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 811-08727
---------------------------------------------
SunAmerica Senior Floating Rate Fund, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Robert M. Zakem, ESQ.
Senior Vice President & General Counsel
AIG SunAmerica Asset Management Corp.
Harborside Financial Center 3200 Plaza 5
Jersey City, NJ 07311
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6363
----------------------------
Date of fiscal year end: December 31, 2003
-------------------------
Date of reporting period: December 31, 2003
------------------------
Item 1. Reports to Shareholders.
SunAmerica Senior Floating Rate Fund, Inc. Annual Report at December 31,
2003.
[GRAPHIC]
SunAmerica
THE RETIREMENT SPECIALIST
Senior Floating Rate Fund
2003 ANNUAL REPORT
[LOGO] AIG Sun America
Mutual Funds
Table of Contents
PRESIDENT'S LETTER.......................... 1
SENIOR FLOATING RATE FUND REVIEW AND OUTLOOK 2
STATEMENT OF ASSETS AND LIABILITIES......... 4
STATEMENT OF OPERATIONS..................... 5
STATEMENTS OF CHANGES IN NET ASSETS......... 6
STATEMENT OF CASH FLOWS..................... 7
FINANCIAL HIGHLIGHTS........................ 8
PORTFOLIO OF INVESTMENTS.................... 11
NOTES TO FINANCIAL STATEMENTS............... 16
REPORT OF INDEPENDENT AUDITORS.............. 24
DIRECTORS INFORMATION....................... 25
December 31, 2003 ANNUAL REPORT
Dear Shareholder:
In the pages that follow, we are pleased to present you with comments from
Chris Jansen, portfolio manager of the Senior Floating Rate Fund, Inc. On
December 31, 2003 the annual reporting period for the SunAmerica Senior
Floating Rate Fund, Inc. came to a close on a favorable note, with the Fund
generating its highest annual return since its inception on August 31, 1998.
During 2003, the Fund benefited from investments in several industry sectors
which had become substantially undervalued due to broad industry downturns in
recent years. Among these, Telecommunications, Cable Television and Energy
companies led the way among sectors that experienced above-market returns. As
anticipated, when conditions within these industries began to improve, many
bank loan prices in these industries also rose.
Due to strengthening credit markets, the latter half of the year presented
fewer such prospects. The Fund, nonetheless, continued to pursue credit
analysis practices that enabled it to uncover important trends in the bank loan
market early on, in order to capture more incremental gains when conditions to
do so were present. In all, the Fund had an excellent year, with the
positioning adopted in late 2002 serving the portfolio well over the 2003
annual period.
We wish you the best in 2004 and thank you for your continued investment in
the Senior Floating Rate Fund, Inc.
Sincerely,
/s/ Peter A. Harbeck
Peter A. Harbeck
President
AIG SunAmerica Asset Management Corp.
- --------
Past performance is no guarantee of future results.
SunAmerica Senior Floating Rate Fund
Chris Jansen and Team, Portfolio Managers
Stanfield Capital Partners, LLC
In what ways did market conditions affect the Fund's performance during the
annual period?
The conditions in the beginning of 2003 provided the Fund with many
opportunities to earn above-market returns. The market was still coming off
very high default rates and very low pricing on many loans. We positioned the
portfolio in late 2002 to take advantage of where the market was trading. As
the loan markets strengthened through 2003, we saw an increase in Fund's net
asset value, as well as in the market prices of the loans within the portfolio.
However, as the year progressed, the opportunities to make these outsized
returns on individual loans were not as plentiful. During the year, we also saw
a small improvement in credit ratings, as well as a strengthening in the market
as loan prices increased. Improving corporate credit conditions have attracted
new capital to this market, in addition to providing many loan issuers with the
opportunity to refinance at lower rates.
What role did sector selection play in the performance of the Fund this year?
This year, the Fund invested in loans in the Cable Television industry, a
main area in which the Fund made sizeable returns. We also garnered strong
results from investment in the Telecommunications and Utilities sectors, both
of which also generated outsized returns for the portfolio. Weak market pricing
was the main reason we invested in both Cable Television and
Telecommunications. We saw strong returns coming from these areas since the
market had beaten down the prices of the loans at the beginning of the year.
Our selection process for these holdings was an opportunistic one, guided by
our perception that these holdings were undervalued.
Two reasons accounted for the undervaluation. First, there were numerous
defaults in the Telecommunications sector, which caused a general and quite
steep decline in that industry. Many investors lost money in the sector, and as
a result, loans reflected the situation, including those of very good
operators. Similarly in Cable Television, although not to the extent that it
occurred in the Telecommunications sector, the Adelphia corporate governance
scandal cast a pall on that sector. During 2003, we held a loan of an Adelphia
subsidiary which provided big returns as that sector began to recover.
Generally speaking, there were good returns across the board in this sector
because the recovery within it was broad-based. The Utilities sector had also
been beaten down because of all the power trading problems. Since Utilities
companies are heavily asset laden, there was an opportunity within this arena
to get strong collateral packages and very well priced loans. These factors
provided us with sound impetus to invest in this sector.
- --------
Past performance is no guarantee of future results.
2
SunAmerica Senior Floating Rate Fund
What role did individual securities selection play in terms of affecting the
Fund's performance over the past year?
The performance of the Fund clearly benefited in 2003 from specific security
selection. We actively sought opportunities in the Cable Television,
Telecommunications, Utilities and other sectors with the focus on achieving
outsized returns. The tilt of the strategy was toward lower-rated companies
since they had been beaten down in value a lot more than the rest of the
market. In Cable Television, Century Cable was the Adelphia subsidiary we
invested in while Adelphia was operating in bankruptcy. Charter Communications
is another loan which brought us outsized returns. With both the Century Cable
and Charter Communications loans, the company's capital structure and the
loan's strong collateral package provided us with excellent security for the
bank loan versus the bond.
In the Telecommunications sector, Rural Cellular and Centennial Cellular
worked out well for the portfolio. Both companies operate in rural areas, where
there is less competition. Although they generated strong cash flows, their
valuations were nonetheless impacted by the overall malaise in the
Telecommunications industry. We recognized that both companies were
fundamentally sound yet undervalued because of the then current difficulties
affecting the entire industry. In the Energy sector, we also invested in the
West Coast-based energy producer Calpine. This company addressed its cash flow
problems by structuring bank loans that are extremely well collateralized and
well priced because of the overall problems in that sector. These loans have
been volatile, but they have also been strong performers overall for the
portfolio.
- --------
The Fund is not a money market fund and its net asset value may fluctuate.
Investments in Loans involve certain risks including nonpayment of principal
and interest; collateral impairment; nondiversification and borrower industry
concentration; and lack of full liquidity, which may impair the Fund's ability
to obtain full value for Loans sold. The Fund may invest all or substantially
all of its assets in Loans or other securities that are rated below investment
grade, or in comparable unrated securities. Credit risks include the
possibility of a default on the Loan or bankruptcy of the borrower. The value
of these Loans is subject to a greater degree of volatility in response to
interest rate fluctuations.
Past performance is no guarantee of future results.
3
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES -- December 31, 2003
ASSETS:
Investments in loans and securities, at value (Cost,
$144,651,311)................................................... $141,593,851
Cash............................................................. 1,666,358
Receivables for:
Investments sold................................................ 2,504,375
Fund shares sold................................................ 704,527
Interest and dividend receivable................................ 655,415
Due from investment adviser..................................... 117,836
------------
Total assets.................................................... 147,242,362
------------
LIABILITIES:
Payables for:
Fund shares repurchased......................................... 2,970,676
Dividends payable............................................... 118,561
Investment adviser.............................................. 103,191
Distribution and service fees................................... 82,767
Administration fees............................................. 49,923
Other accrued expenses.......................................... 257,748
Commitments (Note 10)........................................... --
------------
Total liabilities............................................... 3,582,866
------------
Net assets.................................................... $143,659,496
============
NET ASSETS CONSIST OF:
Capital shares at par value of $.01.............................. $ 154,039
Additional paid-in capital....................................... 172,742,914
------------
172,896,953
Accumulated undistributed net investment income (loss)........... (32,849)
Accumulated net realized gain (loss)............................. (26,147,148)
Unrealized appreciation (depreciation) on investments............ (3,057,460)
------------
Net assets.................................................... $143,659,496
============
Class B Class C Class D
NET ASSET VALUES: ----------- ------------ -----------
Net assets.............................................................................. $26,565,174 $103,725,716 $13,368,606
Shares outstanding...................................................................... 2,848,455 11,121,990 1,433,429
Net Asset Value, offering and redemption price per share (excluding any
applicable contingent deferred sales charges)......................................... $ 9.33 $ 9.33 $ 9.33
=========== ============ ===========
See Notes to Financial Statements
4
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF OPERATIONS -- For the year ended December 31, 2003
INVESTMENT INCOME:
Interest........................................................... $ 6,324,831
Dividends.......................................................... 57,724
Facility and other fee income (Note 2)............................. 1,114,084
-----------
Total income.................................................... 7,496,639
-----------
EXPENSES:
Investment advisor fee............................................. 1,091,115
Distribution and service maintenance fee -- for Class B............ 214,333
Distribution and service maintenance fee -- for Class C............ 646,201
Transfer agent fee and expenses -- Class B......................... 36,500
Transfer agent fee and expenses -- Class C......................... 64,080
Transfer agent fee and expenses -- Class D......................... 23,800
Administration fees................................................ 515,003
Accounting service fees............................................ 67,535
Custody fee........................................................ 55,594
Printing expense................................................... 132,593
Audit fees......................................................... 113,565
Legal fees......................................................... 59,370
Directors' fees and expenses....................................... 32,481
Interest expense................................................... 11,786
Miscellaneous expense.............................................. 84,127
-----------
Total expenses before waivers/reimbursements and custody credits. 3,148,083
Expenses waived/reimbursed by investment adviser................. (1,159,316)
Custody credits earned on cash balances.......................... (4,574)
-----------
Net expenses.................................................... 1,984,193
-----------
Net investment income (loss)....................................... 5,512,446
-----------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investment transactions................ (5,464,399)
Change in unrealized appreciation (depreciation) on investments.... 13,022,369
-----------
Net realized and unrealized gain (loss) on investments............. 7,557,970
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.... $13,070,416
===========
See Notes to Financial Statements
5
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF CHANGES IN NET ASSETS
For the year ended For the year ended
December 31, 2003 December 31, 2002
------------------ ------------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss).......................................................... $ 5,512,446 $ 7,523,444
Net realized gain (loss) on investment transactions................................... (5,464,399) (6,967,383)
Change in unrealized appreciation (depreciation) on investments....................... 13,022,369 2,298,689
------------ ------------
Net increase (decrease) in net assets resulting from operations......................... 13,070,416 2,854,750
Distributions to shareholders from:
Net investment income (Class B)....................................................... (1,250,414) (1,634,402)
Net investment income (Class C)....................................................... (3,676,409) (4,660,669)
Net investment income (Class D)....................................................... (636,830) (924,225)
------------ ------------
Total distributions to shareholders..................................................... (5,563,653) (7,219,296)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 3) $ 3,107,689 $(71,961,280)
------------ ------------
Total increase (decrease) in net assets................................................. 10,614,452 (76,325,826)
Net Assets:
Beginning of period..................................................................... 133,045,044 209,370,870
------------ ------------
End of period........................................................................... $143,659,496 $133,045,044
============ ============
Accumulated undistributed net investment income (loss).................................. $ (32,849) $ 18,358
============ ============
See Notes to Financial Statements
6
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF CASH FLOWS -- For the year ended December 31, 2003
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Net increase in net assets from operations....................................................................... $ 13,070,416
Adjustments to reconcile net increase in net assets from operations to net cash provided by operating activities:
Purchase of loans.............................................................................................. (159,415,182)
Proceeds from loans sold....................................................................................... 90,164,808
Loan principal paydowns........................................................................................ 78,249,727
Purchases -- funding fees...................................................................................... 1,966,373
Purchase of short-term securities, net......................................................................... (8,696,365)
Accretion of facility fee income............................................................................... (817,951)
Decrease in dividends and interest............................................................................. 136,016
Increase in receivables for investments sold................................................................... (2,281,380)
Decrease in amount due from investment adviser................................................................. 54,625
Decrease in other assets....................................................................................... 23,768
Increase in payable to the investment adviser.................................................................. 4,928
Increase in other liabilities.................................................................................. 57,860
Unrealized appreciation on investments......................................................................... (13,022,369)
Net realized loss from investments............................................................................. 5,464,399
-------------
Net cash provided by operating activities........................................................................ $ 4,959,673
-------------
Cash flows from financing activities:
Proceeds from shares sold........................................................................................ 41,913,884
Payment on shares redeemed....................................................................................... (43,861,417)
Cash dividends paid (not including reinvested dividends of $3,763,325)........................................... (1,884,442)
-------------
Net cash used in financing activities............................................................................ $ (3,831,975)
-------------
Net increase in cash............................................................................................. 1,127,698
Cash balance at beginning of period.............................................................................. 538,660
-------------
Cash balance at end of period.................................................................................... $ 1,666,358
=============
See Notes to Financial Statements
7
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Class B
----------------------------------------------
Year Year Year Year Year
ended ended ended ended ended
12/31/03 12/31/02 12/31/01 12/31/00* 12/31/99*
-------- -------- -------- --------- ---------
Net Asset Value, Beginning of Period......... $ 8.78 $ 9.03 $ 9.64 $ 9.98 $ 9.98
Investment Operations:
Net investment income (loss)................. 0.40@ 0.40@ 0.58@ 0.75 0.69
Net realized and unrealized gain (loss) on
investments................................. 0.54 (0.26) (0.60) (0.33) 0.00
------- ------- ------- ------- -------
Total from investment operations............ 0.94 0.14 (0.02) 0.42 0.69
------- ------- ------- ------- -------
Distributions:
Dividends from net investment income......... (0.39) (0.39) (0.59) (0.76) (0.69)
------- ------- ------- ------- -------
Net Asset Value, End of Period............... $ 9.33 $ 8.78 $ 9.03 $ 9.64 $ 9.98
------- ------- ------- ------- -------
Total Return(1).............................. 10.95% 1.54% (0.41%) 4.61% 7.13%
Ratios/Supplemental Data
Net assets, end of period ($000's)........... $26,565 $31,906 $42,335 $50,966 $37,439
Ratio of net expenses to average net assets.. 1.54% 1.45% 1.45% 1.42% 0.70%
Ratio of net investment income to average
net assets.................................. 4.35% 4.42% 6.23% 7.85% 6.87%
Portfolio turnover rate...................... 75% 112% 69% 41% 30%
Expense ratio before waiver of fees and
reimbursement of expenses................... 2.57% 2.51% 2.47% 2.31% 2.29%
Net investment income ratio before waiver of
fees and reimbursement of expenses.......... 3.33% 3.36% 5.21% 6.96% 5.28%
- --------
@ Calculated based upon average shares outstanding.
* The financial statements of the Fund for the periods prior to January 1,
2001 were audited by other independent auditors whose report dated February
23, 2001 expressed an unqualified opinion on the statements.
(1) Total return is not annualized and does not reflect sales load but does
include expense reimbursements.
See Notes to Financial Statements
8
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS -- (continued)
Class C
------------------------------------------------
Year Year Year Year Year
ended ended ended ended ended
12/31/03 12/31/02 12/31/01 12/31/00* 12/31/99*
-------- -------- -------- --------- ---------
Net Asset Value, Beginning of Period......... $ 8.78 $ 9.03 $ 9.64 $ 9.98 $ 9.98
Investment Operations:
Net investment income (loss)................. 0.38@ 0.40@ 0.57@ 0.76 0.69
Net realized and unrealized gain (loss) on
investments................................. 0.56 (0.27) (0.60) (0.33) 0.00
-------- ------- -------- -------- --------
Total from investment operations............ 0.94 0.13 (0.03) 0.43 0.69
-------- ------- -------- -------- --------
Distributions:
Dividends from net investment income......... (0.39) (0.38) (0.58) (0.77) (0.69)
-------- ------- -------- -------- --------
Net Asset Value, End of Period............... $ 9.33 $ 8.78 $ 9.03 $ 9.64 $ 9.98
-------- ------- -------- -------- --------
Total Return(1).............................. 10.92% 1.47% (0.45)% 4.60% 7.12%
Ratios/Supplemental Data
Net assets, end of period ($000's)........... $103,726 $86,101 $140,664 $227,662 $173,322
Ratio of net expenses to average net assets.. 1.59% 1.50% 1.50% 1.43% 0.79%
Ratio of net investment income to average
net assets.................................. 4.22% 4.33% 6.28% 7.85% 6.82%
Portfolio turnover rate...................... 75% 112% 69% 41% 30%
Expense ratio before waiver of fees and
reimbursement of expenses................... 2.51% 2.48% 2.52% 2.32% 2.25%
Net investment income ratio before waiver of
fees and reimbursement of expenses.......... 3.31% 3.36% 5.26% 6.96% 5.36%
- --------
@ Calculated based upon average shares outstanding.
* The financial statements of the Fund for the periods prior to January 1,
2001 were audited by other independent auditors whose report dated February
23, 2001 expressed an unqualified opinion on the statements.
(1) Total return is not annualized and does not reflect sales load but does
include expense reimbursements.
See Notes to Financial Statements
9
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS -- (continued)
- --------------------------------------------------------------------------------
Class D
--------------------------
Period
from
Year Year 05/02/01*
ended ended through
12/31/03 12/31/02 12/31/01
-------- -------- ---------
Net Asset Value, Beginning of Period........................ $ 8.78 $ 9.03 $ 9.46
Investment Operations:
Net investment income (loss)@............................... 0.43 0.43 0.35
Net realized and unrealized gain (loss) on investments...... 0.54 (0.27) (0.42)
------- ------- -------
Total from investment operations........................... 0.97 0.16 (0.07)
------- ------- -------
Distributions:
Dividends from net investment income........................ (0.42) (0.41) (0.36)
------- ------- -------
Net Asset Value, End of Period.............................. $ 9.33 $ 8.78 $ 9.03
------- ------- -------
Total Return(1)............................................. 11.28% 1.72% (0.79)%
Ratios/Supplemental Data
Net assets, end of period ($000's).......................... $13,369 $15,037 $26,372
Ratio of net expenses to average net assets................. 1.25% 1.25% 1.25%#
Ratio of net investment income to average net assets........ 4.63% 4.58% 5.66%#
Portfolio turnover rate..................................... 75% 112% 69%
Expense ratio before waiver of fees and reimbursement of
expenses................................................... 1.86% 1.77% 2.27%#
Net investment income ratio before waiver of fees and
reimbursement of expenses.................................. 4.02% 4.06% 4.64%#
- --------
* Commencement of Operations
@ Calculated based upon average shares outstanding.
# Annualized
(1) Total return is not annualized and does not reflect sales load but does
include expense reimbursements.
See Notes to Financial Statements
10
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2003
Ratings/(1)/
------------
Interest Maturity Principal
Industry Description Type Moody's S&P Rate Date/(2)/ Amount Value
- --------------------------------------------------------------------------- - -------------------------
LOANS/(3) /-- 85.41%
Automobile -- 5.07%
Collins & Aikman Products Co............ BTL-B B1 B+ 4.75% 12/31/05 $ 1,484,022 $ 1,485,506
Polypore, Inc.@......................... BTL-C Ba3 BB- 4.25 12/31/07 1,477,500 1,491,659
Tenneco Automotive, Inc................. BTL-B B2 B 3.25 12/12/10 689,655 698,850
Tenneco Automotive, Inc................. Tranche B1 B2 B 3.25 12/17/10 310,345 314,483
TRW Automotive Acquisitions Corp........ BTL-A Ba3 BB 3.50 2/28/09 768,293 774,455
TRW Automotive Acquisitions Corp........ BTL-C1 Ba3 BB 3.50 2/28/11 1,500,000 1,513,751
United Components, Inc.................. BTL-C B1 BB- 2.75 6/30/10 990,000 998,868
------------
7,277,572
------------
Beverage, Food and Tobacco -- 4.21%
Commonwealth Brands, Inc................ BTL B1 B+ 4.00 8/28/07 1,044,333 1,049,555
Doane Pet Care Co.@..................... BTL-B B2 B- 4.75 12/31/05 283,756 284,702
Doane Pet Care Co.@..................... BTL-C B2 B- 4.75 12/31/06 55,127 55,438
Dole Foods, Inc......................... BTL-C B1 BB 2.50 9/28/08 290,951 295,043
DS Waters Enterprises, LP............... BTL B1 B+ 2.75 11/7/09 1,000,000 1,015,417
Merisant Co............................. BTL-B Ba3 B+ 2.75 1/11/10 840,000 848,663
NBTY, Inc............................... BTL-C Ba2 BB 2.00 6/30/09 1,496,250 1,506,225
Nellson Nutraceutical, Inc.............. BTL NR NR 3.00 10/4/09 987,500 997,992
------------
6,053,035
------------
Broadcasting and Entertainment -- 10.59%
CC VI Operating Partnership............. BTL-B B3 CCC+ 2.50 11/12/08 464,587 444,958
Century Cable Holdings, LLC(4)@......... Discretionary BTL NR NR 4.71 12/31/09 2,500,000 2,295,832
Century -- TCI California LP(5)@........ Revolver NR NR 2.00 12/31/07 1,000,000 969,000
Charter Communications Operating, LLC... BTL-B B3 CCC+ 2.75 3/18/08 1,708,826 1,656,387
Classic Cable, Inc.@.................... BTL-A NR NR 4.00 1/16/08 1,430,432 1,394,671
Classic Cable, Inc.@.................... BTL-B NR NR 4.75 1/16/09 989,997 965,247
DIRECTV Holdings, LLC................... BTL-B1 Ba3 BB- 2.75 3/6/10 2,500,000 2,517,032
Insight Midwest Holdings, LLC........... BTL-B B1 BB 2.75 12/31/09 1,000,000 1,004,297
PANAMSAT Corp........................... Tranche B1 Ba2 BB 2.50 9/30/10 525,000 531,015
Pegasus Media and Communications, Inc.@. Initial BTL Caa1 CCC+ 3.50 4/30/05 905,691 890,974
Pegasus Media and Communications, Inc... Tranche D Caa1 CCC+ 7.00 7/31/06 997,500 1,012,463
RCN Corp................................ BTL-B Ca C 4.00 6/30/07 1,615,752 1,534,964
------------
15,216,840
------------
Buildings & Real Estate -- 1.25%
Associated Materials, Inc............... BTL B1 B+ 2.75 8/29/10 802,632 811,326
Lennar Corp............................. Facility C Baa3 BBB- 1.75 12/15/08 986,667 989,997
------------
1,801,323
------------
Cargo Transport -- 2.76%
Atlas Freighter Leasing III, Inc.(5)@... BTL-A B1 BB- 4.13 4/25/05 350,257 269,698
Moran Transportation Co. @.............. BTL B1 BB- 3.00 8/8/09 995,000 1,004,950
Pacer International Co.................. BTL B1 BB- 2.75 6/10/10 1,678,431 1,692,769
Yellow Roadway Corp..................... BTL Ba1 BBB 1.75 12/11/08 454,545 457,386
Yellow Roadway Corp..................... LOC Ba1 BBB- 1.75 12/11/08 545,455 548,864
------------
3,973,667
------------
See Notes to Financial Statements
11
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2003 -- (continued)
Ratings/(1)/
-----------
Interest Maturity Principal
Industry Description Type Moody's S&P Rate Date/(2)/ Amount Value
- ------------------------------------------------------------------------- - -------------------------
Chemicals, Plastics and Rubber -- 6.06%
Huntsman Corp.@.............................. BTL-A B2 B 4.75% 3/31/07 $ 1,112,452 $ 1,047,930
Huntsman Corp.@.............................. BTL-B B2 B 7.75 3/31/07 842,247 793,397
Huntsman International, LLC.................. BTL-B B2 B- 4.25 6/30/07 1,414,794 1,422,222
Huntsman International, LLC.................. BTL-C B2 B- 4.50 6/30/08 1,414,794 1,422,458
Nalco Co..................................... BTL-B B1 BB 2.50 11/4/10 1,000,000 1,005,125
Rockwood Specialities Group, Inc............. BTL-C B1 B+ 2.75 7/23/10 1,500,000 1,508,437
Westlake Chemical Corp....................... BTL-B Ba3 BB 3.75 7/31/10 1,492,500 1,511,623
------------
8,711,192
------------
Containers, Packaging and Glass -- 8.89%
Berry Plastics Corp.......................... BTL-C B1 B+ 2.50 7/22/10 985,031 994,882
Berry Plastics Corp.......................... Delay Draw B1 B+ 2.50 7/22/10 500,000 501,250
Consolidated Container Co., LLC@............. BTL-B B3 B- 4.25 6/30/07 2,230,901 2,126,791
Constar International, Inc.@................. BTL-B B2 BB- 4.50 11/20/09 821,254 818,517
Graham Packaging Co.......................... Tranche 1 B3 B 4.00 2/14/10 1,494,737 1,508,003
Graphic Packaging International Co........... BTL-B B1 B+ 2.75 8/8/10 1,492,500 1,512,462
Owens-Illinois Group, Inc.................... BTL-A B2 BB 3.25 4/1/07 1,000,000 1,005,625
Owens-Illinois Group, Inc.................... BTL-B B2 BB 2.75 4/1/08 2,500,000 2,523,958
Pliant Corp. (Huntsman Pack)................. BTL-B B3 B+ 4.75 5/31/08 1,774,075 1,777,401
------------
12,768,889
------------
Diversified/Conglomerate Manufacturing -- 1.33%
Colfax Corp.................................. BTL-B Ba3 BB- 3.75 5/30/09 737,917 741,606
Colfax Corp.................................. BTL-C Ba3 BB- 6.25 5/30/10 166,667 166,667
St. Mary's Cement Corp....................... BTL-B B1 BB- 2.50 12/4/09 1,000,000 1,004,688
------------
1,912,961
------------
Diversified/Conglomerate Service -- 1.23%
Bridge Information Systems, Inc.(6)@+........ BTL-B NR NR 4.00 5/29/05 537,771 59,155
United Rental, Inc........................... BTL Ba3 BB 3.00 8/31/07 1,693,304 1,705,607
------------
1,764,762
------------
Ecological -- 0.82%
Allied Waste North America, Inc.............. BTL B1 BB- 2.75 1/15/10 846,429 857,679
Allied Waste North America, Inc.............. Tranche A B1 BB- 2.75 1/15/10 142,857 144,658
IT Group, Inc.(6)@+.......................... BTL-B NR D 3.38 6/1/06 2,114,716 169,177
------------
1,171,514
------------
Electronics -- 2.41%
Dynamic Details, Inc.@....................... Tranche B1 NR NR 4.50 4/22/05 82,899 74,609
Fairchild Semiconductor Corp................. BTL-B Ba3 B+ 2.50 6/19/08 1,492,500 1,506,492
Semiconductors Components Industries, LLC.... BTL-E B3 B 3.25 8/4/07 434,874 436,777
Solectron Corp.@............................. Revolver B1 B+ 3.00 2/12/04 1,500,000 1,443,750
------------
3,461,628
------------
See Notes to Financial Statements
12
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2003 -- (continued)
Ratings/(1)/
-----------
Interest Maturity Principal
Industry Description Type Moody's S&P Rate Date/(2)/ Amount Value
- ------------------------------------------------------------------ - -------------------------
Farming and Agriculture -- 1.70%
Seminis Vegetable Seeds, Inc.............. BTL-B NR NR 3.25% 9/29/09 $ 997,500 $ 1,010,592
United Industries Corp.................... BTL-B B1 B+ 4.00 1/20/06 1,413,195 1,423,794
------------
2,434,386
------------
Healthcare, Education and Childcare -- 8.55%
Conmed, Inc............................... BTL-C Ba3 BB- 2.25 12/15/09 1,872,832 1,895,072
Connecticare Capital, LLC................. BTL B1 B+ 3.75 10/30/09 987,500 997,992
Cross Country Healthcare, Inc............. BTL Ba1 BB- 3.25 6/5/09 745,570 756,753
Dade Behring, Inc......................... BTL-B B1 BB 2.75 10/3/08 722,779 730,007
Da Vita, Inc.............................. BTL-B Ba3 BB- 2.25 3/31/09 1,989,226 2,002,368
Hanger Orthopedic Group, Inc.............. BTL-B NR B+ 2.75 6/30/09 1,000,000 1,010,000
Iasis Healthcare Corp..................... BTL-B B1 B+ 4.25 2/7/09 1,380,000 1,396,819
Insight Health Services Acquisition Corp.. BTL-B B1 B+ 3.50 10/17/08 977,494 982,382
Oxford Health Plans, Inc.................. BTL Ba2 BB+ 2.25 4/30/09 497,500 499,915
Pacificare Health Systems, Inc............ BTL Ba3 BB+ 2.75 6/3/08 995,000 1,003,291
Quintiles Transnational Corp.............. BTL-B B1 BB- 4.25 9/25/09 997,500 1,008,722
------------
12,283,321
------------
Home and Office Furnishings, Housewares -- 0.62%
National Bedding Co....................... BTL-B B1 B+ 3.75 8/31/08 876,889 885,247
------------
Hotels, Motels, Inns, and Gaming -- 3.86%
Extended Stay America, Inc. .............. BTL-B Ba3 BB- 3.75 1/15/08 1,844,913 1,864,746
Marina District Finance Co., Inc.......... BTL-B B2 B+ 4.00 12/13/07 1,496,250 1,515,888
Penn National Gaming...................... BTL-D B1 BB- 2.50 9/1/07 550,292 557,085
Wyndham International, Inc.@.............. BTL-I B2 B- 4.75 6/30/06 1,682,530 1,605,240
------------
5,542,959
------------
Leisure, Amusement, Entertainment -- 2.09%
Affinity Group, Inc....................... BTL-B1 Ba3 BB- 4.00 6/17/09 425,357 426,620
Affinity Group, Inc....................... BTL-B2 Ba3 BB- 4.00 6/17/09 1,063,393 1,066,550
Vivendi Universal Entertainment, LLP...... BTL-B Ba3 BB 2.75 6/30/08 1,500,000 1,512,375
------------
3,005,545
------------
Mining, Steel, Iron and Nonprecious Metals -- 1.91%
CII Carbon, LLC@.......................... BTL NR NR 3.00 6/25/08 203,048 194,926
Ispat Inland LP(7)@#...................... BTL-B Caa2 B- 3.75 7/16/05 1,216,364 1,013,068
Ispat Inland LP(7)@#...................... BTL-C Caa2 B- 3.75 7/16/06 1,216,364 1,013,068
Ispat Sidbec, Inc.@#...................... BTL-B Caa2 B- 4.25 7/16/04 305,174 262,449
Ispat Sidbec, Inc.@#...................... BTL-C Caa2 B- 4.75 7/16/05 305,174 262,449
------------
2,745,960
------------
See Notes to Financial Statements
13
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2003 -- (continued)
Ratings/(1)/
------------
Interest Maturity Principal
Industry Description Type Moody's S&P Rate Date/(2)/ Amount Value
- ----------------------------------------------------------------------- - -------------------------
Oil and Gas -- 2.29%
Basic Energy Services, Inc.@.............. BTL-B B1 B 3.50% 10/3/09 $ 744,643 $ 746,504
Tesoro Petroleum Corp. ................... Sr. Secured B1 BB- 5.50 4/15/08 995,000 1,027,752
Williams Production Co.@.................. BTL B2 B+ 3.75 5/30/07 1,492,500 1,513,022
------------
3,287,278
------------
Personal and Nondurable Consumer Products -- 1.67%
Church & Dwight Co., Inc.................. Tranche B Ba3 BB 2.25 9/30/07 1,380,000 1,397,768
Playtex Products, Inc..................... BTL-C B2 B 3.50 5/31/09 994,949 996,505
------------
2,394,273
------------
Personal, Goods and Misc. Services -- 1.24%
Alderwoods Group, Inc..................... BTL B2 B+ 3.25 9/17/08 894,149 907,283
Domino's, Inc............................. BTL B1 B+ 2.50 6/25/10 870,513 880,579
------------
1,787,862
------------
Printing and Publishing -- 3.94%
Dex Media East, LLC....................... BTL-B Ba3 BB- 2.50 5/8/09 822,169 830,648
Dex Media West, LLC....................... BTL-B Ba3 BB- 2.75 3/9/10 1,415,278 1,432,969
Haight Crossing Operating Co.@............ BTL B3 CCC+ 4.50 8/20/08 1,493,750 1,508,688
R.H. Donnelly, Inc........................ BTL-B2 Ba3 BB 2.25 6/30/10 990,086 1,004,044
Reader's Digest Associations, Inc......... BTL-B Ba1 BB 3.00 5/20/08 882,586 886,289
------------
5,662,638
------------
Retail Stores -- 1.40%
General Nutrition Centers, Inc............ BTL-B B1 B+ 3.00 12/5/09 1,000,000 1,010,313
Quality Stores (Central Tractor)(6)@#+.... BTL-B NR NR 3.75 4/30/06 868,632 --
Weight Watchers International, Inc........ BTL-B Ba1 BB 2.25 12/31/09 881,798 891,057
Weight Watchers International, Inc........ BTL-C Ba1 BB 2.25 12/31/09 113,202 114,298
------------
2,015,668
------------
Telecommunications -- 7.78%
Alamosa PCS, Inc.@........................ BTL NR CC 3.50 2/14/08 879,870 871,071
Centennial Puerto Rico Operations Corp. .. BTL-B B3 B- 3.25 5/31/07 364,876 366,114
Centennial Puerto Rico Operations Corp. .. BTL-C B3 B- 3.50 11/30/07 569,055 570,986
Crown Castle Operating Co................. BTL-B B1 B- 3.50 9/30/10 997,500 1,013,442
Nextel Finance Co. ....................... BTL-E Ba3 BB- 2.25 12/15/10 2,722,500 2,738,879
Ntelos, Inc.@............................. BTL-B NR B 4.00 7/25/07 1,430,097 1,408,646
Qwest Corp................................ BTL-A Ba3 B- 4.75 6/30/07 1,000,000 1,055,000
Rural Cellular Corp....................... BTL-B B3 B- 3.50 10/3/08 1,107,001 1,110,065
Rural Cellular Corp....................... BTL-C B3 B- 3.75 4/3/09 1,107,001 1,109,867
TSI Telecommunications Services, Inc.@.... BTL-B B1 B+ 4.50 12/31/06 924,885 926,041
------------
11,170,111
------------
See Notes to Financial Statements
14
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2003 -- (continued)
Ratings/(1)/
-----------
Interest Maturity Principal
Industry Description Type Moody's S&P Rate Date/(2)/ Amount Value
- ----------------------------------------------------------------- - ------------------------
Textiles and Leather -- 0.00%
Globe Manufacturing Corp.(6)@#+........ BTL-B NR NR 2.75% 7/15/06 $ 837,014 $ --
------------
Utilities -- 3.74%
AES Corp............................... BTL B2 B+ 4.00 4/30/08 1,500,000 1,514,866
Allegheny Energy Supply Co............. 2nd Lien B3 B 10.50 4/18/05 143,202 143,000
Allegheny Energy Supply Co............. 2nd Lien B3 B 6.00 4/18/05 1,283,452 1,281,647
Calpine Corp.@......................... BTL B2 B 5.75 7/16/07 2,493,750 2,433,277
Weststar Energy, Inc.@................. Revolver Ba2 BB+ 3.00 6/6/05 6,667 6,542
------------
5,379,332
------------
Total Loans (Cost $125,754,628)..................................... $122,707,963
------------
COMMON STOCK-- 0.06% Shares
Telecommunications -- 0.06 %
Global Crossing Holding LTD (Cost $94,465).......................... 2,699 83,670
------------
REGISTERED INVESTMENT COMPANIES -- 13.09%
SSgA Money Market Fund (Cost $18,802,218)........................... 18,802,218 $ 18,802,218
------------
TOTAL INVESTMENTS -- 98.56%
(Cost $144,651,311*)................................................ $141,593,851
------------
OTHER ASSETS AND LIABILITIES, NET -- 1.44%.............................. $ 2,065,645
------------
NET ASSETS -- 100.00%................................................... $143,659,496
============
- --------
* See Note 6
@ Illiquid security
# Fair valued
+ Non-income producing securities
BTLBank Term Loan
LOCLine of Credit
NR Security is not rated.
(1)Bank loans rated below Baa by Moody's Investor Service, Inc. or BBB by
Standard & Poor's Group are considered below investment grade. Ratings are
unaudited. Ratings provided as of December 31,2003.
(2)Loans in the Fund's portfolio are generally subject to mandatory and/or
optional prepayment. Because of these mandatory prepayment conditions and
because there may be significant economic incentives for a Borrower to
prepay, prepayments may occur. As a result, the actual remaining maturity
may be substantially less than the stated maturities shown. The Fund
estimates that the maturity of the Loans held in its portfolio will be
approximately 55 months.
(3)The Fund invests in Senior Loans which generally pay interest at rates which
are periodically re-determined by reference to a base lending rate plus a
premium. These base lending rates are generally either the lending rate
offered by one or more major European banks, such as the London Inter-Bank
Offer Rate ("LIBOR") or the prime rate offered by one or more major United
States banks, or the certificate of deposit rate. Senior Loans are generally
considered to be restrictive in that the Fund is ordinarily contractually
obligated to receive approval from the Agent Bank and/or borrower prior to
the disposition of a Senior Loan.
(4)Company has filed Chapter 11 bankruptcy.
(5)Parent company is in default of interest payments.
(6)Loan is in default of interest payment.
(7)Market value is composed of 500,000 par value sales with an approximate
settlement date of February 23, 2004 at a price of 73.25 and 716,364
remaining par value at a market price of 90.2918.
See Notes to Financial Statements
15
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2003
Note 1. Organization of the Fund
The SunAmerica Senior Floating Rate Fund, Inc. (the "Fund"), is a
non-diversified closed-end, investment management company. The Fund is
organized as a Maryland corporation and is registered under the Investment
Company Act of 1940, as amended. The Fund is managed by AIG SunAmerica Asset
Management Corp. (the "Adviser" or "SAAMCo"), an indirect wholly-owned
subsidiary of American International Group, Inc. ("AIG"). The Fund's
investment objective is to provide as high a level of current income as is
consistent with the preservation of capital by investing primarily in senior
secured floating rate loans.
The Fund may offer four classes of shares. Class B shares are sold to the
public at net asset value and are subject to an Early Withdrawal Charge
which declines from 3% in the first year after purchase to zero after the
fourth year. Class C shares are sold to the public at net asset value and
are subject to an Early Withdrawal Charge of 1% in the first year after
purchase. Class D shares are sold and redeemed at net asset value, and were
issued to shareholders of the CypressTree Senior Floating Rate Fund upon its
merger into the Fund on May 11, 2001. Class D shares are sold only to
investors participating in a fee-based investment advisory program (wrap
program) or agency commission program, or to current Class D shareholders.
Class A shares are not currently offered, and are available only upon the
conversion of Class B and C shares after being held by the shareholders for
eight and ten years, respectively. The share classes differ in their
respective distribution and service fees. All classes have equal rights to
assets and voting privileges.
Indemnifications: Under the Fund's organizational documents, its officers
and directors are indemnified against certain liability arising out of the
performance of their duties to the Fund. In addition, in the normal course
of business the Fund enters into contracts that contain a variety of
representations and warranties which provide general indemnifications. The
Fund's maximum exposure under these arrangements are unknown as this would
involve future claims that may be made against the Fund that have not yet
occurred. However, the Fund expects the risk of loss to be remote.
Note 2. Significant Accounting Policies
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could
differ from these estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of their
financial statements:
Security Valuation: The Fund's investments in loan interests ("Loans") are
valued in accordance with guidelines established by the Board of Directors.
Under the Fund's current guidelines, Loans for which
16
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2003 -- (continued)
an active secondary market exists to a reliable degree in the subadviser's
opinion will be valued at the mean of the last available bid and asked
prices in the market for such Loans, as provided by a Board-approved loan
pricing service. Loans for which an active secondary market does not exist
to a reliable degree in the subadviser's opinion will be valued at fair
value, which is intended to approximate market value. In valuing a Loan at
fair value, the following factors will be considered, (a) the
creditworthiness of the borrower and any intermediate participants, (b) the
terms of the Loan, (c) recent prices in the market for similar Loans, if
any, and (d) recent prices in the market for instruments of similar quality,
rate, and period until next interest rate reset and maturity. Other
portfolio securities may be valued on the basis of prices furnished by one
or more pricing services that determine prices for normal,
institutional-size trading units of such securities using market
information, transactions for comparable securities and various
relationships between securities which are generally recognized by
institutional traders. In certain circumstances, other portfolio securities
are valued at the last sale price on the exchange that is the primary market
for such securities, or the last quoted bid price for those securities for
which the over-the-counter market is the primary market or for listed
securities in which there were no sales during the day. Securities listed on
the NASDAQ exchange will be valued using the NASDAQ Official Closing Price
("NOCP"). Generally, the NOCP will be the last sale price unless the
reported trade for the security is outside the range of the bid/ask price.
In such cases, the NOCP will be normalized to the nearer of the bid or ask
price. Securities for which market quotations are not readily available or
if a development/event occurs that may significantly impact the value of a
security, then these securities may be fair valued as determined pursuant to
procedures adopted in good faith by the Board of Directors (the
"Directors"). Short-term investments which mature in less than 60 days are
valued at amortized cost, if their original maturity was 60 days or less, or
by amortizing their value on the 61st day prior to maturity, if their
original term to maturity exceeded 60 days.
The senior Loans in which the Fund primarily invests are generally not
listed on any exchange and the secondary market for those senior Loans is
comparatively illiquid relative to markets for other fixed income
securities. Consequently, obtaining valuations for those Loans may be more
difficult than obtaining valuations for actively traded securities. Thus,
the value upon disposition on any given Loan may differ from its current
valuation.
Repurchase Agreements: The Fund may enter into repurchase agreements. When
the Fund enters into a repurchase agreement through its custodian, it
receives delivery of the underlying securities, the amount of which at the
time of purchase and each subsequent business day is required to be
maintained at such a level that the market value is equal to at least 102%
of the resale price, and the Fund will take constructive receipt of all
securities underlying the repurchase agreements until such agreements
expire. If the seller defaults, the Fund would suffer a loss to the extent
that proceeds from the sale of underlying securities were less than the
repurchase price. At December 31, 2003, the Fund did not enter into any
repurchase agreements.
Investment Income, Expenses, Dividends and Distributions to Shareholders and
Income Taxes: Interest income is determined on the basis of interest
accrued, adjusted for amortization of premium or
17
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2003 -- (continued)
discount. Dividend income is recorded on the ex-dividend date. Facility fees
received, which were $817,951 for the year ended December 31, 2003, are
amortized as income over the stated life of the Loans. Other income,
including amendment fees, commitment fees, letter of credit fees, etc.,
which were $296,133 for the year ended December 31, 2003, are recorded as
income when received or contractually due to the Fund. Net investment
income, other than class-specific expenses, and realized and unrealized
gains and losses, are allocated daily to each class of shares based upon the
relative net asset value of outstanding shares of each class of shares at
the beginning of the day (after adjusting for the current capital share
activity of the respective class).
Expenses common to each class of shares are allocated among the classes
based upon their relative net asset values of each class or other
appropriate methods. Interest earned on cash balances held at the custodian
are shown as custody credits on the Statement of Operations.
The Fund issues and redeems shares, invests in securities and distributes
dividends from net investment income and net realized gains which are paid
in cash or are reinvested at the discretion of shareholders. These
activities are reported in the Statement of Changes in Net Assets.
Dividends from net investment income are accrued daily and paid monthly.
Capital gain distributions, if any, are paid annually. The amount of
dividends and distributions from net investment income and net realized
capital gains are determined and presented in accordance with federal income
tax regulations, which may differ from accounting principles generally
accepted in the United States of America. These "book/tax" differences which
include different treatments for interest on defaulted securities, post
October losses and organization costs, are either considered temporary or
permanent in nature. To the extent these differences are permanent in
nature, such amounts are reclassified within the capital accounts at fiscal
year end based on their federal tax-basis treatment; temporary differences
do not require reclassification. Net investment income/loss, net realized
gain/loss, and net assets are not affected. The Fund intends to comply with
the requirements of the Internal Revenue Code, as amended, applicable to
regulated investment companies and distribute all of its taxable income,
including any net realized gain on investments, to its shareholders.
Therefore, no federal tax provision is required.
Securities Transactions. Realized gains or losses on the sale of portfolio
assets are recognized on the settlement date using the specific
identification method.
Statement of Cash Flows: Information on financial transactions which have
been settled through the receipt or disbursement of cash is presented in the
Statement of Cash Flows. The cash amount shown in the Statement of Cash
Flows is the amount included in the Fund's Statement of Assets and
Liabilities and represents cash on hand at its custodian bank account, and
does not include any short-term investments at December 31, 2003.
18
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2003 -- (continued)
Note 3. Capital Shares
The Fund has 1,000,000,000 of $.01 par value shares authorized that may be
issued in four different classes, of which three classes were outstanding
for the year ended December 31, 2003. Share activity for the year ended
December 31, 2003, and the year ended December 31, 2002, was as follows:
Year Ended Year Ended
December 31, 2003 December 31, 2002
------------------------ ------------------------
Shares Capital Shares Capital
Class B ---------- ------------ ---------- ------------
Sold......................... 302,522 $ 2,767,847 378,450 $ 3,414,848
Reinvestment of distributions 85,439 772,401 113,871 1,013,694
Redeemed..................... (1,171,973) (10,584,805) (1,549,117) (13,874,711)
---------- ------------ ---------- ------------
Net increase/(decrease)... (784,012) $ (7,044,557) (1,056,796) $ (9,446,169)
========== ============ ========== ============
Year Ended Year Ended
December 31, 2003 December 31, 2002
------------------------ ------------------------
Shares Capital Shares Capital
Class C ---------- ------------ ---------- ------------
Sold......................... 4,140,153 $ 38,020,343 510,065 $ 4,590,514
Reinvestment of distributions 276,003 2,497,941 395,405 3,533,372
Redeemed..................... (3,097,227) (27,885,351) (6,686,276) (59,883,782)
---------- ------------ ---------- ------------
Net increase/(decrease)... 1,318,929 $ 12,632,933 (5,780,806) $(51,759,896)
========== ============ ========== ============
Year Ended Year Ended
December 31, 2003 December 31, 2002
------------------------ ------------------------
Shares Capital Shares Capital
Class D ---------- ------------ ---------- ------------
Sold......................... 182,414 $ 1,684,560 44,039 $ 397,771
Reinvestment of distributions 54,475 492,983 80,245 717,010
Redeemed..................... (515,575) (4,658,230) (1,331,606) (11,869,996)
---------- ------------ ---------- ------------
Net increase/(decrease)... (278,686) $ (2,480,687) (1,207,322) $(10,755,215)
========== ============ ========== ============
19
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2003 -- (continued)
In order to provide shareholders with liquidity and the ability to receive
net asset value on a disposition of shares, the Fund will make monthly
offers to repurchase a percentage (usually 10%) of outstanding shares at net
asset value. Shareholders are sent a Notification of Repurchase Offer seven
to fourteen days before each monthly repurchase offer. During the year ended
December 31, 2003 the Fund made twelve Repurchase Offers, and redeemed the
amounts shown in the table below. In no case was a monthly Repurchase Offer
oversubscribed.
Amount Tendered Amount Tendered
------------------ ------------------
Shares Capital Shares Capital
------- ---------- ------- ----------
January. 544,789 $4,783,248 July..... 449,405 $4,121,142
February 512,120 4,486,319 August... 198,490 1,818,179
March... 959,429 8,480,084 September 316,337 2,916,275
April... 425,988 3,814,635 October.. 279,036 2,583,197
May..... 222,556 2,013,990 November. 275,330 2,557,816
June.... 278,219 2,542,519 December. 321,077 3,010,982
Note 4. Purchases And Sales Of Securities
During the year ended December 31, 2003, the Fund's cost of purchases of
Loans and proceeds from Loan sales were $159,415,182 and $90,164,808,
respectively.
Note 5. Investment Advisory Agreement And Other Transactions With Affiliates
The Fund currently maintains an Investment Advisory Agreement with SAAMCo,
who is responsible for managing the corporate and business affairs of the
Fund, and selects, contracts with and compensates the subadviser to manage
the Fund's assets. As compensation for its services the Adviser receives
from the Fund an annual fee equal to the following percentage of average
daily gross assets: 0.85% for the first $1 billion of average daily gross
assets; 0.80% for average daily gross assets between $1 billion and $2
billion; and 0.75% for average daily gross assets of more than $2 billion.
For purposes of computing the advisory fee, average daily gross assets are
determined by deducting from total assets of the Fund all liabilities except
the principal amount of any indebtedness from money borrowed, including debt
securities issued by the Fund. For the year ended December 31, 2003, SAAMCo
received advisory fees in the amount of $1,091,115.
Stanfield Capital Partners, LLC ("Stanfield") acts as sub-adviser to the
Fund pursuant to a Subadvisory Agreement with SAAMCo. Under the Subadvisory
Agreement, Stanfield manages the investment and reinvestment of the Fund's
assets. As compensation for its services as subadviser, Stanfield is
entitled to receive from SAAMCo an annual fee paid monthly equal to the
following percentage of average daily gross assets: 0.25% for the first $1
billion of average daily gross assets; 0.20% for average daily gross
20
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2003 -- (continued)
of more than $1 billion. Stanfield received $320,905 as compensation for its
services. Average daily gross assets are computed as described above. The
fee paid to the subadviser is not an additional charge to the Fund or its
shareholders.
SAAMCo also serves as the Fund's Administrator under an Administration
Agreement and is responsible for managing the Fund's business affairs,
subject to supervision by the Fund's Board of Directors. For its services,
SAAMCo receives an annual fee equal to 0.40% of average daily gross assets
of the Fund. Average daily gross assets are computed as described above. For
the year ended December 31, 2003 SAAMCo received administrator fees in the
amount of $515,003.
The Fund has adopted Distribution Plans ("Plans") applicable to Class B and
C shares to use the assets attributable to that class of shares of the Fund
to finance certain activities relating to the distribution of shares to
investors. The Plans are compensation plans providing for the payment to AIG
SunAmerica Capital Services, Inc. ("SACS"), of a fixed percentage of 0.50%
of average net assets to finance distribution expenses, and 0.25% of average
net assets to finance service fees. For the year ended December 31, 2003
SACS received distribution fees and early withdrawal charges on redemptions
in the amount of $860,534 and $82,363, respectively. For the year ended
December 31, 2003 SACS voluntarily waived fees for the following classes:
Class B $131,164, Class C $350,942.
Pursuant to the Investment Advisory Agreement, the Adviser voluntarily
waived the advisory fee and reimbursed expenses in order to maintain an
expense ratio on the Fund that did not exceed a certain voluntary rate. For
the period from January 1, 2003 to August 31, 2003 the rates were 1.45% for
Class B, 1.50% for Class C, and 1.25% for Class D. Effective September 1,
2003 the rates are 1.75% for Class B, 1.75% for Class C, and 1.25% for
Class D. For the year ended December 31, 2003, the Adviser waived fees and
reimbursed expenses for the following classes: Class B $160,209, Class C
$434,090, and Class D $82,911.
Note 6. Federal Income Taxes
The following details the tax basis distributions as well as the components
of distributable earnings. As of December 31, 2003, the tax basis components
of distributable earnings differ from the amounts reflected in the Statement
of Assets and Liabilities by temporary book/tax differences primarily
arising from post-October losses of $1,934,501.
Distributable Earnings Tax Distributions Tax Distributions
- ---------------------------------------- -------------------- ------------------------------------
For the year ended December 31, 2003 For the year ended December 31, 2002
- ------------------------------------------------------------- ------------------------------------
Long-term Gains/ Unrealized Long-term Long-term
Ordinary Capital Loss Appreciation Ordinary Capital Ordinary Capital
Income Carryover (Depreciation) Income Gains Income Gains
- -------- ---------------- -------------- ---------- --------- ---------- ---------
$27,221 $(24,212,647) $(3,057,460) $5,563,653 $ -- $7,219,296 $ --
21
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2003 -- (continued)
Capital Loss Carryforwards. At December 31, 2003 capital loss carryforwards
available to offset future recognized gains were $24,212,647, with $9,669
expiring in 2005, $334,309 expiring in 2007, $1,179,134 expiring in 2008,
$9,997,029 expiring in 2009, $7,736,363 expiring in 2010, and $4,956,143
expiring in 2011.
Unrealized appreciation and depreciation in the value of investments at
December 31, 2003 for federal income tax purposes were as follows:
Gross unrealized appreciation $ 874,953
Gross unrealized depreciation (3,932,413)
-----------
Net unrealized depreciation.. $(3,057,460)
===========
Note 7. Director Retirement Plan
The Directors of the SunAmerica Senior Floating Rate Fund, Inc. have adopted
the SunAmerica Disinterested Trustees' and Directors' Retirement Plan
("Retirement Plan"). The Retirement Plan provides generally that if an
unaffiliated Director who has at least 10 years of consecutive service as a
Disinterested Director of the Fund (an "Eligible Director") retires after
reaching age 60 but before age 70, or who has at least 5 years of
consecutive service after reaching age 65 but before age 70, or dies while a
Director, such person will be eligible to receive a retirement or death
benefit from the Fund. As of each birthday, prior to the 70th birthday, but
in no event for a period greater than 10 years, each Eligible Director will
be credited with an amount equal to 50% of his or her regular fees
(excluding committee fees) for services as a Disinterested Director of the
Fund for the calendar year in which such birthday occurs. In addition, an
amount equal to 8.50% of any amounts credited under the preceding clause
during prior years, is added to each Eligible Director's account until such
Eligible Director reaches his or her 70th birthday. An Eligible Director may
elect to receive any benefits payable under the Retirement Plan, at his or
her election either in one lump sum or in up to fifteen annual installments.
Any undistributed amounts continue to accrue interest at 8.50% per year. As
of December 31, 2003, the Fund had accrued $3,601 for the Retirement Plan,
which is included in accrued expenses on the Statement of Assets and
Liabilities and for the year ended December 31, 2003, expensed $3,601 for
the Retirement Plan, which is included in Directors fee and expenses on the
Statement of Operations.
Note 8. Commitments and Contingencies
The Fund currently has an agreement with State Street Bank & Trust Company
that provides a $20,000,000 committed unsecured Line of Credit to the Fund
which will be used for cash overdraft protection. The Fund pays a commitment
fee of 0.10% on the unused portion annually, and interest is charged on any
borrowed amounts at the currently effective Federal Funds Rate plus 0.50%.
During the year ended December 31, 2003, the Fund had borrowings outstanding
for 56 days under the line of credit and incurred $11,786 in interest
charges related to these borrowings. The Fund's average
22
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2003 -- (continued)
amount of debt under the line of credit for the days utilized was $4,276,595
at a weighted average interest of 1.77%.
The Fund, pursuant to the exemptive relief granted by the Securities and
Exchange Commission are permitted to participate in an interfund lending
program among investment companies advised by SAAMCo or an affiliate. The
interfund lending program allows the participating funds to borrow money
from and lend money to each other for temporary or emergency purposes. An
interfund loan will be made under this facility only if the participating
funds receive a more favorable interest rate than would otherwise be
available from a typical bank for a comparable transaction. For the year
ended December 31, 2003 the Fund did not participate in this program.
Note 9. Senior Loan Participation Commitments
The Fund invests primarily in participations and assignments, or acts as a
party to the primary lending syndicate of a Variable Rate Senior Loan
interest to United States corporations, partnerships, and other entities. If
the lead lender in a typical lending syndicate becomes insolvent, enters
receivership or, if not FDIC insured, enters into bankruptcy, the Fund may
incur certain costs and delays in receiving payment, or may suffer a loss of
principal and/or interest. When the Fund purchases a participation of a
Senior Loan interest, the Fund typically enters into a contractual agreement
with the lender or other third party selling the participation, but not with
the borrower directly. As such, the Fund assumes the credit risk of the
Borrower, Selling Participant or other persons positioned between the Fund
and the Borrower.
Note 10. Unfunded Loan Commitments
On December 31, 2003, the Fund had the following unfunded loan commitments
which could be extended at the option of the Borrower:
Name Type Amount
---- ---------------- ----------
Alamosa Holdings, LLC.......... Revolver $ 120,130
Allegheny Energy Supply Co. ... Letter of Credit 73,346
Amkor Technology, Inc.......... Letter of Credit 19,343
Amkor Technology, Inc.......... Revolver 1,969,294
Level 3 Communications, Inc.... Revolver 2,141,462
Lyondell Chemical Co........... Revolver 1,500,000
Pacificare Health Systems, Inc. Revolver 426,423
Westar Energy, Inc............. Revolver 993,333
23
SunAmerica Senior Floating Rate Fund, Inc.
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders of the SunAmerica Senior Floating
Rate Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations, of
changes in net assets and of cash flows and the financial highlights present
fairly, in all material respects, the financial position of the SunAmerica
Senior Floating Rate Fund, Inc. (the "Fund") at December 31, 2003, the results
of its operations and its cash flows for the year then ended, the changes in
its net assets for each of the two years in the period then ended and the
financial highlights for each of the periods presented, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit 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, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 2003 by correspondence with the
custodian and selling or agent banks and alternative auditing procedures where
replies of confirmation were not received, provide a reasonable basis for our
opinion. The financial statements of the Fund for the periods prior to January
1, 2001 were audited by other independent accountants whose report dated
February 23, 2001 expressed an unqualified opinion on those statements.
PricewaterhouseCoopers LLP
New York, New York
February 19, 2004
24
SunAmerica Senior Floating Rate Fund, Inc.
DIRECTORS INFORMATION -- (unaudited)
The following table contains basic information regarding the Directors that
oversee operations of the Fund and other investment companies within the
Fund complex.
Number of
Term of Funds in
Position Office and Fund Other
Name, Held With Length of Complex Directorships
Address and SunAmerica Time Principal Occupations Overseen by Held by
Date of Birth* Complex Served(4) During Past 5 Years Director(1) Director(2)
-------------- ---------- ---------- -------------------------------- ----------- ---------------------
Judith L. Craven Director 2000- Retired Administrator. 75 Director, A.G. Belo
DOB: October 6, 1945 present Corporation
(1992 to present);
Director, Sysco
Corporation
(1996 to present);
Director, Luby's Inc.
(1998 to present).
William F. Devin Director 1998- Retired. 75 Member of the Board
DOB: December 30, 1938 present of Governors,
Boston Stock
Exchange (1985-
Present).
Samuel M Eisenstat Director 2001- Attorney, solo practitioner. 47 Director of North
DOB: March 7, 1940 present European Oil
Royalty Trust.
Stephen J. Gutman Director 2001- Partner and Managing Member 47 None
DOB: May 10, 1943 present of B.B. Associates LLC
(menswear specialty retailing
and other activities) (June 1988
to present).
Peter A. Harbeck(3) Director 2001- President, CEO and Director, 84 None
DOB: January 23, 1954 present SAAMCo (August 1995 to
present). Director, SACS
(August 1995 to present).
- --------
* The business address for each Director is the Harborside Financial
Center, 3200 Plaza 5, Jersey City, NJ 07311-4992.
(1) The "Fund Complex" consists of all registered investment company
portfolios for which SAAMCo serves as investment adviser or business
manager. The "Fund Complex" includes the SunAmerica Money Market Funds
(2 funds), SunAmerica Equity Funds (7 funds), SunAmerica Income Funds
(6 funds), SunAmerica Style Select Series, Inc. (15 portfolios),
SunAmerica Strategic Investment Series, Inc. (7 funds), Anchor Series
Trust (9 portfolios), SunAmerica Senior Floating Rate Fund, Inc. (1
fund), SunAmerica Series Trust (32 portfolios), VALIC Company I (22
portfolios), VALIC Company II (15 funds), Anchor Pathway Funds (7
series) and Seasons Series Trust (19 portfolios).
25
SunAmerica Senior Floating Rate Fund, Inc.
DIRECTORS INFORMATION -- December 31, 2003 -- (continued) (unaudited)
(2) Directorships of companies required to report to the Securities and
Exchange Commission under the Securities Exchange Act of 1934 (i.e.
"public companies") or other investment companies registered under the
Investment Company Act of 1940.
(3) Interested Director, as defined in the Investment Company Act of 1940.
(4) Directors serve until their successors are duly elected and qualified,
subject to the Board's retirement plan discussed in Note 7 of the
financial statements.
Additional information concerning the Directors is contained in the
Statement of Additional Information and is available without charge by
calling (800) 858-8850.
26
[LOGO] AIG Sun America
Mutual Funds
AIG SunAmerica Asset Management Corp.
Harborside Financial Center
3200 Plaza 5
Jersey City, NJ 07311-4992
Directors Investment Adviser This report is submitted solely for the general
Judith L. Craven AIG SunAmerica Asset Management Corp. information of shareholders of the Fund.
William F. Devin Harborside Financial Center Distribution of this report to persons other
Samuel M. Eisenstat 3200 Plaza 5 than shareholders of the Fund is authorized
Stephen J. Gutman Jersey City, NJ 07311-4992 only in connection with a currently effective
Peter A. Harbeck prospectus, setting forth details of the Fund,
Distributor which must precede or accompany this report.
Officers AIG SunAmerica Capital Services, Inc.
Robert M. Zakem, President Harborside Financial Center
Donna M. Handel, Treasurer 3200 Plaza 5
Joseph P. Kelly, Secretary Jersey City, NJ 07311-4992
J. Steven Neamtz, Vice President
Abbe P. Stein, Vice President and Shareholder Servicing Agent
Assistant Secretary AIG SunAmerica Fund Services, Inc.
Stacey V. Morrison, Assistant Harborside Financial Center
Secretary 3200 Plaza 5
Laura E. Filippone, Assistant Jersey City, NJ 07311-4992
Treasurer
Gregory R. Kingston, Vice Custodian and Transfer Agent
President and Assistant State Street Bank and Trust Company
Treasurer P.O. Box 219373
Robert A. Chopyak, Assistant Kansas City, MO 64141
Treasurer
Distributed by:
AIG SunAmerica Capital Services, Inc.
SFANN-12/03
Item 2. Code of Ethics.
The SunAmerica Senior Floating Rate Fund, Inc. ("the Fund") has adopted a Code
of Ethics applicable to its Principal Executive and Principal Accounting
Officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002.
Item 3. Audit Committee Financial Expert.
Currently, the SunAmerica Senior Floating Rate Fund, Inc. does not have an
Audit Committee member who possesses all of the attributes required to be an
"audit committee financial expert" as defined in instruction 2(b) of Item 3 of
Form N-CSR. However, the Board of Directors believes that each member of the
Audit Committee has substantial experience relating to the review of financial
statements and the operations of audit committees. Accordingly, the Board
believes that the members are qualified to evaluate the Fund's financial
statements, supervise the Fund's preparation of its financial statements, and
oversee the work of the Fund's independent auditors. The Board of Directors is
currently seeking an individual who will qualify as an audit committee financial
expert.
Item 4. Principal Accountant Fees and Services.
(a) - (d) Aggregate fees billed to the Fund for the last two fiscal
years for professional services rendered by the Fund's principal
accountant were as follows:
2003 2002
Audit Fees $60,219 $55,219
Audit-Related Fees $26,095 $0
Tax Fees $10,255 $7,500
All Other Fees $0 $0
Audit Fees include amounts related to the audit of the Fund's annual
financial statements and services normally provided by the principal
accountant in connection with statutory and regulatory filings.
Audit-Related Fees principally include a SAS No. 100 review of the
Fund's Semiannual Shareholder Report. Tax Fees principally include tax
compliance, tax advice, tax planning and preparation of tax returns.
(e)
(1) The Fund's audit committee pre-approves all audit services
provided by the Fund's principal accountant for the Fund and
all non-audit services provided by the Fund's principal
accountant for the Fund, its investment adviser and any entity
controlling, controlled by, or under common control with the
investment adviser ("Adviser Affiliate") that provides ongoing
services to the Fund, if the engagement by the investment
adviser or Adviser Affiliate relates directly to the
operations and financial reporting of the Fund.
(2) No services included in (b) - (d) above were approved pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not Applicable.
(g) The aggregate fees billed for the most recent fiscal year and the
preceding fiscal year by the Fund's principal accountant for non-audit
services rendered to the Registrant, its investment adviser, and Adviser
Affiliate that provides ongoing services to the Fund for 2003 and 2002
were $1,513,312 and $801,305, respectively.
(h) Non-audit services rendered to the Registrant's investment adviser
and any Adviser Affiliate that were not pre-approved pursuant to
Paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X were considered by
the Fund's audit committee as to whether they were compatible with
maintaining the principal accountant's independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Reserved.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
PROXY VOTING POLICIES AND PROCEDURES
Proxy Voting Responsibility. The Trust has adopted policies and
procedures for the voting of proxies relating to portfolio securities. The
policies and procedures were drafted according to recommendations by a proxy
voting committee composed of senior management of the Trust and the Trust's
investment adviser. The policies and procedures enable the Trust to vote proxies
in a manner consistent with the best interests of the Trust's shareholders.
The Trust has retained a proxy voting service, the Investor
Responsibility Research Center (the "IRRC"), to effect votes on behalf of the
Trust according to the Trust's policies and procedures, and to assist the Trust
with recordkeeping of proxy votes.
Except as otherwise described below regarding case-by-case voting matters
and when conflicts of interest arises, neither SunAmerica nor any subadviser has
discretion concerning proxy voting decisions.
Company Management Recommendations. When determining whether to invest in
the securities of a particular company, one of the key factors the portfolio
manager considers is the quality and depth of the company's management. In
holding portfolio securities, the Trust is seeking to maximize the investment
value for shareholders, but not necessarily exercise control over the issuers of
portfolio securities or otherwise advance a particular social agenda. The
Trust's policies and procedures therefore provide that the Trust will generally
vote in support of management recommendations on most corporate matters. When a
Trust's portfolio manager is dissatisfied with a company's management, the Trust
typically will sell the holding.
Case-By-Case Voting Matters. The policies and procedures identify certain
voting matters that will be decided on a case-by-case basis. In these
circumstances, the Trust may request guidance or a recommendation from the proxy
voting committee, the portfolio manager or other appropriate personnel of
SunAmerica and/or the subadviser of a Fund. In these instances, such person(s)
will recommend the vote that will maximize value for and is in the best
interests of the Trust's shareholders.
Examples of the Trust's Positions on Voting Matters. Consistent with the
approaches described above, the following are examples of the Trust's voting
positions on specific matters:
. Vote with management recommendations on most corporate matters;
. Vote with management recommendations on proposals to increase or decrease
authorized common stock;
. Vote against the authorization of preferred stock if the company's board
has unlimited rights to set the terms and conditions of the shares;
. Vote for a management proposal to decrease authorized preferred stock or
cancel a class or series of preferred stock;
. Vote on a case-by-case basis regarding finance, merger and acquisition
matters;
. Vote against most shareholder proposals;
. Abstain from voting on social responsibility or environmental matters,
unless the fund's objective is directly related to the social or
environmental matter in question;1
. Not vote proxies for index funds/portfolios and passively managed
funds/portfolios;2 and
. May vote in favor of or against proposals relating to stock option plans
and other management compensation issues depending on the details of the
plan.
Conflicts of Interest. Senior management of the Trust and SunAmerica,
including members of the proxy voting committee and legal and compliance
personnel, and/or a subadviser, will resolve conflicts of interest presented by
a proxy vote. In practice, application of the Trust's proxy voting policies and
procedures will in most instances adequately address any possible conflicts of
interest, as the policies and procedures were pre-determined by the proxy voting
committee, and votes are effected according to the policies and procedures by
the IRRC, an independent third party. Also, the proxy voting committee consists
of members who are not involved in marketing or other business units that may be
likely to present conflicts.
- ---------
/1/ In these circumstances, the Fund will consider the effect that the vote's
outcome may have on the issuing company and the value of its securities
as part of the Fund's overall investment evaluation of whether to retain
or sell the company's securities. The Fund will either retain or sell the
securities according to the best interests of the Fund's shareholders.
/2/ The Board of the Trustees has determined that the costs of voting proxies
for index and passively managed funds will generally outweigh any
benefits that may be achieved by voting such proxies because the outcome
will not directly affect whether the fund retains a particular security.
That is, the fund will retain or sell a particular security based on
objective, rather than subjective, criteria. For example, in the case of
an index fund, the fund will make a determination to retain or sell a
security based on whether the index retains or deletes the security.
However, if a situation arises where a vote presents a conflict between
the interests of the Trust's shareholders and the interests of SunAmerica, the
Trust's principal underwriter, or one of SunAmerica's or the underwriter's
affiliates, and the conflict is known to the Trust, senior management of the
Trust and SunAmerica, including the proxy voting committee, will be consulted.
Any Individual with a known conflict may be required by the proxy voting
committee to recuse himself or herself from being involved in the proxy voting
decision. Senior management, including the proxy voting committee, will evaluate
the situation and ensure that the Trust selects the vote that is in the best
interests of the Trust's shareholders.
Proxy Voting Records. The IRRC will maintain records of voting decisions
for each vote cast on behalf of the Trust. Pursuant to SEC requirements,
beginning in August of 2004, on an annual basis the Trust will make available on
its website its proxy voting record for the one-year period ending on June 30th.
The proxy voting record will also be available on the SEC's website at
http://www.sec.gov.
Item 8. Reserved.
Item 9. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures. Based on that evaluation, the
registrant's management, including the President and Treasurer,
concluded that the registrant's disclosure controls and procedures are
effective.
(b) There was no change in the Registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act) that occurred during the Registrant's second fiscal
half-year that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial
reporting.
Item 10. Exhibits.
(a) (1) Code of Ethics applicable to its Principal Executive and Principal
Accounting Officers pursuant to Section 406 of the Sarbanes-Oxley
Act of 2002 attached hereto as Exhibit 99.406.Code of Ethics.
(b) (1) Certification pursuant to Rule 30a-2 under the Investment Company
Act of 1940 (17 CFR 270.30a-2) attached hereto as Exhibit 99.CERT.
(2) Certification pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
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.
SunAmerica Senior Floating Rate Fund, Inc.
By: /s/Robert M. Zakem
------------------
Robert M. Zakem
President
Date: March 9, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/Robert M. Zakem
------------------
Robert M. Zakem
President
Date: March 9, 2004
By: /s/Donna M. Handel
------------------
Donna M. Handel
Treasurer
Date: March 9, 2004