UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-09229
811-10171
Name of Fund: Merrill Lynch Senior Floating Rate Fund, Inc.
Master Senior Floating Rate Trust
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, Merrill Lynch Senior Floating Rate Fund, Inc. and Master Senior
Floating Rate Trust, 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: 08/31/05
Date of reporting period: 09/01/04 - 08/31/05
Item 1 - Report to Stockholders
Merrill Lynch
Senior Floating
Rate Fund, Inc.
Annual Report
August 31, 2005
(BULL LOGO) Merrill Lynch Investment Managers
www.mlim.ml.com
Mercury Advisors
A Division of Merrill Lynch Investment Managers
www.mercury.ml.com
Merrill Lynch Senior Floating Rate Fund, Inc. seeks as high a level of current
income and such preservation of capital as is consistent with investment in
senior collateralized corporate loans made by banks and other financial
institutions.
This report, including the financial information herein, is transmitted for
use only 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.
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) at www.mutualfunds.ml.com; and (3) on the Securities and Exchange
Commission's Web site at http://www.sec.gov. Information about how the
Fund voted proxies relating to securities held in the Fund's portfolio
during the most recent 12-month period ended June 30 is available (1) at
www.mutualfunds.ml.com and (2) on the Securities and Exchange Commission's
Web site at http://www.sec.gov.
Merrill Lynch Senior Floating Rate Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
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Merrill Lynch Senior Floating Rate Fund, Inc.
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at
http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the
SEC's Public Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
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 Web
site at 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.
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
A Letter From the President
Dear Shareholder
Amid what we've coined a "muddle through" year for the financial markets, the
major market benchmarks managed to post positive results for the current
reporting period:
Total Returns as of August 31, 2005 6-month 12-month
U.S. equities (Standard & Poor's 500 Index) +2.33% +12.56%
Small-cap U.S. equities (Russell 2000 Index) +5.75% +23.10%
International equities (MSCI Europe Australasia Far East Index) +1.98% +23.58%
Fixed income (Lehman Brothers Aggregate Bond Index) +2.85% + 4.15%
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +2.85% + 5.31%
High yield bonds (Credit Suisse First Boston High Yield Index) +1.35% + 8.98%
Since June 2004, the Federal Reserve Board (the Fed) has tirelessly advanced
its interest rate-hiking program, bringing the federal funds rate to 3.5% by
August 31 (and to 3.75% on September 20). Economists and investors have
struggled to project the Fed's future moves, vacillating from expectations for
an impending end to monetary tightening to fears that the central bank may
increase interest rates more than is necessary to moderate economic growth and
keep inflation in check. Most recently, the devastation of Hurricane Katrina
added a new element of ambiguity in terms of its impact on the economy and Fed
sentiment. Many now believe the Fed will suspend its interest rate-hiking
campaign at some point this year.
Equity market returns over the past several months have reflected a degree of
investor uncertainty. After a strong finish to 2004, the S&P 500 Index posted
gains in four of the first eight months of 2005. Up to this point, strong
corporate earnings reports and low long-term bond yields have worked in favor
of equities. Factors that pose the greatest risks to stocks include record-
high oil prices, continued interest rate hikes and the possibility for
disappointing earnings for the remainder of the year.
Fixed income markets have fared relatively well in the face of monetary
tightening. As the short end of the yield curve moved in concert with Fed
interest rate hikes, long-term bond yields remained low, perpetuating the
yield curve flattening trend. Because bond prices move in the opposite
direction of yields, the result has been that longer-term bonds have
outperformed short-term bonds. At period end, the spread between two-year and
10-year Treasury yields was just 18 basis points (.18%).
Financial markets are likely to face continued crosscurrents for the remainder
of 2005, particularly as the economy digests the impact of Hurricane Katrina.
Nevertheless, opportunities do exist and we encourage you to work with your
financial advisor to diversify your portfolio among a variety of asset types.
This can help to diffuse risk while also tapping into the potential benefits
of a broader range of investment alternatives. As always, we thank you for
trusting Merrill Lynch Investment Managers with your investment assets.
Sincerely,
(Robert C. Doll, Jr.)
Robert C. Doll, Jr.
President and Director/Trustee
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
A Discussion With Your Fund's Portfolio Manager
The Fund ended the period with an overall credit quality positioned toward the
center of the leveraged loan market, rather than barbelled at the high and low
ends of the quality spectrum.
Describe market conditions during the past year.
The past year has been characterized by heavy investor participation in the
leveraged loan market, primarily through collateralized loan obligations,
which are debt securities backed by pools of commercial bank loans, and
through new closed-end funds and net subscriptions to open-end mutual funds.
There was a notable increase in the issuance of leveraged loan securities in
response to stepped-up demand from investors. The excess cash in the loan
market has led to increased refinancing activity and reductions in the margin
above the London InterBank Offered Rate (LIBOR) paid by borrowers, leading to
higher bids in the secondary market. Although these factors had a somewhat
negative effect on the market, a low default rate and the rise in the LIBOR
enhanced the performance of leveraged loans during the year.
According to Standard & Poor's Leveraged Commentary & Data (LCD), the average
margin above LIBOR for new-issue institutional tranches rated BB/BB- was 178
basis points (1.78%) at August 31, 2005, compared to 213 basis points in
August 2004. The average new-issue margin above LIBOR for institutional
tranches rated B+/B ended the fiscal year at 250 basis points, 41 basis points
lower than its level at the end of August 2004. Meanwhile, the three-month
LIBOR rose from 1.80% to 3.87% during the year, outweighing the effects of the
spread compression. Despite the significant increase in the LIBOR, we believe
the Federal Reserve Board is getting close to ending its bias toward a more
restrictive monetary policy and, consequently, we do not expect the LIBOR to
rise much further. Also benefiting the asset class, the default rate for the
leveraged loan market remained at historically low levels throughout the year
(including the market downturn in May) as fundamental credit quality generally
remained strong across the market. The Standard & Poor's LCD lagging 12-month
default rate, by principal amount, was 1.43% as of August 31, 2005, up from
0.88% one year earlier.
How did the Fund perform during the fiscal year in light of the existing
market conditions?
For the 12-month period ended August 31, 2005, the Common Stock of Merrill
Lynch Senior Floating Rate Fund, Inc. had a net annualized yield of 4.28%,
based on a year-end per share net asset value of $9.01 and $.385 per share
income dividends. For the same period, the total investment return on the
Fund's Common Stock was +5.38%, based on a change in per share net asset value
from $8.91 to $9.01, and assuming reinvestment of all distributions. For the
same period, the Fund's benchmark, the Credit Suisse First Boston (CSFB)
Leveraged Loan Index, recorded a total return of +5.95%.
For the six-month period ended August 31, 2005, the total investment return on
the Fund's Common Stock was +2.19%, based on a change in per share net asset
value from $9.02 to $9.01, and assuming reinvestment of all distributions. The
Fund's benchmark returned +2.85% for the same period.
What factors most influenced Fund performance?
The portfolio's holdings in the transportation, energy - other and steel
sectors had a negative effect on Fund results for the fiscal year. Conversely,
security selection in chemicals, U.S. cable and services benefited
performance.
Our holding in Sirva Worldwide, a moving and relocation service provider,
hindered the Fund's return in the transportation sector. The value of the loan
security fell amid investor concerns about the company's internal audit
procedures and reports that business in its European division was slowing. The
company has announced plans to sell a non-core insurance subsidiary, which
should improve its liquidity and leverage. In the energy - other sector, many
companies repaid at par value debt that had been marked at prices above par.
At period-end, none of our remaining holdings in the sector were priced below
par. The primary driver of the Fund's lagging return in the steel sector was
the Acme Metals, Inc. stock that, in addition to cash payments, we received as
part of a loan restructuring. The stock price declined because the payments
constituted a return of principal, and therefore reduced the value of the
company.
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
The strong performance in the chemical sector was broad-based, as increased
demand sparked an industry-wide rally. Most notably, we sold our holding in
Pioneer Companies, Inc. common stock after it enjoyed strong performance amid
a rally in the chlor-alkali industry. We acquired the stock pursuant to the
company's restructuring. In the U.S. cable sector, our positions in Century
Cable Holdings LLC and Charter Communications Operating LLC were additive to
performance. The Adelphia securities rallied to slightly above par value after
Adelphia sold its cable companies to Comcast Corporation and Time Warner Inc.
At Charter Communications, a recent refinancing worked to improve the
company's liquidity and eliminate short-term debt, prompting our bank loan
holding to advance. In the services sector, our positions in Anthony Crane
Rental LP and The Shaw Group, Inc. contributed positively to Fund performance.
The value of the Anthony Crane term loan has risen as the company prepares to
exit bankruptcy with a more favorable capital structure. Anthony Crane was
further supported by improvements in the commercial construction industry,
which has displayed signs of renewed vigor. The Shaw Group, an engineering and
consulting firm, announced better-than-expected earnings. This boosted the
share price of the company's stock, which we had received from the
restructuring of IT Group, a company that Shaw Group acquired in 2002.
How would you characterize the portfolio's position at the close of the
period?
At the end of the period, the Trust was composed of 164 issuers spread among
26 industries. The Trust was underweight versus its composite benchmark in
securities rated Ba or better and credits rated Caa or below, and there were
overweight positions in B-rated and unrated securities. The portfolio's
overall credit quality effectively is positioned more to the center of the
leveraged loan market.
Joseph P. Matteo
Vice President and Portfolio Manager
September 20, 2005
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Disclosure of Expenses
Shareholders of this Fund may incur the following charges: (a) expenses
related to transactions, including sales charges, redemption fees and exchange
fees; and (b) operating expenses, including advisory fees, distribution fees
including 12(b)-1 fees, and other Fund expenses. The following example (which
is based on a hypothetical investment of $1,000 invested on March 1, 2005 and
held through August 31, 2005) is intended to assist shareholders both in
calculating expenses based on an investment in the Fund and in comparing these
expenses with similar costs of investing in other mutual funds.
The first table below provides information about actual account values and
actual expenses. In order to estimate the expenses a shareholder paid during
the period covered by this report, shareholders can divide their account value
by $1,000 and then multiply the result by the number in the first line under
the heading entitled "Expenses Paid During the Period."
The second table below provides information about hypothetical account values
and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses. In order to assist
shareholders in comparing the ongoing expenses of investing in this Fund and
other funds, compare the 5% hypothetical example with the 5% hypothetical
examples that appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders ongoing
costs only and do not reflect any transactional expenses, such as sales
charges, redemption fees or exchange fees. Therefore, the second table is
useful in comparing ongoing expenses only, and will not help shareholders
determine the relative total expenses of owning different funds. If these
transactional expenses were included, shareholder expenses would have been
higher.
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value March 1, 2005
March 1, August 31, to August 31,
2005 2005 2005
Actual
Merrill Lynch Senior Floating Rate Fund, Inc. $1,000 $1,021.90 $7.08
Hypothetical (5% annual return before expenses)**
Merrill Lynch Senior Floating Rate Fund, Inc. $1,000 $1,018.20 $7.07
* Expenses are equal to the annualized expense ratio of 1.39%, multiplied by the average account value over the period,
multiplied by 184/365 (to reflect the one-half year period shown). Because the Fund is a feeder fund, the expense table
example reflects the expenses of both the feeder fund and the master fund in which it invests.
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the most recent fiscal
half-year divided by 365.
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Statement of Assets and Liabilities Merrill Lynch Senior Floating Rate Fund, Inc.
As of August 31, 2005
Assets
Investment in Master Senior Floating Rate Trust (the "Trust"), at value
(identified cost--$707,857,430) $ 677,573,942
Prepaid expenses 252,699
---------------
Total assets 677,826,641
---------------
Liabilities
Payables:
Dividends to shareholders $ 812,785
Other affiliates 142,119
Administrator 110,883 1,065,787
---------------
Accrued expenses 57,917
---------------
Total liabilities 1,123,704
---------------
Net Assets
Net assets $ 676,702,937
===============
Net Assets Consist of
Common Stock, par value $.10 per share; 1,000,000,000 shares authorized $ 7,512,070
Paid-in capital in excess of par 1,032,762,575
Undistributed investment income--net $ 237,080
Accumulated realized capital losses allocated from the Trust--net (333,525,300)
Unrealized depreciation allocated from the Trust--net (30,283,488)
---------------
Total accumulated losses--net (363,571,708)
---------------
Net Assets--Equivalent to $9.01 per share based on 75,120,703 shares of capital stock
outstanding $ 676,702,937
===============
See Notes to Financial Statements.
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Statement of Operations Merrill Lynch Senior Floating Rate Fund, Inc.
For the Year Ended August 31, 2005
Investment Income
Net investment income allocated from the Trust:
Interest (including $1,968,019 from affiliates) $ 38,509,967
Facility and other fees 601,854
Expenses (7,177,937)
---------------
Total income 31,933,884
---------------
Expenses
Administration fees $ 1,769,338
Transfer agent fees 604,297
Tender offer fees 270,231
Printing and shareholder reports 60,311
Registration fees 56,233
Professional fees 36,169
Other 16,253
---------------
Total expenses 2,812,832
---------------
Investment income--net 29,121,052
---------------
Realized & Unrealized Gain (Loss) Allocated from the Trust--Net
Realized loss on investments--net (1,116,837)
Change in unrealized depreciation on investments and unfunded corporate loans--net 9,410,782
---------------
Total realized and unrealized gain--net 8,293,945
---------------
Net Increase in Net Assets Resulting from Operations $ 37,414,997
===============
See Notes to Financial Statements.
Statements of Changes in Net Assets Merrill Lynch Senior Floating Rate Fund, Inc.
For the Year Ended
August 31,
Increase (Decrease) in Net Assets: 2005 2004
Operations
Investment income--net $ 29,121,052 $ 26,185,996
Realized loss--net (1,116,837) (64,296,777)
Change in unrealized depreciation--net 9,410,782 109,360,252
--------------- ---------------
Net increase in net assets resulting from operations 37,414,997 71,249,471
--------------- ---------------
Dividends to Shareholders
Investment income--net (29,121,069) (26,185,993)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (29,121,069) (26,185,993)
--------------- ---------------
Capital Share Transactions
Net decrease in net assets derived from capital share transactions (88,385,736) (86,588,414)
--------------- ---------------
Net Assets
Total decrease in net assets (80,091,808) (41,524,936)
Beginning of year 756,794,745 798,319,681
--------------- ---------------
End of year* $ 676,702,937 $ 756,794,745
=============== ===============
* Undistributed investment income--net $ 237,080 $ 236,869
=============== ===============
See Notes to Financial Statements.
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Financial Highlights Merrill Lynch Senior Floating Rate Fund, Inc.
The following per share data and ratios have been derived For the Year Ended August 31,
from information provided in the financial statements. 2005 2004 2003+++ 2002 2001
Per Share Operating Performance
Net asset value, beginning of year $ 8.91 $ 8.40 $ 8.05 $ 8.82 $ 9.45
----------- ----------- ----------- ----------- -----------
Investment income--net .37** .30** .38 .43 .79
Realized and unrealized gain (loss)--net .10 .51 .36 (.77) (.62)
----------- ----------- ----------- ----------- -----------
Total from investment operations .47 .81 .74 (.34) .17
----------- ----------- ----------- ----------- -----------
Less dividends from investment income--net (.37) (.30) (.39) (.43) (.80)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 9.01 $ 8.91 $ 8.40 $ 8.05 $ 8.82
=========== =========== =========== =========== ===========
Total Investment Return*
Based on net asset value per share 5.38% 9.73% 9.61% (4.09%) 1.52%
=========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses, excluding interest expense++ 1.41% 1.44% 1.45% 1.41% 1.36%
=========== =========== =========== =========== ===========
Expenses++ 1.41% 1.44% 1.46% 1.41% 1.36%
=========== =========== =========== =========== ===========
Investment income--net 4.11% 3.41% 4.81% 5.07% 8.39%
=========== =========== =========== =========== ===========
Leverage
Average amount of borrowings during the year
(in thousands) -- -- $ 8,138++++ $ 3,374 --
=========== =========== =========== =========== ===========
Average amount of borrowings outstanding per
share during the year -- -- $ .07++++ $ .02 --
=========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of year (in thousands) $ 676,703 $ 756,795 $ 798,320 $ 1,063,983 $ 1,778,295
=========== =========== =========== =========== ===========
Portfolio turnover 52.92%+++++ 76.45%+++++ 56.56%+++++ 89.46% 50.82%
=========== =========== =========== =========== ===========
* Total investment returns exclude the early withdrawal charge, if any. The Fund is a continuously offered
closed-end fund, the shares of which are offered at net asset value. No secondary market for the Fund's
shares exists.
** Based on average shares outstanding.
++ Includes the Fund's share of the Trust's allocated expenses.
++++ Reflects the average amount of borrowings of the Fund prior to the Fund's conversion from a stand-alone
investment company to a "feeder" fund on February 10, 2003.
+++ On February 10, 2003, the Fund converted from a stand-alone investment company to a "feeder" fund
that seeks to achieve its investment objective by investing all of its assets in the Trust, which
has the same investment objective as the Fund. All investments are made at the Trust level. This
structure is sometimes called a "master/feeder" structure.
+++++ Portfolio turnover for the Trust.
See Notes to Financial Statements.
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Notes to Financial Statements
Merrill Lynch Senior Floating Rate Fund, Inc.
1. Significant Accounting Policies:
Merrill Lynch Senior Floating Rate Fund, Inc. (the "Fund") is registered under
the Investment Company Act of 1940, as amended, as a continuously offered, non-
diversified, closed-end management investment company. The Fund seeks to
achieve its investment objective by investing all of its assets in the Master
Senior Floating Rate Trust (the "Trust"), which has the same investment
objective and strategies as the Fund. The value of the Fund's investment in
the Trust reflects the Fund's proportionate interest in the net assets of the
Trust. The performance of the Fund is directly affected by the performance of
the Trust. The financial statements of the Trust, including the Schedule of
Investments, are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements. The Fund's financial
statements are prepared in conformity with U.S. generally accepted accounting
principles, which may require the use of management accruals and estimates.
Actual results may differ from these estimates. The percentage of the Trust
owned by the Fund at August 31, 2005 was 65.6%. The following is a summary of
significant accounting policies followed by the Fund.
(a) Valuation of investments--The Fund records its investment in the Trust at
fair value. Valuation of securities held by the Trust is discussed in Note
1(b) of the Trust's Notes to Financial Statements, which are included
elsewhere in this report.
(b) Investment income and expenses--The Fund records daily its proportionate
share of the Trust's income, expenses and realized and unrealized gains and
losses. In addition, the Fund accrues its own expenses.
(c) 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.
(d) Prepaid registration fees--Prepaid registration fees are charged to
expense as the related shares are issued.
(e) Dividends and distributions--Dividends from net investment income are
declared daily and paid monthly. Distributions of capital gains are recorded
on the ex-dividend dates.
(f) Investment transactions--Investment transactions in the Trust are
accounted for on a trade date basis.
(g) Reclassifications--U.S. generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, during the
current year, $3,278,446 has been reclassified between paid in capital in
excess of par and accumulated realized capital losses and $228 has been
reclassified between accumulated realized capital losses and undistributed net
investment income as a result of permanent differences attributable to the
expiration of capital loss carryforwards and the allocation of differences in
the accrual of income on securities in default. These reclassifications have
no effect on net assets or net asset values per share.
2. Transactions with Affiliates:
The Fund has entered into an Administration Agreement with Fund Asset
Management, L.P. ("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. The Fund pays a monthly fee
at an annual rate of .25% of the Fund's average daily net assets for the
performance of administrative services (other than investment advice and
related portfolio activities) necessary for the operation of the Fund.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co.,
is the Fund's transfer agent.
For the year ended August 31, 2005, FAM Distributors, Inc. ("FAMD"), a wholly-
owned subsidiary of Merrill Lynch Group, Inc., earned early withdrawal charges
of $117,359 relating to the tender of the Fund's shares.
Certain officers and/or directors of the Fund are officers and/or directors of
FAM, PSI, FAMD, FDS, and/or ML & Co.
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Notes to Financial Statements (concluded)
Merrill Lynch Senior Floating Rate Fund, Inc.
3. Capital Share Transactions:
Transactions in capital shares were as follows:
For the Year Ended Dollar
August 31, 2005 Shares Amount
Shares sold 4,122,202 $ 37,010,206
Shares issued to shareholders
in reinvestment of dividends 1,535,576 13,791,434
--------------- -----------------
Total issued 5,657,778 50,801,640
Shares tendered (15,512,910) (139,187,376)
--------------- -----------------
Net decrease (9,855,132) $ (88,385,736)
=============== =================
For the Year Ended Dollar
August 31, 2004 Shares Amount
Shares sold 7,763,845 $ 68,254,923
Shares issued to shareholders
in reinvestment of dividends 1,421,989 12,467,518
--------------- -----------------
Total issued 9,185,834 80,722,441
Shares tendered (19,207,557) (167,310,855)
--------------- -----------------
Net decrease (10,021,723) $ (86,588,414)
=============== =================
4. Distributions to Shareholders:
The tax character of distributions paid during the fiscal years ended August
31, 2005 and August 31, 2004 was as follows:
8/31/2005 8/31/2004
Distributions paid from:
Ordinary income $ 29,121,069 $ 26,185,993
--------------- -----------------
Total taxable distributions $ 29,121,069 $ 26,185,993
=============== =================
As of August 31, 2005, the components of accumulated losses on a tax basis
were as follows:
Undistributed ordinary income--net $ 345,704
Undistributed long-term capital gains--net --
-----------------
Total undistributed earnings--net 345,704
Capital loss carryforward (332,572,470)*
Unrealized losses--net (31,344,942)**
-----------------
Total accumulated losses--net $ (363,571,708)
=================
* On August 31, 2005, the Fund had a net capital loss carryforward
of $332,572,470, of which $4,468,275 expires in 2006, $3,365,959
expires in 2007, $28,290,011 expires in 2008, $64,746,799 expires
in 2009, $87,904,309 expires in 2010, $53,409,203 expires in 2011,
$34,221,818 expires in 2012 and $56,166,096 expires in 2013. This
amount will be available to offset like amounts of any future
taxable gains.
** The difference between book-basis and tax-basis net unrealized
losses is attributable primarily to the deferral of post-October
capital losses for tax purposes and book/tax differences in the
accrual of income on securities in default.
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Report of Independent Registered Public Accounting Firm
Merrill Lynch Senior Floating Rate Fund, Inc.
To the Shareholders and Board of Directors of
Merrill Lynch Senior Floating Rate Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
Merrill Lynch Senior Floating Rate Fund, Inc. (the "Fund"), as of August 31,
2005, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. The Fund is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Fund's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Merrill Lynch Senior Floating Rate Fund, Inc. as of August 31, 2005, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and its financial
highlights for each of the five years in the period then ended, in conformity
with U.S. generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
October 21, 2005
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Portfolio Information Master Senior Floating Rate Trust
As of August 31, 2005
Percent of
Ten Largest Holdings Net Assets
Century Cable Holdings LLC 4.8%
Charter Communications Operating LLC 4.0
MGM Holdings II, Inc. 2.4
Olympus Cable Holdings LLC 2.3
General Growth Properties, Inc.* 2.1
Frontiervision Operating Partners LP* 1.9
PanAmSat Corp. 1.7
Huntsman International LLC 1.6
Wellman, Inc.* 1.6
Venetian Casino Resort* 1.5
* Includes combined holdings and/or affiliates, where applicable.
Percent of
Five Largest Industries Net Assets
Cable--U.S. 18.5%
Utility 9.1
Chemicals 7.6
Diversified Media 4.4
Health Care 4.2
For Trust compliance purposes, the Trust's industry classifications
refer to 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 Trust management. This definition may
not apply for purposes of this report, which may combine industry
sub-classifications for reporting ease.
Percent of
Quality Ratings by Total
S&P/Moody's Investments
BBB/Baa 0.5%
BB/Ba 33.5
B/B 41.0
CCC/Caa 6.4
NR (Not Rated) 5.9
Other* 12.7
* Includes portfolio holdings in common stocks, warrants, other
interests and short-term investments.
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Schedule of Investments (in U.S. dollars)
Master Senior Floating Rate Trust
Face Senior Secured
Amount Floating Rate Loan Interests* Value
Aerospace & Defense--1.5%
$ 5,680,076 K&F Industries, Inc. Term Loan,
6.15% - 6.17% due 11/18/2012 $ 5,780,897
2,076,923 Standard Aero Holdings Term Loan,
5.72% - 5.919% due 8/24/2012 2,106,779
Vought Aircraft Industries, Inc.:
6,270,353 Term Loan, 6.17% due 12/22/2011 6,370,679
1,200,000 Tranche B Line of Credit Deposit, 5.84%
due 12/22/2010 1,221,250
---------------
15,479,605
Automotive--1.6%
5,037,910 Metaldyne Corp. Term Loan D, 8.016%
due 12/31/2009 5,017,446
TRW Automotive, Inc.:
4,228,750 Tranche B Term Loan, 5.25% due 6/30/2012 4,278,087
3,482,500 Tranche E Term Loan, 4.938%
due 11/02/2010 3,517,325
Tenneco Automotive, Inc.:
2,721,197 Term Loan B, 5.12% - 6.08%
due 12/12/2010 2,768,818
1,186,440 Tranche B-1 Credit Linked Deposit, 5.59%
due 12/12/2010 1,207,203
---------------
16,788,879
Broadcasting--2.4%
8,937,475 Emmis Operating Co. Term Loan B, 5.321%
due 11/10/2011 9,017,912
Entravision Communications Corp.:
1,500,000 Term Loan A, 5.24% due 2/24/2012 1,506,563
5,000,000 Term Loan B, 5.24% due 2/24/2012 5,021,875
5,000,000 Raycom Media, Inc. Term Loan B, 5.50%
due 3/22/2012 5,050,000
3,990,000 Susquehanna Media Co. Term Loan B,
5.25% - 5.67% due 3/31/2012 4,042,369
---------------
24,638,719
Cable--U.S.--18.4%
50,000,000 Century Cable Holdings LLC Term Loan,
8.50% due 6/30/2009 49,718,750
41,528,370 Charter Communications Operating LLC Tranche B
Term Loan, 6.83% - 6.93% due 4/07/2011 41,715,621
6,333,333 DIRECTV Holdings, Inc. Tranche B Term Loan,
5.088% due 4/13/2013 6,407,978
Frontiervision Operating Partners LP:
3,582,057 Term Loan A, 7.90% due 9/30/2005 3,594,372
15,668,000 Term Loan B, 8.025% due 3/31/2006 15,787,954
9,975,000 Hilton Head Communications UCA Term Loan B,
7.75% due 3/31/2008 9,844,078
11,352,437 Insight Midwest Holdings LLC Term Loan C,
5.625% due 12/31/2009 11,520,600
5,812,500 MCC Iowa LLC Tranche A Term Loan,
4.60% - 4.80% due 3/31/2010 5,794,336
3,184,000 Mediacom Illinois LLC Tranche B Term
Loan, 5.47% - 6.06% due 3/31/2013 3,235,243
23,500,000 Olympus Cable Holdings LLC Term Loan B, 8.50%
due 9/30/2010 23,372,019
Face Senior Secured
Amount Floating Rate Loan Interests* Value
Cable--U.S. (concluded)
$ 16,871,988 PanAmSat Corp. Tranche B-1 Term Loan, 5.65%
due 8/20/2011 $ 17,089,215
1,980,000 Persona Cable Term Loan B, 6.49%
due 3/31/2011 2,010,320
---------------
190,090,486
Chemicals--6.7%
7,182,700 Cedar Chemical Corp. Term Loan B, 8.90%
due 10/31/2003 (k) 395,047
4,038,679 Celanese Holdings LLC Term Loan B, 5.74%
due 4/06/2011 4,116,928
10,000,000 Cognis Deutschland GmbH & Co. Term Loan B,
8.24% due 11/15/2013 10,200,000
16,600,000 Huntsman International LLC Term Loan B,
5.323% due 8/18/2012 16,843,821
Kosa B.V. (Invista):
3,364,412 New Tranche B-1 Term Loan, 5.75%
due 4/29/2011 3,421,186
1,459,706 New Tranche B-2 Term Loan, 5.75%
due 4/29/2011 1,484,338
733,341 Kraton Polymers Term Loan, 6.125% - 6.50%
due 12/16/2010 745,946
1,485,000 Lyondell-Citgo Refining Term Loan,
5.51% - 5.67% due 5/21/2007 1,508,203
1,995,000 Mosaic Co. Tranche B Term Loan,
5% - 5.438% due 2/21/2012 2,023,056
5,160,610 Nalco Co. Tranche B Term Loan,
5.45% - 5.87% due 11/04/2010 5,249,713
1,137,343 Pinnacle Polymers Term Loan, 6.109%
due 12/15/2006 1,153,390
1,866,667 Polymer Group, Inc. First Lien Term Loan,
6.73% due 4/27/2010 1,903,222
3,980,000 Rockwood Specialties Group, Inc. Tranche B
Term Loan, 5.93% due 12/10/2012 4,053,797
Wellman, Inc.:
9,000,000 First Lien Term Loan, 7.71% due 2/10/2009 9,183,753
7,000,000 Second Lien Term Loan, 10.46%
due 2/10/2010 7,105,000
---------------
69,387,400
Consumer--Non-Durables--1.0%
2,685,837 American Achievement Corp. Tranche B Term
Loan, 5.85% - 8% due 3/25/2011 2,724,446
2,907,000 Camelbak Products LLC First Lien Term Loan,
6.68% - 7.29% due 8/04/2011 2,897,916
4,750,000 Josten's, Inc. Term Loan C, 5.754% - 5.94%
due 10/04/2011 4,794,531
---------------
10,416,893
Diversified Media--4.4%
3,056,444 Dex Media West, LLC Term Loan B,
5.05% - 5.40% due 3/09/2010 3,100,555
3,052,312 Freedom Communications, Inc. Tranche B Term
Loan, 4.83% due 5/01/2013 3,092,374
3,940,125 Liberty Group Operating Term Loan B, 5.813%
due 2/28/2012 3,983,632
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Schedule of Investments (continued) (in U.S. dollars)
Master Senior Floating Rate Trust
Face Senior Secured
Amount Floating Rate Loan Interests* Value
Diversified Media (concluded)
$ 24,000,000 MGM Holdings II, Inc. Tranche B Term Loan,
5.74% due 4/08/2012 $ 24,330,000
2,970,000 MediaNews Group, Inc. Term Loan C, 5.17%
due 12/15/2010 2,986,706
1,627,691 Primedia, Inc. Term Loan B, 6.438%
due 6/30/2009 1,631,253
2,174,054 RH Donnelley Tranche D Term Loan,
5.11% - 5.30% due 6/30/2011 2,206,560
3,137,359 Six Flags Theme Parks, Inc. Term Loan B,
6.28% - 6.50% due 6/30/2009 3,174,289
942,857 Yankee Holdings LP Term Loan,
5.83% - 6.13% due 5/01/2007 952,286
---------------
45,457,655
Energy--Exploration & Production--0.5%
1,500,000 Carrizo Oil & Gas, Inc. Second Lien Term Loan,
9.65% - 9.871% due 7/21/2010 1,546,875
2,000,000 Kerr-McGee Corp. Tranche X Term Loan, 5.85%
due 5/24/2007 2,008,392
1,960,150 Williams Production RMT Co. Term Loan C,
5.83% due 5/31/2008 1,989,552
---------------
5,544,819
Energy--Other--0.7%
574,430 Dresser, Inc. Term Loan C, 5.99% due 4/10/2009 580,653
4,000,000 Epco Holdings, Inc. Term Loan B, 5.84%
due 8/18/2010 4,070,624
2,474,063 Pride Offshore, Inc. Term Loan, 5.31%
due 7/07/2011 2,515,298
---------------
7,166,575
Food & Drug--0.4%
3,536,232 Pantry, Inc. Term Loan, 5.92% due 3/12/2011 3,591,486
Food & Tobacco--2.0%
867,097 American Seafoods Group LLC Term Loan B,
6.74% due 3/31/2009 876,852
1,496,250 Del Monte Term Loan B, 5.18% due 2/08/2012 1,517,010
6,699,375 Doane Pet Care Enterprises, Inc. Term Loan A,
7.093% - 7.431% due 11/05/2009 6,727,291
3,105,601 Domino's, Inc. Term Loan, 5.25% due 6/25/2010 3,158,654
5,437,454 Dr Pepper/Seven Up Bottling Group, Inc. Term
Loan B, 5.339% - 5.609% due 12/19/2010 5,523,094
3,321,899 Merisant Co. Term Loan B, 6.93% due 1/11/2010 3,280,376
---------------
21,083,277
Gaming--4.1%
4,707,281 Ameristar Casinos, Inc. Term Loan B-1, 5.50%
due 12/20/2006 4,730,817
3,960,000 Boyd Gaming Corp. Term Loan, 4.88% - 4.99%
due 6/30/2011 4,005,789
1,808,341 Global Cash Access LLC Term Loan B, 5.74%
due 3/10/2010 1,837,162
3,980,000 Marina District Finance Co., Inc. (Borgota) Term
Loan B, 4.843% - 5.24% due 10/20/2011 4,018,140
Face Senior Secured
Amount Floating Rate Loan Interests* Value
Gaming (concluded)
Pinnacle Entertainment, Inc.:
$ 3,533,333 Delay Draw Term Loan, 6.67%
due 8/27/2010 $ 3,546,583
5,300,000 Term Loan, 6.67% due 8/27/2010 5,362,938
Trump Entertainment Resorts Holdings LP:
717,500 Revolving Line of Credit, 6.13% - 6.21%
due 5/20/2010 699,563
2,500,000 Term Loan B-1, 5.93% - 6.14%
due 5/20/2010 2,543,750
Venetian Casino Resort:
3,982,906 Delayed Draw, 5.462% due 6/15/2011 4,033,624
11,517,094 Term Loan B, 5.24% due 6/15/2011 11,663,753
---------------
42,442,119
Health Care--4.2%
3,313,636 Colgate Medical a.k.a. Orthofix Term Loan B,
5.48% - 5.49% due 12/30/2008 3,348,844
1,985,000 Community Health Systems, Inc. Term Loan,
5.07% due 8/19/2011 2,014,981
HealthSouth Corp.:
3,543,750 Term Loan, 6.15% due 3/08/2010 3,580,297
956,250 Tranche B Term Loan, 6.09% due 3/08/2010 966,112
1,386,915 Kinetic Concepts, Inc. Term Loan B-1, 5.24%
due 8/11/2010 1,405,118
14,362,500 LifePoint Hospitals, Inc. Term Loan B, 5.196%
due 4/15/2012 14,526,649
Medical Specialties (k):
12,845,455 Axel, 8% due 6/30/2004 3,211,364
4,418,182 Term Loan, 8.125% due 9/03/2003 1,104,545
4,144,416 Medpointe Healthcare Inc. Tranche B Term Loan,
8.89% - 8.99% due 9/30/2008 4,196,222
425,712 Rotech Healthcare, Inc. Term Loan B, 6.49%
due 3/31/2008 428,639
Vanguard Health Systems, Inc. Term Loan:
7,940,000 Initial Sub-Tranche 1, 6.74% due 9/23/2011 8,047,523
995,000 Initial Sub-Tranche 2, 6.44% - 6.838%
due 9/23/2011 1,009,303
---------------
43,839,597
Housing--3.9%
General Growth Properties, Inc.:
6,498,705 Term Loan A, 5.76% due 11/12/2007 6,551,234
14,591,778 Term Loan B, 5.67% due 11/12/2008 14,780,859
3,233,750 Goodman Global Holdings Term Loan B,
5.875% due 12/23/2011 3,283,268
4,668,812 Headwaters, Inc. First Lien Term Loan,
5.87% - 7.75% due 4/30/2011 4,734,955
4,992,121 Lake at Las Vegas Joint Venture First Lien Term
Loan, 6.162% - 6.51% due 2/01/2010 5,078,500
1,200,000 Maguire Properties, LP Revolving Line of
Credit, 4.841% - 5.30% due 3/14/2009 1,167,000
4,950,000 Nortek, Inc. Term Loan, 5.91% - 7.75%
due 8/27/2011 5,015,998
---------------
40,611,814
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Schedule of Investments (continued) (in U.S. dollars)
Master Senior Floating Rate Trust
Face Senior Secured
Amount Floating Rate Loan Interests* Value
Information Technology--2.0%
$ 7,522,500 Fidelity National Information Solutions, Inc.
Term Loan B, 5.321% due 3/09/2013 $ 7,541,306
4,000,000 SunGard Data Term Loan, 6.28%
due 2/11/2013 4,059,500
8,970,938 Telcordia Technologies, Inc. Term Loan,
6.51% - 6.61% due 9/15/2012 8,970,938
---------------
20,571,744
Leisure--0.3%
3,366,017 True Temper Term Loan B, 6.53% - 8.50%
due 3/15/2011 3,366,017
Manufacturing--3.8%
7,425,961 Amsted Industries, Inc. Term Loan,
6% - 6.33% due 10/15/2010 7,540,447
1,500,000 Brand Services, Inc. Term Loan B,
6.559% - 6.67% due 1/15/2012 1,523,437
Channel Master Holdings, Inc. (k):
128,199 Revolving Credit, 11.50% due 11/15/2004 10,897
2,065,112 Term Loan, 11.50% due 11/15/2004 175,535
5,771,246 EaglePicher, Inc. Tranche B Term Loan, 10%
due 8/07/2009 (j) 5,735,175
3,446,569 GenTek, Inc. First Lien Term Loan,
6.01% - 6.54% due 2/28/2011 3,479,742
Invensys International Holdings Ltd.:
3,295,474 First Lien Term Loan, 6.881% due 9/04/2009 3,340,786
2,000,000 Second Lien Term Loan, 8.529%
due 12/04/2009 2,050,000
523,597 Itron, Inc. Term Loan, 5.438% - 7.25%
due 12/17/2010 529,815
11,119,021 Mueller Group, Inc. Initial Term Loan,
6.24% - 6.61% due 4/23/2011 11,216,312
3,434,699 Trimas Corp. Term Loan B, 6.90%
due 12/31/2009 3,471,907
---------------
39,074,053
Packaging--2.2%
1,736,000 BWAY Corp. Term Loan B, 5.875% - 6%
due 6/30/2011 1,763,396
3,928,647 Berry Plastics Corp. Term Loan,
5.60% - 5.766% due 12/02/2011 3,995,434
10,945,000 Graham Packaging Company Term Loan B,
5.938% - 6.063% due 10/07/2011 11,134,261
Owens-Illinois Group, Inc.:
4,712,914 French Term Loan C-1, 5.45%
due 4/01/2008 4,762,989
730,099 Term Loan A-1, 5.33% due 4/01/2007 736,487
394,214 Term Loan B, 5.37% due 4/01/2008 398,485
---------------
22,791,052
Paper--2.3%
5,842,207 Boise Cascade Holdings LLC Tranche D Term Loan,
5.25% - 5.438% due 10/28/2011 5,937,511
3,000,000 Escanaba Timber LLC Term Loan, 6.43%
due 5/02/2008 3,045,000
3,422,057 Graphic Packaging International, Inc. Term Loan B,
5.88% - 6.19% due 8/08/2010 3,481,943
SP Newsprint Tranche B-1:
3,182,818 Credit Linked Deposit, 3.609%
due 1/09/2010 3,208,678
1,352,698 Term Loan, 5.74% - 7.759% due 1/09/2010 1,373,833
Face Senior Secured
Amount Floating Rate Loan Interests* Value
Paper (concluded)
Smurfit Stone Container:
$ 2,008,590 Deposit Account, 3.60% due 11/01/2010 $ 2,037,881
3,417,435 Tranche B, 5.375% - 5.56%
due 11/01/2011 3,467,985
1,051,518 Tranche C, 5.375% - 5.56%
due 11/01/2011 1,067,072
---------------
23,619,903
Retail--1.3%
1,670,000 Advance Stores Co., Inc. Delay Draw Term Loan,
5% - 5.438% due 9/30/2010 1,695,050
2,450,000 American Reprographics Co. LLC Second Lien
Term Loan,10.235% due 12/18/2009 2,548,000
Dollarama Group LP:
940,889 Additional Term Loan B, 6.01%
due 11/18/2011 955,002
3,980,000 Term Loan B, 5.93% due 11/18/2011 4,039,700
3,713,489 General Nutrition Centers, Inc. Tranche B Term
Loan, 6.51% - 6.67% due 12/05/2009 3,759,908
---------------
12,997,660
Service--3.1%
2,340,000 Alliance Laundry Systems LLC Term Loan, 5.80%
due 1/27/2012 2,378,757
Allied Waste North America, Inc.:
3,581,081 Tranche A Credit Linked Deposit, 5.34%
due 1/15/2012 3,617,637
9,382,205 Tranche B Term Loan, 5.37% - 5.688%
due 1/15/2012 9,477,097
5,910,300 Buhrmann US, Inc. Tranche C-1 Term Loan,
5.921% - 6.21% due 12/23/2010 6,024,812
2,031,273 Corrections Corp. of America Term Loan E,
5.25% - 5.41% due 3/31/2008 2,065,550
6,106,136 Great Lakes Dredge & Dock Corp. Tranche B
Term Loan, 7.10% - 7.90% due 12/22/2010 6,144,299
7,682,418 Prime Succession, Inc. Term Loan, 5.75%
due 8/01/2003 (k) 0
United Rentals, Inc.:
1,628,509 Initial Term Loan, 5.92% due 2/14/2011 1,647,848
329,825 Tranche B Credit Linked Deposit, 5.59%
due 2/14/2011 333,741
---------------
31,689,741
Steel--0.0%
10,162,693 Acme Metals, Inc. Term Loan, 11.75%
due 12/01/2005 (d) 0
Telecommunications--2.2%
2,000,000 Alaska Communications Systems Holdings, Inc.
Term Loan, 5.49% due 2/01/2012 2,029,167
7,998,750 Consolidated Communications, Inc. Term Loan B,
5.815% - 6.052% due 10/14/2011 8,128,730
WilTel Communications LLC:
8,928,947 First Lien Term Loan, 6.99% due 6/30/2010 9,059,158
3,500,000 Second Lien Term Loan, 9.24%
due 12/31/2010 3,473,750
---------------
22,690,805
Transportation--0.5%
5,194,118 Sirva Worldwide Tranche B Term Loan,
6.52% - 6.56% due 12/01/2010 4,995,012
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Schedule of Investments (continued) (in U.S. dollars)
Master Senior Floating Rate Trust
Face Senior Secured
Amount Floating Rate Loan Interests* Value
Utility--9.1%
$ 2,000,000 AES Corp. Term Loan, 5.57% - 5.69%
due 4/30/2008 $ 2,029,000
6,860,000 Calpine Corp. Second Lien Term Loan, 9.349%
due 7/15/2007 5,614,910
Calpine Generating Co. LLC Term Loan:
4,875,000 First Priority, 7.26% due 4/01/2009 5,003,403
8,125,000 Second Priority, 9.26% due 4/01/2010 8,168,168
8,679,215 Cogentrix Delaware Holdings, Inc. Term Loan,
5.24% due 4/14/2012 8,791,325
Covanta Energy Corp.:
7,200,000 Funded Letter of Credit, 3.36% - 6.46%
due 6/24/2012 7,326,000
4,100,000 Second Lien Term Loan, 8.96% - 9.141%
due 6/24/2013 4,130,750
5,742,000 Dynegy Holdings, Inc. Term Loan, 7.54%
due 5/27/2010 5,779,082
El Paso Corp.:
3,937,500 Deposit Account, 3.24% due 11/23/2009 3,990,274
6,483,750 Term Loan, 6.438% due 11/23/2009 6,588,210
9,975,000 KGen LLC Tranche A Term Loan, 6.115%
due 8/05/2011 9,950,063
2,750,000 Metcalf Energy Center LLC Term Loan B,
6.86% due 5/20/2010 2,777,500
NRG Energy:
1,050,000 Credit Linked Deposit, 2.993%
due 12/24/2007 1,063,563
1,343,250 Term Loan, 5.25% - 5.37%
due 12/24/2011 1,360,601
6,666,500 Reliant Resources, Inc. Term Loan,
6.016% - 6.089% due 4/30/2010 6,734,725
Texas Genco LLC:
4,082,076 Delayed Draw Term Loan, 5.41% - 5.49%
due 12/14/2011 4,150,644
9,858,153 Initial Term Loan, 5.41% - 5.669%
due 12/14/2011 10,023,741
---------------
93,481,959
Wireless Communications--3.5%
2,992,500 American Tower Corp. Term Loan C,
5.15% - 7% due 8/31/2011 3,024,918
4,235,500 Centennial Cellular Operating Co. Term Loan,
5.63% - 6.11% due 2/09/2011 4,308,109
4,500,000 Nextel Partners, Inc. Term Loan 0, 4.83%
due 5/31/2012 4,543,875
12,301,373 SBA Senior Finance, Inc. Tranche D Term Loan,
5.54% - 5.92% due 10/31/2008 12,421,828
11,442,500 SpectraSite Communications Incremental
Facility 2004, 4.91% due 5/01/2012 11,573,609
---------------
35,872,339
Total Senior Secured Floating Rate Loan
Interests (Cost--$877,894,232)--82.1% 847,689,609
Face
Amount Corporate Debt Value
Broadcasting--0.9%
$ 425,000 Emmis Communications Corp., 9.314%
due 6/15/2012 (a) $ 430,312
9,000,000 Paxson Communications Corp., 6.349%
due 1/15/2010 (a)(b) 9,000,000
250,000 XM Satellite Radio, Inc., 9.193%
due 5/01/2009 (a) 252,812
---------------
9,683,124
Cable--U.S.--0.1%
500,000 Intelsat Bermuda Ltd., 8.695%
due 1/15/2012 (a)(b) 508,750
Chemicals--0.9%
1,100,000 Crompton Corp., 9.672% due 8/01/2010 (a) 1,229,250
5,992,000 GEO Specialty Chemicals, Inc.,12.016%
due 12/31/2009 (h) 6,291,600
1,662,678 PCI Chemicals Canada, Inc.,10%
due 12/31/2008 1,770,752
---------------
9,291,602
Diversified Media--0.0%
250,000 Universal City Florida Holding Co. I, 8.443%
due 5/01/2010 (a) 261,875
Food & Drug--0.0%
250,000 Duane Reade, Inc., 7.91% due 12/15/2010 (a) 241,250
Information Technology--0.4%
3,850,000 Sungard Data Systems, Inc., 8.525%
due 8/15/2013 (a)(b) 3,984,750
Leisure--0.9%
9,200,000 Felcor Lodging LP, 7.78% due 6/01/2011 (a) 9,591,000
Paper--0.1%
250,000 Boise Cascade LLC, 6.474% due 10/15/2012 (a) 251,875
650,000 NewPage Corp., 9.943% due 5/01/2012 (a)(b) 646,750
---------------
898,625
Telecommunications--1.7%
9,500,000 Qwest Communications International, Inc.,
7.29% due 2/15/2009 (a) 9,452,500
275,000 Qwest Corp., 7.12% due 6/15/2013 (a)(b) 288,062
7,000,000 Time Warner Telecom Holdings, Inc., 7.79%
due 2/15/2011 (a) 7,175,000
---------------
16,915,562
Wireless Communications--0.0%
250,000 Rogers Wireless Communications, Inc., 6.995%
due 12/15/2010 (a) 260,625
Total Corporate Debt
(Cost--$54,250,491)--5.0% 51,637,163
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Schedule of Investments (concluded) (in U.S. dollars)
Master Senior Floating Rate Trust
Shares
Held Common Stocks Value
Chemicals--0.0%
39,151 GEO Specialty Chemicals, Inc. (g) $ 332,784
Service--0.1%
44,744 The Shaw Group, Inc. (g) 944,098
Steel--0.0%
51,714 Acme Package Corp. Senior Holdings (g)(i) 142,214
Total Common Stocks
(Cost--$540,060)--0.1% 1,419,096
Warrants (c)
Paper--0.1%
57 Cellu Tissue Holdings, Inc. Series A
(expires 9/28/2011) 565,892
Total Warrants (Cost--$1)--0.1% 565,892
Beneficial
Interest Other Interests (e) Value
Health Care--0.0%
$ 14,398 MEDIQ Inc. (Preferred Stock Escrow
due 2/01/2006) $ 0
Total Other Interests
(Cost--$0)--0.0% 0
Short-Term Securities
$ 129,703,756 Merrill Lynch Liquidity Series, LLC
Cash Sweep Series I (f) 129,703,756
Total Short-Term Securities
(Cost--$129,703,756)--12.5% 129,703,756
Total Investments (Cost--$1,062,388,540**)--99.8% 1,031,015,516
Other Assets Less Liabilities--0.2% 1,803,611
---------------
Net Assets--100.0% $ 1,032,819,127
===============
* Senior Secured Floating Rate Loan Interests in which the Trust 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.
** The cost and unrealized appreciation (depreciation) of investments as of August 31,
2005, as computed for federal income tax purposes, were as follows:
Aggregate cost $ 1,062,524,662
=================
Gross unrealized appreciation $ 11,364,262
Gross unrealized depreciation (42,873,408)
-----------------
Net unrealized depreciation $ (31,509,146)
=================
(a) Floating rate note.
(b) The security may be offered and sold to "qualified institutional buyers" under Rule
144A of the Securities Act of 1933.
(c) Warrants entitle the Trust to purchase a predetermined number of shares of common
stock and are non-income producing. The purchase price and number of shares are
subject to adjustment under certain conditions until the expiration date.
(d) Non-income producing security; issuer filed for bankruptcy or is in default of
interest payments.
(e) Other interests represent beneficial interest in liquidation trusts and other
reorganization entities and are non-income producing.
(f) Investments in companies considered to be an affiliate of the Trust, for purposes
of Section 2(a)(3) of the Investment Company Act of 1940, were as follows:
Net Interest
Affiliate Activity Income
Merrill Lynch Liquidity Series, LLC
Cash Sweep Series I $ (64,630,759) $2,903,871
(g) Non-income producing security.
(h) Convertible security.
(i) Restricted security as to resale, representing 0.01% of net assets, were as follows:
Acquisition
Issue Date Cost Value
Acme Package Corp. Senior Holdings 11/25/2002 $ -- $ 142,214
(j) Issuer filed for bankruptcy.
(k) As a result of bankruptcy proceedings, the issuer did not repay the principal amount of
the security upon maturity and is non-income producing.
For Trust compliance purposes, the Trust's industry classifications refer to 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 Trust 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.
These industry classifications are unaudited.
See Notes to Financial Statements.
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Statement of Assets and Liabilities Master Senior Floating Rate Trust
As of August 31, 2005
Assets
Investments in unaffiliated securities, at value (identified cost--$932,684,784) $ 901,311,760
Investments in affiliated securities, at value (identified cost--$129,703,756) 129,703,756
Receivables:
Interest $ 6,656,367
Contributions 744,863
Commitment fees 85,356 7,486,586
---------------
Prepaid expenses 3,544
---------------
Total assets 1,038,505,646
---------------
Liabilities
Unfunded loan commitment 394,739
Payables:
Custodian bank 4,514,067
Investment adviser 643,168
Other affiliates 8,270 5,165,505
---------------
Accrued expenses 126,275
---------------
Total liabilities 5,686,519
---------------
Net Assets
Net assets $ 1,032,819,127
===============
Net Assets Consist of
Investors' capital $ 1,064,552,475
Unrealized depreciation--net (31,733,348)
---------------
Net Assets $ 1,032,819,127
===============
See Notes to Financial Statements.
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Statement of Operations Master Senior Floating Rate Trust
For the Year Ended August 31, 2005
Investment Income
Interest (including $2,903,871 from affiliates) $ 56,606,546
Facility and other fees 880,003
---------------
Total income 57,486,549
---------------
Expenses
Investment advisory fees $ 9,877,046
Accounting services 325,333
Professional fees 158,596
Custodian fees 71,027
Trustees' fees and expenses 45,990
Pricing fees 12,748
Printing and shareholder reports 2,408
Other 28,309
---------------
Total expenses 10,521,457
---------------
Investment income--net 46,965,092
---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain on investments--net 1,613,248
Change in unrealized depreciation on:
Investments--net 10,326,683
Unfunded corporate loans--net (149,591) 10,177,092
--------------- ---------------
Total realized and unrealized gain--net 11,790,340
---------------
Net Increase in Net Assets Resulting from Operations $ 58,755,432
===============
See Notes to Financial Statements.
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Statements of Changes in Net Assets Master Senior Floating Rate Trust
For the Year Ended
August 31,
Increase (Decrease) in Net Assets: 2005 2004
Operations
Investment income--net $ 46,965,092 $ 36,846,436
Realized gain (loss)--net 1,613,248 (66,942,419)
Change in unrealized depreciation--net 10,177,092 121,530,179
--------------- ---------------
Net increase in net assets resulting from operations 58,755,432 91,434,196
--------------- ---------------
Capital Transactions
Proceeds from contributions 132,214,555 250,140,432
Fair value of withdrawals (211,031,968) (231,571,350)
--------------- ---------------
Net increase (decrease) in net assets derived from capital transactions (78,817,413) 18,569,082
--------------- ---------------
Net Assets
Total increase (decrease) in net assets (20,061,981) 110,003,278
Beginning of year 1,052,881,108 942,877,830
--------------- ---------------
End of year $ 1,032,819,127 $ 1,052,881,108
=============== ===============
See Notes to Financial Statements.
Financial Highlights Master Senior Floating Rate Trust
For the Period
October 6,
2000++ to
The following ratios have been derived from For the Year Ended August 31, August 31,
information provided in the financial statements. 2005 2004 2003 2002 2001
Total Investment Return**
Total investment return 5.78% 10.15% 11.07% (4.66%) --
========== ========== ========== ========== ==========
Ratios to Average Net Assets
Expenses, excluding interest expense 1.01% 1.02% 1.04% 1.09% 1.06%*
========== ========== ========== ========== ==========
Expenses 1.01% 1.02% 1.05% 1.12% 1.06%*
========== ========== ========== ========== ==========
Investment income--net 4.52% 3.81% 4.80% 5.31% 7.92%*
========== ========== ========== ========== ==========
Leverage
Amount of borrowings outstanding, end of period
(in thousands) -- -- -- $ 13,000 --
========== ========== ========== ========== ==========
Average amount of borrowings outstanding during the
period (in thousands) -- -- $ 3,187 $ 3,959 --
========== ========== ========== ========== ==========
Supplemental Data
Net assets, end of period (in thousands) $1,032,819 $1,052,881 $ 942,878 $ 182,205 $ 376,931
========== ========== ========== ========== ==========
Portfolio turnover 52.92% 76.45% 56.56% 36.77% 19.53%
========== ========== ========== ========== ==========
* Annualized.
** Total investment return is required to be disclosed for fiscal years beginning after December 15, 2000.
++ Commencement of operations.
See Notes to Financial Statements.
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Notes to Financial Statements Master Senior Floating Rate Trust
1. Significant Accounting Policies:
Master Senior Floating Rate Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, and is organized as a Delaware
statutory trust. The Declaration of Trust permits the Trustees to issue
nontransferable interests in the Trust, subject to certain limitations. The
Trust's financial statements are prepared in conformity with U.S. generally
accepted accounting principles, which may require the use of management
accruals and estimates. Actual results may differ from these estimates. The
following is a summary of significant accounting policies followed by the
Trust.
(a) Loan participation interests--The Trust primarily invests in senior
secured floating rate loan interests ("Loan Interests") with collateral having
a market value, at the time of acquisition by the Trust, which Trust
management believes equals or exceeds the principal amount of the Loan
Interests. The Trust may invest up to 20% of its total assets in loans made on
an unsecured basis. Because agents, banks and intermediate participants from
whom the Trust purchases the loan interest are primarily financial
institutions, the Trust's investment in Loan Interests at August 31, 2005
could be considered to be concentrated in the industry group consisting of
financial institutions.
(b) Valuation of investments--Loan Interests are valued in accordance with
guidelines established by the Board of Trustees. Loan Interests 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 Loan Interests for which no reliable price quotes are available,
such Loan Interests will be valued by Loan Pricing Corporation through the use
of pricing matrixes to determine valuations. If the pricing service does not
provide a value for the Loan Interests, the Investment Adviser will value the
Loan Interests at fair value, which is intended to approximate market value.
Securities that are held by the Trust 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
asked price for short positions. In cases where securities 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 Trustees of the
Trust. Long positions in securities traded in the 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 Trustees of the Trust. Short positions in
securities traded in the OTC market are valued at the last available asked
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 Trust writes an option, the amount of the premium received is
recorded on the books of the Trust 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 asked price. Options purchased by the Trust 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. Swap agreements are
valued based upon quoted fair valuations received daily by the Trust from a
pricing service or counterparty. 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 Trust employs certain pricing services to provide securities
prices for the Trust. 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 Board of Trustees of the Trust, including
valuations furnished by the pricing services retained by the Trust, which may
use a matrix system for valuations. The procedures of a pricing service and
its valuations are reviewed by the officers of the Trust under the general
supervision of the Board of Trustees. Such valuations and procedures will be
reviewed periodically by the Board of Trustees.
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Notes to Financial Statements (continued) Master Senior Floating Rate Trust
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 New York Stock Exchange
("NYSE"). The values of such securities used in computing the net assets of
the Trust are determined as of such times. Foreign currency exchange rates
also are generally determined prior to the close of business 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
Trust's net assets. 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
Trustees or by the Investment Adviser using a pricing service and/or
procedures approved by the Board of Trustees.
(c) Derivative financial instruments--The Trust may engage in various
portfolio investment strategies both to increase the return of the Trust 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.
* Swaps--The Trust may enter into swap agreements, which are over-the-counter
contracts in which the Trust and 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 pre-determined 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. These periodic payments received
or made by the Trust are recorded in the accompanying Statement of Operations
as realized gains and losses, respectively. Gains or losses are also realized
upon termination of the swap agreements. Swaps are marked-to-market daily and
changes in value are recorded as unrealized appreciation (depreciation). Risks
include changes in the returns of the underlying instruments, failure of the
counterparties to perform under the contracts' terms and the possible lack of
liquidity with respect to the swap agreements.
(d) Income taxes--The Trust is classified as a partnership for federal income
tax purposes. As such, each investor in the Trust is treated as owner of its
proportionate share of the net assets, income, expenses and realized and
unrealized gains and losses of the Trust. Therefore, no federal income tax
provision is required. It is intended that the Trust's assets will be managed
so an investor in the Trust can satisfy the requirements of subchapter M of
the Internal Revenue Code.
(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. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Trust amortizes all
premiums and discounts on debt securities.
(f) Securities lending--The Trust may lend securities to financial
institutions that provide cash or securities issued or guaranteed by the U.S.
government as collateral, which will be maintained at all times in an amount
equal to at least 100% of the current market value of the loaned securities.
The market value of the loaned securities is determined at the close of
business of the Trust and any additional required collateral is delivered to
the Trust on the next business day. Where the Trust receives securities as
collateral for the loaned securities, it receives a fee from the borrower. The
Trust typically receives the income on the loaned securities, but does not
receive the income on the collateral. Where the Trust receives cash
collateral, it may invest such collateral and retain the amount earned on such
investment, net of any amount rebated to the borrower. Loans of securities are
terminable at any time and the borrower, after notice, is required to return
borrowed securities within five business days. The Trust may pay reasonable
finder's, lending agent, administrative and custodial fees in connection with
its loans. In the event that the borrower defaults on its obligation to return
borrowed securities because of insolvency or for any other reason, the Trust
could experience delays and costs in gaining access to the collateral. The
Trust also could suffer a loss where the value of the collateral falls below
the market value of the borrowed securities, in the event of borrower default
or in the event of losses on investments made with cash collateral.
(g) Custodian bank--The Trust recorded an amount payable to the custodian bank
reflecting an overnight overdraft, which resulted from management estimates of
available cash.
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Notes to Financial Statements (concluded) Master Senior Floating Rate Trust
2. Investment Advisory Agreement and Transactions with Affiliates:
The Trust has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("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 Trust's portfolio and provides
the necessary personnel, facilities, equipment and certain other services
necessary to the operations of the Trust. For such services, the Trust pays a
monthly fee at an annual rate of .95% of the average daily value of the
Trust's net assets.
The Trust has received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to Merrill Lynch,
Pierce, Fenner & Smith Incorporated, an affiliate of FAM, or its affiliates.
Pursuant to that order, the Trust also has retained Merrill Lynch Investment
Managers, LLC ("MLIM, LLC"), an affiliate of FAM, as the securities lending
agent for a fee based on a share of the returns on investment of cash
collateral. MLIM, LLC may, on behalf of the Trust, invest cash collateral
received by the Trust for such loans, among other things, in a private
investment company managed by MLIM, LLC or in registered money market funds
advised by FAM or its affiliates.
For the year ended August 31, 2005, the Trust reimbursed FAM $23,163 for
certain accounting services.
Certain officers and/or trustees of the Trust are officers and/or directors of
FAM, PSI, ML & Co., and/or MLIM, LLC.
3. Investments:
Purchases and sales (including paydowns) of investments, excluding short-term
securities, for the year ended August 31, 2005 were $572,350,150 and
$475,745,113, respectively.
4. Unfunded Loan Interests:
As of August 31, 2005, the Trust had unfunded loan commitments of
approximately $30,177,000 which would be extended at the option of the
borrower, pursuant to the following loan agreements:
Unfunded
Commitment
Borrower (in Thousands)
Key Energy Services TLB $3,000
Maguire Properties, LP $3,800
NFIL Holdings Corp. $5,000
Pinnacle Entertainment, Inc. $1,060
Trump Entertainment Resorts Holdings LP Revolving
Line of Credit $4,283
Trump Entertainment Resorts Holdings LP Term Loan B-1 $2,500
Vanguard Health Systems, Inc. $1,000
Vought Aircraft Industries, Inc. $6,000
Wyndham International $3,534
5. Short-Term Borrowings:
The Trust, along with certain other funds managed by FAM and its affiliates,
is a party to a $500,000,000 credit agreement with a group of lenders, which
expires November 2005. The Trust may borrow under the credit agreement to fund
shareholder redemptions and for other lawful purposes other than for leverage.
The Trust may borrow up to the maximum amount allowable under the Trust's
current prospectus and statement of additional information, subject to various
other legal, regulatory or contractual limits. The Trust pays a commitment fee
of .07% per annum based on the Trust's pro rata share of the unused portion of
the credit agreement. Amounts borrowed under the credit agreement bear
interest at a rate equal to, at each Trust's election, the federal funds rate
plus .50% or a base rate as defined in the credit agreement. The Trust did not
borrow under the credit agreement during the year ended August 31, 2005.
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Report of Independent Registered Public Accounting Firm
Master Senior Floating Rate Trust
To the Investors and Board of Trustees of
Master Senior Floating Rate Trust:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Master Senior Floating Rate Trust
(the "Trust") as of August 31, 2005, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of
the two years in the period then ended, and the financial highlights for the
respective periods then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. The Trust is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Trust's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. Our
procedures included confirmation of securities owned as of August 31, 2005, by
correspondence with the custodian and financial intermediaries; where replies
were not received from financial intermediaries, we performed other auditing
procedures. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Master Senior Floating Rate Trust as of August 31, 2005, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and its financial highlights for the
respective periods then ended, in conformity with U.S. generally accepted
accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
October 21, 2005
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Officers and Directors/Trustees
Number of
Portfolios in Other Public
Fund Complex Directorships
Position(s) Length of Overseen by Held by
Held with Time Director/ Director/
Name, Address & Age Fund/Trust Served Principal Occupation(s) During Past 5 Years Trustee Trustee
Interested Director/Trustee
Robert C. Doll, Jr.* President 2005 to President of the MLIM/FAM-advised funds since 130 Funds None
P.O. Box 9011 and present 2005; President of MLIM and FAM since 2001; 175 Portfolios
Princeton, Director/ Co-Head (Americas Region) thereof from 2000
NJ 08543-9011 Trustee to 2001 and Senior Vice President from 1999
Age: 51 to 2001; President and Director of Princeton
Services, Inc. ("Princeton Services") since
2001; President of Princeton Administrators,
L.P. ("Princeton Administrators") since 2001;
Chief Investment Officer of Oppenheimer Funds,
Inc. in 1999 and Executive Vice President
thereof from 1991 to 1999.
* Mr. Doll is a director, trustee or member of an advisory board of certain
other investment companies for which MLIM or FAM acts as investment adviser.
Mr. Doll is an "interested person," as defined in the Investment Company Act,
of the Fund based on his current positions with MLIM, FAM, Princeton Services
and Princeton Administrators. Directors/Trustees serve until their resignation,
removal or death, or until December 31 of the year in which they turn 72. As
Fund/Trust President, Mr. Doll serves at the pleasure of the Board of
Directors/ Trustees.
Independent Directors/Trustees*
Ronald W. Forbes** Director/ 1989 to Professor Emeritus of Finance, School of 48 Funds None
P.O. Box 9095 Trustee present Business, State University of New York at 48 Portfolios
Princeton, Albany since 2000 and Professor thereof from
NJ 08543-9095 1989 to 2000; International Consultant, Urban
Age: 64 Institute, Washington D.C. from 1995 to 1999.
Cynthia A. Montgomery Director/ 1994 to Professor, Harvard Business School since 48 Funds Newell
P.O. Box 9095 Trustee present 1989; Associate Professor, J.L. Kellogg 48 Portfolios Rubbermaid,
Princeton, Graduate School of Management, Northwestern Inc.
NJ 08543-9095 University from 1985 to 1989; Associate (manufacturing)
Age: 53 Professor, Graduate School of Business
Administration, University of Michigan from
1979 to 1985; Director, Harvard Business
School of Publishing since 2005.
Jean Margo Reid Director/ 2004 to Self-employed consultant since 2001; Counsel 48 Funds None
P.O. Box 9095 Trustee present of Alliance Capital Management (investment 48 Portfolios
Princeton, adviser) in 2000; General Counsel, Director
NJ 08543-9095 and Secretary of Sanford C. Bernstein & Co.,
Age: 60 Inc. (investment adviser/broker-dealer) from
1997 to 2000; Secretary, Sanford C. Bernstein
Fund, Inc. from 1994 to 2000; Director and
Secretary of SCB, Inc. since 1998; Director
and Secretary of SCB Partners, Inc. since 2000;
and Director of Covenant House from 2001 to 2004.
Roscoe S. Suddarth Director/ 2000 to President, Middle East Institute, from 1995 48 Funds None
P.O. Box 9095 Trustee present to 2001; Foreign Service Officer, United 48 Portfolios
Princeton, States Foreign Service, from 1961 to 1995;
NJ 08543-9095 Career Minister from 1989 to 1995; Deputy
Age: 70 Inspector General, U.S. Department of State,
from 1991 to 1994; U.S. Ambassador to the
Hashemite Kingdom of Jordan from 1987 to 1990.
MERRILL LYNCH SENIOR FLOATING RATE FUND , INC. AUGUST 31, 2005
Officers and Directors/Trustees (concluded)
Number of
Portfolios in Other Public
Fund Complex Directorships
Position(s) Length of Overseen by Held by
Held with Time Director/ Director/
Name, Address & Age Fund/Trust Served Principal Occupation(s) During Past 5 Years Trustee Trustee
Independent Directors/Trustees* (concluded)
Richard R. West Director/ 1989 to Professor of Finance from 1984 to 1995, 48 Funds Bowne & Co.,
P.O. Box 9095 Trustee present Dean from 1984 to 1993 and since 1995 48 Portfolios Inc. (financial
Princeton, Dean Emeritus of New York University's Printers);
NJ 08543-9095 Leonard N. Stern School of Business Vornado Realty
Age: 67 Administration. Trust (real estate
company);
Alexander's, Inc.
(real estate
company).
Edward D. Zinbarg Director/ 2000 to Self-employed financial consultant since 48 Funds None
P.O. Box 9095 Trustee present 1994; Executive Vice President of the 48 Portfolios
Princeton, Prudential Insurance Company of America from
NJ 08543-9095 1988 to 1994; Former Director of Prudential
Age: 70 Reinsurance Company and former Trustee of the
Prudential Foundation.
* Directors/Trustees serve until their resignation, removal or death, or until December 31
of the year in which they turn 72.
** Chairman of the Board and the Audit Committee.
Position(s) Length of
Held with Time
Name, Address & Age Fund/Trust Served Principal Occupation(s) During Past 5 Years
Fund/Trust Officers*
Donald C. Burke Vice 1993 to First Vice President of MLIM and FAM since 1997 and Treasurer thereof since 1999;
P.O. Box 9011 President present Senior Vice President and Treasurer of Princeton Services since 1999 and Director
Princeton, and and since 2004; Vice President of FAM Distributors, Inc. ("FAMD") since 1999; Vice
NJ 08543-9011 Treasurer 1999 to President of MLIM and FAM from 1990 to 1997; Director of Taxation of MLIM from
Age: 45 present 1990 to 2001; Vice President, Treasurer and Secretary of the IQ Funds since 2004.
Joseph P. Matteo Vice 2000 to Director (Global Fixed Income) of MLIM since 2001; Vice President of MLIM
P.O. Box 9011 President present from 1997 to 2000; Vice President at The Bank of New York from 1994 to 1997.
Princeton,
NJ 08543-9011
Age: 41
Jeffrey Hiller Chief 2004 to Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice President
P.O. Box 9011 Compliance present and Chief Compliance Officer of MLIM (Americas Region) since 2004; Chief
Princeton, Officer Compliance Officer of the IQ Funds since 2004; Global Director of Compliance at
NJ 08543-9011 Morgan Stanley Investment Management from 2002 to 2004; Managing Director and
Age: 54 Global Director of Compliance at Citigroup Asset Management from 2000 to 2002;
Chief Compliance Officer at Soros Fund Management in 2000; Chief Compliance
Officer at Prudential Financial from 1995 to 2000; Senior Counsel in the
Commission's Division of Enforcement in Washington, D.C. from 1990 to 1995.
Alice A. Pellegrino Secretary 2004 to Director (Legal Advisory) of MLIM since 2002; Vice President of MLIM from 1999 to
P.O. Box 9011 present 2002; Attorney associated with MLIM since 1997; Secretary of MLIM, FAM, FAMD
Princeton, and Princeton Services since 2004.
NJ 08543-9011
Age: 45
* Officers of the Fund/Trust serve at the pleasure of the Board of Directors/Trustees.
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
800-637-3863
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. AUGUST 31, 2005
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as of
the end of the period covered by this report, that applies to the
registrant's principal executive officer, principal financial
officer and principal accounting officer, or persons performing
similar functions. A copy of the code of ethics is available
without charge upon request by calling toll-free 1-800-MER-FUND
(1-800-637-3863).
Item 3 - Audit Committee Financial Expert - The registrant's board of
directors has determined that (i) the registrant has the following
audit committee financial experts serving on its audit committee and
(ii) each audit committee financial expert is independent: (1)
Ronald W. Forbes, (2) Richard R. West, and (3) Edward D. Zinbarg.
Item 4 - Principal Accountant Fees and Services
Master Senior Floating Rate Trust
(a) Audit Fees - Fiscal Year Ending August 31, 2005 - $70,000
Fiscal Year Ending August 31, 2004 - $65,000
(b) Audit-Related Fees -Fiscal Year Ending August 31, 2005 - $0
Fiscal Year Ending August 31, 2004 - $0
(c) Tax Fees - Fiscal Year Ending August 31, 2005 - $10,900
Fiscal Year Ending August 31, 2004 - $8,000
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ending August 31, 2005 - $0
Fiscal Year Ending August 31, 2004 - $0
Merrill Lynch Senior Floating Rate Fund, Inc.
(a) Audit Fees - Fiscal Year Ending August 31, 2005 - $6,500
Fiscal Year Ending August 31, 2004 - $6,200
(b) Audit-Related Fees -Fiscal Year Ending August 31, 2005 - $0
Fiscal Year Ending August 31, 2004 - $0
(c) Tax Fees - Fiscal Year Ending August 31, 2005 - $6,350
Fiscal Year Ending August 31, 2004 - $5,200
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ending August 31, 2005 - $0
Fiscal Year Ending August 31, 2004 - $0
(e)(1) The registrant's audit committee (the "Committee") has
adopted policies and procedures with regard to the pre-approval of
services. Audit, audit-related and tax compliance services provided
to the registrant on an annual basis require specific pre-approval
by the Committee. The Committee also must approve other non-audit
services provided to the registrant and those non-audit services
provided to the registrant's affiliated service providers that
relate directly to the operations and the financial reporting of the
registrant. Certain of these non-audit services that the Committee
believes are a) consistent with the SEC's auditor independence rules
and b) routine and recurring services that will not impair the
independence of the independent accountants may be approved by the
Committee without consideration on a specific case-by-case basis
("general pre-approval"). However, such services will only be
deemed pre-approved provided that any individual project does not
exceed $5,000 attributable to the registrant or $50,000 for all of
the registrants the Committee oversees. Any proposed services
exceeding the pre-approved cost levels will require specific pre-
approval by the Committee, as will any other services not subject to
general pre-approval (e.g., unanticipated but permissible services).
The Committee is informed of each service approved subject to
general pre-approval at the next regularly scheduled in-person board
meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ending August 31, 2005 - $7,377,027
Fiscal Year Ending August 31, 2004 - $14,913,836
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser and any entity controlling,
controlled by, or under common control with the investment adviser
that provides ongoing services to the registrant that were not pre-
approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation
S-X is compatible with maintaining the principal accountant's
independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $1,227,000, 0%
Item 5 - Audit Committee of Listed Registrants - The following individuals
are members of the registrant's separately-designated standing audit
committee established in accordance with Section 3(a)(58)(A) of the
Exchange Act (15 U.S.C. 78c(a)(58)(A)):
Ronald W. Forbes
Cynthia A. Montgomery
Jean Margo Reid
Kevin A. Ryan (retired as of December 31, 2004)
Roscoe S. Suddarth
Richard R. West
Edward D. Zinbarg
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies -
Proxy Voting Policies and Procedures
Each Fund's Board of Directors/Trustees has delegated to Merrill
Lynch Investment Managers, L.P. and/or Fund Asset Management, L.P.
(the "Investment Adviser") authority to vote all proxies relating to
the Fund's portfolio securities. The Investment Adviser has adopted
policies and procedures ("Proxy Voting Procedures") with respect to
the voting of proxies related to the portfolio securities held in
the account of one or more of its clients, including a Fund.
Pursuant to these Proxy Voting Procedures, the Investment Adviser's
primary objective when voting proxies is to make proxy voting
decisions solely in the best interests of each Fund and its
shareholders, and to act in a manner that the Investment Adviser
believes is most likely to enhance the economic value of the
securities held by the Fund. The Proxy Voting Procedures are
designed to ensure that the Investment Adviser considers the
interests of its clients, including the Funds, and not the interests
of the Investment Adviser, when voting proxies and that real (or
perceived) material conflicts that may arise between the Investment
Adviser's interest and those of the Investment Adviser's clients are
properly addressed and resolved.
In order to implement the Proxy Voting Procedures, the Investment
Adviser has formed a Proxy Voting Committee (the "Committee"). The
Committee is comprised of the Investment Adviser's Chief Investment
Officer (the "CIO"), one or more other senior investment
professionals appointed by the CIO, portfolio managers and
investment analysts appointed by the CIO and any other personnel the
CIO deems appropriate. The Committee will also include two non-
voting representatives from the Investment Adviser's Legal
department appointed by the Investment Adviser's General Counsel.
The Committee's membership shall be limited to full-time employees
of the Investment Adviser. No person with any investment banking,
trading, retail brokerage or research responsibilities for the
Investment Adviser's affiliates may serve as a member of the
Committee or participate in its decision making (except to the
extent such person is asked by the Committee to present information
to the Committee, on the same basis as other interested
knowledgeable parties not affiliated with the Investment Adviser
might be asked to do so). The Committee determines how to vote the
proxies of all clients, including a Fund, that have delegated proxy
voting authority to the Investment Adviser and seeks to ensure that
all votes are consistent with the best interests of those clients
and are free from unwarranted and inappropriate influences. The
Committee establishes general proxy voting policies for the
Investment Adviser and is responsible for determining how those
policies are applied to specific proxy votes, in light of each
issuer's unique structure, management, strategic options and, in
certain circumstances, probable economic and other anticipated
consequences of alternate actions. In so doing, the Committee may
determine to vote a particular proxy in a manner contrary to its
generally stated policies. In addition, the Committee will be
responsible for ensuring that all reporting and recordkeeping
requirements related to proxy voting are fulfilled.
The Committee may determine that the subject matter of a recurring
proxy issue is not suitable for general voting policies and requires
a case-by-case determination. In such cases, the Committee may
elect not to adopt a specific voting policy applicable to that
issue. The Investment Adviser believes that certain proxy voting
issues require investment analysis - such as approval of mergers and
other significant corporate transactions - akin to investment
decisions, and are, therefore, not suitable for general guidelines.
The Committee may elect to adopt a common position for the
Investment Adviser on certain proxy votes that are akin to
investment decisions, or determine to permit the portfolio manager
to make individual decisions on how best to maximize economic value
for a Fund (similar to normal buy/sell investment decisions made by
such portfolio managers). While it is expected that the Investment
Adviser will generally seek to vote proxies over which the
Investment Adviser exercises voting authority in a uniform manner
for all the Investment Adviser's clients, the Committee, in
conjunction with a Fund's portfolio manager, may determine that the
Fund's specific circumstances require that its proxies be voted
differently.
To assist the Investment Adviser in voting proxies, the Committee
has retained Institutional Shareholder Services ("ISS"). ISS is an
independent adviser that specializes in providing a variety of
fiduciary-level proxy-related services to institutional investment
managers, plan sponsors, custodians, consultants, and other
institutional investors. The services provided to the Investment
Adviser by ISS include in-depth research, voting recommendations
(although the Investment Adviser is not obligated to follow such
recommendations), vote execution, and recordkeeping. ISS will also
assist the Fund in fulfilling its reporting and recordkeeping
obligations under the Investment Company Act.
The Investment Adviser's Proxy Voting Procedures also address
special circumstances that can arise in connection with proxy
voting. For instance, under the Proxy Voting Procedures, the
Investment Adviser generally will not seek to vote proxies related
to portfolio securities that are on loan, although it may do so
under certain circumstances. In addition, the Investment Adviser
will vote proxies related to securities of foreign issuers only on a
best efforts basis and may elect not to vote at all in certain
countries where the Committee determines that the costs associated
with voting generally outweigh the benefits. The Committee may at
any time override these general policies if it determines that such
action is in the best interests of a Fund.
From time to time, the Investment Adviser may be required to vote proxies in
respect of an issuer where an affiliate of the Investment Adviser (each, an
"Affiliate"), or a money management or other client of the Investment Adviser
(each, a "Client") is involved. The Proxy Voting Procedures and the Investment
Adviser's adherence to those procedures are designed to address such conflicts
of interest. The Committee intends to strictly adhere to the Proxy Voting
Procedures in all proxy matters, including matters involving Affiliates and
Clients. If, however, an issue representing a non-routine matter that is
material to an Affiliate or a widely known Client is involved such that the
Committee does not reasonably believe it is able to follow its guidelines (or
if the particular proxy matter is not addressed by the guidelines) and vote
impartially, the Committee may, in its discretion for the purposes of ensuring
that an independent determination is reached, retain an independent fiduciary
to advise the Committee on how to vote or to cast votes on behalf of the
Investment Adviser's clients.
In the event that the Committee determines not to retain an
independent fiduciary, or it does not follow the advice of such an
independent fiduciary, the powers of the Committee shall pass to a
subcommittee, appointed by the CIO (with advice from the Secretary
of the Committee), consisting solely of Committee members selected
by the CIO. The CIO shall appoint to the subcommittee, where
appropriate, only persons whose job responsibilities do not include
contact with the Client and whose job evaluations would not be
affected by the Investment Adviser's relationship with the Client
(or failure to retain such relationship). The subcommittee shall
determine whether and how to vote all proxies on behalf of the
Investment Adviser's clients or, if the proxy matter is, in their
judgment, akin to an investment decision, to defer to the applicable
portfolio managers, provided that, if the subcommittee determines to
alter the Investment Adviser's normal voting guidelines or, on
matters where the Investment Adviser's policy is case-by-case, does
not follow the voting recommendation of any proxy voting service or
other independent fiduciary that may be retained to provide research
or advice to the Investment Adviser on that matter, no proxies
relating to the Client may be voted unless the Secretary, or in the
Secretary's absence, the Assistant Secretary of the Committee
concurs that the subcommittee's determination is consistent with the
Investment Adviser's fiduciary duties
In addition to the general principles outlined above, the Investment
Adviser has adopted voting guidelines with respect to certain
recurring proxy issues that are not expected to involve unusual
circumstances. These policies are guidelines only, and the
Investment Adviser may elect to vote differently from the
recommendation set forth in a voting guideline if the Committee
determines that it is in a Fund's best interest to do so. In
addition, the guidelines may be reviewed at any time upon the
request of a Committee member and may be amended or deleted upon the
vote of a majority of Committee members present at a Committee
meeting at which there is a quorum.
The Investment Adviser has adopted specific voting guidelines with
respect to the following proxy issues:
* Proposals related to the composition of the Board of Directors of issuers
other than investment companies. As a general matter, the Committee
believes that a company's Board of Directors (rather than shareholders) is
most likely to have access to important, nonpublic information regarding a
company's business and prospects, and is therefore best-positioned to set
corporate policy and oversee management. The Committee, therefore, believes
that the foundation of good corporate governance is the election of
qualified, independent corporate directors who are likely to diligently
represent the interests of shareholders and oversee management of the
corporation in a manner that will seek to maximize shareholder value over
time. In individual cases, the Committee may look at a nominee's history of
representing shareholder interests as a director of other companies or other
factors, to the extent the Committee deems relevant.
* Proposals related to the selection of an issuer's independent auditors. As
a general matter, the Committee believes that corporate auditors have a
responsibility to represent the interests of shareholders and provide an
independent view on the propriety of financial reporting decisions of
corporate management. While the Committee will generally defer to a
corporation's choice of auditor, in individual cases, the Committee may look
at an auditors' history of representing shareholder interests as auditor of
other companies, to the extent the Committee deems relevant.
* Proposals related to management compensation and employee benefits. As a
general matter, the Committee favors disclosure of an issuer's compensation
and benefit policies and opposes excessive compensation, but believes that
compensation matters are normally best determined by an issuer's board of
directors, rather than shareholders. Proposals to "micro-manage" an
issuer's compensation practices or to set arbitrary restrictions on
compensation or benefits will, therefore, generally not be supported.
* Proposals related to requests, principally from management, for approval of
amendments that would alter an issuer's capital structure. As a general
matter, the Committee will support requests that enhance the rights of
common shareholders and oppose requests that appear to be unreasonably
dilutive.
* Proposals related to requests for approval of amendments to an issuer's
charter or by-laws. As a general matter, the Committee opposes poison pill
provisions.
* Routine proposals related to requests regarding the formalities of corporate
meetings.
* Proposals related to proxy issues associated solely with holdings of
investment company shares. As with other types of companies, the Committee
believes that a fund's Board of Directors (rather than its shareholders) is
best-positioned to set fund policy and oversee management. However, the
Committee opposes granting Boards of Directors authority over certain
matters, such as changes to a fund's investment objective, that the
Investment Company Act envisions will be approved directly by shareholders.
* Proposals related to limiting corporate conduct in some manner that relates
to the shareholder's environmental or social concerns. The Committee
generally believes that annual shareholder meetings are inappropriate forums
for discussion of larger social issues, and opposes shareholder resolutions
"micromanaging" corporate conduct or requesting release of information that
would not help a shareholder evaluate an investment in the corporation as an
economic matter. While the Committee is generally supportive of proposals
to require corporate disclosure of matters that seem relevant and material
to the economic interests of shareholders, the Committee is generally not
supportive of proposals to require disclosure of corporate matters for other
purposes.
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable at this time
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 11 - Controls and Procedures
11(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.
11(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 second 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 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(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.
Merrill Lynch Senior Floating Rate Fund, Inc. and
Master Senior Floating Rate Trust
By: /s/ Robert C. Doll, Jr.
-------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
Merrill Lynch Senior Floating Rate Fund, Inc. and
Master Senior Floating Rate Trust
Date: October 19, 2005
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/ Robert C. Doll, Jr.
-------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
Merrill Lynch Senior Floating Rate Fund, Inc. and
Master Senior Floating Rate Trust
Date: October 19, 2005
By: /s/ Donald C. Burke
-------------------------------
Donald C. Burke,
Chief Financial Officer of
Merrill Lynch Senior Floating Rate Fund, Inc. and
Master Senior Floating Rate Trust
Date: October 19, 2005