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Previous: EATON VANCE PRIME RATE RESERVES, SC 13E4, 1996-01-19 |
Next: PARAGON PORTFOLIO, 497, 1996-01-19 |
MERRILL LYNCH
SENIOR FLOATING
RATE FUND, INC.
FUND LOGO
Quarterly Report
November 30, 1995
This report, including the financial information herein, is
transmitted to the shareholders of Merrill Lynch Senior Floating
Rate Fund, Inc. for their information. It is not a prospectus,
circular or representation intended for use in the purchase of
shares of the Fund or any securities mentioned in this report. Past
performance results shown in this report should not be considered a
representation of future performance. Statements and other
information herein are as dated and are subject to change.
<PAGE>
Merrill Lynch
Senior Floating
Rate Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Merrill Lynch Senior Floating Rate Fund, Inc.
DEAR SHAREHOLDER
During the fiscal quarter ended November 30, 1995, Merrill Lynch
Senior Floating Rate Fund, Inc. continued to benefit from a
relatively flat yield curve. Earlier this year the decline in
interest rates was driven by a slowdown in real economic activity
and a shift in investors' expectations for the Federal Reserve
Board's monetary policy. In contrast, the recent decline in interest
rates has been fueled by a dramatic flattening of the yield curve.
<PAGE>
Over 97% of the Fund's investments in corporate loans are currently
accruing interest at a spread above the London Interbank Offered
Rate (LIBOR), the rate that major international banks charge each
other for dollar-denominated deposits outside the United States.
LIBOR has historically tracked very closely with other short-term
interest rates in the United States, particularly the Federal Funds
rate. Since the easing of short-term interest rates by the Federal
Reserve Board in early July, short-term interest rates, including
three-month LIBOR, have remained at or near the 5.875% level while
long-term interest rates continue to fall with the rally in US
Treasury securities. With the 30-year Treasury yield hovering around
6.0%, it was clear the financial markets were trading on the
expectation that the Federal Reserve Board would ease interest rates
further in late December or early in 1996, bringing them more in
line with other longer-term interest rates. (The central bank did
ease monetary policy at its December 19, 1995 Federal Open Market
Committee meeting.) Since the average rate reset on the Fund's
underlying LIBOR investments is 54 days, the Fund's yield is likely
to reflect any easing of short-term interest rates as it moves
through its resets over the two months subsequent to the easing.
Portfolio Performance
With this interest rate environment and moderate economic growth as
a backdrop, Merrill Lynch Senior Floating Rate Fund, Inc. ended its
fiscal quarter with approximately $2.36 billion out of $2.51
billion, or 94.1%, of its net assets committed for investment in
corporate loan interests. Assets not invested in loan interests were
invested in high-quality, short-term securities. Net of trades that
have not yet closed, the Fund had $2.04 million invested in
corporate loan interests.
The Fund's effective net annualized yield for the 12-month period
ended November 30, 1995 was 7.58%, compared to a yield of 6.03% for
the prior year. The Fund's yield was partially affected by a 15.8%
increase in net assets during the November quarter as new
subscriptions continued at a steady pace. This increase led to a
higher cash position during the period. The Fund's net asset value
continued to remain relatively stable throughout the period. During
the November quarter, the Fund earned $0.178 per share income
dividends, representing a net annualized yield of 7.15%, based on a
month-end per share net asset value of $10.01. The Fund's total
investment return was +1.70%, based on a change in net asset value
from $10.02 to $10.01, and assuming reinvestment of $0.179 per share
income dividends. Since inception (November 3, 1989) through Novem-
ber 30, 1995, the Fund's total investment return was +53.10%, based
on an increase in per share net asset value from $10.00 to $10.01,
and assuming reinvestment of $4.244 per share income dividends.
<PAGE>
Investment Activities
Throughout 1995, our investment strategy has been to invest in
leveraged transactions in which borrowers have strong market shares,
experienced managements, consistent cashflows and appropriate
risk/reward tradeoffs in the form of floating rate spread over the
prime rate or LIBOR. In addition, we have focused our holdings in
companies with significant underlying asset and franchise value,
strong capital structures, and equity sponsors that support their
investments. The advantages of adhering to this strategy are borne
out by both the relative stability of the Fund's asset value and the
continued flexibility of our borrowers as they access capital
markets. As the Fund continues to grow, we will seek to keep our
holdings diversified among industries and individual companies to
the greatest extent possible, given the availability of corporate
loan interests. However, we will also continue to focus on credit
quality and liquidity within the noninvestment-grade sector. We
have also increased the portfolio's weighting in more stable cash
flow-oriented sectors such as supermarkets, cable and broadcasting.
During the quarter ended November 30, 1995, new transaction volume
picked up substantially after a relatively light supply seen in the
third calendar quarter. This can be attributed to a number of
factors, including a strong pick up in mergers and acquisition
activity as well as the increase in leveraged buyout activity.
During the November quarter, we invested $447.2 million in new
purchases, over $244.5 million of which were new primary
transactions, such as:
* The refinancing of UCAR International Inc., Silgan Corp. and
Pierce Leahy Corp. (in conjunction with public debt or equity
issues).
* The leveraged buyouts of Dictaphone Co., Eller Industries, Inc.
and National Gypsum Co.
* The financing of the acquisition of selected cable properties by
Marcus Cable Operating Co.
* The financing of the merger of SkyChef and Cater Air, the two
largest airline catering companies in the United States.
* The financing of the spin-off of Crown Paper Co. from James River.
We supplemented investment in new issues by the purchase of $202.6
million of secondary paper in existing loans such as Jefferson
Smurfit Company/Container Corp. of America, S.D. Warren Co., Fort
Howard Corp., Federated Department Stores Inc., Ralph's Grocery
Company/Food-4-Less Supermarkets, Tenet Healthcare Corp./N.M.E., and
Johnstown America Industrial Inc. These purchases were offset by the
sale of $20.0 million in the secondary market, the partial
prepayment of $39.5 million across 30 different investments and the
full prepayment of Fund investments totaling $97.6 million,
including Waters Corp., Eckerd Corp. and Domino's Pizza Inc.
<PAGE>
As of November 30, 1995, the Fund was invested in 86 different
borrowers across 30 industries. The largest industry concentrations
were in paper (16.6% of net assets), broadcast/media (9.7%), retail
specialty (7.2%), food and beverage (6.0%) and diversified
manufacturing (3.0%). The largest individual credit exposures are
Federated Department Stores Inc. ($146.8 million; 5.7% of net
assets); Jefferson Smurfit Company/Container Corp. of America
($145.6 million; 5.8%); Fort Howard Corp. ($97.2 million; 3.9%);
Stone Container Corp. ($94.5 million; 3.8%); and Marcus Cable
Operating Co. ($80.5 million; 3.2%). The average loan size equaled
$23.7 million, or 0.9% of net assets.
The Fund completed its latest quarterly tender offer on October 17,
1995 with 3.78 million shares tendered and accepted for repurchase.
The most recent tender began on December 15, 1995 and will conclude
on January 16, 1996.
In Conclusion
We thank you for your investment in Merrill Lynch Senior Floating
Rate Fund, Inc., and we look forward to reviewing our outlook and
strategy with you again in our next report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(R. Douglas Henderson)
R. Douglas Henderson
Vice President and Portfolio Manager
January 4, 1996
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Face
Industry Senior Secured Floating Rate Loan Interests* Amount Value
<S> <S> <C> <C>
Aerospace--1.16% Aviall Inc., Term Loan B, due 11/30/00:
9.06% to 12/07/95 $ 346 $ 346
9.19% to 1/08/96 6,921 6,921
9.13% to 3/07/96 3,245 3,245
Gulfstream Aerospace Corp., Term Loan, due 3/31/97:
10.00%(1) 1,537 1,537
7.94% to 1/16/96 7,687 7,687
Gulfstream Aerospace Corp., Term Loan, due 3/31/98,
8.88% to 12/08/95 9,260 9,260
---------- ----------
28,996 28,996
Airlines--0.86% Northwest Airlines Inc., Term Loan, due 6/15/97:
10.75(1) 14,430 14,430
8.6875% to 11/20/95 84 84
Northwest Airlines Inc., Term Loan, due 9/15/97, 8.6875%
to 11/20/95 7,110 7,110
---------- ----------
21,624 21,624
Apparel--0.40% Humphreys, Term Loan B, due 1/15/03:
11.00%(1) 267 267
9.50% to 9/30/96 9,733 9,733
---------- ----------
10,000 10,000
Automobile Exide Corporation, Term Loan B, due 9/30/01:
Products--0.99% 8.8125% to 12/01/95 2,438 2,438
8.9375% to 12/29/95 2,487 2,487
Johnstown America Industrial Inc., Term Loan B, due 3/31/03,
9.00% to 2/23/96 20,000 20,000
---------- ----------
24,925 24,925
<PAGE>
Broadcast/Media American Media Inc., Term Loan B, due 9/30/02, 8.38% to 2/22/96 26,532 26,532
- --9.74% Classic Cable Inc., Term Loan B, due 6/30/05, 9.63% to 12/29/95 20,000 20,000
Coaxial Communications, Term Loan, due 12/31/99:
10.75% (1) 32 32
9.125% to 2/15/96 4,370 4,370
9.19% to 6/14/96 9,468 9,468
8.94% to 7/17/96 5,035 5,035
Comcast Corp., Term Loan, due 9/30/04, 7.065% to 9/01/96 10,000 10,000
Eller Industries, Inc., Term Loan A, due 6/30/02:
8.32% to 12/27/95 4,200 4,200
8.38% to 4/23/96 3,300 3,300
Eller Industries, Inc., Term Loan B, due 12/21/03, 9.13% to 4/23/96 14,327 14,327
Ellis Communications, Term Loan B, due 3/31/03:
9.0625% to 12/20/95 4,950 4,950
11.25% to 12/29/95 17 17
Journal News Inc., Term Loan, due 12/31/01, 7.94% to 1/30/96 10,000 10,000
Marcus Cable Operating Co., Revolving Credit Loan, due 4/30/14:
7.82% to 12/04/95 2,969 2,969
9.50% to 12/29/95 156 156
Marcus Cable Operating Co., Term Loan A, due 12/31/02:
7.82% to 12/04/95 6,811 6,811
7.94% to 2/02/96 21,001 21,001
Marcus Cable Operating Co., Term Loan B, due 4/30/04:
8.57% to 12/04/95 4,200 4,200
8.69% to 12/06/95 11,500 11,500
8.69% to 2/02/96 27,300 27,300
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Face
Industry Senior Secured Floating Rate Loan Interests* Amount Value
<S> <S> <C> <C>
Broadcast/Media QVC, Inc., Term Loan B, due 1/31/04, 8.9375% to 3/05/96 $ 28,000 $ 28,000
(concluded) Silver King Communications, Inc., Term Loan B, due 7/31/02, 8.875%
to 12/01/95 17,775 17,775
US Radio Inc., Term Loan A, due 12/31/01:
9.00% to 3/29/96 1,284 1,284
8.875% to 4/30/96 1,220 1,220
US Radio Inc., Term Loan B, due 9/23/03:
10.00%(1) 1,682 1,682
9.8125% to 12/11/95 823 823
9.875% to 3/08/96 828 828
9.875% to 4/30/96 1,708 1,708
Western Wireless, Revolving Credit Loan, due 12/31/03:
7.88% to 12/07/95 1,333 1,333
7.88% to 12/08/95 67 67
7.94% to 1/08/96 2,467 2,467
7.94% to 1/11/96 133 133
7.87% to 1/22/96 133 133
7.88% to 2/07/96 133 133
7.37% to 2/22/96 200 200
---------- ----------
243,954 243,954
Building Fenway Holdings, Inc., Term Loan B, due 9/15/02:
Products--2.76% 9.1875% to 1/16/96 3,182 3,182
9.00% to 5/16/96 1,818 1,818
MTF Acquisition, Term Loan B, due 12/31/02, 8.88% to 12/29/95 19,800 19,800
National Gypsum Co., Term Loan B, due 9/20/03:
10.50%(1) 91 91
8.88% to 1/26/96 22,727 22,727
8.88% to 2/27/96 2,182 2,182
Overhead Door Corp., Revolving Credit Loan, due 8/18/99:
11.25%(1) 954 954
8.4375% to 12/29/95 682 682
8.375% to 2/20/96 341 341
8.375% to 2/29/96 205 205
Overhead Door Corp., Term Loan, due 8/18/99:
11.25%(1) 68 68
8.4375% to 12/29/95 8,139 8,139
RSI Home Products, Term Loan, due 11/30/99, 8.375% to 2/29/96 9,000 9,000
---------- ----------
69,189 69,189
Carbon & Graphite UCAR International Inc., Term Loan B, due 12/31/02,
Products--0.57% 7.8125% to 12/27/95 14,314 14,314
<PAGE>
Chemicals--2.56% Cedar Chemical, Term Loan B, due 10/31/03, 9.00% to 12/08/95 9,250 9,250
Freedom Chemical Company, Term Loan B, due 6/30/02, 10.75%(1) 27,000 27,000
Harris Specialty Chemicals, Revolving Credit Loan, due 12/30/01:
9.07% to 12/20/95 2,441 2,441
9.13% to 12/29/95 2,320 2,320
9.19% to 12/29/95 381 381
Harris Specialty Chemicals, Term Loan A, due 12/30/99:
10.25%(1) 13 13
8.63% to 12/18/95 604 604
Harris Specialty Chemicals, Term Loan B, due 12/30/01,
9.25% to 9/18/95:
10.75%(1) 19 19
9.13% to 12/18/95 6,000 6,000
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Face
Industry Senior Secured Floating Rate Loan Interests* Amount Value
<S> <S> <C> <C>
Chemicals Hydro Chemical, Term Loan B, due 7/01/02, 9.7031% to 4/30/96 $ 5,000 $ 5,000
(concluded) Inspec Chemical Corp., Term Loan B, due 12/02/00, 8.50%
to 12/29/95 3,974 3,974
Thoro World Systems, Inc., Term Loan A, due 12/30/99, 8.63%
to 12/29/95 2,252 2,252
Thoro World Systems, Inc., Term Loan B, due 12/30/01,
9.13% to 12/29/95 4,916 4,916
---------- ----------
64,170 64,170
Consumer CHF/Ebel USA Inc., Term Loan B, due 9/30/01, 9.125% to 4/30/96 10,032 10,032
Products--2.40% Playtex Family Products Inc., Term Loan A, due 6/30/02:
6.63% to 12/06/95 3,059 3,059
7.38% to 12/06/95 12,237 12,237
7.44% to 1/08/96 16,317 16,317
Playtex Family Products Inc., Term Loan B, due 6/30/02:
6.63% to 12/06/95 328 328
7.38% to 12/06/95 1,311 1,311
7.44% to 1/08/96 1,748 1,748
Revlon Consumer Products Corp., Term Loan B, due 6/30/97,
9.3125% to 12/08/95 15,000 15,000
---------- ----------
60,032 60,032
<PAGE>
Containers--1.06% Ivex Packaging Corp., Term Loan B, due 12/31/99:
11.00%(1) 8,690 8,690
11.25%(1) 11 11
9.32% to 12/28/95 857 857
Silgan Corp., Term Loan B, due 3/15/02:
8.8125% to 12/11/95 2,354 2,354
8.875% to 12/11/95 9,822 9,822
8.9375% to 2/09/96 4,824 4,824
---------- ----------
26,558 26,558
Diversified Desa International Inc., Term Loan B, due 11/30/00,
Manufacturing--2.99% 9.0625% to 12/27/95 9,032 9,032
InterMetro Industries, Term Loan B, due 6/30/01:
8.8125% to 12/07/95 1,835 1,835
8.875% to 1/03/96 7,651 7,651
InterMetro Industries, Term Loan C, due 12/31/02:
9.3125% to 12/07/95 2,669 2,669
9.375% to 1/03/96 11,132 11,132
The Pullman Co., Inc., Revolving Credit Loan, due 12/31/99:
10.25%(1) 1,016 1,016
8.82% to 12/26/95 3,915 3,915
The Pullman Co., Inc., Term Loan A, due 12/31/99, 8.82%
to 12/26/95 9,359 9,359
The Pullman Co., Inc., Term Loan B, due 12/31/99, 9.32% to 12/26/95 650 650
Thermadyne Industries, Revolving Credit Loan, due 12/02/99:
10.25%(1) 68 68
8.5625% to 12/11/95 334 334
Thermadyne Industries, Term Loan A, due 12/02/98,
8.5625% to 12/11/95 3,511 3,511
Thermadyne Industries, Term Loan B, due 2/01/01, 8.8125%
to 12/11/95 23,856 23,856
---------- ----------
75,028 75,028
Drug Stores--1.94% Duane Reade Co., Term Loan A, due 9/30/97, 8.875% to 2/29/96 7,711 7,711
Duane Reade Co., Term Loan B, due 9/30/99, 9.375% to 2/29/96 10,000 10,000
Thrifty Payless Inc., Term Loan B, due 9/30/01, 8.9375% to 12/22/95 20,934 20,934
Thrifty Payless Inc., Term Loan C, due 6/30/02, 9.3125% to 1/11/96 10,000 10,000
---------- ----------
48,645 48,645
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Face
Industry Senior Secured Floating Rate Loan Interests* Amount Value
<S> <S> <C> <C>
Electrical Berg Electronics Inc., Term Loan A, due 3/31/00,
Instruments--2.60% 8.57% to 12/27/95 $ 10,875 $ 10,875
Berg Electronics Inc., Term Loan B, due 6/30/01,
8.82% to 12/27/95 963 963
Communications & Power Industries Inc., Term Loan B,
due 8/11/02:
8.88% to 12/06/95 500 500
8.88% to 3/06/96 5,167 5,167
International Wire Corp., Term Loan B, due 9/30/02, 9.00%
to 12/12/95 9,988 9,988
Reliance Communications Technology, Term Loan B, due 3/11/04,
8.5625% to 12/13/95 13,000 13,000
Reliance Communications Technology, Term Loan C, due 3/11/03,
9.0625% to 12/13/95 12,000 12,000
Tracor Inc., Term Loan A, due 10/31/98, 8.3125% to 12/27/95 2,831 2,831
Tracor Inc., Term Loan B, due 2/28/01:
10.75%(1) 11 11
8.8125% to 12/27/95 9,889 9,889
---------- ----------
65,224 65,224
Food & American Italian Pasta, Term Loan C, due 12/31/00:
Beverage--5.99% 9.50% to 5/17/96 2,483 2,483
9.4375% to 11/18/96 2,517 2,517
Amerifoods, Term Loan B, due 6/30/01, 10.75% (1) 7,500 7,500
Amerifoods, Term Loan C, due 6/30/02, 11.25% (1) 7,500 7,500
Labatt Brewing Co., Term Loan B, due 10/01/03:
8.375% to 12/14/95 9,000 9,000
8.4375% to 1/16/96 6,000 6,000
MAFCO Worldwide Corp., Term Loan B, due 6/30/01,
8.88% to 12/29/95 9,900 9,900
President Baking Co., Inc., Term Loan B, due 9/30/00,
8.625% to 12/29/95 4,949 4,949
Select Beverage Inc., Term Loan B, due 6/30/01, 9.0625%
to 12/01/95 2,000 2,000
Select Beverage Inc., Term Loan C, due 6/30/01:
9.4375% to 1/02/96 1,500 1,500
9.4375% to 2/01/96 1,500 1,500
Sky Chef/Cater Air, Term Loan A, due 9/15/00:
10.25%(1) 22 22
8.3125% to 12/20/95 27,121 27,121
Sky Chef/Cater Air, Term Loan B, due 9/15/02:
11.75%(1) 18 18
8.8125% to 12/20/95 24,927 24,927
Sky Chef/Cater Air, Term Loan C, due 9/15/03:
12.00%(1) 4 4
9.0625% to 12/20/95 3,050 3,050
Specialty Foods Corp., Term Loan, due 4/30/01:
8.0625% to 12/26/95 13,341 13,341
8.0625% to 1/22/96 13,399 13,399
8.1875% to 1/22/96 13,399 13,399
---------- ----------
150,130 150,130
<PAGE>
Grocery--2.93% Big V Supermarkets Inc., Term Loan B, due 3/15/00:
8.6875% to 12/20/95 5,200 5,200
8.8125% to 1/17/96 5,200 5,200
Dominick's Finer Foods Inc., Term Loan B, due 3/31/02,
9.1875% to 12/05/95 4,327 4,327
Dominick's Finer Foods Inc., Term Loan C, due 3/31/03,
9.6875% to 12/05/95 4,687 4,687
Dominick's Finer Foods Inc., Term Loan D, due 9/30/03,
9.9375% to 12/05/95 4,688 4,688
Pathmark Stores Inc., Term Loan, due 10/31/99, 8.875% to 12/29/95 4,576 4,576
Ralph's Grocery Company, Revolving Credit Loan, due 6/15/01:
10.25%(1) 500 500
8.625% to 12/07/95 1,500 1,500
8.625% to 12/28/95 1,000 1,000
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Face
Industry Senior Secured Floating Rate Loan Interests* Amount Value
<S> <S> <C> <C>
Grocery Ralph's Grocery Company, Term Loan A, due 6/15/01,
(concluded) 8.625% to 12/20/95 $ 13,361 $ 13,361
Ralph's Grocery Company, Term Loan B, due 6/15/02,
9.125% to 12/20/95 6,983 6,983
Ralph's Grocery Company, Term Loan C, due 6/15/03,
9.625% to 12/20/95 6,982 6,982
Ralph's Grocery Company, Term Loan D, due 2/15/04,
9.875% to 12/20/95 6,983 6,983
Star Markets Co., Inc., Term Loan B, due 12/31/01,
8.82% to 12/18/95 4,211 4,211
Star Markets Co., Inc., Term Loan C, due 12/31/02,
9.32% to 12/18/95 3,158 3,158
---------- ----------
73,356 73,356
Health Services Medcobehavioral Care Corp., Term Loan B, due 4/06/02,
- --2.87% 8.3125% to 12/06/95 12,009 12,009
Tenet Healthcare Corp./N.M.E.,Term Loan, due 8/31/01(2):
7.125% to 12/01/95 2,423 2,423
7.0625% to 12/04/95 1,656 1,656
7.25% to 12/05/95 12,117 12,117
7.0625% to 12/06/95 606 606
7.125% to 1/03/96 9,814 9,814
7.25% to 1/03/96 2,504 2,504
7.1875% to 1/04/96 1,656 1,656
7.125% to 2/01/96 12,116 12,116
7.1875% to 2/05/96 1,656 1,656
7.125% to 2/29/96 567 567
7.1875% to 2/29/96 1,250 1,250
7.1875% to 3/01/96 9,411 9,411
7.1875% to 3/04/96 2,423 2,423
7.125% to 5/01/96 1,656 1,656
---------- ----------
71,864 71,864
<PAGE>
Leasing & Rental Prime Acquisition, Term Loan, due 12/31/00:
Services--0.79% 8.875% to 12/04/95 6,400 6,400
9.00% to 1/02/96 7,120 7,120
8.9375% to 2/05/96 6,400 6,400
---------- ----------
19,920 19,920
Leisure/Entertainment Metro Goldwyn Mayer Co., Term Loan, due 4/15/97, 8.19% to 1/24/96 10,000 10,000
- --1.36% Orion Pictures Corp., Term Loan, due 12/31/00:
10.75%(1) 285 285
8.8125% to 12/08/95 322 322
8.9375% to 1/08/96 185 185
8.875% to 2/08/96 3,956 3,956
Six Flags Entertainment Corp., Term Loan B, due 6/23/03:
8.875% to 12/27/95 16,154 16,154
9.00% to 2/23/96 3,247 3,247
---------- ----------
34,149 34,149
Manufacturing--1.34% Calmar Inc., Term Loan A, due 9/15/03, 8.88% to 12/15/95 10,571 10,571
Calmar Inc., Term Loan B, due 3/15/04, 9.13% to 12/15/95 7,929 7,929
Trans Technology Corp., Term Loan B, due 6/30/02,
9.125% to 5/02/96 15,000 15,000
---------- ----------
33,500 33,500
Medical Deknatel Holdings Corp., Term Loan A, due 4/20/99:
Devices--0.68% 8.8125% to 12/29/95 115 115
8.9375% to 1/25/96 115 115
8.875% to 4/25/96 1,708 1,708
Deknatel Holdings Corp., Term Loan B, due 4/20/01,
9.375% to 4/25/96 15,000 15,000
---------- ----------
16,938 16,938
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Face
Industry Senior Secured Floating Rate Loan Interests* Amount Value
<S> <S> <C> <C>
Message Dictaphone Co., Term Loan B, due 6/30/02, 9.1875% to 2/16/96 $ 10,000 $ 10,000
Communications--0.40%
Nautical Sperry Marine, Inc., Term Loan, due 11/15/00:
Systems--0.34% 9.125% to 12/29/95 4,947 4,947
9.1875% to 3/29/96 3,507 3,507
---------- ----------
8,454 8,454
<PAGE>
Paper--16.64% Crown Paper Co., Term Loan B, due 8/22/03:
9.125% to 12/22/95 5,000 5,000
9.1875% to 12/22/95 5,000 5,000
9.3125% to 1/22/96 5,000 5,000
9.25% to 2/20/96 5,000 5,000
Fort Howard Corp., Revolving Credit Loan, due 3/16/02:
8.38% to 12/19/95 450 450
8.32% to 3/19/96 450 450
Fort Howard Corp., Term Loan A, due 3/08/02:
8.38% to 12/19/95 15,649 15,649
8.32% to 3/19/96 15,649 15,649
Fort Howard Corp., Term Loan B, due 12/31/02:
8.88% to 12/19/95 31,604 31,604
8.82% to 3/19/96 31,604 31,604
Jefferson Smurfit Company/Container Corp. of America, Revolving
Credit Loan, due 4/30/01:
10.25%(1) 60 60
7.5625% to 12/01/95 298 298
7.5625% to 12/27/95 119 119
Jefferson Smurfit Company/Container Corp. of America, Term Loan A,
due 4/30/01:
7.5625% to 12/22/95 19,051 19,051
7.6875% to 1/26/96 38,556 38,556
7.5625% to 1/29/96 16,556 16,556
7.6875% to 1/30/96 6,124 6,124
Jefferson Smurfit Company/Container Corp. of America, Term Loan B,
due 4/30/02:
8.8125% to 12/22/95 49,337 49,337
8.9375% to 1/19/96 12,928 12,928
Mail-Well, Inc./Supremex, Term Loan B, due 7/31/03:
8.875%(1) 3,644 3,644
8.875% to 12/06/95 9,777 9,777
S.D. Warren Co., Term Loan A, due 12/31/01, 8.32% to 12/27/95 9,180 9,180
S.D. Warren Co., Term Loan B, due 12/19/02, 8.82% to 12/27/95 57,039 57,039
Stone Container Corp., Revolving Credit Loan, due 4/01/00:
10.375%(1) 1,778 1,778
8.4375% to 12/21/95 1,778 1,778
8.4375% to 12/27/95 889 889
Stone Container Corp., Term Loan B, due 4/01/00:
9.0625% to 1/16/96 29,707 29,707
9.00% to 2/20/96 27,307 27,307
Stone Container Corp., Term Loan C, due 4/01/00, 9.3125% to 1/30/96 17,500 17,500
---------- ----------
417,034 417,034
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Face
Industry Senior Secured Floating Rate Loan Interests* Amount Value
<S> <S> <C> <C>
Printing & K-III Communications Corp., Term Loan, due 12/31/00,
Publishing 7.38% to 2/09/96 $ 6,000 $ 6,000
- --1.74% Print Tech International, Term Loan B, due 12/28/01:
8.875% to 12/01/95 600 600
8.8125% to 12/08/95 3,542 3,542
Ziff Davis Acquisition Corp., Term Loan B, due 12/31/01, 8.875%
to 12/27/95 13,696 13,696
Ziff Davis Acquisition Corp., Term Loan C, due 12/31/02, 9.375%
to 3/28/96 19,755 19,755
---------- ----------
43,593 43,593
Retail--Specialty Camelot Music, Inc., Term Loan B, due 8/31/01:
- --7.18% 8.8125% to 12/20/95 8,156 8,156
8.9375% to 1/23/96 13,781 13,781
Camelot Music, Inc., Term Loan C, due 8/31/02, 9.3125%
to 12/21/95 7,500 7,500
Federated Department Stores Inc., Revolving Credit Loan,
due 3/31/00:
6.5625% to 12/06/95 3,125 3,125
6.5625% to 12/14/95 3,125 3,125
6.5625% to 12/18/95 4,688 4,688
6.5625% to 12/20/95 13,281 13,281
6.5625% to 12/29/95 9,375 9,375
Federated Department Stores Inc., Term Loan, due 3/31/00:
6.6875% to 1/29/96 53,125 53,125
6.4375% to 5/29/96 31,875 31,875
Saks & Co., Term Loan A, due 6/30/98:
8.4375% to 1/03/96 625 625
8.25% to 5/09/96 3,750 3,750
Saks & Co., Term Loan B, due 6/30/00, 8.75% to 5/09/96 27,469 27,469
---------- ----------
179,875 179,875
Telecommunications-- LDDS Communications Inc., Term Loan, due 12/31/00:
2.37% 8.75% to 12/31/95 20,000 20,000
6.755% to 2/08/96 10,000 10,000
Paging Network Inc., Term Loan B, due 3/31/02, 8.945% to 5/06/96 29,333 29,333
---------- ----------
59,333 59,333
Textiles--0.99% Chicopee, Inc., Term Loan B, due 3/31/03, 9.13% to 12/29/95 24,875 24,875
<PAGE>
Transportation Petro Properties, Term Loan B, due 5/24/01, 9.125% to 12/29/95 8,658 8,658
Services--0.35%
Warehousing & Pierce Leahy Corp., Term Loan B, due 10/25/02, 9.1875% to 1/31/96 9,462 9,462
Storage--0.60% Pierce Leahy Corp., Term Loan C, due 10/25/03, 9.4375% to 1/31/96 5,538 5,538
---------- ----------
15,000 15,000
Total Senior Secured Floating Rate Loan Interests
(Cost--$1,919,338)--76.60% 1,919,338 1,919,338
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
Face
Short-Term Securities Amount Value
<S> <S> <C> <C>
Commercial Ciesco L.P.:
Paper**--19.45% 5.68% due 12/11/95 $ 50,000 $ 49,921
5.70% due 1/08/96 40,000 39,759
Corporate Asset Funding Co.:
5.70% due 12/27/95 40,000 39,835
5.70% due 1/12/96 25,000 24,834
DuPont (E.I.) de Nemours & Company, 5.67% due 12/21/95 50,000 49,842
General Electric Capital Corp., 5.90% due 12/01/95 53,708 53,708
Matterhorn Capital Corp., 5.71% due 12/01/95 50,000 50,000
National Australia Funding, Inc., 5.71% due 1/08/96 50,000 49,699
National Fleet Fund, Inc., 5.74% due 12/05/95 30,000 29,981
UBS Finance, (Delaware), 5.75% due 12/05/95 50,000 49,968
Wal-Mart Stores, Inc., 5.70% due 12/22/95 50,000 49,834
---------- ----------
488,708 487,381
US Government Federal Home Loan Mortgage Corp., 5.66% due 12/20/95 40,000 39,881
& Agency Federal National Mortgage Association, 5.67% due 12/28/95 50,000 49,787
Obligations**--3.58% ---------- ----------
90,000 89,668
Total Short-Term Securities (Cost--$577,049)--23.03% 578,708 577,049
<PAGE>
Shares
Common Stock Held
Restaurants--0.01% Flagstar Companies, Inc. 44 138
Total Common Stock (Cost--$0)--0.01% 44 138
Total Investments (Cost--$2,496,387)--99.64% 2,496,525
Other Assets Less Liabilities--0.36% 8,966
----------
Net Assets (Equivalent to $10.01 per share based on 250,197,702
shares outstanding)--100.00% $2,505,491
==========
<FN>
*The interest rates on senior secured floating rate loan interests
are subject to change periodically based on the change in the prime
rate of a US Bank, LIBOR (London Interbank Offered Rate), or, in
some cases, another base lending rate. The interest rates shown are
those in effect at November 30, 1995.
**Commercial Paper and certain US Government & Agency Obligations
are traded on a discount basis; the interest rates shown are the
discount rates paid at the time of purchase by the Fund.
(1)Index is based on the prime rate of a US bank, which is subject
to change daily.
(2)Name changed from National Medical Enterprises Inc.
</TABLE>
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
N. John Hewitt, Senior Vice President
Donald C. Burke, Vice President
John W. Fraser, Vice President
R. Douglas Henderson, Vice President
Gerald M. Richard, Treasurer
Patrick D. Sweeney, Secretary
<PAGE>
Custodian
The Bank of New York
90 Washington Street
New York, New York 10286
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
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