Merrill Lynch Florida 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
We are cautiously optimistic regarding the outlook for interest
rates in the second half of 1994 because of the evidence that the
economy is slowing from the strong growth exhibited in late 1993 and
early 1994. The expected reduction of new-issue supply of municipal
bonds in the upcoming year will also contribute to expected future
declines in interest rates.
The increase of volatility of interest rates during the April quarter
has provided the Fund an opportunity to increase its yield by purchasing
bonds with yields not available in over a year. We have also purchased
attractively priced discount bonds that should perform well if interest
rates decline in the second half of 1994. We plan to keep the Fund's
cash position between 5%--10% of net assets, which will allow us to
purchase Florida municipal bonds when secondary offerings become available.
We appreciate your ongoing interest in Merrill Lynch Florida
Municipal Bond Fund, and we look forward to serving your investment
needs and objectives in the months and years to come.
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 $9.80 $10.78 $10.68 -6.89%(1) -9.09%
Class B Shares 9.80 10.78 10.68 -6.89(1) -9.09
Class A Shares--Total Return +0.44(2) -7.86(3)
Class B Shares--Total Return -0.06(4) -7.98(5)
Class A Shares--Standardized 30-day Yield 5.48%
Class B Shares--Standardized 30-day Yield 5.21%
<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 $0.157 per share capital gains distributions.
(2)Percent change includes reinvestment of $0.818 per share ordinary income dividends
and $0.157 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.135 per share ordinary income dividends.
(4)Percent change includes reinvestment of $0.764 per share ordinary income dividends
and $0.157 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.123 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 +0.64% -3.38%
Inception (5/31/91)
through 3/31/94 +6.78 +5.26
[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 +0.14% -3.51%
Inception (5/31/91)
through 3/31/94 +6.25 +5.64
[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.
