MERRILL LYNCH
SENIOR FLOATING
RATE FUND, INC.
FUND LOGO
Quarterly Report
November 30, 1998
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. The Fund has the ability to
leverage its Common Stock to provide Common Stock shareholders with
a potentially higher rate of return. Leverage creates risk for
Common Stock shareholders, including the likelihood of greater
volatility of net asset value and market price of Common Stock
shares, and the risk that fluctuations in short-term interest rates
may reduce the Common Stock's yield. Statements and other
information herein are as dated and are subject to change.
Merrill Lynch
Senior Floating
Rate Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
Merrill Lynch Senior Floating Rate Fund, Inc.
DEAR SHAREHOLDER
During most of the quarter ended November 30, 1998, the volatility
experienced by virtually all of the world's financial markets
adversely affected the performance of Merrill Lynch Senior Floating
Rate Fund, Inc. The Fund had its worst quarterly decline in its
eight-year history as reflected by the total return of +0.36% for
the November quarter. While the high-yield loan market outperformed
all other credit-related fixed-income sectors during the November
quarter, it still suffered from the drying up of liquidity that
affected all fixed-income markets, particularly the high-yield bond
market.
The dislocation of the world financial markets was set off by the
devaluation of the Russian ruble in August and further exacerbated
by the resulting liquidity crisis suffered by hedge funds. Hedge
funds and high-yield mutual funds that had come into the bank loan
market during the last 24 months to take advantage of the lower
volatility of senior bank loans suddenly became sellers of large
pieces of loans. These investors were able to sell loans at a
fraction of the loss that would have been incurred if they sold high-
yield bonds or emerging markets debt. This put technical pressure on
the price levels quoted by dealers in the bank loan market and
resulted in the largest technical correction in the loan market
since the Fund's inception. However, the three 25 basis point
(0.25%) easings by the Federal Reserve Board in less than two months
helped to improve investor sentiment and free up liquidity. During
November, spreads in the US high-yield bond market tightened by over
100 basis points from their historically wide levels in late October
but the loan market's recovery did not really begin until after the
close of the November quarter. The loan market lagged the bond
market on the way up just as it had on the way down in September.
On a comparative basis, senior secured bank loans experienced
relatively little volatility and outperformed every other credit-
oriented fixed-income category during the November quarter. The pick
up in refinancing volume in the non-investment grade sector in
November and December prepaid some large outstanding loans and
provided investors with cash to put back to work in a decidedly
different new-issue market. For example, the Fund's Sprint Spectrum
L.P. investment was repaid early with the proceeds of a $5.0 billion
bond issue from Sprint Corporation.
Although the US economy showed surprisingly robust growth in the
fourth quarter of 1998 as reflected by 3.7% gross domestic product
growth, current consensus expectations are for growth to slow to
less than 2.5% by the end of 1999. We do not expect a recessionary
scenario, particularly if the Federal Reserve Board continues to
aggressively cut short-term interest rates. Currently, inflationary
pressures remain contained, supported by the report showing moderate
growth in wages along with low unemployment figures. We expect the
loan market to continue to experience improving technicals as the
demand side of the equation continues to outpace new issuance. The
market dislocation in October and November served to reduce the
amount of new issuance in the fourth calendar quarter to very low
levels compared to a year earlier. This, in tandem with the strong
cash flows into the loan market, could continue to improve the
secondary bid levels.
At November 30, 1998, over 98% of the Fund's investments in
corporate loans were 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. Historically, LIBOR has tracked very closely with
other US short-term interest rates, particularly the Federal Funds
rate. Meanwhile, the three-month LIBOR traded down with the Federal
Reserve Board easings during the three-month period ended November
30, 1998. The average number of days to LIBOR reset on the Fund's
investments was 34 days at the end of the November quarter.
The three Federal Reserve Board easings were reflected in the Fund's
yield by the end of the year as the Fund's investments moved through
their LIBOR resets. The lower LIBOR has been somewhat offset by the
higher spread over LIBOR that loan investors are demanding in this
environment. The Fund's yield typically reflects any sustained
movement in short-term interest rates within a one-month--two-month
period, depending on the Fund's cash position.
Fund Performance
With this interest rate environment and economic growth as a
backdrop, Merrill Lynch Senior Floating Rate Fund, Inc. ended the
November quarter with approximately $3.0 billion out of $3.3
billion, or 90.1%, 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.
Merrill Lynch Senior Floating Rate Fund, Inc.
November 30, 1998
The Fund's effective net annualized yield for the quarter ended
November 30, 1998 was 6.72%, compared to a yield of 6.93% for the
same period a year earlier. The Fund's net asset value moved down
during the November quarter in response to the drop in dealer quotes
across the board as hedge funds and high-yield mutual funds sold
bank loans to create more liquidity during the market downturn.
During the three-month period ended November 30, 1998, the Fund
earned $0.165 per share income dividends, representing a net
annualized yield of 6.72%, based on a month-end per share net asset
value of $9.84. For the quarter ended November 30, 1998, the Fund's
total investment return was +0.36%, based on a change in net asset
value from $9.97 to $9.84, and assuming reinvestment of $0.166 per
share income dividends. Since inception (November 3, 1989) through
November 30, 1998, the Fund's total investment return was +83.73%,
based on a change in per share net asset value from $10.00 to $9.84,
and assuming reinvestment of $6.249 per share income dividends.
Investment Activities
During the November quarter, we focused on the better-priced new-
issue market where transactions were available at yields relative to
LIBOR that were 100 basis points--150 basis points greater than was
the case in July. The transactions were also much more
conservatively structured with lower leverage and higher interest
coverage as investors became more demanding in the face of a
potentially slowing US economy. As a result, many of the high-yield
loans brought to market in the fourth quarter are now trading above
par. During the three-month period ended November 30, 1998, the
Fund's investment strategy remained unchanged: to invest in
leveraged transactions in which borrowers have strong market shares,
experienced managements, consistent cash flows and appropriate
risk/reward characteristics in the form of its floating rate spreads
over the prime rate of LIBOR. In addition, we look for companies
with significant underlying asset and franchise value, strong
capital structures and equity sponsors that support their
investments. Recent investments that fit this investment philosophy
included Scotts Company, Stryker Corporation and Superior Telecom's
purchase of Essex Corporation.
We took the opportunity to reposition the portfolio during the
November quarter by selling lower-coupon loans (lower spreads over
LIBOR) to raise cash for what we viewed as better-priced new issues.
As evidenced by the number of investments in the Fund, it has become
more diversified by sector and by actual number of issuers. This is
in part by design to help lessen credit exposure to any one holding.
It also reflects the number of investors in the loan market today,
which results in smaller allocations, continued strong demand and
improved liquidity. Since the beginning of the correction in August,
investors who are increasingly concerned with the market quotes on
their loans have been more focused on demanding sufficient initial
pricing so that a loan will trade well. We expect these trends to
continue even as new money comes into the market in the first
quarter of 1999.
As of November 30, 1998, the Fund was invested in 202 different
borrowers across 48 industries. See the "Portfolio Information"
section of this report to shareholders on page 3, which provides
listings of the Fund's ten largest holdings and five largest
industries as of November 30, 1998.
As difficult as the period was for the loan market and the Fund,
their performances illustrate the high-yield loan market's ability
to weather market fluctuations with less volatility than the high-
yield bond market. This attribute continues to draw many new
institutional buyers to the loan market. When there was almost no
liquidity during the recent turmoil and many markets lost their
ability to price transactions, the loan market maintained bids for
most generally syndicated transactions, albeit at lower levels. We
believe this relative stability will continue to improve the
technical conditions in the market and provide the opportunity to
improve the Fund's total return potential over the next six months.
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
Senior Vice President and Portfolio Manager
January 25, 1999
Merrill Lynch Senior Floating Rate Fund, Inc.
November 30, 1998
THE BENEFITS AND RISKS OF LEVERAGING
Merrill Lynch Senior Floating Rate Fund, Inc. (the "Fund") has the
ability to utilize leverage through the borrowings or issuance of
short-term debt securities or shares of Preferred Stock. The concept
of leveraging is based on the premise that the cost of assets to be
obtained from leverage will be based on short-term interest rates,
which normally will be lower than the return earned by the Fund on
its longer-term portfolio investments. Since the total assets of the
Fund (including the assets obtained from leverage) are invested in
higher-yielding port-folio investments, the Fund's Common Stock
shareholders are the beneficiaries of the incremental yield. Should
the differential between the under-lying interest rates narrow, the
incremental yield "pick up" will be reduced. Furthermore, if
long-term interest rates rise, the Common Stock's net asset value
will reflect the full decline in the entire portfolio holdings
resulting therefrom since the assets obtained from leverage do not
fluctuate.
Leverage creates risks for holders of Common Stock including the
likelihood of greater net asset value and market price volatility.
In addition, there is the risk that fluctuations in interest rates
on borrowings (or in the dividend rates on any Preferred Stock, if
the Fund were to issue the Preferred Stock) may reduce the Common
Stock's yield and negatively impact its market price. If the income
derived from securities purchased with assets received from leverage
exceeds the cost of leverage, the Fund's net income will be greater
than if leverage had not been used. Conversely, if the income from
the securities purchased is not sufficient to cover the cost of
leverage, the Fund's net income will be less than if leverage had
not been used, and therefore the amount available for distribution
to Common Stock shareholders will be reduced. In this case, the Fund
may nevertheless decide to maintain its leveraged position in order
to avoid capital losses on securities purchased with leverage.
However, the Fund will not generally utilize leverage if it
anticipates that its leveraged capital structure would result in a
lower rate of return for its Common Stock than would be obtained if
the Common Stock were unleveraged for any significant amount of
time.
PORTFOLIO INFORMATION
As of November 30, 1998
Quality Ratings* Percent of
S&P/Moody's Long-Term Investments
AAA/Aaa 15.7%
A/A 0.3
BBB/Baa 0.1
BB/Ba 25.8
B/B 14.7
CCC/Caa 1.1
NR (Not Rated) 42.3
[FN]
*In cases where bonds are rated differently by Standard & Poor's
Corp. and Moody's Investors Service, Inc., bonds are categorized
according to the higher of the two ratings.
Ten Largest Senior Secured Percent of
Floating Rate Loan Interests Total Assets
Riverwood International Corp. 2.7%
Lyondell Petrochemical Co. 2.1
Starwood Hotels & Resorts Trust 2.1
AMF Group, Inc. 1.9
Stone Container Corp. 1.9
Marcus Cable Operating Co. 1.7
Chancellor Media Corp. 1.4
Omnipoint Communications Corp. 1.3
Huntsman Corp. 1.3
Cellular, Inc. 1.3
Percent of
Five Largest Industries Total Assets
Paper 7.1%
Chemicals 6.7
Health Services 6.5
Wireless Telecommunications 6.3
Cable TV Services 4.6
Merrill Lynch Senior Floating Rate Fund, Inc.
November 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
S&P Moody's Face Senior Secured
Industries Rating Rating Amount Floating Rate Loan Interests* Cost Value
<S> <S> <S> <C> <S> <C> <C>
Advertising--0.4% NR++ Ba2 $11,800,000 Outdoor Systems, Inc., Term, due
6/30/2004 $ 11,778,707 $ 11,741,000
Aerospace--0.5% NR++ NR++ 11,000,000 Hexcel Corp., Term B, due 6/30/2005 10,986,580 10,890,000
NR++ Ba3 4,613,971 K & F Industries, Term B, due 10/15/2005 4,613,971 4,544,761
-------------- --------------
15,600,551 15,434,761
Agriculture--0.3% NR++ NR++ 9,970,000 Seminis, Term B, due 12/31/2003 9,970,000 9,970,000
Air Continental Airlines, Inc.:
Transportation-- BB- NR++ 8,258,819 Term A, due 7/31/2002 8,258,819 8,258,819
0.4% BB- NR++ 6,314,667 Term B, due 7/31/2003 6,314,667 6,314,667
-------------- --------------
14,573,486 14,573,486
Aircraft & NR++ Ba3 7,349,251 Evergreen International Aviation, Inc.,
Parts--1.1% Term B, due 5/31/2003 7,320,270 7,252,792
NR++ NR++ 20,234,375 Gulfstream Aerospace Corp., Term, due
9/30/2002 20,206,443 19,981,445
NR++ NR++ 2,251,599 Technetics, Term, due 6/20/2002 2,251,599 2,251,599
NR++ NR++ 5,794,051 WesternSky Industries, Term, due 7/31/2003 5,794,051 5,794,051
-------------- --------------
35,572,363 35,279,887
Amusement & AMF Group, Inc.:
Recreational NR++ B+ 39,568,042 Axel A, due 5/03/2003 39,720,085 38,430,460
Services--4.9% NR++ B+ 25,493,251 Axel B, due 5/01/2004 25,573,939 24,760,319
NR++ B+ 5,251,201 Term, due 3/31/2002 5,240,701 5,100,229
NR++ B1 2,000,000 ASC East Inc., Term, due 5/31/2006 1,998,176 1,990,000
NR++ B1 5,000,000 ASC West Inc., Term, due 5/31/2006 4,995,441 4,975,000
Amfac Resorts, Inc.:
NR++ NR++ 2,475,000 Term B, due 9/30/2004 2,475,000 2,475,000
NR++ NR++ 2,475,000 Term C, due 9/30/2005 2,475,000 2,475,000
KSL Recreation Group, Inc.:
NR++ B2 12,454,545 Revolving Credit, due 4/30/2004 12,454,545 12,330,000
BB- NR++ 10,890,000 Term A, due 4/30/2005 10,929,784 10,753,875
B+ B1 10,890,000 Term B, due 4/30/2006 10,930,405 10,821,938
B+ NR++ 4,975,000 Kerastotes, Term B, due 12/31/2004 4,975,000 4,975,000
Metro Goldwyn Mayer Co.:
NR++ Ba2 4,000,000 Term A, due 12/31/2005 3,982,031 3,860,000
BB+ Ba2 17,500,000 Term B, due 12/31/2006 17,477,144 17,084,375
NR++ Ba3 4,527,163 Premier Parks Inc., Term C, due 3/21/2006 4,525,039 4,470,573
NR++ Ba3 13,463,783 Six Flags Entertainment Corp., Term B,
due 11/03/2004 13,457,569 13,362,804
NR++ NR++ 4,200,000 Video Update Inc., Term B, due 4/30/2003 4,200,000 4,200,000
-------------- --------------
165,409,859 162,064,573
Apparel--1.3% Arena Brands, Inc.:
NR++ NR++ 1,379,722 Revolving Credit, due 6/01/2002 1,379,722 1,379,722
NR++ NR++ 3,730,551 Term A, due 6/01/2002 3,730,551 3,730,551
NR++ NR++ 7,180,553 Term B, due 6/01/2002 7,180,553 7,180,553
NR++ NR++ 3,250,000 CS Brooks Canada, Inc., Term, due
6/25/2006 3,233,821 3,225,625
NR++ NR++ 4,987,500 Cluett American Corp., Term B, due
5/18/2005 4,982,760 4,950,094
NR++ NR++ 9,500,000 Humphreys Inc., Term B, due 1/15/2003 9,500,000 9,500,000
</TABLE>
Merrill Lynch Senior Floating Rate Fund, Inc.
November 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face Senior Secured
Industries Rating Rating Amount Floating Rate Loan Interests* Cost Value
<S> <S> <S> <C> <S> <C> <C>
Apparel NR++ NR++ $ 4,800,000 Renfro Corp., Term B, due 11/15/2003 $ 4,800,000 $ 4,800,000
(concluded) Walls Industries:
NR++ NR++ 1,228,723 Term B, due 2/28/2005 1,228,723 1,228,723
NR++ NR++ 1,699,468 Term C, due 2/28/2006 1,699,468 1,699,468
BB- Ba3 6,111,000 William Carter Co. (The), Term, due
10/31/2003 6,087,864 6,088,084
-------------- --------------
43,823,462 43,782,820
Automotive American Axel:
Equipment--3.7% NR++ NR++ 5,100,000 Revolving Credit, due 10/31/2005 5,100,000 4,993,500
NR++ NR++ 21,000,000 Term B, due 3/31/2007 21,033,964 20,783,437
NR++ NR++ 9,625,247 Breed Technologies, Inc., Term B, due
4/27/2006 9,625,247 9,625,247
NR++ Ba3 8,376,000 CSK Automotive, Term, due 10/31/2003 8,368,738 8,239,890
BB- B1 11,000,000 Collins & Aikman Corp., Term B, due
6/30/2005 10,994,801 10,917,500
NR++ Ba2 11,922,000 Exide Corporation, Term B, due 3/19/2005 11,922,000 11,623,950
NR++ NR++ 37,500,000 Federal Mogul Corp., Term B, due
12/31/2005 37,500,000 37,031,250
NR++ B1 13,326,395 Johnstown America Industrial, Inc.,
Term B, due 3/31/2003 13,282,080 13,193,131
Safelite Glass Corp.:
BB- B2 3,750,000 Term B, due 12/31/2003 3,744,970 3,675,000
BB- B2 3,750,000 Term C, due 12/31/2004 3,744,870 3,675,000
-------------- --------------
125,316,670 123,757,905
Broadcast-- BB- Ba2 51,891,429 Chancellor Media Corp., Term, due
Radio & TV--2.5% 6/26/2004 51,737,192 50,464,414
NR++ NR++ 10,000,000 Emmis Communications, Term, due 2/28/2007 10,000,000 9,956,250
NR++ NR++ 8,095,652 Latin Communications, Term, due 3/31/2004 8,095,652 8,095,652
NR++ NR++ 4,625,000 Retlaw Broadcasting, Term, due 3/31/2006 4,614,044 4,620,375
NR++ Ba3 5,000,000 Sinclair Broadcasting, Term, due 12/31/2004 4,990,541 4,912,500
NR++ NR++ 3,750,000 Spartan Communications, Term B, due
6/30/2005 3,750,000 3,750,000
-------------- --------------
83,187,429 81,799,191
Building & NR++ NR++ 2,509,281 Fenway Holdings, Inc., Term B, due
Construction-- 9/15/2002 2,509,281 2,509,281
0.1%
Building NR++ Ba3 3,202,862 Amerimax, Term C, due 6/30/2004 3,202,862 3,202,862
Materials--2.0% Behr Process Corp.:
NR++ NR++ 4,088,496 Term B, due 3/31/2004 4,083,924 4,055,277
NR++ NR++ 2,725,664 Term C, due 3/31/2005 2,722,512 2,703,518
NR++ NR++ 11,898,000 Dal Tile International, Inc., Term B,
due 12/31/2003 11,849,171 11,377,463
NR++ NR++ 5,000,000 Dayton Superior Corp., Term, due 9/29/2005 5,000,000 4,981,250
NR++ Ba3 2,052,281 Euramax Holdings Ltd., Term B, due 6/30/2004 2,052,281 2,052,281
NR++ B1 4,971,429 Falcon Building Products, Inc., Term,
due 6/30/2005 4,954,203 4,927,929
NR++ Ba3 29,749,582 National Gypsum Co., Term B, due 9/20/2003 29,707,385 29,433,492
Panolam Industries:
NR++ NR++ 439,875 Term A, due 11/01/2003 439,875 439,875
NR++ NR++ 2,804,528 Term B, due 11/01/2005 2,804,528 2,804,527
NR++ NR++ 1,602,587 Term C, due 11/01/2006 1,602,587 1,602,587
-------------- --------------
68,419,328 67,581,061
</TABLE>
Merrill Lynch Senior Floating Rate Fund, Inc.
November 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face Senior Secured
Industries Rating Rating Amount Floating Rate Loan Interests* Cost Value
<S> <S> <S> <C> <S> <C> <C>
Cable TV NR++ NR++ $ 5,000,000 Avalon Cable, Term B, due 10/31/2006 $ 4,962,713 $ 4,975,000
Services--5.0% NR++ NR++ 24,253,125 Chelsea Communications, Term B, due
9/30/2004 24,170,060 24,101,543
NR++ B1 5,000,000 Classic Cable, Inc., Term, due 10/31/2007 4,995,098 4,950,000
B+ Ba3 9,478,409 Intermedia Partners IV, Inc., Term, due
1/01/2005 9,459,952 9,374,739
B+ Ba3 7,500,000 Intermedia Partners VI, Inc., Term B, due
12/31/2007 7,492,812 7,403,906
Marcus Cable Operating Co.:
NR++ NR++ 25,375,000 Term A, due 12/31/2002 25,306,967 25,184,688
NR++ NR++ 12,495,000 Term B, due 4/30/2004 12,328,102 12,401,288
NR++ NR++ 22,540,000 Term B2, due 4/30/2004 22,483,687 22,370,950
NR++ NR++ 17,000,000 Triax Midwest, Term B, due 6/30/2007 17,000,000 17,000,000
NR++ Ba2 38,958,819 Viacom, Inc., Term, due 7/01/2002 38,917,437 38,179,642
-------------- --------------
167,116,828 165,941,756
Casino--0.4% Alliance Gaming Corp.:
NR++ B1 10,403,674 Term B, due 1/31/2005 10,403,674 10,403,674
NR++ B1 4,155,750 Term C, due 7/31/2005 4,155,750 4,155,750
-------------- --------------
14,559,424 14,559,424
Chemicals--7.3% NR++ NR++ 12,500,000 AOC LLC, Term B, due 9/30/2006 12,469,371 12,312,500
NR++ NR++ 4,488,750 CII Carbon LLC, Term, due 6/25/2008 4,484,370 4,449,473
NR++ NR++ 11,254,869 Cedar Chemical, Term B, due 10/31/2003 11,192,533 11,226,732
NR++ NR++ 10,000,000 Epsillon, Term B, due 12/31/2005 10,000,000 10,000,000
NR++ Ba3 3,777,778 Foamex International PLC, Revolving Credit,
due 6/30/2003 3,777,778 3,740,000
NR++ NR++ 5,985,000 General Chemical Group, Term B, due 6/15/2006 5,985,000 5,985,000
NR++ NR++ 10,000,000 HSC Holdings, Term B, due 3/31/2006 9,985,730 9,950,000
Huntsman Corp.:
NR++ Ba2 20,738,584 Term, due 9/30/2003 20,726,626 20,427,505
NR++ Ba2 4,900,000 Term A, due 12/31/2002 4,900,000 4,826,500
NR++ Ba2 7,516,667 Term B, due 6/30/2004 7,516,667 7,403,917
NR++ Ba2 13,033,333 Term C, due 12/31/2005 12,996,422 12,854,125
Huntsman Specialty Chemicals:
NR++ Ba2 4,900,000 Term B, due 3/15/2004 4,896,545 4,867,844
NR++ Ba2 4,900,000 Term C, due 3/15/2005 4,896,539 4,867,844
Lyondell Petrochemical Co.:
NR++ NR++ 15,000,000 Term A, due 6/30/2003 14,992,824 14,137,500
NR++ NR++ 41,900,000 Term B, due 6/30/2005 41,863,245 40,852,500
NR++ NR++ 21,400,000 Term C, due 5/22/2006 21,507,000 20,865,000
NR++ B1 7,900,000 Pioneer Americas Acquisition Corp., Term,
due 12/05/2006 7,900,000 7,900,000
BB- Ba3 4,980,000 Polymer Group, Inc., Term B, due
12/20/2005 4,980,000 4,945,763
NR++ Ba3 23,940,874 Sterling Chemicals, Inc., Term B, due
9/30/2004 23,846,146 23,402,204
NR++ NR++ 10,000,000 Sybron Chemical, Term B, due 7/31/2004 10,000,000 10,000,000
NR++ Ba3 6,335,466 Texas Petrochemicals Corp., Term B, due
6/30/2004 6,316,827 6,319,627
-------------- --------------
245,233,623 241,334,034
Computer-Related NR++ Ba3 16,911,667 Fairchild Semiconductors Corp., Term C,
Services & due 3/11/2003 16,911,667 16,911,667
Products--0.5%
</TABLE>
Merrill Lynch Senior Floating Rate Fund, Inc.
November 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face Senior Secured
Industries Rating Rating Amount Floating Rate Loan Interests* Cost Value
<S> <S> <S> <C> <S> <C> <C>
Consumer NR++ B1 $ 8,391,136 Amscan Holdings, Inc., Axel, due
Products--1.9% 12/31/2004 $ 8,391,136 $ 8,223,313
B+ Ba3 4,472,222 Boyds Collection Ltd., Term B, due
4/21/2005 4,461,744 4,427,500
E & S Holdings Co.:
NR++ B1 3,261,177 Revolving Credit, due 9/30/2003 3,261,176 2,511,106
NR++ B1 912,753 Term A, due 9/30/2003 881,514 702,820
Hedstrom Corp.:
NR++ B1 2,482,759 Revolving Credit, due 6/30/2003 2,482,759 2,482,759
NR++ B1 4,637,931 Term A, due 6/30/2003 4,637,931 4,637,931
BB- Ba2 14,812,726 Playtex Family Products Inc., Term B,
due 9/15/2003 14,751,779 14,516,471
NR++ NR++ 7,209,568 RTI Funding Corp. (Ritvik Toys), Term B,
due 2/07/2003 7,161,177 5,947,894
BB- Ba3 14,925,000 Revlon Consumer Products Corp., Term,
5/30/2002 14,925,000 14,925,000
NR++ NR++ 4,500,000 Samsonite Corp., Term, due 6/24/2005 4,494,591 4,393,125
-------------- --------------
65,448,807 62,767,919
Defense--0.2% United Defense Industries, Inc.:
NR++ B1 3,154,841 Term A, due 10/06/2003 3,169,039 3,087,801
NR++ B1 1,196,698 Term B, due 10/06/2005 1,196,698 1,179,495
NR++ B1 1,072,616 Term C, due 10/06/2006 1,072,616 1,057,197
-------------- --------------
5,438,353 5,324,493
Diversified-- NR++ NR++ 25,000,000 Bridge Inform, Term B, due 5/29/2005 24,940,894 24,812,500
0.7%
Drilling--0.1% BB+ Ba3 3,695,862 Rigco North America, Term, due 3/30/1999 3,695,862 3,695,862
Drug/Proprietary NR++ NR++ 4,962,500 Duane Reade Co., Term B, due 2/15/2005 4,948,321 4,937,688
Stores--0.1%
Electronics/ NR++ Ba3 6,458,750 Amphenol Corp., Term B, due 5/19/2006 6,562,142 6,380,034
Electrical NR++ NR++ 5,466,667 Communications & Power II Acquisition
Components-- Corp., Term B, due 8/11/2002 5,433,699 5,418,833
2.3% B+ NR++ 5,500,000 Details Inc., Term B, due 4/22/2005 5,493,332 5,486,250
Dictaphone Corp.:
B- B3 941,834 Revolving Credit, due 3/31/2001 941,834 901,806
B- B1 7,750,000 Term C, due 6/30/2003 7,683,791 7,517,500
BB- Ba3 19,844,237 International Wire Group, Inc., Term B,
due 9/30/2003 19,828,232 19,571,378
NR++ Ba3 6,838,301 Neopost, Term C, due 6/24/2006 6,838,301 6,838,301
NR++ NR++ 18,000,000 SPX Corporation, Term B, due 9/30/2006 17,911,173 18,000,000
NR++ Ba3 6,959,615 Telex Communications, Inc., Term B, due
11/30/2004 6,944,850 6,724,728
-------------- --------------
77,637,354 76,838,830
Energy--0.6% NR++ Ba2 11,000,000 Clark Refining & Marketing, Term, due
11/15/2004 11,000,000 10,615,000
Perf-O-Log:
NR++ NR++ 1,556,420 Term, due 8/11/2003 1,556,420 1,556,420
NR++ NR++ 4,140,000 Term B, due 8/11/2003 4,140,000 4,140,000
NR++ NR++ 1,243,750 Term C, due 8/11/2003 1,243,750 1,243,750
NR++ NR++ 1,785,714 Term D, due 12/31/2004 1,785,714 1,785,714
NR++ NR++ 714,286 Term E, due 12/31/2004 714,286 714,286
-------------- --------------
20,440,170 20,055,170
</TABLE>
Merrill Lynch Senior Floating Rate Fund, Inc.
November 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face Senior Secured
Industries Rating Rating Amount Floating Rate Loan Interests* Cost Value
<S> <S> <S> <C> <S> <C> <C>
Financial Outsourcing Solutions, Inc.:
Services--1.2% NR++ B1 $ 4,000,623 Term B, due 10/15/2003 $ 3,997,503 $ 3,945,614
NR++ B1 37,374,992 Term C, due 10/15/2004 37,374,992 36,861,086
-------------- --------------
41,372,495 40,806,700
Food & Kindred Del Monte Corp.:
Products--2.2% NR++ B2 2,945,455 Revolving Credit, due 3/31/2003 2,945,455 2,882,864
NR++ B2 3,133,636 Term A, due 3/31/2003 3,133,636 3,090,549
NR++ B2 2,565,185 Term B, due 3/31/2005 2,565,100 2,544,342
Imperial Holly Corp.:
BB- Ba3 6,533,205 Term A, due 12/31/2003 6,533,205 6,533,205
NR++ B1 5,278,278 Term B, due 12/31/2005 5,278,278 5,278,278
International Homefoods, Inc.:
NR++ Ba3 618,280 Revolving Credit, due 11/21/2001 618,280 613,836
NR++ Ba3 3,169,355 Term A, due 11/21/2001 3,167,556 3,154,498
NR++ Ba3 16,941,333 Term B, due 10/31/2005 16,964,594 16,771,920
Snapple Beverage Corp.:
BB- Ba3 7,337,050 Term B, due 6/01/2004 7,305,783 7,309,536
BB- Ba3 7,337,050 Term C, due 6/01/2005 7,304,827 7,309,536
Specialty Foods, Inc.:
NR++ Ba3 2,372,542 Revolving Credit, due 1/31/2000 2,372,542 2,336,954
NR++ Ba3 6,310,278 Term, due 1/31/2000 6,269,593 6,215,624
Volume Services:
NR++ B2 6,588,200 Term B, due 12/31/2002 6,588,200 6,588,200
NR++ B2 3,293,917 Term C, due 12/31/2003 3,293,917 3,293,917
-------------- --------------
74,340,966 73,923,259
Funeral Homes & NR++ Ba1 21,671,764 Loewen Group Capital, Term, due 7/15/2000 21,671,764 21,671,764
Parlors--1.3% BB- NR++ 14,666,667 Prime Succession Inc., Axel, due 8/01/2003 14,626,377 14,556,667
BB NR++ 6,767,295 Rose Hills Co., Axel A, due 12/01/2003 6,754,268 6,729,229
-------------- --------------
43,052,409 42,957,660
Furniture & NR++ NR++ 10,000,000 Furniture Brands, Term, due 6/27/2007 10,000,000 9,884,375
Fixtures--1.0% Sealy Mattress:
B+ Ba3 3,019,394 Axel B, due 12/15/2004 3,016,016 2,985,426
B+ Ba3 2,174,546 Axel C, due 12/15/2005 2,172,063 2,150,082
B+ Ba3 2,778,788 Axel D, due 12/15/2006 2,775,567 2,747,527
B+ Ba3 9,166,667 Term A, due 12/15/2003 9,223,958 9,029,167
Simmons Co.:
NR++ NR++ 2,142,857 Term B, due 10/29/2005 2,132,243 2,137,500
NR++ NR++ 5,357,143 Term C, due 10/29/2006 5,330,563 5,343,750
-------------- --------------
34,650,410 34,277,827
Grocery--1.8% NR++ NR++ 10,400,000 Big V Supermarkets, Inc., Term B,
due 3/15/2000 10,360,686 10,322,000
NR++ NR++ 39,079,300 Fred Meyer, Term, due 2/28/2003 38,831,692 38,200,015
NR++ NR++ 4,500,000 Grand Union Co., Term, due 8/17/2003 4,495,696 4,455,000
Star Acquisition Co., Inc.:
B Ba3 3,455,179 Term B, due 12/31/2001 3,446,536 3,424,946
B Ba3 2,588,164 Term C, due 12/31/2002 2,580,577 2,565,517
-------------- --------------
59,715,187 58,967,478
</TABLE>
Merrill Lynch Senior Floating Rate Fund, Inc.
November 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face Senior Secured
Industries Rating Rating Amount Floating Rate Loan Interests* Cost Value
<S> <S> <S> <C> <S> <C> <C>
Health Services-- Alaris Medical Systems, Inc.:
7.0% NR++ B1 $ 3,617,762 Term A, due 8/01/2002 $ 3,631,834 $ 3,581,585
NR++ B1 3,044,053 Term B, due 11/01/2003 3,041,200 3,023,126
NR++ B1 3,044,053 Term C, due 11/01/2004 3,041,006 3,023,126
NR++ B1 2,857,505 Term D, due 5/01/2005 2,855,867 2,837,860
NR++ Ba3 5,666,667 Arterial Vascular Engineering Inc., Term B,
due 9/30/2004 5,661,111 5,638,333
NR++ NR++ 3,811,646 Columbia Healthcare Corp., Term A, due
2/25/2002 3,802,793 3,785,441
Community Health Systems, Inc.:
NR++ NR++ 16,027,397 Term B, due 12/31/2003 15,967,457 15,947,260
NR++ NR++ 16,027,397 Term C, due 12/31/2004 15,963,960 15,947,260
NR++ NR++ 12,020,548 Term D, due 12/31/2005 11,970,986 11,960,445
Dade International, Inc.:
NR++ B1 4,059,977 Term A, due 12/31/2001 4,070,127 4,026,990
NR++ B1 4,193,154 Term B, due 12/31/2002 4,184,630 4,169,567
NR++ B1 4,193,153 Term C, due 12/31/2002 4,183,797 4,169,567
NR++ B1 2,743,068 Term D, due 12/31/2004 2,729,777 2,727,639
NR++ NR++ 7,357,143 Endo Pharmaceuticals, Term B, due 6/30/2004 7,344,587 7,265,179
NR++ NR++ 6,499,775 Extendicare Health, Inc., Term B, due
12/31/2004 6,499,775 6,499,775
FHC Health Systems:
NR++ NR++ 2,736,250 Axel B, due 4/30/2005 2,730,576 2,695,206
NR++ NR++ 2,736,250 Axel C, due 4/30/2006 2,730,520 2,695,206
Genesis Health Ventures, Inc.:
NR++ Ba3 5,711,095 Term B, due 9/30/2004 5,701,147 5,586,165
NR++ Ba3 5,697,880 Term C, due 6/01/2005 5,687,758 5,573,239
Integrated Health Services, Inc.:
NR++ Ba3 22,500,000 Term B, due 9/15/2003 22,500,000 22,500,000
NR++ Ba3 10,000,000 Term C, due 12/31/2005 10,000,000 10,000,000
NR++ NR++ 7,000,000 MEDIQ PRN Life Support Services, Term, due
6/30/2006 6,993,301 6,925,625
Magellen Health Services:
NR++ Ba3 5,000,000 Term B, due 2/12/2005 4,993,169 4,875,000
NR++ Ba3 5,000,000 Term C, due 2/12/2006 4,993,056 4,875,000
Medical Specialties:
NR++ NR++ 12,845,454 Axel, due 6/30/2004 12,782,601 12,331,637
NR++ NR++ 4,418,182 Term, due 6/30/2001 4,402,002 4,241,455
Multicare Companies, Inc.:
NR++ B1 4,702,500 Term B, due 9/30/2004 4,694,152 4,634,902
NR++ B1 1,563,542 Term C, due 6/01/2005 1,560,745 1,541,066
Paracelsus HealthCare Corp.:
NR++ NR++ 1,362,667 Term A, due 3/31/2003 1,356,399 1,360,963
NR++ NR++ 2,000,000 Term B, due 3/31/2004 1,990,631 1,998,750
Paragon Health Network, Inc.:
NR++ Ba3 7,500,000 Term B, due 3/31/2005 7,493,334 7,321,875
NR++ Ba3 7,500,000 Term C, due 3/31/2006 7,493,196 7,321,875
Sun Healthcare Group, Inc.:
NR++ Ba3 5,504,771 Term B, due 11/12/2004 5,497,535 5,367,152
NR++ Ba3 5,504,771 Term C, due 11/12/2005 5,497,360 5,367,152
NR++ NR++ 22,275,000 Total Renal Care, Term, due 3/31/2008 22,248,292 21,968,719
-------------- --------------
236,294,681 233,784,140
</TABLE>
Merrill Lynch Senior Floating Rate Fund, Inc.
November 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face Senior Secured
Industries Rating Rating Amount Floating Rate Loan Interests* Cost Value
<S> <S> <S> <C> <S> <C> <C>
Hotels & NR++ NR++ $ 7,125,000 Meristar Hospitality, Term B, due
Motels--3.0% 1/31/2004 $ 7,116,530 $ 7,035,937
NR++ NR++ 19,983,333 Patriot American Hospitality, Term B,
due 3/31/2003 19,983,333 19,983,333
NR++ NR++ 75,000,000 Starwood Hotels & Resorts Trust, Term,
due 2/23/2003 74,933,676 74,062,500
-------------- --------------
102,033,539 101,081,770
Industrial NR++ NR++ 26,177,876 Elis/Omni Services, Inc. Axel, due 10/30/2005 26,325,624 25,654,320
Services--0.8%
Insurance--0.1% BRW Acquisition:
NR++ NR++ 2,500,000 Term B, due 7/09/2006 2,500,000 2,500,000
NR++ NR++ 2,500,000 Term C, due 7/09/2007 2,500,000 2,500,000
-------------- --------------
5,000,000 5,000,000
Leasing & NR++ NR++ 7,250,000 Panavision, Term B, due 3/31/2005 7,250,000 7,250,000
Rental Renters Choice:
Services--1.2% NR++ NR++ 6,434,666 Term B, due 1/31/2006 6,419,691 6,305,973
NR++ NR++ 7,983,735 Term C, due 1/31/2007 7,964,774 7,824,061
NR++ NR++ 20,000,000 United Rentals Inc., Term, due 6/30/2005 19,980,857 19,750,000
-------------- --------------
41,615,322 41,130,034
Manufacturing-- B3 B+ 4,750,000 Alliance Laundry Systems, Term, due
1.8% 6/30/2005 4,750,000 4,750,000
NR++ NR++ 9,685,714 Channel Master, Term, due 10/10/2005 9,685,714 9,685,714
NR++ NR++ 7,500,000 Environmental, Term B, due 9/30/2005 7,475,136 7,481,250
NR++ NR++ 9,500,000 Goodman Manufacturing, Term B, due
7/31/2005 9,490,876 9,375,312
BB- Ba2 6,900,000 Grove Worldwide, Term B, due 4/28/2006 6,893,471 6,787,875
NR++ NR++ 5,000,000 Metokote Corp., Term B, due 11/02/2005 4,962,639 4,990,625
NR++ NR++ 8,139,082 Polyfibron Technologies, Term B, due
12/29/2003 8,139,082 8,139,082
NR++ NR++ 4,982,143 Russell Stanley, Term B, due 6/30/2005 4,982,143 4,982,143
WEC Company:
NR++ NR++ 2,916,667 Term B, due 9/30/2005 2,916,667 2,916,667
NR++ NR++ 2,083,333 Term C, due 9/30/2006 2,083,333 2,083,333
-------------- --------------
61,379,061 61,192,001
Measuring, NR++ NR++ 7,398,389 CHF/Ebel USA, Inc., Term B, due 9/30/2001 7,398,389 7,398,389
Analyzing &
Controlling
Instruments--0.2%
Metals & B+ Ba3 9,957,143 Acme Metals, Inc., Term, due 12/01/2005 9,957,143 8,139,964
Mining--4.0% B+ NR++ 4,995,357 Adience, Inc., Term B, due 4/15/2005 4,995,357 4,995,357
NR++ Caa 3,664,097 Alliance Coal, Term B, due 12/31/2002 3,651,135 3,609,136
Centennial Resources:
NR++ NR++ 706,201 Revolving Credit, due 6/30/1999 706,201 702,670
NR++ NR++ 1,961,538 Term A, due 3/31/2002 1,946,578 419,279
NR++ NR++ 5,105,769 Term B, due 12/31/2003 5,062,590 1,091,358
</TABLE>
Merrill Lynch Senior Floating Rate Fund, Inc.
November 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face Senior Secured
Industries Rating Rating Amount Floating Rate Loan Interests* Cost Value
<S> <S> <S> <C> <S> <C> <C>
Metals & NR++ NR++ $ 6,000,000 Handy & Harman, Term B, due 7/30/2006 $ 5,985,456 $ 5,917,500
Mining Ispat Inland LP:
(concluded) NR++ NR++ 19,451,250 Term B, due 7/15/2005 19,306,518 17,895,150
NR++ NR++ 19,451,250 Term C, due 7/15/2006 19,306,308 17,895,150
NR++ Ba3 14,884,615 Koppers Industries, Term B, due 12/01/2004 14,867,647 14,847,404
NR++ Ba3 8,500,000 Neenah Foundry, Term B, due 9/30/2005 8,492,055 8,478,750
NR++ NR++ 31,000,000 Ormet Corporation, Term, due 8/15/2008 31,000,000 31,000,000
NR++ NR++ 9,230,769 P & L Coal Holdings, Term B, due 6/30/2006 9,230,769 9,069,231
NR++ Ba2 10,086,667 UCAR Global Enterprises, Term B, due
12/31/2002 10,079,042 9,834,500
-------------- --------------
144,586,799 133,895,449
Other Telecom- Pacific Coin:
munications-- NR++ NR++ 3,916,364 Acquisition Term, due 12/31/2003 3,901,684 3,916,364
0.3% NR++ NR++ 2,139,344 Term A, due 12/31/2002 2,132,188 2,139,344
NR++ NR++ 2,715,625 Term B, due 12/31/2004 2,706,141 2,715,625
-------------- --------------
8,740,013 8,771,333
Packaging--0.4% NR++ NR++ 4,339,286 Graham Packaging, Term D, due 1/31/2007 4,339,286 4,323,013
NR++ BB 3,712,500 Huntsman Packaging Corp., Term B, due
6/30/2006 3,708,967 3,680,016
NR++ B1 4,875,189 Ivex Packaging Corp., Term B, due
10/02/2004 4,869,876 4,799,014
-------------- --------------
12,918,129 12,802,043
Paging--0.5% MobileMedia Corp.:
NR++ Caa 6,177,930 Term A, due 6/30/2002 6,156,873 5,807,255
NR++ Caa 1,747,400 Term B, due 6/30/2003 1,742,624 1,642,556
NR++ Ba3 8,142,667 PageNet Finance, Inc., Revolving Credit,
due 12/31/2004 8,142,666 7,888,208
-------------- --------------
16,042,163 15,338,019
Paper--7.7% NR++ NR++ 6,500,000 Cellular Tissue, Term C, due 3/24/2005 6,500,000 6,500,000
BB Ba3 4,663,030 Crown Paper Co., Term B, due 8/22/2003 4,623,571 4,639,715
BB Ba3 35,000,000 Jefferson Smurfit Company/Container Corp.
of America, Term B, due 3/24/2006 35,000,000 34,628,125
NR++ NR++ 5,000,000 Le Groupe Forex, Term B, due 6/30/2005 4,994,040 4,906,250
NR++ NR++ 25,000,000 Paper Acquisition, Term, due 6/08/2001 24,967,642 24,687,500
NR++ NR++ 6,500,000 Repap Brunswick, Term B, due 6/01/2004 6,515,000 6,337,500
Riverwood International Corp.:
B+ B1 5,620,011 Term A, due 2/28/2003 5,461,966 5,472,486
B+ B1 66,465,370 Term B, due 2/28/2004 65,775,753 65,302,226
B+ B1 25,602,280 Term C, due 8/31/2004 25,327,682 25,154,240
Stone Container Corp.:
NR++ Ba3 27,878,817 Term B, due 4/01/2000 27,926,230 27,687,149
NR++ Ba3 19,811,143 Term C, due 10/01/2000 19,796,896 19,674,940
NR++ Ba3 19,038,243 Term E, due 10/01/2003 19,192,577 18,907,353
Stronghaven:
NR++ NR++ 9,352,586 Term B, due 5/15/2004 9,352,586 9,352,586
NR++ NR++ 1,705,714 Term C, due 5/15/2004 1,705,714 1,705,714
-------------- --------------
257,139,657 254,955,784
</TABLE>
Merrill Lynch Senior Floating Rate Fund, Inc.
November 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face Senior Secured
Industries Rating Rating Amount Floating Rate Loan Interests* Cost Value
<S> <S> <S> <C> <S> <C> <C>
Printing & 21st Century:
Publishing--2.7% NR++ B3 $ 214,286 Revolving Credit, due 9/15/2003 $ 214,286 $ 214,286
NR++ B3 5,460,000 Term A, due 9/15/2003 5,460,000 5,460,000
NR++ B1 14,985,000 Advanstar Communications, Term B, due
4/30/2005 14,970,983 14,928,806
NR++ NR++ 8,375,000 Journal Register Co., Term B, due
9/30/2006 8,364,895 8,333,125
NR++ Ba3 9,925,000 Morris Communications, Term B, due
6/30/2005 9,908,441 9,862,969
Primedia Inc.:
NR++ Ba3 9,280,000 Revolving Credit, due 12/31/2000 9,280,000 9,071,200
NR++ Ba3 4,000,000 Term 2, due 6/30/2004 4,000,000 3,920,000
NR++ Ba3 4,000,000 Term 3, due 12/31/2000 4,000,000 3,910,000
RH Donnolley Inc.:
NR++ NR++ 3,364,563 Term B, due 12/05/2005 3,361,366 3,322,505
NR++ NR++ 3,867,312 Term C, due 12/05/2006 3,863,608 3,818,971
Ziff-Davis Inc.:
NR++ Ba2 5,000,000 Term A, due 3/31/2005 4,991,735 4,834,375
NR++ Ba2 22,500,000 Term B, due 3/31/2006 22,478,544 21,698,437
-------------- --------------
90,893,858 89,374,674
Restaurants-- AFC Enterprises:
0.4% NR++ Ba3 6,000,000 Acquisition Term, due 6/30/2002 6,000,000 5,895,000
NR++ Ba3 400,000 Revolving Credit, due 6/30/2002 400,000 393,000
NR++ Ba3 3,540,000 Term, due 6/30/2002 3,526,691 3,478,050
NR++ Ba3 4,475,295 Shoney's, Inc., Term B, due 4/30/2002 4,475,295 4,475,295
-------------- --------------
14,401,986 14,241,345
Retail NR++ NR++ 5,750,000 Advance Store, Term B, due 4/15/2006 5,741,877 5,692,500
Specialty--0.4% NR++ NR++ 2,451,923 Murray's Discount Auto Stores, Term, due
6/30/2003 2,451,923 2,451,923
NR++ Ba2 3,962,500 Travel Centers of America, Term B, due
3/27/2005 3,962,500 3,962,500
-------------- --------------
12,156,300 12,106,923
Satellite Iridium Operating LLC:
Telecommunica- B2 B2 718,158 Revolving Credit, due 12/31/1998 718,159 702,000
tions--0.2% B2 B2 5,219,949 Term, due 12/31/1998 5,216,379 5,138,593
-------------- --------------
5,934,538 5,840,593
Textiles/Mill Joan Fabrics:
Products--0.5% NR++ NR++ 3,183,033 Term B, due 6/30/2005 3,178,837 3,139,266
NR++ NR++ 1,653,780 Term C, due 6/30/2006 1,651,549 1,639,310
NR++ NR++ 10,447,500 Tartan Textiles, Term B, due 5/01/2005 10,422,921 10,369,144
-------------- --------------
15,253,307 15,147,720
</TABLE>
Merrill Lynch Senior Floating Rate Fund, Inc.
November 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face Senior Secured
Industries Rating Rating Amount Floating Rate Loan Interests* Cost Value
<S> <S> <S> <C> <S> <C> <C>
Transportation NR++ Ba3 $13,674,324 Atlas Freighter Leasing I, Term, due
Services--1.1% 5/29/2004 $ 13,667,418 $ 13,469,209
NR++ Ba3 13,674,324 Atlas Freighter Leasing II, Term, due
5/29/2004 13,665,594 13,469,209
NR++ NR++ 7,462,500 North American Van Lines, Term B, due
3/30/2006 7,453,743 7,429,852
BB- Ba3 3,228,713 Petro Shopping Centers, Term B, due
12/31/2003 3,222,326 3,196,426
-------------- --------------
38,009,081 37,564,696
Wired NR++ Ba2 17,187,500 Flag Ltd., Term, due 1/30/2005 17,187,500 17,187,500
Telecommunica-
tions--0.5%
Wireless Cellular, Inc.:
Telecommunica- NR++ B1 13,985,692 Term B, due 9/30/2006 13,976,121 13,933,246
tions--6.8% NR++ B1 8,130,081 Term C, due 3/31/2007 8,111,012 8,099,593
NR++ B1 22,764,227 Term D, due 9/30/2007 22,710,497 22,678,861
NR++ NR++ 25,000,000 Cox Communications, Inc., Term B, due
12/31/2006 24,941,323 24,734,375
NR++ B1 40,000,000 Nextel Communications, Inc., Term B, due
9/30/2006 39,952,991 38,675,000
Omnipoint Communications Corp.:
BB- Ba2 6,777,409 Term A, due 2/17/2006 6,771,098 6,235,216
BB- Ba2 1,934,234 Term B, due 2/17/2006 1,932,433 1,779,495
BB- Ba2 43,531,250 Term C, due 2/17/2006 43,531,250 40,048,750
NR++ NR++ 15,000,000 PowerTel PCS, Inc., Term, due 3/04/2001 15,000,000 14,850,000
NR++ NR++ 15,000,000 TeleCorp PCS, Term B, due 1/15/2008 14,970,778 14,700,000
NR++ NR++ 10,000,000 Triton PCS, Term B, due 4/30/2007 9,976,944 9,800,000
NR++ NR++ 10,000,000 Western PCS, Term B, due 6/30/2007 9,980,625 9,862,500
B+ B2 20,000,000 Western Wireless Corp., Term B, due
3/31/2005 20,000,000 19,862,500
-------------- --------------
231,855,072 225,259,536
Total Senior Secured Floating Rate
Loan Interests--83.4% 2,820,828,925 2,774,332,501
<CAPTION>
Shares
Held Warrants & Agreements
<S> <C> <S> <C> <C>
Cable TV Services--0.0% 707 Classic Cable, Inc. (Warrants)(a) 0 0
Drilling--0.0% 12,250 Rigco North America (Warrants)(a) 0 0
General Merchandise Stores--0.1% 2,288,402 Just For Feet, Inc. (Agreement)(b) 2,288,402 2,288,402
Total Investments in Warrants &
Agreements--0.1% 2,288,402 2,288,402
</TABLE>
Merrill Lynch Senior Floating Rate Fund, Inc.
November 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Face
Amount Short-Term Securities Cost Value
<S> <C> <S> <C> <C>
Commercial $ 24,000,000 Block Financial, 5.23% due 1/22/1999 $ 23,818,693 $ 23,818,693
Paper**--15.2% 20,000,000 CSW Credit, Inc., 5.40% due 1/14/1999 19,868,000 19,868,000
Ciesco, L.P.:
40,000,000 5.35% due 1/08/1999 39,774,111 39,774,111
40,000,000 5.17% due 1/19/1999 39,718,522 39,718,522
du Pont (E.I.) de Nemours & Co.:
25,000,000 5.28% due 1/07/1999 24,864,333 24,864,333
50,000,000 5.17% due 1/08/1999 49,727,139 49,727,139
40,000,000 General Electric Capital Corp., 5.06%
due 12/04/1998 39,983,133 39,983,133
98,190,000 General Motors Acceptance Corp., 5.50%
due 12/01/1998 98,190,000 98,190,000
20,000,000 International Lease Finance Corp., 5.125%
due 12/07/1998 19,982,917 19,982,917
52,000,000 Paacar Financial Corp., 4.85% due
12/18/1998 51,880,906 51,880,906
50,000,000 Rank Xerox Capital (Europe) PLC, 5.15%
due 12/08/1998 49,949,931 49,949,931
30,000,000 Republic Industries, Inc., 5.35% due
1/04/1999 29,848,417 29,848,417
17,330,000 Toys 'R' Us, Inc., 5.18% due 12/10/1998 17,307,558 17,307,558
-------------- --------------
504,913,660 504,913,660
US Government 30,000,000 Federal Home Loan Mortgage Corp., 4.80%
Agency Obligations**--0.9% due 12/10/1998 29,964,000 29,964,000
Total Investments in Short-Term
Securities--16.1% 534,877,660 534,877,660
Total Investments--99.6% $3,357,994,987 3,311,498,563
==============
Other Assets Less Liabilities--0.4% 14,357,016
--------------
Net Assets--Equivalent to $9.84 Per Share Based on 338,017,819 Shares Outstanding--100.0% $3,325,855,579
==============
<FN>
(a)Warrants entitle the Fund to purchase a predetermined number of
shares of common stock and are non-income producing. The purchase
price and numbers of shares are subject to adjustment under certain
conditions until the expiration date.
(b)Represents an obligation by Just for Feet, Inc. to pay an amount
to the Fund on April 30, 2002, contingent upon the earnings before
income taxes and depreciation of Just for Feet, Inc. as of January
31, 2002.
++Not Rated.
*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.
**Commercial Paper and certain US Government Agency Obligations are
traded on a discount basis; the interest rates shown reflect the
discount rates paid at the time of purchase by the Fund.
</TABLE>
Merrill Lynch Senior Floating Rate Fund, Inc.
November 30, 1998
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
R. Douglas Henderson, Senior Vice President
Joseph T. Monagle Jr., Senior Vice President
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Patrick D. Sweeney, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
