MERRILL LYNCH
RETIREMENT
RESERVES
MONEY FUND
Merrill Lynch
Retirement Series Trust
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
October 31, 1998
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1998
DEAR SHAREHOLDER
For the year ended October 31, 1998, Merrill Lynch Retirement Reserves Money
Fund's Class I Shares had a net annualized yield of 5.33%.* For the six-month
period ended October 31, 1998, the Fund's Class I Shares had a net annualized
yield of 5.20%.* Since inception (October 5, 1998) through October 31, 1998, the
Fund's Class II Shares had a net annualized yield of 5.16%. The Fund's Class I
and Class II Shares' 7-day yields as of October 31, 1998 were 4.76% and 4.67%,
respectively.
The average portfolio maturity for Merrill Lynch Retirement Reserves Money Fund
at October 31, 1998 was 75 days, compared to 73 days at April 30, 1998.
The Environment
Concerns over the prospects for the worldwide economy spilled over into the US
stock market during the six months ended October 31, 1998. The increased
volatility in US share prices reflected the deteriorating outlook for corporate
profits amid signs of a weakening US economy. The uncertain economic picture and
the resulting flight to quality by investors pushed the 30-year US Treasury bond
to record low yields. In contrast, corporate bonds, mortgage-backed securities
and emerging market's debt underperformed Treasury securities by a wide margin.
The leverage/derivatives-related problems of a major hedge fund and possible
impeachment of President Clinton further heightened investor uncertainties, as
did Russia's devaluation and effective repudiation of its debt in August. A one-
quarter point cut in the Federal Funds rate in late September did not restore
investor confidence. However, when the Federal Reserve Board cut the Federal
Funds rate another quarter point in October, a rally in stock and bond prices
ensued.
For the six-month period ended October 31, 1998, Merrill Lynch Retirement
Reserves Money Fund had a modestly aggressive average life. As the period
progressed, we believed the global crisis could filter into the US domestic
economy. Consequently, we maintained our longer interest rate exposure by
holding fewer overnight positions and by increasing our commitments to
longer-dated US Treasury and Federal agency issues.
As long as worldwide economic prospects appear fragile, it is likely that stock
and bond market volatility will continue. For the overall global economy, the
deepening recession in Japan is of great concern as are the difficulties in
emerging economies such as Russia and Brazil. Investors are waiting to see
whether the recently implemented reforms in Japan will be successful in
stabilizing, and ultimately resolving, the problems of the banking system.
Positive developments in Japan, combined with continued monetary easing on the
part of the Federal Reserve Board, would likely provide an important element of
stability to the volatile investment environment.
The Fund's portfolio composition at the end of the October period and as of our
last report is detailed below:
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10/31/98 4/30/98
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Bank Notes............................. 7.7% 9.8%
Certificates of Deposit................ 1.5 4.0
Certificates of Deposit--European...... 1.7 1.2
Certificates of Deposit--Yankee........ 6.6 6.8
Commercial Paper ...................... 43.6 48.2
Corporate Notes........................ 12.9 11.3
Funding Agreements..................... 0.7 0.6
Master Notes........................... 1.1 1.3
Repurchase Agreements.................. -- 2.1
US Government, Agency &
Instrumentality Obligations--
Discount Notes....................... 12.9 0.9
US Government, Agency &
Instrumentality Obligations--
Non-Discount Notes................... 12.0 14.8
Liabilities in Excess of Other Assets.. (0.7) (1.0)
----- -----
Total.................................. 100.0% 100.0%
===== =====
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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/ John Ng
John Ng
Vice President and Portfolio Manager
December 7, 1998
* 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, 1998
PROXY RESULTS
During the year ended October 31, 1998, Merrill Lynch Retirement Reserves Money
Fund (the "Fund") shareholders voted on the following proposals. Proposals 1-3
were approved at a shareholders' meeting on January 28, 1998. A quorum has not
been reached with respect to Proposal 4. Accordingly, the existing investment
restrictions will continue as the investment restrictions relating to the Fund.
The description of each proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1.To elect members of the Board of Trustees: Joe Grills 10,896,050,102 200,777,601
Walter Mintz 10,893,195,041 203,632,662
Robert S. Salomon Jr. 10,879,692,998 217,134,705
Melvin R. Seiden 10,895,396,395 201,431,308
Stephen B. Swensrud 10,881,793,313 215,034,390
Arthur Zeikel 10,896,698,946 200,128,757
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2.To ratify the selection of Deloitte & Touche LLP as the Trust's
independent auditors for the current fiscal year. 10,810,143,210 104,940,411 181,744,083
- ------------------------------------------------------------------------------------------------------------------------------------
3.To consider and act upon a proposal to amend the Declaration of the Trust
to permit the issuance of multiple classes of shares of the Fund, as well as
any other series of the Trust created in the future. 9,671,117,957 838,841,020 586,868,726
- ------------------------------------------------------------------------------------------------------------------------------------
4.To consider and act upon proposals to amend certain of the Fund's fundamental
investment restrictions with respect to:
(A) investment in other investment companies. 3,940,514,840 640,751,136 392,212,533
(B) short sales of securities. 3,680,710,815 855,932,291 436,835,403
(C) purchase of restricted securities. 3,518,890,919 1,017,787,378 436,800,212
(D) investment in real estate and in commodities. 3,713,707,198 871,157,513 388,613,797
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1998
SCHEDULE OF INVESTMENTS (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
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Bank Notes--7.7%
- --------------------------------------------------------------------------------
American Express $ 30,000 5.366+% 2/12/99 $ 30,000
Centurion Bank 31,000 5.358+ 3/19/99 31,000
39,000 5.358+ 3/19/99 39,000
50,000 5.325+ 4/05/99 50,000
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Comerica Bank, 64,500 5.285+ 2/02/99 64,494
Detroit 35,500 5.338+ 2/09/99 35,495
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FCC National Bank 22,000 5.05+ 2/23/99 21,995
78,000 5.06+ 5/12/99 77,976
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First National Bank 28,000 5.05+ 2/23/99 27,994
of Chicago
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First of America 35,800 6.00 3/23/99 35,903
Bank N.A.
- --------------------------------------------------------------------------------
First Tennessee 38,000 5.65 3/02/99 38,052
Bank N.A. 5,000 5.82 4/30/99 5,017
22,500 5.454+ 6/09/99 22,479
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First Union 44,000 5.17+ 8/30/99 44,000
National Bank 145,000 5.17+ 9/01/99 145,000
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Fleet National 150,000 5.05+ 5/11/99 149,946
Bank N.A.
- --------------------------------------------------------------------------------
NationsBank N.A. 100,000 5.07+ 4/30/99 99,976
95,000 5.08+ 8/24/99 94,970
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Old Kent Bank 22,300 5.06+ 6/30/99 22,291
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SouthTrust Bank, 40,000 5.08+ 3/25/99 39,994
N.A.
- --------------------------------------------------------------------------------
Total Bank Notes (Cost--$1,075,450) .......................... 1,075,582
- --------------------------------------------------------------------------------
Certificates of Deposit--1.5%
- --------------------------------------------------------------------------------
Chase Manhattan 50,000 5.73 5/12/99 50,167
Bank
- --------------------------------------------------------------------------------
Morgan Guaranty 50,000 5.55 2/02/99 50,019
Trust Company of
New York
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National City Bank, 25,000 5.265+ 2/05/99 24,997
Indiana
- --------------------------------------------------------------------------------
National City Bank, 50,000 5.542+ 3/08/99 49,991
Ohio
- --------------------------------------------------------------------------------
NationsBank N.A. 38,000 5.55 2/09/99 38,016
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Total Certificates of Deposit
(Cost--$212,958) ............................................. 213,190
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Certificates of Deposit--European--1.7%
- --------------------------------------------------------------------------------
Abbey National 72,000 5.25+ 10/29/99 71,964
Treasury Services 72,000 5.249+ 11/01/99 72,000
Plc, London
- --------------------------------------------------------------------------------
Bank of Scotland 50,000 5.61 12/31/98 50,029
Treasury Services
Plc, London
- --------------------------------------------------------------------------------
Bayerische $ 50,000 5.25 % 12/31/98 $ 50,002
Vereinsbank AG,
London
- --------------------------------------------------------------------------------
Total Certificates of Deposit--European
(Cost--$244,011) ............................................. 243,995
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Certificates of Deposit--Yankee--6.6%
- --------------------------------------------------------------------------------
ABN-AMRO Bank 25,000 5.645 3/22/99 25,036
N.V., Chicago
- --------------------------------------------------------------------------------
Bank of Montreal, 20,000 5.69 6/15/99 20,088
Chicago 20,000 5.07+ 7/15/99 19,993
50,000 5.11+ 7/22/99 49,979
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Barclays Bank 67,000 5.03+ 6/01/99 66,965
Plc, NY 50,000 5.24+ 6/02/99 49,977
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Bayerische 50,000 5.65 3/23/99 50,073
Hypotheken-und- 50,000 5.70 3/29/99 50,087
Wechsel Bank, NY
- --------------------------------------------------------------------------------
Canadian Imperial 25,000 5.71 6/21/99 25,116
Bank of Commerce, NY
- --------------------------------------------------------------------------------
Credit Suisse 55,000 5.205+ 12/11/98 55,000
First Boston, NY 44,000 5.35+ 5/12/99 44,000
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Deutsche Bank 50,000 5.645 3/22/99 50,071
AG, NY
- --------------------------------------------------------------------------------
Norddeutsche 25,000 5.68 3/05/99 25,033
Landesbank
Girozentrale, NY
- --------------------------------------------------------------------------------
Rabobank 100,000 5.71 5/21/99 100,341
Nederland N.V., NY
- --------------------------------------------------------------------------------
Royal Bank of 25,000 5.555 2/11/99 25,010
Canada, NY 50,000 5.645 3/09/99 50,063
50,000 5.25+ 8/06/99 49,973
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Toronto-Dominion 50,000 5.74 6/09/99 50,227
Bank, NY 120,000 5.276+ 8/13/99 119,930
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Total Certificates of Deposit--Yankee
(Cost--$925,679) ............................................. 926,962
- --------------------------------------------------------------------------------
Commercial Paper--43.6%
- --------------------------------------------------------------------------------
Alpine Securitization 50,000 5.25 11/05/98 49,956
Corporation 100,000 5.40 11/06/98 99,895
- --------------------------------------------------------------------------------
Amsterdam Funding 15,880 5.22 11/19/98 15,834
Corp.
- --------------------------------------------------------------------------------
Apreco, Inc. 34,125 5.53 11/06/98 34,088
15,000 5.52 11/19/98 14,954
17,375 5.48 11/25/98 17,306
- --------------------------------------------------------------------------------
Asset Securitization 74,935 5.35 11/12/98 74,790
Cooperative Corp.
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3
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1998
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
- --------------------------------------------------------------------------------
Commercial Paper (continued)
- --------------------------------------------------------------------------------
Atlantis One $ 27,355 5.37 % 11/13/98 $ 27,298
Funding Corp. 20,000 5.47 12/11/98 19,875
50,000 5.47 12/14/98 49,666
- --------------------------------------------------------------------------------
Avco Financial 9,706 5.49 12/23/98 9,632
Services Inc. 20,000 5.49 12/23/98 19,847
36,000 5.50 12/23/98 35,725
- --------------------------------------------------------------------------------
Banco Bozano, 15,000 5.51 11/10/98 14,975
Simonsen S.A., Grand
Cayman Branch
- --------------------------------------------------------------------------------
Banco de Galicia y 5,000 5.50 3/01/99 4,916
Buenos Aires S.A. 25,000 5.50 3/01/99 24,581
40,000 5.37 3/02/99 39,323
35,000 5.38 3/02/99 34,408
- --------------------------------------------------------------------------------
Bankers Trust 25,000 5.48 12/18/98 24,811
New York 19,278 5.49 12/18/98 19,132
Corporation
- --------------------------------------------------------------------------------
Bear Stearns 25,000 5.44 12/04/98 24,870
Companies, Inc. 25,000 5.48 12/17/98 24,830
25,000 5.50 12/17/98 24,830
50,000 5.50 12/18/98 49,653
- --------------------------------------------------------------------------------
Block Financial 24,796 5.65 11/02/98 24,784
Corp.
- --------------------------------------------------------------------------------
COFCO Capital Corp. 10,000 5.21 11/23/98 9,965
15,000 5.18 12/17/98 14,896
- --------------------------------------------------------------------------------
CSW Credit Inc. 16,700 5.28 12/03/98 16,617
- --------------------------------------------------------------------------------
CXC Incorporated 25,000 5.52 11/02/98 24,988
50,000 5.52 11/13/98 49,892
50,000 5.10 2/02/99 49,336
50,000 5.10 2/03/99 49,329
20,000 5.35 2/25/99 19,670
- --------------------------------------------------------------------------------
Cemex, S.A. de C.V. 20,000 5.45 12/07/98 19,887
- --------------------------------------------------------------------------------
Centric Capital 25,000 5.52 11/02/98 24,988
Corp.
- --------------------------------------------------------------------------------
China Merchants 30,000 5.45 12/04/98 29,844
(Cayman) Inc.
- --------------------------------------------------------------------------------
Citicorp 50,000 5.16 12/17/98 49,656
- --------------------------------------------------------------------------------
Clipper Receivables 50,000 5.35 11/13/98 49,896
Corp. 23,720 5.47 11/18/98 23,651
20,000 5.28 12/11/98 19,877
- --------------------------------------------------------------------------------
Concord Minutemen 34,669 5.40 11/18/98 34,570
Capital Co. LLC 30,000 5.26 1/22/99 29,636
60,000 5.30 1/26/99 59,237
- --------------------------------------------------------------------------------
Corporate Asset 50,000 5.52 11/03/98 49,969
Funding Co. Inc. 55,000 5.20 11/17/98 54,857
50,000 5.15 12/03/98 49,757
- --------------------------------------------------------------------------------
Daimler-Benz 30,000 5.49 12/18/98 29,792
North America Corp.
- --------------------------------------------------------------------------------
Delaware Funding 74,000 5.35 11/17/98 73,802
Corp. 14,137 5.35 11/19/98 14,095
- --------------------------------------------------------------------------------
Diageo Capital Plc 50,000 5.49 12/22/98 49,625
- --------------------------------------------------------------------------------
Edison Asset 28,078 5.43 12/11/98 27,903
Securitization, LLC 100,000 5.27 1/26/99 98,729
- --------------------------------------------------------------------------------
Eureka 40,000 5.51 11/04/98 39,969
Securitization Inc.
- --------------------------------------------------------------------------------
Falcon Asset 14,765 5.22 12/01/98 14,696
Securitization Corp.
- --------------------------------------------------------------------------------
Finova Capital Corp. 20,000 5.52 11/20/98 19,936
21,400 5.50 1/21/99 21,143
11,600 5.51 2/04/99 11,443
5,000 5.48 2/26/99 4,917
- --------------------------------------------------------------------------------
First Data 50,000 5.32 2/09/99 49,287
Corporation 17,500 5.35 3/09/99 17,187
- --------------------------------------------------------------------------------
General Electric 50,000 5.48 12/21/98 49,632
Capital Corp. 100,000 5.47 2/08/99 98,589
100,000 5.47 2/09/99 98,575
50,000 5.47 2/19/99 49,218
42,000 5.47 2/23/99 41,319
- --------------------------------------------------------------------------------
General Motors 65,000 5.51 11/16/98 64,831
Acceptance Corp. 50,000 5.52 11/19/98 49,847
50,000 5.50 12/28/98 49,582
50,000 5.50 12/29/98 49,575
50,000 5.50 12/30/98 49,559
50,000 5.50 12/31/98 49,552
- --------------------------------------------------------------------------------
Greenwich Funding 84,263 5.40 11/06/98 84,175
Corp. 15,528 5.38 11/12/98 15,498
18,538 5.25 11/13/98 18,500
- --------------------------------------------------------------------------------
Greyhawk Capital 35,000 5.37 11/12/98 34,932
Corp. 55,000 5.22 11/23/98 54,809
- --------------------------------------------------------------------------------
International 1,912 5.40 11/05/98 1,910
Securitization Corp. 33,235 5.52 11/05/98 33,204
103,775 5.45 11/18/98 103,476
22,550 5.35 11/19/98 22,483
38,528 5.22 12/10/98 38,299
- --------------------------------------------------------------------------------
Knight-Ridder, Inc. 10,000 5.57 12/10/98 9,939
25,000 5.45 12/18/98 24,826
- --------------------------------------------------------------------------------
Lehman Brothers 50,000 5.54 12/21/98 49,596
Holdings Inc. 100,000 5.54 12/21/98 99,191
50,000 5.51 2/17/99 49,067
- --------------------------------------------------------------------------------
Lexington Parker 40,000 5.52 11/13/98 39,914
Capital Company, 53,008 5.52 11/20/98 52,838
LLC 60,000 5.46 12/04/98 59,689
143,205 5.46 12/09/98 142,355
- --------------------------------------------------------------------------------
4
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1998
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
- --------------------------------------------------------------------------------
Commercial Paper (continued)
- --------------------------------------------------------------------------------
Monsanto Company $ 16,080 5.50 % 12/14/98 $ 15,973
25,000 5.48 12/29/98 24,788
40,000 5.48 12/29/98 39,660
- --------------------------------------------------------------------------------
Mont Blanc 52,000 5.52 11/05/98 51,952
Capital Corp. 20,000 5.52 11/09/98 19,969
8,737 5.48 11/10/98 8,722
15,000 5.40 11/16/98 14,962
15,000 5.51 11/16/98 14,961
36,320 5.47 11/25/98 36,175
22,199 5.52 11/27/98 22,104
25,069 5.47 12/03/98 24,943
- --------------------------------------------------------------------------------
Monte Rosa 46,798 5.52 11/16/98 46,676
Capital Corp. 13,517 5.48 11/19/98 13,476
65,000 5.48 11/20/98 64,791
85,000 5.52 11/20/98 84,727
15,000 5.40 11/25/98 14,942
44,000 5.17 12/04/98 43,779
16,747 5.17 12/07/98 16,656
42,662 5.17 12/11/98 42,405
- --------------------------------------------------------------------------------
Morgan Stanley, 45,000 5.187+ 12/24/98 45,000
Dean Witter & Co. 17,000 5.366+ 2/08/99 17,000
- --------------------------------------------------------------------------------
New Center 50,000 5.50 12/15/98 49,659
Asset Trust
- --------------------------------------------------------------------------------
ORIX America, Inc. 31,382 5.20 11/02/98 31,368
- --------------------------------------------------------------------------------
Old Line Funding 8,000 5.40 11/06/98 7,992
Corp. 50,000 5.52 11/06/98 49,946
41,596 5.23 11/17/98 41,487
20,000 5.25 12/02/98 19,904
20,505 5.30 12/08/98 20,387
35,000 5.36 12/16/98 34,767
12,979 5.25 12/23/98 12,877
- --------------------------------------------------------------------------------
Park Avenue 23,137 5.30 11/02/98 23,127
Receivables Corp. 37,462 5.52 11/16/98 37,365
13,495 5.25 11/20/98 13,454
19,582 5.22 11/24/98 19,511
56,324 5.20 12/10/98 55,990
- --------------------------------------------------------------------------------
Preferred 92,915 5.47 11/09/98 92,774
Receivables 13,935 5.52 11/25/98 13,880
Funding Corp.
- --------------------------------------------------------------------------------
Repeat Offering 9,153 5.24 11/05/98 9,145
Securitization 8,094 5.38 11/09/98 8,082
Entity Funding Inc. 55,172 5.30 11/17/98 55,026
- --------------------------------------------------------------------------------
Republic Industries 100,000 5.23 11/24/98 99,637
Funding Corp. 25,000 5.25 11/30/98 24,887
- --------------------------------------------------------------------------------
Rio Tinto America 27,000 5.50 12/04/98 26,860
Inc. 47,000 5.08 2/05/99 46,356
- --------------------------------------------------------------------------------
Salomon, 75,000 5.48 12/11/98 74,533
Smith Barney
Holdings, Inc.
- --------------------------------------------------------------------------------
Sears Roebuck 25,000 5.41 12/10/98 24,848
Acceptance Corp.
- --------------------------------------------------------------------------------
Sinochem American 17,300 5.47 11/12/98 17,266
C.P. Inc. 11,600 5.47 12/02/98 11,543
- --------------------------------------------------------------------------------
Sunkyong America 13,400 5.42 12/09/98 13,320
Inc.
- --------------------------------------------------------------------------------
Thames Asset Global 26,000 5.47 11/16/98 25,932
Securitization Inc. 9,166 5.52 11/16/98 9,142
10,000 5.47 12/04/98 9,948
82,446 5.47 12/04/98 82,018
50,000 5.47 12/08/98 49,711
- --------------------------------------------------------------------------------
Toyota Motor 50,000 5.15 2/05/99 49,315
Credit Co. 50,000 4.99 2/12/99 49,266
- --------------------------------------------------------------------------------
Variable Funding 50,000 5.20 11/04/98 49,964
Capital Corp. 127,844 5.40 11/10/98 127,633
- --------------------------------------------------------------------------------
WCP Funding Inc. 15,950 5.47 11/20/98 15,899
25,000 5.47 11/24/98 24,904
9,050 5.17 12/02/98 9,007
50,000 5.18 12/02/98 49,763
- --------------------------------------------------------------------------------
Windmill Funding 15,710 5.72 11/02/98 15,703
Corp. 11,425 5.37 11/06/98 11,413
24,335 5.51 11/10/98 24,294
24,901 5.45 11/13/98 24,848
62,771 5.36 11/20/98 62,575
28,000 5.25 12/01/98 27,869
41,000 5.25 12/01/98 40,809
32,015 5.25 12/03/98 31,856
46,285 5.24 12/22/98 45,928
12,602 5.24 12/30/98 12,491
70,000 5.30 1/22/99 69,151
- --------------------------------------------------------------------------------
Total Commercial Paper (Cost--$6,085,999) .................... 6,087,092
- --------------------------------------------------------------------------------
Corporate Notes--12.9%
- --------------------------------------------------------------------------------
Abbey National 50,000 5.04+ 7/20/99 49,971
Treasury Services 22,000 5.069+ 7/20/99 21,956
Plc 150,000 5.27+ 8/17/99 149,906
75,000 5.538+ 8/17/99 74,850
- --------------------------------------------------------------------------------
CIT Group Holdings, 46,500 5.14+ 1/12/99 46,495
Inc. (The) 10,000 5.473+ 1/15/99 10,004
29,600 5.375 1/25/99 29,593
29,500 5.07+ 3/22/99 29,494
50,000 5.05+ 5/24/99 49,981
50,000 5.04+ 6/28/99 49,974
- --------------------------------------------------------------------------------
Chase Manhattan 67,000 5.41+ 3/25/99 66,997
Corp.
- --------------------------------------------------------------------------------
5
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1998
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
- --------------------------------------------------------------------------------
Corporate Notes (continued)
- --------------------------------------------------------------------------------
Credit Suisse $ 50,000 5.35+ % 4/06/99 $ 50,000
First Boston Inc. 50,000 5.35+ 4/09/99 50,000
15,000 5.35+ 4/20/99 15,000
- --------------------------------------------------------------------------------
Ford Credit Auto 723 5.545 2/16/99 723
Owner Trust,
Series 1998-A
- --------------------------------------------------------------------------------
Ford Credit Auto 20,000 5.67 6/15/99 20,000
Owner Trust,
Series 1998-C
- --------------------------------------------------------------------------------
Ford Motor Credit 25,000 5.21+ 1/08/99 25,000
Company
- --------------------------------------------------------------------------------
General Electric 38,000 5.07+ 6/03/99 37,989
Capital Corp. 20,000 5.464+ 6/03/99 19,985
30,000 5.594+ 9/03/99 29,994
- --------------------------------------------------------------------------------
General Motors 23,000 5.634+ 6/04/99 23,013
Acceptance Corp. 38,000 5.598+ 8/26/99 37,943
33,000 5.718+ 2/27/01 32,987
- --------------------------------------------------------------------------------
Goldman Sachs 123,000 5.438+ 3/26/99 122,974
Group, L.P. 27,000 5.348+ 11/12/99 26,987
- --------------------------------------------------------------------------------
Household Finance 35,000 5.638+ 9/13/99 34,937
Corp.
- --------------------------------------------------------------------------------
IBM Credit Corp. 100,000 5.66 3/03/99 100,060
- --------------------------------------------------------------------------------
J.P. Morgan & Co. 50,000 5.08+ 2/24/99 49,994
- --------------------------------------------------------------------------------
LINCS Series 1998-2 50,000 5.58+ 2/12/99 50,000
- --------------------------------------------------------------------------------
Liberty Lighthouse 140,000 5.30+ 10/08/99 139,748
US Capital Co. LLC
- --------------------------------------------------------------------------------
Morgan Stanley, 20,900 5.298+ 1/15/99 20,900
Dean Witter & Co.
- --------------------------------------------------------------------------------
National Rural 74,000 5.608+ 9/21/99 73,926
Utilities Cooperative
Finance Corp.
- --------------------------------------------------------------------------------
PepsiCo, Inc. 100,000 5.498+ 8/19/99 99,830
- --------------------------------------------------------------------------------
Premier Auto Trust, 14,719 5.62 2/08/99 14,719
Series 1998-3
- --------------------------------------------------------------------------------
Restructured Asset 53,500 5.398+ 8/13/99 53,500
Securities with
Enhanced Returns,
Series 1998-MM-7-1
Trust
- --------------------------------------------------------------------------------
U.S. BanCorp 49,000 5.093+ 6/22/99 48,978
10,000 5.452+ 7/21/99 9,994
- --------------------------------------------------------------------------------
Xerox Capital 30,000 5.578+ 8/20/99 29,961
(Europe) Plc
- --------------------------------------------------------------------------------
Total Corporate Notes (Cost--$1,798,974) ..................... 1,798,363
- --------------------------------------------------------------------------------
Funding Agreements--0.7%
- --------------------------------------------------------------------------------
Jackson National 50,000 5.364+ 5/03/99 50,000
Life Insurance Co.
- --------------------------------------------------------------------------------
John Hancock 22,000 5.384+ 7/30/99 22,000
Mutual Life
Insurance Co.
- --------------------------------------------------------------------------------
Travelers Insurance 20,000 5.374+ 2/01/99 20,000
Company
- --------------------------------------------------------------------------------
Total Funding Agreements (Cost--$92,000) ..................... 92,000
- --------------------------------------------------------------------------------
Master Notes--1.1%
- --------------------------------------------------------------------------------
Goldman Sachs 125,000 5.344+ 1/20/99 125,000
Group, L.P. 34,000 5.344+ 2/22/99 34,000
- --------------------------------------------------------------------------------
Total Master Notes (Cost--$159,000) .......................... 159,000
- --------------------------------------------------------------------------------
US Government, Agency & Instrumentality Obligations--
Discount--12.9%
- --------------------------------------------------------------------------------
Federal Farm 113,000 4.65 5/03/99 110,281
Credit Banks 12,250 6.36 7/26/99 12,384
25,000 5.10 8/31/99 24,028
46,000 4.72 9/13/99 44,172
8,000 4.68 9/30/99 7,665
- --------------------------------------------------------------------------------
Federal Home 50,000 4.77 4/14/99 48,891
Loan Bank 20,000 5.25 5/21/99 19,463
- --------------------------------------------------------------------------------
Federal Home 53,685 5.17 2/03/99 52,983
Loan Mortgage 100,000 5.18 2/05/99 98,666
Corporation 11,000 5.18 2/12/99 10,843
16,000 5.18 2/16/99 15,763
15,000 5.18 2/22/99 14,765
16,000 5.18 2/23/99 15,747
74,000 5.15 2/24/99 72,821
40,000 4.90 3/01/99 39,341
100,000 4.85 3/05/99 98,299
50,000 4.85 3/26/99 49,008
35,000 4.93 3/26/99 34,305
27,000 4.65 7/08/99 26,130
- --------------------------------------------------------------------------------
Federal National 41,045 5.18 2/18/99 40,425
Mortgage 50,000 4.90 3/01/99 49,176
Association 20,000 4.85 3/02/99 19,668
- --------------------------------------------------------------------------------
6
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1998
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
- --------------------------------------------------------------------------------
US Government, Agency & Instrumentality Obligations--
Discount (concluded)
- --------------------------------------------------------------------------------
Federal National $ 80,000 4.90 % 3/02/99 $ 78,672
Mortgage 95,550 4.87 3/05/99 93,925
Association 50,000 5.04 3/26/99 49,008
(concluded) 25,000 5.18 4/05/99 24,476
15,000 5.26 6/01/99 14,580
47,000 5.26 6/04/99 45,666
125,000 4.63 6/15/99 121,271
80,000 4.82 6/25/99 77,509
8,195 5.05 8/20/99 7,888
5,000 5.13 8/20/99 4,812
70,000 5.15 8/20/99 67,376
75,000 5.05 8/24/99 72,150
- --------------------------------------------------------------------------------
US Treasury Bills 2,400 3.69 4/22/99 2,352
65,000 3.865 4/22/99 63,692
50,000 3.87 4/22/99 48,993
25,000 3.82 10/14/99 24,031
25,000 3.96 10/14/99 24,031
25,000 4.00 10/14/99 24,030
50,000 4.065 10/14/99 48,061
- --------------------------------------------------------------------------------
Total US Government, Agency & Instrumentality
Obligations--Discount (Cost--$1,796,118) ..................... 1,797,347
- --------------------------------------------------------------------------------
US Government, Agency & Instrumentality Obligations--
Non-Discount--12.0%
- --------------------------------------------------------------------------------
Federal Home 10,000 5.45 2/19/99 10,009
Loan Bank 100,000 4.605+ 3/26/99 99,980
15,000 5.718 5/06/99 15,058
10,000 6.60 6/21/99 10,105
20,000 6.08 6/30/99 20,153
65,000 4.70+ 9/02/99 64,973
15,000 5.875 8/18/00 15,005
50,000 5.835 8/24/00 50,016
56,800 5.563 9/18/00 56,832
20,000 5.48 9/29/00 20,009
51,500 5.551 9/29/00 51,524
- --------------------------------------------------------------------------------
Federal Home 25,000 7.125+ 7/21/99 25,401
Loan Mortgage 20,000 5.975 11/24/99 20,008
Corporation
- --------------------------------------------------------------------------------
Federal National 75,000 4.421+ 11/03/98 74,999
Mortgage 22,150 5.351+ 12/14/98 22,148
Association 50,000 4.56+ 1/21/99 49,994
35,000 5.33 2/12/99 35,017
100,000 4.56+ 3/03/99 99,985
60,000 4.304+ 7/14/99 59,929
100,000 4.57+ 7/15/99 99,965
100,000 4.346+ 7/30/99 99,938
50,000 4.635+ 8/19/99 49,970
75,000 5.08 9/24/99 75,194
78,000 4.67+ 10/27/99 77,964
20,000 5.75 3/09/00 20,038
50,620 4.89 10/13/00 50,569
- --------------------------------------------------------------------------------
Student Loan 100,000 4.42+ 11/06/98 99,999
Marketing 42,000 4.64+ 11/25/98 41,999
Association 51,425 5.80 12/18/98 51,469
60,000 5.40 2/10/99 60,040
21,900 6.00 12/16/99 21,921
50,000 4.57+ 1/12/00 49,989
46,000 4.615+ 2/04/00 45,986
- --------------------------------------------------------------------------------
US Treasury Notes 25,000 7.125 9/30/99 25,609
10,000 5.125 8/31/00 10,163
- --------------------------------------------------------------------------------
Total US Government, Agency & Instrumentality
Obligations--Non-Discount (Cost--$1,680,911) ................. 1,681,958
- --------------------------------------------------------------------------------
Total Investments (Cost--$14,071,100)--100.7% ................ 14,075,489
Liabilities in Excess of Other Assets--(0.7%) ................ (101,383)
-----------
Net Assets--100.0% ........................................... $13,974,106
===========
- --------------------------------------------------------------------------------
* Commercial Paper and certain US Government, Agency & Instrumentality
Obligations are traded on a discount basis; the interest rates shown
reflect 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, 1998.
+ Floating Rate Notes.
See Notes to Financial Statements.
7
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1998
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$14,071,100,127*) (Note 1a) ... $14,075,488,619
Cash................................................................... 48,747
Receivables:
Securities sold...................................................... $ 176,716,783
Interest............................................................. 62,786,480
Beneficial interest sold............................................. 207,041 239,710,304
-------------
Prepaid registration fees and other assets (Note 1e)................... 582,101
---------------
Total assets........................................................... 14,315,829,771
---------------
- -------------------------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Securities purchased................................................. 182,343,558
Beneficial interest redeemed......................................... 151,388,655
Investment adviser (Note 2).......................................... 4,012,708
Dividends to shareholders (Note 1f).................................. 5,460
Distributor (Note 2)................................................. 2,493 337,752,874
-------------
Accrued expenses and other liabilities................................. 3,970,634
---------------
Total liabilities...................................................... 341,723,508
---------------
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets: Net assets............................................................. $13,974,106,263
===============
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets Class I shares of beneficial interest, $0.10 par value,
Consist of: unlimited number of shares authorized.................................. $ 1,391,331,793
Class II shares of beneficial interest, $0.10 par value,
unlimited number of shares authorized.................................. 5,639,985
Paid-in capital in excess of par....................................... 12,572,745,993
Unrealized appreciation on investments--net............................ 4,388,492
---------------
Net assets............................................................. $13,974,106,263
===============
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Class I--Based on net assets of $13,917,721,375 and
Value: 13,913,317,927 shares outstanding...................................... $ 1.00
===============
Class II--Based on net assets of $56,384,888 and
56,399,845 shares outstanding.......................................... $ 1.00
===============
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* As of October 31, 1998, net unrealized appreciation for Federal
income tax purposes amounted to $4,197,534, of which $5,558,653
related to appreciated securities and $1,361,119 related to
depreciated securities. The aggregate cost of investments at October
31, 1998 for Federal income tax purposes was $14,071,291,085.
See Notes to Financial Statements.
8
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1998
FINANCIAL INFORMATION (continued)
Statement of Operations
<TABLE>
<CAPTION>
For the Year Ended
October 31, 1998
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income Interest and amortization of premium and discount earned.... $ 680,666,770
(Note 1d):
- -------------------------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees (Note 2)........................... $ 43,135,917
Transfer agent fees--Class I (Note 2)....................... 16,155,131
Registration fees (Note 1e)................................. 1,370,936
Printing and shareholder reports............................ 852,973
Accounting services (Note 2)................................ 499,482
Custodian fees.............................................. 337,806
Professional fees........................................... 119,935
Trustees' fees and expenses................................. 79,449
Interest expense............................................ 9,669
Transfer agent fees--Class II (Note 2)*..................... 3,348
Distribution fees--Class II (Note 2)*....................... 2,493
Other....................................................... 2,682,461
------------
Total expenses.............................................. 65,249,600
--------------
Investment income--net...................................... 615,417,170
--------------
- -------------------------------------------------------------------------------------------------------------------------------
Realized & Unreal- Realized gain on investments--net........................... 1,292,223
ized Gain on Change in unrealized appreciation on investments--net....... 3,920,495
Investments--Net --------------
(Note 1d): Net Increase in Net Assets Resulting from Operations........ $ 620,629,888
==============
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Class II Shares commenced operations on October 5, 1998.
See Notes to Financial Statements.
9
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1998
FINANCIAL INFORMATION (continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the
Year Ended
October 31,
------------------------------
Increase (Decrease) in Net Assets: 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations: Investment income--net...................................... $ 615,417,170 $ 536,352,386
Realized gain on investments--net........................... 1,292,223 581,438
Change in unrealized appreciation on investments--net....... 3,920,495 (368,533)
--------------- ---------------
Net increase in net assets resulting from operations........ 620,629,888 536,565,291
--------------- ---------------
- -------------------------------------------------------------------------------------------------------------------------------
Dividends & Investment income--net:
Distributions to Class I................................................... (615,358,911) (536,352,386)
Shareholders Class II*................................................. (58,259) --
(Note 1f): Realized gain on investments--net:
Class I................................................... (1,292,074) (581,438)
Class II*................................................. (149) --
--------------- ---------------
Net decrease in net assets resulting from dividends and
distributions to shareholders............................... (616,709,393) (536,933,824)
--------------- ---------------
- -------------------------------------------------------------------------------------------------------------------------------
Beneficial Interest Net increase in net assets derived from beneficial
Transactions interest transactions....................................... 3,279,840,626 1,350,484,603
(Note 3): --------------- ---------------
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets: Total increase in net assets................................ 3,283,761,121 1,350,116,070
Beginning of year........................................... 10,690,345,142 9,340,229,072
--------------- ---------------
End of year................................................. $13,974,106,263 $10,690,345,142
=============== ===============
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Class II Shares commenced operations on October 5, 1998.
See Notes to Financial Statements.
10
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1998
FINANCIAL INFORMATION (continued)
Financial Highlights
<TABLE>
<CAPTION>
Class I
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: 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ---------- ---------- ----------
Operating Investment income--net.................... .0517 .0512 .0509 .0540 .0345
Performance: Realized and unrealized gain (loss) on
investments--net ......................... .0004 .0001 (.0002) .0015 (.0011)
----------- ----------- ---------- ---------- ----------
Total from investment operations.......... .0521 .0513 .0507 .0555 .0334
----------- ----------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net.................. (.0517) (.0512) (.0509) (.0540) (.0345)
Realized gain on investments--net....... (.0001) (.0001) (.0001) (.0002) --+
----------- ----------- ---------- ---------- ----------
Total dividends and distributions......... (.0518) (.0513) (.0510) (.0542) (.0345)
----------- ----------- ---------- ---------- ----------
Net asset value, end of year.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== ========== ========== ==========
Total investment return................... 5.31% 5.35% 5.19% 5.55% 3.47%
=========== =========== ========== ========== ==========
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses.................................. .55% .54% .56% .59% .59%
Net Assets: =========== =========== ========== ========== ==========
Investment income and realized gain
on investments--net....................... 5.19% 5.13% 5.07% 5.43% 3.44%
=========== =========== ========== ========== ==========
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of year (in thousands)... $13,917,721 $10,690,345 $9,340,229 $8,648,907 $7,403,684
Data: =========== =========== ========== ========== ==========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Amount is less than $.0001 per share.
See Notes to Financial Statements.
11
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1998
FINANCIAL INFORMATION (concluded)
Financial Highlights (concluded)
<TABLE>
<CAPTION>
Class II
------------
For the
Period
The following per share data and ratios have been derived Oct. 5, 1998+
from information provided in the financial statements. to Oct. 31,
1998
Increase (Decrease) in Net Asset Value:
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per Share Net asset value, beginning of period.......................................................... $ 1.00
Operating ----------
Performance: Investment income--net......................................................................... .0037
Realized and unrealized gain on investments--net............................................... .0010
----------
Total from investment operations.............................................................. .0047
----------
Less dividends and distributions:
Investment income--net....................................................................... (.0037)
Realized gain on investments--net............................................................ --++
----------
Total dividends and distributions............................................................. (.0037)
----------
Net asset value, end of period................................................................ $ 1.00
==========
Total investment return....................................................................... 5.16%*
==========
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses...................................................................................... .72%*
Net Assets: ==========
Investment income and realized gain on investments--net........................................ 4.69%*
==========
- ----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands)...................................................... $ 56,385
Data: ==========
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Commencement of operations.
++ Amount is less than $.0001 per share.
* Annualized.
See Notes to Financial Statements.
12
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1998
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. Effective April 27, 1998, the
Fund's existing class of shares was designated Class I Shares and on October 2,
1998, the Fund began offering Class II Shares. Both classes of shares have equal
voting, dividend, liquidation and other rights, except that only shares of the
respective classes are entitled to vote on matters concerning only that class
and Class II Shares bear certain expenses related to the distribution of such
shares. At the present time, the Fund is the only series offered. The following
is a summary of significant accounting polices consistently followed by the
Fund.
(a) Valuation of investments--Portfolio securities with remaining maturities of
greater than sixty days are valued at the most recent bid price or yield
equivalent as obtained from dealers that make markets in such securities. As
securities transition from sixty-one to sixty days 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. Securities
maturing sixty days or less from their date of acquisition are valued at
amortized cost, which approximates market value. For the purposes of valuation,
the maturity of variable rate security is deemed to be the next coupon date on
which the interest rate is to be adjusted. Other investments for which market
quotations are not readily available are valued at their fair value as
determined in good faith by or under the direction of the Fund's Board of
Trustees.
(b) Repurchase agreements--The Fund invests in US Government and Agency
securities pursuant to repurchase agreements. Under such agreements, the
counterparty 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 share holders. 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 entered into
a Distribution Agreement and Distribution Plan with Merrill Lynch Funds
Distributor ("MLFD" or "Distributor"), a division of Princeton Funds
Distributor, Inc. ("PFD"), which is 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
13
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
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.
Pursuant to the Distribution Plan adopted by the Fund in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Fund pays the Distributor an
ongoing distribution fee accrued daily and paid monthly at the annual rate of
0.20% of the Fund's average daily net assets attributable to Class II Shares.
This fee is used to help defray the expenses associated with marketing
activities and services related to Class II Shares.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co., is
the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or trustees of the Trust are officers and/or directors of
MLAM, PFD, FDS, PSI, and/or ML & Co.
3. Shares of Beneficial Interest:
Net increase in net assets derived from beneficial interest transactions was
$3,279,840,626 and 1,350,484,603 for the years ended October 31, 1998 and
October 31, 1997, respectively.
Transactions in shares of beneficial interest for each class were as follows:
- --------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended October 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ....................... 42,739,661,096 $ 42,739,661,096
Shares issued to share-
holders in reinvestment
of dividends and
distributions ..................... 616,611,073 616,611,073
--------------- ----------------
Total issued ...................... 43,356,272,169 43,356,272,169
Shares redeemed ................... (40,132,831,388) (40,132,831,388)
--------------- ----------------
Net increase ...................... 3,223,440,781 $ 3,223,440,781
=============== ================
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended October 31, 1997 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ....................... 35,790,703,282 $ 35,790,703,282
Shares issued to share-
holders in reinvestment
of dividends ...................... 536,932,268 536,932,268
--------------- ----------------
Total issued ...................... 36,327,635,550 36,327,635,550
Shares redeemed ................... (34,977,150,947) (34,977,150,947)
--------------- ----------------
Net increase ...................... 1,350,484,603 $ 1,350,484,603
=============== ================
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class II Shares for the
Period October 5, 1998+ Dollar
to October 31, 1998 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ....................... 85,369,645 $ 85,369,645
Shares issued to share-
holders in reinvestment
of dividends and
distributions ..................... 58,435 58,435
--------------- ----------------
Total issued ...................... 85,428,080 85,428,080
Shares redeemed ................... (29,028,235) (29,028,235)
--------------- ----------------
Net increase ...................... 56,399,845 $ 56,399,845
=============== ================
- --------------------------------------------------------------------------------
+ Prior to October 5, 1998 (commencement of operations), the Fund issued
10,000 shares to MLAM for $10,000.
14
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 1998
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, 1998, 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, 1998 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, 1998, 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 10, 1998
IMPORTANT TAX INFORMATION (unaudited)
Merrill Lynch Retirement Reserves Money Fund did not distribute long-term
capital gains during the year.
Please retain this information for your records.
15
<PAGE>
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
Kevin J. McKenna, Senior Vice President
Joseph T. Monagle Jr., Senior Vice President
Donald C. Burke, Vice President
John Ng, 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
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 221-7210
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. An
investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other Government agency. Although the Fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund. 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--10/98
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