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
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: June 30, 2006
Item 1. Reports to Stockholders
SunAmerica Senior Floating Rate Fund, Inc. Semiannual report at June 30, 2006.
2006
Semi-annual
SunAmerica Report
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[PHOTO]
[GRAPHIC]
Senior Floating Rate Fund
Table of Contents
SHAREHOLDERS' LETTER............... 1
STATEMENT OF ASSETS AND LIABILITIES 2
STATEMENT OF OPERATIONS............ 3
STATEMENT OF CHANGES IN NET ASSETS. 4
STATEMENT OF CASH FLOWS............ 5
FINANCIAL HIGHLIGHTS............... 6
PORTFOLIO OF INVESTMENTS........... 10
NOTES TO FINANCIAL STATEMENTS...... 18
DIRECTORS AND OFFICERS INFORMATION. 25
SPECIAL MEETING OF SHAREHOLDERS.... 27
June 30, 2006 SEMI-ANNUAL REPORT
Shareholders' Letter
Dear Shareholders,
We are pleased to present the semi-annual shareholder report for the
SunAmerica Senior Floating Rate Fund for the six-month period ending June 30,
2006. This period began on a very strong note, with institutional new issue
volume setting a record pace of more than US$160 billion. As was the case in
2005, much of this volume was spurred by mergers and acquisitions activity.
Demand for bank loans was exceedingly strong during the first half of the
year. Many issuers took advantage of these market conditions to reprice their
loans. Offsetting the spread compression was the steady increase in LIBOR
(London Interbank Offered Rate). About mid-way through the six-month period,
the market reached an inflection point. The huge supply of bank loans finally
absorbed the excess loan demand and the bank-loan asset class began to trade at
more normalized levels. This is best illustrated by the average bid of a
composite of large, liquid loans tracked by a division of Standard & Poors. The
average bid price of this loan composite reached a high for the year of $101.05
on March 2. Shortly thereafter, the market reversed course, bringing the
average bid price to a 13-month low of $99.91 on June 29.
The drop in the average bid price of the loan market negatively impacted our
portfolio's net asset value, but overall, the recent change in market
conditions will benefit investors. In general, spreads are widening, structures
are improving and investors should have the opportunity to find better value in
the secondary market given current market levels.
We thank you for your continued investment in the Fund.
Sincerely,
The SunAmerica Senior Floating Rate Fund Portfolio Managers
AIG Global Investment Group
Thomas G. Brandt
John G. Lapham
Steven S. Oh
- --------
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; non-diversification and borrower industry
concentration; and lack of full liquidity, which may impair the Fund's ability
to obtain full value for loans sold. The Fund may invest all or substantially
all of its assets in loans or other securities that are rated below investment
grade, or in comparable unrated securities. Credit risks include the
possibility of a default on the loan or bankruptcy of the borrower. The value
of these loans is subject to a greater degree of volatility in response to
interest rate fluctuations.
Past performance is no guarantee of future results.
1
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES -- June 30, 2006 (unaudited)
ASSETS:
Long-term investment securities, at value (unaffiliated)*......... $208,745,882
Short-term investment securities, at value (unaffiliated)*........ 4,536,632
------------
Total investments............................................... 213,282,514
Receivable for:
Fund shares sold................................................ 369,040
Dividends and interest.......................................... 2,427,632
Investments sold................................................ 4,654,002
Prepaid expenses and other assets................................. 102,833
Due from investment adviser for expense reimbursements/fee waivers 67,272
Due from distributor for fee waivers.............................. 40,719
------------
Total assets.................................................... 220,944,012
------------
LIABILITIES:
Payable for:
Fund shares repurchased......................................... 12,076,499
Investments purchased........................................... 5,472,222
Investment advisory and management fees......................... 157,128
Distribution and service maintenance fees....................... 122,260
Administration fees............................................. 73,942
Directors' fees and expenses.................................... 18,428
Other accrued expenses.......................................... 197,311
Dividends payable................................................. 458,135
Commitments (Note 11)............................................. --
------------
Total liabilities............................................... 18,575,925
------------
Net assets..................................................... $202,368,087
============
NET ASSETS REPRESENTED BY:
Capital shares at par value of $.01............................... $ 215,610
Additional paid-in capital........................................ 230,625,789
------------
230,841,399
Accumulated undistributed net investment income (loss)............ (39,753)
Accumulated undistributed net realized gain (loss) on investments. (27,379,381)
Unrealized appreciation (depreciation) on investments............. (1,054,178)
------------
Net assets...................................................... $202,368,087
============
Class A Class B Class C Class D
NET ASSET VALUES: -------- ----------- ------------ ------------
Net assets................................................... $379,663 $25,562,017 $158,728,298 $ 17,698,109
Shares outstanding........................................... 40,443 2,723,344 16,911,385 1,885,783
Net asset value, offering and repurchase price per share
(excluding any applicable contingent deferred sales charges) $ 9.39 $ 9.39 $ 9.39 $ 9.39
======== =========== ============ ============
*COST
Long-term investment securities (unaffiliated)............................................. $209,800,060
============
Short-term investment securities (unaffiliated)............................................ $ 4,536,632
============
See Notes to Financial Statements
2
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF OPERATIONS -- For the six months ended June 30, 2006
(unaudited)
INVESTMENT INCOME:
Interest (unaffiliated)........................................................... $7,573,824
Dividends (unaffiliated).......................................................... 117,447
Facility and other fee income (Note 2)............................................ 353,362
----------
Total investment income........................................................ 8,044,633
----------
EXPENSES:
Investment advisory and management fees........................................... 887,031
Administration fees............................................................... 417,427
Distribution and service maintenance fees:
Class A......................................................................... 472
Class B......................................................................... 96,355
Class C......................................................................... 595,229
Transfer agent fees and expenses:
Class A......................................................................... 1,277
Class B......................................................................... 10,210
Class C......................................................................... 36,243
Class D......................................................................... 5,143
Registration fees:
Class A......................................................................... 3,192
Class B......................................................................... 5,570
Class C......................................................................... 8,860
Class D......................................................................... 6,673
Accounting service fees........................................................... 34,350
Custodian fees.................................................................... 47,529
Reports to shareholders........................................................... 92,327
Audit and tax fees................................................................ 42,024
Legal fees........................................................................ 40,513
Directors' fees and expenses...................................................... 25,454
Interest expense.................................................................. 116
Other expenses.................................................................... 39,258
----------
Total expenses before fee waivers, expense reimbursements and custody credits.. 2,395,253
Fees waived and expenses reimbursed by investment adviser and distributor...... (629,006)
Custody credits earned on cash balances........................................ (356)
----------
Net expenses................................................................... 1,765,891
----------
Net investment income (loss)...................................................... 6,278,742
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments (unaffiliated)............................ 318,131
Change in unrealized appreciation (depreciation) on investments (unaffiliated).... (374,465)
----------
Net realized and unrealized gain (loss) on investments............................ (56,334)
----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $6,222,408
==========
See Notes to Financial Statements
3
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF CHANGES IN NET ASSETS
For the
six months
ended For the year
June 30, ended
2006 December 31,
(unaudited) 2005
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss).......................................................... $ 6,278,742 $ 9,753,762
Net realized gain (loss) on investments (unaffiliated)................................ 318,131 14,295
Net unrealized gain (loss) on investments (unaffiliated).............................. (374,465) (618,514)
------------ ------------
Increase (decrease) in net assets resulting from operations............................. 6,222,408 9,149,543
------------ ------------
Distributions To Shareholders From:
Net investment income (Class A)....................................................... (11,761) (16,613)
Net investment income (Class B)....................................................... (765,501) (1,163,563)
Net investment income (Class C)....................................................... (4,729,080) (7,353,487)
Net investment income (Class D)....................................................... (772,452) (1,212,647)
------------ ------------
Total distributions to shareholders..................................................... (6,278,794) (9,746,310)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 3) (889,403) (26,056,887)
------------ ------------
Total increase (decrease) in net assets................................................. (945,789) (26,653,654)
============ ============
NET ASSETS:
Beginning of period..................................................................... 203,313,876 229,967,530
------------ ------------
End of period+.......................................................................... $202,368,087 $203,313,876
============ ============
- --------
+Includes accumulated undistributed net investment income (loss)........................ $ (39,753) $ (39,701)
============ ============
See Notes to Financial Statements
4
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF CASH FLOWS -- For the six months ended June 30, 2006 --
(unaudited)
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Net increase in net assets from operations...................................................................... $ 6,222,408
Adjustments to reconcile net increase in net assets from operations to net cash provided by operating activities
Purchase of loans............................................................................................. (73,215,592)
Proceed from loans sold....................................................................................... 29,517,664
Loan principal paydowns....................................................................................... 37,952,035
Proceeds from short-term securities sold...................................................................... 5,278,173
Accretion of facility fee income.............................................................................. (43,312)
Increase in dividends and interest receivable................................................................. (530,028)
Increase in receivables for investments sold.................................................................. (3,895,704)
Decrease in amount due from investment adviser................................................................ 17,245
Increase in amount due from distributor....................................................................... (2,033)
Increase in other assets...................................................................................... (77,517)
Decrease in payable for investments purchased................................................................. (1,245,417)
Increase in payable to the adviser............................................................................ 7,971
Increase in other liabilities................................................................................. 90,997
Unrealized depreciation on investments........................................................................ 374,465
Net realized gain from investments............................................................................ (318,131)
------------
Net cash provided by operating activities....................................................................... $ 133,224
------------
Cash flows from financing activities:
Proceeds from shares sold....................................................................................... 31,655,380
Payment on shares repurchased................................................................................... (29,685,144)
Cash dividends paid (not including reinvested dividends of $4,053,048).......................................... (2,093,279)
------------
Net cash used by financing activities........................................................................... $ (123,043)
------------
Net increase in cash............................................................................................ 10,181
Cash balance at beginning of period............................................................................. (10,181)
------------
Cash balance at end of period................................................................................... $ --
============
See Notes to Financial Statements
5
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS
Class A
-----------------------------
For the For the
Six Months period from
ended Year 4/28/04*
06/30/06 ended through
(unaudited) 12/31/05 12/31/04
----------- -------- -----------
Net Asset Value, Beginning of Period........................................... $ 9.39 $ 9.41 $ 9.42
Investment Operations:
Net investment income (loss)@.................................................. 0.30 0.43 0.22
Net realized and unrealized gain (loss) on investments......................... (0.00) (0.01) (0.01)
------ ------ ------
Total from investment operations............................................. 0.30 0.42 0.21
------ ------ ------
Distributions:
Dividends from net investment income........................................... (0.30) (0.44) (0.22)
------ ------ ------
Net Asset Value, End of Period................................................. $ 9.39 $ 9.39 $ 9.41
------ ------ ------
Total Return(1)................................................................ 3.14% 4.55% 2.22%
Ratios/Supplemental Data
Net assets, end of period ($000's)............................................. $ 380 $ 401 $ 224
Ratio of net expenses to average net assets.................................... 1.45%# 1.45% 1.45%#
Ratio of net investment income to average net assets........................... 6.23%# 4.74% 3.44%#
Portfolio turnover rate........................................................ 33% 57% 24%
Expense ratio before waiver of fees and reimbursement of expenses.............. 4.18%# 4.32% 9.31%#
Net investment income ratio before waiver of fees and reimbursement of expenses 3.50%# 1.87% (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
6
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS -- (continued)
Class B
-------------------------------------------------------
For the
Six Months
ended Year Year Year Year Year
06/30/06 ended ended ended ended ended
(unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
----------- -------- -------- -------- -------- --------
Net Asset Value, Beginning of Period.... $ 9.39 $ 9.41 $ 9.33 $ 8.78 $ 9.03 $ 9.64
Investment Operations:
Net investment income (loss)@........... 0.28 0.41 0.29 0.40 0.40 0.58
Net realized and unrealized gain (loss)
on investments......................... (0.00) (0.02) 0.08 0.54 (0.26) (0.60)
------- ------- ------- ------- ------- -------
Total from investment operations....... 0.28 0.39 0.37 0.94 0.14 (0.02)
------- ------- ------- ------- ------- -------
Distributions:
Dividends from net investment income.... (0.28) (0.41) (0.29) (0.39) (0.39) (0.59)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period.......... $ 9.39 $ 9.39 $ 9.41 $ 9.33 $ 8.78 $ 9.03
------- ------- ------- ------- ------- -------
Total Return(1)......................... 2.99% 4.24% 3.97% 10.95% 1.54% (0.41)%
Ratios/Supplemental Data
Net assets, end of period ($000's)...... $25,562 $25,181 $27,530 $26,565 $31,906 $42,335
Ratio of net expenses to average net
assets................................. 1.75%# 1.75% 1.75% 1.54% 1.45% 1.45%
Ratio of net investment income to
average net assets..................... 5.96%# 4.36% 3.04% 4.35% 4.42% 6.23%
Portfolio turnover rate................. 33% 57% 24% 75% 112% 69%
Expense ratio before waiver of fees and
reimbursement of expenses.............. 2.43%# 2.38% 2.38% 2.57% 2.51% 2.47%
Net investment income ratio before
waiver of fees and reimbursement of
expenses............................... 5.28%# 3.73% 2.41% 3.33% 3.36% 5.21%
- --------
@ 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 C
-----------------------------------------------------------
For the
Six Months
ended Year Year Year Year Year
06/30/06 ended ended ended ended ended
(unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
----------- -------- -------- -------- -------- --------
Net Asset Value, Beginning of Period.... $ 9.39 $ 9.41 $ 9.33 $ 8.78 $ 9.03 $ 9.64
Investment Operations:
Net investment income (loss)@........... 0.28 0.42 0.28 0.38 0.40 0.57
Net realized and unrealized gain (loss)
on investments......................... (0.00) (0.03) 0.09 0.56 (0.27) (0.60)
-------- -------- -------- -------- ------- --------
Total from investment operations....... 0.28 0.39 0.37 0.94 0.13 (0.03)
-------- -------- -------- -------- ------- --------
Distributions:
Dividends from net investment income.... (0.28) (0.41) (0.29) (0.39) (0.38) (0.58)
-------- -------- -------- -------- ------- --------
Net Asset Value, End of Period.......... $ 9.39 $ 9.39 $ 9.41 $ 9.33 $ 8.78 $ 9.03
-------- -------- -------- -------- ------- --------
Total Return(1)......................... 2.99% 4.24% 3.97% 10.92% 1.47% (0.45)%
Ratios/Supplemental Data
Net assets, end of period ($000's)...... $158,728 $154,584 $174,583 $103,726 $86,101 $140,664
Ratio of net expenses to average net
assets................................. 1.75%# 1.75% 1.75% 1.59% 1.50% 1.50%
Ratio of net investment income to
average net assets..................... 5.96%# 4.36% 3.06% 4.22% 4.33% 6.28%
Portfolio turnover rate................. 33% 57% 24% 75% 112% 69%
Expense ratio before waiver of fees and
reimbursement of expenses.............. 2.36%# 2.32% 2.35% 2.51% 2.48% 2.52%
Net investment income ratio before
waiver of fees and reimbursement of
expenses............................... 5.34%# 3.79% 2.46% 3.31% 3.36% 5.26%
- --------
@ 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
8
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS -- (continued)
Class D
---------------------------------------------------------
For the For the
Six Months period from
ended Year Year Year Year 5/02/01*
06/30/06 ended ended ended ended through
(unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
----------- -------- -------- -------- -------- -----------
Net Asset Value, Beginning of Period.... $ 9.39 $ 9.41 $ 9.33 $ 8.78 $ 9.03 $ 9.46
Investment Operations:
Net investment income (loss)@........... 0.32 0.47 0.33 0.43 0.43 0.35
Net realized and unrealized gain (loss)
on investments......................... (0.02) (0.03) 0.08 0.54 (0.27) (0.42)
------- ------- ------- ------- ------- -------
Total from investment operations....... 0.30 0.44 0.41 0.97 0.16 (0.07)
------- ------- ------- ------- ------- -------
Distributions:
Dividends from net investment income.... (0.30) (0.46) (0.33) (0.42) (0.41) (0.36)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period.......... $ 9.39 $ 9.39 $ 9.41 $ 9.33 $ 8.78 $ 9.03
------- ------- ------- ------- ------- -------
Total Return(1)......................... 3.24% 4.76% 4.49% 11.28% 1.72% (0.79)%
Ratios/Supplemental Data
Net assets, end of period ($000's)...... $17,698 $23,148 $27,630 $13,369 $15,037 $26,372
Ratio of net expenses to average net
assets................................. 1.25%# 1.25% 1.25% 1.25% 1.25% 1.25%#
Ratio of net investment income to
average net assets..................... 6.46%# 4.86% 3.60% 4.63% 4.58% 5.66%#
Portfolio turnover rate................. 33% 57% 24% 75% 112% 69%
Expense ratio before waiver of fees and
reimbursement of expenses.............. 1.66%# 1.60% 1.62% 1.86% 1.77% 2.27%#
Net investment income ratio before
waiver of fees and reimbursement of
expenses............................... 6.05%# 4.51% 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
9
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO PROFILE -- June 30, 2006 -- (unaudited)
Industry Allocation*
Broadcasting & Entertainment........................ 17.32%
Chemicals, Plastics and Rubber...................... 8.32
Telecommunications.................................. 6.62
Leisure, Amusement, Entertainment................... 6.54
Healthcare, Education and Childcare................. 5.92
Hotels, Motels, Inns and Gaming..................... 5.28
Containers, Packaging and Glass..................... 4.84
Electronics......................................... 4.55
Buildings & Real Estate............................. 4.51
Automobile.......................................... 4.19
Diversified/Conglomerate Manufacturing.............. 4.02
Printing and Publishing............................. 3.96
Utilities........................................... 3.30
Oil and Gas......................................... 2.86
Home and Office Furnishings, Housewares and Durables 2.80
Personal Transportation............................. 2.39
Registered Investment Companies..................... 2.24
Retail Stores....................................... 2.17
Beverage, Food & Tobacco............................ 1.92
Personal and Nondurable Consumer Products........... 1.81
Personal, Goods and Misc. Services.................. 1.76
Diversified/Conglomerate Service.................... 1.61
Ecological.......................................... 1.60
Cargo Transport..................................... 1.34
Aerospace/Defense................................... 1.26
Finance............................................. 1.23
Farming and Agriculture............................. 0.45
Mining, Steel, Iron and Nonprecious Metals.......... 0.39
Textiles and Leather................................ 0.19
------
105.39%
======
Credit Quality+#
BBB-............ 1.44%
BB+............. 2.86
BB.............. 9.02
BB-............. 19.75
B+.............. 26.32
B............... 20.55
B-.............. 7.04
CCC+............ 1.57
CCC............. 0.72
CCC-............ 0.48
D............... 0.37
Not Rated@...... 9.88
------
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.
10
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2006 -- (unaudited)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- ------------------------------------------------------------------------------------------------------------------------
LOANS(3)(4) -- 102.52%
Aerospace/Defense -- 1.26%
Axle Tech International.................. 1st Lien B2 B+ 7.32-7.36% 10/20/12 $ 239,286 $ 241,428
Hexcel Corp.............................. BTL-B Ba3 BB- 6.75-6.94 03/01/12 820,146 822,537
Midwestern Aircraft...................... BTL-B B1 BB- 7.32 07/01/13 594,000 598,009
SI International, Inc.................... BTL B1 B+ 6.97 02/01/11 855,446 857,584
-----------
2,519,558
-----------
Automobile -- 4.19%
Dura Operating Corp...................... 2nd Lien B3 B 8.95 04/13/11 500,000 507,499
FleetPride Corp.......................... BTL-B B2 B 8.49-8.59 06/29/13 250,000 250,312
Goodyear Tire & Rubber Co................ 2nd Lien B2 B+ 7.95 04/30/10 2,000,000 2,010,833
HLI Operating Co., Inc................... BTL-C Caa1 B- 10.68-11.26 06/03/10 500,000 504,791
Key Plastics LLC......................... BTL-B B1 BB- 8.11-8.23 06/25/10 1,207,459 1,219,533
Navistar International Corp.............. BTL B1 BB- 10.01-10.11 02/28/09 1,739,963 1,755,186
Ozburn-Hessey Holding Co. LLC............ BTL B2 B+ 7.29 08/01/12 522,198 527,420
Plastech, Inc.@.......................... 2nd Lien B1 B 12.58 02/15/10 1,000,000 962,500
United Components, Inc................... BTL-D B2 BB- 7.41 06/30/10 723,333 725,142
-----------
8,463,216
-----------
Beverage, Food & Tobacco -- 1.92%
Alliance One International, Inc.......... BTL-B B2 B+ 8.49 05/13/10 491,269 494,339
Dole Food Co............................. BTL B1 BB- 7.00-9.00 04/01/13 208,779 207,034
Dole Food Co............................. Tranche C B1 BB- 7.00-9.00 04/01/13 695,930 690,113
Dole Food Co............................. LOC B1 BB- 4.92 04/01/13 93,023 92,246
Keystone Foods Holdings LLC.............. BTL Ba3 B+ 7.13-7.25 06/16/11 1,188,088 1,192,048
Leiner Health Products Group, Inc........ BTL-B B2 B 8.61 05/27/11 496,203 498,684
Pierre Foods, Inc........................ BTL-B B1 B+ 6.93 06/30/10 715,121 715,568
-----------
3,890,032
-----------
Broadcasting & Entertainment -- 16.83%
Adelphia Communications Corp.(5)......... BTL-B NR NR 7.31 08/07/06 2,000,000 2,003,750
Century -- TCI California LP(5).......... Revolver NR NR 8.25 06/30/09 1,000,000 994,583
Century Cable Holdings LLC(5)............ Discretionary BTL Ca NR 10.25 12/31/09 2,500,000 2,393,750
Cequel Communications LLC................ 1st Lien B1 B+ 7.38 05/01/13 2,000,000 1,991,072
Cequel Communications LLC................ 2nd Lien Caa1 B- 9.85 05/05/14 1,000,000 970,000
Charter Communications Operating LLC..... BTL B2 B 7.76 04/28/13 4,000,000 4,012,648
CSC Holdings, Inc........................ BTL Ba3 BB 6.49-6.74 03/29/13 1,995,000 1,987,311
Haights Cross Operating Co............... BTL B3 B- 9.67 08/20/08 1,456,313 1,471,786
Hilton Head Communications LP(5)(10)..... BTL NR NR 9.50 03/31/08 1,000,000 948,542
HIT Entertainment, Ltd................... 2nd Lien B2 CCC+ 10.58 02/05/13 1,000,000 1,009,375
HIT Entertainment, Ltd................... BTL B1 B 7.42 08/05/15 497,500 499,988
Insight Midwest Holdings LLC............. BTL-C Ba3 BB- 7.38 12/31/09 975,000 976,625
Intelstat Zeus, Ltd...................... BTL B1 B 9.00 07/28/11 985,000 987,052
Liberty Cablevision of Puerto Rico, Ltd.. BTL NR NR 7.48 02/13/13 1,496,250 1,498,120
Mission Broadcasting, Inc................ BTL-B Ba3 B+ 6.28 10/01/12 1,207,076 1,206,321
Nexstar Broadcasting, Inc................ BTL-B Ba3 B 7.25 10/01/12 1,172,405 1,171,672
NextMedia Operating...................... 2nd Lien B3 CCC+ 9.75 11/18/12 500,000 508,334
PANAMSAT Corp............................ BTL-B1 Ba3 BB+ 7.18 08/20/11 4,432,500 4,445,798
Panavision, Inc.......................... 2nd Lien Caa3 CCC 12.13 04/10/13 500,000 510,313
Spanish Broadcasting Systems, Inc........ 1st Lien B1 B+ 7.25 06/01/12 987,500 987,500
UPC Financing Partnership................ BTL-J2 B1 B 7.11 09/30/13 1,000,000 999,821
UPC Financing Partnership................ BTL-K2 B1 B 7.11 09/30/12 1,000,000 999,821
WideOpenWest Finance LLC................. 2nd Lien B2 NR 10.23 06/22/11 500,000 503,500
Young Broadcasting, Inc.................. BTL B2 B- 7.69-7.75 11/02/12 990,000 988,144
-----------
34,065,826
-----------
11
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2006 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- ---------------------------------------------------------------------------------------------------------
Buildings & Real Estate -- 4.51%
Atrium Cos., Inc.................... BTL B2 B 7.83-8.25% 12/28/11 $ 445,294 $ 445,851
Kyle Acquisition Group LLC.......... BTL Ba3 BB 7.38 07/15/10 500,000 500,000
Masonite International Corp......... BTL B2 BB- 7.11-7.50 04/16/13 1,483,749 1,472,050
Masonite International Corp......... CND TL B2 BB- 7.11-7.50 04/16/13 1,481,226 1,469,546
North Las Vegas..................... 1st Lien B1 BB 8.25 05/01/11 498,750 499,997
North Las Vegas..................... 2nd Lien B2 B 12.50 05/01/12 250,000 253,125
Palmdale Hills Property LLC......... 1st Lien B1 B+ 8.26-8.50 05/01/12 990,000 992,475
Palmdale Hills Property LLC......... 2nd Lien B2 B- 12.76 05/01/12 1,000,000 1,002,500
PGT Industries, Inc................. 1st Lien B2 B+ 8.13 02/01/12 748,125 752,801
PGT Industries, Inc................. 2nd Lien B3 CCC+ 12.13 02/01/13 250,000 255,000
Rhodes Homes........................ 1st Lien Ba3 BB- 8.75 11/10/10 231,250 232,406
TCO Funding Corp.................... BTL B2 B- 8.12 10/25/12 995,000 1,004,950
Yellowstone Mountain Club........... BTL B1 B+ 7.73 09/30/10 237,733 238,365
-----------
9,119,066
-----------
Cargo Transport -- 1.34%
Hertz Corp.......................... BTL Ba2 BB 7.26-7.41 12/21/12 497,562 499,548
Pacer International, Inc............ BTL B1 NR 6.63-8.75 06/10/10 627,451 627,451
Transport Industries LP............. BTL-B B2 NR 8.00 09/30/12 201,551 202,811
United States Shipping LLC.......... BTL Ba3 NR 7.50 04/30/10 1,371,842 1,376,129
-----------
2,705,939
-----------
Chemicals, Plastics & Rubber -- 8.32%
Basell Finance Co................... BTL-B2 Ba3 B+ 7.73 08/01/13 104,167 105,686
Basell Finance Co................... BTL-B4 Ba3 B+ 7.73 08/01/13 20,833 21,137
Basell Finance Co................... BTL-C2 Ba3 B+ 8.23 08/01/13 104,167 105,686
Basell Finance Co................... BTL-C4 Ba3 B+ 8.23 08/01/13 20,833 21,137
Brenntag Holdings................... BTL-B2 B2 B 7.44 12/22/13 200,909 202,617
Brenntag Holdings................... BTL B2 B 7.44 12/22/13 49,091 49,582
Celanese AG......................... BTL B1 B+ 7.50 04/06/11 2,575,951 2,584,967
Hercules, Inc....................... BTL-B Ba1 BB 6.53-7.00 10/08/10 879,750 882,829
Hexion Specialty Chemicals, Inc..... BTL-C1 B2 B+ 7.13 05/15/13 821,538 814,949
Hexion Specialty Chemicals, Inc..... BTL-C2 B2 B+ 7.13 05/15/13 178,462 177,030
Huntsman International LLC.......... BTL-B Ba3 BB- 7.04 08/31/12 3,479,262 3,467,846
Ineos US Finance LLC................ BTL-B2 Ba3 B+ 7.34 12/31/13 750,000 755,906
Ineos US Finance LLC................ BTL-C2 Ba3 B+ 7.84 12/31/14 750,000 755,906
Invista B.V......................... BTL-B1 Ba3 BB 7.00 04/29/11 985,692 987,129
Invista B.V......................... BTL-B2 Ba3 BB 7.00 04/29/11 501,059 501,789
ISP Chemco, Inc..................... BTL Ba3 BB- 6.94 02/14/13 498,750 499,284
Kraton Polymers LLC................. BTL B1 BB- 7.38 12/23/10 439,871 439,871
PQ Corp............................. BTL B1 B+ 7.50 02/15/13 740,625 742,477
Rockwood Specialties Group, Inc..... BTL-E B1 B+ 7.13 07/30/12 1,980,000 1,986,324
Wellman, Inc........................ 2nd Lien B2 B- 11.90 02/10/10 1,700,000 1,727,413
-----------
16,829,565
-----------
Containers, Packaging & Glass -- 4.84%
Appleton Papers, Inc................ BTL Ba3 BB- 7.40-7.68 06/11/10 943,119 947,834
Berry Plastics Corp................. BTL B1 B+ 7.10 12/02/11 1,159,097 1,159,581
Boise Cascade Corp.................. BTL-D Ba3 BB 7.13-7.25 10/28/11 726,450 728,926
Captive Plastics, Inc............... BTL B2 B- 8.50 08/10/11 481,250 487,266
Captive Plastics, Inc............... 2nd Lien B3 CCC 12.34 12/15/12 1,000,000 1,000,000
Georgia-Pacific Corp................ 1st Lien Ba2 BB- 7.30-7.50 12/20/12 1,990,000 1,988,446
Georgia-Pacific Corp................ 2nd Lien Ba3 B+ 8.30 12/23/13 1,000,000 1,009,663
Graham Packaging Co. LP............. Tranche B B2 B 6.94-7.75 04/07/12 2,462,500 2,469,272
-----------
9,790,988
-----------
12
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2006 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- -------------------------------------------------------------------------------------------------------------------
Diversified/Conglomerate Manufacturing -- 4.02%
Accuride Corp................................ BTL-B B1 B+ 7.31% 01/31/12 $1,398,636 $1,403,182
Aearo Technologies, Inc...................... 2nd Lien Caa1 CCC+ 11.96 09/24/13 500,000 509,375
Aearo Technologies, Inc...................... BTL B2 B 7.96 03/24/13 997,500 1,006,436
AGY Holding Corp............................. 1st Lien B2 B 8.25 03/31/12 498,750 502,179
Bombardier Capital, Inc...................... BTL NR NR 8.24 06/30/13 1,000,000 1,001,250
Enersys, Inc................................. BTL Ba3 BB 7.03-7.44 03/17/11 588,000 589,470
Flowserve Corp............................... BTL Ba3 BB- 7.00-7.25 08/10/12 468,870 469,676
Maxim Crane Works LP......................... BTL B1 BB 7.31-9.25 01/31/10 318,052 318,848
National Distributing@....................... 2nd Lien B2 B- 11.85 06/16/10 1,000,000 1,002,500
Penn Engineering & Manufacturing Corp........ BTL B2 B 7.60 05/01/12 365,664 371,149
Polypore, Inc................................ BTL B2 B 8.35 11/12/11 948,547 958,033
----------
8,132,098
----------
Diversified/Conglomerate Service -- 1.61%
Billing Services Group....................... 1st Lien B1 B+ 7.63 04/27/11 493,750 496,219
Bridge Information Systems, Inc.+#@(5)(6).... BTL-B Caa1 NR 11.25 06/30/05 417,016 --
Coinstar, Inc................................ BTL Ba3 BB- 7.03 07/07/11 798,440 803,430
NES Rentals Holdings, Inc.................... 2nd Lien B3 B 11.13-13.25 07/20/10 1,470,000 1,482,862
Protection One, Inc.......................... BTL B2 B+ 7.70-8.00 04/11/11 465,300 466,463
----------
3,248,974
----------
Ecological -- 1.60%
Allied Waste North America, Inc.............. Tranche A B1 BB 6.58 01/15/12 765,132 763,045
Allied Waste North America, Inc.............. BTL B1 BB 6.48-6.86 01/15/12 1,971,199 1,965,599
Wastequip, Inc............................... 2nd Lien B3 B 11.00 07/15/11 500,000 502,500
----------
3,231,144
----------
Electronics -- 4.55%
Amkor Technology, Inc........................ 2nd Lien B2 NR 9.69 10/27/10 1,000,000 1,036,875
Aspect Software.............................. 1st Lien B2 B 7.94 09/22/10 250,000 250,469
Eastman Kodak Co............................. BTL-B1 Ba3 B+ 7.33-7.70 10/15/12 995,006 994,384
Epicor Software Corp......................... BTL B1 B+ 7.71-9.15 03/31/12 498,750 504,049
SSA Global Technologies, Inc................. BTL-B B2 BB- 7.49 08/02/12 248,125 248,125
Sungard Data Systems, Inc.................... BTL-B B1 B+ 7.66 08/01/13 3,960,000 3,978,149
UGS Corp..................................... BTL B1 B+ 7.35 03/31/12 1,950,668 1,949,855
Vertafore, Inc............................... 2nd Lien B3 CCC+ 10.98-11.23 12/22/10 250,000 253,958
----------
9,215,864
----------
Farming & Agriculture -- 0.45%
AGCO Corp.................................... BTL Ba1 BB+ 7.25 07/03/09 903,167 908,811
----------
Finance -- 1.23%
Check$mart Financial Co...................... BTL-B B2 B 8.03-8.14 04/28/12 498,750 499,373
iPayment, Inc................................ BTL B2 B 7.42-7.75 05/08/13 997,500 997,500
Nasdaq Stock Market, Inc..................... BTL-B Ba3 BBB- 6.97-7.25 04/18/12 631,458 631,695
Nasdaq Stock Market, Inc..................... BTL-C Ba2 BBB- 6.83-7.25 04/18/12 366,042 366,179
----------
2,494,747
----------
13
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2006 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare, Education & Childcare -- 5.92%
Accellent Corp......................................... BTL B2 BB- 7.23% 11/18/12 $ 497,500 $ 496,878
AMR/EmCare Holdings.................................... BTL B2 B+ 6.91-7.17 02/15/12 677,213 678,483
Community Health Systems, Inc.......................... BTL Ba3 BB- 6.97 08/19/11 1,305,497 1,309,343
ComPsych Investment Corp............................... BTL-B NR NR 7.86-8.25 03/01/12 992,500 994,981
DaVita, Inc............................................ BTL-B B1 BB- 6.99-7.69 07/30/12 2,706,912 2,715,934
HealthSouth Corp....................................... BTL-B B2 NR 8.52 03/10/13 1,000,000 1,001,161
Magellan Health Services, Inc.......................... BTL B1 B+ 7.33-7.42 08/15/08 277,778 278,472
Magellan Health Services, Inc.......................... LOC B1 B+ 5.01 08/15/08 277,778 278,472
Spectrum Labs.......................................... BTL-B NR NR 8.75 12/20/12 995,000 1,002,463
Team Health, Inc....................................... BTL-B B2 B+ 7.69 11/18/12 248,750 250,072
Vanguard Health Holding Co. II......................... BTL B2 B 6.95 09/23/11 985,075 990,411
Warner Chilcott Holdings Co............................ BTL B2 B 7.63 01/18/12 44,054 44,246
Warner Chilcott Holdings Co............................ BTL B2 B 7.61-8.00 01/18/12 220,268 221,232
Warner Chilcott Holdings Co............................ BTL-B B2 B 7.61-7.63 01/18/12 1,078,173 1,083,564
Warner Chilcott Holdings Co............................ BTL-C B2 B 7.61 01/18/12 434,451 436,623
Warner Chilcott Holdings Co............................ BTL-D B2 B 7.61 01/18/12 200,704 201,708
-----------
11,984,043
-----------
Home & Office Furnishings, Housewares & Durables -- 2.80%
Jarden Corp............................................ BTL B1 B+ 7.50 04/11/12 1,278,674 1,280,159
Jarden Corp............................................ BTL-B2 B1 B+ 6.74 01/24/12 681,035 679,474
Maax Corp.............................................. BTL-B B2 B- 8.13-8.50 06/04/11 1,646,058 1,637,828
Sealy Mattress Co...................................... BTL-D Ba3 B+ 6.98-8.75 08/06/12 1,226,246 1,229,503
Simmons Co............................................. BTL-D B2 B+ 7.25-9.50 12/19/11 843,120 847,467
-----------
5,674,431
-----------
Hotels, Motels, Inns, & Gaming -- 5.28%
CCM Merger, Inc........................................ BTL-B B1 B+ 7.21-7.49 07/13/12 495,001 494,197
Fairmont Hotels and Resorts............................ BTL-B NR NR 8.61 06/15/11 2,000,000 2,000,000
Isle of Capri Black Hawk LLC........................... BTL B1 B+ 7.03-7.51 10/24/11 496,250 497,491
Isle of Capri Casinos, Inc............................. BTL Ba2 BB- 6.47-7.25 02/04/11 295,500 296,239
Kulima Resort Co....................................... 2nd Lien B2 CCC+ 11.85 09/30/11 250,000 235,000
Penn National Gaming, Inc.............................. BTL-B Ba2 BB 6.86-7.25 06/01/12 1,985,000 1,993,271
Trump Entertainment Resorts Holdings LP................ BTL-B1 B2 BB- 7.92-8.03 05/04/12 495,000 499,563
Venetian Casino Resorts LLC............................ Delayed Draw Ba3 BB- 7.25 06/15/11 683,761 685,363
Venetian Casino Resorts LLC............................ BTL-B Ba3 BB- 7.25 06/15/11 3,316,239 3,324,013
Venetian Macau, Ltd.................................... BTL B1 BB- 8.10 04/01/13 166,667 167,570
Wembley, Inc........................................... 1st Lien B1 B+ 6.99 07/18/12 247,500 247,655
Wembley, Inc........................................... 2nd Lien B2 B 8.74 07/18/12 250,000 252,188
-----------
10,692,550
-----------
Leisure, Amusement, Entertainment -- 6.54%
24 Hour Fitness Worldwide, Inc......................... BTL-B B2 B 7.50-8.12 06/30/12 1,995,000 2,010,587
Deluxe, Inc............................................ 1st Lien B1 B 9.25 01/28/11 480,518 486,224
Fender Musical Instruments Corp........................ 1st Lien B2 B+ 7.24-7.37 03/31/12 417,920 420,009
Metro-Goldwyn-Mayer Studios, Inc....................... BTL-B Ba3 B+ 7.75 04/08/12 2,992,500 3,010,524
Regal Cinemas, Inc..................................... BTL Ba2 BB- 7.07-7.25 11/10/10 1,421,925 1,422,248
Six Flags Theme Parks, Inc............................. BTL-B B1 B- 7.26-7.41 06/30/09 987,406 993,754
Southwest Sports Group LLC............................. BTL NR NR 7.80 12/22/12 1,000,000 1,000,625
True Temper Sports, Inc................................ BTL B2 B 8.03-8.41 03/15/11 465,026 468,514
WMG Acquisition Corp................................... BTL Ba2 B+ 7.09-7.32 02/28/11 3,414,155 3,426,484
-----------
13,238,969
-----------
Mining, Steel, Iron & Nonprecious Metals -- 0.39%
Novelis, Inc........................................... BTL-B Ba2 BB- 7.38 01/07/12 389,525 391,138
Novelis, Inc........................................... CND TL Ba2 BB- 7.38 01/07/12 224,272 225,201
Walter Industries, Inc................................. BTL-B Ba3 B+ 6.87-7.25 10/03/12 180,571 181,192
-----------
797,531
-----------
14
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2006 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- ------------------------------------------------------------------------------------------------------------------------
Oil & Gas -- 2.81%
Alon USA, Inc................................... BTL-B B2 BB- 7.91% 06/15/14 $ 222,222 $ 223,819
Calumet Lubricants Co. LP....................... BTL B2 B 8.79 11/30/12 110,556 111,730
Calumet Lubricants Co. LP....................... CLD B2 B 5.13 11/30/12 111,111 112,292
CDX Funding LLC................................. 2nd Lien NR NR 10.75 03/01/13 1,000,000 1,017,917
Epco Holdings, Inc.............................. BTL-C Ba3 B+ 7.08-7.35 08/18/10 495,000 497,828
Helix Energy Solutions Group, Inc............... BTL-B B2 BB 7.39-7.64 05/05/13 1,000,000 1,001,500
Key Energy Services, Inc........................ Delayed Draw NR NR 8.40 06/30/12 995,000 999,975
Petrohawk Energy Corp........................... 2nd Lien NR B- 9.69-9.88 02/24/09 777,778 785,556
Primary Energy Finance LLC...................... BTL Ba2 BB- 7.35 08/24/12 433,700 436,682
Targa Resources, Inc............................ LOC Ba3 B+ 7.23 10/31/12 96,774 97,046
Targa Resources, Inc............................ BTL-B Ba3 B+ 7.23-7.75 10/31/12 400,202 401,327
----------
5,685,672
----------
Personal & Nondurable Consumer Products -- 1.81%
American Achievement Corp....................... BTL-B Ba3 BB- 7.63-9.75 03/22/11 687,164 690,600
American Safety Razor Co........................ BTL-B B2 B 7.97 02/28/12 928,056 930,376
Bushnell Performance Optics..................... BTL B1 B+ 8.32 08/19/11 496,341 500,271
Hillman Group, Inc.............................. BTL-B B2 B 8.38 03/31/11 814,583 820,439
Solo Cup, Inc................................... 2nd Lien B3 B- 9.66 02/27/12 250,000 253,281
Spectrum Brands, Inc............................ BTL-B B1 B- 8.03-8.44 02/07/12 461,700 463,864
----------
3,658,831
----------
Personal, Goods & Misc. Services -- 1.76%
Burt's Bees, Inc................................ BTL B2 B 7.92-8.37 03/29/11 487,750 487,750
Garden Fresh Restaurants Corp................... BTL B2 B 8.23-10.50 06/22/11 248,438 249,059
Maidenform, Inc................................. BTL Ba3 B+ 6.92-7.04 05/11/10 416,667 417,188
Reynolds American, Inc.......................... BTL B1 BBB- 7.19-7.31 06/01/13 2,000,000 2,009,218
Stewart Enterprises, Inc........................ BTL-B Ba3 BB 6.66-7.28 11/19/11 402,737 403,744
----------
3,566,959
----------
Personal Transportation -- 2.39%
Delta Air Lines, Inc.(5)........................ BTL-C B3 B 12.77 10/01/08 1,500,000 1,551,000
Northwest Airlines, Inc.(5)..................... BTL-A Caa2 D 10.54 11/17/09 750,000 763,438
United Airlines, Inc............................ BTL B1 B+ 9.13 02/01/12 250,000 252,839
United Airlines, Inc............................ BTL-B B1 B+ 8.63 02/01/12 1,750,000 1,769,870
US Airways Group, Inc........................... BTL B2 B 9.00 04/10/13 500,000 503,563
----------
4,840,710
----------
Printing & Publishing -- 3.96%
Affinity Group, Inc............................. BTL Ba3 B+ 7.85 06/24/09 1,169,732 1,178,505
Dex Media West LLC.............................. BTL-B Ba2 BB 6.67-7.00 03/09/10 1,031,712 1,028,429
FSC Acquisition LLC............................. Delayed Draw B2 B 7.46 08/01/12 51,391 51,541
FSC Acquisition LLC............................. BTL B2 B 7.33-7.42 08/01/12 430,257 431,512
GateHouse Media Operating, Inc.................. 1st Lien B1 B+ 5.14-7.39 12/06/13 2,000,000 2,000,000
New Publications, Inc........................... 2nd Lien B3 CCC+ 12.32 02/05/13 250,000 252,188
Primedia, Inc................................... BTL-B B2 B 7.38 12/31/09 1,087,114 1,075,156
R.H. Donnelly, Inc.............................. BTL-D2 Ba3 BB 6.49-7.00 06/30/11 1,506,523 1,501,412
Thomas Nelson Publishers........................ BTL-B B1 B 7.43 05/13/13 500,000 502,813
----------
8,021,556
----------
Retail Stores -- 2.17%
Alimentation Couche-Tard, Inc................... BTL Ba1 BB+ 7.13 12/17/10 598,469 603,207
Burlington Coat Factory......................... BTL-B B2 B 7.43-7.53 05/28/13 498,750 484,723
Jean Coutu Group, Inc........................... BTL-B B2 BB- 7.63 07/30/11 1,352,840 1,356,503
Neiman-Marcus Group, Inc........................ BTL B1 B+ 7.77 04/15/13 949,367 956,953
Quality Stores, Inc. (Central Tractor)+#@(5)(6). BTL-B Caa2 NR 10.75 04/30/06 833,705 --
Supervalu, Inc.................................. BTL-B Ba3 BB- 7.06 06/01/13 1,000,000 999,297
----------
4,400,683
----------
15
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2006 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- -----------------------------------------------------------------------------------------------------------
Telecommunications -- 6.53%
Cavalier Telecom...................... BTL-B B2 B 9.52% 03/31/12 $ 249,375 $ 252,492
Centennial Cellular Operating Co...... BTL B2 B- 7.23-7.75 02/09/11 1,375,000 1,381,875
Cricket Communications, Inc........... BTL-B B2 B 8.25 12/20/10 3,000,000 3,025,125
Crown Castle Operating Co............. BTL-B B2 BB 7.65 06/01/14 2,000,000 2,010,626
FairPoint Communications, Inc......... BTL B1 BB- 7.25 02/07/12 1,000,000 998,125
Hawaiian Telecom Communications, Inc.. BTL-B B1 B 7.75 10/31/12 997,778 1,003,034
Madison River Capital LLC............. BTL-B1 B1 B+ 7.26 08/01/12 750,000 752,579
Ntelos, Inc........................... 1st Lien B2 B 7.60 08/31/11 1,477,517 1,477,517
Paetec Communications, Inc............ 2nd Lien B3 CCC+ 12.88 06/15/13 250,000 255,625
Paetec Communications, Inc............ BTL-B B3 B 8.88 06/15/13 500,000 504,375
Syniverse Holding LLC................. BTL-B Ba3 BB- 7.25 02/01/12 1,550,453 1,552,391
------------
13,213,764
------------
Textiles & Leather -- 0.19%
Globe Manufacturing Corp.+#@(5)(7).... BTL-B Caa2 NR 11.00 08/15/06 837,014 --
William Carter Co..................... BTL-B B1 BB 6.63-6.76 07/14/12 393,894 393,647
------------
393,647
------------
Utilities -- 3.30%
Calpine Corp.......................... DIP B2 B 9.50 12/20/07 500,000 507,917
Cheniere LNG Holdings LLC............. BTL Ba2 BB 8.25 08/30/12 248,125 250,374
Complete Production Services, Inc..... BTL-B NR B 7.66 08/01/12 248,125 248,849
La Paloma Generating Co............... BTL Ba3 BB- 6.73 08/16/12 15,338 15,278
La Paloma Generating Co............... LOC Ba3 BB- 7.10 08/16/12 32,787 32,659
La Paloma Generating Co............... BTL-C B2 B 9.00 08/16/13 250,000 250,391
La Paloma Generating Co............... BTL-B Ba3 BB- 7.25 08/16/12 192,588 191,836
NRG Energy, Inc....................... CLD Ba2 BB- 7.50 02/02/13 1,000,000 1,002,031
NRG Energy, Inc....................... BTL Ba2 BB- 7.23 02/02/13 2,992,500 2,999,131
Reliant Energy, Inc................... BTL B2 B 7.50-7.66 10/01/10 995,000 997,384
Reliant Energy Resources, Inc......... BTL B2 B 7.47 03/15/07 180,978 181,247
------------
6,677,097
------------
Total Loans (Cost $208,641,517)................................................ 207,462,271
------------
CORPORATE BONDS -- 0.49%
Broadcasting & Entertainment -- 0.49%
Paxson Communications Corp.*(8)
11.32% due 01/15/13 (Cost $981,389)........................................... 1,000,000 1,002,500
------------
COMMON STOCK -- 0.14%
Oil & Gas -- 0.05%
Shaw Group, Inc.+.............................................................. 3,276 91,073
------------
Telecommunications -- 0.09%
Global Crossing, Ltd.+......................................................... 175 3,110
SAVVIS Communications Corp.+................................................... 6,313 186,928
------------
190,038
------------
Total Common Stock (Cost $177,154)............................................. 281,111
------------
Total Long-Term Investment Securities (Cost $209,800,060)...................... 208,745,882
------------
16
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2006 -- (unaudited) (continued)
Principal Value
Industry Description Amount (Note 2)
----------------------------------------------------------------------------
SHORT-TERM INVESTMENT SECURITIES -- 2.24%
Registered Investment Companies -- 2.24%
SSgA Money Market Fund (Cost $4,536,632)....... $4,536,632 $ 4,536,632
------------
TOTAL INVESTMENTS -- 105.39%.......................
(Cost $214,336,692)(9)......................... 213,282,514
Liabilities in Excess of Other Assets -- (5.39)%... (10,914,427)
------------
NET ASSETS -- 100.00%.............................. $202,368,087
============
- --------
BTL Bank Term Loan
CNDTL Canadian Term Loan
LOC Letter of Credit
CLD Credit Linked Deposit
DIP Debtor in Possession
NR Security is not rated.
+ Non-income producing security
@ Illiquid security. At June 30, 2006, the aggregate value of these
securities was $1,965,000 representing 0.97% of net assets.
# Fair valued security (see Note 2)
* Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. The Fund has no
rights to demand registration of these securities. At June 30, 2006, the
aggregate value of these securities was $1,002,500 representing 0.49% of
net assets. Unless otherwise indicated, these securities are not
considered to be illiquid.
(1) Bank loans rated below Baa by Moody's Investor Service, Inc. or BBB by
Standard & Poor's Group are considered below investment grade. Ratings
are unaudited. Ratings provided are as of June 30, 2006.
(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 65 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) Company has filed Chapter 11 bankruptcy protection.
(6) Bond is in default and did not pay principal at maturity. Final outcome
of Chapter 11 bankruptcy still to be determined.
(7) Loan is in default of interest payments.
(8) Floating rate security where the rate fluctuates. The rate moves up or
down at each reset date. The rate reflected is as of June 30, 2006.
(9) See Note 6 for cost of investments on a tax basis.
(10) Loan was purchased through a participation agreement.
See Notes to Financial Statements
17
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2006 -- (unaudited)
Note 1. Organization of the Fund
The SunAmerica Senior Floating Rate Fund, Inc. (the "Fund"), is a
non-diversified closed-end, investment management company. The Fund is
organized as a Maryland corporation and is registered under the Investment
Company Act of 1940, as amended. The Fund is managed by AIG SunAmerica Asset
Management Corp. (the "Adviser" or "SAAMCo"), an indirect wholly-owned
subsidiary of American International Group, Inc. ("AIG"). The Fund's
investment objective is to provide as high a level of current income as is
consistent with the preservation of capital by investing primarily in senior
secured floating rate loans and other institutionally traded senior secured
floating rate debt obligations.
The Fund offers three classes of shares. Class B shares are offered for sale
at net asset value without a front-end sales charge but are subject to an
Early Withdrawal Charge which declines from 3% during the first year after
purchase to zero after the fourth year. Class C shares are offered for sale
at net asset value without a front-end sales charge, but are subject to an
Early Withdrawal Charge of 1% during the first year after purchase. Class D
shares are offered for sale at net asset value without a front-end sales
charge and no Early Withdrawal Charge. Class D shares are available only to
investors participating in a fee-based investment advisory program (such as
a "wrap" program) or agency commission program or to CypressTree Investors.
Class A shares are not currently offered for sale to the public and are
available only through a conversion of Class B shares after being held by
the shareholders for approximately eight years. Class C shares do not have a
conversion feature (except that Class C shares purchased before August 18,
1999 will automatically convert to Class A shares ten years after purchase).
The share classes differ in their respective distribution and service fees.
All classes have equal rights to assets and voting privileges except as may
otherwise be provided in the Fund's registration statement.
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 may contain the obligation
to indemnify others. The Fund's maximum exposure under these arrangements is
unknown. Currently, 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 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 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. Stocks are generally valued
based upon closing sales prices reported on recognized securities exchanges.
Stocks listed on the NASDAQ are valued using the NASDAQ Official Closing
Price ("NOCP"). Generally, the NOCP will be the last sale price unless the
reported trade for the stock 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. For listed securities having no sales reported and for unlisted
securities, such securities will be valued based upon the last reported bid
price. Non-convertible bonds and debentures, other long-term debt
securities, and short-term debt securities with maturities in excess of 60
days, are valued at bid prices obtained for the day of valuation from a bond
pricing service, when such prices are available. If a vendor quote is
unavailable the securities may be priced at the mean of two independent
quotes obtained from brokers. Securities for which market quotations are not
readily available are valued as determined pursuant to procedures adopted in
good faith by the Board of Directors. Short-term securities with
18
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2006 -- (unaudited)
(continued)
60 days or less to maturity are amortized to maturity based on their cost to
the Fund if acquired within 60 days of maturity or, if already held by the
Fund on the 60/th/ day, are amortized to maturity based on the value
determined on the 61/st/ day. Securities for which market quotations are not
readily available or if a development/significant event occurs that may
significantly impact the value of the security, then these securities are
valued, as determined pursuant to procedures adopted in good faith by the
Board of Directors.
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. The
Fund's custodian takes possession of the collateral pledged for investments
in repurchase agreements. The underlying collateral is valued daily on a
mark to market basis to ensure that the value, including accrued interest,
is at least 102% of the repurchase price. In the event of default of the
obligation to repurchase, the Fund has the right to liquidate the collateral
and apply the proceeds in satisfaction of the obligation. If the seller
defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited. At June
30, 2006, 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 $43,312 for the
period ended June 30, 2006, 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 $310,050 for the period ended June 30,
2006, 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 normally declared 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.
On July 13, 2006, the Financial Accounting Standards Board (FASB) released
FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN
48). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements.
FIN 48 requires the evaluation of tax positions taken or expected to be
taken in the course of preparing the Fund's tax returns to determine whether
the tax positions are "more-likely-than-not" of being sustained by the
applicable tax authority. Adoption of FIN 48 is required for fiscal years
beginning after December 15, 2006 and is to be applied to all open tax years
as of the effective date. At this time, management is evaluating the
implications of FIN 48 and its impact in the financial statements, if any,
has not yet been determined.
19
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2006 -- (unaudited)
(continued)
Statement of Cash Flows: Information on financial transactions which have
been settled through the receipt or disbursement of cash is presented in the
Statement of Cash Flows. The cash amount shown in the Statement of Cash
Flows is the amount included in the Fund's Statement of Assets and
Liabilities and represents cash on hand at its custodian bank account, and
does not include any short-term investments at June 30, 2006.
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 ended For the
June 30, 2006 year ended
(unaudited) December 31, 2005
------------------------- -------------------------
Shares Amount Shares Amount
Class A ---------- ------------ ---------- ------------
Shares sold................. 4,939* $ 46,487* 20,621@ $ 194,088@
Reinvested distributions.... 762 7,176 1,003 9,426
Shares repurchased.......... (8,006) (75,647) (2,715) (25,453)
---------- ------------ ---------- ------------
Net increase (decrease).. (2,305) $ (21,984) 18,909 $ 178,061
========== ============ ========== ============
For the
period ended For the
June 30, 2006 year ended
(unaudited) December 31, 2005
------------------------- -------------------------
Shares Amount Shares Amount
Class B ---------- ------------ ---------- ------------
Shares sold................. 224,867 $ 2,118,522 254,487 $ 2,391,460
Reinvested distributions.... 56,926 536,385 84,193 791,345
Shares repurchased.......... (240,785)* (2,268,270)* (581,114)@ (5,462,413)@
---------- ------------ ---------- ------------
Net increase (decrease).. 41,008 $ 386,637 (242,434) $ (2,279,608)
========== ============ ========== ============
For the
period ended For the
June 30, 2006 year ended
(unaudited) December 31, 2005
------------------------- -------------------------
Shares Amount Shares Amount
Class C ---------- ------------ ---------- ------------
Shares sold................. 2,701,011 $ 25,452,135 3,815,180 $ 35,893,397
Reinvested distributions.... 310,261 2,923,431 480,086 4,512,412
Shares repurchased.......... (2,567,327) (24,190,770) (6,375,191) (59,926,283)
---------- ------------ ---------- ------------
Net increase (decrease).. 443,945 $ 4,184,796 (2,079,925) $(19,520,474)
========== ============ ========== ============
For the
period ended For the
June 30, 2006 year ended
(unaudited) December 31, 2005
------------------------- -------------------------
Shares Amount Shares Amount
Class D ---------- ------------ ---------- ------------
Shares sold................. 451,655 $ 4,258,199 923,576 $ 8,679,305
Reinvested distributions.... 62,174 586,056 101,255 951,642
Shares repurchased.......... (1,093,804) (10,283,107) (1,494,315) (14,065,813)
---------- ------------ ---------- ------------
Net increase (decrease).. (579,975) $ (5,438,852) (469,484) $ (4,434,866)
========== ============ ========== ============
-----
* Includes automatic conversion of 4,939 shares of Class B shares in the
amount of $46,487 to 4,939 shares of Class A shares in the amount of
$46,487.
@ Includes automatic conversion of 20,621 shares of Class B shares in the
amount of $194,088 to 20,621 shares of Class A shares in the amount of
$194,088.
20
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2006 -- (unaudited)
(continued)
In order to provide shareholders with liquidity and the ability to receive
net asset value on a disposition of shares, the Fund will make monthly
offers to repurchase a percentage (usually 10%) of outstanding shares at net
asset value. Shareholders are sent a Notification of Repurchase Offer seven
to fourteen days before each monthly repurchase offer. During the period
ended June 30, 2006, the Fund made six Repurchase Offers, and redeemed the
amounts shown in the table below. In no case was a monthly Repurchase Offer
oversubscribed.
Amount Tendered
---------------------
Shares Amount
--------- -----------
January. 544,880 $ 5,127,272
February 482,301 4,548,038
March... 590,069 5,576,080
April... 457,271 4,321,214
May..... 530,129 4,988,532
June.... 1,305,272 12,256,658
Note 4. Purchases And Sales Of Securities
During the period ended June 30, 2006, the Fund's cost of purchases of Loans
and proceeds from Loan sales were $73,215,592 and $67,469,699, respectively.
Note 5. Investment Advisory Agreement And Other Transactions With Affiliates
The Fund currently maintains an Investment Advisory Agreement with SAAMCo,
who oversees the administration of certain aspects of the business and
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 June 30, 2006, SAAMCo
received advisory fees in the amount of $887,031.
American International Group Global Investment Corp. ("AIGGIC") acts as
subadviser to the Fund pursuant to a Subadvisory Agreement with SAAMCo.
Under the Subadvisory Agreement, AIGGIC manages the investment and
reinvestment of the Fund's assets. As compensation for its services as
subadviser, AIGGIC 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. AIGGIC received $257,967 as
compensation for its services. The fee paid to the subadviser is paid by
SAAMCo.
SAAMCo acts 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 June 30, 2006, SAAMCo received administration
fees in the amount of $417,427.
The Fund has adopted Distribution Plans ("Plans") applicable to Class A,
Class B and C shares to use the assets attributable to that class of shares
of the Fund to finance certain activities relating to the distribution of
shares to investors. The Plans are compensation plans providing for the
payment to AIG SunAmerica Capital Services, Inc. ("SACS"), of a fixed
percentage of 0.50% of average net assets to finance distribution expenses
for Class B and Class C, and 0.25% of average net assets to finance service
fees for Class A, Class B and Class C. For the period ended June 30, 2006
SACS received distribution fees of $692,056. In addition, SACS receives the
proceeds of early withdrawal charges paid by investors in connection with
certain redemptions of Class B and Class C shares. For the period ended June
30, 2006, SACS received early withdrawal charges of $29,431. For the period
ended June 30, 2006 SACS waived fees for the following classes: Class A $94,
Class B $32,079, and Class C $198,150.
SAAMCo contractually agreed to waive fees or reimburse expenses, if
necessary, at or below 1.75% for Class B and Class C average net assets. The
expense reimbursements and fee waivers will continue indefinitely, subject to
21
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2006 -- (unaudited)
(continued)
termination by the Directors, including a majority of the Independent
Directors. SAAMCo voluntarily agreed to waive fees or reimburse expenses, if
necessary, at or below 1.45% for Class A and 1.25% for Class D average net
assets. The expense waiver and fee reimbursement will continue indefinitely,
but may be terminated at any time. For the period ended June 30, 2006,
SAAMCo waived fees and reimbursed expenses as follows: Class A $5,057,
Class B $55,383, Class C $289,624, and Class D $48,619.
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 wash
sales, retirement pension expense, dividends payable and treatment of
defaulted securities.
Distributable Earnings Tax Distributions
---------------------------------------- ------------------------------------
For the year ended December 31, 2005 For the year ended December 31, 2005
---------------------------------------- ------------------------------------
Long-term Gains/ Unrealized Long-term
Ordinary Capital Loss Appreciation Ordinary Capital
Income Carryover (Depreciation) Income Gains
-------- ---------------- -------------- ---------- ---------
$ -- $(27,697,156) $(680,069) $9,746,310 $ --
Capital Loss Carryforwards. At December 31, 2005 capital loss carryforwards
available to offset future recognized gains were $27,697,156, with $329,673
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.
During the year ending December 31, 2005, the Senior Floating Rate Fund
utilized $14,305 of capital loss carry forwards to offset current year
capital gains.
Unrealized appreciation and depreciation in the value of investments at June
30, 2006 for federal income tax purposes were as follows:
Cost (tax basis)............................................ $214,364,826
============
Gross unrealized appreciation............................... $ 998,268
Gross unrealized depreciation............................... (2,052,802)
------------
Net unrealized depreciation................................. $ (1,054,534)
============
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 June 30, 2006, the Fund had accrued $15,854 for the Retirement Plan,
which is included in Directors' fees and expenses line on the Statement of
Assets and Liabilities and for the
22
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2006 -- (unaudited)
(continued)
period ended June 30, 2006, expensed $4,110 for the Retirement Plan, which
is included in Directors' fees and expenses line 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 other expenses on the Statement of
Operations. For the period ended June 30, 2006, the Fund had borrowings
outstanding for 3 days under the line of credit and incurred $116 in
interest charges related to these borrowings. The Fund's average amount of
debt under the line of credit for the days utilized was $266,066 at a
weighted average interest rate of 5.25%. At June 30, 2006, there were no
borrowings outstanding.
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 June 30, 2006, the Fund did not participate in this program.
Note 10. Investment Concentration
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 June 30, 2006, the Fund had the following unfunded loan commitments which
could be extended at the option of the Borrower:
Maturity
Name Type Date Amount
- ---- ---------------------- -------- --------
Alon U.S.A, Inc......................... Term Loan 06/15/14 $ 27,778
Atrium Cos., Inc........................ Delayed Draw Term Loan 05/31/12 54,706
Navistar International Corp............. Term Loan 02/22/09 260,037
Trump Entertainment Resorts Holdings LP. Delayed Draw Term Loan 05/22/12 495,000
Venetian Macau, Ltd..................... Delayed Draw Term Loan 05/26/12 83,333
WMG Acquisition Corp.................... Revolver 02/28/10 500,000
Note 12. Other Information
On February 9, 2006, American International Group, Inc. ("AIG"), the parent
company and an affiliated person of AIG SunAmerica Asset Management Corp.
("Adviser"), AIG SunAmerica Capital Services, Inc., the distributor of the
Fund ("Distributor), and AIG Global Investment Corp., the subadviser to the
Fund ("AIGGIC"), announced that it had consented to the settlement of an
injunctive action instituted by the Securities and Exchange Commission
("SEC"). In
23
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2006 -- (unaudited)
(continued)
its complaint, the SEC alleged that AIG violated Section 17(a) of the
Securities Act of 1933, as amended, Sections 10(b), 13(a), 13(b)(2) and
13(b)(5) of the Securities Exchange Act of 1934, as amended, and Rules
10b-5, 12b-20, 13a-1 and 13b2-1 promulgated thereunder, in connection with
AIG's accounting and public reporting practices. The conduct described in
the complaint did not involve any conduct of AIG or its subsidiaries related
to their investment advisory or distribution activities with respect to the
assets of the Fund.
AIG, without admitting or denying the allegations in the complaint (except
as to jurisdiction), consented to the entry of an injunction against further
violations of the statutes referred to above. Absent exemptive relief
granted by the SEC, the entry of such an injunction would prohibit AIG and
its affiliated persons from, among other things, serving as an investment
adviser of any registered investment management company or principal
underwriter for any registered open-end investment company pursuant to
Section 9(a) of the Investment Company Act of 1940, as amended ("1940 Act").
Certain affiliated persons of AIG, including the Adviser, received a
temporary order from the SEC pursuant to Section 9(c) of the 1940 Act with
respect to the entry of the injunction, granting exemptive relief from the
provisions of Section 9(a) of the 1940 Act. The temporary order permits AIG
and its affiliated persons, including AIG's investment management
subsidiaries, to serve as investment adviser, sub-adviser, principal
underwriter or sponsor of the Fund. The Adviser expects that a permanent
exemptive order will be granted, although there is no assurance the SEC will
issue the order.
Additionally, AIG and its subsidiaries reached a resolution of claims and
matters under investigation with the United States Department of Justice
("DOJ"), the Attorney General of the State of New York ("NYAG") and the New
York State Department of Insurance ("DOI"), regarding accounting, financial
reporting and insurance brokerage practices of AIG and its subsidiaries, as
well as claims relating to the underpayment of certain workers compensation
premium taxes and other assessments.
As a result of the settlements with the SEC, the DOJ, the NYAG and the DOI,
AIG will make payments totaling approximately $1.64 billion. In addition, as
part of its settlements, AIG has agreed to retain for a period of three
years an Independent Consultant who will conduct a review that will include
the adequacy of AIG's internal controls over financial reporting and the
remediation plan that AIG has implemented as a result of its own internal
review.
Subject to receipt of permanent relief, the Adviser, Distributor and AIGGIC
believe that the settlements are not likely to have a material adverse
effect on their ability to perform their respective investment advisory or
distribution services relating to the Fund.
Note 13. Subsequent Events
At a meeting held on February 21, 2006, the Board of Directors of the Fund
approved a proposal to convert the Fund from its current status as a
closed-end investment company into an open-end investment company (the
"Conversion") and certain related matters, subject to approval by
shareholders. At meetings held on or before August 4, 2006, shareholders
approved the conversion and the related matters.
24
SunAmerica Senior Floating Rate Fund, Inc.
DIRECTORS AND OFFICERS INFORMATION -- June 30, 2006 -- (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 Term of Funds in
Name, Held With Office and Fund Complex
Address and SunAmerica Length of Principal Occupations Overseen by Other Directorships
Date of Birth* Complex Time Served(4) During Past 5 Years Director(1) Held by Director(2)
- ---------------------- ---------- -------------- ----------------------------- ------------ -------------------------------
Directors
Dr. Judith L. Craven Director 2000- Retired. 90 Director, A.G. Belo
DOB: October 6, 1945 present Corporation (1992 to
present); Director, Sysco
Corporation (1996 to
present); Director, Luby's Inc.
(1998 to present); Director,
University of Texas Board of
Regents (2001-Present).
William F. Devin Director 1998- Retired. 90 Member of the Board of
DOB: December 30, 1938 present Governors, Boston Stock
Exchange (1985-Present).
Samuel M. Eisenstat Director 2001- Attorney, solo practitioner. 52 Director of North European
DOB: March 7, 1940 present Oil Royalty Trust.
Stephen J. Gutman Director 2001- Senior Associate, Corcoran 52 None
DOB: May 10, 1943 present Group (Real Estate) (2003 to
present); Partner and
Member of Managing
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, 99 None
DOB: January 23, 1954 present AIG SunAmerica Asset
Management Corp.
("SAAMCo") (August 1995 to
present); Director, AIG
SunAmerica Capital Services,
Inc. ("SACS") (August 1993 to
present); President and CEO,
AIG AdvisorGroup, Inc. (June
2004 to present).
William J. Shea Director 2004- President and CEO, 52 Chairman of the Board, Royal
DOB: February 9, 1948 present Conseco, Inc. (Financial and SunAlliance, U.S.A., Inc.
Services) (2001 to 2004); (March 2005 to present);
Chairman of the Board of Director, Boston Private
Centennial Technologies, Inc. Financial Holdings (October
(1998 to 2001); Vice 2004 to present).
Chairman, Bank Boston
Corporation (1993 to 1998).
25
SunAmerica Senior Floating Rate Fund, Inc.
DIRECTORS AND OFFICERS INFORMATION -- June 30, 2006 -- (unaudited)
(continued)
Number of
Position Term of Funds in
Name, Held With Office and Fund Complex
Address and SunAmerica Length of Principal Occupations Overseen by Other Directorships
Date of Birth* Complex Time Served(4) During Past 5 Years Director(1) Held by Director(2)
- ---------------------- ---------- -------------- ------------------------------ ------------ -------------------
Officers
Vincent M. Marra President 2004- Senior Vice President, N/A N/A
DOB: May 28, 1950 present SAAMCo (February 2003 to
Present); Chief Administrative
Officer, Chief Operating
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- Senior Vice President, N/A N/A
DOB: June 25, 1966 present SAAMCo (December 2004-
Present); Assistant Treasurer
(2001 to 2002); Vice
President, SAAMCo (August
1997 to December 2004).
Gregory N. Bressler Secretary September Senior Vice President and N/A N/A
DOB: November 17, 1966 and Chief 2005 to General Counsel, SAAMCo
Legal Present (June 2005 to Present); Vice
Officer President and Director of U.S.
Asset Management
Compliance, Goldman Sachs
Asset Management, L.P.
(June 2004 to June 2005);
Deputy General Counsel,
Credit Suisse Asset
Management, LLC. (June
2002-June 2004); Vice
President and Counsel, Credit
Suisse Asset Management,
LLC (January 2000-June
2002).
- --------
* 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 administrator. The "Fund
Complex" includes the SunAmerica Money Market Funds (2 funds), SunAmerica
Equity Funds (10 funds), SunAmerica Income Funds (5 funds), SunAmerica
Focused Series, Inc. (17 portfolios), SunAmerica Focused Alpha Growth Fund,
Inc. (1 fund), SunAmerica Focused Alpha Large-Cap Fund (1 fund), Anchor
Series Trust (9 portfolios), SunAmerica Senior Floating Rate Fund, Inc. (1
fund), SunAmerica Series Trust (32 portfolios), AIG Series Trust (6 funds),
VALIC Company I (32 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.
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.
26
SunAmerica Senior Floating Rate Fund, Inc.
SPECIAL MEETING OF SHAREHOLDERS -- Proxy Voting Results -- June 30,
2006 (unaudited)
A Special Meeting of the Shareholders of the Fund was held on June 23, 2006. At
this meeting the Class A and Class B shareholders of the Fund approved Rule
12b-1 Plans for their respective class of shares. The meeting was adjourned to
allow for the continued solicitation of votes with respect to the proposal to
convert the Fund from a closed-end investment company to that of an open-end
investment company and the proposal to amend the Fund's charter to discontinue
the monthly repurchase offers made by the Fund. Additionally, the meeting was
adjourned with respect to the approval of a Rule 12b-1 Plan for Class C shares.
The Rule 12b-1 Plan approvals are contingent upon the approval of the proposal
to convert the Fund from a closed-end investment company to an open-end
investment company.
The voting results of the shareholder meeting to approve the Class A and Class
B shares' Rule 12b-1 Plans are listed below.
Approval of the Rule 12b-1 Plan for Class A shares
For Against Abstain Total
- ------ ------- ------- ------
Shares Voted 21,880 5,262 4,632 31,774
Approval of the Rule 12b-1 Plan for Class B shares
For Against Abstain Total
- --------- ------- ------- ---------
Shares Voted 1,271,070 40,712 147,877 1,459,659
27
[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 U.S.
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. The Fund's
President AIG SunAmerica Capital Forms N-Q are available
Donna M. Handel, Services, Inc. on the U.S. Securities
Treasurer Harborside Financial and Exchange Commission's
Gregory R. Kingston, Center website at www.sec.gov.
Vice President and 3200 Plaza 5 You can also review and
Assistant Treasurer Jersey City, NJ obtain copies of the
Cynthia A. Gibbons, Vice 07311-4992 Forms N-Q at the U.S.
President and Chief Securities and Ex-change
Compliance Officer Shareholder Servicing Commission's Public
Gregory N. Bressler, Agent Reference Room in
Chief Legal AIG SunAmerica Fund Washington, DC
Officer and Secretary Services, Inc. (information on the
Nori L. Gabert, Harborside Financial operation of the Public
Assistant Secretary Center Reference Room may be
Corey A. Issing, 3200 Plaza 5 ob-tained by calling
Assistant Secretary Jersey City, NJ 1-800-SEC-0330).
Kathryn A. Pearce, 07311-4992
Assistant Treasurer PROXY VOTING RECORD ON
Custodian and Transfer FUND PORTFOLIO SECURITIES
Agent Information regarding how
State Street Bank and the Fund voted proxies
Trust Company related to securities
P.O. Box 219373 held in the Fund's
Kansas City, MO 64141 portfolio during the most
recent twelve month
VOTING PROXIES ON FUND period ended June 30, is
PORTFOLIO SECURITIES available, once filed
A description of the with the U.S. Securities
policies and proce-dures and Exchange Commission
that the Fund uses to (i) without charge, upon
determine how to vote request, by calling
proxies relating to (800) 858-8850 or (ii) on
secu-rities held in the the U.S. Securities and
Fund's portfolio, which Exchange Commis-sion's
is available in the website at
Fund's State-ment of http://www.sec.gov.
Additional Information
and Form N-CSR, may be This report is submitted
obtained with-out charge solely for the general
upon request, by calling information of
(800) 858-8850. This shareholders of the Fund.
information is also Distribution of this
available from the EDGAR report to persons other
data-base on the U.S. than shareholders of the
Securities and Ex-change Fund is authorized only
Commission's website in connection with a
at http://www.sec.gov. currently effective
prospectus, setting forth
details of the Fund which
must precede or accompany
this report.
The accompanying report
has not been audited by
independent accountants
and accordingly no
opinion has been
expressed thereon.
28
[LOGO]
Distributed by:
AIG SunAmerica Capital Services, Inc.
Harborside Financial Center
3200 Plaza 5
Jersey City, NJ 07311-4992
Investors should carefully consider the investment objectives, risks, charges
and expenses of any mutual fund before investing. This and other important
information is contained in the prospectus, which can be obtained from your
financial adviser or from the AIG SunAmerica Sales Desk at 800-858-8850, ext.
6003. Read the prospectus carefully before you invest. Funds distributed by AIG
SunAmerica Capital Services, Inc.
www.sunamericafunds.com
SFSAN-6/06
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
None.
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, as defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270.30a-3(c)). 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 (17 CFR 270.30a-3(d))) 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) Not applicable.
(2) Certifications 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 Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and 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: September 7, 2006
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: September 7, 2006
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: September 7, 2006