<PAGE> 1
PROSPECTUS
April 28, 1994
MERRILL LYNCH READY ASSETS TRUST
BOX 9011, PRINCETON, NEW JERSEY 08543-9011 - PHONE NO. (609) 282-2800
------------------------
Merrill Lynch Ready Assets Trust (the "Trust") is a no-load money market
fund organized as a Massachusetts business trust, seeking preservation of
capital, liquidity and the highest possible current income consistent with the
foregoing objectives available from investing in a diversified portfolio of
short-term money market securities. Portfolio securities principally consist of
short-term United States Government securities, Government agency securities,
bank money instruments, corporate debt instruments, including commercial paper
and variable amount master demand notes, and repurchase and reverse repurchase
agreements. The Trust shares common goals with those investors seeking to put
reserve assets to work in an income producing and prudent manner and to make
these assets readily available without penalty. There can be no assurance that
the investment objectives of the Trust will be realized. The Trust seeks to
maintain a constant $1.00 net asset value per share, although this cannot be
assured. An investment in the Trust is neither insured nor guaranteed by the
U.S. Government.
Shares of the Trust may be purchased at their net asset value without any
sales charge. The minimum initial purchase is $5,000 and subsequent purchases
generally must be $1,000 or more. For accounts advised by banks and registered
investment advisers, the minimum initial purchase is $300 and the minimum
subsequent purchase is $100. The minimum initial purchase with respect to
pension, profit sharing, individual retirement and other retirement plans is
$250 and there is no minimum on subsequent investments with respect to these
plans. The minimum initial purchase under the Merrill Lynch BlueprintSM Program
is $500 (or $50 if the shareholder elects to participate in the automatic
investment of sale proceeds option on the Merrill Lynch BlueprintSM Program
application form) and the minimum subsequent purchase is $50. Shares may be
redeemed at any time at net asset value as described herein. The Trust pays
Merrill Lynch, Pierce, Fenner & Smith Incorporated a distribution fee for
providing certain services in connection with the distribution of Trust shares.
See "Purchase of Shares" and "Redemption of Shares".
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
This Prospectus is a concise statement of information about the Trust that
is relevant to making an investment in the Trust. This Prospectus should be
retained for future reference. A statement containing additional information
about the Trust, dated April 28, 1994 (the "Statement of Additional
Information"), has been filed with the Securities and Exchange Commission and
can be obtained, without charge, by calling or by writing the Trust at the above
telephone number or address. The Statement of Additional Information is hereby
incorporated by reference into this Prospectus.
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MERRILL LYNCH ASSET MANAGEMENT--MANAGER
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.--DISTRIBUTOR
<PAGE> 2
FEE TABLE
<TABLE>
<CAPTION>
ANNUAL TRUST OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993:
- -------------------------------------------------------------------------------------
<S> <C>
Management Fees(a)................................................................. 0.36%
12b-1 Fees(b)...................................................................... 0.12%
Other Expenses(c).................................................................. 0.17%
-----
Total Trust Operating Expenses....................................................... 0.65%
-----
-----
</TABLE>
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(a) See "Management of the Trust--Management and Advisory Arrangements"--page 9.
(b) See "Purchase of Shares--Distribution Plan"--page 11.
(c) See "Management of the Trust--Transfer Agency Services"--page 9.
EXAMPLE:
<TABLE>
<CAPTION>
CUMULATIVE EXPENSES PAID FOR THE PERIOD OF:
-------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming an operating expense ratio of
0.65% and a 5% annual return throughout the periods... $ 6.64 $ 20.80 $ 36.22 $81.04
</TABLE>
The foregoing Fee Table is intended to assist investors in understanding
the costs and expenses that a shareholder in the Trust will bear directly or
indirectly. The Example set forth above assumes reinvestment of all dividends
and distributions and utilizes a 5% annual rate of return as mandated by
Securities and Exchange Commission regulations. The Example should not be
considered a representation of past or future expenses and actual expenses may
be more or less than those assumed for purposes of the Example.
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<PAGE> 3
FINANCIAL HIGHLIGHTS
Financial statements for the fiscal year ended December 31, 1993 and the
independent auditors' report thereon are included in the Statement of Additional
Information. The following per share data and ratios have been derived from
information provided in financial statements of the Trust audited by Deloitte &
Touche, independent auditors.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987
---------- ---------- ---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of year... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ----------- ----------- ---------- ----------
Investment
income -- net... .0272 .0332 .0556 .0771 .0860 .0695 .0616
Realized and
unrealized gain
(loss) on
investments -- net.. .0003 .0009 .0029 .0010 .0005 (.0004) (.0005)
---------- ---------- ---------- ----------- ----------- ---------- ----------
Total from investment
operations.......... .0275 .0341 .0585 .0781 .0865 .0691 .0611
---------- ---------- ---------- ----------- ----------- ---------- ----------
Less dividends and
distributions:
Investment
income -- net... (.0272) (.0332) (.0556) (.0771) (.0860) (.0691) (.0611)
Realized gain on
investments -- net.. (.0005) (.0007) (.0029)* (.0010)* (.0005)* -- --
---------- ---------- ---------- ----------- ----------- ---------- ----------
Total dividends and
distributions....... (.0277) (.0339) (.0585) (.0781) (.0865) (.0691) (.0611)
---------- ---------- ---------- ----------- ----------- ---------- ----------
Net asset value, end
of year............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ----------- ----------- ---------- ----------
---------- ---------- ---------- ----------- ----------- ---------- ----------
TOTAL INVESTMENT
RETURN:............. 2.81% 3.44% 6.02% 8.08% 9.05% 7.16% 6.30%
---------- ---------- ---------- ----------- ----------- ---------- ----------
---------- ---------- ---------- ----------- ----------- ---------- ----------
RATIOS TO AVERAGE NET
ASSETS:
Expenses, excluding
distribution fees
and net of
reimbursement....... .53% .52% .50% .50% .52% .51% .51%
---------- ---------- ---------- ----------- ----------- ---------- ----------
---------- ---------- ---------- ----------- ----------- ---------- ----------
Expenses.............. .65% .64% .62% .62% .63% .62% .62%
---------- ---------- ---------- ----------- ----------- ---------- ----------
---------- ---------- ---------- ----------- ----------- ---------- ----------
Investment
income--net, and
realized gain (loss)
on
investments -- net... 2.78% 3.48% 5.87%* 7.80%* 8.65%* 6.88%* 6.10%*
---------- ---------- ---------- ----------- ----------- ---------- ----------
---------- ---------- ---------- ----------- ----------- ---------- ----------
SUPPLEMENTAL DATA:
Net assets, end of
year (in
thousands).......... $6,523,187 $7,465,869 $9,077,226 $10,180,436 $10,650,487 $9,130,343 $9,864,068
---------- ---------- ---------- ----------- ----------- ---------- ----------
---------- ---------- ---------- ----------- ----------- ---------- ----------
<CAPTION>
1986 1985 1984
----------- ----------- -----------
<S> <<C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of year... $ 1.00 $ 1.00 $ 1.00
----------- ----------- -----------
Investment
income -- net... .0622 .0763 .0980
Realized and
unrealized gain
(loss) on
investments -- net.. .0004 .0015 .0023
----------- ----------- -----------
Total from investment
operations.......... .0626 .0778 .1003
----------- ----------- -----------
Less dividends and
distributions:
Investment
income -- net... (.0622) (.0763) (.0980)
Realized gain on
investments -- net.. (.0004)* (.0015)* (.0023)*
----------- ----------- -----------
Total dividends and
distributions....... (.0626) (.0778) (.1003)
----------- ----------- -----------
Net asset value, end
of year............. $ 1.00 $ 1.00 $ 1.00
----------- ----------- -----------
----------- ----------- -----------
TOTAL INVESTMENT
RETURN:............. 6.47% 8.08% 10.47%
----------- ----------- -----------
----------- ----------- -----------
RATIOS TO AVERAGE NET
ASSETS:
Expenses, excluding
distribution fees
and net of
reimbursement....... .52% .52% .57%
----------- ----------- -----------
----------- ----------- -----------
Expenses.............. .63% .64% .68%
----------- ----------- -----------
----------- ----------- -----------
Investment
income--net, and
realized gain (loss)
on
investments -- net... 6.31%* 7.77%* 9.99%*
----------- ----------- -----------
----------- ----------- -----------
SUPPLEMENTAL DATA:
Net assets, end of
year (in
thousands).......... $11,150,687 $11,875,311 $12,469,374
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
- ---------------
* Includes unrealized gain (loss).
3
<PAGE> 4
YIELD INFORMATION
Set forth below is yield information for the indicated seven-day periods,
computed to include and exclude realized and unrealized gains and losses for the
seven-day period ended December 31, 1993 and to include and exclude realized
gains and losses for the seven-day period ended February 28, 1994, and
information as to the compounded annualized yield, excluding gains and losses,
for the same periods.
<TABLE>
<CAPTION>
SEVEN-DAY PERIOD ENDED
---------------------------------------
DECEMBER 31, 1993 FEBRUARY 28, 1994
----------------- -----------------
<S> <C> <C>
Annualized Yield:
Including gains and losses........................ 2.78% 2.78%
Excluding gains and losses........................ 2.77% 2.78%
Compounded Annualized Yield......................... 2.81% 2.82%
Average maturity of portfolio at end of period...... 77 days 50 days
</TABLE>
The yield of the Trust refers to the income generated by an investment in
the Trust over a stated seven-day period. This income is then annualized; that
is, the amount of income generated by the investment during that week is assumed
to be generated each week over a 52-week period and is shown as a percentage of
the investment. The compounded annualized yield is calculated similarly but,
when annualized, the income earned by an investment in the Trust is assumed to
be reinvested. The compounded annualized yield will be somewhat higher than the
yield because of the effect of the assumed reinvestment.
The yield on Trust shares normally will fluctuate on a daily basis.
Therefore, the yield for any given past period is not an indication or
representation by the Trust of future yields or rates of return on its shares.
The Trust's yield is affected by changes in interest rates on money market
securities, average portfolio maturity, the types and quality of portfolio
securities held and operating expenses. Current yield information may not
provide a basis for comparison with bank deposits or other investments which pay
a fixed yield over a stated period of time.
On occasion, the Trust may compare its yield to (1) yield data (including
Donoghue's Domestic Prime and Eurodollar and Yankeedollar Funds Average)
reported by Donoghue's Money Fund Report, a widely recognized independent
publication that monitors the performance of money market mutual funds, (2) the
average yield reported by the Bank Rate Monitor National Index(TM) for money
market deposit accounts offered by the 100 leading banks and thrift institutions
in the ten largest standard metropolitan statistical areas, (3) yield data
reported by Lipper Analytical Services, Inc., Morningstar Publications, Inc.,
Money Magazine, U.S. News & World Report, Business Week, CDA Investment
Technology, Inc., Forbes Magazine and Fortune Magazine, or (4) the yield on an
investment in 90-day Treasury bills on a rolling basis, assuming quarterly
compounding. As with yield quotations, yield comparisons should not be
considered representative of the Trust's yield or relative performance for any
future period.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of the Trust are to seek preservation of capital,
liquidity and the highest possible current income consistent with these
objectives available from investing in a diversified portfolio of short-term
money market securities. The investment objectives are fundamental policies of
the Trust which may not be changed without a vote of the majority of the
outstanding shares of the Trust.
Investment in the Trust offers several benefits. The Trust seeks to provide
as high a yield potential as is available, consistent with the preservation of
capital, from short-term money market securities utilizing
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<PAGE> 5
professional money market management, block purchases of securities and yield
improvement techniques. It provides high liquidity because of its redemption
features and seeks reduced risk resulting from diversification of assets. There
can be no assurance that the investment objectives of the Trust will be
realized. Certain expenses are borne by investors, including advisory and
management fees, administrative costs and operational costs.
In managing the Trust, Merrill Lynch Asset Management, L.P. (the
"Manager"), will employ a number of professional money management techniques,
including varying the composition of investments and the average maturity of the
portfolio based on its assessment of the relative values of the various money
market securities and future interest rate patterns. These assessments will
respond to changing economic and money market conditions and to shifts in fiscal
and monetary policy. The Manager also will seek to improve yield by taking
advantage of yield disparities that regularly occur in the money market. For
example, market conditions frequently result in similar securities trading at
different prices. Also, there frequently are differences in the yields between
the various types of money market securities. The Trust seeks to enhance yield
by purchasing and selling securities based on these yield disparities.
The following is a description of the types of money market securities in
which the Trust may invest:
United States Government Securities: Marketable securities issued by
or guaranteed as to principal and interest by the U.S. Government and
supported by the full faith and credit of the United States.
United States Government Agency Securities: Debt securities issued by
Government-sponsored enterprises, Federal agencies and certain
international institutions which are not direct obligations of the United
States but involve Government sponsorship or guarantees by Government
agencies or enterprises. The U.S. Government is not obligated to provide
financial support to these instrumentalities.
Bank Money Instruments: The Trust may invest in U.S.
dollar-denominated obligations of U.S. and foreign depository institutions,
including commercial and savings banks and savings and loan associations.
Such obligations include certificates of deposit, bankers' acceptances,
time deposits and deposit notes. For example, the obligations may be issued
by U.S. or foreign depository institutions, foreign branches or
subsidiaries of U.S. depository institutions ("Eurodollar" obligations),
U.S. branches or subsidiaries of foreign depository institutions
("Yankeedollar" obligations) or foreign branches or subsidiaries of foreign
depository institutions. Eurodollar and Yankeedollar obligations and
obligations of branches or subsidiaries of foreign depository institutions
may be general obligations of the parent bank or may be limited to the
issuing branch or subsidiary by the terms of the specific obligations or by
government regulation. Investments in obligations of foreign depository
institutions and their foreign branches and subsidiaries will only be made
if determined to be of comparable quality to other investments permissible
for the Trust. The Trust will not invest more than 25% of its total assets
(taken at market value at the time of each investment) in obligations of
foreign depository institutions and their foreign branches and
subsidiaries.
Commercial Paper and Other Short-term Obligations: Commercial paper
(including variable amount master demand notes), which refers to
short-term, unsecured promissory notes issued by corporations, partnerships
and trusts to finance short-term credit needs, and non-convertible debt
securities (e.g., bonds and debentures) with no more than 397 days (13
months) remaining to maturity at the date of purchase. Short-term
obligations issued by trusts include mortgage-related or asset-backed debt
instruments, including pass-through certificates representing
participations in, or bonds and notes backed by, pools of mortgage, credit
card, automobile or other types of receivables.
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<PAGE> 6
Foreign Short-term Debt Instruments. The Trust may also invest in
U.S. dollar-denominated commercial paper and other short-term obligations
issued by foreign entities. Such investments are subject to quality
standards similar to those applicable to investments in comparable
obligations of domestic issuers. Investments in foreign entities in general
involve the same risks as those described in the Statement of Additional
Information in connection with investments in Eurodollar and Yankeedollar
obligations and obligations of foreign depository institutions and their
foreign branches and subsidiaries.
The following is a description of other types of investments or investment
practices in which the Trust may invest or engage:
Repurchase Agreements; Purchase and Sale Contracts. The Trust may
invest in repurchase agreements or purchase and sale contracts involving
the money market securities described above. Repurchase agreements and
purchase and sale contracts may be entered into only with a member bank of
the Federal Reserve System or a primary dealer in U.S. Government
securities. Under such agreements, the bank or primary dealer agrees, on
entering into the contract, to repurchase the security at a mutually agreed
on time and price, thereby determining the yield during the term of the
agreement. This results in a fixed rate of return insulated from market
fluctuations during such period. In the case of repurchase agreements, the
prices at which the trades are conducted do not reflect accrued interest on
the underlying obligations; whereas, in the case of purchase and sale
contracts, the prices take into account accrued interest. Such agreements
usually cover short periods, such as under one week. Repurchase agreements
may be construed to be collateralized loans by the purchaser to the seller
secured by the securities transferred to the purchaser. In the case of a
repurchase agreement, the Trust will require the seller to provide
additional collateral if the market value of the securities falls below the
repurchase price at any time during the term of the repurchase agreement;
the Trust does not have the right to seek additional collateral in the case
of purchase and sale contracts. In the event of default by the seller under
a repurchase agreement construed to be a collateralized loan, the
underlying securities are not owned by the Trust but only constitute
collateral for the seller's obligation to pay the repurchase price.
Therefore, the Trust may suffer time delays and incur costs or possible
losses in connection with the disposition of the collateral. A purchase and
sale contract differs from a repurchase agreement in that the contract
arrangements stipulate that the securities are owned by the Trust. In the
event of a default under such a repurchase agreement or under a purchase
and sale contract, instead of the contractual fixed rate of return, the
rate of return to the Trust shall be dependent on intervening fluctuations
of the market value of such security and the accrued interest on the
security. In such event, the Trust would have rights against the seller for
breach of contract with respect to any losses arising from market
fluctuations following the failure of the seller to perform.
Reverse Repurchase Agreements. The Trust may enter into reverse repurchase
agreements which involve the sale of money market securities held by the Trust,
with an agreement to repurchase the securities at an agreed on price, date and
interest payment. During the time a reverse repurchase agreement is outstanding,
the Trust will maintain a segregated custodial account containing U.S.
Government or other appropriate high-grade debt securities having a value equal
to the repurchase price.
Lending of Portfolio Securities. The Trust may lend portfolio securities
(with a value not in excess of 20% of its total assets) to brokers, dealers and
financial institutions and receive collateral in cash or securities issued or
guaranteed by the U.S. Government which will be maintained at all times in an
amount equal to at least 100% of the current market value of the loaned
securities. During the period of the loan, the Trust receives the income on both
the loaned securities and the collateral and thereby increases its yield.
6
<PAGE> 7
Preservation of capital is a prime investment objective of the Trust, and
while the types of money market securities in which the Trust invests generally
are considered to have low principal risk, such securities are not completely
risk free. There is a risk of the failure of issuers to meet their principal and
interest obligations. Repurchase agreements may be construed to be
collateralized loans by the purchaser to the seller secured by the securities
transferred to the purchaser. In the event of default by the seller under a
repurchase agreement construed to be a collateralized loan, the underlying
securities are not owned by the Trust but only constitute collateral for the
seller's obligation to pay the repurchase price. With respect to repurchase
agreements, purchase and sale contracts, reverse repurchase agreements and the
lending of portfolio securities by the Trust, there is also the risk of the
failure of the parties involved to repurchase at the agreed on price or to
return the securities involved in such transactions, in which event the Trust
may suffer time delays and incur costs or possible losses in connection with
such transactions.
Bank money instruments in which the Trust invests must be issued by
depository institutions with total assets of at least $1 billion, except that up
to 10% of total assets (taken at market value) may be invested in certificates
of deposit of smaller institutions if such certificates of deposit are Federally
insured. Investments in Eurodollar and Yankeedollar obligations may not exceed
25% of total assets. For purposes of this requirement, the Trust treats bank
money instruments issued by U.S. branches or subsidiaries of foreign banks as
obligations issued by domestic banks (not subject to the 25% limitation) if the
branch or subsidiary is subject to the same banking regulation as U.S. banks.
The Trust's investments in short-term corporate debt and bank money
instruments will be rated, or will be issued by issuers who have been rated, in
one of the two highest rating categories for short-term debt obligations by a
nationally recognized statistical rating organization (an "NRSRO") or, if not
rated, will be of comparable quality as determined by the Trustees of the Trust.
The Trust's investments in corporate bonds and debentures (which must have
maturities at the date of purchase of 397 days (13 months) or less) will be in
issuers who have received from an NRSRO a rating, with respect to a class of
short-term debt obligations that is comparable in priority and security with the
investment, in one of the two highest rating categories for short-term
obligations or, if not rated, will be of comparable quality as determined by the
Trustees of the Trust. Currently, there are six NRSROs: Duff & Phelps Inc.,
Fitch Investors Services, Inc., IBCA Limited and its affiliate IBCA Inc.,
Thompson BankWatch, Inc., Moody's Investors Service, Inc. and Standard & Poor's
Corporation.
A regulation of the Securities and Exchange Commission limits investments
by the Trust in securities issued by any one issuer (other than the U.S.
Government, its agencies or instrumentalities) ordinarily to not more than 5% of
its total assets, or in the event that such securities do not have the highest
rating, not more than 1% of its total assets. In addition, such regulation
requires that not more than 5% of the Trust's total assets be invested in
securities that do not have the highest rating.
The Trust may purchase money market securities on a forward commitment
basis at fixed purchase terms. The purchase will be recorded on the date the
Trust enters into the commitment and the value of the security thereafter will
be reflected in the calculation of the Trust's net asset value. The value of the
security on the delivery date may be more or less than its purchase price. A
separate account of the Trust will be established with its custodian consisting
of cash or liquid money market securities having a market value at all times at
least equal to the amount of the forward commitment.
For purposes of its investment policies, the Trust defines short-term money
market securities as securities having a maturity of no more than 762 days (25
months) in the case of U.S. Government and agency securities and no more than
397 days (13 months) in the case of all other securities. The dollar-weighted
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<PAGE> 8
average maturity of the Trust's Portfolio will not exceed 90 days. During the
Trust's fiscal year ended December 31, 1993, the average maturity of its
portfolio ranged from 51 days to 89 days.
Investment Restrictions. The Trust has adopted a number of restrictions
and policies relating to the investment of its assets and its activities, which
are fundamental policies and may not be changed without the approval of the
holders of a majority of the Trust's outstanding voting securities, as defined
in the Investment Company Act of 1940 (the "Investment Company Act"). Among the
more significant restrictions, the Trust may not: (1) purchase any securities
other than (i) money market and (ii) other securities described under
"Investment Objectives and Policies"; (2) invest more than 25% of its total
assets (taken at market value at the time of each investment) in the securities
of issuers in any particular industry (other than U.S. Government securities,
Government agency securities or bank money instruments); (3) (i) invest more
than 5% of its total assets (taken at market value at the time of each
investment) in the securities (other than U.S. Government or Government agency
securities) of any one issuer (including repurchase agreements and purchase and
sale contracts with any one bank) except that up to 25% of the value of the
Trust's total assets may be invested without regard to such 5% limitation but
shall instead be subject to a 10% limitation, (ii) purchase more than 10% of the
outstanding securities of an issuer except that this restriction shall not apply
to U.S. Government or Government agency securities, bank money instruments,
repurchase agreements and purchase and sale contracts; (4) enter into repurchase
agreements or purchase and sale contracts if, as a result, more than 10% of the
Trust's net assets (taken at market value at the time of each investment) would
be subject to repurchase agreements or purchase and sale contracts maturing in
more than seven days; and (5) borrow amounts in excess of 20% of its total
assets, taken at market value, and then only from banks as a temporary measure
for extraordinary or emergency purposes [usually only "leveraged" investment
companies may borrow in excess of 5% of their assets; however, the Trust will
not borrow to increase income but only to meet redemption requests which might
otherwise require untimely dispositions of portfolio securities; interest paid
on such borrowings will reduce net income]. The Trust will not purchase
securities while borrowings described in investment restriction (5) are
outstanding except to honor prior commitments.
MANAGEMENT OF THE TRUST
TRUSTEES
The Trustees of the Trust consist of seven individuals, five of whom are
not "interested persons" of the Trust as defined in the Investment Company Act.
The Trustees of the Trust are responsible for the overall supervision of the
operations of the Trust and perform the various duties imposed on the directors
of investment companies by the Investment Company Act.
The Trustees of the Trust are:
ARTHUR ZEIKEL*--President and Chief Investment Officer of the Manager
and Fund Asset Management, L.P.; President and Director of Princeton
Services, Inc. ("Princeton Services"); Executive Vice President of Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"); Executive
Vice President of Merrill Lynch & Co., Inc. ("ML & Co."); Director of
Merrill Lynch Funds Distributor, Inc. (the "Distributor").
CHARLES H. ROSS, Jr.*--Executive Vice President Emeritus of ML & Co.,
Director of TECO Energy, Inc. and Director of Enhance Financial Services
Inc.
DONALD CECIL--Special Limited Partner of Cumberland Partners (an
investment partnership).
M. COLYER CRUM--James R. Williston Professor of Investment Management,
Harvard Business School.
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<PAGE> 9
EDWARD H. MEYER--Chairman of the Board of Directors, President and
Chief Executive Officer of Grey Advertising Inc.
JACK B. SUNDERLAND--President and Director of American Independent Oil
Company, Inc. (an energy company).
J. THOMAS TOUCHTON--Managing Partner of The Witt-Touchton Company (a
private investment partnership).
- ---------------
* Interested person, as defined in the Investment Company Act, of the Trust.
MANAGEMENT AND ADVISORY ARRANGEMENTS
The Manager is owned and controlled by ML & Co., a financial services
holding company and the parent of Merrill Lynch. The Manager or an affiliate of
the Manager, Fund Asset Management, L.P. ("FAM"), acts as the investment adviser
for more than 90 registered investment companies and provides investment
advisory services to individual and institutional accounts. As of February 28,
1994, the Manager and FAM had a total of approximately $164.4 billion in
investment company and other portfolio assets under management, including
accounts of certain affiliates of the Manager.
The investment advisory agreement with the Manager (the "Management
Agreement") provides that, subject to the direction of the Trustees, the Manager
is responsible for the actual management of the Trust's portfolio and constantly
reviews the Trust's holdings in light of its own research analysis and that from
other relevant sources. The responsibility for making decisions to buy, sell or
hold a particular security rests with the Manager subject to review by the Board
of Trustees. The Manager performs certain of the other administrative services
and provides all the office space, facilities, equipment and necessary personnel
for management of the Trust.
The Manager receives compensation at the annual rate of 0.50% of the
portion of average net assets not exceeding $500 million; this rate is reduced
at several breakpoints for net assets in excess of $500 million. For the fiscal
year ended December 31, 1993, the total management fee paid by the Trust to the
Manager aggregated $25,841,742 (based on average net assets of approximately
$7.3 billion) and the effective fee rate was 0.36%. At February 28, 1994, the
net assets of the Trust aggregated approximately $6.7 billion. At this asset
level, the annual effective fee rate is approximately 0.36% of average net
assets and the annual management fee would aggregate approximately $24.1
million.
The Management Agreement obligates the Trust to pay certain expenses
incurred in its operations, including, among other things, the management fee,
legal and audit fees, unaffiliated Trustees' fees and expenses, registration
fees, custodian and transfer agency fees, accounting and pricing costs and
certain of the costs of printing proxies, shareholder reports, prospectuses and
statements of additional information. Accounting services are provided to the
Trust by the Manager, and the Trust reimburses the Manager for its costs in
connection with such services. For the fiscal year ended December 31, 1993, the
amount of such reimbursement was $274,854. During 1993, the ratio of operating
expenses, excluding distribution fees, to average net assets was .53%.
TRANSFER AGENCY SERVICES
Financial Data Services, Inc. (the "Transfer Agent"), which is a
wholly-owned subsidiary of ML & Co., acts as the Trust's transfer agent pursuant
to a transfer agency agreement (the "Transfer Agency Agreement"). Pursuant to
the Transfer Agency Agreement, the Transfer Agent is responsible for the
issuance,
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<PAGE> 10
transfer and redemption of shares and the opening and maintenance of shareholder
accounts. Pursuant to the Transfer Agency Agreement, the Transfer Agent receives
a fee of $13.00 per shareholder account for the first 300,000 accounts, $12.50
per shareholder account for the next 300,000 accounts, $12.00 per shareholder
account for the next 300,000 accounts and $11.00 per shareholder account
thereafter, and is entitled to reimbursement for out-of-pocket expenses incurred
by it under the Transfer Agency Agreement. For the fiscal year ended December
31, 1993, the total fee paid by the Trust to the Transfer Agent pursuant to the
Transfer Agency Agreement was $11,259,945. At February 28, 1994, the Trust had
605,417 shareholder accounts. At this level of accounts, the annual fee payable
to the Transfer Agent would aggregate approximately $7.7 million (including
certain subaccounts on which the standard annual transfer agent fees are not
assessed).
PURCHASE OF SHARES
The Trust is offering its shares without sales charge at a public offering
price equal to the net asset value (normally $1.00 per share) next determined
after a purchase order becomes effective. Share purchase orders are effective on
the date Federal Funds become available to the Trust. If Federal Funds are
available to the Trust prior to 4:00 P.M., New York time, on any business day,
the order will be effective on that day. Shares purchased will begin accruing
dividends on the day following the date of purchase. Any order may be rejected
by the Trust or the Distributor.
METHODS OF PAYMENT
Payment Through Securities Dealers. Investment in the Trust may be made
through securities dealers, including Merrill Lynch, who have entered into
selected dealer agreements with the Distributor. In such a case, the dealer will
transmit payment to the Trust on behalf of the investor and will supply the
Trust with the required account information. Generally, purchase orders placed
through Merrill Lynch will be made effective on the day following the day the
order is placed with Merrill Lynch, except that orders received through the
Merrill Lynch BlueprintSM Program in some circumstances may be executed two
business days following the day the order is placed with Merrill Lynch.
Investments in the Trust through the Merrill Lynch BlueprintSM Program
("Blueprint") may be made only through Merrill Lynch. Such orders should be sent
to Merrill Lynch, Pierce, Fenner & Smith Incorporated, Attention: The
BlueprintSM Program, P.O. Box 30441, New Brunswick, New Jersey 08989-0441.
Blueprint maintains a toll-free telephone number for inquiries: (800) 637-3766.
Investors who are not placing orders through Blueprint and who desire same day
effectiveness should utilize the Payment by Wire procedure described below.
Investors with free cash credit balances (i.e., immediately available funds) in
securities accounts of Merrill Lynch will not have their funds invested in the
Trust until the day after the order is placed with Merrill Lynch and will not
receive the daily dividend which would have been received had their funds been
invested in the Trust on the day the order was placed with Merrill Lynch.
Merrill Lynch has an order procedure pursuant to which investors can have the
proceeds from the sale of listed securities invested in shares of the Trust on
the day investors receive such proceeds in their Merrill Lynch securities
accounts. Effective June 1, 1990, Merrill Lynch implemented new order procedures
pursuant to which investors can have the proceeds from the sale of most
securities invested in shares of the Trust on the day following the day
investors receive such proceeds in their Merrill Lynch securities accounts.
Payment by Wire. An expeditious method of investing in the Trust is
available through the transmittal of Federal Funds by wire to the Trust's
Transfer Agent. The Trust will not be responsible for delays in the wiring
system. To purchase shares by wiring Federal Funds, payment should be wired to
First Union National Bank of Florida. Shareholders should give their financial
institutions the following wiring instructions:
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<PAGE> 11
ABA #063000021, DDA #11260006118, Financial Data Services, Inc. The wire should
be identified as a payment to Merrill Lynch Ready Assets Trust and should
include the shareholder's name and account number. Failure to submit the
required information may delay investment. Investors are urged to make payment
by wire in Federal Funds.
Payment to the Transfer Agent. Purchase orders for which remittance is to
be made by check may be submitted directly by mail or otherwise to the Transfer
Agent. Purchase orders by mail should be sent to Financial Data Services, Inc.,
Transfer Agency Operations Department, P.O. Box 45290, Jacksonville, Florida
32232-5290. Purchase orders which are sent by hand should be delivered to
Financial Data Services, Inc., Transfer Agency Operations Department, 4800 Dear
Lake Drive East, Jacksonville, Florida 32246-6484. Investors opening a new
account must enclose a completed Purchase Application. Existing shareholders
should enclose the detachable stub from a monthly account statement which they
have received. Checks should be made payable to Merrill Lynch Funds Distributor,
Inc. Certified checks are not necessary, but checks are accepted subject to
collection at full face value in United States funds and must be drawn in United
States dollars on a United States bank. Payments for the accounts of
corporations, foundations and other organizations may not be made by third party
checks.
DISTRIBUTION PLAN
The Trust has adopted a Shareholder Servicing Plan and Agreement (the
"Plan") in compliance with Rule 12b-1 under the Investment Company Act pursuant
to which the Trust is authorized to pay Merrill Lynch a fee at the annual rate
of 0.125% of average daily net asset value of Trust accounts maintained through
Merrill Lynch. The Plan reimburses Merrill Lynch only for actual expenses
incurred in the fiscal year in which the fee is paid. The fee is principally to
provide compensation to Merrill Lynch financial consultants and other Merrill
Lynch personnel for providing certain services to shareholders who maintain
their Trust accounts through Merrill Lynch. The fee is for direct personal
services to Trust shareholders. Under the Plan, as amended to date, Merrill
Lynch, in its sole discretion, may expend out of the fee an amount not exceeding
0.01% of such average daily net asset value as reimbursement for expenditures
incurred in advertising activities promoting the sale, marketing and
distribution of the shares of the Trust.
For the fiscal year ended December 31, 1993, $8,501,923 was paid to Merrill
Lynch pursuant to the Plan (based on average net assets subject to the Plan of
$7.3 billion). At February 28, 1994, the net assets of the Trust subject to the
Plan aggregated approximately $6.7 billion. At this asset level, the annual fee
payable to Merrill Lynch pursuant to the Plan would aggregate approximately $7.9
million.
REDEMPTION OF SHARES
The Trust is required to redeem for cash all full and fractional shares of
the Trust. The redemption price is the net asset value per share next determined
after receipt by the Transfer Agent of proper notice of redemption as described
in accordance with one of the procedures set forth below. If such notice is
received by the Transfer Agent by 4:00 P.M., New York time, on any day during
which the New York Stock Exchange or New York banks are open for business, the
redemption will be effective on such day and payment will be made on the next
business day. If the notice is received after 4:00 P.M., New York time, the
redemption will be effective on the next business day and payment will be made
on the second business day thereafter. If notice of a redemption of shares held
in connection with the Merrill Lynch BlueprintSM Program is received by Merrill
Lynch by 4:00 P.M., New York time, it will be effective on the business day
following receipt of the redemption request. If the notice is received after
4:00 P.M., New York time, the redemption will be effective on the second
business day thereafter.
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<PAGE> 12
At various times, the Trust may be requested to redeem shares for which
good payment has not yet been received. The Trust may delay, or cause to be
delayed, the payment of redemption proceeds until such time as it or its
Transfer Agent has assured itself that good payment has been collected for the
purchase of such shares. Normally, this delay will not exceed 10 days. In
addition, the Trust reserves the right not to honor redemption checks or
requests for Federal Funds redemptions where the shares to be redeemed have been
purchased by check within 10 days prior to the date the redemption request is
received by the Trust's Transfer Agent.
METHODS OF REDEMPTION
Set forth below is information as to the five methods pursuant to which
shareholders may redeem shares. In certain instances, the Transfer Agent may
require documents in connection with redemptions.
Redemption by Check. Shareholders may redeem shares by check in an amount
not less than $500. At the shareholder's request, the Transfer Agent will
provide the shareholder with checks drawn on the custody account of the Trust
with its Custodian. These checks can be made payable to the order of any person
in any amount not less than $500; however, these checks may not be used to
purchase securities in transactions with Merrill Lynch. The payee of the check
may cash or deposit it like any check drawn on a bank. When such a check is
presented to the Transfer Agent for payment, the Transfer Agent will present the
check to the Trust as authority to redeem a sufficient number of full and
fractional shares in the shareholder's account to cover the amount of the check.
This enables the shareholder to continue earning daily dividends until the check
is cleared. Canceled checks will be returned to the shareholder by the Transfer
Agent.
Shareholders will be subject to the Transfer Agent's rules and regulations
governing such checking accounts, including the right of the Transfer Agent not
to honor checks in amounts exceeding the value of the shareholder's account at
the time the check is presented for payment. The Trust or the Transfer Agent may
modify or terminate the redemption by check privilege at any time on 30 days'
notice to participating shareholders. In order to be eligible for the redemption
by check privilege, purchasers should check the box under the caption "Check
Redemption Privilege" in the Purchase Application. The Transfer Agent will then
send checks to the shareholder.
Federal Funds Redemption. Shareholders also may arrange to have redemption
proceeds of $5,000 or more wired in Federal Funds to a pre-designated bank
account. In order to be eligible for Federal Funds redemption, the shareholder
must designate on his Purchase Application the domestic commercial bank and
account number to receive the proceeds of his redemption and must have his
signature on the Purchase Application guaranteed. The redemption request for
Federal Funds redemption may be made by telephone, wire or letter (no signature
guarantee required) to the Transfer Agent and, if received by 4:00 P.M., New
York time, the redemption proceeds will be wired to the investor's
pre-designated bank account on the next business day. Shareholders may effect
Federal Funds redemptions by telephoning the Transfer Agent at (800) 221-7210
toll-free. The Trust will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine; if it does not, the Trust
may be liable for any losses due to fraudulent or unauthorized instructions.
Among other things, redemption proceeds may only be wired into the bank account
designated on the Purchase Application. The investor must independently verify
this information at the time the redemption request is made.
Repurchase Through Securities Dealers. The Trust will repurchase shares
through securities dealers. The Trust normally will accept orders to repurchase
shares by wire or telephone from dealers for customers at the net asset value
next computed after receipt of the order from the dealer, provided that such
request for repurchase is received from the dealer prior to 4:00 P.M., New York
time, on any business day. These
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<PAGE> 13
repurchase arrangements are for the convenience of shareholders and do not
involve a charge by the Trust; however, dealers may impose a charge on the
shareholder for transmitting the notice of repurchase to the Trust. Redemption
of Trust shares held in connection with Blueprint may be made only through
Merrill Lynch. Such a redemption may be made by submitting a written notice by
mail directly to Merrill Lynch, Pierce, Fenner & Smith Incorporated, Attention:
The BlueprintSM Program, P.O. Box 30441, New Brunswick, New Jersey 08989-0441.
Investors whose shares are held through Blueprint also may effect notice of
redemption by telephoning Merrill Lynch at (800) 637-3766 toll-free. The Trust
reserves the right to reject any order for repurchase through a securities
dealer, but it may not reject properly submitted requests for redemption as
described below. The Trust will promptly notify any shareholder of any rejection
of a repurchase with respect to his shares. For shareholders repurchasing
through their securities dealer, payment will be made by the Transfer Agent to
the dealer.
Regular Redemption. Shareholders may redeem shares by submitting a written
notice by mail directly to the Transfer Agent, Financial Data Services, Inc.,
Transfer Agency Operations Department, P.O. Box 45290, Jacksonville, Florida
32232-5290. Redemption requests which are sent by hand should be delivered to
Financial Data Services, Transfer Agency Operations Department, 4800 Deer Lake
Drive East, Jacksonville, Florida 32246-6484. Redemption requests should not be
sent to the Trust. The notice requires the signatures of all persons in whose
names the shares are registered, signed exactly as their names appear on the
Transfer Agent's register. The signatures on the redemption request must be
guaranteed by an "eligible guarantor institution" as such is defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, the existence and validity of
which may be verified by the Transfer Agent through the use of industry
publications. Notarized signatures are not sufficient.
Automatic Redemption. Merrill Lynch has instituted an automatic redemption
procedure applicable to shareholders of the Trust who maintain securities
accounts with Merrill Lynch. Merrill Lynch may utilize this procedure, which is
not applicable to margin accounts, to satisfy amounts due it by the shareholder
as a result of account fees and expenses owed to Merrill Lynch or one of its
affiliates or as a result of purchases of securities or other transactions in
the shareholder's securities account. Under this procedure, unless the
shareholder notifies Merrill Lynch to the contrary, the shareholder's Merrill
Lynch securities account will be scanned each business day prior to 4:00 P.M.,
New York time, after application of any cash balances in the account, a
sufficient number of Trust shares will be redeemed at the 4:00 P.M., New York
time, pricing that day to satisfy any amounts for which the shareholder is
obligated to make payment to Merrill Lynch or one of its affiliates. Redemptions
will be effected on the business day preceding the date the shareholder is
obligated to make such payment, and Merrill Lynch or its affiliate will receive
the redemption proceeds on the business day following the redemption date.
Shareholders will receive all dividends declared and reinvested through the date
of redemption.
------------------------
Due to the relatively high cost of maintaining accounts of less than
$1,000, the Trust reserves the right to redeem shares in any account for their
then current value (which will be promptly paid to the shareholder), if at any
time the total investment does not have a value of at least $1,000. Shareholders
will be notified that the value of their account is less than $1,000 and allowed
two months to make an additional investment before the redemption is processed.
In such event, the $1,000 minimum on subsequent investment will not be
applicable.
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SHAREHOLDER SERVICES
The Trust offers a number of shareholder services designed to facilitate
investment in its shares. Full details as to each of such services, copies of
the various plans described below and instructions as to how to participate in
the various services or plans, or to change options with respect thereto can be
obtained from the Trust, the Distributor or Merrill Lynch. Included in such
services are the following:
Investment Account. Each shareholder whose account is maintained at the
Transfer Agent has an Investment Account and will receive from the Transfer
Agent a monthly report showing the activity in his account for the month. A
shareholder may make additions to his Investment Account at any time by
purchasing shares at the public offering price either through his securities
dealer, by wire or by mail directly to the Transfer Agent, acting as agent for
his dealer. A shareholder may ascertain the number of shares in his Investment
Account by telephoning the Transfer Agent at (800) 221-7210 toll-free. The
Transfer Agent will furnish this information only after the shareholder has
specified the name, address, account number and social security number of the
registered owner or owners. Shareholders also may maintain their accounts
through Merrill Lynch. Upon the transfer of shares out of a Merrill Lynch
brokerage account, an Investment Account in the transferring shareholder's name
may be opened at the Transfer Agent. Shareholders considering transferring a
tax-deferred retirement account such as an individual retirement account from
Merrill Lynch to another brokerage firm or financial institution should be aware
that, if the firm to which the retirement account is to be transferred will not
take delivery of shares of the Trust, a shareholder must either redeem the
shares so that the cash proceeds can be transferred to the account at the new
firm, or such shareholder must continue to maintain a retirement account at
Merrill Lynch for those shares.
Exchange Privilege. Shareholders of the Trust have an exchange privilege
with Class A shares of certain other mutual funds sponsored by Merrill Lynch.
There is currently no limitation on the number of times a shareholder may
exercise the exchange privilege. The exchange privilege may be modified or
terminated at any time in accordance with the rules of the Securities and
Exchange Commission. Exercise of the exchange privilege is treated as a sale for
Federal income tax purposes. For further information, see "Shareholder
Services--Exchange Privilege" in the Statement of Additional Information.
Accrued Monthly Payout Plan. Shareholders desiring their dividends in cash
may enroll in this plan and receive monthly cash payments resulting from the
redemption of the shares received on dividend reinvestments during the month.
Systematic Withdrawal and Automatic Investment Plans. A shareholder may
elect to receive systematic withdrawal payments from his Investment Account in
the form of payments by check or through automatic payment by direct deposit to
his bank account on either a monthly or quarterly basis. Regular additions may
be made to an investor's Investment Account by prearranged charges to his
regular bank account at a minimum of $50 per month.
Retirement Plans. Self-directed individual retirement accounts and other
retirement plans are available from Merrill Lynch. Under these plans,
investments may be made in the Trust and in certain of the other mutual funds
whose shares are distributed by the Distributor, as well as in other securities.
Merrill Lynch charges an initial establishment fee and an annual custodial fee
for each account. In addition, eligible shareholders of the Trust may
participate in a variety of qualified employee benefit plans which are available
from the Distributor. The minimum initial purchase to establish any such plan is
$250.
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PORTFOLIO TRANSACTIONS
The money market securities in which the Trust invests are traded primarily
in the over-the-counter market. Where possible, the Trust will deal directly
with the dealers who make a market in the securities involved except in those
circumstances where better prices and execution are available elsewhere. Such
dealers usually are acting as principal for their own account. On occasion,
securities may be purchased directly from the issuer. Money market securities
generally are traded on a net basis and normally do not involve either brokerage
commissions or transfer taxes. The cost of executing portfolio transactions will
consist primarily of dealer spreads and underwriting commissions. Under the
Investment Company Act, persons affiliated with the Trust are prohibited from
dealing with the Trust as a principal in the purchase and sale of securities
unless an exemptive order allowing such transactions is obtained from the
Securities and Exchange Commission. An affiliated person of the Trust may serve
as its broker in over-the-counter transactions conducted on an agency basis. The
Securities and Exchange Commission has issued an exemptive order permitting the
Trust to conduct certain principal transactions with Merrill Lynch Government
Securities Inc. or its subsidiary, Merrill Lynch Money Markets Inc. subject to
certain terms and conditions. During the fiscal year ended December 31, 1993,
the Trust engaged in 152 transactions pursuant to such orders aggregating
approximately $5.6 billion.
ADDITIONAL INFORMATION
DIVIDENDS
Dividends are declared and reinvested daily in the form of additional
shares at net asset value. Shareholders will receive statements monthly as to
such reinvestments. Shareholders liquidating their holdings will receive on
redemption all dividends declared and reinvested through the date of redemption.
Since the net income (including realized gains and losses on the portfolio
assets) is declared as a dividend in shares each time the net income of the
Trust is determined, the net asset value per share of the Trust normally remains
constant at $1.00 per share. Fluctuations in value may be reflected in the
number of outstanding shares in the shareholder's account.
Net income (from the time of the immediately preceding determination
thereof) consists of (i) interest accrued and/or discount earned (including both
original issue and market discount), (ii) plus or minus all realized gains and
losses on portfolio securities, (iii) less the estimated expenses of the Trust
applicable to that dividend period.
DETERMINATION OF NET ASSET VALUE
The net asset value of the Trust is determined by the Manager once daily,
immediately after the daily declaration of dividends, as of 4:00 P.M., New York
time, on each day during which the New York Stock Exchange or New York banks are
open for business. The net asset value per share is computed pursuant to the
"penny-rounding" method by dividing the value of the securities held by the
Trust plus any cash or other assets (including interest accrued but not yet
received) minus all liabilities by the total number of shares outstanding at
such time. The money market securities in which the Trust invests are valued at
the most recent bid price or yield equivalent as obtained from dealers that make
markets in such securities. Assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Trustees of the Trust. Securities with a remaining maturity of
60 days or less are valued on an amortized cost basis. This involves valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument.
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<PAGE> 16
TAXES
The Trust intends to continue to qualify for the special tax treatment
afforded regulated investment companies ("RICs") under the Internal Revenue Code
of 1986, as amended (the "Code"). If it so qualifies, the Trust (but not its
shareholders) will not be subject to Federal income tax on the part of its net
ordinary income and net realized capital gains which it distributes to
shareholders. The Trust intends to distribute substantially all of such income.
Dividends paid by the Trust from its ordinary income and distributions of
the Trust's net realized short-term capital gains (together referred to
hereafter as "ordinary income dividends") are taxable to shareholders as
ordinary income. Distributions made from the Trust's net realized long-term
capital gains ("capital gain dividends") are taxable to shareholders as
long-term capital gains, regardless of the length of time the shareholder has
owned Trust shares. Distributions in excess of the Trust's earnings and profits
will first reduce the adjusted tax basis of a holder's shares and, after such
adjusted tax basis is reduced to zero, will constitute capital gains to such
holder (assuming the shares are held as a capital asset).
Dividends are taxable to shareholders even though they are reinvested in
additional shares of the Trust. Not later than 60 days after the close of its
taxable year, the Trust will provide its shareholders with a written notice
designating the amounts of any ordinary income dividends or capital gain
dividends. Distributions by the Trust, whether from ordinary income or capital
gains, will not be eligible for the dividends received deduction allowed to
corporations under the Code. If the Trust pays a dividend in January which was
declared in the previous October, November or December to shareholders of record
on a specified date in one of such months, then such dividend will be treated
for tax purposes as being paid by the Trust and received by its shareholders on
December 31 of the year in which such dividend was declared.
If the value of assets held by the Trust declines, the Board of Directors
may authorize a reduction in the number of outstanding shares in shareholders'
accounts so as to preserve a net asset value of $1.00 per share. After such a
reduction, the basis of eliminated shares would be added to the basis of
shareholders' remaining Trust shares, and any shareholders disposing of shares
at that time may recognize a capital loss. Distributions, including
distributions reinvested in additional shares of the Trust, will nonetheless be
fully taxable, even if the number of shares in shareholders' accounts has been
reduced as described above.
Ordinary income dividends paid by the Trust to shareholders who are
nonresident aliens or foreign entities will be subject to a 30% United States
withholding tax under existing provisions of the Code applicable to foreign
individuals and entities unless a reduced rate of withholding or a withholding
exemption is provided under applicable treaty law. Nonresident shareholders are
urged to consult their own tax advisors concerning the applicability of the
United States withholding tax.
Dividends and interest received by the Trust may give rise to withholding
and other taxes imposed by foreign countries. Tax conventions between certain
countries and the United States may reduce or eliminate such taxes.
Under certain provisions of the Code, some shareholders may be subject to a
31% withholding tax on ordinary income dividends, capital gain dividends and
redemption payments ("backup withholding"). Generally, shareholders subject to
backup withholding will be those for whom no certified taxpayer identification
number is on file with the Trust or who, to the Trust's knowledge, have
furnished an incorrect number. When establishing an account, an investor must
certify under penalty of perjury that such number is correct and that such
investor is not otherwise subject to backup withholding.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect. For the
complete provisions, reference should be made to the
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<PAGE> 17
pertinent Code sections and the Treasury regulations promulgated thereunder. The
Code and the Treasury regulations are subject to change by legislative or
administrative action either prospectively or retroactively.
Ordinary income and capital gain dividends may also be subject to state and
local taxes.
Certain states exempt from state income taxation dividends paid by RICs
which are derived from interest on U.S. Government obligations. State law varies
as to whether and what percentage of dividend income attributable to U.S.
Government obligations is exempt from state income tax.
Shareholders are urged to consult their own tax advisors regarding specific
questions as to Federal, foreign, state or local taxes. Foreign investors should
consider applicable foreign taxes in their evaluation of an investment in the
Trust.
ORGANIZATION OF THE TRUST
The Trust was organized on May 14, 1987 under the laws of the Commonwealth
of Massachusetts. The Trust is a successor to a Massachusetts business trust of
the same name organized on January 21, 1975. It is a no-load, diversified,
open-end investment company. The Declaration of Trust permits the Trustees to
issue an unlimited number of full and fractional shares of beneficial interest
of a single class. Upon liquidation of the Trust, shareholders are entitled to
share pro rata in the net assets of the Trust available for distribution to
shareholders. Shares are fully paid and nonassessable by the Trust. Shareholders
are entitled to one vote for each full share held and fractional votes for
fractional shares held and vote in the election of the Trustees and on other
matters submitted to the vote of shareholders.
The Declaration does not require that the Trust hold an annual meeting of
shareholders. However, the Trust will be required to call special meetings of
shareholders in accordance with the requirements of the Investment Company Act
to seek approval of new management and advisory arrangements, of a material
increase in distribution fees or of a change in the fundamental policies,
objectives or restrictions of the Trust. The Trust also would be required to
hold a special shareholders' meeting to elect new Trustees at such time as less
than a majority of the Trustees holding office have been elected by
shareholders. The Declaration provides that a shareholders' meeting may be
called for any reason at the request of 10% of the outstanding shares of the
Trust or by a majority of the Trustees. Except as set forth above, the Trustees
shall continue to hold office and appoint successor Trustees.
SHAREHOLDER REPORTS
Only one copy of each shareholder report and certain shareholder
communications will be mailed to each identified shareholder regardless of the
number of accounts such shareholder has. If a shareholder wishes to receive
separate copies of each report and communication for each of the shareholder's
related accounts the shareholder should notify in writing:
Financial Data Services, Inc.
Attn: Document Evaluation Unit
P.O. Box 45290
Jacksonville, FL 32232-5290
The written notification should include the shareholder's name, address,
tax identification number and Merrill Lynch and/or mutual fund account numbers.
If you have any questions regarding this please call your Merrill Lynch
financial consultant or Financial Data Services, Inc. at 800-221-7210.
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SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Trust at the address or
telephone number set forth on the cover page of this Prospectus.
------------------------
The Declaration of Trust establishing the Trust, dated May 14, 1987, a copy
of which, together with all amendments thereto (the "Declaration"), is on file
in the office of the Secretary of the Commonwealth of Massachusetts, provides
that the name "Merrill Lynch Ready Assets Trust" refers to the Trustees under
the Declaration collectively as Trustees, but not as individuals or personally;
and no Trustee, shareholder, officer, employee or agent of the Trust shall be
held to any personal liability, nor shall resort be had to their private
property for the satisfaction of any obligation or claim of said Trust but the
"Trust Property" only shall be liable.
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Merrill Lynch Ready Assets Trust PURCHASE APPLICATION
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------------------
Send this completed form to: FINANCIAL DATA SERVICES, INC., Transfer Agency Operations
Department, P.O. Box 45290, Jacksonville, Florida 32232-5290
INSTRUCTIONS Note: This form may not be used for purchases through the Merrill Lynch BlueprintSM Program.
You may request a Merrill Lynch BlueprintSM Program application form by calling toll free (800)
637-3766.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
1. TO REGISTER SHARES. THE ACCOUNT SHOULD BE REGISTERED AS FOLLOWS:
(Please print except ----------------------------------------------------
for signatures) ----------------------------------------------------
Print Applicant's Name. For clarity, please skip a space between names.
----------------------------------------------------
----------------------------------------------------
Print Joint Registrant's Name, if any. In case of joint registration, a
joint tenancy with right of survivorship will be presume, unless otherwise
indicated.
----------------------------------------------------------------- ---------------------------------
Street Address Social Security No. or Tax ID No.
-------------------------------------------------------------------------------------------------------
City State Zip Code
--------------------------------------------------- ------------------------------------------------
Occupation Name and Address Employer
------------------------------------------------
------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Please make any check payable to Merrill Lynch Funds ------------------------------------------------------
Distributor, Inc. Amount of investment $ Home Phone No. (Include Area Code) Business Phone No.
</TABLE>
2. CHECK REDEMPTION PRIVILEGE (SEE TERMS AND CONDITIONS IN THE PROSPECTUS)
<TABLE>
<CAPTION>
<S> <C>
I hereby request and authorize Financial Data Services, Inc. (the "Transfer Agent") to honor
checks or automatic clearing house ("ACH") debits drawn by me on my Merrill Lynch Ready Assets
Trust (the "Trust") account subject to acceptance by the Trust, with payment therefor to be made
/ / by redeeming sufficient shares in my account without a signature guarantee. The Transfer Agent
Check box and the Trust do hereby reserve all their lawful rights for honoring checks or ACH debits drawn
(if desired) by me and for effecting redemptions pursuant to the Check Redemption Privilege. I understand
that this election does not create a checking or other bank account relationship between myself
and the Transfer Agent or the Trust and that the relationship between myself and the Transfer
Agent is that of shareholder-transfer agent.
FOR JOINT ACCOUNT: CHECK HERE WHETHER EITHER OWNER / / IS AUTHORIZED, OR ALL OWNERS / / ARE
REQUIRED TO SIGN CHECKS.
</TABLE>
3. FEDERAL FUNDS REDEMPTION (SEE TERMS AND CONDITIONS IN THE PROSPECTUS)
<TABLE>
<S> <C>
The undersigned hereby authorize(s) and direct(s) Financial Data Services, Inc. (the "Transfer
Agent") to act on telephonic, telegraphic, or other instructions (without signature guarantee)
from any person representing himself to be either the investor or any authorized representative
of the investor, directing redemption of shares in an amount of $5,000 or more of Merrill Lynch
Ready Assets Trust (the "Trust") held by the Transfer Agent on behalf of the undersigned, and to
transmit the proceeds by wire only to the bank account designated below.
Any change in the bank account designated to receive redemption proceeds shall require a
signature guarantee. The investor understands and agrees that the Trust and Transfer Agent
/ / reserve the right to refuse any instructions.
Check box
(if desired) The Transfer Agent requires additional documentation from corporations, partnerships, trustees
and similar institutional investors in addition to this authorization (see No. 7 below).
Absent its own negligence, and so long as reasonable procedures to confirm the validity of
telephoned instructions are employed, neither Merrill Lynch Ready Assets Trust nor Financial
Data Services, Inc. shall be liable for any redemption caused by unauthorized instructions.
Investors may effect notice of this type of redemption by telephoning the Transfer Agent at the
toll-free number (800) 221-7210. Shares which are being repurchased through securities dealers
will not qualify for Federal Funds redemption.
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Fill out the rest of this space only if the above box is checked. Your bank must
be a member of the Federal Reserve or have a correspondent banking relation with
a bank that does belong to the Federal Reserve.
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ENCLOSE A SPECIMEN COPY OF YOUR PERSONAL CHECK
(MARKED "VOID") FOR THE BANK ACCOUNT LISTED BELOW. IF YOUR BANK IS NOT A MEMBER OF THE FEDERAL RESERVE:
------------------------------------------------------
IF YOUR BANK IS A MEMBER OF THE FEDERAL RESERVE: Correspondent Bank Name Routing Code
- ------------------------------------------------------ ------------------------------------------------------
Your Bank Name Bank Routing Code Your Bank Name Routing Code
- ------------------------------------------------------ ------------------------------------------------------
Your Account Name Your Account Number Your Account Name Your Account Number
- ------------------------------------------------------ ------------------------------------------------------
Address of Bank City State Zip Code Your Bank Address City State Zip Code
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4. AUTOMATIC INVESTMENT PLAN PRIVILEGE (SEE TERMS AND CONDITIONS IN
STATEMENT OF ADDITIONAL INFORMATION)
/ / Check this box only if you wish to have an Authorization Form sent to you.
5. SYSTEMATIC WITHDRAWAL PLAN (SEE TERMS AND CONDITIONS IN THE STATEMENT OF
ADDITIONAL INFORMATION)
Minimum requirements: $10,000 for monthly disbursement, $5,000 for quarterly, of
shares in Merrill Lynch Ready Assets Trust at cost or current offering price. In
addition, your signature(s) must be guaranteed. This option is available only if
you do not check No. 6.
The undersigned hereby authorizes and directs Financial Data Services, Inc. on
(check only one)
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/ / the 24th of each month payable to the order of (check only one)
/ / March 24, June 24, September 24 and December 24 / / the registered owner as indicated in item 1 herein
/ / to redeem a sufficient number of Shares in my above.
account to generate redemption proceeds of $ ; / / (other)
or Such check or ACH debit should be mailed to (check only
/ / to redeem % of the Shares in my account on one)
such date and pay the redemption proceeds by check / / the address indicated in item 1 herein above.
or ACH debit / / the following name and address:
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6. ACCRUED MONTHLY PAYOUT PLAN (SEE TERMS AND CONDITIONS IN STATEMENT OF
ADDITIONAL INFORMATION)
The undersigned hereby authorizes and directs Financial Data Services, Inc. to
redeem on the last Friday of each month all shares purchased during such month
through reinvestment of dividends and distributions and send the proceeds to me.
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/ /
Check box
(if desired)
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7. OTHER INFORMATION
This application enables you to take advantage of any or all of the optional
services available to Merrill Lynch Ready Assets Trust shareholders and will
update any options in effect for your account.
If you select the Check Redemption Privilege, a supply of checks imprinted
with your name and shareholder account number will be sent to you in
approximately 10 days. You should be certain that a sufficient number of shares
are held by Transfer Agent for your account to cover the amount of any check or
ACH debit drawn by you. If insufficient shares are in the account, the check
will be returned or the ACH debit will be dishonored marked insufficient funds.
Since the dollar value of your account is constantly changing, the total value
of your account cannot be determined in advance and the account cannot be
entirely redeemed by check or ACH debit. If the Check Redemption Privilege is
being requested for an account in the name of a corporation or other
institution, the following additional documents must be submitted with this
authorization.
CORPORATIONS--"Certification of Corporate Resolution," indicating the names
and titles of officers authorized to write checks or draw ACH debits, must be
signed by an officer other than one empowered to execute transactions, with his
signature guaranteed and the corporate seal affixed.
PARTNERSHIPS--"Certification of Partnership," naming the partners and the
required number that may act in accordance with the terms of the Partnership
Agreement is to be executed by a general partner with his signature guaranteed.
TRUSTS--"Certification of Trustees," naming the trustees and the required
number that may act in accordance with the terms of the Trust Agreement, must be
executed by a certifying trustee with his signature guaranteed and under the
corporate seal.
If you are adding or reinstating the Federal Funds Redemption option, the
signature(s) must be guaranteed in the space provided below. Your signature(s)
must be guaranteed by a commercial bank (not a savings bank) in New York City or
one having a New York City correspondent, or by a member firm of any national
securities exchange. (A Notary Public's seal does not constitute a signature
guarantee.)
8. SIGNATURES
Under penalty of perjury, I certify (1) that the number set forth above is my
correct Social Security Number or Taxpayer Identification Number and (2) that I
am not subject to backup withholding (as discussed under "Additional
Information--Taxes") either because I have not been notified that I am subject
thereto as a result of failure to report all interest and dividends, or the
Internal Revenue Service ("IRS") has notified me that I am no longer subject
thereto. Instructions: You must strike out the language in (2) above if you have
been notified that you are subject to backup withholding due to underreporting
and you have not received a notice from the IRS that backup withholding has been
terminated. By your signature below, you authorize the furnishing of this
certification to other Merrill Lynch-sponsored mutual funds.
By the execution of this Purchase Application, the investor represents and
warrants that the investor has full right, power and authority to make the
investment applied for pursuant to this Application, and the person or persons
signing on behalf of the investor represent and warrant that they are duly
authorized to sign this Application and to purchase or redeem shares of the
Trust on behalf of the investor.
The investor hereby affirms that he has received a current Trust Prospectus
and appoints Merrill Lynch Financial Data Services, Inc. as his agent to receive
dividends and distributions for their automatic reinvestment in additional Trust
shares.
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- --------------------------------------------- ------------------- ---------------------------------------------
Signature of Investor Date Signature of Joint Registrant, if any
NOTE: The Guarantor must be either a U.S. commercial bank (not a
savings bank) or a trust company in New York City or one that
is a correspondent of a New York City commercial bank or trust
company, or a member firm of a national securities exchange (a
Notary Public's seal does not constitute a signature
guarantee).
Signature(s) Guaranteed: (only for those electing No. 3 or No. 5)
By:___________________________________________________
(Authorized Signatory)
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Manager
Merrill Lynch Asset Management
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
Box 9011
Princeton, New Jersey 08543-9011
Distributor
Merrill Lynch Funds Distributor, Inc.
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
Box 9011
Princeton, New Jersey 08543-9011
Custodian
The Bank of New York
1 Wall Street
New York, New York 10286
Transfer Agent
Financial Data Services, Inc.
Administrative Offices:
Transfer Agency Operations Department
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
Mailing Address:
P.O. Box 45290
Jacksonville, Florida 32232-5290
Independent Auditors
Deloitte & Touche
117 Campus Drive
Princeton, New Jersey 08540
Counsel
Brown & Wood
One World Trade Center
New York, New York 10048-0557
<PAGE> 24
Prospectus
NO DEALER, SALESMAN, OR OTHER
PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, IN
CONNECTION WITH THE OFFER CONTAINED
IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED ARTWORK
UPON AS HAVING BEEN AUTHORIZED BY
THE TRUST, THE MANAGER, OR THE
DISTRIBUTOR. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING IN ANY
STATE IN WHICH SUCH OFFERING MAY
NOT LAWFULLY BE MADE.
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TABLE OF CONTENTS
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Fee Table.............................. 2
Financial Highlights................... 3
Yield Information...................... 4
Investment Objectives and Policies..... 4 MERRILL LYNCH
Management of the Trust................ 8 READY ASSETS
Trustees............................. 8 TRUST
Management and Advisory
Arrangements...................... 9
Transfer Agency Services............. 9 Merrill Lynch Ready Assets Trust is organ-
Purchase of Shares..................... 10 ized as a Massachusetts business trust. It is
Methods of Payment................... 10 not a bank nor does it offer fiduciary or trust
Distribution Plan.................... 11 services. Shares of the Trust are not
Redemption of Shares................... 11 equivalent to a bank accouont. As with any
Methods of Redemption................ 12 investment in securities, the value of a
Shareholder Services................... 14 shareholder's investment in the Trust will
Portfolio Transactions................. 15 Trust is not insured by any government
Additional Information................. 15
Dividends............................ 15
Determination of Net Asset Value..... 15 April 28, 1994
Taxes................................ 16
Organization of the Trust............ 17 Funds Distributor, Inc.
Shareholder Reports.................. 17 This prospectus should be retained
Shareholder Inquiries................ 18
Purchase Application................... 19
Code#10053
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Merrill Lynch Ready Assets Trust
GRAPHICS APPENDIX LIST
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PAGE WHERE
GRAPHIC
APPEARS DESCRIPTION OF GRAPHIC OR CROSS-REFERENCE
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Back cover of Detail of top of Greek style building
Prospectus showing four Corinthian columns
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