MERRILL LYNCH & CO INC, 424B5, 1996-01-23

MERRILL LYNCH & CO INC
424B5, 1996-01-23
SECURITY BROKERS, DEALERS & FLOTATION COMPANIES

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<PAGE>

RULE NO. 424(b)(5)
REGISTRATION NO. 33-65135

PRELIMINARY AND SUBJECT TO COMPLETION AND AMENDMENT
ISSUE DATE: JANUARY 19, 1996

PROSPECTUS SUPPLEMENT
- ---------------------
(TO PROSPECTUS DATED JANUARY 19, 1996)
[LOGO]
$25,000,000
MERRILL LYNCH & CO., INC.
AMEX HONG KONG 30 INDEX*
EQUITY PARTICIPATION NOTES DUE FEBRUARY , 1999

The AMEX Hong Kong 30 Index Equity Participation Notes due February , 1999
(the "Notes") are debt securities of Merrill Lynch & Co., Inc. (the
"Company"), which are being issued in denominations of $1,000 and integral
multiples thereof, will bear no periodic payments of interest and will mature
on February , 1999. At maturity, a beneficial owner of a Note will be
entitled to receive, with respect to each Note, the principal amount thereof
plus an interest payment (the "Supplemental Redemption Amount") based on the
percentage increase, if any, in the AMEX Hong Kong 30 Index (the "Index") over
the Benchmark Index Value. The Supplemental Redemption Amount will in no event
be less than zero or more than $1,000 per $1,000 principal amount of Notes,
representing a maximum annualized rate of return of 24.49% compounded semi-
annually over a term of three years. The Notes are not redeemable or callable
by the Company prior to maturity. While at maturity a beneficial owner of a
Note will receive the principal amount of such Note plus the Supplemental
Redemption Amount, if any, there will be no other payment of interest,
periodic or otherwise.

The Supplemental Redemption Amount payable with respect to a Note at
maturity will equal the product of (A) the principal amount of the applicable
Note, and (B) the percentage increase from the Benchmark Index Value to the
Ending Index Value. The Benchmark Index Value will exceed the Starting Index
Value on the date the Notes are priced by the Company for initial sale to the
public (the "Pricing Date") by 15% to 20% (the actual percentage will be
determined on the Pricing Date). The Starting Index Value, as more
particularly described herein, will be the average (arithmetic mean) of values
calculated by the Calculation Agent employing the same methods used to
calculate the Index using intra-day prices in Hong Kong at specified times
during the Pricing Date. The Benchmark Index Value will be set forth in the
final form of this Prospectus Supplement delivered to investors in connection
with sales of the Notes. The Ending Index Value, as more particularly
described herein, will be the average (arithmetic mean) of the closing values
of the Index on certain days, or, if certain events occur, the closing value
of the Index on a single day prior to the maturity of the Notes.

FOR INFORMATION AS TO THE CALCULATION OF THE SUPPLEMENTAL REDEMPTION AMOUNT
WHICH WILL BE PAID AT MATURITY, THE CALCULATION AND THE COMPOSITION OF THE
INDEX, AND CERTAIN TAX CONSEQUENCES TO BENEFICIAL OWNERS OF THE NOTES, SEE
"DESCRIPTION OF NOTES", "THE INDEX", AND "CERTAIN UNITED STATES FEDERAL INCOME
TAX CONSIDERATIONS", RESPECTIVELY, IN THIS PROSPECTUS SUPPLEMENT. FOR OTHER
INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS, SEE "RISK
FACTORS" BEGINNING ON PAGE S-7 OF THIS PROSPECTUS SUPPLEMENT.

Ownership of the Notes will be maintained in book-entry form by or through
the Depository (as hereinafter defined). Beneficial owners of the Notes will
not have the right to receive physical certificates evidencing their ownership
except under the limited circumstances described herein.

Prior to issuance, the Notes will have been approved for listing on the
American Stock Exchange (the "AMEX") under the symbol "HKN.A", subject to
official notice of issuance.

---------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO THE
PUBLIC(1) DISCOUNT(1) COMPANY(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note.............................. 100% % %
- --------------------------------------------------------------------------------
Total................................. $25,000,000 $ $
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) The "Price to Public" and "Underwriting Discount" for any single
transaction to purchase $1,000,000 principal amount of Notes or more will
be % per Note and % per Note, respectively.
(2) Before deduction of expenses payable by the Company.

The Notes are offered by the Underwriter, subject to prior sale, when, as,
and if issued by the Company and accepted by the Underwriter and subject to
certain other conditions. The Underwriter reserves the right to reject orders
in whole or in part. It is expected that delivery of the Notes will be made in
New York, New York on or about February , 1996.

This Prospectus Supplement and the accompanying Prospectus may be used by
the Underwriter in connection with offers and sales related to market-making
transactions in the Notes. The Underwriter may act as principal or agent in
such transactions. Such sales will be made at prices related to prevailing
market prices at the time of sale.

---------------

MERRILL LYNCH & CO.

---------------

The date of this Prospectus Supplement is February , 1996.

*The use and reference to the term "AMEX Hong Kong 30 Index" herein has been
consented to by the American Stock Exchange.
The "AMEX Hong Kong 30 Index" is a service mark of the American Stock
Exchange.
<PAGE>

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE, IN THE OVER-
THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

----------------

The Commissioner of Insurance of The State of North Carolina has not approved
or disapproved the offering of the Notes made hereby nor has the Commissioner
passed upon the accuracy or adequacy of this Prospectus Supplement or
Prospectus.

S-2
<PAGE>

SUMMARY

"The following summary does not purport to be complete and is qualified in its
entirety by the more detailed information appearing elsewhere in this
Prospectus Supplement and the accompanying Prospectus".

Issuer...................... Merrill Lynch & Co., Inc.

Notes Offered............... $25,000,000 of Equity Participation Notes due
February , 1999. The Notes are to be issued as a
series of Senior Debt Securities under the
Chemical Indenture described herein.

Listing..................... Application will be made to list the Notes on the
American Stock Exchange.

Denominations............... $1,000 and integral multiples thereof.

Original Issue Price........ 100%.

Maturity.................... February , 1999.

Payment at Maturity......... At maturity, a beneficial owner of a Note will be
entitled to receive (i) the principal amount
thereof and (ii) the Supplemental Redemption
Amount equal to:

<TABLE>
<S> <C>
Ending Index Value-Benchmark Index Value
Principal Amount X ----------------------------------------
Benchmark Index Value
</TABLE>

S-3
<PAGE>

calculate the Computed Index Value is consistent
with that currently used by the AMEX to calculate
the Index. The Benchmark Index Value will be set
forth in the final form of the Prospectus
Supplement delivered to investors in connection
with sales of the Notes. The Ending Index Value
will equal the average (arithmetic mean) of the
closing value of the Index on certain days prior
to the maturity of the Notes, or, if Market
Disruption Events occur on certain days, then the
Ending Index Value will equal the closing value
of the Index on a single day.

Index....................... The AMEX Hong Kong 30 Index (the "Index") is a
capitalization-weighted stock index designed,
developed, maintained and operated by, and is a
service mark of, the American Stock Exchange (the
"AMEX"). The AMEX commenced the daily calculation
and public dissemination of the Index on
September 1, 1993.

The Index is being used by the Company with the
permission of the AMEX. The Index measures the
composite price performance of 30 selected stocks
trading on the Hong Kong Stock Exchange and is
designed to represent a substantial segment of
the Hong Kong stock market. Business sector
representation of the component stocks comprising
the Index (the "Underlying Stocks") consists
primarily of property development, financing,
utilities, conglomerates, hotel/leisure,
airlines, transportation, property investment and
publishing. The Index was established on June 25,
1993, on which date the Index was set at a value
of 350.00.

As of December 29, 1995, the total capitalization
of the Underlying Stocks ranged from
approximately U.S.$442 million to a high of
U.S.$26.77 billion, with the median being
U.S.$3.73 billion.

Stocks that constitute the Index may be changed
or substituted by the AMEX based on certain
criteria. See "The Index" herein. The AMEX is
under no obligation to continue the calculation
and the dissemination of the Index. If the AMEX
or any third party discontinues publication of
the Index or any Successor Index, the Calculation
Agent shall determine for the remaining term of
the Notes the applicable Cash Settlement Value
based on the formula and method used in
calculating the Index in effect on the date the
Index or any Successor Index was last published.
See "Risk Factors" herein.

Risk Factors................ The Notes are subject to certain special
considerations. On the Pricing Date, the
Benchmark Index Value will exceed the Starting
Index Value by 15% to 20% (the actual percentage
will be determined on the Pricing Date).
Investors should be aware that if the Ending
Index Value does not exceed the Starting Index

S-4
<PAGE>

Value by more than 15% to 20% (the actual
percentage will be determined on the Pricing
Date), beneficial owners of the Notes will
receive only the principal amount thereof. A
beneficial owner of the Notes may receive no
Supplemental Redemption Amount at maturity, or a
Supplemental Redemption Amount that is below what
the Company would pay as interest as of the date
hereof if the Company issued non-callable senior
debt securities with a similar maturity as that
of the Notes. The return of principal of the
Notes at maturity and the payment of the
Supplemental Redemption Amount, if any, may not
reflect the full opportunity costs implied by
inflation or other factors relating to the time
value of money.

In no event will the Supplemental Redemption
Amount exceed $1,000 per $1,000 principal amount
of Notes. As a result, beneficial owners of Notes
will not benefit from Index increases in excess
of 230% to 240% (the actual percentage will be
determined on the Pricing Date) of the Starting
Index Value determined on the Pricing Date (the
"Maximum Index Value").

There is no precedent to indicate how the Notes
will trade in the secondary market or whether
such market will be liquid. It is expected that
the secondary market for the Notes will be
affected by the creditworthiness of the Company
and by a number of other factors. The trading
value of the Notes is expected to depend
substantially on the extent of the appreciation,
if any, of the Index over the Benchmark Index
Value. See "The Index--Historical Data on the
Index" in this Prospectus Supplement for
historical values of the Index. If, however,
Notes are sold prior to the maturity date at a
time when the Index exceeds the Benchmark Index
Value, the sale price may be at a substantial
discount from the amount expected to be payable
to the beneficial owner if such excess of the
Index over the Benchmark Index Value were to
prevail until maturity of the Notes because of
the possible fluctuation of the Index between the
time of such sale and the time that the Ending
Index Value is determined. Furthermore, the price
at which a beneficial owner will be able to sell
Notes prior to maturity may be at a discount,
which could be substantial, from the principal
amount thereof, if, at such time the Index is
below, equal to or not sufficiently above the
Benchmark Index Value. The limitation that the
Supplemental Redemption Amount may not exceed
$1,000 per $1,000 principal amount of Notes may
adversely affect the secondary market value of
the Notes and such adverse effect could occur
even if the value of the Index is below the
Maximum Index Value. A discount could also result
from rising interest rates.

The Index does not reflect the payment of
dividends on the stocks underlying it and,
therefore, the yield based on the Index to the
maturity of the Notes will not produce the same
yield as if such

S-5
<PAGE>

underlying stocks were purchased and held for a
similar period. See "Risk Factors" in this
Prospectus Supplement.

The value of the Index and the Supplemental
Redemption Amount, if any, may be adversely
affected by foreign political, economic and other
developments. Since Underlying Stocks
representing approximately one-third of the
market capitalization of the Index (as of
December 29, 1995) are companies engaged in real
estate asset management, development, leasing,
property sales and other related activities,
factors affecting these real estate companies may
indirectly affect the Index. See "Risk Factors--
The Index" and "Risk Factors--Important
Considerations Relating to Hong Kong".

It is suggested that prospective investors who
consider purchasing the Notes should reach an
investment decision only after carefully
considering the suitability of the Notes in light
of their particular circumstances.

Investors should also consider the tax
consequences of investing in the Notes. See
"Certain United States Federal Income Tax
Considerations" in this Prospectus Supplement.

S-6
<PAGE>

RISK FACTORS

PAYMENT AT MATURITY

"Benchmark Index Value will Exceed Value of Index on the Pricing Date". On the
Pricing Date, the Benchmark Index Value will exceed the Starting Index Value by
15% to 20% (the actual percentage will be determined on the Pricing Date).
Investors should be aware that if the Ending Index Value does not exceed the
Starting Index Value by more than 15% to 20% (the actual percentage will be
determined on the Pricing Date), beneficial owners of the Notes will receive
only the principal amount thereof.

"Yield may be Below Market Interest Rates on the Pricing Date". A beneficial
owner of the Notes may receive no Supplemental Redemption Amount at maturity,
or a Supplemental Redemption Amount that is below what the Company would pay as
interest as of the date hereof if the Company issued non-callable senior debt
securities with a similar maturity as that of the Notes. The return of
principal of the Notes at maturity and the payment of the Supplemental
Redemption Amount, if any, may not reflect the full opportunity costs implied
by inflation or other factors relating to the time value of money.

"Limitation of Supplemental Redemption Amount". Because the Supplemental
Redemption Amount will not exceed $1,000 per $1,000 principal amount of Notes,
beneficial owners of Notes will not benefit from Index increases in excess of
230% to 240% (the actual percentage will be determined on the Pricing Date) of
the Starting Index Value determined on the Pricing Date (the "Maximum Index
Value"). In no event will the Supplemental Redemption Amount exceed $1,000 per
$1,000 principal amount of Notes.

"Yield on Notes will not Reflect Dividends". The Index does not reflect the
payment of dividends on the stocks underlying it and therefore the yield based
on the Index to the maturity of the Notes will not produce the same yield as if
such underlying stocks were purchased and held for a similar period.

"State Law Limit on Interest Paid". Because the Chemical Indenture provides
that the Notes will be governed by and construed in accordance with the laws of
New York, certain usury laws of New York State may apply. Under present New
York law, the maximum rate of interest is 25% per annum on a simple interest
basis. This limit may not apply to Notes in which $2,500,000 or more has been
invested. While the Company believes that New York law would be given effect by
a state or Federal court sitting outside of New York, state laws frequently
regulate the amount of interest that may be charged to and paid by a borrower
(including, in some cases, corporate borrowers). It is suggested that
prospective investors consult their personal advisors with respect to the
applicability of such laws. The Company will covenant for the benefit of the
Holders of the Notes, to the extent permitted by law, not to claim voluntarily
the benefits of any laws concerning usurious rates of interest against a Holder
of the Notes.

TRADING

Application will be made to list the Notes on the American Stock Exchange.
There is no precedent to indicate how the Notes will trade in the secondary
market or whether such market will be liquid. It is expected that the secondary
market for the Notes will be affected by the creditworthiness of the Company
and by a number of other factors.

The trading value of the Notes is expected to depend substantially on the
extent of the appreciation, if any, of the Index over the Benchmark Index
Value. See "The Index--Historical Data on the Index" in this Prospectus
Supplement for historical values of the Index. If, however, Notes are sold
prior to the maturity date at a time when the Index exceeds the Benchmark Index
Value, the sale price may be at a substantial discount from the amount expected
to be payable to the beneficial owner if such excess of the Index over the
Benchmark Index Value were to prevail until maturity of the Notes because of
the possible fluctuation of the

S-7
<PAGE>

Index between the time of such sale and the time that the Ending Index Value is
determined. Furthermore, the price at which a beneficial owner will be able to
sell Notes prior to maturity may be at a discount, which could be substantial,
from the principal amount thereof, if, at such time, the Index is below, equal
to, or not sufficiently above the Benchmark Index Value and/or if the value of
the Index on the days used to calculate the Ending Index Value was below, equal
to, or not sufficiently above the Benchmark Index Value. The limitation that
the Supplemental Redemption Amount will not exceed $1,000 per $1,000 principal
amount of Notes may adversely affect the secondary market value of the Notes
and such adverse effect could occur even if the value of the Index is below the
Maximum Index Value. A discount could also result from rising interest rates.

In addition to the value of the Index, the trading value of the Notes may be
affected by a number of interrelated factors, including the creditworthiness of
the Company and those factors listed below. The relationship among these
factors is complex, including how these factors affect the relative value of
the principal amount of the Notes to be repaid at maturity and the value of the
Supplemental Redemption Amount. Accordingly, investors should be aware that
factors other than the level of the Index are likely to affect the Notes'
trading value. The expected effect on the trading value of the Notes of each of
the factors listed below, assuming in each case that all other factors are held
constant, is as follows:

"Interest Rates". In general, if U.S. interest rates increase, the trading
value of the Notes is expected to decrease. If U.S. interest rates
decrease, the trading value of the Notes is expected to increase. If
interest rates in Hong Kong increase, the trading value of the Notes is
expected to increase; however, increased Hong Kong interest rates may
adversely affect the economy of Hong Kong and, in turn, the Index, and the
trading value of the Notes could then be expected to decrease. If interest
rates in Hong Kong decrease, the trading value of the Notes is expected to
decrease; however, decreased Hong Kong interest rates may favorably affect
the economy of Hong Kong and, in turn, the Index, and consequently, the
trading value of the Notes could then be expected to increase.

"Volatility of the Index". If the volatility of the Index increases, the
trading value of the Notes is expected to increase. If the volatility of
the Index decreases, the trading value of the Notes is expected to
decrease.

"Time Remaining to Maturity". The Notes may trade at a value above that
which may be inferred from the level of interest rates and the Index. This
difference will reflect a "time premium" due to expectations concerning the
value of the Index during the period prior to maturity of the Notes. As the
time remaining to maturity of the Notes decreases, however, this time
premium is expected to decrease, thus decreasing the trading value of the
Notes. In addition, the price at which a beneficial owner may be able to
sell Notes prior to maturity may be at a discount, which may be
substantial, from the principal amount of the Notes if the value of the
Index is below, equal to, or not sufficiently above the Benchmark Index
Value.

"Dividend Rates in Hong Kong". If dividend rates on the stocks comprising
the Index increase, the value of the Notes is expected to decrease.
Conversely, if dividend rates on the stocks comprising the Index decrease,
the value of the Notes is expected to increase. However, in general, rising
corporate dividend rates in Hong Kong may increase the value of the Index
and, in turn, increase the value of the Notes. Conversely, falling dividend
rates in Hong Kong may decrease the value of the Index and, in turn,
decrease the value of the Notes.

"Hong Kong Dollar/U.S. Dollar Exchange Rates". The Supplemental Redemption
Amount is based on a given level of the Index and will not be affected by
changes in the Hong Kong dollar/U.S. dollar exchange rate. However, a
number of economic factors, including the Hong Kong dollar/U.S. dollar
exchange rate, could affect the value of the Underlying Stocks and,
therefore, the value of the Index.

The impact of the factors specified above, excluding the value of the Index,
may offset, partially or in whole, any increase in the trading value of the
Notes that is attributable to an increase in the value of the Index. For
example, an increase in U.S. interest rates may cause the Notes to trade at a
discount from their initial offering price, even if the Index has appreciated
significantly. In general, assuming all relevant factors

S-8
<PAGE>

are held constant, the effect on the trading value of the Notes of a given
change in interest rates, Index volatility and/or dividend rates of stocks
comprising the Index is expected to be less if it occurs later in the term of
the Notes than if it occurs earlier in the term of the Notes. The effect on the
trading value of the Notes of a given appreciation of the Index in excess of
the Benchmark Index Value is expected to be greater if it occurs later in the
term of the Notes than if it occurs earlier in the term of the Notes, assuming
all other relevant factors are held constant.

THE INDEX

The stocks underlying the Index have been issued by companies organized in
Hong Kong. The prices of such Underlying Stocks will be affected by foreign
political, economic and other developments.

The Hong Kong Stock Exchange has adopted certain measures intended to prevent
any extreme short-term price fluctuations resulting from order imbalances or
market volatility. Where the Hong Kong Stock Exchange considers it necessary
for the protection of the investor or the maintenance of an orderly market, it
may at any time suspend dealings in any securities or cancel the listing of any
securities in such circumstances and subject to such conditions as it thinks
fit, whether requested by the listed issuer or not. The Hong Kong Stock
Exchange may also do so when: (1) an issuer fails, in a manner which the Hong
Kong Stock Exchange considers material, to comply with the Hong Kong Stock
Exchange Listing Rules or its Listing Agreements; or (2) the Hong Kong Stock
Exchange considers there are insufficient securities in the hands of the
public; or (3) the Hong Kong Stock Exchange considers that the listed issuer
does not have a sufficient level of operations or sufficient assets to warrant
the continued listing of the issuer's securities; or (4) the Hong Kong Stock
Exchange considers that the issuer or its business is no longer suitable for
listing. Investors should also be aware that the Hong Kong Stock Exchange may
suspend the trading of individual stocks in certain limited and extraordinary
circumstances, until certain price-sensitive information has been disclosed to
the public. Since the stocks underlying the Index are traded on the Hong Kong
Stock Exchange, changes in the Index may be affected by suspensions of trading
generally or of one or more of the stocks underlying the Index, which
limitations may, in turn, adversely affect the value of the Notes.

IMPORTANT CONSIDERATIONS RELATING TO HONG KONG

Investors should realize that the value of the Index, and therefore the
potential Supplemental Redemption Amount, if any, may be adversely affected by
political, economic or social instability, developments and changes in law or
regulations, particularly in Hong Kong and the People's Republic of China
("China"). Certain of these factors are discussed below.

In December 1984, Great Britain and China signed an agreement (the "Sino-
British Accord") under which Hong Kong will revert to Chinese sovereignty
effective July 1, 1997. Although China has committed by treaty to preserve for
50 years the economic and social freedoms currently enjoyed in Hong Kong, the
continuation of the economic system in Hong Kong after the reversion will be
affected by the Chinese government. Any increase in uncertainty as to the
future economic and political status of Hong Kong could have a material adverse
effect on the economy of Hong Kong and the Index.

The Sino-British Accord provides that the basic policies of China regarding
Hong Kong and the elaboration of these policies in the Sino-British Accord will
be stipulated by the National People's Congress of China in a Basic Law of the
Hong Kong Special Administrative Region (the "Hong Kong SAR") (the "Basic
Law"). The Basic Law was finalized in February 1990 and adopted by the National
People's Congress on April 4, 1990. The Basic Law provides that the Chief
Executive of the Hong Kong SAR will be recommended by a committee composed of
Hong Kong residents representing a broad spectrum of distinct constituencies,
such as industry, labor and the various professions, and appointed by the
government of China. The power of amendment of the Basic Law is vested in the
National People's Congress of China. The Basic Law provides that the Hong Kong
dollar will remain the legal tender in the Hong Kong SAR after the transfer of
sovereignty. It also provides that no exchange control policies will be applied
in the Hong Kong SAR and that the Hong Kong dollar will remain freely
convertible.

S-9
<PAGE>

In the past, the prices of shares on the HKSE and Hong Kong property market
values have experienced substantial fluctuations in response to political
developments affecting China and relations between China and the United
Kingdom. Although China has agreed by treaty that the Hong Kong SAR will have a
high degree of legislative, legal and economic autonomy, there can be no
assurance as to the consequence of the exercise of Chinese sovereignty over
Hong Kong on the future economic and political status of Hong Kong and the
Index.

It is not clear how future developments in Hong Kong and China may affect the
implementation of the Basic Law after the transfer of sovereignty in 1997. As a
result of this political and legal uncertainty, the economic prospects of Hong
Kong and the companies whose stocks comprise the Index are uncertain.
Accordingly, the Hong Kong Stock Exchange has been, and can be expected to
remain, highly volatile and sensitive to adverse political developments with
regard to Hong Kong's future and perceptions of actual or potential political
developments of that kind. For this reason, among others, the Index and the
value of the Notes can also be expected to be volatile.

"Underlying Stocks". The performance of certain companies listed on the Hong
Kong Stock Exchange is linked to the economic climate of China. Any downturn in
economic growth or other negative developments affecting the economic climate
of China could have a material adverse effect on the value of the Index. In
addition, the Hong Kong securities markets are currently characterized by a
high level of investment by and interest among United States and other non-Hong
Kong persons. Changes in the level of investment or interest could have a
material adverse effect on the level of the Index.

Although none of the companies whose stocks comprise the Underlying Stocks
are currently organized under the laws of China, the level of the Index
nonetheless can be affected by developments in China. China currently
indirectly influences political and economic developments in various parts of
Asia, including Hong Kong, and its influence is expected to continue to grow.
The government of China, a socialist state controlled by the Communist Party of
China, now permits private economic activities to a certain extent. Political,
economic or social instability in, and diplomatic and other developments
associated with, China could have a significant effect on economic conditions
in Hong Kong and on the market prices and liquidity of securities traded on the
Hong Kong Stock Exchange, including the Underlying Stocks. Moreover, many of
the issuers of the Underlying Stocks have substantial investments in China,
which investments could be adversely affected by political, economic, market
and other developments in or affecting China. Accordingly, adverse political or
economic developments in China could adversely affect the level of the Index
and thus the value of the Notes.

Underlying Stocks representing approximately one-third of the market
capitalization of the Index (as of December 29, 1995) are companies engaged in
real estate asset management, development, leasing, property sales and other
related activities. Many factors may have an adverse impact on the credit
quality of these real estate companies and, indirectly, the Index. Generally,
these include economic recession, the cyclical nature of real estate markets,
overbuilding, changing demographics, changes in governmental regulations
(including tax laws and environmental, building, zoning and sales regulations),
increases in real estate taxes or costs of material and labor, the inability to
secure performance guarantees or insurance as required, the unavailability of
investment capital and the inability to obtain construction financing or
mortgage loans at rates acceptable to builders and purchasers of real estate.
Additional risks include an inability to reduce expenditures associated with a
property (such as mortgage payments and property taxes) when rental revenue
declines, and possible loss upon foreclosure of mortgaged properties if
mortgage payments are not paid when due.

OTHER CONSIDERATIONS

It is suggested that prospective investors who consider purchasing the Notes
should reach an investment decision only after carefully considering the
suitability of the Notes in light of their particular circumstances.

Investors should also consider the tax consequences of investing in the
Notes. See "Certain United States Federal Income Tax Considerations" in this
Prospectus Supplement.

S-10
<PAGE>

Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("MLPF&S") or its affiliates may from time to time engage in transactions
involving the Underlying Stocks for their proprietary accounts and for other
accounts under their management, which may influence the value of such
Underlying Stocks and therefore the value of the Notes. MLPF&S and its
affiliates will also be the counterparties to the hedge of the Company's
obligations under the Notes. See "Use of Proceeds" herein. Accordingly, under
certain circumstances, conflicts of interest may arise between MLPF&S's
responsibilities as Calculation Agent with respect to the Notes and its
obligations under its hedge and its status as a subsidiary of the Company.
Under certain circumstances, the duties of MLPF&S as Calculation Agent in
determining the existence of Market Disruption Events could conflict with the
interests of MLPF&S as an affiliate of the issuer of the Notes, Merrill Lynch
& Co., Inc., and with the interests of the holders of the Notes.

RECENT DEVELOPMENTS

The following summary of consolidated financial information was derived
from, and is qualified in its entirety by reference to, the financial
statements, condensed financial statements, and other information and data
contained in the Company's Annual Report on Form 10-K for the year ended
December 30, 1994, and Quarterly Report on Form 10-Q for the period ended
September 29, 1995, as amended by Form 10-Q/A (Amendment No. 1), (the
"Quarterly Report"). See "Incorporation of Certain Documents by Reference" in
the accompanying Prospectus. The condensed consolidated financial statements
contained in the Quarterly Report are unaudited; however, in the opinion of
management of the Company, all adjustments (consisting only of normal
recurring accruals) necessary for a fair statement of the results of
operations have been included.

The Company conducts its business in highly volatile markets. Consequently,
the Company's results can be affected by many factors, including general
market conditions, the liquidity of secondary markets, the level and
volatility of interest rates and currency values, the valuation of securities
positions, competitive conditions, and the size, number, and timing of
transactions. In periods of unfavorable market activity, profitability can be
adversely affected because certain expenses remain relatively fixed. As a
result, net earnings and revenues can vary significantly from period to
period. Thus, interim results may not necessarily be representative of the
full year results of operations.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
---------------------------
SEPTEMBER 30, SEPTEMBER 29,
INCOME STATEMENT INFORMATION 1994 1995
- ---------------------------- ------------- -------------
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C>
Revenues............................................ $13,749,334 $16,220,017
Net revenues(1)..................................... $ 7,531,792 $ 7,652,115
Earnings before income taxes........................ $ 1,474,392 $ 1,328,569
Net earnings........................................ $ 855,147 $ 810,427
Ratio of earnings to fixed charges(2)............... 1.2 1.2
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 30, AT SEPTEMBER 29,
BALANCE SHEET INFORMATION 1994 1995
- ------------------------- --------------- ----------------
(IN THOUSANDS) <S> <C>
Total assets................................... $163,749,327 $185,472,687
Long-term borrowings(3)........................ $ 14,863,383 $ 16,156,414
Stockholders' equity........................... $ 5,817,545 $ 6,077,346
</TABLE>
- --------
(1) Net revenues are revenues net of interest expense.
(2) For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consists of earnings from continuing operations before income
taxes and fixed charges. "Fixed charges" consists of interest costs,
amortization of debt expense, preferred stock dividend requirements of
majority-owned subsidiaries, and that portion of rentals estimated to be
representative of the interest factor.
(3) To finance its diverse activities, the Company and certain of its
subsidiaries borrow substantial amounts of short-term funds on a regular
basis. Although the amount of short-term borrowings significantly varies
with the level of general business activity, on September 29, 1995,
$1,476,027,000 of bank loans and $16,048,372,000 of commercial paper were
outstanding. In addition, certain of the Company's subsidiaries lend
securities and enter into repurchase agreements to obtain financing. At
September 29, 1995, cash deposits for securities loaned and securities
sold under agreements to repurchase amounted to $4,453,368,000 and
$54,274,118,000, respectively. From September 30, 1995 to January 10,
1996, long-term borrowings, net of repayments and repurchases, increased
by approximately $1,620,928,000.

S-11
<PAGE>

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 29, 1995

Financial markets, which were particularly weak during the last half of 1994,
improved during 1995 as a result of a steadying U.S. economy, declining
interest rates, and heightened investor activity. Net earnings were $810
million for the first nine months of 1995, down 5% from $855 million in the
comparable 1994 period, which included record first quarter net earnings of
$372 million. Total revenues for the first nine months of 1995 were $16,220
million, up 18% over the 1994 nine-month period. Net revenues in the first nine
months of 1995 were $7,652 million, up 2% from the comparable 1994 period due
primarily to higher asset management and portfolio service fees, principal
transactions revenues, and commissions, partially offset by lower investment
banking revenues. Non-interest expenses were $6,324 million, up 4% from the
comparable 1994 period.

Commission revenues were $2,279 million for the first nine months of 1995, up
2% from the comparable 1994 period, due to higher volumes of both listed and
over-the-counter securities, partially offset by lower mutual fund and
commodities revenues. Mutual fund sales were down from 1994 as most stock and
bond mutual funds declined in value after the strong 1994 first quarter,
affecting volume through the first quarter of 1995. Sales of mutual funds,
however, increased during the 1995 second and third quarters as investors were
more active due to improved performance in both the stock and bond markets.

Interest and dividend revenues were $9,329 million for the first nine months
of 1995, up 34% from the comparable 1994 period. Interest expense, which
includes dividend expense, increased 38% from the first nine months of 1994 to
$8,568 million. Net interest profit increased 3% to $761 million, primarily as
a result of higher levels of interest-earning assets relative to interest-
bearing liabilities.

Principal transactions revenues increased 4% from the first nine months of
1994 to $1,953 million. Taxable fixed-income trading revenues increased due, in
part, to higher revenues from corporate bonds and preferred stock, non-U.S.
government and agencies securities, and high-yield bonds. Trading revenues from
mortgage-backed products were negatively affected by reduced market liquidity
since the 1994 first quarter, leading to a loss. Net trading results from
mortgage-backed products were positive, however, when combined with related net
interest profit. Trading revenues in U.S. Government and agencies securities
were down from a year ago as lower interest rates reduced volatility. Revenues
from interest rate and currency swaps increased from the first nine months of
1994, primarily due to higher trading activity in non-U.S. dollar denominated
transactions. In the 1995 third quarter, however, interest rate and currency
swaps were down from the comparable 1994 period, due to lower revenues from
U.S. dollar denominated transactions. Municipal securities revenues for the
nine months were down from 1994 levels as declining interest rates and
discussions on tax law changes decreased investor demand. Equities and equity
derivatives trading revenues increased, due primarily to improved volumes in
the convertible and over-the-counter equities markets, partially offset by
lower equity derivatives trading revenues. Foreign exchange and commodities
trading revenues decreased, due to lower commodity trading activity, partially
offset by increased foreign exchange trading revenues, which resulted from
higher customer volume caused by the strengthening of the U.S. dollar versus
the Japanese yen and German mark in the third quarter of 1995.

Investment banking revenues were $938 million, down 7% from the first nine
months of 1994, as domestic and global industrywide underwriting volume
declined 6% and 8%, respectively, compared to volumes in the first nine months
of 1994. Lower underwriting revenues were reported in equities, private
placements, and high yield securities, partially offset by increases in
corporate debt and preferred stock issuances. In the 1995 third quarter,
however, industrywide domestic underwriting volume increased 9% from the 1995
second quarter and 45% from the 1994 third quarter as a result of declining
interest rates and stronger equity markets. Strategic services revenues
remained strong, benefiting from increased merger and acquisition assignments
in various industries.

Asset management and portfolio service fees rose 7% from the 1994 nine-month
period to $1,397 million, principally due to increases in asset management and
mutual fund transfer agency fees. Other revenues decreased 10% from the 1994
nine-month period to $325 million, as a result of lower net realized investment
gains in the 1995 nine-month period as compared with the 1994 nine-month
period.

S-12
<PAGE>

Non-interest expenses were $6,324 million, up 4% from the 1994 nine-month
period. Compensation and benefits expense, which represented approximately 63%
of non-interest expenses, increased 4% from the 1994 nine-month period, due
primarily to increases in base salaries. Compensation and benefits expense as a
percentage of net revenues was 51.9% in the first nine months of 1995, compared
with 50.8% in the year-ago period.

Occupancy costs were virtually unchanged from the 1994 nine-month period.
Other facilities-related costs, which include communications and equipment
rental expense and depreciation and amortization expense, rose 10% primarily
due to increased usage of market information services, as well as higher
depreciation expense from the purchase of technology-related assets over the
past year.

Advertising and marketing development expenses decreased 3% from the 1994
nine-month period primarily due to reduced recognition program and travel
costs, partially offset by increases in certain advertising programs.
Professional fees increased 18% from the year-ago period, due to higher legal
and consulting fees. Brokerage, clearing and exchange fees increased 4% from
the 1994 nine-month period as a result of higher volumes. Other expenses
increased 2% from the 1994 nine-month period, and included a $26 million charge
for the write-off of assets related to a technology contract in the 1995 first
quarter.

Income tax expense totaled $518 million for the first nine months of 1995.
The effective tax rate for the first nine months of 1995 was 39%, compared with
42% in the year-ago period. The decrease in the effective tax rate was
attributable to lower state income taxes, increases in tax-exempt interest and
deductions for dividends received, and expanded international business
activities.

During the 1995 third quarter, Merrill Lynch Investments PLC, a wholly-owned
subsidiary of the Company, acquired substantially all of the outstanding shares
of Smith New Court PLC ("Smith New Court"), a U.K.-based global securities
firm, for approximately $800 million. As a result of the acquisition, the
Company recorded approximately $550 million of goodwill, which is being
amortized on a straight-line basis over 15 years. The Company's third quarter
1995 results include those of Smith New Court since mid-August 1995, as well as
approximately $4 million of goodwill amortization and approximately $7 million
of integration costs related to the acquisition.

CERTAIN BALANCE SHEET INFORMATION AS OF SEPTEMBER 29, 1995

The Company believes that its equity base is adequate relative to the level
and composition of its assets and the mix of its business.

In the normal course of business, the Company underwrites, trades, and holds
non-investment grade securities in connection with its investment banking,
market-making, and derivative structuring activities. These activities are
subject to risks related to the creditworthiness of the issuers of, and the
liquidity of the market for, such securities, in addition to the usual risks
associated with investing in, financing, underwriting, and trading in
investment grade instruments.

At September 29, 1995, the fair value of long and short non-investment grade
trading inventories amounted to $4,725 million and $406 million, respectively,
and in the aggregate (i.e. the sum of long and short trading inventories),
represented 5.1% of aggregate consolidated trading inventories.

At September 29, 1995, the carrying value of extensions of credit provided to
corporations entering into leveraged transactions aggregated $327 million
(excluding unutilized revolving lines of credit and other lending commitments
of $92 million), consisting primarily of senior term and subordinated
financings to 36 medium-sized corporations. At September 29, 1995, the Company
had no bridge loans outstanding. Loans to highly leveraged corporations are
carried at unpaid principal balances less a reserve for estimated losses. The
allowance for loan losses is estimated based on a review of each loan, and
consideration of economic, market, and credit conditions. Direct equity
investments made in conjunction with the Company's investment and

S-13
<PAGE>

merchant banking activities aggregated $228 million at September 29, 1995,
representing investments in 81 enterprises. Equity investments in privately-
held companies for which sale is restricted by government or contractual
requirements are carried at the lower of cost or estimated net realizable
value. At September 29, 1995, the Company held interests in partnerships,
totaling $109 million (recorded on the cost basis), that invest in highly
leveraged transactions and non-investment grade securities. At September 29,
1995, the Company also committed to invest an additional $81 million in
partnerships that invest in leveraged transactions. As of November 13, 1995,
the Company had additional lending commitments for $520 million to non-
investment grade counterparties or related to highly leveraged transactions, of
which $28 million had been drawn upon.

The Company's insurance subsidiaries hold non-investment grade securities.
Non-investment grade securities were 3.7% of total insurance investments at
September 29, 1995. Non-investment grade securities of insurance subsidiaries
are classified as available-for-sale and are carried at fair value.

At September 29, 1995, the largest non-investment grade concentration
consisted of government and corporate obligations of a South American sovereign
totaling $503 million, of which $456 million represented on-balance-sheet
hedges for off-balance-sheet financial instruments. No one industry sector
accounted for more than 27% of total non-investment grade positions. At
September 29, 1995, the Company held an aggregate carrying value of $310
million in debt and equity securities of issuers in various stages of
bankruptcy proceedings or in default, of which 83% resulted from the Company's
market-making activities in such securities.

DESCRIPTION OF NOTES

GENERAL

The Notes are to be issued as a series of Senior Debt Securities under the
Senior Indenture, referred to as the "Chemical Indenture", which is more fully
described in the accompanying Prospectus. The Notes will mature on February ,
1999.

While at maturity a beneficial owner of a Note will receive the principal
amount of such Note plus the Supplemental Redemption Amount, if any, there will
be no other payment of interest, periodic or otherwise. (See "Payment at
Maturity" below.)

The Notes are not subject to redemption by the Company or at the option of
any beneficial owner prior to maturity. Upon the occurrence of an Event of
Default with respect to the Notes, beneficial owners of the Notes may
accelerate the maturity of the Notes, as described under "Description of
Notes--Events of Default and Acceleration" in this Prospectus Supplement and
"Description of Debt Securities--General--Events of Default" in the
accompanying Prospectus.

The Notes are to be issued in denominations of $1,000 and integral multiples
thereof.

PAYMENT AT MATURITY

At maturity, a beneficial owner of a Note will be entitled to receive the
principal amount thereof plus a Supplemental Redemption Amount, if any, all as
provided below. If the Ending Index Value of the Index does not exceed the
Benchmark Index Value a beneficial owner of a Note will be entitled to receive
only the principal amount thereof.

S-14
<PAGE>

At maturity, a beneficial owner of a Note will be entitled to receive, with
respect to each such Note, (i) the principal amount thereof, and (ii) the
Supplemental Redemption Amount equal in amount to:

Ending Index Value--Benchmark Index Value
Principal Amount X -----------------------------------------
Benchmark Index Value

provided, however, that in no event will the Supplemental Redemption Amount be
less than zero or more than $1,000 per $1,000 principal amount of Notes. The
Benchmark Index Value will be the Starting Index Value on the date the Notes
are priced by the Company for initial sale to the public multiplied by a factor
equal to 115% to 120% as determined by the Company on the Pricing Date. The
Starting Index Value will be determined by the Calculation Agent and, is the
average (arithmetic mean) of the Computed Index Value as of 10:30 A.M., 11:00
A.M., 11:30 A.M., 12:00 Noon, 12:30 P.M., 2:30 P.M., 3:00 P.M. and 3:30 P.M.
(Hong Kong time) on the Pricing Date. The "Computed Index Value" as of any time
means the number obtained by (i) multiplying the last reported sales prices of
each Underlying Stock at such time (as reported by Reuters Information
Services, Inc. with respect to intra-day prices and by The Stock Exchange of
Hong Kong Ltd. (the "Hong Kong Stock Exchange" or "HKSE") with respect to
official closing prices) by the number of shares outstanding (as provided by
the AMEX) to obtain the market capitalization for each of the Underlying Stocks
and (ii) dividing the aggregate market capitalization of all the Underlying
Stocks by the divisor used to calculate the last reported Index (see "The
Index" herein). The AMEX has confirmed that the methodology used by the
Calculation Agent to calculate the Computed Index Value is consistent with that
currently used by the AMEX to calculate the Index. The Ending Index Value will
be determined by Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
"Calculation Agent") and will equal the average (arithmetic mean) of the
closing values of the Index determined on each of the first five Calculation
Days during the Calculation Period. If there are fewer than five Calculation
Days, then the Ending Index Value will equal the average (arithmetic mean) of
the closing values of the Index on such Calculation Days, and if there is only
one Calculation Day, then the Ending Index Value will equal the closing value
of the Index on such Calculation Day. If no Calculation Days occur during the
Calculation Period because of Market Disruption Events, then the Ending Index
Value will equal the closing value of the Index determined on the last
scheduled Index Business Day in the Calculation Period, regardless of the
occurrences of a Market Disruption Event on such day. The "Calculation Period"
means the period from and including the seventh scheduled Index Business Day
prior to the maturity date to and including the second scheduled Index Business
Day prior to the maturity date. "Calculation Day" means any Index Business Day
during the Calculation Period on which a Market Disruption Event has not
occurred. For purposes of determining the Ending Index Value, an "Index
Business Day" is a day on which the Hong Kong Stock Exchange is open for
trading and the Index or any Successor Index is calculated and published. All
determinations made by the Calculation Agent shall be at the sole discretion of
the Calculation Agent and, absent a determination by the Calculation Agent of a
manifest error, shall be conclusive for all purposes and binding on the Company
and beneficial owners of the Notes.

S-15
<PAGE>

The following table illustrates, for a range of hypothetical Ending Index
Values, (i) the total amount payable at maturity for each $1,000 principal
amount of Notes (assuming a Benchmark Index Value which equals 117.5% (the
midpoint of an expected offering range of 115% to 120%) of the Starting Index
Value on the Pricing Date), (ii) the pretax annualized rate of return to
beneficial owners of Notes, and (iii) the pretax annualized rate of return of
an investment in the stocks underlying the Index (which includes an assumed
aggregate dividend yield of 3.31% per annum, and no change in the U.S.
dollar/Hong Kong dollar exchange rate, as more fully described below).

<TABLE>
<CAPTION>
TOTAL PRETAX PRETAX ANNUALIZED
HYPOTHETICAL ENDING PERCENTAGE CHANGE AMOUNT ANNUALIZED RATE OF RATE OF RETURN OF
INDEX VALUE OF OVER STARTING INDEX PAYABLE AT RETURN ON THE STOCKS UNDERLYING THE
THE INDEX VALUE ON PRICING DATE MATURITY(1) NOTES(2) INDEX(2)(3)
------------------- --------------------- ----------- ------------------ ---------------------
<S> <C> <C> <C> <C>
265 -50% $1,000 0.00% -18.74%
318 -40% $1,000 0.00% -13.20%
371 -30% $1,000 0.00% -8.38%
424 -20% $1,000 0.00% -4.09%
477 -10% $1,000 0.00% -0.21%
530(4) 0% $1,000 0.00% 3.32%
583 10% $1,000 0.00% 6.58%
636 20% $1,021 0.66% 9.61%
689 30% $1,106 3.39% 12.43%
742 40% $1,191 5.91% 15.08%
795 50% $1,277 8.32% 17.59%
848 60% $1,362 10.57% 19.96%
901 70% $1,447 12.70% 22.21%
954 80% $1,532 14.74% 24.36%
1007 90% $1,617 16.68% 26.41%
1060 100% $1,702 18.54% 28.38%
1113 110% $1,787 20.32% 30.26%
1166 120% $1,872 22.03% 32.08%
1219 130% $1,957 23.68% 33.83%
1272 140% $2,000 24.49% 35.52%
1325 150% $2,000 24.49% 37.15%
</TABLE>
- --------
(1) The total amount payable at maturity assumes a Benchmark Index Value which
equals 117.5% (the midpoint of an expected offering range of 115% to 120%)
of the Starting Index Value.
(2) The annualized rates of return specified in the preceding table are
calculated on a semiannual bond equivalent basis.
(3) This rate of return assumes (i) an investment of a fixed amount in the
stocks underlying the Index with the allocation of such amount reflecting
the relative weights of such stocks in the Index; (ii) a percentage change
in the aggregate price of such stocks that equals the percentage change in
the Index from the Starting Index Value on the Pricing Date to the relevant
hypothetical Ending Index Value; (iii) a constant dividend yield of 3.31%
per annum, paid quarterly from the date of initial delivery of Notes,
applied to the value of the Index at the end of each such quarter assuming
such value increases or decreases linearly from the Starting Index Value on
the initial offering date to the applicable hypothetical Ending Index
Value; (iv) no transaction fees or expenses; (v) a three year maturity for
the Notes from the date of issuance; (vi) a final Index value equal to the
Ending Index Value; and (vii) no change in the U.S. dollar/Hong Kong dollar
exchange rate. The aggregate dividend yield of the stocks underlying the
Index as of January 16, 1996 was approximately 3.31%.
(4) Approximate value of the Index on January 17, 1996.

The above figures are for purposes of illustration only. The actual
Supplemental Redemption Amount received by investors and the pretax annualized
rate of return resulting therefrom will depend entirely on the actual Ending
Index Value determined by the Calculation Agent as provided herein. Historical
data regarding the Index is included in this Prospectus Supplement under "The
Index--Historical Data on the Index".

S-16
<PAGE>

ADJUSTMENTS TO THE INDEX; MARKET DISRUPTION EVENTS

If at any time the method of calculating the Index, or the value thereof, is
changed in any material respect, or if the Index is in any other way modified
so that such Index does not, in the opinion of the Calculation Agent, fairly
represent the value of the Index had such changes or modifications not been
made, then, from and after such time, the Calculation Agent shall, at the close
of business in New York, New York, on each date that the closing value with
respect to the Ending Index Value is to be calculated, make such adjustments
as, in the good faith judgment of the Calculation Agent, may be necessary in
order to arrive at a calculation of a value of a stock index comparable to the
Index as if such changes or modifications had not been made, and calculate such
closing value with reference to the Index, as adjusted. Accordingly, if the
method of calculating the Index is modified so that the value of such Index is
a fraction or a multiple of what it would have been if it had not been modified
(e.g., due to a split in the Index), then the Calculation Agent shall adjust
such Index in order to arrive at a value of the Index as if it had not been
modified (e.g., as if such split had not occurred).

"Market Disruption Event" means either of the following events, as determined
by the Calculation Agent:

(i) a suspension or absence of trading on the HKSE of (a) 20% or more of
the Underlying Stocks and/or (b) the stocks of any three of the four most
highly capitalized companies included in the Underlying Stocks which then
comprise the Index or a Successor Index; or

(ii) the suspension or material limitation on the HK Futures Exchange or
any other major futures or securities market (which as of the date of this
Prospectus Supplement includes only the HK Futures Exchange, but which in
the Calculation Agent's judgment may change in the future) of trading in
futures or options contracts related to the Hang Seng Index, the Index or a
Successor Index.

The Hang Seng Index uses certain of the same securities in its calculation as
the Index (See "The Index--The Hong Kong Stock Exchange and the Hong Kong
Futures Exchange" herein). For purposes of determining whether a Market
Disruption Event has occurred: (1) a limitation on the hours or number of days
of trading will not constitute a Market Disruption Event if it results from an
announced change in the regular business hours of the relevant exchange, (2) a
decision to permanently discontinue trading in the relevant contract will not
constitute a Market Disruption Event, (3) a suspension of trading in a futures
or options contract on the Index by the AMEX or other major securities market
by reason of (x) a price change exceeding limits set by the AMEX or such
securities market, (y) an imbalance of orders relating to such contracts or (z)
a disparity in bid and ask quotes relating to such contracts will constitute a
suspension or material limitation of trading in futures or options contracts
related to the Index and (4) an "absence of trading" on the HKSE, HK Futures
Exchange or a major securities market on which futures or options contracts
related to the Index are traded will not include any time when the HKSE, HK
Futures Exchange or such securities market, as the case may be, itself is
closed for trading under ordinary circumstances.

DISCONTINUANCE OF THE INDEX

If the AMEX discontinues publication of the Index and the AMEX or another
entity publishes a successor or substitute index that the Calculation Agent
determines, in its sole discretion, to be comparable to such Index (any such
index being referred to hereinafter as a "Successor Index"), then, upon the
Calculation Agent's notification of such determination to the Trustee and the
Company, the Calculation Agent will substitute the Successor Index as
calculated by the AMEX or such other entity for the Index and calculate the
Ending Index Value as described above under "Payment at Maturity". Upon any
selection by the Calculation Agent of a Successor Index, the Company shall
cause notice thereof to be given to Holders of the Notes.

If the AMEX discontinues publication of the Index and a Successor Index is
not selected by the Calculation Agent or is no longer published on any of the
Calculation Dates, the value to be substituted for the Index for any such
Calculation Date used to calculate the Supplemental Redemption Amount at
maturity

S-17
<PAGE>

will be a value computed by the Calculation Agent for each Calculation Date in
accordance with the procedures last used to calculate the Index prior to any
such discontinuance. If a Successor Index is selected or the Calculation Agent
calculates a value as a substitute for the Index as described below, such
Successor Index or value shall be substituted for the Index for all purposes,
including for purposes of determining whether a Market Disruption Event exists.

If the AMEX discontinues publication of the Index prior to the period during
which the Supplemental Redemption Amount is to be determined and the
Calculation Agent determines that no Successor Index is available at such time,
then on each Business Day until the earlier to occur of (i) the determination
of the Ending Index Value and (ii) a determination by the Calculation Agent
that a Successor Index is available, the Calculation Agent shall determine the
value that would be used in computing the Supplemental Redemption Amount as
described in the preceding paragraph as if such day were a Calculation Date.
The Calculation Agent will cause notice of each such value to be published not
less often than once each month in The Wall Street Journal (or another
newspaper of general circulation), and arrange for information with respect to
such values to be made available by telephone. Notwithstanding these
alternative arrangements, discontinuance of the publication of the Index may
adversely affect trading in the Notes.

EVENTS OF DEFAULT AND ACCELERATION

In case an Event of Default with respect to any Notes shall have occurred and
be continuing, the amount payable to a beneficial owner of a Note upon any
acceleration permitted by the Notes, with respect to each $1,000 principal
amount thereof, will be equal to: (i) the initial issue price ($1,000), plus
(ii) an additional amount of contingent interest calculated as though the date
of early repayment were the maturity date of the Notes. See "Description of
Notes--Payment at Maturity" in this Prospectus Supplement. If a bankruptcy
proceeding is commenced in respect of the Company, the claim of the beneficial
owner of a Note may be limited, under Section 502(b)(2) of Title 11 of the
United States Code, to the principal amount of the Note plus an additional
amount of contingent interest calculated as though the date of the commencement
of the proceeding were the maturity date of the Notes.

In case of default in payment at the maturity date of the Notes (whether at
their stated maturity or upon acceleration), from and after the maturity date
the Notes shall bear interest, payable upon demand of the beneficial owners
thereof, at the rate of % per annum (to the extent that payment of such
interest shall be legally enforceable) on the unpaid amount due and payable on
such date in accordance with the terms of the Notes to the date payment of such
amount has been made or duly provided for.

DEPOSITORY

Upon issuance, all Notes will be represented by one or more fully registered
global securities (the "Global Notes"). Each such Global Note will be deposited
with, or on behalf of, The Depository Trust Company ("DTC"), as Depository,
registered in the name of DTC or a nominee thereof. Unless and until it is
exchanged in whole or in part for Notes in definitive form, no Global Note may
be transferred except as a whole by the Depository to a nominee of such
Depository or by a nominee of such Depository to such Depository or another
nominee of such Depository or by such Depository or any such nominee to a
successor of such Depository or a nominee of such successor.

DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the Banking Law of the State of New York, a member of
the Federal Reserve System, a "clearing corporation" within the meaning of the
New York Uniform Commercial Code, and a "clearing agency" registered pursuant
to the provisions of Section 17A of the Securities Exchange Act of 1934, as
amended. DTC was created to hold securities of its participants
("Participants") and to facilitate the clearance and settlement of securities
transactions among its Participants in such securities through electronic book-
entry changes in accounts of the Participants, thereby eliminating the need for
physical movement of securities certificates. DTC's Participants include
securities brokers and dealers, banks, trust companies, clearing corporations,
and certain other organizations.

S-18
<PAGE>

DTC is owned by a number of Participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. Access to the DTC book-entry system is also available
to others, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly ("Indirect Participants").

Purchases of Notes must be made by or through Participants, which will
receive a credit on the records of DTC. The ownership interest of each actual
purchaser of each Note ("Beneficial Owner") is in turn to be recorded on the
Participants' or Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the
Participant or Indirect Participant through which the Beneficial Owner entered
into the transaction. Ownership of beneficial interests in such Global Note
will be shown on, and the transfer of such ownership interests will be effected
only through, records maintained by DTC (with respect to interests of
Participants) and on the records of Participants (with respect to interests of
persons held through Participants). The laws of some states may require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to own,
transfer or pledge beneficial interests in Global Notes.

"So long as DTC, or its nominee, is the registered owner of a Global Note, DTC
or its nominee, as the case may be, will be considered the sole owner or Holder
of the Notes represented by such Global Note for all purposes under the
Chemical Indenture. Except as provided below, Beneficial Owners in a Global
Note will not be entitled to have the Notes represented by such Global Notes
registered in their names, will not receive or be entitled to receive physical
delivery of the Notes in definitive form and will not be considered the owners
or Holders thereof under the Chemical Indenture, including for purposes of
receiving any reports delivered by the Company or the Trustee pursuant to the
Chemical Indenture. Accordingly, each Person owning a beneficial interest in a
Global Note must rely on the procedures of DTC and, if such Person is not a
Participant, on the procedures of the Participant through which such Person
owns its interest, to exercise any rights of a Holder under the Chemical
Indenture. The Company understands that under existing industry practices, in
the event that the Company requests any action of Holders or that an owner of a
beneficial interest in such a Global Note desires to give or take any action
which a Holder is entitled to give or take under the Chemical Indenture, DTC
would authorize the Participants holding the relevant beneficial interests to
give or take such action, and such Participants would authorize Beneficial
Owners owning through such Participants to give or take such action or would
otherwise act upon the instructions of Beneficial Owners. Conveyance of notices
and other communications by DTC to Participants, by Participants to Indirect
Participants, and by Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time".

Payment of the principal of, and any Supplemental Redemption Amount with
respect to, Notes registered in the name of DTC or its nominee will be made to
DTC or its nominee, as the case may be, as the Holder of the Global Notes
representing such Notes. None of the Company, the Trustee or any other agent of
the Company or agent of the Trustee will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests or for supervising or reviewing any records
relating to such beneficial ownership interests. The Company expects that DTC,
upon receipt of any payment of principal or any Supplemental Redemption Amount
in respect of a Global Note, will credit the accounts of the Participants with
payment in amounts proportionate to their respective holdings in principal
amount of beneficial interest in such Global Note as shown on the records of
DTC. The Company also expects that payments by Participants to Beneficial
Owners will be governed by standing customer instructions and customary
practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name", and will be the
responsibility of such Participants.

If (x) any Depository is at any time unwilling or unable to continue as
Depository and a successor depository is not appointed by the Company within 60
days, (y) the Company executes and delivers to the

S-19
<PAGE>

Trustee a Company Order to the effect that the Global Notes shall be
exchangeable or (z) an Event of Default has occurred and is continuing with
respect to the Notes, the Global Notes will be exchangeable for Notes in
definitive form of like tenor and of an equal aggregate principal amount, in
denominations of $1,000 and integral multiples thereof. Such definitive Notes
shall be registered in such name or names as the Depository shall instruct the
Trustee. It is expected that such instructions may be based upon directions
received by the Depository from Participants with respect to ownership of
beneficial interests in such Global Notes.

THE INDEX

Unless otherwise stated, all information herein on the Index is derived from
the AMEX or other publicly available sources. Such information reflects the
policies of the AMEX as stated in such sources and such policies are subject to
change by the AMEX.

The Index is a capitalization-weighted stock index designed, developed,
maintained and operated by, and is a service mark of, the AMEX that measures
the market value performance (share price times the number of shares
outstanding) of selected Hong Kong Stock Exchange listed stocks. The Index
currently is based on the capitalization of 30 Underlying Stocks trading on the
Hong Kong Stock Exchange and is designed to represent a substantial segment of
the Hong Kong stock market. The Hong Kong Stock Exchange is the primary trading
market for most of the 30 Underlying Stocks. The primary trading market for all
of the Underlying Stocks is either Hong Kong or London. Business sector
representation of the Underlying Stocks comprising the Index as of December 29,
1995 was as follows: property development (31.16%), financing (22.82%),
utilities (18.93%), conglomerates (19.16%) and also includes hotel/leisure
(4.26%), airlines (2.10%), property investment (0.83%), transportation (0.49%)
and publishing (0.23%). The Index was established on June 25, 1993. (See the
table below for a list of the Underlying Stocks as of December 29, 1995.) As of
December 29, 1995, the five largest Underlying Stocks accounted for
approximately 50.35% of the market capitalization of the Index, with the
largest being HSBC Holdings plc (12.94%), followed by Hutchison Whampoa Ltd.
(10.55%), Hong Kong Telecommunications Ltd. (9.52%), Sun Hung Kai Properties
Ltd. (9.01%) and Hang Seng Bank Ltd. (8.33%). The lowest weighted Underlying
Stock, as of December 29, 1995, was Oriental Press Group (0.23%).

The Index will be maintained by the AMEX and will contain at least 30
Underlying Stocks at all times. In addition, the Underlying Stocks must meet
certain listing and maintenance standards as discussed below. The AMEX may
change the composition of the Index at any time in order to more accurately
reflect the composition and track the movement of the Hong Kong stock market.
Any replacement Underlying Stock must also meet the Underlying Stock listing
and maintenance standards as discussed below. Further, the AMEX may replace
Underlying Stocks in the event of certain corporate events, such as takeovers,
or mergers, that change the nature of the security.

The AMEX will select Underlying Stocks on the basis of their market weight,
trading liquidity, and representation of the business industries reflected on
the Hong Kong Stock Exchange. The AMEX will require that each Underlying Stock
be one issued by an entity with major business interests in Hong Kong, listed
for trading on the Hong Kong Stock Exchange, and have its primary trading
market located in a country with which the AMEX has an effective surveillance
sharing agreement. The AMEX will remove any Underlying Stock failing to meet
the above listing and maintenance criteria within 30 days after such failure
occurs. In order to ensure that the Index does not contain a large number of
thinly-capitalized, low-priced securities with small public floats and low
trading volumes, the AMEX has also established additional qualification
criteria for the inclusion and maintenance of Underlying Stocks, based on the
following standards: (1) all Underlying Stocks selected for inclusion in the
Index must have and thereafter maintain, an average daily capitalization, as
calculated by the total number of shares outstanding times the latest price per
share (in Hong Kong dollars), measured over the prior 6-month period, of at
least H.K.$3,000,000,000

S-20
<PAGE>

(approximately U.S.$388,000,000 on the date hereof); (2) all Underlying Stocks
selected for inclusion in the Index must have, and thereafter maintain, an
average daily closing price, measured over the prior 6-month period, not lower
than H.K.$2.50 (approximately U.S.$0.32 on the date hereof); (3) all Underlying
Stocks selected for inclusion in the Index must have, and thereafter maintain
an average daily trading volume, measured over the prior 6-month period, of
more than 1,000,000 shares per day, although up to, but no more than, three
Underlying Stocks may have an average daily trading volume, measured over the
prior 6-month period, of less than 1,000,000 shares per day, but in no event
less than 500,000 shares per day; and (4) all Underlying Stocks selected for
inclusion in the Index must have, and thereafter maintain, a minimum "free
float" value (total freely tradeable outstanding shares minus insider
holdings), based on a monthly average measured over the prior 3-month period,
of U.S.$238,000,000, although up to, but no more than, three Underlying Stocks
may have a free float value of less than U.S.$238,000,000 but in no event less
than U.S.$150,000,000, measured over the same period. The AMEX will review and
apply the above qualification criteria relating to the Underlying Stocks on a
quarterly basis, conducted the last business day in January, April, July, and
October. Any Underlying Stock failing to meet the above listing and maintenance
criteria will be reviewed on the second Friday of the second month following
the quarterly review to again determine compliance with the above criteria. Any
Underlying Stock failing this second review will be replaced by a "qualified"
Underlying Stock effective upon the close of business on the following Friday,
"provided however", that if such Friday is not a day on which the AMEX is open
for trading, the replacement will be effective at the close of business on the
first preceding day on which the AMEX is open for trading. For example, if an
Underlying Stock was found to be below the maintenance criteria on Wednesday,
January 31, 1996, it would be reviewed again on March 8 and, if ineligible,
would be replaced by a qualified security at the close of business on March 15,
1996. If March 15 happens not to be a day on which the AMEX is open for
trading, the replacement will be effective at the close of business on the
preceding Thursday, March 14, 1996, assuming that Thursday is a day on which
the AMEX is open for trading. The AMEX will notify its membership immediately
after it determines to replace an Underlying Stock.

The annual reports and prospectuses of the companies listed on the Hong Kong
Stock Exchange are available for investors' inspection in the City Hall Library
(a public library in Central Hong Kong). The Hong Kong Stock Exchange library
also has information for each listed company but it is available only to
members of the Hong Kong Stock Exchange.

A company whose stock is included in the Index is not required to be
incorporated under the laws of Hong Kong.

The Index is a capitalization-weighted index. A company's market
capitalization is calculated by multiplying the number of shares outstanding by
the company's current share price (in Hong Kong dollars). For valuation
purposes unrelated to the Notes, one Index unit (1.0) is assigned a fixed value
of one U.S. dollar. The Index measures the average change in prices of the
Underlying Stocks, weighted according to their respective market
capitalizations, so that the effect of a percentage price change in an
Underlying Stock will be greater the larger the Underlying Stock's market
capitalization. The Index was established by the AMEX on June 25, 1993, on
which date the Index value was set at 350.00. The daily calculation and public
dissemination by the AMEX of the Index commenced on September 1, 1993. The data
relating to the Index was back-calculated by the AMEX from January 2, 1989 to
August 31, 1993. The Index is calculated by (i) adding the market
capitalization of each Underlying Stock and (ii) dividing such sum by an
adjusted base market capitalization or divisor. On June 25, 1993, the market
value of the Underlying Stocks was approximately H.K.$1,152,829,149,500
(equivalent to approximately U.S.$148,656,241,000 based on the exchange rate as
of such date) and the divisor used to calculate the Index was 3,293,797,570.
The AMEX selected that particular divisor number in order, among other things,
to ensure that the Index was set at a general price level consistent with other
well recognized stock markets. The divisor is subject to periodic adjustments
as set forth below. The Index is calculated once every Index Calculation Day by
the AMEX based on the most recent official closing prices of each of the
Underlying Stocks reported by the Hong Kong Stock Exchange. Pricing of the
Index will be performed each day and be disseminated before the opening of

S-21
<PAGE>

trading via the Consolidated Tape Authority Network-B continuously during each
day on which the AMEX is open for trading. The dissemination value, however,
will remain the same throughout the trading day because the trading hours of
the Hong Kong Stock Exchange do not overlap with AMEX trading hours.
Accordingly, updated price information for the Underlying Stocks will be
unavailable.

In order to maintain continuity in the level of the Index in the event of
certain changes due to non-market factors affecting the Underlying Stocks, such
as the addition or deletion of stocks, substitution of stock, stock dividends,
stock splits, distributions of assets to stockholders or other capitalization
events, the divisor used in calculating the Index is adjusted in a manner
designed to prevent any instantaneous change or discontinuity in the level of
the Index and in order that the value of the Index immediately after such
change will equal the level of the Index immediately prior to the change.
Thereafter, the divisor remains at the new value until a further adjustment is
necessary as the result of another change. Nevertheless, changes in the
identities and characteristics of the Underlying Stocks may significantly
affect the behavior of the Index over time.

The AMEX is under no obligation to continue the calculation and dissemination
of the Index and the method by which the Index is calculated and the name "The
AMEX Hong Kong 30 Index" may be changed at the discretion of the AMEX. The
Notes are not sponsored, endorsed, sold or promoted by the AMEX. No inference
should be drawn from the information contained in this Prospectus Supplement
that the AMEX makes any representation or warranty, implied or express, to the
Company, the beneficial owners of Notes or any member of the public regarding
the advisability of investing in securities generally or in the Notes in
particular or the ability of the Index to track general stock market
performance. The AMEX has no obligation to take the needs of the Company or the
beneficial owners of Notes into consideration in determining, composing or
calculating the Index. The AMEX is not responsible for, and has not
participated in the determination of the timing of prices for or quantities of,
the Notes to be issued or in the determination or calculation of the equation
by which the Supplemental Redemption Amount is determined. The AMEX has no
obligation or liability in connection with the administration, marketing or
trading of the Notes.

The use of and reference to the Index in connection with the Notes have been
consented to by the AMEX.

Except with respect to the responsibility of the Calculation Agent to make
certain calculations under certain circumstances as described herein, none of
the Company, the Trustee, the Calculation Agent or the Underwriter accepts any
responsibility for the calculation, maintenance or publication of the Index or
any Successor Index. The AMEX disclaims all responsibility for any inaccuracies
in the data on which the Index is based, or any mistakes or errors or omissions
in the calculations or dissemination of the Index or for the manner in which
such index is applied in determining the Supplemental Redemption Amount, if
any.

S-22
<PAGE>

The following table presents pertinent market information for each of the
component stocks in the Index as of December 29, 1995. As of such date, the
total capitalization of the component stocks of the Index was approximately
U.S.$208.51 billion. Market capitalizations of the individual stocks in the
Index ranged from approximately U.S.$442 million to a high of U.S.$26.77
billion, with the median being U.S.$3.73 billion.

<TABLE>
<CAPTION>
INDEX
COMPANY NAME INDUSTRY WEIGHT*
------------ -------- -------
<S> <C> <C>
HSBC HOLDINGS PLC. ................................ Finance 12.94%
HUTCHISON WHAMPOA LTD. ............................ Conglomerates 10.55%
HONG KONG TELECOMMUNICATIONS LTD. ................. Utilities 9.52%
SUN HUNG KAI PROPERTIES LTD. ...................... Property Development 9.01%
HANG SENG BANK LTD. ............................... Finance 8.33%
CHEUNG KONG HOLDINGS LTD. ......................... Property Development 6.40%
HENDERSON LAND DEVELOPMENT CO. LTD. ............... Property Development 4.61%
CHINA LIGHT AND POWER CO. LTD. .................... Utilities 4.33%
SWIRE PACIFIC LTD "A'. ............................ Conglomerates 3.62%
WHARF HOLDINGS LTD. ............................... Hotels/Leisure 3.51%
NEW WORLD DEVELOPMENT CO. LTD. .................... Property Development 3.49%
CITIC PACIFIC LTD. ................................ Conglomerates 3.32%
HONG KONG ELECTRIC HOLDINGS LTD. .................. Utilities 3.15%
CATHAY PACIFIC AIRWAYS LTD. ....................... Airlines 2.10%
HONG KONG AND CHINA GAS CO. LTD. .................. Utilities 1.93%
WHEELOCK AND COMPANY LTD. ......................... Conglomerates 1.67%
BANK OF EAST ASIA LTD. ............................ Finance 1.55%
HYSAN DEVELOPMENT CO. LTD. ........................ Property Development 1.28%
AMOY PROPERTIES.................................... Property Development 1.19%
HOPEWELL HOLDINGS LTD. ............................ Property Development 1.19%
HANG LUNG DEVELOPMENT CO. LTD. .................... Property Development 1.02%
HENDERSON INVESTMENT LTD. ......................... Property Development 1.00%
SINO LAND COMPANY LTD. ............................ Property Development 0.90%
HONG KONG AND SHANGHAI HOTELS LTD. ................ Hotel/Leisure 0.75%
GUANGDONG INVESTMENT. ............................. Property Investment 0.58%
GREAT EAGLE HOLDINGS LTD. ......................... Property Development 0.57%
CHINESE ESTATES HOLDINGS. ......................... Property Development 0.50%
SHUN TAK HOLDINGS. ................................ Transportation 0.49%
TAI CHEUNG (HOLDINGS) LTD. ........................ Property Investment 0.25%
ORIENTAL PRESS GROUP .............................. Publisher 0.23%
</TABLE>
- --------
* The sum of Index Weight percentages may be less than 100% due to rounding.

HISTORICAL DATA ON THE INDEX

The following table sets forth the level of the Index at the end of each
month, in the period from January 1, 1989 through December 29, 1995. All
historical data presented in the following table relating to periods before
September 1, 1993 (the date the AMEX commenced the daily calculation and public
dissemination of the Index) were calculated by the AMEX and are presented as if
the Index had existed during such periods, based on the Underlying Stocks
contained in the Index as of June 25, 1993, and such closing levels have been
calculated hypothetically on the same basis that the Index is calculated. All
historical data presented in the following table relating to periods after
September 1, 1993 are based on actual data from the Index. These historical
data on the Index are not necessarily indicative of the future performance of
the Index or what the value of the Notes may be. Any historical upward or
downward trend in the level of the Index during any period set forth below is
not any indication that the Index is more or less likely to increase or
decrease at any time during the term of the Notes.

S-23
<PAGE>

<TABLE>
<CAPTION>
MONTH-END
CLOSING LEVEL
-------------
<S> <C>
1989:
January......................................................... 149.88
February........................................................ 147.27
March........................................................... 146.46
April........................................................... 152.01
May............................................................. 133.76
June............................................................ 110.46
July............................................................ 125.78
August.......................................................... 123.02
September....................................................... 135.71
October......................................................... 135.04
November........................................................ 136.23
December........................................................ 140.32
1990:
January......................................................... 136.29
February........................................................ 146.44
March........................................................... 149.57
April........................................................... 146.77
May............................................................. 156.58
June............................................................ 164.36
July............................................................ 172.48
August.......................................................... 154.24
September....................................................... 137.78
October......................................................... 149.74
November........................................................ 148.38
December........................................................ 151.46
1991:
January......................................................... 162.42
February........................................................ 177.56
March........................................................... 187.39
April........................................................... 179.85
May............................................................. 186.43
June............................................................ 184.68
July............................................................ 201.91
August.......................................................... 201.49
September....................................................... 200.42
October......................................................... 204.76
November........................................................ 209.96
December........................................................ 217.58
1992:
January......................................................... 233.06
February........................................................ 250.01
March........................................................... 249.71
April........................................................... 271.89
May............................................................. 308.30
June............................................................ 309.67
July............................................................ 296.24
August.......................................................... 282.96
</TABLE>

S-24
<PAGE>

<TABLE>
<CAPTION>
MONTH-END
CLOSING LEVEL
-------------
<S> <C>
1992:
September....................................................... 276.67
October......................................................... 311.14
November........................................................ 291.86
December........................................................ 276.73
1993:
January......................................................... 287.74
February........................................................ 318.99
March........................................................... 319.68
April........................................................... 341.75
May............................................................. 369.20
June............................................................ 354.06
July............................................................ 348.06
August.......................................................... 374.08
September....................................................... 382.05
October......................................................... 467.64
November........................................................ 458.93
December........................................................ 598.98
1994:
January......................................................... 576.69
February........................................................ 519.77
March........................................................... 452.60
April........................................................... 449.25
May............................................................. 479.28
June............................................................ 437.47
July............................................................ 474.92
August.......................................................... 499.22
September....................................................... 479.69
October......................................................... 485.14
November........................................................ 424.51
December........................................................ 412.70
1995:
January......................................................... 369.57
February........................................................ 421.35
March........................................................... 435.22
April........................................................... 421.62
May............................................................. 475.92
June............................................................ 465.60
July............................................................ 477.39
August.......................................................... 462.52
September....................................................... 486.91
October......................................................... 492.85
November........................................................ 494.12
December........................................................ 507.26
</TABLE>

S-25
<PAGE>

The following graph sets forth the historical performance of the Index at the
end of each month from January 1989 through December 1995. Past movements of
the Index are not necessarily indicative of the future Index values. On January
18, 1996 the closing level of the Index was 532.10.

[The graph sets forth the historical month-end closing levels of the Index
from January 1989 through December 1995, with the vertical axis specifying the
month-end closing level in a range from 0 to 620 in increments of 20 and the
horizontal axis specifying the time period in increments of three months from
January 1989 to December 1995.]

Source: Prepared by the Company from data obtained from the AMEX.

THE HONG KONG STOCK EXCHANGE AND THE HONG KONG FUTURES EXCHANGE

As of September 29, 1995, the Hong Kong Stock Exchange was the world's ninth
largest stock exchange based on U.S. dollar market capitalization. There are no
market-makers in Hong Kong, but exchange dealers may act as dual capacity
broker-dealers. All of the Underlying Stocks of the Index are traded through
the computerized trading system. Trading is undertaken from 10:00 A.M. to 12:30
P.M. and then from 2:30 P.M. to 3:55 P.M. (Hong Kong time) every Hong Kong day
except Saturdays, Sundays and other days on which the Hong Kong Stock Exchange
is closed. Hong Kong time is 12 hours ahead of Eastern Daylight Savings Time
and 13 hours ahead of Eastern Standard Time. Settlement of trades is required
within 48 hours and is conducted by electronic book-entry delivery through the
Central Clearing and Settlement System.

Due to the time differences between New York City and Hong Kong, on any
normal trading day, trading on the Hong Kong Stock Exchange of the Underlying
Stocks currently will cease at 2:55 A.M. or 3:55 A.M., New York City time.
Using the last reported closing prices of the Underlying Stocks on the Hong
Kong Stock Exchange, the level of the Index on any such trading day generally
will be calculated, published and disseminated by the AMEX in the United States
shortly prior to the opening of trading on the AMEX in New York on the same
calendar day.

S-26
<PAGE>

may at any time suspend dealings in any securities or cancel the listing of any
securities in such circumstances and subject to such conditions as it thinks
fit, whether requested by the listed issuer or not. The Hong Kong Stock
Exchange may also do so where: (1) an issuer fails, in a manner which the Hong
Kong Stock Exchange considers material, to comply with the Hong Kong Stock
Exchange Listing Rules or its Listing Agreements; or (2) the Hong Kong Stock
Exchange considers there are insufficient securities in the hands of the
public; or (3) the Hong Kong Stock Exchange considers that the listed issuer
does not have a sufficient level of operations or sufficient assets to warrant
the continued listing of the issuer's securities; or (4) the Hong Kong Stock
Exchange considers that the issuer or its business is no longer suitable for
listing. Investors should also be aware that the Hong Kong Stock Exchange may
suspend the trading of individual stocks in certain limited and extraordinary
circumstances, until certain price-sensitive information has been disclosed to
the public. For instance, dealing on a listed company's shares will normally be
suspended when information about an intention to make a private placing, or a
very substantial transaction compared to the net asset value of the company,
has been leaked through an improper channel. Trading will not be resumed until
after a formal announcement has been made. Trading of a company's shares may
also be suspended if there is unusual trading activity in that stock.

An issuer may apply for suspension on its own accord. A suspension request
will normally only be acceded to in the following circumstances: (1) where, for
a reason acceptable to the Hong Kong Stock Exchange, price-sensitive
information cannot at that time be disclosed; (2) where the issuer is subject
to an offer, but only where terms have been agreed in principle and require
discussion with, and agreement by, one or more major shareholders (suspensions
will only normally be appropriate where no previous announcement has been
made); (3) to maintain an orderly market; (4) where there is an occurrence of
certain levels of notifiable transactions, such as substantial changes in the
nature, control or structure of the issuer, where publication of full details
is necessary to permit a realistic valuation to be made of the securities
concerned, or the approval of shareholders is required; (5) where the issuer is
no longer suitable for listing, or becomes a "cash" company; or (6) for issuers
going into receivership or liquidation.

As a result of the foregoing, variations in the Index may be limited by
suspension of trading of individual stocks which comprise the Index which may
in turn, adversely affect the value of the Notes. In addition, a partial or
total halt in trading of all of the Underlying Stocks could result in a Market
Disruption Event. See "Description of Notes--Adjustments to the Index; Market
Disruption Events" herein.

Because the Index uses certain of the same securities in its calculation as
the Hang Seng Index ("HSI"), another stock index, the HSI is referenced to
determine if a Market Disruption Event has occurred. A Market Disruption Event
can occur if there is a suspension or material limitation on the HK Futures
Exchange of trading in futures or options contracts related to the HSI. The
stock index contracts traded on the HK Futures Exchange are based upon the HSI
and its four sub-indices: properties, utilities, finance, and commerce and
industry. The HSI is a value-weighted index of 33 stocks and every stock in the
HSI is represented in one of the four sub-indices. The following Underlying
Stocks of the Index (as of December 29, 1995) are not constituent securities of
the HSI: Chinese Estates Holdings, Henderson Investment Ltd. and Tai Cheung
(Holdings) Ltd. The following constituent securities of the HSI (as of December
29, 1995) are not Underlying Stocks of the Index: Hong Kong Aircraft Eng. Co.
Ltd., Johnson Electric Holdings Ltd., Mirmar Hotel and Inv. Co. Ltd., Shangri-
La Asia Ltd., South China Morning Post (Holdings) Ltd. and Television
Broadcasts Ltd. The Index also differs from the HSI in that, among other
things, the selection, maintenance and replacement criteria for the constituent
securities of the two indices are not the same and that they are operated and
governed by the rules of different entities.

Currently, the contracts listed on the HK Futures Exchange are HSI futures,
HSI sub-indices futures, HSI options, gold and Hong Kong Interbank Offered Rate
futures. There is a daily maximum fluctuation limit of 300 points imposed on
the HSI contracts (not applicable to spot mark contracts). Once the limit is
touched, orders cannot be transacted above (the outside limit) or below (the
downside limit) but orders within the range can continue to trade.

S-27
<PAGE>

The foregoing discussion reflects the current rules governing the Hong Kong
Stock Exchange and the HK Futures Exchange, which are subject to change.

The HK Futures Exchange takes no responsibility for the contents of this
document, makes no representations as to its accuracy or completeness and
expressly disclaims any liability whatsoever for any loss howsoever arising
from or in reliance upon the whole or any part of the contents of this
document. The HK Futures Exchange has made no assessment of, nor taken any
responsibility for, the financial soundness of the Company or the merits of
investing in the Notes, nor have they verified the accuracy or the truthfulness
of statements made or opinions expressed in this document.

"Hong Kong Futures Exchange" and "HK Futures Exchange" are trademarks of the
Hong Kong Futures Exchange Ltd.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

Set forth in full below is the opinion of Brown & Wood, counsel to the
Company, as to certain United States Federal income tax consequences of the
purchase, ownership and disposition of the Notes. Such opinion is based upon
laws, regulations, rulings and decisions now in effect (or, in the case of
certain regulations, in proposed form), all of which are subject to change
(including retroactive changes in effective dates) or possible differing
interpretations. The discussion below deals only with Notes held as capital
assets and does not purport to deal with persons in special tax situations,
such as financial institutions, insurance companies, regulated investment
companies, dealers in securities or currencies, tax-exempt entities, or persons
holding Notes as a hedge against currency risks or as a position in a
"straddle" for tax purposes. It also does not deal with holders other than
original purchasers (except where otherwise specifically noted herein). The
following discussion also assumes that the issue price of the Notes, as
determined for United States Federal income tax purposes, equals the principal
amount thereof. Persons considering the purchase of the Notes should consult
their own tax advisors concerning the application of the United Stated Federal
income tax laws to their particular situations as well as any consequences of
the purchase, ownership and disposition of the Notes arising under the laws of
any other taxing jurisdiction.

As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for United States Federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity created
or organized in or under the laws of the United States or of any political
subdivision thereof, (iii) an estate or trust the income of which is subject to
United States Federal income taxation regardless of its source or (iv) any
other person whose income or gain in respect of a Note is effectively connected
with the conduct of a United States trade or business. As used herein, the term
"non-U.S. Holder" means a beneficial owner of a Note that is not a U.S. Holder.

GENERAL

There are no statutory provisions, regulations (except possibly the Proposed
Regulations as described below), published rulings or judicial decisions
addressing or involving the characterization, for United States Federal income
tax purposes, of the Notes or securities with terms substantially the same as
the Notes. However, although the matter is not free from doubt, under current
law, each Note should be treated as a debt instrument of the Company for United
States Federal income tax purposes. The Company currently intends to treat each
Note as a debt instrument of the Company for United States Federal income tax
purposes and, where required, intends to file information returns with the
Internal Revenue Service ("IRS") in accordance with such treatment, in the
absence of any change or clarification in the law, by regulation or otherwise,
requiring a different characterization of the Notes. Prospective investors in
the Notes should be aware, however, that the IRS is not bound by the Company's
characterization of the Notes as indebtedness and the IRS could possibly take a
different position as to the proper characterization of the Notes for United
States Federal income tax purposes. The following discussion of the principal
United States Federal income tax consequences of the purchase, ownership and
disposition of the Notes is based upon the assumption that

S-28
<PAGE>

each Note will be treated as a debt instrument of the Company for United
States Federal income tax purposes. If the Notes are not in fact treated as
debt instruments of the Company for United States Federal income tax purposes,
then the United States Federal income tax treatment of the purchase, ownership
and disposition of the Notes could differ from the treatment discussed below
with the result that the timing and character of income, gain or loss
recognized in respect of a Note could differ from the timing and character of
income, gain or loss recognized in respect of a Note had the Notes in fact
been treated as debt instruments of the Company for United States Federal
income tax purposes.

U.S. HOLDERS

Under general principles of current United States Federal income tax law,
payments of interest on a debt instrument generally will be taxable to a U.S.
Holder as ordinary interest income at the time such payments are accrued or
are received (in accordance with the U.S. Holder's regular method of tax
accounting). Under these principles, the amount payable at maturity with
respect to a Note in excess of the principal amount thereof ("i.e.", the
Supplemental Redemption Amount), if any, would be treated as contingent
interest and generally would be includible in income by a U.S. Holder as
ordinary interest on the date the Supplemental Redemption Amount is accrued
("i.e.", generally when the Supplemental Redemption Amount becomes fixed in
amount and becomes unconditionally payable) or when such amount is received
(in accordance with the U.S. Holder's regular method of tax accounting). In
addition, if the amount payable at maturity with respect to a Note exceeds the
principal amount thereof, then such Note would be treated as having been
retired at maturity in exchange for an amount equal to the principal amount
thereof.

Upon the sale, exchange or retirement of a Note, a U.S. Holder generally
would recognize taxable gain or loss in an amount equal to the difference, if
any, between the amount realized on the sale, exchange or retirement and such
U.S. Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax
basis in a Note generally will equal such U.S. Holder's initial investment in
the Note. Such gain or loss generally should be capital gain or loss and
should be long-term capital gain or loss if the Note were held by the U.S.
Holder for more than one year (subject to the market discount rules, as
discussed below). It is possible, however, that the IRS could assert that any
amounts realized upon the sale or exchange of a Note prior to its maturity in
excess of the principal amount thereof constitutes ordinary interest income
(subject to the bond premium rules, as discussed below). Nonetheless, although
the matter is not free from doubt, under current law, any gain realized upon
the sale or exchange of a Note prior to its maturity should be treated
entirely as capital gain (subject to the market discount rules, as discussed
below).

Prospective investors in the Notes should be aware that on December 16,
1994, the Treasury Department issued proposed regulations (the "Proposed
Regulations") concerning the proper United States Federal income tax treatment
of contingent payment debt instruments such as the Notes. The Proposed
Regulations, however, are proposed to apply only to debt instruments issued 60
days or more after the date on which the Proposed Regulations are published as
final Treasury regulations. Accordingly, if ultimately adopted in their
current form, the Proposed Regulations would not apply to the Notes.
Furthermore, proposed Treasury regulations are not binding upon either the IRS
or taxpayers prior to becoming effective as temporary or final regulations. In
general, if ultimately adopted in their current form, the Proposed Regulations
would cause the timing and character of income, gain or loss reported on a
contingent payment debt instrument to substantially differ from the timing and
character of income, gain or loss reported on a contingent payment debt
instrument under general principles of current United States Federal income
tax law (as described above). Specifically, the Proposed Regulations generally
would require a U.S. Holder of such an instrument to include future contingent
interest payments in income as such interest accrues based upon a projected
payment schedule. Moreover, in general, under the Proposed Regulations, any
gain recognized by a U.S. Holder on the sale, exchange, or retirement of a
contingent payment debt instrument such as the Notes would be treated as
ordinary income and a portion of any loss realized could be treated as
ordinary loss as opposed to capital loss (depending upon the circumstances).
Prospective investors in the Notes are urged to consult their own tax advisers
concerning the effect, if any, of the Proposed Regulations on their investment
in the Notes.

S-29
<PAGE>

The Company, where required, currently intends to file information returns
with the IRS treating each Note as a debt instrument of the Company for United
States Federal income tax purposes (as discussed above) and reporting
contingent interest on, if any, and gross proceeds received upon the sale,
exchange or retirement of each Note in accordance with general principles of
current United States Federal income tax law (as described above), in the
absence of any change or clarification in the law, by regulation or otherwise
requiring a different treatment.

MARKET DISCOUNT AND PREMIUM

If a U.S. Holder purchases a Note for an amount that is less than the Note's
issue price (i.e., the Note's stated principal amount), the amount of the
difference will be treated as "market discount," unless such difference is
less than a specified de minimis amount (generally 1/4 of 1% of the Note's
stated redemption price at maturity (defined below) multiplied by the number
of complete years to maturity from the date the U.S. Holder purchased such
Note).

Under the market discount rules, a U.S. Holder will be required to treat any
gain realized on the sale, exchange, retirement or other disposition of a Note
as ordinary income to the extent of the lesser of (i) the amount of such
realized gain or (ii) the market discount which has not previously been
included in income and is treated as having accrued on such Note at the time
of such disposition. Market discount will be considered to accrue ratably
during the period from the date of acquisition to the Note's maturity, unless
the U.S. Holder elects to accrue market discount on the basis of semiannual
compounding.

A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note with market discount until the Note's maturity or
certain earlier dispositions of the Note, because a current deduction is only
allowed to the extent the interest expense exceeds an allocable portion of
market discount. A U.S. Holder may elect to include market discount in income
currently as it accrues (on either a ratable or semiannual compounding basis),
in which case the rules described above regarding the treatment as ordinary
income of gain upon the disposition of the Note and regarding the deferral of
interest deductions will not apply. Generally, such currently included market
discount is treated as ordinary interest for United States Federal income tax
purposes and a U.S. Holder would increase its tax basis in the Note by the
amount of any such currently included market discount. Such an election will
apply to all debt instruments acquired by the U.S. Holder on or after the
first day of the first taxable year to which such election applies and may be
revoked only with the consent of the IRS.

If a U.S. Holder purchases a Note for an amount that is greater than its
stated redemption price at maturity (i.e., the Note's stated principal
amount), such U.S. Holder will be considered to have purchased the Note with
"amortizable bond premium" equal in amount to such excess. A U.S. Holder may
elect to amortize such premium using a constant yield method over the
remaining term of the Note and may offset interest otherwise required to be
included in respect of the Note during any taxable year by the amortized
amount of such excess for the taxable year. A U.S. Holder generally will
reduce its tax basis in the Note by the amount of any interest offset taken.
Such election, if made, would apply to all debt instruments held by the U.S.
Holder at the beginning of the first taxable year to which such election
applies and to all debt instruments acquired by such U.S. Holder thereafter.
Such election would also be irrevocable once made, unless the U.S. Holder
making such an election obtains the express consent of the IRS to revoke such
election.

ORIGINAL ISSUE DISCOUNT

Prospective investors in the Notes should be aware that if the principal
amount of a Note exceeds the issue price of the Note, as determined for United
States Federal income tax purposes, by more than a specified "de minimis" amount
(generally 1/4 of 1% of the principal amount of the Note multiplied by the
number of complete years from the Note's issue date to its maturity date),
then such Note will be treated as having been issued with original issue
discount. If a significant percentage of the total aggregate amount of the
Notes originally issued is sold at a discount from the principal amount
thereof pursuant to the discount noted on

S-30
<PAGE>

the cover of this Prospectus Supplement, then the issue price of the Notes, as
determined for United States Federal income tax purposes, may be less than the
principal amount of the Notes and the Notes may be issued with original issue
discount. Such discount is not expected to be in excess of 2.0% per Note. In
general, a U.S. Holder of a Note issued with original issue discount would be
required to include such original issue discount into income as ordinary
interest over the entire term of the Note using a constant yield method. A U.S.
Holder would increase such U.S. Holder's tax basis in a Note by any original
issue discount included in income by such U.S. Holder. Nevertheless, if a U.S.
Holder purchases a Note issued with original issue discount for an amount equal
to the principal amount thereof, such U.S. Holder would not be required to
include any such original issue discount into income.

NON-U.S. HOLDERS

A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original
issue discount, if any) on a Note, unless such non-U.S. Holder is a direct or
indirect 10% or greater shareholder of the Company, a controlled foreign
corporation related to the Company or a bank receiving interest described in
section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended. However,
income allocable to non-U.S. Holders will generally be subject to annual tax
reporting on IRS Form 1042S. For a non-U.S. Holder to qualify for the exemption
from taxation, the last United States payor in the chain of payment prior to
payment to a non-U.S. Holder (the "Withholding Agent") must have received in
the year in which a payment of interest or principal occurs, or in either of
the two preceding calendar years, a statement that (i) is signed by the
beneficial owner of the Note under penalties of perjury, (ii) certifies that
such owner is not a U.S. Holder and (iii) provides the name and address of the
beneficial owner. The statement may be made on an IRS Form W-8 or a
substantially similar form, and the beneficial owner must inform the
Withholding Agent of any change in the information on the statement within 30
days of such change. If a Note is held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide a signed statement to the Withholding Agent. However,
in such case, the signed statement must be accompanied by a copy of the IRS
Form W-8 or the substitute form provided by the beneficial owner to the
organization or institution. The Treasury Department is considering
implementation of further certification requirements aimed at determining
whether the issuer of a debt obligation is related to holders thereof.

Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
Note, provided the gain is not effectively connected with the conduct of a
trade or business in the United States by the non-U.S. Holder. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.

Under current law, a Note will not be includible in the estate of a non-U.S.
Holder unless the individual is a direct or indirect 10% or greater shareholder
of the Company or, at the time of such individual's death, payments in respect
of such Note would have been effectively connected with the conduct by such
individual of a trade or business in the United States.

BACKUP WITHHOLDING

Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are not
"exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the Notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an exempt recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would
establish an exemption from backup withholding for those non-U.S. Holders who
are not exempt recipients.

In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt

S-31
<PAGE>

recipient or (ii) the seller provides, in the required manner, certain
identifying information and, in the case of a non-U.S. Holder, certifies that
such seller is a non-U.S. Holder (and certain other conditions are met). Such a
sale must also be reported by the broker to the IRS, unless either (i) the
broker determines that the seller is an exempt recipient or (ii) the seller
certifies its non-U.S. status (and certain other conditions are met).
Certification of the registered owner's non-U.S. status would be made normally
on an IRS Form W-8 under penalties of perjury, although in certain cases it may
be possible to submit other documentary evidence.

Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.

USE OF PROCEEDS

The net proceeds from the sale of the Notes will be used as described under
"Use of Proceeds" in the attached Prospectus and to hedge market risks of the
Company affecting the value of the Supplemental Redemption Amount.

UNDERWRITING

Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Underwriter") has
agreed, subject to the terms and conditions of the Underwriting Agreement and a
Terms Agreement, to purchase from the Company $ aggregate principal amount
of Notes. The Underwriting Agreement provides that the obligations of the
Underwriter are subject to certain conditions precedent and that the
Underwriter will be obligated to purchase all of the Notes if any are
purchased.

The Underwriter has advised the Company that it proposes initially to offer
all or part of the Notes directly to the public at the offering prices set
forth on the cover page of this Prospectus Supplement and to certain dealers at
such prices less a concession not in excess of % of the principal amount of
the Notes. The Underwriter may allow, and such dealers may reallow, a discount
not in excess of % of the principal amount of the Notes to certain other
dealers. After the initial public offering, the public offering price and
concession may be changed.

The underwriting of the Notes will conform to the requirements set forth in
the applicable sections of Schedule E to the By-Laws of the National
Association of Securities Dealers, Inc.

VALIDITY OF NOTES

The validity of the Notes will be passed upon for the Company and for the
Underwriter by Brown & Wood, New York, New York.

S-32
<PAGE>

PROSPECTUS
[LOGO]
MERRILL LYNCH & CO., INC.
DEBT SECURITIES AND WARRANTS

Merrill Lynch & Co., Inc. (the "Company") intends to sell from time to time
up to $8,451,425,546 aggregate principal amount (or net proceeds in the case of
warrants and in the case of securities issued at an original issue discount),
or its equivalent in such foreign currencies or units of two or more
currencies, based on the applicable exchange rate at the time of offering, as
shall be designated by the Company at the time of offering, of its senior debt
securities ("Senior Debt Securities"), subordinated debt securities
("Subordinated Debt Securities" and, together with the Senior Debt Securities,
the "Debt Securities"), warrants to purchase Debt Securities ("Debt Warrants"),
warrants entitling the holders thereof to receive from the Company a payment or
delivery determined by reference to decreases or increases in the level of an
index or portfolio based on one or more equity or debt securities (including
the price or yield of such securities), any statistical measure of economic or
financial performance (including any consumer price, currency or mortgage
index) or the price or value of any commodity or a combination thereof (the
"Index Warrants") and warrants to receive from the Company the cash value in
U.S. dollars of the right to purchase ("Currency Call Warrants") or to sell
("Currency Put Warrants" and, together with the Currency Call Warrants, the
"Currency Warrants") such foreign currencies or units of two or more currencies
as shall be designated by the Company at the time of offering. The Debt
Securities, Debt Warrants, Index Warrants and Currency Warrants, which are
collectively called the "Securities", may be offered either jointly or
separately and will be offered to the public on terms determined by market
conditions at the time of sale and set forth in a prospectus supplement.

The Securities will be unsecured and, except in the case of Subordinated Debt
Securities, will rank equally with all other unsecured and unsubordinated
indebtedness of the Company. The Subordinated Debt Securities will be
subordinated to all existing and future Senior Indebtedness of the Company.

Each issue of Securities may vary, where applicable, as to aggregate
principal amount, maturity date, public offering or purchase price, interest
rate or rates, if any, and timing of payments thereof, provision for
redemption, sinking fund requirements, if any, exercise provisions, currencies
of denomination or currencies otherwise applicable thereto and any other
variable terms and method of distribution. The accompanying Prospectus
Supplement (the "Prospectus Supplement") sets forth the specific terms with
regard to the Securities in respect of which this Prospectus is being
delivered. The Company may elect to deliver to purchasers of Securities an
abbreviated term sheet setting forth a description of the Securities being
offered, or a summary thereof (a "Terms Sheet"), instead of a Prospectus
Supplement. This Prospectus may be delivered prior to or concurrently with a
Terms Sheet.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

-----------

The Securities may be sold directly or through Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") as agent or may be
offered and reoffered through, or through underwriting syndicates managed or
co-managed by, one or more of the following: MLPF&S; Bear, Stearns & Co. Inc.;
Donaldson, Lufkin & Jenrette Securities Corporation; CS First Boston
Corporation; Goldman, Sachs & Co.; Lehman Brothers Inc.; Morgan Stanley & Co.
Incorporated; Nomura Securities International, Inc.; PaineWebber Incorporated;
and Salomon Brothers Inc, or directly to purchasers by the Company. The Company
has entered into agreements with such firms with respect to the Securities
providing for agency sales of the Securities through MLPF&S or the purchase and
offering from time to time by one or more of such firms, either alone or with
the several members of any syndicate formed by them. Additional agreements
respecting the distribution of the Securities may be entered into from time to
time by the Company. Securities may not be sold without delivery of a
Prospectus Supplement describing such issue of Securities and the method and
terms of offering thereof or of a Terms Sheet.

-----------

The date of this Prospectus is January 19, 1996.
<PAGE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy and information statements and
other information filed by the Company can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: Midwest Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511 and Northeast Regional Office, Seven
World Trade Center, New York, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Reports, proxy and
information statements and other information concerning the Company may also be
inspected at the offices of the New York Stock Exchange, the American Stock
Exchange, the Chicago Stock Exchange and the Pacific Stock Exchange.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company's Annual Report on Form 10-K for the year ended December 30,
1994, Quarterly Reports on Form 10-Q for the periods ended March 31, 1995 and
June 30, 1995, and Quarterly Report on Form 10-Q for the period ended September
29, 1995, as amended by Form 10-Q/A (Amendment No. 1), and Current Reports on
Form 8-K dated January 12, 1995, January 23, 1995, February 8, 1995, February
9, 1995, March 3, 1995, March 9, 1995, April 18, 1995, May 2, 1995, May 23,
1995, July 18, 1995, July 21, 1995, August 1, 1995, August 2, 1995, September
19, 1995, October 17, 1995, November 2, 1995, November 27, 1995, and January
17, 1996 filed pursuant to Section 13 of the Exchange Act, are hereby
incorporated by reference into this Prospectus.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering of the Securities shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.

THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY
(WITHOUT EXHIBITS OTHER THAN EXHIBITS SPECIFICALLY INCORPORATED BY REFERENCE)
OF ANY OR ALL DOCUMENTS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO MR. GREGORY T. RUSSO, SECRETARY,
MERRILL LYNCH & CO., INC., 100 CHURCH STREET, 12TH FLOOR, NEW YORK, NEW YORK
10080-6512; TELEPHONE NUMBER (212) 602-8435.

2
<PAGE>

MERRILL LYNCH & CO., INC.

Merrill Lynch & Co., Inc. is a holding company that, through its subsidiaries
and affiliates, provides investment, financing, insurance, and related services
on a global basis. Its principal subsidiary, MLPF&S, one of the largest
securities firms in the world, is a leading broker in securities, options
contracts, and commodity and financial futures contracts; a leading dealer in
options and in corporate and municipal securities; a leading investment banking
firm that provides advice to, and raises capital for, its clients; and an
underwriter of selected insurance products. Other subsidiaries provide
financial services on a global basis similar to those of MLPF&S and are engaged
in such other activities as international banking, lending, and providing other
investment and financing services. Merrill Lynch International Incorporated,
through subsidiaries and affiliates, provides investment, financing, and
related services outside the United States and Canada. Merrill Lynch Government
Securities Inc. is a primary dealer in obligations issued or guaranteed by the
U.S. Government and by Federal agencies or instrumentalities. Merrill Lynch
Capital Services, Inc., Merrill Lynch Derivative Products, Inc., and Merrill
Lynch Capital Markets PLC are the Company's primary derivative product dealers
and enter into interest rate and currency swaps and other derivative
transactions as intermediaries and as principals. Merrill Lynch Asset
Management, L.P., with its related affiliates, is one of the largest mutual
fund managers in the world and provides investment advisory services. The
Company's insurance underwriting operations consist of the underwriting of life
insurance and annuity products. Banking, trust, and mortgage lending operations
conducted through subsidiaries of the Company include issuing certificates of
deposit, offering money market deposit accounts, making secured loans, and
providing foreign exchange facilities and other related services.

The principal executive office of the Company is located at World Financial
Center, North Tower, 250 Vesey Street, New York, New York 10281; its telephone
number is (212) 449-1000.

USE OF PROCEEDS

The Company intends to use the net proceeds from the sale of the Securities
for general corporate purposes. Such uses may include the funding of
investments in, or extensions of credit to, its subsidiaries, the funding of
assets held by the Company or its subsidiaries, including securities
inventories, customer receivables and loans (including business loans, home
equity loans and loans in connection with investment banking-related merger and
acquisition activities) and the lengthening of the average maturity of the
Company's borrowings (including the refunding of maturing indebtedness). The
precise amount and timing of investments in, and extensions of credit to, its
subsidiaries will depend upon their funding requirements and the availability
of other funds to the Company and its subsidiaries. Pending such applications,
the net proceeds will be temporarily invested or applied to the reduction of
short-term indebtedness. A substantial portion of the proceeds from the sale of
any Currency Warrants or Index Warrants may be used to hedge market risks with
respect to such Warrants. Management of the Company expects that it will, on a
recurrent basis, engage in additional financings as the need arises to finance
the growth of the Company or to lengthen the average maturity of its
borrowings. To the extent that Securities being purchased for resale by MLPF&S
are not resold, the aggregate proceeds to the Company and its subsidiaries
would be reduced.

3
<PAGE>

SUMMARY FINANCIAL INFORMATION

The following summary of consolidated financial information was derived
from, and is qualified in its entirety by reference to, the financial
statements and other information and data contained in the Company's Annual
Report on Form 10-K for the year ended December 30, 1994. See "Incorporation
of Certain Documents by Reference." The year-end results include 52 weeks for
1990, 1991, 1992, and 1994 and 53 weeks for 1993.

<TABLE>
<CAPTION>
YEAR ENDED LAST FRIDAY IN DECEMBER
----------------------------------------------------------------
1990 1991 1992 1993 1994
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT
INFORMATION
(In thousands, except
ratios)
Revenues................ $11,147,229 $12,352,812 $ 13,412,668 $ 16,588,177 $ 18,233,091
Net revenues(1)......... $ 5,783,329 $ 7,246,468 $ 8,577,401 $ 10,558,230 $ 9,624,521
Earnings before income
taxes and cumulative
effect of changes in
accounting
principles(2).......... $ 282,328 $ 1,017,418 $ 1,621,389 $ 2,424,808 $ 1,729,604
Cumulative effect of
changes in accounting
principles (net of
applicable income
taxes)(2).............. -- -- $ (58,580) $ (35,420) --
Net earnings(2)......... $ 191,856 $ 696,117 $ 893,825 $ 1,358,939 $ 1,016,761
Ratio of earnings to
fixed charges(3)....... 1.1 1.2 1.3 1.4 1.2
BALANCE SHEET
INFORMATION(4)(5)
(In thousands)
Total assets............ $68,129,527 $86,259,343 $107,024,173 $152,910,362 $163,749,327
Long-term borrowings.... $ 6,341,559 $ 7,964,424 $ 10,871,100 $ 13,468,900 $ 14,863,383
Stockholders' equity.... $ 3,225,430 $ 3,818,088 $ 4,569,104 $ 5,485,913 $ 5,817,545
</TABLE>
- --------
(1) Net revenues are revenues net of interest expense.
(2) Net earnings for 1992 were reduced by $58,580,000 to reflect the adoption
of Statement of Financial Accounting Standards ("SFAS") No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions", and
SFAS No. 109, "Accounting for Income Taxes". Net earnings for 1993 were
reduced by $35,420,000 to reflect the adoption of SFAS No. 112, "Employers'
Accounting for Postemployment Benefits".
(3) For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consists of earnings from continuing operations before income
taxes and fixed charges. "Fixed charges" consists of interest costs,
amortization of debt expense, preferred stock dividend requirements of
majority-owned subsidiaries, and that portion of rentals estimated to be
representative of the interest factor.
(4) In 1994, the Company adopted Financial Accounting Standards Board ("FASB")
Interpretation No. 39, "Offsetting of Amounts Related to Certain Contracts",
and FASB Interpretation No. 41, "Offsetting of Amounts Related to Certain
Repurchase and Reverse Repurchase Agreements", which increased assets and
liabilities at December 30, 1994 by approximately $8,500,000,000.
(5) To finance its diverse activities, the Company and certain of its
subsidiaries borrow substantial amounts of short-term funds on a regular
basis. Although the amount of short-term borrowings significantly varies
with the level of general business activity, on December 30, 1994,
$557,776,000 of bank loans and $14,758,830,000 of commercial paper were
outstanding. In addition, certain of the Company's subsidiaries lend
securities and enter into repurchase agreements to obtain financing. At
December 30, 1994, cash deposits for securities loaned and securities sold
under agreements to repurchase amounted to $2,180,186,000 and
$51,864,594,000, respectively.

FISCAL YEAR 1994

Financial markets, strong from 1991 through the first six weeks of 1994,
changed significantly after inflationary fears prompted the Federal Reserve to
increase short-term interest rates in February 1994. As the U.S. economy
continued to expand, the Federal Reserve acted to further curb inflation and
to moderate growth by increasing short-term interest rates five additional
times during the year. The combination of rising interest rates, a falling
U.S. dollar, unsettled global stock, bond, and currency markets, reduced
foreign investment in U.S. financial markets, and overall investor caution
contributed to lower earnings for most U.S. securities firms. These conditions
affected the Company's 1994 fourth quarter and full year results. Net

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earnings for the 1994 fourth quarter were $161.6 million, down 30% from the
1994 third quarter and down 53% from the 1993 fourth quarter.

Net earnings for 1994 were $1,016.8 million, down 25% from record 1993
earnings of $1,358.9 million. Net earnings for 1993 included a $35.4 million
cumulative effect charge (net of $25.1 million of applicable income tax
benefits) related to the adoption of Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits". Earnings
for 1993 before the cumulative effect of the change in accounting principle
were $1,394.4 million. Earnings per common share in 1994 were $4.75 primary and
$4.74 fully diluted, compared with $5.98 primary and $5.95 fully diluted ($6.14
primary and $6.11 fully diluted before the accounting change) in 1993. As
previously reported, 1993 results included a non-recurring pretax lease charge
totaling $103.0 million ($59.7 million after income taxes) related to the
Company's decision not to occupy certain space at the World Financial Center
Headquarters ("Headquarters") facility. This space was sublet in 1994.

Total revenues were $18,233 million, up 10% from 1993. Net revenues (revenues
after interest expense) totaled $9,625 million in 1994, down 9% from 1993.

Commission revenues were $2,871 million, virtually unchanged from $2,894
million in 1993. Higher commission revenues from mutual funds and commodity
transactions were offset by lower revenues from money market instruments,
particularly medium-term notes, and listed securities transactions. Sales of
mutual funds, particularly front-end funds, declined as investors were less
active due to uncertain markets and rising interest rates. For the first time
since 1974, both stock and bond funds fell in value industrywide, on average,
in the same year. Distribution fees from deferred charge funds benefited from
strong mutual fund sales in prior periods, while redemption fees increased as
investors repositioned their portfolios primarily from fixed-income funds to
stock and money market funds. Commissions on listed securities transactions
decreased due to a decline in the relative amount of business by retail clients
versus institutional clients. Other commission revenues declined principally as
a result of lower commissions from money market instruments, partially offset
by higher revenues from commodity transactions.

Interest and dividend revenues increased 35% to $9,578 million from $7,099
million in 1993. Interest expense, which includes dividend expense, rose 43% to
$8,609 million from $6,030 million in 1993. Net interest and dividend profit
decreased 9% to $969 million as a significant increase in short-term interest
rates, year over year, led to a substantial flattening of the yield curve. The
change in the yield curve, the relationship between interest rates and
maturities, resulted from short-term interest rates rising faster than long-
term interest rates in 1994. As a result, interest spreads declined, while
financing and hedging costs increased from 1993.

Principal transactions revenues fell 20% to $2,335 million from the 1993
record $2,920 million due to rising interest rates, a declining U.S. dollar,
and volatile world financial markets. Revenues from taxable fixed-income
securities, equities and equity derivatives, and foreign exchange and
commodities decreased, while interest rate and currency swaps, and municipal
securities revenues increased. Taxable fixed-income revenues declined 52% to
$462 million as higher interest rates, wider credit spreads, and uncertainty in
emerging markets led to reduced demand and lower inventory values. Equities and
equity derivatives trading revenues decreased 28% to $627 million, reflecting
lower trading results in virtually all categories, including a loss in
convertible securities. Foreign exchange and commodities revenues, in the
aggregate, declined 31% to $109 million. Weakness in the U.S. dollar versus
other major currencies depressed foreign exchange trading, while commodities
trading revenues benefited from increased volume. Interest rate and currency
swaps revenues advanced 24% to $749 million reflecting higher revenues from
U.S. dollar-denominated swap trading activities, particularly those related to
structured financing transactions. Municipal securities trading revenues
increased 20% to $388 million due to strong retail investor demand for tax-
exempt investments.

Investment banking revenues were $1,239 million, down 32% from $1,831 million
in 1993 due primarily to the effects of rising interest rates and reduced
demand. Underwriting revenues declined in almost all

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<PAGE>

categories, with significant decreases in equities, corporate bonds and
preferred stock, and convertible securities. Strategic services revenues, which
include fees for debt restructuring, merger and acquisition activity, and other
advisory services, benefited from increased merger and acquisition advisory
assignments in various industries.

Asset management and portfolio services fees rose 12% from $1,558 million in
1993 to a record $1,739 million. Asset management fees advanced due primarily
to an increase in stock funds under management. Portfolio service fees advanced
due to the continued growth in the number of Asset Power(R) accounts, a product
with fees and transaction limits based on asset levels, and increased revenues
from the ML Consults(R) product.

Other revenues were $471 million, up 65% from $285 million in 1993. The
increase in other revenues was attributable to net realized investment gains
related to merchant banking activities of $81 million, compared with unrealized
losses of $133 million in 1993.

Non-interest expenses were $7,895 million, down 3% from $8,133 million in the
year-ago period. Excluding the 1993 non-recurring lease charge totaling $103.0
million, non-interest expenses declined 2%.

Compensation and benefits expense, which represented approximately 63% of
total non-interest expenses, declined 6% due principally to lower incentive and
production-related compensation. Compensation and benefits expense, as a
percentage of net revenues, was 51.5% in 1994, compared with 49.8% in 1993.

Occupancy costs declined 24% (7% excluding the 1993 non-recurring lease
charge) benefiting from continued relocation of support staff to lower-cost
facilities and reduced space requirements at the Headquarters facility. Other
facilities costs, which include communications and equipment rental, and
depreciation and amortization, were up 9% due to increased use of market data,
news, and statistical services and higher depreciation expense from the
acquisition of technology-related equipment.

Advertising and market development expenses were down 1% with discretionary
costs decreasing as business conditions became less favorable. Lower sales
promotion and a reduction in advertising campaigns were partially offset by
increased travel related to international business activities. Professional
fees increased 26% due primarily to the use of system and management
consultants to upgrade technology and processing capabilities in trading,
credit, and customer services, as well as higher legal fees. Brokerage,
clearing, and exchange fees increased 20% reflecting higher international
equity volume and expanded risk management activities related to volatile
global market conditions. Other expenses increased 1% from 1993, due to an
increase in office supplies and postage costs.

Income tax expense totaled $713 million in 1994, down 31% from $1,030 million
in 1993. The effective tax rate was 41.2% in 1994 versus 42.5% in 1993 as a
result of lower state income taxes.

The Company's Annual Report on Form 10-K for the year ended December 30, 1994
describes an action commenced against the Company by Orange County, California
(the "County") and the Orange County Investment Pools (the "Pools"). See
"Incorporation of Certain Documents by Reference." The County and the Pools
seek relief in excess of $2 billion in connection with various securities
transactions between the County and/or the Pools and the Company and its
subsidiaries. Other actions have also been commenced against the Company and
its subsidiaries arising out of the Company's dealings with the County
Treasurer and the Pools.

The Company will vigorously contest these actions and believes it has
meritorious defenses. Although the ultimate outcome of these actions cannot be
ascertained at this time and the results of legal proceedings cannot be
predicted with certainty, it is the opinion of management that the resolution
of these actions will not have a material adverse effect on the consolidated
financial condition or results of operations of the Company for the year ended
December 30, 1994.

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The Company has also received inquiries from various governmental entities
examining the underlying events and is cooperating with these inquiries.

CERTAIN BALANCE SHEET INFORMATION AS OF DECEMBER 30, 1994

On January 1, 1994, the Company adopted Financial Accounting Standards Board
Interpretation No. 39 ("Interpretation No. 39"), "Offsetting of Amounts Related
to Certain Contracts". Interpretation No. 39 affects the financial statement
presentation of balances related to swap, forward, and other similar exchange
or conditional type contracts, and unconditional type contracts. To offset
unconditional contracts, such as resale and repurchase agreements, net cash
settlement of the related receivable and payable balances is also required by
Interpretation No. 39, as modified by Interpretation No. 41, "Offsetting of
Amounts Related to Certain Repurchase and Reverse Repurchase Agreements". Prior
to the adoption of these Interpretations, the Company followed industry
practice in reporting balances related to certain types of contracts on a net
basis. Unrealized gains and losses for swap, forward, and other similar
contracts were reported net on the balance sheet by contract type, while
certain receivables and payables related to resale and repurchase agreements
were reported net by counterparty. The effect of these Interpretations
increased assets and liabilities at December 30, 1994 by approximately $8.5
billion.

The Company believes that its equity base is adequate relative to the level
and composition of its assets and the mix of its business.

In the normal course of business, the Company underwrites, trades, and holds
non-investment grade securities in connection with its market-making,
investment banking, and derivative structuring activities. These activities are
subject to risks related to the creditworthiness of the issuers and the
liquidity of the market for such securities, in addition to the usual risks
associated with investing in, extending credit, underwriting, and trading in
investment grade instruments.

At December 30, 1994, the fair value of long and short non-investment grade
trading inventories amounted to $3,309 million and $456 million, respectively,
and in the aggregate (i.e., the sum of long and short trading inventories)
represented 4.3% of aggregate consolidated trading inventories.

At December 30, 1994, the carrying value of extensions of credit provided to
corporations entering into leveraged transactions aggregated $257 million
(excluding unutilized revolving lines of credit and other lending commitments
of $50 million), consisting primarily of senior term and subordinated
financings to 35 medium-sized corporations. At December 30, 1994, the Company
had no bridge loans outstanding. Loans to highly leveraged corporations are
carried at unpaid principal balance less a reserve for estimated losses. The
allowance for loan losses is estimated based on a review of each loan, and
consideration of economic, market, and credit conditions. Direct equity
investments made in conjunction with the Company's investment and merchant
banking activities aggregated $289 million at December 30, 1994, representing
investments in 80 enterprises. Equity investments in privately-held
corporations for which sale is restricted by government or contractual
requirements are carried at the lower of cost or estimated net realizable
value. At December 30, 1994, the Company held interests in partnerships,
totaling $93 million (recorded on the cost basis), that invest in highly
leveraged transactions and non-investment grade securities. Prior to July 1,
1994, the Company had a co-investment arrangement to enter into direct equity
investments. At December 30, 1994, the Company also committed to invest an
additional $80 million in partnerships that invest in leveraged transactions.

The Company's insurance subsidiaries hold non-investment grade securities. As
a percentage of total insurance investments, non-investment grade securities
were 5.5% at December 30, 1994. Non-investment grade securities of insurance
subsidiaries were classified as available-for-sale and were carried at fair
value at December 30, 1994.

At December 30, 1994, the largest non-investment grade concentration
consisted of various issues of a South American sovereign totaling $235
million, of which $60 million represented on-balance-sheet hedges

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for off-balance-sheet instruments. No one industry sector accounted for more
than 21% of total non-investment grade positions. At December 30, 1994, the
Company held an aggregate carrying value of $292 million in debt and equity
securities of issuers in various stages of bankruptcy proceedings.
Approximately 71% of this amount resulted from the Company's market-making
activities in such securities.

DESCRIPTION OF DEBT SECURITIES

Unless otherwise specified in a Prospectus Supplement, the Senior Debt
Securities are to be issued under an indenture (the "Chemical Indenture"),
dated as of April 1, 1983, as amended and restated, between the Company and
Chemical Bank (successor by merger to Manufacturers Hanover Trust Company), as
trustee or issued under an indenture (the "Chase Indenture"), dated as of
October 1, 1993 between the Company and The Chase Manhattan Bank, N.A. as
trustee (each, a "Senior Debt Trustee"). The Chemical Indenture and the Chase
Indenture are referred to herein as the "Senior Indentures". The Subordinated
Debt Securities are to be issued under an indenture (the "Subordinated
Indenture"), between the Company and Chemical Bank, as trustee (the
"Subordinated Debt Trustee"). The Senior Debt Securities and Subordinated Debt
Securities may also be issued under one or more other indentures (each, a
"Subsequent Indenture") and have one or more other trustees (each, a
"Subsequent Trustee"). Any Subsequent Indenture relating to Senior Debt
Securities will have terms and conditions identical in all material respects
to the above-referenced Senior Indentures and any Subsequent Indenture
relating to Subordinated Debt Securities will have terms and conditions
identical in all material respects to the above-referenced Subordinated
Indenture, including, but not limited to, the applicable terms and conditions
described below. Any Subsequent Indenture relating to a series of Debt
Securities, and the trustee with respect thereto, will be identified in the
applicable Prospectus Supplement. The Senior Indentures, the Subordinated
Indenture and any Subsequent Indentures (whether senior or subordinated) are
referred to herein as the "Indentures"; and the Senior Debt Trustees, the
Subordinated Debt Trustee and any Subsequent Trustees are referred to herein
as the "Trustees". A copy of each Indenture is filed (or, in the case of a
Subsequent Indenture, will be filed) as an exhibit to the registration
statements relating to the Securities (collectively, the "Registration
Statement"). The following summaries of certain provisions of the Indentures
do not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all provisions of the respective Indentures,
including the definitions therein of certain terms.

GENERAL

Each Indenture provides that Debt Securities (Senior Debt Securities in the
case of the Senior Indentures or a Subsequent Indenture for Senior Debt
Securities, and Subordinated Debt Securities in the case of the Subordinated
Indenture or a Subsequent Indenture for Subordinated Debt Securities) may be
issued thereunder, without limitation as to aggregate principal amount, in one
or more series, by the Company from time to time upon satisfaction of certain
conditions precedent, including the delivery by the Company to the applicable
Trustee of a resolution of the Board of Directors, or the Executive Committee
thereof, of the Company which fixes or provides for the establishment of terms
of such Debt Securities, including: (1) the aggregate principal amount of such
Debt Securities and whether there is any limit upon the aggregate principal
amount of such Debt Securities that may be subsequently issued; (2) the date
on which such Debt Securities will mature; (3) the principal amount payable
with respect to such Debt Securities whether at maturity or upon earlier
acceleration, and whether such principal amount will be determined with
reference to an index, formula or other method; (4) the rate or rates per
annum (which may be fixed or variable) at which such Debt Securities will bear
interest, if any; (5) the dates on which such interest, if any, will be
payable; (6) the provisions for redemption of such Debt Securities, if any,
the redemption price and any remarketing arrangements relating thereto; (7)
the sinking fund requirements, if any, with respect to such Debt Securities;
(8) whether such Debt Securities are denominated or provide for payment in
United States dollars or a foreign currency or units of two or more of such
foreign currencies; (9) the form (registered or bearer or both) in which such
Debt Securities may be issued and any restrictions applicable to the exchange
of one form for

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<PAGE>

another and to the offer, sale and delivery of such Debt Securities in either
form; (10) whether and under what circumstances the Company will pay
additional amounts ("Additional Amounts") in respect of such Debt Securities
held by a person who is not a U.S. person (as defined in the Prospectus
Supplement, as applicable) in respect of specified taxes, assessments or other
governmental charges and whether the Company has the option to redeem the
affected Debt Securities rather than pay such Additional Amounts; (11) whether
such Debt Securities are to be issued in global form; (12) the title of the
Debt Securities and the series of which such Debt Securities shall be a part;
and (13) the denominations of such Debt Securities. Reference is made to the
Prospectus Supplement for the terms of the Debt Securities being offered
thereby, including whether such Debt Securities are Senior Debt Securities or
Subordinated Debt Securities. The Company may elect to deliver to purchasers
of Securities a Terms Sheet instead of a Prospectus. This Prospectus may be
delivered prior to or concurrently with a Terms Sheet. Debt Securities may
also be issued under the Indentures upon the exercise of Debt Warrants. See
"Description of Debt Warrants". Nothing in the Indentures or in the terms of
the Debt Securities will prohibit the issuance of securities representing
subordinated indebtedness that is senior or junior to the Subordinated Debt
Securities.

The Debt Securities will be issued, to the extent provided in the Prospectus
Supplement, in fully registered form without coupons, and/or in bearer form
with or without coupons, and in denominations set forth in the Prospectus
Supplement. No service charge will be made for any registration of transfer of
registered Debt Securities or exchange of Debt Securities, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charges that may be imposed in connection therewith. Each Indenture provides
that Debt Securities issued thereunder may be issued in global form. If any
series of Debt Securities is issuable in global form, the applicable
Prospectus Supplement will describe the circumstances, if any, under which
beneficial owners of interest in any such global Debt Securities may exchange
such interests for Debt Securities of such series and of like tenor and
principal amount in any authorized form and denomination. Principal of, and
any premium, Additional Amounts and interest on, a global Debt Security will
be payable in the manner described in the applicable Prospectus Supplement.

The provisions of the Indentures described above provide the Company with
the ability, in addition to the ability to issue Debt Securities with terms
different from those of Debt Securities previously issued, to "reopen" a
previous issue of a series of Debt Securities and issue additional Debt
Securities of such series.

The Senior Debt Securities will be unsecured and will rank pari passu with
all other unsecured and unsubordinated indebtedness of the Company. The
Subordinated Debt Securities will be unsecured and will be subordinated to all
existing and future Senior Indebtedness (as defined below) of the Company.
Since the Company is a holding company, the right of the Company, and hence
the right of creditors of the Company (including the Holders of the Debt
Securities), to participate in any distribution of the assets of any
subsidiary upon its liquidation or reorganization or otherwise is necessarily
subject to the prior claims of creditors of the subsidiary, except to the
extent that claims of the Company itself as a creditor of the subsidiary may
be recognized. In addition, dividends, loans and advances from certain
subsidiaries, including MLPF&S, to the Company are restricted by net capital
requirements under the Securities Exchange Act of 1934 and under rules of
certain exchanges and other regulatory bodies.

Principal and any interest, premium and Additional Amounts will be payable
in the manner, at the places and subject to the restrictions set forth in the
applicable Indenture, the Debt Securities and the Prospectus Supplement
relating thereto, provided that payment of any interest and any Additional
Amounts may be made at the option of the Company by check mailed to the
holders of registered Debt Securities at their registered addresses.

Debt Securities may be presented for exchange, and registered Debt
Securities may be presented for transfer, in the manner, at the places and
subject to the restrictions set forth in the applicable Indenture, the Debt
Securities and the Prospectus Supplement relating thereto. Debt Securities in
bearer form and the coupons, if any, pertaining thereto will be transferable
by delivery. No service charge will be made for any transfer or exchange of
Debt Securities, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

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MERGER AND CONSOLIDATION

The Company may consolidate or merge with or into any other corporation, and
the Company may sell, lease or convey all or substantially all of its assets to
any corporation, provided that (i) the corporation (if other than the Company)
formed by or resulting from any such consolidation or merger or which shall
have received such assets shall be a corporation organized and existing under
the laws of the United States of America or a state thereof and shall assume
payment of the principal of, and any premium, Additional Amounts or interest
on, the Debt Securities and the performance and observance of all of the
covenants and conditions of the Indentures to be performed or observed by the
Company, and (ii) the Company or such successor corporation, as the case may
be, shall not immediately thereafter be in default under the Indentures.

MODIFICATION AND WAIVER

Modification and amendment of each Indenture may be effected by the Company
and the applicable Trustee with the consent of the Holders of at least 66 2/3%
in principal amount of the Outstanding Debt Securities of each series issued
pursuant to such Indenture and affected thereby, provided that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security affected thereby, (a) change the Stated Maturity of,
or any installment of interest or Additional Amounts on, any Debt Security or
any premium payable on the redemption thereof, or change the Redemption Price;
(b) reduce the principal amount of, or the interest or Additional Amounts
payable on, any Debt Security or reduce the amount of principal which could be
declared due and payable prior to the Stated Maturity; (c) change the place or
currency of any payment of principal of, or any premium, interest or Additional
Amounts on, any Debt Security; (d) impair the right to institute suit for the
enforcement of any payment on or with respect to any Debt Security; (e) reduce
the percentage in principal amount of the Outstanding Debt Securities of any
series, the consent of whose Holders is required to modify or amend such
Indenture; or (f) modify the foregoing requirements or reduce the percentage of
Outstanding Debt Securities necessary to waive any past default to less than a
majority. No modification or amendment of the Subordinated Indenture or any
Subsequent Indenture for Subordinated Debt Securities may adversely affect the
rights of any Holder of Senior Indebtedness without the consent of such Holder.
Except with respect to certain fundamental provisions, the Holders of at least
a majority in principal amount of Outstanding Debt Securities of any series
may, with respect to such series, waive past defaults under the applicable
Indenture and waive compliance by the Company with certain provisions of such
Indenture.

EVENTS OF DEFAULT

Under each Indenture, the following will be Events of Default with respect to
Debt Securities of any series issued thereunder: (a) default in the payment of
any interest or Additional Amounts upon any Debt Security of that series when
due, and such default has continued for 30 days; (b) default in the payment of
any principal of or premium, if any, on any Debt Security of that series when
due; (c) default in the deposit of any sinking fund payment, when due, in
respect of any Debt Security of that series; (d) default in the performance of
any other covenant of the Company contained in such Indenture for the benefit
of such series or in the Debt Securities of such series, and such default has
continued for 60 days after written notice as provided in such Indenture; (e)
certain events in bankruptcy, insolvency or reorganization; and (f) any other
Event of Default provided with respect to Debt Securities of that series. The
applicable Trustee or the Holders of 25% in principal amount of the Outstanding
Debt Securities of that series may declare the principal amount (or such lesser
amount as may be provided for in the Debt Securities of that series) of all
Outstanding Debt Securities of that series and the interest accrued thereon and
Additional Amounts payable in respect thereof, if any, to be due and payable
immediately if an Event of Default with respect to Debt Securities of such
series shall occur and be continuing at the time of declaration. At any time
after a declaration of acceleration has been made with respect to Debt
Securities of any series but before a judgment or decree for payment of money
due has been obtained by the applicable Trustee, the Holders of a majority in
principal amount of the Outstanding Debt Securities of that series may rescind
any declaration of acceleration and its consequences, provided that all
payments due (other than those due as a result of acceleration) have been

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<PAGE>

made and all Events of Default have been remedied or waived. Any Event of
Default with respect to Debt Securities of any series may be waived by the
Holders of a majority in principal amount of all Outstanding Debt Securities of
that series, except in a case of failure to pay principal of or premium, if
any, or interest or Additional Amounts, if any, on any Debt Security of that
series for which payment had not been subsequently made or in respect of a
covenant or provision which cannot be modified or amended without the consent
of the Holder of each Outstanding Debt Security of such series affected.

The Holders of a majority in principal amount of the Outstanding Debt
Securities of a series may direct the time, method and place of conducting any
proceeding for any remedy available to the applicable Trustee or exercising any
trust or power conferred on such Trustee with respect to Debt Securities of
such series, provided that such direction shall not be in conflict with any
rule of law or the applicable Indenture. Subject to the provisions of each
Indenture relating to the duties of the appropriate Trustee, before proceeding
to exercise any right or power under an Indenture at the direction of such
Holders, the applicable Trustee shall be entitled to receive from such Holders
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by it in complying with any such direction.

The Company will be required to furnish to each Trustee annually a statement
as to the fulfillment by the Company of all of its obligations under the
applicable Indenture.

SPECIAL TERMS RELATING TO THE SENIOR DEBT SECURITIES

"LIMITATIONS UPON LIENS"

The Senior Indentures provide that the Company may not, and may not permit
any Subsidiary to, create, assume, incur or permit to exist any indebtedness
for borrowed money secured by a pledge, lien or other encumbrance (except for
certain liens specifically permitted by the Senior Indentures) on the Voting
Stock owned directly or indirectly by the Company of any Subsidiary (other than
a Subsidiary which, at the time of incurrence of such secured indebtedness, has
a net worth of less than $3,000,000) without making effective provision whereby
the Outstanding Senior Debt Securities will be secured equally and ratably with
such secured indebtedness.

"LIMITATIONS ON DISPOSITION OF VOTING STOCK OF, AND MERGER AND SALE OF ASSETS
BY, MLPF&S"

The Senior Indentures provide that the Company may not sell, transfer or
otherwise dispose of any Voting Stock of MLPF&S or permit MLPF&S to issue, sell
or otherwise dispose of any of its Voting Stock, unless, after giving effect to
any such transaction, MLPF&S remains a Controlled Subsidiary (defined in the
Senior Indentures to mean a corporation more than 80% of the outstanding shares
of Voting Stock of which are owned directly or indirectly by the Company). In
addition, the Senior Indentures provide that the Company may not permit MLPF&S
to (i) merge or consolidate, unless the surviving company is a Controlled
Subsidiary, or (ii) convey or transfer its properties and assets substantially
as an entirety, except to one or more Controlled Subsidiaries.

SPECIAL TERMS RELATING TO THE SUBORDINATED DEBT SECURITIES

Upon any distribution of assets of the Company resulting from any
dissolution, winding up, liquidation or reorganization, payments on
Subordinated Debt Securities are to be subordinated to the extent provided in
the Subordinated Indenture in right of payment to the prior payment in full of
all Senior Indebtedness, but the obligation of the Company to make payments on
the Subordinated Debt Securities will not otherwise be affected. No payment on
Subordinated Debt Securities may be made at any time when there is a default in
the payment of any principal, premium, interest, Additional Amounts, if any, or
sinking fund of or on any Senior Indebtedness. Holders of Subordinated Debt
Securities will be subrogated to the rights of holders of Senior Indebtedness
to the extent of payments made on Senior Indebtedness upon any distribution of
assets in any such proceedings out of the distributive shares of Subordinated
Debt Securities. By reason of such

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<PAGE>

subordination, in the event of a distribution of assets upon insolvency,
certain creditors of the Company may recover more, ratably, than Holders of
Subordinated Debt Securities.

Senior Indebtedness is defined in the Subordinated Indenture as the principal
of, premium, if any, and unpaid interest on (a) indebtedness of the Company
(including indebtedness of others guaranteed by the Company), other than the
Subordinated Debt Securities, whether outstanding on the date of execution of
the Subordinated Indenture or thereafter created, incurred, assumed or
guaranteed, (i) for money owing to banks, (ii) for money borrowed from sources
other than banks or (iii) in connection with the acquisition by the Company or
a subsidiary of assets of any kind except in the ordinary course of business,
unless in the instrument creating or evidencing the same or pursuant to which
the same is outstanding it is provided that such indebtedness is not superior
in right of payment to the Subordinated Debt Securities, and (b) renewals,
extensions, modifications and refundings of any such indebtedness. As of
September 29, 1995, a total of approximately $34.3 billion of the Company's
indebtedness would have been Senior Indebtedness as so defined.

DESCRIPTION OF DEBT WARRANTS

The Company may issue, together with Debt Securities, Currency Warrants or
Index Warrants or separately, Debt Warrants for the purchase of Debt
Securities. The Debt Warrants are to be issued under debt warrant agreements
(each a "Debt Warrant Agreement") to be entered into between the Company and a
bank or trust company, as debt warrant agent (the "Debt Warrant Agent"), all as
shall be set forth in the Prospectus Supplement relating to Debt Warrants being
offered thereby. A copy of the form of Debt Warrant Agreement, including the
form of warrant certificates representing the Debt Warrants (the "Debt Warrant
Certificates"), reflecting the alternative provisions to be included in the
Debt Warrant Agreements that will be entered into with respect to particular
offerings of Debt Warrants, is filed as an exhibit to the Registration
Statement. The following summaries of certain provisions of the Debt Warrant
Agreement and the Debt Warrant Certificates do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all the
provisions of the Debt Warrant Agreement and the Debt Warrant Certificates,
respectively, including the definitions therein of certain terms.

GENERAL

The applicable Prospectus Supplement will describe the terms of Debt Warrants
offered thereby, the Debt Warrant Agreement relating to such Debt Warrants and
the Debt Warrant Certificates representing such Debt Warrants, including the
following: (1) the designation, aggregate principal amount, price at which such
principal amount may be purchased upon exercise and terms of the Debt
Securities purchasable upon exercise of such Debt Warrants, including whether
such Debt Securities are Senior Debt Securities or Subordinated Debt
Securities, and the procedures and conditions relating to the exercise of such
Debt Warrants; (2) the designation and terms of any related Debt Securities
with which such Debt Warrants are issued, including whether such Debt
Securities are Senior Debt Securities or Subordinated Debt Securities, the
number of such Debt Warrants issued with each such Debt Security, and the
Indenture under which the Debt Securities will be issued; (3) the date, if any,
on and after which such Debt Warrants and the related Debt Securities will be
separately transferable; (4) the date on which the right to exercise such Debt
Warrants shall commence and the date on which such right shall expire (the
"Expiration Date"); (5) if the Debt Securities purchasable upon exercise of
such Debt Warrants are original issue discount Debt Securities, a discussion of
Federal income tax considerations applicable thereto; and (6) whether the Debt
Warrants represented by the Debt Warrant Certificates will be issued in
registered or bearer form, and, if registered, where they may be transferred
and registered.

Debt Warrant Certificates will be exchangeable for new Debt Warrant
Certificates of different denominations and Debt Warrants may be exercised at
the corporate trust office of the Debt Warrant Agent or any other office
indicated in the Prospectus Supplement. Prior to the exercise of their Debt
Warrants,

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holders of Debt Warrants will not have any of the rights of Holders of the Debt
Securities purchasable upon such exercise and will not be entitled to payments
of principal of, and any premium, Additional Amounts, if any, or interest on,
the Debt Securities purchasable upon such exercise.

EXERCISE OF DEBT WARRANTS

Each Debt Warrant will entitle the Holder to purchase for cash such principal
amount of Debt Securities at such exercise price as shall in each case be set
forth in, or be determinable as set forth in, the Prospectus Supplement
relating to the Debt Warrants offered thereby. Debt Warrants may be exercised
at any time up to the close of business on the Expiration Date set forth in the
Prospectus Supplement relating to the Debt Warrants offered thereby. After the
close of business on the Expiration Date, unexercised Debt Warrants will become
void.

Debt Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Debt Warrants offered thereby. Upon receipt of payment and the
Debt Warrant Certificate properly completed and duly executed at the corporate
trust office of the Debt Warrant Agent or any other office indicated in the
Prospectus Supplement, the Company will, as soon as practicable, forward the
Debt Securities purchasable upon such exercise. If less than all of the Debt
Warrants represented by such Debt Warrant Certificate are exercised, a new Debt
Warrant Certificate will be issued for the remaining amount of Debt Warrants.

DESCRIPTION OF CURRENCY WARRANTS

The Company may issue, together with Debt Securities, Debt Warrants or Index
Warrants or separately, Currency Warrants either in the form of Currency Put
Warrants entitling the Holders thereof to receive from the Company the cash
settlement value in U.S. dollars of the right to sell a specified amount of a
specified foreign currency or currency units for a specified amount of U.S.
dollars, or in the form of Currency Call Warrants entitling the Holders thereof
to receive from the Company the cash settlement value in U.S. dollars of the
right to purchase a specified amount of a specified foreign currency or units
of two or more currencies for a specified amount of U.S. dollars. The Currency
Warrants are to be issued under a currency put warrant agreement or a currency
call warrant agreement, as applicable (each a "Currency Warrant Agreement"), to
be entered into between the Company and a bank or trust company, as currency
warrant agent (the "Currency Warrant Agent"), all as shall be set forth in the
applicable Prospectus Supplement. Copies of the forms of Currency Put Warrant
Agreement and Currency Call Warrant Agreement, including the forms of warrant
certificates representing the Currency Put Warrants and Currency Call Warrants
(the "Currency Warrant Certificates"), reflecting the provisions to be included
in the Currency Warrant Agreements that will be entered into with respect to
particular offerings of Currency Warrants, are filed as exhibits to the
Registration Statement. The following summaries of certain provisions of the
Currency Warrant Agreements and the Currency Warrant Certificates do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Currency Warrant Agreements and the
Currency Warrant Certificates, respectively, including the definitions therein
of certain terms.

GENERAL

The applicable Prospectus Supplement will describe the terms of Currency
Warrants offered thereby, the Currency Warrant Agreement relating to such
Currency Warrants and the Currency Warrant Certificates representing such
Currency Warrants, including the following: (1) whether such Currency Warrants
shall be Currency Put Warrants, Currency Call Warrants, or both; (2) the
formula for determining the cash settlement value of each Currency Warrant; (3)
the procedures and conditions relating to the exercise of such Currency
Warrants; (4) the circumstances which will cause the Currency Warrants to be
deemed to be automatically exercised; (5) any minimum number of Currency
Warrants which must be exercised at any one time, other than upon automatic
exercise; and (6) the date on which the right to exercise such Currency
Warrants shall commence and the date on which such right shall expire (the
"Expiration Date"), provided that the commencement date and the Expiration Date
may be the same date.

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<PAGE>

BOOK-ENTRY PROCEDURES AND SETTLEMENT

Except as may otherwise be provided in an applicable Prospectus Supplement,
the Currency Warrants will be issued in the form of global Currency Warrant
Certificates, registered in the name of a depository or its nominee. Beneficial
owners will not be entitled to receive definitive certificates representing
Currency Warrants. Ownership of a Currency Warrant will be recorded on or
through the records of the brokerage firm or other entity that maintains a
beneficial owner's account. In turn, the total number of Currency Warrants held
by an individual brokerage firm for its clients will be maintained on the
records of the depository in the name of such brokerage firm or its agent.
Transfer of ownership of any Currency Warrant will be effected only through the
selling beneficial owner's brokerage firm.

EXERCISE OF CURRENCY WARRANTS

Each Currency Warrant will entitle the Holder to the cash settlement value of
such Currency Warrant on the applicable Exercise Date, in each case as such
terms will be defined in the applicable Prospectus Supplement. If a Currency
Warrant has more than one exercise date and is not exercised prior to 1:30
P.M., New York City time, on the fifth New York Business Day preceding the
Expiration Date, Currency Warrants will be deemed automatically exercised.

LISTING

Each issue of Currency Warrants will be listed on a national securities
exchange, subject only to official notice of issuance, as a condition of sale
of any such Currency Warrants. In the event that the Currency Warrants are
delisted from, or permanently suspended from trading on, such exchange, the
Expiration Date for such Currency Warrants will be the date such delisting or
trading suspension becomes effective and Currency Warrants not previously
exercised will be deemed automatically exercised on the business day
immediately preceding such Expiration Date. The applicable Currency Warrant
Agreement will contain a covenant of the Company not to seek delisting of the
Currency Warrants, or suspension of their trading, on such exchange.

DESCRIPTION OF INDEX WARRANTS

The Company may issue from time to time Index Warrants consisting of put
warrants (the "Index Put Warrants") or call warrants (the "Index Call
Warrants"). The Index Warrants will entitle the holders to receive from the
Company a payment or delivery, subject to applicable law, determined by
reference to decreases (in the case of Index Put Warrants) or to increases (in
the case of Index Call Warrants) in the level of an index or portfolio based on
one or more equity or debt securities (including the price or yield of such
securities), any statistical measure of economic or financial performance
(including any consumer price, currency or mortgage index) or the price or
value of any commodity or any combination thereof (the "Index"). Unless
otherwise specified in the accompanying Prospectus Supplement, payments, if
any, upon exercise (or deemed exercise) of the Index Warrants will be made in
U.S. dollars. The Index Warrants will be offered on terms to be determined at
the time of sale.

GENERAL

The applicable Prospectus Supplement will describe the Index Warrant
Agreement or Index Warrant Trust Indenture (each as defined below), as the case
may be, relating to the Index Warrants being offered thereby and the terms of
such Index Warrants, including, without limitation: (i) whether the Index
Warrants to be issued will be Index Put Warrants, Index Call Warrants or both;
(ii) the aggregate number and initial public offering price or purchase price;
(iii) the Index for such Index Warrants; (iv) whether the Index Warrants will
be deemed exercised as of a specified date or whether the Index Warrants may be
exercised during a period and the date on which the right to exercise such
Index Warrants commences and the date on which such right expires; (v) the
manner in which such Index Warrants may be exercised and any restrictions on,
or other special provisions relating to, the exercise of such Index Warrants;
(vi) the minimum number, if

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<PAGE>

any, of such Index Warrants exercisable at any one time; (vii) the maximum
number, if any, of such Index Warrants that may, subject to the Company's
election, be exercised by all Index Warrantholders (or by any person or entity)
on any day; (viii) any provisions permitting an Index Warrantholder to
condition an exercise notice on the absence of certain specified changes in the
level of the applicable Index after the exercise date, any provisions
permitting the Company to suspend exercise of such Index Warrants based on
market conditions or other circumstances and any other special provision
relating to the exercise of such Index Warrants; (ix) any provisions for the
automatic exercise of such Index Warrants other than at expiration; (x) any
provisions permitting the Company to cancel such Index Warrants upon the
occurrence of certain events; (xi) any additional circumstances which would
constitute an Event of Default with respect to such Index Warrants; (xii) the
method of determining (a) the payment or delivery, if any, to be made in
connection with the exercise or deemed exercise of such Index Warrants (the
"Settlement Value"), (b) the minimum payment or delivery, if any, to be made
upon expiration of such Index Warrants (the "Minimum Expiration Value"), (c)
the payment or delivery to be made upon the exercise of any right which the
Company may have to cancel such Index Warrants and (d) the value of the Index;
(xiii) in the case of Index Warrants relating to an Index for which the trading
prices of underlying securities, commodities or rates are expressed in a
foreign currency, the method of converting amounts in the relevant foreign
currency or currencies into U.S. dollars (or such other currency or composite
currency in which the Index Warrants are payable); (xiv) the method of
providing for a substitute index or otherwise determining the payment or
delivery, if any, to be made in connection with the exercise of such Index
Warrants if the Index changes or ceases to be made available by its publisher;
(xv) the time or times at which payment or delivery, if any, will be made in
respect of such Index Warrants following exercise or deemed exercise; (xvi) the
self-regulatory organization on which such Index Warrants will be traded, if
any; (xvii) any provisions for issuing such Index Warrants in other than book-
entry form; (xviii) if such Index Warrants are not issued in book-entry form,
the place or places at which payment or delivery on cancellation, if any, and
the Minimum Expiration Value, if any, of such Index Warrants is to be made by
the Company; (xix) certain U.S. federal income tax consequences relating to
such Index Warrants; and (xx) other specific provisions.

Except as otherwise provided in the applicable Prospectus Supplement, each
issue of Index Warrants will contain the terms set forth below.

The Index Warrants which are issued without a Minimum Expiration Value will
be issued under one or more index warrant agreements (each, an "Index Warrant
Agreement") to be entered into between the Company and a bank or trust company,
as warrant agent (the "Index Warrant Agent"), all as described in the
Prospectus Supplement relating to such Index Warrants. The Index Warrant Agent
will act solely as the agent of the Company under the applicable Index Warrant
Agreement and will not assume any obligation or relationship of agency or trust
for or with any Index Warrantholders. A single bank or trust company may act as
Index Warrant Agent for more than one issue of Index Warrants.

The Index Warrants which are issued with a Minimum Expiration Value will be
issued under one or more index warrant trust indentures (each an "Index Warrant
Trust Indenture") to be entered into between the Company and a corporation (or
other person permitted to so act by the Trust Indenture Act of 1939, as amended
from time to time (the "Trust Indenture Act")), to act as trustee (the "Index
Warrant Trustee"), all as described in the Prospectus Supplement relative to
such Index Warrants. Any Index Warrant Trust Indenture will be qualified under
the Trust Indenture Act. To the extent allowed by the Trust Indenture Act, a
single qualified corporation may act as Index Warrant Trustee for more than one
issue of Index Warrants.

Forms of Index Warrant Agreement and Index Warrant Trust Indenture and the
respective global index warrant certificates related thereto are filed as
exhibits to the Registration Statement. The summaries herein of certain
provisions of the Index Warrant Agreement, the Index Warrant Trust Indenture
and global index warrant certificates do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the Index Warrant Agreement, the Index Warrant Trust Indenture
and global index warrant certificates, respectively.

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<PAGE>

The Company will have the right to "reopen" a previous issue of Index
Warrants and to issue additional Index Warrants of such issue without the
consent of any Index Warrantholder.

The Index Warrants involve a high degree of risk, including the risk that the
Index Warrants will expire worthless except for the Minimum Expiration Value,
if any, of such Index Warrants. Investors should therefore be prepared to
sustain a total loss of the purchase price of the Index Warrants (except for
the Minimum Expiration Value, if applicable). Investors who consider purchasing
Index Warrants should be experienced with respect to options and option
transactions and reach an investment decision only after carefully considering
the suitability of the Index Warrants in light of their particular
circumstances and the information set forth below as well as additional
information contained in the Prospectus Supplement relating to such Index
Warrants.

Unless otherwise provided in the Prospectus Supplement, each Index Warrant
will entitle Index Warrantholders to receive from the Company upon exercise the
Settlement Value of such Index Warrant. Certain Index Warrants issued pursuant
to an Index Warrant Trust Indenture will, if specified in the Prospectus
Supplement, entitle the Index Warrantholder to receive from the Company, under
certain circumstances specified in the Prospectus Supplement, a payment or
delivery equal to the greater of the applicable Settlement Value and a Minimum
Expiration Value of such Index Warrants. In addition, certain Index Warrants
will, if specified in the Prospectus Supplement, entitle Index Warrantholders
to receive from the Company a certain payment or delivery upon cancellation of
the Index Warrants by the Company, upon the occurrence of specified events. In
addition, if so specified in the Prospectus Supplement, following the
occurrence of an extraordinary event, the Settlement Value of an Index Warrant
may, at the option of the Company, be determined on a different basis,
including in connection with automatic exercise at expiration.

Unless otherwise specified in the related Prospectus Supplement, the Index
Warrants will be deemed to be automatically exercised upon expiration or such
earlier date that may be specified. Upon such automatic exercise, Index
warrantholders will be entitled to receive a payment or delivery equal to the
Settlement Value of the Index Warrants, except that holders of Index Warrants
having a Minimum Expiration Value will be entitled to receive a payment or
delivery equal to the greater of such Settlement Value and the applicable
Minimum Expiration Value. The Minimum Expiration Value may be either a
predetermined payment or delivery or a payment or delivery that varies during
the term of the Index Warrants in accordance with a schedule or formula. Any
Minimum Expiration Value applicable to an issue of Index Warrants, as well as
any additional circumstances resulting in the automatic exercise of such Index
Warrants, will be specified in the related Prospectus Supplement.

If so specified in the Prospectus Supplement, the Index Warrants may be
canceled by the Company, or the exercise or valuation of, or payment or
delivery for, such Index Warrants may be delayed or postponed upon the
occurrence of an extraordinary event. Any extraordinary events relating to an
issue of Index Warrants will be set forth in the related Prospectus Supplement.
Upon cancellation, the related Index warrantholders will be entitled to receive
only the applicable payment or delivery on cancellation specified in such
Prospectus Supplement. The payment or delivery on cancellation may be either a
predetermined payment or delivery or a payment or delivery that varies during
the term of the Index Warrants in accordance with a schedule or formula.

If the Company defaults with respect to any of its obligations under Index
Warrants which are issued with a Minimum Expiration Value pursuant to an Index
Warrant Trust Indenture, such default may be waived by the Index warrantholders
of a majority in interest of all outstanding Index Warrants, except a default
in the payment or delivery of the Settlement Value, Minimum Expiration Value or
cancellation payment or delivery (if applicable) on such Index Warrants or in
respect of a covenant or provision of the applicable Index Warrant Trust
Indenture which cannot be modified or amended without the consent of the Index
warrantholder of each outstanding Index Warrant affected.

The Index Warrants are unsecured contractual obligations of the Company and
will rank pari passu with the Company's other unsecured contractual obligations
and with the Company's unsecured and

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<PAGE>

unsubordinated debt. Since the Company is a holding company, the right of the
Company, and hence the right of creditors of the Company (including the Holders
of the Debt Securities), to participate in any distribution of the assets of
any subsidiary upon its liquidation or reorganization or otherwise is
necessarily subject to the prior claims of creditors of the subsidiary, except
to the extent that claims of the Company itself as a creditor of the subsidiary
may be recognized. In addition, dividends, loans and advances from certain
subsidiaries, including MLPF&S, to the Company are restricted by net capital
requirements under the Securities Exchange Act of 1934 and under rules of
certain exchanges and other regulatory bodies.

Certain special United States federal income tax considerations may be
applicable to instruments such as the Index Warrants. The related Prospectus
Supplement will describe such tax considerations. The summary of United States
Federal income tax considerations contained in the Prospectus Supplement will
be presented for informational purposes only, however, and will not be intended
as legal or tax advice to prospective purchasers. Prospective purchasers of
Index Warrants are urged to consult their own tax advisors prior to any
acquisition of Index Warrants.

BOOK-ENTRY PROCEDURES AND SETTLEMENT

Except as may otherwise be provided in an applicable Prospectus Supplement,
Index Warrants will be issued in book-entry form and represented by global
Index Warrants, registered in the name of a depository or its nominee. Except
as may otherwise be provided in an applicable Prospectus Supplement, Index
Warrantholders will not be entitled to receive definitive certificates
representing Index Warrants, unless the depository is unwilling or unable to
continue as depository or the Company decides to have the Index Warrants
represented by definitive certificates. A beneficial owner's interest in an
Index Warrant represented by a global Index Warrant will be recorded on or
through the records of the brokerage firm or other entity that maintains such
beneficial owner's account. In turn, the total number of Index Warrants held by
an individual brokerage firm or other entity for its clients will be maintained
on the records of the depository in the name of such brokerage firm or other
entity or its agent.

LISTING

Unless otherwise indicated in the Prospectus Supplement, the Index Warrants
will be traded pursuant to the rules of a self-regulatory organization as
specified in the Prospectus Supplement. It is expected that such self-
regulatory organization will cease trading an issue of Index Warrants at the
close of business on the related expiration date of such Index Warrants.

MODIFICATION

Any Index Warrant Agreement or Index Warrant Trust Indenture and the terms of
the related Index Warrants may be amended by the Company and the Index Warrant
Agent or Index Warrant Trustee, as the case may be (which amendment shall take
the form of a supplemental index warrant agreement or supplemental index
warrant trust indenture (collectively referred to as "Supplemental
Agreements")), without the consent of the holders of any Index Warrants, for
the purpose of (i) curing any ambiguity, or of curing, correcting or
supplementing any defective or inconsistent provision contained therein, or of
making any other provisions with respect to matters or questions arising under
the Index Warrant Agreement or Index Warrant Trust Indenture, as the case may
be, which shall not be inconsistent with the provisions thereof or of the Index
Warrants, (ii) evidencing the succession of another corporation to the Company
and the assumption by any such successor of the covenants of the Company
contained in the Index Warrant Agreement or the Index Warrant Trust Indenture,
as the case may be, and the Index Warrants, (iii) appointing a successor
depository, (iv) evidencing and providing for the acceptance of appointment by
a successor Index Warrant Agent or Index Warrant Trustee with respect to the
Index Warrants, as the case may be, (v) adding to the covenants of the Company,
for the benefit of the Index Warrantholders or surrendering any right or power
conferred upon the Company under the Index Warrant Agreement or Index

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<PAGE>

Warrant Trust Indenture, as the case may be, (vi) issuing Index Warrants in
definitive form, or (vii) amending the Index Warrant Agreement or Index Warrant
Trust Indenture, as the case may be, in any manner which the Company may deem
to be necessary or desirable and which will not materially and adversely affect
the interests of the Index warrantholders.

The Company and the Index Warrant Agent may also amend any Index Warrant
Agreement or Index Warrant Trust Indenture, as the case may be, and the terms
of the related Index Warrants (which amendment shall take the form of a
Supplemental Agreement) with the consent of the Index warrantholders holding
not less than 66 2/3% in number of the then outstanding unexercised Index
Warrants affected by such amendment, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of the Index
Warrant Agreement or Index Warrant Trust Indenture, as the case may be, or of
modifying in any manner the rights of the Index warrantholders; provided that
no such amendment that (i) changes the determination of the Settlement Value or
the payment or delivery to be made on cancellation, if any, or Minimum
Expiration Value, if any, of the Index Warrants (or any aspects of such
determination) so as to reduce the payment or delivery to be made upon exercise
or deemed exercise, (ii) shortens the period of time during which the Index
Warrants may be exercised, or otherwise materially and adversely affects the
exercise rights of the Index warrantholders or (iii) reduces the number of
outstanding Index Warrants, the consent of whose holders is required for
amendment of the Index Warrant Agreement, the Index Warrant Trust Indenture or
the terms of the related Index Warrants, may be made without the consent of
each Index warrantholder affected thereby.

EVENTS OF DEFAULT

Certain events in bankruptcy, insolvency or reorganization of the Company
will constitute an Event of Default with respect to Index Warrants having a
Minimum Expiration Value which are issued under an Index Warrant Trust
Indenture. Upon the occurrence of an Event of Default, the holders of 25% of
unexercised Index Warrants may elect to receive a settlement payment or
delivery for such unexercised Index Warrants, which will immediately become due
to the Index warrantholders upon such election in an amount equal to the market
value of such Index Warrants (assuming the Company's ability to satisfy its
obligations under such Index Warrants as they would become due) as of the date
the Company is notified of the intended liquidation, as determined by a
nationally recognized securities broker-dealer unaffiliated with the Company
and mutually selected by the Company and the Index Warrant Trustee.

MERGER, CONSOLIDATION, SALE, LEASE OR OTHER DISPOSITIONS

The Company may consolidate or merge with or into any other corporation and
the Company may sell, lease or convey all or substantially all of its assets to
any corporation, provided that (i) the corporation (if other than the Company)
formed by or resulting from any such consolidation or merger or which shall
have received such assets shall be a corporation organized and existing under
the laws of the United States of America or a State thereof and shall assume
the Company's obligations in respect of the payment or delivery of the
Settlement Value (or any Minimum Expiration Value or cancellation payment or
delivery, if applicable) with respect to all the unexercised Index Warrants and
the performance and observance of all of the covenants and conditions of the
Index Warrant Agreement or Index Warrant Trust Indenture, as the case may be,
to be performed or observed by the Company, and (ii) the Company or such
successor corporation, as the case may be, shall not immediately be in default
under the Index Warrant Agreement or Index Warrant Trust Indenture, as the case
may be.

ENFORCEABILITY OF RIGHTS BY INDEX WARRANTHOLDERS

Any Index warrantholder may, without the consent of the related Index Warrant
Agent, enforce by appropriate legal action, in and for its own behalf, its
right to exercise, and receive payment or delivery for, its Index Warrants.

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PLAN OF DISTRIBUTION

The Company may sell Securities (i) through MLPF&S as agent, (ii) to the
public through, or through underwriting syndicates managed by, one or more of
the firms named on the cover page of this Prospectus or (iii) directly to
purchasers. The Prospectus Supplement with respect to the Securities of a
particular series describes the terms of the offering of such Securities,
including the name of the agent or the name or names of any underwriters, the
public offering or purchase price, any discounts and commissions to be allowed
or paid to the agent or underwriters, all other items constituting underwriting
compensation, the discounts and commissions to be allowed or paid to dealers,
if any, and the exchanges, if any, on which the Securities will be listed. Only
the agents or underwriters so named in the Prospectus Supplement are agents or
underwriters in connection with the Securities offered thereby. Under certain
circumstances, the Company may repurchase Securities and reoffer them to the
public as set forth above. The Company may also arrange for repurchases and
resales of such Securities by dealers.

If so indicated in the Prospectus Supplement, the Company will authorize
underwriters to solicit offers by certain institutions to purchase Debt
Securities from the Company pursuant to delayed delivery contracts providing
for payment and delivery on the date stated in the Prospectus Supplement. Each
such contract will be for an amount not less than, and, unless the Company
otherwise agrees, the aggregate principal amount of Debt Securities sold
pursuant to such contracts shall not be more than, the respective amounts
stated in the Prospectus Supplement. Institutions with whom such contracts,
when authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions, but shall in all cases be subject to the
approval of the Company. Delayed delivery contracts will not be subject to any
conditions except that the purchase by an institution of the Debt Securities
covered thereby shall not at the time of delivery be prohibited under the laws
of any jurisdiction in the United States to which such institution is subject.

The Company has agreed to indemnify the agent and the several underwriters
against certain civil liabilities, including liabilities under the Securities
Act of 1933, as amended (the "Act"), or contribute to payments the agent or the
underwriters may be required to make in respect thereof.

The distribution of Securities will conform to the requirements set forth in
the applicable sections of Schedule E to the By-Laws of the National
Association of Securities Dealers, Inc.

EXPERTS

The consolidated financial statements and related financial statement
schedules of the Company and its subsidiaries included or incorporated by
reference in the Company's 1994 Annual Report on Form 10-K, and incorporated by
reference in this Prospectus, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports incorporated by reference
herein. The information under the caption "Summary Financial Information" for
each of the five years in the period ended December 30, 1994 included in this
Prospectus and the Selected Financial Data under the captions "Operating
Results", "Financial Position" and "Common Share Data" for each of the five
years in the period ended December 30, 1994 included in the 1994 Annual Report
to Stockholders of the Company and incorporated by reference herein, has been
derived from consolidated financial statements audited by Deloitte & Touche
LLP, as set forth in their reports included as an exhibit to the Registration
Statement or incorporated by reference herein. Such consolidated financial
statements and related financial statement schedules, such Summary Financial
Information and Selected Financial Data appearing or incorporated by reference
in this Prospectus and the Registration Statement of which this Prospectus is a
part, have been included or incorporated herein by reference in reliance upon
such reports of Deloitte & Touche LLP given upon their authority as experts in
accounting and auditing.

With respect to unaudited interim financial information for the periods
included in any of the Quarterly Reports on Form 10-Q (including any amendments
applicable thereto) which may be incorporated herein by

19
<PAGE>

reference, Deloitte & Touche LLP have applied limited procedures in accordance
with professional standards for a review of such information. However, as
stated in their report included in any such Quarterly Report on Form 10-Q
(including any amendments applicable thereto) and incorporated by reference
herein, they did not audit and they do not express an opinion on such interim
financial information. Accordingly, the degree of reliance on their reports on
such information should be restricted in light of the limited nature of the
review procedures applied. Deloitte & Touche LLP are not subject to the
liability provisions of Section 11 of the Act for any such report on unaudited
interim financial information because any such report is not a "report" or a
"part" of the registration statement prepared or certified by an accountant
within the meaning of Sections 7 and 11 of the Act.

20
<PAGE>

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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH IN-
FORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR BY THE UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL
UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.

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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary.................................................................... S-3
Risk Factors............................................................... S-7
Recent Developments........................................................ S-11
Description of Notes....................................................... S-14
The Index.................................................................. S-20
Certain United States Federal Income Tax Considerations.................... S-28
Use of Proceeds............................................................ S-32
Underwriting............................................................... S-32
Validity of Notes.......................................................... S-32
PROSPECTUS
</TABLE>
<TABLE>
<S> <C>
Available Information....................................................... 2
Incorporation of Certain Documents by Reference............................. 2
Merrill Lynch & Co., Inc. .................................................. 3
Use of Proceeds............................................................. 3
Summary Financial Information............................................... 4
Description of Debt Securities.............................................. 8
Description of Debt Warrants................................................ 12
Description of Currency Warrants............................................ 13
Description of Index Warrants............................................... 14
Plan of Distribution........................................................ 19
Experts..................................................................... 19
</TABLE>

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[LOGO]

$25,000,000

MERRILL LYNCH & CO., INC.

AMEX HONG KONG 30 INDEX*
EQUITY PARTICIPATION NOTES DUE
FEBRUARY , 1999

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PROSPECTUS SUPPLEMENT

----------------------

MERRILL LYNCH & CO.

FEBRUARY , 1996

*The "AMEX Hong Kong 30 Index" is a service mark of the American Stock
Exchange.

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