Merrill Lynch Ohio Municipal Bond Fund
Quarterly Report -- April 30, 1994
To Our Shareholders:
The magnitude of the rise in tax-exempt bond yields experienced this
past quarter has not been seen since 1987 when municipal bond
rates rose 250 basis points (2.50%) from March to October of that
year. It is very important to note that the municipal bond price
declines of the April quarter, while certainly damaging, were
essentially much different than those in 1987. Recent price declines
were largely the result of consistent and insistent selling pressures
over the last two months. In 1987, the tax-exempt bond market was
much more volatile and, at times, chaotic as investors sought to
liquidate positions without concern for fundamental value. For the
most part, the recent price deterioration has been orderly, and the
municipal bond market's liquidity and integrity have not been
challenged or jeopardized.
Despite recent price declines, tax-exempt securities remain among
the most attractive investment alternatives available. After the
yield increases experienced in the April quarter, longer-term
municipal securities yielded approximately 90% of comparable US
Treasury yields. Purchasers of these municipal bonds also accrue
substantial after-tax yield advantages. To investors in the 39%
marginal Federal income tax bracket, the purchase of a municipal
bond yielding 6.50% represents an after-tax equivalent of 10.65%.
With prevailing estimates of 1994 inflation at no more than 3%--4%,
real after-tax rates in excess of 6.50% easily compensate longer-term
investors for much of the price volatility recently experienced.
<PAGE>
Portfolio Strategy
Merrill Lynch Ohio Municipal Bond Fund remained defensively postured
during the April quarter. We raised the Fund's cash position during
the period, holding as much as 12% of net assets in cash at times.
In addition to this defensive posture, we sought out larger-coupon
securities to help enhance shareholders' income. During this
volatile time, we continued to emphasize quality securities, with
75% of the Fund's holdings rated A or better. By purchasing higher-
yielding, noncallable securities, we expect the Fund to accrue
attractive levels of tax-exempt income for years to come.
We appreciate your ongoing interest in Merrill Lynch Ohio 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 26, 1994
<PAGE>
Performance Data
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
Class A and Class B Shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
<TABLE>
Recent Performance Results*
<CAPTION>
12 Month 3 Month
4/30/94 1/31/94 4/30/93 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $10.37 $11.33 $10.81 -3.96%(1) -8.47%
Class B Shares 10.37 11.33 10.81 -3.96(1) -8.47
Class A Shares--Total Return +1.80(2) -7.26(3)
Class B Shares--Total Return +1.29(4) -7.38(5)
Class A Shares--Standardized 30-day Yield 5.05%
Class B Shares--Standardized 30-day Yield 4.75%
<FN>
*Investment results shown for the 3-month and 12-month periods are before the
deduction of any sales charges.
(1)Percent change includes reinvestment of $0.013 per share capital gains distributions.
(2)Percent change includes reinvestment of $0.645 per share ordinary income dividends
and $0.013 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.140 per share ordinary income dividends.
(4)Percent change includes reinvestment of $0.589 per share ordinary income dividends
and $0.013 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.126 per share ordinary income dividends.
</TABLE>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/94 +3.15% -0.98%
Inception (2/28/92)
through 3/31/94 +7.98 +5.89
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/94 +2.63% -1.24%
Inception (2/28/92)
through 3/31/94 +7.44 +6.55
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced
to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
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.
