UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-2556
Merrill Lynch Ready Assets Trust
Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Terry K. Glenn, President,
Merrill Lynch Ready Assets Trust, 800 Scudders Mill Road,
Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011, Princeton,
NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 12/31/02
Date of reporting period: 01/01/02 - 12/31/02
Item 1 - Is shareholder report attached? - Y
Item 2 - Did registrant adopt a code of ethics, as of the end of the
period covered by this report, that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by
the registrant or a third party? If not, why not? Briefly describe
any amendments or waivers that occurred during the period. State
here if code of ethics/amendments/waivers are on website and give
website address-. State here if fund will send code of ethics to
shareholders without charge upon request--N/A (not answered until
July 15, 2003 and only annually for funds)
Item 3 - Did the registrant's board of directors determine that the
registrant either: (i) has at least one audit committee financial
expert serving on its audit committee; or (ii) does not have an
audit committee financial expert serving on its audit committee? If
yes, disclose name of financial expert and whether he/she is
"independent," (fund may, but is not required, to disclose
name/independence of more than one financial expert) If no, explain
why not. -N/A (not answered until July 15, 2003 and only annually
for funds)
Item 4 - Disclose annually only (not answered until December 15,
2003)
(a) Audit Fees - Disclose aggregate fees billed for each of the last
two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial
statements or services that are normally provided by the accountant
in connection with statutory and regulatory filings or engagements
for those fiscal years. N/A.
(b) Audit-Related Fees - Disclose aggregate fees billed in each of
the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance
of the audit of the registrant's financial statements and are not
reported under paragraph (a) of this Item. Registrants shall
describe the nature of the services comprising the fees disclosed
under this category. N/A.
(c) Tax Fees - Disclose aggregate fees billed in each of the last
two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning.
Registrants shall describe the nature of the services comprising the
fees disclosed under this category. N/A.
(d) All Other Fees - Disclose aggregate fees billed in each of the
last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs
(a) through (c) of this Item. Registrants shall describe the nature
of the services comprising the fees disclosed under this category.
N/A.
(e)(1) Disclose the audit committee's pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of Regulation
S-X. N/A.
(e)(2) Disclose the percentage of services described in each of
paragraphs (b) through (d) of this Item that were approved by the
audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X. N/A.
(f) If greater than 50%, disclose the percentage of hours expended
on the principal accountant's engagement to audit the registrant's
financial statements for the most recent fiscal year that were
attributed to work performed by persons other than the principal
accountant's full-time, permanent employees. N/A.
(g) Disclose the aggregate non-audit fees billed by the registrant's
accountant for services rendered to the registrant, and rendered to
the registrant's investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant for each of the
last two fiscal years of the registrant. N/A.
(h) Disclose whether the registrant's audit committee has considered
whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser
whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence. N/A.
Items 5-6 - Reserved
Item 7 - For closed-end funds that contain voting securities in
their portfolio, describe the policies and procedures that it uses
to determine how to vote proxies relating to those portfolio
securities. N/A.
Item 8--Reserved
Item 9(a) - Disclose the conclusions of the registrant's principal
executive officer or officers and principal financial officer or
officers, or persons performing similar functions, about the
effectiveness of the registrant's disclosure controls and procedures
(as defined in Rule 30a-2(c) under the Act (17 CFR 270.30a-2(c)))
based on their evaluation of these controls and procedures as of a
date within 90 days of the filing date of the report that includes
the disclosure required by this paragraph. N/A.
Item 9(b)--There were no significant changes in the registrant's
internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Item 10 - Exhibits
10(a) - Attach code of ethics or amendments/waivers, unless code of
ethics or amendments/waivers is on website or offered to
shareholders upon request without charge. N/A.
10(b) - Attach certifications (4 in total pursuant to Sections 302
and 906 for CEO/CFO). Attached hereto.
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Merrill Lynch Ready Assets Trust
By: _/s/ Terry K. Glenn_______
Terry K. Glenn,
President of
Merrill Lynch Ready Assets Trust
Date: February 24, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By: _/s/ Terry K. Glenn________
Terry K. Glenn,
President of
Merrill Lynch Ready Assets Trust
Date: February 24, 2003
By: _/s/ Donald C. Burke________
Donald C. Burke
Chief Financial Officer of
Merrill Lynch Ready Assets Trust
Date: February 24, 2003
<ITEM 1>
(BULL LOGO)
Merrill Lynch Investment Managers
Annual Report
December 31, 2002
Merrill Lynch
Ready Assets
Trust
www.mlim.ml.com
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. An
investment in the Trust is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
Although the Trust seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the
Trust. Statements and other information herein are as dated and are
subject to change.
Merrill Lynch Ready Assets Trust
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
Merrill Lynch Ready Assets Trust, December 31, 2002
DEAR SHAREHOLDER
For the year ended December 31, 2002, Merrill Lynch Ready Assets
Trust paid shareholders a net annualized dividend of 1.40%.* For the
six-month period ended December 31, 2002, the Trust paid
shareholders a net annualized dividend of 1.26%.* The Trust's 7-day
yield as of December 31, 2002 was .95%.
The average portfolio maturity for Merrill Lynch Ready Assets Trust
at December 31, 2002 was 56 days, compared to 58 days at June 30,
2002.
Economic Environment
By December 31, 2002, the U.S. economy appeared to be on track for
annual growth of roughly 2.5%, with growth in the fourth quarter of
2002 declining to an estimated 1% from a relatively strong 4% in the
third quarter. Most analysts do not expect consumers to continue to
support economic growth in 2003 as they had in 2002. Large-scale
layoff announcements in the fourth quarter and uncertainty over Iraq
led to a decline in consumer confidence. Industry surveys indicated
that consumers were still uneasy about the employment situation.
These factors contributed to the anemic holiday season, with modest
gains in overall sales limited by heavy discounting needed to bring
buyers into the stores. The strength in the housing market and
mortgage refinancing activity provided household well-being during
the six-month period ended December 31, 2002, but there are signs
this trend is tapering off as mortgage rates have stopped dropping.
After more than two years of retrenchment, corporate balance sheets
improved during the six-month period. It remains unclear if this
will lead to an increase in capital expenditures unless revenues
show signs of growth. However, the combination of low interest rates
and proposed fiscal stimulus may yet bring improvement to the
economic outlook.
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
The impact of economic data continued to be muted in light of other
events that have brought increased volatility to the markets. The
short end of the U.S. Treasury market (two years and under) was
subject to a safe-haven trade during the last few months, with U.S.
Treasury yields approaching historical lows. The equity and
corporate bond markets continued to slide from the disclosure of
questionable accounting and business practices. The threat of a U.S.
military conflict with Iraq cast a pall on financial markets, with
volatility accelerating along with the rhetoric. Increasingly, the
decline in the U.S. dollar compared to other major currencies and
recent highs in oil and gold prices added another element to the
uncertainties facing the markets. We believe that fiscal stimulus
will lead to increased borrowing by the U.S. Treasury, and changes
in the borrowings mix are likely to produce structural changes to
the yield curve. These factors influenced the markets during the
fourth quarter of 2002, and we believe are likely to continue, to
varying degrees, into the first quarter of 2003.
Portfolio Matters
Our desired portfolio mix and average duration remained relatively
unchanged during the six-month period ended December 31, 2002. To
target a 50-day - 60-day average life, we favored an overweight
position in variable rate notes, and for fixed rate exposure, we
preferred callable agency structures. The universe of available
first-tier corporate credits declined throughout the year, thus
collapsing spreads because of scarcity value. Somewhat surprisingly,
spreads on agency issues remained unchanged. We added floating rate
agency securities on a one-month London Interbank Offered Rate
(LIBOR) less an eight basis point (.08%) equivalent, which
represented a similar level to that of first-tier commercial paper.
Sufficient exposure in variable rate product should provide adequate
protection against imminently higher interest rates and allow us
greater flexibility with our fixed rate purchases, as we expect
higher interest rates to eventually produce a steeper curve. Amid
the flat-to-inverted yield curve environment in the middle part of
the year, we became increasingly involved in callable agency paper.
With two-year volatility at all-time highs, we believed the premiums
we received by selling imbedded call options created valuable
investment opportunities, especially given the inversion of the
LIBOR curve in the front end. This scenario enabled us to generate
yields that were otherwise unavailable for the higher-quality
credits, which we were primarily focused on in this extremely credit-
sensitive environment. At these volatility levels, callable bonds
had superior option-adjusted spreads in addition to their higher
coupons.
Merrill Lynch Ready Assets Trust, December 31, 2002
Recently, we have become increasingly cautious of adding any new
longer-exposure issues as volatility has declined, quality spreads
have collapsed and U.S. Treasury yields have re-tested their lows.
Therefore, we no longer see value in callable structures, as their
option-adjusted spreads are far less compelling. We remain content
to allow our duration target to passively drift lower, awaiting
better buying opportunities, which we believe may arise if a
resolution with Iraq is reached and/or the possibility of a
Republican-led tax stimulus package increases.
The Trust's composition at the end of December and as of our last
report to shareholders is detailed below:
12/31/02 6/30/02
-------- -------
Bank Notes 1.3% 2.2%
Certificates of Deposit--European 1.0 4.3
Certificates of Deposit--Yankee++ 6.0 9.5
Commercial Paper 31.5 39.7
Corporate Notes 7.3 6.6
Funding Agreements 3.6 3.3
Municipal Bonds 0.7 --
Promissory Notes -- 1.6
Repurchase Agreements 5.7 2.0
U.S. Government, Agency & Instrumentality
Obligations--Discount 1.2 2.9
U.S. Government, Agency & Instrumentality
Obligations--Non-Discount 41.6 28.5
Liabilities in Excess of Other Assets -- (0.6)
Other Assets Less Liabilities 0.1 --
===== ======
Total 100.0% 100.0%
====== ======
++U.S. branches of foreign banks.
In Conclusion
We appreciate your investment in Merrill Lynch Ready Assets Trust,
and we look forward to sharing our investment outlook with you in
our next report to shareholders.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Trustee
(Donaldo S. Benito)
Donaldo S. Benito
Vice President and
Portfolio Manager
January 29, 2003
Merrill Lynch Ready Assets Trust, December 31, 2002
SCHEDULE OF INVESTMENTS (in Thousands)
Face Interest Maturity
Issue Amount Rate* Date Value
Bank Notes--1.3%
National City $ 45,000 1.40++% 5/19/2003 $ 45,005
Bank--Indiana
National City 25,000 1.501++ 3/05/2003 25,018
Bank--Ohio
Total Bank Notes
(Cost--$70,012) 70,023
Certificates of Deposit--European--1.0%
HBOS Treasury 22,000 1.355 2/12/2003 22,000
Services PLC, London
Lloyds TSB Bank 33,000 2.625 6/05/2003 33,186
PLC, London
Total Certificates of Deposit--European
(Cost--$55,017) 55,186
Certificates of Deposit--Yankee--6.0%
ABN-AMRO Bank NV, 22,500 2.595 6/11/2003 22,628
NY
Abbey National 13,500 2.675 5/23/2003 13,572
Treasury Services
PLC, NY
Canadian Imperial 22,000 2.615 5/30/2003 22,118
Bank of Commerce,
NY
Dresdner Bank AG, 44,000 1.37 4/14/2003 44,009
NY
Nordea Bank Finland, 70,000 1.379++ 9/09/2003 69,993
NY
Svenska 30,000 2.50 6/13/2003 30,161
Handelsbanken AB, NY
SwedBank, NY 55,000 1.35++ 6/20/2003 54,992
Toronto-Dominion 25,000 2.49 7/14/2003 25,158
Bank, NY 36,000 1.36++ 9/26/2003 35,991
Total Certificates of Deposit--Yankee
(Cost--$317,980) 318,622
Face Interest Maturity
Issue Amount Rate* Date Value
Commercial Paper--31.5%
Amsterdam $ 6,400 1.35 % 1/02/2003 $ 6,400
Funding Corp.
Apreco, Inc. 11,000 1.36 1/21/2003 10,992
Aspen Funding Corp. 25,000 1.37 1/06/2003 24,996
Asset Securitization 22,000 1.33 1/16/2003 21,989
Cooperative Corp. 42,000 1.35 2/26/2003 41,915
Blue Ridge Asset 23,000 1.37 1/13/2003 22,990
Funding Corp. 23,000 1.37 1/14/2003 22,989
Clipper Receivables 32,000 1.33 1/13/2003 31,987
Corp. 31,500 1.35 1/27/2003 31,470
11,500 1.35 2/11/2003 11,483
Corporate Asset 30,000 1.35 2/06/2003 29,961
Funding Co., Inc. 30,000 1.35 2/11/2003 29,955
Delaware Funding 17,000 1.36 1/09/2003 16,996
Corp.
Dresdner US 33,500 1.35 3/12/2003 33,413
Finance, Inc.
Edison Asset 23,000 1.33 3/10/2003 22,942
Securitization,
LLC
Enterprise Funding 33,000 1.36 1/09/2003 32,991
Corp. 24,317 1.35 2/06/2003 24,285
Eureka 15,000 1.33 1/07/2003 14,997
Securitization Inc. 40,000 1.35 1/28/2003 39,961
15,400 1.30 2/19/2003 15,373
24,200 1.30 2/28/2003 24,150
FCAR Owner Trust 20,000 1.35 1/08/2003 19,996
Falcon Asset 13,000 1.35 1/17/2003 12,993
Securitization
Forrestal Funding 28,000 1.36 1/07/2003 27,995
Master Trust
Goldman Sachs 27,000 1.76++ 10/09/2003 26,997
Group, Inc. 78,000 1.431++ 10/10/2003 78,000
Merrill Lynch Ready Assets Trust, December 31, 2002
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Face Interest Maturity
Issue Amount Rate* Date Value
Commercial Paper (continued)
Greyhawk $ 33,000 1.33 % 1/15/2003 $ 32,984
Funding, LLC 50,000 1.75 1/16/2003 49,974
30,000 1.35 2/20/2003 29,946
HBOS Treasury 36,000 1.33 1/14/2003 35,984
Services PLC
Kitty Hawk 24,000 1.36 1/09/2003 23,994
Funding Corp. 10,000 1.35 1/22/2003 9,993
30,817 1.35 2/18/2003 30,763
Mont Blanc 7,000 1.35 1/22/2003 6,995
Capital Corp.
Morgan Stanley 22,000 1.393++ 1/21/2003 22,000
Dean Witter & Co. 90,000 1.393++ 2/24/2003 90,000
40,000 1.33++ 5/15/2003 40,000
9,000 1.393++ 5/20/2003 9,000
20,000 1.33++ 5/22/2003 20,000
Newport Funding 20,000 1.33 1/09/2003 19,995
Corp. 5,000 1.35 1/21/2003 4,996
Old Line Funding 22,737 1.34 1/03/2003 22,736
Corp. 25,799 1.35 1/10/2003 25,791
10,000 1.36 1/10/2003 9,997
26,618 1.36 1/23/2003 26,597
36,000 1.35 2/10/2003 35,949
28,846 1.34 2/14/2003 28,800
PB Finance 33,250 1.35 3/18/2003 33,157
(Delaware) Inc.
Park Avenue 19,000 1.35 2/04/2003 18,976
Receivables Corp. 35,000 1.34 2/05/2003 34,956
Preferred 16,000 1.38 1/14/2003 15,993
Receivables 14,750 1.35 1/17/2003 14,742
Funding Corp.
Rio Tinto America,
Inc. 50,136 1.34 1/24/2003 50,095
Rio Tinto Commercial 12,000 1.34 1/24/2003 11,990
Paper Ltd.
Salomon, Smith 44,000 1.57++ 5/08/2003 44,000
Barney Holdings, Inc.
Face Interest Maturity
Issue Amount Rate* Date Value
Commercial Paper (concluded)
Sheffield $ 25,000 1.35 % 1/16/2003 $ 24,987
Receivables
Corporation
Spintab AB 45,000 1.76 1/23/2003 44,965
32,000 1.34 3/13/2003 31,916
Tulip Funding 35,000 1.35 1/29/2003 34,964
Corporation 13,206 1.37 1/29/2003 13,193
22,000 1.37 2/27/2003 21,955
Windmill Funding 17,000 1.33 1/13/2003 16,993
Corp. 15,000 1.33 1/16/2003 14,992
Total Commercial Paper
(Cost--$1,682,562) 1,682,584
Corporate Notes--7.3%
American Honda 12,500 1.798++ 4/22/2003 12,497
Finance Corp. 25,000 1.393++ 9/04/2003 25,017
12,500 1.74++ 10/06/2003 12,499
Associates Corp. of 16,000 1.47++ 6/26/2003 16,000
North America
BMW US Capital 16,000 1.423++ 12/10/2003 16,000
Corp.
Bank of New York 25,000 1.848++ 10/30/2003 24,977
Co., Inc.
General Electric 86,000 1.419++ 3/24/2003 86,006
Capital Corp. 5,000 1.898++ 10/22/2003 5,001
50,000 1.45++ 1/16/2004 50,000
Goldman Sachs 16,000 2.025++ 1/13/2004 16,000
Group, Inc.
Holmes Financing 23,300 1.42++ 10/15/2003 23,300
Number 6
Household 30,000 1.52++ 2/14/2003 30,000
Finance Corp.
Morgan Stanley 20,000 1.52++ 1/16/2004 20,000
Dean Witter & Co.
Northern Rock PLC 22,000 1.42++ 11/19/2003 21,993
Merrill Lynch Ready Assets Trust, December 31, 2002
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Face Interest Maturity
Issue Amount Rate* Date Value
Corporate Notes (concluded)
Salomon Smith $ 12,000 1.665%++ 8/11/2003 $ 12,016
Barney Holdings,
Inc.
Wal-Mart Stores, Inc. 20,500 4.878 6/01/2003 20,771
Total Corporate Notes (Cost--$392,043) 392,077
Funding Agreements--3.6%
Jackson National 80,000 1.519++ 5/01/2003 80,000
Life Insurance Co.
Metropolitan 20,000 1.509++ 4/01/2003 20,000
Life Insurance
Company
Monumental 20,000 1.584++ 11/14/2003 20,000
Life Insurance
Company
New York Life 30,000 1.478++ 5/30/2003 30,000
Insurance 20,000 1.518++ 10/21/2003 20,000
Company
Pacific Life 20,000 1.519++ 1/31/2003 20,000
Insurance Co.
Total Funding Agreements
(Cost--$190,000) 190,000
Municipal Bonds--0.7%
California 38,000 1.42++ 6/20/2003 38,000
State, Revenue
Anticipation Note
Total Municipal Bonds
(Cost--$38,000) 38,000
U.S. Government, Agency & Instrumentality
Obligations--Discount--1.2%
Federal Farm 4,000 2.17 1/30/2003 3,996
Credit Bank
Face Interest Maturity
Issue Amount Rate* Date Value
U.S. Government, Agency & Instrumentality
Obligations--Discount (concluded)
Federal National $ 35,000 2.18 % 2/07/2003 $ 34,959
Mortgage Association 25,000 2.26 2/07/2003 24,970
Total U.S. Government, Agency & Instrumentality
Obligations--Discount (Cost--$63,860) 63,925
U.S. Government, Agency & Instrumentality
Obligations--Non-Discount--41.6%
Federal Farm 21,000 1.319++ 3/01/2004 20,993
Credit Bank 90,000 1.319++ 3/01/2004 89,979
40,000 1.25++ 3/16/2004 39,990
44,000 1.29++ 3/16/2004 43,979
27,000 1.25++ 4/15/2004 26,993
45,000 1.25++ 6/21/2004 45,035
22,000 1.27++ 8/06/2004 21,995
9,000 2.70 10/07/2004 9,003
23,000 1.27++ 11/04/2004 23,000
89,500 1.336++ 12/15/2004 89,491
110,000 1.28++ 12/17/2004 110,000
Federal Home 30,000 5.125 1/13/2003 30,033
Loan Banks 25,000 1.30++ 2/20/2003 25,005
50,000 1.308++ 3/06/2003 49,995
60,000 1.22++ 3/12/2003 59,993
22,000 4.50 4/25/2003 22,221
35,000 4.50 5/15/2003 35,411
45,000 1.24++ 6/17/2003 45,046
15,000 4.50 7/07/2003 15,250
65,000 1.666++ 9/15/2003 65,061
5,000 2.50 11/14/2003 5,052
51,000 1.253++ 12/04/2003 51,037
14,665 3.375 5/14/2004 15,038
9,000 2.35 11/22/2004 9,031
Federal Home 15,000 4.75 3/15/2003 15,106
Loan Mortgage 11,000 2.50 8/27/2004 11,075
Corporation 11,000 3.25 11/15/2004 11,308
11,000 2.23 11/19/2004 11,070
Merrill Lynch Ready Assets Trust, December 31, 2002
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
Face Interest Maturity
Issue Amount Rate* Date Value
U.S. Government, Agency & Instrumentality
Obligations--Non-Discount (continued)
Federal National $ 50,000 1.28++% 2/03/2003 $ 50,000
Mortgage 20,000 2.25 2/07/2003 20,017
Association 8,400 5.00 2/14/2003 8,434
93,000 1.248++ 2/19/2003 92,998
46,000 4.625 5/15/2003 46,566
90,000 1.291++ 6/09/2003 89,980
37,000 1.23++ 6/16/2003 37,035
24,000 1.527++ 8/01/2003 24,006
21,000 4.00 8/15/2003 21,354
56,000 1.27++ 9/19/2003 55,996
85,500 4.75 11/14/2003 88,029
50,000 1.258++ 12/03/2003 50,032
110,000 1.447++ 1/14/2004 110,000
34,000 1.668++ 1/22/2004 34,001
87,000 1.251++ 2/13/2004 87,005
7,500 5.125 2/13/2004 7,814
16,000 3.75 5/12/2004 16,135
110,000 1.285++ 5/27/2004 109,930
15,000 2.46 8/19/2004 15,109
13,000 2.70 8/19/2004 13,024
9,000 2.69 8/27/2004 9,048
9,000 2.72 8/27/2004 9,020
9,000 2.80 9/03/2004 9,022
11,000 2.40 10/29/2004 11,038
9,000 2.625 11/04/2004 9,104
11,000 2.25 11/22/2004 11,041
Face Interest Maturity
Issue Amount Rate* Date Value
U.S. Government, Agency & Instrumentality
Obligations--Non-Discount (concluded)
Student Loan $ 18,000 2.25 % 7/02/2003 $ 18,090
Marketing 50,000 1.357++ 7/10/2003 50,000
Association 50,000 1.417++ 1/09/2004 50,000
69,000 1.427++ 2/12/2004 68,985
Total U.S. Government, Agency & Instrumentality
Obligations--Non-Discount (Cost--$2,216,311) 2,220,003
Repurchase Agreements**--5.7%
Face
Amount Issue
$100,000 Credit Suisse First Boston Corp.,
purchased on 12/31/2002 to yield
1.25% on 1/02/2003 100,000
67,000 J.P. Morgan Securities Inc.,
purchased on 12/31/2002 to yield
1.23% on 1/02/2003 67,000
134,756 UBS Warburg Corp. LLC, purchased
on 12/31/2002 to yield 1.25% on
1/02/2003 134,756
Total Repurchase Agreements (Cost--$301,756) 301,756
Total Investments
(Cost--$5,327,541)--99.9% 5,332,176
Other Assets Less Liabilities--0.1% 4,033
----------
Net Assets--100.0% $5,336,209
==========
*Commercial Paper and certain U.S. Government, Agency &
Instrumentality Obligations are traded on a discount basis; the
interest rates shown reflect 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; the interest rates shown are the rates in
effect at December 31, 2002.
**Repurchase Agreements are fully collateralized by U.S. Government
& Agency Obligations.
++Variable rate notes.
See Notes to Financial Statements.
Merrill Lynch Ready Assets Trust, December 31, 2002
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of December 31, 2002
Assets: Investments, at value (identified cost--$5,327,540,747*) $ 5,332,176,259
Cash 39,929
Receivables:
Beneficial interest sold $ 35,080,944
Interest 11,237,090 46,318,034
---------------
Prepaid registration fees and other assets 177,768
---------------
Total assets 5,378,711,990
---------------
Liabilities: Payables:
Beneficial interest redeemed 37,958,131
Distributor 2,168,357
Investment adviser 1,700,653 41,827,141
---------------
Accrued expenses and other liabilities 675,450
---------------
Total liabilities 42,502,591
---------------
Net Assets: Net assets $ 5,336,209,399
===============
Net Assets Shares of beneficial interest, $.10 par value, unlimited
Consist of: number of shares authorized $ 533,157,389
Paid-in capital in excess of par 4,798,416,498
Unrealized appreciation on investments--net 4,635,512
---------------
Net Assets--Equivalent to $1.00 per share based
on 5,331,573,887 shares of beneficial interest outstanding $ 5,336,209,399
===============
*Cost for Federal income tax purposes. As of December 31, 2002, net
unrealized appreciation for Federal income tax purposes amounted to
$4,635,512, of which $4,701,878 related to appreciated securities
and $66,366 related to depreciated securities.
See Notes to Financial Statements.
Merrill Lynch Ready Assets Trust, December 31, 2002
FINANCIAL INFORMATION (continued)
Statement of Operations
For the Year Ended
December 31, 2002
Investment Interest and amortization of premium and discount earned $ 116,365,223
Income:
Expenses: Investment advisory fees $ 21,056,403
Distribution fees 6,790,592
Transfer agent fees 6,350,370
Accounting services 729,517
Printing and shareholder reports 247,870
Registration fees 179,937
Custodian fees 151,921
Professional fees 146,292
Trustees' fees and expenses 97,440
Pricing services 12,064
Other 71,640
---------------
Total expenses 35,834,046
---------------
Investment income--net 80,531,177
---------------
Realized & Realized gain on investments--net 422,875
Unrealized Change in unrealized appreciation on investments--net (3,590,466)
Gain (Loss)on ---------------
Investments-- Total realized and unrealized loss on investments--net (3,167,591)
Net: ---------------
Net Increase in Net Assets Resulting from Operations $ 77,363,586
===============
See Notes to Financial Statements.
Merrill Lynch Ready Assets Trust, December 31, 2002
FINANCIAL INFORMATION (continued)
Statements of Changes in Net Assets
For the Year Ended
December 31,
Increase (Decrease) in Net Assets: 2002 2001
Operations: Investment income--net $ 80,531,177 $ 235,807,607
Realized gain on investments--net 422,875 1,168,974
Change in unrealized appreciation on
investments--net (3,590,466) 7,984,221
--------------- ---------------
Net increase in net assets resulting from operations 77,363,586 244,960,802
--------------- ---------------
Dividends & Investment income--net (80,531,177) (235,807,607)
Distributions to Realized gain on investments--net (422,875) (1,168,974)
Shareholders: --------------- ---------------
Net decrease in net assets resulting from
dividends and distributions to shareholders (80,954,052) (236,976,581)
--------------- ---------------
Beneficial Net proceeds from sale of shares 6,978,005,181 8,469,358,221
Interest Value of shares issued to shareholders in
Transactions: reinvestment of dividends and distributions 80,953,534 237,068,954
--------------- ---------------
7,058,958,715 8,706,427,175
Cost of shares redeemed (7,723,113,919) (8,556,236,305)
--------------- ---------------
Net increase (decrease) in net assets derived
from beneficial interest transactions (664,155,204) 150,190,870
--------------- ---------------
Net Assets: Total increase (decrease) in net assets (667,745,670) 158,175,091
Beginning of year 6,003,955,069 5,845,779,978
--------------- ---------------
End of year $ 5,336,209,399 $ 6,003,955,069
=============== ===============
See Notes to Financial Statements.
Merrill Lynch Ready Assets Trust, December 31, 2002
FINANCIAL INFORMATION (concluded)
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: 2002 2001 2000 1999 1998
Per Share Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .0139 .0381 .0582 .0464 .0497
Realized and unrealized gain
(loss) on investments--net (.0005) .0015 .0008 (.0007) .0003
---------- ---------- ---------- ---------- ----------
Total from investment operations .0134 .0396 .0590 .0457 .0500
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.0139) (.0381) (.0582) (.0464) (.0497)
Realized gain on investments--net (.0001) (.0002) -- --++ (.0002)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.0140) (.0383) (.0582) (.0464) (.0499)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total investment return 1.40% 3.81% 6.00% 4.74% 5.11%
========== ========== ========== ========== ==========
Ratios to Expenses .62% .63% .63% .64% .65%
Average ========== ========== ========== ========== ==========
Net Assets: Investment income and realized
gain on investments--net 1.40% 3.82% 5.80% 4.64% 5.01%
========== ========== ========== ========== ==========
Supplemental Net assets, end of year
Data: (in thousands) $5,336,209 $6,003,955 $5,845,780 $6,231,946 $7,173,713
========== ========== ========== ========== ==========
++Amount is less than $.0001 per share.
See Notes to Financial Statements.
Merrill Lynch Ready Assets Trust, December 31, 2002
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 Trust's financial statements are
prepared in conformity with accounting principles generally accepted
in the United States of America, which may require the use of
management accruals and estimates. The following is a summary of
significant accounting policies followed by the Trust.
(a) Valuation of investments--Portfolio securities with remaining
maturities of greater than sixty days, for which market quotations
are readily available, are valued at market value. As securities
transition from sixty-one to sixty days 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. Securities maturing sixty days or less 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. Other investments and assets for which
market quotations are not 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 U.S. government
securities pursuant to repurchase agreements. Under such agreements,
the counterparty 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 additions to such securities daily to ensure
that the contract is fully collateralized. If the counterparty
defaults and the fair value of the collateral declines, liquidation
of the collateral by the Trust may be delayed or limited.
(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). Realized gains and losses on security
transactions are determined on the identified cost basis. Interest
income (including amortization of premium and discount) is
recognized on the accrual 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 backup 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 Investment Managers, L.P. ("MLIM"). The general
partner of MLIM 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 Distribution Plan with FAM Distributors,
Inc. ("FAMD" or the "Distributor"), which is a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
MLIM 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 .500%
In excess of $500 million but not exceeding $1 billion .400%
In excess of $1 billion but not exceeding $5 billion .350%
In excess of $5 billion but not exceeding $10 billion .325%
In excess of $10 billion but not exceeding $15 billion .300%
In excess of $15 billion but not exceeding $20 billion .275%
In excess of $20 billion .250%
Merrill Lynch Ready Assets Trust, December 31, 2002
NOTES TO FINANCIAL STATEMENTS (concluded)
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
Incorporated ("MLPF&S"), a wholly-owned subsidiary of ML & Co.,
receives a fee each month from the Trust at the annual rate of .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.
For the year ended December 31, 2002, the Trust reimbursed MLIM
$101,492 for certain accounting services.
Certain officers and/or trustees of the Trust are officers and/or
directors of MLIM, FDS, MLPF&S, PSI, FAMD, and/or ML & Co.
3. Shares of Beneficial Interest:
The number of shares sold, reinvested and redeemed during the years
corresponds to the amounts included in the Statements of Changes in
Net Assets for net proceeds from sale of shares, value of shares
reinvested and cost of shares redeemed, respectively, since shares
are recorded at $1.00 per share.
4. Distributions to Shareholders:
The tax character of distributions paid during the fiscal years
ended December 31, 2002 and December 31, 2001 was as follows:
12/31/2002 12/31/2001
Distributions paid from:
Ordinary income $ 80,954,052 $236,976,581
------------ ------------
Total taxable distributions $ 80,954,052 $236,976,581
============ ============
As of December 31, 2002, there were no significant differences
between the book and tax components of net assets.
Merrill Lynch Ready Assets Trust, December 31, 2002
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, 2002, 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 presented. 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 auditing standards
generally accepted in the United States of America. 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, 2002 by
correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Ready Assets Trust as of December 31, 2002, the
results of its operations, the changes in its net assets, and the
financial highlights for the respective stated periods in conformity
with accounting principles generally accepted in the United States
of America.
Deloitte & Touche LLP
Princeton, New Jersey
February 7, 2003
Merrill Lynch Ready Assets Trust, December 31, 2002
OFFICERS AND TRUSTEES
Number of
Portfolios Other
in Fund Director-
Position(s) Length Complex ships
Held of Time Overseen by Held by
Name, Address & Age with Trust Served Principal Occupation(s) During Past 5 Years Trustee Trustee
Interested Trustee
Terry K. Glenn* President 1999 to Chairman, Americas Region since 2001 and 117 Funds None
P.O. Box 9011 and present Executive Vice President since 1983 162 Portfolios
Princeton, Trustee and of Fund Asset Management ("FAM") and
NJ 08543-9011 1985 to Merrill Lynch Investment Managers L.P.
Age: 62 present ("MLIM"); President of Merrill Lynch
Mutual Funds since 1999; President of
FAM Distributors, Inc. ("FAMD") since
1986 and Director thereof since 1991;
Executive Vice President and Director
of Princeton Services, Inc. ("Princeton
Services") since 1993; President of
Princeton Administrator, L.P. since 1988;
Director of Financial Data Services, Inc.
since 1985.
*Mr. Glenn is a director, trustee or member of an advisory board of
certain other investment companies for which FAM or MLIM acts as
investment adviser. Mr. Glenn is an "interested person," as
described in the Investment Company Act, of each Fund based on his
positions as Chairman (Americas Region) and Executive Vice President
of FAM and MLIM; President of FAMD; Executive Vice President of
Princeton Services; and President of Princeton Administrators, L.P.
The Trustee's term is unlimited. Trustees serve until their
resignation, removal or death, or until December 31 of the year in
which they turn 72. As Trust President, Mr. Glenn serves at the
pleasure of the Board of Trustees.
Number of
Portfolios Other
in Fund Director-
Position(s) Length Complex ships
Held of Time Overseen by Held by
Name, Address & Age with Trust Served Principal Occupation(s) During Past 5 Years Trustee Trustee
Independent Trustees
Donald W. Burton Trustee 2002 to General Partner of The Burton Partnership, 23 Funds ITC Delta-
P.O. Box 9095 present Limited Partnership since 1979; Managing 34 Com, Inc.;
Princeton, General Partner of the South Atlantic Portfolios ITC Holding
NJ 08543-9095 Venture Fund II and III, Limited Company,
Age: 58 Partnerships and Chairman of South Inc.; Knology,
Atlantic Private Equity Fund IV, Limited Inc.; Main-
Partnership since 1983; Member of the Bancorp, N.A.;
Investment Advisory Council of the PriCare, Inc.;
Florida State Board of Administration Symbion, Inc.
since 2001.
M. Colyer Crum Trustee 1981 to James R. Williston Professor of Investment 23 Funds Cambridge
P.O. Box 9095 present Management Emeritus, Harvard Business 34 Bancorp
Princeton, School since 1996. Portfolios
NJ 08543-9095
Age: 70
Laurie Simon Hodrick Trustee 1999 to Professor of Finance and Economics, 23 Funds None
P.O. Box 9095 present Graduate School of Business, Columbia 34
Princeton, University since 1998; Associate Portfolios
NJ 08543-9095 Professor of Finance and Economics,
Age: 40 Graduate School of Business, Columbia
University from 1996 to 1998.
Merrill Lynch Ready Assets Trust, December 31, 2002
OFFICERS AND TRUSTEES (concluded)
Number of
Portfolios Other
in Fund Director-
Position(s) Length Complex ships
Held of Time Overseen by Held by
Name, Address & Age with Trust Served Principal Occupation(s) During Past 5 Years Trustee Trustee
Independent Trustees (concluded)
J. Thomas Touchton Trustee 1977 to Managing Partner of The Witt Touchton 23 Funds TECO
P.O. Box 9095 present Company and its predecessor, The Witt Co., 34 Energy,
Princeton, since 1972; Trustee Emeritus of Washington Portfolios Inc.
NJ 08543-9095 and Lee University.
Age: 64
Fred G. Weiss Trustee 1999 to Managing Director of FGW Associates 23 Funds Watson
P.O. Box 9095 present since 1997. 34 Pharmaceu-
Princeton, Portfolios ticals, Inc.
NJ 08543-9095
Age: 61
*The Trustee's term is unlimited. Trustees serve until their
resignation, removal or death, or until December 31 of the year in
which they turn 72.
Position(s) Length
Held of Time
Name, Address & Age with Trust Served Principal Occupation(s) During Past 5 Years
Fund Officers
Donald C. Burke Vice 1993 to First Vice President of FAM and MLIM since 1997 and Treasurer thereof
P.O. Box 9011 President present since 1999; Senior Vice President and Treasurer of Princeton Services
Princeton, and and since 1999; Vice President of FAMD since 1999; Director of MLIM
NJ 08543-9011 Treasurer 1999 to Taxation since 1990.
Age: 42 present
Kevin J. McKenna Senior 1997 to Managing Director of MLIM and Head of MLIM Americas Fixed Income
P.O. Box 9011 Vice present since 2000; First Vice President of MLIM from 1997 to 2000.
Princeton, President
NJ 08543-9011
Age: 45
Donaldo S. Benito Vice 1998 to Vice President of MLIM since 1985.
P.O. Box 9011 President present
Princeton,
NJ 08543-9011
Age: 57
Phillip S. Gillespie Secretary 2000 to First Vice President (Legal Advisory) of MLIM since 2001; Director of MLIM
P.O. Box 9011 present from 2000 to 2001 and Vice President from 1999 to 2000; Attorney associated
Princeton, with MLIM since 1998.
NJ 08543-9011
Age: 38
*Officers of the Trust serve at the pleasure of the Board of
Trustees.
Further information about the Trust's Trustees is available in the
Trust's Statement of Additional Information, which can be obtained
without charge by calling 1-800-MER-FUND.
Custodian
The Bank of New York
15 Broad Street, 12th Floor
New York, NY 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
800-637-3863
Effective January 1, 2003, J. Thomas Touchton, Trustee of Merrill
Lynch Ready Assets Trust, retired. The Fund's Board of Trustees
wishes Mr. Touchton well in his retirement.
</ITEM 1>