AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 30, 1999
SECURITIES ACT FILE NO. 33-37537
INVESTMENT COMPANY ACT FILE NO. 811-6211
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 10 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 12 [X]
(CHECK APPROPRIATE BOX OR BOXES)
---------------
MERRILL LYNCH U.S. TREASURY MONEY FUND
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
---------------
800 SCUDDERS MILL ROAD
PLAINSBORO, NEW JERSEY 08536
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(609) 282-2800
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
---------------
TERRY K. GLENN
MERRILL LYNCH U.S. TREASURY MONEY FUND
800 SCUDDERS MILL ROAD, PLAINSBORO, NEW JERSEY
MAILING ADDRESS:
P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011
(NAME AND ADDRESS OF AGENT FOR SERVICE)
---------------
COPIES TO:
<TABLE>
<S> <C>
COUNSEL FOR THE FUND: MICHAEL J. HENNEWINKEL, ESQ.
BROWN & WOOD LLP MERRILL LYNCH ASSET MANAGEMENT
ONE WORLD TRADE CENTER P.O. BOX 9011
NEW YORK, NEW YORK 10048-0557 PRINCETON, NEW JERSEY
ATTENTION: THOMAS R. SMITH, JR., ESQ. 08543-9011
</TABLE>
THOMAS D. JONES, III, ESQ.
MERRILL LYNCH ASSET MANAGEMENT
P.O. BOX 9011
PRINCETON, NEW JERSEY 08543-9011
---------------
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK
APPROPRIATE BOX)
[X] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
[ ] This post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.
---------------
TITLE OF SECURITIES BEING REGISTERED: SHARES OF BENEFICIAL INTEREST, PAR VALUE
$.10 PER SHARE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
(MERRILL LYNCH LOGO)
Prospectus
Merrill Lynch U.S. Treasury Money Fund
March 30, 1999
This Prospectus contains information you should know before
investing, including information about risks. Please read
it before you invest and keep it for future reference.
The Securities and Exchange Commission has not approved or
disapproved these securities or passed upon the adequacy of
this Prospectus. Any representation to the contrary is a
criminal offense.
<PAGE>
Table of Contents
<TABLE>
<S> <C>
PAGE
[GRAPHIC]
KEY FACTS
-------------------------------------------------------------
The Merrill Lynch U.S. Treasury Money Fund at a Glance ... 3
Risk/Return Bar Chart .................................... 4
Fees and Expenses ........................................ 5
[GRAPHIC]
DETAILS ABOUT THE FUND
-------------------------------------------------------------
How the Fund Invests ..................................... 6
Investment Risks ......................................... 7
[GRAPHIC]
YOUR ACCOUNT
-------------------------------------------------------------
How to Buy, Sell and Transfer Shares ..................... 8
How Shares are Priced ....................................12
Dividends and Taxes ......................................12
[GRAPHIC]
MANAGEMENT OF THE FUND
-------------------------------------------------------------
Merrill Lynch Asset Management ...........................14
Financial Highlights .....................................15
[GRAPHIC]
FOR MORE INFORMATION
-------------------------------------------------------------
Shareholder Reports ..............................Back Cover
Statement of Additional Information ..............Back Cover
</TABLE>
MERRILL LYNCH U.S. TREASURY MONEY FUND
<PAGE>
Key Facts [GRAPHIC]
In an effort to help you better understand the many concepts involved in making
an investment decision, we have defined the highlighted terms in this
prospectus in the sidebar.
SHORT-TERM MARKETABLE SECURITIES -- securities with maturities of not more than
762 days (25 months).
DIRECT OBLIGATIONS OF THE U.S. TREASURY -- Securities issued directly by The
U.S. Treasury rather than by any Government agency or instrumentality.
THE MERRILL LYNCH U.S. TREASURY MONEY FUND AT A GLANCE
- --------------------------------------------------------------------------------
What are the Fund's Investment objectives?
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 that are DIRECT OBLIGATIONS OF
THE U.S. TREASURY.
What are the Fund's main investment strategies?
The Fund tries to achieve its goals by investing exclusively in a diversified
portfolio of short-term securities that are direct obligations of the U.S.
Treasury. Fund management decides on which securities to buy and sell based on
its assessment of the relative values of different securities and future
interest rates. Fund management seeks to improve the Fund's yield by taking
advantage of yield differentials that occur between securities of a similar
kind. We cannot guarantee that the Fund will achieve its goals.
What are the main risks of investing in the Fund?
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Fund.
Who should invest?
The Fund may be an appropriate investment for you if you:
o Are looking for preservation of capital.
o Are looking for current income and liquidity.
o Are investing with short term goals, such as for cash reserves.
MERRILL LYNCH U.S. TREASURY MONEY FUND
3
<PAGE>
[GRAPHIC] Key Facts
YIELD -- the income generated by an investment in the Fund.
RISK/RETURN BAR CHART
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the Fund. The bar chart shows changes in the Fund's performance
from year to year for each complete calendar year since the Fund's inception.
The table shows the average annual total returns of the Fund for the periods
shown. How the Fund performed in the past is not necessarily an indication of
how the Fund will perform in the future.
(A bar chart appears. See the table below for plot points.)
1992 1993 1994 1995 1996 1997 1998
3.17% 2.70% 3.39% 5.02% 4.61% 4.68% 4.61%
During the period shown in the bar chart, the highest return for a quarter was
1.44% (quarter ended September 30, 1991) and the lowest return for a quarter
was 0.65% (quarter ended March 31, 1994).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
(AS OF THE CALENDAR YEAR ENDED PAST PAST SINCE
DECEMBER 31, 1998) ONE YEAR FIVE YEARS INCEPTION
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Merrill Lynch U.S. Treasury Money Fund 4.61% 4.46% 4.17%+
- ------------------------------------------------------------------------------------
</TABLE>
+ Inception date is April 15, 1991.
YIELD INFORMATION
- --------------------------------------------------------------------
The YIELD on Fund shares normally will go up and down on a daily basis.
Therefore, yields for any given past periods are not an indication or
representation of future yields. The Fund's yield is affected by changes in
interest rates, average portfolio maturity and operating expenses. Current
yield information may not provide the basis for a comparison with bank deposits
or other investments, which pay a fixed yield over a stated period of time. To
obtain the Fund's current 7-day yield, call 1-800-221-7210.
MERRILL LYNCH U.S. TREASURY MONEY FUND
4
<PAGE>
UNDERSTANDING EXPENSES
Fund investors pay various fees and expenses, either directly or indirectly.
Listed below are some of the main types of expenses, which all mutual funds may
charge:
EXPENSES PAID INDIRECTLY BY THE SHAREHOLDER.
ANNUAL FUND OPERATING EXPENSES -- expenses that cover the costs of operating
the Fund.
MANAGEMENT FEE -- a fee paid to the Manager for managing the Fund.
DISTRIBUTION FEES -- fees used to support the Fund's marketing and distribution
efforts, such as compensating Financial Consultants, advertising and promotion.
FEES AND EXPENSES
- --------------------------------------------------------------------------------
This table shows the different fees and expenses that you may pay if you buy
and hold shares of the Fund. Future expenses may be greater or less than those
indicated below.
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
- -------------------------------------------------------------------------------------------
MANAGEMENT FEE(C) 0.50%
- -------------------------------------------------------------------------------------------
DISTRIBUTION (12B-1) FEES(A) 0.13%
- -------------------------------------------------------------------------------------------
Other Expenses (including transfer agency fees)(b) 0.47%
- -------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses(c) 1.10%
- -------------------------------------------------------------------------------------------
</TABLE>
(a) The Fund is authorized to pay Merrill Lynch distribution fees of 0.125%
each year under a distribution plan that the Fund has adopted under rule
12b-1. For the fiscal year ended November 30, 1998, $60,006 was paid to
Merrill Lynch pursuant to the distribution plan.
(b) The Fund pays the Transfer Agent $15.00 for each shareholder account and
reimburses the Transfer Agent's out-of-pocket expenses. For the fiscal
year ended November 30, 1998, the Fund paid the Transfer Agent fees
totaling $25,559. The Manager provides accounting services to the Fund at
its cost. For the fiscal year ended November 30, 1998, the Fund reimbursed
the Manager $30,449 for these services.
(c) The Manager agreed to voluntarily waive $176,379 of its fee and reimburse
the Fund for additional expenses of $1,349 for the fiscal year ended
November 30, 1998. Total Fund Operating Expenses for the year have been
calculated without the reductions caused by the waivers and reimbursement
because the Manager may cease such a waiver of fees and reimbursement of
expenses at any time without notice. The Total Fund Operating Expenses,
net of the waiver and reimbursement, was 0.75%.
EXAMPLE:
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other money-market funds.
This example assumes that you invest $10,000 in the Fund for the time periods
indicated, that your investment has a 5% return each year and that the Fund's
operating expenses remain the same. This assumption is not meant to indicate
you will receive a 5% annual rate of return. Your annual return may be more or
less than the 5% used in this example. Although your actual costs may be higher
or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------
<S> <C> <C> <C>
$ 112 $350 $606 $1,340
- --------------------------------------------
</TABLE>
MERRILL LYNCH U.S. TREASURY MONEY FUND
5
<PAGE>
Details About the Fund [GRAPHIC]
ABOUT THE
PORTFOLIO MANAGER
Marie Dwyer is a Vice President and the portfolio manager of the Fund. Ms.
Dwyer has been a Vice President of Merrill Lynch Asset Management since 1991
and an Assistant Vice President from 1990 to 1991.
ABOUT THE MANAGER
The Fund is managed by
Merrill Lynch Asset Management.
HOW THE FUND INVESTS
- --------------------------------------------------------------------------------
The Fund seeks preservation of capital, liquidity and current income. The Fund
tries to achieve its goals by investing exclusively in a diversified portfolio
of short-term marketable securities that are direct obligations of the U.S.
Treasury. In seeking to achieve the Fund's objectives, Fund management varies
the kinds of U.S. Treasury obligations and the average maturity. Fund
management decides on which securities to buy and sell based on their
assessment of the relative values of different securities and future interest
rates. Fund management seeks to improve the Fund's yield by taking advantage of
yield differential that occurs between securities of a similar kind. For
example, market conditions frequently result in similar securities trading at
different prices. Fund management seeks to improve the Fund's yield by buying
and selling securities based on these yield differences.
The Fund may buy or sell U.S. Treasury securities on a forward commitment
basis. In these transactions, the Fund buys the securities at an established
price with payment and delivery taking place in the future. The value of the
security on the delivery date may be more or less than its purchase price.
The Fund may also buy securities on a when issued basis, and it may purchase or
sell portfolio securities for delayed delivery. In these transactions, the Fund
buys or sells securities with payment and delivery taking place in the future.
The Fund enters into these transactions to secure what Fund management
considers to be a good yield and price to the Fund at the time of entering into
the transaction.
The Fund may not invest in securities that are issued or guaranteed by U.S.
Government entities, but not backed by the full faith and credit of the United
States.
MERRILL LYNCH U.S. TREASURY MONEY FUND
6
<PAGE>
INVESTMENT RISKS
- --------------------------------------------------------------------------------
This section contains a summary discussion of the general risks of investing in
the Fund. As with any mutual fund, there can be no guarantee that the Fund will
meet its goals or that the Fund's performance will be positive for any period
of time. Direct U.S. Treasury obligations are generally considered to have the
lowest principal risk among money market securities. Historically, direct U.S.
Treasury obligations have generally had lower rates of return than other
potentially more risky money market securities.
SELECTION RISK -- Selection risk is the risk that the securities that Fund
management selects will underperform other funds with similar investment
objectives and investment strategies.
INTEREST RATE RISK -- Interest rate risk is the risk that prices of money
market securities generally increase when interest rates decline and decrease
when interest rates increase.
SHARE REDUCTION RISK -- 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.
WHEN ISSUED SECURITIES, DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS --
When issued and delayed delivery securities and forward commitments involve the
risk that the security the Fund buys will lose value prior to its delivery.
There also is the risk that the security will not be issued or that the other
party will not meet its obligation. If this occurs, the Fund loses both the
investment opportunity for the assets it has set aside to pay for the security
and any gain in the security's price.
BORROWING RISK -- The Fund may borrow only to meet redemptions. Borrowing may
exaggerate changes in the net asset value of Fund shares and in the yield on
the Fund's portfolio. Borrowing will cost the Fund interest expense and other
fees. The cost of borrowing money may reduce the Fund's return.
STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------
If you would like further information about the Fund, including how it invests,
please see the Statement of Additional Information.
MERRILL LYNCH U.S. TREASURY MONEY FUND
7
<PAGE>
Your Account [GRAPHIC]
HOW TO BUY, SELL AND TRANSFER SHARES
- --------------------------------------------------------------------------------
The chart below summarizes how to buy, sell and transfer shares through Merrill
Lynch or other securities dealers. You may also buy shares through the Transfer
Agent. To learn more about buying shares through the Transfer Agent, call
1-800-221-7210. Because the selection of a mutual fund involves many
considerations, your Merrill Lynch Financial Consultant may help you with this
decision.
The Fund reserves the right to redeem shares of your account if you do not
maintain a total investment value of at least $1,000. You will be notified if
your account is less than $1,000 and will be allowed two months to make
additions before the redemption is processed.
MERRILL LYNCH U.S. TREASURY MONEY FUND
8
<PAGE>
<TABLE>
<CAPTION>
IF YOU WANT TO YOUR CHOICES INFORMATION IMPORTANT FOR YOU TO KNOW
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C><C> <C>
Buy Shares Determine the amount of The minimum initial investment for the Fund is $5,000 for all
your investment accounts except:
o $300 for accounts advised by banks and registered investment
advisers
o $100 for retirement plans
(The minimums for initial investments may be waived under certain
circumstances.)
----------------------------------------------------------------------------------------------------------
Have your Merrill Lynch Share purchase orders are effective on the date Federal Funds
Financial Consultant or become available to the Fund. Generally, purchase orders placed
securities dealer submit your through Merrill Lynch will be effective on the day following the day
purchase order the order is placed. Investors who wish same-day effectiveness should
purchase by wire as described below.
----------------------------------------------------------------------------------------------------------
Purchase by Wire You may purchase shares of the Fund by wiring Federal Funds to First
Union National Bank of Florida. You should give your financial
institution the following wire instructions: ABA#063000021,
DDA#2112600061186, Financial Data Services, Inc. The wire should be
identified as a payment to Merrill Lynch U.S. Treasury Fund and
should include the shareholder's name and account number.
----------------------------------------------------------------------------------------------------------
Or contact the Transfer Agent To purchase shares directly, call the Transfer Agent at
1-800-MER-FUND and request a purchase application. Mail the
completed purchase application to the Transfer Agent at the address
on the inside back cover of this prospectus.
- -----------------------------------------------------------------------------------------------------------------------------
Add to Your Purchase additional shares The minimum investment for additional purchases is $1,000 for all
Investment accounts except:
o $100 for accounts advised by banks and registered investment
advisers
o $1 for retirement plans.
(The minimums for additional purchases may be waived under
certain circumstances.)
----------------------------------------------------------------------------------------------------------
Acquire additional shares All dividends are automatically reinvested without a sales charge. If
through the automatic you want to receive your dividends in cash you may enroll in the
dividend reinvestment plan Accrued Monthly Payout Plan.
----------------------------------------------------------------------------------------------------------
Participate in the automatic You may invest a specific amount ($50 minimum) on a periodic basis
investment plan through certain Merrill Lynch investment or central asset accounts.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
MERRILL LYNCH U.S. TREASURY MONEY FUND
9
<PAGE>
[GRAPHIC] Your Account
<TABLE>
<CAPTION>
IF YOU WANT TO YOUR CHOICES INFORMATION IMPORTANT FOR YOU TO KNOW
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Transfer Shares to Transfer to a participating You may transfer your Fund shares only to another securities dealer
Another Securities securities dealer that has entered into an agreement with Merrill Lynch. All
Dealer shareholder services will be available for the transferred shares. You
may only purchase additional shares of funds previously owned
before the transfer. All future trading of these assets must be
coordinated by the receiving firm.
----------------------------------------------------------------------------------------------------------
Transfer to a non-participating You must either:
securities dealer o Transfer your shares to an account with the Transfer Agent; or
o Sell your shares.
- -----------------------------------------------------------------------------------------------------------------------------
Sell Your Shares Have your Merrill Lynch To ensure that your redemption request will be priced at the net
Financial Consultant or asset value on the day of your request, you must submit your request
securities dealer submit your to your dealer prior to the determination of net asset value of the
sales order Fund (generally 4:00 p.m. Eastern time). Any redemption request
received from a dealer after that time will be priced at the net asset
value at the close of business on the next business day.
Securities dealers, including Merrill Lynch, may charge a fee to
process a redemption of shares.
The Fund may reject an order to sell shares under certain
circumstances.
----------------------------------------------------------------------------------------------------------
Sell through the Transfer You may sell shares held at the Transfer Agent by writing to the
Agent Transfer Agent at the address on the inside back cover of this
prospectus. All shareholders on the account must sign the letter and
signatures must be guaranteed. The Transfer Agent will normally
mail redemption proceeds within seven days following receipt of a
properly completed request. If you make a redemption request
before the Fund has collected payment for the purchase of shares,
the Fund or the Transfer Agent may delay mailing your proceeds. This
delay will usually not exceed ten days.
Check with the Transfer Agent or your Merrill Lynch Financial
Consultant for details.
----------------------------------------------------------------------------------------------------------
Redemption by check You may redeem shares by check in an amount not less than $500.
You may request checks from the Transfer Agent. These checks can be
made payable to any person, except that they may not be used to
buy securities in transactions with Merrill Lynch. The person to whom
the check is made payable may cash or deposit it like any check,
drawn on any bank. You will continue to earn daily dividends until
the check clears. You will be subject to the rules and regulations
governing such checking accounts including the right of the Transfer
Agent not to honor checks exceeding the value of your account. The
Fund or the Transfer Agent may modify or terminate the redemption
by check privilege on 30 days' notice.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
MERRILL LYNCH U.S. TREASURY MONEY FUND
10
<PAGE>
<TABLE>
<CAPTION>
IF YOU WANT TO YOUR CHOICES INFORMATION IMPORTANT FOR YOU TO KNOW
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C><C> <C>
Sell Your Shares Federal Funds Redemption You may arrange to have redemption proceeds of $5,000 or more
(continued) wired in Federal Funds to a pre-designated bank account. The
application designating the bank must be signature guaranteed. The
redemption request may be made by telephone, wire or letter to the
Transfer Agent. If your redemption request is made prior to the
determination of net asset value of the Fund (generally 4:00 p.m.
Eastern time), redemption proceeds will be wired to your
pre-designated bank account on the next business day.
----------------------------------------------------------------------------------------------------------
Automatic Redemption If you maintain other securities accounts with Merrill Lynch (other
than margin accounts), Merrill Lynch may use its automatic
redemption procedure to satisfy amounts you may owe either as a
result of account fees and expenses or as a result of purchases or
other transactions in those securities accounts. Unless you notify
Merrill Lynch to the contrary, your securities account will be scanned
each day prior to the determination of net asset value of the Fund
(generally, 4:00 p.m. Eastern time) and, after application of any cash
balances in the account, a sufficient number of Fund shares may be
reduced to satisfy any amounts you may owe Merrill Lynch. Such
redemption will be made the day before payment is due, and Merrill
Lynch will receive redemption proceeds on the day following such
redemption. Except under certain circumstances, you will receive all
dividends declared and reinvested through the date of redemption.
- ----------------------------------------------------------------------------------------------------------------------------
Sell Shares Participate in the Fund's You can choose to receive systematic payments from your Fund
Systematically Systematic Withdrawal Plan account on a monthly or quarterly basis. Contact the Transfer Agent
at the telephone number on the inside back cover of this prospectus
for an application.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
MERRILL LYNCH U.S. TREASURY MONEY FUND
11
<PAGE>
[GRAHIC] Your Account
NET ASSET VALUE -- the market value of the Fund's total assets after deducting
liabilities, divided by the number of shares outstanding.
HOW SHARES ARE PRICED
- --------------------------------------------------------------------------------
When you buy shares, you pay the NET ASSET VALUE (normally $1.00 per share)
without a sales charge. The "penny-rounding" method is used in calculating net
asset value, meaning that the calculation is rounded to the nearest whole cent.
This is the offering price. Shares are also redeemed at their net asset value.
The Fund calculates its net asset value each business day as of the close of
business on the New York Stock Exchange (generally, 4:00 p.m. Eastern time) or,
on days when the New York Stock Exchange is closed but New York banks are open,
at 4:00 p.m., Eastern time. The net asset value used in determining your price
is the one calculated after your purchase or redemption order becomes
effective. Share purchase orders are effective on the date Federal Funds become
available to the Fund.
DIVIDENDS -- ordinary income and capital gains paid to shareholders. Dividends
may be reinvested in additional Fund shares as they are paid.
DIVIDENDS AND TAXES
- --------------------------------------------------------------------
DIVIDENDS are declared and reinvested daily in the form of additional shares at
net asset value. You will begin accruing dividends on the day following the
date your purchase becomes effective. Shareholders will receive statements
monthly as to such reinvestments. Shareholders redeeming their holdings will
receive all dividends declared and reinvested through the date of redemption.
You will pay tax on dividends from the Fund whether you receive them in cash or
additional shares. If you redeem Fund shares or exchange them for shares of
another fund, any gain on the transaction may be subject to tax. The Fund
intends to make distributions most of which will be taxed as ordinary income
although the Fund may distribute capital gains as well.
If the value of assets held by the Fund declines, the Trustees 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 your eliminated shares would be added to the basis of your remaining
Fund shares, and you could recognize a capital loss if you disposed of your
shares at that time. Dividends, including those reinvested in additional shares
of the Fund, will nonetheless be fully taxable, even if the number of shares in
your account has been reduced as described above.
MERRILL LYNCH U.S. TREASURY MONEY FUND
12
<PAGE>
"Buying a Dividend"
Unless your investment is in a tax deferred account, you may want to avoid
buying shares shortly before the Fund pays a dividend. The reason? If you buy
shares when a fund has realized but not yet distributed income or capital gains,
you will pay the full price for the shares and then receive a portion of the
price back in the form of a taxable dividend. Before investing you may want to
consult your tax adviser.
If you are neither a lawful permanent resident nor a citizen of the U.S. or if
you are a foreign entity, the Fund's ordinary income dividends (which include
distributions of net short-term capital gains) will generally be subject to a
30% U.S. withholding tax, unless a lower treaty rate applies.
By law, the Fund must withhold 31% of your dividends and proceeds if you have
not provided a taxpayer identification number or social security number.
This section summarizes some of the consequences under current Federal tax law
of an investment in the Fund. It is not a substitute for personal tax advice.
Consult your personal tax adviser about the potential tax consequences of an
investment in the Fund under all applicable tax laws.
MERRILL LYNCH U.S. TREASURY MONEY FUND
13
<PAGE>
Management of the Fund [GRAPHIC]
MERRILL LYNCH ASSET MANAGEMENT
- --------------------------------------------------------------------------------
Merrill Lynch Asset Management, the Fund's Manager, manages the Fund's
investments and its business operations under the overall supervision of the
Fund's Board of Trustees. The Manager has the responsibility for making all
investment decisions for the Fund. The Fund pays the investment adviser a fee
at the annual rate of 0.50% of the average daily net assets of the Fund.
Merrill Lynch Asset Management is part of Merrill Lynch Asset Management Group,
which had approximately $507 billion in investment company and other portfolio
assets under management as of February 1999. This amount includes assets
managed for Merrill Lynch affiliates.
A Note About Year 2000
Many computer systems were designed using only two digits to designate years.
These systems may not be able to distinguish the Year 2000 from the Year 1900
(commonly known as the "Year 2000 Problem"). The Fund could be adversely
affected if the computer systems used by the Fund's management or other Fund
service providers do not properly address this problem before January 1, 2000.
The Fund's management expects to have addressed this problem before then, and
does not anticipate that the services it provides will be adversely affected.
The Fund's other service providers have told the Fund management that they also
expect to resolve the Year 2000 Problem, and the Fund management will continue
to monitor the situation as the Year 2000 approaches. However, if the problem
has not been fully addressed, the Fund could be negatively affected. The Year
2000 Problem could also have a negative impact on the issuers in which the Fund
invests, and this could hurt the Fund's investment returns.
MERRILL LYNCH U.S. TREASURY MONEY FUND
14
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------
The Financial Highlights table is intended to help you understand the Fund's
financial performance for the past five years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate an investor would have earned on an investment in the Fund
(assuming reinvestment of all dividends). This information has been audited by
Deloitte & Touche LLP, whose report, along with the Fund's financial
statements, are included in the Fund's annual report to shareholders, which is
available upon request.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED NOVEMBER 30,
----------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSET VALUE: 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------------------------------------------
Investment income -- net .0453 .0451 .0447 .0484 .0317
- -----------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments -- net .0009 .0002 .0003 .0009 ( .0002)
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations .0462 .0453 .0450 .0493 .0315
- -----------------------------------------------------------------------------------------------------------------------------
Less dividends and distributions:
Investment income -- net ( .0453) ( .0451) ( .0447) ( .0484) ( .0317)
Realized gain on investments -- net ( .0006) ( .0003) ( .0004) ( .0004) ( .0002)
- -----------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions ( .0459) ( .0454) ( .0451) ( .0488) ( .0319)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN 4.66 % 4.65 % 4.70 % 4.98 % 3.21 %
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- -----------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement .75 % .78 % .77 % .83 % .71 %
- -----------------------------------------------------------------------------------------------------------------------------
Expenses 1.10 % 1.13 % 1.12 % 1.18 % 1.06 %
- -----------------------------------------------------------------------------------------------------------------------------
Investment income and realized gain on investments -- net 4.60 % 4.57 % 4.55 % 4.89 % 3.16 %
- -----------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) $46,108 $ 49,742 $ 47,945 $ 56,318 $ 57,184
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
MERRILL LYNCH U.S. TREASURY MONEY FUND
15
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MERRILL LYNCH U.S. TREASURY MONEY FUND
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<PAGE>
[GRAPHIC]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
POTENTIAL
INVESTORS
Open an account (two options).
1 2
MERRILL LYNCH TRANSFER AGENT
FINANCIAL CONSULTANT FINANCIAL DATA SERVICES, INC.
OR SECURITIES DEALER P.O. Box 45290
ADVISES SHAREHOLDERS ON Jacksonville, Florida 32232-5290
THEIR FUND INVESTMENTS. 1-800-221-7210
PERFORMS RECORDKEEPING AND REPORTING
SERVICES.
DISTRIBUTOR
MERRILL LYNCH FUNDS DISTRIBUTOR,
A DIVISION OF PRINCETON FUNDS DISTRIBUTOR, INC.
P.O. Box 9081
Princeton, New Jersey 08543-9081
ARRANGES FOR THE SALE OF FUND SHARES.
COUNSEL CUSTODIAN
BROWN & WOOD LLP THE FUND THE BANK OF NEW YORK
One World Trade Center THE BOARD OF TRUSTEES 90 Washington Street
New York, New York 10048-0557 OVERSEES THE FUND. 12th Floor
PROVIDES LEGAL ADVICE TO THE FUND. NEW YORK, NEW YORK 10286
HOLDS THE FUND'S ASSETS FOR
SAFEKEEPING.
INDEPENDENT AUDITORS INVESTMENT ADVISER
DELOITTE & TOUCHE LLP MERRILL LYNCH ASSET MANAGEMENT, LP
117 Campus Drive ADMINISTRATIVE OFFICES
Princeton, New Jersey 08540-6400 800 Scudders Mill Road
Plainsboro, New Jersey 08536
AUDITS THE FINANCIAL STATEMENTS
OF THE FUND ON BEHALF OF MAILING ADDRESS
THE SHAREHOLDERS. P.O. Box 9011
Princeton, New Jersey 08543-9011
TELEPHONE NUMBER
1-800-221-7210
MANAGES THE FUND'S DAY-TO-DAY ACTIVITIES.
</TABLE>
MERRILL LYNCH U.S. TREASURY MONEY FUND
<PAGE>
For More Information [GRAPHIC]
SHAREHOLDER REPORTS
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year. You
may obtain these reports at no cost by calling 1-800-MER-FUND.
The Fund will send you one copy of each shareholder report and certain other
mailings, regardless of the number of Fund accounts you have. To receive
separate shareholder reports for each account, call your Merrill Lynch
Financial Consultant or write to the Transfer Agent at its mailing address.
Include your name, address, tax identification number and Merrill Lynch
brokerage or mutual fund account number. If you have any questions, please call
your Merrill Lynch Financial Consultant or the Transfer Agent at
1-800-221-7210.
STATEMENT OF ADDITIONAL INFORMATION
The Fund's Statement of Additional Information contains further information
about the Fund and is incorporated by reference (legally considered to be part
of this prospectus). You may request a free copy by writing the Fund at
Financial Data Services, Inc., P.O. Box 45289, Jacksonville, Florida 32232-5289
or by calling 1-800-MER-FUND.
Contact your Merrill Lynch Financial Consultant or the Fund, at the telephone
number or address indicated above, if you have any questions.
Information about the Fund (including the Statement of Additional Information)
can be reviewed and copied at the SEC's Public Reference Room in Washington,
D.C. Call 1-800-SEC-0330 for information on the operation of the Public
Reference Room. This information is also available on the SEC's Internet site
at http://www.sec.gov and copies may be obtained upon payment of a duplicating
fee by writing the Public Reference Section of the SEC, Washington, D.C.
20549-6009.
You should rely only on the information contained in this prospectus. No one is
authorized to provide you with information that is different from information
contained in this prospectus.
Investment Company Act file #811-6211
Code #11624-0198
(c)Merrill Lynch Asset Management, L.P.
Prospectus
[MERRILL LYNCH LOGO]
Merrill Lynch
U.S. Treasury Money Fund
March 30, 1999
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
MERRILL LYNCH U.S. TREASURY MONEY FUND
P.O. Box 9011, Princeton, New Jersey 08543-9011 o Phone No. (609) 282-2800
----------------
Merrill Lynch U.S. Treasury Money Fund (the "Fund") is a no-load,
diversified, open-end investment company that seeks preservation of capital,
liquidity and current income through investment exclusively in a diversified
portfolio of short-term marketable securities that are direct obligations of
the U.S. Treasury. For purposes of its investment policies, the Fund defines
short-term marketable securities that are direct obligations of the U.S.
Treasury as any U.S. Treasury obligations that have 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 Fund pays Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") a distribution fee for providing certain
services in connection with the distribution of Fund shares. See "Purchase of
Shares."
----------------
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
30, 1999 (the "Prospectus"), which has been filed with the Securities and
Exchange Commission (the "Commission") and can be obtained, without charge, by
calling (800) 637-3863 or by writing the Fund at the above address. The
Prospectus is incorporated by reference into this Statement of Additional
Information, and this Statement of Additional Information is incorporated by
reference into the Prospectus. The Fund's audited financial statements are
incorporated in this Statement of Additional Information by reference to its
1998 annual report to shareholders. You may request a copy of the annual report
at no charge by calling (800) 456-4587 ext. 789 between 8:00 a.m. and 8:00 p.m.
on any business day.
----------------
MERRILL LYNCH ASSET MANAGEMENT -- MANAGER
MERRILL LYNCH FUNDS DISTRIBUTOR -- DISTRIBUTOR
----------------
The date of this Statement of Additional Information is March 30, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Investment Objectives and Policies ............. 3
Management of the Fund ......................... 5
Trustees and Officers ........................ 5
Compensation of Trustees ..................... 6
Management and Advisory Arrangements ......... 7
Code of Ethics ............................... 8
Purchase of Shares ............................. 8
Methods of Payment ........................... 9
Distribution Plan ............................ 10
Redemption of Shares ........................... 11
Methods of Redemption ........................ 11
Determination of Net Asset Value ............... 13
Yield Information .............................. 14
Portfolio Transactions ......................... 14
Shareholder Services ........................... 15
Investment Account ........................... 16
Fee-Based Programs ........................... 16
Automatic Investment Plan .................... 16
Accrued Monthly Payout Plan .................. 16
Systematic Withdrawal Plans .................. 16
Dividends and Taxes ............................ 17
Dividends .................................... 17
Taxes ........................................ 17
General Information ............................ 19
Description of Shares ........................ 19
Independent Auditors ......................... 19
Custodian .................................... 19
Transfer Agent ............................... 19
Legal Counsel ................................ 20
Reports to Shareholders ...................... 20
Shareholder Inquiries ........................ 20
Additional Information ....................... 20
Financial Statements ........................... 20
</TABLE>
2
<PAGE>
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 that are direct obligations of
the U.S. Treasury. The investment objectives are fundamental policies of the
Fund that may not be changed without a vote of the majority of the outstanding
shares of the Fund.
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 market securities.
Historically, direct U.S. Treasury obligations have generally had lower rates
of return than other potentially more risky money market securities.
For purposes of its investment objectives, the Fund defines short-term
marketable securities that are direct obligations of the U.S. Treasury as any
U.S. Treasury obligations that have maturities of no more than 762 days (25
months). The dollar weighted average maturity of the Fund's portfolio will not
exceed 90 days. During the fiscal year ended November 30, 1998, the average
maturity of its portfolio ranged from 62 days to 88 days.
Investment in Fund shares offers several potential 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 and yield improvement techniques. It is expected to
provide liquidity because of its redemption features and seeks the reduced risk
that generally results from diversification of assets. The shareholder is also
relieved from the administrative burdens associated with direct investment in
U.S. Treasury securities, such as coordinating maturities and reinvestments,
and making numerous buy-sell decisions. There can be no assurance that the
investment objectives of the Fund will be realized. Certain expenses are borne
by investors, including advisory and management fees, administrative costs and
operational costs.
In managing the Fund, Merrill Lynch Asset Management, L.P. (the "Manager"
or "MLAM") will employ a number of professional money management techniques,
including varying the composition of investments and the average maturity of
the portfolio based on its assessment of the relative values of the various
securities and future interest rate patterns. These assessments will respond to
changing economic and money market conditions and to shifts in fiscal and
monetary policy. The Manager also will seek to improve yield by taking
advantage of yield disparities that regularly occur between securities of a
similar kind. For example, market conditions frequently result in similar
securities trading at different prices. The Fund seeks to enhance yield by
purchasing and selling securities based on these yield disparities.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY SECURITIES. The Fund may
purchase or sell securities that it is entitled to receive on a when-issued
basis. The Fund may also purchase or sell securities on a delayed delivery
basis. These transactions involve the purchase or sale of securities by the
Fund at an established price with payment and delivery taking place in the
future. The Fund enters into these transactions to obtain what is considered an
advantageous price to the Fund at the time of entering into the transaction.
The Fund has not established any limit on the percentage of its assets that may
be committed in connection with these transactions. When the Fund purchases
securities in these transactions, the Fund segregates liquid securities in an
amount equal to the amount of its purchase commitments.
FORWARD COMMITMENTS. The Fund may purchase or sell portfolio securities on
a forward commitment basis at fixed purchase terms. The purchase or sale 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 U.S. Treasury securities having a
market value at all times at least equal to the amount of the forward purchase
commitment. Although the Fund generally will enter into forward commitments
with the intention of acquiring securities for its portfolio, the Fund may
dispose of a commitment prior to settlement if the Manager deems it appropriate
to do so.
There can be no assurance that a security purchased on a when-issued basis
will be issued or that a security purchased or sold through a forward
commitment will be delivered. The value of securities in these transactions on
the delivery date may be more or less than the Fund's purchase price. The Fund
may bear the risk of
3
<PAGE>
a decline in the value of the security in these transactions and may not
benefit from an appreciation in the value of the security during the commitment
period.
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 securities
other than direct obligations of the U.S. Treasury having maturities of 762
days (25 months) or less.
In addition, 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 that have maturities of 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 that 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];
(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;
(8) purchase or sell real estate (other than money market securities
secured by real estate or interests therein or money market securities
issued by companies which invest in real estate, or interests therein);
(9) purchase or sell commodities or contracts on commodities, except to
the extent that the Fund may do so in accordance with applicable law and
the Fund's Prospectus and Statement of Additional Information, as they may
be amended from time to time, and without registering as a commodity pool
operator under the Commodity Exchange Act;
(10) issue senior securities to the extent such issuance would violate
applicable law; and
(11) invest more than 25% of its total assets (taken at market value at
the time of each investment) in the securities of issuers in any particular
industry (other than U.S. Treasury securities).
Subject to the supervision 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 of the office space,
facilities, equipment and necessary personnel for portfolio management of the
Fund.
4
<PAGE>
MANAGEMENT OF THE FUND
TRUSTEES AND OFFICERS
The Board of Trustees of the Fund consists of seven individuals, six of
whom are not "interested persons" of the Fund as defined in the Investment
Company Act (the "non-interested Trustees"). The Trustees are responsible for
the overall supervision of the operations of the Fund and perform the various
duties imposed on the directors of investment companies by the Investment
Company Act.
Information about the Trustees, executive officers and the portfolio
manager of the Fund, including their ages and their principal occupations for
at least the last five years, is set forth below. Unless otherwise noted, the
address of each Trustee, executive officer and the portfolio manager is P.O.
Box 9011, Princeton, New Jersey 08543-9011.
TERRY K. GLENN (58) -- PRESIDENT AND TRUSTEE (1)(2) -- Executive Vice
President of the Manager and Fund Asset Management, L.P. ("FAM") (which terms as
used herein include their corporate predecessors) since 1983; Executive Vice
President and Director of Princeton Services, Inc. ("Princeton Services") since
1993; President of Princeton Funds Distributor, Inc. ("PFD") since 1986 and
Director thereof since 1991; President of Princeton Administrators, L.P. since
1988.
DONALD CECIL (72) -- TRUSTEE (2)(3) -- 1114 Avenue of the Americas, New
York, New York 10036. Special Limited Partner of Cumberland Associates (an
investment partnership) since 1982; Member of Institute of Chartered Financial
Analysts; Member and Chairman of Westchester County (N.Y.) Board of
Transportation.
M. COLYER CRUM (66) -- TRUSTEE (2)(3) -- 104 Westcliff Road, Weston,
Massachusetts 02193. Currently James R. Williston Professor of Investment
Management Emeritus, Harvard Business School; James R. Williston Professor of
Investment Management, Harvard Business School, from 1971 to 1996; Director of
Cambridge Bancorp, Copley Properties, Inc. and Sun Life Assurance Company of
Canada.
EDWARD H. MEYER (72) -- TRUSTEE (2)(3) -- 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. (financial printers),
Harman International Industries, Inc. (stereo and audio equipment
manufacturers) and Ethan Allen Interiors, Inc.
JACK B. SUNDERLAND (70) -- TRUSTEE (2)(3) -- P.O. Box 7, West Cornwall,
Connecticut 06796. President and Director of American Independent Oil Company,
Inc. (an energy company) since 1987; Member of Council on Foreign Relations
since 1971.
J. THOMAS TOUCHTON (60) -- TRUSTEE (2)(3) -- Suite 3405, One Tampa City
Center, 201 North Franklin Street, Tampa, Florida 33062. 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).
FRED G. WEISS (57) -- TRUSTEE (2)(3) -- 16410 Maddalena Place, Delray
Beach, Florida 33446. Managing Director of FGW Associates since 1997; Vice
President, Planning Investment, and Development of Warner Lambert Co. from 1979
to 1997.
ARTHUR ZEIKEL (66) -- TRUSTEE (1)(2) -- Chairman of the Manager and FAM
from 1997 to 1999 and President thereof from 1977 to 1997; Chairman of
Princeton Services from 1997 to 1999, Director thereof from 1993 to 1999 and
President thereof from 1993 to 1997; Executive Vice President of Merrill Lynch &
Co., Inc. ("ML & Co.") from 1990 to 1999.
KEVIN J. MCKENNA (41) -- SENIOR VICE PRESIDENT (1)(2) -- First Vice
President of the Manager since 1997; Vice President of the Manager from 1985 to
1997.
JOSEPH T. MONAGLE, JR. (50) -- SENIOR VICE PRESIDENT (1)(2) -- Senior Vice
President of the Manager and FAM since 1990; Department Head of the Global Fixed
Income Division of the Manager and FAM since 1997; Senior Vice President of
Princeton Services since 1993.
5
<PAGE>
DONALD C. BURKE (38) -- VICE PRESIDENT AND TREASURER (1)(2) -- Senior Vice
President and Treasurer of the Manager and FAM since 1999; Senior Vice President
and Treasurer of Princeton Services since 1999; Vice President of PFD since
1999; First Vice President of the Manager from 1997 to 1999; Vice President of
the Manager from 1990 to 1997; Director of Taxation of the Manager since
1990.
MARIE DWYER (34) -- VICE PRESIDENT AND PORTFOLIO MANAGER (1)(2) -- Vice
President of the Manager since 1991; Assistant Vice President of the Manager
from 1990 to 1991.
THOMAS D. JONES, III (33) -- SECRETARY (1)(2) -- Vice President of the
Manager since 1998; attorney with the Manager and FAM since 1992.
- ----------
(1) Interested person, as defined in the Investment Company Act, of the Fund.
(2) Such Trustee or officer is a director, trustee or officer of certain other
investment companies for which the MLAM or FAM acts as the investment
adviser or manager.
(3) Members of the Fund's Audit Committee, which is responsible for the
selection of the independent auditors and the selection of non-interested
Trustees.
As of March 1, 1999, the Trustees and officers of the Fund as a group (13
persons) owned an aggregate of less than 1% of the outstanding shares of the
Fund. At such date, Mr. Zeikel, a Trustee of the Fund, Mr. Glenn, a Trustee and
officer of the Fund, and the other officers of the Fund owned an aggregate of
less than 1% of the outstanding shares of Common Stock of ML & Co.
COMPENSATION OF TRUSTEES
The Fund pays each non-interested Trustee a fee of $4,000 per year plus
$1,000 per meeting attended. The Fund also compensates members of its Audit and
Nominating Committee (the "Committee"), which consists of all the
non-interested Trustees, a fee of $3,500 per year. The Fund pays the Chairman
of the Committee an additional fee of $1,500 per year. The Fund reimburses each
non-interested Trustee for his out-of-pocket expenses relating to attendance at
Board and Committee meetings.
The following table shows the compensation earned by the non-interested
Trustees for the fiscal year ended November 30, 1998 and also the aggregate
compensation paid to them from all registered investment companies advised by
Manager and its affiliate, FAM ("MLAM/FAM-advised funds"), for the calendar
year ended December 31, 1998.
<TABLE>
<CAPTION>
AGGREGATE
PENSION OR ESTIMATED COMPENSATION FROM
RETIREMENT BENEFITS ANNUAL FUND AND OTHER
POSITION COMPENSATION ACCRUED AS PART OF BENEFITS UPON MLAM/FAM-
NAME WITH FUND FROM FUND FUND EXPENSE RETIREMENT ADVISED FUNDS(1)
- ---------------------------- ----------- ------------- -------------------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
Donald Cecil ............... Trustee $13,000 None None $277,808
M. Colyer Crum ............. Trustee $11,500 None None $116,600
Edward H. Meyer ............ Trustee $11,500 None None $214,558
Jack B. Sunderland ......... Trustee $11,500 None None $133,600
J. Thomas Touchton ......... Trustee $11,500 None None $133,600
Fred G. Weiss .............. Trustee $10,250 None None $140,842
</TABLE>
- ----------
(1) The Trustees serve on the boards of MLAM/FAM-advised funds as follows: Mr.
Cecil (34 registered investment companies consisting of 34 portfolios);
Mr. Crum (15 registered investment companies consisting of 15 portfolios);
Mr. Meyer (34 registered investment companies consisting of 34
portfolios); Mr. Sunderland (18 registered investment companies consisting
of 30 portfolios); Mr. Touchton (18 registered investment companies
consisting of 30 portfolios); and Mr. Weiss (15 registered investment
companies consisting of 15 portfolios).
Trustees of the Fund, members of the Boards of other MLAM-advised
investment companies, ML & Co. and its subsidiaries (the term "subsidiaries,"
when used herein with respect to ML & Co., includes MLAM, FAM and certain other
entities directly or indirectly wholly owned and controlled by ML & Co.) and
their trustees/ directors and employees, and any trust, pension,
profit-sharing or other benefit plan for such persons, may purchase shares of
the Fund at net asset value. The Trust realizes economies of scale and
reduction of sales-related expenses by virtue of the familiarity of these
persons with the Trust. Employees and directors or trustees wishing to purchase
shares of the Trust must satisfy the Trust's suitability standards.
6
<PAGE>
MANAGEMENT AND ADVISORY ARRANGEMENTS
MANAGEMENT SERVICES. The Manager provides the Fund with investment
advisory and management services. Subject to the supervision 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 management of the Fund.
Securities held by the Fund also may be held by, or be appropriate
investments for, other funds or clients (collectively referred to as "clients")
for which the Manager or FAM acts as an adviser or by investment advisory
clients of the Manager. Because of different objectives or other factors, a
particular security may be bought for one or more clients when one or more
clients are selling the same security. If purchases or sales of securities for
the Fund or other advisory clients arise for consideration at or about the same
time, transactions in such securities will be made, insofar as feasible, for
the respective funds and clients in a manner deemed equitable to all. To the
extent that transactions on behalf of more than one client of the Manager or
its subsidiary 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.
MANAGEMENT FEE. The Fund has entered into a management agreement with the
Manager (the "Management Agreement"), pursuant to which the Manager receives
for its services to the Fund monthly compensation at the annual rate of 0.50%
of the average daily net assets of the Fund. The table below sets forth
information about the total management fees payable by the Fund to the Manager
for the periods indicated.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NOVEMBER 30, MANAGEMENT FEE(1)
- -------------------------------- ------------------
<S> <C>
1998 ......................... $253,898
1997 ......................... $270,872
1996 ......................... $279,756
</TABLE>
- ----------
(1) The Manager voluntarily waived fees of $195,829 for the fiscal year ended
November 30, 1996, $189,611 for the fiscal year ended November 30, 1997
and $176,379 for the fiscal year ended November 30, 1998. For the fiscal
year ended November 30, 1998, the Manager also voluntarily waived $1,349,
representing reimbursement of additional expenses. The fees listed are not
adjusted to reflect these waivers because the waivers are voluntary and
can be retracted at any time.
PAYMENT OF FUND EXPENSES. The Management Agreement obligates the Manager
to provide management services and to pay all compensation of and furnish
office space for officers and employees of the Fund connected with investment
and economic research, trading and investment management of the Fund, as well
as the fees of all Trustees of the Fund who are affiliated persons of ML & Co.
or any of its affiliates. The Fund pays all other expenses incurred in the
operation of the Fund, including among other things: taxes, expenses for legal
and auditing services, costs of printing proxies, stock certificates,
shareholder reports, prospectuses and statements of additional information,
except to the extent paid by Merrill Lynch Funds Distributor, a division of PFD
(the "Distributor"); charges of the custodian and the transfer agent; expenses
of redemption of shares; 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 calculations 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 for the Fund by the Manager and the
Fund reimburses the Manager for its costs in connection with such services. See
"Purchase of Shares -- Distribution Plans."
ORGANIZATION OF THE MANAGER. The Manager is a limited partnership, the
partners of which are ML & Co., a financial services holding company and the
parent of Merrill Lynch, and Princeton Services. ML & Co. and Princeton
Services are "controlling persons" of the Manager as defined under the
Investment Company Act because of their ownership of its voting securities or
their power to exercise a controlling influence over its management or
policies.
DURATION AND TERMINATION. Unless earlier terminated as described herein,
the Management Agreement will continue in effect from year to year if approved
annually (a) by the Board of Trustees of the Fund or by a
7
<PAGE>
majority of the outstanding 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 contracts are not
assignable and may be terminated without penalty on 60 days' written notice at
the option of either party or by vote of the shareholders of the Fund.
TRANSFER AGENCY SERVICES. Financial Data Services, Inc. (the "Transfer
Agent"), a subsidiary of ML & Co., acts as the Fund's Transfer Agent pursuant
to a Transfer Agency, Dividend Disbursing Agency and Shareholder Servicing
Agency Agreement (the "Transfer Agency Agreement"). 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 Transfer Agent
receives a fee of $15.00 per shareholder account and is entitled to
reimbursement for out-of-pocket expenses incurred by the Transfer Agent under
the Transfer Agency Agreement. Additionally, a $.20 monthly closed account
charge will be assessed on all accounts which close during the calendar year.
Application of this fee will commence the month following the month the account
is closed. At the end of the calendar year, no further fees will be due. For
purposes of the Transfer Agency Agreement, the term "account" includes a
shareholder account maintained directly by the Transfer Agent and any other
account representing the beneficial interest of a person in the relevant share
class on a recordkeeping system, provided the recordkeeping system is
maintained by a subsidiary of ML & Co.
CODE OF ETHICS
The Board of Trustees of the Fund has adopted a Code of Ethics under Rule
17j-1 under the Investment Company Act which incorporates the Code of Ethics of
the Manager (together, the "Codes"). The Codes significantly restrict the
personal investing activities of all employees of the Manager and, as described
below, impose additional, more onerous, restrictions on fund investment
personnel.
The Codes require that all employees of the Manager pre-clear any personal
securities investment (with limited exceptions, such as government securities).
The pre-clearance requirement and associated procedures are designed to
identify any substantive prohibition or limitation applicable to the proposed
investment. The substantive restrictions applicable to all employees of the
Manager include a ban on acquiring any securities in a "hot" initial public
offering and a prohibition from profiting on short-term trading in securities.
In addition, no employee may purchase or sell any security that at the time is
being purchased or sold (as the case may be), or to the knowledge of the
employee is being considered for purchase or sale, by any fund advised by the
Manager. Furthermore, the Codes provide for trading "blackout periods" which
prohibit trading by investment personnel of the Fund within periods of trading
by the Fund in the same (or equivalent) security (15 or 30 days depending upon
the transaction).
PURCHASE OF SHARES
Reference is made to "How to Buy, Sell and Transfer Shares" in the
Prospectus.
The Fund is offering its shares without a sales charge at a public 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 the determination of net asset value (generally 4:00 p.m.,
Eastern 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 the Distributor.
The minimum initial purchase is $5,000 and the minimum subsequent purchase
is $1,000, except that lower minimums apply in the case of purchases made under
certain retirement plans. The Fund may, at its discretion, establish reduced
minimum initial and subsequent purchase requirements with respect to various
types of accounts. For pension, profit sharing, individual retirement and
certain other retirement plans, including self-directed retirement plans for
which Merrill Lynch acts as passive custodian and the various retirement plans
available from the Distributor, the minimum initial purchase is $100 and the
minimum subsequent purchase is $1. The minimum initial or subsequent purchase
requirements may be waived for certain employer sponsored retirement or
8
<PAGE>
savings plans, such as tax qualified retirement plans within the meaning of
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
deferred compensation plans within the meaning of Section 403(b) and Section
457 of the Code, other deferred compensation arrangements, Voluntary Employee
Benefits Association plans, and non-qualified After Tax Savings and Investment
programs, maintained on the Merrill Lynch Group Employee Services system. 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 under the Merrill Lynch Blueprint(SM) Program
("Blueprint") is $500 (or $50 if the shareholder elects to participate in the
automatic investment of sale proceeds option on Blueprint application form) and
the minimum subsequent purchase is $50. Any order may be rejected by the
Distributor or the Fund.
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 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 Trust 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 the determination of net asset value (generally 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.
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
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 Merrill
Lynch Blueprint(SM) 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 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.
9
<PAGE>
PAYMENT BY WIRE. An expeditious method of investing in the Fund is 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 #2112600061186, 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.,
P.O. Box 45290, Jacksonville, Florida 32232-5290. Purchase orders which are
sent by hand should be delivered to Financial Data Services, Inc., 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 that they
have received. Checks should be made payable to Merrill Lynch Funds
Distributor. Certified checks are not necessary, but checks are accepted
subject to collection at full face value in U.S. funds and must be drawn in
U.S. dollars on a U.S. 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 an Amended and Restated 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 direct personal
services to shareholders of the Fund. The distribution fee is not compensation
for the administrative and operational services rendered to shareholders by
Merrill Lynch, which are covered by the Management Agreement between the Fund
and the Manager (see "Management of the Fund -- Management and Advisory
Arrangements").
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. Under the Plan, as
amended to date, 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 by expenditures incurred in advertising activities, promoting the
sale, marketing and distribution of the shares of the Fund. For the fiscal year
ended November 30, 1998, $60,006 was paid to Merrill Lynch pursuant to the Plan
(based on average daily net assets of approximately $50.5 million). All of such
amounts were allocated to Merrill Lynch Financial Consultants, other Merrill
Lynch personnel and related administrative costs.
Among other things, the Plan provides that Merrill Lynch shall provide and
the Trustees of the Fund shall review quarterly reports of the distribution
expenditures 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 as to 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 (the
"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.
10
<PAGE>
REDEMPTION OF SHARES
Reference is made to "How to Buy, Sell and Transfer Shares" in the
Prospectus.
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 prior to the determination of net asset value on
that day (generally 4:00 p.m., New York time), the redemption will be effective
on such day and payment will be made on the next business day. If the notice is
received after the determination of net asset value has been made, 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 prior to the Fund's
determination of net asset value, it will be effective on the business day
following receipt of the redemption request. If the notice is received after
the determination of net asset value has been made, the redemption will be
effective on the second business day thereafter.
At various times, the Fund may be requested to redeem shares for which
good payment has not yet been received, E.G., cash, Federal Funds or a
certified check drawn on a U.S. bank. The Fund may delay, or cause to be
delayed, the payment of redemption proceeds until such time as good payment has
been collected for the purchase of such shares. Normally, this delay will not
exceed 10 days. In addition, the Fund reserves the right not to honor
redemption checks or requests for Federal Funds redemptions where the shares to
be redeemed have been purchased by check within 10 days prior to the date the
redemption request is received by the Transfer Agent.
The right to redeem shares or to receive payment with respect to any such
redemption may be suspended 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 (the "NYSE") is closed other than customary weekend
and holiday closings or (B) during which trading on the NYSE is restricted; (2)
for any period during which an emergency exists as a result of which (A)
disposal by the Fund of securities owned by it 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 Commission may by order
permit for 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 or her cost, depending on the market
value of the securities held by the Fund at such time and income earned.
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. These checks drawn on the custody account
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.
Canceled checks will be returned to the shareholder by the Transfer Agent upon
request.
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
11
<PAGE>
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 shareholders.
FEDERAL FUNDS REDEMPTION. Shareholders also may arrange to have redemption
proceeds of $5,000 or more wired in Federal Funds to a pre-designated bank
account. In order to be eligible for Federal Funds redemption, the shareholder
must designate on his or her Purchase Application the domestic commercial bank
and account number to receive the proceeds of his or her redemption and must
have his or her signature on the Purchase Application signature guaranteed. The
redemption request for Federal Funds redemption may be made by telephone, wire
or letter (no signature guarantee required) to the Transfer Agent and, if
received before the determination of net asset value of the Fund on any
business day (generally 4:00 p.m., New York time), the redemption proceeds will
be wired to the investor's pre-designated bank account on the next business
day. Shareholders may effect Federal Funds redemptions by telephoning the
Transfer Agent toll-free at (800) 221-7210. The Fund will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine;
if it does not, the Fund may be liable for any losses due to fraudulent or
unauthorized instructions. Among other things, redemption proceeds may only be
wired into the bank account designated on the Purchase Application. The
investor must independently verify this information at the time the redemption
request is made.
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 the determination of
net asset value of the Fund (generally 4:00 p.m., Eastern time) on any business
day. These 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
Merrill Lynch Blueprint(SM) 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 toll-free at (800) 637-3766.
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 or her 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., P.O. Box 45290, Jacksonville, Florida 32232-5290. Redemption requests
which are sent by hand should be delivered to Financial Data Services, Inc.,
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 name the shares are registered, signed exactly as their
names appear on the Transfer Agent's register. The signature(s) on the
redemption request must be guaranteed by an "eligible guarantor institution" as
such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934,
as amended, and the existence and validity of it 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. This procedure, which is not applicable
to margin accounts, may be utilized by Merrill Lynch 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 the determination of net asset value of the Fund (generally 4:00
p.m., New York time); after application of any cash balances in the account, a
sufficient number of Fund shares may be redeemed at net asset value, as
determined that day, to satisfy any amounts for which the shareholder is
obligated to make payment to Merrill Lynch. Redemptions will be effected on the
business day preceding the date the shareholder
12
<PAGE>
is obligated to make such payment, and Merrill Lynch will receive the
redemption proceeds on the day following the redemption date. Shareholders will
receive all dividends declared and reinvested through the date of redemption.
Unless otherwise requested, in those instances where shareholders request
transactions that settle on a "same-day" basis (such as Federal Funds wire
redemptions, branch office checks, transfers to other Merrill Lynch accounts
and certain securities transactions) the Fund shares necessary to effect such
transactions will be deemed to have been transferred to Merrill Lynch prior to
the Fund's declaration of dividends on that day. In such instances,
shareholders will receive all dividends declared and reinvested through the
date immediately preceding 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 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 an event, the $1,000 minimum on subsequent
investment will not be applicable.
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, on each business day
during which the NYSE or New York banks are open for business. Such
determination is made as of the close of business on the NYSE (generally 4:00
p.m., New York time) or, on days when the NYSE is closed but New York banks are
open, at 4:00 p.m., New York time. As a result of this procedure, the net asset
value is determined each day except for days on which both the NYSE and New
York banks are closed. Both the NYSE and New York banks are closed on New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset
value is determined under the "penny-rounding" method by adding the value of
all securities and other assets in the portfolio, deducting the portfolio's
liabilities, dividing by the number of shares outstanding and rounding the
result to the nearest whole cent.
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 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 U.S. Treasury
obligations that may have maturities of not more than 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 penny-rounded net asset value of $1.00 per share,
the shareholders will contribute proportionately to the Fund's capital. Each
shareholder will be deemed to have agreed to such contribution by his or her
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,
13
<PAGE>
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 or her 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 or her
account. See "Dividends and 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 reflects realized and
unrealized gains and losses on portfolio securities. In accordance with
regulations adopted by the Commission, the Fund is required to disclose its
annualized yield for certain seven-day base periods in a standardized manner
that does not take into consideration any realized or unrealized gains or
losses on portfolio securities. The Commission also permits the calculation of
a standardized effective or compounded yield. This is computed 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
excludes realized and unrealized 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 the
Fund's portfolio 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 bank deposits, shares
of other money market funds or other investments.
<TABLE>
<CAPTION>
SEVEN-DAY PERIOD ENDED
NOVEMBER 30, 1998
-----------------------
<S> <C>
Excluding gains and losses ......... 3.98%
</TABLE>
On occasion, the Fund may compare its yield to (1) the Donoghue's Domestic
Prime Funds Average, an average compiled by Donoghue's Money Fund Report, a
widely recognized independent publication that monitors the performance of
money market mutual funds, (2) the average yield reported by the Bank Rate
Monitor National IndexTM for money market deposit accounts offered by the 100
leading banks and thrift institutions in the ten largest standard metropolitan
statistical areas, (3) yield data published 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 (4) 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 indicative of the Fund's yield or relative
performance for any future period.
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 Board of Trustees of the Fund, the Manager is primarily
responsible for the Fund's portfolio decisions and the placing of 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 (including the
applicable dealer spread), the size, type and difficulty of the 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.
14
<PAGE>
The securities in which the Fund invests are traded in the
over-the-counter ("OTC") market. Where possible, 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 principals 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 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 principals in the
purchase and sale of securities unless an exemptive order allowing such
transactions is obtained from the Commission. Since OTC 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. However, an affiliated person of the
Fund may serve as its broker in OTC transactions conducted on an agency basis.
The Commission has issued an exemptive order permitting the Fund to
conduct principal transactions with GSI in U.S. Government securities. This
order contains a number of conditions, including conditions designed to ensure
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 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.
The number and dollar volume of transactions engaged in by the Fund are
set forth in the following table:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NOVEMBER 30, NUMBER DOLLAR VOLUME
- -------------------------------- -------- --------------
<S> <C> <C>
1998 ......................... 1 $ 406,219
1997 ......................... 4 $21,321,418
1996 ......................... 3 $15,689,851
</TABLE>
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 and underwriting commissions, 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 exemptive order described above could be offset
against the management fee payable by the Fund to the Manager. After
considering all factors deemed relevant, the Board of Trustees made a
determination not to seek such recapture. The Trustees will reconsider this
matter from time to time. The Manager has arranged by 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 of 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.
SHAREHOLDER SERVICES
The Fund offers a number of shareholder services described below that are
designed to facilitate investment in shares of the Fund. Full details as to
each of such services and copies of the various plans and instructions as to
how to participate in the various services or plans, or how to change options
with respect thereto, can be obtained from the Fund, by calling the telephone
number on the cover page hereof, or from the Distributor or Merrill Lynch.
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<PAGE>
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 or her account for the month. A shareholder may
make additions to his or her Investment Account at any time by purchasing
shares at the applicable public offering price either through his or her
securities dealer, by wire or by mail directly to the Transfer Agent, acting as
agent for his or her dealer. A shareholder may ascertain the number of shares
in his or her Investment Account by telephoning the Transfer Agent toll-free at
(800) 221-7210. 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 at the Transfer Agent. Shareholders
considering transferring a tax-deferred retirement account such as an IRA from
Merrill Lynch to another securities dealer 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.
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.
FEE-BASED PROGRAMS
Fund shares may be held in certain Merrill Lynch fee-based programs,
including pricing alternatives for securities transactions (each referred to
this paragraph as a "Program"). These Programs generally prohibit such shares
from being transferred to another account at Merrill Lynch, to another
broker-dealer or to the Transfer Agent. Except in limited circumstances (which
may also involve an exchange as described above), such shares must be redeemed
and new shares purchased in order for the investment not to be subject to
Program fees. Additional information regarding a specific Program (including
charges and limitations on transferability applicable to shares that may be
held in such Program) is available in such Program's client agreement and from
the Transfer Agent at (800) MER-FUND (637-3863).
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, under which shares
equal in number to shares credited through the automatic reinvestment of
dividends 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
16
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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.
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 or her 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 or she is enrolled in the
Accrued Monthly Payout Plan. The Fund is not responsible for any failure of
delivery to the shareholder's address of record and no interest will accrue on
amounts represented by uncashed distribution or redemption checks.
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. Periodic investments may not be made into an
Investment Account in which the shareholder has elected to make systematic
withdrawals.
DIVIDENDS AND TAXES
DIVIDENDS
Dividends are declared and reinvested daily in the form of additional
shares at net asset value. Shareholders will receive statements monthly as to
such reinvestments. Shareholders liquidating their holdings will receive on
redemption all dividends declared and reinvested through the date of
redemption. Since the net income (including realized gains and losses on the
portfolio assets) is declared as a dividend in shares each time the net income
of the Fund is determined, the net asset value per share of the Fund normally
remains constant at $1.00 per share. Fluctuations in value may be reflected in
the number of outstanding shares in the shareholders' accounts.
Net income (from the time of the immediately preceding determination
thereof) consists of (i) interest accrued and/or discount earned (including
both original issue and marker discount), (ii) plus or minus all realized gains
and losses on portfolio securities, (iii) less amortization of premiums and the
estimated expenses of the Fund applicable to that dividend period.
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"). As long as the Fund 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.
The Code requires a RIC to pay a nondeductible 4% excise tax to the extent
the RIC 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 capital gains in the manner necessary to minimize imposition of the 4%
excise tax, there can be no assurance that sufficient amounts of the Fund's
taxable 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.
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<PAGE>
Dividends paid by the Fund from its ordinary income or from an excess of
net short-term capital gains over net long-term capital losses (together
referred to hereafter as "ordinary income dividends") are taxable to
shareholders as ordinary income. Distributions made from an excess of net
long-term capital gains over net short-term capital losses ("capital gain
dividends") are taxable to shareholders as long-term gains, regardless of the
length of time the shareholder has owned Fund shares. Certain categories of
capital gains are taxable at different rates. 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. 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). Generally 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 capital gain
dividends, as well as any amount of capital gain dividends in the different
categories of capital gain referred to above.
Dividends are taxable to shareholders even though they are reinvested in
additional shares of the Fund. 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 that 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 Trustees 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. Dividends, including those
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.
A loss realized on a sale or exchange of shares of the Fund will be
disallowed if other Fund shares are acquired (whether through the automatic
reinvestment of dividends or otherwise) within a 61-day period beginning 30
days before and ending 30 days after the date that the shares are disposed of.
In such a case, the basis of the shares acquired will be adjusted to reflect
the disallowed loss.
Ordinary income dividends paid 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 applicability of the United States
withholding tax.
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.
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, judicial or administrative
action either prospectively or retroactively.
Ordinary income 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 United States Treasury obligations. State
law varies as to whether dividend income attributable to United States Treasury
obligations is exempt from state income tax.
18
<PAGE>
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 investment in
the Fund.
GENERAL INFORMATION
DESCRIPTION OF SHARES
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
beneficial interest 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 interests 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. Shares 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 and vote 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
Trustees of the Fund. No amendment may be made to the Declaration of Trust
without the affirmative vote of a majority of the outstanding shares of the
Fund except under certain limited circumstances set forth in the Declaration of
Trust.
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.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, 117 Campus Drive, Princeton, New Jersey 08540-6400,
has been selected as the independent auditors of the Fund. The selection of
independent auditors is subject to approval by the non-interested Trustees of
the Fund. The independent auditors are responsible for auditing the annual
financial statements of the Fund.
CUSTODIAN
The Bank of New York, 90 Washington Street, 12th Floor, New York, New York
10286 (the "Custodian"), 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 and
dividends on the Fund's investments.
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. See "How to Buy,
Sell, and Transfer Shares -- Through the Transfer Agent" in the Prospectus.
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LEGAL COUNSEL
Brown & Wood LLP, 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 November 30 of each year. The Fund
sends to its shareholders, at least semi-annually, reports showing the Fund's
portfolio and other information. An annual report, containing financial
statements audited by independent auditors, is sent to shareholders each year.
After the end of each year, shareholders will receive Federal income tax
information regarding dividends.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Fund at the address or
telephone number set forth on the cover page of this Statement of Additional
Information.
ADDITIONAL INFORMATION
The Prospectus and this Statement of Additional Information with respect
to the shares of the Fund 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 and the Investment Company Act, to which reference is hereby
made.
To the knowledge of the Fund, no person or entity owned beneficially 5% or
more of the Fund's shares as of March 1, 1999.
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
no Trustee, shareholder, officer, employee or agent of the Fund shall be held
to any personal liability, nor shall resort be had to their property for the
satisfaction of any obligation or claim of the Fund but the "Trust Property"
(as defined in the Declaration) only shall be liable.
FINANCIAL STATEMENTS
The Fund's audited financial statements are incorporated in this Statement
of Additional Information by reference to its 1998 annual report to
shareholders. You may request a copy of the annual report at no charge by
calling (800) 456-4587 ext. 789 between 8:00 a.m. and 8:00 p.m. on any business
day.
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PART C. OTHER INFORMATION
ITEM 23. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -----------
<S> <C>
1(a) -- Declaration of Trust of Registrant, dated October 30, 1990.(a)
(b) -- Amendment to Declaration of Trust of Registrant, dated February 1, 1991.(a)
2 -- By-Laws of the Registrant.(a)
3 -- None.
4(a) -- Management Agreement between the Registrant and Merrill Lynch Asset Management, L.P.(a)
(b) -- Supplement to Investment Advisory Agreement between the Registrant and Merrill Lynch Asset
Management, L.P.(b)
5(a) -- Distribution Agreement between the Registrant and Merrill Lynch Funds Distributor, Inc. (now
known as Princeton Funds Distributor, Inc.)(the "Distributor").(a)
(b) -- Selected Dealer Agreement.(a)
6 -- None.
7 -- Custody Agreement between the Registrant and The Bank of New York.(a)
8 -- Transfer Agency, Dividend Disbursing Agency and Shareholder Servicing Agency Agreement
between the Registrant and Merrill Lynch Financial Data Services, Inc. (now known as Financial
Data Services, Inc.)(a)
9 -- Opinion of Brown & Wood LLP, counsel to the Registrant.(a)
10 -- Consent of Deloitte & Touche LLP, independent auditors for the Registrant.
11 -- None.
12 -- Certificate of Merrill Lynch Asset Management, L.P.(a)
13 -- Amended and Restated Shareholder Servicing Plan and Agreement pursuant to Rule 12b-1 between
the Registrant and Merrill Lynch, Pierce, Fenner & Smith Incorporated.(b)
14 -- Financial Data Schedule.
15 -- None.
</TABLE>
- ---------
(a) Filed on March 27, 1995 as an exhibit to Post-Effective Amendment No. 5 to
the Registrant's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended (File No. 33-37537) (the "Registration
Statement").
(b) Filed on February 27, 1998 as an exhibit to Post-Effective Amendment No. 8
to the Registration Statement.
(c) Filed on January 29, 1999 as an Exhibit to Post-Effective Amendment No. 9
to the Registration Statement.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
The Registrant is not controlled by or under common control with any other
person.
ITEM 25. INDEMNIFICATION.
Reference is made to Section 5.3 of the Registrant's Declaration of Trust
and Section 9 of the Distribution Agreement.
Section 5.3 of the Registrant's Declaration of Trust provides as follows:
"The Trust shall indemnify each of its Trustees, officers, employees, and
agents (including persons who serve at its request as directors, officers or
trustees of another organization in which it has any interest as a shareholder,
creditor or otherwise) against all liabilities and expenses (including amounts
paid in satisfaction of judgments, in compromise, as fines and penalties, and
as counsel fees) reasonably incurred by him in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
in which he may be involved or with which he may be threatened, while in office
or thereafter, by reason of his being or having been such a trustee, officer,
employee or agent, except with respect to any matters as to which he shall have
been adjudicated to have acted in bad faith, willful misfeasance, gross
negligence or reckless disregard of his duties; provided, however, that as to
any matter disposed of by a compromise payment by such person, pursuant to a
consent decree or otherwise, no indemnification either for said payment or for
any other expenses shall be provided unless the Trust shall have received a
written opinion from independent legal counsel approved by the Trustee to the
effect that if either the matter of willful misfeasance, gross negligence or
reckless disregard of duty, or the matter of good faith and reasonable belief
as to the best interests of the Trust, had been adjudicated, it would have been
adjudicated in favor of such person. The rights accruing to any person under
these provisions shall not exclude any other right to which
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he may be lawfully entitled; provided that no Person may satisfy any right of
indemnity or reimbursement granted herein or in Section 5.1 or to which he may
be otherwise entitled except out of the property of the Trust, and no
Shareholder shall be personally liable to any person with respect to any claim
for indemnity or reimbursement or otherwise. The Trustees may make advance
payments in connection with indemnification under this Section 5.3, provided
that the indemnified person shall have given a written undertaking to reimburse
the Trust in the event it is subsequently determined that he is not entitled to
such indemnification."
The Registrant's by-laws provide that insofar as the conditional advancing
of indemnification moneys pursuant to Section 5.3 of the Declaration of Trust
for actions based upon the Investment Company Act of 1940, as amended (the
"Investment Company Act") may be concerned, such payments will be made only on
the following conditions: (i) the advances must be limited to amounts used, or
to be used, for the preparation or presentation of a defense to the action,
including costs connected with the preparation of a settlement; (ii) advances
may be made only upon receipt of a written promise by, or on behalf of, the
recipient to repay that amount of the advance which exceeds the amount which it
is ultimately determined that he is entitled to receive from the Registrant by
reason of indemnification; and (iii) (a) such promise must be secured by a
surety bond, other suitable insurance or an equivalent form of security which
assures that any repayments may be obtained by the Registrant without delay or
litigation, which bond, insurance or other form of security must be provided by
the recipient of the advance, or (b) a majority of a quorum of the Registrant's
disinterested, non-party Trustees, or an independent legal counsel in a written
opinion, shall determine, based upon a review of readily available facts, that
the recipient of the advance ultimately will be found entitled to
indemnification.
In Section 9 of the Distribution Agreement relating to the securities
being offered hereby, the Registrant agrees to indemnify the Distributor and
each person, if any, who controls the Distributor within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), against certain
types of civil liabilities arising in connection with the Registration
Statement or Prospectus.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to Trustees, officers and controlling persons of the
Registrant and the principal underwriter pursuant to the foregoing provisions
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a Trustee,
officer, or controlling person of the Registrant and the principal underwriter
in connection with the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person or the principal
underwriter in connection with the shares being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Merrill Lynch Asset Management, L.P. ("MLAM" or the "Manager"), acts as
the investment adviser for the following open-end registered investment
companies: Merrill Lynch Adjustable Rate Securities Fund, Inc., Merrill Lynch
Americas Income Fund, Inc., Merrill Lynch Asset Builder Program, Inc., Merrill
Lynch Asset Growth Fund, Inc., Merrill Lynch Asset Income Fund, Inc., Merrill
Lynch Capital Fund, Inc., Merrill Lynch Convertible Fund, Inc., Merrill Lynch
Developing Capital Markets Fund, Inc., Merrill Lynch Dragon Fund, Inc., Merrill
Lynch EuroFund, Merrill Lynch Fundamental Growth Fund, Inc., Merrill Lynch
Global Allocation Fund, Inc., Merrill Lynch Global Bond Fund for Investment and
Retirement, Merrill Lynch Global Growth Fund, Inc., Merrill Lynch Global
Holdings, Inc., Merrill Lynch Global Resources Trust, Merrill Lynch Global
SmallCap Fund, Inc., Merrill Lynch Global Technology Fund, Inc., Merrill Lynch
Global Utility Fund, Inc., Merrill Lynch Global Value Fund, Inc., Merrill Lynch
Growth Fund, Merrill Lynch Healthcare Fund, Inc., Merrill Lynch Intermediate
Government Bond Fund, Merrill Lynch International Equity Fund, Merrill Lynch
Latin America Fund, Inc., Merrill Lynch Middle East/Africa Fund, Inc., Merrill
Lynch Municipal Series Trust, Merrill Lynch Pacific Fund, Inc., Merrill Lynch
Ready Assets Trust, Merrill Lynch Real Estate Fund, Inc., Merrill Lynch
Retirement Series Trust, Merrill Lynch Series Fund, Inc., Merrill Lynch
Short-Term Global Income Fund, Inc., Merrill Lynch Strategic Dividend Fund,
Merrill Lynch Technology Fund, Inc., Merrill Lynch U.S. Treasury Money Fund,
Merrill Lynch U.S.A. Government Reserves, Merrill Lynch Utility Income Fund,
Inc., Merrill Lynch Variable Series Funds, Inc. and Hotchkis and Wiley Funds
(advised by Hotchkis and Wiley, a division of MLAM); and for the following
closed-end registered investment companies: Merrill Lynch High Income Municipal
Bond Fund, Inc. and Merrill Lynch Senior Floating Rate Fund, Inc. MLAM also
acts as sub-adviser to Merrill Lynch World Strategy Portfolio and Merrill Lynch
Basic Value Equity Portfolio, two investment portfolios of EQ Advisors Trust.
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<PAGE>
Fund Asset Management, L.P. ("FAM"), an affiliate of the Manager, acts as
the investment adviser for the following open-end registered investment
companies: CBA Money Fund, CMA Government Securities Fund, CMA Money Fund, CMA
Multi-State Municipal Series Trust, CMA Tax-Exempt Fund, CMA Treasury Fund, The
Corporate Fund Accumulation Program, Inc., Financial Institutions Series Trust,
Merrill Lynch Basic Value Fund, Inc., Merrill Lynch California Municipal Series
Trust, Merrill Lynch Corporate Bond Fund, Inc., Merrill Lynch Corporate High
Yield Fund, Inc., Merrill Lynch Emerging Tigers Fund, Inc., Merrill Lynch
Federal Securities Trust, Merrill Lynch Funds for Institutions Series, Merrill
Lynch Multi-State Limited Maturity Municipal Series Trust, Merrill Lynch
Multi-State Municipal Series Trust, Merrill Lynch Municipal Bond Fund, Inc.,
Merrill Lynch Phoenix Fund, Inc., Merrill Lynch Special Value Fund, Inc.,
Merrill Lynch World Income Fund, Inc., and The Municipal Fund Accumulation
Program, Inc.; and for the following closed-end registered investment
companies: Apex Municipal Fund, Inc., Corporate High Yield Fund, Inc.,
Corporate High Yield Fund II, Inc., Corporate High Yield Fund III, Inc., Debt
Strategies Fund, Inc., Debt Strategies Fund II, Inc., Debt Strategies Fund III,
Inc., Income Opportunities Fund 1999, Inc., Income Opportunities Fund 2000,
Inc., Merrill Lynch Municipal Strategy Fund, Inc., MuniAssets Fund, Inc.,
MuniEnhanced Fund, Inc., MuniHoldings Fund, Inc., MuniHoldings Fund II, Inc.,
MuniHoldings California Insured Fund, Inc., MuniHoldings California Insured
Fund II, Inc., MuniHoldings California Insured Fund III, Inc., MuniHoldings
California Insured Fund IV, Inc., MuniHoldings Florida Insured Fund,
MuniHoldings Florida Insured Fund II, MuniHoldings Florida Insured Fund III,
MuniHoldings Florida Insured Fund IV, MuniHoldings Insured Fund, Inc.,
MuniHoldings Insured Fund II, Inc., MuniHoldings Michigan Insured Fund, Inc.,
MuniHoldings New Jersey Insured Fund, Inc., MuniHoldings New Jersey Insured
Fund II, Inc., MuniHoldings New Jersey Insured Fund III, Inc., MuniHoldings New
York Fund, Inc., MuniHoldings New York Insured Fund, Inc., MuniHoldings New
York Insured Fund II, Inc., MuniHoldings New York Insured Fund III, Inc.,
MuniHoldings Pennsylvania Insured Fund, MuniInsured Fund, Inc., MuniVest Fund,
Inc., MuniVest Fund II, Inc., MuniVest Florida Fund, MuniVest Michigan Insured
Fund, Inc., MuniVest New Jersey Fund, Inc., MuniVest Pennsylvania Insured Fund,
MuniYield Arizona Fund, Inc., MuniYield California Fund, Inc., MuniYield
California Insured Fund, Inc., MuniYield California Insured Fund II, Inc.,
MuniYield Florida Fund, MuniYield Florida Insured Fund, MuniYield Fund, Inc.,
MuniYield Insured Fund, Inc., MuniYield Michigan Fund, Inc., MuniYield Michigan
Insured Fund, Inc., MuniYield New Jersey Fund, Inc., MuniYield New Jersey
Insured Fund, Inc., MuniYield New York Insured Fund, Inc., MuniYield New York
Insured Fund II, Inc., MuniYield Pennsylvania Fund, MuniYield Quality Fund,
Inc., MuniYield Quality Fund II, Inc., Senior High Income Portfolio, Inc. and
Worldwide DollarVest Fund, Inc.
The address of each of these registered investment companies is P.O. Box
9011, Princeton, New Jersey 08543-9011, except that the address of Merrill
Lynch Funds for Institutions Series and Merrill Lynch Intermediate Government
Bond Fund is One Financial Center, 23rd Floor, Boston, Massachusetts
02111-2665. The address of the Manager, FAM, Princeton Services, Inc.
("Princeton Services") and Princeton Administrators, L.P. ("Princeton
Administrators") is also P.O. Box 9011, Princeton, New Jersey 08543-9011. The
address of Princeton Funds Distributor, Inc. ("PFD") and of Merrill Lynch Funds
Distributor ("MLFD") is P.O. Box 9081, Princeton, New Jersey 08543-9081. The
address of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch")
and Merrill Lynch & Co., Inc. ("ML & Co.") is World Financial Center, North
Tower, 250 Vesey Street, New York, New York 10281-1201. The address of the
Fund's transfer agent, Financial Data Services, Inc. ("FDS"), is 4800 Deer Lake
Drive East, Jacksonville, Florida 32246-6484.
Set forth below is a list of each executive officer and partner of the
Manager indicating each business, profession, vocation or employment of a
substantial nature in which each such person or entity has been engaged since
October 1, 1996 for his, her or its own account or in the capacity of director,
officer, partner or trustee. In addition, Mr. Glenn is President and Mr. Burke
is Vice President and Treasurer of all or substantially all of the investment
companies described in the first two paragraphs of this Item 26, and Messrs.
Giordano and Monagle are officers of one or more of such companies.
<TABLE>
<CAPTION>
POSITION(S) WITH OTHER SUBSTANTIAL BUSINESS,
NAME THE MANAGER PROFESSION, VOCATION OR EMPLOYMENT
- ----------------------------- ----------------- ---------------------------------------------
<S> <C> <C>
ML & Co ..................... Limited Partner Financial Services Holding Company; Limited
Partner of FAM
Princeton Services. ......... General Partner General Partner of FAM
Jeffrey M. Peek ............. President President of FAM; President and Director of
Princeton Services; Executive Vice President
of ML & Co.; Managing Director and
Co-Head of the Investment Banking
Division of Merrill Lynch in 1997; Senior
Vice President and Director of the Global
Securities and Economics Division of
Merrill Lynch from 1995 to 1997
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
POSITION(S) WITH OTHER SUBSTANTIAL BUSINESS,
NAME THE MANAGER PROFESSION, VOCATION OR EMPLOYMENT
- ----------------------------- -------------------------- ---------------------------------------------
<S> <C> <C>
Terry K. Glenn. ............. Executive Vice President Executive Vice President of FAM; Executive
Vice President and Director of Princeton
Services; President and Director of PFD;
Director of FDS; President of Princeton
Administrators
Donald C. Burke ............. Senior Vice President, Senior Vice President and Treasurer of FAM;
Treasurer and Director Senior Vice President and Treasurer of
of Taxation Princeton Services; Vice President
of PFD; First Vice President of
MLAM from 1997 to 1999; Vice President
of MLAM from 1990 to 1997
Michael G. Clark ............ Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services; Director
and Treasurer of PFD; First Vice President
of MLAM from 1997 to 1999; Vice President
of MLAM from 1996 to 1997
Mark A. Desario ............. Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
Linda L. Federici ........... Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
Vincent R. Giordano ......... Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
Michael J. Hennewinkel ...... Senior Vice President, Senior Vice President, Secretary and General
Secretary and General Counsel of FAM; Senior Vice President of
Counsel Princeton Services
Philip L. Kirstein .......... Senior Vice President Senior Vice President of FAM; Senior Vice
President, Director, General Counsel and
Secretary of Princeton Services
Ronald M. Kloss ............. Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
Debra W. Landsman-Yaros ..... Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services; Vice
President of PFD
Stephen M. M. Miller ........ Senior Vice President Executive Vice President of Princeton
Administrators; Senior Vice President of
Princeton Services
Joseph T. Monagle, Jr. ...... Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
Brian A. Murdock ............ Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
Gregory D. Upah ............. Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
</TABLE>
C-4
<PAGE>
ITEM 27. PRINCIPAL UNDERWRITERS.
(a) MLFD, a division of PFD, acts as the principal underwriter for the
Registrant and for each of the open-end registered investment companies
referred to in the first two paragraphs of Item 26 except CBA Money Fund, CMA
Government Securities Fund, CMA Money Fund, CMA Multi-State Municipal Series
Trust, CMA Tax-Exempt Fund, CMA Treasury Fund, The Corporate Fund Accumulation
Program, Inc. and The Municipal Fund Accumulation Program, Inc. MLFD also acts
as the principal underwriter for the following closed-end registered investment
companies: Merrill Lynch High Income Municipal Bond Fund, Inc., Merrill Lynch
Municipal Strategy Fund, Inc. and Merrill Lynch Senior Floating Rate Fund, Inc.
A separate division of PFD acts as the principal underwriter of a number of
other investment companies.
(b) Set forth below is information concerning each director and officer of
PFD. The principal business address of each such person is P.O. Box 9081,
Princeton, New Jersey 08543-9081, except that the address of Messrs. Breen,
Crook, Fatseas and Wasel is One Financial Center, 23rd Floor, Boston,
Massachusetts 02111-2665.
<TABLE>
<CAPTION>
POSITION(S) AND OFFICE(S) POSITION(S) AND OFFICE(S)
NAME WITH PFD WITH REGISTRANT
- ---------------------------------- ------------------------------ --------------------------
<S> <C> <C>
Terry K. Glenn .................. President and Director President and Trustee
Michael G. Clark ................ Director and Treasurer None
Thomas J. Verage ................ Director None
Robert W. Crook ................. Senior Vice President None
Michael J. Brady ................ Vice President None
William M. Breen ................ Vice President None
Donald C. Burke ................. Vice President Vice President and Treasurer
James T. Fatseas ................ Vice President None
Debra W. Landsman-Yaros ......... Vice President None
Michelle T. Lau ................. Vice President None
Salvatore Venezia ............... Vice President None
William Wasel ................... Vice President None
Robert Harris ................... Secretary None
</TABLE>
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act and the rules thereunder are
maintained at the offices of the Registrant (800 Scudders Mill Road,
Plainsboro, New Jersey 08536), and its transfer agent, Financial Data Services,
Inc. (4800 Deer Lake Drive East, Jacksonville, Florida 32246-6484).
ITEM 29. MANAGEMENT SERVICES.
Other than as set forth under the caption "Management of the Fund --
Merrill Lynch Asset Management" in the Prospectus constituting Part A of the
Registration Statement and under "Management of the Fund -- Management and
Advisory Arrangements" in the Statement of Additional Information constituting
Part B of the Registration Statement, the Registrant is not a party to any
management-related service contract.
ITEM 30. UNDERTAKINGS.
Not applicable.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment to its
Registraiton Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to its Registration Statement
to be signed on its behalf by the undersigned thereunto, duly authorized, in
the Township of Plainsboro, and the State of New Jersey, on the 30th day of
March, 1999.
MERRILL LYNCH U.S. TREASURY MONEY FUND
(Registrant)
By: /s/ TERRY K. GLENN
------------------------------------
(TERRY K. GLENN, PRESIDENT)
---------------------------
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date(s) indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------- ---------------
<S> <C> <C>
/s/ TERRY K. GLENN* President and Trustee
- -------------------------------------- (Principal Executive
(TERRY K. GLENN) Officer)
/s/ DONALD C. BURKE* Treasurer (Principal Financial
- -------------------------------------- and Accounting Officer)
(DONALD C. BURKE)
/s/ DONALD CECIL* Trustee
- --------------------------------------
(DONALD CECIL)
/s/ M. COLYER CRUM* Trustee
- --------------------------------------
(M. COLYER CRUM)
/s/ EDWARD H. MEYER* Trustee
- --------------------------------------
(EDWARD H. MEYER)
/s/ JACK B. SUNDERLAND* Trustee
- --------------------------------------
(JACK B. SUNDERLAND)
/s/ J. THOMAS TOUCHTON* Trustee
- --------------------------------------
(J. THOMAS TOUCHTON)
/s/ FRED G. WEISS* Trustee
- --------------------------------------
(FRED G. WEISS)
/s/ ARTHUR ZEIKEL* Trustee
- --------------------------------------
(ARTHUR ZEIKEL)
*By: /s/ TERRY K. GLENN March 30, 1999
----------------------------------
(TERRY K. GLENN, ATTORNEY-IN-FACT)
</TABLE>
C-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- ----------------------------------------------------------------------------
<S> <C> <C>
10 -- Consent of Deloitte & Touche LLP, independent auditors for the Registrant.
</TABLE>
INDEPENDENT AUDITORS' CONSENT
Merrill Lynch U.S. Treasury Money Fund:
We consent to the incorporation by reference in this Post-Effective Amendment
No. 10 to Registration Statement Statement No. 33-37537 of our report dated
January 8, 1999 appearing in the annual report to shareholders of Merrill Lynch
U.S. Treasury Money Fund for the year ended November 30, 1998, and to the
reference to us under the caption "Financial Highlights" in the Prospectus,
which is a part of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Deloitte & Touche LLP
Princeton, New Jersey
March 29, 1999
