<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 27, 1995
SECURITIES ACT FILE NO. 2-52711
INVESTMENT COMPANY ACT FILE NO. 811-2556
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 28 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 17 /X/
(CHECK APPROPRIATE BOX OR BOXES)
------------------------
MERRILL LYNCH READY ASSETS TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
800 SCUDDERS MILL ROAD
PLAINSBORO, NEW JERSEY
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
08536
(ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (609) 282-2800
ARTHUR ZEIKEL
MERRILL LYNCH READY ASSETS TRUST
800 SCUDDERS MILL ROAD, PLAINSBORO, NEW JERSEY
MAILING ADDRESS: P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPIES TO:
PHILIP L. KIRSTEIN
MERRILL LYNCH ASSET MANAGEMENT
P.O. BOX 9011
PRINCETON, NEW JERSEY 08543-9011
BROWN & WOOD
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048-0557
ATTENTION: THOMAS R. SMITH, JR.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK
APPROPRIATE BOX)
/X/ immediately upon filing pursuant to paragraph (b), or
/ / on (date) pursuant to paragraph (b), or
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485.
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
/ / this post-effective amendment designates a new
effective date
for a previously filed post-effective amendment.
------------------------
THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT
OF 1940. THE NOTICE REQUIRED BY SUCH RULE FOR THE REGISTRANT'S MOST RECENT
FISCAL YEAR WAS FILED ON FEBRUARY 27, 1995.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
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- ---------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
AMOUNT OF MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES SHARES BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
Shares of beneficial interest
(par value $.10 per share)...... 6,536,275,124 $1.00 $290,000* $100
- ----------------------------------------------------------------------------------------------------------
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</TABLE>
*
(1) The calculation of the maximum aggregate offering price is made pursuant to
Rule 24e-2 under the Investment Company Act of 1940.
(2) The total amount of securities redeemed or repurchased during Registrant's
previous fiscal year was 13,164,347,398 shares of beneficial interest.
(3) 6,628,362,274 of the shares described in (2) above have been used for
reduction pursuant to Rule 24e-2(a) or Rule 24f-2(c) under the Investment
Company Act of 1940 in previous filings during Registrant's current fiscal
year.
(4) 6,535,985,124 of the shares redeemed during Registrant's previous fiscal
year are being used for the reduction of the registration fee in this
amendment to the Registration Statement.
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<PAGE> 2
MERRILL LYNCH READY ASSETS TRUST
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- ------------- -------------------------------------
<S> <C> <C>
Part A
Item 1. Cover Page.................................. Cover Page
Item 2. Synopsis.................................... Fee Table
Item 3. Condensed Financial Information............. Financial Highlights; Yield
Information
Item 4. General Description of Registrant........... Investment Objectives and Policies;
Additional Information
Item 5. Management of the Fund...................... Fee Table; Management of the Trust;
Portfolio Transactions; Inside Back
Cover Page
Item 5A. Management's Discussion of Fund
Performance................................. Not Applicable
Item 6. Capital Stock and Other Securities.......... Cover Page; Additional Information
Item 7. Purchase of Securities Being Offered........ Cover Page; Fee Table; Purchase of
Shares; Redemption of Shares;
Additional Information; Inside Back
Cover Page
Item 8. Redemption or Repurchase.................... Purchase of Shares; Redemption of
Shares
Item 9. Pending Legal Proceedings................... Not Applicable
Part B
Item 10. Cover Page.................................. Cover Page
Item 11. Table of Contents........................... Back Cover Page
Item 12. General Information and History............. Not Applicable
Item 13. Investment Objectives and Policies.......... Investment Objectives and Policies
Item 14. Management of the Fund...................... Management of the Trust
Item 15. Control Persons and Principal Holders of
Securities.................................. Management of the Trust
Item 16. Investment Advisory and Other Services...... Management of the Trust; Purchase of
Shares; Redemption of Shares;
General Information
Item 17. Brokerage Allocation........................ Portfolio Transactions
Item 18. Capital Stock and Other Securities.......... General Information--Description of
Shares
Item 19. Purchase, Redemption and Pricing of
Securities
Being Offered............................... Purchase of Shares; Redemption of
Shares; Determination of Net Asset
Value; Shareholder Services
Item 20. Tax Status.................................. Taxes
Item 21. Underwriters................................ Purchase of Shares; Redemption of
Shares
Item 22. Calculation of Performance Data............. Yield Information
Item 23. Financial Statements........................ Financial Statements
Part C
</TABLE>
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE> 3
PROSPECTUS
April 27, 1995
MERRILL LYNCH READY ASSETS TRUST
P.O. 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 certain other retirement
plans is $100 and the minimum subsequent purchase with respect to these plans is
$1, except that the minimum purchase requirements are waived for purchases of
Trust shares by certain Employer Sponsored Retirement or Savings Plans, as
defined herein. 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".
Shares may be purchased directly from Merrill Lynch Funds Distributor, Inc.
(the "Distributor"), P.O. Box 9011, Princeton, New Jersey 08543-9011, Tel. No.
(609) 282-2800, or from securities dealers which have entered into selected
dealer agreements with the Distributor including Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"). See "Purchase of Shares".
------------------------
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 27, 1995 (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.
------------------------
MERRILL LYNCH ASSET MANAGEMENT--MANAGER
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.--DISTRIBUTOR
<PAGE> 4
FEE TABLE
<TABLE>
<CAPTION>
ANNUAL TRUST OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994:
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<S> <C>
Management Fees(a)................................................................. 0.32%
Rule 12b-1 Fees(b)................................................................. 0.12%
Other Expenses(c).................................................................. 0.21%
-----
Total Trust Operating Expenses....................................................... 0.65%
=====
</TABLE>
- ---------------
(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:
---------------------------------
<S> <C> <C> <C> <C>
1 3 5 10
YEAR YEARS YEARS YEARS
--- --- --- ---
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... $ 7 $21 $36 $81
</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.
2
<PAGE> 5
FINANCIAL HIGHLIGHTS
The financial information in the table below has been audited in
conjunction with the annual audits of the financial statements of the Trust by
Deloitte & Touche LLP, independent auditors. Financial statements for the fiscal
year ended December 31, 1994 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 the Trust's
audited financial statements. Further information about the performance of the
Trust is contained in the Trust's most recent annual report to shareholders
which may be obtained, without charge, by calling or writing the Trust at the
telephone number or address on the front cover of this Prospectus.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987
---------- ---------- ---------- ---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSET VALUE:
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning
of year................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------- ----------- ---------- ----------
Investment
income--net........... .0366 .0272 .0332 .0556 .0771 .0860 .0695 .0616
Realized and unrealized
gain (loss) on
investments--net...... (.0012) .0003 .0009 .0029 .0010 .0005 (.0004) (.0005)
---------- ---------- ---------- ---------- ----------- ----------- ---------- ----------
Total from investment
operations................ .0354 .0275 .0341 .0585 .0781 .0865 .0691 .0611
---------- ---------- ---------- ---------- ----------- ----------- ---------- ----------
Less dividends and
distributions:
Investment
income--net........... (.0366) (.0272) (.0332) (.0556) (.0771) (.0860) (.0691) (.0611)
Realized gain on
investments--net...... (.0000)+ (.0005) (.0007) (.0029)* (.0010)* (.0005)* -- --
---------- ---------- ---------- ---------- ----------- ----------- ---------- ----------
Total dividends and
distributions............. (.0366) (.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 $ 1.00
========= ========= ========= ========= ========== ========== ========= =========
TOTAL INVESTMENT RETURN:.... 3.74% 2.81% 3.44% 6.02% 8.08% 9.05% 7.16% 6.30%
========= ========= ========= ========= ========== ========== ========= =========
RATIOS TO AVERAGE NET
ASSETS:
Expenses, excluding
distribution fees......... .53% .53% .52% .50% .50% .52% .51% .51%
========= ========= ========= ========= ========== ========== ========= =========
Expenses.................... .65% .65% .64% .62% .62% .63% .62% .62%
========= ========= ========= ========= ========== ========== ========= =========
Investment income and
realized gain on
investments--net.......... 3.67% 2.78% 3.48% 5.87%* 7.80%* 8.65%* 6.88%* 6.10%*
========= ========= ========= ========= ========== ========== ========= =========
SUPPLEMENTAL DATA:
Net assets, end of year (in
thousands)................ $6,240,997 $6,523,187 $7,465,869 $9,077,226 $10,180,436 $10,650,487 $9,130,343 $9,864,068
========= ========= ========= ========= ========== ========== ========= =========
<CAPTION>
1986 1985
----------- -----------
<S> <<C> <C>
INCREASE (DECREASE) IN NET
ASSET VALUE:
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning
of year................... $ 1.00 $ 1.00
----------- -----------
Investment
income--net........... .0622 .0763
Realized and unrealized
gain (loss) on
investments--net...... .0004 .0015
----------- -----------
Total from investment
operations................ .0626 .0778
----------- -----------
Less dividends and
distributions:
Investment
income--net........... (.0622) (.0763)
Realized gain on
investments--net...... (.0004)* (.0015)*
----------- -----------
Total dividends and
distributions............. (.0626) (.0778)
----------- -----------
Net asset value, end of
year...................... $ 1.00 $ 1.00
========== ==========
TOTAL INVESTMENT RETURN:.... 6.47% 8.08%
========== ==========
RATIOS TO AVERAGE NET
ASSETS:
Expenses, excluding
distribution fees......... .52% .52%
========== ==========
Expenses.................... .63% .64%
========== ==========
Investment income and
realized gain on
investments--net.......... 6.31%* 7.77%*
========== ==========
SUPPLEMENTAL DATA:
Net assets, end of year (in
thousands)................ $11,150,687 $11,875,311
========== ==========
</TABLE>
- ---------------
* Includes unrealized gain (loss).
+ Amount is less than $.0001 per share.
3
<PAGE> 6
YIELD INFORMATION
Set forth below is yield information for the indicated seven-day periods,
computed to include and exclude realized gains and losses for the seven-day
period ended December 31, 1994 and to include and exclude realized gains and
losses for the seven-day period ended February 28, 1995, and information as to
the compounded annualized yield, excluding gains and losses, for the same
periods.
<TABLE>
<CAPTION>
SEVEN-DAY PERIOD ENDED
---------------------------------------
DECEMBER 31, 1994 FEBRUARY 28, 1995
----------------- -----------------
<S> <C> <C>
Annualized Yield:
Including gains and losses........................ 5.09% 5.40%
Excluding gains and losses........................ 5.09% 5.40%
Compounded Annualized Yield......................... 5.22% 5.55%
Average maturity of portfolio at end of period...... 50 days 51 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 indicative 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
4
<PAGE> 7
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.
5
<PAGE> 8
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> 9
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 upon 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
Ratings Group.
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 Government agency securities and no
more than 397 days (13 months) in the case of all other securities. The dollar-
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weighted average maturity of the Trust's Portfolio will not exceed 90 days.
During the Trust's fiscal year ended December 31, 1994, the average maturity of
its portfolio ranged from 41 days to 84 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 six 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 of the Manager and its affiliate, Fund Asset
Management, L.P. ("FAM"); 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 the
Distributor.
DONALD CECIL--Special Limited Partner of Cumberland Partners (an
investment partnership).
M. COLYER CRUM--James R. Williston Professor of Investment Management,
Harvard Business School.
EDWARD H. MEYER--Chairman of the Board of Directors, President and
Chief Executive Officer of Grey Advertising Inc.
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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).
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* Interested person, as defined in the Investment Company Act, of the Trust.
MANAGEMENT AND ADVISORY ARRANGEMENTS
The Manager, which is owned and controlled by ML&Co., a financial services
holding company, acts as the Manager for the Trust and provides the Trust with
management services. The Manager or an affiliate of the Manager, FAM, acts as
the investment adviser for more than 130 registered investment companies and
provides investment advisory services to individual and institutional accounts.
As of March 31, 1995, the Manager and FAM had a total of approximately $170.3
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, 1994, the total management fee paid by the Trust to the
Manager aggregated $23,487,917 (based on average net assets of approximately
$6.6 billion) and the effective fee rate was 0.32%. At March 31, 1995, the net
assets of the Trust aggregated approximately $6.5 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 $23.4 million.
John Ng is Vice President and Portfolio Manager of the Trust who is
responsible for the day to day management of the Trust. Mr. Ng has been a
Portfolio Manager and Vice President of the Manager since 1985.
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, 1994, the
amount of such reimbursement was $280,057. During 1994, the ratio of operating
expenses, excluding distribution fees, to average net assets was 0.53%.
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, transfer and redemption of shares and the opening and maintenance of
shareholder accounts. Pursuant to the
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Transfer Agency Agreement, the Transfer Agent receives a fee of $15.00 per
shareholder account, 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, 1994, the total fee paid by the Trust to the Transfer Agent
pursuant to the Transfer Agency Agreement was $10,434,680. At March 31, 1995,
the Trust had 624,518 shareholder accounts. At this level of accounts, the
annual fee payable to the Transfer Agent would aggregate approximately $9.4
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 the determination of net asset value (generally
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.
The minimum initial purchase is $5,000 and the minimum subsequent purchase
is $1,000, except that lower minimums apply in the case of purchases made under
certain retirement plans. The Trust may, at its discretion, establish reduced
minimum initial and subsequent purchase requirements with respect to various
types of accounts. For pension, profit sharing, individual retirement and
certain other retirement plans, including self-directed retirement plans for
which Merrill Lynch acts as passive custodian, and the various retirement plans
available from the Distributor, the minimum initial purchase is $100 and the
minimum subsequent investment is $1. The minimum initial or subsequent purchase
requirements may be waived for certain employer sponsored retirement or savings
plans, such as tax qualified retirement plans within the meaning of Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), deferred
compensation plans within the meaning of Section 403(b) and Section 457 of the
Code, other deferred compensation arrangements, Voluntary Employee Benefits
Association ("VEBA") plans, and non-qualified After Tax Savings and Investment
programs, maintained on the Merrill Lynch Group Employee Services system,
referred to herein and in the Statement of Additional Information as "Employer
Sponsored Retirement or Savings Plans." The minimum initial purchase with
respect to other retirement plans and pension and profit-sharing plans is $100
and the minimum subsequent investment is $1. For accounts advised by banks and
registered investment advisers, the minimum initial purchase is $300 and the
minimum subsequent purchase is $100.
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
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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 and can have the proceeds
from the sale of most other 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: ABA #063000021, DDA
#2112600061186, 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 Money Market Operations, 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 Money Market Operations, 4800
Deer 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, 1994, $7,661,910 was paid to Merrill
Lynch pursuant to the Plan (based on average net assets subject to the Plan of
$6.6 billion). At March 31, 1995, the net assets of the Trust subject to the
Plan aggregated approximately $6.5 billion. At this asset level, the annual fee
payable to Merrill Lynch pursuant to the Plan would aggregate approximately $8.1
million.
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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 prior to the determination of net asset value
(generally 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 the determination of net asset value has been made, 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 prior to the Trust's determination of net asset value, it will be
effective on the business day following receipt of the redemption request. If
the notice is received after the determination of net asset value has been made,
the redemption will be effective on the second business day thereafter.
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
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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 before the determination of net asset value of
the Trust on any business day (generally 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 the determination of
net asset value of the Trust (generally 4:00 P.M., New York time) on any
business day. These 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 Money Market Operations, P.O. Box 45290, Jacksonville, Florida
32232-5290. Redemption requests which are sent by hand should be delivered to
Financial Data Services, Inc., Transfer Agency Money Market Operations, 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 the
determination of net asset value of the Trust (generally 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 net asset value, as determined on 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
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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, except that,
in those instances where shareholders request transactions that settle on a
"same-day" basis (such as Federal Funds wire redemptions, branch office checks,
transfers to other Merrill Lynch accounts and certain securities transactions)
the Trust shares necessary to effect such transactions will be deemed to have
been transferred to Merrill Lynch prior to the Trust's declaration of dividends
on that day. In such instances, shareholders will receive all dividends declared
and reinvested through the date immediately preceding 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.
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 D shares of certain other mutual funds advised by the Manager or FAM
("MLAM-advised mutual funds"). Alternatively, shareholders may exchange shares
of the Trust for Class A shares of one of the MLAM-advised mutual funds if the
shareholder holds any Class A shares of that fund in his account in which the
exchange is made at the time of the exchange or is otherwise an eligible Class A
investor. Shareholders of the Trust also may exchange shares of the Trust into
shares of certain MLAM-advised money market funds specifically designated as
available for exchange by holders of Trust shares. There is currently no
limitation on the number of times a
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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 Plan. 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.
Automatic Investment Plan. 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
$100.
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, 1994,
the Trust engaged in 47 transactions pursuant to such orders aggregating
approximately $2.0 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
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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, on each day during which
the New York Stock Exchange or New York banks are open for business. Such
determination is made as of the close of business on the New York Stock Exchange
(generally 4:00 P.M., New York time) or, on days when the New York Stock
Exchange is closed but New York banks are open, at 4:00 P.M., New York time. 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 result of this
computation will be rounded to the nearest whole cent. It is anticipated that
net asset value will remain constant at $1.00 per share. 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.
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
16
<PAGE> 19
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 Trustees
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.
If a shareholder exercises an exchange privilege within 90 days of
acquiring the shares, then the loss the shareholder can recognize on the
exchange will be reduced (or the gain increased) to the extent the sales charge
paid to the Trust on the exchanged shares reduces any sales charge the
shareholder would have owed upon purchase of the new shares in the absence of
the exchange privilege. Instead, such sales charge will be treated as an amount
paid for the new shares.
A loss realized on a sale or exchange of shares of the Trust will be
disallowed if other Trust shares are acquired (whether through the automatic
reinvestment of dividends or otherwise) within a 61-day period beginning 30 days
before and ending 30 days after the date that the shares are disposed of. In
such a case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss.
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 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.
17
<PAGE> 20
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: TAMMO
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.
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.
18
<PAGE> 21
Merrill Lynch Ready Assets Trust PURCHASE APPLICATION
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------------------
Send this completed form to: FINANCIAL DATA SERVICES, INC., Transfer Agency Money Market
Operations, 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>
- --------------------------------------------------------------------------------
1. TO REGISTER SHARES. THE ACCOUNT SHOULD BE REGISTERED AS FOLLOWS:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------
(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 presumed,
unless otherwise indicated.
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
-----------------------------
- ---------------------------------------------------------------------------------- -----------------------------
Street Address Social Security No. or Tax ID No.
</TABLE>
- --------------------------------------------------------------------------------
City State Zip Code
- ------------------------------------------------------
Occupation
- -----------------------------------------------------
Name and Address of Employer
- ------------------------------------------------------
- ------------------------------------------------------
<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>
<C> <S>
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>
<C> <S>
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.
</TABLE>
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.
<TABLE>
<S> <C>
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
</TABLE>
(continued on reverse side)
- --------------------------------------------------------------------------------
19
<PAGE> 22
- --------------------------------------------------------------------------------
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)
<TABLE>
<S> <C>
/ / the 24th of each month / / the registered owner as indicated in item 1 herein
/ / March 24, June 24, September 24 and December 24 above.
/ / to redeem a sufficient number of Shares in my / / (other)
account to generate redemption proceeds of $ ; Such check or ACH debit should be mailed to (check only
or one)
/ / to redeem % of the Shares in my account on / / the address indicated in item 1 herein above.
such date and pay the redemption proceeds by check / / the following name and address:
or ACH debit payable to the order of (check only
one)
</TABLE>
- --------------------------------------------------------------------------------
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.
<TABLE>
<S> <C>
/ /
Check box
(if desired)
</TABLE>
- --------------------------------------------------------------------------------
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 the 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" in the Prospectus) 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 Financial Data Services, Inc. as his agent to receive dividends and
distributions for their automatic reinvestment in additional Trust shares.
<TABLE>
<S> <C> <C>
- --------------------------------------------- ------------------- ---------------------------------------------
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)
</TABLE>
20
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21
<PAGE> 24
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22
<PAGE> 25
Manager
Merrill Lynch Asset Management
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
P.O. Box 9011
Princeton, New Jersey 08543-9011
Distributor
Merrill Lynch Funds Distributor, Inc.
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
P.O. Box 9011
Princeton, New Jersey 08543-9011
Custodian
The Bank of New York
90 Washington Street
12th Floor
New York, New York 10286
Transfer Agent
Financial Data Services, Inc.
Administrative Offices:
Transfer Agency Money Market Operations
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
Mailing Address:
P.O. Box 45290
Jacksonville, Florida 32232-5290
Independent Auditors
Deloitte & Touche LLP
117 Campus Drive
Princeton, New Jersey 08540
Counsel
Brown & Wood
One World Trade Center
New York, New York 10048-0557
<PAGE> 26
LOGO
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
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.
- --------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C> <C>
Fee Table.............................. 2
Financial Highlights................... 3 MERRILL LYNCH
Yield Information...................... 4 READY ASSETS TRUST
Investment Objectives and Policies..... 4
Management of the Trust................ 8
Trustees............................. 8
Management and Advisory
Arrangements...................... 9
Transfer Agency Services............. 9
Purchase of Shares..................... 10
Methods of Payment................... 10
Distribution Plan.................... 11
Redemption of Shares................... 12
Methods of Redemption................ 12
Shareholder Services................... 14 Prospectus
Portfolio Transactions................. 15
Additional Information................. 15 April 27, 1995
Dividends............................ 15
Determination of Net Asset Value..... 16 Distributor:
Taxes................................ 16 Merrill Lynch
Organization of the Trust............ 18 Funds Distributor, Inc.
Shareholder Reports.................. 18
Shareholder Inquiries................ 18 This prospectus should be retained
Purchase Application................... 19 for future reference.
Code#10053-0495
</TABLE>
<PAGE> 27
STATEMENT OF ADDITIONAL INFORMATION
MERRILL LYNCH READY ASSETS TRUST
P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011 - PHONE NO. (609) 282-2800
------------------------
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 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".
------------------------
This Statement of Additional Information of the Trust is not a prospectus
and should be read in conjunction with the prospectus of the Trust, dated April
27, 1995 (the "Prospectus"), which 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. This Statement of
Additional Information has been incorporated by reference into the Prospectus.
------------------------
MERRILL LYNCH ASSET MANAGEMENT--MANAGER
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.--DISTRIBUTOR
------------------------
The date of this Statement of Additional Information is April 27, 1995.
<PAGE> 28
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. Reference is made to "Investment Objectives and
Policies" in the Prospectus for a discussion of the investment objectives and
policies of the Trust.
As discussed in the Prospectus, 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. 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. Obligations of foreign depository institutions, their
branches and subsidiaries, and Eurodollar and Yankeedollar obligations may
involve additional investment risks to the risks of obligations of U.S.
institutions. Such investment risks include adverse political and economic
developments, the possible imposition of withholding taxes on interest income
payable on such obligations, the possible seizure or nationalization of foreign
deposits and the possible establishment of exchange controls or other foreign
governmental laws or restrictions which might adversely affect the payment of
principal and interest. Generally, the issuers of such obligations are subject
to fewer regulatory requirements than are applicable to U.S. banks. Foreign
depository institutions, their branches or subsidiaries, and foreign branches or
subsidiaries of U.S. banks may be subject to less stringent reserve requirements
than U.S. banks. U.S. branches or subsidiaries of foreign banks are subject to
the reserve requirements of the state in which they are located. There may be
less publicly available information about a foreign bank or a branch or
subsidiary of a foreign bank than about a U.S. institution, and such branches or
subsidiaries may not be subject to the same accounting, auditing and financial
record keeping standards and requirements as U.S. banks. Evidence of ownership
of foreign depository and Eurodollar obligations may be held outside of the
United States and the Trust may be subject to the risks associated with the
holding of such property overseas. Foreign depository and Eurodollar obligations
of the Trust held overseas will be held by foreign branches of the Custodian for
the Trust's portfolio securities or by other U.S. or foreign banks under
subcustodian arrangements complying with the requirements of the Investment
Company Act of 1940 (the "Investment Company Act"). The Trust's manager, Merrill
Lynch Asset Management, L.P. (the "Manager" or "MLAM"), will consider the above
factors in making investments in foreign depository, Eurodollar and Yankeedollar
obligations and will not knowingly purchase obligations which, at the time of
purchase, are subject to exchange controls or withholding taxes. Generally, the
Trust will limit its foreign depository and Yankeedollar investments to
obligations of banks organized in Canada, France, Germany, Japan, the
Netherlands, Switzerland, the United Kingdom and other western industrialized
nations. As discussed in the Prospectus, 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 above in connection with investments in Eurodollar and Yankeedollar
obligations and obligations of foreign depository institutions and their foreign
branches and subsidiaries.
Also as discussed in the Prospectus, the Trust may invest in money market
securities pursuant to repurchase agreements or purchase and sale contracts.
Repurchase agreements and purchase and sale contracts may be entered into only
with a member bank of the Federal Reserve System or 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
upon 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
2
<PAGE> 29
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
obligation; 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
conventional repurchase agreement in that the contract arrangements stipulate
that the securities are owned by the Trust and, if the seller should fail to
repurchase the security, the Trust retains ownership of the security. The Trust
would also retain ownership of the securities in the event of a default under a
repurchase agreement that is construed not to be a collateralized loan. 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 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. While the substance of purchase and sale contracts is similar
to repurchase agreements, because of the different treatment with respect to
accrued interest and additional collateral, management believes that purchase
and sale contracts are not repurchase agreements as such term is understood in
the banking and brokerage community, although they are considered repurchase
agreements for purposes of the Investment Company Act.
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 and 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
Ratings Group. See "Appendix--Description of Commercial Paper, Bank Money
Instruments and Corporate Bond Ratings".
In addition to the investment restrictions set forth in the Prospectus, the
Trust has adopted the following 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 (which for this purpose means the lesser
of (i) 67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented or (ii) more than 50% of the outstanding
shares). The Trust may not (1) make investments for the purpose of exercising
control or management; (2) purchase securities of other investment companies,
except in connection with a merger, consolidation, acquisition or
reorganization; (3) purchase or sell real estate (other than money market
securities secured by real estate or interests therein or money market
securities issued by companies which invest in real estate, or interests
therein), commodities or commodity contracts, interests in oil, gas or other
mineral exploration or
3
<PAGE> 30
development programs; (4) purchase any securities on margin, except for use of
short-term credit necessary for clearance of purchases and sales of portfolio
securities; (5) make short sales of securities or maintain a short position or
write, purchase or sell puts, calls, straddles, spreads or combinations thereof;
(6) make loans to other persons, provided that the Trust may purchase money
market securities or enter into repurchase agreements or purchase and sale
contracts and lend securities owned or held by it pursuant to (7) below; (7)
lend its portfolio securities in excess of 20% of its total assets, taken at
market value, provided that such loans are made according to the guidelines of
the Securities and Exchange Commission and the Trust's Board of Trustees,
including maintaining collateral from the borrower equal at all times to the
current market value of the securities loaned; (8) 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 (the borrowing
provisions shall not apply to reverse repurchase agreements with respect to
which see (12) below) [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]; (9) mortgage, pledge, hypothecate or in any manner
transfer (except as provided in (7) above), as security for indebtedness any
securities owned or held by the Trust except as may be necessary in connection
with borrowings mentioned in (8) above, and then such mortgaging, pledging or
hypothecating may not exceed 25% of the Trust's total assets, taken at market
value [although the Trust has the authority to mortgage, pledge or hypothecate
up to 25% of total assets under this investment restriction (9), as a matter of
operating policy, it will not mortgage, pledge or hypothecate in excess of 10%
of net assets in order to comply with the requirements of certain state
securities commissions]; (10) invest in securities (except for repurchase
agreements, purchase and sale contracts or variable amount master demand notes)
with legal or contractual restrictions on resale or for which no readily
available market exists or in securities of issuers (other than issuers of
Government agency securities) having a record, together with predecessors, of
less than three years of continuous operation if, regarding all such securities,
more than 5% of its total assets, taken at market value, would be invested in
such securities; (11) act as an underwriter of securities; (12) enter into
reverse repurchase agreements if, as a result thereof, the Trust's obligations
with respect to reverse repurchase agreements would exceed one-third of the
Trust's net assets (defined to be total assets, taken at market value, less
liabilities other than reverse repurchase agreements). The Trust will not
purchase securities while borrowings described in investment restriction (8) are
outstanding except to honor prior commitments.
Lending of Portfolio Securities. Subject to investment restriction (7)
above, the Trust may from time to time loan securities from its portfolio to
brokers, dealers and financial institutions and receive collateral in cash or
cash equivalents which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. Such collateral
will be invested in short-term securities, the income from which will increase
the return to the Trust. The Trust will retain all rights of beneficial
ownership as to the loaned portfolio securities, including voting rights and
rights to interest or other distributions, and will have the right to regain
record ownership of loaned securities to exercise such beneficial rights. Such
loans will be terminable at any time. The Trust may pay reasonable fees to
persons unaffiliated with the Trust in connection with the arranging of such
loans.
4
<PAGE> 31
MANAGEMENT OF THE TRUST
TRUSTEES AND OFFICERS
The Trustees and executive officers of the Trust, their ages and their
principal occupations for at least the last five years are set forth below.
Unless otherwise noted, the address of each executive officer and Trustee is
P.O. Box 9011, Princeton, New Jersey 08543-9011.
ARTHUR ZEIKEL (62)--President and Trustee(1)(2)--President of the Manager
(which term as used herein includes its corporate predecessors) since 1977;
President of Fund Asset Management, L.P. ("FAM", which term as used herein
includes its corporate predecessors) since 1977; President and Director of
Princeton Services, Inc. ("Princeton Services") since 1993; Executive Vice
President of Merrill Lynch & Co., Inc. ("ML&Co.") since 1990; Executive Vice
President of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch") since 1990 and Senior Vice President thereof from 1985 to 1990; and
Director of Merrill Lynch Funds Distributor, Inc. (the "Distributor").
DONALD CECIL (68)--Trustee(2)--1114 Avenue of the Americas, New York, New
York 10036. Special Limited Partner of Cumberland Partners (an investment
partnership) since 1982; Member of Institute of Chartered Financial Analysts;
Member and Chairman of Westchester County (N.Y.) Board of Transportation.
M. COLYER CRUM (62)--Trustee(2)--Soldiers Field Road, Boston, Massachusetts
02163. James R. Williston Professor of Investment Management, Harvard Business
School, since 1971; Director of Cambridge Bancorp, Copley Properties, Inc. and
Sun Life Assurance Company of Canada.
EDWARD H. MEYER (68)--Trustee(2)--777 Third Avenue, New York, New York
10017. President of Grey Advertising Inc. since 1968, Chief Executive Officer
since 1970 and Chairman of the Board of Directors since 1972; Director of The
May Department Stores Company, Bowne & Co., Inc. (financial printers), Ethan
Allen Interiors, Inc. and Harman International Industries, Inc.
JACK B. SUNDERLAND (66)--Trustee(2)--P.O. Box 1177, Scarsdale, New York
10583. President and Director of American Independent Oil Company, Inc. (an
energy company) since 1987; Member of Council on Foreign Relations since 1971.
J. THOMAS TOUCHTON (56)--Trustee(2)--Suite 3405, One Tampa City Center,
Tampa, Florida 33602. Managing Partner of The Witt-Touchton Company and its
predecessor The Witt Co. (a private investment partnership) since 1972; Trustee
Emeritus of Washington and Lee University; Director of TECO Energy, Inc. (an
electric utility holding company).
TERRY K. GLENN (54)--Executive Vice President(1)(2)--Executive Vice
President of the Manager and FAM since 1983; Executive Vice President and
Director of Princeton Services since 1993; President of the Distributor since
1986 and Director thereof since 1991; President of Princeton Administrators,
L.P. since 1988.
JOSEPH T. MONAGLE, JR. (46)--Executive Vice President(1)(2)--Senior Vice
President of the Manager and FAM since 1990; Vice President of the Manager from
1978 to 1990; Senior Vice President of Princeton Services since 1993.
DONALD C. BURKE (34)--Vice President(1)(2)--Vice President and Director of
Taxation of the Manager since 1990; employee of Deloitte & Touche LLP from 1982
to 1990.
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<PAGE> 32
JOHN NG (41)--Vice President(1)--Vice President of the Manager since 1985.
GERALD M. RICHARD (45)--Treasurer(1)(2)--Senior Vice President and
Treasurer of the Manager and FAM since 1984; Senior Vice President and Treasurer
of Princeton Services since 1993; Vice President of the Distributor since 1981
and Treasurer since 1984.
MARK B. GOLDFUS (48)--Secretary(1)(2)--Vice President of the Manager and
FAM since 1985.
- ---------------
(1) Interested person, as defined in the Investment Company Act, of the Trust.
(2) Such Trustee or officer is a director or officer of certain other investment
companies for which the Manager or FAM acts as investment adviser.
At March 31, 1995, the Trustees and the officers of the Trust as a group
(12 persons) owned an aggregate of less than 1% of the outstanding shares of
beneficial interest of the Trust. At such date, Mr. Zeikel, an officer and
Trustee of the Trust, and the other officers of the Trust, owned less than 1% of
the outstanding shares of common stock of ML&Co.
COMPENSATION OF TRUSTEES
Pursuant to the terms of its management agreement with the Trust (the
"Management Agreement"), the Manager pays all compensation of all officers and
employees of the Trust as well as the fees of all Trustees of the Trust who are
affiliated persons of ML&Co. or its subsidiaries. The Trust pays each
non-interested Trustee an annual fee of $14,000 plus a fee of $2,000 for each
meeting attended and pays all Trustees' actual out-of-pocket expenses relating
to attendance at meetings. Additionally, the Trust has established an Audit
Committee of the Board of Trustees of which all of the unaffiliated Trustees are
members. Each member of such committee receives an annual fee of $5,000 and the
chairman of such committee receives an additional annual fee of $2,500. The
total fees and expenses of the non-interested Trustees aggregated $138,000 for
the fiscal year ended December 31, 1994.
The following table sets forth for the fiscal year ended December 31, 1994,
compensation paid by the Trust to the non-interested Trustees and for the
calendar year ended December 31, 1994, the aggregate compensation paid by all
investment companies advised by MLAM and its affiliate, FAM ("MLAM/FAM Advised
Funds"), to the non-interested Trustees.
<TABLE>
<CAPTION>
TOTAL
PENSION COMPENSATION
OR FROM
RETIREMENT TRUST
BENEFITS AND
ACCRUED MLAM/FAM
AGGREGATE AS PART ADVISED
COMPENSATION OF FUNDS
NAME OF FROM TRUST PAID TO
TRUSTEE TRUST EXPENSES TRUSTEES
- --------------------------------- ------- ----- --------
<S> <C> <C> <C>
Donald Cecil(1).................. $29,500 None $276,350
M. Colyer Crum(1)................ $27,000 None $126,600
Edward H. Meyer(1)............... $27,000 None $251,600
Jack B. Sunderland(1)............ $27,000 None $134,600
J. Thomas Touchton(1)............ $27,000 None $134,600
</TABLE>
- ---------------
(1) The Trustees serve on the boards of other MLAM/FAM Advised Funds as follows:
Mr. Cecil (34 funds), Mr. Crum (17 funds), Mr. Meyer (34 funds), Mr.
Sunderland (18 funds) and Mr. Touchton (18 funds).
MANAGEMENT AND ADVISORY ARRANGEMENTS
Reference is made to "Management of the Trust--Management and Advisory
Arrangements" in the Prospectus for certain information concerning management
and advisory arrangements of the Trust.
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<PAGE> 33
Subject to the direction of the Board of 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. The Manager performs certain
of the other administrative services and provides all the office space,
facilities, equipment and necessary personnel for portfolio management of the
Trust.
The Manager has access to the expertise of its affiliate, Merrill Lynch
Government Securities Inc. ("GSI"), which is a wholly-owned subsidiary of ML&Co.
In terms of dollar volume of trading, GSI is one of the largest dealers in
United States Government securities and Government agency securities, acting
both as a primary dealer and a secondary market trader. GSI is one of the
reporting dealers in U.S. Government securities who report their daily position
and activity to the Federal Reserve Bank of New York. A subsidiary of GSI acts
as a dealer in other money market securities including bankers' acceptances,
certificates of deposit and commercial paper. In addition, the total securities
and economic research facilities of Merrill Lynch are available to the Manager.
Securities held by the Trust also may be held by, or be appropriate
investments for, other funds or clients (collectively referred to as "clients")
for which the Manager or its affiliate, FAM, acts as an adviser or by investment
advisory clients of the Manager. Because of different objectives or other
factors, a particular security may be bought for one or more clients when one or
more clients are selling the same security. If purchases or sales of securities
for the Trust or other advisory clients arise for consideration at or about the
same time, transactions in such securities will be made, insofar as feasible,
for the respective funds and clients in a manner deemed equitable to all. To the
extent that transactions on behalf of more than one client of the Manager or its
subsidiary during the same period may increase the demand for securities being
purchased or the supply of securities being sold, there may be an adverse effect
on price.
As compensation for its services to the Trust, the Manager receives a fee
from the Trust at the end of each month at the following annual rates:
Portion of average daily value of net assets:
<TABLE>
<CAPTION>
RATE
-------
<S> <C>
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%
</TABLE>
The State of California imposes limitations on the expenses of the Trust.
This annual expense limitation applicable to the Trust requires that the Manager
reimburse the Trust to the extent that the Trust's ordinary operating expenses
exceed 2.5% of the 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. Expenses which are not subject to this limitation are
interest, taxes, brokerage commissions and extraordinary items such as
litigation costs. The obligation of the Manager to reimburse the Trust under
this limitation is not limited to the amount of the management fee. For the
fiscal years ended December 31, 1992, 1993 and 1994, the total management fees
paid by the Trust to the Manager aggregated $29,798,649, $25,841,742 and
$23,487,917, respectively. At the date of this Statement of Additional
Information, the Manager had not been required to make any reimbursement to the
Trust pursuant to limitations on operating expenses.
7
<PAGE> 34
The Manager is obligated to provide investment advisory services, to
furnish administrative services, office space and facilities for management of
the Trust's affairs, to pay all compensation of officers of the Trust as well as
all Trustees of the Trust who are affiliated persons of ML&Co. and its
subsidiaries, and to bear the costs and expenses of the advertising of the
Trust. The Trust pays all other expenses incurred in the operation of the Trust
(except for certain expenses incurred by the Distributor--see "Purchase of
Shares"), including, among other things, taxes, expenses for legal, auditing and
accounting services, allocated portions of clerical salaries related to Trust
activities, costs of printing of prospectuses and statements of additional
information (to the extent not paid by the Distributor), shareholder reports and
proxy statements, charges of the custodian and transfer agent, expenses of
redemption of shares, expenses of registering and qualifying shares for sale
under Federal, state and other laws, costs of conducting shareholder relations,
fees and actual out-of-pocket expenses of unaffiliated Trustees, interest,
brokerage costs and other expenses properly payable by the Trust. 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, 1994, $280,057 was required to be reimbursed.
For information as to the fee to be paid by the Trust to Merrill Lynch
pursuant to the Shareholder Servicing Plan and Agreement, see the Prospectus
under "Purchase of Shares--Distribution Plan" and below under "Purchase of
Shares--Distribution Plan".
Duration and Termination. Unless earlier terminated as described below,
the Management Agreement will continue in effect from year to year if approved
annually (a) by the Trustees of the Trust or by a majority of the outstanding
voting shares of the Trust and (b) by a majority of Trustees who are not parties
to such contract or interested persons (as defined in the Investment Company
Act) of any such party. Such contract is not assignable and may be terminated
without penalty on 60 days' written notice at the option of either party thereto
or by the vote of the shareholders of the Trust.
PURCHASE OF SHARES
Reference is made to "Purchase of Shares" in the Prospectus for certain
information as to the purchase of Trust shares.
The Trust is offering its shares without sales charge at a public offering
price equal to the net asset value next determined after a purchase order
becomes effective. Share purchase orders are effective on the day Federal Funds
become available to the Trust. The Trustees anticipate that the net asset value
will remain constant at $1.00 per share and that fluctuations in value will be
reflected in the number of outstanding shares in the shareholder's account
rather than in the per share dollar value. See "Determination of Net Asset
Value". The minimum initial purchase is $5,000. The minimum subsequent purchase
is $1,000. The minimum initial purchase with respect to pension, profit sharing,
individual retirement and certain other retirement plans is $100 and the minimum
subsequent purchase in connection with such plans is $1. The minimum initial or
subsequent purchase requirements may be waived for certain employer sponsored
retirement or savings plans, such as tax qualified retirement plans within the
meaning of Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), deferred compensation plans within the meaning of Section 403(b) and
Section 457 of the Code, other deferred compensation arrangements, Voluntary
Employee Benefits Association ("VEBA") plans, and non-qualified After Tax
Savings and Investment programs, maintained on the Merrill Lynch Group Employee
Services system, referred to herein and in the Prospectus as "Employer Sponsored
Retirement or Savings Plans." For accounts advised by banks and registered
investment advisers, including the Manager, the minimum initial purchase is $300
and the minimum subsequent purchase is $100. Any order may be rejected by the
Distributor or the Trust.
8
<PAGE> 35
The Distributor acts as the distributor in the continuous offering of the
Trust's shares. Shares may be purchased directly from the Distributor or from
other securities dealers, including Merrill Lynch, with whom the Distributor has
entered into a selected dealer agreement. Securities dealers may charge
investors a fee in connection with such transactions. Merrill Lynch has informed
the Trust that it does not charge such a fee.
The Trust's distribution agreement with the Distributor is renewable
annually, and may be terminated upon 60 days' written notice by either party.
Under such agreement, after the prospectuses, statements of additional
information and periodic reports have been prepared and set in type, the
Distributor will pay for the printing and distribution of copies thereof used in
connection with the offering to dealers and investors. The Distributor also will
pay for other supplementary sales literature.
It is the Trust's policy to be invested as fully as reasonably practicable
at all times to maximize the yield on the Trust's portfolio. The money markets
in which the Trust will purchase and sell portfolio securities normally require
immediate settlement of transactions in Federal Funds. Federal Funds are a
commercial bank's deposits in a Federal Reserve Bank and can be transferred from
one member bank's account to that of another member bank on the same day and
thus are considered to be immediately available funds. Orders for the purchase
of Trust shares shall become effective on the day Federal Funds become available
to the Trust and the shares being purchased will be issued at the net asset
value per share next determined. If Federal Funds are available to the Trust
prior to the determination of net asset value (generally 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.
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 direct personal services to shareholders of the
Trust. 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 the
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.
The Trustees believe that the Trust's expenditures under the Plan benefit
the Trust and its shareholders by providing better shareholder services and by
affecting positively the sale and distribution of Trust shares. For the fiscal
years ended December 31, 1992, 1993 and 1994, $9,900,529, $8,501,923 and
$7,661,910, respectively, was paid to Merrill Lynch pursuant to the Plan. All of
the amounts expended for the years ended December 31, 1992, 1993 and 1994 were
allocated to Merrill Lynch financial consultants, other Merrill Lynch personnel
and related administrative costs.
Among other things, the Plan provides that Merrill Lynch shall provide and
the Trustees of the Trust shall review quarterly reports of the distribution
expenditures made by Merrill Lynch pursuant to the Plan. In their consideration
of the Plan, the Trustees must consider all factors they deem relevant,
including information as to the benefits of the Plan to the Trust and its
shareholders. The Plan further provides that, so long as the Plan remains in
effect, the selection and nomination of Trustees of the Trust who are not
"interested persons" of the Trust as defined in the Investment Company Act (the
"Independent Trustees") shall be committed to the discretion of the Independent
Trustees then in office. The Plan can be terminated at any time, without
penalty, by the vote of a majority of the Independent Trustees or by the vote of
the holders
9
<PAGE> 36
of a majority of the outstanding voting securities of the Trust. Finally, the
Plan cannot be amended to increase materially the amount to be spent by the
Trust thereunder without shareholder approval, and all material amendments are
required to be approved by vote of the Trustees of the Trust, including a
majority of the Independent Trustees, cast in person at a meeting called for
that purpose.
REDEMPTION OF SHARES
Reference is made to "Redemption of Shares" in the Prospectus for certain
information as to the repurchase and redemption of Trust shares.
The right to redeem shares or to receive payment with respect to any such
redemption may be suspended for a period of up to seven days. Suspensions of
more than seven days may not be made except (1) for any period (A) during which
the New York Stock Exchange is closed other than customary weekend and holiday
closings or (B) during which trading on the New York Stock Exchange is
restricted; (2) for any period during which an emergency exists as a result of
which (A) disposal by the Trust of securities owned by it is not reasonably
practicable or (B) it is not reasonably practicable for the Trust fairly to
determine the value of its net assets; or (3) for such other periods as the
Securities and Exchange Commission may by order permit for the protection of
security holders of the Trust. The Commission shall by rules and regulations
determine the conditions under which (i) trading shall be deemed to be
restricted and (ii) an emergency shall be deemed to exist within the meaning of
clause (2) above.
The total value of the shareholder's investment at the time of redemption
may be more or less than his cost, depending on the market value of the
securities held by the Trust at such time and income earned.
PORTFOLIO TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policy
established by the Board of Trustees of the Trust, the Manager is primarily
responsible for the Trust's portfolio decisions and the placing of the Trust's
portfolio transactions. In placing orders, it is the policy of the Trust to
obtain the best net results taking into account such factors as price (including
the applicable dealer spread), the size, type and difficulty of the transaction
involved, the firm's general execution and operational facilities, and the
firm's risk in positioning the securities involved. While the Manager generally
seeks reasonably competitive spreads or commissions, the Trust will not
necessarily be paying the lowest spread or commission available. The Trust's
policy of investing in securities with short maturities will result in high
portfolio turnover.
The money market securities in which the Trust invests are traded primarily
in the over-the-counter market. Bonds and debentures usually are traded
over-the-counter, but may be traded on an exchange. 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
securities transactions of the Trust 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. Since over-the-counter transactions usually are principal
transactions, affiliated persons of the Trust, including Merrill Lynch
Government Securities Inc. ("GSI") and Merrill Lynch, may not serve as the
Trust's dealer in
10
<PAGE> 37
connection with such transactions except pursuant to the exemptive orders
described below. However, affiliated persons 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 principal transactions with GSI in United States
Government and Government agency securities and with a subsidiary of GSI in
certificates of deposit and other short-term money instruments and commercial
paper. This order contains a number of conditions, including conditions designed
to ensure that the price to the Trust from GSI or its subsidiary is equal to or
better than that available from other sources. GSI and its subsidiary have
informed the Trust that they will in no way, at any time, attempt to influence
or control the activities of the Trust or the Manager in placing such principal
transactions. The exemptive order allows GSI or its subsidiary, Merrill Lynch
Money Markets Inc., to receive a dealer spread on any transaction with the Trust
no greater than their customary dealer spread for transactions of the type
involved. Generally, such spreads do not exceed 0.25% of the principal amount of
the securities involved. During the fiscal year ended December 31, 1992, the
Trust engaged in 206 such transactions aggregating approximately $5.1 billion.
During the fiscal year ended December 31, 1993, the Trust engaged in 152 such
transactions aggregating approximately $5.6 billion. During the fiscal year
ended December 31, 1994, the Trust engaged in 47 such transactions aggregating
approximately $2.0 billion.
The Trustees of the Trust have considered the possibilities of recapturing
for the benefit of the Trust expenses of possible portfolio transactions, such
as dealer spreads and underwriting commissions, by conducting such portfolio
transactions through affiliated entities, including GSI and Merrill Lynch. For
example, dealer spreads received by GSI or its subsidiary on transactions
conducted pursuant to the permissive orders described above could be offset
against the management fee payable by the Trust to the Manager. After
considering all factors deemed relevant, the Trustees made a determination not
to seek such recapture. The Trustees will reconsider this matter from time to
time.
The Trust does not expect to use one particular dealer, but, subject to
obtaining the best price and execution, dealers who provide supplemental
investment research (such as economic data and market forecasts) to the Manager
may receive orders for transactions by the Trust. Information so received will
be in addition to and not in lieu of the services required to be performed by
the Manager under its Management Agreement and the expenses of the Manager will
not necessarily be reduced as a result of the receipt of such supplemental
information.
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of the Trust is determined by the Manager
once daily, immediately after the daily declaration of dividends, on each day
the New York Stock Exchange or New York banks are open for business. Such
determination is made as of the close of business on the New York Stock Exchange
(generally 4:00 P.M., New York time) or, on days when the New York Stock
Exchange is closed but New York banks are open, at 4:00 P.M., New York time. As
a result of this procedure, the net asset value is determined each day except
for days on which both the New York Stock Exchange and New York banks are
closed. Both the New York Stock Exchange and New York banks are closed on New
Year's Day, Presidents' Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The net asset value per share is computed
pursuant to the "penny-rounding" method by adding the value of all securities
held by the Trust plus any cash or other assets (including interest accrued but
not yet received) deducting all liabilities (including accrued expenses),
dividing by the total number of shares outstanding at such time and
11
<PAGE> 38
rounding the result to the nearest whole cent. Expenses, including the fees
payable to the Manager, are accrued daily.
The Trust values its portfolio securities with remaining maturities of 60
days or less on an amortized cost basis and values its securities with remaining
maturities of greater than 60 days for which market quotations are readily
available at market value. Other securities held by the Trust are valued at
their fair value as determined in good faith by or under the direction of the
Board of Trustees.
In accordance with the Securities and Exchange Commission rule applicable
to the valuation of its portfolio securities, the Trust will maintain a
dollar-weighted average portfolio maturity of 90 days or less and will purchase
instruments having remaining maturities of not more than 397 days (13 months),
with the exception of U.S. Government and U.S. Government agency securities,
which may have remaining maturities of up to 762 days (25 months). The Trust
will invest only in securities determined by the Trustees to be of high quality
with minimal credit risks. In addition, the Trustees have established procedures
designed to stabilize, to the extent reasonably possible, the Trust's price per
share as computed for the purposes of sales and redemptions at $1.00. Deviations
of more than an insignificant amount between the net asset value calculated
using market quotations and that calculated on a "penny-rounded" basis will be
reported to the Trustees by the Manager. In the event the Trustees determine
that a deviation exists which may result in the material dilution or other
unfair results to investors or existing shareholders, the Trust will take such
corrective action as it regards as necessary and appropriate, including the
reduction of the number of outstanding shares of the Trust by having each
shareholder proportionately contribute shares to the Trust's capital; the sale
of portfolio instruments prior to maturity to realize capital gains or losses or
to shorten average portfolio maturity; withholding dividends; or establishing a
net asset value per share solely by using available market quotations. If the
number of outstanding shares is reduced in order to maintain a constant
penny-rounded net asset value of $1.00 per share, the shareholders will
contribute proportionately to the Trust's capital the number of shares which
represents their proportionate shares of the difference between the portfolio's
fair market value and net asset value based on $1.00 per share. Each shareholder
will be deemed to have agreed to such contribution by an investment in the
Trust.
Since the net income of the Trust (including realized gains and losses on
the portfolio securities) is determined and declared as a dividend immediately
prior to each time the net income of the Trust is determined, the net asset
value per share of the Trust normally remains at $1.00 per share immediately
after each such determination and dividend declaration. Any increase in the
value of a shareholder's investment in the Trust, representing the reinvestment
of dividend income, is reflected by an increase in the number of shares of the
Trust in the account and any decrease in the value of a shareholder's investment
may be reflected by a decrease in the number of shares in the account. (See
"Taxes".)
YIELD INFORMATION
The Trust normally computes its annualized yield by determining the net
income for a seven-day base period for a hypothetical pre-existing account
having a balance of one share at the beginning of the base period, dividing the
net income by the net asset value of the account at the beginning of the base
period to obtain the base period return, multiplying the result by 365 and then
dividing by seven. Under this calculation, the yield reflects realized gains and
losses on portfolio securities. In accordance with regulations adopted by the
Securities and Exchange Commission, the Trust is required to disclose its
annualized yield for certain seven-day base periods in a standardized manner
which does not take into consideration any realized or unrealized gains or
losses on portfolio securities. The Securities and Exchange Commission also
permits the calculation of a standardized effective or compounded yield. This is
computed by compounding the unannualized base period return which is done by
adding one to the base period return, raising the sum to a
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power equal to 365 divided by seven, and subtracting one from the result. This
compounded yield calculation also excludes realized and unrealized gains or
losses on portfolio securities.
The yield on the Trust's 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 yield is affected by such factors as changes in interest rates on Treasury
securities, average portfolio maturity, the types and quality of portfolio
securities held and operating expenses. The yield on Trust shares for various
reasons may not be comparable to the yield on shares of other money market funds
or other investments.
SHAREHOLDER SERVICES
The Trust offers a number of shareholder services described below designed
to facilitate investment in its shares. Full details as to each of such services
and 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.
INVESTMENT ACCOUNT
Each shareholder whose account is maintained at the Transfer Agent has an
Investment Account and will receive monthly statements from the Transfer Agent
showing any activity in his account since the preceding statement. A shareholder
may make additions to his Investment Account at any time by purchasing shares at
the applicable 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.
In the interest of economy and convenience and because of the operating
procedures of the Trust, certificates representing the Trust's shares will not
be issued physically. Shares are maintained by the Trust on its register
maintained by the Transfer Agent and the holders thereof will have the same
rights and ownership with respect to such shares as if certificates had been
issued.
AUTOMATIC INVESTMENT PLAN
The Trust offers an Automatic Investment Plan in connection with accounts
maintained at the Transfer Agent whereby the Transfer Agent is authorized
through preauthorized checks of $50 or more to charge the regular bank account
of the shareholder on a regular basis to provide systematic additions to the
Investment Account of such shareholder. See the Purchase Application in the
Prospectus. A shareholder's Automatic Investment Plan may be terminated at any
time without charge or penalty by the shareholder, the Trust, the Transfer Agent
or the Distributor.
ACCRUED MONTHLY PAYOUT PLAN
The dividends of the Trust are reinvested automatically in additional
shares. Shareholders with accounts maintained at the Transfer Agent desiring
cash payments may enroll in the Accrued Monthly Payout Plan, under which shares
equal in number to shares credited through the automatic reinvestment of
dividends and distributions during each month are redeemed at net asset value on
the last Friday of such month in order to meet the monthly distribution.
Investors may open an Accrued Monthly Payout Plan by completing the appropriate
portion of the Purchase Application in the Prospectus. A shareholder's Accrued
Monthly Payout
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Plan may be terminated at any time without charge or penalty by the shareholder,
the Trust, the Transfer Agent or the Distributor.
SYSTEMATIC WITHDRAWAL PLANS
A shareholder may elect to make systematic withdrawals from an Investment
Account on either a monthly or quarterly basis as provided below. Quarterly
withdrawals are available for shareholders who have acquired shares of the Trust
having a value, based on cost or the current offering price, of $5,000 or more,
and monthly withdrawals for shareholders with shares with such a value of
$10,000 or more. The quarterly periods end on the 24th day of March, June,
September and December. See the Purchase Application in the Prospectus.
At the time of each withdrawal payment, sufficient shares are redeemed from
those on deposit in the shareholder's account to provide the withdrawal payment
specified by the shareholder. The shareholder may specify either a dollar amount
or a percentage of the value of his shares. Redemptions will be made at net
asset value as determined at the close of business on the New York Stock
Exchange on the 24th day of each month or the 24th day of the last month of each
quarter, whichever is applicable. A shareholder's Systematic Withdrawal Plan may
be terminated at any time, without charge or penalty, by the shareholder, the
Trust, the Transfer Agent or the Distributor. A shareholder may not elect to
make systematic withdrawals while he is enrolled in the Accrued Monthly Payout
Plan.
Withdrawal payments should not be considered as dividends, yield or income.
Withdrawals are sales of shares and may result in taxable gain or loss. If
periodic withdrawals continuously exceed reinvested dividends, the shareholder's
original investment will be reduced correspondingly. Shareholders are cautioned
not to designate withdrawal programs that result in an undue reduction of
principal. There are no minimums on amounts that may be systematically
withdrawn. Periodic investments may not be made into an Investment Account in
which the shareholder has elected to make systematic withdrawals.
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 sponsored by Merrill Lynch as
well as in other securities. Merrill Lynch charges an initial establishment fee
and an annual custodial fee for each account. Information with respect to these
plans is available upon request from Merrill Lynch. In addition, eligible
shareholders of the Trust may participate in a variety of qualified employee
benefit plans which are available from the Distributor. Participants in these
plans may invest in the Trust and in certain other mutual funds sponsored by
Merrill Lynch. Information with respect to these plans is available upon request
from the Distributor. See "Purchase of Shares" in the Prospectus.
Capital gains and income received in each of the plans referred to above
are exempt from Federal taxation until distributed from the plans. Investors
considering participation in any such plan should review specific tax laws
relating thereto and should consult their attorneys or tax advisers with respect
to the establishment and maintenance of any such plan.
EXCHANGE PRIVILEGE
Shareholders of the Trust who have held all or part of their shares for at
least 15 days may exchange their shares of the Trust for Class D shares of
mutual funds advised by the Manager or FAM described below (collectively
referred to as the "MLAM-advised mutual funds") on the basis described below.
Shares with a
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<PAGE> 41
net asset value of at least $250 are required to qualify for the exchange
privilege. It is contemplated that the exchange privilege may be applicable to
other new mutual funds whose shares are distributed by the Distributor. The
exchange privilege available to participants in the Merrill Lynch Blueprint(SM)
Program may be different from that available to other investors.
Alternatively, shareholders may exchange shares of the Trust for Class A
shares of one of the MLAM-advised mutual funds if the shareholder holds any
Class A shares of that fund in the account in which the exchange is made at the
time of the exchange or is otherwise an eligible Class A investor. An eligible
Class A investor includes the following: certain employer sponsored retirement
or savings plans, including eligible 401(k) plans, provided such plans meet the
required minimum number of eligible employees or required amount of assets
advised by MLAM or any of its affiliates; corporate warranty insurance reserve
fund programs provided that the program has $3 million or more initially
invested in MLAM-advised mutual funds; participants in certain investment
programs including TMA(SM) Managed Trusts to which Merrill Lynch Trust Company
provides discretionary trustee services and certain purchases made in connection
with the Merrill Lynch Mutual Fund Adviser program; and ML&Co. and its
subsidiaries and their directors and employees and members of the Boards of
MLAM-advised investment companies, including the Trust.
Shareholders of the Trust also may exchange shares of the Trust into shares
of Class A Share Money Market Funds, as listed below.
Under the exchange privilege, each of the MLAM-advised mutual funds offers
to exchange its shares ("new shares") for shares ("outstanding shares") of any
of the other funds, on the basis of relative net asset value per share, plus an
amount equal to the difference, if any, between the sales charge previously paid
on the outstanding shares and the sales charge payable at the time of the
exchange on the new shares. At the present time, the shares of each of the funds
are sold with varying sales charges. With respect to outstanding shares as to
which previous exchanges have taken place, the "sales charge previously paid"
shall include the aggregate of the charges paid with respect to such shares in
the initial purchase and any subsequent exchange. Shares issued pursuant to
dividend reinvestment are sold on a no-load basis in each of the funds. For
purposes of the exchange privilege, dividend reinvestment shares shall be deemed
to have been sold with a sales charge equal to the sales charge previously paid
on the shares on which the dividend was paid. Based on this formula an exchange
of shares of the Trust, which are sold on a no-load basis, for shares of the
other funds, which are sold with a sales charge, generally will require the
payment of a sales charge.
The investment objectives of the other funds into which exchanges can be
made are as follows:
Funds Issuing Class A, Class B, Class C and Class D Shares:
<TABLE>
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MERRILL LYNCH ADJUSTABLE RATE SECURITIES
FUND, INC.................................. High current income, consistent with a policy
of limiting the degree of fluctuation in net
asset value by investing primarily in a
portfolio of adjustable rate securities
consisting principally of mortgage-backed
and asset-backed securities.
MERRILL LYNCH AMERICAS INCOME
FUND, INC.................................. A high level of current income, consistent
with prudent investment risk, by investing
primarily in debt securities denominated in
a currency of a country located in the
Western Hemisphere (i.e., North and South
America and the surrounding waters).
</TABLE>
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<TABLE>
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MERRILL LYNCH ARIZONA LIMITED MATURITY
MUNICIPAL BOND FUND........................ A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal and Arizona income taxes as is
consistent with prudent investment man-
agement through investment in a portfolio
primarily of intermediate-term investment
grade Arizona Municipal Bonds.
MERRILL LYNCH ARIZONA MUNICIPAL BOND FUND,
INC. ...................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Arizona
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH ARKANSAS MUNICIPAL BOND FUND... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Arkansas
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH ASSET GROWTH FUND, INC......... High total investment return, consistent with
prudent risk, from investment in United States
and foreign equity, debt and money market
securities the combination of which will be
varied both with respect to types of
securities and markets in response to chang-
ing market and economic trends.
MERRILL LYNCH ASSET INCOME FUND, INC......... A high level of current income through
investment primarily in United States fixed
income securities.
MERRILL LYNCH BALANCED FUND FOR
INVESTMENT AND RETIREMENT, INC............. As high a level of total investment return as
is con-sistent with reasonable risk by
investing in common stocks and other types
of securities, including fixed income
securities and convertible securities.
MERRILL LYNCH BASIC VALUE FUND, INC.......... Capital appreciation and, secondarily, income,
through investment in securities, primarily
equities, that are undervalued and therefore
represent basic investment value.
</TABLE>
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<TABLE>
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MERRILL LYNCH CALIFORNIA INSURED
MUNICIPAL BOND FUND........................ A portfolio of Merrill Lynch California
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and California
income taxes as is consistent with prudent
investment management through investment in
a portfolio primarily of insured California
Municipal Bonds.
MERRILL LYNCH CALIFORNIA LIMITED
MATURITY MUNICIPAL BOND FUND............... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal and California income taxes as is
consistent with prudent investment man-
agement through investment in a portfolio
primarily of intermediate-term investment
grade California Municipal Bonds.
MERRILL LYNCH CALIFORNIA MUNICIPAL BOND
FUND....................................... A portfolio of Merrill Lynch California
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and California
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH CAPITAL FUND, INC.............. The highest total investment return consistent
with prudent risk through a fully-managed
investment policy utilizing equity, debt and
convertible securities.
MERRILL LYNCH COLORADO MUNICIPAL
BOND FUND.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is as high a level of income
exempt from Federal and Colorado income
taxes as is consistent with prudent invest-
ment management.
MERRILL LYNCH CONNECTICUT MUNICIPAL BOND
FUND....................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Connecticut
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH CORPORATE BOND
FUND, INC. ................................ Current income from three separate diversified
portfolios of fixed income securities.
</TABLE>
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<TABLE>
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MERRILL LYNCH DEVELOPING CAPITAL MARKETS
FUND, INC. ................................ Long-term capital appreciation through
investment in securities, principally
equities, of issuers in countries having
smaller capital markets.
MERRILL LYNCH DRAGON FUND, INC. ............. Capital appreciation primarily through
investment in equity and debt securities of
issuers domiciled in developing countries
located in Asia and the Pacific Basin.
MERRILL LYNCH EUROFUND....................... Capital appreciation primarily through
investment in equity securities of
corporations domiciled in Europe.
MERRILL LYNCH FEDERAL SECURITIES TRUST....... High current return through investments in
U.S. Government and Government agency
securities, including GNMA mortgage-backed
certificates and other mortgage-backed
Government securities.
MERRILL LYNCH FLORIDA LIMITED MATURITY
MUNICIPAL BOND FUND........................ A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is as high a
level of income exempt from Federal income
taxes as is consistent with prudent
investment management while serving to offer
shareholders the opportunity to own
securities exempt from Florida intangible
personal property taxes through investment
in a portfolio primarily of
intermediate-term investment grade Florida
Municipal Bonds.
MERRILL LYNCH FLORIDA MUNICIPAL
BOND FUND.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal income taxes as
is consistent with prudent investment
management while seeking to offer
shareholders the opportunity to own
securities exempt from Florida intangible
personal property taxes.
MERRILL LYNCH FUND FOR TOMORROW, INC. ....... Long-term growth through investment in a
portfolio of good quality securities,
primarily common stock, potentially
positioned to benefit from demographic and
cultural changes as they affect consumer
markets.
</TABLE>
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<TABLE>
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MERRILL LYNCH FUNDAMENTAL GROWTH FUND,
INC........................................ Long-term growth through investment in a
diversified portfolio of equity securities
placing particular emphasis on companies
that have exhibited above- average growth
rate in earnings.
MERRILL LYNCH FUNDAMENTAL VALUE
PORTFOLIO.................................. A portfolio of Merrill Lynch Retirement Asset
Builder
(Available only for exchanges by certain Program, Inc., a series fund, whose objective
is to
individual retirement accounts for which provide capital appreciation and income by
investing
Merrill Lynch acts as custodian) in securities, with at least 65% of the
portfolio's
assets being invested in equities.
MERRILL LYNCH GLOBAL ALLOCATION
FUND, INC.................................. High total investment return, consistent with
prudent risk, through a fully-managed
investment policy utilizing United States
and foreign equity, debt and money market
securities, the combination of which will be
varied from time to time both with respect
to types of securities and markets in
response to changing market and economic
trends.
MERRILL LYNCH GLOBAL BOND FUND FOR INVESTMENT
AND RETIREMENT............................. High total investment return from investment
in a global portfolio of debt instruments
denominated in various currencies and
multinational currency units.
MERRILL LYNCH GLOBAL CONVERTIBLE
FUND, INC.................................. High total return from investment primarily in
an internationally diversified portfolio of
convertible debt securities, convertible
preferred stock and "synthetic" convertible
securities consisting of a combination of
debt securities or preferred stock and
warrants or options.
MERRILL LYNCH GLOBAL HOLDINGS
(residents of Arizona must meet investor
suitability standards)..................... The highest total investment return consistent
with prudent risk through worldwide investment
in an internationally diversified portfolio
of securities.
MERRILL LYNCH GLOBAL OPPORTUNITY
PORTFOLIO.................................. A portfolio of Merrill Lynch Retirement Asset
Builder
(Available only for exchanges by certain Program, Inc., a series fund, whose objective
is to
individual retirement accounts for which provide a high total investment return through
an
Merrill Lynch acts as custodian) investment policy utilizing United States and
foreign
equity, debt and money market securities, the
com-
bination of which will vary depending upon
changing
market and economic trends.
</TABLE>
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<TABLE>
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MERRILL LYNCH GLOBAL RESOURCES TRUST......... Long-term growth and protection of capital
from investment in securities of domestic and
foreign companies that possess substantial
natural resource assets.
MERRILL LYNCH GLOBAL SMALLCAP
FUND, INC.................................. Long-term growth of capital by investing
primarily in equity securities of companies
with relatively small market capitalizations
located in various foreign countries and in
the United States.
MERRILL LYNCH GLOBAL UTILITY FUND, INC....... Capital appreciation and current income
through investment of at least 65% of its
total assets in equity and debt securities
issued by domestic and foreign companies
which are primarily engaged in the own-
ership or operation of facilities used to
generate, transmit or distribute
electricity, telecommunications, gas or
water.
MERRILL LYNCH GROWTH FUND FOR INVESTMENT AND
RETIREMENT................................. Growth of capital and, secondarily, income,
from investment in a diversified portfolio of
equity securities placing principal emphasis
on those securities which management of the
fund believes to be undervalued.
MERRILL LYNCH HEALTHCARE FUND, INC.
(residents of Wisconsin must meet investor
suitability standards)..................... Capital appreciation through worldwide
investment in equity securities of companies
that derive or are expected to derive a
substantial portion of their sales from
products and services in healthcare.
MERRILL LYNCH INTERNATIONAL
EQUITY FUND................................ Capital appreciation and, secondarily, income
by investing in a diversified portfolio of
equity securities of issuers located in
countries other than the United States.
MERRILL LYNCH LATIN AMERICA FUND, INC. ...... Capital appreciation by investing primarily in
Latin American equity and debt securities.
MERRILL LYNCH MARYLAND MUNICIPAL
BOND FUND.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Maryland
income taxes as is consistent with prudent
investment management.
</TABLE>
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<TABLE>
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MERRILL LYNCH MASSACHUSETTS LIMITED
MATURITY MUNICIPAL BOND FUND............... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal and Massachusetts income taxes as is
consistent with prudent investment
management through investment in a portfolio
primarily of intermediate-term investment
grade Massachusetts Municipal Bonds.
MERRILL LYNCH MASSACHUSETTS MUNICIPAL BOND
FUND....................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Massachusetts
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH MICHIGAN LIMITED
MATURITY MUNICIPAL BOND FUND............... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as a high level of income exempt from
Federal and Michigan income taxes as is
consistent with prudent investment man-
agement through investment in a portfolio
primarily of intermediate-term investment
grade Michigan Municipal Bonds.
MERRILL LYNCH MICHIGAN MUNICIPAL
BOND FUND.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Michigan
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH MINNESOTA MUNICIPAL BOND
FUND....................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Minnesota
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH MUNICIPAL BOND
FUND, INC.................................. Tax-exempt income from three separate
diversified portfolios of municipal bonds.
</TABLE>
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<TABLE>
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MERRILL LYNCH MUNICIPAL INTERMEDIATE TERM
FUND....................................... Currently the only portfolio of Merrill Lynch
Municipal Series Trust, a series fund, whose
objective is to provide as high a level as
possible of income exempt from Federal
income taxes by investing in investment
grade obligations with a dollar-weighted
average maturity of five to twelve years.
MERRILL LYNCH NEW JERSEY LIMITED
MATURITY MUNICIPAL BOND FUND............... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal and New Jersey income taxes as is
consistent with prudent investment
management through a portfolio primarily of
intermediate-term investment grade New
Jersey Municipal Bonds.
MERRILL LYNCH NEW JERSEY MUNICIPAL BOND
FUND....................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and New Jersey
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH NEW MEXICO MUNICIPAL BOND
FUND....................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and New Mexico
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH NEW YORK LIMITED
MATURITY MUNICIPAL BOND FUND............... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal, New York State and New York City
income taxes as is consistent with prudent
investment management through investment in
a portfolio primarily of intermediate-term
grade New York Municipal Bonds.
MERRILL LYNCH NEW YORK MUNICIPAL BOND FUND... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal, New York State
and New York City income taxes as is
consistent with prudent investment
management.
</TABLE>
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<TABLE>
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MERRILL LYNCH NORTH CAROLINA MUNICIPAL BOND
FUND....................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and North
Carolina income taxes as is consistent with
prudent investment management.
MERRILL LYNCH OHIO MUNICIPAL
BOND FUND.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Ohio income
taxes as is consistent with prudent
investment management.
MERRILL LYNCH OREGON MUNICIPAL
BOND FUND.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Oregon income
taxes as is consistent with prudent
investment management.
MERRILL LYNCH PACIFIC FUND, INC.............. Capital appreciation by investing in equity
securities of corporations domiciled in Far
Eastern and Western Pacific countries,
including Japan, Australia, Hong Kong and
Singapore.
MERRILL LYNCH PENNSYLVANIA LIMITED
MATURITY MUNICIPAL BOND FUND............... A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal and Pennsylvania income taxes as is
consistent with prudent investment
management through investment in a portfolio
of intermediate-term investment grade
Pennsylvania Municipal Bonds.
MERRILL LYNCH PENNSYLVANIA MUNICIPAL BOND
FUND....................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal and Pennsylvania
income taxes as is consistent with prudent
investment management.
MERRILL LYNCH PHOENIX FUND, INC.............. Long-term growth of capital by investing in
equity and fixed income securities, including
tax-exempt securities, of issuers in weak
financial condition or experiencing poor
operating results believed to be undervalued
relative to the current or prospective
condition of such issuer.
</TABLE>
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<TABLE>
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MERRILL LYNCH QUALITY BOND
PORTFOLIO.................................. A portfolio of Merrill Lynch Retirement Asset
Builder
(Available only for exchanges by Program, Inc., a series fund, whose objective
is to
certain individual retirement accounts for
which provide a high level of current income through
Merrill Lynch acts as custodian) investment in a diversified portfolio of debt
obliga-
tions, such as corporate bonds and notes,
convertible
securities, preferred stocks and governmental
obliga-
tions.
MERRILL LYNCH SHORT-TERM GLOBAL INCOME FUND,
INC........................................ As high a level of current income as is
consistent with prudent investment management
from a global portfolio of high quality debt
securities denominated in various currencies
and multinational currency units and having
remaining maturities not exceeding three
years.
MERRILL LYNCH SPECIAL VALUE FUND, INC........ Long-term growth of capital from investments
in securities, primarily common stocks, of
relatively small companies believed to have
special investment value and emerging growth
companies regardless of size.
MERRILL LYNCH STRATEGIC DIVIDEND FUND........ Long-term total return from investment in
dividend-paying common stocks which yield more
than Standard & Poor's 500 Composite Stock
Price Index.
MERRILL LYNCH TECHNOLOGY FUND................ Capital appreciation through worldwide
investment in equity securities of companies
that derive or are expected to derive a
substantial portion of their sales from
products and services in technology.
MERRILL LYNCH TEXAS MUNICIPAL BOND FUND...... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund, whose
objective is to provide as high a level of
income exempt from Federal income taxes as
is consistent with prudent investment
management by investing primarily in a
portfolio of long-term, investment grade
obligations issued by the state of Texas,
its political subdivisions, agencies and
instrumentalities.
MERRILL LYNCH U.S. GOVERNMENT
SECURITIES PORTFOLIO....................... A portfolio of Merrill Lynch Retirement Asset
Builder
(Available only for exchanges by certain Program, Inc., a series fund, whose objective
is to
individual retirement accounts for which provide a high current return through
investments in
Merrill Lynch acts as custodian) U.S. Government and government agency
securities,
including GNMA mortgage-backed certificates
and
other mortgage-backed government securities.
</TABLE>
24
<PAGE> 51
<TABLE>
<S> <C>
MERRILL LYNCH UTILITY INCOME
FUND, INC. ................................ High current income through investment in
equity and debt securities issued by companies
which are primarily engaged in the ownership
or operation of facilities used to generate,
transmit or distribute electricity,
telecommunications, gas or water.
MERRILL LYNCH WORLD INCOME FUND, INC......... High current income by investing in a global
portfolio of fixed income securities
denominated in various currencies, including
multinational currencies.
</TABLE>
Class A Share Money Market Funds:
<TABLE>
<S> <C>
MERRILL LYNCH RETIREMENT RESERVES MONEY
FUND....................................... Currently the only portfolio of Merrill Lynch
Retire-
(Available only if the exchange ment Series Trust, a series fund, whose
objectives
occurs within certain retirement plans) are current income, preservation of capital
and li-
quidity available from investing in a
diversified port-
folio of short-term money market securities.
MERRILL LYNCH U.S.A. GOVERNMENT RESERVES..... Preservation of capital, current income and
liquidity available from investing in direct
obligations of the U.S. Government and
repurchase agreements relating to such
securities.
MERRILL LYNCH U.S. TREASURY
MONEY FUND................................. Preservation of capital, liquidity and current
income through investment exclusively in a
diversified portfolio of short-term
marketable securities which are direct
obligations of the U.S. Treasury.
</TABLE>
Class B, Class C and Class D Share Money Market Funds:
<TABLE>
<S> <C>
MERRILL LYNCH GOVERNMENT FUND................ A portfolio of Merrill Lynch Funds for
Institutions Series, a series fund, whose
objective is to provide current income
consistent with liquidity and security of
principal from investment in securities
issued or guaranteed by the U.S. Government,
its agencies and instrumentalities and in
repurchase agreements secured by such
obligations.
MERRILL LYNCH INSTITUTIONAL FUND............. A portfolio of Merrill Lynch Funds for
Institutions Series, a series fund, whose
objective is to provide maximum current
income consistent with liquidity and the
maintenance of a high quality portfolio of
money market securities.
</TABLE>
25
<PAGE> 52
<TABLE>
<S> <C>
MERRILL LYNCH INSTITUTIONAL
TAX-EXEMPT FUND............................ A portfolio of Merrill Lynch Funds for
Institutions Series, a series fund, whose
objective is to provide current income
exempt from Federal income taxes,
preservation of capital and liquidity
available from investing in a diversified
portfolio of short-term, high quality
municipal bonds.
MERRILL LYNCH TREASURY FUND.................. A portfolio of Merrill Lynch Funds for
Institutions Series, a series fund, whose
objective is to provide current income
consistent with liquidity and security of
principal from investment in direct
obligations of the U.S. Treasury and up to
10% of its total assets in repurchase
agreements secured by such obligations.
</TABLE>
Before effecting an exchange, shareholders of the Trust should obtain a
currently effective prospectus of the fund into which the exchange is to be
made. Exercise of the exchange privilege is treated as a sale for Federal income
tax purposes and, depending on the circumstances, a short- or long-term capital
gain or loss may be realized. In addition, an exchanging shareholder of any of
the funds may be subject to backup withholding unless such shareholder certifies
under penalty of perjury that the taxpayer identification number on file with
any such fund is correct, and that such shareholder is not otherwise subject to
backup withholding. See "Taxes".
To exercise the exchange privilege shareholders may either contact their
listed securities dealer, who will advise the Trust of the exchange, or write to
the Transfer Agent requesting that the exchange be effected. Such letter must be
signed exactly as the account is registered with the signatures guaranteed by a
national bank or member firm of any national or regional stock exchange.
Shareholders of the Trust, and shareholders of the other funds described above
with shares for which certificates have not been issued, may exercise the
exchange privilege by wire through their securities dealer. The Trust reserves
the right to require a properly completed Exchange Application. This exchange
privilege may be modified or terminated at any time in accordance with the rules
of the Securities and Exchange Commission. The Trust reserves the right to limit
the number of times an investor may exercise the exchange privilege. Certain
funds may suspend the continuous offering of their shares at any time and may
thereafter resume such offering from time to time. The exchange privilege is
available only to U.S. shareholders in states where the exchange legally may be
made.
26
<PAGE> 53
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 for Federal income tax purposes. 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. Any loss upon the sale or exchange
of Trust shares held for six months or less, however, will be treated as
long-term capital loss to the extent of any capital gain dividends received by
the shareholder. 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 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 Trustees
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 advisers 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.
27
<PAGE> 54
If a shareholder exercises an exchange privilege within 90 days of
acquiring the shares, then the loss the shareholder can recognize on the
exchange will be reduced (or the gain increased) to the extent the sales charge
paid to the Trust on the exchanged shares reduces any sales charge the
shareholder would have owed upon purchase of the new shares in the absence of
the exchange privilege. Instead, such sales charge will be treated as an amount
paid for the new shares.
A loss realized on a sale or exchange of shares of the Trust will be
disallowed if other Trust shares are acquired (whether through the automatic
reinvestment of dividends or otherwise) within a 61-day period beginning 30 days
before and ending 30 days after the date that the shares are disposed of. In
such a case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss.
The Code requires a RIC to pay a nondeductible 4% excise tax to the extent
the RIC does not distribute, during any calendar year, 98% of its ordinary
income, determined on a calendar year basis, and 98% of its capital gains,
determined, in general, on an October 31 year end, plus certain undistributed
amounts from previous years. While the Trust intends to distribute its income
and capital gains in a manner necessary to avoid imposition of the 4% excise
tax, there can be no assurance that sufficient amounts of the Trust's taxable
income and capital gains will be distributed to avoid entirely the imposition of
the tax. In such event, the Trust will be liable for the tax only on the amount
by which it does not meet the foregoing distribution requirements.
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 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 also may be subject to state and
local taxes.
Certain states exempt from state income taxation dividends paid by RICs
which are derived in whole or in part 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 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.
GENERAL INFORMATION
DESCRIPTION OF SHARES
The Declaration of Trust of the Trust permits the Trustees to issue an
unlimited number of full and fractional shares of beneficial interest, par value
$.10 per share, of a single class and to divide or combine the shares into a
greater or lesser number of shares without thereby changing the proportionate
beneficial interests in the Trust. Each share represents an equal proportionate
interest in the Trust with each other share. 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 have no preemptive or
conversion rights. The rights of redemption are described elsewhere herein and
in the Prospectus. 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 Trustees
and on other matters submitted to the vote of shareholders. Voting rights are
not cumulative, so that the holders of more than 50% of the shares voting in the
election of Trustees
28
<PAGE> 55
can, if they choose to do so, elect all Trustees of the Trust. No amendment may
be made to the Declaration of Trust without the affirmative vote of a majority
of the outstanding shares of the Trust except under certain limited
circumstances set forth in the Declaration of Trust.
CUSTODIAN
The Bank of New York, 90 Washington Street, 12th Floor, New York, New York
10286, acts as custodian of the Trust's assets (the "Custodian"). The Custodian
is responsible for safeguarding and controlling the Trust's cash and securities,
handling the delivery of securities and collecting interest on the Trust's
investments.
TRANSFER AGENT
Financial Data Services, Inc., 4800 Deer Lake Drive East, Jacksonville,
Florida 32246-6484, acts as the Trust's transfer agent (the "Transfer Agent").
The Transfer Agent is responsible for the issuance, transfer and redemption of
shares and the opening, maintenance and servicing of shareholder accounts.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, 117 Campus Drive, Princeton, New Jersey 08540, have
been selected as the independent auditors of the Trust. The selection of the
independent auditors is subject to ratification by the shareholders of the
Trust. The independent auditors are responsible for auditing the annual
financial statements of the Trust.
LEGAL COUNSEL
Brown & Wood, One World Trade Center, New York, New York 10048-0557, is
counsel for the Trust.
REPORTS TO SHAREHOLDERS
The fiscal year of the Trust ends on December 31 of each year. The Trust
will send to its shareholders at least semi-annually reports showing its
portfolio securities and other information. An annual report, containing
financial statements audited by independent auditors, is sent to shareholders
each year.
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: TAMMO
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.
29
<PAGE> 56
ADDITIONAL INFORMATION
The Prospectus and this Statement of Additional Information with respect to
the shares of the Trust do not contain all the information set forth in the
Registration Statement and the exhibits relating thereto which the Trust has
filed with the Securities and Exchange Commission, Washington, D.C., under the
Securities Act of 1933 and the Investment Company Act, to which reference is
hereby made.
To the knowledge of the Trust, no person or entity owned beneficially 5% or
more of the Trust's shares on April 3, 1995 except as set forth below:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME AND ADDRESS OF BENEFICIAL INTEREST OF CLASS
- ------------------------- ---------------------- --------
<S> <C> <C>
Sharebuilder Customers
400 Atrium Avenue
Somerset, NJ 08873 434,843,702.850 6.6%
</TABLE>
All time references are to New York time.
------------------------
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.
30
<PAGE> 57
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, 1994, 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 management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1994 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Merrill Lynch Ready
Assets Trust as of December 31, 1994, the results of its operations, the changes
in its net assets, and the financial highlights for the respective stated
periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Princeton, New Jersey
January 31, 1995
31
<PAGE> 58
SCHEDULE OF INVESTMENTS (IN THOUSANDS)
<TABLE>
<CAPTION>
FACE INTEREST MATURITY VALUE
ISSUE AMOUNT RATE* DATE (NOTE 1a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------
BANK NOTES--0.4%
- --------------------------------------------------------------------
NationsBank $ 25,000 5.65 % 7/21/95 $ 24,812
North Carolina, N.A.
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL BANK NOTES (COST--$24,976) 24,812
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
CERTIFICATES OF DEPOSIT--YANKEE--0.4%
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
Banque Nationale 25,000 5.58 2/01/95 24,995
de Paris, NY
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL CERTIFICATES OF DEPOSIT--YANKEE
(COST--$24,994) 24,995
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
COMMERCIAL PAPER--DISCOUNT--48.2%
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
ABN Amro North 20,000 5.41 1/05/95 19,982
American Finance 35,000 5.00 2/03/95 34,799
Inc.
- --------------------------------------------------------------------
AIG Funding, Inc. 11,200 5.90 1/03/95 11,193
- --------------------------------------------------------------------
APRECO, Inc. 25,400 5.425 1/23/95 25,303
31,500 5.50 2/01/95 31,330
- --------------------------------------------------------------------
AT&T, Inc. 16,850 5.70 1/23/95 16,785
- --------------------------------------------------------------------
AVCO Financial 65,000 5.40 1/18/95 64,804
Services, Inc. 20,000 5.68 2/13/95 19,850
- --------------------------------------------------------------------
Abbey National N.A. 50,000 5.44 1/24/95 49,800
Corp. 50,000 5.43 1/26/95 49,784
65,000 5.08 3/01/95 64,317
50,000 5.075 3/02/95 49,466
- --------------------------------------------------------------------
Allomon Funding 10,110 5.52 1/10/95 10,093
Corp. 5,055 6.10 1/17/95 5,040
- --------------------------------------------------------------------
American Express 100,000 5.80 1/05/95 99,903
Credit Corp.
- --------------------------------------------------------------------
Associates Corp. of 50,000 6.08 2/03/95 49,704
North America
- --------------------------------------------------------------------
Bankers Trust 50,000 5.57 4/17/95 49,055
NY Corp. 50,000 5.59 4/17/95 49,055
- --------------------------------------------------------------------
Bear Stearns 50,000 5.45 1/27/95 49,776
Companies, 50,000 5.50 2/01/95 49,730
Inc. (The) 50,000 5.90 2/06/95 49,688
50,000 5.80 2/13/95 49,625
25,000 5.77 2/15/95 24,804
- --------------------------------------------------------------------
Bellsouth 30,000 6.25 1/03/95 29,979
Telecommunications
Corp.
- --------------------------------------------------------------------
Beta Finance Inc. 19,000 5.42 1/26/95 18,918
10,000 5.80 2/16/95 9,920
- --------------------------------------------------------------------
Bowater PLC 17,965 5.40 1/17/95 17,914
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FACE INTEREST MATURITY VALUE
ISSUE AMOUNT RATE* DATE (NOTE 1a)
- --------------------------------------------------------------------
COMMERCIAL PAPER--DISCOUNT (CONTINUED)
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
CIT Group Holdings, $ 50,000 6.08 % 1/24/95 $ 49,789
Inc. (The)
- --------------------------------------------------------------------
CSW Credit, Inc. 15,000 6.10 1/26/95 14,931
- --------------------------------------------------------------------
CXC Incorporated 10,000 5.425 1/19/95 9,968
35,000 6.10 1/25/95 34,846
25,000 5.75 1/30/95 24,874
- --------------------------------------------------------------------
Central & 25,000 5.50 1/25/95 24,896
SouthWest 15,000 5.50 1/30/95 14,924
Corp. 15,000 5.95 2/06/95 14,906
- --------------------------------------------------------------------
Corporate Asset 21,307 5.50 1/03/95 21,294
Funding Co. Inc.
- --------------------------------------------------------------------
Corporate Asset 35,000 6.08 1/20/95 34,876
Securitization
Australia Ltd., Inc.
- --------------------------------------------------------------------
Creditanstalt 10,852 5.80 1/03/95 10,845
Finance, Inc.
- --------------------------------------------------------------------
Daimler-Benz North 10,000 5.57 4/10/95 9,823
America Corp. 10,000 5.65 4/10/95 9,823
- --------------------------------------------------------------------
Deer Park Refining 50,000 6.10 1/19/95 49,831
L.P.
- --------------------------------------------------------------------
Eiger Capital 13,516 6.05 1/19/95 13,471
Corp. 26,745 6.05 1/20/95 26,651
14,073 6.05 1/27/95 14,007
- --------------------------------------------------------------------
Falcon Asset 16,025 5.48 1/03/95 16,015
Securitization Corp. 18,000 6.10 1/18/95 17,942
16,700 5.77 2/14/95 16,572
- --------------------------------------------------------------------
Ford Motor 75,000 5.42 1/11/95 74,862
Credit Company 50,000 5.81 2/17/95 49,592
- --------------------------------------------------------------------
General Electric 20,000 5.42 1/19/95 19,937
Capital Corp. 50,000 5.06 2/27/95 49,504
- --------------------------------------------------------------------
Goldman Sachs 50,000 5.95 1/23/95 49,802
Group, L.P. 50,000 5.08 3/01/95 49,475
- --------------------------------------------------------------------
Hanson Finance 54,000 5.42 1/23/95 53,793
(UK) PLC 100,000 5.70 2/13/95 99,250
50,000 5.82 2/16/95 49,612
- --------------------------------------------------------------------
IBM Credit Corp. 3,800 5.50 1/26/95 3,784
- --------------------------------------------------------------------
International Lease 30,000 5.07 3/01/95 29,685
Finance Corp. 29,750 6.27 4/13/95 29,209
10,000 6.27 4/20/95 9,806
- --------------------------------------------------------------------
Internationale 25,000 5.47 2/03/95 24,857
Nederlanden (U.S.)
Funding Corp.
- --------------------------------------------------------------------
</TABLE>
32
<PAGE> 59
SCHEDULE OF INVESTMENTS (CONTINUED) (IN THOUSANDS)
<TABLE>
<CAPTION>
FACE INTEREST MATURITY VALUE
ISSUE AMOUNT RATE* DATE (NOTE 1a)
- --------------------------------------------------------------------
COMMERCIAL PAPER--DISCOUNT (CONCLUDED)
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kingdom of $100,000 5.76 % 1/17/95 $ 99,712
Sweden
- --------------------------------------------------------------------
Koch Industries, Inc. 100,000 6.00 1/03/95 99,933
- --------------------------------------------------------------------
Kredietbank North 25,000 5.47 1/03/95 24,985
American Finance
Corp.
- --------------------------------------------------------------------
McKenna Triangle 50,000 5.77 2/15/95 49,608
National Corp. 10,000 5.05 3/01/95 9,895
- --------------------------------------------------------------------
National Australia 100,000 5.75 2/14/95 99,233
Funding (Delaware)
Inc.
- --------------------------------------------------------------------
New Center 40,000 6.30 1/03/95 39,972
Asset Trust 75,000 6.15 1/13/95 74,821
50,000 6.12 1/17/95 49,847
50,000 6.12 1/18/95 49,839
50,000 5.45 1/23/95 49,808
- --------------------------------------------------------------------
New South Wales 6,900 5.72 1/18/95 6,878
Treasury Corp.
- --------------------------------------------------------------------
Nomura Holding 12,000 5.50 1/13/95 11,974
America Inc. 7,000 5.50 1/18/95 6,979
25,000 5.78 1/24/95 24,900
25,000 5.50 1/30/95 24,874
15,000 5.75 2/07/95 14,904
- --------------------------------------------------------------------
PNC Funding Corp. 25,000 5.08 3/02/95 24,733
- --------------------------------------------------------------------
Premium Funding, 9,283 5.78 1/04/95 9,276
Inc., Series A 50,717 5.85 2/13/95 50,337
- --------------------------------------------------------------------
RTZ America Inc. 10,350 5.80 2/15/95 10,269
26,500 5.82 2/22/95 26,262
- --------------------------------------------------------------------
Riverwoods Funding 25,000 5.95 1/19/95 24,917
Corporation
- --------------------------------------------------------------------
Schering-Plough 40,000 5.07 3/10/95 39,518
Corp.
- --------------------------------------------------------------------
SmithKline Beecham 10,900 5.70 1/25/95 10,855
Corporation
- --------------------------------------------------------------------
Transamerica 11,590 5.65 1/05/95 11,579
Finance Corp. 18,500 5.79 2/15/95 18,355
- --------------------------------------------------------------------
U.S. Borax Inc. 19,500 5.43 1/24/95 19,422
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL COMMERCIAL PAPER--DISCOUNT
(COST--$3,008,961) 3,007,754
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FACE INTEREST MATURITY VALUE
ISSUE AMOUNT RATE* DATE (NOTE 1a)
- --------------------------------------------------------------------
MASTER NOTES--3.1%
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
Goldman Sachs $150,000 6.07 % 5/26/95 $ 150,000
Group, L.P.
- --------------------------------------------------------------------
Smith Barney, 41,000 6.05 6/09/95 41,000
Inc.
- --------------------------------------------------------------------
TOTAL MASTER NOTES
(COST--$191,000) 191,000
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
US GOVERNMENT, AGENCY & INSTRUMENTALITY
OBLIGATIONS--DISCOUNT--20.0%
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Home 29,660 5.31 1/25/95 29,540
Loan Bank 25,000 5.31 1/26/95 24,895
49,800 5.34 2/13/95 49,433
14,500 4.98 3/31/95 14,277
16,450 5.93 10/16/95 15,542
- --------------------------------------------------------------------
Federal Home Loan 25,000 5.58 2/02/95 24,863
Mortgage Corporation 30,000 5.65 2/16/95 29,762
20,000 5.67 2/16/95 19,841
1,036 5.43 4/03/95 1,019
71,782 5.45 4/03/95 70,626
- --------------------------------------------------------------------
Federal National 25,000 5.33 1/19/95 24,922
Mortgage Association 113,500 5.27 1/20/95 113,129
50,000 5.68 2/22/95 49,554
150,000 4.99 3/01/95 148,455
40,000 4.97 3/03/95 39,574
25,000 6.20 3/16/95 24,679
25,000 5.40 3/22/95 24,654
25,000 6.11 3/22/95 24,654
75,000 6.02 3/24/95 73,936
- --------------------------------------------------------------------
US Treasury Bills 25,000 3.41 2/09/95 24,843
50,000 4.80 2/09/95 49,685
50,000 5.425 4/27/95 49,036
37,500 5.25 8/24/95 35,878
40,000 5.26 8/24/95 38,270
34,000 5.265 8/24/95 32,529
25,000 5.27 8/24/95 23,919
37,500 5.275 8/24/95 35,878
30,000 5.29 8/24/95 28,702
50,000 5.825 10/19/95 47,314
85,000 6.72 12/14/95 79,510
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL US GOVERNMENT, AGENCY &
INSTRUMENTALITY OBLIGATIONS--DISCOUNT
(COST--$1,271,992) 1,248,919
- --------------------------------------------------------------------
</TABLE>
33
<PAGE> 60
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (CONCLUDED) (IN THOUSANDS)
FACE INTEREST MATURITY VALUE
ISSUE AMOUNT RATE* DATE (NOTE 1a)
- --------------------------------------------------------------------
US GOVERNMENT, AGENCY & INSTRUMENTALITY
OBLIGATIONS--NON-DISCOUNT--29.8%
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Farm $ 20,000 5.19 % 3/01/95 $ 19,962
Credit Bank 50,000 5.85 5/01/95 49,844
- --------------------------------------------------------------------
Federal Home 23,000 5.30 4/27/95 22,986
Loan Bank++ 32,000 5.79 4/28/95 31,920
44,000 5.93 6/21/95 44,000
79,000 4.625 8/09/95 77,839
75,000 5.93 12/28/95 75,000
73,000 5.96 6/17/96 73,000
29,000 5.96 6/21/96 29,000
- --------------------------------------------------------------------
Federal Home Loan 136,000 5.782 1/06/95 135,999
Mortgage 79,000 4.635 8/09/95 77,839
Corporation++ 56,000 5.86 9/01/95 55,993
39,000 5.87 9/01/95 38,998
16,000 5.83 5/06/96 16,000
15,000 6.00 5/13/98 15,000
- --------------------------------------------------------------------
Federal National 85,000 8.85 3/10/95 85,411
Mortgage 86,000 5.70 6/01/95 85,996
Association++ 30,000 5.62 9/22/95 29,993
30,000 5.90 12/20/95 30,000
8,000 5.87 1/26/96 7,995
95,000 5.83 5/13/96 95,000
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FACE INTEREST MATURITY VALUE
ISSUE AMOUNT RATE* DATE (NOTE 1a)
- --------------------------------------------------------------------
US GOVERNMENT, AGENCY & INSTRUMENTALITY
OBLIGATIONS--NON-DISCOUNT (CONCLUDED)
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal National $ 70,000 5.83 % 5/24/96 $ 70,000
Mortgage 110,000 6.092 10/11/96 110,000
Association++ 70,000 5.95 5/19/97 70,000
(concluded) 65,000 6.00 5/14/98 65,000
- --------------------------------------------------------------------
Student Loan 10,000 6.32 3/23/95 10,003
Marketing 10,000 6.30 4/24/95 10,003
Association+ 80,750 6.07 8/07/95 80,750
43,500 6.07 3/20/96 43,495
10,000 5.94 4/16/96 10,012
5,000 5.90 5/15/96 5,002
25,650 5.87 7/19/96 25,657
125,000 6.092 9/20/96 125,000
60,000 6.08 1/14/97 60,000
- --------------------------------------------------------------------
US Treasury Notes 80,000 3.875 2/28/95 79,680
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
- --------------------------------------------------------------------
TOTAL US GOVERNMENT, AGENCY &
INSTRUMENTALITY OBLIGATIONS--NON-DISCOUNT
(COST--$1,845,426) 1,862,377
- --------------------------------------------------------------------
TOTAL INVESTMENTS (COST--$6,367,349)--101.9% 6,359,857
LIABILITIES IN EXCESS OF OTHER ASSETS--(1.9%) (118,860)
----------
NET ASSETS--100.0% $6,240,997
==========
- --------------------------------------------------------------------
</TABLE>
*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, 1994.
++Variable Rate Notes.
See Notes to Financial Statements.
34
<PAGE> 61
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES AS OF DECEMBER 31,
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS: Investments, at value (identified cost--$6,367,349,370*) (Note 1a) $6,359,857,424
Cash 661,133
Receivables:
Interest $ 19,957,684
Beneficial interest sold 2,228,979 22,186,663
------------
Prepaid registration fees and other assets (Note 1d) 183,517
--------------
Total assets 6,382,888,737
--------------
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES: Payables:
Securities purchased 79,526,000
Beneficial interest redeemed 55,481,791
Distributor (Note 2) 2,210,880
Investment adviser (Note 2) 1,919,417 139,138,088
------------
Accrued expenses and other liabilities 2,753,981
--------------
Total liabilities 141,892,069
--------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS: Net assets $6,240,996,668
==============
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS Shares of beneficial interest, $.10 par value, unlimited
CONSIST OF: number of shares authorized $ 624,848,861
Paid-in capital in excess of par 5,623,639,753
Unrealized depreciation on investments--net (7,491,946)
--------------
Net Assets--Equivalent to $1.00 per share based on 6,248,488,614
shares of beneficial interest outstanding $6,240,996,668
==============
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Cost for Federal income tax purposes. As of December
31, 1994, net unrealized depreciation for Federal income tax
purposes amounted to $7,491,946, of which $10,349 related to
appreciated securities and $7,502,295 related to depreciated
securities.
See Notes to Financial Statements.
35
<PAGE> 62
FINANCIALINFORMATION (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED
DECEMBER 31, 1994
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME Interest and amortization of premium discount earned $282,232,055
(NOTE 1c):
- ------------------------------------------------------------------------------------------------------------------------
EXPENSES: Investment advisory fees (Note 2) $ 23,487,917
Transfer agent fees (Note 2) 10,434,680
Distribution fees (Note 2) 7,661,910
Accounting services (Note 2) 280,057
Custodian fees 229,113
Printing and shareholder reports 201,546
Registration fees (Note 1d) 154,952
Trustees' fees and expenses 138,000
Professional fees 94,754
Other 78,204
------------
Total expenses 42,761,133
------------
Investment income--net 239,470,922
------------
- ------------------------------------------------------------------------------------------------------------------------
REALIZED AND Realized gain on investments--net 287,014
UNREALIZED GAIN Change in unrealized appreciation (depreciation)
(LOSS) ON on investments--net (7,986,580)
INVESTMENTS--NET ------------
(NOTE 1c): NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $231,771,356
============
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
INCREASE (DECREASE) IN NET ASSETS: 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS: Investment income--net $ 239,470,922 $ 197,862,626
Realized gain on investments--net 287,014 3,578,640
Change in unrealized appreciation (depreciation)
on investments--net (7,986,580) (1,103,997)
---------------- ---------------
Net increase in net assets resulting from operations 231,771,356 200,337,269
---------------- ---------------
- ------------------------------------------------------------------------------------------------------------------------
DIVIDENDS & Investment income--net (239,470,922) (197,862,626)
DISTRIBUTIONS TO Realized gain on investments--net (287,014) (3,578,640)
SHAREHOLDERS ---------------- ---------------
(NOTE 1e): Net decrease in net assets resulting from
distributions to shareholders (239,757,936) (201,441,266)
---------------- ---------------
- ------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net proceeds from sale of shares 12,651,358,878 14,756,129,434
TRANSACTIONS Net asset value of shares issued to shareholders in
(NOTE 3): reinvestment of dividends and distributions (Note 1e) 238,784,788 200,674,784
---------------- ---------------
12,890,143,666 14,956,804,218
Cost of shares redeemed (13,164,347,398) (15,898,382,152)
---------------- ---------------
Net decrease in net assets derived from beneficial
interest transactions (274,203,732) (941,577,934)
---------------- ---------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS: Total decrease in net assets (282,190,312) (942,681,931)
Beginning of year 6,523,186,980 7,465,868,911
---------------- ---------------
End of year $ 6,240,996,668 $ 6,523,186,980
================ ===============
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
36
<PAGE> 63
FINANCIAL INFORMATION (CONCLUDED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------------------------------------
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED
FROM INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSET VALUE: 1994 1993 1992 1991 1990
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
OPERATING ---------- ---------- ---------- ---------- -----------
PERFORMANCE: Investment income--net .0366 .0272 .0332 .0556 .0771
Realized and unrealized gain
(loss) on investments--net (.0012) .0003 .0009 .0029 .0010
---------- ---------- ---------- ---------- -----------
Total from investment operations .0354 .0275 .0341 .0585 .0781
---------- ---------- ---------- ---------- -----------
Less dividends and distributions:
Investment income--net (.0366) (.0272) (.0332) (.0556) (.0771)
Realized gain on investments--net (.0000)++ (.0005) (.0007) (.0029)* (.0010)*
---------- ---------- ---------- ---------- -----------
Total dividends and distributions (.0366) (.0277) (.0339) (.0585) (.0781)
---------- ---------- ---------- ---------- -----------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ===========
Total investment return 3.74% 2.81% 3.44% 6.02% 8.08%
========== ========== ========== ========== ===========
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE Expenses, excluding distribution fees .53% .53% .52% .50% .50%
========== ========== ========== ========== ===========
NET ASSETS: Expenses .65% .65% .64% .62% .62%
========== ========== ========== ========== ===========
Investment income and realized gain
on investments--net 3.67% 2.78% 3.48% 5.87%* 7.80%*
========== ========== ========== ========== ===========
- -------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL Net assets, end of year
DATA: (in thousands) $6,240,997 $6,523,187 $7,465,869 $9,077,226 $10,180,436
========== ========== ========== ========== ===========
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Includes unrealized gain (loss).
++Amount is less than $.0001 per share.
See Notes to Financial Statements.
37
<PAGE> 64
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
management investment 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
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 daily such dividends (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, L.P. ("MLAM"). The general partner
of MLAM is Princeton Services, Inc. ("PSI"), an indirect wholly-
owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is
a limited partner. 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 Merrill Lynch Group, Inc.
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:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
PORTION OF AVERAGE DAILY VALUE OF NET ASSETS: RATE
- -----------------------------------------------------------------
<S> <C>
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
- -----------------------------------------------------------------
</TABLE>
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 manager to
reimburse the Trust under this limitation is not limited to the
amount of the management fee.
The Trust has adopted a Shareholder Servicing Plan and Agreement in
accordance with Rule 12b-1 under the Investment Company Act of 1940,
pursuant to which Merrill Lynch, Pierce, Fenner & Smith Inc.
38
<PAGE> 65
NOTES TO FINANCIAL STATEMENTS (concluded)
("MLPF&S"), a wholly-owned subsidiary of ML & Co., 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
ML & Co., 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 MLAM, FDS, PSI, MLFD, MLPF&S and/or ML & Co.
3. SHARES OF BENEFICIAL INTEREST:
The number of shares purchased and redeemed during the years ended
December 31, 1994 and December 31, 1993, 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.
39
<PAGE> 66
APPENDIX
DESCRIPTION OF COMMERCIAL PAPER, BANK MONEY INSTRUMENTS
AND CORPORATE BOND RATINGS
COMMERCIAL PAPER AND BANK MONEY INSTRUMENTS
Commercial paper with the greatest capacity for timely payment is rated A
by Standard & Poor's Ratings Group ("S&P"). Issues within this category are
further redefined with designations 1, 2 and 3 to indicate the relative degree
of safety; A-1, the highest of the three, indicates the degree of safety is
either overwhelming or very strong; A-2 indicates that capacity for timely
repayment is strong.
Moody's Investors Service Inc. ("Moody's") employs the designations of
Prime-1, Prime-2 and Prime-3 to indicate the relative capacity of the rated
issuers to repay punctually. Prime-1 issues have a superior capacity for
repayment. Prime-2 issues have a strong capacity for repayment, but to a lesser
degree than Prime-1.
Commercial paper rated A.1+ by IBCA Limited or its affiliate IBCA Inc.
(together, "IBCA") are obligations supported by the highest capacity for timely
repayment. Commercial paper rated A.1 has a very strong capacity for timely
repayment. Commercial paper rated A.2 has a strong capacity for timely
repayment, although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
Fitch Investors Services, Inc. ("Fitch") employs the rating F-1+ to
indicate issues regarded as having the strongest degree of assurance for timely
payment. The rating F-1 reflects an assurance of timely payment only slightly
less in degree than issues rated F-1+, while the rating F-2 indicates a
satisfactory degree of assurance for timely payment, although the margin of
safety is not as great as indicated by the F-1+ and F-1 categories.
Duff & Phelps, Inc. ("Duff & Phelps") employs the designation of Duff 1
with respect to top grade commercial paper and bank money instruments. Duff 1+
indicates the highest certainty of timely payment: short-term liquidity is
clearly outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations. Duff 1- indicates high certainty of timely payment. Duff 2
indicates good certainty of timely payment: liquidity factors and company
fundamentals are sound.
Thompson BankWatch, Inc. ("TBW") employs the designations TBW-1, TBW-2,
TBW-3 and TBW-4 as ratings for commercial paper, other senior short-term
obligations and deposit obligations of the entities to which the rating has been
assigned. TBW-1 is the highest category and indicates a very high degree of
likelihood that principal and interest will be paid on a timely basis. TBW-2 is
the second highest category and indicates that while the degree of safety
regarding timely repayment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated TBW-1.
CORPORATE BONDS
Bonds rated AAA have the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
Bonds rated AA have a very strong capacity to pay interest and repay principal
and differ from the highest rated issues only in a small degree.
Bonds rated Aaa by Moody's are judged to be of the best quality. Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. Bonds rated Aa are judged to be of high quality by all
standards. They are rated lower then the best bonds because margins of
protection may not be as large or fluctuation of protective elements may be of
greater amplitude or there may be other elements present
40
<PAGE> 67
which make the long-term risks appear somewhat larger than in Aaa securities.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
Bonds rated AAA by IBCA are obligations for which there is the lowest
expectation of investment risk. Capacity for timely repayment of principal and
interest is substantial such that adverse changes in business, economic or
financial conditions are unlikely to increase investment risk significantly.
Bonds rated AA are obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial conditions may
increase investment risk, albeit not very significantly.
Bonds rated AAA by Fitch are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events. Bonds rated AA are considered to be investment grade and of
very high credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds rated AAA.
Bonds rated AAA by Duff & Phelps are deemed to be of the highest credit
quality: the risk factors are negligible, being only slightly more than for
risk-free U.S. Treasury debt. AA indicates high credit quality: protection
factors are strong, and risk is modest but may vary slightly from time to time
because of economic conditions.
Bonds rated AAA by TBW are accorded the highest rating category which
indicates that the ability to repay principal and interest on a timely basis is
very high. AA is the second highest rating category and indicates a superior
ability to repay principal and interest on a timely basis with limited
incremental risk versus issues rated in the highest rating category.
41
<PAGE> 68
[THIS PAGE INTENTIONALLY LEFT BLANK]
42
<PAGE> 69
[THIS PAGE INTENTIONALLY LEFT BLANK]
43
<PAGE> 70
LOGO
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C>
Investment Objectives and Policies..... 2
Management of the Trust................ 5
Trustees and Officers................ 5
Compensation of Trustees............. 6
Management and Advisory
Arrangements...................... 6
Purchase of Shares..................... 8
Distribution Plan.................... 9
Redemption of Shares................... 10 MERRILL LYNCH
Portfolio Transactions................. 10 READY ASSETS TRUST
Determination of Net Asset Value....... 11
Yield Information...................... 12
Shareholder Services................... 13
Investment Account................... 13
Automatic Investment Plan............ 13
Accrued Monthly Payout Plan.......... 13
Systematic Withdrawal Plans.......... 14
Retirement Plans..................... 14
Exchange Privilege................... 14
Taxes.................................. 27
General Information.................... 28
Description of Shares................ 28 Statement of
Custodian............................ 29 Additional Information
Transfer Agent....................... 29
Independent Auditors................. 29
Legal Counsel........................ 29
Reports to Shareholders.............. 29 April 27, 1995
Additional Information............... 30
Independent Auditors' Report........... 31 Distributor:
Financial Statements................... 32 Merrill Lynch
Appendix............................... 40 Funds Distributor, Inc.
Code#10240-0495
</TABLE>
<PAGE> 71
APPENDIX FOR GRAPHIC AND IMAGE MATERIAL
Pursuant to Rule 304 of Regulation S-T, the following table presents fair
and accurate narrative descriptions of graphic and image material omitted
from this EDGAR Submission File due to ASCII-incompatibility and cross-
references this material to location of each occurrence in the text.
DESCRIPTION OF OMITTED LOCATION OF GRAPHIC
GRAPHIC OR IMAGE OR IMAGE IN TEXT
- ---------------------- --------------------
Compass plates, circular graph Back cover of Prospectus and
paper and Merrill Lynch Logo back cover of Statement of
including stylized market bull. Additional Information.
<PAGE> 72
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS
Contained in Part A:
Financial Highlights for each of the years in the ten year period
ended December 31, 1994.
Contained in Part B:
Schedule of Investments, December 31, 1994
Statement of Assets and Liabilities, December 31, 1994
Statement of Operations for the year ended December 31, 1994
Statements of Changes in Net Assets for each of the years in the
two-year period ended December 31, 1994.
Financial Highlights for each of the years in the five year period
ended December 31, 1994.
(B) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --- ------------------------------------------------------------------------------------
<C> <S>
1(a) -- Declaration of Trust, dated May 14, 1987.(a)
(b) -- Amendment to Declaration of Trust, dated April 29, 1988.
2 -- By-Laws of Registrant.(a)
3 -- None.
4 -- Copies of instruments defining the rights of shareholders, including the relevant
portions of the Declaration of Trust and By-Laws of the Registrant.(b)
5(a) -- Management Agreement between Registrant and Merrill Lynch Asset Management.(a)
(b) -- Supplement to Investment Advisory Agreement with Merrill Lynch Asset Management.(c)
6(a) -- Distribution Agreement between Registrant and Merrill Lynch Funds Distributor,
Inc.(a)
(b) -- Form of Selected Dealers Agreement.(a)
7 -- None.
8(a) -- Custody Agreement between Registrant and The Bank of New York.(a)
(b) -- Amendment to the Custody Agreement between the Registrant and The Bank of New
York.(a)
9(a) -- Transfer Agency Agreement between Registrant and Merrill Lynch Financial Data
Services, Inc. (now known as Financial Data Services, Inc.).(a)
(b) -- Form of Agreement and Plan of Reorganization between Merrill Lynch Ready Assets
Trust, Merrill Lynch New Assets Trust and Merrill Lynch New Corporation, Inc.(a)
10 -- Opinion of Brown & Wood, Counsel for Registrant.
11 -- Consent of Deloitte & Touche LLP, independent auditors for Registrant.
12 -- None.
13 -- None.
14(a) -- Prototype Individual Retirement Account Plan, Simplified Employee Pension Plan and
Corporate Individual Retirement Account Plan available from Merrill Lynch, Pierce,
Fenner & Smith Incorporated.(d)
(b) -- Prototype Merrill Lynch Tax-Deferred Basic Retirement Plan available from Merrill
Lynch, Pierce, Fenner & Smith Incorporated.(e)
15 -- Amended and Restated Merrill Lynch Shareholder Servicing Plan and Agreement pursuant
to Rule 12b-1 between Registrant and Merrill Lynch, Pierce, Fenner & Smith
Incorporated.(a)
16 -- Schedule for computation of each performance quotation provided in the Registration
Statement in response to Item 22.(a)
17 -- Financial Data Schedule.
</TABLE>
- ---------------
(a) Refiled pursuant to the Electronic Data Gathering, Analysis, and Retrieval
(EDGAR) phase-in requirements.
C-1
<PAGE> 73
(b) Reference is made to Article II, Section 2.3 and Articles V, VI, VIII, IX, X
and XI of the Registrant's Declaration of Trust, filed as Exhibit 1 to the
Registration Statement and to Articles I, V and VII of the Registrant's
By-Laws, filed as Exhibit 2 to the Registration Statement.
(c) Previously filed as Exhibit 5(b) to Post-Effective Amendment No. 27 to
Registrant's Registration Statement under the Securities Act of 1933, as
amended, on Form N-1A filed on April 28, 1994.
(d) Incorporated by reference to Exhibit 14 to Post-Effective Amendment No. 1 to
the Registration Statement under the Securities Act of 1933, as amended, on
Form N-1 of Merrill Lynch Retirement Series Trust (File No. 2-74584).
(e) Incorporated by reference to Exhibit 14 to Post-Effective Amendment No. 3 to
the Registration Statement under the Securities Act of 1933, as amended, on
Form N-1A of Merrill Lynch Retirement Series Trust (File No. 2-74584).
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Registrant is not controlled by, or under common control with, any person.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<CAPTION>
NUMBER OF
RECORD HOLDERS AT
TITLE OF CLASS FEBRUARY 28, 1995
------------------------------------------------------------------ -----------------
<S> <C>
Shares of beneficial interest, par value $.10 per share........... 8,789
</TABLE>
ITEM 27. INDEMNIFICATION.
Reference is made to Article V of Registrant's Declaration of Trust, as
amended, Article VI of Registrant's By-Laws, and Section 9 of the Distribution
Agreement, which have been filed as exhibits to the Registration Statement.
Insofar as the conditional advancing of indemnification monies for actions
based upon the Investment Company Act may be concerned, such payments will be
made only on the following conditions: (i) the advances must be limited to
amounts used, or to be used, for the preparation or presentation of a defense to
the action, including costs connected with the preparation of a settlement; (ii)
advances may be made only upon receipt of a written promise by, or on behalf of,
the recipient to repay that amount of the advance which exceeds the amount which
it is ultimately determined he is entitled to receive from the Registrant by
reason of indemnification; and (iii)(a) such promise must be secured by a surety
bond, other suitable insurance or an equivalent form of security which assures
that any repayments may be obtained by the Registrant without delay or
litigation, which bond, insurance or other form of security must be provided by
the recipient of the advance, or (b) a majority of a quorum of the Registrant's
disinterested, non-party Trustees, or an independent legal counsel in a written
opinion, shall determine, based upon a review of readily available facts, that
the recipient of the advance ultimately will be found entitled to
indemnification.
In Section 9 of the Distribution Agreement relating to the securities being
offered hereby, the Registrant agrees to indemnify the Distributor and each
person, if any, who controls the Distributor within the meaning of the
Securities Act of 1933, against certain types of civil liabilities arising in
connection with the Registration Statement or Prospectus and Statement of
Additional Information.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to Trustees, officers and controlling persons of the
Registrant and the principal underwriter pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Trustee, officer or controlling
person of the Registrant and the principal underwriter in connection with the
successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person or the principal underwriter in
connection with the shares being
C-2
<PAGE> 74
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF MANAGER.
Merrill Lynch Asset Management, L.P. (the "Manager" or "MLAM"), acts as
investment adviser for the following open-end investment companies: Merrill
Lynch Adjustable Rate Securities Fund, Inc., Merrill Lynch Americas Income Fund,
Inc., Merrill Lynch Asset Growth Fund, Inc., Merrill Lynch Asset Income Fund,
Inc., Merrill Lynch Balanced Fund for Investment and Retirement, Inc., Merrill
Lynch Capital Fund, Inc., Merrill Lynch Developing Capital Markets Fund, Inc.,
Merrill Lynch Dragon Fund, Inc., Merrill Lynch EuroFund, Merrill Lynch
Fundamental Growth Fund, Inc., Merrill Lynch Fund For Tomorrow, Inc., Merrill
Lynch Global Allocation Fund, Inc., Merrill Lynch Global Bond Fund for
Investment and Retirement, Merrill Lynch Global Convertible Fund, Inc., Merrill
Lynch Global Holdings, Merrill Lynch Global Resources Trust, Merrill Lynch
Global SmallCap Fund, Inc., Merrill Lynch Global Utility Fund, Inc., Merrill
Lynch Growth Fund for Investment and Retirement, Merrill Lynch Healthcare Fund,
Inc., Merrill Lynch Institutional Intermediate Fund, Merrill Lynch International
Equity Fund, Merrill Lynch Latin America Fund, Inc., Merrill Lynch Middle
East/Africa Fund, Inc., Merrill Lynch Municipal Series Trust, Merrill Lynch
Pacific Fund, Inc., Merrill Lynch Ready Assets Trust, Merrill Lynch Retirement
Asset Builder Program, Inc., Merrill Lynch Retirement Series Trust, Merrill
Lynch Series Fund, Inc., Merrill Lynch Short-Term Global Income Fund, Inc.,
Merrill Lynch Strategic Dividend Fund, Merrill Lynch Technology Fund, Inc.,
Merrill Lynch U.S.A. Government Reserves, Merrill Lynch U.S. Treasury Money
Fund, Merrill Lynch Utility Income Fund, Inc. and Merrill Lynch Variable Series
Funds, Inc.; and the following closed-end investment companies: Convertible
Holdings, Inc., Merrill Lynch High Income Municipal Bond Fund, Inc. and Merrill
Lynch Senior Floating Rate Fund, Inc. Fund Asset Management, L.P. ("FAM"), an
affiliate of MLAM, acts as the investment adviser for the following open-end
investment companies: CBA Money Fund, CMA Government Securities Fund, CMA Money
Fund, CMA Multi-State Municipal Series Trust, CMA Tax-Exempt Fund, CMA Treasury
Fund, The Corporate Fund Accumulation Program, Inc., Financial Institutions
Series Trust, Merrill Lynch Basic Value Fund, Inc., Merrill Lynch California
Municipal Series Trust, Merrill Lynch Corporate Bond Fund, Inc., Merrill Lynch
Federal Securities Trust, Merrill Lynch Funds for Institutions Series, Merrill
Lynch Multi-State Limited Maturity Municipal Series Trust, Merrill Lynch
Multi-State Municipal Series Trust, Merrill Lynch Municipal Bond Fund, Inc.,
Merrill Lynch Phoenix Fund, Inc., Merrill Lynch Special Value Fund, Inc.,
Merrill Lynch World Income Fund, Inc. and The Municipal Fund Accumulation
Program, Inc.; and the following closed-end investment companies: Apex Municipal
Fund, Inc., Corporate High Yield Fund, Inc., Corporate High Yield Fund II, Inc.,
Emerging Tigers Fund, Inc., Income Opportunities Fund 1999, Inc., Income
Opportunities Fund 2000, Inc., MuniAsset Fund, Inc., MuniBond Income Fund, Inc.,
MuniEnhanced Fund, Inc., MuniInsured Fund, Inc., MuniVest Fund, Inc., MuniVest
California Insured Fund, Inc., MuniVest Florida Fund, MuniVest Michigan Insured
Fund, Inc., MuniVest New Jersey Fund, Inc., MuniVest New York Insured Fund,
Inc., MuniVest Pennsylvania Insured Fund, MuniYield Arizona Fund, Inc.,
MuniYield Arizona Fund II, Inc., MuniYield California Fund, Inc., MuniYield
California Insured Fund, Inc., MuniYield California Insured Fund II, Inc.,
MuniYield Florida Fund, MuniYield Florida Insured Fund, MuniYield Fund, Inc.,
MuniYield Insured Fund, Inc., MuniYield Insured Fund II, Inc., MuniYield
Michigan Fund, Inc., MuniYield Michigan Insured Fund, Inc., MuniYield New Jersey
Fund, Inc., MuniYield New Jersey Insured Fund, Inc., MuniYield New York Insured
Fund, Inc., MuniYield New York Insured Fund II, Inc., MuniYield New York Insured
Fund III, Inc., MuniYield Pennsylvania Fund, MuniYield Quality Fund, Inc.,
MuniYield Quality Fund II, Inc., Senior High Income Portfolio, Inc., Senior High
Income Portfolio II, Inc., Senior Strategic Income Fund, Inc., Taurus
MuniCalifornia Holdings, Inc., Taurus MuniNewYork Holdings, Inc. and Worldwide
DollarVest Fund, Inc. The address of each of these investment companies is P.O.
Box 9011, Princeton, New Jersey 08543-9011. The address of Merrill Lynch Funds
for Institutions Series and Merrill Lynch Institutional Intermediate Fund is One
Financial Center, 15th Floor, Boston, Massachusetts 02111-2646. The address of
the Manager and FAM is also P.O. Box 9011, Princeton, New Jersey 08543-9011. The
address of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch")
and Merrill Lynch & Co., Inc. ("ML&Co.") is World Financial
C-3
<PAGE> 75
Center, North Tower, 250 Vesey Street, New York, New York 10281. The address of
Financial Data Services, Inc. ("FDS") is 4800 Deer Lake Drive East,
Jacksonville, Florida 32246-6484.
Set forth below is a list of each executive officer and partner of the
Manager indicating each business, profession, vocation or employment of a
substantial nature in which each such person or entity has been engaged since
January 1, 1993 for his or its own account or in the capacity of director,
officer, partner or trustee. In addition, Mr. Zeikel is President, Mr. Glenn is
Executive Vice President and Mr. Richard is Treasurer of all or substantially
all of the investment companies described in the preceding paragraph and Messrs.
Durnin, Giordano, Harvey, Hewitt, Kirstein, Monagle and Ms. Griffin are
directors or officers of one or more of such companies.
<TABLE>
<CAPTION>
OTHER SUBSTANTIAL BUSINESS,
PROFESSION, VOCATION
NAME POSITION WITH MANAGER OR EMPLOYMENT
- ------------------------- ------------------------ -----------------------------------------------
<S> <C> <C>
ML&Co. .................. Limited Partner Financial Services Holding Company
Princeton Services, Inc. General Partner General Partner of FAM
("Princeton
Services").............
Arthur Zeikel............ President President of FAM; President and Director of
Princeton Services; Director of Merrill Lynch
Funds Distributor, Inc. ("MLFD"); Executive
Vice President of ML&Co. and Executive Vice
President of Merrill Lynch
Terry K. Glenn........... Executive Vice President Executive Vice President of FAM; Executive Vice
President and Director of Princeton Services;
President and Director of MLFD; Director of
FDS; President of Princeton Administrators,
L.P.
Bernard J. Durnin........ Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
Vincent R. Giordano...... Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
Elizabeth Griffin........ Senior Vice President Senior Vice President of FAM
Norman R. Harvey......... Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
N. John Hewitt........... Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
Philip L. Kirstein....... Senior Vice President, Senior Vice President; General Counsel and
General Counsel and Secretary of FAM; Senior Vice President,
Secretary General Counsel, Director and Secretary of
Princeton Services; Director of MLFD
Ronald M. Kloss.......... Senior Vice President Senior Vice President and Controller of FAM;
and Controller Senior Vice President and Controller of
Princeton Services
Stephen M. M. Miller..... Senior Vice President Executive Vice President of Princeton
Administrators, L.P.
Joseph T. Monagle, Jr.... Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
Gerald M. Richard........ Senior Vice President Senior Vice President and Treasurer of FAM;
and Treasurer Senior Vice President and Treasurer of
Princeton Services; Vice President and
Treasurer of MLFD
Ronald L. Welburn........ Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
Anthony Wiseman.......... Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
</TABLE>
C-4
<PAGE> 76
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) MLFD acts as the principal underwriter for the Registrant and for each
of the open-end investment companies referred to in the first paragraph of Item
28 except CBA Money Fund, CMA Government Securities Fund, CMA Money Fund, CMA
Multi-State Municipal Series Trust, CMA Tax-Exempt Fund, CMA Treasury Fund, The
Corporate Fund Accumulation Program, Inc., The Municipal Fund Accumulation
Program, Inc., and also acts as principal underwriter for the following
closed-end funds: Merrill Lynch High Income Municipal Bond Fund, Inc. and
Merrill Lynch Senior Floating Rate Fund, Inc.
(b) Set forth below is information concerning each director and officer of
MLFD. The principal business address of each such person is P.O. Box 9011,
Princeton, New Jersey 08543-9011, except that the address of Messrs. Aldrich,
Brady, Breen, Crook, Graczyk, Fatseas, and Wasel is One Financial Center,
Boston, Massachusetts 02111-2633.
<TABLE>
<CAPTION>
(2) (3)
(1) POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH MLFD WITH REGISTRANT
- ----------------------------- --------------------------------------- -------------------------
<S> <C> <C>
Terry K. Glenn............... President and Director Executive Vice President
Arthur Zeikel................ Director President and Trustee
Philip L. Kirstein........... Director None
William E. Aldrich........... Senior Vice President None
Robert W. Crook.............. Senior Vice President None
Michael Brady................ Vice President None
William M. Breen............. Vice President None
Sharon Creveling............. Vice President and Assistant Treasurer None
James T. Fatseas............. Vice President None
Mark A. DeSario.............. Vice President None
Stanley Graczyk.............. Vice President None
Debra W. Landsman-Yaros...... Vice President None
Michelle T. Lau.............. Vice President None
Gerald M. Richard............ Vice President and Treasurer Treasurer
Salvatore Venezia............ Vice President None
William Wasel................ Vice President None
Robert Harris................ Secretary None
</TABLE>
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act and the rules thereunder will be
maintained at the offices of the Registrant, 800 Scudders Mill Road, Plainsboro,
New Jersey 08536, and Financial Data Services, Inc., 4800 Deer Lake Drive East,
Jacksonville, Florida 32246-6484.
ITEM 31. MANAGEMENT SERVICES.
Other than as set forth under the caption "Management of the
Trust -- Management and Advisory Arrangements" in the Prospectus constituting
Part A of the Registration Statement, and under the caption "Management of the
Trust -- Management and Advisory Arrangements" in the Statement of Additional
Information constituting Part B of the Registration Statement. Registrant is not
a party to any management related service contract.
ITEM 32. UNDERTAKINGS.
(a) Not applicable.
(b) Not applicable.
(c) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to
shareholders upon request and without charge.
C-5
<PAGE> 77
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE
INVESTMENT COMPANY ACT OF 1940, THE REGISTRANT CERTIFIES THAT IT MEETS ALL THE
REQUIREMENTS FOR EFFECTIVENESS OF THIS REGISTRATION STATEMENT PURSUANT TO RULE
485(B) UNDER THE SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS AMENDMENT TO
ITS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE TOWNSHIP OF PLAINSBORO, AND STATE OF NEW
JERSEY, ON THE 25TH DAY OF APRIL 1995.
MERRILL LYNCH READY ASSETS TRUST
(Registrant)
By: /s/ ARTHUR ZEIKEL
----------------------------------
(Arthur Zeikel, President)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------------- ---------------
<C> <S> <C>
/s/ ARTHUR ZEIKEL President and Trustee April 25, 1995
- ------------------------------------------ (Principal Executive Officer)
(Arthur Zeikel)
/s/ GERALD M. RICHARD Treasurer (Principal April 25, 1995
- ------------------------------------------ Financial and Accounting
(Gerald M. Richard) Officer)
DONALD CECIL* Trustee
- ------------------------------------------
(Donald Cecil)
M. COLYER CRUM* Trustee
- ------------------------------------------
(M. Colyer Crum)
EDWARD H. MEYER* Trustee
- ------------------------------------------
(Edward H. Meyer)
JACK B. SUNDERLAND* Trustee
- ------------------------------------------
(Jack B. Sunderland)
J. THOMAS TOUCHTON* Trustee
- ------------------------------------------
(J. Thomas Touchton)
* By: /s/ ARTHUR ZEIKEL April 25, 1995
-------------------------------------
(Arthur Zeikel, Attorney-in-Fact)
</TABLE>
C-6
<PAGE> 78
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ------
<C> <C> <S>
1(a) -- Declaration of Trust, dated May 14, 1987.(a)
1(b) -- Amendment to Declaration of Trust, dated April 29, 1988.
2 -- By-Laws of Registrant.(a)
5(a) -- Management Agreement between Registrant and Merrill Lynch Asset Management.(a)
6(a) -- Distribution Agreement between Registrant and Merrill Lynch Funds Distributor,
Inc.(a)
6(b) -- Form of Selected Dealers Agreement.(a)
8(a) -- Custody Agreement between Registrant and The Bank of New York.(a)
8(b) -- Amendment to the Custody Agreement between the Registrant and The Bank of New
York.(a)
9(a) -- Transfer Agency Agreement between Registrant and Merrill Lynch Financial Data
Services, Inc. (now known as Financial Data Services, Inc.).(a)
9(b) -- Form of Agreement and Plan of Reorganization between Merrill Lynch Ready Assets
Trust, Merrill Lynch New Assets Trust and Merrill Lynch New Corporation, Inc.(a)
10 -- Opinion of Brown & Wood, counsel for Registrant.
11 -- Consent of Deloitte & Touche LLP, independent auditors for Registrant.
15 -- Amended and Restated Merrill Lynch Shareholder Servicing Plan and Agreement
pursuant to Rule 12b-1 between Registrant and Merrill Lynch, Pierce, Fenner &
Smith Incorporated.(a)
16 -- Schedule for computation of each performance quotation provided in the
Registration Statement in response to Item 22.(a)
17 -- Financial Data Schedule.
</TABLE>
- ---------------
(a) Refiled pursuant to the Electronic Data Gathering, Analysis, and Retrieval
(EDGAR) phase-in requirements.
<PAGE> 1
MERRILL LYNCH NEW ASSETS TRUST
The undersigned, constituting a majority of the Trustees of Merrill
Lynch New Assets Trust, a business trust organized under the laws of the
Commonwealth of Massachusetts (the "Trust"), hereby certify that the Trustees
of the Trust have duly adopted the following amendment to the Declaration of
Trust of the Trust dated the 14th day of May 1987.
Voted: That the Declaration of Trust, dated May 14, 1987, be, and it
hereby is, amended to change the name of the Trust from
"Merrill Lynch New Assets Trust" to "Merrill Lynch Ready
Assets Trust" in the following manner:
1.1. Name. The name of the trust created hereby
(the "Trust") shall be "Merrill Lynch Ready Assets Trust", and
so far as may be practicable the Trustees shall conduct the
activities of the Trust, execute all documents and sue or be
sued under that name, which name (and the word "Trust"
wherever hereinafter used) shall refer to the Trustees as
Trustees, and not individually, and shall not refer to the
officers, agents, employees or Shareholders of the Trust.
However, should the Trustees determine that the use of the
name of the Trust is not advisable, they may select such other
name for the Trust as they deem proper and the Trust may
conduct its activities under such other name. Any name change
shall become effective upon the execution by a majority of the
then Trustees of an instrument setting forth the new name.
Any such instrument shall have the status of an amendment to
this Declaration.
IN WITNESS WHEREOF, the undersigned, constituting a majority of the
Trustees of the Trust, have signed this Certificate in duplicate original
counterparts and have caused a duplicate original to be lodged among the
records of the Trust as required by Article X of the Declaration of Trust, as
of the 29th day of April, 1988.
<PAGE> 2
<TABLE>
<S> <C>
/s/ Arthur Zeikel /s/ George F. James
- ------------------------------ -------------------------
Arthur Zeikel George F. James
279 Watchung Fork Ocean Reef Club
Westfield, New Jersey 07090 Key Large, Florida 33037
/s/ James I. Armstrong /s/ Edward H. Meyer
- ------------------------------ -------------------------
James I. Armstrong Edward H. Meyer
Box 528, R.D. 1 580 Park Avenue
South Berwick, Maine 03908 New York, New York 10021
/s/ Robert F. Bryan /s/ Charles H. Ross, Jr.
- ----------------------------- -------------------------
Robert F. Bryan Charles H. Ross, Jr.
200 North Ocean Boulevard Buena Vista Avenue
Delray Beach, Florida 33444 Rumson, New Jersey 07760
/s/ Donald Cecil /s/ Jack B. Sunderland
- ----------------------------- -------------------------
Donald Cecil Jack B. Sunderland
3 Stratford Road 16 Hadden Road
Harrison, New York 10528 Scarsdale, New York 10583
/s/ M. Colyer Crum /s/ J. Thomas Touchton
- ----------------------------- -------------------------
M. Colyer Crum J. Thomas Touchton
80 Ash Street 2801 Hawthorne Road
Weston, Massachusetts 02193 Tampa, Florida 33611
</TABLE>
2
<PAGE> 1
EXHIBIT 10
BROWN & WOOD
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048-0557
TELEPHONE: (212) 839-5300
FACSIMILE: (212) 839-5599
April 27, 1995
Merrill Lynch Ready Assets Trust
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Dear Sir or Madam:
This opinion is furnished in connection with the registration by Merrill
Lynch Ready Assets Trust, a Massachusetts business trust (the "Trust"), of
6,536,275,124 shares of beneficial interest, par value of $0.10 per share (the
"Shares"), under the Securities Act of 1933 pursuant to a registration statement
on Form N-1A (File No. 2-52711), as amended (the "Registration Statement").
As counsel for the Trust, we are familiar with the proceedings taken by it
in connection with the authorization, issuance and sale of the Shares. In
addition, we have examined and are familiar with the Declaration of Trust of the
Trust, the By-Laws of the Trust and such other documents as we have deemed
relevant to the matters referred to in this opinion.
Based upon the foregoing, we are of the opinion that the Shares, upon
issuance and sale in the manner referred to in the Registration Statement for
consideration not less than the par value thereof, will be legally issued, fully
paid and non-assessable, except that shareholders of the Trust may under
certain circumstances be held personally liable for the Trust's obligations.
In rendering this opinion, we have relied as to matters of Massachusetts
law upon an opinion of Bingham, Dana & Gould, dated February 23, 1995, rendered
to the Trust.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the prospectus and
statement of additional information constituting parts thereof.
Very truly yours,
/s/ BROWN & WOOD
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
MERRILL LYNCH READY ASSETS TRUST:
We consent to the use in Post-Effective Amendment No. 28 to Registration
Statement No. 2-52711 of our report dated January 31, 1995 appearing in the
Statement of Additional Information, which is a part of such Registration
Statement, and to the reference to us under the caption "Financial Highlights"
appearing in the Prospectus, which also is a part of such Registration
Statement.
DELOITTE & TOUCHE LLP
Princeton, New Jersey
April 24, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000065109
<NAME> MERRILL LYNCH READY ASSETS TRUST
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 6367349370
<INVESTMENTS-AT-VALUE> 6359857424
<RECEIVABLES> 22186663
<ASSETS-OTHER> 844650
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6382888737
<PAYABLE-FOR-SECURITIES> 79526000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 62366069
<TOTAL-LIABILITIES> 141892069
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6248488614
<SHARES-COMMON-STOCK> 6248488614
<SHARES-COMMON-PRIOR> 6522692346
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (7491946)
<NET-ASSETS> 6240996668
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 282232055
<OTHER-INCOME> 0
<EXPENSES-NET> 42761133
<NET-INVESTMENT-INCOME> 239470922
<REALIZED-GAINS-CURRENT> 287014
<APPREC-INCREASE-CURRENT> (7986580)
<NET-CHANGE-FROM-OPS> 231771356
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 239470922
<DISTRIBUTIONS-OF-GAINS> 287014
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12651358878
<NUMBER-OF-SHARES-REDEEMED> 13164347398
<SHARES-REINVESTED> 238784788
<NET-CHANGE-IN-ASSETS> (282190312)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 23487917
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 42761133
<AVERAGE-NET-ASSETS> 6554598120
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE> 1
1(a)
DECLARATION OF TRUST
or
MERRILL LYNCH NEW ASSETS TRUST
THE DECLARATION OF TRUST of Merrill Lynch New Assets Trust is
made the 14th day of May, 1987 by the parties signatory hereto, as
trustees (such persons, so long as they shall continue in office in
accordance with the terms of this Declaration of Trust,, and all
other persons who at the time in question have been duly elected or
appointed as trustees in accordance with the provisions of this
Declaration of Trust and are then in office, being hereinafter
called the "Trustees").
W I T N E S S E T H
- - - - - - - - - -
the Trustees desire to form a trust fund under the
laws of Massachusetts for the investment and reinvestment of funds
contributed thereto; and
it is proposed that the beneficial interest in the
trust assets be divided into transferable shares of beneficial
interest as hereinafter provided;
NOW, THEREFORE, the Trustees hereby declare that they will
hold in trust, all money and property contributed to the trust fund
to manage and dispose of the same for the benefit of the holders
from time to time of the shares of beneficial interest issued
hereunder and subject to the provisions hereof,, to wit:
<PAGE> 2
ARTICLE I
The Trust
1.1. Name. The name of the trust created hereby (the
"Trust". shall be "Merrill Lynch New Series Assets Trust",, and so
far as may be practicable the Trustees shall conduct the activities
of the Trust,, execute all documents and sue or be sued under that
name,, which name (and the word "Trust" wherever hereinafter used)
shall refer to the Trustees as Trustees, and not individually, and
shall not refer to the officers, agents, employees or Shareholders
of the Trust. However,, should the Trustees determine that the use
of the name of the Trust is not advisable,, they may select such
other name for the Trust as they deem proper and the Trust may
conduct its activities under such other name. Any name change
shall be effective upon the execution by a majority of the then
Trustees of an instrument setting forth the new name. Any such
instrument shall have the status of an amendment to this
Declaration.
1.2. Definitions. As used in this Declaration. the following
terms shall have the following meanings:
The terms "Affiliated Person",, "Assiqment" "Commission",,
"Interested Persons", "Malority shareholder Vote" (the 67% or more
than 50% requirement of the third sentence of Section 2(a)(42) of'
the 1940 Act,, whichever may be applicable) and "Principal
Underwriter" shall have the meanings given them in the 1940 Act.
"Declaration" shall mean this Declaration of Trust as amended
from time to time. References in this Declaration to
"Declaration",, "hereof", "herein" and "hereunder" shall be deemed
to refer to the declaration rather than the article or section in
which such words appear.
"Fundamental Policies" shall mean the investment restrictions
set forth the Prospectus and designated as fundamental policies
therein.
"Person" shall mean and include individuals, corporations,
partnerships, trusts, associations, joint ventures and other
entities, whether or not legal entities I and governments and
agencies and political subdivisions thereof.
"Prospectus" shall mean the currently effective Prospectus of
the Trust under the Securities Act of 1933, as amended, including
the Statement of Additional Information incorporated by reference
therein.
2.
<PAGE> 3
"Shareholders" shall mean as of any particular time all
holders of record of outstanding Shares at such time.
"Shares" shall mean the equal proportionate transferable units
of inerest into which the beneficial interest in the Trust shall
be divided from time to time and includes fractions of Shares as
well as whole Shares.
"Trustees" shall mean the signatories to this Declaration of
Trust, so long as they shall continue in office in accordance with
the terms hereof, and all other persons who at the time in question
have been duly elected or appointed and have qualified as trustees
in accordance with the provisions hereof and are then in office,
are herein referred to as the "Trustees", and reference in this
Declaration of Trust to a Trustee or Trustees shall refer to such
person or persons in their capacity as Trustees hereunder.
"Trust Property" shall mean as of any particular time any and
all property, real or personal,, tangible or intangible, which at
such time is owned or held by or for the account of the Trust or
the Trustees.
The "1940 Act" refers to the Investment Company Act of 1940
and the regulations promulgated thereunder,, as amended from time
to time.
3.
<PAGE> 4
ARTICLE II
Trustees
2.1. Number and Qualification. The number of Trustees shall
be fixed from time to time by written instrument signed by a
majority of the Trustees then in office, provided, however, that
the number of Trustees shall in no event be less than three or more
than fifteen (except prior to the first public offering of Shares).
Any vacancy created by an increase in Trustees may,, to the extent
permitted by the 1940 Act, be filled by the appointment of an
individual having the qualifications described in this Article made
by a written instrument signed by a majority of the Trustees then
in office. Any such appointment shall not become effective,
however,, until the individual named in the written instrument of
appointment shall have accepted in writing such appointment and
agreed in writing to be bound by the terms of this Declaration. No
reduction in the number of Trustees shall have the effect of
.removing any Trustee from office prior to the expiration of his
term. Whenever a vacancy in the number of Trustees shall occur,
until such vacancy is filled as provided in Section 2.4 hereof, the
Trustees in office, regardless of their number, shall have all the
powers granted to the Trustees and shall discharge all the duties
imposed upon the Trustees by this Declaration. A Trustee shall be
an individual at least 21 years of age who is not under legal
disability. Trustees need not own Shares.
2.2. Term of Office. Each Trustee shall (except in the event
of resignations or removals or vacancies pursuant to Section 2.3 or
2.4 hereof) hold office until his successor has been elected and is
qualified to serve as Trustee.
2.3. Resignation and Removal. Any Trustee may resign his
trust (without need for prior or subsequent accounting) by an
instrument in writing signed by him and delivered or mailed to the
Chairman, if any,, the President or the Secretary and such
resignation shall be effective upon such delivery, or at a later
date according to the terms of the instrument. Any of the Trustees
may be removed (provided the aggregate number of Trustees after
such removal shall not be less than the number required by Section
2.1 hereof) with cause, by the action of two-thirds of the
remaining Trustees. Any Trustee may be removed at any special
meeting of the Shareholders by a vote of two-thirds of the
outstanding !hares. Upon the resignation or removal of a Trustee,
or his otherwise ceasing to be a Trustee, he shall execute and
deliver such documents as the remaining Trustees shall require for
the purpose of conveying to the successor Trustee or the remaining
Trustees any Trust Property held in the name of the resigning or
removed Trustee. Upon the incapacity or death of any Trustee, his
legal representative shall execute and deliver on his behalf such
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documents as the remaining Trustees shall require as provided in
the preceding sentence.
2.4. Vacancies. The term of office-of a Trustee shall
terminate and a vacancy shall occur in the event of the death,,
resignation, bankruptcy, adjudicated incompetence or other'
incapacity to perform the duties of the office,, or removal,, of a
Trustee. No such vacancy shall operate to annul this Declaration
or to revoke any existing agency created pursuant to the terms of
this Declaration. in the case of a vacancy, the Shareholders,
acting at any meeting of Shareholders held in accordance with
Section 10.2 hereof,, or,,- to the extent permitted by the 1940 Act, a
majority of the Trustees continuing in office acting by written
instrument or instruments,, may fill such vacancy,, and any Trustee
so elected by the Trustees shall hold office as provided in this
Declaration.
2.5. Meetings. Meetings of the Trustees shall be held from
time to time upon the call of the Chairman, if any, the President,
the Secretary or any two Trustees. Regular meetings of the
Trustees may be held without call or notice at a time and place
fixed by the By-Laws or by resolution of the Trustees. Notice of
any other meeting shall be mailed or otherwise given not less than
48 hours before the meeting but may be waived in writing by any
Trustee either before or after such meeting. The attendance of a
Trustee at a meeting shall constitute a waiver of notice of such
meeting except where a Trustee attends a meeting for the express
purpose of objecting to the transaction of any business on the
ground that the meeting has not been lawfully called or convened.
The Trustees may act with or without a meeting. A quorum for all
meetings of the Trustees shall be a majority of the Trustees.
Unless provided otherwise in this Declaration of Trust, any action
of the Trustees may be taken at a meeting by vote of a majority of
the Trustees present (a quorum being present) or without a meeting
by written consents of a majority of the Trustees.
Any committee of the Trustees, including an executive
committee, if any, may act with or without a meeting. A quorum for
all meetings of any such committee shall be a majority of the
members thereof. Unless provided otherwise in this Declaration,
any action of any such committee may be taken at a meeting by vote
of a majority of the members present (a quorum being present) or
without a meetlng by written consent of a majority of the members.
With respect to actions of the Trustees and any committee of
the Trustees, Trustees who are Interested Persons of the Trust
within the meaning of Section 1.2 hereof or otherwise interested in
any action to be taken may be counted for quorum purposes under
this Section and shall be entitled to vote to the extent permitted
by the 1940 Act.
<PAGE> 6
To the extent permitted by the 1940 Act,, all or any one or
more Trustees may participate in a meeting of the Trustees or any
committee thereof by means of a conference-telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other and participation
in a meeting pursuant to such communications systems shall
constitute presence in person at such meeting.
2.6. Officers. The Trustees shall annually elect a
President, a Secretary and a Treasurer and may elect a Chairman.
The Trustees may elect or appoint or authorize the Chairman, if
any, or President to appoint such other officers or agents with
such powers as the Trustees may deem to be advisable. The Chairman
and President shall be and the Secretary and Treasurer may,, but
need not, be a Trustee.
2.7. BY-Laws. The Trustees may adopt and from time to time
amend or repeal the By-Laws for the conduct of the business of the
Trust.
<PAGE> 7
ARTICLE III
Powers of Trustees
3.1. General. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust
to the same extent as-if the Trustees were the sole owners of the
Trust Property and business in their own right,, but with such
powers of delegation as may be permitted by this Declaration. The
Trustees may perform such acts as in their sole discretion are
proper for conducting the business of the Trust. The enumeration
of any specific power herein shall not be construed as limiting the
aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
3.2. Investments. The Trustees shall have power, subject to
the Fundamental Policies, to:
(a) conduct,, operate and carry on the business of an
investment company;
(b) subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer,
exchange, distribute or otherwise deal in or dispose of
negotiable or non-negotiable instruments, obligations,
evidences of indebtedness, certificates of deposit or
indebtedness, commercial paper,, repurchase agreements,,
reverse repurchase agreements and other securities,
including,, without limitation,, those issued,, guaranteed or
sponsored by any state, territory or possession of the United
States and the District of Columbia and their political sub-
divisions, agencies and instrumentalities, or by the United
States Government or its agencies or instrumentalities, or
international instrumentalities, or by any bank, savings
institution, corporation or other business entity organized
under the laws of the United States and, to the extent
provided in the Prospectus and not prohibited by the
Fundamental Policies,, organized under foreign laws; and to
exercise any and all rights,, powers and privileges of
ownership or interest in respect of any and all such
investments of every kind and description, including, without
limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more persons,
firms" associations or corporations to exercise any of said
rights,, powers and privileges in respect of any of said
instruments; and the Trustees shall be deemed to have the
foregoing powers with respect to any additional securities in
which the Trust may invest should the investment policies set
forth in the Prospectus or the Fundamental Policies be
amended.
7.
<PAGE> 8
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust, nor shall
the Trustees be limited by any law limiting the investments which
may be made by fiduciaries.
3.3. Legal Title. Legal title to all the Trust Property
shall be vested in the Trustees as joint tenants except that the
Trustees shall have power to cause legal title to any Trust
Property to be held by or in the name of one or more of the
Trustees,, or in the name of the Trust,, or in the name of any other
Person as nominee, on such terms as the Trustees may determine,
provided that the interest of the Trust therein is appropriately
protected.
The right, title and interest of the Trustees in the Trust
Property shall vest automatically in each person who may hereafter
become a Trustee-upon his due election and qualification. Upon the
resignation, removal or death of a Trustee he shall automatically
coats to have any right, title or interest in any of the Trust
Property, and the right, title and interest of such Trustee in the
Trust Property shall vest automatically in the remaining Trustees.
Such vesting and cessation of title shall be effective whether or
not conveyancing documents have been executed and delivered.
3.4. Issuance and Repurchase of Securities. The Trustees
shall have the power to issue,, sell,, repurchase,, redeem,, retire,
cancel, acquire, hold, resell, reissue, dispose of, transfer, and
otherwise deal in, Shares, including shares in fractional
denominations, and, subject to the more detailed provisions set
forth in Articles VIII and IX, to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust whether capital or surplus or
otherwise, to the full extent now or hereafter permitted by the
laws of the Commonwealth of Massachusetts governing business
corporations.
3.5. Borrow Money. Subject to the Fundamental Policies, the
Trustees shall have power to borrow money or otherwise obtain
credit and to secure the same by mortgaging, pledging or otherwise
subjecting as security the assets of the Trust, including the
lending of portfolio securities,, and to endorse,, guarantee, or
undertake the performance of any obligation, contract or engagement
of any other person, firm, association or corporation.
3.6. Delegation; Committees. The Trustees shall have power,
consistent with their continuing exclusive authority over the
management of the Trust and the Trust Property, to delegate from
time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of
such instruments either in the name of the Trust or the names of
the Trustees or otherwise as the Trustees may deem expedient., to
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the same extent as such delegation is permitted to directors of a
Massachusetts business corporation and is permitted by the 1940
Act.
3.7. Collection and Payment. The Trustees shall have power
to collect all property due to the Trust; to pay all claims, in-
cluding taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust Property; to
foreclose any security interest securing any obligations, by virtue
of which any property is owed to the Trust; and to enter into
releases, agreements and other instruments.
3.8. Expenses. The Trustees shall have power to incur and
pay any expenses which in the opinion of the Trustees are necessary
or incidental to carry out any of the purposes of this Declaration
of Trust, and to pay reasonable compensation from the funds of the
Trust to themselves as Trustees. The Trustees shall fix the
compensation of all officers, employees and Trustees. The Trustees
may pay themselves such compensation for special services,
including legal, underwriting, syndicating and brokerage services,
as they in good faith may deem reasonable and reimbursement for
expenses reasonably incurred by themselves on behalf of the Trust.
3.9., Miscellaneous Powers. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may
deem desirable for the transaction of the business of the Trust;
(b) enter into joint ventures, partnerships and any other
combinations or associations; (c) purchase,, and pay for out of
Trust Property, insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisors,
distributors, selected dealers or independent contractors of the
Trust against all claims arising by reason of holding any such
position or by reason of any action taken or omitted by any such
Person in such capacity,, whether or not constituting negligence, or
whether or not the Trust would have the power to indemnify such
Person against such liability; (d) establish pension, profit-
sharing,, share purchase,, and other retirement, incentive and
benefit plans for any Trustees, officers, employees and agents of
the Trust; (a) make donations, irrespective of benefit to the
Trust,, for charitable, religious, educational, scientific, civic or
similar purposes; (f) to the extent permitted by law, indemnify any
Person with whor the Trust has dealings,, including any advisor,
.administrator,, distributor and selected dealers, to such
extent as the Trustees shall determine; (g) guarantee indebtedness
or contractual obligations of others; (h) determine and change the
fiscal year of the Trust and the method in which its accounts shall
be kept; and (i) adopt a seal for the Trust but the absence of such
seal shall not impair the validity of any instrument executed on
behalf of the Trust.
9.
<PAGE> 10
3.10. Further Powers. The Trustees shall have power to
conduct the business of the Trust and carry on its operations in
any and all of its branches and maintain offices both within and
without the Commonwealth of Massachusetts,, in any and all states of
the United States of America, in the District of Columbia, and in
any and all commonwealths,, territories,, dependencies,, colonies,,
possessions, agencies or instrumentalities of the United States of
America and of foreign governments, and to do all such other things
and execute all such instruments as they deem necessary,, proper or
desirable in order to promote the interests of the Trust although
such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. It construing the
provisions of this Declaration, the presumption shall be in favor
of a grant of power to the Trustees. The Trustees will not be
required to obtain any court order to deal with the Trust Property.
10.
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ARTICLE IV
Advisory, Management and Distribution Arrangements
4.1. Advisory and Management Arrangements. Subject to a
Majority Shareholder Vote, as required by the 1940 Act, the
Trustees may in their discretion from time to time enter into
advisory or management contracts whereby the other party to such
contract shall undertake to furnish the Trustees such advisory and
management services as the Trustees shall from time to time
consider desirable and all upon such terms and conditions as the
Trustees may in their discretion determine. Notwithstanding any
provisions of this Declaration of Trust, the Trustees may authorize
any adviser or manager (subject to such general or specific in-
structions as the Trustees may from time to time adopt) to effect
purchases, sales, loans or exchanges of portfolio securities of the
Trust on behalf of the Trustees or may authorize any officer,
employee or Trustee to effect such purchases, sales, loans or
exchanges pursuant to recommendations of any such advisor,
administrator or manager (and all without further action by the
Trustees). Any such purchases, sales, loans and exchanges shall be
deemed to have been authorized by all of the Trustees.
4.2. Distribution Arrangements. The Trustees may in their
discretion from time to time enter into a contract, providing for
the sale of the Shares of the Trust to net the Trust not less than
the par value per share, whereby the Trust may either agree to sell
the Shares to the other party to the contract or appoint such other
party its sales agent for such Shares. In either case, the
contract shall be on such terms and conditions as the Trustees may
in their discretion determine not inconsistent with the provisions
of this Article IV or the By-Laws; and such contract may also
provide for the repurchase or sale of Shares by such other party as
principal or as agent of the Trust and may provide that such other
party may enter into selected dealer agreements with registered
securities dealers to further the purpose of the distribution or
repurchase of the Shares.
4.3. Parties to Contract. Any-contract of the character
described Section 4.1 and 4.2 of this Article IV or in Article
VII hereof may be entered into with any corporation, firm, trust or
association, although one or more of thn Trustees or officers of
the Trust may be an officer,, director, Trustee, shareholder, or
.member of such other party to the contract. and no such contract
shall be invalidated or rendered voidable by reason of the
existence of any such relationship, nor shall any person holding
such relationship be liable merely by reason of such relationship
for any loss or expense to the Trust- under or by reason of said
contract or accountable for any profit realized directly or indi-
rectly therefrom, provided that the contract when entered -into was
<PAGE> 12
reasonable and fair and not inconsistent with the provisions of
this Article IV or the By-Laws. The same person (including a firm,
corporation, trust, or association) may be the other party to
contracts entered into pursuant to Sections 4.1 and 4.2 above or
Article Vll, and any individual may be financially interested or
otherwise affiliated with persons who are parties to any or all of
the contracts mentioned in this Section 4.3.
4.4. Provisions and Amendments. Any contract entered into
pursuant to Section 4.1 and 4.2 of this Article IV shall be
consistent with and subject to the requirements of Section 15 of
the 1940 Act with respect to its continuance in affect,, its
termination,, and the method of authorization and approval of such
contract or renewal thereof, and no amendment to any contract
entered into pursuant to Section 4.1 shall be effective unless
assented to by a Majority Shareholder Vote.
12.
<PAGE> 13
ARTICLE V
Limitations of Liability of Shareholders,
Trustees and Others
5.1. No Personal Liability of Shareholders, Trustees, etc.
No Shareholder shall be subject to any personal liability
whatsoever to any Person in connection with Trust Property or the
acts, obligations or affairs of the Trust. No Trustee, officer,
employee or agent of the Trust shall be subject to any personal
liability whatsoever to any Person,, other than the Trust or its
Shareholders, in connection with Trust Property or the affairs of
the Trust,, save only that arising from his bad faith, willful
misfeasance, gross negligence or reckless disregard of his duty to
such Person; and all such Persons shall look solely to the Trust
Property for satisfaction of claims of any nature arising in
connection with the affairs of the Trust. If any Shareholder-
Trustee, officer, employe*, or agent, as such, of the Trust, is
made a party to any suit or proceeding to enforce any such
liability, he shall not an account thereof, be hold to any personal
liability. The Trust shall indemnify and hold each Shareholder
harmless from and against all claims and liabilities,. to which such
Shareholder may become subject by reason of his being or having
been a Shareholder, and shall reimburse such Shareholder for all
legal and other expenses reasonably incurred by him in connection
with any such claim or liability. The rights accruing to a
Shareholder under this Section 5.1 shall not exclude any other
right to which such Shareholder may be lawfully entitled, nor shall
anything herin contained restrict the right of the Trust to
indemnify or reimburse a Shareholder in any appropriate situation
even though not specifically provided herein.
5.2. Non-Liability of Trustees, etc. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust, its
Shareholders, or to any Shareholder, Trustee, officer, employee, or
agent thereof for any action or failure to act (including without
limitation the failure to compel in any way any former or acting
Trustee to redress any breach of trust) except for his own bad
faith, willful misfeasance, gross negligence or reckless disregard
of his duties.
5.3. Mandatory Indemnification. The Trust shall indemnify,
each of its Trustees, officers, employees, and agents (including
persons who serve at its request as directors,, officers or trustees
of another organization in which it has any interest, as a
shareholder,, creditor or otherwise) against all liabilities and
expenses (including amounts paid in satisfaction of judgments, in
compromise, as fines and penalties, and as counsel fees) reasonably
incurred by him in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal, in
13.
<PAGE> 14
which he may be involved or with which he may be threatened, while
in office or thereafter, by reason of his being or having been such
a trustee, officer, employee or agent, except with respect to any
matter as to which he shall have been adjudicated to have acted in
bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties; provided, however, that as to any matter
disposed of by a compromise payment by such person, pursuant to a
consent decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless the
Trust shall have received a written opinion from independent legal
counsel approved by the Trustees to the effect that if either the
matter of willful misfeasance, gross negligence or reckless
disregard of duty, or the matter of good faith and reasonable
belief as to the best interests of the Trust, had been adjudicated,
it would have been adjudicated in favor of such person. The rights
accruing to any Person under these provisions shall not exclude any
other right to which he may be lawfully entitled; provided that no
Person may satisfy any right of indemnity or reimbursement granted
herin or in Section 5.1 or to which he may be otherwise entitled
except out of the property of the Trust, and no Shareholder shall
be personally liable to any Person with respect to any claim for
indemnity or reimbursement or otherwise. The Trustees may make
advance payments in connection with indemnification under this
Section 5.3 provided that the indemnified person shall have given
a written undertaking to reimburse the Trust in the event it is
subsequently determined that he is not entitled to such
indemnification.
5.4. No Bond Required of Trustees. No Trustee shall, as
such, be obligated to give any bond or security or other security
for the performance of any of his duties hereunder.
5.5. No Duty of Investigation; Notice in Trust Instruments,
etc. No purchaser,, lender,, transfer agent or other person dealing
with the Trustees or any officer,, employee or agent of the Trust
shall be bound to make any inquiry concerning the validity of any
transaction purporting to be made by the Trustees or by said
officer, employee or agent or be liable for the application of
money or property paid, loaned, or delivered to or on the order of
the Trustees or of said officer,, employee or agent. Every
obligation, contract, undertaking, instrument, certificate, Share,
other security of the Trust,, and every other act or thing
whatsoever executed in connection with the Trust shall be
conclusively taken to have been executed or done by the executors
thereof only in their capacity as Trustees under this Declaration
of Trust or in their capacity as officers, employees or agents of
the Trust. Every written obligation, contract,, undertaking,,
instrument certificate, Share, other security of the Trust made or,
issued by the Trustees or by any officers, employees or agents of
the Trust, in their capacity as such, shall contain an appropriate
recital to the effect that the Shareholders, Trustees, officers,
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<PAGE> 15
employees and agents-of the Trust shall not personally be bound by
or liable thereunder, nor-shall resort be had to their private
property for the satisfaction of any obligation or claim
thereunder, and appropriate references shall be made therein to the
Declaration of Trust, and may contain any further recital which
they may deem appropropriate but the omission of such recital shall
not operate to impose personal liability on any of the Trustees,
Shareholders , officers, employees or agents of the Trust. The
Trustees may maintain insurance for the protection of the Trust
Property, its Sharsholders Trustees, officers, employees and
agents in such amount as the Trustees shall deem adequate to cover
possible tort liability and such other insurance as the Trustees
in their sole judgment shall deem advisable.
5.6. Reliance on Experts, etc. Each Trusted and officer or
employee of the Trust shall in the performance of his duties, be
fully and completely justified and protected with regard to any act
or any failure to act resulting from reliance in good faith upon
the books of account or other records of the Trust, upon an opinion-
of counsel, or upon report made to the Trust by any of its
officers or employees or by any investment adviser, administrator,
manager, distributor, selected dealer, accountant, appraiser or
other expert or consultant selected with reasonable care by the
Trustees, officers or employees of the Trust, regardless of whether
such counsel or expert may also be a Trustee.
15.
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ARTICLE VI
Shares of Beneficial Interest
6.1. Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided to transferable shares of beneficial
interest, all of one class, with par value $0.10 per share. The
number of such shares of beneficial interest authorized hereunder
is unlimited. All Shares issued hereunder including, without limi-
tation, Shares issued in connection with a dividend in Shares or a
split of Shares, shall be fully paid and nonassessable.
6.2. Rights of Shareholders. The ownership of the Trust
Property of every descript on and the right to conduct any business
herainbefore described are vested exclusively in the Trustees, and
the Shareholders shall have no interest therein other than the
beneficial interest conferred by their Shares, and they shall have
no right to call for any partition or division of any property,
profits, rights or interests of the Trust nor can they be called
.upon to share or assume any losses of the Trust or suffer an
assessment of any kind by virtue of their ownership of Shares. The
Shares shall be personal property giving only the rights in this
Declaration specifically not forth. The Shares shall not entitle
the holder to preference,, preemptive, appraisal, conversion or
exchange rights (except for rights of appraisal specified in
Section 11.4).
6.3. Trust Only. It is the intention of the Trustees to
create only the relationship of Trustee and beneficiary between the
Trustees and each Shareholder from time to time. It is not the
intention of the Trustees to create a general partnership, limited
partnership, joint stock association, corporation, bailment or any
form of legal relationship other than a trust. Nothing in this
Declaration of Trust shall be construed to make the Shareholders,
either by themselves or with the Trustees,, partners or members of a
joint stock association.
6.4. Issuance of Shares. The Trustees, in their discretion,
may from time to time without vote of the Shareholders issue
Shares, in addition to the then issued and outstanding Shares and
Shares hold in the treasury,, to such party or parties and for such
amount not less than par value and type of consideration, including
cash or property, at such time or times (including, without
limitation,, each business day in accordance with the maintenance of
a constant not asset value per share as set forth in Section 9.3
hereof), and on such terms as the Trustees may deem best, and may
in such manner acquire other assets (including the acquisition of
assets subject to, and in connection with the assumption of,
liabilities) and businesses. In connection with any issuance of
Shares, the Trustees may issue fractional Shares. The Trustees may
16.
<PAGE> 17
from time to time divide or combine the Shares into a greater or
lesser number without thereby changing the proportionate beneficial
interests of the Trust. Reductions in the number of outstanding
Shares may be made pursuant to the constant net asset value per
share formula set forth in Section 9.3. Contributions to the Trust
may be accepted for, and Shares shall be redeemed as, whole Shares
and/or 1/1,000ths of a Share or multiples thereof.
6.5. Register of Shares. A register shall be kept at the
Trust or any transfer agent duly appointed by the Trustees under
the direction of the Trustees which shall contain the names and
addresses of the Shareholders and the number of Shares held by them
respectively and a record of all transfers thereof. Such register
shall be conclusive as to who are the holders of the Shares and who
shall be entitled to receive dividends or distributions or
otherwise to exercise or enjoy the rights of Shareholders. No
Shareholder shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to him as'herein provided,,
until he has given his address to a transfer agent or such other
officer or agent of the Trustees as shall keep the register for
entry thereon. It is not contemplated that certificates will be
issued for the Shares; however,, the Trustees, in their discretion,
may authorize the issuance of share certificates and promulgate
appropriate rules and regulations as to their use.
6.6. Transfer Agent and Registrar. The Trustee shall have
power to employ a transfer agent or transfer agents, and a
registrar or registrars, with respect to the Shares. The transfer
agent or transfer agents may keep the applicable register and
record therin the original issues and transfers, if any, of the
said Shares. Any such transfer agent and registrars shall perform
the duties usually performed by transfer agents and registrars of
certificates of stock in a corporation, except as modified by the
Trustees.
6.7. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his
agent thereto duly authorized in writing, upon delivery to the
Trustees or a transfer agent of the Trust of a duly executed
instrument of transfer,, together with such evidence of the
genuineness of each such execution and authorization and of other
matters as may reasonably be required. Upon such delivery the
transfer shall be recorded in the applicable register of the Trust.
Until such record is made, the Shareholder of record shall be
deemed to be the holder of such Shares for all purposes hereof and
neither the Trustees nor any transfer agent or registrar nor any
officer, employee or agent of the Trust shall be affected by any
notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of
the death,, bankruptcy,, or incompetence of any Shareholder, or
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<PAGE> 18
otherwise by operation of law, shall be recorded on the register of
Shares as the holder of such Shares upon production of the proper
evidence thereof to the Trustees or a transfer agent of the Trust,
but until such record is made,, the Shareholder of record shall be
deemed to be the holder of such Shares for all purposes hereof and
neither the Trustees nor any transfer agent or registrar nor any
officer or agent of the Trust shall be affected by any notice of
such death, bankruptcy or incompetence, or other operation of law.
6.8 Notices. Any and all notices to which any shareholder
hereunder may Fe-entitled and any and all communications shall be
deemed duly served or given if mailed,, postage prepaid, addressed
to any Shareholder of record at his last known address as recorded
on the register of the Trust.
18.
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ARTICLE VII
Custodian
7.1. Appointment and Duties. The Trustees shall at all times
employ a custodian or custodians, meeting the qualifications for
custodians for portfolio securities of investment companies
contained in the 1940 Act,, as custodian with respect to the Trust.
Any custodian shall have authority as agent of the Trust,, but
subject to such restrictions, limitations and other requirements,
if any,, as may be contained in the By-Laws of the Trust and the
1940 Act:
(1) to hold the securities owned by the Trust and
deliver the same upon written order;
(2) to receive and receipt for any moneys due to the
Trust and deposit the same in its own banking department (if
a bank) or elsewhere as the Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
(4) if authorized by the Trustees, to keep the books
and accounts of the Trust and furnish clerical and accounting
services; and
(5) if authorized to do so by the Trustees, to compute
the not income of the Trust;
all upon such basis of compensation as may be agreed upon between
the Trustees and the custodian. If so directed by a Majority
Shareholder Vote, the custodian shall deliver and pay over all
property of the Trust held by it as specified in such vote.
The Trustees may also authorize each custodian to employ one
or more sub-custodians from time to time to perform such of the
acts and services of the custodian and upon such terms and
conditions,, as may be agreed upon between the custodian and such
subcustodian and approved by the Trustees,, provided that in every
case such sub-custodian shall meet the qualifications for
custodians contained in the 1940 Act.
7.2. Central Certificate System. Subject to such rules,
regulations and order as the Commission may adopt, the Trustess may
direct the custodian to deposit all or any part of the securities
owned by the Trust in a system for the central handling of
securities established by A national securities exchange or a
national securities association registered with the Commission
under the Securities Exchange Act of 1934, or such other person as
may be permitted by the Commission, or otherwise in accordance with
19.
<PAGE> 20
the 1940 Act, pursuant to which system all securities of any
particular class or series of any issuer deposited within the
system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities,
provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust.
20.
<PAGE> 21
ARTICLE VIII
Redemption
8.1. Redemptions. All outstanding Shares may be redeemed at
the option of the holders thereof, upon and subject to the terms
and conditions provided in this Article VIII. The Trust shall,
upon application of any Shareholder or pursuant to authorization
from any Shareholder,, redeem or repurchase from such Shareholder
outstanding Shares for an amount per share determined by the
application of a formula adopted for such purpose by the Trustees
(which formula shall be consistent with the 1940 Act); provided
that (a) such amount per share shall not exceed the cash equivalent
of the proportionate interest of each share in the assets of the
Trust at the time of the purchase or redemption and (b) if so
authorized by the Trustees,, the Trust may, at any time and from
time to time,, charge fees for affecting such redemption,, at such
rates as the Trustees may establish, as and to the extent permitted
under the 1940 Act, and may,, at any time and from time to time,
pursuant to such Act,, suspend such right of redemption. The
procedures for effecting redemption shall be as set forth in the
Prospectus with respect to the applicable Series from time to time.
8.2. Redemption of Shares; Disclosure of Holding. If the
Trustees shall, at any time and in good faith, be of the opinion
that direct or indirect ownership of Shares or other securities of
the Trust has-or may become concentrated in any person to an extent
which would disqualify the Trust as a regulated investment company
under the Internal Revenue Code,, then the Trustees shall have the
power by lot or other means deemed equitable by them (i) to call
for redemption a number, or principal amount, of Shares or other
,securities of the Trust sufficient, in the opinion of the Trustees,
to maintain or bring the direct or indirect ownership of Shares or
other securities of the Trust into conformity with the requirements
for such qualification and (ii) to refuse to transfer or issue
Shares or other securities of the Trust to any Person whose
acquisition of the Shares or other securities of the Trust in
question would in the opinion of the Trustees result in such
disqualification. The redemption shall be affected at a redemption
price determined in accordance with Section 8.1.
The holders of Shares or other securities of the Trust shall
upon demand disclose to the Trustees in writing such information
with respect to direct and indirect ownership of Shares or other
securities of the Trust as the Trustees deem necessary to comply
with the provisions-of the Internal Revenue Code,, or to comply with
the requirements of any other taxing authority..
8.3. Redemptions of Accounts of Less than $1,000. Due to the
relatively high cost of maintaining investment accounts of less
21.
<PAGE> 22
than $1,000, the Trustees shall have the power to redeem shares at
a redemption price determined in accordance with Section 8.1 if at
any time the total investment in such account does not have a value
of at least $1,000; provided,, however, that the Trustees may not
exercise such power with respect to Shares if the Prospectus does
not describe such power. In the event the Trustees determine to
exercise their power to redeem Shares provided in this Section 8.3.
shareholders shall be notified that the value of their account is
less than $1,OOO and allowed So days to make an additional
investment before redemption is processed.
8.4. Redemptions Pursuant to Constant Net Asset Value
Formula. The Trust may also reduce the number of outstanding
Shares pursuant to the provisions of Section 9.3.
22.
<PAGE> 23
ARTICLE IX
Determination of Net Asset Value,
Net Income and Distributions
9.1. Net Asset Value. The net asset value of each
outstanding Share of the Trust shall be determined at such time or
times on such days as the Trustees may determine, in accordance
with the 1940 Act. The method of determination of net asset value
shall be determined by the Trustees and shall be as set forth in
the Prospectus. The power and duty to make the daily calculations
may be delegated by the Trustees to the adviser, administrator,
manager, custodian, transfer agent or such other person as the
Trustees may determine. The Trustees may suspend the daily
determination of not asset value to the extent permitted by the
1940 Act.
9.2. Distributions to Shareholders. The Trustees shall from
time to time distribute ratably among the Shareholders such
proportion of the net profits,, surplus (including paid-in surplus),,
capital, or assets held by the Trustees as they may deem proper.
Such distribution may be made in cash or property (including
without limitation any type of obligations of the Trust or any
assets thereof),, and the Trustees may distribute ratably among the
Shareholders additional Shares in such manner, at such times, and
on such terms as the Trustees may deem proper. Such distributions
may be among the Shareholders of record at the time of declaring a
distribution or among the Shareholders of record at such later date
as the Trustees shall determine. The Trustees may always retain
from the net profits such amount as they may deem necessary to pay
the debts or expenses of the Trust or to meet obligations of the
Trust, or as they may deem desirable to use in the conduct of its
affairs or to retain for future requirements or extensions of the
business. The Trustees may adopt and offer to Shareholders such
dividend reinvestment plans, cash dividend payout plans or related.
plans as the Trustees shall deem appropriate.
Inasmuch as the computation of not income and gains for
Federal income tax purposes may vary from the computation thereof
on the books. the above provisions shall be interpreted to give the
Trustees the power in their discretion to distribute for any fiscal
year as ordinary dividends and as capital gains distributions,
respectively,, additional amounts sufficient to enable the Trust to
avoid or reduce liability for taxes.
9.3. Constant Net Asset Value; Reduction of Outstanding
Shares. The Trustees shall have the power to determine the net
income of the Trust on each day the net asset value is determined
as provided in Section 9.1 and at each such determination declare
such net income as dividends with the result that the net asset
23.
<PAGE> 24
value per share of the Trust shall remain at a constant dollar
value. The determination of net income and the resultant
declaration of dividends shall be as set forth in the Prospectus.
In such 'event fluctuations in value may be reflected in the number
of outstanding Shares in each Shareholder's account. It is
expected that the Trust will have a positive net income at the time
of each determination. If for any reason such not income is a
negative amount, the Trust may offset such amount against dividends
accrued in the account of the Shareholder. If and to the extent
such negative amount exceeds such accrued dividends,, the Trust
shall have authority to reduce the number of the outstanding
Shares. Such reduction will be affected by having each Shareholder
proportionately contributing to capital the necessary Shares that
represent the amount of the excess upon such determination. Each
Shareholder will be deemed to have agreed to such contribution in
these circumstances by his investment in the Trust. This procedure
will permit the not asset value per share of the Trust to be
maintained at a constant dollar value per share.
The Trustees, by resolution, may discontinue or amend the
practice of maintaining the net asset value per share at a constant
dollar amount at any time and such modification shall be evidenced
by appropriate changes in the Prospectus.
9.4. Power to Modify Foregoing Procedures. Notwithstanding
any of the foregoing provisions of this Article IX, the Trustees
may prescribe, in their absolute discretion, such other bases and
times for determining the per share not asset value of the Trust's
Shares or not income, or the declaration and payment of dividends
and distributions as they may deem necessary or desirable to enable
the Trust to comply with any provision of the 1940 Act,, or any se-
curities association registered under the Securities Exchange Act
of 1934, or any order of exemption issued by said Comission, all
as in effect now or hereafter amended or modified.
24.
<PAGE> 25
ARTICLE X
Shareholders
10.1. Voting Powers. The Shareholders shall have power to
vote (i) for the removal of Trustees as provided in Section 2.3,
(ii) with respect to any advisory or management contract as
provided in Section 4.1, (iii) with respect to the amendment of
this Declaration as provided in Section 11.3. (iv) with respect to
such additional matters relating to the Trust as may be required or
authorized by the 1940 Act, the laws of the Commonwealth of
Massachusetts or other applicable law or by this Declaration or by
the By-Laws of the Trust,, and (v) with respect to such additional
matters relating to the Trust as may be properly submitted for
Shareholder approval.
10.2. Meetings of Shareholders. Special meetings of the
Shareholders may be called at any time By- a majority of the
Trustees and shall be called by any Trustee upon written request of
Shareholders holding in the aggregate not less than 10% of the
outstanding Shares having voting rights,, such request specifying
the purpose or purposes for which such meeting is to be called.
Any such meeting shall be held within or without the Commonwealth
of Massachusetts on such day and at such time as the Trustees shall
designate. The holders of a majority of outstanding Shares present
in person or by proxy shall constitute a quorum for the transaction
of any business, except as may otherwise be required by the 1940
Act,, the laws of the Commonwealth of Massachusetts or other
applicable law or by this Declaration or the By-Laws of the Trust.
If a quorum is present at a meeting,, the affirmative vote of a
majority of the Shares represented at the meeting constitutes the
action of the Shareholders, unless the 1940 Act.the laws of the
Commonwealth of Massachusetts or other applicable law, this
Declaration or the By-Laws of the Trust requires a greater number
of affirmative votes.
10.3. Notice of Meetings. Notice of all meetings of the
Shareholders, stating the time, place and purposes of the meeting,
shall be given by the Trustees by mail to each Shareholder at his
registered address, mailed at least 10 days and not more than 60
days before the meeting. Only the business stated in the notice of
the meeting shall be considered at such meeting. Any adjourned
meeting may be held as adjourned without further notice.
10.4. Record Date for Meetings. For the purpose of
determining the Sharholders who are entitled to notice of and to
vote at any meeting, or to participate in any distribution, or for
the purpose of any other action,, the Trustees may from time to time
close the transfer books for such period, not exceeding 30 days, as
the Trustees may determine; or without closing the transfer books
the Trustees may fix a date not more than 60 days prior to the date
25.
<PAGE> 26
of any meeting of Shareholders or daily dividends or other action
as a record date for the determination of the Persons to be treated
as Shareholders of record for such purposes, except for dividend
payments which shall be governed by Section 9.2 hereof.
10.5. Proxies, etc. At any meeting of Shareholders, any
holder of Shares entitled to vote thereat may vote by proxy,
provided that no proxy shall be voted at any meeting unless it
shall have been placed on file with the Secretary, or with such
other officer or agent of the Trust as the Secretary may direct,
for verification prior to the time at which such vote shall be
taken. Pursuant to a resolution of a majority of the Trustees,
proxies may be solicited in the name of one or more Trustees or one
or more of the officers of the Trust. Only Shareholders of recor
shall be entitled to vote. Each full Share shall be entitled to
on vote and fractional Shares shall be entitled to a vote of such
fraction. When any Share is held jointly by several persons, any
one of them may vote at any meeting in person or by proxy in
respect of such Share, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint
owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Share. A
proxy purporting to be executed by or on behalf of a Shareholder
shall be deemed valid unless challenged at or prior to its
exercise,, and the burden of proving invalidity shall rest on the
challenger. If the holder of any such Share is a minor or a person
of unsound mind, and subject to guardianship or to the legal
control of any other person as regards the charge or management of
such Share,, he may vote by his guardian or such other person
appointed or having such control,, and such vote may be given in.
person or by proxy.
10.6. Reports. The Trustees shall cause to be prepared at
least annually a report of operations containing a balance sheet
and statement of income and undistributed income of the Trust
prepared in conformity with generally accepted accounting
principles and an opinion of an independent public accountant on
such financial statements. Copies of such reports shall be mailed
to all Shareholders of record within the time required by the 1940
Act, and in any event within a reasonable period preceding the
annual meeting of Shareholders. The Trustees shall, in addition,
furnish to the Shareholders at least annually,, interim reports
containing an unaudited balance sheet as of the end of such period
and an unaudited statement of income and surplus for the period
from the beginning of the current fiscal year to the end of such
period.
10.7. Inspection of Records. The records of the Trust shall
be open to inspection by Shareholders to the same extent as is
permitted shareholders of a Massachusetts business corporation.
26.
<PAGE> 27
10.8. Shareholder Action by Written Consent. Any action
which may be taken by Shareholders may be taken without a meeting
if a majority of Shareholders entitled to vote on the matter (or
such larger proportion thereof as shall be required by any express
provision of this Declaration) consent to the action in writing and
the written consents are filed with the records of the meetings of
Shareholders. Such consent shall be treated for all purposes as a
vote taken at a meeting of Shareholders.
27.
<PAGE> 28
ARTICLE XI
Duration; Termination of Trust;
Amendment; Mergers, Etc.
11.1. Duration. Subject to possible termination in
accordance with the provisions of Section 11.2 hereof, the Trust
created hereby shall continue until the expiration of 20 years
after the death of the last survivor of the initial Trustees named
herein and the following named persons:
<TABLE>
<CAPTION>
Name Address Date of Birth
---- ------- -------------
<S> <C> <C>
Avery Moores Bruno 25 Rutgers Place September 19, 1983
Scarsdale, N.Y. 10583
Daryl Lian Kleiman 375 South End-Avenue May 9, 1986
Now York, N.Y. 10280
.Lindsay Rider MacKinnon Mountain Farm Road January 27, 1981
Tuxedo Park, N.Y. 10987
Eric Alfred Pietrzak 525 Monterey Avenue January 29, 1981
Pelham Manor,, N.Y. 10803
Angus Washburn Smith 26 Prescott Avenue October 15,, 1982
Bronxville, N.Y..10708
Elisabeth Lyon Smith 26 Prescott Avenue October 15, 1982
Bronxville, N.Y. 10708
</TABLE>
11.2. Termination.
(a) The Trust may be terminated by the affirmative vote
of the holders of not less than two-thirds of the Shares at any
meeting of Shareholders or by an instrument in writing, without a
meeting, signed by a majority of the Trustees and consented to by
the holders of not less than two-thirds of such Shares. Upon the
termination of the Trust,,
(i) The Trust shall carry an no business except for
the purpose of windinq up its affairs.
(ii) The Trustees shall proceed to wind up the affairs
of the Trust and all of the powers of the Trustees under
this Declaration shall continue until the affairs of the
Trust shall have been wound up, including the power to
fulfill or discharge the contracts of the Trust, collect its
28.
<PAGE> 29
assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining Trust
Property to one or more persons at public or private sale
for consideration which may consist in whole or in part of
cash, securities or other property of any kind, discharge or
pay its liabilities, and do all other acts appropriate to
liquidate its business; provided that any sale, conveyance,,
assigment, exchange,, transfer or other disposition of all
or substantially all the Trust Property shall require
approval of the principal terms of the transaction and the
nature and amount of the consideration by vote or consent of
the holders of a majority of the Shares entitled to vote.
(iii) After paying or adequately providing for the
payment of all liabilities, and upon receipt of such
releases, indemnities and refunding agreements, as they deem
necessary for their protection, the Trustees may distribute
the remaining Trust Property, in cash or in kind or partly
each,, among the Shareholders according to their respective
rights.
(b) After termination of the Trust and distribution to
the Shareholders as herein provided, a majority of the Trustees
shall execute and lodge among the records of the Trust an
instrument in writing setting forth the fact of such termination.
'Upon termination of the Trust,, the Trustees shall thereupon be
discharged from all further liabilities and duties hereunder, and
the rights and interests of all Shareholders shall thereupon
cease,
11.3. Amendment Procedure.
(a) This Declaration may be amended by the affirmative
vote of the holders of not less than a majority of the Shares at
any meeting of Shareholders or by an instrument in writing,
without a meeting, signed by a majority of the Trustees and
consented to by the holders of not less than a majority of such
Shares. The Trustees may also amend this Declaration without the
vote or consent of Shareholders if they deem it necessary to
conform this Declaration to the requirements of applicable federal
laws or regulations or the requirements of the regulated
investment company provisions of the Internal Revenue Code,, but
the Trustees shall not be liable for failing so to do.
(b) No amendment may be made, under Section 11.3 (a)
above, which would change any rights with respect to any Shares of
the Trust by reducing the amount payable thereon upon liquidation
of the Trust or by diminishing or eliminating any voting rights
pertaining thereto,, except with the vote or consent of the holders
of two-thirds of the Shares. Nothing contained in this
Declaration shall permit the amendment of this Declaration to
29.
<PAGE> 30
impair the exemption from personal liability of the Shareholders,
Trustees, officers, employees and agents of the Trust or to permit
assessments upon Shareholders.
(C) A certification in recordable form signed by a
majority of the Trustees setting forth an amendment and reciting
that it was duly adopted by the Shareholders or by the Trustees as
aforesaid or a copy of the Declaration, as amended, in recordable
form,, and executed by a majority of the Trustees,, shall be
conclusive evidence of such amendment when lodged among the
records of the Trust.
Notwithstanding any other provision hereof, until such time
as a Registration Statement under the Securities Act of 1933, as
amended, covering the first public offering of Shares of the Trust
shall have become effective,, this Declaration of Trust may be
terminated or amended in any respect by the affirmative vote of a
majority of the Trustees or by an instrument signed by a majority
of the Trustees.
11.4. Merger, Consolidation and Sale of Assets. The Trust
may merge or consolidate with any other corporation, association,
trust or other organization or may sell,, lease or exchange all or
substantially all of the Trust Property, including its good will,
upon such terms and conditions and for such consideration when and
as authorized at any meeting of Shareholders called for the pur-
pose by the affirmative vote of the holders of not less than two-
thirds of the Shares,, or by an instrument or instruments in
writing without a meeting,, consented to by the holders of not less
than two-thirds of such Shares,, and any such merger,
consolidation, sale, lease or exchange shall be deemed for all
purposes to have been accomplished under and pursuant to the
statutes of the Commonwealth of Massachusetts. In respect of any
such merger, consolidation, sale or exchange of assets, any
Shareholder shall be entitled to rights of appraisal of his Shares
to the same extent as a shareholder of a Massachusetts business
corporation in respect of a merger or, consolidation, sale or
exchange of assets of a Massachusetts business corporation, and
such rights shall be his exclusive remedy in respect of his
dissent from any such action.
11.5. Incorporation. With the approval of the holders of a
majority of the Shares, the Trustees may cause to be organized or
assist in organizing a corporation or corporations under the laws
of any jurisdiction ,Dr any other trust# partnership, association
or other organization to take over all of the Trust Property or to
carry on any business in which the Trust shall directly or
indirectly have any interest,, and to sell,, convey and transfer the
Trust Property to any such corporation, trust, association or
organization in exchange for the Shares or securities thereof or
otherwise, and to land money to,, subscribe for the Shares or
30.
<PAGE> 31
securities of, and enter into any contracts with any such
corporation, trust, partnership, association or organization, or
any corporation, partnership, trust, association or organization
in which the Trust holds or is about to acquire shares or any
other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any
such corporation,, trust, partnership, association or other
organization if and to the extent permitted by law,, as provided
under the law then in effect. Nothing contained herein shall be
construed as requiring approval of Shareholders for the Trustees
to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the Trust Property
to such organizations or entities.
31.
<PAGE> 32
ARTICLE XII
Miscellaneous
12.1. Filing This Declaration and any amendment hereto
shall be filed the office of the Secretary of the Commonwealth
of Massachusetts and in such other places as may be required under
the laws of Massachusetts and may also be filed or recorded in
such other places as the Trustees doom appropriate. Each
amendment so filed shall be accompanied by a certificate signed
and acknowleged by a Trustee stating that such action was duly
taken in a manner provided herein,, and unless such amendment or
such certificate sets forth some later time for the effectiveness
of such amendment,, such amendment shall be effective upon its
filing. A restated Declaration, containing the original
Declaration and all amendments theretofore made,, may be executed
from time to time by a majority of the Trustees and shall,, upon
filing with the Secretary of the Commonwealth of Massachusetts,, be
conclusive evidence of all amendments contained therein and may
thereafter be referred to in lieu of the original Declaration and
the various amendments thereto.
12.2. Resident Agent. The Trust shall maintain a resident
agent in the Commonwealth of Massachusetts,, which agent shall
initially be CT Corporation System, 10 Post Office Square, Boston,
Massachusetts 02109. The Trustees may designate a successor
resident agent, provided,, however,, that such appointment shall not
become effective until written notice thereof is delivered to the
office of the Secretary of the Commonwealth.
12.3. Governing Law. This Declaration is executed by the
Trustees and delivered in the Commonwealth of Massachusetts and
with reference to the laws thereof,, and the rights of all parties
and the validity and construction of every provision hereof shall
be subject to and construed according to the laws of said State
and reference shall be specifically made to the business cor-
poration law of the Commonwealth of Massachusetts as to the
construction of matters not specifically covered herein or as to
which an ambiguity exists.
12.4. Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to
be an original,, and such counterparts together, shall constitute
one and the same instrument,, which shall be Sufficiently evidenced
by any such original counterpart.
12.5. Reliance by Third Parties. Any certificate executed
by an individual who, a cording to the records of the Trust,, or of
any recording office in which this Declaration may be recorded,
appears to be a Trustee hereunder, certifying to: (a) the number
32.
<PAGE> 33
or identity of Trustees or Shareholders, (b) the name of the Trust
(c) the due authorization of the execution of any instrument or
writing, (d) the form of any vote passed at a meeting of Trustees
or Shareholders, (e) the fact that the number of Trustees or
Shareholders present at any meeting or executing any written
instrument satisfies the requirements of this Declaration, (f) the
form of any By-Laws adopted by or the identity of any officers .
elected by the Trustees,, or (g) the existence of any fact or facts
which in any manner relate to the affairs of the Trust,, shall be
conclusive evidence as to the matters so certified in favor of any
person dealing with the Trustees and their successors.
12.6. Provisions in Conflict With Law or Regulations.
(a) The provisions of this Declaration are severable,
and if the Trustees shall determine, with the advice of counsel,
that any of such provisions is in conflict with 1940 Act,, the
regulated investment company provisions of the Internal Revenue
Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a
part of this Declaration; provided,, however,, that such
determination shall not affect any of the remaining provisions of
this Declaration or render invalid or improper any action taken or
omitted prior to such determination.
(b) If any provision of this Declaration shall be held
invalid or unenforceable in any jurisdiction,, such invalidity or
unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Declaration
in any jurisdiction.
33.
<PAGE> 34
IN WITNESS.WHEREOF, the undersigned, constituting all of the
Trustees of the Trust, have caused these presents to be executed
as of the day and year first above written.
/s/ Robert Harris
-------------------------------
22 Zeloof Drive
Lawrenceville New Jersey 08648
/s/Philip L. Kirstein
-------------------------------
79 West Shore Drive
Pennington, New Jersey 08534
/s/Barbara G. Fraser
-------------------------------
324 Cedar Lane
Swarthmore, Pennsylvania 19081
/s/WilLiam E. Aldrich
-------------------------------
111 Windsor Road
Needham. Massachusetts 02192
34.
<PAGE> 1
2
LIONEL, D. EDIE READY ASSETS TRUST
BY-LAWS
These by-laws are made and adopted pursuant to
Section 2.7 of the Declaration of Trust establishing
LIONEL D. EDIE READY ASSETS TRUST dated January 21,
1975, as from time to time amended (hereinafter called
the "Declaration"). All words and terms capitalized
in these By-Laws shall have the meaning or meanings
set forth for such words or terms in the Declaration.
ARTICLE I
Shareholder Meetings
Section 1.1 Chairman. The Chairman, if any, shall
act as chairman at all meetings of the Shareholders; in
his absence, the President shall act as chairman; and,
in the absence of the Chairman and the President the
Trustee or Trustees present at each meeting may elect a
temporary chairman for meeting, who may be one of
themselves.
Section 1.2 Proxies; Voting Shareholders may
Vote either in person or by duly executed proxy and
each full share represented at the meeting shall have
one vote, all as provided in Section 11.4 of the
Declaration. No proxy shall be valid after eleven (11)
<PAGE> 2
-2-
months from the date of its execution, unless a longer
period is expressly stated in such proxy.
Section 1.3 Closing, of Transfer Books and Fixing
Record Dates. For the purpose of determining the Share-
holders who are entitled to notice of or to vote or act
any meeting, including any adjournment thereof, or
who are entitled to participate in any dividends, or
for any other proper purpose, the Trustees may from
time to time close the transfer books or fix a record
date in the manner provided in Section 11.3 of the
Declaration. If the Trustees do not prior to any
meeting of Shareholders so fix a record date or close
the transfer books, then the date of mailing notice of
the meeting or the date upon which the dividend reso-
lution is adopted, as the case may be, shall be the
record date.
Section 1.4 Inspectors of Election. In advance
of any meeting of Shareholders, the Trustees may appoint
Inspectors of Election to act at the meeting or any
adjournment thereof. If Inspectors of Election are
not so appointed, the Chairman, if any, of any meeting
of Shareholders may, and on the request of any Share-
holder or his proxy shall, appoint up to three Inspectors
of Election of the meeting. If appointed at the meeting
<PAGE> 3
-3-
on the request of one or more Shareholders or proxies',
majority of Shares present shall determine the number
of Inspectors to be appointed, but failure to allow
such determination by the Shareholders shall not affect
the validity of the appointment of Inspectors of
Election. In case any person appointed as Inspector
fails to appear or fails or refuses to act, the vacancy
may be filed by appointment made by the Trustees in
advance of the convening of the meeting or at the
meeting by the person acting as chairman. The Inspectors
of Election shall determine the number of Shares out-
standing, the Shares represented at the meeting, the
existence of a quorum, the authenticity, validity and
effect of proxies, shall receive votes, ballots or
consents, shall hear and determine all challenges and
questions in any way arising in connection with the
right to vote, shall count and tabulate all votes or
consents, determine the results, and do such other
acts as may be proper to conduct the election or vote
with fairness to all Shareholders. If there are three
Inspectors of Election, the decision, act or certifi-
cate of a majority is effective in all respects as
the decision act or certificate of all. On request
of the Chairman, if any, of the meeting, or of any
<PAGE> 4
Sharebolder or his proxy, the Inspectors of Election
shal1 make a report in writing of any challenge or
question or matter determined by them and shall execute
certificate of any facts found by them.
Section 1.5 Records at Shareholder Meeting At
each meeting of the Shareholders there shall be open
for inspection the minutes of the last previous Annual
or Special Meeting of Shareholders of the Trust and a
list of the Shareholders of the Trust, certified to be
true and correct by the Secretary or other proper agent
of the Trust, as of the record date of the meeting or
the date of closing of transfer books, as the case may
be. Such list of Shareholders shall contain the name
of each Shareholder in alphabetical order and the
address and number of Shares owned by such Shareholder.
shareholders shall have such other rights and procedures
of inspection of the books and records of the Trust as
are granted to shareholders of a Massachusetts business
corporation.
ARTICLE II
Trustees
Section 2.1 Annual and Regular Meetings. The
Trustees shall hold an annual meeting for the election
<PAGE> 5
of officers and the transaction of other business which
come before such meeting, as soon as practicable
after the Annual Meeting of Shareholders. Regular
meetings of the Trustees may be held without call or
notice at such place or places and times as the Trustees
may by resolution provide from time to time.
Section 2.2 Special Meetings. Special Meetings
of the Trustees shall be held upon the call of the
Chairman, if any, the President, the Secretary or any
two Trustees, at such time, on such day, and at such
place, as shall be designated in the notice of the
meeting
Section 2.3 Notice. Notice of a meeting shall
be given by mail or by telegram (Which term shall in-
elude a cablegram) or delivered personally. If notice
is given by mail, it shall be mailed not later than 48,
hours preceding the meeting and if given by telegram
or personally-, such telegram shall be sent or delivery
made not later than 46 hours preceding the meeting.
Notice by telephone shall constitute personal delivery
for these purposes. Notice of a Meeting of Trustees
may be waived before or after any meeting by signed
written waivers Neither the business to be transacted
at, nor the purpose of, any meeting of the Board of
<PAGE> 6
-6-
Trustees need be stated in the notice or waiver of
notice of such meeting, and no notice need be given of
action proposed to be taken by unanimous written consent.
The attendance of a Trustee at a meeting shall constitute
a waiver of notice of such meeting except where a Trustee
attends a meeting for the express purpose of objecting
to the transaction of any business on the ground that
the meeting has not been lawfully called or convened.
Section 2.4 Chairman; Records. The Chairman, if
any, shall act as chairman at all meetings of the
Trustees; in his absence the President shall act as
chairman; and, in the absence of the Chairman and the
President, the Trustees present shall elect one of
their number to act as temporary chairman. The results
of all actions taken at a meeting of the Trustees, or
by unanimous written consent of the Trustees, shall be
recorded by the Secretary.
ARTICLE III
Officers
Section 3.1 Officers of the Trust. The officers
of the Trust shall consist of a Chairman if any, a
President, a Secretary, a Treasurer and such other
officers or assistant officers, including Vice
<PAGE> 7
-7-
as may be elected by the Trustees. Any two or more of
the Offices may be held by the same person, except that
the same person may not be both President and Secretary.
The Trustees may designate a Vice-President as an Execu-
tive Vice-President and may designate the order in which
the other Vice-Presidents may act. The Chairman and the
President shall be Trustees, but no other officer of
the Trust need be a Trustee.
Section 3.2 Election and Tenure. At the initial
organization meeting and thereafter at each annual
meeting of the Trustees, the Trustees shall elect the
Chairman, if any, President, Secretary, Treasurer and
such other officers as the Trustees shall deem neces-
sary or appropriate in order to carry out the business
of the Trust. Such officers shall hold office until
the next annual meeting of the Trustees and until their
Successors have been duly elected and Qualified. The
Trustees may fill any vacancy in office or add any
additional officers at any time.
Section 3.3 Removal of Officers. Any officer may
be removed at any time, with or without cause, by action
Of a majority of the Trustees. This provision shall not
Prevent the making of a contract of employment for a
definite term with any officer and shall have no effect
<PAGE> 8
upon any cause of action which any officer may have as
a result of removal in breach of a contract of employ-
ment. Any officer may resign at any time by notice in
writing signed by such officer and delivered or mailed
to the Chairman, if any, President, or Secretary, and
:such resignation shall take effect immediately upon
receipt by the Chairman, if any, President, or Secretary,
or at a later date according to the terms of such notice
in writing.
Section 3.4 Bonds and Surety. Any officer may be
required by the Trustees to be bonded for the faithful
performance of his duties in such amount and with such
Sureties as the Trustees nay determine.
Section 3.5 Chairman, President,_and Vice-Presidents.
'The Chairman, if any, shall, if present, preside at all
meetings of the Shareholders and of the Trustees and
shall exercise and perform such other powers and duties
as may be from time to time assigned to him by the
Trustees. Subject to such supervisory powers, if any,
as may be given by the Trustees to the Chairman, if any,
the President shall be the chief executive officer of
the Trust and, subject to the control of the Trustees,
shall have general supervision, direction and control
of the business of the Trust and of its employees and
<PAGE> 9
Vice-President designated by the Trustees, shall perform
all of the duties of the President, and when so acting
shall have all the powers of and be subject to all of
the restrictions upon the President. Subject to the
direction of the Trustees and of the President each
Vice-President shall have the power in the name and on
behalf of the Trust to execute any and all loan docu-
mentS, contracts agreements, deeds, mortgages and
other instruments in writing, and, in addition, shall
have such other duties and powers as shall be designated
from time to time by the Trustees or by the President.
Section 3.6 Secretary. The Secretary shall keep
the minutes of all meetings of, and record all votes of,
Shareholders, Trustees and the Executive Committee, if
any. He shall be custodian of the seal of the Trust,
if any, and he (and any other person so authorized by
the Trustees) shall affix the seal or, if permitted,
a facsimile thereof, to any instrument executed by the
Trust which would be sealed by a Massachusetts business cor-
poration executing the same or a similar instrument and
shall attest the seal and the signature or signatures of
the officer or officers executing such instrument on
behalf of the Trust. The Secretary shall also perform
any other duties commonly incident to such office in a
<PAGE> 10
Massachusetts business corporation, and shall have such other
authorities and duties as the Trustee shall from time to time
determine.
Section 3.7 Treasurer. Except as otherwise directed
by the Trustees, the Treasurer shall have the general
supervision of the monies, funds, securities, notes
receivable and other valuable papers and documents of
the Trust, and shall have and exercise under the super
vision of the Trustees and of the President all powers
and duties normally incident to his office. He may en-
dorse for deposit or collection all notes, checks and
other instruments payable to the Trust or to its order.
He shall deposit all funds of the Trust in such deposi-
tories as the Trustees shall designate. He shall be
responsible for such disbursement of the funds of the
Trust as may be ordered by the Trustees or the President.
He shall keep accurate account of the books of the Trust's
transactions which shall be the property of the Trust,
and which, together with all other property of the
Trust in his possession, shall be subject at all times
to the inspection and control of the Trustees. Unless
the Trustees shall otherwise determine, the Treasurer
shall be the principal accounting officer of the Trust
and shall also be the principal financial officer of
<PAGE> 11
-12-
the Trust. Ile shall have such other duties and authorities
as the Trustees shall from time to time determine. Notwith-
standing anything to the contrary herein contained, the
Trustees may authorize the Investment Adviser, the Distribu-
tor, the Custodian or the Transfer Agent to maintain bank
accounts and deposit and disburse funds fo the Trust
behalf of the Trust.
Section 3.8 Other Officers and Duties. The Trustees
may elect such other officers and assistant officers as
they shall from time to time determine to be necessary
or desirable in order to conduct the business of the
Trust. Assistant officers shall act generally in the
absence of the officer whom they assist and shall assist
that officer in the duties of his office. Each officer,
employee and agent of the Trust shall have such other
duties and authority as may be conferred upon him by
the Trustees or delegated to him by the President.
ARTICLE IV
Miscellaneous
Section 4.1 Depositories. The funds of the Trust
shall be deposited in such depositories as the Trustees
shall designate and shall be drawn out on checks, drafts
or other orders signed by such officer, officers, agent
or agents (including the Investment Adviser and Distributor),
as the Trustees may from time to time authorize.
<PAGE> 12
13-
Section 4.2 Signatures. All contracts and other
instruments shall be executed on behalf of the Trust
by such officer, officers, agent or agents, as provided
in these By-Laws or as the Trustees may from time to
time by resolution provide.
Section 4.3 Seal. The seal of the Trust, if any,
may be affixed to any document, and the seal and its
attestation may be lithographed, engraved or otherwise
printed on any document with the same force and effect
as if it had been imprinted and attested manually in
the same manner and with the same effect as if done by a
Massachusetts business corporation under Massachusetts law.
ARTICLE V
Stock Transfers
Section 5.1 Certificates. It is not contemplated
that certificates will be issued for the Shares; however, the
Trustees, in their discretion, may authorize the issuance
of share certificates and promulgate appropriate rules
and regulations as to their use.
Section 5.2 Transfer Agents, Registrars and the Like.
As provided in Section 7.7 of the Declaration, the
Trustees shall have authority to employ and compensate
such transfer agents and registrars as the Trustees shall
deem necessary or desirable. In addition, the Trustees
shall have power to employ and compensate such-dividend
<PAGE> 13
-14-
disbursing agents, warrant agents and agents for the
reinvestment of dividends as they shall deem necessary
or desirable. Any of such agents shall have such power
and authority as is delegated to any of them by the
Trustees.
Section 5.3 Transfer of Shares. The Shares of the
Trust shall be transferable on the books of the Trust
only upon delivery to the Trustees or a transfer agent
of the Trust of proper documentation as provided in
Section 7.8 of the Declaration of The Trust, or its
transfer agent, shall be authorized to refuse any
transfer unless and until presentation of such evidence
as may be reasonably required to show that the requested
transfer Is proper.
Section 5.4 Registered Shareholders. The Trust
may deem and treat the holder of record of any Share
as the absolute owner thereof for all purposes and
shall not be required to take any notice of any right
or claim of right of any other person.
ARTICLE VI
Amendment of By-Laws
Section 6.1 Amendment and Repeal of By-Laws. In
accordance with Section 2.7 of the Declaration, the
Trustees shall have the power to alter, amend or repeal
the By-Lawn or adopt new By-Laws at any time. Action
<PAGE> 14
by the Trustees with respect to the By-Laws shall be
by an affirmative vote of a majority of the
Trustees. The Trustees shall in no event adopt By-Laws
which are in conflict with the Declaration, and any
apparent inconsistency shall be construed in favor of
the related provisions in the Declaration.
<PAGE> 15
-16-
The Declaration of Trust establishing Lionel D. Edie Ready Assets Trust,
dated January 21, 1975, acopy 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 "Lionel D. Edie
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 Lionel D. Edie Ready
Assets Trust shall be held to any personal liability, nor shall resort be
had to their private property for the satisfaction of any obligaiton or
claim or otherwise in connection with the affairs of said Lionel D. Edie
Ready Assets Trust but the Trust Estate only Shall by liable
<PAGE> 1
5(a)
MANAGEMENT AGREEMENT
AGREEMENT made this 29th day of April, 1988 by and between
MERRILL LYNCH READY ASSETS TRUST, a Massachusetts business trust
(hereinafter referred to as the "Trust"), and MERRILL LYNCH ASSET
MANAGEMENT, INC., a Delaware corporation (hereinafter referred to
as the "Manager").
W I T N E S S E T H:
WHEREAS, the Trust is engaged in business as a diversified
open-end investment company registered under the investment
Company Act of 1940, as amended (hereinafter referred to as the
"Investment Company Act"); and
WHEREAS, the Manager is willing to provide management and
investment advisory services to the Trust under the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, the Trust and the Manager agree
as follows;
ARTICLE I
DUTIES OF THE MANAGER
The Trust hereby employs the Manager to act as the manager
and investment adviser of the Trust and to furnish, or arrange
for affiliates to furnish, the management and investment advisory
services described below, subject to the supervision of the
Trustees of the Trust, for the period and on the terms and
conditions set forth in this Agreement. The Manager hereby
accepts such employment and agrees during such period, at its own
<PAGE> 2
expense, to render, or arrange for the rendering of, such
services and to assume the obligations herein set forth for the
compensation provided for herein. The Manager and its affiliates
shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or
authorized, have authority to act for or represent the Trust in
any way or otherwise be deemed an agent of the Trust.
(a) Management Services. The Manager shall perform (or
arrange for the performance by affiliates) the management and
administrative services necessary for the operation of the Trust
including processing the orders, administering shareholder
accounts and handling shareholder relations. The Manager shall
provide the Trust with office space, equipment and facilities and
such other services as the Manager, subject to review by the
Trustees, shall from time to time determine to be necessary or
useful to perform its obligations under this Agreement. The
Manager shall also, on behalf of the Trust, conduct relations
with custodians, depositories, transfer agents, accountants,
attorneys, underwriters, brokers and dealers, corporate
beneficiaries, insurers, banks and such other persons in any such
other capacity deemed to be necessary or desirable. The Manager
shall make reports to the Trustees of its performance of
obligations hereunder and furnish advice and recommendations with
respect to such other aspects of the business and affairs of the
Trust as it shall determine to be desirable.
<PAGE> 3
(b) Investment Advisory Services. The Manager shall
provide the Trust with such investment research, advice and
supervision as the latter may from time to time consider
necessary for the proper supervision of the assets of the Trust,
shall furnish continuously an investment program for the Trust
and shall determine from time to time which securities shall be
purchased, sold or exchanged and what portion of the assets of
the Trust shall be held in the various securities in which the
Trust invests or cash, subject always to the Restrictions of the
Declaration of Trust and By-Laws of the Trust, as amended from
time to time, the provisions of the Investment Company Act and
the statements relating to the Trust's investment objectives,
investment policies and investment restrictions as the same are
set forth in the currently effective prospectus relating to the
shares of beneficial interest of the Trust under the Securities
Act of 1933, as amended (the "Prospectus"). The Manager shall
also make decisions for the Trust as to the manner in which
voting rights, rights to consent to corporate action and any
other rights pertaining to the Trust's portfolio securities shall
be exercised. Should the Trustees at any time, however, make any
definite'determination as to investment policy and notify the
Manager thereof in writing, the Manager shall be bound by such
determination for the period, if any, specified in such notice or
until similarly notified that such determination has been
revoked. The Manager shall take, on behalf of the Trust, all
actions which it deems necessary to implement the investment
<PAGE> 4
policies determined as provided above, and in particular to place
all orders for the purchase of sale of portfolio securities for
the trust's account with brokers or dealers selected by it, and
to that end, the Manager in authorized as the agent of the Trust
to give instructions to the Custodian of the Trust as to
deliveries of securities and payments of cash for the account of
the Trust. In connection with the selection of such brokers or
dealers and the placing of such orders with respect to assets of
the Trust, the Manager is directed at all times to seek to obtain
execution and price within the policy guidelines determined by
the Trustees of the Trust and set forth in the Prospectus.
Subject to this requirement and the provisions of the Investment
Company Act, the Securities Exchange Act of 1934, as amended, and
other applicable provisions of law, the manager may select
brokers or dealers with which it or the Trust is affiliated.
ARTICLE II
ALLOCATION OF CHARGES AMD EXPENSES
(a) The Manager. The Manager, at its own expense, shall
furnish to the Trust office space and all necessary office
facilities for managing the affairs and investments and keeping
the books of the Trust. The Manager assumes and shall pay or
reimburse the Trust for the Trust-related compensation of all
officers of the Trust and of all Trustees of the Trust who are
affiliated persons (as defined in the Investment Company Act) of
Merrill Lynch & Co., Inc. or its subsidiaries, and shall bear the
costs and expenses of advertising of the Trust used in connection
<PAGE> 5
with the offering of the shares for sale to the public. It is
-understood that the principal underwriter of the Trust shall
assume and pay all costs and expenses of printing and
distributing the prospectuses,-annual and interim reports and
supplementary sales material to be used in connection with the
offering of the shares for sale to the public.
(b) The Trust. Except as otherwise expressly provided
above, the Trust assumes and shall pay all expenses of the Trust,
including, without limitation: (1) the charges and expenses of
any custodian or depository appointed by the Trust for the
safekeeping of its cash, securities and other property, (2) the
charges and expenses of accounting and auditors, (3) the charges
and expenses of any transfer agents and registrars appointed by
the Trust, (4) fees and actual out-of-pocket expenses of all
Trustees who are not affiliated persons of Merrill Lynch & Co.
Inc., or its subsidiaries, (5) brokers, commissions and issue and
transfer taxes chargeable to the Trust in connection with
securities transactions to which the Trust is a party, (6)
interest charges, (7) all taxes and fees payable by the Trust to
Federal, state or other governmental agencies, (8) expenses of
registering and qualifying shares for sale under Federal, state
and other laws, (9) expenses in connection with the repurchase
and redemption of shares of the Trust, (10) all expenses of
shareholders, and Trustees' meetings and of preparing and
printing reports, prospectuses and proxy statements to
shareholders, (11) charges and expenses of legal counsel for the
<PAGE> 6
trust, (12) costs of conducting shareholder relations and (13)
the allocated portion of clerical salaries related to Trust
activities.
ARTICLE III
COMPENSATION OF THE MANAGER
(a) Management Fee. For the services rendered,-the
facilities furnished and the expenses assumed by the Manager, the
Trust shall pay to the Manager compensation at the following
annual rates calculated as hereinafter set forth, commencing on
the day following effectiveness hereof;
Management Fee
--------------
Portion of average daily value of net assets:
Not exceeding $500 million . . . . . . . . . . . . 0.50 %
in excess of $500 million but not exceeding $1 billion . . 0.40 %
in excess of $1 billion but not exceeding $5 billion . . . 0.35 %
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 $150 billion but not exceeding $20 billion. . 0.275%
In excess of $20 billion . . . . . . . . . . . . . . . 0.250%
except as hereinafter set forth, compensation under this
Agreement sha11 be calculated and accrued daily and paid monthly
by applying the annual rate to the average daily net assets of
the Trust determined as of each business day. If this Agreement
becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for that
part of the month this Agreement is in effect shall be prorated
in a manner consistent with the calculation of the fees as act
<PAGE> 7
forth above. Subject to the provisions of section (b) hereof,
payment of the Manager's compensation for the preceding month
shall be made as promptly an possible after completion of the
computations contemplated by subsection (b) hereof.
(b) Expense Limitations. In the event the total ordinary
operating expenses of the Trust in any fiscal year exclusive of
the fee paid to the Manager pursuant to the preceding paragraph,
but excluding taxes and rental fees, interest paid and brokerage
commissions paid and expenses of extraordinary items such an
litigation, shall exceed an amount equal to I%% of the first
$30,000,000 of the average daily value of net assets of the Trust
and it of the average daily value of net assets of the Trust in
excess thereof, the Manager shall pay on behalf of the Trust, or
reimburse the Trust for, any amount by which such total expenses
exceed such limit. Whenever the expenses of the Trust exceed a
pro rata portion of the annual expense limitation herein provided
for, the estimated amount of reimbursement under such expense
limitation shall be applied as an offset against the monthly
payment of the investment advisory fee due to the Manager.
ARTICLE IV
LIMITATION OF LIABILITY OF THE MANAGER
The Manager shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or
for any act or omission in the management of the Trust, except
for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of
<PAGE> 8
its obligations or duties hereunder. As used in this Article IV,
the term "Manager" shall include any affiliates of the Manager
performing services for the Trust contemplated hereby and
directors, officers and employees of the Manager and such
affiliates.
ARTICLE V
ACTIVITIES OF THE MANAGER
The services of the Manager to the Trust are not to be
deemed to be exclusive, the Manager being free to provide
services to others. It is understood that Trustees, officers,
employees and shareholders of the Trust are or may become
interested in the Manager, as directors, officers, employees and
shareholders or otherwise and that directors, officers, employees
and shareholders of the Manager are or may become similarly
interested in the Trust, and that the Manager may become
interested in the Trust as shareholder or otherwise.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
(a) This Agreement shall become effective as of the date
first above written and unless earlier stated as provided in
subsection (b) or (c) hereof, shall remain in force until August
31, 1984 and thereafter, but only so long as such continuance is
specifically approved at least annually by (i) the Trustees of
the Trust, or by the vote of a majority of the outstanding voting
securities of the Trust, and (ii) a majority of the Trustees who
<PAGE> 9
are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of
voting on such approval.
(b) This Agreement may be terminated at any time without
payment of any penalty by the Trust on sixty days, written notice
to the Manager by vote of the Trustees of the Trust or by vote of
a majority of the outstanding voting securities of the Trust, or
by the Manager on sixty days' written notice to the Trust.
(c) This Agreement will automatically terminate in the
event of its assignment.
ARTICLE VII
AMENDMENT OF THIS AGREEMENT
This Agreement may be amended at any time by mutual consent
of the parties, provided that such consent on the part of the
Trust shall have been approved by vote of the holders of a
majority of the outstanding securities of the Trust.
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
The terms "vote of a majority of the outstanding voting
securities", "assignment", "affiliated persons, and "interested
person", when used in this Agreement, shall have the respective
meanings specified in the Investment Company Act.
<PAGE> 10
ARTICLE IX
GOVERNING LAW
This Agreement shall be-construed in accordance with the
laws of the State of New York and the applicable provisions of
the Investment Company Act. To the extent that the applicable
laws of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the investment Company
Act, the latter shall control.
ARTICLE X
PERSONAL LIABILITY
The Declaration of Trust establishing Merrill Lynch Ready
Assets 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 Merrill Lynch Ready
Assets Trust shall be held to any personal liability, nor shall
resort be had to their private property for the satisfaction of
any litigation or claim of said Merrill Lynch Ready Assets Trust,
but the Trust Property only shall be liable.
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
MERRILL LYNCH READY ASSETS TRUST
By
-----------------------------------
MERRILL LYNCH ASSETS MANAGEMENT, INC.
By
-----------------------------------
<PAGE> 1
6(a)
DISTRIBUTION AGREEMENT
AGREEMENT made this 29th day of April, 1988 between
MERRILL LYNCH READY ASSETS TRUST,, a trust organized under
the laws of Massachusetts, hereinafter called the "Trust"
and MERRILL LYNCH FUNDS DISTRIBUTOR, INC., a Delaware
corporation, hereinafter called the "Distributor";
W I T N E S S E T H
WHEREAS., the Trust is registered under the Investment
Company Act of 1940, as amended to date (the "Investment
Company Act"), as a diversified open-end investment company
and it is affirmatively in the interest of the Trust to
offer its shares for sale, continuously; and
WHEREAS,, the Distributor is a securities firm engaged
in the business of selling shares of investment companies
either directly to purchasers or through other securities
dealers; and
WHEREAS, the Trust and the Distributor wish to enter
into an agreement with each other with respect to the
continuous offering of the Trust's Shares of Beneficial
Interest.
NOW, THEREFORE,-the parties agree as follows:
<PAGE> 2
Section 1. Appointment of the Distributor. The
Trust hereby appoints the Distributor as the principal
underwriter and distributor of the Trust to sell Shares of
Beneficial Interest of the Trust (sometimes herein referred
to as "shares") to the public and the Distributor hereby
accepts such appointment. The Trust during the term of this
Agreement shall sell its shares to the Distributor upon the
terms and conditions set forth below.
Section 2. Exclusive Nature of Duties. The Distri-
butor shall be the exclusive representative of the Trust
to act as principal underwriter and distributor, except that:
(a) The Trust may, upon written notice to
the Distributor, from time to time designate other
principal underwriters and distributors of its
shares with respect to areas other than the United
States as to which %'.he Distributor may have ex-
pressly waived in writing its right to act as
such. If such designation is deemed exclusive,
the right of the Distributor under this Agreement
to sell shares in the areas so designated shall
terminate, but this Agreement shall remain other-
wise in full effect until terminated in accordance
with the other provisions hereof.
(b) The exclusive rights granted to the
2 .
<PAGE> 3
Distributor to purchase shares from the Trust
shall not apply to shares of the Trust issued in
connection with the merger or consolidation of
any other investment. company or personal holding
company with the Trust or the acquisition by purchase
or otherwise of all (or substantially all) the assets
or the outstanding shares of any such company by
the Trust.
(c) Such exclusive rights shall also not apply
to shares issued by the Trust pursuant to reinvest-
ment of dividends, capital gains distributions or
otherwise pursuant to its daily reinvestment program.
Section 3. Purchase of Shares from the Trust.
(a) The Distributor shall have the right to buy from
the Trust the shares needed, but not more than the shares
needed (except for clerical errors in transmission) to fill
unconditional orders for shares of the Trust placed with
the Distributor by investors or securities dealers. The
price which the Distributor shall pay for the shares so
purchased from the Trust shall be the net asset value,
determined as set forth in Section 3(.d) hereof, used in
determining the public offering price on which such orders
were based.
(b) The shares are to be resold by the Distributor to
investors at the public offering price, as set forth in
<PAGE> 4
Section 3(c) hereof, or to securities dealers having agree-
ments with the Distributor upon the terms and conditions
set forth in Section 7 hereof.
(c) The public offering price of the shares, i.e., the
price per share at which the Distributor or selected dealers
may sell shares to the public, shall be the public offering
price as set forth in the currently effective prospectus
of the Trust under the Securities Act of 1933 (the "pro-
spectus") relating to such shares., but not to exceed the net
asset value at which the Distributor is to purchase the
shares, plus a purchase fee, if any, not to exceed 8/10 of
1% of the net asset value. Such purchase fee, if any, may
be reduced for volume purchases or pursuant to a right of
accumulation. If the resulting public offering price does
not equal an even cent, the public offering price may be
adjusted to the nearest cent. All payments to the Trust
hereunder shall be made in the manner set forth in Section
3(f).
(d) The net asset value of shares of the Trust shall
be determined by it or any of its agents as of the close of
the New York Stock Exchange on each business day on which
said Exchange is open, in accordance with the method set
forth in the most current prospectus-of the Trust and guide-
lines established by the Board of Trustees of the Trust.
The Trust may also cause the net asset value to be determined
<PAGE> 5
in substantially the same manner or estimated in such manner
and as of such other hour or hours as may from time to time
be agreed upon in writing by the Trust and the Distributor.
(e) The Trust shall have the right to suspend the sale
of its shares at times when redemption is suspended pursuant
to the conditions set forth in Section 4(b) hereof. The
Trust shall also have the-right to suspend the sale of its
shares if trading on the New York Stock Exchange shall have
been suspended, if a banking moratorium shall,have been
declared by Federal or New York authorities, or if there
shall have been some other extraordinary event, which, in
the judgment of the Trust, makes it impracticable to sell
the shares.
(g) The Trust, or any agent of the Trust designated in
writing by it, shall be promptly advised of all purchase
orders for shares received by the Distributor. Procedures
may be established whereby purchase orders are presented
directly to the Trust or its designated agent upon the con-
dition that in such cases it shall be deemed that the issuance
of the shares to be purchased are made pursuant to Section 3
hereof. Any order may be rejected by the Trust or the Dis-
tributor, provided, however, that neither will arbitrarily
or without reasonable cause refuse to accept or Confirm
orders for the purchase of shares. The Trust (or its agent)
will confirm orders upon their receipt, and will make
<PAGE> 6
appropriate book entries pursuant to the instructions of
the Distributor. Purchase orders are effective when Federal
Funds become available to the Trust. The Distributor agrees
to cause such payment and such instructions to be delivered
promptly to the Trust (or its agent).
Section 4. Redemption or Repurchase of Shares by
the Trust.
(a) 'Any of the outstanding shares may be tendered for
redemption or repurchase at any time, and the Trust shall
redeem or repurchase the shares so tendered in accordance
with its obligations and rights as set forth in Article IX
of its Declaration of Trust, as amended from time to time.,
and in accordance with the applicable provisions set forth
in the most current prospectus of the Trust. The price to
be paid to redeem or repurchase the shares shall be equal to
the net asset value calculated in accordance with the pro-
visions of Section 3(d) hereof. All payments by the Trust
hereunder shall be made in the manner set forth below. The
redemption or repurchase by the Trust of any of the shares-
purchased by or through the Distributor will not affect the
.purchase fee or other compensation-received by the Distri-
butor or any selected dealer in the course of the original
sale or during the operation of the Trust, except that if
any shares are tendered for redemption or repurchase within
seven business days after the date of the confirmation of
<PAGE> 7
the original purchase, the right to the purchase fee shall
be forfeited by the Distributor and the selected dealer who
sold such shares.
The Trust shall pay the total amount of the redemption
price as defined in the above paragraph pursuant to the
instructions of the Distributor and in accordance with the
terms set forth in the most current prospectus.
(b) The Trust reserves the right to reject.any order
for repurchase through a securities dealer, but the right to
redeem shares, or to receive payment with respect to any
such redemption, upon the presentation of properly submitted
redemption requests in accordance with the procedures set
forth in the most current prospectus of the Trust, may only
be suspended for any period during which trading on the New
York Stock Exchange is restricted as determined by the
Securities and Exchange Commission or such Exchange is closed
(other than customary weekend and holiday closings), for any-
period during which an emergency exists as defined by the
Securities and Exchange Commission as a result of which dis-
posal of portfolio securities or determination of the net
asset value of the Trust is not reasonably practicable, and
for such other periods as the Securities and Exchange Com-
mission may by order permit for the protection of share-
-holders of the Trust.
<PAGE> 8
Section 5. Duties of the Trust.
(a) The Trust shall furnish to the Distributor copies
of.all information, financial statements and other papers
which the Distributor may reasonably request for use in
connection with the distribution of shares of the Trust, and
this shall include one certified copy, upon request by the
Distributor, of all financial statements prepared for the
'Trust by independent public accountants. The Trust shall
make available to the Distributor such number of copies of
its most current prospectus as the Distributor shall reason-
ably request.
(b) The Trustees shall take, from time to time all
necessary action to fix the number of authorized shares and
such steps as may be necessary to register the same under
the Securities Act of 1933, as amended (the "Securities Act")
to the end that there will be available for sale such number
of shares as the Distributor reasonably.may be expected to
sell.
(a) The Trust shall use its best efforts to qualify
and maintain the qualification of an appropriate number of
its shares for sale under the securities laws of such states
as-the Distributor and the Trust may approve. Any such
qualification may be withheld, terminated or withdrawn by
the Trust at any time in its discretion. As provided in
Section 8(c) hereof, the expense of qualification and main-
tenance of qualification shall be borne by the Trust. The
8.
<PAGE> 9
Distributor shall furnish such information and other material
relating to its affairs and activities as may be required
by the Trust in connection with such qualifications.
(d) The Trust will furnish, in reasonable quantities
upon request by %"#he Distributor, copies of. annual and interim
reports of the Trust.
Section 6. Duties of the Distributor.
(a) The Distributor shall devote reasonable time and
effort to effect sales of shares of the Trust but shall not
be obligated to sell any specific number of shares. The
services of the Distributor to the Trust hereunder are not
to be deemed exclusive and nothing herein contained shall
prevent the Distributor from entering into like arrangements
with other investment companies so long as the performance
of its obligations hereunder is not impaired thereby.
(b) In-selling the shares of the Trust, the Distributor
shall use its best efforts in all respects duly to conform
with the requirements of all federal and state laws and regu-
lations and the regulations of the National Association of
Securities Dealers, Inc. (.the "NASD") -elating to the sale
of such securities. Neither the Distributor nor any selected
dealer nor any other person is authorized by the Trust to
give any information or to make any representations, other
than those contained in the registration statement or related
prospectus-and any sales literature specifically approved by
<PAGE> 10
the Trust.
(c) The Distributor shall adopt and follow procedures,
as approved by the officers of the Trust, for the confirma-
tion of sales to investors and selected dealers, the col-
lection of amounts payable by investors and selected dealers
on such sales, and the cancellation of unsettled transactions,
as may be necessary to comply with the requirement of the
'NASD., as such requirements may from time to time exist.
Section 7. Selected Dealers Agreements.
(a) The Distributor shall have the right to enter into
selected dealer agreements wit:oh securities dealers of its
choice ("selected dealers") for the sale of shares and-fix
therein the portion of the purchase fee, if any., which may
be allocated to the selected dealers; provided that the Trust
shall approve the forms of agreements with dealers and the
dealer compensation set forth therein and shall evidence
such approval by filing said forms and amendments thereto as
exhibits to its currently effective registration statement
on Form S-5 filed under the Securities Act. Shares sold to
selected dealers shall be for resale by such dealers only at
the public offering price set forth in the Prospectus.
(b) Within the United States, the Distributor shall
offer and sell shares only to such selected dealers as are
members in good standing of the NASD.
10.
<PAGE> 11
section 8. Payment of Exnenses.
(a) The Trust shall bear all costs and expenses of the
Trust, including fees and disbursements of its counsel and
auditors, in connection with the preparation and filing of
any required registration statements and/or prospectuses
under the Investment Company Act, the Securities Act, and
all amendments and supplements thereto, and preparing and
mailing-annual and interim reports and proxy materials to
shareholders (including but not limited to the expense of
setting in type any such registration statements, prospectuses,
annual or interim reports or proxy materials).
(b) After the prospectuses and annual and interim reports
have been prepared and set in type, the Distributor shall bear
the costs and expenses of printing-and distributing any copies
thereof which are to be used in connection with the offering
of shares to selected dealers or investors. The Distributor
shall bear the costs and expenses of preparing, printing and
distributing any other literature used by the Distributor or
furnished by it for use by selected dealers in connection
with the offering of the shares for sale to the public.
Any expenses of advertising incurred in connection with such
offering will be the obligation of the Investment Adviser.
(c) The Trust shall bear the cost of expenses (other
than auditing expense) of qualification of the shares for
sale, and, if necessary or advisable in connection therewith
of qualifying the Trust as a broker or dealer, in such states
<PAGE> 12
of the United States or other Jurisdictions as shall be
selected by the Trust and the Distributor pursuant to
Section 5(c) hereof and the cost and expenses payable to each
such state for continuing qualification therein until the
Trust decides to discontinue such qualification pursuant to
Section 5(c) hereof.
Section 9. Indemnification.
(a) The Trust shall indemnify and hold harmless the
Distributor and each person, if any, who controls the Dis-
tributor against any loss, liability, claim, damage or
expense (including the reasonable cost of investigating or
defending any alleged-loss, liability, claim, damage or
expense and reasonable counsel- fees incurred in connection
therewith), arising by reason of any person acquiring any
shares, which may be based upon the Securities Act, or on
any other statute or at common law, on the ground that the
registration statement or related prospectus, as from time
to time amended and supplemented, or the annual or interim
,reports to shareholders of the Trust, includes an untrue
statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to
make the statements therein not misleading, unless such
statement or omission was made in reliance upon, and in
conformity with, information furnished to the Trust in
connection therewith by or on behalf of the Distributor;
provided, however, that in no case (i) is the indemnity of
<PAGE> 13
the Trust in favor of the Distributor and any such con-
trolling persons to be deemed to protect such Distributor or
any such controlling persons thereof against any liability
to the Trust or its security holders to which the Distributor
or Any such controlling persons would otherwise be subject
by reason of willful misfeasance,, bad faith or gross negligence
in the performance of their dutied or by reason of the
reckless disregard of their,obligations and duties under
this Agreement, or (II) is the Trust to be liable under its
indemnity agreement contained in this paragraph with respect
to any claim made against the Distributor or any such con-
trolling persons, unless the Distributor or such controlling
persons, as the case may.be, shall have notified the Trust
in writing within a reasonable time after the summons or
other first legal process giving information of the nature
of the claim-shall have been served upon the Distributor or
such controlling persons (or after the Distributor or such
controlling persons shall. have received notice of such
service on any designated agent), but failure to notify the
Trust of any such claim shall not relieve it from any liability
which it may have to the person against whom such action is
brought otherwise than on account of its indemnity agreement
contained in this paragraph. The Trust will be entitled to
participate at Its own expense in the defense, or, if it so
elects, to assume the defense of any suit brought to enforce
any such liability, but If the Trust elects to assume the
<PAGE> 14
defense, such defense shall be conducted by counsel chosen
by it and satisfactory to the Distributor or such controlling
person or persons, defendant or defendants in the suit. In
the event the Trust elects to assume the defense of any such
suit and retain such counsel, the Distributor or such con-
trolling person or persons, defendant or defendants in the
suit, shall bear the fees and expenses of any additional
counsel retained by them, but, in case the Trust does not
elect to assume the defense of-any such suit., it will re-
imburse the Distributor or such controlling person or persons,
defendant or defendants in the suit, for the reasonable fees
and expenses of any counsel retained by them. The Trust
shall promptly notify the Distributor of the commencement of
any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or
sale of any of the shares.
(b) The Distributor shall indemnify and hold harmless
the Trust and each of its directors and officers and each
person, if any, who controls the Trust against any loss,
liability, claim, damage, or expense described in the fore-
going indemnity contained in subsection (a) of this Section,
but only with respect to statements or omissions made in
reliance upon, and in conformity with, information furnished
to the Trust in writing by or on behalf of the Distributor
for use in connection with the registration statement or
related prospectus, as from time to time amended, or the
annual or interim reports to shareholders. In case any
<PAGE> 15
action shall be brought against the Trust or any person so
indemnified, in respect of which indemnity may be sought
against the Distributor, the Distributor shall have the
rights and duties given to the Trust, and the Trust and each
person so indemnified shall have the rights and duties given
to the Distributor by the provisions of subsection (a) of
this Section 9.
Section 10. Term of Agreement. This Agreement shall
commence on the date of its execution. Unless sooner ter-
minated in accordance with the other provisions hereof, this.
Agreement shall continue in effect from year to year here-
after, but only so long as such continuance is specifically
approved at least annually by (i) the vote of a majority of
the Trustees' of the Trust who are not parties to this Agree-
ment or interested persons (Within the meaning of the
Investment Company Act) of the Trust or the Distributor, cast
in person at a meeting called for the purpose of voting on
such approval, and (ii) either the Trustees of the Trust or
a vote of a majority (within the meaning of the Investment
Company Act),of the outstanding voting securities of the
Trust.
Section 11. Termination and Assignment.
(a) This. Agreement may be terminated at any time, without
payment of any penalty, by either party on sixty days written
notice to the other party.
(b) This Agreement shall not be assignable by either
15.
<PAGE> 16
party hereto and in the event of assignment (as defined in
the Investment Company Act) this Agreement shall automatically
terminate forthwith.
Section 12. Notices. Any notice required or permitted
to be given hereunder by either party to the other shall be
deemed sufficiently given if sent by registered mail, postage
prepaid, addressed by the party giving such notice to the
.other party at the last address furnished by such other party
to the party giving notice, and unless and until changed pur-
suant to the foregoing provisions hereof addressed, if to
the Trust at One Liberty Plaza, 165 Broadway, New York, N.Y.
10006 and if to the Distributor at One Liberty Plaza, 165
Broadway, New York, N.Y. 10006.
Section 13. Governing Law.- This Agreement is to the
extent applicable governed and construed in accordance with
the laws of the state of New York.
Section 14. Shareholder Liability. The Declaration of
Trust establishing Merrill Lynch Ready Assets Trust, dated
Mav 14, 1987, a copy of which, together with all amend-
ments thereto (the "Declaration"), is on file in the office
of the Secretary of the Commonwealth of Massachusetts, pro-
vides 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 Trus-
tee, shareholder, officer, employee or agent of Merrill Lynch
16.
<PAGE> 17
Ready Assets 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 or otherwise in
connection with the affairs of said Merrill Lynch Ready
Assets Trust but the Trust Estate only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed this
-Agreement on the day and year first written.
MERRILL LYNCH READY ASSETS TRUST
By /s/Gerald M. Richard
-----------------------------
MERRILL LYNCH FUNDS DISTRIBUTOR,
INC.
By /s/Terry K. Glenn
-----------------------------
17.
<PAGE> 1
6(b)
EXHIBIT A
LIONEL D. EDIE READY ASSETS TRUST
SHARES OF BENEFICIAL INTEREST
SELECTED DEALERS AGREEMENT
Gentlemen:
Edie Fund Sales, Inc. (the "Distributor") has an
agreement with Lionel D. Edie Ready Assets Trust, a
Massachusetts business trust (the "Trust"),, pursuant to
which it acts as the distributor for the sale of Shares
of Beneficial Interest of the Trust, par value $.10 per
share (the "shares"), and as such has the right to
distribute shares of the Trust for resale. The Trust
is a diversified open-end investment company registered
under the Investment Company Act of 1940, as amended,
and its shares being offered to the public are registered
under the Securities Act of 1933, as amended. You have
received a copy of the Distribution Agreement between
ourselves and the Trust and reference is made herein to
certain provisions of such Distribution Agreement. The
term Prospectus as used herein refers to the prospectus
on file with the Securities and Exchange Commission
which is part of the most recent effective registration
statement pursuant to the Securities Act of 1933, as
<PAGE> 2
amended. As principal, we offer to sell to you,as a
member of the Selected Dealers Group,shares of the Trust
upon the following terms and conditions:
1. In all sales of these shares to the public
you shall act as dealer for your own account, and in
no transaction shall you have any authority to act as
agent for the Trust, for us or for any other member of
the Selected Dealers Group.
2. Orders received from you will be accepted
through us only at the public offering price applicable
to each order, as set forth in the current Prospectus
of the Trust. The procedure relating to the handling of
orders shall be subject to Section 5 hereof and instruc-
tions which we or the Trust shall forward from time to
time to you. All orders are subject to acceptance or
rejection by the Distributor or the Trust in the sole
discretion of either. The minimum initial purchase is
$5,000. The minimum subsequent purchase is $1,000 or
more.
3. The purchase fees for sales to the public,
computed as percentages of the net amount invested, are
as follows:
2.
<PAGE> 3
Purchase Fee
as Percentage
of the Net
Amount of Purchase Amount Invested
------------------ ---------------
$5,OOO but less than $10 000 8/10 of 1%
$10,000 but less than $20,000 6/l0 of 1%
$20 000 but less thin $50,000 4/10 of 1%
$50,000 but less than $100,000 2/10 of 1%
$100,000 and over 1/10 of 1%
The term "purchase" refers to an individual purchase
by a single purchaser or to concurrent purchases., which in
the aggregate are at least equal to the prescribed amounts
by a purchaser., the purchasers spouse, and their children
under the age of 21 years, purchasing shares for his or
their own account and to individual purchases by a
trustee or other fiduciary purchasing shares for a single
trust estate or single fiduciary account.
Until April 30, 1975, we shall reallow to you all
purchase fees regarding shares of the Trust sold by you
and thereafter reallow 87.5% of such purchase action
fees to you,
4. You shall not place orders for any of the shares
unless you have already received purchase orders for such
shares at the applicable public offering prices and subject
to the terms hereof and of the Distribution Agreement.
You agree that you will not offer or sell any of the
3.
<PAGE> 4
shares except under! circumstances that will result in
compliance with the applicable Federal and State
securities laws and that in connection with sales
Offers to sell shares you will furnish to each person
to whom any such sale or offer is made a copy of the
Prospectus (as then amended or supplemented) and will
not furnish to any person any information relating to
the shares of the Trust, which is inconsistent in any
respect with the information contained in the Prospectus
(as then amended or supplemented) or cause any
advertisement to be published in any newspaper or posted
in any public place without our consent and the consent
of the Trust.
5. As a! selected dealer, you are hereby authorized
(i) to place orders directly with the Trust for shares
of the Trust to be resold by us to you subject to the
applicable terms and conditions Governing the placement
of orders by us set forth in Section 3 of the Distribution
Agreement and subject to the compensation provisions of
Section 3 hereof and (ii) to tender shares directly to
the Trust or its agent for redemption subject to the
applicable terms and conditions set forth in Section
of the Distribution Agreement and the Prospectus.
<PAGE> 5
6. You shall not withhold placing orders received
from your customers so as to profit yourself as a result
of such withholding: e.g.., by a change in the "net asset
value" from that used in determining the offering price
to your customers.
7. If any shares sold to you under the terms of
this Agreement are repurchased by the Trust or by us
for the account of the Trust or are tendered for redemp-
tion within seven business days after the date of the
confirmation of the original purchase by you, it is
agreed that you shall forfeit your right to, and refund
to us, any reallowance of the purchase fee received
by you on such shares.
8. No person is authorized to make any representations
concerning shares of the issuer except those contained
in the current Prospectus of the Trust and in such Printed
information subsequently issued by us or the Trust as
information supplemental to such Prospectus. In purchasing
shares through us, you shall rely solely on the representa-
tions contained in the Prospectus and supplemental informa-
tion above mentioned. Any printed information which we
furnish you other than the Trust's Prospectus, periodic
reports and proxy solicitation material are our sole
<PAGE> 6
responsibility and not the responsibility of the Trust,
and you agree that the Trust shall have no liability or
responsibility to you in these respects unless 'expressly
assumed in connection therewith.
9. You agree to deliver to each of the purchasers
making purchases from you a copy of the then current
Prospectus at or prior to the time of offering or sale
and you agree thereafter to deliver to any purchasers
whose shares you are holding as record holders copies
of the annual and interim reports and proxy solicitation
materials of the Trust. You further agree to make reason-
able efforts to endeavor to obtain proxies from such
purchasers whose shares you are holding as record holders.
Additional copies of the Prospectus, annual or interim
reports and proxy solicitation materials of the Trust
will be supplied to you in reasonable quantities upon
request.
10. We reserve the right in our discretion, without
notice, to suspend sales or withdraw the offering of
shares entirely. Each party hereto has the right to
cancel this agreement upon notice to the other party.
6
<PAGE> 7
We shall have full authority to take such
action as we may deem advisable in respect of all matters
pertaining to the continuous offering. We shall be under
no liability to you except for lack of good faith and
for obligations expressly assumed by us herein. Nothing
contained in this paragraph is intended to operate as,
and the provisions of this paragraph shall not in any
way whatsoever constitute, a waiver by you of compliance
with any provision of the Securities Act of 1933, as
amended, or of the rules and regulations of the Securities
and Exchange Commission issued thereunder.
12. If a United States dealer, you represent that
you are a member of the National Association of Securities
Dealers, Inc.,and with respect to any sales in the United
States we both hereby agree to abide by the Rules of Fair
Practice of such Association.
13. Upon application to us, we will inform you as
to the States or other jurisdictions in which vie believe
the shares have been qualified for sale-under, or are
exempt from the requirements of, the respective securities
laws of such States, but we assume no responsibility or
obligation as to your right to sell shares in any juris-
diction. We will file with the Department of State in
7.
<PAGE> 8
Notice with respect to the shares, New York a Further State
if necessary.
14. All communications to us should be sent to
the above address. Any notice to you shall be duly
given if mailed or telegraphed to you at the address
specified by you below.
15. Your first order placed pursuant to this
Agreement for the purchase of shares of the Trust will
represent your acceptance of this Agreement.
EDIE FUND SALES, INC.
By
----------------------
(Authorized Signature)
Please return one signed copy of this agreement to:
Edie Fund Sales, Inc.
530 Fifth Avenue
New York, N.Y. 10036
Accepted:
Firm Name:..........................................
By:.................................................
Address:............................................
....................................................
Date:...............................................
8.
<PAGE> 1
8(a)
CUSTODY AGREEMENT
AGREEMENT made this 29th day of April, 1988 between-MERRILL
LYNCH READY ASSETS TRUST, an unincorporated business trust
organized under the laws of the Commonwealth of Massachusetts,
having its principal office and place of business at 165
Broadway# New York, New York 10080 (hereinafter called the
*Trust"), and THE BANK OF NEW YORK, a corporation organized
and existing under the laws of the State of New York, having
its principal office and place of business at 48 wall
Street, New York, New York 10015 (hereinafter called the
'Custodian'),
W I T N E S S E T H
that for and in consideration of the mutual promises herein-
after set forth the Trust and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires,
shall have the following meanings:
1. "Authorized Person* shall be deemed to include
the Treasurer or any other person, whether or not any such
person is an Officer or employee of the Trust, duly authorized
by the Board of Trustees of the Trust to give Oral Instructions
and Written Instructions on behalf of the Trust and listed in the
Certificate annexed hereto as Appendix A or such-other Certificate
as may be received by the Custodian from time to time.
2. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and
federal agency securities, its successor or successors and
its nominee or nominees, provided the Custodian has received
a certified copy of a resolution of the Board of Trustees of
the Trust specifically approving deposits in the Book-Entry
System.
3. "Certificate" shall mean any notice, instructions
or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, which is actually
received by the Custodian and signed on behalf of the Trust by any
two Officers thereof.
4. "Money Market Security" shall be deemed to
include, without limitation, debt obligations issued or
guaranteed as to interest and principal by the Government
<PAGE> 2
of the United States or agencies or instrumentalities thereof,
commercial paper, certificates of deposit and bankers' accep-
tances, repurchase and reverse repurchase agreements with
respect to the same, and bank time deposits, where the purchase
or sale of such securities normally requires settlement in
federal funds on the same day as such purchase or sale.
5. "Officers" shall be deemed to include the
President, any Vice President, the Secretary, the Treasurer
and any other person or persons duly authorized by the Trust
to execute any Certificate, instruction, notice or other
instrument on behalf of the Trust and listed in the Certificate
annexed hereto as Appendix B or such other Certificate as
may be received by the Custodian from time to time,
6. "Oral Instructions' shall mean verbal instructions
actually received by the Custodian from an Authorized Person or
from a person reasonably believed by the Custodian to be an
Authorized Person.
7."Security" shall be deemed to include, without
limitation, Money Market Securities, stocks, shares, bonds,
debentures, non-convertible corporate debt securities, notes,
mortgages or other obligations and any certificates, receipts,
warrants or other instruments representing rights to receive,
purchase, or subscribe for the same, or evidencing or represen-
ting any other rights or interest therein, or in any property
or assets.
8. "Written Instructions" shall mean written com-
munications actually received by the Custodian by telex or any
other such system whereby the receiver of such communications is
able to verify by codes or otherwise with a reasonable degree of
certainty the authenticity of the sender of such communication,
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Trust hereby constitutes and appoints the
Custodian as custodian of all of the Securities and moneys at
any time owned by the Trust during the period of this Agreement.
2. The Custodian hereby accepts appointment as
such custodian and agrees to perform the duties thereof as
hereinafter set forth.
2
<PAGE> 3
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. The Trust will deliver or cause to be delivered
to the Custodian all Securities and all moneys owned by it,
including cash received for the issuance of its shares of
beneficial interest, at any time during the period of this
Agreement. The Custodian will not be responsible for such
Securities and such moneys until actually received by it.
The Custodian will be entitled to reverse any credits made on
the Trust's behalf where such credits have been previously
made and moneys are not finally collected. The Trust shall
instruct the Custodian from time to time in its sole discretion,
by means of a Certificate or, in connection with the purchase or
sale of Money Market Securities, by means of Oral Instructions
or a Certificate, as to the manner in which and in what amounts
such Securities and moneys are to be deposited on behalf of the
Trust in the Book-Entry System; provided, however, that prior
to the deposit of Securities of the Trust in the Book-Entry
System, including a deposit in connection with the settlement
of a purchase or sale, the Custodian shall have received a
certified resolution of the Board of Trustees of the Trust
specifically approving such deposits by the Custodian on
behalf of the Trust in the Book-Entry System. Securities and
moneys of the Trust deposited in the Book-Entry System will be
represented in an account which includes only assets held by
the Custodian for the Trust or any other investment company
advised by Merrill Lynch Asset Management or its subsidiaries.
2. The Custodian shall credit to a separate account
in the name of the Trust all moneys received by it for the
account of the Trust and shall disburse the same only:
(a) In payment for Securities purchased, as
provided in Article IV hereof;
(b) In payment of dividends or distributions
as provided in Article VI hereof;
(c) In payment of original issue or other
taxes, as provided in Article VII hereof;
(d) In payment for shares of beneficial
interest of the Trust redeemed by it, as provided in
Article VII hereof;
(e) Pursuant to Certificates, or with respect
to Money Market Securities, Oral Instructions or Certificates,
setting forth the name and address of the person to whom the
payment is to be made, and the purpose for which payment is
to be made; or,
3
<PAGE> 4
(f) In payment of the fees and in reimbursement
of the expenses and liabilities of the Custodian, as provided
in Article IX hereof.
3. Promptly after the close of business on each day
the Custodian shall furnish the Trust with confirmations and a
summary of all transfers to or from the account of the Trust
during said day and a statement of the moneys held pursuant to
paragraph 2 of Article III of this Agreement. Where Securities
are transferred to the account of the Trust, the Custodian shall
also by book entry or otherwise identify as belonging to the
Trust a quantity of Securities in a fungible bulk of Securities
registered in the name of the Custodian (or its nominee) or
shown on the Custodian's account on the books of the Book-Entry
System. At least monthly and from time to time, the Custodian
shall furnish the Trust with a detailed statement of the
Securities and moneys held for the Trust under this Agreement.
4. All Securities held for the Trust, which are issued
or issuable only in bearer form, except such Securities as are
held in the Book-Entry System, shall be held by the Custodian
in that form; all other Securities held for the Trust may be
registered in the name of the Trust, in the name of any duly
appointed registered nominee of the Custodian as the Custodian
may from time to time determine, or in the name of the Book-Entry
System or its successor or successors, or its nominee or nominees.
The Trust agrees to furnish to the Custodian appropriate instru-
ments to enable the Custodian to hold or deliver in proper form
for transfer, or to register in the name of its registered nominee
or in the name of the Book-Entry System any Securities which it
may hold for the account of the Trust and which may from time to
time be registered in the name of the Trust. The Custodian shall
hold all such Securities which are not held in the Book-Entry
System in a separate account in the name of the Trust physically
segregated at all times from those of any other person or persons.
5. Unless otherwise instructed to the contrary by a
Certificater the Custodian by itself, or through the use of the
Book-Entry System with respect to Securities therein deposited,
shall with respect to all Securities held for the Trust in
accordance with this Agreement:
(a) Collect all income due or payable;
(b) Present for payment and collect the
amount payable upon all Securities which may mature or be
called redeemed, or retired, or otherwise become payable;
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<PAGE> 5
(c) Surrender Securities in temporary form
for definitive Securities;
(d) Execute# as custodian, any necessary
declarations or certificates of ownership under the Federal
Income Tax Laws or the laws or regulations of any other
taxing authority now or hereafter in effect; and
(e) Hold directly, or through the Book-Entry
System with respect to Securities therein deposited, for
the account of the Trust all rights and similar securities
issued with respect to any Securities held by the Custodian
hereunder.
6. Upon receipt of a Certificate and not otherwise,
the Custodian, directly or through the use of the Book-Entry
System, shall:
(a) Execute and deliver to such persons as
may be designated in such Certificate proxies, consents,
authorizations, and any other instruments whereby the
authority of the Trust as owner of any Securities may be
exercised;
(b) Deliver any Securities held for the
Trust in exchange for other Securities or cash issued or
paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of
any corporation, or the exercise of any conversion privilege;
(c) Deliver any Securities held for the
Trust to any protective committee, reorganization committee
or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale
of assets of any corporation, and receive and hold under the
terms of this Agreement such certificates of deposit,
interim receipts or other instruments or documents as may be
issued to it to evidence such delivery; and
(d) Make such transfers or exchanges of the
assets of the Trust and take such other steps as shall be
stated in said order to be for the purpose of effectuating
any duly authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Trust.
7. The Custodian is hereby authorized to endorse
and collect all checks, drafts or other orders for the pay-
ment of money received by the Custodian for the account of
the Trust.
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<PAGE> 6
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE TRUST
1. Promptly after each purchase of Securities by the
Trust, the Trust shall deliver to the Custodian (i) with respect
to each purchase of Securities which are not Money Market
Securities, a Certificate and (ii) with respect to each purchase
of Money Market Securities, a Certificate or Oral Instructions#
specifying with respect to each such purchase: (a) the name of
the issuer and the title of the Securities, (b) the number of
shares or the principal amount purchased and accrued interest,
if any, (c) the date of purchase and settlement, (d) the pur-
chase price per unit, (e) the total amount payable upon such
purchase, (f) the name of the person from whom or the broker
through whom the purchase was made, (g) whether such purchase
is to be settled through the Book-Entry System, and (h) whether
the Securities purchased are to be deposited in the Book-Entry
System. The Custodian shall upon receipt of Securities purchased
by or for the Trust pay out of the moneys held for the account
of the Trust the total amount payable upon such purchase,
provided that the same conforms to the total amount payable
as set forth in such Certificate or such Oral Instructions.
2. Promptly after each sale of Securities by the Trust,
the Trust shall deliver to the Custodian (i) with respect to each
sale of Securities which are not Money Market Securities, a
Certificate and (ii) with respect to each sale of Money Market
Securities, a Certificate or Oral Instructions, specifying with
respect to each such sale: (a) the name of the issuer and the
title of the Security, (b) the number of shares or principal
amount sold, and accrued interest, if any, (c) the date of sale,
(d) the sale price per unit, (e) the total amount payable to the
Trust upon such sale, (f) the name of the broker through whom or
the person to whom the sale was made, and (g) whether such sale
is to be settled through the Book-Entry System.. The Custodian
shall deliver the Securities upon receipt of the total amount
payable to the Trust upon such sale, provided that the same
conforms to the total amount payable as set forth in such
Certificate or such Oral Instructions. Subject to the fore-
going, the Custodian may accept payment in such form as shall
be satisfactory to it, and may deliver Securities and arrange
for payment in accordance with the customs prevailing among
dealers in Securities.
<PAGE> 7
ARTICLE V
LOAN OF PORTFOLIO SECURITIES OF THE TRUST
1. If the Trust is permitted by the terms of its
Declaration of Trust and as disclosed in the most current and
effective prospectus to lend its portfolio Securities,
within 24 hours after each loan of portfolio Securities the
Trust shall deliver to the Custodian a Certificate specifying
with respect to each such loan: (a) the name of the issuer
and the title of the Securities, (b) the number of shares or
the principal amount loaned, (c) the date of loan and delivery,
(d) the total amount to be delivered to the Custodian against
the loan of the Securities including the amount of cash
collateral or cash equivalents in treasury bills, and the
premium, if any, separately identified, (e) the name of the
broker, dealer or financial institution to which the loan was
made and (f) whether the Securities loaned are to be delivered
through the Book-Entry System. The Custodian shall deliver
the Securities thus designated to the broker, dealer or
financial institution to which the loan was made upon receipt
of the total amount designated to be delivered against the
loan of Securities. The Custodian may accept payment in
connection with a delivery otherwise than through the Book-
Entry System only in the form of a certified or bank cashier's
check payable to the order of the Trust or the Custodian
drawn on New York Clearing House funds and may deliver
Securities in accordance with the customs prevailing among
dealers in Securities.
2. Promptly after each termination of a loan of
Securities by the Trust, the Trust shall deliver to the
Custodian a Certificate specifying with respect to each such
loan termination and return of Securities: (a) the name of
the issuer and the title of the Securities to be returned,
(b) the number of shares or the principal amount to be
returned, (c) the date of termination, (d) the total amount
to be delivered by the Custodian (including the. cash collateral
or cash equivalents in treasury bills for such Securities
minus any offsetting credits as described in said Certifi-
cate), (e) the name of the broker, dealer or financial
institution from which the Securities will be returned, and
(f) whether such return is to be effected through the Book-
Entry System. The Custodian shall receive all Securities
returned from the broker, dealer or financial institution to
which such Securities were loaned and upon receipt thereof
shall pay out of the moneys held for the account of the
Trust, the total amount payable upon such return of Securities
as set forth in the Certificate. Securities returned to the
Custodian shall be held as they were prior to such loan.
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<PAGE> 8
ARTICLE VI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. 'The Trust shall furnish to the Custodian a certified
resolution of the Board of Trustees of the Trust authorizing the
declaration of dividends on a daily basis and (i) setting forth
the date of the declaration of such dividend or distribution, the
date of payment thereof, the record date as of which shareholders
entitled to payment shall be determined, the amount payable per
share to the shareholders of record as of that date and the total
amount payable to the Dividend Agent on the payment date, or (ii)
authorizing the Custodian to rely on Oral Instructions or a
Certificate specifying the date of the declaration of such divi-
dend or distribution, the date of payment thereof, the record date
as of which shareholders entitled to payment shall be determined,
the amount payable per share to the shareholders of record as of
that date and the total amount payable to the Dividend Agent of
the Trust on the payment date.
2. Upon the payment date specified in such
resolution, Oral Instructions or Certificate the Custodian
shall pay out of the moneys held for the account of the Trust
the total amount payable to the Dividend Agent of the Trust.
ARTICLE VII
SALE AND REDEMPTION OF SHARES OF
BENEFICIAL INTEREST OF THE TRUST.
1. Whenever the Trust shall sell any shares of
beneficial interest, it shall cause to be delivered to the
Custodian a Certificate duly specifying:
(a) The number of shares sold, trade date,
and price; and
(b) The amount of money to be received by
the Custodian for the sale of such shares.
2. Upon receipt of such money from the Transfer
Agent, the Custodian shall credit such money to the account
of the Trust.
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<PAGE> 9
3. Upon issuance of any shares of beneficial
interest of the Trust in accordance with the foregoing
provisions of this Article# the Custodian shall pay, out of
the money held for the account of the Trust, all original
issue or other taxes required to be paid by the Trust in
connection with such issuance upon the receipt of a Certificate
specifying the amount to be paid.
4. Except as provided hereafter, whenever the
Trust shall hereafter redeem any shares of beneficial
interest, it shall furnish to the Custodian a Certificate,
specifying:
(a) The number of shares of beneficial
interest redeemed: and
(b) The amount to be paid for the shares of
beneficial interest redeemed.
5. Upon receipt from the Transfer Agent of an
advice setting forth the number of shares of beneficial
interest received by the Transfer Agent for redemption and
that such shares are valid and in good form for redemption,
the Custodian shall make payment to the Transfer Agent out
of the moneys held for the account of the Trust of the total
amount specified in the Certificate issued pursuant to the
foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding
the redemption of any shares of beneficial interest of the
Trust, whenever such shares are redeemed pursuant to any
check redemption privilege which may from time to time be
offered by the Trust, the Custodian, unless otherwise
instructed by a Certificate, shall, upon receipt of an advice
from the Trust or its agent setting-forth that the redemption
is in good form for redemption in accordance with the check
redemption procedure, honor the check presented as part of such
check redemption privilege out of the money held in the account
of the Trust for such purposes.
ARTICLE VIII
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion
advance funds on behalf of the Trust which results in an
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<PAGE> 10
overdraft because the moneys held by the Custodian for the
account of the Trust shall be insufficient to pay the total
amount payable upon purchase of Securities as set forth in a
Certificate or oral Instructions issued pursuant to Article
IV or which results in an overdraft for some other reasons
or if the Trust is for any other reason indebted to the
Custodian, such overdraft or indebtedness shall be deemed to
be a loan made by the Custodian to the Trust payable on
demand and shall bear interest from the date incurred at a
rate per annum (based on a 360-day year for the actual
number of days involved) equal to the Custodian's
prime commercial lending rate in effect from time to time,
such rate to be adjusted on the effective date of any change
in such prime commercial lending rate but in no event to be
less the 6% per annum. Any such overdraft or indebtedness
shall be reduced by an amount equal to the total of all
amounts due the Trust which have not been collected-by the
Custodian on behalf of the Trust when due because of the
failure of the Custodian to timely make demand or presentment
for payment. In addition thereto the Trust hereby agrees
that the Custodian shall have a continuing lien and security
interest in and to any property at any time held by it for
the benefit of the Trust or in which the Trust may have an
interest which is then in the Custodian's possession or
control or in possession or control of any third party
acting in the Custodian's behalf. The Trust authorizes the
Custodian, in its sole discretion, at any time to charge any
such overdraft or indebtedness together with interest due
thereon against any balance of account standing to the
Trust's credit on the Custodian's books.
2. The Trust will cause to be delivered to the
Custodian by any bank (excluding the Custodian) from which
it borrows money as a temporary measure for extraordinary or
emergency purposes using Securities as collateral for such
borrowings, a notice or undertaking in the form currently
employed by any such bank setting forth the amount which
such bank will loan to the Trust against delivery of a
stated amount of collateral. The Trust shall promptly
deliver to the Custodian a Certificate specifying with
.respect to each such borrowing: (a) the name of the bank,
(b) the amount and terms of the borrowing which may be set
forth by incorporating by reference an attached promissory
note, duly endorsed by the Trust, or other loan agreement
(c) the time and date, if known, on which the loan is to be
entered into (the "borrowing date)" (d) the date on which
the loan becomes due and payable, (e) the total amount
payable to the Trust on the borrowing date, (f) the market
value of Securities to be delivered as collateral for such
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<PAGE> 11
loan, including the name of the issuer,, the title and the Z...
number of shares or the principal amount of any particular
Securities, (g) whether the Custodian is to deliver such
collateral through the Book-Entry System, and (h) a statement
that such loan for temporary emergency or extraordinary
purposes is in conformance with the Investment Company Act
of 1940 and the Trust's prospectus. The Custodian shall
deliver on the borrowing date such specified collateral and
the executed promissory note, if any, against delivery by
the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable
as set forth in the Certificate. The Custodian may, at the
option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all
rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall
deliver in the manner directed by the Trust from time to
time such Securities as additional collateral as may be
specified in a Certificate to collateralize further any
transaction described in this paragraph. The Trust shall
cause all Securities released from collateral status to be
returned directly to the Custodian, and the Custodian shall
receive from time to time such return of collateral as may
be tendered to it. In the event that the Trust fails to
specify in a Certificate the name of the issuer, the title
and number of shares or the principal amount of any particular
Securities to be delivered as collateral by the Custodian,
the Custodian shall not be under any obligation to deliver
any Securities. Collateral returned to the Custodian shall
be held hereunder as it was prior to being used as collateral.
ARTICLE IX
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the
Custodian nor its nominee shall be liable for any loss or
damage including counsel fees, resulting from its action or
omission to act or otherwise, except for any such loss or
damage arising out of its own negligence or willful misconduct.
The Custodian may, with respect to questions of law, apply
for and obtain the advice and opinion of counsel to the
Trust or of its own counsel, at the expense of the Trust,
and shall be fully protected with respect to anything done
or omitted by it in good faith in conformity with such
<PAGE> 12
advice or opinion. The Custodian shall be liable to the
Trust for any loss or damage resulting from the use of the
Book-Entry System arising by reason of any negligence,
misfeasance or misconduct on the part of the Custodian or
any of its employees or agents.
2. Without limiting the generality of the fore-
going, the Custodian shall be under no duty or obligation to
inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities
purchased by or for the Trust, the legality of the purchase
thereof, or the propriety of the amount paid thereof;
(b) The legality of the sale of any Securities
by or for the Trust, or the propriety of the amount for
which the same are sold;
(c) The legality of the issue or sale of any
shares of beneficial interest, or the sufficiency of the
amount to be received therefor;
(d) The legality of the redemption of any
shares of beneficial interest, or the sufficiency of the
amount to be paid therefor;
(e) The legality of the declaration or
payment of any dividend by the Trust;
(f) The legality of any loan of portfolio
securities pursuant to Article V of this Agreement, nor
shall the Custodian be under any duty or obligation to see
to it that any collateral delivered to it by a broker,
dealer or financial institution or held by it at any time as
a result of such loan of the portfolio Securities of the
Trust is adequate collateral for the Trust against any loss
it might sustain as a result of such loan. The Custodian
specifically, but not by way of limitation, shall not be
under any duty or obligation to periodically check or notify
the Trust that the amount of such cash collateral held by it
for the Trust is sufficient collateral for the Trust, but
such duty or obligation shall be the sole responsibility of
the Trust. In addition the Custodian shall be under no
duty or obligation to see that any broker, dealer or financial
institution to which portfolio Securities of the Trust are
lent pursuant to Article V of this Agreement makes payment
to it of any dividends or interest which are payable to or
for the account of the Trust during the period of such loan
or at the termination of such loan; provided, however, that
the Custodian shall promptly notify the Trust in the event
that such dividends or interest are not paid and received
when due; or
12
<PAGE> 13
(g) The legality of any borrowing as a
temporary measure for extraordinary or emergency purposes."
3. The Custodian shall not be liable for, or con-
sidered to be the Custodian of, any money, whether or not
represented by any check, draft, or other instrument for the
payment of money, received by it on behalf of the Trust until
the Custodian actually receives and collects such money directly
or by the final crediting of the account representing the
Trust's interest in the Book-Entry System.
4. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount
due to the Trust from the Transfer Agent of the Trust nor to
take any action to effect payment or distribution by the
Transfer Agent of the Trust of any amount paid by the Custo-
dian to the Transfer Agent of the Trust in accordance with
this Agreement.
5. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount,
if the Securities upon which such amount is payable are in
default, or if payment is refused after due demand or presenta-
tion, unless and until (i) it shall be directed to take such
action by a Certificate and (ii) it shall be assured to
its satisfaction of reimbursement of its costs and expenses
in connection with any such action.
6. The Custodian may appoint one or more banking
institutions, including but not limited to banking institutions
located in foreign countries, to act as Sub-Custodian or
Sub-Custodians of Securities and moneys at any time owned by
the Trust, upon terms and conditions specified in a Certificate.
7. The Custodian shall not be under any duty or
obligation to ascertain whether any Securities at any time
delivered to or held by it for the account of the Trust are
such as may properly be held by the Trust under the provisions
of the Declaration of Trust which created the Trust.
8. The Custodian shall be entitled to receive and
the Trust agrees to pay to the Custodian, such compensation
as may be agreed upon from time to time between the Custodian
and the Trust. The Custodian may charge such compensation and
any expenses incurred by the Custodian in the performance of
its duties pursuant to such agreement against any money held
by it for the account of the Trust. The Custodian shall also
be entitled to charge against any money held by it for the
account of the Trust the amount of any loss, damage, liability
or expense, including counsel fees, for which it shall be en-
titled to reimbursement under the provisions of this Agreement.
The expenses which the Custodian may charge against this account
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<PAGE> 14
of the Trust include, but are not limited to, the expenses of
Sub-Custodians and foreign branches of the Custodian incurred
in settling transactions 'outside' of New York City -involving
the purchase and sale of Securities of the Trust.
9. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by
the Custodian and reasonably believed by the Custodian to be
genuine and to be signed by two Officers of the Trust. The
Custodian shall be entitled to rely upon any Oral Instructions
actually received by the Custodian pursuant to Articles III, IV
and VI hereof and reasonably believed by the Custodian to be
genuine and to be given by an Authorized Person. The Trust
agrees to forward to the Custodian Written Instructions from an
Authorized Person confirming such Oral Instructions in such
manner so that such Written Instructions are received by the
Custodian, whether by hand delivery, telex or otherwise, by the
close of business of the same day that such Oral Instructions are
given to the Custodian. The Trust agrees that the fact that such
confirming instructions are not received by the Custodian shall
in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the
Trust. The Trust agrees that the Custodian shall incur no
liability to the Trust in acting upon Oral Instructions given to
the Custodian hereunder concerning such transactions provided
such instructions reasonably appear to have been received from a
duly Authorized Person.
10. The books and records of the Custodian shall be
open to inspection and audit at reasonable times by Officers
and auditors employed by the Trust.
11. The Custodian shall provide the Trust with any
report obtained by the Custodian on the system of internal
accounting control of the Book-Entry System and with such
reports on its own systems of internal accounting control as
the Trust may reasonably request from time to time.
12. The Trust agrees to indemnify-the Custodian
against and save the Custodian harmless from all liability,
claims, losses and demands whatsoever, including attorney's
fees, howsoever arising or incurred because of or in connec-
tion with the Custodian's payment or non-payment of checks
pursuant to paragraph 6 of Article VII as part of the check
redemption privilege program of the Trust, except for any
such liability, claim, loss and demand arising out of the
Custodian's own negligence or willful misconduct. The
provisions of this paragraph are not intended to protect the
Custodian for its action or failure to act in any capacity
in connection with the check redemption privilege program
other than for its action or failure to act in its capacity
as Custodian in accordance with the terms of this Agreement.
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<PAGE> 15
In order that the indemnification provision contained in this
paragraph 12 shall apply, upon the assertion of a claim for
which the Trust may be required to indemnify the Custodian,
the Custodian shall promptly notify the Trust of such assertion,
and shall keep the Trust advised with respect to all develop-
ments concerning such claim. The Trust shall have the option
to participate with the Custodian in the defense of such claim.
The Custodian shall in no case confess any claim or make any
compromise in any case in which the Trust may be required to
indemnify the Custodian except with the Trust's prior written
consent.
ARTICLE X
TERMINATION
1. Either of the parties hereto may terminate this
Agreement by giving to the other party a notice in writing
specifying the date of such termination, which shall be not
less than ninety (90) days after the date of giving of such
notice. In the event such notice is given by the Trust, it
shall be accompanied by a certified resolution of the Board of
Trustees of the Trust, electing to terminate this Agreement
and designating a successor custodian or custodians, each of
which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided profits.
In the event such notice is given by the Custodian, the Trust
shall, on or before the termination date, deliver to the Cus-
todian a certified resolution of the Board of Trustees of the
Trust designating a successor custodian or custodians. in
the absence of such designation by the Trust, the Custodian
may designate a successor custodian which shall be a bank
or trust company having not less than $2,000,000 aggregate
capital, surplus, and undivided profits. If the Trust a s
to designate a successor Custodian the Trust shall upon the
date specified in the notice of termination of this Agreement
and upon the delivery by the Custodian of all Securities and
moneys then owned by the Trust be deemed to be its own custodian
and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement.
2. Upon the date set forth in such notice this Agree-
ment shall terminate and the Custodian shall upon receipt of
a notice of acceptance by the successor custodian on that date
deliver directly to the successor custodian all Securities and
moneys then owned by the Trust and held by it as Custodian,
after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled.
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<PAGE> 16
ARTICLE XI
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate
signed by two of the present Officers of the Trust under its
seal# setting forth the names and the signatures of the present
Authorized Persons. The Trust agrees to furnish to the Custodian
a new Certificate in similar form in the event that any such
present Authorized Person ceases to be such an Authorized
Person or in the event that other or additional Authorized
Persons are elected or appointed. Until such new Certificate
shall be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon Oral
Instructions or signatures of the present Authorized.
Persons as set forth in the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate
signed by two of the present Officers of the Trust under its
seal, setting forth the names and the signatures of the present
Officers of the Trust. The Trust agrees to furnish to the
Custodian a new Certificate in similar form in the event any
such present officer ceases to be such an Officer of the Trust,
or in the event that other or additional Officers are elected
or appointed. Until such new Certificate shall be received,
the Custodian shall be fully protected in acting under the
provisions of this Agreement upon the signature of the
Officers as set forth in the last delivered Certificate.
3. Any notice or other instrument in writing, autho-
rized or required by this Agreement to be given to the Custodian
shall be sufficiently given if addressed to the Custodian and
mailed or delivered to it at its offices at 90 Washington
Street, New York, New York 10015, or at such other place as
the Custodian may from time to time designate in writing.
4. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Trust shall be sufficiently given if addressed to the Trust
and mailed or delivered to it at its offices at 165 Broadway,
New York, New York 10080, or at such other place as the
Trust may from time to time designate in writing.
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<PAGE> 17
5. This Agreement may not be amended or modified
in any manner except by a written agreement executed by both
parties with the same formality as this Agreement, and
authorized and approved by a resolution of the Board of
Trustees of the Trust.
6. This Agreement shall extend to and shall be
binding upon the parties hereto# and their respective suc-
cessors and assigns; provided, however# that this Agreement
shall not be assignable by the Trust without the written
consent of the Custodian, or by the Custodian without the
written consent of the Trust authorized or approved by a
resolution of the Board of Trustees of the Trust.
7. This Agreement shall be construed in accordance
with the laws of the State of New York.
8. 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, shareholders 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 otherwise in connection with the affairs
of said Trust but the Trust Estate only shall be liable.
9. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an
original, but such counterparts shall, together, constitute
only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers
thereunder duly authorized and their respective seals to be
hereunto affixed, as of the day and year first above written.
17
<PAGE> 18
MERRILL LYNCH READY ASSETS TRUST
By: /s/John Ng
-----------------------------
Attest:
/s/Mark B. Goldfus
------------------
THE BANK OF NEW YORK
By:
-----------------------------
Attest:
------------------
<PAGE> 19
APPENDIX A
I, President and I,
Secretary of Merrill Lynch Ready Assets Trust, a Massachusetts
business trust (the "Trust"), do hereby certify that:
The following individuals have been duly authorized
by the Board of Trustees of the Trust in conformity with the
Trust's Declaration of Trust to give Oral instructions and
Written Instructions on behalf of the Trust and the signatures
set forth opposite their respective names are their true and
correct signatures:
Name Signature
<PAGE> 20
APPENDIX B
President and I, Secretary of Merrill Lynch Ready Assets
Trust, a Massachusetts business trust (the "Trust"), do hereby
certify that:
The following individuals serve in the following
positions with the Trust. and each individual has been duly
elected or appointed to each such position and qualified therefor
in conformity with the Trust's Declaration of Trust and the
signatures set forth opposite their respective names are their
true and correct signatures:
Name Position Signature
<PAGE> 1
8(b)
AMENDMENT NUMBER I TO CUSTODY AGREEMENT
This Amendment Number I to Custody Agreement made
this 11th day of November 1990 between MERRILL LYNCH
READY ASSETS TRUST incorporated business trust
organized under the laws of the Commonwealth of
Massachusetts and having its principal office and place
of business at 800 Scudders Mill Road, Plainsboro, New
Jersey 08536 (hereinafter called the "Trust") and THE
BANK OF NEW YORK, a New York corporation authorized to
do a banking business having its principal office and
place of business at 48 Wall Street, New York, New York
10015 (hereinafter called the "Custodian")
W I T N E S S E T H:
WHEREAS, the Trust and the Custodian have executed
a Custody Agreement dated the 29th day of April, 1988;
and
WHEREAS, the Trust and the Custodian desire to
make the amendments to the Custody Agreement contained
herein.
NOW, THEREFORE, in consideration of the premises
and of the mutual agreements herein contained, the
Custodian and the Trust do hereby covenant to and agree
as follows:
1) Article I is hereby amended by adding the
following definition after the last definition in such
Article:
119. Depository" shall mean The Depository
Trust Company ("DTC"), a clearing agency
registered with the Securities and Exchange
Commission, its successor or successors and
its nominee or nominees. The term
"Depository" shall further mean and include
any other person authorized to act as a
depository under the Investment Company Act
of 1940, its successor or successors and its
nominee or nominees, specifically identified
in a certified copy of a resolution of the
Trust's Board of Trustees specifically
<PAGE> 2
approving deposits therein by the Custodian."
2) Article III paragraph 1 is hereby amended by
adding the following immediately before the last
sentence of the paragraph:
"Prior to a deposit of Securities in the
Depository, the Trust shall deliver to the
Custodian a certified resolution of the
Board of Trustees of the Trust,
substantially in the form of Exhibit A
hereto, approving, authorizing and
instructing the Custodian on a continuous
and ongoing basis until instructed to the
contrary by a Certificate actually received
by the Custodian to deposit in the
Depository all Securities eligible for
deposit therein, and to utilize the
Depository to the extent possible with
respect to such Securities in connection
with its performance hereunder, including,
without limitation, in connection with
settlements of purchases and sales of
Securities, loans of Securities and
deliveries and returns of securities
collateral. Securities and moneys deposited
in the Depository will be represented in
accounts which include only assets held by
the Custodian for its customers, including
but not limited to, accounts in which the
Custodian acts in a fiduciary or
representative capacity and will be
specifically allocated on the Custodian's
books to the separate account for the
Trust."
3) Article III paragraph 3 is hereby amended by
adding "or the Depository" after the words the Book-
Entry System at the end of the second to last sentence
of such paragraph.
4) Article III paragraph 4 is hereby amended by
replacing the first sentence of such paragraph with the
following:
"All Securities held for the Trust, which
are issued or issuable only in bearer form,
except such Securities as are held in the
Book-Entry System, shall be held by the
- 2 -
<PAGE> 3
Custodian in that form; all other Securities
held for the Trust may be registered in the
name of the Trust, in the name of any duly
appointed registered nominee of the
Custodian as the Custodian may from time to
time determine, or in the name of the Book-
Entry System or the Depository or their
successor or successors, or their nominee or
nominees."
5) Article III paragraph 4 is hereby amended by
adding "or the Depository" after the words the Book-
Entry System in the second and third sentences of such
paragraph.
6) Article III paragraph 5 is hereby amended by
adding "or the Depository" after the words the Book-
Entry System in the first part of the first sentence and
after the words the Book-Entry System in the section
lettered (e) of such paragraph.
7) Article III paragraphs is hereby amended by
adding "or the Depository" after the words the Book-
Entry System in the first part of the first sentence of
such paragraph.
8) Article V paragraph 1 is hereby amended by
adding "or Depository" after the words the Book-Entry
System in the last sentence of such paragraph.
9) Article IX paragraph 1 is hereby amended by
adding "or Depository" after the words the Book-Entry
System in the last sentence of such paragraph.
10) Article IX paragraph 3 is hereby amended by
adding "or the Depository" after the words Book-Entry
System at the end of such paragraph.
11) Article IX paragraph 11 is hereby amended by
adding "or the Depository" after the words the Book-
Entry System in the only sentence in such paragraph.
12) Article XI paragraph 8 is hereby restated in
its entirety as follows:
"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
- 3 -
<PAGE> 4
"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 otherwise in connection
with the affairs of said Trust but the Trust
Estate only shall be liable."
The parties agree that in the case of any conflict
between the terms of this Amendment and the Custody
Agreement, the terms of this Amendment shall prevail.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by their respective
Officers, thereunto duly authorized and their respective
seals to be hereunto affixed, as of the day and year
first above written.
MERRILL LYNCH READY
ASSETS TRUST
By: /s/ John Ng
----------------
[SEAL]
Attest:
/s/ Mark Goldfus
----------------
THE BANK OF NEW YORK
By
----------------
[SEAL]
Attest
----------------
4
<PAGE> 5
EXHIBIT A
CERTIFICATION
The undersigned, Mark B.Goldfus
hereby Quantities that he or she is duly elected and
acting Secretary of MERRILL LYNCH READY ASSETS TRUST,
a Massachusetts business Trust (the "Trust"), and
further certifies that the following resolution was
adopted by the Board of Trustees of the Trust at a
meeting duly held on 1990, at which a
quorum was at all times present and that such resolution
has not been modified or rescinded and is in full force
and effect as of the date hereof.
RESOLVED, that The Bank of New York, as
Custodian pursuant to a Custody Agreement between
The Bank of New York and the Fund dated as of
April 29, 1988, as amended (the "Custody
Agreement") is authorized and instructed on a
continuous and ongoing basis until such time as it
receives a certificate, as defined in the Custody
Agreement, to the contrary to deposit in the
Depository, as defined in the Custody Agreement,
all Securities eligible for deposit therein, and
to utilize the Depository to the extent possible
in connection with its performance thereunder,
including, without limitation, in connection with
settlements of purchases and sales of securities,
loans of securities, and deliveries and returns of
securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand
and the seal of MERRILL LYNCH READY ASSETS TRUST as of
the 15th day of November, 1990.
/s/ Mark B. Goldfus
-------------------
[SEAL]
5
<PAGE> 1
9(a)
TRANSFER AGENCY AGREEMENT
AGREEMENT made this 29th.day of April, 1988 between
MERRILL LYNCH READY ASSETS TRUST, an unincorporated business trust
organized and existing under the laws of the Commonwealth of
Massachusetts, having its principal office and place of business
at Plainsboro# New Jersey (hereinafter referred to as the
'Trust'), and Merrill Lynch Financial Data Services, Inc. a
corporation organized and existing under the laws of the State of
New Jersey, having its principal office and place of business at
Somerset, New Jersey hereinafter referred to as the *Transfer
Agent').
W I T N E S S E T H
that for and in consideration of the mutual promises hereinafter
set forth, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following meanings:
<PAGE> 2
1. "Authorized Officer" shall be deemed to be the
chairman, President, any Vice President, the Secretary, and the
Treasurer of the Trust, or any other person duly authorized by
the Board of Trustees of the Trost to execute any certificate,
instruction, notice or other instrument on behalf of the Trust.
2. "Certificate" shall mean any notice, instruction
or other instrument in writing authorized or required by this
Agreement to be given to the Transfer Agent, which is actually
received by the Transfer Agent and signed on behalf of the
Trust by any two Authorized Officers.
3. "Custodian" shall mean the custodian of all
of the securities and all monies owned by the Trust.
4. "Shares" shall mean all or any part of the
shares of beneficial interest of the Trust which are autho-
rized and issued by the Trust.
5.. "Written Instructions" shall mean written
communications by telex or any other such system whereby
the receiver of such communications is able to verify by
codes or otherwise with a reasonable degree of certainty
the authenticity of the sender of such communication.
2
<PAGE> 3
ARTICLE II
APPOINTMENT OF TRANSFER AGENT
1. The Trust hereby constitutes and appoints the
Transfer Agent as transfer agent for all of the Shares issued
by the Trust during the period of this Agreement as the same
shall from time-to time be constituted.
2. The Transfer Agent hereby accepts appointment
as transfer agent and agrees to perform the duties thereof
as hereinafter set forth.
3. in connection with such appointment the Trust
shall deliver or in the case of item (e), make available upon
request, the following documents to the Transfer Agent:
(a) A certified copy of the Declaration of Trust
or other document evidencing the Trust's form of Organization
(.Such document hereinafter being referred to as the 'Charter')
and all amendments thereto;.
(b) A certified"copy of the he By-Laws of the Trust;
(c) A certified copy of a resolution of the
Board of Tr Os tees of the Trust appointing the Transfer Agent
and appointing an Authorized Officer of the Trust o execute
this Transfer Agency Agreement;
(d) A certificate signed by the Secretary of
the Trust specifying the number of authorized Shares of the
he Trust and the number of such authorized Shares issued and
3
<PAGE> 4
currently outstanding, the names and specimen signatures of
the officers of the Trust and the name and address of the
legal counsel for the Trust;
(e) Copies of the Registration Statements,
as amended to date, filed by the Trust with the Securities
and Exchange Commission under the Securities Act of 1933, as
amended, and the investment Company Act of 1940, as amended,
together with any applications filed in connection therewith;
(f) A certified copy of the order or consent
of each governmental or-regulatory authority, required by law
for the issuance of the Shares of the Trust, and an opinion of
legal counsel for the Trust that the order or consent of no
other governmental or regulatory authority is required;
(g) opinion of counsel for the Trust with
respect to the validity of the authorized and outstanding
Shares of the Trust and the status of such Shares under the
Securities Act of 1933, as amended, and any other applicable
federal or state law or regulation (i.e., if subject to
registration, that they have been registered and that the
4
<PAGE> 5
Registration Statement has become effective or, if exempt,
specific grounds therfor) and
(h) A signature card bearing the signatures
of the Authorized Officers of the Trust who will be the only
persons authorized to Sign Written Instructions and requests.
ARTICLE III
AUTHORIZATION AND ISSUANCE OF SHARES
1. The Trust is authorized to issue an unlimited
number of Shares, and shall deliver to the Transfer Agent the
following documents on or before the effective date of any
decrease in the total number of Shares of the Trust authorized
to be issued:
(a) A certified copy of the amendment to
the Charter giving effect to such decrease;
(b) A certified copy of the 'order or consent
of each governmental or regulatory authority, required by
law for the decrease in the number of Shares
authorized to be issued, and an opinion of counsel for the
Trust that the order or consent chg. no other governmental or
regulatory authority is required; and
<PAGE> 6
(c) An opinion or cousel for the Trust with
respect to the validity of the Shares of the Trust and the Status
of such Shares under the Securities Act of 1933, as amended,
and any other applicable federal or state law or regulation
(i.e., if subject to registration, that they have been
registered and that the Registration Statement has become
effective or, if exempt, the specific grounds therefor.).
as amended, and any other applicable federal or state law
or regulation (i.e., if subject to registration, that they
have been registered and that the Registration Statement has
become effective or, if exempt, the specific grounds therefor).
ARTICLE IV
ISSUE, REDEMPTION, AND TRANSFER OF SHARES
OF BENEFICIAL INTEREST OF THE TRUST
A written order for the purchase of Shares
actually received by the Transfer Agent through the mail
shall be accepted by the Transfer Agent if such order:
(a) Consists of a Share purchase application
designed by the Trust which is completed and signed by the'
purchaser or 'his 'authorized agent, orin the case of an order
for the account of an existing Shareholder, consists of eith-er
the detachable Stub from a Statement of an Account previously
sent to such Shareholde'r pursuant to paragraph 9 of this Article
IV, or a signed writing indicating the name, address, and social
security number of each person in whose name the Shares are to
be registered and the account number: and
6
<PAGE> 7
(b) Is accompanied by a check drawn in U.S. dollars on
a U.S. bank and payable to the order of Merrill Lynch Funds
Distributor, Inc. ("Distributor"), or such other entity as may be
approved. in a Certificate# for an amount which satisfies the
minimum purchase requirements set forth in paragraph 5 of this
Article IV.
2. A bank wire order actually received by the Transfer
Agent for the purchase of full and fractional Shares ("bank wire
purchase order') shall be accepted by the Transfer Agent and the
wired funds delivered to the Custodian if such bank wire purchase
order:
(a) is for an amount which satisfies the minimum
purchase requirements set forth-in paragraph 4 of this Article IV;
(b) Includes the name of the Trust;
(c) Specifies (i) in the case of a bank wire
purchase order for the account of an existing Shareholder the
name of the Shareholder and the Shareholder's account number, or
(ii) in the case of a bank wire purchase order for a person not an
existing Shareholder the name, address, and social security number
of each person in whose name the Shares are to be registered.
3. An order for the purchase of Shares actually
received by the Transfer Agent form the Distributor shall be
accepted by the Transfer Agent if such order:
7
<PAGE> 8
(a) Is for an appropriate amount within the
meaning of paragraph 4 of this Article IV; and
(b) Specifies (i) in 'the case of an order for the
account of an existing Shareholder# such Shareholder's account
numbers or (ii) in the case of an order for a person not an
existing Shareholder, the name, address, and social security
number of each person in whose name the Shares are to be
registered.
4. The Transfer Agent shall not accept any order for
the purchase of Shares unless such order satisfies the following
minimum purchases requirements:
(a) The minimum purchase in the case of an initial
purchase order the the account of a person not a Shareholder it
the time of such order is $5,000.00.
(b) The minimum purchase in the case of a purchase
order for the account of a Shareholder at the time of such order
is $l,000.00.
(c) The minimum purchase of the case of an initial
purchase order which states the such order is for a Keogh,
Pension, Profit-Sharing or Individual Retirement Account is
$250.OO per plan. There shall be no minimum applicable with
respect to subsequent purchase orders in connection with such
plans.
8
<PAGE> 9
(d) The minimum purchase in the case of an inital
purchase order vhich states that such order is for an accout
advised by a bank or an investment advisor registered under
Investment Adviser Act of 1940t including the Investment Adviser
of the Trust, in $300.00.
(e) The minimum purchase in the case of a purchase
order which states that such order is for an existing account
advised by a bank or an investment adviser registered under the
investment Advisers Act of 1940 is $100.00.
(f) There shall be no minimum purchase requirement
with respect to a purchase order for the account of an existing
Shareholder who has been advised by the Trust that the value of
his account is less than Sl,000.00 and that the Shares in his
account may be redeemed unless additional Shares are purchased.
5. The Transfer Agent shall have no duty or obligation
to accept any purchase order not satisfying all the requirements
of any one of the first three paragraphs of this Article IV and
shall be free to reject any such order without the giving of any
notice.
9
<PAGE> 10
6. Upon the Transfer Agent's acceptance of an order
for the purchase of Shares, the Transfer Agent shall furnish
the Custodian with an advice specifying (a) the number of Shares
sold, trade date and price, and (b) the amount Of money to be
received by the Custodian for the sale of such Shares.
7. A purchase order accepted pursuant to this
Article by the Transfer Agent shall become effective on the
day Federal Funds are made available to the Custodian with
respect to such order, provided, however, that in the event
Federal Funds are received with respect to a purchase order
after the close of trading on the New York Stock Exchange,,' Inc.
such order shall become effective on the next business day.
8. The Transfer Agent shall, when so instructed by
a Shareholder on forms prescribed by the Trust and acceptable
to the Transfer Agent draw a reauthorized check of $50 or more on
the Shareholder's regular bank account on the specific date in
each month or quarter, as specified in such form, to be applied
to the purchase of full and fractional Shares to be held in the
Shareholder's account by the Transfer Agent and shall process
such check for collection. The Transfer Agent shall at all times
have the absolute right* without the prior consent Of the Trust,
to amend or cancel this service for any Shareholder, 'and shall 'do
so whenever directed in a writing signed by the Shareholder that
is actually received by the Transfer Agent. The Transfer Agent
shall automatically cancel this service to any Shareholder whenever
any pre-authorized check is returned as being uncollected.
10
<PAGE> 11
9 (a) On the business day next succeeding the day
on which (i) a purchase order becomes effective or (ii) federal
Funds with respect to a pre-authorized check drawn by the
Transfer Agent have been received, the Transfer Agent shall*
unless it would result in an over-issue of Shares as defined
in Section 8-104(2) of the Uniform Commercial Code, issue the
appropriate number of full and fractional Shares based on the
net asset value per Share as next determined after the purchase
order became effective or Federal Funds with respect to the
pre-authorized check were made available to the Custodian, as
the case may be, and hold such Shares in the account for which.
the purchase order was accepted or the pre-authorized check
drawn; provided, however, that the Transfer Agent shall not
be required to 'Issue any Shares after it has' received from an
Authorized Officer of the Trust or from any appropriate Federal
or State authority written notification that the sale of the
Shares has been suspended or discontinued, and the Transfer
Agent shall be entitled to rely upon such written notification-
<PAGE> 12
Promptly after the issuance of such Shares, the transfer Agent
shall send to the Purchaser or his authorized agent at the
address appearing on the books of the Transfer Agent a Statement
of Account indicating that amount of full and fractional Shares
purchased (in the case of fractional Shares, rounded to' three
decimal places), the price per Share, and the balance in the'
account as of the date of such Statement of Account. In no
event shall the Transfer Agent be required to issue any
certificate for any Shares.
(b) Notwithstanding paragraph 14 of this Article
IV, on the last Friday of each month the Transter Agent
shall upon receipt of (i) an advice from an Authorized:Officer
of the Trust specifying the per Share dividend for each day
during,such month and (ii) an advice from the Custodian that
the -aggregate amount of such per Share dividends has been
received by it, unless it would result in an over-issue as
defined in Section 8-104(2) of. the Uniform Commercial Code,,
issue to each Shareholder the appropriate amount of full and
fractional Shares, based on the net asset value per Share
determined as of the close of trading on the New York Stock
Exchange, Inc. on such day. Shares so issued shall be credited
to the account which holds the Shares on which the dividends.
were paid. Notwithstanding the foregoing, the Transfer Agent
1 2 -
<PAGE> 13
shall not be required to issue any Shares after it has received
from an Authorized Officer of the Trust or from any appropriate
Federal or State authority written notifications that the sale of
the Shares has been suspended or discontinued and the Transfer
Age.-it shall be entitled to rely upon such written notification.
10. A written redemption request actually received
by the Transfer Agent for the redemption of Shares shall be
accepted by the Transfer Agent if:
(a) Such redemption request specifies either
(i) the number of full and fractional Shares to be redeemed,
or (ii) the dollar value, based on the net asset value next
determined after the Transfer Agent's acceptance of such
request, of Shares to be redeemed;
(b) Such redemption re-quest is signed by all
of the registered owners of the..Shares; and
(c) Either (i) all the signatures contained
in -.he redemption request are subject to a signature guarantee
of a national bank or other-bank which is a member of the
Federal Reserve System or a firm of any national or regional
stock exchange acceptable to the Transfer Agent and the Trust
given not more than'30 days prior to the Transfer Agent's actual
receipt of the redemption request or(ii) if the redemption
proceeds are in-excess of $1000, the request specifies a
13
<PAGE> 14
domestic bank account# previously designated in a signed writing
with appropriate signature guarantees received from the
Shareholder named in the written requests to which the redemption
proceeds are to be wired.
11. A telephone, telegraph, or telex (or other similar
device) redemption request actually received by the Transfer Agent
shall be accepted by the Transfer Agent if:
(a) Such redemption requests specifies either,(i)
a number of full and fractional Shares having a value equal to or
in excess of $1,000 based on the not asset value next determined
after the Transfer Agent's acceptance of such request# or (ii) a
dollar value of Shares to be redeemed in excess of S1,000 based on
the not asset value next determined after the Transfer Agent's
acceptance of such request, and
(b) Such redemption request specifies the full
name of the Shareholderr the number of the account which the
Shares are held by the Transfer Agent and, in the case of a
telegraph, or telex for other similar device) redemption request,
the name of the Trust; and
(c) The Transfer Agent has previously received a
signed writing from the Shareholder named in the telephone,
telegraph, or telex or other similar device redemption request
with each signature thereon guaranteed by a national bank or
14
<PAGE> 15
other bank which is a member of the Federal Reserve System or a
member firm of any national or regional stock exchange acceptable
to the Transfer Agent and the Trust, electing to utilize such
redemption procedures and designating the domestic bank account
specified in the redemption request.
.12. A redemption request actually received by the
Transfer Agent from Distributor shall be accepted if such request
specifies (a) the number of full and fractional Shares to be
redeemed; and (b) the full name of the Shareholder and the number
of the account in which the Shares are held by-the Transfer Agent.
13. The Transfer Agent shall, when instructed by a
Shareholder on a form prescribed by the Trust and acceptable to
the Transfer Agent, redeem on the 24th day of each calendar month
or calendar quarter, as the case may be, or if such day is not a
business day on the next succeeding day which is a business days a
sufficient number of shares in the Shareholder's account to
generate the amount of redemption proceeds the Shareholder elects
from time to time to receive; provided, however, that a direction
from a Shareholder to redeem Shares shall be acted upon by the
Transfer Agent only if such Shareholder has previously purchased
Shares having a value, based on cost of the public offering price
on the day an which a redemption is to be mader of at least
$5,000, in the case of quarterly redemptions, and at least
$1,000, in the case of monthly redemptions.
15
<PAGE> 16
Such redemptions Shall be made at the met asset value per
Share applicable to such last Friday of such month
or quarter, as the case may-be.
14. -The Transfer Agent shall, when instructed by
Shareholder on a form prescribed by the Trust and acceptable
to the Transfer Agent, redeem on the last Friday of each calendar
month the number of Shares purchased.for such Shareholder
by the reinvestment of dividends and distributions paid during
such month, provided, however, that the Transfer Agent shall not
act upon any such direction received from a Shareholder who has
directed the Transfer Agent to act pursuant to paragraph 13 of
this Article IV unless such direction has previously been
withdrawn. Redemptions pursuant to this paragraph shall be at
the net asset value per Share, including accrued dividends,
determined as of the close of the trading on the New York
Stock Exchange, Inc. on the last Friday of such month.
15. A. redemption request actually received by the
Transfer Agent to redeem Shares held in the account of a Share-
holder for at least 60 days and pay the proceeds of such redemp-
tion to the Transfer Agent for any of the investment companies
in -the most recent and currently effective prospectus for the
Trust shall be accepted by the Transfer Agent if such request:
<PAGE> 17
(a) Specifies the Shareholder account number
from which the Shares are to be redeemed;
(b) Specifies either (i) a number of full and
fractional Shares to be redeemed or (ii) a dollar value, based
an the net asset value next determined after the Transfer
Agent's acceptance of such request, of Shares to be redeemed;
(c) Specifies the name of the above investment
company to whose Transfer Agent the proceeds of redemption
are to be sent; and
(d) Consists of either (i) a writing signed
by each registered owner of the Shares to be redeemed with
each signatures guaranteed by a national bank or a member
firm of any regional stock exchange acceptable to the Transfer
Agent and the Trust or (ii) a wire received from Distributor.
16. The Transfer Agent shall accept a Certificate
directing the redemption of Shares (Oa redemption direction"),
provided such Certificate:
(a) Specifies the number of the account in
which is held the Shares to be redeemed;
(b) Specifies either (i) the number of full
and fractional Shares to be redeemed or (ii)-directs that
all the Shares in such account are to be redeemed; and
17
<PAGE> 18
(c) States that such redemption either (i) is
necessary in order for the Trust not to be deemed a personal
holding company within the meaning of the Internal Revenue Code of
1954, as amended, or (ii) is a proper exercise of the Trust's
right to redeem Shares in an account when the value of the Shares
in such account is below a minimum amount established by the Trust
and has remained below such amount after appropriate notice was
given to the owner of such account by the Trust.
17. The Transfer Agent shall accept checks drawn on the
Trust's account ('redemption checks') and affect a redemption of
full and fractional Shares having a value equal to the amount of
such check provided:
(a) Such check contains the Shareholder account
number the signer(s) of such check;
(b) Such check is signed by each registered owner
of Shares in such account;
(c) Each drawer has previously elected in writing
to use the check redemption privilege and has supplied the
Transfer Agent with a signature card and any other documents
required by the Transfer Agent;
(d) Acceptance of such check would not conflict
with the rules, regulations and procedures of the account of the
Trust.
<PAGE> 19
(e) Such Check is for an &Mount Of at least
$500.00; and
(f) The Shares in the account have.& value
based on the net asset value next determined after presentment
of such check at least equal to the amount of such check.
18. A redemption request, a redemption direction,
and a redemption check accepted prior to the close of trading
on the New York Stock Exchange, Inc. shall become effective on
the day of acceptance. A redemption pursuant to paragraph 13
of this Article IV shall become effective on the 24th day of
the calendar month, or if such day is not a business day on the
next succeeding day which is a business day, and a redemption
pursuant to paragraph 14 of this Article IV shall become effective
on the last Friday of the calendar month, calendar year or so
calendar quarter, as the case may be, and a redemption request,
a redemption direction, and a redemption check accepted after the
close of trading on the New York Stock Exchange, Inc. shall-
become effective on the next succeeding business day. All
redemptions of Shares shall be at the net asset value, including
accrued dividends, next determined after the redemption, redemption
request, redemption direction, or redemption check became effective.
19. The Transfer Agent shall have no duty or obligation
to accept any redemption requests redemption check, redemption
direction or to effect any redemption except as hereinbefore
provided.
19
<PAGE> 20
20. Upon the effectiveness of a redemption request,
redemption check, redemption direction or redemption pursuant
to paragraphs 10, 11, 12, 13, 14, 15, 16 or 17 of this Article,
the Transfer Agent shall deliver to the Custodian an advice
setting forth the number of Shares redeemed and the amount
to be paid for such Shares, and stating that such Shares are
valid and in good form for redemption. After the-Transfer
Agent has received moneys paid to it by the Custodian for the
redemption of Shares the Transfer Agent shall (i) in the case of a
check redemption, deposit such moneys in the account of the Trust
on which the redemption check was drawn; (ii) in the case of a
redemption that specifies a previously designated domestic bank
account, wire Federal Funds to such account on the business day
next succeeding *.,he business day on which the redemption request
became effective, (iii) in the case of a redemption request from
the Distributor, make payment to the Distributor on the business
day next succeeding the business day on which the redemption
request became effective: (iv) in the case of an exchange
privilege described in paragraph 15 of this Article pay the
proceeds of such redemption to the designated transfer agent for
such investment company on the business day next succeeding the
business day on which such-redemption became effective: and (v) in
all other cases mail the redemption proceeds in the form of a
check, payable to the order of the registered owner(s) of the
20
<PAGE> 21
Shares, to the address as it appears on the books of the Transfer
Agent on the business day next succeeding the business day on
which the redemption request or redemption direction became
effective, provided however, that in the event Shares being
redeemed were purchased within 30 calendar days of the date of the
effectiveness -of the redemption request,t redemption check or
redemption direction, the Transfer Agent may delay acting in
accordance with 'this paragraph until the second succeeding
business day after the redemption request# redemption check# or
redemption direction became effective.
21. All Shares redeemed pursuant to this Article shall
be canceled by the Transfer Agent.
22. The Transfer Agent shall effect a transfer of
Shares by the registered owner(s) thereof upon the Transfer
Agent's receipt of a letter of instructions signed by the
registered owner(s), with all signatures guaranteed by a national
bank or other bank which is a member of the Federal Reserve System
or by a member firm of any national or regional stock exchange,
acceptable to the Transfer Agent and the Trust dated not more than
30 days prior to the date of receipt by the Transfer Agent, which
specifies the name, address and social security number of the
transferee.
21
<PAGE> 22
23. Notwithstanding any provision contained in this
Agreement to the contrary, the Transfer Agent may require as a
condition when he transfers redemption of any Shares or such
documents as the Transfer Agent may deem necessary to evidence the
authority of the person requesting the transfer or redemption and
the payment of any taxes. In the case of small *states, where no
administration is contemplated, the Transfer Agent may, when
furnished with an appropriate surety bond, without further approval-
of the Trust, transfer or redeem Shares registered in the name of
the deceased when the current market value of the Shares being
registered does not exceed S2,000.00. The Transfer Agent may, in
effecting transfers or redemptions, rely upon the Uniform Act for
the Simplication of Fiduciary Securities Transfers or the Uniform
Commercial Code, as the same may be amended from time to time,
which in the opinion- of legal counsel for the Trust or the Trans-
fez Asent's own legal counsel protect the Transfer Agent in not
recurring certain documents in connection with the transfer or
redemption of Shares, and the Trust shall indemnify the Transfer
Agent for any act done or omitted in reliance upon such laws or
opinions of counsel.
24. The Transfer Agent shall when so directed
in a Certificate, suspend the right of redemption or postpone
the date of payment of the proceeds of redemption for more
than.7 calendar days following the day on which tender for
22
<PAGE> 23
redemption is made (1) for any period during which the New
York Stock Exchange, Inc. is closed other than on customary
weekend and holiday closings; (2) for any period during which,
as determined by the Securities and Exchange Commission by
rule, regulation or orders, (i) trading on the New York
Stock Exchange, Inc. is suspended or (ii) an emergency exists
as a result of which disposal by the Trust of its portfolio
securities is not reasonably practicable or it is not reasonably
practicable to determine the value of the Trust's net assets; or
(3) for such other periods as the Securities and Exchange
Commission may by order permit.
25. Prior to the close of business on each business
day the Trust shall deliver or cause to be delivered to the
Transfer Agent an advice setting forth the net asset value
of the Shares of the Trust, and the Transfer Agent shall be
entitled to rely upon such advice and shall not be responsible
for the accuracy of the same.
26. Not later than the last day of the firs: week
of each calendar month the Transfer Agent shall mail to each
Shareholder or his authorized agent, at the address appearing
on the books of the Transfer Agent, a Monthly Activity Statement
indicating each purchase and redemption by or for the account of
such Shareholder for the prior calendar month, specifying the
date, amount of full and fractional Shares purchased or redeemed,
23
<PAGE> 24
as the case may be, the price at which the same were purchased
or redeemed, the balance in the Shareholder's account after giving
effect to-each purchase or redemption, and the closing balance in
Such account as Of the Friday of the calendar month.
27. After the close of business an each business day
the Transfer Agent shall adjust the number of Shares outstanding
as of the close of business on such day by adding to the number of
Shares outstanding at the start of such day (i) the number of
Shares for which purchase orders were accepted on such day., (ii)
the number of Shares for the pre-authorized checks were drawn by
the Transfer Agent on such day, and (iii) the number of Shares
purchased by the reinvestment of dividends or distributions on
such day, and subtract therefrom (a) the number of Shares for
which a redemption request was accepted on such day, (b) the
number of Shares for which a redemption direction was accepted on
such day, (c) the number of Shares for which 3 redemotion check
was received on such day, and (d) thenumber of Shares redeemed
pursuant to paragraphs 13 or 14 of this Article on such day. 0n
the next business day the Transfer Agent shall send to the Trust
an advice setting forth the number of Shares outstanding as of
the close of business on the preceding business day.
24
<PAGE> 25
28. The Transfer Agent shall orally advise any.
telephone caller, without regard to-the identity of the caller, of
the number' of full and fractional Shares owned by any registered
owner at the time of receipt of such telephone call if# but only
if# the telephone called specifies either:
I. (a) The name(s) of the registered owner(s);
(b) The address of the registered owner(s)
appearing on the books of the Transfer
Agent;
(c) The registered owner's(s') account number;
and
(d) The social security number of the registered
owner(s);
or
11. (a) The Financial Consultant -number appearing-on
the books of the Transfer Agents; and
(b) The account number of the registered owner.
25
<PAGE> 26
ARTICLE V
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
I. The Trust shall furnish to the Transfer Agent a
certified resolution of the Board of Trustees of the Trust
authorizing the declaration of dividends or distributions on a
daily basis and authorizing the Transfer Agent to rely on a
Certificate specifying the date of the declaration of such
dividend or distribution, the date of payment thereof,-the
record date as of which Shareholders entitled to payment
shall be determined, the amount payable per Share to the
Shareholders of record as of that date.
2. Upon the payment date specified in such resolu-
tion, or Certificate the Transfer Agent shall accrue for each
Share issued and outstanding at the opening of business on such
payment date the total amount payable as a dividend or distri-
bution with respect to such Shares. On the last Friday of
each month the Trransfer Agent shall act in accordance with the
provisions of Article IV.
26
<PAGE> 27
3 The Transfer Agent- shall in no way be responsible
for the determination of the rate of dividend or distributions due
to the Shareholders.
4. It is understood that the Transfer Agent shall
file such appropriate information returns concerning the payment
of dividends and capital gain distributions with the proper
Federal, State and local authorities as may be required by law
to be filed by the Trust, but shall in no way be responsible for
the collection or withholding of taxes due on such dividends or
distributions due to Shareholders unless required of it by
applicable law.
ARTICLE VI
CONCERNING THE TRUSR
1. The-Trust stall promptly deliver to the Transfer
Agent written notice of any change in the officers authorized to
sign written Instructions or requests, together 'with a specimen
signature of each new Authorized Officer.
2. At any time the Transfer Agent-may apply to an
Authorized Officer of the Trust for written Instructions, and may
consult counsel for the Trust or its own counsel, with respect to
any matter arising in connection with the appointment, and shall
not be liable for any action taken or omitted by it in good
faith in accordance with such Written instructions or such
opinion of counsel.
27
<PAGE> 28
3. The copy of the Charter of the Trust and copies
of all amendments thereto shall be certified by the Secretary
of State (or other appropriate official) of the state of organ-
ization, and if such Charter and/or amendments are required by
law also to be filed with a county or other officer or official
body, a certificate of such filing shall be filed with a
certified copy submitted to the Transfer Agent. A copy of the
order or consent of each governmental or regulatory authority
required by law as a prerequisite to the issuance of Shares of
the Trust shall be certified by the Secretary or other proper
officer of such governmental or regulatory authority.; The copy
of the By-Laws and copies of all amendments thereto, and copies
of resolutions of the Board of Trustees of the Trust, shall be
certified by the Secretary of the Trust under the corporate
seal.
4. The Trust or its authorized agent shall be respon-
sible or the valuation of its Shares with respect to all purchase
and redemption orders.
ARTICLE VII
CONCERNING THE TRANSFER AGENT
I. The Transfer Agent shall not be liable and shall be
fully protected in acting upon any paper, document, or telephone
28
<PAGE> 29
instruction believed by it to be genuine and to have been signed
or made by the proper person or persons and shall-not be held to
have any notice of any change of authority of any person until
receipt of written notice thereof from the Trust or such person.
2. The Transfer Agent shall keep such records in the
form and manner as it may deem advisable but not inconsistent with
the rules and regulations of appropriate government authorities.
The Transfer Agent may deliver to the Trust from time to time at
its discretion for safekeeping or disposition by the Trust in
accordance with law, such records, papers or documents, including
checks drawn on the Trust's account and signed by Shareholders,
accumulated in the execution of its duties as such Transfer Agents
as the Transfer Agent may deem expedients and the Trust assume all
responsibility for any failure thereafter to produce any record,
paper or document so returned, if and when required. The records
maintained by the Transfer Agent' pursuant this Paragraph,
including the records described in Schedule A annexed hereto and
made a part hereof, which have not been previously delivered to
the Trust pursuant to the foregoing provisions of this paragraph,
shall be considered to be the property of the Trust and such
records shall be delivered to the Trust on the date of termination
of this Agreement, as specified in Article IX of this Agreement*
in the form and manner kept by the Transfer Agent on such date of
termination.
29 -
<PAGE> 30
3. The Transfer Agent may, in connection with its
appointment, employ agents or attorneys in fact, and shall not
be liable-for any loss arising out of or in connection with its
actions under this appointment so long as it acts in good faith
and is not negligent or guilty of any willful misconduct. The
Trust shall indemnify and exonerate, save and hold harmless the
Transfer Agent from and against any and all claims (whether with
or without basis in fact or law), demands, expenses and liabili-
ties of any and every nature which the Transfer Agent may sus-.
tain or incur or which may be asserted against the Transfer
Agent by any person by reason of or as a result of any action
taken or omitted to be taken by the Transfer Agent in good faith
and without negligence in reliance upon any (i) written, telephone
purchase order, redemption request or instruction received by the
Transfer Agent pursuant to this Agreement, (ii) instrument or
order believed by it to be genuine and to be signed, countersigned
or executed by any duly authorized person or persons, (iii)
Certificate or oral or Written Instruction of an Authorized
Officer of the Trust or (iv) opinion of legal counsel for the
Trust or the Transfer Agent. The Trust shall indemnify and
exonerate, save and hold the Transfer Agent harmless from and
against any and all claims (whether with or without basis in
fact or law), demands, expenses and liabilities of any and every
.nature which the Transfer Agent may sustain or incur or which
30
<PAGE> 31
may be asserted against the Transfer Agent by any person by reason
of or as a result of any action taken or omitted to be taken by
the Transfer Agent in connection with its appointment in reliance
upon any law, act, regulation or interpretation of the same by an
appropriate governmental agency even though the same may
thereafter have been altered, changed, amended or repealed. In
order that the indemnification provision contained in this
paragraph 3 shall apply,, upon the assertion of a claim for which
the Trust may be required to indemnify the Transfer Agent, the
Transfer Agent shall promptly notify the trust of such assertion
,and shall keep the Trust advised with respect to all developments
concerning.such claim. The Trust . shall have the option to
participate with the Transfer Agent in the defense of such claim..
The Transfer Agent shall in no case confess any claim of make any
compromise in any case in which the Trust may be required to
indemnify the Transfer Agent except with the Trust's prior written
consent.
4. Specifically, but not by way of limitations the
Trust shall indemnify and exonerate save and bold the Transfer
Agent harmless from and against any and all claims (whether with
or without basis in fact or law) demands, expenses and
liabilities of any and every nature which the Transfer Agent may
sustain by any person in connection with the Transfer Agent's
capacity and authorization to issue shares of the Trust and the
form and amount of authorized Shares of the Fund.
31
<PAGE> 32
S. The Transfer Agent will Supply Shareholder 1ists
to the Trust from time to time upon receiving a request therefor
from an Authorized Officer of the Trust.
6. In case of any requests or demands for the in-'
spection of the Shareholder records of the Trust, the Transfer
Agent will endeavor to notify the Trust and to secure instructions
from an Authorized Officer of the Trust as to such inspection.
The Transfer Agent reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its
counsel that it may be held liable for the failure to exhibit the
Shareholder records to such person.
7. At the request of an Authorized Officer of the
Trust, the Transfer Agent will address and mail such appropriate
notices to Shareholders as the Trust may direct.
S. The Transfer Agent shall not be responsible for
the valuation of the Shares of the Trust with respect to purchase
and redemption orders, and shall be furnished such valuations by
the Trust or its agent.
9. The Transfer Agent shall not be responsible for
the payment of any original issue or other taxes required to be
paid by the Trust in connection with the issuance or transfer of
any Shares.
10. Notwithstanding any of the foregoing provisions of
'this Agreement, the Transfer Agent shall be under no duty or
obligation to inquire into, and shall not be liable for:
32
<PAGE> 33
(a) The legality of the issue or sale of any
Shares of 'the Trust, or the sufficiency of the amount to be
received therefor;
(b) The legality of the redemption of any Shares
of the Trustr or the propriety of the amount to be paid therefor;
(c) The legality of the declaration of any
dividend by the Trust, or the legality of the issue of any Shares
of the Trust,, in payment of any stock dividend; or
(d) The legality of any recapitalization or
readjustment of the Shares of the Trust.
11. The Transfer Agent shall be entitled to receive and
the Trust hereby agrees to pay to the Transfer Agent its out-of-
pocket expenses and such compensation as may be agreed from time
to time by the Transfer Agent and the Trust.
12. The Transfer Agent hereby agrees to hire, purchase,
develop and maintain such dedicated personnel, facilities#
equipment, software, resources and capabilities as may be
reasonably determined by the Fund to be necessary for the
satisfactory performance of the duties and responsibilities of the
Transfer Agent under the Agreement.
ARTICLE X
TERMINATION
1. Either of the parties hereto may terminate this
Agreement by giving to the other party a notice in writing
specifying the date of such termination which shall be not less
than 90 days after the date of receipt of such notice. in the
event such notice is given by the Trust, it shall be
33
<PAGE> 34
accompanied by a copy of a resolution of the Board of Trustees
of the Trust, certified by the Secretary or any Assistant
Secretary electing to terminate this Agreement and designating
a successor transfer agent or transfer agents. In the event
such notice is given by the Transfer Agent, the Trust shall,
on-or before the termination date, deliver to the Transfer
Agent a copy of a resolution of its Board of Directors certi-
fied by the Secretary or any Assistant Secretary designating a
successor transfer agent or transfer agents. In the absence of
such designation by the Trust., the Transfer Agent may designate
a successor transfer agent. If the Trust fails to designate a
successor transfer agent and if the Transfer Agent is unable
to -find a successor transfer agent, the Trust shall upon the date
specified-in the notice of termination of this Agreement be
deemed to be its own transfer agent and the Transfer Agent shall
thereby be relieved of all duties and responsibilities pursuant
to this Agreement.
ARTICLE XI
MISCELLANEOUS
1. Any notice or other instrument in writing, au-
thorized or required by this Agreement to be given to the Trust
34
<PAGE> 35
shall be sufficiently given if addressed to the Trust and mailed
or delivered to it as its primary office in Plainsboro, New Jersey
or at such -other place as the Trust may from time to time
designate in writing.
2. Any notices or other instrument in writing,
authorized or required by this Agreement to be given to the
Transfer Agent shall be sufficiently given if addressed to the
Transfer Agent and mailed or delivered to it at its primary office
in Somerset, Now Jersey or at such other place as the Transfer
Agent may from time to time designate in writing.
3. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties with
the formality of this Agreement.
4. This Agreement shall extend to and shall be binding
upon the parties hereto, and their respective successors and
assigns; provided however, that this Agreement shall not be
assignable by the Trust without the written consent of the
Transfer Agent.
5. This Agreement shall be construed in accordance with
the laws of the State of New York.
35
<PAGE> 36
6. 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 otherwise in connection with the affairs
of said Trust by the Trust Estate only shall'- be liable.
7. This Agreement may be executed in any number of
counterparts each of which shall be deemed to he an original;
but such counterparts shall, together, Constitute only one
instrument.
36
<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized and their respective seals to be hereunto affixed,
as of the day and year first above written.
MERRILL LYNCH READY ASSETS TRUST
By /s/ John Ng
----------------------------
ATTEST:
/s/ Mark B. Goldfus
-------------------
MERRILL LYNCH FINANCIAL DATA
SERVICES, INC.
By /s/
----------------------------
ATTEST:
/s/
-------------------
37
<PAGE> 38
Schedule A
The Transfer Agent will establish, maintain and provide to the
Trust the following:
A. Daily Journal of Subscription Receipts, Availability and
Funds Transfers to Custody.
B. Daily Journal of Redemption Payment Demand.
C. Daily Sales and Transaction Journals containing the day's
detail of all transactions.
D. Daily Closed Account Journal.
E. Daily Dividend Proof (Daily a Monthly).
F. Daily Redemption Blotter.
G. Daily Shakes Proof (Daily & Monthly).
H. Daily Master'Control Proof.
I. Daily Prospectus mailing Report.
J. Daily Blue Sky Report (frequency as agreed upon).
K. Daily Quality Control Reports.
L. Large Item Report.
M. Weekly Status Report.
N. Research and Correspondence Status Report.
0. Monthly Sales by State and Dividends Reinvested.
P. Monthly Shareholders Master File List.
Q. Monthly Record of Out-of-Pocket Cost Incurred.
<PAGE> 1
9(b)
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION made this
day of , 1988 by and between MERRILL LYNCH READY ASSETS
TRUST, a Massachusetts business trust (the "Trust"), MERRILL LYNCH
NEW ASSETS TRUST, a Massachusetts business trust (the "New
Trust"), and MERRILL LYNCH NEW CORPORATION, INC., a Massachusetts
corporation ("New Corp.").
SECTION 1. Plan of Reorganization and Liquidation.
(a) The Trust shall assign, sell, convey, transfer and
deliver to the New Trust at the closing provided for in Section 2
hereof (hereinafter called the "Closing") all of its then existing
assets of every kind and nature. In consideration therefor, the
New Trust shall at the Closing (i) assume all of the Trust's
obligations and liabilities then existing, whether absolute,
accrued, contingent or otherwise, and (ii) deliver to the Trust a
number of full and fractional shares of beneficial interest of the
New Trust, par value $.10 per share (the "New Trust Shares"),
equal to the number of full and fractional shares of the Trust
then outstanding.
(b) The Trust shall assign, sell, convey, transfer and
deliver to New Corp. at the Closing one New Trust Share. In
consideration therefor, New Corp. shall deliver to the Trust one
share of its common stock, par value $.10 per share, representing
all of the issued and outstanding common stock of New Corp.
(c) Upon consummation of the transactions described in
paragraphs (a) and (b) of this Section 1, the Trust will be merged
into New Corp. and New Corp. will simultaneously distribute in
complete liquidation to Trust shareholders of record as of the
closing Date, as defined in Section 2 hereof, the New Trust Shares
received by the Trust. Such distribution shall be accomplished by
the establishment of an open account on the share records of the
New Trust in the name of each shareholder of the Trust
representing a number of New Trust Shares equal to the number of
shares of the Trust owned of record by the shareholder at the
Closing Date. No certificates representing New Trust Shares will
be issued.
(d) As promptly as practicable after the completion of the
actions set forth in paragraph (c) of this Section 1, New Corp.
shall be dissolved pursuant to the provisions of the Massachusetts
Business Corporation Law and its legal existence terminated.
<PAGE> 2
SECTION 2. Closing and Closing Date. The Closing shall
occur at P.M. on , 1987 or at such later time and
date as the parties may mutually agree (the "Closing Date").
SECTION 3. Conditions Precedent. The obligations of the
Trust, New Trust and New Corp. to effect the transactions
contemplated hereunder shall be subject to the satisfaction of
each of the following conditions:
(a) All filings shall have been made with, and all authority
and orders shall have been received from, the Securities and
Exchange Commission (the "SEC") and state securities commissions
as may be necessary in the opinion of Brown & Wood, counsel to the
Trust, to permit the parties to carry out the transactions
contemplated by this Agreement.
(b) Each party shall have received an opinion of Brown &
Wood to the effect that for Federal income tax purposes: (i) no
gain or loss will be recognized by the Trust upon the transfer of
its assets and liabilities to the New Trust; (ii) the tax basis of
the assets of the Trust in the hands of the New Trust will be the
same as the tax basis of such assets in the hands of the Trust
immediately prior to the transfer, (iii) the holding period of the
assets of the Trust transferred to the New Trust will include the
period during which such assets were held by the Trust; (iv) no
gain or loss will be recognized by the New Trust upon the receipt
of the assets of the Trust in exchange for shares of the New Trust
and the assumption by the New Trust of the liabilities and
obligations of the Trust; (v) no gain or loss will be recognized
by the Trust in the exchange of one New Trust Share for one New
Corp. share; (vi) no gain or loss will be recognized by New Corp.
in the exchange of one New Corp. share for one New Trust Share;
(vii) no gain or loss will be recognized by shareholders of the
Trust upon the receipt of New Trust Shares in the liquidating
distribution; (viii) the basis of the New Trust Shares received by
Trust shareholders will be the same as the basis of the shares of
the Trust; and (ix) the holding period of New Trust Shares
received by the shareholders of the Trust will include the holding
period of the shares of the Trust, provided that the shares of the
Trust were held as capital assets; and as to such other matters as
it may reasonably request.
(c) The Trust shall have received an opinion of Gaston &
Snow, Massachusetts counsel to the Trust, that upon the receipt of
the favorable vote of the holders of a majority of the outstanding
shares of beneficial interest of the Trust, this Agreement will
have been validly approved and adopted and no further action by
the Trustees or shareholders of the Trust will be necessary to
carry out the transactions contemplated by this Agreement.
2.
<PAGE> 3
(d) This Agreement and the reorganization contemplated
hereby shall have been adopted and approved by the affirmative
vote of the holders of at least a majority of the outstanding
shares of beneficial interest, par value $.10 per share, of the
Trust entitled to vote thereon.
(e) The Trustees of the Trust shall be elected as Trustees
of the New Trust by the shareholders of the Kew Trust (it being
understood that the Trust as sole shareholder of the New Trust
prior to the consummation of the reorganization hereby agrees and
is authorized to vote for such election).
(f) The New Trust shall have entered into a Management
Agreement with Merrill Lynch Asset Management, Inc., a
Distribution Agreement with Merrill Lynch Funds Distributor, Inc.,,
a Shareholder Servicing Plan and Agreement with Merrill Lynch,
Pierce, Fenner & Smith Incorporated, a Custody Agreement with The
Bank of New York and a Transfer Agency Shareholder Servicing
Agency and Proxy Agency Agreement with Merrill Lynch Financial
Date Service, Inc., such contracts to be in each case
substantially identical in form and substance to those respective
contracts in effect at the Closing Date between the Trust and said
other parties, and such contracts shall have been approved by the
Trustees of the New Trust as defined in the Investment Company Act
of 1940 and by the shareholders of the Kew Trust (it being
understood that the Trust as sole shareholder of the New Trust
prior to the consummation of the reorganization hereby agrees and
is authorized to vote for such approval).
(g) The Trustees of the New Trust who are not "interested
persons" of the New Trust as defined in the Investment Company Act
of 1940 shall have selected as auditors for the New Trust such
auditors as shall have been selected and ratified for the Trust,
and such selection shall have been ratified by the shareholders of
the New Trust (it being understood that the Trust as sole
shareholder of the New Trust prior to the consummation of the
reorganization hereby agrees and is authorized to vote for such
ratification).
(h) The Trustees of the Trust, the shareholders of New Corp
and the Directors of New Corp. shall have authorized and approved
the merger of the Trust into New Corp. and the subsequent
liquidation of New Corp. (it being understood that the Trust as
sole shareholder of New Corp. prior to the consummation of the
reorganization hereby agrees and is authorized to vote for such
approval).
(i) The Trust and New Corp. shall have entered into an
agreement of merger and liquidation.
3.
<PAGE> 4
At any time prior to the Closing, any of the foregoing
conditions may be waived by the Trustees of the Trust, the
Trustees of the New Trust, and the Directors of New Corp. if, in
their judgment, such waiver will not have a material adverse
effect on the interests of the shareholders of the Trust.
SECTION 4. Amendment. This Agreement may be amended at any
time by action of the Trustees of the Trust, the Trustees of the
New Trust, and the Directors of New Corp., notwithstanding
approval thereof by the shareholders of the Trust, provided that
no amendment shall have a material adverse effect on the interests
of the shareholders of the Trust.,
SECTION 5. Termination. The Trustees of the Trust, the
Trustees of the New Trust, and the Directors of New Corp. may
terminate this Agreement and abandon the reorganization
contemplated hereby, notwithstanding approval thereof by the
shareholders of the Trust at any time prior to the Closing, if
circumstances should develop that, in their judgment, make
proceeding with this Agreement inadvisable.
SECTION 6. Limitation of Liability of the Trustees and
Shareholders.
(a) The Declaration of Trust establishing the Trust, dated
January 21, 1975, a copy of which together with all amendments
thereto (the "Declaration") is on file in the office of the
Secretary of State 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 to their private property for
the satisfaction of any obligation or claim of the Trust but the
Trust Property only shall be liable.
(b) The Declaration of Trust establishing the New Trust
dated May 14, 1987, a copy of which together with all amendments
thereto (the "New Declaration"), is on file in the office of the
Secretary of State of the Commonwealth of Massachusetts, provides
that the name "Merrill Lynch New Assets Trust" refers to the
Trustees under the New Declaration collectively as Trustees, but
not as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of the New 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 the
New Trust but the New Trust Property only shall be liable.
4.
<PAGE> 5
IN WITNESS WHEREOF, the parties have hereunto caused this
Agreement to be executed and delivered by their duly authorized
officers as of the day and year first written above.
MERRILL LYNCH READY ASSETS TRUST
By:
-----------------------------
MERRILL LYNCH NEW ASSETS TRUST
By:
-----------------------------
MERRILL LYNCH NEW CORPORATION, INC.
By:
-----------------------------
5.
<PAGE> 1
15
AMENDED AND RESTATED
MERRILL LYNCH SHAREHOLDER SERVICING
PLAN AND AGREEMENT
AMENDED AND RESTATED PLAN AND AGREEMENT made as of the 2nd
day of February, 1988 by and between Merrill Lynch Ready Assets
Trust, a Massachusetts business trust (the "Trust"), and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, a Delaware corporation
("MLPF&S").
WHEREAS, the Trust is a no-load open-end investment company
registered under the Investment Company Act of 1940, as amended
(the "Investment Company Act"), which operates as a money market
fund;
WHEREAS, MLPF&S acts as a dealer selling shares of the Trust
to its customers and substantially all of the shareholders of the
Trust are MLPF&S customers who maintain their Trust accounts
through MLPF&S (such accounts being referred to herein as the
"MLPF&S Trust Accounts");
WHEREAS, MLPF&S provides a variety of administrative and
operational services to MLPF&S Trust Accounts including processing
shareholder orders and administering MLPF&S Trust Accounts (such
services being referred to herein as "MLPF&S Administrative
Services") which are being provided pursuant to the management
arrangements between the Trust and Merrill Lynch Asset Management,
Inc. ("MLAM") ;
WHEREAS, MLPF&S financial consultants and other personnel
spend substantial amounts of time providing shareholder services
to existing and prospective MLPF&S Trust Accounts, including
furnishing information as to the status of such MLPF&S Trust
Accounts and handling purchase and redemption orders for Trust
shares, (such services being referred to herein as "MLPF&S
Shareholder Services and Activities");
WHEREAS, pursuant to a Merrill Lynch Shareholder Servicing
Plan and Agreement (the "Plan") made as of August 26, 1983 with
MLPF&S, and continued annually thereafter, pursuant to the pro-
visions of Rule 12b-1 under the Investment Company Act, the
Trustees of the Trust have determined that the Trust should make
direct payments to MLPF&S for distribution to its financial con-
sultants and other directly involved Merrill Lynch personnel as
compensation for the MLPF&S Shareholder Services and Activities
and that such payments should be in addition to the management
compensation being paid MLAM;
<PAGE> 2
WHEREAS, the Trustees of the Trust have determined that in
addition to providing the services and activities provided in the
Plan, MLPF&S in their discretion may promote the sale, marketing
and distribution of the shares of the Trust by engaging in adver-
tising activities in newspapers, magazines, radio, television and
other media and through direct mail solicitations and that a
portion of the aforesaid direct payments made to MLPF&S may be
utilized to reimburse MLPF&S for the costs (or a portion thereof)
of preparing, running and otherwise engaging in such advertising
activities (the "Advertising Expenditures");
WHEREAS, the Trust desires to adopt this Amended and Restated
Shareholder Servicing Plan and Agreement (referred to herein as
the "Amended Plan" which term shall be deemed to include the Plan
when the context requires) in the manner and on the terms and
conditions hereinafter set forth, which Amended Plan must be
adopted pursuant to the provisions of Paragraph 11 of the Plan as
they relate to material amendments which do not increase the fee
paid pursuant to the Plan and in accordance with Rule 12b-1 under
the Investment Company Act;
WHEREAS, MLPF&S desires to enter into the Amended Plan on
said terms and conditions; and
WHEREAS, the Trustees of the Trust have determined that there
is a reasonable likelihood that adoption of the Amended Plan will
benefit the Trust and its shareholders:
NOW, THEREFORE, the Trust hereby adopts the Amended Plan in
accordance with the requirements of Paragraph 11 of the Plan and
Rule 12b-1 under the Investment Company Act and the parties hereto
enter into this agreement on the following terms and conditions:
1. The Trust is hereby authorized to utilize its assets
to make payments to MLPF&S pursuant to the Amended Plan (i)
to compensate Merrill Lynch financial consultants and other
directly involved MLPF&S personnel for providing the MLPF&S
Shareholder Services and Activities with respect to MLPF&S
Trust Accounts and (ii) subject to the limitations specified
in paragraph 2, to reimburse MLPF&S for part or all of any
Advertising Expenditures incurred by MLPF&S with respect to
shares of the Trust.
2. The Trust shall pay MLPF&S a fee at the end of each
month at the annual rate of 0.125% of average daily net asset
value of the MLPF&S Trust Accounts. Out of such fee, MLPF&S,
in its sole discretion, may expend an amount not exceeding
0.01% of the average daily net asset value of the MLPF&S
Trust Accounts as reimbursement for Advertising Expenditures;
MLPF&S is obligated to expend the remaining amount of the fee
2.
<PAGE> 3
for compensation, including sales incentives and bonuses, to
MLPF&S financial consultants and other directly involved
MLPF&S personnel (such expenditures of the fee, including
Advertising Expenditures, being referred to as the "Plan
Expenditures"). The fee is not to be considered compensation
for the MLPF&S Administrative Services..
3. In the event that the aggregate payments received by
MLPF&S under the Amended Plan in any year shall exceed the
Plan Expenditures in such fiscal year, MLPF&S shall be re-
quired to reimburse the Trust the amount of such excess.
4. MLPF&S shall provide the Trust for review by the
Trustees, and the Trustees shall review, at least quarterly,
a written report complying with the requirements of Rule
12b-1 regarding the disbursement of the fee for Plan Expen-
ditures during such period. The report shall include an
itemization of the Plan Expenditures made by MLPF&S, the
purpose of such Plan Expenditures and a description of the
benefits derived by the Trust therefrom.
5. MLPF&S will use its best efforts in rendering and
causing its employees to render services to the Trust, but in
the absence of willful misfeasance, bad faith, gross negli-
gence or reckless disregard of its obligations hereunder,
MLPF&S shall not be liable to the Trust or any of its share-
holders for any error of judgment or mistake of law for any
act of omission or for any losses sustained by the Trust or
its shareholders.
6. Nothing contained in the Amended Plan shall prevent
MLPF&S or any affiliated person of MLPF&S from performing
services similar to those to be performed hereunder for any
other person, firm or corporation or for its or their own
accounts or for the accounts of others.
7. The Amended Plan shall not take effect until it has
been approved by votes of a majority of both (a) the Trustees
of the Trust and (b) those Trustees of the Trust who are not
"interested persons" of the Trust as defined in the Invest-
ment Company Act, and have no direct or indirect financial
interest in the operation of the Amended Plan or any agree-
ments related to it (the "Rule 12b-1 Trustees"), cast in
person at a meeting or meetings called for the purpose of
voting on the Amended Plan.
8. The Amended Plan shall continue in effect for so
long as such continuance is specifically approved at least
annually in the manner provided for approval of the Amended
Plan in Paragraph 7.
3.
<PAGE> 4
9. The Amended Plan may be terminated at any time by
vote of a majority of the Rule 12b-1 Trustees, or by vote of
a majority of the outstanding voting securities of the Trust.
I
10. The Amended Plan may not be amended to increase
materially the fee provided for in Paragraph 2 unless and
until such amendment is approved in the manner provided for
in Paragraph 7 and approved by a vote of at least a majority,
as defined in the Investment Company Act, of the outstanding
voting securities of the Trust, and no other material amend-
ment to the Amended Plan shall be made unless approved in the
manner provided for approval in Paragraph 7.
11. While the Amended Plan is in effect, the selection
and nomination of Trustees who are not interested persons, as
defined in the Investment Company Act, of the Trust shall be
committed to the discretion of the Trustees who are not
interested persons.
12. The Trust shall preserve copies of the Plan and the
Amended Plan and any related agreements and all reports made
pursuant to Paragraph 2, for a period of not less than six
years, the first two years in an easily accessible place.
13. The Declaration of Trust establishing Merrill Lynch
Ready Assets Trust, dated January 21, 1975, 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 per-
sonally; and no Trustee, shareholder, officer, employee or
agent of Merrill Lynch Ready Assets 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 Merrill Lynch Ready Assets Trust, but the Trust
Property only shall be liable.
4.
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Amended and Restated Shareholder Servicing Plan and
Agreement as of the date first above written.
MERRILL LYNCH READY ASSETS TRUST
By /s/ Joseph T. Monagle
-----------------------------
MERRILL LYNCH PIERCE, FENNER
& SMITH INCORPORATED
By
-----------------------------
5 .
<PAGE> 1
16
Merrill Lynch Ready Assets Trust
Schedule for Computation of Performance Quotations
As of December 31, 1987
Base Period Return
<TABLE>
<CAPTION>
Including Excluding
gains and losses gains and losses
---------------- ----------------
<S> <C> <C>
Net income of one share for a seven-day base period 0.001471 0.001337
Divided by
Net asset value of one share at beginning of base period $1.00 $1.00
Equals 0.001471 0.001337
Base period return (unannualized) 0.001471 0.001337
Annualized Return
-----------------
Base period return (unannualized) 0.001471 0.001337
Divided by 7 0.00021 0.000191
Multiplied by 365
Equals
Annualized return 7.67% 6.97%
Effective or Compounded Yield
-----------------------------
Base period return (unannualized)* 0.001337
Divided by 7 0.000191
Add
1
Equals 1.000191
Sum raised to 365th power 1.072195
Subtract
1
Equals
Effective or Compounded Yield 7.22%
</TABLE>
- -------------------
*Calculated using base period return (unannualized) excluding gains and losses.
