Exhibit 17(b)
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to provide you with this Annual Report for the Merrill
Lynch Funds For Institutions Series.
Merrill Lynch Premier Institutional Fund
For the year ended April 30, 2000, Merrill Lynch Premier Institutional
Fund's net yield was 5.38%. The Fund's seven-day annualized yield as of April
30, 2000, was 6.00%. The average portfolio maturity for the Merrill Lynch
Premier Institutional Fund at April 30, 2000, was 62 days, compared to 64 days
at October 31, 1999.
During the period ended April 30, 2000, Merrill Lynch Premier
Institutional Fund maintained an average life ranging from a low of 52 days to
a high of 71 days. The US economy has shrugged off repeated attempts by the
Federal Reserve Board to slow it down, and appears to be accelerating at a
faster pace in recent months. While it has been our opinion that the Federal
Reserve Board would continue to raise interest rates, value in some longer-dated
securities has led us to maintain our average life in the 60-day range.
Much of our effort early in the period was focused on preparation for the
arrival of the year 2000 (Y2K). Even though we believed that the Federal
Reserve Board had taken adequate steps to ensure that markets would remain
orderly, we thought that it was important to provide enhanced shareholder
liquidity toward year-end. As such, we focused the Fund's investments on
securities maturing in December. As the period progressed and it became
apparent that the Federal Reserve Board would continue to raise interest rates,
we increased our position in floating rate securities since we believed that
they would benefit the Fund as interest rates increased. Later in the period,
we took advantage of the relatively steep yield curve by investing in one-year
bank issues.
Looking ahead, we expect the rapid growth of the US economy coupled with
signs of accelerating price pressures to keep the Federal Reserve Board in a
tightening mode.
Merrill Lynch Institutional Fund
For the year ended April 30, 2000, Merrill Lynch Institutional Fund's net
yield was 5.32%. The Fund's seven-day annualized yield as of April 30, 2000,
was 5.96%. The average portfolio maturity for the Merrill Lynch Institutional
Fund at April 30, 2000, was 62 days, compared to 67 days at October 31, 1999.
During the period ended April 30, 2000, Merrill Lynch Institutional Fund
maintained an average life ranging from a low of 51 days to a high of 72 days.
The US economy has shrugged off repeated attempts by the Federal Reserve Board
to slow it down, and appears to be accelerating at a faster pace in recent
months. While it has been our opinion that the Federal Reserve Board would
continue to raise interest rates, value in some longer-dated securities has led
us to maintain our average life in the 60-day range.
Much of our effort early in the period was focused on Y2K preparations.
Even though we believed that the Federal Reserve Board had taken adequate steps
to ensure that markets would remain orderly, we thought that it was important
to provide enhanced shareholder liquidity toward year-end. As such, we focused
the Fund's investments on securities maturing in December. As the period
progressed and it became apparent that the Federal Reserve Board would continue
to raise interest rates, we increased our position in floating rate securities
since we believed that they would benefit the Fund as interest rates increased.
Later in the period, we took advantage of the relatively steep yield curve by
investing in one-year bank issues.
1
Looking ahead, we expect the rapid growth of the US economy coupled with
signs of accelerating price pressures to keep the Federal Reserve Board in a
tightening mode.
Merrill Lynch Rated Institutional Fund
For the year ended April 30, 2000, Merrill Lynch Rated Institutional
Fund's net yield was 5.29%. The Fund's seven-day annualized yield as of April
30, 2000, was 5.85%. The average portfolio maturity for the Merrill Lynch Rated
Institutional Fund at April 30, 2000, was 52 days, compared to 39 days at
October 31, 1999.
During the period ended April 30, 2000, Merrill Lynch Rated Institutional
Fund maintained an average life ranging from a low of 28 days to a high of 55
days. The US economy has shrugged off repeated attempts by the Federal Reserve
Board to slow it down, and appears to be accelerating at a faster pace in
recent months. While it has been our opinion that the Federal Reserve Board
would continue to raise interest rates, value in some longer-dated securities
has led us to maintain our average life in the 50-day range.
Much of our effort early in the period was focused on Y2K preparations.
Even though we believed that the Federal Reserve Board had taken adequate steps
to ensure that markets would remain orderly, we thought that it was important
to provide enhanced shareholder liquidity toward year-end. As such, we focused
the Fund's investments on securities maturing in December. As the period
progressed and it became apparent that the Federal Reserve Board would continue
to raise interest rates, we increased our position in floating rate securities
since we believed that they would benefit the Fund as interest rates increased.
Later in the period, we took advantage of the relatively steep yield curve by
investing in one-year bank issues.
Looking ahead, we expect the rapid growth of the US economy coupled with
signs of accelerating price pressures to keep the Federal Reserve Board in a
tightening mode.
Merrill Lynch Government Fund
For the year ended April 30, 2000, Merrill Lynch Government Fund's net
yield was 5.22%. The Fund's seven-day annualized yield as of April 30, 2000,
was 5.79%. The average portfolio maturity for the Merrill Lynch Government Fund
at April 30, 2000, was 55 days, compared to 56 days at October 31, 1999.
For the six months ended April 30, 2000, Merrill Lynch Government Fund
generally held its average life close to the 60-day area. This reflected our
involvement in a steep yield curve environment that was driven initially by Y2K
concerns and a more restrictive monetary policy.
For the balance of 1999, we prepared the Fund for Y2K. We reduced our
overnight position from 30% of net assets to 18% by 1999 year-end. Conversely,
we added a three-month agency exposure as financing levels declined
dramatically. On the floating rate front, we favored securities with an
interest rate floor that were reset off the weekly three-month Treasury bill
auction.
Recent months have seen a pronounced change in the Fund's structure. We
believed that, despite rising interest rates, the lack of Treasury supply
resulting from diminished issuance and buybacks would invert the yield curve.
As a result, we adopted a barbell structure. At April 30, 2000, nearly 50% of
the Fund's net assets were invested in overnight issues, with 30% in floating
rate issues and the balance in the one-year sector. This allows the greater
portion of the Fund's assets to take advantage of rising interest rates while
the longer-term investments should provide yield enhancement and potential
price appreciation.
2
Merrill Lynch Treasury Fund
For the year ended April 30, 2000, Merrill Lynch Treasury Fund's net yield
was 4.83%. The Fund's seven-day annualized yield as of April 30, 2000, was
5.54%. The average portfolio maturity for Merrill Lynch Treasury Fund at April
30, 2000, was 54 days, compared to 55 days at October 31, 1999.
For the six months ended April 30, 2000, Merrill Lynch Treasury Fund
largely maintained its average life near the 60-day limit as relatively tight
technicals fostered a steep yield curve and a favorable interest rate
environment. The first half of the period dealt with uncertainty surrounding
the Y2K phenomena. We believed that while our asset base usually grows
temporarily at year-end, the assets attracted by this event would be invested
for an extremely short term as a result of their tenuous nature. As a result,
the Fund's average life fell to a low of 30 days in recognition that
preservation of capital would take precedent over yield.
More recently, we have taken a more aggressive stance. Changes to the
Treasury's auction calendar have steepened the yield curve in the front end and
dramatically tightened Treasury liquidity spreads. As a result, we eliminated
our Treasury note position and extended the Fund's average life to the high
50-day area. We have targeted early May, June and July bills as sectors with
value. Reinvestment of April cash management bills coupled with the results of
the Federal Reserve Board's meeting on May 16 have continued to keep the front
end of the yield curve steep.
Merrill Lynch Institutional Tax-Exempt Fund
For the year ended April 30, 2000, Merrill Lynch Institutional Tax-Exempt
Fund's net yield was 3.36%. The Fund's seven-day annualized yield as of April
30, 2000, was 4.28%. The average portfolio maturity for Merrill Lynch
Institutional Tax-Exempt Fund at April 30, 2000, was 50 days, compared to 65
days at October 31, 1999.
We continued to pursue a neutral investment strategy throughout the
six-month period ended April 30, 2000. Tight labor conditions persisted
throughout the period, while economic growth continued at an accelerated rate.
As a result of an increase in energy prices, inflation, which had remained
somewhat subdued for the majority of the period, began to show signs of
filtering into the economy by the end of the period. The Federal Reserve Board
continued its approach to monetary policy by increasing the Federal Funds rate
in a series of 25 basis point (0.25%) moves to slow economic growth. The latest
move came at the May 16, 2000 Federal Open Market Committee meeting, when the
Federal Funds rate was increased to 6.50%.
We allowed the average life of the Fund, which began the period in the
70-day range, to decline steadily and to end the period in the 50-day range. In
an attempt to stabilize the Fund's yield during periods when variable rate
demand note (VRDN) rates became volatile, we pursued short-term municipal notes
and purchased tax-exempt commercial paper in the 60-day to 90-day range. At the
beginning of the period, we anticipated that short-term municipal issuance
would subside with the coming of Y2K, however a steady inventory of smaller
local municipal note issuance persisted. This issuance allowed yields on
one-year municipal notes to increase from the 3.70% range to the 4.00% range in
December and end the period in the 4.25% range. In December, we had prepared
for an anticipated increase in subscriptions from individuals seeking a safe
haven from Y2K and from corporations taking advantage of an anticipated spike
in VRDN yields that were caused by seasonal year-end factors. However, the
Fund's net assets did not increase but declined. As for the short-term,
tax-exempt municipal market in general, year-end cash flows were similar to
those of the previous year with no noticeable irregularities created by the
effects of Y2K.
The Fund was well situated in January and February as a seasonal increase
in subscriptions allowed yields on VRDN securities to decline below attractive
tax-equivalent levels. This reduction in VRDN yield levels allowed
3
the Fund to perform well because of its smaller exposure to such securities. In
March, we began to increase the Fund's exposure to VRDNs to seek to take
advantage of the anticipated rise in VRDN yield levels offered during the
annual tax season. The net assets of the Fund, which began the period at $2.4
billion, increased to a high of nearly $2.5 billion on December 2, 1999 before
ending the period at $2.1 billion.
In the coming months, we will continue to monitor the changes in the
economic environment in accordance with the Fund's investment strategy. As
inflationary data begins to show signs of accelerating, the Federal Reserve
Board remains prepared to continue to raise short-term interest rates in an
effort to slow economic growth. The emphasis will be on how high short-term
interest rates will have to go in order to slow the domestic economy. However,
with the equity markets beginning to become more volatile, it has become
unclear as to what effect this will have on the Federal Reserve Board's agenda.
We will begin the upcoming period pursuing a more defensive approach to the
market as we continue through a period of higher short-term municipal rates
created from seasonal tax-related redemptions. We expect to continue to
concentrate on maintaining tax-exempt commercial paper in the 60-day to 90-day
range while looking to increase the Fund's exposure to VRDNs. We will also
pursue short-term municipal notes when yield levels warrant it. Finally, we
will closely monitor credit quality while at the same time seek to maintain an
attractive tax-exempt yield for our shareholders.
We thank you for your continued interest in Merrill Lynch Funds For
Institutions Series, and we look forward to serving your investment needs in
the months and years ahead.
Sincerely,
/s/ Robert W. Crook /s/ P. Michael Walsh
Robert W. Crook P. Michael Walsh
President and Trustee Vice President and Portfolio Manager
Merrill Lynch Funds For Institutions Series Merrill Lynch Premier Institutional Fund
Merrill Lynch Institutional Fund
Merrill Lynch Rated Institutional Fund
/s/ Kevin Schiatta /s/ John Ng
Kevin Schiatta John Ng
Vice President and Portfolio Manager Vice President and Portfolio Manager
Merrill Lynch Institutional Tax-Exempt Fund Merrill Lynch Government Fund
Merrill Lynch Treasury Fund
May 26, 2000
4
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
U.S. $15,000,000 U.S. Treasury Notes ................... 5.38% 07/31/00 $ 14,967,195
Government & 30,000,000 U.S. Treasury Notes ................... 4.63 11/30/00 29,700,000
Agency 10,000,000 U.S. Treasury Notes ................... 4.63 12/31/00 9,875,000
Issues -- 3.1% 56,800,000 U.S. Treasury Notes ................... 4.50 01/31/01 55,983,500
40,000,000 U.S. Treasury Notes ................... 5.00 04/30/01 39,412,520
25,000,000 Federal Home Loan Banks ............... 4.95 11/20/00 24,819,573
25,000,000 Federal Home Loan Mortgage Corp. ...... 5.05 11/17/00 24,836,575
25,000,000 Federal Home Loan Mortgage Corp. ...... 5.13 11/24/00 24,838,997
25,000,000 Federal Home Loan Mortgage Corp. ...... 5.18 11/24/00 24,845,847
12,500,000 Federal Home Loan Mortgage Corp. ...... 5.25 01/19/01 12,393,686
25,000,000 Federal Home Loan Mortgage Corp. ...... 5.15 01/26/01 24,760,197
25,000,000 Federal National Mortgage Assoc. ...... 5.21 01/26/01 24,706,797
41,455,000 Federal National Mortgage Assoc. ...... 5.41 03/22/01 40,956,915
25,000,000 Federal National Mortgage Assoc. ...... 5.38 03/27/01 24,688,848
25,000,000 Federal National Mortgage Assoc. ...... 5.40 03/27/01 24,694,223
24,900,000 Federal National Mortgage Assoc. ...... 5.38 04/06/01 24,582,398
20,000,000 Federal National Mortgage Assoc. ...... 6.00 07/17/01 19,802,500
- -------------------------------------------------------------------------------------------------------------------------
Total U.S. Government & Agency
Issues (Cost $450,554,822) ............ 445,864,771
- -------------------------------------------------------------------------------------------------------------------------
U.S. 25,000,000 Federal Home Loan Mortgage Corp. ...... 6.28 07/14/00 24,997,473
Government 100,000,000 Federal Home Loan Mortgage Corp. ...... 6.06 01/10/01 99,970,990
Agency 100,000,000 Federal Home Loan Mortgage Corp. ...... 6.10 09/17/01 99,900,852
Issues -- 244,500,000 Federal National Mortgage Assoc. ...... 6.08 09/17/01 244,241,603
Variable Rate -- 200,000,000 Student Loan Marketing Assoc. ......... 6.43 09/29/00 199,979,715
10.7% 200,000,000 Student Loan Marketing Assoc. ......... 6.22 03/09/01 199,917,106
100,000,000 Student Loan Marketing Assoc. ......... 6.28 08/14/01 99,981,501
140,000,000 Student Loan Marketing Assoc. ......... 6.30 08/23/01 139,929,654
450,000,000 Student Loan Marketing Assoc. ......... 6.25 04/12/02 449,752,149
- -------------------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency
Issues -- Variable Rate
(Cost $1,558,634,124) ................. 1,558,671,043
- -------------------------------------------------------------------------------------------------------------------------
Certificates of 25,000,000 First USA Bank, NA .................... 6.20 10/18/00 24,928,421
Deposit -- 0.2%
- -------------------------------------------------------------------------------------------------------------------------
Total Certificates of Deposit
(Cost $24,993,341) .................... 24,928,421
- -------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
5
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
Certificates $ 50,000,000 First Union National Bank, NC ............... 6.16% 08/29/00 $50,000,000
of Deposit -- 100,000,000 First Union National Bank, NC ............... 6.21 08/31/00 100,000,000
Variable
Rate -- 1.0%
- -------------------------------------------------------------------------------------------------------------------------
Total Certificates of Deposit --
Variable Rate (Cost $150,000,000) ........... 150,000,000
- -------------------------------------------------------------------------------------------------------------------------
Euro 20,000,000 Bayerische Landesbank Girozentrale,
Certificates of London .................................... 6.09 06/13/00 19,999,742
Deposit -- 50,000,000 Cassa di Risparmio delle Provincie
Variable Lombarde, London .......................... 6.07 06/09/00 50,000,534
Rate -- 1.5% 50,000,000 Credit Agricole Indosuez, NY ................ 6.71 03/07/01 49,882,504
100,000,000 Svenska Handelsbanken, London ............... 6.02 05/09/00 100,000,394
- -------------------------------------------------------------------------------------------------------------------------
Total Euro Certificates of Deposit --
Variable Rate (Cost $220,004,701) ........... 219,883,174
- -------------------------------------------------------------------------------------------------------------------------
Yankee 25,000,000 Australia & New Zealand Banking
Certificates of Group, NY ................................. 6.72 03/16/01 24,944,244
Deposit -- 100,000,000 Banco Bilbao Vizcaya, NY .................... 6.80 04/17/01 99,822,253
10.6% 100,000,000 Bank of Nova Scotia, Portland ............... 6.01 11/13/00 99,556,000
97,000,000 Bank of Nova Scotia, Portland ............... 6.78 02/22/01 96,842,706
38,000,000 Bank of Nova Scotia, Portland ............... 6.74 03/14/01 37,909,964
25,000,000 Commerzbank AG, NY .......................... 5.91 08/04/00 24,944,529
57,000,000 Commerzbank AG, NY .......................... 6.76 03/27/01 56,889,490
70,000,000 Credit Communal de Belgique, NY ............. 5.96 10/02/00 69,745,791
20,000,000 Credit Communal de Belgique, NY ............. 6.54 01/18/01 19,943,727
50,000,000 Credit Communal de Belgique, NY ............. 6.71 02/28/01 49,887,918
60,000,000 Deutsche Bank AG, NY ........................ 6.67 03/12/01 59,841,475
25,000,000 Deutsche Bank AG, NY ........................ 6.80 04/17/01 24,957,858
50,000,000 Norddeutsche Landesbank
Girozentrale, NY .......................... 6.72 02/07/01 49,906,331
100,000,000 Norddeutsche Landesbank
Girozentrale, NY .......................... 6.86 04/06/01 99,889,161
50,000,000 Rabobank Nederland N.V., NY ................. 6.71 03/16/01 49,884,304
50,000,000 Rabobank Nederland N.V., NY ................. 6.85 04/06/01 49,935,761
50,000,000 Royal Bank of Canada, NY .................... 6.54 01/16/01 49,860,023
See Notes to Financial Statements.
6
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
Yankee $ 50,000,000 Svenska Handelsbanken, NY .................. 6.40% 12/29/00 $ 49,834,399
Certificates of 50,000,000 Svenska Handelsbanken, NY .................. 6.67 03/02/01 49,872,021
Deposit 100,000,000 Toronto-Dominion Bank Ltd., NY ............. 6.05 06/19/00 100,000,000
(continued) 23,000,000 UBS AG, Stamford ........................... 5.82 08/03/00 22,944,620
100,000,000 UBS AG, Stamford ........................... 6.00 11/13/00 99,550,803
50,000,000 UBS AG, Stamford ........................... 6.06 11/20/00 49,781,819
100,000,000 UBS AG, Stamford ........................... 6.38 12/22/00 99,671,172
50,000,000 Unibank A/S, NY ............................ 6.81 04/17/01 49,920,261
50,000,000 Westpac Banking Corp., NY .................. 6.80 03/28/01 49,721,759
- -------------------------------------------------------------------------------------------------------------------------
Total Yankee Certificates of Deposit
(Cost $1,539,495,050) ...................... 1,536,058,389
- -------------------------------------------------------------------------------------------------------------------------
Yankee 150,000,000 Bank Austria, NY ........................... 6.08 12/11/00 149,936,087
Certificates of 50,000,000 Bayerische Hypo-und Vereinsbank
Deposit -- AG, NY ................................... 6.04 05/15/00 49,998,634
Variable 225,000,000 Bayerische Hypo-und Vereinsbank
Rate -- 7.6% AG, NY ................................... 6.10 02/28/01 224,908,821
75,000,000 Bayerische Landesbank Girozentrale,
NY ....................................... 6.10 11/09/00 74,972,459
100,000,000 Bayerische Landesbank Girozentrale,
NY ....................................... 6.03 12/15/00 99,937,705
155,000,000 Bayerische Landesbank Girozentrale,
NY ....................................... 6.10 02/28/01 154,937,187
200,000,000 Credit Agricole Indosuez, NY ............... 6.12 11/08/00 199,937,377
150,000,000 Commerzbank AG, NY ......................... 6.05 03/01/01 149,939,026
- -------------------------------------------------------------------------------------------------------------------------
Total Yankee Certificates of
Deposit -- Variable Rate
(Cost $1,104,567,296) ...................... 1,104,567,296
- -------------------------------------------------------------------------------------------------------------------------
Time 150,000,000 Barclays Bank PLC, Nassau .................. 5.97 05/01/00 150,000,000
Deposits -- 200,000,000 Chase Manhattan Bank, Nassau ............... 6.00 05/01/00 200,000,000
10.6% 150,000,000 Citibank, Nassau ........................... 5.88 05/01/00 150,000,000
225,000,000 Deutsche Bank AG, Cayman ................... 6.02 05/01/00 225,000,000
150,000,000 First Union National Bank, Nassau .......... 5.88 05/01/00 150,000,000
72,000,000 State Street Bank & Trust Co.,
Cayman ................................... 6.00 05/01/00 72,000,000
See Notes to Financial Statements.
7
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
Time $100,760,000 SunTrust Bank, Cayman .................... 5.88% 05/01/00 $ 100,760,000
Deposits 200,000,000 UBS AG, Cayman ........................... 5.97 05/01/00 200,000,000
(continued) 288,000,000 Westdeutsche Landesbank
Girozentrale, Cayman ................... 6.00 05/01/00 288,000,000
- -------------------------------------------------------------------------------------------------------------------------
Total Time Deposits
(Cost $1,535,760,000) .................... 1,535,760,000
- -------------------------------------------------------------------------------------------------------------------------
Bank Notes -- 50,000,000 Bank One, N.A., Illinois ................. 5.96 11/13/00 49,951,370
0.8% 25,000,000 First USA Bank, N.A. ..................... 6.08 10/10/00 24,886,623
35,000,000 National City Bank, PA ................... 6.67 03/13/01 34,768,822
- -------------------------------------------------------------------------------------------------------------------------
Total Bank Notes
(Cost $109,955,343) ...................... 109,606,815
------------------------------------------------------------------------------------------------------------------------
Bank Notes -- 50,000,000 American Express Centurion Bank .......... 6.20 05/03/00 50,000,000
Variable 65,000,000 American Express Centurion Bank .......... 6.23 06/19/00 64,987,439
Rate -- 3.6% 50,000,000 Bank of America N.A. ..................... 6.15 04/27/01 50,000,000
90,000,000 Comerica Bank ............................ 6.13 05/01/00 90,000,000
50,000,000 First Union National Bank ................ 6.20 05/08/00 50,000,000
20,000,000 First Union National Bank ................ 6.06 06/02/00 20,000,000
75,000,000 First Union National Bank ................ 6.26 09/27/00 75,000,000
20,000,000 Fleet National Bank ...................... 6.27 08/14/00 19,994,823
50,000,000 Fleet National Bank ...................... 6.41 01/22/01 50,027,895
29,000,000 Morgan Guaranty Trust Co. of NY .......... 6.15 05/10/00 28,999,646
25,000,000 National City Bank, Ohio ................. 6.10 11/22/00 24,991,598
- -------------------------------------------------------------------------------------------------------------------------
Total Bank Notes -- Variable Rate
(Cost $524,019,910) ...................... 524,001,401
- -------------------------------------------------------------------------------------------------------------------------
Corporate 75,000,000 Abbey National Treasury Services
Notes -- 2.4% PLC .................................... 6.03 11/20/00 74,465,175
29,500,000 AT&T Corp. ............................... 7.50 11/15/00 29,581,181
20,000,000 AT&T Corp. ............................... 6.88 01/16/01 19,957,898
50,000,000 Beta Finance Corp. ....................... 5.62 06/15/00 49,999,699
17,000,000 Beta Finance Corp. ....................... 5.75 07/21/00 17,000,000
23,000,000 Beta Finance Corp. ....................... 5.90 08/14/00 23,000,000
50,000,000 Beta Finance Corp. ....................... 6.62 01/25/01 50,000,000
10,000,000 Beta Finance Corp. ....................... 6.99 04/10/01 10,000,000
See Notes to Financial Statements.
8
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
Corporate $ 12,500,000 CIT Group Holdings Inc. ................. 6.70% 06/02/00 $ 12,505,538
Notes 25,000,000 General Motors Acceptance Corp. ......... 5.33 10/20/00 24,832,497
(continued) 40,000,000 Goldman Sachs Group Inc. ................ 6.00 08/07/00 39,931,556
- -------------------------------------------------------------------------------------------------------------------------
Total Corporate Notes
(Cost $352,079,538) ..................... 351,273,544
- -------------------------------------------------------------------------------------------------------------------------
Corporate 25,000,000 American Honda Finance Corp. ............ 6.08 05/24/00 24,999,694
Notes -- 150,000,000 Associates Corp of North America ........ 6.03 03/16/01 149,936,400
Variable 25,000,000 AT&T Corp. .............................. 6.07 03/08/01 24,993,401
Rate -- 14.7% 50,000,000 Bear Stearns Companies Inc. ............. 6.25 06/22/00 49,999,830
25,000,000 Bear Stearns Companies Inc. ............. 6.28 01/11/01 24,986,725
80,000,000 Beta Finance Corp. ...................... 6.12 02/05/01 80,000,000
20,000,000 Beta Finance Corp. ...................... 6.12 03/15/01 20,000,000
60,000,000 CIT Group Holdings Inc. ................. 6.16 05/30/00 59,997,438
83,500,000 CIT Group Holdings Inc. ................. 6.30 09/15/00 83,513,936
115,000,000 CIT Group Holdings Inc. ................. 6.11 04/24/01 114,921,490
54,000,000 Ford Motor Credit Company ............... 6.20 05/05/00 54,000,000
60,000,000 Ford Motor Credit Company ............... 6.06 11/22/00 59,989,434
300,600,000 Ford Motor Credit Company ............... 6.13 11/24/00 300,541,984
23,500,000 General Electric Capital Corp. .......... 6.04 05/03/00 23,500,000
39,900,000 General Electric Capital Corp. .......... 6.05 05/12/00 39,900,000
50,000,000 General Electric Capital Corp. .......... 6.05 05/26/00 50,000,000
56,585,000 General Motors Acceptance Corp. ......... 6.25 07/20/00 56,564,624
114,000,000 General Motors Acceptance Corp. ......... 6.41 11/20/00 114,123,576
36,000,000 General Motors Acceptance Corp. ......... 6.25 12/01/00 36,007,376
22,000,000 General Motors Acceptance Corp. ......... 6.14 02/27/01 22,000,000
15,000,000 Goldman Sachs Group Inc. ................ 6.41 05/15/01 15,000,000
90,000,000 Household Finance Corp. ................. 6.25 03/29/01 89,929,800
100,000,000 Lincs Series 1998-2 ..................... 6.13 03/01/01 100,000,000
75,000,000 Morgan Stanley Dean Witter & Co. ........ 6.70 11/13/00 75,171,967
250,000,000 Natural Rural Utilities Coop. Corp. Fin.. 6.26 01/24/01 249,910,250
30,000,000 Racers 1998-MM-7-1 ...................... 6.18 08/11/00 30,000,000
85,000,000 SMM Trust 1999-H ........................ 6.32 09/25/00 85,000,000
100,000,000 Toyota Motor Corp. ...................... 6.18 01/09/01 99,974,200
- -------------------------------------------------------------------------------------------------------------------------
Total Corporate Notes -- Variable
Rate (Cost $2,135,079,328) .............. 2,134,962,125
- -------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
9
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
Master $ 50,000,000 General Electric Company ................. 6.21% 09/01/00 $ 50,000,000
Notes -- 20,000,000 Goldman Sachs Group Inc. ................. 6.02 06/30/00 20,000,000
Variable 150,000,000 Goldman Sachs Group Inc. ................. 6.07 08/04/00 150,000,000
Rate -- 6.4% 30,000,000 Jackson National Life Insurance Co. ...... 6.15 05/01/00 30,000,000
30,000,000 Jackson National Life Insurance Co. ...... 6.25 05/01/01 30,000,000
250,000,000 J. P. Morgan Securities Inc. ............. 6.07 06/20/00 250,000,000
80,000,000 MetLife Funding Inc. ..................... 6.18 05/01/00 80,000,000
80,000,000 MetLife Funding Inc. ..................... 6.25 05/01/01 80,000,000
100,000,000 MetLife Funding Inc. ..................... 6.27 05/01/01 100,000,000
60,000,000 Monumental Life Insurance Co. ............ 6.28 11/17/00 60,000,000
10,000,000 Pacific Life Insurance Co. ............... 6.21 06/01/00 10,000,000
10,000,000 Pacific Life Insurance Co. ............... 6.21 10/02/00 10,000,000
25,000,000 Principal Life Insurance Company ......... 6.23 08/16/00 25,000,000
30,000,000 Travelers Insurance Company (The) ........ 6.16 02/01/01 30,000,000
- -------------------------------------------------------------------------------------------------------------------------
Total Master Notes -- Variable Rate
(Cost $925,000,000) ...................... 925,000,000
- -------------------------------------------------------------------------------------------------------------------------
Commercial 100,000,000 Abbey National North America Corp. 6.05 08/29/00 97,880,923
Paper -- 25.0% 50,000,000 Abbey National North America Corp. 6.07 08/30/00 48,931,282
30,319,000 Alpine Securitization Corp. .............. 5.96 05/23/00 30,208,571
100,000,000 American Express Credit Corp. ............ 6.03 05/25/00 99,598,000
25,000,000 Amsterdam Funding Corp. .................. 5.92 05/04/00 24,987,667
23,754,000 Amsterdam Funding Corp. .................. 6.05 05/22/00 23,670,168
50,000,000 Amsterdam Funding Corp. .................. 6.05 05/23/00 49,815,139
20,000,000 Amsterdam Funding Corp. .................. 6.05 05/30/00 19,902,528
25,000,000 Amsterdam Funding Corp. .................. 6.23 07/27/00 24,619,656
50,000,000 Apreco Inc. .............................. 6.05 05/31/00 49,747,917
50,000,000 AT&T Corp. ............................... 6.67 03/08/01 50,000,000
92,387,000 Atlantis One Funding Corp. ............... 5.87 05/01/00 92,387,000
80,475,000 Atlantis One Funding Corp. ............... 5.87 05/02/00 80,461,878
30,000,000 Bills Securitization Ltd. ................ 5.91 05/18/00 29,916,275
45,000,000 Bills Securitization Ltd. ................ 6.10 05/31/00 44,771,250
25,000,000 Bills Securitization Ltd. ................ 6.01 06/12/00 24,824,708
50,000,000 CBA Delaware (Finance) Inc. .............. 5.74 05/19/00 49,856,500
61,000,000 Ciesco L.P. .............................. 6.05 05/30/00 60,702,710
25,000,000 Clipper Receivables Corp. ................ 5.97 06/09/00 24,838,312
150,000,000 Corporate Asset Funding Co., Inc. ........ 5.93 05/26/00 149,382,292
See Notes to Financial Statements.
10
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
Commercial $ 50,000,000 Corporate Asset Funding Co., Inc. .......... 6.04% 05/30/00 $49,756,722
Paper 100,000,000 Corporate Asset Funding Co., Inc. .......... 6.04 05/31/00 99,496,667
(continued) 50,000,000 Corporate Receivables Corp. ................ 6.20 07/17/00 49,328,818
50,000,000 Countrywide Home Loans Inc. ................ 6.06 05/23/00 49,814,833
50,000,000 Credit Suisse First Boston Inc. ............ 5.94 06/16/00 49,620,500
75,000,000 CXC Inc. ................................... 5.75 05/15/00 74,832,292
25,000,000 CXC Inc. ................................... 5.94 05/15/00 24,942,250
75,000,000 CXC Inc. ................................... 6.20 07/14/00 74,033,281
50,000,000 DaimlerChrysler North America
Holding Corp. ............................ 5.75 05/15/00 49,888,194
80,000,000 DaimlerChrysler North America
Holding Corp. ............................ 5.93 06/15/00 79,407,000
45,215,000 Delaware Funding Corp. ..................... 6.06 05/25/00 45,032,331
50,000,000 Edison Asset Securitization LLC ............ 6.07 05/31/00 49,747,083
41,202,000 Edison Asset Securitization LLC ............ 6.19 07/24/00 40,597,357
40,544,000 Enterprise Funding Corp. ................... 6.06 05/24/00 40,387,027
45,993,000 Enterprise Funding Corp. ................... 6.05 05/25/00 45,807,495
27,000,000 Formosa Plastics Corp. U.S.A.
(Series A) ............................... 5.92 05/09/00 26,964,480
12,648,000 France Telecom ............................. 5.93 05/04/00 12,641,750
100,000,000 GE Capital International Funding Inc. 5.88 05/17/00 99,738,667
50,000,000 GE Capital International Funding Inc. 5.88 05/19/00 49,853,000
75,000,000 General Electric Capital Corp. ............. 5.73 05/25/00 74,713,500
100,000,000 General Electric Capital Corp. ............. 6.04 05/31/00 99,496,667
37,000,000 GTE Corp. .................................. 6.06 05/23/00 36,862,977
24,000,000 GTE Corp. .................................. 6.07 05/26/00 23,898,833
40,000,000 Lehman Brothers Holdings Inc. .............. 6.15 08/18/00 39,232,732
42,335,000 Mont Blanc Capital Corp. ................... 5.95 05/22/00 42,188,062
28,263,000 Monte Rosa Capital Corp. ................... 5.96 05/23/00 28,160,060
50,000,000 Park Avenue Receivables Corp. .............. 5.92 05/03/00 49,983,556
100,341,000 Park Avenue Receivables Corp. .............. 6.05 05/15/00 100,104,920
29,000,000 Reed Elsevier Inc. ......................... 6.06 05/30/00 28,858,432
50,500,000 Riverwoods Funding Corp. ................... 6.05 05/22/00 50,321,777
50,000,000 Sigma Finance Inc. ......................... 6.23 07/21/00 49,293,115
36,000,000 Sigma Finance Inc. ......................... 5.92 05/10/00 35,946,720
50,000,000 Sigma Finance Inc. ......................... 5.92 05/12/00 49,909,556
See Notes to Financial Statements.
11
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
Commercial $ 50,000,000 Svenska Handelsbanken Inc. ................. 5.87% 05/26/00 $ 49,796,180
Paper 50,000,000 Tulip Funding Corp. ........................ 6.00 06/21/00 49,575,000
(continued) 75,000,000 Tulip Funding Corp. ........................ 6.21 07/25/00 73,885,914
200,000,000 UBS Finance Inc. ........................... 6.04 05/01/00 200,000,000
75,000,000 United Mexican States ...................... 5.75 05/15/00 74,832,292
75,000,000 Variable Funding Capital Corp. ............. 5.92 05/05/00 74,950,667
25,000,000 WCP Funding Inc. ........................... 5.96 05/12/00 24,954,472
25,000,000 Windmill Funding Corp. ..................... 5.92 05/02/00 24,995,889
50,000,000 Windmill Funding Corp. ..................... 6.07 05/24/00 49,806,097
25,000,000 Windmill Funding Corp. ..................... 6.05 05/26/00 24,894,965
17,460,000 Windmill Funding Corp. ..................... 6.06 05/30/00 17,374,766
25,000,000 Windmill Funding Corp. ..................... 6.25 07/27/00 24,601,313
150,000,000 Woolwich PLC ............................... 5.75 05/16/00 149,640,625
- -------------------------------------------------------------------------------------------------------------------------
Total Commercial Paper
(Cost $3,636,919,076) ...................... 3,636,671,610
- -------------------------------------------------------------------------------------------------------------------------
Commercial 121,000,000 AT&T Corp. ................................. 6.24 07/13/00 120,989,553
Paper -- 150,000,000 AT&T Corp. ................................. 6.07 03/08/01 149,975,167
Variable 50,000,000 General Electric Capital Corp. ............. 6.22 10/04/00 50,000,000
Rate -- 2.7% 75,000,000 Variable Funding Capital Corp. ............. 6.12 08/22/00 75,000,000
- -------------------------------------------------------------------------------------------------------------------------
Total Commercial Paper --
Variable Rate (Cost $395,965,513) .......... 395,964,720
- -------------------------------------------------------------------------------------------------------------------------
Total Investments -- 100.9%
(Cost $14,663,028,042) ..................... 14,653,213,309
- -------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other
Assets -- (0.9%) ........................... (128,354,805)
- -------------------------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00
Per Share on 14,534,673,237
Shares of Beneficial Interest
Outstanding -- 100.0% ...................... $14,524,858,504
=========================================================================================================================
Note--Costs for federal income tax purposes are the same as those shown above.
At April 30, 2000, net unrealized depreciation amounted to $9,814,733 and is
comprised of $154,915 in appreciation and $9,969,648 in depreciation.
*Commercial Paper and some U.S. Government and Agency Issues are traded on a
discount basis; the interest rate shown is the discount rate paid at the time
of purchase by the Fund. Other securities bear interest at the rates shown,
payable at fixed dates or upon maturity; the rates shown are the rates in
effect at April 30, 2000. For variable rate instruments, the next date on which
the interest rate is to be adjusted is deemed the maturity date for valuation.
See Notes to Financial Statements.
12
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Statement of Assets and Liabilities
April 30, 2000
================================================================================
Assets:
Total investments at value (identified cost $14,663,028,042) (Note 1a) ............ $14,653,213,309
Cash .............................................................................. 12,230,304
Interest receivable ............................................................... 88,878,339
Receivable for investments sold ................................................... 23,000,000
Prepaid expense ................................................................... 17,319
---------------
Total assets ................................................................ 14,777,339,271
---------------
Liabilities:
Advisory fee payable (Note 2) ..................................................... 1,817,724
Payable for investments purchased ................................................. 210,000,000
Payable for fund shares purchased ................................................. 30,150,000
Dividends payable ................................................................. 10,055,068
Accrued expenses .................................................................. 457,975
---------------
Total liabilities ........................................................... 252,480,767
---------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based on
14,534,673,237 shares of beneficial interest outstanding) ....................... $14,524,858,504
===============
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Statement of Operations
For the Year Ended April 30, 2000
================================================================================
Investment Income:
Interest and discount earned (Note 1d) ............................................ $727,386,950
------------
Expenses:
Investment advisory fee (Note 2) .................................................. 19,401,530
Registration fees ................................................................. 2,186,490
Accounting and custodian services ................................................. 595,528
Dividend and transfer agency fees ................................................. 178,836
Legal and audit fees .............................................................. 148,503
Trustees' fees (Note 5) ........................................................... 100,147
Printing and shareholder reports .................................................. 64,690
Insurance ......................................................................... 54,587
Miscellaneous ..................................................................... 46,707
------------
Total expense .................................................................. 22,777,018
------------
Net investment income .......................................................... 704,609,932
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain from investment transactions .................... $ 139,941
Net unrealized depreciation of investments ........................ (7,828,719)
----------
Net realized and unrealized loss from investments .............................. (7,688,778)
------------
Net Increase in Net Assets Resulting From Operations .............................. $696,921,154
============
See Notes to Financial Statements.
13
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Statements of Changes in Net Assets Year Ended April 30,
2000 1999
========================================================================================================
Increase in Net Assets:
Operations:
Net investment income ........................................ $ 704,609,932 $ 464,873,396
Net realized gain from investment transactions ............... 139,941 928,397
Net unrealized depreciation of investments ................... (7,828,719) (1,036,026)
--------------- ---------------
Net increase in net assets resulting from operations ......... 696,921,154 464,765,767
Total declared as dividends to shareholders (Note 4) ......... (704,749,873) (465,801,793)
Capital share transactions (Note 3) .......................... 3,904,804,404 3,984,396,212
--------------- ---------------
Net increase in net assets ................................... 3,896,975,685 3,983,360,186
Net Assets:
Beginning of year ............................................ 10,627,882,819 6,644,522,633
--------------- ---------------
End of year .................................................. $14,524,858,504 $10,627,882,819
=============== ===============
- --------------------------------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Financial Highlights Year Ended April 30,
---------------------------------------
For the Period
January 27, 1997*
2000 1999 1998 to April 30, 1997
=============================================================================================================================
Net Asset Value, Beginning of period .............. $1.00 $1.00 $1.00 $1.00
Income from Investment Operations:
Net investment income ............................ .054 .052 .055 .014
Less Distributions:
Dividends from net investment income ............. (.054) (.052) (.055) (.014)
----------- ----------- ---------- ------------
Net Asset Value, End of period .................... $1.00 $1.00 $1.00 $ 1.00
=========== =========== ========== ============
Total Return ...................................... 5.51% 5.32% 5.69% 1.40%(1)
Ratios/Supplemental Data:
Net Assets, end of period (000) .................. $14,524,859 $10,627,883 $6,644,523 $2,823,196
Ratio of expenses to average net assets
(before waiver) ................................. .18% .18% .18% .18%(2)
Ratio of expenses to average net assets
(after waiver) .................................. -- -- -- .17%(2)
Ratio of net investment income, including realized
and unrealized gains and losses, to average net
assets (before waiver) .......................... 5.40% 5.13% 5.55% 5.26%(2)
Ratio of net investment income, including realized
and unrealized gains and losses, to average net
assets (after waiver) ........................... -- -- -- 5.27%(2)
*Commencement of operations
(1) Cumulative total return
(2) On an annualized basis
See Notes to Financial Statements.
14
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
U.S. $ 12,500,000 U.S. Treasury Notes .................. 6.25% 05/31/00 $ 12,515,040
Government & 15,000,000 U.S. Treasury Notes .................. 5.38 07/31/00 14,971,875
Agency 22,500,000 U.S. Treasury Notes .................. 4.50 09/30/00 22,324,230
Issues -- 3.9% 10,000,000 U.S. Treasury Notes .................. 4.63 11/30/00 9,900,000
24,000,000 U.S. Treasury Notes .................. 4.50 01/31/01 23,662,512
20,000,000 U.S. Treasury Notes .................. 4.88 03/31/01 19,700,000
24,000,000 Federal Home Loan Banks .............. 4.95 11/20/00 23,830,822
28,000,000 Federal Home Loan Mortgage Corp. ..... 5.05 11/17/00 27,821,273
25,000,000 Federal Home Loan Mortgage Corp. ..... 5.18 11/24/00 24,849,522
12,500,000 Federal Home Loan Mortgage Corp. ..... 5.25 01/19/01 12,396,149
25,000,000 Federal Home Loan Mortgage Corp. ..... 5.15 01/26/01 24,765,423
25,000,000 Federal National Mortgage Assoc. ..... 5.21 01/26/01 24,711,672
21,870,000 Federal National Mortgage Assoc. ..... 5.41 03/22/01 21,603,580
25,000,000 Federal National Mortgage Assoc. ..... 5.38 04/06/01 24,674,248
9,000,000 Federal National Mortgage Assoc. ..... 5.30 04/17/01 8,872,469
20,000,000 Federal National Mortgage Assoc. ..... 6.00 07/17/01 19,791,700
- -------------------------------------------------------------------------------------------------------------------------
Total U.S. Government & Agency
Issues (Cost $319,323,727) ........... 316,390,515
- -------------------------------------------------------------------------------------------------------------------------
U.S. 25,000,000 Federal Home Loan Mortgage Corp. ..... 6.28 07/14/00 24,997,473
Government 100,000,000 Federal Home Loan Mortgage Corp. ..... 6.10 09/17/01 99,900,852
Agency 190,000,000 Student Loan Marketing Assoc. ........ 6.43 09/29/00 189,980,494
Issues -- 100,000,000 Student Loan Marketing Assoc. ........ 6.48 10/04/00 99,977,350
Variable 84,000,000 Student Loan Marketing Assoc. ........ 6.30 08/23/01 83,957,793
Rate -- 7.4% 100,000,000 Student Loan Marketing Assoc. ........ 6.25 04/12/02 99,944,922
- -------------------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency
Issues -- Variable Rate
(Cost $598,758,883) .................. 598,758,884
- -------------------------------------------------------------------------------------------------------------------------
Certificates of 25,000,000 First USA Bank, NA ................... 6.20 10/18/00 24,916,898
Deposit -- 0.3%
- -------------------------------------------------------------------------------------------------------------------------
Total Certificates of Deposit
(Cost $24,993,341) ................... 24,916,898
- -------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
15
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
Certificates $100,000,000 First Union National Bank ............... 6.21% 08/31/00 $100,000,000
of Deposit --
Variable
Rate -- 1.2%
- -------------------------------------------------------------------------------------------------------------------------
Total Certificates of Deposit --
Variable Rate (Cost $100,000,000) ....... 100,000,000
- -------------------------------------------------------------------------------------------------------------------------
Euro 100,000,000 Abbey National Treasury Services
Certificates PLC, London ........................... 6.27 08/29/00 99,855,560
of Deposit -- 25,000,000 Credit Agricole Indosuez, NY ............ 6.71 03/07/01 24,918,402
Variable
Rate -- 1.6%
- -------------------------------------------------------------------------------------------------------------------------
Total Euro Certificates of Deposit --
Variable Rate (Cost $125,008,467) ....... 124,773,962
- -------------------------------------------------------------------------------------------------------------------------
Yankee 50,000,000 Bank of Nova Scotia, Portland ........... 6.78 02/22/01 49,874,915
Certificates 75,000,000 Bank of Nova Scotia, Portland ........... 6.74 03/14/01 74,750,460
of Deposit -- 50,000,000 Commerzbank AG, NY ...................... 5.29 05/22/00 49,998,341
11.9% 25,000,000 Commerzbank AG, NY ...................... 5.91 08/04/00 24,937,465
25,000,000 Commerzbank AG, NY ...................... 6.76 03/27/01 24,925,907
50,000,000 Credit Agricole Indosuez, NY ............ 6.82 03/28/01 49,877,230
55,000,000 Credit Communal de Belgique, NY ......... 5.96 10/02/00 54,774,396
100,000,000 Credit Communal de Belgique, NY ......... 6.54 01/18/01 99,628,160
50,000,000 Credit Communal de Belgique, NY ......... 6.71 02/28/01 49,844,125
40,000,000 Deutsche Bank, AG, NY ................... 6.67 03/12/01 39,856,612
100,000,000 Rabobank Nederland N.V., NY ............. 6.85 04/06/01 99,766,330
50,000,000 Royal Bank of Canada, NY ................ 6.54 01/16/01 49,815,055
50,000,000 Societe Generale, NY .................... 5.53 06/05/00 49,998,160
50,000,000 Svenska Handelsbanken, NY ............... 6.10 05/30/00 50,000,400
49,000,000 Svenska Handelsbanken, NY ............... 6.67 03/02/01 48,831,112
50,000,000 Svenska Handelsbanken, NY ............... 6.74 03/16/01 49,848,610
25,000,000 UBS AG, Stamford ........................ 5.82 08/03/00 24,932,662
20,000,000 UBS AG, Stamford ........................ 6.06 11/20/00 19,899,662
50,000,000 UBS AG, Stamford ........................ 6.38 12/22/00 49,794,950
- -------------------------------------------------------------------------------------------------------------------------
Total Yankee Certificates of Deposit
(Cost $963,703,540) ..................... 961,354,552
- -------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
16
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
Yankee $ 75,000,000 Bank Austria, NY ...................... 6.08% 12/11/00 $ 74,968,044
Certificates 64,000,000 Bayerische Hypo-und Vereinsbank
of Deposit -- AG, NY .............................. 6.04 05/15/00 63,998,251
Variable 75,000,000 Bayerische Landesbank Girozentrale,
Rate -- 5.4% NY .................................. 6.10 11/09/00 74,972,459
95,000,000 Bayerische Landesbank Girozentrale,
NY .................................. 6.10 02/28/01 94,961,502
75,000,000 Credit Agricole Indosuez, NY .......... 6.12 11/08/00 74,976,516
50,000,000 Credit Agricole Indosuez, NY .......... 6.15 11/29/00 49,979,727
- -------------------------------------------------------------------------------------------------------------------------
Total Yankee Certificates of
Deposit -- Variable Rate
(Cost $433,856,499) ................... 433,856,499
- -------------------------------------------------------------------------------------------------------------------------
Time 200,000,000 Barclays Bank PLC, Nassau ............. 5.97 05/01/00 200,000,000
Deposit -- 200,000,000 Chase Manhattan Bank, Nassau .......... 6.00 05/01/00 200,000,000
10.5% 100,000,000 Citibank, Nassau ...................... 5.88 05/01/00 100,000,000
185,000,000 Deutsche Bank, AG, Cayman ............. 6.02 05/01/00 185,000,000
166,420,000 SunTrust Bank, Cayman ................. 5.88 05/01/00 166,420,000
- -------------------------------------------------------------------------------------------------------------------------
Total Time Deposits
(Cost $851,420,000) ................... 851,420,000
- -------------------------------------------------------------------------------------------------------------------------
Bank 22,000,000 First USA Bank, NA .................... 6.08 10/10/00 21,897,654
Notes -- 20,000,000 National City Bank, PA ................ 6.67 03/13/01 19,865,760
0.5%
- -------------------------------------------------------------------------------------------------------------------------
Total Bank Notes
(Cost $41,983,840) .................... 41,763,414
- -------------------------------------------------------------------------------------------------------------------------
Bank 50,000,000 American Express Centurion Bank ....... 6.20 05/03/00 50,000,000
Notes -- 50,000,000 American Express Centurion Bank ....... 6.21 05/25/00 49,994,850
Variable 50,000,000 Bank of America N.A. .................. 6.15 04/27/01 50,000,000
Rate -- 7.6% 90,000,000 Comerica Bank ......................... 6.13 05/01/00 90,000,000
65,000,000 Comerica Bank ......................... 6.15 09/01/00 64,984,650
36,000,000 Comerica Bank ......................... 6.12 04/25/01 35,989,378
25,000,000 First Union National Bank ............. 6.20 05/08/00 25,000,000
50,000,000 First Union National Bank ............. 6.06 06/02/00 50,000,000
See Notes to Financial Statements.
17
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
Bank $ 75,000,000 First Union National Bank ................ 6.26% 09/27/00 $ 75,000,000
Notes -- 80,000,000 Fleet National Bank ...................... 6.27 08/14/00 79,979,293
Variable Rate 20,000,000 Morgan Guaranty Trust Company of NY. 6.15 05/10/00 19,999,756
(continued) 25,000,000 National City Bank, Ohio ................. 6.10 11/22/00 24,991,598
- -------------------------------------------------------------------------------------------------------------------------
Total Bank Notes -- Variable Rate
(Cost $615,939,525) ...................... 615,939,525
- -------------------------------------------------------------------------------------------------------------------------
Corporate 25,000,000 Abbey National Treasury Services PLC ..... 6.03 11/20/00 24,821,000
Notes -- 3.3% 47,000,000 Beta Finance Corp. ....................... 5.62 06/15/00 46,999,717
45,000,000 Beta Finance Corp. ....................... 5.71 07/21/00 45,000,000
58,000,000 Beta Finance Corp. ....................... 5.75 07/21/00 58,000,000
50,000,000 Beta Finance Corp. ....................... 6.83 04/25/01 50,000,000
12,000,000 General Motors Acceptance Corp. .......... 6.88 07/17/00 12,011,232
25,000,000 Goldman Sachs Group Inc. ................. 6.00 08/07/00 24,954,047
8,000,000 Goldman Sachs Group Inc. ................. 6.55 12/22/00 8,000,000
- -------------------------------------------------------------------------------------------------------------------------
Total Corporate Notes
(Cost $270,014,497) ...................... 269,785,996
- -------------------------------------------------------------------------------------------------------------------------
Corporate 50,000,000 American Honda Finance Corp. ............. 6.26 01/10/01 49,975,045
Notes -- 125,000,000 AT&T Corp. ............................... 6.07 03/08/01 124,967,005
Variable 50,000,000 Beta Finance Corp. ....................... 6.12 03/15/01 50,000,000
Rate -- 10.1% 33,000,000 CIT Group Holdings Inc. .................. 6.16 05/30/00 32,998,591
40,000,000 Ford Motor Credit Company ................ 6.20 05/05/00 40,000,000
125,000,000 Ford Motor Credit Company ................ 6.13 11/24/00 124,976,363
48,000,000 General Electric Capital Corp. ........... 6.05 05/26/00 48,000,000
30,500,000 General Motors Acceptance Corp. .......... 6.25 12/01/00 30,505,761
19,000,000 General Motors Acceptance Corp. .......... 6.14 02/27/01 19,000,000
17,000,000 Goldman Sachs Group Inc. ................. 6.41 05/15/01 17,000,000
100,000,000 Household Finance Corp. .................. 6.25 03/29/01 99,918,000
50,000,000 Morgan Stanley Dean Witter & Co. ......... 6.23 03/13/01 49,997,645
25,000,000 Morgan Stanley Dean Witter & Co. ......... 6.11 03/16/01 24,988,900
25,000,000 Racers 1998-MM-7-1 ....................... 6.18 08/11/00 25,000,000
80,000,000 SMM Trust 1999-H ......................... 6.32 09/25/00 80,000,000
- -------------------------------------------------------------------------------------------------------------------------
Total Corporate Notes -- Variable
Rate (Cost $817,484,928) ................. 817,327,310
- -------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
18
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
Master $ 45,000,000 General Electric Capital Corp. .......... 6.21% 09/01/00 $ 45,000,000
Notes -- 20,000,000 Goldman Sachs Group Inc. ................ 6.02 06/30/00 20,000,000
Variable 150,000,000 Goldman Sachs Group Inc. ................ 6.07 08/04/00 150,000,000
Rate -- 7.7% 89,000,000 Jackson National Life Insurance Co. ..... 6.22 02/01/01 89,000,000
249,000,000 J.P. Morgan Securities Inc. ............. 6.07 06/20/00 249,000,000
40,000,000 Monumental Life Insurance Co. ........... 6.28 11/17/00 40,000,000
25,000,000 Pacific Life Insurance Co. .............. 6.21 01/31/01 25,000,000
- -------------------------------------------------------------------------------------------------------------------------
Total Master Notes -- Variable Rate
(Cost $618,000,000) ..................... 618,000,000
- -------------------------------------------------------------------------------------------------------------------------
Commercial 100,000,000 American Express Credit Corp. ........... 6.03 05/25/00 99,598,000
Paper -- 20.6% 25,000,000 Amsterdam Funding Corp. ................. 5.92 05/09/00 24,967,111
50,754,000 Amsterdam Funding Corp. ................. 6.05 05/11/00 50,668,705
30,000,000 Amsterdam Funding Corp. ................. 6.05 05/30/00 29,853,792
18,000,000 Amsterdam Funding Corp. ................. 6.00 06/05/00 17,895,000
50,000,000 Apreco Inc. ............................. 6.05 05/31/00 49,747,917
40,000,000 Atlantis One Funding Corp. .............. 5.92 05/10/00 39,940,800
45,000,000 Bills Securitization Ltd. ............... 6.10 05/31/00 44,771,250
50,000,000 Bills Securitization Ltd. ............... 6.01 06/12/00 49,649,417
50,000,000 British Telecommunications PLC .......... 5.87 05/30/00 49,763,569
25,000,000 Clipper Receivables Corp. ............... 5.98 06/06/00 24,850,500
50,000,000 Corporate Asset Funding Co., Inc. ....... 6.05 05/30/00 49,756,319
50,000,000 Corporate Receivables Corp. ............. 6.20 07/17/00 49,326,334
65,000,000 Countrywide Home Loans Inc. ............. 6.07 05/16/00 64,835,604
50,000,000 Credit Suisse First Boston Inc. ......... 5.92 05/15/00 49,884,889
50,000,000 CXC Inc. ................................ 6.07 06/01/00 49,738,653
50,000,000 Edison Asset Securitization LLC ......... 6.07 05/31/00 49,747,083
45,000,000 Eureka Securitization Inc. .............. 6.07 06/07/00 44,719,263
50,000,000 GE Capital International Funding ........ 5.78 05/05/00 49,967,889
50,000,000 GE Capital International Funding ........ 5.88 05/19/00 49,853,000
25,000,000 General Electric Capital Corp. .......... 5.73 05/25/00 24,904,500
63,375,000 Monte Rosa Capital Corp. ................ 6.04 05/16/00 63,215,506
18,262,000 Monte Rosa Capital Corp. ................ 5.98 05/23/00 18,195,263
36,371,000 Monte Rosa Capital Corp. ................ 6.05 05/25/00 36,224,304
38,000,000 Old Line Funding Corp. .................. 6.05 05/18/00 37,891,436
21,324,000 Park Avenue Receivables Corp. ........... 6.05 05/22/00 21,248,744
50,000,000 Park Avenue Receivables Corp. ........... 6.10 05/26/00 49,788,194
See Notes to Financial Statements.
19
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
Commercial $ 50,000,000 Sigma Finance Inc. ....................... 5.92% 05/11/00 $ 49,917,778
Paper 50,000,000 Sigma Finance Inc. ....................... 6.23 07/21/00 49,289,298
(continued) 31,962,000 Tulip Funding Corp. ...................... 6.00 06/21/00 31,690,323
36,812,000 Tulip Funding Corp. ...................... 6.21 07/20/00 36,295,582
56,226,000 Tulip Funding Corp. ...................... 6.21 07/25/00 55,384,920
90,000,000 UBS Finance Inc. ......................... 6.04 05/01/00 90,000,000
34,436,000 Windmill Funding Corp. ................... 6.05 05/23/00 34,308,682
100,000,000 Windmill Funding Corp. ................... 6.05 05/30/00 99,512,639
25,000,000 Windmill Funding Corp. ................... 6.21 07/28/00 24,611,993
- -------------------------------------------------------------------------------------------------------------------------
Total Commercial Paper
(Cost $1,662,068,280) .................... 1,662,014,257
- -------------------------------------------------------------------------------------------------------------------------
Commercial 100,000,000 AT&T Corp. ............................... 6.24 07/13/00 99,991,803
Paper -- 61,200,000 AT&T Corp. ............................... 6.07 03/08/01 61,189,868
Variable 50,000,000 General Electric Capital Corp. ........... 6.22 10/04/00 49,979,955
Rate -- 3.9% 50,000,000 Variable Funding Capital Corp. ........... 6.12 08/22/00 50,000,000
50,000,000 Variable Funding Capital Corp. ........... 6.12 08/24/00 50,000,000
- -------------------------------------------------------------------------------------------------------------------------
Total Commercial Paper -- Variable
Rate (Cost $311,181,890) ................. 311,161,626
- -------------------------------------------------------------------------------------------------------------------------
Repurchase 200,000,000 Barclays Capital Inc.,
Agreements** purchased on 04/28/00 .................. 5.85 05/01/00 200,000,000
- -- 2.5%
- -------------------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $200,000,000) ...................... 200,000,000
- -------------------------------------------------------------------------------------------------------------------------
Total Investments -- 98.4%
(Cost $7,953,737,417) .................... 7,947,463,438
- -------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.6% 132,804,550
- -------------------------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00
Per Share on 8,086,541,967
Shares of Beneficial Interest
Outstanding -- 100.0% .................... $8,080,267,988
=========================================================================================================================
Note--Costs for federal income tax purposes are the same as those shown above.
At April 30, 2000, net unrealized depreciation
amounted to $6,273,979 and is comprised of $16,765 in appreciation and
$6,290,744 in depreciation.
*Repurchase Agreements bear interest payable at fixed dates or upon maturity.
Commercial Paper and some U.S. Government and Agency Issues are traded on a
discount basis; the interest rate shown is the discount rate paid at the time
of purchase by the Fund. Other securities bear interest at the rates shown,
payable at fixed dates or upon maturity; the rates shown are the rates in
effect at April 30, 2000. For variable rate instruments, the next date on
which the interest rate is to be adjusted is deemed the maturity date for
valuation.
**Repurchase Agreements are fully collateralized by U.S. Government and Agency
Obligations.
See Notes to Financial Statements.
20
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Statement of Assets and Liabilities
April 30, 2000
================================================================================
Assets:
Total investments at value (identified cost $7,953,737,417) (Note 1a)................................ $7,947,463,438
Cash ................................................................................................ 4,098,913
Receivable for investments sold ..................................................................... 75,654,917
Interest receivable ................................................................................. 56,720,420
Prepaid expense ..................................................................................... 13,134
--------------
Total assets .................................................................................. 8,083,950,822
--------------
Liabilities:
Advisory fee payable (Note 2) ....................................................................... 1,354,751
Dividends payable ................................................................................... 1,948,897
Accrued expenses .................................................................................... 379,186
--------------
Total liabilities ............................................................................. 3,682,834
--------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based on
8,086,541,967 shares of beneficial interest outstanding) .......................................... $8,080,267,988
==============
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Statement of Operations
For the Year Ended April 30, 2000
================================================================================
Investment Income:
Interest and discount earned (Note 1d) .............................................................. $460,494,560
------------
Expenses:
Investment advisory fee (Note 2) .................................................... $ 27,369,970
Dividend and transfer agency fees ................................................... 1,349,137
Registration fees ................................................................... 873,425
Accounting and custodian services ................................................... 397,935
Legal and audit fees ................................................................ 112,742
Printing and shareholder reports .................................................... 99,311
Trustees' fees (Note 5) ............................................................. 71,359
Insurance ........................................................................... 40,972
Miscellaneous ....................................................................... 38,171
-------------
Total expense .................................................................... 30,353,022
Waived investment advisory fee (Note 2) ............................................. (10,758,313) 19,594,709
------------- ------------
Net investment income ............................................................................... 440,899,851
Realized and Unrealized Loss on Investments:
Net realized loss from investment transactions ...................................... (10,478)
Net unrealized depreciation of investments .......................................... (4,639,922)
-------------
Net realized and unrealized loss from investments ................................................ (4,650,400)
------------
Net Increase in Net Assets Resulting From Operations ................................................ $436,249,451
============
See Notes to Financial Statements.
21
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Statements of Changes in Net Assets
Year Ended April 30,
-------------------------------------
2000 1999
=========================================================================================================================
Increase in Net Assets:
Operations:
Net investment income .......................................................... $ 440,899,851 $ 410,903,273
Net realized gain (loss) from investment transactions .......................... (10,478) 673,370
Net unrealized depreciation of investments ..................................... (4,639,922) (364,199)
-------------- --------------
Net increase in net assets resulting from operations ........................... 436,249,451 411,212,444
Total declared as dividends to shareholders (Note 4) ........................... (440,889,373) (411,576,643)
Capital share transactions (Note 3) ............................................ 24,796,950 688,050,212
-------------- --------------
Net increase in net assets ..................................................... 20,157,028 687,686,013
Net Assets:
Beginning of year .............................................................. 8,060,110,960 7,372,424,947
-------------- --------------
End of year .................................................................... $8,080,267,988 $8,060,110,960
============== ==============
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Financial Highlights
Year Ended April 30,
--------------------------------------------------------------------------
2000 1999 1998 1997 1996
=========================================================================================================================
Net Asset Value, Beginning of period .......... $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment Operations: ............
Net investment income ....................... .053 .051 .054 .052 .056
Less Distributions:
Dividends from net investment
income ...................................... (.053) (.051) (.054) (.052) (.056)
---------- ---------- ---------- ---------- -----------
Net Asset Value, End of period ................ $1.00 $1.00 $1.00 $1.00 $1.00
========== ========== ========== ========== ==========
Total Return .................................. 5.45% 5.25% 5.57% 5.34% 5.81%
Ratios/Supplemental Data:
Net Assets, end of period (000) .............. $8,080,268 $8,060,111 $7,372,425 $6,197,878 $7,615,126
Ratio of expenses to average net
assets (before waiver) ...................... .37% .37% .38% .38% .37%
Ratio of expenses to average net
assets (after waiver) ....................... .24% .24% .25% .25% .24%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (before waiver) ...................... 5.14% 4.98% 5.34% 5.12% 5.42%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (after waiver) ....................... 5.27% 5.11% 5.47% 5.25% 5.55%
See Notes to Financial Statements.
22
- --------------------------------------------------------------------------------
Merrill Lynch Rated Institutional Fund
Schedule of Investments
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
U.S. $ 1,000,000 Federal Home Loan Mortgage Corp. ......... 5.05% 11/17/00 $ 993,617
Government 3,000,000 Federal National Mortgage Assoc. ......... 5.41 03/22/01 2,963,454
Agency
Issues -- 1.4%
- -------------------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency Issues
(Cost $3,998,652) ........................ 3,957,071
- -------------------------------------------------------------------------------------------------------------------------
U.S. 10,000,000 Federal National Mortgage Assoc. ......... 6.08 09/17/01 9,989,432
Government 10,000,000 Student Loan Marketing Assoc. ............ 6.43 09/29/00 9,999,222
Agency 10,000,000 Student Loan Marketing Assoc. ............ 6.30 08/23/01 9,994,975
Issues --
Variable
Rate --10.4%
- -------------------------------------------------------------------------------------------------------------------------
Total U.S. Government
Agency Issues -- Variable Rate
(Cost $29,983,629) ....................... 29,983,629
- -------------------------------------------------------------------------------------------------------------------------
Yankee 3,000,000 Bank of Nova Scotia, Portland ............ 6.78 02/22/01 2,992,495
Certificates of 5,000,000 Bank of Nova Scotia, Portland ............ 6.74 03/14/01 4,983,364
Deposit -- 5,000,000 Credit Communal de Belgique, NY .......... 6.54 01/18/01 4,981,408
6.2% 3,000,000 Svenska Handelsbanken, NY ................ 6.65 03/06/01 2,989,038
2,000,000 UBS AG, Stamford ......................... 5.82 08/03/00 1,994,613
- -------------------------------------------------------------------------------------------------------------------------
Total Yankee Certificates of Deposit
(Cost $17,993,552) ....................... 17,940,918
- -------------------------------------------------------------------------------------------------------------------------
Time 10,000,000 Chase Manhattan Bank, Nassau ............. 6.00 05/01/00 10,000,000
Deposits -- 5,000,000 Citibank, Nassau ......................... 5.88 05/01/00 5,000,000
17.3% 10,000,000 Deutsche Bank AG, Cayman ................. 6.02 05/01/00 10,000,000
12,640,000 State Street Bank & Trust Co., Cayman 6.00 05/01/00 12,640,000
12,000,000 Westdeutsche Landesbank
Girozentrale, Cayman ................... 6.00 05/01/00 12,000,000
- -------------------------------------------------------------------------------------------------------------------------
Total Time Deposits
(Cost $49,640,000) ....................... 49,640,000
- -------------------------------------------------------------------------------------------------------------------------
Bank Notes -- 3,000,000 First USA Bank, NA ....................... 6.08 10/10/00 2,986,044
1.0%
- -------------------------------------------------------------------------------------------------------------------------
Total Bank Notes
(Cost $2,999,365) ........................ 2,986,044
- -------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
23
- --------------------------------------------------------------------------------
Merrill Lynch Rated Institutional Fund
Schedule of Investments -- Continued
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
Bank Notes -- $ 5,000,000 First Union National Bank ................. 6.06% 06/02/00 $ 5,000,000
Variable 10,000,000 First Union National Bank ................. 6.37 08/28/00 10,002,016
Rate -- 5.2%
- -------------------------------------------------------------------------------------------------------------------------
Total Bank Notes -- Variable Rate
(Cost $15,002,016) ........................ 15,002,016
- -------------------------------------------------------------------------------------------------------------------------
Corporate 3,000,000 Beta Finance Corp. ........................ 5.62 06/15/00 2,999,982
Notes -- 6.5% 5,000,000 Beta Finance Corp. ........................ 6.83 04/25/01 5,000,000
1,000,000 Chrysler Financial Corp. .................. 6.08 03/09/01 991,451
1,500,000 General Motors Acceptance Corp. ........... 5.63 02/15/01 1,481,794
3,200,000 General Motors Acceptance Corp. ........... 8.25 02/20/01 3,227,974
5,000,000 General Motors Acceptance Corp. ........... 7.88 03/07/01 5,030,265
- -------------------------------------------------------------------------------------------------------------------------
Total Corporate Notes
(Cost $18,761,285) ........................ 18,731,466
- -------------------------------------------------------------------------------------------------------------------------
Corporate 10,000,000 American Honda Finance Corp. .............. 6.26 01/10/01 9,995,009
Notes -- 7,000,000 Associates Corp. of North America ......... 6.03 03/16/01 6,993,817
Variable 5,000,000 Beta Finance Corp. ........................ 6.12 03/15/01 5,000,000
Rate -- 21.6% 10,000,000 CIT Group Holdings Inc. ................... 6.30 09/15/00 10,001,659
2,500,000 Ford Motor Credit Company ................. 6.20 05/05/00 2,500,000
2,000,000 General Electric Capital Corp. ............ 6.05 05/26/00 2,000,000
4,000,000 General Electric Capital Corp. ............ 6.22 10/04/00 4,000,000
1,500,000 General Motors Acceptance Corp. ........... 6.25 12/01/00 1,500,283
10,000,000 Household Finance Corp. ................... 6.25 03/29/01 9,991,800
10,000,000 Morgan Stanley Dean Witter & Co. .......... 6.11 03/16/01 9,995,560
- -------------------------------------------------------------------------------------------------------------------------
Total Corporate Notes -- Variable
Rate (Cost $61,990,164) ................... 61,978,128
- -------------------------------------------------------------------------------------------------------------------------
Master 5,000,000 Combined Insurance Co. of America ......... 6.21 06/01/00 5,000,000
Notes -- 12,000,000 Goldman Sachs Group Inc. .................. 6.02 08/04/00 12,000,000
Variable 10,000,000 Jackson National Life Insurance Co. ....... 6.22 02/01/01 10,000,000
Rate -- 9.4%
- -------------------------------------------------------------------------------------------------------------------------
Total Master Notes -- Variable Rate
(Cost $27,000,000) ........................ 27,000,000
- -------------------------------------------------------------------------------------------------------------------------
Commercial 10,000,000 Bills Securitization Ltd. ................. 6.10 05/31/00 9,949,167
Paper -- 19.4%
12,000,000 CSW Credit Inc. ........................... 6.10 05/01/00 12,000,000
8,702,000 Knight-Ridder Inc. ........................ 5.87 05/12/00 8,686,392
See Notes to Financial Statements.
24
- --------------------------------------------------------------------------------
Merrill Lynch Rated Institutional Fund
Schedule of Investments -- Continued
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
Commercial $10,000,000 Lehman Brothers Holdings Inc. ............ 5.93% 05/16/00 $ 9,975,291
Paper 5,178,000 Old Line Funding Corp. ................... 6.05 05/15/00 5,165,817
(continued) 10,000,000 UBS Finance (Delaware) Inc. .............. 6.04 05/01/00 10,000,000
- -------------------------------------------------------------------------------------------------------------------------
Total Commercial Paper
(Cost $55,776,668) ....................... 55,776,667
- -------------------------------------------------------------------------------------------------------------------------
Total Investments -- 98.4%
(Cost $283,145,331) ...................... 282,995,939
- -------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.6% 4,621,960
- -------------------------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00
Per Share on 287,767,291
Shares of Beneficial Interest
Outstanding -- 100.0% .................... $287,617,899
=========================================================================================================================
Note -- Costs for federal income tax purposes are the same as those shown
above. At April 30, 2000, net unrealized depreciation amounted to $149,392 and
is comprised of $5,595 of appreciation and $154,987 in depreciation.
*Commercial Paper and some U.S. Government and Agency Issues are traded on a
discount basis; the interest rate shown is the discount rate paid at the time
of the purchase by the Fund. Other securities bear interest at the rates shown,
payable at fixed dates or upon maturity; the rates shown are the rates in
effect at April 30, 2000. For variable rate instruments, the next date on which
the interest rate is to be adjusted is deemed the maturity date for valuation.
See Notes to Financial Statements.
25
- --------------------------------------------------------------------------------
Merrill Lynch Rated Institutional Fund
Statement of Assets and Liabilities
April 30, 2000
======================================================================================================
Assets:
Total investments at value (identified cost $283,145,331) (Note 1a).................... $282,995,939
Cash .................................................................................. 1,026,872
Receivable for investments sold ....................................................... 2,000,000
Interest receivable ................................................................... 1,686,113
Prepaid expense ....................................................................... 40,782
------------
Total assets ....................................................................... 287,749,706
------------
Liabilities:
Advisory fee payable (Note 2) ......................................................... 50,206
Dividends payable ..................................................................... 63,704
Accrued expenses ...................................................................... 17,897
------------
Total liabilities .................................................................. 131,807
------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based on
287,767,291 shares of beneficial interest outstanding) ............................... $287,617,899
============
- ------------------------------------------------------------------------------------------------------
Merrill Lynch Rated Institutional Fund
Statement of Operations
For the Year Ended April 30, 2000
======================================================================================================
Investment Income:
Interest and discount earned (Note 1d) ....................... $20,518,107
-----------
Expenses:
Investment advisory fee (Note 2) ............................. 742,612
Registration fees ............................................ 161,959
Accounting and custodian services ............................ 75,762
Dividend and transfer agency fees ............................ 16,818
Legal and audit fees ......................................... 10,013
Trustees' fees (Note 5) ...................................... 4,058
Printing and shareholder reports ............................. 3,328
Insurance .................................................... 2,215
Miscellaneous ................................................ 2,437
-----------
Total expense ............................................. 1,019,202
-----------
Net investment income ..................................... 19,498,905
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain from investment transactions ............... $ 211
Net unrealized depreciation of investments ................... (145,189)
---------
Net realized and unrealized loss from investments ............ (144,978)
-----------
Net Increase in Net Assets Resulting From Operations ......... $19,353,927
===========
See Notes to Financial Statements.
26
- --------------------------------------------------------------------------------
Merrill Lynch Rated Institutional Fund
Statements of Changes in Net Assets
Year For the Period
Ended June 15, 1998*
April 30, 2000 to April 30, 1999
======================================================================================================
Increase (Decrease) in Net Assets:
Operations:
Net investment income ........................................ $ 19,498,905 $ 17,950,747
Net realized gain from investment transactions ............... 211 23,721
Net unrealized depreciation of investments ................... (145,189) (4,203)
------------- ------------
Net increase in net assets resulting from operations ......... 19,353,927 17,970,265
Total declared as dividends to shareholders (Note 4) ......... (19,499,116) (17,974,468)
Capital share transactions (Note 3) .......................... (149,900,984) 437,568,275
------------- ------------
Net increase (decrease) in net assets ........................ (150,046,173) 437,564,072
Net Assets:
Beginning of year (Note 3) ................................... 437,664,072 100,000
------------- ------------
End of year .................................................. $ 287,617,899 $437,664,072
============= ============
- --------------------------------------------------------------------------------
Merrill Lynch Rated Institutional Fund
Financial Highlights
Year For the Period
Ended June 15, 1998*
April 30, 2000 to April 30, 1999
================================================================================================================
Net Asset Value, Beginning of period ................................... $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income ................................................. .053 .045
Less Distributions:
Dividends from net investment income .................................. (.053) (.045)
-------- ----------
Net Asset Value, End of period ......................................... $ 1.00 $ 1.00
======== ==========
Total Return ........................................................... 5.42% 4.57%(1)
Ratios/Supplemental Data:
Net Assets, end of period (000) ....................................... $287,618 $437,664
Ratio of expenses to average net assets (before waiver) ............... .28% .27%(2)
Ratio of expenses to average net assets (after waiver) ................ -- .23%(2)
Ratio of net investment income, including realized and unrealized gains
and losses, to average net assets (before waiver) .................... 5.23% 4.95%(2)
Ratio of net investment income, including realized and unrealized gains
and losses, to average net assets (after waiver) ..................... -- 4.99%(2)
*Commencement of operations
(1) Cumulative total return
(2) On an annualized basis
See Notes to Financial Statements.
27
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Schedule of Investments
April 30, 2000
================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
U.S. $ 20,000,000 Federal Home Loan Banks .............. 5.00% 08/14/00 $ 19,936,280
Government 20,500,000 Federal Home Loan Banks .............. 6.09 11/03/00 20,487,495
Agency 25,000,000 Federal Home Loan Banks .............. 6.36 01/18/01 24,984,375
Issues -- 30.1% 21,000,000 Federal Home Loan Banks .............. 5.25 01/22/01 20,822,812
15,000,000 Federal Home Loan Banks .............. 6.45 03/16/01 14,977,047
15,000,000 Federal Home Loan Banks .............. 5.13 04/17/01 14,783,549
15,000,000 Federal Home Loan Banks .............. 5.69 12/10/01 14,689,545
20,000,000 Federal Home Loan Mortgage
Corp. .............................. 5.18 11/24/00 19,879,618
10,000,000 Federal Home Loan Mortgage
Corp. .............................. 5.15 01/26/01 9,906,169
5,000,000 Federal Home Loan Mortgage
Corp. .............................. 5.18 02/09/01 4,950,519
9,570,000 Federal Home Loan Mortgage
Corp. .............................. 6.63 11/08/01 9,506,464
15,000,000 Federal National Mortgage Assoc. ..... 5.12 05/12/00 14,996,072
10,000,000 Federal National Mortgage Assoc. ..... 4.89 10/13/00 9,923,799
16,000,000 Federal National Mortgage Assoc. ..... 5.07 12/14/00 15,838,014
15,000,000 Federal National Mortgage Assoc. ..... 5.35 03/01/01 14,817,494
15,000,000 Federal National Mortgage Assoc. ..... 5.52 03/06/01 14,839,170
18,300,000 Federal National Mortgage Assoc. ..... 6.42 03/13/01 18,234,759
5,380,000 Federal National Mortgage Assoc. ..... 6.00 06/21/01 5,326,872
25,000,000 Student Loan Marketing Assoc. ........ 5.90 12/01/00 24,880,348
150,000,000 Federal Home Loan Banks D/N .......... 5.88 05/01/00 150,000,000
20,000,000 Federal Home Loan Banks D/N .......... 4.77 05/05/00 19,989,400
66,000,000 Federal Home Loan Banks D/N .......... 5.80 06/14/00 65,532,133
15,000,000 Federal Home Loan Banks D/N .......... 5.95 01/08/01 14,337,000
10,000,000 Federal Home Loan Banks D/N .......... 6.12 03/01/01 9,466,000
25,000,000 Federal Home Loan Banks D/N .......... 6.07 03/09/01 23,630,673
15,000,000 Federal Home Loan Banks D/N .......... 6.12 03/14/01 14,164,498
15,000,000 Federal Home Loan Banks D/N .......... 6.11 03/19/01 14,152,501
10,175,000 Federal Home Loan Mortgage
Corp. D/N .......................... 5.85 05/02/00 10,173,347
13,140,000 Federal Home Loan Mortgage
Corp. D/N .......................... 5.90 05/05/00 13,131,386
See Notes to Financial Statements.
28
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Schedule of Investments -- Continued
April 30, 2000
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
U.S. $10,000,000 Federal Home Loan Mortgage
Government Corp. D/N .......................... 5.08% 06/02/00 $ 9,954,844
Agency 5,000,000 Federal Home Loan Mortgage
Issues Corp. D/N .......................... 5.22 06/02/00 4,976,800
(continued) 10,000,000 Federal Home Loan Mortgage
Corp. D/N .......................... 5.20 06/06/00 9,948,000
15,000,000 Federal Home Loan Mortgage
Corp. D/N .......................... 5.22 06/15/00 14,902,125
15,000,000 Federal Home Loan Mortgage
Corp. D/N .......................... 5.23 06/15/00 14,901,919
29,589,000 Federal Home Loan Mortgage
Corp. D/N .......................... 6.07 03/01/01 27,952,728
5,000,000 Federal Home Loan Mortgage
Corp. D/N .......................... 6.18 03/29/01 4,683,450
10,000,000 Federal Home Loan Mortgage
Corp. D/N .......................... 6.21 03/29/01 9,366,900
5,051,000 Federal Home Loan Mortgage
Corp. D/N .......................... 6.26 03/29/01 4,731,221
25,000,000 Federal Home Loan Mortgage
Corp. D/N .......................... 6.20 04/26/01 23,428,500
16,319,000 Federal National Mortgage Assoc.
D/N ................................ 5.85 05/03/00 16,313,696
15,000,000 Federal National Mortgage Assoc.
D/N ................................ 6.16 04/12/01 14,089,499
- -------------------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency
Issues (Cost $784,992,536) ........... 783,607,021
- -------------------------------------------------------------------------------------------------------------------------
U.S. 20,000,000 Federal Farm Credit Banks ............ 6.29 07/24/00 20,010,748
Government 50,000,000 Federal Home Loan Banks .............. 5.87 05/12/00 49,998,723
Agency 25,000,000 Federal Home Loan Banks .............. 6.05 05/17/00 24,999,464
Issues -- 75,000,000 Federal Home Loan Banks .............. 6.24 07/14/00 74,992,213
Variable 50,000,000 Federal Home Loan Banks .............. 6.13 09/01/00 49,993,340
Rate -- 28.2% 75,000,000 Federal Home Loan Mortgage
Corp. .............................. 6.28 07/14/00 74,992,213
30,000,000 Federal Home Loan Mortgage
Corp. .............................. 6.06 01/10/01 29,989,737
75,000,000 Federal National Mortgage Assoc. ..... 5.95 08/02/00 74,986,860
See Notes to Financial Statements.
29
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Schedule of Investments -- Continued
April 30, 2000
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
U.S. $ 35,000,000 Federal National Mortgage Assoc. ..... 5.86% 11/13/00 $ 34,979,418
Government 75,000,000 Federal National Mortgage Assoc. ..... 5.99 11/22/00 74,966,065
Agency 50,000,000 Federal National Mortgage Assoc. ..... 6.02 11/05/01 49,978,250
Issues -- 25,000,000 Student Loan Marketing Assoc. ........ 6.43 09/29/00 24,998,028
Variable 100,000,000 Student Loan Marketing Assoc. ........ 6.22 03/09/01 99,958,553
Rate 50,000,000 Student Loan Marketing Assoc. ........ 6.30 08/23/01 49,974,772
(continued)
- -------------------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency
Issues -- Variable Rate
(Cost $734,810,077) .................. 734,818,384
- -------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
30
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Schedule of Investments -- Continued
April 30, 2000
Face Amount Rate* Date (Note 1a)
=========================================================================================================================
Repurchase $310,000,000 Barclays Capital Inc.,
Agreements** purchased on 04/28/00 ............. 5.85% 05/01/00 $ 310,000,000
- -- 43.1% 200,000,000 HSBC Securities (USA) Inc.,
purchased on 04/28/00 ............. 5.81 05/01/00 200,000,000
95,000,000 Lehman Brothers Inc.,
purchased on 04/28/00 ............. 5.75 05/01/00 95,000,000
115,000,000 Lehman Brothers Inc.,
purchased on 04/28/00 ............. 5.72 05/01/00 115,000,000
50,722,000 State Street Bank and Trust,
purchased on 04/28/00 ............. 5.66 05/01/00 50,722,000
350,000,000 Warburg Dillion Read LLC.,
purchased on 04/28/00 ............. 5.85 05/01/00 350,000,000
- -------------------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $1,120,722,000) ............... 1,120,722,000
- -------------------------------------------------------------------------------------------------------------------------
Total Investments -- 101.4%
(Cost $2,640,524,613) ............... 2,639,147,405
- -------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other
Assets -- (1.4%) .................... (35,939,270)
- -------------------------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00
Per Share on 2,604,585,343 Shares
of Beneficial Interest
Outstanding -- 100.0% ............... $2,603,208,135
=========================================================================================================================
Note--Costs for federal income tax purposes are the same as those shown above.
At April 30, 2000, net unrealized depreciation amounted to $1,377,208 and is
comprised of $27,551 of appreciation and $1,404,759 in depreciation.
*Repurchase Agreements bear interest payable at fixed dates or upon maturity.
U.S. Government and Agency Issues are purchased on a discount basis; the
interest rate shown is the discount paid at the time of purchase by the Fund.
Other U.S. Government and Agency Issues bear interest at the rates shown,
payable at fixed dates or upon maturity; the rates shown are the rates in
effect at April 30, 2000. For variable rate instruments, the next date on which
the interest rate is to be adjusted is deemed the maturity date for valuation.
**Repurchase Agreements are fully collateralized by U.S. Government and Agency
Obligations.
D/N--Discount Notes
See Notes to Financial Statements.
31
- -------------------------------------------------------------------------------
Merrill Lynch Government Fund
Statement of Assets and Liabilities
April 30, 2000
===============================================================================
Assets:
Investments in securities subject to repurchase agreements ........................ $1,120,722,000
Investments in other marketable securities ........................................ 1,518,425,405
--------------
Total investments at value (identified cost $2,640,524,613) (Note 1a)............................. $2,639,147,405
Cash ................................................................................................ 3,847,141
Interest receivable ................................................................................. 11,513,045
Prepaid expense ..................................................................................... 183,015
--------------
Total assets ..................................................................................... 2,654,690,606
--------------
Liabilities:
Advisory fee payable (Note 2) ....................................................................... 446,924
Payable for investments purchased ................................................................... 49,978,250
Dividends payable ................................................................................... 942,793
Accrued expenses .................................................................................... 114,504
--------------
Total liabilities ................................................................................ 51,482,471
--------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based on
2,604,585,343 shares of beneficial interest outstanding) ........................................... $2,603,208,135
==============
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Statement of Operations
For the Year Ended April 30, 2000
================================================================================
Investment Income:
Interest and discount earned (Note 1d) ........................................................... $143,548,467
------------
Expenses:
Investment advisory fee (Note 2) ................................................. $ 8,277,269
Registration fees ................................................................ 462,160
Dividend and transfer agency fees ................................................ 330,244
Accounting and custodian services ................................................ 160,507
Legal and audit fees ............................................................. 49,686
Printing and shareholder reports ................................................. 36,940
Trustees' fees (Note 5) .......................................................... 21,400
Insurance ........................................................................ 13,393
Miscellaneous .................................................................... 33,293
------------
Total expense .................................................... 9,384,892
Waived investment advisory fee (Note 2) ............................. (3,018,131) 6,366,761
------------ ------------
Net investment income .......................................................................... 137,181,706
Realized and Unrealized Loss on Investments:
Net realized loss from investment transactions ......... (24)
Net unrealized depreciation of investments ............. (1,255,770)
-----------
Net realized and unrealized loss from investments ................................................. (1,255,794)
------------
Net Increase in Net Assets Resulting From Operations .............................................. $135,925,912
============
See Notes to Financial Statements.
32
- ---------------------------------------------------------------------------------------------------------
Year Ended April 30,
Merrill Lynch Government Fund -----------------------------------
Statements of Changes in Net Assets 2000 1999
=========================================================================================================
Increase (Decrease) in Net assets:
Operations:
Net investment income ............................................. $ 137,181,706 $ 124,467,945
Net realized gain (loss) from investment transactions ............. (24) 180,541
Net unrealized appreciation (depreciation) of investments ......... (1,255,770) 80,459
-------------- --------------
Net increase in net assets resulting from operations .............. 135,925,912 124,728,945
Total declared as dividends to shareholders (Note 4) .............. (137,181,682) (124,648,486)
Capital share transactions (Note 3) ............................... (32,208,401) 521,999,418
-------------- --------------
Net increase (decrease) in net assets ............................. (33,464,171) 522,079,877
Net Assets:
Beginning of year ................................................. 2,636,672,306 2,114,592,429
-------------- --------------
End of year ....................................................... $2,603,208,135 $2,636,672,306
============== ==============
- --------------------------------------------------------------------------------
Year Ended April 30,
Merrill Lynch Government Fund ----------------------------------------------------------------------
Financial Higlights 2000 1999 1998 1997 1996
========================================================================================================================
Net Asset Value, Beginning of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income ........................ .052 .050 .053 .052 .055
Less Distributions:
Dividends from net investment income (.052) (.050) (.053) (.052) (.055)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return .................................. 5.34% 5.16% 5.48% 5.31% 5.67%
Ratios/Supplemental Data:
Net Assets, end of period (000) .............. $2,603,208 $2,636,672 $2,114,592 $2,017,399 $1,643,625
Ratio of expenses to average net
assets (before waiver) ...................... .35% .36% .37% .38% .38%
Ratio of expenses to average net
assets (after waiver) ....................... .24% .24% .25% .26% .26%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (before waiver) ...................... 5.07% 4.90% 5.24% 5.07% 5.37%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (after waiver) ....................... 5.18% 5.02% 5.36% 5.19% 5.49%
See Notes to Financial Statements.
33
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Schedule of Investments
April 30, 2000
- ------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
============================================================================================================
U.S. $47,000,000 U.S. Treasury Bills .......... 5.54% 05/11/00 $46,927,672
Government 17,000,000 U.S. Treasury Bills .......... 5.52 05/18/00 16,955,727
Issues -- 100.0% 25,000,000 U.S. Treasury Bills .......... 5.53 05/18/00 24,934,715
40,000,000 U.S. Treasury Bills .......... 5.55 05/18/00 39,895,167
14,138,000 U.S. Treasury Bills .......... 5.60 05/18/00 14,100,613
5,700,000 U.S. Treasury Bills .......... 5.61 05/18/00 5,684,913
17,717,000 U.S. Treasury Bills .......... 5.62 05/18/00 17,670,023
7,900,000 U.S. Treasury Bills .......... 5.54 06/01/00 7,862,313
12,494,000 U.S. Treasury Bills .......... 5.59 06/01/00 12,433,912
10,000,000 U.S. Treasury Bills .......... 5.60 06/01/00 9,951,778
3,645,000 U.S. Treasury Bills .......... 5.55 06/08/00 3,623,666
15,000,000 U.S. Treasury Bills .......... 5.64 06/08/00 14,910,700
25,000,000 U.S. Treasury Bills .......... 5.66 06/08/00 24,850,639
53,000,000 U.S. Treasury Bills .......... 5.67 06/08/00 52,682,837
4,490,000 U.S. Treasury Bills .......... 5.70 06/08/00 4,462,985
5,000,000 U.S. Treasury Bills .......... 5.69 06/29/00 4,953,374
15,000,000 U.S. Treasury Bills .......... 5.70 06/29/00 14,859,875
23,313,000 U.S. Treasury Bills .......... 5.72 06/29/00 23,094,562
65,000,000 U.S. Treasury Bills .......... 5.63 07/06/00 64,329,200
15,000,000 U.S. Treasury Bills .......... 5.65 07/06/00 14,845,200
25,000,000 U.S. Treasury Bills .......... 5.71 07/06/00 24,742,000
25,000,000 U.S. Treasury Bills .......... 5.73 07/06/00 24,742,000
1,099,000 U.S. Treasury Bills .......... 5.63 07/13/00 1,086,405
See Notes to Financial Statements.
34
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Schedule of Investments -- Continued
April 30, 2000
- ---------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
===============================================================================================================
U.S. $52,918,000 U.S. Treasury Bills ............. 5.65% 07/13/00 $ 52,311,560
Government 6,240,000 U.S. Treasury Bills ............. 5.57 07/27/00 6,154,637
Issues 25,000,000 U.S. Treasury Bills ............. 5.60 07/27/00 24,658,000
(continued) 32,000,000 U.S. Treasury Bills ............. 5.61 07/27/00 31,562,240
95,893,000 U.S. Treasury Bills ............. 5.62 07/27/00 94,581,184
- ---------------------------------------------------------------------------------------------------------------
Total Investments -- 100.0%
(Cost $678,878,908) ............. 678,867,897
- ---------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other
Assets -- (0.0%) ................ (27,299)
- ---------------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00
Per Share on 678,851,609 Shares
of Beneficial Interest
Outstanding -- 100.0% ........... $678,840,598
===============================================================================================================
Note--Costs for federal income tax purposes are the same as those shown above.
At April 30, 2000, net unrealized depreciation amounted to $11,011 and is
comprised of $8,475 in appreciation and $19,486 in depreciation.
*U.S. Treasury Bills are purchased on a discount basis; the interest rate shown
is the discount paid at the time of purchase by the Fund.
See Notes to Financial Statements.
35
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Statement of Assets and Liabilities
April 30, 2000
================================================================================
Assets:
Total investments at value (identified cost $678,878,908) (Note 1a) ................... $678,867,897
Cash .................................................................................. 150,491
Prepaid expense ....................................................................... 7,060
------------
Total assets ....................................................................... 679,025,448
------------
Liabilities:
Advisory fee payable (Note 2) ......................................................... 107,361
Accrued expenses ...................................................................... 38,782
Dividends payable ..................................................................... 38,707
------------
Total liabilities .................................................................. 184,850
------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based on
678,851,609 shares of beneficial interest outstanding) ............................... $678,840,598
============
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Statement of Operations
For the Year Ended April 30, 2000
================================================================================
Investment Income:
Interest and discount earned (Note 1d) ................................. $35,802,958
-----------
Expenses:
Investment advisory fee (Note 2) ....................... $ 2,444,364
Dividend and transfer agency fees ...................... 126,683
Registration fees ...................................... 88,674
Accounting and custodian services ...................... 79,088
Legal and audit fees ................................... 14,268
Trustees' fees (Note 5) ................................ 5,721
Printing and shareholder reports ....................... 5,544
Insurance .............................................. 3,457
Miscellaneous .......................................... 20,296
------------
Total expense ....................................... 2,788,095
Waived investment advisory fee (Note 2) ................ (1,024,599) 1,763,496
------------ -----------
Net investment income ............................................... 34,039,462
Realized and Unrealized Gain on Investments:
Net realized gain from investment transactions ......... 146,608
Net unrealized appreciation of investments ............. 33,206
------------
Net realized and unrealized gain from investments ................... 179,814
-----------
Net Increase in Net Assets Resulting From Operations ................... $34,219,276
===========
See Notes to Financial Statements.
36
Year Ended April 30,
Merrill Lynch Treasury Fund ----------------------------------
Statements of Changes in Net Assets 2000 1999
=======================================================================================================
Decrease in Net assets:
Operations:
Net investment income ............................................. $ 34,039,462 $ 35,098,764
Net realized gain from investment transactions .................... 146,608 339,022
Net unrealized appreciation (depreciation) of investments ......... 33,206 (984,043)
------------- -------------
Net increase in net assets resulting from operations .............. 34,219,276 34,453,743
Total declared as dividends to shareholders (Note 4) .............. (34,186,070) (35,437,786)
Capital share transactions (Note 3) ............................... (1,533,095) (77,872,328)
------------- -------------
Net decrease in net assets ........................................ (1,499,889) (78,856,371)
Net Assets:
Beginning of year ................................................. 680,340,487 759,196,858
------------- -------------
End of year ....................................................... $ 678,840,598 $ 680,340,487
------------- -------------
- -------------------------------------------------------------------------------------------------------------------------
Year Ended April 30,
Merrill Lynch Treasury Fund ----------------------------------------------------------------------
Financial Highlights 2000 1999 1998 1997 1996
=========================================================================================================================
Net Asset Value, Beginning of period ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income ......................... .048 .046 .051 .049 .052
Less Distributions:
Dividends from net investment income .......... (.048) (.046) (.051) (.049) (.052)
-------- -------- -------- -------- --------
Net Asset Value, End of period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return ................................... 4.94% 4.76% 5.24% 5.08% 5.37%
Ratios/Supplemental Data:
Net Assets, end of period (000) ............... $678,841 $680,340 $759,197 $611,844 $514,123
Ratio of expenses to average net
assets (before waiver) ....................... .39% .39% .41% .42% .41%
Ratio of expenses to average net
assets (after waiver) ........................ .25% .25% .26% .27% .26%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (before waiver) ....................... 4.69% 4.36% 5.11% 4.85% 5.09%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (after waiver) ........................ 4.83% 4.50% 5.26% 5.00% 5.24%
See Notes to Financial Statements.
37
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments
April 30, 2000
===============================================================================================================
Value
Face Amount Issue (Note 1a)
===============================================================================================================
Alabama -- $15,000,000 Mobile, Alabama Port City Medical Clinic Board Revenue
0.7% (Infirmary Health Systems--Series A) CP 4.20% due
07/17/2000 ................................................... $15,000,000
- ---------------------------------------------------------------------------------------------------------------
Arkansas -- 10,000,000 Arkansas Hospital Equipment Finance Authority Revenue
0.8% (AHA Pooled Financing Program) VRDN 5.10% due
11/01/2028 (a) ............................................... 10,000,000
6,000,000 Arkansas State Development Finance Authority IDR (Defiance
Metal Products Project) VRDN 5.25% due 11/01/2011 (a) ........ 6,000,000
- ---------------------------------------------------------------------------------------------------------------
Colorado -- 15,000,000 Castle Pines North Metropolitan District VRDN 5.10% due
1.9% 12/01/2028 (a) ............................................... 15,000,000
11,695,000 Denver, Colorado City & County Airport Revenue (Municipal
Securities Trust Receipts--SGA 18) VRDN 5.15% due
11/15/2025 (a) ............................................... 11,695,000
7,800,000 Douglas County, Colorado School District (Douglas and Elbert
Counties) TAN 3.50% due 06/30/2000 ........................... 7,811,162
4,800,000 Montrose, Colorado IDR (Scaled Manufacturing Inc.) VRDN
5.20% due 12/01/2005 (a) ..................................... 4,800,000
- ---------------------------------------------------------------------------------------------------------------
Florida -- Capital Trust Agency, Florida--M/F Housing Revenue Bond--
2.8% Community Loan Program VRDN:
10,000,000 (Series A) 5.18% due 12/01/2032 (a) ............................ 10,000,000
22,100,000 (Series B) 5.18% due 12/01/2032 (a) ............................ 22,100,000
20,000,000 Gulf Breeze, Florida Health Care Facilities Revenue (Heritage
Health Care Project) VRDN 5.18% due 01/01/2024 (a) ........... 20,000,000
4,570,000 Lee County, Florida IDA Revenue (Raymond Building Supply
Corp. Project) VRDN 5.40% due 04/01/2017 (a) ................. 4,570,000
- ---------------------------------------------------------------------------------------------------------------
Georgia -- 6,640,000 Albany & Dougherty County, Georgia Hospital Authority
4.1% Revenue (Phoebe Putney Memorial Hospital) VRDN 5.10%
due 09/01/2026 (a) ........................................... 6,640,000
22,955,000 Eagle Tax-Exempt Trust--State of Georgia (Series 991001)
FXRDN 3.95% due 05/01/2000 ................................... 22,955,000
19,145,000 Eagle Tax-Exempt Trust--State of Georgia (Series 981002)
VRDN 5.13% due 07/01/2014 (a) ................................ 19,145,000
9,000,000 La Grange, Georgia Development Authority IDR (Reltec Corp.
Project) VRDN 5.20% due 12/01/2021 (a) ....................... 9,000,000
7,200,000 Rome, Georgia TAN 5.00% due 12/29/2000 ......................... 7,232,201
20,000,000 Southern Georgia Hospital Authority Revenue (Georgia
Alliance of Community Hospitals Pooled Finance Program--
Series A) VRDN 5.10% due 04/01/2029 (a) ...................... 20,000,000
- ---------------------------------------------------------------------------------------------------------------
Hawaii -- 18,000,000 ABN-AMRO Munitops--Honolulu City & County Waste
0.9% Water System VRDN 5.15% due 04/04/2007 (a) ................... 18,000,000
- ---------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
38
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 2000
===============================================================================================================
Value
Face Amount Issue (Note 1a)
===============================================================================================================
Idaho -- $ 3,200,000 Madison, Idaho Economic Development Corp. IDR (Floyd
0.2% Wilcox & Sons, Inc. Project) VRDN 5.40% due
08/01/2012 (a) ............................................... $ 3,200,000
- ---------------------------------------------------------------------------------------------------------------
Illinois -- 2,700,000 Aurora, Illinois IDR (Aztech Engineering Inc. Project) VRDN
3.4% 5.20% due 10/01/2018 (a) ..................................... 2,700,000
2,000,000 Chicago, Illinois O'Hare International Airport Revenue
(American Airlines--Series C) DDN 5.80% due
12/01/2017 (a) ............................................... 2,000,000
6,000,000 Chicago, Illinois Solid Waste Disposal Facilities Revenue
(Groot Industries Inc.) VRDN 5.20% due 12/01/2015 (a) ........ 6,000,000
2,975,000 Des Plaines, Illinois IDR (East Golf Road LLC Project)
VRDN 5.20% due 05/01/2017 (a) ................................ 2,975,000
3,300,000 Elgin, Illinois IDR (Starro Precision Products Inc. Project)
VRDN 5.20% due 06/01/2025 (a) ................................ 3,300,000
1,400,000 Geneva, Illinois IDR (Continental Envelope Corp. Project)
VRDN 5.20% due 09/01/2006 (a) ................................ 1,400,000
10,000,000 Illinois Health Facilities Authority Revenue (Evanston Hospital
Corp.--Series E) CP 4.00% due 11/30/2000 ..................... 10,000,000
6,740,000 Illinois Health Facilities Authority Revenue (Riverside Health
Systems--Series B) VRDN 5.10% due 11/15/2016 (a) ............. 6,740,000
10,000,000 Illinois Health Facilities Authority Revenue (Friend Village of
Schaumburg--Series 97B) VRDN 5.15% due 12/01/2020 (a) ........ 10,000,000
2,905,000 Illinois State Development Finance Authority IDR (Rockford
College Project) VRDN 5.10% due 02/01/2001 (a) ............... 2,905,000
3,380,000 Illinois State Development Finance Authority IDR (Design
Automotive LLC Project) VRDN 5.20% due 06/01/2011 (a) ........ 3,380,000
10,000,000 Illinois State Development Finance Authority Revenue (Local
Government Financing--Series A) VRDN 5.10% due
09/01/2029 (a) ............................................... 10,000,000
2,250,000 Kane County, Illinois School District No. 131 (Aurora East
Side) TAN 4.97% due 09/29/2000 ............................... 2,255,160
2,460,000 Peoria, Illinois IDR (CDC Realty L.P. Project) VRDN 5.20%
due 12/01/2014 (a) ........................................... 2,460,000
4,000,000 Upper Illinois River Valley Authority, Solid Waste Disposal
Revenue (Exolon-Esk Co. Project) VRDN 5.25%
due 12/01/2021 (a) ........................................... 4,000,000
- ---------------------------------------------------------------------------------------------------------------
Indiana -- 1,935,000 Allen County, Indiana EDR (Water Furnace International Inc.)
4.1% VRDN 5.25% due 11/01/2014 (a) ................................ 1,935,000
4,000,000 Allen County, Indiana EDR (YMCA of Greater Fort Wayne
Project) VRDN 5.15% due 12/01/2009 (a) ....................... 4,000,000
6,490,000 Anderson, Indiana EDR (Applecreek Commons L.P.) VRDN
5.20% due 12/01/2027 (a) ..................................... 6,490,000
See Notes to Financial Statements.
39
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 2000
==================================================================================================================
Value
Face Amount Issue (Note 1a)
==================================================================================================================
Indiana $ 2,525,000 Bloomington, Indiana EDR (Bloomington Square Project)
(continued) VRDN 5.10% due 12/01/2008 (a) ................................. $ 2,525,000
2,500,000 Connersville, Indiana EDR (Inland Southern Corp. Project)
VRDN 5.15% due 02/01/2012 (a) ................................. 2,500,000
2,500,000 Crawfordsville, Indiana EDR (Performance Master LLC
Project) VRDN 5.35% due 10/01/2018 (a) ........................ 2,500,000
4,265,000 Elkhart County, Indiana EDR (Patriot Homes Inc. Project)
VRDN 5.40% due 08/01/2012 (a) ................................. 4,265,000
2,810,000 Greencastle, Indiana IDR (Crown Equipment Corp. Project)
VRDN 5.20% due 02/01/2011 (a) ................................. 2,810,000
2,375,000 Indiana State Development Finance Authority EDR (Hart
Housing Group Inc. Project) VRDN 5.40% due
06/01/2011 (a) ................................................ 2,375,000
2,805,000 Indiana State Development Finance Authority EDR (Haulin
Trailers Project) VRDN 5.45% due 12/01/2017 (a) ............... 2,805,000
2,230,000 Indiana State Development Finance Authority EDR
(Indianapolis Urban League Inc.) VRDN 5.15% due
01/01/2020 (a) ................................................ 2,230,000
1,680,000 Indiana State Development Finance Authority IDR (Centurion
Industries Inc. Project) VRDN 5.25% due 10/01/2005 (a) ........ 1,680,000
22,200,000 Indiana State Development Authority PCR (Southern Indiana
Gas & Electric Co.--Series C) FXRDN 4.45% due
03/01/2001 .................................................... 22,200,000
5,000,000 Indiana State Health Facilities Financing Authority Revenue
(Hartsfield Village Project--Series B) VRDN 5.20% due
08/15/2027 (a) ................................................ 5,000,000
20,407,000 Indiana State Office Building Commission (Series A Hoosier
Notes) CP 4.00% due 06/19/2000 ................................ 20,407,000
- ------------------------------------------------------------------------------------------------------------------
Kansas -- Butler County, Kansas Solid Waste Disposal & Cogeneration
2.8% Revenue (Texaco Refining & Marketing) DDN:
15,400,000 (Series A) 6.25% due 08/01/2024 (a) ............................. 15,400,000
38,600,000 (Series B) 6.25% due 08/01/2024 (a) ............................. 38,600,000
3,000,000 (Series B) 6.25% due 12/01/2024 (a) ............................. 3,000,000
- ------------------------------------------------------------------------------------------------------------------
Kentucky -- 23,000,000 Carroll County, Kentucky Collateralized Solid Waste Disposal
3.9% Facilities Revenue (Kentucky Utilities Co. Project--Series A)
DDN 6.40% due 11/01/2024 (a) .................................. 23,000,000
4,280,000 Crestview Hill, Kentucky Industrial Building Revenue (Thomas
More College Project) VRDN 5.20% due 11/01/2018 (a) ........... 4,280,000
1,700,000 Jefferson County, Kentucky Industrial Building Revenue
(Thomas Development Project) VRDN 5.25% due
04/10/2010 (a) ................................................ 1,700,000
See Notes to Financial Statements.
40
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 2000
================================================================================================================
Value
Face Amount Issue (Note 1a)
================================================================================================================
Kentucky $ 9,000,000 Jeffersontown, Kentucky Lease Program Revenue (Kentucky
(continued) League of Cities Funding Trust) VRDN 5.05% due
03/01/2030 (a) ........................................... $ 9,000,000
5,000,000 Kenton County, Kentucky TAN 3.95% due 06/30/2000 ........... 5,001,582
5,000,000 Kenton County, Kentucky TRAN 3.75% due 06/30/2000 .......... 5,000,393
9,835,000 Kentucky Economic Development Finance Authority Hospital
Facilities Revenue (St. Elizabeth's Medical Center Inc.--
Series A) VRDN 5.22% due 05/01/2017 (a) .................. 9,835,000
19,700,000 Kentucky State Pollution Abatement and Water Resource
Finance Authority PCR (Toyota Motor) DDN 6.25% due
08/13/2006 (a) ........................................... 19,700,000
3,500,000 Shelby County, Kentucky IDR (Truss Co. Inc./Kingbrook
Commerce Park LLC Project) VRDN 5.25% due
06/01/2018 (a) ........................................... 3,500,000
- ----------------------------------------------------------------------------------------------------------------
Louisiana -- Louisiana Public Facilities Authority Revenue (Christus
1.7% Health--Series B) CP:
26,000,000 4.00% due 05/08/2000 ....................................... 26,000,000
9,000,000 4.10% due 06/21/2000 ....................................... 9,000,000
- ----------------------------------------------------------------------------------------------------------------
Maine -- 0.6% 2,170,000 Gray, Maine Revenue (Advance Realty Project) VRDN 5.20%
due 10/01/2011 (a) ....................................... 2,170,000
990,000 Lewiston, Maine Revenue (Geiger Brothers Project) VRDN
4.20% due 09/01/2004 (a) ................................. 990,000
2,995,000 Millinocket, Maine Revenue (Gardner Chipmills Project)
VRDN 5.40% due 03/01/2005 (a) ............................ 2,995,000
1,505,000 Saco, Maine IDR (First Light Technology Project) VRDN
5.40% due 04/01/2007 (a) ................................. 1,505,000
4,135,000 Topsham, Maine Revenue (Village Candle Inc.) VRDN 5.40%
due 08/01/2013 (a) ....................................... 4,135,000
- ----------------------------------------------------------------------------------------------------------------
Maryland -- 1,000,000 Anne Arundel County, Maryland EDR (Atlas Container Corp.
1.0% Project) VRDN 5.20% due 04/01/2006 (a) ................... 1,000,000
10,000,000 Gaithersburg, Maryland EDR (Asbury Methodist) VRDN
5.15% due 07/01/2027 (a) ................................. 10,000,000
10,000,000 Maryland State Community Development Administrative
Department (Housing & Community Development--
Series G) FXRDN 3.65% due 08/30/2000 ..................... 10,000,000
- ----------------------------------------------------------------------------------------------------------------
Massachusetts -- 6,732,000 Attleboro, Massachusetts BAN 3.75% due 07/03/2000 .......... 6,733,780
7.0% 7,100,000 Brockton, Massachusetts RAN 3.90% due 08/04/2000 ........... 7,103,558
23,607,000 Clipper Tax-Exempt Trust--Massachusetts State Housing
Finance Agency (Series A) VRDN 4.78% due
05/01/2007 (a) ........................................... 23,607,000
See Notes to Financial Statements.
41
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 2000
=================================================================================================================
Value
Face Amount Issue (Note 1a)
=================================================================================================================
Massachusetts $ 8,107,000 Clipper Tax-Exempt Trust--Massachusetts State Housing
(continued) Finance Agency (Series 98-B) VRDN 5.13% due
07/20/2007 (a) ............................................... $ 8,107,000
2,600,000 Greater Attleboro-Taunton Regional Transit Authority RAN
4.00% due 08/11/2000 ......................................... 2,602,805
6,000,000 Lynn, Massachusetts BAN 4.25% due 11/16/2000 ................... 6,008,780
4,150,000 Massachusetts State Industrial Finance Agency Health Care
Facilities Revenue (Beverly Enterprises) DDN 5.90% due
04/01/2009 (a) ............................................... 4,150,000
9,750,000 Northbridge, Massachusetts BAN 4.75% due 03/13/2001 ............ 9,785,535
3,000,000 Norwell, Massachusetts BAN 4.50% due 10/18/2000 ................ 3,009,392
18,000,000 Pioneer Valley Transit Authority RAN 3.90% due 08/04/2000 ...... 18,012,637
6,000,000 Southeastern Regional Transit Authority RAN 4.10% due
09/15/2000 ................................................... 6,007,588
20,000,000 Wilmington, Massachusetts BAN 3.50% due 06/29/2000 ............. 20,000,000
16,100,000 Worcester, Massachusetts BAN 4.40% due 08/30/2000 .............. 16,128,306
11,900,000 Worcester, Massachusetts Regional Transit Authority RAN
3.50% due 06/16/2000 ......................................... 11,900,000
- -----------------------------------------------------------------------------------------------------------------
Michigan -- 7,000,000 Dearborn, Michigan Economic Development Corp. Revenue
2.5% (Henry Ford Village Inc. Project) VRDN 5.10% due
10/01/2023 (a) ............................................... 7,000,000
Michigan Municipal Bond Authority RAN:
5,000,000 (Series B-1) 4.25% due 08/25/2000 .............................. 5,009,931
5,000,000 (Series B-2) 4.25% due 08/25/2000 .............................. 5,010,392
7,500,000 Michigan State Higher Educational Facilities Authority
Revenue (Center Creative Project) VRDN 5.10% due
12/01/2024 (a) ............................................... 7,500,000
5,900,000 Michigan State Strategic Fund Limited Obligation Revenue
(AVL North America Inc. Project) VRDN 5.35% due
04/01/2011 (a) ............................................... 5,900,000
4,000,000 Michigan State Strategic Fund Limited Obligation Revenue
(FATA Automation Project) VRDN 5.25% due
10/01/2024 (a) ............................................... 4,000,000
4,230,000 Michigan State Strategic Fund Limited Obligation Revenue
(Weller Truck Parts Project) VRDN 5.25% due
10/01/2029 (a) ............................................... 4,230,000
5,500,000 Oakland County, Michigan Economic Development Corp
Limited Obligation Revenue (Su Dan Co. Project) VRDN
5.25% due 07/01/2024 (a) ..................................... 5,500,000
7,300,000 University of Michigan, University Hospital Revenue (Series A)
DDN 5.85% due 12/01/2027 (a) ................................. 7,300,000
- -----------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
42
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 2000
=====================================================================================================================
Value
Face Amount Issue (Note 1a)
=====================================================================================================================
Minnesota -- $ 6,000,000 Minneapolis-St. Paul, Minnesota Housing Finance Board
0.3% Revenue (Single Family--Series B-2) FXRDN 3.65% due
08/01/2000 .................................................... $ 6,000,000
- ---------------------------------------------------------------------------------------------------------------------
Mississippi -- 31,400,000 Mississippi State Hospital Equipment & Facilities Authority
1.5% Revenue (North Mississippi Health Services--Series 1) CP
4.05% due 06/12/2000 .......................................... 31,400,000
- ---------------------------------------------------------------------------------------------------------------------
Missouri -- 1,875,000 Missouri State Development Finance Board IDR (Filtration
0.9% Group Inc.) VRDN 5.20% due 03/01/2012 (a) ..................... 1,875,000
14,000,000 Missouri State Health & Higher Educational Facilities
Authority Revenue (Pooled Hospital Loan Program--
Series A) VRDN 5.10% due 08/01/2029 (a) ....................... 14,000,000
1,875,000 Sikeston, Missouri IDA Revenue (Heritage American Homes
LP/ North Ridge Homes Inc. Project) VRDN 5.40% due
07/01/2009 (a) ................................................ 1,875,000
- ---------------------------------------------------------------------------------------------------------------------
Nevada -- 11,290,000 Eagle Tax-Exempt Trust--Clark County, Nevada School
0.5% District (Series 962804) VRDN 5.13% due 06/15/2015 (a) ........ 11,290,000
- ---------------------------------------------------------------------------------------------------------------------
New Hampshire -- 2,100,000 New Hampshire State Business Finance Authority Revenue
0.6% (Hydra LLC Inc.) VRDN 5.20% due 11/01/2006 (a) ................ 2,100,000
4,710,000 New Hampshire State Business Finance Authority Industrial
Facilities Revenue (Nim-Cor Inc.) VRDN 5.20% due
11/01/2009 (a) ................................................ 4,710,000
1,060,000 New Hampshire State Business Finance Authority Revenue
(Freed's Bakery Inc. Project) VRDN 5.40% due
05/02/2011 (a) ................................................ 1,060,000
5,605,000 New Hampshire State Business Finance Authority Revenue
(Montgomery Wire Corp.) VRDN 5.20% due
02/01/2014 (a) ................................................ 5,605,000
- ---------------------------------------------------------------------------------------------------------------------
New Jersey -- 12,180,000 Essex County, New Jersey BAN 4.00% due 08/15/2000 ............... 12,191,747
2.0% 7,000,000 Essex County, New Jersey Import Authority Lease Revenue
BAN 4.25% due 08/10/2000 ...................................... 7,005,634
12,040,000 Jersey City, New Jersey Refunding Notes GO 5.00% due
01/12/2001 .................................................... 12,090,383
10,000,000 New Jersey Economic Development Authority Water Facilities
Revenue (United Water of New Jersey Inc. Project) VRDN
5.95% due 11/01/2026 (a) ...................................... 10,000,000
- ---------------------------------------------------------------------------------------------------------------------
New York -- 11,000,000 Attica, New York Central School District BAN 5.00% due
5.0% 04/18/2001 .................................................... 11,050,707
8,000,000 Avoca, New York Central School District BAN 4.50% due
12/14/2000 .................................................... 8,019,053
See Notes to Financial Statements.
43
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 2000
=================================================================================================================
Value
Face Amount Issue (Note 1a)
=================================================================================================================
New York $ 9,500,000 East Meadow, New York United Free School District TAN
(continued) 4.00% due 06/28/2000 ......................................... $ 9,506,838
7,000,000 Gananda Central School District BAN 4.25% due 08/18/2000 ....... 7,010,027
7,200,000 Gananda Central School District BAN 5.00% due 01/19/2001 ....... 7,224,731
2,000,000 Garden City, New York United Free School District TAN
4.00% due 06/27/2000 ......................................... 2,001,416
8,630,000 Honeoye, New York Central School District BAN 4.50% due
11/01/2000 ................................................... 8,650,809
9,950,000 Jamestown, New York City School District BAN 4.25% due
06/23/2000 ................................................... 9,954,223
3,000,000 Mayfield Central School District BAN 4.25% due 06/28/2000 ...... 3,001,848
9,200,000 Olean, New York City School District BAN 4.63% due
03/08/2001 ................................................... 9,219,127
10,000,000 Sachem Central School District TAN 4.00% due 06/29/2000 ........ 10,007,161
8,500,000 Sodus, New York Central School District BAN 4.25% due
11/21/2000 ................................................... 8,511,354
9,400,000 Sullivan County, New York (Series A) BAN 4.75% due
03/30/2001 ................................................... 9,426,242
- -----------------------------------------------------------------------------------------------------------------
Ohio -- 6,700,000 Akron, Ohio Metropolitan Housing Authority Facilities
14.4% Revenue (Administration Building Project) VRDN 5.17%
due 04/01/2018 (a) ........................................... 6,700,000
4,950,000 Athens, Ohio City School District BAN 4.46% due 07/27/2000 4,955,287
5,000,000 Cardinal, Ohio Local School District BAN 4.50% due
06/15/2000 ................................................... 5,003,008
10,532,000 Cincinnati, Ohio City School District BAN 4.18% due
09/14/2000 ................................................... 10,546,324
7,250,000 Cincinnati, Ohio City School District BAN 4.75% due
09/14/2000 ................................................... 7,267,138
6,480,000 Cincinnati, Ohio City School District BAN 5.00% due
04/27/2001 ................................................... 6,510,635
5,100,000 Clinton County, Ohio Hospital Revenue (Hospital Capital Inc.)
VRDN 5.10% due 07/01/2029 (a) ................................ 5,100,000
4,000,000 Cuyahoga County, Ohio IDR (Motch Corp. Project) VRDN
5.25% due 02/01/2003 (a) ..................................... 4,000,000
10,000,000 Cuyahoga County, Ohio Hospital Revenue (The Cleveland
Clinic) VRDN 5.80% due 01/01/2026 (a) ........................ 10,000,000
3,500,000 Eagle Tax-Exempt Trust--Ohio Water Development Authority
(Ohio Edison) VRDN 5.13% due 07/01/2015 (a) .................. 3,500,000
4,800,000 Eagle Tax-Exempt Trust--Ohio Edison (Series 953509) VRDN
5.13% due 07/01/2015 (a) ..................................... 4,800,000
See Notes to Financial Statements.
44
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 2000
==============================================================================================================
Value
Face Amount Issue (Note 1a)
==============================================================================================================
Ohio $15,000,000 Eagle Tax-Exempt Trust--Cleveland Water (Series 983501)
(continued) VRDN 5.13% due 01/01/2025 (a) ............................. $15,000,000
22,065,000 Eagle Tax-Exempt Trust--Ohio State Turnpike Revenue
(Series 983502) VRDN 5.13% due 02/15/2020 (a) ............. 22,065,000
5,035,000 Franklin County, Ohio M/F Revenue (Community Housing
Network) VRDN 5.15% due 03/01/2027 (a) .................... 5,035,000
8,750,000 Hamilton County, Ohio Hospital Facilities Revenue (Children's
Hospital Medical Center) VRDN 5.10% due 05/15/2017 (a) 8,750,000
4,705,000 Indian Hill, Ohio EDR (Cincinnati Country Day School)
VRDN 4.97% due 05/01/2019 (a) ............................. 4,705,000
4,285,000 Lucas-Beacon Place Housing Development Corp. M/F Revenue
(Beacon Place Apartments Project) FXRDN 4.35% due
09/15/2000 ................................................ 4,285,000
4,000,000 Lucas County, Ohio Metropolitan Sewer & Water District
BAN 4.28% due 10/19/2000 .................................. 4,006,821
5,390,000 Mahoning County, Ohio Health Care Facilities Revenue
(Shepherds Woods Project) VRDN 5.15% due
09/01/2022 (a) ............................................ 5,390,000
7,100,000 Marion, Ohio BAN 4.30% due 11/16/2000 ....................... 7,107,386
3,045,000 Mentor, Ohio IDR (Risch Investments/Roll-Kraft Project)
VRDN 5.20% due 08/01/2017 (a) ............................. 3,045,000
13,470,000 Middleburg Heights, Ohio Hospital Revenue (Southwest
General Health) VRDN 5.10% due 08/15/2022 (a) ............. 13,470,000
Montgomery County, Ohio Revenue (Miami Valley Hospital--
Series B) CP:
17,000,000 4.00% due 05/05/2000 ........................................ 17,000,000
25,450,000 4.15% due 07/17/2000 ........................................ 25,450,000
4,370,000 North Ridgeville, Ohio BAN 4.15% due 10/19/2000 ............. 4,374,907
5,200,000 Ohio State Solid Waste Revenue (BP Exploration & Oil
Project) DDN 6.20% due 02/01/2033 (a) ..................... 5,200,000
4,000,000 Ontario County, Ohio BAN 4.20% due 10/26/2000 ............... 4,004,669
3,755,000 Ottawa County, Ohio IDR (Adrian Sand & Stone Inc. Project)
VRDN 5.25% due 10/01/2008 (a) ............................... 3,755,000
5,400,000 Paulding County, Ohio Solid Waste Disposal Revenue (LaFarge
Corp. Project) DDN 6.00% due 08/01/2026 (a) ................ 5,400,000
7,425,000 Richland County, Ohio Revenue (Mansfield Area YMCA
Project) VRDN 5.15% due 11/01/2019 (a) ..................... 7,425,000
2,500,000 Sheffield, Ohio GO 3.60% due 05/18/2000 ..................... 2,500,000
Teays Valley, Ohio Local School District BAN:
7,275,000 4.50% due 06/15/2000 ........................................ 7,279,383
5,925,000 4.75% due 06/15/2000 ........................................ 5,928,945
See Notes to Financial Statements.
45
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 2000
===============================================================================================================
Value
Face Amount Issue (Note 1a)
===============================================================================================================
Ohio Trumbull County, Ohio BAN:
(continued) $ 5,100,000 (Series 2) 4.20% due 07/27/2000 ............................ $ 5,103,489
7,450,000 (Series 1) 4.75% due 04/11/2001 ............................ 7,471,381
26,100,000 Warrensville Heights, Ohio City School District BAN 4.55%
due 07/15/2000 ........................................... 26,128,808
6,295,000 Willoughby, Ohio IDR (Kennedy Group Inc. Project) VRDN
5.25% due 09/01/2018 (a) ................................. 6,295,000
1,940,000 Wood County, Ohio IDR (GHT Property Management LLC
Project) VRDN 5.40% due 08/01/2019 (a) ................... 1,940,000
- ---------------------------------------------------------------------------------------------------------------
Oklahoma -- Oklahoma State Development Finance Authority Revenue
2.0% (Oklahoma Hospital Association--Series A) VRDN:
20,000,000 5.10% due 06/01/2029 (a) ................................... 20,000,000
10,000,000 5.10% due 01/01/2030 (a) ................................... 10,000,000
11,673,000 Oklahoma State Housing Finance Agency Single-Family
Revenue (Series B) BAN 4.75% due 12/28/2000 .............. 11,685,503
- ---------------------------------------------------------------------------------------------------------------
Oregon -- 3,592,400 Oregon State EDR (Sheffer Corp. Project--Series 185) VRDN
0.5% 5.10% due 12/01/2013 (a) ................................. 3,592,400
6,000,000 Oregon State Housing & Community Services Department
Mortgage Revenue (Single Family Mortgages--Series K)
FXRDN 3.58% due 08/17/2000 ............................... 6,000,000
- ---------------------------------------------------------------------------------------------------------------
Pennsylvania -- 24,660,000 Dauphin County, Pennsylvania General Authority Revenue
4.3% (School District Pooled Financing) VRDN 5.20% due
09/01/2032 (a) ........................................... 24,660,000
38,405,000 Montgomery County, Pennsylvania Higher Education & Health
Authority Revenue (Higher Education & Health Loan)
VRDN 5.15% due 08/01/2021 (a) ............................ 38,405,000
25,000,000 New Garden, Pennsylvania General Authority Municipal
Revenue (Municipal Pooled Financing Program) VRDN
5.20% due 11/01/2029 (a) ................................. 25,000,000
- ---------------------------------------------------------------------------------------------------------------
Rhode Island -- 5,500,000 Rhode Island State Health & Educational Building Corp.
0.9% Revenue (La Salle Academy) VRDN 5.05% due
03/01/2029 (a) ........................................... 5,500,000
2,660,000 Rhode Island State Housing & Mortgage Finance Corp.
(Smith Building Development Corp.) VRDN 5.20% due
12/01/2028 (a) ........................................... 2,660,000
2,500,000 Rhode Island State Industrial Facilities Corporation IDR
(Capital Development Corp. Project) VRDN 4.00% due
11/01/2005 (a) ........................................... 2,500,000
2,665,000 Rhode Island State Industrial Facilities Corporation IDR
(Beta Realty Corp.) VRDN 5.05% due 12/01/2019 (a) ......... 2,665,000
5,000,000 Rhode Island State Resource Recovery Corp. (Landfill Lease)
GO 4.00% due 07/28/2000 .................................... 5,004,641
- ---------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
46
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 2000
=======================================================================================================================
Value
Face Amount Issue (Note 1a)
=======================================================================================================================
South Carolina -- $ 2,500,000 South Carolina Economic Development Authority EDR
0.5% (Parkway Products Inc. Project) VRDN 5.25% due
11/01/2007 (a) ................................................. $ 2,500,000
6,935,000 South Carolina Economic Development Authority IDR (Core
Materials Corp. Project) VRDN 4.70% due 04/01/2013 (a) ......... 6,935,000
- -----------------------------------------------------------------------------------------------------------------------
Tennessee -- 4,000,000 Coffee County, Tennessee Industrial Board Inc. IDR (Hillsdale
4.1% Tool & Manufacturing Co. Project) VRDN 5.20% due
06/01/2017 (a) ................................................. 4,000,000
19,775,000 Johnson City, Tennessee Municipal Securities Trust (SGA 45)
DDN 5.90% due 05/01/2021 (a) ................................... 19,775,000
35,000,000 Knox County, Tennessee Health, Educational & Housing
Facilities Board Revenue (THA Solutions Group Inc. Project)
VRDN 5.10% due 05/01/2029 (a) .................................. 35,000,000
9,500,000 Memphis & Shelby County, Tennessee Industrial Board PCR
(Birmingham Steel Corp. Project) VRDN 5.20% due
10/01/2026 (a) ................................................. 9,500,000
4,120,000 Nashville & Davidson County, Tennessee IDB Revenue (Gibson
Guitar Project) VRDN 5.20% due 03/01/2011 (a) .................. 4,120,000
2,480,000 Nashville & Davidson County, Tennessee IDB Revenue
(Hickory M/F Housing Revenue) VRDN 5.15% due
06/01/2015 (a) ................................................. 2,480,000
10,500,000 Shelby County, Tennessee (Series A) CP 4.10% due 06/09/2000 10,500,000
- -----------------------------------------------------------------------------------------------------------------------
Texas -- 20,000,000 ABN-AMRO Muni Tops--Dallas, Texas Waterworks & Sewer
12.5% Systems Revenue (Series 9819) VRDN 5.13% due
07/04/2007 (a) ................................................. 20,000,000
13,884,000 ABN-AMRO Muni Tops--Texas A&M University Revenue
(Series 995) FXRDN 3.60% due 05/17/2000 ........................ 13,884,000
9,000,000 ABN-AMRO Muni Tops--San Antonio, Texas Electric & Gas
Revenue (Series 9822) VRDN 5.15% due 01/02/2007 (a) ............ 9,000,000
23,500,000 Dallas, Texas Area Rapid Transit Sales Tax Revenue CP 4.00%
due 06/15/2000 ................................................. 23,500,000
25,000,000 Gulf Coast IDA, Solid Waste Disposal Revenue (Citgo
Petroleum Corp. Project) DDN 6.25% due 04/01/2028 (a) .......... 25,000,000
4,000,000 Mesquite, Texas IDR (Morrison Products) VRDN 5.40% due
01/10/2010 (a) ................................................. 4,000,000
1,340,000 Montgomery County, Texas IDC Revenue (Sawyer Research
Products Inc.) VRDN 5.40% due 02/04/2015 (a) ................... 1,340,000
22,700,000 Plano, Texas Health Facilities Development Corporation
Revenue (Children's Presbyterian Health Care Center) CP
4.10% due 06/19/2000 ........................................... 22,700,000
15,000,000 San Antonio, Texas Water System CP 4.00% due 06/21/2000 .......... 15,000,000
See Notes to Financial Statements.
47
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 2000
==============================================================================================================
Value
Face Amount Issue (Note 1a)
==============================================================================================================
Texas $80,000,000 Texas State TRAN 4.50% due 08/31/2000 .................... $80,203,497
(continued) Texas Municipal Power Agency Revenue CP:
23,700,000 4.00% due 05/04/2000 ..................................... 23,700,000
19,200,000 4.10% due 07/20/2000 ..................................... 19,200,000
- --------------------------------------------------------------------------------------------------------------
Utah -- 26,000,000 Intermountain Power Agency Power Supply Revenue CP 4.10%
1.3% due 06/09/2000 ......................................... 26,000,000
- --------------------------------------------------------------------------------------------------------------
Vermont -- 5,000,000 Vermont Housing Finance Agency Single-Family Housing Note
0.2% (Series 11-B) FXRDN 3.70% due 09/07/2000 ............... 5,000,000
- --------------------------------------------------------------------------------------------------------------
Washington -- 26,745,000 Eagle Tax-Exempt Trust--Port of Seattle, Washington
2.9% Passenger Facility Charge (Series 984705) VRDN 5.13% due
12/01/2019 (a) ......................................... 26,745,000
14,680,000 Eagle Tax-Exempt Trust--Washington State Public Power
Supply System (Nuclear Project Number 1--Series 964702)
VRDN 5.13% due 07/01/2011 (a) ............................ 14,680,000
17,280,000 Seattle, Washington Municipal Light & Power Revenue
(Municipal Securities Trust--SGA 85) DDN 5.90% due
10/01/2023 (a) ......................................... 17,280,000
- --------------------------------------------------------------------------------------------------------------
West Virginia -- 10,000,000 ABN-AMRO Muni Tops--State of West Virginia VRDN
0.5% 3.50% due 06/06/2007 (a) ............................... 10,000,000
- --------------------------------------------------------------------------------------------------------------
Wisconsin -- 2,000,000 Iron County, Wisconsin BAN 4.20% due 12/01/2000 .......... 2,000,000
3.9%
6,000,000 Oshkosh, Wisconsin Area School District TRAN 4.00% due
08/23/2000 ............................................. 6,005,053
8,900,000 Racine, Wisconsin United School District TRAN 3.75% due
07/06/2000 ............................................. 8,903,090
4,615,000 Sturtevant, Wisconsin IDR (Andis Co. Project--Series A)
VRDN 5.20% due 12/01/2016 (a) .......................... 4,615,000
9,000,000 Sun Prairie, Wisconsin Area School District BAN 3.75% due
10/01/2000 ............................................. 9,010,934
4,100,000 Verona, Wisconsin Area School District TRAN 4.00% due
08/25/2000 ............................................. 4,103,264
Wisconsin State G.O. CP:
10,000,000 (Series 1997-B) 3.95% due 05/04/2000 ..................... 10,000,000
11,000,000 (Series 1998-B) 3.95% due 05/05/2000 ..................... 11,000,000
25,000,000 (Series 1998-B) 4.00% due 06/21/2000 ..................... 25,000,000
- --------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
48
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 2000
===========================================================================================================
Value
Face Amount Issue (Note 1a)
===========================================================================================================
Wyoming -- Laramie County, Wyoming IDR (Cheyenne Light Fuel &
1.6% Power Co.) VRDN:
$ 3,500,000 (Series 97-B) 5.15% due 09/01/2021 (a) .................... $ 3,500,000
5,000,000 (Series 97-A) 5.15% due 03/01/2027 (a) .................... 5,000,000
24,200,000 Sweetwater County, Wyoming PCR (Idaho Power Co. Project--
Series B) DDN 6.10% due 07/15/2026 (a) .................. 24,200,000
- -----------------------------------------------------------------------------------------------------------
Total Investments (Cost $2,031,741,065) -- 98.8% .......... 2,031,741,065
- -----------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.2% ..................... 23,933,388
- -----------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00 Per Share on
2,055,694,399 Shares of Beneficial Interest
Outstanding -- 100.0% ..................................... $2,055,674,453
===========================================================================================================
(a) The interest rate is subject to change periodically based on a certain
index. The rates shown are those in effect at April 30, 2000. For variable rate
demand instruments, the next coupon date on which the interest is to be
adjusted is deemed the maturity date for valuation.
Note -- Cost for federal income tax purposes is the same as that shown above.
===============================================================================
Portfolio Abbreviations for Merrill Lynch Institutional Tax-Exempt Fund
BAN Bond Anticipation Notes GO General Obligation PCR Pollution Control Revenue
CP Commercial Paper IDA Industrial Development Authority RAN Revenue Anticipation Notes
DDN Daily Demand Notes IDB Industrial Development Board TAN Tax Anticipation Notes
EDR Economic Development Revenue IDR Industrial Development Revenue TRAN Tax and Revenue Anticipation Notes
FXRDN Fixed Rate Demand Notes M/F Multi-Family VRDN Variable Rate Demand Notes
- -------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
49
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Statement of Assets and Liabilities
April 30, 2000
================================================================================
Assets:
Investments, at amortized cost and value (Note 1a) ................................ $2,031,741,065
Cash .............................................................................. 1,949,521
Interest receivable ............................................................... 21,353,867
Receivable for investments sold ................................................... 1,195,000
Prepaid expense ................................................................... 3,183
--------------
Total assets ................................................................... 2,056,242,636
--------------
Liabilities:
Advisory fee payable (Note 2) ..................................................... 351,896
Accrued expenses .................................................................. 156,971
Dividends payable ................................................................. 59,316
--------------
Total liabilities .............................................................. 568,183
--------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based on
2,055,694,399 shares of beneficial interest outstanding) ......................... $2,055,674,453
==============
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Statement of Operations
For the Year Ended April 30, 2000
================================================================================
Investment Income:
Interest and discount earned (Note 1d) ............................ $80,689,853
-----------
Expenses:
Investment advisory fee (Note 2) ................ $ 9,877,352
Registration fees ............................... 353,736
Dividend and transfer agency fees ............... 195,124
Accounting and custodian services ............... 143,072
Legal and audit fees ............................ 32,395
Printing and shareholder reports ................ 21,898
Trustees' fees (Note 5) ......................... 18,253
Insurance ....................................... 9,981
Miscellaneous ................................... 7,634
------------
Total expense .............................. 10,659,445
Waived investment advisory fee (Note 2) ......... (5,377,309) 5,282,136
------------ -----------
Net investment income ........................................ 75,407,717
Net realized gain from investment transactions .................... 117,232
-----------
Net Increase in Net Assets Resulting From Operations .............. $75,524,949
===========
See Notes to Financial Statements.
50
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Statements of Changes in Net Assets
Year Ended April 30,
-------------------------------------
2000 1999
- ------------------------------------------------------------------------------------------------------------
Increase in Net assets:
Operations:
Net investment income .............................................. $ 75,407,717 $ 63,764,839
Net realized gain (loss) from investment transactions .............. 117,232 (538)
-------------- --------------
Net increase in net assets resulting from operations ............... 75,524,949 63,764,301
Total declared as dividends to shareholders (Note 4) ............... (75,427,016) (63,752,758)
Capital share transactions (Note 3) ................................ 102,501,621 148,621,747
-------------- --------------
Net increase in net assets ......................................... 102,599,554 148,633,290
Net Assets:
Beginning of year .................................................. 1,953,074,899 1,804,441,609
-------------- --------------
End of year, including undistributed net investment income of $0 and
$134,601 and accumulated capital losses of $128,519 and $252,480
respectively (Note 1g and Note 4) .................................. $2,055,674,453 $1,953,074,899
============== ==============
- --------------------------------------------------------------------------------
Year Ended April 30,
Merrill Lynch Institutional Tax-Exempt Fund ------------------------------------------------------------------------
Financial Highlights 2000 1999 1998 1997 1996
=========================================================================================================================
Net Asset Value, Beginning of period ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income ........................... .03 .03 .04 .03 .04
Dividends from net investment income ............ (.03) (.03) (.04) (.03) (.04)
---------- ---------- ---------- ---------- --------
Net Asset Value, End of period ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ========
Total Return ..................................... 3.41% 3.22% 3.59% 3.41% 3.68%
Ratios/Supplemental Data:
Net Assets, end of period (000) ................. $2,055,674 $1,953,075 $1,804,442 $1,003,655 $667,205
Ratio of expenses to average net assets
(before waiver) ................................ .48% .49% .49% .52% .54%
Ratio of expenses to average net assets
(after waiver) ................................. .24% .24% .24% .27% .29%
Ratio of net investment income, including
realized and unrealized gains and losses,
to average net assets (before waiver) .......... 3.12% 2.92% 3.28% 3.12% 3.35%
Ratio of net investment income, including
realized and unrealized gains and losses,
to average net assets (after waiver) ........... 3.36% 3.17% 3.53% 3.37% 3.60%
See Notes to Financial Statements.
51
- --------------------------------------------------------------------------------
Merrill Lynch Funds For Institutions Series
Notes to Financial Statements
================================================================================
1. Significant Accounting Policies
Merrill Lynch Funds For Institutions Series (the "Trust") was organized as a
Massachusetts business trust on May 7, 1987, and is registered under the
Investment Company Act of 1940 as a diversified, open-end management company.
On June 15, 1998, Merrill Lynch Rated Institutional Fund commenced operations
as a separate series of the Trust. On January 27, 1997, Merrill Lynch Premier
Institutional Fund commenced operations as a separate series of the Trust. The
Trust has a fiscal year end of April 30. The Trust's financial statements are
prepared in accordance with generally accepted accounting principles, which may
require the use of management accruals and estimates. The following is a
summary of significant accounting policies consistently followed by the Trust
in conformity with generally accepted accounting principles.
(a) The value of the Premier Institutional, Institutional, Rated
Institutional, Government and Treasury Fund portfolio securities is determined
on the basis of fair value as determined in good faith by the Board of Trustees
(the "Trustees") of the Trust. In determining fair value, securities for which
market quotations are readily available are valued at market value. Other
securities, if any, are valued at their fair value in the best judgment of Fund
Asset Management, L.P., ("FAM") under procedures established by, and under the
supervision of, the Trustees. Securities with remaining maturities of 60 days
or less are valued by use of the amortized cost method. Institutional Tax-Exempt
Fund's portfolio securities are carried at amortized cost which approximates
market value.
For the purpose of valuation, the maturity of a variable rate demand
instrument is deemed to be the next coupon date on which the interest rate is
to be adjusted. In the case of a floating rate instrument, the remaining
maturity is deemed to be the demand notice payment period.
(b) It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income to its shareholders. Therefore, no federal income tax
provision is required.
(c) Realized gains and losses on investments are computed on the basis of
identified cost of the security sold.
(d) Security transactions are accounted for on the date the securities are
purchased or sold (the trade date). Interest income (after adjustment for
amortization of premium or accretion of discount) is recorded as earned.
(e) Prepaid registration fees are charged to income as the related shares are
sold.
(f) Repurchase agreements--The Premier Institutional Fund, the Institutional
Fund, the Rated Institutional Fund and the Government Fund invest in U.S.
Government & Agency securities pursuant to repurchase agreements with member
banks of the Federal Reserve System or primary dealers in U.S. Government
securities. Under such agreements, the bank or primary dealer agrees to
repurchase the security at a mutually agreed upon time and price. The Trust
takes possession of the underlying securities, marks to market such securities
daily and, if necessary, receives additional securities to ensure that the
contract is adequately collateralized.
(g) During the year ended April 30, 2000, Merrill Lynch Institutional
Tax-Exempt Fund reclassified amounts to reflect a decrease of $6,729 and
$115,302 in accumulated capital losses and undistributed net investment income,
respectively, as a result of permanent differences arising from different
treatments of market discount for book and tax purposes.
2. Investment Advisory Fees and Other
Transactions with Affiliates
FAM, a subsidiary of Merrill Lynch & Co., Inc., provides investment advisory
and corporate administrative services to the Trust for a fee, subject to
certain limitations, at the following annual rates:
52
- --------------------------------------------------------------------------------
Merrill Lynch Funds For Institutions Series
Notes to Financial Statements -- Continued
================================================================================
Percentage of Average Daily Net Assets
-----------------------------------------
Premier Institutional
Fund ....................... .15%
Institutional Fund ......... .40% up to and including $250,000,000
plus .375% over $250,000,000 up to and
including $500,000,000
plus .35% over $500,000,000 up to and
including $750,000,000
plus .325% over $750,000,000
Rated Institutional
Fund ....................... .20%
Government Fund
and Treasury Fund .......... .35% up to and including $500,000,000
plus .335% over $500,000,000 up to and
including $750,000,000
plus .32% over $750,000,000 up to and
including $1,000,000,000
plus .30% over $1,000,000,000
Institutional
Tax-Exempt Fund ............ .45% up to and including $1,500,000,000
plus .425% over $1,500,000,000 up to and
including $2,000,000,000
plus .40% over $2,000,000,000
During its initial offering period, FAM agreed to waive a portion of its
advisory fee for the Rated Institutional Fund. For the period ended April 30,
1999, the effective fee payable to FAM was 0.16% of the Fund's average daily
assets. FAM has agreed to waive a portion of its advisory fees for the
Institutional, Government, Treasury and Tax-Exempt Funds. The effective fee
payable to FAM will be at the annual rate of 0.20% of each Fund's average daily
net assets. FAM may discontinue waiver of the fee in whole or in part at any
time without notice.
For the period ended April 30, 2000, FAM waived a portion of its fees
amounting to $10,758,313 for the Institutional Fund, $3,018,131 for the
Government Fund, $1,024,599 for the Treasury Fund and $5,377,309 for the
Institutional Tax-Exempt Fund.
All officers and certain trustees of the Trust are affiliated with Merrill
Lynch & Co., Inc.
3. Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
shares of beneficial interest in the Premier Institutional Fund, Institutional
Fund, Rated Institutional Fund, Government Fund and Treasury Fund ($.01 par
value) and Institutional Tax-Exempt Fund ($.10 par value) of a single class. At
April 30, 2000, capital paid-in aggregated $14,534,673,237 for Premier
Institutional Fund, $8,086,541,967 for Institutional Fund, $287,767,291 for
Rated Institutional Fund, $2,604,585,343 for Government Fund, $678,851,609 for
Treasury Fund and $2,055,802,972 for Institutional Tax-Exempt Fund.
Transactions in shares at a constant net asset value of $1.00 per share were as
follows:
Year Ended April 30,
---------------------------------
Premier Institutional Fund 2000 1999
- -------------------------- --------------- ---------------
Shares sold ........................ 162,189,841,950 118,945,464,135
Shares issued to shareholders in=
reinvestment of dividends ......... 583,456,797 383,116,366
--------------- ---------------
Total ............................ 162,773,298,747 119,328,580,501
Shares redeemed .................... 158,868,494,343 115,344,184,289
--------------- ---------------
Net increase ..................... 3,904,804,404 3,984,396,212
=============== ===============
Year Ended April 30,
---------------------------------
Institutional Fund 2000 1999
- ------------------ -------------- ---------------
Shares sold ........................ 43,234,479,150 44,168,257,580
Shares issued to shareholders in
reinvestment of dividends ......... 399,231,203 364,014,371
-------------- --------------
Total ............................ 43,633,710,353 44,532,271,951
Shares redeemed .................... 43,608,913,403 43,844,221,739
-------------- --------------
Net increase ..................... 24,796,950 688,050,212
============== ==============
Year Period
Ended Ended
April 30, April 30,
Rated Institutional Fund 2000 1999
- ----------------------- -------------- --------------
Shares sold ........................ 2,703,108,746 4,497,694,629
Shares issued to shareholders in
reinvestment of dividends ......... 18,133,352 15,592,631
------------- -------------
Total ............................ 2,721,242,098 4,513,287,260
Shares redeemed .................... 2,871,143,082 4,075,718,985
------------- -------------
Net increase (decrease) .......... (149,900,984) 437,568,275
============= =============
Prior to June 15, 1998 (commencement of operations) there were 100,000 shares
of beneficial interest outstanding which were owned by FAM.
53
- --------------------------------------------------------------------------------
Merrill Lynch Funds For Institutions Series
Notes to Financial Statements -- Continued
================================================================================
Year Ended April 30,
-----------------------------------
Government Fund 2000 1999
- --------------- -------------- --------------
Shares sold ........................ 17,291,527,785 14,384,418,297
Shares issued to shareholders in
reinvestment of dividends ......... 125,465,660 115,470,085
-------------- --------------
Total ............................ 17,416,993,445 14,499,888,382
Shares redeemed .................... 17,449,201,846 13,977,888,964
-------------- --------------
Net increase (decrease) .......... (32,208,401) 521,999,418
============== ==============
Year Ended April 30,
---------------------------------
Treasury Fund 2000 1999
- ------------- ------------- -------------
Shares sold ........................ 2,721,983,100 3,344,371,792
Shares issued to shareholders in
reinvestment of dividends ......... 32,705,642 33,682,662
------------- -------------
Total ............................ 2,754,688,742 3,378,054,454
Shares redeemed .................... 2,756,221,837 3,455,926,782
------------- -------------
Net decrease ..................... (1,533,095) (77,872,328)
============= =============
Year Ended April 30,
-------------------------------
Institutional
Tax-Exempt Fund 2000 1999
- --------------- ------------- -------------
Shares sold ........................ 8,507,810,314 9,221,984,624
Shares issued to shareholders in
reinvestment of dividends ......... 71,052,924 59,822,347
------------- -------------
Total ............................ 8,578,863,238 9,281,806,971
Shares redeemed .................... 8,476,361,617 9,133,185,224
------------- -------------
Net increase ..................... 102,501,621 148,621,747
============= =============
4. Distributions
The Funds declare dividends daily, pay dividends monthly and automatically
reinvest such dividends in additional Fund shares at net asset value, unless
shareholders request payment in cash. Dividends for the Premier Institutional,
Institutional, Rated Institutional, Government and Treasury Funds are declared
from the total net investment income plus or minus realized gains or losses, if
any, on investments.
Dividends for the Institutional Tax-Exempt Fund are declared from net
investment income- excluding discounts earned other than original issue
discounts. Net realized capital gains, if any, are normally distributed
annually, after deducting prior years' loss carryovers. The Fund may distribute
capital gains more frequently than annually in order to maintain the Fund's net
asset value at $1.00 per share.
At April 30, 2000, the Institutional Tax-Exempt Fund had net capital loss
carryovers of $128,519 of which $124,729 expire in the year 2003, and $3,790
expire in 2007.
5. Trustees' Fees
Each Trustee who is not affiliated with the Trust or its adviser is paid an
annual fee of $36,000 by the Trust. Trustees' fees are allocated among the six
series of the Trust based on the net assets under management.
54
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
================================================================================
To the Trustees of and the Shareholders of Merrill Lynch Funds For Institutions
Series:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of Merrill Lynch Funds For Institutions
Series (the "Trust"), consisting of Merrill Lynch Premier Institutional Fund,
Merrill Lynch Institutional Fund, Merrill Lynch Rated Institutional Fund,
Merrill Lynch Government Fund, Merrill Lynch Treasury Fund, and Merrill Lynch
Institutional Tax-Exempt Fund (the "Funds"), each a separate series of the
Trust, as of April 30, 2000, and the related statements of operations for the
year then ended, and the statements of changes in net assets and the financial
highlights for each of the respective periods then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of the securities owned at April 30, 2000, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds of Merrill Lynch Funds For Institutions Series as of
April 30, 2000, the results of their operations for the year then ended, and
the changes in their net assets and their financial highlights for each of the
respective periods presented, in conformity with accounting principles
generally accepted in the United States of America.
Deloitte & Touche LLP
Boston, Massachusetts
May 26, 2000
55
ADMINISTRATOR & DISTRIBUTOR Merrill Lynch Funds Distributor, Inc.
One Financial Center -- 23rd Floor
Boston, Massachusetts 02111
INVESTMENT ADVISER
Fund Asset Management, L.P.
P.O. Box 9011
Princeton, N.J. 08543-9011
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company
P.O. Box 8118
Boston, Massachusetts 02266-8118
LEGAL COUNSEL
Clifford Chance Rogers & Wells
200 Park Avenue
New York, New York 10166
AUDITORS
Deloitte & Touche LLP
200 Berkeley Street
Boston, Massachusetts 02116
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of the Trust unless accompanied or preceded by the
Trust's current prospectus. Past performance results shown in this report
should not be considered a representation of future performance, which will
fluctuate. Each Fund seeks to maintain a consistent $1.00 net asset value per
share, although this cannot be assured. An investment in the Funds is neither
insured nor guaranteed by the U.S. Government.
#WWANRPT5/00
[Logo] Merrill Lynch
Annual Report
Merrill Lynch Funds
For Institutions Series
Merrill Lynch Premier
Institutional Fund
Merrill Lynch
Institutional Fund
Merrill Lynch Rated
Institutional Fund
Merrill Lynch
Government Fund
Merrill Lynch
Treasury Fund
Merrill Lynch Institutional
Tax-Exempt Fund
April 30, 2000