MERRILL LYNCH ADJUSTABLE RATE SECURITIES FUND, INC.
Supplement dated June 30, 2000
to the Prospectus dated September 28, 1999
The Board of Directors of Merrill Lynch Adjustable Rate Securities
Fund, Inc. ("the Fund") has approved a proposed amendment to the investment
objective and policies of the Fund, subject to stockholder approval at a
meeting to be held August 23, 2000.
The proposed amended investment objective of the Fund will be to
provide current income and low net asset value fluctuation. The Fund will seek
to achieve its objective by investing at least 65% of its total assets in
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, including mortgage-backed securities issued by government
agencies such as the Federal Home Loan Bank, Government National Mortgage
Association (GNMA or "Ginnie Mae"), Federal National Mortgage Association
(FNMA or "Fannie Mae") and Student Loan Marketing Association (SLMA or "Sallie
Mae"). Further, the Fund will adopt a non-fundamental operating policy whereby
it will seek to maintain a dollar weighted average maturity of less than three
years to try to reduce the volatility of the value of its securities
portfolio. However, the Fund may purchase securities of any maturity and may
use derivative instruments to try to reduce interest rate risk.
If the proposed amendment to the investment objective and policies is
approved by stockholders, the management fee payable by the Fund to Merrill
Lynch Investment Managers, L.P. will be reduced from an annual rate of 0.50%
of average daily net assets to an annual rate of 0.40% of average daily net
assets. Also, the maximum initial sales charge imposed on purchases of Class A
or Class D shares of the Fund will be reduced from 4.00% to 1.00% and the
maximum deferred sales charge imposed on redemptions of Class B shares will be
reduced from 4.00% to 1.00%. If the proposed amendment is approved, the
aggregate account maintenance and/or distribution fees payable will be reduced
for Class B shares from an annual rate of 0.75% of average daily net assets to
0.40%, for Class C shares from an annual rate of 0.80% of average daily net
assets to 0.40%, and for Class D Shares from an annual rate of 0.25% of
average daily net assets to 0.10%.
The proposed change to the investment objective and policies is not
expected to substantially change the main risks of investing in the Fund.
However, if the stockholders approve the change to the investment objective
and policies, the Fund may be subject to an increase in interest rate risk and
fluctuation in net asset value, and a possible increase in capital gains
distributions.
If the stockholders approve the proposed amendments, it is anticipated
that the Fund will change its name to Merrill Lynch U.S. Short Term Government
Fund, Inc. to correspond to the change in the investment objective and
policies of the Fund.
Code No. 13937-0999ALL
