MERRILL LYNCH
MUNICIPAL
INTERMEDIATE
TERM FUND
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
April 30, 2000
<PAGE>
MERRILL LYNCH MUNICIPAL INTERMEDIATE TERM FUND
Officers and
Trustees
Terry K. Glenn, President and Trustee
Ronald W. Forbes, Trustee
Cynthia A. Montgomery, Trustee
Charles C. Reilly, Trustee
Kevin A. Ryan, Trustee
Richard R. West, Trustee
Arthur Zeikel, Trustee
Vincent R. Giordano, Senior Vice President
William R. Bock, Vice President
Kenneth A. Jacob, Vice President
Donald C. Burke, Vice President and Treasurer
William E. Zitelli, Secretary
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
<PAGE>
Merrill Lynch Municipal Intermediate Term Fund, April 30, 2000
DEAR SHAREHOLDER
The Municipal Market Environment
From October 1999 through mid-January 2000, fixed-income bond yields rose
steadily higher. US economic growth, in part intensified by Year 2000
preparations, grew at a 7.3% rate in the fourth quarter of 1999 and at a 4.2%
annual rate for all of 1999. Initial estimates for the first quarter of 2000
were reported at 5.4%. However, despite these significant growth rates, no price
measure indicator has shown any considerable signs of future price pressures at
the consumer level, despite the lowest unemployment rates since January 1970.
Given no signs of an economic slowdown, the Federal Reserve Board continued to
raise short-term interest rates in November 1999 and again in February and March
2000. In each instance, the Federal Reserve Board cited both the continued
growth of US employment and the impressive strength of the US equity markets as
reasons for attempting to moderate US economic growth before inflationary price
increases are realized. By mid-January 2000, US Treasury bond yields rose 60
basis points (0.60%) to 6.75%. Similarly, as measured by the Bond Buyer Revenue
Bond Index, long-term tax-exempt bond yields rose approximately 20 basis points
to 6.35%.
Since mid-January, fixed-income markets have largely ignored strong economic
fundamentals and concentrated on positive technical supply factors. Declining
bond issuance, both current, and more importantly, expected future issuance,
helped push bond yields lower from mid-January to mid-April 2000. In late
January and early February 2000, the US Treasury announced its intention to
reduce the number of issues to be auctioned in the quarterly Treasury note and
bond auctions. Furthermore, budgetary surpluses would allow the US Treasury to
repurchase outstanding, higher-couponed Treasury issues, primarily in the
15-year and longer-term maturity sectors. Both these actions would result in a
significant reduction in the outstanding supply of long-term US Treasury debt.
Domestic and international investors quickly began to accumulate what was
expected to become a scarce commodity and bond prices quickly rose.
By mid-April 2000, US Treasury bond yields had declined over 100 basis points to
5.67%. However, bond yields rose somewhat during the last two weeks of the
period as economic statistics were released, indicating that the economic
strength seen in late 1999 was continuing into early 2000. The decline in
long-term US Treasury bond yields resulted in an inverted taxable yield curve as
short-term and intermediate-term interest rates have not fallen proportionately
since the Federal Reserve Board is expected to continue to raise short-term
interest rates. The current inversion has had much more to do with debt
reduction and Treasury buybacks than with investor expectations of slower
economic growth. Over the last six months, long-term US Treasury bond yields
have fallen almost 20 basis points to close the six-month period ended April 30,
2000 at 5.96%.
Tax-exempt bond yields have also declined in recent months. The decline has
largely been in response to the rally in US Treasury securities, as well as a
continued positive technical supply environment. States such as California and
Maryland have announced that their large current and anticipated future budget
surpluses will permit the cancellation or postponement of expected bond
issuance. Additionally, some issuers have also initiated tenders to repurchase
existing debt, reducing the supply of tax-exempt bonds in the secondary market
as well. Since their recent peak in January 2000, long-term municipal bond
yields declined over 25 basis points to finish the six-month period ended April
30, 2000 at 6.07%. During the last six months, municipal bond yields declined
just 10 basis points overall.
The relative underperformance of the municipal bond market in recent months has
been especially disappointing given the strong technical position the tax-exempt
bond market enjoyed. The issuance of long-term tax-exempt securities has
dramatically declined. Over the last year, $203 billion in new long-term
municipal securities was issued, a decline of almost 25% compared to the same
period a year earlier. For the six months ended April 30, 2000, approximately
$90 billion in new tax-exempt bonds was underwritten, a decline of more than 25%
compared to the same period in 1999. Although investors received over $30
billion in coupon payments, bond maturities and the proceeds from early bond
redemptions, coupled with the highest municipal bond yields in three years,
overall investor demand has diminished. Long-term municipal bond mutual funds
have seen consistent outflows in recent months as the yields of individual
securities have risen faster than those of larger, more diverse mutual funds.
Over the last four months, tax-exempt mutual funds have had net redemptions of
more than $8 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 favorable supply position, tax-exempt municipal bond yields have
underperformed their taxable counterparts.
Any significantly lower municipal bond yields are still likely to require weaker
US employment growth and consumer spending. The actions taken in recent months
by the Federal Reserve Board should eventually slow US economic growth. The
recent declines in US home sales are perhaps the first sign that consumer
spending is being slowed by higher interest rates. Until further signs develop,
it is likely that the municipal bond market's current favorable technical
position will dampen significant tax-exempt interest rate volatility and provide
a stable environment for eventual improvement in municipal bond prices.
Portfolio Strategy
During the six-month period ended April 30, 2000, we continued our investment
strategy of maintaining a fully invested position in seeking to enhance the
level of tax-exempt income while decreasing the net asset value volatility of
the Fund. We focused on purchasing premium couponed issues in the 6-year-10-year
maturity range and the sale of long duration bonds. Because of the recent
steepness in the tax-exempt yield curve, bonds in this maturity range capture
approximately 95% or more of the yield available in the 11-year-15-year maturity
range. This sector also provided the Fund with better downside protection with
respect to recent market volatility.
Looking ahead, we expect to maintain our fully invested position in an effort to
enhance shareholder income. Because tax-exempt bond yields are expected to
remain in a narrow range, we do not anticipate making any consequential changes
to the Fund, and we will continue to maintain our present investment strategy.
If either the US economy or equity markets display any major weakness, we may
adopt a more positive stance in order to enhance portfolio appreciation.
In Conclusion
We appreciate your ongoing interest in Merrill Lynch Municipal Intermediate Term
Fund, and we look forward to serving your investment needs in the months and
years to come.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Trustee
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ William R. Bock
William R. Bock
Vice President and
Portfolio Manager
May 31, 2000
2 & 3
<PAGE>
Merrill Lynch Municipal Intermediate Term Fund, April 30, 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:
o Class A Shares incur a maximum initial sales charge (front-end load) of 1%
and bear no ongoing distribution or account maintenance fees. Class A
Shares are available only to eligible investors.
o Class B Shares are subject to a maximum contingent deferred sales charge
of 1% if redeemed during the first year, decreasing 1% thereafter to 0%
after the first year. In addition, Class B Shares are subject to a
distribution fee of 0.10% and an account maintenance fee of 0.20%. These
shares automatically convert to Class D Shares after approximately 10
years. (There is no initial sales charge for automatic share conversions.)
o Class C Shares are subject to a distribution fee of 0.10% and an account
maintenance fee of 0.20%. In addition, Class C Shares are subject to a 1%
contingent deferred sales charge if redeemed within one year of purchase.
o Class D Shares incur a maximum initial sales charge of 1% 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.
Recent
Performance
Results*
<TABLE>
<CAPTION>
======================================================================================================================
Ten Years/
6 Month 12 Month Since Inception Standardized
As of April 30, 2000 Total Return Total Return Total Return 30-Day Yield
======================================================================================================================
<S> <C> <C> <C> <C>
ML Municipal Intermediate Term Fund Class A Shares +2.32% -0.97% +81.15% 4.52%
----------------------------------------------------------------------------------------------------------------------
ML Municipal Intermediate Term Fund Class B Shares +2.16 -1.18 +75.62 4.24
----------------------------------------------------------------------------------------------------------------------
ML Municipal Intermediate Term Fund Class C Shares +2.26 -1.19 +29.77 4.24
----------------------------------------------------------------------------------------------------------------------
ML Municipal Intermediate Term Fund Class D Shares +2.37 -0.97 +31.39 4.41
======================================================================================================================
</TABLE>
* 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 ten-year/since inception periods are
ten years for Class A & Class B Shares and from 10/21/94 for Class C &
Class D Shares.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 3/31/00 +0.05% -0.95%
--------------------------------------------------------------------------------
Five Years Ended 3/31/00 +5.11 +4.90
--------------------------------------------------------------------------------
Ten Years Ended 3/31/00 +6.13 +6.03
--------------------------------------------------------------------------------
* Maximum sales charge is 1%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 3/31/00 -0.37% -1.32%
--------------------------------------------------------------------------------
Five Years Ended 3/31/00 +4.76 +4.76
--------------------------------------------------------------------------------
Ten Years Ended 3/31/00 +5.80 +5.80
--------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after
1 year.
** Assuming payment of applicable contingent deferred sales charge.
================================================================================
% Return % Return
Without CDSC With CDSC**
================================================================================
Class C Shares*
================================================================================
Year Ended 3/31/00 -0.38% -1.33%
--------------------------------------------------------------------------------
Five Years Ended 3/31/00 +4.75 +4.75
--------------------------------------------------------------------------------
Inception (10/21/94) through 3/31/00 +5.02 +5.02
--------------------------------------------------------------------------------
* 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 3/31/00 -0.15% -1.15%
--------------------------------------------------------------------------------
Five Years Ended 3/31/00 +4.98 +4.77
--------------------------------------------------------------------------------
Inception (10/21/94) through 3/31/00 +5.26 +5.06
--------------------------------------------------------------------------------
* Maximum sales charge is 1%.
** Assuming maximum sales charge.
4 & 5
<PAGE>
Merrill Lynch Municipal Intermediate Term Fund, April 30, 2000
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
Alabama--1.6% A1 VMIG1+ $2,300 Columbia, Alabama, IDB, PCR, Refunding
(Alabama Power Company Project), VRDN, Series A,
5.40% due 5/01/2022 (a) $ 2,300
=======================================================================================================================
Alaska--1.6% AAA Aaa 2,250 Alaska Student Loan Corporation, Student Loan
Revenue Bonds, AMT, Series A, 5.65% due
7/01/2012 (b) 2,238
=======================================================================================================================
Arizona--1.4% NR* NR* 2,000 Mohave County, Arizona, IDA, IDR (North Star Steel
Company Project), AMT, 6.70% due 3/01/2020 2,021
=======================================================================================================================
California--17.4% AAA Aaa 5,000 California Educational Facilities Authority, Revenue
Refunding Bonds (Santa Clara University), 5.75% due
9/01/2006 (c)(g) 5,325
BBB+ Baa1 6,000 California Statewide Communities Development
Authority, COP (Catholic Healthcare West), 6%
due 7/01/2009 5,905
A+ Aa3 2,500 Los Angeles, California, Department of Water and
Power, Electric Plant Revenue Refunding Bonds,
5.90% due 2/15/2015 2,538
AAA Aaa 1,500 M-S-R Public Power Agency, California, Revenue
Bonds (San Juan Project), Series E, 6.50% due
7/01/2017 (c) 1,559
AAA Aaa 4,000 Oxnard, California, Financing Authority, Solid
Waste Revenue Bonds, AMT, 5.75% due
5/01/2010 (b) 4,107
AAA Aaa 5,000 Port Oakland, California, Revenue Bonds, AMT,
Series K, 5.75% due 11/01/2014 (d) 5,084
=======================================================================================================================
Colorado--2.8% AAA Aaa 3,935 Denver, Colorado, City and County Airport
Revenue Refunding Bonds, AMT, Series C,
5.60% due 11/15/2011 (c) 3,951
=======================================================================================================================
District of A1+ VMIG1+ 1,300 District of Columbia, GO, General Fund Recovery,
Columbia--4.4% VRDN, Series B-1, 6.10% due 6/01/2003 (a) 1,300
AAA Aaa 5,000 District of Columbia, GO, Refunding, Series B,
5.50% due 6/01/2013 (e) 4,954
=======================================================================================================================
Florida--2.4% AAA Aaa 2,000 Florida State Board of Education, Capital Outlay,
GO (Public Education), Series F,
6.0% due 6/01/2005 (g) 2,104
AA VMIG1+ 1,300 Hillsborough County, Florida, IDA, PCR, Refunding
(Tampa Electric Company Project), VRDN,
5.85% due 9/01/2025 (a) 1,300
=======================================================================================================================
Georgia--13.8% AAA Aaa 5,025 Atlanta, Georgia, Airport Revenue Refunding Bonds,
Series A, 5.75% due 1/01/2014 (d) 5,123
A1 VMIG1+ 4,800 Bartow County, Georgia, Development Authority,
PCR, Refunding (Georgia Power Company
Plant--Bowen Project), VRDN, 5.45% due
3/01/2024 (a) 4,800
A1 VMIG1+ 2,200 Burke County, Georgia, Development Authority,
PCR (Georgia Power Company Plant--Vogtle Project),
VRDN, Third Series, 6.10% due 7/01/2024 (a) 2,200
AAA Aaa 7,000 Georgia State, GO, Series D, 5.80% due 11/01/2007 7,316
=======================================================================================================================
Hawaii--3.7% AAA Aaa 5,000 Hawaii State, GO, Refunding, Series CO, 6% due
3/01/2009 (d) 5,244
=======================================================================================================================
Louisiana--0.7% A1+ VMIG1+ 1,000 Louisiana State Offshore Terminal Authority,
Deepwater Port Revenue Refunding Bonds
(1st Stage A--Loop Inc.), VRDN, 5.85% due
9/01/2008 (a) 1,000
=======================================================================================================================
Maine--1.8% NR* A 2,535 Maine Educational Loan Marketing Corporation,
Student Loan Revenue Refunding Bonds, AMT,
6.90% due 11/01/2003 2,588
=======================================================================================================================
Massachusetts--2.1% BB+ Baa3 3,000 Massachusetts State Port Authority Revenue Bonds
(United Airlines, Inc.), AMT, Series 1999A,
5.75% due 10/01/2029 2,979
=======================================================================================================================
Michigan--0.7% NR* A 1,000 Michigan Higher Education, Student Loan Revenue
Bonds, AMT, Series XIV-A, 6.75% due 10/01/2006 1,027
=======================================================================================================================
New Hampshire--2.5% A Baa3 3,580 Manchester, New Hampshire, Housing and
Redevelopment Authority Revenue Bonds, Series A,
6.05% due 1/01/2012 3,553
=======================================================================================================================
New Jersey--3.8% AAA Aaa 5,300 New Jersey State Turnpike Authority, Turnpike
Revenue Refunding Bonds, Series A,
5.50% due 1/01/2009 (c) 5,421
=======================================================================================================================
New York--12.8% AA Aa3 7,650 New York City, New York, City Transitional Finance
Authority, Revenue Refunding Bonds, Series C,
5.50% due 11/01/2009 7,786
AAA NR* 5,000 New York State Dormitory Authority, Revenue
Refunding Bonds (State University Educational
Facilities), Series 1989, 6% due 5/15/2013 (c) 5,244
AAA Aaa 5,000 Triborough Bridge and Tunnel Authority, New York
Special Obligation Revenue Refunding Bonds,
Series A, 6% due 1/01/2019 (c) 5,007
=======================================================================================================================
North Carolina--2.9% North Carolina Eastern Municipal Power Agency,
Power System Revenue Bonds, Series D:
BBB Baa3 2,350 6% due 1/01/2009 2,348
BBB Baa3 1,000 6.45% due 1/01/2014 1,008
Raleigh Durham, North Carolina, Airport Authority,
Special Facility Revenue Refunding Bonds
(American Airlines Inc.), VRDN (a):
A1+ NR* 200 Series A, 6.10% due 11/01/2015 200
A1+ NR* 550 Series B, 6.10% due 11/01/2015 550
=======================================================================================================================
Oregon--7.6% AAA Aaa 5,475 Oregon State Department of Administrative Services,
COP, Series A, 5.75% due 5/01/2011 (b) 5,674
AAA Aaa 5,000 Oregon State Department of Administrative Services,
Lottery Revenue Bonds, Series B,
5.75% due 4/01/2013 (e) 5,125
=======================================================================================================================
Pennsylvania--2.7% A1+ NR* 3,800 Schuylkill County, Pennsylvania, IDA, Resource
Recovery Revenue Refunding Bonds (Northeastern Power
Company), VRDN, Series A, 5.85% due 12/01/2022 (a) 3,800
=======================================================================================================================
</TABLE>
Portfolio Abbreviations
To simplify the listings of Merrill Lynch Municipal Intermediate Term Fund's
portfolio holdings in the Schedule of Investments, we have abbreviated the names
of many of the securities according to the list below and at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
GO General Obligation Bonds
HDA Housing Development Authority
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
RITES Residual Interest Tax-Exempt Securities
VRDN Variable Rate Demand Notes
6 & 7
<PAGE>
Merrill Lynch Municipal Intermediate Term Fund, April 30, 2000
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
Texas--0.9% A1+ NR* $1,300 Harris County, Texas, Health Facilities Development
Corporation, Hospital Revenue Refunding
Bonds (Methodist Hospital), VRDN, 5.40% due
12/01/2025 (a) $ 1,300
=======================================================================================================================
Virginia--1.0% AA+ Aa1 1,365 Virginia State, HDA, Commonwealth Mortgage
Revenue Bonds, Series J, Sub-Series J-2,
6.45% due 1/01/2010 1,426
=======================================================================================================================
Washington--11.2% AA Aa2 5,000 Seattle, Washington, Municipal Light and Power
Revenue Bonds, 6% due 10/01/2012 5,216
AA+ Aa1 5,000 Washington State, GO, Series B, 6% due 1/01/2012 5,212
AAA Aaa 5,250 Washington State Public Power Supply System,
Revenue Refunding Bonds (Nuclear Project No. 3),
Series A, 5.50% due 7/01/2007 (b) 5,305
=======================================================================================================================
Wisconsin--0.3% AA Aa2 335 Wisconsin Housing and Economic Development
Authority, Home Ownership Revenue Refunding
Bonds, AMT, Series F, 7.40% due 7/01/2013 347
=======================================================================================================================
Wyoming--1.7% A1+ NR* 2,400 Lincoln County, Wyoming, PCR (Exxon Project),
VRDN, 6.05% due 8/01/2015 (a) 2,400
=======================================================================================================================
Puerto Rico--2.8% A Baa1 3,950 Puerto Rico Commonwealth Highway and Transportation
Authority, Highway Revenue Refunding
Bonds, RITES, Series X, 5.697% due 7/01/2005 (f) 3,985
=======================================================================================================================
Total Investments (Cost--$147,602)--104.6% 147,870
Liabilities in Excess of Other Assets--(4.6%) (6,527)
--------
Net Assets--100.0% $141,343
========
=======================================================================================================================
</TABLE>
(a) The interest rate is subject to change periodically based upon prevailing
market rates. The interest rate shown is the rate in effect at April 30,
2000.
(b) AMBAC Insured.
(c) MBIA Insured.
(d) FGIC Insured.
(e) FSA 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 April 30, 2000.
(g) Prerefunded.
* Not Rated.
+ Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
As of April 30, 2000
============================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$147,602,264) ................... $147,870,214
Cash .................................................................... 154,610
Receivables:
Interest .............................................................. $ 1,949,596
Beneficial interest sold .............................................. 244,788 2,194,384
-----------
Prepaid registration fees and other assets .............................. 59,021
------------
Total assets ............................................................ 150,278,229
------------
============================================================================================================================
Liabilities: Payables:
Securities purchased .................................................. 7,899,306
Beneficial interest redeemed .......................................... 705,223
Dividends to shareholders ............................................. 105,958
Investment adviser .................................................... 61,019
Distributor ........................................................... 16,119 8,787,625
-----------
Accrued expenses and other liabilities .................................. 147,984
------------
Total liabilities ....................................................... 8,935,609
------------
============================================================================================================================
Net Assets: Net assets .............................................................. $141,342,620
============
============================================================================================================================
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited
Consist of: number of shares authorized ............................................. $ 510,055
Class B Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized ............................................. 530,600
Class C Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized ............................................. 40,174
Class D Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized ............................................. 367,545
Paid-in capital in excess of par ........................................ 143,014,114
Accumulated realized capital losses on investments--net ................. (982,298)
Accumulated distributions in excess of realized capital gains on
investments--net ........................................................ (2,405,520)
Unrealized appreciation on investments--net ............................. 267,950
------------
Net assets .............................................................. $141,342,620
============
============================================================================================================================
Net Asset Class A--Based on net assets of $49,782,260 and 5,100,550 shares
Value: of beneficial interest outstanding ...................................... $ 9.76
============
Class B--Based on net assets of $51,781,678 and 5,306,004 shares
of beneficial interest outstanding ...................................... $ 9.76
============
Class C--Based on net assets of $3,919,051 and 401,744 shares of
beneficial interest outstanding ......................................... $ 9.76
============
Class D--Based on net assets of $35,859,631 and 3,675,447 shares
of beneficial interest outstanding ...................................... $ 9.76
============
============================================================================================================================
</TABLE>
See Notes to Financial Statements.
8 & 9
<PAGE>
Merrill Lynch Municipal Intermediate Term Fund, April 30, 2000
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six Months Ended April 30, 2000
================================================================================================================
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned ...... $ 3,833,376
Income:
================================================================================================================
Expenses: Investment advisory fees ...................................... $ 402,431
Account maintenance and distribution fees--Class B ............ 79,377
Registration fees ............................................. 45,597
Professional fees ............................................. 36,292
Accounting services ........................................... 26,122
Transfer agent fees--Class B .................................. 25,589
Transfer agent fees--Class A .................................. 21,482
Account maintenance fees--Class D ............................. 18,610
Transfer agent fees--Class D .................................. 15,220
Printing and shareholder reports .............................. 13,677
Custodian fees ................................................ 8,064
Account maintenance and distribution fees--Class C ............ 5,443
Trustees' fees and expenses ................................... 4,947
Pricing fees .................................................. 4,194
Transfer agent fees--Class C .................................. 1,888
Other ......................................................... 4,608
---------
Total expenses ................................................ 713,541
-----------
Investment income--net ........................................ 3,119,835
-----------
================================================================================================================
Realized & Realized loss on investments--net ............................. (982,298)
Unrealized Change in unrealized appreciation/depreciation on
Gain (Loss) on investments--net ............................................ 1,291,957
Investments--Net: -----------
Net Increase in Net Assets Resulting from Operations .......... $ 3,429,494
===========
================================================================================================================
</TABLE>
See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 2000 1999
========================================================================================================================
<S> <C> <C> <C>
Operations: Investment income--net ...................................... $ 3,119,835 $ 7,030,037
Realized loss on investments--net ........................... (982,298) (2,049,930)
Change in unrealized appreciation/depreciation on
investments--net .......................................... 1,291,957 (9,040,599)
------------ ------------
Net increase (decrease) in net assets resulting from
operations ................................................ 3,429,494 (4,060,492)
------------ ------------
========================================================================================================================
Dividends & Investment income--net:
Distributions to Class A ................................................... (1,159,263) (2,740,214)
Shareholders: Class B ................................................... (1,084,133) (2,391,903)
Class C ................................................... (74,268) (143,019)
Class D ................................................... (802,171) (1,754,901)
Realized gain on investments--net:
Class A ................................................... -- (730,036)
Class B ................................................... -- (725,291)
Class C ................................................... -- (47,080)
Class D ................................................... -- (491,912)
In excess of realized gain on investments--net:
Class A ................................................... -- (880,561)
Class B ................................................... -- (874,836)
Class C ................................................... -- (56,786)
Class D ................................................... -- (593,337)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders ............................. (3,119,835) (11,429,876)
------------ ------------
========================================================================================================================
Beneficial Interest Net decrease in net assets derived from beneficial interest
Transactions: transactions .............................................. (14,325,891) (31,592,836)
------------ ------------
========================================================================================================================
Net Assets: Total decrease in net assets ................................ (14,016,232) (47,083,204)
Beginning of period ......................................... 155,358,852 202,442,056
------------ ------------
End of period ............................................... $141,342,620 $155,358,852
============ ============
========================================================================================================================
</TABLE>
See Notes to Financial Statements.
10 & 11
<PAGE>
Merrill Lynch Municipal Intermediate Term Fund, April 30, 2000
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended For the Year Ended October 31,
April 30, ------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ..................... $ 9.75 $ 10.60 $ 10.23 $ 9.94 $ 10.00
Operating -------- -------- -------- -------- --------
Performance: Investment income--net ................................... .21 .40 .43 .45 .48
Realized and unrealized gain (loss) on investments--net .. .01 (.62) .37 .29 (.06)
-------- -------- -------- -------- --------
Total from investment operations ......................... .22 (.22) .80 .74 .42
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net ................................. (.21) (.40) (.43) (.45) (.48)
Realized gain on investments--net ...................... -- (.10) -- -- --
In excess of realized gain on investments--net ......... -- (.13) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions ........................ (.21) (.63) (.43) (.45) (.48)
-------- -------- -------- -------- --------
Net asset value, end of period ........................... $ 9.76 $ 9.75 $ 10.60 $ 10.23 $ 9.94
======== ======== ======== ======== ========
==================================================================================================================================
Total Based on net asset value per share ....................... 2.32%+ (2.16%) 8.00% 7.59% 4.27%
Investment ======== ======== ======== ======== ========
Return:**
==================================================================================================================================
Ratios to Expenses ................................................. .83%* .80% .74% .79% .81%
Average ======== ======== ======== ======== ========
Net Assets: Investment income--net ................................... 4.40%* 3.97% 4.17% 4.40% 4.79%
======== ======== ======== ======== ========
==================================================================================================================================
Supplemental Net assets, end of period (in thousands) ................. $ 49,782 $ 58,635 $ 73,769 $ 71,684 $ 30,353
Data: ======== ======== ======== ======== ========
Portfolio turnover ....................................... 123.48% 159.37% 174.64% 167.41% 146.82%
======== ======== ======== ======== ========
==================================================================================================================================
<CAPTION>
Class B
--------------------------------------------------------
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended For the Year Ended October 31,
April 30, ------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ..................... $ 9.75 $ 10.60 $ 10.23 $ 9.93 $ 10.00
Operating -------- -------- -------- -------- --------
Performance: Investment income--net ................................... .20 .37 .40 .41 .44
Realized and unrealized gain (loss) on investments--net .. .01 (.62) .37 .30 (.07)
-------- -------- -------- -------- --------
Total from investment operations ......................... .21 (.25) .77 .71 .37
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net ................................. (.20) (.37) (.40) (.41) (.44)
Realized gain on investments--net ...................... -- (.10) -- -- --
In excess of realized gain on investments--net ......... -- (.13) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions ........................ (.20) (.60) (.40) (.41) (.44)
-------- -------- -------- -------- --------
Net asset value, end of period ........................... $ 9.76 $ 9.75 $ 10.60 $ 10.23 $ 9.93
======== ======== ======== ======== ========
==================================================================================================================================
Total Based on net asset value per share ....................... 2.16%+ (2.46%) 7.67% 7.35% 3.84%
Investment ======== ======== ======== ======== ========
Return:**
==================================================================================================================================
Ratios to Expenses ................................................. 1.14%* 1.11% 1.06% 1.11% 1.13%
Average ======== ======== ======== ======== ========
Net Assets: Investment income--net ................................... 4.09%* 3.65% 3.86% 4.13% 4.47%
======== ======== ======== ======== ========
==================================================================================================================================
Supplemental Net assets, end of period (in thousands) ................. $ 51,782 $ 54,559 $ 75,688 $ 94,552 $169,441
Data: ======== ======== ======== ======== ========
Portfolio turnover ....................................... 123.48% 159.37% 174.64% 167.41% 146.82%
======== ======== ======== ======== ========
==================================================================================================================================
<CAPTION>
Class C
--------------------------------------------------------
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended For the Year Ended October 31,
April 30, ------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ..................... $ 9.74 $ 10.60 $ 10.23 $ 9.93 $ 10.00
Operating -------- -------- -------- -------- --------
Performance: Investment income--net ................................... .20 .37 .40 .41 .44
Realized and unrealized gain (loss) on investments--net .. .02 (.63) .37 .30 (.07)
-------- -------- -------- -------- --------
Total from investment operations ......................... .22 (.26) .77 .71 .37
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net ................................. (.20) (.37) (.40) (.41) (.44)
Realized gain on investments--net ...................... -- (.10) -- -- --
In excess of realized gain on investments--net ......... -- (.13) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions ........................ (.20) (.60) (.40) (.41) (.44)
-------- -------- -------- -------- --------
Net asset value, end of period ........................... $ 9.76 $ 9.74 $ 10.60 $ 10.23 $ 9.93
======== ======== ======== ======== ========
==================================================================================================================================
Total Based on net asset value per share ....................... 2.26%+ (2.58%) 7.65% 7.34% 3.82%
Investment ======== ======== ======== ======== ========
Return:**
==================================================================================================================================
Ratios to Expenses ................................................. 1.15%* 1.12% 1.07% 1.13% 1.15%
Average ======== ======== ======== ======== ========
Net Assets: Investment income--net ................................... 4.08%* 3.64% 3.85% 4.10% 4.44%
======== ======== ======== ======== ========
==================================================================================================================================
Supplemental Net assets, end of period (in thousands) ................. $ 3,919 $ 3,275 $ 5,116 $ 6,110 $ 8,313
Data: ======== ======== ======== ======== ========
Portfolio turnover ....................................... 123.48% 159.37% 174.64% 167.41% 146.82%
======== ======== ======== ======== ========
==================================================================================================================================
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales
charges.
+ Aggregate total investment return.
See Notes to Financial Statements.
12 & 13
<PAGE>
Merrill Lynch Municipal Intermediate Term Fund, April 30, 2000
FINANCIAL HIGHLIGHTS (concluded)
<TABLE>
<CAPTION>
Class D
--------------------------------------------------------
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended For the Year Ended October 31,
April 30, ------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ..................... $ 9.74 $ 10.60 $ 10.23 $ 9.94 $ 10.00
Operating -------- -------- -------- -------- --------
Performance: Investment income--net ................................... .21 .39 .42 .44 .47
Realized and unrealized gain (loss) on investments--net .. .02 (.63) .37 .29 (.06)
-------- -------- -------- -------- --------
Total from investment operations ......................... .23 (.24) .79 .73 .41
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net ................................. (.21) (.39) (.42) (.44) (.47)
Realized gain on investments--net ...................... -- (.10) -- -- --
In excess of realized gain on investments--net ......... -- (.13) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions ........................ (.21) (.62) (.42) (.44) (.47)
-------- -------- -------- -------- --------
Net asset value, end of period ........................... $ 9.76 $ 9.74 $ 10.60 $ 10.23 $ 9.94
======== ======== ======== ======== ========
==================================================================================================================================
Total Based on net asset value per share ....................... 2.37%+ (2.35%) 7.90% 7.48% 4.17%
Investment ======== ======== ======== ======== ========
Return:**
==================================================================================================================================
Ratios to Expenses ................................................. .93%* .90% .84% .89% .91%
Average ======== ======== ======== ======== ========
Net Assets: Investment income--net ................................... 4.30%* 3.87% 4.07% 4.31% 4.68%
======== ======== ======== ======== ========
==================================================================================================================================
Supplemental Net assets, end of period (in thousands) ................. $ 35,860 $ 38,890 $ 47,869 $ 47,809 $ 8,375
Data: ======== ======== ======== ======== ========
Portfolio turnover ....................................... 123.48% 159.37% 174.64% 167.41% 146.82%
======== ======== ======== ======== ========
==================================================================================================================================
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales
charges.
+ Aggregate total investment return.
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Municipal Intermediate Term Fund (the "Fund") is presently the
only series of Merrill Lynch Municipal Series Trust (the "Trust"). The Fund is
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The Fund's financial statements are prepared in
accordance with accounting principles generally accepted in the United States of
America, 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 by the
Fund's pricing service from one or more dealers that make markets in the
securities. Financial futures contracts, which are traded on exchanges, are
valued at their last sale price as of the close of such exchanges. Options on
financial futures contracts on US Government securities, which are traded on
exchanges, are valued at their last bid price in the case of options purchased
and their last asked price in the case of options written. Short-term
investments with a remaining maturity 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 Fund, including valuations furnished by a pricing service retained by the
Fund, which may utilize a matrix system for valuations. The procedures of the
pricing service and its valuations are reviewed by the officers of the Fund
under the general supervision of the Board of Trustees.
(b) Derivative financial instruments--The Fund may engage in various portfolio
investment strategies to increase or decrease the level of risk to which the
Fund is exposed more quickly and efficiently than transactions in other types of
instruments. Losses may arise due to changes in the value of the contract or if
the counterparty does not perform under the contract.
o 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.
14 & 15
<PAGE>
Merrill Lynch Municipal Intermediate Term Fund, April 30, 2000
NOTES TO FINANCIAL STATEMENTS (continued)
(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) Prepaid registration fees--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 timing differences in book/tax recognition of realized losses.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Merrill Lynch
Asset Management, L.P. ("MLAM"). The general partner of MLAM 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 the "Distributor"), a division of Princeton Funds
Distributor, Inc. ("PFD"), which is a wholly-owned subsidiary of Merrill Lynch
Group, Inc.
MLAM 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 of
.55% on the average daily value of the Fund's net assets.
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 ................................. .20% .10%
Class C ................................. .20% .10%
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 April 30, 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 ........................................... $ 5 $ 68
Class D ........................................... $ 68 $ 610
--------------------------------------------------------------------------------
For the six months ended April 30, 2000, MLPF&S received contingent deferred
sales charges of $11,870 and $3 relating to transactions in Class B and Class C
Shares, respectively.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co., is
the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or trustees of the Fund are officers and/or directors of
MLAM, PSI, PFD, FDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended April 30, 2000, were $167,857,260 and $183,926,685, respectively.
Net realized losses for the six months ended April 30, 2000 and net unrealized
gains as of April 30, 2000, were as follows:
--------------------------------------------------------------------------------
Realized Unrealized
Losses Gains
--------------------------------------------------------------------------------
Long-term investments .......................... $ (982,298) $ 267,950
----------- -----------
Total .......................................... $ (982,298) $ 267,950
=========== ===========
--------------------------------------------------------------------------------
As of April 30, 2000, net unrealized appreciation for Federal income tax
purposes aggregated $267,950, of which $727,821 related to appreciated
securities and $459,871 related to depreciated securities. The aggregate cost of
investments at April 30, 2000 for Federal income tax purposes was $147,602,264.
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest transactions was
$14,325,891 and $31,592,836 for the six months ended April 30, 2000 and for the
year ended October 31, 1999, respectively.
Transactions in shares of beneficial interest for each class were as follows:
--------------------------------------------------------------------------------
Class A Shares for the Six Months Dollar
Ended April 30, 2000 Shares Amount
--------------------------------------------------------------------------------
Shares sold ............................ 699,214 $ 6,828,991
Shares issued to shareholders
in reinvestment of dividends ........... 81,708 799,748
----------- ------------
Total issued ........................... 780,922 7,628,739
Shares redeemed ........................ (1,695,417) (16,615,274)
----------- ------------
Net decrease ........................... (914,495) $ (8,986,535)
=========== ============
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended October 31, 1999 Shares Amount
--------------------------------------------------------------------------------
Shares sold ............................ 1,712,913 $ 17,636,576
Shares issued to shareholders
in reinvestment of dividends
and distributions ...................... 306,689 3,143,960
----------- ------------
Total issued ........................... 2,019,602 20,780,536
Shares redeemed ........................ (2,961,472) (30,092,122)
----------- ------------
Net decrease ........................... (941,870) $ (9,311,586)
=========== ============
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class B Shares for the Six Months Dollar
Ended April 30, 2000 Shares Amount
--------------------------------------------------------------------------------
Shares sold ............................ 1,054,714 $ 10,271,100
Shares issued to shareholders
in reinvestment of dividends ........... 70,436 689,545
----------- ------------
Total issued ........................... 1,125,150 10,960,645
Automatic conversion of shares ......... (99,549) (974,346)
Shares redeemed ........................ (1,317,130) (12,878,596)
----------- ------------
Net decrease ........................... (291,529) $ (2,892,297)
=========== ============
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended October 31, 1999 Shares Amount
--------------------------------------------------------------------------------
Shares sold ............................ 802,474 $ 8,254,703
Shares issued to shareholders
in reinvestment of dividends
and distributions ...................... 254,818 2,615,325
----------- ------------
Total issued ........................... 1,057,292 10,870,028
Automatic conversion of shares ......... (137,966) (1,398,296)
Shares redeemed ........................ (2,460,606) (25,100,577)
----------- ------------
Net decrease ........................... (1,541,280) $(15,628,845)
=========== ============
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class C Shares for the Six Months Dollar
Ended April 30, 2000 Shares Amount
--------------------------------------------------------------------------------
Shares sold .............................. 196,268 $ 1,914,748
Shares issued to shareholders
in reinvestment of dividends ............. 6,332 61,978
----------- ------------
Total issued ............................. 202,600 1,976,726
Shares redeemed .......................... (137,022) (1,343,786)
----------- ------------
Net increase ............................. 65,578 $ 632,940
=========== ============
--------------------------------------------------------------------------------
16 & 17
<PAGE>
Merrill Lynch Municipal Intermediate Term Fund, April 30, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
--------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended October 31, 1999 Shares Amount
--------------------------------------------------------------------------------
Shares sold .............................. 92,988 $ 942,941
Shares issued to shareholders
in reinvestment of dividends
and distributions ........................ 18,330 188,016
----------- ------------
Total issued ............................. 111,318 1,130,957
Shares redeemed .......................... (257,964) (2,639,330)
----------- ------------
Net decrease ............................. (146,646) $ (1,508,373)
=========== ============
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class D Shares for the Six Months Dollar
Ended April 30, 2000 Shares Amount
--------------------------------------------------------------------------------
Shares sold .............................. 395,191 $ 3,875,728
Shares issued to shareholders
in reinvestment of dividends ............. 40,251 393,815
Automatic conversion of shares ........... 99,575 974,346
----------- ------------
Total issued ............................. 535,017 5,243,889
Shares redeemed .......................... (850,422) (8,323,888)
----------- ------------
Net decrease ............................. (315,405) $ (3,079,999)
=========== ============
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended October 31, 1999 Shares Amount
--------------------------------------------------------------------------------
Shares sold ............................ 489,473 $ 5,089,465
Shares issued to shareholders
in reinvestment of dividends
and distributions ...................... 131,541 1,348,494
Automatic conversion of shares ......... 137,994 1,398,296
----------- ------------
Total issued ........................... 759,008 7,836,255
Shares redeemed ........................ (1,284,204) (12,980,287)
----------- ------------
Net decrease ........................... (525,196) $ (5,144,032)
=========== ============
--------------------------------------------------------------------------------
5. Capital Loss Carryforward:
At October 31, 1999, the Fund had a net capital loss carryforward of
approximately $2,210,000, all of which expires in 2007. This amount will be
available to offset like amounts of any future taxable gains.
18
<PAGE>
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 Municipal
Intermediate Term Fund
Merrill Lynch Municipal
Series Trust
Box 9011
Princeton, NJ
08543-9011 #10437--4/00
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