MERRILL LYNCH
OHIO MUNICIPAL
BOND FUND
FUND LOGO
Semi-Annual Report
January 31, 2000
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, 2000
TO OUR SHAREHOLDERS
The Municipal Market Environment
During the six months ended January 31, 2000, continued strong
domestic growth, gradual improvement in foreign economies and
investor concerns regarding future inflationary pressures pushed
long-term fixed-income bond yields higher. The Federal Reserve Board
continued to raise short-term interest rates in August and November
1999 as well as just after the period's close, seeking to moderate
US economic growth and maintain the existing benign inflationary
environment. US economic growth, in part intensified by Year 2000
preparations, grew 5.8% during the last fiscal quarter of 1999 and
had an annual rate of 4.1% for 1999. A number of inflationary
indicators have also begun to signal some increase in price
pressures.
However, most investors believe that the Federal Reserve Board will
be extremely vigilant in preventing such pressures from any material
escalation. US Treasury bond yields responded by rising
approximately 60 basis points (0.60%) by mid-January 2000. A strong
rally, largely based upon an expected significant reduction in the
future supply of US Treasury 30-year maturity bonds, pushed yields
lower to 6.50% at January 31, 2000. Over the last six months, yields
on 30-year US Treasury bonds rose approximately 40 basis points.
The tax-exempt bond market was also under pressure throughout the
entire period. Despite receiving more than $30 billion in coupon
payments, bond maturities and proceeds from early redemptions in
December and January, overall investor demand has diminished. It is
likely that the returns generated by the US equity market have
continued to attract investor attention and have left little demand
for competing investment alternatives. At January 31, 2000, the long-
term tax-exempt revenue bond yield, as measured by the Bond Buyer
Revenue Index, was 6.34%, an increase of nearly 70 basis points over
the last six months.
Issuance by municipalities has significantly declined in recent
months. Over the last six months, less than $100 billion in long-
term tax-exempt bonds were issued, representing a decline of over
20% compared to the same period a year ago. During the last three
months, less than $45 billion in long-term bonds were issued by
various municipalities. This most recent quarterly issuance is 30%
below the level of the January 31, 1999 quarter. Additionally,
during January 2000, less than $8 billion in municipal debt was
underwritten, down more than 50% from January 1999 levels. This
represents the lowest monthly issuance in over five years. Toward
the end of 1999, consensus estimates for 2000 annual issuance were
in the $210 billion--$215 billion range. January's underwritings,
as well as those expected to be issued in the near future, have led
some analysts to revise their forecasts to the $190 billion range.
We believe an overall reduction in bond supply in the coming year
should help support the municipal bond market's overall technical
position. While tax-exempt bond yields, which are at their highest
level in over three years, have attracted significant retail
investor interest, institutional demand declined sharply. Long-term
municipal mutual funds have seen consistent outflows in recent
months as the yields of individual securities rose faster than those
of larger, more diverse mutual funds. During the six months ended
January 31, 2000, tax-exempt mutual funds have had net redemptions
of approximately $9 billion. Also, the demand from property and
casualty insurance companies has weakened as a result of the
losses and anticipated losses incurred from a series of damaging
storms across much of the eastern United States. Additionally, many
institutional investors who have in recent years been attracted
to the municipal bond market by historically attractive tax-exempt
bond yield ratios of over 90%, found other asset classes even more
attractive. Even with a reduced supply position, tax-exempt
issuers have been forced to repeatedly raise municipal bond yields
in an attempt to attract adequate demand. We believe a
reduced bond supply going forward is likely to promote a more
closely balanced supply/demand structure and foster a more
stable tax-exempt interest rate environment.
Looking ahead, it appears to us that long-term tax-exempt bond
yields will remain under pressure, trading in a broad range centered
around current levels. Investors are also likely to remain concerned
regarding future action by the Federal Reserve Board in early 2000.
Any improvement in bond prices may be contingent upon weakening in
both US employment growth and consumer spending. The 100 basis
Merrill Lynch Ohio Municipal Bond Fund
January 31, 2000
point rise in US Treasury bond yields seen thus far could negatively
affect US economic growth. The US housing market is likely to be
among the first sectors to be affected, as some declines have
already been evidenced because of higher mortgage rates. We believe
it is also unrealistic to expect double-digit returns in US equity
markets to continue indefinitely. Much of the US consumer's wealth
is tied to recent stock market appreciation. Any slowing in these
incredible growth rates may reduce consumer spending. We believe
that these factors suggest that the worst of the recent increase in
bond yields has passed and stable, if not slightly improving, bond
prices may be expected.
Portfolio Strategy
The volatility within the municipal market during the past six
months stands in sharp contrast to the relative stability that
typified the environment for the first half of last year. The degree
and suddenness of the decline caught many investors by surprise as
few anticipated the extent to which tax-exempt yields would climb
relative to their taxable counterparts. Much emphasis had been
placed on the favorable implications of a sharp reduction in new-
issue supply coupled with vigorous retail investor demand. Instead,
institutional selling proved the market's undoing as both mutual
funds and casualty insurers moved aggressively to liquidate tax-
exempt holdings. Consequently, yield ratios on long-term municipal
bonds are once again approaching 100% of Treasury bond yields and
therefore represent one of the more compelling values in the fixed-
income marketplace.
Developments within the Ohio municipal market mirrored those of the
overall marketplace since the respective declines in issuance were
roughly comparable for the six-month period. At the beginning of the
six months ended January 31, 2000, our investment outlook was for a
fairly stable interest rate environment. We reduced our cash reserve
position on the expectation that an income-oriented approach would
generate the most favorable returns for the Fund. While we achieved
modest success through the use of selective restructuring, hindsight
suggests that Fund performance would have benefited from a more
consistent and prolonged defensive strategy designed to preserve
unrealized gains from last year's market rally. More recently, with
long-term interest rates at their highest level in over two years,
we have turned our efforts to seeking to limit tax liabilities
through a program designed to offset existing capital gains with the
realization of losses incurred in recent months.
We are comfortable with the Fund's current position given the
absolute level of long-term interest rates as well as the inherent
value in the tax-exempt sector. Economic fundamentals point to a
modestly slower pace of economic growth with no solid evidence of a
broad-based pickup in inflation. Investors' increased level of
comfort with Federal Reserve Board monetary policy combined with a
favorable seasonal outlook for municipal bonds suggest that a more
constructive outlook may soon be warranted.
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,
(Terry K. Glenn)
Terry K. Glenn
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Theodore R. Jaeckel Jr.)
Theodore R. Jaeckel Jr.
Vice President and Portfolio Manager
March 3, 2000
Merrill Lynch Ohio Municipal Bond Fund
January 31, 2000
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>
6 Month 12 Month Since Inception Standardized
As of January 31, 2000 Total Return Total Return Total Return 30-Day Yield
<S> <C> <C> <C> <C>
ML Ohio Municipal Bond Fund Class A Shares -4.37% -6.55% +53.62% 4.64%
ML Ohio Municipal Bond Fund Class B Shares -4.61 -7.03 +47.57 4.32
ML Ohio Municipal Bond Fund Class C Shares -4.66 -7.12 +26.51 4.22
ML Ohio Municipal Bond Fund Class D Shares -4.41 -6.64 +29.97 4.54
*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 from 2/28/92 for Class A & Class
B Shares and from 10/21/94 for Class C & Class D Shares.
</TABLE>
Merrill Lynch Ohio Municipal Bond Fund
January 31, 2000
PERFORMANCE DATA (concluded)
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/99 -4.48% -8.30%
Five Years Ended 12/31/99 +5.93 +5.06
Inception (2/28/92)
through 12/31/99 +5.79 +5.24
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/99 -4.96% -8.51%
Five Years Ended 12/31/99 +5.39 +5.39
Inception (2/28/92)
through 12/31/99 +5.26 +5.26
*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 12/31/99 -5.15% -6.04%
Five Years Ended 12/31/99 +5.28 +5.28
Inception (10/21/94)
through 12/31/99 +4.87 +4.87
*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 12/31/99 -4.58% -8.40%
Five Years Ended 12/31/99 +5.82 +4.96
Inception (10/21/94)
through 12/31/99 +5.40 +4.58
*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
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, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face
Ratings Ratings Amount Issue Value
Ohio--94.9%
<S> <S> <C> <S> <C>
AAA Aaa $ 1,000 Avon, Ohio, Local School District, GO, 6% due 12/01/2020 (b) $ 1,001
AAA Aaa 2,000 Brunswick, Ohio, City School District, GO, Refunding (School
Improvements), 5% due 12/01/2023 (b) 1,709
AAA Aaa 1,000 Cleveland, Ohio, GO, Refunding, 4.625% due 10/01/2018 (d) 813
AAA Aaa 150 Cleveland, Ohio, Waterworks Revenue Bonds, First Mortgage F-92, Series A,
6.25% due 1/01/2015 (b) 154
AAA Aaa 1,000 Columbus, Ohio, GO, Series 2, 5.50% due 6/15/2016 972
AAA Aaa 1,015 Columbus, Ohio, Limited Tax, GO, Series 1, 4.625% due 6/15/2018 846
AAA Aaa 1,500 Columbus, Ohio, Tax Increment Financing, Tax Allocation Revenue Bonds
(Easton Project), 5.30% due 12/01/2019 (b) 1,361
A1+ VMIG1++ 2,700 Cuyahoga County, Ohio, Hospital Revenue Bonds (The Cleveland Clinic),
VRDN, Series D, 3.70% due 1/01/2026 (i) 2,700
BBB NR* 1,000 Dayton, Ohio, Special Facilities Revenue Refunding Bonds (Emery Air
Freight), Series F, 6.05% due 10/01/2009 995
NR* Aa2 2,470 Dublin, Ohio, GO, Refunding and Improvement, Series A, 4.625% due 12/01/2018 2,035
AAA NR* 1,600 Forest Hills, Ohio, Local School District, GO, 6.25% due 12/01/2020 (d) 1,628
NR* Aa3 1,000 Franklin County, Ohio, Hospital Improvement Revenue Bonds (Children's
Hospital Project), 5% due 5/01/2018 822
NR* Baa3 1,000 Franklin County, Ohio, Hospital Revenue Bonds (Doctors of Ohio Health Corp.),
Series A, 5.60% due 12/01/2028 757
AAA Aaa 350 Girard, Ohio, City School District, GO (School Improvement), 5.85% due
12/01/2019 (b) 347
AAA Aaa 1,200 Huron County, Ohio, GO, Human Services Building, 7.25% due 12/01/2013 (d) 1,333
AA NR* 2,500 Knox County, Ohio, Hospital Facilities Revenue Refunding Bonds (Knox
Community Hospital), 5% due 6/01/2012 2,323
AAA Aaa 1,740 Lakota, Ohio, Local School District, GO, 7% due 12/01/2010 (b) 1,971
A+ NR* 1,660 Loveland, Ohio, City School District, GO, 6.65% due 12/01/2002 (g) 1,771
NR* NR* 2,000 Lucas County, Ohio, Hospital Revenue Bonds (Flower Hospital),
6.125% due12/01/2004 (g) 2,102
AAA Aaa 2,500 Mahoning County, Ohio, Hospital Facilities Revenue Refunding Bonds
(YHA Inc. Project), Series A, 7% due 10/15/2002 (d)(g) 2,600
A A2 2,000 Moraine, Ohio, Solid Waste Disposal Revenue Bonds (General
Motors Corp. Project), AMT, 6.75% due 7/01/2014 2,131
AAA Aaa 3,000 North Canton, Ohio, City School District, GO, 6.70% due 12/01/2004 (b)(g) 3,273
Ohio HFA Mortgage Revenue Bonds, AMT (e):
AAA Aaa 1,720 Series A-1, 6.15% due 3/01/2029 1,692
AAA Aaa 905 Series B-2, 6.70% due 3/01/2025 916
AAA Aaa 675 Ohio HFA, S/F Mortgage Revenue Bonds, AMT, RIB, Series B, 9.466%
due 3/31/2031 (a)(e) 710
A1+ VMIG1++ 400 Ohio State Air Quality Development Authority, Revenue Refunding Bonds
(Cincinnati Gas and Electric), VRDN, Series A, 3.55% due 9/01/2030 (i) 400
AA+ Aa1 2,000 Ohio State Common Schools Capital Facilities, GO, Series A, 5.75%
due 6/15/2014 2,011
BBB- Baa2 1,500 Ohio State Environmental Improvement Revenue Refunding Bonds
(USX Corporation Project), 5.625% due 5/01/2029 1,256
NR* NR* 1,900 Ohio State, HFA, Mortgage Revenue Refunding Bonds, RITR, AMT, Series 15,
7.07% due 9/01/2019 (a)(e)(h) 1,458
</TABLE>
Merrill Lynch Ohio Municipal Bond Fund
January 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face
Ratings Ratings Amount Issue Value
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 $ 962
AA Aa2 1,000 Ohio State Higher Educational Facility, Commission Revenue Refunding Bonds
(Case Western Reserve University), Series D, 6.25% due 7/01/2014 1,064
AA Aa3 1,410 Ohio State Higher Educational Facility Revenue Refunding Bonds
(Case Western Reserve University), 6.25% due 10/01/2016 1,468
AAA Aaa 1,000 Ohio State Water Development Authority, Pollution Control Facilities
Revenue Bonds (Water Control Loan Fund), Water Quality Series, 5.125%
due 6/01/2019 (d) 888
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) 1,000
AAA Aaa 250 Southwest Licking, Ohio, Local School District, GO, 5.75% due 12/01/2015 (c) 251
NR* Aaa 1,125 Springfield, Ohio, GO, Refunding, 6% due 12/01/2023 (c) 1,116
NR* Aa3 1,000 Toledo-Lucas County, Ohio, Port Authority, Revenue Refunding Bonds
(Cargill Inc. Project), 5.90% due 12/01/2015 982
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) 2,111
Puerto Rico--4.6%
A1+ Baa1 2,500 Puerto Rico Commonwealth Highway and Transportation Authority,
Highway Revenue Refunding Bonds, RITES, Series X, 6.059%
due 7/01/2004 (a) 2,534
Total Investments (Cost--$55,484)--99.5% 54,463
Other Assets Less Liabilities--0.5% 261
--------
Net Assets--100.0% $ 54,724
========
(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, 2000.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)GNMA Collateralized.
(f)Escrowed to maturity.
(g)Prerefunded.
(h)FSA 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, 2000.
*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, 2000
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of January 31, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$55,483,526) $ 54,462,812
Cash 52,430
Receivables:
Interest $ 710,014
Variation margin 913 710,927
------------
Prepaid expenses and other assets 1,367
------------
Total assets 55,227,536
------------
Liabilities: Payables:
Beneficial interest redeemed 329,029
Dividends to shareholders 48,876
Investment adviser 24,576
Distributor 18,070 420,551
------------
Accrued expenses and other liabilities 82,880
------------
Total liabilities 503,431
------------
Net Assets: Net assets $ 54,724,105
============
Net Assets Class A Shares of beneficial interest, $.10 par value,
Consist of: unlimited number of shares authorized $ 70,605
Class B Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 417,821
Class C Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 20,199
Class D Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 49,271
Paid-in capital in excess of par 57,996,829
Accumulated realized capital losses on investments--net (2,809,906)
Unrealized depreciation on investments--net (1,020,714)
------------
Net assets $ 54,724,105
============
Net Asset Value: Class A--Based on net assets of $6,926,050 and 706,053 shares of
beneficial interest outstanding $ 9.81
============
Class B--Based on net assets of $40,985,290 and 4,178,206 shares of
beneficial interest outstanding $ 9.81
============
Class C--Based on net assets of $1,981,258 and 201,990 shares of
beneficial interest outstanding $ 9.81
============
Class D--Based on net assets of $4,831,507 and 492,714 shares of
beneficial interest outstanding $ 9.81
============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Ohio Municipal Bond Fund
January 31, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended
January 31, 2000
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 1,802,014
Income:
Expenses: Investment advisory fees $ 169,739
Account maintenance and distribution fees--Class B 115,168
Professional fees 29,702
Printing and shareholder reports 25,410
Accounting services 23,924
Transfer agent fees--Class B 11,645
Account maintenance and distribution fees--Class C 7,164
Registration fees 4,371
Custodian fees 3,304
Pricing fees 3,010
Account maintenance fees--Class D 2,611
Trustees' fees and expenses 2,228
Transfer agent fees--Class A 1,665
Transfer agent fees--Class D 1,082
Transfer agent fees--Class C 611
Other 1,253
------------
Total expenses 402,887
------------
Investment income--net 1,399,127
------------
Realized & Realized loss on investments--net (1,944,472)
Unrealized Change in unrealized appreciation/depreciation on investments--net (2,423,839)
Loss on ------------
Investments--Net: Net Decrease in Net Assets Resulting from Operations $ (2,969,184)
============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Ohio Municipal Bond Fund
January 31, 2000
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, 2000 July 31, 1999
<S> <S> <C> <C>
Operations: Investment income--net $ 1,399,127 $ 3,158,160
Realized gain (loss)on investments--net (1,944,472) 1,806,200
Change in unrealized appreciation/depreciation on
investments--net (2,423,839) (4,057,372)
------------ ------------
Net increase (decrease) in net assets resulting
from operations (2,969,184) 906,988
------------ ------------
Dividends & Investment income--net:
Distributions to Class A (198,956) (438,546)
Shareholders: Class B (1,021,889) (2,333,145)
Class C (51,759) (112,661)
Class D (126,523) (273,808)
Realized gain on investments--net:
Class A (181,498) (82,802)
Class B (1,029,521) (518,154)
Class C (51,882) (24,689)
Class D (122,551) (76,467)
------------ ------------
Net decrease in net assets resulting from dividends
and distributions to shareholders (2,784,579) (3,860,272)
------------ ------------
Beneficial Net decrease in net assets derived from beneficial interest
Interest transactions (8,155,176) (1,012,661)
Transactions:
Net Assets: Total decrease in net assets (13,908,939) (3,965,945)
Beginning of period 68,633,044 72,598,989
------------ ------------
End of period $ 54,724,105 $ 68,633,044
============ ============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Ohio Municipal Bond Fund
January 31, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
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: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.77 $ 11.21 $ 11.17 $ 10.70 $ 10.56
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .26 .52 .55 .55 .54
Realized and unrealized gain (loss)on
investments--net (.72) (.34) .04 .47 .14
-------- -------- -------- -------- --------
Total from investment operations (.46) .18 .59 1.02 .68
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.26) (.52) (.55) (.55) (.54)
Realized gain on investments--net (.24) (.10) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.50) (.62) (.55) (.55) (.54)
-------- -------- -------- -------- --------
Net asset value, end of period $ 9.81 $ 10.77 $ 11.21 $ 11.17 $ 10.70
======== ======== ======== ======== ========
Total Investment Based on net asset value per share (4.37%)++ 1.59% 5.43% 9.80% 6.56%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses .89%* .92% .83% .80% .87%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 4.93%* 4.70% 4.92% 5.07% 5.03%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 6,926 $ 9,161 $ 9,252 $ 8,506 $ 7,281
Data: ======== ======== ======== ======== ========
Portfolio turnover 28.17% 82.55% 35.46% 52.57% 118.21%
======== ======== ======== ======== ========
<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: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.77 $ 11.21 $ 11.17 $ 10.70 $ 10.56
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .23 .47 .50 .49 .49
Realized and unrealized gain (loss) on
investments--net (.72) (.34) .04 .47 .14
-------- -------- -------- -------- --------
Total from investment operations (.49) .13 .54 .96 .63
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.23) (.47) (.50) (.49) (.49)
Realized gain on investments--net (.24) (.10) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.47) (.57) (.50) (.49) (.49)
-------- -------- -------- -------- --------
Net asset value, end of period $ 9.81 $ 10.77 $ 11.21 $ 11.17 $ 10.70
======== ======== ======== ======== ========
Total Investment Based on net asset value per share (4.61%)++ 1.08% 4.90% 9.25% 6.01%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses 1.40%* 1.43% 1.34% 1.31% 1.38%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 4.42%* 4.19% 4.41% 4.56% 4.52%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 40,985 $ 50,892 $ 55,554 $ 60,072 $ 64,397
Data: ======== ======== ======== ======== ========
Portfolio turnover 28.17% 82.55% 35.46% 52.57% 118.21%
======== ======== ======== ======== ========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Ohio Municipal Bond Fund
January 31, 2000
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
Class C
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: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.77 $ 11.21 $ 11.17 $ 10.70 $ 10.56
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .22 .46 .48 .48 .48
Realized and unrealized gain (loss)on
investments--net (.72) (.34) .04 .47 .14
-------- -------- -------- -------- --------
Total from investment operations (.50) .12 .52 .95 .62
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.22) (.46) (.48) (.48) (.48)
Realized gain on investments--net (.24) (.10) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.46) (.56) (.48) (.48) (.48)
-------- -------- -------- -------- --------
Net asset value, end of period $ 9.81 $ 10.77 $ 11.21 $ 11.17 $ 10.70
======== ======== ======== ======== ========
Total Investment Based on net asset value per share (4.66%)++ .98% 4.79% 9.14% 5.90%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses 1.50%* 1.53% 1.44% 1.41% 1.49%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 4.32%* 4.08% 4.31% 4.46% 4.42%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 1,981 $ 2,713 $ 2,526 $ 2,412 $ 2,720
Data: ======== ======== ======== ======== ========
Portfolio turnover 28.17% 82.55% 35.46% 52.57% 118.21%
======== ======== ======== ======== ========
<CAPTION>
Class D
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: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.77 $ 11.21 $ 11.16 $ 10.70 $ 10.56
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .25 .51 .54 .54 .53
Realized and unrealized gain (loss)on
investments--net (.72) (.34) .05 .46 .14
-------- -------- -------- -------- --------
Total from investment operations (.47) .17 .59 1.00 .67
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.25) (.51) (.54) (.54) (.53)
Realized gain on investments--net (.24) (.10) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.49) (.61) (.54) (.54) (.53)
-------- -------- -------- -------- --------
Net asset value, end of period $ 9.81 $ 10.77 $ 11.21 $ 11.16 $ 10.70
======== ======== ======== ======== ========
Total Investment Based on net asset value per share (4.41%)++ 1.49% 5.42% 9.60% 6.45%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses .99%* 1.02% .93% .90% .97%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 4.83%* 4.59% 4.82% 4.97% 4.93%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 4,832 $ 5,867 $ 5,267 $ 4,310 $ 3,513
Data: ======== ======== ======== ======== ========
Portfolio turnover 28.17% 82.55% 35.46% 52.57% 118.21%
======== ======== ======== ======== ========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Ohio Municipal Bond Fund
January 31, 2000
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, 2000
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 the "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: .55%
of the Fund's average daily net assets not exceeding $500 million;
.525% of average daily net assets in excess of $500 million but not
exceeding $1 billion; and .50% of average daily net assets in excess
of $1 billion.
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 .25% .25%
Class C .25% .35%
Class D .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, 2000, 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 $ 18 $ 219
Class D $353 $3,501
For the six months ended January 31, 2000, MLPF&S received
contingent deferred sales charges of $26,065 and $48 relating to
transactions in Class B and Class C Shares, respectively.
Furthermore, MLPF&S received contingent deferred sales charges of
$517 relating to transactions subject to front-end sales charge
waivers in Class D Shares.
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, 2000, were $16,598,775 and
$27,208,699, respectively.
Net realized gains (losses) for the six months ended January 31,
2000, and net unrealized losses as of January 31, 2000 were as
follows:
Realized Unrealized
Gains (Losses) Losses
Long-term investments $(2,072,666) $(1,020,714)
Financial futures contracts 128,194 --
----------- -----------
Total $(1,944,472) $(1,020,714)
=========== ===========
As of January 31, 2000, net unrealized depreciation for Federal
income tax purposes aggregated $1,020,714, of which $1,087,965
related to appreciated securities and $2,108,679 related to
depreciated securities. The aggregate cost of investments at January
31, 2000 for Federal income tax purposes was $55,483,526.
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest
transactions was $8,155,176 and $1,012,661 for the six months ended
January 31, 2000 and for the year ended July 31, 1999, respectively.
Merrill Lynch Ohio Municipal Bond Fund
January 31, 2000
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, 2000 Shares Amount
Shares sold 23,328 $ 239,876
Shares issued to share-
holders in reinvestment of
dividends and distributions 23,090 233,212
---------- -----------
Total issued 46,418 473,088
Shares redeemed (190,735) (1,954,402)
---------- -----------
Net decrease (144,317) $(1,481,314)
========== ===========
Class A Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
Shares sold 189,937 $ 2,132,490
Shares issued to share-
holders in reinvestment of
dividends and distributions 26,959 301,021
---------- -----------
Total issued 216,896 2,433,511
Shares redeemed (191,628) (2,144,491)
---------- -----------
Net increase 25,268 $ 289,020
========== ===========
Class B Shares for the Six Months Dollar
Ended January 31, 2000 Shares Amount
Shares sold 186,414 $ 1,914,222
Shares issued to share-
holders in reinvestment of
dividends and distributions 107,348 1,083,605
---------- -----------
Total issued 293,762 2,997,827
Automatic conversion of
shares (30,972) (321,939)
Shares redeemed (808,475) (8,301,681)
---------- -----------
Net decrease (545,685) $(5,625,793)
========== ===========
Class B Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
Shares sold 646,773 $ 7,277,335
Shares issued to share-
holders in reinvestment of
dividends and distributions 128,730 1,438,427
---------- -----------
Total issued 775,503 8,715,762
Automatic conversion of
shares (15,109) (168,630)
Shares redeemed (990,985) (11,008,358)
---------- -----------
Net decrease (230,591) $(2,461,226)
========== ===========
Class C Shares for the Six Months Dollar
Ended January 31, 2000 Shares Amount
Shares sold 9,226 $ 94,412
Shares issued to share-
holders in reinvestment of
dividends and distributions 5,571 56,201
---------- -----------
Total issued 14,797 150,613
Shares redeemed (64,623) (662,077)
---------- -----------
Net decrease (49,826) $ (511,464)
========== ===========
Class C Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
Shares sold 114,969 $ 1,292,429
Shares issued to share-
holders in reinvestment of
dividends and distributions 7,613 85,119
---------- -----------
Total issued 122,582 1,377,548
Shares redeemed (96,023) (1,069,071)
---------- -----------
Net increase 26,559 $ 308,477
========== ===========
Class D Shares for the Six Months Dollar
Ended January 31, 2000 Shares Amount
Shares sold 88,036 $ 914,986
Automatic conversion
of shares 30,972 321,939
Shares issued to share-
holders in reinvestment of
dividends and distributions 13,979 140,901
---------- -----------
Total issued 132,987 1,377,826
Shares redeemed (185,093) (1,914,431)
---------- -----------
Net decrease (52,106) $ (536,605)
========== ===========
Class D Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
Shares sold 453,317 $ 5,101,859
Automatic conversion
of shares 15,115 168,630
Shares issued to share-
holders in reinvestment of
dividends and distributions 12,986 144,755
---------- -----------
Total issued 481,418 5,415,244
Shares redeemed (406,546) (4,564,176)
---------- -----------
Net increase 74,872 $ 851,068
========== ===========
Merrill Lynch Ohio Municipal Bond Fund
January 31, 2000
OFFICERS AND TRUSTEES
Terry K. Glenn, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Arthur Zeikel, Trustee
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Theodore R. Jaeckel Jr., Vice President
Donald C. Burke, Vice President and Treasurer
Alice A. Pellegrino, Secretary
Robert R. Martin, Trustee of Merrill Lynch Ohio Municipal Bond Fund
has recently retired. The Fund's Board of Trustees wishes Mr. Martin
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
