================================================================================
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, 2000, the Fund's net annualized yield
was 6.40%. The Fund's seven-day net annualized yield as of October 31, 2000, was
6.51%. The average portfolio maturity for the Merrill Lynch Premier
Institutional Fund at October 31, 2000, was 64 days compared to 62 days at April
30, 2000.
During the six-month period ended October 31, 2000, Merrill Lynch Premier
Institutional Fund maintained an average life ranging from a low of 56 days to a
high of 71 days. With the recent slowdown in the US economy, we attempted to
maintain our average life in the 70-day range.
Early in the period, with strong economic growth and tight labor markets as
the backdrop, it appeared as though the Federal Reserve Board could continue to
tighten monetary policy throughout 2000. We continued to focus on floating rate
securities in this environment, especially those linked to the London Interbank
Offered Rate (LIBOR) since they provided some degree of protection against
higher interest rates. The fear of a continuing move toward higher interest
rates caused the yield curve to remain steep in the front end, allowing us to
invest in the one-year sector when we believed interest rates were compensating
us for the magnitude of tightening we projected. As the period progressed and
the economy showed signs of slowing, the yield curve flattened substantially. In
this environment, we focused on securities with three-month and four-month
maturities, which were providing the same yield as those with one-year
maturities.
Looking ahead, it appears that the impact of 100 basis points (1.00%) of
tightening by the Federal Reserve Board in 2000 is finally starting to slow the
US economy. We believe that it is premature to discuss an easing by the Federal
Reserve Board, but that there is the potential for monetary policy to remain
unchanged for a prolonged period.
Merrill Lynch Institutional Fund
For the six months ended October 31, 2000, the Fund's net annualized yield
was 6.33%. The Fund's seven-day net annualized yield as of October 31, 2000, was
6.44%. The average portfolio maturity for the Merrill Lynch Institutional Fund
at October 31, 2000, was 51 days, compared to 62 days at April 30, 2000.
During the six-month period ended October 31, 2000, Merrill Lynch
Institutional Fund maintained an average life ranging from a low of 49 days to a
high of 66 days. With the recent slowdown in the US economy, we attempted to
maintain our average life as close to the 60-day cap as possible.
Early in the period, with strong economic growth and tight labor markets as
the backdrop, it appeared as though the Federal Reserve Board could continue to
tighten monetary policy throughout 2000. We continued to focus on floating rate
securities in this environment, especially those linked to LIBOR since they
provided some degree of protection against higher interest rates. The fear of a
continuing more toward higher interest rates caused the yield curve to remain
steep in the front end, allowing us to invest in the one-year sector when we
believed interest rates were compensating us for the magnitude of tightening we
projected. As the period
1
<PAGE>
progressed and the economy showed signs of slowing, the yield curve flattened
substantially. In this environment, we focused on securities with three-month
and four-month maturities, which were providing the same yield as those with
one-year maturities.
Looking ahead, it appears that the impact of 100 basis points of tightening
by the Federal Reserve Board in 2000 is finally starting to slow the US economy.
We believe that it is premature to discuss an easing by the Federal Reserve
Board, but that there is the potential for monetary policy to remain unchanged
for a prolonged period.
Merrill Lynch Rated Institutional Fund
For the six months ended October 31, 2000, the Fund's net annualized yield
was 6.25%. The Fund's seven-day net annualized yield as of October 31, 2000, was
6.37%. The average portfolio maturity for the Merrill Lynch Rated Institutional
Fund at October 31, 2000, was 45 days, compared to 52 days at April 30, 2000.
During the six-month period ended October 31, 2000, Merrill Lynch Rated
Institutional Fund maintained an average life ranging from a low of 35 days to a
high of 53 days. Even with the recent slowdown in the US economy, uncertainties
surrounding asset flows have caused us to maintain our average life around 50
days.
Early in the period, with strong economic growth and tight labor markets as
the backdrop, it appeared as though the Federal Reserve Board could continue to
tighten monetary policy throughout 2000. We continued to focus on floating rate
securities in this environment, especially those linked to LIBOR since they
provided some degree of protection against higher interest rates. The fear of a
continuing move toward higher interest rates caused the yield curve to remain
steep in the front end, allowing us to invest in the one-year sector when we
believed interest rates were compensating us for the magnitude of tightening we
projected. As the period progressed and the economy showed signs of slowing, the
yield curve flattened substantially. In this environment, we focused on
securities with three-month and four-month maturities, which were providing the
same yield as those with one-year maturities.
Looking ahead, it appears that the impact of 100 basis points of tightening
by the Federal Reserve Board in 2000 is finally starting to slow the US economy.
We believe that it is premature to discuss an easing by the Federal Reserve
Board, but that there is the potential for monetary policy to remain unchanged
for a prolonged period.
Merrill Lynch Government Fund
For the six months ended October 31, 2000, the Fund's net annualized yield
was 6.25%. The Fund's seven-day net annualized yield as of October 31, 2000, was
6.35%. The average portfolio maturity for the Merrill Lynch Government Fund at
October 31, 2000, was 49 days, compared to 55 days at April 30, 2000.
For the six months ended October 31, 2000, Merrill Lynch Government Fund
remained relatively optimistic as to the direction of interest rates. Despite an
aggressive Federal Reserve Board policy earlier in the period, slowing demand
and diminished productivity gains held the Federal Reserve Board in check after
its May meeting.
Throughout the period, we continued to emphasize a barbelled structure.
However, we have started to build liquidity for year-end to meet investor needs
and to take advantage of any potential financing aberrations. Structurally, we
reduced our commitments to the overnight markets (from 50% to 33%), while
increasing our holdings in longer-dated, deep-discounted, callable agency issues
for yield. Additionally, while we modestly
2
<PAGE>
reduced our holdings in floating rate securities, we have continued to emphasize
indexes that continue to outperform financing levels.
Merrill Lynch Treasury Fund
For the six months ended October 31, 2000, the Fund's net annualized yield
was 5.83%. The Fund's seven-day net annualized yield as of October 31, 2000, was
5.97%. The average portfolio maturity for the Merrill Lynch Treasury Fund at
October 31, 2000, was 56 days, compared to 54 days at April 30, 2000.
For the six months ended October 31, 2000, Merrill Lynch Treasury Fund for
the most part held its average life near the 60-day limit as strong technicals
and a steep yield curve dominated the front end of the Treasury curve. Recent
shifts in Treasury funding needs away from the one-year sector have given the
three-month to six-month sector more supply and in turn, better liquidity.
During the six-month period, we took advantage of some of the market
aberrations that have occurred as the Treasury has utilized cash management
bills to cover its cash shortfalls. We targeted issues that we believed would
benefit from reinvestment of the proceeds. As supply has clearly favored bills
in our investment horizon, we reduced our position in Treasury notes, with the
exception of issues that will mature after year-end, for liquidity purposes.
Currently, our focus is on preparing for year-end investor needs. We limited our
involvement in late December maturities while focusing on January and February.
Investor anticipation of a large cash management bill maturing after year-end
has diminished, given an increase in the amount of the Treasury's cash receipts
expected during the fourth quarter of 2000.
Merrill Lynch Institutional Tax-Exempt Fund
For the six months ended October 31, 2000, the Fund's net annualized yield
was 4.09%. The Fund's seven-day net annualized yield as of October 31, 2000, was
4.20%. The average portfolio maturity for the Merrill Lynch Institutional
Tax-Exempt Fund at October 31, 2000, was 32 days, compared to 50 days at April
30, 2000.
Merrill Lynch Institutional Tax-Exempt Fund began the six-month period
ended October 31, 2000 employing a cautious investment strategy to the
short-term municipal market. While still experiencing the effects of seasonal
tax-related redemptions, the Fund's net assets declined to a low of $2.0 billion
before stabilizing in the middle of May. With overall tax-related redemptions
coming in higher than in previous years, combined with an anticipated interest
rate increase by the Federal Reserve Board, yields on one-year short-term
municipal notes rose to the 4.90% range, or 80% of their taxable equivalent. At
the same time, yields on variable rate demand notes (VRDN) rose to 100% of the
taxable equivalents. The Fund took advantage of the opportunity to lock in
attractive yields by purchasing municipal notes when the situations presented
themselves.
On May 16, 2000, the Federal Reserve Board increased the Federal Funds rate
50 basis points to 6.50%. This dramatic showing by the Federal Reserve Board
created a positive feeling among investors, giving a sense that we may be near
an end to the current cycle of rising short-term interest rates. As funds began
to see subscriptions and the need to replace maturing notes grew, investors
began to scramble to try to lock in the high yields offered by municipal notes.
This scenario carried over through October as the Federal Reserve Board held
short-term interest rates steady at the June, August and October Federal Open
Market Committee meetings and was further reinforced as economic statistics
indicated that the economy was beginning to slow. Yields on one- year municipal
notes declined approximately 60 basis points to the 4.30% range, or 66% of the
taxable
3
<PAGE>
equivalents, during this period. The Fund improved its performance during this
period as we replaced lower-yielding, maturing municipal notes with
higher-yielding securities. In addition, as the Fund received new subscriptions,
we were also able to take advantage of fluctuations in yield offered by VRDNs
during the period. As the municipal yield curve flattened during this period, we
began to concentrate more on tax-exempt commercial paper as a means to diversify
maturities. The Fund's assets grew steadily and ended the period near a record
$2.8 billion, while the average life fluctuated around the 35-day range.
In the near term, we expect to continue to employ a similar approach to the
short-term municipal market. This investment strategy is warranted due to the
uncertainty surrounding the presidential election as well as the rise in oil
prices. In addition, it is still unclear whether the domestic economy is
stabilizing, which could prompt the Federal Reserve Board into action in the
future. We will continue to pursue and take advantage of yield opportunities in
both municipal notes and tax-exempt commercial paper when they exist and become
available. We will also 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>
<CAPTION>
<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 27, 2000
4
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH PREMIER INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000 (UNAUDITED)
=====================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
=====================================================================================================================
<S> <C> <C> <C> <C>
U.S. $ 10,000,000 U.S. Treasury Bills ..................... 4.63% 11/30/00 $ 10,001,525
GOVERNMENT & 10,000,000 U.S. Treasury Notes ..................... 4.63 12/31/00 9,963,669
AGENCY 42,800,000 U.S. Treasury Notes ..................... 4.50 01/31/01 42,577,440
ISSUES -- 2.8% 40,000,000 U.S. Treasury Notes ..................... 5.00 04/30/01 39,722,636
25,000,000 Federal Home Loan Banks ................. 4.95 11/20/00 25,000,208
25,000,000 Federal Home Loan Mortgage Corp. ........ 5.05 11/17/00 24,999,573
25,000,000 Federal Home Loan Mortgage Corp. ........ 5.13 11/24/00 24,999,508
25,000,000 Federal Home Loan Mortgage Corp. ........ 5.18 11/24/00 24,999,385
12,500,000 Federal Home Loan Mortgage Corp. ........ 5.25 01/19/01 12,460,461
25,000,000 Federal Home Loan Mortgage Corp. ........ 5.15 01/26/01 24,908,348
25,000,000 Federal National Mortgage Assoc. ........ 5.21 01/26/01 24,927,623
41,455,000 Federal National Mortgage Assoc. ........ 5.41 03/22/01 41,282,212
25,000,000 Federal National Mortgage Assoc. ........ 5.40 03/27/01 24,890,522
25,000,000 Federal National Mortgage Assoc. ........ 5.38 03/27/01 24,888,100
24,900,000 Federal National Mortgage Assoc. ........ 5.38 04/06/01 24,780,303
20,000,000 Federal National Mortgage Assoc. ........ 6.00 07/17/01 19,922,318
45,979,000 Federal Home Loan Mortgage Corp. D/N .... 6.38 12/28/00 45,514,535
---------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT & AGENCY
ISSUES (COST $447,116,844) ............. 445,838,366
---------------------------------------------------------------------------------------------------------------------
U.S. 83,690,000 Federal Home Loan Banks ................. 6.84 12/01/00 83,686,570
GOVERNMENT 100,000,000 Federal Home Loan Mortgage Corp. ........ 6.69 09/17/01 99,937,049
AGENCY 244,500,000 Federal National Mortgage Assoc. ....... 6.67 09/17/01 244,335,938
ISSUES -- 200,000,000 Student Loan Marketing Assoc. .......... 6.81 03/09/01 199,965,992
VARIABLE RATE -- 294,000,000 Student Loan Marketing Assoc. .......... 6.87 02/26/02 293,852,891
11.3% 100,000,000 Student Loan Marketing Assoc. .......... 6.84 03/11/02 99,935,179
200,000,000 Student Loan Marketing Assoc. .......... 6.84 03/18/02 199,868,529
450,000,000 Student Loan Marketing Assoc. .......... 6.84 04/12/02 449,816,290
100,000,000 Student Loan Marketing Assoc. .......... 6.87 04/24/02 99,986,205
---------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY
ISSUES -- VARIABLE RATE
(Cost $1,771,384,643) .................. 1,771,384,643
---------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH PREMIER INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
=====================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
=====================================================================================================================
<S> <C> <C> <C> <C>
CERTIFICATES OF $ 25,000,000 Bank One, N.A., Illinois ................ 6.94% 12/29/00 $ 25,001,949
DEPOSIT -- 2.1% 250,000,000 Citibank, N. A. ......................... 6.80 02/02/01 250,026,700
50,000,000 SouthTrust Bank, N.A. ................... 6.86 12/19/00 50,000,644
---------------------------------------------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT
(COST $325,002,593) .................... 325,029,293
---------------------------------------------------------------------------------------------------------------------
EURO 175,000,000 Abbey National Treasury Services
CERTIFICATES OF PLC, London........................... 7.06 12/27/00 174,999,276
DEPOSIT -- 4.3% 250,000,000 ABN-AMRO Bank, NV ....................... 6.57 12/29/00 250,003,777
100,000,000 BNP Paribas, London ..................... 6.57 12/28/00 100,001,560
50,000,000 Credit Agricole Indosuez ................ 6.71 03/07/01 49,945,310
100,000,000 Westdeutsche Landesbank Girozentrale,
London ............................... 6.67 02/13/01 99,976,320
---------------------------------------------------------------------------------------------------------------------
TOTAL EURO CERTIFICATES OF DEPOSIT
(COST $675,006,252) .................... 674,926,243
---------------------------------------------------------------------------------------------------------------------
YANKEE 25,000,000 Australia & New Zealand Banking
CERTIFICATES OF Group, NY ............................ 6.72 03/16/01 24,973,610
DEPOSIT -- 100,000,000 Banco Bilbao Vizcaya, Argentina ......... 6.80 04/17/01 99,922,970
15.0% 100,000,000 Bank of Nova Scotia, Portland ........... 6.01 11/13/00 99,998,744
97,000,000 Bank of Nova Scotia, Portland ........... 6.78 02/22/01 96,922,400
38,000,000 Bank of Nova Scotia, Portland ........... 6.74 03/14/01 37,957,759
49,500,000 Bayerische Hypo-und Vereinsbank AG, NY .. 7.10 07/24/01 49,585,873
25,000,000 Bayerische Hypo-und Vereinsbank AG, NY .. 6.88 09/04/01 25,016,453
200,000,000 Canadian Imperial Bank of Commerce, NY .. 6.87 08/24/01 200,095,760
50,000,000 Canadian Imperial Bank of Commerce, NY .. 6.72 10/10/01 49,987,640
57,000,000 Commerzbank AG, NY ...................... 6.76 03/27/01 56,946,842
43,000,000 Commerzbank AG, NY ...................... 6.89 08/20/01 43,024,316
20,000,000 Credit Communal de Belgique, NY ......... 6.54 01/18/01 19,976,856
50,000,000 Credit Communal de Belgique, NY ......... 6.71 02/28/01 49,948,340
60,000,000 Deutsche Bank AG, NY .................... 6.67 03/12/01 59,926,722
25,000,000 Deutsche Bank AG, NY .................... 6.80 04/17/01 24,980,743
100,000,000 Deutsche Bank AG, NY .................... 6.87 09/04/01 100,057,800
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH PREMIER INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
======================================================================================================================
<S> <C> <C> <C> <C>
YANKEE $100,000,000 Deutsche Bank AG, NY .................... 6.77% 09/13/01 $ 99,990,140
CERTIFICATES OF 100,000,000 Landesbank Hessen-Thuringen Girozentrale,
DEPOSIT NY ................................... 6.75 09/14/01 99,974,620
(CONTINUED) 50,000,000 National Bank of Canada, NY ............. 6.91 08/20/01 50,035,810
50,000,000 Norddeutsche Landesbank Girozentrale, NY 6.72 02/07/01 49,955,000
100,000,000 Norddeutsche Landesbank Girozentrale, NY 6.86 04/06/01 99,946,240
75,000,000 Norddeutsche Landesbank Girozentrale, NY 6.87 08/24/01 75,035,910
50,000,000 Rabobank Nederland N.V., NY ............. 6.71 03/16/01 49,945,505
50,000,000 Rabobank Nederland N.V., NY ............. 6.85 04/06/01 49,971,115
50,000,000 Royal Bank of Canada, NY ................ 6.54 01/16/01 49,942,925
50,000,000 Svenska Handelsbanken, NY ............... 6.40 12/29/00 49,996,220
50,000,000 Svenska Handelsbanken, NY ............... 6.67 03/02/01 49,941,840
100,000,000 Svenska Handelsbanken, NY ............... 7.28 05/10/01 100,164,230
50,000,000 Svenska Handelsbanken, NY ............... 6.98 07/12/01 50,038,245
100,000,000 UBS AG, Stamford ........................ 6.00 11/13/00 99,998,116
50,000,000 UBS AG, Stamford ........................ 6.06 11/20/00 49,998,188
100,000,000 UBS AG, Stamford ........................ 6.38 12/22/00 99,993,351
100,000,000 UBS AG, Stamford ........................ 7.08 06/22/01 100,115,110
50,000,000 Unibank A/S, NY ......................... 6.81 04/17/01 49,963,645
50,000,000 Westpac Banking Corp., NY ............... 6.80 03/28/01 49,881,445
----------------------------------------------------------------------------------------------------------------------
TOTAL YANKEE CERTIFICATES OF DEPOSIT
(COST $2,364,165,868) .................. 2,364,210,483
----------------------------------------------------------------------------------------------------------------------
YANKEE 150,000,000 Bank Austria, NY ........................ 6.57 12/11/00 149,988,587
CERTIFICATES OF 225,000,000 Bayerische Hypo-und Vereinsbank AG,
DEPOSIT -- NY ................................... 6.54 02/28/01 224,964,190
VARIABLE 75,000,000 Bayerische Landesbank Girozentrale,
RATE -- 7.8% NY ................................... 6.59 11/09/00 74,998,853
100,000,000 Bayerische Landesbank Girozentrale,
NY ................................... 6.54 12/15/00 99,987,978
155,000,000 Bayerische Landesbank Girozentrale,
NY ................................... 6.54 02/28/01 154,975,331
----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH PREMIER INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
======================================================================================================================
<S> <C> <C> <C> <C>
YANKEE $150,000,000 Commerzbank AG, NY ...................... 6.54% 03/01/01 $ 149,975,931
CERTIFICATES OF 200,000,000 Credit Agricole Indosuez, NY ............ 6.61 11/08/00 199,997,705
DEPOSIT -- VARIABLE 75,000,000 First Tennessee Bank, National
RATE Association .......................... 6.67 12/18/00 75,000,000
(CONTINUED) 100,000,000 Royal Bank of Canada, NY ................ 6.62 06/07/01 99,970,137
----------------------------------------------------------------------------------------------------------------------
TOTAL YANKEE CERTIFICATES OF
DEPOSIT -- VARIABLE RATE
(COST $1,229,858,712) ................... 1,229,858,712
----------------------------------------------------------------------------------------------------------------------
TIME 100,000,000 Canadian Imperial Bank of Commerce,
DEPOSITS -- 1.4% Cayman ............................... 6.56 11/01/00 100,000,000
125,000,000 Chase Manhattan Bank, Cayman ............ 6.53 11/01/00 125,000,000
----------------------------------------------------------------------------------------------------------------------
TOTAL TIME DEPOSITS
(COST $225,000,000) .................... 225,000,000
----------------------------------------------------------------------------------------------------------------------
BANK NOTES -- 50,000,000 Bank One, N.A., Illinois ................ 5.96 11/13/00 49,998,822
1.0% 50,000,000 Bank One, N.A., Illinois ................ 6.96 12/27/00 50,000,447
35,000,000 National City Bank, Ohio ................ 6.67 03/13/01 34,970,072
25,000,000 National City Bank, Ohio ................ 6.87 09/04/01 25,019,723
----------------------------------------------------------------------------------------------------------------------
TOTAL BANK NOTES
(COST $159,986,877) .................... 159,989,064
----------------------------------------------------------------------------------------------------------------------
BANK NOTES -- 50,000,000 Bank of America N.A. ................... 6.65 04/27/01 50,000,000
VARIABLE 249,000,000 Bank of America N.A. ................... 6.65 06/06/01 248,971,282
RATE -- 3.0% 100,000,000 Comerica Bank ........................... 6.64 06/01/01 99,983,011
50,000,000 Fleet National Bank ..................... 6.86 01/22/01 50,014,305
25,000,000 National City Bank, Ohio ................ 6.57 11/22/00 24,999,139
----------------------------------------------------------------------------------------------------------------------
TOTAL BANK NOTES -- VARIABLE RATE
(COST $473,967,737) .................... 473,967,737
----------------------------------------------------------------------------------------------------------------------
CORPORATE 75,000,000 Abbey National Treasury Services PLC 6.03 11/20/00 74,997,282
NOTES -- 1.8% 29,500,000 AT&T Corp. .............................. 7.50 11/15/00 29,510,967
20,000,000 AT&T Corp. .............................. 6.88 01/16/01 19,999,698
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH PREMIER INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
======================================================================================================================
<S> <C> <C> <C> <C>
CORPORATE $ 50,000,000 Beta Finance Corp. ...................... 6.62% 01/25/01 $ 50,000,000
NOTES 10,000,000 Beta Finance Corp. ...................... 6.99 04/10/01 10,000,000
(CONTINUED) 100,000,000 Ford Motor Credit Company ............... 6.67 06/15/01 99,885,190
----------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE NOTES
(COST $284,520,425) .................... 284,393,137
----------------------------------------------------------------------------------------------------------------------
CORPORATE 100,000,000 American Honda Finance Corp. ............ 6.67 08/14/01 100,000,000
NOTES -- 150,000,000 Associates Corp. of North America ....... 6.52 03/16/01 149,992,335
VARIABLE 84,000,000 Associates Corp. of North America ....... 6.66 06/26/01 84,000,000
RATE -- 15.2% 25,000,000 Bear Stearns Companies Inc. ............ 6.80 01/11/01 25,002,323
80,000,000 Beta Finance Corp. ...................... 6.60 02/05/01 80,000,000
20,000,000 Beta Finance Corp. ...................... 6.61 03/15/01 20,000,000
115,000,000 CIT Group Holdings Inc. ................. 6.61 04/24/01 115,001,495
56,000,000 CIT Group Holdings Inc. ................. 6.64 05/09/01 55,993,778
45,000,000 Credit Suisse First Boston Inc. ......... 6.65 10/10/01 45,000,000
60,000,000 Ford Motor Credit Company ............... 6.64 11/22/00 59,998,316
300,600,000 Ford Motor Credit Company ............... 6.60 11/24/00 300,590,744
114,000,000 General Motors Acceptance Corp. ......... 6.99 11/20/00 114,015,560
36,000,000 General Motors Acceptance Corp. ......... 6.83 12/01/00 36,000,000
22,000,000 General Motors Acceptance Corp. ......... 6.71 02/27/01 22,000,000
229,000,000 General Motors Acceptance Corp. ......... 6.72 07/09/01 228,823,670
15,000,000 Goldman Sachs Group Inc. ................ 6.92 11/13/01 14,998,890
90,000,000 Household Finance Corp. ................. 6.64 03/29/01 90,026,271
35,000,000 Household Finance Corp. ................. 6.77 05/21/01 35,007,980
75,000,000 Household Finance Corp. ................. 6.71 07/20/01 75,030,593
100,000,000 Household Finance Corp. ................. 6.65 11/16/01 99,967,390
100,000,000 Lincs Series 1998-2 ..................... 6.62 03/01/01 100,000,000
25,000,000 Morgan Stanley Dean Witter & Co. ........ 7.28 11/13/00 25,004,390
50,000,000 Morgan Stanley Dean Witter & Co. ........ 6.65 11/16/01 49,998,300
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH PREMIER INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
======================================================================================================================
<S> <C> <C> <C> <C>
CORPORATE $250,000,000 Natural Rural Utilities Coop. Fin.
NOTES -- Corp. ................................ 6.71% 01/24/01 $ 250,020,975
VARIABLE 108,000,000 Strategic Money Market Trust
RATE 2000-H ............................... 6.66 09/24/01 108,000,000
(CONTINUED) 100,000,000 Toyota Motor Credit Corp. ............... 6.71 01/09/01 100,000,790
----------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE NOTES -- VARIABLE
RATE (COST $2,384,378,653) ............. 2,384,473,800
----------------------------------------------------------------------------------------------------------------------
MASTER 50,000,000 GE Life and Annuity Assurance Co. ....... 6.67 10/01/01 50,000,000
NOTES -- 50,000,000 GE Life and Annuity Assurance Co. ....... 6.68 11/01/01 50,000,000
VARIABLE 20,000,000 Goldman Sachs Group Inc. ................ 6.50 03/22/01 20,000,000
RATE -- 6.5% 100,000,000 Goldman Sachs Group Inc. ................ 6.63 04/25/01 100,000,000
30,000,000 Jackson National Life Insurance Co. ..... 6.69 05/01/00 30,000,000
80,000,000 MetLife Funding Inc. .................... 6.67 05/01/01 80,000,000
100,000,000 MetLife Funding Inc. .................... 6.69 05/01/01 100,000,000
250,000,000 J.P. Morgan Securities Inc. ............. 6.54 03/14/01 250,000,000
60,000,000 Monumental Life Insurance Co. ........... 6.76 08/17/01 60,000,000
10,000,000 Pacific Life Insurance Co. .............. 6.70 06/01/01 10,000,000
10,000,000 Pacific Life Insurance Co. .............. 6.70 10/01/01 10,000,000
25,000,000 Principal Life Insurance Co. ............ 6.72 05/16/01 25,000,000
100,000,000 Security Life of Denver Insurance Co. ... 6.64 11/17/00 100,000,000
100,000,000 Security Life of Denver Insurance Co. ... 6.75 11/27/00 100,000,000
30,000,000 Travelers Insurance Company (The) ....... 6.65 02/01/01 30,000,000
----------------------------------------------------------------------------------------------------------------------
TOTAL MASTER NOTES -- VARIABLE RATE
(COST $1,015,000,000) ................... 1,015,000,000
----------------------------------------------------------------------------------------------------------------------
COMMERCIAL 21,000,000 AEP Credit Inc. ......................... 6.48 12/15/00 20,833,680
PAPER -- 19.1% 40,140,000 Apreco Inc. ............................. 6.50 12/14/00 39,828,357
30,010,000 Atlantis One Funding Corp. .............. 6.46 02/22/01 29,400,134
100,000,000 Atlantis One Funding Corp. .............. 6.50 02/23/01 97,950,040
145,861,000 Atlantis One Funding Corp. .............. 6.45 03/15/01 142,353,510
50,000,000 AT&T Corp. .............................. 6.67 03/08/01 50,000,000
90,000,000 Banco de Galicia y Buenos Aires S.A. .... 6.50 02/23/01 88,155,036
24,903,000 Barton Capital Corp. .................... 6.51 11/10/00 24,862,470
50,000,000 BHF Finance (DEL) Inc. .................. 6.48 02/28/01 49,967,725
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH PREMIER INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
======================================================================================================================
<S> <C> <C> <C> <C>
COMMERCIAL $ 75,000,000 British Tele PLC ........................ 6.51% 12/12/00 $ 74,443,937
PAPER 125,000,000 British Tele PLC ........................ 6.51 12/14/00 124,028,020
(CONTINUED) 50,000,000 British Tele PLC ........................ 6.51 12/22/00 49,538,875
40,000,000 Corporate Asset Funding Co., Inc. ....... 6.54 01/25/01 39,387,056
52,300,000 Corporate Asset Funding Co., Inc. ....... 6.45 03/07/01 51,116,493
50,000,000 Corporate Receivables Corp. ............. 6.48 12/12/00 49,631,000
40,000,000 Credit Suisse First Boston Inc. ......... 6.65 12/15/00 39,674,889
59,000,000 CXC Inc. ................................ 6.48 12/18/00 58,500,860
68,500,000 Countrywide Home Loans Inc. ............. 6.52 11/27/00 68,177,441
200,000,000 DaimlerChrysler North America
Holding Corp. ........................ 6.55 02/01/01 196,683,260
75,000,000 Den Danske Corp. ........................ 6.47 12/29/00 74,218,208
25,000,000 Den Norske Bank ASA ..................... 6.59 02/05/01 24,567,570
75,000,000 Edison Asset Securitization LLC ......... 6.52 11/22/00 74,714,750
49,157,000 Enterprise Funding Corp. ................ 6.50 11/17/00 49,014,991
25,000,000 Formosa Plastics Corp. U.S.A. ........... 6.49 03/14/01 24,403,260
23,000,000 Forrestal Funding Master Trust .......... 6.51 12/08/00 22,846,111
26,711,000 France Telecom .......................... 6.49 12/15/00 26,499,122
100,000,000 GE Capital International Funding Inc. 6.59 01/29/01 98,395,520
60,000,000 GE Capital International Funding Inc. 6.52 02/01/01 59,004,978
20,000,000 GE Financial Assurance Holdings Inc. 6.59 01/29/01 19,679,104
200,000,000 General Electric Capital Corp. .......... 6.51 02/02/01 196,647,580
88,000,000 General Electric Capital Corp. .......... 6.44 03/20/01 85,806,019
100,000,000 General Motors Acceptance Corp. ......... 6.59 02/13/01 98,127,790
100,000,000 General Motors Acceptance Corp. ......... 6.59 02/14/01 98,110,000
65,000,000 Goldman Sachs Group Inc. ................ 6.50 02/20/01 64,398,750
45,582,000 Intrepid Funding Master Trust ........... 6.52 11/01/00 45,582,000
50,000,000 Intrepid Funding Master Trust ........... 6.54 11/02/00 49,990,917
24,000,000 Jupiter Securitization Corporation ...... 6.51 11/14/00 23,943,580
50,000,000 Jupiter Securitization Corporation ...... 6.52 11/30/00 49,737,389
50,455,000 Jupiter Securitization Corporation ...... 6.49 12/13/00 50,072,972
25,422,000 Jupiter Securitization Corporation ...... 6.49 12/19/00 25,202,015
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH PREMIER INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
======================================================================================================================
<S> <C> <C> <C> <C>
COMMERCIAL $ 25,034,000 Kitty Hawk Funding Corp. ................ 6.54% 02/21/01 $ 24,529,703
PAPER 50,000,000 Nordbanken N.A. Inc. .................... 6.60 01/24/01 49,242,835
(CONTINUED) 25,000,000 Nordbanken N.A. Inc. .................... 6.60 01/29/01 24,598,880
25,000,000 Preferred Receivables Funding Corp. ..... 6.50 11/15/00 24,936,806
25,000,000 Salomon Smith Barney Holdings Inc. ..... 6.48 12/04/00 24,851,500
25,000,000 San Paolo U.S. Finance Co. .............. 6.64 12/18/00 24,783,278
50,000,000 Societe Generale N.A., Inc. ............. 6.47 02/27/01 48,939,520
50,000,000 Spintab AB .............................. 6.54 12/27/00 49,491,722
50,000,000 Spintab AB .............................. 6.59 01/29/01 49,197,760
70,492,000 Tulip Funding Corp. ..................... 6.48 12/20/00 69,870,261
60,000,000 Tulip Funding Corp. ..................... 6.54 01/25/01 59,080,584
----------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(COST $3,003,079,926) .................. 3,005,018,258
----------------------------------------------------------------------------------------------------------------------
COMMERCIAL 175,000,000 AT&T Corp. .............................. 6.56 03/08/01 174,987,164
PAPER -- VARIABLE 115,800,000 AT&T Corp. .............................. 6.82 07/13/01 115,800,000
RATE -- 2.6% 113,200,000 Unilever Capital Corporation ............ 6.68 09/07/01 113,200,000
----------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER -- VARIABLE
RATE (COST $403,987,164) ............... 403,987,164
----------------------------------------------------------------------------------------------------------------------
REPURCHASE 155,000,000 Barclays Capital Inc.,
AGREEMENTS** PURCHASED ON 10/31/00 ................ 6.62 11/01/00 155,000,000
-- 5.1% 100,000,000 Chase Securities Inc.,
purchased on 10/31/00 ................ 6.58 11/01/00 100,000,000
241,000,000 Chase Securities Inc.,
purchased on 10/31/00 ................ 6.69 11/01/00 241,000,000
70,160,000 Deutsche Bank Securities Inc.,
purchased on 10/31/00 ................ 6.57 11/01/00 70,160,000
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH PREMIER INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
======================================================================================================================
<S> <C> <C> <C> <C>
REPURCHASE $200,000,000 Deutsche Bank Securities Inc.,
AGREEMENTS** purchased on 10/31/00 ................ 6.76% 11/01/00 $ 200,000,000
(CONTINUED) 30,000,000 Goldman Sachs & Co.,
purchased on 10/31/00 ................ 6.79 11/01/00 30,000,000
----------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(COST $796,160,000) .................... 796,160,000
----------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.0%
(COST $15,558,615,694)................... 15,559,236,900
----------------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES -- 1.0%...................... 164,477,475
----------------------------------------------------------------------------------------------------------------------
NET ASSETS -- EQUIVALENT TO $1.00
PER SHARE ON 15,723,093,169
SHARES OF BENEFICIAL INTEREST
OUTSTANDING -- 100.0%.................... $15,723,714,375
======================================================================================================================
</TABLE>
Note--Costs for federal income tax purposes are the same as those shown above.
At October 31, 2000, net unrealized appreciation amounted to $621,206 and is
comprised of $2,009,648 in appreciation and $1,388,442 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, 2000. For variable rate instruments, the next date on
which the interest rate is to be adjusted is deemed the maturity date for
valuation.
**Repurchase Agreements are fully collaterized by U.S. Government and Agency
Obligations.
D/N--Discount Notes
See Notes to Financial Statements.
13
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH PREMIER INSTITUTIONAL FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000 (UNAUDITED)
==================================================================================================================
<S> <C>
ASSETS:
Total investments at value (identified cost $15,558,615,694) (Note 1a).......................... $15,559,236,900
Cash............................................................................................ 8,734,409
Interest receivable............................................................................. 167,407,545
Prepaid expense................................................................................. 98,500
---------------
Total assets............................................................................ 15,735,477,354
---------------
LIABILITIES:
Advisory fee payable (Note 2)................................................................... 2,098,684
Dividends payable............................................................................... 9,309,920
Accrued expenses................................................................................ 354,375
---------------
Total liabilities....................................................................... 11,762,979
---------------
NET ASSETS: (Equivalent to $1.00 per share, offering and redemption price, based on
15,723,093,169 shares of beneficial interest outstanding).................................... $15,723,714,375
===============
------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH PREMIER INSTITUTIONAL FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 2000 (UNAUDITED)
==================================================================================================================
INVESTMENT INCOME:
Interest and discount earned (Note 1d)........................................................... $504,776,431
------------
EXPENSES:
Investment advisory fee (Note 2)................................................................. 11,502,373
Registration fees................................................................................ 1,667,972
Accounting and custodian services................................................................ 282,174
Dividend and transfer agency fees................................................................ 145,071
Legal and audit fees............................................................................. 68,796
Trustees' fees (Note 5).......................................................................... 59,699
Printing and shareholder reports................................................................. 34,204
Insurance........................................................................................ 31,224
Miscellaneous.................................................................................... 17,251
------------
Total expense............................................................................ 13,808,764
------------
Net investment income.................................................................... 490,967,667
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from investment transactions................................... $ 10,514
Net unrealized appreciation of investments....................................... 10,435,939
-----------
Net realized and unrealized gain from investments........................................ 10,446,453
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................. $501,414,120
============
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
<TABLE>
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
MERRILL LYNCH PREMIER INSTITUTIONAL FUND
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED) SIX MONTHS YEAR
ENDED ENDED
OCTOBER 31, 2000 APRIL 30, 2000
=================================================================================================================
<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income.................................................... $ 490,967,667 $ 704,609,932
Net realized gain from investment transactions........................... 10,514 139,941
Net unrealized appreciation (depreciation) of investments................ 10,435,939 (7,828,719)
--------------- ---------------
Net increase in net assets resulting from operations..................... 501,414,120 696,921,154
Total declared as dividends to shareholders (Note 4)..................... (490,978,181) (704,749,873)
Capital share transactions (Note 3)...................................... 1,188,419,932 3,904,804,404
--------------- ---------------
Net increase in net assets............................................... 1,198,855,871 3,896,975,685
NET ASSETS:
Beginning of period...................................................... 14,524,858,504 10,627,882,819
--------------- ---------------
--------------- ---------------
End of period............................................................ $15,723,714,375 $14,524,858,504
=============== ===============
-------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH PREMIER INSTITUTIONAL FUND SIX MONTHS YEAR ENDED APRIL 30, FOR THE PERIOD
FINANCIAL HIGHLIGHTS (UNAUDITED) ENDED ---------------------------------- JANUARY 27, 1997*
OCTOBER 31, 2000 2000 1999 1998 TO APRIL 30, 1997
=========================================================================================================================
Net Asset Value, Beginning of period........ $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment Operations:
Net investment income.................... .032 .054 .052 .055 .014
Less Distributions:
Dividends from net investment
income................................. (.032) (.054) (.052) (.055) (.014)
---- ---- ---- ---- ----
Net Asset Value, End of period.............. $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total Return................................ 3.27%(1) 5.51% 5.32% 5.69% 1.40%(1)
Ratios/Supplemental Data:
Net Assets, End of period (000).......... $15,723,714 $14,524,859 $10,627,883 $6,644,523 $2,823,196
Ratio of expenses to average net assets
(before waiver)........................ .18%(2) .18% .18% .18% .18%(2)
Ratio of expenses to average net assets
(after waiver)......................... -- -- -- -- .17%(2)
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (before waiver)................. 6.54%(2) 5.40% 5.13% 5.55% 5.26%(2)
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (after waiver).................. -- -- -- -- 5.27%(2)
</TABLE>
*Commencement of operations
(1) Cumulative total return
(2) On an annualized basis
See Notes to Financial Statements.
15
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000 (UNAUDITED)
=====================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
=====================================================================================================================
<S> <C> <C> <C> <C>
U.S. $ 10,000,000 U.S. Treasury Notes ..................... 4.63% 11/30/00 $ 10,000,991
GOVERNMENT & 10,000,000 U.S. Treasury Notes ..................... 4.50 01/31/01 9,948,000
AGENCY 20,000,000 U.S. Treasury Notes ..................... 4.88 03/31/01 19,868,760
ISSUES -- 3.7% 24,000,000 Federal Home Loan Banks ................. 4.95 11/20/00 23,999,217
28,000,000 Federal Home Loan Mortgage Corp. ........ 5.05 11/17/00 27,999,521
25,000,000 Federal Home Loan Mortgage Corp. ........ 5.18 11/24/00 24,999,385
12,500,000 Federal Home Loan Mortgage Corp. ........ 5.25 01/19/01 12,460,461
25,000,000 Federal Home Loan Mortgage Corp. ........ 5.15 01/26/01 24,908,348
25,000,000 Federal National Mortgage Assoc. ........ 5.21 01/26/01 24,927,622
21,870,000 Federal National Mortgage Assoc. ........ 5.41 03/22/01 21,778,844
25,000,000 Federal National Mortgage Assoc. ........ 5.38 04/06/01 24,879,823
9,000,000 Federal National Mortgage Assoc. ........ 5.30 04/17/01 8,950,158
20,000,000 Federal National Mortgage Assoc. ........ 6.00 07/17/01 19,922,318
68,896,000 Federal Home Loan Banks D/N ............. 6.38 12/27/00 68,212,245
---------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT & AGENCY
ISSUES (COST $323,542,796) .............. 322,855,693
---------------------------------------------------------------------------------------------------------------------
U.S. 100,000,000 Federal Home Loan Mortgage Corp. ........ 6.69 09/17/01 99,937,049
GOVERNMENT 84,000,000 Student Loan Marketing Assoc. ........... 6.89 08/23/01 83,974,006
AGENCY 300,000,000 Student Loan Marketing Assoc. ........... 6.84 03/18/02 299,802,794
ISSUES -- VARIABLE 100,000,000 Student Loan Marketing Assoc. ........... 6.84 04/12/02 99,959,175
RATE -- 7.8% 100,000,000 Student Loan Marketing Assoc. ........... 6.87 04/24/02 99,986,205
---------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY
ISSUES -- VARIABLE RATE
(COST $683,659,229) ..................... 683,659,229
---------------------------------------------------------------------------------------------------------------------
CERTIFICATES 45,000,000 Citibank, N.A. .......................... 6.80 02/02/01 45,004,806
OF DEPOSIT -- 1.1% 50,000,000 SouthTrust Bank, N.A. ................... 6.86 12/19/00 50,000,644
---------------------------------------------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT
(COST $95,000,644) ...................... 95,005,450
---------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
=====================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
=====================================================================================================================
<S> <C> <C> <C> <C>
EURO $170,000,000 Abbey National Treasury Services PLC,
CERTIFICATES London ............................... 7.06% 12/27/00 $ 169,999,297
OF DEPOSIT -- 50,000,000 BNP Paribas, London ..................... 6.57 12/28/00 50,000,780
4.4% 25,000,000 Credit Agricole Indosuez ................ 6.71 03/07/01 24,972,655
94,000,000 Norddeutsche Landesbank, London ......... 6.72 02/28/01 93,973,332
50,000,000 Norddeutsche Landesbank, London ......... 6.67 03/12/01 49,984,450
---------------------------------------------------------------------------------------------------------------------
TOTAL EURO CERTIFICATES OF DEPOSIT
(COST $389,004,588) .................... 388,930,514
---------------------------------------------------------------------------------------------------------------------
YANKEE 50,000,000 Bank of Nova Scotia, Portland ........... 6.78 02/22/01 49,960,000
CERTIFICATES OF 75,000,000 Bank of Nova Scotia, Portland ........... 6.74 03/14/01 74,916,630
DEPOSIT -- 11.5% 47,000,000 Canadian Imperial Bank of Commerce, NY .. 6.87 08/24/01 47,022,504
50,000,000 Canadian Imperial Bank of Commerce, NY .. 6.72 10/10/01 49,987,640
25,000,000 Commerzbank AG, NY ...................... 6.76 03/27/01 24,976,685
50,000,000 Commerzbank AG, NY ...................... 7.09 06/22/01 50,060,560
50,000,000 Commerzbank AG, NY ...................... 6.89 08/20/01 50,028,275
50,000,000 Credit Agricole Indosuez, NY ............ 6.82 03/28/01 49,964,715
50,000,000 Credit Agricole Indosuez, NY ............ 6.89 08/31/01 50,035,905
100,000,000 Credit Communal de Belgique, NY ......... 6.54 01/18/01 99,884,280
50,000,000 Credit Communal de Belgique, NY ......... 6.71 02/28/01 49,948,340
40,000,000 Deutsche Bank, AG, NY ................... 6.67 03/12/01 39,951,148
100,000,000 Rabobank Nederland N.V., NY ............. 6.85 04/06/01 99,942,230
50,000,000 Royal Bank of Canada, NY ................ 6.54 01/16/01 49,942,925
49,000,000 Svenska Handelsbanken, NY ............... 6.67 03/02/01 48,943,003
50,000,000 Svenska Handelsbanken, NY ............... 6.74 03/16/01 49,950,750
50,000,000 Svenska Handelsbanken, NY ............... 6.98 07/12/01 50,038,245
20,000,000 UBS AG, Stamford ........................ 6.06 11/20/00 19,999,275
50,000,000 UBS AG, Stamford ........................ 6.38 12/22/00 49,996,676
---------------------------------------------------------------------------------------------------------------------
TOTAL YANKEE CERTIFICATES OF DEPOSIT
(COST $1,005,872,672) ................... 1,005,549,786
---------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
=====================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
=====================================================================================================================
<S> <C> <C> <C> <C>
YANKEE $ 75,000,000 Bank Austria, NY ........................ 6.57% 12/11/00 $ 74,994,294
CERTIFICATES 50,000,000 Bank Austria, NY ........................ 6.65 07/05/01 49,995,124
OF DEPOSIT -- 75,000,000 Bayerische Landesbank Girozentrale,
VARIABLE NY ................................... 6.59 11/09/00 74,998,853
RATE -- 5.5% 95,000,000 Bayerische Landesbank Girozentrale, NY .. 6.54 02/28/01 94,984,880
75,000,000 Credit Agricole Indosuez, NY ............ 6.61 11/08/00 74,999,139
50,000,000 Credit Agricole Indosuez, NY ............ 6.59 11/29/00 49,997,322
65,000,000 First Tennessee Bank, NA ................ 6.67 12/18/00 65,000,000
---------------------------------------------------------------------------------------------------------------------
TOTAL YANKEE CERTIFICATES OF
DEPOSIT -- VARIABLE RATE
(COST $484,969,612) .................... 484,969,612
---------------------------------------------------------------------------------------------------------------------
TIME DEPOSIT -- 200,000,000 Barclays Bank PLC, Nassau ............... 6.56 11/01/00 200,000,000
10.7% 250,000,000 Canadian Imperial Bank of
Commerce, Cayman ..................... 6.59 11/01/00 250,000,000
75,000,000 Canadian Imperial Bank of
Commerce, Cayman ..................... 6.56 11/01/00 75,000,000
200,000,000 Chase Manhattan Bank, Nassau ............ 6.63 11/01/00 200,000,000
40,250,000 State Street Bank & Trust Co.,
Cayman................................ 6.56 11/01/00 40,250,000
173,000,000 SunTrust Bank, Cayman ................... 6.50 11/01/00 173,000,000
---------------------------------------------------------------------------------------------------------------------
TOTAL TIME DEPOSITS
(COST $938,250,000) ..................... 938,250,000
---------------------------------------------------------------------------------------------------------------------
BANK 40,000,000 Bank One N.A., Illinois ................. 6.96 12/27/00 40,000,358
NOTES -- 25,000,000 Bank One N.A., Illinois ................. 6.84 02/01/01 25,000,000
1.0% 20,000,000 National City Bank, PA .................. 6.67 03/13/01 19,982,898
---------------------------------------------------------------------------------------------------------------------
TOTAL BANK NOTES
(COST $84,995,553) ...................... 84,983,256
---------------------------------------------------------------------------------------------------------------------
BANK NOTES -- 50,000,000 Bank of America N.A. .................... 6.65 04/27/01 50,000,000
VARIABLE 25,000,000 Bank of America N.A. .................... 6.67 09/06/01 25,018,432
RATE -- 2.5% 36,000,000 Comerica Bank ........................... 6.62 04/25/01 35,994,822
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
=====================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
=====================================================================================================================
<S> <C> <C> <C> <C>
BANK NOTES -- $ 35,000,000 Commerica Bank .......................... 6.64% 06/01/01 $ 34,994,054
VARIABLE RATE -- 25,000,000 National City Bank, Ohio ................ 6.57 11/22/00 24,999,139
(CONTINUED) 50,000,000 NationsBank N.A. ........................ 6.71 08/06/01 50,021,694
---------------------------------------------------------------------------------------------------------------------
TOTAL BANK NOTES -- VARIABLE RATE
(COST $221,028,141) .................... 221,028,141
---------------------------------------------------------------------------------------------------------------------
CORPORATE 25,000,000 Abbey National Treasury Services PLC..... 6.03 11/20/00 24,999,094
NOTES -- 1.0% 50,000,000 Beta Finance Corp. ...................... 6.83 04/25/01 50,000,000
8,000,000 Goldman Sachs Group Inc. ................ 6.55 12/22/00 8,000,000
---------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE NOTES
(COST $82,999,094) ...................... 82,999,094
---------------------------------------------------------------------------------------------------------------------
CORPORATE 50,000,000 American Honda Finance Corp. ............ 6.79 01/10/01 50,005,150
NOTES-- 50,000,000 Associates Corp. of North America ....... 6.66 06/26/01 50,000,000
VARIABLE 125,000,000 AT&T Corp. .............................. 6.56 03/08/01 124,986,526
RATE -- 17.2% 50,000,000 Beta Finance Corp. ...................... 6.61 03/15/01 50,000,000
265,000,000 CIT Group Holdings Inc. ................. 6.64 05/09/01 264,970,559
125,000,000 Ford Motor Credit Company ............... 6.60 11/24/00 124,996,151
100,000,000 Ford Motor Credit Company ............... 6.67 06/15/01 99,885,190
30,500,000 General Motors Acceptance Corp. ......... 6.83 12/01/00 30,500,000
19,000,000 General Motors Acceptance Corp. ......... 6.71 02/27/01 19,000,000
175,000,000 General Motors Acceptance Corp. ......... 6.72 07/09/01 174,890,292
50,000,000 General Motors Acceptance Corp. ......... 6.75 07/27/01 50,015,650
17,000,000 Goldman Sachs Group Inc. ................ 6.92 11/13/01 17,000,000
100,000,000 Household Finance Corp. ................. 6.64 03/29/01 100,029,190
15,000,000 Household Finance Corp. ................. 6.77 05/21/01 15,003,420
75,000,000 Household Finance Corp. ................. 6.71 07/20/01 75,030,592
100,000,000 Household Finance Corp. ................. 6.65 11/16/01 99,967,390
50,000,000 Morgan Stanley Dean Witter & Co. ........ 6.76 03/13/01 50,027,245
25,000,000 Morgan Stanley Dean Witter & Co. ........ 6.60 03/16/01 25,005,073
80,000,000 Strategic Money Market Trust 2000-H 6.66 09/24/01 80,000,000
---------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE NOTES -- VARIABLE
RATE (COST $1,501,331,003) .............. 1,501,312,428
---------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
=====================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
=====================================================================================================================
<S> <C> <C> <C> <C>
MASTER NOTES -- $ 45,000,000 GE Life and Annuity Assurance Co. 6.67% 10/01/01 $ 45,000,000
VARIABLE 100,000,000 Goldman Sachs Group Inc. ................ 6.63 04/25/01 100,000,000
RATE -- 6.3% 250,000,000 J.P. Morgan Securities Inc. ............. 6.54 03/14/01 250,000,000
89,000,000 Jackson National Life Insurance Co. ..... 6.71 02/01/01 89,000,000
40,000,000 Monumental Life Insurance Co. ........... 6.76 08/17/01 40,000,000
25,000,000 Pacific Life Insurance Co. .............. 6.70 01/31/01 25,000,000
---------------------------------------------------------------------------------------------------------------------
TOTAL MASTER NOTES -- VARIABLE RATE
(COST $549,000,000) ..................... 549,000,000
---------------------------------------------------------------------------------------------------------------------
COMMERCIAL 35,000,000 AEP Credit Inc. ......................... 6.50 12/08/00 34,766,181
PAPER -- 18.4% 30,000,000 Amsterdam Funding Corp. ................. 6.52 11/10/00 29,951,100
20,000,000 Amsterdam Funding Corp. ................. 6.51 11/14/00 19,952,983
50,000,000 Apreco Inc. ............................. 6.50 11/29/00 49,747,222
25,000,000 Bear Stearns Companies, Inc. ............ 6.50 02/15/01 24,523,053
50,000,000 BHF Finance (DEL) Inc. .................. 6.48 02/28/01 48,677,000
75,000,000 Clipper Receivables Corp. ............... 6.52 11/02/00 74,986,417
50,000,000 Corporate Asset Funding Co., Inc. ....... 6.45 03/07/01 48,868,540
100,000,000 Corporate Receivables Corp. ............. 6.48 12/05/00 99,388,000
40,000,000 Credit Suisse First Boston Inc. ......... 6.49 03/12/01 39,059,380
41,000,000 CXC Inc. ................................ 6.48 12/18/00 40,653,140
25,000,000 Den Danske Corp. ........................ 6.47 12/29/00 24,739,403
25,000,000 Den Norske Bank ASA ..................... 6.59 02/05/01 24,567,570
50,000,000 Enterprise Funding Corp. ................ 6.50 11/03/00 49,981,944
46,709,000 Enterprise Funding Corp. ................ 6.49 12/19/00 46,304,811
26,438,000 Enterprise Funding Corp. ................ 6.48 12/19/00 26,209,576
42,880,000 Eureka Securitization Inc. .............. 6.51 11/15/00 42,771,442
20,000,000 Formosa Plastics Corp. U.S.A. ........... 6.60 02/09/01 19,639,802
50,000,000 GE Financial Assurance Holdings
Inc. ................................. 6.59 01/29/01 49,197,760
100,000,000 General Electric Capital Corp. .......... 6.51 02/01/01 98,341,630
50,000,000 General Electric Capital Corp. .......... 6.44 03/20/01 48,753,420
21,676,000 Monte Rosa Capital Corp. ................ 6.51 11/08/00 21,648,562
25,000,000 Nordbanken N.A. Inc. .................... 6.60 01/24/01 24,621,417
64,546,000 Old Line Funding Corp. .................. 6.51 11/17/00 64,359,247
75,000,000 Salomon Smith Barney Holdings Inc. ...... 6.48 12/04/00 74,554,500
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
=====================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
=====================================================================================================================
<S> <C> <C> <C> <C>
COMMERCIAL $ 25,000,000 San Paolo U.S. Finance Co. .............. 6.64% 12/18/00 $ 24,783,278
PAPER 50,000,000 Societe Generale N.A., Inc. ............. 6.47 02/27/01 48,939,520
(CONTINUED) 50,000,000 Spintab AB .............................. 6.54 12/27/00 49,491,722
50,000,000 Spintab AB .............................. 6.59 01/29/01 49,197,760
113,799,000 Tulip Funding Corp. ..................... 6.48 12/20/00 112,795,293
10,000,000 Tulip Funding Corp. ..................... 6.54 01/25/01 9,846,764
50,000,000 WCP Funding Inc. ........................ 6.50 12/12/00 49,629,861
40,000,000 Windmill Funding Corp. .................. 6.50 11/01/00 40,000,000
50,000,000 Windmill Funding Corp. .................. 6.50 11/21/00 49,819,444
25,000,000 Windmill Funding Corp. .................. 6.50 11/29/00 24,873,611
25,000,000 Windmill Funding Corp. .................. 6.47 12/20/00 24,779,840
---------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(COST $1,610,623,401) 1,610,421,193
---------------------------------------------------------------------------------------------------------------------
COMMERCIAL 61,200,000 AT&T Corp. .............................. 6.56 03/08/01 61,195,863
PAPER -- 58,000,000 AT&T Corp. .............................. 6.82 07/13/01 58,000,000
VARIABLE RATE -- 2.0% 55,000,000 Unilever Capital Corporation ............ 6.68 09/07/01 55,000,000
---------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER -- VARIABLE
RATE (COST $174,195,863) 174,195,863
---------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes To Financial Statements.
21
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
=====================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
=====================================================================================================================
<S> <C> <C> <C> <C>
REPURCHASE $200,000,000 Goldman Sachs & Co.,
AGREEMENTS** purchased on 10/31/00 ................ 6.68% 11/01/00 $ 200,000,000
-- 5.9% 65,000,000 Goldman Sachs & Co.,
purchased on 10/31/00 ................ 6.71 11/01/00 65,000,000
250,000,000 Salomon Smith Barney Inc.,
purchased on 10/31/00 ................ 6.75 11/01/00 250,000,000
---------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(COST $515,000,000) 515,000,000
---------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.0%
(COST $8,659,472,596) 8,658,160,259
---------------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 1.0%.... 84,426,160
---------------------------------------------------------------------------------------------------------------------
NET ASSETS -- EQUIVALENT TO $1.00
PER SHARE ON 8,743,898,756
OUTSTANDING -- 100.0%.................... $8,742,586,419
=====================================================================================================================
</TABLE>
Note--Costs for federal income tax purposes are the same as those shown above.
At October 31, 2000, net unrealized depreciation amounted to $1,312,337 and is
comprised of $452,809 in appreciation and $1,765,146 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, 2000. For variable rate instruments, the next date on
which the interest rate is to be adjusted is deemed the maturity date for
valuation.
**Repurchase Agreements are fully collaterized by U.S. Government and Agency
Obligations.
D/N--Discount Notes
See Notes to Financial Statements.
22
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------------------------
<CAPTION>
MERRILL LYNCH INSTITUTIONAL FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000 (UNAUDITED)
==================================================================================================================
ASSETS:
<S> <C>
Total investments at value (identified cost $8,659,472,596) (Note 1a).......................... $8,658,160,259
Cash........................................................................................... 6,046,836
Interest receivable............................................................................ 82,224,917
Prepaid expense................................................................................ 61,544
--------------
Total assets........................................................................... 8,746,493,556
--------------
LIABILITIES:
Advisory fee payable (Note 2).................................................................. 1,528,785
Dividends payable.............................................................................. 1,921,866
Accrued expenses............................................................................... 456,486
--------------
Total liabilities...................................................................... 3,907,137
--------------
NET ASSETS: (Equivalent to $1.00 per share, offering and redemption price, based on
8,743,898,756 shares of beneficial interest outstanding).................................... $8,742,586,419
==============
------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 2000 (UNAUDITED)
==================================================================================================================
INVESTMENT INCOME:
Interest and discount earned (Note 1d)........................................ $275,317,742
------------
EXPENSES:
Investment advisory fee (Note 2).............................................. $13,794,134
Dividend and transfer agency fees............................................. 765,123
Registration fees............................................................. 575,930
Accounting and custodian services............................................. 189,223
Legal and audit fees.......................................................... 41,849
Printing and shareholder reports.............................................. 37,843
Trustees' fees (Note 5)....................................................... 29,680
Insurance..................................................................... 17,637
Miscellaneous................................................................. 21,951
-----------
Total expense......................................................... 15,473,370
Waived investment advisory fee (Note 2)....................................... (5,421,769) 10,051,601
----------- ------------
Net investment income................................................. 265,266,141
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from investment transactions................................ (389)
Net unrealized appreciation of investments.................................... 4,961,643
-----------
Net realized and unrealized gain from investments...................................... 4,961,254
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................................... $270,227,395
============
</TABLE>
See Notes to Financial Staements.
23
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
MERRILL LYNCH INSTITUTIONAL FUND SIX MONTHS YEAR
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED) ENDED ENDED
OCTOBER 31, 2000 APRIL 30, 2000
=====================================================================================================================
<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income..................................................... $ 265,266,141 $ 440,899,851
Net realized loss from investment transactions............................ (389) (10,478)
Net unrealized appreciation (depreciation) of investments................. 4,961,643 (4,639,922)
-------------- --------------
Net increase in net assets resulting from operations...................... 270,227,395 436,249,451
Total declared as dividends to shareholders (Note 4)...................... (265,265,752) (440,889,373)
Capital share transactions (Note 3)....................................... 657,356,788 24,796,950
-------------- --------------
Net increase in net assets................................................ 662,318,431 20,157,028
NET ASSETS:
Beginning of period....................................................... 8,080,267,988 8,060,110,960
-------------- --------------
End of period............................................................. $8,742,586,419 $8,080,267,988
============== ==============
-----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL FUND SIX MONTHS
FINANCIAL HIGHLIGHTS (UNAUDITED) ENDED YEAR ENDED APRIL 30,
OCTOBER 31, -----------------------------------------------------------
2000 2000 1999 1998 1997 1996
=======================================================================================================================
Net Asset Value, Beginning of period. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment Operations:
Net investment income............. .032 .053 .051 .054 .052 .056
Less Distributions:
Dividends from net investment
income.......................... (.032) (.053) (.051) (.054) (.052) (.056)
----- ----- ----- ----- ----- -----
Net Asset Value, End of period....... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== =====
Total Return......................... 3.24%(1) 5.45% 5.25% 5.57% 5.34% 5.81%
Ratios/Supplemental Data:
Net Assets, End of period (000)... $8,742,586 $8,080,268 $8,060,111 $7,372,425 $6,197,878 $7,615,126
Ratio of expenses to average net
assets (before waiver).......... .37%(2) .37% .37% .38% .38% .37%
Ratio of expenses to average net
assets (after waiver)........... .24%(2) .24% .24% .25% .25% .24%
Ratio of net investment income,
including realized and
unrealized gains and losses, to
average net assets (before
waiver)......................... 6.33%(2) 5.14% 4.98% 5.34% 5.12% 5.42%
Ratio of net investment income,
including realized and
unrealized gains and losses, to
average net assets (after waiver) 6.46% 5.27% 5.11% 5.47% 5.25% 5.55%
(1) Cumulative total return
(2) On an annualized basis
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH RATED INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000 (UNAUDITED)
=====================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
=====================================================================================================================
<S> <C> <C> <C> <C>
U.S. $ 1,000,000 Federal Home Loan Mortgage Corp. ........ 5.05% 11/17/00 $ 999,983
GOVERNMENT 3,000,000 Federal National Mortgage Assoc. ........ 5.41 03/22/01 2,987,496
AGENCY
ISSUES -- 1.6%
---------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY ISSUES
(COST $3,999,491) ....................... 3,987,479
---------------------------------------------------------------------------------------------------------------------
U.S. 10,000,000 Federal National Mortgage Assoc. ........ 6.67 09/17/01 9,996,905
GOVERNMENT 10,000,000 Student Loan Marketing Assoc. ........... 6.89 08/23/01 9,993,290
AGENCY
ISSUES --
VARIABLE RATE -- 8.2%
---------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY ISSUES --
VARIABLE RATE (COST $19,990,195) ........ 19,990,195
---------------------------------------------------------------------------------------------------------------------
CERTIFICATES OF 5,000,000 Citibank, NA ............................ 6.80 02/02/01 5,000,534
DEPOSIT-- 2.1%
---------------------------------------------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT
(COST $5,000,000) ....................... 5,000,534
---------------------------------------------------------------------------------------------------------------------
EURO 5,000,000 Abbey National Treasury Services PLC,
CERTIFICATES OF London ............................... 7.06 12/27/00 4,999,979
DEPOSIT-- 2.1%
---------------------------------------------------------------------------------------------------------------------
TOTAL EURO CERTIFICATES OF DEPOSIT
(COST $4,999,979) ....................... 4,999,979
---------------------------------------------------------------------------------------------------------------------
YANKEE 3,000,000 Bank of Nova Scotia, NY ................. 6.78 02/22/01 2,997,600
CERTIFICATES OF 5,000,000 Bank of Nova Scotia, NY ................. 6.74 03/14/01 4,994,442
DEPOSIT-- 7.8% 3,000,000 Canadian Imperial Bank of Commerce, NY .. 6.87 08/24/01 3,001,437
5,000,000 Credit Communal de Belgique, NY ......... 6.54 01/18/01 4,994,214
3,000,000 Svenska Handelsbanken, NY ............... 6.65 03/06/01 2,996,255
---------------------------------------------------------------------------------------------------------------------
TOTAL YANKEE CERTIFICATES OF
DEPOSIT (COST $18,996,988) .............. 18,983,948
---------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH RATED INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
=====================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
=====================================================================================================================
<S> <C> <C> <C> <C>
YANKEE $10,000,000 First Tennessee Bank, NA ................ 6.67% 12/18/00 $10,000,000
CERTIFICATES OF
DEPOSIT --
VARIABLE RATE -- 4.1%
---------------------------------------------------------------------------------------------------------------------
TOTAL YANKEE CERTIFICATES OF DEPOSIT --
VARIABLE RATE (COST $10,000,000) ....... 10,000,000
---------------------------------------------------------------------------------------------------------------------
TIME 11,873,000 State Street Bank & Trust Co.,
DEPOSITS -- 4.9% Cayman ............................... 6.56 11/01/00 11,873,000
---------------------------------------------------------------------------------------------------------------------
TOTAL TIME DEPOSITS
(COST $11,873,000) ...................... 11,873,000
---------------------------------------------------------------------------------------------------------------------
CORPORATE 5,000,000 Beta Finance Corp. ...................... 6.83 04/25/01 5,000,000
NOTES -- 6.5% 1,000,000 DaimlerChrysler AG ...................... 6.08 03/09/01 998,034
1,500,000 General Motors Acceptance Corp. ......... 5.63 02/15/01 1,494,352
3,200,000 General Motors Acceptance Corp. ......... 8.25 02/20/01 3,214,028
5,000,000 General Motors Acceptance Corp. ......... 7.88 03/07/01 5,019,130
---------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE NOTES
(COST $15,724,377) ...................... 15,725,544
---------------------------------------------------------------------------------------------------------------------
CORPORATE 10,000,000 American Honda Finance Corp. ............ 6.79 01/10/01 10,001,030
NOTES -- 7,000,000 Associates Corp. of North America ....... 6.52 03/16/01 6,997,383
VARIABLE 5,000,000 Beta Finance Corp. ...................... 6.61 03/15/01 5,000,000
RATE -- 17.9% 1,500,000 General Motors Acceptance Corp. ......... 6.83 12/01/00 1,500,000
10,000,000 Household Finance Corp. ................. 6.64 03/29/01 10,002,919
10,000,000 Morgan Stanley Dean Witter & Co. ........ 6.60 03/16/01 10,002,029
---------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE NOTES --
VARIABLE RATE
(COST $43,497,383) ...................... 43,503,361
---------------------------------------------------------------------------------------------------------------------
MASTER NOTES -- 5,000,000 Combined Insurance Co. of America ....... 6.70 06/01/01 5,000,000
VARIABLE 10,000,000 Goldman Sachs Group Inc. ................ 6.50 04/18/01 10,000,000
RATE -- 10.3% 10,000,000 Jackson National Life Insurance Co. ..... 6.71 02/01/01 10,000,000
---------------------------------------------------------------------------------------------------------------------
TOTAL MASTER NOTES --
VARIABLE RATE
(COST $25,000,000) ...................... 25,000,000
---------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH RATED INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
=====================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
=====================================================================================================================
<S> <C> <C> <C> <C>
COMMERCIAL $10,000,000 Credit Suisse First Boston Inc. ......... 6.49% 03/12/01 $ 9,764,845
PAPER -- 11.8% 9,943,000 Tulip Funding Corp. .................... 6.54 01/25/01 9,790,638
9,043,000 Windmill Funding Corp. .................. 6.51 11/01/00 9,043,000
---------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(COST $28,596,300) ...................... 28,598,483
---------------------------------------------------------------------------------------------------------------------
COMMERCIAL 5,000,000 General Electric Capital Corp. .......... 6.51 02/01/01 4,917,082
PAPER-- 2,000,000 Unilever Capital Corporation ............ 6.68 09/07/01 2,000,000
VARIABLE RATE-- 2.9%
---------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER --
VARIABLE RATE (COST $6,916,817) ......... 6,917,082
---------------------------------------------------------------------------------------------------------------------
REPURCHASE 45,000,000 Barclays Capital Inc.,
AGREEMENTS** purchased on 10/31/00 ................
--18.6% 6.62 11/01/00 45,000,000
---------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(COST $45,000,000) ...................... 45,000,000
---------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 98.8%
(COST $239,594,530) ..................... 239,579,605
---------------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES -- 1.2% ..................... 2,969,443
---------------------------------------------------------------------------------------------------------------------
NET ASSETS -- EQUIVALENT TO $1.00 PER
SHARE ON 242,563,973 SHARES OF
BENEFICIAL INTEREST
OUTSTANDING -- 100.0% ................... $242,549,048
=====================================================================================================================
</TABLE>
Note--Costs for federal income tax purposes are the same as those shown above.
At October 31, 2000, net unrealized depreciation amounted to $14,925 and is
comprised of $10,128 of appreciation and $25,053 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, 2000. For variable rate instruments, the next date on
which the interest rate is to be adjusted is deemed the maturity date for
valuation.
** Repurchase Agreements are fully collateralized by U.S. Government and Agency
Obligations.
D/N--Discount Notes
See Notes to Financial Statements.
27
<PAGE>
<TABLE>
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
MERRILL LYNCH RATED INSTITUTIONAL FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000 (UNAUDITED)
===================================================================================================================
<S> <C>
ASSETS:
Total investments at value (identified cost $239,594,530) (Note 1a)............................ $239,579,605
Cash........................................................................................... 1,014,760
Interest receivable............................................................................ 2,060,656
Prepaid expense................................................................................ 48,332
------------
Total assets........................................................................... 242,703,353
------------
LIABILITIES:
Advisory fee payable (Note 2).................................................................. 46,326
Accrued expenses............................................................................... 57,460
Dividends payable.............................................................................. 50,519
------------
Total liabilities...................................................................... 154,305
------------
NET ASSETS: (Equivalent to $1.00 per share, offering and redemption price, based on
242,563,973 shares of beneficial interest outstanding)...................................... $242,549,048
============
-------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH RATED INSTITUTIONAL FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 2000 (UNAUDITED)
===================================================================================================================
INVESTMENT INCOME:
Interest and discount earned (Note 1d)............................................................... $9,679,078
----------
EXPENSES:
Investment advisory fee (Note 2)..................................................................... 294,193
Registration fees.................................................................................... 104,593
Accounting and custodian services.................................................................... 39,635
Legal and audit fees................................................................................. 22,342
Printing and shareholder reports..................................................................... 21,051
Dividend and transfer agency fees.................................................................... 9,128
Trustees' fees (Note 5).............................................................................. 1,111
Insurance............................................................................................ 598
Miscellaneous........................................................................................ 4,121
----------
Total expense................................................................................ 496,772
----------
Net investment income........................................................................ 9,182,306
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain (loss) from investment transactions......................... $ --
Net unrealized appreciation of investments.................................... 134,467
-------
Net realized and unrealized gains from investments........................................... 134,467
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................. $9,316,773
==========
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------------------------------
<CAPTION>
MERRILL LYNCH RATED INSTITUTIONAL FUND SIX MONTHS YEAR
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED) ENDED ENDED
OCTOBER 31, 2000 APRIL 30, 2000
========================================================================================================================
<S> <C> <C>
DECREASE IN NET ASSETS:
OPERATIONS:
Net investment income....................................................... $ 9,182,306 $ 19,498,905
Net realized gain from investment transactions.............................. -- 211
Net unrealized appreciation (depreciation) of investments................... 134,467 (145,189)
------------ ------------
Net increase in net assets resulting from operations........................ 9,316,773 19,353,927
Total declared as dividends to shareholders (Note 4)........................ (9,182,306) (19,499,116)
Capital share transactions (Note 3)......................................... (45,203,318) (149,900,984)
------------ ------------
Net decrease in net assets.................................................. (45,068,851) (150,046,173)
NET ASSETS:
Beginning of period......................................................... 287,617,899 437,664,072
------------ ------------
End of period............................................................... $242,549,048 $287,617,899
============ ============
-----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH RATED INSTITUTIONAL FUND SIX MONTHS YEAR FOR THE PERIOD
FINANCIAL HIGHLIGHTS (UNAUDITED) ENDED ENDED JUNE 15, 1998*
OCTOBER 31, 2000 APRIL 30, 2000 TO APRIL 30, 1999
=======================================================================================================================
Net Asset Value, Beginning of period.............................. $1.00 $1.00 $1.00
Income from Investment Operations:
Net investment income.......................................... .032 .053 .045
Less Distributions:
Dividends from net investment income........................... (.032) (.053) (.045)
----- ----- -----
Net Asset Value, End of period.................................... $1.00 $1.00 $1.00
===== ===== =====
Total Return...................................................... 3.19%(1) 5.42% 4.57%(1)
Ratios/Supplemental Data:
Net Assets, End of period (000)................................ $242,549 $287,618 $437,664
Ratio of expenses to average net assets
(before waiver).............................................. .34%(2) .28% .27%(2)
Ratio of expenses to average net assets
(after waiver)............................................... -- -- .23%(2)
Ratio of net investment income, including realized
and unrealized gains and losses, to average net
assets (before waiver)....................................... 6.33%(2) 5.23% 4.95%(2)
Ratio of net investment income, including realized
and unrealized gains and losses, to average net
assets (after waiver)........................................ -- -- 4.99%(2)
</TABLE>
*Commencement of operations
(1) Cumulative total return
(2) On an annualized basis
See Notes to Financial Statements.
29
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH GOVERNMENT FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000 (UNAUDITED)
=====================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
=====================================================================================================================
<S> <C> <C> <C> <C>
U.S. $20,500,000 Federal Home Loan Banks ................ 6.09% 11/03/00 $20,499,982
GOVERNMENT 25,000,000 Federal Home Loan Banks ................. 6.36 01/18/01 24,979,472
AGENCY 21,000,000 Federal Home Loan Banks ................. 5.25 01/22/01 20,934,375
ISSUES -- 42.4% 15,000,000 Federal Home Loan Banks ................. 5.69 12/10/01 14,856,838
15,000,000 Federal Home Loan Banks ................. 6.45 03/16/01 14,985,885
15,000,000 Federal Home Loan Banks ................. 5.13 04/17/01 14,895,765
5,000,000 Federal Home Loan Banks ................. 5.76 05/24/02 4,939,062
20,000,000 Federal Home Loan Mortgage
Corp. ................................ 5.18 11/24/00 19,999,508
10,000,000 Federal Home Loan Mortgage
Corp. ................................ 5.15 01/26/01 9,963,339
5,000,000 Federal Home Loan Mortgage
Corp. ................................ 5.18 02/09/01 4,979,370
9,570,000 Federal Home Loan Mortgage
Corp. ................................ 6.63 11/08/01 9,558,612
16,000,000 Federal National Mortgage Assoc. ........ 5.07 12/14/00 15,998,575
15,000,000 Federal National Mortgage Assoc. ........ 5.35 03/01/01 14,936,895
15,000,000 Federal National Mortgage Assoc. ........ 5.52 03/06/01 14,952,750
18,300,000 Federal National Mortgage Assoc. ........ 6.42 03/13/01 18,293,961
5,380,000 Federal National Mortgage Assoc. ........ 6.00 06/21/01 5,360,976
5,000,000 Federal National Mortgage Assoc. ........ 5.00 10/29/01 4,927,800
6,200,000 Federal National Mortgage Assoc. ........ 6.63 11/05/01 6,192,683
9,731,000 Federal National Mortgage Assoc. ........ 6.44 11/15/01 9,708,327
7,500,000 Federal National Mortgage Assoc. ........ 5.67 03/04/02 7,419,607
5,000,000 Federal National Mortgage Assoc. ........ 6.64 07/10/02 4,987,550
5,000,000 Federal National Mortgage Assoc. ........ 6.55 07/15/02 4,983,054
25,000,000 Student Loan Marketing Assoc. ........... 5.90 12/01/00 24,998,012
5,000,000 Federal Farm Credit Banks D/N ........... 6.34 12/27/00 4,950,689
10,000,000 Federal Farm Credit Banks D/N ........... 6.40 12/27/00 9,900,444
40,000,000 Federal Home Loan Banks D/N ............. 6.33 12/26/00 39,613,167
4,000,000 Federal Home Loan Banks D/N ............. 5.95 01/08/01 3,951,200
10,000,000 Federal Home Loan Banks D/N ............. 6.12 03/01/01 9,785,001
25,000,000 Federal Home Loan Banks D/N ............. 6.07 03/09/01 24,427,548
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH GOVERNMENT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
=====================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
=====================================================================================================================
<S> <C> <C> <C> <C>
U.S. $15,000,000 Federal Home Loan Banks D/N ............. 6.12% 03/14/01 $14,643,000
GOVERNMENT 15,000,000 Federal Home Loan Banks D/N ............. 6.11 03/19/01 14,629,500
AGENCY 75,000,000 Federal Home Loan Banks D/N ............. 6.36 03/28/01 73,027,500
ISSUES 10,000,000 Federal Home Loan Banks D/N ............. 6.70 05/15/01 9,657,001
(CONTINUED) 25,000,000 Federal Home Loan Mortgage
Corp. D/N ............................ 6.40 12/07/00 24,840,000
50,000,000 Federal Home Loan Mortgage
Corp. D/N ............................ 6.36 12/28/00 49,496,500
60,000,000 Federal Home Loan Mortgage
Corp. D/N ............................ 6.37 12/28/00 59,394,850
25,000,000 Federal Home Loan Mortgage
Corp. D/N ............................ 6.40 12/28/00 24,746,667
20,589,000 Federal Home Loan Mortgage
Corp. D/N ............................ 6.07 03/01/01 20,046,177
4,000,000 Federal Home Loan Mortgage
Corp. D/N ............................ 6.21 03/29/01 3,895,413
5,051,000 Federal Home Loan Mortgage
Corp. D/N ............................ 6.26 03/29/01 4,918,933
25,000,000 Federal Home Loan Mortgage
Corp. D/N ............................ 6.20 04/26/01 24,007,812
10,000,000 Federal National Mortgage Assoc.
D/N .................................. 6.65 11/03/00 9,996,307
25,000,000 Federal National Mortgage Assoc.
D/N .................................. 6.65 11/16/00 24,930,781
15,000,000 Federal National Mortgage Assoc.
D/N .................................. 6.53 12/07/00 14,902,050
62,618,000 Federal National Mortgage Assoc.
D/N .................................. 6.50 12/21/00 62,052,699
25,000,000 Federal National Mortgage Assoc.
D/N .................................. 6.39 12/26/00 24,755,937
80,000,000 Federal National Mortgage Assoc.
D/N .................................. 6.38 12/27/00 79,206,044
25,000,000 Federal National Mortgage Assoc.
D/N .................................. 6.42 12/28/00 24,745,875
20,000,000 Federal National Mortgage Assoc.
D/N .................................. 6.53 12/28/00 19,793,375
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH GOVERNMENT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
=====================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
=====================================================================================================================
<S> <C> <C> <C> <C>
U.S. $ 75,000,000 Federal National Mortgage Assoc.
GOVERNMENT D/N .................................. 6.43% 01/25/01 $ 73,852,000
AGENCY 30,000,000 Federal National Mortgage Assoc.
ISSUES D/N .................................. 6.38 02/07/01 29,469,000
(CONTINUED) 15,000,000 Federal National Mortgage Assoc.
D/N .................................. 6.16 04/12/01 14,570,698
10,000,000 Federal National Mortgage Assoc.
D/N .................................. 6.70 05/18/01 9,651,849
---------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY
ISSUES (COST $1,097,573,668) ............ 1,097,210,915
---------------------------------------------------------------------------------------------------------------------
U.S. 50,000,000 Federal Home Loan Banks ................. 6.55 10/19/01 49,994,500
GOVERNMENT 30,000,000 Federal Home Loan Mortgage Corp. ........ 6.59 01/10/01 30,004,707
AGENCY 35,000,000 Federal National Mortgage Assoc. ........ 6.44 11/13/00 34,998,753
ISSUES -- 100,000,000 Federal National Mortgage Assoc. ........ 6.53 05/24/01 100,000,000
VARIABLE 100,000,000 Federal National Mortgage Assoc. ........ 6.47 10/04/01 99,945,951
RATE -- 23.8% 50,000,000 Federal National Mortgage Assoc. ........ 6.52 11/05/01 49,985,434
50,000,000 Student Loan Marketing Assoc. ........... 6.89 08/23/01 49,984,527
50,000,000 Student Loan Marketing Assoc. ........... 6.84 02/07/02 49,974,856
50,000,000 Student Loan Marketing Assoc. ........... 6.87 02/28/02 49,968,262
100,000,000 Student Loan Marketing Assoc. ........... 6.87 04/25/02 99,943,325
---------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY
ISSUES -- VARIABLE RATE
(COST $614,762,748) ..................... 614,800,315
---------------------------------------------------------------------------------------------------------------------
REPURCHASE 390,000,000 Barclays Capital Inc.,
AGREEMENTS** purchased on 10/31/00 ................ 6.62 11/01/00 390,000,000
-- 33.3% 350,000,000 Deutsche Bank Securities Inc., purchased
on 10/31/00........................... 6.61 11/01/00 350,000,000
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH GOVERNMENT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
=====================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
=====================================================================================================================
<S> <C> <C> <C> <C>
REPURCHASE $60,000,000 HSBC Securities (USA) Inc.,
AGREEMENTS** purchased on 10/31/00 ................ 6.58% 11/01/00 $ 60,000,000
(CONTINUED) 62,367,000 State Street Bank and Trust,
purchased on 10/31/00 ................ 6.53 11/01/00 62,367,000
---------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS... $2,586,236,236
(COST $862,367,000) ..................... 862,367,000
---------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.5%
(COST $2,574,703,416) ................... 2,574,378,230
---------------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 0.5% 11,858,006
---------------------------------------------------------------------------------------------------------------------
NET ASSETS -- EQUIVALENT TO $1.00 PER
SHARE ON 2,586,561,422 SHARES OF
BENEFICIAL INTEREST
OUTSTANDING -- 100.0% .................... $2,586,236,236
=====================================================================================================================
</TABLE>
Note--Costs for federal income tax purposes are the same as those shown above.
At October 31, 2000, unrealized depreciation amounted to $325,186 and is
comprised of $341,762 of appreciation and $666,948 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, 2000. For variable rate instruments, the next date on
which the interest rate is to be adjusted is deemed the maturity date for
valuation.
**Repurchase Agreements are fully collateralized by U.S. Government and Agency
Obligations.
D/N--Discount Notes
See Notes to Financial Statements.
33
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------------------------
<CAPTION>
MERRILL LYNCH GOVERNMENT FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000 (UNAUDITED)
==================================================================================================================
ASSETS:
<S> <C> <C>
Investments in securities subject to repurchase agreements.................... $ 862,367,000
Investments in other marketable securities.................................... 1,712,011,230
--------------
Total investments at value (identified cost $2,574,703,416) (Note 1a)................... $2,574,378,230
Cash............................................................................................ 1,947,386
Interest receivable............................................................................. 11,416,337
Prepaid expense................................................................................. 96,333
--------------
Total assets............................................................................ 2,587,838,286
--------------
LIABILITIES:
Advisory fee payable (Note 2)................................................................... 445,629
Dividends payable............................................................................... 1,031,340
Accrued expenses................................................................................ 125,081
--------------
Total liabilities....................................................................... 1,602,050
--------------
NET ASSETS: (Equivalent to $1.00 per share, offering and redemption price, based on
2,586,561,422 shares of beneficial interest outstanding)..................................... $2,586,236,236
==============
-----------------------------------------------------------------------------------------------------------------
MERRILL LYNCH GOVERNMENT FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 2000 (UNAUDITED)
=================================================================================================================
INVESTMENT INCOME:
Interest and discount earned (Note 1d)........................................................ $84,437,690
-----------
EXPENSES:
Investment advisory fee (Note 2).............................................. $4,133,279
Registration fees............................................................. 200,277
Dividend and transfer agency fees............................................. 175,018
Accounting and custodian services............................................. 84,758
Printing and shareholder reports.............................................. 15,812
Legal and audit fees.......................................................... 14,359
Trustees' fees (Note 5)....................................................... 9,997
Insurance..................................................................... 5,469
Miscellaneous................................................................. 15,856
----------
Total expense......................................................... 4,654,825
Waived investment advisory fee (Note 2)....................................... (1,533,643) 3,121,182
---------- -----------
Net investment income................................................. 81,316,508
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from investment transactions................................ 5,478
Net unrealized appreciation of investments.................................... 1,052,022
----------
Net realized and unrealized gain from investments..................................... 1,057,500
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................................... $82,374,008
===========
</TABLE>
See Notes to Financial Statements.
34
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
MERRILL LYNCH GOVERNMENT FUND SIX MONTHS YEAR
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED) ENDED ENDED
OCTOBER 31, 2000 APRIL 30, 2000
======================================================================================================================
<S> <C> <C>
DECREASE IN NET ASSETS:
OPERATIONS:
Net investment income.................................................... $ 81,316,508 $ 137,181,706
Net realized gain (loss) from investment transactions.................... 5,478 (24)
Net unrealized appreciation (depreciation) of investments................ 1,052,022 (1,255,770)
--------------- ---------------
Net increase in net assets resulting from operations..................... 82,374,008 135,925,912
Total declared as dividends to shareholders (Note 4)..................... (81,321,986) (137,181,682)
Capital share transactions (Note 3)...................................... (18,023,921) (32,208,401)
--------------- ---------------
Net decrease in net assets............................................... (16,971,899) (33,464,171)
NET ASSETS:
Beginning of period...................................................... 2,603,208,135 2,636,672,306
--------------- ---------------
End of period............................................................ $2,586,236,236 $2,603,208,135
============== ===============
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH GOVERNMENT FUND SIX MONTHS
FINANCIAL HIGHLIGHTS (UNAUDITED) ENDED YEAR ENDED APRIL 30,
OCTOBER 31, --------------------------------------------------------
2000 2000 1999 1998 1997 1996
======================================================================================================================
Net Asset Value, Beginning of period.... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment Operations:
Net investment income................ .032 .052 .050 .053 .052 .055
Less Distributions:
Dividends from net investment income. (.032) (.052) (.050) (.053) (.052) (.055)
----- ----- ----- ----- ----- -----
Net Asset Value, End of period.......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== =====
Total Return............................ 3.19%(1) 5.34% 5.16% 5.48% 5.31% 5.67%
Ratios/Supplemental Data:
Net Assets, End of period (000)...... $2,586,236 $2,603,208 $2,636,672 $2,114,592 $2,017,399 $1,643,625
Ratio of expenses to average net
assets (before waiver)............. .36%(2) .35% .36% .37% .38% .38%
Ratio of expenses to average net
assets (after waiver).............. .24%(2) .24% .24% .25% .26% .26%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (before waiver)............. 6.22%(2) 5.07% 4.90% 5.24% 5.07% 5.37%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (after waiver).............. 6.34%(2) 5.18% 5.02% 5.36% 5.19% 5.49%
</TABLE>
(1) Cumulative total return
(2) On an annualized basis
See Notes to Financial Statements.
35
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH TREASURY FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000 (UNAUDITED)
=====================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
=====================================================================================================================
<S> <C> <C> <C> <C>
U.S. $30,000,000 U.S. Treasury Bills .................. 6.06% 11/16/00 $29,924,250
GOVERNMENt 10,110,000 U.S. Treasury Bills .................. 6.10 11/16/00 10,084,325
ISSUES -- 10,000,000 U.S. Treasury Bills .................. 5.98 11/24/00 9,961,794
99.6% 49,100,000 U.S. Treasury Bills .................. 6.10 11/24/00 48,908,646
481,000 U.S. Treasury Bills .................. 6.11 11/24/00 479,124
2,260,000 U.S. Treasury Bills .................. 6.12 11/24/00 2,251,171
32,951,000 U.S. Treasury Bills .................. 6.07 11/30/00 32,789,879
30,000,000 U.S. Treasury Bills .................. 6.13 11/30/00 29,851,858
10,000,000 U.S. Treasury Bills .................. 6.15 11/30/00 9,950,499
31,353,000 U.S. Treasury Bills .................. 5.92 12/07/00 31,167,547
13,690,000 U.S. Treasury Bills .................. 5.93 12/07/00 13,608,887
12,000,000 U.S. Treasury Bills .................. 5.97 12/07/00 11,928,360
11,663,000 U.S. Treasury Bills .................. 6.00 12/07/00 11,593,022
6,616,000 U.S. Treasury Bills .................. 6.01 12/07/00 6,576,238
3,440,000 U.S. Treasury Bills .................. 5.94 12/14/00 3,415,614
24,985,000 U.S. Treasury Bills .................. 5.97 12/14/00 24,806,836
7,216,000 U.S. Treasury Bills .................. 5.99 12/21/00 7,156,017
10,000,000 U.S. Treasury Bills .................. 5.95 01/04/01 9,890,839
15,852,000 U.S. Treasury Bills .................. 6.05 01/04/01 15,678,958
55,368,000 U.S. Treasury Bills .................. 6.07 01/04/01 54,763,598
6,093,000 U.S. Treasury Bills .................. 6.08 01/04/01 6,026,488
15,245,000 U.S. Treasury Bills .................. 6.09 01/04/01 15,078,584
15,000,000 U.S. Treasury Bills .................. 6.00 01/11/01 14,817,765
7,387,000 U.S. Treasury Bills .................. 6.01 01/11/01 7,297,255
9,000,000 U.S. Treasury Bills .................. 6.02 01/11/01 8,890,659
16,233,000 U.S. Treasury Bills .................. 6.04 01/11/01 16,035,785
16,068,000 U.S. Treasury Bills .................. 6.05 01/11/01 15,872,790
22,591,000 U.S. Treasury Bills .................. 6.06 01/11/01 22,316,542
25,000,000 U.S. Treasury Bills .................. 6.09 01/11/01 24,696,275
332,000 U.S. Treasury Bills .................. 6.15 01/11/01 327,967
4,065,000 U.S. Treasury Bills .................. 6.16 01/11/01 4,015,614
15,000,000 U.S. Treasury Bills .................. 6.15 01/25/01 14,781,480
</TABLE>
See Notes to Financial Statements.
36
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH TREASURY FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT RATE* DATE (NOTE 1a)
======================================================================================================================
<S> <C> <C> <C> <C>
U.S. $ 1,730,000 U.S. Treasury Bills .................. 6.16% 01/25/01 $ 1,704,797
GOVERNMENT 20,000,000 U.S. Treasury Bills .................. 6.17 01/25/01 19,708,640
ISSUES 51,362,000 U.S. Treasury Bills .................. 6.18 01/25/01 50,613,758
(CONTINUED) 10,000,000 U.S. Treasury Bills .................. 6.00 03/29/01 9,750,870
15,000,000 U.S. Treasury Notes .................. 5.75 11/15/00 14,996,567
80,746,000 U.S. Treasury Notes .................. 4.63 12/31/00 80,569,247
30,000,000 U.S. Treasury Notes .................. 5.50 12/31/00 29,891,007
29,000,000 U.S. Treasury Notes .................. 4.50 01/31/01 28,849,200
----------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.6%
(COST $ 751,071,277).................. 751,028,752
----------------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 0.4% 3,247,874
----------------------------------------------------------------------------------------------------------------------
NET ASSETS -- EQUIVALENT TO $1.00
PER SHARE ON 754,319,151 SHARES
OF BENEFICIAL INTEREST
OUTSTANDING -- 100.0% ................ $754,276,626
----------------------------------------------------------------------------------------------------------------------
</TABLE>
Note--Costs for federal income tax purposes are the same as those shown above.
At October 31, 2000, net unrealized depreciation amounted to $42,525 and is
comprised of $72,379 in appreciation and $114,904 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.
37
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
MERRILL LYNCH TREASURY FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
ASSETS:
<S> <C>
Total investments at value (identified cost $751,071,277) (Note 1a)............................ $751,028,752
Cash........................................................................................... 978,021
Interest receivable............................................................................ 2,529,303
Prepaid expense................................................................................ 12,138
----------------
Total assets........................................................................... 754,548,214
----------------
LIABILITIES:
Advisory fee payable (Note 2).................................................................. 134,331
Accrued expenses............................................................................... 86,591
Dividends payable.............................................................................. 50,666
----------------
Total liabilities...................................................................... 271,588
----------------
NET ASSETS: (Equivalent to $1.00 per share, offering and redemption price, based on
754,319,151 shares of beneficial interest outstanding)...................................... $754,276,626
================
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH TREASURY FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
INVESTMENT INCOME:
Interest and discount earned (Note 1d)......................................................... $22,438,658
-----------
EXPENSES:
Investment advisory fee (Note 2).............................................. $1,281,217
Registration fees............................................................. 61,586
Dividend and transfer agency fees............................................. 59,265
Accounting and custodian services............................................. 48,070
Legal and audit fees.......................................................... 4,884
Printing and shareholder reports.............................................. 2,780
Trustees' fees (Note 5)....................................................... 2,221
Insurance..................................................................... 1,201
Miscellaneous................................................................. 10,786
----------
Total expense......................................................... 1,472,010
Waived investment advisory fee (Note 2)....................................... (539,627) 932,383
---------- -----------
Net investment income................................................. 21,506,275
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from investment transactions................................ 121,665
Net unrealized depreciation of investments.................................... (31,514)
----------
Net realized and unrealized gain from investments...................................... 90,151
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................................... $21,596,426
===========
</TABLE>
See Notes to Financial Statements.
38
<PAGE>
<TABLE>
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
MERRILL LYNCH TREASURY FUND SIX MONTHS YEAR
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED) ENDED ENDED
OCTOBER 31, 2000 APRIL 30, 2000
=======================================================================================================================
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income.................................................... $ 21,506,275 $ 34,039,462
Net realized gain from investment transactions........................... 121,665 146,608
Net unrealized appreciation (depreciation) of investments................ (31,514) 33,206
--------------- ---------------
Net increase in net assets resulting from operations..................... 21,596,426 34,219,276
Total declared as dividends to shareholders (Note 4)..................... (21,627,940) (34,186,070)
Capital share transactions (Note 3)...................................... 75,467,542 (1,533,095)
--------------- ---------------
Net increase (decrease) in net assets.................................... 75,436,028 (1,499,889)
NET ASSETS:
Beginning of period...................................................... 678,840,598 680,340,487
--------------- ---------------
End of period............................................................ $754,276,626 $678,840,598
============ ============
-----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH TREASURY FUND SIX MONTHS
FINANCIAL HIGHLIGHTS (UNAUDITED) ENDED YEAR ENDED APRIL 30,
OCTOBER 31, --------------------------------------------------------
2000 2000 1999 1998 1997 1996
=======================================================================================================================
Net Asset Value, Beginning of period....... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment Operations:
Net investment income................... .029 .048 .046 .051 .049 .052
Less Distributions:
Dividends from net investment income....... (.029) (.048) (.046) (.051) (.049) (.052)
----- ----- ----- ----- ----- -----
Net Asset Value, End of period............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== =====
Total Return............................... 2.98%(1) 4.94% 4.76% 5.24% 5.08% 5.37%
Ratios/Supplemental Data:
Net Assets, End of period (000)......... $754,277 $678,841 $680,340 $759,197 $611,844 $514,123
Ratio of expenses to average net assets
(before waiver)....................... .39%(2) .39% .39% .41% .42% .41%
Ratio of expenses to average net assets
(after waiver)........................ .25%(2) .25% .25% .26% .27% .26%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (before waiver)................ 5.68%(2) 4.69% 4.36% 5.11% 4.85% 5.09%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (after waiver)................. 5.82%(2) 4.83% 4.50% 5.26% 5.00% 5.24%
</TABLE>
(1) Cumulative total return
(2) On an annualized basis
See Notes to Financial Statements.
39
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
VALUE
FACE AMOUNT ISSUE (NOTE 1a)
======================================================================================================================
<S> <C> <C>
ALABAMA-- $29,100,000 Montgomery, Alabama IDB PCR (GE Co. Project) CP
1.0% 4.30% due 11/13/2000 ...................................... $29,100,000
----------------------------------------------------------------------------------------------------------------------
ALASKA-- Valdez, Alaska Marine Terminal Revenue (Arco Transportation
1.8% Project--Series A) CP:
10,000,000 4.25% due 11/07/2000 ......................................... 10,000,000
25,825,000 4.30% due 03/08/2001 ......................................... 25,825,000
14,475,000 4.35% due 03/08/2001 ......................................... 14,475,000
----------------------------------------------------------------------------------------------------------------------
ARIZONA-- 7,896,000 Salt River Project of Arizona, Agricultural Improvement
0.3% & Power District Electrical Systems Revenue CP 4.35%
due 01/26/2001 ............................................ 7,896,000
----------------------------------------------------------------------------------------------------------------------
ARKANSAS-- 10,000,000 Arkansas Hospital Equipment Finance Authority Revenue (AHA
0.6% Pooled Financing Program) VRDN 4.45% due 11/01/2028 (a) ... 10,000,000
5,885,000 Arkansas State Development Finance Authority IDR
(Defiance Metal Products Project) VRDN 4.55% due
11/01/2011(a) ............................................. 5,885,000
----------------------------------------------------------------------------------------------------------------------
COLORADO-- 15,000,000 Castle Pines North Metropolitan District VRDN 4.45% due
1.3% 12/01/2028 (a) ............................................ 15,000,000
6,195,000 Colorado Educational & Cultural Facilities Authority Revenue
(Denver Academy Project) VRDN 4.45% due 08/01/2020 (a) .... 6,195,000
11,695,000 Denver, Colorado City & County Airport Revenue
(Municipal Securities Trust Receipts--SGA 18) VRDN 4.43% due
11/15/2025 (a) ............................................ 11,695,000
4,800,000 Montrose, Colorado IDR (Scaled Manufacturing Inc.)
VRDN 4.60% due 12/01/2005 (a).............................. 4,800,000
----------------------------------------------------------------------------------------------------------------------
DELAWARE-- 15,000,000 Delaware State EDA IDR (Delaware Clean Power Project) VRDN
0.5% 4.55% due 08/01/2029 (a) .................................. 15,000,000
----------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA 4,800,000 District of Columbia Enterprise Zone Revenue
--0.2% (HF Enterprises LLC Project) VRDN 4.60% due 11/01/2025 (a) 4,800,000
----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
40
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
VALUE
FACE AMOUNT ISSUE (NOTE 1a)
======================================================================================================================
<S> <C> <C>
FLORIDA -- Capital Trust Agency, Florida--M/F Housing Revenue
7.3% Bond--Community Loan Program VRDN:
$10,000,000 (Series A) 4.48% due 12/01/2032(a) ........................... $10,000,000
44,600,000 (Series B) 4.48% due 12/01/2032(a) ........................... 44,600,000
20,000,000 Florida State Board of Education Public Education
Municipal Securities Trust Receipts (SGA 102) DDN 4.70% due
06/01/2029 (a) ............................................ 20,000,000
20,000,000 Gulf Breeze, Florida Health Care Facilities Revenue
(Heritage Health Care Project) VRDN 4.48% due 01/01/2024 (a) 20,000,000
13,800,000 Jacksonville, Florida PCR (Florida Power & Light Co.) CP 4.20%
due 11/09/2000 ............................................ 13,800,000
4,500,000 Lee County, Florida IDA Revenue (Raymond Building
Supply Corp. Project) VRDN 4.55% due 04/01/2017 (a) ....... 4,500,000
20,000,000 Martin County, Florida PCR (Florida Power & Light Co. Project)
DDN 4.70% due 07/15/2022 (a) .............................. 20,000,000
10,000,000 Orange County, Florida Health Facilities Authority Revenue CP
4.45% due 06/01/2030 ...................................... 10,000,000
62,500,000 Saint Lucie County, Florida PCR (Florida Power & Light
Co. Project) DDN 4.70% due 09/01/2028 (a) ................. 62,500,000
----------------------------------------------------------------------------------------------------------------------
GEORGIA -- 6,550,000 Albany & Dougherty County, Georgia Hospital Authority Revenue
3.9% (Phoebe Putney Memorial Hospital) VRDN 4.45% due 09/01/2026
(a) ....................................................... 6,550,000
19,145,000 Eagle Tax-Exempt Trust--State of Georgia (Series 981002) VRDN
4.43% due 07/01/2014 (a) .................................. 19,145,000
22,955,000 Eagle Tax-Exempt Trust--State of Georgia (Series 991001) VRDN
4.43% due 11/01/2017 (a) .................................. 22,955,000
23,770,000 Georgia Municipal Electric Authority (Project 1-Series B)
CP 4.35% due 12/19/2000 ................................... 23,770,000
9,000,000 La Grange, Georgia Development Authority IDR (Reltec Corp.
Project) VRDN 4.50% due 12/01/2021 (a) .................... 9,000,000
7,200,000 Rome, Georgia TAN 5.00% due 12/29/2000 ....................... 7,207,717
20,000,000 Southern Georgia Hospital Authority Revenue (Georgia Alliance
of Community Hospitals Pooled Finance Program--Series A)
VRDN 4.45% due 04/01/2029 (a) ............................. 20,000,000
----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
41
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
VALUE
FACE AMOUNT ISSUE (NOTE 1a)
======================================================================================================================
<S> <C> <C>
IDAHO -- $ 3,005,000 Madison, Idaho Economic Development Corp. IDR (Floyd Wilcox &
0.1% Sons, Inc. Project) VRDN 4.55% due 08/01/2012 (a) ......... $ 3,005,000
----------------------------------------------------------------------------------------------------------------------
ILLINOIS -- 2,700,000 Aurora, Illinois IDR (Aztech Engineering Inc. Project)
9.0% VRDN 4.65% due 10/01/2018 (a) ............................. 2,700,000
6,000,000 Chicago, Illinois Solid Waste Disposal Facilities
Revenue (Groot Industries Inc.) VRDN 4.65% due 12/01/2015
(a) ....................................................... 6,000,000
2,975,000 Des Plaines, Illinois IDR (East Golf Road LLC Project)
VRDN 4.65% due 05/01/2017 (a) ............................. 2,975,000
3,300,000 Elgin, Illinois IDR (Starro Precision Products Inc. Project)
VRDN 4.65% due 06/01/2025 (a) ............................. 3,300,000
1,200,000 Geneva, Illinois IDR (Continental Envelope Corp. Project) VRDN
4.65% due 09/01/2006 (a) .................................. 1,200,000
10,000,000 Illinois Health Facilities Authority Revenue (Evanston Hospital
Corp.--Series E) CP 4.00% due 11/30/2000 ................... 10,000,000
41,000,000 Illinois Health Facilities Authority Revenue (Victory Health
Services--Series B) CP 4.40% due 02/16/2001 ................ 41,000,000
Illinois Health Facilities Authority Revenue (Central Dupage
Health) DDN:
45,000,000 (Series B) 4.70% due 11/01/2027 (a) .......................... 45,000,000
50,000,000 (Series C) 4.70% due 11/01/2027 (a) .......................... 50,000,000
Illinois Health Facilities Authority Revenue (Resurrection
Health--Series A) DDN:
13,200,000 4.70% due 05/01/2029 (a) ..................................... 13,200,000
10,600,000 4.70% due 05/15/2029 (a) ..................................... 10,600,000
6,445,000 Illinois Health Facilities Authority Revenue (Riverside
Health Systems--Series B) VRDN 4.40% due
11/15/2016 (a) ............................................ 6,445,000
10,000,000 Illinois Health Facilities Authority Revenue (Friend Village
of Schaumburg--Series 97B) VRDN 4.40% due
12/01/2020 (a) ............................................ 10,000,000
2,905,000 Illinois State Development Finance Authority IDR (Rockford
College Project) VRDN 4.50% due 02/01/2001 (a) ............ 2,905,000
</TABLE>
See Notes to Financial Statements.
42
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
VALUE
FACE AMOUNT ISSUE (NOTE 1a)
======================================================================================================================
<S> <C> <C>
ILLINOIS $ 3,380,000 Illinois State Development Finance Authority IDR (Design
(CONTINUed) (Automotive LLC Project) VRDN 4.65% due 06/01/2011 (a) .... $ 3,380,000
10,000,000 Illinois State Development Finance Authority Revenue
(Local Government Financing--Series A) VRDN 4.45% due
09/01/2029 (a) ............................................ 10,000,000
30,975,000 Illinois State Municipal Securities Trust Receipts (SGA 103)
VRDN 4.70% due 08/01/2024 (a) ............................. 30,975,000
2,460,000 Peoria, Illinois IDR (CDC Realty L.P. Project) VRDN 4.65% due
12/01/2014 (a) ............................................ 2,460,000
----------------------------------------------------------------------------------------------------------------------
INDIANA-- 1,870,000 Allen County, Indiana EDR (Water Furnace International
3.4% Inc.) VRDN 4.55% due 11/01/2014 (a) ....................... 1,870,000
4,000,000 Allen County, Indiana EDR (YMCA of Greater Fort Wayne Project)
VRDN 4.45% due 12/01/2009 (a) ............................. 4,000,000
6,400,000 Anderson, Indiana EDR (Applecreek Commons L.P.)
VRDN 4.50% due 12/01/2027 (a) ............................. 6,400,000
2,385,000 Bloomington, Indiana EDR (Bloomington Square Project) VRDN
4.50% due 12/01/2008 (a) .................................. 2,385,000
2,500,000 Connersville, Indiana EDR (Inland Southern Corp. Project) VRDN
4.50% due 02/01/2012 (a) .................................. 2,500,000
2,500,000 Crawfordsville, Indiana EDR (Performance Master LLC Project)
VRDN 4.65% due 10/01/2018 (a) ............................. 2,500,000
4,160,000 Elkhart County, Indiana EDR (Patriot Homes Inc. Project) VRDN
4.55% due 08/01/2012 (a) .................................. 4,160,000
2,810,000 Greencastle, Indiana IDR (Crown Equipment Corp. Project) VRDN
4.50% due 02/01/2011 (a) .................................. 2,810,000
4,000,000 Indianapolis, Indiana EDR (New Bridges Apartments
Project) VRDN 4.50% due 06/01/2035 (a) .................... 4,000,000
2,250,000 Indiana State Development Finance Authority EDR (Hart Housing
Group Inc. Project) VRDN 4.55% due 06/01/2011 (a) ......... 2,250,000
2,230,000 Indiana State Development Finance Authority EDR (Indianapolis
Urban League Inc.) VRDN 4.45% due 01/01/2020 (a) .......... 2,230,000
</TABLE>
See Notes to Financial Statements.
43
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
VALUE
FACE AMOUNT ISSUE (NOTE 1a)
======================================================================================================================
<S> <C> <C>
INDIANA $ 1,400,000 Indiana State Development Finance Authority IDR
(CONTINUED) (Centurion Industries Inc. Project) VRDN 4.55% due
10/01/2005 (a) ............................................ $ 1,400,000
22,200,000 Indiana State Development Authority PCR (Southern
Indiana Gas & Electric Co.--Series C) FXRDN 4.45%
due 03/01/2001 ............................................ 22,200,000
5,000,000 Indiana State Health Facilities Financing Authority Revenue
(Hartsfield Village Project--Series B) VRDN 4.40% due
08/15/2027 (a) ............................................ 5,000,000
12,600,000 Indiana University Revenue CP 4.35% due 02/14/2001 ........... 12,600,000
20,900,000 Mount Vernon, Indiana PCR & Solid Waste Disposal Revenue
(General Electric Project--Series A) CP 4.30%
due 11/13/2000 ............................................ 20,900,000
----------------------------------------------------------------------------------------------------------------------
KANSAS -- Butler County, Kansas Solid Waste Disposal & Cogeneration
2.0% Revenue (Texaco Refining & Marketing) DDN:
15,400,000 (Series A) 4.80% due 08/01/2024 (a) .......................... 15,400,000
38,600,000 (Series B) 4.80% due 08/01/2024 (a) .......................... 38,600,000
3,000,000 (Series B) 4.80% due 12/01/2024 (a) .......................... 3,000,000
----------------------------------------------------------------------------------------------------------------------
KENTUCKY -- 23,000,000 Carroll County, Kentucky Collateralized Solid Waste
2.3% Disposal Facilities Revenue (Kentucky Utilities Co.
Project--Series A) DDN 4.85% due 11/01/2024 (a) ........... 23,000,000
3,970,000 Crestview Hill, Kentucky Industrial Building Revenue (Thomas
More College Project) VRDN 4.50% due 11/01/2018 (a) ....... 3,970,000
1,600,000 Jefferson County, Kentucky Industrial Building Revenue (Thomas
Development Project) VRDN 4.55% due 04/10/2010 (a) ........ 1,600,000
9,835,000 Kentucky Economic Development Finance Authority
Hospital Facilities Revenue (St. Elizabeth's Medical
Center Inc.--Series A) VRDN 4.52% due 05/01/2017 (a) ...... 9,835,000
19,700,000 Kentucky State Pollution Abatement and Water Resource Finance
Authority PCR (Toyota Motor) DDN 5.10%
due 08/13/2006 (a) ........................................ 19,700,000
</TABLE>
See Notes to Financial Statements.
44
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
VALUE
FACE AMOUNT ISSUE (NOTE 1a)
======================================================================================================================
<S> <C> <C>
KENTUCKY $ 2,250,000 Lawrenceburg, Kentucky BAN 5.15% due 10/01/2001 .............. $ 2,257,867
(CONTINUED) 3,385,000 Shelby County, Kentucky IDR (Truss Co. Inc./ Kingbrook
Commerce Park LLC Project) VRDN 4.55% due 06/01/2018 (a) .. 3,385,000
----------------------------------------------------------------------------------------------------------------------
LOUISIANA -- Louisiana Public Facilities Authority Revenue (Christus
3.2% Health--Series B) CP:
48,500,000 4.50% due 11/13/2000 ......................................... 48,500,000
11,850,000 4.30% due 11/28/2000 ......................................... 11,850,000
23,350,000 4.30% due 12/05/2000 ......................................... 23,350,000
7,535,000 4.30% due 12/07/2000 ......................................... 7,535,000
----------------------------------------------------------------------------------------------------------------------
MAINE -- 1,990,000 Gray, Maine Revenue (Advance Realty Project) VRDN
0.7% 4.60% due 10/01/2011 (a) .................................. 1,990,000
815,000 Lewiston, Maine Revenue (Geiger Brothers Project)
VRDN 5.00% due 09/01/2004 (a) ............................. 815,000
2,700,000 Millinocket, Maine Revenue (Gardner Chipmills Project) VRDN
4.55% due 03/01/2005 (a) .................................. 2,700,000
4,715,000 Portland, Maine Revenue (Grass Properties & Applicators) VRDN
4.60% due 10/01/2020 (a) .................................. 4,715,000
1,425,000 Saco, Maine IDR (First Light Technology Project) VRDN 4.55% due
04/01/2007 (a) ............................................ 1,425,000
3,955,000 Topsham, Maine Revenue (Village Candle Inc.) VRDN
4.55% due 08/01/2013 (a)................................... 3,955,000
5,000,000 Trenton, Maine Revenue (The Talaria Co. Project) VRDN 4.55% due
10/15/2015 (a) ............................................ 5,000,000
----------------------------------------------------------------------------------------------------------------------
MARYLAND -- 900,000 Anne Arundel County, Maryland EDR (Atlas Container
0.4% Corp. Project) VRDN 4.45% due 04/01/2006 (a) .............. 900,000
10,000,000 Gaithersburg, Maryland EDR (Asbury Methodist) VRDN 4.45% due
07/01/2027 (a) ............................................ 10,000,000
----------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS -- 6,000,000 Lynn, Massachusetts BAN 4.25% due 11/16/2000 ................. 6,000,662
1.1% 14,500,000 Massachusetts State Industrial Finance Agency PCR (New England
Power Co. Project) CP 4.25% due 12/11/2000 ................ 14,500,000
9,750,000 Northbridge, Massachusetts BAN 4.75% due
03/12/2001 ................................................ 9,764,778
----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
45
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
VALUE
FACE AMOUNT ISSUE (NOTE 1a)
======================================================================================================================
<S> <C> <C>
MICHIGAN -- $17,307,000 ABN-AMRO Muni-Tops Michigan State Trunkline (Series
2.2% 1998-13) VRDN 4.38% due 10/04/2006 (a)..................... $17,307,000
6,870,000 Dearborn, Michigan Economic Development Corp. Revenue (Henry
Ford Village Inc. Project) VRDN 4.45% due 10/01/2023 (a) .. 6,870,000
7,500,000 Michigan State Higher Educational Facilities Authority Revenue
(Center Creative Project) VRDN 4.45% due 12/01/2024 (a) ... 7,500,000
4,000,000 Michigan State Hospital Finance Authority Revenue
(Chelsea Community Hospital) VRDN 4.40% due 05/15/2031 (a) 4,000,000
5,900,000 Michigan State Strategic Fund Limited Obligation Revenue (AVL
North America Inc. Project) VRDN 4.65% due 04/01/2011 (a) . 5,900,000
4,000,000 Michigan State Strategic Fund Limited Obligation Revenue (FATA
Automation Project) VRDN 4.55% due
10/01/2024 (a) ............................................ 4,000,000
4,230,000 Michigan State Strategic Fund Limited Obligation Revenue
(Weller Truck Parts Project) VRDN 4.55% due
10/01/2029 (a) ............................................ 4,230,000
7,500,000 Michigan State Strategic Fund Limited Obligation
Revenue (Flo Plastics Inc. Project) VRDN 4.55% due
08/01/2025 (a) ............................................ 7,500,000
5,500,000 Oakland County, Michigan Economic Development Corp Limited
Obligation Revenue (Su Dan Co. Project) VRDN 4.55% due
07/01/2024 (a) ............................................ 5,500,000
----------------------------------------------------------------------------------------------------------------------
MISSISSIPPI -- Mississippi State Business Finance Corp. Solid Waste
2.4% Disposal Revenue (Mississippi Power Co.) DDN:
9,400,000 4.80% due 12/01/2027 (a) ..................................... 9,400,000
13,420,000 4.70% due 05/01/2028 (a) ..................................... 13,420,000
Mississippi State Hospital Equipment & Facilities Authority
Revenue (North Mississippi Health Services--Series 1) CP:
32,535,000 4.25% due 11/10/2000 ......................................... 32,535,000
12,450,000 4.30% due 11/10/2000 ......................................... 12,450,000
----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
46
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
VALUE
FACE AMOUNT ISSUE (NOTE 1a)
======================================================================================================================
<S> <C> <C>
MISSOURI -- $ 1,875,000 Missouri State Development Finance Board IDR (Filtration
1.5% Group Inc.) VRDN 4.65% due 03/01/2012 (a) ................. $ 1,875,000
14,000,000 Missouri State Health & Higher Educational Facilities Authority
Revenue (Pooled Hospital Loan Program--
Series A) VRDN 4.45% due 08/01/2029 (a) ................... 14,000,000
24,100,000 Missouri State Health & Higher Educational Facilities Authority
Revenue (Washington University--Series A) DDN 4.65% due
09/01/2030 (a) ............................................ 24,100,000
1,805,000 Sikeston, Missouri IDA Revenue (Heritage American Homes LP/
North Ridge Homes Inc. Project) VRDN 4.55% due 07/01/2009
(a) ....................................................... 1,805,000
----------------------------------------------------------------------------------------------------------------------
NEVADA -- 11,290,000 Eagle Tax-Exempt Trust--Clark County, Nevada School District
0.8% (Series 962804) VRDN 4.43% due
06/15/2015 (a) ............................................ 11,290,000
12,600,000 Washoe County, Nevada Water Facilities Revenue
(Sierra Pacific Power Co. Project) DDN 4.75% due 12/01/2020
(a) ....................................................... 12,600,000
----------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE -- 1,800,000 New Hampshire State Business Finance Authority Revenue (Hydra
0.5% LLC Inc.) VRDN 4.60% due 11/01/2006 (a) ................... 1,800,000
4,350,000 New Hampshire State Business Finance Authority Industrial
Facilities Revenue (Nim-Cor Inc.) VRDN 4.60% due 11/01/2009
(a) ....................................................... 4,350,000
1,030,000 New Hampshire State Business Finance Authority Revenue (Freed's
Bakery Inc. Project) VRDN 4.55% due
05/02/2011 (a)............................................. 1,030,000
5,605,000 New Hampshire State Business Finance Authority Revenue
(Montgomery Wire Corp.) VRDN 4.60% due
02/01/2014 (a) ............................................ 5,605,000
----------------------------------------------------------------------------------------------------------------------
NEW JERSEY -- 12,040,000
0.4% Jersey City, New Jersey Refunding Notes GO 5.00% due 01/12/2001 12,054,170
----------------------------------------------------------------------------------------------------------------------
NEW YORK -- 11,000,000 Attica, New York Central School District BAN 5.00% due
3.9% 04/18/2001 ................................................ 11,024,201
8,000,000 Avoca, New York Central School District BAN 4.50% due
12/14/2000 ................................................ 8,003,609
</TABLE>
See Notes to Financial Statements.
47
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
VALUE
FACE AMOUNT ISSUE (NOTE 1a)
======================================================================================================================
<S> <C> <C>
NEW YORK $ 7,500,000 Chateaugay, New York Central School District BAN 4.75%
(CONTINUED) due 06/19/2001 ............................................ $ 7,516,004
7,200,000 Gananda Central School District BAN 5.00% due
01/19/2001 ................................................ 7,207,429
8,600,000 Gananda Central School District BAN 5.00% due
06/15/2001 ................................................ 8,620,986
5,950,000 Gowanda, New York Central School District BAN 4.75%
due 06/29/2001 ............................................ 5,961,366
8,630,000 Honeoye, New York Central School District BAN 4.50%
due 11/01/2000 ............................................ 8,630,000
6,600,000 Madison, New York Central School District BAN 4.88%
due 10/30/2001 ............................................ 6,626,649
9,200,000 Olean, New York City School District BAN 4.63% due 03/08/2001 9,207,811
9,000,000 Saint Johnsville, New York Central School District BAN 5.00%
due 06/27/2001 ............................................ 9,024,169
8,500,000 Sodus, New York Central School District BAN 4.25% due
11/21/2000 ................................................ 8,501,113
9,400,000 Sullivan County, New York (Series A) BAN 4.75% due 03/30/2001 9,411,742
10,000,000 William Floyd United Free School District TAN 4.75% due
06/29/2001 ................................................ 10,022,250
----------------------------------------------------------------------------------------------------------------------
OHIO -- 6,700,000 Akron, Ohio Metropolitan Housing Authority Facilities Revenue
9.8% (Administration Building Project) VRDN 4.45% due 04/01/2018
(a) ....................................................... 6,700,000
4,000,000 Buckeye, Ohio Local School District (Medina County) BAN 5.13%
due 11/16/2000 ............................................ 4,000,676
6,000,000 Butler County, Ohio EDR (Greater Miami Valley YMCA Project)
VRDN 4.45% due 09/01/2020 (a) ............................. 6,000,000
6,590,000 Canfield, Ohio Local School District BAN 4.75%
09/27/2001 ................................................ 6,609,955
6,480,000 Cincinnati, Ohio City School District BAN 5.00% due 04/27/2001 6,495,020
13,000,000 Cincinnati, Ohio City School District BAN 5.12% due 06/28/2001 13,034,134
</TABLE>
See Notes to Financial Statements.
48
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
VALUE
FACE AMOUNT ISSUE (NOTE 1a)
======================================================================================================================
<S> <C> <C>
OHIO $19,800,000 Cincinnati, Ohio City School District BAN 4.78% due
(CONTINUED) 09/13/2001 ................................................ $19,862,396
5,100,000 Clinton County, Ohio Hospital Revenue (Hospital Capital Inc.)
VRDN 4.45% due 07/01/2029 (a) ............................. 5,100,000
5,000,000 Crawford County, Ohio BAN 4.86% due 07/25/2001 ............... 5,009,050
4,000,000 Cuyahoga County, Ohio IDR (Motch Corp. Project) VRDN 4.55% due
02/01/2003 (a) ............................................ 4,000,000
3,500,000 Eagle Tax-Exempt Trust--Ohio Water Development Authority (Ohio
Edison) VRDN 4.43% due 07/01/2015 (a) ..................... 3,500,000
4,800,000 Eagle Tax-Exempt Trust--Ohio Edison (Series 953509)
VRDN 4.43% due 07/01/2015 (a) ............................. 4,800,000
15,000,000 Eagle Tax-Exempt Trust--Cleveland Water (Series 983501) VRDN
4.43% due 01/01/2025 (a) .................................. 15,000,000
22,065,000 Eagle Tax-Exempt Trust--Ohio State Turnpike Revenue (Series
983502) VRDN 4.43% due 02/15/2020 (a) ..................... 22,065,000
5,035,000 Franklin County, Ohio M/F Revenue (Community Housing Network)
VRDN 4.45% due 03/01/2027 (a) ............................. 5,035,000
8,750,000 Hamilton County, Ohio Hospital Facilities Revenue (Children's
Hospital Medical Center) VRDN 4.42%
due 05/15/2017 (a) ........................................ 8,750,000
8,125,000 Heath County, Ohio City School District BAN 4.99% due
11/21/2000 ................................................ 8,127,976
4,705,000 Indian Hill, Ohio EDR (Cincinnati Country Day School) VRDN
4.35% due 05/01/2019 (a) .................................. 4,705,000
6,650,000 Licking County, Ohio IDR (Renosol Corp. Project) VRDN 4.55% due
06/01/2030 (a)............................................. 6,650,000
4,205,000 Lucas-Beacon Place Housing Development Corp. M/F Revenue
(Beacon Place Apartments Project)
FXRDN 4.50% due 03/15/2001 ................................ 4,205,000
5,315,000 Mahoning County, Ohio Health Care Facilities Revenue (Shepherds
Woods Project) VRDN 4.45% due
09/01/2022 (a)............................................. 5,315,000
</TABLE>
See Notes to Financial Statements.
49
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
VALUE
FACE AMOUNT ISSUE (NOTE 1a)
======================================================================================================================
<S> <C> <C>
OHIO $ 7,100,000 Marion, Ohio BAN 4.30% due 11/16/2000......................... $ 7,100,557
(CONTINUED) 2,800,000 Mentor, Ohio IDR (Risch Investments/Roll-Kraft Project) VRDN
4.65% due 08/01/2017 (a) .................................. 2,800,000
13,095,000 Middleburg Heights, Ohio Hospital Revenue (Southwest General
Health) VRDN 4.40% due 08/15/2022 (a) ..................... 13,095,000
Montgomery County, Ohio Revenue (Miami Valley Hospital--Series
B) CP:
25,450,000 4.35% due 12/07/2000 ......................................... 25,450,000
23,400,000 4.20% due 12/08/2000 ......................................... 23,400,000
3,340,000 Ottawa County, Ohio IDR (Adrian Sand & Stone Inc.
Project) VRDN 4.55% due 10/01/2008 (a) .................... 3,340,000
9,000,000 Port Authority of Columbiana County, Ohio IDR (GEI
of Columbiana Inc. Project) VRDN 4.55% due
06/01/2022 (a) ............................................ 9,000,000
7,425,000 Richland County, Ohio Revenue (Mansfield Area YMCA Project)
VRDN 4.45% due 11/01/2019 (a) ............................. 7,425,000
4,490,000 Sandusky, Ohio BAN 4.63% due 09/12/2001 ...................... 4,498,331
7,450,000 Trumbull County, Ohio BAN 4.75% due 04/11/2001 ............... 7,459,431
6,085,000 Willoughby, Ohio IDR (Kennedy Group Inc. Project)
VRDN 4.55% due 09/01/2018 (a) ............................. 6,085,000
1,900,000 Wood County, Ohio IDR (GHT Property Management
LLC Project) VRDN 4.55% due 08/01/2019 (a) ................ 1,900,000
----------------------------------------------------------------------------------------------------------------------
OKLAHOMA -- Oklahoma State Development Finance Authority Revenue (Oklahoma
1.8% Hospital Association--Series A) VRDN:
18,220,000 4.45% due 06/01/2029 (a) ..................................... 18,220,000
10,000,000 4.45% due 01/01/2030 (a) ..................................... 10,000,000
11,673,000 Oklahoma State Housing Finance Agency Single-Family Revenue
(Series B) BAN 4.75% due 12/28/2000 ....................... 11,675,957
12,000,000 Rural Enterprises of Oklahoma Inc. Revenue (Governmental
Financing Project--Series A) VRDN 4.45% due 10/01/2030 (a). 12,000,000
----------------------------------------------------------------------------------------------------------------------
OREGON -- 3,592,400 Oregon State EDR (Sheffer Corp. Project--Series 185)
0.1% VRDN 4.70% due 12/01/2013 (a) ............................. 3,592,400
----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
50
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
VALUE
FACE AMOUNT ISSUE (NOTE 1a)
======================================================================================================================
<S> <C> <C>
PENNSYLVANIA -- $32,360,000 Dauphin County, Pennsylvania General Authority Revenue (School
2.3% District Pooled Financing) VRDN 4.37% due 09/01/2032 (a) .. $32,360,000
Montgomery County, Pennsylvania Higher Education & Health
Authority Revenue (Higher Education & Health Loan) VRDN:
3,270,000 4.45% due 06/01/2021 (a) ..................................... 3,270,000
5,375,000 4.45% due 08/01/2021 (a) ..................................... 5,375,000
25,000,000 New Garden, Pennsylvania General Authority Municipal Revenue
(Municipal Pooled Financing Program) VRDN 4.37% due
11/01/2029 (a) ............................................ 25,000,000
----------------------------------------------------------------------------------------------------------------------
RHODE ISLAND -- 4,400,000 Rhode Island State Health & Educational Building Corp. Revenue
0.6% (La Salle Academy) VRDN 4.50% due 03/01/2029 (a) .......... 4,400,000
2,615,000 Rhode Island State Housing & Mortgage Finance Corp. (Smith
Building Development Corp.) VRDN 4.45% due 12/01/2028 (a) . 2,615,000
2,400,000 Rhode Island State Industrial Facilities Corporation IDR
(Capital Development Corp. Project) VRDN 4.90% due
11/01/2005 (a) ............................................ 2,400,000
2,590,000 Rhode Island State Industrial Facilities Corporation IDR
(Beta Realty Corp.) VRDN 4.60% due 12/01/2019 (a) ......... 2,590,000
5,000,000 Warwick, Rhode Island BAN 4.63% due 12/22/2000 ............... 5,001,676
----------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA -- 24,200,000 Oconee County, South Carolina PCR (Duke Energy
1.3% Corp-- Series A) DDN 4.70% due 02/01/2017 (a) ............. 24,200,000
2,500,000 South Carolina EDA Revenue (Parkway Products Inc.
Project) VRDN 4.55% due 11/01/2007 (a) .................... 2,500,000
3,500,000 South Carolina EDA Revenue (Defiance Metal Products Project)
VRDN 4.55% due 02/01/2012 (a) ............................. 3,500,000
6,780,000 South Carolina EDA IDR (Core Materials Corp. Project) VRDN
4.55% due 04/01/2013 (a) .................................. 6,780,000
----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
51
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
VALUE
FACE AMOUNT ISSUE (NOTE 1a)
======================================================================================================================
<S> <C> <C>
TENNESSEE -- $19,775,000 Johnson City, Tennessee Municipal Securities Trust
6.6% (SGA 45) DDN 4.70% 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 4.45%
due 05/01/2029 (a) ........................................ 35,000,000
40,000,000 Memphis, Tennessee Health, Educational & Housing
Facilities Board Revenue (Not-For-Profit Multi-Family
Project) VRDN 4.48% due 07/01/2032 (a) .................... 40,000,000
9,500,000 Memphis & Shelby County, Tennessee Industrial Board
PCR (Birmingham Steel Corp. Project) VRDN 4.50%
due 10/01/2026 (a) ........................................ 9,500,000
4,120,000 Nashville & Davidson County, Tennessee IDB Revenue (Gibson
Guitar Project) VRDN 4.60% due
03/01/2011 (a) ............................................ 4,120,000
2,480,000 Nashville & Davidson County, Tennessee IDB Revenue (Hickory M/F
Housing Revenue) VRDN 4.45% due 06/01/2015 (a) ............ 2,480,000
10,400,000 Sevier County, Tennessee Public Building Authority (Local
Government Public Improvement--Series B-1) DDN
4.65% due 06/01/2020 (a) .................................. 10,400,000
Sevier County, Tennessee Public Building Authority (Local
Government Public Improvement) DDN:
13,000,000 (Series E-1) 4.40% due 02/12/2001 (a) ........................ 13,000,000
10,000,000 (Series E-2) 4.40% due 02/12/2001 (a) ........................ 10,000,000
4,000,000 (Series E-4) 4.40% due 02/12/2001 (a) ........................ 4,000,000
3,500,000 (Series E-5) 4.40% due 02/12/2001 (a) ........................ 3,500,000
1,200,000 (Series E-6) 4.40% due 02/12/2001 (a) ........................ 1,200,000
Shelby County, Tennessee CP:
8,000,000 (Series 99-A) 4.25% due 11/10/2000 ........................... 8,000,000
13,500,000 (Series 98-A) 4.35% due 12/01/2000 ........................... 13,500,000
10,500,000 (Series 97-B )4.25% due 12/06/2000 ........................... 10,500,000
----------------------------------------------------------------------------------------------------------------------
TEXAS -- 13,884,000 ABN-AMRO Muni Tops--Texas A&M University Revenue (Series 1999-5)
14.9% FXRDN 4.40% due 11/15/2000 ................................ 13,884,000
15,750,000 ABN-AMRO Muni Tops--Houston, Texas Airport System (Series
1998-15) VRDN 4.48% due 07/05/2006 (a) .................... 15,750,000
</TABLE>
See Notes to Financial Statements.
52
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
VALUE
FACE AMOUNT ISSUE (NOTE 1a)
======================================================================================================================
<S> <C> <C>
TEXAS $20,000,000 ABN-AMRO Muni Tops--Dallas, Texas Waterworks & Sewer Systems
(CONTINUED) Revenue (Series 1998-19) VRDN 4.44% due 07/04/2007 (a) .... $20,000,000
9,000,000 ABN-AMRO Muni Tops--San Antonio, Texas Electric &
Gas Revenue (Series 1998-22) VRDN 4.44% due 01/02/2007 (a) 9,000,000
30,000,000 Austin, Texas Utility Systems Revenue (Series A) CP 4.35% due
02/09/2001 ................................................ 30,000,000
Dallas, Texas Area Rapid Transit Sales Tax Revenue CP:
10,000,000 4.30% due 11/06/2000 ......................................... 10,000,000
25,500,000 4.25% due 11/10/2000 ......................................... 25,500,000
15,000,000 4.30% due 12/12/2000 ......................................... 15,000,000
13,350,000 Dickinson, Texas Independent School District Municipal
Securities Trust Receipts (SGA 94) DDN 4.70% due 02/15/2028
(a) ....................................................... 13,350,000
4,200,000 Fort Bend County, Texas IDC Revenue (Aaton Rents Inc. Project)
VRDN 4.60% due 01/01/2026 (a) ............................. 4,200,000
19,000,000 Gulf Coast IDA, Environmental Facilities Revenue
(Citgo Petroleum Corp Project) DDN 4.80% due 04/01/2029 (a) 19,000,000
Gulf Coast IDA, Solid Waste Disposal Revenue (Citgo Petroleum
Corp. Project) DDN:
8,450,000 4.80% due 05/01/2025 (a) ..................................... 8,450,000
9,400,000 4.80% due 04/01/2026 (a) ..................................... 9,400,000
25,000,000 4.80% due 04/01/2028 (a) ..................................... 25,000,000
14,700,000 Gulf Coast Waste Disposal Authority Revenue (Amoco Oil Co.
Project) DDN 4.75% due 08/01/2023 (a) ..................... 14,700,000
20,100,000 Harris County, Texas IDC Solid Waste Disposal Revenue (Deer
Park Project) DDN 4.85% due 03/01/2023 (a) ................ 20,100,000
4,000,000 Mesquite, Texas IDR (Morrison Products) VRDN 4.55%
due 01/10/2010 (a) ........................................ 4,000,000
1,175,000 Montgomery County, Texas IDC Revenue (Sawyer Research Products
Inc.) VRDN 4.55% due 02/04/2015 (a) ....................... 1,175,000
</TABLE>
See Notes to Financial Statements.
53
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
VALUE
FACE AMOUNT ISSUE (NOTE 1a)
======================================================================================================================
<S> <C> <C>
TEXAS North Central Texas Health Facilities Development Corp Revenue
(CONTINUED) (Methodist Hospital of Dallas) CP:
$23,200,000 4.30% due 11/09/2000 ......................................... $23,200,000
25,000,000 4.30% due 11/14/2000 ......................................... 25,000,000
22,700,000 Plano, Texas Health Facilities Development Corporation Revenue
(Children's Presbyterian Health Care Center) CP 4.35% due
12/11/2000 ................................................ 22,700,000
San Antonio, Texas Water System CP:
18,000,000 4.30% due 11/10/2000 ......................................... 18,000,000
30,000,000 4.30% due 12/08/2000 ......................................... 30,000,000
Texas Municipal Power Agency Revenue CP:
10,000,000 4.30% due 11/08/2000 ......................................... 10,000,000
19,200,000 4.25% due 12/07/2000 ......................................... 19,200,000
11,435,000 Texas State Municipal Securities Trust Receipts (SGA 92) DDN
4.70% due 08/01/2029 (a) .................................. 11,435,000
----------------------------------------------------------------------------------------------------------------------
UTAH -- Intermountain Power Agency Power Supply Revenue CP:
2.5% 11,000,000 (Series B-3) 4.30% due 11/01/2000 ............................ 11,000,000
14,000,000 (Series B-4) 4.30% due 12/07/2000 ............................ 14,000,000
24,600,000 (Series E) 4.30% due 12/11/2000 .............................. 24,600,000
20,000,000 (Series B-3) 4.35% due 03/07/2001 ............................ 20,000,000
----------------------------------------------------------------------------------------------------------------------
VIRGINIA -- 10,000,000 Dinwiddie County, Virginia IDA Exempt Facilities
0.4% (Chaparral East Project) DDN 4.80% due
09/01/2028 (a) ............................................ 10,000,000
----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
54
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
VALUE
FACE AMOUNT ISSUE (NOTE 1a)
======================================================================================================================
<S> <C> <C>
WASHINGTON -- $26,745,000 Eagle Tax-Exempt Trust--Port of Seattle, Washington
2.6% Passenger Facility Charge (Series 984705) VRDN 4.43%
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 4.43% due 07/01/2011 (a) .............. 14,680,000
18,950,000 Seattle, Washington Municipal Light & Power Revenue
(Series B) CP 4.35% due 02/26/2001 ........................ 18,950,000
12,180,000 Seattle, Washington Municipal Light & Power Revenue (Municipal
Securities Trust--SGA 85) DDN 4.70% due 10/01/2023 (a) .... 12,180,000
----------------------------------------------------------------------------------------------------------------------
WISCONSIN -- 4,900,000 Franklin County, Wisconsin Public School District TRAN 4.75%
4.3% due 08/30/2001 ............................................ 4,914,798
2,000,000 Iron County, Wisconsin BAN 4.20% due 12/01/2000............... 2,000,000
4,615,000 Sturtevant, Wisconsin IDR (Andis Co. Project--Series A) VRDN
4.60% due 12/01/2016 (a) .................................. 4,615,000
2,700,000 Wausau, Wisconsin School District TRAN 4.63% due 09/24/2001 .. 2,705,191
Wisconsin State G.O. CP:
9,500,000 (Series 1999-B) 4.30% due 11/10/2000 ......................... 9,500,000
35,000,000 (Series 1999-B) 4.35% due 12/07/2000 ......................... 35,000,000
10,000,000 (Series 2000-A) 4.35% due 12/07/2000 ......................... 10,000,000
11,000,000 (Series 1999-B) 4.25% due 12/08/2000 ......................... 11,000,000
25,000,000 (Series 2000-A) 4.40% due 02/14/2001 ......................... 25,000,000
15,000,000 (Series 2000-A) 4.35% due 02/21/2001 ......................... 15,000,000
----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
55
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS -- CONTINUED
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<CAPTION>
VALUE
FACE AMOUNT ISSUE (NOTE 1a)
======================================================================================================================
<S> <C> <C>
WYOMING -- Laramie County, Wyoming IDR (Cheyenne Light Fuel &
1.2% Power Co.) VRDN:
$ 3,500,000 (Series 97-B) 4.50% due 09/01/2021 (a) ....................... $ 3,500,000
5,000,000 (Series 97-A) 4.50% due 03/01/2027 (a) ....................... 5,000,000
24,200,000 Sweetwater County, Wyoming PCR (Idaho Power Co. Project--Series
B) DDN 4.70% due 07/15/2026 (a) ........................... 24,200,000
----------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $2,791,282,071)-- 99.2% 2,791,282,071
----------------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-- 0.8% 23,083,759
----------------------------------------------------------------------------------------------------------------------
NET ASSETS-- EQUIVALENT TO $1.00 PER SHARE ON
2,814,390,490 SHARES OF BENEFICIAL INTEREST
OUTSTANDING-- 100.0% $2,814,365,830
======================================================================================================================
</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, 2000. For variable
rate demand instruments, the next coupon date on which the interest is to be
adjusted is deemed the maturity date for valuation.
*Cost for federal income tax purposes.
<TABLE>
======================================================================================================================
<CAPTION>
PORTFOLIO ABBREVIATIONS FOR MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
<S> <C> <C> <C> <C> <C>
BAN Bond Anticipation Notes IDA Industrial Development Authority RAN Revenue Anticipation Note
CP Commercial Paper IDB Industrial Development Board TAN Tax Anticipation Notes
DDN Daily Demand Notes IDC Industrial Development TRAN Tax and Revenue Anticipation
EDA Economic Development Authority Corporation Notes
EDR Economic Development Revenue IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
FXRDN Fixed Rate Demand Notes M/F Multi-Family
GO General Obligation PCR Pollution Control Revenue
----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
56
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
<S> <C>
ASSETS:
Investments, at amortized cost and value (Note 1a)............................................... $2,791,282,071
Cash............................................................................................. 827,962
Interest receivable.............................................................................. 20,929,933
Receivable for investments sold.................................................................. 2,055,000
Prepaid expense.................................................................................. 16,127
--------------
Total assets............................................................................. 2,815,111,093
--------------
LIABILITIES:
Advisory fee payable (Note 2).................................................................... 475,318
Accrued expenses................................................................................. 223,713
Dividends payable................................................................................ 46,232
--------------
Total liabilities........................................................................ 745,263
--------------
NET ASSETS: (Equivalent to $1.00 per share, offering and redemption price, based on
2,814,390,490 shares of beneficial interest outstanding)...................................... $2,814,365,830
==============
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 2000 (UNAUDITED)
======================================================================================================================
INVESTMENT INCOME:
Interest and discount earned (Note 1d)........................................................... $52,086,618
-----------
EXPENSES:
Investment advisory fee (Note 2).............................................. $5,252,596
Registration fees............................................................. 195,044
Dividend and transfer agency fees............................................. 113,188
Accounting and custodian services............................................. 81,671
Legal and audit fees.......................................................... 11,911
Printing and shareholder reports.............................................. 9,277
Trustees' fees (Note 5)....................................................... 8,526
Insurance..................................................................... 4,869
Miscellaneous................................................................. 3,846
----------
Total expense......................................................... 5,680,928
Waived investment advisory fee (Note 2)....................................... (2,846,846) 2,834,082
---------- -----------
Net investment income.................................................................... 49,252,536
Net realized loss from investment transactions................................................... (4,734)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................. $49,247,802
===========
</TABLE>
See Notes to Financial Statements.
57
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND SIX MONTHS YEAR
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED) ENDED ENDED
OCTOBER 31, 2000 APRIL 30, 2000
======================================================================================================================
<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income..................................................... $ 49,252,536 $ 75,407,717
Net realized gain (loss) from investment transactions..................... (4,734) 117,232
-------------- --------------
Net increase in net assets resulting from operations...................... 49,247,802 75,524,949
Total declared as dividends to shareholders (Note 4)...................... (49,252,515) (75,427,016)
Capital share transactions (Note 3)....................................... 758,696,090 102,501,621
-------------- --------------
Net increase in net assets................................................ 758,691,377 102,599,554
NET ASSETS:
Beginning of period....................................................... 2,055,674,453 1,953,074,899
-------------- --------------
End of period, including undistributed net investment income of $21 and
$0 and accumulated capital losses of $133,253 and $128,519 respectively
(Note 1g and Note 4)................................................... $2,814,365,830 $2,055,674,453
============== ==============
----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH INSTITUTIONAL TAX-EXEMPT FUND SIX MONTHS
FINANCIAL HIGHLIGHTS (UNAUDITED) ENDED ENDED APRIL 30,
OCTOBER 31,YEAR -------------------------------------------------------
2000 2000 1999 1998 1997 1996
======================================================================================================================
Net Asset Value, Beginning of period.... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Net investment income................ .02 .03 .03 .04 .03 .04
Dividends from net investment income. (.02) (.03) (.03) (.04) (.03) (.04)
---- ---- ---- ---- ---- ----
Net Asset Value, End of period.......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
==== ==== ==== ==== ==== ====
Total Return............................ 2.08%(1) 3.41% 3.22% 3.59% 3.41% 3.68%
Ratios/Supplemental Data:
Net Assets, End of period (000)...... $2,814,366 $2,055,674 $1,953,075 $1,804,442 $1,003,655 $667,205
Ratio of expenses to average net assets
(before waiver).................... .47%(2) .48% .49% .49% .52% .54%
Ratio of expenses to average net assets
(after waiver)..................... .24%(2) .24% .24% .24% .27% .29%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (before waiver)............. 3.86%(2) 3.12% 2.92% 3.28% 3.12% 3.35%
Ratio of net investment income,
including realized and unrealized
gains and losses, to average net
assets (after waiver).............. 4.09%(2) 3.36% 3.17% 3.53% 3.37% 3.60%
</TABLE>
(1) Cumulative total return
(2) On an annualized basis
See Notes to Financial Statements.
58
<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 Trust's financial statements are
prepared in accordance with generally accepted accounting principles, which may
require the use of management accruals and estimates. The following is a summary
of significant accounting policies consistently followed by the Trust in
conformity with generally accepted accounting principles.
(a) The value of the Premier Institutional, Institutional, Rated
Institutional, Government and Treasury Fund portfolio securities is determined
on the basis of fair value as determined in good faith by the Board of Trustees
(the "Trustees") of the Trust. In determining fair value, securities for which
market quotations are readily available are valued at market value. Other
securities, if any, are valued at their fair value in the best judgment of Fund
Asset Management, L.P., ("FAM") under procedures established by, and under the
supervision of, the Trustees. Securities with remaining maturities of 60 days or
less are valued by use of the amortized cost method. Institutional Tax-Exempt
Fund's portfolio securities are carried at amortized cost which approximates
market value.
For the purpose of valuation, the maturity of a variable rate demand
instrument is deemed to be the next coupon date on which the interest rate is to
be adjusted. In the case of a floating rate instrument, the remaining maturity
is deemed to be the demand notice payment period.
(b) It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income to its share-holders. Therefore, no federal income tax
provision is required.
(c) Realized gains and losses on investments are computed on the basis of
identified cost of the security sold.
(d) Security transactions are accounted for on
the date the securities are purchased or sold (the trade date). Interest income
(after adjustment for amortization of premium or accretion of discount) is
recorded as earned.
(e) Prepaid registration fees are charged to income as the related shares are
sold.
(f) Repurchase agreements--The Premier Institutional Fund, the Institutional
Fund, the Rated Institutional Fund and the Government Fund invest in U.S.
Government & Agency securities pursuant to repurchase agreements with member
banks of the Federal Reserve System or primary dealers in U.S. Government
securities. Under such agreements, the bank or primary dealer agrees to
repurchase the security at a mutually agreed upon time and price. The Trust
takes possession of the underlying securities, marks to market such securities
daily and, if necessary, receives additional securities to ensure that the
contract is adequately collateralized.
(g) During the year ended April 30, 2000, Merrill Lynch Institutional
Tax-Exempt Fund reclassified amounts to reflect a decrease of $6,729 and
$115,302 in accumulated capital losses and undistributed net investment income,
respectively, as a result of permanent differences arising from different
treatments of market discount for book and tax purposes.
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
FAM, a subsidiary of Merrill Lynch & Co., Inc., provides investment advisory
and corporate administrative services to the Trust for a fee, subject to certain
limitations, at the following annual rates:
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MERRILL LYNCH FUNDS FOR INSTITUTIONS SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
================================================================================
Percentage of Average Daily Net Assets
-------------------------------------------
Premier
Institutional
Fund.................. .15%
Institutional Fund.... .40% up to and including $250,000,000
plus .375% over $250,000,000 up to and
including $500,000,000
plus .35% over $500,000,000 up to and
including $750,000,000
plus .325% over $750,000,000
Rated
Institutional
Fund.................. .20%
Government Fund and
Treasury Fund......... .35% up to and including $500,000,000
plus .335% over $500,000,000 up to and
including $750,000,000
plus .32% over $750,000,000 up to and
including $1,000,000,000
plus .30% over $1,000,000,000
Institutional
Tax-Exempt Fund....... .45% up to and including $1,500,000,000
plus .425% over $1,500,000,000 up
to and including $2,000,000,000
plus .40% over $2,000,000,000
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 six months ended October 31, 2000, FAM waived a portion of its fees
amounting to $5,421,769 for the Institutional Fund, $1,533,643 for the
Government Fund, $539,627 for the Treasury Fund and $2,846,846 for the
Institutional Tax-Exempt Fund.
All officers and certain trustees of the Trust are affiliated with Merrill
Lynch & Co., Inc.
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
shares of beneficial interest in the Premier Institutional Fund, Institutional
Fund, Rated Institutional Fund, Government Fund and Treasury Fund ($.01 par
value) and Institutional Tax-Exempt Fund ($.10 par value) of a single class. At
October 31, 2000, capital paid-in aggregated $15,723,093,169 for Premier
Institutional Fund, $8,743,898,756 for Institutional Fund, $242,563,973 for
Rated Institutional Fund, $2,586,561,422 for Government Fund, $754,319,151 for
Treasury Fund and $2,814,390,490 for Institutional Tax-Exempt Fund. Transactions
in shares at a constant net asset value of $1.00 per share were as follows:
Period Year
Ended Ended
October 31, April 30,
Premier Institutional Fund 2000 2000
-------------------------- -------------- ---------------
Shares sold................... 89,050,039,938 162,189,841,950
Shares issued to shareholders in
reinvestment of dividends...... 409,694,508 583,456,797
-------------- ---------------
Total........................ 89,459,734,446 162,773,298,747
Shares redeemed................... 88,271,314,514 158,868,494,343
-------------- ---------------
Net increase................. 1,188,419,932 3,904,804,404
============== ===============
Period Year
Ended Ended
October 31, April 30,
Institutional Fund 2000 2000
------------------ -------------- ---------------
Shares sold...................... 16,597,351,939 43,234,479,150
Shares issued to shareholders in
reinvestment of dividends..... 247,098,300 399,231,203
-------------- ---------------
Total....................... 16,844,450,239 43,633,710,353
Shares redeemed.................. 16,187,093,451 43,608,913,403
-------------- ---------------
Net increase................ 657,356,788 24,796,950
============== ===============
Period Year
Ended Ended
October 31, April 30,
Rated Institutional Fund 2000 2000
------------------------ -------------- ---------------
Shares sold...................... 570,262,905 2,703,108,746
Shares issued to shareholders
in reinvestment of dividends. 8,570,694 18,133,352
-------------- ---------------
Total....................... 578,833,599 2,721,242,098
Shares redeemed.................. 624,036,917 2,871,143,082
-------------- ---------------
Net decrease............... (45,203,31) (149,900,98)
============== ===============
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MERRILL LYNCH FUNDS FOR INSTITUTIONS SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
================================================================================
Period Year
Ended Ended
October 31, April 30,
Government Fund 2000 2000
--------------- -------------- ---------------
Shares sold...................... 8,245,278,688 17,291,527,785
Shares issued to shareholders in
reinvestment of dividends..... 72,339,992 125,465,660
-------------- ---------------
Total...................... 8,317,618,680 17,416,993,445
Shares redeemed.................. 8,335,642,601 17,449,201,846
-------------- ---------------
Net decrease............... (18,023,921) (32,208,401)
============== ===============
Period Year
Ended Ended
October 31, April 30,
Treasury Fund 2000 2000
------------- -------------- ---------------
Shares sold...................... 1,082,497,368 2,721,983,100
Shares issued to shareholders in
reinvestment of dividends..... 20,732,707 32,705,642
-------------- ---------------
Total...................... 1,103,230,075 2,754,688,742
Shares redeemed.................. 1,027,762,533 2,756,221,837
-------------- ---------------
Net increase (decrease).... 75,467,542 (1,533,095)
============== ===============
Period Year
Ended Ended
Institutional October 31, April 30,
Tax-Exempt Fund 2000 2000
--------------- -------------- ---------------
Shares sold...................... 4,554,550,951 8,507,810,314
Shares issued to shareholders in
reinvestment of dividends..... 47,865,553 71,052,924
-------------- ---------------
Total...................... 4,602,416,504 8,578,863,238
Shares redeemed.................. 3,843,720,414 8,476,361,617
-------------- ---------------
Net increase............... 758,696,090 102,501,621
============== ===============
4. DISTRIBUTIONS
The Funds declare dividends daily, pay dividends monthly and automatically
reinvest such dividends in additional Fund shares at net asset value, unless
shareholders request payment in cash. Dividends for the Premier Institutional,
Institutional, Rated Institutional, Government and Treasury Funds are declared
from the total net investment income plus or minus realized gains or losses, if
any, on investments.
Dividends for the Institutional Tax-Exempt Fund are declared from net
investment income-excluding discounts earned other than original issue
discounts. Net realized capital gains, if any, are normally distributed
annually, after deducting prior years' loss carryovers. The Fund may distribute
capital gains more frequently than annually in order to maintain the Fund's net
asset value at $1.00 per share.
At April 30, 2000, the Institutional Tax-Exempt Fund had net capital loss
carryovers of $128,519 of which $124,729 expire in the year 2003 and $3,790
expire in 2007.
5. TRUSTEES' FEES
Each Trustee who is not affiliated with the Trust or its adviser is paid an
annual retainer fee of $40,000 plus an additional fee of $2,500 per meeting
attended. Trustees' fees are allocated among the six series of the Trust based
on the net assets under management.
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ADMINISTRATOR & DISTRIBUTOR
Merrill Lynch Funds Distributor, Inc.
One Financial Center -- 23rd Floor
Boston, Massachusetts 02111
INVESTMENT ADVISOR
Fund Asset Management, L.P.
P.O. Box 9011
Princeton, N.J. 08543-9011
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company
P.O. Box 8118
Boston, Massachusetts 02266-8118
LEGAL COUNSEL
Clifford Chance Rogers & Wells LLP
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 prospec-
tus. Past performance results shown in this
report should not be considered a represen-
tation 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 invest-
ment in the Funds in neither insured nor
guaranteed by the U.S. Government.
#WWSANRPT2000
[logo] MERRILL LYNCH
Investment Managers
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, 2000
