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)
Vincent M. Marra
Senior Vice President & Chief Operating Officer
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) 324-6464
Date of fiscal year end: December 31
Date of reporting period: December 31, 2004
Item 1. Reports to Stockholders
SunAmerica Senior Floating Rate Fund, Inc. Annual report at December 31, 2004.
[GRAPHIC]
SunAmerica
THE RETIREMENT SPECIALIST
Senior Floating Rate Fund
2004 ANNUAL REPORT
[LOGO] AIG Sun America
Mutual Funds
Table of Contents
PRESIDENT'S LETTER..................................... 1
SENIOR FLOATING RATE FUND REVIEW....................... 2
STATEMENT OF ASSETS AND LIABILITIES.................... 3
STATEMENT OF OPERATIONS................................ 4
STATEMENT OF CHANGES IN NET ASSETS..................... 5
STATEMENT OF CASH FLOWS................................ 6
FINANCIAL HIGHLIGHTS................................... 7
PORTFOLIO OF INVESTMENTS............................... 12
NOTES TO FINANCIAL STATEMENTS.......................... 17
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 23
DIRECTORS AND OFFICERS INFORMATION..................... 24
December 31, 2004 ANNUAL REPORT
President's Letter
Dear Shareholder;
We are pleased to present you with the annual report for the SunAmerica
Senior Floating Rate Fund.
During 2004, the Fund benefited from a combination of improving credit
fundamentals and investments in several industry sectors that had become
undervalued. As anticipated, when conditions within these industries began to
improve, many bank loan prices in these industries also rose. A long
anticipated increase in interest rates also fueled the market. This was
precipitated by two notable changes in economic data: improvement in domestic
employment numbers and a spike in inflation. On June 30/th/, 2004, the Federal
Open Market Committee raised the Federal Funds rate 25 basis points, the first
of several through year-end.
The Fund continued to pursue credit analysis practices that enabled it to
uncover important trends in the bank loan market early on, thus capturing more
incremental gains when conditions to do so were present. In all, the Fund had a
solid year.
We wish you all the best in 2005 and thank you for your continued interest
in the SunAmerica Senior Floating Rate Fund.
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 the twelve-month period from January 1 to December 31, 2004, the bank
loan market benefited from the strengthening economy and lower forecasted
defaults. Credit fundamentals of companies issuing loans improved throughout
the year and demand for bank loan investing grew. On June 30/th/, 2004, the
Federal Open Market Committee instituted a 25 basis point hike in the Fed Funds
rate -- the first increase since May 2000. This marked the beginning of an
incremental rate increase that led to an overall 125 basis point rise in the
Fed Funds rate by year-end. Anticipating these market conditions, we made
opportunistic purchases for the Fund, and loans within the portfolio generally
experienced price increases.
The performance of the Fund also benefited from specific sector and security
selection. For example, investments in Utilities and Broadcasting &
Entertainment outperformed in the fourth quarter and the Fund saw strong
returns from these areas. Both sectors continued their rebound after being
undervalued due to sector concerns. We saw gains in our holdings in NTL, a
European cable provider, and Century Cable, the Adelphia subsidiary we have
held during Adelphia's bankruptcy. The Fund also benefited from a position in a
West Coast based energy producer, Calpine. This volatile credit quality of
Calpine improved due to increased comfort with the company's liquidity
situation. Positions in Pan Am Sat (a satellite company) and Invensys (a
diversified industrial equipment manufacturer) also appreciated.
Poor performing issuers included Atkins, a low carb food manufacturer
dealing with liquidity problems due to poor order levels. Also, Grand Vehicle
Works, an automotive supplier to specialty markets, was recently buffeted by
concerns over high metals prices.
Healthcare and Broadcasting & Entertainment continued to be the Fund's
largest holdings, representing 8.7% and 8.3% of the portfolio, respectively.
- --------
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 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.
2
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES -- December 31, 2004
ASSETS:
Long-term investment securities, at value (unaffiliated)*......... $211,295,346
Short-term investment securities, at value*....................... 22,516,667
------------
Total investments............................................... 233,812,013
Cash.............................................................. 1,989,211
Receivable for:
Fund shares sold................................................ 171,282
Dividends and interest.......................................... 1,293,532
Investments sold................................................ 1,529,729
Prepaid expenses and other assets................................. 22,171
Due from investment adviser for expense reimbursements/fee waivers 87,519
Due from distributor for fee waivers.............................. 42,843
------------
Total assets.................................................... 238,948,300
------------
LIABILITIES:
Payable for:
Fund shares repurchased......................................... 6,634,700
Investments purchased........................................... 1,584,677
Investment advisory and management fees......................... 166,415
Distribution and service maintenance fees....................... 128,533
Administration fees............................................. 78,313
Directors' fees and expenses.................................... 7,292
Other accrued expenses.......................................... 123,515
Dividends payable................................................. 257,325
Commitments (Note 10)............................................. --
------------
Total liabilities............................................... 8,980,770
------------
Net assets..................................................... $229,967,530
============
NET ASSETS REPRESENTED BY:
Capital shares at par value of $.01............................... $ 244,312
Additional paid-in capital........................................ 257,543,377
------------
257,787,689
Accumulated undistributed net investment income (loss)............ (47,153)
Accumulated undistributed net realized gain (loss) on investments. (27,711,807)
Unrealized appreciation (depreciation) on investments............. (61,199)
------------
Net assets........................................................ $229,967,530
============
Class A Class B Class C Class D
NET ASSET VALUES: -------- ----------- ------------ ------------
Net assets................................................... $224,431 $27,529,959 $174,583,309 $ 27,629,831
Shares outstanding........................................... 23,839 2,924,770 18,547,365 2,935,242
Net asset value, offering and repurchase price per share
(excluding any applicable contingent deferred sales charges) $ 9.41 $ 9.41 $ 9.41 $ 9.41
======== =========== ============ ============
*COST
Long-term investment securities (unaffiliated)............................................. $211,356,545
============
Short-term investment securities........................................................... $ 22,516,667
============
See Notes to Financial Statements
3
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF OPERATIONS -- For the year ended December 31, 2004
INVESTMENT INCOME:
Interest (unaffiliated)........................................................... $ 8,514,824
Dividends (unaffiliated).......................................................... 213,065
Facility and other fee income (Note 2)............................................ 687,968
-----------
Total investment income........................................................ 9,415,857
-----------
EXPENSES:
Investment advisory and management fees........................................... 1,663,171
Administration fees............................................................... 781,306
Distribution and service maintenance fees:
Class A......................................................................... 342
Class B......................................................................... 205,829
Class C......................................................................... 1,108,580
Transfer agent fees and expenses:
Class A......................................................................... 1,453
Class B......................................................................... 23,603
Class C......................................................................... 76,597
Class D......................................................................... 7,925
Registration fees:
Class A......................................................................... 8,723
Class B......................................................................... 2,480
Class C......................................................................... 13,700
Class D......................................................................... 8,620
Accounting service fees........................................................... 59,160
Custodian fees.................................................................... 73,402
Reports to shareholders........................................................... 106,010
Audit and tax fees................................................................ 91,698
Legal fees........................................................................ 120,955
Directors' fees and expenses...................................................... 35,010
Interest expense.................................................................. 109
Other expenses.................................................................... 77,446
-----------
Total expenses before fee waivers, expense reimbursements and custody credits.. 4,466,119
Fees waived and expenses reimbursed by investment adviser and distributor...... (1,136,934)
Custody credits earned on cash balances........................................ (6,425)
-----------
Net expenses................................................................... 3,322,760
-----------
Net investment income (loss)...................................................... 6,093,097
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments (unaffiliated)............................ (1,564,659)
Change in unrealized appreciation (depreciation) on investments................... 2,996,261
-----------
Net realized and unrealized gain (loss) on investments............................ 1,431,602
-----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $ 7,524,699
===========
See Notes to Financial Statements
4
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF CHANGES IN NET ASSETS
For the year For the year
ended ended
December 31, December 31,
2004 2003
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss).......................................................... $ 6,093,097 $ 5,512,446
Net realized gain (loss) on investments (unaffiliated)................................ (1,564,659) (5,464,399)
Net unrealized gain (loss) on investments (unaffiliated).............................. 2,996,261 13,022,369
------------ ------------
Increase (decrease) in net assets resulting from operations............................. 7,524,699 13,070,416
------------ ------------
Distributions To Shareholders From:
Net investment income (Class A)....................................................... (4,667) --
Net investment income (Class B)....................................................... (837,534) (1,250,414)
Net investment income (Class C)....................................................... (4,536,155) (3,676,409)
Net investment income (Class D)....................................................... (729,045) (636,830)
------------ ------------
Total distributions to shareholders..................................................... (6,107,401) (5,563,653)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 3) $ 84,890,736 $ 3,107,689
------------ ------------
Total increase (decrease) in net assets................................................. 86,308,034 10,614,452
NET ASSETS:
Beginning of period..................................................................... 143,659,496 133,045,044
------------ ------------
End of period+.......................................................................... $229,967,530 $143,659,496
============ ============
+Includes undistributed net investment income (loss).................................... $ (47,153) $ (32,849)
============ ============
See Notes to Financial Statements
5
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF CASH FLOWS -- For the year ended December 31, 2004
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Net increase in net assets from operations.................................................................. $ 7,524,699
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities
Purchase of loans......................................................................................... (236,656,917)
Proceed from loans sold................................................................................... 41,929,953
Loan principal paydowns................................................................................... 107,879,052
Purchases -- funding fees................................................................................. 83,241
Purchase of short-term securities, net.................................................................... (3,714,449)
Accretion of facility fee income.......................................................................... (307,440)
Increase in dividends and interest receivable............................................................. (638,117)
Decrease in receivables for securities sold............................................................... 974,646
Decrease in amount due from investment adviser............................................................ 3,350
Increase in amount due from distributor................................................................... (15,876)
Increase in other assets.................................................................................. (22,171)
Increase in payable for securities purchased.............................................................. 1,584,677
Increase in payable to the adviser........................................................................ 63,224
Decrease in other liabilities............................................................................. (52,785)
Unrealized appreciation on securities..................................................................... (2,996,261)
Net realized loss from investments........................................................................ 1,564,659
-------------
Net cash used by operating activities....................................................................... $ (82,796,515)
-------------
Cash flows from financing activities:
Proceeds from shares sold................................................................................... 129,381,069
Payment on shares repurchased............................................................................... (44,251,335)
Cash dividends paid (not including reinvested dividends of $3,958,271)...................................... (2,010,366)
-------------
Net cash provided by financing activities................................................................... $ 83,119,368
-------------
Net increase in cash........................................................................................ 322,853
Cash balance at beginning of period......................................................................... 1,666,358
-------------
Cash balance at end of period............................................................................... $ 1,989,211
=============
See Notes to Financial Statements
6
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS
Class A
-----------
For the
period from
4/28/04*
through
12/31/04
-----------
Net Asset Value, Beginning of Period........................................... $ 9.42
Investment Operations:
Net investment income (loss)@.................................................. 0.22
Net realized and unrealized gain (loss) on investments......................... (0.01)
------
Total from investment operations............................................. 0.21
------
Distributions:
Dividends from net investment income........................................... (0.22)
------
Net Asset Value, End of Period................................................. $ 9.41
------
Total Return(1)................................................................ 2.22%
Ratios/Supplemental Data
Net assets, end of period ($000's)............................................. $ 224
Ratio of net expenses to average net assets.................................... 1.45%#
Ratio of net investment income to average net assets........................... 3.44%#
Portfolio turnover rate........................................................ 24%
Expense ratio before waiver of fees and reimbursement of expenses.............. 9.31%#
Net investment income ratio before waiver of fees and reimbursement of expenses (4.42)%#
- --------
* 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
7
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS -- (continued)
Class B
---------------------------------------------
Year Year Year Year Year
ended ended ended ended ended
12/31/04 12/31/03 12/31/02 12/31/01 12/31/00*
-------- -------- -------- -------- ---------
Net Asset Value, Beginning of Period......... $ 9.33 $ 8.78 $ 9.03 $ 9.64 $ 9.98
Investment Operations:
Net investment income (loss)................. 0.29@ 0.40@ 0.40@ 0.58@ 0.75
Net realized and unrealized gain (loss) on
investments................................. 0.08 0.54 (0.26) (0.60) (0.33)
------- ------- ------- ------- -------
Total from investment operations............ 0.37 0.94 0.14 (0.02) 0.42
------- ------- ------- ------- -------
Distributions:
Dividends from net investment income......... (0.29) (0.39) (0.39) (0.59) (0.76)
------- ------- ------- ------- -------
Net Asset Value, End of Period............... $ 9.41 $ 9.33 $ 8.78 $ 9.03 $ 9.64
------- ------- ------- ------- -------
Total Return(1).............................. 3.97% 10.95% 1.54% (0.41)% 4.61%
Ratios/Supplemental Data
Net assets, end of period ($000's)........... $27,530 $26,565 $31,906 $42,335 $50,966
Ratio of net expenses to average net assets.. 1.75% 1.54% 1.45% 1.45% 1.42%
Ratio of net investment income to average
net assets.................................. 3.04% 4.35% 4.42% 6.23% 7.85%
Portfolio turnover rate...................... 24% 75% 112% 69% 41%
Expense ratio before waiver of fees and
reimbursement of expenses................... 2.38% 2.57% 2.51% 2.47% 2.31%
Net investment income ratio before waiver of
fees and reimbursement of expenses.......... 2.41% 3.33% 3.36% 5.21% 6.96%
- --------
@ Calculated based upon average shares outstanding.
* The financial statements of the Fund for the period ended 12/31/00 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
12/31/04 12/31/03 12/31/02 12/31/01 12/31/00*
-------- -------- -------- -------- ---------
Net Asset Value, Beginning of Period................... $ 9.33 $ 8.78 $ 9.03 $ 9.64 $ 9.98
Investment Operations:
Net investment income (loss)........................... 0.28@ 0.38@ 0.40@ 0.57@ 0.76
Net realized and unrealized gain (loss) on investments. 0.09 0.56 (0.27) (0.60) (0.33)
-------- -------- ------- -------- --------
Total from investment operations...................... 0.37 0.94 0.13 (0.03) 0.43
-------- -------- ------- -------- --------
Distributions:
Dividends from net investment income................... (0.29) (0.39) (0.38) (0.58) (0.77)
-------- -------- ------- -------- --------
Net Asset Value, End of Period......................... $ 9.41 $ 9.33 $ 8.78 $ 9.03 $ 9.64
-------- -------- ------- -------- --------
Total Return(1)........................................ 3.97% 10.92% 1.47% (0.45)% 4.60%
Ratios/Supplemental Data
Net assets, end of period ($000's)..................... 174,583 $103,726 $86,101 $140,664 $227,662
Ratio of net expenses to average net assets............ 1.75% 1.59% 1.50% 1.50% 1.43%
Ratio of net investment income to average net assets... 3.06% 4.22% 4.33% 6.28% 7.85%
Portfolio turnover rate................................ 24% 75% 112% 69% 41%
Expense ratio before waiver of fees and reimbursement
of expenses........................................... 2.35% 2.51% 2.48% 2.52% 2.32%
Net investment income ratio before waiver of fees and
reimbursement of expenses............................. 2.46% 3.31% 3.36% 5.26% 6.96%
- --------
@ Calculated based upon average shares outstanding.
* The financial statements of the Fund for the period ended 12/31/00 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
---------------------------------------
For the period
Year Year Year 05/02/01*
ended ended ended through
12/31/04 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)@........................................................ 0.33 0.43 0.43 0.35
Net realized and unrealized gain (loss) on investments............................... 0.08 0.54 (0.27) (0.42)
------- ------- ------- -------
Total from investment operations.................................................... 0.41 0.97 0.16 (0.07)
------- ------- ------- -------
Distributions:
Dividends from net investment income................................................. (0.33) (0.42) (0.41) (0.36)
------- ------- ------- -------
Net Asset Value, End of Period....................................................... $ 9.41 $ 9.33 $ 8.78 $ 9.03
------- ------- ------- -------
Total Return(1)...................................................................... 4.49% 11.28% 1.72% (0.79)%
Ratios/Supplemental Data
Net assets, end of period ($000's)................................................... $27,630 $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................................. 3.60% 4.63% 4.58% 5.66%#
Portfolio turnover rate.............................................................. 24% 75% 112% 69%
Expense ratio before waiver of fees and reimbursement of expenses.................... 1.62% 1.86% 1.77% 2.27%#
Net investment income ratio before waiver of fees and reimbursement of expenses...... 3.23% 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
10
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO PROFILE -- December 31, 2004 -- (unaudited)
INDUSTRY ALLOCATION*
Registered Investment Companies..................... 9.79%
Healthcare, Education and Childcare................. 8.65%
Broadcasting & Entertainment........................ 8.30%
Automobile.......................................... 7.66%
Containers, Packaging and Glass..................... 7.20%
Chemicals, Plastics and Rubber...................... 7.08%
Telecommunications.................................. 6.23%
Beverage, Food & Tobacco............................ 5.84%
Home and Office Furnishings, Housewares and Durables 4.77%
Printing and Publishing............................. 4.09%
Leisure, Amusement, Entertainment................... 3.57%
Buildings & Real Estate............................. 3.47%
Utilities........................................... 3.46%
Electronics......................................... 3.19%
Hotels, Motels, Inns and Gaming..................... 3.15%
Retail Stores....................................... 2.96%
Diversified/Conglomerate Manufacturing.............. 2.76%
Personal and Nondurable Consumer Products........... 2.05%
Diversified/Conglomerate Service.................... 1.92%
Cargo Transport..................................... 1.47%
Oil and Gas......................................... 1.36%
Ecological.......................................... 0.86%
Textiles and Leather................................ 0.66%
Farming and Agriculture............................. 0.41%
Mining, Steel, Iron and Nonprecious Metals.......... 0.41%
Personal, Goods and Misc. Services.................. 0.36%
------
101.67%
======
CREDIT QUALITY+#
BBB............. 0.81%
BBB-............ 0.24%
BB+............. 10.12%
BB.............. 15.53%
BB-............. 14.41%
B+.............. 30.47%
B............... 15.01%
B-.............. 5.87%
CCC+............ 0.38%
D............... 0.45%
Not Rated@...... 6.71%
------
100.00%
======
- --------
* Calculated as a percentage of Net Assets.
@ Represents debt issues that either have no rating, or the rating is
unavailable from the data source.
+ Source: Standard and Poors
# Calculated as a percentage of total debt issues, excluding short-term
securities.
11
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2004
Ratings/(1)/
-----------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- -------------------------------------------------------------------------------------------------------------------
LOANS/(3)(4) /-- 91.78%
Automobile -- 7.66%
AM General, LLC....................... BTL-B B1 B+ 6.57-6.99% 11/01/11 $1,000,000 $ 1,025,000
Collins & Aikman Products Co.......... Tranche B1 B1 B+ 6.34 9/01/11 816,667 819,389
Collins & Aikman Products Co.......... Revolver B1 B+ 5.99 9/01/09 347,953 349,693
Grand Vehicle Works Holding Corp.@.... 2nd Lien B3 B- 7.92 7/23/11 2,000,000 1,900,000
Grand Vehicle Works Holding Corp.@.... BTL-B B2 B+ 4.92-5.42 7/23/10 995,000 975,100
Intermet Corp.(6)..................... BTL-B Caa1 D 7.88-10.50 3/31/09 997,571 940,210
Key Automotive Group.................. BTL-B B1 BB- 5.20-7.25 6/25/09 1,802,131 1,829,163
Metaldyne Co., LLC.................... BTL-D B2 BB- 6.56 12/31/09 1,994,981 1,987,293
Plastech Engineered Products, Inc..... 2nd Lien B1 B 6.88 3/31/11 1,000,000 1,010,000
Polypore, Inc......................... BTL B1 B 4.67 11/12/11 1,194,000 1,211,910
Tenneco Automotive, Inc............... BTL-B B1 B+ 5.41 12/12/10 682,759 695,845
Tenneco Automotive, Inc............... BTL-B1 B1 B+ 5.28 12/17/10 310,345 316,293
TRW Automotive Acquisitions Corp...... BTL-A1 Ba2 BB+ 3.63 2/28/09 1,200,000 1,203,000
TRW Automotive Acquisitions Corp...... BTL-D1 Ba2 BB+ 4.13 2/28/11 1,035,451 1,045,288
TRW Automotive Acquisitions Corp...... BTL-E Ba2 BB+ 3.88 10/31/10 1,500,000 1,507,970
United Components, Inc................ BTL-C B1 BB- 4.78 6/30/10 773,333 783,967
-----------
17,600,121
-----------
Beverage, Food and Tobacco -- 5.84%
Atkins Nutritionals, Inc.............. 1st Lien B2 B+ 7.67 10/29/09 930,000 834,675
Atkins Nutritionals, Inc.............. 2nd Lien B3 B- 10.17 10/29/09 1,000,000 676,250
Commonwealth Brands, Inc.............. BTL B1 BB- 5.69 8/28/07 728,334 738,349
Dole Food Co., Inc.................... BTL-D Ba3 BB 4.31-6.50 9/28/08 158,516 161,389
Dole Food Co., Inc.................... Incremental BTL Ba3 BB 4.19-6.50 9/28/08 485,714 494,518
Dole Holding Co., LLC................. 2nd Lien B3 B 7.00 7/22/10 1,500,000 1,537,032
Keystone Foods Holdings, LLC.......... BTL Ba3 B+ 4.44-4.81 6/16/11 1,407,476 1,422,431
Merisant Co........................... BTL-B B1 B+ 4.88 1/11/10 747,129 750,865
Nash Finch Co. ....................... BTL B1 B+ 4.69 11/12/10 1,000,000 1,013,125
NBTY, Inc............................. BTL-C Ba2 BB 4.38 3/15/07 1,034,267 1,045,041
NeIIson Nutraceutical, Inc............ BTL B1 B+ 9.25 10/04/09 1,802,016 1,736,693
Pierre Foods, Inc..................... BTL-B B1 B+ 4.48 6/30/10 945,698 955,942
Pinnacle Foods Holdings............... Delay Draw B1 B+ 4.76 10/25/10 2,071,844 2,072,275
-----------
13,438,585
-----------
Broadcasting and Entertainment -- 8.30%
Cebridge Connections, Inc.@........... 1st Lien NR NR 5.24-7.50 2/23/09 694,750 696,053
Cebridge Connections, Inc.@........... 2nd Lien NR NR 8.00-8.60 2/23/10 1,290,250 1,290,250
Century Cable Holdings, LLC @(6)...... Discretionary BTL NR NR 7.25 12/31/09 2,500,000 2,483,855
Century -- TCI California, LP@(6)..... Revolver NR NR 5.25 12/31/07 1,000,000 999,375
Charter Communications Operating, LLC. BTL-B B2 B 5.38 4/27/11 2,487,500 2,492,681
DIRECTV Holdings, LLC................. BTL-B2 Ba2 BB 4.39-4.41 3/06/10 2,064,796 2,092,154
Insight Midwest Holdings, LLC......... BTL-B Ba3 BB+ 5.19 12/31/09 990,000 1,007,050
PANAMSAT Corp......................... BTL-B B1 BB+ 5.16 8/20/11 4,466,114 4,497,051
Sinclair Broadcast Group, Inc......... BTL-A Ba2 BB 4.17 6/30/09 2,750,000 2,768,906
Sinclair Broadcast Group, Inc......... BTL-C Ba2 BB 4.17 12/31/09 750,000 758,125
-----------
19,085,500
-----------
Buildings & Real Estate -- 3.47%
Builders Firstsource, Inc............. BTL-A B1 B+ 5.42 2/25/10 1,488,750 1,505,498
Crescent Real Estate Funding XII, LP.. BTL NR BB+ 4.53 1/12/06 509,078 514,010
General Growth Properties, Inc........ BTL-A Ba2 BB+ 4.53 11/12/07 2,500,000 2,502,273
General Growth Properties, Inc........ BTL-B Ba2 BB+ 4.53 11/12/08 1,000,000 1,004,006
PGT Industries, Inc.@................. BTL-A B1 B 5.13-5.42 1/29/10 971,000 986,172
Ply Gem Industries, Inc............... BTL B1 B+ 5.06-5.28 2/27/11 1,265,438 1,280,465
Ply Gem Industries, Inc............... CND TL B1 B+ 5.06-5.28 2/27/11 185,813 188,019
-----------
7,980,443
-----------
12
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2004 -- (continued)
Ratings/(1)/
-----------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- ------------------------------------------------------------------------------------------------------------------
Cargo Transport -- 1.47%
Moran Transportation Co.@.................... BTL B1 BB- 5.06% 8/08/09 $ 985,000 $ 996,081
Pacer International, Inc..................... BTL B1 BB- 4.06-5.06 6/10/10 1,207,843 1,225,206
United States Shipping, LLC.................. BTL Ba3 BB- 4.56 4/30/10 1,149,519 1,162,451
-----------
3,383,738
-----------
Chemicals, Plastics and Rubber -- 7.08%
Brenntag AG.................................. BTL-B2 B1 BB- 4.73 3/02/12 1,500,000 1,513,000
Celanese Americas Corp....................... BTL-C B2 B- 6.06 4/06/11 1,000,000 1,013,750
Celanese Americas Corp....................... BTL Ba3 B+ 4.81 4/06/11 997,500 1,008,722
Cognis Deutschland Eins GMBH................. 2nd Lien B2 B 7.22 11/15/13 1,500,000 1,560,625
Hercules, Inc................................ BTL-B Ba1 BB 3.97-4.31 10/08/10 893,250 900,508
Huntsman International, LLC.................. BTL-B B1 B 4.94 12/31/10 2,707,862 2,742,387
Kosa B.V..................................... BTL-B1 Ba3 BB 5.31 4/29/11 1,345,765 1,370,998
Kosa B.V..................................... BTL-B2 Ba3 BB 5.31 4/29/11 607,176 618,561
Resolution Specialty Materials, LLC.......... BTL NR B+ 5.13 8/02/10 2,000,000 2,033,126
Rockwood Specialties Group, Inc.............. BTL-D B1 B+ 4.38 7/30/12 2,000,000 2,015,468
Wellman, Inc................................. 2nd Lien B2 B- 8.91 2/10/10 1,000,000 1,003,333
Westlake Chemical Corp....................... BTL-B Ba1 BB+ 4.27-6.50 7/31/10 502,500 509,095
-----------
16,289,573
-----------
Containers, Packaging and Glass -- 7.20%
Appleton Papers, Inc......................... BTL Ba3 BB 4.33-4.79 6/11/10 1,119,375 1,133,647
Berry Plastics Corp.......................... BTL-C B1 B+ 4.22 7/22/10 1,306,907 1,324,877
Boise Cascade Corp........................... BTL-B Ba3 BB 4.47 10/28/11 1,756,688 1,780,232
Boise Cascade Corp........................... BTL-C Ba3 BB 4.47 10/29/10 1,618,313 1,623,931
Constar International, Inc.(5)............... BTL-B B2 BB- 7.06 11/20/09 812,937 832,584
Constar International, Inc................... Revolver B2 BB- 6.22 11/20/07 166,667 160,000
Constar International, Inc................... 2nd Lien B2 B 10.56 12/23/10 1,000,000 1,035,000
Graham Packaging Co., LP..................... Tranche B B2 B 4.88-6.25 10/07/11 2,500,000 2,537,053
Graphic Packaging International, Inc......... BTL-C B1 B+ 4.51-4.92 8/08/10 1,368,823 1,394,317
Owens-Illinois Group, Inc.................... BTL-A B1 BB- 4.95 4/01/07 684,735 697,788
Owens-Illinois Group, Inc.................... BTL-B1 B1 BB- 5.17 4/01/08 674,932 688,712
Precise Technology, Inc.@.................... 1st Lien B1 B+ 5.56 3/25/11 744,375 749,260
Precise Technology, Inc.@.................... 2nd Lien B2 B- 8.56 3/25/11 500,000 501,250
Ranpak Corp.@................................ BTL-B B3 B 6.15-12.00 5/26/10 770,993 771,957
Waddington North America, Inc.@.............. BTL-B B1 B 4.98-5.31 4/07/11 1,358,000 1,317,260
-----------
16,547,868
-----------
Diversified/Conglomerate Manufacturing -- 2.76%
Colfax Corp.@................................ BTL-B Ba3 BB- 4.81 5/30/09 675,000 681,750
Enersys Capital, Inc......................... BTL Ba3 BB 3.92-4.54 3/17/11 597,000 606,142
Invensys International Holdings, Ltd......... BTL-B1 Ba3 B+ 5.48 9/05/09 3,250,121 3,302,936
Invensys International Holdings, Ltd......... 2nd Lien B1 B- 6.76 12/05/09 1,712,329 1,763,699
-----------
6,354,527
-----------
Diversified/Conglomerate Service -- 1.92%
Bridge Information Systems, Inc. + @(7)...... BTL-B NR NR 4.00 5/29/05 521,115 23,450
Coinstar, Inc................................ BTL Ba3 BB- 4.29-6.50 7/07/11 883,374 898,833
lnfoUSA, Inc.@............................... BTL Ba3 BB 5.06 3/25/09 875,000 883,750
NES Rentals Holdings, Inc.................... 2nd Lien B3 B 8.35-10.25 6/30/09 1,496,250 1,507,472
Syniverse Holding, LLC....................... BTL-B Ba3 BB- 5.40-5.56 12/31/10 1,097,280 1,108,939
-----------
4,422,444
-----------
Ecological -- 0.86%
Allied Waste North America, Inc.............. BTL-B B1 BB 4.95-5.24 1/15/10 830,662 843,945
Allied Waste North America, Inc.............. BTL-D B1 BB 4.54 1/15/10 981,531 995,457
Allied Waste North America, Inc.............. Tranche A B1 BB 4.59 1/15/10 141,429 143,329
-----------
1,982,731
-----------
13
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2004 -- (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
Electronics -- 3.19%
Amkor Technology, Inc...................................... BTL B1 B+ 6.56% 10/27/10 $1,000,000 $ 1,045,417
Fairchild Semiconductor Corp............................... BTL Ba3 BB- 4.75 6/19/08 1,477,500 1,497,355
Seagate Technology Holdings, Inc........................... BTL-B Ba1 BB+ 4.31 5/13/07 1,402,806 1,427,136
UGS Corp................................................... BTL-B B1 B+ 4.67 5/27/11 1,791,000 1,821,223
VUTEk, Inc.@............................................... BTL B1 B+ 1.75 6/25/10 1,560,000 1,556,100
-----------
7,347,231
-----------
Farming and Agriculture -- 0.41%
AGCO Corp.................................................. BTL Ba1 BB+ 4.47-4.55 1/31/06 918,167 935,096
-----------
Healthcare, Education and Childcare -- 8.65%
Accredo Health, Inc........................................ BTL-B Ba2 BB 4.23 6/30/11 1,492,500 1,504,627
Community Health Systems, Inc.............................. BTL Ba3 BB- 4.15 8/19/11 1,325,428 1,337,751
Concentra Operating Corp................................... BTL B1 B+ 4.88-5.10 6/30/10 992,512 1,003,264
Conmed Corp................................................ BTL-C Ba3 BB- 4.66-5.01 12/15/09 987,001 998,722
Connecticare Capital, LLC@................................. BTL B1 NR 6.17 10/30/09 887,500 891,937
Cooper Companies, Inc...................................... BTL-B Ba3 BB 4.19 11/15/11 1,000,000 1,014,687
Dade Behring, Inc.......................................... BTL-B Ba3 BB 4.31 10/03/08 348,129 349,869
Da Vita, Inc............................................... BTL-B Ba2 BB 3.98-4.78 3/31/09 1,967,677 1,974,880
Hanger Orthopedic Group, Inc............................... BTL-B B2 B 6.06 9/30/09 987,500 998,609
Insight Health Services Acquisition Corp................... BTL-B B1 B 6.31 10/17/08 967,487 976,255
Magellan Health Services, Inc.............................. BTL B1 B+ 4.74 8/15/08 472,222 479,010
Magellan Health Services, Inc.............................. LOC B1 B+ 1.72 8/15/08 277,778 281,771
Medco Health Solutions, Inc................................ BTL Ba1 BBB 2.76-3.72 3/26/09 1,696,429 1,708,444
Multiplan, Inc............................................. BTL NR B+ 5.31 3/04/09 1,333,333 1,348,333
Quintiles Transnational Corp............................... BTL B1 BB- 6.67-6.81 9/25/09 987,500 1,006,016
Team Health, Inc.@......................................... BTL-B NR B+ 5.81 3/23/11 1,985,000 1,993,684
Vanguard Health Systems, Inc............................... Tranche 1 B2 B 5.31 9/30/11 997,500 1,014,956
Youth and Family Centered Services, Inc.................... BTL-B B2 B+ 5.94-8.00 5/28/11 997,500 999,994
-----------
19,882,809
-----------
Home and Office Furnishings, Housewares and Durables -- 4.77%
Buhrmann U.S., Inc......................................... BTL-C1 Ba3 BB- 4.94 12/31/10 1,732,544 1,757,991
Hillman Group, Inc.@....................................... BTL-B B2 B 5.50-7.50 3/31/11 827,083 836,905
Holmes Group, Inc.......................................... 1st Lien B1 B 5.58-7.50 11/08/10 995,000 1,004,950
Holmes Group, lnc.......................................... 2nd Lien B3 CCC+ 9.83-9.98 5/06/11 500,000 505,000
Juno Lighting, Inc......................................... 1st Lien B1 B+ 4.37-6.75 11/21/10 2,213,447 2,245,265
Juno Lighting, Inc......................................... 2nd Lien B2 B- 7.44-7.85 5/21/11 1,000,000 1,016,250
Knoll, Inc................................................. BTL Ba3 BB- 5.34 9/30/11 1,383,529 1,399,527
Maax Corp.@................................................ BTL-B B1 B 4.79-7.00 6/04/11 1,194,000 1,205,940
Simmons Co................................................. Tranche C B2 B+ 3.88-6.75 12/19/11 979,259 992,724
-----------
10,964,552
-----------
Hotels, Motels, Inns, and Gaming -- 3.15%
Boyd Gaming Corp........................................... BTL-B Ba2 BB 3.92-4.53 6/30/11 663,333 673,035
CNL Hospitality Partners, LP............................... BTL Ba3 NR 5.33 10/13/06 1,000,000 1,016,250
Penn National Gaming....................................... BTL-D Ba3 BB- 4.92-5.06 9/01/07 371,884 373,557
Venetian Casino Resorts, LLC............................... Delay Draw B1 NR 4.90 6/15/11 3,238,636 3,298,687
Wyndham International, Inc................................. Revolver B1 B- 8.13-8.65 4/01/06 491,544 489,762
Wyndham International, Inc................................. BTL-1 B1 NR 7.13 6/30/06 1,393,552 1,402,698
-----------
7,253,989
-----------
Leisure, Amusement, Entertainment -- 3.57%
Affinity Group, Inc........................................ BTL-B1 Ba2 B+ 5.47-5.53 6/24/09 344,541 348,417
Affinity Group, Inc........................................ BTL-B2 Ba2 B+ 5.47 6/24/09 861,352 871,042
Metro-Goldwyn-Mayer Studios, Inc........................... BTL-B Ba3 B+ 5.06 4/30/11 1,995,000 2,003,479
Regal Cinemas, Inc......................................... BTL Ba3 BB- 4.56 11/10/10 1,443,523 1,459,222
Warner Music Group......................................... BTL-B B1 B+ 4.97-5.38 2/28/11 3,473,750 3,524,408
-----------
8,206,568
-----------
14
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2004 -- (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- ---------------------------------------------------------------------------------------------------------------------
Mining, Steel, Iron and Nonprecious Metals -- 0.41%
Headwaters, Inc.................................. 1st Lien B1 B+ 5.33% 4/30/11 $ 921,875 $ 934,935
-----------
Oil and Gas -- 1.31%
ATP Oil & Gas Corp............................... 1st Lien NR NR 8.23-8.55 3/29/09 992,502 1,012,352
Tesoro Petroleum Corp............................ FATL Ba2 BBB- 7.90-7.99 4/15/08 485,000 500,035
Williams Production RMT Co.@..................... BTL-C B1 BB 4.99 5/30/08 1,477,575 1,502,202
-----------
3,014,589
-----------
Personal and Nondurable Consumer Products -- 2.05%
American Safety Razor Co......................... Tranche B B2 B 5.38-5.85 4/29/11 657,897 661,187
American Safety Razor Co......................... Tranche C B3 CCC+ 9.11 10/29/11 300,000 304,500
Church & Dwight Co., Inc......................... Tranche B Ba2 BB 4.17 5/30/11 1,134,197 1,148,730
Sealy Mattress Co................................ BTL-C B2 B+ 4.45-4.65 4/06/12 1,573,661 1,597,266
United Industries Corp........................... BTL B1 B+ 4.63-4.92 4/30/11 992,513 1,009,261
-----------
4,720,944
-----------
Personal, Goods and Misc. Services -- 0.36%
Domino's, Inc.................................... BTL Ba3 B+ 4.31 6/25/10 816,414 827,470
-----------
Printing and Publishing -- 4.09%
Dex Media West, LLC.............................. BTL-B Ba2 BB- 4.10-6.00 3/09/10 1,226,440 1,240,110
Haights Crossing Operating Co.@.................. BTL B3 B- 6.78 8/20/08 1,478,775 1,515,744
Journal Register Co.............................. BTL Ba2 BB+ 3.42-3.76 8/12/12 1,000,000 1,001,875
Primedia, Inc.................................... BTL B3 B 6.69 12/31/09 1,592,000 1,607,920
R.H. Donnelly, Inc............................... BTL-D Ba3 BB 4.09-4.31 6/30/11 1,529,504 1,546,870
Transwestern Publishing Co....................... 1st Lien B1 B+ 3.94-6.25 2/25/11 955,053 967,588
Transwestern Publishing Co....................... BTL B1 B+ 4.56 2/25/11 1,500,000 1,519,688
-----------
9,399,795
-----------
Retail Stores -- 2.96%
Alimentation Couche-Tard, lnc.................... BTL Ba2 BB 4.19 12/17/10 607,653 616,388
American Achievement Corp........................ BTL-B B1 B+ 4.92-6.75 3/25/11 992,500 1,008,628
Educate Operating Co., LLC....................... BTL B1 B+ 5.06 3/30/11 1,398,243 1,415,721
General Nutrition Centers, Inc................... Tranche B B2 B 5.42 12/07/09 990,000 996,188
Jean Coutu Group, Inc............................ BTL-B B1 BB 4.44 7/30/11 1,496,250 1,520,564
Quality Stores (Central Tractor) +@#(6)(7)....... BTL-B Caa2 D 3.75 9/30/06 856,334 --
Weight Watchers International, Inc............... BTL-C Ba1 BB 3.77 3/31/10 1,246,875 1,256,747
-----------
6,814,236
-----------
Telecommunications -- 6.18%
Centennial Cellular Operating Co., LLC........... BTL-B B2 B- 4.92-5.38 2/09/11 1,488,750 1,510,151
Nexstar Broadcasting............................. BTL-D Ba3 B+ 4.31 12/31/10 2,493,743 2,504,653
Nextel Finance Co................................ BTL-E Ba1 BB+ 4.69 12/15/10 2,695,275 2,700,183
Ntelos, Inc...................................... BTL-B NR B 6.17 7/25/08 1,409,302 1,411,063
NTL Investment Holding, Ltd...................... BTL-B B1 BB- 5.20 4/30/12 2,000,000 2,020,000
Qwest Corp....................................... BTL-A Ba3 NR 7.39 6/30/07 1,000,000 1,044,167
Spectrasite Communications, Inc.................. BTL-B Ba3 BB- 4.03 5/19/12 2,000,000 2,015,416
Western Wireless Corp............................ BTL-B B2 B- 5.03-5.42 5/31/11 995,000 1,012,234
-----------
14,217,867
-----------
Textiles and Leather -- 0.66%
Globe Manufacturing Corp. +@#(7)................. BTL-B NR NR 2.75 7/15/06 837,014 --
Springs Industries, Inc.......................... BTL-B Ba3 BB+ 5.31 12/07/10 1,500,000 1,516,875
-----------
1,516,875
-----------
15
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2004 -- (continued)
Ratings/(1)/
-----------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount/Shares (Note 2)
- ----------------------------------------------------------------------------------------------------------------
Utilities -- 3.46%
AES Corp............................... BTL Ba3 BB 4.25-4.44% 4/30/08 $ 1,423,571 $ 1,447,742
Allegheny Energy Supply Co............. BTL B1 B+ 5.01-5.16 3/08/11 1,123,370 1,143,871
Astoria Energy, LLC.................... 1st Lien Ba3 B+ 6.86-7.81 4/16/12 1,000,000 1,023,750
Calpine Corp.@......................... 2nd Lien NR B 7.82 12/31/07 2,468,750 2,257,363
La Grange Acquisition, LP.............. BTL Ba2 B+ 5.44 1/18/08 1,050,000 1,067,391
Reliant Energy Resources, Inc.......... BTL-B B1 B+ 4.80 4/30/10 1,000,000 1,013,854
------------
7,953,971
------------
Total Loans (Cost $211,121,675)....................................... 211,076,457
------------
COMMON STOCK -- 0.10%
Oil and Gas -- 0.05%
Shaw Group, Inc.+..................................................... 6,276 112,026
------------
Telecommunications -- 0.05%
Global Crossing, Ltd.+................................................ 175 3,175
SAVVIS Communications Corp.+.......................................... 89,386 103,688
------------
106,863
------------
Total Common Stock (Cost $234,870).................................... 218,889
------------
Total Long-Term Investment Securities (Cost $211,356,545)............. 211,295,346
------------
SHORT-TERM INVESTMENT SECURITIES -- 9.79%
Registered Investment Companies -- 9.79%
SSgA Money Market Fund (Cost $22,516,667)............................. 22,516,667 22,516,667
------------
TOTAL INVESTMENTS -- 101.67%
(Cost $233,873,212)(8)................................................ 233,812,013
Liabilities in Excess of Other Assets -- (1.67%).......................... (3,844,483)
------------
NET ASSETS -- 100.00%..................................................... $229,967,530
============
- --------
BTL Bank Term Loan
CND TLCanadian Term Loan
FATL Fixed Asset Term Loan
LOC Line of Credit
NR Security is not rated.
+ Non-income producing
@ Illiquid security. At December 31, 2004, the aggregate value of these
securities was $27,015,438, representing 11.75% of net assets.
# Fair valued (see Note 2).
(1) Bank loans rated below Baa by Moody's lnvestor Service, Inc. or BBB by
Standard & Poor's Group are considered below investment grade. Ratings are
unaudited. Ratings provided as of December 31, 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 63 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) All loans in the portfolio were purchased through assignment agreements
unless otherwise indicated.
(5) Loan was purchased through a participation agreement.
(6) Company has filed Chapter 11 bankruptcy.
(7) Loan is in default of interest payment.
(8) See Note 6 for cost of investments on a tax basis.
See Notes to Financial Statements
16
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2004
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 repurchased 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 principles (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 its 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
17
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2004 -- (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 December 31, 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 accrued daily except when
collection is not expected. 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 $307,440 for the
period ended December 31, 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 $380,528 for the period ended
December 31, 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 in accordance with federal income tax
regulations, which may differ from U.S. generally accepted accounting
principles. These "book/tax" differences 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.
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, 2004.
18
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2004 -- (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**-
December 31, 2004
-------------------------
Shares Amount
Class A ---------- ------------
Shares sold................. 23,650* $ 222,806*
Reinvested distributions.... 391 3,681
Shares repurchased.......... (202) (1,902)
---------- ------------
Net increase (decrease).. 23,839 $ 224,585
========== ============
For the For the
year ended year ended
December 31, 2004 December 31, 2003
------------------------- ------------------------
Shares Amount Shares Amount
Class B ---------- ------------ ---------- ------------
Shares sold................. 649,863 $ 6,108,232 302,522 $ 2,767,847
Reinvested distributions.... 60,214 566,344 85,439 772,401
Shares repurchased.......... (633,762)* (5,961,214)* (1,171,973) (10,584,805)
---------- ------------ ---------- ------------
Net increase (decrease).. 76,315 $ 713,362 (784,012) $ (7,044,557)
========== ============ ========== ============
For the For the
year ended year ended
December 31, 2004 December 31, 2003
------------------------- ------------------------
Shares Amount Shares Amount
Class C ---------- ------------ ---------- ------------
Shares sold................. 11,042,355 $103,837,676 4,140,154 $ 38,020,342
Reinvested distributions.... 300,723 2,828,393 276,003 2,497,941
Shares repurchased.......... (3,917,703) (36,835,107) (3,097,227) (27,885,351)
---------- ------------ ---------- ------------
Net increase (decrease).. 7,425,375 $ 69,830,962 1,318,930 $ 12,632,932
========== ============ ========== ============
For the For the
year ended year ended
December 31, 2004 December 31, 2003
------------------------- ------------------------
Shares Amount Shares Amount
Class D ---------- ------------ ---------- ------------
Shares sold................. 1,986,376 $ 18,679,110 182,414 $ 1,684,560
Reinvested distributions.... 59,527 559,853 54,475 492,983
Shares repurchased.......... (544,090) (5,117,136) (515,575) (4,658,230)
---------- ------------ ---------- ------------
Net increase (decrease).. 1,501,813 $ 14,121,827 (278,686) $ (2,480,687)
========== ============ ========== ============
- --------
* Includes automatic conversion of 13,025 shares of Class B shares in the
amount of $122,726 to 13,025 shares of Class A shares in the amount of
$122,726.
** Inception date of class.
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 December 31, 2004, 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 Amount Shares Amount
------- ---------- - ------- ----------
January. 267,200 $2,511,843 July..... 319,980 $3,014,260
February 371,990 3,493,081 August... 735,985 6,910,581
March... 327,789 3,077,932 September 669,183 6,283,631
April... 262,610 2,476,436 October.. 402,791 3,786,141
May..... 244,062 2,297,155 November. 331,103 3,115,673
June.... 455,190 4,287,520 December. 707,874 6,661,106
19
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2004 -- (continued)
Note 4. Purchases And Sales Of Securities
During the period ended December 31, 2004, the Fund's cost of purchases of
Loans and proceeds from Loan sales were $236,656,917 and $41,929,953,
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. The Fund will pay SAAMCo a monthly advisory fee at the
following annual rates, based on the average daily net assets of the Fund:
0.85% on the first $1 billion; 0.80% on the next $1 billion; and 0.75%
thereafter. For the period ended December 31, 2004, SAAMCo received advisory
fees in the amount of $1,663,171.
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 net assets: 0.25% for the first $1
billion of average daily net assets; 0.20% for average daily net assets of
more than $1 billion. Stanfield received $489,192 as compensation for its
services. The fee paid to the subadviser is paid by SAAMCo.
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 net assets of
the Fund. For the period ended December 31, 2004 SAAMCo received
administrator fees in the amount of $781,306.
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 December 31,
2004 SACS received distribution fees and early withdrawal charges on
redemptions in the amount of $1,314,409 and $104,047, respectively. For the
period ended December 31, 2004 SACS voluntarily waived fees for the
following classes: Class A $94, Class B $67,668, Class C $370,650.
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 December 31, 2004, the Adviser waived fees and
reimbursed expenses for the following classes: Class A $10,551, Class B
$104,179, Class C $509,341, and Class D $74,451.
20
0
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2004 -- (continued)
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
retirement pension expense, dividends payable and treatment of defaulted
securities.
Distributable Earnings Tax Distributions
- ---------------------------------------- -------------------------------------------------------------------------
For the year ended December 31, 2004 For the year ended December 31, 2004 For the year ended December 31, 2003
- ---------------------------------------- ------------------------------------ ------------------------------------
Long-term Gains/ Unrealized Long-term Long-term
Ordinary Capital Loss Appreciation Ordinary Capital Ordinary Capital
Income Carryover (Depreciation) Income Gains Income Gains
- -------- ---------------- -------------- ---------- --------- ---------- ---------
$ -- $(27,711,461) $(61,545) $6,107,401 $ -- $5,563,653 $ --
Capital Loss Carryforwards. At December 31, 2004 capital loss carryforwards
available to offset future recognized gains were $27,711,461, 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, $4,956,144
expiring in 2011, and $3,498,813 expiring in 2012.
Unrealized appreciation and depreciation in the value of investments at
December 31, 2004 for federal income tax purposes were as follows:
Gross unrealized appreciation............................... $ 2,472,828
Gross unrealized depreciation............................... (2,534,373)
-----------
Net unrealized depreciation................................. $ (61,545)
===========
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") for the unaffiliated Directors. The Retirement Plan
provides generally that if an unaffiliated Director who has at least 10
years of consecutive service as a Disinterested Director of any of the AIG
SunAmerica mutual funds (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 each
AIG SunAmerica mutual fund with respect to which he or she is an Eligible
Director. 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 each AIG SunAmerica mutual
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, 2004, the Fund had accrued $7,517 for the Retirement Plan,
which is included in Directors' fees and expenses on the Statement of Assets
and Liabilities and for the period ended December 31, 2004, expensed $3,916
for the Retirement Plan, which is included in Directors' fees and expenses
on the Statement of Operations.
Note 8. Line of Credit
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 December 31, 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 December 31, 2004, there were no
borrowings outstanding.
21
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2004 -- (continued)
Note 9. Interfund Leading Agreement
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 December 31, 2004, the Fund did not participate in this program.
Note 10. 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 11. Unfunded Loan Commitments
On December 31, 2004, the Fund had the following unfunded loan commitments
which could be extended at the option of the Borrower:
Maturity
Name Type Date Amount
- ---- ---------------------- -------- ----------
Boise Cascade Corp...................... Revolver 06/30/05 $2,500,000
Constar International, Inc.............. Revolver 11/20/07 833,333
United States Shipping, LLC............. Delayed Draw Term Loan 03/30/10 346,154
Venetian Casino Resorts, LLC............ Delayed Draw Term Loan 06/15/11 511,364
Venetian Casino Resorts, LLC............ Term Loan 08/20/09 1,250,000
Warner Music Group...................... Revolver 02/28/11 500,000
Wyndham International, Inc.............. Revolver 04/01/06 357,962
Note 12. Subsequent Events
Effective December 31, 2004, Stanfield Capital Partners, LLC is no longer
the sub-adviser for the Fund. On December 20, 2004, effective January 1,
2005, the Fund's Board of Directors approved an interim sub-advisory
agreement between AIG SunAmerica Asset Management Corp. (SAAMCo) and
American International Group Global Investment Corp. ("AIGGIC"). AIGGIC is
an indirect "wholly-owned" subsidiary of AIG and an affiliate of SAAMCO. On
January 12, 2005, the Board of Directors approved a new sub-advisory
agreement between SAAMCo and AIGGIC subject to approval by the shareholders
of the Fund at a special meeting of shareholders to be held on March 31,
2005.
22
SunAmerica Senior Floating Rate Fund, Inc.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 schedule 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, 2004, 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 four years in the period then ended, 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 the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements 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, 2004 by correspondence with the custodian and
selling or agent banks, provide a reasonable basis for our opinion. The
financial statements of the Fund for the year ended December 31, 2000 were
audited by other independent accountants whose report dated February 23, 2001
expressed an unqualified opinion on those statements.
PricewaterhouseCoopers LLP
Houston, Texas
February 22, 2005
23
SunAmerica Senior Floating Rate Fund, Inc.
DIRECTORS AND OFFICERS INFORMATION -- December 31, 2004 -- (unaudited)
The following table contains basic information regarding the Directors and
Officers that oversee operations of the Fund and other investment companies
within the Fund complex.
Number of
Position Held Term of Funds in
Name, With Office and Fund Complex
Address and SunAmerica Length of Principal Occupations Overseen by
Date of Birth* Complex Time Served(4) During Past 5 Years Director(1)
- ---------------------- ------------- -------------- ------------------------------------- ------------
Dr. Judith L. Craven Director 2000- Retired. 76
DOB: October 6, 1945 present
William F. Devin Director 1998- Retired. 76
DOB: December 30, 1938 present
Samuel M. Eisenstat Director 2001- Attorney, solo practitioner. 46
DOB: March 7, 1940 present
Stephen J. Gutman Director 2001- President and Member of Managing 46
DOB: May 10, 1943 present Directors, 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, AIG 85
DOB: January 23, 1954 present SunAmerica Asset Management
Corp. ("SAAMCo") (August 1995 to
present); Director, AIG SunAmerica
Capital Services, Inc. ("SACS")
(August 1993 to present).
William J. Shea(5) Director 2004- President and CEO, Conseco, Inc. 46
DOB: February 9, 1948 present (Financial Services) (2001 to 2004);
Chairman of the Board of Centennial
Technologies, Inc. (1998 to 2001);
Vice Chairman, Bank Boston
Corporation (1993 to 1998).
Vincent M. Marra President 2004- Senior Vice President and Chief N/A
DOB: May 28, 1950 present Operating Officer, SAAMCo
(February 2003 to Present); Chief
Administrative Officer and Chief
Financial Officer, Carret & Co., LLC
(June 2002 to February 2003);
President, Bowne Digital Solutions
(1999 to May 2002).
Donna M. Handel Treasurer 2002- Assistant Treasurer (2001 to 2002); N/A
DOB: June 25, 1966 present Senior Vice President, SAAMCo
(December 2004-Present);
Vice President, SAAMCo (August
1997 to December 2004).
Name,
Address and Other Directorships
Date of Birth* Held by Director(2)
- ---------------------- -----------------------------------
Dr. Judith L. Craven Director, A.G. Belo Corporation
DOB: October 6, 1945 (1992 to present); Director, Sysco
Corporation
(1996 to present); Director, Luby's
Inc. (1998 to present); Director,
University of Texas Board of
Regents (2001-Present).
William F. Devin Member of the Board of Governors,
DOB: December 30, 1938 Boston Stock Exchange (1985-
Present).
Samuel M. Eisenstat Director of North European Oil
DOB: March 7, 1940 Royalty Trust.
Stephen J. Gutman None
DOB: May 10, 1943
Peter A. Harbeck(3) None
DOB: January 23, 1954
William J. Shea(5) None
DOB: February 9, 1948
Vincent M. Marra N/A
DOB: May 28, 1950
Donna M. Handel N/A
DOB: June 25, 1966
- --------
* The business address for each Director and Officer 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 (24 portfolios), VALIC Company II (15 funds) and Seasons Series
Trust (24 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,
because he is an officer and director of the adviser and a director of the
principal underwriter of the Fund.
(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.
(5) Effective on November 30, 2004, William J. Shea began serving as a Director.
Additional information concerning the Directors and Officers is contained in
the Statement of Additional Information and is available without charge by
calling (800) 858-8850.
24
SunAmerica Senior Floating Rate Fund
If you would like additional information:
[_] Call FastFacts -- our 24-hour, automated account and fund information
hotline at 800-654-4760.
[_] Visit www.sunamericafunds.com for more up-to-date information.
Thank you for your continued support.
AIG SunAmerica Mutual Funds
25
[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
Dr. Judith L. Craven PORTFOLIO HOLDINGS
William F. Devin AIG SunAmerica Asset Management Corp. The Fund is required to
Samuel M. Eisenstat Harborside Financial file its com-plete
Stephen J. Gutman Center schedule of portfolio
Peter A. Harbeck 3200 Plaza 5 holdings with the
William J. Shea Jersey City, NJ Securities and Exchange
07311-4992 Commission for its first
Officers and third fiscal quarters
Vincent M. Marra, Distributor on Form N-Q for fiscal
President AIG SunAmerica Capital quar-ters ending after
Donna M. Handel, Services, Inc. July 9, 2004. Once filed,
Treasurer Harborside Financial the Fund's Form N-Q will
Thomas Lynch, Assistant Center be available without
Secretary 3200 Plaza 5 charge on the Secu-rities
J. Steven Neamtz, Vice Jersey City, NJ and Exchange Commission's
President 07311-4992 website at www.sec.gov.
Gregory R. Kingston, You can also obtain
Vice President and Shareholder Servicing copies of Form N-Q by (i)
Assistant Treasurer Agent visit-ing the Securities
Cynthia A. Gibbons, Vice AIG SunAmerica Fund and Exchange
President and Chief Services, Inc. Com-mission's Public
Compliance Officer Harborside Financial Reference Room in
Kathryn A. Pearce, Center Washington DC
Assistant Treasurer 3200 Plaza 5 (information on the
Jersey City, NJ operation of the Public
07311-4992 Reference Room may be
obtained by calling
Custodian and Transfer 1-800-SEC-0330); (ii)
Agent sending your re-quest and
State Street Bank and a duplicating fee to the
Trust Company Securities and Exchange
P.O. Box 219373 Commission's Public
Kansas City, MO 64141 Reference Room,
Washington, DC 20549-0102
VOTING PROXIES ON FUND or (iii) sending your
PORTFOLIO SECURITIES request electronically to
A description of the publicinfo.sec.gov.
policies and proce-dures
that the Fund uses to PROXY VOTING RECORD ON
determine how to vote FUND PORTFOLIO SECURITIES
proxies relating to Information regarding how
secu-rities held in the the Fund voted proxies
Fund's portfolio which is related to securities
available in the Fund's held in the Fund's
State-ment of Additional portfolio during the
Information, may be twelve month period ended
obtained without charge June 30, 2004 is
upon re-quest, by calling available (i) without
(800) 858-8850. This charge, upon request, by
information is also calling (800) 858-8850 or
available from the EDGAR (ii) on the Securities
database on the and Ex-change
Securities and Exchange Commission's website at
Commission's website at http://www.sec.gov.
http://www.sec.gov.
This report is submitted
solely for the general
information of
shareholders of the Fund.
Distribution of this
report to persons other
than shareholders of the
Fund is authorized only
in connection with a
currently effective
prospectus, setting forth
details of the Fund which
must precede or accompany
this report.
26
[LOGO] AIG Sun America
Mutual Funds
Distributed by:
AIG SunAmerica Capital Services, Inc.
SFANN-12/04
Item 2. Code of Ethics.
The SunAmerica Senior Floating Rate Fund, Inc. ("the registrant") 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. Effective
December 2, 2004, the Code of Ethics has been amended to reflect Vincent M.
Marra as President, replacing Robert M. Zakem.
Item 3. Audit Committee Financial Expert.
Currently, the registrant 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 registrant's financial statements, supervise the registrant's
preparation of its financial statements, and oversee the work of the
registrant's independent auditors.
Item 4. Principal Accountant Fees and Services.
(a)--(d) Aggregate fees billed to the registrant for the last two fiscal years
for professional services rendered by the registrant's principal
accountant were as follows:
2003 2004
---- ----
Audit Fees ................... $58,592 $65,637
Audit-Related Fees ........... $26,095 $22,138
Tax Fees ..................... $ 8,705 $ 8,650
All Other Fees ............... $ 0 $ 0
Audit Fees include amounts related to the audit of the registrant'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 registrant's Semiannual
Shareholder Report. Tax Fees principally include tax compliance, tax advice, tax
planning and preparation of tax returns.
(e)
(1) The registrant's audit committee pre-approves all audit services
provided by the registrant's principal accountant for the registrant
and all non-audit services provided by the registrant's principal
accountant for the registrant, 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 registrant, if the engagement by the investment
adviser or Adviser Affiliate relates directly to the operations and
financial reporting of the registrant.
(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 registrant's principal accountant for non-audit services
rendered to the Registrant, its investment adviser, and Adviser Affiliate
that provides ongoing services to the registrant for 2004 and 2003 were
$1,817,631 and $636,504, 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
registrant'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. Schedule of Investments.
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
PROXY VOTING POLICIES AND PROCEDURES
Proxy Voting Responsibility. The Corporation have 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 Corporation and the
Corporation's investment adviser. The policies and procedures enable the
Corporation to vote proxies in a manner consistent with the best interests of
the Corporation's shareholders.
The Corporation has retained a proxy voting service, the Investor
Responsibility Research Center (the "IRRC"), to effect votes on behalf of the
Corporation according to the Corporation's policies and procedures, and to
assist the Corporation 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 Corporation 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 Corporation's policies and procedures therefore provide that the Corporation
will generally vote in support of management recommendations on most corporate
matters. When a Corporation's portfolio manager is dissatisfied with a company's
management, the Corporation 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 Corporation 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 Portfolio. In these instances, such
person(s) will recommend the vote that will maximize value for and is in the
best interests of the Corporation's shareholders.
Examples of the Corporation's Positions on Voting Matters. Consistent
with the approaches described above, the following are examples of the
Corporation'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 Corporation'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 Corporation 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 Corporation'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.
However, if a situation arises where a vote presents a conflict
between the interests of the Corporation's shareholders and the interests of
SunAmerica, the Corporation's principal underwriter, or one of SunAmerica's or
the underwriter's affiliates, and the conflict is known to the Corporation,
senior management of the Corporation 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 Corporation
selects the vote that is in the best interests of the Corporation's
shareholders.
Proxy Voting Records. The IRRC will maintain records of voting
decisions for each vote cast on behalf of the Corporation. Pursuant to SEC
requirements, beginning in August of 2004, on an annual basis the Corporation
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.
- ----------
/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 Directors 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.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
(a) As of March 10, 2005, the SunAmerica Senior Floating Rate Fund's
investments were managed by AIG Global Investment Company. The portfolio
managers for the Fund, who are jointly responsible for the day-to-day investment
management of the portfolio are Steven Oh, John Lapham and Thomas Brandt.
Steven Oh, CFA, joined AIG Global Investment Company in 2002 and is a
managing director and co-portfolio manager for the Leveraged Loan Group. Prior
to joining AIG Global Investment Group, Mr. Oh served as a portfolio manager at
Citadel Investments and Koch Capital and was a Vice President in high yield and
distressed debt trading at BancAmerica Securities.
John Lapham, CFA, joined AIG Global Investment Company with the acquisition
of SunAmerica in 1999, he is a co-portfolio manager for the Leveraged Loan
Group. Mr. Lapham joined SunAmerica in 1995 and was managing director in the
Corporate Finance group.
Thomas Brandt joined AIG Global Investment Company in 2000 as a trader and
is responsible for co-managing the portfolio. Specifically, Mr. Brandt is
responsible for the purchase and sale of bank debt. Prior to joining AIG Global
Investment Group, Mr. Brandt was a Managing Director at BNP Paribas' Media and
Telecom Finance Department, where he was responsible for a $2.8 billion media
and telecom loan portfolio.
Other Accounts Managed by Portfolio Managers
The following table indicates the type, name, and total assets of other
accounts of which the Portfolio Manager has day-to-day responsibilities as of
January 31, 2005. These accounts include, Registered Investment Companies
("RIC"), Other Pooled Investments ("OPI") (hedge funds, private institutional
accounts, etc.), and Other Accounts ("OA").
- ---------------------------- -------------------------- -------------------------- --------------------------
Name of Portfolio Manager Type of Account Name/Number of Account(s) Total Assets Managed in
Accounts
- ---------------------------- -------------------------- -------------------------- --------------------------
John Lapham and OPI 1 $1.1 billion
Steven Oh -------------------------- -------------------------- --------------------------
as Co-Managers OA 5 $2.95 billion
- ---------------------------- -------------------------- -------------------------- --------------------------
Thomas Brandt None None None
- ---------------------------- -------------------------- -------------------------- --------------------------
Conflicts of Interest
AIG Global Investment Corp. ("AIGGIC") aims to conduct its activities in
such a manner that permits it to deal fairly with each of its clients on an
overall basis in accordance with applicable securities laws and fiduciary
obligations. In that regard, AIGGIC has adopted and implemented policies and
procedures, including brokerage and trade allocation policies and procedures,
which AIGGIC believes address the conflicts associated with managing multiple
accounts for multiple clients (including affiliated clients). AIGGIC also
monitors a variety of areas, including compliance with guidelines of the Fund
and other accounts it manages and compliance with AIGGIC's Code of Ethics.
Furthermore, AIGGIC's management periodically reviews the performance of a
portfolio manager. Although AIGGIC does not track the time a portfolio manager
spends on a single portfolio, AIGGIC does periodically assess whether a
portfolio manager has adequate time and resources to effectively manage all of
such portfolio manager's accounts.
Fund Ownership
The following table indicates the number of shares/units of the fund
beneficially owned by the Portfolio Manager and the value of those shares as of
January 31, 2005.
- ------------------------------------- ----------------------------------- -----------------------------------
Name of Portfolio Manager Number of Shares/Units of the Approximate value of Shares/Units
Fund Beneficially Owned owned (as of Fund's Fiscal Year
End)
- ------------------------------------- ----------------------------------- -----------------------------------
John Lapham None None
- ------------------------------------- ----------------------------------- -----------------------------------
Steven Oh None None
- ------------------------------------- ----------------------------------- -----------------------------------
Thomas Brandt None None
- ------------------------------------- ----------------------------------- -----------------------------------
Portfolio Manager Compensation
The portfolio managers' compensation has both a salary and a bonus
component. The compensation structure described below is utilized for both the
Registered Investment Companies and all other accounts aforementioned. The
salary component is a fixed annual salary paid to all AIGGIC portfolio managers.
The bonus component is computed as follows: 60% is measured largely by the
performance in managing the Portfolio Manager's funds, 20% of the bonus is
determined by the overall profitability of AIGGIC; and the final twenty percent
(20%) is determined on a discretionary basis. Determination of the performance
portion of the compensation includes such factors as portfolio returns relative
to benchmark indices, default losses, impaired sales and other criteria. Any
long-term compensation, including stock options, is not performance based, but
instead is based on certain vesting dates.
(b) Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(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 of 1940) that occurred during the second fiscal quarter of
the period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
Item 12. Exhibits.
(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.
(2) Certification pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) 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/ Vincent M. Marra
--------------------
Vincent M. Marra
President
Date: March 11, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Vincent M. Marra
--------------------
Vincent M. Marra
President
Date: March 11, 2005
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: March 11, 2005