MERRILL LYNCH
READY ASSETS
TRUST
FUND LOGO
Annual Report
December 31, 1996
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. Statements
and other information herein are as dated and are subject to change.
<PAGE>
Merrill Lynch
Ready Assets Trust
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
DEAR SHAREHOLDER
For the year ended December 31, 1996, Merrill Lynch Ready Assets
Trust paid shareholders a net annualized dividend of 5.00%*. For the
six-month period ended December 31, 1996, the Trust's net annualized
yield was 4.89%*. The Trust's 7-day yield as of December 31, 1996
was 4.95%.
The average portfolio maturity for Merrill Lynch Ready Assets Trust
at December 31, 1996 was 75 days, compared to 75 days at June 30,
1996.
The Environment
A relatively benign economic environment created the backdrop for
strong US stock and bond markets in 1996. Although expectations of
an overheating economy sparked inflationary concerns at mid-year,
business activity subsequently subsided back to a more moderate
pace. As a result, equity and bond prices rebounded in the latter
half of the year. Positive investor sentiment was further reinforced
when the Federal Reserve Board kept monetary policy unchanged.
Commensurate with that scenario, we modestly extended the average
life of the Trust's portfolio into the mid 70-day area, where it
stood at year-end. The results of the US election were well-received
by investors, and further enhanced the already positive investment
outlook.
<PAGE>
Highlighting the economic results as 1996 drew to a close were
reports of a decline in the trade deficit in October and stronger
industrial production. Underscoring the moderating growth trend were
some signs of softening in the labor market, and initial indications
suggested a respectable but unremarkable holiday selling season.
On balance, US economic fundamentals appear to be the most positive
they have been for many years. However, as 1997 begins, the dilemma
facing investors is how long the economic expansion can continue at
a steady, noninflationary pace. At this late stage of the current
economic recovery, investor expectations can quickly change from
positive to negative with the release of surprising economic
results. Therefore, continued reassurance of steady, noninflationary
economic growth would be a very positive development for the stock
and bond markets in the new year.
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
The portfolio's composition at the end of the December period and as
of our last report is detailed below:
12/31/96 6/30/96
Bank Notes 1.6% 1.1%
Certificates of Deposit 1.4 --
Certificates of Deposit--European 3.1 2.4
Certificates of Deposit--Yankee* 1.8 0.3
Commercial Paper--Discount 51.3 43.4
Corporate Notes 8.6 8.6
Funding Agreements 1.1 1.1
Master Notes 2.5 2.4
Repurchase Agreements 4.8 5.5
US Government, Agency &
Instrumentality Obligations--
Discount 0.2 8.6
US Government, Agency &
Instrumentality Obligations--
Non-Discount 26.5 27.1
Liabilities in Excess of Other Assets (2.9) (0.5)
------ ------
Total 100.0% 100.0%
====== ======
<PAGE>
[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 31, 1997
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
<S> <C> <C> <C> <C>
Bank Notes--1.6%
Colorado National $ 90,000 5.587++% 5/21/97 $ 89,997
Bank of Denver
<PAGE>
KeyBank National
Association 25,000 5.60 11/04/97 24,980
Total Bank Notes (Cost--$114,997) 114,977
Certificates of Deposit--1.4%
Chase Manhattan 24,000 5.85 1/08/97 24,002
Bank
Morgan Guaranty
Trust Company 73,000 5.86 10/03/97 73,107
Total Certificates of Deposit
(Cost--$97,088) 97,109
Certificates of Deposit--European--3.1%
Australia and New 20,000 5.57 4/07/97 20,003
Zealand Banking 50,000 5.505 4/11/97 49,998
Group
Bank of Scotland 50,000 5.65 4/03/97 50,016
Bankers Trust 50,000 5.40 1/21/97 49,999
Company
Bayerische 50,000 5.79 3/06/97 50,022
Hypotheken-und
Wechsel Bank
Total Certificates of Deposit--European
(Cost--$220,001) 220,038
Certificates of Deposit--Yankee--1.8%
ABN AMRO Bank, 5,000 5.68 4/17/97 5,000
NY 100,000 5.68 12/22/97 100,017
Bayerische 20,000 5.475++ 1/15/97 19,999
Landesbank
Girozentrale, NY
Total Certificates of Deposit--Yankee
(Cost--$125,029) 125,016
<PAGE>
Commercial Paper--Discount--51.3%
ABN-AMRO 37,000 5.65 2/28/97 36,672
North America
Finance Inc.
ANZ (Delaware), 25,000 5.39 2/10/97 24,847
Inc.
Abbey National 10,000 5.35 4/08/97 9,853
N.A. Corporation
Allomon Funding 40,460 5.34 1/07/97 40,418
Corporation
Ameritech Capital 25,000 5.55 2/18/97 24,811
Funding Corp.
Apreco, Inc. 20,000 5.32 1/21/97 19,938
25,000 5.52 2/12/97 24,835
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
<S> <C> <C> <C> <C>
Commercial Paper--Discount (continued)
Asset Securitization $ 15,000 5.35 % 1/29/97 $ 14,935
Cooperative Corp. 50,000 5.36 3/13/97 49,458
Atlantic Asset 25,121 5.65 1/13/97 25,070
Securitization Corp. 24,879 5.65 1/15/97 24,820
BTR Dunlop 70,000 5.33 3/05/97 69,326
Finance Inc.
Bank of Scotland 50,000 5.40 2/20/97 49,617
Treasury Services PLC
Bear Stearns 25,000 5.34 1/23/97 24,915
Companies, Inc. 14,400 5.35 2/18/97 14,294
25,000 5.31 2/28/97 24,778
<PAGE>
Beta Finance Inc. 18,000 5.57 1/27/97 17,928
14,000 5.31 2/07/97 13,921
8,000 5.33 3/11/97 7,916
10,000 5.50 3/18/97 9,884
13,000 5.35 4/07/97 12,810
CIT Group Holdings, 10,000 5.32 1/29/97 9,957
Inc. (The)
CSW Credit, Inc. 29,800 5.32 2/14/97 29,600
Caisse 50,000 5.40 2/24/97 49,587
d'Amortissement 25,000 5.50 3/10/97 24,740
de la Dette Sociale 25,000 5.66 3/10/97 24,740
(CADES) 45,000 5.45 4/01/97 44,383
Chase Manhattan 24,000 5.68 1/09/97 23,968
Corporation
Cheltenham & 75,000 5.36 3/11/97 74,210
Gloucester PLC
Ciesco L.P. 28,400 5.30 1/17/97 28,329
Commerzbank 25,000 5.34 4/22/97 24,578
U.S. Finance Inc.
Commonwealth 30,000 5.39 2/03/97 29,848
Bank of Australia
Corporate 35,000 5.32 1/17/97 34,912
Receivables Corp.
Dean Witter 100,000 5.30 2/28/97 99,113
Discover & Co.
Eureka 25,000 5.32 1/16/97 24,941
Securitization Inc. 31,000 5.325 2/13/97 30,796
50,000 5.33 2/14/97 49,664
10,000 5.35 3/06/97 9,902
Falcon Asset 60,000 5.32 1/07/97 59,938
Securitization Corp.
Finova Capital Corp. 25,000 5.37 2/24/97 24,793
50,000 5.47 3/20/97 49,405
20,000 5.42 6/25/97 19,472
Ford Motor Credit 25,000 5.40 1/08/97 24,970
Company 25,000 5.41 2/03/97 24,873
50,000 5.48 3/24/97 49,375
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
<S> <C> <C> <C> <C>
Commercial Paper--Discount (continued)
General Electric $ 50,000 5.39 % 2/07/97 $ 49,716
Capital Corp. 100,000 5.39 2/10/97 99,388
30,000 5.64 3/10/97 29,688
40,000 5.45 3/25/97 39,494
100,000 5.46 3/25/97 98,735
25,000 5.69 5/12/97 24,505
General Motors 50,000 5.34 1/22/97 49,838
Acceptance Corp. 50,000 5.35 1/22/97 49,838
50,000 5.35 1/27/97 49,801
70,000 5.33 2/05/97 69,624
25,000 5.34 5/13/97 24,501
80,000 5.31 5/20/97 78,320
20,000 5.31 5/23/97 19,571
Glaxo Wellcome 25,500 5.34 1/02/97 25,492
PLC
Goldman Sachs 50,000 5.68 1/06/97 49,956
Group, L.P. 50,000 5.35 4/25/97 49,134
Greenwich Funding 18,367 5.325 1/27/97 18,294
Corporation 10,000 5.31 2/03/97 9,949
113,437 5.45 3/21/97 112,071
Industrial 25,000 5.37 3/06/97 24,755
Bank of Korea 15,000 5.40 3/10/97 14,844
10,000 5.40 3/12/97 9,893
International 60,000 5.335 1/23/97 59,797
Securitization Corp. 40,000 5.35 1/29/97 39,827
Kingdom of Sweden 25,000 5.55 1/21/97 24,923
25,000 5.50 3/12/97 24,733
100,000 5.44 3/24/97 98,750
Korea 73,000 5.35 1/10/97 72,892
Development Bank 27,000 5.35 1/15/97 26,940
50,000 5.33 2/10/97 49,694
<PAGE>
Lehman Brothers 50,000 5.40 3/03/97 49,533
Holdings, Inc. 50,000 5.40 3/05/97 49,518
Mont Blanc 50,000 5.39 3/14/97 49,450
Capital Corp.
NYNEX 18,000 5.33 3/03/97 17,832
Corporation
National Australia 50,000 5.35 1/06/97 49,956
Funding (Delaware)
Inc.
New Center 50,000 5.44 1/06/97 49,956
Asset Trust 70,000 5.40 2/07/97 69,603
117,000 5.43 2/14/97 116,214
25,000 5.41 2/18/97 24,816
40,000 5.47 3/24/97 39,500
Nomura Holding 25,000 5.35 1/02/97 24,993
America, Inc. 25,000 5.35 1/10/97 24,963
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
<S> <C> <C> <C> <C>
Commercial Paper--Discount (concluded)
Old Line $ 40,813 5.47 % 1/24/97 $ 40,664
Funding Corp. 10,300 5.33 2/05/97 10,245
18,000 5.36 3/11/97 17,810
Rexam PLC 15,590 5.32 3/07/97 15,435
Transamerica 12,782 5.60 3/11/97 12,647
Finance Corp. 12,394 5.29 4/30/97 12,170
WCP Funding Inc. 40,000 5.32 1/17/97 39,900
15,300 5.33 3/13/97 15,134
Western Australia 28,000 5.65 2/28/97 27,752
Treasury Corp. 10,395 5.61 3/10/97 10,287
Windmill 25,000 5.33 3/10/97 24,740
Funding Corp. 17,739 5.45 3/21/97 17,525
Xerox Corp. 29,909 5.30 1/14/97 29,847
Total Commercial Paper--Discount
(Cost--$3,642,584) 3,642,593
<PAGE>
Corporate Notes--8.6%
Abbey National 100,000 5.48++ 5/16/97 99,962
Treasury Services PLC
Asset-Backed 68,000 5.605++ 10/15/97 68,000
Securities Investment
Trust 1996-M
Bear Stearns 50,000 5.655++ 1/16/97 50,002
Companies, Inc. 15,000 5.50 3/05/97 15,000
Chase Manhattan 19,000 5.489 1/15/98 19,000
Auto Owner Trust
1996-C
KeyBank National 23,000 5.576++ 8/21/97 22,991
Association
LABS Trust 85,000 5.625++ 12/29/97 85,000
Senior Notes,
Series 1996-4
SMM Trust (1995-Q) 100,000 5.605++ 1/08/97 100,000
Short Term Card 150,000 5.615++ 1/15/97 150,000
Account Trust 1995-1
Total Corporate Notes (Cost--$609,954) 609,955
Funding Agreements--1.1%
Jackson National 80,000 5.41++ 4/08/97 80,000
Life Insurance Co.
Total Funding Agreements (Cost--$80,000) 80,000
Master Notes--2.5%
Goldman Sachs 26,000 5.73++ 5/01/97 26,000
Group, L.P. 150,000 5.73++ 8/01/97 150,000
<PAGE>
Total Master Notes (Cost--$176,000) 176,000
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
<S> <C> <C> <C> <C>
US Government, Agency & Instrumentality
Obligations--Discount--0.2%
Federal National $ 13,000 5.48 % 3/07/97 $ 12,872
Mortgage
Association
US Treasury STRIPS++++ 5,000 5.252 2/15/98 4,697
Total US Government, Agency & Instrumentality
Obligations--Discount (Cost--$17,569) 17,569
US Government, Agency & Instrumentality--
Obligations Non-Discount--26.5%
Federal Farm 45,000 5.85 10/01/97 45,077
Credit Banks 20,000 6.24 5/07/98 20,012
10,000 5.81 12/04/98 9,963
Federal Home 80,000 5.24++ 12/10/97 79,964
Loan Banks 26,000 5.60++ 1/26/98 26,029
15,000 6.17 11/06/98 14,991
10,000 6.12 11/19/98 9,988
Federal National 100,000 5.27++ 2/21/97 100,000
Mortgage 50,000 5.30++ 3/14/97 50,000
Association 35,000 5.48++ 3/19/97 34,995
52,000 5.435++ 4/15/97 51,984
50,000 5.524++ 4/28/97 49,989
40,000 5.494++ 4/29/97 39,987
100,000 5.25++ 5/01/97 99,977
35,000 5.455++ 5/14/97 34,989
70,000 5.70++ 5/19/97 70,000
50,000 5.521++ 5/22/97 49,987
114,000 5.23++ 7/16/97 113,958
54,000 5.25++ 8/01/97 53,986
44,000 5.235++ 9/03/97 43,978
34,000 5.24++ 9/09/97 33,984
32,000 5.24++ 9/29/97 31,986
20,000 5.53 10/14/97 19,988
58,000 5.225++ 10/20/97 57,959
50,000 5.47 12/30/97 49,924
50,000 5.29++ 4/24/98 49,975
<PAGE> Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
<S> <C> <C> <C> <C>
US Government, Agency & Instrumentality
Obligations--Non-Discount (concluded)
Federal National $ 33,000 5.75++% 5/14/98 $ 33,000
Mortgage 25,000 6.54 9/11/98 25,125
Association 10,000 5.81 11/25/98 9,963
(concluded) 10,000 5.81 12/01/98 9,963
Student Loan 60,000 5.41++ 1/14/97 60,000
Marketing 50,000 5.30++ 8/04/97 49,994
Association 60,000 5.24++ 10/01/97 59,974
12,000 6.02 11/20/98 11,992
15,000 5.80 12/18/98 14,940
US Treasury Notes 126,000 6.50 4/30/97 126,473
34,000 5.875 7/31/97 34,080
40,000 5.75 9/30/97 40,072
25,000 5.625 10/31/97 25,016
73,500 5.25 12/31/97 73,265
27,000 5.00 1/31/98 26,810
20,000 5.625 11/30/98 19,916
15,000 5.75 12/31/98 14,975
Total US Government, Agency &
Instrumentality Obligations--Non-Discount
(Cost--$1,879,721) 1,879,228
<CAPTION>
Face
Amount Issue
<S> <S> <C>
Repurchase Agreements**--4.8%
$100,000 HSBC Securities, Inc., purchased on
12/31/1996 to yield 6.80% to 1/02/1997 100,000
<PAGE>
241,638 Lehman Brothers Inc., purchased on
12/31/1996 to yield 7.10% to 1/02/1997 241,638
Total Repurchase Agreements
(Cost--$341,638) 341,638
Total Investments (Cost--$7,304,581)--102.9% 7,304,123
Liabilities in Excess of Other Assets--(2.9%) (207,863)
----------
Net Assets--100.0% $7,096,260
==========
<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, 1996.
**Repurchase Agreements are fully collateralized by US Government
Obligations.
++Variable Rate Notes.
++++Separately Traded Registered Interest and Principal of
Securities (STRIPS).
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL INFORMATION
<CAPTION>
Statement of Assets and Liabilities as of December 31, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$7,304,581,349*)
(Note 1a) $ 7,304,123,288
Cash 41,634
Receivables:
Interest $ 22,121,964
Beneficial interest sold 3,133,003 25,254,967
---------------
Prepaid registration fees and other assets (Note 1d) 314,957
---------------
Total assets 7,329,734,846
---------------
<PAGE>
Liabilities: Payables:
Securities purchased 165,167,591
Beneficial interest redeemed 62,228,194
Investment adviser (Note 2) 2,266,545
Distributor (Note 2) 2,092,750 231,755,080
---------------
Accrued expenses and other liabilities 1,719,649
---------------
Total liabilities 233,474,729
---------------
Net Assets: Net assets $ 7,096,260,117
===============
Net Assets Shares of beneficial interest, $.10 par value, unlimited
Consist of: number of shares authorized $ 709,671,818
Paid-in capital in excess of par 6,387,046,360
Unrealized depreciation on investments--net (458,061)
---------------
Net Assets--Equivalent to $1.00 per share based on
7,096,718,178 shares of beneficial interest outstanding $ 7,096,260,117
===============
<FN>
*As of December 31, 1996, net unrealized depreciation for
Federal income tax purposes amounted to $704,340, of which
$511,022 related to appreciated securities and $1,215,362
related to depreciated securities. The aggregate cost of
investments at December 31, 1996 for Federal income tax
purposes was $7,304,827,628.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Statement of Operations
For the Year Ended
December 31, 1996
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 407,557,799
(Note 1c):
<PAGE>
Expenses: Investment advisory fees (Note 2) $ 26,214,794
Transfer agent fees (Note 2) 11,479,556
Distribution fees (Note 2) 8,008,404
Accounting services (Note 2) 370,559
Registration fees (Note 1d) 317,938
Custodian fees 204,323
Interest expense 201,878
Trustees' fees and expenses 137,722
Professional fees 87,469
Printing and shareholder reports 81,944
Other 96,850
---------------
Total expenses 47,201,437
---------------
Investment income--net 360,356,362
---------------
Realized & Realized gain on investments--net 559,269
Unrealized Gain Change in unrealized appreciation on investments--net (2,689,938)
(Loss) on ---------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 358,225,693
(Note 1c): ===============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Statements of Changes in Net Assets
For the Year
Ended December 31,
Increase (Decrease) in Net Assets: 1996 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 360,356,362 $ 370,112,443
Realized gain on investments--net 559,269 995,794
Change in unrealized appreciation/depreciation on investments
--net (2,689,938) 9,723,823
--------------- ---------------
Net increase in net assets resulting from operations 358,225,693 380,832,060
--------------- ---------------
Dividends & Investment income--net (360,356,362) (370,112,443)
Distributions to Realized gain on investments--net (559,269) (995,794)
Shareholders --------------- ---------------
(Note 1e): Net decrease in net assets resulting from dividends and
distributions to shareholders (360,915,631) (371,108,237)
--------------- ---------------
<PAGE>
Beneficial Interest Net proceeds from sale of shares 13,961,575,969 14,615,042,905
Transactions Net asset value of shares issued to shareholders in
(Note 3): reinvestment of dividends and distributions (Note 1e) 359,459,266 369,564,239
--------------- ---------------
14,321,035,235 14,984,607,144
Cost of shares redeemed (14,301,439,885) (14,155,972,930)
--------------- ---------------
Net increase in net assets derived from beneficial interest
transactions 19,595,350 828,634,214
--------------- ---------------
Net Assets: Total increase in net assets 16,905,412 838,358,037
Beginning of year 7,079,354,705 6,240,996,668
--------------- ---------------
End of year $ 7,096,260,117 $ 7,079,354,705
=============== ===============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL INFORMATION (concluded)
<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: 1996 1995 1994 1993 1992
<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 .0491 .0538 .0366 .0272 .0332
Realized and unrealized gain (loss)
on investments--net (.0003) .0016 (.0012) .0003 .0009
---------- ---------- ---------- ---------- ----------
Total from investment operations .0488 .0554 .0354 .0275 .0341
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.0491) (.0538) (.0366) (.0272) (.0332)
Realized gain on investments--net (.0001) (.0001) --++ (.0005) (.0007)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.0492) (.0539) (.0366) (.0277) (.0339)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total investment return 5.05% 5.53% 3.73% 2.81% 3.45%
========== ========== ========== ========== ==========
Ratios to Average Expenses .64% .67% .65% .65% .64%
Net Assets: ========== ========== ========== ========== ==========
Investment income and realized
gain (loss) on investments--net 4.88% 5.40% 3.67% 2.78% 3.48%
========== ========== ========== ========== ==========
<PAGE>
Supplemental Net assets, end of year
Data: (in thousands) $7,096,260 $7,079,355 $6,240,997 $6,523,187 $7,465,869
========== ========== ========== ========== ==========
<FN>
++Amount is less than $.0001 per share.
See Notes to Financial Statements.
</TABLE>
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.
<PAGE>
(d) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(e) Dividends and distributions 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 net investment income and distributions from 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
the 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 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)
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), 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, MLFDS, 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, 1996 and December 31, 1995 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, 1996, 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, 1996 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, 1996, 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
February 4, 1997
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
During the year ended December 31, 1996, Merrill Lynch Ready Assets
Trust distributed long-term capital gains of $.0000014 per share to
shareholders of record as of March 7, 1996.
Please retain this information for your records.
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Donald Cecil, Trustee
M. Colyer Crum, Trustee
Edward H. Meyer, Trustee
Jack B. Sunderland, Trustee
J. Thomas Touchton, Trustee
Terry K. Glenn, Executive Vice President
Joseph T. Monagle Jr., Senior 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
90 Washington Street, 12th floor
New York, New York 10286
<PAGE>
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 221-7210