MERRILL LYNCH
READY ASSETS
TRUST
FUND LOGO
Annual Report
December 31, 1994
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Trust unless
accompanied or preceded by the Trust's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance, which will fluctuate. The
Trust seeks to maintain a consistent $1.00 net asset value per
share, although this cannot be assured. An investment in the Trust
is neither insured nor guaranteed by the US Government.
<PAGE>
Merrill Lynch
Ready Assets Trust
Box 9011
Princeton, NJ
08543-9011
DEAR SHAREHOLDER
For the year ended December 31, 1994, Merrill Lynch Ready Assets
Trust paid shareholders a net annualized yield of 3.74%*. For the
six-month period ended December 31, 1994, the Trust's net annualized
yield was 4.30%*. The Trust's 7-day yield as of December 31, 1994
was 5.09% (excluding gains and losses) and 5.09% (including gains
and losses).
The Environment
Volatility in the US financial markets continued during the six
months ended December 31, 1994, largely prompted by concerns of
increasing inflationary pressures. The possibility of continued
monetary policy tightening by the Federal Reserve Board was
predominant in the minds of investors throughout most of the period.
Therefore, there was little surprise in mid-November when the
central bank announced the sixth increase in short-term interest
rates in 1994. Early in the period, the weakness of the US dollar in
foreign exchange markets prompted declines in US stock and bond
prices, but some strengthening of the US currency has occurred
recently.
The manufacturing sector was the driving force behind the US economy
through the final quarter of the year, making an important
contribution to the substantial increase in corporate earnings. US
companies have been successful at containing labor costs, which are
an important component of the inflation outlook. Although consumer
spending grew at a slower pace than in previous economic recoveries,
purchases of vehicles and household durable goods rose in the latter
months of 1994. Despite the relatively modest rise in consumer
spending, the personal savings rate fell to an all-time annual low
in 1994.
<PAGE>
In the weeks ahead, investors will continue to assess economic data
and inflationary trends in order to gauge whether further increases
in short-term interest rates are likely. The core inflation rate
rose less than 3% in 1994 following a 3% increase in 1993, the best
sustained inflation performance in 30 years. It is not likely that
such positive inflation results will be duplicated in 1995. In
addition, investor interest in the new year will also be focused on
the progress that the new Congress makes on both reducing spending
and the Federal budget deficit and passing tax cuts that promote
savings and investment. Legislative progress, combined with
continued indications of moderate and sustainable levels of economic
growth, would be positive for the US capital markets. However, the
lagged effects of higher interest rates could slow the economy
sharply and with it, the growth of corporate profits.
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
Portfolio Matters
For the six months ended December 31, 1994, Merrill Lynch Ready
Assets Trust maintained a relatively cautious approach to the market
based on our belief that a growing domestic economy and dwindling
capacity would prompt the Federal Reserve Board to push short-term
interest rates higher.
Since our last report, and on the heels of a robust June employment
report, the Trust adopted a strategy based on the expectation that
the central bank would seek to further tighten monetary policy.
Accordingly, we reinvested new cash positions and maturities in the
very front end of the investment spectrum, which reduced the Trust's
exposure to interest rates. By the end of July, the Trust's average
life stood at 44 days. This strategy remained in effect throughout
the first part of August.
The second half of August was dominated by the Federal Reserve
Board's move to raise the Federal Funds rate to 4.75% and the
discount rate to 4.00%. The Trust sought to take advantage of the
higher interest rate environment by extending the average life to
the 50-day area, with much of our incremental exposure limited to
purchases in the one-month--three-month sector. Additionally, we
selectively added positions in six-month money markets to take
advantage of the steepness of the yield curve. By the end of August,
the Trust's average life stood at 53 days.
<PAGE>
The Trust continued this investment strategy for most of September.
By mid-month we had extended the Trust's average life to 60 days as
favorable technical conditions continued. Much of the new exposure
to the market was limited to year-end maturities to enable the Trust
to take advantage of the interest rate differential of early January
securities as they became available. The market began to price in
another round of monetary tightening following the release of
August's industrial production and capacity utilization numbers. In
response, we sought to refocus our investment strategy by reducing
our average life and building overnight cash reserves. By month-end,
the Trust's average life stood at 51 days.
The Trust continued this cautious approach into the first half of
October, allowing the average life to fall to 46 days. New purchases
were limited for the most part to the front end of the investment
spectrum as we awaited further evidence of the state of the economy
and inflation. However, by the second half of October it became
apparent that any move by the central bank would not occur until the
Federal Open Market Committee (FOMC) meeting on November 15, 1994.
As a result, we sought to take advantage of the steepness of the
yield curve and extended the Trust's average life into the high 60-
day area. However, most of the exposure was limited to money market
instruments in the three-month--six-month area, which reflected much
of the market's repricing to an anticipated interest rate hike.
As the FOMC meeting approached, the average life of the Trust was
allowed to come into the high 50-day area, as our overnight cash
position was increased to almost 10% of the Trust's assets. After
the FOMC's decision to raise interest rates by 75 basis points
(0.75%), we began to reduce overnight positions and extend the
average life modestly with minor extensions in the three-month
sector. By November month-end, the average life stood at 59 days.
We approached the month of December cautiously as there was a
growing concern that the Federal Reserve Board might have to act
again to tighten interest rates at its December 20, 1994 meeting.
The average life was reduced to the high 40-day area as investors
awaited the FOMC meeting. While this meeting produced no change in
monetary policy, we sought to maintain an adequate overnight cash
position to accommodate investor needs at year-end. By month-end,
the average life stood at 51 days, reflective of our continued
cautious outlook.
Looking ahead we believe that the central bank may still raise
interest rates at the next FOMC meeting at the end of January.
Accordingly, we expect to remain cautious in the months ahead as the
economy shows continued strength.
<PAGE>
The portfolio's composition at the end of the December period and as
of our last report is detailed below:
12/31/94 6/30/94
Bankers' Acceptances--Yankee* -- 0.8%
Bank Notes 0.4% 0.4
Certificates of Deposit -- 0.4
Certificates of Deposit--Yankee* 0.4 --
Commercial Paper 48.2 51.3
Corporate Notes -- 0.1
Master Notes 3.1 7.3
Repurchase Agreements -- 1.6
US Government, Agency &
Instrumentality--Discount 20.0 13.5
US Government, Agency &
Instrumentality--Non-Discount 29.8 25.1
Other Assets (Liabilities)--Net (1.9) (0.5)
-------- --------
Total 100.0% 100.0%
======== ========
[FN]
*US branches of foreign banks.
In Conclusion
We thank you for your support of Merrill Lynch Ready Assets Trust,
and we look forward to serving your investment needs in the months
and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(John Ng)
John Ng
Vice President and Portfolio Manager
January 24, 1995
<PAGE>
SCHEDULE OF INVESTMENTS (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Bank Notes--0.4%
NationsBank $ 25,000 5.65 % 7/21/95 $ 24,812
North Carolina, N.A.
Total Bank Notes (Cost--$24,976) 24,812
Certificates of Deposit--Yankee--0.4%
Banque Nationale 25,000 5.58 2/01/95 24,995
de Paris, NY
Total Certificates of Deposit--Yankee
(Cost--$24,994) 24,995
Commercial Paper--Discount--48.2%
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.
<PAGE>
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
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Commercial Paper--Discount (continued)
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.
<PAGE>
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.
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Commercial Paper--Discount (concluded)
Kingdom of $100,000 5.76 % 1/17/95 $ 99,712
Sweden
<PAGE>
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
Total Commercial Paper--Discount
(Cost--$3,008,961) 3,007,754
<PAGE>
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Master Notes--3.1%
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
US Government, Agency & Instrumentality
Obligations--Discount--20.0%
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
Total US Government, Agency &
Instrumentality Obligations--Discount
(Cost--$1,271,992) 1,248,919
<PAGE>
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%
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
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
US Government, Agency & Instrumentality
Obligations--Non-Discount (concluded)
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
<PAGE>
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
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
==========
[FN]
*Commercial Paper and certain US Government, Agency &
Instrumentality Obligations are traded on a discount basis; the
interest rates shown are the discount rates paid at the time of
purchase by the Trust. Other securities bear interest at the rates
shown, payable at fixed dates or upon maturity. Interest rates on
variable rate securities are adjusted periodically based upon
appropriate indexes. Interest rates shown are the rates in effect at
December 31, 1994.
++Variable Rate Notes.
See Notes to Financial Statements.
<PAGE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of December 31, 1994
<S> <S> <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
==============
<FN>
*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.
</TABLE>
<PAGE>
FINANCIALINFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended
December 31, 1994
<S> <S> <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>
<PAGE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended December 31,
Increase (Decrease) in Net Assets: 1994 1993
<S> <S> <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
================ ===============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
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> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Operating ---------- ---------- ---------- ---------- -----------
Performance: Investment income--net .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
========== ========== ========== ========== ===========
<FN>
*Includes unrealized gain (loss).
++Amount is less than $.0001 per share.
See Notes to Financial Statements.
</TABLE>
<PAGE>
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.
<PAGE>
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:
Portion of average daily value of net assets: Rate
Not exceeding $500 million 0.500%
In excess of $500 million but not exceeding $1 billion 0.400
In excess of $1 billion but not exceeding $5 billion 0.350
In excess of $5 billion but not exceeding $10 billion 0.325
In excess of $10 billion but not exceeding $15 billion 0.300
In excess of $15 billion but not exceeding $20 billion 0.275
In excess of $20 billion 0.250
The most restrictive annual expense limitation requires that the
Adviser reimburse the Trust to the extent the Trust's expenses
(excluding interest, taxes, distribution fees, brokerage fees and
commissions, and extraordinary items) exceed 2.5% of the Trust's
first $30 million of average daily net assets, 2.0% of the next $70
million of average daily net assets, and 1.5% of the average daily
net assets in excess thereof. The obligation of the 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.
("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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
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.
<AUDIT-REPORT>
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.
<PAGE>
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
</AUDIT-REPORT>
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Donald Cecil, Trustee
M. Colyer Crum, Trustee
Edward H. Meyer, Trustee
Charles H. Ross, Jr., Trustee
Jack B. Sunderland, Trustee
J. Thomas Touchton, Trustee
Terry K. Glenn, Executive Vice President
Joseph T. Monagle, Jr., Executive Vice President
Donald C. Burke, Vice President
John Ng, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
The Bank of New York
1 Wall Street
New York, New York 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 221-7210
