MERRILL LYNCH CONNECTICUT
MUNICIPAL BOND FUND
Quarterly Report April 30, 1995
TO OUR SHAREHOLDERS
Throughout most of the three months ended April 30, 1995, the
municipal bond market continued the improvement that began in late
1994. Signs of a weakening domestic economy and ongoing moderate
inflationary pressures have continued to foster an environment of
declining interest rates. A-rated, uninsured municipal revenue bond
yields, as measured by the Bond Buyer Revenue Bond Index, declined
an additional 50 basis points (0.50%) to close the April quarter at
6.29%. Tax-exempt bond yields have declined over 100 basis points
from their highs of last November and are presently lower than they
were a year ago. US Treasury bonds experienced a similar, but less
dramatic, improvement during the April quarter, and 30-year US
Treasury bond yields declined approximately 35 basis points to end
the April quarter at 7.33%.
<PAGE>
Tax-exempt bond yields declined more than their taxable counterparts
thus far in 1995, largely in response to the significant decline in
new bond issuance in recent quarters. During the April quarter, less
than $30 billion in new long-term municipal securities were
underwritten. This represents a decline in issuance of nearly 40%
versus the comparable period a year earlier. Similarly, over the
past six months, less than $60 billion in municipal bonds were
issued, a decline of approximately 45% versus the comparable period
a year earlier. Both institutional and individual investors have
seen significant cash inflows in recent months. These assets were
derived from regular coupon payments, bond maturities and the
proceeds from early bond calls and redemptions. It has been
estimated that investors received over $20 billion in principal
redemptions and coupon income in January 1995 alone. With monthly
issuance in the $10 billion range thus far this year, the current
supply/demand imbalance has dominated the municipal market and bond
prices have risen accordingly. The tax-exempt bond market's
technical position is likely to remain very strong throughout most
of 1995. Investors are expected to receive almost $40 billion in
principal and coupon payments on July 1, 1995. Investor proceeds
from all sources have been estimated to exceed $200 billion for all
of 1995. Estimates of total new bond issuance for 1995 have
continued to be lowered with most estimates now in the $125 billion
range. Investors should find it increasingly difficult to replace
existing holdings as they mature and to reinvest coupon income in
such an environment.
The municipal bond market's outperformance thus far this year caused
the tax-exempt market to become temporarily expensive relative to
its taxable counterpart in late April. Investor concerns regarding
the international currency situation and the future impact of
proposed revisions to US taxation policies upon the tax advantage
inherent to municipal bonds have combined to cause tax-exempt bond
yields to increase marginally in recent weeks. Municipal bond yields
have risen approximately 15 basis points from their lows in mid-
April 1995. Long-term US Treasury bond yields have remained
essentially stable.
Such an underperformance by the tax-exempt bond market is likely to
be limited in duration. The recent increase in tax-exempt bond
yields has already begun to attract institutional investors since
some municipal bonds yielding in excess of 85% of US Treasury bond
yields are again available. Also, concerns regarding the implication
for municipal bonds' tax advantage resulting from various proposed
tax law changes (for example, flat-tax, value-added tax or national
sales tax) are all likely to quickly recede as investors realize
that such, if any, changes are unlikely to be enacted before late
1996 at the earliest. Long-term investors will also recall 1986 when
similar tax proposals were made and tax-exempt bond yields initially
rose and then quickly fell. Investors are likely to view the current
situation as an opportunity to purchase very attractively priced tax-
advantaged products, causing municipal bond yields to quickly return
to their more historic relationship.
<PAGE>
Portfolio Strategy
During the quarter ended April 30, 1995, our investment strategy
continued to concentrate on the acquisition of high-quality current
coupon and income-oriented securities. Within this context, the
average coupon of the portfolio increased from 6.41% to 6.52%, and
the Fund's holdings of issues rated A or better by at least one of
the major rating agencies increased to 96% from 94%. We lowered the
Fund's cash reserve position to below 5%, and we were able to
participate fully in the continued improvement in the tax-exempt
bond market. Looking forward, we anticipate maintaining our strategy
of concentrating on sustaining an appealing level of tax-exempt
income by continuing to emphasize the Fund's present coupon and high-
credit quality structure.
In Conclusion
We appreciate your ongoing interest in Merrill Lynch Connecticut
Municipal Bond Fund, and we look forward to assisting you with your
financial needs in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
May 31, 1995
<PAGE>
PERFORMANCE DATA
About Fund Performance
Since October 21, 1994, investors have been able to purchase shares
of the Fund through the Merrill Lynch Select Pricing SM System,
which offers four pricing alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 4% and bear no ongoing distribution or account maintenance
fees. Class A Shares are available only to eligible investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.25% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 10 years.
* Class C Shares are subject to a distribution fee of 0.35% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 4% and an
account maintenance fee of 0.10% (but no distribution fee).
Performance data for all of the Fund's shares are presented in the
"Aggregate Total Return" and "Recent Performance Results" tables
below and on page 3. The "Recent Performance Results" table shows
investment results before the deduction of any sales charges for
Class A and Class B Shares for the since inception (July 1, 1994)
and 3-month periods ended April 30, 1995 and for Class C and Class D
Shares for the since inception (October 21, 1994) and 3-month
periods ended April 30, 1995. All data in this table assume
imposition of the actual total expenses incurred by each class of
shares during the relevant period.
None of the past results shown should be considered a represen-
tation 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>
Aggregate Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Inception (7/1/94)
through 3/31/95 +6.13% +1.88%
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Inception (7/1/94)
through 3/31/95 +5.73% +1.73%
[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*
Inception (10/21/94)
through 3/31/95 +5.99% +4.99%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Inception (10/21/94)
through 3/31/95 +6.12% +1.87%
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
PERFORMANCE DATA (concluded)
<TABLE>
Recent Performance Results
<CAPTION>
Since Inception 3 Month
4/30/95 1/31/95 Inception++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $10.08 $9.92 $10.00 +0.80% +1.61%
Class B Shares* 10.08 9.92 10.00 +0.80 +1.61
Class C Shares* 10.09 9.92 9.82 +2.75 +1.71
Class D Shares* 10.08 9.92 9.82 +2.65 +1.61
Class A Shares--Total Return* +5.99(1) +3.17(2)
Class B Shares--Total Return* +5.56(3) +3.04(4)
Class C Shares--Total Return* +5.80(5) +3.12(6)
Class D Shares--Total Return* +5.97(7) +3.14(8)
Class A Shares--Standardized 30-day Yield 5.92%
Class B Shares--Standardized 30-day Yield 5.65%
Class C Shares--Standardized 30-day Yield 5.54%
Class D Shares--Standardized 30-day Yield 5.82%
<PAGE>
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
++Class A and Class B Shares commenced operations on 7/1/94. Class C
and Class D Shares commenced operations on 10/21/94.
(1)Percent change includes reinvestment of $0.488 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.155 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.447 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.142 per share ordinary
income dividends.
(5)Percent change includes reinvestment of $0.279 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.140 per share ordinary
income dividends.
(7)Percent change includes reinvestment of $0.305 per share ordinary
income dividends.
(8)Percent change includes reinvestment of $0.152 per share ordinary
income dividends.
</TABLE>
PORTFOLIO COMPOSITION
For the Quarter Ended April 30, 1995
Distribution by Market Sector*
Other Revenue Bonds 80.4%
General Obligation & Tax Revenue Bonds 16.6
Prerefunded Bonds** 3.0
------
Total 100.0%
======
Net assets as of April 30, 1995 were $38,862,700.
<PAGE>
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart illustrating the following percentages:
AAA/Aaa 53%
AA/Aa 38%
A/A 3%
BBB/Baa 1%
Other++ 2%
NR++++ 3%
[FN]
*Based on total market value of the portfolio as of April 30, 1995.
**Backed by an escrow fund.
++Temporary investments in short-term municipal securities.
++++Not rated.
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.
Officers and Trustees
Arthur Zeikel, President and Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Jerry Weiss, Secretary
<PAGE>
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
Merrill Lynch Connecticut Municipal Bond Fund
Merrill Lynch Multi-State Municipal Series Trust
Box 9011
Princeton, New Jersey 08543-9011
