UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-21413
Name of Fund: Floating Rate Income Strategies Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Terry K. Glenn, President,
Floating Rate Income Strategies Fund, Inc., 800 Scudders Mill Road,
Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011, Princeton,
NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 08/31/04
Date of reporting period: 09/01/03 - 02/29/04
Item 1 - Report to Stockholders
(BULL LOGO)
Merrill Lynch Investment Managers
www.mlim.ml.com
Floating Rate
Income Strategies
Fund, Inc.
Semi-Annual Report
February 29, 2004
Floating Rate Income Strategies Fund, Inc. seeks a high current
income and such preservation of capital as is consistent with
investment in a diversified, leveraged portfolio consisting
primarily of floating rate debt securities and instruments.
This report, including the financial information herein, is
transmitted for use only to the shareholders of Floating Rate Income
Strategies 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.
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities is
available (1) without charge, upon request, by calling toll-free
1-800-MER-FUND (1-800-637-3863); (2) on www.mutualfunds.ml.com;
and (3) on the Securities and Exchange Commission's website at
http://www.sec.gov.
Floating Rate Income Strategies Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
(GO PAPERLESS LOGO)
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Floating Rate Income Strategies Fund, Inc.
The Benefits and Risks of Leveraging
Floating Rate Income Strategies Fund, Inc. has the ability to
utilize leverage through 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 income earned by the Fund on its longer-term
portfolio investments. To the extent that the total assets of the
Fund (including the assets obtained from leverage) are invested in
higher-yielding portfolio investments, the Fund's Common Stock
shareholders will be the beneficiaries of the incremental yield.
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.
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
A Letter From the President
Dear Shareholder
As I write to you at February month-end, fixed income markets in the
United States continued to reward those investors willing to accept
greater risk. The high yield market, as measured by the Credit
Suisse First Boston High Yield Index, provided a return of +10.88%
over the past six months and +25.17% for the 12-month period ended
February 29, 2004. In other areas of fixed income, investment grade
corporate bonds, as measured by the Merrill Lynch Corporate Master
Index, returned +6.59% and +8.11% for the six-month and 12-month
periods ended February 29, 2004, respectively. Treasury issues, as
measured by the Merrill Lynch U.S. Treasuries 1-10 Years Index,
returned +3.16% and +2.73% for the six-month and 12-month periods
ended February 29, 2004, respectively.
At the same time, equity markets maintained their positive momentum
from year-end 2003. For the six-month and 12-month periods ended
February 29, 2004, Standard & Poor's (S&P) 500 Index returned
+14.59% and +38.52%, respectively. Much of the boost came from
improving economic conditions in the United States.
The major signposts as we enter 2004 indicate that we are seeing a
shift from economic growth fueled primarily by fiscal and monetary
stimulus to a broader-based, self-sustaining economic expansion.
Gross domestic product growth, which peaked at an annualized rate of
8.2% in the third quarter of 2003, was 4.1% in the fourth quarter. A
similar level of growth is expected in the first quarter of 2004.
For its part, the Federal Reserve Board has reiterated its
willingness to keep short-term interest rates at current low levels
to ensure the economy's strength.
Accompanying the increase in economic activity was an improvement
in corporate earnings. By February 10, 2004, 392 of the S&P 500
companies had reported their fourth-quarter 2003 results, and 67.6%
of those exceeded expectations. In the meantime, the American
consumer, who continued to spend despite the faltering economy, may
get further incentive from another round of Federal tax refunds this
year.
At Merrill Lynch Investment Managers, we believe the events and
efforts of 2003 left us with a much stronger economy and that recent
optimism suggests it is time for investors to consider what can go
right in 2004. We encourage you to revisit your portfolio and your
asset allocation strategy to ensure you are well positioned to take
advantage of the opportunities that lie ahead.
We thank you for trusting Merrill Lynch Investment Managers with
your investment assets, and we look forward to serving you in the
months and years ahead.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
A Discussion With Your Fund's Portfolio Managers
We are pleased to present you with this first semi-annual
shareholder report for Floating Rate Income Strategies Fund, Inc.
The Fund's objective is to provide high current income and such
preservation of capital as is consistent with investment in a
diversified, leveraged portfolio consisting primarily of floating
rate debt securities and instruments.
How did the Fund perform since its inception in October 2003?
Since inception (October 31, 2003) through February 29, 2004, the
Common Stock of Floating Rate Income Strategies Fund, Inc. had net
annualized yields of 3.51% and 3.52%, based on a period-end per
share net asset value of $19.19 and a per share market price of
$19.15, respectively, and $.225 per share income dividends. Over the
same period, the total investment return on the Fund's Common Stock
was +1.26%, based on a change in per share net asset value from
$19.10 to $19.19, and assuming reinvestment of $.150 per share
ordinary income dividends.
This compares to a total return of +3.33% for the Fund's unmanaged
benchmark Index, which consists 80% of the Credit Suisse First
Boston (CSFB) Leveraged Loan Index and 20% of the CSFB High Yield
Index, for the period from October 31, 2003 to February 29, 2004.
The Fund was launched at the end of October 2003, and we spent the
following four months making our initial investments. This would
account for the Fund's underperformance relative to the benchmark.
At February month-end, the Fund had settled on purchases
approximating 94% of the net proceeds from its October initial
public offering and, as such, had not yet begun to take advantage of
its leverage facility. Nevertheless, the Fund was able to meet and
pay its fully leveraged target dividend of 4.5% beginning with the
January dividend payment.
For a description of the Fund's total investment return based on a
change in the per share market value of the Fund's Common Stock (as
measured by the trading price of the Fund's shares on the New York
Stock Exchange), and assuming reinvestment of dividends, please
refer to the Financial Highlights section included in this report.
As a closed-end fund, the Fund's shares may trade in the secondary
market at a premium or discount to the Fund's net asset value. As a
result, total investment returns based on changes in the market
value of the Fund's Common Stock can vary significantly from total
investment return based on changes in the Fund's net asset value.
What were the primary market and economic developments that affected
the Fund?
During the period, inflows into the loan market via new
collateralized debt obligations, prime funds and hedge funds
surpassed the amount of new-loan issues coming to market. This
helped to maintain a strong bid on loans in the secondary market as
loan managers competed to put their cash to work. In the primary
market, pricing was equally competitive with market participants
routinely receiving new-issue allocation amounts well below their
commitment levels.
Adding to the levels of cash held by loan managers was a steady
stream of refinancings. The refinancing activity was initiated by
corporate issuers seeking to take advantage of the new lower market
spreads, which had steadily dropped throughout the period. According
to Standard & Poor's (S&P) Leveraged Commentary and Data, the new-
issue spread for BB/BB- institutional loans was 235 basis points
(2.35%) in February 2004 versus 261 basis points in October 2003.
For B/B+ loans, the spread was 294 basis points in February 2004
versus 332 basis points in October 2003.
A steady decline in the default rate over the past year also
contributed to investor demand for the leveraged loan asset class.
For example, the lagging 12-month default rate for the S&P/LSTA
Leveraged Loan Index was 1.61% on February 29, 2004, down from 2.30%
on October 31, 2003 and 5.01% on February 28, 2003. The floating
rate nature of leveraged loans also has been a desired feature among
those investors seeking to add an interest-rate-defensive position
to their portfolio in anticipation of a Federal Reserve Board move
to increase interest rates.
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
What investments were made during the period?
As mentioned earlier, since the Fund's launch in October 2003, we
established our initial investments. From a sector perspective,
we put the most emphasis on those industries with strong asset
values and stable cash flow characteristics. The Fund's highest
concentration was in the media/telecommunications sector, followed
by utilities, food/tobacco, chemicals and manufacturing. Included in
this list are sectors in which we have traditionally favored (and
benefited from) an overweighting. We believe these are strong cash-
flowing industries with significant underlying asset values.
How would you characterize the Fund's position at the close of the
period?
At period end, the Fund was composed of 104 issuers spread among 24
industries. As compared to its benchmark index, the Fund was
underweight Ba and above issues (40.7% versus 45.8% for the index),
overweight single B (43.3% versus 33.3%), underweight Caa or below
(3.9% versus 8.7%) and underweight not rated issues (12.1% versus
12.2%).
The Fund was launched during and has participated in the rally of
the leveraged loan market. The rally, however, has led to a
refinancing boom that has resulted in lower spreads and more cash
being put into the hands of loan managers. Given the prepayable
characteristics of loans, it is unlikely that there will be
significant amounts of additional price appreciation based upon
their current trading levels. This, combined with lower spreads on
new-issue loans, will likely lead to a moderation in the monthly
total return percentages of the leveraged loan market over the next
period. Given this challenging secondary and new-issue market, we
will strive to remain vigilant in our analysis of the structure and
terms of potential leveraged loan and high yield investments.
Kevin J. Booth
Vice President and Portfolio Manager
Joseph P. Matteo
Vice President and Portfolio Manager
March 26, 2004
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
Schedule of Investments
S&P Moody's Face
Industry++ Rating Rating Amount Senior Secured Floating Rate Loan Interests++++ Value
Aerospace--0.4% BB- Ba3 $ 1,369,131 DRS Technologies, Inc., Term, due 11/04/2010 $ 1,382,823
Automotive BB- B1 4,000,000 INTERMET Corporation, Term B, due 3/31/2009 4,025,000
Equipment--3.1% B+ B1 2,000,000 Keystone Automotive Operations, Inc., Term, due 10/30/2009 2,030,000
Tenneco Automotive Inc.,:
B B1 3,241,379 Term B, due 12/12/2010 3,300,804
B B1 1,458,621 Term B-1, due 12/12/2010 1,485,362
---------------
10,841,166
Cable--U.S.--8.2% D Caa1 5,000,000 Century Cable Holdings LLC, Term, due 12/31/2009 4,748,440
Charter Communications Holdings:
NR* NR* 3,000,000 Term A, due 9/18/2007 2,905,938
NR* NR* 425,219 Term B, due 9/18/2008 414,647
NR* NR* 1,596,502 Charter Communications Operating LLC, Incremental Term,
due 9/18/2008 1,555,037
B+ Ba2 2,500,000 DIRECTV Holdings, Inc., Term, due 3/06/2010 2,529,375
B Ba3 2,992,126 Falcon Holdings Group, Term C, due 12/31/2007 2,914,830
Inmarsat Investments Limited:
BB- Ba3 2,500,000 Term B, due 1/23/2017 2,511,457
BB- Ba3 2,500,000 Term C, due 1/23/2012 2,511,458
BB+ Ba3 5,000,000 Insight Midwest Holdings, LLC, Term B, due 12/31/2009 5,034,030
BB Ba2 1,155,060 Panamsat Corp., Term B-1, due 9/30/2010 1,173,829
BB Ba3 2,500,000 Mediacom Iowa LLC, Tranche A, Term, due 3/31/2010 2,486,720
---------------
28,785,761
Chemicals--4.0% BB- B1 1,000,000 KRATON Polymers LLC, Revolving Term, due 12/24/2010 1,017,917
BB- B1 8,000,000 Nalco Company, Term, due 11/04/2010 8,090,000
NR* NR* 2,000,000 Pinnacle Polymers, Term, due 12/15/2006 2,004,320
B- B1 3,000,000 Wellman, Inc., Second Lien Term, due 2/04/2010 2,946,249
---------------
14,058,486
Consumer Simmons Co.:
Products--1.9% BB- Ba2 2,500,000 Term B, due 10/29/2005 2,514,063
B+ B3 4,000,000 Term B, due 6/19/2011 4,052,084
---------------
6,566,147
Diversified BB- B1 4,375,766 Dex Media West LLC, Term B, due 3/09/2010 4,441,858
Media--5.6% B NR* 2,000,000 Primedia, Term, due 7/31/2004 1,980,250
BB Ba3 2,475,216 RH Donnelley, Term B, due 11/15/2009 2,510,951
BB- Ba2 1,973,856 Regal Cinemas, Inc., Term D, due 6/30/2009 2,001,202
B B2 3,000,000 TransWestern Publishing Company, LLC, Second Lien Term,
due 2/25/2012 3,036,564
BB+ Ba2 5,600,000 Vivendi, Term B, due 6/30/2008 5,644,626
---------------
19,615,451
Energy--1.5% NR* NR* 2,750,000 GulfTerra Energy Partners, L.P., Term, due 12/10/2008 2,774,062
NR* NR* 2,500,000 Pride International, Inc., Term B, due 1/15/2009 2,531,250
---------------
5,305,312
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
Schedule of Investments (continued)
S&P Moody's Face
Industry++ Rating Rating Amount Senior Secured Floating Rate Loan Interests++++ Value
Food & Drug--0.4% BB Ba2 $ 1,250,000 Alimentation Couche-Tard, Inc., Term C, due 12/17/2010 $ 1,260,156
Food & Tobacco-- B+ B2 8,000,000 Atkins Nutritionals, Inc., Floating Term, due 11/26/2009 8,030,000
8.9% BB Ba1 1,500,000 Constellation Brands, Inc., Term B, due 11/30/2008 1,521,429
B+ B1 3,000,000 DS Waters Enterprises, LP, Term B, due 11/06/2009 3,047,343
Doane Pet Care Company:
B+ B1 3,346,943 Term B, due 5/08/2007 3,360,190
B+ B1 1,653,057 Term C, due 5/08/2007 1,662,355
NR* NR* 6,312,329 Dr. Pepper Bottling, Term B, due 12/19/2010 6,410,959
NR* Ba3 3,975,000 Meow Mix, Inc., Term, due 10/10/2009 3,984,938
B+ B1 2,992,500 Michael Foods, Inc., Term, due 11/21/2010 3,043,465
---------------
31,060,679
Gaming--2.5% B+ B1 2,000,000 Green Valley Ranch Gaming, LLC, Term, due 12/22/2010 2,030,000
B+ B1 1,000,000 Isle of Capri Black Hawk LLC, Term C, due 12/31/2007 1,012,500
B B2 3,920,000 Pinnacle Entertainment, Inc., Term, due 12/15/2009 3,968,185
BB- Ba3 1,679,000 Scientific Games Corporation, Term C, due 11/04/2009 1,705,234
---------------
8,715,919
Health Care--3.7% BBB Ba1 1,995,000 MedCo Health, Term B, due 6/30/2010 2,026,535
BB- Ba3 6,000,000 Orthofix International NV, Term B, due 12/15/2008 6,048,750
BB Ba2 1,088,919 Rotech Healthcare, Inc., Term B, due 3/31/2008 1,099,808
BB- Ba3 3,713,744 Triad Hospitals Holdings, Inc., Term B, due 9/30/2008 3,768,299
---------------
12,943,392
Housing--1.6% B+ Ba3 3,111,111 Associated Materials Incorporated, Term, due 8/29/2010 3,150,000
B B1 2,500,000 PGT Industries, Inc., First Lien Term, due 7/29/2010 2,531,250
---------------
5,681,250
Service--1.0% B+ B1 2,000,000 Baker Tanks, Inc., Term, due 1/30/2011 2,015,626
United Rentals, Inc.:
BB Ba3 1,222,222 Term, due 2/14/2011 1,237,964
BB Ba3 333,333 Term B, due 2/14/2011 337,708
---------------
3,591,298
Leisure--1.7% B B1 3,000,000 24 Hour Fitness Worldwide, Term B, due 7/01/2009 3,039,375
BB- Ba3 2,000,000 Extended Stay America, Inc., Term B, due 1/15/2008 2,027,500
NR* NR* 924,545 Wyndham International, Inc., Increasing Rate Term,
due 4/01/2006 902,422
---------------
5,969,297
Manufacturing-- MetoKote Corporation:
5.1% B+ B1 1,000,000 Term, due 8/13/2010 1,012,500
B- B3 3,500,000 Term, due 2/13/2011 3,548,125
BB+ Ba2 5,000,000 Roper Industries, Inc., due 12/29/2008 5,065,625
BBB- Ba2 1,324,653 SPX Corporation, Term B, due 9/30/2009 1,335,209
Sensus Metering Systems Inc.:
B+ B2 5,652,174 Term B-1, due 12/17/2010 5,701,630
B+ B2 847,826 Term B-2, due 12/19/2010 855,245
---------------
17,518,334
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
Schedule of Investments (continued)
S&P Moody's Face
Industry++ Rating Rating Amount Senior Secured Floating Rate Loan Interests++++ Value
Packaging--2.6% B+ B1 $ 2,000,000 Berry Plastics Corporation, Delayed Draw Term,
due 11/05/2008 $ 2,005,000
B+ B1 4,925,156 Berry Plastics Corporation, Term C, due 7/22/2010 4,975,949
BB- B1 2,000,000 Owens-Illinois Inc., Term B, due 4/01/2008 2,017,292
---------------
8,998,241
Paper--1.4% B+ B1 1,500,000 SP Newsprint Co., Term B, due 1/09/2010 1,520,625
Stone Container Corporation:
NR* NR* 2,666,296 Term B, due 6/30/2009 2,701,846
NR* NR* 451,759 Term C, due 6/30/2009 455,994
---------------
4,678,465
Retail--2.2% B B3 2,500,000 American Reprographics Company, LLC, Term, due 12/18/2009 2,537,500
B+ B1 5,000,000 General Nutrition Center, Inc., Term B, due 12/05/2009 5,034,375
---------------
7,571,875
Telecommunica- NR* NR* 3,454,304 WilTel Communications Group, Inc., Term, due 5/03/2008 3,449,987
tions--1.0%
Transportation-- BB+ Ba3 4,642,543 Laidlaw International, Term B, due 6/30/2009 4,727,655
1.4%
Utilities--10.4% BB B2 1,571,429 The AES Corporation, Term, due 4/30/2008 1,591,661
B NR* 4,989,962 Calpine Corporation, Term, due 7/16/2007 4,762,295
BBB- Ba1 7,983,784 CenterPoint Energy, Inc., Term, due 10/07/2006 8,186,708
NR* NR* 13,000,000 Mission Energy Holding Company, Term, due 12/11/2006 13,130,000
BB B1 250,000 NRG Energy, Inc., Credit Link Deposit, due 6/23/2010 257,539
BB B1 446,500 NRG Energy, Inc., Term, due 6/23/2010 459,965
BB- Ba3 2,500,000 Quanta Services, Inc., Revolving Credit, due 6/19/2008 2,532,813
NR* NR* 1,607,159 Reliant Resources, Inc., Term, due 3/15/2007 1,577,695
B+ Ba3 3,500,000 Teton Power Funding LLC, Term B, due 1/12/2011 3,548,125
---------------
36,046,801
Wireless--1.2% B1 B1 4,000,000 American Tower Systems Corp., Term B, due 12/31/2007 4,049,168
Wireless B- B2 2,350,000 Centennial, Term A, due 2/09/2011 2,362,974
Communications-- B- B1 1,995,000 Crown Castle Operating Company, Term B, due 9/30/2010 2,034,345
8.5% B- B1 1,995,000 Dobson Cellular Systems, Inc., Term, due 3/31/2010 2,014,238
Nextel Communications, Inc.:
BB Ba2 4,861,111 Term A, due 12/31/2007 4,833,262
BB- Ba2 15,000,000 Term E, due 12/15/2010 15,152,820
CCC+ B2 3,215,385 SBA Senior Finance, Inc., Term B, due 10/31/2008 3,246,198
---------------
29,643,837
Total Investments in Senior Secured Floating Rate
Loan Interests (Cost--$270,550,517)--78.3% 272,461,500
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
Schedule of Investments (continued)
S&P Moody's Face
Industry++ Rating Rating Amount Corporate Debt Value
Broadcasting-- CCC B3 $ 4,000,000 Granite Broadcasting Corporation, 9.75% due
1.1% 12/01/2010 (b) $ 3,930,000
Cable - U.S.-- B B2 850,000 Inmarsat Finance PLC, 7.625% due 6/30/2012 (b) 892,500
0.6% Intelsat, Ltd.:
BBB+ Baa3 500,000 5.25% due 11/01/2008 519,415
BBB+ Baa3 500,000 6.50% due 11/01/2013 531,649
---------------
1,943,564
Chemicals--1.5% BB- B3 5,000,000 PolyOne Corporation, 10.625% due 5/15/2010 5,150,000
Consumer B B2 2,000,000 Playtex Products, Inc., 8% due 3/01/2011 (b) 2,080,000
Non-Durables--
0.6%
Consumer B- B3 250,000 Elizabeth Arden, Inc., 7.75% due 1/15/2014 (b) 258,125
Products--0.1%
Energy--0.8% CCC Caa2 4,000,000 Trico Marine Services, Inc., 8.875% due 5/15/2012 2,620,000
Food & Drug--0.1% B Ba3 450,000 Alimentation Couche-Tard US, LP/Couche-Tard Finance Corp.,
7.50% due 12/15/2013 (b) 481,500
Gaming--1.3% B- B3 250,000 Premier Entertainment Biloxi LLC, 10.75% due 2/01/2012 (b) 267,500
B+ B2 325,000 River Rock Entertainment Authority, 9.75% due 11/01/2011 (b) 350,187
B+ B1 775,000 Station Casinos, Inc., 6.50% due 2/01/2014 (b) 782,750
CCC+ Caa1 3,000,000 Trump Casino Holdings, LLC, 11.625% due 3/15/2010 2,977,500
---------------
4,377,937
Housing--0.7% B+ B1 2,425,000 Nortek Holdings, Inc., 4.17% due 12/31/2010 (b)(c) 2,431,062
Hybrid--2.9% NR* B3 10,000,000 Dow Jones TRAC-X North America High Yield Series 2
March 2009 Trust 3, 8% due 3/25/2009 (b) 10,012,500
Manufacturing-- B- B3 2,900,000 Invensys plc, 9.875% due 3/15/2011 (b) 2,846,263
0.9% B- B3 325,000 Erico International Corporation, 8.875% due 3/01/2012 (b) 338,000
---------------
3,184,263
Metal--Other-- NR* Ba2 2,000,000 Vale Overseas Ltd., 8.25% due 1/17/2034 1,770,000
0.5%
Packaging--1.1% B- B3 3,000,000 Pliant Corporation, 11.125% due 9/01/2009 3,127,500
B- B2 250,000 Portola Packaging, Inc., 8.25% due 2/01/2012 (b) 257,500
B- B2 600,000 Tekni-Plex, Inc., 8.75% due 11/15/2013 (b) 625,500
---------------
4,010,500
Services--0.1% B- B2 400,000 FTD Inc., 7.75% due 2/15/2014 (b) 401,000
Steel--0.8% B+ B1 3,000,000 CSN Islands VIII Corp., 9.75% due 12/16/2013 (b) 2,842,500
Telecommunica- B- B3 6,000,000 Cincinnati Bell Inc., 8.375% due 1/15/2014 6,315,000
tions--3.8% CCC+ B3 3,700,000 Qwest Communications International Inc., 4.63% due
2/15/2009 (b)(c) 3,496,500
B B1 3,500,000 Time Warner Telecom Holdings, Inc., 5.12% due
2/15/2011 (b)(c) 3,473,750
---------------
13,285,250
Utilities--1.5% CCC+ Caa1 3,000,000 Calpine Canada Energy Finance ULC, 8.50% due 5/01/2008 2,317,500
B Caa1 3,000,000 Calpine Corporation, 9.875% due 12/01/2011 (b) 2,925,000
---------------
5,242,500
Wireless CC Caa1 450,000 SBA Telecommunications, Inc., 9.75% due 12/15/2011 (a)(b) 310,500
Telecommunica-
tions--0.1%
Total Investments in Corporate Debt
(Cost--$64,821,951)--18.5% 64,331,201
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
Schedule of Investments (concluded)
Beneficial
Interest Short-Term Securities Value
$21,044,733 Merrill Lynch Liquidity Series, LLC Cash Sweep Series I** $ 21,044,733
Total Investments in Short-Term Securities
(Cost--$21,044,733)--6.0% 21,044,733
Total Investments (Cost--$356,417,201)--102.8% 357,837,434
Liabilities in Excess of Other Assets--(2.8%) (9,875,759)
---------------
Net Assets--100.0% $ 347,961,675
===============
++For Fund compliance purposes, "Industry" means any one or more
of the industry sub-classifications used by one or more widely
recognized market indexes or ratings group indexes, and/or as
defined by Fund management. This definition may not apply for
purposes of this report, which may combine industry sub-
classifications for reporting ease. Industries are shown as a
percent of net assets.
++++Senior secured floating rate loan interests in which the Fund
invests generally pay interest at rates that are periodically
redetermined by reference to a base lending rate plus a premium.
These base lending rates are generally (i) the lending rate offered
by one or more major European banks, such as LIBOR (London InterBank
Offered Rate), (ii) the prime rate offered by one or more major U.S.
banks or (iii) the certificate of deposit rate.
*Not Rated.
**Investments in companies considered to be an affiliate of the Fund
(such companies are defined as "Affiliated Companies" in Section
2(a)(3) of the Investment Company Act of 1940) are as follows:
Net Interest
Affiliate Activity Income
Merrill Lynch Liquidity Series,
LLC Cash Sweep Series I $21,044,733 $201,087
(a)Represents a zero coupon bond; the interest rate shown reflects
the effective yield at the time of purchase by the Fund.
(b)The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
(c)Floating rate note.
See Notes to Financial Statements.
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
Statements of Assets, Liabilities and Capital
As of February 29, 2004
Assets
Investments at value (identified cost--$356,417,201) $ 357,837,434
Interest receivable (including $586 from affiliates) 2,523,608
Deferred income 31,041
Deferred facility fees 6,834
---------------
Total assets 360,398,917
---------------
Liabilities
Payables:
Securities purchased $ 12,242,411
Offering costs 99,518
Investment adviser 39,953
Commitment fees 6,708
Other affiliates 2,231 12,390,821
---------------
Accrued expenses and other liabilities 46,421
---------------
Total liabilities 12,437,242
---------------
Net Assets
Net assets $ 347,961,675
===============
Capital
Common Stock, par value $.10 per share; 200,000,000 shares authorized
(18,133,972 shares issued and outstanding) $ 1,813,397
Paid-in capital in excess of par 344,099,886
Undistributed investment income--net $ 668,432
Accumulated realized capital losses on investments--net (7,069)
Unrealized appreciation on investments--net 1,387,029
---------------
Total accumulated earnings--net 2,048,392
---------------
Total capital--Equivalent to $19.19 net asset value per share of
Common Stock (market price--$19.15) $ 347,961,675
===============
See Notes to Financial Statements.
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
Statement of Operations
For the Period October 31, 2003++ to February 29, 2004
Investment Income
Interest (including $201,087 from affiliates) $ 3,659,006
Facility and other fees 16,841
---------------
Total income 3,675,847
---------------
Expenses
Investment advisory fees $ 836,102
Accounting services 34,753
Transfer agent fees 20,890
Directors' fees and expenses 13,847
Borrowing costs 12,597
Listing fees 10,752
Printing and shareholder reports 9,100
Custodian fees 8,706
Professional fees 7,470
Pricing services 3,144
Other 4,820
---------------
Total expenses before waiver 962,181
Waiver of expenses (668,881)
---------------
Total expenses after waiver 293,300
---------------
Investment income--net 3,382,547
---------------
Realized & Unrealized Gain (Loss) on Investments--Net
Realized loss on investments--net (7,069)
Unrealized appreciation on investments--net 1,387,029
---------------
Total realized and unrealized gain on investments--net 1,379,960
---------------
Net Increase in Net Assets Resulting from Operations $ 4,762,507
===============
++Commencement of Operations.
See Notes to Financial Statements.
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
Statement of Changes in Net Assets
For the Period
October 31, 2003++
to February 29,
Increase (Decrease) in Net Assets: 2004
Operations
Investment income--net $ 3,382,547
Realized loss on investments--net (7,069)
Unrealized appreciation on investments--net 1,387,029
---------------
Net increase in net assets resulting from operations 4,762,507
---------------
Dividends to Shareholders
Dividends to shareholder from investment income--net (2,714,115)
---------------
Stock Transactions
Net proceeds from issuance of Common Stock 345,232,500
Value of shares issued to Common Stock shareholders in reinvestment of dividends 1,032,581
Offering costs resulting from the issuance of Common Stock (451,806)
---------------
Net increase in net assets resulting from stock transactions 345,813,275
---------------
Net Assets
Total increase in net assets 347,861,667
Beginning of period 100,008
---------------
End of period* $ 347,961,675
===============
*Undistributed investment income--net $ 668,432
===============
++Commencement of Operations.
See Notes to Financial Statements.
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
Financial Highlights
The following per share data and ratios have been derived For the Period
from information provided in the financial statements. October 31, 2003++
to February 29,
Increase (Decrease) in Net Asset Value: 2004
Per Share Operating Performance
Net asset value, beginning of period $ 19.10
---------------
Investment income--net .19
Realized and unrealized gain on investments--net .07
---------------
Total from investment operations .26
---------------
Less dividends from investment income--net (.15)
---------------
Offering costs resulting from the issuance of Common Stock (.02)
---------------
Net asset value, end of period $ 19.19
===============
Market price per share, end of period $ 19.15
===============
Total Investment Return**
Based on net asset value per share 1.26%+++
===============
Based on market price per share (7.32%)+++
===============
Ratios to Average Net Assets
Expenses, net of waiver .26%*
===============
Expenses .87%*
===============
Investment income--net 3.05%*
===============
Supplemental Data
Net assets, end of period (in thousands) $ 347,962
===============
Portfolio turnover 12.05%
===============
*Annualized.
**Total investment returns based on market price, which can be
significantly greater or lesser than the net asset value, may result
in substantially different returns. total investment returns exclude
the effects of sales charges.
++Commencement of operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
Notes to Financial Statements
1. Significant Accounting Policies:
Floating Rate Income Strategies Fund, Inc. (the "Fund") is
registered under the Investment Company Act of 1940, as amended, as
a non-diversified, closed-end management investment company. Prior
to commencement of operations on October 31, 2003, the Fund had no
operations other than those relating to organizational matters and
the sale of 5,236 shares of Common Stock on October 15, 2003 to Fund
Asset Management, L.P. ("FAM") for $100,008. The Fund's financial
statements are prepared in conformity with accounting principles
generally accepted in the United States of America, which may
require the use of management accruals and estimates. These
unaudited financial statements reflect all adjustments, which are,
in the opinion of management, necessary to a fair statement of the
results for the interim period presented. All such adjustments are
of a normal, recurring nature. The Fund determines and makes
available for publication the net asset value of its Common Stock on
a weekly basis. The Fund's Common Stock is listed on the New York
Stock Exchange ("NYSE") under the symbol FRA.
(a) Corporate debt obligations--The Fund invests principally in
senior debt obligations of companies, including Corporate Loans made
by banks and other financial institutions and both privately and
publicly offered corporate bonds and notes. Because agents and
intermediaries are primarily commercial banks, the Fund's investment
in Corporate Loans could be considered concentrated in financial
institutions.
(b) Valuation of investments--Corporate Loans are valued in
accordance with guidelines established by the Fund's Board of
Directors. Corporate Loans are valued at the mean between the last
available bid and asked prices from one or more brokers or dealers
as obtained from Loan Pricing Corporation. For the limited number of
Corporate Loans for which no reliable price quotes are available,
such Corporate Loans will be valued by Loan Pricing Corporation
through the use of pricing matrices to determine valuations. If the
pricing service does not provide a value for a Corporate Loan, the
Investment Adviser will value the Corporate Loan at fair value,
which is intended to approximate market value.
Securities that are held by the Fund that are traded on stock
exchanges or the Nasdaq National Market are valued at the last sale
price or official close price on the exchange on which such
securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last
available bid price for long positions, and at the last available
ask price for short positions. In cases where securites are traded
on more than one exchange, the securities are valued on the exchange
designated as the primary market by or under the authority of the
Board of the Fund. Long positions in securities traded in over-the-
counter ("OTC") market, Nasdaq Small Cap or Bulletin Board are
valued at the last available bid price or yield equivalent obtained
from one or more dealers or pricing services approved by the Board
of the Fund. Short positions in securities traded in the OTC market
are valued at the last available ask price. Portfolio securities
that are traded both in the OTC market and on a stock exchange are
valued according to the broadest and most representative market.
When the Fund writes an option, the amount of the premium received
is recorded on the books of the Fund as an asset and an equivalent
liability. The amount of the liability is subsequently valued to
reflect the current market value of the option written, based on the
last sale price in the case of exchange-traded options or, in the
case of options traded in the OTC market, the last ask price.
Options purchased by the Fund are valued at their last sale price in
the case of exchange-traded options or, in the case of options
traded in the OTC market, the last bid price. The value of swaps,
including interest rate swaps, caps and floors, will be determined
by obtaining dealer quotations. Other investments, including futures
contracts and related options, are stated at market value.
Obligations with remaining maturities of 60 days or less are valued
at amortized cost unless the Investment Adviser believes that this
method no longer produces fair valuations. Repurchase agreements
will be valued at cost plus accrued interest. The Fund employs
certain pricing services to provide securities prices for the Fund.
Securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or
under the direction of the Directors of the Fund, including
valuations furnished by the pricing services retained by the Fund,
which may use a matrix system for valuations. The procedures of a
pricing service and its valuations are reviewed by the officers of
the Fund under the general supervision of the Directors. Such
valuations and procedures will be reviewed periodically by the
Directors.
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
Notes to Financial Statements (continued)
Generally, trading in foreign securities, as well as U.S. government
securities and money market instruments, is substantially completed
each day at various times prior to the close of business on the
NYSE. The values of such securities used in computing the net asset
value of the Fund's shares are determined as of such times. Foreign
currency exchange rates also are generally determined prior to the
close of businss on the NYSE. Occasionally, events affecting the
values of such securities and such exchange rates may occur between
the times at which they are determined and the close of business on
the NYSE that may not be reflected in the computation of the Fund's
net asset value. If events (for example, a company announcement,
market volatility or a natural disaster) occur during such periods
that are expected to materially affect the value of such securities,
those securities may be valued at their fair value as determined in
good faith by the Board of Directors or by the Invesetment Adviser
using a pricing service and/or procedures approved by the Board of
Directors.
(c) Derivative financial instruments--The Fund may engage in various
portfolio investment strategies both to increase the return of the
Fund and to hedge, or protect, its exposure to interest rate
movements and movements in the securities markets. Losses may arise
due to changes in the value of the contract or if the counterparty
does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts.
Futures contracts are contracts for delayed delivery of securities
at a specific future date and at a specific price or yield. Upon
entering into a contract, the Fund deposits and maintains as
collateral such initial margin as required by the exchange on which
the transaction is effected. Pursuant to the contract, the Fund
agrees to receive from or pay to the broker an amount of cash equal
to the daily fluctuation in value of the contract. Such receipts or
payments are known as variation margin and are recorded by the Fund
as unrealized gains or losses. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the
time it was closed.
* Options--The Fund may write and purchase call and put options.
When the Fund writes an option, an amount equal to the premium
received by the Fund is reflected as an asset and an equivalent
liability. The amount of the liability is subsequently marked to
market to reflect the current market value of the option written.
When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction is less than or exceeds the premiums paid or
received).
Written and purchased options are non-income producing investments.
* Swaps--The Fund may enter into swap agreements, which are over-the-
counter contracts in which the Fund and a counterparty agree to make
periodic net payments on a specified notional amount. The net
payments can be made for a set period of time or may be triggered by
a predetermined credit event. The net periodic payments may be based
on a fixed or variable interest rate; the change in market value of
a specified security, basket of securities, or index; or the return
generated by a security.
(d) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(e) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Realized gains and losses on security
transactions are determined on the identified cost basis. Interest
income is recognized on the accrual basis. The Fund amortizes all
premiums and discounts on debt securities.
(f) Offering expenses--Direct expenses relating to the public
offering of the Fund's Common Stock were charged to capital at the
time of issuance of the shares.
(g) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates. The Fund may at times pay out
less than the entire amount of net investment income earned in any
particular period and may at times pay out such accumulated
undistributed income in other periods to permit the Fund to maintain
a more stable level of dividends.
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
Notes to Financial Statements (continued)
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with FAM.
The general partner of FAM is Princeton Services, Inc. ("PSI"),
an indirect, wholly-owned subsidiary of Merrill Lynch & Co., Inc.
("ML & Co."), which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of .75% of
the Fund's average weekly net assets plus the proceeds of any
outstanding borrowings used for leverage. For the period October 31,
2003 to February 29, 2004, FAM earned fees of $836,102, of which
$668,881 was waived.
For the period October 31, 2003 to February 29, 2004, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, an affiliate of FAM, received
underwriting fees of $13,059,419 in connection with the issuance of
the Fund's Common Stock.
For the period October 31, 2003 to February 29, 2004, the Fund
reimbursed the underwriters $96,785 as a partial reimbursement of
expenses incurred in connection with the issuance of the Fund's
Common Stock.
For the period October 31, 2003 to February 29, 2004, the Fund
reimbursed FAM $1,992 for certain accounting services.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the period October 31, 2003 to February 29, 2004 were
$356,918,960 and $21,580,280, respectively.
Net realized losses for the period October 31, 2003 to February 29,
2004 and net unrealized gains (losses) as of February 29, 2004 were
as follows:
Realized Unrealized
Losses Gains (Losses)
Long-term investments $ (7,069) $ 1,420,233
Unfunded loan interests -- (33,204)
------------- -------------
Total $ (7,069) $ 1,387,029
============= =============
As of February 29, 2004, net unrealized appreciation for Federal
income tax purposes aggregated $1,420,233, of which $3,271,960
related to appreciated securities and $1,851,727 related to
depreciated securities. The aggregate cost of investments at
February 29, 2004 for Federal income tax purposes was $356,417,201.
4. Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of capital stock
par value $.10, all of which are initially classified as Common
Stock. The Board of Directors is authorized, however, to classify
and reclassify any unissued shares of capital stock without approval
of the holders of Common Stock.
Shares issued and outstanding during the period October 31, 2003 to
February 29, 2004 increased by 18,075,000 from shares sold and
53,736 from reinvestment of dividends.
5. Short-Term Borrowings:
On February 20, 2004, the Fund entered into a $172,500,000 revolving
credit and security agreement with Citibank, N.A. and other lenders
(the "Lenders"). The Fund may borrow money through (i) a line of
credit from certain Lenders at the eurodollar rate plus .75%, or
the highest of the Federal Funds rate plus .50%, a base rate as
determined by Citibank, N.A. and the latest 3-week moving average
of secondary market morning offering rates in the United States for
3-month certificates of deposit of major U.S. money market banks
plus .50%, or (ii) the issuance of commercial paper notes by certain
Lenders at rates of interest derived from the weighted average of
the per annum rates paid or payable by such Lenders in respect of
those commercial notes. As security for its obligations to the
Lenders under the revolving credit and security agreement, the Fund
has granted a security interest in substantially all of its assets
to and in favor of the Lenders. For the period October 31, 2003 to
February 29, 2004, the Fund did not utilize the revolving credit.
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
Notes to Financial Statements (concluded)
6. Unfunded Corporate Loans:
As of February 29, 2004, the Fund had unfunded loan commitments of
$4,075,726, which would be extended at the option of the borrower
pursuant to the following loan agreements:
Unfunded
Commitment
Borrower (in thousands)
Pinnacle Entertainment, Inc. $2,080
SBA Telecommunications, Inc. $ 585
SP Newsprint Co. $ 967
United Rentals Inc. $ 444
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
Portfolio Information
As of February 29, 2004
Percent of
Ten Largest Holdings Total Assets
Nextel Communications Inc., Term E,
due 12/15/2010 4.2%
Mission Energy Holding Company, Term,
due 12/11/2006 3.6
CenterPoint Energy, Inc., Term,
due 10/07/2006 2.3
Nalco Company, Term, due 11/04/2010 2.2
Atkins Nutritionals, Inc., Floating Term,
due 11/26/2009 2.2
Dr. Pepper Bottling, Term B, due 12/19/2010 1.8
Orthofix International NV, Term B,
due 12/15/2008 1.7
Sensus Metering Systems Inc., Term B-1,
due 12/17/2010 1.6
Vivendi, Term B, due 6/30/2008 1.6
Roper Industries, Inc., 3.11% due 12/29/2008 1.4
Percent of
Long-Term
Quality Ratings by S&P/Moody's Investments
BBB/Baa 3.7%
BB/Ba 37.0
B/B 43.3
CCC/Caa 3.9
NR (Not Rated) 12.1
Percent of
Geographic Allocation Long-Term
By Country Investments
United States 98.2%
Cayman Islands 0.8
Canada 0.7
United Kingdom 0.3
Percent of
Five Largest Industries++ Total Assets
Utilities 11.5%
Food & Tobacco 8.6
Cable--U.S. 8.5
Wireless Communications 8.2
Manufacturing 5.7
++For Fund compliance purposes, "Industries" means any one or more
of the industry sub-classifications used by one or more widely
recognized market indexes or ratings group indexes, and/or as
defined by Fund management. This definition may not apply for
purposes of this report, which may combine industry sub-
classifications for reporting ease.
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
Officers and Directors
Terry K. Glenn, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Kevin A. Ryan, Director
Roscoe S. Suddarth, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Kevin J. Booth, Vice President
Joseph P. Matteo, Vice President
Donald C. Burke, Vice President and Treasurer
Phillip S. Gillespie, Secretary
Charles R. Reilly, Director of Floating Rate Income Strategies Fund,
Inc., has recently retired. The Fund's Board of Directors wishes
Mr. Reilly well in his retirement.
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
EquiServe
P.O. Box 43010
Providence, RI 02940-3010
NYSE Symbol
FRA
Electronic Delivery
The Fund offers electronic delivery of communications to its
shareholders. In order to receive this service, you must
register your account and provide us with e-mail information.
To sign up for this service, simply access this website
http://www.icsdelivery.com/live and follow the instructions.
When you visit this site, you will obtain a personal identification
number (PIN). You will need this PIN should you wish to update your
e-mail address, choose to discontinue this service and/or make any
other changes to the service. This service is not available for
certain retirement accounts at this time.
FLOATING RATE INCOME STRATEGIES FUND, INC., FEBRUARY 29, 2004
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this
semi-annual report
Item 4 - Principal Accountant Fees and Services - Not Applicable to
this semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable to
this semi-annual report
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for
Closed-End Management Investment Companies - Not Applicable to this
semi-annual report
Item 8 - Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers - Not Applicable
Item 9 - Submission of Matters to a Vote of Security Holders - Not
Applicable
Item 10 - Controls and Procedures
10(a) - The registrant's certifying officers have reasonably
designed such disclosure controls and procedures to ensure material
information relating to the registrant is made known to us by others
particularly during the period in which this report is being
prepared. The registrant's certifying officers have determined that
the registrant's disclosure controls and procedures are effective
based on our evaluation of these controls and procedures as of a
date within 90 days prior to the filing date of this report.
10(b) - There were no changes in the registrant's internal control
over financial reporting (as defined in Rule 30a-3(d) under the Act
(17 CFR 270.30a-3(d)) that occurred during the last fiscal half-year
of the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
Item 11 - Exhibits attached hereto
11(a)(1) - Code of Ethics - Not Applicable to this semi-annual
report
11(a)(2) - Certifications - Attached hereto
11(a)(3) - Not Applicable
11(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Floating Rate Income Strategies Fund, Inc.
By: _/s/ Terry K. Glenn_______
Terry K. Glenn,
President of
Floating Rate Income Strategies Fund, Inc.
Date: April 16, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By: _/s/ Terry K. Glenn________
Terry K. Glenn,
President of
Floating Rate Income Strategies Fund, Inc.
Date: April 16, 2004
By: _/s/ Donald C. Burke________
Donald C. Burke,
Chief Financial Officer of
Floating Rate Income Strategies Fund, Inc.
Date: April 16, 2004