As filed with the Securities and Exchange Commission on October 13, 2000
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, For Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
Merrill Lynch Short Term U.S. Government Fund, Inc.
P.O. Box 9011 Princeton, New Jersey 08543-9011
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(Name of Registrants as Specified In Its Charter)
SAME AS ABOVE
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Payment of Filing Fee (Check the appropriate box):
/X / No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
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<PAGE>
MERRILL LYNCH INTERMEDIATE GOVERNMENT BOND FUND
MERRILL LYNCH SHORT TERM U.S. GOVERNMENT FUND, INC.
Dear Shareholder:
You are being asked to consider a transaction involving the funds
listed above. The transaction is a Reorganization of similar funds in which
Merrill Lynch Short Term U.S. Government Fund, Inc. ("Short Term U.S.
Government") will acquire Merrill Lynch Intermediate Government Bond Fund
("Intermediate Government Bond"). The following chart outlines the
Reorganization structure.
--------------------------------------------- --------------------------------
Surviving Fund Acquired Fund
--------------------------------------------- --------------------------------
Merrill Lynch Short Term U.S. Government Merrill Lynch Intermediate
Fund, Inc. Government Bond Fund
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On November 21, 2000, Intermediate Government Bond will hold a
Special Meeting of Shareholders for the purpose of considering the
Reorganization. A combined proxy statement and prospectus which provides
information about the proposed Reorganization and about each Fund is enclosed
along with a Question and Answer sheet that addresses frequently asked
questions.
You are being asked to approve the Agreement and Plan of
Reorganization pursuant to which Short Term U.S. Government will acquire
substantially all of the assets and assume substantially all of the
liabilities of Intermediate Government Bond, and the separate existence of
Intermediate Government Bond will thereafter cease. Each share of beneficial
interest of Intermediate Government Bond will be converted into the right to
receive an equivalent dollar amount of the same class of shares (i.e., Class
A, Class B, Class C or Class D) of common stock of Short Term U.S. Government,
as described in the combined proxy statement and prospectus.
The Board of Trustees of Intermediate Government Bond has reviewed
the proposed Reorganization and recommends that you vote FOR the proposed
Reorganization after carefully reviewing the enclosed materials.
The investment objective of Short Term U.S. Government is similar,
though not identical, to that of Intermediate Government Bond. Short Term U.S.
Government seeks current income and low net asset value fluctuation by
investing primarily in U.S. government securities.
Your vote is important. Please take a moment now to sign and return
your proxy card in the enclosed postage paid return envelope. If you have been
provided with the opportunity on your proxy card or voting instruction form to
provide voting instructions via telephone or the internet, you may take
advantage of these voting options. If we do not hear from you after a
reasonable amount of time, you may receive a telephone call from our proxy
solicitor, Shareholder Communications Corporation, reminding you to vote your
shares.
Sincerely,
/s/ Phillip S. Gillespie
Phillip S. Gillespie
Secretary of
Merrill Lynch Intermediate
Government Bond Fund
Enclosure
<PAGE>
Q. Why am I receiving this proxy?
A. As a shareholder of Intermediate Government Bond you are being asked
to consider a transaction in which Short Term U.S. Government will
acquire substantially all of the assets and assume substantially all
of the liabilities of Intermediate Government Bond. This transaction
is referred to in this question and answer sheet as the
Reorganization. The Reorganization requires the approval of
Intermediate Government Bond's shareholders.
Q. Which Fund will be the Surviving Fund and which Fund will be the Acquired
Fund in the Reorganization?
A. Short Term U.S. Government will be the Surviving Fund. Intermediate
Government Bond will be the Acquired Fund.
Q. Will the Reorganization change my privileges as a shareholder?
A. Your rights as a shareholder will not change in any substantial way
as a result of the Reorganization. In addition, the shareholder services
available to you after the Reorganization will be substantially the same
as the shareholder services currently available to you.
Q. How will the Reorganization benefit shareholders?
A. Shareholders should consider the following:
|X| After the Reorganization, Intermediate Government Bond's
shareholders will be invested in a fund with an increased level
of net assets with substantially similar investment objectives
and policies
After the Reorganization, shareholders in the Surviving Fund are
expected to experience:
|_| greater efficiency and flexibility in portfolio management
|_| a lower aggregate operating expense ratio (the ratio of
operating expenses to total fund assets) than prior to the
Reorganization
Q. Will the Reorganization affect the value of my investment?
A. The value of your investment will not change.
Q. As an owner of shares of beneficial interest of Intermediate
Government Bond, will I own the same number of shares of Short Term U.S.
Government after the Reorganization as I currently own?
A. No. You will receive shares of common stock of Short Term U.S.
Government with the same aggregate net asset value as the shares of
beneficial interest of Intermediate Government Bond you own on the
business day prior to the closing date of the Reorganization (the
"Effective Date"). The number of shares you receive will depend on the
relative net asset values of the shares of the two Funds on that date.
For example, let us assume that you own 10 Class A shares of beneficial
interest of Intermediate Government Bond. If the net asset value of that
Fund's Class A shares of beneficial interest on the Effective Date is $6
per share, and the net asset value of the Class A shares of common stock
of Short Term U.S. Government on the Effective Date is $12 per share,
you will receive 5 Class A shares of common stock of Short Term U.S.
Government in the Reorganization. The aggregate net asset value of your
investment will not change. (10 Intermediate Government Bond Class A
shares x $6 = $60; 5 Short Term U.S. Government shares x $12 = $60).
Q. What are the tax consequences for shareholders?
A. The Reorganization is structured as a tax-free transaction so that
the completion of the Reorganization itself will not result in Federal
income tax liability for shareholders of Intermediate Government Bond.
Intermediate Government Bond and Short Term U.S. Government have
requested a private letter ruling from the Internal Revenue Service on
the tax-free treatment of the Reorganization. Of course, shareholders
will continue to be taxed on any dividends and distributions made to
them by the Combined Fund after the Reorganization.
Q. Who will manage the Surviving Fund after the Reorganization?
A. Merrill Lynch Investment Managers, L.P. serves as the manager for
Short Term U.S. Government and for Intermediate Government Bond and will
be the manager of the Surviving Fund after the Reorganization. The
portfolio of Short Term U.S. Government is managed by Gregory Mark Maunz
and Theodore J. Magnani. After the Reorganization, the portfolio of the
Surviving Fund will be managed by Mr. Maunz and Mr. Magnani. Mr. Maunz
has managed the portfolio of Short Term U.S. Government since 1991 and
Mr. Magnani since 2000. The portfolio of Intermediate Government Bond is
managed by Ralph A. DeCesare.
Q. What will the name of the Surviving Fund be after the Reorganization?
A. If the Reorganization is approved by Intermediate Government Bond
shareholders, the Surviving Fund's name will be Merrill Lynch Short Term
U.S. Government Fund, Inc.
Q. Will there be a Shareholders' Meeting?
A. Yes, a Shareholders' Meeting for Intermediate Government Bond will be
held on November 21, 2000, at 800 Scudders Mill Road, Plainsboro, New
Jersey at _________.
Q. Why is my vote important
A. For a quorum to be present at the Special Meeting, one-third of the
outstanding shares of Intermediate Government Bond must be
represented either in person or by proxy. Approval of the
Reorganization requires the affirmative vote of shareholders
representing two-thirds of the outstanding shares of Intermediate
Government Bond entitled to vote, with all shares voting as a single
class. The Board of Trustees of Intermediate Government Bond urges
every shareholder to vote. Please read all proxy materials thoroughly
before casting your vote.
Q. How can I vote?
A. You may vote by signing and returning your proxy card in the enclosed
postage-paid envelope. If you have been provided with the opportunity on
your proxy card or voting instruction form to provide voting
instructions via telephone or the Internet, please take advantage of
these voting options. You may also vote in person at the Shareholders'
Meeting. If you submitted a proxy by mail, by telephone or on the
Internet, you may withdraw it at the Meeting and then vote in person at
the Meeting or you may submit a superseding proxy by mail, by telephone
or on the Internet.
Q. Has Intermediate Government Bond retained a proxy solicitation firm?
A. Yes, Intermediate Government Bond has hired Shareholder
Communications Corporation to assist in the solicitation of proxies for
the Meeting. While Intermediate Government Bond expects most proxies to
be returned by mail, Intermediate Government Bond may also solicit
proxies by telephone, fax, telegraph or personal interview.
Q. What if there are not enough votes to reach a quorum by the scheduled
meeting date?
A. In order to ensure that we receive enough votes, we may need to take
further action. We or our proxy solicitation firm may contact you by
mail or telephone. Therefore, we encourage shareholders to vote as soon
as they review the enclosed proxy materials to avoid additional mailings
or telephone calls. If enough shares are not represented at the
Shareholders' Meeting for the necessary quorum or the necessary quorum
is present but there are not sufficient votes to approve the proposal by
the time of the Shareholders' Meeting on November 21, 2000, such
Shareholders' Meeting may be adjourned to permit further solicitation of
proxy votes.
Q. What is the Board's recommendation?
A. The Board of Trustees of Intermediate Government Bond believes the
Reorganization is in the best interests of the Fund and its
shareholders. It encourages shareholders to vote FOR the Reorganization.
