<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 26, 1996
SECURITIES ACT FILE NO. 2-74584
INVESTMENT COMPANY ACT FILE NO. 811-3310
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [_]
POST-EFFECTIVE AMENDMENT NO. 16 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 18 [X]
(CHECK APPROPRIATE BOX OR BOXES) [X]
----------------
MERRILL LYNCH RETIREMENT RESERVES MONEY FUND
OF MERRILL LYNCH RETIREMENT SERIES TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
800 SCUDDERS MILL ROAD 08536
PLAINSBORO, NEW JERSEY (ZIP CODE)
(ADDRESS OF PRINCIPAL
EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (609) 282-2800
ARTHUR ZEIKEL
MERRILL LYNCH RETIREMENT SERIES TRUST
800 SCUDDERS MILL ROAD
PLAINSBORO, NEW JERSEY
MAILING ADDRESS: P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011
(NAME AND ADDRESS OF AGENT FOR SERVICE)
----------------
COPIES TO:
PHILIP L. KIRSTEIN, ESQ. COUNSEL FOR THE TRUST:
MERRILL LYNCH ASSET MANAGEMENT BROWN & WOOD
BOX 9011 ONE WORLD TRADE CENTER
PRINCETON, NEW JERSEY 08543-9011 NEW YORK, N.Y. 10048-0557
ATTENTION: THOMAS R. SMITH, JR.,
ESQ.
----------------
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
[X] immediately upon filing pursuant to paragraph (b)
[_] on (date) pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2) of rule 485.
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
[_] this post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.
----------------
The Registrant has registered an indefinite number of its shares of
beneficial interest under the Securities Act of 1933 pursuant to Rule 24f-2
under the Investment Company Act of 1940. The notice required by such rule for
the Registrant's most recent fiscal year was filed on December 26, 1995.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
MERRILL LYNCH RETIREMENT RESERVES MONEY FUND
OF MERRILL LYNCH RETIREMENT SERIES TRUST
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A
ITEM NO. LOCATION
-------- --------
<C> <S> <C>
PART A
Item 1. Cover Page................ Cover Page
Item 2. Synopsis.................. Not Applicable
Item 3. Condensed Financial
Information............... Financial Highlights; Yield Information
Item 4. General Description of
Registrant................ Investment Objectives and Policies;
Additional Information
Item 5. Management of the Fund.... Fee Table; Management of the Trust;
Portfolio Transactions; Inside Back
Cover Page
Item 5A. Management's Discussion of
Fund Performance.......... Not Applicable
Item 6. Capital Stock and Other
Securities................ Cover Page; Additional Information
Item 7. Purchases of Securities
Being Offered............. Cover Page; Fee Table; Purchase of
Shares; Redemption of Shares; Additional
Information; Inside Back Cover Page
Item 8. Redemption or Repurchase.. Purchase of Shares; Redemption of Shares
Item 9. Pending Legal Proceedings. Not Applicable
PART B
Item 10. Cover Page................ Cover Page
Item 11. Table of Contents......... Back Cover Page
Item 12. General Information and
History................... Not Applicable
Item 13. Investment Objectives and
Policies.................. Investment Objectives and Policies
Item 14. Management of the Fund.... Management of the Trust
Item 15. Control Persons and
Principal Holders of
Securities................ Management of the Trust
Item 16. Investment Advisory and
Other Services............ Management of the Trust; Purchase of
Shares; Redemption of Shares; General
Information
Item 17. Brokerage Allocation...... Portfolio Transactions
Item 18. Capital Stock and Other
Securities................ General Information--Description of
Series and Shares
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered............. Purchase of Shares; Redemption of Shares;
Determination of Net Asset Value;
Exchange Privilege
Item 20. Tax Status................ Taxes
Item 21. Underwriters.............. Purchase of Shares; Redemption of Shares
Item 22. Calculation of Performance
Data...................... Yield Information
Item 23. Financial Statements...... Financial Statements
PART C Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration
Statement.
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
FEBRUARY 26, 1996
MERRILL LYNCH RETIREMENT RESERVES MONEY FUND
MERRILL LYNCH RETIREMENT SERIES TRUST
P.O. Box 9011, Princeton, New Jersey 08543-9011 . Phone No. (609) 282-2800
-------------------------
The investment objectives of the Merrill Lynch Retirement Reserves Money
Fund (the "Money Market Fund") are to seek current income, preservation of
capital, and liquidity available from investing in a diversified portfolio of
short-term money market securities. These securities primarily consist of U.S.
Government and agency securities, bank certificates of deposit and bankers'
acceptances, commercial paper and repurchase agreements. For purposes of its
investment policies, the Money Market Fund defines short-term money market
securities as having a maturity of no more than 762 days (25 months) in the
case of U.S. Government and Government agency securities and no more than 397
days (13 months) in the case of all other securities. THE MONEY MARKET FUND
SEEKS TO MAINTAIN A CONSTANT $1.00 NET ASSET VALUE PER SHARE, ALTHOUGH THIS
CANNOT BE ASSURED. AN INVESTMENT IN THE MONEY MARKET FUND IS NEITHER INSURED
NOR GUARANTEED BY THE U.S. GOVERNMENT. The Money Market Fund is a separate
series, offering a separate class of shares, of Merrill Lynch Retirement
Series Trust (the "Trust"), which is a Massachusetts business trust.
Shares of the Money Market Fund are offered to participants in the self-
directed retirement plans for which Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") acts as passive custodian (the "Self-Directed
Plans"). For a description of the Self-Directed Plans, see Appendix A to the
Statement of Additional Information referred to below. The participant in each
Self-Directed Plan is responsible for making investment decisions concerning
the funds contributed to his Self-Directed Plan. Participants in the Self-
Directed Plans may elect to have cash balances in their accounts automatically
invested in shares of the Money Market Fund. Shares of the Money Market Fund
are also offered to certain independent pension, profit-sharing, annuity and
other qualified plans. Shares are sold at their net asset value without any
sales charge. There is no minimum initial or subsequent purchase requirement.
Shares may be redeemed at any time at net asset value as described herein. See
"Purchase of Shares" and "Redemption of Shares".
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------
This Prospectus is a concise statement of information about the Trust and
the Money Market Fund that is relevant to making an investment in the Money
Market Fund. This Prospectus should be read carefully and retained for future
reference. A statement containing additional information about the Trust and
the Money Market Fund, dated February 26, 1996 (the "Statement of Additional
Information"), has been filed with the Securities and Exchange Commission and
can be obtained, without charge, by calling or by writing the Money Market
Fund at the above telephone number or address. The Statement of Additional
Information is hereby incorporated by reference into this Prospectus.
-------------------------
MERRILL LYNCH ASSET MANAGEMENT--MANAGER
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.--DISTRIBUTOR
<PAGE>
FEE TABLE
<TABLE>
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
FOR THE YEAR ENDED OCTOBER 31, 1995:
Management Fees(a)................................................ 0.39%
Other Expenses
Custodial Fees................................................ 0.01%
Shareholder Servicing Fees(b)................................. 0.17%
Other......................................................... 0.02%
----
Total Other Expenses.......................................... 0.20%
----
Total Fund Operating Expenses(c).................................. 0.59%
====
</TABLE>
- --------
(a) See "Management of the Trust--Management and Advisory Arrangements"--page
9.
(b) See "Management of the Trust--Transfer Agency Services"--page 10.
(c) The Money Market Fund has no minimum initial or subsequent purchase
requirement. Therefore, there are a large number of Money Market Fund
accounts of relatively small asset size, and as a result, the total
operating expenses of the Money Market Fund may be higher than the
expenses incurred in other money market funds.
EXAMPLE:
<TABLE>
<CAPTION>
CUMULATIVE EXPENSES PAID FOR THE PERIOD OF:
-------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------
<S> <C> <C> <C> <C>
An investor would pay the fol-
lowing expenses on a $1,000
investment, assuming an oper-
ating expense ratio of 0.59%
and a 5% annual return
throughout the periods........ $6.03 $18.90 $32.93 $73.79
</TABLE>
The foregoing Fee Table is intended to assist investors in understanding the
costs and expenses that a shareholder in the Money Market Fund will bear
directly or indirectly. The Example set forth above assumes reinvestment of
all dividends and distributions and utilizes a 5% annual rate of return as
mandated by Securities and Exchange Commission regulations. The Example should
not be considered a representation of past or future expenses or annual rate
of return and actual expenses or annual rate of return may be more or less
than those assumed for purposes of the Example.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The financial information in the table below has been audited in conjunction
with the annual audits of the financial statements of the Money Market Fund by
Deloitte & Touche LLP, independent auditors. Financial statements for the
fiscal year ended October 31, 1995 and the independent auditors' report thereon
are included in the Statement of Additional Information. The following per
share data and ratios have been derived from information provided in the Money
Market Fund's audited financial statements.
Further information about the performance of the Money Market Fund is
contained in the Money Market Fund's most recent annual report to shareholders
which may be obtained, without charge, by calling or writing the Money Market
Fund at the telephone number or address on the front cover of this Prospectus.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERAT-
ING PERFORMANCE:
Net asset value,
beginning of
year............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Investment in-
come--net....... .0540 .0345 .0279 .0370 .0609
Realized and
unrealized gain
(loss) on in-
vestments--net.. .0015 (.0011) .0004 .0012 .0025
---------- ---------- ---------- ---------- ----------
Total from in-
vestment opera-
tions............ .0555 .0334 .0283 .0382 .0634
---------- ---------- ---------- ---------- ----------
Less dividends
and distribu-
tions:
Investment in-
come--net....... (.0540) (.0345) (.0279) (.0370) (.0609)
Realized gain on
investments--
net............. (.0002) -- + (.0003) (.0010) (.0025)*
---------- ---------- ---------- ---------- ----------
Total dividends
and distribu-
tions............ (.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
NET ASSETS:
Expenses......... .59% .59% .62% .63% .64%
========== ========== ========== ========== ==========
Investment income
and realized gain
on investments--
net.............. 5.43% 3.44% 2.82% 3.88% 6.30%*
========== ========== ========== ========== ==========
SUPPLEMENTAL DA-
TA:
Net assets, end
of year (in thou-
sands)........... $8,648,907 $7,403,684 $7,066,326 $6,474,640 $6,485,985
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1990 1989 1988 1987 1986
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERAT-
ING PERFORMANCE:
Net asset value,
beginning of
year............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Investment in-
come--net....... .0775 .0853 .0668 .0573 .0627
Realized and
unrealized gain
(loss) on in-
vestments--net.. -- .0002 (.0004) (.0009) .0019
---------- ---------- ---------- ---------- ----------
Total from in-
vestment opera-
tions............ .0775 .0855 .0664 .0564 .0646
---------- ---------- ---------- ---------- ----------
Less dividends
and distribu-
tions:
Investment in-
come--net....... (.0775) (.0853) (.0664) (.0564) (.0627)
Realized gain on
investments--
net............. -- (.0002)* -- -- (.0019)*
---------- ---------- ---------- ---------- ----------
Total dividends
and distribu-
tions............ (.0775) (.0855) (.0664) (.0564) (.0646)
---------- ---------- ---------- ---------- ----------
Net asset value,
end of year...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Investment
Return........... 8.04% 8.89% 6.79% 5.80% 6.82%
========== ========== ========== ========== ==========
RATIOS TO AVERAGE
NET ASSETS:
Expenses......... .69% .81% .90% .93% .99%
========== ========== ========== ========== ==========
Investment income
and realized gain
on investments--
net.............. 7.75%* 8.55%* 6.62%* 5.67%* 6.37%*
========== ========== ========== ========== ==========
SUPPLEMENTAL DA-
TA:
Net assets, end
of year (in thou-
sands)........... $5,597,641 $5,012,328 $3,366,310 $2,995,894 $2,565,928
========== ========== ========== ========== ==========
</TABLE>
- ----
* Includes unrealized gain (loss).
+ Amount is less than $.0001 per share.
3
<PAGE>
YIELD INFORMATION
Set forth below is yield information for the indicated seven-day periods,
computed to include and exclude realized and unrealized gains and losses, and
information as to the compounded annualized yield, excluding gains and losses,
for the same periods.
<TABLE>
<CAPTION>
SEVEN-DAY PERIOD ENDED
---------------------------------
OCTOBER 31, 1995 JANUARY 31, 1996
---------------- ----------------
<S> <C> <C>
Annualized Yield:
Including gains and losses................. 5.41% 5.27%
Excluding gains and losses................. 5.41% 5.22%
Compounded Annualized Yield.................. 5.56% 5.36%
Average maturity of portfolio at end of
period....................................... 84 days 82 days
</TABLE>
The yield of the Money Market Fund refers to the income generated by an
investment in the Money Market Fund over a stated seven-day period. This income
is then annualized; that is, the amount of income generated by the investment
during that week is assumed to be generated each week over a 52-week period and
is shown as a percentage of the investment. The compounded annualized yield is
calculated similarly but, when annualized, the income earned by an investment
in the Money Market Fund is assumed to be reinvested. The compounded annualized
yield will be somewhat higher than the yield because of the effect of the
assumed reinvestment.
This yield on Money Market Fund shares normally will fluctuate on a daily
basis. Therefore, the yield for any given past period is not an indication or
representation by the Money Market Fund of future yields or rates on its
shares. The Money Market Fund's yield is affected by changes in interest rates
on money market securities, average portfolio maturity, the types and quality
of portfolio securities held, and operating expenses. Current yield information
may not provide a basis for comparison with bank deposits or other investments
which pay a fixed yield over a stated period of time.
On occasion, the Money Market Fund may compare its yield to (1) the
Donoghue's Domestic Prime Funds Average, an average compiled by Donoghue's
Money Fund Report, a widely recognized independent publication that monitors
the performance of money market mutual funds, (2) the average yield reported by
the Bank Rate Monitor National Index (TM) for money market deposit accounts
offered by the 100 leading banks and thrift institutions in the ten largest
standard metropolitan statistical areas, (3) yield data published by Lipper
Analytical Services, Inc., Morningstar Publications, Inc., Money Magazine, U.S.
News & World Report, Business Week, CDA Investment Technology, Inc., Forbes
Magazine and Fortune Magazine, or (4) the yield on an investment in 90-day
Treasury bills on a rolling basis, assuming quarterly compounding. As with
yield quotations, yield comparisons should not be considered indicative of the
Money Market Fund's yield or relative performance for any future period.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of the Money Market Fund are to seek current
income, preservation of capital and liquidity available from investing in a
diversified portfolio of short-term money market securities. The
4
<PAGE>
investment objectives are fundamental policies of the Money Market Fund which
may not be changed without the vote of a majority of the outstanding shares of
the Money Market Fund.
Investment in the Money Market Fund offers several benefits. The Money Market
Fund seeks to provide as high a yield potential as is available, consistent
with the preservation of capital, from short-term money market securities
utilizing professional money market management, block purchases of securities
and yield improvement techniques. It provides high liquidity because of its
redemption features and reduced risk resulting from diversification of assets.
There can be no assurance that the objectives of the Money Market Fund will be
realized. Certain expenses are borne by investors, including management fees,
administrative costs and operational costs.
In managing the Money Market Fund's portfolio, Merrill Lynch Asset
Management, L.P. ("MLAM" or the "Manager") will employ a number of professional
money management techniques, including varying the composition of the Money
Market Fund's investments and the average maturity of the portfolio based on
its assessment of the relative values of the various money market instruments
and future interest rate patterns. The Manager's assessments will respond to
changing economic and money market conditions and to shifts in fiscal and
monetary policy. The Manager will also seek to improve yield by taking
advantage of yield disparities that regularly occur in the money market. For
example, market conditions frequently result in similar securities trading at
different prices. Also, there are frequently differences in the yield between
the various types of money market securities. The Money Market Fund seeks to
enhance yield by purchasing and selling securities based on these yield
differences.
The following is a description of the types of money market securities in
which the Money Market Fund may invest:
United States Government Securities: Marketable securities issued by or
guaranteed as to principal and interest by the U.S. Government and supported by
the full faith and credit of the United States.
United States Government Agency Securities: Debt securities issued by U.S.
Government-sponsored enterprises, Federal agencies and certain international
institutions which are not direct obligations of the United States but involve
U.S. Government sponsorship or guarantees by U.S. Government agencies or
enterprises. The U.S. Government is not obligated to provide financial support
to these instrumentalities.
Bank Money Instruments: Obligations of commercial banks, savings banks or
savings and loan associations such as certificates of deposit, including
variable rate certificates of deposit, bankers' acceptances, bank notes and
time deposits. The savings banks and savings and loan associations must be
organized and operating in the United States. The obligations of commercial
banks may be issued by U.S. banks, foreign branches or subsidiaries of U.S.
banks ("Eurodollar" obligations) or U.S. branches or subsidiaries of foreign
banks ("Yankeedollar" obligations). The Money Market Fund may invest in
Eurodollar obligations which by their terms are general obligations of the U.S.
parent bank.
Commercial Paper and Other Short-term Obligations: Commercial paper
(including variable amount master demand notes), which refers to short-term,
unsecured promissory notes issued by corporations, partnerships, trusts and
other entities to finance short-term credit needs, and non-convertible debt
securities (e.g., bonds and debentures) with no more than 397 days (13 months)
remaining to maturity at the date of
5
<PAGE>
purchase. Short-term obligations issued by trusts include mortgage-related or
asset-backed debt instruments, including pass-through certificates representing
participations in, or bonds and notes backed by, pools of mortgage, credit
card, automobile or other types of receivables.
Foreign Bank Money Instruments: The Money Market Fund may invest in U.S.
dollar-denominated obligations of foreign depository institutions and their
foreign branches and subsidiaries, such as certificates of deposit, bankers'
acceptances, time deposits and deposit notes. The obligations of such foreign
branches and subsidiaries may be the general obligation of the parent bank or
may be limited to the issuing branch or subsidiary by the terms of the specific
obligation or by government regulation. Such investments will only be made if
determined to be of comparable quality to other investments permissible for the
Money Market Fund. The Money Market Fund will not invest more than 25% of its
total assets (taken at market value at the time of each investment) in these
obligations.
Foreign Short-term Debt Instruments: The Money Market Fund may also invest in
U.S. dollar-denominated commercial paper and other short-term obligations
issued by foreign entities. Such investments are subject to quality standards
similar to those applicable to investments in comparable obligations of
domestic issuers. Investments in foreign entities in general involve the same
risks as those described in the Money Market Fund Statement of Additional
Information in connection with investments in Eurodollar and Yankeedollar
obligations.
The following is a description of other types of investments or investment
practices in which the Money Market Fund may invest or engage:
Repurchase Agreements: The Money Market Fund may invest in repurchase
agreements involving the money market securities described above and repurchase
agreements involving U.S. Government and agency securities with longer
maturities. Repurchase agreements may be entered into only with a member bank
of the Federal Reserve System or a primary dealer in U.S. Government securities
or an affiliate thereof. Under such agreements, the seller agrees, upon
entering into the contract, to repurchase the security from the Money Market
Fund at a mutually agreed upon time and price, thereby determining the yield
during the term of the agreement. This results in a fixed rate of return
insulated from market fluctuations during such period.
Reverse Repurchase Agreements: The Money Market Fund may enter into reverse
repurchase agreements which involve the sale of money market securities held by
the Money Market Fund, with an agreement to repurchase the securities at an
agreed upon price, date and interest payment. During the time a reverse
repurchase agreement is outstanding, the Money Market Fund will maintain a
segregated custodial account containing U.S. Government or other appropriate
high-grade debt securities having a value equal to the repurchase price.
Lending of Portfolio Securities: The Money Market Fund may lend portfolio
securities (with a value not in excess of 33 1/3% of its total assets) to
brokers, dealers and financial institutions and receive collateral in cash or
securities issued or guaranteed by the U.S. Government which will be maintained
at all times in an amount equal to at least 100% of the current market value of
the loaned securities. During the period of the loan, the Money Market Fund
receives the income on both the loaned securities and the collateral and
thereby increases its yield.
6
<PAGE>
Preservation of capital is a prime investment objective of the Money Market
Fund, and, while the types of money market securities in which the Money Market
Fund invests are not completely risk free, such securities generally are
considered to have low principal risk. There is the risk of the failure of
issuers to meet their principal and interest obligations. Repurchase agreements
may be construed to be collateralized loans by the purchaser to the seller
secured by the securities transferred to the purchaser. In the event of default
by the seller under a repurchase agreement construed to be a collateralized
loan, the underlying securities are not owned by the Money Market Fund but only
constitute collateral for the seller's obligation to pay the repurchase price.
With respect to repurchase agreements, purchase and sale contracts and reverse
repurchase agreements, there is also the risk of the failure of parties
involved to repurchase at the agreed upon price or to return the securities
involved in such transaction, in which event the Money Market Fund may suffer
time delays and incur costs or possible losses in connection with such
transactions.
Bank money instruments in which the Money Market Fund invests must be issued
by depository institutions with total assets of at least $1 billion, except
that up to 10% of total assets (taken at market value) may be invested in
certificates of deposit of smaller institutions if such certificates of deposit
are Federally insured. Investments in Eurodollar and Yankeedollar obligations
may not exceed 25% of total assets. For purposes of this requirement, the Money
Market Fund treats bank money instruments issued by U.S. branches or
subsidiaries of foreign banks as obligations issued by domestic banks (not
subject to the 25% limitation) if the branch or subsidiary is subject to the
same banking regulation as U.S. banks.
The Money Market Fund may invest in participations in, or bonds and notes
backed by, pools of mortgage, credit card, automobile or other types of
receivables with remaining maturities of no more than 397 days (13 months).
These structured financings will be supported by sufficient collateral and
other credit enhancements, including letters of credit, insurance, reserve
funds and guarantees by third parties, to enable such instruments to obtain the
requisite quality rating by a nationally recognized statistical rating
organization, as described below.
The Money Market Fund's investments in short-term corporate, partnership,
trust and other entities debt and bank money instruments will be rated, or will
be issued by issuers who have been rated, in one of the two highest rating
categories for short-term debt obligations by a nationally recognized
statistical rating organization (an "NRSRO") or, if not rated, will be of
comparable quality as determined by the Trustees of the Money Market Fund. The
Money Market Fund's investments in corporate, partnership and trust bonds and
debentures (which must have maturities at the date of purchase of 397 days (13
months) or less) will be in issuers who have received from the requisite NRSROs
a rating, with respect to a class of short-term debt obligations that is
comparable in priority and security with the investment, in one of the two
highest rating categories for short-term obligations or, if not rated, will be
of comparable quality as determined by the Trustees of the Trust. Currently,
there are six NRSROs: Duff & Phelps Inc., Fitch Investors Service, Inc., IBCA
Limited and its affiliate IBCA Inc., Thompson Bankwatch, Inc., Moody's
Investors Service, Inc., and Standard & Poor's Corporation.
A Securities and Exchange Commission regulation ordinarily limits investments
by the Money Market Fund in securities issued by any one issuer (other than the
U.S. Government, its agencies or instrumentalities) to not more than 5% of its
total assets, or in the event that such securities do not have the highest
rating, not more than 1% of its total assets. In addition, such regulation
requires that not more than 5% of the Money
7
<PAGE>
Market Fund's total assets be invested in securities that do not have the
highest rating or are not of comparable quality to securities with the highest
rating as determined by the Trustees of the Trust.
The Money Market Fund may purchase money market securities on a forward
commitment basis at fixed purchase terms. The purchase of money market
securities on a forward commitment basis involves the risk that the yields
available in the market when the delivery takes place may actually be higher
than those obtained in the transaction itself; if yields increase, the value of
securities purchased on a forward commitment basis will generally decrease. A
separate account of the Money Market Fund will be established with its
Custodian consisting of cash or liquid money market securities having a market
value at all times at least equal to the amount of the forward commitment.
For purposes of its investment policies, the Money Market Fund defines short-
term money market securities as securities having a maturity of no more than
762 days (25 months) in the case of U.S. Government and agency securities and
no more than 397 days (13 months) in the case of all other securities. The
dollar-weighted average maturity of the Money Market Fund's portfolio will not
exceed 90 days. During the Money Market Fund's fiscal year ended October 31,
1995, the average maturity of its portfolio ranged from 45 days to 89 days.
Investment Restrictions: The Money Market Fund has adopted a number of
restrictions and policies relating to the investment of its assets and its
activities, which are fundamental policies and may not be changed without the
approval of the holders of a majority of the Money Market Fund's outstanding
voting securities as defined in the Investment Company Act of 1940, as amended
(the "Investment Company Act"). Among the more significant restrictions, the
Money Market Fund may not: (1) purchase any securities other than (i) money
market and (ii) other securities described under "Investment Objectives and
Policies"; (2) invest more than 25% of its total assets (taken at market value
at the time of each investment) in the securities of issuers in any particular
industry (other than U.S. Government securities, Government agency securities,
or domestic bank money instruments); (3) purchase the securities of any one
issuer, other than the U.S. Government, its agencies or instrumentalities, if
immediately after such purchase, more than 5% of the value of its total assets
(taken at market value) would be invested in such issuer, except that in the
case of bank money instruments, repurchase agreements and purchase and sale
contracts with any one bank up to 25% of the value of the Money Market Fund's
total assets may be invested without regard to such 5% limitation but shall
instead be subject to a limitation of 15% of the value of its total assets; and
(4) enter into repurchase agreements or purchase and sale contracts if, as a
result, more than 10% of the Money Market Fund's total assets (taken at market
value at the time of each investment) would be subject to repurchase agreements
or purchase and sale contracts maturing in more than seven days.
MANAGEMENT OF THE TRUST
TRUSTEES
The Trustees of the Trust consist of six individuals, five of whom are not
"interested persons" of the Trust as defined in the Investment Company Act of
1940. The Trustees of the Trust are responsible for the overall supervision of
the operations of the Money Market Fund and perform the various duties imposed
on the directors of investment companies by the Investment Company Act.
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The Trustees of the Trust are:
Arthur Zeikel*--President of the Manager and its affiliate, Fund Asset
Management, L.P. ("FAM"); President and Director of Princeton Services, Inc.
("Princeton Services"); Executive Vice President of Merrill Lynch & Co., Inc.
("ML&Co."); and Director of Merrill Lynch Funds Distributor, Inc. (the
"Distributor").
Joe Grills--Member of the Committee of Investment of Employee Benefit Assets
of the Financial Executives Institute ("CIEBA"); Member of CIEBA's Executive
Committee; and Member of the Investment Advisory Committee of the State of New
York Common Retirement Fund.
Walter Mintz--Special Limited Partner of Cumberland Associates (investment
partnership).
Robert S. Salomon, Jr.--Principal of STI Management (investment adviser).
Melvin R. Seiden--President of Silbanc Properties, Ltd. (real estate,
investment and consulting).
Stephen B. Swensrud--Principal of Fernwood Associates (financial
consultants).
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* Interested person, as defined in the Investment Company Act, of the Trust.
MANAGEMENT AND ADVISORY ARRANGEMENTS
The Manager acts as the manager for the Money Market Fund and provides the
Trust and the Money Market Fund with management and investment advisory
services. The Manager is owned and controlled by ML&Co., a financial services
holding company and the parent of Merrill Lynch. The Manager, or an affiliate,
FAM, acts as the investment adviser for more than 130 registered investment
companies and provides investment advice to individual and institutional
accounts. As of January 31, 1996, the Manager and FAM had a total of $202.8
billion in investment company and other portfolio assets under management,
including accounts of certain affiliates of the Manager.
The management agreement with the Manager (the "Management Agreement")
provides that, subject to the direction of the Trustees, the Manager is
responsible for the actual management of the Money Market Fund's portfolio and
constantly reviews the Money Market Fund's holdings in light of its own
research analysis and that from other relevant sources. The responsibility for
making decisions to buy, sell or hold a particular security rests with the
Manager, subject to review by the Trustees. The Manager performs certain of the
other administrative services and provides all of the office space, facilities,
equipment and necessary personnel for management of the Money Market Fund.
Pursuant to the Management Agreement, the Manager is entitled to receive
compensation at the annual rate of 0.50% of the Fund's average net assets not
exceeding $1 billion; 0.45% of the average daily net assets exceeding $1
billion but not exceeding $2 billion; 0.40% of the average daily net assets
exceeding $2 billion but not exceeding $3 billion; 0.375% of average daily net
assets exceeding $3 billion but not exceeding $4 billion; 0.35% of average
daily net assets exceeding $4 billion but not exceeding $7 billion; and 0.325%
of average daily net assets exceeding $7 billion. For the year ended October
31, 1995, the total fee paid by the Money Market Fund to the Manager aggregated
$30,946,227 (based on average net assets of approximately $8.0 billion) and the
effective fee rate was 0.39%. At January 31, 1996 the net assets of the Trust
aggregated approximately $8.8 billion. At this asset level, the annual
management fee would aggregate approximately $33.5 million.
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The Management Agreement obligates the Money Market Fund to pay certain
expenses incurred in its operations, including, among other things, the
management fee, legal and audit fees, unaffiliated Trustees' fees and expenses,
registration fees, custodian and transfer agency fees, accounting and pricing
costs, and certain of the costs of printing proxies, shareholder reports,
prospectuses and statements of additional information. Accounting services are
provided to the Trust by the Manager, and the Trust reimburses the Manager for
its costs in connection with such services. For the year ended October 31,
1995, the Trust paid $478,087 to the Manager in connection with accounting
services. For the year ended October 31, 1995, the ratio of total expenses to
average net assets was 0.59%.
Christopher G. Ayoub is primarily responsible for the day-to-day management
of the Trust's portfolio. Mr. Ayoub is a Vice President of the Fund and has
been a Vice President of the Manager since 1985.
TRANSFER AGENCY SERVICES
Merrill Lynch Financial Data Services, Inc. (the "Transfer Agent"), which is
a wholly-owned subsidiary of ML & Co., acts as the Trust's Transfer Agent
pursuant to a transfer agency agreement (the "Transfer Agency Agreement").
Pursuant to the Transfer Agency Agreement, the Transfer Agent is responsible
for the issuance, transfer and redemption of shares and the opening and
maintenance of shareholder accounts. Pursuant to the Transfer Agency Agreement,
the Transfer Agent receives a fee at the rate of $6.50 per shareholder account
for the first one million accounts and $6.00 per shareholder account for each
account thereafter and is entitled to reimbursement from the Fund for out-of-
pocket expenses incurred by it under the Transfer Agency Agreement. For the
year ended October 31, 1995, the total fee paid by the Trust to the Transfer
Agent pursuant to the Transfer Agency Agreement was $13,964,991. At January 31,
1996, the Trust had 1,915,340 shareholder accounts. At this level of accounts,
the annual fee payable to the Transfer Agent would aggregate approximately
$21.1 million, plus out-of-pocket expenses.
PURCHASE OF SHARES
The Trust is offering Money Market Fund shares to participants in the Self-
Directed Plans and certain independent pension, profit-sharing, annuity and
other qualified plans. There are no minimum initial or subsequent purchase
requirements. Fractional shares of the Money Market Fund will not be sold,
other than through dividend reinvestments.
The Trust is offering shares without a sales charge at a public offering
price equal to the net asset value (normally $1.00 per share) next determined
after a purchase order becomes effective. Share purchase orders are effective
on the date Federal Funds become available to the Money Market Fund. If Federal
Funds are available to the Money Market Fund prior to the determination of net
asset value (generally 4:00 P.M. New York time), on any business day, the order
will be effective on that day. Shares purchased will begin accruing dividends
on the day following the date of purchase. Any order may be rejected by the
Money Market Fund or the Distributor.
Shares of the Fund are offered to participants in various retirement plans in
association with the Merrill Lynch BlueprintSM Program ("Blueprint"). Most
contributions to such plans are made through payroll deductions. In addition to
investing in the Money Market Fund, participants in such plans may invest in
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other mutual funds associated with the Merrill Lynch organization or various
other types of securities. If participants elect to have their contributions
invested in the Money Market Fund, the contributions will be invested
automatically on the business day following the date they are received in the
account. There will be no minimum initial or subsequent purchase requirement
pursuant to these types of plans. Cash balances of less than $1.00 will not be
invested. Additional information about Blueprint can be obtained from Merrill
Lynch, Pierce, Fenner & Smith Incorporated, The BlueprintSM Program, P.O. Box
30441, New Brunswick, New Jersey 08989-0441.
Purchases of shares of the Money Market Fund by pension, profit-sharing and
annuity plans (other than the Self-Directed Plans) are made by payments by the
trustee or sponsor of such plan directly to Merrill Lynch.
As described in Appendix A to the Statement of Additional Information, there
are seven types of Self-Directed Plans: the individual retirement account
("IRA"), the individual retirement rollover account ("IRRA"), a simplified
employee pension plan ("SEP Plus (R)"), a Basic SM (Keogh Plus) profit sharing
plan, a Basic SM (Keogh Plus) money purchase pension plan (together with the
profit sharing plan, the "Basic SM Plans"), a 403(b)(7) Retirement Selector
Account ("RSA") and the corporate self-directed account of Blueprint. Although
the amount which may be contributed to a Self-Directed Plan account in any one
year is subject to certain limitations, assets already in a Self-Directed Plan
account may be invested in the Money Market Fund without regard to such
limitations.
Shareholders considering transferring a tax-deferred retirement account such
as an IRA from Merrill Lynch to another brokerage firm or financial
institution should be aware that, if the firm to which the retirement account
is to be transferred will not take delivery of shares of the Trust, a
shareholder must either redeem the shares so that the cash proceeds can be
transferred to the account at the new firm, or such shareholder must continue
to maintain a retirement account at Merrill Lynch for those shares.
Self-Directed Plan Investments. Investment in shares of the Money Market
Fund by participants in the Self-Directed Plans are made as follows:
Participants in these Self-Directed Plans have three options concerning cash
balances which may arise in their IRA, IRRA, SEP Plus (R), RSA and Basic SM
("Retirement Plan") accounts. First, participants may elect to have such
balances automatically invested in shares of the Money Market Fund or another
money market mutual fund advised by the Manager on a daily basis. Second,
participants may elect to have such balances deposited in an FDIC-insured
money market account with a commercial bank designated by Merrill Lynch except
for RSA accounts. Third, participants may elect to maintain the cash balances
in their Retirement Plan account, in which case such amounts will not be
invested and no return will be earned until investment instructions are
received by Merrill Lynch from the participant.
Cash balances of participants who elect to have such funds automatically
invested in the Money Market Fund will be invested as follows. Cash balances
arising from the sale of securities held in the Self-Directed Plan account
which do not settle on the day of the transaction (such as most common and
preferred stock transactions) become available to the Trust and will be
invested in shares of the Money Market Fund on the business day following the
day that proceeds with respect thereto are received in the Self-Directed Plan
account. Proceeds giving rise to cash balances from the sale of securities
held in the Self-Directed Plan
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account settling on a same day basis and from principal repayments on debt
securities held in the account become available to the Trust and will be
invested in shares of the Money Market Fund on the next business day following
receipt. Cash balances arising from dividends or interest payments on
securities held in the Self-Directed Plan account or from a contribution to the
Self-Directed Plan are invested in shares of the Money Market Fund on the
business day following the date the payment is received in the Self-Directed
Plan account. Cash balances of less than $1.00 will not be invested and no
return will be earned.
A participant in these Self-Directed Plans (except retirement plans in
association with Blueprint) who has not elected to have cash balances
automatically invested in shares of the Money Market Fund may enter a purchase
order through his Merrill Lynch financial consultant. Orders to invest either
cash balances held in a Self-Directed Plan account or funds deposited in the
commercial bank referred to above will become effective on the business day
following the date on which the order is given.
REDEMPTION OF SHARES
Distributions from a Self-Directed Plan to a participant prior to the time
the participant reaches age 59 1/2 may subject the participant to penalty
taxes. There are, however, no adverse tax consequences resulting from
redemptions of shares of the Money Market Fund where the redemption proceeds
remain in the Self-Directed Plan account and are otherwise invested.
Shareholders other than participants in the Self-Directed Plans should consult
their tax advisers concerning tax consequences resulting from redemption of
shares of the Money Market Fund.
The Money Market Fund is required to redeem for cash all of its full and
fractional shares. The redemption price is the net asset value per share next
determined after receipt by Merrill Lynch of proper notice of redemption as
described below. If such notice is received by Merrill Lynch prior to the
determination of net asset value on that day, the redemption will be effective
on such day and payment generally will be made on the next business day. If the
notice is received after the determination of net asset value has been made,
the redemption will be effective on the next business day and payment will be
made on the second business day after receipt of the notice. Shareholders
liquidating their holdings in the Money Market Fund will receive upon
redemption all dividends declared and reinvested until the time of redemption.
Any shareholder may redeem shares of the Money Market Fund by submitting a
written notice of redemption to Merrill Lynch. Participants in IRA, Basic, RSA
and SEP Self-Directed Plans should contact their Merrill Lynch financial
consultant to effect such redemptions. Participants in Self-Directed Plans in
association with Blueprint should contact Merrill Lynch at the toll-free number
furnished to them to effect such redemptions. Redemption requests should not be
sent to the Money Market Fund or to its Transfer Agent. If inadvertently sent
to the Money Market Fund or the Transfer Agent, redemption requests will be
forwarded to Merrill Lynch. The notice must bear the signature of the person in
whose name the Self-Directed Plan is maintained, signed exactly as his name
appears on his Self-Directed Plan adoption agreement.
The Trust has instituted an automatic redemption procedure for participants
in the Self-Directed Plans who have elected to have cash balances in their
accounts automatically invested in shares of the Money Market Fund. In the case
of such participants, unless directed otherwise, Merrill Lynch will redeem a
sufficient number of shares of the Money Market Fund to purchase other
securities which the participant has selected for investment in his Self-
Directed Plan account.
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PORTFOLIO TRANSACTIONS
The money market securities in which the Money Market Fund invests are traded
primarily in the over-the-counter market. Where possible, the Money Market Fund
will deal directly with the dealers who make a market in the securities
involved except in those circumstances where better prices and execution are
available elsewhere. Such dealers usually are acting as principal for their own
account. On occasion, securities may be purchased directly from the issuer.
Money market securities generally are traded on a net basis and do not normally
involve either brokerage commissions or transfer taxes. The cost of executing
portfolio securities transactions of the Money Market Fund will consist
primarily of dealer spreads and underwriting commissions. Under the Investment
Company Act of 1940, persons affiliated with the Trust are prohibited from
dealing with the Trust as a principal in the purchase and sale of securities
unless a permissive order allowing such transactions is obtained from the
Securities and Exchange Commission. Affiliated persons of the Trust may serve
as its broker in over-the-counter transactions conducted on an agency basis.
The Securities and Exchange Commission has issued an order permitting the Trust
to conduct certain principal transactions with Merrill Lynch Government
Securities Inc. and Merrill Lynch Money Markets Inc. subject to certain terms
and conditions. During the fiscal year ended October 31, 1995, the Money Market
Fund engaged in 74 transactions pursuant to such order aggregating
$2,938,941,431.
ADDITIONAL INFORMATION
DIVIDENDS
Dividends are declared and reinvested daily in the form of additional shares
at net asset value. Shareholders will receive statements monthly as to such
reinvestments. Shareholders liquidating their holdings will receive upon
redemption all dividends declared and reinvested through the date of
redemption. Since the net income (including realized gains and losses on the
portfolio assets) is declared as a dividend in shares each time the net income
of the Money Market Fund is determined, the net asset value per share of the
Money Market Fund normally remains constant at $1.00 per share. Fluctuations in
value may be reflected in the number of outstanding shares in the shareholder's
account.
Net income (from the time of the immediately preceding determination thereof)
consists of (i) interest accrued and/or discount earned (including both
original issue and market discount), (ii) plus or minus all realized gains and
losses on portfolio securities, (iii) less the estimated expenses of the Money
Market Fund applicable to that dividend period.
DETERMINATION OF NET ASSET VALUE
The net asset value of the Money Market Fund is determined by the Manager
once daily, immediately after the daily declaration of dividends, on each day
during which the New York Stock Exchange or New York banks are open for
business. Such determination is made as of the close of business on the New
York Stock Exchange (generally, 4:00 P.M., New York time) or, on days when the
New York Stock Exchange is closed but New York banks are open, at 4:00 P.M.,
New York time. The net asset value per share is determined pursuant to the
"penny-rounding" method by adding the fair value of all securities and other
assets in the portfolio including interest accrued but not yet received,
deducting the portfolio's liabilities and dividing by the number of shares
outstanding. The result of this computation will be rounded to the nearest
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whole cent. Securities with remaining maturities of greater than 60 days for
which market quotations are readily available will be valued at market value.
Securities with a remaining maturity of 60 days or less are valued on an
amortized cost basis. This involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument.
EXCHANGE PRIVILEGE
Shareholders of the Money Market Fund have an exchange privilege with Class D
shares of certain other mutual funds advised by the Manager or FAM ("MLAM-
advised mutual funds"). Alternatively, shareholders may exchange shares of the
Money Market Fund for Class A shares of one of the MLAM-advised mutual funds if
the shareholder holds any Class A shares of that fund in his account in which
the exchange is made at the time of the exchange or is otherwise an eligible
Class A investor. Shareholders of the Money Market Fund also may exchange
shares of the Money Market Fund into shares of certain MLAM-advised money
market funds specifically designated as available for exchange by holders of
Money Market Fund shares. There is currently no limitation on the number of
times a shareholder may exercise the exchange privilege. The exchange privilege
may be modified or terminated at any time in accordance with the rules of the
Securities and Exchange Commission. Exercise of the exchange privilege is
treated as a sale for Federal income tax purposes. For further information, see
"Exchange Privilege" in the Statement of Additional Information.
TAXES
Federal. The following is a general summary of the treatment of regulated
investment companies ("RICs") and their shareholders under the Internal Revenue
Code of 1986, as amended (the "Code"). The Trust intends to continue to qualify
the Money Market Fund for the special tax treatment afforded RICs under the
Code. If it so qualifies, the Money Market Fund (but not its shareholders) will
not be subject to Federal income tax on the part of its net ordinary income and
net realized capital gains which it distributes to participants' Self-Directed
Plan accounts. The Trust intends to cause the Money Market Fund to distribute
substantially all of such income.
Dividends paid by the Money Market Fund from its ordinary income or from an
excess of net short-term capital gains over net long-term capital losses
(together referred to hereafter as "ordinary income dividends") are ordinarily
taxable to shareholders as ordinary income. Distributions made from an excess
of net long-term capital gains over net short-term capital losses ("capital
gain dividends") are ordinarily taxable to shareholders as long-term capital
gains, regardless of the length of time the shareholder has owned Fund shares.
Any loss upon the sale or exchange of Fund shares held for six months or less,
however, will be treated as long-term capital loss to the extent of any capital
gain dividends received by the shareholder. Distributions in excess of the
Money Market Fund's earnings and profits will first reduce the adjusted tax
basis of a holder's shares and, after such adjusted tax basis is reduced to
zero, will constitute capital gains to such holder (assuming the shares are
held as a capital asset). Dividends of a RIC are ordinary taxable to
shareholders even though they are reinvested in additional shares of the Fund.
Under certain provisions of the Code, some taxpayers may be subject to a 31%
withholding tax on ordinary income dividends, capital gain dividends and
redemption payments ("backup withholding").
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Generally, participants in the Self-Directed Plans subject to backup
withholding will be those for whom no certified taxpayer identification number
is on file with the Trust or who, to the Trust's knowledge, have furnished an
incorrect number. When establishing an account, an investor must certify under
penalty of perjury that such number is correct and that such investor is not
otherwise subject to backup withholding.
Self-Directed Retirement Plans. Investment in the Money Market Fund is
limited to participants in the self-directed retirement plans ("retirement
plans") for which Merrill Lynch acts as passive custodian. Accordingly, the
general description of the tax treatment of RICs as set forth above is
qualified with respect to the special tax treatment afforded retirement plans
under the Code. Under the Code, neither ordinary income dividends nor capital
gain dividends represent current income to shareholders if such shares are held
in a retirement plan. Rather, distributions from a retirement plan will be
taxable as ordinary income at the rate applicable to the participant at the
time of the distribution. Such distributions would include (i) any pre-tax
contributions to the retirement plan (including pre-tax contributions that have
been rolled over from another retirement plan or individual retirement account
("IRA")), and (ii) dividends (whether or not such dividends are classified as
ordinary income or capital gain dividends). In addition to ordinary income tax,
participants may be subject to the imposition of excise taxes on any
distributed amount, including: (i) a 10% excise tax on any amount withdrawn
from a retirement plan prior to the participant's attainment of age 59 1/2; and
(ii) a 15% excise tax on the amount of any "excess distributions" (generally,
amounts in excess of $150,000) made from the retirement plan or any other
qualified retirement plan or IRA annually.
Under certain limited circumstances (for example, if an individual for whose
benefit a retirement plan is established engages in any transaction prohibited
under Section 4975 of the Code with respect to such account), the retirement
plan would cease to be qualified for the special treatment afforded certain
retirement plans under the Code as of the first day of such taxable year that
the transaction causing disqualification occurred. If a retirement plan through
which a shareholder holds Money Market Fund shares becomes ineligible for
special tax treatment, such shareholder will be treated as having received a
distribution on the first day of the taxable year from the retirement plan in
an amount equal to the fair market value of all assets in the account. Thus,
the shareholder would be taxed currently on (i) the amount of any pre-tax
contributions and previously untaxed dividends held within the account, and
(ii) all ordinary income and capital gain dividends paid by the Fund subsequent
to such event, whether such dividends are received in cash or reinvested in
additional shares. These ordinary income and capital gain dividends also might
be subject to state and local taxes. In the event of retirement plan
disqualification, shareholders also could be subject to the excise tax
described above. Additionally, retirement plan disqualification may subject a
nonresident alien
shareholder to a 30% United States withholding tax on ordinary income dividends
paid by the Fund unless a reduced rate of withholding or a withholding
exemption is provided under applicable treaty law.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect. For the
complete provisions, reference should be made to the pertinent Code sections
and the Treasury regulations promulgated thereunder. The Code and the Treasury
regulations are subject to change by legislative, judicial or administrative
action either prospectively or retroactively.
State. Ordinary income and capital gain dividends on RIC shares held in a
disqualified retirement plan or outside of a retirement plan also may be
subject to state and local taxes. Certain states exempt from state income
taxation dividends paid by RICs which are derived from interest on United
States Government
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obligations. State law varies as to whether dividend income attributable to
United States Government obligations is exempt from state income tax.
Generally, however, states exempt from state income taxation dividends on
shares held within a qualified retirement plan, and commence taxation on such
amounts when actually distributed from the retirement plan.
Shareholders are urged to consult their tax advisers regarding specific
questions as to Federal, foreign, state or local taxes. Foreign investors
should consider applicable foreign taxes in their evaluation of an investment
in the Fund.
ORGANIZATION OF THE TRUST
The Trust was organized on July 15, 1986 under the laws of the Commonwealth
of Massachusetts. The Trust is the successor to a Massachusetts business trust
of the same name organized October 28, 1981. It is a no-load, diversified,
open-end investment company. The Declaration of Trust provides that the Trust
shall be comprised of separate series (the "Series") each of which will consist
of a separate portfolio which will issue a separate class of shares. The
Trustees are authorized to create an unlimited number of Series and, with
respect to each Series, to issue an unlimited number of full and fractional
shares of beneficial interest of a single class. All shares have equal voting
rights, except that only shares of the respective Series are entitled to vote
on matters concerning only that Series. Each issued and outstanding share of a
Series is entitled to one vote and to participate equally in dividends and
distributions declared by such Series and in net assets of such Series upon
liquidation or dissolution remaining after satisfaction of outstanding
liabilities. In the event a Series were unable to meet its obligations, the
remaining Series would assume the unsatisfied obligations of that Series. The
shares of each Series, when issued, will be fully paid and non-assessable by
the Trust. At the date of this Prospectus, the Money Market Fund is the only
Series of the Trust.
The Declaration does not require that the Trust hold an annual meeting of
shareholders. However, the Trust will be required to call special meetings of
shareholders in accordance with the requirements of the Investment Company Act
of 1940 to seek approval of new management and advisory arrangements, of a
material increase in distribution fees or of a change in the fundamental
policies, objectives or restrictions of the Money Market Fund or the Trust. The
Trust also would be required to hold a special shareholders' meeting to elect
new Trustees at such time as less than a majority of the Trustees holding
office have been elected by shareholders. The Declaration provides that a
shareholders' meeting may be called for any reason at the request of 10% of the
outstanding shares of the Trust or by a majority of the Trustees. Except as set
forth above, the Trustees shall continue to hold office and appoint successor
Trustees.
The Declaration of Trust establishing the Trust, dated July 15, 1986, a copy
of which, together with all amendments thereto (the "Declaration"), is on file
in the office of the Secretary of the Commonwealth of Massachusetts, provides
that the name "Merrill Lynch Retirement Series Trust" refers to the Trustees
under the Declaration collectively as Trustees, but not as individuals or
personally; and no Trustee, shareholder, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim of said Trust
but the "Trust Property" (as defined in the Declaration) only shall be liable.
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SHAREHOLDER REPORTS
Only one copy of each shareholder report and certain shareholder
communications will be mailed to each identified shareholder regardless of the
number of accounts such shareholder has. If a shareholder wishes to receive
separate copies of each report and communication for each of the shareholder's
related accounts the shareholder should notify in writing:
Merrill Lynch Financial Data Services, Inc.
P.O. Box 45290
Jacksonville, Florida 32232-5290
The written notification should include the shareholder's name, address, tax
identification number and Merrill Lynch, Pierce, Fenner & Smith Incorporated
and/or mutual fund account numbers. If you have any questions regarding this
please call your Merrill Lynch financial consultant or Merrill Lynch Financial
Data Services, Inc. at 800-221-7210.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Money Market Fund at the
address or telephone number set forth on the cover page of this Prospectus.
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APPLICATION FOR CHECK WRITING PRIVILEGES FOR
MERRILL LYNCH RETIREMENT RESERVES MONEY FUND
If you are either 59 1/2 years or older, permanently disabled or, in the
case of a Merrill Lynch Tax-Deferred Basic (TM) Retirement Plan, you are
eligible for distributions, you may be eligible to write checks of $500 or
more against your balance in the Merrill Lynch Retirement Reserves Money Fund.
(THE RETIREMENT RESERVES CHECK WRITING PRIVILEGE IS NOT AVAILABLE TO
PARTICIPANTS IN CERTAIN EMPLOYEE BENEFIT PLANS (IN ASSOCIATION WITH THE
MERRILL LYNCH BLUEPRINT (SM) PROGRAM) OR TO A PARTICIPANT IN A PENSION, PROFIT-
SHARING OR OTHER QUALIFIED PLAN, WITH THE EXCEPTION OF THE MERRILL LYNCH TAX-
DEFERRED BASIC (TM) RETIREMENT PLAN.)
To apply for the check writing privilege:
--Read the information on this page to determine if you are eligible.
--If you are eligible, read the terms governing the check writing
privilege.
--Complete the Check Request Form on the back of this page.
WHO IS ELIGIBLE FOR CHECK WRITING
You are eligible for the check writing privilege only if you meet the
following three conditions:
(1) YOU ARE EITHER (I) AGE 59 1/2 OR OLDER, (II) PERMANENTLY DISABLED OR
(III), IN THE CASE OF BASIC PLANS, ARE ELIGIBLE FOR DISTRIBUTIONS.
Distributions from an IRA or SEP before you reach age 59 1/2 are
generally subject to an Internal Revenue Service penalty tax equal to
10% of the amount withdrawn unless you are permanently disabled.
Distributions from certain Basic Plans before you reach age 59 1/2 may
also be subject to penalty taxes.
(2) YOU CHOOSE NOT TO HAVE INCOME TAXES WITHHELD FROM AMOUNTS DISTRIBUTED
FROM YOUR ACCOUNT THROUGH USE OF THE CHECK WRITING PRIVILEGE. All
distributions from your account are taxable income to you and are
subject to Federal Income Tax withholding. However, you may for any
reason choose not to have these taxes withheld. You can participate in
the check writing program only if you choose not to have taxes
withheld, since Merrill Lynch cannot withhold taxes from checks you
write. NOTE: You may be responsible, under IRS regulations, for paying
estimated taxes based on the amounts distributed from your account by
check. Be aware also that when your actual taxes for a year are
determined, you could incur IRS penalties if your estimated tax
payments were not sufficient.
(3) YOU HAVE A MERRILL LYNCH RETIREMENT RESERVES MONEY FUND POSITION.
NOTE: IF YOU ARE A PARTICIPANT IN A BASIC PLAN, YOU MUST BE ELIGIBLE UNDER
THE PLAN TO BEGIN RECEIVING PAYMENTS. CHECK WITH YOUR PLAN
ADMINISTRATOR (USUALLY IT IS YOUR EMPLOYER) TO MAKE SURE YOU ARE
ELIGIBLE. IF YOU ARE, YOUR PLAN ADMINISTRATOR MUST ALSO SIGN THE CHECK
REQUEST FORM.
TERMS GOVERNING CHECK WRITING
The check writing program does not establish a checking account relationship
between you and Merrill Lynch or between you and Merrill Lynch Financial Data
Services, Inc.
Instead, these terms apply to the check writing program:
--Each check must be for at least $500.
--Any check for less than $500 will be returned unpaid.
--There are no charges for checks.
--A transaction advice will confirm any check paid against your account, and
distribution by check will be indicated on your account's monthly statement--
there is no separate "checking statement".
--No check may exceed your balance in the Merrill Lynch Retirement Reserves
Money Fund.
NOTE: DO NOT USE CHECKS TO CLOSE OUT OR TRANSFER YOUR ACCOUNT, TO CORRECT AN
OVERCONTRIBUTION (EXCESS CONTRIBUTION) OR TO WITHDRAW AMOUNTS
CLASSIFIED AS VOLUNTARY CONTRIBUTIONS TO BASIC PLANS. THIS IS BECAUSE
ALL MERRILL LYNCH RETIREMENT RESERVES MONEY FUND CHECK DISTRIBUTIONS
WILL BE REPORTED TO THE IRS AS TAXABLE DISTRIBUTIONS. AS A RESULT YOU
MAY BE SUBJECT TO ADVERSE TAX CONSEQUENCES. INSTEAD, CONTACT YOUR
MERRILL LYNCH FINANCIAL CONSULTANT TO MAKE SUCH TRANSACTIONS.
DISTRIBUTIONS OTHER THAN BY CHECK
If you decide to use the check writing privilege, you may still choose to
take distributions from your Retirement Account by contacting your Financial
Consultant rather than by writing checks.
NOTE: FOR DISTRIBUTIONS OTHER THAN BY CHECK WRITING YOU WILL NEED TO COMPLETE
THE APPROPRIATE DISTRIBUTION AND TAX WITHHOLDING FORM WHICH CAN BE
OBTAINED FROM YOUR MERRILL LYNCH FINANCIAL CONSULTANT.
19
<PAGE>
CHECK REQUEST FORM
When completed return this form to: Merrill Lynch Financial Data Services,
Inc.
P.O. Box 45290
Jacksonville, Florida 32232-5290
CHECK NAME. Checks are issued only in the name of the owner of the Retirement
Account. Please enter your name exactly as it appears on your Merrill Lynch
Adoption Agreement:
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
Last Name First Name Initial
ACCOUNT NUMBER FOR YOUR MERRILL LYNCH IRA, BASIC OR SEP RETIREMENT
ACCOUNT. (If you have more than one account, you must complete a separate form
to request checks for each account on which you want to write checks.)
[ ][ ][ ][ ][ ][ ][ ]
Account Number
BIRTHDATE: [ ][ ][ ][ ][ ]
Month-Day-Year
SOCIAL SECURITY NUMBER: [ ][ ][ ][ ][ ][ ][ ][ ][ ]
ADDRESS:[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
Street Address
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
City State Zip Code
CHECK REDEMPTION PRIVILEGE (SEE TERMS AND CONDITIONS IN THE PROSPECTUS): By
signing this form, you request and authorize Merrill Lynch Financial Data
Services, Inc. (the "Transfer Agent") to honor checks or automatic clearing
house ("ACH") debits you draw on the Merrill Lynch Retirement Reserves Money
Fund in your Merrill Lynch Retirement Account (IRA, Basic or SEP) in the
amount of $500 or more, subject to acceptance by the Fund. Payment for the
checks will be made by redeeming sufficient Fund shares in your account
without a signature guarantee.
The Transfer Agent and the Fund reserve all their lawful rights for honoring
checks or ACH debits drawn by you and for redeeming Fund shares pursuant to
this check redemption privilege. You acknowledge that this privilege does not
create a checking account or other bank account relationship between you and
the Transfer Agent or the Fund and the relationship between you and the
Transfer Agent is that of a shareholder-transfer agent.
INTERNAL REVENUE SERVICE REPORTING
MERRILL LYNCH IS REQUIRED BY LAW TO REPORT TO THE INTERNAL REVENUE SERVICE
ALL DISTRIBUTIONS MADE DURING THE YEAR FROM YOUR RETIREMENT ACCOUNT.
PLEASE NOTE:-- THE YEAR OF DISTRIBUTION WILL BE DETERMINED BY THE DATE THE
CHECK IS PROCESSED BY MERRILL LYNCH FINANCIAL DATA SERVICES,
INC., NOT THE DATE YOU WRITE THE CHECK OR THE DATE THE CHECK IS
PRESENTED TO A LOCAL BANK FOR PAYMENT.
THEREFORE, IF YOU ARE OVER AGE 70 1/2 AND MUST TAKE A
DISTRIBUTION BY DECEMBER 31 OF A CALENDAR YEAR, YOU MUST ALLOW
SUFFICIENT TIME FOR THE CHECK TO BE PAID BY THE BANK BEFORE
YEAR-END. OTHERWISE, YOUR DISTRIBUTION WILL NOT BE REFLECTED
AND REPORTED TO THE IRS IN THE YEAR FOR WHICH IT WAS INTENDED.
SIGNATURE
By signing this check request form, you confirm that you are either 59 1/2
years of age or older, permanently disabled or, in the case of Basic Plans,
are eligible for distributions, and that you choose not to have income taxes
withheld from distributions made under the check writing program.
Your signature: _____________________________________________ Date: __________
If you are a Basic Plan participant, your Plan Administrator must also sign
to indicate you are eligible to start receiving distributions under the Plan.
Signature of Plan Administrator: ______________________________________________
20
<PAGE>
[This Page Intentionally Left Blank]
21
<PAGE>
[This Page Intentionally Left Blank]
22
<PAGE>
MANAGER
Merrill Lynch Asset Management
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Mailing Address:
P.O. Box 9011
Princeton, New Jersey 08543-9011
DISTRIBUTOR
Merrill Lynch Funds Distributor, Inc.
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Mailing Address:
P.O. Box 9081
Princeton, New Jersey 08543-9081
CUSTODIAN
The Bank of New York
90 Washington Street
12th Floor
New York, New York 10286
TRANSFER AGENT
Merrill Lynch Financial Data Services, Inc.
Administrative Offices:
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
Mailing Address:
P.O. Box 45290
Jacksonville, Florida 32232-5290
INDEPENDENT AUDITORS
Deloitte & Touche LLP
117 Campus Drive
Princeton, New Jersey 08540-6400
COUNSEL
Brown & Wood
One World Trade Center
New York, New York 10048-0557
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESEN-
TATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE TRUST, THE MANAGER, OR THE DISTRIBUTOR. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFERING IN ANY STATE IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
----------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fee Table.................................................................. 2
Financial Highlights....................................................... 3
Yield Information.......................................................... 4
Investment Objectives and Policies......................................... 4
Management of the Trust.................................................... 8
Trustees.................................................................. 8
Management and Advisory Arrangements...................................... 9
Transfer Agency Services.................................................. 10
Purchase of Shares......................................................... 10
Redemption of Shares....................................................... 12
Portfolio Transactions..................................................... 13
Additional Information..................................................... 13
Dividends................................................................. 13
Determination of Net Asset Value.......................................... 13
Exchange Privilege........................................................ 14
Taxes..................................................................... 14
Organization of the Trust................................................. 16
Shareholder Reports....................................................... 17
Shareholder Inquiries..................................................... 17
Application for Check Writing Privileges................................... 19
</TABLE>
Code # 10093-0296
[LOGO] MERRILL LYNCH
MERRILL LYNCH RETIREMENT
RESERVES MONEY FUND
[ART]
PROSPECTUS
February 26, 1996
Distributor:
Merrill Lynch
Funds Distributor, Inc.
This prospectus should be retained for future reference.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
MERRILL LYNCH RETIREMENT RESERVES MONEY FUND
MERRILL LYNCH RETIREMENT SERIES TRUST
P.O. Box 9011, Princeton, New Jersey 08543-9011 . Phone No. (609) 282-2800
-------------------------
The investment objectives of the Merrill Lynch Retirement Reserves Money Fund
(the "Money Market Fund") are to seek current income, preservation of capital,
and liquidity available from investing in a diversified portfolio of short-term
money market securities. These securities primarily consist of U.S. Government
and agency securities, bank certificates of deposit and bankers' acceptances,
commercial paper and repurchase agreements. For purposes of its investment
policies, the Money Market Fund defines short-term money market securities as
securities having a maturity of no more than 762 days (25 months) in the case
of U.S. Government and agency securities and no more than 397 days (13 months)
in the case of all other securities. Management of the Money Market Fund
expects that substantially all the assets of the Money Market Fund will be
invested in securities maturing in less than one year, but at times some
portion may have longer maturities not exceeding 762 days. The dollar weighted-
average maturity of the Money Market Fund's portfolio will not exceed 90 days.
Shares of the Money Market Fund are offered to participants in the self-
directed retirement plans for which Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") acts as passive custodian (the "Self-Directed
Plans"). For a description of the Self-Directed Plans, see Appendix A to this
Statement of Additional Information. Shares of the Money Market Fund are also
offered to certain independent pension, profit-sharing, annuity and other
qualified plans.
The Money Market Fund is a separate series, offering a separate class of
shares, of Merrill Lynch Retirement Series Trust (the "Trust"), an
unincorporated business trust organized under the laws of Massachusetts. The
Trust is a no-load, diversified, open-end investment company which may be
comprised of separate series ("Series"), each of which would be a separate
portfolio offering a separate class of shares to participants in the retirement
plans described herein.
-------------------------
This Statement of Additional Information of the Money Market Fund is not a
prospectus and should be read in conjunction with the prospectus of the Money
Market Fund, dated February 26, 1996 (the "Prospectus"), which has been filed
with the Securities and Exchange Commission and can be obtained, without
charge, by calling or by writing the Money Market Fund at the above telephone
number or address. This Statement of Additional Information has been
incorporated by reference into the Prospectus. Capitalized terms used but not
defined herein have the same meanings as in the Prospectus.
-------------------------
MERRILL LYNCH ASSET MANAGEMENT--MANAGER
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.--DISTRIBUTOR
-------------------------
The date of this Statement of Additional Information is February 26, 1996.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of the Money Market Fund are to seek current
income, preservation of capital, and liquidity available from investing in a
diversified portfolio of short-term money market securities. Reference is made
to "Investment Objectives and Policies" in the Prospectus for a discussion of
the investment objectives and policies of the Money Market Fund.
As discussed in the Prospectus, the Money Market Fund may invest in money
market securities pursuant to repurchase agreements involving money market
securities and involving U.S. Government and agency securities with longer
maturities. Repurchase agreements may be entered into only with a member bank
of the Federal Reserve System or a primary dealer in U.S. Government securities
or an affiliate thereof. Under such agreements, the bank or primary dealer or
an affiliate thereof agrees, upon entering into the contract, to repurchase the
security at a mutually agreed upon time and price, thereby determining the
yield during the term of the agreement. This results in a fixed rate of return
insulated from market fluctuations during such period. The prices at which the
trades of repurchase agreements are conducted do not reflect accrued interest
on the underlying obligation. Such agreements usually cover short periods, such
as under a week. Repurchase agreements may be construed to be collateralized
loans by the purchaser to the seller secured by the securities transferred to
the purchaser. The Money Market Fund will require the seller to provide
additional collateral if the market value of the securities falls below the
repurchase price at any time during the term of the repurchase agreement. In
the event of a default by the seller, the Money Market Fund ordinarily will
retain ownership of the securities underlying the repurchase agreement, and
instead of a contractually fixed rate of return, the rate of return to the
Money Market Fund shall be dependent upon intervening fluctuations of the
market value of such securities and the accrued interest on the securities. In
such event, the Money Market Fund would have rights against the seller for
breach of contract with respect to any losses arising from market fluctuations
following the failure of the seller to perform. In the event of default by the
seller under a repurchase agreement construed to be a collateralized loan, the
underlying securities are not owned by the Money Market Fund but only
constitute collateral for the seller's obligation to pay the repurchase price.
Therefore, the Money Market Fund may suffer time delays and incur costs or
possible losses in connection with the disposition of the collateral. From time
to time the Money Market Fund also may invest in money market securities
pursuant to purchase and sale contracts. While purchase and sale contracts are
similar to repurchase agreements, purchase and sale contracts are structured so
as to be in substance more like a purchase and sale of the underlying security
than is the case with repurchase agreements.
Also, as discussed in the Prospectus, the Money Market Fund may invest in
obligations issued by commercial and savings banks and savings and loan
associations. The savings banks and savings and loan associations must be
organized and operating in the United States. The obligations of commercial
banks may be issued by U.S. banks, foreign branches or subsidiaries of U.S.
banks ("Eurodollar" obligations) or U.S. branches or subsidiaries of foreign
banks ("Yankeedollar" obligations). Eurodollar and Yankeedollar obligations may
be general obligations of the parent bank or may be limited to the issuing
branch by the terms of the specific obligation or by government regulation.
Eurodollar and Yankeedollar obligations may involve additional investment
risks from the risks of obligations of U.S. banks. Such investment risks
include adverse political and economic developments, the possible imposition of
withholding taxes on interest income payable on such obligations, the possible
seizure or nationalization of foreign deposits and the possible establishment
of exchange controls or other foreign
2
<PAGE>
governmental laws or restrictions which might adversely affect the payment of
principal and interest. Generally the issuers of such obligations are subject
to fewer U.S. regulatory requirements than are applicable to U.S. banks.
Foreign branches or subsidiaries of U.S. banks may be subject to less stringent
reserve requirements than U.S. banks. U.S. branches or subsidiaries of foreign
banks are subject to the reserve requirements of the states in which they are
located. There may be less publicly available information about a U.S. branch
or subsidiary of a foreign bank than about a U.S. bank, and such branches or
subsidiaries may not be subject to the same accounting, auditing and financial
recordkeeping standards and requirements as U.S. banks. Evidence of ownership
of Eurodollar obligations may be held outside of the United States, and the
Money Market Fund may be subject to risks associated with the holding of such
property overseas. Eurodollar obligations of the Money Market Fund held
overseas will be held by foreign branches of the Money Market Fund's Custodian
or by foreign branches of other U.S. banks or foreign banks under subcustodian
arrangements complying with the requirements of the Investment Company Act of
1940.
Merrill Lynch Asset Management, L.P. ("MLAM" or the "Manager") will carefully
consider the above factors in making investments in Eurodollar and Yankeedollar
obligations and will not knowingly purchase obligations which, at the time of
purchase, are subject to exchange controls or withholding taxes. Generally the
Money Market Fund will limit its Yankeedollar investments to obligations of
banks organized in Canada, France, Germany, Japan, the Netherlands,
Switzerland, the United Kingdom and other western industrialized nations.
The Money Market Fund's investments in short-term corporate, partnership and
trust debt and bank money instruments will be rated, or will be issued by
issuers who have been rated in one of the two highest rating categories for
short-term debt obligations by a nationally recognized statistical rating
organization (an "NRSRO") or, if not rated, will be of comparable quality as
determined by the Trustees of the Money Market Fund. The Money Market Fund's
investments in corporate, partnership and trust bonds and debentures (which
must have maturities at the date of purchase of 397 days (13 months) or less)
will be in issuers who have received from the requisite NRSROs a rating with
respect to a class of short-term debt obligations that is comparable in
priority and security with the investment in one of the two highest rating
categories for short-term obligations or if not rated, will be of comparable
quality as determined by the Trustees of the Money Market Fund. Currently,
there are six NRSROs: Duff and Phelps Inc., Fitch Investors Service, Inc., IBCA
Limited and its affiliate IBCA Inc., Thompson Bankwatch, Inc., Moody's
Investors Service, Inc. and Standard & Poor's Corporation. See "Appendix--
Description of Commercial Paper, Bank Money Instruments and Corporate Bond
Ratings".
In addition to the investment restrictions set forth in the Prospectus, the
Money Market Fund has adopted the following restrictions and policies relating
to the investment of its assets and its activities, which are fundamental
policies and may not be changed without the approval of the holders of a
majority of the Money Market Fund's outstanding voting securities (which for
this purpose means the lesser of (i) 67% of the shares represented at a meeting
at which more than 50% of the outstanding shares are represented or (ii) more
than 50% of the outstanding shares). The Money Market Fund may not (1) make
investments for the purpose of exercising control or management; (2) underwrite
securities issued by other persons; (3) purchase securities of other investment
companies, except in connection with a merger, consolidation, acquisition or
reorganization; (4) purchase or sell real estate (other than money market
securities secured by real estate or interests therein or money market
securities issued by companies which invest in real estate or interests
3
<PAGE>
therein), commodities or commodity contracts, interests in oil, gas or other
mineral exploration or development programs; (5) purchase any securities on
margin, except for use of short-term credit necessary for clearance of
purchases and sales of portfolio securities; (6) make short sales of securities
or maintain a short position or write, purchase or sell puts, calls, straddles,
spreads or combinations thereof; (7) make loans to other persons, provided that
the Money Market Fund may purchase money market securities or enter into
repurchase agreements or purchase and sale contracts and lend securities owned
or held by it pursuant to (8) below; (8) lend its portfolio securities other
than as provided in the guidelines set forth below, or in excess of 33 1/3% of
its total assets, taken at market value; (9) borrow amounts in excess of 20% of
its total assets, taken at market value (including the amount borrowed), and
then only from banks as a temporary measure for extraordinary or emergency
purposes. (The borrowing provisions shall not apply to reverse repurchase
agreements.) Usually only "leveraged" investment companies may borrow in excess
of 5% of their assets; however, the Money Market Fund will not borrow to
increase income but only to meet redemption requests which might otherwise
require untimely dispositions of portfolio securities. The Money Market Fund
will not purchase securities while borrowings are outstanding. Interest paid on
such borrowings will reduce net income.; (10) mortgage, pledge, hypothecate or
in any manner transfer (except as provided in (8) above) as security for
indebtedness any securities owned or held by the Money Market Fund except as
may be necessary in connection with borrowings referred to in investment
restriction (9) above, and then such mortgaging, pledging or hypothecating may
not exceed 10% of the Money Market Fund's net assets, taken at market value;
(11) invest in securities for which no readily available market exists if more
than 10% of its total assets (taken at market value) would be invested in such
securities; (12) invest in securities with legal or contractual restrictions on
resale (except for repurchase agreements or purchase and sale contracts), or in
securities of issuers (other than U.S. Government agency securities) having a
record, together with predecessors, of less than three years of continuous
operation if, regarding all such securities, more than 5% of its total assets
(taken at market value) would be invested in such securities; (13) enter into
reverse repurchase agreements if, as a result thereof, the Money Market Fund's
obligations with respect to reverse repurchase agreements and borrowings
permitted in (9) above would exceed 33 1/3% of its net assets (defined to be
total assets, taken at market value, less liabilities other than reverse
repurchase agreements). Also, the Money Market Fund has specifically undertaken
with one state securities commission that, because the Money Market Fund can
only invest in a diversified portfolio of short-term money market securities,
it will not invest in warrants.
Lending of Portfolio Securities. Subject to investment restriction (8) above,
the Money Market Fund may from time to time lend securities from its portfolio
to brokers, dealers and financial institutions and receive collateral in cash
or securities issued or guaranteed by the United States Government which will
be maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. Such cash collateral will be invested in
short-term securities, the income from which will increase the return to the
Money Market Fund. Such loans will be terminable at any time. The Money Market
Fund will have the right to regain record ownership of loaned securities to
exercise beneficial rights and may do so when deemed appropriate. The Money
Market Fund may pay reasonable fees to persons unaffiliated with the Money
Market Fund in connection with the arranging of such loans.
4
<PAGE>
MANAGEMENT OF THE TRUST
TRUSTEES AND OFFICERS
The Trustees and executive officers of the Trust, their ages and their
principal occupations for at least the last five years are set forth below.
Unless otherwise noted, the address of each Trustee and executive officer is
Merrill Lynch Asset Management, L.P., P.O. Box 9011, Princeton, New Jersey
08543-9011.
Arthur Zeikel (63)--President and Trustee (1)(2)--President of MLAM (which
term as used herein includes its corporate predecessors) since 1977; President
of Fund Asset Management, L.P. ("FAM") (which term as used herein includes its
corporate predecessors) since 1977; President and Director of Princeton
Services, Inc. ("Princeton Services") since 1993; Executive Vice President of
Merrill Lynch & Co., Inc. ("ML&Co.") since 1990; Executive Vice President of
Merrill Lynch from 1990 to 1995 and a Senior Vice President thereof from 1985
to 1990; Director of Merrill Lynch Funds Distributor, Inc. (the "Distributor").
Joe Grills (60)--Trustee (2)--183 Soundview Lane, New Canaan, Connecticut
06840. Member of the Committee of Investment of Employee Benefit Assets of the
Financial Executives Institute ("CIEBA") since 1986; member of CIEBA's
Executive Committee since 1988 and its Chairman from 1991 to 1992; Assistant
Treasurer of International Business Machines Incorporated ("IBM") and Chief
Investment Officer of the IBM Retirement Funds from 1986 until 1993; Member of
the Investment Advisory Committee of the State of New York Common Retirement
Fund; Director, Duke Management Company and LaSalle Street Fund.
Walter Mintz (67)--Trustee (2)--1114 Avenue of the Americas, New York, New
York 10036. Special Limited Partner of Cumberland Associates (investment
partnership) since 1982.
Robert S. Salomon, Jr. (59)--Trustee (2)(3)--106 Dolphin Cove Quay, Stamford,
Connecticut 06902. Principal of STI Management (investment adviser); Chairman
and CEO of Salomon Brothers Asset Management Inc from 1992 to 1995; Chairman of
Salomon Brothers equity mutual funds from 1992 to 1995; Director of Stock
Research and U.S. Equity Strategist at Salomon Brothers Inc from 1975 to 1991;
Director, Common Fund and the Norwalk Community Technical College Foundation.
Melvin R. Seiden (65)--Trustee (2)--780 Third Avenue, Suite 2502, New York,
New York 10017. President of Silbanc Properties, Ltd. (real estate, investments
and consulting) since 1987; Chairman and President of Seiden & de Cuevas, Inc.
(private investment firm) from 1964 to 1987.
Stephen B. Swensrud (62)--Trustee (2)--24 Federal Street, Suite 400, Boston,
Massachusetts 02110. Principal of Fernwood Associates (financial consultants).
Terry K. Glenn (55)--Executive Vice President (1)(2)--Executive Vice
President of the Manager and FAM since 1983; President of the Distributor since
1986 and Director thereof since 1991; Executive Vice President and Director of
Princeton Services since 1993; President of Princeton Administrators, L.P.
since 1988.
Joseph T. Monagle, Jr. (47)--Senior Vice President (1)(2)--Senior Vice
President of the Manager and FAM since 1990; Vice President of the Manager from
1978 to 1990; Senior Vice President of Princeton Services since 1993.
Christopher G. Ayoub (40)--Vice President (1)(2)--Vice President of the
Manager since 1985; Assistant Vice President of the Manager from 1984 to 1985
and employee since 1982.
5
<PAGE>
Donald C. Burke (35)--Vice President (1)(2)--Vice President and Director of
Taxation of MLAM since 1990; employee of Deloitte & Touche LLP from 1982 to
1990.
Gerald M. Richard (46)--Treasurer (1)(2)--Senior Vice President and
Treasurer of the Manager and FAM since 1984; Vice President of the Distributor
since 1981 and Treasurer thereof since 1984; Senior Vice President and
Treasurer of Princeton Services since 1993.
Mark B. Goldfus (49)--Secretary (1)(2)--Vice President of the Manager and
FAM since 1985.
- ---------------------
(1) Interested person, as defined in the Investment Company Act of 1940, of
the Trust.
(2) Such Trustee or officer is a director, trustee, officer or member of an
advisory board of certain other investment companies for which the Manager
or FAM acts as investment adviser.
(3) On January 17, 1996, Robert S. Salomon, Jr. was elected a Trustee of the
Trust to fill the vacancy created by the retirement of Harry Woolf, who
retired as a Trustee, effective December 31, 1995, pursuant to the Trust's
retirement policy.
At February 1, 1996, the Trustees and officers of the Trust as a group (12
persons) owned an aggregate of less than 1% of the outstanding shares of
beneficial interest of the Trust. At such date, the officers of the Trust
owned an aggregate of less than 1% of the outstanding Common Stock of ML&Co.
COMPENSATION OF TRUSTEES
Pursuant to the terms of its management agreement with the Trust (the
"Management Agreement"), the Manager pays all compensation of officers and
employees of the Trust as well as the fees of all Trustees of the Trust who
are affiliated persons of ML&Co. or its subsidiaries. The Trust pays each
unaffiliated Trustee a fee of $4,000 per year plus $1,000 per meeting attended
and all Trustees' actual out-of-pocket expenses relating to attendance at
meetings. The Trust also pays each member of the Audit Committee, which
consists of all of the unaffiliated Trustees, an annual fee of $4,000 plus a
fee of $750 for each meeting of the Audit Committee which is held on a day on
which the Board of Trustees does not meet, together with all out-of-pocket
expenses relating to attendance at such meetings. These fees and expenses
aggregated $77,794 for the fiscal year ended October 31, 1995.
The following table sets forth for the fiscal year ended October 31, 1995,
compensation paid by the Trust to the non-interested Trustees and, for the
calendar year ending December 31, 1995, the aggregate compensation paid by all
investment companies (including the Trust) advised by MLAM and its affiliate,
FAM ("MLAM/FAM Advised Funds"), to the non-interested Trustees.
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION
PENSION OR FROM TRUST AND
COMPENSATION RETIREMENT BENEFITS MLAM/FAM ADVISED
NAME OF FROM THE ACCRUED AS PART FUNDS PAID TO
TRUSTEE TRUST OF TRUST EXPENSE TRUSTEES
- ------- ------------ ------------------- ----------------------
<S> <C> <C> <C>
Joe Grills(1) $15,500 None $153,883
Walter Mintz(1) $15,500 None $153,883
Melvin R. Seiden(1) $15,500 None $153,883
Stephen B. Swensrud(1) $15,500 None $153,883
Harry Woolf(1) $15,500 None $153,883
</TABLE>
- --------
(1) In addition to the Trust, the Trustees serve on the boards of other
MLAM/FAM Advised Funds as follows: Joe Grills (36 funds and portfolios);
Walter Mintz (36 funds and portfolios); Melvin R. Seiden (36 funds and
portfolios); Stephen B. Swensrud (46 funds and portfolios); and Harry
Woolf, prior to his retirement, effective December 31, 1995, pursuant to
the Trust's retirement policy (36 funds and portfolios).
6
<PAGE>
MANAGEMENT AND ADVISORY ARRANGEMENTS
Reference is made to "Management of the Trust--Management and Advisory
Arrangements" in the Prospectus for certain information concerning the
management and advisory arrangements of the Money Market Fund.
Subject to the direction of the Trustees, the Manager performs, or arranges
for affiliates to perform, pursuant to the Management Agreement, the management
and administrative services necessary for the operation of the Trust and the
Money Market Fund. The Manager and its affiliates will provide a variety of
administrative and operational services to shareholders of the Money Market
Fund, including processing services related to the purchase and redemption of
shares and the general handling of shareholder relations. The Manager is
responsible for the actual management of the Money Market Fund's portfolio and
constantly reviews the Money Market Fund's holdings in light of its own
research analysis and that from other relevant sources. The responsibility for
making decisions to buy, sell or hold a particular security rests with the
Manager, subject to review by the Trustees. The Manager provides the Trust and
the Money Market Fund with office space, equipment and facilities and such
other services as the Manager, subject to supervision and review by the
Trustees, shall from time to time determine to be necessary to perform its
obligations under the Management Agreement.
Securities held by the Money Market Fund may also be held by, or be
appropriate investments for, other funds or clients (collectively referred to
as "clients") for which the Manager or its affiliate, FAM, acts as an
investment adviser. Because of different investment objectives or other
factors, a particular security may be bought for one or more clients when one
or more other clients are selling the security. If purchases or sales of
securities for the Money Market Fund or other clients arise for consideration
at or about the same time, transactions in such securities will be made,
insofar as feasible, for the respective clients in a manner deemed equitable to
all by the Manager or FAM. To the extent that transactions on behalf of more
than one client of the Manager or FAM during the same period may increase the
demand for securities being purchased or the supply of securities being sold,
there may be an adverse effect on price.
As compensation for its services under the Management Agreement with the
Trust, the Manager is entitled to receive a fee from the Money Market Fund at
the end of each month at the annual rates of 0.50% of average daily net assets
not exceeding $1 billion; 0.45% of average daily net assets exceeding $1
billion but not exceeding $2 billion; 0.40% of average daily net assets
exceeding $2 billion but not exceeding $3 billion; 0.375% of average daily net
assets exceeding $3 billion but not exceeding $4 billion; 0.35% of average
daily net assets exceeding $4 billion but not exceeding $7 billion; and 0.325%
of average daily net assets exceeding $7 billion. For the years ended October
31, 1993, 1994 and 1995, the fees paid by the Money Market Fund to the Manager
were $27,339,619, $28,889,652 and $30,946,227, respectively.
The State of California imposes limitations on the annual expenses of the
Money Market Fund. These expense limitations require that the Manager reimburse
the Money Market Fund in an amount necessary to prevent the aggregate ordinary
operating expenses of the Money Market Fund from exceeding in any fiscal year
2.5% of the Money Market 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. Expenses not covered by the limitations are
interest, taxes, distribution fees, brokerage fees and commissions and
extraordinary charges such as litigation costs. Such reimbursement, if any,
will be subtracted from the monthly management fee. The Manager's obligation to
reimburse the Fund is limited to the amount of the management fee. No fee
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payment will be made to the Manager during the year which will cause such
expenses to exceed the most restrictive expense limitation at the time of such
payment.
Additionally, the Manager has voluntarily undertaken to reimburse the Money
Market Fund for fees received by it from the Money Market Fund to the extent
that the Money Market Fund's aggregate ordinary operating expenses in any
fiscal year exceed 0.99% of the Money Market Fund's average net assets. The
Manager may discontinue this arrangement at any time. For the years ended
October 31, 1993, 1994 and 1995, no reimbursement was required pursuant to the
applicable expense limitations.
The Management Agreement obligates the Manager to provide advisory,
administrative and management services, to furnish office space and facilities
for management of the affairs of the Trust and the Money Market Fund, to pay
all compensation of and furnish office space for officers and employees of the
Trust, as well as the fees of all Trustees of the Trust who are affiliated
persons of ML&Co. or any of its subsidiaries. The Money Market Fund pays all
other expenses incurred in its operation, and, if other Series should be added,
a portion of the Trust's general administrative expenses will be allocated on
the basis of the asset size of the respective Series. Expenses that will be
borne directly by the Series include redemption expenses, expenses of portfolio
transactions, expenses of registering the shares under Federal and state
securities laws, pricing costs (including the daily calculation of net asset
value), fees for legal and auditing services, expenses of printing proxies,
shareholder reports, prospectuses and statements of additional information
(except to the extent paid by the Distributor as described below), charges of
the Custodian and Transfer Agent, Securities and Exchange Commission fees,
interest, certain taxes, and other expenses attributable to a particular
Series. Expenses which will be allocated on the basis of asset size of the
respective Series include fees and expenses of unaffiliated Trustees, state
franchise taxes, expenses related to shareholder meetings, and other expenses
properly payable by the Trust. If additional Series are added to the Trust, the
organizational expenses will be allocated among the Series in a manner deemed
equitable by the Trustees. Depending upon the nature of a lawsuit, litigation
costs may be assessed to the specific Series to which the lawsuit relates or
allocated on the basis of the asset size of the respective Series. The Trustees
have determined that this is an appropriate method of allocation of expenses.
As required by the Distribution Agreement, the Distributor will pay certain of
the expenses of each Series incurred in connection with the offering of shares
of each Series; after the prospectuses, statements of additional information
and periodic reports have been prepared and set in type, the Distributor will
pay for the printing and distribution of copies thereof used in connection with
the offering to investors. The Distributor will also pay for other
supplementary sales literature.
The Manager is a limited partnership, the partners of which are ML&Co. and
Princeton Services, Inc. ML&Co. and Princeton Services are "controlling
persons" of the Manager (as defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act")) because of their ownership of its
voting securities or their power to exercise a controlling influence over its
management or policies.
Duration and Termination. Unless earlier terminated as described below, the
Management Agreement will continue in effect from year to year if approved
annually (a) by the Trustees of the Trust or by a majority of the outstanding
shares of the Money Market Fund and (b) by a majority of the Trustees who are
not parties to such contract or interested persons (as defined in the
Investment Company Act) of any such party. Such agreement terminates upon
assignment and may be terminated without penalty on 60 days' written notice at
the option of either party thereto or by the vote of the shareholders of the
Money Market Fund.
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PURCHASE AND REDEMPTION OF SHARES
Reference is made to "Purchase of Shares" and "Redemption of Shares" in the
Prospectus for certain information as to the purchase and redemption of Money
Market Fund shares.
The right to receive payment with respect to any redemption of Money Market
Fund shares may be suspended by the Trust for a period of up to seven days.
Suspensions of more than seven days may not be made except (1) for any period
(a) during which the New York Stock Exchange is closed, other than customary
weekend and holiday closings or (b) during which trading on the New York Stock
Exchange is restricted; (2) for any period during which an emergency exists as
a result of which (a) disposal by the Money Market Fund of securities owned by
it is not reasonably practicable or (b) it is not reasonably practicable for
the Money Market Fund fairly to determine the value of its net assets; or (3)
for such other periods as the Securities and Exchange Commission may by order
permit for the protection of security holders of the Money Market Fund. The
Commission shall by rules and regulations determine the conditions under which
(i) trading shall be deemed to be restricted and (ii) an emergency shall be
deemed to exist within the meaning of clause (2) above.
All purchases and redemptions of Money Market Fund shares and dividend
reinvestments will be confirmed to participants in the IRA, Basic and SEP Self-
Directed Plans (rounded to the nearest share) in the statement which is sent
monthly to all participants in these Self-Directed Plans. The Money Market Fund
and the Distributor have received an exemptive order from the Securities and
Exchange Commission which permits the Money Market Fund to omit sending out
more frequent confirmations with respect to certain transactions. These
transactions are purchases resulting from automatic investments in shares of
the Money Market Fund and redemptions which are effected automatically to
purchase other securities which the participant has selected for investment in
his account.
Participants in Self-Directed Plans in association with the Merrill Lynch
Blueprint Program will receive quarterly statements reflecting all purchases,
redemptions and dividend reinvestments of Money Market Fund shares. In
addition, these participants will receive an individual confirmation with
respect to each redemption of Money Market Fund shares and each purchase of
such shares other than purchases which are made automatically through payroll
deductions. Shareholders who are not participants in the Self-Directed Plans
will receive quarterly statements reflecting all purchases, redemptions and
dividend reinvestments of Money Market Fund shares.
In the interest of economy and convenience and because of the operating
procedures of the Money Market Fund, certificates representing the Money Market
Fund's shares will not be physically issued. Shares are maintained by the Money
Market Fund on the register maintained by the Transfer Agent, and the holders
thereof will have the same rights of ownership with respect to such shares as
if certificates had been issued.
Shares of the Money Market Fund are redeemable at the option of the Trust if,
in the opinion of the Trust, ownership of the shares has or may become
concentrated to an extent which would cause the Trust to be deemed a personal
holding company within the meaning of the Internal Revenue Code of 1986, as
amended.
The Distributor acts as the distributor of the shares of the Money Market
Fund pursuant to a distribution agreement with the Trust (the "Distribution
Agreement"). The Distribution Agreement is renewable annually
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and may be terminated upon 60 days' written notice by either party. Under such
Agreement, after the prospectuses, statements of additional information and
periodic reports have been prepared and set in type, the Distributor will pay
for the printing and distribution of copies thereof used in connection with the
offering to investors. The Distributor will also pay for other supplementary
sales literature.
PORTFOLIO TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policy
established by the Trustees and officers of the Trust, the Manager is primarily
responsible for the Money Market Fund's portfolio decisions and the placing of
the Money Market Fund's portfolio transactions. In placing orders, it is the
policy of the Money Market Fund to obtain the best net results taking into
account such factors as price (including the applicable dealer spread), size,
type and difficulty of the transaction involved, the firm's general execution
and operational facilities, and the firm's risk in positioning the securities
involved. While the Manager generally seeks reasonably competitive spreads or
commissions, the Money Market Fund will not necessarily be paying the lowest
spread or commission available. The Money Market Fund's policy of investing in
securities with short maturities will result in high portfolio turnover.
The money market securities in which the Money Market Fund invests are traded
primarily in the over-the-counter market. Bonds and debentures are usually
traded over-the-counter but may be traded on an exchange. Where possible, the
Money Market Fund will deal directly with the dealers who make a market in the
securities involved, except in those circumstances where better prices and
execution are available elsewhere. Such dealers usually act as principal for
their own accounts. On occasion, securities may be purchased directly from the
issuer. The money market securities in which the Money Market Fund invests are
generally traded on a net basis and do not normally involve either brokerage
commissions or transfer taxes. The cost of executing portfolio securities
transactions of the Money Market Fund will primarily consist of dealer spreads
and underwriting commissions. Under the Investment Company Act, persons
affiliated with the Trust are prohibited from dealing with the Trust as a
principal in the purchase and sale of securities, unless a permissive order
allowing such transactions is obtained from the Securities and Exchange
Commission. Since over-the-counter transactions are usually principal
transactions, affiliated persons of the Trust, including Merrill Lynch
Government Securities Inc. ("GSI") and Merrill Lynch, may not serve as the
Money Market Fund's dealer in connection with such transactions, except
pursuant to the permissive order described below. However, affiliated persons
of the Trust may serve as its broker in over-the-counter transactions conducted
on an agency basis. The Trust may not generally purchase securities from any
underwriting syndicate of which Merrill Lynch is a member. Of the money market
securities in which the Money Market Fund invests, generally only United States
Government agency securities are sold in underwritings.
The Securities and Exchange Commission has issued an order permitting all
Merrill Lynch-sponsored money market funds, including the Money Market Fund, to
conduct principal transactions with GSI in U.S. Government securities and U.S.
Government agency securities and with Merrill Lynch Money Markets Inc., a
subsidiary of GSI ("MMI"), in certificates of deposit and other short-term bank
money instruments and commercial paper. This order contains a number of
conditions, including conditions designed to ensure that the price to the Money
Market Fund from GSI or MMI is equal to or better than that available from
other sources. GSI and MMI have informed the Trust that they will in no way, at
any time, attempt to influence or
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control the activities of the Money Market Fund or the Manager in placing such
principal transactions. The permissive order allows GSI or MMI to receive a
dealer spread on any transaction with the Money Market Fund no greater than its
customary dealer spread from transactions of the type involved. Generally such
spreads do not exceed 0.25% of the principal amount of the securities involved.
During the fiscal year ended October 31, 1995, the Money Market Fund engaged in
74 transactions pursuant to such order aggregating approximately $2.9 billion.
The Trustees of the Trust have considered the possibilities of recapturing
for the benefit of the Money Market Fund expenses of possible portfolio
transactions, such as dealer spreads and underwriting commissions, by
conducting such portfolio transactions through affiliated entities, including
GSI and Merrill Lynch. For example, dealer spreads received by GSI or its
subsidiary on transactions conducted pursuant to the permissive order described
above could be offset against the management fee payable by the Money Market
Fund to the Manager. After considering all factors deemed relevant, the
Trustees made a determination not to seek such recapture. The Trustees will
reconsider this matter from time to time.
The Money Market Fund does not expect to use one particular dealer, but,
subject to obtaining the best price and execution, dealers who provide
supplemental investment research (such as information concerning money market
securities, economic data and market forecasts) to the Manager may receive
orders for transactions by the Money Market Fund. Information so received will
be in addition to and not in lieu of the services required to be performed by
the Manager under its Management Agreement and the expenses of the Manager will
not necessarily be reduced as a result of the receipt of such supplemental
information.
DETERMINATION OF NET ASSET VALUE
The net asset value of the Money Market Fund is determined by the Manager
once daily, immediately after the daily declaration of dividends, on each day
during which the New York Stock Exchange or New York banks are open for
business. Such determination is made as of the close of business on the New
York Stock Exchange (generally 4:00 P.M., New York time) or, on days when the
New York Stock Exchange is closed but the New York banks are open, at 4:00
P.M., New York time. As a result of this procedure, the net asset value is
determined each day except for days on which both the New York Stock Exchange
and New York banks are closed. Both the New York Stock Exchange and New York
banks are closed on New Year's Day, Presidents' Day, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset value per
share is determined under the "penny-rounding" method by adding the value of
all securities and other assets in the portfolio, deducting the portfolio's
liabilities, dividing by the number of shares outstanding and rounding the
result to the nearest whole cent.
The Money Market Fund values its portfolio securities with remaining
maturities of 60 days or less on an amortized cost basis and values its
securities with remaining maturities of greater than 60 days for which market
quotations are readily available at market value. Other securities held by the
Money Market Fund are valued at their fair value as determined in good faith by
or under the direction of the Board of Trustees.
In accordance with the Securities and Exchange Commission rule applicable to
the valuation of its portfolio securities, the Money Market Fund will maintain
a dollar-weighted average portfolio maturity of 90 days or less and will
purchase instruments having remaining maturities of not more than 397 days (13
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months), with the exception of U.S. Government Securities and U.S. Government
agency securities, which may have remaining maturities of up to 762 days
(twenty-five months). The Money Market Fund will invest only in securities
determined by the Trustees to be of high quality with minimal credit risks. In
addition, the Trustees have established procedures designed to stabilize, to
the extent reasonably possible, the Money Market Fund's price per share as
computed for the purposes of sales and redemptions at $1.00. Deviations of more
than an insignificant amount between the net asset value per share calculated
using market quotations and that calculated on a "penny-rounded" basis will be
reported to the Trustees by the Manager. In the event the Trustees determine
that a deviation exists which may result in the material dilution or other
unfair results to investors or existing shareholders, the Money Market Fund
will take such corrective action as it regards as necessary and appropriate,
including the reduction of the number of outstanding shares of the Money Market
Fund by having each shareholder proportionately contribute shares to the Money
Market Fund's capital; the sale of portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio maturity;
withholding dividends; or establishing a net asset value per share solely by
using available market quotations. If the number of outstanding shares is
reduced in order to maintain a constant "penny rounded" net asset value of
$1.00 per share, the shareholders will contribute proportionately to the Money
Market Fund's capital. Each shareholder will be deemed to have agreed to such
contribution by an investment in the Money Market Fund.
Since the net income of the Money Market Fund (including realized gains and
losses on the portfolio securities) is determined and declared as a dividend
immediately prior to each time the net asset value of the Money Market Fund is
determined, the net asset value per share of the Money Market Fund normally
remains at $1.00 per share immediately after each such dividend declaration.
Any increase in the value of a shareholder's investment in the Money Market
Fund, representing the reinvestment of dividend income, is reflected by an
increase in the number of shares of the Money Market Fund in the account, and
any decrease in the value of a shareholder's investment may be reflected by a
decrease in the number of shares in the account. See "Taxes".
YIELD INFORMATION
The Money Market Fund normally computes its annualized yield by determining
the net income for a seven-day base period for a hypothetical pre-existing
account having a balance of one share at the beginning of the base period,
dividing the net income by the net asset value of the account at the beginning
of the base period to obtain the base period return, multiplying the result by
365 and then dividing by seven. Under this calculation, the yield reflects
realized and unrealized gains and losses on portfolio securities. In accordance
with regulations adopted by the Securities and Exchange Commission, the Money
Market Fund is required to disclose its annualized yield for certain seven-day
base periods in a standardized manner which does not take into consideration
any realized or unrealized gains or losses on portfolio securities. The
Securities and Exchange Commission also permits the calculation of a
standardized effective or compounded yield. This is computed by compounding the
unannualized base period return which is done by adding one to the base period
return, raising the sum to a power equal to 365 divided by seven and
subtracting one from the result. This compounded yield calculation also
excludes realized and unrealized gains or losses on portfolio securities.
The yield on the Trust's shares normally will fluctuate on a daily basis.
Therefore, the yield for any given past period is not an indication or
representation by the Trust of future yields or rates of return on its shares.
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The yield is affected by such factors as changes in interest rates on Treasury
securities, average portfolio maturity, the types and quality of portfolio
securities held and operating expenses. The yield on Trust shares for various
reasons may not be comparable to the yield on shares of other money market
funds or other investments.
TAXES
FEDERAL
Regulated Investment Companies. The following is a general summary of the
treatment of regulated investment companies ("RICs") and their shareholders
under the Internal Revenue Code of 1986, as amended (the "Code"). The Trust
intends to continue to qualify the Money Market Fund for the special tax
treatment afforded RICs under the Code. If it so qualifies, the Money Market
Fund (but not its shareholders) will not be subject to Federal income tax on
the part of its net ordinary income and net realized capital gains which it
distributes to participants' Self-Directed Plan accounts. The Trust intends to
cause the Money Market Fund to distribute substantially all of its income.
As discussed in the Prospectus, the Trust may establish other series in
addition to the Money Market Fund (together with the Money Market Fund, the
"Series"). Each Series of the Trust will be treated as a separate corporation
for Federal income tax purposes. Each Series, therefore, will be considered to
be a separate entity in determining its treatment under the rules for RICs
described in the Prospectus. Losses in one Series do not offset gains in
another Series, and the requirements (other than certain organizational
requirements) for qualifying for RIC status are determined at the Series level
rather than at the Money Market Fund level.
Dividends paid by the Money Market Fund from its ordinary income or from an
excess of net short-term capital gains over net long-term capital losses
(together referred to hereafter as "ordinary income dividends") are ordinarily
taxable to shareholders as ordinary income. Distributions made from an excess
of net long-term capital gains over net short-term capital losses ("capital
gain dividends") are ordinarily taxable to shareholders as long-term capital
gains, regardless of the length of time the shareholder has owned Fund shares.
Any loss upon the sale or exchange of Fund shares held for six months or less,
however, will be treated as long-term capital loss to the extent of any capital
gain dividends received by the shareholder. Distributions in excess of the
Money Market Fund's earnings and profits will first reduce the adjusted tax
basis of a holder's shares and, after such adjusted tax basis is reduced to
zero, will constitute capital gains to such holder (assuming the shares are
held as a capital asset). Dividends of a RIC are ordinarily taxable to
shareholders even though they are reinvested in additional shares of the Fund.
If the value of assets held by the Money Market Fund declines, the Board of
Trustees may authorize a reduction in the number of outstanding shares in
shareholders' accounts so as to preserve a net asset value of $1.00 per share.
After such a reduction, the basis of eliminated shares would be added to the
basis of shareholders' remaining Money Market Fund shares. In the event of
retirement plan disqualification or for shares held outside of a retirement
plan, distributions, including distributions reinvested in additional shares of
the Money Market Fund, would be fully taxable, even if the number of shares in
shareholders' accounts has been reduced as described above.
Under certain provisions of the Code, some taxpayers may be subject to a 31%
withholding tax on ordinary income dividends, capital gain dividends and
redemption payments ("backup withholding"). Generally, participants in the
Self-Directed Plans subject to backup withholding will be those for whom no
certified taxpayer identification number is on file with the Trust or who, to
the Trust's knowledge, have
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furnished an incorrect number. When establishing an account, an investor must
certify under penalty of perjury that such number is correct and that such
investor is not otherwise subject to backup withholding.
The Code requires a RIC to pay a nondeductible 4% excise tax to the extent
the RIC does not distribute, during each calendar year, 98% of its ordinary
income, determined on a calendar year basis, and 98% of its capital gains,
determined, in general, on an October 31 year end, plus certain undistributed
amounts from previous years. While the Money Market Fund intends to distribute
its income and capital gains in the manner necessary to avoid imposition of the
4% excise tax, there can be no assurance that sufficient amounts of the Fund's
taxable income and capital gains will be distributed to avoid entirely the
imposition of the tax. In such event, the Fund will be liable for the tax only
on the amount by which it does not meet the foregoing distribution
requirements.
Self-Directed Retirement Plans. Investment in the Money Market Fund is
limited to participants in the self-directed retirement plans ("retirement
plans") for which Merrill Lynch acts as passive custodian. Accordingly, the
general description of the tax treatment of RICs as set forth above is
qualified with respect to the special tax treatment afforded retirement plans
under the Code. Under the Code, neither ordinary income dividends nor capital
gain dividends represent current income to shareholders if such shares are held
in a retirement plan. Rather, distributions from a retirement plan will be
taxable as ordinary income at the rate applicable to the participant at the
time of the distribution. Such distributions would include (i) any pre-tax
contributions to the retirement plan (including pre-tax contributions that have
been rolled over from another retirement plan or individual retirement account
("IRA")), and (ii) dividends (whether or not such dividends are classified as
ordinary income or capital gain dividends). In addition to ordinary income tax,
participants may be subject to the imposition of excise taxes on any
distributed amount, including: (i) a 10% excise tax on any amount withdrawn
from a retirement plan prior to the participant's attainment of age 59 1/2; and
(ii) a 15% excise tax on the amount of any "excess distributions" (generally,
amounts in excess of $150,000) made from the retirement plan or any other
qualified retirement plan or IRA annually.
Under certain limited circumstances (for example, if an individual for whose
benefit a retirement plan is established engages in any transaction prohibited
under Section 4975 of the Code with respect to such account), the retirement
plan would cease to be qualified for the special treatment afforded certain
retirement plans under the Code as of the first day of such taxable year that
the transaction causing disqualification occurred. If a retirement plan through
which a shareholder holds Money Market Fund shares becomes ineligible for
special tax treatment, such shareholder will be treated as having received a
distribution on the first day of the taxable year from the retirement plan in
an amount equal to the fair market value of all assets in the account. Thus,
the shareholder would be taxed currently on (i) the amount of any pre-tax
contributions and previously untaxed dividends held within the account, and
(ii) all ordinary income and capital gain dividends paid by the Money Market
Fund subsequent to such event, whether such dividends are received in cash or
reinvested in additional shares. These ordinary income and capital gain
dividends also might be subject to state and local taxes. In the event of
retirement plan disqualification, shareholders also could be subject to the
excise taxes described above. Additionally, retirement plan disqualification
may subject a nonresident alien shareholder to a 30% United States withholding
tax on ordinary income dividends paid by the Fund unless a reduced rate of
withholding or withholding exemption is provided under applicable treaty law.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect. For the
complete provisions, reference should be made to the
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pertinent Code sections and the Treasury regulations promulgated thereunder.
The Code and the Treasury regulations are subject to change by legislative,
judicial or administrative action either prospectively or retroactively.
STATE
Ordinary income and capital gain dividends on RIC shares held in a
disqualified retirement plan or outside of a retirement plan also may be
subject to state and local taxes. Certain states exempt from state income
taxation dividends paid by RICs which are derived from interest on United
States Government obligations. State law varies as to whether dividend income
attributable to United States Government obligations is exempt from state
income taxation dividends on shares held within a qualified retirement plan,
and commence taxation on such amounts when actually distributed from the
retirement plan.
Shareholders are urged to consult their tax advisers regarding specific
questions as to Federal, foreign, state or local taxes. Foreign investors
should consider applicable foreign taxes in their evaluation of an investment
in the Fund.
EXCHANGE PRIVILEGE
Participants in the Self-Directed Plans (except retirement plans in
association with the Merrill Lynch Blueprint SM Program) who are shareholders
of the Money Market Fund and who have held all or part of their shares for at
least 15 days may exchange their shares of the Money Market Fund for Class D
shares of mutual funds advised by the Manager or FAM described below
(collectively referred to as the "MLAM-advised mutual funds") on the basis
described below. Shares with a net asset value of at least $250 are required
to qualify for the exchange privilege. Certain funds into which exchanges may
be made may impose a redemption fee (not in excess of 2.00% of the amount
redeemed) on shares purchased through the exchange privilege when such shares
are subsequently redeemed, including redemption through subsequent exchanges.
Alternatively, shareholders may exchange shares of the Money Market Fund for
Class A shares of one of the MLAM-advised mutual funds if the shareholder
holds any Class A shares of that fund in his or her account in which the
exchange is made at the time of the exchange or is otherwise an eligible Class
A investor. An eligible Class A investor includes the following: certain
employer sponsored retirement or savings plans, including eligible 401(k)
plans, provided such plans meet the required minimum number of eligible
employees or required amount of assets advised by MLAM or any of its
affiliates; corporate warranty insurance reserve fund programs provided that
the program has $3 million or more initially invested in MLAM-advised mutual
funds; participants in certain investment programs including TMASM Managed
Trusts to which Merrill Lynch Trust Company provides discretionary trustee
services and certain purchases made in connection with the Merrill Lynch
Mutual Fund Adviser program; and ML&Co. and its subsidiaries and their
directors and employees and members of the Board of MLAM-advised investment
companies, including the Money Market Fund.
Shareholders of the Money Market Fund also may exchange shares of the Money
Market Fund into shares of Class A Share Money Market Funds, as listed below.
Under the exchange privilege, each of the funds offers to exchange its
shares ("new shares") for shares ("outstanding shares") of any of the other
funds, on the basis of relative net asset value per share, plus an amount
equal to the difference, if any, between the sales charge previously paid on
the outstanding shares
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and the sales charge payable at the time of the exchange on the new shares. At
the present time, the shares of each of the funds other than Merrill Lynch
U.S.A. Government Reserves are sold with varying sales charges. With respect
to outstanding shares as to which previous exchanges have taken place, the
"sales charge previously paid" shall include the aggregate of the sales
charges paid with respect to such shares in the initial purchase and any
subsequent exchange. Shares issued pursuant to dividend reinvestment are sold
on a no-load basis in each of the funds. For purposes of the exchange
privilege, dividend reinvestment shares shall be deemed to have been sold with
a sales charge equal to the sales charge previously paid on the shares on
which the dividend was paid. Based on this formula, an exchange of shares of
the Money Market Fund, which are sold on a no-load basis, for shares of the
other funds, which are sold with a sales charge, will generally require the
payment of a sales charge.
It is contemplated that the exchange privilege may be applicable to other
new mutual funds whose shares may be distributed by the Distributor. The
exchange privilege available to participants in the Merrill Lynch Blueprint SM
Program may be different from that available to other investors. Shareholders
of the Money Market Fund other than participants in the Self-Directed Plans
should consult with Merrill Lynch as to availability of the exchange
privilege.
Set forth below is a description of the investment objectives of the other
funds into which exchanges can be made:
Funds issuing Class A, Class B, Class C and Class D Shares:
Merrill Lynch Adjustable Rate
Securities Fund, Inc. ........ High current income consistent with a policy
of limiting the degree of fluctuation in net
asset value by investment primarily in a
portfolio of adjustable rate securities,
consisting principally of mortgage-backed
and asset-backed securities.
Merrill Lynch Americas Income
Fund, Inc. ................... A high level of current income, consistent
with prudent investment risk, by investing
primarily in debt securities denominated in
a currency of a country located in the West-
ern Hemisphere (i.e., North and South Amer-
ica and the surrounding waters).
Merrill Lynch Arizona Limited
Maturity Municipal Bond Fund.. A portfolio of Merrill Lynch Multi-State Lim-
ited Maturity Municipal Series Trust, a se-
ries fund, whose objective is to provide as
high a level of income exempt from Federal
and Arizona income taxes as is consistent
with prudent investment management through
investment in a portfolio primarily of in-
termediate-term investment grade Arizona Mu-
nicipal Bonds.
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Merrill Lynch Arizona
Municipal Bond Fund........... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Arizona in-
come taxes as is consistent with prudent in-
vestment management.
Merrill Lynch Arkansas
Municipal Bond Fund........... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Arkansas in-
come taxes as is consistent with prudent in-
vestment management.
Merrill Lynch Asset Growth
Fund, Inc. ................... High total investment return, consistent with
prudent risk, from investment in United
States and foreign equity, debt and money
market securities the combination of which
will be varied both with respect to types of
securities and markets in response to chang-
ing market and economic trends.
Merrill Lynch Asset Income
Fund, Inc. ................... A high level of current income through in-
vestment primarily in United States fixed
income securities.
Merrill Lynch Basic Value
Fund, Inc. ................... Capital appreciation and, secondarily, income
through investment in securities, primarily
equities, that are undervalued and therefore
represent basic investment value.
Merrill Lynch California
Insured Municipal Bond Fund .. A portfolio of Merrill Lynch California Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and California
income taxes as is consistent with prudent
investment management through investment in
a portfolio primarily of insured California
Municipal Bonds.
Merrill Lynch California
Limited Maturity Municipal A portfolio of Merrill Lynch Multi-State Lim-
Bond Fund .................... ited Maturity Municipal Series Trust, a se-
ries fund, whose objective is to provide as
high a level of income exempt from Federal
and California income taxes as is consistent
with prudent investment management through
investment in a portfolio primarily of in-
termediate-term investment grade California
Municipal Bonds.
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Merrill Lynch California
Municipal Bond Fund, Inc. .... A portfolio of Merrill Lynch California Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and California
income taxes as is consistent with prudent
investment management.
Merrill Lynch Capital Fund, The highest total investment return consis-
Inc. ......................... tent with prudent risk through a fully man-
aged investment policy utilizing equity,
debt and convertible securities.
Merrill Lynch Colorado
Municipal Bond Fund .......... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series, a series fund, whose objec-
tive is to provide as high a level of income
exempt from Federal and Colorado income
taxes as is consistent with prudent invest-
ment management.
Merrill Lynch Connecticut
Municipal Bond Fund........... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Connecticut
income taxes as is consistent with prudent
investment management.
Merrill Lynch Corporate Bond
Fund, Inc. ................... Current income from three separate diversi-
fied portfolios of fixed income securities.
Merrill Lynch Developing
Capital Markets Fund, Inc. ... Long-term appreciation through investment in
securities, principally equities, of issuers
in countries having smaller capital markets.
Merrill Lynch Dragon Fund, Capital appreciation primarily through in-
Inc. ......................... vestment in equity and debt securities of
issuers domiciled in developing countries
located in Asia and the Pacific Basin, other
than Japan, Australia and New Zealand.
Merrill Lynch EuroFund ........ Capital appreciation primarily through in-
vestment in equity securities of corpora-
tions domiciled in Europe.
Merrill Lynch Federal
Securities Trust ............. High current return through investments in
U.S. Government and Government agency secu-
rities, including GNMA mortgage-backed cer-
tificates and other mortgage-backed Govern-
ment securities.
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Merrill Lynch Florida Limited
Maturity Municipal Bond Fund.. A portfolio of Merrill Lynch Multi-State Lim-
ited Maturity Municipal Series Trust, a se-
ries fund, whose objective is to provide as
high a level of income exempt from Federal
income taxes as is consistent with prudent
investment management while serving to offer
shareholders the opportunity to own securi-
ties exempt from Florida intangible personal
property taxes through investment in a port-
folio primarily of intermediate-term invest-
ment grade Florida Municipal Bonds.
Merrill Lynch Florida
Municipal Bond Fund .......... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal income taxes as
is consistent with prudent investment man-
agement while seeking to offer shareholders
the opportunity to own securities exempt
from Florida intangible personal property
taxes.
Merrill Lynch Fund for
Tomorrow, Inc. ............... Long-term growth through investment in a
portfolio of good quality securities, pri-
marily common stock, potentially positioned
to benefit from demographic and cultural
changes as they affect consumer markets.
Merrill Lynch Fundamental
Growth Fund, Inc. ............ Long-term growth through investment in a di-
versified portfolio of equity securities
placing particular emphasis on companies
that have exhibited an above-average growth
rate in earnings.
Merrill Lynch Fundamental
Value Portfolio.... (Available A portfolio of Merrill Lynch Asset Builder
only for exchanges by certain Program, Inc., a series fund, whose objec-
individual retirement tive is to provide capital appreciation and
accounts for which Merrill income by investing in securities, with at
Lynch acts as custodian and least 65% of the portfolio's assets being
by certain CBA (R) Accounts invested in equities.
and CMA (R) Sub-Accounts)
Merrill Lynch Global
Allocation Fund, Inc. ........ High total return, consistent with prudent
risk, through a fully managed investment
policy utilizing United States and foreign
equity, debt and money market securities,
the combination of which will be varied from
time to time both with respect to the types
of securities and markets in response to
changing market and economic trends.
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Merrill Lynch Global Bond Fund
for Investment and
Retirement.................... High total investment return by investment in
a global portfolio of debt instruments de-
nominated in various currencies and multina-
tional currency units.
Merrill Lynch Global
Convertible Fund, Inc. ....... High total return by investment primarily in
an internationally diversified portfolio of
convertible debt securities, convertible
preferred stock and "synthetic" convertible
securities consisting of a combination of
debt securities or preferred stock and war-
rants or options.
Merrill Lynch Global Holdings,
Inc. (residents of Arizona
must meet investor
suitability standards)........ The highest total investment return consis-
tent with prudent risk through worldwide in-
vestment in an internationally diversified
portfolio of securities.
Merrill Lynch Global
Opportunity Portfolio......... A portfolio of Merrill Lynch Asset Builder
Program, Inc., a series fund, whose objec-
(Available only for exchanges tive is to provide a high total investment
by certain individual return through an investment policy utiliz-
retirement accounts for which ing U.S. and foreign equity, debt and money
Merrill Lynch acts as market securities, the combination of which
custodian and by certain will vary depending upon changing market and
CBA (R) Accounts and CMA (R) economic trends.
Sub-Accounts)
Merrill Lynch Global Resources
Trust......................... Long-term growth and protection of capital
from investment in securities of domestic
and foreign companies that possess substan-
tial natural resource assets.
Merrill Lynch Global SmallCap
Fund, Inc. ................... Long-term growth of capital by investing pri-
marily in equity securities of companies
with relatively small market capitalizations
located in various foreign countries and in
the United States.
Merrill Lynch Global Utility
Fund, Inc. ................... Capital appreciation and current income
through investment of at least 65% of its
total assets in equity and debt securities
issued by domestic and foreign companies
which are primarily engaged in the ownership
or operation of facilities used to generate,
transmit or distribute electricity, telecom-
munications, gas or water.
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Merrill Lynch Growth Fund for
Investment and Retirement..... Growth of capital and, secondarily, income
from investment in a diversified portfolio
of equity securities placing principal em-
phasis on those securities which management
of the fund believes to be undervalued.
Merrill Lynch Growth
Opportunity Portfolio....
A portfolio of Merrill Lynch Asset Builder
Program, Inc., a series fund, whose objec-
(Available only for exchanges tive is to seek long-term growth of capital
by certain individual by investing in a portfolio of equity secu-
retirement accounts for which rities placing particular emphasis on compa-
Merrill Lynch acts as nies that have exhibited above-average
custodian and by certain growth rates in earnings.
CBA (R) Accounts and CMA (R)
Sub-Accounts)
Merrill Lynch Healthcare Fund,
Inc.
(residents of Wisconsin must
meet investor suitability
standards).................... Capital appreciation through worldwide in-
vestment in equity securities of companies
that derive or are expected to derive a sub-
stantial portion of their sales from prod-
ucts and services in healthcare.
Merrill Lynch International
Equity Fund................... Capital appreciation and, secondarily, income
by investing in a diversified portfolio of
equity securities of issuers located in
countries other than the United States.
Merrill Lynch Latin America
Fund, Inc..................... Capital appreciation by investing primarily
in Latin American equity and debt securi-
ties.
Merrill Lynch Maryland
Municipal Bond Fund........... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Maryland in-
come taxes as is consistent with prudent in-
vestment management.
Merrill Lynch Massachusetts
Limited Maturity Municipal
Bond Fund..................... A portfolio of Merrill Lynch Multi-State Lim-
ited Maturity Municipal Series Trust, a se-
ries fund, whose objective is to provide as
high a level of income exempt from Federal
and Massachusetts income taxes as is consis-
tent with prudent investment management
through investment in a portfolio primarily
of intermediate-term investment grade Massa-
chusetts Municipal Bonds.
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Merrill Lynch Massachusetts
Municipal Bond Fund........... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Massachusetts
income taxes as is consistent with prudent
investment management.
Merrill Lynch Michigan Limited
Maturity Municipal Bond Fund.. A portfolio of Merrill Lynch Multi-State Lim-
ited Maturity Municipal Series Trust, a se-
ries fund, whose objective is to provide a
high level of income exempt from Federal and
Michigan income taxes as is consistent with
prudent investment management through in-
vestment in a portfolio primarily of inter-
mediate-term investment grade Michigan Mu-
nicipal Bonds.
Merrill Lynch Michigan
Municipal Bond Fund........... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Michigan in-
come taxes as is consistent with prudent in-
vestment management.
Merrill Lynch Minnesota
Municipal Bond Fund........... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Minnesota
personal income taxes as is consistent with
prudent investment management.
Merrill Lynch Municipal Bond
Fund, Inc. ................... Tax-exempt income from three separate diver-
sified portfolios of municipal bonds.
Merrill Lynch Municipal
Intermediate Term Fund........ Currently the only portfolio of Merrill Lynch
Municipal Series Trust, a series fund, whose
objective is to provide as high a level as
possible of income exempt from Federal in-
come taxes by investing in investment grade
obligations with a dollar weighted average
maturity of five to twelve years.
Merrill Lynch New Jersey
Limited Maturity Municipal
Bond Fund..................... A portfolio of Merrill Lynch Multi-State Lim-
ited Maturity Municipal Series Trust, a se-
ries fund, whose objective is to provide as
high a level of income exempt from Federal
and New Jersey income taxes as is consistent
with prudent investment management through a
portfolio primarily of intermediate-term in-
vestment grade New Jersey Municipal Bonds.
22
<PAGE>
Merrill Lynch New Jersey
Municipal Bond Fund........... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and New Jersey
income taxes as is consistent with prudent
investment management.
Merrill Lynch New Mexico
Municipal Bond Fund........... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and New Mexico
income taxes as is consistent with prudent
investment management.
Merrill Lynch New York Limited
Maturity Municipal Bond Fund.. A portfolio of Merrill Lynch Multi-State Lim-
ited Maturity Municipal Series Trust, a se-
ries fund, whose objective is to provide as
high a level of income exempt from Federal,
New York State and New York City income
taxes as is consistent with prudent invest-
ment management through investment in a
portfolio primarily of intermediate-term
grade New York Municipal Bonds.
Merrill Lynch New York
Municipal Bond Fund........... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal, New York State
and New York City income taxes as is consis-
tent with prudent investment management.
Merrill Lynch North Carolina
Municipal Bond Fund........... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and North Caro-
lina income taxes as is consistent with pru-
dent investment management.
Merrill Lynch Ohio Municipal
Bond Fund..................... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Ohio income
taxes as is consistent with prudent invest-
ment management.
Merrill Lynch Oregon Municipal
Bond Fund..................... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Oregon income
taxes as is consistent with prudent invest-
ment management.
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Merrill Lynch Pacific Fund,
Inc. ......................... Capital appreciation by investing in equity
securities of corporations domiciled in Far
Eastern and Western Pacific countries, in-
cluding Japan, Australia, Hong Kong and Sin-
gapore.
Merrill Lynch Pennsylvania
Limited Maturity Municipal
Bond Fund..................... A portfolio of Merrill Lynch Multi-State Lim-
ited Maturity Municipal Series Trust, a se-
ries fund, whose objective is to provide as
high a level of income exempt from Federal
and Pennsylvania income taxes as is consis-
tent with prudent investment management
through investment in a portfolio of inter-
mediate-term investment grade Pennsylvania
Municipal Bonds.
Merrill Lynch Pennsylvania
Municipal Bond Fund .......... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Pennsylvania
income taxes as is consistent with prudent
investment management.
Merrill Lynch Phoenix Fund,
Inc........................... Long-term growth of capital by investing in
equity and fixed- income securities, includ-
ing tax-exempt securities, of issuers in
weak financial condition or experiencing
poor operating results believed to be under-
valued relative to the current or prospec-
tive condition of such issuer.
Merrill Lynch Quality Bond
Portfolio..................... A portfolio of Merrill Lynch Asset Builder
Program, Inc., a series fund, whose objec-
(Available only for exchanges tive is to provide a high level of current
by certain individual income through investment in a diversified
retirement accounts for which portfolio of debt obligations, such as cor-
Merrill Lynch acts as porate bonds and notes, convertible securi-
custodian and by certain ties, preferred stocks and governmental ob-
CBA(R) Accounts and CMA (R) ligations.
Sub-Accounts)
Merrill Lynch Short-Term
Global Income Fund, Inc. ..... As high a level of current income as is con-
sistent with prudent investment management
from a global portfolio of high quality debt
securities denominated in various currencies
and multinational currency units and having
remaining maturities not exceeding three
years.
Merrill Lynch Special Value
Fund, Inc. ................... Long-term growth of capital from investments
in securities, primarily common stock, of
relatively small companies believed to have
special investment value and emerging growth
companies regardless of size.
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Merrill Lynch Strategic
Dividend Fund ................ Long-term total return from investment in
dividend paying common stocks which yield
more than Standard & Poor's 500 Composite
Stock Price Index.
Merrill Lynch Technology
Fund, Inc. ................... Capital appreciation through worldwide in-
vestment in equity securities of companies
that derive or are expected to derive a sub-
stantial portion of their sales from prod-
ucts and services in technology.
Merrill Lynch Texas Municipal
Bond Fund .................... A portfolio of Merrill Lynch Multi-State Mu-
nicipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal income taxes as
is consistent with prudent investment man-
agement by investing primarily in a portfo-
lio of long-term, investment grade obliga-
tions issued by the State of Texas, its po-
litical subdivisions, agencies and instru-
mentalities.
Merrill Lynch U.S. Government
Securities Portfolio..... A portfolio of Merrill Lynch Asset Builder
Program, Inc., a series fund, whose objec-
(Available only for exchanges tive is to provide a high current return
by certain individual through investments in U.S. Government and
retirement accounts for which government agency securities, including GNMA
Merrill Lynch acts as mortgage-backed certificates and other mort-
custodian and by certain gage-backed government securities.
CBA (R) Accounts and CMA (R)
Sub-Accounts)
Merrill Lynch Utility Income
Fund, Inc. ................... High current income through investment in eq-
uity and debt securities issued by companies
which are primarily engaged in the ownership
or operation of facilities used to generate,
transmit or distribute electricity, telecom-
munications, gas or water.
Merrill Lynch World Income
Fund, Inc. ................... High current income by investing in a global
portfolio of fixed- income securities denom-
inated in various currencies, including mul-
tinational currencies.
Class A Share Money Market
Funds:
Merrill Lynch Ready Assets
Trust......................... Preservation of capital, liquidity and the
highest possible current income consistent
with the foregoing objectives from the
short-term money market securities in which
the Trust invests.
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Merrill Lynch U.S.A.
Government Reserves .......... Preservation of capital, current income and
liquidity available from investing in direct
obligations of the U.S. Government and re-
purchase agreements relating to such securi-
ties.
Merrill Lynch U.S. Treasury
Money Fund ................... Preservation of capital, liquidity and cur-
rent income through investment exclusively
in a diversified portfolio of short-term
marketable securities which are direct obli-
gations of the U.S. Treasury.
Class B, Class C and Class D
Share Money Market Funds:
Merrill Lynch Government Fund.. A portfolio of Merrill Lynch Funds for Insti-
tutions Series, a series fund, whose objec-
tive is to provide current income consistent
with liquidity and security of principal
from investment in securities issued or
guaranteed by the U.S. Government, its agen-
cies and instrumentalities and in repurchase
agreements secured by such obligations.
Merrill Lynch Institutional
Fund.......................... A portfolio of Merrill Lynch Funds for Insti-
tutions Series, a series fund, whose objec-
tive is to provide maximum current income
consistent with liquidity and the mainte-
nance of a high quality portfolio of money
market securities.
Merrill Lynch Institutional
Tax-Exempt Fund .............. A portfolio of Merrill Lynch Funds for Insti-
tutions Series, a series fund, whose objec-
tive is current income exempt from Federal
income taxes, preservation of capital and
liquidity available from investing in a di-
versified portfolio of short-term, high
quality municipal bonds.
Merrill Lynch Treasury Fund ... A portfolio of Merrill Lynch Funds for Insti-
tutions Series, a series fund, whose objec-
tive is current income consistent with li-
quidity and security of principal from in-
vestment in direct obligations of the U.S.
Treasury and up to 10% of its total assets
in repurchase agreements secured by such ob-
ligations.
Before effecting an exchange, shareholders of the Money Market Fund should
obtain a currently effective prospectus of the fund into which the exchange is
to be made. Exercise of the exchange privilege is treated as a sale for Federal
income tax purposes and depending on the circumstances, a short or long-term
capital gain or loss may be realized. In addition, an exchanging shareholder of
any of the funds may be subject to backup
26
<PAGE>
withholding unless such shareholder certifies under penalty of perjury that the
taxpayer identification number on file with any such fund is correct, and that
he or she is not otherwise subject to backup withholding. See "Taxes".
To exercise the exchange privilege, shareholders may either contact their
listed securities dealer, who will advise the Money Market Fund of the
exchange, or write to the Transfer Agent requesting that the exchange be
effected. Such letter must be signed by an "eligible guarantor institution" as
such is defined in Rule 17 Ad-15 under the Securities Exchange Act of 1934, as
amended, the existence and validity of which may be verified by the Transfer
Agent through the use of industry publications. Shareholders of the Money
Market Fund, and shareholders of the other funds described above with shares
for which certificates have not been issued, may exercise the exchange
privilege by wire through their securities dealer. The Money Market Fund
reserves the right to require a properly completed Exchange Application. This
exchange privilege may be modified or terminated in accordance with the rules
of the Securities and Exchange Commission. The Money Market Fund reserves the
right to limit the number of times an investor may exercise the exchange
privilege. Certain funds may suspend the continuous offering of their shares to
the general public at any time and may thereafter resume such offering from
time to time. The exchange privilege is available only to U.S. shareholders in
states where the exchange legally may be made.
GENERAL INFORMATION
DESCRIPTION OF SERIES AND SHARES
The Declaration of Trust provides that the Trust shall comprise separate
Series each of which will consist of a separate portfolio which will issue a
separate class of shares. The Trustees are authorized to create an unlimited
number of Series and, with respect to each Series, to issue an unlimited number
of full and fractional shares of beneficial interest, par value $.10 per share,
of a single class and to divide or combine the shares into a greater or lesser
number of shares without thereby changing the proportionate beneficial
interests in the Series. All shares have equal voting rights, except that only
shares of the respective Series are entitled to vote on matters concerning only
that Series. Each issued and outstanding share of a Series is entitled to one
vote for each full share held and fractional votes on fractional shares in the
election of Trustees (to the extent hereinafter provided) and on other matters
submitted to the vote of Shareholders, and to participate equally in dividends
and distributions declared by such Series and in net assets of such Series upon
liquidation or dissolution remaining after satisfaction of outstanding
liabilities.
In the event a Series were unable to meet its obligations, the remaining
Series would assume the unsatisfied obligations of that Series. The shares of
each Series, when issued, will be fully paid and non-assessable, have no
preference, pre-emptive, conversion, exchange or similar rights, and are freely
transferable. Shareholders of the Trust are entitled to redeem their shares as
set forth under "Redemption of Shares" in the Prospectus and "Purchase and
Redemption of Shares" herein. Shares do not have cumulative voting rights and
the holders of more than 50% of the shares of the Trust voting for the election
of Trustees can elect all of the Trustees of the Trust if they choose to do so,
and in such event the holders of the remaining shares would not be able to
elect any Trustees. No amendment may be made to the Declaration of Trust
without the affirmative vote of a majority of the outstanding shares of the
Trust. At the date of this Statement of Additional Information, the Money
Market Fund is the only Series of the Trust.
27
<PAGE>
CUSTODIAN
The Bank of New York, (the "Custodian"), 90 Washington Street, 12th Floor,
New York, New York 10286, acts as Custodian of the Money Market Fund's assets.
The Custodian is responsible for safeguarding and controlling the Money Market
Fund's cash and securities, handling the receipt and delivery of securities and
collecting interest and dividends on the Money Market Fund's investments.
TRANSFER AGENT
Merrill Lynch Financial Data Services (the "Transfer Agent"), Inc., 4800 Deer
Lake Drive East, Jacksonville, Florida 32246-6484, a subsidiary of ML&Co., acts
as the Money Market Fund's Transfer Agent. The Transfer Agent is responsible
for the issuance, transfer and redemption of shares and the opening,
maintenance and servicing of shareholder accounts.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, 117 Campus Drive, Princeton, New Jersey 08540, has
been selected as the independent auditors of the Trust. The selection of
independent auditors is subject to ratification by the shareholders of the
Trust. The independent auditors are responsible for auditing the annual
financial statements of the Money Market Fund.
LEGAL COUNSEL
Brown & Wood, One World Trade Center, New York, New York 10048-0557, is
counsel for the Trust.
REPORTS TO SHAREHOLDERS
The fiscal year of the Money Market Fund ends on October 31 of each year. The
Money Market Fund sends to its shareholders at least semi-annually reports
showing the Money Market Fund's portfolio and other information. An annual
report, containing financial statements audited by independent auditors, is
sent to shareholders each year.
ADDITIONAL INFORMATION
The Prospectus and this Statement of Additional Information do not contain
all of the information set forth in the Registration Statement and the exhibits
relating thereto, which the Money Market Fund has filed with the Securities and
Exchange Commission, Washington, D.C. 20549, under the Securities Act of 1933
and the Investment Company Act of 1940, to which reference is hereby made.
To the knowledge of the Trust, no person or entity owned beneficially 5% or
more of the Money Market Fund's shares on February 1, 1996.
----------------
The Declaration of Trust establishing the Trust, dated July 15, 1986, a copy
of which, together with all amendments thereto (the "Declaration"), is on file
in the office of the Secretary of the Commonwealth of Massachusetts, provides
that the name "Merrill Lynch Retirement Series Trust" refers to the Trustees
under the Declaration collectively as Trustees, but not as individuals or
personally; and no Trustee, shareholder, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim of said Trust
but the "Trust Property" (as defined in the Declaration) only shall be liable.
28
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APPENDIX A
DESCRIPTION OF THE SELF-DIRECTED PLANS
This Appendix describes in summary form the various types of self-directed
retirement plans for which Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") acts as passive custodian (the "Self-Directed Plans"). This
description does not purport to be complete, and it should be read in
conjunction with the materials concerning the Self-Directed Plans, including
copies of the Plans and the forms necessary to establish a plan, which are
available from Merrill Lynch. Investors should read such materials carefully
before establishing a Self-Directed Plan and should consult with their
attorney or tax adviser to determine if any of the Self-Directed Plans are
suited to their needs and circumstances. The laws applicable to the Self-
Directed Plans, including the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") and the Internal Revenue Code of 1986, as amended (the
"Code") are complex and include a variety of transitional rules which may be
applicable to some investors. These laws should be reviewed by investors'
attorneys to determine their applicability. Investors are further advised that
the discussion of taxation contained in this Appendix relates solely to
federal tax laws but generally does not address the numerous transitional
rules and that the tax treatment of the Self-Directed Plans under applicable
state law may vary.
There are seven types of Self-Directed Plans available: the individual
retirement account ("IRA"); the individual retirement rollover account
("IRRA"), the simplified employee pension plan ("SEP Plus (R)"); the Basic SM
(Keogh Plus) profit sharing plan; the Basic SM (Keogh Plus) money purchase
pension plan (together with the profit sharing plan, the "Basic SM Plans");
the 403(b)(7) Retirement Selector Account ("RSA") and the corporate Self-
Directed account of the Merrill Lynch Blueprint SM Program. Specific
information with respect to certain requirements and limitations for each
Self-Directed Plan is described in greater detail below. See "Types of Self-
Directed Plans".
ESTABLISHMENT OF A SELF-DIRECTED PLAN ACCOUNT
Self-Directed Plan accounts may be established by qualified individuals and
businesses through Merrill Lynch.
Generally, Self-Directed Plans afford participants the opportunity to take a
tax deduction, up to the maximum amount permitted under the Code for the
particular Self-Directed Plan, for amounts contributed to the Plan. Each Self-
Directed Plan is "self-directed"; that is, each participant is responsible for
making investment decisions concerning the funds contributed to his Self-
Directed Plan.
Merrill Lynch charges an annual custodial fee for each account established
pursuant to the Self-Directed Plans. These fees, which are contained in the
Self-Directed Plan documents, vary according to the type of account. Brokerage
fees will be assessed separately for each transaction to which they apply.
Shares of the Trust are also offered to participants in various retirement
plans in association with the Merrill Lynch Blueprint SM Program. Most
contributions to such plans are made through payroll deductions. In addition
to investing in the Money Market Fund, participants in such plans may invest
in other mutual funds associated with the Merrill Lynch organization or
various other types of securities. If participants elect to have their
contributions invested in the Money Market Fund, the contributions will be
invested automatically on the business day following the date they are
received in the account. There will be no
29
<PAGE>
minimum initial or subsequent purchase requirement pursuant to these types of
plans. Cash balances of less than $1.00 will not be invested.
PERMISSIBLE SELF-DIRECTED PLAN INVESTMENTS
The type of investments that may be made depends on the type of Self-
Directed Plan established.
Participants and employers that maintain IRAs, IRRAs, Basic SM Plans,
SEPs(R) or retirement plans in association with the Merrill Lynch Blueprint SM
Program may invest in securities through Merrill Lynch or its affiliates,
including stocks traded "over-the-counter" or on a recognized exchange,
government or corporate debt obligations, certain mutual funds, certain
limited partnership interests in real estate, and bank money instruments.
Participants and employers may also invest in annuity contracts issued by a
life insurance company (including Merrill Lynch Life Insurance Company and
Merrill Lynch Life Insurance Company of New York), and, in the case of Basic
Plan participants only, life insurance contracts. Participants and employers
that maintain RSAs are restricted to investing in mutual funds. Those
participants and employers desiring a diversified portfolio but not wishing to
actively manage the portfolio may elect to invest all or a portion of their
account in certain mutual funds advised by Merrill Lynch Asset Management (the
"Manager") or its subsidiary. Participants and employers may vary their
investment portfolio as often as they wish.
Cash balances arise in a Self-Directed Plan account from contributions to
the Plan, the sale of securities held in the account and the receipt of
dividends, interest and principal repayments on securities held in the
account. Cash balances for which no other investment directions are given
will, in accordance with the option previously selected by the participant or
employer, be invested in full shares of the Money Market Fund or another money
market fund advised by the Manager, deposited in an Insured Investment
Account, an FDIC insured interest-bearing account with a Merrill Lynch Bank
and Trust Company, or maintained uninvested in the Self-Directed Plan account.
If such amounts are not invested, no return will be earned. All cash balances
will be invested or maintained in accordance with the option selected by the
participant or employer, pending instructions as to further investment.
Based upon performance of money market funds generally over the last several
years, the yield on amounts invested in the Money Market Fund may be greater
at times than the yield on amounts deposited in the interest-bearing account.
There can be no assurance, however, that the yield on an investment in the
Money Market Fund will be or will remain greater than that available on such
interest-bearing account. In addition, the Money Market Fund is not a bank,
and shares of the Money Market Fund are not equivalent to a bank account. As
with any investment in securities, the value of an investment in the Money
Market Fund will fluctuate. Amounts deposited in the interest-bearing account
will be insured as to principal in an amount of up to $100,000 per account by
the Federal Deposit Insurance Corporation. Cash balances maintained in a Self-
Directed Plan account will be insured, up to $100,000, by the Securities
Investor Protection Corporation.
CONTRIBUTIONS AND DISTRIBUTIONS
The amount which may be contributed to a Self-Directed Plan in any one year
is subject to certain limitations under the Code; however, assets already in a
Self-Directed Plan account may be invested without regard to such limitations
on contributions. With the exception of contributions made on behalf of
employees
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by employers under the Basic SM Plans, and employer contributions to a SEP,
RSA or 401(k) plan in association with the Merrill Lynch Blueprint SM Program
(as discussed herein), a Self-Directed Plan participant may deduct from his
annual gross income, up to the maximum permitted under the Code, amounts
contributed to his Self-Directed Plan. These amounts, plus any additional
income earned on such contributions, will ordinarily not be taxed until
distributed to the participant.
Generally, under the Code, distributions may be made at any time but, as
discussed below, distributions made prior to the date on which the participant
reaches age 59 1/2 may be subject to a penalty and may be subject to mandatory
federal income tax withholding at a 20 percent rate (as described below).
Distributions will be taxed as ordinary income at the rate applicable to the
participant in the year in which distributed.
Excess Contributions. Contributions to an IRA, IRRA or SEP in excess of
those allowed by law are subject to a six percent excise tax if not withdrawn,
together with additional income attributable to such excess contributions,
prior to the date the participant files his income tax return for the year in
which the excess contribution was made. If an excess amount is contributed in
one year and is not eliminated in later years, the excess amount will be
subject to a cumulative six percent excise tax each year until it is
eliminated. Elimination of the excess may be accomplished either by reducing
the contribution (and deduction) for a succeeding year, or by withdrawal of
the excess amount plus the income attributable to it. Such income will be
considered a premature distribution subject to the ten percent penalty tax on
premature distributions discussed below, and will additionally be taxable as
ordinary income at the applicable rate for the year in which it is
distributed. Contributions to a Basic Plan SM, RSA or a 401(k) plan in
association with the Merrill Lynch Blueprint SM Program are not subject to the
six percent excise tax, but premature distributions from these plans under the
Code are generally subject to the ten percent penalty.
Timing of Retirement Benefits. Generally, a participant, upon reaching age
59 1/2, may make such distributions from his Self-Directed Plan account as he
chooses without tax penalties. Generally, the Code requires that amounts in
all Self-Directed Plans must commence to be distributed to a participant on or
before April 1 of the calendar year following the calendar year in which he
reaches age 70 1/2, even if the employee has not retired.
Such distributions may be made in a lump sum or installments over the life
of the participant, or the joint lives of the participant and a designated
beneficiary, or over a period not to exceed the life expectancy (determined,
generally, by IRS life expectancy tables) of the participant or the joint life
expectancy of the participant and designated beneficiary. If the employee dies
before his entire interest has been distributed, the remaining portion of his
interest must be distributed at least as rapidly as the method of distribution
in effect prior to his death. Special rules apply under the Code to spousal
beneficiaries.
If the minimum payout required from a Self-Directed Plan for a particular
year is not made, a 50 percent excise tax will be imposed on the amount
representing the difference between the minimum payout required from the Self-
Directed Plan, and the amount actually distributed, under Section 4974 of the
Code.
Treatment of Lump Sum Distributions and Annuities. The recipient of a "lump
sum distribution" (generally a distribution or payment within one taxable year
to the recipient of the balance to the credit of the employee on account of
the employee's death, attainment of age 59 1/2, disability or separation from
service
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(except in the case of a self-employed individual)) from a qualified
retirement plan (including Basic SM Plans, RSA and 401(k) plans but not IRAs
or SEPs) may compute his tax liability using the five-year averaging tax
computation, subject to certain requirements. The total taxable amount of a
lump sum distribution is the part that is the employer's contribution and
income earned on the account. Generally, the part of the distribution that
consists of the employee's contributions (other than deductible voluntary
employee contributions), the actuarial value of any annuity contract
distributed and the net unrealized appreciation in employer's securities
distributed (until such securities are sold or otherwise disposed of in a
taxable transaction), together with the death benefit exclusion, if
applicable, is not taxed. Employee contributions should be reduced by any
amounts previously distributed that were included in gross income because they
were a return of employer contributions. If annuity payments are made from
qualified retirement plans after January 1, 1986, under Section 72(b) of the
Code a portion of the annuity payments received annually by recipients may be
excluded from income as a return of the recipient's investment. This
"exclusion ratio" is the employee's investment in the contract over the
expected return. For annuity starting dates commencing after 1986, this
exclusion ratio is applied to only a limited number of annuity payments, and
the excludable amount is limited to the employee's total investment. If an
annuitant dies before the entire investment has been recovered, the
unrecovered investment is deductible on the individual's final income tax
return. No income averaging methods apply to distributions from IRAs, IRRAs,
SEPs or RSAs.
Excise Tax on Large Distributions. To limit the total tax-deferred benefits
any individual can receive annually, Section 4980A of the Code imposes a 15
percent excise tax on certain "excess distributions" from qualified retirement
plans. All distributions from qualified retirement plans including Basics SM
Plans, 401(k) plans, tax-sheltered annuities, RSAs, IRAs and SEPs made within
one year are aggregated for this purpose. Total benefits paid in a year
exceeding the greater of $112,500, indexed for inflation ($50,000 for 1995),
or $150,000 (unindexed) are subject to the tax to the extent of the excess.
For lump sum distributions eligible to be taxed under the five-year averaging
provisions, the penalty will be applied separately with respect to the lump
sum distribution and other retirement distributions. The penalty will be
applied on the portion of the lump sum distribution which exceeds five times
the otherwise applicable limit for the year.
Unless an election is made by a spouse, distributions made to beneficiaries
after the death of an individual are disregarded for purposes of applying this
tax; instead, an additional estate tax may be payable. The penalty tax on
excess distributions is reduced by any excise tax on early withdrawals.
Benefits accrued before August 1, 1986 may have been grandfathered and may
not be subject to the excise tax.
Premature Distributions. 1. Excise Tax: Distributions from an IRA, IRRA,
RSA, SEP or qualified retirement plan (including Basic SM Plans and 401(k)
plans) prior to the time the participant reaches age 59 1/2 generally are
subject to penalty unless the participant has died or has become disabled
(within the meaning of Code Section 72(m)(7)). The penalty for early
distributions is an excise tax equivalent to ten percent of the amount so
distributed, in addition to the applicable ordinary income tax payable on such
amount for the year in which it is distributed. The tax will be waived for any
distribution that is part of a scheduled series of substantially level
payments under an annuity for the life or life expectancy of the taxpayer or
the joint lives of the taxpayer and his designated beneficiary. Distributions
can also be made, without penalty, to cover deductible medical expenses, for
certain payments in a divorce settlement, or to an employee who is age 55 or
older, has separated from service, and has satisfied the requirements of the
employer's plan for early
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retirement (if the plan permits such payments). In certain cases, the penalty
will not be waived if the distribution is from an IRA or retirement annuity. A
premature distribution of an employee's contribution from a 401(k) plan or RSA
may be permitted without penalty in the event of hardship, termination of the
plan or a sale of the employer's business. The penalty is also not waived for
distributions from a qualified retirement plan, if the employee is a more than
five percent owner or has been a more than five-percent owner at any time
during the five plan years preceding the plan year ending in the tax year in
which the amount is received. A five percent owner is a person who, in the case
of a corporate employer, actually or constructively owns more than five percent
of the outstanding stock of the employer or stock possessing more than five
percent of the total combined voting power of all stock of the employer, or
who, in the case of a non-corporate employer, owns more than five percent of
the capital or profits interest in the employer. A rollover will avoid
imposition of the excise tax. However, for distributions prior to 1993, the
Code restricts the rollover of partial distributions to distributions received
on account of an employee's separation from service, death or disability.
2. Mandatory Income Tax Withholding: Generally, any portion of an "eligible
rollover distribution" made from a qualified retirement plan after December 31,
1992 qualifies for tax-free rollover into an eligible retirement plan under
Section 402(c) of the Code. Under Section 402(c), as amended, all distributions
from a qualified retirement plan (including in-service distributions) are
eligible rollover distributions, except for certain periodic payments, required
amounts distributed to a participant who is over age 70 1/2 as described above,
and amounts otherwise not includible in gross income. Rollovers may be made by
the participant in one of two ways: first, by direct transfers from the
qualified retirement plan to an IRA (including an individual retirement annuity
other than an endowment contract), a qualified defined contribution plan or an
annuity under Section 403(a) of the Code (a "direct rollover") or, in the case
of the RSA plan to another 403(b) plan, a tax sheltered annuity; or second, by
rolling over an eligible rollover distribution within 60 days of receipt to any
of the arrangements described above. In the event a direct rollover is not
chosen by the participant, a mandatory 20 percent of the distribution is
withheld to satisfy any federal tax liability that may be assessed. The
mandatory 20 percent withholding tax is not assessed against any distributions
that may not be rolled over (including, but not limited to, distributions to
beneficiaries other than a surviving spouse, or a present or former spouse
under a qualified domestic relations order).
Participants should consult with their attorneys or tax advisers in order to
determine the application of the new rollover and mandatory withholding
requirements to their own circumstances.
The foregoing rules are of general applicability to the Self-Directed Plans.
The following section discusses specific considerations applicable to the
different types of Self-Directed Plans.
TYPES OF SELF-DIRECTED PLANS
Individual Retirement Accounts. As a result of changes made by the Tax Reform
Act of 1986, the allowable deductions for contributions to IRAs are restricted
for certain taxpayers who are (or their spouses are) active participants in
employer-sponsored retirement plans and whose adjusted gross income exceeds
certain levels. An individual will be considered an active participant in a
defined contribution plan if any employer contribution or forfeiture is added
to his account for the year. In the case of a defined benefit plan, an
individual will be considered an active participant if he is not excluded under
the eligibility rules for the
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year. The determination of whether an individual is an active participant is
made without regard to whether the individual's rights under a plan are vested.
If an unmarried taxpayer, or either spouse in the case of married taxpayers, is
an "active participant" in an employer-sponsored retirement plan, deductible
contributions are permitted subject to a pro rata phase-out rule where adjusted
gross income (before the IRA deduction) is over $40,000 on a joint return or
$25,000 for an unmarried individual. The allowable deduction is completely
eliminated for such taxpayers when adjusted gross income (before the IRA
deduction) reaches $50,000 on a joint return or $35,000 for an unmarried
person. For this purpose, an employer-sponsored retirement plan means a
pension, profit-sharing or stock bonus plan qualified under Code section 401(a)
(including a Keogh plan or 401(k) plan), an annuity plan qualified under
Section 403(a), a SEP, a tax-sheltered Code section 403(b) annuity and
retirement plans covering federal, state or local government employees. A
minimum deductible contribution of $200 is provided for any taxpayer whose
adjusted gross income is not above the phase-out range even if the phase-out
rules would provide for a lower deduction.
Subject to the above limitations, any individual with compensation may
establish an IRA. Generally, the maximum yearly tax deduction that may be taken
for an IRA contribution is the lesser of $2,000 or 100% of the individual's
compensation. If a husband and wife are both employed, they may take a
deduction of up to $4,000 on a joint return. If only one spouse is employed, a
separate IRA, called a "spousal IRA", may be established for the benefit of the
non-working spouse or a spouse that elects to be treated as having no
compensation for the year. The deduction for a spousal IRA may only be taken if
a joint return is filed, and the maximum contribution and aggregate deduction
for the two IRAs for any year is $2,250. Allocations may be made between the
two accounts in any manner so long as no more than $2,000 is contributed to
either of the accounts. No deduction for IRA contributions may be made for or
after the tax year in which a participant reaches age 70 1/2. In addition, no
deduction will be allowed for amounts paid to an "inherited IRA" (i.e., an IRA
acquired on account of the death of another individual other than by the
surviving spouse of the original owner).
Active participants in employer-sponsored plans who are not eligible to make
deductible contributions to IRAs (or whose deductions are limited) may make
nondeductible contributions to a separate account. The nondeductible
contribution is subject to the same dollar limitations ($2,000 or 100% of
compensation) as deductible contributions described above. Income in the
separate account will accumulate tax-free until distributed; however, only the
account earnings will be included in taxable income upon distribution.
The Self-Directed IRA program allows for the establishment of IRRAs, which
are "rollover IRAs". Prior to 1993, a rollover IRA could have only been
established with a distribution received from a qualified employer-sponsored
pension plan that was of an amount equal to at least 50% of the balance to the
credit of the employee in the plan; after December 31, 1992, this 50%
requirement no longer applies. This distribution would ordinarily be subject to
income tax; however, tax may be deferred to the extent that all or part of the
rollover amount, less any voluntary contributions made to the employer-
sponsored plan, is put into an IRA within 60 days of receiving the
distribution. With respect to a distribution of less than the entire balance to
the credit of the employee in the plan prior to 1993 (a "partial rollover"),
the distribution was eligible for rollover treatment only if the distribution
was made on account of the employee's death, separation from service or
disability and was not one of a series of periodic payments and the employee
elected, in a manner to be prescribed by regulations, to have rollover
treatment apply to such distribution. However, as described above, effective
for rollovers made after December 31, 1992, the limitations described with
respect to partial
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rollovers have been eliminated, and new mandatory federal income tax
withholding requirements have been imposed for any rollover that is not a
direct rollover. The amounts in a rollover IRA are taxed only upon
distribution, as with other IRAs. However, tax-free rollover treatment will be
denied for amounts received from an "inherited IRA".
Simplified Employee Pension Plans. A SEP is essentially a collection of IRA
accounts established by employers for their employees, and any employer,
whether it is a sole proprietorship, a partnership or a corporation, may set
up a SEP. To qualify as a SEP, certain requirements must be met; in
particular, the plan must cover all current employees age 21 years or older
who have worked for the business in three of the last five calendar years and
have received at least $400 in compensation from the employer. Up to $22,500
or 15% of the employee's compensation up to $150,000 (effective for plan years
beginning after December 31, 1994), subject to inflation adjustments may be
paid by the employer to the employee's SEP. The same percentage of
compensation (determined under a written formula) must be contributed on
behalf of each employee. Such contributions are deductible by the employer and
excluded from the employee's income. In addition, elective salary deferrals
may be made by a participant in the SEP Plus (R) Plan. The tax-free elective
deferral of an employee's income for a taxable year cannot exceed $7,000, as
adjusted for inflation (currently, $9,240 in 1995). This cap limits all tax-
free elective deferrals by an employee under all cash and deferred
arrangements, SEPs and tax sheltered annuities.
Because the SEP is also an IRA, the employee may, if otherwise eligible
under the rules applicable to IRAs discussed above, make up to a $2,000
contribution to the SEP or make rollover contributions (see "Individual
Retirement Accounts" above). Amounts contributed to a participant's SEP
account vest immediately. If the participant should cease to be employed by
the business maintaining the SEP, the participant retains full rights to and
investment power over the account. In such case, the account should be changed
to a regular IRA so that the participant may make additional permissible
contributions.
Tax-deductible employer contributions may continue to be made to a SEP
participant's account even after he has reached age 70 1/2.
Basic SM Plans. The Basic SM Plan provides a format under which a profit-
sharing plan or a money purchase pension plan may be established either by a
corporation for its employees or by a self-employed individual or partnership
as a "Keogh" plan. A Keogh plan is a self-employed retirement plan established
by a self-employed individual or other non-corporate employer for the
exclusive benefit of employees and their beneficiaries. For Keogh plan
purposes, "employer" takes on a special meaning. A sole proprietor (i.e., a
self-employed individual who owns the entire interest in an unincorporated
trade or business), an independent contractor, or an individual in business
for himself is self-employed and is his own employer. A partnership is treated
as the employer of each partner who earns income from the performance of
services for the partnership. Silent partners who put up capital but do not
work in the business may not be included in a Keogh plan. Under the money
purchase pension plan, regular, set contributions must be made for each
employee each year. Under the profit-sharing plan, contributions are keyed to
the existence of profits and should be made on a regular basis to ensure that
the Basic SM Plan maintains its qualified status.
Generally, all employees who are at least 21 years of age and have worked
for the employer (whether corporate or non-corporate) for at least two years
must be covered under the terms of the Basic SM Plan. Contributions under a
Basic SM Plan are usually required to be allocated among those who are
participants on
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the last day of a plan year. For this purpose, the Basic SM Plan provides
several options to define the compensation that will be included in
determining contributions under the Basic SM Plan. Contributions under the
Basic SM Plan are fully vested when made.
Top-Heavy Plan Requirements. The Code imposes special rules with respect to
qualified plans that are considered to be "top-heavy" plans (individual
retirement plans are not subject to the Code's rules relating to "top-heavy"
plans). A defined contribution plan, such as the Basic Plan, is considered to
be "top-heavy" where the account balances of "key employees" exceed 60% of the
account balances of all employees. "Key employees" include all employees who,
at any time during the plan year or the four preceding plan years (1) are
officers having annual compensation of more than $45,000, as adjusted for
inflation, (2) are one of the ten employees with annual compensation of more
than $30,000 that actually or constructively own the largest interests in the
employer, (3) are "five-percent owners", or (4) own more than a one percent
interest in the employer and have annual compensation in excess of $150,000.
The account balance of an individual that has not received compensation as an
employee during the five preceding plan years is not taken into account.
When a plan favoring key employees is determined to be "top-heavy", its
continued qualification under the Code depends on its compliance with certain
requirements, which (1) limit the amount of a participant's compensation that
may be taken into account, (2) provide stringent vesting schedules, (3)
provide minimum contributions or benefits for non-key employees, and (4)
reduce the aggregate limit on benefits and contributions for certain key
employees who participate in both a defined benefit plan and a defined
contribution plan. Even if a Basic SM Plan were determined to be "top-heavy",
it would continue to maintain its qualification under the Code because the
provisions of the Plan relating to the above limitations have been designed to
comply with such limitations, whether or not the Basic SM Plan is found to be
"top-heavy".
For a SEP Plus (R) Plan which is top-heavy (either because it was deemed to
be top-heavy as of the adoption of the plan or as determined through annual
testing prescribed by the Code) the employer may preserve the plan's
qualification by making a contribution on behalf of each non-key employee of
the lesser of: (1) 3% of each such non-key employee's compensation, or (2) the
highest contribution percentage rate for any key employee under the plan.
Retirement Plans in Association with the Merrill Lynch Blueprint SM
Program. The Merrill Lynch Blueprint SM Program is available to participants
in a cash or deferred plan (commonly known as a "401(k) plan") and to
participants in IRAs in which contributions are made through payroll
deductions.
A 401(k) plan is a cash or deferred arrangement that allows an employee to
choose whether the employer will pay a certain amount directly to the employee
in cash or to a qualified profit-sharing plan or a stock bonus plan on behalf
of such employee. The tax-free elective deferral of an employee's income for a
taxable year cannot exceed $7,000, as adjusted for inflation (currently,
$9,240 in 1995). This cap limits all tax-free elective deferrals by an
employee under all cash and deferred arrangements, SEPs and tax sheltered
annuities. The employer may make "non-elective" contributions directly into
the plan on the employee's behalf. These contributions must meet special non-
discrimination tests. Generally, participants in a 401(k) plan in association
with the Merrill Lynch Blueprint SM Program are treated in the same manner as
participants in other qualified retirement plans.
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Participants in IRA plans which are maintained in association with the
Merrill Lynch Blueprint SM Program are generally treated for contribution and
distribution purposes in the same manner as other IRA participants, as
discussed above.
Each of the foregoing Self-Directed Plans is designed to meet differing
needs and has varying financial and tax consequences. An investor should
thoroughly review all of the materials available from Merrill Lynch concerning
the Self-Directed Plans and consult with his attorney or tax adviser in
determining whether any of these Plans is suited to his needs and
circumstances.
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APPENDIX B
DESCRIPTION OF COMMERCIAL PAPER, BANK MONEY INSTRUMENTS AND CORPORATE BOND
RATINGS
COMMERCIAL PAPER AND BANK MONEY INSTRUMENTS
Commercial paper with the greatest capacity for timely payment is rated A by
Standard & Poor's Corporation ("S&P"). Issues within this category are further
refined with designations 1, 2 and 3 to indicate the relative degree of safety;
A-1, the highest of the three, indicates the degree of safety is either
overwhelming or very strong; A-2 indicates that capacity for timely repayment
is strong.
Moody's Investors Service ("Moody's") employs the designations of Prime-1,
Prime-2 and Prime-3 to indicate the relative capacity of the rated issuers to
repay punctually. Prime-1 issues have a superior capacity for repayment. Prime-
2 issues have a strong capacity for repayment, but to a lesser degree than
Prime-1.
Short-term obligations, including commercial paper, rated A1+ by IBCA Limited
or its affiliate IBCA Inc. (together, "IBCA") are obligations supported by the
highest capacity for timely repayment. Obligations rated A1 have a very strong
capacity for timely repayment. Obligations rated A2 have a strong capacity for
timely repayment, although such capacity may be susceptible to adverse changes
in business, economic or financial conditions.
Fitch Investors Service, Inc. ("Fitch") employs the rating F-1+ to indicate
issues regarded as having the strongest degree of assurance for timely payment.
The rating F-1 reflects an assurance of timely payment only slightly less in
degree than issues rated F-1+, while the rating F-2 indicates a satisfactory
degree of assurance for timely payment, although the margin of safety is not as
great as indicated by the F-1+ and F-1 categories.
Duff & Phelps Inc. ("Duff & Phelps") employs the designation of Duff 1 with
respect to top grade commercial paper and bank money instruments. Duff 1+
indicates the highest certainty of timely payment: short-term liquidity is
clearly outstanding, and safety is just below risk-free U.S. Treasury short-
term obligations. Duff 1- indicates high certainty of timely payment. Duff 2
indicates good certainty of timely payment: liquidity factors and company
fundamentals are sound.
CORPORATE BONDS
Bonds rated AAA have the highest rating assigned by S&P to a debt obligation.
Capacity to pay interest and repay principal is extremely strong. Bonds rated
AA have a very strong capacity to pay interest and repay principal and differ
from the highest rated issues only in a small degree.
Bonds rated Aaa by Moody's are judged to be of the best quality. Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. Bonds rated Aa are judged to be of high quality by all
standards. They are rated lower than the best bonds because margins of
protection may not be as large or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the long-
term risks appear somewhat larger than in Aaa securities. Moody's applies
numerical modifiers, 1, 2 and 3 in each generic rating classification from Aa
through B in its corporate bond rating system. The modifier 1 indicates that
the security ranks in the higher end of its generic rating category;
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the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of its generic rating category.
Bonds rated AAA by IBCA are obligations for which there is the lowest
expectation of investment risk. Capacity for timely repayment of principal and
interest is substantial such that adverse changes in business, economic or
financial conditions are unlikely to increase investment risk significantly.
Bonds rated AA are obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial conditions may
increase investment risk, albeit not very significantly.
Bonds rated AAA by Fitch are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events. Bonds rated AA are considered to be investment grade and of
very high credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds rated AAA.
Bonds rated AAA by Duff & Phelps are deemed to be of the highest credit
quality: the risk factors are negligible, being only slightly more than for
risk-free U.S. Treasury debt. AA indicates high credit quality: protection
factors are strong, and risk is modest but may vary slightly from time to time
because of economic conditions.
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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 material 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.
Deloitte & Touche LLP
Princeton, New Jersey
December 1, 1995
40
<PAGE>
<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
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
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)
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>
41
<PAGE>
<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.
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
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
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>
42
<PAGE>
<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
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)
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
==========
<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>
43
<PAGE>
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
==============
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>
44
<PAGE>
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
--------------
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
============== ==============
See Notes to Financial Statements.
</TABLE>
45
<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 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>
46
<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.
(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.
47
<PAGE>
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)
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.
48
<PAGE>
[This Page Intentionally Left Blank]
49
<PAGE>
[This Page Intentionally Left Blank]
50
<PAGE>
[This Page Intentionally Left Blank]
51
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Objectives and Policies......................................... 2
Management of the Trust.................................................... 5
Trustees and Officers..................................................... 5
Compensation of Trustees.................................................. 6
Management and Advisory Arrangements...................................... 7
Purchase and Redemption of Shares.......................................... 9
Portfolio Transactions..................................................... 10
Determination of Net Asset Value........................................... 11
Yield Information.......................................................... 12
Taxes...................................................................... 13
Federal................................................................... 13
State..................................................................... 15
Exchange Privilege......................................................... 15
General Information........................................................ 27
Description of Series and Shares.......................................... 27
Custodian................................................................. 28
Transfer Agent............................................................ 28
Independent Auditors...................................................... 28
Legal Counsel............................................................. 28
Reports to Shareholders................................................... 28
Additional Information.................................................... 28
Appendix A................................................................. 29
Appendix B................................................................. 38
Independent Auditors' Report............................................... 40
Financial Statements....................................................... 41
</TABLE>
Code #10237-0296
[LOGO] MERRILL LYNCH
MERRILL LYNCH RETIREMENT
RESERVES MONEY FUND
[ART]
STATEMENT OF
ADDITIONAL
INFORMATION
February 26, 1996
Distributor:
Merrill Lynch
Funds Distributor, Inc.
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(A) Financial Statements
Contained in Part A:
Financial Highlights for each of the years in the ten-year period
ended October 31, 1995
Contained in Part B:
Schedule of Investments as of October 31, 1995
Statement of Assets and Liabilities as of October 31, 1995
Statement of Operations for the year ended October 31, 1995
Statements of Changes in Net Assets for the years ended October 31,
1995 and October 31, 1994
Financial Highlights for each of the years in the five-year period
ended October 31, 1995
(B) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1(a) --Declaration of Trust dated July 15, 1986.(a)
(b) --Instrument establishing Merrill Lynch Retirement Reserves Money Fund
as a series of Registrant.(a)
2 --By-Laws of Registrant.(a)
3 --None.
4 --None.
5 --Management Agreement between Registrant and Merrill Lynch Asset
Management, L.P.(b)
6 --Distribution Agreement between Registrant and Merrill Lynch Funds
Distributor, Inc.(a)
7 --None.
8 --Custody Agreement between Registrant and The Bank of New York.(a)
9 --Transfer Agency, Shareholder Servicing Agency and Proxy Agency
Agreement between Registrant and Merrill Lynch Financial Data
Service, Inc.(a)
10 --None.
11 --Consent of Deloitte & Touche LLP, independent auditors for
Registrant.
12 --None.
13 --Certificate of Merrill Lynch Asset Management.(a)
14 --None.
15 --None.
16 --Schedule for computation of each performance quotation provided in
the Registration Statement in response to Item 22.(a)
17 --Financial Data Schedule.
</TABLE>
- --------
(a) Refiled pursuant to the Electronic Data Gathering, Analysis and Retrieval
(EDGAR) phase-in requirements.
(b) Filed on EDGAR on February 24, 1995 as an exhibit to Post-Effective
Amendment No. 15 to Registrant's Registration Statement under the
Securities Act of 1933 on Form N-1A.
C-1
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
The Registrant is not controlled by or under common control with any person.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<CAPTION>
NUMBER OF
HOLDERS AT
TITLE OF CLASS JANUARY 31, 1996
-------------- ----------------
<S> <C>
Shares of beneficial interest, par value $.10 per share........ 1,915,340
</TABLE>
Note: The number of holders shown above includes holders of record plus
beneficial owners whose shares are held of record by Merrill Lynch, Pierce,
Fenner & Smith Incorporated.
ITEM 27. INDEMNIFICATION.
Section 5.3 of Registrant's declaration of Trust provides as follows:
The Trust shall indemnify each of its Trustees, officers, employees, and
agents (including persons who serve at its request as directors, officers
or trustees of another organization in which it has any interest, as a
shareholder, creditor or otherwise) against all liabilities and expenses
(including amounts paid in satisfaction of judgments, in compromise, as
fines and penalties, and as counsel fees) reasonably incurred by him in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, at which he may be involved or with
which he may be threatened, while in office or thereafter, by reason of his
being or having been such a trustee, officer, employee or agent, except
with respect to any matter as to which he shall have been adjudicated to
have acted in bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties; provided, however, that as to any matter disposed
of by a compromise payment by such person, pursuant to a consent decree or
otherwise, no indemnification either for said payment or for any other
expenses shall be provided unless the Trust shall have received a written
opinion from independent legal counsel approved by the Trustees to the
effect that if either the matter of willful misfeasance, gross negligence
or reckless disregard of duty, or the matter of good faith and reasonable
belief as to the best interests of the Trust, had been adjudicated, it
would have been adjudicated in favor of such person. The rights accruing to
any Person under these provisions shall not exclude any other right to
which he may be lawfully entitled; provided that no Person may satisfy any
right of indemnity or reimbursement granted herein or in Section 5.1
(relating to
C-2
<PAGE>
no personal liability of shareholders, Trustees, etc.) or to which he may
be otherwise entitled except out of the property of the Trust, and no
Shareholder shall be personally liable to any Person with respect to any
claim for indemnity or reimbursement or otherwise. The Trustees may make
advance payments in connection with indemnification under this Section 5.3,
provided that the indemnified person shall have given a written undertaking
to reimburse the Trust in the event it is subsequently determined that he
is not entitled to such indemnification.
Insofar as the conditional advancing of indemnification monies for actions
based upon the Investment Company Act of 1940 may be concerned, such payments
will be made only on the following conditions: (i) the advances must be limited
to amounts used, or to be used, for the preparation or presentation of a
defense to the action, including costs connected with the preparation of a
settlement; (ii) advances may be made only upon receipt of a written promise
by, or on behalf of, the recipient to repay that amount of the advance which
exceeds the amount to which it is ultimately determined that he is entitled to
receive from the Registrant by reason of indemnification; and (iii) (a) such
promise must be secured by a surety bond, other suitable insurance or an
equivalent form of security which assures that any repayments may be obtained
by the Registrant without delay or litigation, which bond, insurance or other
form of security must be provided by the recipient of the advance, or (b) a
majority of a quorum of the Registrant's disinterested, non-party Trustees, or
an independent legal counsel in written opinion, shall determine, based upon a
review of readily available facts, that the recipient of the advance ultimately
will be found entitled to indemnification.
In Section 9 of the Distribution Agreement relating to the securities being
offered hereby, the Registrant agrees to indemnify the Distributor and each
person, if any, who controls the Distributor within the meaning of the
Securities Act of 1933, against certain types of civil liabilities arising in
connection with the Registration Statement or Prospectus.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to Trustees, officers and controlling persons of the
Registrant and the principal underwriter pursuant to the foregoing provisions
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a Trustee, officer,
or controlling person of the Registrant and the principal underwriter in
connection with the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person or the principal
underwriter in connection with the shares being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF MANAGER.
Fund Asset Management, L.P. ("FAM"), an affiliate of the Manager, acts as the
investment adviser for the following open-end investment companies: CBA Money
Fund, CMA Government Securities Fund, CMA Money Fund, CMA Multi-State Municipal
Series Trust, CMA Tax-Exempt Fund, CMA Treasury Fund, The Corporate Fund
Accumulation Program, Inc., Financial Institutions Series Trust, Merrill Lynch
Basic Value Fund, Inc., Merrill Lynch California Municipal Series Trust,
Merrill Lynch Corporate Bond Fund,
C-3
<PAGE>
Inc., Merrill Lynch Federal Securities Trust, Merrill Lynch Funds for
Institutions Series, Merrill Lynch Multi-State Limited Maturity Municipal
Series Trust, Merrill Lynch Multi-State Municipal Series Trust, Merrill Lynch
Municipal Bond Fund, Inc., Merrill Lynch Phoenix Fund, Inc., Merrill Lynch
Special Value Fund, Inc., Merrill Lynch World Income Fund, Inc., and The
Municipal Fund Accumulation Program, Inc., and for the following closed-end
investment companies: Apex Municipal Fund, Inc., Corporate High Yield Fund,
Inc., Corporate High Yield Fund II, Inc., Emerging Tigers Fund, Inc., Income
Opportunities Fund 1999, Inc., Income Opportunities Fund 2000, Inc.
Merrill Lynch Asset Management, L.P. ("MLAM" or the "Manager") acts as
investment adviser for the following open-end investment companies: Merrill
Lynch Adjustable Rate Securities Fund, Inc., Merrill Lynch Americas Income
Fund, Inc., Merrill Lynch Asset Builder Program, Inc., Merrill Lynch Asset
Growth Fund, Inc., Merrill Lynch Asset Income Fund, Inc., Merrill Lynch Capital
Fund, Inc., Merrill Lynch Developing Capital Markets Fund, Inc., Merrill Lynch
Dragon Fund, Inc., Merrill Lynch EuroFund, Merrill Lynch Fundamental Growth
Fund, Inc., Merrill Lynch Fund For Tomorrow, Inc., Merrill Lynch Global
Allocation Fund, Inc., Merrill Lynch Global Bond Fund for Investment and
Retirement, Merrill Lynch Global Convertible Fund, Inc., Merrill Lynch Global
Holdings, Inc., Merrill Lynch Global Resources Trust, Merrill Lynch Global
SmallCap Fund, Inc., Merrill Lynch Global Utility Fund, Inc., Merrill Lynch
Growth Fund for Investment and Retirement, Merrill Lynch Healthcare Fund, Inc.,
Merrill Lynch Institutional Intermediate Fund, Merrill Lynch International
Equity Fund, Merrill Lynch Latin America Fund, Inc., Merrill Lynch Middle
East/Africa Fund, Inc., Merrill Lynch Municipal Series Trust, Merrill Lynch
Pacific Fund, Inc., Merrill Lynch Ready Assets Trust, Merrill Lynch Retirement
Series Trust, Merrill Lynch Series Fund, Inc., Merrill Lynch Short-Term Global
Income Fund, Inc., Merrill Lynch Strategic Dividend Fund, Merrill Lynch
Technology Fund, Inc., Merrill Lynch U.S. Treasury Money Fund, Merrill Lynch
U.S.A. Government Reserves, Merrill Lynch Utility Income Fund, Inc. and Merrill
Lynch Variable Series Funds, Inc., and for the following closed-end investment
companies: Convertible Holdings Inc., Merrill Lynch High Income Municipal Bond
Fund, Inc. and Merrill Lynch Senior Floating Rate Fund, Inc.
The address of each of these investment companies is P.O. Box 9011,
Princeton, New Jersey 08543-9011, except that the address of Merrill Lynch
Funds for Institutions Series and Merrill Lynch Institutional Intermediate Fund
is One Financial Center, 15th Floor, Boston, Massachusetts 02111-2646. The
address of the Manager, FAM and Princeton Services, Inc. ("Princeton
Services"), and Princeton Administrators, L.P. is also P.O. Box 9011,
Princeton, New Jersey 08543-9011. The address of Merrill Lynch Funds
Distributor, Inc. ("MLFD") is P.O. Box 9081, Princeton, New Jersey 08543-9081.
The address of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch") and Merrill Lynch & Co., Inc. ("ML&Co.") is North Tower, World
Financial Center, 250 Vesey Street, New York, New York 10281-1201. The address
of the Fund's transfer agent, Merrill Lynch Financial Data Services, Inc.
("FDS"), is 4800 Deer Lake Drive East, Jacksonville, Florida 32246-6484.
Set forth below is a list of each executive officer and partner of the
Manager indicating each business, profession, vocation or employment of a
substantial nature in which each such person or entity has been engaged since
September 1, 1992, for his own account or in the capacity of director, officer,
partner or trustee. In addition, Mr. Zeikel is President, Mr. Glenn is
Executive Vice President and Mr. Richard is Treasurer of
C-4
<PAGE>
all or substantially all of the investment companies described in the preceding
paragraph and Messrs. Giordano, Harvey, Hewitt, Kirstein and Monagle are
directors or officers of one or more of such companies.
<TABLE>
<CAPTION>
POSITION OTHER SUBSTANTIAL BUSINESS,
NAME WITH MANAGER PROFESSION, VOCATION OR EMPLOYMENT
---- ------------ ----------------------------------
<S> <C> <C>
ML & Co. ............... Limited Partner Financial Services Holding Company;
Limited Partner of FAM
Princeton Services...... General Partner General Partner of FAM
Arthur Zeikel........... President and President of FAM; President and Director
Director of Princeton Services; Director of
Merrill Lynch Funds Distributor, Inc.
(the "Distributor"); Executive Vice
President of ML & Co.
Terry K. Glenn.......... Executive Vice Executive Vice President of FAM;
President Executive Vice President and Director
of Princeton Services; President and
Director of the Distributor, Director
of FDS; President of Princeton
Administrators, L.P.
Philip L. Kirstein...... Senior Vice Senior Vice President, General Counsel
President, General and Secretary of FAM; Senior Vice
Counsel and President, General Counsel, Director
Secretary and Secretary of Princeton Services;
Director of the Distributor
Vincent R. Giordano..... Senior Vice President Senior Vice President of FAM; Senior
Vice President of Princeton Services
Elizabeth Griffin....... Senior Vice President Senior Vice President of FAM
Norman R. Harvey........ Senior Vice President Senior Vice President of FAM; Senior
Vice President of Princeton Services
N. John Hewitt.......... Senior Vice President Senior Vice President of FAM; Senior
Vice President of Princeton Services
Ronald M. Kloss......... Senior Vice President Senior Vice President and Controller of
and Controller FAM; Senior Vice President and
Controller of Princeton Services
Stephen M.M. Miller..... Senior Vice President Executive Vice President of Princeton
Administrators, L.P.
Joseph T. Monagle, Jr. . Senior Vice President Senior Vice President of FAM; Senior
Vice President of Princeton Services
</TABLE>
<TABLE>
<S> <C> <C>
Gerald M. Richard....... Senior Vice President Senior Vice President and Treasurer of
and Treasurer FAM; Senior Vice President and
Treasurer of Princeton Services; Vice
President and Treasurer of the
Distributor
Richard L. Rufener...... Senior Vice President Senior Vice President of FAM; Vice
President of the Distributor; Senior
Vice President of Princeton Services
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
POSITION OTHER SUBSTANTIAL BUSINESS,
NAME WITH MANAGER PROFESSION, VOCATION OR EMPLOYMENT
---- ------------ ----------------------------------
<S> <C> <C>
Ronald L. Welburn. Senior Vice President Senior Vice President of FAM; Senior
Vice President of Princeton Services
Anthony Wiseman... Senior Vice President Senior Vice President of FAM; Senior
Vice President of Princeton Services
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) MLFD acts as the principal underwriter for the Registrant. MLFD acts as
the principal underwriter for each of the open-end investment companies
referred to in the first two paragraphs of Item 28 except CBA Money Fund, CMA
Government Securities Fund, CMA Money Fund, CMA Multi-State Municipal Series
Trust, CMA Tax-Exempt Fund, CMA Treasury Fund, Convertible Holdings, Inc., The
Corporate Fund Accumulation Program, Inc., MuniAssets Fund, Inc. and The
Municipal Fund Accumulation Program, Inc., and MLFD also acts as the principal
underwriter for the following closed-end investment companies: Merrill Lynch
High Income Municipal Bond Fund, Inc. and Merrill Lynch Senior Floating Rate
Fund, Inc.
(b) Set Forth below is information concerning each director and officer of
the Distributor. The principal business address of each such person is P.O. Box
9081, Princeton, New Jersey 08543-9081, except that the address of Messrs.
Crook, Aldrich, Brady, Breen, Graczyk, Fatseas, and Wasel is One Financial
Center, Boston, Massachusetts 02111-2665.
<TABLE>
<CAPTION>
(2) (3)
(1) POSITION(S) AND OFFICES POSITIONS AND OFFICES
NAME WITH DISTRIBUTOR WITH REGISTRANT
----- -------------------------------------- ------------------------
<S> <C> <C>
Terry K. Glenn.......... President and Director Executive Vice President
Arthur Zeikel........... Director President and Trustee
Philip L. Kirstein...... Director None
William E. Aldrich...... Senior Vice President None
Robert W. Crook......... Senior Vice President None
Kevin P. Boman.......... Vice President None
Michael J. Brady........ Vice President None
William M. Breen........ Vice President None
Sharon Creveling........ Vice President and Assistant Treasurer None
Mark A. DeSario......... Vice President None
James T. Fatseas........ Vice President None
Stanley Graczyk......... Vice President None
Debra W. Landsman-Yaros. Vice President None
Michelle T. Lau......... Vice President None
Gerald M. Richard....... Vice President and Treasurer Treasurer
Richard L. Rufener...... Vice President None
Salvatore Venezia....... Vice President None
William Wasel........... Vice President None
Robert Harris........... Secretary None
</TABLE>
(c) Not applicable.
C-6
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules thereunder will be
maintained at the offices of the Registrant, 800 Scudders Mill Road,
Plainsboro, New Jersey 08536 and its transfer agent, Merrill Lynch Financial
Data Services, Inc., 4800 Deer Lake Drive East, Jacksonville, Florida 32246-
6484.
ITEM 31. MANAGEMENT SERVICES.
Other than as set forth under the caption "Management of the Trust--
Management and Advisory Arrangements" in the Prospectus constituting Part A of
the Registration Statement, and under "Management of the Trust--Management and
Advisory Arrangements" in the Statement of Additional Information constituting
Part B of the Registration Statement, Registrant is not a party to any
management-related service contract.
ITEM 32. UNDERTAKINGS.
Not applicable.
C-7
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, THE REGISTRANT CERTIFIES THAT IT MEETS ALL THE
REQUIREMENTS FOR EFFECTIVENESS OF THIS REGISTRATION STATEMENT PURSUANT TO RULE
485(b) UNDER THE SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE TOWNSHIP OF PLAINSBORO, AND STATE OF NEW JERSEY, ON THE 26TH
DAY OF FEBRUARY, 1996.
Merrill Lynch Retirement Series
Trust
(Registrant)
/s/ Arthur Zeikel
By___________________________________
(ARTHUR ZEIKEL, PRESIDENT)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND
ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Arthur Zeikel President and
- ------------------------------------- Trustee (Principal February 26,
(ARTHUR ZEIKEL) Executive Officer) 1996
Treasurer (Principal
Gerald M. Richard* Financial and
- ------------------------------------- Accounting Officer)
(GERALD M. RICHARD)
Joe Grills* Trustee
- -------------------------------------
(JOE GRILLS)
Walter Mintz* Trustee
- -------------------------------------
(WALTER MINTZ)
Melvin R. Seiden* Trustee
- -------------------------------------
(MELVIN R. SEIDEN)
Stephen B. Swensrud* Trustee
- -------------------------------------
(STEPHEN B. SWENSRUD)
Trustee
Robert S. Salomon, Jr.*
- -------------------------------------
(ROBERT S. SALOMON, JR.)
/s/ Arthur Zeikel
*By _________________________________ February 26,
(ARTHUR ZEIKEL, ATTORNEY-IN-FACT) 1996
C-8
<PAGE>
POWER OF ATTORNEY
I, Joe Grills, hereby authorize Arthur Zeikel, Terry K. Glenn, Gerald M.
Richard, Mark B. Goldfus, Robert Harris or Michael J. Hennewinkel, or any of
them, as attorney-in-fact, to sign on my behalf any amendments to the
Registration Statement for each of the following registered investment
companies and to file the same, with all exhibits thereto, with the Securities
and Exchange Commission: Merrill Lynch Adjustable Rate Securities Fund, Inc.;
Merrill Lynch Asset Builder Program, Inc.; Merrill Lynch Federal Securities
Trust; Merrill Lynch Fundamental Growth Fund, Inc.; Merrill Lynch Retirement
Reserves Money Fund of Merrill Lynch Retirement Series Trust; Merrill Lynch
Phoenix Fund, Inc.; and Summit Cash Reserves Fund of Financial Institutions
Series Trust.
/s/ Joe Grills
-------------------------------------
Joe Grills
(Director of each above referenced
Maryland corporation and Trustee
of each above referenced
Massachusetts business trust)
Dated: February 21, 1996
<PAGE>
POWER OF ATTORNEY
I, Robert S. Salomon, Jr., hereby authorize Arthur Zeikel, Terry K. Glenn,
Gerald M. Richard, Mark B. Goldfus, Robert Harris or Michael J. Hennewinkel, or
any of them, as attorney-in-fact, to sign on my behalf any amendments to the
Registration Statement for each of the following registered investment
companies and to file the same, with all exhibits thereto, with the Securities
and Exchange Commission: Merrill Lynch Adjustable Rate Securities Fund, Inc.;
Merrill Lynch Asset Builder Program, Inc.; Merrill Lynch Federal Securities
Trust; Merrill Lynch Fundamental Growth Fund, Inc.; Merrill Lynch Retirement
Reserves Money Fund of Merrill Lynch Retirement Series Trust; Merrill Lynch
Phoenix Fund, Inc.; and Summit Cash Reserves Fund of Financial Institutions
Series Trust.
/s/ Robert S. Salomon, Jr.
-------------------------------------
Robert S. Salomon, Jr.
(Director of each above referenced
Maryland corporation and Trustee
of each above referenced
Massachusetts business trust)
Dated: February 21, 1996
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE NO.
------- ----------- --------
<C> <S>
1(a) --Declaration of Trust dated July 15, 1986.(a)
(b) --Instrument establishing Merrill Lynch Retirement Reserves
Money Fund as a series of Registrant.(a)
2 --By-Laws of Registrant.(a)
3 --None.
4 --None.
6 --Distribution Agreement between Registrant and Merrill
Lynch Funds Distributor, Inc.(a)
7 --None.
8 --Custody Agreement between Registrant and The Bank of New
York.(a)
9 --Transfer Agency, Shareholder Servicing Agency and Proxy
Agency Agreement between Registrant and Merrill Lynch
Financial Data Services, Inc.(a)
10 --None.
11 --Consent of Deloitte & Touche LLP, independent auditors
for Registrant.
12 --None.
13 --Certificate of Merrill Lynch Asset Management.(a)
14 --None.
15 --None.
16 --Schedule for computation of each performance quotation
provided in the Registration Statement in response to Item
22.(a)
17 --Financial Data Schedule.
</TABLE>
- --------
(a) Refiled pursuant to the Electronic Data Gathering, Analysis and Retrieval
(EDGAR) phase-in requirements.
<PAGE>
APPENDIX FOR GRAPHIC AND IMAGE MATERIAL
Pursuant to Rule 304 of Regulation S-T, the following table presents
fair and accurate narrative descriptions of graphic and image material omitted
from this EDGAR Submission file due to ASCII-incompatibility and cross-
references this material to the location of each occurrence in the text.
DESCRIPTION OF OMITTED LOCATION OF GRAPHIC
GRAPHIC OR IMAGE OR IMAGE IN TEXT
- ---------------------- -------------------
Compass plate, circular Back cover of Prospectus and
graph paper and Merrill Lynch back cover of Statement of
logo including stylized market Additional Information
bull
<PAGE>
Ex-99.1(a)
DECLARATION OF TRUST
OF
MERRILL LYNCH NEW SERIES TRUST
THE DECLARATION OF TRUST of Merrill Lynch New Series Trust is
made the 15th day of July, 1986 by the parties signatory hereto, as
trustees (such persons, so long as they shall continue in office in
accordance with the terms of this Declaration of Trust, and all
other persons who at the time in question have been duly elected or
appointed as trustees in accordance with the provisions of this
Declaration of Trust and are then in office, being hereinafter
called the "Trustees").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Trustees desire to form a trust fund under the
laws of Massachusetts for the investment and reinvestment of funds
contributed thereto; and
WHEREAS, it is proposed that the beneficial interest in the
trust assets be divided into transferable shares of beneficial
interest which may, at the discretion of the Trustees, be divided
into separate series as hereinafter provided;
NOW, THEREFORE, the Trustees hereby declare that they will
hold in trust, all money and property contributed to the trust fund
to manage and dispose of the same for the benefit of the holders
from time to time of the shares of beneficial interest issued
hereunder and subject to the provisions hereof, to wit:
<PAGE>
ARTICLE I
The Trust
---------
1.1. Name. The name of the trust created hereby (the
----
"Trust", which term shall be deemed to include any Series of the
Trust when the context requires) shall be "Merrill Lynch New Series
Trust", and so far as may be practicable the Trustees shall conduct
the activities of the Trust, execute all documents and sue or be
sued under that name, which name (and the word "Trust" wherever
hereinafter used) shall refer to the Trustees as Trustees, and not
individually, and shall not refer to the officers, agents,
employees or Shareholders of the Trust or any Series thereof. Each
Series of the Trust which shall be established and designated by
the Trustees pursuant to Section 6.2 shall conduct its activities
under such name as the Trustees shall determine and set forth in
the instrument establishing such Series. Should the Trustees
determine that the use of the name of the Trust or any Series is
not advisable, they may select such other name for the Trust or
such Series as they deem proper and the Trust or Series may conduct
its activities under such other name. Any name change shall be
effective upon the execution by a majority of the then Trustees of
an instrument setting forth the new name. Any such instrument
shall have the status of an amendment to this Declaration.
1.2. Definitions. As used in this Declaration, the following
-----------
terms shall have the following meanings:
The terms "Affiliated Person", "Assignment", "Commission",
----------------- ---------- ----------
"Interested Person", "Majority Shareholder Vote" (the 67% or 50%
----------------- -------------------------
requirement of the third sentence of Section 2(a)(42) of the 1940
Act, whichever may be applicable) and "Principal Underwriter" shall
---------------------
have the meanings given them in the 1940 Act.
"Declaration" shall mean this Declaration of Trust as amended
-----------
from time to time. References in this Declaration to
"Declaration", "hereof", "herein" and "hereunder" shall be deemed
----------- ------ ------ ---------
to refer to the Declaration rather than the article or section in
which such words appear.
"Fundamental Policies" shall mean the investment restrictions
--------------------
set forth in the Prospectus of any Series and designated as
fundamental policies therein.
"Person" shall mean and include individuals, corporations,
------
partnerships, trusts, associations, joint ventures and other
entities, whether or not legal entities, and governments and
agencies and political subdivisions thereof.
2.
<PAGE>
"Prospectus" shall mean the currently effective Prospectus of
----------
any Series of the Trust under the Securities Act of 1933, as
amended, including the Statement of Additional Information
incorporated by reference therein.
"Series" shall mean the separate series that may be
------
established and designated pursuant to Section 6.2.
"Shareholders" shall mean as of any particular time all
------------
holders of record of outstanding Shares at such time.
"Shares" shall mean the equal proportionate transferable units
------
of interest into which the beneficial interest in any Series of the
Trust shall be divided from time to time and includes fractions of
Shares as well as whole Shares. All references to Shares shall be
deemed to be Shares of any or all Series as the context may
require.
"Trustees" shall mean the signatories to this Declaration of
--------
Trust, so long as they shall continue in office in accordance with
the terms hereof, and all other persons who it the time in question
have been duly elected or appointed and have qualified as trustees
in accordance with the provisions hereof and are then in office,
are herein referred to as the "Trustees", and reference in this
Declaration of Trust to a Trustee or Trustees shall refer to such
person or persons in their capacity as Trustees hereunder.
"Trust Property" shall mean as of any particular time any and
--------------
all property, real or personal, tangible or intangible, which at
such time is owned or held by or for the account of the Trust, any
Series thereof or the Trustees.
The "1940 Act" refers to the Investment Company Act of 1940
--------
and the regulations promulgated thereunder, as amended from time to
time.
3.
<PAGE>
ARTICLE II
Trustees
--------
2.1. Number and Qualification. The number of Trustees shall
------------------------
be fixed from time to time by written instrument signed by a
majority of the Trustees then in office, provided, however, that
the number of Trustees shall in 'no event be less than three or more
than fifteen (except prior to the first public offering of Shares).
Any vacancy created by an increase in Trustees may, to the extent
permitted by the 1940 Act, be filled by the appointment of an
individual having the qualifications described in this Article made
by a written instrument signed by a majority of the Trustees then
in office. Any such appointment shall not become effective,
however, until the individual named in the written instrument of
appointment shall have accepted in writing such appointment and
agreed in writing to be bound by the terms of this Declaration. No
reduction in the number of Trustees shall have the effect of
removing any Trustee from office prior to the expiration of his
term. Whenever a vacancy in the number of Trustees shall occur,
until such vacancy is filled as provided in Section 2.4 hereof, the
Trustees in office, regardless of their number, shall have all the
powers granted to the Trustees and shall discharge all the duties
imposed upon the Trustees by this Declaration. A Trustee shall be
an individual at least 21 years of age who is not under legal
disability. Trustees need not own Shares.
2.2. Term of Office. Each Trustee shall (except in the event
--------------
of resignations or removals or vacancies pursuant to Section 2.3 or
2.4 hereof) hold office until his successor has been elected and is
qualified to serve as Trustee.
2.3. Resignation and Removal. Any Trustee may resign his
-----------------------
trust (without need for prior or subsequent accounting) by an
instrument in writing signed by him and delivered or mailed to the
Chairman, if any, the President or the Secretary and such
resignation shall be effective upon such delivery, or at a later
date according to the terms of the instrument. Any of the Trustees
may be removed (provided the aggregate number of Trustees after
such removal shall not be less than the number required by Section
2.1 hereof) with cause, by the action of two-thirds of the
remaining Trustees. Any Trustee may be removed at any special
meeting of the Shareholders by a vote of two-thirds of the
outstanding Shares. Upon the resignation or removal of a Trustee,
or his otherwise ceasing to be a Trustee, he shall execute and
deliver such documents as the remaining Trustees shall require for
the purpose of conveying to the successor Trustee or the remaining
Trustees any Trust Property held in the name of the resigning or
removed Trustee. Upon the incapacity or death of any Trustee, his
legal representative shall execute and deliver on his behalf such
4.
<PAGE>
documents as the remaining Trustees shall require as provided in
the preceding sentence.
2.4. Vacancies. The term of office of a Trustee shall
---------
terminate and a vacancy shall occur in the event of the death,
resignation, bankruptcy, adjudicated incompetence or other
incapacity to perform the duties of the office, or removal, of a
Trustee. No such vacancy shall-operate to annul this Declaration
or to revoke any existing agency created pursuant to the terms of
this Declaration. In the case of a vacancy, the Shareholders,,
acting at any meeting of Shareholders held in accordance with
Section 10.2 hereof, or, to the extent permitted by the 1940 Act, a
majority of the Trustees continuing in office acting by written
instrument or instruments, may fill such vacancy,, and any Trustee
so elected by the Trustees shall hold office as provided in this
Declaration.
2.5. Meetings. Meetings of the Trustees shall be held from
--------
time to time upon the call of the Chairman, if any, the President,
the Secretary or any two Trustees. Regular meetings of the
Trustees may be held without call or notice at a time and place
fixed by the By-Laws or by resolution of the Trustees. Notice of
any other meeting shall be mailed or otherwise given not less than
48 hours before the meeting but may be waived in writing by any
Trustee either before or after such meeting. The attendance of a
Trustee at a meeting shall constitute a waiver of notice of such
meeting except where a Trustee attends a meeting for the express
purpose of objecting to the transaction of any business on the
ground that the meeting has not been lawfully called or convened.
The Trustees may act with or without a meeting. A quorum for all
meetings of the Trustees shall be a majority of the Trustees.
Unless provided otherwise in this Declaration of Trust, any action
of the Trustees may be taken at a meeting by vote of a majority of
the Trustees present (a quorum being present) or without a meeting
by written consents of a majority of the Trustees.
Any committee of the Trustees, including an executive
committee, if any, may act with or without a meeting. A quorum for
all meetings of any such committee shall be a majority of the
members thereof. Unless provided otherwise in this Declaration,
any action of any such committee may be taken at a meeting by vote
of a majority of the members present (a quorum being present) or
without a meeting by written consent of a majority of the members.
With respect to actions of the Trustees and any committee of
the Trustees, Trustees who are Interested Persons of the Trust
within the meaning of Section 1.2 hereof or otherwise interested in
any action to be taken may be counted for quorum purposes under
this Section and shall be entitled to vote to the extent permitted
by the 1940 Act.
5.
<PAGE>
To the extent permitted by the 1940 Act, all or any one or
more Trustees may participate in a meeting of the Trustees or any
committee thereof by means of a conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other and participation
in a meeting pursuant to such communications systems shall
constitute presence in person at such meeting.
2.6. Officers. The Trustees shall annually elect a
--------
President, a Secretary and a Treasurer and may elect a chairman.
The Trustees may elect or appoint or authorize the Chairman, if
any, or President to appoint such other officers or agents with
such powers as the Trustees may deem to be advisable. The Chairman
and President shall be and the Secretary and Treasurer may, but
need not, be a Trustee.
2.7. By-Laws. The Trustees may adopt and from time to time
-------
amend or repeal the By-Laws for the conduct of the business of the
Trust.
6.
<PAGE>
ARTICLE III
Powers of Trustees
------------------
3.1. General. The Trustees shall have exclusive and absolute
-------
control over the Trust Property and over the business of the Trust
or any Series thereof to the same extent as if the Trustees were
the sole owners of the Trust Property and business in their own
right, but with such powers of delegation as may be permitted by
this Declaration. The Trustees may perform such acts as in their
sole discretion are proper for conducting the business of the Trust
or any Series thereof. The enumeration of any specific power
herein shall not be construed as limiting the aforesaid power.
Such powers of the Trustees may be exercised without order of or
resort to any court.
3.2. Investments. The Trustees shall have power, subject to
-----------
the Fundamental Policies, to:
(a) conduct, operate and carry on the business of an
investment company;
(b) subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer,
exchange, distribute or otherwise deal in or dispose of
negotiable or non-negotiable instruments, obligations,
evidences of indebtedness, certificates of deposit or
indebtedness, commercial paper, repurchase agreements,
reverse repurchase agreements and other securities,,
including, without limitation, those issued, guaranteed or
sponsored by any state, territory or possession of the United
States and the District of Columbia and their political sub-
divisions, agencies and instrumentalities, or by the United
States Government or its agencies or instrumentalities, or
international instrumentalities, or by any bank, savings
institution, corporation or other business entity organized
under the laws of the United States and, to the extent
provided in the Prospectus and not prohibited by the
Fundamental Policies, organized under foreign laws; and to
exercise any and all rights, powers and privileges of
ownership or interest in respect of any and all such
investments of every kind and description, including, without
limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more persons,
firms, associations or corporations to exercise any of said
rights, powers and privileges in respect of any of said
instruments; and the Trustees shall be deemed to have the
foregoing powers with respect to any additional securities in
which any Series of the Trust may invest should the
7.
<PAGE>
investment policies set forth in the Prospectus or the
Fundamental Policies be amended.
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust or any
Series, nor shall the Trustees be limited by any law limiting the
investments which may be made by fiduciaries.
3.3. Legal Title. Legal title to all the Trust Property
-----------
shall be vested in the Trustees as joint tenants except that the
Trustees shall have power to cause legal title to any Trust
Property to be held by or in the name of one or more of the
Trustees, or in the name of the Trust or any Series thereof, or in
the name of any other Person as nominee, on such terms as the
Trustees may determine, provided that the interest of the Trust or
any Series thereof therein is appropriately protected.
The right, title and interest of the Trustees in the Trust
Property shall vest automatically in each person who may hereafter
become a Trustee upon his due election and qualification. Upon the
resignation, removal or death of a Trustee he shall automatically
cease to have any right, title or interest in any of the Trust
Property, and the right, title and interest of such Trustee in the
Trust Property shall vest automatically in the remaining Trustees.
Such vesting and cessation of title shall be effective whether or
not conveyancing documents have been executed and delivered.
3.4. Issuance and Repurchase of Securities. The Trustees
-------------------------------------
shall have the power to issue, sell, repurchase, redeem, retire,
cancel, acquire, hold, resell, reissue, dispose of, transfer, and
otherwise deal in, Shares, including shares in fractional
denominations, and, subject to the more detailed provisions set
forth in Articles VIII and IX, to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares any
funds or property of the applicable Series of the Trust whether
capital or surplus or otherwise, to the full extent now or
hereafter permitted by the laws of the Commonwealth of
Massachusetts governing business corporations.
3.5. Borrow Money. Subject to the Fundamental Policies, the
------------
Trustees shall have power to borrow money or otherwise obtain
credit and to secure the same by mortgaging, pledging or otherwise
subjecting as security the assets of the Trust or any Series
thereof, including the lending of portfolio securities, and to
endorse, guarantee, or undertake the performance of any obligation,
contract or engagement of any other person, firm, association or
corporation.
3.6. Delegation; Committees. The Trustees shall have power,
----------------------
consistent with their continuing exclusive authority over the
management of the Trust and the Trust Property, to delegate from
8.
<PAGE>
time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of
such instruments either in the name of the Trust or the names of
the Trustees or otherwise as the Trustees may deem expedient, to
the same extent as such delegation is permitted to directors of a
Massachusetts business corporation and is permitted by the 1940
Act.
3.7. Collection and Payment. The Trustees shall have power
----------------------
to collect all property due to the Trust or any Series thereof; to
pay all claims, including taxes, against the Trust Property; to
prosecute, defend, compromise or abandon any claims relating to the
Trust Property; to foreclose any security interest securing any
obligations, by virtue of which any property is owed to the Trust
or any Series thereof; and to enter into releases, agreements and
other instruments.
3.8. Expenses. The Trustees shall have power to incur and
--------
pay any expenses which in the opinion of the Trustees are necessary
or incidental to carry out any of the purposes of this Declaration
of Trust, and to pay reasonable compensation from the funds of the
Trust to themselves as Trustees. The Trustees shall fix the
compensation of all officers, employees and Trustees. The Trustees
may pay themselves such compensation for special services,
including legal, underwriting, syndicating and brokerage services,
as they in good faith may deem reasonable and reimbursement for
expenses reasonably incurred by themselves on behalf of the Trust.
3.9. Miscellaneous Powers. The Trustees shall have the power
--------------------
to: (a) employ or contract with such Persons as the Trustees may
deem desirable for the transaction of the business of the Trust or
any Series thereof; (b) enter into joint ventures, partnerships and
any other combinations or associations; (c) purchase, and pay for
out of Trust Property, insurance policies insuring the
Shareholders, Trustees, officers, employees, agents, investment
advisors, distributors, selected dealers or independent contractors
of the Trust or any Series thereof against all claims arising by
reason of holding any such position or by reason of any action
taken or omitted by any such Person in such capacity, whether or
not constituting negligence, or whether or not the Trust would have
the power to indemnify such Person against such liability; (d)
establish pension, profit-sharing, share purchase, and other
retirement, incentive and benefit plans for any Trustees, officers,
employees and agents of the Trust; (e) make donations, irrespective
of benefit to the Trust, for charitable, religious, educational,
scientific, civic or similar purposes; (f) to the extent permitted
by law, indemnify any Person with whom the Trust or any Series
thereof has dealings, including any advisor, administrator,
manager, distributor and selected dealers with respect to any
Series, to such extent as the Trustees shall determine; (g)
guarantee indebtedness or contractual obligations of others; (h)
9.
<PAGE>
determine and change the fiscal year of the Trust and the method in
which its accounts shall be kept; and (i) adopt a seal for the
Trust but the absence of such seal shall not impair the validity of
any instrument executed on behalf of the Trust.
3.10. Further Powers. The Trustees shall have power to
--------------
conduct the business of the Trust or any Series thereof and carry
on its operations in any and all of its branches and maintain
offices both within and without the Commonwealth of Massachusetts,
in any and all states of the United States of America, in the
District of Columbia, and in any and all commonwealths,
territories, dependencies, colonies, possessions, agencies or
instrumentalities of the United States of America and of foreign
governments, and to do all such other things and execute all such
instruments as they deem necessary, proper or desirable in order to
promote the interests of the Trust or any Series thereof although
such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust or any
Series thereof made by the Trustees in good faith shall be
conclusive. In construing the provisions of this Declaration, the
presumption shall be in favor of a grant of power to the Trustees.
The Trustees will not be required to obtain any court order to deal
with the Trust Property.
10.
<PAGE>
ARTICLE IV
Advisory, Management and Distribution Arrangements
--------------------------------------------------
4.1. Advisory and Management Arrangements. Subject to a
------------------------------------
Majority Shareholder Vote of the applicable Series, as required by
the 1940 Act, the Trustees may in their discretion from time to
time enter into advisory or management contracts whereby the other
party to such contract shall undertake to furnish the Trustees such
advisory and management services, with respect to a Series as the
Trustees shall from time to time consider desirable and all upon
such terms and conditions as the Trustees may in their discretion
determine. Notwithstanding any provisions of this Declaration of
Trust, the Trustees may authorize any advisor or manager (subject
to such general or specific instructions as the Trustees may from
time to time adopt) to effect purchases, sales, loans or exchanges
of portfolio securities of any Series of the Trust on behalf of the
Trustees or may authorize any officer, employee or Trustee to
effect such purchases, sales, loans or exchanges pursuant to
recommendations of any such advisor, administrator or manager (and
all without further action by the Trustees). Any such purchases,
sales, loans and exchanges shall be deemed to have been authorized
by all of the Trustees.
4.2. Distribution Arrangements. The Trustees may in their
-------------------------
discretion from time to time enter into a contract, providing for
the sale of the Shares of the Trust or any Series of the Trust to
net the Trust not less than the par value per share, whereby the
Trust may either agree to sell the Shares to the other party to the
contract or appoint such other party its sales agent for such
Shares. In either case, the contract shall be on such terms and
conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Article IV or the By-Laws;
and such contract may also provide for the repurchase or sale of
Shares by such other party as principal or as agent of the Trust
and may provide that such other party may enter into selected
dealer agreements with registered securities dealers to further the
purpose of the distribution or repurchase of the Shares.
4.3. Parties to Contract. Any contract of the character
-------------------
described in Section 4.1 and 4.2 of this Article IV or in Article
VII hereof may be entered into with any corporation, firm, trust or
association, although one or more of the Trustees or officers of
the Trust may be an officer, director, Trustee, shareholder, or
member of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the
existence of any such relationship, nor shall any person holding
such relationship be liable merely by reason of such relationship
for any loss or expense to the Trust under or by reason of said
contract or accountable for any profit realized directly or indi-
11.
<PAGE>
rectly therefrom, provided that the contract when entered into was
reasonable and fair and not inconsistent with the provisions of
this Article IV or the By-Laws. The same person (including a firm,
corporation, trust, or association) may be the other party to
contracts entered into pursuant to Sections 4.1 and 4.2 above or
Article VII, and any individual may be financially interested or
otherwise affiliated with persons who are parties to any or all of
the contracts mentioned in this Section 4.3.
4.4. Provisions and Amendments. Any contract entered into
-------------------------
pursuant to Section 4.1 and 4.2 of this Article IV shall be
consistent with and subject to the requirements of Section 15 of
the 1940 Act with respect to its continuance in effect, its
termination, and the method of authorization and approval of such
contract or renewal thereof, and no amendment to any contract
entered into pursuant to Section 4.1 shall be effective unless
assented to by a Majority Shareholder Vote of the applicable
Series.
12.
<PAGE>
ARTICLE V
Limitations of Liability of Shareholders,
Trustees and Others
-----------------------------------------
5.1. No Personal Liability of Shareholders, Trustees, etc.
-----------------------------------------------------
No Shareholder shall be subject to any personal liability
whatsoever to any Person in connection with Trust Property or the
acts, obligations or affairs of the Trust or any Series thereof.
No Trustee, officer, employee or agent of the Trust shall be
subject to any personal liability whatsoever to any Person, other
than the Trust or its Shareholders, in connection with Trust
Property or the affairs of the Trust or any Series thereof, save
only that arising from his bad faith, willful misfeasance, gross
negligence or reckless disregard of his duty to such Person; and
all such Persons shall look solely to the Trust Property for satis-
faction of claims of any nature arising in connection with the
affairs of the Trust or any Series thereof. If any Shareholder,
Trustee, officer, employee, or agent, as such, of the Trust, is
made a party to any suit or proceeding to enforce any such
liability, he shall not on account thereof, be held to any personal
liability. The Trust shall indemnify and hold each Shareholder
harmless from and against all claims and liabilities, to which such
Shareholder may become subject by reason of his being or having
been a Shareholder, and shall reimburse such Shareholder for all
legal and other expenses reasonably incurred by him in connection
with any such claim or liability. The rights accruing to a
Shareholder under this Section 5.1 shall not exclude any other
right to which such Shareholder may be lawfully entitled, nor shall
anything herein contained restrict the right of the Trust to
indemnify or reimburse a Shareholder in any appropriate situation
even though not specifically provided herein.
5.2. Non-Liability of Trustees, etc. No Trustee, officer,
-------------------------------
employee or agent of the Trust shall be liable to the Trust, any
Series, its Shareholders, or to any Shareholder, Trustee, officer,
employee, or agent thereof for any action or failure to act
(including without limitation the failure to compel in any way any
former or acting Trustee to redress any breach of trust) except for
his own bad faith, willful misfeasance, gross negligence or
reckless disregard of his duties.
5.3. Mandatory Indemnification. The Trust shall indemnify
-------------------------
each of its Trustees, officers, employees, and agents (including
persons who serve at its request as directors, officers or trustees
of another organization in which it has any interest, as a
shareholder, creditor or otherwise) against all liabilities and
expenses (including amounts paid in satisfaction of judgments, in
compromise, as fines and penalties, and as counsel fees) reasonably
incurred by him in connection with the defense or disposition of
13.
<PAGE>
any action, suit or other proceeding, whether civil or criminal, in
which he may be involved or with which he may be threatened, while
in office or thereafter, by reason of his being or having been such
a trustee, officer, employee or agent, except with respect to any
matter as to which he shall have been adjudicated to have acted in
bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties; provided, however, that as to any matter
disposed of by a compromise payment by such person, pursuant to a
consent decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless the
Trust shall have received a written opinion from independent legal
counsel approved by the Trustees to the effect that if either the
matter of willful misfeasance, gross negligence or reckless
disregard of duty, or the matter of good faith and reasonable
belief as to the best interests of the Trust, had been adjudicated,
it would have been adjudicated in favor of such person. The rights
accruing to any Person under these provisions shall not exclude any
other right to which he may be lawfully entitled; provided that no
Person may satisfy any right of indemnity or reimbursement granted
herein or in Section 5.1 or to which he may be otherwise entitled
except out of the property of the Trust, and no Shareholder shall
be personally liable to any Person with respect to any claim for
indemnity or reimbursement or otherwise. The Trustees may make
advance payments in connection with indemnification under this
Section 5.3, provided that the indemnified person shall have given
a written undertaking to reimburse the Trust in the event it is
subsequently determined that he is not entitled to such
indemnification.
5.4. No Bond Required of Trustees. No Trustee shall, as
----------------------------
such, be obligated to give any bond or security or other security
for the performance of any of his duties hereunder.
5.5. No Duty of Investigation; Notice in Trust Instruments,
------------------------------------------------------
etc. No purchaser, lender, transfer agent or other person dealing
with the Trustees or any officer, employee or agent of the Trust
shall be bound to make any inquiry concerning the validity of any
transaction purporting to be made by the Trustees or by said
officer, employee or agent or be liable for the application of
money or property paid, loaned, or delivered to or on the order of
the Trustees or of said officer, employee or agent. Every
obligation, contract, undertaking, instrument, certificate, Share,
other security of the Trust or any Series, and every other act or
thing whatsoever executed in connection with the Trust or any
Series shall be conclusively taken to have been executed or done by
the executors thereof only in their capacity as Trustees under this
Declaration of Trust or in their capacity as officers, employees or
agents of the Trust. Every written obligation, contract,
undertaking, instrument, certificate, Share, other security of the
Trust or any Series made or issued by the Trustees or by any
officers, employees or agents of the Trust, in their capacity as
14.
<PAGE>
such, shall contain an appropriate recital to the effect that the
Shareholders, Trustees, officers, employees and agents of the Trust
shall not personally be bound by or liable thereunder, nor shall
resort be had to their private property for the satisfaction of any
obligation or claim thereunder, and appropriate references shall be
made therein to the Declaration of Trust, and may contain any
further recital which they may deem appropriate, but the omission
of such recital shall not operate to impose personal liability on
any of the Trustees, Shareholders, officers, employees or agents of
the Trust. The Trustees may maintain insurance for the protection
of the Trust Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem
adequate to cover possible tort liability, and such other insurance
as the Trustees in their sole judgment shall deem advisable.
5.6. Reliance on Experts, etc. Each Trustee and officer or
-------------------------
employee of the Trust shall, in the performance of his duties, be
fully and completely justified and protected with regard to any act
or any failure to act resulting from reliance in good faith upon
the books of account or other records of the Trust, upon an opinion
of counsel, or upon reports made to the Trust by any of its
officers or employees or by any advisor, administrator, manager,
distributor, selected dealer, accountant, appraiser or other expert
or consultant selected with reasonable care by the Trustees,
officers or employees of the Trust, regardless of whether such
counsel or expert may also be a Trustee.
15.
<PAGE>
ARTICLE VI
Shares of Beneficial Interest
-----------------------------
6.1. Beneficial Interest. The interest of the beneficiaries
-------------------
hereunder shall be divided into transferable shares of beneficial
interest with par value $.10 per share. The number of such shares
of beneficial interest authorized hereunder is unlimited. All
Shares issued hereunder including, without limitation, Shares
issued in connection with a dividend in Shares or a split of
Shares, shall be fully paid and nonassessable.
6.2. Series Designation. The Trustees, in their discretion
------------------
from time to time, may authorize the division of Shares into two or
more Series, each Series relating to a separate portfolio of
investments. The different Series shall be established and
designated, and the variations in the relative rights and
preferences as between the different Series shall be fixed and
determined, by the Trustees; provided, that all Shares shall be
identical except that there may be variations between different
Series as to purchase price, determination of net asset value, the
price, terms and manner of redemption, special and relative rights
as to dividends and on liquidation, conversion rights, and
conditions under which the several Series shall have separate
voting rights. All references to Shares in this Declaration shall
be deemed to be shares of any or all Series as the context may
require.
If the Trustees shall divide the Shares into two or more
Series, the following provisions shall be applicable:
(a) The number of Shares of each Series that may be issued
shall be unlimited. The Trustees may classify or reclassify any
unissued Shares or any Shares previously issued and reacquired of
any Series into one or more Series that may be established and
designated from time to time. The Trustees may hold as treasury
Shares (of the same or some other Series), reissue for such
consideration and on such terms as they may determine, or cancel
any Shares of any Series reacquired by the Trust at their
discretion from time to time.
(b) The power of the Trustees to invest and reinvest the
Trust Property of each Series that may be established shall be
governed by Section 3.2 of this Declaration.
(c) All consideration received by the Trust for the issue or
sale of Shares of a particular series, together with all assets in
which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and
16.
<PAGE>
any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably belong
to that Series for all purposes, subject only to the rights of
creditors, and shall be so recorded upon the books of account of
the Trust. In the event that there are any assets, income,
earnings, profits, and proceeds thereof, funds, or payments which
are not readily identifiable as belonging to any particular series,
the Trustees shall allocate them among any one or more of the
Series established and designated from time to time in such manner
and on such basis as they, in their sole discretion, deem fair and
equitable. Each such allocation by the Trustees shall be
conclusive and binding upon the shareholders of all Series for all
purposes.
(d) The assets belonging to each particular Series shall be
charged with the liabilities of the Trust in respect of that Series
and all expenses, costs, charges and reserves attributable to that
Series, and any general liabilities, expenses, costs, charges or
reserves of the Trust which are not readily identifiable as
belonging to any particular series shall be allocated and charged
by the Trustees to and among any one or more of the Series
established and designated from time to time in such manner and on
such basis as the Trustees in their sole discretion deem fair and
equitable. Each allocation of liabilities, expenses, costs,
charges and reserves by the Trustees shall be conclusive and
binding upon the holders of all Series for all purposes. The
Trustees shall have full discretion, to the extent not inconsistent
with the 1940 Act, to determine which items shall be treated as
income and which items as capital; and each such determination and
allocation shall be conclusive and binding upon the Shareholders.
(e) The power of the Trustees to pay dividends and make
distributions with respect to any one or more Series shall be
governed by Section 9.2 of this Trust. Dividends and distributions
on Shares of a particular Series may be paid with such frequency as
the Trustees may determine, which may be daily or otherwise,
pursuant to a standing resolution or resolutions adopted only once
or with such frequency as the Trustees may determine, to the
holders of Shares of that Series, from such of the income and
capital gains, accrued or realized, from the assets belonging to
that Series, as the Trustees may determine, after providing for
actual and accrued liabilities belonging to that Series. All
dividends and distributions on Shares of a particular Series shall
be distributed pro rata to the holders of that Series in proportion
to the number of Shares of that Series held by such holders at the
date and time of record established for the payment of such
dividends or distributions.
The establishment and designation of any Series of Shares
shall be effective upon the execution by a majority of the then
Trustees of an instrument setting forth the establishment and
17.
<PAGE>
designation of such Series. Such instrument shall also set forth
any rights and preferences of such Series which are in addition to
the rights and preferences of Shares set forth in this Declaration.
At any time that there are no Shares outstanding of any particular
Series previously established and designated, the Trustees may by
an instrument executed by a majority of their number abolish that
Series and the establishment and designation thereof. Each
instrument referred to in this paragraph shall have the status of
an amendment to this Declaration.
6.3. Rights of Shareholders. The ownership of the Trust
----------------------
Property of every description and the right to conduct any business
hereinbefore described are vested exclusively in the Trustees, and
the Shareholders shall have no interest therein other than the
beneficial interest conferred by their Shares with respect to a
particular Series, and they shall have no right to call for any
partition or division of any property, profits, rights or interests
of the Trust nor can they be called upon to share or assume any
losses of the Trust or suffer an assessment of any kind by virtue
of their ownership of Shares. The Shares shall be personal
property giving only the rights in this Declaration specifically
set forth. The Shares shall not entitle the holder to preference,
preemptive, appraisal, conversion or exchange rights (except for
rights of appraisal specified in Section 11.4).
6.4. Trust Only. It is the intention of the Trustees to
----------
create only the relationship of Trustee and beneficiary between the
Trustees and each Shareholder from time to time. It is not the
intention of the Trustees to create a general partnership, limited
partnership, joint stock association, corporation, bailment or any
form of legal relationship other than a trust. Nothing in this
Declaration of Trust shall be construed to make the Shareholders,,
either by themselves or with the Trustees, partners or members of a
joint stock association.
6.5. Issuance of Shares. The Trustees, in their discretion,
------------------
may from time to time without vote of the Shareholders issue Shares
with respect to any Series that may have been established pursuant
to Section 6.2, in addition to the then issued and outstanding
Shares and Shares held in the treasury, to such party or parties
and for such amount not less than par value and type of con-
sideration, including cash or property, at such time or times
(including, without limitation, each business day in accordance
with the maintenance of a constant net asset value per share as set
forth in Section 9.3 hereof), and on such terms as the Trustees may
deem best, and may in such manner acquire other assets (including
the acquisition of assets subject to, and in connection with the
assumption of, liabilities) and businesses. In connection with any
issuance of Shares, the Trustees may issue fractional Shares. The
Trustees may from time to time divide or combine the Shares of any
Series into a greater or lesser number without thereby changing the
18.
<PAGE>
proportionate beneficial interests in such Series of the Trust.
Reductions in the number of outstanding Shares may be made pursuant
to the constant net asset value per share formula set forth in
Section 9.3. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1,000ths of a
Share or multiples thereof.
6.6. Register of Shares. A register shall be kept at the
------------------
Trust or any transfer agent duly appointed by the Trustees under
the direction of the Trustees which shall contain the names and
addresses of the Shareholders and the number of Shares (with
respect to each Series that nay have been established) held by then
respectively and a record of all transfers thereof. Separate reg-
isters shall be established and maintained for each Series of the
Trust. Each such register shall be conclusive as to who are the
holders of the Shares of the applicable Series and who shall be
entitled to receive dividends or distributions or otherwise to
exercise or enjoy the rights of Shareholders. No Shareholder shall
be entitled to receive payment of any dividend or distribution, nor
to have notice given to him as herein provided, until he has given
his address to a transfer agent or such other officer or agent of
the Trustees as shall keep the register for entry thereon. It is
not contemplated that certificates will be issued for the Shares;
however, the Trustees, in their discretion, nay authorize the
issuance of share certificates and promulgate appropriate rules and
regulations as to their use.
6.7. Transfer Agent and Registrar. The Trustee shall have
----------------------------
power to employ a transfer agent or transfer agents, and a
registrar or registrars, with respect to the Shares of the various
Series. The transfer agent or transfer agents may keep the
applicable register and record therein the original issues and
transfers, if any, of the said Shares of the applicable Series.
Any such transfer agent and registrars shall perform the duties
usually performed by transfer agents and registrars of certificates
of stock in a corporation, except as modified by the Trustees.
6.8. Transfer of Shares. Shares shall be transferable on the
------------------
records of the Trust only by the record holder thereof or by his
agent thereto duly authorized in writing, upon delivery to the
Trustees or a transfer agent of the Trust of a duly executed
instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other
matters as may reasonably be required. Upon such delivery the
transfer shall be recorded on the applicable register of the Trust.
Until such record is made, the Shareholder of record shall be
deemed to be the holder of such Shares for all purposes hereof and
neither the Trustees nor any transfer agent or registrar nor any
officer, employee or agent of the Trust shall be affected by any
notice of the proposed transfer.
19.
<PAGE>
Any person becoming entitled to any Shares in consequence of
the death, bankruptcy, or incompetence of any Shareholder, or
otherwise by operation of law, shall be recorded on the applicable
register of Shares as the holder of such Shares upon production of
the proper evidence thereof to the Trustees or a transfer agent of
the Trust, but until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes
hereof and neither the Trustees nor any transfer agent or registrar
nor any officer or agent of the Trust shall be affected by any
notice of such death, bankruptcy or incompetence, or other
operation of law.
6.9. Notices. Any and all notices to which any Shareholder
-------
hereunder may be entitled and any and all communications shall be
deemed duly served or given if mailed, postage prepaid, addressed
to any Shareholder of record at his last known address as recorded
on the applicable register of the Trust.
20.
<PAGE>
ARTICLE VII
Custodians
----------
7.1. Appointment and Duties. The Trustees shall at all times
----------------------
employ a custodian or custodians, meeting the qualifications for
custodians for portfolio securities of investment companies
contained in the 1940 Act, as custodian with respect to each Series
of the Trust. It is contemplated that separate custodians may be
employed for the different Series of the Trust. Any custodian,
acting with respect to one or more Series, shall have authority as
agent of the Trust or the Series with respect to which it is
acting, but subject to such restrictions, limitations and other
requirements, if any, as may be contained in the By-Laws of the
Trust and the 1940 Act:
(1) to hold the securities owned by the Trust or the
Series and deliver the same upon written order;
(2) to receive and receipt for any moneys due to the
Trust or the Series and deposit the same in its own banking
department (if a bank) or elsewhere as the Trustees may
direct;
(3) to disburse such funds upon orders or vouchers;
(4) if authorized by the Trustees, to keep the books
and accounts of the Trust or the Series and furnish clerical
and accounting services; and
(5) if authorized to do so by the Trustees, to compute
the net income of the Trust or the Series,
all upon such basis of compensation as may be agreed upon between
the Trustees and the custodian. If so directed by a Majority
Shareholder Vote of the Series with respect to which the custodian
is acting, the custodian shall deliver and pay over all property of
the Trust held by it as specified in such vote.
The Trustees may also authorize each custodian to employ one
or more sub-custodians from time to time to perform such of the
acts and services of the custodian and upon such terms and
conditions, as may be agreed upon between the custodian and such
sub-custodian and approved by the Trustees, provided that in every
case such sub-custodian shall meet the qualifications for
custodians contained in the 1940 Act.
7.2. Central Certificate System. Subject to such rules,
--------------------------
regulations and order as the Commission may adopt, the Trustees may
direct the custodian to deposit all or any part of the securities
21.
<PAGE>
owned by the Trust or the Series in a system for the central
handling of securities established by a national securities
exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other
person as may be permitted by the Commission, or otherwise in
accordance with the 1940 Act, pursuant to which system all
securities of any particular class or series of any issuer
deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical
delivery of such securities, provided that all such deposits shall
be subject to withdrawal only upon the order of the Trust.
22.
<PAGE>
ARTICLE VIII
Redemption
----------
8.1. Redemptions. All outstanding Shares of any Series of
-----------
the Trust may be redeemed at the option of the holders thereof,
upon and subject to the terms and conditions provided in this
Article VIII. The Trust shall, upon application of any Shareholder
or pursuant to authorization from any Shareholder of a particular
Series, redeem or repurchase from such Shareholder outstanding
Shares of such Series for an amount per share determined by the
application of a formula adopted for such purpose by the Trustees
with respect to such Series (which formula shall be consistent with
the 1940 Act); provided that (a) such amount per share shall not
exceed the cash equivalent of the proportionate interest of each
share in the assets of the Series of the Trust at the time of the
purchase or redemption and (b) if so authorized by the Trustees,
the Trust may, at any time and from time to time, charge fees for
effecting such redemption, at such rates as the Trustees may
establish, as and to the extent permitted under the 1940 Act, and
may,, at any time and from time to time, pursuant to such Act,
suspend such right of redemption. The procedures for effecting
redemption shall be as set forth in the Prospectus with respect to
the applicable Series from time to time.
8.2. Redemption of Shares; Disclosure of Holding. If the
-------------------------------------------
Trustees shall, at any time and in good faith, be of the opinion
that direct or indirect ownership of Shares or other securities of
the Trust has or may become concentrated in any person to an extent
which would disqualify the Trust as a regulated investment company
under the Internal Revenue Code, then the Trustees shall have the
power by lot or other means deemed equitable by them (i) to call
for redemption a number, or principal amount, of Shares or other
securities of the Trust sufficient, in the opinion of the Trustees,
to maintain or bring the direct or indirect ownership of Shares or
other securities of the Trust into conformity with the requirements
for such qualification and (ii) to refuse to transfer or issue
Shares or other securities of the Trust to any Person whose
acquisition of the Shares or other securities of the Trust in
question would in the opinion of the Trustees result in such
disqualification. The redemption shall be effected at a redemption
price determined in accordance with Section 8.1.
The holders of Shares or other securities of the Trust shall
upon demand disclose to the Trustees in writing such information
with respect to direct and indirect ownership of Shares or other
securities of the Trust as the Trustees deem necessary to comply
with the provisions of the Internal Revenue Code, or to comply with
the requirements of any other taxing authority.
23.
<PAGE>
8.3. Redemptions of Accounts of Less than $1,000. Due to the
-------------------------------------------
relatively high cost of maintaining investment accounts of less
than $1,000, the Trustees shall have the power to redeem shares at
a redemption price determined in accordance with Section 8.1 if at
any time the total investment in such account does not have a value
of at least $1,000; provided, however, that the Trustees may not
exercise such power with respect to Shares of any Series if the
Prospectus of such Series does not describe such power. In the
event the Trustees determine to exercise their power to redeem
Shares provided in this Section 8.3, shareholders shall be notified
that the value of their account is less than $1,000 and allowed 60
days to make an additional investment before redemption is
processed.
8.4. Redemptions Pursuant to Constant Net Asset Value
------------------------------------------------
Formula. The Trust may also reduce the number of outstanding
-------
Shares of any Series pursuant to the provisions of Section 9.3.
24.
<PAGE>
ARTICLE IX
Determination of Net Asset Value,
Net Income and Distributions
---------------------------------
9.1. Net Asset Value. The net asset value of each
---------------
outstanding share of each Series of the Trust shall be determined
at such time or times on such days as the Trustees may determine,
in accordance with the 1940 Act, with respect to each series. The
method of determination of net asset value shall be determined by
the Trustees and shall be as set forth in the Prospectus with
respect to the applicable Series. The power and duty to make the
daily calculations for any series may be delegated by the Trustees
to the adviser, administrator, manager, custodian, transfer agent
or such other person as the Trustees may determine. The Trustees
may suspend the daily determination of net asset value to the
extent permitted by the 1940 Act.
9.2. Distributions to Shareholders. The Trustees shall from
-----------------------------
time to time distribute ratably among the Shareholders of any
Series such proportion of the net profits, surplus (including
paid-in surplus), capital, or assets with respect to such Series
held by the Trustees as they may deem proper. Such distribution
may be made in cash or property (including without limitation any
type of obligations of the Trust or any assets thereof), and the
Trustees may distribute ratably among the Shareholders of any
Series additional Shares of such Series in such manner, at such
times, and on such terms as the Trustees may deem proper. Such
distributions may be among the Shareholders of record at the time
of declaring a distribution or among the Shareholders of record at
such later date as the Trustees shall determine. The Trustees may
always retain from the net profits such amount as they may deem
necessary to pay the debts or expenses of the Trust or to meet
obligations of the Trust, or as they may deem desirable to use in
the conduct of its affairs or to retain for future requirements or
extensions of the business. The Trustees may adopt and offer to
Shareholders of any Series such dividend reinvestment plans, cash
dividend payout plans or related plans as the Trustees shall deem
appropriate for such series.
Inasmuch as the computation of net income and gains for
Federal income tax purposes may vary from the computation thereof
on the books, the above provisions shall be interpreted to give the
Trustees the power in their discretion to distribute for any fiscal
year as ordinary dividends and as capital gains distributions,
respectively, additional amounts sufficient to enable the Trust to
avoid or reduce liability for taxes.
9.3. Constant Net Asset Value; Reduction of Outstanding
--------------------------------------------------
Shares. The Trustees shall have the power to determine the net
------
25.
<PAGE>
income of any Series of the Trust on each day the net asset value
of such Series is determined as provided in Section 9.1 and at each
such determination declare such net income for such Series as
dividends with the result that the net asset value per share of the
Series of the Trust shall remain at a constant dollar value. The
determination of net income and the resultant declaration of
dividends shall be as set forth in the Prospectus. In such event
fluctuations in value may be reflected in the number of outstanding
Shares in each Shareholder's account. It is expected that each
Series of the Trust will have a positive net income at the time of
each determination. If for any reason such net income is a
negative amount, the Trust may offset such amount against dividends
accrued in the account of the Shareholder of the applicable Series.
If and to the extent such negative amount exceeds such accrued
dividends, the Trust shall have authority to reduce the number of
the outstanding Shares of the Series. Such reduction will be
effected by having each Shareholder proportionately contributing to
the Series capital the necessary Shares that represent the amount
of the excess upon such determination. Each Shareholder will be
deemed to have agreed to such contribution in these circumstances
by his investment in the Series of the Trust. This procedure will
permit the net asset value per share of the Series of the Trust to
be maintained at a constant dollar value per share.
The Trustees, by resolution, may discontinue or amend the
practice of maintaining the net asset value per share at a constant
dollar amount with respect to any Series at any time and such
modification shall be evidenced by appropriate changes in the
Prospectus.
9.4. Power to Modify Foregoing Procedures. Notwithstanding
------------------------------------
any of the foregoing provisions of this Article IX, the Trustees
may prescribe, in their absolute discretion, such other bases and
times for determining the per share net asset value of the Trust's
Shares or net income, or the declaration and payment of dividends
and distributions as they may deem necessary or desirable to enable
the Trust to comply with any provision of the 1940 Act, or any se-
curities association registered under the Securities Exchange Act
of 1934, or any order of exemption issued by said Commission, all
as in effect now or hereafter amended or modified.
26.
<PAGE>
ARTICLE X
Shareholders
------------
10.1. Voting Powers. The Shareholders shall have power to
-------------
vote (i) for the removal of Trustees as provided in Section 2.3,
(ii) with respect to any advisory or management contract as
provided in Section 4.1, (iii) with respect to the amendment of
this Declaration as provided in Section 11.3, (iv) with respect to
such additional matters relating to the Trust as may be required or
authorized by the 1940 Act, the laws of the Commonwealth of
Massachusetts or other applicable law or by this Declaration or by
the By-Laws of the Trust, and (v) with respect to such additional
matters relating to the Trust as may be properly submitted for
Shareholder approval. Any matter affecting a particular series,
including without limitation matters affecting the advisory or
management arrangements or investment policies or restrictions of a
Series, shall not be deemed to have been effectively acted upon
unless approved by the required vote of the Shareholders of such
Series. Notwithstanding the foregoing, to the extent permitted by
the 1940 Act, each Series shall not be required to vote separately
on the selection of independent public accountants, the election of
Trustees and any submission with respect to a contract with a
principal underwriter or distributor.
10.2. Meetings of Shareholders. Special meetings of the
------------------------
Shareholders may be called at any time by a majority of the
Trustees and shall be called by any Trustee upon written request of
Shareholders of any Series holding in the aggregate not less than
10% of the outstanding Shares of such Series having voting rights,
such request specifying the purpose or purposes for which such
meeting is to be called. Any such meeting shall be held within or
without the Commonwealth of Massachusetts on such day and at such
time as the Trustees shall designate. The holders of a majority
of outstanding Shares of each Series present in person or by proxy
shall constitute a quorum for the transaction of any business,
except as may otherwise be required by the 1940 Act, the laws of
the Commonwealth of Massachusetts or other applicable law or by
this Declaration or the By-Laws of the Trust. If a quorum is
present at a meeting of a particular Series, the affirmative vote
of a majority of the Shares of such Series represented at the
meeting constitutes the action of the Shareholders, unless the 1940
Act, the laws of the Commonwealth of Massachusetts or other
applicable law, this Declaration or the By-Laws of the Trust
requires a greater number of affirmative votes.
10.3. Notice of Meetings. Notice of all meetings of the
-----------------
Shareholders, stating the time, place and purposes of the meeting,
shall be given by the Trustees by mail to each Shareholder at his
registered address, mailed at least 10 days and not more than 60
days before the meeting. only the business stated in the notice of
27.
<PAGE>
the meeting shall be considered at such meeting. Any adjourned
meeting may be held as adjourned without further notice.
10.4. Record Date for Meetings. For the purpose of
------------------------
determining the Shareholders who are entitled to notice of and to
vote at any meeting, or to participate in any distribution, or for
the purpose of any other action, the Trustees may from time to time
close the transfer books for such period, not exceeding 30 days, as
the Trustees may determine; or without closing the transfer books
the Trustees may fix a date not more than 60 days prior to the date
of any meeting of Shareholders or daily dividends or other action
as a record date for the determination of the Persons to be treated
as Shareholders of record for such purposes, except for dividend
payments which shall be governed by Section 9.2 hereof.
10.5. Proxies, etc. At any meeting of Shareholders, any
-------------
holder of Shares entitled to vote thereat may vote by proxy,
provided that no proxy shall be voted at any meeting unless it
shall have been placed on file with the Secretary, or with such
other officer or agent of the Trust as the Secretary may direct,
for verification prior to the time at which such vote shall be
taken. Pursuant to a resolution of a majority of the Trustees,
proxies may be solicited in the name of one or more Trustees or one
or more of the officers of the Trust. Only Shareholders of record
shall be entitled to vote. Each full Share shall be entitled to
one vote and fractional Shares shall be entitled to a vote of such
fraction. When any Share is held jointly by several persons, any
one of them may vote at any meeting in person or by proxy in
respect of such Share, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint
owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Share. A
proxy purporting to be executed by or on behalf of a Shareholder
shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving invalidity shall rest on the
challenger. If the holder of any such Share is a minor or a person
of unsound mind, and subject to guardianship or to the legal
control of any other person as regards the charge or management of
such Share, he may vote by his guardian or such other person
appointed or having such control, and such vote may be given in
person or by proxy.
10.6. Reports. The Trustees shall cause to be prepared with
-------
respect to each Series at least annually a report of operations
containing a balance sheet and statement of income and
undistributed income of the applicable Series of the Trust prepared
in conformity with generally accepted accounting principles and an
opinion of an independent public accountant on such financial
statements. It is contemplated that separate reports may be
prepared for the various Series. Copies of such reports shall be
mailed to all Shareholders of record of the applicable Series
28.
<PAGE>
within the time required by the 1940 Act, and in any event within a
reasonable period preceding the annual meeting of Shareholders.
The Trustees shall, in addition, furnish to the Shareholders at
least annually, interim reports containing an unaudited balance
sheet of the Series as of the end of such period and an unaudited
statement of income and surplus for the period from the beginning
of the current fiscal year to the end of such period.
10.7. Inspection of Records. The records of the Trust shall
---------------------
be open to inspection by Shareholders to the same extent as is
permitted shareholders of a Massachusetts business corporation.
10.8. Shareholder Action by Written Consent. Any action
-------------------------------------
which may be taken by Shareholders may be taken without a meeting
if a majority of Shareholders of each Series entitled to vote on
the matter (or such larger proportion thereof as shall be required
by any express provision of this Declaration) consent to the action
in writing and the written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for
all purposes as a vote taken at a meeting of.Shareholders.
29.
<PAGE>
ARTICLE XI
Duration; Termination of Trust;
Amendment; Mergers, Etc.
-------------------------------
11.1. Duration. Subject to possible termination in
--------
accordance with the provisions of Section 11.2 hereof, the Trust
created hereby shall continue until the expiration of 20 years
after the death of the last survivor of the initial Trustees named
herein and the following named persons:
Name Address Date of Birth
---- ------- -------------
Avery Moores Bruno 25 Rutgers Place September 19, 1983
Scarsdale, N.Y. 10583
Avery Daniel Katz 435 E. 70th Street July 20, 1984
New York, N.Y. 10021
Lindsay Rider MacKinnon Mountain Farm Road January 27, 1981
Tuxedo Park, N.Y. 10987
Eric Alfred Pietrzak 525 Monterey Avenue January 29, 1981
Pelham Manor, N.Y. 10803
Angus Washburn Smith 12 Masterton Road October 15, 1982
Bronxville, N.Y. 10708
Elisabeth Lyon Smith 12 Masterton Road October 15, 1982
Bronxville, N.Y. 10708
11.2. Termination.
-----------
(a) The Trust may be terminated by the affirmative vote
of the holders of not less than two-thirds of the Shares of each
Series of the Trust at any meeting of Shareholders or by an
instrument in writing, without a meeting, signed by a majority of
the Trustees and consented to by the holders of not less than
two-thirds of such Shares. Any Series may be so terminated by vote
or written consent of not less than two-thirds of the Shares of
such Series. Upon the termination of the Trust or any Series,
(i) The Trust or such Series shall carry on no
business except for the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs
of the Trust or such Series and all of the powers of the
Trustees under this Declaration shall continue until the
30.
<PAGE>
affairs of the Trust or such Series shall have been wound
up, including the power to fulfill or discharge the
contracts of the Trust or such Series, collect its assets,
sell, convey, assign, exchange, transfer or otherwise
dispose of all or any part of the remaining Trust Property
to one or more persons at public or private sale for
consideration which may consist in whole or in part of cash,
securities or other property of any kind, discharge or pay
its liabilities, and do all other acts appropriate to
liquidate its business; provided that any sale, conveyance,
assignment, exchange, transfer or other disposition of all
or substantially all the Trust Property shall require
approval of the principal terms of the transaction and the
nature and amount of the consideration by vote or consent of
the holders of a majority of the Shares entitled to vote.
(iii) After paying or adequately providing for the
payment of all liabilities, and upon receipt of such
releases, indemnities and refunding agreements, as they deem
necessary for their protection, the Trustees may distribute
the remaining Trust Property of any Series, in cash or in
kind or partly each, among the Shareholders of such Series
according to their respective rights.
(b) After termination of the Trust or any Series and
distribution to the Shareholders as herein provided, a majority of
the Trustees shall execute and lodge among the records of the
Trust an instrument in writing setting forth the fact of such
termination. Upon termination of the Trust, the Trustees shall
thereupon be discharged from all further liabilities and duties
hereunder, and the rights and interests of all Shareholders shall
thereupon cease. Upon termination of any Series, the Trustees
shall thereunder be discharged from all further liabilities and
duties with respect to such Series, and the rights and interests
of all Shareholders of such Series shall thereupon cease.
11.3. Amendment Procedure.
-------------------
(a) This Declaration may be amended by the affirmative
vote of the holders of not less than a majority of the Shares at
any meeting of Shareholders or by an instrument in writing,
without a meeting, signed by a majority of the Trustees and
consented to by the holders of not less than a majority of such
Shares. The Shareholders of each Series shall have the right to
vote separately on amendments to this Declaration to the extent
provided by Section 10.1. The Trustees may also amend this
Declaration without the vote or consent of Shareholders if they
deem it necessary to conform this Declaration to the requirements
of applicable federal laws or regulations or the requirements of
the regulated investment company provisions of the Internal
31.
<PAGE>
Revenue Code, but the Trustees shall not be liable for failing so
to do.
(b) No amendment may be made, under Section 11.3 (a)
above, which would change any rights with respect to any Shares of
the Trust by reducing the amount payable thereon upon liquidation
of the Trust or by diminishing or eliminating any voting rights
pertaining thereto, except with the vote or consent of the holders
of two-thirds of the Shares of each Series. Nothing contained in
this Declaration shall permit the amendment of this Declaration to
impair the exemption from personal liability of the Shareholders,
Trustees, officers, employees and agents of the Trust or to permit
assessments upon Shareholders.
(c) A certification in recordable form signed by a
majority of the Trustees setting forth an amendment and reciting
that it was duly adopted by the Shareholders or by the Trustees as
aforesaid or a copy of the Declaration, as amended, in recordable
form, and executed by a majority of the Trustees, shall be
conclusive evidence of such amendment when lodged among the
records of the Trust.
Notwithstanding any other provision hereof, until such time
as a Registration Statement under the Securities Act of 1933, as
amended, covering the first public offering of Shares of the Trust
shall have become effective, this Declaration of Trust may be
terminated or amended in any respect by the affirmative vote of a
majority of the Trustees or by an instrument signed by a majority
of the Trustees.
11.4. Merger, Consolidation and Sale of Assets. The Trust
----------------------------------------
may merge or consolidate with any other corporation, association,
trust or other organization or may sell, lease or exchange all or
substantially all of the Trust Property, including its good will,
upon such terms and conditions and for such consideration when and
as authorized at any meeting of Shareholders called for the pur-
pose by the affirmative vote of the holders of not less than two-
thirds of the Shares of each Series, or by an instrument or
instruments in writing without a meeting, consented to by the
holders of not less than two-thirds of such Shares of each Series,
and any such merger, consolidation, sale, lease or exchange shall
be deemed for all purposes to have been accomplished under and
pursuant to the statutes of the Commonwealth of Massachusetts.
Any Series may so merge, consolidate or effect a sale or exchange
of assets by the vote or written consent of not less than two-
thirds of the Shares of such Series. In respect of any such
merger, consolidation, sale or exchange of assets, any Shareholder
shall be entitled to rights of appraisal of his Shares to the same
extent as a shareholder of a Massachusetts business corporation in
respect of a merger, consolidation, sale or exchange of assets of
32.
<PAGE>
a Massachusetts business corporation, and such rights shall be his
exclusive remedy in respect of his dissent from any such action.
11.5. Incorporation. With the approval of the holders of a
-------------
majority of the Shares, the Trustees may cause to be organized or
assist in organizing a corporation or corporations under the laws
of any jurisdiction or any other trust, partnership, association
or other organization to take over all of the Trust Property or to
carry on any business in which the Trust shall directly or
indirectly have any interest, and to sell, convey and transfer the
Trust Property to any such corporation, trust, association or
organization in exchange for the Shares or securities thereof or
otherwise, and to lend money to, subscribe for the Shares or
securities of, and enter into any contracts with any such
corporation, trust, partnership, association or organization, or
any corporation, partnership, trust, association or organization
in which the Trust holds or is about to acquire shares or any
other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor-thereto and any
such corporation, trust, partnership, association or other
organization if and to the extent permitted by law, as provided
under the law then in effect. Nothing contained herein shall be
construed as requiring approval of Shareholders for the Trustees
to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the Trust Property
to such organizations or entities.
33.
<PAGE>
ARTICLE XII
Miscellaneous
-------------
12.1. Filing. This Declaration and any amendment hereto
------
shall be filed in the office of the Secretary of the Commonwealth.
of Massachusetts and in such other places as may be required under
the laws of Massachusetts and may also be filed or recorded in
such other places as the Trustees deem appropriate. Each
amendment so filed shall be accompanied by a certificate signed
and acknowleged by a Trustee stating that such action was duly
taken in a manner provided herein, and unless such amendment or
such certificate sets forth some later time for the effectiveness
of such amendment, such amendment shall be effective upon its
filing. A restated Declaration, containing the original
Declaration and all amendments theretofore made, may be executed
from time to time by a majority of the Trustees and shall, upon
filing with the Secretary of the Commonwealth of-Massachusetts, be
conclusive evidence of all amendments contained therein and may
thereafter be referred to in lieu of the original Declaration and
the various amendments thereto.
12.2. Resident Agent. The Trust shall maintain a resident
--------------
agent in the Commonwealth of Massachusetts, which agent shall
initially be CT Corporation System, 10 Post Office Square, Boston,
Massachusetts 02109. The Trustees may designate a successor
resident agent, provided, however, that such appointment shall not
become effective until written notice thereof is delivered to the
office of the Secretary of the Commonwealth.
12.3. Governing Law. This Declaration is executed by the
-------------
Trustees and delivered in the Commonwealth of Massachusetts and
with reference to the laws thereof, and the rights of all parties
and the validity and construction of every provision hereof shall
be subject to and construed according to the laws of said State
and reference shall be specifically made to the business cor-
poration law of the Commonwealth of Massachusetts as to the
construction of matters not specifically covered herein or as to
which an ambiguity exists.
12.4. Counterparts. This Declaration may be simultaneously
------------
executed in several counterparts, each of which shall be deemed to
be an original, and such counterparts, together, shall constitute
one and the same instrument, which shall be sufficiently evidenced
by any such original counterpart.
12.5. Reliance by Third Parties. Any certificate executed
-------------------------
by an individual who, according to the records of the Trust, or of
any recording office in which this Declaration may be recorded,
appears to be a Trustee hereunder, certifying to: (a) the number
34.
<PAGE>
or identity of Trustees or Shareholders, (b) the name of the Trust
or any Series thereof, (c) the establishment of any Series, (d)
the due authorization of the execution of any instrument or
writing, (e) the form of any vote passed at a meeting of Trustees
or Shareholders, (f) the fact that the number of Trustees or
Shareholders present at any meeting or executing any written
instrument satisfies the requirements of this Declaration, (g) the
form of any By-Laws adopted by or the identity of any officers
elected by the Trustees, or (h) the existence of any fact or facts
which in any manner relate to the affairs of the Trust or any
Series, shall be conclusive evidence as to the matters so
certified in favor of any person dealing with the Trustees and
their successors.
12.6. Provisions in Conflict With Law or Regulations.
----------------------------------------------
(a) The provisions of this Declaration are severable,
and if the Trustees shall determine, with the advice of counsel,
that any of such provisions is in conflict with 1940 Act, the
regulated investment company provisions of the Internal Revenue
Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a
part of this Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of
this Declaration or render invalid or improper any action taken or
omitted prior to such determination.
(b) If any provision of this Declaration shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Declaration
in any jurisdiction.
35.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
/s/ Robert Harris
-------------------------------
Robert Harris
22 Zeloof Drive
Lawrenceville, New Jersey 08648
/s/ Michael J. Hennewinkel
-------------------------------
Michael J. Hennewinkel
5 Bennington Way
Belle Mead, New Jersey 08502
/s/ Barbara G. Fraser
-------------------------------
Barbara G. Fraser
324 Cedar Lane
Swarthmore, Pennsylvania 19081
/s/ William E. Aldrich
-------------------------------
William E. Aldrich
111 Windsor Road
Needham, Massachusetts 02192
36.
<PAGE>
Ex-99.1(b)
MERRILL LYNCH RETIREMENT SERIES TRUST
Establishment and Designation
of
Merrill Lynch Retirement Reserves Money Fund
The undersigned, being a majority of the Trustees of Merrill
Lynch Retirement Series Trust, a Massachusetts business trust
(the "Trust"), acting pursuant to Section 6.2 of the Declaration
of Trust, dated July 15, 1986, as amended (the "Declaration"), of
the Trust, do hereby divide the shares of beneficial interest of
the Trust, par value $.10 per share ("Shares"), to create a
separate Series, within the meaning of said Section 6.2, as
follows:
1. The Series is designated the "Merrill Lynch Retirement
Reserves Money Fund" (referred to herein as the "Money
Market Fund").
2. Shares of the Money Market Fund shall be entitled to
all of the rights and preferences accorded to Shares
under the Declaration.
3. The purchase price of Shares of the Money Market Fund,
the method of determination of net asset value of the
Money Market Fund, the price, terms and manner of
redemption of Shares of the Money Market Fund, and the
relative dividend rights of holders of Shares of the
Money Market Fund shall be established by the Trustees
of the Trust in accordance with the provisions of the
Declaration and shall be set forth in the currently
effective prospectus relating to shares of the Money
Market Fund, as amended from time to time, under the
Securities Act of 1933, as amended.
<PAGE>
IN WITNESS WHEREOF, the undersigned have signed this
instrument in duplicate original counterparts and have caused a
duplicate original to be lodged among the records of the Trust
this 31st of December, 1986.
/s/ Arthur Zeikel /s/ Melvin R. Seiden
--------------------------- -----------------------------
Arthur Zeikel Melvin R. Seiden
279 Watchung Fork 6 Stegman Terrace
Westfield, New Jersey 07090 Jersey City, New Jersey 07305
/s/ Howard Hawkins /s/ Stephen B. Swensrud
--------------------------- -----------------------------
Howard Hawkins Stephen B. Swensrud
33 Meadow Croft Lane RFD #2 - Box 403
Greenwich, Connecticut 06830 East Kingston, New Hampshire
03827
/s/ Walter Mintz /s/ Harry Woolf
--------------------------- -----------------------------
Walter Mintz Harry Woolf
923 Fifth Avenue Olden Farm
New York, New York 10021 Olden Lane
Princeton, New Jersey 05840
The Declaration of Trust establishing Merrill Lynch Retirement
Series Trust, dated July 15, 1986, a copy of which, together with all
amendments thereto (the "Declaration"), is on file in the office of
the Secretary of the Commonwealth of Massachusetts, provides that the
name "Merrill Lynch Retirement Series Trust" refers to the Trustees
under the Declaration collectively as Trustees, but not as
individuals or personally; and no Trustee, shareholder, officer,
employee or agent of Merrill Lynch Retirement Series Trust shall be
held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of said Trust but the Trust
Property only shall be liable.
2.
<PAGE>
Ex-99.1 (c)
MERRILL LYNCH NEW SERIES TRUST
The undersigned, constituting a majority of the Trustees of
Merrill Lynch New Series Trust (the "Trust"), a Massachusetts
business trust, hereby certify that the Trustees of the Trust
have duly adopted the following amendment, as approved by the
sole shareholder of the Trust, to the Declaration of Trust of the
Trust dated the 15th day of July, 1986.
VOTED: That the Declaration of Trust dated July 15, 1986 be
and it hereby is amended to change the name of the
Trust from "Merrill Lynch New Series Trust" to "Merrill
Lynch Retirement Series Trust" in the following manner:
1.1. Name. The name of the trust created hereby
----
(the "Trust", which term shall be deemed to include any
Series of the Trust when the context requires) shall be
"Merrill Lynch Retirement Series Trust", and so far as
may be practicable the Trustees shall conduct the
activities of the Trust, execute all documents and sue
or be sued under that name, which name (and the word
"Trust" wherever hereinafter used) shall refer to the
Trustees as Trustees, and not individually, and shall
not refer to the officers, agents, employees or
Shareholders of the Trust or any Series thereof. Each
Series of the Trust which shall be established and
designated by the Trustees pursuant to Section 6.2
shall conduct its activities under such name as the
Trustees shall determine and set forth in the
instrument establishing such Series. Should the
Trustees determine that the use of the name of the
Trust or any Series is not advisable, they may select
such other name for the Trust or such Series as they
deem proper and the Trust or Series may conduct its
activities under such other name. Any name change
shall be effective upon the execution by a majority of
the then Trustees of an instrument setting forth the
new name. Any such instrument shall have the status of
an amendment to this Declaration.
<PAGE>
IN WITNESS WHEREOF, the undersigned have signed this
certificate in duplicate original counterparts and have caused a
duplicate original to be lodged among the records of the Trust as
required by Article XI, Section 11.3(c) of the Declaration of
Trust, as of the 31st day of December, 1986.
/s/ Arthur Zeikel /s/ Melvin R. Seiden
--------------------------- -----------------------------
Arthur Zeikel Melvin R. Seiden
279 Watchung Fork 6 Stegman Terrace
Westfield, New Jersey 07090 Jersey City, New Jersey 07305
/s/ Howard R. Hawkins /s/ Stephen B. Swensrud
--------------------------- -----------------------------
Howard R. Hawkins Stephen B. Swensrud
33 Meadow Croft Lane RFD #2 - Box 403
Greenwich, Connecticut 06830 East Kingston, New Hampshire
03827
/s/ Walter Mintz /s/ Harry Woolf
--------------------------- -----------------------------
Walter Mintz Harry Woolf
923 Fifth Avenue Olden Farm
New York, New York 10021 Olden Lane
Princeton, New Jersey 08540
2.
<PAGE>
Ex-99.2
MERRILL LYNCH RETIREMENT SERIES TRUST
-------------------------------------
BY-LAWS
-------
These By-Laws are made and pursuant to Section
2.7 of the Declaration of Trust establishing MERRILL LYNCH
RETIREMENT SERIES TRUST dated October 28, 1981, as from time
to time amended (hereinafter called the "Declaration"). All
words and terms capitalized in these By-Laws shall have the
meaning or meanings set forth for such words or terms in the
Declaration.
ARTICLE
-------
Shareholder Meetings
--------------------
Section 1.1. Chairman. The Chairman, is any, shall
--------
act as chairman at all meetings of the Shareholders; in his
absence, the President shall act as chairman; and in the
absence of the Chairman and President, the Trustee or Trustees
present at each meeting may elect a temporary chairman for
the meeting, who may be one of themselves.
<PAGE>
Section 1.2. Proxies; Voting. Shareholders may vote
---------------
either in person or by duly executed proxy and each full
share represented at the meeting shall have one vote, all
as provided in Article 10 of the Declaration. No proxy
shall be valid after eleven (11) months from the date of
its execution, unless a longer period is expressly stated
in such proxy.
Section 1.3. Closing of Transfer Books and Fixing
------------------------------------
Record Dates. For the purpose of determining the Sharehold-
------------
ers who are entitled to notice of or to vote or act at any
meeting, including any adjournment thereof, or who are en-
titled to participate in any dividends, or for any other
proper purpose, the Trustees may from time to time close the
transfer books or fix a record date in the manner provided
in Section 10.3 of the ]Declaration. If the Trustees do not
prior to any meeting of Shareholders so fix a record date or
close the transfer books, then the date of mailing notice of
the meeting or the date upon which the dividend resolution
is adopted, as the case may be, shall be the record date.
Section 1.4. Inspectors of Election. In advance of
----------------------
any meeting of Shareholders, the Trustees may appoint In-
spectors of Election to act at the meeting or any adjourn-
ment thereof. If Inspectors of Election are not so appointed,
-2-
<PAGE>
the Chairman, if any, of any meeting of Shareholders may,
and on the request of any Shareholder or his proxy shall,
appoint Inspectors of Election of the meeting. The number
of Inspectors shall be either one or three. If appointed
at the meeting on the request of one or more Shareholders
or proxies, a majority of Shares present shall determine
whether one or three Inspectors are to be appointted, but
failure to allow such determination by the Shareholders shall
not affect the validity of the appointment as Inspectors of
Election. In case any person appointed as Inspector fails to
appear or fails or refuses to act, the vacancy may be filled
by appointment made by the Trustees in advance of the con-
vening of the meeting or at the meeting by the person acting
as chairman. The Inspectors of Election shall determine the
number of Shares outstanding, the Shares represented at the
meeting, the existence of a quorum, the authenticity, valid-
ity and effect of proxies, shall receive votes, ballots or
consents, shall hear and determine all challenges and ques-
tions in any way arising in connection with the right to
vote, shall count and tabulate all votes or consents, deter-
mine the results, and do such other acts as may be proper to
conduct the election or vote with fairness to all Shareholders.
If there are three Inspectors of Election, the decision, act
-3-
<PAGE>
or certificate of a majcrity is effective in all respects as
the decision, act or certificate of all. On request of the
Chairman, if any, of the meeting, or of any Shareholder or
his proxy, the Inspectors of Election shall make a report in
writing of any challenge or question or matter determined by
them and shall execute a certificate of any facts found by
them.
Section 1.5. Records at Shareholder Meetings. At each
-------------------------------
meeting of the Shareholders there shall be open for inspec-
tion the minutes of the last previous Annual or Special Meet-
ing of Shareholders of the Trust and a list of the Share-
holders of the Trust, certified to be true and correct by
the Secretary or other proper agent of the Trust, as of
the record date of the meeting or the date of closing of
transfer books, as the case may be. Such list of Share-
holders shall contain the name of each Shareholder in alpha-
betical order and the address and number of shares owned by
such Shareholder. Shareholders shall have such other rights
and procedures of inspection of the books and records of the
Trust as are granted to shareholders of a Massachusetts busi-
ness corporation.
-4-
<PAGE>
ARTICLE II
----------
Trustees
--------
Section 2.1. Annual and Regular Meetings. The Trustees
---------------------------
shall hold an annual meeting for the elction of officers and
the transaction of other business which may come before such
meeting, as soon as practicable after the Annual Meeting of
Shareholders. Regular meetings of the Trustees may be held
without call or notice at such place or places and times as
the Trustees may by resolution provide from time to time.
Section 2.2. Special Meetings. Special Meetings of
----------------
the Trustees shall be held upon the call of the Chairman,
if any, the President, the Secretary or any two Trustees,
at such time, on such day, and at such place, as shall be
designated in the notice of the meeting.
Section 2.3. Notice. Notice of a meeting shall be
------
given by mail or by telegram (which term shall include a
cablegram) or delivered Personally. If notice is given by
mail, it shall be mailed not later than 48 hours preceding
the meeting and if given by telegram or personally, such
telegram shall be sent or delivery made not later than 48
hours preceding the meeting. Notice by telephone shall con-
stitute personal delivery for these purposes. Notice of a
-5-
<PAGE>
meeting of Trustees may be waived before or after any meeting
by signed written waiver. Neither the business to be trans-
acted at, nor the purpose of, any meeting of the Board of
Trustees need be stated in the notice or waiver of notice
of such meeting, and no notice need be given of action pro-
posed to be taken by unanimous written consent. The attend-
ance of a Trustee at a meeting shall constitute a waiver of
notice of such meeting except where a Trustee attends a
meeting for the express purpose of objecting to the trans-
action of any business on the ground that the meeting has
not been lawfully called or convened.
Section 2.4. Chairman; Records. The Chairman, if any,
-----------------
shall act as chairman at all meetings of the Trustees; in
his absence the President shall act as chairman; and, in the
absence of the Chairman and the President, the Trustees pres-
ent shall elect one of their number to act as temporary
chairman. The results of all actions taken at a meeting
of the Trustees, or by unanimous written consent of the
Trustees, shall be recorded by the Secretary.
-6-
<PAGE>
ARTICLE III
-----------
Officers
--------
Section 3.1. Officers of the Trust. The officers of
---------------------
the Trust shall consist of a Chairman, if any, a President,
a Secretary, a Treasurer and such other officers or assis-
tant officers, including Vice-Presidents, as may be elected
by the Trustees. Any two or more of the offices may be
held by the same person, except that the same person may not
be both President and Secretary. The Trustees may designate
a Vice-President as an Executive Vice-President and may de-
signate the order in which the other Vice-Presidents may act.
The Chairman and the President shall be Trustees, but no
other officer of the Trust need be a Trustee.
Section 3.2. Election and Tenure. At the initial or-
-------------------
ganization meeting and thereafter at each annual meeting of
the Trustees, the Trustees shall elect the chairman, if any,
President, Secretary, Treasurer and such other officers as
the Trustees shall deem necessary or appropriate in order to
carry out the business of the Trust. Such officers shall
hold office until the next annual meeting of the Trustees
and until their successors have been duly elected and quali-
-7-
<PAGE>
fied. The Trustees may fill any vacancy in office or add any
additional officers at any time.
Section 3.3. Removal of officers. Any officer may be
-------------------
removed at any time, with or without cause, by action of a
majority of the Trustees. This provision shall not prevent
the making of a contract of employment for a definite term
with any officer and shall have no effect upon any cause of
action which any officer may have as a result of removal in
breach of a contract of employment. Any officer may resign
at any time by notice in writing signed by such officer and
delivered or mailed to the Chairman, if any, President, or
Secretary, and such resignation shall take effect immediately
upon receipt by the Chairman, if any, President, or Secretary,
or at a later date according to the terms of such notice in
writing.
Section 3.4. Bonds and Surety. Any officer may be re-
----------------
quired by the Trustees to be bonded for the faithful perform-
ance of his duties in such amount and with such sureties as
the Trustees may determine.
Section 3.5. Chairman, President, and Vice-Presidents.
----------------------------------------
The Chairman, if any, shall, if present, preside at all meet-
ings of the Shareholders and of the Trustees and shall exer-
cise and perform such other powers and duties as may be from
-8-
<PAGE>
time to time assigned to him by the Trustees. Subject to
such supervisory powers, if any, as may be given by the
Trustees to the Chairman, if any, the President shall be
the chief executive officer of the Trust and, subject to
the control of the Trustees, shall have general supervision,
direction and control of the business of the Trust and of
its employees and shall exercise such general powers of
management as are usually vested in the office of President
of a corporation. In the absence of the Chairman, if any,
the President shall preside at all meetings of the Share-
holders and of the Trustees. The President shall be, ex
officio, a member of all standing committees. Subject to
direction of the Trustees, the Chairman, if any, and the
President shall each have power in the name and on behalf
of the Trust to execute any and all loan documents, con-
tracts, agreements, deeds, mortgages, and other instruments
in writing, and to employ and discharge employees and agents
of the Trust. Unless otherwise directed by the Trustees,
the Chairman, if any, and the President shall each have full
authority and power, on behalf of all of the Trustees, to
attend and to act and to vote, on behalf of the Trust at any
meetings of business organizations in which the Trust holds
an interest, or to confer such powers upon any other persons,
-9-
<PAGE>
by executing any proxies duly authorizing such persons. The
Chairman, if any, and the President shall have such further
authorities and duties as the Trustees shall from time to
time determine. In the absence or disability of the Presi-
dent, the Vice-Presidents in order of their rank as fixed
by the Trustees or, if more than one and not ranked, the
Vice-President designated by the Trustees, shall perform
all of the duties of the President, and when so acting shall
have all the powers of and be subject to all of the restric-
tions upon the President. Subject to the direction of the
Trustees, and of the President, each Vice-President shall
have the power in the name and on behalf of the Trust to
execute any and all loan documents, contracts, agreements,
deeds, mortgages and other instruments in writing, and, in
addition, shall have such other duties and powers as shall
be designated from time to time by the Trustees or by the
President.
Section 3.6. Secretary. The Secretary shall keep the
---------
minutes of all meetings of, and record all votes of, Share-
holders, Trustees and the Executive Committee, if any. He
shall be custodian of the seal of the Trust, if any, and he
(and any other person so authorized by the Trustees) shall
affix the seal or, if permitted, a facsimile thereof, to any
-10-
<PAGE>
instrument executed by the Trust which would be sealed by a
Delaware corporation executing the same or a similar instru-
ment and shall attest the seal and the signature or signa-
tures of the officer or officers executing such instrument
on behalf of the Trust. The Secretary shall also perform
any other duties commonly incident to such office in a
Massachusetts business corporation, and shall have such
other authorities and duties as the Trustees shall from time
to time determine.
Section 3.7. Treasurer. Except as otherwise directed
---------
by the Trustees, the Treasurer shall have the general super-
vision of the monies, funds, securities, notes receivable
and other valuable papers and documents of the Trust, and
shall have and exercise under the supervision of the Trustees
and of the President all powers and duties normally incident
to his office. He may endorse for deposit or collection all
notes, checks and other instruments payable to the Trust or
to its order. He shall deposit all funds of the Trust in
such depositories as the Trustees shall designate. He shall
be responsible for such disbursement of the Funds of the
Trust as may be ordered by the Trustees or the President.
He shall keep accurate account of the books of the Trust's
transactions which shall be the property of the Trust, and
-11-
<PAGE>
which together with all other property of the Trust in his
possession, shall be subject at all times to the inspection
and control of the Trustees. Unless the Trustees shall
otherwise determine, the Treasurer shall be the principal
accounting officer of the Trust and shall also be the
principal financial officer of the Trust. He shall have
such other duties and authorities as the Trustees shall
from time to time determine. Notwithstanding anything to
the contrary herein contained, the Trustees may authorize
any adviser, administrator, manager or transfer agent to
maintain bank accounts and deposit and disburse funds of any
Series of the Trust on behalf of such Series.
Section 3.8. Other Officers and Duties. The Trustees
-------------------------
may elect such other officers and assistant officers as they
shall from time to time determine to be necessary or desir-
able in order to conduct the business of the Trust. Assis-
tant officers shall act generally in the absence of the of-
ficer whom they assist and shall assist that officer in the
duties of his office. Each officer, employee and agent of
the Trust shall have such other duties and authority as may
be conferred upon him by the Trustees or delegated to him by
the President.
- 12 -
<PAGE>
ARTICLE IV
----------
Miscellaneous
-------------
Section 4.1. Depositories. In accordance with Section
------------
7.1 of the Declaration, the funds of the Trust shall be de-
posited in such depositories as the Trustees shall designate
and shall be drawn out on checks, drafts or other orders
signed by such officer, officers, agent or agents (including
any adviser, administrator or manager), as the Trustees may
from time to time authorize.
Section 4.2. Signatures. All contracts and other in-
----------
struments shall be executed on behalf of the Trust by such
officer, officers, agent or agents, as provided in these
By-Laws or as the Trustees may from time to time by reso--
lution provide.
Section 4.3. Seal. The seal of the Trust, if any, or
----
any Series of the Trust, if any, may be affixed to any
document, and the seal and its attestation may be litho-
graphed, engraved or otherwise printed on any document with
the same force and effect as if it had been imprinted and
attested manually in the same manner and with the same
effect as if done by a Massachusetts business corporation.
-13-
<PAGE>
ARTICLE V
---------
Stock Transfers
---------------
Section 5.1. Certificates. Certificates representing
------------
Shares of any Series of the Trust shall not be issued.
Section 5.2. Transfer Agents, Registrars and the Like.
----------------------------------------
As provided in Section 6.7 of the Declaration, the Trustees
shall have authority to employ and compensate such transfer
agents and registrars with respect to the Shares of the
various Series of the Trust as the Trustees'-shall deem
necessary or desirable. In addition, the Trustees shall
have power to employ and compensate such dividend disbursing
agents, warrant agents and agents for the reinvestment of
dividends as they shall deem necessary or desirable. Any of
such agents shall have such power and authority as is dele-
gated to any of them by the Trustees.
Section 5.3. Transfer of Shares. The Shares of the
------------------
Trust shall be transferable on the books of the Trust only
upon delivery to the Trustees or a transfer agent of the
Trust of proper documentation as provided in Section 6.8
of the Declaration. The Trust, or its transfer agents, shall
be authorized to refuse any transfer unless and until pre-
sentation of such evidence as may be reasonably required to
show that the requested transfer is proper.
-14-
<PAGE>
Section 5.4. Registered Shareholders. The Trust may
-----------------------
deem and treat the holder of record of any Share as the ab-
solute owner thereof for all purposes and shall not be re-
quired to take any notice of any right or claim of right of
any other person.
ARTICLE VI
----------
Amendment of By-Laws
--------------------
Section 6. 1. Amendment and Reneal of By-Laws. In accord-
-------------------------------
ance with Section 2.7 of the Declaration, the Trustees shall
have the power to alter, amend or repeal the By-Laws or adopt
new By-Laws at any time. Action by the Trustees with respect
to the By-Laws shall be taken by an affirmative vote of a
majority of the Trustees. The Trustees shall in no event
adopt By-Laws which are in conflict with the Declaration,
and any apparent inconsistency shall be construed in favor
of the related provisions in the Declaration.
The Declaration of Trust establishing Merrill Lynch
Retirement Series Trust, dated October 28, 1981, a copy of
which, together with all amendments thereto (the "Declaration")
is on file in the office of the Secretary of the Commonwealth
-15-
<PAGE>
of Massachusetts, provides that the name Merrill Lynch
Retirement Series Trust refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee
or agent of Merrill Lynch Retirement Series Trust shall be
held to any personal liability, nor shall resort be had to
their private property for the satisfaction of any obliga-
tion or claim or otherwise in connection with the affairs of
said Merrill Lynch Retirement Series Trust but the Trust
Estate only shall be liable.
-16-
<PAGE>
EX-99.6
DISTRIBUTION AGREEMENT
----------------------
AGREEMENT made this 31st day of December, 1986 between
MERRILL LYNCH RETIRENENT SERIES TRUST, a trust organized under
the laws of Massachusetts (the "Trust"), and MERRILL LYNCH
FUNDS DISTRIBUTOR, INC., a Delaware corporation (the "Dis-
tributor");
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Trust is registered under the Investment
company Act of 1940, as amended (the "Investment Company
Act"), as a diversified opon-end investment company and it
is affirmatively in the interest of the Trust to offer its
shares for sale in a continuous offering; and
WHEREAS, the Trust is authorized to establish separate
series ("Series"), each of which will offer a separate class
of shares of beneficial interest, par value $.10 per share
collectively referred to as "shares"), to selected groups
of purchasers; and
WHEREAS, the Distributor is a securities firm engaged
in the business of selling shares of investment companies
<PAGE>
either directly to investors or through other securities
dealers; and
WHEREAS, the Trust and the Distributor wish to enter
into an agreement with each other with respect to the con-
tinuous offering of the shares of the various Series, as
the same are organized from time to time, each offering to
commence after the effectiveness of the registration state-
ment covering the shares of a particular Series filed pur-
suant to the Securities Act of 1933, as amended (the "Secu-
rities Act
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor. The Trust
------------------------------
hereby appoints the Distributor as the exclusive distributor
and representative of the Trust to sell shares to the selected
groups of investors specified as eligible investors in the
currently effective prospectus (the "Prospectus") relating
to the shares of each Series which may be established by the
Trust and the Distributor hereby accents such appointment.
The Trust during the term of this Agreement shall sell its
shares to the Distributor upon the terms and conditions set
forth below.
Section 2. Exclusive Nature of Duties. The Distribu-
--------------------------
tor shall be the exclusive representative of the Trust to
-2-
<PAGE>
act as principal underwriter and distributor, except that
such exclusive rights shall not apply to shares issued by
the Trust pursuan to reinvestments of dividends and capital
gains distributions.
Section 3. Purchase of Shares from the Trust.
---------------------------------
(a) The Distributor shall have the right to buy from
the Trust the shares needed, but not more than the shares
needed (except for clerical errors in transmission to fill
unconditional orders for shares of the Trust placed With
the Distributor by investors or securities dealers. The
price which the Distributor shall pay for the shares so
purchased from the Trust shall be the net asset value, de-
termined as get forth in Section 3(c) hereof, used in deter-
mining public offering price described below on which such
orders were based..
(b) The shares are to be resold by the Distributor to
investors at the public offering price, as set forth in Sec-
tion 3(c) hereof, or to securities dealers having agreements
with the Distributor union the terms and conditions set forth
in Section 7 hereof.
(c) The public offering price of the shares of any
Series, i.e., the price per share at which the Distributor
may sell shares to the public, shall be the public offering
price as set forth in the Prospectus relating to such shares,
-3-
<PAGE>
which shall be the net asset value thereof, as determined in
accordance with the desciption thereof contained in the
Prospectus relating to that Series, plus any sales charge
which may be approved by the Trustees of the Trust.
(d) The Trust, or any agent of the Trust designated
in writing by it, shall be promptly advised of all purchase
orders for shares received by the Distributor. Procedures
may be established by the Trust and the Distributor whereby
purchase orders for shares of any Series are presented
directly to the Trust or an agent designated by the Trust
upon the condition that in such cases it shall be deemed
that the sale of the shares to be purchased is made pursuant
to Section 3.hereof. Any order may be rejected by the Trust
or the Distributor, provided, however, that neither will
arbitrarily or without reasonable cause refuse to accept or
confirm orders for the purchase of shares. The Trust (or
its agent) will confirm orders upon the their receipt, or in
accordance with any exemptive order of the Securities and
Exchange Commission, and will make appropriate book entries
pursuant to the instructions of the Distributor. Purchase
orders are effective when Federal Funds become available to
the Trust. The Distributor agrees to cause such payment and
such instructions to be delivered promptly to the Trust (or
its agent).
-4-
<PAGE>
Section 4. Redemption or Repurchase of Shares by the
-----------------------------------------
Trust.
-----
(a) Outstanding shares may be tendered !or redemption
or repurchase in accordance with the Prospectus relating to
such shares, and the Trust shall redeem or repurchase the
shares so tendered in accordance with its obligations and
rights as set forth in its Declaration of Trust, as amended
from time to time, and in accordance with the applicable
provisions contained in the Prospectus relating to such
shares. The Trust shall pay the total amount of the redemp-
tion price as defined in the above paragraph pursuant to the
instructions of the Distributor and in accordance with the
terms set forth in the Prospect as relating to the shares
being redeemed.
(b) The Trust reserves the right to reject any order
for repurchase through a securities dealer, but the right
to redeem shares, or to receive payment with respect to any
such redemption, upon the presentation of properly submitted
redemption request in accordance with the procedures set
forth in the Prospectus relating to such shares, may only be
suspended in accordance with the provisions of the invest-
ment Company Act.
-5-
<PAGE>
Section 5. Duties of the Trust.
-------------------
(a) The Trust shall furnish to the Distributor copies
of all information, financial statements and other documents
which the Distributor may reasonably request for use in con-
nection with the distribution of shares of the Trust, and
this shall include one certified copy, upon request by the
Distributor, of all financial statements of each Series pro-
pared for the Trust by independent public accountants. The
Trust shall make available to the Distributor such number of
copies of the Prospectus for each Series as the Distributor
shall reasonably request.
(b) The Trust shall take, from time to time, all
necessary action to register shares of each Series under the
Securities Act to the end that there will be available or
sale such number of shares as the Distributor may reasonably
be expected to sell.
(c) The Trust shall use its best efforts to quality
and maintain the qualification of an appropriate number of
shares of each Series for sale under the securities laws of
such states as the Distributor and the Trust may approve.
Any such qualification may be withheld, terminated or with-
drawn by the Trust at any time in its discretion. As pro-
vided in Section 8(c) hereof, the expense of qualification
and maintenance of qualification shall be borne by the
-6-
<PAGE>
Trust. The Distributor shall furnish such information and
other material relating to its affairs and activities as may
be required by the Trust in connection with such qualifica-
tions.
(d) The Trust will furnish to the Distributor, in
reasonable quantities upon request by the Distributor,
copies of annual and interim reports of each Series.
Section 6. Duties of the Distributor.
-------------------------
(a) The Distributor shall devote reasonable time and
effort to effect sales of shares of the Trust, but shall
not be obligated to sell any specific number of shares.
The services of the Distributor hereunder are not to be
deemed exclusive and nothing herein contained shall prevent
the Distributor from entering into distribution arrangements
with other investment cmpanies so long as the performance
of its obligations hereunder is not impaired thereby.
(b) In selling the shares of the Trust, the Distributor
shall use its best efforts in all respects duly to conform
with the requirements of all federal and state laws and reg-
ulations and the regulations of the National Association of
Securities Dealers, Inc. (the "NASD") relating to the sale
of such securities. Neither the Distributor nor any other
person is authorized by the Trust to give any information
or to make any representations, other than those contained
-7-
<PAGE>
in the Prospectus for each Series or any sales literature
specifically approved by the Trust for use with respect to
a particular Series.
(c) The Distributor shall adopt and follow procedures,
as approved by the Trust, for the confirmation of salts to
investors and selected dealers, the collection of amounts
payable by investors on such sales, and the cancellation of
unsettled transactions, as may be necessary to comply with
the requirements of the NASD, as such requirements may from
time to time exist.
Section 7. Selected Dealers Agreements.
---------------------------
(a) The Distributor shall have the right to enter into
selected dealers agreements with securities dealers of its
choice ("selected dealers") for the sale of shares; provided,
however, that the form of selected dealers agreement shall
be approved by the Trust Shares sold to selected dealers
shall be for resale by such dealers only in accordance with
the provisions of the Prospectus relating to such shares.
A form of selected dealer agreement for the first Series of
the Trust, designated "Merrill Lynch Retirement Reserves
Money Fund", is appended hereto as Exhibit A.
(b) Within the United States, the Distributor shall
offer and sell shares only to such selected dealers as are
members in good standing of the NASD.
-8-
<PAGE>
Section 8. Payment of Expenses.
-------------------
(a) The Trust shall bear all of its costs and expenses,
including fees and disbursements of its counsel and auditors,
in connection with the preparation and filing of any re-
quired registration statements and prospectuses under the
Investment Company Act, the Securities Act, and all amend-
ments and supplements thereto, and the expense of preparing,
printing, mailing and otherwise distributing prospectuses,
annual or interim reports and proxy materials to its share-
holders.
(b) After the prospectuses and annual and interim re-
ports have been prepared, set in type and mailed to share-
holders, the Distributor shall bear the costs and expenses
of printing and distributing any copies thereof which are
used in connection with the offering of the shares. The
Distributor shall bear the costs and expenses of preparing,
printing and distributing any supplementary sales literature
used by the Distributor in connection with the offering of
the shares for sale. Any expenses of advertising incurred
in connection with such offering will also be the obligation
of the Distributor.
(c) The Trust shall bear the cost and expenses of
qualification of the shares for sale, and, if necessary or
advisable in connection therewith, of qualifying the Trust
-9-
<PAGE>
as a broker or dealer, in such states of the United States
or other jurisdictions as shall be selected by the Trust
and the Distributor, and the cost and expenses payable to
each such state for continuing qualification therein until
the Trust decides to discontinue such qualification.
Section 9. Indemnification.
---------------
(a) The Trust shall indemnify and hold harmless the
Distributor and each person, if any, who controls the Dis-
tributor against any loss, liability, claim, damage or
expense (including the reasonable cost of investigating or
defending any alleged loss, liability, claim, damage or ex-
pense and reasonable counsel fees incurred in connection
therewith), arising by reason of any person acquiring any
shares, which may be base, upon the Securities Act, or an
any other statute or at common law, on the ground that
the registration statement or related Prospectus of any
Series, as from time to time amended and supplemented, or
an annual or interim report to shareholders Co. any Series,
includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or
necessary in order to make the statements therein not mis-
leading, unless such statement or commission was made in
reliance upon, and in conformity with, infomation furnished
-10-
<PAGE>
to the Trust in connection therewith by or on behalf of the
Distributor; provided, however, that in no case (i) is the
indemnity of the Trust in favor of the Distributor and any
such controlling persons to be deemed to protect such Dis-
tributor or any such controlling persons thereof against any
liability to the Trust or its security holders to which the
Distributor or any such controlling persons would otherwise
be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties or by
reason of reckless disregard of its obligations and duties
under this Agreement, or (ii) is the Trust to be liable
under its indemnity agreement contained in this paragraph
with respect. to any claim made against the Distributor or
any such controlling persons, unless the Distributor or such
controlling persons, as the case may be, shall have notified
the Trust in writing within a reasonable time after the
summon or other first legal process giving in information of
the nature of the claim shall have been served upon the
Distributor or such controlling persons (or alter the Dis-
tributor or such controlling persons shall have received
notice of such se--vice on any designated agent), but failure
to notify the Trust of any such claim shall not relieve it
from any liability which it may have to the person against
whom such action is brought otherwise than on account of its
-11-
<PAGE>
indemnity agreement contained in this paragraph. The Trust
will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any
suit brought to enforce any such liability, but if the Trust
elects to assume the defense, such defense shall be con-
ducted by counsel chosen by it and satisfactory to the
Distributor or such controlling person or persons, defendant
or defendants in the suit. In the event the Trust elects to
assume the defense of any such suit and retain such counsel,
the Distributor or such controlling person or persons,
defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them, but, in
case the Trust does not elect to assume the defense of any
such suit, it will reimburse the Distributor or such con-
trolling person or persons, defendant or defendants in the
suit, for the reasonable fees and expenses of any counsel-
retained by them. The Trust shall promptly notify the
Distributor of the commencement of any litigation or pro-
ceedings against it or any of its officers or Trustees in
connection wit.% the issuance or sale of any of the shares.
(b) The Distributor shall indemnify and hold harmless
the Trust and each of its Trustees and officers an each
person, if any, who controls the Trust against any loss,
liability, claim, damage, or expense described in the fore-
going indemnity contained in subsection (a) of this Section,
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<PAGE>
but only with respect to statements or commissions made in
reliance upon, and in conformity with, information furnished
to the Trust in writing by or on behalf of the Distributor
for use in connection with the registration statement or re-
lated Prospectus of any Series, as from time to time amended,
or the annual or interim reports to shareholders of any
Series. in case any action shall be brought against the
Trust or any person so indemnified, in respect of which
indemnity may be sought against the Distributor the Dis-
tributor shall have the rights and duties given to the
Trust, and the Trust and each person so indemnified shall
have the rights and duties given to the Distributor by the
provisions of subsection (a) of this Section 9.
Section 10. Duration and Termination of this Agreement.
------------------------------------------
This Agreement shall become effective as of the date first
above written and shall remain in force until May 31, 1987
and thereafter but only so long as such continuance is spe-
cifically approved at least annually by (i) the Trustees of
the Trust, or by the vote of a majority of the outstanding
voting securities of the Trust, and (ii) a majority of those
Trustees who are not parties to this Agreement or interestsed
persons of any such party cast in person at a meeting called
for the purpose of voting on such approval.
-13-
<PAGE>
This Agreement may be terminated at any time, without
the payment of any penalty, by the Trustees of the Trust or
by vote of a majority of the outstanding voting securities
of the Trust, or by the Distributor, on sixty days written
notice to the other party. This Agreement shall automati-
cally terminate in the event of its assignment.
Section 11. Amendments. This Agreement may be amended
----------
by the parties hereto only if such amendment is specifically
approved (i) by the Trustees of the Trust, or by the vote of
a majority of outstanding voting securities of the Trust, and
(ii) by a majority of those Trustees who are not parties to
this Agreement or interested persons of any such party, which
vote must becasuse in person at a meeting called for the pur-
pose of voting on such approval.
Section 12. Definitions of Certain Terms. The terms
----------------------------
"vote of a majority of the outstanding voting securities",
"assignment", "interested person" and "affiliated person",
when used in this Agreement, shall have the respective
meanings specified in the investment Company Act.
Section 13. Governing Law. This Agreement shall be
-------------
construed in accordance with the laws of the State of New
York and the applicable provisions of the Investment Company
Act. To the extent the applicable law of the State of New
-14-
<PAGE>
York, or any of the provisions herein, conflict with the
applicable provisions of the Investment Company Act, the
latter shall control.
Section 14. Personal Liability. The Declaration of
------------------
Trust establishing Merrill Lynch Retirement Series Trust,
dated July 15, 1986, a copy of which, together with all
amendments thereto (the "Declaration"), is on file in the
office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "Merrill Lynch Retirement Series
Trust" refers to the Trustees under the Declaration collec-
tively as Trustees, but not as individuals or personally;
and no Trustee, shareholder, officer, employee or agent of
Merrill Lynch Retirement Series Trust shall be held to any
personal liability, nor shall resort be had to their private
property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of said Merrill
Lynch Retirement Series Trust, but the Trust Estate only
shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Agreement as of the day and year first
above written.
MERRILL LYNCH RETIREMENT SERIES TRUST
By___________________________________
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By___________________________________
-15-
<PAGE>
Exhibit A
MERRILL LYNCH RETIREMENT RESERVES MONEY FUND
Merrill Lynch Retirement Series Trust
SHARES OF BENEFICIAL INTEREST
SELECTED DEALER AGREEMENT
-------------------------
, 198
Merrill Lynch, Pierce, Fenner Smith
Incorporated
One Liberty Plaza
165 Broadway
Now York, New York 10080
Gentleman:
Merrill Lynch Funds Distributor, Inc. (the "Distributor")
has an agreement with Merrill Lynch Retirement Series Trust, a
Massachusetts business trust (the "Trust"), pursuant to which
it acts as the distributor for the sale of shares of benefi-
cial interest, par value $.10 per share (the "shares"), of
the Merrill Lynch Retirement Reserves Money Fund (the "Money
Market Fund"), a series of the Trust, and as such has the
right to distribute shares for resale. The Trust is a
diversified open-end investment company registered under the
Investment Company Act of 1940, as amended, and the shares
being offered are registered under the Securities Act of
1933, as amended. You have received a copy of the Distribu-
tion Agreement between ourselves and the Trust and reference
is made herein to certain provisions of such Distribution
Agreement. The team "Prospectus" as used herein refers to
the prospectus on file with the Securities and Exchange
Commission which is part of the most recent effective regis-
tration statement relating to the shares filed pursuant to
the Securities Act of 1933, as amended. As principal, we
offer to sell to you, as the exclusive selected dealer,
shares of the Money Market Fund upon the following terms and
conditions:
<PAGE>
1. In all sales of these shares to the public you
shall act as dealer for your own account, and in no trans-
action shall you have any authority to act as agent for the
Trust or for us.
2. Shares may be offered by you only to the eligible
purchasers described in the Prospectus. Orders received
from you will be accepted through us only at the public
offering price applicable to each order, as set forth in the
Prospectus. The procedure relating to the handling of orders
shall be subject to Section 4 hereof and instructions which
we or the Trust shall forward to you from time to time. All
orders are subject to acceptance or rejection by the Distri-
butor or the Trust in the sole discretion of either. Except
as otherwise set forth in the Prospectus, there are no
minimum initial or subsequent purchase requirements.
3. You agree that you will not place orders for any
shares except in accordance with the procedures described in
the Prospectus. You agree that you will not offer or sell
any of the shares except under circumstances that will
result in compliance with the applicable Federal and state
securities laws and that in connection with sales and offers
to sell shares you will furnish to each person to whom any
such sale or offer is made a copy of the Prospectus (as then
amended or supplemented) and will not furnish to any person
any information relating to the shares which is inconsistent
in any respect with the information contained in the Prospec-
tus (as then amended or supplemented) or cause any advertise-
ment to be published in any newspaper or posted in any
public place without our consent and the consent of the
Trust.
4. As a selected dealer, you are hereby authorized
(i) to place orders directly with the Trust for shares to
be sold by us to you subject to the applicable terms and
conditions governing the placement of orders by us set
forth in Section 3 of the Distribution Agreement, and (ii)
to tender shares directly to the Trust or its agent for re-
demption subject to the applicable terms and conditions set
forth in Section 4 of the Distribution Agreement and the
Prospectus.
5. You shall not withhold placing orders received
from your customers so as to profit yourself as a result of
such withholding: e.g., by a change in the "net asset value"
from that used in determining the offering price to you
customers.
-2-
<PAGE>
6. No person is authorized to make any representa-
tions concerning shares except those contained in the. Pro-
spectus and in such printed information subsequently issued
by us or the Trust as information supplemental to such
Prospectus. In purchasing shares through us you shall rely
solely on the representations contained in the Prospectus
and supplemental information above mentioned. Any printed
information which we furnish you other than the Trust's
Prospectus, periodic reports and proxy solicitation material
are our sole responsibility and not the responsibility of
the Trust, and you agree that the Trust shall have no lia-
bility or responsibility to you in these respects unless
epressly assumed in connection therewith.
7. You agree to deliver to any purchasers whose
shares you are holding as record holder copies of the
Prospectus, as amended from time to time, and the annual
and interim reports and proxy solicitation materials re-
lating to the Trust. You further agree to make reasonable
efforts to endeavor to obtain proxies from such purchasers
whose shares you are holding as record holder. Additional
copies of the Prospectus, annual or interim reports and
proxy solicitation materials of the Trust will be supplied
to you in reasonable quantities upon request.
8. We reserve the right in our discretion, without
notice, to suspend sales or withdraw the offering of shares
entirely. Each party hereto has the right to cancel this
agreement upon notice to the other party.
9. We shall have full authority to take such action'
as we may deem advisable in respect of all matters pertaining
to the continuous offering. we shall be under no liability
to you except for lack of good faith and for obligations ex-
prtssly assumed by us herein. Nothing contained in this
paragraph is intended to operate as, and the provisions of
this paragraph shall not in any way whatsoever constitute,
a waiver by you of compliance with any provisions of the
Securities Act of 1933, as amended, or of the rules and
regulations of the Securities and Exchange Commission is-
sued thereunder.
10. You represent that you are a member of the National
Association of Securities Dealers, Inc. and, with respect to
any sales in the United States, we both hereby agree to abide
by the Rules of Fair Practice of such Association.
-3-
<PAGE>
11. Upon application to us, we will inform you as to
the states or other jurisdictions in which we believe
the
shares have been qualified for sale under, or are exempt
from the requirements of, the respective securities laws
of such states, but we assume no responsibility or obli-
gation as to your right to sell shares in any jurisdiction.
We will file with the Department of State in New York a
Further State Notice with respect to the shares, if neces-
sary.
12. We shall have full authority to act upon your
express instructions to effect transactions in shares through
us an behalf of your customers under the terms and conditions
provided in the Prospectus. You agree to hold us free and
harmless as a result of action taken with respect to author-
ized repurchases or exchanges upon your express instructions.
13. All communications to us should be sent to one
Liberty Plaza, 165 Broadway, New York, New York 10080. Any
notice to you shall be duly given if mailed or telegraphed
to you at the same address.
MERRILL LYNCH FUNDS DISTRIBUT0R, INC.
By /s/_____________________________
(Authorized Signature)
Accepted:
MERRILL LYNCH, PIERCE, FENNER, SMITH
INCORPORATION
By___________________________
Date________________
-4-
<PAGE>
The Declaration of Trust establishing Merrill Lynch
Retirement Series Trust, dated July 15, 1986, a copy of which,
together with all amendments thereto (the "Declaration"), is on
file in the office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "Merrill Lynch Retirement
Series Trust" refers to the Trustees under the Declaration.
collectively as Trustees, but not as individuals or personally;
and no Trustee, shareholder, officer, employee or agent of
Merrill Lynch Retirement Series Trust shall be held to any
personal liability, nor shall resort be had to their private
property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of said Merrill Lynch
Retirement Series Trust but the Trust Estate only shall be
liable.
<PAGE>
Ex-99.8
CUSTODY AGREEMENT
AGREEMENT made as of this 22nd day of January, 1982,
between MERRILL LYNCH. RETIREMENT SERIES TRUST, a business
trust, organized and existing under the laws of the Common-
wealth of Massachusetts, having its principal office and
place of business at 165 Broadway, New York, New York 10080
U.S.A. (hereinafter called the "Fund"), and THE BANK OF NEW
YORK, a corporation organized and existing under the laws of
the State of New York, having its principal office and place
of business at 48 Wall Street, New York, New York 10015
U.S.A. (hereinafter called the "Custodian") and an office at
147 Leadenhall Street, London, England EC3V 4PN.
W I T N E S S E T H:
That for and in consideration of the mutual promises
hereinafter set forth, the parties hereto covenant and agree
as follows:
ARTICLE I
DEFINITIONS
-----------
Whenever used in this Agreement, the following words
and phrases shall have the following meanings:
1. "Authorized Person" shall be deemed to include the
Treasurer, the Controller or any other person, whether or
not any such person is an Officer or employee of the Fund,
duly authorized by the Board of Trustees of the Fund to give
Oral Instructions and Written Instructions on behalf of the
Fund and listed in the Certificate annexed hereto as Appen-
dix A or such other Certificate as may be received by the
Custodian from time to time.
<PAGE>
2. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for the United States
government and federal agency securities, its successor or
successors and its nominee rr nominees.
3. "Certificate" shall mean any notice, instructions,
or other instrument in writing, authorized. or required by
this Agreement to be given to the Custodian which is actu-
ally received by the Custodian and signed, or reasonably
believed by the Custodian to have been signed, on behalf of
the Fund by any two Officers of the Fund.
4. "Depository" shall mean The Depository Trust Com-
pany ("DTC"), a clearing agency registered with the Secu-
rities and Exchange Commission, its successor or successors
and its nominee or nominees, provided the Custodian has
received a certified copy of a resolution of the Fund's
Board of Trustees specifically approving deposits in DTC.
The term "Depository" shall further mean and include any
other person authorized to act as a depository under the
Investment Company Act of 1940, its successor or successors
and its nominee or nominees, specifically identified in a
certified copy of a resolution of the Funds Board of
Trustees approving deposits therein by the Custodian.
5. "Money Market Security" shall be deemed to
include, without limitation, short term United States
government securities, government agency securities, certif-
icates of deposit, variable rate certificates of deposits,
bankers' acceptances, Eurodollar and Yankee dollar obliga-
tions, non-convertible corporate debt instruments, com-
mercial paper, and repurchase and reverse repurchase agree-
ments.
6. "Officers" shall be deemed to include the Presi-
dent, any Vice President, the Secretary, the Treasurer, the
Controller, any Assistant Controller, any Assistant Treas-
-2-
<PAGE>
urer, or any other person or persons duly authorized "by the
Board of Trustees of the Fund to execute any Certificate,
instruction, notice or other instrument on behalf of the
Fund and listed in the Certificate annexed hereto as
Appendix B or such other Certificate as may be received-by
the Custodian from time to time.
7. "Oral Instructions" shall mean verbal instructions
actually received by the Custodian from-an Authorized Person
or from a person reasonably believed by the Custodian to be
an Authorized Person.
8. "Security" shall be deemed to include, without
limitation, Money Market Securities and such other secu-
rities which the Company is authorized to invest in pursuant
to its current prospectus.
9. "Series" shall mean each separate series compris-
ing the Fund, each of which is a separate portfolio offering
a separate class of shares of beneficial interest of the
Fund. The first Series of the Fund has been designated
"Merrill Lynch Retirement Reserves Money Fund".
10. "Shares" shall mean shares of beneficial interest
of the Fund each of which is allocated to a particular
Series.
11. "Written Instructions" shall mean written communi-
cations actually received by the Custodian from an Author-
ized Person or from A person reasonably believed by thL-
Custodian to be an Authorized Person by telex or any other
such system whereby the receiver of such communications is
able to verify by codes or otherwise with a reasonable
degree of certainty the authenticity of the sender of such
communication.
-3-
<PAGE>
ARTICLE II
APPOINTMENT OF CUSTODIAN
------------------------
1. The Fund hereby constitutes and appoints the
Custodian as custodian of all Securities and moneys owned by
each Series of the Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as said
custodian and agrees to perform the duties thereof as here-
inafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
------------------------------
1. The Fund will deliver or cause to be delivered
to the Custodian all Securities and moneys owned by each
series, including cash received for the issuance of Sharies,
during the period of this Agreement and shall specify the
Series to which the same are specifically allocated. The
Custodian shall segregate keep, and maintain the assets of
the Series separate and apart. The Custodian will not be
responsible for such Securities and such moneys until
actually received by it. The Custodian will be entitled to
reverse any credits made for a Series on the Fund's behalf
which such credits have been previously made and moneys are
not finally collected. The Fund shall deliver to the
Custodian a certified resolution of the Board of Trustees of
the Fund approving, authorizing and instructing the
Custodian on a continuous and on-going basis to deposit in
the Book-Entry System all Securities eligible for deposit
therein, regardless of the Series to which the same are
specifically allocated, and to utilize the Book-Entry System
-4-
<PAGE>
to the extent possible in connection with its performance
hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities and deliveries and returns of Securities colla-
teral, regardless of the Series to which the same are speci-
fically allocated. Prior to the deposit of Securities of
the Fund in the Depository, the Custodian shall have
received a certified resolution of the Board of Trustees of
the Fund approving, authorizing and Instructing the Custo-
dian on a continuous and ongoing basis until instructed to
the contrary by a Certificate actually received by the
Custodian to deposit in the Depository all securities
eligible for deposit therein, and to utilize the Depository
to the extent possible in connection with its performance
hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities and deliveries and returns of Securities collat-
eral regardless of the Series to which the same are specif-
ically allocated. Securities and moneys of a Series
deposited in either the Book-Entry System or the Depository
will be represented in accounts Which include only assets
held by the Custodian for customers, including, but not
limited to, accounts in which the Custodian acts in a
fiduciary or representative capacity and shall be specif
cally allocatd on the Custodian's books to the separate
account for such Series.
2. The Custodian shall establish and maintain sepa-
rate accounts, in the name of each series of the Fund, and
shall credit to the separate account established and main-
tained for a particular Series all moneys received by it for
the account of the Fund with respect to such Series. Moneys
credited to a separate account for a Series shall be dis-
bursed by the Custodian only:
-5-
<PAGE>
(a) In payment for Securities purchased for such
Series, as provided in Article IV hereof;.
(b) In payment of dividends or distributions with
respect to Shares of such Series, as provided in Article V
hereof;
(c) In payment of original issue or other taxes
with respect to the Shares of such Series, as provided in
Article VI hereof;
(d) In payment for Shares of such Series
redeemed by it, as provided in Article VI hereof;'
(e) Pursuant to a Certificate, setting forth the
name and address of the person. to whom the payment is to be
made, the amount to be paid, the Series account from which
the payment is to be made, and the purpose for which payment
is to be made; or
(f) In payment of the fees and in reimbursement
of the expenses and liabilities of the Custodian attribut-
able to such Series, as provided in Article IX hereof.
3. Promptly after the close of business on each day
the Custodian shall furnish the Fund with a written state-
ment (i) summarizing all transactions and entries for the
account of each series of the Fund during said day and
specifying the Series to which each transaction and entry
relates, and (ii) confirming any purchase or sale of Securi-
ties during said day and specifying the Series to which each
purchase or sale relates. Where Securities are transferred
to the account of any series of the Fund for a Series, the
Custodian shall also by book entry or otherwise identify as
-6-
<PAGE>
belonging to such series and specifically allocated to such
Series a quantity of Securities in a fungible bulk of
Securities registered in the name of the Custodian (or its
nominee) or shown on the Custodian's account on the books of
the Book-Entry System or the Depository. At least monthly
and from time to time, the Custodian shall furnish the Fund
with a detailed statement of the Securities and moneys held
for each series of the Fund under this Agreement with
respect to each Series.
4. All Securities held for the Series of the Fund,
which are issued or issuable only in bearer form, except
such Securities as are held in the Book-Entry System, shall
be held by the Custodian in that form; all other Securities
held for the Fund may be registered in the name of the Fund,
in the name of any duly appointed registered nominee of the
Custodian as the Custodian may from time to time determine,
or in the name of the Book-Entry System or the Depository,
or their successor or successors, or their nominee or
nominees. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or
deliver in proper form for transfer, or to register in the
name of its registered nominee or in the name of the Book-
Entry System or the Depository any Securities which it may
hold for the account of a series of the Fund and which may
from time to time be registered in the name of the Fund.
The Custodian shall hold all such Securities which are
specifically allocated to a Series and not held in the Book-
Entry System or in the Depository in separate accounts in
the name of each series of the Fund for such Series physic-
ally segregated at all times from those of any other person
or persons.
5. Unless otherwise instructed to the contrary by a
Certificate, the Custodian by itself, or through the use of
-7-
<PAGE>
the Book-Entry System or the Depository with respect to
Securities therein deposited, shall with respect to all
Securities held for the Fund in accordance with this
Agreement:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount
payable upon all Securities which may mature or be called,
redeemed, or retired, or otherwise become payable;
(c) Surrender Securities in temporary form for
definitive Securities;
(d) Execute, as custodian, any necessary declara-
tions or certificates of ownership under the Federal Income
Tax Laws or the laws rr regulations of any other taxing
authority now or hereafter in effect;
(e) Hold directly, or through the Book-Entry Sys-
tem or the Depository with respect to Securities therein
deposited, for the account of the Fund and the particular
Series all rights and similar securities is sued with respect
to any Securities held by the Custodian for such Series
hereunder; and
6. Upon receipt of a Certificate and not otherwise,
the Custodian, directly or through the use of the Book-Entry
System or the Depository, shall:
(a) Execute and deliver to such persons as may be
designated in such Certificate, consents, authorizations,
and any other instruments whereby the authority of the
Fund as owner of any Securities held -for the Series speci-
fied in such Certificate may be exercised;
-8-
<PAGE>
(b) Deliver any Securities held for the Series
specified in such Certificate in exchange for other Securi-
ties or cash issued or paid in connection with the liquids-
tion, reorganization, or refinancing, merger, consolidation
or recapitalization of any corporation, or exercise of any
conversion privilege and receive and hold hereunder specifi-
cally allocated to such Series any cash or other Securities
received in exchange;
(c) Deliver any Securities held for the Series
specified in the Certificate to any. protective committee,
reorganization committee or other person in connection with
the reorganization, refinancing, merger, consolidation, re-
capitalization or sale of assets of any corporation, and
receive and hold under the terms of this Agreement specifi-
cally allocated to such Series such certificates of deposit,
interim receipts or other instruments or documents as may be
issued to it to evidence such delivery; and
(d) Make such transfers or exchanges of the
assets of the Series specified in such Certificate ,and take
such other steps as shall be stated in said Certificate to
be for the purpose of effectuating any duly authorized plan
of liquidation, reorganization, merger, consolidation or re-
capitalization of the Fund.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
--------------------------------------------
1. Promptly after each purchase of Securities by the
Fund, for any of its Series, the Fund shall deliver to the
Custodian a Certificate, or with respect to a purchase of
-9-
<PAGE>
Money Market Securities, a Certificate, Written Instructions
or Oral Instructions, specifying with respect to each such
purchase: (a) the Series to which the purchased Securities
are to be specifically allocated, (b) the name of the issuer
and the title of the Securities, (c)the number of. shares or
the principal amount purchased and accrued interest, if any,
(d) the date of purchase and settlement, (e) the purchase
price per unit, including accrued interest, if any, (f ) the
total amount payable upon such purchase, including accrued
interest, if any, and (g) the name of the person from whom
or the broker through whom the purchase was. made. The
Custodian shall upon receipt of Securities purchased by or
for the Fund pay out of the moneys held for the account of
the Series to which the purchased Securities are to be
specifically allocated the total amount payable to the
person from whom or the broker through whom the purchase was
made, provided that the same conforms to the total amount
payable as set forth in such Certificate, Written Instruct-
ions, or Oral Instructions.
2. Promptly after each sale of Securities by the
Fund, the Fund shall deliver to the Custodian a Certificate,
or with respect to a sale of Money Market Securities, a
Certificate, Written Instructions or Oral Instructions,
specifying with respect to each sale: (a) the Series to
which such Securities were specifically allocated, (b) the
name of the issuer and the title of the Security,(c) the
principal amount sold, and accrued interest if any,(f) the
total amount payable to the Fund upon such sale, including
accrued interest, if any, and (g) the name of the, broker
through whom or the person to whom the sale was made. The
Custodian shall deliver the Securities upon receipt of the
total amount payable to the Fund upon such sale, provided
that the same conforms to the total amount payable as set
forth in such Certificate, Written Instructions or Oral
-10-
<PAGE>
Instructions. Subject to the foregoing, the Custodian may
accept payment in such form as shall be satisfactory to it,
and may deliver Securities and arrange for payment in
accordance with the customs prevailing among dealers in
Securities.
ARTICLE V
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
-------------------------------------
1. The Fund shall furnish to. the Custodian a copy
of the resolution or resolutions of the Board of Trustees,
certified by the Secretary or any Assistant Secretary,
either (i) setting forth with respect to the Series speci-
fied therein the date of the declaration of a dividend or
distribution, the date of payment thereof, the record date
as of which shareholders entitled to payment shall be deter-
mined, the amount payable per Share of such Series to the
shareholders of record as of that date and-.the total amount
payable to the Transfer Agent of the Fund on the payment
date, or (ii) authorizing With respect to the Seriee speci-
fied therein the declaration of dividends and distributions
on a daily basis' and authorizing the Custodian to rely on
Oral Instructions, Written Instructions, or a Certificate
setting forth the date of the declaration of such dividend
or distribution, the date of payment thereof, the record
date as of which shareholders entitled to payment shall, be
determined, the amount payable per Share of such Series to
the shareholders of record as of that date and the total
amount payable to the Transfer Agent on the payment date.
2. Upon the payment date specified in such resolu-
tion, Oral Instructions, Written Instructions, or Certifi-
cate, as the case may be, the Custodian shall pay out of the
moneys held for the account of the Fund the total amount
payable to the Transfer Agent of the Fund.
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<PAGE>
ARTICLE VI
SALE AND_REDEMPTION OF SHARES OF BENEFICIAL INTEREST
----------------------------------------------------
OF THE FUND
-----------
1. Whenever the Fund shall sell any Shares of benefi-
cial interest of any Series, it shall deliver to the
Custodian a Certificate duly specifying:
(a) The Series, number of Shares sold, trade
date, and price; and
(b) The amount of money to be received by the
Custodian for the sale of such Shares and specifically allo-
cated to the separate account in the name of the Fund for
such Series.
2. Upon receipt of such money from the Transfer
Agent, the Custodian shall credit such money to the separate
account in the name of the Fund for the Series for which
such money was received.
3. Upon issuance of any Shares in accordance with the
foregoing provisions of this Article, the Custodian shall
pay, out of the money held in the separate account in the
name of the Fund for the Series of Shares issued, all
original issue or other taxes required to be paid by the
Fund in connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.
4. Whenever the Fund shall hereafter redeem any
Shares it shall furnish to the Custodian a Certificate
specifying:
(a) The Series and number of Shares redeemed; and
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<PAGE>
(b) The amount to be paid for the Shares of such
Series redeemed.
5. Upon receipt from the Transfer Agent of an advice
setting forth the Series and number of Shares received by
the Transfer Agent for redemption and stating that such
Shares are valid and in good form for redemption, the Custo-
dian shall make payment to the Transfer Agent out of the
moneys held in the separate account in the name of the
Series of the Fund for such Series of the total amount
specified in the Certificate issued pursuant to the fore-
going paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the
redemption of any shares of the beneficial interest of the
Fund, whenever shares of the beneficial interest of the Fund
are redeemed pursuant to any check redemption privilege
which may from time to time be offered by the Fund, the
Custodian, unless otherwise instructed by a Certificate,
shall, upon receipt of an advice from the Fund or its agent
setting forth that the redemption is in good form for
redemption in accordance with the check redemption proce-
dure, honor the check presented as part of such check
redemption privilege out of the money held in the account of
the Fund for such purposes.
ARTICLE VII
OVERDRAFTS OR INDEBTEDNESS
--------------------------
1. If the Custodian should in its sole discretion
advance funds on behalf of any series of the Fund for a
Series which results in an overdraft because the moneys held
by the Custodian in the separate account in the name of the
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<PAGE>
Fund for such Series shall be insufficient to pay the total
amount payable upon purchase of Securities to be specifi-
cally allocated to such Series as set forth in a Certifi-
cate, Written Instructions or Oral Instructions issued
pursuant to Article IV, or which results in an overdraft in
the account for such Series for some other reason, or if the
Fund is for any other reason indebted to the Custodian with
respect to a Series, (other than a borrowing for investment
or for temporary or emergency purposes using Securities as
collateral pursuant to a separate agreement and subject to
the provisions of paragraph 2 of this Article) such over-
draft or indebtedness shall be deemed to be a loan made by
the Custodian to the Fund for such Series payable on demand
and shall bear interest from the date incurred at a rate per
annum (based on a 360-day year foe the actual number of days
involved) equal to 1/2% over Custodian's prime commercial
lending rate in effect from time to time, such rate to be
adjusted on the effective date of any change in such prime
commercial lending rate but in no event to be less than 6%
per annum. In addition thereto the Fund hereby agrees that
the Custodian shall have a continuing lien and security
interest in and to any property specifically allocated to
such Series at any time held by it for the benefit of the
Series deemed to have made such loan or in which the Series
deemed to have made such loan may have an interest which is
then in the Custodian's possession or control or in possess-
ion or control of any third party acting in the Custodian's
behalf. The Fund authorizes the Custodian, in its sole
discretion, at any time to charge any such overdraft or
indebtedness together with interest due thereon against any
balance of account standing to the Fund's credit on the
Custodian's books and specifically allocated to such Series.
-14-
<PAGE>
2. The Fund will cause to be delivered to the
Custodian by any bank (including the Custodian) from which
anyseries borrows money for temporary or emergency purposes
using Securities as collateral for such borrowings, a notice
or undertaking in the form currently employed by any such
bank setting forth the amount which such bank will loan to
the Fund against delivery of a stated amount of collateral.
The Fund shall promptly deliver to the Custodian a Certifi-
cate specifying with respect to each such borrowing. (a)
the Series to which such borrowing relates, (b) the name of
the bank, (c) the amount and terms of the borrowing, which
may be set forth by incorporating by reference an attached
promissory note, duly endorsed by the Fund, or other loan
agreement, (d) the time and date, if known, on which the
loan is to be entered into (the "borrowing date"), (e) the
date on which the loan becomes due and payable, (f) the
total amount payable to the Fund on the borrowing date, (g)
the market value of Securities specifically allocated to
such Series to be delivered as collateral for such loan,
including the name of the issuer, the title and the number
of shares or the principal amount of any particular Securi-
ties, (h) whether the Custodian is to deliver such collate-
ral through the Depository, and (i) a statement that such
loan for temporary or emergency purposes is in conformance
with the Investment Company Act of 1940 and the Fund's cur-
rent prospectus. The Custodian shall deliver on the borrow-
ing date such specified collateral and the executed promis-
sory note, if any, against delivery by the lending bank of
the total amount of the loan payable, provided that the same
conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lend-
ing bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the
lending bank by virtue of any promissory note or loan agree-
ment. The Custodian shall deliver in the manner directed by
-15-
<PAGE>
the Fund from time to time such Securities as additional
collateral as may be specified in a Certificate to colla-
teralize further any transaction described in this para-
graph. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian,
and the Custodian shall receive from time to time such
returns of collateral as may be tendered to it. In the
event the Custodian fails to -specify in a Certificate the
name of the issuer, the title and number of Shares or the
principal amount of any particular Securities to be deliver-
ed as collateral by the Custodian, the Custodian shall not
be under any obligation to deliver any Securities Collateral
returned to the Custodian shall be held hereunder as it was
prior to being used as collateral.
ARTICLE VIII
LOAN OF PORTFOLIO SECURITIES OF THE FUND
----------------------------------------
1. If the Fund is permitted by the terms of its
Declaration of Trust and its most recent and currently
effective prospectus to lend portfolio Securities speci-
fically allocated to a Series, within 24 hours after each
loan of portfolio Securities the Fund shall deliver or cause
to be delivered to the Custodian a Certificate specifying
with respect to each such loan: (a) the name of the issuer
and the title of the Securities, (b) the number of shares or
the principal amount loaned, (e) the date of loan and
delivery, (d) the total amount to be delivered to the Custo-
dian against the loan of the Securities, including the
amount of cash collateral and the premium, if any, separate-
ly identified, (e) the name of the broker, dealer, or finan-
cial institution to which the loan was made, and (f) the
-16-
<PAGE>
name of the Series to which the loaned Securities are speci-
fically allocated. The Custodian shall deliver the Securi-
ties thus designated to the broker, dealer or financial
institution to which the loan was made upon receipt of the
total amount designated as to be delivered against the loan
of Securities. The Custodian may accept payment in connect-
ion with a delivery otherwise than through the Book Entry
System or Depository only in the form of a certified or bank
cashier's check payable to the order of the Fund or the
Custodian drawn on. New York Clearing House funds and may
deliver Securities in accordance with the customs prevailing
among dealers in securities.
2. Promptly after each termination of the loan of
Securities by the Fund, the Fund shall deliver or cause to
be delivered to the Custodian a Certificate specifying with
respect to each such loan termination and return of securi-
ties: (a) the name of the issuer and the title of the Secu-
rities to be returned, (b) the number of shares or the prin-
cipal amount to be returned, (c) the date of termination,
(d) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any
offsetting credits as described in said. Certificate), (e)
the name of the broker, dealer, or financial institution
from which the Securities will be returned, and (f) the name
of the Series to which the loaned Securities are specifi-
cally allocated. The Custodian shall receive all Securities
returned. from the broker, dealer, or financial institution
to which such Securities were loaned and upon receipt there-
of shall pay, out of the moneys held for the account of the
Fund, the total amount payable upon such return of Securi-
ties as set forth in the Certificate.
-17-
<PAGE>
ARTICLE X
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the Custo-
dian nor its nominee shall be liable for any loss or damage
including counsel fees, resulting from its action or omis-
sion to act or otherwise, except for any such loss or damage
arising out of its own negligence or willful misconduct.
The Custodian may, with respect to questions of law, apply
for and obtain the advice and opinion of counsel to the Fund
or of its own counsel, at the expense of the Fund, and shall
be fully protected with respect to anything it does or fails
to do in good faith in conf ormity with such advice or
opinion. The Custodian shall be liable to the Fund for any
loss or damage resulting from the use of the Book-Entry
System or any Depository arising by reason of any negli-
gence, misfeasance or misconduct on the part of the Custo-
dian or any of its employees or agents.
2. Without limiting the generality of the foregoing,
the Custodian shall be under no obligation to inquire into,
and shall not be liable for:
(a) The validity of the issue of any Securities
purchased by or for the Fund, the legality of the purchase
thereof or the propriety of the amount paid therefor;
(b) The legality of the sale of any Securities by
or for the Fund, or the propriety of the amount for which
the same are sold;
(a) The legality of the issue or sale of any
shares of the Fund, or the sufficiency of the amount to be
received therefor;
-18-
<PAGE>
(d) The legality of the redemption of any.-shares
of the Fund, or the propriety of the amount to be paid
therefor;
(e) The legality of the declaration or.payment of
any dividend by the Fund;
(f) The legality of any borrowing by the Fund
using Securities as collateral; or
(g) The legality of any loan of portfolio Securi-
ties pursuant to Article VIII of this Agreement, nor shall
the Custodian be under any duty or obligation to see to it
that any collateral delivered to it by a broker, dealer, or
financial institution or held by it at any time as a result
of such loan of portfolio Securities of the Fund is adequate
collateral for the Fund against any loss it night sustain as
a result of such loan. The Custodian specifically, but not
by way of limitation, shall not be under any duty or obliga-
tion periodically to check or notify the Fund that the
amount of such collateral held by it for the Fund id suffi-
cient collateral for the Fund, but such duty or obligation
shall be the sole responsibility of the Fund. In addition,
the Custodian shall be under no duty or obligation to see
that any broker, dealer or of financial institution to which
portfolio Securities of the Fund are lent pursuant to
Article VIII of this Agreement makes, payment to it of any
dividends or interest which are payable to or for the
account of the Fund during the period of such loan or at the
termination of such loan, provided, however, that the Custo-
dian shall promptly notify the Fund in the event that such
dividends or interest are not paid and received when due.
3. The Custodian shall not be liable for, or consid-
ered to be the Custodian of, any money, whether or not rep-
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<PAGE>
resented by any check, draft, or other instrument for the
payment of money, received by It on behalf of the Fund
until the Custodian actually receives and collects such
money directly or by the final crediting of the account
representing the Fund's interest at the Book-Entry System or
the Depository.
4. The Custodian shall not be under any duty, or
obligation to take action to effect collection of any amount
due to the Fund from the Transfer Agent of the Fund nor to
take any action to effect payment or distribution by the
Transfer Agent of the Fund of any amount paid by the
Custodian to the Transfer Agent of the Fund in accordance
with this Agreement.
5. The Custodian shall. not be under any duty or
obligation to take action to effect collection of any
amount, if the Securities upon which such amount is payable
are in default, or if payment is refused after due demand or
presentation, unless and until (I) it shall be directed to
take such action by a Certificate and (II) it shall be
assured to its satisfaction of reimbursement of its costs
and expenses in connection with any such action.
6. The Custodian may appoint one or more banking in
stitutions as Depository or Depositories or as Sub-Custodian
or Sub-Custodians, including, but not limited to, banking
institutions located in foreign countries, of Securities and
moneys at any time owned by the Fund, upon terms and con-
ditions approved in a Certificate.
7. The Custodian shall not be under any duty or obli-
gation to ascertain whether any Securities at any time de-
livered to or held by it for the account of the Fund and
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<PAGE>
specifically allocated to a Series are such as properly may
be held by the Fund and allocated to such Series under the
provisions of its Declaration of Trust.
8. The Custodian shall be entitled to receive and the
Fund agrees to pay to the Custodian with respect to each
Series such compensation as may be agreed upon from time to
time between the Custodian and the Fund. The Custodian may
charge such compensation and any expenses incurred by the
Custodian in the performance of its duties with respect to a
Series pursuant to such agreement against any moneys speci-
fically allocated to such Series. Unless and until the Fund
instructs the Custodian by a Certificate to apportion any
loss, damage, liability or expenses among the Series in a
different manner, the Custodian shall also be entitled to
charge against any money held by it for the account of a
Series such Series' pro rata share (based on the relation-
ship of such Series' net-asset value at the time of the
change to the aggregate net asset value of all Series at
that time) the amount of any loss, damage, liability or
expense (including counsel fees) for which it shall be
entitled to reimbursement under the provisions of this
agreement. The expenses which the Custodian may charge
against the account of a Series include, but are not limited
to the expenss of Sub-Custodians and foreign branches of
the Custodian incurred in setting outside of New York City
transactions involving the purchase and sale of Securities
of such Series.
9. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received
by the Custodian and reasonably believed by the Custodian to
be genuine and to be a Certificate. Tne Custodian shall be
entitled to rely upon any Oral Instructions and any Written
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<PAGE>
Instructions actually received by the Custodian pursuant to
Articles IV and V hereof and reasonably believed by the
Custodian to be genuine and to be given by an Authorized
Person. The Fund agrees to forward to the Custodian a
Certificate or facsimile thereof confirming such Oral
Instructions in such manner so that such Certificate or
facsimile thereof is received by the Custodian, whether by
hand delivery, telecopier or other similar devices, or
otherwise by the close of business on the same day that such
Oral instructions or Written Instructions are given to the
Custodian. The Fund agrees that the fact that such confirm-
ing Certificate or facsimile thereof is not received by the
Custodian shall in no way affect the validity or enforce-
ability of the transactions, hereby authorized by the Fund.
The Fund agrees that the Custodian shall incur no liability
to the Fund in acting upon Oral Instructions or Written
Instructions given to the Custodian hereunder concerning
such transactions provided such instructions reasonably
appear to have been received from an Authorized Person.
10. The Books and records of the Custodian shall be
open to inspection and audit at reasonable times by Officers
and auditors employed by the Fund.
11. The Custodian shall provide the Fund with any
report obtained by the Custodian on the system of internal
accounting control of the Book-Entry System and the Deposi-
tory and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from
time to time.
12. The Fund agrees to indemnify the Custodian against
and save the Custodian harmless from all liability, claims,
losses and demands whatsoever, including attorney's fees,
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<PAGE>
howsoever arising or incurred because of or in connection
with the Custodian's payment of non-payment of a check
pursuant to paragraph 6 of Article VI as part of any check
redemption privilege program of the Fund, except for any
such liability, claim, loss and demand arising put of the
Custodian's own negligence or willful misconduct.
13. The Custodian shall have no duties or responsibi-
lities whatsoever except such duties and responsibilities as
are specifically set forth in this Agreement, and no cove-
nant or obligation shall be implied in this Agreement
against the Custodian.
ARTICLE X
TERMINATION
-----------
1. Either of the parties hereto may terminate this
Agreement by giving to the other party a notice in writing
specifying the date of such termination, which shall be not
less than ninety (90)days after the date of giving of such
notice. In the event such notice is given by the Fund, It
shall be accompanied by a copy of a resolution of the Board
of Trustees of the Fund, certified by the Secretary or any
Assistant Secretary, electing to terminate this Agreement
and designating a successor custodian or custodians, each of
which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided profits.
In the event such notice is given by the Custodian, the Fund
shall, on or before the termination date, deliver to the
Custodian a copy of a resolution of its Board of Trustees,
certified by the Secretary of any Assistant Secretary,
designating a successor custodian or custodians. In the
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<PAGE>
absence of such designation by the Fund, the Custodian may
designate a successor custodian which shall be a bank or
trust company having not less than $2,000,000 aggregate
capital, surplus, and undivided profits. Upon the date set
forth in such notice this Agreement shall terminate, and the
Custodian shall upon receipt of a notice of acceptance by
the successor custodian on that date deliver directly to the
successor custodian all Securities and moneys then owned by
the Fund and held by it as Custodian, after deducting all
fees, expenses and other amounts for the payment of
reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the
Fund or the Custodian in accordance with the preceding para-
graph, the Fund shall, upon the date specified in the notice
of termination of this Agreement and upon the delivery by
the Custodian to the Fund of all Securities (other than
Securities held in the Book-Entry System which cannot be
delivered to the Fund) and moneys then owned by the Fund be
deemed to be its own custodian and the Custodian shall
thereby be relieved of all duties and responsibilities
pursuant to this Agreement, other than the duty with respect
to Securities held in the Book-Entry Systems which cannot be
delivered to the Fund to hold such Securities hereunder in
accordance with this Agreement.
ARTICLE XI
MISCELLANEOUS
-------------
1. Annexed hereto as Appendix A is a Certificate
signed by two of the present Officers of the Fund, setting
forth the names of the signatures of the present Authorized
-24-
<PAGE>
Persons. The Fund agrees to furnish to the Custodian a new
Certificate in similar form in the event that any such
present Authorized Person ceases to be an Authorized Person
or in the event that other or additional Authorized Persons
are elected or appointed. Until such new Certificate shall
be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon Oral
Instructions, Written Instructions or signatures of the
present Authorized Persons as set forth in the last deliver-
ed Certificate.
2. Annexed hereto as Appendix B is a Certificate
signed by two of the present Officers of the Fund,
setting forth the names and the signatures of the present
Officers of the Fund. The Fund agrees to furnish to the
Custodian a new Certificate in similar form in the event
that any such present Officer ceases to be an Officer of the
Fund, or in the event that other or additional Officers of
the Fund, are elected or appointed. Until such new Certifi-
cate shall be received, the Custodian shall be fully
protected in acting under the provisions of this. Agreement
upon the signatures of the Officers as set forth in the last
delivered Certificate.
3. Any notice or other instrument in writing, autho-
rized or required by this Agreement to be given to the
Custodian, shall be sufficiently given if addressed to the
Custodian and mailed or delivered to it at its offices at 90
Washington Street, New York, New York 10015, or at such
other place as the Custodian may from time to time designate
in writing.
4. Any notice or other instrument in writing, author-
ized or required by this Agreement to be given to the Fund
shall be sufficiently given if addressed to the Fund and
-25-
<PAGE>
mailed or delivered to it at its office 165 Broadway, New
York, New York 10080, or at such other place as the Fund may
from time to time designate in writing.
5. This Agreement. may not be. amended or modified in
any manner except by a written agreement executed by both
parties with the same formality as this Agreement, and
authorized and approved by a resolution of the Board of
Trustees of the Fund.
6. This Agreement shall extend to and shall be bind-
ing upon the parties hereto, and their respective successors
and assigns; provided, however, that this Agreement shall
not be assignable by the Fund without the written consent of
the Custodian or by the Custodian without the written
consent of the Fund authorized or approved by a resolution
of its Board of Trustees. A merger or consolidation of the
Custodian will not be an assignment.
7. This Agreement shall be construed in accordance
with the laws of the State of New York.
8. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an
original, but such counterparts shall, together, constitute
only one instrument.
9. The Declaration of Trust establishing Merrill
Lynch Retirement Series Trust, dated October 27, 1981, a
copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of
the Commonwealth of Massachusetts, provides that the name
"Merrill Lynch Retirement Series Trust" refers to the
Trustees under the Declaration collectively as Trustees, but
-26 -
<PAGE>
not as individuals or personally; and no Trustee,
shareholder, officer, employee or agent or Merrill Lynch
Retirement Series Trust shall be held to any personal
liability, nor shall resort be had to their private property
for the satisfaction of any obligation or claim or otherise
in connection with the affairs of said Merrill Lynch
Retirement Series Trust, but the Trust Estate only shall be
liable.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective Officers,
thereunto duly authorized, as of the day and year first
above written.
MERRILL LYNCH RETIREMENT
SERIES TRUST
By:/s/ Arthur Zeikel
Attest: /s/ Robert Harris
THE BANK OF NEW YORK
By: /s/
Attest:/s/
-27-
<PAGE>
APPENDIX A
I, ,President and I, Robert Harris,
Secretary of Merrill Lynch Retirement Series Trust, a
Massachusetts business trust (the "Fund"), do hereby cer-
tify that:
The following individuals have been duly authorized by
the Board of Trustees of the Fund in conformity with the
Fund's Declaration of Trust and By-Laws to give Oral In-
structions and Written Instructions on behalf of the Fund,
and the signatures set forth opposite their respective
names are their true and correct signatures:
Name Signature
---- ---------
-------------------------- -----------------------------
<PAGE>
APPENDIX B
I, ,President and I, Robert Harris,
Secretary of Merrill Lynch Retirement Series Trust, a
Massachusetts business trust (the "Fund"), do hereby cer-
tify that:
The following individuals serve in the following posi-
tions with the Fund and each individual has been duly elected
or appointed by the Board of Trustees of the Fund to each
such position and qualified therefor in conformity with the
Fund's Declaration of Trust and By-Laws, and the signatures
set forth opposite their respective names are their true and
correct signatures:
Name Position Signature
---- -------- ---------
--------------------- -------------------- -------------------
<PAGE>
Ex-99.9
TRANSFER AGENCY, SHAREHOLDER SERVICING
AGENCY, AND PROXY AGENCY AGREEMENT
THIS AGREEMENT made as of the lot day of September, 1985 by
and between Merrill Lynch Retirement Series Trust (the "Fund"), an
unincorporated business trust organized under the laws of the
Commonwealth of Massachusetts, and Merrill Lynch Financial Data
Service, Inc., a corporation organized and existing under the laws
of New Jersey (the "Transfer Agent").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Fund wishes to appoint the Transfer Agent to be
its transfer agent, shareholder servicing agent and proxy agent
upon, and subject to, the terms and provisions of this Agreement,
and the Transfer Agent is desirous of accepting such appointment
upon, and subject to, such terms and provisions;
NOW THEREFORE, in consideration of the mutual covenants
contained in this Agreement, the Fund and the Transfer Agent agree
as follows:
1. Appointment As Transfer Agent, Shareholder Servicing
----------------------------------------------------
Agent and Proxy Agent for the Fund.
----------------------------------
1.1. The Fund hereby appoints the Transfer Agent to act
as its transfer agent, shareholder servicing agent and proxy agent
upon, and subject to, the terms and provisions of this Agreement.
<PAGE>
1.2. The Transfer Agent hereby accepts the appointment
as transfer agent, shareholder servicing agent, and proxy agent
for the Fund, and agrees to act as such upon, and subject to, the
terms and provisions of this Agreement. The Transfer Agent hereby
agrees to hire, purchaser develop and maintain such dedicated
personnel, facilities, equipment, software, resources and
capabilities as may be reasonably determined by the Fund to be
necessary for the satisfactory performance of the duties and
responsibilities of the Transfer Agent under this Agreement.
2. Definitions
-----------
In this Agreement:
2.1. The term 'Act' means the Investment Company Act
of 1940, as amended from time to times and any applicable rule,
regulation or order thereunder.
2.2. The term "Account" means any account of a Share-
holder established in connection with the self directed retirement
plans for which Merrill Lynch, Pierce, Fenner & Smith Incorporated
acts as a passive Custodian ("Self-Directed Plans").
2.3. The term "Custodian" means the bank duly appointed
to act as Custodian for the, assets of the Fund and the term
'Custodian Agreement' means any agreement in effect between the
Fund and the Custodian.
2.4. The term "officer's Instruction" means an instruc-
tion given in writing on behalf of the Fund to the Transfer Agent
by the President, any Vice President, the Secretary# the Treasurer
or the Controller of the Fund.
-2-
<PAGE>
2.5. The term *Prospectus" means the prospectus of the
Fund from time to time in effect.
2.6. The term "Shares" means the shares of the Fund.
2.7. The term Shareholder means the holder of record
of Shares, irrespective of the category of Account maintained in
respect of such Shares.
2.8. The term "Statement of Additional Information"
means the statement of additional information of the Fund from
time to time in effect.
3. Functions of Transfer Agent, Shareholder Servicing Agent
--------------------------------------------------------
and Proxy Agent,
---------------
3.1. Subject to the succeeding provisions of this
Agreement, the Transfer Agent hereby agrees to perform the
following functions on behalf of the Fund:
3.1.1. Issuing, transferring and redeeming shares;
3.1.2. Opening, maintaining, servicing and closing Ac-
counts.
3.1.3. Acting as agent of the Fund and/or Shareholders
in connectionn with Accounts, upon the terms and subject to the
conditions contained in tbe Prospectus and the Statement of
Additional Information.
3.1.4. Causing the reinvestment in Accounts of dividends
declared upon Shares.
3.1.5. Processing liquidations.
3.1.6. Furnishing to Shareholders appropriate income tax
information and income tax forms duly completed.
-3-
<PAGE>
3.1.7. Mailing to Shareholders annual, semi-annual, and
quarterly reports prepared by or on behalf of the Fund, and mail-
ing new Prospectuses upon their issue to Shareholders whose Shares
are held in Accounts.
3.1.8. Furnishing to the Fund such periodic statements
of transactions effected by the Transfer Agent, reconciliations,
balances and summaries as set forth in Exhibit A and as shall be
necessary in connection with the Self-Directed Plans program.
3.1.9. Maintaining such books and records relating to
transactions effected by the Transfer Agent as are required by the
Act or by any other applicable provisions of law to be maintained
by the Fund or the Transfer Agent with respect to such trans-
actions, and preserving, or causing to be preserved, any such
books and records for such periods as may be required by any law,
rule or regulation.
3.2. The Transfer Agent agrees to act as proxy agent in
connection with the holding of annual or special meetings of
Shareholders, such services to include, but not limited to,
mailing to Shareholders notices, proxies and proxy statements in
connection with the holding of such meetings, receiving and
tabulating votes cast by proxy, communicating to the Fund the
results of such tabulation accompanied by appropriate
certificatess and preparing and furnishing to the Fund certified
lists of Shareholders, all of the foregoing in such form and
containing such information as may be required by the Fund to
comply with any provisions of law applicable to such meetings.
-4-
<PAGE>
3.3. The Transfer Agent agrees to deal with, and answer,
all correspondence from or on behalf of Shareholders relating to
the functions of the Transfer Agent under this Agreement.
3.4. The Transfer Agent agrees to furnish to the Fund
such information and at such intervals as is necessary for the
Fund to comply with the registration and/or the reporting
requirements of the Securities and Exchange Commission, Blue Sky
authorities or other regulatory agencies.
3.5. The Transfer Agent agrees to provide to the Fund
upon request such information as may reasonably be required to
enable the Fund to reconcile the number of outstanding Shares
between the Transfer Agent's records and the account books of the
Fund.
3.6 The parties hereto agree that, without prejudice to
any other provisions of this section 3, the functions of the
Transfer Agent under this section 3 will be performed in ac-
cordance with the Activities List set out in Exhibit A to this
Agreement.
3.7 Notwithstanding anything in the foregoing
provisions of this section 3, the Transfer Agent agrees to perform
its functions hereunder subject to such modification (whether in
respect of particular cases or in any particular class of cases)
as may from time to time be contained in an Officer's Instruction.
4. Compensation of Transfer Agent,
------------------------------
The charges for services described in this
Agreement, including "out-of-pocket" expenses will be established
-5-
<PAGE>
by a Fee Agreement between the Fund and the Transfer Agent under
separate cover.
5. Right to Inspect Records, etc., of Transfer Agent,
-------------------------------------------------
The Transfer Agent agrees that it will make available
for examination, upon request by any officer of the Fund, its
accountant or its investment adviser, to any officer, employee,
or agent of the Fund, of its accountant or of its investment
adviser any books and records (whether or not books and records to
be preserved as required by law) which relate to any transaction
or function to be performed by the Transfer Agent under or
pursuant to this Agreement and shall permit any such person to
transcribe or to duplicate on equipment provided by the Transfer
Agent any such book or record, in whole or in part.
6. Confidential Relationships of the Transfer agent, etc.
-----------------------------------------------------
The Transfer Agent agrees, on behalf of itself and its
officers, employees, vendors and agents, that each of the
foregoing shall treat the identity and all transactions of
Shareholders, and all other transactions contemplated by this
Agreement, and all information germane thereto, as confidential
and not to be disclosed to any person (other than the Shareholder
concerned,, or the Fund, or as may be disclosed in the examination
of any books or records by any person lawfully entitled to examine
the same) except as may be authorized by an officer's Instruction.
The Transer Agent agrees to adopt procedures for and written
instructions to its officers, employees, vendors, and agents
-6-
<PAGE>
reasonably designed to implement the agreement established in this
section 6.
7. Standard of Care; loss caused by imposters,
------------------------------------------
The Transfer Agent shall use its best efforts to insure
the accuracy of all services performed under this Agreement, but
assumes no responsibility for, and shall not be liable for, any
loss or damage to any party unless the negligence, bad faith or
willful misconduct of the Transfer Agent is a proximate cause of
such loss or damage; provided, however, that losses due to the
failure of the Transfer Agent to detect payments made by it under
this Agreement to imposters shall be borne by the Transfer Agent.
8. Termination of Appointment.
--------------------------
The appointment of the Transfer Agent provided by this
Agreement shall be in effect for one year from the date hereof and
thereafter on a year-to-year basis, each such term to expire on
the anniversary of the date hereof. Any party may terminate such
appointment by delivering a written notice to that effect at the
princial place of business of the other party at least 60 days
prior to the expiration of the then current term of the Agreement.
In the event such appointment shall be terminated, for whatever
reason, the Transfer Agent will provide the Fund without further
charge with:
8.1. A complete and current computer reproducible
record, within 7 days of the date of termination, of that file
data which may reasonably be required to establish transfer
agency, shareholder servicing agency and proxy agency services
elsewhere.
-7-
<PAGE>
8.2. All hard copy records in file containers or other
acceptable container for shipping to a new location.
8.3. A referral service, for a reasonable period of
time, indicating to Shareholders or potential Shareholders the
next appropriate address for inquiries or Shareholder information.
8.4. Any other services, including correction of errors
or the costs of such correction, as may be normal and necessary to
effect the transfer of Shareholder information in an orderly and
timely manner, should the occasion arise.
Notwithstanding anything in the foregoing provisions of
this section 8, if it appears impracticable in the circumstances
to effect an orderly delivery of-the necessary and appropriate
records of the Transfer Agent to a successor transfer agent,
shareholder servicing agent, and/or proxy acent for the Fund
within the time specified in the notice of termination as a
foresaid, the Transfer Agent agrees that its appointment shall
remain in force and effect for such reasonable period as may be
required to complete necessary arrangements with a successor
transfer agent, shareholder servicing agent, and/or proxy agent.
9. Amendment, etc, of Agreement,
----------------------------
Except to the extent that the performance by the
Transfer Agent of its functions under this Agreement may from time
to time be modified by an Officer's Instruction, this Agreement
may be amended or modified only by a further written agreement
between the parties.
-8-
<PAGE>
10. No Personal Liability of Trustegs, etc.
---------------------------------------
The Transfer Agents acknowledges that the Declaration of
Trust establishing the Fund, a copy of which, together with all
amendments thereto (the "Declaration") is on file in the office
of the Secretary of the Commonwealtb of Massachusetts, provides
that the name of the Fund refers to the trustees under the
Declaration collectively as trustees, but not as individuals or
personally; and no trustee, Shareholder, officer, employee or
agent of the Fund shall be held to any personal liability, nor
shall resort be bad to their private property for the satisfaction
of any obligation or claim or otherwise in connection with the
affairs of said Fund but the Trust Estate only shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written by
their respective officers hereunto duly authorized.
MERRILL LYNCH RETIREMENT SERIES
TRUST
By /s/ Gerald M. Richard
---------------------
Treasurer
ATTEST:
/s/ Mark B. Goldfus
-------------------
Secretary
MERRILL LYNCH FINANCIAL DATA
SERVICE, INC.
By /s/ Robert C. Doan
------------------
ATTEST:
/s/ Herbert Hirsche Jr.
-----------------------
Secretary
-9-
<PAGE>
Exhibit A
Activities List
I Services Further Described
A. Shareholder and Accounting Services.
1. General Scope.
The Transfer Agent will provide a comprehensive accounting
and shareholder service generally consistent with that
provided to other investment companies. The Transfer Agent
acknowledges that the services necessitated for the Fund may
be significantly more demanding from a time and precision
viewpoint than other types of investment companies with
respect to such features as:
a. Daily dividend accounting.
b. Wire receipt and payout of Shareholders' funds.
c. Immediate determination of Federal Funds availability on
subscriptions received.
d. Rapid and efficient transfers of investment monies
between the Fund's various accounts (e.g., subscription/
custody/ redemption).
e. Effective and controlled processing of redemptions.
-10-
<PAGE>
2. Computer Accounting and Record Keeping.
a. The Transfer Agent will perform daily maintenance
and routine file update prior to investment of the daily
dividend or establishing new Accounts.
b. The Transfer Agent will perform a dividend reinvestment
run daily in order to credit all existing Accounts with
dividends earned that day.
c. The Transfer Agency will take reasonable precautions for
safeguarding all Accounts during computer runs.
d. The Transfer Agent will provide continuous proof of the
outstanding Shares on a daily basis and on-line availability
of all file data.
3. Establishing and Servicing accounts.
The Transfer Agent will accept instructions from
the Fund opening a new account and will:
a. Audit and verify payment items for proper registration and
other particulars as prescribed by the Prospectus or
Statement of Additional Information.
b. Verify that there is no other existing Account with the
same registration.
c. Assign Account numbers.
d. Produce microfilm record of all incoming checks
and source documentation of filmstrips so as to be
retrievable and reproducible on command.
e. Process address changes and acknowledge such
changes to previous address of record.
-11-
<PAGE>
f. Answer inquiries from Shareholders.
g. Process on a daily basis routine transactions such
as:
i. Change of address.
ii. Miscellaneuous changes.
h. Incorporate in the Shareholder accounting software
and procedures the necessary flags, audits, and
tests to assure that the various provisions and
requirements specified elsewhere in this contract
are satisfied.
B. Transfer Agent Services.
The Transfer Agent will perform all functions normally
required of a transfer agent for an investment company. Such
functions shall include but not necessarily be limited to:
1. Keeping such records in the form and manner as it may deem
advisable consistent with the rules and regulations of
appropriate governmental authorities.
2. Processing transfers as requested, including obtaining'
and reviewing papers and all other documents necessary to
satisfy transfer requirements.
3. Processing initial and subsequent investments from
Shareholders.
4. Processing and record liquidation of Account balances to
satisfy full or partial account redemptions.
5. Accepting the daily dividend income calculated by the
Fund and reinvesting such income to the benefit of the
-12-
<PAGE>
Shareholders in additional full and fractional non-
certificated Shares. The procedure used must prove that the
amount reinvested daily balances to the total net income
accrued to this portfolio and that each Account is credited
daily with the corresponding Shares reinvested. To insure
these objectives are achieved appropriate reports and proofs
are to be generated.
C. Subscription Agent Services.
The Transfer Agent will accept subscriptions as set forth-In
the Prospectus and Statement of Additional Information. In
addition to subscription functions described elsewhere in
this Agreement, the Transfer Agent will:
1. Maintain a subscription account for the Fund. This
account shall be established and operated so as to satisfy
the following criteria:
a. The account shall be established for the benefit of the
Fund at State Street Bank & Trust Company (the "Bank"), which
shall be prepared to receive, efficiently process, and
cashier as promptly as possible all income, cash, checks,
Federal Reserve Drafts and bank wire transfers.
b. The account shall serve as the sole depository for
subscription monies intended for the purchase of Share until
such funds are transferred to the custody account.
c. All withdrawals from the account shall be for the
exclusive purpose of transferring funds into the Fund's
custody account.
-13-
<PAGE>
d. No dividend or redemption or any other payments shall be
made to Shareholders from the subscription account.
2. in connection with managing the subscription account, the
Transfer Agent will exercise all possible care in
satisfying, or causing the Bank to satisfy, operational
requirements in each of the following critical areas:
a. Determining on each business day the availability of
Federal Funds on all items paid in or to be paid in to
the subscription account. The determination of Federal
Funds availability shall be made as early as possible the
same day an item is received and shall be made in
specific accord with the Federal Reserve Schedule
(Federal Reserve Bank of New York). Federal Funds
availability shall be reported to the Fund during the
course of each business day.
b. Adopting such procedures as the Fund's auditors may
reasonably specify to monitor compliance with the the terms
and conditions set forth in Fund's prospectus or Statement of
Additional Information in the determination and timely
transfer of Federal Funds.
D. Dividend Disbursment and Redemption Agent Services.
1. Dividends.
a. Determination of daily dividend amounts shall be as
generally described in Section I.B.5. and as more
specifically as set forth in:
-14-
<PAGE>
i. The Fund's Prospectus and Statement of
Additional Information.
ii. The Transfer Agent's dividend accrual and
update routine.
b. Dividends shall be reinvested daily in additional
non-certificated Shares of the Fund.
c. Additional dividend information shall be provided to
Shareholders upon written request.
2. Redemption Processing
The Transfer Agent will take all necessary steps to insure
that redemptions and repurchase requirements have been met,
including the receipt and examination of signature guarantees
and obtain any needed papers or documents.
a. All redemption requests will be automatically reviewed:
i. To insure there are sufficient Shares
available in the Account.
ii. To insure collection of the applicable
subscription check before using funds for
redemption (other than payment received by the
Transfer Agent from Bank Wire and Federal
Reserve Drafts).
iii. To notify the Fund of all redemption requests
in excess of $1,000,0000.
iv. And signed by an individual other than the
preparer of the checks, to insure that the
checks issued in redemption correspond to the
amounts requested to be redeemed.
-15-
<PAGE>
b. Develop and employ a method for validating receipt of
good subscription funds to comply with section I.D.2.a.ii.
c. No signature guarantees shall be acceptable unless
provided by a domestic bank or by a brokerage firm which is a
member of the New York, American, Midwest,, Pacific or Boston
Stock Exchange.
3. Redemption Account.
The Transfer Agent shall maintain a redemption account for
the Fund. This account shall be established and operated so
as to satisfy the following criteria:
a. The account shall be established at the Bank for the
benefit of the Fund.
b. All withdrawals from the redemption account shall be for
the exclusive purpose of making payments in accordance with
the Fund's prospectus and Statement of Additional Informa-
tion. Monies paid out will be paid out in accordance with
the description set forth therein and elsewhere in this
contract.
c. All deposits into this account shall be from the
Fund's custody account. No deposits of subscription receipts
shall be made directly in the redemption account.
d. The Transfer Agent will advise the Fund at various
mutually established times during each business day as to the
total demand for valid dividends and full or partial Account
liquidations. The notification of demand for payment shall
only include valid demands for payment which are actually in
-16-
<PAGE>
hand, such that the Fund need not fund the redemption account
with an amount in excess of what is actually required to
satisfy current demands for payment. The specific objective
of this procedure is mutually recognized to be the maximum
employment of the Fund's assets through minimization of any
float in the redemption account. The Transfer Agent agrees
to develop with the Fund methods and procedures to accomplish
this objective.
e. Wire redemptions shall be made in Federal Funds.
f. Federal Reserve Draft redemption payments shall only be
made upon specific request.
g. Adopt such reasonable safeguards as may be prescribed by
the Fund's auditors to safeguard redemption assets.
h. Employ all due diligence in servicing redemption requests
as rapidly as possible. Rapid servicing of redemptions are
specifically recognized as a key feature of the Fund.
C. Proxy Agent Services.
The Transfer Agent agrees to act as proxy agent in connection
with the holding of annual or special meetings of
Shareholders, mailing to Shareholders notices, proxies and
proxy statements in connection with the holding of such
meetings, receiving and tabulating votes cast by proxy and
communicating to the Fund the results of such tabulations
accompanied by appropriate certificates, and preparing and
furnishing to the fund certified lists of shareholders as of
such date, and in such form and containing such information
-17-
<PAGE>
as may be required by the Fund to comply with any provisions
of law applicable to such meetings.
II. Reports.
The Transfer Agent will establish maintain and provide
to the Fund the following:
A. Daily Journal of Subscription Receipts, Availabil-
ity and Funds Transfers to Custody.
B. Daily Journal of Redemption Payment Demand.
C. Daily Sales and Transaction Journals containing
the day's detail of all transactions.
D. Daily Closed Account Journal.
E. Daily Dividend Proof (Daily & Monthly).
F. Daily Redemption Blotter.
G. Daily Shares Proof (Daily & Monthly).
H. Daily Master Control Proof.
I. Daily Prospectus Mailing Report.
J. Daily Blue Sky Report (frequency as agreed upon).
K. Daily Quality Control Reports.
L. Large Item Report.
M. weekly Status Report.
N. Research and Correspondence Status Report.
0. Monthly Sales by State and Dividends Reinvested.
P. Monthly Shareholders Master File List.
Q. Monthly Record of Out-of-Pocket Costs Incurred.
-18-
<PAGE>
III. Other Services.
The Transfer Agent will provide the following additional
services within the basic fee structure:
A. Referral of Inquiries.
Refer all Shareholder or governmental inquiry questions
of a policy or non-routine nature to the Fund.
B. Account Officer at The Transfer Agent.
Assign an account officer who will serve as the primary point
of contact between the Fund, its investment adviser, and the
Transfer Agent in its various capacities. The Transfer Agent
will exercise due care in assigning an individual to this
function who is both conversant with standard investment
company practice and of sufficient stature to deal quickly
and efficiently with problems peculiar to placing a new
investment company on line and which may be peculiar to the
cash management variety of investment company.
C. Security.
1. Provide reasonable security against possible
theft and/or use by others of the names, addresses and
proterpties of the Shareholders and the properties of the
Fund.
2. Periodic duplication of all records (computer/microfilm/
bardcopy/copy) at a frequency and in a detail sufficient
to assure full protection of Shareholder record informa-
tion in the event of a disaster to the Transfer Agent's
facilities.
-19-
<PAGE>
D. Other Mailings.
Provide mailing services to all Accounts, including
addressing, enclosing and mailing quarterly reports,
semi-annual reportse annual reports, Prospectuses,
Statements of Additional Infomation, proxy cards, proxy
statements, and notices. Postage will be paid by the
Fund.
-20-
<PAGE>
EX-99.13
CERTIFICATE OF SOLE SHAREHOLDER
Merrill Lynch Asset Management, Inc., the holder of
100,000 shares of beneficial interest, par value $0.10 per
share, of Merrill Lynch Retirement Reserves Money Fund (the
"Money Market Fund"), a series of Merrill Lynch Retirement
Series Trust, a Massachusetts business trust (the "Trust"),
does hereby confirm to the Trust its representation that it
purchased such shares for investment purposes, with no
present intention of redeeming or reselling any portion
thereof, and does further agree that if it redeems any
portion of such shares prior to the amortization of the
Money Market Fund's organizational expenses, the proceeds
thereof will be reduced by the proportionate amount that the
total unamortized balance bears to the number of shares
being redeemed.
MERRILL LYNCH
By /s/
____________________________
Dated: January 25, 1982
<PAGE>
Exhibit 16
Merrill Lynch Retirement Reserves Money Fund of
Merrill Lynch Retirement Series Trust
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
AS OF October 31, 1988
Base Period Return
------------------
Including Excluding
gains and losses gains and losses
---------------- ----------------
Net Income of one share for a
seven-day base period .001625 .001606
Divided by
Net asset value of one share at
beginning of base period $1.00 $1.00
Equals
Base period return (unannualized) .001625 .001606
Annualized Return
-----------------
Base period return (unannualized) .001625 .001606
Divided by 7 .000232 .000229
Multiplied by 365 .08468 .083585
Equals
Annualized return 8.47% 8.36%
Effective or Compounded Yield
-----------------------------
Base period return (unannualized)* .001625 .001606
Divided by 7 .000232 .000229
Add 1, Equals 1.000232 1.000229
Sum raised to 365th power 1.08836
Subtract 1, Equals
Effective or Compounded Yield 8.84
- --------------
* Calculated using base period return (unannualized) excluding gains
and losses.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000356013
<NAME> MERRILL LYNCH RETIREMENT SERIES TRUST
<SERIES>
<NUMBER> 1
<NAME> MERRILL LYNCH RETIREMENT RESERVES MONEY FUND
<S> <C>
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<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 8695148017
<INVESTMENTS-AT-VALUE> 8698834998
<RECEIVABLES> 76376993
<ASSETS-OTHER> 1381036
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<TOTAL-ASSETS> 8776593027
<PAYABLE-FOR-SECURITIES> 40000000
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<OTHER-ITEMS-LIABILITIES> 87686510
<TOTAL-LIABILITIES> 127686510
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8645219536
<SHARES-COMMON-STOCK> 8645219536
<SHARES-COMMON-PRIOR> 7410373160
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
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<ACCUM-APPREC-OR-DEPREC> 3686981
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<INTEREST-INCOME> 479151248
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<EXPENSES-NET> 47131965
<NET-INVESTMENT-INCOME> 432019283
<REALIZED-GAINS-CURRENT> 1637926
<APPREC-INCREASE-CURRENT> 10376159
<NET-CHANGE-FROM-OPS> 444033368
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 432019283
<DISTRIBUTIONS-OF-GAINS> 1637926
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24132766015
<NUMBER-OF-SHARES-REDEEMED> 23331574095
<SHARES-REINVESTED> 433654456
<NET-CHANGE-IN-ASSETS> 1245222535
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 30946227
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 47131965
<AVERAGE-NET-ASSETS> 7983454429
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .05
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<PAGE>
EXHIBIT 99.11
INDEPENDENT AUDITORS' CONSENT
Merrill Lynch Retirement Reserves Money Fund of
Merrill Lynch Retirement Series Trust:
We consent to the use in Post-Effective Amendment No. 16 to Registration
Statement No. 2-74584 of our report dated December 1, 1995 appearing in the
Statement of Additional Information, which is a part of such Registration
Statement, and to the reference to us under the caption "Financial Highlights"
appearing in the Prospectus, which also is a part of such Registration
Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Princeton, New Jersey
February 23, 1996
