MERRILL LYNCH
OHIO MUNICIPAL
BOND FUND
FUND LOGO
Annual Report
July 31, 1995
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
<PAGE>
Merrill Lynch Ohio
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
TO OUR SHAREHOLDERS
In the July quarter, economic data generally showed evidence of
slowing activity. Gross domestic product growth for the first three
months of 1995 was reported at 2.7%, the weakest showing in the past
18 months. Other signs of a sluggish economy included lackluster
durable goods orders, slowing growth in the manufacturing sector,
and three consecutive months of declines in the Index of Leading
Economic Indicators, an occurrence which has often (but not always)
forecast recessions. As a result, concerns arose that the economic
"soft landing" could turn into an actual recession. However, at the
same time there were also expectations that a few months of very
slow or zero growth would be followed by a pickup in economic
activity later in the year. This view was supported by the
stronger-than-expected employ-ment data for June and an upward
revision in May's employment figures, as well as improving housing
activity measures and consumer confidence surveys.
<PAGE>
Thus far in 1995, economic developments have been very positive for
the US stock and bond markets, and most US stock market averages
recently have attained record levels. In contrast, the US dollar has
been persistently weak, especially relative to the yen. Following
the Federal Reserve Board's cut in short-term interest rates in
early July, continued signs of a moderating expansion and
well-contained inflationary pressures could provide further
assurance that the peak in US interest rates is behind us, creating
a stronger foundation for higher stock and bond prices. On the other
hand, indications of reaccelerating growth and increasing
inflationary pressures would likely suggest that higher interest
rates are on the horizon, a negative development for the US
financial markets. The outcome of the current deliberations on
reducing the Federal budget deficit will also play a role in the
investment outlook for the US capital markets.
The Municipal Market
Tax-exempt bond yields exhibited considerable volatility during the
three months ended July 31, 1995. Municipal bond yields initially
fell throughout May into early June as evidence of a slowing
domestic economy and moderate inflationary pressures accumulated. As
measured by the Bond Buyer Revenue Bond Index, yields of A-rated,
uninsured tax-exempt revenue bonds declined 35 basis points (0.35%)
to 5.94%. By late June, however, amid signs of a potentially
resurgent economy, particularly in the rebounding housing sector,
bond yields returned to their April quarter's levels of
approximately 6.30%. The lowering of short-term interest rates by
the Federal Reserve Board in early July temporarily restored
investor confidence and tax-exempt bond yields fell to 6.05%. As
additional economic indicators were released during July, investors
again saw signs that the economy was regaining momentum and that the
Federal Reserve Board action had been premature. Fears that an
expanding economy would have negative inflationary consequences
pushed municipal bond yields higher, ending the July 31, 1995
quarter essentially unchanged at 6.27%. US Treasury bond yields
exhibited a similar pattern of volatility during the July quarter.
However, US Treasury bond yields continued to decline, falling
approximately 50 basis points to 6.85%.
Municipal bonds have underperformed US Treasury securities for a
number of reasons. The record highs of the US equity market have
continued to attract retail investors seeking further capital
gains. Investor demand has also been diminished in recent months by
the "sticker shock" effect that periodically affects the municipal
bond market. Investors who had become accustomed to purchasing
tax-exempt securities in the 6.50%--7.00% range six to seven months
ago have demonstrated understandable reluctance to purchase similar
securities at current levels. The strong fundamental structure of
the municipal bond market, however, suggests that such hesitancy may
prove costly.
<PAGE>
However, the major reason by far for the tax-exempt market's recent
underperformance has been concerns regarding the implication for
municipal bonds' tax advantage resulting from various proposed tax
law changes (for example, flat tax, value-added tax or national
sales tax) that have reduced investor demand for tax-exempt
products. Such concerns are likely to quickly recede as investors
realize that such, if any, changes are unlikely to be enacted before
late 1996 at the earliest. Long-term investors will also recall 1986
when similar tax proposals were made, municipal bond yields
initially rose, in some instances, to over 100% of taxable yields.
Tax-exempt bond yields quickly declined as investors' fears proved
to be unfounded.
The municipal bond market's strong technical position has diminished
somewhat in recent months. New-issue supply over the last six months
has totaled approximately $71 billion, or a decline of over 20%
compared to the corresponding period in 1994. In recent months,
however, municipalities issued approximately $41 billion in new
securities, which represents only a 6% decline versus the same
period a year earlier. Investor demand has remained muted in recent
months despite significant funds available to investors. By the end
of July investors, both individual and institutional, are expected
to have received as much as $80 billion from tax-exempt bond
maturities, coupon payments and the proceeds of early bond
redemptions. Little new money has entered the municipal market in
recent months largely in response to the factors mentioned above.
Consequently, much of the technical support the municipal market
enjoyed earlier this year has evaporated, causing municipal bond
yields to decline at a slower rate than their taxable counterparts.
However, the recent relative underperformance of municipal bonds has
made them particularly attractive to long-term investors. Tax-exempt
bonds currently yield well over 90% of US Treasury securities. In
some instances, A-rated, long term revenue bonds have yielded almost
95% of US Treasury bonds. Analysts usually consider municipal bonds
yielding over 82% of US Treasury securities to be historically
attractive. With inflation-adjusted, "real" after-tax equivalent tax-
exempt yields of over 6.50%, municipal securities appear to
represent considerable value.
Current tax-exempt yield levels appear to be overcompensating for
any proposed changes in tax law can reasonably be expected to be
enacted. As Congressional hearings on this matter would continue
into 1996, and the revenue losses resultant from such changes become
more apparent, the likelihood of any significant changes to tax
codes and the resultant decline of municipal bonds' inherent tax
advantage should decline. Under such a scenario, tax-exempt bond
yields would quickly decline and currently available municipal bond
yields would return to their normal historic relationship.
<PAGE>
Fiscal Year in Review
At the beginning of the Fund's fiscal year, conditions in the bond
market caused us to become defensive and look to reduce the
volatility of the Fund's net asset value. As the backup in interest
rates became extreme, we anticipated an improving situation for
bonds and extended maturities through spring of 1995. As the bond
market improved, we continued to believe that the Federal Reserve
Board would need to relax monetary conditions to encourage growth,
and the Fund participated in the resulting municipal bond market
rally. After the Federal Reserve Board signaled a change in monetary
policy by lowering interest rates, investors initially showed their
approval. However, investor sentiment turned sharply negative and
the market abruptly reversed course, causing a backup in interest
rates. Nevertheless, our strategy of being fully invested in a
generally declining interest rate environment produced a positive
total return for our shareholders.
Municipal bond market yields, as measured by the Bond Buyer Revenue
Bond Index, began and ended the year almost unchanged at 6.47% and
6.27%, respectively. This belies the tremendous fluctuations in
yields during the year from a high of 7.37% to a low of 5.94%.
During the year ended July 31, 1995, we attempted to take advantage
of opportunities to purchase and hold securities which would benefit
the Fund as long-term holdings. Many of the higher-yielding
healthcare holdings, for example, represent value which investors in
general have yet to recognize. We believe that this strategy will
benefit shareholders over time.
Looking ahead, we are cautious regarding the prospects for a
continuation of a bond market rally and may look for opportunities
to seek to protect the Fund's net asset value.
In Conclusion
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
September 6, 1995
<PAGE>
PERFORMANCE DATA
About Fund Performance
Since October 21, 1994, investors have been able to purchase shares
of the Fund through the Merrill Lynch Select Pricing SM System,
which offers four pricing alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 4% and bear no ongoing distribution or account maintenance
fees. Class A Shares are available only to eligible investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.25% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 10 years.
* Class C Shares are subject to a distribution fee of 0.35% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of
4% and an account maintenance fee of 0.10% (but no distribution
fee).
Performance data for all the Fund's shares are presented in the
"Total Return Based on a $10,000 Investment" graphs on page 5 and
the "Recent Performance Results" table below. Data for the Fund's
Class A and Class B Shares are presented in the "Performance
Summary" tables on page 6 and "Average Annual Total Return" tables
on page 5. Data for Class C and Class D Shares are also presented in
the "Aggregate Total Return" tables on page 5.
The "Recent Performance Results" table shows investment results
before the deduction of any sales charges for Class A and Class B
Shares for the 12-month and 3-month periods ended July 31, 1995 and
for Class C and Class D Shares for the since inception and 3-month
periods ended July 31, 1995. All data in this table assume
imposition of the actual total expenses incurred by each class of
shares during the relevant period.
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<PAGE>
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
7/31/95 4/30/95 7/31/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $10.56 $10.41 $10.50 +0.57% +1.44%
Class B Shares* 10.56 10.41 10.50 +0.57 +1.44
Class C Shares* 10.56 10.41 10.09 +4.66 +1.44
Class D Shares* 10.56 10.41 10.09 +4.66 +1.44
Class A Shares--Total Return* +6.03(1) +2.75(2)
Class B Shares--Total Return* +5.49(3) +2.62(4)
Class C Shares--Total Return* +8.50(5) +2.59(6)
Class D Shares--Total Return* +8.93(7) +2.72(8)
Class A Shares--Standardized 30-day Yield 4.89%
Class B Shares--Standardized 30-day Yield 4.58%
Class C Shares--Standardized 30-day Yield 4.47%
Class D Shares--Standardized 30-day Yield 4.79%
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
++Investment results shown for Class C and Class D Shares are since
inception (10/21/94).
(1)Percent change includes reinvestment of $0.544 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.136 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.492 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.123 per share ordinary
income dividends.
(5)Percent change includes reinvestment of $0.362 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.120 per share ordinary
income dividends.
(7)Percent change includes reinvestment of $0.403 per share ordinary
income dividends.
(8)Percent change includes reinvestment of $0.133 per share ordinary
income dividends.
</TABLE>
<PAGE>
PERFORMANCE DATA (continued)
Total Return Based on a $10,000 Investment--Class A Shares and Class B Shares
A line graph depicting the growth of an investment in the Fund's
Class A Shares and Class B Shares compared to growth of an
investment in the Lehman Brothers Municipal Bond Index. Beginning
and ending values are:
2/28/92** 7/95
ML Ohio Municipal
Bond Fund++--Class A Shares* $ 9,600 $12,305
ML Ohio Municipal
Bond Fund++--Class B Shares* $10,000 $12,499
Lehman Brothers Municipal
Bond Index++++ $10,000 $12,790
Total Return Based on a $10,000 Investment--Class C Shares and Class D Shares
A line graph depicting the growth of an investment in the Fund's
Class C Shares and Class D Shares compared to growth of an
investment in the Lehman Brothers Municipal Bond Index. Beginning
and ending values are:
10/21/94** 7/95
ML Ohio Municipal
Bond Fund++--Class C Shares* $10,000 $10,750
ML Ohio Municipal
Bond Fund++--Class D Shares* $ 9,600 $10,458
Lehman Brothers Municipal
Bond Index++++ $10,000 $11,107
<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 investment-grade 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.
Past performance is not predictive of future performance.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/95 +7.26% +2.97%
Inception (2/28/92)
through 6/30/95 +7.44 +6.14
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/95 +6.71% +2.71%
Inception (2/28/92)
through 6/30/95 +6.90 +6.65
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced
to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
Aggregate Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94)
through 6/30/95 +7.61% +6.61%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced
to 0% after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Inception (10/21/94)
through 6/30/95 +8.00% +3.68%
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
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
1994 11.22 9.90 -- 0.548 - 6.98
1/1/95-7/31/95 9.90 10.56 -- 0.306 + 9.92
------ ------
Total $0.013 Total $2.027
Cumulative total return as of 7/31/95: + 28.18%**
<PAGE>
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
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
1994 11.22 9.90 -- 0.495 - 7.45
1/1/95-7/31/95 9.90 10.56 -- 0.276 + 9.61
------ ------
Total $0.013 Total $1.844
Cumulative total return as of 7/31/95: + 25.99%**
<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>
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 below and at right.
AMT Alternative Minimum Tax (subject to)
GO General Obligation Bonds
HFA Housing Finance Agency
IDR Industrial Development Revenue Bonds
LEVRRS Leveraged Reverse Rate Securities
M/F Multi-Family
PCR Pollution Control Revenue Bonds
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Ohio--92.3%
<S> <S> <C> <S> <C>
AAA Aaa $ 1,500 Adams County, Ohio, Local School District Improvement Bonds (Ohio Valley),
UT, 7% due 12/01/2015 (d) $ 1,745
NR* Baa1 900 Ashtabula County, Ohio, IDR, Refunding (Ashland Oil Inc. Project), Series A,
6.90% due 5/01/2010 933
NR* A 4,000 Barberton, Ohio, Hospital Facilities Revenue Bonds (Barberton Citizens
Hospital Co. Project), 7.25% due 1/01/2012 4,248
AAA Aaa 1,000 Buckeye Valley, Ohio, Local School District Revenue Bonds (Delaware County),
Series A, UT, 6.85% due 12/01/2015 (d) 1,133
A1 NR* 3,500 Cincinnati and Hamilton County, Ohio, Port Authority, IDR (Multi-Color Corp.
Project), VRDN, 3.90% due 11/01/2000 (a) 3,500
NR* NR* 710 Cincinnati, Ohio, Student Loan Funding Corporation, Revenue Refunding
Bonds, AMT, Sub-Series B, 6.75% due 1/01/2007 723
A NR* 3,000 Cuyahoga County, Ohio, Health Care Facilities Revenue Bonds (Benjamin Rose
Institute Project), Series A, 5.30% due 12/01/2025 2,955
NR* VMIG1++ 300 Cuyahoga County, Ohio, Hospital Revenue Improvement Bonds (Cleveland
University Hospital, VRDN, 3.85% due 1/01/2016 (a) 300
NR* NR* 1,400 Cuyahoga County, Ohio, IDR (Cleveland E Excel), VRDN, AMT, 4.10% due
3/01/2019 (a) 1,400
AA A1 2,000 Delaware County, Ohio, Sewer Improvement Revenue Bonds,
5.25% due 12/01/2015 1,856
A- A 1,220 Erie County, Ohio, Hospital Improvement Revenue Refunding Bonds
(Firelands Community Hospital Project), 6.75% due 1/01/2015 1,242
Hamilton County, Ohio, Health System Revenue Refunding Bonds:
NR* VMIG1++ 600 (Franciscan Sisters Poor Health), VRDN, Series A, 3.85% due 3/01/2017 (a) 600
BBB Baa1 3,000 Refunding (Providence Hospital-Franciscan), 6.875% due 7/01/2015 2,960
<PAGE>
AAA Aaa 1,200 Huron County, Ohio, Human Services Building Revenue Bonds, 7.25%
due 12/01/2013 (d) 1,362
NR* Aaa 5,530 Kent, Ohio, M/F Housing Mortgage Revenue Bonds (Silver Meadows), AMT,
7.30% due 12/20/2036 (e) 5,913
AAA Aaa 2,110 Kings Local School District Revenue Bonds, UT, 7.50% due 12/01/2016 (c) 2,578
NR* Aa 1,830 Lakewood, Ohio, Revenue Bonds, Series A, 5.50% due 12/01/2015 1,752
Lakota, Ohio, Local School District Revenue Bonds, GO, UT (b):
AAA Aaa 1,000 7% due 12/01/2008 1,163
AAA Aaa 1,740 7% due 12/01/2010 2,012
AAA NR* 1,660 Loveland, Ohio, City School District, GO, UT, 6.65% due 12/01/2015 (d) 1,777
</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>
BBB+ NR* $ 3,350 Lucas County, Ohio, Hospital Revenue Bonds (Flower Hospital),
6.125% due 12/01/2013 $ 3,131
AAA Aaa 1,500 Mahoning County, Ohio, Hospital Facilities Revenue Refunding Bonds
(YHA Inc. Project), Series A, 7% due 10/15/2014 (d) 1,647
BBB+ A3 2,000 Moraine, Ohio, Solid Waste Disposal Revenue Bonds (General Motors Corp.
Project), AMT, 6.75% due 7/01/2014 2,156
AAA Aaa 3,000 North Canton City, Ohio, School District Improvement Bonds, GO, UT,
6.70% due 12/01/2019 (b) 3,303
AAA NR* 1,000 Ohio HFA, Residential Mortgage Revenue Bonds, AMT, Series B-2, 6.70%
due 3/01/2025 (e) 1,027
AAA Aaa 1,185 Ohio HFA, S/F Mortgage Revenue Bonds, AMT, Series B, 6.903%
due 3/24/2031 (e) 1,215
Ohio State Air Quality Development Authority Revenue Bonds:
NR* NR* 400 (Honda America Manufacturing), VRDN, 3.95% due 1/01/1997 (a) 400
AAA Aaa 1,505 PCR, Refunding (Ohio-Edison), Series B, 7.10% due 6/01/2018 (c) 1,654
NR* Baa1 1,000 Refunding (Ashland Oil Inc. Project), 6.85% due 4/01/2010 1,023
AA- Aa3 4,200 Refunding (Coll-Dayton Power & Light Project), Series B, 6.40%
due 8/15/2027 4,295
<PAGE>
AA- Aa 1,410 Ohio State Higher Educational Facilities, Revenue Refunding Bonds
(Case Western Reserve University), 6.25% due 10/01/2016 1,497
AAA Aaa 1,925 Ohio State Public Facilities Commission Revenue Refunding Bonds (Higher
Education Capital Facilities), Series II-A, 5.20% due 5/01/2002 (b) 1,984
AAA Aaa 2,825 South Western City, Ohio (Franklin and Pickway Counties), School District
Revenue Bonds, UT, 5% due 12/01/2013 (d) 2,578
AAA Aaa 200 University of Toledo, Ohio, General Receipts Refunding Bonds, Series A, 5.90%
due 6/01/2020 (c) 197
AAA Aaa 2,000 Westerville, Ohio, Minerva Park and Blendon Joint Township, Hospital
District Revenue Refunding Bonds (Saint Ann's Hospital), Series B, 7%
due 9/15/2012 (b) 2,207
AAA Aaa 725 Whitehall, Ohio, Revenue Bonds, 5.65% due 12/01/2010 (b) 713
NR* A1 475 Wood County, Ohio, Sewer District Water Assessment Improvement Bonds,
Issue II, 6.55% due 12/01/2014 505
Guam--4.0%
BBB NR* 3,000 Guam Power Authority Revenue Bonds, Series A, 6.75% due 10/01/2024 3,035
Puerto Rico--2.5%
AAA Aaa 1,900 Puerto Rico Electric Power Authority, Power Revenue Bonds, LEVRRS,
8.018% due 7/01/2023 (f)(g) 1,857
Total Investments (Cost--$72,249)--98.8% 74,576
Other Assets Less Liabilities--1.2% 870
-------
Net Assets--100.0% $75,446
=======
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate
in effect at July 31, 1995.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)GNMA Collateralized.
(f)FSA Insured.
(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 July 31, 1995.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of July 31, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$72,248,576) (Note 1a) $ 74,575,974
Cash 483,837
Receivables:
Securities sold $ 2,692,571
Interest 907,675
Beneficial interest sold 74,703 3,674,949
------------
Deferred organization expenses (Note 1e) 18,645
Prepaid registration fees and other assets (Note 1e) 14,270
------------
Total assets 78,767,675
------------
Liabilities: Payables:
Securities purchased 2,970,450
Beneficial interest redeemed 160,995
Dividends to shareholders (Note 1f) 68,636
Investment adviser (Note 2) 33,274
Distributor (Note 2) 26,351 3,259,706
------------
Accrued expenses and other liabilities 61,944
------------
Total liabilities 3,321,650
------------
Net Assets: Net assets $ 75,446,025
============
Net Assets Class A Shares of beneficial interest, $.10 par value,
Consist of: unlimited number of shares authorized $ 68,825
Class B Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 606,538
Class C Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 8,273
Class D Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 30,632
Paid-in capital in excess of par 74,227,750
Accumulated realized capital losses on investments--net (Note 5) (1,392,366)
Accumulated distributions in excess of realized capital gains--net (431,025)
Unrealized appreciation on investments--net 2,327,398
------------
Net assets $ 75,446,025
============
<PAGE>
Net Asset Value: Class A--Based on net assets of $7,269,939 and 688,246 shares
of beneficial interest outstanding $ 10.56
============
Class B--Based on net assets of $64,068,057 and 6,065,383 shares
of beneficial interest outstanding $ 10.56
============
Class C--Based on net assets of $873,714 and 82,726 shares
of beneficial interest outstanding $ 10.56
============
Class D--Based on net assets of $3,234,315 and 306,321 shares
of beneficial interest outstanding $ 10.56
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended
July 31, 1995
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 4,511,797
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 402,455
Account maintenance and distribution fees--Class B (Note 2) 317,043
Professional fees 66,161
Printing and shareholder reports 56,036
Transfer agent fees--Class B (Note 2) 48,452
Accounting services (Note 2) 32,847
Registration fees (Note 1e) 12,961
Amortization of organization expenses (Note 1e) 11,836
Custodian fees 7,443
Pricing fees 5,846
Transfer agent fees--Class A (Note 2) 4,977
Trustees' fees and expenses 3,551
Account maintenance and distribution fees--Class C (Note 2) 1,984
Account maintenance fees--Class D (Note 2) 1,854
Transfer agent fees--Class D (Note 2) 1,211
Transfer agent fees--Class C (Note 2) 264
Other 3,889
------------
Total expenses before reimbursement 978,810
Reimbursement of expenses (Note 2) (19,871)
------------
Total expenses after reimbursement 958,939
------------
Investment income--net 3,552,858
------------
<PAGE>
Realized & Realized loss on investments--net (1,392,365)
Unrealized Change in unrealized appreciation/depreciation
Gain (Loss) on on investments--net 1,835,744
Investments--Net ------------
(Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations $ 3,996,237
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended July 31,
Increase (Decrease) in Net Assets: 1995 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 3,552,858 $ 3,310,756
Realized loss on investments--net (1,392,365) (276,074)
Change in unrealized appreciation/depreciation on
investments--net 1,835,744 (2,899,454)
------------ ------------
Net increase in net assets resulting from operations 3,996,237 135,228
------------ ------------
Dividends & Investment income--net:
Distributions to Class A (402,108) (470,881)
Shareholders Class B (3,039,531) (2,839,875)
(Note 1f): Class C (15,289) --
Class D (95,930) --
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 (3,552,858) (3,903,438)
------------ ------------
Beneficial Interest Net increase in net assets derived from beneficial interest
Transactions transactions 20,090 16,963,612
(Note 4): ------------ ------------
Net Assets: Total increase in net assets 463,469 13,195,402
Beginning of year 74,982,556 61,787,154
------------ ------------
End of year $ 75,446,025 $ 74,982,556
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
Class A
For the
Period
The following per share data and ratios have been derived Feb. 28,
from information provided in the financial statements. 1992++ to
For the Year Ended July 31, July 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.50 $ 11.02 $ 10.56 $ 10.00
Operating -------- -------- -------- --------
Performance: Investment income--net .55 .56 .58 .25
Realized and unrealized gain (loss) on
investments--net .06 (.43) .49 .56
-------- -------- -------- --------
Total from investment operations .61 .13 1.07 .81
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.55) (.56) (.58) (.25)
Realized gain on investments--net -- -- (.03) --
In excess of realized gain on investments--net -- (.09) -- --
-------- -------- -------- --------
Total dividends and distributions (.55) (.65) (.61) (.25)
-------- -------- -------- --------
Net asset value, end of period $ 10.56 $ 10.50 $ 11.02 $ 10.56
======== ======== ======== ========
Total Investment Based on net asset value per share 6.03% 1.10% 10.51% 8.21%+++
Return:** ======== ======== ======== ========
Ratios to Expenses, net of reimbursement .86% .65% .51% .16%*
Average ======== ======== ======== ========
Net Assets: Expenses .89% .89% 1.04% 1.36%*
======== ======== ======== ========
Investment income--net 5.30% 5.12% 5.44% 5.75%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 7,270 $ 9,373 $ 8,446 $ 4,209
Data: ======== ======== ======== ========
Portfolio turnover 169.34% 44.83% 41.51% 13.21%
======== ======== ======== ========
<PAGE>
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class B
For the
Period
The following per share data and ratios have been derived Feb. 28,
from information provided in the financial statements. 1992++ to
For the Year Ended July 31, July 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.50 $ 11.02 $ 10.56 $ 10.00
Operating -------- -------- -------- --------
Performance: Investment income--net .49 .50 .52 .23
Realized and unrealized gain (loss) on
investments--net .06 (.43) .49 .56
-------- -------- -------- --------
Total from investment operations .55 .07 1.01 .79
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.49) (.50) (.52) (.23)
Realized gain on investments--net -- -- (.03) --
In excess of realized gain on investments--net -- (.09) -- --
-------- -------- -------- --------
Total dividends and distributions (.49) (.59) (.55) (.23)
-------- -------- -------- --------
Net asset value, end of period $ 10.56 $ 10.50 $ 11.02 $ 10.56
======== ======== ======== ========
Total Investment Based on net asset value per share 5.49% .59% 9.95% 7.98%+++
Return:** ======== ======== ======== ========
Ratios to Expenses, excluding account maintenance and
Average distribution fees and net of reimbursement .87% .66% .52% .17%*
Net Assets: ======== ======== ======== ========
Expenses, net of reimbursement 1.37% 1.16% 1.02% .67%*
======== ======== ======== ========
Expenses 1.40% 1.39% 1.55% 1.86%*
======== ======== ======== ========
Investment income--net 4.79% 4.61% 4.93% 5.26%*
======== ======== ======== ========
<PAGE>
Supplemental Net assets, end of period (in thousands) $ 64,068 $ 65,610 $ 53,341 $ 26,244
Data: ======== ======== ======== ========
Portfolio turnover 169.34% 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>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
The following per share data and ratios have been derived For the Period
from information provided in the financial statements. October 21, 1994++ to
July 31, 1995
Increase (Decrease) in Net Asset Value: Class C Class D
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 10.09 $ 10.09
Operating -------- --------
Performance: Investment income--net .37 .41
Realized and unrealized gain on investments--net .47 .47
-------- --------
Total from investment operations .84 .88
-------- --------
Less dividends from investment income--net (.37) (.41)
-------- --------
Net asset value, end of period $ 10.56 $ 10.56
======== ========
Total Investment Based on net asset value per share 8.50%+++ 8.93%+++
Return:** ======== ========
Ratios to Expenses, excluding account maintenance and
Average distribution fees and net of reimbursement .90%* .89%*
Net Assets: ======== ========
Expenses, net of reimbursement 1.50%* .99%*
======== ========
Expenses 1.50%* .99%*
======== ========
Investment income--net 4.62%* 5.17%*
======== ========
<PAGE>
Supplemental Net assets, end of period (in thousands) $ 874 $ 3,234
Data: ======== ========
Portfolio turnover 169.34% 169.34%
======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
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 four classes of shares under the Merrill Lynch Select Pricing
SM System. Shares of Class A and Class D are sold with a front-end
sales charge. Shares of Class B and Class C may be subject to a
contingent deferred sales charge. All classes of shares have
identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class B, Class C and Class D
Shares bear certain expenses related to the account maintenance of
such shares, and Class B and Class C Shares also bear certain
expenses related to the distribution of such shares. Each class has
exclusive voting rights with respect to matters relating to its
account maintenance and distribution expenditures. The 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.
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) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures
contracts for the purpose of hedging the market risk on existing
securities or the intended purchase of securities. Futures contracts
are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a
contract, the Fund deposits and maintains as collateral such initial
margin as required by the exchange on which the transaction is
effected. Pursuant to the contract, the Fund agrees to receive from
or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unrealized
gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. 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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
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 also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), 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: 0.55%
of the Fund's average daily net assets not exceeding $500 million;
0.525% of average daily net assets in excess of $500 million but not
exceeding $1 billion; and 0.50% of average daily net assets in
excess of $1 billion. The Investment Advisory Agreement obligates
FAM to reimburse the Fund to the extent the Fund's expenses
(excluding interest, taxes, distribution fees, brokerage fees and
commissions, and extraordinary items) exceed 2.5% of the Fund's
first $30 million of average daily net assets, 2.0% of the next $70
million of average daily net assets, and 1.5% of the average daily
net assets in excess thereof. FAM's obligation to reimburse the Fund
is limited to the amount of the management fee. No fee payment will
be made to the Investment Adviser during any fiscal year which will
cause such expenses to exceed expense limitations at the time of
payment. For the year ended July 31, 1995, FAM earned fees of
$402,455, of which $19,871 was voluntarily waived.
Pursuant to the distribution plans ("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
ongoing account maintenance and distribution fees. The fees are
accrued daily and paid monthly at annual rates based upon the
average daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.25%
Class C 0.25% 0.35%
Class D 0.10% --
<PAGE>
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the year ended July 31, 1995, MLFD earned underwriting discounts
and MLPF&S earned dealer concessions on sales of the Fund's Class A
and Class D Shares as follows:
MLFD MLPF&S
Class A $310 $2,251
Class D $112 $ 625
MLPF&S received contingent deferred sales charges of $150,198
relating to transactions in Class B Shares of beneficial interest
and $123 relating to transactions in Class C Shares of beneficial
interest for the Fund for the year ended July 31, 1995.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a
wholly-owned subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, PSI, MLPF&S, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended July 31, 1995 were $114,346,888 and $115,944,053,
respectively.
Net realized and unrealized gains (losses) as of July 31, 1995 were
as follows:
Realized Unrealized
Losses Gains
Long-term investments $ (638,995) $ 2,327,398
Short-term investments (320,617) --
Financial futures contracts (432,753) --
----------- -----------
Total $(1,392,365) $ 2,327,398
=========== ===========
<PAGE>
As of July 31, 1995, net unrealized appreciation for Federal income
tax purposes aggregated $2,327,398, of which $2,425,949 related to
appreciated securities and $98,551 related to depreciated
securities. The aggregate cost of investments at July 31, 1995 for
Federal income tax purposes was $72,248,576.
4. Beneficial Interest Transactions:
Net increase in net assets derived from beneficial interest
transactions was $20,090 and $16,963,612 for the years ended July
31, 1995 and July 31, 1994, respectively.
Transactions in shares of beneficial interest for each class were as
follows:
Class A Shares
for the Year Ended Dollar
July 31, 1995 Shares Amount
Shares sold 181,071 $ 1,870,062
Shares issued to shareholders
in reinvestment of dividends 17,661 181,209
----------- -----------
Total issued 198,732 2,051,271
Shares redeemed (403,178) (4,123,436)
----------- -----------
Net decrease (204,446) $(2,072,165)
=========== ===========
Class A Shares
for the Year Ended Dollar
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 B Shares for the Year Dollar
Ended July 31, 1995 Shares Amount
Shares sold 1,171,885 $12,053,962
Shares issued to shareholders
in reinvestment of dividends 169,857 1,744,620
----------- -----------
Total issued 1,341,742 13,798,582
Automatic conversion of
shares (600) (6,397)
Shares redeemed (1,524,736) (15,586,483)
----------- -----------
Net decrease (183,594) $(1,794,298)
=========== ===========
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 C Shares for the Period Dollar
Oct. 21, 1994++ to July 31, 1995 Shares Amount
Shares sold 88,400 $ 911,000
Shares issued to shareholders
in reinvestment of dividends 1,135 11,864
----------- -----------
Total issued 89,535 922,864
Shares redeemed (6,809) (71,984)
----------- -----------
Net increase 82,726 $ 850,880
=========== ===========
[FN]
++Commencement of Operations.
<PAGE>
Class D Shares for the Period Dollar
Oct. 21, 1994++ to July 31, 1995 Shares Amount
Shares sold 303,361 $ 3,004,430
Automatic conversion of shares 600 6,397
Shares issued to shareholders
in reinvestment of dividends 3,127 32,727
----------- -----------
Total issued 307,088 3,043,554
Shares redeemed (767) (7,881)
----------- -----------
Net increase 306,321 $ 3,035,673
=========== ===========
[FN]
++Commencement of Operations.
5. Capital Loss Carryforward:
At July 31, 1995, the Fund had a net capital loss of approximately
$750,000, all of which expires in 2003. This amount will be
available to offset like amounts of any future taxable gains.
<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, 1995, 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 three-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.
<PAGE>
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,
1995 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, 1995, 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
September 6, 1995
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly by
Merrill Lynch Ohio Municipal Bond Fund during its taxable year ended
July 31, 1995 qualify as tax-exempt interest dividends for Federal
income tax purposes.
Additionally, there were no capital gains distributions during the
year.
Please retain this information for your records.
<PAGE>
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Jerry Weiss, Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
