AUSTRALIAN PROSPECTUS
                                   SUPPLEMENT

                        Merrill Lynch Capital Fund, Inc.
                                ARBN 088 293 627






Table of Contents

Interpretation..............................................................3

Important Notice............................................................3

Class of Shares.............................................................5

Minimum Investment..........................................................5

Shareholder Services........................................................5

Investment Account..........................................................5

Exchange Privilege..........................................................5

Systematic Withdrawal Plan..................................................5

Automatic Investment Plans..................................................5

Statutory information and disclosures.......................................5

   EXPERTS..................................................................6
   INDEPENDENT AUDITORS.....................................................6
   LEGAL COUNSEL............................................................6
   CONSENTS.................................................................6

Purchase of shares..........................................................6

Redemption of shares........................................................6

Appointment of Agent........................................................7

Disclaimer..................................................................7

Investments Risks...........................................................7

Australian taxation issues..................................................8








                        Australian Prospectus Supplement
                        Merrill Lynch Capital Fund, Inc.
                                ARBN 088 293 627

Interpretation

This Prospectus is comprised of the following documents:

     o   This Australian Prospectus Supplement;

     o   The  Prospectus  for the Merrill Lynch Capital  Fund,  Inc.  dated
         22 July, 1999 which accompanies this Australian Prospectus Supplement
         ("US Prospectus");

     o   The Statement of Additional  Information  for the Merrill Lynch
         Capital Fund, Inc. dated 22 July, 1999 which accompanies this
         Australian Prospectus Supplement ("Statement of Additional
         Information");

     o   The Application  Form for the Merrill Lynch Capital Fund,  Inc.
         accompanying this Australian Prospectus Supplement ("Australian
         Application Form").

Accordingly,  "the Australian Prospectus" means all of the above documents as if
they were one document.

The term "Australian Business Day" means any day on which the banks are open for
business in Sydney  (other than a  Saturday,  Sunday or Public  Holiday) or such
other  day as the  Manager  from  time to time may  agree.  The term  "New  York
Business Day" means any day on which the New York Stock  Exchange is open or the
banks in New York are open for business.

Important Notice

The Merrill Lynch Capital  Fund,  Inc.  ("Fund") is subject to regulation by the
United States  Securities  and Exchange  Commission  and the Federal laws of the
United  States of America  and the laws of the State of  Maryland.  Accordingly,
this may have a legal and  practical  effect on the  rights  and  ability  of an
Australian  investor to make any claim or enforce any right arising out of or in
connection with an investment in the Fund. For example:

     o   Australian law may not always be the relevant law to be applied in
         proceedings commenced by an investor;

     o   depending  on the  subject  matter  of the  claim  or  enforcement,
         proceedings may not be capable of commencement and determination in an
         Australian jurisdiction;

     o   any  judgement  awarded in favour of an  Australian  investor may need
         to be enforced in the United States or other foreign jurisdiction; and

     o   consequentially  there may be  additional  costs  and legal  risks
         involved in making a claim or enforcing a right in connection with an
         investment in the Fund.

Australian  investors  should  read  the  whole  of this  Australian  Prospectus
carefully  and are  encouraged to seek  professional  advice taking into account
their financial and taxation circumstances, investment objectives and particular
needs before investing in the Fund.

The US Prospectus which forms part of the Australian  Prospectus has been issued
in the  United  States  by the  Fund  and  has  been  primarily  directed  at US
investors.  Accordingly,  references to legislation and other laws will be to US
legislation  and laws.  Similarly,  references to "foreign" and "offshore"  will
relate to issues and matters existing or occurring outside of the United States,
rather than outside Australia.

When reading the US  Prospectus  and the  Statement of  Additional  Information,
Australian investors should disregard references to funds other than the Merrill
Lynch Capital Fund, Inc. The Australian  Prospectus  relates only to an offer of
shares in the Merrill Lynch Capital Fund, Inc.

If there is any  inconsistency  between the terms of the  Australian  Prospectus
Supplement and the US Prospectus or the Statement of Additional Information, the
terms of the  Australian  Prospectus  Supplement  prevail  to the extent of that
inconsistency.

All amounts  referred to in the US Prospectus  are  denominated in United States
dollars.

Financial  information  contained  in  the  US  Prospectus,   the  Statement  of
Additional Information and other reports including,  without limitation,  annual
reports,  is based on US Generally  Accepted  Accounting  Practices,  and not on
Australian Accounting Standards.

All  subscriptions  to the Merrill  Lynch  Capital  Fund,  Inc. are processed in
United States dollars.  In instances  where  application is made for shares in a
currency other than United States dollars,  a foreign  exchange  conversion will
take place, after which shares in the Fund will be requested.  Given the need to
convert currency, there may be a delay between the time that monies are received
and the  allocation of shares of up to 2 Sydney  Business Days. The value of any
shares will be determined by the date that shares are allocated.  Shares will be
allocated  on the New York  Business  Day that the order is  received by Merrill
Lynch  Financial  Data  Services,  Inc.  Merrill Lynch does not  guarantee  that
subscriptions   will  be  cleared,   and  will  hold  the  investor   liable  in
circumstances  where an  account  incurs a  returned  deposit  due to  uncleared
subscriptions.

Australian Securities & Investments Commission (ASIC) has granted interim relief
under section 1084 of the Corporations  Law to various  provisions of Division 2
of Part 7.12 of the Corporations Law in accordance with the provisions of Policy
Statement 65 and Pro Forma 72 to permit the issue of this Australian Prospectus.
ASIC is currently  reviewing  Policy Statement 65 and accordingly the relief has
been  granted on an interim  basis until 1 July 2000.  It is expected  that ASIC
will give  relief  after its  review,  although  the relief may be on  different
terms.  ASIC has  confirmed  that it will give  reasonable  notice of applicable
transitional  arrangements and will consider the position of schemes established
during the interim period.

The Fund has been  registered as a foreign  company as a condition of the relief
granted by ASIC under Policy Statement 65.

The  Fund has  lodged  a deed  poll  with  ASIC  undertaking  to  maintain  this
registration until the number of Australian residents holding shares in the Fund
falls below 20, the Fund is wound up or ASIC otherwise agrees.

If the number of Australian investors falls below 20, the Fund will no longer be
required to maintain this registration.  This may lead to reduced protection for
Australian  investors as, for example,  there will no longer be a requirement to
maintain a local agent.

The remaining  Australian  shareholders may instead be required to deal directly
with the Fund in the United States.


Class of Shares

The  Australian  offering of the Fund will consist of three classes of shares of
the  Merrill  Lynch  Select  Pricing(SM)System.  The shares of each class may be
purchased  at a price  equal to the next  determined  net asset  value per share
subject to the sales charges and ongoing fee arrangements as described in the US
Prospectus.  The  classes of shares to be offered to  Australian  investors  are
Class A,  Class B and  Class  D. A  detailed  description  of each  class  and a
discussion of the factors that  investors  should  consider in  determining  the
method of purchasing  shares that is most beneficial under his or her particular
circumstances is contained in the US Prospectus under the heading "Merrill Lynch
Select Pricing(SM)System".


Minimum Investment

The  minimum  initial  investment  is  USD$1,000,  with the  minimum  subsequent
investment  amount  being  USD$50.  Shares  purchased  as  a  result  of  income
reinvestment will not be subject to this subsequent minimum.


Shareholder Services

Investment Account

Australian  investors  will not be eligible to transfer  shares in the Fund from
Merrill Lynch to another brokerage firm or financial institution.


Exchange Privilege

Australian  investors  of each  class  of shares of the Fund  being  offered  in
Australia  have an exchange  privilege  with certain  other MLAM advised  mutual
funds  that  are  registered  with  the  Australian  Securities  and  Investment
Commission.  Full details of the terms and conditions of this exchange privilege
can be found in the US Prospectus and Statement of Additional  Information under
"Exchange Privilege". The exchange privilege can only be undertaken in shares.


Systematic Withdrawal Plan

Australian  investors  will  not  be  offered  the  Systematic  Withdrawal  Plan
facility.



Automatic Investment Plans

Australian investors will not be offered the Automatic Investment Plan facility.


Statutory information and disclosures

The  Australian  Prospectus is dated 12 August 1999. A copy of the US Prospectus
has been  lodged  with  ASIC on 12  August  1999.  No  responsibility  as to the
contents of this Australian Prospectus is taken by ASIC.

Shares  in the  Fund  will  not be  issued  or  allotted  on the  basis  of this
Australian  Prospectus  after  later  than  12  months  after  the  date of this
Australian Prospectus.


Experts

Independent auditors

Deloitte & Touche LLP, the Fund's auditor, has been paid  US$53,070 for services
rendered in relation to the Fund  (including  in relation to the US  Prospectus)
from 1 January, 1997 to 31 December, 1998.

Legal Counsel

Brown & Wood LLP has been paid US$15,000 for legal services rendered in relation
to the US Prospectus from 1 January, 1997 to 31 December, 1998.


Consents

Deloitte & Touche LLP, the Fund's auditor, has given and has not, before the
date of this Australian Prospectus, withdrawn its written consent to:

   (a)   be named in this Australian Prospectus as the Fund's independent
         auditor; and

   (b)   the issue of this  Australian  Prospectus  insofar as it includes their
         report on the Fund's  financial  statements which appears in the annual
         report of the Fund incorporated by reference in the Fund's Statement of
         Additional Information.



Purchase of shares

Shares in the Merrill Lynch Capital Fund, Inc. may be purchased by lodging an
Australian Application Form with Merrill Lynch Private (Australia) Limited. You
will be required to pay the subscription amount on the same Business Day on
which the relevant shares are issued.

The issue price will be determined as set out in the US Prospectus and Statement
of Additional  Information.  Australian  investors  should be aware that Merrill
Lynch Private  (Australia)  Limited will maintain and receive all  applications.
Subsequent  issue of shares in the Fund may be delayed  where  applications  are
lodged  on  days  which  are  not  Business  Days  in  the  relevant  Australian
jurisdiction, or on days which are not New York Business Days or generally after
2.30pm (Sydney time).

If an application is received by Merrill Lynch Private  (Australia) Limited on a
day that the New York  Stock  Exchange  is  closed  or the banks in New York are
closed for  business,  the net asset value  applicable  will be the price on the
next Business Day on which the New York Stock Exchange is open.



Redemption of shares

Australian  shareholders  have the right to lodge a full or  partial  withdrawal
from the Fund by providing  written notice to Merrill Lynch Private  (Australia)
Limited on any Sydney  Business  Day.  The  shareholder  will not be required to
lodge this written  request with Merrill Lynch  Financial  Data  Services, Inc.,
Jackonsville, Florida, USA.

All full or partial redemptions by Australian  investors must specify the number
of shares to be redeemed.

Properly  completed  requests for redemption of shares received by Merrill Lynch
Private  (Australia)  Limited by 2.30pm (Sydney Time) on any Sydney Business Day
will be redeemed at the next determined net asset value. If a properly completed
request for withdrawal is received by Merrill Lynch Private  (Australia) Limited
on a  non-Business  Day or after 2.30pm  (Sydney  Time) on any Business Day, the
relevant shares will be redeemed at the net asset value applicable on the second
Business Day following receipt.

If a written  redemption in the proper form is received by Merrill Lynch Private
(Australia)  Limited on a day that the New York Stock  Exchange is closed or the
banks in New York are closed for business,  the net asset value  applicable will
be the price  determined  on the next  Business  Day on which the New York Stock
Exchange is open.



Appointment of Agent

The Fund has appointed Merrill Lynch Private (Australia) Limited (ACN 004 620
026) ("Agent") as its agent, in relation to:

o        receiving applications for shares;

o        receiving redemption requests;

o        accepting other notices, correspondence and service of process on
         behalf of the Fund; and

o        making available for public  inspection and providing Fund shareholders
         with copies of constituent and other documents in relation to the Fund,
         and meeting all  reasonable  requests for  information  relating to the
         affairs of the Fund.

All notices and other  correspondence  relating  to the  Australian  Prospectus,
including applications for shares and redemption requests must be sent to:

         Merrill Lynch Private (Australia) Limited

         Level 43

         120 Collins Street

         Melbourne, Victoria, Australia, 3000.

         Or  any  of the  offices  specified  at  the  end  of  this  Australian
Prospectus Supplement.

Disclaimer

Neither the Fund,  Merrill Lynch Private  (Australia)  Limited nor any member of
the Merrill  Lynch group of companies  guarantees  the success of the Fund,  any
rate of return or the repayment of capital.



Investments Risks

Almost any investment involves some risks.

Investors should be aware that the underlying  investments will rise and fall in
value,  and foreign  currencies  will  fluctuate  in relation to the  Australian
dollar.  Investments  on  an  international  basis  involve  certain  risks  not
typically  involved  in  domestic  investments,  including,  but not limited to,
fluctuations in foreign  exchange rates,  future foreign  political and economic
developments,  and the possible imposition of exchange controls or other foreign
governmental  laws or restrictions  applicable to such  investments.  Securities
prices in  different  countries  are subject to different  economic,  financial,
political and social factors.

Since the Fund will invest in securities  denominated  in currencies  other than
the US dollar, changes in foreign currency exchange rates will affect the values
of the  securities in the Fund's  portfolio and the unrealised  appreciation  or
depreciation  of  investments.  Changes in the foreign  currency  exchange rates
relative to the Australian dollar and to the underlying  investments of the Fund
may impact on the value to the investor.

A deposit in a currency other than the investor's base currency may, because of
higher  interest  rates paid on certain  currencies  in relation to others from
time to time, provide potentially attractive returns. However, possible adverse
currency  movements  - that is, the risk that the value of the  currency of the
deposit may decline,  can not only  eliminate  such benefits but also result in
substantial losses. Losses, as such, may be more substantial if the currency of
the  deposit  weakens  along with the  currency's  interest  rate.  All persons
considering  foreign currency  deposits should  carefully  consider the risk of
movements  of both  interest  and  exchange  rates  prior  to  making  any such
deposits.


Australian taxation issues

The following is a general discussion of the Australian taxation issues that may
be relevant to an  investment  by an  Australian  investor in the Fund.  In this
regard, it is assumed that the investor is an Australian resident individual for
taxation purposes,  not subject to US tax on non-US source income and gains, and
that any investment in the Fund will be on capital  account.  It is also assumed
that the  investor  does  not  (with  associated  parties)  at any time  hold an
interest of 10% or more in the Fund.

Tax  consequences  for any investor  will depend on their  individual  financial
circumstances.  Accordingly,  this  information is not to be taken as tax advice
nor as  necessarily  canvassing  all relevant tax issues,  and this  information
should in no way be relied upon as such by any investor or  potential  investor.
All investors  should seek their own independent  professional tax advice on any
investment in light of their particular circumstances.

These comments  should be read in conjunction  with the discussion of "Taxes" in
the US Prospectus and Statement of Additional Information.



Taxation of the Fund

The Fund is  established,  managed  and  operated  in the US. US tax  issues are
discussed in the US Prospectus and Statement of Additional Information. Assuming
that the Fund does not invest in Australia,  it will not be taxable in Australia
on its income or capital gains.



Taxation of the Investor

Foreign Investment Fund (FIF) rules

The FIF rules tax a resident  taxpayer on unrealised gains on certain  interests
in foreign  companies and trusts.  The Fund is a FIF and thus investments in the
Fund are potentially  subject to taxation under the FIF rules.  However,  recent
amendments  in Taxation  Laws  Amendment Act (No.2) 1999 have the effect that an
investment in the Fund,  as a US Regulated  Investment  Company,  will be exempt
from the FIF rules.

Australian tax on distributions to investors

Dividends received from the Fund will be subject to Australian tax when they are
paid to or  reinvested  on behalf of  investors.  The  amount of such  dividends
(including any foreign tax deducted) should be translated to Australian  dollars
at the  exchange  rate  applying  at the  earlier of the date when the funds are
remitted to Australia and the end of the  financial  year in which the dividends
are received.



Investors  may  be  subject  to  US  withholding  tax  on  the  dividends,  such
withholding tax generally  applying at 15%. If so,  investors may be entitled to
an Australian  foreign tax credit for the US  withholding  tax paid.  Any excess
foreign tax credit may be able to be offset against certain other foreign income
of the investor or otherwise  carried  forward to offset such foreign  income in
future years.  It is unlikely  that an Australian  foreign tax credit will arise
for any form of foreign tax other than US withholding tax paid on dividends.



Redemption of your investment

Each  redemption  of some  part or the whole of the  investment  in the Fund may
realise a gain or loss upon redemption.  Investors will be subject to Australian
tax on any gains,  either as ordinary income or as a capital gain. Any loss will
be a capital loss and will only be able to be offset against capital gains.



In broad  terms,  any capital gain will be the  difference  between the proceeds
received on redemption,  reduced by amounts (if any) representing  distributions
of  income,  and the cost  base of the  investment.  Both the cost  base and the
redemption proceeds are translated to Australian dollars at the exchange rate on
the date(s) when (for costs) the cost(s) are incurred and (for  proceeds) on the
date of disposal of the investment. The cost base of the investment includes any
costs of  acquisition  and any  amount of  income  reinvested  in the  Fund.  To
calculate a capital gain, each element of the cost base is indexed for inflation
to the  extent  that the  investment  in the Fund has been held for more than 12
months.  The cost base or  indexed  cost base as  appropriate  is reduced to the
extent that the investor has received any non-assessable  capital  distributions
from the Fund.  The proceeds may be decreased by any deferred  sales charges and
any amount  included  in  assessable  income  under the FIF rules  which has not
previously  been  applied  to reduce  the tax  applicable  on  distributions  or
previous gains on the investment.



The  exchange  of shares in one class for  another,  or from one Fund to another
where permitted,  will involve a redemption and therefore potentially generate a
gain or loss for Australian tax purposes.



Tax file numbers



There is no  obligation  on an investor to provide  their tax file number  (TFN)
with  the  Application  Form.  However,  if the  investor  does not do so and no
exemption  applies,  tax may be required to be deducted from any distribution at
the top marginal tax rate plus the Medicare Levy.



US estate duty



In  certain  situations,  US estate  duty can apply if an  investor  dies  while
holding  US  investments.  The Fund is one such  investment.  Estate  duty  will
generally only apply where the investor holds US assets of at least US$60,000 in
value. However, advice should be sought on the implications of this law prior to
making an investment in the Fund.






Offices

                                    Melbourne

                    Merrill Lynch Private (Australia) Limited

                                    Level 43

                               120 Collins Street

                      Melbourne, Victoria, AUSTRALIA, 3000



                                     Sydney

                    Merrill Lynch Private (Australia) Limited

                                    Level 51

                          MLC Centre 19-29 Martin Place

                    Sydney, New South Wales, AUSTRALIA, 2000



                                    Brisbane

                    Merrill Lynch Private (Australia) Limited

                                    Level 32

                                    AMP Place

                                 10 Eagle Street

                      Brisbane, Queensland, AUSTRALIA, 4000



                                      Perth

                    Merrill Lynch Private (Australia) Limited

                                    Level 37

                                 Exchange Plaza

                                 2 The Esplanade

                    Perth, Western Australia, AUSTRALIA 6000