================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-CSR
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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 5, 185 Hudson Street, Jersey City, NJ 07311
--------------------------------------------------------
(Address of principal executive offices) (Zip code)
John T. Genoy
Senior Vice President
SunAmerica Asset Management, LLC
Harborside 5, 185 Hudson Street
Jersey City, NJ 07311
-------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6414
Date of fiscal year end: December 31
Date of reporting period: December 31, 2018
================================================================================
Item 1. Reports to Stockholders
ANNUAL REPORT 2018
AIG
Senior Floating
Rate Fund
[GRAPHIC]
Beginning on January 1, 2021, as permitted by regulations adopted by the
Securities and Exchange Commission, paper copies of each Fund's shareholder
reports will no longer be sent by mail, unless you specifically request paper
copies of the reports from the Fund or your financial intermediary. Instead,
the reports will be made available on a website, and you will be notified by
mail each time a report is posted and provided with a website link to access
the report.
If you already elected to receive shareholder reports electronically, you will
not be affected by this change and you need not take any action. At any time,
you may elect to receive reports and other communications from a Fund
electronically by calling 800-858-8850 or contacting your financial
intermediary directly.
You may elect to receive all future reports in paper free of charge. If your
account is held directly at the Fund, you can inform the Fund that you wish to
receive paper copies of reports by calling 800-858-8850. If your account is
held through a financial intermediary, please contact the financial
intermediary to make this election. Your election to receive paper will apply
to all AIG Funds in which you are invested and may apply to all funds held with
your financial intermediary.
[LOGO]
aig.com/funds
TABLE OF CONTENTS
SHAREHOLDERS' LETTER.................................... 2
EXPENSE EXAMPLE......................................... 4
STATEMENT OF ASSETS AND LIABILITIES..................... 6
STATEMENT OF OPERATIONS................................. 7
STATEMENT OF CHANGES IN NET ASSETS...................... 8
FINANCIAL HIGHLIGHTS.................................... 9
PORTFOLIO OF INVESTMENTS................................ 10
NOTES TO FINANCIAL STATEMENTS........................... 23
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. 38
DIRECTORS AND OFFICERS INFORMATION...................... 39
SHAREHOLDER TAX INFORMATION............................. 41
COMPARISON: FUND VS. INDEX.............................. 43
DECEMBER 31, 2018 ANNUAL REPORT
SHAREHOLDERS' LETTER -- (unaudited)
Dear Shareholders:
We are pleased to present this annual report for the AIG Senior Floating Rate
Fund (the "Fund") for the 12 months ended December 31, 2018.
Overall, fixed income markets posted flat to modestly negative returns during
the annual period, as volatility heightened dramatically. During the first
three quarters of 2018, sovereign yields outside of Europe generally moved
higher, driven by continued global economic growth momentum and rising
inflation expectations. Government bonds enjoyed short-lived periods of
strength, however, amid escalating tensions between the U.S. and its trade
partners and bouts of elevated political uncertainty in Europe. Most
non-government bond sectors underperformed government bonds for the first half
of the year. Corporate bonds struggled on a pickup in equity market volatility,
lower demand as U.S. firms repatriated overseas funds, higher currency hedging
costs, concerns about increased leverage and heavy supply from an increase in
mergers and acquisitions. The notable exception was high yield corporate bonds,
which posted positive returns on continued demand for income and a scarcity of
supply. Corporate bonds as a whole then rebounded in the third quarter amid
favorable earnings trends, positive economic data and light supply. However,
sharp declines in select emerging market currencies sparked fears of emerging
market contagion, before policymakers intervened with various stabilization
measures. The U.S. dollar came under pressure amid protectionist rhetoric from
the U.S. President during the first calendar quarter but then rallied versus
most currencies during the second and third quarters of 2018, as strong U.S.
economic data releases reinforced expectations that U.S. policy rates were
likely to continue to move higher.
In the fourth quarter of 2018, sovereign yields declined across most markets
amid a spike in equity market volatility and increased concerns about global
economic growth. Geopolitical risks remained elevated despite some seemingly
positive developments, including a U.S. and China trade war truce, U.K. Prime
Minister Theresa May's survival of a no-confidence vote, and a budget
compromise between Italy and the European Union. Corporate bonds underperformed
by a wide margin, owing to unresolved political issues in Europe and a sharp
sell-off in energy prices. The Japanese yen and U.S. dollar gained versus most
developed market currencies.
Meanwhile, on the monetary policy front, the U.S. Federal Reserve (the "Fed")
raised interest rates four times during the annual period -- in March, June,
September and December 2018 -- as expected. Through most of the year, the Fed
had upgraded its economic growth and employment projections and shifted
inflation expectations higher, but by the end of the year had set expectations
for a slower pace of tightening in 2019. Elsewhere, global monetary policies
diverged. The European Central Bank ended its quantitative easing program as
anticipated in December 2018 but pledged to keep policy rates unchanged at
least through the summer of 2019. The People's Bank of China unexpectedly cut
its reserve requirement ratio for most banks to free up lending for small
businesses and subsequently announced a significant change in its reserve
requirement for banks to help stabilize its currency. The Bank of Canada raised
its interest rates three times. The Bank of England increased its interest
rates once but then left its rates unchanged as the U.K. negotiated terms of
its exit from the European Union. The Bank of Japan amended its yield-curve
targeting policy to allow longer-term bond yields to fluctuate more freely
around its 0% target. Although Sweden's central bank embarked on a tightening
cycle for the first time since 2011, its policy rates remained below zero.
Although bank loan deal quality weakened, the sector's overall credit
fundamentals remained stable -- elevated interest coverage helped to mitigate
higher leverage -- and bank loan valuations appeared attractive, in our view.
Technicals, or supply/demand factors, remained favorable as well. Bank loan
mutual funds experienced outflows of $13.4 billion during the fourth quarter of
2018, but inflows during the first three quarters of the year brought the
annual figure to an outflow of approximately $0.3 billion./*/ Gross U.S.
collateralized loan obligation ("CLO") volume, one of the main sources of
demand for bank loans, totaled $27.9 billion for the fourth calendar quarter,
bringing total gross volume to $128.9 billion for the
2
DECEMBER 31, 2018 ANNUAL REPORT
SHAREHOLDERS' LETTER -- (unaudited) (continued)
12-month period.+ The trailing 12-month loan default rate, examined by
principal amount, was 1.63% at the end of the annual period, as compared to
1.84% at the end of 2017.++
On the following pages, you will find a brief discussion regarding the Fund's
annual results. You will also find financial statements and portfolio
information for the Fund for the annual period ended December 31, 2018.
As always, we remain diligent in the management of your assets. We value your
ongoing confidence in us and look forward to serving your investment needs in
the future.
Sincerely,
THE AIG SENIOR FLOATING RATE FUND PORTFOLIO MANAGER
Jeffrey W. Heuer
Wellington Management Company LLP
--------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
* Source: Lipper, Inc.
+ Source: S&P Leveraged Commentary & Data.
++ Source: JP Morgan.
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 an active trading market, in certain cases, 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
(e.g., unsecured loans or high yield 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.
3
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
EXPENSE EXAMPLE -- DECEMBER 31, 2018 -- (UNAUDITED)
DISCLOSURE OF PORTFOLIO EXPENSES IN SHAREHOLDER REPORTS
As a shareholder of the AIG Senior Floating Rate Fund (the "Fund"), you may
incur two types of costs: (1) transaction costs, including sales charges on
purchase payments and contingent deferred sales charges and (2) ongoing costs,
including management fees, distribution and account maintenance fees, and other
Fund expenses. The example set forth below is intended to help you understand
your ongoing costs (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds. The Example is
based on an investment of $1,000 invested at July 1, 2018 and held until
December 31, 2018.
ACTUAL EXPENSES
The "Actual" section of the table provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the column under the heading entitled "Expenses Paid During the Six
Months Ended December 31, 2018" to estimate the expenses you paid on your
account during this period. The "Expenses Paid During the Six Months Ended
December 31, 2018" column and the "Annualized Expense Ratio" column do not
include small account fees that may be charged if your account balance is below
$500 ($250 for retirement plan accounts). In addition, the "Expenses Paid
During the Six Months Ended December 31, 2018" column and the "Annualized
Expense Ratio" column do not include administrative or other fees that may
apply to qualified retirement plan accounts and accounts held through financial
institutions. See the Fund's prospectus, your retirement plan documents and/or
materials from your financial adviser, for a full description of these fees.
Had these fees been included, the "Expenses Paid During the Six Months Ended
December 31, 2018" column would have been higher and the "Ending Account Value"
column would have been lower.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The "Hypothetical" section of the table provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an annual rate of return of 5% before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in this Fund and other funds. To do so, compare this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder reports of
other funds. The "Expenses Paid During the Six Months Ended December 31, 2018"
column and the "Annualized Expense Ratio" column do not include small account
fees that may be charged if your account balance is below $500 ($250 for
retirement plan accounts). In addition, the "Expenses Paid During the Six
Months Ended December 31, 2018" column and the "Annualized Expense Ratio"
column do not include administrative or other fees that may apply to qualified
retirement plan accounts and accounts held through financial institutions. See
the Fund's prospectus, your retirement plan document and/or materials from your
financial adviser for full description of these fees. Had these fees been
included, the "Expenses Paid During the Six Months Ended December 31, 2018"
column would have been higher and the "Ending Account Value" column would have
been lower.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, including sales
charges on purchase payments, contingent deferred sales charges and
administrative fees, if applicable to your account. Please refer to the Fund's
prospectus, qualified retirement plan document and/or materials from your
financial adviser, for more information. Therefore, the "Hypothetical" example
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. In addition, if these
transaction costs and other fees were included, your costs would have been
higher.
4
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
EXPENSE EXAMPLE -- DECEMBER 31, 2018 -- (UNAUDITED) (CONTINUED)
ACTUAL HYPOTHETICAL
----------------------------------------------------- -----------------------------------------------------
ENDING ENDING ACCOUNT
ACCOUNT VALUE EXPENSES PAID VALUE USING EXPENSES PAID
BEGINNING USING ACTUAL DURING THE BEGINNING A HYPOTHETICAL 5% DURING THE
ACCOUNT VALUE RETURN AT SIX MONTHS ENDED ACCOUNT VALUE ANNUAL RETURN AT SIX MONTHS ENDED
AT JULY 1, 2018 DECEMBER 31, 2018 DECEMBER 31, 2018* AT JULY 1, 2018 DECEMBER 31, 2018* DECEMBER 31, 2018*
--------------- ----------------- ------------------ --------------- ------------------ ------------------
AIG Senior Floating Rate Fund#
Class A.... $1,000.00 $979.61 $5.59 $1,000.00 $1,019.56 $5.70
Class C.... $1,000.00 $977.58 $7.63 $1,000.00 $1,017.49 $7.78
Class W.... $1,000.00 $980.53 $4.59 $1,000.00 $1,020.57 $4.69
ANNUALIZED
EXPENSE
RATIO*
----------
AIG Senior Floating Rate Fund#
Class A.... 1.12%
Class C.... 1.53%
Class W.... 0.92%
--------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 184 days then divided
by 365 days (to reflect the one-half year period). These ratios do not
reflect transaction costs, including sales charges on purchase payments,
contingent deferred sales charges, small account fees and administrative
fees, if applicable to your account. Please refer to your Prospectus, your
qualified retirement plan document and/or materials from your financial
advisor for more information.
# During the stated period, the investment adviser either waived a portion of
or all of the fees and assumed a portion of or all expenses for the Fund. As
a result, if these fees and expenses had not been waived or assumed, the
"Actual/Hypothetical Ending Account Value" would have been lower and the
"Actual/Hypothetical Expenses Paid During the Six Months Ended December 31,
2018" and the "Annualized Expense Ratio" would have been higher.
5
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES -- DECEMBER 31, 2018
AIG
SENIOR
FLOATING RATE
FUND
-------------
ASSETS:
Investments at value (unaffiliated)*............................... $231,238,539
Repurchase agreements (cost approximates value).................... 8,905,000
Cash............................................................... 1,082,430
Foreign cash*...................................................... 1,773,901
Due from broker.................................................... 860
Receivable for:
Fund shares sold................................................. 1,596,727
Dividends and interest........................................... 1,246,680
Investments sold................................................. 1,787,604
Investments sold on an extended settlement basis................. 3,236,954
Prepaid expenses and other assets.................................. 6,675
Due from investment adviser for expense reimbursements/fee waivers. 309,950
Unrealized appreciation on forward foreign currency contracts...... 34,478
Unrealized appreciation on swap contracts.......................... --
------------
Total assets..................................................... 251,219,798
------------
LIABILITIES:
Payable for:
Fund shares redeemed............................................. 1,634,427
Investments purchased............................................ 477,736
Investments purchased on an extended settlement basis............ 10,743,636
Investment advisory and management fees.......................... 171,526
Distribution and service maintenance fees........................ 97,703
Administration fees.............................................. 61,754
Transfer agent fees and expenses................................. 62,177
Directors' fees and expenses..................................... 1,135
Other accrued expenses........................................... 252,416
Dividends payable.................................................. 141,398
Commitments (Note 10).............................................. 54,207
Unrealized depreciation on swap contracts.......................... --
------------
Total liabilities................................................ 13,698,115
------------
Net Assets...................................................... $237,521,683
============
NET ASSETS REPRESENTED BY:
Common stock, $0.01 par value...................................... $ 308,263
Additional paid-in capital......................................... 277,319,370
------------
277,627,633
Total distributable earnings (loss)................................ (40,105,950)
------------
Net Assets...................................................... $237,521,683
============
CLASS A:
Net assets......................................................... $113,868,572
Shares outstanding................................................. 14,777,636
Net asset value and redemption price per share..................... $ 7.71
Maximum sales charge (3.75% of offering price)..................... 0.30
------------
Maximum offering price to public................................... $ 8.01
============
CLASS C:
Net assets......................................................... $ 95,038,275
Shares outstanding................................................. 12,342,081
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charges)..... $ 7.70
============
CLASS W:
Net assets......................................................... $ 28,614,836
Shares outstanding................................................. 3,706,613
Net asset value, offering and redemption price per share........... $ 7.72
============
*COST
Investments securities (unaffiliated)............................ $246,354,783
============
Foreign cash..................................................... $ 1,773,747
============
See Notes to Financial Statements
6
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF OPERATIONS -- FOR THE YEAR ENDED DECEMBER 31, 2018
AIG
SENIOR
FLOATING RATE
FUND
-------------
INVESTMENT INCOME:
Interest (unaffiliated)........................................................... $ 12,556,210
Dividends (unaffiliated).......................................................... 45,162
Facility and other fee income (Note 2)............................................ 326,113
------------
Total investment income........................................................ 12,927,485
------------
EXPENSES:
Investment advisory and management fees........................................... 2,028,361
Administrative fees............................................................... 477,261
Distribution and account maintenance fees:
Class A......................................................................... 378,689
Class C......................................................................... 809,441
Service fees:
Class W......................................................................... 32,405
Transfer agent fees and expenses:
Class A......................................................................... 254,374
Class C......................................................................... 250,335
Class W......................................................................... 46,981
Registration fees:
Class A......................................................................... 33,344
Class C......................................................................... 31,161
Class W......................................................................... 18,821
Accounting service fees........................................................... 17,837
Custodian and accounting fees..................................................... 79,331
Reports to shareholders........................................................... 127,470
Audit and tax fees................................................................ 117,081
Legal fees........................................................................ 41,038
Directors' fees and expenses...................................................... 70,312
Interest expense.................................................................. 14
Other expenses.................................................................... 27,619
------------
Total expenses before fee waivers and expense reimbursements................... 4,841,875
Fees waived and expenses reimbursed by investment adviser (Note 5)............. (1,541,884)
------------
Net expenses................................................................... 3,299,991
------------
Net investment income (loss)...................................................... 9,627,494
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investments (unaffiliated)...................................................... (1,770,888)
Forward contracts............................................................... 532,328
Swap contracts.................................................................. 56,495
Net realized foreign exchange gain (loss) on other assets and liabilities......... (46,172)
------------
Net realized gain (loss) on investments and foreign currencies.................... (1,228,237)
------------
Change in unrealized appreciation (depreciation) on:
Investments (unaffiliated)...................................................... (10,081,356)
Forward contracts............................................................... 84,699
Change in unrealized foreign exchange gain (loss) on other assets and liabilities. 23,634
------------
Net unrealized gain (loss) on investments and foreign currencies.................. (9,973,023)
------------
Net realized and unrealized gain (loss) on investments and foreign currencies..... (11,201,260)
------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $ (1,573,766)
============
See Notes to Financial Statements
7
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
AIG
SENIOR FLOATING
RATE FUND
--------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2018 2017
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss)........................................................... $ 9,627,494 $ 9,603,218
Net realized gain (loss) on investments and foreign currencies......................... (1,228,237) (2,626,477)
Net unrealized gain (loss) on investments and foreign currencies....................... (9,973,023) 3,842,840
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... (1,573,766) 10,819,581
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:(1)
Distributable earnings (Class A)....................................................... (4,860,861) (4,380,612)
Distributable earnings (Class C)....................................................... (4,268,732) (4,997,645)
Distributable earnings (Class W)....................................................... (1,010,466) (251,108)
------------ ------------
Total distributions to shareholders...................................................... (10,140,059) (9,629,365)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 3). 197,672 (39,480,646)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (11,516,153) (38,290,430)
NET ASSETS:
Beginning of period...................................................................... 249,037,836 287,328,266
------------ ------------
End of period............................................................................ $237,521,683 $249,037,836
============ ============
--------
(1)The prior year amounts have been restated to reflect the adoption of the
amendments to Rule 6-09.3 of Regulation S-X. Below are the amounts as stated
in the December 31, 2017 audited annual report.
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)... $(4,380,612)
Net investment income (Class C)... (4,997,645)
Net investment income (Class W)... (251,108)
-----------
Total distributions to shareholders. $(9,629,365)
-----------
See Notes to Financial Statements
8
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
FINANCIAL HIGHLIGHTS
AIG SENIOR FLOATING RATE FUND
-----------------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DIVIDENDS NET NET RATIO OF
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, EXPENSES
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF TO AVERAGE
PERIOD BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD NET
ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENTS BUTIONS PERIOD RETURN(2) (000'S) ASSETS(3)
------------ --------- ---------- ----------- ---------- ---------- ----------- ------- ------ --------- -------- ----------
CLASS A
-------
12/31/14 $8.34 $0.31 $(0.29) $ 0.02 $(0.31) $ -- $(0.31) $8.05 0.20% $150,966 1.45%
12/31/15 8.05 0.33 (0.44) (0.11) (0.33) -- (0.33) 7.61 (1.42) 114,375 1.45
12/31/16 7.61 0.31 0.44 0.75 (0.30) -- (0.30) 8.06 10.08 131,640 1.45
12/31/17 8.06 0.30 0.03 0.33 (0.30) -- (0.30) 8.09 4.14 93,346 1.45
12/31/18 8.09 0.33 (0.36) (0.03) (0.35) -- (0.35) 7.71 (0.41) 113,869 1.22
CLASS C
-------
12/31/14 $8.34 $0.29 $(0.30) $(0.01) $(0.28) $ -- $(0.28) $8.05 (0.10)% $217,174 1.75%
12/31/15 8.05 0.31 (0.45) (0.14) (0.31) -- (0.31) 7.60 (1.85) 172,236 1.75
12/31/16 7.60 0.29 0.44 0.73 (0.28) -- (0.28) 8.05 9.76 155,688 1.75
12/31/17 8.05 0.28 0.03 0.31 (0.27) -- (0.27) 8.09 3.96 135,902 1.75
12/31/18 8.09 0.31 (0.38) (0.07) (0.32) -- (0.32) 7.70 (0.90) 95,038 1.61
CLASS W
-------
04/20/17 @ -
12/31/17 $8.11 $0.25 $(0.03) $ 0.22 $(0.22) $ -- $(0.22) $8.11 2.69% $ 19,790 1.25%(4)
12/31/18 8.11 0.35 (0.37) (0.02) (0.37) -- (0.37) 7.72 (0.34) 28,615 1.02
RATIO OF
NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS(3) TURNOVER
------------- ---------
3.73% 65%
4.14 48
3.95 60
3.69 68
4.21 44
3.44% 65%
3.84 48
3.68 60
3.38 68
3.77 44
3.72%(4) 68%
4.43 44
--------
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load but does
include expense reimbursements.
(3)Net of the following expense waivers and/or reimbursements, if applicable
(based on average daily net assets) (see Note 5):
12/31/14 12/31/15 12/31/16 12/31/17 12/31/18
-------- -------- -------- -------- --------
Class A............. 0.32% 0.34% 0.33% 0.38% 0.64%
Class C............. 0.41 0.44 0.42 0.48 0.65
Class W............. -- -- -- 0.50(4) 0.69
(4)Annualized
@ Inception date of class.
See Notes to Financial Statements
9
AIG SENIOR FLOATING RATE FUND
PORTFOLIO PROFILE -- DECEMBER 31, 2018 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Hotels, Restaurants & Leisure............................... 7.7%
IT Services................................................. 6.4
Health Care Providers & Services............................ 6.1
Software.................................................... 5.7
Commercial Services & Supplies.............................. 5.3
Media....................................................... 5.3
Machinery................................................... 5.2
Oil, Gas & Consumable Fuels................................. 4.9
Containers & Packaging...................................... 4.8
Insurance................................................... 4.0
Chemicals................................................... 3.9
Repurchase Agreements....................................... 3.7
Specialty Retail............................................ 2.3
Diversified Telecommunication Services...................... 2.2
Pharmaceuticals............................................. 2.1
Trading Companies & Distributors............................ 2.1
Diversified Financial Services.............................. 1.8
Food Products............................................... 1.7
Construction & Engineering.................................. 1.6
Entertainment............................................... 1.6
Registered Investment Companies............................. 1.5
Consumer Finance............................................ 1.2
Semiconductors & Semiconductor Equipment.................... 1.2
Health Care Equipment & Supplies............................ 1.1
Building Products........................................... 1.1
Internet & Direct Marketing Retail.......................... 1.1
Metals & Mining............................................. 1.1
Capital Markets............................................. 1.1
Personal Products........................................... 1.0
Electronic Equipment, Instruments & Components.............. 1.0
Construction Materials...................................... 0.9
Road & Rail................................................. 0.9
Real Estate Investment Trusts............................... 0.9
Textiles, Apparel & Luxury Goods............................ 0.9
Wireless Telecommunication Services......................... 0.9
Professional Services....................................... 0.9
Household Products.......................................... 0.7
Industrial Conglomerates.................................... 0.6
Aerospace & Defense......................................... 0.6
Food & Staples Retailing.................................... 0.6
Life Sciences Tools & Services.............................. 0.6
Leisure Products............................................ 0.6
Energy Equipment & Services................................. 0.6
Diversified Consumer Services............................... 0.4
Banks....................................................... 0.3
Household Durables.......................................... 0.3
Multiline Retail............................................ 0.2
Communications Equipment.................................... 0.2
Electric Utilities.......................................... 0.2
Multi Utilities............................................. 0.0
-----
101.1%
=====
CREDIT QUALITY+#
Baa3........................................................ 1.4%
Baa2........................................................ 0.4
Ba3......................................................... 16.3
Ba2......................................................... 15.5
Ba1......................................................... 2.7
B3.......................................................... 9.5
B2.......................................................... 22.4
B1.......................................................... 24.2
Caa3........................................................ 0.1
Caa2........................................................ 3.8
Caa1........................................................ 3.5
Not Rated@ ................................................. 0.2
-----
100.0%
=====
--------
* 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: Moody's
# Calculated as a percentage of total debt issues, excluding short-term
securities.
10
AIG SENIOR FLOATING RATE FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2018
RATINGS/(1)/
------------
INTEREST REFERENCE MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE RATE DATE/(2)/ AMOUNT** (NOTE 2)
------------------------------------------------------------------------------------------------------------------------------
LOANS(3)(4) -- 90.1%
AEROSPACE & DEFENSE -- 0.6%
TransDigm Group, Inc.................... BTL-F Ba2 B+ 5.02% 1 ML+2.50% 06/09/2023 $ 1,129,668 $ 1,064,359
TransDigm Group, Inc.................... BTL-E Ba2 B+ 5.02 1 ML+2.50% 05/30/2025 451,587 425,057
-----------
1,489,416
-----------
BUILDING PRODUCTS -- 1.1%
NCI Building Systems, Inc............... BTL-B B2 B+ 6.18 3 ML+3.75% 04/12/2025 1,264,735 1,150,909
Wilsonart LLC........................... BTL-D B2 B+ 6.06 3 ML+3.25% 12/19/2023 1,509,831 1,441,888
-----------
2,592,797
-----------
CAPITAL MARKETS -- 1.1%
Aretec Group, Inc....................... 1st Lien B2 B- 6.77 1 ML+4.25% 10/01/2025 695,000 670,674
NFP Corp................................ BTL-B B2 B 5.52 1 ML+3.00% 01/08/2024 841,535 793,847
Russell Investments U.S. Institutional
Holdco, Inc............................ BTL-B Ba2 BB- 5.77 1 ML+3.25% 06/01/2023 1,110,029 1,079,503
-----------
2,544,024
-----------
CHEMICALS -- 3.9%
Allnex (Lux) & Cy SCA................... BTL-B2 B1 B 5.96 3 ML+3.25% 09/13/2023 332,069 325,012
Allnex USA, Inc......................... BTL-B3 B1 B 5.96 3 ML+3.25% 09/13/2023 250,188 244,872
Chemours Co............................. BTL-B Baa3 BBB- 4.28 1 ML+1.75% 04/03/2025 352,885 337,887
CTC AcquiCo GmbH(15).................... BTL-B1 B2 B 2.75 3 ME+2.75% 03/07/2025 EUR 400,036 447,226
DuBois Chemicals, Inc................... 1st Lien B1 B- 5.76 1 ML+3.25% 03/15/2024 983,554 944,212
H.B. Fuller Company..................... BTL-B Ba2 BB+ 4.47 1 ML+2.00% 10/20/2024 946,071 886,153
LTI Holdings, Inc....................... 1st Lien B2 B- 6.02 1 ML+3.50% 09/06/2025 613,462 578,188
LTI Holdings, Inc....................... 2nd Lien Caa2 CCC+ 9.27 1 ML+6.75% 09/06/2026 265,000 243,358
MacDermid, Inc.......................... BTL-B6 B2 BB- 5.52 1 ML+3.00% 06/07/2023 502,087 492,046
Messer Industries GmbH.................. BTL-B1 B1 BB- TBD 10/01/2025 815,000 776,288
Messer Industries GmbH.................. BTL-B2 B1 BB- TBD 10/01/2025 EUR 220,000 247,969
Minerals Technologies, Inc.............. BTL-B Ba2 BB+ 4.72-4.78 1 ML+2.25% 02/14/2024 678,601 654,851
Minerals Technologies, Inc.............. BTL-B Ba2 BB+ 5.08 3 ML+2.25% 02/14/2024 188,187 181,600
Platform Specialty Products Corp........ BTL Ba2 BB TBD 11/15/2025 445,000 429,425
Starfruit Finco BV(15).................. BTL-B B1 B+ 3.75 6 ME+3.75% 10/01/2025 EUR 165,000 185,937
Starfruit Finco BV...................... BTL-B B1 B+ 5.60 1 ML+3.25% 10/01/2025 415,000 388,025
Tronox Blocked Borrower LLC............. BTL-B Ba3 BB- 5.52 1 ML+3.00% 09/23/2024 286,948 278,237
Tronox Finance LLC...................... BTL-B Ba3 BB- 5.52 1 ML+3.00% 09/23/2024 662,187 642,085
U.S. Coating Acquisition, Inc........... BTL-B3 Ba1 BBB- 4.55 3 ML+1.75% 06/01/2024 456,550 429,157
WR Grace & Co........................... BTL-B1 Ba1 BBB- 4.55 3 ML+1.75% 04/03/2025 185,588 179,556
WR Grace & Co........................... BTL-B2 Ba1 BBB- 4.56 3 ML+1.75% 04/03/2025 318,150 307,810
-----------
9,199,894
-----------
COMMERCIAL SERVICES & SUPPLIES -- 5.3%
ADS Waste Holdings, Inc................. BTL-B3 Ba3 BB+ 4.67 1 WL+2.25% 11/10/2023 979,028 939,052
APX Group, Inc.......................... BTL-B B1 B- 7.50 2 ML+5.00% 04/01/2024 1,170,648 1,131,139
APX Group, Inc.......................... BTL-B B1 B- 9.50 USFRBPLR+4.00% 04/01/2024 1,414 1,366
Blitz F18-675 GmbH(15).................. BTL-B1 B1 B+ 3.75 3 ME+3.75% 07/31/2025 EUR 450,000 512,494
Blitz F18-675 GmbH(15).................. BTL-B2 B1 B+ 3.75 3 ME+3.75% 07/31/2025 EUR1,355,000 1,543,176
Brickman Group, Ltd..................... BTL-B B1 BB- 5.00-5.02 1 ML+2.50% 08/15/2025 1,247,240 1,187,997
Clean Harbors, Inc...................... BTL-B Ba1 BBB- 4.27 1 ML+1.75% 06/28/2024 544,685 524,259
Grizzly Acquisition, Inc................ BTL-B Ba3 BB+ 5.65 3 ML+3.25% 10/01/2025 982,537 960,430
KAR Auction Services, Inc............... BTL-B5 Ba2 BB- 5.31 3 ML+2.50% 03/09/2023 431,714 419,482
PSAV Holdings LLC....................... 1st Lien B2 B- 5.77 1 ML+3.25% 03/01/2025 847,040 798,335
PSAV Holdings LLC....................... 1st Lien B2 B- 5.96-6.05 3 ML+3.25% 03/01/2025 911,924 859,488
PSAV Holdings LLC....................... 2nd Lien Caa2 CCC 9.78 3 ML+7.25% 09/01/2025 870,000 822,150
Quad Graphics, Inc...................... BTL-B Ba2 BB- TBD 12/18/2025 685,000 666,163
USAGM Holdco LLC........................ BTL B2 B- 6.77 1 ML+4.25% 07/28/2022 840,000 800,625
Verisure Holding AB..................... BTL-B B1 B TBD 10/21/2022 1,290,000 1,457,387
-----------
12,623,543
-----------
11
AIG SENIOR FLOATING RATE FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
RATINGS/(1)/
------------
INTEREST REFERENCE MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE RATE DATE/(2)/ AMOUNT** (NOTE 2)
-------------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 0.2%
Lumentum Holdings............................ 1st Lien Ba2 BB TBD 08/07/2025 $ 580,000 $ 558,250
----------
CONSTRUCTION & ENGINEERING -- 1.2%
Brand Energy & Infrastructure Services, Inc.. BTL B3 B 6.73-6.76% 3 ML+4.25% 06/21/2024 1,817,263 1,718,222
Gopher Sub, Inc.............................. 2nd Lien Caa2 CCC 9.27 1 ML+6.75% 02/02/2026 190,000 178,600
Hamilton Holdco, LLC......................... BTL-B Ba1 BB+ 4.81 3 ML+2.00% 07/02/2025 626,850 598,642
Verra Mobility Corporation................... 1st Lien B2 B+ 6.27 1 ML+3.75% 02/28/2025 462,011 448,151
----------
2,943,615
----------
CONSTRUCTION MATERIALS -- 0.9%
Quikrete Holdings, Inc....................... 1st Lien B1 BB- 5.27 1 ML+2.75% 11/15/2023 1,403,846 1,333,654
Summit Materials LLC......................... BTL-B Ba2 BBB- 4.52 1 ML+2.00% 11/21/2024 900,900 860,923
----------
2,194,577
----------
CONSUMER FINANCE -- 0.9%
Capital Automotive LP........................ 2nd Lien B3 CCC+ 8.52 1 ML+6.00% 03/24/2025 447,501 442,187
GreenSky Holdings, Inc....................... BTL-B B1 B+ 5.81 1 ML+3.25% 03/31/2025 1,736,875 1,671,742
----------
2,113,929
----------
CONTAINERS & PACKAGING -- 4.0%
Berlin Packaging LLC......................... BTL-B B3 B- 5.35-5.53 1 ML+3.00% 11/07/2025 592,285 560,450
Berlin Packaging LLC......................... BTL-B B3 B- 5.81 3 ML+3.00% 11/07/2025 35,250 33,355
Berry Plastics Holding Corp.................. BTL-Q Ba2 BBB- 4.39 1 ML+2.00% 10/01/2022 2,228,913 2,163,438
Crown Americas LLC(15)....................... BTL-B Baa2 BBB- 2.38 1 ME+2.38% 04/03/2025 EUR 388,052 442,626
Crown Americas LLC........................... BTL-B Baa2 BBB- 4.48 1 ML+2.00% 04/03/2025 401,135 398,210
Flex Acquisition Co., Inc.................... 1st Lien B1 B 5.35 1 ML+3.00% 12/29/2023 1,526,750 1,433,237
Flex Acquisition Co., Inc.................... BTL B1 B 5.60 1 ML+3.25% 06/29/2025 498,750 472,150
Plastipak Holdings, Inc...................... BTL-B Ba3 BB- 5.03 1 ML+2.50% 10/14/2024 627,062 598,845
ProAmpac PG Borrower LLC..................... 1st Lien B3 B 5.98 1 ML+3.50% 11/18/2023 377,117 361,089
ProAmpac PG Borrower LLC..................... 1st Lien B3 B 6.02-6.14 3 ML+3.50% 11/18/2023 660,049 631,997
ProAmpac PG Borrower LLC..................... 2nd Lien Caa2 CCC+ 11.14 3 ML+8.50% 11/18/2024 385,000 373,450
Reynolds Group Holdings, Inc................. BTL B1 B+ 5.27 1 ML+2.75% 02/05/2023 2,078,382 1,977,581
----------
9,446,428
----------
DIVERSIFIED CONSUMER SERVICES -- 0.4%
Belron Finance US LLC........................ BTL-B Ba3 BB 5.11 3 ML+2.50% 11/13/2025 600,000 577,500
Weight Watchers International, Inc........... BTL-B Ba2 BB- 7.56 3 ML+4.75% 11/29/2024 517,750 509,984
----------
1,087,484
----------
DIVERSIFIED FINANCIAL SERVICES -- 1.8%
Financial & Risk US Holdings, Inc.(15)....... BTL-B B2 B 4.00 6 ME+4.00% 10/01/2025 EUR 100,000 112,212
Financial & Risk US Holdings, Inc............ BTL-B B2 B 6.27 1 ML+3.75% 10/01/2025 570,000 531,240
NAB Holdings LLC............................. BTL B2 B 5.80 3 ML+3.00% 07/01/2024 740,653 703,620
Nets Holding AS(15).......................... BTL-B1E B1 B 3.00 3 ME+3.00% 02/06/2025 EUR 798,159 900,774
Trans Union LLC.............................. BTL-B4 Ba2 BB+ 4.52 1 ML+2.00% 06/19/2025 736,300 707,155
Vantiv LLC................................... BTL-B3 Ba2 BBB- 4.17 1 WL+1.75% 10/14/2023 23,322 22,390
Vantiv LLC................................... BTL-B3 Ba2 BBB- 4.19 1 ML+1.75% 10/14/2023 461,919 443,442
Vantiv LLC................................... BTL-B4 Ba2 BBB- 4.19 1 ML+1.75% 08/09/2024 818,191 783,076
----------
4,203,909
----------
DIVERSIFIED TELECOMMUNICATION SERVICES -- 2.2%
MTN Infrastructure TopCo, Inc................ BTL-B B2 B 5.52 1 ML+3.00% 11/15/2024 1,483,287 1,412,831
Numericable Group SA......................... BTL-B12 B2 B 6.14 1 ML+3.69% 01/31/2026 1,494,197 1,380,731
Telenet Bidco NV............................. BTL-AN Ba3 BB- 4.71 1 ML+2.25% 08/15/2026 1,020,000 967,980
Zacapa SARL.................................. BTL-B B2 B- 7.80 3 ML+5.00% 07/02/2025 533,663 526,992
Zayo Group LLC............................... BTL Ba2 BB 4.77 1 ML+2.25% 01/19/2024 906,388 867,111
----------
5,155,645
----------
12
AIG SENIOR FLOATING RATE FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
RATINGS/(1)/
------------
INTEREST REFERENCE MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE RATE DATE/(2)/ AMOUNT** (NOTE 2)
-----------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES -- 0.2%
Pike Corp.............................. BTL-B B2 B 6.03% 1 ML+3.50% 03/23/2025 $ 450,449 $ 440,314
----------
ENTERTAINMENT -- 1.6%
Crown Finance US, Inc.(15)............. BTL B1 BB- 2.63 1 ME+2.63% 02/28/2025 EUR 416,850 466,959
Crown Finance US, Inc.................. BTL B1 BB- 5.02 1 ML+2.50% 02/28/2025 1,017,312 962,378
Delta 2 (Lux) SARL..................... BTL-B B2 B+ 5.02 1 ML+2.50% 02/01/2024 2,000,951 1,880,894
NAI Entertainment Holdings LLC......... BTL-B B1 BB 5.03 1 ML+2.50% 05/08/2025 478,800 447,678
----------
3,757,909
----------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS -- 1.0%
Avantor, Inc........................... 1st Lien B2 B 6.57 3 ML+3.75% 11/21/2024 470,751 455,452
Immucor, Inc........................... BTL-B3 B1 B- 7.80 3 ML+5.00% 06/15/2021 981,479 961,849
Lifescan Global Corporation............ 1st Lien B2 B+ 8.40 3 ML+6.00% 10/01/2024 750,000 703,125
Resideo Funding, Inc................... BTL-B Ba2 BBB- 4.49 3 ML+2.00% 10/24/2025 305,000 293,944
----------
2,414,370
----------
ENERGY EQUIPMENT & SERVICES -- 0.6%
Paragon Offshore, Ltd.(5)(6)+.......... Escrow Holding NR NR 6.00 07/18/2021 4,516 0
Philadelphia Energy Solutions LLC(8)... BTL-C B2 B- 9.30 3 ML+3.50% 12/31/2022 740,474 625,700
Seadrill Partners Finco LLC............ BTL-B Caa2 CCC+ 8.82 3 ML+6.00% 02/21/2021 887,144 685,319
----------
1,311,019
----------
FOOD & STAPLES RETAILING -- 0.6%
SF CC Intermediate Holdings, Inc....... BTL Caa1 B 6.02 1 ML+3.50% 11/15/2022 575,000 527,084
U.S. Foods, Inc........................ BTL-B Ba3 BBB- 4.52 1 ML+2.00% 06/27/2023 985,009 931,654
----------
1,458,738
----------
FOOD PRODUCTS -- 1.7%
CHG PPC Parent LLC..................... BTL-B B2 B 5.27 1 ML+2.75% 03/31/2025 427,850 408,597
Hearthside Food Solutions LLC.......... BTL-B B2 B- 6.21 1 ML+3.69% 05/23/2025 497,500 474,491
Hostess Brands LLC..................... BTL-B B1 BB- 4.77 1 ML+2.25% 08/03/2022 637,127 603,478
Hostess Brands LLC..................... BTL-B B1 BB- 4.78 3 ML+2.25% 08/03/2022 929,926 880,815
Pinnacle Operating Corp.(13)........... BTL Caa2 NR 11.52 1 ML+7.25% 11/15/2021 757,814 621,408
Post Holdings, Inc..................... BTL Ba2 BB 4.51 1 ML+2.00% 05/24/2024 1,036,570 998,994
----------
3,987,783
----------
HEALTH CARE EQUIPMENT & SUPPLIES -- 1.1%
Agiliti Health, Inc.................... BTL-B B1 B TBD 01/04/2026 465,000 448,725
Kinetic Concepts, Inc.................. BTL-B B1 B 6.05 3 ML+3.25% 02/02/2024 827,400 794,304
Ortho Clinical Diagnostics SA.......... BTL-B B1 B- 5.76 1 ML+3.25% 06/30/2025 453,758 420,521
Sotera Health Holdings, LLC............ BTL-B B1 B 5.52 1 ML+3.00% 05/15/2022 1,096,873 1,046,600
----------
2,710,150
----------
13
AIG SENIOR FLOATING RATE FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
RATINGS/(1)/
------------
INTEREST REFERENCE MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE RATE DATE/(2)/ AMOUNT** (NOTE 2)
-------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES -- 6.1%
Air Medical Group Holdings, Inc........... BTL-B1 B1 B 5.68% 1 ML+3.25% 04/28/2022 $ 246,713 $ 228,562
Catalent Pharma Solutions, Inc............ BTL-B Ba2 BB 4.77 1 ML+2.25% 05/20/2024 719,919 697,122
Change Healthcare Holdings, Inc........... BTL-B Ba3 B+ 5.27 1 ML+2.75% 03/01/2024 1,196,955 1,134,614
CHS/Community Health Systems, Inc......... BTL-H Caa1 B- 5.96 3 ML+3.25% 01/27/2021 427,436 408,415
Dental Corp. Perfect Smile ULC............ 1st Lien B2 B- 6.27 1 ML+3.75% 06/06/2025 494,824 481,835
Dental Corp. Perfect Smile ULC(7)......... Delayed Draw B2 B- 3.75 06/06/2025 54,207 52,784
Dental Corp. Perfect Smile ULC............ 1st Lien B2 B- 6.27 1 ML+3.75% 06/06/2025 69,867 68,033
DuPage Medical Group, Ltd................. 1st Lien B1 B 5.27 1 ML+2.75% 08/15/2024 914,416 877,839
DuPage Medical Group, Ltd................. 2nd Lien Caa1 CCC+ 9.50 1 ML+7.00% 08/15/2025 748,968 718,073
Envision Healthcare Corp.................. 1st Lien B1 B+ 6.27 1 ML+3.75% 10/10/2025 2,065,000 1,923,318
Gentiva Health Services, Inc.............. BTL-B B1 B 6.31 1 ML+3.75% 07/02/2025 789,822 766,127
Gentiva Health Services, Inc.............. BTL-B2 Caa1 CCC+ 9.56 1 ML+7.00% 07/02/2026 145,000 143,913
Healogics, Inc............................ 1st Lien B3 B- 7.01 3 ML+4.25% 07/01/2021 967,747 874,198
MPH Acquisition Holdings LLC.............. BTL-B B1 B+ 5.55 3 ML+2.75% 06/07/2023 1,826,052 1,715,576
NVA Holdings, Inc......................... BTL-B3 B2 B 5.27 1 ML+2.75% 02/02/2025 707,251 664,816
One Call Corporation...................... BTL-B1 B2 CCC+ 7.71 1 ML+5.25% 11/25/2022 467,418 411,561
Pharmaceutical Product Development, Inc... BTL-B Ba3 B 5.02 1 ML+2.50% 08/18/2022 1,496,143 1,416,764
Sound Inpatient Physicians................ 1st Lien Ba3 B 5.27 1 ML+2.75% 06/27/2025 472,625 457,265
Sound Inpatient Physicians................ 2nd Lien B3 CCC+ 9.27 1 ML+6.75% 06/26/2026 205,000 197,313
Surgery Center Holdings, Inc.............. 1st Lien B1 B 5.78 1 ML+3.25% 09/02/2024 797,481 757,109
U.S. Renal Care, Inc...................... BTL-B B2 B 7.05 3 ML+4.25% 12/30/2022 619,369 588,710
-----------
14,583,947
-----------
HOTELS, RESTAURANTS & LEISURE -- 7.5%
8th Avenue Food & Provisions, Inc......... 1st Lien B2 B 6.10 1 ML+3.75% 10/01/2025 425,000 414,906
8th Avenue Food & Provisions, Inc......... 2nd Lien Caa1 CCC+ 10.10 1 ML+7.75% 10/01/2026 270,000 265,950
Aramark Services, Inc..................... BTL-B3 Ba1 BBB- 4.27 1 ML+1.75% 03/11/2025 596,904 577,256
Boyd Gaming Corp.......................... BTL-B3 Ba3 BB 4.67 1 WL+2.25% 09/15/2023 938,916 894,709
Caesars Entertainment Operating Co., Inc.. BTL-B Ba3 BB 4.52 1 ML+2.00% 10/06/2024 2,123,550 2,006,755
Caesars Resort Collection LLC............. BTL-B Ba3 BB 5.27 1 ML+2.75% 12/22/2024 2,918,013 2,786,702
CityCenter Holdings LLC................... BTL-B B1 BB- 4.77 1 ML+2.25% 04/18/2024 1,490,991 1,408,986
Eldorado Resorts LLC...................... BTL-B Ba1 BB 4.75 2 ML+2.25% 04/17/2024 1,385,638 1,312,891
Four Seasons Holdings, Inc................ 1st Lien Ba3 BB 4.52 1 ML+2.00% 11/30/2023 607,600 579,119
Golden Entertainment, Inc................. 1st Lien B1 B+ 5.53 1 ML+3.00% 10/21/2024 1,955,250 1,862,376
Golden Entertainment, Inc................. 2nd Lien Caa1 CCC+ 9.53 1 ML+7.00% 10/20/2025 1,075,000 1,021,250
Hilton Worldwide Finance LLC.............. BTL-B2 Baa3 BBB- 4.26 1 ML+1.75% 10/25/2023 591,190 567,543
IRB Holding Corp.......................... BTL-B B2 B 5.68 1 ML+3.25% 02/05/2025 384,033 365,471
Lindblad Expeditons, Inc.................. BTL B2 BB 6.02 1 ML+3.50% 03/27/2025 1,552,200 1,543,469
Lindblad Expeditons, Inc.................. CTL B2 BB 6.02 1 ML+3.50% 03/27/2025 388,050 385,867
Penn National Gaming, Inc................. BTL-B Ba2 BB 4.71 1 ML+2.25% 10/15/2025 705,000 677,430
Scientific Games International, Inc....... BTL-B5 Ba3 B+ 5.25 2 ML+2.75% 08/14/2024 467,645 437,949
Scientific Games International, Inc....... BTL-B5 Ba3 B+ 5.27 1 ML+2.75% 08/14/2024 111,901 104,795
Station Casinos, Inc...................... BTL-B Ba3 BB- 5.03 1 ML+2.50% 06/08/2023 688,061 662,581
-----------
17,876,005
-----------
HOUSEHOLD DURABLES -- 0.3%
Installed Building Products, Inc.......... BTL-B2 B1 BB 5.02 1 ML+2.50% 04/15/2025 681,381 644,757
-----------
HOUSEHOLD PRODUCTS -- 0.7%
Diamond (BC) BV(15)....................... BTL B1 B 3.25 3 ME+3.25% 09/06/2024 EUR 207,900 229,070
Diamond (BC) BV........................... BTL B1 B 5.53 3 ML+3.00% 09/06/2024 905,850 833,382
Energizer Holdings, Inc................... BTL-B Ba1 BB+ TBD 06/20/2025 305,000 294,325
Prestige Brands, Inc...................... BTL-B4 Ba3 BB 4.52 1 ML+2.00% 01/26/2024 264,952 253,857
-----------
1,610,634
-----------
14
AIG SENIOR FLOATING RATE FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
RATINGS/(1)/
------------
INTEREST REFERENCE MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE RATE DATE/(2)/ AMOUNT** (NOTE 2)
----------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES -- 0.3%
Ameriforge Group, Inc..................... BTL NR NR 9.80% 3 ML+7.00% 06/08/2022 $ 106,440 $ 105,854
UTEX Industries, Inc...................... 1st Lien B3 CCC+ 6.52 1 ML+4.00% 05/22/2021 681,337 620,869
-----------
726,723
-----------
INSURANCE -- 3.8%
Asurion LLC............................... BTL-B4 Ba3 B+ 5.52 1 ML+3.00% 08/04/2022 855,494 819,991
Asurion LLC............................... BTL-B6 Ba3 B+ 5.52 1 ML+3.00% 11/03/2023 844,571 806,918
Asurion LLC............................... 2nd Lien B3 B- 9.02 1 ML+6.50% 08/04/2025 1,480,000 1,435,600
Asurion LLC............................... BTL-B7 Ba3 B+ 5.52 1 ML+3.00% 11/03/2024 1,014,900 966,692
Compass Investments, Inc.................. BTL-B B2 B 5.80 3 ML+3.00% 05/16/2024 2,143,669 2,018,264
Genworth Financial, Inc................... BTL Ba3 B+ 6.96 1 ML+4.50% 03/07/2023 367,225 362,635
Hub International, Ltd.................... BTL-B B2 B 5.24 3 ML+2.75% 04/25/2025 980,075 922,904
Sedgwick Claims Management Services, Inc.. BTL-B B2 B TBD 12/31/2025 1,730,000 1,650,709
-----------
8,983,713
-----------
INTERNET & DIRECT MARKETING RETAIL -- 1.1%
Acosta, Inc............................... BTL Caa1 CCC+ 5.77 1 ML+3.25% 09/26/2021 802,042 482,562
Lands' End, Inc........................... BTL-B B3 B- 5.77 1 ML+3.25% 04/04/2021 914,432 863,377
Rodan & Fields, LLC....................... BTL-B B1 BB 6.46 1 ML+4.00% 06/06/2025 562,175 511,579
Shutterfly, Inc........................... BTL-B2 Ba3 BB- 5.28 1 ML+2.75% 08/17/2024 746,255 720,136
-----------
2,577,654
-----------
IT SERVICES -- 6.4%
Blackhawk Network Holdings, Inc........... 1st Lien B1 B 5.52 1 ML+3.00% 06/15/2025 900,475 854,701
CCC Information Services, Inc............. 1st Lien B2 B 5.53 1 ML+3.00% 04/26/2024 650,100 617,595
EVERTEC Group LLC......................... BTL-B B2 B+ 6.02 1 ML+3.50% 11/27/2024 1,225,000 1,200,500
EVO Payments International LLC............ 1st Lien B2 B 5.76 1 ML+3.25% 12/22/2023 1,798,542 1,733,345
First Data Corp........................... BTL Ba2 BB 4.50 1 ML+2.00% 04/26/2024 2,681,026 2,555,910
First Data Corp........................... BTL Ba2 BB 4.50 1 ML+2.00% 07/08/2022 1,052,759 1,007,140
Global Payments, Inc...................... BTL-B3 Ba2 BBB- 4.27 1 ML+1.75% 04/21/2023 946,362 906,141
Go Daddy Operating Co. LLC................ BTL-B Ba3 BB- 4.77 1 ML+2.25% 02/15/2024 983,926 938,420
Tempo Acquisition LLC..................... BTL-B B1 B 5.52 1 ML+3.00% 05/01/2024 1,002,108 955,760
Web.com Group, Inc........................ BTL-B B2 B+ 6.17 3 ML+3.75% 10/10/2025 510,000 489,919
Web.com Group, Inc........................ 2nd Lien Caa2 CCC+ 10.17 3 ML+7.75% 10/09/2026 813,512 801,309
WEX, Inc.................................. BTL-B2 Ba3 BB- 4.77 1 ML+2.25% 06/30/2023 1,584,670 1,521,283
Xerox Business Services LLC............... BTL-B Ba3 BB+ 5.02 1 ML+2.50% 12/07/2023 1,744,400 1,648,458
-----------
15,230,481
-----------
LEISURE PRODUCTS -- 0.6%
Hayward Industries, Inc................... 1st Lien B3 B 6.02 1 ML+3.50% 08/05/2024 400,935 383,895
SRAM LLC.................................. BTL-B B1 B+ 5.22 3 ML+2.75% 03/15/2024 524,751 498,514
SRAM LLC.................................. BTL-B B1 B+ 5.37 2 ML+2.75% 03/15/2024 517,361 491,493
SRAM LLC.................................. BTL-B B1 B+ 7.25 USFRBPLR+1.75% 03/15/2024 21,571 20,492
-----------
1,394,394
-----------
LIFE SCIENCES TOOLS & SERVICES -- 0.6%
PAREXEL International Corp................ BTL-B B1 B 5.27 1 ML+2.75% 09/27/2024 646,812 582,940
Syneos Health, Inc........................ BTL-B Ba2 BB 4.52 1 ML+2.00% 08/01/2024 848,195 816,741
-----------
1,399,681
-----------
15
AIG SENIOR FLOATING RATE FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
RATINGS/(1)/
------------
INTEREST REFERENCE MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE RATE DATE/(2)/ AMOUNT** (NOTE 2)
-------------------------------------------------------------------------------------------------------------------------
MACHINERY -- 5.2%
AI Alpine US Bidco, Inc............... BTL-B B2 B 5.81% 3 ML+3.25% 10/31/2025 $ 390,000 $ 371,475
Altra Industrial Motion Corp.......... BTL-B Ba2 BB- 4.52 1 ML+2.00% 10/01/2025 999,851 949,858
Brookfield WEC Holdings, Inc.......... 1st Lien B2 B 6.27 1 ML+3.75% 08/01/2025 960,000 926,640
Brookfield WEC Holdings, Inc.......... 2nd Lien Caa1 B- 9.27 1 ML+6.75% 08/03/2026 295,000 289,100
CIRCOR International, Inc............. 1st Lien B1 B+ 5.92 1 ML+3.50% 12/11/2024 1,003,795 948,587
Columbus McKinnon Corp................ BTL-B Ba2 BB- 5.30 3 ML+2.50% 01/31/2024 888,622 859,742
Crosby US Acquisition Corp............ 1st Lien Caa1 B- 5.50 1 ML+3.00% 11/23/2020 1,003,123 932,905
Gardner Denver, Inc................... BTL-B Ba3 BB+ 3.00 1 ME+3.00% 07/30/2024 EUR1,037,862 1,169,807
Gardner Denver, Inc................... BTL-B Ba3 BB+ 5.27 1 ML+2.75% 07/30/2024 970,371 936,003
Navistar International Corp........... BTL-B Ba3 B+ 5.89 1 ML+3.50% 11/06/2024 927,987 888,548
NN, Inc............................... BTL B2 B 5.77 1 ML+3.25% 04/02/2021 1,660,050 1,606,098
Pro Mach Group, Inc................... BTL-B B2 B- 5.43 1 ML+3.00% 03/07/2025 744,375 707,156
Utility One Source LP................. BTL-B B2 B 8.00-8.02 1 ML+5.50% 04/18/2023 715,619 712,041
WireCo WorldGroup, Inc................ 1st Lien B3 B+ 7.52 1 ML+5.00% 09/30/2023 610,937 603,046
Zodiac Pool Solutions LLC............. BTL-B Ba3 BB 4.77 1 ML+2.25% 07/02/2025 437,800 418,829
-----------
12,319,835
-----------
MEDIA -- 5.3%
Advantage Sales & Marketing LLC....... 1st Lien B1 B 5.77 1 ML+3.25% 07/23/2021 685,904 602,738
Advantage Sales & Marketing LLC....... 2nd Lien Caa1 CCC+ 9.02 1 ML+6.50% 07/25/2022 1,000,000 780,000
Altice Financing SA................... 1st Lien B2 B+ 5.22 3 ML+2.75% 01/31/2026 1,277,100 1,181,318
Charter Communications Operating LLC.. BTL-B Ba1 BBB- 4.53 1 ML+2.00% 04/30/2025 657,290 628,369
CSC Holdings, Inc..................... BTL-B Ba2 BB 4.71 1 ML+2.25% 07/17/2025 502,966 472,788
CSC Holdings, Inc..................... BTL-B Ba2 BB 4.96 1 ML+2.50% 01/25/2026 696,500 664,577
Gray Television, Inc.................. BTL-C Ba2 BB TBD 11/02/2025 1,745,000 1,680,185
Houghton Mifflin Harcourt Publishing
Company.............................. BTL-B Caa2 B 5.52 1 ML+3.00% 05/31/2021 648,320 585,920
ION Media Networks, Inc............... BTL-B3 B1 BB- 5.28 1 ML+2.75% 12/18/2020 2,251,045 2,183,513
NEP Group, Inc........................ BTL B1 B+ 5.77 1 ML+3.25% 10/20/2025 200,000 191,750
NEP Group, Inc.(6).................... 2nd Lien Caa1 CCC+ 9.52 1 ML+7.00% 10/19/2026 595,000 553,350
Unitymedia Hessen GmbH & Co. KG....... BTL-B Ba3 BB- 4.71 1 ML+2.25% 09/30/2025 1,000,000 962,812
Univision Communications, Inc......... BTL-C5 B2 B 5.27 1 ML+2.75% 03/15/2024 747,876 673,463
UPC Financing Partnership............. BTL-AR Ba3 BB 4.96 1 ML+2.50% 01/15/2026 416,456 395,633
Virgin Media Bristol LLC.............. BTL-K Ba3 BB- 4.96 1 ML+2.50% 01/15/2026 500,000 473,000
Ziggo Secured Finance Partnership..... BTL-E B1 BB- 4.96 1 ML+2.50% 04/15/2025 500,000 470,313
-----------
12,499,729
-----------
METALS & MINING -- 0.6%
American Rock Salt Co. LLC............ 1st Lien B3 B 6.27 1 ML+3.75% 03/21/2025 1,489,518 1,437,385
-----------
MULTILINE RETAIL -- 0.2%
Neiman Marcus Group Ltd. LLC.......... BTL Caa2 CCC- 5.63 1 ML+3.25% 10/25/2020 663,352 561,362
-----------
OIL, GAS & CONSUMABLE FUELS -- 3.3%
Ascent Resources Marcellus LLC........ 1st Lien NR NR 8.89 1 ML+6.50% 03/30/2023 260,833 260,507
BCP Raptor LLC........................ BTL-B B3 B 6.87 2 ML+4.25% 06/24/2024 593,120 550,489
BCP Renaissance Parent LLC............ BTL-B B1 B+ 6.03 3 ML+3.50% 10/31/2024 999,975 968,101
California Resources Corp............. 1st Lien B2 B 7.26 1 ML+4.75% 12/31/2022 395,000 367,350
California Resources Corp............. 2nd Lien Caa1 B 12.90 1 ML+10.38% 12/31/2021 500,000 475,000
Foresight Energy LLC.................. 1st Lien B2 B 8.28 3 ML+5.75% 03/28/2022 1,883,085 1,842,284
Medallion Midland Acquisition LLC..... 1st Lien B2 B+ 5.77 1 ML+3.25% 10/30/2024 470,250 437,333
Peabody Energy Corp................... BTL Ba3 BB 5.27 1 ML+2.75% 03/31/2025 491,587 481,755
Power Buyer LLC....................... 1st Lien B2 B 6.06 3 ML+3.25% 03/06/2025 1,257,203 1,206,915
Power Buyer LLC....................... 2nd Lien Caa2 CCC+ 10.06 3 ML+7.25% 03/06/2026 585,000 561,600
Traverse Midstream Partners LLC....... BTL-B B2 B+ 6.60 6 ML+4.00% 09/27/2024 850,000 813,875
-----------
7,965,209
-----------
16
AIG SENIOR FLOATING RATE FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
RATINGS/(1)/
------------
INTEREST REFERENCE MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE RATE DATE/(2)/ AMOUNT** (NOTE 2)
-----------------------------------------------------------------------------------------------------------------------------
PERSONAL PRODUCTS -- 0.9%
Coty, Inc.(15)............................... BTL-B Ba3 BB 2.50% 1 ME+2.50% 04/07/2025 EUR 820,875 $ 886,045
Coty, Inc.................................... BTL-B Ba3 BB 4.63 1 ML+2.25% 04/07/2025 568,179 523,435
Revlon Consumer Products Corp................ BTL-B B3 CCC+ 6.21 3 ML+3.50% 09/07/2023 1,075,250 756,707
-----------
2,166,187
-----------
PHARMACEUTICALS -- 1.5%
Endo Luxembourg Finance Co. I SARL........... BTL-B Ba2 BB- 6.81 1 ML+4.25% 04/29/2024 1,095,731 1,029,988
Valeant Pharmaceuticals International, Inc... BTL-B Ba2 BB- 5.13 1 ML+2.75% 11/27/2025 1,555,312 1,466,854
Valeant Pharmaceuticals International, Inc... BTL-B Ba2 BB- 5.38 1 ML+3.00% 06/02/2025 1,234,459 1,178,908
-----------
3,675,750
-----------
PROFESSIONAL SERVICES -- 0.9%
AlixPartners LLP............................. BTL-B B2 B+ 5.27 1 ML+2.75% 04/04/2024 1,684,987 1,614,218
Team Health Holdings, Inc.................... 1st Lien B2 B 5.27 1 ML+2.75% 02/06/2024 490,622 439,107
-----------
2,053,325
-----------
REAL ESTATE INVESTMENT TRUSTS -- 0.9%
MGM Growth Properties Operating Partnership
LP.......................................... BTL-B Ba3 BB+ 4.52 1 ML+2.00% 03/21/2025 775,219 739,365
VICI Properties 1 LLC........................ BTL Ba3 BBB- 4.50 1 ML+2.00% 12/20/2024 1,453,864 1,389,530
-----------
2,128,895
-----------
ROAD & RAIL -- 0.9%
Fly Funding II SARL.......................... BTL-B Ba2 BB+ 4.60 3 ML+2.00% 02/09/2023 1,130,144 1,094,827
Savage Enterprises LLC....................... BTL-B B1 B+ 6.88 1 ML+4.50% 08/01/2025 1,084,716 1,063,022
-----------
2,157,849
-----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 1.2%
Cabot Microelectronics Corp.................. BTL-B Ba2 BB+ 4.81 1 ML+2.25% 11/14/2025 525,000 504,656
Entegris, Inc................................ BTL-B Baa3 BBB- 4.52 1 ML+2.00% 11/01/2025 1,000,000 970,000
Integrated Device Technology, Inc............ BTL-B Baa3 BB 5.02 1 ML+2.50% 04/04/2024 530,590 525,285
Microchip Technology, Inc.................... BTL-B Baa3 BB+ 4.53 1 ML+2.00% 05/29/2025 886,247 838,980
-----------
2,838,921
-----------
SOFTWARE -- 5.7%
Almonde, Inc................................. 1st Lien B2 B- 6.30 3 ML+3.50% 06/13/2024 1,177,876 1,095,424
Almonde, Inc................................. 2nd Lien Caa2 CCC 10.05 3 ML+7.25% 06/13/2025 230,000 210,306
Ascend Learning LLC.......................... BTL-B B2 B+ 5.52 1 ML+3.00% 07/12/2024 502,757 474,477
Ceridian HCM Holding, Inc.................... BTL-B B3 B 5.77 1 ML+3.25% 04/30/2025 1,087,489 1,041,271
Compuware Corp............................... BTL-B B1 B 6.01 1 ML+3.50% 08/22/2025 195,000 190,856
Epicore Software Co.......................... 1st Lien B2 B- 5.77 1 ML+3.25% 06/01/2022 1,101,782 1,050,824
Evergreen Skills Lux S.a.r.l................. 1st Lien B3 CCC+ 7.27 1 ML+4.75% 04/28/2021 548,568 438,854
Hyland Software, Inc......................... 1st Lien B1 B- 6.02 1 ML+3.50% 07/01/2024 977,152 938,879
Hyland Software, Inc......................... 2nd Lien Caa1 CCC 9.52 1 ML+7.00% 07/07/2025 535,000 529,650
IQVIA, Inc................................... BTL-B Ba1 BBB- 2.50 3 ME+2.00% 06/11/2025 EUR1,179,075 1,337,078
Infor US, Inc................................ BTL-B6 B1 B 5.27 1 ML+2.75% 02/01/2022 679,767 649,517
MA FinanceCo. LLC............................ BTL-B3 B1 BB- 5.02 1 ML+2.50% 06/21/2024 128,011 119,050
Quest Software US Holdings, Inc.............. 1st Lien B2 B+ 6.78 3 ML+4.25% 05/18/2025 1,090,000 1,050,760
RP Crown Parent LLC.......................... BTL-B B1 B 5.27 1 ML+2.75% 10/12/2023 872,200 836,222
Seattle Spinco, Inc.......................... BTL-B3 B1 BB- 5.02 1 ML+2.50% 06/21/2024 864,489 803,975
SS&C Technologies, Inc....................... BTL-B3 Ba3 BB 4.77 1 ML+2.25% 04/16/2025 1,161,204 1,095,678
SS&C Technologies, Inc....................... BTL-B4 Ba3 BB 4.77 1 ML+2.25% 04/16/2025 440,461 416,235
SS&C Technologies, Inc....................... BTL-B5 Ba3 BB 4.77 1 ML+2.25% 04/16/2025 1,376,530 1,297,809
-----------
13,576,865
-----------
17
AIG SENIOR FLOATING RATE FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
RATINGS/(1)/
------------
INTEREST REFERENCE MATURITY PRINCIPAL
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE RATE DATE/(2)/ AMOUNT**
-----------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL -- 2.0%
At Home Holding III, Inc...................... BTL B2 B+ 6.03% 3 ML+3.50% 06/03/2022 $ 678,489
Bass Pro Group LLC............................ BTL-B B1 B+ 7.52 1 ML+5.00% 09/25/2024 1,498,133
Foundation Building Materials Holding Co. LLC. BTL-B B3 B+ 5.71 1 ML+3.25% 08/13/2025 500,000
J. Crew Group, Inc............................ BTL-B Caa2 CCC 5.52 1 ML+3.00% 03/05/2021 136,485
J. Crew Group, Inc............................ BTL-B Caa2 CCC 5.80 3 ML+3.00% 03/05/2021 582,884
PetSmart, Inc................................. BTL-B2 B3 CCC 5.38 1 ML+3.00% 03/11/2022 1,054,323
Staples, Inc.................................. BTL-B B1 B+ 6.54 3 ML+4.00% 09/12/2024 861,300
TEXTILES, APPAREL & LUXURY GOODS -- 0.9%
ASP Unifrax Holdings, Inc..................... 2nd Lien Caa2 CCC+ TBD 12/14/2026 375,000
Unifrax Holding Co............................ 1st Lien B3 B- TBD 12/12/2025 1,865,000
TRADING COMPANIES & DISTRIBUTORS -- 1.9%
ABC Supply Co., Inc........................... BTL-B B1 BB+ 4.52 1 ML+2.00% 10/31/2023 992,791
Beacon Roofing Supply, Inc.................... BTL-B B1 BB+ 4.68 1 ML+2.25% 01/02/2025 446,625
HD Supply, Inc................................ BTL-B5 Ba2 BBB- 4.27 1 ML+1.75% 10/17/2023 1,073,785
HD Supply Waterworks, Ltd..................... BTL-B B2 B+ 5.71-5.74 3 ML+3.00% 08/01/2024 316,800
Nexeo Solutions LLC........................... BTL-B1 B3 B 5.78-6.05 3 ML+3.25% 06/09/2023 1,298,935
Univar, Inc................................... BTL-B3 B1 BB 4.77 1 ML+2.25% 07/01/2024 571,423
WIRELESS TELECOMMUNICATION SERVICES -- 0.9%
Sprint Communications, Inc.................... BTL-B Ba2 BB- 5.06 1 ML+2.50% 02/02/2024 2,214,365
TOTAL LOANS (cost $225,409,671)...............
U.S. CORPORATE BONDS & NOTES -- 3.5%
CONSTRUCTION & ENGINEERING -- 0.4%
Brand Energy & Infrastructure Services,
Inc.*........................................ Senior Notes Caa2 CCC+ 8.50 07/15/2025 1,000,000
CONSUMER FINANCE -- 0.3%
Navient Corp.................................. Senior Notes Ba3 B+ 6.50 06/15/2022 300,000
Springleaf Finance Corp....................... Company Guar. Notes B1 B+ 6.13 05/15/2022 500,000
CONTAINERS & PACKAGING -- 0.5%
Reynolds Group Issuer, Inc. FRS*.............. Senior Sec. Notes B1 B+ 5.94 3 ML+3.50% 07/15/2021 1,245,000
INSURANCE -- 0.2%
USIS Merger Sub, Inc.*........................ Senior Notes Caa2 CCC+ 6.88 05/01/2025 500,000
METALS & MINING -- 0.2%
Warrior Met Coal, Inc.*....................... Senior Sec. Notes B2 BB- 8.00 11/01/2024 525,000
MULTI UTILITIES -- 0.0%
Texas Competitive Electric Holdings Co.
LLC*(5)...................................... Escrow Notes NR NR 6.25 10/01/2020 4,174,956
OIL, GAS & CONSUMABLE FUELS -- 1.3%
Chesapeake Energy Corp........................ Company Guar. Notes B3 B- 7.00 10/01/2024 1,250,000
Foresight Energy/Finance*..................... Sec. Notes Caa2 CCC 11.50 04/01/2023 715,000
Jagged Peak Energy LLC*....................... Company Guar. Notes B3 B 5.88 05/01/2026 500,000
Vine Oil & Gas LP / Vine Oil & Gas Finance
Corp.*....................................... Company Guar. Notes Caa1 B- 8.75 04/15/2023 1,000,000
PERSONAL PRODUCTS -- 0.1%
Revlon Consumer Products Corp................. Company Guar. Notes Caa3 CCC 6.25 08/01/2024 505,000
VALUE
INDUSTRY DESCRIPTION (NOTE 2)
-------------------------------------------------------------
SPECIALTY RETAIL -- 2.0%
At Home Holding III, Inc...................... $ 653,894
Bass Pro Group LLC............................ 1,430,717
Foundation Building Materials Holding Co. LLC. 471,250
J. Crew Group, Inc............................ 108,505
J. Crew Group, Inc............................ 463,393
PetSmart, Inc................................. 829,752
Staples, Inc.................................. 822,542
------------
4,780,053
------------
TEXTILES, APPAREL & LUXURY GOODS -- 0.9%
ASP Unifrax Holdings, Inc..................... 354,375
Unifrax Holding Co............................ 1,757,762
------------
2,112,137
------------
TRADING COMPANIES & DISTRIBUTORS -- 1.9%
ABC Supply Co., Inc........................... 942,442
Beacon Roofing Supply, Inc.................... 423,643
HD Supply, Inc................................ 1,028,149
HD Supply Waterworks, Ltd..................... 305,712
Nexeo Solutions LLC........................... 1,276,204
Univar, Inc................................... 544,852
------------
4,521,002
------------
WIRELESS TELECOMMUNICATION SERVICES -- 0.9%
Sprint Communications, Inc.................... 2,109,182
------------
TOTAL LOANS (cost $225,409,671)............... 214,165,469
------------
U.S. CORPORATE BONDS & NOTES -- 3.5%
CONSTRUCTION & ENGINEERING -- 0.4%
Brand Energy & Infrastructure Services,
Inc.*........................................ 852,500
------------
CONSUMER FINANCE -- 0.3%
Navient Corp.................................. 279,750
Springleaf Finance Corp....................... 484,855
------------
764,605
------------
CONTAINERS & PACKAGING -- 0.5%
Reynolds Group Issuer, Inc. FRS*.............. 1,240,331
------------
INSURANCE -- 0.2%
USIS Merger Sub, Inc.*........................ 459,050
------------
METALS & MINING -- 0.2%
Warrior Met Coal, Inc.*....................... 521,063
------------
MULTI UTILITIES -- 0.0%
Texas Competitive Electric Holdings Co.
LLC*(5)...................................... 22,962
------------
OIL, GAS & CONSUMABLE FUELS -- 1.3%
Chesapeake Energy Corp........................ 1,081,250
Foresight Energy/Finance*..................... 607,750
Jagged Peak Energy LLC*....................... 465,000
Vine Oil & Gas LP / Vine Oil & Gas Finance
Corp.*....................................... 790,000
------------
2,944,000
------------
PERSONAL PRODUCTS -- 0.1%
Revlon Consumer Products Corp................. 267,650
------------
18
AIG SENIOR FLOATING RATE FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
RATINGS/(1)/
------------
INTEREST REFERENCE MATURITY
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE RATE DATE/(2)/
----------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL -- 0.3%
PetSmart, Inc.*.................................... Senior Sec. Notes B3 CCC 5.88% 06/01/2025
Staples, Inc.*..................................... Company Guar. Notes B3 B- 8.50 09/15/2025
TRADING COMPANIES & DISTRIBUTORS -- 0.2%
Beacon Roofing Supply, Inc.*....................... Company Guar. Notes B3 B+ 4.88 11/01/2025
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $9,422,440).................................
FOREIGN CORPORATE BONDS & NOTES -- 1.3%
CONTAINERS & PACKAGING -- 0.3%
Ardagh Packaging Finance PLC*...................... Company Guar. Notes B3 B 7.25 05/15/2024
HOTELS, RESTAURANTS & LEISURE -- 0.2%
LHMC Finco Sarl FRS*(15)........................... Senior Sec. Notes B2 B+ 5.75 3 ME+5.75% 12/20/2023
METALS & MINING -- 0.3%
Costellium NV*..................................... Company Guar. Notes B2 B- 6.63 03/01/2025
PHARMACEUTICALS -- 0.5%
Endo, Ltd./Endo Finance LLC*....................... Company Guar. Notes B3 CCC+ 6.00 07/15/2023
Valeant Pharmaceuticals*........................... Senior Sec. Notes Ba2 BB- 7.00 03/15/2024
Valeant Pharmaceuticals*........................... Company Guar. Notes B3 B- 9.00 12/15/2025
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $3,275,640).................................
COMMON STOCKS -- 0.7%
ENERGY EQUIPMENT & SERVICES -- 0.0%
Paragon Offshore, Litigation Trust, Class A+(5)(9).
Paragon Offshore, Litigation Trust, Class B+(5)(9).
INDUSTRIAL CONGLOMERATES -- 0.4%
AFG Holdings, Inc.+(5)(9)..........................
MEDIA -- 0.0%
Vivial+(5)(6)(9)...................................
OIL, GAS & CONSUMABLE FUELS -- 0.3%
Ascent Resources Marcellus LLC,
Class A+(5)(6)(9).................................
Philadelphia Energy Solutions LLC, Class A+(5)(9)..
TE Holdcorp LLC, Class A+(5)(6)(9).................
TOTAL COMMON STOCKS (cost $3,981,842)..............
PREFERRED SECURITIES/CAPITAL SECURITIES -- 0.3%
BANKS -- 0.3%
Banco Bilbao Vizcaya Argentaria SA(10)
(cost $800,000)................................... Ba2 NR 6.13 11/16/2027
PRINCIPAL VALUE
INDUSTRY DESCRIPTION AMOUNT**/SHARES (NOTE 2)
--------------------------------------------------------------------------------
SPECIALTY RETAIL -- 0.3%
PetSmart, Inc.*.................................... $250,000 $ 180,625
Staples, Inc.*..................................... 650,000 586,430
----------
767,055
----------
TRADING COMPANIES & DISTRIBUTORS -- 0.2%
Beacon Roofing Supply, Inc.*....................... 500,000 439,375
----------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $9,422,440)................................. 8,278,591
----------
FOREIGN CORPORATE BONDS & NOTES -- 1.3%
CONTAINERS & PACKAGING -- 0.3%
Ardagh Packaging Finance PLC*...................... 685,000 683,288
----------
HOTELS, RESTAURANTS & LEISURE -- 0.2%
LHMC Finco Sarl FRS*(15)........................... 320,000 368,524
----------
METALS & MINING -- 0.3%
Costellium NV*..................................... 655,000 607,513
----------
PHARMACEUTICALS -- 0.5%
Endo, Ltd./Endo Finance LLC*....................... 560,000 427,000
Valeant Pharmaceuticals*........................... 630,000 636,300
Valeant Pharmaceuticals*........................... 385,000 383,075
----------
1,446,375
----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $3,275,640)................................. 3,105,700
----------
COMMON STOCKS -- 0.7%
ENERGY EQUIPMENT & SERVICES -- 0.0%
Paragon Offshore, Litigation Trust, Class A+(5)(9). 1,242 1,087
Paragon Offshore, Litigation Trust, Class B+(5)(9). 621 21,114
----------
22,201
----------
INDUSTRIAL CONGLOMERATES -- 0.4%
AFG Holdings, Inc.+(5)(9).......................... 14,309 786,995
----------
MEDIA -- 0.0%
Vivial+(5)(6)(9)................................... 1,136 20,153
----------
OIL, GAS & CONSUMABLE FUELS -- 0.3%
Ascent Resources Marcellus LLC,
Class A+(5)(6)(9)................................. 187,384 534,044
Philadelphia Energy Solutions LLC, Class A+(5)(9).. 35,161 193,385
TE Holdcorp LLC, Class A+(5)(6)(9)................. 44,278 0
----------
727,429
----------
TOTAL COMMON STOCKS (cost $3,981,842).............. 1,556,778
----------
PREFERRED SECURITIES/CAPITAL SECURITIES -- 0.3%
BANKS -- 0.3%
Banco Bilbao Vizcaya Argentaria SA(10)
(cost $800,000)................................... 800,000 670,000
----------
19
AIG SENIOR FLOATING RATE FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
PRINCIPAL VALUE
INDUSTRY DESCRIPTION AMOUNT**/SHARES (NOTE 2)
-----------------------------------------------------------------------------------------------------------------
WARRANTS -- 0.0%
OIL, GAS & CONSUMABLE FUELS -- 0.0%
Ascent Resources Marcellus LLC+(5)(6)(9)
Expires 03/30/2023
(strike price $6.15)
(cost $4,625)................................................................... 48,515 $ 1,455
------------
TOTAL LONG-TERM INVESTMENT SECURITIES (cost $242,894,218)........................ 227,777,993
------------
SHORT-TERM INVESTMENT SECURITIES -- 1.5%
REGISTERED INVESTMENT COMPANIES -- 1.5%
State Street Institutional Liquid Reserves Fund, Administration Class 2.25%(11)
(cost $3,460,565)............................................................... 3,460,892 3,460,546
------------
REPURCHASE AGREEMENTS -- 3.7%
Bank of America Securities LLC Joint Repurchase Agreement(12).................... $1,880,000 1,880,000
Barclays Capital, Inc. Joint Repurchase Agreement(12)............................ 1,550,000 1,550,000
BNP Paribas SA Joint Repurchase Agreement(12).................................... 1,860,000 1,860,000
Deutsche Bank AG Joint Repurchase Agreement(12).................................. 1,755,000 1,755,000
RBS Securities, Inc. Joint Repurchase Agreement(12).............................. 1,860,000 1,860,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $8,905,000)............................................................... 8,905,000
------------
TOTAL INVESTMENTS
(cost $255,259,783)(14).......................................................... 101.1% 240,143,539
LIABILITIES IN EXCESS OF OTHER ASSETS.............................................. (1.1)% (2,621,856)
---------- ------------
NET ASSETS......................................................................... 100.0% $237,521,683
========== ============
--------
BTL Bank Term Loan
CTL Cayman Term Loan
EUR Euro Currency
NR Security is not rated.
FRS--FloatingRate Security
The rates shown on FRS are the current interest rates as of December 31, 2018
and unless noted otherwise, the dates shown are the original maturity dates.
TBD--Seniorloan purchased on a when-issued or delayed-delivery basis. Certain
details associated with this purchase are not known prior to the
settlement date of the transaction. In addition, senior loans
typically trade without accrued interest and therefore a coupon rate
is not available prior to the settlement.
+ Non-income producing security
* 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 December 31, 2018,
the aggregate value of these securities was $9,270,786, representing 3.9%
of net assets. Unless otherwise indicated, these securities are not
considered to be illiquid.
** Denominated in United States Dollars unless otherwise noted.
(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
provided are as of December 31, 2018.
(2) Based on the stated maturity, the weighted average to maturity of the loans
held in the portfolio is approximately 70 months. 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.
(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) Illiquid security. At December 31, 2018, the aggregate value of these
securities was $1,581,195, representing 0.7% of net assets.
(6) Security classified as Level 3 (see Note 2).
(7) All or a portion of this holding is subject to unfunded loan commitments
(see Note 10).
(8) "Payment-in-Kind" (PIK) security -- Income may be paid in additional
securities or cash at the discretion of the issuer. The security is
currently paying interest in cash at an annual rate of 6.30%. The security
is also currently paying interest in the form of additional loans at an
annual rate of 3.00%.
(9) Denotes a restricted security that: (a) cannot be offered for public sale
without first being registered, or being able to take advantage of an
exemption from registration, under the Securities Act of 1933, as amended
(the "1933 Act"); (b) is subject to a contractual restriction on public
sales; or (c) is otherwise subject to a restriction on sales by operation
of applicable law. Restricted securities are valued pursuant to Note 2.
Certain restricted securities held by the Fund may not be sold except in
exempt transactions or in a public offering registered under the 1933 Act.
The Fund has no right to demand registration of these securities. The risk
of investing in certain restricted securities is greater than the risk of
investing in the securities of widely held, publicly traded companies. To
the extent applicable, lack of a secondary market and resale restrictions
may result in the inability of a Fund to sell a security at a fair price
and may substantially delay the sale of the security.
20
AIG SENIOR FLOATING RATE FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
In addition, certain restricted securities may exhibit greater price
volatility than securities for which secondary markets exist. As of
December 31, 2018, the Fund held the following restricted securities:
ACQUISITION ACQUISITION VALUE PER % OF NET
DESCRIPTION DATE SHARES COST VALUE SHARE ASSETS
----------- ----------- ------- ----------- ---------- --------- --------
COMMON STOCKS
-------------
AFG Holdings, Inc........................... 01/22/2013 14,309 $ 911,111 $ 786,995 $55.00 0.33%
Ascent Resources Marcellus LLC, Class A..... 03/30/2018 187,384 567,151 534,044 2.85 0.22
Paragon Offshore, Litigation Trust, Class A. 07/11/2014 1,242 704 1,087 0.88 0.00
Paragon Offshore, Litigation Trust, Class B. 10/21/2014 621 10,557 21,114 34.00 0.01
Philadelphia Energy Solutions LLC, Class A.. 04/04/2018 35,161 185,574 193,385 5.50 0.08
TE Holdcorp LLC, Class A.................... 11/21/2013 44,278 1,638,216 0 0.00 0.00
Vivial...................................... 04/24/2008 1,136 668,529 20,153 17.74 0.01
WARRANTS
--------
Ascent Resources Marcellus LLC.............. 03/30/2018 48,515 4,625 1,455 0.03 0.00
---------- ----
$1,558,233 0.65%
========== ====
(10)Perpetual maturity -- maturity date reflects the next call date.
(11)The rate shown is the 7-day yield as of December 31, 2018.
(12)See Note 2 for details of the Joint Repurchase Agreement.
(13)"Payment-in-Kind" (PIK) security -- Income may be paid in additional
securities or cash at the discretion of the issuer. The security is
currently paying interest in cash at an annual rate of 9.77%. The security
is also currently paying interest in the form of additional loans at an
annual rate of 1.75%.
(14)See Note 6 for cost of investments on a tax basis.
(15)The referenced Index is less than 0.00% at the period end. The loan has an
interest rate floor whereby the floating rate used in the coupon rate
calculation cannot be less than zero.
INDEX LEGEND
1 ME--1 Month Euribor
1 ML--1 Month USD LIBOR
1 WL--1 Week USD LIBOR
2 ML--2 Month USD LIBOR
3 ME--3 Month Euribor
3 ML--3 Month USD LIBOR
6 ME--6 month Euribor
6 ML--6 month USD LIBOR
USFRBPLR--US Federal Reserve Bank Prime Loan Rate
FORWARD FOREIGN CURRENCY CONTRACTS
-----------------------------------------------------------------------------------------------------
CONTRACT TO IN EXCHANGE DELIVERY UNREALIZED UNREALIZED
COUNTERPARTY DELIVER FOR DATE APPRECIATION DEPRECIATION
-----------------------------------------------------------------------------------------------------
Bank of America, N.A............... EUR 9,657,745 USD 11,125,674 01/31/2019 $34,478 $ --
======= ====
--------
EUR--EuroCurrency
USD--UnitedStates Dollar
The following is a summary of the inputs used to value the Fund's net assets as
of December 31, 2018 (see Note 2):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
--------------------- ----------------- ---------------------- ------------
ASSETS:
Investments at Value:*
Loans:
Energy Equipment & Services... $ -- $ 1,311,019 $ 0 $ 1,311,019
Media......................... -- 11,946,379 553,350 12,499,729
Other Industries.............. -- 200,354,721 -- 200,354,721
U.S. Corporate Bonds & Notes.... -- 8,278,591 -- 8,278,591
Foreign Corporate Bonds & Notes. -- 3,105,700 -- 3,105,700
21
AIG SENIOR FLOATING RATE FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
--------------------- ----------------- ---------------------- ------------
Common Stocks:
Media................................. $ -- $ -- $ 20,153 $ 20,153
Oil, Gas & Consumable Fuels........... -- 193,385 534,044 727,429
Other Industries...................... -- 809,196 -- 809,196
Preferred Securities/Capital Securities. -- 670,000 -- 670,000
Warrants................................ -- -- 1,455 1,455
Short-Term Investment Securities........ 3,460,546 -- -- 3,460,546
Repurchase Agreements................... -- 8,905,000 -- 8,905,000
---------- ------------ ---------- ------------
TOTAL INVESTMENTS AT VALUE.............. $3,460,546 $235,573,991 $1,109,002 $240,143,539
========== ============ ========== ============
Other Financial Instruments:@
Forward Foreign Currency Contracts...... $ -- $ 34,478 $ -- $ 34,478
========== ============ ========== ============
--------
* For a detailed presentation of investments, please refer to the Portfolio of
Investments.
@ Other financial instruments are derivative instruments not reflected in the
Portfolio of Investments, such as futures, forward, swap and written option
contracts, which are valued at the unrealized appreciation (depreciation) on
the instrument.
At the beginning and end of the reporting period, Level 3 investments in
securities were not considered a material portion of the Fund. There were no
Level 3 transfers during the reporting period.
See Notes to Financial Statements
22
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2018
Note 1. Organization of the Fund
SunAmerica Senior Floating Rate Fund, Inc. (the "Corporation") is an
open-end, diversified management investment company organized as a Maryland
corporation in 1998 and is registered under the Investment Company Act of
1940, as amended (the "1940 Act"). The Corporation consists of one series --
AIG Senior Floating Rate Fund (the "Fund"). The Fund is managed by
SunAmerica Asset Management, LLC (the "Adviser" or "SunAmerica"), an
indirect wholly-owned subsidiary of American International Group, Inc.
("AIG"). The Fund's investment goal and principal investment techniques are
to provide as high a level of current income as is consistent with the
preservation of capital by investing, under normal market conditions, at
least 80% of its net assets, plus any borrowings for investment purposes, in
senior secured floating rate loans and other institutionally traded secured
floating rate debt obligations ("Loans"). The Fund may also purchase both
investment grade and high yield fixed income securities and money market
instruments, although the Fund may not invest more than 10% of its total
assets in high yield fixed income securities. The Fund may invest in foreign
securities, including up to 10% of its total assets in non-U.S. dollar
denominated Loans and high yield fixed income securities and up to 25% of
its total assets in U.S. dollar denominated Loans issued by non-U.S.
companies.
The Fund offers three classes of shares: Class A, Class C and Class W. These
classes within the Fund are presented in the Statement of Assets and
Liabilities. The cost structure for each class is as follows:
Class A shares-- Offered at net asset value per share plus an initial sales
charge. Additionally, purchases of Class A shares in excess
of $1,000,000 will be purchased at net asset value but will
be subject to a contingent deferred sales charge ("CDSC")
on redemptions made within two years of purchase.
Class C shares-- Offered at net asset value without an initial sales charge
and may be subject to a CDSC on redemptions made within 12
months of purchase. Effective March 1, 2018, Class C shares
will convert automatically to Class A shares approximately
ten years after purchase and at such time will be subject
to the lower distribution fee applicable to Class A shares.
Class W shares-- Offered at net asset value per share. The class is offered
exclusively through advisory fee-based programs sponsored
by certain financial intermediaries and other programs.
Each class of shares bears the same voting, dividend, liquidation and other
rights and conditions, except as may otherwise be provided in the Fund's
registration statement. Class A and Class C shares each make distribution
and account maintenance fee payments under the distribution plans pursuant
to Rule 12b-1 under the 1940 Act, with Class C shares being subject to
higher distribution fee rates. Class W shares have not adopted a 12b-1 plan
and make no payments thereunder, however, Class W shares pay a service fee
to the Fund's distributor for providing administrative and shareholder
services.
INDEMNIFICATIONS: The Fund's organizational documents provide current and
former officers and directors with a limited indemnification against
liabilities arising out of the performance of their duties to the Fund. In
addition, pursuant to Indemnification Agreements between the Fund and each
of the current directors who is not an "interested person," as defined in
Section 2(a)(19) of the 1940 Act, of the Fund (collectively, the
"Disinterested Directors"), the Fund provides the Disinterested Directors
with a limited indemnification against liabilities arising out of the
performance of their duties to the Fund, whether such liabilities are
asserted during or after their service as directors. In addition, in the
normal course of business, the Fund enters into contracts that 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 and those differences could be significant. The Fund is considered
an investment company under GAAP and follows the accounting and reporting
guidance applicable to
23
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
investment companies. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements:
SECURITY VALUATION: In accordance with the authoritative guidance on fair
value measurements and disclosures under GAAP, the Fund discloses the fair
value of its investments in a hierarchy that prioritizes the inputs to
valuation techniques used to measure the fair value. In accordance with
GAAP, fair value is defined as the price that the Fund would receive upon
selling an asset or transferring a liability in a timely transaction to an
independent third party in the principal or most advantageous market. GAAP
establishes a three-tier hierarchy to provide more transparency around the
inputs used to measure fair value and to establish classification of fair
value measurements for disclosure purposes. Inputs refer broadly to the
assumptions that market participants would use in pricing the asset or
liability, including assumptions about risk. Inputs may be observable or
unobservable. Observable inputs are inputs that reflect the assumptions
market participants would use in pricing the asset or liability developed
based on market data obtained from sources independent of the reporting
entity. Unobservable inputs are inputs that reflect the reporting entity's
own assumptions about the assumptions market participants would use in
pricing the asset or liability developed based on the best information
available in the circumstances. The three-tiers are as follows:
Level 1 -- Unadjusted quoted prices in active markets for identical
securities
Level 2 -- Other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
referenced indices, quoted prices in inactive markets, adjusted quoted
prices in active markets, adjusted quoted prices on foreign equity
securities that were adjusted in accordance with pricing procedures approved
by the Board of Directors (the "Board"), etc.)
Level 3 -- Significant unobservable inputs (includes inputs that reflect the
Fund's own assumptions about the assumptions market participants would use
in pricing the security, developed based on the best information available
under the circumstances)
Changes in valuation techniques may result in transfers in or out of an
investment's assigned Level within the hierarchy. The methodology used for
valuing investments is not necessarily an indication of the risk associated
with investing in those investments and the determination of the
significance of a particular input to the fair value measurement in its
entirety requires judgment and consideration of factors specific to each
security.
The availability of observable inputs can vary from security to security and
is affected by a wide variety of factors, including, for example, the type
of security, whether the security is recently issued and not yet established
in the marketplace, the liquidity of markets, and other characteristics
particular to the security. To the extent that valuation is based on models
or inputs that are less observable or unobservable in the market, the
determination of fair value requires more judgment. Accordingly, the degree
of judgment exercised in determining fair value is greatest for instruments
categorized in Level 3.
The summary of the Fund's assets and liabilities classified in the fair
value hierarchy as of December 31, 2018, is reported on a schedule at the
end of the Portfolio of Investments.
Stocks are generally valued based upon closing sales prices reported on
recognized securities exchanges on which the securities are principally
traded and are generally categorized as Level 1. 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.
As of the close of regular trading on the New York Stock Exchange ("NYSE"),
securities traded primarily on security exchanges outside the United States
are valued at the last sale price on such exchanges on the day of valuation,
or if there is no sale on the day of valuation, at the last-reported bid
price. If a security's price is available from more than
24
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
one exchange, the Fund uses the exchange that is the primary market for the
security. Such securities are generally categorized as Level 1. However,
depending on the foreign market, closing prices may be up to 15 hours old
when they are used to price a Fund's shares, and the Fund may determine that
certain closing prices do not reflect the fair value of the security. This
determination will be based on the review of a number of factors, including
developments in foreign markets, the performance of U.S. securities markets,
and the performance of instruments trading in U.S. markets that represent
foreign securities and baskets of foreign securities. If the Fund determines
that closing prices do not reflect the fair value of the securities, the
Fund will adjust the previous closing prices in accordance with pricing
procedures approved by the Board to reflect what it believes to be the fair
value of the securities as of the close of regular trading on the NYSE. The
Fund may also fair value securities in other situations, for example, when a
particular foreign market is closed but the Fund is open. For foreign equity
securities and foreign equity futures contracts, the Fund uses an outside
pricing service to provide it with closing market prices and information
used for adjusting those prices, and when so adjusted, such securities and
futures are generally categorized as Level 2.
Bonds, debentures, and other debt securities are valued at evaluated bid
prices obtained for the day of valuation from a Board-approved pricing
service, and are generally categorized as Level 2. The pricing service may
use valuation models or matrix pricing which considers information with
respect to comparable bond and note transactions, quotations from bond
dealers, or by reference to other securities that are considered comparable
in such characteristics as rating, interest rate, and maturity date, option
adjusted spread models, prepayments projections, interest rate spreads, and
yield curves to determine current value. If a price is unavailable from a
Board-approved pricing service, the securities may be priced at the mean of
two independent quotes obtained from brokers.
Senior secured floating rate loans ("Loans") are valued at the average of
available bids in the market for such Loans, as provided by a Board-approved
loan pricing service, and are generally categorized as Level 2.
Investments in registered investment companies that do not trade on an
exchange are valued at the end of day net asset value per share. Investments
in registered investment companies that trade on an exchange are valued at
the last sales price or official closing price as of the close of the
customary trading session on the exchange where the security is principally
traded. Investments in registered investment companies are generally
categorized as Level 1.
Swap contracts traded on national securities exchanges are valued at the
closing price of the exchange on which they are traded or if a closing price
of the exchange is not available, the swap will be valued using a mid
valuation provided by a Board-approved pricing service, and are generally
categorized as Level 2. Swap contracts traded in the over-the-counter
("OTC") market are valued at a mid valuation provided by a Board-approved
pricing service, and are generally categorized as Level 2. Forward foreign
currency contracts ("forward contracts") are valued at the 4:00 pm Eastern
time forward rate and are generally categorized as Level 2.
The Board is responsible for the share valuation process and has adopted
policies and procedures (the "PRC Procedures") for valuing the securities
and other assets held by the Fund, including procedures for the fair
valuation of securities and other assets for which market quotations are not
readily available or are unreliable. The PRC Procedures provide for the
establishment of a pricing review committee, which is responsible for, among
other things, making certain determinations in connection with the Fund's
fair valuation procedures. Securities for which market quotations are not
readily available or the values of which may be significantly impacted by
the occurrence of developments or significant events are generally
categorized as Level 3. There is no single standard for making fair value
determinations, which may result in prices that vary from those of other
funds.
DERIVATIVE INSTRUMENTS:
FORWARD FOREIGN CURRENCY CONTRACTS: During the period, the Fund used forward
contracts to protect against uncertainty in the level of future exchange
rates.
A forward contract is an agreement between two parties to buy or sell
currency at a set price on a future date. The market value of the contract
will fluctuate with changes in currency exchange rates. The contract is
marked-to-market
25
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
daily using the forward rate and the cumulative change in market value is
recorded by the Fund as unrealized appreciation or depreciation. On the
settlement date, the Fund records either realized gains or losses equal to
the difference between the value of the contract at the time it was opened
and the value at the time it was closed.
Risks to the Fund of entering into forward contracts include counterparty
risk, market risk and illiquidity risk. Counterparty risk arises upon
entering into these contracts from the potential inability of counterparties
to meet the terms of their contracts. If the counterparty defaults, the
Fund's loss will generally consist of the net amount of contractual payments
that the Fund has not yet received though the Fund's maximum exposure due to
counterparty risk could extend to the notional amount of the contract.
Market risk is the risk that the value of the forward contract will
depreciate due to unfavorable changes in the exchange rates. These contracts
may involve market risk in excess of the unrealized appreciation or
depreciation reported on the Statement of Assets and Liabilities.
Illiquidity risk arises because the secondary market for forwards may have
less liquidity relative to markets for other securities. Currency
transactions are also subject to risks different from those of other
portfolio transactions. Because currency control is of great importance to
the issuing governments and influences economic planning and policy,
purchases and sales of currency and related instruments can be adversely
affected by government exchange controls, limitations or restrictions on
repatriation of currency, and manipulations or exchange restrictions imposed
by governments.
Forward foreign currency contracts outstanding at the end of the period, if
any, are reported on a schedule at the end of the Fund's Portfolio of
Investments.
SWAP CONTRACTS: The Fund may enter into credit default, interest rate,
equity and/or total return swap contracts. Swap contracts are privately
negotiated in the OTC market and may be entered into as a bilateral contract
or a centrally cleared contract ("centrally cleared swaps"). In a centrally
cleared swap, immediately following execution of the swap contract, the swap
contract is novated to a central counterparty (the "CCP") and a Fund faces
the CCP through a broker. Upon entering into a centrally cleared swap, the
Fund is required to deposit initial margin with the broker in the form of
cash or securities in an amount that varies depending on the size and risk
profile of the particular swap. Securities deposited as initial margin are
designated on the Portfolio of Investments and cash deposited is recorded on
the Statements of Assets and Liabilities as cash collateral for centrally
cleared swap contracts. Unlike a bilateral swap contract, for centrally
cleared swaps, the Fund has no credit exposure to the counterparty as the
CCP stands between the Fund and the counterparty. Swaps are marked-to-market
daily and the changes in value are recorded as an unrealized gain (loss).
The daily change in valuation of swap contracts, if any, is recorded as
unrealized appreciation (depreciation) on swap contracts. When the swap is
terminated, the Fund will record a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transaction
and the Fund's basis in the contract, if any. Generally, the basis of the
contracts is the premium received or paid. The Fund amortizes upfront
payments and receipts on swap contracts on a daily basis. Net periodic
payments made or received by a Fund is included as part of realized gain
(loss).
CREDIT DEFAULT SWAP AGREEMENTS: During the period, the Fund used credit
default swaps on credit indices primarily for liquidity management purposes.
Credit default swaps generally are contracts in which one party makes
periodic fixed-rate payments or a one time premium payment (referred to as
the buyer of protection) to another party (the seller of protection) in
exchange for the right to receive a specified payment in the event of a
default or other credit event for the referenced entity, obligation or
index. As a seller of protection on credit default swaps, a Fund will
generally receive from the buyer of protection a fixed rate of income
throughout the term of the swap provided that there is no credit event. As
the seller, a Fund would effectively add leverage to its portfolio because,
in addition to its total net assets, the Fund would be subject to investment
exposure on the notional amount of the swap. If a Fund is a seller of
protection and a credit event occurs, as defined under the terms of that
particular swap agreement, the Fund will either (i) pay to the buyer of
protection an amount equal to the notional amount of the swap and take
delivery of the referenced obligation, other deliverable obligations or
underlying securities comprising the referenced index or (ii) pay a net
settlement amount in the form of cash or securities equal to the notional
amount of the swap less the recovery value of the referenced obligation or
underlying securities comprising the referenced index. As a buyer of
protection on credit default swaps,
26
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
a Fund will make periodic payments, similar to an insurance premium and the
seller of protection agrees to compensate the Fund for future potential
losses as a result of a credit event on the reference bond or other asset. A
Fund effectively transfers the credit event risk of the reference bond or
asset from it to the seller of protection. If a Fund is a buyer of
protection and a credit event occurs, as defined under the terms of that
particular swap agreement, the Fund will either (i) receive from the seller
of protection an amount equal to the notional amount of the swap and deliver
the referenced obligation, other deliverable obligations or underlying
securities comprising the referenced index or (ii) receive a net settlement
amount in the form of cash or securities equal to the notional amount of the
swap less the recovery value of the referenced obligation or underlying
securities comprising the referenced index. Recovery values are assumed by
market makers considering either industry standard recovery rates or entity
specific factors and considerations until a credit event occurs. If a credit
event has occurred, the recovery value is determined by a facilitated
auction whereby a minimum number of allowable broker bids, together with a
specified valuation method, are used to calculate the settlement value.
Credit default swaps on corporate issues or sovereign issues of an emerging
market country are contracts in which the buyer of protection makes periodic
fixed payments or a one time premium payment to the seller of protection in
exchange for the right to receive a specified payment in the event of a
default or other credit event. If a credit event occurs and cash settlement
is not elected, a variety of other deliverable obligations may be delivered
in lieu of the specific referenced obligation. The ability to deliver other
obligations may result in a cheapest-to deliver option (the buyer of
protection's right to choose the deliverable obligation with the lowest
value following a credit event). A Fund may use credit default swaps on
corporate issues or sovereign issues of an emerging market country to
provide a measure of protection against defaults of the issuers (i.e., to
reduce credit risk where the Portfolio owns or has exposure to the
referenced obligation) or to take a speculative credit position with an
active long or short position with respect to the likelihood of a particular
issuer's default.
Credit default swaps on asset-backed securities are contracts in which the
buyer of protection makes periodic fixed-rate payments or a one time premium
payment to the seller of protection in exchange for the right to receive a
specified payment in the event of a default or other credit event. Unlike
credit default swaps on corporate issues or sovereign issues of an emerging
market country, deliverable obligations in most instances would be limited
to the specific referenced obligation as performance for asset-backed
securities can vary across deals. Prepayments, principal paydowns, and other
writedown or loss events on the underlying mortgage loans will reduce the
outstanding principal balance of the referenced obligation. These reductions
may be temporary or permanent as defined under the terms of the swap
agreement and the notional amount for the swap agreement will be adjusted by
corresponding amounts. A Fund may use credit default swaps on asset-backed
securities to provide a measure of protection against defaults of the
referenced obligation or to take a speculative credit position with an
active long or short position with respect to the likelihood of a particular
referenced obligation's default.
Credit default swaps on credit indices are generally contracts in which the
buyer of protection makes periodic fixed-rate payments or a one time premium
payment to the seller of protection in exchange for the right to receive a
specified payment in the event of a write-down, principal shortfall,
interest shortfall or default of all or part of the referenced entities
comprising the credit index. A credit index is a list of a basket of credit
instruments or exposures designed to be representative of some part of the
credit market as a whole. These indices are made up of reference credits
that are judged by a poll of dealers to be the most liquid entities in the
credit default swap market based on the sector of the index. Components of
the indices may include, but are not limited to, investment grade
securities, high yield securities, asset backed securities, emerging
markets, and/or various credit ratings within each sector. Credit indices
are traded using credit default swaps with standardized terms including a
fixed spread and standard maturity dates. An index credit default swap
references all the names in the index, and if there is a default, the credit
event is settled based on that name's weight in the index. The composition
of the indices changes periodically, usually every six months, and for most
indices, each name has an equal weight in the index. A Fund may use credit
default swaps on credit indices to hedge a portfolio of credit default swaps
or bonds which is less expensive than it would be to enter into many credit
default swaps to achieve a similar effect. Credit-default swaps on indices
are used for protecting investors owning bonds against default, and also to
speculate on changes in credit quality.
27
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
Implied credit spreads, represented in absolute terms, utilized in
determining the market value of credit default swaps on corporate issues or
sovereign issues of an emerging market country as of period end are reported
on a schedule at the end of the Fund's Portfolio of Investments and serve as
an indicator of the current status of the payment/performance risk and
represent the likelihood or risk of default for the credit derivative. The
implied credit spread of a particular referenced entity reflects the cost of
buying/selling protection and may include upfront payments required to be
made to enter into the agreement. For credit default swaps on asset-based
securities and credit indices, the quoted market prices and resulting values
serve as the indicator of the current status of the payment/performance
risk. Wider credit spreads and increasing market values, in absolute terms
when compared to the notional amount of the swap, represent a deterioration
of the referenced entity's credit soundness and a greater likelihood or risk
of default or other credit event occurring as defined under the terms of the
agreement. The maximum potential amount of future payments (undiscounted)
that a Fund as a seller of protection could be required to make under a
credit default swap would be an amount equal to the notional amount of the
agreement. Notional amounts of all credit default swaps outstanding at the
end of the period for which a Fund is the seller of protection, if any, are
disclosed on a schedule at the end of the Fund's Portfolio of Investments.
These potential amounts would be partially offset by any recovery values of
the respective referenced obligations, upfront payments received upon
entering into the agreement, or net amounts received from the settlement of
buy protection credit default swaps entered into by a Portfolio for the same
referenced entity or entities.
Credit default swap contracts outstanding at the end of the period, if any,
are reported on a schedule at the end of the Fund's Portfolio of Investments
Risks of Entering into Swap Agreements: Risks to a Fund of entering into
credit default swaps, equity swaps and interest rate swaps, include credit
risk, market risk, counterparty risk, liquidity risk and documentation risk.
By entering into swap agreements, a Fund may be exposed to risk of potential
loss due to unfavorable changes in interest rates, the price of the
underlying security or index, or the underlying referenced asset's perceived
or actual credit, that the counterparty may default on its obligation to
perform or the possibility that there is no liquid market for these
agreements. There is also the risk that the parties may disagree as to the
meaning of contractual terms in the swap agreement. In addition, to the
extent that a subadviser does not accurately analyze and predict the
underlying economic factors influencing the value of the swap, a Fund may
suffer a loss, which may be in excess of the amount reflected on the
statement of assets and liabilities.
MASTER AGREEMENTS: The Fund holds derivative instruments and other financial
instruments whereby the Fund may be a party to ISDA (International Swaps and
Derivatives Association, Inc.) Master Agreements or similar agreements
("Master Agreements") with certain counterparties that govern such
instruments. Master Agreements may contain provisions regarding, among other
things, the parties' general obligations, representations, agreements,
collateral requirements, events of default and early termination. Collateral
can be in the form of cash or securities as agreed to by the Fund and
applicable counterparty. Collateral requirements are generally determined
based on the Fund's net position with each counterparty. Master Agreements
may also include certain provisions that require the Fund to post additional
collateral upon the occurrence of certain events, such as when a Fund's net
assets fall below a specified level. In addition, Master Agreements
typically specify certain standard termination events, such as failure of a
party to pay or deliver, credit support defaults and other events of
default. Termination events applicable to the Fund may also occur upon a
decline in the Fund's net assets below a specified level over a certain
period of time. Additional termination events applicable to counterparties
may occur upon a decline in a counterparty's long-term and short-term credit
ratings below a specified level, or upon a decline in the ratings of a
counterparty's credit support provider. Upon the occurrence of a termination
event, the other party may elect to terminate early and cause settlement of
all instruments outstanding pursuant to a particular Master Agreement,
including the payment of any losses and costs resulting from such early
termination, as reasonably determined by the terminating party. Any decision
by one or more of the Fund's counterparties to elect early termination could
cause the Fund to accelerate the payment of liabilities, which settlement
amounts could be in excess of the amount of assets that are already posted
as collateral. Typically, the Master Agreement will permit a single net
payment in the event of default. Note, however, that bankruptcy or
insolvency laws of a particular jurisdiction may impose restrictions on or
prohibitions against the right of offset in bankruptcy, insolvency or other
events. As a result, the early termination with respect to derivative
instruments subject to Master Agreements that are in a net liability
position could be material to the Fund's financial statements. The Fund does
not offset derivative assets and derivative liabilities that are subject to
netting arrangements in the Statement of Assets and Liabilities.
28
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
The following tables represent the value of derivatives held as of December
31, 2018, by their primary underlying risk exposure and respective location
on the Statement of Assets and Liabilities and the effect of derivatives on
the Statement of Operations for the year ended December 31, 2018. The
derivative contracts held during the period are not accounted for as hedging
instruments under GAAP. For a detailed presentation of derivatives held as
of December 31, 2018, please refer to the schedule at the end of the Fund's
Portfolio of Investments.
ASSET DERIVATIVES
--------------------------------------------------------
CREDIT CONTRACTS FOREIGN EXCHANGE CONTRACTS
----------------- --------------------------
FORWARD FOREIGN
SWAP CONTRACTS(1) CURRENCY CONTRACTS(3) TOTAL
----------------- -------------------------- -------
$ -- $34,478 $34,478
LIABILITY DERIVATIVES
--------------------------------------------------------
CREDIT CONTRACTS FOREIGN EXCHANGE CONTRACTS
----------------- --------------------------
FORWARD FOREIGN
SWAP CONTRACTS(2) CURRENCY CONTRACTS(4) TOTAL
----------------- -------------------------- -------
$ -- $ -- $ --
STATEMENT OF ASSETS AND LIABILITIES LOCATION:
(1) Unrealized appreciation on swap contracts
(2) Unrealized depreciation on swap contracts
(3) Unrealized appreciation on forward foreign currency contracts
(4) Unrealized depreciation on forward foreign currency contracts
REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN STATEMENT OF OPERATIONS
-------------------------------------------------------------------------------------
CREDIT CONTRACTS FOREIGN EXCHANGE CONTRACTS
----------------------- --------------------------------
FORWARD FOREIGN
SWAP CONTRACTS(1) CURRENCY CONTRACTS(2) TOTAL
----------------------- -------------------------------- -------------
$56,495 $532,328 $588,823
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED IN STATEMENT OF OPERATIONS
-------------------------------------------------------------------------------------
CREDIT CONTRACTS FOREIGN EXCHANGE CONTRACTS
----------------------- --------------------------------
FORWARD FOREIGN
SWAP CONTRACTS(3) CURRENCY CONTRACTS(4) TOTAL
----------------------- -------------------------------- -------------
$ -- $84,699 $84,699
STATEMENT OF OPERATIONS LOCATION:
(1) Net realized gain (loss) on swap contracts
(2) Net realized gain (loss) on forward contracts
(3) Change in unrealized appreciation (depreciation) on swap
contracts
(4) Change in unrealized appreciation (depreciation) on forward
contracts
AVERAGE AMOUNT OUTSTANDING DURING
THE PERIOD
----------------------------------------------------------------
CREDIT CONTRACTS(1) FOREIGN EXCHANGE CONTRACTS(1)
---------------------------------- -----------------------------
$443,099 $8,138,314
--------
(1) Amounts represent notional amounts in US dollars.
The following table sets forth the Fund's derivative assets and liabilities
by counterparty, net of amounts available for offset under Master Agreements
and net of the related collateral pledged/(received) as of December 31,
2018. The repurchase agreements held by the Fund as of December 31, 2018,
are also subject to Master Agreements but are
29
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
not included in the following tables. See the Portfolio of Investments and
the Notes to the Financial Statements for more information about the Fund's
holdings in repurchase agreements.
AIG SENIOR FLOATING RATE FUND
----------------------------------------------
DERIVATIVE ASSETS(1) DERIVATIVE LIABILITIES(1)
-------------------- -------------------------
FORWARD FORWARD NET
FOREIGN FOREIGN DERIVATIVE COLLATERAL
CURRENCY CURRENCY ASSETS PLEDGED/
COUNTERPARTY CONTRACTS TOTAL CONTRACTS TOTAL (LIABILITIES) (RECEIVED)(2) NET AMOUNT(3)
------------ --------- ------- --------- ----- ------------- ------------- -------------
Bank of America N.A................ $34,478 $34,478 $ -- $ -- $34,478 $ -- $34,478
======= ======= ==== ==== ======= ==== =======
-
(1)Gross amounts of recognized assets and liabilities not offset in the
Statement of Assets and Liabilities.
(2)For each respective counterparty, collateral pledged or (received) is
limited to an amount not to exceed 100% of the derivative
asset/liability in the table above.
(3)Net amount represents the net amount due (to)/from counterparty in
the event of a default based on the contractual set-off rights under
the agreement.
REPURCHASE AGREEMENTS: The Fund, along with other affiliated registered
investment companies, pursuant to procedures adopted by the Board and
applicable guidance from the Securities and Exchange Commission ("SEC"), may
transfer uninvested cash balances into a single joint account, the daily
aggregate balance of which is invested in one or more repurchase agreements
collateralized by U.S. Treasury or federal agency obligations. In a
repurchase agreement, the seller of a security agrees to repurchase the
security at a mutually agreed-upon time and price, which reflects the
effective rate of return for the term of the agreement. For repurchase
agreements and joint repurchase agreements, the Fund's custodian takes
possession of the collateral pledged for investments in such repurchase
agreements ("repo" or collectively "repos"). The underlying collateral is
valued daily on a mark to market basis, plus accrued interest, to ensure
that the value, at the time the agreement is entered into, is equal to at
least 102% of the repurchase price, including accrued interest. 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.
As of December 31, 2018, the Fund held an undivided interest in a joint
repurchase agreement with Bank of America Securities LLC:
PERCENTAGE PRINCIPAL
OWNERSHIP AMOUNT
---------- ----------
Senior Floating Rate Fund.......... 6.27% $1,880,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Bank of America Securities LLC, dated December 31, 2018, bearing interest at
a rate of 2.94% per annum, with a principal amount of $30,000,000, a
repurchase price of $30,004,900, and a maturity date of January 2, 2019. The
repurchase agreement is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT VALUE
------------------ -------- ---------- ---------------- -----------
U.S. Treasury Notes................ 2.63% 12/31/2023 $30,448,000 $30,525,138
As of December 31, 2018, the Fund held an undivided interest in a joint
repurchase agreement with Barclays Capital, Inc.:
PERCENTAGE PRINCIPAL
OWNERSHIP AMOUNT
---------- ----------
Senior Floating Rate Fund.......... 6.20% $1,550,000
30
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Barclays Capital, Inc., dated December 31, 2018, bearing interest at a rate
of 2.90% per annum, with a principal amount of $25,000,000, a repurchase
price of $25,004,028, and a maturity date of January 2, 2019. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT VALUE
------------------ -------- ---------- ---------------- -----------
U.S. Treasury Bonds................ 3.38% 05/15/2044 $23,860,000 $25,413,763
As of December 31, 2018, the Fund held an undivided interest in a joint
repurchase agreement with BNP Paribas SA:
PERCENTAGE PRINCIPAL
OWNERSHIP AMOUNT
---------- ----------
Senior Floating Rate Fund.......... 6.20% $1,860,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
BNP Paribas SA, dated December 31, 2018, bearing interest at a rate of 2.94%
per annum, with a principal amount of $30,000,000, a repurchase price of
$30,004,900, and a maturity date of January 2, 2019. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT VALUE
------------------ -------- ---------- ---------------- -----------
U.S. Treasury Notes................ 2.13% 11/30/2024 $31,344,500 $30,553,326
As of December 31, 2018, the Fund held an undivided interest in a joint
repurchase agreement with Deutsche Bank AG:
PERCENTAGE PRINCIPAL
OWNERSHIP AMOUNT
---------- ----------
Senior Floating Rate Fund.......... 6.20% $1,755,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Deutsche Bank AG, dated December 31, 2018, bearing interest at a rate of
2.90% per annum, with a principal amount of $28,295,000, a repurchase price
of $28,299,559, and a maturity date of January 2, 2019. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT VALUE
------------------ -------- ---------- ---------------- -----------
U.S. Treasury Notes................ 1.75% 05/31/2022 $29,587,000 $28,877,819
As of December 31, 2018, the Fund held an undivided interest in a joint
repurchase agreement with RBS Securities, Inc.:
PERCENTAGE PRINCIPAL
OWNERSHIP AMOUNT
---------- ----------
Senior Floating Rate Fund.......... 6.20% $1,860,000
31
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
RBS Securities, Inc., dated December 31, 2018, bearing interest at a rate of
2.90% per annum, with a principal amount of $30,000,000, a repurchase price
of $30,004,833, and a maturity date of January 2, 2019. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT VALUE
------------------ -------- ---------- ---------------- -----------
U.S. Treasury Notes................ 1.38% 05/31/2020 $31,080,000 $30,596,736
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: The Fund may purchase or
sell when-issued securities that have been authorized, but not yet issued in
the market. In addition, the Fund may purchase or sell securities on a
forward commitment basis. A forward commitment involves entering into a
contract to purchase or sell securities, typically on an extended settlement
basis, for a fixed price at a future date. The Fund may engage in
when-issued or forward commitment transactions in order to secure what is
considered to be an advantageous price and yield at the time of entering
into the obligation. The purchase of securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines before the settlement date. Conversely, the sale of
securities on a when-issued or forward commitment basis involves the risk
that the value of the securities sold may increase before the settlement
date. Securities purchased or sold on a when-issued or forward commitment
basis outstanding at the end of the period, if any, are included in
investments purchased/sold on an extended settlement basis in the Statement
of Assets and Liabilities.
LOANS: The Fund invests in senior loans which generally consist of direct
debt obligations of companies (collectively, "Borrowers"), primarily U.S.
companies and their affiliates, undertaken to finance the growth of the
Borrower's business internally and externally, or to finance a capital
restructuring. Transactions in senior loans may settle on a delayed basis.
Unsettled loans at the end of the period, if any, are included in
investments purchased/sold on an extended settlement basis in the Statement
of Assets and Liabilities.
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 from
settlement date 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 are
accreted over the life of the loan. Fees in the amount of $147,643 were
recognized in the current year. Other income, including amendment fees,
commitment fees, letter of credit fees, etc., which were $178,470 for the
year ended December 31, 2018, 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 (or the value
of dividend-eligible shares, as appropriate) of each class of shares at the
beginning of the day (after adjusting for the current capital share activity
of the respective class).
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 GAAP. 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 assets are not affected by the reclassifications.
The Fund is considered a separate entity for tax purposes and 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,
32
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
including any net capital gains on investments, to its shareholders. The
Fund also intends to distribute sufficient net investment income and net
capital gains, if any, so that the Fund will not be subject to excise tax on
undistributed income and gains. Therefore, no federal income tax or excise
tax provision is required.
The Fund recognizes the tax benefits of uncertain tax positions only when
the position is more likely than not to be sustained, assuming examination
by tax authorities. Management has analyzed the Fund's tax positions and
concluded that no liability for unrecognized tax benefits should be recorded
related to uncertain tax positions taken on returns filed for open tax years
2015-2017 or expected to be taken in the Fund's 2018 tax return. The Fund is
not aware of any tax provisions for which it is reasonably possible that the
total amounts of unrecognized tax benefits will change materially in the
next twelve months. The Fund files U.S. federal and certain state income tax
returns. With few exceptions, the Fund is no longer subject to U.S. federal
and state tax examinations by tax authorities for tax returns ending before
2015.
FOREIGN CURRENCY TRANSLATION: The books and records of the Fund is
maintained in U.S. dollars. Assets and liabilities denominated in foreign
currencies and commitments under forward foreign currency contracts are
translated into U.S. dollars based on the exchange rate of such currencies
against U.S. dollars on the date of valuation.
The Fund does not isolate that portion of the results of operations arising
as a result of changes in the foreign exchange rates from the changes in the
market prices of securities held at the end of the period. Similarly, the
Fund does not isolate the effect of changes in foreign exchange rates from
the changes in the market prices of portfolio securities sold during the
period.
Realized foreign exchange gains and losses on other assets and liabilities
and change in unrealized foreign exchange gains and losses on other assets
and liabilities located in the Statements of Operations include realized
foreign exchange gains and losses from currency gains or losses between the
trade and the settlement dates of securities transactions, the difference
between the amounts of interest, dividends and foreign withholding taxes
recorded on the Funds' books and the U.S. dollar equivalent amounts actually
received or paid and changes in the unrealized foreign exchange gains and
losses relating to the other assets and liabilities arising as a result of
changes in the exchange rates.
NEW ACCOUNTING PRONOUNCEMENTS: In August 2018, the SEC adopted amendments to
certain financial statement disclosure requirements of Regulation S-X to
conform them to GAAP for investment companies. The final rule became
effective on November 5, 2018. All required changes have been made in
accordance with Regulation S-X.
In August 2018, the FASB issued Accounting Standards Update ("ASU") No.
2018-13 "Disclosure Framework -- Changes to the Disclosure Requirements for
Fair Value Measurement". The ASU eliminates, modifies, and adds disclosure
requirements for fair value measurements and is effective for fiscal years,
and interim periods within those fiscal years, beginning after December 15,
2019. The ASU allows for early adoption of either the entire standard or
only the provisions that eliminate or modify the requirements. Management
has elected to early adopt the provisions that eliminate disclosure
requirements and is still evaluating the impact of applying the rest of the
ASU.
Note 3. Capital Share Transactions
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 2018 DECEMBER 31, 2017
----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS A ---------- ----------- ---------- ------------
Shares sold............................................................... 5,481,742 $44,300,731 3,434,101 $27,824,751
Reinvested dividends...................................................... 509,372 4,096,024 421,399 3,408,788
Shares redeemed........................................................... (4,147,475) (33,471,507) (8,657,492) (70,030,581)
---------- ----------- ---------- ------------
Net increase (decrease) in shares outstanding before automatic conversion. 1,843,639 14,925,248 (4,801,992) (38,797,042)
Shares issued/(reacquired) upon automatic conversion...................... 1,400,892 11,357,027 -- --
---------- ----------- ---------- ------------
Net increase (decrease)................................................ 3,244,531 $26,282,275 (4,801,992) $(38,797,042)
========== =========== ========== ============
33
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 2018 DECEMBER 31, 2017
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS C ---------- ------------ ---------- ------------
Shares sold............................................................... 2,003,292 $15,909,264 1,459,830 $11,815,111
Reinvested dividends...................................................... 427,597 3,440,328 487,601 3,943,236
Shares redeemed........................................................... (5,490,815) (44,322,304) (4,475,181) (36,188,359)
---------- ------------ ---------- ------------
Net increase (decrease) in shares outstanding before automatic conversion. (3,059,926) (24,972,712) (2,527,750) (20,430,012)
Shares issued/(reacquired) upon automatic conversion...................... (1,402,611) (11,357,027) -- --
---------- ------------ ---------- ------------
Net increase (decrease)................................................ (4,462,537) $(36,329,739) (2,527,750) $(20,430,012)
========== ============ ========== ============
FOR THE
FOR THE PERIOD APRIL 20, 2017@
YEAR ENDED THROUGH DECEMBER 31,
DECEMBER 31, 2018 2017
----------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
CLASS W ---------- ----------- --------- -----------
Shares sold................. 3,006,055 $24,317,429 3,180,792 $25,734,259
Reinvested dividends........ 110,289 885,761 24,217 196,167
Shares redeemed............. (1,851,429) (14,958,054) (763,311) (6,184,018)
---------- ----------- --------- -----------
Net increase (decrease).. 1,264,915 $10,245,136 2,441,698 $19,746,408
========== =========== ========= ===========
-----
@ Inception date of class
Note 4. Purchases and Sales of Securities
During the year ended December 31, 2018, the Fund's cost of purchases and
proceeds from sale of long-term investments, including loan principal
paydowns, were $106,312,963 and $109,929,814, respectively.
Note 5. Investment Advisory Agreement and Other Transactions with Affiliates
The Fund has entered into an Investment Advisory and Management Agreement
(the "Advisory Agreement") with SunAmerica. Pursuant to the Advisory
Agreement, SunAmerica provides continuous supervision of the Fund and
administers its corporate affairs, subject to the general review and
oversight of the Board. In connection therewith, SunAmerica furnishes the
Fund with office facilities, maintains certain of the Fund's books and
records and pays the salaries and expenses of all personnel, including
officers of the Fund who are employees of SunAmerica and its affiliates.
SunAmerica also selects, contracts with and compensates the subadviser to
manage the Fund's assets. The Fund will pay SunAmerica a monthly management
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% in excess of $2 billion.
Pursuant to an Advisory Fee Waiver Agreement, effective May 1, 2018,
SunAmerica was contractually obligated to waive its advisory fee with
respect to the Fund so that the advisory fee payable by the Fund to
SunAmerica equaled 0.69% on the first $2 billion of average daily net assets
and 0.64% above $2 billion of average daily net assets. Effective November
19, 2018, SunAmerica is contractually obligated to waive its advisory fee
with respect to the Fund so that the advisory fee payable by the Fund to
SunAmerica equals 0.63% on the first $2 billion of average daily net assets
and 0.58% above $2 billion of average daily net assets. For the year ended
December 31, 2018, SunAmerica waived $271,183 of investment advisory fees.
Wellington Management Company LLP ("Wellington") acts as subadviser to the
Fund pursuant to a Subadvisory Agreement with SunAmerica. Under the
Subadvisory Agreement, Wellington manages the investment and reinvestment of
the Fund's assets. The fee paid to the subadviser is paid by SunAmerica and
not the Fund.
Pursuant to the Administrative Services Agreement (the "Administrative
Agreement"), SunAmerica acts as the Fund's administrator and is responsible
for providing and supervising the performance by others, of administrative
services in connection with the operations of the Fund, subject to
supervision by the Fund's Board. For its services, SunAmerica receives an
annual fee equal to 0.20% of average daily net assets of the Fund. For the
year ended December 31, 2018, SunAmerica earned fees as reflected in the
Statement of Operations based upon the aforementioned rate.
34
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
The Fund has entered into a Distribution Agreement with AIG Capital
Services, Inc. ("ACS" or the "Distributor"), an affiliate of the Adviser.
The Fund has adopted a Distribution Plan on behalf of each class of shares
(other than Class W shares) (each a "Plan" and collectively, the "Plans") in
accordance with the provisions of Rule 12b-1 under the 1940 Act, hereinafter
referred to as the "Class A Plan" and "Class C Plan". In adopting the Plans,
the Board determined that there was a reasonable likelihood that each such
Plan would benefit the Fund and the shareholders of the respective class.
The sales charge and distribution fees of a particular class will not be
used to subsidize the sale of shares of any other class.
Under the Class A Plan and Class C Plan, the Distributor receives payments
from the Fund at an annual rate of 0.10% and 0.50%, respectively, of the
average daily net assets of the Fund's Class A and Class C shares to
compensate the Distributor and certain securities firms for providing sales
and promotional activities for distributing that class of shares. The
distribution costs for which the Distributor may be compensated include fees
paid to broker-dealers that have sold Fund shares, commissions and other
expenses such as those incurred for sales literature, prospectus printing
and distribution and compensation to wholesalers. It is possible that in any
given year, the amount paid to the Distributor under each Class' Plan may
exceed the Distributor's distribution costs as described above. The Plans
provide that the Class A and Class C shares of the Fund will pay the
Distributor an account maintenance fee up to an annual rate of 0.25% of the
aggregate average daily net assets of such class of shares for payments to
compensate the Distributor and certain securities firms for account
maintenance activities. The Distributor does not receive or retain any
distribution and/or account maintenance fees for any shares when the
shareholder does not have a broker of record. For the year ended December
31, 2018, ACS received fees (see Statement of Operations) based upon the
aforementioned rates. The Fund has entered into an Administrative and
Shareholder Services Agreement with ACS, pursuant to which ACS is paid an
annual fee of 0.15% of average daily net assets of Class W shares as
compensation for providing additional shareholder services to Class W
shareholders. For the year ended December 31, 2018, ACS earned fees as
reflected in the Statement of Operations based on the aforementioned rate.
For the year ended December 31, 2018, ACS received sales charges on Class A
shares of $204,774, of which $91,401 was reallowed to affiliated
broker-dealers and $77,862 to non-affiliated broker-dealers. In addition,
ACS receives the proceeds of contingent deferred sales charges paid by
investors in connection with certain redemptions of Class A and Class C
shares. For the year ended December 31, 2018, ACS received contingent
deferred sales charges of $7,650.
The Fund has entered into a Service Agreement with AIG Fund Services, Inc.
("AFS") an affiliate of the Adviser. Under the Service Agreement, AFS
performs certain shareholder account functions by assisting the Fund's
transfer agent in connection with the services that it offers to the
shareholders of the Fund. The Service Agreement, which permits the Fund to
compensate AFS for services rendered based upon an annual rate of 0.22% of
average daily net assets, is approved annually by the Board. For the year
ended December 31, 2018, the Fund incurred the following expenses, which are
included in the transfer agent fees and expenses payable in the Statement of
Assets and Liabilities and in transfer agent fees and expenses in the
Statement of Operations to compensate AFS pursuant to the terms of the
Service Agreement.
PAYABLE AT
EXPENSE DECEMBER 31, 2018
- -------- -----------------
Class A............................ $239,373 $21,531
Class C............................ 237,418 17,548
Class W............................ 47,527 5,315
Effective November 19, 2018, SunAmerica has contractually agreed to waive
fees and/or reimburse expenses to the extent necessary to cap the Fund's
annual operating expenses at 1.04% for Class A, 1.44% for Class C and 0.84%
for Class W of average daily net assets. From May 1, 2018 to November 19,
2018, SunAmerica contractually agreed to waive fees and/or reimburse
expenses to the extent necessary to cap the Fund's annual operating expenses
at 1.15% for Class A, 1.55% for Class C and 0.95% for Class W of average
daily net assets. Prior to May 1, 2018, SunAmerica contractually agreed to
waive fees and/or reimburse expenses to the extent necessary to cap the
Fund's
35
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
annual operating expenses at 1.45% for Class A, 1.75% for Class C and 1.25%
for Class W of average daily net assets. For purposes of waived fees and/or
reimbursed expense calculations, annual Fund operating expenses shall not
include extraordinary expenses, (i.e., expenses that are unusual in nature
and infrequent in occurrence, such as litigation), or acquired fund fees and
expenses, brokerage commissions and other transactional expenses relating to
the purchase and sale of portfolio securities, interest, taxes and
governmental fees and other expenses not incurred in the ordinary course of
the Fund's business. The expense reimbursements and fee waivers will
continue indefinitely, unless terminated by the Board, including a majority
of the Disinterested Directors. For the year ended December 31, 2018,
SunAmerica waived fees and/or reimbursed expenses as follows: Class A
$564,983, Class C $584,183 and Class W $121,535.
Note 6. Federal Income Taxes
The following details the tax basis distributions as well as the components
of distributable earnings. The tax basis components of distributable
earnings differ from the amounts reflected in the Statement of Assets and
Liabilities by temporary book/tax differences primarily arising from
dividends payable and wash sales.
DISTRIBUTABLE EARNINGS TAX DISTRIBUTIONS TAX DISTRIBUTIONS
---------------------------------------- ------------------------------------- -------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 2018 FOR THE YEAR ENDED DECEMBER 31, 2018 FOR THE YEAR ENDED DECEMBER 31, 2017
---------------------------------------- ------------------------------------- -------------------------------------
LONG-TERM GAINS/ UNREALIZED LONG-TERM LONG-TERM
ORDINARY CAPITAL AND APPRECIATION/ ORDINARY CAPITAL ORDINARY CAPITAL
INCOME OTHER LOSSES (DEPRECIATION) INCOME GAINS INCOME GAINS
-------- ---------------- -------------- ------------ --------- ----------- ---------
$ -- $(24,525,023) $(15,136,235) $10,140,060 $ -- $9,629,365 $ --
CAPITAL LOSS CARRYFORWARDS: At December 31, 2018 for Federal income tax
purposes, the Fund has $24,525,023 of unlimited long-term capital losses.
Under the current law, capital losses realized after October 31 and
specified ordinary losses may be deferred and treated as occurring on the
first day of the following year. For the year ended December 31, 2018, the
fund deferred $48,712 of late year ordinary losses, $152,773 of post-October
short-term capital losses and $69,182 of post-October long-term capital
losses.
For the year ended December 31, 2018, reclassifications were made to
increase accumulated net realized gain (loss) by $293,176 and undistributed
net investment income by $293,176. The reclassifications arising from
book/tax differences were due primarily to the reclassification of foreign
currency gains and losses.
At December 31, 2018, the amounts of aggregate unrealized gain (loss) and
the cost of investment securities for federal tax purposes, including
short-term securities, repurchase agreements and derivatives, were as
follows:
Cost (tax basis)............................................ $255,270,038
============
Gross unrealized appreciation............................... 68,633
Gross unrealized depreciation............................... (15,195,132)
------------
Net unrealized depreciation................................. $(15,126,499)
============
On December 22, 2017, the Tax Cuts and Jobs Act (the "Act") was signed into
law. Certain provisions of the Act were effective upon enactment with the
remainder becoming effective for tax years beginning after December 31,
2017. All required changes have been made in accordance with the Act.
Note 7. Line of Credit
The Fund, along with certain other funds managed by the Adviser has access
to a $75 million committed unsecured line of credit and a $50 million
uncommitted unsecured line of credit. The committed and uncommitted lines of
credit are renewable on an annual basis with State Street Bank and Trust
Company ("State Street"), the Fund's custodian.
36
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2018 -- (CONTINUED)
Interest is currently payable on the committed line of credit at the higher
of the Federal Funds Rate (but not less than zero) plus 125 basis points or
the One-Month London Interbank Offered Rate (but not less than zero) plus
125 basis points and State Street's discretionary bid rate on the
uncommitted line of credit. There is also a commitment fee of 25 basis
points per annum on the daily unused portion of the committed line of credit
and a one-time closing fee of $25,000 on the uncommitted line of credit.
Borrowings under the line of credit will commence when the respective Fund's
cash shortfall exceeds $100,000.
For the year ended December 31, 2018, the Fund had borrowings outstanding
for 1 day under the line of credit and incurred $14 in interest charges
related to this borrowing. The Fund's average amount of debt under the line
of credit for the days utilized was $155,418 at a weighted average interest
rate of 3.32%. At December 31, 2018, there were no borrowings outstanding.
Note 8. Interfund Lending
Pursuant to the exemptive relief granted by the SEC, the Fund is permitted
to participate in an interfund lending program among investment companies
advised by SunAmerica or an affiliate. The interfund lending program allows
the participating funds to borrow money from and lend money to each other
for temporary or emergency purposes. An interfund loan will be made under
this facility only if the participating funds receive a more favorable
interest rate than would otherwise be available from a typical bank for a
comparable transaction. For the year ended December 31, 2018, the Fund did
not participate in this program.
Note 9. 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 is subject to the credit risk of
the borrower, selling participant, lender or other persons positioned
between the Fund and the borrower.
Note 10. Unfunded Loan Commitments
At December 31, 2018, the Fund had the following unfunded loan commitments
which could be extended at the option of the Borrower:
MATURITY PRINCIPAL
BORROWER TYPE DATE AMOUNT VALUE
-------- ------------ ---------- --------- -------
Dental Corp. Perfect Smile ULC..... Delayed Draw 06/06/2025 $54,207 $52,784
37
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of SunAmerica Senior Floating Rate Fund, Inc. and
Shareholders of the AIG Senior Floating Rate Fund
OPINION ON THE FINANCIAL STATEMENTS
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of AIG Senior Floating Rate Fund (the "Fund") as
of December 31, 2018, the related statement of operations for the year ended
December 31, 2018, the statement of changes in net assets for each of the two
years in the period ended December 31, 2018, including the related notes, and
the financial highlights for each of the periods indicated therein
(collectively referred to as the "financial statements"). In our opinion, the
financial statements present fairly, in all material respects, the financial
position of the Fund as of December 31, 2018, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period ended December 31, 2018 and the financial highlights for each of the
periods indicated therein in conformity with accounting principles generally
accepted in the United States of America.
BASIS FOR OPINION
These financial statements are the responsibility of the Fund's management. Our
responsibility is to express an opinion on the Fund's financial statements
based on our audit. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) ("PCAOB") and are required
to be independent with respect to the Fund in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audit of these financial statements in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. Our procedures
included confirmation of securities owned as of December 31, 2018 by
correspondence with the custodian, brokers and selling or agent banks; when
replies were not received, we performed other auditing procedures. We believe
that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
February 27, 2019
We have served as the auditor of one or more investment companies in the AIG
Funds family of funds since 1984.
38
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
DIRECTORS AND OFFICERS INFORMATION -- DECEMBER 31, 2018 -- (UNAUDITED)
The following table contains basic information regarding the Trustees and
Officers that oversee operations of the Funds and other investment companies
within the Fund complex. Unless otherwise noted, the address of each Director
and executive officer is Harborside 5, 185 Hudson Street, Suite 3300, Jersey
City, NJ 07311.
NUMBER OF
FUNDS IN
NAME POSITION(S) FUND COMPLEX
AND HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY
AGE TRUST TIME SERVED(1) DURING PAST 5 YEARS TRUSTEE(2)
----------------------- ----------- -------------- ------------------------------- ------------
DISINTERESTED TRUSTEES
Dr. Judith L. Craven Trustee 2001- Retired. 73
Age: 73 present
William F. Devin Trustee 2001- Retired. 24
Age: 80 present
Richard W. Grant Trustee 2011- Retired. 24
Age: 73 Chairman present
of the
Board
Stephen J. Gutman Trustee 2001- Senior Vice President and 24
Age: 75 present Associate Broker, The
Corcoran Group (real estate)
(2002 to present); President,
SJG Marketing, Inc. (2009 to
present).
Eileen A. Kamerick Trustee 2018- National Association of 24
Age: 60 present Corporate Directors Board
Leadership Fellow and
financial expert; Adjunct
Professor of Law, University
of Chicago, Washington
University in St. Louis and
University of Iowa law schools
(2007 to Present); formerly,
Senior Advisor to the Chief
Executive Officer and
Executive Vice President and
Chief Financial Officer of
ConnectWise, Inc. (software
and services company) (2015
to 2016); Chief Financial
Officer, Press Ganey
Associates (health care
informatics company) (2012
to 2014).
INTERESTED TRUSTEE
Peter A. Harbeck(4) Trustee 2001- President (1995 to present), 150
Age: 64 present CEO (1997 to present), and
Director (1992 to present),
SunAmerica; Director, AIG
Capital Services, Inc. ("ACS")
(1993 to present); Chairman,
President and CEO, Advisor
Group, Inc. (2004 to 2016).
NAME OTHER DIRECTORSHIP(S)
AND HELD BY TRUSTEE
AGE DURING PAST FIVE YEARS(3)
----------------------- ---------------------------------
DISINTERESTED TRUSTEES
Dr. Judith L. Craven Director A.G. Belo Corp.
Age: 73 (media company) (1992 to
2014); Director, Sysco Corp.
(food marketing and
distribution company) (1996
to 2017); Director, Luby's, Inc.
(1998 to present).
William F. Devin None
Age: 80
Richard W. Grant None
Age: 73
Stephen J. Gutman None
Age: 75
Eileen A. Kamerick Hochschild Mining plc
Age: 60 (precious metals company)
(2016 to Present); Associated
Banc-Corp (financial services
company) (2007 to Present);
Legg Mason Closed End
Funds (registered investment
companies) (2013 to
Present); Westell
Technologies, Inc.
(technology company) (2003
to 2016).
INTERESTED TRUSTEE
Peter A. Harbeck(4) None
Age: 64
--------
(1) Trustees serve until their successors are duly elected and qualified.
(2) The term "Fund Complex" means two or more registered investment companies
that hold themselves out to investors as related companies for purposes of
investment services or have a common investment adviser or any investment
adviser that is an affiliate of the Adviser. The "Fund Complex" includes
the Trust (1 fund), SunAmerica Money Market
39
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
DIRECTORS AND OFFICERS INFORMATION -- DECEMBER 31, 2018 -- (UNAUDITED)
(CONTINUED)
Funds Inc. ("SAMMF") (1 fund), SunAmerica Equity Funds ("SAEF") (2 funds),
SunAmerica Income Funds ("SAIF") (3 funds), SunAmerica Series, Inc. ("SA
Series") (6 funds), Anchor Series Trust ("AST") (5 portfolios), SunAmerica
Specialty Series (6 funds), SunAmerica Series Trust ("SAST")
(58 portfolios), VALIC Company I ("VALIC I") (34 funds), VALIC Company II
("VALIC II") (15 funds), Seasons Series Trust ("SST") (19 portfolios).
(3) Directorships of companies required to report to the SEC under the
Securities Exchange Act of 1934 (i.e., "public companies") or other
investment companies registered under the 1940 Act.
(4) Mr. Harbeck is considered to be an Interested Trustee because he serves as
President, CEO and Director of SunAmerica and Director of ACS.
Additional information concerning the Trustees is contained in the Statement of
Additional Information which is available, without charge, by calling (800)
858-8850.
NAME
AND POSITION(S) LENGTH OF PRINCIPAL OCCUPATION(S)
AGE HELD WITH TRUST TIME SERVED DURING PAST 5 YEARS
--------------------- --------------- ----------- ---------------------------------------------------------------------------
OFFICERS
John T. Genoy President 2007- Chief Financial Officer, SunAmerica (2002 to present); Senior Vice
Age: 50 present President, SunAmerica (2004 to present); Chief Operating Officer,
SunAmerica (2006 to present).
Gregory R. Kingston Treasurer 2014- Vice President, SunAmerica (2001 to present); Head of Mutual Fund
Age: 52 present Administration, SunAmerica (2014 to present); Senior Vice President,
2919 Allen Parkway SunAmerica (2014-present).
Houston, Texas 77019
James Nichols Vice President 2006- Director, President and CEO, ACS (2006 to present); Senior Vice President,
Age: 52 present SunAmerica (2002 to present).
Gregory N. Bressler Secretary 2005- Senior Vice President and General Counsel, SunAmerica (2005 to present).
Age: 52 present
Kathleen D. Fuentes Chief Legal 2013- Vice President and Deputy General Counsel, SunAmerica (2006 to present).
Age: 49 Officer and present
Assistant
Secretary
Timothy P. Pettee Vice President 2018 to Chief Investment Officer, SunAmerica (2018 to Present); Lead Portfolio
Age: 60 Present Manager-Rules Based Funds (2013 to Present); Chief Investment Officer
(2003 to 2013)
Shawn Parry Vice President 2014- Assistant Vice President, SunAmerica (2005 to 2014); Vice President,
Age: 46 and Assistant present SunAmerica (2014 to present).
2919 Allen Parkway Treasurer
Houston, Texas 77019
Donna M. McManus Vice President 2014- Managing Director, BNY Mellon (2009-2014); Vice President, SunAmerica,
Age: 57 and Assistant present (2014 to present).
Treasurer
Christopher C. Joe Chief 2017 to Chief Compliance Officer, AIG Funds, Anchor Series Trust, Seasons Series
Age: 49 Compliance Present Trust, SunAmerica Series Trust, VALIC Company I and VALIC Company II
2919 Allen Parkway Officer (2017-Present); Chief Compliance Officer, VALIC Retirement Services
Houston, Texas 77019 Company (2017-Present); Chief Compliance Officer, The Variable Annuity
Life Insurance Company (2017 to Present); Chief Compliance Officer,
Invesco PowerShares (2012-2017); Chief Compliance Officer, Invesco
Investment Advisers, LLC (2010-2013); U.S. Compliance Director, Invesco
Ltd. (2006-2014); Deputy Chief Compliance Officer, Invesco Advisers, LLC
(2014-2015).
Matthew J. Hackethal Anti-Money 2006- Acting Chief Compliance Officer, AIG Funds, Anchor Series Trust, Seasons
Age: 47 Laundering present Series Trust, SunAmerica Series Trust, VALIC Company I and VALIC
("AML") Company II (2016 to 2017); Chief Compliance Officer, SunAmerica (2006 to
Compliance Present); Chief Compliance Officer, The Variable Annuity Life Insurance
Officer Company (2016 to 2017); AML Compliance Officer, AIG Funds, Anchor
Series Trust, Seasons Series Trust, SunAmerica Series Trust, VALIC
Company I and VALIC Company II (2006 to Present); and Vice President,
SunAmerica (2011 to Present).
40
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
SHAREHOLDER TAX INFORMATION -- (UNAUDITED)
Certain tax information regarding the Fund is required to be provided to
shareholders based upon the Fund's income and distributions for the taxable
year ended December 31, 2018. The information necessary to complete your income
tax returns is included with your Form 1099-DIV, which will be mailed to
shareholders in early 2019.
During the year ended December 31, 2018, the Fund paid the following dividends
along with the percentage of ordinary income dividends that qualified for the
70% dividends received deductions for corporations:
NET QUALIFYING % FOR
LONG-TERM THE 70% DIVIDENDS
CAPITAL GAINS RECEIVED DEDUCTION
- ------------- ------------------
Class A............................ $ -- --%
Class C............................ -- --
For the year ended December 31, 2018, certain dividends paid by the Fund may be
subject to a maximum tax rate of 15%, as provided by the Jobs and Growth Tax
Relief Reconciliation Act of 2003. Of the distributions paid during the fiscal
year, none may be considered qualified dividend income.
41
(THIS PAGE INTENTIONALLY LEFT BLANK)
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
COMPARISON: FUND VS. INDEX -- (UNAUDITED)
As required by the Securities and Exchange Commission, the graph on the
following pages compares the performance of a $10,000 investment in the Fund to
a similar investment in the index. Please note that the term "inception," as
used herein, reflects the date on which a specific class of shares commenced
operations. It is important to note that the Fund is a professionally managed
mutual fund while the index is not available for investment and is unmanaged.
The comparison is shown for illustrative purposes only. The graph presents the
performance of Class C shares of the Fund. The performance of the other class
will vary based upon the difference in sales charges and fees assessed to
shareholders of that class. Past performance does not predict future results.
43
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
COMPARISON: FUND VS. INDEX -- (UNAUDITED) (CONTINUED)
The AIG Senior Floating Rate Fund (Class C) returned -0.90%, modestly
underperforming its benchmark, the S&P/LSTA Leveraged Loan Index (the "LLI"),*
which returned 0.44% for the annual period ended December 31, 2018. The Fund
also underperformed the Bloomberg Barclays U.S. Aggregate Bond Index,* a
broad-based fixed income market index, which returned 0.01% for the same annual
period.
In aggregate, industry allocation decisions detracted from the Fund's relative
results, including the Fund's underweight position in the strongly performing
retail industry. We held the underweight, however, as the industry faces strong
secular headwinds and companies within the sector have highly levered capital
structures and limited free cash flow to invest. We were particularly cautious
on mall-based retailers. The Fund's overweight to the building materials
industry also dampened its relative results. Recent earnings trends from high
quality companies in the industry have shown a trend of higher cost inflation.
Partially offsetting these detractors was the Fund's overweight to the metals
and mining industry, which contributed positively to relative results during
the annual period. We were finding what we viewed as shorter-term opportunities
among U.S. thermal coal companies that are increasing exports to Europe and
Asia. We were also finding what we saw as longer-term opportunities in U.S.
aluminum manufacturers that stand to benefit, in our view, as the auto industry
transitions to electric vehicles.
Security selection overall contributed favorably to the Fund's results, driven
primarily by strong selection within the consumer cyclical services and what is
known as the "other industrial" industries. The type of "other industrial"
holdings in the portfolio included companies in the power transmission and
transportation, integrated manufacturing, equipment and materials, and home
improvement industries. This was partially offset by weaker selection within
the financial institutions and energy industries, which detracted.
Quality allocation as a whole contributed positively. Compared to the LLI, as
of the end of 2018, we maintained an overweight position in loans rated BB, as
we believed they offered the best risk/reward profiles.
Among individual loans, we found what we considered to be the best
opportunities among higher quality, U.S.-focused issuers in less cyclical
industries. The individual loans that contributed most positively to the Fund's
absolute returns were those of coal miner Foresight Energy, oil refineries
owner and operator Philadelphia Energy Solutions and forged products
sub-systems manufacturing company Ameriforge Group, the last of which is not a
constituent of the LLI but outperformed the LLI during the annual period.
Significant detractors from the Fund's returns included loans issued by sales
and marketing services provider to consumer-packaged goods companies and
retailers Acosta, oil and gas properties owner and operator American-Energy
Marcellus, construction services provider Brand Services and oil and gas
exploration and production company Chesapeake Energy.
--------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
* The S&P/LSTA LEVERAGED LOAN INDEX (LLI) reflects the market-weighted
performance of U.S. dollar-denominated institutional leveraged loans. The
LLI is the only domestic leveraged loan index that utilizes real-time market
weightings, spreads and interest payments. The BLOOMBERG BARCLAYS U.S.
AGGREGATE BOND INDEX represents securities that are U.S. domestic, taxable
and dollar denominated. The index covers components for government and
corporate securities, mortgage pass-through securities and asset-backed
securities. Indices are not managed and an investor cannot invest directly
into an index.
Securities listed may or may not be a part of current portfolio construction.
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 an active trading market, in certain cases, 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
(e.g., unsecured loans or high yield 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.
44
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
COMPARISON: FUND VS. INDEX -- (UNAUDITED) (CONTINUED)
[CHART]
Senior Floating S&P/LSTA Leveraged Bloomberg Barclays U.S.
Rate Fund Class C Loan Index++ Aggregate Bond Index**
----------------- ------------------- ----------------------
12/31/2008 $10,000 $10,000 $10,000
1/31/2009 10,590 10,740 9,912
2/28/2009 10,503 10,824 9,874
3/31/2009 10,479 10,980 10,012
4/30/2009 11,765 11,935 10,060
5/31/2009 12,731 12,663 10,132
6/30/2009 13,558 13,218 10,190
7/31/2009 14,253 13,844 10,354
8/31/2009 14,668 14,158 10,462
9/30/2009 15,238 14,611 10,572
10/31/2009 15,518 14,691 10,624
11/30/2009 15,599 14,729 10,761
12/31/2009 16,025 15,162 10,593
1/31/2010 16,470 15,472 10,755
2/28/2010 16,480 15,516 10,795
3/31/2010 16,863 15,865 10,782
4/30/2010 17,116 16,099 10,894
5/31/2010 16,752 15,736 10,986
6/30/2010 16,635 15,663 11,158
7/31/2010 16,858 15,903 11,277
8/31/2010 16,935 15,957 11,422
9/30/2010 17,144 16,181 11,434
10/31/2010 17,377 16,435 11,475
11/30/2010 17,439 16,493 11,409
12/31/2010 17,630 16,698 11,286
1/31/2011 17,897 17,027 11,299
2/28/2011 18,034 17,106 11,327
3/31/2011 18,028 17,103 11,334
4/30/2011 18,108 17,212 11,478
5/31/2011 18,104 17,197 11,627
6/30/2011 18,032 17,133 11,593
7/31/2011 18,046 17,158 11,777
8/31/2011 17,167 16,403 11,949
9/30/2011 17,227 16,473 12,036
10/31/2011 17,646 16,949 12,049
11/30/2011 17,574 16,866 12,039
12/31/2011 17,641 16,952 12,171
1/31/2012 17,947 17,322 12,278
2/29/2012 18,070 17,455 12,275
3/31/2012 18,204 17,589 12,208
4/30/2012 18,312 17,719 12,343
5/31/2012 18,200 17,600 12,455
6/30/2012 18,307 17,721 12,460
7/31/2012 18,482 17,926 12,632
8/31/2012 18,663 18,128 12,640
9/30/2012 18,862 18,329 12,657
10/31/2012 18,885 18,387 12,682
11/30/2012 18,949 18,444 12,702
12/31/2012 19,087 18,589 12,684
1/31/2013 19,312 18,787 12,595
2/28/2013 19,325 18,826 12,658
3/31/2013 19,457 18,981 12,669
4/30/2013 19,632 19,094 12,797
5/31/2013 19,622 19,130 12,568
6/30/2013 19,495 19,017 12,374
7/31/2013 19,675 19,205 12,391
8/31/2013 19,666 19,198 12,328
9/30/2013 19,678 19,245 12,444
10/31/2013 19,834 19,385 12,545
11/30/2013 19,918 19,481 12,498
12/31/2013 19,996 19,572 12,427
1/31/2014 20,123 19,700 12,611
2/28/2014 20,153 19,735 12,678
3/31/2014 20,212 19,806 12,656
4/30/2014 20,194 19,828 12,763
5/31/2014 20,250 19,965 12,908
6/30/2014 20,352 20,080 12,915
7/31/2014 20,314 20,074 12,883
8/31/2014 20,349 20,105 13,025
9/30/2014 20,209 19,985 12,937
10/31/2014 20,244 20,037 13,064
11/30/2014 20,306 20,137 13,156
12/31/2014 20,000 19,884 13,169
1/31/2015 20,015 19,950 13,445
2/28/2015 20,326 20,231 13,318
3/31/2015 20,391 20,307 13,380
4/30/2015 20,579 20,493 13,332
5/31/2015 20,624 20,532 13,300
6/30/2015 20,513 20,446 13,155
7/31/2015 20,475 20,445 13,247
8/31/2015 20,289 20,302 13,228
9/30/2015 20,119 20,170 13,317
10/31/2015 20,111 20,133 13,319
11/30/2015 19,867 19,957 13,284
12/31/2015 19,630 19,747 13,241
1/31/2016 19,462 19,618 13,423
2/29/2016 19,369 19,515 13,519
3/31/2016 19,928 20,053 13,643
4/30/2016 20,333 20,451 13,695
5/31/2016 20,529 20,633 13,698
6/30/2016 20,538 20,637 13,945
7/31/2016 20,812 20,933 14,033
8/31/2016 20,953 21,090 14,017
9/30/2016 21,120 21,272 14,008
10/31/2016 21,265 21,448 13,901
11/30/2016 21,295 21,504 13,572
12/31/2016 21,546 21,753 13,592
1/31/2017 21,744 21,875 13,618
2/28/2017 21,858 21,984 13,710
3/31/2017 21,872 22,002 13,703
4/30/2017 21,908 22,098 13,808
5/31/2017 21,969 22,179 13,915
6/30/2017 21,950 22,169 13,901
7/31/2017 22,093 22,322 13,960
8/31/2017 22,015 22,312 14,086
9/30/2017 22,118 22,399 14,019
10/31/2017 22,305 22,533 14,027
11/30/2017 22,312 22,560 14,009
12/31/2017 22,399 22,649 14,073
1/31/2018 22,571 22,867 13,911
2/28/2018 22,594 22,912 13,779
3/31/2018 22,621 22,977 13,867
4/30/2018 22,713 23,072 13,764
5/31/2018 22,708 23,111 13,863
6/30/2018 22,706 23,137 13,845
7/31/2018 22,874 23,308 13,849
8/31/2018 22,986 23,402 13,938
9/30/2018 23,124 23,563 13,848
10/31/2018 23,070 23,555 13,739
11/30/2018 22,810 23,343 13,821
12/31/2018 22,197 22,749 14,075
Class A Class C Class W
Senior ------------------ ------------------ ------------------
Floating Average Average Average
Rate Annual Cumulative Annual Cumulative Annual Cumulative
Fund# Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return (4.20)% (0.41)% (1.85)% (0.90)% (0.34)% (0.34)%
--------------------------------------------------------------------------
5 Year Return 1.66% 12.77% 2.11% 11.01% N/A N/A
--------------------------------------------------------------------------
10 Year Return 8.21% 128.68% 8.30% 121.97% N/A N/A
--------------------------------------------------------------------------
Since Inception* 2.76% 45.02% 3.53% 102.65% 1.37% 2.34%
--------------------------------------------------------------------------
# For the purposes of the table, it has been assumed that
the maximum sales charge of 3.75% with respect to Class
A shares was deducted from the initial investment in
the Fund and that the CDSCs with respect to the Class C
shares have been deducted, as applicable.
+ Cumulative returns do not include sales load. If sales
load had been included, the return would have been
lower.
* Inception date: Class A: 10/04/2006; Class C:
08/31/1998; Class W: 04/20/2017
++ The S&P/LSTA Leveraged Loan Index (LLI) reflects the
market-weighted performance of U.S. dollar-denominated
institutional leveraged loans. The LLI is the only
domestic leveraged loan index that utilizes real-time
market weightings, spreads and interest payments.
** The Bloomberg Barclays U.S. Aggregate Bond Index
represents securities that are U.S. domestic, taxable
and dollar denominated. The index covers components for
government and corporate securities, mortgage
pass-through securities and asset-backed securities.
Indices are not managed and an investor cannot invest
directly into an index.
The Fund operated as a closed-end investment company with
monthly repurchase offers until October 4, 2006, whereupon
it converted to an open-end investment company.
Information in the graph and table reflects performance of
the Fund as a closed-end investment company through
October 3, 2006, and the Fund may have performed
differently if it were an open-end investment company
prior to that date.
For the 12 month period ended December 31, 2018, the AIG
Senior Floating Rate Class C returned -1.85% compared to
0.44% for the S&P/LSTA Leveraged Loan Index and 0.01% for
the Bloomberg Barclays U.S. Aggregate Bond Index. (The
performance data and graph do not reflect the deduction of
taxes that a shareholder would pay on fund distributions
or the redemption of fund shares.)
--------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. Maximum Sales Charge: Class A: 3.75%; Contingent Deferred Sales
Charge (CDSC): Class C: 1.00% CDSC. The fund's daily net asset values are not
guaranteed and shares are not insured by the FDIC, the Federal Reserve Board or
any other agency. The investment return and principal value of an investment
will fluctuate so that an investor's shares, when redeemed, may be higher or
lower than the original cost. Current performance may be higher or lower than
that shown. Performance as of the most recent month end is available at
www.safunds.com
45
[LOGO]
AIG Funds
HARBORSIDE 5
185 HUDSON STREET, SUITE 3300
JERSEY CITY, NJ 07311
DIRECTORS VOTING PROXIES ON FUND DISCLOSURE OF QUARTERLY
Dr. Judith L. Craven PORTFOLIO SECURITIES PORTFOLIO HOLDINGS
William F. Devin A description of the The Fund is required to
Richard W. Grant policies and proce-dures file its com-plete
Stephen J. Gutman that the Fund uses to schedule of portfolio
Peter A. Harbeck determine how to vote holdings with the U.S.
Eileen A. Kamerick proxies related to Securities and Exchange
OFFICERS securities held in the Commission for its first
John T. Genoy, President Fund's portfolio, which and third fiscal quarters
and Chief Executive is available in the on Form N-Q. The Fund's
Officer Fund's Statement of Forms N-Q are available
James Nichols, Vice Additional Information on the U.S. Securities
President may be ob-tained without and Exchange Commission's
Timothy Pettee, Vice charge upon request, by website at
President calling (800) 858-8850. http://www.sec.gov. You
Christopher C. Joe, This in-formation is also can also review and
Chief Compliance available from the EDGAR obtain copies of the
Officer database on the U.S. Forms N-Q at the U.S.
Gregory N. Bressler, Secu-rities and Exchange Securities and Exchange
Secretary Commission's website at Commission's Public
Gregory R. Kingston, http://www.sec.gov. Refer-ence Room in
Treasurer DELIVERY OF SHAREHOLDER Washington, DC
Kathleen Fuentes, Chief DOCUMENTS (information on the
Legal Officer and The Fund has adopted a operation of the Public
Assistant Secretary policy that allows it to Reference Room may be
Matthew J. Hackethal, send only one copy of the ob-tained by calling
Anti-Money Laundering Fund's prospectus, proxy 1-800-SEC-0330).
Compliance Officer material, annual report PROXY VOTING RECORD ON
Donna McManus, Vice and semi-annual report FUND PORTFOLIO SECURITIES
President and (the "shareholder Information regarding how
Assistant Treasurer documents") to the Fund voted proxies
Shawn Parry, Vice shareholders with relating to securities
President and multiple accounts held in the Fund's
Assistant Treasurer residing at the same portfolio during the most
INVESTMENT ADVISER "household." This recent twelve month
SunAmerica Asset practice is called period ended June 30 is
Management, LLC householding and reduces available, once filed
Harborside 5 Fund expenses, which with the U.S. Securities
185 Hudson Street, Suite benefits you and other and Exchange Commis-sion,
3300 shareholders. Unless the without charge, upon
Jersey City, NJ 07311 Fund receives request, by calling
DISTRIBUTOR instructions to the (800) 858-8850 or on the
AIG Capital Services, con-trary, you will only U.S. Securities and
Inc. receive one copy of the Exchange Commission's
Harborside 5 shareholder documents. website at
185 Hudson Street, Suite The Fund will continue to http://www.sec.gov.
3300 household the This report is submitted
Jersey City, NJ 07311 share-holder documents solely for the general
SHAREHOLDER SERVICING indefinitely, until we information of
AGENT are instructed otherwise. shareholders of the Fund.
AIG Fund Services, Inc. If you do not wish to Distribution of this
Harborside 5 participate in report to persons other
185 Hudson Street, Suite house-holding, please than shareholders of the
3300 contact Shareholder Fund is authorized only
Jersey City, NJ 07311 Services at (800) in connection with a
TRANSFER AGENT 858-8850 ext. 6010 or currently effective
DST Asset Manager send a written request prospectus, setting forth
Solutions, Inc. with your name, the name details of the Fund,
303 W 11th Street of your fund(s) and your which must precede or
Kansas City, MO 64105 account number(s) to AIG accompany this report.
CUSTODIAN Funds, P.O. Box 219186,
State Street Bank and Kansas City MO,
Trust Company 64121-9186. We will
One Lincoln St. resume individual
Boston, MA 02111 mailings for your account
within thirty (30) days
of receipt of your
request.
[GRAPHIC]
GO PAPERLESS!!
DID YOU KNOW THAT YOU HAVE THE OPTION TO
RECEIVE YOUR SHAREHOLDER REPORTS ONLINE?
By choosing this convenient service, you will no longer receive paper copies of
Fund documents such as annual reports, semi-annual reports, prospectuses and
proxy statements in the mail. Instead, you are provided with quick and easy
access to this information via the Internet.
Why Choose Electronic Delivery?
IT'S QUICK -- Fund documents will be received faster than via traditional mail.
IT'S CONVENIENT -- Elimination of bulky documents from personal files.
IT'S COST EFFECTIVE -- Reduction of your Fund's printing and mailing costs.
TO SIGN UP FOR ELECTRONIC DELIVERY, FOLLOW
THESE SIMPLE STEPS:
1 GO TO WWW.AIG.COM/FUNDS
2 CLICK ON THE LINK TO "GO PAPERLESS!!"
The email address you provide will be kept strictly confidential. Once your
enrollment has been processed, you will begin receiving email notifications
when anything you receive electronically is available online.
You can return to www.aig.com/funds at any time to change your email
address, edit your preferences or to cancel this service if you choose to
resume physical delivery of your Fund documents.
Please note - this option is only available to accounts opened through the
Funds.
FOR INFORMATION ON RECEIVING THIS REPORT ONLINE, SEE INSIDE BACK COVER.
AIG FUNDS ARE ADVISED BY SUNAMERICA ASSET MANAGEMENT, LLC (SAAMCO) AND
DISTRIBUTED BY AIG CAPITAL SERVICES, INC. (ACS), MEMBER FINRA. Harborside
5, 185 Hudson Street, Suite 3300, Jersey City, NJ 07311, 800-858-8850. SAAMCo
and ACS are members of American International Group, Inc. (AIG).
This fund report must be preceded by or accompanied by a prospectus.
Investors should carefully consider a Fund's investment objectives, risks,
charges and expenses before investing. The prospectus, containing this and
other important information, can be obtained from your financial adviser, the
AIG Funds Sales Desk at 800-858-8850, ext. 6003, or at aig.com/funds. Read the
prospectus carefully before investing.
[LOGO]
aig.com/funds
SFANN - 12/18
Item 2. Code of Ethics
The SunAmerica Senior Floating Rate Fund, Inc. (the "registrant") has
adopted a Code of Ethics applicable to its Principal Executive and
Principal Accounting Officers pursuant to Section 406 of the Sarbanes-Oxley
Act of 2002 (the "Code"). During the fiscal year ended December 31, 2018,
there were no reportable waivers or implicit waivers to a provision of the
Code that applies to the registrant's Principal Executive and Principal
Accounting Officers (the "Covered Officers").
Item 3. Audit Committee Financial Expert.
As of January 16, 2018, the registrant's Board of Directors has determined
that Eileen A. Kamerick, a Director of the registrant, qualifies as an
audit committee financial expert, as defined in Item 3(b) of Form N-CSR.
Ms. Kamerick is considered to be "independent" for purposes of Item 3(a)(2)
of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a)--(d) Aggregate fees billed to the registrant for the last two fiscal
years for professional services rendered by the registrant's principal
accountant were as follows:
2017 2018
-------- --------
(a) Audit Fees $107,713 $110,943
(b) Audit-Related Fees $ 0 $ 0
(c) Tax Fees $ 16,216 $ 14,067
(d) All Other Fees $ 0 $ 0
Audit Fees include amounts related to the audit of the registrant's annual
financial statements and services normally provided by the principal
accountant in connection with statutory and regulatory filings. Tax Fees
principally include tax compliance, tax advice, tax planning and
preparation of tax returns.
Aggregate fees billed to the investment adviser and Adviser Affiliates (as
defined below in Item 4(e)) that are required to be pre-approved pursuant
to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X for the last two
fiscal years for services rendered by the registrant's principal accountant
were as follows:
2017 2018
------- -------
(b) Audit-Related Fees $ 0 $ 0
(c) Tax Fees $ 0 $ 0
(d) All Other Fees $ 0 $36,429
(e) (1) The registrant's audit committee pre-approves all audit services
provided by the registrant's principal accountant for the registrant
and all non-audit services provided by the registrant's principal
accountant for the registrant, its investment adviser and any entity
controlling, controlled by, or under common control with the
investment adviser ("Adviser Affiliates") that provides ongoing
services to the registrant, if the engagement by the investment
adviser or Adviser Affiliate relates directly to the operations and
financial reporting of the registrant. The audit committee has not
presently established any pre-approval policies and procedures that
permit the pre-approval of the above services other than by the full
audit committee. Certain de minimis exceptions are allowed for non-
audit services in accordance with Rule 2-01(c)(7)(i)(C) of Regulation
S-X as set forth in the registrant's audit committee charter.
(2) No services included in (b)-(d) above in connection with fees
billed to the registrant or the investment adviser or Adviser
Affiliates were approved pursuant to paragraph (c)(7)(i)(C) of Rule
2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the
preceding fiscal year by the registrant's principal accountant for
non-audit services rendered to the registrant, its investment adviser,
and Adviser Affiliates that provides ongoing services to the
registrant for 2017 and 2018 were $16,216 and $119,067, respectively.
(h) Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. 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.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board of Directors that were
implemented after the registrant last provided disclosure in response to
the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407)
(as required by 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this
Item 10.
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
registrant's last fiscal quarter of the period covered by this report
that has materially affected, or is reasonably likely to materially
affect, the registrant's internal contro1 over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management
Investment Companies.
Not applicable.
Item 13. Exhibits.
(a) (1) Code of Ethics applicable to its Principal Executive and Principle
Accounting Officers pursuant to Section 406 of the Sarbanes-Oxley Act
of 2002 attached hereto as Exhibit 99.406. Code of Ethics.
(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/ John T. Genoy
------------------------------------
John T. Genoy
President
Date: March 8, 2019
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/ John T. Genoy
------------------------------------
John T. Genoy
President
Date: March 8, 2019
By: /s/ Gregory R. Kingston
------------------------------------
Gregory R. Kingston
Treasurer
Date: March 8, 2019