MERRILL LYNCH
READY ASSETS
TRUST
[FUND LOGO]
STRATEGIC
Performance
Annual Report
December 31, 1997
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.
Merrill Lynch
Ready Assets Trust
Box 9011
Princeton, NJ
08543-9011 #10250 -- 12/97
[RECYCLE LOGO]
Printed on post-consumer recycled paper
Merrill Lynch Ready Assets Trust December 31, 1997
DEAR SHAREHOLDER
For the year ended December 31, 1997, Merrill Lynch Ready Assets Trust
paid shareholders a net annualized dividend of 5.16%*. For the six-
month period ended December 31, 1997, the Trust's net annualized yield
was 5.11%*. The Trust's 7-day yield as of December 31, 1997 was 5.21%.
The average portfolio maturity for Merrill Lynch Ready Assets Trust at
December 31, 1997 was 69 days, compared to 74 days at June 30, 1997.
* Based on a constant investment throughout the period, with dividends
compounded daily, and reflecting a net return to the investor after all
expenses.
The Environment
Volatility highlighted stock and bond markets worldwide during the six
months ended December 31, 1997. The initial focus of investor concerns
was the widening financial crisis in Asia. In the wake of a series of
currency devaluations, many emerging economies are facing the
challenges of higher interest rates, slowing economic growth and
declining corporate earnings. Although the announcement of
International Monetary Fund loan packages to Thailand, Indonesia and
South Korea initially reassured investors, the stringent terms of the
loans and their potential negative impact on these already beleaguered
economies are now being called into question. In Japan, the failure of
several major financial institutions has undermined the prospects for
economic recovery.
As developments in Asia continue to unfold, US equity investors are
trying to gauge the impact of poorer Asian economic prospects on
multinational corporations. Although there have been periods of rising
share prices, investor confidence has not been definitively restored.
The US bond market benefited from a "flight to quality" as investors
anticipated slower economic growth, but the release of stronger-than-
expected economic statistics also prompted periods of declining bond
prices.
During the six-month period ended December 31, 1997, we maintained a
constructive average maturity for the Trust given our belief that, in
spite of a robust economy and tight labor market, the Federal Reserve
Board would remain on hold.
As 1998 begins, investors are likely to continue to focus on the
prospects for the US economy within the context of international
developments. Although the Federal Reserve Board did not tighten
monetary policy at its latest meeting, it remains to be seen whether
US economic growth remains moderate enough and inflationary pressures
sufficiently contained to preclude an increase in short-term interest
rates in early 1998. The ongoing developments in Asia will undoubtedly
also influence the central bank's monetary policy decisions in the new
year.
The portfolio's composition at the end of the December period and as
of our last report is detailed below:
12/31/97 6/30/97
-------- --------
Bank Notes 9.4% 4.1%
Certificates of Deposit 0.3 1.0
Certificates of Deposit -- European 1.1 3.2
Certificates of Deposit -- Yankee* 12.5 7.1
Commercial Paper -- Discount 48.0 51.8
Corporate Notes 9.2 6.8
Funding Agreements 1.2 1.1
Master Notes 4.3 2.5
Repurchase Agreements 3.6 1.4
Time Deposits -- 1.4
US Government, Agency &
Instrumentality Obligations --
Discount 1.7 1.9
US Government, Agency &
Instrumentality Obligations --
Non-Discount 9.0 19.0
Liabilities in Excess of Other Assets (0.3) (1.3)
-------- --------
Total 100.0% 100.0%
======== ========
* 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,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/JOHN NG
John Ng
Vice President and Portfolio Manager
February 6, 1998
<TABLE>
<CAPTION>
Merrill Lynch Ready Assets Trust December 31, 1997
SCHEDULE OF INVESTMENTS (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
<S> <C> <C> <C> <C>
Bank Notes -- 9.4%
American Express $50,000 5.96+ % 12/11/98 $50,000
Centurion Bank
Bank of America N.A. 25,000 6.04 6/10/98 25,010
Bank of America 25,000 5.93 6/24/98 25,000
N.T. & S.A. 40,000 6.10+ 6/30/98 39,984
First Bank N.A., 25,000 5.597+ 5/15/98 24,995
Minneapolis
KeyBank N.A. 28,000 5.64+ 5/06/98 27,995
51,500 5.62+ 8/20/98 51,476
50,000 5.24+ 8/28/98 49,978
100,000 5.655+ 11/27/98 99,978
Morgan Guaranty 45,000 5.615+ 2/19/98 44,997
Trust Company
of NY
Northern Trust 15,000 5.96 6/17/98 15,002
Company 13,000 5.95 6/24/98 13,001
PNC Bank N.A. 131,900 5.60+ 10/01/98 131,833
Royal Bank of 26,000 5.61+ 6/30/98 25,990
Canada
Sun Trust Bank, 20,000 5.80 7/24/98 19,987
Atlanta
U.S. National Bank 10,000 5.665+ 4/14/98 9,998
of Oregon ----------
Total Bank Notes
(Cost -- $655,197) 655,224
==========
Certificates of Deposit -- 0.3%
Chase Manhattan 20,000 5.87 7/21/98 19,996
Bank, USA ----------
Total Certificates of Deposit
(Cost -- $20,000) 19,996
==========
Certificates of Deposit --
European -- 1.1%
Barclays Bank PLC 25,000 6.08 6/15/98 25,001
Lloyds Bank PLC 25,000 5.90 8/18/98 24,999
Westdeutsche 30,000 5.83 8/03/98 29,984
Landesbank
Girozentrale ----------
Total Certificates of Deposit --
European
(Cost -- $80,008) 79,984
==========
Certificates of Deposit --
Yankee -- 12.5%
ABN -- AMRO Bank, 20,000 5.77 7/28/98 19,986
N.V., NY 25,000 5.71 10/09/98 24,959
Barclays Bank PLC, 18,000 5.94 6/30/98 18,003
NY 40,000 5.86 8/18/98 39,988
Bayerische 40,000 5.835 9/29/98 39,979
Hypotheken-und
Wechsel Bank, NY
Bayerische 50,000 5.85 7/10/98 49,984
Landesbank
Girozentrale, NY
Bayerische 50,000 5.89 9/15/98 49,989
Vereinsbank 25,000 5.70 10/06/98 24,957
AG, NY
Canadian 25,000 5.79 10/06/98 24,974
Imperial Bank of
Commerce, NY
Credit Suisse 35,000 5.705+ 12/11/98 35,000
First Boston, NY
Deutsche Bank 25,000 5.80 1/28/98 24,994
AG, NY 25,000 5.63 2/26/98 24,978
15,000 5.95 6/16/98 15,002
25,000 5.935 9/15/98 25,002
Landesbank 25,000 5.78 1/27/98 24,994
Hessen -- Thuringen 25,000 6.00 6/09/98 25,008
Girozentrale, NY 22,600 6.08 6/09/98 22,615
Royal Bank of 50,000 5.77 1/27/98 49,988
Canada, NY 25,000 5.95 3/24/98 24,999
20,000 6.05 6/08/98 20,010
25,000 6.04 6/15/98 25,013
16,100 5.79 8/20/98 16,089
25,000 5.80 10/06/98 24,976
Swiss Bank 58,000 6.02 6/12/98 58,025
Corp., NY 20,000 5.95 7/02/98 20,003
38,000 5.84 7/17/98 37,987
50,000 5.85 7/17/98 49,986
26,000 5.85 8/26/98 25,992
Westdeutsche 23,000 5.94 6/29/98 23,004
Landesbank
Girozentrale, NY ----------
Total Certificates of Deposit --
Yankee
(Cost -- $866,580) 866,484
==========
Commercial Paper -- Discount --
48.0%
Aesop Funding Corp. 35,000 5.81 2/02/98 34,814
Allomon Funding 14,100 6.20 1/14/98 14,066
Corporation
Alpine 89,687 5.82 2/02/98 89,213
Securitization Corp. 25,000 5.80 2/04/98 24,857
25,852 5.70 2/13/98 25,667
21,461 5.70 2/19/98 21,286
American Express 52,039 6.45 1/02/98 52,020
Credit Corp.
American Honda 40,000 6.05 1/30/98 39,798
Finance Corp. 60,000 5.70 2/09/98 59,609
Apreco Inc. 25,000 6.15 1/20/98 24,915
50,000 5.85 2/13/98 49,643
Asset Securitization 50,000 5.80 2/19/98 49,592
Cooperative Corp.
Bear Stearns 25,000 5.55 1/29/98 24,884
Companies, Inc. 25,000 5.62 2/06/98 24,849
25,000 5.57 2/13/98 24,821
25,000 5.74 3/11/98 24,725
25,000 5.56 4/13/98 24,596
CSW Credit, Inc. 23,900 5.62 2/09/98 23,744
Centric Capital Corp. 16,740 5.80 2/09/98 16,632
26,000 5.82 2/09/98 25,832
Chrysler Financial 40,000 5.80 2/09/98 39,742
Corporation 50,000 5.74 3/04/98 49,506
Clipper Receivables 50,000 5.62 2/05/98 49,707
Corp.
Countrywide Home 25,000 6.55 1/08/98 24,964
Loans, Inc. 15,000 5.78 2/12/98 14,895
35,000 5.75 3/03/98 34,660
Cregem North 11,900 5.70 2/24/98 11,793
America, Inc.
Daimler-Benz 50,000 6.70 1/02/98 49,981
North America Corp.
Eureka 30,000 6.05 1/12/98 29,940
Securitization Inc. 30,000 5.65 2/06/98 29,819
13,000 5.72 2/23/98 12,886
25,000 5.75 2/26/98 24,768
10,000 5.78 2/26/98 9,907
18,500 5.75 3/03/98 18,320
15,000 5.73 3/05/98 14,849
Finova Capital Corp. 30,000 5.63 2/06/98 29,819
20,000 5.72 2/24/98 19,821
60,000 5.56 3/19/98 59,266
20,000 5.56 3/23/98 19,743
25,000 5.59 4/17/98 24,580
France Telecom 11,200 5.75 3/20/98 11,061
General Electric 50,000 5.50 3/02/98 49,521
Capital Corp.
General Motors 50,000 5.81 2/03/98 49,726
Acceptance Corp. 25,000 5.64 2/11/98 24,829
75,000 5.72 2/13/98 74,462
75,000 5.75 2/13/98 74,462
40,000 5.73 3/13/98 39,548
30,000 5.72 3/16/98 29,647
20,000 5.54 3/18/98 19,758
25,000 5.57 3/20/98 24,690
Greenwich 24,500 5.82 2/10/98 24,336
Funding 14,785 5.82 2/12/98 14,681
Corporation 13,470 5.75 3/10/98 13,324
34,743 5.80 3/23/98 34,296
Internationale 40,000 5.70 6/09/98 39,004
Nederlanden (U.S.)
Funding Corp.
Lehman Brothers 65,000 5.90 1/27/98 64,712
Holdings, Inc. 46,400 5.75 2/17/98 46,037
38,000 5.74 2/23/98 37,665
Lexington Parker 14,413 5.82 2/02/98 14,336
Capital Corp. 49,402 5.63 2/12/98 49,056
40,000 5.71 2/24/98 39,641
40,666 5.75 3/05/98 40,258
30,519 5.73 3/06/98 30,208
Mont Blanc 80,000 5.80 2/04/98 79,544
Capital Corp. 40,000 5.85 2/05/98 39,765
50,000 5.81 2/12/98 49,649
50,000 5.85 2/26/98 49,535
Morgan Stanley 50,000 5.75 3/11/98 49,451
Group, Inc. 50,000 5.51 4/09/98 49,223
New Center 50,000 5.71 2/17/98 49,609
Asset Trust 40,000 5.75 3/18/98 39,517
Nordbanken 50,000 5.74 3/12/98 49,443
North America 50,000 5.75 3/16/98 49,411
Inc.
Old Line 50,000 5.89 1/28/98 49,771
Funding Corp. 50,000 5.82 2/03/98 49,727
25,000 5.85 2/03/98 24,862
8,490 5.82 2/06/98 8,439
12,000 5.98 2/26/98 11,888
Park Avenue 18,678 5.75 1/30/98 18,588
Receivables Corp. 29,277 5.83 2/06/98 29,102
22,204 5.70 2/12/98 22,048
Preferred 19,300 5.65 2/10/98 19,171
Receivables
Funding Corp.
Sears Roebuck 50,000 5.71 2/17/98 49,609
Acceptance 50,000 5.71 2/18/98 49,601
Corporation 50,000 5.71 2/20/98 49,584
Three Rivers 50,000 6.00 1/16/98 49,867
Funding Corp.
Twin Towers Inc. 23,917 6.00 1/21/98 23,833
40,000 5.90 2/17/98 39,685
WCP Funding Inc. 35,000 5.78 2/18/98 34,720
Windmill Funding 40,000 6.50 1/05/98 39,964
Corp. 20,464 5.82 2/02/98 20,355
48,000 5.70 2/05/98 47,718
15,062 5.75 2/06/98 14,971
35,362 5.65 2/10/98 35,126
9,854 5.80 2/13/98 9,783
19,000 5.75 3/09/98 18,797
25,000 5.77 3/20/98 24,690
----------
Total Commercial Paper
(Cost -- $3,337,026) 3,336,833
==========
Corporate Notes -- 9.2%
Abbey National 50,000 5.59+ 2/25/98 49,994
Treasury Services 50,000 5.65+ 4/15/98 49,993
PLC 50,000 5.62+ 6/09/98 49,985
Bank of Scotland 13,000 5.95 6/18/98 12,998
Treasury Services PLC
CIT Group 15,000 6.35 7/31/98 15,041
Holdings, Inc. 14,500 5.58+ 8/17/98 14,492
36,200 5.59+ 9/30/98 36,176
Credit Suisse 33,000 6.19+ 5/22/98 33,000
First Boston Inc.
IBM Credit Corp. 10,000 5.868 8/13/98 9,999
70,000 5.635+ 11/23/98 69,973
LABS Trust -- 61,448 6.00+ 12/28/98 61,448
Series 1996-4
Senior Notes
LABS Trust -- 38,866 5.969+ 10/21/98 38,866
Series 1997-6
Senior Notes
LABS Trust -- 30,000 5.969+ 12/22/98 30,000
Series 1997-7
Senior Notes
Morgan Stanley 50,000 5.921+ 9/14/98 50,000
Group, Inc.
Premier Auto 15,028 5.649 6/08/98 15,027
Trust 1997-3
(Class A-1)
SMM Trust 1997-Q 100,000 5.98+ 1/15/98 100,000
----------
Total Corporate Notes
(Cost -- $636,984) 636,992
==========
Funding Agreements -- 1.2%
Jackson National 80,000 5.718+ 5/01/98 80,000
Life Insurance Co. ----------
Total Funding Agreements
(Cost -- $80,000) 80,000
==========
Master Notes -- 4.3%
Goldman Sachs 75,000 5.94+ 4/28/98 75,000
Group, L.P. 75,000 5.969+ 4/28/98 75,000
150,000 5.94+ 5/29/98 150,000
----------
Total Master Notes
(Cost -- $300,000) 300,000
==========
US Government, Agency &
Instrumentality
Obligations -- Discount -- 1.7%
Federal Home 25,000 5.35 6/05/98 24,406
Loan Banks 5,095 5.34 6/19/98 4,963
24,330 5.35 6/19/98 23,700
Federal National 15,000 5.35 4/09/98 14,774
Mortgage Association
US Treasury Bills 13,300 5.36 4/30/98 13,068
36,700 5.40 4/30/98 36,060
----------
Total US Government, Agency &
Instrumentality Obligations --
Discount (Cost -- $116,982) 116,971
==========
US Government, Agency &
Instrumentality Obligations --
Non-Discount -- 9.0%
Federal Farm 10,000 5.81 12/04/98 9,995
Credit Banks 15,000 6.10 4/15/99 15,000
Federal Home 26,000 5.85+ 1/26/98 26,002
Loan Banks 25,000 5.80 6/12/98 24,995
5,000 6.355 6/11/99 5,010
10,000 5.98 8/11/99 9,994
20,000 5.99 8/11/99 19,981
Federal Home 30,000 5.685 8/21/98 29,972
Loan Mortgage Corp.
Federal National 51,000 5.57+ 3/26/98 50,993
Mortgage 66,000 5.629+ 3/27/98 65,989
Association 50,000 5.669+ 4/24/98 49,994
33,000 6.00+ 5/14/98 33,000
29,000 5.56+ 5/21/98 28,992
45,000 5.56+ 5/22/98 44,988
25,000 5.68 7/31/98 24,979
10,000 5.81 11/25/98 9,995
10,000 5.81 12/01/98 9,995
14,930 5.40 12/30/98 14,869
15,000 6.375 5/21/99 15,030
11,000 6.11 6/22/99 11,048
40,000 5.504+ 7/14/99 39,897
15,000 5.95 8/05/99 14,984
8,900 5.88 8/10/99 8,884
Student Loan 7,500 5.60 8/11/98 7,490
Marketing 15,000 5.80+ 12/18/98 14,978
Association 35,000 5.909+ 11/25/98 34,991
----------
Total US Government, Agency &
Instrumentality Obligations --
Non-Discount (Cost -- $621,881) 622,045
==========
<CAPTION>
Face
Amount Issue
<S> <C>
Repurchase Agreements** -- 3.6%
$250,000 HSBC Securities, Inc., purchased on
12/31/1997 to yield 6.80% to 1/02/1998 250,000
----------
Total Repurchase Agreements (Cost -- $250,000) 250,000
==========
Total Investments (Cost -- $6,964,658) -- 100.3% 6,964,529
==========
Liabilities in Excess of Other Assets -- (0.3%) (17,862)
----------
Net Assets -- 100.0% $6,946,667
==========
* 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, 1997.
** Repurchase Agreements are fully collateralized by US Government Obligations.
+ Variable Rate Notes.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of December 31, 1997
<S> <C> <C> <C>
Assets: Investments, at value (identified cost -- $6,964,657,805*) (Note 1a) $6,964,528,823
Cash 4,514,581
Receivables:
Interest $45,384,797
Securities sold 4,996,866
Beneficial interest sold 2,133,140 52,514,803
--------------
Prepaid registration fees and other assets (Note 1e) 175,493
--------------
Total assets 7,021,733,700
--------------
Liabilities: Payables:
Beneficial interest redeemed 68,193,342
Distributor (Note 2) 2,439,306
Investment adviser (Note 2) 2,306,532 72,939,180
--------------
Accrued expenses and other liabilities 2,127,864
--------------
Total liabilities 75,067,044
--------------
Net Assets: Net assets $6,946,666,656
==============
Net Assets Shares of beneficial interest, $.10 par value, unlimited number of
Consist of: shares authorized $694,679,564
Paid-in capital in excess of par 6,252,116,074
Unrealized depreciation on investments -- net (128,982)
--------------
Net Assets -- Equivalent to $1.00 per share based on 6,946,795,638
shares of beneficial interest outstanding $6,946,666,656
==============
* As of December 31, 1997, net unrealized depreciation for Federal
income tax purposes amounted to $128,982 of which $509,654 related
to appreciated securities and $638,636 related to depreciated
securities. The aggregate cost of investments at December 31, 1997
for Federal income tax purposes was $6,964,657,805.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the Year Ended
December 31, 1997
<S> <C> <C> <C>
Investment Income Interest and amortization of premium and discount earned $412,382,281
(Note 1d):
Expenses: Investment advisory fees (Note 2) $25,839,319
Transfer agent fees (Note 2) 11,354,568
Distribution fees (Note 2) 8,242,767
Accounting services (Note 2) 366,592
Registration fees (Note 1e) 308,041
Interest expense 306,707
Printing and shareholder reports 286,393
Custodian fees 219,143
Trustees' fees and expenses 137,773
Professional fees 88,613
Other 74,017
--------------
Total expenses 47,223,933
--------------
Investment income -- net 365,158,348
--------------
Realized & Realized gain on investments -- net 175,283
Unrealized Gain on Change in unrealized depreciation on investments -- net 329,079
Investments -- Net --------------
(Note 1d): Net Increase in Net Assets Resulting from Operations $365,662,710
==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
For the Year
Ended December 31,
Increase (Decrease) in Net Assets: 1997 1996
<S> <C> <C> <C>
Operations: Investment income -- net $365,158,348 $360,356,362
Realized gain on investments -- net 175,283 559,269
Change in unrealized appreciation/depreciation on investments
-- net 329,079 (2,689,938)
--------------- ---------------
Net increase in net assets resulting from operations 365,662,710 358,225,693
--------------- ---------------
Dividends & Investment income -- net (365,158,348) (360,356,362)
Distributions to Realized gain on investments -- net (175,283) (559,269)
Shareholders --------------- ---------------
(Note 1f): Net decrease in net assets resulting from dividends and
distributions to shareholders (365,333,631) (360,915,631)
--------------- ---------------
Beneficial Interest Net proceeds from sale of shares 13,708,317,153 13,961,575,969
Transactions Net asset value of shares issued to shareholders in reinvestment
(Note 3): of dividends and distributions (Note 1f) 363,840,858 359,459,266
--------------- ---------------
14,072,158,011 14,321,035,235
Cost of shares redeemed (14,222,080,551) (14,301,439,885)
--------------- ---------------
Net increase (decrease) in net assets derived from beneficial
interest transactions (149,922,540) 19,595,350
--------------- ---------------
Net Assets: Total increase (decrease) in net assets (149,593,461) 16,905,412
Beginning of year 7,096,260,117 7,079,354,705
--------------- ---------------
End of year $6,946,666,656 $7,096,260,117
=============== ===============
See Notes to Financial Statements.
</TABLE>
<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,
1997 1996 1995 1994 1993
Increase (Decrease) in Net Asset Value:
<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 .0503 .0491 .0538 .0366 .0272
Realized and unrealized gain (loss) on
investments -- net .0001 (.0003) .0016 (.0012) .0003
---------- ---------- ---------- ---------- ----------
Total from investment operations .0504 .0488 .0554 .0354 .0275
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income -- net (.0503) (.0491) (.0538) (.0366) (.0272)
Realized gain on investments -- net --+ (.0001) (.0001) --+ (.0005)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.0503) (.0492) (.0539) (.0366) (.0277)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
========== ========== ========== ========== ==========
Total investment return 5.16% 5.05% 5.53% 3.73% 2.81%
========== ========== ========== ========== ==========
Ratios to Average Expenses .65% .64% .67% .65% .65%
Net Assets: ========== ========== ========== ========== ==========
Investment income and realized gain
(loss) on investments -- net 5.03% 4.88% 5.40% 3.67% 2.78%
========== ========== ========== ========== ==========
Supplemental Net assets, end of year
Data: (in thousands) $6,946,667 $7,096,260 $7,079,355 $6,240,997 $6,523,187
========== ========== ========== ========== ==========
+ Amount is less than $.0001 per share.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Ready Assets Trust December 31, 1997
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) Repurchase agreements -- The Trust invests in US Government
securities pursuant to repurchase agreements with a member bank of the
Federal Reserve System or a primary dealer in US Government
securities. Under such agreements, the bank or primary dealer agrees
to repurchase the security at a mutually agreed upon time and price.
The Trust takes possession of the underlying securities, marks to
market such securities and, if necessary, receives additional
securities daily to ensure that the contract is fully collateralized.
(c) 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.
(d) 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.
(e) Prepaid registration fees -- Prepaid registration fees are charged
to expense as the related shares are issued.
(f) 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 and 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.
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, and/or ML & Co.
3. Shares of Beneficial Interest:
The number of shares purchased and redeemed during the year ended
December 31, 1997 and the year ended December 31, 1996 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.
4. Capital Loss Carryforward:
At December 31, 1997, the Trust had a net capital loss carryforward of
approximately $71,000, all of which expires in 2005. This amount will
be available to offset like amounts of any future taxable gains.
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, 1997, 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, 1997 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, 1997, 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 6, 1998
IMPORTANT TAX INFORMATION (unaudited)
During the year ended December 31, 1997, Merrill Lynch Ready Assets
Trust distributed long-term capital gains of $.000044 per share to
shareholders of record as of March 14, 1997. All of the above amount
is subject to a 28% tax rate.
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
Kevin J. McKenna, Senior Vice President
Joseph T. Monagle Jr., Senior Vice President
Donald C. Burke, Vice President
John Ng, Vice President
Gerald M. Richard, Treasurer
Thomas D. Jones, III, Secretary
Custodian
The Bank of New York
90 Washington Street, 12th floor
New York, NY 10286
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 221-7210