[Front cover]
[Graphic; Merrill Lynch Logo]
Semi-Annual Report
MERRILL LYNCH FUNDS
FOR INSTITUTIONS SERIES
Merrill Lynch Premier
Institutional Fund
Merrill Lynch
Institutional Fund
Merrill Lynch Rated
Institutional Fund
Merrill Lynch
Government Fund
Merrill Lynch
Treasury Fund
Merrill Lynch Institutional
Tax-Exempt Fund
October 31, 1999
<PAGE>
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to provide you with this Semi-Annual Report for the Merrill
Lynch Funds For Institutions Series.
Merrill Lynch Premier Institutional Fund
For the six months ended October 31, 1999, the Fund's net annualized yield
was 4.99%. The Fund's seven-day net annualized yield as of October 31, 1999, was
5.33%. The average portfolio maturity for the Merrill Lynch Premier
Institutional Fund at October 31, 1999, was 64 days, compared to 87 days at
April 30, 1999.
During the period ended October 31, 1999, Merrill Lynch Premier
Institutional Fund maintained an average life ranging from a low of 63 days to a
high of 85 days. The US economy continues to perform impressively, even in the
wake of two tightenings by the Federal Reserve Board. We gradually reduced the
Fund's average life throughout the period as it became clear that the Federal
Reserve Board would seek to unwind some of the crisis-induced easing it did in
late 1998.
Our strategy for the last six months has been greatly influenced by the
market activity resulting from the approach of the year 2000 (Y2K). Pressure on
issuers to put maturities into the new year increased the supply of fixed-rate
and floating-rate securities in the six-month-one-year area, thus steepening the
yield curve. We favored floating-rate securities linked to the one-month and
three-month London Interbank Offered Rate (LIBOR). In line with our belief that
issuance of commercial paper and repurchase agreements will slow as year-end
approaches, we also purchased investments maturing in late December seeking to
enhance shareholder liquidity.
Looking ahead, we believe that the economy will remain strong and that
further tightening by the Federal Reserve Board may be necessary early in 2000.
We believe the magnitude of the remaining tightening will be predicated on any
emergence of inflation.
Merrill Lynch Institutional Fund
For the six months ended October 31, 1999, the Fund's net annualized yield
was 4.95%. The Fund's seven-day net annualized yield as of October 31, 1999, was
5.27%. The average portfolio maturity for the Merrill Lynch Institutional Fund
at October 31, 1999, was 67 days, compared to 85 days at April 30, 1999.
During the period ended October 31, 1999, Merrill Lynch Institutional Fund
maintained an average life ranging from a low of 65 days to a high of 85 days.
The US economy continued to grow rapidly while technology-driven productivity
gains have helped restrain inflation. We gradually reduced the Fund's average
life throughout the six-month period as it became clear that the Federal Reserve
Board would seek to unwind some of the crisis-induced easing it did in late
1998.
Our strategy over the last six months has been greatly influenced by the
market activity resulting from the approach of Y2K. Pressure on issuers to put
maturities into the new year increased the supply of fixed-rate and
floating-rate securities in the six-month-one-year area at wider spreads than
would be seen under normal year-end conditions. With the possibility that
issuance of commercial paper and repurchase agreements will slow as year-end
approaches, we also purchased investments maturing in December.
1
<PAGE>
Looking ahead, we believe that the economy will remain strong and that
further tightening by the Federal Reserve Board may be necessary early in 2000.
We believe the magnitude of the remaining tightening will be predicated on any
emergence of inflation.
Merrill Lynch Rated Institutional Fund
For the six months ended October 31, 1999, the Fund's net annualized yield
was 4.95%. The Fund's seven-day net annualized yield as of October 31, 1999, was
5.22%. The average portfolio maturity for the Merrill Lynch Rated Institutional
Fund at October 31, 1999, was 39 days, compared to 48 days at April 30, 1999.
During the period ended October 31, 1999, Merrill Lynch Rated
Institutional Fund maintained an average life ranging from a low of 34 days to
a high of 52 days. The US economy continued to grow rapidly while
technology-driven productivity gains have helped restrain inflation.
Our strategy for the last six months has been greatly influenced by the
market activity resulting from the approach of Y2K. Pressure on issuers to put
maturities in the new year increased the supply of fixed-rate and floating-rate
sucurities in the six-month-one-year area, thus steepening the yield curve. We
favored floating-rate securities linked to one-month and three-month LIBOR.
Looking ahead, we believe that the economy will remain strong and that
further tightening by the Federal Reserve Board may be necessary early in 2000.
We believe the magnitude of the remaining tightening will be predicated on any
emergence of inflation.
Merrill Lynch Government Fund
For the six months ended October 31, 1999, the Fund's net annualized yield
was 4.89%. The Fund's seven-day net annualized yield as of October 31, 1999, was
5.16%. The average portfolio maturity for the Merrill Lynch Government Fund at
October 31, 1999, was 56 days, compared to 59 days at April 30, 1999.
During the period ended October 31, 1999, we generally maintained the
Fund's average life near 60 days as investors' focus on the approach of Y2K kept
the yield curve steep, while widening quality spreads. We utilized floating-rate
securities whose yields exceeded financing rates to decrease our dependency on
the overnight market. Seeking to enhance the Fund's yield, we increased
commitment to agency discount notes, favoring the February-May 2000 maturity
sector.
We believe that further tightening by the Federal Reserve Board may be
necessary early in 2000. Despite the Treasury's attempt to liquefy the financial
system for year-end, the overall trend in Treasury financing has been declining
while agency issues have increased their outstandings, which once again is
likely to cause quality spreads to remain wide going forward.
Merrill Lynch Treasury Fund
For the six months ended October 31, 1999, the Fund's net annualized yield
was 4.50%. The Fund's seven-day net annualized yield as of October 31, 1999, was
4.68%. The average portfolio maturity for the Merrill Lynch Treasury Fund at
October 31, 1999, was 55 days, compared to 56 days at April 30, 1999.
During the period ended October 31, 1999, we maintained the Fund's average
life near the 60-day range as favorable technicals and interest rate uncertainty
kept the yield curve steep. For most of the six-month period, the Treasury
issued minimal amounts of debt, utilizing large amounts of short-dated cash
management bills to cover shortfalls. Reinvestment of these maturities during
the period caused concern as issuance has been declining and investors have
focused on the approach of Y2K.
2
<PAGE>
In anticipation of year-end growth, we limited our exposure into late
December and extended into early January bills and February notes at attractive
levels. Recently, the Treasury increased its weekly bill supply and plans to
issue at least two cash management bills maturing in mid-January to accommodate
market liquidity. This caused us to reduce our Treasury note position, while
increasing our bill position for liquidity purposes at minimal spreads.
Merrill Lynch Institutional Tax-Exempt Fund
For the six months ended October 31, 1999, the Fund's net annualized yield
was 3.15%. The Fund's seven-day net annualized yield as of October 31, 1999, was
3.37%. The average portfolio maturity for the Merrill Lynch Institutional
Tax-Exempt Fund at October 31, 1999, was 65 days, compared to 34 days at April
30, 1999.
Merrill Lynch Institutional Tax-Exempt Fund began the six-month period
ended October 31, 1999, incorporating a neutral investment strategy. However, as
the period progressed we adopted a slightly more defensive investment strategy.
The Fund's average life, which began the period in the 35-day range, was allowed
to decline to the 25-day range. This decline was in response to a lack of
incentive to extend the average life with economic conditions remaining strong,
the yield curve being fairly flat and the seasonal tax-related redemptions still
affecting the municipal money funds. We concentrated on maintaining a high
percentage of variable rate demand notes (VRDN) and tax-exempt commercial paper
between 30-60 days, while allowing the Fund's municipal note positions to
mature.
With strong domestic economic conditions and overseas economic conditions
improving, yields in the US Treasury market continued to move higher, especially
as Federal Reserve Board members hinted at a possible interest rate increase. In
May, a reduced amount of municipal issuance allowed yields on longer-dated
municipal notes to remain at artificially low levels relative to the comparable
Treasury securities. It was not until June, with an approaching Federal Open
Market Committee meeting combined with an increased amount of municipal issuance
and reduced investor participation, that municipal yields adjusted to more
attractive levels relative to Treasury securities. We began to selectively
purchase longer-dated municipal notes as yield levels increased from the
3.15%-3.20% range to the 3.55%-3.65% range. We made these purchases for
diversification reasons, and in an effort to stabilize the Fund's yield from
volatile fluctuations of VRDN yields.
The Fund was well situated when the Federal Reserve Board increased the
Federal Funds rate by 25 basis points (0.25%) to 5.00% on June 29, 1999.
However, in a surprise move, the Federal Reserve Board also changed its bias to
neutral, which suggested that there might not be the need for any further
interest rate increases. This change in bias combined with a large influx of
subscriptions into municipal money funds at the beginning of July allowed the
municipal market to rally, with yields on longer-dated securities declining to
the 3.45% range. On August 24, 1999, the Federal Reserve Board again raised the
Federal Funds rate 25 basis points to 5.25%, maintaining a neutral bias. Yields
on one-year Treasury bills increased to the 5.25% range, while the comparable
one-year municipal note increased to the 3.70% range. We began to increase the
Fund's purchases of municipal notes, especially after $3.9 billion in Texas
State Tax and Revenue Anticipated Notes were priced in the market. We made these
purchases in anticipation of a reduced amount of issuance available in the
coming months and for diversification purposes. This reduction in municipal
issuance was anticipated as a result of strong economic conditions translating
into solid balance sheets for various municipalities, which allowed them to
reduce their borrowing needs. These purchases resulted in the Fund's average
life increasing to the 70-day range.
In the coming months, we expect to adopt a more neutral approach to the
municipal market. This investment strategy results from an economy that is
beginning to show signs of slowing combined with an increasing focus by
investors on the approach of Y2K that may allow the Federal Reserve Board some
latitude in its decisions con-
3
<PAGE>
cerning further interest rate hikes. In addition, we expect to look to increase
our purchases of VRDNs in anticipation of potential year-end uncertainties. We
will continue to closely monitor credit quality and at the same time seek to
maintain an attractive tax-exempt yield for our shareholders.
We thank you for your continued interest in Merrill Lynch Funds For
Institutions Series, and we look forward to serving your investment needs in the
months and years ahead.
Sincerely,
<TABLE>
<S> <C>
/s/ Robert W. Crook /s/ P. Michael Walsh
- ------------------- --------------------
Robert W. Crook P. Michael Walsh
President and Trustee Vice President and Portfolio Manager
Merrill Lynch Funds For Institutions Series Merrill Lynch Premier Institutional Fund
Merrill Lynch Institutional Fund
Merrill Lynch Rated Institutional Fund
/s/ Kevin Schiatta /s/ John Ng
- ------------------ -----------
Kevin Schiatta John Ng
Vice President and Portfolio Manager Vice President and Portfolio Manager
Merrill Lynch Institutional Tax-Exempt Fund Merrill Lynch Government Fund
Merrill Lynch Treasury Fund
</TABLE>
November 26, 1999 4
<PAGE>
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Merrill Lynch Premier Institutional Fund
Schedule of Investments
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
===============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
===============================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. $ 25,000,000 U.S. Treasury Bills ................... 4.25% 01/06/00 $ 24,787,291
Government & 12,500,000 U.S. Treasury Notes ................... 5.88 11/15/99 12,506,634
Agency 216,000,000 U.S. Treasury Notes ................... 5.63 12/31/99 216,135,000
Issues -- 10.3% 12,500,000 U.S. Treasury Notes ................... 7.75 01/31/00 12,582,038
24,310,000 U.S. Treasury Notes ................... 5.88 02/15/00 24,363,190
23,000,000 U.S. Treasury Notes ................... 5.63 04/30/00 23,028,750
15,000,000 U.S. Treasury Notes ................... 5.38 07/31/00 14,985,945
30,000,000 U.S. Treasury Notes ................... 4.63 11/30/00 29,681,250
10,000,000 U.S. Treasury Notes ................... 4.63 12/31/00 9,881,250
80,000,000 U.S. Treasury Notes ................... 4.50 01/31/01 78,850,000
40,000,000 U.S. Treasury Notes ................... 5.00 04/30/01 39,575,000
25,000,000 Federal Home Loan Banks ............... 4.98 01/19/00 24,959,900
25,000,000 Federal Home Loan Banks ............... 4.98 02/16/00 24,945,313
25,000,000 Federal Home Loan Banks ............... 4.95 11/20/00 24,723,500
25,000,000 Federal Home Loan Mortgage Corp. ...... 5.05 11/17/00 24,750,000
25,000,000 Federal Home Loan Mortgage Corp. ...... 5.13 11/24/00 24,762,898
25,000,000 Federal Home Loan Mortgage Corp. ...... 5.18 11/24/00 24,774,823
12,500,000 Federal Home Loan Mortgage Corp. ...... 5.25 01/19/01 12,375,461
25,000,000 Federal Home Loan Mortgage Corp. ...... 5.15 01/26/01 24,718,900
25,000,000 Federal National Mortgage Assoc. ...... 5.21 01/26/01 24,741,847
41,455,000 Federal National Mortgage Assoc. ...... 5.41 03/22/01 41,057,156
25,000,000 Federal National Mortgage Assoc. ...... 5.38 03/27/01 24,746,247
25,000,000 Federal National Mortgage Assoc. ...... 5.40 03/27/01 24,754,025
24,900,000 Federal National Mortgage Assoc. ...... 5.38 04/06/01 24,641,660
20,000,000 Federal National Mortgage Assoc. ...... 6.00 07/17/01 19,899,418
10,280,000 Student Loan Marketing Assoc. ......... 5.89 11/17/99 10,285,669
50,000,000 Federal Home Loan Mortgage Corp. D/N. 5.09 12/17/99 49,674,805
50,000,000 Federal Home Loan Mortgage Corp. D/N. 5.10 12/17/99 49,674,167
50,000,000 Federal Home Loan Mortgage Corp. D/N. 5.11 12/17/99 49,673,528
50,000,000 Federal Home Loan Mortgage Corp. D/N. 5.10 12/23/99 49,631,667
75,000,000 Federal Home Loan Mortgage Corp. D/N. 5.05 12/30/99 74,379,271
- ---------------------------------------------------------------------------------------------------------------
Total U.S. Government & Agency
Issues (Cost $1,120,735,016) .......... 1,115,546,603
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
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Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
===============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
===============================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. $ 25,000,000 Federal Home Loan Banks ................. 5.31% 11/09/99 $ 24,999,678
Government 48,500,000 Federal Home Loan Banks ................. 5.31 11/12/99 48,499,137
Agency 50,000,000 Federal Home Loan Banks ................. 5.31 11/16/99 49,998,561
Issues -- 30,000,000 Federal Home Loan Banks ................. 5.46 04/28/00 29,994,131
Variable 25,000,000 Federal Home Loan Mortgage Corp. ........ 5.65 07/14/00 24,991,257
Rate -- 5.1% 76,000,000 Student Loan Marketing Assoc. ........... 5.59 02/04/00 75,995,253
100,000,000 Student Loan Marketing Assoc. ........... 5.80 02/14/00 99,980,286
100,000,000 Student Loan Marketing Assoc. ........... 5.79 09/29/00 99,972,431
100,000,000 Student Loan Marketing Assoc. ........... 5.80 09/29/00 99,982,835
- ---------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency
Issues -- Variable Rate
(Cost $554,413,569) ..................... 554,413,569
- ---------------------------------------------------------------------------------------------------------------
Certificates of 25,000,000 First USA Bank, NA ...................... 6.20 10/18/00 24,987,551
Deposit -- 0.2%
- ---------------------------------------------------------------------------------------------------------------
Total Certificates of Deposit
(Cost $24,986,211) ...................... 24,987,551
- ---------------------------------------------------------------------------------------------------------------
Certificates 100,000,000 First Union National Bank ............... 5.49 08/31/00 100,000,000
of Deposit -- 75,000,000 Fleet National Bank ..................... 5.40 04/17/00 74,983,636
Variable
Rate -- 1.6%
- ---------------------------------------------------------------------------------------------------------------
Total Certificates of Deposit -- Variable
Rate (Cost $174,983,636) ................ 174,983,636
- ---------------------------------------------------------------------------------------------------------------
Euro 65,000,000 Deutsche Bank AG, Grand Cayman .......... 5.43 12/29/99 64,997,718
Certificates of 50,000,000 Svenska Handelsbanken, London ........... 5.44 12/29/99 50,000,790
Deposit -- 1.5% 50,000,000 Svenska Handelsbanken, London ........... 5.45 12/29/99 50,000,792
- ---------------------------------------------------------------------------------------------------------------
Total Euro Certificates of Deposit
(Cost $164,999,300) ..................... 164,999,300
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
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Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
================================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
================================================================================================================
<S> <C> <C> <C> <C> <C>
Euro $ 43,000,000 Abbey National Treasury Services PLC...... 5.43% 11/01/99 $ 43,000,000
Certificates of
Deposit --
Variable
Rate -- 0.4%
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Total Euro Certificates of Deposit --
Variable Rate (Cost $43,000,000) ........ 43,000,000
- ----------------------------------------------------------------------------------------------------------------
Yankee 50,000,000 Banque Nationale de Paris, NY ............ 5.42 12/29/99 49,999,210
Certificates of 25,000,000 Banque Nationale de Paris, NY ............ 5.45 12/30/99 25,000,403
Deposit -- 100,000,000 Bayerische Landesbank
6.1% Girozentrale, NY ......................... 5.43 12/30/99 100,000,000
25,000,000 Bayerische Vereinsbank AG, NY ............ 5.27 03/03/00 24,906,904
50,000,000 Canadian Imperial Bank of
Commerce, NY ............................. 5.45 12/31/99 49,921,988
50,000,000 Canadian Imperial Bank of
Commerce, NY ............................. 5.10 04/12/00 49,734,269
90,000,000 Commerzbank AG, NY ....................... 5.09 02/16/00 89,765,277
25,000,000 Commerzbank AG, NY ....................... 5.19 02/25/00 24,905,214
25,000,000 Commerzbank AG, NY ....................... 5.91 08/04/00 24,924,201
70,000,000 Credit Communal de Belgique, NY .......... 5.96 10/02/00 69,773,314
60,000,000 Deutsche Bank AG, NY ..................... 5.13 04/20/00 59,675,863
15,000,000 Landesbank Hessen-Thuringen
Girozentrale, NY ......................... 5.22 02/29/00 14,942,330
50,000,000 National Bank of Canada, NY .............. 5.17 04/10/00 49,751,570
23,000,000 UBS AG, Stamford ......................... 5.82 08/03/00 22,915,474
- ----------------------------------------------------------------------------------------------------------------
Total Yankee Certificates of Deposit
(Cost $657,742,692) ...................... 656,216,017
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
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Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
=============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=============================================================================================================
<S> <C> <C> <C> <C> <C>
Yankee $ 50,000,000 Bayerische Hypo und Vereinsbank AG...... 5.32% 05/15/00 $ 49,980,875
Certificates 50,000,000 Deutsche Bank AG, NY ................... 5.39 04/17/00 49,986,304
of Deposit -- 50,000,000 First Union National Bank, NY .......... 5.56 08/29/00 50,000,000
Variable 73,000,000 Societe Generale, NY ................... 5.33 03/03/00 72,985,446
Rate -- 2.1%
- -------------------------------------------------------------------------------------------------------------
Total Yankee Certificates of
Deposit -- Variable Rate
(Cost $222,952,625) .................... 222,952,625
- -------------------------------------------------------------------------------------------------------------
Time 200,000,000 Chase Manhattan Bank, Nassua ........... 5.25 11/01/99 200,000,000
Deposits -- 290,000,000 Deutsche Bank AG, Grand Cayman ......... 5.34 11/01/99 290,000,000
6.2% 172,470,000 SunTrust Bank, Grand Cayman ............ 5.25 11/01/99 172,470,000
- -------------------------------------------------------------------------------------------------------------
Total Time Deposits
(Cost $662,470,000) .................... 662,470,000
- -------------------------------------------------------------------------------------------------------------
Bank Notes -- 25,000,000 First USA Bank, NA ..................... 6.08 10/10/00 24,943,348
0.2%
- -------------------------------------------------------------------------------------------------------------
Total Bank Notes
(Cost $24,988,762) ..................... 24,943,348
- -------------------------------------------------------------------------------------------------------------
Bank Notes -- 50,000,000 American Express Centurion Bank ........ 5.45 05/03/00 50,000,000
Variable 65,000,000 American Express Centurion Bank ........ 5.48 06/19/00 64,940,782
Rate -- 6.5% 90,000,000 Comerica Bank .......................... 5.38 05/01/00 89,969,388
50,000,000 First Union National Bank .............. 5.47 11/16/99 49,999,795
50,000,000 First Union National Bank .............. 5.45 05/08/00 50,000,000
20,000,000 First Union National Bank .............. 5.47 06/02/00 20,000,000
75,000,000 First Union National Bank .............. 5.51 09/27/00 75,000,000
20,000,000 Fleet National Bank .................... 5.52 08/14/00 19,985,850
50,000,000 Harris Trust & Savings ................. 5.41 04/05/00 49,991,601
50,000,000 KeyBank N.A. ........................... 5.61 03/20/00 50,000,000
29,000,000 Morgan Guaranty Trust Co., NY .......... 5.40 05/10/00 28,992,492
25,000,000 National City Bank, Ohio ............... 5.38 03/29/00 24,993,017
125,000,000 NationsBank, N.A. ...................... 5.41 04/05/00 124,979,003
- -------------------------------------------------------------------------------------------------------------
Total Bank Notes -- Variable Rate
(Cost $698,851,928) .................... 698,851,928
- -------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
===============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
===============================================================================================================
<S> <C> <C> <C> <C> <C>
Corporate $13,630,000 Associates Corp. of North America .......... 6.13% 11/12/99 $ 13,634,135
Notes -- 2.8% 50,000,000 Beta Finance Corp. ......................... 5.15 01/13/00 50,000,000
10,000,000 Beta Finance Corp. ......................... 5.26 03/08/00 9,960,000
50,000,000 Beta Finance Corp. ......................... 5.62 06/15/00 49,789,800
17,000,000 Beta Finance Corp. ......................... 5.75 07/21/00 17,000,000
23,000,000 Beta Finance Corp. ......................... 5.90 08/14/00 23,000,000
15,424,000 Chrysler Financial Corp. ................... 12.75 11/01/99 15,424,000
12,500,000 CIT Group Holdings Inc. .................... 6.70 06/02/00 12,542,186
24,000,000 First Union National Bank .................. 5.30 03/01/00 23,936,712
40,000,000 Goldman Sachs Group L.P. ................... 6.00 08/07/00 39,861,236
24,000,000 Wells Fargo & Co. .......................... 5.31 03/31/00 23,952,360
25,000,000 Wells Fargo & Co. .......................... 5.23 04/10/00 24,935,148
- ---------------------------------------------------------------------------------------------------------------
Total Corporate Notes
(Cost $304,598,014) ........................ 304,035,577
- ---------------------------------------------------------------------------------------------------------------
Corporate 25,000,000 American Honda Finance Corp. ............... 5.55 11/29/99 25,000,000
Notes -- 50,000,000 American Honda Finance Corp. ............... 5.47 04/10/00 49,963,140
Variable 25,000,000 American Honda Finance Corp. ............... 5.48 05/24/00 24,992,500
Rate -- 8.5% 50,000,000 Bear Stearns Companies Inc. ................ 5.51 06/22/00 49,954,695
25,000,000 Citigroup Inc. ............................. 5.44 02/03/00 25,011,222
50,000,000 CIT Group Holdings Inc. .................... 5.39 03/27/00 49,966,195
60,000,000 CIT Group Holdings Inc. .................... 5.41 05/30/00 59,932,014
83,500,000 CIT Group Holdings Inc. .................... 5.55 09/15/00 83,424,174
54,000,000 Ford Motor Credit Co. ...................... 5.45 05/05/00 53,948,916
30,000,000 General Electric Capital Corp. ............. 6.13 04/12/00 29,988,597
23,500,000 General Electric Capital Corp. ............. 5.29 05/03/00 23,498,705
39,900,000 General Electric Capital Corp. ............. 5.39 05/12/00 39,887,348
50,000,000 General Electric Capital Corp. ............. 5.43 05/26/00 49,970,445
56,585,000 General Motors Acceptance Corp. ............ 6.16 07/20/00 56,508,044
36,000,000 General Motors Acceptance Corp. ............ 5.65 12/01/00 35,963,460
22,000,000 General Motors Acceptance Corp. ............ 5.53 02/27/01 22,000,000
15,000,000 Goldman Sachs Group L.P. ................... 6.26 11/13/00 15,000,000
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
===============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
===============================================================================================================
<S> <C> <C> <C> <C> <C>
Corporate $ 30,000,000 Racers 1998-MM-12-3 ...................... 5.46% 08/11/00 $ 30,000,000
Notes -- 47,500,000 Racers 1998-MM-7-1 ....................... 5.51 01/21/00 47,500,000
Variable 85,000,000 SMM Trust 1999-H ......................... 5.59 09/25/00 85,000,000
Rate 20,000,000 Wells Fargo & Co. ........................ 5.39 04/26/00 19,960,138
(continued) 40,000,000 Xerox Capital (Europe) PLC ............... 5.37 04/06/00 39,964,400
- ---------------------------------------------------------------------------------------------------------------
Total Corporate Notes -- Variable
Rate (Cost $917,844,285) ................. 917,433,993
- ---------------------------------------------------------------------------------------------------------------
Euro Notes -- 75,000,000 BankAmerica Corporation .................. 8.38 12/15/99 75,281,502
Variable
Rate -- 0.7%
- ---------------------------------------------------------------------------------------------------------------
Total Euro Notes -- Variable Rate
(Cost $75,281,502) ....................... 75,281,502
- ---------------------------------------------------------------------------------------------------------------
Master 50,000,000 General Electric Co. ..................... 5.48 09/01/00 50,000,000
Notes -- 300,000,000 Goldman Sachs Group L.P. ................. 5.33 11/18/99 300,000,000
Variable 20,000,000 Goldman Sachs Group L.P. ................. 5.29 06/30/00 20,000,000
Rate -- 8.6% 30,000,000 Jackson National Life Insurance Co. ...... 5.42 05/01/00 30,000,000
28,000,000 John Hancock Mutual Life
Insurance Co. ............................ 5.44 12/13/99 28,000,000
80,000,000 MetLife Funding Inc. ..................... 5.45 05/01/00 80,000,000
250,000,000 Morgan (J.P.) & Co., Inc. ................ 5.33 06/20/00 250,000,000
10,000,000 Pacific Life Insurance Co. ............... 5.43 06/01/00 10,000,000
10,000,000 Pacific Life Insurance Co. ............... 5.43 10/02/00 10,000,000
25,000,000 Principal Financial Securities Inc. ...... 5.51 08/16/00 25,000,000
71,000,000 Security Life of Denver Insurance Co. 5.51 03/23/00 71,000,000
20,000,000 TransAmerica Life Insurance &
Annuity Co. .............................. 5.49 03/24/00 20,000,000
30,000,000 Travelers Insurance Company (The) ........ 5.43 02/01/00 30,000,000
- ---------------------------------------------------------------------------------------------------------------
Total Master Notes -- Variable
Rate (Cost $924,000,000) ................. 924,000,000
- ---------------------------------------------------------------------------------------------------------------
Commercial 25,028,000 Alpine Securitization Corp. .............. 5.35 11/04/99 25,016,842
Paper -- 29.7% 38,216,000 Alpine Securitization Corp. .............. 5.42 11/22/99 38,095,174
46,450,000 Alpine Securitization Corp. .............. 5.42 11/29/99 46,254,187
25,000,000 Amsterdam Funding Corp. .................. 5.36 11/16/99 24,944,167
25,000,000 Amsterdam Funding Corp. .................. 5.78 02/01/00 24,613,994
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
=================================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=================================================================================================================
<S> <C> <C> <C> <C> <C>
Commercial $ 25,000,000 Amsterdam Funding Corp. ..................... 5.87% 02/01/00 $ 24,613,994
Paper 25,000,000 Amsterdam Funding Corp. ..................... 5.78 02/04/00 24,601,344
(continued) 55,000,000 Apreco Inc. ................................. 5.40 11/22/99 54,826,750
25,000,000 Apreco Inc. ................................. 5.40 12/15/99 24,835,000
100,000,000 Associates First Capital Corp. .............. 5.17 12/21/99 99,281,944
50,000,000 Bank of Scotland Treasury
Services PLC ................................ 5.35 12/29/99 49,569,028
50,000,000 BASF AG ..................................... 5.36 12/30/99 49,560,778
75,000,000 Bear Stearns Companies Inc. ................. 5.79 03/09/00 73,373,032
25,000,000 Caisse des Depots et Consignations .......... 5.28 12/22/99 24,813,000
30,000,000 Centric Capital Corp. ....................... 5.40 12/14/99 29,806,500
25,000,000 Centric Capital Corp. ....................... 5.38 12/28/99 24,787,042
20,000,000 China Merchants (Cayman) Inc. ............... 5.42 11/29/99 19,915,689
50,000,000 Ciesco L.P. ................................. 5.32 11/15/99 49,896,555
50,000,000 Clipper Receivables Corp. ................... 5.39 12/10/99 49,708,042
25,000,000 Corporate Asset Funding Co. Inc. ............ 5.35 11/18/99 24,936,840
55,500,000 Corporate Asset Funding Co. Inc. ............ 5.37 12/07/99 55,201,965
75,000,000 Corporate Receivables Corp. ................. 5.35 11/18/99 74,810,521
57,000,000 Countrywide Home Loans Inc. ................. 5.31 11/02/99 56,991,592
75,000,000 Credit Suisse First Boston Inc. ............. 5.76 02/17/00 73,639,420
50,000,000 DaimlerChrysler North America
Holding Corp. ............................... 5.36 11/15/99 49,895,778
50,000,000 Delaware Funding Corp. ...................... 5.77 02/11/00 49,143,615
25,000,000 Den Norske Bank ASA ......................... 5.35 12/27/99 24,791,944
48,093,000 Edison Asset Securitization LLC ............. 5.75 03/09/00 47,049,723
19,050,000 Edison Asset Securitization LLC ............. 5.78 03/10/00 18,633,524
100,000,000 Edison Asset Securitization LLC ............. 5.79 03/16/00 97,712,144
25,000,000 Eureka Securitization Inc. .................. 5.36 11/15/99 24,947,889
25,000,000 Eureka Securitization Inc. .................. 5.37 11/19/99 24,932,875
45,000,000 Finova Capital Corp. ........................ 5.85 02/18/00 44,176,048
100,000,000 Ford Motor Credit Co. ....................... 5.26 12/28/99 99,167,167
100,000,000 Ford Motor Credit Co. ....................... 5.26 12/29/99 99,152,556
24,000,000 Formosa Plastics Corp. U.S.A. ............... 5.90 04/19/00 23,312,362
200,000,000 General Electric Co. ........................ 5.34 12/23/99 198,457,333
50,000,000 Grand Funding Corp. ......................... 5.36 11/29/99 49,791,556
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
==============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
==============================================================================================================
<S> <C> <C> <C> <C> <C>
Commercial $ 32,039,000 Greenwich Funding Corp. ................ 6.13% 01/31/00 $ 31,529,046
Paper 100,000,000 Greyhawk Capital Corp. ................. 5.39 12/15/99 99,341,222
(continued) 34,000,000 GTE Corp. .............................. 5.40 11/16/99 33,923,500
30,000,000 InterPeru Funding Ltd. ................. 5.83 03/22/00 29,283,140
76,727,000 Kitty Hawk Funding Corp. ............... 5.38 12/13/99 76,245,410
34,702,000 Kitty Hawk Funding Corp. ............... 5.28 12/17/99 34,467,877
40,000,000 Lehman Brothers Holdings Inc. .......... 5.85 02/10/00 39,321,644
100,000,000 Morgan Stanley Dean Witter & Co. ....... 5.89 03/10/00 97,813,777
200,000,000 National Australia Funding (DE) Inc. 5.30 11/01/99 200,000,000
50,000,000 Nordbanken N.A. Inc. ................... 5.35 12/27/99 49,583,889
57,203,000 Park Avenue Receivables Corp. .......... 5.35 11/29/99 56,964,972
50,000,000 Prudential Funding Corp. ............... 5.17 12/10/99 49,719,958
50,000,000 Salomon, Smith Barney Holdings, Inc. 5.75 03/08/00 48,923,824
50,000,000 Santander Finance (Delaware) Inc. ...... 5.30 12/16/99 49,668,750
25,000,000 Tulip Funding Corp. .................... 5.74 02/11/00 24,571,807
50,000,000 Tulip Funding Corp. .................... 5.74 02/14/00 49,118,283
12,300,000 Tulip Funding Corp. .................... 5.78 02/14/00 12,083,098
12,700,000 Tulip Funding Corp. .................... 6.06 02/15/00 12,473,899
50,000,000 Unifunding Inc. ........................ 5.35 12/23/99 49,613,611
50,000,000 United Mexican States .................. 5.92 04/19/00 48,567,420
85,000,000 Variable Funding Capital Corp. ......... 5.36 11/01/99 85,000,000
61,577,000 Vodafone AirTouch PLC .................. 5.37 12/21/99 61,117,738
25,000,000 WCP Funding Inc. ....................... 5.35 11/15/99 24,947,986
50,000,000 Windmill Funding Corp. ................. 5.41 12/09/99 49,714,472
- --------------------------------------------------------------------------------------------------------------
Total Commercial Paper
(Cost $3,209,975,985) .................. 3,209,253,237
- --------------------------------------------------------------------------------------------------------------
Commercial 250,000,000 Asset Securitization Cooperative Corp. 5.52 03/13/00 250,000,000
Paper -- 121,000,000 AT&T Corp. ............................. 6.13 07/13/00 120,966,279
Variable 100,000,000 CXC Inc. ............................... 5.52 03/15/00 99,996,303
Rate -- 6.2% 30,000,000 Finova Capital Corp. ................... 6.38 01/21/00 30,000,000
25,000,000 Morgan Stanley Dean Witter & Co. ....... 5.47 02/14/00 25,000,000
38,500,000 Park Avenue Receivables Corp. .......... 5.51 02/11/00 38,494,495
100,000,000 Variable Funding Capital Corp. ......... 5.56 02/01/00 100,000,000
- --------------------------------------------------------------------------------------------------------------
Total Commercial Paper --
Variable Rate (Cost $664,457,077) ...... 664,457,077
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
========================================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
========================================================================================================================
<S> <C> <C> <C> <C> <C>
Repurchase $250,000,000 Aubrey G. Lanston & Co. Inc.,
Agreements** purchased on 10/29/99 ......................... 5.38% 11/01/99 $ 250,000,000
-- 2.3%
- ------------------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $250,000,000) ............................ 250,000,000
- ------------------------------------------------------------------------------------------------------------------------
Total Investments -- 99.0%
(Cost $10,696,280,602) ......................... 10,687,825,963
- ------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.0% .......... 108,920,245
- ------------------------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00
Per Share on 10,805,200,847
Shares of Beneficial Interest
Outstanding -- 100.0% .......................... $10,796,746,208
========================================================================================================================
</TABLE>
Note--Costs for federal income tax purposes are the same as those shown above.
At October 31, 1999, net unrealized depreciation amounted to $8,454,639 and is
comprised of $9,066 in appreciation and $8,463,705 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 October 31, 1999. 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.
13
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Statement of Assets and Liabilities
October 31, 1999 (Unaudited)
================================================================================
<TABLE>
<S> <C>
Assets:
Total investments at value (identified cost $10,696,280,602) (Note 1a) ............ $10,687,825,963
Cash .............................................................................. 49,719,204
Interest receivable ............................................................... 65,727,985
Prepaid expenses .................................................................. 324,566
---------------
Total assets ................................................................... 10,803,597,718
---------------
Liabilities:
Advisory fee payable (Note 2) ..................................................... 1,352,107
Dividends payable ................................................................. 5,314,282
Accrued expenses .................................................................. 185,121
---------------
Total liabilities .............................................................. 6,851,510
---------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based on
10,805,200,847 shares of beneficial interest outstanding) ........................ $10,796,746,208
===============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Statement of Operations
For the Six Months Ended October 31, 1999 (Unaudited)
================================================================================
<TABLE>
<S> <C> <C>
Investment Income:
Interest and discount earned (Note 1d) .............................. $265,706,138
------------
Expenses:
Investment advisory fee (Note 2) .................................... 7,714,930
Registration fees ................................................... 971,331
Accounting and custodian services ................................... 265,604
Dividend and transfer agency fees ................................... 87,054
Legal and audit fees ................................................ 72,264
Trustees' fees (Note 5) ............................................. 47,631
Printing and shareholder reports .................................... 25,220
Insurance ........................................................... 23,908
Miscellaneous ....................................................... 18,500
------------
Total expenses ................................................... 9,226,442
------------
Net investment income ............................................ 256,479,696
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain from investment transactions ...... $ 4,758
Net unrealized depreciation of investments .......... (6,468,625)
-----------
Net realized and unrealized loss from investments ................ (6,463,867)
------------
Net Increase in Net Assets Resulting From Operations ................ $250,015,829
============
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
October 31, 1999 April 30, 1999
=======================================================================================================
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income ........................................ $ 256,479,696 $ 464,873,396
Net realized gain from investment transactions ............... 4,758 928,397
Net unrealized depreciation of investments ................... (6,468,625) (1,036,026)
--------------- ---------------
Net increase in net assets resulting from operations ......... 250,015,829 464,765,767
Total declared as dividends to shareholders (Note 4) ......... (256,484,454) (465,801,793)
Capital share transactions (Note 3) .......................... 175,332,014 3,984,396,212
--------------- ---------------
Net increase in net assets ................................... 168,863,389 3,983,360,186
Net Assets:
Beginning of period .......................................... 10,627,882,819 6,644,522,633
--------------- ---------------
End of period ................................................ $10,796,746,208 $10,627,882,819
=============== ===============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Premier Institutional Fund
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
October 31, 1999
=======================================================================================
<S> <C>
Net Asset Value, beginning of period ............................. $1.00
Income from Investment Operations:
Net investment income ........................................... .025
Less Distributions:
Dividends from net investment income ............................ (.025)
-----
Net Asset Value, end of period ................................... $1.00
=====
Total Return ..................................................... 2.54%(1)
Ratios/Supplemental Data:
Net Assets, end of period (000) ................................. $10,796,746
Ratio of expenses to average net assets
(before waiver) ................................................ .18%(2)
Ratio of expenses to average net assets (after waiver) ..........
Ratio of net investment income, including realized
and unrealized gains and losses, to average net
assets (before waiver) ......................................... 4.86%(2)
Ratio of net investment income, including realized
and unrealized gains and losses, to average net
assets (after waiver) .......................................... --
<CAPTION>
Year Ended April 30, For the Period
-------------------------- January 27, 1997*
1999 1998 to April 30, 1997
====================================================================================================================
<S> <C> <C> <C>
Net Asset Value, beginning of period ............................. $1.00 $1.00 $1.00
Income from Investment Operations:
Net investment income ........................................... .052 .055 .014
Less Distributions:
Dividends from net investment income ............................ (.052) (.055) (.014)
----- ----- -----
Net Asset Value, end of period ................................... $1.00 $1.00 $1.00
===== ===== =====
Total Return ..................................................... 5.32% 5.69% 1.40%(1)
Ratios/Supplemental Data:
Net Assets, end of period (000) ................................. $10,627,883 $6,644,523 $2,823,196
Ratio of expenses to average net assets
(before waiver) ................................................ .18% .18% .18%(2)
Ratio of expenses to average net assets (after waiver) .......... -- -- .17%(2)
Ratio of net investment income, including realized
and unrealized gains and losses, to average net
assets (before waiver) ......................................... 5.13% 5.55% 5.26%(2)
Ratio of net investment income, including realized
and unrealized gains and losses, to average net
assets (after waiver) .......................................... -- -- 5.27%(2)
</TABLE>
*Commencement of operations
(1) Cumulative total return
(2) On an annualized basis
See Notes to Financial Statements.
15
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
===============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
===============================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. $25,000,000 U.S. Treasury Bills ...................... 4.17% 01/06/00 $ 24,787,291
Government & 12,500,000 U.S. Treasury Notes ...................... 5.88 11/15/99 12,506,634
Agency 50,000,000 U.S. Treasury Notes ...................... 5.63 12/31/99 50,031,250
Issues -- 8.3% 10,000,000 U.S. Treasury Notes ...................... 5.38 01/31/00 10,065,630
12,500,000 U.S. Treasury Notes ...................... 7.75 01/31/00 12,507,812
13,000,000 U.S. Treasury Notes ...................... 5.88 02/15/00 13,028,444
25,000,000 U.S. Treasury Notes ...................... 5.50 03/31/00 25,023,450
25,000,000 U.S. Treasury Notes ...................... 5.63 04/30/00 25,031,250
12,500,000 U.S. Treasury Notes ...................... 6.25 05/31/00 12,558,600
15,000,000 U.S. Treasury Notes ...................... 5.38 07/31/00 14,985,945
22,500,000 U.S. Treasury Notes ...................... 4.50 09/30/00 22,282,042
10,000,000 U.S. Treasury Notes ...................... 4.63 11/30/00 9,893,750
30,000,000 U.S. Treasury Notes ...................... 4.50 01/31/01 29,568,750
20,000,000 U.S. Treasury Notes ...................... 4.88 03/31/01 19,762,500
25,000,000 Federal Home Loan Banks .................. 4.98 01/19/00 24,959,900
25,000,000 Federal Home Loan Banks .................. 4.98 02/16/00 24,945,312
24,000,000 Federal Home Loan Banks .................. 4.95 11/20/00 23,734,560
28,000,000 Federal Home Loan Mortgage Corp. ......... 5.05 11/17/00 27,720,000
25,000,000 Federal Home Loan Mortgage Corp. ......... 5.18 11/24/00 24,774,822
12,500,000 Federal Home Loan Mortgage Corp. ......... 5.25 01/19/01 12,375,461
25,000,000 Federal Home Loan Mortgage Corp. ......... 5.15 01/26/01 24,718,900
25,000,000 Federal National Mortgage Assoc. ......... 5.21 01/26/01 24,741,848
21,870,000 Federal National Mortgage Assoc. ......... 5.41 03/22/01 21,660,114
25,000,000 Federal National Mortgage Assoc. ......... 5.38 04/06/01 24,740,623
9,000,000 Federal National Mortgage Assoc. ......... 5.30 04/17/01 8,895,509
20,000,000 Federal National Mortgage Assoc. ......... 6.00 07/17/01 19,899,418
20,000,000 Student Loan Marketing Assoc. ............ 5.89 11/17/99 20,011,029
50,000,000 Federal Home Loan Mortgage Corp.
D/N ...................................... 5.10 12/17/99 49,674,167
25,000,000 Federal National Mortgage Assoc. D/N. 4.61 11/22/99 24,932,844
50,000,000 Federal National Mortgage Assoc. D/N. 4.66 12/13/99 49,728,167
- ---------------------------------------------------------------------------------------------------------------
Total U.S. Government & Agency
Issues (Cost $693,024,863) ............... 689,546,022
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
===============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
===============================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. $ 25,000,000 Federal Home Loan Banks ............... 5.31% 11/09/99 $ 24,999,678
Government 50,000,000 Federal Home Loan Banks ............... 5.31 11/12/99 49,999,111
Agency 50,000,000 Federal Home Loan Banks ............... 5.31 11/16/99 49,998,562
Issues -- 30,000,000 Federal Home Loan Banks ............... 5.46 04/28/00 29,994,131
Variable 150,000,000 Federal Home Loan Mortgage Corp. ...... 5.65 04/14/00 149,966,188
Rate -- 8.6% 25,000,000 Federal Home Loan Mortgage Corp. ...... 5.65 07/14/00 24,991,257
100,000,000 Student Loan Marketing Assoc. ......... 5.79 09/29/00 99,972,431
90,000,000 Student Loan Marketing Assoc. ......... 5.80 09/29/00 89,984,552
100,000,000 Student Loan Marketing Assoc. ......... 5.85 10/04/00 99,950,925
55,000,000 Student Loan Marketing Assoc. ......... 5.55 01/12/00 54,998,003
40,000,000 Student Loan Marketing Assoc. ......... 5.56 02/02/00 39,997,554
- ---------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency
Issues -- Variable Rate
(Cost $714,852,392) ................... 714,852,392
- ---------------------------------------------------------------------------------------------------------------
Certificates of 25,000,000 First USA Bank, NA .................... 6.20 10/18/00 24,987,551
Deposit -- 0.3%
- ---------------------------------------------------------------------------------------------------------------
Total Certificates of Deposit
(Cost $24,986,211) .................... 24,987,551
- ---------------------------------------------------------------------------------------------------------------
Certificates 50,000,000 First Union National Bank ............. 5.56 08/29/00 50,000,000
of Deposit -- 100,000,000 First Union National Bank ............. 5.49 08/31/00 100,000,000
Variable 75,000,000 Fleet National Bank ................... 5.40 04/17/00 74,983,636
Rate -- 2.7%
- ---------------------------------------------------------------------------------------------------------------
Total Certificates of Deposit--
Variable Rate (Cost $224,983,636) ..... 224,983,636
- ---------------------------------------------------------------------------------------------------------------
Euro 50,000,000 Svenska Handelsbanken, London ......... 5.44 12/29/99 50,000,790
Certificates
of Deposit 60,000,000 Svenska Handelsbanken, London ......... 5.45 12/29/99 60,000,951
- -- 1.3%
- ---------------------------------------------------------------------------------------------------------------
Total Euro Certificates of Deposit
(Cost $110,001,741) ................... 110,001,741
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
===============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
===============================================================================================================
<S> <C> <C> <C> <C> <C>
Euro $42,500,000 Abbey National Treasury Services PLC 5.43% 11/01/99 $ 42,500,000
Certificates of
Deposit --
Variable
Rate -- 0.5%
- ---------------------------------------------------------------------------------------------------------------
Total Euro Certificates of Deposit --
Variable Rate (Cost $42,500,000) ....... 42,500,000
- ---------------------------------------------------------------------------------------------------------------
Yankee 25,000,000 Bank Austria, NY ........................ 5.25 03/01/00 24,905,185
Certificates of 25,000,000 Banque Nationale de Paris, NY ........... 5.45 12/30/99 25,000,403
Deposit -- 8.9% 50,000,000 Bayerische Landesbank
Girozentrale, NY ....................... 5.43 12/30/99 50,000,000
25,000,000 Bayerische Hypo und Vereinsbank
AG, NY .................................. 5.27 03/03/00 24,905,575
35,000,000 Canadian Imperial Bank of
Commerce, NY ............................ 5.45 12/31/99 34,943,706
50,000,000 Commerzbank AG, NY ...................... 5.09 02/17/00 49,804,560
25,000,000 Commerzbank AG, NY ...................... 5.19 02/25/00 24,903,755
25,000,000 Commerzbank AG, NY ...................... 5.17 04/24/00 24,865,180
50,000,000 Commerzbank AG, NY ...................... 5.29 05/22/00 49,721,750
25,000,000 Commerzbank AG, NY ...................... 5.91 08/04/00 24,924,057
55,000,000 Credit Communal de Belgique, NY ......... 5.96 10/02/00 54,821,905
75,000,000 Deutsche Bank AG, NY .................... 5.10 04/19/00 74,582,775
40,000,000 Deutsche Bank AG, NY .................... 5.13 04/20/00 39,781,780
15,000,000 Landesbank Hessen-Thuringen
Girozentrale, NY ........................ 5.22 02/29/00 14,941,477
25,000,000 Societe Generale, NY .................... 5.18 02/28/00 24,903,972
25,000,000 Societe Generale, NY .................... 5.22 02/28/00 24,900,750
25,000,000 Societe Generale, NY .................... 5.28 03/01/00 24,907,585
25,000,000 Societe Generale, NY .................... 5.29 03/03/00 24,907,212
50,000,000 Societe Generale, NY .................... 5.53 06/05/00 49,772,895
25,000,000 UBS AG, Stamford ........................ 5.20 02/29/00 24,901,668
25,000,000 UBS AG, Stamford ........................ 5.82 08/03/00 24,907,860
25,000,000 Unibank A/S, NY ......................... 5.45 12/23/99 25,000,355
- ---------------------------------------------------------------------------------------------------------------
Total Yankee Certificates of Deposit
(Cost $744,725,391) ..................... 742,304,405
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
============================================================================================================
<S> <C> <C> <C> <C> <C>
Yankee $ 64,000,000 Bayerische Hypo und Vereinsbank
Certificates of AG, NY .............................. 5.32% 05/15/00 $ 63,975,520
Deposit -- 50,000,000 Societe Generale, NY ................ 5.33 03/03/00 49,990,032
Variable
Rate -- 1.4%
- ------------------------------------------------------------------------------------------------------------
Total Yankee Certificates of
Deposit -- Variable Rate
(Cost $113,965,552) ................. 113,965,552
- ------------------------------------------------------------------------------------------------------------
Time 300,000,000 Chase Manhattan Bank, Nassau ........ 5.25 11/01/99 300,000,000
Deposit -- 57,664,000 State Street Bank & Trust Co. ....... 5.25 11/01/99 57,664,000
4.6% 21,000,000 SunTrust Bank, Grand Cayman ......... 5.25 11/01/99 21,000,000
- ------------------------------------------------------------------------------------------------------------
Total Time Deposits
(Cost $378,664,000) ................. 378,664,000
- ------------------------------------------------------------------------------------------------------------
Bank 22,000,000 First USA Bank, NA .................. 6.08 10/10/00 21,950,146
Notes --
0.3%
- ------------------------------------------------------------------------------------------------------------
Total Bank Notes
(Cost $21,990,110) .................. 21,950,146
- ------------------------------------------------------------------------------------------------------------
Bank 50,000,000 American Express Centurion Bank ..... 5.45 05/03/00 50,000,000
Notes -- 50,000,000 American Express Centurion Bank ..... 5.46 05/25/00 49,955,792
Variable 90,000,000 Comerica Bank ....................... 5.38 05/01/00 89,969,388
Rate -- 9.7% 65,000,000 Comerica Bank ....................... 5.42 09/01/00 64,961,937
50,000,000 First Union National Bank ........... 5.47 11/16/99 49,999,795
25,000,000 First Union National Bank ........... 5.45 05/08/00 25,000,000
50,000,000 First Union National Bank ........... 5.47 06/02/00 50,000,000
75,000,000 First Union National Bank ........... 5.51 09/27/00 75,000,000
80,000,000 Fleet National Bank ................. 5.52 08/14/00 79,943,401
50,000,000 Harris Trust & Savings .............. 5.41 04/05/00 49,991,601
50,000,000 KeyBank N.A. ........................ 5.61 03/20/00 50,000,000
20,000,000 Morgan Guaranty Trust Co., NY ....... 5.40 05/10/00 19,994,822
25,000,000 National City Bank, Ohio ............ 5.38 03/29/00 24,993,017
125,000,000 NationsBank, N.A. ................... 5.41 04/05/00 124,979,003
- ------------------------------------------------------------------------------------------------------------
Total Bank Notes -- Variable Rate
(Cost $804,788,756) ................. 804,788,756
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
==============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
==============================================================================================================
<S> <C> <C> <C> <C> <C>
Corporate $19,000,000 Associates Corp. of North America ........ 8.30% 11/23/99 $ 19,036,178
Notes -- 2.5% 47,000,000 Beta Finance Corp. ....................... 5.62 06/15/00 47,000,000
45,000,000 Beta Finance Corp. ....................... 5.71 07/21/00 45,000,000
58,000,000 Beta Finance Corp. ....................... 5.75 07/21/00 58,000,000
12,000,000 General Motors Acceptance Corp. .......... 6.88 07/17/00 12,000,000
25,000,000 Goldman Sachs Group L.P. ................. 6.00 08/07/00 24,913,272
- --------------------------------------------------------------------------------------------------------------
Total Corporate Notes
(Cost $206,117,025) ...................... 205,949,450
- --------------------------------------------------------------------------------------------------------------
Corporate 50,000,000 CIT Group Holdings Inc. .................. 5.39 03/27/00 49,966,195
Notes -- 33,000,000 CIT Group Holdings Inc. .................. 5.41 05/30/00 32,962,608
Variable 40,000,000 Ford Motor Credit Co. .................... 5.45 05/05/00 39,962,160
Rate -- 6.0% 25,000,000 General Electric Capital Corp. ........... 6.13 04/12/00 24,990,497
48,000,000 General Electric Capital Corp. ........... 5.43 05/26/00 47,971,627
30,500,000 General Motors Acceptance Corp. .......... 5.65 12/01/00 30,469,042
19,000,000 General Motors Acceptance Corp. .......... 5.53 02/27/01 19,000,000
25,000,000 Goldman Sachs Group L.P. ................. 5.65 03/02/00 24,978,748
17,000,000 Goldman Sachs Group L.P. ................. 6.26 11/13/00 17,000,000
11,000,000 NationsBank Corp. ........................ 5.56 02/09/00 11,006,105
41,000,000 Racers 1998-MM-12-3 ...................... 5.51 01/21/00 41,000,000
25,000,000 Racers 1998-MM-7-1 ....................... 5.46 08/11/00 25,000,000
80,000,000 SMM Trust 1999-H ......................... 5.59 09/25/00 80,000,000
25,000,000 Variable Funding Capital Corp. ........... 5.56 02/01/00 25,000,000
28,000,000 Xerox Capital (Europe) PLC ............... 5.37 04/06/00 27,975,080
- --------------------------------------------------------------------------------------------------------------
Total Corporate Notes -- Variable Rate
(Cost $497,484,522) ...................... 497,282,062
- --------------------------------------------------------------------------------------------------------------
Euro 50,000,000 BankAmerica Corp. ........................ 8.38% 12/15/99 50,187,668
Notes -- 0.6%
- --------------------------------------------------------------------------------------------------------------
Total Euro Notes
(Cost $50,187,668) ....................... 50,187,668
- --------------------------------------------------------------------------------------------------------------
Euro Notes -- 10,000,000 BankAmerica Corp. ........................ 5.90 03/01/00 10,010,200
Variable
Rate -- 0.1%
- --------------------------------------------------------------------------------------------------------------
Total Euro Notes -- Variable Rate
(Cost $10,012,635) ....................... 10,010,200
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
=================================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=================================================================================================================
<S> <C> <C> <C> <C> <C>
Master $ 45,000,000 General Electric Co. ...................... 5.48% 09/01/00 $ 45,000,000
Notes -- 185,000,000 Goldman Sachs Group L.P. .................. 5.33 11/18/99 185,000,000
Variable 20,000,000 Goldman Sachs Group L.P. .................. 5.29 06/30/00 20,000,000
Rate -- 7.6% 89,000,000 Jackson National Life Insurance Co. ....... 5.49 02/01/00 89,000,000
250,000,000 Morgan (J.P.) & Co., Inc. ................. 5.33 06/20/00 250,000,000
22,000,000 Security Life of Denver Insurance Co. ..... 5.51 03/23/00 22,000,000
20,000,000 TransAmerica Life Insurance &
Annuity Co. ............................... 5.49 03/24/00 20,000,000
- -----------------------------------------------------------------------------------------------------------------
Total Master Notes --Variable Rate
(Cost $631,000,000) ....................... 631,000,000
- -----------------------------------------------------------------------------------------------------------------
Commercial 25,000,000 Amsterdam Funding Corp. ................... 5.78 02/01/00 24,613,994
Paper -- 25.0% 25,000,000 Amsterdam Funding Corp. ................... 5.87 02/01/00 24,613,994
20,000,000 Apreco Inc. ............................... 5.40 11/22/99 19,937,000
60,000,000 Apreco Inc. ............................... 5.38 11/29/99 59,748,933
50,000,000 Bank of Scotland Treasury
Services PLC .............................. 5.35 12/29/99 49,569,028
50,000,000 Bear Stearns Companies, Inc. .............. 5.79 03/03/00 48,966,132
75,000,000 Bear Stearns Companies, Inc. .............. 5.79 03/09/00 73,373,032
75,000,000 Caisse des Depots et Consignations ........ 5.28 12/22/99 74,439,000
23,000,000 Centric Capital Corp. ..................... 5.38 12/28/99 22,804,078
50,000,000 Clipper Receivables Corp. ................. 5.37 11/16/99 49,888,125
25,000,000 Corporate Receivables Corp. ............... 5.35 11/18/99 24,936,840
50,000,000 Credit Suisse First Boston Inc ............ 5.76 02/17/00 49,092,947
50,000,000 DaimlerChrysler North America
Holdings Corp. ........................... 5.36 11/15/99 49,895,778
25,000,000 DaimlerChrysler North America
Holdings Corp. ............................ 5.75 02/29/00 24,495,758
25,472,000 Delaware Funding Corp. .................... 5.38 11/22/99 25,392,060
50,000,000 Delaware Funding Corp. .................... 5.77 02/11/00 49,143,615
25,000,000 Den Norske Bank ASA ....................... 5.35 12/27/99 24,791,944
40,876,000 Edison Asset Securitization LLC ........... 5.75 02/29/00 40,051,544
50,000,000 Edison Asset Securitization LLC ........... 5.75 03/08/00 48,923,824
50,000,000 Edison Asset Securitization LLC ........... 5.79 03/16/00 48,856,072
25,000,000 Eureka Securitization Inc. ................ 5.37 11/19/99 24,932,875
50,000,000 Finova Capital Corp. ...................... 5.43 12/13/99 49,683,250
25,000,000 Finova Capital Corp. ...................... 5.85 02/18/00 24,542,249
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
===================================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
===================================================================================================================
<S> <C> <C> <C> <C> <C>
Commercial $100,000,000 Ford Motor Credit Co. ..................... 5.26% 12/27/99 $ 99,181,778
Paper 100,000,000 General Electric Capital Corp. ............ 5.34 12/23/99 99,228,667
(continued) 25,000,000 Grand Funding Corp. ....................... 5.38 11/17/99 24,940,222
32,000,000 Greenwich Funding Corp. ................... 6.13 01/31/00 31,490,667
25,000,000 Greyhawk Capital Corp. .................... 5.40 12/17/99 24,827,500
50,000,000 Internationale Nederlanden (U.S.)
Funding Corp. ............................. 5.92 03/23/00 48,796,751
50,000,000 Kitty Hawk Funding Corp. .................. 5.38 12/13/99 49,686,167
79,894,000 Kitty Hawk Funding Corp. .................. 5.38 12/15/99 79,368,653
40,000,000 Lehman Brothers Holdings Inc. ............. 5.85 02/10/00 39,321,644
50,000,000 Morgan Stanley Dean Witter & Co. .......... 5.89 03/10/00 48,906,888
117,957,000 National Australia Funding (DEL.) Inc. 5.30 11/01/99 117,957,000
50,000,000 Nordbanken N.A. Inc. ...................... 5.35 12/27/99 49,583,889
50,000,000 Prudential Funding Corp. .................. 5.17 12/10/99 49,719,958
60,000,000 Salomon, Smith Barney Holdings, Inc. ...... 5.75 02/14/00 58,941,940
25,000,000 Salomon, Smith Barney Holdings, Inc. ...... 5.73 02/28/00 24,499,988
25,000,000 Salomon, Smith Barney Holdings, Inc. ...... 5.75 03/08/00 24,461,912
45,000,000 Santander Finance (Delaware) Corp. ........ 5.30 12/16/99 44,701,875
26,541,000 Tulip Funding Corp. ....................... 6.00 02/07/00 26,104,333
45,000,000 Tulip Funding Corp. ....................... 5.74 02/14/00 44,206,455
28,449,000 Tulip Funding Corp. ....................... 6.06 02/15/00 27,942,515
50,000,000 United Mexican States ..................... 5.92 04/19/00 48,567,420
50,000,000 Variable Funding Capital Corp. ............ 5.36 11/16/99 49,888,333
35,000,000 WCP Funding Inc. .......................... 5.35 11/15/99 34,927,181
- -------------------------------------------------------------------------------------------------------------------
Total Commercial Paper
(Cost $2,080,630,131) ..................... 2,079,943,808
- -------------------------------------------------------------------------------------------------------------------
Commercial 250,000,000 Asset Securitization Cooperative Corp. 5.52 03/13/00 250,000,000
Paper -- 100,000,000 AT&T Corp. ................................ 6.13 07/13/00 99,972,131
Variable 192,000,000 CXC Inc. .................................. 5.52 03/15/00 191,992,902
Rate -- 7.9% 25,000,000 Morgan Stanley Dean Witter & Co. .......... 5.47 02/14/00 25,000,000
14,000,000 Park Avenue Receivables Corp. ............. 5.51 02/11/00 13,999,226
75,000,000 Variable Funding Capital Corp. ............ 5.56 02/01/00 75,000,000
- -------------------------------------------------------------------------------------------------------------------
Total Commercial Paper -- Variable
Rate (Cost $655,964,259) .................. 655,964,259
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
==================================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
==================================================================================================================
<S> <C> <C> <C> <C> <C>
Repurchase $250,000,000 Aubrey G. Lanston & Co. Inc.,
Agreements** purchase on 10/29/99 ...................... 5.38% 11/01/99 $ 250,000,000
- -- 3.0%
- -------------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $250,000,000) ....................... 250,000,000
- -------------------------------------------------------------------------------------------------------------------
Total Investments -- 99.3%
(Cost $8,255,878,892) ..................... 8,248,881,648
- -------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.7% ..... 58,506,884
- -------------------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00
Per Share on 8,314,385,776
Shares of Beneficial Interest
Outstanding -- 100.0% ..................... $8,307,388,532
==================================================================================================================
</TABLE>
Note--Costs for federal income tax purposes are the same as those shown above.
At October 31, 1999 net unrealized depreciation amounted to $6,997,244 and is
comprised of $54,253 in appreciation and $7,051,497 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 October 31, 1999. 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.
23
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Statement of Assets and Liabilities
October 31, 1999 (Unaudited)
================================================================================
<TABLE>
<S> <C>
Assets:
Total investments at value (identified cost $8,255,878,892) (Note 1a) ............. $8,248,881,648
Cash .............................................................................. 6,838,850
Interest receivable ............................................................... 55,619,777
Prepaid expenses .................................................................. 65,755
--------------
Total assets ................................................................... 8,311,406,030
--------------
Liabilities:
Advisory fee payable (Note 2) ..................................................... 1,422,946
Dividends payable ................................................................. 2,091,879
Accrued expenses .................................................................. 502,673
--------------
Total liabilities .............................................................. 4,017,498
--------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based on
8,314,385,776 shares of beneficial interest outstanding) ......................... $8,307,388,532
==============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Statement of Operations
For the Six Months Ended October 31, 1999 (Unaudited)
================================================================================
<TABLE>
<S> <C> <C>
Investment Income:
Interest and discount earned (Note 1d) ................................ $216,620,367
------------
Expenses:
Investment advisory fee (Note 2) ....................... $13,752,820
Registration fees ...................................... 605,978
Dividend and transfer agency fees ...................... 591,172
Accounting and custodian services ...................... 215,434
Legal and audit fees ................................... 50,658
Printing and shareholder reports ....................... 40,768
Trustees' fees (Note 5) ................................ 36,838
Insurance .............................................. 18,072
Miscellaneous .......................................... 20,000
-----------
Total expenses ...................................... 15,331,740
Waived investment advisory fee (Note 2) ................ (5,405,879) 9,925,861
----------- ------------
Net investment income .............................................. 206,694,506
Realized and Unrealized Gain (Loss) on investments:
Net realized gain from investment transactions ......... 11,821
Net unrealized depreciation of investments ............. (5,363,186)
-----------
Net realized and unrealized loss from investments .................. (5,351,365)
------------
Net Increase in Net Assets Resulting From Operations .................. $201,343,141
============
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
October 31, 1999 April 30, 1999
=====================================================================================================
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income ........................................ $ 206,694,506 $ 410,903,273
Net realized gain from investment transactions ............... 11,821 673,370
Net unrealized depreciation of investments ................... (5,363,186) (364,199)
-------------- --------------
Net increase in net assets resulting from operations ......... 201,343,141 411,212,444
Total declared as dividends to shareholders (Note 4) ......... (206,706,327) (411,576,643)
Capital share transactions (Note 3) .......................... 252,640,758 688,050,212
-------------- --------------
Net increase in net assets ................................... 247,277,572 687,686,013
Net Assets:
Beginning of period .......................................... 8,060,110,960 7,372,424,947
-------------- --------------
End of period ................................................ $8,307,388,532 $8,060,110,960
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Fund
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
October 31,
1999
===============================================================
<S> <C>
Net Asset Value, beginning of period ...... $1.00
Income from Investment Operations:
Net investment income .................... .025
Less Distributions:
Dividends from net investment income...... (.025)
-----
Net Asset Value, end of period ............ $1.00
=====
Total Return .............................. 2.52%(1)
Ratios/Supplemental Data:
Net Assets, end of period (000) .......... $8,307,389
Ratio of expenses to average net
assets (before waiver) .................. .37%(2)
Ratio of expenses to average net
assets (after waiver) ................... .24%(2)
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (before waiver) .................. 4.69%(2)
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (after waiver) ................... 4.82%(2)
<CAPTION>
Year Ended April 30,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
====================================================================================================================
<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 .054 .052 .056 .050
Less Distributions:
Dividends from net investment income...... (.051) (.054) (.052) (.056) (.050)
----- ----- ----- ----- -----
Net Asset Value, end of period ............ $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total Return .............................. 5.25% 5.57% 5.34% 5.81% 5.11%
Ratios/Supplemental Data:
Net Assets, end of period (000) .......... $8,060,111 $7,372,425 $6,197,878 $7,615,126 $6,580,086
Ratio of expenses to average net
assets (before waiver) .................. .37% .38% .38% .37% .37%
Ratio of expenses to average net
assets (after waiver) ................... .24% .25% .25% .24% .24%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (before waiver) .................. 4.98% 5.34% 5.12% 5.42% 5.00%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (after waiver) ................... 5.11% 5.47% 5.25% 5.55% 5.13%
</TABLE>
(1) Cumulative total return
(2) On an annualized basis
See Notes to Financial Statements.
25
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Rated Institutional Fund
Schedule of Investments
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
==============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
==============================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. $ 2,000,000 U.S. Treasury Notes ..................... 5.63% 04/30/00 $ 2,002,500
Government & 1,000,000 Federal Home Loan Mortgage Corp. ........ 5.05 11/17/00 990,000
Agency 3,000,000 Federal National Mortgage Assoc. ........ 5.41 03/22/01 2,971,209
Issues -- 1.7%
- --------------------------------------------------------------------------------------------------------------
Total U.S. Government & Agency
Issues (Cost $6,006,591) ................ 5,963,709
- --------------------------------------------------------------------------------------------------------------
U.S. 4,000,000 Federal Home Loan Banks ................. 5.31 11/09/99 3,999,948
Government 2,000,000 Federal Home Loan Banks ................. 5.31 11/12/99 1,999,964
Agency 10,000,000 Student Loan Marketing Assoc. ........... 5.80 09/29/00 9,998,284
Issues --
Variable
Rate -- 4.6%
- --------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency
Issues -- Variable Rate
(Cost $15,998,196) ...................... 15,998,196
- --------------------------------------------------------------------------------------------------------------
Euro 1,500,000 Abbey National Treasury
Certificates of Services PLC ........................... 5.43 11/01/99 1,500,000
Deposit --
Variable
Rate -- 0.4%
- --------------------------------------------------------------------------------------------------------------
Total Euro Certificates of Deposit --
Variable Rate (Cost $1,500,000) ........ 1,500,000
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Rated Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
============================================================================================================
<S> <C> <C> <C> <C> <C>
Yankee $15,000,000 Canadian Imperial Holdings Inc. ........ 5.45% 12/31/99 $14,975,874
Certificates of 5,000,000 Societe Generale, NY ................... 5.16 02/22/00 4,980,663
Deposit -- 10,000,000 Societe Generale, NY ................... 5.22 02/28/00 9,961,589
9.1% 2,000,000 UBS AG, Stamford ....................... 5.82 08/03/00 1,992,629
- ------------------------------------------------------------------------------------------------------------
Total Yankee Certificates of Deposit
(Cost $31,997,814) ..................... 31,910,755
- ------------------------------------------------------------------------------------------------------------
Yankee 15,000,000 Societe Generale, NY ................... 5.33 03/03/00 14,997,009
Certificates of
Deposit --
Variable
Rate -- 4.3%
- ------------------------------------------------------------------------------------------------------------
Total Yankee Certificates of
Deposit -- Variable Rate
(Cost $14,997,009) ..................... 14,997,009
- ------------------------------------------------------------------------------------------------------------
Time 15,000,000 Chase Manhattan Bank, Nassau ........... 5.25 11/01/99 15,000,000
Deposits -- 10,000,000 Deutsche Bank AG, Grand
9.2% Cayman ........................... .... 5.34 11/01/99 10,000,000
7,151,000 State Street Bank & Trust Co. .......... 5.25 11/01/99 7,151,000
- ------------------------------------------------------------------------------------------------------------
Total Time Deposits
(Cost $32,151,000) ..................... 32,151,000
- ------------------------------------------------------------------------------------------------------------
Bank Notes -- 5,000,000 First Union National Bank .............. 5.47 06/02/00 5,000,000
Variable
Rate -- 1.4%
- ------------------------------------------------------------------------------------------------------------
Total Bank Notes -- Variable Rate
(Cost $5,000,000) ...................... 5,000,000
- ------------------------------------------------------------------------------------------------------------
Corporate 3,000,000 Beta Finance Corp. ..................... 5.62 06/15/00 3,013,200
Notes -- 1.7% 3,000,000 First USA Bank, NA ..................... 6.08 10/10/00 2,993,202
- ------------------------------------------------------------------------------------------------------------
Total Corporate Notes
(Cost $5,998,560)....................... 6,006,402
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Rated Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
==============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
==============================================================================================================
<S> <C> <C> <C> <C> <C>
Corporate $10,000,000 CIT Group Holdings Inc. ................... 5.55% 09/15/00 $ 9,990,919
Notes -- 2,500,000 Ford Motor Credit Corp. ................... 5.45 05/05/00 2,497,635
Variable 5,000,000 General Electric Capital Corp. ............ 6.13 04/12/00 4,998,100
Rate -- 8.3% 2,000,000 General Electric Capital Corp. ............ 5.43 05/26/00 1,998,818
1,500,000 General Motors Acceptance Corp. ........... 5.20 12/01/00 1,498,477
5,000,000 NationsBank Corp. ......................... 5.56 02/09/00 5,002,775
3,000,000 Racers 1998-MM 3 .......................... 5.51 01/21/00 3,000,000
- --------------------------------------------------------------------------------------------------------------
Total Corporate Notes --
Variable Rate (Cost $28,994,619) .......... 28,986,724
- --------------------------------------------------------------------------------------------------------------
Euro 10,000,000 BankAmerica Corp. ......................... 8.38 12/15/99 10,037,534
Notes -- 2.8%
- --------------------------------------------------------------------------------------------------------------
Total Euro Notes
(Cost $10,037,534) ........................ 10,037,534
- --------------------------------------------------------------------------------------------------------------
Master 5,000,000 Combined Insurance Co. of
Notes -- America ............................ ..... 5.48 06/01/00 5,000,000
Variable 15,000,000 Goldman Sachs Group L.P. .................. 5.33 11/30/99 15,000,000
Rate -- 12.1% 10,000,000 Jackson National Life Insurance Co. ....... 5.49 02/01/00 10,000,000
1,000,000 John Hancock Mutual Life
Insurance Co. ............................. 5.44 08/01/00 1,000,000
1,500,000 Security Life of Denver Insurance Co. ..... 5.51 03/23/00 1,500,000
10,000,000 TransAmerica Life Insurance &
Annuity Co. ............................... 5.49 03/24/00 10,000,000
- --------------------------------------------------------------------------------------------------------------
Total Master Notes -- Variable Rate
(Cost $42,500,000) ........................ 42,500,000
- --------------------------------------------------------------------------------------------------------------
Commercial 7,866,000 Alpine Securitization Corp. ............... 5.50 11/09/99 7,856,386
Paper -- 35.4% 4,000,000 BASF AG ................................... 5.40 12/30/99 3,964,600
4,000,000 Bear Stearns Companies, Inc. .............. 5.79 03/09/00 3,913,229
15,000,000 Centric Capital Corp. ..................... 5.40 12/15/99 14,901,000
4,000,000 Countrywide Home Loans Inc. ............... 5.35 11/01/99 4,000,000
14,000,000 GTE Funding Inc. .......................... 5.40 11/05/99 13,991,600
15,000,000 Salomon, Smith Barney
Holdings, Inc. ............................ 5.75 02/14/00 14,735,485
5,000,000 Santander Finance (DE) Inc. ............... 5.30 12/16/99 4,966,875
15,835,000 Toyota Motor Credit Corp. ................. 5.30 11/01/99 15,835,000
5,000,000 Tulip Funding Corp. ....................... 6.00 02/07/00 4,917,737
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Rated Institutional Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
=============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=============================================================================================================
<S> <C> <C> <C> <C> <C>
Commercial $ 5,000,000 Tulip Funding Corp. ...................... 5.74% 02/14/00 $ 4,911,828
Paper 15,000,000 Variable Funding Capital Corp. ........... 5.36 11/01/99 15,000,000
(continued) 15,000,000 WCP Funding Inc. ......................... 5.35 11/15/99 14,968,792
- -------------------------------------------------------------------------------------------------------------
Total Commercial Paper
(Cost $123,984,325) ...................... 123,962,532
- -------------------------------------------------------------------------------------------------------------
Commercial 10,000,000 CXC Inc. ................................. 5.52 03/15/00 9,999,535
Paper -- 1,000,000 Park Avenue Receivables Corp. ............ 5.51 02/11/00 999,945
Variable
Rate -- 3.1%
- -------------------------------------------------------------------------------------------------------------
Total Commercial Paper --
Variable Rate (Cost $10,999,575) ......... 10,999,480
- -------------------------------------------------------------------------------------------------------------
Repurchase 20,000,000 Lehman Brothers Holdings Inc.,
Agreements** purchased on 10/29/99 ................... 5.00 11/01/99 20,000,000
- -- 5.7%
- -------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $20,000,000) ....................... 20,000,000
- -------------------------------------------------------------------------------------------------------------
Total Investments -- 99.8%
(Cost $350,165,223) ...................... 350,013,341
- -------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.2% 676,780
- -------------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00
Per Share on 350,842,003
Shares of Beneficial Interest
Outstanding -- 100.0% .................... $350,690,121
=============================================================================================================
</TABLE>
Note--Costs for federal income tax purposes are the same as those shown above.
At October 31, 1999, unrealized depreciation amounted to $151,882 and is
comprised of $13,291 of appreciation and $165,173 in depreciation.
*Commercial Paper and some U.S. Government and Agency Issues are traded on a
discount basis; the interest rate shown is the discount rate paid at the time
of the purchase by the Fund. Other securities bear interest at the rates
shown, payable at fixed dates or upon maturity; the rates shown are the rates
in effect at October 31, 1999. 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.
29
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Rated Institutional Fund
Statement of Assets and Liabilities
October 31, 1999 (Unaudited)
================================================================================
<TABLE>
<S> <C>
Assets:
Total investments at value (identified cost $350,165,223) (Note 1a) ................... $350,013,341
Cash .................................................................................. 85,851
Interest receivable ................................................................... 648,063
Prepaid expenses ...................................................................... 87,496
------------
Total assets ....................................................................... 350,834,751
------------
Liabilities:
Advisory fee payable (Note 2) ......................................................... 68,639
Dividends payable ..................................................................... 53,678
Accrued expenses ...................................................................... 22,313
------------
Total liabilities .................................................................. 144,630
------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based on
350,842,003 shares of beneficial interest outstanding) ............................... $350,690,121
============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Rated Institutional Fund
Statement of Operations
For the Six Months Ended October 31, 1999 (Unaudited)
================================================================================
<TABLE>
<S> <C> <C>
Investment Income:
Interest and discount earned (Note 1d) ............................ $10,362,824
-----------
Expenses:
Investment advisory fee (Note 2) .................................. $ 398,932
Accounting and custodian services ................................. 38,222
Registration fees ................................................. 32,671
Legal and audit fees .............................................. 11,245
Dividend and transfer agency fees ................................. 7,369
Trustees' fees (Note 5) ........................................... 2,747
Printing and shareholder reports .................................. 1,584
Insurance ......................................................... 985
Miscellaneous ..................................................... 6,500
------------
Total expenses ................................................. 500,255
------------
Net investment income .......................................... 9,862,569
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain from investment transactions ...... $ 211
Net unrealized depreciation of investments .......... (147,679)
---------
Net realized and unrealized loss from investments .............. (147,468)
-----------
Net Increase in Net Assets Resulting From Operations .............. $ 9,715,101
===========
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Rated Institutional Fund
Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months For the Period
Ended June 15, 1998*
October 31, 1999 to April 30, 1999
========================================================================================================
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income ........................................ $ 9,862,569 $ 17,950,747
Net realized gain from investment transactions ............... 211 23,721
Net unrealized depreciation of investments ................... (147,679) (4,203)
------------ ------------
Net increase in net assets resulting from operations ......... 9,715,101 17,970,265
Total declared as dividends to shareholders (Note 4) ......... (9,862,780) (17,974,468)
Capital share transactions (Note 3) .......................... (86,826,272) 437,568,275
------------ ------------
Net increase (decrease) in net assets ........................ (86,973,951) 437,564,072
Net Assets:
Beginning of period (Note 3) ................................. 437,664,072 100,000
------------ ------------
End of period ................................................ $350,690,121 $437,664,072
============ ============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Rated Institutional Fund
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Six Months For the Period
Ended June 15, 1998*
October 31, 1999 to April 30, 1999
=================================================================================================================
<S> <C> <C>
Net Asset Value, beginning of period ............................. $1.00 $1.00
Income from Investment Operations:
Net investment income ........................................... .025 .045
Less Distributions:
Dividends from net investment income ............................ (.025) (.045)
----- -----
Net Asset Value, end of period ................................... $1.00 $1.00
===== =====
Total Return ..................................................... 2.52%(1) 4.57%(1)
Ratios/Supplemental Data:
Net Assets, end of period (000) ................................. $350,690 $437,664
Ratio of expenses to average net assets (before waiver) ......... .25%(2) .27%(2)
Ratio of expenses to average net assets (after waiver) .......... -- .23%(2)
Ratio of net investment income, including realized and
unrealized gains and losses, to average net assets
(before waiver) ................................................ 4.87%(2) 4.95%(2)
Ratio of net investment income, including realized and
unrealized gains and losses, to average net assets
(after waiver) ................................................. -- 4.99%(2)
</TABLE>
*Commencement of operations
(1) Cumulative total return
(2) On an annualized basis
See Notes to Financial Statements.
31
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Schedule of Investments
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
===================================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
===================================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. $15,000,000 U.S. Treasury Notes .................. 7.75% 12/31/99 $15,060,945
Government & 50,000,000 Federal Home Loan Banks .............. 4.94 01/19/00 49,915,045
Agency 10,000,000 Federal Home Loan Banks .............. 5.08 04/28/00 9,967,769
Issues -- 37.5% 20,500,000 Federal Home Loan Banks .............. 6.09 11/03/00 20,496,720
20,000,000 Federal Home Loan Mortgage
Corp. ................................ 5.18 11/24/00 19,819,858
10,000,000 Federal Home Loan Mortgage
Corp. ................................ 5.15 01/26/01 9,887,560
5,000,000 Federal Home Loan Mortgage
Corp. ................................ 5.18 02/09/01 4,943,520
10,000,000 Federal National Mortgage Assoc....... 4.89 10/13/00 9,898,219
16,000,000 Federal National Mortgage Assoc....... 5.07 12/14/00 15,830,046
10,000,000 Federal National Mortgage Assoc....... 4.99 02/22/00 9,982,210
15,000,000 Federal National Mortgage Assoc....... 5.18 03/10/00 14,976,675
10,000,000 Federal National Mortgage Assoc....... 5.02 04/26/00 9,966,429
5,380,000 Federal National Mortgage Assoc....... 6.00 06/21/01 5,357,183
25,000,000 Student Loan Marketing Assoc. ........ 5.57 03/17/00 24,992,723
2,000,000 Federal Farm Credit Banks D/N ........ 4.65 11/24/99 1,994,058
15,000,000 Federal Farm Credit Banks D/N ........ 4.69 04/11/00 14,627,864
25,000,000 Federal Home Loan Banks D/N .......... 5.57 03/03/00 24,533,768
26,575,000 Federal Home Loan Banks D/N .......... 4.74 03/17/00 26,021,350
16,058,000 Federal Home Loan Banks D/N .......... 5.45 03/24/00 15,705,038
10,187,000 Federal Home Loan Banks D/N .......... 5.52 04/04/00 9,944,966
25,000,000 Federal Home Loan Banks D/N .......... 4.70 04/14/00 24,366,651
20,000,000 Federal Home Loan Banks D/N .......... 4.77 05/05/00 19,423,438
25,000,000 Federal Home Loan Mortgage
Corp. D/N ............................ 5.09 12/17/99 24,837,403
25,000,000 Federal Home Loan Mortgage
Corp. D/N ............................ 5.15 12/20/99 24,824,757
10,000,000 Federal Home Loan Mortgage
Corp. D/N ............................ 5.23 12/21/99 9,927,361
25,000,000 Federal Home Loan Mortgage
Corp. D/N ............................ 5.10 12/23/99 24,815,833
30,000,000 Federal Home Loan Mortgage
Corp. D/N ............................ 5.51 02/04/00 29,563,677
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
===============================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
===============================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. $25,000,000 Federal Home Loan Mortgage
Government & Corp. D/N ........................ . 5.52% 02/10/00 $ 24,612,598
Agency 47,817,000 Federal Home Loan Mortgage
Issues Corp. D/N ........................ . 5.55 03/10/00 46,870,635
(continued) 7,891,000 Federal Home Loan Mortgage
Corp. D/N ........................... 5.20 03/30/00 7,710,125
15,000,000 Federal Home Loan Mortgage
Corp. D/N ........................... 5.53 04/04/00 14,644,157
10,000,000 Federal Home Loan Mortgage
Corp. D/N ........................... 5.08 06/02/00 9,667,647
10,000,000 Federal Home Loan Mortgage
Corp. D/N ........................... 5.22 06/02/00 9,667,647
10,000,000 Federal Home Loan Mortgage
Corp. D/N ........................... 5.20 06/06/00 9,661,173
15,000,000 Federal Home Loan Mortgage
Corp. D/N ........................... 5.22 06/15/00 14,469,836
15,000,000 Federal Home Loan Mortgage
Corp. D/N ........................... 5.23 06/15/00 14,469,836
25,000,000 Federal National Mortgage Assoc. D/N 5.12 11/08/99 24,975,111
22,964,000 Federal National Mortgage Assoc. D/N 5.21 12/22/99 22,794,507
50,000,000 Federal National Mortgage Assoc. D/N 5.05 12/23/99 49,635,278
10,720,000 Federal National Mortgage Assoc. D/N 5.10 12/23/99 10,641,029
25,000,000 Federal National Mortgage Assoc. D/N 5.15 12/27/99 24,799,722
50,000,000 Federal National Mortgage Assoc. D/N 5.11 12/28/99 49,595,458
35,000,000 Federal National Mortgage Assoc. D/N 5.50 02/25/00 34,374,067
25,000,000 Federal National Mortgage Assoc. D/N 5.59 04/10/00 24,383,088
20,000,000 Federal National Mortgage Assoc. D/N 5.60 04/10/00 19,506,470
10,000,000 Federal National Mortgage Assoc. D/N 5.60 04/17/00 9,742,103
40,000,000 Federal National Mortgage Assoc. D/N 5.60 04/24/00 38,923,737
- ---------------------------------------------------------------------------------------------------------------
Total U.S. Government & Agency
Issues (Cost $934,089,967) .......... 932,825,290
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
33
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
====================================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
====================================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. $ 50,000,000 Federal Farm Credit Banks ............ 5.26% 01/20/00 $ 50,000,000
Government 20,000,000 Federal Farm Credit Banks ............ 5.54 07/24/00 20,033,243
Agency 70,000,000 Federal Home Loan Banks .............. 5.31 11/09/99 69,998,947
Issues -- 15,000,000 Federal Home Loan Banks .............. 5.31 11/12/99 14,999,733
Variable 50,000,000 Federal Home Loan Banks .............. 5.30 03/17/00 49,990,829
Rate -- 43.1% 100,000,000 Federal Home Loan Banks .............. 5.31 04/14/00 99,982,328
26,000,000 Federal Home Loan Banks .............. 5.66 04/24/00 25,995,159
50,000,000 Federal Home Loan Banks .............. 5.22 05/12/00 49,977,589
25,000,000 Federal Home Loan Banks .............. 5.30 05/17/00 24,993,373
75,000,000 Federal Home Loan Banks .............. 5.61 07/14/00 74,973,771
50,000,000 Federal Home Loan Banks .............. 5.38 09/01/00 49,983,750
100,000,000 Federal Home Loan Mortgage Corp. 5.21 03/20/00 99,969,482
75,000,000 Federal Home Loan Mortgage Corp. 5.65 07/14/00 74,973,771
50,000,000 Federal National Mortgage Assoc....... 5.16 05/05/00 49,984,246
75,000,000 Federal National Mortgage Assoc....... 5.22 08/02/00 74,961,962
30,000,000 Student Loan Marketing Assoc. ........ 5.43 11/18/99 29,992,099
100,000,000 Student Loan Marketing Assoc. ........ 5.23 12/03/99 99,994,301
25,000,000 Student Loan Marketing Assoc. ........ 5.55 01/12/00 24,999,092
10,000,000 Student Loan Marketing Assoc. ........ 5.59 02/04/00 9,999,375
50,000,000 Student Loan Marketing Assoc. ........ 5.80 02/14/00 49,990,143
25,000,000 Student Loan Marketing Assoc. ........ 5.80 09/29/00 24,995,709
- --------------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency
Issues -- Variable Rate
(Cost $1,070,788,902) ................ 1,070,788,902
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
34
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
================================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
================================================================================================================
<S> <C> <C> <C> <C> <C>
Repurchase $ 20,000,000 Lehman Brothers Inc.,
Agreements** purchased on 10/29/99 ........... 5.25% 11/01/99 $ 20,000,000
- -- 19.8% 200,000,000 Lehman Brothers Inc.,
purchased on 10/29/99 ........... 5.29 11/01/99 200,000,000
225,000,000 SG Cowen Securities Corp.,
purchased on 10/29/99 ........... 5.31 11/01/99 225,000,000
46,797,000 State Street Bank and Trust,
purchased on 10/29/99 ........... 5.17 11/01/99 46,797,000
- ----------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $491,797,000).............. 491,797,000
- ----------------------------------------------------------------------------------------------------------------
Total Investments -- 100.4%
(Cost $2,496,675,869)............ 2,495,411,192
- ----------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other
Assets -- (0.4%) ................ (10,992,224)
- ----------------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00
Per Share on 2,485,683,645 Shares
of Beneficial Interest
Outstanding -- 100.0% ........... $2,484,418,968
================================================================================================================
</TABLE>
Note--Costs for federal income tax purposes are the same as those shown above.
At October 31, 1999, unrealized depreciation amounted to $1,264,677 and is
comprised of $54,814 of appreciation and $1,319,491 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 October 31, 1999. 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.
35
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Statement of Assets and Liabilities
October 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Total investments at value (identified cost $2,496,675,869) (Note 1a)............ $2,495,411,192
Cash ............................................................................ 952,562
Receivable for investments sold ................................................. 25,000,000
Interest receivable ............................................................. 9,474,392
Prepaid expenses ................................................................ 21,720
--------------
Total assets ................................................................. 2,530,859,866
--------------
Liabilities:
Advisory fee payable (Note 2) ................................................... 420,473
Payable for investments purchased ............................................... 45,496,720
Dividends payable ............................................................... 383,567
Accrued expenses ................................................................ 140,138
--------------
Total liabilities ............................................................ 46,440,898
--------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based on
2,485,683,645 shares of beneficial interest outstanding) ....................... $2,484,418,968
==============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Statement of Operations
For the Six Months Ended October 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income:
Interest and discount earned (Note 1d) ................................. $65,057,808
-----------
Expenses:
Investment advisory fee (Note 2) ....................... $ 4,002,696
Registration fees ...................................... 222,648
Dividend and transfer agency fees ...................... 146,492
Accounting and custodian services ...................... 78,568
Printing and shareholder reports ....................... 15,831
Legal and audit fees ................................... 15,118
Trustees' fees (Note 5) ................................ 11,546
Insurance .............................................. 5,918
Miscellaneous .......................................... 14,500
-----------
Total expenses ...................................... 4,513,317
Waived investment advisory fee (Note 2) ................ (1,464,460) 3,048,857
----------- -----------
Net investment income ............................................... 62,008,951
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain from investment transactions ......... 12,280
Net unrealized depreciation of investments ............. (1,143,239)
-----------
Net realized and unrealized loss from investments ................... (1,130,959)
-----------
Net Increase in Net Assets Resulting From Operations ................... $60,877,992
===========
</TABLE>
See Notes to Financial Statements.
36
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
October 31, 1999 April 30, 1999
==========================================================================================================
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income ............................................. $ 62,008,951 $ 124,467,945
Net realized gain from investment transactions .................... 12,280 180,541
Net unrealized appreciation (depreciation) of investments ......... (1,143,239) 80,459
-------------- --------------
Net increase in net assets resulting from operations .............. 60,877,992 124,728,945
Total declared as dividends to shareholders (Note 4) .............. (62,021,231) (124,648,486)
Capital share transactions (Note 3) ............................... (151,110,099) 521,999,418
-------------- --------------
Net increase (decrease) in net assets ............................. (152,253,338) 522,079,877
Net Assets:
Beginning of period ............................................... 2,636,672,306 2,114,592,429
-------------- --------------
End of period ..................................................... $2,484,418,968 $2,636,672,306
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Government Fund
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
October 31,
1999
===================================================================
<S> <C>
Net Asset Value, beginning of period .......... $1.00
Income from Investment Operations:
Net investment income ........................ .025
Less Distributions:
Dividends from net investment income (.025)
-----
Net Asset Value, end of period ................ $1.00
=====
Total Return .................................. 2.49%(1)
Ratios/Supplemental Data:
Net Assets, end of period (000) .............. $2,484,419
Ratio of expenses to average net
assets (before waiver) ...................... .36%(2)
Ratio of expenses to average net
assets (after waiver) ....................... .24%(2)
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (before waiver) ...................... 4.68%(2)
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (after waiver) ....................... 4.80%(2)
<CAPTION>
Year Ended April 30,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
========================================================================================================================
<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 ........................ .050 .053 .052 .055 .049
Less Distributions:
Dividends from net investment income (.050) (.053) (.052) (.055) (.049)
----- ----- ----- ----- -----
Net Asset Value, end of period ................ $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total Return .................................. 5.16% 5.48% 5.31% 5.67% 4.99%
Ratios/Supplemental Data:
Net Assets, end of period (000) .............. $2,636,672 $2,114,592 $2,017,399 $1,643,625 $1,601,085
Ratio of expenses to average net
assets (before waiver) ...................... .36% .37% .38% .38% .37%
Ratio of expenses to average net
assets (after waiver) ....................... .24% .25% .26% .26% .24%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (before waiver) ...................... 4.90% 5.24% 5.07% 5.37% 4.82%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (after waiver) ....................... 5.02% 5.36% 5.19% 5.49% 4.95%
</TABLE>
(1) Cumulative total return
(2) On an annualized basis
See Notes to Financial Statements.
37
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Schedule of Investments
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
===========================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
===========================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. $33,110,000 U.S. Treasury Bills .......... 4.53% 11/12/99 $33,064,170
Government 14,208,000 U.S. Treasury Bills .......... 4.83 11/26/99 14,160,344
Issues -- 99.5% 50,000,000 U.S. Treasury Bills .......... 4.84 12/02/99 49,791,826
65,000,000 U.S. Treasury Bills .......... 4.85 12/02/99 64,728,815
608,000 U.S. Treasury Bills .......... 4.52 12/09/99 605,099
4,341,000 U.S. Treasury Bills .......... 4.55 12/09/99 4,320,174
960,000 U.S. Treasury Bills .......... 4.56 12/09/99 955,379
9,500,000 U.S. Treasury Bills .......... 4.57 12/09/99 9,454,173
1,449,000 U.S. Treasury Bills .......... 4.67 01/06/00 1,436,671
17,890,000 U.S. Treasury Bills .......... 4.68 01/06/00 17,737,786
20,000,000 U.S. Treasury Bills .......... 4.73 01/06/00 19,829,833
47,000,000 U.S. Treasury Bills .......... 4.77 01/06/00 46,600,108
8,000,000 U.S. Treasury Bills .......... 4.81 01/06/00 7,931,933
18,547,000 U.S. Treasury Bills .......... 4.85 01/06/00 18,389,196
20,000,000 U.S. Treasury Bills .......... 4.90 01/06/00 19,829,833
5,869,000 U.S. Treasury Bills .......... 4.96 01/27/00 5,799,394
13,700,000 U.S. Treasury Bills .......... 4.98 01/27/00 13,537,518
23,000,000 U.S. Treasury Bills .......... 4.99 01/27/00 22,727,220
45,706,000 U.S. Treasury Bills .......... 4.90 02/10/00 45,080,002
439,000 U.S. Treasury Bills .......... 4.93 02/10/00 432,987
55,000,000 U.S. Treasury Notes .......... 5.88 11/15/99 55,018,382
45,000,000 U.S. Treasury Notes .......... 5.63 11/30/99 45,023,973
41,359,000 U.S. Treasury Notes .......... 7.75 11/30/99 41,447,241
</TABLE>
See Notes to Financial Statements.
38
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
=================================================================================================================
Interest Maturity Value
Face Amount Rate* Date (Note 1a)
=================================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. $25,000,000 U.S. Treasury Notes ................. 5.38% 01/31/00 $ 25,015,625
Government 30,000,000 U.S. Treasury Notes ................. 7.75 01/31/00 30,196,890
Issues 25,000,000 U.S. Treasury Notes ................. 5.88 02/15/00 25,250,000
(continued) 5,000,000 U.S. Treasury Notes ................. 8.50 02/15/00 5,010,940
8,000,000 U.S. Treasury Notes ................. 5.50 02/29/00 8,007,504
- -----------------------------------------------------------------------------------------------------------------
Total Investments -- 99.5%
(Cost $631,155,901).................. 631,383,016
- -----------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.5% 3,085,012
- -----------------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00
Per Share on 634,240,913 Shares
of Beneficial Interest
Outstanding -- 100.0% ............... $634,468,028
=================================================================================================================
</TABLE>
Note--Costs for federal income tax purposes are the same as those shown above.
At October 31, 1999, net unrealized appreciation amounted to $227,115 and is
comprised of $261,848 in appreciation and $34,733 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.
39
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Statement of Assets and Liabilities
October 31, 1999 (Unaudited)
================================================================================
<TABLE>
<S> <C>
Assets:
Total investments at value (identified cost $631,155,901) (Note 1a) ................... $631,383,016
Cash .................................................................................. 862,803
Interest receivable ................................................................... 5,309,941
Prepaid expenses ...................................................................... 12,004
------------
Total assets ....................................................................... 637,567,764
------------
Liabilities:
Advisory fee payable (Note 2) ......................................................... 110,092
Payable for fund shares repurchased ................................................... 2,913,431
Accrued expenses ...................................................................... 44,083
Dividends payable ..................................................................... 32,130
------------
Total liabilities .................................................................. 3,099,736
------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based on
634,240,913 shares of beneficial interest outstanding) ............................... $634,468,028
============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Statement of Operations
For the Six Months Ended October 31, 1999 (Unaudited)
================================================================================
<TABLE>
<S> <C> <C>
Investment Income:
Interest and discount earned (Note 1d) ............................... $16,590,736
-----------
Expenses:
Investment advisory fee (Note 2) ....................... $1,215,732
Registration fees ...................................... 60,000
Dividend and transfer agency fees ...................... 54,678
Accounting and custodian services ...................... 37,366
Legal and audit fees ................................... 6,420
Trustees' fees (Note 5) ................................ 3,298
Printing and shareholder reports ....................... 2,627
Insurance .............................................. 1,523
Miscellaneous .......................................... 11,157
----------
Total expenses ...................................... 1,392,801
Waived investment advisory fee (Note 2) ................ (512,188) 880,613
---------- -----------
Net investment income ............................................. 15,710,123
Realized and Unrealized Gain on Investments:
Net realized gain from investment transactions ......... 107,769
Net unrealized appreciation of investments ............. 271,331
----------
Net realized and unrealized gain from investments ................. 379,100
-----------
Net Increase in Net Assets Resulting From Operations ................. $16,089,223
===========
</TABLE>
See Notes to Financial Statements.
40
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
October 31, 1999 April 30, 1999
=========================================================================================================
<S> <C> <C>
Decrease in Net Assets:
Operations:
Net investment income ............................................. $ 15,710,123 $ 35,098,764
Net realized gain from investment transactions .................... 107,769 339,022
Net unrealized appreciation (depreciation) of investments ......... 271,331 (984,043)
------------ -------------
Net increase in net assets resulting from operations .............. 16,089,223 34,453,743
Total declared as dividends to shareholders (Note 4) .............. (15,817,892) (35,437,786)
Capital share transactions (Note 3) ............................... (46,143,790) (77,872,328)
------------ -------------
Net decrease in net assets ........................................ (45,872,459) (78,856,371)
Net Assets:
Beginning of period ............................................... 680,340,487 759,196,858
------------ -------------
End of period ..................................................... $634,468,028 $ 680,340,487
============ =============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Treasury Fund
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
October 31,
1999
==================================================================
<S> <C>
Net Asset Value, beginning of period ........... $1.00
Income from Investment Operations:
Net investment income ......................... .023
Less Distributions:
Dividends from net investment income .......... (.023)
-----
Net Asset Value, end of period ................. $1.00
=====
Total Return ................................... 2.29%(1)
Ratios/Supplemental Data:
Net Assets, end of period (000) ............... $634,468
Ratio of expenses to average net
assets (before waiver) ....................... .39%(2)
Ratio of expenses to average net
assets (after waiver) ........................ .25%(2)
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (before waiver) ....................... 4.43%(2)
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (after waiver) ........................ 4.57%(2)
<CAPTION>
Year Ended April 30,
------------------------------------------------------------
1999 1998 1997 1996 1995
===============================================================================================================
<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 ......................... .046 .051 .049 .052 .045
Less Distributions:
Dividends from net investment income .......... (.046) (.051) (.049) (.052) (.045)
----- ----- ----- ----- -----
Net Asset Value, end of period ................. $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total Return ................................... 4.76% 5.24% 5.08% 5.37% 4.68%
Ratios/Supplemental Data:
Net Assets, end of period (000) ............... $680,340 $759,197 $611,844 $514,123 $342,844
Ratio of expenses to average net
assets (before waiver) ....................... .39% .41% .42% .41% .44%
Ratio of expenses to average net
assets (after waiver) ........................ .25% .26% .27% .26% .29%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (before waiver) ....................... 4.36% 5.11% 4.85% 5.09% 4.58%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (after waiver) ........................ 4.50% 5.26% 5.00% 5.24% 4.73%
</TABLE>
(1) Cumulative total return
(2) On an annualized basis
See Notes to Financial Statements.
41
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
=======================================================================================================
Value
Face Amount Issue (Note 1a)
=======================================================================================================
<S> <C> <C> <C>
Alabama -- $20,000,000 Montgomery, Alabama IDB PCR (General Electric Co.)
1.9% CP 3.55% due 11/04/1999 ............................... $20,000,000
Mobile, Alabama Port City Medical Clinic Board Revenue
(Infirmary Health Systems--Series A) CP:
11,000,000 3.55% due 01/31/2000 .................................. 11,000,000
15,000,000 3.55% due 02/14/2000 .................................. 15,000,000
- -------------------------------------------------------------------------------------------------------
Arizona -- 11,250,000 Salt River Project of Arizona, Agricultural Improvement
0.5% & Electrical Systems Revenue CP 3.50% due
01/27/2000 ............................................ 11,250,000
- -------------------------------------------------------------------------------------------------------
Arkansas -- 10,000,000 Arkansas Hospital Equipment Finance Authority Revenue
0.5% (AHA Pooled Financing Program) VRDN 3.60% due
11/01/2028 (a) ........................................ 10,000,000
2,665,000 Arkansas State Development Finance Authority Single
Family Mortgage Revenue (Series C) FXRDN 3.00%
due 03/01/2000 ........................................ 2,665,000
- -------------------------------------------------------------------------------------------------------
Colorado -- 11,695,000 Denver, Colorado City & County Airport Revenue
1.6% (Municipal Securities Trust Receipts--SGA 18) VRDN
3.55% due 11/15/2025 (a) .............................. 11,695,000
7,800,000 Douglas County, Colorado School District (Douglas and
Elbert Counties) TAN 3.50% due 06/30/2000 ............. 7,845,021
5,600,000 Montrose, Colorado IDR (Scaled Manufacturing Inc.)
VRDN 3.65% due 12/01/2005 (a) ......................... 5,600,000
14,290,000 Pitkin County, Colorado IDR (Aspen Skiing Co. Project--
Series A) DDN 3.50% due 04/01/2016 (a) ................ 14,290,000
- -------------------------------------------------------------------------------------------------------
District of District of Columbia General Fund Recovery DDN:
Columbia -- 5,200,000 (Series B-1) 3.75% due 06/01/2003 (a) ................. 5,200,000
1.5% 7,600,000 (Series B-2) 3.75% due 06/01/2003 (a) ................. 7,600,000
Metropolitan, Washington D.C. Airport Authority CP:
18,000,000 (Series 99-A) 3.50% due 11/22/1999 .................... 18,000,000
5,000,000 (Series 99-B) 3.50% due 12/21/1999 .................... 5,000,000
- -------------------------------------------------------------------------------------------------------
Florida -- 25,400,000 Capital Projects Finance Authority Revenue (Florida
6.2% Hospital Association Capital Projects--Series A) VRDN
3.55% due 06/01/2028 (a) .............................. 25,400,000
9,900,000 Eagle Tax-Exempt Trust--Florida State Board of
Education (Series 96C0917) VRDN 3.54% due
06/01/2017 (a) ........................................ 9,900,000
</TABLE>
See Notes to Financial Statements.
42
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
==========================================================================================================
Value
Face Amount Issue (Note 1a)
==========================================================================================================
<S> <C> <C> <C>
Florida $53,865,000 Florida State Board of Education Capital Outlay
(continued) (Municipal Securities Trust Receipts--SGA 67) DDN
3.55% due 06/01/2022 (a) ................................ $53,865,000
9,551,000 Greater Orlando Aviation Authority, Airport Facilities
Revenue CP (Series A-51) 3.54% due 12/15/1999 ........... 9,551,000
20,000,000 Gulf Breeze, Florida Health Care Facilities Revenue
(Heritage Health Care Project) VRDN 3.62% due
01/01/2024 (a) .......................................... 20,000,000
25,000,000 Jacksonville, Florida Electric Authority Notes (Series A)
CP 3.50% due 01/28/2000 ................................. 25,000,000
4,640,000 Lee County, Florida IDA Revenue (Raymond Building
Supply Corp.) VRDN 3.70% due 04/01/2017 (a) ............. 4,640,000
- ----------------------------------------------------------------------------------------------------------
Georgia -- 6,640,000 Albany & Dougherty County, Georgia Hospital Authority
6.7% Revenue (Phoebe Putney Memorial Hospital) VRDN
3.60% due 09/01/2026 (a) ................................ 6,640,000
6,600,000 Atlanta, Georgia Urban Residential Finance Authority
M/F Revenue (The Park at Lakewood) VRDN 3.70%
due 11/01/2022 (a) ...................................... 6,600,000
5,400,000 Atlanta, Georgia Urban Residential Finance Authority
M/F Revenue (New Community East Lake Project)
VRDN 3.70% due 11/01/2028 (a) ........................... 5,400,000
3,200,000 Burke County, Georgia Development Authority PCR
(Georgia Power Co.) DDN 3.50% due 07/01/2024 (a) ........ 3,200,000
Burke County, Georgia Development Authority PCR
(Georgia Power Co.) CP:
15,000,000 3.65% due 11/01/1999 .................................... 15,000,000
25,000,000 3.70% due 02/15/2000 .................................... 25,000,000
10,300,000 Chatham County, Georgia TAN 4.00% due 12/30/1999 ........ 10,308,136
Eagle Tax-Exempt Trust--State of Georgia VRDN:
19,145,000 (Series 981002) 3.54% due 07/01/2014 (a) ................ 19,145,000
20,245,000 (Series 981003) 3.54% due 07/15/2015 (a) ................ 20,245,000
9,000,000 La Grange, Georgia Development Authority IDR (Reltec
Corp. Project) VRDN 3.65% due 12/01/2021 (a) ............ 9,000,000
19,650,000 Georgia Municipal Electric Authority (General
Resolution--Series 85A) CP 3.65% due 02/11/2000 ......... 19,650,000
20,000,000 Southern Georgia Hospital Authority Revenue (Georgia
Alliance of Community Hospitals) VRDN 3.60%
due 04/01/2029 (a) ...................................... 20,000,000
- ----------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
43
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
========================================================================================================
Value
Face Amount Issue (Note 1a)
========================================================================================================
<S> <C> <C> <C>
Idaho -- $ 3,390,000 Madison, Idaho Economic Development Corp. IDR (Floyd
0.1% Wilcox & Sons, Inc. Project) VRDN 3.70% due
08/01/2012 (a) ........................................... $ 3,390,000
- --------------------------------------------------------------------------------------------------------
Illinois -- 2,700,000 Aurora, Illinois IDR (Aztech Engineering Inc. Project)
5.3% VRDN 3.70% due 10/01/2018 (a) ............................ 2,700,000
4,300,000 Chicago, Illinois IDR (Enterprise Center Project) VRDN
3.59% due 06/01/2022 (a) ................................. 4,300,000
6,400,000 Chicago, Illinois Solid Waste Disposal Facilities
Revenue (Groot Industries Inc.) VRDN 3.70%
due 12/01/2015 (a) ....................................... 6,400,000
3,150,000 Des Plaines, Illinois IDR (East Golf Road LLC Project)
VRDN 3.70% due 05/01/2017 (a) ............................ 3,150,000
3,300,000 Elgin, Illinois IDR (Starro Precision Products Inc.) VRDN
3.70% due 06/01/2025 (a) ................................. 3,300,000
1,500,000 Geneva, Illinois IDR (Continental Envelope Corp. Project)
VRDN 3.70% due 09/01/2006 (a) ............................ 1,500,000
10,000,000 Illinois Health Facilities Authority Revenue (Evanston
Hospital Corp.--Series E) CP 2.95% due 11/30/1999 ........ 10,000,000
21,000,000 Illinois Health Facilities Authority Revenue (Victory
Health Services--Series 19) CP 3.65% due 12/06/1999 ...... 21,000,000
13,850,000 Illinois Health Facilities Authority Revenue (Resurrection
Health Care Systems--Series A) DDN 3.55% due
05/01/2029 (a) ........................................... 13,850,000
11,300,000 Illinois Health Facilities Authority Revenue (Northwestern
Memorial Hospital) DDN 3.50% due 08/15/2025 (a) .......... 11,300,000
6,740,000 Illinois Health Facilities Authority Revenue
(Riverside Health Systems--Series B) VRDN 3.55%
due 11/15/2016 (a) ....................................... 6,740,000
5,000,000 Illinois Health Facilities Authority Revenue (Pekin
Memorial Hospital) VRDN 3.55% due 08/15/2017 (a) ......... 5,000,000
10,000,000 Illinois Health Facilities Authority Revenue (Friend
Village of Schaumburg--Series 97-B) VRDN 3.55%
due 12/01/2020 (a) ....................................... 10,000,000
2,000,000 Illinois State Development Finance Authority IDR
(CPR/Downers Grove Partnership) VRDN 3.70%
due 12/01/2005 (a) ....................................... 2,000,000
1,500,000 Illinois State Development Finance Authority IDR (Revcor
Inc. Project) VRDN 3.59% due 06/01/2008 (a) .............. 1,500,000
</TABLE>
See Notes to Financial Statements.
44
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
===========================================================================================================
Value
Face Amount Issue (Note 1a)
===========================================================================================================
<S> <C> <C> <C>
Illinois $ 3,125,000 Illinois State Development Finance Authority IDR
(continued) (Rockford College Project) VRDN 3.55% due
02/01/2001 (a) ............................................. $ 3,125,000
3,500,000 Illinois State Development Finance Authority IDR
(Design Automotive LLC Project) VRDN 3.70%
due 06/01/2011 (a) ......................................... 3,500,000
10,000,000 Illinois State Development Finance Authority Revenue
(Local Government Financing--Series A) VRDN 3.60%
due 09/01/2029 (a) ......................................... 10,000,000
2,500,000 Illinois State Educational Facilities Authority Revenue (Art
Institute of Chicago) VRDN 3.50% due 03/01/2027 (a) 2,500,000
2,570,000 Peoria, Illinois IDR (CDC Realty L.P. Project) VRDN
3.70% due 12/01/2014 (a) ................................... 2,570,000
4,000,000 Upper Illinois River Valley Authority, Solid Waste
Disposal Revenue (Exolon-Esk Co. Project) VRDN
3.70% due 12/01/2021 (a) ................................... 4,000,000
- -----------------------------------------------------------------------------------------------------------
Indiana -- 6,490,000 Anderson, Indiana EDR (Applecreek Commons L.P.)
2.9% VRDN 3.65% due 12/01/2027 (a) .............................. 6,490,000
2,665,000 Bloomington, Indiana EDR (Bloomington Square Project)
VRDN 3.55% due 12/01/2008 (a) .............................. 2,665,000
14,000,000 Carmel Clay, Indiana School District TAN 3.70%
due 12/31/1999 ............................................. 14,007,800
2,500,000 Connersville, Indiana EDR (Inland Southern Corp.
Project) VRDN 3.65% due 02/01/2012 (a) ..................... 2,500,000
2,500,000 Crawfordsville, Indiana EDR (Performance Master LLC
Project) VRDN 3.75% due 10/01/2018 (a) ..................... 2,500,000
4,365,000 Elkhart County, Indiana EDR (Patriot Homes Inc. Project)
VRDN 3.70% due 08/01/2012 (a) .............................. 4,365,000
13,305,000 Fort Wayne, Indiana Hospital Authority Municipal
Securities Trust (Series 19) FXRDN 3.40% due
11/03/1999 ................................................. 13,305,000
3,000,000 Greencastle, Indiana IDR (Crown Equipment Corp.
Project) VRDN 3.70% due 02/01/2011 (a) ..................... 3,000,000
575,000 Greendale, Indiana EDR (Pripak Inc. Project) VRDN
3.70% due 12/01/2003 (a) ................................... 575,000
2,375,000 Indiana State Development Finance Authority EDR
(Hart Housing Group Inc. Project) VRDN 3.70%
due 06/01/2011 (a) ......................................... 2,375,000
</TABLE>
See Notes to Financial Statements.
45
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
========================================================================================================
Value
Face Amount Issue (Note 1a)
========================================================================================================
<S> <C> <C> <C>
Indiana $ 3,055,000 Indiana State Development Finance Authority
(continued) EDR (Haulin Trailers Project) VRDN 3.90%
due 12/01/2017 (a) ...................................... $ 3,055,000
1,680,000 Indiana State Development Finance Authority IDR
(Centurion Industries Inc. Project) VRDN 3.70%
due 10/01/2005 (a) ...................................... 1,680,000
4,565,000 Indiana State Educational Facilities Authority Revenue
(Wesleyan University Project) VRDN 3.55% due
12/01/2015 (a) .......................................... 4,565,000
5,000,000 Indiana State Health Facilities Financing Authority
Revenue (Hartsfield Village Project) VRDN 3.55%
due 08/15/2027 (a) ...................................... 5,000,000
2,000,000 Muncie, Indiana IDR (Diamond Plastics Corp. Project)
VRDN 3.75% due 10/01/2006 (a) ........................... 2,000,000
1,440,000 New Castle, Indiana EDR (Barden Homes Indiana Inc.)
VRDN 3.70% due 08/01/2010 (a) ........................... 1,440,000
- --------------------------------------------------------------------------------------------------------
Kansas -- Butler County, Kansas Solid Waste Disposal &
2.1% Cogeneration Revenue (Texaco Refining & Marketing)
DDN:
15,400,000 (Series A) 3.65% due 08/01/2024 (a) ..................... 15,400,000
33,600,000 (Series B) 3.65% due 08/01/2024 (a) ..................... 33,600,000
1,150,000 Spring Hill, Kansas IDR (Abrasive Engineering Project)
VRDN 3.52% due 10/01/2016 (a) ........................... 1,150,000
- --------------------------------------------------------------------------------------------------------
Kentucky -- 4,280,000 Crestview Hill, Kentucky Industrial Building Revenue
4.5% (Thomas More College Project) VRDN 3.60% due
11/01/2018 (a) .......................................... 4,280,000
3,500,000 Graves County, Kentucky IDR (Seaboard Farms Kentucky
Inc. Project) VRDN 3.60% due 12/01/2012 (a) ............. 3,500,000
600,000 Harvey Brewers Fire Protection District Lease Revenue
(Kentucky Area Development Districts--Series C-1)
VRDN 3.55% due 12/01/2031 (a) ........................... 600,000
Jefferson County, Kentucky Industrial Building Revenue
(Thomas Development Project) VRDN:
1,700,000 3.70% due 04/10/2010 (a) ................................ 1,700,000
970,000 3.70% due 10/01/2011 (a) ................................ 970,000
5,000,000 Kenton County, Kentucky TAN 3.95% due 06/30/2000 ........ 5,006,380
5,000,000 Kenton County, Kentucky TRAN 3.75% due 06/30/2000. ...... 5,001,584
</TABLE>
See Notes to Financial Statements.
46
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
========================================================================================================
Value
Face Amount Issue (Note 1a)
========================================================================================================
<S> <C> <C> <C>
Kentucky Kentucky Area Development Districts Financing Trust
(continued) Lease Program Revenue (Calloway County Fire District)
VRDN:
$ 850,000 (Series D-1) 3.55% due 12/01/2031 (a) ................... $ 850,000
490,000 (Series D-2) 3.55% due 12/01/2031 (a) ................... 490,000
365,000 (Series E-1) 3.55% due 12/01/2031 (a) ................... 365,000
2,085,000 (Series F-1) 3.55% due 12/01/2031 (a) ................... 2,085,000
490,000 (Series F-2) 3.55% due 12/01/2031 (a) ................... 490,000
Kentucky Area Development Districts Financing Trust
Lease Program Revenue (Lyon County Fire District)
VRDN:
2,150,000 (Series G-1) 3.55% due 12/01/2031 (a) ................... 2,150,000
490,000 (Series G-2) 3.55% due 12/01/2031 (a) ................... 490,000
1,020,000 (Series I-1) 3.55% due 12/01/2031 (a) ................... 1,020,000
490,000 (Series I-2) 3.55% due 12/01/2031 (a) ................... 490,000
1,775,000 Kentucky Area Development Districts Financing Trust Lease
Program Revenue (Symsonia County Fire District--Series
H-1) VRDN 3.55% due 12/01/2031 (a) ...................... 1,775,000
20,000,000 Kentucky Asset & Liability Commission General Fund
Revenue (Series A) CP 3.65% due 03/02/2000 .............. 20,000,000
18,850,000 Kentucky Economic Development Finance Authority
Revenue (Pooled Hospital Loan) VRDN 3.65% due
08/01/2018 (a) .......................................... 18,850,000
9,835,000 Kentucky Economic Development Finance Authority
Hospital Facilities Revenue (St. Elizabeth's Medical
Center Inc.) VRDN 3.62% due 05/01/2017 (a) .............. 9,835,000
19,700,000 Kentucky State Pollution Abatement and Water Resource
Finance Authority PCR (Toyota Motor) DDN 4.40%
due 08/13/2006 (a) ...................................... 19,700,000
5,500,000 Middletown, Kentucky Revenue (Christian Academy
Project) VRDN 3.55% due 07/01/2022 (a) .................. 5,500,000
220,000 Muhlenberg County, Kentucky Airport District (Financing
Trust Lease Program Revenue--Series B-1) VRDN
3.55% due 12/01/2031 (a) ................................ 220,000
3,500,000 Shelby County, Kentucky IDR (Truss Co. Inc./Kingbrook
Commerce Park LLC Project) VRDN 3.70% due
06/01/2018 (a) .......................................... 3,500,000
- --------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
47
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
================================================================================================================
Value
Face Amount Issue (Note 1a)
================================================================================================================
<S> <C> <C> <C>
Louisiana -- Calcasieu Parish of Louisiana Inc. IDB Environmental
0.9% Revenue (Citgo Petroleum Corp. Project) DDN:
$17,100,000 (Series 94) 3.65% due 12/01/2024 (a) ....................... $17,100,000
5,000,000 (Series 96-2) 3.65% due 07/01/2026 (a) ..................... 5,000,000
- ----------------------------------------------------------------------------------------------------------------
Maine -- 2,170,000 Gray, Maine Revenue (Advance Realty Project) VRDN
0.7% 3.65% due 10/01/2011 (a) ................................... 2,170,000
4,500,000 Lewiston, Maine IDR (Diamond Turnpike Association)
VRDN 3.50% due 07/01/2014 (a) .............................. 4,500,000
990,000 Lewiston, Maine Revenue (Geiger Brothers Project)
FXRDN 3.90% due 09/01/2004 ................................. 990,000
3,285,000 Millinocket, Maine IDB Revenue (Gardner Chipmills
Project) VRDN 3.70% due 03/01/2005 (a) ..................... 3,285,000
1,585,000 Saco, Maine IDR (First Light Technology Project) VRDN
3.70% due 04/01/2007 (a) ................................... 1,585,000
4,315,000 Topsham, Maine Revenue (Village Candle Inc.) VRDN
3.70% due 08/01/2013 (a) ................................... 4,315,000
- ----------------------------------------------------------------------------------------------------------------
Maryland -- 1,100,000 Anne Arundel County, Maryland EDR (Atlas Container
0.9% Corp. Project) VRDN 3.70% due 04/01/2006 (a) ............... 1,100,000
10,000,000 Gaithersburg, Maryland EDR (Asbury Methodist) VRDN
3.55% due 07/01/2027 (a) ................................... 10,000,000
10,000,000 Maryland State Community Development Administrative
Department (Housing & Community Development--
Series G) FXRDN 3.65% due 08/30/2000 ....................... 10,000,000
- ----------------------------------------------------------------------------------------------------------------
Massachusetts -- 6,732,000 Attleboro, Massachusetts BAN 3.75% due 07/03/2000 .......... 6,738,921
6.8% 7,100,000 Brockton, Massachusetts RAN 3.90% due 08/04/2000 ........... 7,110,374
13,647,000 Clipper Tax-Exempt Trust--Massachusetts State
Housing Finance Agency (Series A) VRDN 3.62%
due 09/01/2004 (a) ......................................... 13,647,000
8,305,000 Clipper Tax-Exempt Trust--Massachusetts State Housing
Finance Agency (Series 98-B) VRDN 3.57% due
07/20/2007 (a) ............................................. 8,305,000
2,600,000 Greater Attleboro--Taunton Regional Transit Authority
RAN 4.00% due 08/11/2000 ................................... 2,607,810
7,500,000 Massachusetts State Health & Educational Facilities
Authority Revenue (Capital Asset Program--Series E)
DDN 3.50% due 01/01/2035 (a) ............................... 7,500,000
</TABLE>
See Notes to Financial Statements.
48
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
=========================================================================================================
Value
Face Amount Issue (Note 1a)
=========================================================================================================
<S> <C> <C> <C>
Massachusetts $ 2,685,000 Massachusetts State Industrial Finance Agency IDR (Hi-
(continued) Tech Mold & Tool) VRDN 3.65% due 06/01/2018 (a) .......... $ 2,685,000
3,000,000 Norwell, Massachusetts BAN 4.50% due 10/18/2000 .......... 3,019,447
18,000,000 Pioneer Valley Transit Authority RAN 3.90% due
08/04/2000 ............................................... 18,036,847
9,370,000 Pittsfield, Massachusetts BAN 3.25% due 11/23/1999 ....... 9,371,011
6,000,000 Southeastern Regional Transit Authority RAN 4.10%
due 09/15/2000 ........................................... 6,017,668
6,000,000 Springfield, Massachusetts BAN 4.00% due 03/02/2000 ...... 6,009,760
15,000,000 Westfield, Massachusetts BAN 4.25% due 04/20/2000 ........ 15,030,893
10,300,000 Whitman-Hanson Regional School District BAN 3.25%
due 04/21/2000 ........................................... 10,302,336
20,000,000 Wilmington, Massachusetts BAN 3.50% due 06/29/2000 ....... 20,000,000
16,100,000 Worcester, Massachusetts BAN 4.40% due 08/30/2000 ........ 16,170,881
11,900,000 Worcester, Massachusetts Regional Transit Authority
RAN 3.50% due 06/16/2000 ................................. 11,900,000
- ---------------------------------------------------------------------------------------------------------
Michigan -- 7,000,000 Dearborn, Michigan Economic Development Corp.
2.4% Revenue (Henry Ford Village Inc. Project) VRDN
3.60% due 10/01/2023 (a) ................................. 7,000,000
5,000,000 Detroit, Michigan Sewer Disposal Revenue (Series A)
VRDN 3.45% due 07/01/2023 (a) ............................ 5,000,000
Michigan Municipal Bond Authority RAN:
5,000,000 (Series B-1) 4.25% due 08/25/2000 ........................ 5,025,514
5,000,000 (Series B-2) 4.25% due 08/25/2000 ........................ 5,026,698
7,500,000 Michigan State Higher Educational Facilities Authority
Revenue (Center Creative Project) VRDN 3.70%
due 12/01/2024 (a) ....................................... 7,500,000
4,000,000 Michigan State Strategic Fund Limited Obligation
Revenue (FATA Automation Project) VRDN 3.70%
due 10/01/2024 (a) ....................................... 4,000,000
4,230,000 Michigan State Strategic Fund Limited Obligation
Revenue (Weller Truck Parts Project) VRDN 3.80%
due 10/01/2029 (a) ....................................... 4,230,000
13,800,000 Michigan State Strategic Fund Limited Obligation
Revenue (Detroit Edison Co.) DDN 3.50% due
09/01/2030 (a) ........................................... 13,800,000
5,500,000 Oakland County, Michigan Economic Development Corp.
Limited Obligation Revenue (Su Dan Co. Project)
VRDN 3.70% due 07/01/2024 (a) ............................ 5,500,000
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
49
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
==============================================================================================================
Value
Face Amount Issue (Note 1a)
==============================================================================================================
<S> <C> <C> <C>
Minnesota -- $ 6,000,000 Minneapolis-St. Paul, Minnesota Housing Finance Board
0.3% Revenue (Series B-2) FXRDN 3.65% due 08/01/2000 ............ $ 6,000,000
- --------------------------------------------------------------------------------------------------------------
Mississippi -- 9,100,000 Harrison County, Mississippi PCR (E. I. DuPont de
1.1% Nemours Project) DDN 3.50% due 09/01/2010 (a) .............. 9,100,000
18,400,000 Mississippi State Hospital Equipment & Facilities
Authority Revenue (North Mississippi Health Services)
CP 3.60% due 11/15/1999 .................................... 18,400,000
- --------------------------------------------------------------------------------------------------------------
Missouri -- 355,000 Jefferson County, Missouri IDA Revenue (Sinclair & Rush
1.0% Inc. Project) VRDN 3.70% due 11/01/2001 (a) ................ 355,000
2,175,000 Missouri State Development Finance Board IDR
(Filtration Group Inc.) VRDN 3.70% due
03/01/2012 (a) ............................................. 2,175,000
20,000,000 Missouri State Health & Higher Educational Facilities
Authority (Washington University--Series 96B) CP
3.65% due 03/01/2000 ....................................... 20,000,000
1,945,000 Sikeston, Missouri IDA Revenue (Heritage American
Homes LP/North Ridge Homes Inc. Project) VRDN
3.70% due 07/01/2009 (a) ................................... 1,945,000
- --------------------------------------------------------------------------------------------------------------
Nevada -- 11,290,000 Eagle Tax-Exempt Trust--Clark County, Nevada
1.0% School District (Series 962804) VRDN 3.54%
due 06/15/2015 (a) ......................................... 11,290,000
13,000,000 Washoe County, Nevada Water Facilities Revenue
(Sierra Pacific Power Co. Project) DDN 3.60%
due 12/01/2020 (a) ......................................... 13,000,000
- --------------------------------------------------------------------------------------------------------------
New Hampshire -- 2,100,000 New Hampshire State Business Finance Authority
0.4% Revenue (Hydra LLC Inc.) VRDN 3.65% due
11/01/2006 (a) ............................................. 2,100,000
1,090,000 New Hampshire State Business Finance Authority
Revenue (Freed's Bakery Inc. Project) VRDN 3.70%
due 05/02/2011 (a) ......................................... 1,090,000
6,400,000 New Hampshire State Business Finance Authority
Revenue (Montgomery Wire Corp.) VRDN 3.65%
due 02/01/2014 (a) ......................................... 6,400,000
- --------------------------------------------------------------------------------------------------------------
New Jersey -- 12,180,000 Essex County, New Jersey BAN 4.00% due 08/15/2000 .......... 12,211,916
0.5%
- --------------------------------------------------------------------------------------------------------------
New York -- 9,500,000 East Meadow, New York United Free School District TAN
2.8% 4.00% due 06/28/2000 ....................................... 9,528,296
</TABLE>
See Notes to Financial Statements.
50
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
========================================================================================================
Value
Face Amount Issue (Note 1a)
========================================================================================================
<S> <C> <C> <C>
New York $ 7,000,000 Gananda Central School District BAN 4.25% due
(continued) 08/18/2000 .............................................. $ 7,026,770
2,000,000 Garden City, New York United Free School District TAN
4.00% due 06/27/2000 .................................... 2,005,936
3,000,000 Mayfield Central School District BAN 4.25% due
06/28/2000 .............................................. 3,007,648
8,705,000 New York City, New York Municipal Securities Trust
Receipts (SGA 63) DDN 3.55% due 02/15/2026 (a) .......... 8,705,000
6,650,000 New York City, New York (Series B, Subseries B-6)
GO/DDN 3.50% due 08/15/2005 (a) ......................... 6,650,000
19,400,000 New York State Local Government Assistance Corp.
Municipal Securities Trust (SGA 59) VRDN 3.55%
due 04/01/2019 (a) ...................................... 19,400,000
10,000,000 Sachem Central School District TAN 4.00% due
06/29/2000 .............................................. 10,029,249
- --------------------------------------------------------------------------------------------------------
Ohio -- 6,855,000 Akron, Ohio Metropolitan Housing Authority Facilities
12.6% Revenue (Administration Building Project) VRDN
3.57% due 04/01/2018 (a) ................................ 6,855,000
17,300,000 Avon Lake, Ohio City School District BAN 3.90% due
12/21/1999 .............................................. 17,307,650
10,532,000 Cincinnati, Ohio City School District BAN 4.18% due
09/14/2000 .............................................. 10,565,492
6,500,000 Clinton County, Ohio Hospital Revenue (Hospital Capital
Inc.) VRDN 3.60% due 07/01/2029 (a) ..................... 6,500,000
4,000,000 Cuyahoga County, Ohio IDR (Motch Corp. Project)
VRDN 3.70% due 02/01/2003 (a) ........................... 4,000,000
26,600,000 Cuyahoga County, Ohio Hospital Revenue (The Cleveland
Clinic) DDN 3.60% due 01/01/2026 (a) .................... 26,600,000
3,500,000 Eagle Tax-Exempt Trust--Ohio Water Development
Authority (Ohio Edison) VRDN 3.54% due
07/01/2015 (a) .......................................... 3,500,000
4,800,000 Eagle Tax-Exempt Trust--Ohio Edison (Series 953509)
VRDN 3.54% due 07/01/2015 (a) ........................... 4,800,000
15,000,000 Eagle Tax-Exempt Trust--Cleveland Water (Series
983501) VRDN 3.54% due 01/01/2025 (a) ................... 15,000,000
22,065,000 Eagle Tax-Exempt Trust--Ohio State Turnpike Revenue
(Series 983502) VRDN 3.54% due 02/15/2020 (a) ........... 22,065,000
5,175,000 Franklin County, Ohio M/F Revenue (Community
Housing Network) VRDN 3.55% due 03/01/2027 (a) .......... 5,175,000
4,900,000 Gates Mills, Ohio BAN 3.50% due 11/18/1999 .............. 4,900,663
</TABLE>
See Notes to Financial Statements.
51
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
=========================================================================================================
Value
Face Amount Issue (Note 1a)
=========================================================================================================
<S> <C> <C> <C>
Ohio $ 8,750,000 Hamilton County, Ohio Hospital Facilities Revenue
(continued) (Children's Hospital Medical Center) VRDN 3.50%
due 05/15/2017 (a) ....................................... $ 8,750,000
12,000,000 Hamilton, Ohio City School District BAN 4.20% due
12/22/1999 ............................................... 12,011,471
5,000,000 Indian Hill, Ohio EDR (Cincinnati Country Day School)
VRDN 3.50% due 05/01/2019 (a) ............................ 5,000,000
9,400,000 Lorain County, Ohio Hospital Revenue (Catholic Health
Care) CP 3.39% due 11/15/1999 ............................ 9,400,000
5,000,000 Lorain County, Ohio Independent Living Facilities
Revenue (Elyria United Methodist Project) VRDN
3.55% due 06/01/2022 (a) ................................. 5,000,000
4,285,000 Lucas-Beacon Place Housing Development Corp. M/F
Revenue (Beacon Place Apartments Project) FXRDN
3.85% due 09/15/2006 ..................................... 4,285,000
4,000,000 Lucas County, Ohio Metropolitan Sewer & Water District
BAN 4.28% due 10/19/2000 ................................. 4,014,081
6,860,000 Mahoning County, Ohio Health Care Facilities Revenue
(Shepherd of the Valley Lutheran Home & Retirement
Center) VRDN 3.55% due 09/01/2020 (a) .................... 6,860,000
5,465,000 Mahoning County, Ohio Health Care Facilities Revenue
(Shepherds Woods Project) VRDN 3.55% due
09/01/2022 (a) ........................................... 5,465,000
4,950,000 Marion, Ohio BAN 3.53% due 12/15/1999 .................... 4,951,038
7,100,000 Medina County, Ohio Housing Revenue (The Oaks at
Medina Project) VRDN 3.55% due 12/01/2023 (a) ............ 7,100,000
3,045,000 Mentor, Ohio IDR (Risch Investments/Roll-Kraft Project)
VRDN 3.70% due 08/01/2017 (a) ............................ 3,045,000
13,470,000 Middleburg Heights, Ohio Hospital Revenue (Southwest
General Health) VRDN 3.50% due 08/15/2022 (a) ............ 13,470,000
Montgomery County, Ohio Revenue (Miami Valley
Hospital--Series B) CP:
12,600,000 3.55% due 11/10/1999 ..................................... 12,600,000
5,300,000 3.55% due 01/27/2000 ..................................... 5,300,000
25,450,000 3.80% due 02/07/2000 ..................................... 25,450,000
4,370,000 North Ridgeville, Ohio BAN 4.15% due 10/19/2000 .......... 4,380,129
5,000,000 Ohio State Housing Finance Agency Mortgage Revenue--
Residential (Series A-2) FXRDN 3.05% due 03/01/2000 5,000,000
</TABLE>
See Notes to Financial Statements.
52
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
=========================================================================================================
Value
Face Amount Issue (Note 1a)
=========================================================================================================
<S> <C> <C> <C>
Ohio $ 3,000,000 Ohio State Solid Waste Revenue (BP Exploration & Oil
(continued) Project) DDN 3.60% due 02/01/2033 (a) .................. $ 3,000,000
4,000,000 Ontario County, Ohio BAN 4.20% due 10/26/2000 .......... 4,009,443
3,755,000 Ottawa County, Ohio IDR (Adrian Sand & Stone Inc.
Project) VRDN 3.70% due 10/01/2008 (a) ................. 3,755,000
2,500,000 Sheffield, Ohio GO 3.60% due 05/18/2000 ................ 2,500,000
Trumbull County, Ohio BAN:
7,100,000 (Series 1) 4.00% due 04/13/2000 ........................ 7,120,156
5,100,000 (Series 2) 4.20% due 07/27/2000 ........................ 5,110,787
6,500,000 Willoughby, Ohio IDR (Kennedy Group Inc. Project)
VRDN 3.70% due 09/01/2018 (a) .......................... 6,500,000
1,980,000 Wood County, Ohio IDR (GHT Property Management
LLC Project) VRDN 3.70% due 08/01/2019 (a) ............. 1,980,000
- ---------------------------------------------------------------------------------------------------------
Oklahoma -- 20,000,000 Oklahoma State Development Finance Authority Revenue
0.8% (Oklahoma Hospital Association--Series A) VRDN
3.60% due 06/01/2029 (a) ............................... 20,000,000
- ---------------------------------------------------------------------------------------------------------
Oregon -- 3,972,400 Oregon State EDR (Sheffer Corp. Project--Series 185)
0.6% VRDN 3.50% due 12/01/2013 (a) .......................... 3,972,400
4,790,000 Oregon State EDR (Kettle Foods Project--Series 186)
VRDN 3.55% due 12/01/2018 (a) .......................... 4,790,000
6,000,000 Oregon State Housing & Community Services Department
Mortgage Revenue (Single Family Mortgages--Series K)
FXRDN 3.58% due 08/17/2000 ............................. 6,000,000
- ---------------------------------------------------------------------------------------------------------
Pennsylvania -- 1,200,000 Allegheny County, Pennsylvania IDA Revenue (Parkway
3.1% Center Project) VRDN 3.50% due 05/01/2009 (a) .......... 1,200,000
24,660,000 Dauphin County, Pennsylvania General Authority
Revenue (School District Pooled Financing) VRDN
3.55% due 09/01/2032 (a) ............................... 24,660,000
8,600,000 Emmaus, Pennsylvania General Authority Revenue (Series
F-1) VRDN 3.55% due 03/01/2024 (a) ..................... 8,600,000
38,580,000 Montgomery County, Pennsylvania Higher Education &
Health Authority Revenue (Higher Education & Health
Loan) VRDN 3.60% due 08/01/2021 (a) .................... 38,580,000
2,500,000 Montgomery County, Pennsylvania Higher Education &
Health Authority Revenue (Philadelphia Presbytery)
VRDN 3.60% due 07/01/2025 (a) .......................... 2,500,000
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
53
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
===========================================================================================================
Value
Face Amount Issue (Note 1a)
===========================================================================================================
<S> <C> <C> <C>
Rhode Island -- $ 5,500,000 Rhode Island State Health & Educational Building Corp.
0.7% Revenue (La Salle Academy) VRDN 3.65% due
03/01/2029 (a) ......................................... $ 5,500,000
2,660,000 Rhode Island State Housing & Mortgage Finance Corp.
(Smith Building Development Corp.) VRDN 3.80%
due 12/01/2028 (a) ..................................... 2,660,000
2,500,000 Rhode Island State Industrial Facilities Corporation IDR
(Capital Development Corp. Project) VRDN 3.55%
due 11/01/2005 (a) ..................................... 2,500,000
5,000,000 Rhode Island State Resource Recovery Corp. (Landfill
Lease) GO 4.00% due 07/28/2000 ......................... 5,014,240
- -----------------------------------------------------------------------------------------------------------
South Carolina -- Berkeley County, South Carolina Exempt Facilities IDR
1.2% (Amoco Chemical Co. Project) DDN:
9,800,000 3.60% due 04/01/2027 (a) ............................... 9,800,000
8,500,000 3.60% due 04/01/2028 (a) ............................... 8,500,000
2,500,000 South Carolina Economic Development Authority EDR
(Parkway Products Inc. Project) VRDN 3.60% due
11/01/2007 (a) ......................................... 2,500,000
7,085,000 South Carolina Economic Development Authority IDR
(Core Materials Corp. Project) VRDN 3.70% due
04/01/2013 (a) ......................................... 7,085,000
- -----------------------------------------------------------------------------------------------------------
Tennessee -- 4,000,000 Coffee County, Tennessee Industrial Board Inc. IDR
3.4% (Hillsdale Tool & Manufacturing Co. Project) VRDN
3.70% due 06/01/2017 (a) ............................... 4,000,000
19,775,000 Johnson City, Tennessee Municipal Securities Trust
(SGA 45) DDN 3.55% due 05/01/2021 (a) .................. 19,775,000
35,000,000 Knox County, Tennessee Health, Educational & Housing
Facilities Board Revenue (THA Solutions Group Inc.
Project) VRDN 3.60% due 05/01/2029 (a) ................. 35,000,000
9,500,000 Memphis & Shelby County, Tennessee Industrial Board
PCR (Birmingham Steel Corp. Project) VRDN 3.70%
due 10/01/2026 (a) ..................................... 9,500,000
6,695,000 Montgomery County, Tennessee Public Building Authority
(Pooled Financing Revenue) VRDN 3.60% due
07/01/2015 (a) ......................................... 6,695,000
4,300,000 Nashville & Davidson County, Tennessee IDB
Revenue (Gibson Guitar Project) VRDN 3.65% due
03/01/2011 (a) ......................................... 4,300,000
</TABLE>
See Notes to Financial Statements.
54
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
=========================================================================================================
Value
Face Amount Issue (Note 1a)
=========================================================================================================
<S> <C> <C> <C>
Tennessee $ 2,600,000 Nashville & Davidson County, Tennessee IDB Revenue
(continued) (Hickory M/F Housing Revenue) VRDN 3.55% due
06/01/2015 (a) ........................................... $ 2,600,000
- ---------------------------------------------------------------------------------------------------------
Texas -- 13,884,000 ABN-AMRO Muni Tops--Texas A&M University Revenue
12.8% (Series 995) FXRDN 3.60% due 05/17/2000 .................. 13,884,000
20,000,000 ABN-AMRO Muni Tops--Dallas, Texas Waterworks &
Sewer Systems Revenue (Series 9819) VRDN 3.63%
due 07/04/2007 (a) ....................................... 20,000,000
9,000,000 ABN-AMRO Muni Tops--San Antonio, Texas Electric &
Gas Revenue (Series 9822) VRDN 3.63% due
01/02/2007 (a) ........................................... 9,000,000
9,400,000 Brazos River Authority PCR (Texas Utilities Electric Co.)
DDN 3.60% due 04/01/2030 (a) ............................. 9,400,000
9,000,000 Brazos River, Texas Harbor Naval District (Brazoria
County Environmental Facilities Revenue Joint Venture
Project) DDN 3.65% due 09/01/2018 (a) .................... 9,000,000
Gulf Coast IDA, Solid Waste Disposal Revenue
(Citgo Petroleum Corp. Project) DDN:
9,800,000 (Series 95) 3.65% due 05/01/2025 (a) ..................... 9,800,000
2,100,000 (Series 94) 3.65% due 04/01/2026 (a) ..................... 2,100,000
15,000,000 (Series 98) 3.65% due 04/01/2028 (a) ..................... 15,000,000
22,600,000 Gulf Coast Waste Disposal Authority PCR & Solid Waste
Disposal Revenue (Amoco Oil Co. Project) DDN
3.60% due 05/01/2024 (a) ................................. 22,600,000
12,800,000 Houston, Texas Water & Sewer Systems Revenue
Municipal Securities Trust (Series SGA 73) VRDN
3.55% due 12/01/2023 (a) ................................. 12,800,000
7,900,000 Lower Neches Valley Authority IDC Exempt Facilities
Revenue (Mobil Oil Refining Corp. Project) DDN
3.60% due 03/01/2029 (a) ................................. 7,900,000
4,000,000 Mesquite, Texas IDR (Morrison Products) VRDN 3.70%
due 01/10/2010 (a) ....................................... 4,000,000
6,800,000 Midlothian, Texas IDC Exempt Facilities Revenue
(Texas Industries Inc. Project) DDN 3.60% due
05/01/2029 (a) ........................................... 6,800,000
1,440,000 Montgomery County, Texas IDC Revenue
(Sawyer Research Products Inc.) VRDN 3.70% due
02/04/2015 (a) ........................................... 1,440,000
12,000,000 North Central Texas Health Facility (Methodist Hospital
of Dallas--Series 1998) CP 3.55% due 12/14/1999 .......... 12,000,000
</TABLE>
See Notes to Financial Statements.
55
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<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 3.65% due 04/01/2026 (a) .......................... $ 4,800,000
4,600,000 Port Corpus Christi, Texas IDC Environmental Facilities
Revenue (Citgo Petroleum Corp. Project) DDN 3.65%
due 08/01/2028 (a) .................................... 4,600,000
Texas Municipal Power Agency Revenue CP:
18,000,000 3.60% due 01/28/2000 .................................. 18,000,000
19,200,000 3.55% due 02/14/2000 .................................. 19,200,000
23,700,000 3.75% due 03/13/2000 .................................. 23,700,000
80,000,000 Texas State TRAN 4.50% due 08/31/2000 ................. 80,507,075
- ------------------------------------------------------------------------------------------------------
Utah -- Intermountain Power Agency Power Supply Revenue CP:
1.9% 22,000,000 (Series B-2) 3.70% due 11/09/1999 ..................... 22,000,000
10,000,000 (Series B-4) 3.50% due 01/27/2000 ..................... 10,000,000
13,400,000 (Series B-3) 3.50% due 01/28/2000 ..................... 13,400,000
- ------------------------------------------------------------------------------------------------------
Vermont -- 5,000,000 Vermont Housing Finance Agency (Series 11B) FXRDN
0.3% 3.70% due 09/07/2000 .................................. 5,000,000
2,300,000 Vermont IDA Revenue (Burlington Project) VRDN 3.50%
due 12/01/2011 (a) .................................... 2,300,000
- ------------------------------------------------------------------------------------------------------
Virginia -- 2,100,000 Brunswick County, Virginia IDA Exempt Facilities
1.7% Revenue (Aegis Waste Solutions Inc.) VRDN 3.60%
due 01/01/2017 (a) .................................... 2,100,000
18,750,000 Dinwiddie County, Virginia IDA Exempt Facilities
Revenue (Chaparral East Project) DDN 3.60% due
09/01/2028 (a) ........................................ 18,750,000
19,500,000 Dinwiddie County, Virginia IDA Exempt Facilities
Revenue (Chaparral Steel Project) DDN 3.60% due
08/01/2029 (a) ........................................ 19,500,000
- ------------------------------------------------------------------------------------------------------
Washington -- 26,745,000 Eagle Tax-Exempt Trust--Port of Seattle, Washington
2.2% Passenger Facility Charge (Series 984705) VRDN
3.54% due 12/01/2019 (a) .............................. 26,745,000
14,680,000 Eagle Tax-Exempt Trust--Washington State Public Power
Supply System (Nuclear Project Number 1-- Series
964702) VRDN 3.54% due 07/01/2011 (a) ................. 14,680,000
11,260,000 King County, Washington Municipal Securities Trust
Receipts (Series SGA 19) VRDN 3.55% due
01/01/2027 (a) ........................................ 11,260,000
- ------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
56
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
=================================================================================================================
Value
Face Amount Issue (Note 1a)
=================================================================================================================
<S> <C> <C> <C>
West Virginia -- $10,000,000 ABN-AMRO Muni Tops--State of West Virginia VRDN
0.4% 3.50% due 06/06/2007 (a) .................................... $10,000,000
- -----------------------------------------------------------------------------------------------------------------
Wisconsin -- 1,210,000 Appleton, Wisconsin IDR (Valley Packaging Industries
3.4% Inc. Project) VRDN 3.55% due 02/01/2011 (a) ................. 1,210,000
Deerfield, Wisconsin IDR (Interpane Coatings Project)
VRDN:
1,100,000 3.60% due 05/01/2003 (a) .................................... 1,100,000
1,635,000 3.70% due 05/01/2003 (a) .................................... 1,635,000
2,220,000 Milwaukee, Wisconsin Redevelopment Authority
Revenue (Jensar Corp. Project) VRDN 3.70% due
03/01/2007 (a) .............................................. 2,220,000
8,515,000 Monroe, Wisconsin School District BAN 3.55% due
12/01/1999 .................................................. 8,516,277
6,000,000 Oshkosh, Wisconsin Area School District TRAN 4.00%
due 08/23/2000 .............................................. 6,013,121
970,000 Oshkosh, Wisconsin IDR (Automatic Handling Inc.)
VRDN 3.70% due 06/01/2006 (a) ............................... 970,000
500,000 Plymouth, Wisconsin IDR (Great Lakes Cheese Inc.
Project) VRDN 3.65% due 08/01/2024 (a) ...................... 500,000
8,900,000 Racine, Wisconsin United School District TRAN 3.75%
due 07/06/2000 .............................................. 8,911,610
5,000,000 Sturtevant, Wisconsin IDR (Andis Co. Project--Series A)
VRDN 3.65% due 12/01/2016 (a) ............................... 5,000,000
4,100,000 Verona, Wisconsin Area School District TRAN 4.00%
due 08/25/2000 .............................................. 4,108,385
25,000,000 Wisconsin State (Series A) CP 3.70% due 02/09/2000 .......... 25,000,000
5,800,000 Wisconsin State Public Power Inc. Systems Revenue
Municipal Trust Receipts (Series SGA 2) VRDN 3.55%
due 07/01/2021 (a) .......................................... 5,800,000
10,338,000 Wisconsin State Transportation Revenue (Series A) CP
3.50% due 01/27/2000 ........................................ 10,338,000
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
57
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Schedule of Investments -- Continued
October 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
===========================================================================================================
Value
Face Amount Issue (Note 1a)
===========================================================================================================
<S> <C> <C> <C>
Wyoming -- Laramie County, Wyoming IDR (Cheyenne Light Fuel &
1.4% Power Co.) VRDN:
$ 3,500,000 (Series 97-B) 3.65% due 09/01/2021 (a) .................... $ 3,500,000
5,000,000 (Series 97-A) 3.65% due 03/01/2027 (a) .................... 5,000,000
24,200,000 Sweetwater County, Wyoming PCR (Idaho Power Co.
Project--Series B) DDN 3.55% due 07/15/2026 (a) ........... 24,200,000
- -----------------------------------------------------------------------------------------------------------
Total Investments (Cost $2,381,400,914) -- 99.1% .......... 2,381,400,914
- -----------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.9% ..................... 21,053,903
- -----------------------------------------------------------------------------------------------------------
Net Assets -- Equivalent to $1.00 Per Share on
2,402,478,074 Shares of Beneficial Interest
Outstanding -- 100.0% ..................................... $2,402,454,817
===========================================================================================================
</TABLE>
(a) The interest rate is subject to change periodically based on a certain
index. The rates shown are those in effect at October 31, 1999. For variable
rate demand instruments, the next coupon date on which the interest is to be
adjusted is deemed the maturity date for valuation.
*Cost for federal income tax purposes.
- --------------------------------------------------------------------------------
Portfolio Abbreviations for Merrill Lynch Institutional Tax-Exempt Fund
<TABLE>
<S> <C> <C> <C> <C> <C>
BAN Bond Anticipation Notes GO General Obligation PCR Pollution Control Revenue
CP Commercial Paper IDA Industrial Development Authority RAN Revenue Anticipation Notes
DDN Daily Demand Notes IDB Industrial Development Board TAN Tax Anticipation Notes
EDR Economic Development Revenue IDC Industrial Development Corporation TRAN Tax and Revenue Anticipation Notes
FXRDN Fixed Rate Demand Notes IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
M/F Multi-Family
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
58
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Statement of Assets and Liabilities
October 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at amortized cost and value (Note 1a) ................................ $2,381,400,914
Cash .............................................................................. 1,428,260
Interest receivable ............................................................... 15,987,518
Receivable for investments sold ................................................... 4,392,000
Prepaid expenses .................................................................. 15,808
--------------
Total assets ................................................................... 2,403,224,500
--------------
Liabilities:
Advisory fee payable (Note 2) ..................................................... 404,769
Accrued expenses .................................................................. 242,128
Dividends payable ................................................................. 122,786
--------------
Total liabilities .............................................................. 769,683
--------------
Net Assets: (Equivalent to $1.00 per share, offering and redemption price, based on
2,402,478,074 shares of beneficial interest outstanding) ......................... $2,402,454,817
==============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Statement of Operations
For the Six Months Ended October 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income:
Interest and discount earned (Note 1d) ............................ $37,835,219
-----------
Expenses:
Investment advisory fee (Note 2) ................ $ 4,885,351
Registration fees ............................... 323,284
Dividend and transfer agency fees ............... 85,334
Accounting and custodian services ............... 78,684
Legal and audit fees ............................ 14,337
Printing and shareholder reports ................ 8,420
Trustees' fees (Note 5) ......................... 7,888
Insurance ....................................... 4,378
Miscellaneous ................................... 4,000
-----------
Total expenses ............................. 5,411,676
Waived investment advisory fee (Note 2) ......... (2,663,158) 2,748,518
----------- -----------
Net investment income ........................................ 35,086,701
Net realized gain from investment transactions .................... 118,062
-----------
Net Increase in Net Assets Resulting From Operations .............. $35,204,763
===========
</TABLE>
See Notes to Financial Statements.
59
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
October 31, 1999 April 30, 1999
===============================================================================================================
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income .................................................. $ 35,086,701 $ 63,764,839
Net realized gain (loss) from investment transactions .................. 118,062 (538)
-------------- --------------
Net increase in net assets resulting from operations ................... 35,204,763 63,764,301
Total declared as dividends to shareholders (Note 4) ................... (35,110,140) (63,752,758)
Capital share transactions (Note 3) .................................... 449,285,295 148,621,747
-------------- --------------
Net increase in net assets ............................................. 449,379,918 148,633,290
Net Assets:
Beginning of period .................................................... 1,953,074,899 1,804,441,609
-------------- --------------
End of period, including undistributed net investment income of $111,161
and $134,601 and accumulated capital losses of $134,418 and $252,480
respectively (Note 1g and Note 4) ...................................... $2,402,454,817 $1,953,074,899
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
October 31,
1999
- --------------------------------------------------------------------
<S> <C>
Net Asset Value, beginning of period .......... $1.00
Net investment income ........................ .02
Dividends from net investment income ......... (.02)
-----
Net Asset Value, end of period ................ $1.00
=====
Total Return .................................. 1.60%(1)
Ratios/Supplemental Data:
Net Assets, end of period (000) ............. $2,402,455
Ratio of expenses to average net assets
(before waiver) ............................. .49%(2)
Ratio of expenses to average net assets
(after waiver) .............................. .25%(2)
Ratio of net investment income, to average
net assets (before waiver) .................. 2.92%(2)
Ratio of net investment income, to average
net assets (after waiver) ................... 3.16%(2)
<CAPTION>
Year Ended April 30,
------------------------------------------------------------------
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period .......... $1.00 $1.00 $1.00 $1.00 $1.00
Net investment income ........................ .03 .04 .03 .04 .03
Dividends from net investment income ......... (.03) (.04) (.03) (.04) (.03)
----- ----- ----- ----- -----
Net Asset Value, end of period ................ $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total Return .................................. 3.22% 3.59% 3.41% 3.68% 3.20%
Ratios/Supplemental Data:
Net Assets, end of period (000) ............. $1,953,075 $1,804,442 $1,003,655 $667,205 $403,903
Ratio of expenses to average net assets
(before waiver) ............................. .49% .49% .52% .54% .56%
Ratio of expenses to average net assets
(after waiver) .............................. .24% .24% .27% .29% .31%
Ratio of net investment income, to average
net assets (before waiver) .................. 2.92% 3.28% 3.12% 3.35% 2.90%
Ratio of net investment income, to average
net assets (after waiver) ................... 3.17% 3.53% 3.37% 3.60% 3.15%
</TABLE>
(1) Cumulative total return
(2) On an annualized basis
See Notes to Financial Statements.
60
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Funds For Institutions Series
Notes to Financial Statements (Unaudited)
================================================================================
1. Significant Accounting Policies
Merrill Lynch Funds For Institutions Series (the "Trust") was organized as a
Massachusetts business trust on May 7, 1987, and is registered under the
Investment Company Act of 1940 as a diversified, open-end management company. On
June 15, 1998, Merrill Lynch Rated Institutional Fund commenced operations as a
separate series of the Trust. On January 27, 1997, Merrill Lynch Premier
Institutional Fund commenced operations as a separate series of the Trust. The
Trust has a fiscal year end of April 30. The following is a summary of
significant accounting policies consistently followed by the Trust in conformity
with generally accepted accounting principles.
(a) The value of the Premier Institutional, Institutional, Rated Institutional,
Government and Treasury Fund portfolio securities is determined on the basis of
fair value as determined in good faith by the Trustees of the Trust. In
determining fair value, securities for which market quotations are readily
available are valued at market value. Other securities, if any, are valued at
their fair value in the best judgment of Fund Asset Management, L.P., ("FAM")
under procedures established by, and under the supervision of, the Trustees.
Securities with remaining maturities of 60 days or less are valued by use of the
amortized cost method. Institutional Tax-Exempt Fund's portfolio securities are
carried at amortized cost which approximates market value.
For the purpose of valuation, the maturity of a variable rate demand instrument
is deemed to be the next coupon date on which the interest rate is to be
adjusted. In the case of a floating rate instrument, the remaining maturity is
deemed to be the demand notice payment period.
(b) It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income to its shareholders. Therefore, no federal income tax
provision is required.
(c) Realized gains and losses on investments are computed on the basis of
identified cost of the security sold.
(d) Security transactions are accounted for on the date the securities are
purchased or sold (the trade date). Interest income (after adjustment for
amortization of premium or accretion of discount) is recorded as earned.
(e) Prepaid registration fees are charged to income as the related shares are
sold.
(f) Repurchase agreements--The Premier Institutional Fund, the Institutional
Fund, the Rated Institutional Fund and the Government Fund invest in U.S.
Government & Agency securities pursuant to repurchase agreements with member
banks of the Federal Reserve System or primary dealers in U.S. Government
securities. Under such agreements, the bank or primary dealer agrees to
repurchase the security at a mutually agreed upon time and price. The Trust
takes possession of the underlying securities, marks to market such securities
daily and, if necessary, receives additional securities to ensure that the
contract is adequately collateralized.
(g) During the year ended April 30, 1999, Merrill Lynch Institutional
Tax-Exempt Fund reclassified amounts to reflect a decrease of $12,081 in both
accumulated capital losses and undistributed net investment income as a result
of permanent differences arising from different treatments of market discount
for book and tax purposes.
2. Investment Advisory Fees and Other
Transactions with Affiliates
FAM, a subsidiary of Merrill Lynch & Co., Inc., provides investment advisory and
corporate administrative services to the Trust for a fee, subject to certain
limitations, at the following annual rates:
61
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Funds For Institutions Series
Notes to Financial Statements -- Continued (Unaudited)
================================================================================
<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
Rated Institutional
Fund ....................... .20%
Government Fund
and Treasury Fund .......... .35% up to and including $500,000,000
plus .335% over $500,000,000 up to and
including $750,000,000
plus .32% over $750,000,000 up to and
including $1,000,000,000
plus .30% over $1,000,000,000
Institutional
Tax-Exempt Fund ............ .45% up to and including $1,500,000,000
plus .425% over $1,500,000,000 up to and
including $2,000,000,000
plus .40% over $2,000,000,000
</TABLE>
During its initial offering period, FAM agreed to waive a portion of its
advisory fee for the Rated Institutional Fund. For the period ended April 30,
1999, the effective fee payable to FAM was 0.16% of the Fund's average daily
assets. FAM has agreed to waive a portion of its advisory fees for the
Institutional, Government, Treasury and Tax-Exempt Funds. The effective fee
payable to FAM will be at the annual rate of 0.20% of each Fund's average daily
net assets. FAM may discontinue waiver of the fee in whole or in part at any
time without notice
For the period ended October 31, 1999, FAM waived a portion of its fees
amounting to $5,405,879 for the Institutional Fund, $1,464,460 for the
Government Fund, $512,188 for the Treasury Fund and $2,663,158 for the
Institutional Tax-Exempt Fund.
All officers and certain trustees of the Trust are affiliated with Merrill
Lynch & Co., Inc.
3. Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
shares of beneficial interest in the Premier Institutional Fund, Institutional
Fund, Rated Institutional Fund, Government Fund and Treasury Fund ($.01 par
value) and Institutional Tax-Exempt Fund ($.10 par value) of a single class. At
October 31, 1999, capital paid-in aggregated $10,805,200,847 for Premier
Institutional Fund, $8,314,385,776 for Institutional Fund, $350,842,003 for
Rated Institutional Fund, $2,485,683,645 for Government Fund, $634,240,913 for
Treasury Fund and $2,402,478,074 for Institutional Tax-Exempt Fund. Transactions
in shares at a constant net asset value of $1.00 per share were as follows:
<TABLE>
<CAPTION>
Period Year
Ended Ended
October 31, April 30,
Premier Institutional Fund 1999 1999
- -------------------------- -------------- ---------------
<S> <C> <C>
Shares sold ........................... 56,648,657,352 118,945,464,135
Shares issued to shareholders
in reinvestment of dividends ......... 220,857,616 383,116,366
-------------- ---------------
Total ............................... 56,869,514,968 119,328,580,501
Shares redeemed ....................... 56,694,182,954 115,344,184,289
-------------- ---------------
Net increase ........................ 175,332,014 3,984,396,212
============== ===============
</TABLE>
<TABLE>
<CAPTION>
Period Year
Ended Ended
October 31, April 30,
Institutional Fund 1999 1999
- ------------------ -------------- --------------
<S> <C> <C>
Shares sold ........................... 18,967,005,996 44,168,257,580
Shares issued to shareholders
in reinvestment of dividends ......... 189,221,836 364,014,371
-------------- --------------
Total ............................... 19,156,228,832 44,532,271,951
Shares redeemed ....................... 18,903,587,074 43,844,221,739
-------------- --------------
Net increase ........................ 252,640,758 688,050,212
============== ==============
</TABLE>
<TABLE>
<CAPTION>
Period Period
Ended Ended
October 31, April 30,
Rated Institutional Fund 1999 1999
- ------------------------ ----------------- -------------
<S> <C> <C>
Shares sold ........................... 1,626,718,289 4,497,694,629
Shares issued to shareholders
in reinvestment of dividends ......... 9,189,536 15,592,631
------------- -------------
Total ............................... 1,635,907,825 4,513,287,260
Shares redeemed ....................... 1,722,734,097 4,075,718,985
------------- -------------
Net increase (decrease) ............. (86,826,272) 437,568,275
============= =============
</TABLE>
Prior to June 15, 1998 (commencement of operations) there were 100,000 shares
of beneficial interest outstanding which were owned by FAM.
62
<PAGE>
- --------------------------------------------------------------------------------
Merrill Lynch Funds For Institutions Series
Notes to Financial Statements -- Continued (Unaudited)
================================================================================
<TABLE>
<CAPTION>
Period Year
Ended Ended
October 31, April 30,
Government Fund 1999 1999
- --------------- ------------- --------------
<S> <C> <C>
Shares sold ........................... 6,101,514,821 14,384,418,297
Shares issued to shareholders
in reinvestment of dividends ......... 58,993,498 115,470,085
------------- --------------
Total ............................... 6,160,508,319 14,499,888,382
Shares redeemed ....................... 6,311,618,418 13,977,888,964
------------- --------------
Net increase (decrease) ............. (151,110,099) 521,999,418
============= ==============
</TABLE>
<TABLE>
<CAPTION>
Period Year
Ended Ended
October 31, April 30,
Treasury Fund 1999 1999
- ------------- ----------- --------------
<S> <C> <C>
Shares sold ........................... 846,222,959 3,344,371,792
Shares issued to shareholders
in reinvestment of dividends ......... 15,435,134 33,682,662
----------- -------------
Total ............................... 861,658,093 3,378,054,454
Shares redeemed ....................... 907,801,883 3,455,926,782
----------- -------------
Net decrease ........................ (46,143,790) (77,872,328)
=========== =============
</TABLE>
<TABLE>
<CAPTION>
Period Year
Ended Ended
Institutional October 31, April 30,
Tax-Exempt Fund 1999 1999
- --------------- ------------- -------------
<S> <C> <C>
Shares sold ........................... 4,690,802,608 9,221,984,624
Shares issued to shareholders
in reinvestment of dividends ......... 32,628,438 59,822,347
------------- -------------
Total ............................... 4,723,431,046 9,281,806,971
Shares redeemed ....................... 4,274,145,751 9,133,185,224
------------- -------------
Net increase ........................ 449,285,295 148,621,747
============= =============
</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, Rated Institutional, Government and Treasury Funds are declared
from the total net investment income plus or minus realized gains or losses, if
any, on investments.
Dividends for the Institutional Tax-Exempt Fund are declared from net
investment income-excluding discounts earned other than original issue
discounts. Net realized capital gains, if any, are normally distributed
annually, after deducting prior years' loss carryovers. The Fund may distribute
capital gains more frequently than annually in order to maintain the Fund's net
asset value at $1.00 per share.
At April 30, 1999, the Institutional Tax-Exempt Fund had net capital loss
carryovers of $252,269 of which $90,891 expire in the year 2001, $17,520 expire
in 2002, $140,040 expire in 2003 and $3,818 expire in 2007.
5. Trustees' Fees
Each Trustee who is not affiliated with the Trust or its adviser is paid an
annual fee of $36,000 by the Trust. Trustees' fees are allocated among the six
series of the Trust based on the net assets under management.
63
<PAGE>
[Back cover]
ADMINISTRATOR & DISTRIBUTOR
Merrill Lynch Funds Distributor, Inc.
One Financial Center -- 23rd Floor
Boston, Massachusetts 02111
INVESTMENT ADVISER
Fund Asset Management, L.P.
P.O. Box 9011
Princeton, N.J. 08543-9011
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company
P.O. Box 8118
Boston, Massachusetts 02266-8118
LEGAL COUNSEL
Rogers & Wells
200 Park Avenue
New York, New York 10166
AUDITORS
Deloitte & Touche LLP
200 Berkeley Street
Boston, Massachusetts 02116
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of the Trust unless accompanied or preceded by the
Trust's current prospectus. Past performance results shown in this report should
not be considered a representation of future performance, which will fluctuate.
Each Fund seeks to maintain a consistent $1.00 net asset value per share,
although this cannot be assured. An investment in the Funds is neither insured
nor guaranteed by the U.S. Government.
