MERRILL LYNCH
RETIREMENT
RESERVES
MONEY FUND
Merrill Lynch
Retirement Series Trust
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
October 31, 2000
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 2000
DEAR SHAREHOLDER
For the year ended October 31, 2000, Merrill Lynch Retirement Reserves Money
Fund's Class I and Class II Shares had net annualized yields of 5.93%* and
5.72%*, respectively. The Fund's Class I and Class II Shares had 7-day yields as
of October 31, 2000 of 6.14% and 5.93%, respectively.
The average portfolio maturity for Merrill Lynch Retirement Reserves Money Fund
at October 31, 2000 was 65 days, compared to 45 days at April 30, 2000.
The Environment
By October 31, 2000, there was ample evidence to indicate that the economy was
finally beginning to moderate from the unsustainable growth rate of the previous
three quarters. The increases in the Federal Funds rate so far this year have
begun to have an effect. Since our last report to shareholders, the US equity
market has also moderated, with major equity indexes experiencing volatility.
Recently, weaker earnings reports by several technology leaders drove the
technology-heavy NASDAQ significantly lower. The optimism that fueled
unrealistic expectations in the equity market earlier this year is almost gone,
as a weak euro has slowed demand from overseas. The stock and bond markets are
presently driven by expectations of a neutral monetary policy from the Federal
Reserve Board, although concern remains in the equity market that the economy
may have a harder landing than is currently anticipated. Although the labor
market is still tight, with the unemployment rate hovering around 4%, continued
productivity gains will most likely alleviate inflationary pressures from gains
in wages and benefits. The extraordinary rise in oil and gasoline prices, while
eating into corporate profits, has also contributed to the drop in consumer
confidence. Investors are hoping that the economy has a soft landing, with gross
domestic product growth more in line with the Federal Reserve Board's target of
about 3%, making further interest rate increases unnecessary.
Portfolio Strategy
During the six-month period ended October 31, 2000, we pursued a strategy of
adding fixed rate bank and corporate notes in the one-year sector. Our average
life ranged from 39 days to 71 days. Even though we were in a rising interest
rate environment for a majority of the time, the inversion in the US Treasury
yield curve indicated that yields in the short-end of the yield curve would
probably not rise to extreme levels, as the one-year sector represented the
pivot point of the curve inversion. We targeted six-month certificates of
deposit when a break-even analysis showed they had greater value. Nevertheless,
since July, interest rates have declined, while credit and liquidity spreads
have tightened. It appears that the Federal Reserve Board may have reached the
culmination of its tightening cycle, causing investor demand to increase for
corporate product and spreads to narrow further for both fixed rate and floating
rate securities.
The Fund's portfolio composition at the end of the October period and as of our
last report to shareholders is detailed below:
-------------------------------------------------------------------------------
10/31/00 4/30/00
-------------------------------------------------------------------------------
Bank Notes ............................................... 6.3% 5.9%
Certificates of Deposit .................................. 2.0 3.1
Certificates of Deposit--European ........................ 3.5 7.1
Certificates of Deposit--Yankee .......................... 19.3 8.7
Commercial Paper ......................................... 39.4 48.1
Corporate Notes .......................................... 15.5 16.2
Funding Agreements ....................................... 2.2 1.8
Time Deposits ............................................ 1.2 --
US Government, Agency &
Instrumentality Obligations--
Non-Discount ............................................. 11.7 10.6
Liabilities in Excess of Other Assets .................... (1.1) (1.5)
----- -----
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/ Terry K. Glenn
Terry K. Glenn
President and Trustee
/s/ John Ng
John Ng
Vice President and Portfolio Manager
December 5, 2000
* 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, 2000
SCHEDULE OF INVESTMENTS (in Thousands)
Face Interest Maturity
Issue Amount Rate* Date Value
------------------------------------------------------------------------
Bank Notes--6.3%
------------------------------------------------------------------------
American Express $ 75,000 6.66+ % 3/07/2001 $ 75,000
Centurion Bank
------------------------------------------------------------------------
Bank of America, 200,000 6.65+ 6/06/2001 199,977
NA 5,000 6.83+ 7/11/2001 5,003
------------------------------------------------------------------------
Bank of America, 100,000 6.90 12/13/2000 100,024
NTSA
------------------------------------------------------------------------
Comerica Bank 50,000 6.559+ 2/02/2001 49,994
50,000 6.535+ 2/14/2001 49,991
------------------------------------------------------------------------
National City 50,000 6.788+ 7/05/2001 50,006
Bank of Ohio
------------------------------------------------------------------------
National City Bank 25,000 6.67 3/13/2001 24,979
of Pennsylvania
------------------------------------------------------------------------
U.S. Bank, NA 45,000 6.88 4/04/2001 44,984
------------------------------------------------------------------------
U.S. Bank, NA, 25,000 6.635+ 6/25/2001 24,994
North Dakota
------------------------------------------------------------------------
Total Bank Notes (Cost--$624,953) ........................ 624,952
------------------------------------------------------------------------
Certificates of Deposit--2.0%
------------------------------------------------------------------------
Comerica Bank 50,000 6.63+ 6/27/2001 49,987
------------------------------------------------------------------------
First Tennessee 75,000 6.57 12/28/2000 75,001
Bank, NA
------------------------------------------------------------------------
Old Kent Bank 75,000 6.65+ 4/30/2001 74,993
------------------------------------------------------------------------
Total Certificates of Deposit
(Cost--$199,980) ......................................... 199,981
------------------------------------------------------------------------
Certificates of Deposit--European--3.5%
------------------------------------------------------------------------
Bank Austria AG, 35,000 6.60 12/28/2000 35,009
London
------------------------------------------------------------------------
Bank of Scotland 15,000 6.66 1/19/2001 14,999
Treasury Services
PLC, London
------------------------------------------------------------------------
Bayerische Hypo- und 50,000 7.04 7/17/2001 50,108
Vereinsbank AG,
London
------------------------------------------------------------------------
Bayerische 55,000 6.88 12/29/2000 55,020
Landesbank
Girozentrale,
London
------------------------------------------------------------------------
ING Bank NV, 25,000 6.87 12/29/2000 25,009
London
------------------------------------------------------------------------
Landesbank 50,000 6.65 1/31/2001 50,000
Baden-Wurttemberg,
London
------------------------------------------------------------------------
Norddeutsche 50,000 6.65 1/30/2001 50,000
Landesbank 15,000 6.90 4/30/2001 15,051
Girozentrale, London
------------------------------------------------------------------------
Westdeutsche 50,000 7.00 5/02/2001 50,045
Landesbank
Girozentrale,
London
------------------------------------------------------------------------
Total Certificates of Deposit--
European (Cost--$345,015) ................................ 345,241
------------------------------------------------------------------------
Certificates of Deposit--Yankee--19.3%
------------------------------------------------------------------------
Australia & 25,000 6.84 3/28/2001 24,984
New Zealand
Banking Group,
NY
------------------------------------------------------------------------
Bank Austria AG, NY 40,000 6.65+ 7/05/2001 39,992
25,000 6.88 9/04/2001 25,017
------------------------------------------------------------------------
Bayerische Hypo- und 25,000 6.68 3/08/2001 24,971
Vereinsbank AG, NY 35,000 6.90 8/22/2001 35,024
25,000 6.88 9/04/2001 25,017
------------------------------------------------------------------------
Bayerische 150,000 6.585+ 11/09/2000 149,997
Landesbank 145,000 6.64+ 8/03/2001 144,963
Girozentrale, NY
------------------------------------------------------------------------
Canadian Imperial 25,000 7.13 6/29/2001 25,039
Bank of Commerce, 50,000 6.98 7/16/2001 50,040
NY
------------------------------------------------------------------------
Commerzbank AG, 75,000 6.57+ 4/26/2001 74,989
NY 25,000 7.145 6/26/2001 25,040
25,000 7.14 6/27/2001 25,040
50,000 7.00 7/17/2001 50,049
25,500 7.055 7/20/2001 25,535
49,500 7.00 8/02/2001 49,558
------------------------------------------------------------------------
Credit Agricole 150,000 6.61+ 11/08/2000 149,998
Indosuez, NY 30,000 6.591+ 11/29/2000 29,998
20,000 6.82 4/27/2001 19,987
------------------------------------------------------------------------
Den Danske Bank 25,000 6.90 12/07/2000 25,003
A/S, NY
------------------------------------------------------------------------
Deutsche Bank AG, 25,000 6.00 11/13/2000 24,991
NY 25,000 6.75 3/20/2001 24,976
25,000 6.80 4/17/2001 24,981
100,000 6.70 10/10/2001 99,958
------------------------------------------------------------------------
Royal Bank of 25,000 6.525 1/16/2001 24,970
Canada, NY 100,000 6.62+ 6/07/2001 99,970
50,000 6.615+ 7/06/2001 49,973
------------------------------------------------------------------------
Svenska 25,000 6.65 3/06/2001 24,969
Handelsbanken AB, 63,500 7.00 7/16/2001 63,560
NY 79,000 6.89 8/24/2001 79,051
------------------------------------------------------------------------
UBS AG, Stanford 125,000 5.97 11/17/2000 124,942
25,000 6.85 3/28/2001 24,985
------------------------------------------------------------------------
Unibank A/S, NY 25,000 6.81 4/11/2001 24,982
25,000 6.80 4/17/2001 24,980
------------------------------------------------------------------------
2
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 2000
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Face Interest Maturity
Issue Amount Rate* Date Value
------------------------------------------------------------------------
Certificates of Deposit--Yankee (concluded)
------------------------------------------------------------------------
Westdeutsche $ 50,000 6.66 % 1/31/2001 $ 50,000
Landesbank
Girozentrale, NY
------------------------------------------------------------------------
Westpac Banking 25,000 6.59+ 11/10/2000 25,000
Corp., NY 75,000 6.59+ 11/13/2000 74,999
25,000 6.79 4/12/2001 24,980
------------------------------------------------------------------------
Total Certificates of Deposit--
Yankee (Cost--$1,912,254) ................................ 1,912,508
------------------------------------------------------------------------
Commercial Paper--39.4%
------------------------------------------------------------------------
AT&T Corp. 76,000 6.50 12/13/2000 75,413
24,000 6.50 12/14/2000 23,810
98,950 6.819+ 7/13/2001 98,988
------------------------------------------------------------------------
Amsterdam Funding 24,000 6.51 12/05/2000 23,848
Corporation 50,000 6.52 12/06/2000 49,683
------------------------------------------------------------------------
Apreco, Inc. 20,000 6.51 11/01/2000 19,996
20,800 6.56 11/15/2000 20,744
39,200 6.58 1/24/2001 38,591
------------------------------------------------------------------------
Atlantis One 75,000 6.50 11/21/2000 74,716
Funding Corp.
------------------------------------------------------------------------
BASF AG 60,000 6.50 12/15/2000 59,515
------------------------------------------------------------------------
BBL North America 75,000 6.51 11/27/2000 74,634
Funding Corp.
------------------------------------------------------------------------
Banco Itau SA 10,000 6.55 12/22/2000 9,907
------------------------------------------------------------------------
Banco Rio de la 112,500 6.48 3/08/2001 109,914
Plata SA
------------------------------------------------------------------------
Bear Stearns 39,000 6.50 2/15/2001 38,249
Companies, Inc.
------------------------------------------------------------------------
CXC Inc. 100,000 6.50 11/28/2000 99,494
50,000 6.49 12/04/2000 49,694
15,000 6.54 1/25/2001 14,767
------------------------------------------------------------------------
Centric Capital Corp. 12,000 6.51 11/06/2000 11,987
10,488 6.50 11/13/2000 10,463
8,000 6.50 12/04/2000 7,951
15,000 6.48 12/21/2000 14,863
5,500 6.48 12/27/2000 5,444
12,058 6.50 3/09/2001 11,779
7,900 6.45 3/26/2001 7,693
7,000 6.41 4/23/2001 6,782
------------------------------------------------------------------------
Clipper Receivables 25,000 6.48 12/28/2000 24,740
Corp.
------------------------------------------------------------------------
Corporate Asset 50,000 6.50 11/14/2000 49,874
Funding Co., Inc. 49,700 6.50 11/16/2000 49,556
24,960 6.50 11/21/2000 24,865
10,000 6.50 11/22/2000 9,960
50,000 6.48 12/07/2000 49,666
50,000 6.48 12/08/2000 49,657
------------------------------------------------------------------------
Corporate 60,000 6.55 11/03/2000 59,968
Receivables Corp. 45,000 6.50 11/07/2000 44,943
50,000 6.50 11/08/2000 49,928
------------------------------------------------------------------------
Credit Suisse First 15,000 6.48 3/16/2001 14,634
Boston Inc. 25,000 6.45 4/03/2001 24,310
------------------------------------------------------------------------
DaimlerChrysler 50,000 6.55 12/29/2000 49,471
North America 50,000 6.55 1/30/2001 49,163
Holdings Corp. 150,000 6.55 4/03/2001 145,862
125,000 6.55 4/20/2001 121,178
------------------------------------------------------------------------
Den Danske Corp. 21,000 6.47 12/29/2000 20,778
------------------------------------------------------------------------
Deutsche Bank 50,000 6.46 3/30/2001 48,656
Financial Inc.
------------------------------------------------------------------------
Edison Asset 189,000 6.65 11/01/2000 188,965
Securitization, LLC 80,000 6.50 11/16/2000 79,769
------------------------------------------------------------------------
Enterprise Funding 21,251 6.50 2/15/2001 20,842
Corp.
------------------------------------------------------------------------
Falcon Asset 43,000 6.50 11/30/2000 42,767
Securitization Corp.
------------------------------------------------------------------------
Formosa Plastics 30,000 6.67 12/20/2000 29,730
Corporation, Series II
------------------------------------------------------------------------
Forrestal Funding 19,320 6.51 11/01/2000 19,317
Master Trust 75,000 6.51 11/02/2000 74,973
35,428 6.51 11/13/2000 35,345
29,293 6.50 12/04/2000 29,113
17,360 6.51 12/07/2000 17,244
------------------------------------------------------------------------
General Electric 100,000 6.52 3/01/2001 97,826
Capital Corp. 40,000 6.52 5/01/2001 38,700
------------------------------------------------------------------------
General Electric 60,000 6.52 5/01/2001 58,050
Capital Services Inc.
------------------------------------------------------------------------
Internationale 50,000 6.44 3/29/2001 48,665
Nederlanden (US) 50,000 6.44 3/30/2001 48,656
Funding Corp.
------------------------------------------------------------------------
Kitty Hawk Funding 50,000 6.51 11/07/2000 49,937
Corp. 80,408 6.49 12/08/2000 79,857
15,000 6.46 3/20/2001 14,623
------------------------------------------------------------------------
Old Line Funding 31,527 6.51 11/14/2000 31,447
Corp. 38,583 6.51 11/16/2000 38,471
20,000 6.51 11/21/2000 19,924
27,742 6.51 11/22/2000 27,632
------------------------------------------------------------------------
Park Avenue 49,919 6.51 11/03/2000 49,892
Receivables Corp. 50,000 6.51 11/20/2000 49,819
10,321 6.50 11/27/2000 10,271
------------------------------------------------------------------------
Preferred Receivables 25,000 6.50 11/27/2000 24,878
Funding Corp. 6,025 6.50 11/29/2000 5,993
------------------------------------------------------------------------
3
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 2000
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Face Interest Maturity
Issue Amount Rate* Date Value
------------------------------------------------------------------------
Commercial Paper (concluded)
------------------------------------------------------------------------
Prudential $ 25,000 6.45 % 3/23/2001 $ 24,359
Funding LLC
------------------------------------------------------------------------
Rio Tinto 50,000 6.48 12/18/2000 49,569
Limited 50,000 6.48 12/19/2000 49,560
------------------------------------------------------------------------
Spintab AB 100,000 6.535 12/27/2000 98,977
------------------------------------------------------------------------
Tulip Funding Corp. 75,000 6.50 11/13/2000 74,824
------------------------------------------------------------------------
Unilever Capital 82,500 6.683+ 9/07/2001 82,534
Corp.
------------------------------------------------------------------------
United Mexican 50,000 6.50 11/22/2000 49,801
States 22,700 6.565 11/30/2000 22,577
------------------------------------------------------------------------
WCP Funding Inc. 50,000 6.50 12/12/2000 49,623
------------------------------------------------------------------------
Windmill Funding 15,000 6.50 11/01/2000 14,997
Corp. 110,000 6.51 11/06/2000 109,881
75,000 6.50 11/10/2000 74,865
50,000 6.50 11/15/2000 49,865
25,000 6.49 12/11/2000 24,816
------------------------------------------------------------------------
Woolwich PLC 45,000 6.68 12/12/2000 44,660
------------------------------------------------------------------------
Total Commercial Paper (Cost--$3,899,426) ................ 3,899,748
------------------------------------------------------------------------
Corporate Notes--15.5%
------------------------------------------------------------------------
AT&T Capital 10,000 7.50 11/15/2000 10,003
Corporation
------------------------------------------------------------------------
Abbey National 75,000 6.00 11/20/2000 74,965
Treasury Services PLC
------------------------------------------------------------------------
American Honda 25,000 6.68+ 8/10/2001 25,000
Finance Corp. 25,000 6.68+ 8/23/2001 24,998
------------------------------------------------------------------------
Associates 34,000 6.66+ 6/26/2001 34,001
Corporation of
North America
------------------------------------------------------------------------
The CIT Group 127,000 6.609+ 3/27/2001 126,965
Holdings, Inc.
------------------------------------------------------------------------
Chrysler Financial 27,500 5.25 10/22/2001 27,118
Corporation
------------------------------------------------------------------------
Credit Suisse 25,000 6.65+ 10/10/2001 25,000
First Boston
International
(Guernsey) Ltd.
------------------------------------------------------------------------
Ford Motor Credit 150,000 6.60+ 11/24/2000 149,995
Company 25,000 6.838+ 11/16/2001 25,040
------------------------------------------------------------------------
General Motors 25,000 7.021+ 11/09/2000 25,001
Acceptance Corp. 48,500 6.83+ 12/01/2000 48,500
33,000 6.71+ 2/27/2001 32,998
50,000 6.723+ 7/09/2001 49,980
10,000 6.90+ 8/10/2001 10,018
------------------------------------------------------------------------
Goldman Sachs 18,000 6.55 12/22/2000 18,000
Group, Inc. 125,000 6.629+ 3/21/2001 125,000
50,000 6.629+ 4/25/2001 50,000
27,000 6.923+ 11/13/2001 26,998
------------------------------------------------------------------------
Household Finance 25,000 6.763+ 11/01/2000 25,000
Corp. 75,000 6.715+ 7/20/2001 75,031
100,000 6.65+ 11/16/2001 99,967
------------------------------------------------------------------------
International 28,500 6.684+ 5/21/2001 28,506
Business Machines
Corp.
------------------------------------------------------------------------
LINCS, Series 1998-2 50,000 6.618+ 3/01/2001 50,000
------------------------------------------------------------------------
Morgan Stanley, 25,000 6.60+ 3/16/2001 25,000
Dean Witter & Co. 50,000 6.64+ 11/16/2001 49,998
------------------------------------------------------------------------
National Rural 20,000 6.10 12/22/2000 19,970
Utilities Cooperative
Finance Corp.
------------------------------------------------------------------------
NationsBank Corp. 15,000 6.90+ 5/25/2001 15,024
------------------------------------------------------------------------
Salomon Smith 18,000 7.02+ 8/23/2001 18,048
Barney Holdings,
Inc.
------------------------------------------------------------------------
Strategic Money 175,000 6.66+ 9/24/2001 175,000
Market Trust 2000-H
------------------------------------------------------------------------
Structured Asset 40,000 6.723+ 10/04/2001 40,000
Vehicle Securities
Trust, Series 99-1
------------------------------------------------------------------------
Total Corporate Notes
(Cost--$1,531,133) ....................................... 1,531,124
------------------------------------------------------------------------
Funding Agreements--2.2%
------------------------------------------------------------------------
General Electric 50,000 6.688+ 5/18/2001 50,000
Life and Annuity
Assurance Co.
------------------------------------------------------------------------
4
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 2000
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
Face Interest Maturity
Issue Amount Rate* Date Value
------------------------------------------------------------------------
Funding Agreements (concluded)
------------------------------------------------------------------------
Hartford Life $ 50,000 6.678+% 12/01/2000 $ 50,000
Insurance Company
------------------------------------------------------------------------
Jackson National 50,000 6.669+ 5/01/2001 50,000
Life Insurance Co.
------------------------------------------------------------------------
Monumental Life 30,000 6.764+ 8/17/2001 30,000
Insurance Company
------------------------------------------------------------------------
Principal Life 20,000 6.719+ 5/16/2001 20,000
Insurance Co.
------------------------------------------------------------------------
The Travelers 20,000 6.658+ 2/01/2001 20,000
Insurance Company
------------------------------------------------------------------------
Total Funding Agreements
(Cost--$220,000) ......................................... 220,000
------------------------------------------------------------------------
Time Deposits--1.2%
------------------------------------------------------------------------
Deutsche Bank AG 118,500 6.625 11/01/2000 118,500
------------------------------------------------------------------------
Total Time Deposits
(Cost--$118,500) ......................................... 118,500
------------------------------------------------------------------------
US Government, Agency & Instrumentality Obligations--
Non-Discount--11.7%
------------------------------------------------------------------------
Federal Home 6,500 4.905 11/20/2000 6,494
Loan Banks 13,050 5.33 3/20/2001 12,982
------------------------------------------------------------------------
Federal Home 30,000 5.05 11/17/2000 29,979
Loan Mortgage 25,000 5.13 11/24/2000 24,976
Corporation 52,000 5.18 11/24/2000 51,953
17,525 5.25 1/19/2001 17,470
40,000 5.15 1/26/2001 39,853
20,000 5.18 2/09/2001 19,917
20,000 5.53 3/09/2001 19,918
15,000 7.15 7/11/2002 15,057
------------------------------------------------------------------------
US Government, Agency & Instrumentality Obligations--
Non-Discount (concluded)
------------------------------------------------------------------------
Federal 50,000 5.07 12/14/2000 49,923
National Mortgage 23,500 5.21 1/26/2001 23,432
Association 33,150 5.52 3/06/2001 33,046
50,000 6.874+ 3/07/2001 50,000
20,000 5.48 5/03/2001 19,894
12,000 6.00 6/21/2001 11,958
10,000 6.00 7/17/2001 9,961
50,000 6.644+ 9/17/2001 49,966
20,000 6.625 11/05/2001 19,976
9,000 5.67 3/04/2002 8,904
50,000 6.854+ 4/19/2002 50,000
22,315 6.64 7/10/2002 22,259
17,900 6.55 7/15/2002 17,839
------------------------------------------------------------------------
Student Loan 50,000 4.75 12/11/2000 49,914
Marketing 7,415 5.46 3/30/2001 7,384
Association 75,000 6.864+ 8/23/2001 74,977
100,000 6.844+ 2/28/2002 99,954
70,000 6.814+ 3/11/2002 69,954
75,000 6.814+ 3/18/2002 74,951
100,000 6.814+ 4/12/2002 99,959
50,000 6.844+ 4/25/2002 49,972
------------------------------------------------------------------------
US Treasury Notes 25,000 4.625 11/30/2000 24,962
------------------------------------------------------------------------
Total US Government, Agency &
Instrumentality Obligations--
Non-Discount (Cost--$1,158,453) .......................... 1,157,784
------------------------------------------------------------------------
Total Investments (Cost--$10,009,714)--101.1% ............ 10,009,838
Liabilities in Excess of Other Assets--(1.1%) ............ (112,917)
-----------
Net Assets--100.0% ....................................... $ 9,896,921
===========
------------------------------------------------------------------------
* 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, 2000.
+ Floating rate note.
See Notes to Financial Statements.
5
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 2000
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of October 31, 2000
<TABLE>
<C> <S> <C> <C>
Assets: Investments, at value (identified cost--$10,009,713,848*) $10,009,838,183
Receivables:
Interest ............................................. $ 83,618,176
Beneficial interest sold ............................. 976,346 84,594,522
---------------
Prepaid registration fees and other assets .............. 461,709
---------------
Total assets ............................................ 10,094,894,414
---------------
------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Beneficial interest redeemed ......................... 110,762,198
Securities purchased ................................. 75,098,143
Investment adviser ................................... 3,329,279
Distributor .......................................... 107,905 189,297,525
---------------
Accrued expenses and other liabilities .................. 8,675,528
---------------
Total liabilities ....................................... 197,973,053
---------------
------------------------------------------------------------------------------------------------------------
Net Assets: Net assets .............................................. $ 9,896,921,361
===============
------------------------------------------------------------------------------------------------------------
Net Assets Class I Shares of beneficial interest, $.10 par value,
Consist of: unlimited number of shares authorized ................... $ 930,352,225
Class II Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized ................... 59,327,478
Paid-in capital in excess of par ........................ 8,907,117,323
Unrealized appreciation on investments--net ............. 124,335
---------------
Net assets .............................................. $ 9,896,921,361
===============
------------------------------------------------------------------------------------------------------------
Net Asset Class I--Based on net assets of $9,303,582,585 and
Value: 9,303,522,248 shares outstanding ........................ $ 1.00
===============
Class II--Based on net assets of $593,338,776 and
593,274,779 shares outstanding .......................... $ 1.00
===============
------------------------------------------------------------------------------------------------------------
</TABLE>
* Cost for Federal income tax purposes. As of October 31, 2000, net
unrealized appreciation for Federal income tax purposes amounted to
$124,335, of which $1,592,746 related to appreciated securities and
$1,468,411 related to depreciated securities.
See Notes to Financial Statements.
6
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 2000
FINANCIAL INFORMATION (continued)
Statement of Operations
<TABLE>
<CAPTION>
For the Year Ended
October 31, 2000
------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Investment Income: Interest and amortization of premium and discount earned ......... $ 872,389,421
------------------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees ......................................... $ 49,144,132
Transfer agent fees--Class I ..................................... 16,892,945
Distribution fees--Class II ...................................... 2,103,381
Accounting services .............................................. 1,390,153
Transfer agent fees--Class II .................................... 1,362,097
Printing and shareholder reports ................................. 842,181
Registration fees ................................................ 705,919
Custodian fees ................................................... 419,640
Professional fees ................................................ 255,253
Trustees' fees and expenses ...................................... 102,404
Pricing services ................................................. 29,650
Other ............................................................ 121,558
-------------
Total expenses ................................................... 73,369,313
-------------
Investment income--net ........................................... 799,020,108
-------------
------------------------------------------------------------------------------------------------------------------------
Realized & Unreal- Realized loss on investments--net ................................ (482,835)
ized Gain (Loss) on Change in unrealized appreciation/depreciation on investments--net 14,387,777
Investments--Net: -------------
Net Increase in Net Assets Resulting from Operations ............. $ 812,925,050
=============
------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 2000
FINANCIAL INFORMATION (continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the
Year Ended
October 31,
------------------------------------
Increase (Decrease) in Net Assets: 2000 1999
-------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Operations: Investment income--net ............................................ $ 799,020,108 $ 699,683,340
Realized loss on investments--net ................................. (482,835) (134,258)
Change in unrealized appreciation/depreciation on investments--net 14,387,777 (18,651,934)
---------------- ----------------
Net increase in net assets resulting from operations .............. 812,925,050 680,897,148
---------------- ----------------
-------------------------------------------------------------------------------------------------------------------------------
Dividends to Investment income--net:
Shareholders: Class I ........................................................ (740,405,441) (659,925,475)
Class II ....................................................... (58,131,832) (39,623,607)
---------------- ----------------
Net decrease in net assets resulting from dividends to shareholders (798,537,273) (699,549,082)
---------------- ----------------
-------------------------------------------------------------------------------------------------------------------------------
Beneficial Interest Net increase (decrease) in net assets derived from beneficial
Transactions: interest transactions ............................................. (5,347,226,094) 1,274,305,349
---------------- ----------------
-------------------------------------------------------------------------------------------------------------------------------
Net Assets: Total increase (decrease) in net assets ........................... (5,332,838,317) 1,255,653,415
Beginning of year ................................................. 15,229,759,678 13,974,106,263
---------------- ----------------
End of year ....................................................... $ 9,896,921,361 $ 15,229,759,678
================ ================
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 2000
FINANCIAL INFORMATION (continued)
Financial Highlights
<TABLE>
<CAPTION>
The following per share data and ratios have been derived Class I
from information provided in the financial statements. ---------------------------------------------------------------------
For the Year Ended October 31,
---------------------------------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------------------------------
<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 ............... .0583 .0474 .0517 .0512 .0509
Realized and unrealized gain (loss) on
investments--net ..................... .0010 (.0012) .0004 .0001 (.0002)
---------- ----------- ----------- ----------- ----------
Total from investment operations ..... .0593 .0462 .0521 .0513 .0507
---------- ----------- ----------- ----------- ----------
Less dividends and distributions:
Investment income--net ............ (.0583) (.0474) (.0517) (.0512) (.0509)
Realized gain on investments--net . -- -- (.0001) (.0001) (.0001)
---------- ----------- ----------- ----------- ----------
Total dividends and distributions .... (.0583) (.0474) (.0518) (.0513) (.0510)
---------- ----------- ----------- ----------- ----------
Net asset value, end of year ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== =========== =========== =========== ==========
Total investment return .............. 5.93% 4.84% 5.31% 5.35% 5.19%
========== =========== =========== =========== ==========
----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses ............................. .51% .50% .55% .54% .56%
Net Assets: ========== =========== =========== =========== ==========
Investment income and realized gain
on investments--net .................. 5.76% 4.75% 5.19% 5.13% 5.07%
========== =========== =========== =========== ==========
----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of year (in thousands) $9,303,582 $13,865,025 $13,917,721 $10,690,345 $9,340,229
Data: ========== =========== =========== =========== ==========
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 2000
FINANCIAL INFORMATION (concluded)
Financial Highlights (concluded)
<TABLE>
<CAPTION>
Class II
------------------------------------------
For the
The following per share data and ratios have been derived For the Year Ended Period
from information provided in the financial statements. October 31, Oct. 5, 1998+
--------------------------- to Oct. 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998
--------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Per Share Net asset value, beginning of period .................. $ 1.00 $ 1.00 $ 1.00
Operating ---------- ------------ ----------
Performance: Investment income--net ................................ .0566 .0454 .0037
Realized and unrealized gain (loss) on investments--net .0010 (.0019) .0010
---------- ------------ ----------
Total from investment operations ...................... .0576 .0435 .0047
---------- ------------ ----------
Less dividends and distributions:
Investment income--net ............................. (.0566) (.0454) (.0037)
Realized gain on investments--net .................. -- -- --++
---------- ------------ ----------
Total dividends and distributions ..................... (.0566) (.0454) (.0037)
---------- ------------ ----------
Net asset value, end of period ........................ $ 1.00 $ 1.00 $ 1.00
========== ============ ==========
Total investment return ............................... 5.72% 4.63% 5.16%*
========== ============ ==========
--------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses .............................................. .71% .71% .72%*
Net Assets: ========== ============ ==========
Investment income and realized gain on investments--net 5.52% 4.54% 4.69%*
========== ============ ==========
--------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) .............. $ 593,339 $ 1,364,735 $ 56,385
Data: ========== ============ ==========
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
+ Commencement of operations.
++ Amount is less than $.0001 per share.
See Notes to Financial Statements.
10
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 2000
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Retirement Reserves Money Fund (the "Fund") is a separate Fund
offering separate classes 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 Incorporated ("MLPF&S") acts as passive custodian. The Fund's financial
statements are prepared in conformity with accounting principles generally
accepted in the United States of America, which may require the use of
management accruals and estimates. The Fund offers two classes of shares. Class
I and Class II 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
policies consistently followed by the Fund.
(a) Valuation of investments--Portfolio securities with remaining maturities of
greater than sixty days, for which market quotations are readily available, are
valued at market value. 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 a variable rate security is deemed to be the next
coupon date on which the interest rate is to be adjusted. Other investments and
assets for which market quotations are not 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. If the seller defaults and
the fair value of the collateral declines, liquidation of the collateral of the
Fund may be delayed or limited.
(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
Investment Managers, L.P. ("MLIM"). The general partner of MLIM 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 Plans with FAM Distributors, Inc.
("FAMD" or the "Distributor"), which is a wholly-owned subsidiary of Merrill
Lynch Group, Inc.
MLIM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee
based upon the average daily value of the Fund's net assets at the following
annual rates: .50% of the Fund's average daily net assets not
11
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
exceeding $1 billion; .45% of average daily net assets in excess of $1 billion
but not exceeding $2 billion; .40% of average daily net assets in excess of $2
billion but not exceeding $3 billion; .375% of average daily net assets in
excess of $3 billion but not exceeding $4 billion; .35% of average daily net
assets in excess of $4 billion but not exceeding $7 billion; .325% of average
daily net assets in excess of $7 billion but not exceeding $10 billion; .30% of
average daily net assets in excess of $10 billion but not exceeding $15 billion
and .29% of average daily net assets in excess of $15 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
.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 MLIM at cost.
Certain officers and/or trustees of the Trust are officers and/or directors of
MLIM, FAMD, FDS, PSI, and/or ML & Co.
3. Shares of Beneficial Interest:
Net increase (decrease) in net assets derived from beneficial interest
transactions was $(5,347,226,094) and $1,274,305,349 for the years ended October
31, 2000 and October 31, 1999, respectively.
Transactions in shares of beneficial interest for each class were as follows:
-------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended October 31, 2000 Shares Amount
-------------------------------------------------------------------------------
Shares sold ...................... 40,677,388,358 $ 40,677,388,358
Shares issued to share-
holders in reinvestment
of dividends ..................... 738,753,837 738,753,837
---------------- ----------------
Total issued ..................... 41,416,142,195 41,416,142,195
Shares redeemed .................. (45,990,891,495) (45,990,891,495)
---------------- ----------------
Net decrease ..................... (4,574,749,300) $ (4,574,749,300)
================ ================
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class I Shares for the Year Dollar
Ended October 31, 1999 Shares Amount
-------------------------------------------------------------------------------
Shares sold ...................... 43,972,818,950 $ 43,972,818,950
Shares issued to share-
holders in reinvestment
of dividends ..................... 659,870,375 659,870,375
---------------- ----------------
Total issued ..................... 44,632,689,325 44,632,689,325
Shares redeemed .................. (44,667,735,705) (44,667,735,705)
---------------- ----------------
Net decrease ..................... (35,046,380) $ (35,046,380)
================ ================
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class II Shares for the Year Dollar
Ended October 31, 2000 Shares Amount
-------------------------------------------------------------------------------
Shares sold ...................... 3,071,695,373 $ 3,071,695,373
Shares issued to share-
holders in reinvestment
of dividends ..................... 58,326,688 58,326,688
---------------- ----------------
Total issued ..................... 3,130,022,061 3,130,022,061
Shares redeemed .................. (3,902,498,855) (3,902,498,855)
---------------- ----------------
Net decrease ..................... (772,476,794) $ (772,476,794)
================ ================
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class II Shares for the Year Dollar
Ended October 31, 1999 Shares Amount
-------------------------------------------------------------------------------
Shares sold ...................... 7,590,795,757 $ 7,590,795,757
Shares issued to share-
holders in reinvestment
of dividends ..................... 39,614,823 39,614,823
---------------- ----------------
Total issued ..................... 7,630,410,580 7,630,410,580
Shares redeemed .................. (6,321,058,851) (6,321,058,851)
---------------- ----------------
Net increase ..................... 1,309,351,729 $ 1,309,351,729
================ ================
-------------------------------------------------------------------------------
4. Capital Loss Carryforward:
At October 31, 2000, the Fund had a net capital loss carryforward of
approximately $808,000, of which $325,000 expires in 2007 and $483,000 expires
in 2008. This amount will be available to offset like amounts of any future
taxable gains.
12
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 2000
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, 2000, 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 auditing standards generally
accepted in the United States of America. 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, 2000 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, 2000, the results of its operations, the changes in its net assets,
and the financial highlights for the respective stated periods in conformity
with accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
December 15, 2000
13
<PAGE>
Merrill Lynch Retirement Reserves Money Fund October 31, 2000
OFFICERS AND TRUSTEES
Terry K. Glenn, President and Trustee
Joe Grills, Trustee
Walter Mintz, Trustee
Robert S. Salomon Jr., Trustee
Melvin R. Seiden, Trustee
Stephen B. Swensrud, Trustee
Arthur Zeikel, Trustee
Kevin J. McKenna, Senior Vice President
Joseph T. Monagle Jr., Senior Vice President
John Ng, Vice President
Donald C. Burke, Vice President and Treasurer
Phillip S. Gillespie, 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
14
<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. 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. Past performance results shown in this report should not be considered a
representation of future performance, which will fluctuate. 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--10/00
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