- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to provide you with this Annual Report for the Merrill
Lynch Funds For Institutions Series.
Merrill Lynch Premier Institutional Fund
For the year ended April 30, 1998, Merrill Lynch Premier Institutional
Fund's net yield was 5.55%. The Fund's seven-day net annualized yield as of
April 30, 1998 was 5.51%. The average portfolio maturity for Merrill Lynch
Premier Institutional Fund at April 30, 1998 was 73 days, compared to 66 days
at October 31, 1997.
During the six months ended April 30, 1998, Merrill Lynch Premier
Institutional Fund's average life ranged from a low of 55 days to a high of 88
days. This wide range is a reflection of both asset fluctuation and our
generally constructive view. During the same period, the Fund's asset size
ranged from a high of $7.3 billion to a low of $4.7 billion.
We attempted to maintain the Fund's average life near the longer end of
the allowed spectrum because we believed that the Federal Reserve Board would
keep monetary policy on hold and that the US economy would moderate as a result
of the Asian financial crisis. We employed a barbelled portfolio strategy
emphasizing a combination of overnight investments and securities maturing in
six months - one year. Given the liquidity characteristics of our shareholders,
and considering the potential for spikes in the Federal Funds rate at quarter-
ends, we believed it was prudent to maintain an overnight cash position in the
range of 15%-25% of net assets. We viewed variable rate securities as an
attractive alternative to short-term money market securities. We favored
floating rate notes linked to the three-month Treasury bill as spreads
temporarily widened as a result of "safe haven" buying of Treasury securities.
Looking ahead, we believe that tight labor markets and a slight increase
in wage inflation have the Federal Reserve Board on heightened alert. If the
expected economic slowdown does not occur, there may be some upward pressure on
interest rates by summer.
Merrill Lynch Institutional Fund
For the year ended April 30, 1998, Merrill Lynch Institutional Fund's net
yield was 5.43%. The Fund's seven-day net annualized yield as of April 30, 1998
was 5.44%. The average portfolio maturity for Merrill Lynch Institutional Fund
at April 30, 1998 was 75 days, unchanged from 75 days at October 31, 1997.
During the six months ended April 30, 1998, Merrill Lynch Institutional
Fund's average life ranged from a low of 60 days to a high of 83 days. Our
stance remained constructive throughout the period; therefore, we maintained
the Fund's average life at the longer end of the allowable spectrum. We
believed that the Federal Reserve Board would keep monetary policy on hold as
the impact of the Asian financial crisis was assessed, and as long as there was
no material acceleration of inflationary pressures. The relative stability of
the Fund's asset base allowed us to decrease our overnight position in favor of
60-day and 90-day commercial paper. We also purchased bank securities maturing
in six months to one year at favorable spreads to US Treasury securities with
similar maturities. We viewed variable rate securities, such as floating rate
notes linked to the one-month - three-month London Interbank Offered Rate
(LIBOR), as an attractive alternative to short-term money market securities. We
also favored floating rate notes linked to the three-month Treasury bill as
spreads temporarily widened as a result of "safe haven" buying of Treasury
securities.
Looking ahead, we believe that tight labor markets and a slight increase
in wage inflation have the Federal Reserve Board on heightened alert. If the
expected economic slowdown does not occur, we believe there may be some upward
pressure on interest rates by summer.
1
<PAGE>
Merrill Lynch Government Fund
For the year ended April 30, 1998, Merrill Lynch Government Fund's net
yield was 5.35%. The Fund's seven-day net annualized yield as of April 30, 1998
was 5.29%. The average portfolio maturity for Merrill Lynch Government Fund at
April 30, 1998 was 58 days, compared to 54 days at October 31, 1997.
For the six months ended April 30, 1998, Merrill Lynch Government Fund's
average life ranged from a low of 49 days to a high of 60 days. In spite of a
strong domestic economy, modest inflation and unrest in Asia kept the Federal
Reserve Board on the sidelines. For the most part, we maintained the Fund's
exposure toward the upper end of the allowable range. We used one-year agency
securities because their yields mirrored those attainable in the two-year note
sector. Additionally, we increased the Fund's holdings in callable securities
as market volatility provided opportunities. In the front end, we used
short-term discount notes and repurchase agreements for liquidity. As a hedge
against rising interest rates, we added to the Fund's floating rate position,
emphasizing LIBOR-based issues.
Merrill Lynch Treasury Fund
For the year ended April 30, 1998, the Merrill Lynch Treasury Fund's net
yield was 5.12%. The Fund's seven-day net annualized yield as of April 30, 1998
was 5.11%. The average portfolio maturity of Merrill Lynch Treasury Fund at
April 30, 1998 was 60 days, compared to 59 days at October 31, 1997.
During the six months ended April 30, Merrill Lynch Treasury Fund's
average life ranged from a low of 48 days to a high of 60 days. Our stance was
consistent with an unchanged Federal Reserve Board monetary policy and lower
Treasury issuance. As issuance in Treasury bills continued to decline, we held
a greater portion of the Fund's assets in Treasury notes for yield while
Treasury bills provided liquidity. April cash management bills offered the Fund
an attractive investment with little yield curve risk. Recently, reinvestment
of these securities steepened the front end of the Treasury market even
further. As a result, we will continue to keep the Fund's average life toward
the high end of the allowable range.
Merrill Lynch Institutional Tax-Exempt Fund
For the year ended April 30, 1998, Merrill Lynch Institutional Tax-Exempt
Fund's net yield was 3.53%. The Fund's seven-day net annualized yield as of
April 30, 1998 was 3.90%. The average portfolio maturity of Merrill Lynch
Institutional Tax-Exempt Fund at April 30, 1998 was 42 days, compared to 48
days at October 31, 1997.
During the six-month period ended April 30, 1998, we continued to employ a
neutral investment strategy. This approach proved to be correct as economic
statistics continued to be contradictory with tight labor conditions and strong
economic growth being offset by benign inflation data. In addition, the economy
was complicated by the Asian currency crisis, its impact on our economic growth
and the uncertainty surrounding the Federal Reserve Board's direction toward
monetary policy.
Despite our neutral strategy, we allowed the average life of the Fund,
which began the six-month period in the 50-day range, to decline to the 35-day
range by the end of the period. During the first two months of the period, the
Fund began to experience a new surge in assets as a steady increase in
subscriptions allowed the Fund to grow approximately 39% to over $2 billion.
With most of the annual short-term municipal note issuance already placed in
the market, the only alternatives for investment opportunities were tax-exempt
commercial paper (TECP) and variable rate demand notes (VRDN). The Fund
initially purchased VRDNs to seek to take advantage of the spike in VRDN yields
that typically occurs at year-end as remarketing agents try to maintain low
inventory levels. Since yields on these products do not remain high
indefinitely as supply imbalances in the first quarter drove yields to lower
levels, we began pursuing TECP as an alternative. We purchased TECP to try to
stabilize the Fund's yield as VRDN's yields declined. As the supply imbalances
increased in February, VRDN's yields declined to a level that began to
negatively effect the yield of the Fund. This ultimately provided
2
<PAGE>
the catalyst for cross-over investors to seek the higher-yielding taxable
market. The Fund's net assets subsequently declined approximately 20% to the
$1.6 billion range. For the remainder of the period, we continued to pursue a
balance of primarily VRDNs and TECP. We increased the Fund's percentage of TECP
over municipal notes due to the limited supply of municipal notes, which
combined with a very flat yield curve provided little incentive to participate
in the longer-term municipal note market.
Overall, our investment strategy allowed us to take advantage of market
conditions as they presented themselves during the six-month period ended April
30, 1998. These strategies and the timing of their implementation helped the
Fund perform well during the year while offering an attractive tax-exempt yield
to our shareholders. In addition, we were able to handle the increased market
volatility with a limited effect on the performance of the Fund.
We expect to continue to maintain a neutral approach to the market during
the upcoming months. With economic statistics still indicating a strong economy
and labor conditions getting tighter, there still remains uncertainty as to
whether the Federal Reserve Board will elect to adjust monetary policy despite
benign inflationary data and conditions in Asia. However, we will look to this
upcoming period as an opportunity to purchase longer-term municipal notes to
seek to take advantage of yield levels offered by an anticipated seasonal
increase in municipal issuance. In addition, these municipal note purchases
will help stabilize the Fund's yield as VRDNs continue to fluctuate during
periods of supply imbalances. At the same time, we expect these purchases to
give us an opportunity to diversify the Fund's holdings. We will continue to
monitor and adjust our strategy as economic conditions change. We will also
continue to closely monitor credit quality while seeking to offer an attractive
tax-exempt yield.
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
Robert W. Crook
President and Trustee
Merrill Lynch Funds For Institutions Series
/s/ Kevin Schiatta
Kevin Schiatta
Vice President and Portfolio Manager
Merrill Lynch Institutional Tax-Exempt Fund
/s/ P. Michael Walsh
P. Michael Walsh
Vice President and Portfolio Manager
Merrill Lynch Premier Institutional Fund
Merrill Lynch Institutional Fund
/s/ John Ng
John Ng
Vice President and Portfolio Manager
Merrill Lynch Government Fund
Merrill Lynch Treasury Fund
May 28, 1998
3
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments
April 30, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. $10,000,000 U.S. Treasury Notes .................. 5.50% 03/31/00 $ 9,960,937
Government & 3,750,000 Federal Home Loan Banks .............. 6.40 06/03/99 3,768,900
Agency 7,960,000 Federal Home Loan Banks .............. 6.15 07/09/99 7,987,653
Issues -- 2.9% 11,000,000 Federal Home Loan Banks .............. 5.99 08/11/99 11,020,779
25,000,000 Federal Home Loan Banks .............. 5.86 01/20/00 25,023,500
10,000,000 Federal Home Loan Banks .............. 5.67 01/20/00 9,980,000
15,000,000 Federal Home Loan Banks .............. 5.75 03/16/00 14,985,000
20,000,000 Federal Home Loan Banks .............. 5.87 03/17/00 20,021,000
7,000,000 Federal Home Loan Mortgage Corp....... 6.10 09/10/99 7,024,864
15,000,000 Federal Home Loan Mortgage Corp....... 5.98 11/24/99 15,030,000
10,000,000 Federal National Mortgage Assoc. ..... 5.72 08/28/98 9,999,990
10,000,000 Federal National Mortgage Assoc. ..... 5.95 08/05/99 10,013,350
4,700,000 Federal National Mortgage Assoc. ..... 5.88 08/10/99 4,702,547
10,000,000 Federal National Mortgage Assoc. ..... 5.98 09/23/99 10,021,850
21,000,000 Student Loan Marketing Assoc. ........ 6.00 12/16/99 21,069,300
13,450,000 Student Loan Marketing Assoc. ........ 5.81 01/27/00 13,452,959
- ---------------------------------------------------------------------------------------------------------------
Total U.S. Government & Agency
Issues (Cost $193,749,719) ........... 194,062,629
- ---------------------------------------------------------------------------------------------------------------
U.S. 63,800,000 Federal Home Loan Banks .............. 5.54 10/20/98 63,791,251
Government 75,000,000 Federal Home Loan Banks .............. 5.51 03/26/99 74,966,199
Agency 50,000,000 Federal Home Loan Banks .............. 5.51 04/01/99 49,977,055
Issues -- 59,000,000 Federal National Mortgage Assoc. ..... 5.54 10/20/98 58,987,878
Variable 85,000,000 Federal National Mortgage Assoc. ..... 5.46 01/21/99 84,969,144
Rate -- 11.0% 31,000,000 Federal National Mortgage Assoc. ..... 5.46 03/03/99 30,988,305
50,000,000 Federal National Mortgage Assoc. ..... 5.54 04/09/99 49,976,507
10,000,000 Federal National Mortgage Assoc. ..... 5.32 07/26/99 9,979,133
18,000,000 Federal National Mortgage Assoc. ..... 5.32 09/22/99 17,955,620
48,000,000 Federal National Mortgage Assoc. ..... 5.57 10/27/99 47,966,340
24,000,000 Student Loan Marketing Assoc. ........ 5.54 11/25/98 23,994,711
30,000,000 Student Loan Marketing Assoc. ........ 5.59 08/02/99 29,907,577
50,000,000 Student Loan Marketing Assoc. ........ 5.47 01/12/00 49,984,343
60,000,000 Student Loan Marketing Assoc. ........ 5.54 02/02/00 59,974,672
76,000,000 Student Loan Marketing Assoc. ........ 5.52 02/04/00 75,967,818
- ---------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency
Issues -- Variable Rate
(Cost $729,386,553) .................. 729,386,553
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Certificates of $ 25,000,000 Bank of America N.T. & S.A. .......... 5.60% 01/12/99 $ 24,949,062
Deposit -- 5.3% 25,000,000 Bankers Trust Company ................ 5.55 02/24/99 24,934,793
50,000,000 Bankers Trust Company ................ 5.66 02/26/99 49,912,869
25,000,000 Bankers Trust Company ................ 5.65 03/19/99 24,946,978
25,000,000 Bankers Trust Company ................ 5.68 04/06/99 24,945,592
23,000,000 Chase Manhattan Bank ................. 5.87 07/21/98 23,000,359
20,000,000 Morgan Guaranty Trust Co. of NY ...... 5.80 07/28/98 19,997,593
40,000,000 Morgan Guaranty Trust Co. of NY ...... 5.77 10/07/98 39,981,411
50,000,000 Morgan Guaranty Trust Co. of NY ...... 5.55 02/02/99 49,871,502
68,000,000 World Savings Bank, FSB .............. 5.59 05/06/98 68,000,086
- ---------------------------------------------------------------------------------------------------------------
Total Certificates of Deposit
(Cost $350,928,950) .................. 350,540,245
- ---------------------------------------------------------------------------------------------------------------
Certificates of 100,000,000 Bankers Trust Company ................ 5.57 02/19/99 99,941,603
Deposit -- 75,000,000 Bankers Trust Company ................ 5.57 03/18/99 74,974,111
Variable 25,000,000 National City Bank, Kentucky ......... 5.55 01/20/99 24,990,959
Rate -- 3.0%
- ---------------------------------------------------------------------------------------------------------------
Total Certificates of Deposit
Variable Rate --
(Cost $199,906,673) .................. 199,906,673
- ---------------------------------------------------------------------------------------------------------------
Euro 25,000,000 Bayerische Hypotheken-und
Certificates of Wechsel-Bank AG, London ............. 5.66 04/07/99 24,941,182
Deposit -- 0.4%
- ---------------------------------------------------------------------------------------------------------------
Total Euro Certificates of Deposit
(Cost $25,002,041) .................. 24,941,182
- ---------------------------------------------------------------------------------------------------------------
Yankee 15,000,000 ABN-AMRO Bank N.V., NY ............... 5.77 07/27/98 14,997,092
Certificates of 50,000,000 Bank of Nova Scotia, Portland ........ 5.89 08/27/98 50,006,901
Deposit -- 10.6% 24,000,000 Bayerische Landesbank
Girozentrale, NY .................... 5.64 03/15/99 23,945,588
28,000,000 Canadian Imperial Bank of
Commerce, NY ........................ 5.55 02/10/99 27,923,297
50,000,000 Commerzbank AG, NY ................... 5.54 02/02/99 49,860,429
38,000,000 Deutsche Bank AG, NY ................. 5.94 10/22/98 38,012,634
50,000,000 Deutsche Bank AG, NY ................. 5.67 03/26/99 49,903,183
20,000,000 Generale Bank S.A./N.V., NY .......... 5.81 07/31/98 19,998,124
15,000,000 Landesbank Hessen-Thuringen
Girozentrale, NY .................... 6.00 06/09/98 14,999,234
100,000,000 Norinchukin Bank, NY ................. 5.77 07/01/98 99,961,887
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Yankee $50,000,000 Societe Generale, NY .................... 5.84% 07/24/98 $ 49,998,241
Certificates of 23,000,000 Societe Generale, NY .................... 5.87 10/05/98 22,998,548
Deposit 25,000,000 Societe Generale, NY .................... 5.55 02/09/99 24,931,575
(continued) 25,000,000 Societe Generale, NY .................... 5.58 02/10/99 24,937,117
50,000,000 Societe Generale, NY .................... 5.68 03/22/99 49,906,185
25,000,000 Societe Generale, NY .................... 5.73 03/30/99 24,964,936
50,000,000 Societe Generale, NY .................... 5.80 03/31/99 49,960,725
25,000,000 Westpac Banking Corp., NY ............... 5.64 04/09/99 24,934,523
34,000,000 Westpac Banking Corp., NY ............... 5.73 04/23/99 33,940,273
10,000,000 Swiss Bank Corporation, NY .............. 5.86 07/17/98 9,999,947
- ---------------------------------------------------------------------------------------------------------------
Total Yankee Certificates of
Deposit (Cost $706,784,891) ............. 706,180,439
- ---------------------------------------------------------------------------------------------------------------
Yankee 35,000,000 Credit Suisse First Boston Inc., NY ..... 5.71 12/11/98 35,000,000
Certificates 10,000,000 Royal Bank of Canada, NY ................ 5.37 06/30/98 9,998,730
of Deposit -- 50,000,000 Societe Generale, NY .................... 5.59 01/19/99 49,986,000
Variable
Rate -- 1.4%
- ---------------------------------------------------------------------------------------------------------------
Total Yankee Certificates of
Deposit -- Variable Rate
(Cost $94,981,328) ...................... 94,984,730
- ---------------------------------------------------------------------------------------------------------------
Bank Notes -- 20,000,000 Bank of America N.T. & S.A. ............. 5.93 06/24/98 19,997,738
2.2% 20,000,000 First National Bank of Chicago .......... 6.02 06/11/98 19,999,142
10,000,000 First Tennessee Bank, N.A. .............. 6.10 05/15/98 9,999,977
20,000,000 First Tennessee Bank, N.A. .............. 5.75 01/22/99 19,960,000
25,000,000 Huntington National Bank, N.A. .......... 5.89 09/18/98 24,982,048
35,000,000 KeyBank National Association ............ 5.90 09/17/98 34,975,948
15,000,000 Northern Trust Company .................. 5.95 06/24/98 14,998,939
- ---------------------------------------------------------------------------------------------------------------
Total Bank Notes --
(Cost $144,984,637) ..................... 144,913,792
- ---------------------------------------------------------------------------------------------------------------
Bank Notes -- 50,000,000 American Express Centurion Bank ......... 5.62 10/16/98 50,000,000
Variable 39,000,000 American Express Centurion Bank ......... 5.61 03/19/99 39,000,000
Rate -- 9.5% 60,000,000 BankBoston, N.A. ........................ 5.40 10/06/98 59,986,050
22,000,000 Bank of America N.T. & S.A. ............. 5.36 06/30/98 21,997,100
37,500,000 Comerica Bank, Detroit .................. 5.60 02/02/99 37,489,012
23,500,000 Comerica Bank, Detroit .................. 5.56 02/09/99 23,491,176
50,000,000 FCC National Bank, Wilmington ........... 5.41 05/08/98 49,999,626
15,000,000 First Bank System, Inc. ................. 5.80 10/21/98 15,012,465
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bank Notes -- $ 20,000,000 First Tennessee Bank N.A.,
Variable Memphis .............................. 5.51% 02/08/99 $ 19,993,960
Rate 25,000,000 First Tennessee Bank N.A.,
(continued) Memphis .............................. 5.51 02/18/99 24,992,264
15,000,000 Huntington National Bank
(Columbus) ........................... 5.55 01/20/99 14,994,684
15,000,000 Huntington National Bank
(Columbus) ........................... 5.55 01/22/99 14,994,534
15,000,000 KeyBank National Association .......... 5.35 05/06/98 14,999,900
20,000,000 KeyBank National Association .......... 5.35 05/19/98 19,999,569
29,500,000 KeyBank National Association .......... 5.33 08/20/98 29,493,438
23,000,000 KeyBank National Association .......... 5.33 08/28/98 22,994,930
124,400,000 PNC Bank, N.A. ........................ 5.60 10/01/98 124,364,755
15,000,000 SouthTrust Bank, N.A. ................. 5.56 09/11/98 14,997,260
35,000,000 SouthTrust Bank, N.A. ................. 5.65 10/06/98 34,995,565
- -------------------------------------------------------------------------------------------------------------
Total Bank Notes -- Variable Rate
(Cost $633,796,288) ................... 633,796,288
- -------------------------------------------------------------------------------------------------------------
Corporate 25,000,000 Abbey National Treasury Services
Notes -- 4.1% PLC .................................. 5.50 02/02/99 24,933,989
11,000,000 Bank of Scotland, Treasury Services
PLC .................................. 5.95 06/18/98 10,999,308
25,000,000 Beta Finance Inc. ..................... 6.15 05/19/98 25,000,000
25,000,000 Beta Finance Inc. ..................... 6.00 06/25/98 25,000,000
6,869,217 Chase Manhattan Auto Owner Trust
1998-A ............................... 5.55 03/12/99 6,866,470
20,700,156 Ford Credit Auto Owner Trust
1998-A ............................... 5.55 02/16/99 20,696,016
23,250,000 General Motors Acceptance Corp. ....... 5.88 09/21/98 23,255,580
12,661,000 General Motors Acceptance Corp. ....... 7.75 01/15/99 12,820,402
10,000,000 IBM Credit Corp. ...................... 5.87 08/13/98 10,002,000
25,000,000 International Lease Finance Corp. ..... 5.50 01/15/99 24,937,000
5,000,000 International Lease Finance Corp. ..... 6.44 05/03/99 5,024,600
8,400,000 KFW International Finance Inc. ........ 9.38 07/15/98 8,457,876
15,154,033 Newcourt Receivables Asset Trust
1997-1 ............................... 5.82 12/21/98 15,156,402
13,436,330 Premier Auto Trust 1998-1 ............. 5.55 11/06/98 13,437,378
14,810,677 Premier Auto Trust 1998-2 ............. 5.61 12/06/98 14,814,143
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Corporate $ 20,000,000 Republic Mase Australia Ltd. ........ 5.95% 06/30/98 $ 20,010,000
Notes 10,000,000 Shearson Lehman Brothers Holdings
(continued) Inc. ............................... 6.13 06/30/98 10,004,600
- -------------------------------------------------------------------------------------------------------------
Total Corporate Notes
(Cost $271,511,757) ................. 271,415,764
- -------------------------------------------------------------------------------------------------------------
Corporate 30,000,000 Abbey National Treasury Services
Notes -- PLC ................................ 5.33 06/09/98 29,997,859
Variable 50,000,000 American Honda Finance Corp. ........ 5.62 04/08/99 49,982,500
Rate -- 13.7% 20,000,000 Bear Stearns Companies Inc. ......... 5.49 06/04/98 19,999,855
50,000,000 Bear Stearns Companies Inc. ......... 5.49 06/08/98 50,000,000
30,000,000 Bear Stearns Companies Inc. ......... 5.63 08/24/98 30,000,000
70,000,000 Bear Stearns Companies Inc. ......... 5.64 12/11/98 70,000,000
50,000,000 Bear Stearns Companies Inc. ......... 5.57 02/16/99 50,000,000
30,000,000 Bear Stearns Companies Inc. ......... 5.62 03/02/99 30,000,000
20,000,000 Chrysler Financial Corp. ............ 5.66 03/11/99 20,003,332
10,000,000 Chrysler Financial Corp. ............ 5.64 03/11/99 10,001,241
7,900,000 CIT Group Holdings Inc. ............. 5.58 08/17/98 7,897,969
27,700,000 CIT Group Holdings Inc. ............. 5.59 09/30/98 27,689,977
25,000,000 CIT Group Holdings Inc. ............. 5.56 04/19/99 24,985,844
20,000,000 Credit Suisse First Boston Inc. ..... 5.44 05/04/99 20,000,000
25,000,000 Ford Motor Credit Co. ............... 5.71 01/08/99 25,000,000
25,000,000 General Motors Acceptance Corp. ..... 5.46 05/15/98 25,000,415
100,000,000 General Motors Acceptance Corp. ..... 5.60 07/28/98 99,983,704
55,000,000 General Motors Acceptance Corp. ..... 5.55 02/24/99 54,995,740
22,000,000 General Motors Acceptance Corp. ..... 5.70 02/27/01 22,000,000
20,000,000 Goldman Sachs Group L.P. ............ 5.76 02/01/99 20,010,000
15,000,000 Goldman Sachs Group L.P. ............ 5.66 05/11/99 15,001,800
15,000,000 Lehman Brothers Holdings Inc. ....... 5.65 10/16/98 15,000,000
26,891,672 LABS Trust Series 1997-6 Senior
Notes .............................. 5.66 10/21/98 26,891,673
50,000,000 Morgan (J.P.) & Co., Inc. ........... 5.58 02/24/99 49,984,176
40,000,000 Morgan Stanley, Dean Witter,
Discover & Co. ..................... 5.62 10/26/98 40,000,000
25,000,000 Morgan Stanley, Dean Witter,
Discover & Co. ..................... 5.62 11/20/98 25,000,000
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Corporate $ 25,000,000 Morgan Stanley, Dean Witter,
Notes -- Discover & Co. ......................... 5.76% 12/10/98 $ 25,021,435
Variable 23,000,000 Morgan Stanley, Dean Witter,
Rate Discover & Co. ......................... 5.61 01/15/99 22,994,020
(continued)
- ---------------------------------------------------------------------------------------------------------------
Total Corporate Notes -- Variable
Rate (Cost $907,462,558) ................ 907,441,540
- ---------------------------------------------------------------------------------------------------------------
Master Notes -- 280,000,000 Goldman Sachs Group L.P. ................ 5.58 05/29/98 280,000,000
Variable 15,000,000 Goldman Sachs Group L.P. ................ 5.53 01/08/99 15,000,000
Rate -- 9.8% 30,000,000 Jackson National Life Insurance Co. ..... 5.72 05/01/98 30,000,000
169,900,000 Morgan (J.P.) & Co., Inc. ............... 5.58 01/12/99 169,900,000
125,000,000 Lehman Brothers Holdings Inc. ........... 5.59 10/14/98 125,000,000
20,000,000 Travelers Insurance Company (The) ....... 5.72 01/21/99 20,000,000
10,000,000 Travelers Insurance Company (The) ....... 5.72 02/01/99 10,000,000
- ---------------------------------------------------------------------------------------------------------------
Total Master Notes -- Variable
Rate (Cost $649,900,000) ................ 649,900,000
- ---------------------------------------------------------------------------------------------------------------
Commercial 50,000,000 Apreco Inc. ............................. 5.53 06/08/98 49,708,139
Paper -- 21.8% 36,125,000 Banner Receivables Corp. ................ 5.83 05/01/98 36,125,000
25,351,000 Banner Receivables Corp. ................ 5.80 05/11/98 25,310,157
39,562,000 Banner Receivables Corp. ................ 5.62 05/29/98 39,389,070
30,000,000 Broadway Capital Corp. .................. 5.80 05/11/98 29,951,667
30,071,000 Broadway Capital Corp. .................. 5.63 05/13/98 30,014,567
13,800,000 Chrysler Financial Corp. ................ 5.55 05/22/98 13,755,322
59,500,000 Chrysler Financial Corp. ................ 5.56 05/26/98 59,270,264
25,700,000 CSW Credit Inc. ......................... 5.47 05/05/98 25,684,380
100,000,000 Countrywide Home Loans Inc. ............. 5.62 05/01/98 100,000,000
25,000,000 Credit Suisse First Boston Inc. ......... 5.48 05/07/98 24,977,167
50,000,000 Den Norske Bank ASA ..................... 5.52 07/07/98 49,483,542
29,000,000 FCTR, Inc. .............................. 5.55 05/12/98 28,950,821
21,000,000 FCTR, Inc. .............................. 5.55 05/27/98 20,915,825
42,550,000 Finova Capital Corp. .................... 5.48 05/21/98 42,420,459
45,000,000 Finova Capital Corp. .................... 5.54 06/04/98 44,764,550
15,000,000 Finova Capital Corp. .................... 5.53 06/18/98 14,889,400
25,000,000 Finova Capital Corp. .................... 5.53 06/23/98 24,796,465
25,000,000 Greenwich Funding Corp. ................. 5.48 05/07/98 24,977,167
21,375,000 Greenwich Funding Corp. ................. 5.50 07/15/98 21,127,852
15,000,000 Lehman Brothers Holdings Inc. ........... 5.47 05/05/98 14,990,883
30,000,000 Lehman Brothers Holdings Inc. ........... 5.50 05/14/98 29,940,417
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial $25,000,000 Lehman Brothers Holdings Inc. ......... 5.50% 07/09/98 $ 24,734,062
Paper 25,000,000 Lehman Brothers Holdings Inc. ......... 5.52 07/14/98 24,714,792
(continued) 80,551,000 Lexington Parker Capital Co., LLC ..... 5.56 05/12/98 80,414,153
23,965,000 Lexington Parker Capital Co., LLC ..... 5.47 05/21/98 23,892,173
76,338,000 Lexington Parker Capital Co., LLC ..... 5.56 06/05/98 75,925,351
30,000,000 Lexington Parker Capital Co., LLC ..... 5.50 07/22/98 29,620,750
42,938,000 Mont Blanc Capital Corp. .............. 5.56 05/06/98 42,904,842
25,000,000 Nomura Holding America Inc. ........... 5.78 05/14/98 24,947,819
25,000,000 Nomura Holding America Inc. ........... 5.78 05/15/98 24,943,805
25,000,000 Nomura Holding America Inc. ........... 5.77 05/29/98 24,887,805
25,000,000 Nomura Holding America Inc. ........... 5.75 06/05/98 24,860,243
65,831,000 Old Line Funding Corp. ................ 5.54 05/21/98 65,628,387
75,000,000 Salomon Smith Barney Holdings Inc. 5.55 05/04/98 74,965,312
50,000,000 Salomon Smith Barney Holdings Inc. 5.48 07/16/98 49,414,167
17,000,000 Three Rivers Funding Corp. ............ 5.53 05/11/98 16,973,886
50,000,000 Three Rivers Funding Corp. ............ 5.52 05/19/98 49,862,000
40,000,000 Twin Towers Inc. ...................... 5.49 07/10/98 39,568,333
- ------------------------------------------------------------------------------------------------------------
Total Commercial Paper
(Cost $1,449,725,422) ................. 1,449,700,994
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
April 30, 1998
<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 04/30/98 .................... 5.58% 05/01/98 $ 100,000,000
- -- 5.0% 150,000,000 Nikko Securities Co. International, Inc.,
purchased on 04/30/98 .................... 5.58 05/01/98 150,000,000
75,000,000 Nomura Securities International, Inc.,
purchased on 04/30/98 .................... 5.55 05/01/98 75,000,000
7,900,000 State Street Bank & Trust,
purchased on 04/30/98 .................... 5.43 05/01/98 7,900,000
- -------------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $332,900,000) ....................... 332,900,000
- -------------------------------------------------------------------------------------------------------------------
Total Investments -- 100.7%
(Cost $6,691,020,817) ..................... 6,690,070,829
- -------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other
Assets -- (0.7%) .......................... (45,548,196)
- -------------------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00
Per Share on 6,645,472,621
Shares of Beneficial Interest
Outstanding -- 100.0% ..................... $6,644,522,633
===================================================================================================================
</TABLE>
Note-Costs for federal income tax purposes are the same as those shown above.
At April 30, 1998, net unrealized depreciation amounted to $949,988 and is
comprised of $442,645 in appreciation and $1,392,633 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, 1998. 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 collaterized by U.S. Government and Agency
Obligations.
See Notes to Financial Statements.
11
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Statement of Assets and Liabilities
April 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Total investments at value (identified cost $6,691,020,817) (Note 1a)............... $6,690,070,829
Cash ............................................................................... 4,538,703
Interest receivable ................................................................ 49,709,450
Receivable for investments sold .................................................... 5,000,000
Prepaid expense .................................................................... 556,241
--------------
Total assets .................................................................... 6,749,875,223
--------------
Liabilities:
Advisory fee payable (Note 2) ...................................................... 819,955
Payable for investments purchased .................................................. 100,003,356
Dividends payable .................................................................. 4,453,390
Accrued expenses ................................................................... 75,889
--------------
Total liabilities ............................................................... 105,352,590
--------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based
on 6,645,472,621 shares of beneficial interest outstanding) ....................... $6,644,522,633
==============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Statement of Operations
For the Year Ended April 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income:
Interest and discount earned (Note 1d) .......................... $307,743,412
------------
Expenses:
Investment advisory fee (Note 2) ................................ 8,073,755
Registration fees ............................................... 986,541
Accounting and custodian services ............................... 295,327
Legal and audit fees ............................................ 61,933
Dividend and transfer agency fees ............................... 53,927
Trustees' fees (Note 5) ......................................... 48,867
Amortization of organization expenses ........................... 43,298
Printing and shareholder reports ................................ 40,483
Insurance ....................................................... 14,010
Miscellaneous ................................................... 9,628
------------
Total expense .............................................. 9,627,769
------------
Net investment income ...................................... 298,115,643
Realized and Unrealized Gain on Investments:
Net realized gain from investment transactions ...... $ 558,082
Net unrealized depreciation of investments .......... (13,174)
---------
Net realized and unrealized gain from investments ............ 544,908
------------
Net Increase in Net Assets Resulting From Operations ............ $298,660,551
============
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year For the Period
Ended January 27, 1997*
April 30, 1998 to April 30, 1997
---------------- ------------------
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income .................................... $ 298,115,643 $ 37,708,510
Net realized gain from investment transactions ........... 558,082 248,533
Net unrealized depreciation of investments ............... (13,174) (936,814)
-------------- --------------
Net increase in net assets resulting from operations ..... 298,660,551 37,020,229
Total declared as dividends to shareholders (Note 4) ..... (298,673,725) (37,957,043)
Capital share transactions (Note 3) ...................... 3,821,339,552 2,824,033,069
-------------- --------------
Net increase in net assets ............................... 3,821,326,378 2,823,096,255
Net Assets:
Beginning of period (Note 3) ............................. 2,823,196,255 100,000
-------------- --------------
End of period ............................................ $6,644,522,633 $2,823,196,255
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Financial Highlights
<TABLE>
<CAPTION>
Year For the Period
Ended January 27, 1997*
April 30, 1998 to April 30, 1997
---------------- ------------------
<S> <C> <C>
Net Asset Value, beginning of period .............................. $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income ............................................ .055 .014
Less Distributions:
Dividends from net investment income ............................. (.055) (.014)
---------- ----------
Net Asset Value, end of period .................................... $ 1.00 $ 1.00
========== ==========
Total Return ...................................................... 5.69% 1.40%(2)
Ratios/Supplemental Data:
Net Assets, end of period (000) .................................. $6,644,523 $2,823,196
Ratio of expenses to average net assets (before waiver) .......... .18% .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) ......... 5.55% 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>
* Commencement of operations
(1) On an annualized basis
(2) Cumulative total return
See Notes to Financial Statements.
13
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments
April 30, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. $ 5,000,000 U.S. Treasury Notes ................... 5.75% 09/30/99 $ 5,003,906
Government & 5,000,000 U.S. Treasury Notes ................... 5.63 10/31/99 4,993,750
Agency 10,000,000 U.S. Treasury Notes ................... 5.63 12/31/99 9,985,938
Issues -- 5.6% 20,000,000 U.S. Treasury Notes ................... 5.38 01/31/00 19,887,500
10,000,000 Federal Home Loan Banks ............... 6.15 07/09/99 10,034,740
20,000,000 Federal Home Loan Banks ............... 5.99 08/11/99 20,037,780
25,000,000 Federal Home Loan Banks ............... 5.86 01/20/00 25,023,500
10,000,000 Federal Home Loan Banks ............... 5.75 03/16/00 9,990,000
20,000,000 Federal Home Loan Banks ............... 5.87 03/17/00 20,021,000
10,000,000 Federal Home Loan Mortgage Corp........ 6.10 09/10/99 10,035,520
17,300,000 Federal Home Loan Mortgage Corp........ 5.98 11/10/99 17,346,848
15,000,000 Federal Home Loan Mortgage Corp........ 5.98 11/24/99 15,030,000
25,000,000 Federal Home Loan Mortgage Corp........ 5.61 03/12/99 24,968,900
15,000,000 Federal National Mortgage Assoc. ...... 5.95 08/05/99 15,020,025
8,000,000 Federal National Mortgage Assoc. ...... 5.88 08/10/99 8,004,336
10,000,000 Federal National Mortgage Assoc. ...... 5.98 09/23/99 10,021,850
15,000,000 Federal National Mortgage Assoc. ...... 5.72 08/28/98 14,999,985
20,550,000 Student Loan Marketing Assoc. ......... 6.00 12/16/99 20,617,815
50,000,000 Federal National Mortgage Assoc. D/N 5.28 05/28/98 49,802,000
25,000,000 Federal National Mortgage Assoc. D/N 5.46 07/06/98 24,750,667
38,000,000 Federal National Mortgage Assoc. D/N 5.22 02/26/99 36,281,123
25,000,000 Federal National Mortgage Assoc. D/N 5.27 04/09/99 23,720,896
17,000,000 International Bank for Reconstruction
& Development D/N .................... 5.18 05/15/98 16,965,754
- ----------------------------------------------------------------------------------------------------------------
Total U.S. Government & Agency
Issues (Cost $412,428,191) ............ 412,543,833
- ----------------------------------------------------------------------------------------------------------------
U.S. 60,300,000 Federal Home Loan Banks ............... 5.54 10/20/98 60,291,731
Government 75,000,000 Federal Home Loan Banks ............... 5.51 03/26/99 74,966,199
Agency 50,000,000 Federal Home Loan Banks ............... 5.51 04/01/99 49,977,055
Issues -- 56,000,000 Federal National Mortgage Assoc. ...... 5.54 10/20/98 55,988,494
Variable 50,000,000 Federal National Mortgage Assoc. ...... 5.60 11/03/98 49,982,164
Rate -- 10.2% 75,000,000 Federal National Mortgage Assoc. ...... 5.46 01/21/99 74,972,774
100,000,000 Federal National Mortgage Assoc. ...... 5.46 03/03/99 99,962,274
50,000,000 Federal National Mortgage Assoc. ...... 5.54 04/09/99 49,976,507
40,000,000 Federal National Mortgage Assoc. ...... 5.32 09/22/99 39,901,378
44,000,000 Federal National Mortgage Assoc. ...... 5.57 10/27/99 43,969,146
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. $59,000,000 Student Loan Marketing Assoc. ........ 5.26% 08/20/98 $ 58,986,726
Government 55,000,000 Student Loan Marketing Assoc. ........ 5.47 01/12/00 54,982,777
Agency 40,000,000 Student Loan Marketing Assoc. ........ 5.54 02/02/00 39,983,115
Issues --
Variable
Rate
(continued)
- -------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency
Issues -- Variable Rate
(Cost $753,940,340) .................. 753,940,340
- -------------------------------------------------------------------------------------------------------------
Certificates of 25,000,000 Bank of America N.T. & S.A. .......... 5.60 01/12/99 24,949,062
Deposit -- 2.8% 35,000,000 Chase Manhattan Bank ................. 5.87 07/21/98 35,000,546
30,000,000 Morgan Guaranty Trust Co. of NY ...... 5.80 07/28/98 29,996,389
40,000,000 Morgan Guaranty Trust Co. of NY ...... 5.77 10/07/98 39,981,411
25,000,000 Morgan Guaranty Trust Co. of NY ...... 5.55 02/02/99 24,935,751
50,000,000 World Savings Bank, FSB .............. 5.59 05/06/98 50,000,063
- -------------------------------------------------------------------------------------------------------------
Total Certificates of Deposit
(Cost $204,975,337) .................. 204,863,222
- -------------------------------------------------------------------------------------------------------------
Euro 20,000,000 Bank of Scotland, London ............. 5.93 09/17/98 20,004,481
Certificates of 55,000,000 Barclays Bank PLC, London ............ 6.09 06/12/98 55,008,174
Deposit -- 2.1% 25,000,000 Bayerische Hypotheken-und
Wechsel-Bank AG ..................... 5.66 04/07/99 24,941,182
55,000,000 Westdeutsche Landesbank
Girozentrale, London ................ 5.83 08/03/98 54,994,556
- -------------------------------------------------------------------------------------------------------------
Total Euro Certificates of Deposit
(Cost $155,010,944) .................. 154,948,393
- -------------------------------------------------------------------------------------------------------------
Yankee 60,000,000 ABN-AMRO Bank N.V., NY ............... 5.77 07/27/98 59,988,367
Certificates of 25,000,000 ABN-AMRO Bank N.V., NY ............... 5.77 07/28/98 24,995,260
Deposit -- 9.7% 30,000,000 ABN-AMRO Bank N.V., NY ............... 5.85 08/07/98 29,998,887
10,000,000 Barclays Bank PLC, NY ................ 5.94 06/30/98 10,000,614
20,000,000 Barclays Bank PLC, NY ................ 5.72 10/09/98 19,986,108
35,000,000 Barclays Bank PLC, NY ................ 5.94 10/23/98 35,011,857
25,000,000 Barclays Bank PLC, NY ................ 5.71 04/16/99 24,949,652
35,000,000 Canadian Imperial Bank of
Commerce, NY ........................ 5.79 10/06/98 34,986,597
78,000,000 Canadian Imperial Bank of
Commerce, NY ........................ 5.55 02/10/99 77,786,327
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Yankee $ 50,000,000 Canadian Imperial Bank of
Certificates of Commerce, NY ........................... 5.74% 04/01/99 $ 49,912,559
Deposit 69,000,000 Credit Suisse First Boston Inc., NY ..... 5.74 01/07/99 68,918,808
(continued) 25,000,000 Credit Suisse First Boston Inc., NY ..... 5.60 01/29/99 24,946,769
50,000,000 Credit Suisse First Boston Inc., NY ..... 5.72 03/29/99 49,814,737
20,000,000 Deutsche Bank AG, NY .................... 5.90 08/17/98 20,002,446
50,000,000 Deutsche Bank AG, NY .................... 5.62 02/26/99 49,889,052
25,000,000 Deutsche Bank AG, NY .................... 5.70 03/30/99 24,957,298
25,000,000 Deutsche Bank AG, NY .................... 5.73 04/15/99 24,955,289
20,000,000 Landesbank Hessen-Thuringen
Girozentrale, NY ....................... 6.00 06/09/98 19,998,979
25,000,000 Norddeutsche Landesbank
Girozentrale, NY ....................... 5.72 04/16/99 24,953,091
15,000,000 Swiss Bank Corporation, NY .............. 5.86 07/17/98 14,999,920
25,000,000 Westeutsche Landesbank
Girozentrale, NY ....................... 5.78 07/31/98 24,995,865
- ------------------------------------------------------------------------------------------------------------------
Total Yankee Certificates of
Deposit (Cost $716,824,981) ............. 716,048,482
- ------------------------------------------------------------------------------------------------------------------
Yankee 35,000,000 Credit Suisse First Boston Inc., NY ..... 5.71 12/11/98 35,000,000
Certificates of 80,000,000 Norddeutsche Landesbank
Deposit -- Girozentrale, NY ....................... 5.59 02/02/99 79,970,700
Variable 35,000,000 Royal Bank of Canada, Canada ............ 5.37 06/30/98 34,995,554
Rate -- 2.0%
- ------------------------------------------------------------------------------------------------------------------
Total Yankee Certificates of
Deposit -- Variable Rate
(Cost $149,966,254) ..................... 149,966,254
- ------------------------------------------------------------------------------------------------------------------
Time 200,000,000 SunTrust Bank, Atlanta .................. 5.50 05/01/98 200,000,000
Deposits -- 2.7%
- ------------------------------------------------------------------------------------------------------------------
Total Time Deposits
(Cost $200,000,000) ..................... 200,000,000
- ------------------------------------------------------------------------------------------------------------------
Bank 26,000,000 Bank of America N.T. & S.A. ............. 5.93 06/24/98 25,997,059
Notes -- 4.9% 15,000,000 FCC National Bank, Wilmington ........... 5.70 01/07/99 14,965,969
25,000,000 First National Bank of Chicago .......... 6.02 06/11/98 24,998,927
25,000,000 First National Bank of Chicago .......... 5.89 08/26/98 24,981,605
10,000,000 First National Bank of Chicago .......... 5.87 08/28/98 9,992,119
30,000,000 First National Bank of Chicago .......... 5.63 03/16/99 29,903,848
20,000,000 First Tennessee Bank, N.A. .............. 6.10 05/15/98 19,999,955
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bank Notes $ 23,000,000 First Tennessee Bank, N.A. ............. 5.75% 01/22/99 $ 22,954,000
(continued) 5,000,000 First Tennessee Bank, N.A. ............. 5.82 04/30/99 4,991,847
50,000,000 Fleet National Bank, RI ................ 5.57 03/19/99 49,976,322
25,000,000 Huntington National Bank (Columbus) 5.60 01/29/99 24,926,309
21,800,000 Lasalle National Bank, Chicago ......... 5.75 10/08/98 21,803,887
20,000,000 Lasalle National Bank, Chicago ......... 5.55 02/22/99 19,872,807
25,000,000 National City Bank, Indiana ............ 5.57 02/05/99 24,990,743
25,000,000 National City Bank, Kentucky ........... 5.55 01/20/99 24,990,959
15,000,000 Northern Trust Company ................. 5.95 06/24/98 14,998,939
- ---------------------------------------------------------------------------------------------------------------
Total Bank Notes
(Cost $360,711,718) .................... 360,345,295
- ---------------------------------------------------------------------------------------------------------------
Bank Notes -- 38,000,000 Bank of America N.T. & S.A. ............ 5.36 06/30/98 37,994,990
Variable 40,000,000 Comerica Bank, Detroit ................. 5.60 02/02/99 39,988,280
Rate -- 8.4% 29,000,000 Comerica Bank, Detroit ................. 5.56 02/09/99 28,989,110
66,000,000 FCC National Bank ...................... 5.55 02/23/99 65,963,358
34,000,000 First National Bank of Chicago ......... 5.55 02/23/99 33,981,124
25,000,000 First Tennessee Bank N.A., Memphis 5.51 02/18/99 24,992,264
16,000,000 Huntington National Bank (Columbus) 5.55 01/20/99 15,994,329
40,000,000 Huntington National Bank (Columbus) 5.55 01/22/99 39,985,425
26,000,000 KeyBank National Association ........... 5.35 05/06/98 25,999,827
40,000,000 KeyBank National Association ........... 5.35 05/19/98 39,999,138
44,400,000 KeyBank National Association ........... 5.33 08/20/98 44,390,124
50,000,000 KeyBank National Association ........... 5.33 08/28/98 49,988,979
137,000,000 PNC Bank, Pittsburgh, NA ............... 5.60 10/01/98 136,961,185
35,000,000 SouthTrust Bank, Alabama, N.A. ......... 5.54 04/21/99 34,983,320
- ---------------------------------------------------------------------------------------------------------------
Total Bank Notes -- Variable Rate
(Cost $620,211,453) .................... 620,211,453
- ---------------------------------------------------------------------------------------------------------------
Corporate 6,869,217 Chase Manhattan Auto Owner Trust
Notes -- 1.8% 1998-A ................................ 5.55 03/12/99 6,866,470
28,832,360 Ford Credit Auto Owner Trust
1998-A ................................ 5.55 02/16/99 28,826,594
13,382,782 Newcourt Receivables Asset Trust
1997-1 ................................ 5.82 12/21/98 13,384,875
12,747,287 Premier Auto Trust 1998-1 .............. 5.55 11/06/98 12,748,282
16,255,623 Premier Auto Trust 1998-2 .............. 5.61 12/06/98 16,259,427
50,000,000 Republic Mase Australia Ltd. ........... 5.95 06/30/98 50,025,000
- ---------------------------------------------------------------------------------------------------------------
Total Corporate Notes
(Cost $128,088,041) .................... 128,110,648
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Corporate $100,000,000 Abbey National Treasury Services PLC 5.33% 06/09/98 $ 99,992,864
Notes 78,000,000 Chase Manhattan Corp. ................... 5.60 03/25/99 77,993,124
Variable 12,500,000 CIT Group Holdings Inc. ................. 5.58 08/17/98 12,496,786
Rate -- 7.2% 17,500,000 CIT Group Holdings Inc. ................. 5.57 03/22/99 17,492,397
50,000,000 CIT Group Holdings Inc. ................. 5.56 04/19/99 49,971,688
25,000,000 Ford Motor Credit Co. ................... 5.71 01/08/99 25,000,000
19,000,000 General Motors Acceptance Corp. ......... 5.70 02/27/01 19,000,000
17,000,000 Goldman Sachs Group L.P. ................ 5.66 05/11/99 17,002,040
25,000,000 Lehman Brothers Holdings Inc. ........... 5.65 10/16/98 25,000,000
30,477,229 LABS Trust Series 1997-6 Senior
Notes .................................. 5.66 10/21/98 30,477,229
29,092,208 LABS Trust Series 1997-7 Senior
Notes .................................. 5.66 12/22/98 29,092,208
25,000,000 Morgan Stanley, Dean Witter,
Discover & Co. ......................... 5.66 11/20/98 25,000,000
52,000,000 Morgan Stanley, Dean Witter,
Discover & Co. ......................... 5.62 12/24/98 52,000,000
24,000,000 Morgan Stanley, Dean Witter,
Discover & Co. ......................... 5.84 02/05/99 24,043,451
25,000,000 Republic Mase Australia Ltd. ............ 5.49 02/17/99 24,988,440
- ----------------------------------------------------------------------------------------------------------------
Total Corporate Notes -- Variable
Rate (Cost $529,548,187) ................ 529,550,227
- ----------------------------------------------------------------------------------------------------------------
Master Notes -- 300,000,000 Goldman Sachs Group L.P. ................ 5.58 05/29/98 300,000,000
Variable 20,000,000 Goldman Sachs Group L.P. ................ 5.53 01/08/99 20,000,000
Rate -- 8.5% 181,000,000 Morgan (J.P.) & Co., Inc. ............... 5.58 01/12/99 181,000,000
125,000,000 Lehman Brothers Holdings Inc. ........... 5.59 10/14/98 125,000,000
- ----------------------------------------------------------------------------------------------------------------
Total Master Notes -- Variable
Rate (Cost $626,000,000) ................ 626,000,000
- ----------------------------------------------------------------------------------------------------------------
Commercial 83,673,000 Alpine Securitization Corp. ............. 5.53 05/14/98 83,505,910
Paper -- 30.9% 11,000,000 American Honda Finance Corp. ............ 5.52 05/11/98 10,983,133
39,000,000 American Honda Finance Corp. ............ 5.52 05/21/98 38,880,400
25,000,000 Apreco Inc. ............................. 5.49 05/14/98 24,950,438
50,000,000 Apreco Inc. ............................. 5.53 06/04/98 49,738,861
50,000,000 Atlantic Asset Securitization Corp. ..... 5.53 05/18/98 49,869,431
15,400,000 Chrysler Financial Corp. ................ 5.55 05/22/98 15,350,143
25,000,000 Corporate Receivables Corp. ............. 5.47 05/20/98 24,927,826
100,000,000 Countrywide Home Loans, Inc. ............ 5.57 05/27/98 99,597,722
24,000,000 Credit Suisse First Boston Inc. ......... 5.51 07/14/98 23,726,200
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial $35,000,000 Daimler-Benz North America Corp. ...... 5.51% 07/06/98 $34,643,875
Paper 50,000,000 Den Norske Bank ASA ................... 5.51 07/02/98 49,522,083
(continued) 83,000,000 Diageo Capital PLC .................... 5.52 06/30/98 82,232,250
25,000,000 Finova Capital Corp. .................. 5.60 05/04/98 24,988,333
50,000,000 Finova Capital Corp. .................. 5.52 06/18/98 49,632,000
30,000,000 Finova Capital Corp. .................. 5.52 08/05/98 29,556,000
35,000,000 Ford Credit Europe PLC ................ 5.51 07/02/98 34,665,458
15,000,000 Ford Credit Europe PLC ................ 5.51 07/10/98 14,838,125
25,000,000 General Motors Acceptance Corp. ....... 5.69 06/02/98 24,873,556
65,000,000 General Motors Corp. .................. 5.53 05/26/98 64,750,382
25,000,000 Greenwich Funding Corp. ............... 5.48 05/07/98 24,977,167
30,270,000 Greenwich Funding Corp. ............... 5.51 06/12/98 30,075,414
50,000,000 Lehman Brothers Holdings Inc. ......... 5.50 05/12/98 49,915,972
50,000,000 Lehman Brothers Holdings Inc. ......... 5.52 05/19/98 49,862,000
25,000,000 Lehman Brothers Holdings Inc. ......... 5.50 07/09/98 24,734,063
50,000,000 Lehman Brothers Holdings Inc. ......... 5.52 07/14/98 49,429,583
45,000,000 Lexington Parker Capital Company,
LLC .................................. 5.47 05/18/98 44,883,763
20,000,000 Lexington Parker Capital Company,
LLC .................................. 5.47 05/28/98 19,917,950
26,500,000 Lexington Parker Capital Company,
LLC .................................. 5.52 05/29/98 26,386,227
50,000,000 Lexington Parker Capital Company,
LLC .................................. 5.56 06/05/98 49,729,722
49,667,000 Lexington Parker Capital Company,
LLC .................................. 5.54 06/09/98 49,368,915
50,733,000 Lexington Parker Capital Company,
LLC .................................. 5.48 07/10/98 50,185,506
35,819,000 Mont Blanc Capital Corp. .............. 5.53 05/22/98 35,703,454
75,000,000 Morgan (J.P.) & Co., Inc. ............. 5.35 07/13/98 74,155,937
40,784,000 Old Line Funding Corp. ................ 5.57 05/18/98 40,676,727
50,000,000 Old Line Funding Corp. ................ 5.54 05/21/98 49,846,111
50,000,000 Old Line Funding Corp. ................ 5.54 05/26/98 49,807,639
21,248,000 Park Avenue Receivables Corp. ......... 5.57 05/01/98 21,248,000
66,040,000 Park Avenue Receivables Corp. ......... 5.51 07/01/98 65,418,949
50,000,000 Republic Industries Funding Corp. ..... 5.56 05/05/98 49,969,111
49,341,000 Republic Industries Funding Corp. ..... 5.53 05/29/98 49,128,778
35,000,000 Republic Industries Funding Corp. ..... 5.52 06/12/98 34,774,600
25,000,000 Salomon Smith Barney Holdings Inc...... 5.55 05/04/98 24,988,438
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial $ 50,000,000 Salomon Smith Barney Holdings Inc........ 5.47% 05/07/98 $ 49,954,417
Paper 50,000,000 Salomon Smith Barney Holdings Inc........ 5.48 07/16/98 49,414,167
(continued) 100,000,000 Salomon Smith Barney Holdings Inc........ 5.49 07/22/98 98,735,833
33,000,000 Three Rivers Funding Corp. .............. 5.53 05/11/98 32,949,308
16,352,000 Three Rivers Funding Corp. .............. 5.52 05/13/98 16,321,912
25,648,000 Three Rivers Funding Corp. .............. 5.53 05/22/98 25,565,264
52,412,000 Twin Towers Inc. ........................ 5.49 07/10/98 51,846,387
100,769,000 Windmill Funding Corp. .................. 5.56 05/15/98 100,551,115
56,642,000 Windmill Funding Corp. .................. 5.53 05/15/98 56,520,188
- -----------------------------------------------------------------------------------------------------------------
Total Commercial Paper
(Cost $2,278,367,303) ................... 2,278,274,743
- -----------------------------------------------------------------------------------------------------------------
Repurchase 100,000,000 Fuji Securities Inc.,
Agreements** -- purchased on 04/30/98 .................. 5.58 05/01/98 100,000,000
2.4% 25,000,000 Nomura Securities International, Inc.,
purchased on 04/30/98 .................. 5.55 05/01/98 25,000,000
50,000,000 State Street Bank & Trust,
purchased on 04/30/98 .................. 5.43 05/01/98 50,000,000
- -----------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $175,000,000) ..................... 175,000,000
- -----------------------------------------------------------------------------------------------------------------
Total Investments--99.2%
(Cost $7,311,072,749) ................... 7,309,802,890
- -----------------------------------------------------------------------------------------------------------------
Other Assets Less
Liabilities--0.8% ....................... 62,622,057
- -----------------------------------------------------------------------------------------------------------------
Net Assets--Equivalent to $1.00
Per Share on 7,373,694,806
Shares of Beneficial Interest
Outstanding--100.0% ..................... $7,372,424,947
=================================================================================================================
</TABLE>
Note -- Costs for federal income tax purposes are the same as those shown
above. At April 30, 1998, net unrealized depreciation amounted to $1,269,859
and is comprised of $527,895 in appreciation and $1,797,754 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, 1998. 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 collaterized by U.S. Government and Agency
Obligations.
D/N-Discount Notes
See Notes to Financial Statements.
20
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Statement of Assets and Liabilities
April 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Total investments at value (identified cost $7,311,072,749) (Note 1a)............... $7,309,802,890
Cash ............................................................................... 5,179,369
Interest receivable ................................................................ 56,396,446
Receivable for investments sold .................................................... 5,370,000
Prepaid expense .................................................................... 13,516
--------------
Total assets .................................................................... 7,376,762,221
--------------
Liabilities:
Advisory fee payable (Note 2) ...................................................... 1,222,101
Dividends payable .................................................................. 2,666,315
Accrued expenses ................................................................... 448,858
--------------
Total liabilities ............................................................... 4,337,274
--------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based
on 7,373,694,806 shares of beneficial interest outstanding) ....................... $7,372,424,947
==============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Statement of Operations
For the Year Ended April 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income:
Interest and discount earned (Note 1d) ................................ $374,545,277
------------
Expenses:
Investment advisory fee (Note 2) ....................... $21,807,793
Registration fees ...................................... 1,572,201
Dividend and transfer agency fees ...................... 1,027,971
Accounting and custodian services ...................... 415,352
Legal and audit fees ................................... 113,043
Trustees' fees (Note 5) ................................ 63,663
Printing and shareholder reports ....................... 59,469
Insurance .............................................. 30,756
Miscellaneous .......................................... 30,552
-----------
Total expense ..................................... 25,120,800
Waived investment advisory fee (Note 2) ................ (8,619,014) 16,501,786
----------- ------------
Net investment income ........................................... 358,043,491
Realized and Unrealized Gain on Investments:
Net realized gain from investment transactions ......... 235,380
Net unrealized appreciation of investments ............. 2,160,230
-----------
Net realized and unrealized gain from investments ................. 2,395,610
------------
Net Increase in Net Assets Resulting From Operations ................. $360,439,101
============
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended April 30,
------------------------
1998 1997
----------------- -------------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income ........................................ $ 358,043,491 $ 380,650,526
Net realized gain from investment transactions ............... 235,380 874,595
Net unrealized appreciation of investments ................... 2,160,230 2,606,218
-------------- ----------------
Net increase in net assets resulting from operations ......... 360,439,101 384,131,339
Total declared as dividends to shareholders (Note 4) ......... (358,278,871) (381,525,121)
Capital share transactions (Note 3) .......................... 1,172,386,778 (1,419,854,155)
-------------- ----------------
Net increase (decrease) in net assets ........................ 1,174,547,008 (1,417,247,937)
Net Assets:
Beginning of year ............................................ 6,197,877,939 7,615,125,876
-------------- ----------------
End of year .................................................. $7,372,424,947 $ 6,197,877,939
============== ================
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Financial Highlights
<TABLE>
<CAPTION>
Year Ended April 30,
---------------------------------------------
1998 1997 1996 1995 1994
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income ........................ .054 .052 .056 .050 .031
Less Distributions:
Dividends from net investment income ......... (.054) (.052) (.056) (.050) (.031)
---------- ---------- ---------- ---------- ----------
Net Asset Value, end of period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return .................................. 5.57% 5.34% 5.81% 5.11% 3.20%
Ratios/Supplemental Data:
Net Assets, end of period (000) .............. $7,372,425 $6,197,878 $7,615,126 $6,580,086 $3,775,121
Ratio of expenses to average net assets
(before waiver) ............................. .38% .38% .37% .37% .37%
Ratio of expenses to average net assets
(after waiver) .............................. .25% .25% .24% .24% .24%
Ratio of net investment income, including
realized and unrealized gains and losses, to
average net assets (before waiver) .......... 5.34% 5.12% 5.42% 5.00% 2.91%
Ratio of net investment income, including
realized and unrealized gains and losses, to
average net assets (after waiver) ........... 5.47% 5.25% 5.55% 5.13% 3.04%
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Schedule of Investments
April 30, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. $ 45,000,000 Federal Farm Credit Banks ............ 5.90% 06/02/98 $ 45,013,849
Government 20,000,000 Federal Farm Credit Banks ............ 5.60 10/01/98 19,987,080
Agency 25,000,000 Federal Farm Credit Banks ............ 5.65 01/04/99 24,977,500
Issues -- 53.7% 10,000,000 Federal Home Loan Banks .............. 5.91 06/11/98 10,004,912
25,000,000 Federal Home Loan Banks .............. 5.80 06/12/98 24,997,411
15,900,000 Federal Home Loan Banks .............. 5.63 06/15/98 15,899,882
10,000,000 Federal Home Loan Banks .............. 5.90 06/19/98 9,999,973
20,250,000 Federal Home Loan Banks .............. 5.80 12/18/98 20,257,290
7,000,000 Federal Home Loan Banks .............. 5.45 02/19/99 6,981,800
10,000,000 Federal Home Loan Banks .............. 5.56 03/25/99 9,984,200
50,000,000 Federal Home Loan Banks .............. 5.63 04/09/99 49,943,000
5,000,000 Federal Home Loan Banks .............. 5.86 01/20/00 5,004,700
10,000,000 Federal Home Loan Banks .............. 5.77 01/27/00 9,996,000
5,000,000 Federal Home Loan Banks .............. 5.75 03/16/00 4,995,000
5,845,000 Federal Home Loan Banks .............. 5.87 03/17/00 5,851,137
10,000,000 Federal Home Loan Banks .............. 5.87 04/20/00 10,011,600
5,000,000 Federal Home Loan Mortgage Corp. 5.69 08/21/98 4,999,285
10,000,000 Federal Home Loan Mortgage Corp. 5.00 12/15/98 9,955,000
10,000,000 Federal National Mortgage Assoc. ..... 5.68 07/31/98 9,997,920
10,000,000 Federal National Mortgage Assoc. ..... 5.38 02/12/99 9,968,600
20,000,000 Federal National Mortgage Assoc. ..... 5.52 03/26/99 19,961,320
2,200,000 Federal National Mortgage Assoc. ..... 5.88 08/10/99 2,201,192
5,550,000 Federal National Mortgage Assoc. ..... 6.00 10/26/99 5,566,411
13,900,000 Student Loan Marketing Assoc ......... 5.85 06/10/98 13,898,942
21,110,000 Student Loan Marketing Assoc ......... 5.40 02/10/99 21,047,092
25,000,000 Federal Farm Credit Banks D/N ........ 5.43 05/15/98 24,947,208
18,000,000 Federal Home Loan Banks D/N .......... 5.35 05/26/98 17,933,125
2,524,000 Federal Home Loan Banks D/N .......... 5.34 06/30/98 2,501,158
10,500,000 Federal Home Loan Banks D/N .......... 5.36 07/31/98 10,355,613
3,000,000 Federal Home Loan Banks D/N .......... 5.39 09/04/98 2,943,090
2,503,000 Federal Home Loan Banks D/N .......... 5.39 09/11/98 2,452,880
22,000,000 Federal Home Loan Mortgage Corp.
D/N ................................. 5.40 05/04/98 21,990,100
60,000,000 Federal Home Loan Mortgage Corp.
D/N ................................. 5.41 05/08/98 59,936,883
116,000,000 Federal Home Loan Mortgage Corp.
D/N ................................. 5.41 05/13/98 115,790,813
75,000,000 Federal Home Loan Mortgage Corp.
D/N ................................. 5.45 05/15/98 74,841,042
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. $ 10,500,000 Federal Home Loan Mortgage Corp.
Government D/N .................................... 5.44% 05/18/98 $ 10,473,027
Agency 50,000,000 Federal Home Loan Mortgage Corp.
Issues D/N .................................... 5.41 05/20/98 49,857,236
(continued) 31,986,000 Federal Home Loan Mortgage Corp.
D/N .................................... 5.44 05/20/98 31,894,165
50,000,000 Federal Home Loan Mortgage Corp.
D/N .................................... 5.44 05/22/98 49,841,333
50,000,000 Federal Home Loan Mortgage Corp.
D/N .................................... 5.42 06/19/98 49,631,139
1,000,000 Federal Home Loan Mortgage Corp.
D/N .................................... 5.39 06/30/98 990,950
20,000,000 Federal National Mortgage Assoc. D/N .... 5.40 05/06/98 19,985,000
25,000,000 Federal National Mortgage Assoc. D/N .... 5.46 05/07/98 24,977,250
50,000,000 Federal National Mortgage Assoc. D/N .... 5.41 05/08/98 49,947,403
9,087,000 Federal National Mortgage Assoc. D/N .... 5.44 05/18/98 9,063,657
50,000,000 Federal National Mortgage Assoc. D/N .... 5.43 05/18/98 49,871,792
35,000,000 Federal National Mortgage Assoc. D/N .... 5.41 06/12/98 34,779,092
25,000,000 Federal National Mortgage Assoc. D/N .... 5.32 10/23/98 24,341,320
25,000,000 Federal National Mortgage Assoc. D/N .... 5.25 01/27/99 23,979,986
- -----------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency Issues
(Cost $1,135,028,255) ................... 1,134,826,358
- -----------------------------------------------------------------------------------------------------------------
U.S. 40,000,000 Federal Farm Credit Banks ............... 5.54 01/14/99 39,990,441
Government 50,000,000 Federal Home Loan Banks ................. 5.45 08/04/98 49,986,192
Agency 20,000,000 Federal Home Loan Banks ................. 5.51 09/16/98 19,994,832
Issues -- 3,000,000 Federal Home Loan Mortgage Corp. ........ 6.00 05/13/98 3,000,000
Variable 50,000,000 Federal Home Loan Mortgage Corp. ........ 5.49 01/26/99 49,974,369
Rate -- 17.3% 13,000,000 Federal National Mortgage Assoc. ........ 6.00 05/14/98 13,000,000
100,000,000 Federal National Mortgage Assoc. ........ 5.41 07/30/98 99,971,342
20,000,000 Federal National Mortgage Assoc. ........ 5.46 03/03/99 19,992,455
10,000,000 Student Loan Marketing Assoc. ........... 5.42 05/21/98 9,999,457
25,000,000 Student Loan Marketing Assoc. ........... 5.51 10/06/98 24,993,182
25,000,000 Student Loan Marketing Assoc. ........... 5.47 01/12/00 24,992,172
10,000,000 Student Loan Marketing Assoc. ........... 5.52 02/04/00 9,995,766
- -----------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency
Issues -- Variable Rate
(Cost $365,890,208) ..................... 365,890,208
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Repurchase $95,000,000 BZW Securities Inc.,
Agreements**-- purchased on 04/30/98 ............... 5.55% 05/01/98 $ 95,000,000
28.1% 95,000,000 Dean Witter Discover & Co.,
purchased on 04/30/98 ............... 5.55 05/01/98 95,000,000
25,293,000 Goldman Sachs & Company,
purchased on 04/30/98 ............... 5.44 05/01/98 25,293,000
95,000,000 Greenwich Capital Markets Inc.,
purchased on 04/30/98 ............... 5.52 05/01/98 95,000,000
95,000,000 HSBC Securities Inc.,
purchased on 04/30/98 ............... 5.55 05/01/98 95,000,000
95,000,000 Nomura Securities International, Inc.,
purchased on 04/30/98 ............... 5.55 05/01/98 95,000,000
95,000,000 SBC Warburg Dillon Read Inc.,
purchased on 04/30/98 ............... 5.51 05/01/98 95,000,000
- --------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $595,293,000) .................. 595,293,000
- --------------------------------------------------------------------------------------------------------------
Total Investments -- 99.1%
(Cost $2,096,211,463) ................ 2,096,009,566
- --------------------------------------------------------------------------------------------------------------
Other Assets Less
Liabilities -- 0.9% .................. 18,582,863
- --------------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00
Per Share on 2,114,794,326 Shares
of Beneficial Interest
Outstanding -- 100.0% ................ $2,114,592,429
==============================================================================================================
</TABLE>
Note--Costs for federal income tax purposes are the same as those shown above.
At April 30, 1998, unrealized depreciation amounted to $201,897 and is
comprised of $69,038 of appreciation and $270,935 in depreciation.
*Repurchase Agreements bear interest payable at fixed dates or upon maturity.
U.S. Government and Agency Issues are purchased on a discount basis; the
interest rate shown is the discount paid at the time of purchase by the Fund.
Other U.S. Government and Agency Issues bear interest at the rates shown,
payable at fixed dates or upon maturity; the rates shown are the rates in
effect at April 30, 1998. 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.
25
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Statement of Assets and Liabilities
April 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities subject to repurchase agreements ......... $ 595,293,000
Investments in other marketable securities ......................... 1,500,716,566
--------------
Total investments at value (identified cost $2,096,211,463) (Note 1a)............. $2,096,009,566
Cash ............................................................... 12,931,898
Interest receivable ................................................ 6,613,612
Prepaid expense .................................................... 4,431
--------------
Total assets .................................................... 2,115,559,507
--------------
Liabilities:
Advisory fee payable (Note 2) ...................................... 353,550
Accrued expenses ................................................... 152,128
Dividends payable .................................................. 461,400
--------------
Total liabilities ............................................... 967,078
--------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price,
based on 2,114,794,326 shares of beneficial interest outstanding) .................. $2,114,592,429
==============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Statement of Operations
April 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income:
Interest and discount earned (Note 1d) ................................. $ 110,719,788
--------------
Expenses:
Investment advisory fee (Note 2) ....................... $ 6,330,489
Registration fees ...................................... 353,429
Dividend and transfer agency fees ...................... 301,079
Accounting and custodian services ...................... 182,278
Legal and audit fees ................................... 134,059
Trustees' fees (Note 5) ................................ 18,363
Printing and shareholder reports ....................... 16,328
Insurance .............................................. 10,011
Miscellaneous .......................................... 9,215
------------
Total expense ..................................... 7,355,251
Waived investment advisory fee (Note 2) ................ (2,369,204) 4,986,047
------------ --------------
Net investment income ............................................. 105,733,741
Realized and Unrealized Gain on Investments:
Net realized gain from investment transactions ......... 113,052
Net unrealized appreciation of investments ............. 216,971
------------
Net realized and unrealized gain from investments ................... 330,023
--------------
Net Increase in Net Assets Resulting From Operations ................... $ 106,063,764
==============
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended April 30,
------------------------
1998 1997
----------------- ------------------
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income ......................................... $ 105,733,741 $ 97,235,269
Net realized gain from investment transactions ................ 113,052 199,811
Net unrealized appreciation (depreciation) of investments ..... 216,971 (227,150)
-------------- --------------
Net increase in net assets resulting from operations .......... 106,063,764 97,207,930
Total declared as dividends to shareholders (Note 4) .......... (105,846,793) (97,435,080)
Capital share transactions (Note 3) ........................... 96,976,511 374,001,437
-------------- --------------
Net increase in net assets .................................... 97,193,482 373,774,287
Net Assets:
Beginning of year ............................................. 2,017,398,947 1,643,624,660
-------------- --------------
End of year ................................................... $2,114,592,429 $2,017,398,947
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Financial Highlights
<TABLE>
<CAPTION>
Year Ended April 30,
---------------------------------------------
1998 1997 1996 1995 1994
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income ........................ .053 .052 .055 .049 .030
Less Distributions:
Dividends from net investment income ......... (.053) (.052) (.055) (.049) (.030)
---------- ---------- ---------- ---------- ----------
Net Asset Value, end of period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return .................................. 5.48% 5.31% 5.67% 4.99% 3.06%
Ratios/Supplemental Data:
Net Assets, end of period (000) .............. $2,114,592 $2,017,399 $1,643,625 $1,601,085 $1,533,478
Ratio of expenses to average net assets
(before waiver) ............................. .37% .38% .38% .37% .38%
Ratio of expenses to average net assets
(after waiver) .............................. .25% .26% .26% .24% .32%
Ratio of net investment income, to average net
assets (before waiver) ...................... 5.24% 5.07% 5.37% 4.82% 2.83%
Ratio of net investment income, to average net
assets (after waiver) ....................... 5.36% 5.19% 5.49% 4.95% 2.89%
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Schedule of Investments
April 30, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. $ 5,702,000 U.S. Treasury Bills ............. 5.12% 05/21/98 $ 5,685,797
Government 7,475,000 U.S. Treasury Bills ............. 5.13 05/28/98 7,446,240
Issues -- 98.1% 69,488,000 U.S. Treasury Bills ............. 5.00 05/28/98 69,227,420
10,000,000 U.S. Treasury Bills ............. 5.14 06/04/98 9,951,455
93,638,000 U.S. Treasury Notes ............. 6.13 05/15/98 93,662,580
61,500,000 U.S. Treasury Notes ............. 9.00 05/15/98 61,580,322
85,000,000 U.S. Treasury Notes ............. 6.00 05/31/98 85,038,840
50,000,000 U.S. Treasury Notes ............. 6.25 06/30/98 50,937,500
130,000,000 U.S. Treasury Notes ............. 8.25 07/15/98 130,792,194
70,670,000 U.S. Treasury Notes ............. 5.25 07/31/98 70,670,000
84,466,000 U.S. Treasury Notes ............. 6.25 07/31/98 84,677,165
27,000,000 U.S. Treasury Notes ............. 5.88 08/15/98 27,033,750
25,000,000 U.S. Treasury Notes ............. 6.13 08/31/98 25,058,595
23,000,000 U.S. Treasury Notes ............. 6.00 09/30/98 23,052,109
- -----------------------------------------------------------------------------------------------------------
Total Investments -- 98.1%
(Cost $743,874,141) ............. 744,813,967
- -----------------------------------------------------------------------------------------------------------
Other Assets Less
Liabilities -- 1.9% ............. 14,382,891
- -----------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00
Per Share on 758,257,032 Shares
of Beneficial Interest
Outstanding -- 100.0% ........... $759,196,858
===========================================================================================================
</TABLE>
Note--Costs for federal income tax purposes are the same as those shown above.
At April 30, 1998, net unrealized appreciation amounted to $939,826 and is
comprised of $948,333 in appreciation and $8,507 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.
28
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Statement of Assets and Liabilities
April 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Total investments at value (identified cost $743,874,141) (Note 1a).................... $744,813,967
Cash .................................................................................. 345,735
Interest receivable ................................................................... 14,452,318
Prepaid expense ....................................................................... 1,391
------------
Total assets ....................................................................... 759,613,411
------------
Liabilities:
Advisory fee payable (Note 2) ......................................................... 130,871
Dividends payable ..................................................................... 231,138
Accrued expenses ...................................................................... 54,544
------------
Total liabilities ................................................................. 416,553
------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based on
758,257,032 shares of beneficial interest outstanding) ............................... $759,196,858
============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Statement of Operations
April 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income:
Interest and discount earned (Note 1d) ............................... $35,145,485
-----------
Expenses:
Investment advisory fee (Note 2) ....................... $2,294,733
Registration fees ...................................... 166,174
Dividend and transfer agency fees ...................... 100,281
Accounting and custodian services ...................... 82,870
Legal and audit fees ................................... 12,789
Printing and shareholder reports ....................... 6,891
Trustees' fees (Note 5) ................................ 6,569
Insurance .............................................. 3,284
Miscellaneous .......................................... 3,760
----------
Total expense ..................................... 2,677,351
Waived investment advisory fee (Note 2) ................ (974,269) 1,703,082
---------- -----------
Net investment income ........................................... 33,442,403
Realized and Unrealized Gain on Investments:
Net realized gain from investment transactions ......... 384,816
Net unrealized appreciation of investments ............. 886,152
----------
Net realized and unrealized gain from investments ................. 1,270,968
-----------
Net Increase in Net Assets Resulting From Operations ................. $34,713,371
===========
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended April 30,
------------------------
1998 1997
---------------- ----------------
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income ........................................ $ 33,442,403 $ 28,318,554
Net realized gain from investment transactions ............... 384,816 209,801
Net unrealized appreciation of investments ................... 886,152 63,853
------------- -------------
Net increase in net assets resulting from operations ......... 34,713,371 28,592,208
Total declared as dividends to shareholders (Note 4) ......... (33,827,219) (28,528,355)
Capital share transactions (Note 3) .......................... 146,466,848 97,656,523
------------- -------------
Net increase in net assets ................................... 147,353,000 97,720,376
Net Assets:
Beginning of year ............................................ 611,843,858 514,123,482
------------- -------------
End of year .................................................. $ 759,196,858 $ 611,843,858
============= =============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Financial Highlights
<TABLE>
<CAPTION>
Year Ended April 30,
---------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income .......................... .051 .049 .052 .045 .027
Less Distributions:
Dividends from net investment income ........... (.051) (.049) (.052) (.045) (.027)
-------- -------- -------- -------- --------
Net Asset Value, end of period .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return .................................... 5.24% 5.08% 5.37% 4.68% 2.82%
Ratios/Supplemental Data:
Net Assets, end of period (000) ................ $759,197 $611,844 $514,123 $342,844 $266,953
Ratio of expenses to average net assets
(before waiver) ............................... .41% .42% .41% .44% .45%
Ratio of expenses to average net assets
(after waiver) ................................ .26% .27% .26% .29% .39%
Ratio of net investment income, including
realized and unrealized gains and losses,
to average net assets (before waiver) ......... 5.11% 4.85% 5.09% 4.58% 2.67%
Ratio of net investment income, including
realized and unrealized gains and losses,
to average net assets (after waiver) .......... 5.26% 5.00% 5.24% 4.73% 2.73%
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments
April 30, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Value
Face Amount Issue (Note 1a)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Arizona -- $13,000,000 Maricopa County, Arizona PCR (El Paso Electric Co.
2.7% Project) VRDN 4.05% due 07/01/2014 (a) ................... $ 13,000,000
Salt River Project of Arizona, Agricultural Improvement
& Electrical Systems Revenue CP:
25,000,000 3.55% due 07/13/1998 ..................................... 25,000,000
11,100,000 3.65% due 09/01/1998 ..................................... 11,100,000
- ------------------------------------------------------------------------------------------------------
Colorado -- 11,695,000 Denver, Colorado City & County Airport Revenue
1.4% (Municipal Securities Trust Receipts--SGA 18)
VRDN 4.20% due 11/15/2025 (a) ............................ 11,695,000
7,000,000 Fort Morgan, Colorado Waterworks & Distribution
Enterprise Water Revenue VRDN 4.30% due
12/01/2017 (a) ........................................... 7,000,000
6,000,000 Montrose, Colorado IDR (Scaled Manufacturing Inc.)
VRDN 4.40% due 12/01/2005 (a) ............................ 6,000,000
- ------------------------------------------------------------------------------------------------------
District of 12,350,000 District of Columbia (Municipal Securities Trust
Columbia -- Receipts--SGA 62) DDN 4.25%
5.0% due 06/01/2017 (a) ....................................... 12,350,000
District of Columbia General Fund Recovery DDN:
32,200,000 (Series B-2) 4.35% due 06/01/2003 (a) .................... 32,200,000
37,200,000 (Series B-3) 4.35% due 06/01/2003 (a) .................... 37,200,000
9,200,000 District of Columbia Housing Finance Agency Mortgage
Revenue FXRDN 4.05% due 09/01/1998 ....................... 9,200,000
- ------------------------------------------------------------------------------------------------------
Florida -- 18,885,000 Broward County, Florida Professional Sports Facilities
9.7% Tax Revenue (Municipal Securities Trust Receipts--
SGA 38) VRDN 4.20% due 09/01/2021 (a) .................... 18,885,000
Florida Local Government Finance Authority Revenue
(Pooled Loan Note-Series A) CP:
15,000,000 3.60% due 07/29/1998 ..................................... 15,000,000
25,000,000 3.70% due 09/01/1998 ..................................... 25,000,000
24,265,000 Florida State Board of Education Capital Outlay
(Municipal Securities Trust Receipts--SGA 67)
DDN 4.25% due 06/01/2022 (a) ............................. 24,265,000
10,700,000 Jacksonville, Florida Electric Authority Revenue CP
3.70% due 05/21/1998 ..................................... 10,700,000
4,800,000 Lee County, Florida IDA Revenue (Raymond Building
Supply Corp.) VRDN 4.38% due 04/01/2017 (a) .............. 4,800,000
8,900,000 Sarasota County, Florida Health Facilities Authority
Hospital Revenue (Sarasota Memorial Hospital) CP
3.70% due 05/22/1998 ..................................... 8,900,196
Sunshine State Governmental Financing Commission
Revenue (Series B) CP:
29,500,000 3.55% due 05/01/1998 ..................................... 29,500,000
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Value
Face Amount Issue (Note 1a)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Florida $10,000,000 3.65% due 05/08/1998 ...................................... $ 10,000,000
(continued) 10,000,000 3.60% due 07/13/1998 ...................................... 10,000,000
17,800,000 Tampa, Florida Sports Authority Revenue (Municipal
Securities Trust Receipts--SGA 61) DDN 4.25%
due 01/01/2027 (a) ........................................ 17,800,000
- --------------------------------------------------------------------------------------------------------
Georgia -- 6,860,000 Albany & Dougherty County, Georgia Hospital Authority
4.0% Revenue (Phoebe Putney Memorial Hospital) VRDN
4.30% 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
4.20% due 11/01/2028 (a) .................................. 5,400,000
6,900,000 Atlanta, Georgia Urban Residential Finance Authority
Revenue (The Park at Lakewood) VRDN 4.20% due
11/01/2022 (a) ............................................ 6,900,000
40,000,000 Burke County, Georgia Development Authority PCR CP
3.60% due 07/09/1998 ...................................... 40,000,000
1,000,000 Columbus, Georgia Development Authority IDR (Georgia
Packaging Inc.) VRDN 4.40% due 01/01/2012 (a) ............. 1,000,000
2,570,000 Eagles Tax-Exempt Trust--Georgia Residential Finance
Authority (Single Family) FXRDN 3.90%
due 06/01/1998 ............................................ 2,570,000
9,000,000 La Grange, Georgia Development Authority IDR (Reltec
Corp. Project) VRDN 4.30% due 12/01/2021 (a) .............. 9,000,000
- --------------------------------------------------------------------------------------------------------
Idaho -- 3,840,000 Madison, Idaho Economic Development Corp. IDR (Floyd
0.2% Wilcox & Sons, Inc. Project) VRDN 4.38%
due 08/01/2012 (a) ........................................ 3,840,000
- --------------------------------------------------------------------------------------------------------
Illinois -- 4,300,000 Chicago, Illinois IDR (Enterprise Center Project) VRDN
7.9% 4.38% due 06/01/2022 (a) .................................. 4,300,000
6,700,000 Chicago, Illinois Solid Waste Disposal Facilities Revenue
(Groot Industries Inc.) VRDN 4.40% due 12/01/2015 (a) ..... 6,700,000
3,325,000 Des Plaines, Illinois IDR (East Golf Road LLC Project)
VRDN 4.40% due 05/01/2017 (a) ............................. 3,325,000
3,300,000 Elgin, Illinois IDR (Starro Precision Products Inc.) VRDN
4.45% due 06/01/2025 (a) .................................. 3,300,000
2,300,000 Geneva, Illinois IDR (Continental Envelope Corp. Project)
VRDN 4.40% due 09/01/2006 (a) ............................. 2,300,000
8,000,000 Illinois Health Facilities Authority Revenue (Evanston
Hospital Corp. Project) CP 3.85% due 02/01/1999 ........... 8,000,000
14,000,000 Illinois Health Facilities Authority Revenue (Resurrection
Health Care Systems) DDN 4.25% due 05/01/2011 (a) ......... 14,000,000
9,700,000 Illinois Health Facilities Authority Revenue (Northwestern
Memorial Hospital) DDN 4.25% due 08/15/2025 (a) ........... 9,700,000
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Value
Face Amount Issue (Note 1a)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Illinois $ 7,300,000 Illinois Health Facilities Authority Revenue
(continued) (Riverside Health Systems--Series B) VRDN
4.15% due 11/15/2016 (a) ..................................... $ 7,300,000
5,000,000 Illinois Health Facilities Authority Revenue (Pekin
Memorial Hospital) VRDN 4.20% due 08/15/2017 (a) ............. 5,000,000
10,000,000 Illinois Health Facilities Authority Revenue (Friendship
Village--Series B) VRDN 4.20% due 12/01/2020 (a) ............. 10,000,000
19,000,000 Illinois Health Facilities Authority Revenue (Little
Company of Mary Hospital & Health Care) VRDN
4.20% due 08/15/2021 (a) ..................................... 19,000,000
Illinois Housing Development Authority Revenue
(Homeowner Mortgage) FXRDN:
8,250,000 (Series B-1) 4.10% due 07/07/1998 ............................ 8,250,000
15,215,000 (Series B-2) 4.15% due 07/07/1998 ............................ 15,215,000
1,055,000 (Series B) 3.85% due 04/29/1999 .............................. 1,053,485
6,160,000 (Series B-2) 3.85% due 04/29/1999 ............................ 6,151,154
2,000,000 Illinois State Development Finance Authority
(CPR/Downers Grove Partnership) IDR VRDN 4.30%
due 12/01/2005 (a) ........................................... 2,000,000
1,700,000 Illinois State Development Finance Authority IDR (Revcor
Inc. Project) VRDN 4.25% due 06/01/2008 (a) .................. 1,700,000
3,245,000 Illinois State Development Finance Authority IDR
(Rockford College Project) VRDN 4.25% due
02/01/2001 (a) ............................................... 3,245,000
3,500,000 Illinois State Development Finance Authority IDR
(Design Automotive LLC Project) VRDN 4.40% due
06/01/2011 (a) ............................................... 3,500,000
2,500,000 Illinois State Educational Facilities Authority Revenue
(Art Institute of Chicago) VRDN 4.20% due
03/01/2027 (a) ............................................... 2,500,000
2,675,000 Peoria, Illinois IDR (CDC Realty L.P. Project) VRDN
4.25% due 12/01/2014 (a) ..................................... 2,675,000
4,000,000 Upper Illinois River Valley Authority, Solid Waste Disposal
Revenue (Exolon-Esk Co. Project) VRDN 4.30% due
12/01/2021 (a) ............................................... 4,000,000
- ----------------------------------------------------------------------------------------------------------
Indiana -- 6,660,000 Anderson, Indiana EDR (Applecreek Commons L.P.)
4.6% VRDN 4.30% due 12/01/2027 (a) ................................ 6,660,000
2,945,000 Bloomington, Indiana EDR (Bloomington Square Project)
VRDN 4.15% due 12/01/2008 (a) ................................ 2,945,000
2,500,000 Connersville, Indiana EDR (Inland Southern Corp.
Project) VRDN 4.35% due 02/01/2012 (a) ....................... 2,500,000
4,600,000 Elkhart County, Indiana EDR (Patriot Homes Inc. Project)
VRDN 4.38% due 08/01/2012 (a) ................................ 4,600,000
</TABLE>
See Notes to Financial Statements.
33
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Value
Face Amount Issue (Note 1a)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Indiana $ 3,000,000 Greencastle, Indiana IDR (Crown Equipment Corp.
(continued) Project) VRDN 4.35% due 02/01/2011 (a) .................. $ 3,000,000
840,000 Greendale, Indiana EDR (Pripak Inc. Project) VRDN
4.35% due 12/01/2003 (a) ................................ 840,000
11,300,000 Indianapolis, Indiana Gas Utility Revenue CP 3.60% due
07/09/1998 .............................................. 11,300,000
2,600,000 Indiana State Development Finance Authority EDR
(Hart Housing Group Inc. Project) VRDN 4.38% due
06/01/2011 (a) .......................................... 2,600,000
3,300,000 Indiana State Development Finance Authority EDR
(Haulin Trailers Project) VRDN 4.40% due
12/01/2017 (a) .......................................... 3,300,000
2,245,000 Indiana State Development Finance Authority IDR
(Centurion Industries Inc. Project) VRDN 4.35% due
10/01/2005 (a) .......................................... 2,245,000
4,745,000 Indiana State Educational Facilities Authority Revenue
(Wesleyan University Project) VRDN 4.20% due
12/01/2015 (a) .......................................... 4,745,000
12,900,000 Indiana State Health Facilities Financing Authority
Revenue (Capital Access Designation Project) VRDN
4.15% due 04/01/2013 (a) ................................ 12,900,000
5,000,000 Indiana State Health Facilities Financing Authority
Revenue (Hartsfield Village Project) VRDN 4.15% due
08/15/2027 (a) .......................................... 5,000,000
12,000,000 Jasper County, Indiana PCR (Northern Indiana Public
Service Co.) DDN 4.25% due 04/01/2019 (a) ............... 12,000,000
2,000,000 Muncie, Indiana IDR (Diamond Plastics Corp. Project)
VRDN 4.25% due 10/01/2006 (a) ........................... 2,000,000
1,725,000 New Castle, Indiana EDR (Barden Homes Indiana Inc.)
VRDN 4.25% due 08/01/2010 (a) ........................... 1,725,000
2,385,000 Saint Joseph County, Indiana Hospital Authority (Madison
Center Inc. Project) VRDN 4.23% due 03/04/2015 (a) ...... 2,385,000
2,000,000 Westfield, Indiana IDR (Standard Locknut Inc. Project)
VRDN 4.25% due 02/01/2002 (a) ........................... 2,000,000
- -----------------------------------------------------------------------------------------------------
Kansas -- 32,000,000 Butler County, Kansas Solid Waste Disposal &
1.8% Cogeneration Revenue (Texaco Refining & Marketing)
DDN 4.40% due 08/01/2024 (a) ............................ 32,000,000
1,150,000 Spring Hill, Kansas IDR (Abrasive Engineering Project)
VRDN 4.25% due 10/01/2016 (a) ........................... 1,150,000
- -----------------------------------------------------------------------------------------------------
Kentucky -- 3,500,000 Graves County, Kentucky IDR (Seaboard Farms
3.7% Kentucky Inc. Project) VRDN 4.35% due
12/01/2012 (a) .......................................... 3,500,000
</TABLE>
See Notes to Financial Statements.
34
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Value
Face Amount Issue (Note 1a)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Kentucky Jefferson County, Kentucky Industrial Building Revenue
(continued) (Thomas Development Project) VRDN:
$ 1,800,000 4.35% due 04/10/2010 (a) .................................. $ 1,800,000
1,090,000 4.35% due 10/01/2011 (a) .................................. 1,090,000
Kentucky Area Development Districts Financing Trust Lease
Program Revenue (Calloway County Fire District) VRDN:
3,675,000 (Series D-1) 4.23% due 12/01/2031 (a) ..................... 3,675,000
490,000 (Series D-2) 4.23% due 12/01/2031 (a) ..................... 490,000
3,810,000 (Series F-1) 4.23% due 12/01/2031 (a) ..................... 3,810,000
490,000 (Series F-2) 4.23% due 12/01/2031 (a) ..................... 490,000
Kentucky Area Development Districts Financing Trust Lease
Program Revenue (Lyon County Fire District) VRDN:
4,410,000 (Series G-1) 4.23% due 12/01/2031 (a) ..................... 4,410,000
490,000 (Series G-2) 4.23% due 12/01/2031 (a) ..................... 490,000
4,410,000 (Series I-1) 4.23% due 12/01/2031 (a) ..................... 4,410,000
490,000 (Series I-2) 4.23% due 12/01/2031 (a) ..................... 490,000
Kentucky Area Development Districts Financing Trust Lease
Program Revenue (Symsonia County Fire District) VRDN:
4,410,000 (Series H-1) 4.23% due 12/01/2031 (a) ..................... 4,410,000
490,000 (Series H-2) 4.23% due 12/01/2031 (a) ..................... 490,000
1,300,000 Kentucky Economic Development Finance Authority
Revenue (Sisters of Charity) DDN 4.20% due
11/01/2020 (a) ............................................ 1,300,000
9,835,000 Kentucky Economic Development Finance Authority
Hospital Facilities Revenue (St. Elizabeth's Medical
Center Inc.) VRDN 4.30% due 05/01/2017 (a) ................ 9,835,000
19,500,000 Kentucky State Pollution Abatement and Water Resource
Finance Authority PCR (Toyota Motor) DDN 4.75% due
08/13/2006 (a) ............................................ 19,500,000
5,500,000 Middletown, Kentucky Revenue (Christian Academy Project)
VRDN 4.15% due 07/01/2022 (a) ............................. 5,500,000
- -------------------------------------------------------------------------------------------------------
Louisiana -- Calcasieu Parish Inc., Louisiana IDB Revenue (Citgo
3.1% Petroleum Corp. Project) DDN:
8,600,000 4.40% due 12/01/2024 (a) .................................. 8,600,000
6,500,000 4.40% due 03/01/2025 (a) .................................. 6,500,000
40,030,000 Saint James Parish, Louisiana PCR (Texaco Project) CP
3.65% due 05/12/1998 ...................................... 40,030,000
- -------------------------------------------------------------------------------------------------------
Maine -- 2,530,000 Gray, Maine Revenue (Advance Realty Project) VRDN
0.6% 4.40% due 10/11/2011 (a) .................................. 2,530,000
2,130,000 Lewiston, Maine Revenue (Geiger Brothers Project) VRDN
3.90% due 09/01/2004 (a) .................................. 2,130,000
</TABLE>
See Notes to Financial Statements.
35
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Value
Face Amount Issue (Note 1a)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maine $ 4,155,000 Millinocket, Maine IDB Revenue (Gardner Chipmills
(continued) Project) VRDN 4.38% due 03/01/2005 (a) ................. $ 4,155,000
1,800,000 Saco, Maine IDR (First Light Technology Project) VRDN
4.38% due 04/01/2007 (a) ............................... 1,800,000
- -------------------------------------------------------------------------------------------------------
Maryland -- 1,400,000 Anne Arundel County, Maryland EDR (Atlas Container
1.3% Corp. Project) VRDN 4.40% due 04/01/2006 (a) ........... 1,400,000
10,000,000 Gaithersburg, Maryland EDR (Asbury Methodist) VRDN
4.20% due 07/01/2027 (a) ............................... 10,000,000
2,500,000 Maryland State Health & Higher Educational Facilities
Authority Revenue (Helix Health Hospital) VRDN
4.05% due 07/01/2026 (a) ............................... 2,500,000
10,000,000 Montgomery County, Maryland CP 3.70% due
05/06/1998 ............................................. 10,000,000
- -------------------------------------------------------------------------------------------------------
Massachusetts -- 8,670,875 Amesbury, Massachusetts BAN 4.25% due 10/01/1998 ........ 8,678,548
6.6% 3,000,000 Amesbury, Massachusetts BAN 4.20% due 10/01/1998 ........ 3,003,650
7,659,000 Beverly, Massachusetts BAN 3.90% due 09/24/1998 ......... 7,663,733
5,000,000 Central Berkshire Regional School District BAN 4.04%
due 07/15/1998 ......................................... 5,001,383
4,600,000 Fitchburg, Massachusetts RAN 4.25% due 06/30/1998 ....... 4,602,220
9,000,000 Hamilton-Wenham, Massachusetts Regional School
District BAN 4.30% due 05/21/1998 ...................... 9,001,279
14,230,000 Massachusetts State GO (Tender Option) FXRDN 3.70%
due 05/27/1998 ......................................... 14,230,000
13,000,000 Massachusetts State Health & Educational Facilities
Authority Revenue (Boston University--Series H) CP
3.70% due 05/05/1998 ................................... 13,000,000
6,850,000 Massachusetts State Industrial Finance Agency IDR
(Lightlife Foods Inc.) VRDN 4.05% due 12/01/2018 (a) 6,850,000
7,600,000 Norton, Massachusetts BAN 4.30% due 09/15/1998 .......... 7,612,512
16,000,000 Pioneer Valley Transit Authority RAN 4.25% due
08/07/1998 ............................................. 16,012,794
10,000,000 Springfield, Massachusetts BAN 4.25% due 11/20/1998 ..... 10,021,425
13,800,000 Triton, Massachusetts Regional School District BAN
4.00% due 04/16/1999 ................................... 13,831,759
- -------------------------------------------------------------------------------------------------------
Michigan -- 23,425,000 Michigan State Building Authority Revenue CP 3.80%
2.2% due 05/07/1998 ......................................... 23,425,000
15,700,000 Michigan State Strategic Fund Limited Obligation
Revenue (Consumers Power Co. Project) DDN 4.25%
due 06/15/2010 (a) ..................................... 15,700,000
- -------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
36
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Value
Face Amount Issue (Note 1a)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mississippi -- Mississippi State Hospital Equipment & Facilities
1.1% Authority Revenue (North Mississippi Health
Services) CP:
$ 8,000,000 (Series 1) 3.60% due 08/13/1998 ........................... $ 8,000,000
12,000,000 (Series 1) 3.65% due 08/13/1998 ........................... 12,000,000
- ----------------------------------------------------------------------------------------------------------
Missouri -- 1,075,000 Jefferson County, Missouri IDA Revenue (Sinclair & Rush
1.8% Inc. Project) VRDN 4.25% due 11/01/2001 (a) ............... 1,075,000
2,475,000 Missouri State Development Finance Board IDR
(Filtration Group Inc.) VRDN 4.40% due
03/01/2012 (a) ............................................ 2,475,000
18,000,000 Missouri State Health & Educational Facilities Authority
Revenue (Medical Research Facilities) VRDN 4.15%
due 04/01/2038 (a) ........................................ 18,000,000
8,000,000 Missouri State Housing Development Commission
Mortgage Revenue (Series C) FXRDN 3.90% due
04/01/1999 ................................................ 8,000,000
2,100,000 Sikeston, Missouri IDA Revenue (Heritage American
Homes LP/North Ridge Homes Inc. Project) VRDN
4.38% due 07/01/2009 (a) .................................. 2,100,000
- ----------------------------------------------------------------------------------------------------------
New 6,000,000 Littleton, New Hampshire BAN 4.00% due 07/30/1998 .......... 6,004,404
Hampshire -- 9,830,000 New Hampshire Higher Educational & Health Facilities
1.6% Authority Revenue (Dartmouth Educational Loan Corp.)
FXRDN 4.05% due 06/01/1998 ................................ 9,830,000
1,180,000 New Hampshire State Business Finance Authority
Revenue (Freed's Bakery Inc. Project) VRDN 4.38%
due 05/02/2011 (a) ........................................ 1,180,000
2,700,000 New Hampshire State Business Finance Authority
Revenue (Hydra LLC Inc.) VRDN 4.40% due
11/01/2006 (a) ............................................ 2,700,000
6,400,000 New Hampshire State Business Finance Authority
Revenue (Montgomery Wire Corp.) VRDN 4.40% due
02/01/2014 (a) ............................................ 6,400,000
3,000,000 Portsmouth, New Hampshire TAN 4.00% due
06/30/1998 ................................................ 3,002,194
- ----------------------------------------------------------------------------------------------------------
New Jersey -- 18,720,000 Jersey City, New Jersey GO 4.25% due 01/15/1999 ............ 18,761,425
1.0%
- ----------------------------------------------------------------------------------------------------------
New Mexico -- New Mexico Mortgage Finance Authority (Single Family
0.5% Mortgage) FXRDN:
1,625,000 3.85% due 10/15/1998 ...................................... 1,625,000
7,000,000 3.90% due 10/15/1998 ...................................... 7,000,000
- ----------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
37
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Value
Face Amount Issue (Note 1a)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York -- $15,200,000 New York City, New York (Series D) VRDN 4.00% due
3.0% 02/01/2021 (a) ........................................... $15,200,000
8,705,000 New York, New York (Municipal Securities Trust
Receipts--SGA 63) DDN 4.25% due 02/15/2026 (a) ........... 8,705,000
30,000,000 New York City, New York Municipal Water Finance Authority
& Sewer Systems Revenue (Municipal Securities Trust
Receipts--SGB 26) VRDN 4.25% due 06/15/2029 (a) .......... 30,000,000
- ------------------------------------------------------------------------------------------------------
Ohio -- 5,000,000 Cincinnati, Ohio City School District TAN 4.08% due
8.6% 12/31/1998 ............................................... 5,015,516
14,575,000 Cleveland, Ohio City School District RAN/VRDN 4.25% due
06/01/2004 (a) ........................................... 14,575,000
3,500,000 Eagles Tax-Exempt Trust--Ohio Water Development
Authority (Ohio Edison) VRDN 4.20% due 07/01/2015 (a) 3,500,000
15,000,000 Eagles Tax-Exempt Trust--Cleveland Water FXRDN 3.60%
due 10/01/1998 ........................................... 15,000,000
5,305,000 Franklin County, Ohio M/F Revenue (Community
Housing Network) VRDN 4.20% due 03/01/2027 (a) ........... 5,305,000
8,750,000 Hamilton County, Ohio Hospital Facilities Revenue
(Children's Hospital Medical Center) VRDN 4.20% due
05/15/2017 (a) ........................................... 8,750,000
12,000,000 Lorain County, Ohio Hospital Revenue (Catholic Health
Care) CP 3.65% due 07/28/1998 ............................ 12,000,000
5,000,000 Lorain County, Ohio Independent Living Facilities Revenue
(Elyria United Methodist Project) VRDN 4.20% due
06/01/2022 (a) ........................................... 5,000,000
4,470,000 Lucas-Beacon Place Housing Development Corp. M/F
Revenue (Beacon Place Apartments Project) FXRDN
3.70% due 09/15/1998 ..................................... 4,470,000
Mahoning County, Ohio Health Care Facilities Revenue
(Shepherd of the Valley Lutheran Home & Retirement
Center) VRDN:
7,130,000 4.15% due 09/01/2020 (a) ................................. 7,130,000
3,450,000 4.15% due 09/01/2022 (a) ................................. 3,450,000
5,675,000 Mahoning County, Ohio Health Care Facilities Revenue
(Shepherds Woods Project) VRDN 4.20% due
09/01/2022 (a) ........................................... 5,675,000
3,500,000 Mentor, Ohio IDR (Risch Investments LTP/ Roll-Kraft Inc.
Project) VRDN 4.25% due 08/01/2017 (a) ................... 3,500,000
14,000,000 Middleburg Heights, Ohio Hospital Revenue (Southwest
General Health) VRDN 4.15% due 08/15/2022 (a) ............ 14,000,000
7,500,000 Montgomery County, Ohio M/F Housing Revenue
(Timber Creek Village Apartments) FXRDN 3.80% due
03/01/2028 ............................................... 7,500,000
</TABLE>
See Notes to Financial Statements.
38
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Value
Face Amount Issue (Note 1a)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ohio $10,000,000 Montgomery County, Ohio Revenue (Miami Hospital--
(continued) Series B) CP 3.65% due 08/20/1998 ...................... $10,000,000
6,400,000 Ohio State Environmental Improvement Revenue (Mead
Corp. Project) DDN 4.30% due 03/01/2023 (a) ............ 6,400,000
1,205,000 Ohio State Higher Educational Facilities Commission
Revenue (Ashland University Project) VRDN 4.20%
due 09/01/2001 (a) ..................................... 1,205,000
12,000,000 Ohio State Solid Waste Revenue (BP Exploration & Oil
Project) DDN 4.35% due 02/01/2033 (a) .................. 12,000,000
4,585,000 Ottawa County, Ohio IDR (Adrian Sand & Stone Inc.
Project) VRDN 4.35% due 10/01/2008 (a) ................. 4,585,000
6,191,900 Wilmington, Ohio City School District BAN 4.30% due
09/08/1998 ............................................. 6,204,879
- ------------------------------------------------------------------------------------------------------
Oklahoma -- 5,000,000 Muskogee, Oklahoma Industrial PCR (Oklahoma Gas &
0.3% Electric Co.) VRDN 4.45% due 01/01/2025 (a) ............ 5,000,000
- ------------------------------------------------------------------------------------------------------
Pennsylvania -- 1,200,000 Allegheny County, Pennsylvania IDA Revenue (Parkway
7.8% Center Mall Project) VRDN 4.15% due 05/01/2009 (a) ..... 1,200,000
24,660,000 Dauphin County, Pennsylvania General Authority
Revenue (School District Pooled Financing) VRDN 4.25%
due 09/01/2032 (a) ..................................... 24,660,000
15,000,000 Emmaus, Pennsylvania General Authority Local
Government Revenue VRDN 4.10% due 12/01/2028 (a) ....... 15,000,000
17,500,000 Harrisburg, Pennsylvania Authority Revenue (Pooled
Financing Fund) VRDN 4.25% due 07/01/2021 (a) .......... 17,500,000
10,000,000 Lancaster, Pennsylvania Hospital Authority Revenue
(Masonic Homes Project) VRDN 4.20% due
07/01/2027 (a) ......................................... 10,000,000
Montgomery County, Pennsylvania Higher Education &
Health Authority Revenue (Higher Education & Health
Loan) VRDN:
22,960,000 4.20% due 06/01/2021 (a) ............................... 22,960,000
4,800,000 4.20% due 08/01/2021 (a) ............................... 4,800,000
2,800,000 Montgomery County, Pennsylvania Higher Education &
Health Authority Revenue (Philadelphia Presbytery)
VRDN 4.20% due 07/01/2025 (a) .......................... 2,800,000
16,455,000 Pennsylvania State GO (Tender Option) VRDN 4.25%
due 04/15/2002 (a) ..................................... 16,455,000
5,000,000 Philadelphia, Pennsylvania TRAN 4.50% due
06/30/1998 ............................................. 5,003,950
21,000,000 Philadelphia, Pennsylvania School District TRAN 4.50%
due 06/30/1998 ......................................... 21,016,592
- ------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
39
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Value
Face Amount Issue (Note 1a)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rhode Island -- $ 5,000,000 Bristol-Warren, Rhode Island Regional School District
1.3% BAN 4.25% due 07/16/1998 ................................. $ 5,002,495
3,800,000 Central Falls, Rhode Island BAN 4.25% due 09/24/1998 ...... 3,802,180
6,900,000 Cumberland, Rhode Island (Series 1) BAN 4.25% due
08/06/1998 ............................................... 6,906,243
2,500,000 Rhode Island State Industrial Facilities Corporation IDR
(Capital Development Corp. Project) VRDN 3.80% due
11/01/2005 (a) ........................................... 2,500,000
5,000,000 Rhode Island State Resource Recovery Corp. (Landfill
Lease) GO 4.25% due 07/31/1998 ........................... 5,003,600
- ----------------------------------------------------------------------------------------------------------
South 560,000 South Carolina Economic Development Authority IDR
Carolina -- (Trimite Powders Inc. Project) FXRDN 4.13% due
1.1% 09/01/1998 ............................................... 560,000
18,632,000 South Carolina State Public Service Authority Electrical
Systems Revenue CP 3.65% due 09/10/1998 .................. 18,632,000
- ----------------------------------------------------------------------------------------------------------
Tennessee -- 24,500,000 Clarksville, Tennessee Public Building Authority Revenue
2.9% (Pooled Financing) VRDN 4.10% due 11/01/2027 (a) ......... 24,500,000
4,000,000 Coffee County, Tennessee Industrial Board Inc. IDR
(Hillsdale Tool & Manufacturing Co. Project) VRDN
4.35% due 06/01/2017 (a) ................................. 4,000,000
9,500,000 Memphis & Shelby County, Tennessee Industrial Board
PCR (Birmingham Steel Corp. Project) VRDN 4.35%
due 10/01/2026 (a) ....................................... 9,500,000
7,000,000 Montgomery County, Tennessee Public Building Authority
(Pooled Financing Revenue) VRDN 4.10% due
07/01/2015 (a) ........................................... 7,000,000
4,300,000 Nashville & Davidson County, Tennessee IDB Revenue
(Gibson Guitar Project) VRDN 4.40% due
03/01/2011 (a) ........................................... 4,300,000
2,700,000 Nashville & Davidson County, Tennessee IDB Revenue
(Hickory M/F Housing Revenue) VRDN 4.20% due
06/01/2015 (a) ........................................... 2,700,000
- ----------------------------------------------------------------------------------------------------------
Texas -- Gulf Coast IDA Solid Waste Disposal Revenue (Citgo
6.3% Petroleum Corp. Project) DDN:
11,500,000 4.40% due 05/01/2025 (a) ................................. 11,500,000
21,300,000 4.40% due 04/01/2026 (a) ................................. 21,300,000
6,300,000 Harris County, Texas Health Facilities Development Corp.
Revenue (Buckner Retirement Services Project) VRDN
4.15% due 08/15/2026 (a) ................................. 6,300,000
1,625,000 Montgomery County, Texas IDA Revenue (Sawyer
Research Products Inc.) VRDN 4.38% due
02/04/2015 (a) ........................................... 1,625,000
</TABLE>
See Notes to Financial Statements.
40
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Value
Face Amount Issue (Note 1a)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Texas $ 4,800,000 Port Corpus Christi, Texas IDC Sewer & Solid Waste
(continued) Disposal Revenue (Citgo Petroleum Corp. Project) DDN
4.40% due 04/01/2026 (a) ................................. $ 4,800,000
24,300,000 San Antonio, Texas Electric & Gas Revenue CP 3.70%
due 05/01/1998 ........................................... 24,300,000
San Antonio, Texas Water Revenue (Municipal Securities
Trust Receipts) VRDN:
10,430,000 (SGA 41) 4.20% due 05/15/2021 (a) ........................ 10,430,000
9,115,000 (SGA 42) 4.20% due 05/15/2026 (a) ........................ 9,115,000
25,000,000 Texas Municipal Power Agency Revenue CP 3.75% due
07/20/1998 ............................................... 25,000,000
- ----------------------------------------------------------------------------------------------------------
Utah -- 8,400,000 Intermountain Power Agency Power Supply Revenue CP
1.3% 3.65% due 09/11/1998 ..................................... 8,400,000
15,000,000 Intermountain Power Agency Power Supply Revenue
(Series F) FXRDN 3.45% due 09/15/1998 .................... 15,000,000
- ----------------------------------------------------------------------------------------------------------
Vermont -- 2,400,000 Vermont IDA Revenue (Burlington Project) VRDN 4.20%
0.1% due 12/01/2011 (a) ....................................... 2,400,000
- ----------------------------------------------------------------------------------------------------------
Virginia -- 2,100,000 Brunswick County, Virginia IDA Exempt Facilities
0.1% Revenue (Aegis Waste Solutions Inc.) VRDN 4.20%
due 01/01/2017 (a) ....................................... 2,100,000
- ----------------------------------------------------------------------------------------------------------
Washington -- 6,200,000 King County, Washington (Municipal Securities Trust
0.5% Receipts--SGA 19) VRDN 4.20% due 01/01/2027 (a) .......... 6,200,000
3,000,000 Pierce County, Washington Housing Authority Revenue
(Eagles Watch Project) VRDN 4.13%
due 09/01/2020 (a) ....................................... 3,000,000
- ----------------------------------------------------------------------------------------------------------
West Virginia -- 4,700,000 Preston County, West Virginia IDR (Allegheny Wood
0.5% Products Inc. Project) VRDN 4.25% due 12/01/2007 (a) 4,700,000
3,400,000 Randolph County, West Virginia IDR (Allegheny Wood
Products Inc. Project) VRDN 4.25% due 12/01/2007 (a) 3,400,000
- ----------------------------------------------------------------------------------------------------------
Wisconsin -- 1,360,000 Appleton, Wisconsin IDR (Valley Packaging Industries
2.2% Inc. Project) VRDN 4.15% due 02/01/2011 (a) .............. 1,360,000
3,700,000 Ashland, Wisconsin School District TRAN 4.10% due
08/28/1998 ............................................... 3,701,156
4,900,000 D.C. Everest School District TRAN 4.13% due
08/27/1998 ............................................... 4,901,356
Deerfield, Wisconsin IDR (Interpane Coatings Project)
VRDN:
1,300,000 4.20% due 05/01/2003 (a) ................................. 1,300,000
1,945,000 4.35% due 05/01/2003 (a) ................................. 1,945,000
1,800,000 Elkhorn, Wisconsin School District TRAN 4.25% due
08/27/1998 ............................................... 1,801,111
</TABLE>
See Notes to Financial Statements.
41
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
April 30, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Value
Face Amount Issue (Note 1a)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Wisconsin $ 6,200,000 Franklin, Wisconsin School District TRAN 4.25% due
(continued) 08/28/1998 ............................................ $ 6,204,851
2,440,000 Milwaukee, Wisconsin Redevelopment Authority
Revenue (Jensar Corp. Project) VRDN 4.40% due
03/01/2007 (a) ........................................ 2,440,000
3,200,000 Neenah, Wisconsin Joint School District TRAN 4.15%
due 08/31/1998 ........................................ 3,202,187
1,125,000 Oshkosh, Wisconsin IDR (Automatic Handling Inc.)
VRDN 4.35% due 06/01/2006 (a) ......................... 1,125,000
500,000 Plymouth, Wisconsin IDR (Great Lakes Cheese Inc.
Project) VRDN 4.25% due 08/01/2024 (a) ................ 500,000
5,000,000 Sturtevant, Wisconsin IDR (Andis Co. Project-Series A)
VRDN 4.25% due 12/01/2016 (a) ......................... 5,000,000
1,500,000 Tomah, Wisconsin School District TRAN 4.15% due
09/23/1998 ............................................ 1,500,854
3,500,000 Two Rivers, Wisconsin Public School District TRAN
4.15% due 09/30/1998 .................................. 3,501,397
2,000,000 Two Rivers, Wisconsin Public School District BAN 4.05%
due 01/11/1999 ........................................ 2,001,382
- ------------------------------------------------------------------------------------------------------
Wyoming -- Laramie County, Wyoming IDR (Cheyenne Light Fuel &
1.8% Power Co.) VRDN:
3,500,000 4.35% due 09/01/2021 (a) .............................. 3,500,000
5,000,000 4.35% due 03/01/2027 (a) .............................. 5,000,000
24,200,000 Sweetwater County, Wyoming PCR (Idaho Power Co.
Project - Series B) DDN 4.30% due 07/15/2026 (a) ...... 24,200,000
- ------------------------------------------------------------------------------------------------------
Total Investments (Cost $1,779,123,910) -- 98.6% ...... 1,779,123,910
- ------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.4% .................. 25,317,699
- ------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00 Per Share on
1,804,571,031 Shares of Beneficial Interest
Outstanding -- 100.0% .................................. $1,804,441,609
======================================================================================================
</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, 1998. For variable rate
demand instruments, the next coupon date on which the interest is to be
adjusted is deemed the maturity date for valuation.
Note--Cost for federal income tax purposes is the same as that shown above.
- --------------------------------------------------------------------------------
Portfolio Abbreviations for Merrill Lynch Institutional Tax-Exempt Fund
<TABLE>
<S> <C>
BAN Bond Anticipation Notes
CP Commercial Paper
DDN Daily Demand Notes
EDR Economic Development Revenue
FXRDN Fixed Rate Demand Notes
GO General Obligation
IDA Industrial Development Authority
IDB Industrial Development Board
IDC Industrial Development Corporation
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
</TABLE>
See Notes to Financial Statements.
42
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Statement of Assets and Liabilities
April 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at amortized cost and value (Note 1a) ................................ $1,779,123,910
Cash .............................................................................. 1,264,577
Interest receivable ............................................................... 13,013,795
Receivable for investments sold ................................................... 11,480,000
Prepaid expense ................................................................... 2,189
--------------
Total assets ................................................................... 1,804,884,471
--------------
Liabilities:
Advisory fee payable (Note 2) ..................................................... 307,043
Accrued expenses .................................................................. 72,132
Dividends payable ................................................................. 63,687
--------------
Total liabilities .............................................................. 442,862
--------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based on
1,804,571,031 shares of beneficial interest outstanding) ......................... $1,804,441,609
==============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Statement of Operations
April 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income:
Interest and discount earned (Note 1d) ............................ $57,940,736
-----------
Expenses:
Investment advisory fee (Note 2) ................ $ 6,881,461
Registration fees ............................... 295,362
Dividend and transfer agency fees ............... 180,485
Accounting and custodian services ............... 145,562
Legal and audit fees ............................ 29,623
Trustees' fees (Note 5) ......................... 14,418
Printing and shareholder reports ................ 12,272
Insurance ....................................... 4,981
Miscellaneous ................................... 5,369
------------
Total expense .............................. 7,569,533
Waived investment advisory fee (Note 2) ......... (3,810,001) 3,759,532
------------ -----------
Net investment income ........................................ 54,181,204
Net realized loss from investment transactions .................... (15,572)
-----------
Net Increase in Net Assets Resulting From Operations .............. $54,165,632
===========
</TABLE>
See Notes to Financial Statements.
43
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended April 30,
-------------------------------------
1998 1997
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income ........................................... $ 54,181,204 $ 27,969,532
Net realized loss from investment transactions .................. (15,572) (2,657)
-------------- --------------
Net increase in net assets resulting from operations ............ 54,165,632 27,966,875
Total declared as dividends to shareholders (Note 4) ............ (54,172,922) (27,969,332)
Capital share transactions (Note 3) ............................. 800,793,413 336,453,248
-------------- --------------
Net increase in net assets ...................................... 800,786,123 336,450,791
Net Assets:
Beginning of period ............................................. 1,003,655,486 667,204,695
-------------- --------------
End of period, including undistributed net investment income of
$134,601 and $134,573 and accumulated capital losses of $264,023
and $256,705 respectively (Note 1g and Note 4)................... $1,804,441,609 $1,003,655,486
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Financial Highlights
<TABLE>
<CAPTION>
Year Ended April 30,
-----------------------------------------------------
1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income ............................ .04 .03 .04 .03
Dividends from net investment income ............. (.04) (.03) (.04) (.03)
---------- ---------- -------- --------
Net Asset Value, end of period .................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ======== ========
Total Return ...................................... 3.59% 3.41% 3.68% 3.20%
Ratios/Supplemental Data:
Net Assets, end of period (000) .................. $1,804,442 $1,003,655 $667,205 $403,903
Ratio of expenses to average net assets
(before waiver) ................................. .49% .52% .54% .56%
Ratio of expenses to average net assets
(after waiver) .................................. .24% .27% .29% .31%
Ratio of net investment income, to average net
assets (before waiver) .......................... 3.28% 3.12% 3.35% 2.90%
Ratio of net investment income, to average net
assets (after waiver) ........................... 3.53% 3.37% 3.60% 3.15%
<CAPTION>
Five Months Year
Ended Ended
April 30, November 30,
------------------ -------------
1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, beginning of period .............. $ 1.00 $ 1.00
Net investment income ............................ .01 .02
Dividends from net investment income ............. (.01) (.02)
--------- --------
Net Asset Value, end of period .................... $ 1.00 $ 1.00
======== ========
Total Return ...................................... 2.14%(1) 2.14%
Ratios/Supplemental Data:
Net Assets, end of period (000) .................. $390,375 $278,697
Ratio of expenses to average net assets
(before waiver) ................................. .59%(1) .62%
Ratio of expenses to average net assets
(after waiver) .................................. .34%(1) .45%
Ratio of net investment income, to average net
assets (before waiver) .......................... 1.92%(1) 1.96%
Ratio of net investment income, to average net
assets (after waiver) ........................... 2.17%(1) 2.13%
</TABLE>
(1) On an annualized basis
See Notes to Financial Statements.
44
<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's portfolio securities are carried at
amortized cost which approximates market value.
For the purpose of valuation, the maturity of a variable rate demand
instrument is deemed to be the next coupon date on which the interest rate is
to be adjusted. In the case of a floating rate instrument, the remaining
maturity is deemed to be the demand notice payment period.
(b) It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income to its shareholders. Therefore, no federal income tax
provision is required.
(c) Realized gains and losses on investments are computed on the basis of
identified cost of the security sold.
(d) Security transactions are accounted for on the date the securities are
purchased or sold (the trade date). Interest income (after adjustment for
amortization of premium or accretion of discount) is recorded as earned.
(e) 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, 1998, Merrill Lynch Institutional
Tax-Exempt Fund reclassified amounts to reflect a decrease of $8,254 in both
accumulated capital losses and undistributed net investment income as a result
of a permanent difference 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:
45
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Funds For Institutions Series
Notes to Financial Statements -- Continued
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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
</TABLE>
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, 1998, FAM waived a portion of its fees amounting
to $8,619,014 for the Institutional Fund, $2,369,204 for the Government Fund,
$974,269 for the Treasury Fund and $3,810,001 for the Institutional Tax-Exempt
Fund.
All officers and certain trustees of the Trust are affiliated with Merrill
Lynch & Co., Inc.
3. Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
shares of beneficial interest in the Premier Institutional Fund, Institutional
Fund, Government Fund and Treasury Fund ($.01 par value) and Institutional Tax-
Exempt Fund ($.10 par value) of a single class. At April 30, 1998, capital
paid-in aggregated $6,645,472,621 for Premier Institutional Fund,
$7,373,694,806 for Institutional Fund, $2,114,794,326 for Government Fund,
$758,257,032 for Treasury Fund and $1,804,571,031 for Institutional Tax-Exempt
Fund. Transactions in shares at a constant net asset value of $1.00 per share
were as follows:
<TABLE>
<CAPTION>
Year Ended Period Ended
April 30, April 30,
Premier Institutional Fund 1998 1997
- --------------------------------------- ---------------- -----------------
<S> <C> <C>
Shares sold ........................... 80,884,136,647 12,237,737,259
Shares issued to shareholders
in reinvestment of dividends ......... 239,118,722 32,118,561
-------------- --------------
Total ............................... 81,123,255,369 12,269,855,820
Shares redeemed ....................... 77,301,915,817 9,445,822,751
-------------- --------------
Net increase ........................ 3,821,339,552 2,824,033,069
============== ==============
</TABLE>
Prior to January 27, 1997 (commencement of operations) there were 100,000
shares of beneficial interest outstanding which were owned by FAM.
<TABLE>
<CAPTION>
Year Ended April 30,
--------------------------------------
Institutional Fund 1998 1997
- --------------------------------------- ---------------- -------------------
<S> <C> <C>
Shares sold ........................... 42,976,137,621 67,124,483,921
Shares issued to shareholders
in reinvestment of dividends ......... 314,438,784 323,268,144
-------------- --------------
Total ............................... 43,290,576,405 67,447,752,065
Shares redeemed ....................... 42,118,189,627 68,867,606,220
-------------- --------------
Net increase (decrease) ............. 1,172,386,778 (1,419,854,155)
============== ==============
Year Ended April 30,
------------------------------------
Government Fund 1998 1997
- --------------------------------------- ---------------- -----------------
Shares sold ........................... 11,216,903,849 13,658,666,165
Shares issued to shareholders
in reinvestment of dividends ......... 100,120,146 92,067,429
-------------- --------------
Total ............................... 11,317,023,995 13,750,733,594
Shares redeemed ....................... 11,220,047,484 13,376,732,157
-------------- --------------
Net increase ........................ 96,976,511 374,001,437
============== ==============
Year Ended April 30,
-----------------------------------
Treasury Fund 1998 1997
- --------------------------------------- ---------------- ----------------
Shares sold ........................... 4,496,611,001 3,277,418,270
Shares issued to shareholders
in reinvestment of dividends ......... 31,614,356 27,446,045
-------------- --------------
Total ............................... 4,528,225,357 3,304,864,315
Shares redeemed ....................... 4,381,758,509 3,207,207,792
-------------- --------------
Net increase ........................ 146,466,848 97,656,523
============== ==============
</TABLE>
46
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Funds For Institutions Series
Notes to Financial Statements -- Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended April 30,
Institutional ----------------------------------
Tax-Exempt Fund 1998 1997
- ----------------------------------- --------------- ----------------
<S> <C> <C>
Shares sold ....................... 9,422,006,794 5,129,231,992
Shares issued to shareholders
in reinvestment of dividends ..... 50,969,555 26,648,229
------------- -------------
Total ........................... 9,472,976,349 5,155,880,221
Shares redeemed ................... 8,672,182,936 4,819,426,973
------------- -------------
Net increase .................... 800,793,413 336,453,248
============= =============
</TABLE>
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, 1998, the Institutional Tax-Exempt Fund had net capital loss
carryovers of $248,451 of which $90,891 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, 1998, the related statements of operations for the year then
ended, and the statements of changes in net assets and the financial highlights
for each of the respective periods then ended. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with 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, 1998, 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,
1998, the results of their operations, the changes in their net assets, and
their financial highlights for each of the respective periods presented in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
May 28, 1998
47
<PAGE>
[Back cover]
- --------------------------------------------------------------------------------
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
<PAGE>
[Front cover]
- --------------------------------------------------------------------------------
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, 1998
