MERRILL LYNCH
OREGON
MUNICIPAL
BOND FUND
FUND LOGO
Semi-Annual Report
January 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.
Merrill Lynch Oregon
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
<PAGE>
TO OUR SHAREHOLDERS
The combination of heightened inflationary concerns, anticipation of
further tightening of monetary policy by the Federal Reserve Board
and the turmoil of the Mexican currency crisis all exerted negative
influences on the US financial markets during the January quarter.
On the positive side, increasing signs that the US economy may be
losing momentum suggested that most of the interest rate increases
for this economic cycle may be behind us. As a result of these
economic crosscurrents, the US stock and bond markets continued to
be volatile during the period.
The manufacturing sector proved to be the driving force behind the
US economy through the final quarter of 1994, making an important
contribution to the substantial increase in corporate earnings. US
companies have been successful at containing labor costs, which are
an important component of the inflation outlook. Growth in the
economy has not been translated into higher wages and benefits for
US workers. Consumer spending is growing at a slower pace than in
previous economic recoveries, but households are nonetheless
spending more than saving, as the personal savings rate fell to an
all-time annual low in 1994.
In the weeks ahead, investors will continue to assess economic data
and inflationary trends in order to gauge whether further increases
in short-term interest rates are likely as 1995 unfolds. Despite the
widespread concerns about rising prices for raw materials and
incipient inflationary pressures, 1994's inflation results were as
positive as those in 1993, creating the best sustained inflation
performance in 30 years. However, it is not likely that such
positive inflation results will be duplicated in 1995. Investors
will also focus on the progress that the new Congress makes on both
reducing spending and the Federal budget deficit and passing tax
cuts that promote savings and investment. Legislative progress,
combined with continued indications of moderate and sustainable
levels of economic growth, would be positive for the US capital
markets. However, the lagged effects of higher interest rates could
slow the economy sharply and with it, the growth of corporate
profits.
The Municipal Market
The municipal bond market continued to exhibit considerable interest
rate volatility during the three months ended January 31, 1995.
Yields on A-rated municipal revenue bonds continued to rise
throughout November to a high of 7.37% as measured by the Bond Buyer
Revenue Bond Index. The tax-exempt bond market improved dramatically
for the remainder of the quarter, and yields fell by approximately
60 basis points (0.60%) to a four-month low of 6.78%. However, the
Index failed to capture much of the rally that occurred at the end
of January as market yields declined a further ten basis points into
the 6.65% range. Municipal bond prices have now recaptured most of
their declines of the last six months.
<PAGE>
This improvement in municipal bond prices during the January quarter
was largely the result of significant positive change in investor
sentiment. The series of interest rate increases engineered during
1994 have gone a long way in confirming the Federal Reserve Board's
anti-inflationary resolve. Additionally, the recent signs of a
weakening domestic economy, as well as the negative near-term impact
of the Kobe earthquake and Mexican currency situation, have allowed
investors to become more comfortable with the concept that the vast
majority of the recent rise in fixed-income rates has already
occurred and that yields during 1995 are more likely to remain
stable or decline than they are to significantly rise again.
Consequently, current yield levels are being viewed as attractive to
long-term investors.
In addition to this more positive outlook, the ongoing strong
technical position of the municipal bond market has only fostered
the increase in tax-exempt bond prices seen in recent months. Over
$25 billion in bond proceeds became available to investors at year-
end 1994 from bond maturities, coupon payments and early
redemptions. However, during the recent January quarter, new bond
issuance was less than $25 billion, down 50% from the January 1994
quarter. In January 1995, less than $7 billion in long-term
municipal securities were issued, making this past January's
issuance the lowest monthly total since the mid-1980s. Investor
demand has easily surpassed supply, causing bond prices to rise
rapidly. Also, as 1995 annual issuance is expected to be below the
recent historically low 1994 levels, this positive technical
environment should continue to support the recent improvements in
municipal bond prices into the coming quarters.
Portfolio Strategy
The Oregon tax-exempt market experienced a significant rebound for
the three months ended January 31, 1995. Along with the changes in
investor sentiment mentioned above, the heavy Oregon supply
experienced in the previous quarter reversed and is now virtually
non-existent. As mentioned in our last shareholder report, Oregon
issuance in the second half of 1994 increased substantially because
of tax law measures that were up for voter approval. Most of these
measures failed. During the January quarter, total Oregon issuance
decreased by nearly 55% from the same period of one year ago. This
created a technically strong municipal market. The Fund was fully
invested for the period in order to take advantage of the decline in
interest rates. Looking forward, we will remain cautiously
optimistic until the economy shows signs of weakening and the threat
of inflation is eliminated.
In Conclusion
We appreciate your ongoing interest in Merrill Lynch Oregon
Municipal Bond Fund, and we look forward to serving your investment
needs in the months and years to come.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
February 28, 1995
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).
<PAGE>
Performance data for the Fund's Class A and Class B Shares are
presented in the "Recent Performance Results," "Performance
Summary" and "Average Annual Total Return" tables below and on page
4. Data for Class C and Class D Shares are also presented in the
"Recent Performance Results" and "Aggregate Total Return" tables on
page 4.
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 January 31, 1995
and for Class C and Class D Shares for the since inception and 3-
month periods ended January 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.
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
8/27/93--12/31/93 $10.00 $10.30 -- $0.185 + 4.89%
1994 10.30 8.77 -- 0.515 -10.01
1/1/95--1/31/95 8.77 9.07 -- 0.030 + 3.88
------
Total $0.730
Cumulative total return as of 1/31/95: - 1.94%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<PAGE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
8/27/93--12/31/93 $10.00 $10.30 -- $0.167 + 4.70%
1994 10.30 8.77 -- 0.468 -10.46
1/1/95--1/31/95 8.77 9.07 -- 0.027 + 3.85
------
Total $0.662
Cumulative total return as of 1/31/95: - 2.64%**
<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>
PERFORMANCE DATA (concluded)
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/94 -10.01% -13.61%
Inception (8/27/93)
through 12/31/94 -4.20 -7.06
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/94 -10.46% -13.86%
Inception (8/27/93)
through 12/31/94 -4.69 -6.67
<PAGE>
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
Aggregate Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94)
through 12/31/94 -1.68% -2.66%
[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 12/31/94 -1.65% -5.58%
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
1/31/95 10/31/94 1/31/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $9.07 $8.84 $10.30 -11.94% +2.60%
Class B Shares* 9.07 8.84 10.30 -11.94 +2.60
Class C Shares* 9.08 8.84 9.02 + 0.67 +2.71
Class D Shares* 9.07 8.84 9.02 + 0.55 +2.60
Class A Shares--Total Return* - 6.89(1) +4.11(2)
Class B Shares--Total Return* - 7.36(3) +3.98(4)
Class C Shares--Total Return* + 2.09(5) +4.04(6)
Class D Shares--Total Return* + 2.17(7) +4.11(8)
Class A Shares--Standardized 30-day Yield 5.57%
Class B Shares--Standardized 30-day Yield 5.36%
Class C Shares--Standardized 30-day Yield 5.22%
Class D Shares--Standardized 30-day Yield 5.50%
<PAGE>
<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 $0.513 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.128 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.466 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.116 per share ordinary
income dividends.
(5)Percent change includes reinvestment of $0.113 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.112 per share ordinary
income dividends.
(7)Percent change includes reinvestment of $0.129 per share ordinary
income dividends.
(8)Percent change includes reinvestment of $0.128 per share ordinary
income dividends.
</TABLE>
PORTFOLIO ABBREVIATIONS
To simplify the listings of Merrill Lynch Oregon 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)
PCR Pollution Control Revenue Bonds
S/F Single-Family
STRIPES Short-Term Rate Inverse Payment Exempt Securities
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)
Oregon--87.4%
<S> <S> <C> <S> <C>
NR* Baa1 $1,385 Clackamas County, Oregon, Hospital Facilities Authority, Revenue
Refunding Bonds (Gross Willamette Falls), 5.75% due 4/01/2015 $ 1,189
AAA Aaa 1,000 Emerald Peoples Utility District, Oregon, Electric System Revenue
Refunding Bonds, 5.75% due 11/01/2016 (d) 948
AAA Aaa 1,000 Eugene, Oregon, Electric Utility Revenue Bonds, Series C, 5.80% due
8/01/2022 (b) 943
AAA Aaa 1,000 Hermiston, Oregon, UT, 6% due 8/01/2015 (d) 987
BBB+ NR* 1,000 Hillsboro, Oregon, Hospital Facility Authority, Revenue Refunding Bonds
(Quality Healthcare), 5.75% due 10/01/2012 872
BBB+ NR* 1,000 Klamath Falls, Oregon, Intercommunity Hospital Authority Revenue Bonds
(Gross-Merle West Medical Center Project), Series A, 7.10% due 9/01/2024 1,007
AAA Aaa 2,280 Marion County, Oregon, Union High School District No. 007J Revenue
Bonds, UT, 7% due 6/01/2010 (c) 2,469
AAA Aaa 1,000 McMinnville, Oregon, Sewer System Revenue Bonds, Series A, 5% due 2/01/2014 (e) 857
A1 VMIG1++ 300 Medford, Oregon, Hospital Facilities Authority Revenue Bonds (Gross
Rogue Valley Health Services), VRDN, 3.90% due 10/01/2016 (a) 300
A- NR* 1,250 Multnomah County, Oregon, Educational Facilities Revenue Bonds (University
of Portland Project), 6% due 4/01/2014 1,219
A- NR* 1,000 North Clackamas, Oregon, Parks and Recreation District, Recreational
Facilities Revenue Bonds, 5.70% due 4/01/2013 928
AAA Aaa 400 Oregon State Health, Housing, Educational, and Cultural Facilities
Authority, Revenue Refunding Bonds (Lewis & Clark College Project),
Series A, 6% due 10/01/2013 (b) 394
Oregon State Housing and Community Services Department, Mortgage Revenue
Bonds (S/F Mortgage Program):
NR* Aa 500 Refunding, Series A, 6.40% due 7/01/2018 490
NR* Aa 2,050 Series B, 6.875% due 7/01/2028 2,082
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Oregon (concluded)
<S> <S> <C> <S> <C>
A1+ VMIG1++ $ 600 Oregon State Veteran Welfare Board Revenue Bonds, VRDN, Series
73F, 2.55% due 12/01/2017 (a) $ 600
AAA Aaa 1,200 Polk County, Oregon, Dallas School District No. 002, UT, 5.40% due
6/01/2012 (c) 1,107
AAA Aaa 1,000 Port Portland International Airport Revenue Bonds (Portland
International Airport), AMT, Series Seven-B, 7.10% due 7/01/2021 (b) 1,042
A1+ VMIG1++ 700 Port Saint Helens, Oregon, PCR (Portland General Electric Company
Project), VRDN, Series A, 4.10% due 4/01/2010 (a) 700
Portland, Oregon, Sewer System Revenue Bonds, Series A:
A+ A1 1,400 6.20% due 6/01/2012 1,415
A+ A1 1,500 6.25% due 6/01/2015 1,502
AAA Aaa 500 Umatilla County, Oregon, Pendleton School District No. 016R, UT, 6%
due 7/01/2014 (d) 495
AAA Aaa 1,400 Washington County, Oregon, Sherwood School District No. 088J, UT,
6.10% due 6/01/2012 (c) 1,411
AAA Aaa 1,000 Western Lane Hospital District, Oregon, Hospital Facility Authority
Revenue Refunding Bonds (Sisters of Saint Joseph's Peace), 5.75% due
8/01/2019 (b) 938
AAA Aaa 1,130 Yamhill County, Oregon, Newberg School District No. 029J, UT, 6.875%
due 6/01/2007 (c) 1,227
Puerto Rico--11.9%
AAA Aaa 2,720 Puerto Rico Commonwealth, UT, 7% due 7/01/2010 (d) 3,005
AAA Aaa 400 Puerto Rico Electric Power Authority, Power Revenue Bonds, STRIPES,
Series T, 5.715% due 7/01/2005 (c)(f) 410
Total Investments (Cost--$28,466)--99.3% 28,537
Other Assets Less Liabilities--0.7% 190
-------
Net Assets--100.0% $28,727
=======
<PAGE>
<FN>
(a)The interest rate is subject to change periodically based upon
the prevailing market rate. The interest rate shown is the rate in
effect at January 31, 1995.
(b)MBIA Insured.
(c)FSA Insured.
(d)AMBAC Insured.
(e)FGIC Insured.
(f)The interest rate is subject to change periodically and inversely
based upon prevailing market rate. The interest rate shown is the
rate in effect at January 31, 1995.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of January 31, 1995
<CAPTION>
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$28,466,231) (Note 1a) $28,537,259
Cash 84,286
Receivables:
Securities sold $ 509,275
Interest 414,320
Investment adviser (Note 2) 58,407
Beneficial interest sold 27,991 1,009,993
-----------
Deferred organization expenses (Note 1e) 38,763
Prepaid registration fees and other assets (Note 1e) 29,181
-----------
Total assets 29,699,482
-----------
Liabilities: Payables:
Securities purchased 837,819
Dividends to shareholders (Note 1f) 32,623
Beneficial interest redeemed 19,713
Distributor (Note 2) 9,441 899,596
-----------
Accrued expenses and other liabilities 72,345
-----------
Total liabilities 971,941
-----------
Net Assets: Net assets $28,727,541
===========
<PAGE>
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited
Consist of: number of shares authorized $ 45,599
Class B Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 268,132
Class C Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 2,854
Class D Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 132
Paid-in capital in excess of par 31,918,347
Accumulated realized capital losses on investments--net (3,578,551)
Unrealized appreciation on investments--net 71,028
-----------
Net assets $28,727,541
===========
Net Asset Value: Class A--Based on net assets of $4,135,720 and 455,987 shares
of beneficial interest outstanding $ 9.07
===========
Class B--Based on net assets of $24,320,847 and 2,681,325 shares
of beneficial interest outstanding $ 9.07
===========
Class C--Based on net assets of $258,995 and 28,535 shares
of beneficial interest outstanding $ 9.08
===========
Class D--Based on net assets of $11,979 and 1,321 shares
of beneficial interest outstanding $ 9.07
===========
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months
Ended January 31, 1995
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 905,485
(Note 1d):
<PAGE>
Expenses: Investment advisory fees (Note 2) $ 83,564
Distribution fees--Class B (Note 2) 61,991
Printing and shareholder reports 28,670
Professional fees 25,086
Accounting services (Note 2) 18,416
Transfer agent fees--Class B (Note 2) 7,719
Registration fees (Note 1e) 6,172
Custodian fees 4,081
Amortization of organization expenses (Note 1e) 3,882
Pricing fees 2,290
Transfer agent fees--Class A (Note 2) 1,418
Trustees' fees and expenses 896
Distribution fees--Class C (Note 2) 173
Transfer agent fees--Class C (Note 2) 21
Other 896
-----------
Total expenses before reimbursement 245,275
Reimbursement of expenses (Note 2) (141,971)
-----------
Total expenses after reimbursement 103,304
-----------
Investment income--net 802,181
-----------
Realized & Realized loss on investments--net (2,510,845)
Unrealized Change in unrealized appreciation/depreciation on investments--net 1,225,540
Gain (Loss) -----------
on Investments Net Decrease in Net Assets Resulting from Operations $ (483,124)
--Net (Notes ===========
1d & 3):
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the
For the Period
Six Months August 27,
Ended 1993++
January 31, to July 31,
Increase (Decrease) in Net Assets: 1995 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 802,181 $ 1,271,483
Realized loss on investments--net (2,510,845) (1,049,275)
Change in unrealized appreciation/depreciation on
investments--net 1,225,540 (1,154,512)
----------- -----------
Net decrease in net assets resulting from operations (483,124) (932,304)
----------- -----------
<PAGE>
Dividends & Investment income--net:
Distributions to Class A (157,086) (295,489)
Shareholders Class B (643,560) (975,994)
(Note 1f): Class C (1,509) --
Class D (26) --
In excess of realized gain on investments--net:
Class A -- (3,927)
Class B -- (14,505)
----------- -----------
Net decrease in net assets resulting from dividends and
distributions to shareholders (802,181) (1,289,915)
----------- -----------
Beneficial Net increase (decrease) in net assets derived from beneficial
Interest interest transactions (2,641,667) 34,776,732
Transactions ----------- -----------
(Note 4):
Net Assets: Total increase (decrease) in net assets (3,926,972) 32,554,513
Beginning of period 32,654,513 100,000
----------- -----------
End of period $28,727,541 $32,654,513
=========== ===========
<FN>
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
Financial Highlights
<CAPTION>
Class A Class B
For the For the For the For the
Six Period Six Period
The following per share data and ratios have been derived Months Aug. 27, Months Aug. 27,
from information provided in the financial statements. Ended 1993++ to Ended 1993++ to
Jan. 31, July 31, Jan. 31, July 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1995 1994
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.41 $ 10.00 $ 9.41 $ 10.00
Operating -------- -------- -------- --------
Performance: Investment income--net .25 .48 .23 .43
Realized and unrealized loss on investments--net (.34) (.58) (.34) (.58)
-------- -------- -------- --------
Total from investment operations (.09) (.10) (.11) (.15)
<PAGE> -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.25) (.48) (.23) (.43)
In excess of realized gain on investments--net -- (.01) -- (.01)
-------- -------- -------- --------
Total dividends and distributions (.25) (.49) (.23) (.44)
-------- -------- -------- --------
Net asset value, end of period $ 9.07 $ 9.41 $ 9.07 $ 9.41
======== ======== ======== ========
Total Investment Based on net asset value per share (0.82%)+++ (1.13%)+++ (1.07%)+++ (1.59%)+++
Return:** ======== ======== ======== ========
Ratios to Expenses, excluding distribution fees and net
Average of reimbursement .25%* .08%* .27%* .08%*
Net Assets: ======== ======== ======== ========
Expenses, net of reimbursement .25%* .08%* .77%* .58%*
======== ======== ======== ========
Expenses 1.19%* 1.30%* 1.71%* 1.80%*
======== ======== ======== ========
Investment income--net 5.68%* 5.26%* 5.19%* 4.75%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 4,135 $ 6,712 $ 24,321 $ 25,943
Data: ======== ======== ======== ========
Portfolio turnover 63.84% 52.88% 63.84% 52.88%
======== ======== ======== ========
<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 January 31, 1995
Increase (Decrease) in Net Asset Value: Class C Class D
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 9.02 $ 9.02
Operating ----------- -----------
Performance: Investment income--net .12 .14
Realized and unrealized gain on investments--net .06 .05
----------- -----------
Total from investment operations .18 .19
<PAGE> ----------- -----------
Less dividends:
Investment income--net (.12) (.14)
----------- -----------
Total dividends (.12) (.14)
----------- -----------
Net asset value, end of period $ 9.08 $ 9.07
=========== ===========
Total Investment Based on net asset value per share 2.09%+++ 2.17%+++
Return:** =========== ===========
Ratios to Expenses, excluding account maintenance and distribution fees
Average and net of reimbursement .35%* .33%*
Net Assets: =========== ===========
Expenses, net of reimbursement .95%* .40%*
=========== ===========
Expenses 1.80%* 1.31%*
=========== ===========
Investment income--net 5.22%* 5.75%*
=========== ===========
Supplemental Net assets, end of period (in thousands) $ 259 $ 12
Data: =========== ===========
Portfolio turnover 63.84% 63.84%
=========== ===========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Oregon 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. 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.
<PAGE>
* 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.
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 had 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.
<PAGE>
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays 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 six months ended January 31, 1995, FAM earned fees
of $83,564, all of which were voluntarily waived. FAM also
reimbursed the Fund for additional expenses of $58,407.
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% --
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.
<PAGE>
For the six-months ended January 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 $825 $6,425
Class D -- --
MLPF&S received contingent deferred sales charges of $52,708
relating to transactions in Class B Shares of beneficial interest
for the six months ended January 31, 1995.
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, MLPF&S, FDS, MLFD, and/or ML & Co.
NOTES TO FINANCIAL STATEMENTS (concluded)
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended January 31, 1995 were $17,525,770 and
$18,567,519, respectively.
Net realized and unrealized gains (losses) as of January 31, 1995
were as follows:
Realized Unrealized
Losses Gains
Long-term investments $(2,435,001) $ 71,028
Financial futures contracts (75,844) --
----------- -----------
Total $(2,510,845) $ 71,028
=========== ===========
As of January 31, 1995, net unrealized appreciation for Federal
income tax purposes aggregated $71,028, of which $541,763 related to
appreciated securities and $470,735 related to depreciated
securities. The aggregate cost of investments at January 31, 1995
for Federal income tax purposes was $28,466,231.
<PAGE>
4. Beneficial Interest Transactions:
Net increase (decrease) in net assets derived from beneficial
interest transactions was $(2,641,667) and $34,776,732 for the six
months ended January 31, 1995 and the year ended July 31, 1994,
respectively.
Transactions in shares of beneficial interest for each class were as
follows:
Class A Shares for the Six Dollar
Months Ended Jan. 31, 1995 Shares Amount
Shares sold 51,701 $ 461,427
Shares issued to shareholders
in reinvestment of dividends 9,884 88,217
----------- -----------
Total issued 61,585 549,644
Shares redeemed (319,107) (2,830,962)
----------- -----------
Net decrease (257,522) $(2,281,318)
=========== ===========
Class A Shares for the Period Dollar
Aug. 27, 1993++ to July 31, 1994 Shares Amount
Shares sold 798,207 $ 8,031,308
Shares issued to shareholders
in reinvestment of dividends
and distributions 18,709 182,974
----------- -----------
Total issued 816,916 8,214,282
Shares redeemed (108,407) (1,045,172)
----------- -----------
Net increase 708,509 $ 7,169,110
=========== ===========
[FN]
++Prior to August 27, 1993 (commencement of operations), the Fund
issued 5,000 shares to FAM for $50,000.
Class B Shares for the
Six Months Ended Dollar
January 31, 1995 Shares Amount
Shares sold 305,593 $ 2,759,509
Shares issued to shareholders
in reinvestment of dividends 37,646 335,577
----------- -----------
Total issued 343,239 3,095,086
Shares redeemed (419,582) (3,717,650)
----------- -----------
Net decrease (76,343) $ (622,564)
=========== ===========
<PAGE>
Class B Shares for the
Period August 27, 1993++ Dollar
to July 31, 1994 Shares Amount
Shares sold 2,895,412 $28,978,505
Shares issued to shareholders
in reinvestment of dividends
and distributions 54,074 528,427
----------- -----------
Total issued 2,949,486 29,506,932
Shares redeemed (196,818) (1,899,310)
----------- -----------
Net increase 2,752,668 $27,607,622
=========== ===========
[FN]
++Prior to August 27, 1993 (commencement of operations), the Fund
issued 5,000 shares to FAM for $50,000.
Class C Shares for the
Period October 21, 1994++ Dollar
to January 31, 1995 Shares Amount
Shares sold 28,454 $ 249,711
Shares issued to shareholders
in reinvestment of dividends 81 713
----------- -----------
Total issued 28,535 250,424
----------- -----------
Net increase 28,535 $ 250,424
=========== ===========
[FN]
++Commencement of Operations.
Class D Shares for the
Period October 21, 1994++ Dollar
to January 31, 1995 Shares Amount
Shares sold 1,320 $ 11,777
Shares issued to shareholders
in reinvestment of dividends 1 14
----------- -----------
Total issued 1,321 11,791
----------- -----------
Net increase 1,321 $ 11,791
=========== ===========
<PAGE>
[FN]
++Commencement of Operations.
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Kenneth S. Axelson, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Jerry Weiss, Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
