MERRILL LYNCH
RETIREMENT
RESERVES
MONEY FUND
Merrill Lynch
Retirement Series Trust
STRATEGIC
Performance
Annual Report
October 31, 1997
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1997
DEAR SHAREHOLDER
For the year ended October 31, 1997, Merrill Lynch Retirement Reserves Money
Fund's net annualized yield was 5.26%.* For the six-month period ended October
31, 1997, the Fund's net annualized yield was 5.21%.* The Fund's 7-day yield as
of October 31, 1997 was 5.24%.
The average portfolio maturity for Merrill Lynch Retirement Reserves Money Fund
at October 31, 1997 was 77 days, compared to 63 days at April 30, 1997.
The Environment
The six-month period ended October 31, 1997 was marked by increasing volatility
in world stock and bond markets. The difficulties began in Southeast Asia.
Following the currency devaluations in several Southeast Asian countries this
summer, the Hong Kong dollar--the value of which is pegged to the US
dollar--came under speculative attack in foreign currency markets. Monetary
authorities in Hong Kong raised interest rates to support the currency, and the
Hong Kong stock market declined sharply. This event raised investor concerns
worldwide regarding the viability of continued global economic growth.
At first, US stock market investors focused on the challenges that would face US
multinational corporations in the wake of the poorer Asian economic prospects.
The sell-off then broadened to other stocks as well, leading to a decline in the
Dow Jones Industrial Average of over 500 points on October 27. Although the
decline proved to be short-lived, investor confidence was not definitively
restored, and stock market volatility continued. Although the US bond market
benefited during periods when investors anticipated slower economic growth, the
release of stronger-than-expected economic statistics led to periods of
declining bond prices. However, the absence of inflationary pressures prevented
a trend toward higher interest rates from developing.
As 1997 draws to a close, investors are likely to continue to focus on the
prospects for the US economy. Although the Federal Reserve Board did not tighten
monetary policy at its November 12 meeting, it remains to be seen whether US
economic growth remains moderate enough and inflationary pressures sufficiently
contained to preclude an increase in short-term interest rates.
The Fund's portfolio composition at the end of the October period and as of our
last report is detailed below:
- --------------------------------------------------------------------------------
10/31/97 4/30/97
- --------------------------------------------------------------------------------
Bank Notes ............................ 9.3% 2.2%
Certificates of Deposit ............... 3.6 2.2
Certificates of Deposit--European ..... 1.3 --
Certificates of Deposit--Yankee ....... 5.2 2.0
Commercial Paper ...................... 38.2 37.0
Corporate Notes ....................... 10.4 9.8
Funding Agreements .................... 0.5 0.5
Master Notes .......................... 1.5 2.0
Repurchase Agreements ................. 10.1 1.0
Time Deposits ......................... -- 8.4
US Government, Agency &
Instrumentality Obligations--
Discount Notes ........................ 1.6 5.9
US Government, Agency &
Instrumentality Obligations--
Non-Discount Notes .................... 20.3 29.5
Liabilities in Excess of Other Assets . (2.0) (0.5)
----- -----
Total ................................. 100.0% 100.0%
===== =====
- --------------------------------------------------------------------------------
In Conclusion
We appreciate your continued interest in Merrill Lynch Retirement Reserves Money
Fund, and we look forward to assisting you with your financial needs in the
months and years ahead.
Sincerely,
/s/ Arthur Zeikel
Arthur Zeikel
President
/s/ Christopher G. Ayoub
Christopher G. Ayoub
Vice President and Portfolio Manager
November 25, 1997
* Based on a constant investment throughout the period, with dividends
compounded daily, and reflecting a net return to the investor after all
expenses.
1
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1997
SCHEDULE OF INVESTMENTS (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
================================================================================
Bank Notes--9.3%
================================================================================
Bank of America, $ 40,000 5.93 % 6/24/98 $ 40,009
N.T. & S.A. 60,000 5.46+ 6/30/98 59,968
- --------------------------------------------------------------------------------
BankBoston, N.A. 69,500 5.69 3/16/98 69,474
- --------------------------------------------------------------------------------
Barclays Bank PLC 70,000 5.65+ 4/16/98 69,984
- --------------------------------------------------------------------------------
First Bank N.A., 20,000 5.665+ 3/18/98 20,007
Minneapolis
- --------------------------------------------------------------------------------
First National Bank 45,000 6.02 6/11/98 45,030
of Chicago
- --------------------------------------------------------------------------------
First Tennessee 20,000 6.10 5/15/98 20,018
Bank N.A., Memphis
- --------------------------------------------------------------------------------
KeyBank N.A. 44,000 5.56+ 5/06/98 43,990
40,000 5.56+ 5/19/98 39,990
77,400 5.54+ 8/20/98 77,355
100,000 5.54+ 8/28/98 99,944
85,000 5.90 9/17/98 85,020
- --------------------------------------------------------------------------------
Morgan Guaranty 65,000 5.615+ 2/19/98 64,989
Trust Company of NY
- --------------------------------------------------------------------------------
Northern Trust Co., 25,000 5.96 6/17/98 25,009
Chicago 14,000 5.95 6/24/98 14,005
- --------------------------------------------------------------------------------
PNC Bank N.A. 150,000 5.60+ 10/01/98 149,907
- --------------------------------------------------------------------------------
Royal Bank of 29,000 5.47+ 6/30/98 28,985
Canada
- --------------------------------------------------------------------------------
SunTrust Bank, 25,000 5.80 7/24/98 24,987
Atlanta
- --------------------------------------------------------------------------------
U.S. National Bank 15,000 5.665+ 4/14/98 14,996
of Oregon
- --------------------------------------------------------------------------------
Total Bank Notes
(Cost--$993,526) ........................................ 993,667
================================================================================
Certificates of Deposit--3.6%
================================================================================
Chase Manhattan 55,000 5.87 7/21/98 54,996
Bank
- --------------------------------------------------------------------------------
Morgan Guaranty 30,000 5.94 3/20/98 29,997
Trust Company 150,000 5.80 7/28/98 149,926
of NY 100,000 5.77 10/07/98 99,926
- --------------------------------------------------------------------------------
World Savings Bank, 50,000 5.53 11/17/97 49,999
FSB
- --------------------------------------------------------------------------------
Total Certificates of Deposit
(Cost--$384,935) ........................................ 384,844
================================================================================
Certificates of Deposit--European--1.3%
================================================================================
Abbey National 60,000 5.93 9/17/98 60,029
Treasury Services
PLC, London
- --------------------------------------------------------------------------------
Bank of Scotland 20,000 5.93 9/17/98 20,010
Treasury Services
PLC, London
- --------------------------------------------------------------------------------
Westdeutsche 60,000 5.83 8/03/98 59,976
Landesbank
Girozentrale, London
- --------------------------------------------------------------------------------
Total Certificates of Deposit--European
(Cost--$140,007) ........................................ 140,015
================================================================================
Certificates of Deposit--Yankee--5.2%
================================================================================
ABN-AMRO Bank $ 25,000 5.77 % 7/27/98 $ 24,982
N.V., Chicago 30,000 5.77 7/28/98 29,979
- --------------------------------------------------------------------------------
Barclays Bank 50,000 5.94 6/30/98 50,014
PLC, NY 50,000 5.715 10/09/98 49,930
- --------------------------------------------------------------------------------
Bayerische 100,000 5.87 10/27/98 100,015
Hypotheken-und-
Wechsel Bank, NY
- --------------------------------------------------------------------------------
Canadian Imperial 55,000 5.79 10/06/98 54,959
Bank of
Commerce, NY
- --------------------------------------------------------------------------------
Deutsche Bank, NY 25,000 5.63 2/26/98 24,977
22,000 5.94 10/22/98 22,017
- --------------------------------------------------------------------------------
Landesbank 25,000 5.78 1/27/98 24,990
Hessen-Thuringen 25,000 5.78 1/30/98 24,989
Girozentrale, NY 40,000 6.00 6/09/98 40,019
- --------------------------------------------------------------------------------
Rabobank 15,000 5.50 12/05/97 14,995
Nederland, NY
- --------------------------------------------------------------------------------
Swiss Bank Corp., NY 25,000 5.95 7/02/98 25,009
- --------------------------------------------------------------------------------
Westdeutsche 25,000 5.94 6/29/98 25,006
Landesbank 50,000 5.78 7/31/98 49,969
Girozentrale, NY
- --------------------------------------------------------------------------------
Total Certificates of Deposit--Yankee
(Cost--$561,809) ........................................ 561,850
================================================================================
Commercial Paper--38.2%
================================================================================
Aesop Funding Corp. 5,000 5.60 11/14/97 4,989
20,000 5.60 11/17/97 19,947
28,000 5.53 11/19/97 27,918
40,000 5.55 11/19/97 39,883
- --------------------------------------------------------------------------------
Alpine 32,000 5.53 11/07/97 31,966
Securitization 78,407 5.53 11/10/97 78,287
Corporation 76,069 5.56 11/12/97 75,928
- --------------------------------------------------------------------------------
American Express 25,000 5.51 12/31/97 24,763
Credit Corporation
- --------------------------------------------------------------------------------
American Honda 40,000 5.55 11/04/97 39,975
Finance Corp.
- --------------------------------------------------------------------------------
Apreco, Inc. 20,000 5.53 11/19/97 19,942
- --------------------------------------------------------------------------------
Atlantic Asset 24,000 5.53 11/07/97 23,974
Securitization Corp. 13,881 5.55 11/12/97 13,855
12,119 5.54 11/18/97 12,085
- --------------------------------------------------------------------------------
Bear Stearns 70,000 5.53 12/19/97 69,471
Companies, Inc.
- --------------------------------------------------------------------------------
Countrywide Home 45,000 5.53 11/12/97 44,917
Loans, Inc. 29,500 5.55 11/12/97 29,445
- --------------------------------------------------------------------------------
Dresdner U.S. 125,000 5.52 11/04/97 124,923
Finance Inc.
- --------------------------------------------------------------------------------
Eiger Capital Corp. 14,983 5.52 11/14/97 14,951
- --------------------------------------------------------------------------------
Eureka 75,000 5.53 11/17/97 74,804
Securitization, Inc. 40,000 5.54 11/19/97 39,883
25,000 5.52 11/20/97 24,923
- --------------------------------------------------------------------------------
Finova Capital Corp. 36,500 5.53 11/17/97 36,405
37,000 5.55 11/18/97 36,897
16,400 5.56 3/19/98 16,047
2
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1997
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
================================================================================
Commercial Paper (continued)
================================================================================
Finova Capital $ 25,000 5.56 % 3/23/98 $ 24,446
Corp. (concluded) 10,000 5.58 4/06/98 9,757
50,000 5.62 4/27/98 48,623
- --------------------------------------------------------------------------------
Ford Motor Credit 50,000 5.53 12/29/97 49,544
Company 120,000 5.53 12/30/97 118,886
75,000 5.58 12/30/97 74,304
88,000 5.60 3/30/98 85,954
- --------------------------------------------------------------------------------
General Electric 50,000 5.68 11/25/97 49,807
Capital Corp. 100,000 5.68 12/03/97 99,493
68,000 5.545 3/17/98 66,556
75,000 5.55 3/23/98 73,338
27,000 5.55 4/06/98 26,344
- --------------------------------------------------------------------------------
General Electric 200,000 5.52 12/31/97 198,102
Company
- --------------------------------------------------------------------------------
General Motors 19,000 5.82 11/03/97 18,991
Acceptance Corp. 50,000 5.72 11/10/97 49,923
50,000 5.74 11/20/97 49,846
90,000 5.71 12/01/97 89,569
50,000 5.65 12/31/97 49,526
100,000 5.59 3/02/98 98,109
50,000 5.54 3/16/98 48,946
100,000 5.55 3/30/98 97,675
- --------------------------------------------------------------------------------
Goldman Sachs 125,000 5.53 11/20/97 124,616
Group, L.P. 50,000 5.69 2/06/98 49,238
- --------------------------------------------------------------------------------
Greenwich Funding 50,000 5.53 11/12/97 49,908
Corp. 50,000 5.57 11/25/97 49,807
- --------------------------------------------------------------------------------
International Lease 20,000 5.53 12/12/97 19,871
Finance Corp.
- --------------------------------------------------------------------------------
Lehman Brothers 100,000 5.75 11/03/97 99,952
Holdings Inc.
- --------------------------------------------------------------------------------
Lexington Parker 50,000 5.55 11/05/97 49,961
Capital Company, 27,674 5.53 11/20/97 27,589
LLC 55,000 5.55 12/01/97 54,737
41,137 5.53 12/04/97 40,922
- --------------------------------------------------------------------------------
Lloyds Bank PLC 55,000 5.51 12/29/97 54,498
- --------------------------------------------------------------------------------
Mont Blanc Capital 50,000 5.52 11/06/97 49,954
Corp. 67,093 5.52 11/12/97 66,970
50,000 5.53 11/14/97 49,892
- --------------------------------------------------------------------------------
National Australia 50,000 5.51 12/29/97 49,544
Funding (Delaware) 36,455 5.53 3/11/98 35,715
Inc.
- --------------------------------------------------------------------------------
New Center 170,000 5.55 12/31/97 168,387
Asset Trust
- --------------------------------------------------------------------------------
Old Line Funding 14,159 5.55 11/17/97 14,122
Corp. 79,341 5.54 11/18/97 79,121
56,500 5.55 11/18/97 56,343
- --------------------------------------------------------------------------------
Park Avenue 32,036 5.53 11/20/97 31,938
Receivables Corp.
- --------------------------------------------------------------------------------
Three Rivers 75,000 5.53 11/18/97 74,793
Funding Corp.
- --------------------------------------------------------------------------------
Twin Towers Inc. 100,480 5.54 11/20/97 100,171
- --------------------------------------------------------------------------------
WCP Funding Inc. 25,000 5.52 11/17/97 24,935
- --------------------------------------------------------------------------------
Windmill Funding 50,000 5.55 11/10/97 49,923
Corp. 38,083 5.57 11/12/97 38,012
171,019 5.53% 11/13/97 170,677
50,000 5.54 11/14/97 49,892
- --------------------------------------------------------------------------------
Total Commercial Paper
(Cost--$4,085,447) ...................................... 4,085,405
================================================================================
Corporate Notes--10.4%
================================================================================
Abbey National 75,000 5.61+ 2/10/98 74,986
Treasury Services 65,000 5.59+ 2/25/98 64,984
PLC 5,000 5.93+ 3/25/98 5,004
100,000 5.65+ 4/15/98 99,978
175,000 5.54+ 6/09/98 174,929
- --------------------------------------------------------------------------------
Bank of Scotland 20,000 5.95 6/18/98 20,030
Treasury Services PLC
- --------------------------------------------------------------------------------
CIT Group Holdings, 21,500 5.58+ 8/17/98 21,485
Inc. (The) 54,800 5.59 9/30/98 54,756
- --------------------------------------------------------------------------------
Credit Suisse 25,000 5.57+ 4/14/98 25,002
First Boston Inc. 44,000 5.55+ 5/22/98 44,000
- --------------------------------------------------------------------------------
First Bank 29,000 5.605+ 11/19/97 29,000
System, Inc.
- --------------------------------------------------------------------------------
General Motors 20,000 5.69+ 4/17/98 20,006
Acceptance Corp.
- --------------------------------------------------------------------------------
IBM Credit Corp. 25,000 5.665+ 7/31/98 25,000
- --------------------------------------------------------------------------------
International 30,000 5.67 1/28/98 29,994
Business Machines
Corporation
- --------------------------------------------------------------------------------
LABS Trust 92,361 5.656+ 12/29/97 92,361
Series 1996-4,
Senior Notes
- --------------------------------------------------------------------------------
LABS Trust 61,738 5.625+ 10/21/98 61,738
Series 1997-6,
Senior Notes
- --------------------------------------------------------------------------------
LINCS 50,000 5.625+ 1/12/98 50,000
Series 1996-3
- --------------------------------------------------------------------------------
Morgan Stanley 15,000 5.68+ 2/23/98 15,005
Group, Inc.
- --------------------------------------------------------------------------------
Republic Mase 23,000 5.945 6/30/98 23,032
Australia Ltd.
- --------------------------------------------------------------------------------
SMM Trust (1997-Q) 182,000 5.625+ 1/15/98 182,000
- --------------------------------------------------------------------------------
Total Corporate Notes
(Cost--$1,113,213) ...................................... 1,113,290
================================================================================
Funding Agreements--0.5%
================================================================================
Jackson National 50,000 5.686+ 5/01/98 50,000
Life Insurance Co.
- --------------------------------------------------------------------------------
Total Funding Agreements
(Cost--$50,000) ......................................... 50,000
================================================================================
Master Notes--1.5%
================================================================================
Goldman Sachs 125,000 5.656+ 4/28/98 125,000
Group, L.P. 34,000 5.656+ 5/29/98 34,000
- --------------------------------------------------------------------------------
Total Master Notes
(Cost--$159,000) ........................................ 159,000
- --------------------------------------------------------------------------------
3
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1997
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
================================================================================
US Government, Agency & Instrumentality Obligations--
Discount Notes--1.6%
================================================================================
Federal Farm $ 15,000 5.38 % 8/21/98 $ 14,334
Credit Banks 10,000 5.38 9/01/98 9,540
- --------------------------------------------------------------------------------
Federal Home 25,000 5.32 4/28/98 24,324
Loan Bank 17,500 5.34 7/09/98 16,836
- --------------------------------------------------------------------------------
Federal National 40,000 5.58 11/12/97 39,927
Mortgage 5,000 5.41 10/09/98 4,741
Association 60,000 5.41 10/16/98 56,833
- --------------------------------------------------------------------------------
Total US Government, Agency & Instrumentality
Obligations--Discount Notes (Cost--$166,584) ............ 166,535
================================================================================
US Government, Agency & Instrumentality Obligations--
Non-Discount Notes--20.3%
================================================================================
Federal Farm 40,000 5.63+ 11/25/97 39,999
Credit Banks 50,000 5.65 2/03/98 49,968
- --------------------------------------------------------------------------------
Federal Home 120,000 5.29+ 12/10/97 119,994
Loan Bank 75,000 5.30+ 1/15/98 74,991
25,000 5.99 2/09/98 25,006
40,000 5.90 6/19/98 40,026
108,600 5.57+ 10/20/98 108,569
15,000 6.12 11/19/98 15,002
15,000 6.00 12/17/98 14,999
8,000 6.355 6/11/99 8,030
20,000 6.08 6/30/99 20,064
30,000 5.99 8/11/99 30,011
- --------------------------------------------------------------------------------
Federal Home Loan 35,000 5.58+ 4/15/98 34,992
Mortgage Corp. 6,900 6.02 3/03/99 6,900
5,000 6.205 6/30/99 5,002
10,325 6.10 9/10/99 10,342
- --------------------------------------------------------------------------------
Federal National 75,000 5.47 12/30/97 74,956
Mortgage 25,000 5.19 1/08/98 24,970
Association 150,000 5.51+ 1/15/98 149,985
70,000 5.57+ 3/26/98 69,984
83,000 5.30+ 3/27/98 82,977
65,000 5.59+ 4/21/98 64,988
60,000 5.34+ 4/24/98 59,989
38,000 6.00+ 5/14/98 38,000
20,000 7.85 9/10/98 20,340
101,000 5.57+ 10/20/98 100,957
75,000 5.57+ 11/03/98 74,948
15,000 5.81 12/01/98 14,983
22,150 5.36+ 12/14/98 22,129
21,850 6.375 5/21/99 21,929
26,150 6.16 7/13/99 26,209
60,000 5.29+ 7/14/99 59,829
25,000 5.95 8/05/99 25,000
13,500 5.88 8/10/99 13,486
17,740 5.98 9/23/99 17,749
78,000 5.60+ 10/27/99 77,927
- --------------------------------------------------------------------------------
Student Loan 67,075 5.45+ 1/21/98 67,095
Marketing 85,000 5.305+ 2/05/98 84,990
Association 29,200 5.40+ 2/17/98 29,196
75,000 5.345+ 4/21/98 74,992
25,000 5.60 8/11/98 24,968
100,000 5.35+ 11/06/98 99,971
15,000 6.02+ 11/20/98 15,007
51,425 5.80+ 12/18/98 51,399
- --------------------------------------------------------------------------------
US Treasury Notes 48,000 5.25 12/31/97 47,985
13,000 5.00 1/31/98 12,982
15,000 5.75 9/30/99 15,023
- --------------------------------------------------------------------------------
Total US Government, Agency & Instrumentality
Obligations--Non-Discount Notes
(Cost--$2,168,455) ...................................... 2,168,838
- --------------------------------------------------------------------------------
Face
Amount Issue
================================================================================
Repurchase Agreements**--10.1%
================================================================================
$100,000 Fuji Securities, Inc., purchased
on 10/31/1997 to yield 5.80% to
11/03/1997 100,000
- --------------------------------------------------------------------------------
250,000 HSBC Securities, Inc., purchased
on 10/31/1997 to yield 5.80% to
11/03/1997 250,000
- --------------------------------------------------------------------------------
200,000 J.P. Morgan Securities Inc.,
purchased on 10/31/1997 to yield
5.68% to 11/03/1997 200,000
- --------------------------------------------------------------------------------
250,000 Nomura Securities International,
Inc., purchased on 10/31/1997 to
yield 5.78% to 11/03/1997 250,000
- --------------------------------------------------------------------------------
250,000 PaineWebber Inc., purchased on
10/31/1997 to yield 5.70% to
11/03/1997 250,000
- --------------------------------------------------------------------------------
31,837 UBS Securities, LLC, purchased
on 10/31/1997 to yield 5.72% to
11/03/1997 31,837
- --------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost--$1,081,837) ..................................... 1,081,837
- --------------------------------------------------------------------------------
Total Investments (Cost--$10,904,813)--102.0% .......... 10,905,281
Liabilities in Excess of Other Assets--(2.0%) .......... (214,936)
-----------
Net Assets--100.0% ..................................... $10,690,345
===========
- --------------------------------------------------------------------------------
* 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, 1997.
** Repurchase Agreements are fully collateralized by US Government
Obligations.
+ Floating Rate Notes.
See Notes to Financial Statements.
4
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1997
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
==================================================================================================================
Statement of Assets and Liabilities as of October 31, 1997
==================================================================================================================
<C> <S> <C> <C>
Assets: Investments, at value (identified cost--$10,904,813,468*)
(Note 1a) .................................................. $10,905,281,465
Cash ......................................................... 730,491
Receivables:
Interest ................................................... $ 51,158,346
Beneficial interest sold ................................... 199,696 51,358,042
------------
Prepaid registration fees and other assets (Note 1e) ......... 440,147
---------------
Total assets ................................................. 10,957,810,145
---------------
- ------------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Beneficial interest redeemed ............................... 186,208,583
Securities purchased ....................................... 74,947,500
Investment adviser (Note 2) ................................ 3,467,704
Dividends to shareholders (Note 1f) ........................ 3,937 264,627,724
------------
Accrued expenses and other liabilities ....................... 2,837,279
---------------
Total liabilities ............................................ 267,465,003
---------------
- ------------------------------------------------------------------------------------------------------------------
Net Assets: Net assets ................................................... $10,690,345,142
===============
- ------------------------------------------------------------------------------------------------------------------
Net Assets Shares of beneficial interest, $0.10 par value,
Consist of: unlimited number of shares authorized ........................ $ 1,068,987,715
Paid-in capital in excess of par ............................. 9,620,889,430
Unrealized appreciation on investments--net .................. 467,997
---------------
Net assets--Equivalent to $1.00 per share based on
10,689,877,146 shares of beneficial interest outstanding ..... $10,690,345,142
===============
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* As of October 31, 1997, net unrealized appreciation for
Federal income tax purposes amounted to $145,063, of which
$1,085,682 related to appreciated securities and $940,619
related to depreciated securities. The aggregate cost of
investments at October 31, 1997 for Federal income tax
purposes was $10,905,136,402.
See Notes to Financial Statements.
5
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1997
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
======================================================================================================================
Statement of Operations
======================================================================================================================
For the Year Ended
October 31, 1997
- ----------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned .... $ 593,141,521
(Note 1d):
- ----------------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees (Note 2) ........................... $ 38,870,409
Transfer agent fees (Note 2) ................................ 14,619,064
Registration fees (Note 1e) ................................. 1,236,692
Printing and shareholder reports ............................ 669,209
Accounting services (Note 2) ................................ 524,387
Interest expense ............................................ 319,012
Custodian fees .............................................. 299,372
Professional fees ........................................... 83,881
Trustees' fees and expenses ................................. 75,354
Other ....................................................... 91,755
-------------
Total expenses .............................................. 56,789,135
-------------
Investment income--net ...................................... 536,352,386
-------------
- ----------------------------------------------------------------------------------------------------------------------
Realized & Realized gain on investments--net ........................... 581,438
Unrealized Gain Change in unrealized appreciation on investments--net ....... (368,533)
(Loss) on -------------
Investments--Net Net Increase in Net Assets Resulting from Operations ........ $ 536,565,291
(Note 1d): =============
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1997
FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
======================================================================================================================
Statements of Changes in Net Assets
======================================================================================================================
For the
Year Ended
October 31,
-----------------------------------
Increase (Decrease) in Net Assets: 1997 1996
- ----------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Operations: Investment income--net .................................... $ 536,352,386 $ 457,309,800
Realized gain on investments--net ......................... 581,438 471,407
Change in unrealized appreciation on investments--net ..... (368,533) (2,850,451)
---------------- ----------------
Net increase in net assets resulting from operations ...... 536,565,291 454,930,756
---------------- ----------------
- ----------------------------------------------------------------------------------------------------------------------
Dividends & Investment income--net .................................... (536,352,386) (457,309,800)
Distributions to Realized gain on investments--net ......................... (581,438) (471,407)
Shareholders ---------------- ----------------
(Note 1f): Net decrease in net assets resulting from dividends and
distributions to shareholders ............................. (536,933,824) (457,781,207)
---------------- ----------------
- ----------------------------------------------------------------------------------------------------------------------
Beneficial Interest Net proceeds from sale of shares .......................... 35,790,703,282 27,785,847,538
Transactions Net asset value of shares issued to shareholders in
(Notes 1f & 3): reinvestment of dividends and distributions ............... 536,932,268 457,779,630
---------------- ----------------
36,327,635,550 28,243,627,168
Cost of shares redeemed ................................... (34,977,150,947) (27,549,454,162)
---------------- ----------------
Net increase in net assets derived from beneficial interest
transactions .............................................. 1,350,484,603 694,173,006
---------------- ----------------
- ----------------------------------------------------------------------------------------------------------------------
Net Assets: Total increase in net assets .............................. 1,350,116,070 691,322,555
Beginning of year ......................................... 9,340,229,072 8,648,906,517
---------------- ----------------
End of year ............................................... $ 10,690,345,142 $ 9,340,229,072
================ ================
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1997
FINANCIAL INFORMATION (concluded)
<TABLE>
<CAPTION>
===================================================================================================================================
Financial Highlights
===================================================================================================================================
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: 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <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 .................. .0512 .0509 .0540 .0345 .0279
Realized and unrealized gain (loss) on
investments--net ........................ .0001 (.0002) .0015 (.0011) .0004
----------- ---------- ---------- ---------- ----------
Total from investment operations ........ .0513 .0507 .0555 .0334 .0283
----------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net ................ (.0512) (.0509) (.0540) (.0345) (.0279)
Realized gain on investments--net ..... (.0001) (.0001) (.0002) --+ (.0003)
----------- ---------- ---------- ---------- ----------
Total dividends and distributions ....... (.0513) (.0510) (.0542) (.0345) (.0282)
----------- ---------- ---------- ---------- ----------
Net asset value, end of year ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== ========== ========== ========== ==========
Total investment return ................. 5.35% 5.19% 5.55% 3.47% 2.85%
=========== ========== ========== ========== ==========
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses ................................ .54% .56% .59% .59% .62%
Net Assets: =========== ========== ========== ========== ==========
Investment income and realized gain
on investments--net ..................... 5.13% 5.07% 5.43% 3.44% 2.82%
=========== ========== ========== ========== ==========
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of year (in thousands) .. $10,690,345 $9,340,229 $8,648,907 $7,403,684 $7,066,326
Data: =========== ========== ========== ========== ==========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Amount is less than $.0001 per share.
See Notes to Financial Statements.
8
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1997
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Retirement Reserves Money Fund (the "Fund") is a separate Fund
offering a separate class of shares of Merrill Lynch Retirement Series Trust
(the "Trust"). The Trust is registered under the Investment Company Act of 1940
as a diversified, open-end management investment company which will comprise a
series of separate portfolios offering a separate class of shares to
participants in the retirement plans for which Merrill Lynch, Pierce, Fenner &
Smith Inc. ("MLPF&S") acts as passive custodian. At the present time, the Fund
is the only series offered. The following is a summary of significant accounting
policies consistently followed by the Fund.
(a) Valuation of investments--Investments maturing more than sixty days after
the valuation date are valued at the most recent bid price or yield equivalent
as obtained from dealers that make markets in such securities. When securities
are valued with sixty days or less to maturity, the difference between the
valuation existing on the sixty-first day before maturity and maturity value is
amortized on a straight-line basis to maturity. Investments maturing within
sixty days from their date of acquisition are valued at amortized cost, which
approximates market value.
For the purposes of valuations, the maturity of variable rate certificates of
deposit, variable rate commercial paper, short-term corporate bond notes,
variable rate Government agency notes and variable rate corporate notes is
deemed to be the next coupon date on which the interest rate is to be adjusted.
Assets for which market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the Board of
Trustees.
(b) Repurchase agreements--The Fund invests in US Government securities pursuant
to repurchase agreements with a member bank of the Federal Reserve System or a
primary dealer in US Government securities. Under such agreements, the bank or
primary dealer agrees to repurchase the security at a mutually agreed upon time
and price. The Fund takes possession of the underlying securities, marks to
market such securities and, if necessary, receives additional securities daily
to ensure that the contract is fully collateralized.
(c) 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.
(d) 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.
(e) Prepaid registration fees--Prepaid registration fees are charged to expense
as the related shares are issued.
(f) Dividends and distributions to shareholders--The Fund declares dividends
daily and reinvests daily such dividends in additional fund shares at net asset
value. Dividends and distributions are declared from the total of net investment
income and net realized gains or losses on investments.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Merrill Lynch
Asset Management, L.P. ("MLAM"). The general partner of MLAM is Princeton
Services, Inc. ("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch &
Co., Inc. ("ML & Co."), which is the limited partner. The Fund has also entered
into a Distribution Agreement and 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,
9
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1997
NOTES TO FINANCIAL STATEMENTS (concluded)
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; 0.325% of average daily net assets in excess of $7 billion
but not exceeding $10 billion; and 0.30% of average daily net assets in excess
of $10 billion.
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, and/or ML & Co.
3. Shares of Beneficial Interest:
The number of shares purchased and redeemed during the period corresponds to the
amounts included in the Statements of Changes in Net Assets with respect to net
proceeds from sale of shares and cost of shares redeemed, since shares are
recorded at $1.00 per share.
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, 1997, 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, 1997 by correspondence with the custodian and brokers. 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, 1997, 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 3, 1997
10
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1997
IMPORTANT TAX INFORMATION (unaudited)
Merrill Lynch Retirement Reserves Money Fund distributed long-term capital gains
of $.0000883 per share to shareholders of record on December 6, 1996.
Please retain this information for your records.
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Joe Grills, Trustee
Walter Mintz, Trustee
Robert S. Salomon Jr., Trustee
Melvin R. Seiden, Trustee
Stephen B. Swensrud, Trustee
Terry K. Glenn, Executive Vice President
Joseph T. Monagle Jr., Senior Vice President
Christopher G. Ayoub, Vice President and
Portfolio Manager
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Barbara G. Fraser, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 221-7210
11
<PAGE>
This report is not authorized for use as an offer of
sale or a solicitation of an offer to buy shares of the
Fund unless accompanied or preceded by the Fund's
current prospectus. Past performance results shown in
this report should not be considered a representation of
future performance, which will fluctuate. The Fund seeks
to maintain a consistent $1.00 net asset value per
share, although this cannot be assured. An investment in
the Fund is neither insured nor guaranteed by the US
Government. Statements and other information herein are
as dated and are subject to change.
Merrill Lynch
Retirement Reserves
Money Fund
Box 9011
Princeton, New Jersey
08543-9011 #10262--10/97
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