MERRILL LYNCH
OREGON
MUNICIPAL
BOND FUND
FUND LOGO
Semi-Annual Report
January 31, 1996
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.
<PAGE>
Merrill Lynch Oregon
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
TO OUR SHAREHOLDERS
Although the partial shutdown of the US Government curtailed the
release of most economic data in the latter part of the six-month
period ended January 31, 1996, it was nonetheless apparent that
gross domestic product (GDP) growth was losing momentum. Consumer
spending is barely growing, the industrial sector is at a virtual
standstill and, despite lower mortgage rates, there is little or no
pick-up in housing activity. With inflationary pressures subdued,
the Federal Reserve Board responded to the slowing economy by
continuing to modestly lower short-term interest rates.
Historically, it has taken some time for shifts in monetary policy
to have an impact on economic growth. Therefore, the Federal Reserve
Board's gradual shift to lowering interest rates, which began early
last year, may not be reflected in a pick-up in real economic growth
until later this year.
<PAGE>
The impasse between the Clinton Administration and Congress over the
Federal budget continues, although both sides have made concessions
since the debate began. It appears that investors are currently
focusing on the progress that has been made rather than on the
differences that remain. Initially, President Clinton proposed
deficits of about $190 billion annually through fiscal year 2002,
but now proposes balanced budgets, as do the Republicans. Current
indications are that a piecemeal budget accord is the most likely
outcome. Even without the proposed policy changes, it appears that
the US Federal budget deficit would remain stable at about 2% of GDP
for the rest of the decade. This would be far better than is the
case for most Group of Seven industrial nations, and for the United
States would represent a great improvement over the last 15 years.
Although this may fall short of investors' best expectations, it
appears that the Federal budget debate over the past year has
resulted in a trend toward a more conservative fiscal policy.
The Municipal Market
The municipal bond market rallied strongly during the six months
ended January 31, 1996. Long-term, tax-exempt revenue bond yields,
as measured by the Bond Buyer Revenue Bond Index, declined over 65
basis points (0.65%) to end the January period at 5.69%. Continued
weak economic conditions coupled with low inflation fostered a very
positive environment for almost all fixed-income investments during
the last three months of 1995. Long-term US Treasury bond yields
also declined approximately 65 basis points to 6.00% by January 31,
1996. Both US Treasury and long-term tax-exempt bond yields are near
their lowest levels in the past two years.
The municipal bond market had to contend with a number of
difficulties for much of 1995. Various tax reform proposals have
made the future tax advantage of municipal bonds uncertain. This
has, at a minimum, reduced the overall demand for tax-exempt
securities. At the same time, as municipal bond yields declined, tax-
exempt authorities have rushed to issue debt at near historic low
yield levels. During the six-month period ended January 31, 1996,
approximately $90 billion in municipal securities were underwritten,
an increase of over 30% compared to the same period last year.
However, as early 1995 issuance was significantly reduced, the last
12 months issuance of approximately $160 billion remained the same
as that issued a year earlier. Tax-exempt bond yields declined
throughout the six months ended January 31, 1996, despite investor
uncertainty and increased supply pressures.
<PAGE>
It is likely that the municipal market will regain much of the
technical support it enjoyed earlier in 1995. 1995 issuance remained
significantly below levels underwritten in 1993, when over $290
billion in long-term tax-exempt securities were issued. Also,
municipal investors received over $25 billion in bond maturities,
coupon income and early redemptions on January 1, 1996. This $25
billion is almost twice the average monthly issuance for 1995. The
amount of outstanding municipal securities will continue to decline
throughout 1996 and into early 1997. As the uncertainties
surrounding proposed tax reforms are resolved in 1996, the tax-
exempt bond market's renewed technical position should provide
support to municipal bond prices.
Many of the features that made tax-exempt products attractive to
investors last year are still in place. Long-term, A-rated municipal
revenue bonds continue to yield well over 90% of comparable US
Treasury bond yields. Historically, analysts have considered yields
in excess of 82% attractive for long-term investors. For example,
currently available tax-exempt bond yields generate taxable
equivalent yields in excess of 8.50% for an investor in the 36%
Federal income tax bracket. While the uncertainties regarding
potential changes in current tax law remain, it appears that, at
current price levels, bond investors have discounted at least some
of the uncertainty.
Looking ahead, it may be unreasonable to expect to duplicate the
double-digit returns produced by most tax-exempt issues in 1995,
given current municipal bond yields. Municipal bond yields would
have to decline to levels not seen since the 1960s in order to
generate such significant returns in the coming years. While the
current economic environment may still justify additional declines
in interest rates, it may be prudent to expect some period of
consolidation before the interest rate decline resumes. Tax-exempt
bond market performance in 1996 is likely to be generated more by
enhancing current income and limiting credit risk than by
significant interest rate declines.
Portfolio Strategy
We started the six-month period ended January 31, 1996 neutral on
the interest rate outlook. The economy seemed to be turning around;
the housing market started showing strength; retail sales were
exhibiting strong momentum; and the Federal Reserve Board began
easing monetary policy to spur what was believed to be a weak
economy. We focused on seeking to enhance tax-exempt income while
minimizing interest rate risk exposure. This strategy protected the
Fund from increased volatility while maintaining a competitive
yield.
By the end of September, we became more constructive on the interest
rate outlook in response to signs that the resurgent economy was
weakening and the risk of rising inflation subsiding. The strength
in housing and retail sales proved to be temporary and began
slipping going into the fourth quarter of 1995. Perception at this
time was that the easing of short-term interest rates initiated by
the Federal Reserve Board was not aggressive enough to stimulate the
economy. We started extending the Fund's duration by purchasing
bonds with greater price sensitivity to declining interest rates to
seek to enhance total return to our shareholders.
<PAGE>
This strategy proved very successful as we realized an attractive
total return while providing a competitive yield to our
shareholders. Looking ahead, we continue to be constructive on the
interest rate outlook. We maintained the Fund's cash reserves under
5% of net assets enabling the Fund to fully participate in the
expected continuing trend of lower tax-exempt interest rates.
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.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President
(Robert A. DiMella)
Robert A. DiMella
Portfolio Manager
March 15, 1996
<PAGE>
We are pleased to announce that Robert A. DiMella is responsible for
the day-to-day management of Merrill Lynch Oregon Municipal Bond
Fund. Mr. DiMella has been employed by Merrill Lynch Asset
Management, L.P. (an affiliate of the Fund's investment adviser)
since 1995 as Assistant Vice President and was Assistant Portfolio
Manager thereof from 1993 to 1995. Prior thereto, he was Assistant
Portfolio Manager with Prudential Investment Advisors from 1992 to
1993, and was a Research Assistant with Prudential Investment
Corporation from 1989 to 1992.
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.
* 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. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<PAGE>
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
1/31/96 10/31/95 1/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $9.80 $9.58 $9.07 + 8.05% +2.30%
Class B Shares* 9.80 9.58 9.07 + 8.05 +2.30
Class C Shares* 9.81 9.58 9.08 + 8.04 +2.40
Class D Shares* 9.80 9.57 9.07 + 8.05 +2.40
Class A Shares--Total Return* +13.74(1) +3.59(2)
Class B Shares--Total Return* +13.17(3) +3.46(4)
Class C Shares--Total Return* +13.05(5) +3.54(6)
Class D Shares--Total Return* +13.63(7) +3.68(8)
Class A Shares--Standardized 30-day Yield 4.63%
Class B Shares--Standardized 30-day Yield 4.32%
Class C Shares--Standardized 30-day Yield 4.22%
Class D Shares--Standardized 30-day Yield 4.54%
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
(1)Percent change includes reinvestment of $0.488 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.123 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.440 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.111 per share ordinary
income dividends.
(5)Percent change includes reinvestment of $0.431 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.109 per share ordinary
income dividends.
(7)Percent change includes reinvestment of $0.479 per share ordinary
income dividends.
(8)Percent change includes reinvestment of $0.121 per share ordinary
income dividends.
</TABLE>
PERFORMANCE DATA (continued)
<PAGE>
<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
1995 8.77 9.80 -- 0.489 +17.69
1/1/96--1/31/96 9.80 9.80 -- 0.029 + 0.40
------
Total $1.218
Cumulative total return as of 1/31/96: +11.54%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <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
1995 8.77 9.80 -- 0.441 +17.10
1/1/96--1/31/96 9.80 9.80 -- 0.026 + 0.37
------
Total $1.102
Cumulative total return as of 1/31/96: +10.18%**
<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>
<PAGE>
<TABLE>
Performance Summary--Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $9.02 $8.78 -- $0.087 - 1.68%
1995 8.78 9.81 -- 0.432 +16.96
1/1/96--1/31/96 9.81 9.81 -- 0.026 + 0.36
------
Total $0.545
Cumulative total return as of 1/31/96: +15.41%**
<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)
<TABLE>
Performance Summary--Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $9.02 $8.77 -- $0.100 - 1.65%
1995 8.77 9.80 -- 0.480 +17.58
1/1/96--1/31/96 9.80 9.80 -- 0.028 + 0.39
------
Total $0.608
Cumulative total return as of 1/31/96: +16.10%**
<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>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/95 +17.69% +12.98%
Inception (8/27/93)
through 12/31/95 + 4.59 + 2.78
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/95 +17.10% +13.10%
Inception (8/27/93)
through 12/31/95 + 4.06 + 3.26
[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 12/31/95 +16.96% +15.96%
Inception (10/21/94)
through 12/31/95 +12.41 +12.41
[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*
<PAGE>
Year Ended 12/31/95 +17.58% +12.87%
Inception (10/21/94)
through 12/31/95 +12.94 + 9.14
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
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)
GO General Obligation Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
S/F Single-Family
STRIPES Short-Term Inverse Payment Exempt Securities
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Oregon--87.4%
<S> <S> <C> <S> <C>
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 $ 1,076
AAA Aaa 1,165 Lincoln County, Oregon, School District, UT, 5.25% due 6/15/2012 (e) 1,183
Marion County, Oregon, School District No. 103C (Woodburn), Series B (e):
AAA Aaa 3,000 5.45%* due 11/01/2011 1,312
AAA Aaa 1,500 5.70%* due 11/01/2012 617
AAA Aaa 2,280 Marion County, Oregon, Union High School District No. 007J (Silverton), UT,
7% due 6/01/2010 (c) 2,641
<PAGE>
AAA Aaa 1,500 McMinnville, Oregon, Sewer System Revenue Bonds, Series A, 5% due
2/01/2014 (e) 1,470
A1 VMIG1++ 1,100 Medford, Oregon, Hospital Facilities Authority Revenue Bonds (Gross-
Rogue Valley Health Services), VRDN, 3.60% due 10/01/2016 (a) 1,100
AAA Aaa 1,215 Morrow County, Oregon, School District No. 001, UT, 6% due 6/01/2007 (b) 1,365
A- NR** 1,250 Multnomah County, Oregon, Educational Facilities Revenue Bonds
(University of Portland Project), 6% due 4/01/2014 1,310
AA- Aa 500 Multnomah County, Oregon, School District No. 1J (Portland), UT,
4.25% due 6/01/2003 499
Oregon Health Sciences, University Revenue Bonds, Series A (b):
AAA Aaa 1,665 5.65%* due 7/01/2014 616
AAA Aaa 2,575 5.65%* due 7/01/2015 907
AA- Aa 1,000 Oregon State Higher Education Building Improvement Bonds, UT, Series A,
6.45% due 8/01/2024 1,094
</TABLE>
<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>
Oregon State Housing and Community Services Department, Mortgage
Revenue Bonds (S/F Mortgage Program):
NR** Aa $1,430 AMT, Series C, 6.40% due 7/01/2026 $ 1,484
NR** Aa 500 Refunding, Series A, 6.40% due 7/01/2018 522
NR** Aa 1,050 Series B, 6.875% due 7/01/2028 1,128
AA- Aa 1,475 Oregon State Veterans Welfare Revenue Bonds, Series 75, 5.85% due
10/01/2015 1,523
AAA Aaa 1,000 Port of Portland International Airport Revenue Bonds (Portland
International Airport), AMT, Series 7-B, 7.10% due 7/01/2021 (b) 1,117
A1+ A3 100 Port Saint Helens, Oregon, PCR (Portland General Electric Company Project),
VRDN, AMT, Series A, 4% due 8/01/2014 (a) 100
NR** NR** 1,000 Portland, Oregon, Housing Authority, M/F Housing Revenue Bonds (Riverwood
Project), 6% due 1/01/2019 1,003
<PAGE>
A+ A1 1,500 Portland, Oregon, Sewer System Revenue Bonds, Series A, 6.25% due 6/01/2015 1,602
NR** A 1,000 Salem, Oregon, Educational Facilities Revenue Refunding Bonds (Willamette
University Projects), 6.10% due 4/01/2014 1,054
AAA Aaa 1,000 Tillamook County, Oregon, GO, UT, 6.25% due 1/01/2014 (e) 1,092
AAA Aaa 1,130 Yamhill County, Oregon, School District No. 029J (Newberg), UT, 6.875%
due 6/01/2007 (c) 1,312
Puerto Rico--12.1%
AAA Aaa 2,720 Puerto Rico Commonwealth, UT, 7% due 7/01/2010 (d) 3,309
AAA Aaa 400 Puerto Rico Electric Power Authority, Power Revenue Bonds, STRIPES,
Series T, 7.571% due 7/01/2005 (c)(f) 463
Total Investments (Cost--$28,872)--99.5% 30,899
Other Assets Less Liabilities--0.5% 148
-------
Net Assets--100.0% $31,047
=======
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at January 31, 1996.
(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 rates. The interest rate shown is the
rate in effect at January 31, 1996.
*Represents a zero coupon bond; the interest rate shown is the
effective yield at the time of purchase by the Fund.
**Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<PAGE>
<TABLE>
Statement of Assets and Liabilities as of January 31, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$28,872,456) (Note 1a) $ 30,898,758
Cash 19,226
Receivables:
Interest $ 324,596
Beneficial interest sold 38,214
Investment adviser (Note 2) 15,008 377,818
------------
Deferred organization expenses (Note 1e) 23,884
Prepaid registration fees and other assets (Note 1e) 40,694
------------
Total assets 31,360,380
------------
Liabilities: Payables:
Beneficial interest redeemed 163,145
Dividends to shareholders (Note 1f) 36,010
Distributor (Note 2) 10,952 210,107
------------
Accrued expenses and other liabilities 103,635
------------
Total liabilities 313,742
------------
Net Assets: Net assets $ 31,046,638
------------
Net Assets Class A Shares of beneficial interest, $.10 par value,
Consist of: unlimited number of shares authorized $ 45,377
Class B Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 255,605
Class C Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 13,829
Class D Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 1,943
Paid-in capital in excess of par 31,844,101
Accumulated realized capital losses on investments--net (Note 5) (3,122,087)
Accumulated distributions in excess of realized capital
gains--net (18,432)
Unrealized appreciation on investments--net 2,026,302
------------
Net assets $ 31,046,638
============
Net Asset Value: Class A--Based on net assets of $4,447,238 and 453,773 shares
of beneficial interest outstanding $ 9.80
============
Class B--Based on net assets of $25,052,734 and 2,556,053
shares of beneficial interest outstanding $ 9.80
============
Class C--Based on net assets of $1,356,343 and 138,288 shares
of beneficial interest outstanding $ 9.81
============
Class D--Based on net assets of $190,323 and 19,429 shares
of beneficial interest outstanding $ 9.80
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORAMTION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended January 31, 1996
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 872,489
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 87,259
Account maintenance and distribution fees--Class B (Note 2) 64,773
Professional fees 28,868
Accounting services (Note 2) 28,400
Registration fees (Note 1e) 10,778
Printing and shareholder reports 10,031
Transfer agent fees--Class B (Note 2) 8,423
Amortization of organization expenses (Note 1e) 4,030
Account maintenance and distribution fees--Class C (Note 2) 3,553
Custodian fees 1,895
Transfer agent fees--Class A (Note 2) 1,228
Trustees' fees and expenses 852
Pricing fees 775
Transfer agent fees--Class C (Note 2) 384
Account maintenance fees--Class D (Note 2) 96
Transfer agent fees--Class D (Note 2) 54
------------
Total expenses before reimbursement 251,399
Reimbursement of expenses (Note 2) (111,583)
------------
Total expenses after reimbursement 139,816
------------
Investment income--net 732,673
------------
<PAGE>
Realized & Realized gain on investments--net 305,966
Unrealized Change in unrealized appreciation on investments--net 1,029,440
Gain on ------------
Investments Net Increase in Net Assets Resulting from Operations $ 2,068,079
- --Net (Notes ============
1b, 1d & 3):
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: Jan. 31, 1996 July 31, 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 732,673 $ 1,546,572
Realized gain (loss) on investments--net 305,966 (2,378,778)
Change in unrealized appreciation/depreciation on investments--net 1,029,440 2,151,374
------------ ------------
Net increase in net assets resulting from operations 2,068,079 1,319,168
------------ ------------
Dividends to Investment income--net:
Shareholders Class A (112,397) (270,715)
(Note 1f): Class B (589,084) (1,258,134)
Class C (26,392) (14,460)
Class D (4,800) (3,263)
------------ ------------
Net decrease in net assets resulting from dividends to shareholders (732,673) (1,546,572)
------------ ------------
Beneficial Net decrease in net assets derived from beneficial
Interest interest transactions (1,523,233) (1,192,644)
Transactions ------------ ------------
(Note 4):
Net Assets: Total decrease in net assets (187,827) (1,420,048)
Beginning of period 31,234,465 32,654,513
------------ ------------
End of period $ 31,046,638 $ 31,234,465
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<PAGE>
<TABLE>
Financial Highlights
<CAPTION>
Class A Class B
For the For the For the For the
Six For the Period Six For the Period
The following per share data and ratios have been derived Months Year Aug. 27, Months Year Aug. 27,
from information provided in the financial statements. Ended Ended 1993++ to Ended Ended 1993++ to
Jan. 31, July 31, July 31, Jan. 31, July 31, July 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1994 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 9.40 $ 9.41 $ 10.00 $ 9.40 $ 9.41 $ 10.00
Performance: ------- ------- ------- ------- ------- -------
Investment income--net .24 .50 .48 .22 .45 .43
Realized and unrealized gain
(loss) on investments--net .40 (.01) (.58) .40 (.01) (.58)
------- ------- ------- ------- ------- -------
Total from investment operations .64 .49 (.10) .62 .44 (.15)
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Investment income--net (.24) (.50) (.48) (.22) (.45) (.43)
In excess of realized gain on
investments--net -- -- (.01) -- -- (.01)
------- ------- ------- ------- ------- -------
Total dividends and distributions (.24) (.50) (.49) (.22) (.45) (.44)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 9.80 $ 9.40 $ 9.41 $ 9.80 $ 9.40 $ 9.41
======= ======= ======= ======= ======= =======
Total Investment Based on net asset value per share 6.89%+++ 5.54% (1.13%)+++ 6.62%+++ 5.00% (1.59%)+++
Return:** ======= ======= ======= ======= ======= =======
Ratios to Expenses, net of reimbursement .44%* .31% .08%* .95%* .84% .58%*
Average ======= ======= ======= ======= ======= =======
Net Assets: Expenses 1.14%* 1.23% 1.30%* 1.65%* 1.75% 1.80%*
======= ======= ======= ======= ======= =======
Investment income--net 5.04%* 5.51% 5.26%* 4.53%* 4.99% 4.75%*
======= ======= ======= ======= ======= =======
Supplemental Net assets, end of period
Data: (in thousands) $ 4,447 $ 4,332 $ 6,712 $25,053 $25,861 $25,943
======= ======= ======= ======= ======= =======
Portfolio turnover 64.01% 142.77% 52.88% 64.01% 142.77% 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>
<PAGE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class C Class D
For the For the For the For the
Six Period Six Period
The following per share data and ratios have been derived Months Oct. 21, Months Oct. 21,
from information provided in the financial statements. Ended 1994++ to Ended 1994++ to
Jan. 31, July 31, Jan. 31, July 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1996 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.40 $ 9.02 $ 9.39 $ 9.02
Operating -------- -------- -------- --------
Performance: Investment income--net .21 .34 .24 .38
Realized and unrealized gain on investments--net .41 .38 .41 .37
-------- -------- -------- --------
Total from investment operations .62 .72 .65 .75
-------- -------- -------- --------
Less dividends from investment income--net (.21) (.34) (.24) (.38)
-------- -------- -------- --------
Net asset value, end of period $ 9.81 $ 9.40 $ 9.80 $ 9.39
======== ======== ======== ========
Total Investment Based on net asset value per share 6.68%+++ 8.19%+++ 6.95%+++ 8.55%+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement 1.05%* 1.00%* .54%* .51%*
Net Assets: ======== ======== ======== ========
Expenses 1.75%* 1.88%* 1.25%* 1.39%*
======== ======== ======== ========
Investment income--net 4.44%* 4.68%* 4.96%* 5.12%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 1,357 $ 853 $ 190 $ 188
Data: ======== ======== ======== ========
Portfolio turnover 64.01% 142.77% 64.01% 142.77%
======== ======== ======== ========
<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.
<PAGE>
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell interest
rate futures contracts and options on such futures contracts for the
purpose of hedging the market risk on existing securities or the
intended purchase of securities. Futures contracts are contracts for
delayed delivery of securities at a specific future date and at a
specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Deferred organization expenses and prepaid registration fees--
Deferred organization expenses are charged to expense on a straight-
line basis over a five-year period. Prepaid registration fees are
charged to expense as the related shares are issued.
(f) Dividends and distributions--Dividends from net investment
income are declared daily and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates.
<PAGE>
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee based upon the average daily
value of the Fund's net assets at the following annual rates: 0.55%
of the Fund's average daily net assets not exceeding $500 million;
0.525% of average daily net assets in excess of $500 million but not
exceeding $1 billion; and 0.50% of average daily net assets in
excess of $1 billion. The Investment Advisory Agreement obligates
FAM to reimburse the Fund to the extent the Fund's expenses
(excluding interest, taxes, distribution fees, brokerage fees and
commissions, and extraordinary items) exceed 2.5% of the Fund's
first $30 million of average daily net assets, 2.0% of the next $70
million of average daily net assets, and 1.5% of the average daily
net assets in excess thereof. FAM's obligation to reimburse the Fund
is limited to the amount of the management fee. No fee payment will
be made to FAM 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, 1996, FAM earned fees of $87,259, all of
which was voluntarily waived. FAM also reimbursed the Fund
additional expenses of $24,324.
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
Maintenance Distribution
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, 1996, 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 $170 $1,100
Class D $ 18 $ 281
For the six months ended January 31, 1996, MLPF&S received
contingent deferred sales charges of $58,920 and $240 relating to
transactions in Class B and Class C Shares, respectively.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, PSI, MLPF&S, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended January 31, 1996 were $20,637,919 and
$18,856,524, respectively.
Net realized and unrealized gains as of January 31, 1996 were as
follows:
Realized Unrealized
Gains Gains
Long-term investments $ 305,966 $ 2,026,302
------------ ------------
Total $ 305,966 $ 2,026,302
============ ============
As of January 31, 1996, net unrealized appreciation for Federal
income tax purposes aggregated $2,026,302, all of which related to
appreciated securities. The aggregate cost of investments at January
31, 1996 for Federal income tax purposes was $28,872,456.
<PAGE>
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest
transactions was $1,523,233 and $1,192,644 for the six months ended
January 31, 1996 and the year ended July 31, 1995, respectively.
Transactions in shares of beneficial interest for each class were as
follows:
Class A Shares for the
Six Months Ended Dollar
January 31, 1996 Shares Amount
Shares sold 18,073 $ 172,514
Shares issued to shareholders
in reinvestment of dividends 7,645 73,287
----------- ------------
Total issued 25,718 245,801
Shares redeemed (32,956) (317,617)
----------- ------------
Net decrease (7,238) $ (71,816)
=========== ============
Class A Shares for the
Year Ended Dollar
July 31, 1995 Shares Amount
Shares sold 65,606 $ 590,520
Shares issued to shareholders
in reinvestment of dividends 18,358 167,505
----------- ------------
Total issued 83,964 758,025
Shares redeemed (336,462) (2,993,389)
----------- ------------
Net decrease (252,498) $ (2,235,364)
=========== ============
<PAGE>
Class B Shares for the
Six Months Ended Dollar
January 31, 1996 Shares Amount
Shares sold 221,752 $ 2,121,128
Shares issued to shareholders
in reinvestment of dividends 30,681 294,088
----------- ------------
Total issued 252,433 2,415,216
Shares redeemed (448,668) (4,312,353)
----------- ------------
Net decrease (196,235) $ (1,897,137)
=========== ============
Class B Shares for the
Year Ended Dollar
July 31, 1995 Shares Amount
Shares sold 579,985 $ 5,316,243
Shares issued to shareholders
in reinvestment of dividends 73,142 667,752
----------- ------------
Total issued 653,127 5,983,995
Shares redeemed (658,507) (5,958,286)
----------- ------------
Net increase (decrease) (5,380) $ 25,709
=========== ============
Class C Shares for the
Six Months Ended Dollar
January 31, 1996 Shares Amount
Shares sold 51,391 $ 488,294
Shares issued to shareholders
in reinvestment of dividends 1,722 16,573
----------- ------------
Total issued 53,113 504,867
Shares redeemed (5,565) (53,276)
----------- ------------
Net increase 47,548 $ 451,591
=========== ============
Class C Shares for the Period
October 21, 1994++ to Dollar
July 31, 1995 Shares Amount
Shares sold 94,204 $ 863,629
Shares issued to shareholders
in reinvestment of dividends 883 8,240
----------- ------------
Total issued 95,087 871,869
Shares redeemed (4,347) (41,198)
----------- ------------
Net increase 90,740 $ 830,671
=========== ============
[FN]
++Commencement of Operations.
<PAGE>
Class D Shares for the
Six Months Ended Dollar
January 31, 1996 Shares Amount
Shares sold 2,068 $ 19,581
Shares issued to shareholders
in reinvestment of dividends 147 1,415
----------- ------------
Total issued 2,215 20,996
Shares redeemed (2,818) (26,867)
----------- ------------
Net decrease (603) $ (5,871)
=========== ============
Class D Shares for the Period
October 21, 1994++ Dollar
to July 31, 1995 Shares Amount
Shares sold 23,942 $ 223,020
Shares issued to shareholders
in reinvestment of dividends 129 1,210
----------- ------------
Total issued 24,071 224,230
Shares redeemed (4,039) (37,890)
----------- ------------
Net increase 20,032 $ 186,340
=========== ============
[FN]
++Commencement of Operations.
5. Capital Loss Carryforward:
At July 31, 1995, the Fund had a capital loss carryforward of
approximately $1,691,000, all of which expires in 2003. This amount
will be available to offset like amounts of any future taxable gains.
<PAGE>
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Robert A. DiMella, Portfolio Manager
Gerald M. Richard, Treasurer
Jerry Weiss, Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
