Merrill Lynch Ready Assets Trust
FUND LOGO
Annual Report December 31, 1993
Officers and Trustees
Arthur Zeikel--President and Trustee
Donald Cecil--Trustee
M. Colyer Crum--Trustee
Edward H. Meyer--Trustee
Charles H. Ross, Jr.--Trustee
Jack B. Sunderland--Trustee
J. Thomas Touchton--Trustee
Terry K. Glenn--Executive Vice President
Joseph T. Monagle, Jr.--Executive Vice President
Donald C. Burke--Vice President
John Ng--Vice President
Gerald M. Richard--Treasurer
Mark B. Goldfus--Secretary
Custodian
The Bank of New York
110 Washington Street
New York, New York 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 221-7210
This report is not authorized for use as an offer of sale or
a solicitation of an offer to buy shares of the Trust unless
accompanied or preceded by the Trust's current prospectus.
Past performance results shown in this report should not be
considered a representation of future performance, which will
fluctuate. The Trust seeks to maintain a consistent $1.00 net
asset value per share, although this cannot be assured. An
investment in the Trust is neither insured nor guaranteed by
the US Government.
Merrill Lynch
Ready Assets Trust
Box 9011
Princeton, NJ 08543-9011
<PAGE>
Merrill Lynch Ready Assets Trust
Dear Shareholder:
For the year ended December 31, 1993, Merrill Lynch Ready Assets
Trust paid shareholders a net annualized yield of 2.81%*. For the
six-month period ended December 31, 1993, the Trust's net annualized
yield was 2.74%*. The Trust's 7-day yield as of December 31, 1993 was
2.77% (excluding gains and losses) and 2.78% (including gains and losses).
[FN]
*Based on a constant investment throughout the period, with dividends
compounded daily, and reflecting a net return to the investor after
all expenses.
The Environment
As 1993 drew to a close, the US economy began to show some signs
of improvement with little evidence of an appreciable increase in
the rate of inflation. Interest rate-sensitive sectors of the US
economy are expanding, such as capital goods, consumer durables
and residential construction. However, excluding the interest rate-
sensitive sectors, the US economy grew only marginally during 1993.
Growth was hampered by declining government spending, a deteriorating
trade balance, and sluggishness in other sectors of the economy.
Despite the areas of economic weakness that persist, concerns arose
late in 1993 that the rate of business activity might increase
inflationary pressures which were reflected in an upturn of long-term
interest rates.
Other developments late in the year had significant long-term
implications for the US financial markets. The outline for proposed
healthcare reform is very important for the US economy. As the various
healthcare reform proposals are debated, investors will focus on their
potential effects on the Federal budget, the US economy and the quality
of healthcare delivery in the United States. In addition, the ratification
of the North American Free Trade Agreement by the US Congress was important
not only for the prospect of expanding trade with Canada and Mexico, but
also as a positive influence on the recently concluded round of negotiations
on the General Agreement on Tariffs and Trade. Further economic integration
and growth through trade liberalization would be positive for the capital
markets in the United States and around the world.
Portfolio Matters
For the six months ended December 31, 1993, Merrill Lynch Ready Assets Trust
maintained a constructive approach to the market, as reflected in our weighted
average portfolio maturity, which ranged from a low of 63 days to a high of
89 days. Throughout the period, we gradually added to the Trust's holdings
of Government securities as weak credit demand compressed quality spreads.
This trend had been consistent during the course of 1993, as the Trust's
position in commercial paper declined from 69.7% as of January 1, 1993 to
39.3% of net assets at year-end, with a similar increase in our commitment
to Government securities over the same time frame.
<PAGE>
As we began the month of July, we adopted a mildly constructive approach to
the market, consistent with our view that a stumbling economy would eventually
lead to lower interest rates. Reflective of this viewpoint, we extended the
average portfolio maturity of the Trust from the low 60-day area to the low
70-day area. Short-term interest rates actually rose in late July, following
Federal Reserve Board Chairman Alan Greenspan's unexpected warning that short-
term interest rates would ultimately move higher. With concerns that monetary
policy was soon to become less accommodative, the yield curve flattened, with
short-term interest rates rising and long-term interest rates falling.
During the months of August and September, we moved the Trust's average
portfolio maturity to the mid 80-day range, since it seemed that a less-
than-robust recovery, combined with well-contained inflationary pressures,
would preclude any near-term tightening of monetary policy. This was
primarily accomplished by adding to the Trust's position in one-year US
Treasury securities and Federal agency issues, both of which were attractive
on the yield curve. Additionally, we continued to increase our holdings of
variable rate products, especially in the Treasury bill-based sector, as
some increase in Treasury bill supply seemed likely. This came at the expense
of our commercial paper holdings, since they were expensive on a spread basis.
We held a rather constructive view on the market through the middle of
October, believing that short-term interest rates could still move slightly
lower as the economy showed signs of lackluster growth. The interest rate
declines that occurred during August and September were gradually dissipated
during October as investors felt that the economy could finally build some
momentum. By the end of October, we reduced the average portfolio maturity
slightly in response to the change in investor sentiment.
During the month of November, we continued to reduce the Trust's average
portfolio maturity. Investor opinion had turned decidedly negative as the
advent of supply and year-end pressures continued to mount. As the long-
term end of the Treasury bill market became expensive, we reduced our
exposure to this area. New purchases were concentrated in the one-month--
two-month sector, primarily in money market instruments taking advantage
of year-end incremental yield pick ups. By month's end, the average
portfolio maturity stood at 74 days.
We continued this posture throughout the month of December and maintained
the average portfolio maturity in the mid 70-day range. Throughout the
month, quality spreads narrowed even more dramatically, enabling us to
reinvest maturities into short-term Federal agencies with little yield
concession. Additionally, during December we selectively added to our
positions in one-year Treasuries and Federal agency issues which appeared
attractive on a spread basis to the two-year Treasury note. The average
portfolio maturity at the end of the month was 77 days.
Looking ahead, we believe that the Federal Reserve Board will continue
its course over the near term as long as inflation and the economy remain
subdued. As the yield curve remains relatively steep, we will maintain a
somewhat positive approach to the market.
<PAGE>
The portfolio's composition at the end of the December period and
as of our last report is detailed below:
12/31/93 6/30/93
Bankers' Acceptances--Yankee* -- 0.2%
Bank Notes 1.3% 0.3
Certificates of Deposit -- 0.4
Certificates of Deposit--European 1.5 1.1
Certificates of Deposit--Yankee* 1.4 7.0
Commercial Paper 39.3 53.3
Corporate Notes 0.2 0.3
Master Notes 5.6 5.6
Medium-Term Notes 1.5 1.2
Repurchase Agreements 3.7 --
Taxable Municipal Bonds 0.3 --
US Government, Agency & Instrumentality--Discount 21.6 18.8
US Government, Agency & Instrumentality--Non-Discount 24.5 14.9
Other Assets (Liabilities)--Net (0.9) (3.1)
-------- -------
100.0% 100.0%
======== =======
[FN]
*US branches of foreign banks.
We thank you for your support of Merrill Lynch Ready Assets Trust, and we
look forward to serving your investment needs in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(John Ng)
John Ng
Vice President and Portfolio Manager
January 31, 1994
<PAGE>
Merrill Lynch Ready Assets Trust
Schedule of Investments as of December 31, 1993 (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Bank Notes--1.3%
First National Bank $ 17,000 3.35 % 1/31/94 $ 17,000
of Chicago, IL 25,000 3.37 2/04/94 25,003
NationsBank, Texas
N.A. 25,000 3.625 11/30/94 25,055
PNC Bank, N.A. 20,000 3.25 4/19/94 19,994
Total Bank Notes
(Cost--$86,983) 87,052
Certificates of Deposit--European--1.5%
NationsBank 25,000 3.30 2/14/94 24,999
North Carolina, 50,000 3.24 2/22/94 49,991
N.A., London
Rabobank 20,000 3.34 2/14/94 19,999
Nederland, London
Total Certificates of Deposit--European
(Cost--$95,000) 94,989
Certificates of Deposit--Yankee--1.4%
Societe Generale, NY 71,000 3.27 1/07/94 70,999
19,000 3.26 3/04/94 18,996
Total Certificates of Deposit--Yankee
(Cost--$90,000) 89,995
Commercial Paper--39.3%
APRECO, Inc. 25,000 3.37 2/11/94 24,902
28,300 3.35 3/07/94 28,134
ARCO Coal 22,500 3.18 1/31/94 22,435
Australia Inc.
Abbey National 100,000 3.21 4/05/94 99,142
North America 70,000 3.22 4/07/94 69,387
Corp. 50,000 3.23 4/07/94 49,562
American Express 30,000 3.22 1/10/94 29,973
Credit Corp.
Australian Wool 12,000 3.20 2/16/94 11,948
Realisation 15,000 3.20 2/18/94 14,932
Commission
Bankers Trust NY Corp. 100,000 3.20 2/15/94 99,576
<PAGE>
Bayerische 25,000 3.17 1/13/94 24,970
Vereinsbank AG 25,000 3.20 1/21/94 24,951
Bear Stearns 120,000 3.35 1/03/94 119,967
Companies, Inc. (The) 100,000 3.35 3/11/94 99,377
C.I.T. Group $ 25,000 3.24 % 1/11/94 $ 24,975
Holdings, Inc. (The) 25,000 3.25 1/11/94 24,975
50,000 3.25 1/14/94 49,936
25,000 3.50 3/29/94 24,804
CS First Boston Inc. 40,000 3.37 2/04/94 39,869
CXC Incorporated 7,000 3.35 2/04/94 6,977
Central & SouthWest 10,700 3.36 2/03/94 10,666
Corp.
Central Hispano N.A. 25,000 3.25 1/04/94 24,991
Capital Corp. 25,000 3.25 1/10/94 24,977
Cheltenham & 25,000 3.23 1/12/94 24,973
Glouster Building
Society
Commerzbank US 100,000 3.18 1/13/94 99,881
Finance Inc.
Corporate Asset 16,300 3.25 2/18/94 16,228
Securitization
Aus. Ltd, Inc.
Corporate 40,000 3.30 2/04/94 39,872
Receivables Corp.
Ford Motor Credit Co. 55,000 3.20 3/02/94 54,702
50,000 3.22 4/06/94 49,567
General Electric 25,000 3.35 2/07/94 24,911
Capital Corp. 17,970 3.35 2/11/94 17,899
44,700 3.35 3/01/94 44,450
Goldman Sachs 40,000 3.35 1/25/94 39,907
Group, L.P. 80,000 3.36 2/07/94 79,715
50,000 3.27 2/22/94 49,756
100,000 3.27 2/23/94 99,502
<PAGE>
Hanson Finance 67,000 3.20 2/03/94 66,787
(UK) PLC 75,000 3.21 2/11/94 74,705
60,000 3.37 2/15/94 59,745
34,000 3.30 4/08/94 33,699
Hertz Funding Corp. 15,000 3.37 2/09/94 14,944
International Lease 29,500 3.21 2/01/94 29,412
Finance Corp.
Internationale 100,000 3.18 1/21/94 99,805
Nederlanden (US) 50,000 3.21 3/28/94 49,613
Funding Corp.
Merrill Lynch Ready Assets Trust
Schedule of Investments as of December 31, 1993 (continued) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Commercial Paper (concluded)
Leeds Permanent $ 50,000 3.23 % 1/10/94 $ 49,954
Building Society
McKenna Triangle 25,000 3.23 1/27/94 24,937
National Corporation 65,000 3.22 1/28/94 64,831
New South Wales 30,000 3.34 2/17/94 29,867
Treasury Corp. 30,020 3.37 2/25/94 29,865
Queensland Treasury 50,000 3.20 2/22/94 49,756
Corp.
Societe Generale 60,000 3.28 1/10/94 59,945
North America, Inc. 50,000 3.23 2/28/94 49,728
Sony Capital Corp. 25,000 3.35 2/08/94 24,909
Svenska 70,000 3.25 1/05/94 69,968
Handelsbanken, Inc. 20,000 3.25 2/28/94 19,891
Swedish Export 25,000 3.28 1/14/94 24,968
Credit Corporation
Transamerica 30,000 3.35 2/15/94 29,873
Finance Corp. 15,000 3.35 3/01/94 14,916
Total Commercial Paper
(Cost--$2,564,976) 2,564,907
<PAGE>
Corporate Notes--0.2%
Associates Corp. 5,000 6.625 12/01/94 5,129
of North America
Shell Oil Co. 5,000 6.125 11/15/94 5,103
Total Corporate Notes
(Cost--$10,233) 10,232
Master Notes--5.6%
Goldman Sachs 50,000 3.33 3/01/94 50,000
Group, L.P.
Kingdom of Sweden 320,000 3.25 7/15/94 320,000
Total Master Notes
(Cost--$370,000) 370,000
Medium-Term Notes--1.5%
Bear Stearns 50,000 3.80 3/18/94 50,000
Companies Inc. (The) 45,000 3.34 5/23/94 45,000
Total Medium-Term Notes
(Cost--$95,000) 95,000
Taxable Municipal Bonds--0.3%
Orange County, $ 20,000 3.625 % 6/30/94 $ 20,011
California, Taxable
Note (TEETER)
Total Taxable Municipal Bonds
(Cost--$20,000) 20,011
US Government, Agency & Instrumentality
Obligations--Discount--21.6%
Federal Farm 8,000 3.50 12/08/94 7,732
Credit Bank
Federal Home 10,000 3.11 2/01/94 9,972
Loan Bank 50,000 3.50 12/02/94 48,357
<PAGE>
Federal National 80,000 3.14 3/15/94 79,480
Mortgage 20,000 3.41 9/19/94 19,505
Association 25,000 3.43 9/19/94 24,381
125,000 3.42 9/20/94 121,895
67,000 3.42 9/26/94 65,298
50,000 3.42 9/30/94 48,711
20,000 3.45 10/13/94 19,453
100,800 3.44 10/14/94 98,035
125,000 3.45 10/18/94 121,524
US Treasury Bills 100,000 3.245 1/27/94 99,769
55,500 3.21 2/03/94 55,338
4,500 3.235 2/03/94 4,487
93,000 3.25 2/03/94 92,728
8,000 3.235 2/10/94 7,971
64,000 3.26 5/26/94 63,177
10,000 3.30 5/26/94 9,871
16,000 3.3025 6/09/94 15,775
50,000 3.31 6/09/94 49,296
55,000 3.23 6/23/94 54,149
110,000 3.24 6/23/94 108,299
50,000 3.45 12/15/94 48,328
36,000 3.455 12/15/94 34,796
25,000 3.46 12/15/94 24,164
25,000 3.465 12/15/94 24,164
56,500 3.48 12/15/94 54,610
Total US Government, Agency &
Instrumentality Obligations--Discount
(Cost--$1,411,071) 1,411,265
Merrill Lynch Ready Assets Trust
Schedule of Investments as of December 31, 1993 (concluded) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
US Government, Agency & Instrumentality
Obligations--Non-Discount--24.5%
Federal Home $ 44,000 3.43 % 6/21/95 $ 44,000
Loan Bank++ 79,000 3.43 8/09/95 79,000
75,000 3.43 12/28/95 75,000
73,000 3.46 6/17/96 73,000
29,000 3.46 6/21/96 29,000
<PAGE>
Federal Home Loan 136,000 3.1825 1/06/95 135,953
Mortgage 79,000 3.37 8/09/95 79,000
Corporation++ 56,000 3.36 9/01/95 55,982
39,000 3.37 9/01/95 38,994
16,000 3.33 5/06/96 16,000
15,000 3.50 5/13/98 15,000
Federal National 45,000 2.92 7/08/94 44,977
Mortgage 30,000 3.40 12/20/95 30,000
Association++ 95,000 3.33 5/13/96 95,000
70,000 3.33 5/24/96 70,000
70,000 3.45 5/19/97 70,000
65,000 3.50 5/14/98 65,000
Student Loan 7,500 3.62 8/22/94 7,506
Marketing 30,000 3.42 9/09/94 29,990
Association++ 23,000 3.42 12/30/94 22,999
10,000 3.72 3/23/95 10,017
10,000 3.695 4/24/95 10,013
80,750 3.47 8/07/95 80,750
43,500 3.47 3/20/96 43,490
5,000 3.30 5/15/96 5,003
60,000 3.48 1/14/97 60,000
US Treasury $ 117,000 5.75 % 3/31/94 $ 117,731
Notes 80,000 5.00 6/30/94 80,650
62,000 4.25 8/31/94 62,310
55,000 5.50 2/15/95 56,014
Total US Government, Agency &
Instrumentality Obligations--Non-Discount
(Cost--$1,602,073) 1,602,379
Repurchase Agreements**--3.7%
Face
Amount Issue
$220,000 BT Securities, Inc., purchased
on 12/31/93 to yield 3.27% to 1/03/94 220,000
19,203 Caroll McEntee & McGinley, Inc.,
purchased on 12/31/93 to yield
3.17% to 1/03/94 19,203
Total Repurchase Agreements
(Cost--$239,203) 239,203
Total Investments
(Cost--$6,584,539)--100.9% 6,585,033
Liabilities in Excess of Other Assets--(0.9%) (61,846)
----------
Net Assets--100.0% $6,523,187
==========
<PAGE>
[FN]
*Commercial Paper and certain US Government, Agency &
Instrumentality Obligations are traded on a discount basis; the
interest rates shown are the discount rates paid at the time of
purchase by the Trust. 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. Interest rates shown are the rates in effect at December 31, 1993.
**Repurchase Agreements are fully collateralized by the US
Government Obligations.
++Variable Rate Notes.
See Notes to Financial Statements.
<TABLE>
Merrill Lynch Ready Assets Trust
Statement of Assets and Liabilities as of December 31, 1993
<CAPTION>
<S> <C> <C>
Assets:
Investments, at value (identified cost--$6,584,538,537*) (Note 1a) $ 6,585,033,171
Cash 331,628
Receivables:
Interest $ 13,951,325
Beneficial interest sold 2,432,807 16,384,132
---------------
Prepaid registration fees and other assets (Note 1d) 76,692
---------------
Total assets 6,601,825,623
---------------
Liabilities:
Payables:
Beneficial interest redeemed 72,206,570
Investment adviser (Note 2) 2,111,760
Distributor (Note 2) 2,019,775 76,338,105
---------------
Accrued expenses and other liabilities 2,300,538
---------------
Total liabilities 78,638,643
---------------
Net Assets $ 6,523,186,980
===============
Net Assets Consist of:
Shares of beneficial interest, $.10 par value, unlimited number
of shares authorized $ 652,269,235
Paid-in capital in excess of par 5,870,423,111
Unrealized appreciation on investments--net 494,634
---------------
Net assets--Equivalent to $1.00 per share based on 6,522,692,346
shares of beneficial interest outstanding $ 6,523,186,980
===============
<PAGE>
<FN>
*Cost for Federal income tax purposes. As of December 31,
1993, net unrealized appreciation for Federal income tax purposes
amounted to $494,634, of which $735,953 related to appreciated
securities and $241,319 related to depreciated securities.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Merrill Lynch Ready Assets Trust
Statement of Operations for the Year Ended December 31, 1993
<S> <C> <C>
Investment Income (Note 1c):
Interest income and discount earned $ 244,866,727
Expenses:
Investment advisory fees (Note 2) $ 25,841,742
Transfer agent fees (Note 2) 11,259,945
Distribution fees (Note 2) 8,501,923
Registration fees (Note 1d) 363,136
Accounting services (Note 2) 274,854
Custodian fees 238,259
Printing and shareholder reports 196,057
Trustees' fees and expenses 135,367
Professional fees 112,339
Other 80,479
---------------
Total expenses 47,004,101
---------------
Investment income--net 197,862,626
Realized Gain on Investments--Net (Note 1c) 3,578,640
Change in Unrealized Appreciation on Investments--Net
(1,103,997)
---------------
Net Increase in Net Assets Resulting from Operations $ 200,337,269
===============
</TABLE>
<PAGE>
<TABLE>
Merrill Lynch Ready Assets Trust
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended December 31,
Increase (Decrease) in Net Assets: 1993 1992
<S> <C> <C>
Operations:
Investment income--net $ 197,862,626 $ 282,489,103
Realized gain on investments--net 3,578,640 12,790,860
Change in unrealized appreciation on investments--net
(1,103,997) (5,379,695)
--------------- ---------------
Net increase in net assets resulting from operations 200,337,269 289,900,268
--------------- ---------------
Dividends & Distributions to Shareholders (Note 1e):
Investment income--net (197,862,626) (282,489,103)
Realized gain on investments--net (3,578,640) (5,812,534)
--------------- ---------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (201,441,266) (288,301,637)
--------------- ---------------
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 14,756,129,434 16,032,112,394
Net asset value of shares issued to shareholders in reinvestment
of dividends and distributions (Note 1e) 200,674,784 287,472,569
--------------- ---------------
14,956,804,218 16,319,584,963
Cost of shares redeemed (15,898,382,152) (17,932,540,977)
--------------- ---------------
Net decrease in net assets derived from beneficial interest
transactions (941,577,934) (1,612,956,014)
--------------- ---------------
Net Assets:
Total decrease in net assets (942,681,931) (1,611,357,383)
Beginning of year 7,465,868,911 9,077,226,294
--------------- ---------------
End of year $ 6,523,186,980 $ 7,465,868,911
=============== ===============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
Merrill Lynch Ready Assets Trust
Financial HighlightS
<CAPTION>
The following per share data and ratios have For the Year Ended December 31,
been derived from information provided in the 1993 1992 1991 1990 1989
financial statements.
<S> <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
---------- ---------- ---------- ----------- -----------
Investment income--net .0272 .0332 .0556 .0771 .0860
Realized and unrealized gain on
investments--net .0003 .0009 .0029 .0010 .0005
---------- ---------- ---------- ----------- ----------
Total from investment operations .0275 .0341 .0585 .0781 .0865
---------- ---------- ---------- ----------- ----------
Less dividends and distributions:
Investment income--net (.0272) (.0332) (.0556) (.0771) (.0860)
Realized gain on investments--net (.0005) (.0007) (.0029)++ (.0010)++ (.0005)++
---------- ---------- ---------- ----------- ----------
Total dividends and distributions (.0277) (.0339) (.0585) (.0781) (.0865)
---------- ---------- ---------- ----------- -----------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== =========== ==========
Total Investment Return 2.81% 3.45% 6.02% 8.12% 9.02%
========== ========== ========== =========== ==========
Ratios to Average Net Assets:
Expenses, excluding distribution fees .53% .52% .50% .50% .52%
========== ========== ========== =========== ==========
Expenses .65% .64% .62% .62% .63%
========== ========== ========== =========== ==========
Investment income--net and realized gain (loss) on
investments--net 2.78% 3.48% 5.87%++ 7.80%++ 8.65%++
========== ========== ========== =========== ==========
Supplemental Data:
Net assets, end of year (in thousands) $6,523,187 $7,465,869 $9,077,226 $10,180,436 $10,650,487
========== ========== ========== =========== ==========
<FN>
++Includes unrealized gain (loss) on investments.
See Notes to Financial Statements.
</TABLE>
<PAGE>
Merrill Lynch Ready Assets Trust
Notes to Financial Statements.
1. Significant Accounting Policies:
Merrill Lynch Ready Assets Trust (the "Trust") is registered under the
Investment Company Act of 1940 as a diversified, open-end investment
management company. The following is a summary of significant accounting
policies followed by the Trust.
(a) Valuation of investments--Investments maturing more than sixty days
after the valuation date are valued at the most recent bid price or yield
equivalent as obtained from dealers that make markets in such securities.
When such securities are valued with sixty days or less to maturity, the
difference between the valuation existing on the sixty-first day before
maturity and maturity value is amortized on a straight-line basis to
maturity. Investments maturing within sixty days from their date of
acquisition are valued at amortized cost, which approximates market value.
For 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. Assets for which market quotations are not readily available
are valued at fair value as determined in good faith by or under the
direction of the Board of Trustees.
(b) Income taxes--It is the Trust's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Therefore,
no Federal income tax provision is required.
(c) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Interest income (including amortization of premium or discount) is recognized
on the accrual basis. Realized gains and losses on security transactions
are determined on the identified cost basis.
(d) Prepaid registration fees--Prepaid registration fees are charged to
expense as the related shares are issued.
(e) Dividends to shareholders--The Trust declares dividends daily and
reinvests such dividends daily (net of non-resident alien tax and back-up
withholding tax) in additional shares of beneficial interest at net asset
value. Dividends are declared from the total of net investment income and
net realized gain or loss on investments.
2. Investment Advisory Agreement and Transactions with
Affiliates:
The Trust has entered into an Investment Advisory Agreement with Merrill
Lynch Asset Management ("MLAM" or "Adviser"). MLAM is the name under which
Merrill Lynch Investment Management, Inc. ("MLIM") does business. MLIM is
an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. The Trust
has also entered into a Distribution Agreement and a Distribution Plan
with Merrill Lynch Funds Distributor, Inc. ("MLFD" or "Distributor"), a
wholly-owned subsidiary of MLIM. MLAM provides the Trust with investment
management, research, statistical, and advisory services, and pays certain
other expenses of the Trust. For such services, the Trust pays a monthly
fee based upon the average daily value of the Trust's net assets at the
following annual rates:
<PAGE>
Portion of average daily value of net assets: Rate
Not exceeding $500 million 0.500%
In excess of $500 million but not exceeding $1 billion 0.400
In excess of $1 billion but not exceeding $5 billion 0.350
In excess of $5 billion but not exceeding $10 billion 0.325
In excess of $10 billion but not exceeding $15 billion 0.300
In excess of $15 billion but not exceeding $20 billion 0.275
In excess of $20 billion 0.250
The most restrictive annual expense limitation requires that the Adviser
reimburse the Trust to the extent the Trust's expenses (excluding interest,
taxes, distribution fees, brokerage fees and commissions, and extraordinary
items) exceed 2.5% of the Trust's first $30 million of average daily net
assets, 2.0% of the next $70 million of average daily net assets, and 1.5%
of the average daily net assets in excess thereof. The obligation of the
Adviser to reimburse the Trust under this limitation is not limited to the
amount of the management fee.
Notes to Financial Statments (concluded)
Effective January 1, 1994, the investment advisory business of MLAM
reorganized from a corporation to a limited partnership. The general
partner of MLAM is Princeton Services, Inc., an indirect wholly-owned
subsidiary of Merrill Lynch & Co.
The Trust has adopted a Shareholder Servicing Plan and Agreement in
compliance with Rule 12b-1 under the Investment Company Act of 1940,
pursuant to which Merrill Lynch, Pierce, Fenner and Smith Inc. ("MLPF&S"),
a wholly-owned subsidiary of Merrill Lynch & Co., Inc., receives a fee each
month from the Trust at the annual rate of 0.125% of average daily net assets
of the accounts of Trust shareholders who maintain their Trust accounts through
MLPF&S. This fee is to compensate MLPF&S financial consultants and other
directly involved branch office personnel for providing direct personal
services to shareholders. The fee is not compensation for administrative
services.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of Merrill
Lynch & Co., Inc., is the Trust's transfer agent.
Accounting services are provided to the Trust by MLAM at cost.
Certain officers and/or trustees of the Trust are officers and/or directors
of MLIM, FDS, MLFD, MLPF&S, and/or Merrill Lynch & Co., Inc.
3. Shares of Beneficial Interest:
The number of shares purchased and redeemed during the years ended
December 31, 1993 and December 31, 1992, corresponds to the amounts
included in the Statements of Changes in Net Assets for net proceeds
from sale of shares and cost of shares redeemed, respectively, since
shares are recorded at $1.00 per share.
<PAGE>
<AUDIT-REPORT>
Merrill Lynch Ready Assets Trust
Independent Auditors' Report
The Board of Trustees and Shareholders, Merrill Lynch Ready
Assets Trust:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Merrill Lynch Ready Assets
Trust as of December 31, 1993, 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 Trust's manage-
ment. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and the
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned at December 31, 1993 by correspondence with the custodian.
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
Ready Assets Trust as of December 31, 1993, the results of its operations,
the changes in its net assets, and the financial highlights for the
respective stated periods in conformity with generally accepted accounting
principles.
Deloitte & Touche
Princeton, New Jersey
February 4, 1994
</AUDIT-REPORT>
