MERRILL LYNCH U S TREASURY MONEY FUND, 497, 1994-04-04

MERRILL LYNCH U S TREASURY MONEY FUND
497, 1994-04-04

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PROSPECTUS
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MARCH 29, 1994

MERRILL LYNCH U.S. TREASURY MONEY FUND

BOX 9011, PRINCETON, NEW JERSEY 08543-9011 PHONE NO. (609) 282-2800

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Merrill Lynch U.S. Treasury Money Fund (the "Fund") is a no-load,
diversified, open-end investment company seeking preservation of capital,
liquidity and current income through investment exclusively in a diversified
portfolio of short-term marketable securities which are direct obligations of
the U.S. Treasury. For purposes of its investment policies, the Fund defines
short-term marketable securities which are direct obligations of the U.S.
Treasury as any U.S. Treasury obligations having a maturity of no more than 762
days (25 months). There can be no assurance that the investment objectives of
the Fund will be realized.

The net income of the Fund is declared as dividends daily and reinvested at
net asset value in additional shares. The Fund seeks to maintain a constant
$1.00 net asset value per share, although this cannot be assured. In order to
maintain a constant net asset value of $1.00 per share, the Fund may reduce the
number of shares held by its shareholders. The shares of the Fund are neither
insured nor guaranteed by the U.S. Government.

Shares of the Fund may be purchased at their net asset value without any
sales charge. The minimum initial purchase is $5,000 and subsequent purchases
generally must be $1,000 or more. For accounts advised by banks and registered
investment advisers, the minimum initial purchase is $300 and the minimum
subsequent purchase is $100. The minimum initial purchase with respect to
pension, profit sharing, individual retirement and other retirement plans is
$250 and there is no minimum on subsequent investments with respect to these
plans. The minimum initial purchase under the Merrill Lynch BlueprintSM Program
is $500 (or $50 if the shareholder elects to participate in the automatic
investment of sale proceeds option on the Merrill Lynch BlueprintSM Program
application form) and the minimum subsequent purchase is $50. Shares may be
redeemed at any time at net asset value as described herein. The Fund has
adopted a Shareholder Servicing Plan and Agreement in compliance with Rule 12b-
1 under the Investment Company Act of 1940. See "Purchase of Shares" and
"Redemption of Shares".

Shares may be purchased directly from Merrill Lynch Funds Distributor, Inc.
(the "Distributor"), Box 9011, Princeton, New Jersey 08543-9011, Tel. No. (609)
282-2800, or from securities dealers which have entered into selected dealer
agreements with the Distributor. See "Purchase of Shares".

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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.

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This Prospectus is a concise statement of information about the Fund that is
relevant to making an investment in the Fund. This Prospectus should be
retained for future reference. A statement containing additional information
about the Fund, dated March 29, 1994 (the "Statement of Additional
Information"), has been filed with the Securities and Exchange Commission and
can be obtained without charge by calling or writing to the Fund at the above
telephone number or address. The Statement of Additional Information is hereby
incorporated by reference into this Prospectus.

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MERRILL LYNCH ASSET MANAGEMENT--MANAGER
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.--DISTRIBUTOR
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FEE TABLE

ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS) FOR THE
FISCAL YEAR ENDED NOVEMBER 30, 1993:

<TABLE>
<S> <C>
Management Fees(a)................................................... 0.50 %
Rule 12b-1 Fees(b)................................................... 0.12 %
Other Expenses(c).................................................... 0.34 %
Reimbursement of Expenses(d)......................................... (0.35)%
-----
Total Fund Operating Expenses, net of reimbursement.................. 0.61 %
=====
</TABLE>
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(a) See "Management of the Fund--Management and Advisory Arrangements"--page 6.
(b) See "Purchase of Shares--Distribution Plan"--page 8.
(c) See "Management of the Fund--Transfer Agency Services"--page 7.
(d) The Manager voluntarily elected to waive $327,310 of its management fee for
the year ended November 30, 1993.

EXAMPLE:

<TABLE>
<CAPTION>
CUMULATIVE EXPENSES
PAID FOR THE PERIOD OF:
----------------------------
1 3 5
YEAR YEARS YEARS 10 YEARS
----- ------ ------ --------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a
$1,000 investment, assuming an operating expense
ratio of 0.61% and a 5% annual return throughout
the periods..................................... $6.23 $19.53 $34.03 $76.21
</TABLE>

The foregoing Fee Table is intended to assist investors in understanding the
costs and expenses that a shareholder in the Fund will bear directly or
indirectly. The example set forth above assumes reinvestment of all dividends
and distributions and utilizes a 5% annual rate of return as mandated by
Securities and Exchange Commission regulations. The example should not be
considered a representation of past or future expenses or annual rate of return
and actual expenses or annual rate of return may be more or less than those
assumed for purposes of the example.

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<PAGE>

FINANCIAL HIGHLIGHTS

Financial Statements for the year ended November 30, 1993 and the independent
auditors' report thereon are included in the Statement of Additional
Information. The following per share data and ratios have been derived from
information provided in financial statements of the Fund audited by Deloitte &
Touche, independent auditors.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD
--------------------------- APRIL 15, 1991+
NOV. 30, 1993 NOV. 30, 1992 TO NOV. 30, 1991
------------- ------------- ----------------
<S> <C> <C> <C>
Increase (Decrease) in Net Asset
Value:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of pe-
riod............................. $ 1.00 $ 1.00 $ 1.00
------- ------- -------
Investment income--net........... .0262 .0312 .0328
Realized and unrealized gain on
investments--net................ .0010 .0014 .0029
------- ------- -------
Total from investment operations.. .0272 .0326 .0357
------- ------- -------
Less dividends and distributions:
Investment income--net........... (.0262) (.0312) (.0328)
Realized gain on investments--
net............................. (.0004) (.0020) (.0029)++
------- ------- -------
Total dividends and distributions. (.0266) (.0332) (.0357)
------- ------- -------
Net asset value, end of period.... $ 1.00 $ 1.00 $ 1.00
======= ======= =======
TOTAL INVESTMENT RETURN........... 2.69% 3.36% 5.58%*
======= ======= =======
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement and
excluding distribution fees...... .41% .53% .27%*
======= ======= =======
Expenses, net of reimbursement.... .53% .65% .39%*
======= ======= =======
Expenses.......................... .96% 1.16% 1.55%*
======= ======= =======
Investment income and realized
gain on investments--net......... 2.66% 3.41% 5.45%*
======= ======= =======
SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)....................... $70,544 $80,978 $94,301
======= ======= =======
</TABLE>
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* Annualized.
+ Commencement of Operations.
++ Includes unrealized gain (loss).

3
<PAGE>

YIELD INFORMATION

Set forth below is yield information for the indicated seven-day periods,
computed to include and exclude realized and unrealized gains and losses, and
information as to the compounded annualized yield, excluding gains and losses,
for the same periods.

<TABLE>
<CAPTION>
SEVEN-DAY PERIOD ENDED
----------------------------------
NOVEMBER 30, 1993 JANUARY 31, 1994
----------------- ----------------
<S> <C> <C>
Annualized Yield:
Including gains and losses............. 2.83% 2.66%
Excluding gains and losses............. 2.82% 2.65%
Compounded Annualized Yield.............. 2.86% 2.69%
Average maturity of portfolio at end of
period.................................. 80 days 75 days
</TABLE>

The yield of the Fund refers to the income generated by an investment in the
Fund over a stated seven-day period. This income is then annualized; that is,
the amount of income generated by the investment during that period is assumed
to be generated each seven-day period over a 52-week period and is shown as a
percentage of the investment. The compounded annualized yield is calculated
similarly but, when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The compounded annualized yield will be somewhat
higher than the yield because of the effect of the assumed reinvestment.

The yield on Fund shares normally will fluctuate on a daily basis. Therefore,
the yield for any given past period is not an indication or representation by
the Fund of future yields or rates of return on its shares. The Fund's yield is
affected by changes in interest rates on Treasury securities, average portfolio
maturity, the types and quality of portfolio securities held and operating
expenses. Current yield information may not provide a basis for comparison with
bank deposits or other investments which pay a fixed yield over a stated period
of time.

On occasion, the Fund may compare its yield to (i) yield data (including
Donoghue's U.S. Funds Average) reported by Donoghue's Money Fund Report, a
widely recognized independent publication that monitors the performance of
money market mutual funds, (ii) the average yield reported by the Bank Rate
Monitor National Index for money market deposit accounts offered by the 100
leading banks and thrift institutions in the ten largest standard metropolitan
statistical areas, (iii) yield data reported by Lipper Analytical Services,
Inc., Morningstar Publications, Inc., Money Magazine, U.S. News & World Report,
Business Week, CDA Investment Technology, Inc., Forbes Magazine and Fortune
Magazine, or (iv) the yield on an investment in 91-day Treasury bills on a
rolling basis, assuming quarterly compounding. As with yield quotations, yield
comparisons should not be considered representative of the Fund's yield or
relative performance for any future period.

INVESTMENT OBJECTIVES AND POLICIES

The investment objectives of the Fund are to seek preservation of capital,
liquidity and current income through investment exclusively in a diversified
portfolio of short-term marketable securities which are direct obligations of
the U.S. Treasury.

Preservation of capital is a prime investment objective of the Fund, and the
direct U.S. Treasury obligations in which it will invest are generally
considered to have the lowest principal risk among money

4
<PAGE>

market securities. Historically, direct U.S. Treasury obligations have
generally had lower rates of return than other money market securities with
less safety.

For purposes of its investment objectives, the Fund defines short-term
marketable securities which are direct obligations of the U.S. Treasury as any
U.S. Treasury obligations having maturities of no more than 762 days (25
months) or less. The dollar weighted average maturity of the Fund's portfolio
will not exceed 90 days. During the fiscal year ended November 30, 1993, the
average maturity of its portfolio ranged from 58 days to 89 days.

Investment in Fund shares offers several benefits. The Fund seeks to provide
as high a yield potential, consistent with preservation of capital, as is
available through investment in short-term U.S. Treasury obligations, by
utilizing professional money market management and block purchases of
securities. The Fund provides high liquidity because of its redemption
features. The shareholder is also relieved from administrative burdens
associated with direct investment in U.S. Treasury securities, such as
coordinating maturities and reinvestments, and making numerous buy-sell
decisions. Certain expenses are borne by investors, including advisory and
management fees, administrative costs and operational costs.

Forward Commitments. The Fund may purchase portfolio securities on a forward
commitment basis at fixed purchase terms with periods of up to 110 days between
the commitment and settlement dates. The purchase will be recorded on the date
the Fund enters into the commitment, and the value of the security will
thereafter be reflected in the calculation of the Fund's net asset value. The
value of the security on the delivery date may be more or less than its
purchase price. A separate account of the Fund will be established with its
custodian consisting of cash or Treasury securities having a market value at
all times at least equal to the amount of the forward commitment.

When-Issued Securities and Delayed Delivery Transactions. The Fund also may
purchase portfolio securities on a when-issued basis, and it may purchase or
sell portfolio securities for delayed delivery. These transactions occur when
securities are purchased or sold by the Fund with payment and delivery taking
place in the future to secure what is considered an advantageous yield and
price to the Fund at the time of entering into the transaction. The Fund will
maintain a segregated account with its custodian of cash or Treasury securities
having a market value at all times at least equal to the amount of its
commitments in connection with such purchase transactions.

Investment Restrictions. The Fund has adopted a number of restrictions and
policies relating to the investment of its assets and its activities, which are
fundamental policies and may not be changed without the approval of the holders
of a majority of the Fund's outstanding voting securities as defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act").
Among the more significant restrictions, the Fund may not purchase any
securities other than direct obligations of the U.S. Treasury having maturities
of 762 days (25 months) or less.

MANAGEMENT OF THE FUND

TRUSTEES

The Trustees of the Fund consist of six individuals, five of whom are not
"interested persons" of the Fund, as defined in the Investment Company Act. The
Trustees of the Fund are responsible for the overall

5
<PAGE>

supervision of the operations of the Fund and perform the various duties
imposed on the directors of investment companies by the Investment Company Act.

The Trustees of the Fund are:

Arthur Zeikel*--President and Chief Investment Officer of Merrill Lynch
Asset Management, L.P. and Fund Asset Management, L.P.; President and
Director of Princeton Services, Inc. ("Princeton Services"); Executive Vice
President of Merrill Lynch & Co., Inc. ("ML&Co."); Executive Vice President
of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch");
Director of the Distributor.

Donald Cecil--Special Limited Partner of Cumberland Partners (an
investment partnership).

M. Colyer Crum--James R. Williston Professor of Investment Management,
Harvard Business School.

Edward H. Meyer--Chairman of the Board, President and Chief Executive
Officer of Grey Advertising Inc.

Jack B. Sunderland--President and Director of American Independent Oil
Company, Inc. (an energy company).

J. Thomas Touchton--Managing Partner of The Witt-Touchton Company (a
private investment partnership).
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*Interested person, as defined in the Investment Company Act, of the Fund.

MANAGEMENT AND ADVISORY ARRANGEMENTS

The Fund's investment adviser is Merrill Lynch Asset Management, L.P., which
does business as Merrill Lynch Asset Management ("MLAM" or the "Manager"). MLAM
is owned and controlled by ML & Co., a financial services holding company and
the parent of Merrill Lynch. The Manager or an affiliate of the Manager, Fund
Asset Management, L.P. ("FAM"), acts as the investment adviser for more than 90
registered investment companies and provides investment advisory services to
individual and institutional accounts. As of February 28, 1994, the Manager and
FAM had a total of $164.4 billion in investment company and other portfolio
assets under management, including accounts of certain affiliates of the
Manager.

The investment advisory agreement with the Manager (the "Management
Agreement") provides that, subject to the direction of the Trustees, the
Manager is responsible for the actual management of the Fund's portfolio and
constantly reviews the Fund's holdings in light of its own research analysis
and that from other relevant sources. The responsibility for making decisions
to buy, sell or hold a particular security rests with the Manager subject to
review by the Board of Trustees. The Manager performs certain of the other
administrative services and provides all the office space, facilities,
equipment and necessary personnel for portfolio management of the Fund.

As compensation for its services under the Management Agreement, the Manager
receives a fee from the Fund at the end of each month at the annual rate of
0.50% of the Fund's average daily net assets. For the fiscal year ended
November 30, 1993, the total management fee payable by the Fund to the Manager
aggregated $379,689 (based on average net assets of approximately $75.9
million) of which the Manager waived $327,310. This voluntary waiver may be
withdrawn by the Manager at any time and without prior notice. At February 28,
1994, the net assets of the Fund aggregated approximately $70.3 million. At
this asset level, the annual management fee would aggregate $351,713.

6
<PAGE>

The Management Agreement obligates the Fund to pay certain expenses incurred
in its operations, including, among other things, the management fee, legal and
audit fees, unaffiliated Trustees' fees and expenses, registration fees,
Custodian and Transfer Agent fees, accounting and pricing costs, and certain of
the costs of printing proxies, shareholder reports, prospectuses and statements
of additional information. Accounting services are provided to the Fund by the
Manager, and the Fund reimburses the Manager for its costs in connection with
such services. For the fiscal year ended November 30, 1993, the Fund paid
$26,584 to the Manager in connection with accounting services. For the fiscal
year ended November 30, 1993, the ratio of total expenses, net of
reimbursement, to average net assets was 0.53%.

TRANSFER AGENCY SERVICES

The Fund has entered into a transfer agency, shareholder servicing agency and
proxy agency agreement (the "Transfer Agency Agreement") with Financial Data
Services, Inc. (the "Transfer Agent"), a subsidiary of ML & Co. Pursuant to the
Transfer Agency Agreement, the Transfer Agent is responsible for the issuance,
transfer and redemption of shares and the opening and maintenance of
shareholder accounts. Pursuant to the Transfer Agency Agreement, the Fund pays
the Transfer Agent an annual fee of $13.00 per shareholder account and the
Transfer Agent is entitled to reimbursement from the Fund for out-of-pocket
expenses incurred by the Transfer Agent under the Transfer Agency Agreement.
For the fiscal year ended November 30, 1993, the total fee paid by the Fund to
the Transfer Agent pursuant to the Transfer Agency Agreement was $24,640. At
January 31, 1994, the Fund had 1,422 shareholder accounts. At this level of
accounts, the annual fee payable to the Transfer Agent would aggregate
approximately $18,486, plus out-of-pocket expenses.

PURCHASE OF SHARES

The Fund is offering its shares without sales charge at a public offering
price equal to the net asset value (normally $1.00 per share) next determined
after a purchase order becomes effective. Share purchase orders are effective
on the date Federal funds become available to the Fund. If Federal funds are
available to the Fund prior to 4:00 P.M., New York time, on any business day,
the order will be effective on that day. Shares purchased will begin accruing
dividends on the day following the date of purchase. Any order may be rejected
by the Fund or its distributor, Merrill Lynch Funds Distributor, Inc. (the
"Distributor").

METHODS OF PAYMENT

Payment Through Securities Dealers. Investment in the Fund may be made
through securities dealers, including Merrill Lynch, who have entered into
selected dealer agreements with the Distributor. In such a case, the dealer
will transmit payment to the Fund on behalf of the investor and will supply the
Fund with the required account information. Generally, purchase orders placed
through Merrill Lynch will be made effective on the day following the day the
order is placed with Merrill Lynch, except that orders received through the
Merrill Lynch BlueprintSM Program ("Blueprint") in some circumstances may be
executed two business days following the day the order is placed with Merrill
Lynch. Investments in the Fund through Blueprint may be made only through
Merrill Lynch. Such orders should be sent to Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Attention: The BlueprintSM Program, P.O. Box 30441, New
Brunswick, New Jersey 08989-0441. Blueprint maintains a toll-free telephone
number for inquiries: (800) 637-3766. Investors who are not placing orders
through Blueprint and who desire same day effectiveness should utilize the
Payment by Wire procedure described below. Merrill Lynch has an order procedure
pursuant to which investors can have the proceeds from the sale of listed
securities invested in shares of the Fund on the day investors receive such
proceeds in their Merrill Lynch securities accounts. Investors with free cash
credit balances (i.e., immediately available funds) in securities accounts of
Merrill Lynch will not have their funds

7
<PAGE>

invested in the Fund until the day after the order is placed with Merrill Lynch
and will not receive the daily dividend which would have been received had
their funds been invested in the Fund on the day the order was placed with
Merrill Lynch.

Payment by Wire. An expeditious method of investing in the Fund is available
through the transmittal of Federal funds by wire to the Transfer Agent. The
Fund will not be responsible for delays in the wiring system. To purchase
shares by wiring Federal funds, payment should be wired to First Union National
Bank of Florida. Shareholders should give their financial institutions the
following wiring instructions: ABA #063000021, DDA #11260006011, Financial Data
Services, Inc. The wire should be identified as a payment to Merrill Lynch U.S.
Treasury Money Fund and should include the shareholder's name and account
number. Failure to submit the required information may delay investment.
Investors are urged to make payment by wire in Federal funds.

Payment to the Transfer Agent. Purchase orders for which remittance is to be
made by check may be submitted directly by mail or otherwise to the Transfer
Agent. Purchase orders by mail should be sent to Financial Data Services, Inc.,
Transfer Agency Operations Department, P.O. Box 45290, Jacksonville, Florida
32232-5290. Purchase orders which are sent by hand should be delivered to
Financial Data Services, Inc., Transfer Agency Operations Department, 4800 Deer
Lake Drive East, Jacksonville, Florida 32246-6484. Investors opening a new
account must enclose a completed Purchase Application. Existing shareholders
should enclose the detachable stub from a monthly account statement which they
have received. Checks should be made payable to Merrill Lynch Funds
Distributor, Inc. Certified checks are not necessary, but checks are accepted
subject to collection at full face value in United States funds and must be
drawn in United States dollars on a United States bank. Payments for the
accounts of corporations, foundations and other organizations may not be made
by third party checks.

DISTRIBUTION PLAN

The Fund has adopted a shareholder servicing plan and agreement (the "Plan")
in compliance with Rule 12b-1 under the Investment Company Act pursuant to
which the Fund is authorized to pay Merrill Lynch a fee at the annual rate of
0.125% of the average daily net asset value of Fund accounts maintained through
Merrill Lynch. The Plan reimburses Merrill Lynch only for actual expenses
incurred in the fiscal year in which the fee is paid. The fee is principally to
provide compensation to Merrill Lynch financial consultants and other Merrill
Lynch personnel for providing certain services to shareholders who maintain
their Fund accounts through Merrill Lynch. The fee is for direct personal
services to Fund shareholders. Under the Plan, Merrill Lynch, in its sole
discretion, may expend out of the fee an amount not exceeding 0.01% of such
average daily net asset value as reimbursement for expenditures incurred in
advertising activities promoting the sale, marketing and distribution of the
shares of the Fund. For the fiscal year ended November 30, 1993 $92,033 was
paid to Merrill Lynch pursuant to the Plan (based on average net assets subject
to the Plan of $75.9 million). At February 28, 1994, the net assets of the Fund
subject to the Plan aggregated approximately $70.3 million. At this asset
level, the annual fee payable to Merrill Lynch pursuant to the Plan would
aggregate approximately $85,252.

REDEMPTION OF SHARES

The Fund is required to redeem for cash all full and fractional shares of the
Fund. The redemption price is the net asset value per share next determined
after receipt by the Transfer Agent of proper notice of redemption as described
in accordance with one of the procedures set forth below. If such notice is
received by the Transfer Agent by 4:00 P.M., New York time, on any day during
which the New York Stock Exchange

8
<PAGE>

or New York banks are open for business, the redemption will be effective on
such day and payment will be made on the next business day. If the notice is
received after 4:00 P.M., New York time, the redemption will be effective on
the next business day and payment will be made on the second business day
thereafter. If notice of a redemption of shares held in connection with
Blueprint is received by Merrill Lynch by 4:00 P.M., New York time, it will be
effective on the business day following receipt of the redemption request. If
the notice is received after 4:00 P.M., New York time, the redemption will be
effective on the second business day thereafter.

At various times, the Fund may be requested to redeem shares for which it has
not yet received good payment (e.g., cash, Federal funds or certified check
drawn on a United States bank). The Fund may delay or cause to be delayed the
mailing of a redemption check until such time as good payment has been
collected for the purchase of such Fund shares, which may take up to 10 days.

Information concerning redemptions by participants in the self-directed
retirement plans for which Merrill Lynch acts as passive custodian is set forth
in the Statement of Additional Information.

METHODS OF REDEMPTION

Set forth below is information as to the five methods pursuant to which
shareholders may redeem shares. In certain instances, the Transfer Agent may
require additional documents in connection with redemptions.

Redemption by Check. Shareholders may redeem shares by check in an amount not
less than $500. At the shareholder's request, the Transfer Agent will provide
the shareholder with checks drawn on the custody account of the Fund with the
Custodian. These checks can be made payable to the order of any person in any
amount not less than $500; however, these checks may not be used to purchase
securities in transactions with Merrill Lynch. The payee of the check may cash
or deposit it like any check drawn on a bank. When such a check is presented to
the Transfer Agent for payment, the Transfer Agent will present the check to
the Fund as authority to redeem a sufficient number of full and fractional
shares in the shareholder's account to cover the amount of the check. This
enables the shareholder to continue earning daily dividends until the check is
cleared. Cancelled checks will be returned to the shareholder by the Transfer
Agent.

Shareholders will be subject to the Transfer Agent's rules and regulations
governing such checking accounts, including the right of the Transfer Agent not
to honor checks in amounts exceeding the value of the shareholder's account at
the time the check is presented for payment. The Fund or the Transfer Agent may
modify or terminate the redemption by check privilege at any time on 30 days'
notice to participating shareholders. In order to be eligible for the
redemption by check privilege, purchasers should check the box under the
caption "Check Redemption Privilege" in the Purchase Application. The Transfer
Agent will then send checks to the shareholder.

Repurchase Through Securities Dealers. The Fund will repurchase shares
through securities dealers. The Fund normally will accept orders to repurchase
shares by wire or telephone from dealers for customers at the net asset value
next computed after receipt of the order from the dealer, provided that such
request for repurchase is received from the dealer prior to 4:00 P.M., New York
time, on any business day. These

9
<PAGE>

repurchase arrangements are for the convenience of shareholders and do not
involve a charge by the Fund; however, dealers may impose a charge on the
shareholder for transmitting the notice of repurchase to the Fund. Redemption
of Fund shares held in connection with Blueprint may be made only through
Merrill Lynch. Such a redemption may be made by submitting a written notice by
mail directly to Merrill Lynch, Pierce, Fenner & Smith Incorporated, Attention:
The BlueprintSM Program, P.O. Box 30441, New Brunswick, New Jersey 08989-0441.
Investors whose shares are held through Blueprint also may effect notice of
redemption by telephoning Merrill Lynch at (800) 637-3766 toll-free. The Fund
reserves the right to reject any order for repurchase through a securities
dealer, but it may not reject properly submitted requests for redemption as
described below. The Fund will promptly notify any shareholder of any rejection
of a repurchase with respect to his shares. For shareholders repurchasing
through their securities dealer, payment will be made by the Transfer Agent to
the dealer.

Regular Redemption. Shareholders may redeem shares by submitting a written
notice by mail directly to the Transfer Agent, Financial Data Services, Inc.,
Transfer Agency Operations Department, P.O. Box 45290, Jacksonville, Florida
32232-5290. Redemption requests which are sent by hand should be delivered to
Financial Data Services, Inc., Transfer Agency Operations Department, 4800 Deer
Lake Drive East, Jacksonville, Florida 32246-6484. Redemption requests should
not be sent to the Fund. The notice requires the signatures of all persons in
whose names the shares are registered, signed exactly as their names appear on
the Transfer Agent's register. The signatures on the redemption request must be
guaranteed by an "eligible guarantor institution" as such is defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, the existence and validity
of which may be verified by the Transfer Agent through the use of industry
publications. Notarized signatures are not sufficient.

Automatic Redemption. Merrill Lynch has instituted an automatic redemption
procedure applicable to shareholders of the Fund who maintain securities
accounts with Merrill Lynch. Merrill Lynch may utilize this procedure, which is
not applicable to margin accounts, to satisfy amounts due it by the shareholder
as a result of account fees and expenses owed to Merrill Lynch or one of its
affiliates or as a result of purchases of securities or other transactions in
the shareholder's securities account. Under this procedure, unless the
shareholder notifies Merrill Lynch to the contrary, the shareholder's Merrill
Lynch securities account will be scanned each business day prior to 4:00 P.M.,
New York time; after application of any cash balances in the account, a
sufficient number of Fund shares will be redeemed at the 4:00 P.M., New York
time, pricing that day to satisfy any amounts for which the shareholder is
obligated to make payment to Merrill Lynch or one of its affiliates.
Redemptions will be effected on the business day preceding the date the
shareholder is obligated to make such payment, and Merrill Lynch or its
affiliate will receive the redemption proceeds on the business day following
the redemption date. Shareholders will receive all dividends declared and
reinvested through the date of redemption.

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

Due to the relatively high cost of maintaining accounts of less than $1,000,
the Fund reserves the right to redeem shares in any account (other than
accounts which have a minimum initial purchase of less than $1,000) for their
then current value (which will be promptly paid to the shareholder), if at any
time the total investment does not have a value of at least $1,000.
Shareholders will be notified that the value of their account is less than
$1,000 and allowed two months to make an additional investment before the
redemption is processed. In such event, the $1,000 minimum on subsequent
investment will not be applicable.

10
<PAGE>

SHAREHOLDER SERVICES

The Fund offers a number of shareholder services designed to facilitate
investment in its shares. Full details as to each of such services, copies of
the various plans described below and instructions as to how to participate in
the various services or plans, or to change options with respect thereto can be
obtained from the Fund, the Distributor or Merrill Lynch. Included in such
services are the following:

Investment Account. Each shareholder whose account is maintained at the
Transfer Agent has an Investment Account and will receive from the Transfer
Agent a monthly report showing the activity in his account for the month. A
shareholder may make additions to his Investment Account at any time by
purchasing shares at the public offering price either through his securities
dealer, by wire or by mail directly to the Transfer Agent, acting as agent for
his dealer. A shareholder may ascertain the number of shares in his Investment
Account by telephoning the Transfer Agent at (800) 221-7210 toll-free. The
Transfer Agent will furnish this information only after the shareholder has
specified the name, address, account number and social security number of the
registered owner or owners. Shareholders also may maintain their accounts
through Merrill Lynch. Upon the transfer of shares out of a Merrill Lynch
brokerage account, an Investment Account in the transferring shareholder's name
may be opened automatically, without charge, at the Transfer Agent.
Shareholders considering transferring a tax-deferred retirement account such as
an individual retirement account from Merrill Lynch to another brokerage firm
or financial institution should be aware that, if the firm to which the
retirement account is to be transferred will not take delivery of shares of the
Fund, a shareholder must either redeem the shares so that the cash proceeds can
be transferred to the account at the new firm, or such shareholder must
continue to maintain a retirement account at Merrill Lynch for those shares.

Exchange Privilege. Shareholders of the Fund have an exchange privilege with
Class A shares of certain other mutual funds sponsored by Merrill Lynch. There
is currently no limitation on the number of times a shareholder may exercise
the exchange privilege. The exchange privilege may be modified or terminated at
any time in accordance with the rules of the Securities and Exchange
Commission. Exercise of the exchange privilege is treated as a sale for Federal
income tax purposes. For further information, see "Shareholder Services--
Exchange Privilege" in the Statement of Additional Information.

Accrued Monthly Payout Plan. Shareholders desiring their dividends in cash
may enroll in this plan and receive monthly cash payments resulting from the
redemption of the shares received on dividend reinvestments during the month.

Systematic Withdrawal and Automatic Investment Plans. A shareholder may elect
to receive systematic withdrawal checks from his Investment Account on either a
monthly or quarterly basis. Regular additions may be made to an investor's
Investment Account by prearranged charges to his regular bank account at a
minimum of $50 per month.

PORTFOLIO TRANSACTIONS

The portfolio securities in which the Fund invests are traded in the over-
the-counter market. The Fund will deal directly with the dealers who make a
market in the securities involved, except in those circumstances where better
prices and execution are available elsewhere. Such dealers usually are acting
as principal for their own account. On occasion, securities may be purchased
directly from the U.S. Treasury. Portfolio securities generally are traded on a
net basis and normally do not involve either brokerage commissions or transfer
taxes. The cost of executing portfolio transactions primarily will consist of
dealer spreads. Under the

11
<PAGE>

Investment Company Act, persons affiliated with the Fund are prohibited from
dealing with the Fund as a principal in the purchase and sale of securities
unless an exemptive order allowing such transactions is obtained from the
Securities and Exchange Commission. An affiliated person of the Fund may serve
as its broker in over-the-counter transactions conducted on an agency basis.

The Securities and Exchange Commission has issued an exemptive order
permitting the Fund to conduct certain principal transactions with Merrill
Lynch Government Securities Inc. or its subsidiary, Merrill Lynch Money
Markets, Inc., subject to certain terms and conditions. During the fiscal year
ended November 30, 1993, the Fund engaged in 10 transactions pursuant to such
order aggregating approximately $7.2 million.

ADDITIONAL INFORMATION

DIVIDENDS

All of the net income of the Fund is declared as dividends daily. The Fund's
net income for dividend purposes is determined by the Manager at 4:00 P.M., New
York time, on each day the New York Stock Exchange or New York banks are open
for business immediately prior to the determination of the Fund's net asset
value on that day. See "Determination of Net Asset Value". Net income of the
Fund (from the time of the immediately preceding determination thereof)
consists of (i) interest accrued and/or discount earned (including both
original issue and market discount), (ii) less the estimated expenses of the
Fund (including the fees payable to the Manager) applicable to that dividend
period and (iii) plus or minus all realized gains and losses on the portfolio
securities. Dividends are declared and reinvested daily in the form of
additional full and fractional shares of the Fund at net asset value.

DETERMINATION OF NET ASSET VALUE

The net asset value of the Fund is determined by the Manager once daily,
immediately after the daily declaration of dividends, as of 4:00 P.M., New York
time, on each day the New York Stock Exchange or New York banks are open for
business. The net asset value is computed pursuant to the "penny rounding"
method by dividing the fair value of all securities held by the Fund plus any
cash or other assets (including interest accrued but not yet received ) minus
all liabilities by the total number of shares outstanding at such time. It is
anticipated that the net asset value will remain constant at $1.00 per share.

The securities of the Fund are valued at the most recent bid price or yield
equivalent as obtained from dealers that make markets in such securities.
Assets for which market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the Trustees of
the Fund. Securities with a remaining maturity of 60 days or less are valued on
an amortized cost basis i.e., by valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument.

TAXES

The Fund intends to continue to qualify for the special tax treatment
afforded regulated investment companies ("RICs") under the Internal Revenue
Code of 1986, as amended (the "Code"). If it so qualifies, the Fund (but not
its shareholders) will not be subject to Federal income tax on the part of its
net ordinary income and net realized capital gains which it distributes to
shareholders. The Fund intends to distribute substantially all of such income.

12
<PAGE>

Dividends paid by the Fund from its ordinary income and distributions of its
net realized short-term capital gains (together referred to hereafter as
"ordinary income dividends") are taxable to shareholders as ordinary income.
Distributions made from the Fund's net realized long-term capital gains
("capital gain dividends") are taxable to shareholders as long-term capital
gains, regardless of the length of time the shareholder has owned Fund shares.
Distributions in excess of the Fund's earnings and profits will first reduce
the adjusted tax basis of a holder's shares and, after such adjusted tax basis
is reduced to zero, will constitute capital gains to such holder (assuming the
shares are held as a capital asset).

Dividends are taxable to shareholders even though they are reinvested in
additional shares of the Fund. Not later than 60 days after the close of its
taxable year, the Fund will provide its shareholders with a written notice
designating the amounts of any ordinary income dividends or capital gain
dividends. Distributions by the Fund, whether from ordinary income or capital
gains, will not be eligible for the dividends received deduction allowed to
corporations under the Code. If the Fund pays a dividend in January which was
declared in the previous October, November or December to shareholders of
record on a specified date in one of such months, then such dividend will be
treated for tax purposes as being paid by the Fund and received by its
shareholders on December 31 of the year in which such dividend was declared.

Ordinary income dividends paid by the Fund to shareholders who are
nonresident aliens or foreign entities will be subject to a 30% United States
withholding tax under existing provisions of the Code applicable to foreign
individuals and entities unless a reduced rate of withholding or a withholding
exemption is provided under applicable treaty law. Nonresident shareholders are
urged to consult their own tax advisers concerning the applicability of the
United States withholding tax.

Under certain provisions of the Code, some taxpayers may be subject to a 31%
withholding tax on ordinary income dividends, capital gain dividends and
redemption payments ("backup withholding"). Generally, shareholders subject to
backup withholding will be those for whom no certified taxpayer identification
number is on file with the Fund or who, to the Fund's knowledge, have furnished
an incorrect number. When establishing an account, an investor must certify
under penalty of perjury that such number is correct and that such investor is
not otherwise subject to backup withholding.

The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect. For the
complete provisions, reference should be made to the pertinent Code sections
and the Treasury regulations promulgated thereunder. The Code and the Treasury
regulations are subject to change by legislative or administrative action
either prospectively or retroactively.

Ordinary income dividends and capital gain dividends may also be subject to
state and local taxes.

Certain states exempt from state income taxation dividends paid by RICs which
are derived from interest on U.S. Treasury obligations. State law varies as to
whether dividend income attributable to U.S. Treasury obligations is exempt
from state income tax.

Shareholders are urged to consult their tax advisers regarding specific
questions as to Federal, foreign, state or local taxes. Foreign investors
should consider applicable foreign taxes in their evaluation of an investment
in the Fund.

13
<PAGE>

ORGANIZATION OF THE FUND

The Fund was organized on October 30, 1990 as a business trust under the laws
of the Commonwealth of Massachusetts.

The Fund is a no-load, diversified, open-end investment company. The
Declaration of Trust of the Fund permits the Trustees to issue an unlimited
number of full and fractional shares of a single class. Upon liquidation of the
Fund, shareholders of the Fund are entitled to share pro rata in the net assets
of the Fund available for distribution to shareholders. Shares are fully paid
and nonassessable by the Fund. Shareholders are entitled to one vote for each
full share held and fractional votes for fractional shares held and to vote in
the election of Trustees and on other matters submitted to the vote of
shareholders.

The Declaration of Trust of the Fund does not require that the Fund hold
annual meetings of shareholders. However, the Fund will be required to call
special meetings of shareholders in accordance with the requirements of the
Investment Company Act to seek approval of new management and advisory
arrangements, of a material increase in distribution fees or of a change in the
fundamental policies, objectives or restrictions of the Fund. The Fund also
would be required to hold a special shareholders' meeting to elect new Trustees
at such time as less than a majority of the Trustees holding office have been
elected by shareholders. The Fund's Declaration of Trust provides that a
shareholders' meeting may be called for any reason at the request of 10% of the
outstanding shares of the Fund or by a majority of the Trustees. Except as set
forth above, the Trustees shall continue to hold office and appoint successor
Trustees.

SHAREHOLDER INQUIRIES

Shareholder inquiries may be addressed to the Fund at the address or
telephone number set forth on the cover page of this Prospectus.

SHAREHOLDER REPORTS

Only one copy of each shareholder report and certain shareholder
communications will be mailed to each identified shareholder regardless of the
number of accounts such shareholder has. If a shareholder wishes to receive
separate copies of each report and communication for all of the shareholder's
related accounts the shareholder should notify in writing:

Financial Data Services, Inc.
Attn: Document Evaluation Unit
P.O. Box 45290
Jacksonville, FL 32232-5290

The notification should include the shareholder's name, address, tax
identification number and Merrill Lynch, Pierce, Fenner & Smith Incorporated
and/or mutual fund account numbers. If you have any questions regarding this
please call your Merrill Lynch financial consultant or Financial Data Services,
Inc. at 800-221-7210.

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

The Declaration of Trust establishing the Fund, a copy of which, together
with all amendments thereto (the "Declaration"), is on file in the office of
the Secretary of the Commonwealth of Massachusetts, provides that the name
"Merrill Lynch U.S. Treasury Money Fund" refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally; and
except for his own bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties, no Trustee, shareholder, officer, employee or agent of
the Fund shall be held to any personal liability, nor shall resort be had to
their private property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of the Fund but the "Trust Property"
only shall be liable.

14
<PAGE>

MERRILL LYNCH U.S. TREASURY MONEY FUND PURCHASE APPLICATION

Send this completed form to: FINANCIAL DATA SERVICES, INC.,
Transfer Agency Operations Department, P.O. Box 45290,
Jacksonville, Florida 32232-5290. Note: This form may not be
INSTRUCTIONS used for purchases through the Merrill Lynch BlueprintSM
Program. You may request a Merrill Lynch BlueprintSM Program
application form by calling toll free (800) 637-3766.

1. TO REGISTER SHARES. The Account should be registered as follows:

(Please print except
for signatures) [_] [_] [_] [_] [_] [_] [_] [_] [_] [_] [_] [_] [_] [_]

Print Applicant's name. For clarity, please skip a space between names.

[_] [_] [_] [_] [_] [_] [_] [_] [_] [_] [_] [_] [_] [_]

Print Joint Registrant's Name, if any. In case of joint registration, a joint
tenancy with right of survivorship will be presumed, unless otherwise
indicated.

__________________________________________ [_] [_] [_] [_] [_] [_] [_] [_] [_]
Street Address Social Security No. or Tax ID No.

_______________________________________________________________________________
City State Zip Code

___________________________________ __________________________________
Occupation Name and Address of Employer

__________________________________

Please make any check payable ______________________________________
to Merrill Lynch Funds Home Phone No. (Include Area Code)
Distributor, Inc. Amount of Business Phone No.
investment $ __________________

2. CHECK REDEMPTION PRIVILEGE (SEE TERMS AND CONDITIONS IN THE PROSPECTUS)

[_] I hereby request and authorize Financial Data Services, Inc. (the
Check "Transfer Agent") to honor checks or automatic clearing house ("ACH")
box (if debits drawn by me on my Merrill Lynch U.S. Treasury Money Fund (the
desired) "Fund") account subject to acceptance by the Fund, with payment
therefor to be made by redeeming sufficient shares in my account
without a signature guarantee. The Transfer Agent and the Fund do
hereby reserve all their lawful rights for honoring checks or ACH
debits drawn by me and for effecting redemptions pursuant to the
Check Redemption Privilege. I understand that this election does not
create a checking or other bank account relationship between myself
and the Transfer Agent or the Fund and that the relationship between
myself and the Transfer Agent is that of shareholder-transfer agent.

FOR JOINT ACCOUNT: CHECK HERE WHETHER EITHER OWNER [_] IS AUTHORIZED,
OR ALL OWNERS [_] ARE REQUIRED TO SIGN CHECKS.

3. AUTOMATIC INVESTMENT PLAN PRIVILEGE (SEE TERMS AND CONDITIONS IN STATEMENT
OF ADDITIONAL INFORMATION)

[_] Check this box only if you wish to have an Authorization Form sent to you.

4. SYSTEMATIC WITHDRAWAL PLAN (SEE TERMS AND CONDITIONS IN THE STATEMENT OF
ADDITIONAL INFORMATION)

Minimum requirements: $10,000 for monthly disbursement, $5,000 for quarterly,
of shares in Merrill Lynch U.S. Treasury Money Fund at cost or current
offering price. In addition, your signature(s) must be guaranteed. This option
is available only if you do not check No. 5.

The undersigned hereby authorizes and directs Financial Data Services, Inc. on
(check only one)

[_] the 24th of each month payable to the order of (check only one)
[_] March 24, June 24, September [_] the registered owner as
24 and December 24 indicated in item 1 herein above
[_] to redeem a sufficient number of Shares in my
account to generate [_] (other) _____________________
redemption proceeds of Such check or ACH debits should be
$________; or mailed to (check only one)
[_] to redeem ______ % of the [_] the address indicated in
Shares in my account on such item 1 herein above
date and pay the redemption [_] the following name and
proceeds by check address:
_________________________________

5. ACCRUED MONTHLY PAYOUT PLAN (SEE TERMS AND CONDITIONS IN STATEMENT OF
ADDITIONAL INFORMATION)

The undersigned hereby authorizes and directs Financial Data Services, Inc. to
redeem on the last Friday of each month all shares purchased during such month
through reinvestment of dividends and distributions and send the proceeds to
me.
[_]
Check box
(if desired)

15
<PAGE>

6. OTHER INFORMATION

This application enables you to take advantage of any or all of the optional
services available to Merrill Lynch U.S. Treasury Money Fund shareholders and
will update any options in effect for your account.
If you select the Check Redemption Privilege, a supply of checks imprinted
with your name and shareholder account number will be sent to you in
approximately 10 days. You should be certain that a sufficient number of
shares are held by the Transfer Agent for your account to cover the amount of
any check drawn by you. If insufficient shares are in the account, the check
will be returned or the ACH debit will be dishonored marked insufficient
funds. Since the dollar value of your account is constantly changing, the
total value of your account cannot be determined in advance and the account
cannot be entirely redeemed by check or ACH debit. If the Check Redemption
Privilege is being requested for an account in the name of a corporation or
other institution, the following additional documents must be submitted with
this authorization.
CORPORATIONS--"Certification of Corporate Resolution," indicating the names
and titles of officers authorized to write checks or to draw ACH debits, must
be signed by an officer other than one empowered to execute transactions, with
his signature guaranteed and the corporate seal affixed.
PARTNERSHIPS--"Certification of Partnership," naming the partners and the
required number that may act in accordance with the terms of the Partnership
Agreement, is to be executed by a general partner with his signature
guaranteed.
TRUSTS--"Certification of Trustees," naming the trustees and the required
number that may act in accordance with the terms of the Trust Agreement, must
be executed by a certifying trustee with his signature guaranteed and under
the corporate seal.
If you are adding or reinstating the Federal Funds Redemption option, the
signature(s) must be guaranteed in the space provided below. Your signature(s)
must be guaranteed by a commercial bank (not a savings bank) in New York City
or one having a New York City correspondent, or by a member firm of any
national securities exchange. (A Notary Public's seal does not constitute a
signature guarantee.)

7. SIGNATURES

Under penalty of perjury, I certify (1) that the number set forth above is my
correct Social Security Number or Taxpayer Identification Number and (2) that
I am not subject to backup withholding (as discussed under "Additional
Information--Taxes") either because I have not been notified that I am subject
thereto as a result of a failure to report all interests and dividends, or the
Internal Revenue Service ("IRS") has notified me that I am no longer subject
thereto. Instructions: You must strike out the language in (2) above if you
have been notified that you are subject to backup withholding due to
underreporting and you have not received a notice from the IRS that backup
withholding has been terminated. By your signature below, you authorize the
furnishing of this certification to other Merrill Lynch-sponsored mutual
funds.
By the execution of this Purchase Application, the investor represents and
warrants that the investor has full right, power and authority to make the
investment applied for pursuant to this Application, and the person or persons
signing on behalf of the investor represent and warrant that they are duly
authorized to sign this Application and to purchase or redeem shares of the
Fund on behalf of the investor.
The investor hereby affirms that he has received a current Fund Prospectus
and appoints Financial Data Services, Inc. as his agent to receive dividends
and distributions for their automatic reinvestment in additional Fund shares.
- ----------------------------------- ------- ---------------------------------
Signature of Investor Date Signature of Joint Registrant, if
any
NOTE: The Guarantor must be either
a U.S. commercial bank (not a
savings bank) or a trust company
in New York City or one that is a
correspondent of a New York City
commercial bank or trust company,
or a member firm of a national
securities exchange. (A Notary
Public's seal does not constitute
a signature guarantee.)
Signature(s) Guaranteed: (for
those electing No. 4)

By: ____________________________
(Authorized Signatory)

16
<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>

MANAGER

Merrill Lynch Asset Management
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
Box 9011
Princeton, New Jersey 08543-9011

DISTRIBUTOR

Merrill Lynch Funds Distributor, Inc.
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
Box 9011
Princeton, New Jersey 08543-9011

CUSTODIAN

The Bank of New York
1 Wall Street
New York, New York 10286

TRANSFER AGENT

Financial Data Services, Inc.
Administrative Offices:
Transfer Agency Operations Department
4800 Deer Lake Drive East
Jacksonville, Florida 32246
Mailing Address:
P.O. Box 45290
Jacksonville, Florida 32232-5290

INDEPENDENT AUDITORS

Deloitte & Touche
117 Campus Drive
Princeton, New Jersey 08540

COUNSEL

Brown & Wood
One World Trade Center
New York, New York 10048-0557
<PAGE>

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PRO-
SPECTUS, IN CONNECTION WITH THE OFFERS CONTAINED THEREIN, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAV-
ING BEEN AUTHORIZED BY THE FUND, THE MANAGER, OR THE DISTRIBUTOR. THIS PROSPEC-
TUS DOES NOT CONSTITUTE AN OFFERING IN ANY STATE IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fee Table.................................................................. 2
Financial Highlights....................................................... 3
Yield Information.......................................................... 4
Investment Objectives and Policies......................................... 4
Management of the Fund..................................................... 5
Trustees................................................................. 5
Management and Advisory Arrangements..................................... 6
Transfer Agency Services................................................. 7
Purchase of Shares......................................................... 7
Methods of Payment....................................................... 7
Distribution Plan........................................................ 8
Redemption of Shares....................................................... 8
Methods of Redemption.................................................... 9
Shareholder Services....................................................... 11
Portfolio Transactions..................................................... 11
Additional Information..................................................... 12
Dividends................................................................ 12
Determination of Net Asset Value......................................... 12
Taxes.................................................................... 12
Organization of the Fund................................................. 14
Shareholder Inquiries.................................................... 14
Shareholder Reports...................................................... 14
Purchase Application....................................................... 15
</TABLE>

Code #11624
Prospectus

(ART WORK)

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

MERRILL LYNCH U.S. TREASURY MONEY FUND

Merrill Lynch U.S. Treasury Money Fund is organized as a Massachusetts business
trust. It is not a bank nor does it offer fiduciary or trust services. Shares
of the Fund are not equivalent to a bank account. A shareholder's investment in
the Fund is not insured by any Government agency.

March 29, 1994

Distributor:
Merrill Lynch
Funds Distributor, Inc.

This Prospectus should be
retained for future reference.
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

MERRILL LYNCH U.S. TREASURY MONEY FUND

BOX 9011, PRINCETON, NEW JERSEY 08543-9011 . PHONE NO. (609) 282-2800

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

This Statement of Additional Information of the Fund is not a prospectus and
should be read in conjunction with the prospectus of the Fund dated March 29,
1994 (the "Prospectus"), which has been filed with the Securities and Exchange
Commission and can be obtained without charge by calling or writing to the Fund
at the above telephone number or address. This Statement of Additional
Information has been incorporated by reference into the Prospectus. Capitalized
terms used but not defined herein have the same meanings as in the Prospectus.

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

MERRILL LYNCH ASSET MANAGEMENT--MANAGER

MERRILL LYNCH FUNDS DISTRIBUTOR--DISTRIBUTOR

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

The date of this Statement of Additional Information is March 29, 1994.

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

The Fund is a no-load money market fund. Reference is made to "Investment
Objectives and Policies" in the Prospectus of the Fund for a discussion of the
investment objectives and policies of the Fund.

The Fund has adopted the following restrictions and policies relating to the
investment of its assets and its activities, which are fundamental policies and
may not be changed without the approval of the holders of a majority of the
Fund's outstanding voting securities (which for this purpose means the lesser
of (i) 67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented or (ii) more than 50% of the outstanding
shares). The Fund may not: (1) purchase any securities other than direct
obligations of the U.S. Treasury having maturities no more than 762 days (25
months); (2) act as an underwriter of securities issued by other persons; (3)
purchase any securities on margin, except for use of short-term credit
necessary for clearance of purchases and sales of portfolio securities; (4)
make short sales of securities or maintain a short position or write, purchase
or sell puts, calls, straddles, spreads or combinations thereof; (5) make loans
to other persons, provided that the Fund may purchase short-term marketable
securities which are direct obligations of the U.S. Treasury; (6) borrow
amounts in excess of 20% of its total assets, taken at market value (including
the amount borrowed), and then only from banks as a temporary measure for
extraordinary or emergency purposes [Usually only "leveraged" investment
companies may borrow in excess of 5% of their assets; however, the Fund will
not borrow to increase income but only to meet redemption requests which might
otherwise require untimely dispositions of portfolio securities. The Fund will
not purchase securities while borrowings are outstanding. Interest paid on such
borrowings will reduce net income.]; and (7) mortgage, pledge, hypothecate or
in any manner transfer as security for indebtedness any securities owned or
held by the Fund except as may be necessary in connection with borrowings
mentioned in (6) above, and then such mortgaging, pledging or hypothecating may
not exceed 10% of the Fund's net assets, taken at market value.

MANAGEMENT OF THE FUND

TRUSTEES AND OFFICERS

The Trustees and executive officers of the Fund and their principal
occupations for at least the last five years are set forth below. Unless
otherwise noted, the address of each Trustee and executive officer is Merrill
Lynch Asset Management, P.O. Box 9011, Princeton, New Jersey 08543-9011.

Arthur Zeikel--President and Trustee (1)(2)--President of Merrill Lynch Asset
Management, L.P., doing business as Merrill Lynch Asset Management ("MLAM" or
the "Manager"), since 1977 and Chief Investment Officer since 1976; President
and Chief Investment Officer of Fund Asset Management, L.P. ("FAM"), since
1977; President and Director of Princeton Services, Inc. ("Princeton Services")
since 1993; Executive Vice President of Merrill Lynch & Co., Inc. ("ML&Co")
since 1990; Executive Vice President of Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") since 1990 and a Senior Vice President thereof
from 1985 to 1990; Director of Merrill Lynch Funds Distributor, Inc. (the
"Distributor").

Donald Cecil--Trustee (2)--1114 Avenue of the Americas, New York, New York
10036. Special Limited Partner of Cumberland Partners (an investment
partnership) since 1982; Member of Institute of Chartered Financial Analysts;
Member and Chairman of Westchester County (N.Y.) Board of Transportation.

2
<PAGE>

M. Colyer Crum--Trustee (2)--Soldiers Field Road, Boston, Massachusetts
02163. James R. Williston Professor of Investment Management, Harvard Business
School, since 1971; Director of Cambridge Bancorp, Copley Properties, Inc. and
Sun Life Assurance Company of Canada.

Edward H. Meyer--Trustee (2)--777 Third Avenue, New York, New York 10017.
President of Grey Advertising Inc. since 1968, Chief Executive Officer since
1970 and Chairman of the Board of Directors since 1972; Director of The May
Department Stores Company, Bowne & Co. Inc., Harman International Industries,
Inc. and Ethan Allen Interiors, Inc.

Jack B. Sunderland--Trustee (2)--P.O. Box 1177, Scarsdale, New York 10583.
President and Director of American Independent Oil Company, Inc. (an energy
company) since 1987; Chairman of Murexco Petroleum, Inc. (an energy company)
from 1981 to 1988; President, Director and Chief Executive Officer of Coroil,
Inc. (an energy company) from 1979 to 1985; Member of Council on Foreign
Relations since 1971.

J. Thomas Touchton--Trustee (2)--Suite 3405, One Tampa City Center, Tampa,
Florida 33602. Managing Partner of The Witt-Touchton Company and its
predecessor The Witt Co. (a private investment partnership) since 1972; Trustee
Emeritus of Washington and Lee University; Director of TECO Energy, Inc. (an
electric utility holding company).

Terry K. Glenn--Executive Vice President (1)(2)--Executive Vice President of
the Manager and FAM since 1983; Executive Vice President and Director of
Princeton Services since 1993; President and Director of the Distributor since
1986.

Joseph T. Monagle, Jr.--Executive Vice President (1)(2)--Senior Vice
President of the Manager and FAM since 1990; Vice President of the Manager from
1978 to 1990.

Linda B. Costanzo--Vice President (1)(2)--Vice President of the Manager since
1989; Assistant Vice President of the Manager from 1988 to 1989; employee of
the Manager from 1986 to 1988.

Alex V. Bouzakis--Vice President (1)(2)--Vice President of the Manager since
1985.

John Ng--Vice President (1)(2)--Vice President of the Manager since 1985.

Donald C. Burke--Vice President (1)(2)--Vice President and Director of
Taxation of the Manager since 1990; employee of Deloitte & Touche from 1982 to
1990.

Gerald M. Richard--Treasurer (1)(2)--Senior Vice President and Treasurer of
the Manager and FAM since 1984; Senior Vice President and Treasurer of
Princeton Services since 1993; Vice President of the Distributor since 1981 and
Treasurer of the Distributor since 1984; employee of the Distributor since
1978.

Mark B. Goldfus--Secretary (1)(2)--Vice President of the Manager and FAM
since 1985.
- --------
(1) Interested person, as defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act"), of the Fund.
(2) Such Trustee or officer is a director or officer of certain other
investment companies for which the Manager or FAM acts as investment
adviser.

At March 14, 1994 the Trustees and officers of the Fund as a group (14
persons) owned an aggregate of less than 1/4 of 1% of the outstanding shares of
beneficial interest of the Fund. At such date, Mr. Zeikel and the other
officers of the Fund owned an aggregate of less than 1/4 of 1% of the
outstanding common stock of ML&Co.

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<PAGE>

Pursuant to the terms of its management agreement (the "Management
Agreement") with the Fund, the Manager pays all compensation of officers and
employees of the Fund as well as the fees of all Trustees of the Fund who are
affiliated persons of ML&Co. or its subsidiaries. The Fund pays each
unaffiliated Trustee an annual fee of $4,000 plus a fee of $1,000 for each
meeting attended and pays all Trustees' actual out-of-pocket expenses relating
to attendance at meetings. Additionally, the Fund has established an Audit and
Nominating Committee of the Board of Trustees of which all of the unaffiliated
Trustees are members. Each member of such committee receives an annual fee of
$3,500 and the chairman of such committee receives an annual fee of $1,500. The
total Trustees' fees and expenses aggregated $58,094 for the fiscal year ended
November 30, 1993.

MANAGEMENT AND ADVISORY ARRANGEMENTS

Reference is made to "Management of the Fund--Management and Advisory
Arrangements" in the Prospectus of the Fund for certain information concerning
the management arrangements of the Fund.

Subject to the direction of the Board of Trustees, the Manager is responsible
for the actual management of the Fund's portfolio and constantly reviews the
Fund's holdings in light of its own research analysis and that from other
relevant sources. The responsibility for making decisions to buy, sell or hold
a particular security rests with the Manager. The Manager performs certain of
the other administrative services and provides all the office space,
facilities, equipment and necessary personnel for portfolio management of the
Fund.

Securities held by the Fund may also be held by, or be appropriate
investments for, other funds or clients (collectively referred to as "clients")
for which the Manager, or its affiliate, FAM, acts as an investment adviser.
Because of different investment objectives or other factors, a particular
security may be bought for one or more clients when one or more clients are
selling the security. If purchases or sales of securities for the Fund or other
clients arise for consideration at or about the same time, transactions in such
securities will be made, insofar as feasible, for the respective clients in a
manner deemed equitable to all by the Manager or FAM. To the extent that
transactions on behalf of more than one client of the Manager or FAM during the
same period may increase the demand for securities being purchased or the
supply of securities being sold, there may be an adverse effect on price.

The Manager presently receives a fee from the Fund at the end of each month
at the annual rate of 0.50% of the average daily net assets of the Fund. The
State of California imposes limitations on the expenses of the Fund. This
annual expense limitation applicable to the Fund requires that the Manager
reimburse the Fund in any amount necessary to prevent such operating expenses
(excluding interest, taxes, distribution fees, brokerage fees and commissions
and extraordinary charges such as litigation costs) of the Fund from exceeding
in any fiscal year 2.5% of the Fund's first $30 million of average net assets,
2.0% of the next $70 million of average net assets and 1.5% of the remaining
average net assets. No fee payment will be made to the Manager during the year
which will cause such expenses to exceed the pro rata expense limitation at the
time of such payment. For the periods ended November 30, 1991, 1992 and 1993,
the total management fees payable by the Fund to the Manager aggregated
$127,558, $363,986 and $379,689, respectively. The Manager voluntarily waived
its entire fee for the periods ended November 30, 1991 and 1992 and waived
$327,310 of its fee for the fiscal year ended November 30, 1993. This voluntary
waiver may be withdrawn by the Manager at any time and without prior notice.

The Management Agreement obligates the Manager to provide investment advisory
services, to furnish administrative services, office space and facilities for
management of the affairs of the Fund, to pay all compensation of and furnish
office space for officers and employees of the Fund, as well as the fees of all

4
<PAGE>

Trustees of the Fund who are affiliated persons of Merrill Lynch & Co., Inc. or
any of its subsidiaries. Except for certain expenses incurred by the
Distributor (see "Purchase and Redemption of Shares"), the Fund pays all other
expenses incurred in its operations, including, among other things, taxes,
expenses for legal and auditing services, costs of printing proxies, reports,
prospectuses and statements of additional information sent to current
shareholders, charges of the Custodian and Transfer Agent, expenses of
redemption of shares, Securities and Exchange Commission fees, expenses of
registering the shares under Federal and state securities laws, fees and
expenses of unaffiliated Trustees, accounting and pricing costs (including the
daily calculation of net asset value), insurance, interest, brokerage costs,
litigation and other extraordinary or non-recurring expenses and other expenses
properly payable by the Fund. Accounting services are provided by the Manager
and the Fund reimburses the Manager for its costs in connection with such
services provided to the Fund. For the fiscal year ended November 30, 1993, the
Fund paid $26,584 to the Manager in connection with accounting services.

For information as to the distribution fee to be paid by the Fund to Merrill
Lynch pursuant to the Distribution Agreement, see "Purchase and Redemption of
Shares".

Duration and Termination. Unless earlier terminated as described below, the
Management Agreement will continue in effect from year to year if approved
annually (a) by the Trustees of the Fund or by a majority of the outstanding
voting shares of the Fund and (b) by a majority of the Trustees who are not
parties to such contract or interested persons (as defined in the Investment
Company Act) of any such party. Such contract is not assignable and may be
terminated without penalty on 60 days' written notice at the option of either
party thereto or by the vote of the shareholders of the Fund.

PURCHASE AND REDEMPTION OF SHARES

Reference is made to "Purchase of Shares" and "Redemption of Shares" in the
Prospectus of the Fund for certain information as to the purchase and
redemption of Fund shares.

The Fund is offering its shares without sales charge at a public offering
price equal to the net asset value next determined after a purchase order
becomes effective. It is anticipated that the net asset value will remain
constant at $1.00 per share, although this cannot be assured.

The Distributor acts as the distributor in the continuous offering of the
Fund's shares. Shares may be purchased directly from the Distributor or from
other securities dealers, including Merrill Lynch, with whom the Distributor
has entered into a selected dealer agreement. Securities dealers may charge
investors a fee in connection with such transactions. Merrill Lynch has
informed the Fund that it does not charge such a fee.

The Fund's distribution agreement with the Distributor is renewable annually
and may be terminated on 60 days' written notice by either party. Under such
agreement, after the prospectuses, statements of additional information and
periodic reports have been prepared and set in type, the Distributor will pay
for the printing and distribution of copies thereof used in connection with the
offering to dealers and investors. The Distributor also will pay for other
supplementary sales literature.

It is the Fund's policy to be as fully invested as reasonably practicable at
all times to maximize the yield on the Fund's portfolio. The money markets in
which the Fund will purchase and sell portfolio securities normally require
immediate settlement of transactions in Federal funds. Federal funds are a
commercial

5
<PAGE>

bank's deposits in a Federal Reserve Bank and can be transferred from one
member bank's account to that of another member bank on the same day and thus
are considered to be immediately available funds. Orders for the purchase of
Fund shares shall become effective on the day Federal funds become available to
the Fund and the shares being purchased will be issued at the net asset value
per share next determined. If Federal funds are available to the Fund prior to
4:00 P.M., New York time, on any business day, the order will be effective on
that day. Shares purchased will begin accruing dividends on the day following
the date of purchase.

The Fund has adopted a Shareholder Servicing Plan and Agreement (the "Plan")
in compliance with Rule 12b-1 under the Investment Company Act pursuant to
which Merrill Lynch receives a distribution fee under the Distribution
Agreement from the Fund at the end of each month at the annual rate of 0.125%
of average daily net assets of the Fund. The Plan reimburses Merrill Lynch only
for actual expenses incurred in the fiscal year in which the fees are paid. The
distribution fees are principally to provide compensation to Merrill Lynch
financial consultants and other Merrill Lynch personnel for selling shares of
the Fund and for providing direct personal services to shareholders of the
Fund. Under the Plan, Merrill Lynch, in its sole discretion, may expend out of
the fee an amount not exceeding 0.01% of such average daily net asset value as
reimbursement for expenditures incurred in advertising activities promoting the
sale, marketing and distribution of the shares of the Fund. For the period
April 15, 1991 (commencement of operations) to November 30, 1991, $31,486 was
paid to Merrill Lynch pursuant to the Plan (based on average net assets subject
to the Plan of $40.1 million). For the fiscal year ended November 30, 1992,
$88,152 was paid to Merrill Lynch pursuant to the Plan (based on average net
assets subject to the Plan of $72.6 million). For the fiscal year ended
November 30, 1993, $92,033 was paid to Merrill Lynch pursuant to the Plan
(based on average net assets subject to the Plan of $75.9 million). At February
28, 1994, the net assets of the Fund subject to the Plan aggregated
approximately $70.3 million. At this asset level, the annual fee payable to
Merrill Lynch pursuant to the Plan would aggregate $85,252.

The Trustees believe that the Fund's expenditures under the Plan benefit the
Fund and its shareholders by providing better shareholder services and by
facilitating the sale and distribution of Fund shares.

Among other things, the Plan provides that Merrill Lynch shall provide and
the Trustees of the Fund shall review quarterly reports of the distribution
expenses made by Merrill Lynch pursuant to the Plan. In their consideration of
the Plan, the Trustees must consider all factors they deem relevant, including
information regarding the benefits of the Plan to the Fund and its
shareholders. The Plan further provides that, so long as the Plan remains in
effect, the selection and nomination of Trustees of the Fund who are not
"interested persons" of the Fund as defined in the Investment Company Act
("Independent Trustees") shall be committed to the discretion of the
Independent Trustees then in office. The Plan can be terminated at any time,
without penalty, by the vote of a majority of the Independent Trustees or by
the vote of the holders of a majority of the outstanding voting securities of
the Fund. Finally, the Plan cannot be amended to increase materially the amount
to be spent by the Fund thereunder without shareholder approval, and all
material amendments are required to be approved by vote of the Trustees of the
Fund, including a majority of the Independent Trustees, cast in person at a
meeting called for that purpose.

The right to receive payment with respect to any redemption of Fund shares
may be suspended by the Fund for a period of up to seven days. Suspensions of
more than seven days may not be made except (1) for any period (a) during which
the New York Stock Exchange is closed other than customary weekend and holiday
closings or (b) during which trading on the New York Stock Exchange is
restricted; (2) for any period during which an emergency exists as a result of
which (a) disposal by the Fund of portfolio securities is not reasonably
practicable or (b) it is not reasonably practicable for the Fund fairly to
determine the value of its net assets; or (3) for such other periods as the
Securities and Exchange Commission may by order permit for

6
<PAGE>

the protection of security holders of the Fund. The Commission shall by rules
and regulations determine the conditions under which (i) trading shall be
deemed to be restricted and (ii) an emergency shall be deemed to exist within
the meaning of clause (2) above.

The total value of the shareholder's investment in the Fund at the time of
redemption may be more or less than his cost, depending on the market value of
the securities held by the Fund at such time and income earned.

PURCHASE AND REDEMPTION OF SHARES THROUGH MERRILL LYNCH RETIREMENT PLANS

Merrill Lynch offers four types of self-directed retirement plans for which
it acts as passive custodian (the "Retirement Plans"). These plans are an
individual retirement account ("IRA"), The Merrill Lynch Tax-Deferred BasicTM
Retirement Plan, designed for sole proprietors, partnerships and small
corporations (the "Basic Plan"), a simplified employee pension plan ("SEP") and
a special IRA available through payroll deductions to individuals through their
employers, labor unions and other employee associations that have chosen to
make such IRAs available on a voluntary basis through the Merrill Lynch
BlueprintSM Program. Information concerning the establishment and maintenance
of Retirement Plans and investments by Retirement Plan accounts is contained in
the Retirement Plan documents available from Merrill Lynch.

PURCHASE BY RETIREMENT PLANS

Special purchase procedures apply in the case of the Retirement Plans. There
is no minimum initial or subsequent purchase requirement with respect to
purchases of Fund shares by participants in the Retirement Plans. In addition,
participants in the Retirement Plans may elect to have cash balances in their
Retirement Plan account automatically invested in the Fund.

Cash balances of participants who elect to have such funds automatically
invested in the Fund will be invested as follows. Cash balances arising from
the sale of securities held in the Retirement Plan account which do not settle
on the day of the transaction (such as most common and preferred stock
transactions) become available to the Fund and will be invested in shares of
the Fund on the business day following the day that proceeds with respect
thereto are received in the Retirement Plan account. Proceeds giving rise to
cash balances from the sale of securities held in the Retirement Plan account
settling on a same day basis and from principal repayments on debt securities
held in the account become available to the Fund and will be invested in shares
of the Fund on the next business day following receipt. Cash balances arising
from dividends or interest payments on securities held in the Retirement Plan
account or from a contribution to the Retirement Plan are invested in shares of
the Fund on the business day following the date the payment is received in the
Retirement Plan account. Cash balances of less than $1.00 will not be invested
and no return will be earned.

A participant in the IRA, Basic or SEP Retirement Plans who has not elected
to have cash balances automatically invested in shares of the Fund may enter a
purchase order through his Merrill Lynch financial consultant.

REDEMPTIONS BY RETIREMENT PLANS

Distributions from Retirement Plans to a participant prior to the time the
participant reaches age 59 1/2 may subject the participant to penalty taxes.
There are, however, no adverse tax consequences resulting from

7
<PAGE>

redemptions of shares of the Fund where the redemption proceeds remain in the
Retirement Plan account or are otherwise invested therein.

The Fund has instituted an automatic redemption procedure for participants in
the Retirement Plans who have elected to have cash balances in their accounts
automatically invested in shares of the Fund. In the case of such participants,
unless directed otherwise, Merrill Lynch will redeem a sufficient number of
shares of the Fund to purchase other securities (such as common stocks) that
the participant has selected for investment in his Retirement Plan account.

Any shareholder may redeem shares of the Fund by submitting a written notice
of redemption to Merrill Lynch. Participants in IRA, Basic and SEP Retirement
Plans should contact their Merrill Lynch financial consultant to effect such
redemptions. Participants in the IRA program through the Merrill Lynch
BlueprintSM Program should contact Merrill Lynch at the toll-free number
furnished to them to effect such redemptions. Redemption requests should not be
sent to the Fund. If inadvertently sent to the Fund, they will be forwarded to
Merrill Lynch. The notice must bear the signature of the person in whose name
the Retirement Plan is maintained, signed exactly as his name appears on his
Retirement Plan adoption agreement.

CONFIRMATIONS

All purchases and redemptions of Fund shares and dividend reinvestments will
be confirmed to participants in the IRA, Basic and SEP Retirement Plans
(rounded to the nearest share) in the statement which is sent quarterly to all
participants in IRA Retirement Plans and monthly to all participants in Basic
and SEP Retirement Plans.

Participants in the IRA program through the Merrill Lynch BlueprintSM Program
will receive quarterly statements reflecting all purchases, redemptions and
dividend reinvestments of Fund shares, and, at least monthly, will receive an
individual confirmation with respect to each redemption of Fund shares and each
purchase of such shares other than purchases which are made automatically
through payroll deductions.

PORTFOLIO TRANSACTIONS

The Fund has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policy
established by the Trustees and officers of the Fund, the Manager is primarily
responsible for the Fund's portfolio decisions and the placing of the Fund's
portfolio transactions. In placing orders, it is the policy of the Fund to
obtain the best net results taking into account such factors as price of the
securities offered, the type of transaction involved, the firm's general
execution and operational facilities and the firm's risk in positioning the
securities involved. While the Manager generally seeks reasonably competitive
spreads or commissions, the Fund will not necessarily be paying the lowest
spread or commission available. The Fund's policy of investing in securities
with short maturities will result in high portfolio turnover.

The securities in which the Fund invests are traded in the over-the-counter
market. The Fund will deal directly with the dealers who make a market in the
securities involved except in those circumstances where better prices and
execution are available elsewhere. Such dealers usually are acting as principal
for their own accounts. On occasion, securities may be purchased directly from
the U.S. Treasury. The Treasury securities in which the Fund invests are
generally traded on a net basis and do not normally involve either brokerage

8
<PAGE>

commissions or transfer taxes. The cost of executing portfolio securities
transactions of the Fund primarily will consist of dealer spreads. Under the
Investment Company Act, persons affiliated with the Fund are prohibited from
dealing with the Fund as a principal in the purchase and sale of securities
unless an exemptive order allowing such transactions is obtained from the
Securities and Exchange Commission. Since over-the-counter transactions are
usually principal transactions, affiliated persons of the Fund, including
Merrill Lynch Government Securities Inc. ("GSI") and Merrill Lynch, may not
serve as the Fund's dealer in connection with such transactions, except
pursuant to the exemptive order described below.

The Securities and Exchange Commission has issued an exemptive order
permitting certain investment companies advised by the Manager or FAM to
conduct principal transactions with GSI in United States Government securities.
This order contains a number of conditions, including conditions designed to
insure that the price to the Fund from GSI is equal to or better than that
available from other sources. GSI has informed the Fund that it will in no way,
at any time, attempt to influence or control the activities of the Fund or the
Manager in placing such principal transactions. The exemptive order allows GSI
or its subsidiary, Merrill Lynch Money Markets Inc., to receive a dealer spread
on any transaction with the Fund no greater than its customary dealer spread
from transactions of the type involved. Generally such spreads do not exceed
0.25% of the principal amount of the securities involved. During the fiscal
year ended November 30, 1993, the Fund engaged in 10 such transactions
aggregating approximately $7.2 million.

The Trustees of the Fund have considered the possibilities of recapturing for
the benefit of the Fund expenses of possible portfolio transactions, such as
dealer spreads, by conducting such portfolio transactions through affiliated
entities, including GSI and Merrill Lynch. For example, dealer spreads received
by GSI or its subsidiary on transactions conducted pursuant to the permissive
order described above could be offset against the management fee payable by the
Fund to the Manager. After considering all factors deemed relevant, the
Trustees made a determination not to seek such recapture. The Trustees will
reconsider this matter from time to time. The Manager has arranged for the
Fund's custodian to receive any tender offer solicitation fees on behalf of the
Fund payable with respect to portfolio securities of the Fund.

The Fund does not expect to use one particular dealer, but, subject to
obtaining the best price and execution, dealers who provide supplemental
investment research (such as economic data and market forecasts) to the Manager
may receive orders for transactions by the Fund. Information so received will
be in addition to and not in lieu of the services required to be performed by
the Manager under the Management Agreement, and the expenses of the Manager
will not necessarily be reduced as a result of the receipt of such supplemental
information.

DETERMINATION OF NET ASSET VALUE

The net asset value of the Fund is determined by the Manager at 4:00 P.M.,
New York time, on each day during which the New York Stock Exchange or New York
banks are open for business, immediately after the daily declaration of
dividends. As a result of this procedure, the net asset value is determined
each day except for days on which both the New York Stock Exchange and New York
banks are closed. Both the New York Stock Exchange and New York banks are
closed for New Year's Day, Presidents' Day, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. The net asset value per share is
computed under the "penny rounding" method by dividing the value of the
securities held by the Fund plus any cash or other assets (including interest
accrued but not yet received) minus all liabilities (including accrued
expenses) by the total number of shares outstanding at such time. Expenses,
including fees payable to the Manager, are accrued daily.

9
<PAGE>

The Fund values its portfolio securities with remaining maturities of 60 days
or less on an amortized cost basis and values its securities with remaining
maturities of greater than 60 days for which market quotations are readily
available at market value. Other securities held by the Fund are valued at
their fair value as determined in good faith by or under the direction of the
Board of Trustees.

In accordance with the Securities and Exchange Commission rule applicable to
the valuation of its portfolio securities, the Fund will maintain a dollar-
weighted average portfolio maturity of 90 days or less and will purchase
instruments having remaining maturities of not more than 397 days (13 months),
with the exception of U.S. Government and U.S. Government agency securities,
which may have remaining maturities of up to 762 days (25 months). The Fund
will invest only in securities determined by the Trustees to be of high quality
with minimal credit risks. In addition, the Trustees have established
procedures designed to stabilize, to the extent reasonably possible, the Fund's
price per share as computed for the purpose of sales and redemptions at $1.00.
Deviations of more than an insignificant amount between the net asset value
calculated using market quotations and that calculated on a "penny rounded"
basis will be reported to the Trustees by the Manager. In the event the
Trustees determine that a deviation exists which may result in material
dilution or other unfair results to investors or existing shareholders, the
Fund will take such corrective action as it regards as necessary and
appropriate, including the reduction of the number of outstanding shares of the
Fund by having each shareholder proportionately contribute shares to the Fund's
capital; the sale of portfolio instruments prior to maturity to realize capital
gains or losses or to shorten average portfolio maturity; withholding
dividends; or establishing a net asset value per share solely by using
available market quotations. If the number of outstanding shares is reduced in
order to maintain a constant net asset value of $1.00 per share, the
shareholders will contribute proportionately to the Fund's capital the number
of shares which represents the difference between the "penny rounded" valuation
and market valuation of the portfolio. Each shareholder will be deemed to have
agreed to such contribution by such shareholder's investment in the Fund.

Since the net income of the Fund (including realized gains and losses on the
portfolio securities) is determined and declared as a dividend immediately
prior to each time the net asset value of the Fund is determined, the net asset
value per share of the Fund normally remains at $1.00 per share immediately
after each such dividend declaration. Any increase in the value of a
shareholder's investment in the Fund, representing the reinvestment of dividend
income, is reflected by an increase in the number of shares of the Fund in his
account and any decrease in the value of a shareholder's investment may be
reflected by a decrease in the number of shares in his account. See "Taxes".

YIELD INFORMATION

The Fund normally computes its annualized yield by determining the net income
for a seven-day base period for a hypothetical pre-existing account having a
balance of one share at the beginning of the base period, dividing the net
income by the net asset value of the account at the beginning of the base
period to obtain the base period return, multiplying the result by 365 and then
dividing by seven. Under this calculation, the yield on the Fund shares
reflects realized gains and losses on portfolio securities. In accordance with
regulations adopted by the Securities and Exchange Commission, the Fund is
required to disclose its annualized yield for certain seven-day periods in a
standardized manner which does not take into consideration any realized or
unrealized gains or losses on portfolio securities. The Securities and Exchange
Commission also permits the calculation of a standardized effective or
compounded yield. This is computed

10
<PAGE>

by compounding the unannualized base period return which is done by adding one
to the base period return, raising the sum to a power equal to 365 divided by
seven and subtracting one from the result. This compounded yield calculation
also reflects realized gains or losses on portfolio securities.

The yield on the Fund's shares normally will fluctuate on a daily basis.
Therefore, the yield for any given past period is not an indication or
representation by the Fund of future yields or rates of return on its shares.
The yield is affected by such factors as changes in interest rates on Treasury
securities, average portfolio maturity, the types and quality of portfolio
securities held and operating expenses. The yield on Fund shares for various
reasons may not be comparable to the yield on shares of other money market
funds or other investments.

SHAREHOLDER SERVICES

The Fund offers a number of shareholder services described below designed to
facilitate investment in its shares. Full details as to each of such services
and copies of the various plans described below can be obtained from the Fund,
the Distributor or Merrill Lynch.

INVESTMENT ACCOUNT

Every shareholder whose account is maintained at the Transfer Agent has an
Investment Account and will receive from the Transfer Agent a monthly report
showing the activity in his account for the month. A shareholder may make
additions to his Investment Account at any time by purchasing shares at the
applicable public offering price either through his securities dealer, by wire
or by mail directly to the Transfer Agent, acting as agent for his dealer. A
shareholder may ascertain the number of shares in his Investment Account by
telephoning the Transfer Agent at (800) 221-7210 toll-free. The Transfer Agent
will furnish this information only after the shareholder has specified the
name, address, account number and social security number of the registered
owner or owners.

In the interest of economy and convenience and because of the operating
procedures of the Fund, certificates representing the Fund's shares will not be
issued physically. Shares are maintained by the Fund on its register maintained
by the Transfer Agent, and the holders thereof will have the same rights and
ownership with respect to such shares as if certificates had been issued.

AUTOMATIC INVESTMENT PLAN

The Fund offers an Automatic Investment Plan in connection with accounts
maintained at the Transfer Agent whereby the Transfer Agent is authorized
through preauthorized checks of $50 or more to charge the regular bank account
of the shareholder on a regular basis to provide systematic additions to the
Investment Account of such shareholder. See the Purchase Application in the
Prospectus. A shareholder's Automatic Investment Plan may be terminated at any
time without charge or penalty by the shareholder, the Fund, the Transfer Agent
or the Distributor.

ACCRUED MONTHLY PAYOUT PLAN

The dividends of the Fund are reinvested automatically in additional shares.
Shareholders with accounts maintained at the Transfer Agent desiring cash
payments may enroll in the Accrued Monthly Payout Plan,

11
<PAGE>

under which shares equal in number to shares credited through the automatic
reinvestment of dividends and distributions during each month are redeemed at
net asset value on the last Friday of such month in order to meet the monthly
distribution. Investors may open an Accrued Monthly Payout Plan by completing
the appropriate portion of the Purchase Application in the Prospectus. A
shareholder's Accrued Monthly Payout Plan may be terminated at any time without
charge or penalty by the shareholder, the Fund, the Transfer Agent or the
Distributor.

SYSTEMATIC WITHDRAWAL PLANS

A shareholder may elect to make systematic withdrawals from an Investment
Account on either a monthly or quarterly basis as provided below. Quarterly
withdrawals are available for shareholders who have acquired shares of the Fund
having a value, based on cost or the current offering price of $5,000 or more,
and monthly withdrawals for shareholders with shares with such a value of
$10,000 or more. The quarterly periods end on the 24th day of March, June,
September and December. See the Purchase Application in the Prospectus.

At the time of each withdrawal payment, sufficient shares are redeemed from
those on deposit in the shareholder's account to provide the withdrawal payment
specified by the shareholder. The shareholder may specify either a dollar
amount or a percentage of the value of his shares. Redemptions will be made at
net asset value as determined at the close of business on the New York Stock
Exchange on the 24th day of each month or the 24th day of the last month of
each quarter, whichever is applicable. A shareholder's Systematic Withdrawal
Plan may be terminated at any time, without charge or penalty, by the
shareholder, the Fund, the Transfer Agent or the Distributor. A shareholder may
not elect to make systematic withdrawals while he is enrolled in the Accrued
Monthly Payout Plan.

Withdrawal payments should not be considered as dividends, yield or income.
Withdrawals are sales of shares and may result in taxable gain or loss. If
periodic withdrawals continuously exceed reinvested dividends, the
shareholder's original investment will be reduced correspondingly. Shareholders
are cautioned not to designate withdrawal programs that result in an undue
reduction of principal. There are no minimums on amounts that may be
systematically withdrawn.

RETIREMENT PLANS

Self-directed individual retirement accounts and other retirement plans are
available from Merrill Lynch. Under these plans, investments may be made in the
Fund and certain of the other mutual funds sponsored by Merrill Lynch as well
as in other securities. Merrill Lynch charges an initial establishment fee and
an annual custodial fee for each account. Information with respect to these
plans is available upon request from Merrill Lynch. In addition, eligible
shareholders of the Fund may participate in a variety of qualified employee
benefit plans which are available from the Distributor. Participants in these
plans may invest in the Fund and in certain other mutual funds sponsored by
Merrill Lynch. Information with respect to these plans is available upon
request from the Distributor. See "Purchase of Shares" in the Prospectus and
"Purchase and Redemption of Shares through Merrill Lynch Retirement Plans"
herein.

Capital gains and income received in each of the plans referred to above are
exempt from Federal taxation until distributed from the plans. Investors
considering participation in any such plan should review specific tax laws
relating thereto and should consult their attorneys or tax advisers with
respect to the establishment and maintenance of any such plan.

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<PAGE>

EXCHANGE PRIVILEGE

Shareholders of the Fund who have held all or part of their shares for at
least 15 days may exchange their shares of the Fund for Class A shares of the
mutual funds described below (collectively referred to as the "funds") on the
basis described below. Shares with a net asset value of at least $250 are
required to qualify for the exchange privilege. It is contemplated that the
exchange privilege may be applicable to other new mutual funds whose shares
may be distributed by the Distributor. The exchange privilege available to
participants in the Merrill Lynch Blueprint SM Program may be different from
that available to other investors.

Under the exchange privilege, each of the funds offers to exchange its
shares ("new shares") for shares ("outstanding shares") of any of the other
funds, on the basis of relative net asset value per share, plus an amount
equal to the difference, if any, between the sales charge previously paid on
the outstanding shares and the sales charge payable at the time of the
exchange on the new shares. At the present time, the shares of each of the
funds are sold with varying sales charges. With respect to outstanding shares
as to which previous exchanges have taken place, the "sales charge previously
paid" shall include the aggregate of the charges paid with respect to such
shares in the initial purchase and any subsequent exchange. Shares issued
pursuant to dividend reinvestment are sold on a no-load basis in each of the
funds. For purposes of the exchange privilege, dividend reinvestment shares
shall be deemed to have been sold with a sales charge equal to the sales
charge previously paid on the shares on which the dividend was paid. Based on
this formula, an exchange of shares of the Fund, which are sold on a no-load
basis, for shares of the other funds, which are sold with a sales charge,
generally will require the payment of a sales charge.

The investment objectives of the other funds into which exchanges can be
made are as follows:

<TABLE>
<C> <S>
Merrill Lynch Adjustable Rate
Securities Fund, Inc....................... High current income, consistent
with a policy of limiting the
degree of fluctuation in net
asset value by investing
primarily in a portfolio of
adjustable rate securities
consisting principally of
mortgage-backed and asset-
backed securities.
Merrill Lynch Americas Income
Fund, Inc. ................................ A high level of current income,
consistent with prudent
investment risk, by investing
primarily in debt securities
denominated in a currency of a
country located in the Western
Hemisphere (i.e., North and
South America and the
surrounding waters).
Merrill Lynch Arizona Limited
Maturity Municipal Bond Fund............... A portfolio of Merrill Lynch
Multi-State Limited Maturity
Municipal Series Trust, a
series fund, whose objective
is to provide as high a level
of income exempt from Federal
and Arizona income taxes as is
consistent with prudent
investment management through
investment in a portfolio
primarily of intermediate-term
investment grade Arizona
Municipal Bonds.
</TABLE>

13
<PAGE>

<TABLE>
<C> <S>
Merrill Lynch Arizona Municipal Bond Fund,
Inc........................................ A portfolio of Merrill Lynch
Multi-State Municipal Series
Trust, a series fund, whose
objective is to provide
investors with as high a level
of income exempt from Federal
and Arizona income
taxes as is consistent with
prudent investment management.
Merrill Lynch Balanced Fund For Investment
and Retirement............................. As high a level of total
investment return as is
consistent with reasonable
risk by investing in common
stock and other types of
securities, including fixed
income securities and
convertible securities.
Merrill Lynch Basic Value Fund, Inc......... Capital appreciation and,
secondarily, income by
investment in securities,
primarily equities, that are
undervalued and therefore
represent basic investment
value.
Merrill Lynch California Insured Municipal
Bond Fund.................................. A portfolio of Merrill Lynch
California Municipal Series
Trust, a series fund whose
objective is to provide
shareholders with as high a
level of income exempt from
Federal and California income
taxes as is consistent with
prudent investment management.
Merrill Lynch California Limited Maturity
Municipal Bond Fund........................ A portfolio of Merrill Lynch
Multi-State Limited Maturity
Municipal Series Trust, a
series fund, whose objective
is to provide shareholders
with as high a level of income
exempt from Federal and
California income taxes as is
consistent with prudent
investment management through
investment in a portfolio
primarily of intermediate-term
investment grade California
Municipal Bonds.
Merrill Lynch California Municipal
Bond Fund.................................. A portfolio of Merrill Lynch
California Municipal Series
Trust, a series fund, whose
objective is to provide
investors with as high a level
of income exempt from Federal
and California income taxes as
is consistent with prudent
investment management.
</TABLE>

14
<PAGE>

<TABLE>
<C> <S>
Merrill Lynch Capital Fund, Inc............. The highest total investment
return consistent with prudent
risk through a fully managed
investment policy utilizing
equity, debt and convertible
securities.
Merrill Lynch Colorado Municipal Bond Fund..
A portfolio of Merrill Lynch
Multi-State Municipal Series, a
series fund, whose objective is
as high a level of income
exempt from Federal and
Colorado income taxes as is
consistent with prudent
investment management.
Merrill Lynch Corporate Bond
Fund, Inc.................................. Current income from three
separate diversified portfolios
of fixed income securities.
Merrill Lynch Developing
Capital Markets Fund, Inc.................. Long-term appreciation through
investment in securities,
principally equities, of
issuers in countries having
smaller capital markets.
Merrill Lynch Dragon Fund, Inc.............. Capital appreciation primarily
through investment in equity
and debt securities of issuers
domiciled in developing
countries located in Asia and
the Pacific Basin, other than
Japan, Australia and New
Zealand.
Merrill Lynch Eurofund...................... Capital appreciation primarily
through investment in equity
securities of corporations
domiciled in Europe.
Merrill Lynch Federal Securities Trust...... High current return through
investments in U.S. Government
and Government agency
securities, including GNMA
mortgage-backed certificates
and other mortgage-backed
Government securities.
Merrill Lynch Florida Limited
Maturity Municipal Bond Fund............... A portfolio of Merrill Lynch
Multi-State Limited Maturity
Municipal Series Trust, a
series fund, whose objective is
as high a level of income
exempt from Federal income
taxes as is consistent with
prudent investment management
while serving to offer
shareholders the opportunity to
own securities exempt from
Florida intangible personal
property taxes through
investment in a portfolio
primarily of intermediate-term
investment grade Florida
Municipal Bonds.
</TABLE>

15
<PAGE>

<TABLE>
<C> <S>
Merrill Lynch Florida Municipal Bond Fund...
A portfolio of Merrill Lynch
Multi-State Municipal Series
Trust, a series fund, whose
objective is as high a level
of income exempt from Federal
income taxes as is consistent
with prudent investment man-
agement while seeking to offer
shareholders the opportunity
to own securities exempt from
Florida intangible personal
property taxes.
Merrill Lynch Fund for Tomorrow, Inc........ Long-term growth through
investment in a portfolio of
good quality securities,
primarily common stock,
potentially positioned to
benefit from demographic and
cultural changes as they
affect consumer markets.
Merrill Lynch Fundamental Growth
Fund, Inc.................................. Long-term growth through
investment in a diversified
portfolio of equity securities
placing particular emphasis on
companies that have exhibited
above-average growth rate in
earnings.
Merrill Lynch Global Allocation
Fund, Inc.................................. High total return, consistent
with prudent risk, through a
fully-managed investment
policy utilizing United States
and foreign equity, debt and
money market securities, the
combination of which will be
varied from time to time both
with respect to types of
securities and markets in
response to changing market
and economic trends.
Merrill Lynch Global Bond Fund For
Investment and Retirement.................. High total investment return
from investment in a global
portfolio of debt instruments
denominated in various
currencies and multinational
currency units.
Merrill Lynch Global Convertible
Fund, Inc.................................. High total return from
investment primarily in an
internationally diversified
portfolio of convertible debt
securities, convertible
preferred stock and
"synthetic" convertible
securities consisting of a
combination of debt securities
or preferred stock and
warrants or options.
Merrill Lynch Global Holdings
(residents of Arizona must meet investor
suitability standards)..................... The highest total investment
return consistent with prudent
risk through worldwide
investment in an
internationally diversified
portfolio of securities.
</TABLE>

16
<PAGE>

<TABLE>
<C> <S>
Merrill Lynch Global Resources Trust........ Long-term growth and protection
of capital from investment in
securities of domestic and
foreign companies that possess
substantial natural resource
assets.
Merrill Lynch Global Utility Fund, Inc...... Capital appreciation and current
income through investment of at
least 65% of its total assets
in equity and debt securities
issued by domestic and foreign
companies which are primarily
engaged in the ownership or
operation of facilities used to
generate, transmit or
distribute electricity,
telecommunications, gas or
water.
Merrill Lynch Growth Fund for Investment and
Retirement................................. Growth of capital and,
secondarily, income from
investment in a diversified
portfolio of equity securities
placing principal emphasis on
those securities which
management of the fund believes
to be undervalued.
Merrill Lynch Healthcare Fund, Inc.
(residents of Wisconsin must meet investor
suitability standards)..................... Capital appreciation through
worldwide investment in equity
securities of companies that
derive or are expected to
derive a substantial portion of
their sales from products and
services in healthcare.
Merrill Lynch International
Equity Fund................................ Capital appreciation and,
secondarily, income by
investing in a diversified
portfolio of equity securities
of issuers located in countries
other than the United States.
Merrill Lynch Latin America Fund, Inc. ..... Capital appreciation by
investing primarily in Latin
American equity and debt
securities.
Merrill Lynch Maryland Municipal Bond Fund..
A portfolio of Merrill Lynch
Multi-State Municipal Series
Trust, a series fund, whose
objective is as high a level of
income exempt from Federal and
Maryland income taxes as is
consistent with prudent
investment management.
</TABLE>

17
<PAGE>

<TABLE>
<S> <C>
Merrill Lynch Massachusetts Limited Maturity
Municipal Bond Fund........................ A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is as high a
level of income exempt from Federal and
Massachusetts income taxes as is consistent
with prudent investment management through
investment in a portfolio primarily of
intermediate-term investment grade
Massachusetts Municipal Bonds.
Merrill Lynch Massachusetts Municipal Bond
Fund....................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is as high a level of
income exempt from Federal and
Massachusetts income taxes as is consistent
with prudent investment management.
Merrill Lynch Michigan Limited Maturity
Municipal Bond Fund........................ A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is a high
level of income exempt from Federal and
Michigan income taxes as is consistent with
prudent investment management through
investment in a portfolio primarily of
intermediate-term investment grade Michigan
Municipal Bonds.
Merrill Lynch Michigan Municipal
Bond Fund.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is as high a level of
income exempt from Federal and Michigan
income taxes as is consistent with prudent
investment management.
Merrill Lynch Minnesota Municipal
Bond Fund.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is as high a level of
income exempt from Federal and Minnesota
income taxes as is consistent with prudent
investment management.
Merrill Lynch Municipal Bond
Fund, Inc.................................. Tax-exempt income from three separate
diversified portfolios of municipal bonds.
</TABLE>

18
<PAGE>

<TABLE>
<S> <C>
Merrill Lynch Municipal Intermediate Term
Fund....................................... Currently the only portfolio of Merrill
Lynch Municipal Series Trust, a series
fund, whose objective is to provide as high
a level as possible of income exempt from
Federal income taxes by investing
in investment grade obligations with a dol-
lar weighted average maturity of five to
twelve years.
Merrill Lynch New Jersey Limited Maturity
Municipal Bond Fund........................ A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is as high a
level of income exempt from Federal and New
Jersey income taxes as is consistent with
prudent investment management through a
portfolio primarily of intermediate-term
investment grade New Jersey Municipal
Bonds.
Merrill Lynch New Jersey Municipal
Bond Fund.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is as high a level of
income exempt from Federal and New Jersey
income taxes as is consistent with prudent
investment management.
Merrill Lynch New York Limited Maturity
Municipal Bond Fund........................ A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is as high a
level of income exempt from Federal, New
York State and New York City income taxes
as is consistent with prudent investment
management through investment in a
portfolio primarily of intermediate-term
invest-ment grade New York Municipal Bonds.
Merrill Lynch New York Municipal
Bond Fund.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is as high a level of
income exempt from Federal, New York State
and New York City income taxes as is
consistent with prudent investment
management.
Merrill Lynch North Carolina Municipal Bond
Fund....................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is as high a level of
income exempt from Federal and North
Carolina income taxes as is consistent with
prudent investment management.
</TABLE>

19
<PAGE>

<TABLE>
<S> <C>
Merrill Lynch Ohio Municipal
Bond Fund.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is as high a level of
income exempt from Federal and Ohio income
taxes as is consistent with prudent
investment management.
Merrill Lynch Oregon Municipal
Bond Fund.................................. A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is as high a level of
income exempt from Federal and Oregon
income tax as is consistent with prudent
investment management.
Merrill Lynch Pacific Fund, Inc............. Capital appreciation by investing in equity
securities of corporations domiciled in Far
Eastern and Western Pacific countries,
including Japan, Australia, Hong Kong,
Singapore and the Philippines.
Merrill Lynch Pennsylvania Limited Maturity
Municipal Bond Fund........................ A portfolio of Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, a
series fund, whose objective is to provide
as high a level of income exempt from
Federal and Pennsylvania income taxes as is
consistent with prudent investment
management through investment in a
portfolio of intermediate-term investment
grade Pennsylvania Municipal Bonds.
Merrill Lynch Pennsylvania Municipal Bond
Fund....................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is as high a level of
income exempt from Federal and Pennsylvania
income taxes as is consistent with prudent
investment management.
Merrill Lynch Phoenix Fund, Inc............. Long-term growth of capital by investing in
equity and fixed income securities,
including tax-exempt securities, of issuers
in weak financial condition or experiencing
poor operating results believed to be
undervalued relative to the current or
prospective conditions of such issuer.
</TABLE>

20
<PAGE>

<TABLE>
<S> <C>
Merrill Lynch Ready Assets Trust............ Preservation of capital, liquidity and the
highest possible current income consistent
with the foregoing objectives from the
short-term money market securities in which
the Trust invests.
Merrill Lynch Retirement Reserves
Money Fund (available only if the
exchange occurs within certain retirement
plans)..................................... Currently the only portfolio of Merrill
Lynch Retirement Series Trust, a series
fund, whose objectives are current income,
preservation of capital and liquidity
available from investing in a diversified
portfolio of short-term money market
securities.
Merrill Lynch Short-Term Global
Income Fund, Inc........................... As high a level of current income as is con-
sistent with prudent investment management
from a global portfolio of high quality
debt securities denominated in various cur-
rencies and multinational currency units
and having remaining maturities not exceed-
ing three years.
Merrill Lynch Special Value Fund, Inc....... Long-term growth of capital from investments
in
securities, primarily common stocks, of
relatively small companies believed to have
special investment value and emerging
growth companies regardless of size.
Merrill Lynch Strategic Dividend Fund....... Long-term total return from investment in
dividend-paying common stocks which yield
more than Standard & Poor's 500 Composite
Stock Price Index.
Merrill Lynch Technology Fund, Inc.......... Capital appreciation through worldwide
investment in equity securities of
companies that derive or are expected to
derive a substantial portion of their sales
from products and services in technology.
Merrill Lynch Texas Municipal Bond
Fund....................................... A portfolio of Merrill Lynch Multi-State
Municipal Series Trust, a series fund,
whose objective is as high a level of
income exempt from Federal income taxes as
is consistent with prudent investment
management by investing primarily in a
portfolio of long-term, investment grade
obligations issued by the State of Texas,
its political subdivisions, agencies and
instrumentalities.
</TABLE>

21
<PAGE>

<TABLE>
<S> <C>
Merrill Lynch U.S.A. Government Reserves....
Preservation of capital, current income and
liquidity available from investing in
direct obligations of the U.S. Government
and repurchase agreements relating to such
securities.
Merrill Lynch Utility Income Fund, Inc...... High current income through investment in
equity and debt securities issued by
companies which are primarily engaged in
the ownership or operation of facilities
used to generate, transmit or distribute
electricity, telecommunications, gas or
water.
Merrill Lynch World Income Fund, Inc........ High current income by investing in a global
portfolio of fixed income securities
denominated in various currencies,
including multinational currencies.
</TABLE>

Before effecting an exchange, shareholders of the Fund should obtain a
currently effective prospectus of the fund into which the exchange is to be
made. Exercise of the exchange privilege is treated as a sale for Federal
income tax purposes and depending on the circumstances, a short- or long-term
capital gain or loss may be realized. In addition, an exchanging shareholder of
any of the funds may be subject to backup withholding unless such shareholder
certifies under penalty of perjury that the taxpayer identification number on
file with any such fund is correct, and that he is not otherwise subject to
backup withholding. See "Taxes".

To exercise the exchange privilege, shareholders may either contact their
listed securities dealer, who will advise the Fund of the exchange, or write to
the Transfer Agent requesting that the exchange be effected. Such letter must
be signed by an "eligible guarantor institution" as such is defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended, the existence
and validity of which may be verified by the Transfer Agent through the use of
industry publications. Shareholders of the Fund, and shareholders of the other
funds described above with shares for which certificates have not been issued,
may exercise the exchange privilege by wire through their securities dealer.
The Fund reserves the right to require a properly completed Exchange
Application. This exchange privilege may be modified or terminated at any time
in accordance with the rules of the Securities and Exchange Commission. The
Fund reserves the right to limit the number of times an investor may exercise
the exchange privilege. Certain funds may suspend the continuous offering of
their shares at any time and may thereafter resume such offering from time to
time. The exchange privilege is available only to U.S. shareholders in states
where the exchange legally may be made.

TAXES

FEDERAL

22
<PAGE>

Dividends paid by the Fund from its ordinary income and distributions of the
Fund's net realized short-term capital gains (together referred to hereafter as
"ordinary income dividends") are taxable to shareholders as ordinary income.
Distributions made from the Fund's net realized long-term capital gains
("capital gain dividends") are taxable to shareholders as long-term capital
gains, regardless of the length of time the shareholder has owned the Fund
shares. Distributions in excess of the Fund's earnings and profits will first
reduce the adjusted tax basis of a holder's shares and, after such adjusted tax
basis is reduced to zero, will constitute capital gains to such holder
(assuming the shares are held as a capital asset). Any loss upon the sale or
exchange of Fund shares held for six months or less will be treated as long-
term capital loss to the extent of any capital gain dividends received by the
shareholder.

Dividends are taxable to shareholders even though they are reinvested in
additional shares of the Fund. Not later than 60 days after the close of its
taxable year, the Fund will provide its shareholders with a written notice
designating the amounts of any ordinary income dividends or capital gain
dividends. Since none of the Fund's net investment income arises from dividends
on common or preferred stock, none of its distributions are eligible for the
dividends received deduction for corporations provided in the Code. If the Fund
pays a dividend in January which was declared in the previous October, November
or December to shareholders of record on a specified date in one of such
months, then such dividend will be treated for tax purposes as being paid by
the Fund and received by its shareholders on December 31 of the year in which
such dividend was declared.

If the value of assets held by the Fund declines, the Board of Directors may
authorize a reduction in the number of outstanding shares in shareholders'
accounts so as to preserve a net asset value of $1.00 per share. After such a
reduction, the basis of eliminated shares would be added to the basis of
shareholders' remaining Fund shares, and any shareholders disposing of shares
at that time may recognize a capital loss. Distributions, including
distributions reinvested in additional shares of the Fund, will nonetheless be
fully taxable, even if the number of shares in shareholders' accounts has been
reduced as described above.

Under certain provisions of the Code, some shareholders may be subject to a
31% withholding tax on ordinary income dividends, capital gain dividends and
redemption payments ("backup withholding"). Generally, shareholders subject to
backup withholding will be those for whom no certified taxpayer identification
number is on file with the Fund or who, to the Fund's knowledge, have furnished
an incorrect number. When establishing an account, an investor must certify
under penalty of perjury that such number is correct and that such investor is
not otherwise subject to backup withholding.

If a shareholder exercises the exchange privilege within 90 days of acquiring
the shares, then the loss the shareholder can recognize on the exchange will be
reduced (or the gain increased) to the extent the sales charge paid to the Fund
(including any sales charge paid with respect to shares that were exchanged,
within 90 days after being acquired, for shares of the Fund) reduces any sales
charge the shareholder would have owed upon purchase of the new Class A shares
in the absence of the exchange privilege. Instead, such sales charge will be
treated as an amount paid for the new Class A shares.

23
<PAGE>

The Code requires a RIC to pay a nondeductible 4% excise tax to the extent it
does not distribute, during each calendar year, 98% of its ordinary income,
determined on a calendar year basis, and 98% of its capital gains, determined,
in general, on an October 31 year end, plus certain undistributed amounts from
previous years. While the Fund intends to distribute its income and gains in
the manner necessary to avoid imposition of the excise tax, there can be no
assurance that sufficient amounts of the Fund's taxable ordinary income and
capital gains will be distributed to avoid entirely the imposition of the tax.
In such event, the Fund will be liable for the tax only on the amount by which
it does not meet the foregoing distribution requirements.

Ordinary income dividends and capital gain dividends may also be subject to
state and local taxes.

GENERAL INFORMATION

DESCRIPTION OF SHARES

The Declaration of Trust of the Fund permits the Trustees to issue an
unlimited number of full and fractional shares of a single class and to divide
or combine the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interest in the Fund. Each share
represents an equal proportionate interest in the Fund with each other share.
Upon liquidation of the Fund, shareholders are entitled to share pro rata in
the net assets of the Fund available for distribution to shareholders. Shares
have no preemptive or conversion rights. The rights of redemption and exchange
are described elsewhere herein and in the Prospectus of the Fund. Shares of the
Fund are fully paid and non-assessable by the Fund.

Shareholders are entitled to one vote for each full share held and fractional
votes for fractional shares held in the election of Trustees and on other
matters submitted to the vote of shareholders. Voting rights are not
cumulative, so that the holders of more than 50% of the shares voting in the
election of Trustees can, if they choose to do so, elect all the Trustees of
the Fund, in which event the holders of the remaining shares are unable to
elect any person as a Trustee. No amendment may be made to any Declaration of
Trust without the affirmative vote of a majority of the outstanding shares of
the Fund.

CUSTODIAN

The Bank of New York, 1 Wall Street, New York, New York 10286, acts as
custodian of the Fund's assets. The custodian is responsible for safeguarding
and controlling the Fund's cash and securities, handling the receipt and
delivery of securities and collecting interest on the Fund's investments.

24
<PAGE>

TRANSFER AGENT

Financial Data Services, Inc., 4800 Deer Lake Drive East, Jacksonville,
Florida 32246-6484, acts as the Fund's transfer agent. The transfer agent is
responsible for the issuance, transfer and redemption of shares and the
opening, maintenance and servicing of shareholder accounts.

INDEPENDENT AUDITORS

Deloitte & Touche, 117 Campus Drive, Princeton, New Jersey 08540, has been
selected as the independent auditors of the Fund. The selection of independent
auditors is subject to ratification by the shareholders of the Fund. The
independent auditors are responsible for auditing the annual financial
statements of the Fund.

LEGAL COUNSEL

Brown & Wood, One World Trade Center, New York, New York 10048-0557, is
counsel for the Fund.

REPORTS TO SHAREHOLDERS

The fiscal year of the Fund ends on the last day of November of each year.
The Fund will send to its shareholders at least semi-annually reports showing
its portfolio and other information. An annual report containing financial
statements audited by independent auditors is sent to the shareholders each
year. After the end of each year shareholders will receive federal income tax
information regarding dividends and capital gains distributions.

ADDITIONAL INFORMATION

The Prospectus and Statement of Additional Information do not contain all the
information set forth in the Registration Statement and the exhibits relating
thereto, which the Fund has filed with the Securities and Exchange Commission,
Washington, D.C., under the Securities Act of 1933 and the Investment Company
Act, to which reference is hereby made.

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

The Declaration of Trust establishing the Fund, a copy of which, together
with all amendments thereto (the "Declaration"), is on file in the office of
the Secretary of the Commonwealth of Massachusetts. The Declaration provides
that the name "Merrill Lynch U.S. Treasury Money Fund" refers to the Trustees
under the Declaration collectively as Trustees, but not as individuals or
personally; and except for his own bad faith, willful misfeasance, gross
negligence or reckless disregard of his duties, no Trustee, shareholder,
officer, employee or agent of the Fund shall be held to any personal liability,
nor shall resort be had to their private property for the satisfaction of any
obligation or claim or otherwise in connection with the affairs of the Fund but
the "Trust Property" only shall be liable.

25
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Trustees and Shareholders,
Merrill Lynch U.S. Treasury Money Fund:

We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Merrill Lynch U.S. Treasury Money Fund as of
November 30, 1993, the related statements of operations for the year then ended
and changes in net assets for each of the years in the two year period then
ended, and the financial highlights for each of the years in the two-year
period then ended and the period April 15, 1991 (commencement of operations) to
November 30, 1991. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and the financial highlights based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at
November 30, 1993 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Merrill Lynch U.S.
Treasury Money Fund as of November 30, 1993, the results of its operations, the
changes in its net assets, and the financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE
Princeton, New Jersey
December 31, 1993

26
<PAGE>

<TABLE>
Merrill Lynch U.S. Treasury Money Fund
Schedule of Investments as of November 30, 1993 (in Thousands)
<CAPTION>
Face Interest Maturity Value
Issue Amount Rate Date (Note 1a)
<S> <C> <C> <C> <C>
US Government Obligations--100.2%
US Treasury Bills* $2,940 3.015% 12/02/93 $ 2,940
4,853 2.93 12/23/93 4,844
5,000 2.915 12/30/93 4,988
545 2.96 1/06/94 543
1,710 2.98 1/06/94 1,705
1,021 3.005 1/13/94 1,017
776 3.03 1/13/94 773
732 3.08 1/20/94 729
6,135 3.11 1/20/94 6,108
4,006 3.12 1/20/94 3,988
250 3.05 1/27/94 249
1,263 3.075 1/27/94 1,257
1,538 3.08 1/27/94 1,530
1,030 3.10 2/03/94 1,024
1,799 3.08 2/10/94 1,788
894 3.095 2/10/94 888
15,739 3.11 2/10/94 15,641
800 3.18 2/10/94 795
765 3.20 2/10/94 760
3,624 3.08 3/10/94 3,592
555 3.245 3/10/94 550
855 3.085 4/07/94 845
500 3.24 4/07/94 494
1,189 3.14 4/14/94 1,175
112 3.19 4/28/94 110
119 3.23 5/12/94 117
400 3.28 5/12/94 394
232 3.24 5/19/94 228
704 3.265 5/19/94 693
1,252 3.28 5/19/94 1,233
151 3.265 6/30/94 148
500 3.31 7/28/94 489
2,000 3.245 9/22/94 1,944

US Treasury Notes 1,700 7.625 12/31/93 1,706
1,000 4.875 1/31/94 1,003
364 6.875 2/15/94 367
1,500 5.75 3/31/94 1,512
1,500 5.125 5/31/94 1,513
500 4.25 10/31/94 503
500 4.125 6/30/95 501

Total US Government Obligations (Cost--$70,684) 70,684

Total Investments (Cost--$70,684)--100.2% 70,684
Liabilities in Excess of Other Assets--(0.2%) (140)
-------
Net Assets--100.0% $70,544
=======
<FN>
* US Treasury Bills are traded on a discount basis; the interest rates shown are the discount rates paid at the time of purchase
by the Fund.

See Notes to Financial Statements.
</TABLE>
<PAGE>

<TABLE>
Merrill Lynch U.S. Treasury Money Fund
<CAPTION>
Statement of Assets and Liabilities as of November 30, 1993
<S> <C> <C>
Assets:
Investments, at value (identified cost--$70,683,969*) (Note 1a) $70,684,129
Cash 1,752
Interest receivable 102,419
Deferred organization expenses (Note 1d) 26,592
Prepaid registration fees and other assets (Note 1d) 51,072
------------
Total assets 70,865,964
------------
Liabilities:
Payables:
Beneficial interest redeemed $ 225,773
Distributor (Note 2) 19,890
Investment adviser (Note 2) 11,011 256,674
---------
Accrued expenses and other liabilities 65,358
-----------
Total liabilities 322,032
-----------
Net Assets $70,543,932
===========
Net Assets Consist of:
Shares of beneficial interest, $.10 par value, unlimited number of shares authorized $ 7,054,377
Paid-in capital in excess of par 63,489,395
Unrealized appreciation on investments--net 160
-----------
Net Assets--Equivalent to $1.00 per share based on 70,543,772 shares of beneficial
interest outstanding $70,543,932
===========
<FN>
* Cost for Federal income tax purposes. As of November 30, 1993, net unrealized appreciation for
Federal income tax purposes aggregated $160, of which $5,748 related to appreciated securities and
$5,588 related to depreciated securities.

See Notes to Financial Statements.
</TABLE>
<PAGE>

<TABLE>
Merrill Lynch U.S. Treasury Money Fund
<CAPTION>
Statement of Operations for the Year Ended November 30, 1993
<S> <C> <C>
Investment Income (Note 1c):
Interest and amortization of premium and discount earned $ 2,390,892

Expenses:
Investment advisory fees (Note 2) $ 379,689
Distribution fees (Note 2) 92,033
Trustees' fees and expenses 58,094
Professional fees 55,035
Registration fees (Note 1d) 47,550
Printing and shareholder reports 31,784
Accounting services (Note 2) 26,584
Transfer agent fees (Note 2) 24,640
Amortization of organization expenses (Note 1d) 11,208
Custodian fees 1,977
Other 1,312
---------
Total expenses before reimbursement 729,906
Reimbursement of expenses (Note 2) (327,310)
---------
Total expenses after reimbursement 402,596
-----------
Investment income--net 1,988,296

Realized Gain on Investments--Net (Note 1c) 33,592
Change in Unrealized Appreciation on Investments--Net 41,965
-----------
Net Increase in Net Assets Resulting from Operations $ 2,063,853
===========
See Notes to Financial Statements.
</TABLE>
<PAGE>

<TABLE>
Merrill Lynch U.S. Treasury Money Fund
Statements of Changes in Net Assets
<CAPTION> For the Year Ended November 30,
1993 1992
<S> <C> <C>
Increase (Decrease) in Net Assets:

Operations:
Investment income--net $ 1,988,296 $ 2,309,112
Realized gain on investments--net 33,592 183,550
Change in unrealized appreciation/depreciation on investments--net 41,965 (79,268)
------------ -----------
Net increase in net assets resulting from operations 2,063,853 2,413,394
------------ -----------
Dividends & Distributions to Shareholders (Note 1e):
Investment income--net (1,988,296) (2,309,112)
Realized gain on investments--net (33,592) (146,087)
------------ -----------
Net decrease in net assets resulting from dividends and distributions to shareholders (2,021,888) (2,455,199)
------------ -----------
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 169,140,970 200,067,719
Net asset value of shares issued to shareholders in reinvestment of dividends (Note 1e) 2,019,817 2,443,968
------------ -----------
171,160,787 202,511,687
Cost of shares redeemed (181,636,527) (215,792,824)
------------ -----------
Net decrease in net assets derived from beneficial interest transactions (10,475,740) (13,281,137)
------------ -----------
Net Assets:
Total decrease in net assets (10,433,775) (13,322,942)
Beginning of year 80,977,707 94,300,649
------------ -----------
End of year $ 70,543,932 $80,977,707
============ ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>

<TABLE>
Merrill Lynch U.S. Treasury Money Fund
Financial Highlights
<CAPTION> For the Period
For the Year Ended November 30, April 15, 1991++
1993 1992 to Nov. 30, 1991
<S> <C> <C> <C>
The following per share data and ratios have been derived from
information provided in the financial statements.

Increase (Decrease) in Net Asset Value:

Per Share Operating Performance:
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
--------- -------- ---------
Investment income--net .0262 .0312 .0328
Realized and unrealized gain on investments--net .0010 .0014 .0029
--------- -------- ---------
Total from investment operations .0272 .0326 .0357
--------- -------- ---------
Less dividends and distributions:
Investment income--net (.0262) (.0312) (.0328)
Realized gain on investments--net (.0004) (.0020) (.0029)++++
--------- -------- ---------
Total dividends and distributions (.0266) (.0332) (.0357)
--------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
========= ======== =========
Total Investment Return 2.69% 3.36% 5.58%*
========= ======== =========
Ratios to Average Net Assets:
Expenses, net of reimbursement and excluding distribution fees .41% .53% .27%*
========= ======== =========
Expenses, net of reimbursement .53% .65% .39%*
========= ======== =========
Expenses .96% 1.16% 1.55%*
========= ======== =========
Investment income and realized gain on investments--net 2.66% 3.41% 5.45%*
========= ======== =========
Supplemental Data:
Net assets, end of period (in thousands) $ 70,544 $ 80,978 $ 94,301
========= ======== =========
<FN>
*Annualized.
++Commencement of Operations.
++++Includes unrealized gain (loss).
See Notes to Financial Statements.
</TABLE>
<PAGE>

Notes to Financial Statements

1. Significant Accounting Policies:
Merrill Lynch U.S. Treasury Money Fund (the "Fund") is registered
under the Investment Company Act of 1940 as a diversified, open-
end investment management company. The following is a summary of
significant accounting policies followed by the Fund.

(a) Valuation of investments--The Treasury securities in which
the Fund invests are traded primarily in the over-the-counter
markets. Except as set forth below, these securities are valued
at the most recent bid price or yield equivalent as obtained from
dealers that make markets in Treasury securities. When securities
are valued with sixty days or less to maturity, the difference
between the valuation existing on the sixty-first day before maturity
and maturity value is amortized on a straight-line basis to maturity.
Investments maturing within sixty days from their date of acquisition
are valued at amortized cost, which approximates market value.
Assets for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the
direction of the Trustees of the Fund.

(b) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income
to its shareholders. Therefore, no Federal income tax provision
is required.

(c) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income (including amortization of
premium and discount) is recognized on the accrual basis. Realized
gains and losses on security transactions are determined on the
identified cost basis.

(d) Deferred organization expenses and prepaid registration fees--
Deferred organization expenses are charged to expense on a straight-
line basis over a five-year period. Prepaid registration fees are
charged to expense as the related shares are issued.

(e) Dividends to shareholders--The Fund declares dividends daily
and reinvests daily such dividends in additional fund shares at net
asset value. Dividends are declared from the total of net investment
income and net realized gain or loss on investments. However, un-
realized appreciation or depreciation will not be included in the
daily dividend to shareholders.

2. Investment Advisory Agreement and Transactions with
Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management ("MLAM"). MLAM is the name under
which Merrill Lynch Investment Management, Inc. ("MLIM") does
business. MLIM is an indirect wholly-owned subsidiary of Merrill
Lynch & Co., Inc.

MLAM is responsible for the management of the Fund's portfolio
and provides the necessary personnel, facilities, equipment and
certain other services necessary to the operations of the Fund.
For such services, the Fund pays a monthly fee at the annual
rate of 0.50% of the average daily net assets of the Fund. The
Investment Advisory Agreement obligates MLAM to reimburse the
Fund to the extent the Fund's expenses (excluding interest,
taxes, distribution fees, brokerage fees and commissions, and
extraordinary charges such as litigation costs) exceed 2.5% of
the Fund's first $30 million of average daily net assets, 2.0% of
the next $70 million of average daily net assets, and 1.5% of the
remaining average daily net assets.

No fee payment will be made to MLAM during the period which will
cause such expenses to exceed the pro rata expense limitation at
the time of such payment.

For the year ended November 30, 1993, MLAM earned fees of
$379,689, of which $327,310 was voluntarily waived.
<PAGE>

The Fund has adopted a Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the Investment Company Act of 1940 pursuant to
which Merrill Lynch Funds Distributor, Inc. ("MLFD") receives a
fee from the Fund at the end of each month at the annual rate of
0.125% of the average daily net assets of the Fund. This fee is
to compensate MLFD for the services it provides and the expenses
borne by MLFD under the Distribution Agreement. As authorized by
the Plan, MLFD has entered into an agreement with Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S") which provides for the
compensation of MLPF&S for providing distribution-related services
to the Fund. Such services relate to the sale, promotion, and
marketing of the shares of the Fund. For the year ended
November 30, 1993, MLFD earned $92,033 under the Plan, all
of which was paid to MLPF&S pursuant to the agreement.

Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary
of Merrill Lynch & Co., Inc., is the Fund's transfer agent.

Accounting services are provided to the Fund by MLAM at cost.

Certain officers and/or trustees of the Fund are officers and/or
directors of MLIM, FDS, MLFD, MLPF&S and/or Merrill Lynch & Co., Inc.

3. Shares of Beneficial Interest:
The number of shares purchased and redeemed during the periods
corresponds to the amounts included in the Statements of Changes
in Net Assets for net proceeds from sale of shares and cost of
shares redeemed, respectively, since shares are recorded at $1.00
per share.
<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>

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

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Objectives and Policies.............................................................. 2
Management of the Fund.......................................................................... 2
Trustees and Officers.......................................................................... 2
Management and Advisory
Arrangements.................................................................................. 4
Purchase and Redemption of Shares............................................................... 5
Purchase and Redemption of Shares
through Merrill Lynch Retirement Plans......................................................... 7
Purchase by Retirement Plans................................................................... 7
Redemptions by Retirement Plans................................................................ 7
Confirmations.................................................................................. 8
Portfolio Transactions.......................................................................... 8
Determination of Net Asset Value................................................................ 9
Yield Information............................................................................... 10
Shareholder Services............................................................................ 11
Investment Account............................................................................. 11
Automatic Investment Plan...................................................................... 11
Accrued Monthly Payout Plan.................................................................... 11
Systematic Withdrawal Plans.................................................................... 12
Retirement Plans............................................................................... 12
Exchange Privilege............................................................................. 13
Taxes........................................................................................... 22
Federal........................................................................................ 22
General Information............................................................................. 24
Description of Shares.......................................................................... 24
Custodian...................................................................................... 24
Transfer Agent................................................................................. 25
Independent Auditors........................................................................... 25
Legal Counsel.................................................................................. 25
Reports to Shareholders........................................................................ 25
Additional Information......................................................................... 25
Independent Auditors' Report.................................................................... 26
Financial Statements............................................................................ 27
</TABLE>

Code #11625
Statement of Additional Information

(ART WORK)

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

MERRILL LYNCH U.S. TREASURY MONEY FUND

March 29, 1994

Distributor: Merrill Lynch Funds Distributor, Inc.
<PAGE>

GRAPHICS APPENDIX LIST

PAGE WHERE
GRAPHIC
APPEARS DESCRIPTION OF GRAPHIC OR CROSS-REFERENCE
- --------------------------------------------------------------------------------

Back cover of Profile of head of eagle appearing over a scroll
Prospectus and showing a graph.
back cover of
Statement of
Additional
Information