MERRILL LYNCH UTILITY INCOME FUND, INC.
-------------------
SUPPLEMENT DATED SEPTEMBER 28, 1994, TO
PROSPECTUS DATED MARCH 3, 1994.
-------------------
The following paragraph replaces the first three sentences in the section
entitled "ADDITIONAL INFORMATION--Dividends and Distributions":
All or a portion of the Fund's net investment income will be declared
and paid as dividends monthly. The Fund may at times pay out less than the
entire amount of net investment income earned in any particular period and
may at times pay out such accumulated undistributed income in addition to
net investment income earned in any particular period in order to permit the
Fund to maintain a more stable level of distributions. As a result, the
distribution paid by the Fund for any particular period may be more or less
than the amount of net investment income earned by the Fund during such
period. However, it is the Fund's intention to distribute during any fiscal
year all its net investment income. Shares will accrue dividends as long as
they are issued and outstanding. Shares are issued and outstanding as of the
settlement date of a purchase order to the settlement date of a redemption
order. All net realized long-term and short-term capital gains, if any, will
be distributed to the Fund's shareholders at least annually.
The following paragraph is added after the second paragraph in the section
entitled "TAXES":
In the event that the amount of distributions paid or deemed paid for
the Fund's fiscal year exceeds its investment company taxable income plus
realized net capital gains for such year, the amount of such excess may be
treated as a return of capital to all those shareholders who held shares of
the Fund during the year, thereby decreasing a shareholder's capital
investment in the Fund. In such case, each distribution paid or deemed paid
for that year would be treated as a return of capital to all those
shareholders who held shares of the Fund during the year. In such case, each
distribution paid or deemed paid for that year would be treated, in the same
proportion, in part as a distribution of taxable income and in part as a
return of capital. Shareholders would incur no current federal income tax on
the portion of such distributions that are treated as a return of capital,
but each shareholder's basis in its Fund shares would be reduced by that
amount. This reduction of basis would operate to increase the shareholder's
capital gain (or decrease its capital loss) upon redemption of it shares.
Moreover, to the extent that a distribution exceeds both his proportionate
share of earnings and profits of the Fund plus his tax basis in the shares,
the shareholder would recognize capital gain equal to such excess.
If a shareholder buys shares near or on the record date for any upcoming
distribution, the shareholder will receive, in the form of a taxable
distribution, a portion of the money the shareholder just invested.
Code # 16855S-1
<PAGE>
MERRILL LYNCH UTILITY INCOME FUND, INC.
-------------------
SUPPLEMENT DATED SEPTEMBER 28, 1994, TO
STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 3, 1994.
-------------------
The following paragraph replaces the first three sentences in the section
entitled "DIVIDENDS, DISTRIBUTIONS AND TAXES--Dividends and Distributions":
All or a portion of the Fund's net investment income will be declared
and paid as dividends monthly. The Fund may at times pay out less than the
entire amount of net investment income earned in any particular period and
may at times pay out such accumulated undistributed income in addition to
net investment income earned in any particular period in order to permit the
Fund to maintain a more stable level of distributions. As a result, the
distribution paid by the Fund for any particular period may be more or less
than the amount of net investment income earned by the Fund during such
period. However, it is the Fund's intention to distribute during any fiscal
year all its net investment income. Shares will accrue dividends as long as
they are issued and outstanding. Shares are issued and outstanding as of the
settlement date of a purchase order to the settlement date of a redemption
order. All net realized long-term and short-term capital gains, if any, will
be distributed to the Fund's shareholders at least annually.
Code # 16857S-1
