MERRILL LYNCH
CONNECTICUT
MUNICIPAL
BOND FUND
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
January 31, 2000
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
TO OUR SHAREHOLDERS
During the six months ended January 31, 2000, continued strong domestic growth,
gradual improvement in foreign economies and investor concerns regarding future
inflationary pressures pushed long-term fixed-income bond yields higher. The
Federal Reserve Board continued to raise short-term interest rates in August and
November 1999 as well as just after the period's close, seeking to moderate US
economic growth and maintain the existing benign inflationary environment. US
economic growth, in part intensified by Year 2000 preparations, grew 5.8% during
the last fiscal quarter of 1999 and had an annual rate of 4.1% for 1999. A
number of inflationary indicators have also begun to signal some increase in
price pressures.
However, most investors believe that the Federal Reserve Board will be extremely
vigilant in preventing such pressures from any material escalation. US Treasury
bond yields responded by rising approximately 60 basis points (0.60%) by
mid-January 2000. A strong rally, largely based upon an expected significant
reduction in the future supply of US Treasury 30-year maturity bonds, pushed
yields lower to 6.50% at January 31, 2000. Over the last six months, yields on
30-year US Treasury bonds rose approximately 40 basis points.
The tax-exempt bond market was also under pressure throughout the entire period.
Despite receiving more than $30 billion in coupon payments, bond maturities and
proceeds from early redemptions in December and January, overall investor demand
has diminished. It is likely that the returns generated by the US equity market
have continued to attract investor attention and have left little demand for
competing investment alternatives. At January 31, 2000, the long-term tax-exempt
revenue bond yield, as measured by the Bond Buyer Revenue Index, was 6.34%, an
increase of nearly 70 basis points over the last six months.
Issuance by municipalities has significantly declined in recent months. Over the
last six months, less than $100 billion in long-term tax-exempt bonds were
issued, representing a decline of over 20% compared to the same period a year
ago. During the last three months, less than $45 billion in long-term bonds were
issued by various municipalities. This most recent quarterly issuance is 30%
below the level of the January 31, 1999 quarter. Additionally, during January
2000, less than $8 billion in municipal debt was underwritten, down more than
50% from January 1999 levels. This represents the lowest monthly issuance in
over five years. Toward the end of 1999, consensus estimates for 2000 annual
issuance were in the $210 billion-$215 billion range. January's underwritings,
as well as those expected to be issued in the near future, have led some
analysts to revise their forecasts to the $190 billion range.
We believe an overall reduction in bond supply in the coming year should help
support the municipal bond market's overall technical position. While tax-exempt
bond yields, which are at their highest level in over three years, have
attracted significant retail investor interest, institutional demand declined
sharply. Long-term municipal mutual funds have seen consistent outflows in
recent months as the yields of individual securities rose faster than those of
larger, more diverse mutual funds. During the six months ended January 31, 2000,
tax-exempt mutual funds have had net redemptions of approximately $9 billion.
Also, the demand from property and casualty insurance companies has weakened as
a result of the losses and anticipated losses incurred from a series of damaging
storms across much of the eastern United States. Additionally, many
institutional investors who have in recent years been attracted to the municipal
bond market by historically attractive tax-exempt bond yield ratios of over 90%,
found other asset classes even more attractive. Even with a reduced supply
position, tax-exempt issuers have been forced to repeatedly raise municipal bond
yields in an attempt to attract adequate demand. We believe a reduced bond
supply going forward is likely to promote a more closely balanced supply/demand
structure and foster a more stable tax-exempt interest rate environment.
Looking ahead, it appears to us that long-term tax-exempt bond yields will
remain under pressure, trading in a broad range centered around current levels.
Investors are also likely to remain concerned regarding future action by the
Federal Reserve Board in early 2000. Any improvement in bond prices may be
contingent upon weakening in both US employment growth and consumer spending.
The 100 basis point rise in US Treasury bond yields seen thus far could
1
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
negatively affect US economic growth. The US housing market is likely to be
among the first sectors to be affected, as some declines have already been
evidenced because of higher mortgage rates. We believe it is also unrealistic to
expect double-digit returns in US equity markets to continue indefinitely. Much
of the US consumer's wealth is tied to recent stock market appreciation. Any
slowing in these incredible growth rates may reduce consumer spending. We
believe that these factors suggest that the worst of the recent increase in bond
yields has passed and stable, if not slightly improving, bond prices may be
expected.
Portfolio Strategy
During the six-month period ended January 31, 2000, we continued to focus on
seeking to increase the Fund's coupon income by purchasing securities with
higher coupons and by reducing the duration of lower coupon issues. The
execution of this strategy, which is still ongoing, has been somewhat difficult
because the supply of higher-coupon Connecticut securities has been negligible.
We also increased the Fund's cash reserve position as a defensive measure in
attempting to reduce the portfolio's duration. We anticipate maintaining this
larger position in cash and cash equivalents until we believe economic
fundamentals have created a more positive outlook for interest rates or when
suitable full coupon securities enter the market.
In Conclusion
We appreciate your continuing interest in Merrill Lynch Connecticut Municipal
Bond Fund, and we look forward to assisting you with your financial needs in the
months and years to come.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ William R. Bock
William R. Bock
Vice President and Portfolio Manager
March 3, 2000
2
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the Merrill
Lynch Select Pricing(SM) System, which offers four pricing alternatives:
o 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.
o Class B Shares are subject to a maximum contingent deferred sales charge
of 4% if redeemed during the first year, decreasing 1% each year
thereafter to 0% after the fourth year. In addition, Class B Shares are
subject to a distribution fee of 0.25% and an account maintenance fee of
0.25%. These shares automatically convert to Class D Shares after
approximately 10 years. (There is no initial sales charge for automatic
share conversions.)
o 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.
o Class D Shares incur a maximum initial sales charge of 4% and an account
maintenance fee of 0.10% (but no distribution fee).
None of the past results shown should be considered a representation of
future performance. Figures shown in the "Recent Performance Results" and
"Average Annual Total Return" tables assume reinvestment of all dividends
and capital gains distributions at net asset value on the payable date.
Investment return and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost.
Dividends paid to each class of shares will vary because of the different
levels of account maintenance, distribution and transfer agency fees
applicable to each class, which are deducted from the income available to
be paid to shareholders. The Fund's Investment Adviser voluntarily waived
a portion of its management fee. Without such waiver, the Fund's
performance would have been lower.
Recent Performance Results*
<TABLE>
<CAPTION>
6 Month 12 Month Since Inception Standardized
As of January 31, 2000 Total Return Total Return Total Return 30-Day Yield
===================================================================================================================
<S> <C> <C> <C> <C>
ML Connecticut Municipal Bond Fund Class A Shares -3.98% -5.97% +32.65% 4.79%
-------------------------------------------------------------------------------------------------------------------
ML Connecticut Municipal Bond Fund Class B Shares -4.12 -6.35 +29.09 4.49
-------------------------------------------------------------------------------------------------------------------
ML Connecticut Municipal Bond Fund Class C Shares -4.17 -6.52 +28.65 4.39
-------------------------------------------------------------------------------------------------------------------
ML Connecticut Municipal Bond Fund Class D Shares -3.93 -5.97 +32.13 4.70
===================================================================================================================
</TABLE>
* Investment results shown do not reflect sales charges; results would be
lower if a sales charge was included. Total investment returns are based
on changes in net asset values for the periods shown, and assume
reinvestment of all dividends and capital gains distributions at net asset
value on the payable date. The Fund's since inception dates are from
7/01/94 for Class A & Class B Shares and from 10/21/94 for Class C & Class
D Shares.
3
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
PERFORMANCE DATA (concluded)
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
============================================================================
Class A Shares*
============================================================================
Year Ended 12/31/99 -4.46% -8.29%
----------------------------------------------------------------------------
Five Years Ended 12/31/99 +6.12 +5.26
----------------------------------------------------------------------------
Inception (7/01/94)
through 12/31/99 +5.39 +4.61
----------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
============================================================================
Class B Shares*
============================================================================
Year Ended 12/31/99 -4.94% -8.58%
----------------------------------------------------------------------------
Five Years Ended 12/31/99 +5.59 +5.59
----------------------------------------------------------------------------
Inception (7/01/94)
through 12/31/99 +4.85 +4.85
----------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 4% and is reduced to 0% after
4 years.
** Assuming payment of applicable contingent deferred sales charge.
============================================================================
% Return % Return
Without CDSC With CDSC**
============================================================================
Class C Shares*
============================================================================
Year Ended 12/31/99 -5.12% -6.03%
----------------------------------------------------------------------------
Five Years Ended 12/31/99 +5.48 +5.48
----------------------------------------------------------------------------
Inception (10/21/94)
through 12/31/99 +5.08 +5.08
----------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after 1
year.
** Assuming payment of applicable contingent deferred sales charge.
============================================================================
% Return Without % Return With
Sales Charge Sales Charge**
============================================================================
Class D Shares*
============================================================================
Year Ended 12/31/99 -4.56% -8.38%
----------------------------------------------------------------------------
Five Years Ended 12/31/99 +6.01 +5.15
----------------------------------------------------------------------------
Inception (10/21/94)
through 12/31/99 +5.61 +4.79
----------------------------------------------------------------------------
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
4
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
Ratings Ratings Amount Issue Value
- --------------------------------------------------------------------------------------------------------------------------
Connecticut--89.6%
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AAA Aaa $2,000 Bridgeport, Connecticut, GO, Refunding, Series A, 5.875% due 7/15/2019 (c) $ 1,956
- --------------------------------------------------------------------------------------------------------------------------
AAA Aaa 40 Connecticut State Clean Water Fund, Revenue Refunding Bonds, 5.80% due 6/01/2016 40
- --------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Connecticut State Development Authority, Governmental Lease Revenue Bonds,
6.60% due 6/15/2014 (b) 1,065
- --------------------------------------------------------------------------------------------------------------------------
BB+ Ba1 2,000 Connecticut State Development Authority, PCR, Refunding (Connecticut Light
and Power Company), Series A, 5.85% due 9/01/2028 1,740
- --------------------------------------------------------------------------------------------------------------------------
AA A1 2,000 Connecticut State Development Authority Revenue Bonds (General Fund), Series A,
6.375% due 10/15/2024 2,052
- --------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,500 Connecticut State Development Authority, Solid Waste Disposal Facilities Revenue Bonds
(Pfizer Inc. Project), AMT, 7% due 7/01/2025 1,612
- --------------------------------------------------------------------------------------------------------------------------
Connecticut State Development Authority, Water Facility Revenue Bonds (Bridgeport
Hydraulic Co. Project), AMT:
A+ NR* 1,250 6.15% due 4/01/2035 1,185
A+ NR* 3,000 6% due 9/01/2036 2,781
- --------------------------------------------------------------------------------------------------------------------------
Connecticut State Development Authority, Water Facility Revenue Refunding Bonds
(Bridgeport Hydraulic Co. Project) (b):
AAA Aaa 1,000 Series A, 6.05% due 3/01/2029 992
AAA Aaa 1,890 Series B, 5.50% due 6/01/2028 1,715
- --------------------------------------------------------------------------------------------------------------------------
Connecticut State, GO:
AA Aa3 1,000 Series A, 5% due 6/15/2018 879
AA Aa3 2,000 Series B, 5.50% due 11/01/2018 1,901
AA Aa3 3,750 Series C, 5.25% due 8/01/2017 3,455
- --------------------------------------------------------------------------------------------------------------------------
Connecticut State, HFA, Revenue Bonds (Housing Mortgage Finance Program):
AA Aa2 825 AMT, Series A, Sub-Series A-2, 6.20% due 11/15/2022 821
AAA Aaa 4,110 Series B, 6.75% due 11/15/2023 (b) 4,298
- --------------------------------------------------------------------------------------------------------------------------
Connecticut State, HFA, Revenue Refunding Bonds (Housing Mortgage Finance Program):
AA Aa2 1,000 AMT, Series B, Sub-Series B-2, 5.70% due 5/15/2017 946
AA Aa2 1,200 Series C-1, 6.30% due 11/15/2017 1,208
- --------------------------------------------------------------------------------------------------------------------------
Connecticut State Health and Educational Facilities Authority Revenue Bonds:
AAA Aaa 1,000 (Bridgeport Hospital), Series A, 6.625% due 7/01/2018 (b) 1,042
AAA Aaa 1,000 (Child Care Facilities Program), Series C, 5.50% due 7/01/2019 (d) 930
AAA Aaa 2,000 (Fairfield University), Series I, 5.25% due 7/01/2025 (b) 1,747
AAA Aaa 1,400 (Newington Children's Hospital), Series A, 6.30% due 7/01/2021 (b) 1,406
NR* Baa3 1,000 (Sacred Heart University), Series D, 6.20% due 7/01/2007 (e) 1,070
AA NR* 1,500 (Waterbury Hospital Issue), Series C, 5.75% due 7/01/2020 1,401
AAA Aaa 1,000 (Yale--New Haven Hospital Issue), Series G, 6.50% due 7/01/2012 (b) 1,047
A1+ VMIG1+ 600 (Yale University), VRDN, Series T-2, 2.85% due 7/01/2029 (a) 600
A1+ VMIG1+ 1,000 (Yale University), VRDN, Series U, 3% due 7/01/2033 (a) 1,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
PORTFOLIO ABBREVIATIONS
To simplify the listings of Merrill Lynch Connecticut Municipal Bond Fund's
portfolio holdings in the Schedule of Investments, we have abbreviated the names
of many of the securities according to the list at right.
AMT Alternative Minimum Tax (subject to)
GO General Obligation Bonds
HFA Housing Finance Agency
PCR Pollution Control Revenue Bonds
S/F Single-Family
VRDN Variable Rate Demand Notes
5
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
Ratings Ratings Amount Issue Value
- --------------------------------------------------------------------------------------------------------------------------
Connecticut (concluded)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Connecticut State Health and Educational Facilities Authority,
Revenue Refunding Bonds:
BBB- Baa3 $ 130 (Sacred Heart University), Series C, 6.625% due 7/01/2026 $ 129
AAA Aaa 900 (Trinity College), Series D, 6.125% due 7/01/2004 (c)(e) 957
AAA Aaa 1,000 (Yale--New Haven Hospital Issue), Series H, 5.70% due 7/01/2025 (b) 926
- --------------------------------------------------------------------------------------------------------------------------
NR* A1 630 Connecticut State Higher Education, Supplemental Loan Authority Revenue Bonds
(Family Education Loan Program), AMT, Series A, 6.40% due 11/15/2014 635
- --------------------------------------------------------------------------------------------------------------------------
NR* NR* 1,000 Connecticut State Regional Learning Educational Service Center Revenue Bonds
(Office/Education Center Facility), 7.75% due 2/01/2015 1,055
- --------------------------------------------------------------------------------------------------------------------------
Connecticut State Special Tax Obligation Revenue Bonds, Transportation
Infrastructure:
AAA Aaa 1,000 Series A, 5.625% due 12/01/2019 (c) 956
A1+ VMIG1+ 100 VRDN, Second Lien, Series 1, 3.25% due 12/01/2010 (a) 100
- --------------------------------------------------------------------------------------------------------------------------
NR* NR* 1,795 Eastern Connecticut, State Regional Educational Service Center Revenue Bonds,
6.50% due 5/15/2009 1,829
- --------------------------------------------------------------------------------------------------------------------------
AA Baa3 1,870 Waterbury, Connecticut, GO, 5% due 2/15/2018 1,578
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Guam--1.8%
- --------------------------------------------------------------------------------------------------------------------------
AAA NR* 1,000 Guam Housing Corporation, S/F Mortgage Revenue Bonds, AMT, Series A,
5.75% due 9/01/2031 (f) 933
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (Cost--$48,884)--91.4% 47,987
Other Assets Less Liabilities--8.6% 4,488
-------
Net Assets--100.0% $52,475
=======
- --------------------------------------------------------------------------------------------------------------------------
</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 January 31, 2000.
(b) MBIA Insured.
(c) FGIC Insured.
(d) AMBAC Insured.
(e) Prerefunded.
(f) FHLMC Collateralized.
*Not Rated.
+Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
6
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of January 31, 2000
<TABLE>
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$48,883,869) ............ $ 47,987,412
Cash ............................................................ 2,363,598
Receivables:
Securities sold ............................................. $ 3,552,746
Interest .................................................... 705,395
Beneficial interest sold .................................... 45,956 4,304,097
-----------
Prepaid expenses and other assets ............................... 795
------------
Total assets .................................................... 54,655,902
------------
- -------------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Securities purchased ........................................ 1,858,765
Beneficial interest redeemed ................................ 169,337
Dividends to shareholders ................................... 44,855
Investment adviser .......................................... 18,302
Distributor ................................................. 17,037 2,108,296
-----------
Accrued expenses and other liabilities .......................... 72,594
------------
Total liabilities ............................................... 2,180,890
------------
- -------------------------------------------------------------------------------------------------------------------
Net Assets: Net assets ...................................................... $ 52,475,012
============
- -------------------------------------------------------------------------------------------------------------------
Net Assets Class A Shares of beneficial interest, $.10 par value,
Consist of: unlimited number of shares authorized ........................... $ 67,943
Class B Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized ........................... 360,168
Class C Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized ........................... 49,788
Class D Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized ........................... 53,996
Paid-in capital in excess of par ................................ 54,149,369
Accumulated realized capital losses on investments--net ......... (978,650)
Accumulated distributions in excess of realized
capital gains on investments--net ............................... (331,145)
Unrealized depreciation on investments--net ..................... (896,457)
------------
Net assets ...................................................... $ 52,475,012
============
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value: Class A--Based on net assets of $6,701,575 and 679,428 shares
of beneficial interest outstanding .............................. $ 9.86
============
Class B--Based on net assets of $35,530,852 and 3,601,677 shares
of beneficial interest outstanding .............................. $ 9.87
============
Class C--Based on net assets of $4,914,800 and 497,877 shares
of beneficial interest outstanding .............................. $ 9.87
============
Class D--Based on net assets of $5,327,785 and 539,955 shares
of beneficial interest outstanding .............................. $ 9.87
============
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
FINANCIAL INFORMATION (continued)
Statement of Operations
<TABLE>
<CAPTION>
For the Six Months Ended
January 31, 2000
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income: Interest and amortization of premium and discount earned ........... $ 1,654,070
- -----------------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees ........................................... $ 160,170
Account maintenance and distribution fees--Class B ................. 97,276
Professional fees .................................................. 37,596
Accounting services ................................................ 25,079
Account maintenance and distribution fees--Class C ................. 16,798
Transfer agent fees--Class B ....................................... 6,751
Registration fees .................................................. 4,478
Pricing fees ....................................................... 3,479
Account maintenance fees--Class D .................................. 3,110
Custodian fees ..................................................... 2,844
Trustees' fees and expenses ........................................ 2,032
Printing and shareholder reports ................................... 1,621
Transfer agent fees--Class A ....................................... 1,068
Transfer agent fees--Class C ....................................... 931
Transfer agent fees--Class D ....................................... 887
Other .............................................................. 1,104
---------
Total expenses before reimbursement ................................ 365,224
Reimbursement of expenses .......................................... (29,122)
---------
Total expenses after reimbursement ................................. 336,102
------------
Investment income--net ............................................. 1,317,968
------------
- -----------------------------------------------------------------------------------------------------------------------
Realized & Realized loss on investments--net .................................. (1,101,302)
Unrealized Loss on Change in unrealized appreciation/depreciation on investments--net . (2,720,798)
Investments--Net: ------------
Net Decrease in Net Assets Resulting from Operations ............... $ (2,504,132)
============
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
FINANCIAL INFORMATION (continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
January 31, July 31,
Increase (Decrease) in Net Assets: 2000 1999
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations: Investment income--net ....................................... $ 1,317,968 $ 2,646,129
Realized gain (loss) on investments--net ..................... (1,101,302) 398,934
Change in unrealized appreciation/depreciation
on investments--net .......................................... (2,720,798) (1,872,803)
------------ ------------
Net increase (decrease) in net assets resulting
from operations .............................................. (2,504,132) 1,172,260
------------ ------------
- -------------------------------------------------------------------------------------------------------------------
Dividends & Investment income--net:
Distributions to Class A .................................................... (184,885) (412,500)
Shareholders: Class B .................................................... (861,891) (1,720,492)
Class C .................................................... (121,042) (225,980)
Class D .................................................... (150,150) (287,157)
Realized gain on investments--net:
Class A .................................................... (2,382) --
Class B .................................................... (12,672) --
Class C .................................................... (1,685) --
Class D .................................................... (1,865) --
In excess of realized gain on investments--net:
Class A .................................................... -- (46,064)
Class B .................................................... -- (216,885)
Class C .................................................... -- (30,363)
Class D .................................................... -- (37,833)
------------ ------------
Net decrease in net assets resulting from dividends
and distributions to shareholders ............................ (1,336,572) (2,977,274)
------------ ------------
- -------------------------------------------------------------------------------------------------------------------
Beneficial Interest Net increase (decrease) in net assets derived from
Transactions: beneficial interest transactions ............................. (8,551,680) 6,820,583
------------ ------------
- -------------------------------------------------------------------------------------------------------------------
Net Assets: Total increase (decrease) in net assets ...................... (12,392,384) 5,015,569
Beginning of period .......................................... 64,867,396 59,851,827
------------ ------------
End of period ................................................ $ 52,475,012 $ 64,867,396
============ ============
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
FINANCIAL INFORMATION (continued)
Financial Highlights
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------------
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended For the Year Ended July 31,
Jan. 31, ---------------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ... $ 10.53 $ 10.79 $ 10.68 $ 10.29 $ 10.23
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net ................. .25 .48 .52 .56 .58
Realized and unrealized gain (loss) on
investments--net ....................... (.67) (.21) .11 .39 .06
--------- --------- --------- --------- ---------
Total from investment operations ....... (.42) .27 .63 .95 .64
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net ............... (.25) (.48) (.52) (.56) (.58)
Realized gain on investments--net .... --+ -- -- -- --
In excess of realized gain on
investments--net ..................... -- (.05) -- -- --
--------- --------- --------- --------- ---------
Total dividends and distributions ...... (.25) (.53) (.52) (.56) (.58)
--------- --------- --------- --------- ---------
Net asset value, end of period ......... $ 9.86 $ 10.53 $ 10.79 $ 10.68 $ 10.29
========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ..... (3.98%)++ 2.50% 6.00% 9.51% 6.37%
Return:** ========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses, net of reimbursement ......... .74%* .84% .77% .52% .34%
Net Assets: ========= ========= ========= ========= =========
Expenses ............................... .84%* .94% .89% .92% .98%
========= ========= ========= ========= =========
Investment income--net ................. 4.91%* 4.43% 4.79% 5.38% 5.58%
========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $ 6,701 $ 9,013 $ 8,855 $ 8,380 $ 7,589
Data: ========= ========= ========= ========= =========
Portfolio turnover ..................... 33.59% 47.62% 53.99% 32.46% 57.58%
========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales
charges.
+ Amount is less than $.01 per share.
++ Aggregate total investment return.
See Notes to Financial Statements.
10
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class B
-------------------------------------------------------------------
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended For the Year Ended July 31,
Jan. 31, ---------------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ... $ 10.53 $ 10.79 $ 10.68 $ 10.29 $ 10.23
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net ................. .22 .43 .46 .51 .56
Realized and unrealized gain (loss) on
investments--net ....................... (.66) (.21) .11 .39 .06
--------- --------- --------- --------- ---------
Total from investment operations ....... (.44) .22 .57 .90 .59
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net ............... (.22) (.43) (.46) (.51) (.53)
Realized gain on investments--net .... --+ -- -- -- --
In excess of realized gain on
investments--net ..................... -- (.05) -- -- --
--------- --------- --------- --------- ---------
Total dividends and distributions ...... (.22) (.48) (.46) (.51) (.53)
--------- --------- --------- --------- ---------
Net asset value, end of period ......... $ 9.87 $ 10.53 $ 10.79 $ 10.68 $ 10.29
========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ..... (4.12%)++ 1.99% 5.47% 8.96% 5.82%
Return:** ========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses, net of reimbursement ......... 1.25%* 1.35% 1.27% 1.02% .85%
Net Assets: ========= ========= ========= ========= =========
Expenses ............................... 1.35%* 1.45% 1.40% 1.43% 1.49%
========= ========= ========= ========= =========
Investment income--net ................. 4.42%* 3.93% 4.28% 4.87% 5.07%
========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $ 35,531 $ 41,835 $ 41,964 $ 35,563 $ 31,359
Data: ========= ========= ========= ========= =========
Portfolio turnover ..................... 33.59% 47.62% 53.99% 32.46% 57.58%
========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales
charges.
+ Amount is less than $.01 per share.
++ Aggregate total investment return.
See Notes to Financial Statements.
11
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class C
-------------------------------------------------------------------
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended For the Year Ended July 31,
Jan. 31, ---------------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ... $ 10.53 $ 10.80 $ 10.69 $ 10.30 $ 10.24
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net ................. .22 .41 .45 .50 .52
Realized and unrealized gain (loss) on
investments--net ....................... (.66) (.22) .11 .39 .06
--------- --------- --------- --------- ---------
Total from investment operations ....... (.44) .19 .56 .89 .58
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net ............... (.22) (.41) (.45) (.50) (.52)
Realized gain on investments--net .... --+ -- -- -- --
In excess of realized gain on
investments--net ..................... -- (.05) -- -- --
--------- --------- --------- --------- ---------
Total dividends and distributions ...... (.22) (.46) (.45) (.50) (.52)
--------- --------- --------- --------- ---------
Net asset value, end of period ......... $ 9.87 $ 10.53 $ 10.80 $ 10.69 $ 10.30
========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ..... (4.17%)++ 1.79% 5.36% 8.84% 5.72%
Return:** ========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses, net of reimbursement ......... 1.35%* 1.45% 1.37% 1.12% .95%
Net Assets: ========= ========= ========= ========= =========
Expenses ............................... 1.45%* 1.55% 1.50% 1.53% 1.58%
========= ========= ========= ========= =========
Investment income--net ................. 4.31%* 3.82% 4.17% 4.77% 4.96%
========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $ 4,915 $ 6,837 $ 4,399 $ 2,016 $ 1,829
Data: ========= ========= ========= ========= =========
Portfolio turnover ..................... 33.59% 47.62% 53.99% 32.46% 57.58%
========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales
charges.
+ Amount is less than $.01 per share.
++ Aggregate total investment return.
See Notes to Financial Statements.
12
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
FINANCIAL INFORMATION (concluded)
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class D
-------------------------------------------------------------------
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended For the Year Ended July 31,
Jan. 31, ---------------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ... $ 10.53 $ 10.79 $ 10.68 $ 10.29 $ 10.23
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net ................. .25 .47 .51 .55 .57
Realized and unrealized gain (loss) on
investments--net ....................... (.66) (.21) .11 .39 .06
--------- --------- --------- --------- ---------
Total from investment operations ....... (.41) .26 .62 .94 .63
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net ............... (.25) (.47) (.51) (.55) (.57)
Realized gain on investments--net .... --+ -- -- -- --
In excess of realized gain on
investments--net ..................... -- (.05) -- -- --
--------- --------- --------- --------- ---------
Total dividends and distributions ...... (.25) (.52) (.51) (.55) (.57)
--------- --------- --------- --------- ---------
Net asset value, end of period ......... $ 9.87 $ 10.53 $ 10.79 $ 10.68 $ 10.29
========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ..... (3.93%)++ 2.40% 5.90% 9.40% 6.26%
Return:** ========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses, net of reimbursement ......... .85%* .95% .87% .62% .44%
Net Assets: ========= ========= ========= ========= =========
Expenses ............................... .95%* 1.05% .99% 1.03% 1.07%
========= ========= ========= ========= =========
Investment income--net ................. 4.82%* 4.32% 4.67% 5.27% 5.46%
========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) $ 5,328 $ 7,182 $ 46349 $ 3,440 $ 2,657
Data: ========= ========= ========= ========= =========
Portfolio turnover ..................... 33.59% 47.62% 53.99% 32.46% 57.58%
========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales
charges.
+ Amount is less than $.01 per share.
++ Aggregate total investment return.
See Notes to Financial Statements.
13
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Connecticut Municipal Bond Fund (the "Fund") is part of Merrill
Lynch Multi-State Municipal Series Trust (the "Trust"). The Fund is registered
under the Investment Company Act of 1940 as a non-diversified, open-end
management investment company. The Fund's financial statements are prepared in
accordance with generally accepted accounting principles, which may require the
use of management accruals and estimates. These unaudited financial statements
reflect all adjustments, which are, in the opinion of management, necessary to a
fair statement of the results for the interim period presented. All such
adjustments are of a normal recurring nature. The Fund offers four classes of
shares under the Merrill Lynch Select Pricing(SM) System. Shares of Class A and
Class D are sold with a front-end sales charge. Shares of Class B and Class C
may be subject to a contingent deferred sales charge. All classes of shares have
identical voting, dividend, liquidation and other rights and the same terms and
conditions, except that Class B, Class C and Class D Shares bear certain
expenses related to the account maintenance of such shares, and Class B and
Class C Shares also bear certain expenses related to the distribution of such
shares. Each class has exclusive voting rights with respect to matters relating
to its account maintenance and distribution expenditures. The following is a
summary of significant accounting policies followed by the Fund.
(a) Valuation of investments--Municipal bonds and other portfolio securities in
which the Fund invests are traded primarily in the over-the-counter municipal
bond and money markets and are valued at the last available bid price in the
over-the-counter market or on the basis of yield equivalents as obtained from
one or more dealers that make markets in the securities. Financial futures
contracts and options thereon, which are traded on exchanges, are valued at
their settlement prices as of the close of such exchanges. Short-term
investments with remaining maturities of sixty days or less are valued at
amortized cost, which approximates market value. Securities and assets for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of Trustees of
the Trust, including valuations furnished by a pricing service retained by the
Trust, which may utilize a matrix system for valuations. The procedures of the
pricing service and its valuations are reviewed by the officers of the Trust
under the general supervision of the Trustees.
(b) Derivative financial instruments--The Fund may engage in various portfolio
strategies to seek to increase its return by hedging its portfolio against
adverse movements in the debt markets. Losses may arise due to changes in the
value of the contract or if the counterparty does not perform under the
contract.
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.
(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.
14
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
(d) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Interest income is recognized on the accrual basis. Discounts and market
premiums are amortized into interest income. Realized gains and losses on
security transactions are determined on the identified cost basis.
(e) Dividends and distributions--Dividends from net investment income are
declared daily and paid monthly. Distributions of capital gains are recorded on
the ex-dividend dates. Distributions in excess of realized capital gains are
primarily due to differing tax treatments for post-October losses.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), which is the limited partner. The Fund has also entered into a
Distribution Agreement and Distribution Plans with Merrill Lynch Funds
Distributor ("MLFD" or the "Distributor"), a division of Princeton Funds
Distributor, Inc. ("PFD"), which is a wholly-owned subsidiary of Merrill Lynch
Group, Inc.
FAM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee
based upon the average daily value of the Fund's net assets at the following
annual rates: .55% of the Fund's average daily net assets not exceeding $500
million; .525% of average daily net assets in excess of $500 million but not
exceeding $1 billion; and .50% of average daily net assets in excess of $1
billion. For the six months ended January 31, 2000, FAM earned fees of $160,170,
of which $29,122 was voluntarily waived.
Pursuant to the Distribution Plans adopted by the Fund in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Fund pays the Distributor
ongoing account maintenance and distribution fees. The fees are accrued daily
and paid monthly at annual rates based upon the average daily net assets of the
shares as follows:
- --------------------------------------------------------------------------------
Account Distribution
Maintenance Fee Fee
- --------------------------------------------------------------------------------
Class B ....................................... .25% .25%
Class C ....................................... .25% .35%
Class D ....................................... .10% --
- --------------------------------------------------------------------------------
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("MLPF&S"), a subsidiary of ML & Co., also provides account
maintenance and distribution services to the Fund. The ongoing account
maintenance fee compensates the Distributor and MLPF&S for providing account
maintenance services to Class B, Class C and Class D shareholders. The ongoing
distribution fee compensates the Distributor and MLPF&S for providing
shareholder and distribution-related services to Class B and Class C
shareholders.
For the six months ended January 31, 2000, MLFD earned underwriting discounts
and MLPF&S earned dealer concessions on sales of the Fund's Class A and Class D
Shares as follows:
- --------------------------------------------------------------------------------
MLFD MLPF&S
- --------------------------------------------------------------------------------
Class A ................................... $ 8 $ 85
Class D ................................... $ 113 $1,563
- --------------------------------------------------------------------------------
For the six months ended January 31, 2000, MLPF&S received contingent deferred
sales charges of $38,301 and $977 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.
15
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or directors of
FAM, PSI, FDS, PFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended January 31, 2000 were $18,199,879 and $27,241,955, respectively.
Net realized losses for the six months ended January 31, 2000 and net unrealized
losses as of January 31, 2000 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Losses Losses
- --------------------------------------------------------------------------------
Long-term investments ................ $(1,101,302) $ (896,457)
----------- -----------
Total ................................ $(1,101,302) $ (896,457)
=========== ===========
- --------------------------------------------------------------------------------
As of January 31, 2000, net unrealized depreciation for Federal income tax
purposes aggregated $896,457, of which $692,604 related to appreciated
securities and $1,589,061 related to depreciated securities. The aggregate cost
of investments at January 31, 2000 for Federal income tax purposes was
$48,883,869.
4. Beneficial Interest Transactions:
Net increase (decrease) in net assets derived from beneficial interest
transactions was $(8,551,680) and $6,820,583 for the six months ended January
31, 2000 and for the year ended July 31, 1999, respectively.
Transactions in shares of beneficial interest for each class were as follows:
- --------------------------------------------------------------------------------
Class A Shares for the Six Months Dollar
Ended January 31, 2000 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................ 217,086 $ 2,141,806
Shares issued to shareholders
in reinvestment of dividends
and distributions .......................... 8,250 83,218
-------- -----------
Total issued ............................... 225,336 2,225,024
Shares redeemed ............................ (402,178) (4,039,532)
-------- -----------
Net decrease ............................... (176,842) $(1,814,508)
======== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................ 177,165 $ 1,934,587
Shares issued to shareholders
in reinvestment of dividends
and distributions .......................... 25,662 278,945
-------- -----------
Total issued ............................... 202,827 2,213,532
Shares redeemed ............................ (166,927) (1,812,430)
-------- -----------
Net increase ............................... 35,900 $ 401,102
======== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the Six Months Dollar
Ended January 31, 2000 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................ 241,648 $ 2,451,948
Shares issued to shareholders
in reinvestment of dividends
and distributions .......................... 38,781 391,192
-------- -----------
Total issued ............................... 280,429 2,843,140
Automatic conversion
of shares .................................. (944) (9,554)
Shares redeemed ............................ (652,428) (6,581,758)
-------- -----------
Net decrease ............................... (372,943) $(3,748,172)
======== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................ 759,454 $ 8,251,448
Shares issued to shareholders
in reinvestment of dividends
and distributions .......................... 96,851 1,052,027
-------- -----------
Total issued ............................... 856,305 9,303,475
Automatic conversion
of shares .................................. (1,859) (20,268)
Shares redeemed ............................ (767,760) (8,274,670)
-------- -----------
Net increase ............................... 86,686 $ 1,008,537
======== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Shares for the Six Months Dollar
Ended January 31, 2000 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................ 41,746 $ 426,546
Shares issued to shareholders
in reinvestment of dividends
and distributions .......................... 8,739 88,248
-------- -----------
Total issued ............................... 50,485 514,794
Shares redeemed ............................ (201,715) (2,068,659)
-------- -----------
Net decrease ............................... (151,230) $(1,553,865)
======== ===========
- --------------------------------------------------------------------------------
16
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................ 274,615 $ 2,996,710
Shares issued to shareholders
in reinvestment of dividends
and distributions .......................... 17,146 186,113
-------- -----------
Total issued ............................... 291,761 3,182,823
Shares redeemed ............................ (49,930) (544,294)
-------- -----------
Net increase ............................... 241,831 $ 2,638,529
======== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Six Months Dollar
Ended January 31, 2000 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................ 32,433 $ 328,174
Automatic conversion
of shares .................................. 944 9,554
Shares issued to shareholders
in reinvestment of dividends
and distributions .......................... 7,819 78,923
-------- -----------
Total issued ............................... 41,196 416,651
Shares redeemed ............................ (183,437) (1,851,786)
-------- -----------
Net decrease ............................... (142,241) $(1,435,135)
======== ===========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ................................ 360,488 $ 3,945,264
Automatic conversion
of shares .................................. 1,859 20,268
Shares issued to shareholders
in reinvestment of dividends
and distributions .......................... 15,941 172,967
-------- -----------
Total issued ............................... 378,288 4,138,499
Shares redeemed ............................ (125,408) (1,366,084)
-------- -----------
Net increase ............................... 252,880 $ 2,772,415
======== ===========
- --------------------------------------------------------------------------------
17
<PAGE>
Merrill Lynch Connecticut Municipal Bond Fund January 31, 2000
OFFICERS AND TRUSTEES
Terry K. Glenn, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Arthur Zeikel, Trustee
Vincent R. Giordano, Senior Vice President
William R. Bock, Vice President
Kenneth A. Jacob, Vice President
Donald C. Burke, Vice President and Treasurer
Alice A. Pellegrino, Secretary
- --------------------------------------------------------------------------------
Robert R. Martin, Trustee of Merrill Lynch Connecticut Municipal Bond Fund has
recently retired. The Fund's Board of Trustees wishes Mr. Martin well in his
retirement.
- --------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
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 Connecticut
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011 18138--1/00
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