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Merrill Lynch
Funds For Institutions Series
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Merrill Lynch Institutional Fund
Merrill Lynch Government Fund
Merrill Lynch Treasury Fund
Merrill Lynch Institutional Tax-Exempt Fund
Annual Report
April 30, 1997
<PAGE>
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Dear Shareholder:
We are pleased to provide you with this Annual Report for the Merrill Lynch
Funds For Institutions Series including, for the first time, Merrill Lynch
Premier Institutional Fund which commenced operations on January 27, 1997. In
this and in future shareholder reports we will highlight the Fund's performance,
describe recent investment activities, and examine some of the important market
developments that helped shape our investment strategy during the period under
review.
Merrill Lynch Premier Institutional Fund
Merrill Lynch Premier Institutional Fund seeks to provide shareholders with
a high level of current income consistent with liquidity and the maintenance of
a portfolio of high-quality, short-term money market instruments. The minimum
initial investment for the Fund is $10 million.
Since inception (January 27, 1997), Merrill Lynch Premier Institutional
Fund's net annualized yield was 5.40%. The Fund's seven-day net annualized yield
as of April 30, 1997, was 5.47%. The average portfolio maturity for Merrill
Lynch Premier Institutional Fund at April 30, 1997, was 51 days.
The Fund's average life since inception has ranged from a low of 31 days to
a high of 69 days. Given the liquidity characteristics of the Fund's
shareholders, our investment strategy initially was governed by a cautious
approach. This approach was warranted, particularly given the expectation that
the Federal Reserve Board was contemplating a shift to a more restrictive
monetary policy. Subsequent to the 25 basis point hike in the Federal Funds rate
on March 25, 1997, we sought to take advantage of the steepness which had
developed in the front end of the yield curve. We implemented a slightly more
barbelled structure with the most notable investments being callable Government
agency securities in the one-year--two-year sector of the yield curve and bank
certificates of deposit in the six-month--nine-month sector. Overnight cash
positions continue to approximate 30% of total assets, a percentage that we
believe is prudent given the nature of the Fund and market conditions.
Merrill Lynch Institutional Fund
For the year ended April 30, 1997, Merrill Lynch Institutional Fund's net
yield was 5.22%. The Fund's seven-day net annualized yield as of April 30, 1997,
was 5.37%. The average portfolio maturity for Merrill Lynch Institutional Fund
at April 30, 1997, was 62 days, compared to 70 days at October 31, 1996.
During the six-month period ended April 30, 1997, we maintained an average
life ranging from a low of 45 days to a high of 81 days. Throughout much of the
six-month period, interest rates were greatly influenced by investor
expectations regarding Federal Reserve Board monetary policy. Although we did
not concur with the belief that the Federal Reserve Board would seek to push the
Federal Funds rate higher during the latter half of 1996, we felt it was
appropriate to maintain a cautious investment bias. Accordingly, we
de-emphasized longer-term securities in favor of variable rate instruments,
although trading opportunities did occasionally arise. Furthermore, we built
overnight cash positions to approximately 20% of total assets in order to
adequately meet shareholder redemption needs at year-end. Additionally, some
assets were earmarked into early 1997 to take advantage of the inversion which
had developed in the money market yield curve in that sector.
1
<PAGE>
By early March, investor nervousness once again heightened as investors
began to believe that the Federal Reserve Board would seek to push short-term
interest rates higher at its March Federal Open Market Committee meeting. In his
Humphrey-Hawkins testimony, Federal Reserve Board Chairman Alan Greenspan
cautioned investors about the need to act preemptively with respect to inflation
during times of strong economic growth and tight labor markets. Confirming
investor expectations, the Federal Reserve Board pushed the Federal Funds rate
up 25 basis points (0.25%) to 5.50% on March 25, 1997. Subsequent to the
tightening, we decided to reduce overnight cash positions and invest those
assets in the 90-day--180-day area. We expect this strategy to allow the Fund to
benefit from the steepness which had developed in the front end of the yield
curve without taking on an inappropriate level of interest rate risk.
Merrill Lynch Government Fund
For the year ended April 30, 1997, Merrill Lynch Government Fund's net
yield was 5.19%. The Fund's seven-day net annualized yield as of April 30, 1997,
was 5.35%. The average portfolio maturity for Merrill Lynch Government Fund at
April 30, 1997, was 54 days, compared to 57 days at October 31, 1996.
For the six-month period ended April 30, 1997, our investment outlook
reflected two distinct sentiments. For the first four months of the six-month
period we operated the Fund under the premise that the Federal Reserve Board
would leave monetary policy unchanged. Structurally, the Fund held modest
overnight positions, rolling over maturities into one-month--two-month agency
securities. We de-emphasized Treasury bills in deference to Treasury notes and
longer-term Government agency securities. The longer-term securities represented
our belief that the yield curve would flatten as a tightening scenario faded.
Then, during March and April, Chairman Greenspan's comments and the Federal
Reserve Board's March 25, 1997, Federal Funds rate hike gave us little incentive
to remain positive. We modestly reduced our yield curve exposure while
increasing our overnight and floating rate positions as a hedge against rising
interest rates.
Merrill Lynch Treasury Fund
For the year ended April 30, 1997, Merrill Lynch Treasury Fund's net yield
was 4.97%. The Fund's seven-day net annualized yield as of April 30, 1997, was
5.12%.
The average portfolio maturity for Merrill Lynch Treasury Fund at April 30,
1997, was 57 days, compared to 56 days at October 31, 1996. During the six
months ended April 30, 1997, the average life of the Fund ranged from a low of
48 days to a high of 60 days.
As the six-month period began, a strong dollar and lack of supply in the
front end of the yield curve kept the Treasury market well-bid while inverting
the yield curve as investors sought incremental yield. Our exposure was
primarily in 60-day--90-day maturity issues although we selectively added
longer-term securities to seek to take advantage of the interest rate rally that
ensued at year-end. Of particular note was an increase in our holdings of
Treasury notes and Separate Trading of Registered Interest and Principal of
Securities ("STRIPS") which we added at attractive spreads to corresponding bill
maturities.
The first two months of 1997 saw little change in our outlook. We modified
our structure to include three-month Treasury bills for liquidity and six-month
Treasury notes for yield. By March we adopted a slightly more conservative
stance by utilizing mid-April cash management bills and June Treasury notes.
2
<PAGE>
Despite the interest rate hike in March, securities in the front end of the
yield curve remained well-bid. Maturities of cash management bills coupled with
small bill auctions enabled us to keep a relatively ambitious investment
strategy.
Merrill Lynch Institutional Tax-Exempt Fund
For the year ended April 30, 1997, Merrill Lynch Institutional Tax-Exempt
Fund's net yield was 3.36%. The Fund's seven-day net annualized yield as of
April 30, 1997, was 4.21%.
The average portfolio maturity for Merrill Lynch Institutional Tax-Exempt
Fund at April 30, 1997, was 29 days, compared to 68 days at October 31, 1996.
Merrill Lynch Institutional Tax-Exempt Fund began the six-month period
ended April 30, 1997, with a neutral approach to the market and an average life
in the 65-day range. Coming into the period, we structured the Fund for slowing
economic conditions as the Treasury bill and short-term municipal market rallied
25 basis points--50 basis points. As economic data began to indicate that the
economy might be regaining some of the momentum it had lost at the end of the
October period, we began reducing the Fund's purchases of longer-term municipal
notes.
Fueling the economic resurgence was robust consumer spending. Sales gains
began coming from a broad array of goods and services, including housing.
Supporting this consumer buying were substantial job and personal income gains
and soaring consumer confidence. During this time, we began to see a large
number of subscriptions, as corporations began to plan for the seasonal year-end
increase in variable rate demand note (VRDN) yields. This increase in VRDN
yields was created from remarketing agents trying to avoid the high cost of
carrying inventory. The Fund, which during the period experienced an increase in
net assets of approximately $330 million, peaked at $1.1 billion on December 30,
1996. We then used this increase to begin to shorten its average life. As yields
on short-term municipal notes remained unattractive, we largely purchased VRDNs
and short-term tax-exempt commercial paper to meet the influx. The Fund
benefited from this strategy as yields on VRDNs remained attractive through
December. In January 1997, VRDNs continued to remain attractive when anticipated
seasonal inflows did not materialize to the degree that was expected.
As economic data continued to register strength, we changed our investment
strategy to a defensive one, allowing the Fund's average life to decline to the
30-day range. We continued to avoid longer-term municipal note purchases as
yields remained unattractive, primarily in response to the scarcity of municipal
issuance during this period. This strategy continued to work well for the Fund
except for the first half of March as large supply imbalances created
artificially low yields in VRDN issues. However, the Fund was well-situated when
the Federal Reserve Board made a preemptive move against the inflation potential
created from a growing economy and tight labor market by raising the Federal
Funds rate 25 basis points to 5.50% on March 25, 1997. This increase in interest
rates, which many believe is the first in a series of interest rate hikes, has
forced yields on Treasury bills and municipal notes higher by 25 basis
points--50 basis points.
Overall, the Fund performed well during the fiscal year as it took
advantage of periods of weakness in yields created by market uncertainties, and
extended the average life and locked in attractive yields when the market
reversed itself. At the same time, we avoided being too aggressive in our
purchases of municipal notes allowing the Fund's average life to decline.
3
<PAGE>
In the upcoming months, we expect to continue to pursue a defensive
strategy to the market. However, because a major portion of the annual issuance
of municipal notes comes during this next period, we will utilize market
weakness to selectively purchase notes as a means of diversification. In
addition, these purchases may at times increase the average life of the Fund
beyond a defensive posture. We will continue to monitor both the economic
environment and the Federal Reserve Board's intentions, adjusting the Fund's
strategy accordingly while looking for opportunities to continue to diversify as
the market adjusts to higher yield levels. We also will closely monitor credit
quality, while seeking 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/ Christopher Ayoub
Robert W. Crook Christopher Ayoub
President and Trustee Vice President and Portfolio Manager
Merrill Lynch Funds Merrill Lynch Premier Institutional Fund
For Institutions Series Merrill Lynch Institutional Fund
/s/ John Ng
John Ng
Vice President and Portfolio Manager
Merrill Lynch Government Fund
Merrill Lynch Treasury Fund
/s/ Kevin Schiatta
Kevin Schiatta
Vice President and Portfolio Manager
Merrill Lynch Institutional Tax-Exempt Fund
May 28, 1997
4
<PAGE>
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Merrill Lynch Premier Institutional Fund
Schedule of Investments
April 30, 1997
<TABLE>
<CAPTION>
=============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
==============================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. $ 15,000,000 U.S. Treasury Notes .................. 5.88% 01/31/99 $14,892,187
Government & 15,000,000 U.S. Treasury Notes .................. 5.88 02/28/99 14,880,470
Agency 5,000,000 Federal Farm Credit Banks ............ 5.65 02/03/98 4,985,900
Issues -- 4.2% 6,525,000 Federal Home Loan Banks ............ 5.42 02/06/98 6,502,163
15,000,000 Federal Home Loan Banks ............ 6.00 09/04/98 14,914,500
5,000,000 Federal National Mortgage Assoc. ... 5.79 10/16/97 4,998,400
6,000,000 Federal National Mortgage Assoc. ... 6.50 04/30/99 5,984,400
51,900,000 Federal Home Loan Banks D/N ......... 5.20 10/14/97 50,545,468
- -------------------------------------------------------------------------------------------------------------
Total U.S. Government & Agency
Issues (Cost $118,080,859) ......... 117,703,488
- -------------------------------------------------------------------------------------------------------------
U.S. 40,000,000 Federal Home Loan Banks ............ 5.56 01/15/98 39,982,793
Government 50,000,000 Federal Home Loan Mortgage Corp. .5.58 04/15/98 49,976,913
Agency 22,000,000 Federal National Mortgage Assoc. ... 5.57 03/26/98 21,988,370
Issues -- 40,000,000 Federal National Mortgage Assoc. ... 5.56 03/27/98 39,975,491
Variable 25,000,000 Federal National Mortgage Assoc. ... 5.60 04/24/98 24,994,651
Rate -- 9.2% 10,000,000 Federal National Mortgage Assoc. ... 5.68 07/26/99 9,962,245
18,000,000 Federal National Mortgage Assoc. ... 5.68 09/22/99 17,923,795
55,000,000 Student Loan Marketing Assoc. ...... 5.57 02/05/98 54,980,414
- -------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency
Issues -- Variable Rate
(Cost $259,784,672) .................. 259,784,672
- -------------------------------------------------------------------------------------------------------------
Certificates of 40,000,000 Morgan Guaranty Trust Co. ............ 5.82 01/30/98 39,907,156
Deposit -- 2.1% 20,000,000 Morgan Guaranty Trust Co. ............ 5.94 03/20/98 19,965,415
- -------------------------------------------------------------------------------------------------------------
Total Certificates of Deposit
(Cost $59,990,359) .................. 59,872,571
- -------------------------------------------------------------------------------------------------------------
Yankee 10,000,000 Deutsche Bank AG ..................... 5.63 02/26/98 9,959,353
Certificates of 20,000,000 Landesbank Hessen-Thuringen
Deposit -- 5.5% Girozentrale ..................... 5.78 01/27/98 19,950,889
25,000,000 Royal Bank of Canada ............... 5.79 01/30/98 24,940,281
15,000,000 Sumitomo Bank Ltd. .................. 5.68 05/09/97 15,000,000
60,000,000 Sumitomo Bank Ltd. .................. 5.65 05/12/97 60,000,000
25,000,000 Sumitomo Bank Ltd. .................. 5.65 05/14/97 25,000,074
- -------------------------------------------------------------------------------------------------------------
Total Yankee Certificates of
Deposit (Cost $154,978,732) ......... 154,850,597
- -------------------------------------------------------------------------------------------------------------
Time 100,000,000 Citibank N.A. ........................ 5.65 05/01/97 100,000,000
Deposits -- 100,000,000 Deutsche Bank AG ..................... 5.65 05/01/97 100,000,000
12.1%
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
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Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
=============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=============================================================================================================
<S> <C> <C> <C> <C> <C>
Time $100,000,000 First Union National Bank of
Deposits North Carolina .................. 5.66% 05/01/97 $100,000,000
(continued) 40,000,000 Morgan Guaranty Trust Co. ......... 5.69 05/01/97 40,000,000
- -------------------------------------------------------------------------------------------------------------
Total Time Deposits
(Cost $340,000,000) ............... 340,000,000
- -------------------------------------------------------------------------------------------------------------
Bank Notes -- 20,000,000 Barclays Bank PLC .................. 5.65 04/16/98 19,990,622
Variable 15,000,000 KeyBank National Association ...... 5.57 05/06/98 14,992,710
Rate -- 2.1% 17,000,000 Morgan Guaranty Trust Co. ......... 5.62 02/19/98 16,992,721
7,500,000 United States National Bank of
Oregon ........................... 5.67 04/14/98 7,496,154
- -------------------------------------------------------------------------------------------------------------
Total Bank Notes -- Variable Rate
(Cost $59,472,207) ............... 59,472,207
- -------------------------------------------------------------------------------------------------------------
Corporate 10,000,000 Abbey National Treasury Services
Notes -- 2.1% PLC .............................. 5.50 11/21/97 9,970,000
15,000,000 Abbey National Treasury Services
PLC .............................. 5.76 02/11/98 14,959,500
5,000,000 Abbey National Treasury Services
PLC .............................. 5.93 03/25/98 4,992,000
15,000,000 Beta Finance Inc. .................. 5.87 01/30/98 14,973,000
15,000,000 International Business Machines
Corp. ........................... 5.67 01/28/98 14,950,500
- -------------------------------------------------------------------------------------------------------------
Total Corporate Notes
(Cost $59,970,817) ............... 59,845,000
- -------------------------------------------------------------------------------------------------------------
Corporate 21,000,000 Abbey National North America Corp. 5.61 02/10/98 20,988,901
Notes -- 30,000,000 Abbey National Treasury Services
Variable PLC .............................. 5.59 02/25/98 29,980,925
Rate -- 5.9% 40,000,000 Abbey National Treasury Services
PLC .............................. 5.65 04/15/98 39,981,489
25,000,000 Bear Stearns Companies Inc. ...... 5.95 07/30/97 25,004,295
20,000,000 Bear Stearns Companies Inc. ...... 5.84 04/17/98 20,026,422
10,000,000 Chrysler Financial Corp. ......... 5.81 07/31/97 10,006,867
20,000,000 First Bank System, Inc. ............ 5.67 11/19/97 20,000,000
- -------------------------------------------------------------------------------------------------------------
Total Corporate Notes -- Variable
Rate (Cost $165,988,899) ......... 165,988,899
- -------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
=============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=============================================================================================================
<S> <C> <C> <C> <C> <C>
Master Notes -- $100,000,000 Goldman Sachs Group L.P. ............ 5.51% 12/01/97 $100,000,000
Variable 30,000,000 Jackson National Life Insurance Co. 5.72 05/01/98 30,000,000
Rate -- 4.6%
- -------------------------------------------------------------------------------------------------------------
Total Master Notes -- Variable
Rate (Cost $130,000,000) ............ 130,000,000
- -------------------------------------------------------------------------------------------------------------
Commercial 17,000,000 Allomon Funding Corp. ............... 5.62 07/02/97 16,833,702
Paper -- 48.9% 25,000,000 Associates First Capital Corp. ...... 5.69 05/01/97 25,000,000
15,170,000 Atlantic Asset Securitization Corp. 5.57 05/09/97 15,151,223
14,425,000 Atlas Funding Corp. .................. 5.63 05/05/97 14,415,976
24,550,000 Atlas Funding Corp. .................. 5.61 05/07/97 24,527,046
12,980,000 Atlas Funding Corp. .................. 5.61 05/21/97 12,939,546
15,000,000 Bear Stearns Companies Inc. ......... 5.65 07/22/97 14,805,933
27,750,000 Broadway Capital Corp. ............... 5.61 05/30/97 27,624,593
25,000,000 Chrysler Financial Corp. ............ 5.57 05/21/97 24,922,639
58,166,000 Countrywide Home Loans, Inc. ...... 5.53 05/14/97 58,049,846
50,000,000 Daimler-Benz North America Corp. ... 5.27 05/15/97 49,897,528
10,000,000 Finova Capital Corp. ............... 5.30 05/15/97 9,979,389
20,000,000 Finova Capital Corp. ............... 5.30 05/20/97 19,944,055
30,000,000 Finova Capital Corp. ............... 5.29 05/23/97 29,903,016
25,000,000 Finova Capital Corp. ............... 5.61 06/03/97 24,871,437
15,000,000 Finova Capital Corp. ............... 5.60 06/05/97 14,918,333
15,000,000 Finova Capital Corp. ............... 5.65 07/21/97 14,808,300
50,000,000 General Electric Capital Corp. ...... 5.31 05/08/97 49,948,375
45,000,000 General Motors Acceptance Corp. ...... 5.43 07/29/97 44,368,100
15,000,000 General Motors Acceptance Corp. ...... 5.43 07/30/97 14,787,000
20,000,000 General Motors Acceptance Corp. ...... 5.38 08/04/97 19,699,166
10,000,000 General Motors Acceptance Corp. ...... 5.34 08/12/97 9,836,917
21,000,000 General Motors Acceptance Corp. ...... 5.32 08/13/97 20,654,200
15,000,000 General Motors Acceptance Corp. ...... 5.33 08/20/97 14,736,375
10,000,000 General Motors Acceptance Corp. ...... 5.33 08/26/97 9,814,750
20,000,000 Greenwich Funding Corp. ............ 5.53 05/06/97 19,984,639
20,000,000 Greenwich Funding Corp. ............ 5.46 05/20/97 19,942,367
32,000,000 Industrial Bank of Korea ............ 5.38 05/07/97 31,971,307
15,000,000 Industrial Bank of Korea ............ 5.38 05/12/97 14,975,342
19,875,000 International Securitization Corp. ... 5.31 05/12/97 19,842,753
15,000,000 International Securitization Corp. ... 5.43 05/27/97 14,941,175
31,655,000 International Securitization Corp. ... 5.67 07/25/97 31,230,471
36,000,000 Kingdom of Sweden .................. 5.30 08/28/97 35,321,700
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
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Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
=============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=============================================================================================================
<S> <C> <C> <C> <C> <C>
Commercial $25,000,000 Korea Development Bank ............ 5.37% 05/06/97 $ 24,981,354
Paper 10,000,000 Korea Development Bank ............ 5.36 05/07/97 9,991,067
(continued) 16,000,000 Korea Development Bank ............ 5.58 05/08/97 15,982,640
25,000,000 Korea Development Bank ............ 5.34 05/12/97 24,959,208
30,000,000 Korea Development Bank ............ 5.30 05/27/97 29,885,167
25,000,000 Korea Development Bank ............ 5.70 07/25/97 24,664,722
25,000,000 Lehman Brothers Holdings Inc. ... 5.67 05/05/97 24,984,250
30,000,000 Lehman Brothers Holdings Inc. ... 5.65 05/07/97 29,971,750
45,000,000 Lehman Brothers Holdings Inc. ... 5.67 05/15/97 44,900,775
25,000,000 Monte Rosa Capital Corp. ......... 5.57 05/06/97 24,980,660
25,000,000 Morgan Stanley Group Inc. ......... 5.70 05/01/97 25,000,000
50,000,000 Morgan Stanley Group Inc. ......... 5.31 05/16/97 49,889,375
50,000,000 Morgan Stanley Group Inc. ......... 5.28 05/20/97 49,860,667
10,000,000 National Fleet Funding Corp. ...... 5.57 05/07/97 9,990,717
25,000,000 Nomura Holding America, Inc. ...... 5.40 05/05/97 24,985,000
28,557,000 Old Line Funding Corp. ............ 5.60 05/02/97 28,552,558
18,585,000 Old Line Funding Corp. ............ 5.59 05/05/97 18,573,456
10,000,000 Old Line Funding Corp. ............ 5.30 05/15/97 9,979,389
40,000,000 RTZ America Inc. .................. 5.64 07/21/97 39,488,800
15,000,000 Westpac Capital Corp. ............ 5.31 08/11/97 14,757,750
50,000,000 Windmill Funding Corp. ............ 5.28 05/05/97 49,970,667
10,089,000 Windmill Funding Corp. ............ 5.60 06/03/97 10,037,210
25,000,000 Windmill Funding Corp. ............ 5.68 07/28/97 24,652,889
- -------------------------------------------------------------------------------------------------------------
Total Commercial Paper
(Cost $1,381,874,973) ............ 1,381,687,270
- -------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
=============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=============================================================================================================
<S> <C> <C> <C> <C> <C>
Repurchase $100,000,000 Fuji Securities, Inc., purchased
Agreements**-- on 04/30/97 .................. 5.55% 05/01/97 $100,000,000
3.5%
- -------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $100,000,000) ............ 100,000,000
- -------------------------------------------------------------------------------------------------------------
Total Investments -- 100.2%
(Cost $2,830,141,518) ............ 2,829,204,704
- -------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other
Assets -- (0.2%) ............... (6,008,449)
- -------------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00
Per Share on 2,824,133,069
Shares of Beneficial Interest
Outstanding -- 100.0% ......... $2,823,196,255
=============================================================================================================
</TABLE>
Note--Costs for federal income tax purposes are the same as those shown above.
At April 30, 1997, net unrealized depreciation amounted to $936,814 and is
comprised of $11,496 in appreciation and $948,310 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, 1997. 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.
9
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Statement of Assets and Liabilities
April 30, 1997
================================================================================
<TABLE>
<CAPTION>
<S> <C>
Assets:
Total investments at value (identified cost $2,830,141,518) (Note 1a) ......... $2,829,204,704
Cash ........................................................................... 3,467,456
Interest receivable ............................................................ 6,718,859
Prepaid expense and deferred organization expenses (Note 1e) .................. 189,200
---------------
Total assets ............................................................... 2,839,580,219
---------------
Liabilities:
Advisory fee payable (Note 2) ................................................ 360,034
Payable for investments purchased ............................................. 14,992,710
Dividends payable ............................................................... 971,343
Accrued expenses ............................................................... 59,877
---------------
Total liabilities ............................................................ 16,383,964
---------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based
on 2,824,133,069 shares of beneficial interest outstanding) .................. $2,823,196,255
===============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Statement of Operations
For the Period January 27, 1997 (Commencement of Operations) to April 30, 1997
================================================================================
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Income:
Interest and discount earned (Note 1d) ..............................$38,920,898
-----------
Expenses:
Investment advisory fee (Note 2) ..................... $1,053,985
Registration fees .................................... 115,617
Accounting and custodian services ..................... 51,160
Amortization of organization expenses (Note 1e) ...... 10,825
Dividend and transfer agency fees ..................... 9,183
Trustees' fees (Note 5) .............................. 8,000
Legal and audit fees ................................. 5,459
Printing and shareholder reports ..................... 3,733
----------
Total expenses ................................. 1,257,962
Waived investment advisory fee (Note 2) ............ (45,574) 1,212,388
---------- -----------
Net investment income ..........................................37,708,510
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain from investment transactions ...... 248,533
Net unrealized depreciation of investments ......... (936,814)
----------
Net realized and unrealized loss from investments .................. (688,281)
-----------
Net Increase in Net Assets Resulting From Operations ..................$37,020,229
===========
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Statement of Changes in Net Assets
For the Period January 27, 1997 (Commencement of Operations) to April 30, 1997
================================================================================
<TABLE>
<CAPTION>
<S> <C>
Increase in Net Assets:
Operations:
Net investment income .................................... $ 37,708,510
Net realized gain from investment transactions ............ 248,533
Net unrealized depreciation of investments ............... (936,814)
--------------
Net increase in net assets resulting from operations ...... 37,020,229
Total declared as dividends to shareholders (Note 4) ...... (37,957,043)
Capital share transactions (Note 3) ........................ 2,824,033,069
--------------
Net increase in net assets ................................. 2,823,096,255
Net Assets:
Beginning of period (Note 3) .............................. 100,000
--------------
End of period ............................................. $2,823,196,255
==============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Financial Highlights
For the Period January 27, 1997 (Commencement of Operations) to April 30, 1997
================================================================================
<TABLE>
<S> <C>
Net Asset Value, beginning of period ....................................... $ 1.00
Income from Investment Operations:
Net investment income ...................................................... .014
Net realized and unrealized gain (loss) on investments .................. --
---------
Total from investment operations .......................................... .014
Less Distributions:
Dividends from net investment income .................................... (.014)
---------
Net Asset Value, end of period ............................................. $ 1.00
=========
Total Return ............................................................... 1.40%(2)
Ratios/Supplemental Data:
Net Assets, end of period (000) .......................................... $2,823,196
Ratio of expenses to average net assets (before waiver) .................. .18%(1)
Ratio of expenses to average net assets (after waiver) .................. .17%(1)
Ratio of net investment income, including realized and unrealized gains and
losses, to average net assets (before waiver) ........................... 5.26%(1)
Ratio of net investment income, including realized and unrealized gains and
losses, to average net assets (after waiver) ........................... 5.27%(1)
</TABLE>
(1) On an annualized basis
(2) Cumulative total return
See Notes to Financial Statements.
11
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments
April 30, 1997
<TABLE>
<CAPTION>
=============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=============================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. $25,000,000 U.S. Treasury Notes .................. 8.50% 07/15/97 $25,156,250
Government & 25,000,000 U.S. Treasury Notes .................. 5.75 09/30/97 25,000,000
Agency 50,000,000 U.S. Treasury Notes .................. 8.75 10/15/97 50,664,065
Issues -- 13.2% 28,000,000 U.S. Treasury Notes .................. 5.63 10/31/97 27,978,126
29,500,000 U.S. Treasury Notes .................. 5.25 12/31/97 29,380,156
150,000,000 U.S. Treasury Notes .................. 5.00 01/31/98 148,968,751
35,000,000 U.S. Treasury Notes .................. 5.88 01/31/99 34,748,437
10,000,000 U.S. Treasury Notes .................. 5.88 02/28/99 9,920,313
40,000,000 Federal Farm Credit Banks ............ 5.85 10/01/97 40,000,000
20,000,000 Federal Farm Credit Banks ............ 5.65 02/03/98 19,943,600
25,000,000 Federal Home Loan Banks ............ 5.99 02/09/98 24,990,000
23,500,000 Federal Home Loan Banks ............ 6.00 09/04/98 23,366,050
32,000,000 Federal Home Loan Banks ............ 6.17 11/06/98 31,904,000
44,000,000 Federal Home Loan Mortgage Corp. .5.73 06/06/97 44,003,473
8,000,000 Federal Home Loan Mortgage Corp. .6.25 02/05/99 7,968,800
25,000,000 Federal National Mortgage Assoc. ... 5.53 10/14/97 24,964,750
5,000,000 Federal National Mortgage Assoc. ... 5.79 10/16/97 4,998,400
25,000,000 Federal National Mortgage Assoc. ... 5.19 01/08/98 24,865,000
10,000,000 Federal National Mortgage Assoc. ... 5.81 11/25/98 9,938,000
14,000,000 Federal National Mortgage Assoc. ... 6.50 04/30/99 13,963,600
38,500,000 Student Loan Marketing Assoc. ...... 5.50 10/24/97 38,438,400
13,000,000 Student Loan Marketing Assoc. ...... 6.02 11/20/98 12,944,100
50,000,000 Federal Home Loan Banks D/N ......... 5.22 10/23/97 48,624,306
50,000,000 Federal Home Loan Banks D/N ......... 5.17 11/17/97 48,419,444
23,160,000 Federal National Mortgage Assoc.
D/N ................................. 5.26 07/28/97 22,849,193
25,950,000 Federal National Mortgage Assoc.
D/N ................................. 5.27 07/28/97 25,601,751
- ------------------------------------------------------------------------------------------------------------
Total U.S. Government & Agency
Issues (Cost $822,089,952) ......... 819,598,965
- ------------------------------------------------------------------------------------------------------------
U.S. 25,000,000 Federal Farm Credit Banks ............ 5.56 02/06/98 24,994,580
Government 80,000,000 Federal Home Loan Banks ............ 5.55 12/10/97 79,976,412
Agency 50,000,000 Federal Home Loan Banks ............ 5.56 01/15/98 49,978,491
Issues -- 4,000,000 Federal Home Loan Banks ............ 5.85 01/26/98 3,990,421
Variable 72,000,000 Federal Home Loan Mortgage Corp. .5.56 04/15/98 71,966,755
Rate -- 18.8% 30,000,000 Federal National Mortgage Assoc. ... 5.54 05/14/97 29,999,062
135,000,000 Federal National Mortgage Assoc. ... 5.55 05/22/97 134,994,724
57,000,000 Federal National Mortgage Assoc. ... 5.70 06/20/97 57,002,357
59,000,000 Federal National Mortgage Assoc. ... 5.56 08/01/97 58,993,532
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
=============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=============================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. $50,000,000 Federal National Mortgage Assoc. ... 5.56% 08/22/97 $ 49,991,011
Government 33,000,000 Federal National Mortgage Assoc. ... 5.55 09/29/97 32,991,854
Agency 57,000,000 Federal National Mortgage Assoc. ... 5.54 10/20/97 56,976,492
Issues -- 100,000,000 Federal National Mortgage Assoc. ... 5.74 01/15/98 99,965,656
Variable 49,000,000 Federal National Mortgage Assoc. ... 5.57 03/26/98 48,974,096
Rate (continued) 60,000,000 Federal National Mortgage Assoc. ... 5.56 03/27/98 59,963,237
60,000,000 Federal National Mortgage Assoc. ... 5.60 04/24/98 59,977,487
40,000,000 Federal National Mortgage Assoc. ... 5.68 09/22/99 39,830,657
15,150,000 Student Loan Marketing Assoc. ...... 5.71 11/20/97 15,158,937
18,000,000 Student Loan Marketing Assoc. ...... 5.70 01/27/98 18,013,667
60,000,000 Student Loan Marketing Assoc. ...... 5.57 02/05/98 59,978,365
50,000,000 Student Loan Marketing Assoc. ...... 5.61 04/21/98 49,988,373
59,000,000 Student Loan Marketing Assoc. ...... 5.55 08/20/98 58,943,078
- ------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency
Issues -- Variable Rate
(Cost $1,162,649,244) ............ 1,162,649,244
- ------------------------------------------------------------------------------------------------------------
Certificates of 25,000,000 Morgan Guaranty Trust Co. ......... 5.90 09/30/97 24,994,773
Deposit -- 0.8% 25,000,000 Morgan Guaranty Trust Co. ......... 5.94 03/20/98 24,956,769
- ------------------------------------------------------------------------------------------------------------
Total Certificates of Deposit
(Cost $50,011,870) ............... 49,951,542
- ------------------------------------------------------------------------------------------------------------
Yankee 15,000,000 Deutsche Bank AG .................. 5.63 02/26/98 14,939,030
Certificates of 25,000,000 Landesbank Hessen-Thuringen
Deposit -- 1.9% Girozentrale ..................... 5.78 01/27/98 24,938,611
75,000,000 Landesbank Hessen-Thuringen
Girozentrale ..................... 5.78 01/30/98 74,815,469
- ------------------------------------------------------------------------------------------------------------
Total Yankee Certificates of
Deposit (Cost $114,968,363) ...... 114,693,110
- ------------------------------------------------------------------------------------------------------------
Time 71,800,000 Chase Manhattan Bank N.A. ......... 5.63 05/01/97 71,800,000
Deposits -- 120,000,000 Citibank N.A. ..................... 5.65 05/01/97 120,000,000
10.5% 150,000,000 Deutsche Bank AG .................. 5.65 05/01/97 150,000,000
150,000,000 First Union National Bank of North
Carolina ........................ 5.66 05/01/97 150,000,000
160,000,000 Morgan Guaranty Trust Co. ......... 5.69 05/01/97 160,000,000
- ------------------------------------------------------------------------------------------------------------
Total Time Deposits
(Cost $651,800,000) ............... 651,800,000
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
===========================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
===========================================================================================================
<S> <C> <C> <C> <C> <C>
Bank Notes -- $35,000,000 Barclays Bank PLC ............... 5.65% 04/16/98 $34,983,588
Variable 25,000,000 KeyBank National Association ...... 5.59 07/22/97 24,995,619
Rate -- 2.7% 22,000,000 KeyBank National Association ...... 5.42 08/21/97 21,996,047
26,000,000 KeyBank National Association ...... 5.57 05/06/98 25,987,364
50,000,000 Morgan Guaranty Trust Co. ...... 5.62 02/19/98 49,978,593
8,000,000 United States National Bank of
Oregon ........................... 5.67 04/14/98 7,995,897
- ------------------------------------------------------------------------------------------------------------
Total Bank Notes -- Variable Rate
(Cost $165,937,108) ............... 165,937,108
- ------------------------------------------------------------------------------------------------------------
Corporate 15,000,000 Abbey National Treasury Services
Notes -- 2.0% PLC .............................. 5.50 11/21/97 14,955,000
50,000,000 Abbey National Treasury Services
PLC .............................. 5.76 02/11/98 49,865,000
5,000,000 Abbey National Treasury Services
PLC .............................. 5.93 03/25/98 4,992,000
30,000,000 International Business Machines
Corp. ........................... 5.67 01/28/98 29,901,000
25,000,000 NBD Bank, N.A. Detroit ............ 5.79 01/30/98 24,917,380
- ------------------------------------------------------------------------------------------------------------
Total Corporate Notes
(Cost $124,946,025) ............... 124,630,380
- ------------------------------------------------------------------------------------------------------------
Corporate 50,000,000 Abbey National Treasury Services
Notes -- PLC .............................. 5.61 02/10/98 49,973,573
Variable 50,000,000 Abbey National Treasury Services
Rate -- 6.9% PLC .............................. 5.59 02/25/98 49,968,208
60,000,000 Abbey National Treasury Services
PLC .............................. 5.65 04/15/98 59,972,233
25,000,000 Chrysler Financial Corp. ......... 5.81 07/31/97 25,017,168
175,000,000 CIT Group Holdings Inc. ......... 5.61 10/27/97 174,940,252
34,000,000 First Bank System, Inc. ......... 5.67 12/17/97 34,000,000
35,000,000 Morgan Stanley Group Inc. ...... 5.97 02/23/98 35,031,952
- ------------------------------------------------------------------------------------------------------------
Total Corporate Notes -- Variable
Rate (Cost $428,903,386) ......... 428,903,386
- ------------------------------------------------------------------------------------------------------------
Master Notes -- 225,100,000 Goldman Sachs Group L.P. ......... 5.51 07/03/97 225,100,000
Variable 50,000,000 Goldman Sachs Group L.P. ......... 5.59 08/01/97 50,000,000
Rate -- 4.4%
- ------------------------------------------------------------------------------------------------------------
Total Master Notes -- Variable
Rate (Cost $275,100,000) ......... 275,100,000
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
============================================================================================================
<S> <C> <C> <C> <C> <C>
Commercial $19,676,000 Allomon Funding Corp. ............... 5.62% 07/02/97 $ 19,483,525
Paper -- 37.2% 25,000,000 American Honda Finance Corp. ...... 5.65 07/21/97 24,680,500
20,000,000 Atlantic Asset Securitization Corp. 5.57 05/09/97 19,975,244
8,491,000 Atlantic Asset Securitization Corp. 5.55 05/09/97 8,480,528
15,817,000 Atlantic Asset Securitization Corp. 5.55 05/15/97 15,782,862
25,000,000 Bank of Scotland ..................... 5.31 05/12/97 24,959,437
15,000,000 Bear Stearns Companies Inc. ......... 5.65 07/22/97 14,805,933
18,000,000 Chrysler Financial Corp. ............ 5.57 05/21/97 17,944,300
25,000,000 Clipper Receivables Corp. ......... 5.62 05/06/97 24,980,486
15,000,000 Columbia/HCA Healthcare Corp. ...... 5.58 05/27/97 14,939,550
20,000,000 Columbia/HCA Healthcare Corp. ...... 5.58 05/28/97 19,916,300
50,000,000 Corporate Receivables Corp. ......... 5.65 07/08/97 49,463,555
40,000,000 Corporate Receivables Corp. ......... 5.65 07/14/97 39,532,978
29,000,000 Countrywide Home Loans, Inc. ...... 5.62 05/07/97 28,972,837
36,166,000 Countrywide Home Loans, Inc. ...... 5.62 05/13/97 36,098,249
12,834,000 Countrywide Home Loans, Inc. ...... 5.53 05/14/97 12,808,371
40,000,000 CXC Inc. ........................... 5.62 05/05/97 39,975,022
30,950,000 CXC Inc. ........................... 5.70 07/25/97 30,534,926
25,000,000 Eureka Securitization Inc. ......... 5.62 05/09/97 24,968,778
46,394,000 Falcon Asset Securitization Corp. ... 5.32 05/12/97 46,318,584
25,000,000 Finova Capital Corp. ............... 5.30 05/15/97 24,948,472
33,000,000 Finova Capital Corp. ............... 5.30 05/16/97 32,927,125
60,000,000 Finova Capital Corp. ............... 5.30 05/21/97 59,823,333
50,000,000 Finova Capital Corp. ............... 5.29 05/23/97 49,838,361
46,000,000 Finova Capital Corp. ............... 5.30 05/27/97 45,823,922
25,000,000 Finova Capital Corp. ............... 5.30 06/24/97 24,801,250
10,000,000 Finova Capital Corp. ............... 5.46 07/15/97 9,881,667
16,000,000 First Data Corp. .................. 5.64 07/15/97 15,810,667
100,000,000 General Electric Capital Corp. ...... 5.31 05/08/97 99,896,750
75,000,000 General Motors Acceptance Corp. ... 5.48 07/09/97 74,183,500
50,000,000 General Motors Acceptance Corp. ... 5.43 07/29/97 49,297,889
50,000,000 General Motors Acceptance Corp. ... 5.38 08/04/97 49,247,917
50,000,000 General Motors Acceptance Corp. ... 5.34 08/12/97 49,184,583
50,000,000 General Motors Acceptance Corp. ... 5.32 08/13/97 49,176,667
20,000,000 General Motors Acceptance Corp. ... 5.33 08/19/97 19,651,667
25,000,000 Goldman Sachs Group L.P. ............ 5.30 05/01/97 25,000,000
62,238,000 Greenwich Funding Corp. ............ 5.53 05/06/97 62,190,198
8,000,000 Industrial Bank of Korea ............ 5.62 05/05/97 7,995,004
22,000,000 Industrial Bank of Korea ............ 5.36 05/12/97 21,963,969
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
============================================================================================================
<S> <C> <C> <C> <C> <C>
Commercial $15,000,000 Industrial Bank of Korea ............ 5.38% 05/12/97 $ 14,975,342
Paper 5,000,000 Industrial Bank of Korea ............ 5.40 05/15/97 4,989,500
(continued) 9,510,000 International Securitization Corp. 5.43 05/27/97 9,472,705
100,000,000 International Securitization Corp. ... 5.55 05/30/97 99,552,917
17,336,000 International Securitization Corp. ... 5.62 06/17/97 17,208,802
30,000,000 Kingdom of Sweden .................. 5.30 08/28/97 29,434,750
25,000,000 Korea Development Bank ............... 5.37 05/06/97 24,981,354
25,000,000 Korea Development Bank ............... 5.36 05/07/97 24,977,667
93,000,000 Korea Development Bank ............... 5.58 05/08/97 92,899,095
45,000,000 Lehman Brothers Holdings Inc. ...... 5.67 05/05/97 44,971,650
55,000,000 Lehman Brothers Holdings Inc. ...... 5.65 05/07/97 54,948,208
54,188,000 Mont Blanc Capital Corp. ............ 5.54 05/21/97 54,021,221
25,000,000 Monte Rosa Capital Corp. ............ 5.57 05/06/97 24,980,660
78,322,000 Monte Rosa Capital Corp. ............ 5.53 05/15/97 78,153,564
75,000,000 Morgan Stanley Group Inc. ............ 5.70 05/01/97 75,000,000
50,000,000 Morgan Stanley Group Inc. ............ 5.31 05/16/97 49,889,375
15,000,000 Nomura Holding America Inc. ......... 5.39 05/16/97 14,966,312
34,943,000 Old Line Funding Corp. ............... 5.59 05/05/97 34,921,297
30,000,000 Old Line Funding Corp. ............... 5.62 05/08/97 29,967,217
13,635,000 Old Line Funding Corp. ............... 5.33 05/13/97 13,610,775
48,367,000 Old Line Funding Corp. ............... 5.58 05/14/97 48,269,541
12,755,000 Old Line Funding Corp. ............... 5.60 05/15/97 12,727,222
40,000,000 Preferred Receivables Funding
Corp. .............................. 5.65 07/25/97 39,463,556
32,100,000 RTZ America Inc. ..................... 5.30 05/02/97 32,095,274
25,151,000 Windmill Funding Corp. ............... 5.28 05/05/97 25,136,245
43,353,000 Windmill Funding Corp. ............... 5.57 05/20/97 43,225,554
25,000,000 Windmill Funding Corp. ............... 5.68 07/28/97 24,652,889
- ------------------------------------------------------------------------------------------------------------
Total Commercial Paper
(Cost $2,306,045,473) ............... 2,305,757,598
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
============================================================================================================
<S> <C> <C> <C> <C> <C>
Repurchase $100,000,000 Fuji Securities, Inc.
Agreements**-- purchased on 04/30/97 ............ 5.55% 05/01/97 $ 100,000,000
1.6%
- ------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $100,000,000) ............ 100,000,000
- ------------------------------------------------------------------------------------------------------------
Total Investments -- 100.0%
(Cost $6,202,451,421) ............ 6,199,021,333
- ------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other
Assets -- (0.0%) ............... (1,143,394)
- ------------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00
Per Share on 6,201,308,027 Shares
of Beneficial Interest
Outstanding -- 100.0% ......... $6,197,877,939
============================================================================================================
</TABLE>
Note--Costs for federal income tax purposes are the same as those shown above.
At April 30, 1997, net unrealized depreciation amounted to $3,430,088 and is
comprised of $24,391 in appreciation and $3,454,479 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, 1997. For variable 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.
17
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Statement of Assets and Liabilities
April 30, 1997
<TABLE>
<CAPTION>
====================================================================================================
<S> <C>
Assets:
Total investments at value (identified cost $6,202,451,421) (Note 1a) ......... $6,199,021,333
Cash ........................................................................... 5,612,215
Interest receivable ............................................................ 22,916,889
Prepaid expenses ............................................................... 377,568
---------------
Total assets ............................................................... 6,227,928,005
---------------
Liabilities:
Advisory fee payable (Note 2) ................................................ 1,070,582
Payable for investments purchased ............................................. 25,987,364
Dividends payable ............................................................ 2,699,298
Accrued expenses ............................................................... 292,822
---------------
Total liabilities ......................................................... 30,050,066
---------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based
on 6,201,308,027 shares of beneficial interest outstanding) .................. $6,197,877,939
===============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Statement of Operations
For the Year Ended April 30, 1997
<TABLE>
<CAPTION>
====================================================================================================
<S> <C> <C>
Investment Income:
Interest and discount earned (Note 1d) ....................................$398,767,235
-------------
Expenses:
Investment advisory fee (Note 2) ..................... $24,155,920
Registration fees .................................... 1,573,602
Dividend and transfer agency fees ..................... 966,439
Accounting and custodian services ..................... 513,259
Legal and audit fees ................................. 146,857
Printing and shareholder reports ..................... 118,433
Trustees' fees (Note 5) .............................. 85,709
Insurance ............................................. 40,274
Miscellaneous ....................................... 38,356
-----------
Total expenses ................................. 27,638,849
Waived investment advisory fee (Note 2) ............ (9,522,140) 18,116,709
----------- -------------
Net investment income ................................................ 380,650,526
Realized and Unrealized Gain on Investments:
Net realized gain from investment transactions ...... 874,595
Net unrealized appreciation of investments ......... 2,606,218
-----------
Net realized and unrealized gain from investments ..................... 3,480,813
-------------
Net Increase in Net Assets Resulting From Operations .....................$384,131,339
=============
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended April 30,
------------------------
1997 1996
====================================================================================================
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income .......................................... $ 380,650,526 $ 445,376,961
Net realized gain from investment transactions .................. 874,595 2,709,598
Net unrealized appreciation (depreciation) of investments ...... 2,606,218 (6,134,973)
--------------- --------------
Net increase in net assets resulting from operations ............ 384,131,339 441,951,586
Total declared as dividends to shareholders (Note 4) ............ (381,525,121) (448,086,559)
Capital share transactions (Note 3) ........................... (1,419,854,155) 1,041,174,836
--------------- --------------
Net increase (decrease) in net assets ........................... (1,417,247,937) 1,035,039,863
Net Assets:
Beginning of year ............................................. 7,615,125,876 6,580,086,013
--------------- --------------
End of year ................................................... $6,197,877,939 $7,615,125,876
=============== ==============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Financial Highlights
<TABLE>
<CAPTION>
Year Ended April 30,
--------------------------------------------------------------
1997 1996 1995 1994 1993
================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of year ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income ........................ .052 .056 .050 .031 .033
Net realized and unrealized gain on
investments ................................. -- -- -- -- .001
--------- --------- --------- --------- ---------
Total from investment operations ............ .052 .056 .050 .031 .034
Less Distributions:
Dividends from net investment income ......... (.052) (.056) (.050) (.031) (.034)
--------- --------- --------- --------- ---------
Net Asset Value, end of year .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return ................................. 5.34% 5.81% 5.11% 3.20% 3.46%
Ratios/Supplemental Data:
Net Assets, end of year (000) ............... $6,197,878 $7,615,126 $6,580,086 $3,775,121 $4,712,639
Ratio of expenses to average net assets
(before waiver) ........................... .38% .37% .37% .37% .38%
Ratio of expenses to average net assets
(after waiver) .............................. .25% .24% .24% .24% .26%
Ratio of net investment income, including
realized and unrealized gains and losses, to
average net assets (before waiver) ......... 5.12% 5.42% 5.00% 2.91% 3.29%
Ratio of net investment income, including
realized and unrealized gains and losses, to
average net assets (after waiver) ......... 5.25% 5.55% 5.13% 3.04% 3.41%
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Schedule of Investments
April 30, 1997
<TABLE>
<CAPTION>
========================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
========================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. $40,000,000 U.S. Treasury Notes ............... 5.63% 10/31/97 $ 39,968,752
Government 50,000,000 U.S. Treasury Strips ............... 5.28 08/15/97 49,225,000
& Agency 50,000,000 Federal Farm Credit Banks ......... 5.55 05/02/97 50,000,087
Issues -- 47.7% 10,000,000 Federal Farm Credit Banks ......... 5.85 10/01/97 10,000,000
12,500,000 Federal Home Loan Banks ............ 5.77 11/05/97 12,486,250
10,000,000 Federal Home Loan Banks ............ 5.80 01/23/98 9,979,000
15,000,000 Federal Home Loan Banks ............ 5.71 06/19/98 14,926,500
25,000,000 Federal Home Loan Mortgage Corp. .5.84 04/08/98 24,937,500
57,000,000 Federal National Mortgage Assoc. ... 9.20 06/10/97 57,236,686
20,000,000 Federal National Mortgage Assoc. ... 5.53 10/14/97 19,971,800
25,000,000 Federal Farm Credit Banks D/N ...... 5.30 11/05/97 24,257,139
10,145,000 Federal Farm Credit Banks D/N ...... 5.29 11/18/97 9,822,702
22,640,000 Federal Farm Credit Banks D/N ...... 5.29 11/21/97 21,910,011
12,000,000 Federal Home Loan Banks D/N ...... 5.30 05/07/97 11,989,400
6,000,000 Federal Home Loan Banks D/N ...... 5.36 05/30/97 5,974,093
8,500,000 Federal Home Loan Banks D/N ...... 5.26 06/27/97 8,429,209
25,000,000 Federal Home Loan Banks D/N ...... 5.26 06/30/97 24,773,333
30,000,000 Federal Home Loan Banks D/N ...... 5.23 07/10/97 29,679,750
25,000,000 Federal Home Loan Banks D/N ...... 5.54 08/29/97 24,535,833
13,250,000 Federal Home Loan Banks D/N ...... 5.31 09/04/97 12,990,300
47,250,000 Federal Home Loan Banks D/N ...... 5.31 09/12/97 46,265,100
12,890,000 Federal Home Loan Banks D/N ...... 5.25 09/30/97 12,585,223
20,000,000 Federal Home Loan Banks D/N ...... 5.61 11/03/97 19,412,034
3,785,000 Federal Home Loan Banks D/N ...... 5.34 12/11/97 3,650,759
6,250,000 Federal Home Loan Banks D/N ...... 5.23 02/09/98 5,967,479
41,000,000 Federal Home Loan Mortgage Corp.
D/N .............................. 5.24 05/12/97 40,934,417
15,000,000 Federal Home Loan Mortgage Corp.
D/N .............................. 5.29 06/06/97 14,920,650
32,152,000 Federal Home Loan Mortgage Corp.
D/N .............................. 5.44 06/23/97 31,894,498
21,259,000 Federal Home Loan Mortgage Corp.
D/N .............................. 5.45 06/30/97 21,066,252
27,391,000 Federal Home Loan Mortgage Corp.
D/N .............................. 5.44 06/30/97 27,142,655
47,000,000 Federal Home Loan Mortgage Corp.
D/N .............................. 5.51 07/11/97 46,491,108
62,000,000 Federal Home Loan Mortgage Corp.
D/N .............................. 5.54 07/25/97 61,196,325
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
========================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
========================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. $50,000,000 Federal Home Loan Mortgage Corp.
Government D/N .............................. 5.54% 07/28/97 $49,329,000
& Agency 50,000,000 Federal National Mortgage Assoc. D/N 5.29 06/05/97 49,743,090
Issues 25,000,000 Federal National Mortgage Assoc. D/N 5.30 06/06/97 24,867,500
(continued) 25,000,000 Federal National Mortgage Assoc. D/N 5.31 09/15/97 24,467,222
4,000,000 Federal National Mortgage Assoc. D/N 5.59 10/14/97 3,895,605
5,000,000 Federal National Mortgage Assoc. D/N 5.34 12/18/97 4,817,125
10,770,000 Federal National Mortgage Assoc. D/N 5.33 12/22/97 10,369,266
- --------------------------------------------------------------------------------------------------------
Total U.S. Government & Agency Issues
(Cost $962,527,521) .................. 962,108,653
- --------------------------------------------------------------------------------------------------------
U.S. 50,000,000 Federal Farm Credit Banks ............ 5.49 05/22/97 49,996,357
Government 30,000,000 Federal Farm Credit Banks ............ 5.49 10/02/97 29,992,399
Agency 60,000,000 Federal Farm Credit Banks ............ 5.55 02/20/98 59,971,554
Issues -- 40,000,000 Federal Home Loan Banks ............ 5.55 12/10/97 39,988,206
Variable 50,000,000 Federal Home Loan Banks ............ 5.85 01/26/98 49,989,060
Rate -- 31.6% 45,000,000 Federal Home Loan Mortgage Corp. 5.55 07/03/97 44,994,683
40,000,000 Federal Home Loan Mortgage Corp. 5.58 04/15/98 39,981,531
3,000,000 Federal Home Loan Mortgage Corp. 6.00 05/13/98 3,000,000
25,000,000 Federal National Mortgage Assoc. ... 5.56 05/01/97 25,000,000
8,000,000 Federal National Mortgage Assoc. ... 5.54 05/14/97 7,999,750
31,000,000 Federal National Mortgage Assoc. ... 5.95 05/19/97 31,002,440
20,000,000 Federal National Mortgage Assoc. ... 5.54 07/16/97 19,997,184
20,000,000 Federal National Mortgage Assoc. ... 5.56 08/01/97 19,998,904
10,000,000 Federal National Mortgage Assoc. ... 5.55 09/03/97 9,997,496
8,000,000 Federal National Mortgage Assoc. ... 5.55 09/09/97 7,998,042
9,000,000 Federal National Mortgage Assoc. ... 5.55 09/29/97 8,997,778
14,000,000 Federal National Mortgage Assoc. ... 5.60 04/24/98 13,994,747
13,000,000 Federal National Mortgage Assoc. ... 6.00 05/14/98 13,000,000
20,000,000 Student Loan Marketing Assoc. ...... 5.51 05/08/97 20,000,000
75,000,000 Student Loan Marketing Assoc. ...... 5.54 08/21/97 74,998,451
67,000,000 Student Loan Marketing Assoc. ...... 5.61 04/21/98 66,984,420
- --------------------------------------------------------------------------------------------------------
Total U.S. Government Agency
Issues -- Variable Rate
(Cost $637,883,002) .................. 637,883,002
- --------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
============================================================================================================
<S> <C> <C> <C> <C> <C>
Repurchase $90,000,000 Donaldson, Lufkin & Jenrette Securi-
Agreements**-- ties Corp., purchased on 04/30/97 ... 5.35% 05/01/97 $ 90,000,000
20.1% 60,527,000 Goldman Sachs & Co., purchased on
04/30/97 ........................... 5.20 05/01/97 60,527,000
90,000,000 HSBC Securities Inc., purchased on
04/30/97 ........................... 5.45 05/01/97 90,000,000
90,000,000 Smith Barney Inc., purchased on
04/30/97 ........................... 5.30 05/01/97 90,000,000
75,000,000 SBC Warburg, Inc., purchased on
04/30/97 ........................... 5.30 05/01/97 75,000,000
- ------------------------------------------------------------------------------------------------------------
Repurchase Agreements
(Cost $405,527,000) ............... 405,527,000
- ------------------------------------------------------------------------------------------------------------
Total Investments -- 99.4%
(Cost $2,005,937,523) ............... 2,005,518,655
- ------------------------------------------------------------------------------------------------------------
Other Assets Less
Liabilities -- 0.6% ............... 11,880,292
- ------------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00
Per Share on 2,017,817,815 Shares
of Beneficial Interest
Outstanding -- 100.0% ............ $2,017,398,947
============================================================================================================
</TABLE>
Note--Costs for federal income tax purposes are the same as those shown above.
At April 30, 1997, unrealized depreciation amounted to $418,868 and is comprised
of $27,505 of appreciation and $446,373 in depreciation.
* U.S. Treasury Notes and Repurchase Agreements bear interest payable at fixed
dates or upon maturity. U.S. Treasury Strips are purchased on a discount
basis; the interest rate shown represents the yield at the time of purchase
by the Fund. U.S. Government and Agency Issues are purchased on a discount
basis; the interest rate shown is the discount paid at the time 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, 1997. 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.
22
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Statement of Assets and Liabilities
April 30, 1997
<TABLE>
<CAPTION>
==============================================================================================================
<S> <C> <C>
Assets:
Investments in securities subject to repurchase agreements ............ $ 405,527,000
Investments in other marketable securities ........................... 1,599,991,655
--------------
Total investments at value (identified cost $2,005,937,523) (Note 1a) $2,005,518,655
Cash .................................................................. 3,709,619
Interest receivable ................................................... 8,857,367
Prepaid expenses ...................................................... 3,984
----------------
Total assets ...................................................... 2,018,089,625
----------------
Liabilities:
Advisory fee payable (Note 2) .......................................... 335,376
Dividends payable ...................................................... 224,053
Accrued expenses ...................................................... 131,249
----------------
Total liabilities ................................................... 690,678
----------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption
price, based on 2,017,817,815 shares of beneficial interest outstanding) ..................$2,017,398,947
================
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Statement of Operations
April 30, 1997
<TABLE>
<CAPTION>
==============================================================================================================
<S> <C> <C>
Investment Income:
Interest and discount earned (Note 1d) ....................................$102,019,279
------------
Expenses:
Investment advisory fee (Note 2) ..................... $ 6,007,440
Registration fees .................................... 378,083
Dividend and transfer agency fees .................. 305,213
Accounting and custodian services .................. 208,519
Legal and audit fees ................................. 76,006
Printing and shareholder reports ..................... 30,278
Trustees' fees (Note 5) .............................. 22,322
Insurance .......................................... 8,590
Miscellaneous ....................................... 9,080
-----------
Total expenses ................................. 7,045,531
Waived investment advisory fee (Note 2) ............ (2,261,521) 4,784,010
----------- ------------
Net investment income ................................................ 97,235,269
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain from investment transactions ...... 199,811
Net unrealized depreciation of investments ......... (227,150)
-----------
Net realized and unrealized loss from investments ..................... (27,339)
------------
Net Increase in Net Assets Resulting From Operations .....................$ 97,207,930
============
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended April 30,
------------------------------------
1997 1996
====================================================================================================
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income .................................... $ 97,235,269 $ 92,115,643
Net realized gain from investment transactions ............ 199,811 318,832
Net unrealized depreciation of investments ............... (227,150) (230,159)
-------------- --------------
Net increase in net assets resulting from operations ...... 97,207,930 92,204,316
Total declared as dividends to shareholders (Note 4) ...... (97,435,080) (92,434,475)
Capital share transactions (Note 3) ........................ 374,001,437 42,769,813
-------------- --------------
Net increase in net assets ................................. 373,774,287 42,539,654
Net Assets:
Beginning of year .......................................... 1,643,624,660 1,601,085,006
-------------- --------------
End of year ................................................ $2,017,398,947 $1,643,624,660
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Financial Highlights
<TABLE>
<CAPTION>
Year Ended April 30,
-------------------------------------------------------------
1997 1996 1995 1994 1993
=================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of year ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income ..................... .052 .055 .049 .030 .030
Net realized and unrealized gain (loss) on
investments .............................. -- -- -- -- .001
--------- --------- --------- --------- ---------
Total from investment operations ............ .052 .055 .049 .030 .031
Less Distributions:
Dividends from net investment income ......... (.052) (.055) (.049) (.030) (.031)
--------- --------- --------- --------- ---------
Net Asset Value, end of year .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return ................................. 5.31% 5.67% 4.99% 3.06% 3.19%
Ratios/Supplemental Data:
Net Assets, end of year (000) ............... $2,017,399 $1,643,625 $1,601,085 $1,533,478 $1,355,044
Ratio of expenses to average net assets
(before waiver) ........................... .38% .38% .37% .38% .39%
Ratio of expenses to average net assets
(after waiver) .............................. .26% .26% .24% .32% --
Ratio of net investment income, including
realized and unrealized gains and losses, to
average net assets (before waiver) ......... 5.07% 5.37% 4.82% 2.83% 3.19%
Ratio of net investment income, including
realized and unrealized gains and losses, to
average net assets (after waiver) ......... 5.19% 5.49% 4.95% 2.89% --
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Schedule of Investments
April 30, 1997
<TABLE>
<CAPTION>
========================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
========================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. $3,812,000 U.S. Treasury Bills ...... 5.00% 05/15/97 $3,804,595
Government 2,002,000 U.S. Treasury Bills ...... 4.95 05/22/97 1,996,219
Issues -- 98.8% 5,854,000 U.S. Treasury Bills ...... 5.18 05/22/97 5,836,311
1,917,000 U.S. Treasury Bills ...... 5.02 05/29/97 1,909,515
1,754,000 U.S. Treasury Bills ...... 4.98 05/29/97 1,747,206
15,900,000 U.S. Treasury Bills ...... 5.01 05/29/97 15,838,105
3,231,000 U.S. Treasury Bills ...... 5.07 05/29/97 3,218,259
2,631,000 U.S. Treasury Bills ...... 5.06 05/29/97 2,620,656
10,277,000 U.S. Treasury Bills ...... 5.10 05/29/97 10,236,235
1,813,000 U.S. Treasury Bills ...... 5.13 05/29/97 1,805,766
20,000,000 U.S. Treasury Bills ...... 5.06 06/05/97 19,901,611
9,000,000 U.S. Treasury Bills ...... 5.19 06/05/97 8,954,588
20,000,000 U.S. Treasury Bills ...... 5.17 06/05/97 19,899,472
10,381,000 U.S. Treasury Bills ...... 5.15 06/05/97 10,329,023
10,568,000 U.S. Treasury Bills ...... 5.09 06/05/97 10,515,703
25,000,000 U.S. Treasury Bills ...... 5.09 06/12/97 24,851,688
1,508,000 U.S. Treasury Bills ...... 5.12 06/12/97 1,499,001
10,749,000 U.S. Treasury Bills ...... 5.11 06/12/97 10,684,918
13,930,000 U.S. Treasury Bills ...... 5.15 06/12/97 13,846,304
5,994,000 U.S. Treasury Bills ...... 5.13 06/12/97 5,958,147
14,000,000 U.S. Treasury Bills ...... 5.03 06/12/97 13,917,843
21,000,000 U.S. Treasury Bills ...... 5.12 06/19/97 20,853,653
15,000,000 U.S. Treasury Bills ...... 5.14 06/19/97 14,895,160
5,572,000 U.S. Treasury Bills ...... 5.07 06/19/97 5,533,549
10,000,000 U.S. Treasury Bills ...... 5.19 07/24/97 9,881,933
10,000,000 U.S. Treasury Bills ...... 5.20 07/24/97 9,881,933
10,000,000 U.S. Treasury Bills ...... 5.29 08/14/97 9,847,896
9,959,000 U.S. Treasury Bills ...... 5.24 08/14/97 9,807,520
5,437,000 U.S. Treasury Bills ...... 5.26 08/14/97 5,354,301
2,980,000 U.S. Treasury Bills ...... 5.17 08/14/97 2,934,673
15,132,000 U.S. Treasury Bills ...... 5.32 08/21/97 14,885,786
5,015,000 U.S. Treasury Bills ...... 5.22 08/21/97 4,933,400
53,000,000 U.S. Treasury Notes ...... 6.50 05/15/97 53,023,609
26,000,000 U.S. Treasury Notes ...... 8.50 05/15/97 26,031,566
40,000,000 U.S. Treasury Notes ...... 6.38 06/30/97 40,068,752
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Schedule of Investments--Continued
April 30, 1997
<TABLE>
<CAPTION>
===========================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
===========================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. 50,000,000 U.S. Treasury Notes ............ 5.63% 06/30/97 $ 50,023,440
Government 45,000,000 U.S. Treasury Notes ............ 8.50 07/15/97 45,281,250
Issues 71,500,000 U.S. Treasury Notes ............ 5.88 07/31/97 71,578,206
(continued) 20,000,000 U.S. Treasury Notes ............ 6.50 08/15/97 20,056,250
- -----------------------------------------------------------------------------------------------------------
Total Investments -- 98.8%
(Cost $604,190,368) ............ $604,244,042
- -----------------------------------------------------------------------------------------------------------
Other Assets Less
Liabilities -- 1.2% ............ 7,599,816
- -----------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00
Per Share on 611,790,184 Shares
of Beneficial Interest
Outstanding -- 100.0% ......... $611,843,858
===========================================================================================================
</TABLE>
Note--Costs for federal income tax purposes are the same as those shown above.
At April 30, 1997, net unrealized appreciation amounted to $53,674 and is
comprised of $55,998 in appreciation and $2,324 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. U.S. Treasury
Notes bear interest payable at fixed dates or upon maturity.
See Notes to Financial Statements.
26
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Statement of Assets and Liabilities
April 30, 1997
<TABLE>
<CAPTION>
======================================================================================================
<S> <C>
Assets:
Total investments at value (identified cost $604,190,368) (Note 1a) ............... $604,244,042
Cash .............................................................................. 950,811
Interest receivable ............................................................... 6,834,954
Prepaid expenses .................................................................. 1,258
-------------
Total assets .................................................................. 612,031,065
-------------
Liabilities:
Advisory fee payable (Note 2) ...................................................... 99,097
Accrued expenses .................................................................. 45,138
Dividends payable .................................................................. 42,972
-------------
Total liabilities ............................................................... 187,207
-------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based on
611,790,184 shares of beneficial interest outstanding) ........................... $611,843,858
=============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Statement of Operations
April 30, 1997
<TABLE>
<CAPTION>
=====================================================================================
<S> <C> <C>
Investment Income:
Interest and discount earned (Note 1d) .................................$29,856,444
------------
Expenses:
Investment advisory fee (Note 2) ..................... $1,991,236
Registration fees .................................... 159,647
Dividend and transfer agency fees .................. 109,028
Accounting and custodian services .................. 88,639
Legal and audit fees ................................. 14,708
Printing and shareholder reports ..................... 8,409
Trustees' fees (Note 5) .............................. 6,616
Insurance .......................................... 2,706
Miscellaneous ....................................... 3,452
-----------
Total expenses ................................. 2,384,441
Waived investment advisory fee (Note 2) ............ (846,551) 1,537,890
----------- ------------
Net investment income ............................................. 28,318,554
Realized and Unrealized Gain on Investments:
Net realized gain from investment transactions ...... 209,801
Net unrealized appreciation of investments ......... 63,853
-----------
Net realized and unrealized gain from investments .................. 273,654
------------
Net Increase in Net Assets Resulting From Operations ..................$28,592,208
============
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended April 30,
--------------------------------
1997 1996
======================================================================================================
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income .................................... $ 28,318,554 $ 26,646,144
Net realized gain from investment transactions ............ 209,801 221,477
Net unrealized appreciation of investments ............... 63,853 10,300
------------ ------------
Net increase in net assets resulting from operations ...... 28,592,208 26,877,921
Total declared as dividends to shareholders (Note 4) ...... (28,528,355) (26,867,621)
Capital share transactions (Note 3) ........................ 97,656,523 171,268,720
------------ ------------
Net increase in net assets ................................. 97,720,376 171,279,020
Net Assets:
Beginning of year .......................................... 514,123,482 342,844,462
------------ ------------
End of year ................................................ $611,843,858 $514,123,482
============ ============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Financial Highlights
<TABLE>
<CAPTION>
Year Ended April 30,
----------------------------------------------------------
1997 1996 1995 1994 1993
=============================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of year ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income ..................... .049 .052 .045 .027 .028
Net realized and unrealized gain
on investments ........................... -- -- -- -- .001
------- ------- ------- ------- -------
Total from investment operations ............ .049 .052 .045 .027 .029
Less Distributions:
Dividends from net investment income ...... (.049) (.052) (.045) (.027) (.029)
------- ------- ------- ------- -------
Net Asset Value, end of year ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total Return ................................. 5.08% 5.37% 4.68% 2.82% 2.97%
Ratios/Supplemental Data:
Net Assets, end of year (000) ............... $611,844 $514,123 $342,844 $266,953 $359,318
Ratio of expenses to average net assets
(before waiver) ........................... .42% .41% .44% .45% .45%
Ratio of expenses to average net assets
(after waiver) ........................... .27% .26% .29% .39% --
Ratio of net investment income, including
realized and unrealized gains and losses, to
average net assets (before waiver) ......... 4.85% 5.09% 4.58% 2.67% 2.93%
Ratio of net investment income, including
realized and unrealized gains and losses, to
average net assets (after waiver) ......... 5.00% 5.24% 4.73% 2.73% --
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments
April 30, 1997
<TABLE>
<CAPTION>
======================================================================================================
Value
Face Amount Issue (Note 1a)
======================================================================================================
<S> <C> <C> <C>
Alabama -- $3,200,000 Birmingham, Alabama Medical Clinic Board Revenue
2.1% (University of Alabama Health Services Project) DDN
3.85% due 12/01/2026 (a) ................................ $ 3,200,000
17,700,000 McIntosh, Alabama IDB PCR (CIBA-Geigy Corp. Project)
DDN 4.00% due 07/01/2004 (a) .......................... 17,700,000
- ------------------------------------------------------------------------------------------------------
Alaska -- Valdez, Alaska Marine Terminal Revenue (Arco Trans-
1.4% portation Project) CP:
10,000,000 3.55% due 05/09/1997 .................................... 10,000,000
3,900,000 3.70% due 08/01/1997 .................................... 3,900,000
- ------------------------------------------------------------------------------------------------------
Arizona -- 13,000,000 Maricopa County, Arizona PCR (El Paso Electric Co.
2.6% Project) VRDN 4.65% due 07/01/2014 (a) ................. 13,000,000
2,100,000 Maricopa County, Arizona PCR (Southern Co. Edison
California) CP 3.70% due 08/01/1997 .................... 2,100,000
10,800,000 Salt River Project, Arizona Agricultural Improvement &
Power District Revenue CP 3.60% due 05/08/1997 ........ 10,800,000
- ------------------------------------------------------------------------------------------------------
Colorado -- 8,000,000 Denver, Colorado City & County Airport Revenue VRDN
1.4% 4.60% due 11/15/2025 (a) ................................ 8,000,000
6,000,000 Montrose, Colorado IDR (Scaled Manufacturing Inc.)
VRDN 4.75% due 12/01/2005 (a) .......................... 6,000,000
- ------------------------------------------------------------------------------------------------------
District of District of Columbia General Fund Recovery DDN:
Columbia -- 31,400,000 Series B-1 4.15% due 06/01/2003 (a) ..................... 31,400,000
7.3% 3,500,000 Series B-2 4.15% due 06/01/2023 (a) ..................... 3,500,000
3,100,000 Series B-2 4.15% due 06/01/2007 (a) ..................... 3,100,000
6,000,000 Series B-3 4.15% due 06/01/2003 (a) ..................... 6,000,000
29,700,000 District of Columbia Revenue (American Association
for the Advancement of Sciences) DDN 4.05% due
10/01/2022 (a) ......................................... 29,700,000
- ------------------------------------------------------------------------------------------------------
Florida -- 4,800,000 Lee County, Florida IDA Revenue (Raymond Building
0.8% Supply Corp. Project) VRDN 4.80% due 04/01/2017 (a) ..... 4,800,000
3,365,000 Sunshine State Governmental Financing Commission Fla.
Revenue (Series B) CP 3.70% due 08/01/1997 .............. 3,365,000
- ------------------------------------------------------------------------------------------------------
Georgia -- 6,860,000 Albany & Dougherty County, Georgia Hospital Authority
2.7% Revenue (Phoebe Putney Memorial Hospital) VRDN
4.50% due 09/01/2026 (a) ................................ 6,860,000
5,400,000 Atlanta, Georgia Urban Residential Finance Authority M/F
Revenue (New Community East Lake Project) VRDN
4.85% due 11/01/2028 (a) ................................ 5,400,000
1,000,000 Columbus, Georgia Development Authority IDR (Georgia
Packaging Inc.) VRDN 4.75% due 01/01/2012 (a) ........... 1,000,000
3,200,000 Eagles Tax-Exempt Trust (Georgia Residential Finance
Authority) FXRDN 3.75% due 06/01/1997 ................. 3,200,000
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
========================================================================================================
Value
Face Amount Issue (Note 1a)
========================================================================================================
<S> <C> <C> <C>
Georgia $2,030,000 Georgia State Residential Finance Authority FXRDN
(continued) 3.75% due 06/01/1997 ...................................... $2,030,000
9,000,000 La Grange, Georgia Development Authority IDR (Reltec
Corp. Project) VRDN 4.70% due 12/01/2021 (a) .............. 9,000,000
- --------------------------------------------------------------------------------------------------------
Illinois -- 4,300,000 Chicago, Illinois IDR (Enterprise Center Project) VRDN
7.2% 4.80% due 06/01/2022 (a) ................................... 4,300,000
10,000,000 Chicago, Illinois Public Building Commission Revenue
FXRDN 4.20% due 12/01/1997 ................................ 10,016,781
7,000,000 Chicago, Illinois Solid Waste Disposal Facilities Revenue
(Groot Industries Inc. Project) VRDN 4.60% due
12/01/2015 (a) ............................................ 7,000,000
1,800,000 Illinois State Development Finance Authority IDR (Revcor
Inc. Project) VRDN 4.70% due 06/01/2008 (a) ................. 1,800,000
2,000,000 Illinois State Development Finance Authority Economic
Development Revenue (CPL Downers Grove Partner-
ship) VRDN 4.70% due 12/01/2005 (a) 2,000,000
2,500,000 Illinois State Educational Facilities Authority Revenue (Art
Institute of Chicago) VRDN 4.55% due 03/01/2027 (a) ........ 2,500,000
Illinois Health Facilities Authority Revenue (Evanston
Hospital Corp. Project) CP:
5,000,000 3.65% due 05/29/1997 ....................................... 5,000,000
12,000,000 3.95% due 08/15/1997 ....................................... 12,000,000
11,000,000 Illinois Health Facilities Authority Revenue (Northwestern
Community Hospital) VRDN 4.60% due 07/01/2027 (a) ........... 11,000,000
8,000,000 Illinois Health Facilities Authority Revenue (Advocate Health
Care Series B) VRDN 4.60% due 08/15/2022 (a) .............. 8,000,000
2,250,000 Kane County, Illinois School District TAN 4.25% due
09/29/1997 .................................................. 2,254,544
2,775,000 Peoria, Illinois IDR (CDC Realty L.P. Project) VRDN 4.80%
due 12/01/2014 (a) ......................................... 2,775,000
4,000,000 Upper Illinois River Valley Authority Solid Waste Disposal
Revenue (Exolon-Esk Co. Project) VRDN 4.70% due
12/01/2021 (a) ............................................ 4,000,000
- --------------------------------------------------------------------------------------------------------
Indiana -- 6,660,000 Anderson, Indiana Economic Development Revenue
4.0% (Applecreek Commons L.P. Project) VRDN 4.70% due
12/01/2027 (a) ............................................ 6,660,000
3,225,000 Bloomington, Indiana Economic Development Revenue
(Bloomington Square Project) VRDN 4.70% due
12/01/2008 (a) ............................................ 3,225,000
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
================================================================================================
Value
Face Amount Issue (Note 1a)
================================================================================================
<S> <C> <C> <C>
Indiana $2,500,000 Connersville, Indiana Economic Development Revenue
(continued) (Inland Southern Group Project) VRDN 4.65% due
02/01/2012 (a) ...................................... $2,500,000
3,000,000 Greencastle, Indiana IDR (Crown Equipment Corp.
Project) VRDN 4.75% due 02/01/2011 (a) .............. 3,000,000
1,000,000 Greendale, Indiana Economic Development Revenue
(Pripak Inc. Project Series A) VRDN 4.75% due
12/01/2003 (a) ...................................... 1,000,000
5,000,000 Hamilton, Indiana Southeastern Schools Building Corp.
TAN 4.25% due 12/31/1997 ............................. 5,016,196
2,700,000 Indiana State Development Finance Authority Economic
Development Revenue (Hart Housing Group Inc.
Project) VRDN 4.80% due 06/01/2011 (a) .............. 2,700,000
2,530,000 Indiana State Development Finance Authority IDR
(Centurion Industries Inc. Project) VRDN 4.75% due
10/01/2005 (a) ...................................... 2,530,000
4,915,000 Indiana State Educational Facilities Authority Revenue
(Wesleyan University Project) VRDN 4.70% due
12/01/2015 (a) ...................................... 4,915,000
2,000,000 Muncie, Indiana IDR (Diamond Plastics Corp. Project)
VRDN 4.90% due 10/01/2006 (a) ....................... 2,000,000
1,915,000 New Castle, Indiana Economic Development Revenue
(Barden Homes of Indiana Inc. Project) VRDN 4.80%
due 08/01/2010 (a) ................................... 1,915,000
2,445,000 St. Joseph County, Indiana Hospital Authority (Madison
Center Inc. Project) VRDN 4.65% due 03/04/2015 (a) .. 2,445,000
2,500,000 Westfield, Indiana IDR (Standard Locknut Inc. Project)
VRDN 4.80% due 02/01/2002 (a) ....................... 2,500,000
- --------------------------------------------------------------------------------------------------------
Kansas -- 3,550,000 Overland Park, Kansas IDR (General Motors Corp.
0.5% Project) DDN 4.10% due 11/01/2021 (a) .............. 3,550,000
1,150,000 Spring Hill, Kansas IDR (Abrasive Engineering Manufac-
turing Inc. Project) VRDN 4.75% due 10/01/2016 (a) 1,150,000
- --------------------------------------------------------------------------------------------------------
Kentucky -- 3,500,000 Graves County, Kentucky IDR (Seaboard Farms Kentucky
7.2% Inc. Project) VRDN 4.85% due 12/01/2012 (a) ........ 3,500,000
3,400,000 Jefferson County, Kentucky Industrial Building Revenue
(Advanced Chemtech Inc. Project) VRDN 4.75% due
04/01/2016 (a) ...................................... 3,400,000
Jefferson County, Kentucky Industrial Building Revenue
(Thomas Development Project) VRDN:
1,900,000 4.75% due 04/10/2010 (a) ........................... 1,900,000
1,170,000 4.75% due 10/01/2011 (a) ........................... 1,170,000
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
=======================================================================================================
Value
Face Amount Issue (Note 1a)
=======================================================================================================
<S> <C> <C> <C>
Kentucky $9,835,000 Kentucky Economic Development Finance Authority
(continued) Hospital Facilities Revenue (St. Elizabeth's Medical
Center Inc.) VRDN 4.67% due 05/01/2017 (a) ............ $9,835,000
22,000,000 Kentucky Economic Development Finance Authority
Revenue (Sisters of Charity of Nazareth Health Sys-
tem) DDN 4.05% due 11/01/2020 (a) ...................... 22,000,000
10,000,000 Louisville & Jefferson County, Kentucky Regional Airport
System Revenue BAN/VRDN 4.70% due 06/30/1998 ........... 10,000,000
20,600,000 Perry County, Kentucky Health Care Systems Revenue
(Appalachian Regional Health Care) VRDN 4.75% due
08/01/2014 (a) ......................................... 20,600,000
- --------------------------------------------------------------------------------------------------------
Louisiana -- 11,000,000 Saint James Parish, Louisiana PCR (Texaco Project) CP
1.1% 4.10% due 05/21/1997 ................................... 11,000,000
- --------------------------------------------------------------------------------------------------------
Maine -- 2,530,000 Gray, Maine Revenue (Advance Realty Project) VRDN
2.1% 4.75% due 10/01/2011 (a) .............................. 2,530,000
9,085,000 Jay, Maine Solid Waste Disposal Revenue (International
Paper Co.) FXRDN 3.95% due 06/02/1997 ................. 9,085,000
6,600,000 Maine TAN 4.50% due 06/27/1997 ........................ 6,605,236
3,140,000 Maine School Administrative District #35 Eliot Commons
BAN 4.25% due 11/12/1997 .............................. 3,145,710
- --------------------------------------------------------------------------------------------------------
Maryland -- 1,900,000 Anne Arundel County, Maryland Economic Development
0.5% Revenue (Atlas Container Corp Project) VRDN 4.95%
due 04/01/2006 (a) .................................... 1,900,000
2,600,000 Maryland State Health & Higher Educational Facilities
Authority Revenue (Helix Health Hospital) VRDN
4.70% due 07/01/2026 (a) .............................. 2,600,000
- --------------------------------------------------------------------------------------------------------
Massachusetts -- 5,000,000 Bolton, Massachusetts BAN 4.50% due 04/17/1998 ......... 5,018,466
10.2% 5,400,000 Gardner, Massachusetts BAN 4.15% due 11/07/1997 ......... 5,407,648
7,000,000 Lynn, Massachusetts BAN 4.25% due 08/14/1997 ............ 7,006,625
10,000,000 Lynn, Massachusetts Water & Sewer Commission BAN
4.25% due 10/08/1997 .................................. 10,008,000
14,230,000 Massachusetts GO Tender Option FXRDN 3.53% due
05/29/1997 ............................................. 14,230,000
9,500,000 Massachusetts State Housing Finance Agency Housing
Projects (Series 13-C) VRDN 4.50% due 10/01/2008
(a) ................................................... 9,500,000
3,570,000 Massachusetts State Industrial Finance Agency Revenue
(WBC Extrusion Products) VRDN 3.75% due
04/01/2006 (a) ....................................... 3,570,000
10,000,000 Massachusetts State Water Resource Authority CP
4.00% due 05/21/1997 ................................... 10,000,000
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
=========================================================================================================
Value
Face Amount Issue (Note 1a)
=========================================================================================================
<S> <C> <C> <C>
Massachusetts $9,310,000 Mendon & Upton, Massachusetts Regional School
(continued) District BAN 3.85% due 05/09/1997 .................... $9,310,350
Middlesex County, Massachusetts BAN:
2,802,000 4.39% due 07/17/1997 ................................. 2,802,792
2,670,000 4.30% due 07/17/1997 ................................. 2,670,265
7,000,000 Pioneer Valley Regional Transit Authority Massachusetts
RAN 4.63% due 08/08/1997 ............................. 7,009,653
Springfield, Massachusetts BAN:
6,000,000 4.50% due 06/27/1997 ................................. 6,004,501
9,600,000 4.60% due 07/11/1997 ................................. 9,608,969
- --------------------------------------------------------------------------------------------------------
Michigan -- 14,700,000 Michigan State Building Authority Revenue CP 3.65%
3.4% due 05/01/1997 ......................................... 14,700,000
13,500,000 Michigan State Building Authority Revenue CP 3.50%
due 05/01/1997 ......................................... 13,500,000
5,600,000 Michigan State Strategic Fund Limited Obligation
Revenue (Detroit Edison Co.) DDN 4.10% due
09/01/2030 (a) ......................................... 5,600,000
- --------------------------------------------------------------------------------------------------------
Missouri -- 1,415,000 Jefferson County, Missouri IDA Revenue (Sinclair &
0.4% Rush Project) VRDN 4.80% due 11/01/2001 (a) ........... 1,415,000
2,700,000 Missouri State Development Finance Board IDR (Filtra-
tion Group Inc.) VRDN 4.76% due 03/01/2012 (a) ......... 2,700,000
- --------------------------------------------------------------------------------------------------------
New 9,830,000 New Hampshire Higher Educational & Health Facilities
Hampshire -- Authority Revenue (Dartmouth Educational Loan
1.9% Corp.) FXRDN 3.90% due 06/01/1997 .................... 9,830,000
1,230,000 New Hampshire State Business Finance Authority IDR
(Freed's Bakery Inc. Project) VRDN 4.80% due
05/02/2011 (a) ......................................... 1,230,000
3,000,000 New Hampshire State Business Finance Authority IDR
(Hydra Inc.) VRDN 4.75% due 11/01/2006 (a) ........... 3,000,000
4,500,000 Salem, New Hampshire TAN 4.00% due 12/18/1997 ......... 4,508,543
- --------------------------------------------------------------------------------------------------------
New York -- 11,085,000 Little Falls, New York School District BAN 4.50% due
4.3% 06/15/1997 ............................................ 11,091,651
5,955,000 New York City NY (Series B) DDN 4.25% due
10/01/2020 (a) ...................................... 5,955,000
11,200,000 New York City Municipal Water Finance Authority Systems
Revenue (Series C) DDN 4.05% due 06/15/2023 (a) ........ 11,200,000
15,100,000 New York State BAN/CP 3.65% due 05/22/1997 ............ 15,100,000
- --------------------------------------------------------------------------------------------------------
North Carolina -- 5,200,000 Raleigh-Durham, North Carolina Airport Authority Special
0.5 % Facilities Revenue (American Airlines Series B) DDN
4.05% due 11/01/2005 (a) .............................. 5,200,000
- --------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
33
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
=========================================================================================================
Value
Face Amount Issue (Note 1a)
=========================================================================================================
<S> <C> <C> <C>
Ohio -- $2,400,000 Cadiz, Ohio BAN 4.15% due 07/15/1997 .................. $2,402,764
7.9% 3,500,000 Cleveland, Ohio BAN 4.50% due 10/15/1997 ............... 3,507,687
13,900,000 Cuyahoga County, Ohio Hospital Revenue (University
Hospital of Cleveland) DDN 4.00% due 01/01/2016 (a) .. 13,900,000
3,500,000 Eagles Tax-Exempt Trust, Ohio Water Development Author-
ity (Ohio Edison) VRDN 4.67% due 07/01/2015 (a)........ 3,500,000
5,420,000 Franklin County, Ohio M/F Housing Revenue (Community
Housing Network) VRDN 4.65% due 03/01/2027 (a) ........ 5,420,000
1,000,000 Gates Mills, Ohio BAN 4.13% due 11/25/1997 ............ 1,002,343
4,000,000 Greene County, Ohio BAN 4.50% due 09/11/1997 ......... 4,005,874
4,475,000 Lucas-Beacon Place Housing Development Corp. M/F
Housing Revenue (Beacon Place Apartments Project)
FXRDN 3.80% due 09/15/1997 .......................... 4,475,000
7,295,000 Mahoning County, Ohio Health Care Facilities Revenue
(Shepherd of the Valley Lutheran Home & Retirement
Center) VRDN 4.70% due 09/01/2020 (a) ................. 7,295,000
Montgomery County, Ohio Hospital Revenue (Miami Valley
Hospital Series C) CP:
7,000,000 3.55% due 05/09/1997 ................................. 7,000,000
11,800,000 3.70% due 08/01/1997 ................................. 11,800,000
3,000,000 New Bremen, Ohio Local School District BAN 4.20% due
05/29/1997 ............................................ 3,001,252
4,500,000 Ohio State Air Quality Development Authority Revenue
(Cincinnati Gas & Electric) DDN 4.00% due 09/01/2030
(a) .................................................. 4,500,000
2,735,000 Ohio State Higher Educational Facilities Commission
Revenue (Ashland University Project) VRDN 4.65% due
09/01/2001 (a) ...................................... 2,735,000
5,000,000 Ottawa County, Ohio IDR (Adrian Sand & Stone Project)
VRDN 4.75% due 10/01/2008 (a) ....................... 5,000,000
- --------------------------------------------------------------------------------------------------------
Oklahoma -- 5,000,000 Muskogee, Oklahoma IDR PCR (Oklahoma Gas & Elec.
0.5% Co. Series a) VRDN 4.55% due 01/01/2025 (a) ........... 5,000,000
- --------------------------------------------------------------------------------------------------------
Oregon -- 1,000,000 Portland, Oregon M/F Revenue (Union Station) VRDN
0.1% 4.80% due 12/01/2027 (a) .............................. 1,000,000
- --------------------------------------------------------------------------------------------------------
Pennsylvania -- 13,425,000 Allegheny County, Pennsylvania Hospital Development
10.7% Authority Revenue (Presbyterian University Hospital)
VRDN 4.60% due 03/01/2018 (a) ....................... 13,425,000
1,200,000 Allegheny County, Pennsylvania IDA Revenue (Parkway
Center Mall Project) VRDN 4.60% due 05/01/2009 (a) .. 1,200,000
</TABLE>
See Notes to Financial Statements.
34
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
=========================================================================================================
Value
Face Amount Issue (Note 1a)
=========================================================================================================
<S> <C> <C> <C>
Pennsylvania Emmaus, Pennsylvania General Authority Revenue
(continued) VRDN:
$10,000,000 Series C-11 4.60% due 03/01/2024 (a) ..................... $10,000,000
8,600,000 Series D-11 4.60% due 03/01/2024 (a) ..................... 8,600,000
1,500,000 Series F-6 4.60% due 03/01/2024 (a) ..................... 1,500,000
10,000,000 Harrisburg, Pennsylvania Authority Revenue (Pooled
Loan Fund) VRDN 4.65% due 07/01/2021 (a) ................. 10,000,000
10,000,000 Lancaster, Pennsylvania Hospital Authority Revenue
(Masonic Homes Project) VRDN 4.65% due
07/01/2027 (a) ......................................... 10,000,000
23,000,000 Montgomery County, Pennsylvania Higher Education &
Health Authority Revenue VRDN 4.65% due
06/01/2021 (a) ......................................... 23,000,000
2,900,000 Montgomery County, Pennsylvania Higher Education &
Health Authority Revenue (Philadelphia Presbytery)
VRDN 4.60% due 07/01/2025 (a) .......................... 2,900,000
16,455,000 Pennsylvania GO Tender Option VRDN 4.65% due
04/15/2002 (a) ......................................... 16,455,000
10,400,000 Philadelphia, Pennsylvania TRAN 4.50% due
06/30/1997 ............................................... 10,409,032
- --------------------------------------------------------------------------------------------------------
Rhode Island -- 5,000,000 Cumberland, Rhode Island BAN 4.25% due 11/26/1997 ......... 5,009,650
1.7% 2,600,000 Rhode Island State Industrial Facilities Corp. IDR (Capi-
tal Development Corp. Project) VRDN 3.65% due
11/01/2005 (a) ......................................... 2,600,000
3,500,000 Rhode Island State Solid Waste Management Corp.
(Landfill Lease) CP 4.50% due 08/01/1997 ................. 3,511,760
6,350,000 West Warwick, Rhode Island BAN 4.25% due
08/01/1997 ............................................... 6,355,491
- --------------------------------------------------------------------------------------------------------
South Carolina -- 630,000 South Carolina Economic Development Authority IDR
1.1% (Trimite Powders Inc. Project) FXRDN 4.13% due
09/01/1997 ............................................... 630,000
9,989,000 South Carolina Public Services Authority Electrical
Systems Revenue CP 3.70% due 08/01/1997 ................. 9,989,000
- --------------------------------------------------------------------------------------------------------
South Dakota -- 3,000,000 South Dakota Housing Development Authority Revenue
0.3% FXRDN (Series G) 4.25% due 05/01/1997 .................... 3,000,000
- --------------------------------------------------------------------------------------------------------
Tennessee -- 9,500,000 Memphis & Shelby County, Tennessee Industrial Board
2.1% PCR (Birmingham Steel Corp. Project) VRDN 4.75%
due 10/01/2026 (a) ...................................... 9,500,000
7,000,000 Montgomery County, Tennessee Public Building Authority
(Pooled Financing Revenue) VRDN 4.70% due
07/01/2015 (a) ......................................... 7,000,000
4,300,000 Nashville & Davidson County, IDB Revenue (Gibson
Guitar Project) VRDN 4.75% due 03/01/2011 (a) ........... 4,300,000
- --------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
35
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
=========================================================================================================
Value
Face Amount Issue (Note 1a)
=========================================================================================================
<S> <C> <C> <C>
Texas -- $1,825,000 Montgomery County, Texas IDA Revenue (Sawyer
0.6% Research Products Inc.) VRDN 4.80% due
02/04/2015 (a) ...................................... $1,825,000
4,000,000 Texas State TRAN 4.75% due 08/29/1997 .................. 4,009,439
- --------------------------------------------------------------------------------------------------------
Utah -- 5,000,000 Salt Lake County, Utah PCR (Service Station Holdings
0.5% -The BP Co. Project) DDN 4.05% due 02/01/2008 (a) ..... 5,000,000
- --------------------------------------------------------------------------------------------------------
Vermont -- 2,600,000 Vermont IDA Revenue (Burlington PPTY LP Project)
0.3% VRDN 4.60% due 12/01/2011 (a) ....................... 2,600,000
- --------------------------------------------------------------------------------------------------------
Virginia -- 2,100,000 Brunswick County, Virginia IDA Exempt Facilities Rev-
1.2% enue (Aegis Waste Solutions Inc.) VRDN 4.65% due
01/01/2017 (a) ...................................... 2,100,000
10,000,000 Richmond, Virginia Public Utilities Revenue VRDN 4.75%
due 06/30/2001 (a) ................................... 10,000,000
- --------------------------------------------------------------------------------------------------------
Washington -- 3,000,000 Pierce County, Washington Housing Authority Revenue
2.1% (Eagles Watch Project) VRDN 4.55% due
09/01/2020 (a) ...................................... 3,000,000
5,000,000 Washington State Housing Finance Commission Rev-
enue (Emerald Heights Project) DDN 4.10% due
01/01/2021 (a) ...................................... 5,000,000
12,850,000 Washington State Housing Finance Commission Rev-
enue (Panorama City Project) DDN 4.60% due
01/01/2027 (a) ...................................... 12,850,000
- --------------------------------------------------------------------------------------------------------
West Virginia -- 2,600,000 Raleigh County, West Virginia Health Care Systems Rev-
0.3% enue (Appalachian Regional Health Care) VRDN
4.75% due 09/01/2006 (a) ............................. 2,600,000
- --------------------------------------------------------------------------------------------------------
Wisconsin -- 1,405,000 Appleton, Wisconsin IDR (Valley Packaging Industries
3.7% Inc. Project) VRDN 4.70% due 02/01/2011 (a) ........... 1,405,000
2,320,000 Arrowhead, Wisconsin School District TRAN 4.50% due
09/26/1997 ............................................ 2,323,608
Deerfield, Wisconsin IDR (Interpane Coatings Project)
VRDN:
1,600,000 4.60% due 05/01/2003 (a) .............................. 1,600,000
1,745,000 4.75% due 05/01/2003 (a) .............................. 1,745,000
1,750,000 Howard-Suamico, Wisconsin School District TRAN
4.40% due 08/22/1997 ................................ 1,752,082
2,650,000 Milwaukee, Wisconsin Redevelopment Authority Rev-
enue (Jensar Corp. Project) VRDN 4.80% due
03/01/2007 (a) ...................................... 2,650,000
1,265,000 Oshkosh, Wisconsin IDR (Automatic Handling Inc.
Project) VRDN 4.75% due 06/01/2006 (a) .............. 1,265,000
</TABLE>
See Notes to Financial Statements.
36
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1997
<TABLE>
<CAPTION>
=========================================================================================================
Value
Face Amount Issue (Note 1a)
=========================================================================================================
<S> <C> <C> <C>
Wisconsin $ 500,000 Plymouth, Wisconsin IDR (Great Lakes Cheese of
(continued) Wisconsin Inc. Project) VRDN 4.75% due 08/01/2024
(a) ..................................................... $ 500,000
4,000,000 Shorewood, Wisconsin School District TRAN 4.35% due
09/02/1997 ............................................... 4,004,556
5,000,000 Sturtevant, Wisconsin IDR (Andis Co. Project Series A)
VRDN 4.65% due 12/01/2016 (a) .......................... 5,000,000
2,100,000 Sun Prairie, Wisconsin School District TRAN 4.25% due
08/22/1997 ............................................... 2,101,558
4,250,000 Verona, Wisconsin School District TRAN 4.50% due
08/27/1997 ............................................ 4,255,433
9,000,000 Wisconsin State Health & Educational Facilities Authority
Revenue (Wheaton Franciscan System Revenue)
VRDN 4.60% due 08/15/2016 (a) .......................... 9,000,000
- --------------------------------------------------------------------------------------------------------
Wyoming -- 5,300,000 Converse County, Wyoming Environmental Improvement
4.8% Revenue (Pacificorp Projects) DDN 4.25% due
11/01/2025 (a) ......................................... 5,300,000
5,000,000 Laramie County, Wyoming IDR (Cheyenne Light Fuel &
Power Co.) VRDN 4.60% due 03/01/2027 (a) ................. 5,000,000
4,000,000 Lincoln County, Wyoming Environmental Improvement
Revenue (Pacificorp Projects) DDN 4.25% due
11/01/2025 (a) ......................................... 4,000,000
13,300,000 Sweetwater County, Wyoming Environmental Improve-
ment Revenue (Pacificorp Projects) DDN 4.25% due
11/01/2025 (a) ......................................... 13,300,000
20,900,000 Sweetwater County, Wyoming PCR (Idaho Power Co.
Project) DDN 4.10% due 07/15/2026 (a) .................... 20,900,000
- --------------------------------------------------------------------------------------------------------
Total Investments (Cost $998,272,459) -- 99.5% ............ 998,272,459
- --------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.5% ..................... 5,383,027
- --------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00 Per Share on
1,003,777,618 Shares of Beneficial Interest
Outstanding -- 100.0% ................................... $1,003,655,486
=========================================================================================================
</TABLE>
(a) The interest rate is subject to change periodically based on a certain
index. The rates shown are those in effect at April 30, 1997. For variable rate
demand instruments, the next coupon date on which the interest rate 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
BAN Bond Anticipation Notes
CP Commercial Paper
DDN Daily Demand Notes
FXRDN Fixed Rate Demand Notes
GO General Obligation
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue
M/F Multi-Family
PCR Pollution Control Revenue
RAN Revenue Anticipation Notes
TAN Tax Anticipation Notes
TRAN Tax Revenue Anticipation Notes
VRDN Variable Rate Demand Notes
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
37
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Statement of Assets and Liabilities
April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at amortized cost and value (Note 1a) ................................. $ 998,272,459
Cash .............................................................................. 1,797,039
Interest receivable ............................................................... 7,612,391
Receivable for investments sold ................................................... 1,220,000
Prepaid expenses .................................................................. 1,794
---------------
Total assets .................................................................. 1,008,903,683
---------------
Liabilities:
Advisory fee payable (Note 2) ................................................... 160,350
Payable for investments purchased ................................................ 5,013,782
Accrued expenses .................................................................. 45,364
Dividends payable ............................................................... 28,701
---------------
Total liabilities ............................................................ 5,248,197
---------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based on
1,003,777,618 shares of beneficial interest outstanding) ........................ $1,003,655,486
===============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Statement of Operations
April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income:
Interest and discount earned (Note 1d) ....................................$30,216,695
-----------
Expenses:
Investment advisory fee (Note 2) ..................... $ 3,731,200
Registration fees .................................... 207,440
Dividend and transfer agency fees .................. 147,047
Accounting and custodian services .................. 105,578
Amortization of organization expenses (Note 1e) ...... 76,980
Legal and audit fees ................................. 15,677
Printing and shareholder reports ..................... 12,143
Trustees' fees (Note 5) .............................. 9,724
Insurance .......................................... 3,489
Miscellaneous ....................................... 10,774
-----------
Total expenses ................................. 4,320,052
Waived investment advisory fee (Note 2) ............ (2,072,889) 2,247,163
----------- -----------
Net investment income ................................................27,969,532
Net realized loss from investment transactions ........................... (2,657)
-----------
Net Increase in Net Assets Resulting From Operations .....................$27,966,875
===========
</TABLE>
See Notes to Financial Statements.
38
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended April 30,
-----------------------------------
1997 1996
======================================================================================================
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income ....................................... $ 27,969,532 $ 16,875,293
Net realized gain (loss) from investment transactions ......... (2,657) 796
-------------- ------------
Net increase in net assets resulting from operations ......... 27,966,875 16,876,089
Total declared as dividends to shareholders (Note 4) ......... (27,969,332) (16,870,256)
Capital share transactions (Note 3) ........................... 336,453,248 263,295,555
-------------- ------------
Net increase in net assets .................................... 336,450,791 263,301,388
Net Assets:
Beginning of year ............................................. 667,204,695 403,903,307
-------------- ------------
End of year, including undistributed net investment income of
$134,573 and accumulated capital losses of $256,705 and $254,248
respectively (Note 1g and Note 4) ........................... $1,003,655,486 $667,204,695
============== ============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Financial Highlights
<TABLE>
<CAPTION>
Five Months
Ended
Year Ended April 30, April 30, Year Ended November 30,
----------------------------------- ---------------- ---------------------
1997 1996 1995 1994 1993 1992
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income ..................... .03 .04 .03 .01 .02 .03
Dividends from net investment income ...... (.03) (.04) (.03) (.01) (.02) (.03)
---------- ------- ------- --------- ------- -------
Net Asset Value, end of period ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======= ======= ========= ======= =======
Total Return .............................. 3.41% 3.68% 3.20% 2.14%(1) 2.14% 2.74%
Ratios/Supplemental Data:
Net Assets, end of period (000) ......... $1,003,655 $667,205 $403,903 $390,375 $278,697 $329,254
Ratio of expenses to average net assets
(before waiver) ........................ .52% .54% .56% .59%(1) .62% .61%
Ratio of expenses to average net assets
(after waiver) ........................... .27% .29% .31% .34%(1) .45% .53%
Ratio of net investment income, to average
net assets (before waiver) ............... 3.12% 3.35% 2.90% 1.92%(1) 1.96% 2.67%
Ratio of net investment income, to average
net assets (after waiver) ............... 3.37% 3.60% 3.15% 2.17%(1) 2.13% 2.75%
</TABLE>
(1) On an annualized basis
See Notes to Financial Statements.
39
<PAGE>
- --------------------------------------------------------------------------------
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
January 27, 1997, Merrill Lynch Premier Institutional Fund commenced operations
as a separate series of the Trust. On February 18, 1994 Merrill Lynch
Institutional Tax-Exempt Fund was reorganized as a separate series of the Trust.
The Trust has a fiscal year end of April 30. 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, Government and
Treasury Fund portfolio securities is determined on the basis of fair value as
determined in good faith by 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 investments 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) Deferred organization expenses are amortized over a period not exceeding
five years. Prepaid registration fees are charged to income as the related
shares are sold.
(f) Repurchase agreements--The Premier Institutional Fund, the 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, 1997, Merrill Lynch Institutional
Tax-Exempt Fund reclassified amounts to reflect a decrease of $200 in both
accumulated capital losses and undistributed net investment income 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
Fund Asset Management, L.P., 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:
40
<PAGE>
- --------------------------------------------------------------------------------
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
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 Premier Institutional Fund. For the period ended April 30,
1997, the effective fee payable to FAM was 0.14% 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 year ended April 30, 1997, FAM waived a portion of its fees amounting
to $45,574 for the Premier Institutional Fund, $9,522,140 for the Institutional
Fund, $2,261,521 for the Government Fund, $846,551 for the Treasury Fund and
$2,072,889 for the Institutional Tax-Exempt Fund.
All officers and certain trustees of the Trust are affiliated with Merrill
Lynch & Co., Inc.
3. Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
shares of beneficial interest in the Premier Institutional Fund, Institutional
Fund, Government Fund and Treasury Fund ($.01 par value) and Institutional Tax-
Exempt Fund ($.10 par value) of a single class. At April 30, 1997, capital
paid-in aggregated $2,824,133,069 for Premier Institutional Fund, $6,201,308,027
for Institutional Fund, $2,017,817,815 for Government Fund, $611,790,184 for
Treasury Fund and $1,003,777,618 for Institutional Tax-Exempt Fund. Transactions
in shares at a constant net asset value of $1.00 per share were as follows:
Period
Ended April 30,
-----------------
Premier Institutional Fund 1997
- ------------------------------- -----------------
Shares sold .................. 12,237,737,259
Shares issued to shareholders
in reinvestment of dividends 32,118,561
---------------
Total ..................... 12,269,855,820
Shares redeemed ............ 9,445,822,751
---------------
Net increase ............... 2,824,033,069
===============
Prior to January 27, 1997 (commencement of operations) there were 100,000
shares of beneficial interest outstanding which were owned by FAM.
Year Ended April 30,
-----------------------------------
Institutional Fund 1997 1996
- ------------------------------- ------------------- ---------------
Shares sold .................. 67,124,483,921 81,859,341,129
Shares issued to shareholders
in reinvestment of dividends 323,268,144 360,863,781
--------------- ---------------
Total ..................... 67,447,752,065 82,220,204,910
Shares redeemed ............ 68,867,606,220 81,179,030,074
--------------- ---------------
Net increase (decrease) ... (1,419,854,155) 1,041,174,836
=============== ===============
Year Ended April 30,
--------------------------------
Government Fund 1997 1996
- ------------------------------- ---------------- ---------------
Shares sold .................. 13,658,666,165 11,319,796,312
Shares issued to shareholders
in reinvestment of dividends 92,067,429 86,908,080
--------------- ---------------
Total ..................... 13,750,733,594 11,406,704,392
Shares redeemed ............ 13,376,732,157 11,363,934,579
--------------- ---------------
Net increase ............... 374,001,437 42,769,813
=============== ===============
Year Ended April 30,
--------------------------------
Treasury Fund 1997 1996
- -------------------------------- --------------- --------------
Shares sold .................. 3,277,418,270 2,984,431,147
Shares issued to shareholders
in reinvestment of dividends 27,446,045 25,665,244
-------------- --------------
Total ..................... 3,304,864,315 3,010,096,391
Shares redeemed ............... 3,207,207,792 2,838,827,671
-------------- --------------
Net increase ............... 97,656,523 171,268,720
============== ==============
41
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Funds For Institutions Series
Notes to Financial Statements -- Continued
- --------------------------------------------------------------------------------
Year Ended April 30,
--------------------------------
Institutional
Tax-Exempt Fund 1997 1996
- ---------------------------------- --------------- --------------
Shares sold ..................... 5,129,231,992 3,532,959,162
Shares issued to shareholders
in reinvestment of dividends . 26,648,229 15,674,384
-------------- --------------
Total ........................ 5,155,880,221 3,548,633,546
Shares redeemed ............... 4,819,426,973 3,285,337,991
-------------- --------------
Net increase .................. 336,453,248 263,295,555
============== ==============
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, Government and Treasury Funds are declared from the total of 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 incomeexcluding 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, 1997, the Institutional Tax-Exempt Fund had net capital loss
carryovers of $254,048 of which $96,488 expire in the year 2001, $17,520 expire
in 2002 and $140,040 expire in 2003.
5. Trustees' Fees
Each Trustee who is not affiliated with the Trust or its adviser is paid an
annual fee of $30,000 by the Trust. Trustees' fees are allocated among the five
series of the Trust based on the net assets under management.
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Trustees and 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 Government Fund, Merrill Lynch Treasury
Fund, and Merrill Lynch Institutional Tax-Exempt Fund (the "Funds"), as of April
30, 1997, the related statements of operations, the statements of changes in net
assets and the financial highlights for each of the respective fiscal 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 generally accepted auditing
standards. 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, 1997, 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, such financial statements and financial highlights present
fairly, in all material respects, the financial position of each of the
respective Funds of Merrill Lynch Funds For Institutions Series at April 30,
1997, the results of their operations, the changes in their net assets, and
their financial highlights for each of the respective fiscal periods then ended
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
May 28, 1997
42
<PAGE>
- --------------------------------------------------------------------------------
TRUSTEES, SENIOR OFFICERS AND PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------
Robert W. Crook*
President & Trustee
Senior Vice President,
Merrill Lynch Asset Management, L.P.
A. Bruce Brackenridge
Trustee
Retired Group Executive,
J.P. Morgan & Co. Inc.
Charles C. Cabot, Jr.
Trustee
Partner, Sullivan & Worcester
James T. Flynn
Trustee
Retired Chief Financial Officer,
J.P. Morgan & Co., Inc.
Terry K. Glenn*
Trustee
Executive Vice President,
Merrill Lynch Asset Management, L.P.
George W. Holbrook Jr.
Trustee
Managing Partner,
Bradley Resources Company
W. Carl Kester
Trustee
James R. Williston Professor of Business
Administration,
Harvard University Graduate School of
Business Administration
William E. Aldrich
Executive Vice President
William M. Breen
Senior Vice President, Chief Financial
Officer & Treasurer
Michael J. Brady
Senior Vice President
James J. Fatseas
Senior Vice President
Joseph T. Monagle Jr.
Senior Vice President
William Wasel
Senior Vice President
Mark E. Maguire
Senior Vice President
Barry F. X. Smith
Senior Vice President
Christopher Ayoub
Vice President & Portfolio Manager
John Ng
Vice President & Portfolio Manager
Kevin Schiatta
Vice President & Portfolio Manager
Ira P. Shapiro
Secretary
43
<PAGE>
- --------------------------------------------------------------------------------
ADMINISTRATOR & DISTRIBUTOR
Merrill Lynch Funds Distributor, Inc.
One Financial Center
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 8500
Boston, Massachusetts 02266-8500
LEGAL COUNSEL
Rogers & Wells
200 Park Avenue
New York, New York 10166
AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, Massachusetts 02110-1617
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.
Merrill Lynch Premier Institutional Fund
Merrill Lynch Institutional Fund
Merrill Lynch Government Fund
Merrill Lynch Treasury Fund
Merrill Lynch Institutional Tax-Exempt Fund
