MERRILL LYNCH
RETIREMENT
RESERVES
MONEY FUND
Merrill Lynch
Retirement Series Trust
FUND LOGO
Annual Report
October 31, 1995
<PAGE>
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
DEAR SHAREHOLDER
For the year ended October 31, 1995, Merrill Lynch Retirement
Reserves Money Fund's net annualized yield was 5.57%.* For the six-
month period ended October 31, 1995, the Fund's net annualized yield
was 5.60%.* The Fund's 7-day yield as of October 31, 1995 was 5.41%.
<PAGE>
The Environment
After losing momentum through the second calendar quarter of 1995,
it now appears that the US economic expansion has resumed. Gross
domestic product growth for the three months ended September 30 was
reported to be 4.2%, higher than generally expected. September
durable goods orders increased a surprisingly strong 3%, and
existing home sales rose to a near-record level. At the same time,
there is evidence that inflationary pressures remain subdued.
Reflecting the trend of renewed economic growth--and continued good
news on the inflation front--the Federal Reserve Board signaled no
near-term shift in monetary policy following its September meeting.
Thus, official interest rates may not be reduced further in the
immediate future.
Another significant development has been the strengthening of the US
dollar relative to the yen and the Deutschemark. Improving interest
rate differentials favoring the US currency, combined with
coordinated central bank intervention and more positive investor
sentiment, have helped to bolster the dollar in foreign exchange
markets. Other factors that appear to be improving the US dollar's
outlook in the near term are a pick-up in capital flows to the
United States and the prospect of increased capital outflows from
Japan. However, it remains to be seen if the US dollar's
strengthening trend can continue without significant improvements in
the US budget and trade deficits.
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
In the weeks ahead, investor interest will continue to focus on US
economic activity. Clear signs of a moderate, noninflationary
expansion could further benefit the US stock and bond markets. In
addition, should the current Federal budget deficit reduction
efforts now underway in Washington prove successful, the
implications would likely be positive for the US financial markets.
Portfolio Matters
During the six months ended October 31, 1995, Merrill Lynch
Retirement Reserves Money Fund maintained an average portfolio
maturity ranging from a low of 65 days to a high of 89 days.
Throughout the six-month period, the Fund's average life was
extended to reflect our belief that interest rates would continue to
trend lower and the front end of the yield curve would flatten
further. It was our contention that a slowdown of the economy,
combined with a tame inflation picture, would prompt the Federal
Reserve Board to reverse its restrictive monetary policy.
<PAGE>
Our investment approach during the earlier part of the period
remained focused on earmarking a greater percentage of assets in the
one-year area. We believed that a barbelled approach would prove
rewarding as the yield curve continued to flatten towards the
prevailing 6% Federal Funds rate environment. The Fund's overnight
cash positions benefited from high broker/dealer financing rates,
with yields comparable to 90-day money market securities. By early
summer, we concentrated on reducing the Fund's overnight cash
position in favor of 90-day--180-day money market securities, given
our belief that the Federal Reserve Board would be compelled to
lower short-term interest rates at its July Federal Open Market
Committee meeting. We remained very active in trading our Government
agency discount note position, as opportunities were facilitated by
the narrow yield spread relationship between money market and
Federal agency securities.
Subsequent to the 25 basis point (0.25%) ease in the Federal Funds
rate to 5.75% in July, we became a net seller of two-year Treasury
notes, opting to move in on the curve without sacrificing yield.
However, the front-end of the yield curve continued to exhibit a
considerable amount of price volatility throughout the remainder of
the six-month period. This situation provided numerous trading
opportunities for Treasury and Government agency issues. At October
31, 1995, the Fund's average life stood at 83 days, a level we
expect to maintain during the near term.
Looking ahead, we believe that the Federal Reserve Board will
maintain its easing bias toward interest rates, although economic
activity and inflation data will be closely monitored.
The Fund's portfolio composition at the end of the October period
and as of our last report is detailed below:
10/31/95 4/30/95
Bank Notes 3.8% 2.0%
Certificates of Deposit--European 6.6 5.1
Certificates of Deposit--Yankee 6.7 6.0
Commercial Paper--Discount 29.3 31.9
Corporate Notes 6.1 1.5
Master Notes 3.3 3.3
Repurchase Agreements 1.3 1.9
US Government, Agency &
Instrumentality Obligations--
Discount Notes 6.8 16.4
US Government, Agency &
Instrumentality Obligations--
Non-Discount Notes 36.7 34.9
Liabilities in Excess of Other
Assets (0.6) (3.0)
------ ------
100.0% 100.0%
====== ======
<PAGE>
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 in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Christopher G. Ayoub)
Christopher G. Ayoub
Vice President and Portfolio Manager
November 28, 1995
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
<S> <C> <C> <C> <C>
Bank Notes--3.8%
Banc One, Columbus $125,000 5.71 % 9/18/96 $ 124,915
Banc One, 50,000 5.77++ 8/28/96 49,984
Milwaukee 32,000 5.84++ 8/28/96 31,990
42,000 5.84++ 9/05/96 41,986
Banc One, Texas 50,000 5.84 9/05/96 49,984
First Bank N.A., 25,000 5.825 2/05/96 25,000
Milwaukee
<PAGE>
Total Bank Notes (Cost--$323,859) 323,859
Certificates of Deposit--European--6.6%
Abbey National 50,000 5.76 2/01/96 49,997
Treasury Services PLC 10,000 7.22 2/05/96 10,030
25,000 6.62 4/01/96 25,066
50,000 6.54 4/08/96 50,123
Banco Bilbao 21,000 5.71 12/22/95 20,996
Vizcaya, S.A.
Bank of Scotland 25,000 6.76 4/04/96 25,082
Bayerische 75,000 5.81 1/31/96 75,002
Vereinsbank AG
Commerzbank AG 12,000 6.76 4/04/96 12,039
Dai-Ichi Kangyo 20,000 5.94 12/11/95 20,000
Bank, Ltd. 25,000 5.97 12/11/95 25,002
Deutsche Bank AG 75,000 5.79 1/12/96 74,996
85,000 5.77 4/25/96 85,002
Mitsubishi Bank, Ltd. 50,000 5.91 12/20/95 49,995
50,000 5.94 12/20/95 49,997
Total Certificates of Deposit--European
(Cost--$573,091) 573,327
Certificates of Deposit--Yankee--6.7%
Bayerische 10,000 5.78 2/05/96 9,999
Hypotheken-und- 25,000 5.78 4/12/96 25,000
Wechsel Bank 115,000 6.20 9/03/96 115,000
Bayerische 125,000 6.20 8/28/96 125,000
Landesbank 113,000 6.205 9/13/96 113,000
Girozentrale
Dai-Ichi Kangyo 55,000 5.94 12/18/95 54,998
Bank, Ltd., NY
Landesbank Hessen 40,000 5.79 1/29/96 39,996
Thuringen
Girozentrale
<PAGE>
Sumitomo Bank, 74,000 5.95 11/13/95 74,001
Ltd., NY 26,000 5.93 12/15/95 26,000
Total Certificates of Deposit--Yankee
(Cost--$583,004) 582,994
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
<S> <C> <C> <C> <C>
Commercial Paper--Discount--29.3%
ABN AMRO North $ 25,000 5.65 % 12/27/95 $ 24,773
American
Finance Inc.
Alpine Securitization 23,373 5.75 11/15/95 23,317
Corp. 25,000 5.75 11/16/95 24,936
26,627 5.75 12/07/95 26,469
American Express 50,000 5.75 11/03/95 49,976
Credit Corporation 20,000 5.69 12/18/95 19,847
58,000 5.62 4/11/96 56,522
35,000 5.62 4/12/96 34,102
Arco Coal Australia 15,783 5.70 1/23/96 15,571
Inc.
Bass Finance (C.I.) 36,600 5.68 12/04/95 36,401
Ltd.
Bear Stearns 40,000 5.72 12/22/95 39,668
Companies Inc. 25,000 5.66 2/02/96 24,628
Beta Finance Inc. 25,000 5.61 4/23/96 24,316
British Gas Capital 25,000 5.71 1/29/96 24,641
Inc.
CIT Group Holdings, 110,000 5.75 11/21/95 109,631
Inc. (The)
<PAGE>
CSW Credit, Inc. 29,300 5.71 12/14/95 29,095
Corporate 50,000 5.73 12/12/95 49,664
Receivables Corp.
Deer Park Refining 15,500 5.73 12/22/95 15,372
L.P. 12,000 5.71 12/29/95 11,887
Delaware Funding 58,050 5.69 11/06/95 57,995
Corp.
Eksportfinans 19,500 5.65 12/11/95 19,372
(A/S)
Electricite de France 20,000 5.65 12/15/95 19,856
20,000 5.65 12/22/95 19,834
Falcon Asset 51,975 5.71 11/08/95 51,909
Securitization
Corp.
Ford Motor Credit 50,000 5.75 1/09/96 49,441
Company
Goldman Sachs 25,000 5.63 4/03/96 24,394
Group, L.P. 50,000 5.65 4/10/96 48,733
66,000 5.60 4/18/96 64,245
50,000 5.58 4/19/96 48,663
Hanson Finance 40,000 5.69 1/31/96 39,412
(UK) PLC 30,000 5.68 2/16/96 29,487
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
<S> <C> <C> <C> <C>
Commercial Paper--Discount (concluded)
Internationale $ 50,000 5.65 % 2/26/96 $ 49,066
Nederlanden (U.S.)
Funding Corp.
Kredietbank North 12,000 5.70 1/22/96 11,841
American Finance Corp.
<PAGE>
National Fleet 50,000 5.74 11/03/95 49,976
Funding Corp. 32,700 5.71 11/10/95 32,648
12,300 5.77 11/30/95 12,241
15,000 5.72 12/07/95 14,912
New Center Asset 100,000 5.81 11/15/95 99,758
Trust 50,000 5.76 11/20/95 49,840
85,000 5.74 11/21/95 84,715
100,000 5.77 11/22/95 99,647
Oesterreichische 50,000 5.59 3/27/96 48,834
Kontrollbank AG
Preferred 50,000 5.74 11/02/95 49,984
Receivables
Funding Corp.
Sandoz Corporation 21,125 5.80 11/10/95 21,091
Santander Finance 40,000 5.62 3/05/96 39,206
(Delaware) Inc.
Schering-Plough 57,200 5.60 4/11/96 55,742
Corp.
Svenska 30,000 5.68 12/05/95 29,832
Handelsbanken, Inc. 70,000 5.68 12/12/95 69,530
50,000 5.63 12/20/95 49,601
45,000 5.74 1/25/96 44,382
5,000 5.72 1/26/96 4,930
Sweden, 59,000 5.65 1/10/96 58,331
Kingdom of 25,000 5.68 2/16/96 24,572
30,000 5.65 3/01/96 29,424
50,000 5.54 3/12/96 48,953
75,000 5.595 3/18/96 73,358
30,000 5.64 3/28/96 29,296
25,000 5.63 3/29/96 24,409
Swedish Export 25,000 5.70 1/24/96 24,661
Credit Corp.
Toshiba International 22,400 5.75 12/20/95 22,221
Finance (UK) PLC
Transamerica 20,000 5.84 11/22/95 19,930
Finance Corp.
WCP Funding, Inc. 31,200 5.73 12/14/95 30,980
15,000 5.72 1/11/96 14,827
<PAGE>
Windmill Funding 41,000 5.78 11/15/95 40,901
Corp. 59,335 5.75 11/17/95 59,174
Total Commercial Paper--Discount
(Cost--$2,533,163) 2,532,970
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
<S> <C> <C> <C> <C>
Corporate Notes--6.1%
Abbey National $ 24,000 7.05 % 3/01/96 $ 24,094
Treasury Services PLC 47,000 6.45 5/15/96 47,155
Beta Finance Inc. 25,000 5.87++ 8/26/96 25,000
40,000 5.88++ 9/16/96 40,000
30,000 5.825++ 9/25/96 29,997
CIT Group Holdings, 25,000 5.80++ 9/20/96 24,977
Inc. (The) 50,000 5.81++ 9/26/96 49,961
40,000 5.98++ 11/14/96 40,034
General Electric 55,000 6.95 3/01/96 55,203
Capital Corp. 20,000 6.55 3/28/96 20,060
Key Bank of NY, 100,000 5.73++ 8/16/96 99,962
Albany
SMM Trust Certificate 71,000 5.895++ 6/14/96 71,000
(1995-K)
Total Corporate Notes (Cost--$526,909) 527,443
Master Notes--3.3%
Goldman Sachs 34,000 5.82++ 11/24/95 34,000
Group, L.P. 175,000 5.82++ 2/14/96 175,000
Smith Barney Inc. 49,000 5.80++ 3/07/96 49,000
Toyota Motor Credit 30,000 5.727++ 9/13/96 29,982
Corp.
Total Master Notes (Cost--$287,982) 287,982
<PAGE>
US Government, Agency & Instrumentality Obligations--
Discount Notes--6.8%
Federal Home Loan 105,645 6.14 1/03/96 104,595
Bank 25,000 5.57 1/30/96 24,647
50,000 5.54 2/02/96 49,274
38,000 5.47 2/27/96 37,302
69,000 5.44 3/26/96 67,445
18,000 6.07 4/01/96 17,580
Federal Home Loan 6,500 6.44 11/01/95 6,499
Mortgage Corp. 25,000 6.07 3/22/96 24,452
Federal National 25,000 5.53 2/13/96 24,595
Mortgage Association 13,110 5.52 3/04/96 12,859
45,000 5.50 3/28/96 43,972
US Treasury Bills 15,000 6.72 12/14/95 14,902
77,000 6.59 2/08/96 75,864
25,000 6.02 4/04/96 24,424
60,000 5.875 5/02/96 58,372
Total US Government, Agency &
Instrumentality Obligations--Discount Notes
(Cost--$586,074) 586,782
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
<S> <C> <C> <C> <C>
US Government, Agency & Instrumentality Obligations--
Non-Discount Notes--36.7%
Federal Farm Credit 55,000 6.39 4/17/96 55,165
Bank 40,000 5.88++ 11/25/97 39,983
<PAGE>
Federal Home Loan 60,000 6.18++ 12/28/95 60,000
Bank 25,000 6.91 2/21/96 25,102
45,000 6.42 4/24/96 45,148
70,000 6.27++ 6/17/96 70,000
29,000 6.21++ 6/21/96 29,000
15,000 5.635++ 8/05/96 14,982
20,500 5.63 6/28/96 20,489
20,095 6.875 11/18/96 20,252
25,000 6.33++ 2/18/97 25,039
35,000 6.20++ 10/11/00 35,000
Federal Home Loan 124,500 6.84 2/28/96 124,967
Mortgage Corp. 30,000 6.45 4/08/96 30,093
15,500 6.08++ 5/06/96 15,500
38,250 6.005 5/13/96 38,281
16,000 6.25++ 5/13/96 16,000
21,850 6.00++ 6/03/96 21,825
55,000 6.20++ 6/07/96 54,990
Federal National 30,000 6.15++ 12/20/95 30,000
Mortgage 50,000 6.12++ 1/26/96 49,989
Association 100,000 5.48++ 2/16/96 100,000
26,705 6.86 2/28/96 26,806
70,000 6.46 3/27/96 70,203
50,000 5.48++ 5/10/96 49,987
98,000 6.08++ 5/13/96 98,000
80,000 6.08++ 5/24/96 80,000
110,000 5.63 6/28/96 109,940
100,000 5.75++ 7/05/96 100,000
45,000 5.693++ 7/18/96 44,975
70,000 5.66++ 8/08/96 69,969
40,000 6.08++ 8/13/96 40,000
20,000 6.35++ 10/07/96 20,030
150,000 5.718++ 10/11/96 150,000
40,000 6.18 11/04/96 40,000
30,000 6.35++ 2/14/97 30,062
123,000 5.60++ 2/21/97 123,000
68,500 6.20++ 5/19/97 68,500
71,000 6.25++ 5/14/98 71,000
22,150 5.60++ 12/14/98 22,092
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
<S> <C> <C> <C> <C>
US Government, Agency & Instrumentality Obligations--
Non-Discount Notes--(concluded)
<PAGE>
Student Loan $ 50,000 5.53++% 11/09/95 $ 50,000
Marketing 50,000 5.55++ 2/08/96 50,000
Association 8,000 5.73++ 3/20/96 8,000
25,930 5.60++ 4/16/96 25,939
53,750 5.56++ 5/14/96 53,753
67,350 6.08++ 7/01/96 67,299
15,000 5.53++ 7/19/96 15,001
125,000 5.718++ 9/20/96 125,000
50,000 5.53++ 9/23/96 50,000
75,000 5.97 10/04/96 75,000
11,830 5.78++ 11/01/96 11,858
59,415 5.59++ 12/20/96 59,415
45,000 5.74++ 1/14/97 45,014
37,125 5.78++ 1/23/97 37,210
17,500 5.805++ 2/14/97 17,515
25,000 5.70++ 3/03/97 25,000
67,075 5.73++ 1/21/98 67,283
US Treasury Notes 50,000 9.375 4/15/96 50,828
12,000 6.50 9/30/96 12,090
20,000 6.875 10/31/96 20,241
31,000 7.25 11/30/96 31,509
15,000 7.50 12/31/96 15,312
19,000 6.875 2/28/97 19,294
45,000 6.125 5/31/97 45,302
33,000 5.625 6/30/97 32,995
25,000 5.75 9/30/97 25,051
Total US Government, Agency & Instrumentality
Obligations--Non-Discount Notes
(Cost--$3,169,866) 3,172,278
Face
Amount Issue
Repurchase Agreements**--1.3%
$ 111,200 Lehman Brothers, Inc., purchased
on 10/31/1995 to yield 5.92% to
11/01/1995 111,200
Total Repurchase Agreements (Cost--$111,200) 111,200
Total Investments (Cost--$8,695,148)--100.6% 8,698,835
Liabilities in Excess of Other Assets--(0.6%) (49,928)
----------
Net Assets--100.0% $8,648,907
==========
<PAGE>
<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, 1995.
**Repurchase Agreements are fully collateralized by US Government
Obligations.
++Floating Rate Notes.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of October 31, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$8,695,148,017*)(Note 1a) $8,698,834,998
Cash 1,069,999
Receivables:
Interest $ 51,366,110
Securities sold 25,010,883 76,376,993
--------------
Prepaid registration fees and other assets (Note 1d) 311,037
--------------
Total assets 8,776,593,027
--------------
Liabilities: Payables:
Beneficial interest redeemed 82,263,203
Securities purchased 40,000,000
Investment adviser (Note 2) 2,902,535 125,165,738
--------------
Accrued expenses and other liabilities 2,520,772
--------------
Total liabilities 127,686,510
--------------
Net Assets: Net assets $8,648,906,517
==============
<PAGE>
Net Assets Shares of beneficial interest, $0.10 par value, unlimited number of
Consist of: shares authorized $ 864,521,954
Paid-in capital in excess of par 7,780,697,582
Unrealized appreciation on investments--net 3,686,981
--------------
Net assets--Equivalent to $1.00 per share based on 8,645,219,536
shares of beneficial interest outstanding $8,648,906,517
==============
<FN>
*As of October 31, 1995, net unrealized appreciation for Federal
income tax purposes amounted to $3,582,872, of which $4,199,793
related to appreciated securities and $616,921 related to
depreciated securities. The aggregate cost of investments at October
31, 1995 for Federal income tax purposes was $8,695,252,126.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended
October 31, 1995
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 479,151,248
(Note 1c):
Expenses: Investment advisory fees (Note 2) $ 30,946,227
Transfer agent fees (Note 2) 13,964,991
Registration fees (Note 1d) 718,247
Printing and shareholder reports 567,425
Accounting services (Note 2) 478,087
Custodian fees 237,732
Trustees' fees and expenses 77,794
Professional fees 46,884
Other. 94,578
--------------
Total expenses 47,131,965
--------------
Investment income--net 432,019,283
--------------
<PAGE>
Realized & Unreal- Realized gain on investments--net 1,637,926
ized Gain on Change in unrealized appreciation/depreciation on
Investments--Net investments--net 10,376,159
(Note 1c): --------------
Net Increase in Net Assets Resulting from Operations $ 444,033,368
==============
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 1995 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 432,019,283 $ 252,806,430
Realized gain on investments--net 1,637,926 112,929
Change in unrealized appreciation/depreciation on
investments--net 10,376,159 (7,988,665)
-------------- --------------
Net increase in net assets resulting from operations 444,033,368 244,930,694
-------------- --------------
Dividends & Investment income--net (432,019,283) (252,806,430)
Distributions to Realized gain on investments--net (1,637,926) (112,929)
Shareholders -------------- --------------
(Note 1e): Net decrease in net assets resulting from dividends and
distributions to shareholders (433,657,209) (252,919,359)
-------------- --------------
Beneficial Net proceeds from sale of shares 24,132,766,015 22,552,419,060
Interest Net asset value of shares issued to shareholders in
Transactions reinvestment of dividends and distributions 433,654,456 252,920,548
(Notes 1e & 3): -------------- --------------
24,566,420,471 22,805,339,608
Cost of shares redeemed (23,331,574,095) (22,459,993,404)
-------------- --------------
Net increase in net assets derived from beneficial
interest transactions 1,234,846,376 345,346,204
-------------- --------------
Net Assets: Total increase in net assets 1,245,222,535 337,357,539
Beginning of year 7,403,683,982 7,066,326,443
-------------- --------------
End of year $8,648,906,517 $7,403,683,982
============== ==============
<PAGE>
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<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: 1995 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .0540 .0345 .0279 .0370 .0609
Realized and unrealized gain (loss)
on investments--net .0015 (.0011) .0004 .0012 .0025
---------- ---------- ---------- ---------- ----------
Total from investment operations .0555 .0334 .0283 .0382 .0634
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.0540) (.0345) (.0279) (.0370) (.0609)
Realized gain on investments--net (.0002) --++ (.0003) (.0010) (.0025)*
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.0542) (.0345) (.0282) (.0380) (.0634)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total investment return 5.57% 3.48% 2.86% 3.95% 6.54%
========== ========== ========== ========== ==========
Ratios to Average Expenses .59% .59% .62% .63% .64%
Net Assets: ========== ========== ========== ========== ==========
Investment income and realized gain
on investments--net 5.43% 3.44% 2.82% 3.88% 6.30%*
========== ========== ========== ========== ==========
Supplemental Net assets, end of year (in thousands) $8,648,907 $7,403,684 $7,066,326 $6,474,640 $6,485,985
Data: ========== ========== ========== ========== ==========
<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 and 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.
<PAGE>
(d) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(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 Transac-
tions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management, L.P. ("MLAM"). The general partner
of MLAM is Princeton Services, Inc. ("PSI"), an indirect wholly-
owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is
the limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
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. MLAM'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
period which will cause such expenses to exceed the most restrictive
expense limitation at the time of such payment.
NOTES TO FINANCIAL STATEMENTS (concluded)
<PAGE>
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), 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, MLFD, MLFDS, PSI, 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, 1995, 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, 1995 by correspondence with the custodian and broker. 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 materials respects, the financial position of
Merrill Lynch Retirement Reserves Money Fund of Merrill Lynch
Retirement Series Trust as of October 31, 1995, 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 1, 1995
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
Merrill Lynch Retirement Reserves Money Fund distributed long-term
capital gains of $0.000153 per share to shareholders of record on
December 30, 1994.
Please retain this information for your records.
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
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 221-7210
<PAGE>
