MERRILL LYNCH
RETIREMENT
RESERVES
MONEY FUND
Merrill Lynch
Retirement Series Trust
FUND LOGO
Annual Report
October 31, 1994
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance, which will fluctuate. The Fund
seeks to maintain a consistent $1.00 net asset value per share,
although this cannot be assured. An investment in the Fund is
neither insured nor guaranteed by the US Government.
Merrill Lynch
Retirement Reserves
Money Fund
Box 9011
Princeton, New Jersey
08543-9011
<PAGE>
TO OUR SHAREHOLDERS
For the year ended October 31, 1994, Merrill Lynch Retirement
Reserves Money Fund's net annualized yield was 3.48%.* For the six-
month period ended October 31, 1994, the Fund's net annualized yield
was 3.99%.* The Fund's 7-day yield as of October 31, 1994 was 4.66%
(including gains and losses) and 4.65% (excluding gains and losses.)
The Environment
As discussed in our last report to shareholders, the Federal Reserve
Board moved to counteract inflationary pressures by tightening
monetary policy. This trend continued during the May--October
period. Despite the series of preemptive strikes against inflation
by the central bank, concerns of increasing inflationary pressures
continued to prompt volatility in the US capital markets during the
period. In addition, the weakness of the US dollar in foreign
exchange markets prolonged stock and bond market declines.
Ongoing strength in the manufacturing sector and better-than-
expected economic results continue to fuel speculation that the
Federal Reserve Board will continue to raise short-term interest
rates in the months ahead. However, although consumer spending is
increasing, it is doing so at a lower rate than has been the case in
recent economic recoveries. In the weeks ahead, investors will
continue to assess economic data and inflationary trends in order to
gauge whether further increases in short-term interest rates are
imminent. Continued indications of moderate and sustainable levels
of economic growth would be positive for the US capital markets. At
the same time, greater US dollar stability in foreign exchange
markets would help to dampen expectations of significantly higher
short-term interest rates.
Portfolio Matters
During the six months ended October 31, 1994, Merrill Lynch
Retirement Reserves Money Fund maintained an average portfolio
maturity ranging from a low of 41 days to a high of 67 days. This
investment strategy reflected our strong belief that the Federal
Reserve Board would continue to tighten monetary policy to stem the
tide of rising inflation.
<PAGE>
As the six-month period opened, and in response to continued
evidence that the US economy was gaining momentum as highlighted by
the growth in non-farm payrolls, we maintained the Fund's average
portfolio maturity in the 40-day area. Our conservative strategy
reflected our belief that the Federal Reserve Board would seek to
push short-term interest rates higher at the mid-May Federal Open
Market Committee (FOMC) meeting. Subsequent to the 50 basis point
(0.50%) tightening on May 17, 1994, the Fund established positions
in 3-month--6-month money market securities which pushed the Fund's
average portfolio maturity into the 60-day area. Our actions
reflected our view that the central bank would hold monetary policy
steady, thereby allowing us to take advantage of the steepness in
the front end of the yield curve.
By mid-year, the alarming deterioration of the US dollar in foreign
exchange markets and the implied inflationary ramifications caused
investor nervousness to heighten and pushed interest rates higher.
The market's overall bearish tone was reinforced by Chairman
Greenspan's Humphrey-Hawkins testimony, which suggested that
capacity restraints threatened future price stability. With
attention squarely focused on the August 16, 1994 FOMC meeting,
investors remained determined to fully price in the anticipated
interest rate move by the Federal Reserve Board. Following the
central bank's tightening of the Federal Funds rate to 4.75%, we
again sought to take advantage of the higher interest rate
environment by pushing the average portfolio maturity back into the
60-day area.
Our investment strategy shifted to a more defensive posture by mid-
September and continued throughout October. Specifically, new
purchases were limited to a 30-day maturity with emphasis placed on
overnight repurchase agreements in an effort to shorten the Fund's
average maturity and build cash positions. We were preparing for
another round of Federal Reserve Board tightening which we felt
would come at the FOMC mid-November meeting, which proved to be the
case.
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
Going forward, we believe that the Federal Reserve Board will have
adequate reason to implement further tightening measures as it
continues to curb inflationary pressures.
The Fund's portfolio composition at the end of the October period
and as of our last report is detailed below:
<PAGE>
10/31/94 4/30/94
Bank Notes 5.6% 5.5%
Certificates of Deposit--European 1.1 1.3
Certificates of Deposit--Yankee 1.3 3.2
Certificates of Deposit--Discount -- --
Commercial Paper--Discount 35.5 42.6
Corporate Notes 0.6 0.4
Master Notes 3.0 7.7
Repurchase Agreements 1.3 --
US Government, Agency &
Instrumentality Obligations--
Discount Notes 14.7 8.5
US Government, Agency &
Instrumentality Obligations--
Non-Discount Notes 36.9 30.8
------ ------
100.0% 100.0%
====== ======
In Conclusion
We appreciate your continued interest in Merrill Lynch Retirement
Reserves Money Fund, and we look forward to assisting you with your
financial needs and objectives in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Christopher G. Ayoub)
Christopher G. Ayoub
Vice President and Portfolio Manager
December 5, 1994
<PAGE>
SCHEDULE OF INVESTMENTS (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Bank Notes--5.7%
NationsBank, NC $ 23,000 5.40 % 5/19/95 $ 22,943
50,000 5.65 7/21/95 49,876
47,000 5.50 8/04/95 46,813
NationsBank, 25,000 3.625 11/30/94 24,968
Texas
PNC Bank, N.A. 25,000 3.65 12/15/94 24,941
110,000 5.28 2/14/95 109,889
139,600 5.15 2/22/95 139,390
Total Bank Notes (Cost--$419,435) 418,820
Certificates of Deposit--European--1.1%
Bayerische Landes- 50,000 5.44 1/24/95 49,939
bank Girozentrale,
London
NationsBank, NC 30,000 5.47 5/19/95 29,915
Total Certificates of Deposit--European
(Cost--$80,006) 79,854
Certificates of Deposit--Yankee--1.3%
Banque Nationale de 45,000 5.20 3/06/95 44,926
Paris, NY
Sumitomo Bank, 50,000 5.21 12/29/94 50,001
Ltd., NY
Total Certificates of Deposit--Yankee
(Cost--$94,999) 94,927
Commercial Paper*--Discount--35.6%
<PAGE>
ABN-AMRO 50,000 5.42 1/17/95 49,404
North American
Finance Inc.
ANZ (Delaware), Inc. 14,500 5.05 1/20/95 14,321
APRECO, Inc. 50,000 5.46 1/09/95 49,465
AT&T, Inc. 42,000 5.47 1/03/95 41,589
38,250 5.47 1/04/95 37,870
Abbey National 50,000 5.44 1/24/95 49,351
N.A. Corp. 50,000 5.07 2/28/95 49,075
45,000 5.08 3/01/95 44,153
60,000 5.08 3/07/95 58,815
Allomon Funding 9,218 5.08 12/13/94 9,162
Corp.
American Express 100,000 4.83 11/01/94 99,987
Credit Corp. 11,000 4.78 11/02/94 10,997
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Commercial Paper*--Discount (continued)
Arco Coal $ 14,000 5.44 % 1/19/95 $ 13,829
Australia Inc.
BTR Dunlop 15,000 5.50 1/23/95 14,808
Finance Inc.
Bankers Trust Corp. 50,000 5.41 1/27/95 49,328
100,000 5.58 4/12/95 97,442
50,000 5.58 4/13/95 48,713
Beta Finance Inc. 42,900 5.20 3/13/95 42,012
35,000 5.22 3/13/95 34,276
Bowater PLC 12,000 5.47 1/03/95 11,883
CSW Credit Inc. 21,460 4.85 11/02/94 21,454
Central and South 25,000 5.13 11/07/94 24,975
West Corp. 25,000 5.45 1/12/95 24,721
19,600 5.50 1/23/95 19,348
<PAGE>
Citicorp 29,000 4.85 11/01/94 28,996
Coca-Cola Co. 10,000 5.03 2/13/95 9,838
Deer Park 36,271 4.90 11/14/94 36,202
Refining L.P.
ESC Securitization 20,000 5.43 1/09/95 19,786
Inc.
Ford Motor 60,000 5.10 11/07/94 59,941
Credit Company 25,000 4.80 11/21/94 24,928
60,000 5.42 1/11/95 59,340
50,000 5.42 1/12/95 49,442
General Electric 75,000 5.46 1/10/95 74,186
Capital Corp. 50,000 5.43 1/11/95 49,450
75,000 5.50 1/13/95 74,152
62,000 5.03 1/23/95 61,204
50,000 5.05 1/24/95 49,351
60,000 5.48 1/24/95 59,221
Goldman Sachs 50,000 4.62 11/01/94 49,993
Group, L.P. 15,000 5.15 2/10/95 14,764
100,000 5.08 3/01/95 98,118
Grand Metropolitan 5,000 4.65 11/14/94 4,990
Investment Corp. 20,012 4.66 11/28/94 19,934
Hanson Finance 20,000 4.65 11/01/94 19,997
(UK) PLC 78,000 5.39 1/06/95 77,202
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Commercial Paper*--Discount (concluded)
International Lease $ 25,000 5.42 % 1/09/95 $ 24,733
Finance Corp. 25,000 5.33 1/20/95 24,691
10,000 5.07 2/21/95 9,826
Internationale 80,000 4.965 1/31/95 78,876
Nederlanden (U.S.)
Funding Corp.
<PAGE>
Kingdom of Sweden 50,000 5.55 2/23/95 49,114
MCA Funding Corp. 20,000 5.07 2/16/95 19,667
20,000 5.08 3/06/95 19,608
25,000 5.20 3/15/95 24,475
McKenna Triangle 15,000 5.05 1/20/95 14,814
National Corp. 25,000 5.05 1/27/95 24,664
10,000 5.07 2/27/95 9,816
25,000 5.08 2/27/95 24,541
New Center Asset 50,000 5.45 1/23/95 49,358
Trust
Nomura Holding 30,000 5.41 1/11/95 29,670
America, Inc.
Ontario Hydro 19,000 5.35 1/03/95 18,814
PNC Bank Corp. 20,000 5.08 3/02/95 19,620
Premium Funding 11,247 5.20 12/01/94 11,197
Inc., Series A 17,148 5.20 12/02/94 17,069
25,257 5.20 12/05/94 25,129
Societe Generale 75,000 5.40 1/23/95 74,037
North America, Inc.
Svenska Handels- 17,000 5.00 11/03/94 16,993
banken, Inc.
Transamerica 20,000 5.40 1/18/95 19,759
Finance Corp.
UBS Finance 50,000 4.82 11/01/94 49,993
(Delaware), Inc.
Wal-Mart Stores, 91,610 4.75 11/04/94 91,562
Inc. 33,000 4.75 11/07/94 32,970
Total Commercial Paper--Discount
(Cost--$2,640,292) 2,639,009
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Corporate Notes--0.6%
Bank One $ 20,000 4.775% 5/02/95 $ 19,874
Diversified Services
<PAGE>
Bear Stearns 25,000 3.875 11/08/94 25,000
Companies, Inc. (The)
Total Corporate Notes
(Cost--$44,990) 44,874
Master Notes--3.0%
Goldman Sachs 175,000 4.98 5/26/95 175,000
Group, L.P.
Smith Barney, Inc. 49,000 4.96 6/09/95 49,000
Total Master Notes
(Cost--$224,000) 224,000
US Government, Agency & Instrumentality Obligations*--
Discount Notes--14.7%
Federal Farm 20,000 5.19 3/01/95 19,975
Credit Banks 21,000 4.95 3/07/95 20,591
2,000 5.03 5/16/95 1,938
Federal Home 34,000 5.79 4/28/95 33,988
Loan Bank 117,000 4.625 8/09/95 115,713
25,000 5.33 2/18/97 25,070
Federal Home 84,000 4.635 8/09/95 83,084
Loan Mortgage
Corp.
Federal National 262,000 4.56 11/04/94 261,862
Mortgage 100,000 4.81 12/13/94 99,397
Association 50,000 4.82 12/14/94 49,691
12,000 5.35 1/30/95 11,838
87,000 5.38 2/01/95 85,782
65,000 5.50 4/18/95 63,300
US Treasury Bills 50,000 3.43 2/09/95 49,286
65,000 4.905 3/16/95 63,711
100,000 5.43 4/27/95 97,300
10,000 5.466 8/24/95 9,528
Total US Government, Agency &
Instrumentality Obligations--Discount Notes
(Cost--$1,094,782) 1,092,054
<PAGE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
US Government, Agency & Instrumentality Obligations*--
Non-Discount Notes--37.1%
Federal Farm $ 36,000 4.75 % 2/09/95 $ 36,000
Credit Banks++
Federal Home 23,000 4.635 4/27/95 22,979
Loan Bank++ 42,000 5.18 6/21/95 42,000
60,000 5.18 12/28/95 60,000
70,000 5.21 6/17/96 70,000
29,000 5.21 6/21/96 29,000
Federal Home 146,000 5.272 1/06/95 145,991
Loan Mortgage 54,000 5.11 9/01/95 53,992
Corp.++ 34,000 5.12 9/01/95 33,998
15,500 5.08 5/06/96 15,500
21,850 5.00 6/03/96 21,783
55,000 5.20 6/07/96 54,973
16,000 5.25 5/13/98 16,000
Federal National 77,000 5.19 6/01/95 76,996
Mortgage 125,000 4.81 8/23/95 125,000
Association++ 80,000 4.81 8/25/95 79,993
100,000 4.78 9/22/95 99,973
30,000 4.79 12/20/95 30,000
50,000 5.12 1/26/96 49,942
98,000 5.08 5/13/96 98,000
80,000 5.08 5/24/96 80,000
45,000 5.317 7/18/96 44,940
88,000 5.08 8/13/96 88,000
150,000 5.405 10/11/96 150,000
68,500 5.20 5/19/97 68,500
71,000 5.25 5/14/98 71,000
22,150 4.95 12/14/98 22,074
Student Loan 21,250 4.205 11/10/94 21,249
Marketing 50,000 5.21 12/08/94 50,000
Association++ 97,850 5.51 12/30/94 97,878
25,000 5.20 3/09/95 25,000
2,000 5.81 3/20/95 2,004
2,000 5.81 3/23/95 2,004
73,850 5.51 6/02/95 73,923
20,000 5.48 6/30/95 20,010
<PAGE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
US Government, Agency & Instrumentality Obligations*--
Non-Discount Notes (concluded)
Student Loan $ 70,000 5.56 % 8/07/95 $ 70,003
Marketing 8,000 5.56 3/20/96 7,999
Association++ 25,930 5.27 4/16/96 25,959
(concluded) 15,000 5.36 7/19/96 15,003
125,000 5.405 9/20/96 125,000
50,000 5.36 9/23/96 50,000
11,830 5.61 11/01/96 11,887
45,000 5.57 1/14/97 45,025
25,000 5.53 3/03/97 25,000
67,075 5.56 1/21/98 67,375
US Treasury 75,000 6.00 11/15/94 75,040
Notes 65,000 4.625 11/30/94 64,980
15,000 4.625 12/31/94 14,981
50,000 5.50 2/15/95 50,000
48,000 3.875 8/31/95 47,160
5,000 3.875 10/31/95 4,887
24,000 5.875 5/31/96 23,722
7,000 6.25 8/31/96 6,937
20,000 6.50 9/30/96 19,894
20,000 6.875 10/31/96 20,006
Total US Government, Agency & Instrumentality
Obligations--Non-Discount Notes
(Cost--$2,751,284) 2,749,560
Face
Amount Issue
Repurchase Agreements**--1.4%
$ 100,000 Fuji Securities, Inc., purchased
on 10/31/1994 to yield 4.80%
to 11/01/1994 100,000
Total Repurchase Agreements
(Cost--$100,000) 100,000
<PAGE>
Total Investments (Cost--$7,449,788)--100.5% 7,443,098
Liabilities in Excess of Other Assets--(0.5)% (39,414)
----------
Net Assets--100.0% $7,403,684
==========
[FN]
*Commercial Paper and certain US Government, Agency &
Instrumentality Obligations are traded on a discount basis; the
interest rates shown are the discount rates paid at the time of
purchase by the Fund. Other securities bear interest at the rates
shown, payable at fixed dates or upon maturity. Interest rates on
variable rate securities are adjusted periodically based upon
appropriate indexes. The interest rates shown are the rates in
effect at October 31, 1994.
**Repurchase Agreements are fully collateralized by US Government
Obligations.
++Floating Rate Notes.
See Notes to Financial Statements.
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of October 31, 1994
<CAPTION>
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$7,449,787,538*)(Note 1a) $7,443,098,360
Cash 691,681
Receivables:
Interest $ 33,065,789
Beneficial interest sold 21,966 33,087,755
--------------
Prepaid registration fees and other assets (Note 1d) 276,921
--------------
Total assets 7,477,154,717
--------------
Liabilities: Payables:
Beneficial interest redeemed 69,554,831
Investment adviser (Note 2) 2,457,589 72,012,420
--------------
Accrued expenses and other liabilities 1,458,315
--------------
Total liabilities 73,470,735
--------------
Net Assets: Net assets $7,403,683,982
==============
<PAGE>
Net Assets Shares of beneficial interest, $.10 par value, unlimited number
Consist of: of shares authorized $ 741,037,316
Paid-in capital in excess of par 6,669,335,844
Unrealized depreciation on investments--net (6,689,178)
--------------
Net assets--Equivalent to $1.00 per share based on 7,410,373,160
shares of beneficial interest outstanding $7,403,683,982
==============
<FN>
*Cost for Federal income tax purposes. As of October 31, 1994,
net unrealized depreciation for Federal income tax purposes
amounted to $6,689,178, of which $163 related to appreciated
securities and $6,689,341 related to depreciated securities.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended
October 31, 1994
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 296,526,323
Income
(Note 1c):
Expenses: Investment advisory fees (Note 2) $ 28,889,652
Transfer agent fees (Note 2) 13,013,444
Registration fees (Note 1d) 555,052
Printing and shareholder reports 394,577
Accounting services (Note 2) 329,129
Custodian fees 251,794
Professional fees 104,948
Trustees' fees and expenses 60,493
Other 120,804
--------------
Total expenses 43,719,893
--------------
Investment income--net 252,806,430
--------------
Realized & Unreal- Realized gain on investments--net 112,929
ized Gain (Loss) Change in unrealized appreciation/depreciation on
on Investments investments--net (7,988,665)
- --Net --------------
(Note 1c): Net Increase in Net Assets Resulting from Operations $ 244,930,694
==============
</TABLE>
<PAGE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 1994 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 252,806,430 $ 193,085,929
Realized gain on investments--net 112,929 1,945,804
Change in unrealized appreciation/depreciation on investments
--net (7,988,665) 381,890
--------------- ---------------
Net increase in net assets resulting from operations 244,930,694 195,413,623
--------------- ---------------
Dividends & Investment income--net (252,806,430) (193,085,929)
Distributions to Realized gain on investments--net (112,929) (1,945,804)
Shareholders --------------- ---------------
(Note 1e): Net decrease in net assets resulting from dividends and
distributions to shareholders (252,919,359) (195,031,733)
--------------- ---------------
Beneficial Net proceeds from sale of shares 22,552,419,060 21,925,175,618
Interest Net asset value of shares issued to shareholders in
Transactions reinvestment of dividends and distributions 252,920,548 195,031,928
(Notes 1e & 3): --------------- ---------------
22,805,339,608 22,120,207,546
Cost of shares redeemed (22,459,993,404) (21,528,902,531)
--------------- ---------------
Net increase in net assets derived from beneficial interest
transactions 345,346,204 591,305,015
--------------- ---------------
Net Assets: Total increase in net assets 337,357,539 591,686,905
--------------- ---------------
Beginning of year 7,066,326,443 6,474,639,538
--------------- ---------------
End of year $ 7,403,683,982 $ 7,066,326,443
=============== ===============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<PAGE>
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements.
For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Performance: ---------- ---------- ---------- ---------- ----------
Investment income--net .0345 .0279 .0370 .0609 .0775
Realized and unrealized gain
(loss) on investments--net n (.0011) .0004 .0012 .0025 --
---------- ---------- ---------- ---------- ----------
Total from investment
operations .0334 .0283 .0382 .0634 .0775
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.0345) (.0279) (.0370) (.0609) (.0775)
---------- ---------- ---------- ---------- ----------
Realized gain on invest-
ments--net --++ (.0003) (.0010) (.0025)* --
---------- ---------- ---------- ---------- ----------
Total dividends and dis-
tributions (.0345) (.0282) (.0380) (.0634) (.0775)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Investment Return 3.48% 2.86% 3.95% 6.54% 8.06%
========== ========== ========== ========== ==========
Ratios to Expenses .59% .62% .63% .64% .69%
Average ========== ========== ========== ========== ==========
Net Assets: Investment income and realized
gain (loss) on investments
--net 3.44% 2.82% 3.88% 6.30%* 7.75%*
========== ========== ========== ========== ==========
Supplemental Net assets, end of year (in
Data: thousands) $7,403,684 $7,066,326 $6,474,640 $6,485,985 $5,597,641
========== ========== ========== ========== ==========
<FN>
*Includes unrealized gain (loss).
++Amount is less than $.0001 per share.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Retirement Reserves Money Fund (the "Fund") is a
separate Fund offering a separate class of shares of Merrill Lynch
Retirement Series Trust (the "Trust"). The Trust is registered under
the Investment Company Act of 1940 as a diversified, open-end
management investment company which will comprise a series of
separate portfolios offering a separate class of shares to
participants in the retirement plans for which Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S") acts as passive custodian. At
the present time, the Fund is the only series offered. The following
is a summary of significant accounting policies consistently
followed by the Fund.
(a) Valuation of investments--Investments maturing more than sixty
days after the valuation date are valued at the most recent bid
price or yield equivalent as obtained from dealers that make markets
in such securities. When securities are valued with sixty days or
less to maturity, the difference between the valuation existing on
the sixty-first day before maturity and maturity value is amortized
on a straight-line basis to maturity. Investments maturing within
sixty days from their date of acquisition are valued at amortized
cost, which approximates market value.
For the purposes of valuations, the maturity of variable rate
certificates of deposit, variable rate commercial paper, short-term
corporate bond notes, variable rate Government agency notes and
variable rate corporate notes is deemed to be the next coupon date
on which the interest rate is to be adjusted. Assets for which
market quotations are not readily available are valued at fair value
as determined in good faith by or under the direction of the Board
of Trustees.
(b) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to
its shareholders. Therefore, no Federal income tax provision is
required.
(c) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income (including amortization of
premium and discount) is recognized on the accrual basis. Realized
gains and losses on security transactions are determined on the
identified cost basis.
(d) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
<PAGE>
(e) Dividends to shareholders--The Fund declares dividends daily and
reinvests daily such dividends in additional fund shares at net
asset value. Dividends are declared from the total of net investment
income and net realized gains or losses on investments.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management, L.P. ("MLAM"). Effective January 1,
1994, the investment advisory business of MLAM was reorganized from
a corporation to a limited partnership. Both prior to and after the
reorganization, ultimate control of MLAM was vested with Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of MLAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of ML & Co. The limited partners are ML & Co. and Merrill
Lynch Investment Management, Inc. ("MLIM"), which is also an
indirect wholly-owned subsidiary of ML & Co. The Fund has also
entered into a Distribution Agreement and a Distribution Plan with
Merrill Lynch Funds Distributor, Inc. ("MLFD" or "Distributor"), a
wholly-owned subsidiary of MLIM.
NOTES TO FINANCIAL STATEMENTS (concluded)
MLAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee based upon the average daily
value of the Fund's net assets at the following annual rates: 0.50%
of the Fund's average daily net assets not exceeding $1 billion;
0.45% of average daily net assets in excess of $1 billion but not
exceeding $2 billion; 0.40% of average daily net assets in excess of
$2 billion but not exceeding $3 billion; 0.375% of average daily net
assets in excess of $3 billion but not exceeding $4 billion; 0.35%
of average daily net assets in excess of $4 billion but not
exceeding $7 billion; and 0.325% of average daily net assets in
excess of $7 billion. The most restrictive annual expense limitation
requires that MLAM reimburse the Fund to the extent the Fund's
expenses (excluding interest, taxes, distribution fees, brokerage
fees and commissions, and extraordinary charges such as litigation
costs) exceed 2.5% of the Fund's first $30 million of average daily
net assets, 2.0% of the next $70 million of average daily net
assets, and 1.5% of the remaining average daily net assets. The
Manager's obligation to reimburse the Fund is limited to the amount
of the management fee. No fee payment will be made to MLAM during
the year which will cause such expenses to exceed the most
restrictive expense limitation at the time of such payment.
<PAGE>
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or trustees of the Trust are officers and/or
directors of MLAM, MLIM, FDS, PSI, MLFD, MLPF&S, and/or ML & Co.
3. Shares of Beneficial Interest:
The number of shares purchased and redeemed during the periods
corresponds to the amounts included in the Statements of Changes in
Net Assets, since shares are recorded at $1.00 per share.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
Merrill Lynch Retirement Reserves Money Fund
of Merrill Lynch Retirement Series Trust:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of Merrill Lynch
Retirement Reserves Money Fund of Merrill Lynch Retirement Series
Trust as of October 31, 1994, the related statements of operations
for the year then ended and changes in net assets for each of the
years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended.
These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at October
31, 1994 by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Retirement Reserves Money Fund of Merrill Lynch
Retirement Series Trust as of October 31, 1994, the results of its
operations, the changes in its net assets, and the financial
highlights for the respective stated periods in conformity with
generally accepted accounting principles.
<PAGE>
Deloitte & Touche LLP
Princeton, New Jersey
December 6, 1994
</AUDIT-REPORT>
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Joe Grills, Trustee
Walter Mintz, Trustee
Melvin R. Seiden, Trustee
Stephen B. Swensrud, Trustee
Harry Woolf, Trustee
Terry K. Glenn, Executive Vice President
Joseph T. Monagle, Jr., Senior Vice President
Christopher G. Ayoub, Vice President
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, New York 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 221-7210
IMPORTANT TAX INFORMATION (unaudited)
Merrill Lynch Retirement Reserves Money Fund distributed long-term
capital gains of $0.000010 per share to shareholders of record on
December 31, 1993.
Please retain this information for your records.
<PAGE>
