MERRILL LYNCH
RETIREMENT
RESERVES
MONEY FUND
Merrill Lynch
Retirement Series Trust
FUND LOGO
Semi-Annual Report
April 30, 1995
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.
<PAGE>
Merrill Lynch
Retirement Reserves
Money Fund
Box 9011
Princeton, New Jersey
08543-9011
DEAR SHAREHOLDER
For the six months ended April 30, 1995 Merrill Lynch Retirement
Reserves Money Fund's net annualized yield was 5.39%.* The Fund's 7-
day yield as of April 30, 1995 was 5.71% (including realized gains
and losses) and 5.65% (excluding realized gains and losses).
The Environment
During the six months ended April 30, 1995, the perception that the
US economy was overheating and inflationary pressures were
increasing gave way to a more benign economic outlook. With more
signs of slowing growth, investors now appear to be forecasting a
"soft landing" for the US economy. Although gross domestic product
was reported to have increased at a revised 5.1% rate during the
final quarter of 1994, declines in other indicators such as new home
sales and durable goods orders registered thus far in 1995 have led
investors to anticipate that the economy is losing enough momentum
to keep inflation under control and preclude further significant
monetary policy tightening by the Federal Reserve Board. A further
indication of a slowing economy was the reported decline in the
Index of Leading Economic Indicators for March.
As US stock and bond markets have risen on more positive economic
news, the value of the US dollar has reached new lows relative to
the yen and the Deutschemark. Persistent trade deficits and exports
of capital from the United States have kept the US currency in a
decade-long decline relative to the Japanese and German currencies.
Over the longer term, since the United States has the highest
productivity among industrialized nations and among the lowest labor
costs, demand for US dollar-denominated assets may improve. However,
a reduction of the still-widening US trade deficit may be necessary
before the US dollar appreciates substantially relative to the yen
and the Deutschemark.
The first months of 1995 have been very positive for the stock and
bond markets. Continued signs of a moderating expansion and well-
contained inflationary pressures would provide further assurance
that the peak in interest rates is behind us. On the other hand,
indications of reaccelerating growth and further significant
monetary policy tightening by the Federal Reserve Board would be a
decided negative for the US financial markets.
<PAGE>
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
Portfolio Matters
During the six months ended April 30, 1995, Merrill Lynch Retirement
Reserves Money Fund maintained an average life ranging from a low of
45 days to a high of 70 days. The extent to which the average
maturity varied was testimony to the contrary factors affecting the
front end of the fixed-income yield curve.
As we entered November, we maintained a very conservative approach
to the Fund's investment strategy. Specifically, it was our
contention that the domestic economy would exhibit sufficient
forward momentum which would necessitate the Federal Reserve Board
to maintain its tight monetary policy. In line with this, we
increased the Fund's overnight cash position and sold 6-month--12-
month Federal agency discount notes given the narrowing in yield
spreads to US Treasury bills. Furthermore, variable rate securities
exceeded 35% of total assets. Subsequent to the 75 basis point
(0.75%) hike in the Federal Funds rate, we earmarked some of the
Fund's cash position for investment in 90-day money market
securities. Our rationale was that the Federal Reserve Board would
be on hold for no less than three months, and thus it was beneficial
to take advantage of the steepness in the front end of the yield
curve.
By mid-January, with the two-year Treasury note yielding 7.5%, we
made the decision to extend the Fund's average portfolio maturity in
response to our belief that the market had fully priced another
round of tightening by the Federal Reserve Board. Although we were
anticipating a 50 basis point move in the Federal Funds rate at the
Federal Open Market Committee's February 1, 1995 meeting, the one-
year--two-year sector of the yield curve offered good value to even
an expected 6% Federal Funds rate. Shortly after the interest rate
hike on February 1, 1995, the market caught a very technically
driven bid as investors who had built up significant cash balances
began to put this money to work. Market psychology was further
enhanced by the preliminary signs that the economy may well be
achieving a soft landing. By the April period-end, the two-year
Treasury note had rallied nearly 100 basis points.
Looking ahead, we expect to maintain the Fund's average life toward
the higher end of the allowed band as the market continues to be
favorably affected by market technicals. We will closely monitor
this as well as the state of the economy and will adjust our
investment strategy accordingly.
<PAGE>
The Fund's portfolio composition at the end of the April period and
as of our last report is detailed below:
4/30/95 10/31/94
Bank Notes 2.0% 5.6%
Certificates of Deposit--European 5.0 1.1
Certificates of Deposit--Yankee 5.8 1.3
Commercial Paper--Discount 30.9 35.5
Corporate Notes 1.5 0.6
Master Notes 3.2 3.0
Repurchase Agreements 1.8 1.3
US Government, Agency &
Instrumentality Obligations--
Discount Notes 16.0 14.7
US Government, Agency &
Instrumentality Obligations--
Non-Discount Notes 33.8 36.9
------ ------
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 in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Christopher G. Ayoub)
Christopher G. Ayoub
Vice President and Portfolio Manager
June 1, 1995
<PAGE>
SCHEDULE OF INVESTMENTS (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Bank Notes--2.0%
BankAmerica $ 9,000 6.30% 7/24/95 $ 8,869
Corporation 10,000 6.30 7/26/95 9,851
Fifth Third 20,000 6.24 10/18/95 19,980
Bank, N.A.,
Cincinnati
NationsBank, N.A. 23,000 5.40 5/19/95 22,985
(Carolinas) 50,000 5.65 7/21/95 49,901
47,000 5.50 8/04/95 46,859
Total Bank Notes (Cost--$158,658) 158,445
Certificates of Deposit--European--5.1%
Abbey National 10,000 7.22 2/05/96 10,054
Treasury 25,000 6.62 4/01/96 25,020
Services 50,000 6.54 4/08/96 50,008
PLC
Bank of America 50,000 6.26 10/19/95 50,000
Corporation
N.T., S.A.
Bank of Scotland 25,000 6.76 4/04/96 25,052
NationsBank, NC 30,000 5.47 5/19/95 29,983
Societe 90,000 6.08 6/15/95 90,004
Generale, NY
Sumitomo Bank 100,000 6.11 5/03/95 100,000
Ltd., Japan 22,000 6.12 5/03/95 22,000
Total Certificates of Deposit--European
(Cost--$402,120) 402,121
Certificates of Deposit--Yankee--6.0%
Banc One, 50,000 6.00 6/06/95 50,000
Colorado
<PAGE>
Credit Suisse 25,000 6.25 10/18/95 24,999
Dai-Ichi Kangyo 85,000 6.06 5/22/95 85,000
Bank, Ltd., NY 30,000 6.18 5/23/95 29,999
20,000 6.19 5/31/95 20,001
Sanwa Bank Ltd., 20,000 6.08 5/08/95 20,000
NY 50,000 6.05 5/22/95 50,000
50,000 6.06 5/22/95 50,000
20,000 6.13 6/12/95 20,001
Societe 45,000 6.75 6/02/95 45,023
Generale, NY
Sumitomo Bank, 20,000 6.15 5/02/95 20,000
Ltd., NY 48,000 6.11 5/03/95 48,000
10,000 6.14 5/09/95 10,000
Total Certificates of Deposit--Yankee
(Cost--$473,011) 473,023
Commercial Paper--Discount--31.9%
AIG Funding, Inc. 21,000 5.97 5/03/95 20,982
Allomon Funding 10,055 6.00 5/08/95 10,038
Corp.
American Express 50,000 6.07 10/16/95 48,556
Credit
Corporation
Associates 50,000 6.00 5/09/95 49,908
Corporation
of North America
B.B.V. Finance 50,000 5.99 5/08/95 49,917
(Delaware), Inc.
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Commercial Paper--Discount (continued)
CXC Inc. $ 45,000 6.03 % 5/03/95 $ 44,962
50,000 6.00 5/08/95 49,917
<PAGE>
Caisse des 27,000 5.96 5/30/95 26,857
Depots et
Consignations
Central and 44,000 5.98 5/02/95 43,971
South West Corp. 30,000 6.03 5/04/95 29,970
Citicorp 50,000 6.05 5/03/95 49,958
Creditanstalt 50,000 5.99 5/08/95 49,917
Finance, Inc. 50,000 6.00 5/11/95 49,892
Deer Park 25,000 6.03 5/01/95 24,987
Refining L.P. 12,000 6.00 5/08/95 11,980
13,000 6.02 5/31/95 12,928
Du Pont (E.I.) 30,000 6.03 9/19/95 29,272
de Nemours & 50,000 6.05 10/12/95 48,590
Company
Eiger Capital 50,000 6.00 5/03/95 49,958
Corp. 35,000 5.97 5/17/95 34,890
Falcon Asset 12,475 6.10 5/08/95 12,454
Securitization 15,875 6.00 5/10/95 15,843
Corp. 12,963 5.96 5/25/95 12,905
21,600 6.00 6/06/95 21,460
45,825 6.02 6/12/95 45,480
Ford Motor 100,000 6.10 5/01/95 99,949
Credit Company 66,900 5.97 5/15/95 66,711
General Electric 75,000 6.43 5/04/95 74,924
Capital Corp. 25,000 6.36 5/08/95 24,958
50,000 6.38 8/03/95 49,185
Goldman Sachs 100,000 6.04 5/08/95 99,832
Group, L.P. 25,000 6.02 5/22/95 24,900
47,000 6.175 9/18/95 45,867
Internationale 36,000 6.00 5/05/95 35,958
Nederlanden 74,000 6.00 5/11/95 73,840
(U.S.) Funding 40,000 6.24 7/12/95 39,498
Corp.
Kingdom of 39,000 6.18 7/12/95 38,510
Sweden
Kredietbank 50,000 5.97 5/24/95 49,784
North American
Finance Corp.
<PAGE>
McKenna Triangle 13,700 6.00 5/05/95 13,684
National Corp. 10,000 6.00 5/10/95 9,980
National Rural 57,000 5.95 5/22/95 56,774
Utilities
Cooperative
Finance Corp.
New Center 40,000 6.03 6/12/95 39,699
Asset Trust 50,000 6.13 7/31/95 49,213
45,000 6.15 7/31/95 44,291
50,000 6.15 8/15/95 49,084
New South Wales 35,000 6.00 5/09/95 34,936
Treasury Corp.
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Commercial Paper--Discount (concluded)
Nomura Holding $ 25,000 6.17 % 5/04/95 $ 24,975
America Inc. 45,000 6.07 5/17/95 44,856
25,000 6.07 5/30/95 24,865
PHH Corporation 34,950 5.98 5/08/95 34,892
Paribas 100,000 5.96 6/01/95 99,437
Finance Inc.
Pitney-Bowes 11,950 6.05 9/11/95 11,676
Credit
Corporation
Preferred 20,450 5.99 5/24/95 20,362
Receivables
Funding Corp.
Premium Funding, 30,405 6.08 5/05/95 30,369
Inc., Series A
Sheffield 60,000 6.00 5/01/95 59,970
Receivables Corp.
Svenska 17,000 6.05 5/30/95 16,908
Handelsbanken, 30,000 6.03 7/21/95 29,578
Inc.
<PAGE>
Transamerica 20,000 6.05 10/16/95 19,422
Finance Corp.
USL Capital Corp. 6,000 6.02 5/09/95 5,989
Unilever PLC 40,000 6.30 7/31/95 39,370
Vattenfall 25,000 6.32 8/16/95 24,538
Treasury AB
Vermont American 8,907 6.00 5/11/95 8,888
Corp.
WCP Funding, Inc. 20,400 6.03 7/19/95 20,120
Windmill Funding 72,000 5.99 5/31/95 71,605
Corp. 48,486 5.97 6/09/95 48,148
Total Commercial Paper--Discount
(Cost--$2,502,962) 2,503,137
Corporate Notes--1.5%
Abbey National 24,000 7.05 3/01/96 24,072
N.A. Corp.
Bank One 20,000 6.025 5/02/95 19,999
Diversified
Corporation
General Electric 55,000 6.95 3/01/96 55,127
Capital Corp. 20,000 6.55 3/28/96 19,970
Total Corporate Notes
(Cost--$118,964) 119,168
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Master Notes--3.3%
<PAGE>
Goldman Sachs $ 175,000 6.07 % 5/26/95 $ 175,000
Group, L.P. 34,000 6.00 11/24/95 34,000
Smith Barney Inc. 49,000 6.05 6/09/95 49,000
Total Master Notes
(Cost--$258,000) 258,000
US Government, Agency & Instrumentality Obligations--
Discount Notes--16.4%
Federal Farm 2,000 5.03 5/16/95 1,994
Credit Bank
Federal Home 25,000 6.20 6/26/95 24,757
Loan Bank 117,000 4.625 8/09/95 116,497
105,645 6.14 1/03/96 101,228
50,000 6.02 1/12/96 47,834
25,000 6.91 2/21/96 25,098
18,000 6.07 4/01/96 16,971
5,000 5.97 4/11/96 4,706
25,000 5.98 4/19/96 23,495
45,000 6.42 4/24/96 44,960
22,000 7.10 4/03/97 22,000
Federal Home 84,000 4.635 8/09/95 83,656
Loan Mortgage 6,500 6.44 11/01/95 6,298
Corp. 69,500 6.84 2/28/96 69,688
25,000 6.07 3/22/96 23,615
30,000 6.45 4/08/96 29,982
Federal National 87,000 6.10 5/03/95 86,928
Mortgage 15,000 5.76 5/09/95 14,973
Association 25,000 5.92 8/02/95 24,605
20,000 6.18 8/08/95 19,664
26,705 6.86 2/28/96 26,774
70,000 6.46 3/27/96 69,958
20,000 6.60 10/07/96 20,046
US Treasury Bills 75,000 6.365 7/13/95 74,102
50,000 6.325 7/20/95 49,346
10,000 5.466 8/24/95 9,811
15,000 6.72 12/14/95 14,438
102,000 6.589 2/08/96 97,203
25,000 6.02 4/04/96 23,592
125,000 5.875 5/02/96 117,467
<PAGE>
Total US Government, Agency &
Instrumentality Obligations--Discount Notes
(Cost--$1,291,757) 1,291,686
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
US Government, Agency & Instrumentality Obligations--
Non-Discount Notes--34.9%
Federal Home $ 42,000 6.43 % 6/21/95 $ 42,000
Loan Bank++ 60,000 6.43 12/28/95 60,000
70,000 6.46 6/17/96 70,000
29,000 6.46 6/21/96 29,000
15,000 5.885 8/05/96 14,970
25,000 6.58 2/18/97 25,055
Federal Home 34,000 6.37 9/01/95 33,999
Loan Mortgage 15,500 6.33 5/06/96 15,500
Corp.++ 21,850 6.25 6/03/96 21,804
55,000 6.45 6/07/96 54,981
16,000 6.50 5/13/98 16,000
Federal National 77,000 5.82 6/01/95 76,999
Mortgage 125,000 6.09 8/23/95 125,000
Association++ 80,000 6.09 8/25/95 79,997
100,000 6.06 9/22/95 99,988
115,000 6.09 10/16/95 114,970
30,000 6.40 12/20/95 30,000
50,000 6.37 1/26/96 49,965
100,000 6.00 2/16/96 100,000
50,000 5.99 5/10/96 49,976
98,000 6.33 5/13/96 98,000
80,000 6.33 5/24/96 80,000
45,000 6.005 7/18/96 44,957
40,000 6.33 8/13/96 40,000
150,000 6.03 10/11/96 150,000
30,000 6.60 2/14/97 30,086
123,000 6.06 2/21/97 123,000
68,500 6.45 5/19/97 68,500
71,000 6.50 5/14/98 71,000
22,150 6.15 12/14/98 22,083
<PAGE>
Student Loan 73,850 6.14 6/02/95 73,862
Marketing 20,000 6.07 6/30/95 20,002
Association++ 70,000 6.19 8/07/95 70,001
8,000 6.19 3/20/96 8,000
25,930 6.06 4/16/96 25,949
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 $ 53,750 6.02 % 5/14/96 $ 53,757
Marketing 15,000 5.99 7/19/96 15,002
Association++ 125,000 6.03 9/20/96 125,000
(concluded) 50,000 5.99 9/23/96 50,000
11,830 6.24 11/01/96 11,873
59,415 6.05 12/20/96 59,415
45,000 6.20 1/14/97 45,020
37,125 6.24 1/23/97 37,245
25,000 6.16 3/03/97 25,000
67,075 6.19 1/21/98 67,330
US Treasury 25,000 4.25 7/31/95 24,891
Notes 48,000 3.875 8/31/95 47,662
5,000 3.875 10/31/95 4,944
24,000 5.875 5/31/96 23,865
7,000 6.25 8/31/96 6,976
20,000 6.50 9/30/96 20,006
20,000 6.875 10/31/96 20,100
31,000 7.25 11/30/96 31,320
15,000 7.50 12/31/96 15,220
20,000 6.875 2/28/97 20,094
Total US Government, Agency & Instrumentality
Obligations--Non-Discount Notes
(Cost--$2,740,086 ) 2,740,364
Face
Amount Issue
Repurchase Agreements**--1.9%
$ 150,000 Fuji Securities, Inc., purchased on
4/28/1995 to yield 5.95% to 5/01/1995 150,000
Total Repurchase Agreements
(Cost--$150,000) 150,000
Total Investments (Cost--$8,095,558)--103.0% 8,095,944
<PAGE>
Liabilities in Excess of Other Assets--(3.0%) (234,796)
----------
Net Assets--100.0% $7,861,148
==========
[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 April 30, 1995.
**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 April 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$8,095,558,021*)(Note 1a) $8,095,943,652
Cash 270,210
Receivables:
Securities sold $ 71,336,236
Interest 41,232,166
Beneficial interest sold 211,736 112,780,138
--------------
Prepaid registration fees and other assets (Note 1d) 273,599
--------------
Total assets 8,209,267,599
--------------
Liabilities: Payables:
Securities purchased 259,742,628
Beneficial interest redeemed 84,931,844
Investment adviser (Note 2) 2,293,699 346,968,171
--------------
Accrued expenses and other liabilities 1,151,350
--------------
Total liabilities 348,119,521
--------------
<PAGE>
Net Assets: Net assets $7,861,148,078
==============
Net Assets Shares of beneficial interest, $.10 par value, unlimited number of
Consist of: shares authorized $ 786,076,245
Paid-in capital in excess of par 7,074,686,202
Unrealized appreciation on investments--net 385,631
--------------
Net assets--Equivalent to $1.00 per share based on 7,860,762,447 shares
of beneficial interest outstanding $7,861,148,078
==============
<FN>
*Cost for Federal income tax purposes. As of April 30, 1995, net
unrealized appreciation for Federal income tax purposes amounted to
$385,631, of which $2,434,538 related to appreciated securities and
$2,048,907 related to depreciated securities.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six
Months Ended
April 30, 1995
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 216,784,728
(Note 1c):
Expenses: Investment advisory fees (Note 2) $ 14,402,154
Transfer agent fees (Note 2) 6,445,325
Registration fees (Note 1d) 320,033
Printing and shareholder reports 267,935
Accounting services (Note 2) 178,623
Custodian fees 104,197
Professional fees 44,656
Trustees' fees and expenses 37,213
Other. 44,656
--------------
Total expenses 21,844,792
--------------
Investment income--net 194,939,936
--------------
<PAGE>
Realized & Unreal- Realized gain on investments 1,194,020
ized Gain on Change in unrealized appreciation/depreciation on
Investments--Net investments--net 7,074,809
(Note 1c): --------------
Net Increase in Net Assets Resulting from Operations $ 203,208,765
==============
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: April 30, 1995 October 31, 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 194,939,936 $ 252,806,430
Realized gain on investments--net 1,194,020 112,929
Change in unrealized appreciation/depreciation on
investments--net 7,074,809 (7,988,665)
--------------- ---------------
Net increase in net assets resulting from operations 203,208,765 244,930,694
--------------- ---------------
Dividends & Investment income--net (194,939,936) (252,806,430)
Distributions to Realized gain on investments--net (1,194,020) (112,929)
Shareholders --------------- ---------------
(Note 1e): Net decrease in net assets resulting from dividends and
distributions to shareholders (196,133,956) (252,919,359)
--------------- ---------------
Beneficial Net proceeds from sale of shares 11,735,493,855 22,552,419,060
Interest Net asset value of shares issued to shareholders in
Transactions reinvestment of dividends and distributions 196,130,634 252,920,548
(Notes 1e & 3): --------------- ---------------
11,931,624,489 22,805,339,608
Cost of shares redeemed (11,481,235,202) (22,459,993,404)
--------------- ---------------
Net increase in net assets derived from beneficial interest
transactions 450,389,287 345,346,204
--------------- ---------------
Net Assets: Total increase in net assets 457,464,096 337,357,539
Beginning of period 7,403,683,982 7,066,326,443
--------------- ---------------
End of period $ 7,861,148,078 $ 7,403,683,982
=============== ===============
See Notes to Financial Statements.
</TABLE>
<PAGE>
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 Six
Months Ended For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: April 30, 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of
Operating period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Performance: ---------- ---------- ---------- ---------- ----------
Investment income--net .0261 .0345 .0279 .0370 .0609
Realized and unrealized gain
(loss) on investments--net .0011 (.0011) .0004 .0012 .0025
---------- ---------- ---------- ---------- ----------
Total from investment operations .0272 .0334 .0283 .0382 .0634
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.0261) (.0345) (.0279) (.0370) (.0609)
Realized gain on invest-
ments--net (.0002) --++ (.0003) (.0010) (.0025)**
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.0263) (.0345) (.0282) (.0380) (.0634)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total investment return 2.69%+++ 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 5.33%* 3.44% 2.82% 3.88% 6.30%**
========== ========== ========== ========== ==========
Supplemental Net assets, end of period
Data: (in thousands) $7,861,148 $7,403,684 $7,066,326 $6,474,640 $6,485,985
========== ========== ========== ========== ==========
<FN>
*Annualized.
**Includes unrealized gain (loss).
++Amount is less than $.0001 per share.
+++Aggregate total investment return.
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. These
unaudited financial statements reflect all adjustments which are, in
the opinion of management, necessary to a fair statement of the
results for the interim period presented. All such adjustments are
of a normal recurring nature. 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.
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(c) Security transaction 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.
(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"). 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 a Distribution Plan with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
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 asset 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
period which will cause such expenses to exceed the most restrictive
expense limitation at the time of such payment.
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Merrill Lynch 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, 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.
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
