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MERRILL LYNCH SENIOR FLOATING RATE FUND
(FORMERLY KNOWN AS MERRILL LYNCH PRIME FUND, INC.)
SUPPLEMENT TO PROSPECTUS DATED DECEMBER 20, 1993
FOR USE IN TEXAS
As described under "Net Asset Value", the Investment Adviser, subject to
guidelines adopted and periodically reviewed by the Fund's Board of Directors,
values the Corporate Loans at fair value, which approximates market value. In
valuing a Corporate Loan, the Investment Adviser considers, among other factors,
(i) the creditworthiness of the Borrower and any Intermediate Participants, (ii)
the current interest rate, period until next interest rate reset and maturity of
the Corporate Loan, (iii) recent prices in the market for similar Corporate
Loans, if any, and (iv) recent prices in the market for instruments of similar
quality, rate, period until next interest rate reset and maturity. The
Investment Adviser believes that Intermediate Participants selling Corporate
Loans or otherwise involved in a Corporate Loan transaction may tend, in valuing
Corporate Loans for their own account, to be less sensitive to interest rate and
credit quality changes and, accordingly, the Investment Adviser may not rely
solely on such valuations in valuing the Corporate Loans for the Fund's account.
In addition, because a secondary trading market in Corporate Loans has not yet
fully developed, in valuing Corporate Loans, the Investment Adviser may not rely
solely on but may consider prices or quotations provided by banks, dealers or
pricing services with respect to secondary market transactions in Corporate
Loans. To the extent that an active secondary market in Corporate Loans develops
to a reliable degree, or exists in respect of other loans or instruments deemed
to be similar to Corporate Loans, the Investment Adviser may rely to an
increasing extent on such market prices and quotations in valuing the Corporate
Loans in the Fund's portfolio.
The investment advisory and administrative fees payable by the Fund to the
Investment Adviser are based on the net asset value of the Fund.
There can be no assurance that the investment objective of the Fund will be
realized. The Fund's ability to realize its investment objective depends on,
among other things, the availability of suitable Corporate Loans and future
market or economic conditions.
Code #10938STK
