MERRILL LYNCH
OHIO MUNICIPAL
BOND FUND
FUND LOGO
Semi-Annual Report
January 31, 1999
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change.
Merrill Lynch Ohio
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
Merrill Lynch Ohio Municipal Bond Fund
January 31, 1999
TO OUR SHAREHOLDERS
The Municipal Market Environment
During the six months ended January 31, 1999, long-term bond yields
moved significantly lower. US domestic economic growth remained
moderate, with losses in the manufacturing sector offset by strong
growth in service-oriented industries. Industrial commodity prices
recently fell to their lowest level in over a decade. This suggests
that the current positive inflationary environment is unlikely to be
challenged in the near term. Additionally, the Federal Reserve Board
lowered short-term interest rates in September, October and
November, in part to ensure that US domestic economic growth would
not be negatively impacted by ongoing weak economic growth overseas.
However, various external factors, as well as increased volatility,
contributed to the decline in bond yields as they have for much of
the past year. Episodes of foreign economic instability generated a
significant "flight to quality" rally in US Treasury securities, as
well as fostering lower tax-exempt bond yields as a result. Periods
of strong foreign equity market appreciation, particularly in Asia,
have at times resulted in higher US bond yields as foreign investors
have sold US fixed-income instruments to reinvest the proceeds in
their own domestic equity markets. Additionally, the continued
distraction of President Clinton's impeachment trial added to recent
interest rate volatility. However, on balance, the favorable
fundamental economic scenario supported lower bond yields. During
the six-month period ended January 31, 1999, the yield on the US
Treasury 30-year bond fell over 60 basis points (0.60%) to 5.09%,
and long-term municipal revenue bond yields declined almost 20 basis
points to 5.17%, as measured by the Bond Buyer Revenue Bond Index.
Throughout most of 1998, the municipal bond market's performance was
impeded by a significant increase in new-issue supply. However, in
recent months, the technical position of the tax-exempt market
improved. Over the last 12 months, almost $285 billion in new long-
term tax-exempt bonds was underwritten, an increase of almost 30%
compared to the same period a year ago. As municipal bond yields
declined in recent years, it has taken increasingly lower bond
yields to generate the cost savings necessary to refinance remaining
higher-couponed debt. Consequently, the rate of increases in
municipal bond issuance slowed in recent quarters. During the last
six months, more than $125 billion in new tax-exempt bonds was
issued, an increase of approximately 5% compared to the same period
a year ago. During the January 31, 1999 quarter, $63 billion in new
long-term municipal bonds was underwritten, representing an increase
of 5% compared to the January 31, 1998 quarter.
The pace of tax-exempt issuance continued to slow in 1999. January's
monthly issuance was less than $15 billion, representing a decline
of almost 25% compared to January 1998's volume. Additionally,
investors received more than $22 billion in coupon payments,
maturities and proceeds from early redemptions in January. Investors
can also expect to receive an additional $15 billion--$18 billion
in February for reinvestment. Consequently, investor demand has been
strong in recent months, easily matching, if not at times exceeding,
available supply. We will monitor this trend closely in the coming
months to determine if the supply pressures exerted in 1998 are
abating and fostering a more balanced supply/demand environment for
1999. Such an environment should allow the tax-exempt market's
performance to more closely mirror that of its taxable counterpart.
Foreign investors have rarely been active investors in the tax-
exempt bond market since they are unable to benefit from the
inherent tax advantage of municipal securities. Consequently, the
municipal bond market has not been able to benefit from the strong
flight to quality demand enjoyed by US Treasury securities since
late 1997. This inability has in large part resulted in
significantly smaller declines in municipal bond yields compared to
US Treasury securities. However, this has resulted in the
opportunity to purchase tax-exempt securities with yields very close
to or, in some instances, exceeding those of comparable US Treasury
bonds. By January 31, 1999, long-term tax-exempt bond yields were at
102% of US Treasury securities of comparable maturities, nearly
matching the least expensive level of the past year. Municipal bond
yield ratios have averaged approximately 95% for the last six months
and 92% for all of 1998. During 1997, tax-exempt bond yield ratios
averaged 84%. It is likely that the combination of the increase in
new-issue volume and the "safe-haven" status of US Treasury
securities drove municipal bond yield ratios to their present
attractive levels. Should new volume decline and/or foreign
financial markets regain stability in 1999, tax-exempt bond yield
ratios could quickly return to their more historic levels (85%--
88%).
Merrill Lynch Ohio Municipal Bond Fund
January 31, 1999
Looking ahead, the expected combination of moderate economic growth
in the United States and continued negligible inflation suggests a
relatively stable interest rate environment into early 1999.
However, it is likely that foreign financial markets will again be a
critical factor in determining US bond yields. Economic problems in
Russia and Brazil remain unresolved, suggesting that additional
shocks to the world's financial system are possible. On the other
hand, the continued robustness of the US economy has led to some
back up in interest rates. However, at present these factors
indicate that there is little immediate risk of sustained
significant increases in long-term bond yields.
Portfolio Strategy
During the six months ended January 31, 1999, our portfolio strategy
was driven mainly by our constructive investment outlook. A number
of factors contributed to this optimistic assessment, not the least
of which was the steady decline in the rate of inflation. While the
economy proved to be surprisingly resilient despite the economic and
financial turbulence faced by much of the world during the period,
the absence of emergent price pressures suggested that the
environment for long-term interest rates would remain favorable.
Consequently, we sought to build and maintain a maximum exposure to
tax-exempt securities that possessed strong performance
characteristics. In the absence of any material growth in the Fund's
assets by way of new subscriptions, funding for these purchases
originated from the sale of more seasoned holdings that we believed
faced a high probability of being redeemed on their first call date
within the next few years. During the period, we preferred to
redeploy the Fund's assets at a time of our own choosing rather than
face the uncertain reinvestment risk at some point in the future.
During the six months ended January 31, 1999, new long-term issuance
of tax-exempt debt in Ohio failed to keep pace with volume at the
national level. This relative decline in supply, coupled with
healthy demand both from retail and institutional investors, created
an environment in which Ohio issues outperformed the broader market.
However, expected issuance during the months ahead should alleviate
matters somewhat since the extraordinary relative value inherent in
current market levels will likely sustain demand for the foreseeable
future.
Looking ahead, we expect to maintain our current strategy in an
effort to capitalize on the fundamentally positive environment for
fixed-income markets. In addition, we will continue to seek out
opportunities to upgrade the average quality of the portfolio.
Quality spreads remain historically narrow in the municipal
marketplace, and we believe there is insufficient compensation for
the increased risk of holding lower-rated credits longer term.
In Conclusion
We appreciate your ongoing interest in Merrill Lynch Ohio Municipal
Bond Fund, and we look forward to serving your investment needs in
the months and years ahead.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
Executive Vice President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Theodore R. Jaeckel Jr.)
Theodore R. Jaeckel Jr.
Vice President and Portfolio Manager
March 5, 1999
Merrill Lynch Ohio Municipal Bond Fund
January 31, 1999
PERFORMANCE DATA
About Fund Performance
Investors are 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. (There is no initial
sales charge for automatic share conversions.)
* 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).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Recent Performance
Results" and "Average Annual Total Return" tables assume
reinvestment of all dividends and capital gains distributions at net
asset value on the payable date. Investment return and principal
value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Dividends paid to each
class of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<TABLE>
Recent Performance Results*
<CAPTION>
Standardized
12 Month 3 Month Since Inception 30-Day Yield
Total Return Total Return Total Return As of 1/31/99
<S> <C> <C> <C> <C>
ML Ohio Municipal Bond Fund Class A Shares +5.80% +1.64% +64.40% 3.70%
ML Ohio Municipal Bond Fund Class B Shares +5.27 +1.51 +58.73 3.35
ML Ohio Municipal Bond Fund Class C Shares +5.17 +1.49 +36.21 3.25
ML Ohio Municipal Bond Fund Class D Shares +5.79 +1.62 +39.22 3.60
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the payable date. The
Fund's since inception periods are Class A & Class B Shares, from
2/28/92 to 1/31/99 and Class C & Class D Shares, from 10/21/94 to
1/31/99.
</TABLE>
Merrill Lynch Ohio Municipal Bond Fund
January 31, 1999
PERFORMANCE DATA (concluded)
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/98 +5.77% +1.54%
Five Years Ended 12/31/98 +5.37 +4.51
Inception (2/28/92)
through 12/31/98 +7.38 +6.75
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/98 +5.24% +1.24%
Five Years Ended 12/31/98 +4.83 +4.83
Inception (2/28/92)
through 12/31/98 +6.84 +6.84
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 12/31/98 +5.13% +4.13%
Inception (10/21/94)
through 12/31/98 +7.41 +7.41
[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*
Year Ended 12/31/98 +5.57% +1.35%
Inception (10/21/94)
through 12/31/98 +7.94 +6.89
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
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
HFA Housing Finance Agency
M/F Multi-Family
RIB Residual Interest Bonds
RITES Residual Interest Tax-Exempt Securities
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
Merrill Lynch Ohio Municipal Bond Fund
January 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Ohio--95.8%
<S> <S> <C> <S> <C>
AAA Aaa $1,000 Avon, Ohio, Local School District, GO, 6% due 12/01/2020 (b) $ 1,098
NR* A2 2,575 Butler County, Ohio, Hospital Facilities Revenue Refunding and Improvement Bonds
(Middletown Hospital), 5% due 11/15/2028 2,524
AAA Aaa 150 Cleveland, Ohio, Waterworks Revenue Bonds, First Mortgage, Series F-92 A, 6.25%
due 1/01/2015 (b) 162
Columbus, Ohio, Limited Tax, GO, Series 1:
AAA Aaa 1,420 4.625% due 6/15/2017 1,398
AAA Aaa 1,015 4.625% due 6/15/2018 993
NR* NR* 1,000 Cuyahoga County, Ohio, Health Care Facilities, Revenue Refunding Bonds (Benjamin
Rose Institute Project), 5.50% due 12/01/2028 971
A1+ VMIG1++ 300 Cuyahoga County, Ohio, Hospital Revenue Bonds (The Cleveland Clinic), VRDN,
Series D, 2.80% due 1/01/2026 (i) 300
Cuyahoga County, Ohio, M/F Revenue Bonds (Dalebridge Apartments), AMT (e)(h):
NR* Aaa 1,000 6.50% due 10/20/2020 1,089
NR* Aaa 2,850 6.60% due 10/20/2030 3,119
Dayton, Ohio, Special Facilities Revenue Refunding Bonds (Emery Air Freight):
BBB NR* 1,000 Series A, 5.625% due 2/01/2018 1,014
BBB NR* 1,000 Series F, 6.05% due 10/01/2009 1,086
NR* Aa2 1,635 Dublin, Ohio, GO, Refunding and Improvement, Series A, 4.625% due 12/01/2018 1,592
A A2 2,120 Erie County, Ohio, Hospital Improvement Revenue Refunding Bonds (Firelands
Community Hospital Project), 6.75% due 1/01/2015 2,305
AAA Aaa 1,200 Finneytown, Ohio, Local School District, GO, 5.80% due 12/01/2024 (c) 1,308
NR* Baa3 1,000 Franklin County, Ohio, Hospital Revenue Bonds (Doctors Ohio Health Corp.),
Series A, 5.60% due 12/01/2028 977
AAA Aaa 1,200 Huron County, Ohio, GO, Human Services Building, 7.25% due 12/01/2013 (d) 1,439
NR* Aaa 3,030 Kent, Ohio, M/F Revenue Bonds (Silver Meadows), AMT, 7.30% due 12/20/2036 (e)(h) 3,459
AA NR* 3,000 Knox County, Ohio, Hospital Facilities, Revenue Refunding Bonds (Knox Community
Hospital), 5% due 6/01/2012 3,115
AAA Aaa 1,740 Lakota, Ohio, Local School District, GO, 7% due 12/01/2010 (b) 2,198
A NR* 1,660 Loveland, Ohio, City School District, GO, 6.65% due 12/01/2015 1,837
NR* NR* 2,000 Lucas County, Ohio, Hospital Revenue Bonds (Flower Hospital), 6.125% due
12/01/2004 (g) 2,256
AAA Aaa 2,500 Mahoning County, Ohio, Hospital Facilities Revenue Refunding Bonds (YHA Inc.
Project), Series A, 7% due 10/15/2002 (d)(g) 2,706
A A2 2,000 Moraine, Ohio, Solid Waste Disposal Revenue Bonds (General Motors Corp.
Project), AMT, 6.75% due 7/01/2014 2,439
AAA Aaa 3,000 North Canton, Ohio, City School District, GO, 6.70% due 12/01/2004 (b)(g) 3,522
Ohio HFA, Mortgage Revenue Bonds (e):
AAA NR* 1,745 AMT, Series A-1, 6.15% due 3/01/2029 1,864
AAA NR* 965 AMT, Series B-2, 6.70% due 3/01/2025 1,041
AAA Aaa 1,900 RITR, Series 15, 7.42% due 9/01/2019 (a) 1,980
AAA Aaa 925 Ohio HFA, S/F Mortgage Revenue Bonds, RIB, AMT, Series B, 10.226% due
3/31/2031 (a)(e) 1,033
AA- Aa3 4,200 Ohio State Air Quality Development Authority, Revenue Refunding Bonds
(Coll-Dayton Power & Light Project), Series B, 6.40% due 8/15/2027 4,535
</TABLE>
Merrill Lynch Ohio Municipal Bond Fund
January 31, 1999
<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>
NR* NR* $1,000 Ohio State Higher Educational Facility Commission Revenue Bonds (University
of Findlay Project), 6.125% due 9/01/2016 $ 1,047
Ohio State Higher Educational Facility Commission, Revenue Refunding Bonds
(Case Western Reserve University):
AA Aa3 1,410 6.25% due 10/01/2016 1,676
AA Aa3 1,000 Series D, 6.25% due 7/01/2014 1,192
BBB Baa3 1,000 Ohio State Solid Waste Disposal Revenue Bonds (USG Corporation Project), AMT,
5.65% due 3/01/2033 1,004
AAA Aaa 2,000 Ohio State Turnpike Commission, Turnpike Revenue Refunding Bonds, Series A,
5.50% due 2/15/2026 (c) 2,204
AAA Aaa 2,500 Ohio State Water Development Authority, Pollution Control Facilities Revenue
Bonds (Water Control Loan Fund), Water Quality Series, 5.125% due 6/01/2019 (d) 2,569
AAA Aaa 1,000 Ohio State Water Development Authority, Pollution Control Facilities Revenue
Refunding Bonds (Pennsylvania Power Co. Project), 6.15% due 8/01/2023 (b) 1,117
AAA Aaa 1,000 Southwestern City School District, Ohio (Franklin and Pickway Counties), GO,
4.75% due 12/01/2026 (b) 968
NR* Aa3 1,000 Toledo-Lucas County, Ohio, Port Authority Revenue Refunding Bonds (Cargill Inc.
Project), 5.90% due 12/01/2015 1,065
AAA Aaa 1,000 Upper Arlington, Ohio, City School District, GO, 5.25% due 12/01/2022 (d) 1,022
NR* Aa2 2,000 Westerville, Ohio, GO, Refunding and Improvement, 4.50% due 12/01/2018 1,919
AAA Aaa 2,000 Westerville, Ohio, Minerva Park and Blendon Township, Joint Hospital District
Revenue Refunding Bonds (St. Ann's Hospital), Series B, 7% due 9/15/2012 (b)(f) 2,213
AAA Aaa 1,100 Wyoming, Ohio, City School District, GO, Series B, 5.15% due 12/01/2027 (c) 1,115
Puerto Rico--3.7%
A1+ Baa1 2,500 Puerto Rico Commonwealth, Highway and Transportation Authority, Highway Revenue
Refunding Bonds, RITES, Series X, 6.658% due 7/01/2004 (a) 2,825
Total Investments (Cost--$69,881)--99.5% 75,296
Other Assets Less Liabilities--0.5% 382
--------
Net Assets--100.0% $ 75,678
========
<FN>
(a)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 January 31, 1999.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)GNMA Collateralized.
(f)Escrowed to maturity.
(g)Prerefunded.
(h)FHA Insured.
(i)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at January 31, 1999.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Ohio Municipal Bond Fund
January 31, 1999
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of January 31, 1999
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$69,881,120) (Note 1a) $ 75,295,755
Cash 5,990
Receivables:
Securities sold $ 2,203,882
Interest 993,964
Beneficial interest sold 99,782 3,297,628
------------
Prepaid expenses and other assets 1,357
------------
Total assets 78,600,730
------------
Liabilities: Payables:
Securities purchased 2,572,250
Beneficial interest redeemed 183,627
Dividends to shareholders (Note 1e) 53,213
Investment adviser (Note 2) 32,821
Distributor (Note 2) 23,915 2,865,826
------------
Accrued expenses and other liabilities 56,896
------------
Total liabilities 2,922,722
------------
Net Assets: Net assets $ 75,678,008
============
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited
Consist of: number of shares authorized $ 83,781
Class B Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 509,038
Class C Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 25,257
Class D Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 52,731
Paid-in capital in excess of par 69,717,527
Accumulated realized capital losses on investments--net (124,961)
Unrealized appreciation on investments--net 5,414,635
------------
Net assets $ 75,678,008
============
Net Asset Value: Class A--Based on net assets of $9,452,379 and 837,810 shares of
beneficial interest outstanding $ 11.28
============
Class B--Based on net assets of $57,429,098 and 5,090,383 shares of
beneficial interest outstanding $ 11.28
============
Class C--Based on net assets of $2,849,363 and 252,574 shares of
beneficial interest outstanding $ 11.28
============
Class D--Based on net assets of $5,947,168 and 527,313 shares of
beneficial interest outstanding $ 11.28
============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Ohio Municipal Bond Fund
January 31, 1999
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended
January 31, 1999
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 2,098,625
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 205,928
Account maintenance and distribution fees--Class B (Note 2) 141,799
Printing and shareholder reports 39,809
Professional fees 34,302
Transfer agent fees--Class B (Note 2) 12,920
Accounting services (Note 2) 10,216
Account maintenance and distribution fees--Class C (Note 2) 7,947
Registration fees 7,554
Account maintenance fees--Class D (Note 2) 3,130
Pricing fees 2,673
Custodian fees 2,625
Trustees' fees and expenses 1,986
Transfer agent fees--Class A (Note 2) 1,716
Transfer agent fees--Class D (Note 2) 1,174
Transfer agent fees--Class C (Note 2) 615
Other 1,067
------------
Total expenses 475,461
------------
Investment income--net 1,623,164
------------
Realized & Realized gain on investments--net 1,161,221
Unrealized Change in unrealized appreciation on investments--net (45,862)
Gain (Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 2,738,523
(Notes 1b, ============
1d & 3):
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Ohio Municipal Bond Fund
January 31, 1999
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: Jan. 31, 1999 July 31, 1998
<S> <S> <C> <C>
Operations: Investment income--net $ 1,623,164 $ 3,307,710
Realized gain on investments--net 1,161,221 378,211
Change in unrealized appreciation on investments--net (45,862) (114,833)
------------ ------------
Net increase in net assets resulting from operations 2,738,523 3,571,088
------------ ------------
Dividends & Investment income--net:
Distributions to Class A (219,896) (432,401)
Shareholders Class B (1,203,221) (2,538,683)
(Note 1e): Class C (54,819) (101,635)
Class D (145,228) (234,991)
Realized gain on investments--net:
Class A (82,802) --
Class B (518,154) --
Class C (24,689) --
Class D (76,467) --
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (2,325,276) (3,307,710)
------------ ------------
Beneficial Net increase (decrease) in net assets derived from beneficial
Interest interest transactions 2,665,772 (2,964,461)
Transactions ------------ ------------
(Note 4):
Net Assets: Total increase (decrease) in net assets 3,079,019 (2,701,083)
Beginning of period 72,598,989 75,300,072
------------ ------------
End of period $ 75,678,008 $ 72,598,989
============ ============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Ohio Municipal Bond Fund
January 31, 1999
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
Class A
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended
Jan. 31, For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.21 $ 11.17 $ 10.70 $ 10.56 $ 10.50
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .27 .55 .55 .54 .55
Realized and unrealized gain on
investments--net .17 .04 .47 .14 .06
-------- -------- -------- -------- --------
Total from investment operations .44 .59 1.02 .68 .61
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.27) (.55) (.55) (.54) (.55)
Realized gain on investments--net (.10) -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.37) (.55) (.55) (.54) (.55)
-------- -------- -------- -------- --------
Net asset value, end of period $ 11.28 $ 11.21 $ 11.17 $ 10.70 $ 10.56
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 3.97%++ 5.43% 9.80% 6.56% 6.03%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement .85%* .83% .80% .87% .86%
Net Assets: ======== ======== ======== ======== ========
Expenses .85%* .83% .80% .87% .89%
======== ======== ======== ======== ========
Investment income--net 4.75%* 4.92% 5.07% 5.03% 5.30%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 9,453 $ 9,252 $ 8,506 $ 7,281 $ 7,270
Data: ======== ======== ======== ======== ========
Portfolio turnover 37.50% 35.46% 52.57% 118.21% 169.34%
======== ======== ======== ======== ========
<CAPTION>
Class B
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended
Jan. 31, For the Year Ended July 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.21 $ 11.17 $ 10.70 $ 10.56 $ 10.50
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .24 .50 .49 .49 .49
Realized and unrealized gain on
investments--net .17 .04 .47 .14 .06
-------- -------- -------- -------- --------
Total from investment operations .41 .54 .96 .63 .55
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.24) (.50) (.49) (.49) (.49)
Realized gain on investments--net (.10) -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.34) (.50) (.49) (.49) (.49)
-------- -------- -------- -------- --------
Net asset value, end of period $ 11.28 $ 11.21 $ 11.17 $ 10.70 $ 10.56
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 3.70%++ 4.90% 9.25% 6.01% 5.49%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement 1.36%* 1.34% 1.31% 1.38% 1.37%
Net Assets: ======== ======== ======== ======== ========
Expenses 1.36%* 1.34% 1.31% 1.38% 1.40%
======== ======== ======== ======== ========
Investment income--net 4.24%* 4.41% 4.56% 4.52% 4.79%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 57,429 $ 55,554 $ 60,072 $ 64,397 $ 64,068
Data: ======== ======== ======== ======== ========
Portfolio turnover 37.50% 35.46% 52.57% 118.21% 169.34%
======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Ohio Municipal Bond Fund
January 31, 1999
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class C
For the For the
The following per share data and ratios have been derived Six Months Period
from information provided in the financial statements. Ended Oct. 21, 1994++
Jan. 31, For the Year Ended July 31, to July 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.21 $ 11.17 $ 10.70 $ 10.56 $ 10.09
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .23 .48 .48 .48 .37
Realized and unrealized gain on
investments--net .17 .04 .47 .14 .47
-------- -------- -------- -------- --------
Total from investment operations .40 .52 .95 .62 .84
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.23) (.48) (.48) (.48) (.37)
Realized gain on investments--net (.10) -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.33) (.48) (.48) (.48) (.37)
-------- -------- -------- -------- --------
Net asset value, end of period $ 11.28 $ 11.21 $ 11.17 $ 10.70 $ 10.56
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 3.65%+++ 4.79% 9.14% 5.90% 8.50%+++
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses 1.46%* 1.44% 1.41% 1.49% 1.50%*
Net Assets: ======== ======== ======== ======== ========
Investment income--net 4.14%* 4.31% 4.46% 4.42% 4.62%*
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 2,849 $ 2,526 $ 2,412 $ 2,720 $ 874
Data: ======== ======== ======== ======== ========
Portfolio turnover 37.50% 35.46% 52.57% 118.21% 169.34%
======== ======== ======== ======== ========
<CAPTION>
Class D
For the For the
The following per share data and ratios have been derived Six Months Period
from information provided in the financial statements. Ended Oct. 21, 1994++
Jan. 31, For the Year Ended July 31, to July 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.21 $ 11.16 $ 10.70 $ 10.56 $ 10.09
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .26 .54 .54 .53 .41
Realized and unrealized gain on
investments--net .17 .05 .46 .14 .47
-------- -------- -------- -------- --------
Total from investment operations .43 .59 1.00 .67 .88
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.26) (.54) (.54) (.53) (.41)
Realized gain on investments--net (.10) -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.36) (.54) (.54) (.53) (.41)
-------- -------- -------- -------- --------
Net asset value, end of period $ 11.28 $ 11.21 $ 11.16 $ 10.70 $ 10.56
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 3.92%+++ 5.42% 9.60% 6.45% 8.93%+++
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses .96%* .93% .90% .97% .99%*
Net Assets: ======== ======== ======== ======== ========
Investment income--net 4.64%* 4.82% 4.97% 4.93% 5.17%*
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 5,947 $ 5,267 $ 4,310 $ 3,513 $ 3,234
Data: ======== ======== ======== ======== ========
Portfolio turnover 37.50% 35.46% 52.57% 118.21% 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>
Merrill Lynch Ohio Municipal Bond Fund
January 31, 1999
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's
financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of
management accruals and estimates. These unaudited financial
statements reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the
interim period presented. All such adjustments are of a normal
recurring nature. 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.
(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
financial 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) 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.
Merrill Lynch Ohio Municipal Bond Fund
January 31, 1999
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 a
limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor ("MLFD" or "Distributor"), a division of Princeton Funds
Distributor, Inc. ("PFD"), which is a wholly-owned subsidiary of
Merrill Lynch Group, Inc.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee based upon the average daily
value of the Fund's net assets at the following annual rates: 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.
Pursuant to the Distribution Plans adopted by the Fund in accordance
with Rule 12b-1 under the Investment Company Act of 1940, the Fund
pays the Distributor 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% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("MLPF&S"), a subsidiary of ML &
Co., also provides account maintenance and distribution services to
the Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class 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 six months ended January 31, 1999, 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 $258 $ 2,034
Class D $685 $65,282
For the six months ended January 31, 1999, MLPF&S received
contingent deferred sales charges of $15,432 and $7 relating to
transactions in Class B and Class C Shares, respectively.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
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, FDS, PFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended January 31, 1999 were $29,373,106 and
$27,171,795, respectively.
Net realized gains for the six months ended January 31, 1999 and net
unrealized gains as of January 31, 1999 were as follows:
Realized Unrealized
Gains Gains
Long-term investments. $ 1,161,221 $ 5,414,635
----------- -----------
Total $ 1,161,221 $ 5,414,635
=========== ===========
As of January 31, 1999, net unrealized appreciation for Federal
income tax purposes aggregated $5,414,635, of which $5,426,381
related to appreciated securities and $11,746 related to depreciated
securities. The aggregate cost of investments at January 31, 1999
for Federal income tax purposes was $69,881,120.
4. Beneficial Interest Transactions:
Net increase (decrease) in net assets derived from beneficial
interest transactions was $2,665,772 and $(2,964,461) for the six
months ended January 31, 1999 and for the year ended July 31, 1998,
respectively.
Merrill Lynch Ohio Municipal Bond Fund
January 31, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
Transactions in shares of beneficial interest for each class were as
follows:
Class A Shares for the Six Months Dollar
Ended January 31, 1999 Shares Amount
Shares sold 95,502 $ 1,080,952
Shares issued to shareholders
in reinvestment of dividends
and distributions 15,483 174,474
---------- -----------
Total issued 110,985 1,255,426
Shares redeemed (98,277) (1,113,156)
---------- -----------
Net increase 12,708 $ 142,270
========== ===========
Class A Shares for the Year Dollar
Ended July 31, 1998 Shares Amount
Shares sold 214,291 $ 2,394,765
Shares issued to share-
holders in reinvestment of
dividends 22,076 246,854
---------- -----------
Total issued 236,367 2,641,619
Shares redeemed (172,776) (1,932,706)
---------- -----------
Net increase 63,591 $ 708,913
========== ===========
Class B Shares for the Six Months Dollar
Ended January 31, 1999 Shares Amount
Shares sold 411,075 $ 4,656,202
Shares issued to shareholders
in reinvestment of dividends
and distributions 77,811 876,649
---------- -----------
Total issued 488,886 5,532,851
Automatic conversion of
shares (9,515) (107,629)
Shares redeemed (343,470) (3,879,601)
---------- -----------
Net increase 135,901 $ 1,545,621
========== ===========
Class B Shares for the Year Dollar
Ended July 31, 1998 Shares Amount
Shares sold 638,961 $ 7,148,780
Shares issued to share-
holders in reinvestment of
dividends 117,234 1,310,128
---------- -----------
Total issued 756,195 8,458,908
Automatic conversion of
shares (11,946) (134,491)
Shares redeemed (1,168,222) (13,051,017)
---------- -----------
Net decrease (423,973) $(4,726,600)
========== ===========
Class C Shares for the Six Months Dollar
Ended January 31, 1999 Shares Amount
Shares sold 55,882 $ 635,090
Shares issued to shareholders
in reinvestment of dividends
and distributions 4,726 53,237
---------- -----------
Total issued 60,608 688,327
Shares redeemed (33,291) (376,753)
---------- -----------
Net increase 27,317 $ 311,574
========== ===========
Class C Shares for the Year Dollar
Ended July 31, 1998 Shares Amount
Shares sold 68,147 $ 764,188
Shares issued to share-
holders in reinvestment of
dividends 5,921 66,153
---------- -----------
Total issued 74,068 830,341
Shares redeemed (64,751) (719,191)
---------- -----------
Net increase 9,317 $ 111,150
========== ===========
Class D Shares for the Six Months Dollar
Ended January 31, 1999 Shares Amount
Shares sold 396,275 $ 4,478,175
Automatic conversion
of shares 9,522 107,629
Shares issued to shareholders
in reinvestment of dividends
and distributions 7,146 80,376
---------- -----------
Total issued 412,943 4,666,180
Shares redeemed (355,578) (3,999,873)
---------- -----------
Net increase 57,365 $ 666,307
========== ===========
Class D Shares for the Year Dollar
Ended July 31, 1998 Shares Amount
Shares sold 140,789 $ 1,583,031
Automatic conversion
of shares 11,950 134,491
Shares issued to share-
holders in reinvestment of
dividends 6,109 68,375
---------- -----------
Total issued 158,848 1,785,897
Shares redeemed (74,987) (843,821)
---------- -----------
Net increase 83,861 $ 942,076
========== ===========
Merrill Lynch Ohio Municipal Bond Fund
January 31, 1999
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
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Theodore R. Jaeckel Jr., Vice President
Donald C. Burke, Vice President and Treasurer
Robert E. Putney, III, Secretary
Gerald M. Richard, Treasurer of Merrill Lynch Ohio Municipal Bond
Fund has recently retired. His colleagues at Merrill Lynch Asset
Management, L.P. join the Fund's Board of Trustees in wishing Mr.
Richard well in his retirement.
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
