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
Date of reporting period: June 30, 2004
Item 1. Reports to Shareholders
SunAmerica Senior Floating Rate Fund, Inc. Semi-Annual report at June 30, 2004.
[GRAPHIC]
SunAmerica
THE RETIREMENT SPECIALIST
Senior Floating Rate Fund
2004 SEMIANNUAL REPORT
[LOGO] AIG Sun America
Mutual Funds
Table of Contents
SHAREHOLDER LETTER................. 1
STATEMENT OF ASSETS AND LIABILITIES 2
STATEMENT OF OPERATIONS............ 3
STATEMENT OF CHANGES IN NET ASSETS. 4
STATEMENT OF CASH FLOWS............ 5
FINANCIAL HIGHLIGHTS............... 6
PORTFOLIO OF INVESTMENTS........... 10
NOTES TO FINANCIAL STATEMENTS...... 15
DIRECTORS INFORMATION.............. 21
June 30, 2004 SEMIANNUAL REPORT
Shareholder Letter
Dear Shareholders,
On June 30, 2004, the semiannual period for the SunAmerica Senior Floating
Rate Fund came to a close. We are pleased to report that overall during this
period, loans within the portfolio experienced price increases due to
significant investor demand. At the same time, credit fundamentals of companies
issuing loans continued to improve, driven by strength in the U.S. economy.
Both of these factors drove the portfolio's positive performance during the
first six months of 2004.
Investment in sectors that performed strongly during this time frame also
benefited the Fund. Chemicals continued to be the Fund's largest holding,
followed by Healthcare, Broadcasting and Containers. It is also interesting to
note that strong investor inflows into the Fund augmented the portfolio's size
over the semiannual period, helping us to boost investment in other sectors,
including the Automotive Industry.
Over the past six months, investment in cyclical industries have generated
the strongest gains for the portfolio, a dynamic we have capitalized upon fully
as we sought, and succeeded in, augmenting performance. In the coming months,
we will continue to exercise judicious care over the selection process for
loans considered for inclusion in the SunAmerica Senior Floating Rate Fund.
We thank you for your continued investment in the Fund.
Sincerely,
Chris Jansen, Senior Portfolio Manager
Stanfield Capital Partners, LLC
- --------
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.
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES -- June 30, 2004 -- (unaudited)
ASSETS:
Investments in loans and securities, at value*.................................................................... $178,227,618
Short-term securities*............................................................................................ 29,545,411
Cash.............................................................................................................. 623,701
Receivables for:
Fund shares sold................................................................................................ 1,562,078
Dividends and interest.......................................................................................... 911,773
Investments sold................................................................................................ 4,271,506
Prepaid expenses and other assets................................................................................. 44,731
Due from investment advisor for expense reimbursements/fee waivers................................................ 35,314
Due from distributor for fee waivers.............................................................................. 59,093
------------
Total assets.................................................................................................... 215,281,225
------------
LIABILITIES:
Payables for:
Fund shares redeemed............................................................................................ 3,938,896
Investments purchased........................................................................................... 6,028,425
Investment advisory and management fees......................................................................... 136,414
Distribution and service maintenance fees....................................................................... 109,567
Administration fees............................................................................................. 65,606
Directors' fees and expenses.................................................................................... 649
Other accrued expenses.......................................................................................... 124,228
Dividends payable................................................................................................. 172,397
Commitments (Note 10)............................................................................................. --
------------
Total liabilities............................................................................................... 10,576,182
------------
Net assets.................................................................................................. $204,705,043
============
NET ASSETS WERE COMPOSED OF:
Capital shares at par value of $.01............................................................................... $ 217,300
Additional paid-in capital........................................................................................ 232,143,352
------------
232,360,652
Accumulated undistributed net investment income (loss)............................................................ (44,479)
Accumulated net realized gain (loss) on investments............................................................... (27,636,905)
Unrealized appreciation (depreciation) on investments............................................................. 25,775
------------
Net assets.................................................................................................. $204,705,043
============
Class A Class B Class C Class D
NET ASSET VALUES: -------- ----------- ------------ ------------
Net assets...................................................................... $166,208 $27,491,593 $158,323,137 $ 18,724,105
Shares outstanding.............................................................. 17,640 2,918,322 16,806,381 1,987,610
Net Asset Value, offering and redemption price per share (excluding any
applicable contingent deferred sales charges).................................. $ 9.42 $ 9.42 $ 9.42 $ 9.42
======== =========== ============ ============
*Identified cost
Investment securities........................................................................................... $178,201,843
============
Short-term securities........................................................................................... $ 29,545,411
============
See Notes to Financial Statements
2
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF OPERATIONS -- For the six months ended June 30, 2004 --
(unaudited)
INVESTMENT INCOME:
Interest.......................................................................... $ 3,399,755
Dividends......................................................................... 79,692
Facility and other fee income (Note 2)............................................ 403,056
-----------
Total investment income........................................................ 3,882,503
-----------
EXPENSES:
Investment advisory and management fees........................................... 712,582
Distribution and service maintenance fees:
Class A......................................................................... 77
Class B......................................................................... 101,027
Class C......................................................................... 469,888
Transfer agent fees:
Class A......................................................................... 210
Class B......................................................................... 12,882
Class C......................................................................... 35,746
Class D......................................................................... 5,378
Administration fees............................................................... 335,381
Accounting service fees........................................................... 24,300
Custodian fees.................................................................... 32,553
Audit and tax fees................................................................ 41,420
Reports to shareholders........................................................... 45,320
Legal fees........................................................................ 24,100
Directors' fees and expenses...................................................... 16,961
Interest expense.................................................................. 109
Other expenses.................................................................... 48,165
-----------
Total expenses before fee waivers, expense reimbursements and custody credits.. 1,906,099
Fees waived and expenses reimbursed by investment advisor and distributor...... (474,611)
Custody credits earned on cash balances........................................ (2,523)
-----------
Net expenses................................................................... 1,428,965
-----------
Net investment income (loss)...................................................... 2,453,538
-----------
REALIZED AND UNREALIZED GAIN/(LOSS):
Net realized gain (loss) on investments........................................... (1,489,757)
Change in unrealized appreciation (depreciation) on investments................... 3,083,235
-----------
Net realized and unrealized gain (loss) on investments............................ 1,593,478
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................... $ 4,047,016
===========
See Notes to Financial Statements
3
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF CHANGES IN NET ASSETS
For the six months For the year
ended ended
June 30, 2004 December 31,
(unaudited) 2003
------------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss).......................................................... $ 2,453,538 $ 5,512,446
Net realized gain (loss) on investments............................................... (1,489,757) (5,464,399)
Change in unrealized appreciation (depreciation) on investments....................... 3,083,235 13,022,369
------------ ------------
Net increase (decrease) in net assets resulting from operations......................... 4,047,016 13,070,416
Distributions to shareholders from:
Net investment income (Class A)....................................................... (986) --
Net investment income (Class B)....................................................... (391,603) (1,250,414)
Net investment income (Class C)....................................................... (1,813,236) (3,676,409)
Net investment income (Class D)....................................................... (259,343) (636,830)
------------ ------------
Total distributions to shareholders..................................................... (2,465,168) (5,563,653)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 3) 59,463,699 3,107,689
------------ ------------
Total increase (decrease) in net assets................................................. 61,045,547 10,614,452
Net Assets:
Beginning of period..................................................................... 143,659,496 133,045,044
------------ ------------
End of period*.......................................................................... $204,705,043 $143,659,496
============ ============
*Includes accumulated undistributed net investment income (loss)........................ $ (44,479) $ (32,849)
============ ============
See Notes to Financial Statements
4
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF CASH FLOWS -- For the six months ended June 30, 2004 --
(unaudited)
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Net increase in net assets from operations.................................................................. $ 4,047,016
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities
Purchase of loans......................................................................................... (123,376,027)
Proceed from loans sold................................................................................... 23,738,419
Loan principal paydowns................................................................................... 45,919,194
Purchases -- funding fees................................................................................. 76,073
Purchase of short-term securities, net.................................................................... (10,743,193)
Accretion of facility fee income.......................................................................... (200,166)
Increase in dividends and interest receivable............................................................. (256,358)
Increase in receivables for securities sold............................................................... (1,767,131)
Decrease in amount due from investment advisor............................................................ 55,555
Increase in amount due from distributor................................................................... (32,126)
Increase in other assets.................................................................................. (44,731)
Increase in payable for securities purchased.............................................................. 6,028,425
Increase in payable to the adviser........................................................................ 33,223
Decrease in other liabilities............................................................................. (90,388)
Unrealized appreciation on securities..................................................................... (3,083,235)
Net realized loss from investments........................................................................ 1,489,757
-------------
Net cash used by operating activities....................................................................... $ (58,205,693)
-------------
Cash flows from financing activities:
Proceeds from shares sold................................................................................... 75,141,826
Payment on shares redeemed.................................................................................. (17,175,747)
Cash dividends paid (not including reinvested dividends of $1,608,289)...................................... (803,043)
-------------
Net cash provided for financing activities.................................................................. $ 57,163,036
-------------
Net decrease in cash........................................................................................ (1,042,657)
Cash balance at beginning of period......................................................................... 1,666,358
-------------
Cash balance at end of period............................................................................... $ 623,701
=============
See Notes to Financial Statements
5
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS
Class A
-----------
For the
period
4/28/04*
through
06/30/04
(unaudited)
-----------
Net Asset Value, Beginning of Period........................................... $ 9.42
Investment Operations:
Net investment income (loss)@.................................................. 0.05
Net realized and unrealized gain (loss) on investments......................... (0.00)
------
Total from investment operations............................................. 0.05
------
Distributions:
Dividends from net investment income........................................... (0.05)
------
Net Asset Value, End of Period................................................. $ 9.42
------
Total Return(1)................................................................ 0.55%
Ratios/Supplemental Data
Net assets, end of period ($000's)............................................. $ 166
Ratio of net expenses to average net assets.................................... 1.45%#
Ratio of net investment income to average net assets........................... 3.22%#
Portfolio turnover rate........................................................ 16%
Expense ratio before waiver of fees and reimbursement of expenses.............. 9.69%#
Net investment income ratio before waiver of fees and reimbursement of expenses (5.02)%#
- --------
* Inception date of class
@ 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
6
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS -- (continued)
Class B
----------------------------------------------------------
Six Months
ended Year Year Year Year Year
06/30/04 ended ended ended ended ended
(unaudited) 12/31/03 12/31/02 12/31/01 12/31/00* 12/31/99*
----------- -------- -------- -------- --------- ---------
Net Asset Value, Beginning of Period......... $ 9.33 $ 8.78 $ 9.03 $ 9.64 $ 9.98 $ 9.98
Investment Operations:
Net investment income (loss)................. 0.14@ 0.40@ 0.40@ 0.58@ 0.75 0.69
Net realized and unrealized gain (loss) on
investments................................. 0.09 0.54 (0.26) (0.60) (0.33) --
------- ------- ------- ------- ------- -------
Total from investment operations............ 0.23 0.94 0.14 (0.02) 0.42 0.69
------- ------- ------- ------- ------- -------
Distributions:
Dividends from net investment income......... (0.14) (0.39) (0.39) (0.59) (0.76) (0.69)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period............... $ 9.42 $ 9.33 $ 8.78 $ 9.03 $ 9.64 $ 9.98
------- ------- ------- ------- ------- -------
Total Return(1).............................. 2.43% 10.95% 1.54% (0.41)% 4.61% 7.13%
Ratios/Supplemental Data
Net assets, end of period ($000's)........... $27,492 $26,565 $31,906 $42,335 $50,966 $37,439
Ratio of net expenses to average net assets.. 1.75%# 1.54% 1.45% 1.45% 1.42% 0.70%
Ratio of net investment income to average
net assets.................................. 2.89%# 4.35% 4.42% 6.23% 7.85% 6.87%
Portfolio turnover rate...................... 16% 75% 112% 69% 41% 30%
Expense ratio before waiver of fees and
reimbursment of expenses.................... 2.37%# 2.57% 2.51% 2.47% 2.31% 2.29%
Net investment income ratio before waiver of
fees and reimbursement of expenses.......... 2.27%# 3.33% 3.36% 5.21% 6.96% 5.28%
- --------
@ Calculated based upon average shares outstanding.
# Annualized
* 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
7
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS -- (continued)
Class C
------------------------------------------------------------
Six Months
ended Year Year Year Year Year
06/30/04 ended ended ended ended ended
(unaudited) 12/31/03 12/31/02 12/31/01 12/31/00* 12/31/99*
----------- -------- -------- -------- --------- ---------
Net Asset Value, Beginning of Period................... $ 9.33 $ 8.78 $ 9.03 $ 9.64 $ 9.98 $ 9.98
Investment Operations:
Net investment income (loss)........................... 0.13@ 0.38@ 0.40@ 0.57@ 0.76 0.69
Net realized and unrealized gain (loss) on investments. 0.10 0.56 (0.27) (0.60) (0.33) --
-------- -------- ------- -------- -------- --------
Total from investment operations...................... 0.23 0.94 0.13 (0.03) 0.43 0.69
-------- -------- ------- -------- -------- --------
Distributions:
Dividends from net investment income................... (0.14) (0.39) (0.38) (0.58) (0.77) (0.69)
-------- -------- ------- -------- -------- --------
Net Asset Value, End of Period......................... $ 9.42 $ 9.33 $ 8.78 $ 9.03 $ 9.64 $ 9.98
-------- -------- ------- -------- -------- --------
Total Return(1)........................................ 2.43% 10.92% 1.47% (0.45)% 4.60% 7.12%
Ratios/Supplemental Data
Net assets, end of period ($000's)..................... $158,323 $103,726 $86,101 $140,664 $227,662 $173,322
Ratio of net expenses to average net assets............ 1.75%# 1.59% 1.50% 1.50% 1.43% 0.79%
Ratio of net investment income to average net assets... 2.88%# 4.22% 4.33% 6.28% 7.85% 6.82%
Portfolio turnover rate................................ 16% 75% 112% 69% 41% 30%
Expense ratio before waiver of fees and reimbursement
of expenses........................................... 2.33%# 2.51% 2.48% 2.52% 2.32% 2.25%
Net investment income ratio before waiver of fees and
reimbursement of expenses............................. 2.30%# 3.31% 3.36% 5.26% 6.96% 5.36%
- --------
@ Calculated based upon average shares outstanding.
# Annualized
* 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 D
-------------------------------------
For the
Six Months period
ended Year Year 5/02/01*
06/30/04 ended ended through
(unaudited) 12/31/03 12/31/02 12/31/01
----------- -------- -------- --------
Net Asset Value, Beginning of Period................................................. $ 9.33 $ 8.78 $ 9.03 $ 9.46
Investment Operations:
Net investment income (loss)@........................................................ 0.15 0.43 0.43 0.35
Net realized and unrealized gain (loss) on investments............................... 0.10 0.54 (0.27) (0.42)
------- ------- ------- -------
Total from investment operations.................................................... 0.25 0.97 0.16 (0.07)
------- ------- ------- -------
Distributions:
Dividends from net investment income................................................. (0.16) (0.42) (0.41) (0.36)
------- ------- ------- -------
Net Asset Value, End of Period....................................................... $ 9.42 $ 9.33 $ 8.78 $ 9.03
------- ------- ------- -------
Total Return(1)...................................................................... 2.68% 11.28% 1.72% (0.79)%
Ratios/Supplemental Data
Net assets, end of period ($000's)................................................... $18,724 $13,369 $15,037 $26,372
Ratio of net expenses to average net assets.......................................... 1.25%# 1.25% 1.25% 1.25%#
Ratio of net investment income to average net assets................................. 3.38%# 4.63% 4.58% 5.66%#
Portfolio turnover rate.............................................................. 16% 75% 112% 69%
Expense ratio before waiver of fees and reimbursement of expenses.................... 1.60%# 1.86% 1.77% 2.27%#
Net investment income ratio before waiver of fees and reimbursement of expenses...... 3.03%# 4.02% 4.06% 4.64%#
- --------
* Inception date of class
@ 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
9
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2004 -- (unaudited)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- -----------------------------------------------------------------------------------------------------------------
LOANS/(3)/ -- 87.03%
Automobile -- 4.94%
Collins & Aikman Products Co.......... BTL-B B2 B+ 4.75% 12/31/05 $ 712,700 $ 720,807
Intermet Corp......................... BTL-B B2 B+ 4.25 3/31/09 995,000 996,244
Metaldyne Co., LLC.................... BTL-D B3 BB- 4.25 12/31/09 1,997,491 1,999,780
Plastech Engineered Products, Inc..... 2nd Lien NR NR 4.50 3/31/11 1,000,000 1,014,375
Polypore, Inc......................... BTL B2 B+ 2.50 11/12/11 1,200,000 1,221,750
Tenneco Automotive, Inc............... BTL-B B2 B+ 3.25 12/12/10 686,207 701,218
Tenneco Automotive, Inc............... Tranche B1 B2 B+ 3.25 12/17/10 310,345 317,133
TRW Automotive Acquisitions Corp...... BTL-A1 B1 BB+ 1.75 2/28/08 1,200,000 1,211,125
TRW Automotive Acquisitions Corp...... BTL-D1 B1 BB+ 2.25 2/28/11 1,040,668 1,060,397
United Components, Inc................ BTL-C NR BB- 2.75 6/30/10 856,667 868,981
-----------
10,111,810
-----------
Beverage, Food and Tobacco -- 5.56%
Atkins Nutritionals, Inc.............. 1st Lien B3 B+ 3.25 10/29/09 965,000 968,619
Atkins Nutritionals, Inc.............. 2nd Lien NR B+ 5.75 10/29/09 1,000,000 1,006,250
Commonwealth Brands, Inc.............. BTL B2 B+ 4.00 8/28/07 881,500 896,926
Dean Foods Co......................... BTL-C Ba2 BB+ 1.75 7/15/08 498,750 503,582
Doane Pet Care Co..................... BTL-B B2 B- 5.00 12/31/05 283,756 286,890
Doane Pet Care Co..................... BTL-C B2 B- 5.00 12/31/06 55,127 55,679
Dole Food Co., Inc.................... BTL-D B2 BB- 2.25 9/28/08 216,991 220,426
Dole Food Co., Inc.................... Incremental BTL NR BB- 12.20 9/28/08 500,000 507,656
Luigino's, Inc........................ BTL-B B2 B+ 3.00 4/02/11 997,500 1,014,333
Merisant Co........................... BTL-B NR B+ 2.75 1/11/10 835,784 841,321
NBTY, Inc............................. BTL-C Ba3 BB 2.00 12/18/09 1,039,484 1,049,229
Nellson Nutraceutical, Inc............ BTL B2 B+ 3.00 10/04/09 1,912,963 1,912,963
Pinnacle Foods Holdings............... BTL NR BB- 2.75 10/25/10 458,484 464,215
Pinnacle Foods Holdings............... Delay Draw NR BB- 2.75 10/25/10 1,623,797 1,644,095
-----------
11,372,184
-----------
Broadcasting and Entertainment -- 7.63%
Cebridge Connections, Inc.@........... 1st Lien NR NR 3.25 2/23/09 698,250 706,978
Cebridge Connections, Inc.@........... 2nd Lien NR NR 6.00 2/23/10 1,296,750 1,293,508
Century Cable Holdings, LLC@(4)....... Discretionary BTL NR NR 4.71 12/31/09 2,500,000 2,415,000
Century -- TCI California, LP@(4)..... Revolver NR NR 2.00 12/31/07 1,000,000 988,304
Charter Communications Operating, LLC. Tranche B B3 CCC+ 3.25 4/27/11 2,500,000 2,492,613
DIRECTV Holdings, LLC................. BTL-B2 B1 BB- 2.25 3/06/10 2,064,796 2,095,768
Insight Midwest Holdings, LLC......... BTL-B B1 BB 2.75 12/31/09 995,000 1,010,132
RCN Corp.(7).......................... BTL-B NR C 4.00 6/30/07 2,621,784 2,608,675
Sinclair Broadcast Group, Inc......... BTL-C Ba2 BB 1.75 12/31/09 750,000 759,375
Sinclair Broadcast Group, Inc......... BTL-A Ba2 BB 1.75 6/30/09 1,250,000 1,257,812
-----------
15,628,165
-----------
Buildings & Real Estate -- 3.12%
Associated Materials, Inc............. BTL NR B+ 2.50 8/29/10 736,842 746,053
Builders Firstsource, Inc.@........... Tranche A NR B+ 3.25 2/25/10 1,496,250 1,511,212
Crescent Real Estate Funding XII, LP.. BTL NR BB 2.25 1/12/06 598,670 604,282
PGT Industries, Inc................... BTL-A B2 B 3.00 1/29/10 997,500 1,009,969
Ply Gem Industries, Inc............... BTL B2 B+ 2.50 2/27/11 1,271,813 1,275,390
Ply Gem Industries, Inc............... CND TL B2 B+ 2.50 2/27/11 224,437 225,630
St. Mary's Cement, Inc................ BTL-B NR BB- 2.50 12/04/09 995,000 1,011,169
-----------
6,383,705
-----------
Cargo Transport -- 1.99%
Moran Transportation Co.@............. BTL NR BB- 2.50 8/08/09 990,000 999,900
Pacer International, Inc.............. BTL B2 BB- 2.75 6/10/10 1,435,294 1,455,926
United States Shipping, LLC........... BTL Ba3 BB 2.25 4/13/10 864,249 872,351
Yellow Roadway Corp................... BTL B1 BBB- 1.75 12/11/08 194,805 196,571
Yellow Roadway Corp................... LOC B1 BBB- 1.82 12/11/08 545,454 550,398
-----------
4,075,146
-----------
10
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2004 -- (unaudited) (continued)
Ratings/(1)/
-----------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- -------------------------------------------------------------------------------------------------------------------
Chemicals, Plastics and Rubber -- 8.18%
Brenntag AG.................................. BTL-B2 NR NR 2.75% 3/02/12 $1,500,000 $ 1,522,032
Celanese Americas Corp....................... BTL-C B1 B+ 4.25 4/06/11 1,000,000 1,033,333
Celanese Americas Corp....................... BTL-1st Lien B1 B+ 2.50 4/06/11 689,815 701,168
Cognis Deutschland Eins GMBH................. 2nd Lien B3 BB- 4.75 11/15/13 1,500,000 1,500,000
Hercules, Inc................................ BTL-B Ba2 BB 2.25 10/08/10 897,750 912,152
Huntsman Corp.@.............................. BTL-A B3 B 4.00 3/31/07 1,112,452 1,112,452
Huntsman Corp.@.............................. BTL-B B3 B 9.00 3/31/07 176,410 176,410
Huntsman International, LLC.................. BTL-B B3 B- 4.00 6/30/07 1,414,794 1,417,890
Huntsman International, LLC.................. BTL-C B3 B- 4.25 6/30/08 1,414,794 1,417,890
Kosa B.V..................................... BTL-B1 B1 BB 3.00 4/29/11 1,388,235 1,411,662
Kosa B.V..................................... BTL-B2 B1 BB 3.00 4/29/11 611,765 622,088
Nalco Co..................................... BTL-B B2 B+ 2.50 11/04/10 913,209 927,620
Rockwood Specialities Group, Inc............. BTL-C NR B+ 2.75 7/23/10 1,492,500 1,499,030
Wellman, Inc................................. 2nd Lien B3 B+ 6.75 2/10/10 1,000,000 988,125
Westlake Chemical Corp....................... BTL-B NR BB- 3.75 7/31/10 1,485,000 1,505,419
-----------
16,747,271
-----------
Containers, Packaging and Glass -- 7.41%
Appleton Papers, Inc......................... BTL NR BB 2.25 6/11/10 1,125,000 1,139,766
Berry Plastics Corp.......................... BTL-C NR B+ 2.50 7/22/10 944,185 958,938
Berry Plastics Corp.......................... Delay Draw NR B+ 2.50 7/22/10 500,000 505,000
Boise Cascade Corp........................... Revolver NR BB 1.33 6/30/05 1,250,000 1,246,875
Constar International, Inc................... BTL-B B3 BB- 4.50 11/20/09 817,096 831,054
Graham Packaging Co.......................... Tranche 1 B3 B 2.75 2/14/10 990,356 1,005,830
Graphic Packaging International, Inc......... BTL-B NR B+ 2.75 8/08/10 1,485,000 1,510,987
Owens-Illinois Group, Inc.................... BTL-A B3 BB- 2.75 4/01/07 1,000,000 1,008,229
Owens-Illinois Group, Inc.................... BTL-B1 B3 BB- 3.00 4/01/08 2,500,000 2,530,802
Precise Technology, Inc...................... 1st Lien B2 B+ 3.00 3/25/11 748,125 751,165
Precise Technology, Inc...................... 2nd Lien B3 B+ 6.00 3/25/11 500,000 499,688
Ranpak Corp.................................. BTL-B NR NR 8.00 5/26/11 790,000 790,987
Ranpak Corp.................................. 1st Lien B3 B- 3.75 5/26/10 1,000,000 995,000
Waddington North America, Inc................ BTL-B B2 B 3.00 4/07/11 1,386,000 1,387,733
-----------
15,162,054
-----------
Diversified/Conglomerate Manufacturing -- 3.66%
Colfax Corp.@................................ BTL-B B1 BB- 3.00 5/30/09 709,167 713,156
Colfax Corp.@................................ BTL-C B2 BB- 6.25 5/30/10 166,667 170,833
Enersys Capital, Inc......................... 1st Lien B2 BB- 2.50 3/17/11 598,500 608,506
Enersys Capital, Inc......................... 2nd Lien B3 BB- 5.00 3/17/12 900,000 914,625
Invensys International Holdings, Ltd......... BTL-B1 B3 B+ 3.50 9/05/09 3,287,671 3,328,767
Invensys International Holdings, Ltd......... 2nd Lien B3 B+ 4.75 12/05/09 1,712,329 1,759,418
-----------
7,495,305
-----------
Diversified/Conglomerate Service -- 1.64%
Bridge Information Systems, Inc.+@(5)........ BTL-B NR NR 4.00 5/29/05 521,115 160,243
InfoUSA, Inc................................. BTL B1 BB 2.50 3/25/09 958,333 970,312
Syniverse Technologies, Inc.@................ BTL-B B1 B+ 3.50 12/31/06 2,199,520 2,222,203
-----------
3,352,758
-----------
Ecological -- 0.99%
Allied Waste North America, Inc.............. BTL-B B2 BB 2.75 1/15/10 846,429 863,195
Allied Waste North America, Inc.............. BTL-D NR BB 2.50 1/15/10 1,000,000 1,019,250
Allied Waste North America, Inc.............. Tranche A B2 BB 2.75 1/15/10 142,857 145,523
-----------
2,027,968
-----------
Electronics -- 2.13%
Fairchild Semiconductor Corp................. BTL-B NR B+ 2.50 6/19/08 1,485,000 1,509,131
Semiconductors Components Industries, LLC.... BTL-F Caa1 B 2.75 8/04/07 1,006,204 1,016,057
UGS Corp..................................... BTL-B B2 B+ 2.75 5/27/11 1,800,000 1,835,438
-----------
4,360,626
-----------
11
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2004 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
Farming and Agriculture -- 0.46%
AGCO Corp.................................................. BTL Ba3 BB+ 2.25% 1/31/06 $ 923,167 $ 940,765
-----------
Healthcare, Education and Childcare -- 7.89%
Conmed Corp................................................ BTL-C B1 BB- 2.25 12/15/09 1,717,776 1,741,395
Connecticare Capital, LLC.................................. BTL B2 B+ 3.75 10/30/09 912,500 920,484
Dade Behring, Inc.......................................... BTL-B B1 BB 2.25 10/03/08 524,290 531,171
Da Vita, Inc............................................... BTL-B NR BB 2.00 3/31/09 1,978,451 2,006,583
Hanger Orthopedic Group, Inc............................... BTL-B B2 B+ 2.75 6/30/09 992,500 1,000,358
Insight Health Services Acquisition Corp................... BTL-B NR B+ 3.50 10/17/08 972,490 973,706
Magellan Health Services, Inc.............................. BTL B3 B+ 3.50 8/15/08 513,889 520,313
Magellan Health Services, Inc.............................. LOC B3 B+ 3.62 8/15/08 444,444 450,000
Medco Health Solutions, Inc................................ BTL-A NR BBB 1.25 3/26/09 975,000 980,891
Multiplan, Inc............................................. BTL B3 B+ 2.75 3/04/09 1,496,250 1,511,213
Oxford Health Plans, Inc................................... BTL NR BB+ 2.00 4/30/09 495,000 496,856
Pacificare Health Systems, Inc............................. BTL B1 BB+ 2.50 6/03/08 990,000 1,007,325
Quintiles Transnational Corp............................... BTL-B B2 BB- 4.25 9/25/09 992,500 1,006,147
Team Health, Inc........................................... BTL-B B2 B+ 3.25 10/31/08 1,995,000 1,999,987
Youth and Family Centered Services, Inc.@.................. BTL-B B3 B+ 4.00 5/28/11 1,000,000 1,000,000
-----------
16,146,429
-----------
Home and Office Furnishings, Housewares and Durables -- 3.58%
Buhrmann U.S., Inc......................................... Tranche B1 B1 BB- 2.75 12/31/10 1,741,250 1,757,212
Hillman Group, Inc.@....................................... BTL-B NR B 3.25 3/31/11 831,250 840,592
Holmes Group, Inc.......................................... 1st Lien B2 B 3.25 11/08/10 1,000,000 1,005,000
Holmes Group, Inc.......................................... 2nd Lien NR NR 7.50 5/06/11 500,000 505,000
Juno Lighting, Inc......................................... 2nd Lien NR NR 5.50 5/21/11 1,000,000 1,012,500
Maax Corp.................................................. BTL-B B2 B+ 2.75 6/04/11 1,200,000 1,217,250
Simmons Co................................................. BTL-B B3 B+ 2.75 12/19/11 979,259 993,132
-----------
7,330,686
-----------
Hotels, Motels, Inns, and Gaming -- 1.75%
Marina District Finance Co., Inc........................... BTL-B B3 B+ 4.00 12/13/07 1,424,014 1,438,432
Penn National Gaming....................................... BTL-D B1 BB- 2.50 9/01/07 520,075 527,678
Wyndham International, Inc................................. BTL-I B2 B- 4.75 6/30/06 1,628,799 1,618,038
-----------
3,584,148
-----------
Leisure, Amusement, Entertainment -- 4.77%
Affinity Group, Inc........................................ BTL-B1 NR B+ 4.00 6/17/09 346,684 350,295
Affinity Group, Inc........................................ BTL-B2 NR B+ 4.00 6/17/09 866,709 875,738
Metro-Goldwyn-Mayer Studios, Inc........................... BTL-B B1 B 2.50 4/30/11 2,000,000 2,010,000
Regal Cinemas, Inc......................................... BTL B1 BB- 2.75 11/10/10 1,450,795 1,469,837
Vivendi Universal Entertainment, LLP....................... BTL-B NR BBB- 2.75 6/30/08 1,500,000 1,510,078
Warner Music Group......................................... BTL-B B2 B+ 2.75 2/28/11 3,491,250 3,547,983
-----------
9,763,931
-----------
Mining, Steel, Iron and Nonprecious Metals -- 0.09%
CII Carbon, LLC@........................................... BTL NR NR 2.75 6/25/08 201,974 194,400
-----------
Oil and Gas -- 2.59%
ATP Oil & Gas Corp......................................... 1st Lien NR NR 8.50 3/29/09 997,500 1,002,487
Basic Energy Services, LP.................................. BTL-B B2 B 3.50 10/03/09 1,744,643 1,762,089
Tesoro Petroleum Corp...................................... BTL B1 BB- 5.50 4/15/08 990,000 1,022,175
Williams Production Co.@................................... BTL-C NR B+ 2.50 5/30/08 1,485,038 1,504,993
-----------
5,291,744
-----------
Personal and Nondurable Consumer Products -- 2.54%
American Safety Razor Co................................... Tranche B NR NR 3.25 4/29/11 700,000 708,313
American Safety Razor Co................................... Tranche C NR NR 7.00 10/29/11 300,000 301,500
Church & Dwight Co., Inc................................... Tranche B Ba3 BB 1.75 5/30/11 1,250,000 1,262,305
Sealy Mattress Co.......................................... BTL-B B3 B+ 2.75 4/06/12 1,875,000 1,907,227
United Industries Corp..................................... BTL B2 B+ 2.50 4/30/11 997,500 1,011,216
-----------
5,190,561
-----------
12
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2004 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- -------------------------------------------------------------------------------------------------------------
Personal, Goods and Misc. Services -- 0.84%
Alderwoods Group, Inc..................... BTL-B NR B+ 2.75% 9/17/08 $ 836,364 $ 849,955
Domino's, Inc............................. BTL NR B+ 2.25 6/25/10 857,398 874,680
------------
1,724,635
------------
Printing and Publishing -- 1.90%
Dex Media West, LLC....................... BTL-B B3 BB- 2.25 3/09/10 1,340,277 1,367,642
Haights Crossing Operating Co.@........... BTL NR CCC+ 4.50 8/20/08 1,486,263 1,523,419
R.H. Donnelly, Inc........................ BTL-B B1 BB 2.25 6/30/10 985,259 1,000,380
------------
3,891,441
------------
Retail Stores -- 2.70%
Alimentation Couche-Tard, Inc............. BTL NR BB- 2.25 12/17/10 610,714 617,330
American Achievement Corp................. BTL-B B2 B+ 2.50 3/25/11 997,500 1,011,528
Educate Operating Co., LLC................ BTL NR NR 3.00 3/30/11 1,995,000 2,018,691
General Nutrition Centers, Inc............ BTL-B B2 B+ 3.00 12/05/09 995,000 1,007,811
Home Interiors & Gifts, Inc.@............. BTL B3 B 4.25 3/31/11 892,969 869,528
Quality Stores (Central Tractor)+@#(4)(5). BTL-B NR NR 3.75 4/30/06 868,632 --
------------
5,524,888
------------
Telecommunications -- 4.73%
Centennial Cellular Operating Co., LLC.... BTL-B NR B- 2.75 2/09/11 1,496,250 1,506,404
Crown Castle Operating Co................. BTL-B NR B- 3.50 9/30/10 992,500 994,981
Dobson Cellular Systems, Inc.............. BTL B2 B- 3.50 3/31/10 990,013 992,179
Nextel Finance Co......................... BTL-E Ba3 BB+ 2.25 12/15/10 2,708,887 2,732,105
Ntelos, Inc............................... BTL-B NR B 4.00 7/25/07 1,416,513 1,402,347
Qwest Corp................................ BTL-A NR BB- 4.75 6/30/07 1,000,000 1,040,750
Western Wireless Corp..................... BTL-B B3 B- 3.00 5/28/11 1,000,000 1,013,750
------------
9,682,516
------------
Textiles and Leather -- 0.91%
Globe Manufacturing Corp.+@#(5)........... BTL-B NR NR 2.75 7/15/06 837,014 --
Springs Industries, Inc................... BTL-A NR BBB 3.25 3/05/07 1,862,069 1,871,962
------------
1,871,962
------------
Utilities -- 5.03%
AES Corp.................................. BTL B2 B+ 4.00 4/30/08 428,571 435,134
Allegheny Energy Supply Co................ BTL-B B3 B 3.00 3/08/11 897,750 912,900
Allegheny Energy Supply Co................ BTL-C B3 B 4.25 6/08/11 598,500 610,096
Astoria Energy, LLC@...................... 1st Lien B1 B 5.25 4/16/12 1,000,000 1,011,042
Calpine Corp.@............................ 2nd Lien NR B 5.75 7/16/07 2,481,250 2,223,130
La Grange Acquisition, LP................. BTL Ba3 B 3.00 1/18/08 1,050,000 1,065,750
NRG Energy, Inc........................... BTL-B NR B+ 4.00 6/23/10 922,953 953,175
NRG Energy, Inc........................... CLD NR B+ 4.00 6/23/10 520,833 537,891
Reliant Resources, Inc.................... BTL B2 B 4.00 3/15/07 2,542,001 2,557,096
------------
10,306,214
------------
Total Loans (Cost $178,086,829)........................................ $178,161,312
------------
13
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2004 -- (unaudited) (continued)
Value
Industry Description Shares (Note 2)
---------------------------------------------------------------------------------------
COMMON STOCK -- 0.03%
Oil and Gas -- 0.03%
Shaw Group, Inc.+....................................... 6,276 $ 63,576
------------
Telecommunications -- 0.00%
Global Crossing Holding, Ltd.+.......................... 175 2,730
------------
Total Common Stock (Cost $115,014)...................... 66,306
------------
Total Loans and Investment Securities (Cost $178,201,843) 178,227,618
------------
SHORT-TERM INVESTMENTS -- 14.43%
Registered Investment Companies -- 14.43%
SSgA Money Market Fund (Cost $29,545,411)............... 29,545,411 29,545,411
------------
TOTAL INVESTMENTS -- 101.49%
(Cost $207,747,254) (6)................................. 207,773,029
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.49)%............ (3,067,986)
------------
NET ASSETS -- 100.00%....................................... $204,705,043
============
- --------
+ Non-income producing securities
@ Illiquid security
# Fair valued
BTL Bank Term Loan
CDN TL Canadian Term Loan
CLD Credit Linked Deposit
LOC Line 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 June 30, 2004.
(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 62 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)Loan is in default of interest payment.
(6)See Note 6 for cost of investments on a tax basis.
(7)Company has filed Chapter 11 bankruptcy subsequent to June 30, 2004.
See Notes to Financial Statements
14
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2004 -- (unaudited)
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 U.S. generally
accepted accounting principals (GAAP) 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 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
15
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2004 -- (unaudited)
(continued)
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 June 30, 2004, the Fund did not enter into any
repurchase agreements.
Securities Transactions, Investment Income, Expenses, Dividends and
Distributions to Shareholders: Security transactions are recorded on a trade
date basis. Realized gains and losses on sales of investments are calculated
on the identified cost basis. Interest income is recorded on the accrual
basis, dividend income is recorded on the ex-dividend date. For financial
statement purposes, the Fund amortizes all premiums and accretes all
discounts. Facility fees received, which were $200,166 for the period ended
June 30, 2004, 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 $202,890 for the period ended June 30, 2004, 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). Interest earned on cash
balances held at the custodian are shown as custody credits on the statement
of operations.
Dividends from net investment income are accrued daily and paid monthly.
Capital gain distributions, if any, are paid annually. The Fund records
dividends and distributions to the shareholders on the ex-dividend date. 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 and post October losses, 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 by these reclassifications. 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.
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 June 30, 2004.
16
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2004 -- (unaudited)
(continued)
Note 3. Capital Share Transactions
The Fund has 1,000,000,000 of $.01 par value shares authorized that may be
issued in four different classes. Transactions in capital shares of each
class were as follows:
For the period
April 28, 2004-
June 30, 2004
(unaudited)
-------------------------
Shares Capital
Class A ---------- ------------
Shares sold................. 17,642 * $ 166,191 *
Reinvested distributions.... -- --
Shares redeemed............. (2) (22)
---------- ------------
Net increase (decrease).. 17,640 $ 166,169
========== ============
For the
period ended For the
June 30, 2004 year ended
(unaudited) December 31, 2003
------------------------- ------------------------
Shares Capital Shares Capital
Class B ---------- ------------ ---------- ------------
Shares sold................. 407,103 $ 3,824,453 302,522 $ 2,767,847
Reinvested distributions.... 27,597 259,614 85,439 772,401
Shares redeemed............. (364,833)* (3,432,408)* (1,171,973) (10,584,805)
---------- ------------ ---------- ------------
Net increase (decrease).. 69,867 $ 651,659 (784,012) $ (7,044,557)
========== ============ ========== ============
For the
period ended For the
June 30, 2004 year ended
(unaudited) December 31, 2003
------------------------- ------------------------
Shares Capital Shares Capital
Class C ---------- ------------ ---------- ------------
Shares sold................. 6,983,917 $ 65,659,978 4,140,154 $ 38,020,342
Reinvested distributions.... 121,484 1,142,886 276,003 2,497,941
Shares redeemed............. (1,421,010) (13,367,126) (3,097,227) (27,885,351)
---------- ------------ ---------- ------------
Net increase (decrease).. 5,684,391 $ 53,435,738 1,318,930 $ 12,632,932
========== ============ ========== ============
For the
period ended For the
June 30, 2004 year ended
(unaudited) December 31, 2003
------------------------- ------------------------
Shares Capital Shares Capital
Class D ---------- ------------ ---------- ------------
Shares sold................. 675,301 $ 6,348,755 182,414 $ 1,684,560
Reinvested distributions.... 21,876 205,789 54,475 492,983
Shares redeemed............. (142,996) (1,344,411) (515,575) (4,658,230)
---------- ------------ ---------- ------------
Net increase (decrease).. 554,181 $ 5,210,133 (278,686) $ (2,480,687)
========== ============ ========== ============
- --------
* Includes automatic conversion of 7,022 shares of Class B shares in the amount
of $66,150 to 7,022 shares of Class A shares in the amount of $66,150.
17
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2004 -- (unaudited)
(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 period
ended June 30, 2004, the Fund made six Repurchase Offers, and redeemed the
amounts shown in the table below. In no case was a monthly Repurchase Offer
oversubscribed.
Amount Tendered
------------------
Shares Capital
------- ----------
January................................................ 267,200 $2,511,843
February............................................... 371,990 3,493,081
March.................................................. 327,789 3,077,932
April.................................................. 255,588 2,410,286
May.................................................... 244,062 2,297,155
June................................................... 455,190 4,287,520
Note 4. Purchases And Sales Of Securities
During the period ended June 30, 2004, the Fund's cost of purchases of Loans
and proceeds from Loan sales were $123,376,027 and $23,738,419, 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 period ended June 30, 2004, SAAMCo
received advisory fees in the amount of $712,582.
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 of more
than $1 billion. Stanfield received $209,607 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 period ended June 30, 2004 SAAMCo received administrator fees in the
amount of $335,381.
The Fund has adopted Distribution Plans ("Plans") applicable to Class A,
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
for Class B and Class C, and 0.25% of average net assets to finance service
fees for Class A, Class B and Class C. For the period ended June 30, 2004
SACS received distribution fees and early withdrawal charges on redemptions
in the amount of $570,915 and $46,508, respectively. For the period ended
June 30, 2004 SACS voluntarily waived fees for the following classes: Class
A $48, Class B $34,026, Class C $194,130.
18
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2004 -- (unaudited)
(continued)
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. The
rates are 1.45% for Class A, 1.75% for Class B and Class C, and 1.25% for
Class D. For the period ended June 30, 2004, the Adviser waived fees and
reimbursed expenses for the following classes: Class A $2,476, Class B
$48,757, Class C $168,639, and Class D $26,535.
Note 6. Federal Income Taxes
The following details the tax basis distributions as well as the components
of distributable earnings. 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
--------------------------------------------------------- --------------------
For the year ended December 31, 2003
------------------------------------------------------------------------------
Long-term
Ordinary Long-term Gains/ Capital Unrealized Appreciation Ordinary Capital
Income Loss Carryover (Depreciation) Income Gains
-------- ------------------------ ----------------------- ---------- ---------
$27,221 $(24,212,647) $(3,057,460) $5,563,653 $ --
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 June
30, 2004 for federal income tax purposes were as follows:
Gross unrealized appreciation............................... $ 2,813,357
Gross unrealized depreciation............................... (2,787,582)
-----------
Net unrealized depreciation................................. $ 25,775
===========
Note 7. Director Retirement Plan
The Directors of the SunAmerica Senior Floating Rate Fund, Inc. have adopted
the AIG 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 June 30, 2004, the Fund had accrued $5,548 for the Retirement Plan, which
is included in Directors' fees and expenses on the Statement of Assets and
Liabilities and for the period ended June 30, 2004, expensed $1,947 for the
Retirement Plan, which is included in Directors' fees 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. Interest is currently
payable at the Federal Funds rate plus 50 basis points. There is also a
commitment fee of 10 basis points per annum on the daily unused portion of
the line of credit which is included in interest expense on the Statement of
Operations. During the period ended June 30, 2004, the Fund had borrowings
outstanding for 3 days under the line of credit and incurred $109 in
interest charges related to these borrowings. The Fund's average amount of
debt under the line of credit for the days utilized was $837,565 at a
weighted average interest of 1.56%. At June 30, 2004, there were no
borrowings outstanding.
19
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2004 -- (unaudited)
(continued)
Pursuant to the exemptive relief granted by the Securities and Exchange
Commission, the Fund is 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 period
ended June 30, 2004, 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 June 30, 2004, the Fund had the following unfunded loan commitments which
could be extended at the option of the Borrower:
Name Type Amount
---- --------------------- ----------
Boise Cascade Corp...................... Revolver $1,250,000
Celanese Americas Corp.................. Term Loan 310,184
Juno Lighting, Inc...................... Term Loan 2,500,000
Lyondell Chemical Co.................... Revolver 1,500,000
NRG Energy, Inc......................... Credit Linked Deposit 1,000,000
Pacificare Health Systems, Inc.......... Revolver 250,000
Warner Music Group...................... Revolver 500,000
20
SunAmerica Senior Floating Rate Fund, Inc.
DIRECTORS INFORMATION -- June 30, 2004 -- (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. 74 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. 74 Member of the Board
DOB: December 30, 1938 present of Governors,
Boston Stock
Exchange (1985-
Present).
Samuel M. Eisenstat Director 2001- Attorney, solo practitioner. 46 Director of North
DOB: March 7, 1940 present European Oil
Royalty Trust.
Stephen J. Gutman Director 2001- President and Member of Managing Directors, 46 None
DOB: May 10, 1943 present Beau Brummell-Soho, LLC (licensing of
menswear specialty retailing and other
activities) (June 1988 to present).
Peter A. Harbeck(3) Director 2001- President, CEO and Director, SAAMCo (August 83 None
DOB: January 23, 1954 present 1995 to present). Director, SACS (August 1993
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 (9 funds), SunAmerica Income Funds
(6 funds), SunAmerica Focused Series, Inc. (15 portfolios), Anchor
Series Trust (9 portfolios), SunAmerica Senior Floating Rate Fund, Inc.
(1 fund), SunAmerica Series Trust (32 portfolios), AIG Series Trust (4
funds), VALIC Company I (22 portfolios), VALIC Company II (15 funds) and
Seasons Series Trust (19 portfolios).
(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.
21
[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 DISCLOSURE OF QUARTERLY
Judith L. Craven PORTFOLIO HOLDINGS
William F. Devin AIG SunAmerica Asset Management Corp. The Fund will be required
Samuel M. Eisenstat Harborside Financial to file its complete
Stephen J. Gutman Center schedule of portfolio
Peter A. Harbeck 3200 Plaza 5 holdings with the SEC for
Jersey City, NJ its first and third
Officers 07311-4992 fis-cal quarters on Form
Robert M. Zakem, N-Q for fiscal quarters
President Distributor ending after July 9,
Donna M. Handel, AIG SunAmerica Capital 2004. Once filed, the
Treasurer Services, Inc. Fund's Form N-Q will be
Joseph P. Kelly, Harborside Financial available without charge
Secretary Center on the SEC's website at
J. Steven Neamtz, Vice 3200 Plaza 5 www.sec.gov. You can also
President Jersey City, NJ obtain copies of Form N-Q
Abbe P. Stein, Vice 07311-4992 by (i) visiting the SEC's
President and Public Reference Room in
Assistant Secretary Shareholder Servicing Washington, DC
Stacey V. Morrison, Agent (information on the
Assistant Secretary AIG SunAmerica Fund operation of the Public
Thomas Lynch, Assistant Services, Inc. Reference Room may be
Secretary Harborside Financial ob-tained by calling
Gregory R. Kingston, Center 1-800-SEC-0330) (ii)
Vice President and 3200 Plaza 5 sending your request and
Assistant Treasurer Jersey City, NJ a duplicating fee to the
Robert A. Chopyak, 07311-4992 SEC's Public Reference
Assistant Treasurer Room, Washington DC
Custodian and Transfer 20549-0102 or (iii)
Agent sending your request
State Street Bank and electroni-cally to
Trust Company publicinfo@sec.gov.
P.O. Box 219373
Kansas City, MO 64141 This report is submitted
solely for the general
VOTING PROXIES ON FUND information of
PORTFOLIO SECURITIES shareholders of the Fund.
A description of the Distribution of this
policies and proce-dures report to persons other
that the Fund uses to than shareholders of the
determine how to vote Fund is authorized only
proxies relating to in connection with a
secu-rities held in the currently effective
Fund's portfolio which is prospectus, setting forth
available in the Trust's details of the Fund,
State-ment of Additional which must precede or
Information, may be accompany this report.
obtained without charge
upon re-quest, by calling The accompanying report
(800) 858-8850. This has not been audited by
information is also independent accountants
available from the EDGAR and accordingly no
database on the opinion has been
Securities and Exchange expressed thereon.
Commission's Internet
site at
http://www.sec.gov.
Distributed by:
AIG SunAmerica Capital Services, Inc.
SFSAN-6/04
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 10. Controls and Procedures.
(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 first fiscal
half-year that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial
reporting.
Item 11. Exhibits.
(a) (1) Not applicable.
(2) Certification pursuant to Rule 30a-2 under the Investment Company
Act of 1940 (17 CFR 270.30a-2) attached hereto as Exhibit 99.CERT.
(3) Not applicable.
(b) 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: September 7, 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: September 7, 2004
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: September 7, 2004