.1%
<S> <S> <C> <S> <C>
NR Baa1 $ 900 Ashtabula County, Ohio, IDR, Refunding (Ashland Oil Inc. Project), Series
A, 6.90% due 5/01/2010 $ 924
NR A 1,000 Barberton, Ohio, Hospital Facilities Revenue Bonds (Barberton Citizens
Hospital Company Project), 7.25% due 1/01/2012 1,084
NR A 1,000 Bedford, Ohio, City School District, GO, UT, 6.25% due 12/01/2013 1,003
BBB NR 1,000 Bellefontaine, Ohio, Hospital Revenue Refunding Bonds (Mary Rutan Health
Association), 6% due 12/01/2002 997
NR Aa 500 Berea, Ohio, Various Purpose, GO, UT, Bank Qualified, 6.125% due 12/01/2012 512
A1 NR 200 Cincinnati and Hamilton County, Ohio, Port Authority, Economic Development
Revenue Bonds (Kenwood Office Association Project), VRDN, 2.75% due 9/01/2025 (a) 200
AAA Aaa 2,300 Cleveland, Ohio, Waterworks Revenue Bonds (First Mortgage), Series F-92-A,
6.50% due 1/01/2002 (b) (e) 2,513
AA- A1 700 Columbus, Ohio, Water System Revenue Refunding Bonds, 6.375% due 11/01/2010 713
<PAGE>
NR Aa 500 Cuyahoga County, Ohio, GO, 6.50% due 10/01/2012 520
NR NR 2,000 Cuyahoga County, Ohio, GO, Light County Building Improvement, 6.70% due
10/01/l999 (e) 2,196
A A1 500 Cuyahoga County, Ohio, Hospital Revenue Bonds (Meridia Health System), 7.25%
due 8/15/2019 523
A A1 2,000 Cuyahoga County, Ohio, Hospital Revenue Health Bonds (Cleveland--Fairview
General Hospital and Lutheran Medical Center), 6.25% due 8/15/2010 2,011
Cuyahoga County, Ohio, Hospital Revenue Improvement Bonds:
NR VMIG1 2,500 (Cleveland University Hospital), VRDN, 2.90% due 1/01/2016 (a) 2,500
AA Aa 900 (University Hospital Health Project), 6.50% due 1/15/2019 914
NR NR 1,400 Cuyahoga County, Ohio, IDR, AMT, VRDN, 3.15% due 3/01/2019 (a) 1,400
A- A 1,220 Erie County, Ohio, Hospital Improvement Revenue Refunding Bonds (Firelands
Community Hospital Project), 6.75% due 1/01/2015 1,226
NR NR 1,500 Franklin County, Ohio, Courthouse Revenue Bonds, 6.375% due 12/01/2001(e) 1,641
AAA Aaa 3,500 Franklin County, Ohio, GO, Refunding Bonds, 5.375% due 12/01/2020 3,216
NR VMIG1 100 Franklin County, Ohio, Health System Revenue Bonds (Franciscan Sisters--
Saint Anthony Medical Center), Series B, VRDN, 2.80% due 7/01/2015 (a) 100
NR Aa 1,000 Franklin County, Ohio, Hospital Revenue Refunding Bonds (Riverside United
Methodist Church), Series A, 5.75% due 5/15/2020 940
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Ohio (continued)
<S> <S> <C> <S> <C>
A A $1,000 Garfield Heights, Ohio, Hospital Revenue Refunding and Improvement Bonds
(Marymont Hospital Project), Series B, 6.65% due 11/15/2011 $ 1,027
Hamilton County, Ohio, Health System Revenue Bonds:
NR VMIG1 400 (Franciscan Sisters Poor Health), Series A, VRDN, 2.90% due 3/01/2017 (a) 400
BBB- Baa 1,000 Refunding (Providence Hospital--Franciscan), 6.875% due 7/01/2015 988
Hamilton County, Ohio, Hospital Facilities, Revenue Refunding Bonds:
A A1 1,000 (Bethesda Hospital), Series A, 6.25% due 1/01/2012 1,003
NR Aa2 500 (Episcopal Retirement Homes), 6.80% due 1/01/2008 519
NR Aa 500 Lake County, Ohio, GO, Refunding, 6.60% due 12/01/2010 525
NR Aa 425 Lakewood, Ohio, GO, 6.50% due 12/01/2012 442
Lakota, Ohio, Local School District Revenue Bonds, GO, UT (b):
AAA Aaa 1,000 7% due 12/01/2008 1,130
AAA Aaa 1,740 7% due 12/01/2010 1,960
A- NR 1,750 Lorain County, Ohio, Hospital Improvement Revenue Refunding Bonds (Lakeland
Community Hospital Inc.), 6.50% due 11/15/2012 1,752
A NR 2,000 Lorain County, Ohio, M/F Revenue Refunding Bonds (Elderly Housing Corporation),
Harr Plaza & International, Series A, 6.375% due 7/15/2019 1,957
A NR 840 Loveland, Ohio, City School District, GO, UT, 6.65% due 12/01/2015 874
BBB+ NR 1,500 Lucas County, Ohio, Hospital Revenue Bonds (Flower Hospital), 6.125% due
12/01/2013 1,410
BBB+ NR 750 Marion County, Ohio, IDR, Refunding (K mart Corporation Project), 6.70% due
2/01/2007 763
BBB+ Baa1 2,000 Moraine, Ohio, Solid Waste Disposal Revenue Bonds (General Motors Corporation
Project), AMT, 6.75% due 7/01/2014 2,027
AAA Aaa 1,000 Mount Vernon, Ohio, City School District Revenue Bonds, Bank Qualified, GO,
UT, 5.85% due 12/01/2019 (c) 982
AAA Aaa 2,000 North Royalton, Ohio, City School District Revenue Bonds, GO, UT, 6.10%
due 12/01/2019 (d) 2,015
<PAGE>
AAA Aaa 750 Ohio Capital Corporation for Housing, Mortgage Revenue Refunding Bonds, Series
J, 6.50% due 1/01/2025 (d) 753
AAA Aaa 2,820 Ohio Municipal Electric Generation Agency, Joint Venture, Electric Revenue
Bonds, 5.375% due 2/15/2024(b) 2,506
Ohio State Air Quality Development Authority, Revenue Bonds:
AAA Aaa 2,000 (Columbus & Southern Ohio Power Company Project), Series A, 6.375% due
12/01/2020 (c) 2,052
BBB Baa3 1,000 (Columbus & Southern Ohio Power Company Project), Series B, 6.25% due 12/01/2020 953
NR Baa1 1,000 Refunding (Ashland Oil Inc., Project), 6.85% due 4/01/2010 1,029
AA- A1 1,500 Refunding (Coll--Dayton Power & Light Project), Series B, 6.40% due 8/15/2027 1,503
BBB- NR 1,000 Refunding (Owens-Corning Fiberglass Project), 6.25% due 6/01/2004 1,016
BBB- Baa2 2,000 Refunding, PCR (Ohio--Edison), Series A, 5.95% due 5/15/2029 1,772
Ohio State Building Authority, State Facilities Revenue Bonds (Adult Correctional
Building), Series A:
A+ A1 1,000 6.30% due 10/01/2011 1,015
A+ A1 2,000 6.125% due 10/01/2012 2,000
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Ohio (concluded)
<S> <S> <C> <S> <C>
AA- Aa $2,500 Ohio State Higher Educational Facilities, Revenue Refunding Bonds (Case Western
Reserve University), 6.25% due 10/01/2017 $ 2,613
AAA Aaa 900 Ohio State Higher Educational Facility, Community Mortgage Revenue Bonds
(University of Dayton Project), 6.60% due 12/01/2017 (c) 946
BBB+ NR 505 Ohio State IDR, Mortgage Revenue Refunding Bonds (K mart Corporation), Series A,
6.75% due 10/01/2007 519
AA- A1 1,415 Ohio State Turnpike Commission, Turnpike Revenue Bonds, Series A, 5.75% due
2/15/2024 1,338
Student Loan Funding Corporation, Cincinnati, Ohio, Student Loan Revenue Bonds,
VRDN (a):
A1 VMIG1 100 Series 1983 A, 2.60% due 12/29/1998 100
NR VMIG1 300 Series A-1, AMT, 2.90% due 1/01/2007 300
NR VMIG1 2,700 Series A-3, AMT, 2.90% due 1/01/2007 2,700
<PAGE>
NR NR 475 Student Loan Funding Corporation, Cincinnati, Ohio, Student Loan Revenue
Refunding Bonds, Sub-Series B, Refunding, AMT, 6.75% due 1/01/2007 485
BBB+ NR 500 Trumbull County, Ohio, IDR, Refunding (K mart Corporation Project), 5.60% due
5/15/2006 472
AAA Aaa 1,275 Twin Valley, Ohio, Community Local School District, GO, Bank Qualified, 6.15% due
12/01/2016 (c) 1,280
AAA Aaa 1,000 Wooster, Ohio, City School District, GO, UT, 6.50% due 12/01/2017 (b) 1,040
Puerto Rico -- 6.3%
AAA NR 700 Puerto Rico Commonwealth, Public Improvement, GO, UT, Series A, 6.50% due
7/01/l999 (e) 752
AAA Aaa 1,500 Puerto Rico Commonwealth, RIB, 8.49% due 7/01/2020 (f)(g) 1,414
Puerto Rico Electric Power Authority, Power Revenue Bonds:
AAA Aaa 900 LEVRRS, 8.778% due 7/01/2023 (f)(g) 870
A- Baa1 500 Refunding, Series S, 7% due 7/01/2007 559
AAA Aaa 1,000 Puerto Rico Public Buildings Authority, Guaranteed Public Education and Health
Facilities Authority Revenue Bonds, Series L, 6.875% due 7/01/0002 (e) 1,126
Total Investments (Cost--$75,529)--101.4% 76,020
Liabilities in Excess of Other Assets--(1.4%) (1,037)
-------
Net Assets--100.0% $74,983
=======
<FN>
(a)The interest rate is subject to change periodically based upon
the prevailing market rate. The interest rates shown are the
rates in effect at July 31, 1994.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)Prerefunded.
(f)FSA Insured.
(g)The interest rate is subject to change periodically and inversely
based upon the prevailing market rate. The interest rates shown
are the rates in effect at July 31, 1994.
NR--Not Rated.
Ratings of issues shown have not been audited by Deloitte & Touche
LLP.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of July 31, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$75,528,839) (Note 1a) $76,020,493
Cash 6,475
Receivables:
Interest $ 934,913
Beneficial interest sold 157,428 1,092,341
----------
Deferred organization expenses (Note 1e) 30,481
Prepaid registration fees and other assets (Note 1e) 13,539
-----------
Total assets 77,163,329
-----------
Liabilities: Payables:
Securities purchased 1,999,762
Dividends to shareholders (Note 1f) 56,549
Distributor (Note 2) 27,388
Investment adviser (Note 2) 21,914
Beneficial interest redeemed 20,210 2,125,823
----------
Accrued expenses and other liabilities 54,950
-----------
Total liabilities 2,180,773
-----------
Net Assets: Net assets $74,982,556
===========
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited number
Consist of: of shares authorized $ 89,269
Class B Shares of beneficial interest, $.10 par value, unlimited number
of shares authorized 624,898
Paid-in capital in excess of par 74,207,760
Accumulated distributions in excess of realized capital gains--net (431,025)
Unrealized appreciation on investments--net 491,654
-----------
Net assets $74,982,556
===========
Net Asset Class A--Based on net assets of $9,372,533 and 892,692 shares of
Value: beneficial interest outstanding $ 10.50
===========
Class B--Based on net assets of $65,610,023 and 6,248,977 shares of
beneficial interest outstanding $ 10.50
===========
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the
Year Ended
July 31, 1994
<S> <S> <C>
Investment Interest and amortization of premium and discount earned $ 4,085,404
Income
(Note 1d):
Expenses: Investment advisory fees (Note 2) 389,433
Distribution fees--Class B (Note 2) 308,004
Printing and shareholder reports 53,758
Professional fees 51,345
Accounting services (Note 2) 49,715
Transfer agent fees--Class B (Note 2) 31,145
Registration fees (Note 1e) 16,364
Custodian fees 12,314
Amortization of organization expenses (Note 1e) 11,836
Pricing fees 7,574
Transfer agent fees--Class A (Note 2) 4,038
Trustees' fees and expenses 2,977
Other 1,817
------------
Total expenses before reimbursement 940,320
Reimbursement of expenses (Note 2) (165,672)
------------
Total expenses after reimbursement 774,648
------------
Investment income--net 3,310,756
------------
Realized & Realized loss on investments--net (276,074)
Unrealized Change in unrealized appreciation/depreciation on investments--net (2,899,454)
Loss On ------------
Investments Net Increase in Net Assets Resulting from Operations $ 135,228
- --Net (Notes ============
1d & 3):
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended July 31,
Increase (Decrease) in Net Assets: 1994 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 3,310,756 $ 2,167,480
Realized gain (loss) on investments--net (276,074) 521,730
Change in unrealized appreciation/depreciation on
investments--net (2,899,454) 1,973,664
------------ ------------
Net increase in net assets resulting from operations 135,228 4,662,874
------------ ------------
Dividends & Investment income--net:
Distributions Class A (470,881) (317,057)
to Shareholders Class B (2,839,875) (1,850,423)
(Note 1f): Realized gain on investments--net:
Class A -- (13,015)
Class B -- (89,139)
In excess of realized gain on investments--net:
Class A (76,803) --
Class B (515,879) --
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (3,903,438) (2,269,634)
------------ ------------
Beneficial Net increase in net assets derived from beneficial interest
Interest transactions 16,963,612 28,940,785
Transactions ------------ ------------
(Note 4):
Net Assets: Total increase in net assets 13,195,402 31,334,025
Beginning of year 61,787,154 30,453,129
------------ ------------
End of year $ 74,982,556 $ 61,787,154
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
Class A Class B
For the For the
Period Period
The following per share data and ratios have been derived Feb 28, Feb 28,
from information provided in the financial statements. For the Year 1992++ to For the Year 1992++ to
Ended July 31, July 31, Ended July 31, July 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.02 $ 10.56 $ 10.00 $ 11.02 $ 10.56 $ 10.00
Operating ------- ------- ------- ------- ------- -------
Performance: Investment income--net .56 .58 .25 .50 .52 .23
Realized and unrealized gain (loss)
on investments--net (.43) .49 .56 (.43) .49 .56
------- ------- ------- ------- ------- -------
Total from investment operations .13 1.07 .81 .07 1.01 .79
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Investment income--net (.56) (.58) (.25) (.50) (.52) (.23)
Realized gain on investments--net -- (.03) -- -- (.03) --
In excess of realized gain on invest-
ments--net (.09) -- -- (.09) -- --
------- ------- ------- ------- ------- -------
Total dividends and distributions (.65) (.61) (.25) (.59) (.55) (.23)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 10.50 $ 11.02 $ 10.56 $ 10.50 $ 11.02 $ 10.56
======= ======= ======= ======= ======= =======
Total Based on net asset value per share 1.10% 10.51% 8.21%+++ 0.59% 9.96% 7.98%+++
Investment ======= ======= ======= ======= ======= =======
Return:**
Ratios to Expenses, excluding distribution fees
Average and net of reimbursement -- -- -- .66% .52% .17%*
Net Assets: ======= ======= ======= ======= ======= =======
Expenses, net of reimbursement .65% .51% .16% 1.16% 1.02% .67%*
======= ======= ======= ======= ======= =======
Expenses .89% 1.04% 1.36% 1.39% 1.55% 1.86%*
======= ======= ======= ======= ======= =======
Investment income--net 5.12% 5.44% 5.75% 4.61% 4.93% 5.26%*
======= ======= ======= ======= ======= =======
Supplemental Net assets, end of period (in thousands) $ 9,373 $ 8,446 $ 4,209 $65,610 $53,341 $ 26,244
Data: ======= ======= ======= ======= ======= =======
Portfolio turnover 44.83% 41.51% 13.21% 44.83% 41.51% 13.21%
======= ======= ======= ======= ======= =======
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Ohio Municipal Bond Fund (the "Fund") is part of
Merrill Lynch Multi-State Municipal Series Trust (the "Trust"). The
Fund is registered under the Investment Company Act of 1940 as a non-
diversified, open-end management investment company. The Fund offers
both Class A and Class B Shares. Class A Shares are sold with a
front-end sales charge. Class B Shares may be subject to a
contingent deferred sales charge. Both classes of shares have
identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class B Shares bear certain
expenses related to the distribution of such shares and have
exclusive voting rights with respect to matters relating to such
distribution expenditures. The following is a summary of significant
accounting policies followed by the Fund.
(a) Valuation of investments--Municipal bonds and other portfolio
securities in which the Fund invests are traded primarily in the
over-the-counter municipal bond and money markets and are valued at
the last available bid price in the over-the-counter market or on
the basis of yield equivalents as obtained from one or more dealers
that make markets in the securities. Financial futures contracts and
options thereon, which are traded on exchanges, are valued at their
settlement prices as of the close of such exchanges. Short-term
investments with remaining maturities of sixty days or less are
valued at amortized cost, which approximates market value. Options,
which are traded on exchanges, are valued at their last sale price
as of the close of such exchanges or, lacking any sales, at the last
available bid price. Securities and assets for which market
quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of
Trustees of the Trust, including valuations furnished by a pricing
service retained by the Trust, which may utilize a matrix system for
valuations. The procedures of the pricing service and its valuations
are reviewed by the officers of the Trust under the general
supervision of the Trustees.
<PAGE>
(b) Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures
contracts for the purpose of hedging the market risk on existing or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the Fund
agrees to receive from or pay to the broker an amount of cash equal
to the daily fluctuation in value of the contract. Such receipts or
payments are known as variation margin and are recorded by the Fund
as unrealized gains or losses. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the
time it was closed.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Deferred organization expenses and prepaid registration fees--
Deferred organization expenses are charged to expense on a straight-
line basis over a five-year period. Prepaid registration fees are
charged to expense as the related shares are issued.
(f) Dividends and distributions--Dividends from net investment
income are declared daily and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates. Distributions in excess
of realized capital gains are due primarily to differing tax
treatments for futures transactions and post October losses.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). Effective January 1, 1994, the
investment advisory business of FAM was reorganized from a
corporation to a limited partnership. Both prior to and after the
reorganization, ultimate control of FAM was vested with Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of ML & Co. The limited partners are ML & Co. and Fund
Asset Management, Inc. ("FAMI"), which is also an indirect wholly-
owned subsidiary of ML & Co. The Fund has also entered into
Distribution Agreements and a Distribution Plan with Merrill Lynch
Funds Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Investment Management, Inc. ("MLIM"),
which is also an indirect wholly-owned subsidiary of ML & Co.
<PAGE>
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 at the following annual rates: 0.55% of the
Fund's average daily net assets not exceeding $500 million; 0.525%
of average daily net assets in excess of $500 million but not
exceeding $1 billion; and 0.50% of average daily net assets in
excess of $1 billion. The Investment Advisory Agreement obligates
FAM to reimburse the Fund to the extent the Fund's expenses
(excluding interest, taxes, distribution fees, brokerage fees and
commissions, and extraordinary items) exceed 2.5% of the Fund's
first $30 million of average daily net assets, 2.0% of the next $70
million of average daily net assets, and 1.5% of the average daily
net assets in excess thereof. FAM's obligation to reimburse the Fund
is limited to the amount of the management fee. No fee payment will
be made during any fiscal year which will cause such expenses to
exceed expense limitations at the time of such payment. For the year
ended July 31, 1994, FAM earned fees of $389,433, of which $165,672
was voluntarily waived.
The Fund has adopted a Plan of Distribution (the "Plan") in
accordance with Rule 12b-1 under the Investment Company Act of 1940,
pursuant to which the Fund pays the Distributor ongoing account
maintenance and distribution fees relating to Class B Shares, which
are accrued daily and paid monthly at the annual rates of 0.25% and
0.25%, respectively, of the average daily net assets of the Class B
Shares of the Fund. Pursuant to a sub-agreement with the
Distributor, Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"),
an affiliate of ML & Co., also provides account maintenance and
distribution services to the Fund. The ongoing distribution and
account maintenance fees compensate the Distributor and Merrill
Lynch for providing distribution and account maintenance services to
Class B Shareholders. As authorized by the Plan, the Distributor has
entered into an agreement with MLPF&S, which provides for the
compensation of MLPF&S for providing distribution-related services
to the Fund. For the year ended July 31, 1994, MLFD earned
underwriting discounts of $3,919, and MLPF&S earned dealer
concessions of $36,095 on sales of the Fund's Class A Shares.
MLPF&S also received contingent deferred sales charges of $111,978
relating to Class B Share transactions during the year.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, FAMI, MLIM, PSI, MLFD, FDS, MLPF&S, and/or ML &
Co.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended July 31, 1994 were $41,879,323 and $29,760,008,
respectively.
Net realized and unrealized gains (losses) as of July 31, 1994 were
as follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $ (754,246) $ 491,654
Financial futures contracts 478,172 --
---------- ----------
Total $ (276,074) $ 491,654
========== ==========
As of July 31, 1994, net unrealized appreciation for Federal income
tax purposes aggregated $491,654, of which $1,744,396 related to
appreciated securities and $1,252,742 related to depreciated
securities. The aggregate cost of investments at July 31, 1994 for
Federal income tax purposes was $75,528,839.
4. Beneficial Interest Transactions:
Net increase in net assets derived from beneficial interest
transactions was $16,963,612 and $28,940,785 for the years ended
July 31, 1994 and July 31, 1993, respectively.
Transactions in shares of beneficial interest for Class A and Class
B Shares were as follows:
Class A Shares for the Year Dollar
Ended July 31, 1994 Shares Amount
Shares sold 337,482 $ 3,657,739
Shares issued to shareholders
in reinvestment of dividends
and distributions 26,056 285,141
---------- ------------
Total issued 363,538 3,942,880
Shares redeemed (237,374) (2,563,654)
---------- ------------
Net increase 126,164 $ 1,379,226
========== ============
<PAGE>
Class A Shares for the Year Dollar
Ended July 31, 1993 Shares Amount
Shares sold 391,700 $ 4,184,535
Shares issued to shareholders
in reinvestment of dividends
and distributions 19,119 202,971
---------- -----------
Total issued 410,819 4,387,506
Shares redeemed (42,747) (457,176)
---------- -----------
Net increase 368,072 $ 3,930,330
========== ===========
Class B Shares for the Year Dollar
Ended July 31, 1994 Shares Amount
Shares sold 1,957,432 $21,477,219
Shares issued to shareholders
in reinvestment of dividends
and distributions 180,104 1,968,660
---------- -----------
Total issued 2,137,536 23,445,879
Shares redeemed (729,706) (7,861,493)
---------- -----------
Net increase 1,407,830 $15,584,386
========== ===========
Class B Shares for the Year Dollar
Ended July 31, 1993 Shares Amount
Shares sold 2,554,298 $27,098,873
Shares issued to shareholders
in reinvestment of dividends
and distributions 103,855 1,101,321
---------- -----------
Total issued 2,658,153 28,200,194
Shares redeemed (301,529) (3,189,739)
---------- -----------
Net increase 2,356,624 $25,010,455
========== ===========
<PAGE>
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
Merrill Lynch Ohio Municipal Bond Fund of
Merrill Lynch Multi-State Municipal Series Trust:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of Merrill Lynch
Ohio Municipal Bond Fund of Merrill Lynch Multi-State Municipal
Series Trust as of July 31, 1994, the related statements of
operations for the year then ended and changes in net assets for
each of the years in the two-year period then ended, and the
financial highlights for each of the years in the two-year period
then ended and for the period February 28, 1992 (commencement of
operations) to July 31, 1992. These financial statements and the
financial highlights are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at July 31,
1994 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Ohio Municipal Bond Fund of Merrill Lynch Multi-State
Municipal Series Trust as of July 31, 1994, the results of its
operations, the changes in its net assets, and the financial
highlights for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
August 29, 1994
</AUDIT-REPORT>
<PAGE>
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Kenneth S. Axelson, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Jerry Weiss, Secretary
Custodian
National Westminster Bank NJ
Exchange Place Centre
10 Exchange Place
Jersey City, New Jersey 07302
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
APPENDIX: GRAPHIC AND IMAGE MATERIAL.
Item 1:
Total Return Based on a $10,000 Investment--Class A Shares*
A line graph depicting the growth of an investment in the Fund's
Class A Shares compared to growth of an investment in the Lehman
Brothers Municipal Bond Index. Beginning and ending values are:
2/28/92** 7/94
ML Ohio Municipal Bond Fund++ $ 9,600 $11,606
Lehman Brothers
Municipal Bond Index++++ $10,000 $11,857
<PAGE>
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses including advisory fees.
**Commencement of Operations.
++ML Ohio Municipal Bond Fund invests primarily in long-term
obligations issued by or on behalf of the State of Ohio, 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.
Item 2:
Total Return Based on a $10,000 Investment--Class B Shares*
A line graph depicting the growth of an investment in the Fund's
Class B Shares compared to growth of an investment in the Lehman
Brothers Municipal Bond Index. Beginning and ending values are:
2/28/92** 7/94
ML Ohio Municipal Bond Fund++ $10,000 $11,743
Lehman Brothers
Municipal Bond Index++++ $10,000 $11,857
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses including advisory fees.
**Commencement of Operations.
++ML Ohio Municipal Bond Fund invests primarily in long-term
obligations issued by or on behalf of the State of Ohio,
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.
