-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DWNOZ1Dtr85B92ai5smqeT5QVR/595pskh3qcPNXFzGqMYi413L4ns2p9OyHpiJ0 eC52/a6p6QIH0fRxMfBBiw== 0001193125-06-051013.txt : 20060310 0001193125-06-051013.hdr.sgml : 20060310 20060310160234 ACCESSION NUMBER: 0001193125-06-051013 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20051231 FILED AS OF DATE: 20060310 DATE AS OF CHANGE: 20060310 EFFECTIVENESS DATE: 20060310 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNAMERICA SENIOR FLOATING RATE FUND INC CENTRAL INDEX KEY: 0001059040 IRS NUMBER: 043412472 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-08727 FILM NUMBER: 06679435 BUSINESS ADDRESS: STREET 1: 286 CONGRESS ST STREET 2: C/O NORTH AMERICAN FUNDS CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6173683535 MAIL ADDRESS: STREET 1: C/O NORTH AMERICAN FUNDS STREET 2: 286 CONGRESS ST CITY: BOSTON STATE: MA ZIP: 02110 FORMER COMPANY: FORMER CONFORMED NAME: NORTH AMERICAN SENIOR FLOATING RATE FUND INC DATE OF NAME CHANGE: 19980401 N-CSR 1 dncsr.txt SUNAMERICA SENIOR FLOATING RATE FUND, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-08727 SunAmerica Senior Floating Rate Fund, Inc. (Exact name of registrant as specified in charter) Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311 (Address of principal executive offices) (Zip code) Vincent M. Marra Senior Vice President & Chief Operating Officer AIG SunAmerica Asset Management Corp. Harborside Financial Center 3200 Plaza 5 Jersey City, NJ 07311 (Name and address of agent for service) Registrant's telephone number, including area code: (201) 324-6464 Date of fiscal year end: December 31 Date of reporting period: December 31, 2005 Item 1. Reports to Stockholders SunAmerica Senior Floating Rate Fund, Inc. Annual report at December 31, 2005. + 2005 Annual SunAmerica Report - -------------------------
[PHOTO] [GRAPHIC] Senior Floating Rate Fund Table of Contents PRESIDENT'S LETTER..................................... 1 SENIOR FLOATING RATE FUND REVIEW....................... 2 STATEMENT OF ASSETS AND LIABILITIES.................... 3 STATEMENT OF OPERATIONS................................ 4 STATEMENT OF CHANGES IN NET ASSETS..................... 5 STATEMENT OF CASH FLOWS................................ 6 FINANCIAL HIGHLIGHTS................................... 7 PORTFOLIO OF INVESTMENTS............................... 11 NOTES TO FINANCIAL STATEMENTS.......................... 18 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 25 APPROVAL OF ADVISORY AGREEMENTS........................ 26 DIRECTORS AND OFFICERS INFORMATION..................... 30
December 31, 2005 ANNUAL REPORT President's Letter Dear Shareholder: We are pleased to present you with the annual report for the SunAmerica Senior Floating Rate Fund. During 2005, the Fund benefited from strong economic and credit fundamentals and continued strong demand for bank loans. In addition, the Fund benefited from the continuation of the Federal Reserve's interest rate tightening policy. During the year, London Interbank Offered Rate (LIBOR), the reference rate used for most loans, increased from a low of 2.57% to 4.54% by the end of the year. The Fund continues to emphasize strong credit analysis in its pursuit of total return. This fundamental analysis plays an important role in identifying credits which offer solid return/risk characteristics. On the following page, you will find the detailed commentary written by the Fund's portfolio management team. It offers specific insight on the challenges and opportunities that the Fund faced in 2005. We thank you for your continued interest in the SunAmerica Senior Floating Rate Fund. We value your ongoing confidence in us and look forward to serving your investment needs in the future. Sincerely, /s/ Peter A. Harbeck Peter A. Harbeck President and CEO AIG SunAmerica Asset Management Corp. - -------- Past performance is no guarantee of future results. 1 SunAmerica Senior Floating Rate Fund, Inc. FUND REVIEW -- (unaudited) John G. Lapham and Steven S. Oh, Portfolio Managers AIG Global Investment Group In the year ended December 31, 2005, the bank loan market benefited from a strong economy, relatively benign default rates, several interest rate increases and continued strong demand for bank loans. In general, issuers of bank debt posted strong earnings enabling them to easily service their debt obligations. London Interbank Offered Rate (LIBOR), the reference rate used for most loans, increased from a low of 2.57% to over 4.54% by the end of the year. Anticipating increases in interest rates, the Fund made opportunistic purchases of certain loan holdings to take advantage of this trend. While we witnessed some compression in loan spreads during the course of the year, this was generally off-set by the increases in LIBOR. The year 2005 was a record year for new loan issuance. Strong merger and acquisition activity, dividend recaps and leveraged buy-outs all drove the supply, as did a weak high yield bond market. Investor demand for bank loans remained high during the course of the year. In the first half of the year, the Telecommunications and Gaming/Leisure industries were the top performing sectors. In the second half of the year, the Chemical and Service sectors were the top performing industries. The Fund saw strong returns from these sectors, especially the Telecommunications and Gaming/Leisure sectors. The Fund benefited from holdings of specific issuers such as cable companies Adelphia Communications and Charter Communications. Credit news in 2005 was dominated by the automotive sector. Lower production volumes from such companies as General Motors and Ford resulted in bankruptcy filings by such large auto suppliers as Delphi Corporation, Tower Automotive and Collins & Aikman. The Fund had a position in Collins & Aikman, which we believed would have a par recovery even upon a bankruptcy filing. However, in the wake of management's departure and eroding financial results, we chose to sell our position during the course of the year. Calpine, the West Coast based energy producer, also had performance issues during 2005. The company filed for bankruptcy in December. - -------- Past performance is no guarantee of future results. The Fund is not a money market fund and its net asset value may fluctuate. Investments in loans involve certain risks including nonpayment of principal and interest; collateral impairment; nondiversification and borrower industry concentration; and lack of full liquidity, which may impair the Fund's ability to obtain full value for loans sold. The fund may invest all or substantially all of its assets in loans or other securities that are rated below investment grade, or in comparable unrated securities. Credit risks include the possibility of a default on the loan or bankruptcy of the borrower. The value of these loans is subject to a greater degree of volatility in response to interest rate fluctuations. 2 SunAmerica Senior Floating Rate Fund, Inc. STATEMENT OF ASSETS AND LIABILITIES -- December 31, 2005 ASSETS: Long-term investment securities, at value (unaffiliated)*......... $203,013,011 Short-term investment securities, at value*....................... 9,814,805 ------------ Total investments............................................... 212,827,816 Receivable for: Fund shares sold................................................ 149,077 Dividends and interest.......................................... 1,897,604 Investments sold................................................ 758,298 Prepaid expenses and other assets................................. 25,316 Due from investment adviser for expense reimbursements/fee waivers 84,517 Due from distributor for fee waivers.............................. 38,686 ------------ Total assets.................................................... 215,781,314 ------------ LIABILITIES: Payable for: Fund shares repurchased......................................... 4,943,849 Investments purchased........................................... 6,717,639 Investment advisory and management fees......................... 149,157 Distribution and service maintenance fees....................... 116,166 Administration fees............................................. 70,191 Directors' fees and expenses.................................... 13,855 Other accrued expenses.......................................... 120,732 Dividends payable................................................. 325,668 Due to custodian.................................................. 10,181 Commitments (Note 11)............................................. -- ------------ Total liabilities............................................... 12,467,438 ------------ Net assets..................................................... $203,313,876 ============ NET ASSETS REPRESENTED BY: Capital shares at par value of $.01............................... $ 216,583 Additional paid-in capital........................................ 231,514,219 ------------ 231,730,802 Accumulated undistributed net investment income (loss)............ (39,701) Accumulated undistributed net realized gain (loss) on investments. (27,697,512) Unrealized appreciation (depreciation) on investments............. (679,713) ------------ Net assets..................................................... $203,313,876 ============
Class A Class B Class C Class D NET ASSET VALUES: -------- ----------- ------------ ------------ Net assets................................................... $401,378 $25,180,574 $154,584,056 $ 23,147,868 Shares outstanding........................................... 42,748 2,682,336 16,467,440 2,465,758 Net asset value, offering and repurchase price per share (excluding any applicable contingent deferred sales charges) $ 9.39 $ 9.39 $ 9.39 $ 9.39 ======== =========== ============ ============ *COST Long-term investment securities (unaffiliated)............................................. $203,692,724 ============ Short-term investment securities........................................................... $ 9,814,805 ============
See Notes to Financial Statements 3 SunAmerica Senior Floating Rate Fund, Inc. STATEMENT OF OPERATIONS -- For the year ended December 31, 2005 INVESTMENT INCOME: Interest (unaffiliated)........................................................... $12,743,364 Dividends (unaffiliated).......................................................... 292,398 Facility and other fee income (Note 2)............................................ 459,005 ----------- Total investment income........................................................ 13,494,767 ----------- EXPENSES: Investment advisory and management fees........................................... 1,878,221 Administration fees............................................................... 883,869 Distribution and service maintenance fees: Class A......................................................................... 878 Class B......................................................................... 200,277 Class C......................................................................... 1,267,042 Transfer agent fees and expenses: Class A......................................................................... 2,899 Class B......................................................................... 21,529 Class C......................................................................... 78,357 Class D......................................................................... 10,674 Registration fees: Class A......................................................................... 6,088 Class B......................................................................... 12,654 Class C......................................................................... 28,680 Class D......................................................................... 14,361 Accounting service fees........................................................... 69,034 Custodian fees.................................................................... 87,769 Reports to shareholders........................................................... 142,761 Audit and tax fees................................................................ 82,910 Legal fees........................................................................ 46,841 Directors' fees and expenses...................................................... 49,266 Interest expense.................................................................. 100 Other expenses.................................................................... 78,945 ----------- Total expenses before fee waivers, expense reimbursements and custody credits.. 4,963,155 Fees waived and expenses reimbursed by investment adviser and distributor...... (1,208,141) Custody credits earned on cash balances........................................ (14,009) ----------- Net expenses................................................................... 3,741,005 ----------- Net investment income (loss)...................................................... 9,753,762 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (unaffiliated)............................ 14,295 Change in unrealized appreciation (depreciation) on investments................... (618,514) ----------- Net realized and unrealized gain (loss) on investments............................ (604,219) ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $ 9,149,543 ===========
See Notes to Financial Statements 4 SunAmerica Senior Floating Rate Fund, Inc. STATEMENT OF CHANGES IN NET ASSETS
For the year For the year ended ended December 31, December 31, 2005 2004 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS: Operations: Net investment income (loss).......................................................... $ 9,753,762 $ 6,093,097 Net realized gain (loss) on investments (unaffiliated)................................ 14,295 (1,564,659) Net unrealized gain (loss) on investments (unaffiliated).............................. (618,514) 2,996,261 ------------ ------------ Increase (decrease) in net assets resulting from operations............................. 9,149,543 7,524,699 ------------ ------------ Distributions To Shareholders From: Net investment income (Class A)....................................................... (16,613) (4,667) Net investment income (Class B)....................................................... (1,163,563) (837,534) Net investment income (Class C)....................................................... (7,353,487) (4,536,155) Net investment income (Class D)....................................................... (1,212,647) (729,045) ------------ ------------ Total distributions to shareholders..................................................... (9,746,310) (6,107,401) ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 3) $(26,056,887) $ 84,890,736 ------------ ------------ Total increase (decrease) in net assets................................................. (26,653,654) 86,308,034 NET ASSETS: Beginning of period..................................................................... 229,967,530 143,659,496 ------------ ------------ End of period+.......................................................................... $203,313,876 $229,967,530 ============ ============ +Includes accumulated undistributed net investment income (loss)........................ $ (39,701) $ (47,153) ============ ============
See Notes to Financial Statements 5 SunAmerica Senior Floating Rate Fund, Inc. STATEMENT OF CASH FLOWS -- For the year ended December 31, 2005 INCREASE (DECREASE) IN CASH Cash flows from operating activities: Net increase in net assets from operations...................................................................... $ 9,149,543 Adjustments to reconcile net increase in net assets from operations to net cash provided by operating activities Purchase of loans............................................................................................. (208,085,718) Proceed from loans sold....................................................................................... 122,164,302 Loan principal paydowns....................................................................................... 93,692,487 Purchases -- funding fees..................................................................................... 5,288 Proceeds from short-term securities sold...................................................................... 12,701,862 Accretion of facility fee income.............................................................................. (98,243) Increase in dividends and interest receivable................................................................. (604,072) Decrease in receivables for investments sold.................................................................. 771,431 Decrease in amount due from investment adviser................................................................ 3,002 Decrease in amount due from distributor....................................................................... 4,157 Increase in other assets...................................................................................... (3,145) Increase in payable for investments purchased................................................................. 5,132,962 Decrease in payable to the adviser............................................................................ (17,258) Decrease in other liabilities................................................................................. (16,709) Unrealized depreciation on investments........................................................................ 618,514 Net realized gain from investments............................................................................ (14,295) ------------- Net cash provided by operating activities....................................................................... $ 35,404,108 ------------- Cash flows from financing activities: Proceeds from shares sold....................................................................................... 47,180,455 Payment on shares repurchased................................................................................... (81,170,813) Cash dividends paid (not including reinvested dividends of $6,264,825).......................................... (3,413,142) ------------- Net cash used by financing activities........................................................................... $ (37,403,500) ------------- Net decrease in cash............................................................................................ (1,999,392) Cash balance at beginning of period............................................................................. 1,989,211 ------------- Cash balance at end of period................................................................................... $ (10,181) =============
See Notes to Financial Statements 6 SunAmerica Senior Floating Rate Fund, Inc. FINANCIAL HIGHLIGHTS
Class A ----------------- For the period from Year 4/28/04* ended through 12/31/05 12/31/04 -------- ----------- Net Asset Value, Beginning of Period........................................... $ 9.41 $ 9.42 Investment Operations: Net investment income (loss)@.................................................. 0.43 0.22 Net realized and unrealized gain (loss) on investments......................... (0.01) (0.01) ------ ------ Total from investment operations............................................. 0.42 0.21 ------ ------ Distributions: Dividends from net investment income........................................... (0.44) (0.22) ------ ------ Net Asset Value, End of Period................................................. $ 9.39 $ 9.41 ------ ------ Total Return(1)................................................................ 4.55% 2.22% Ratios/Supplemental Data Net assets, end of period ($000's)............................................. $ 401 $ 224 Ratio of net expenses to average net assets.................................... 1.45% 1.45%# Ratio of net investment income to average net assets........................... 4.74% 3.44%# Portfolio turnover rate........................................................ 57% 24% Expense ratio before waiver of fees and reimbursement of expenses.............. 4.32% 9.31%# Net investment income ratio before waiver of fees and reimbursement of expenses 1.87% (4.42)%#
- -------- * Inception date of class @ Calculated based upon average shares outstanding. # Annualized (1)Total return is not annualized and does not reflect sales load but does include expense reimbursements. See Notes to Financial Statements 7 SunAmerica Senior Floating Rate Fund, Inc. FINANCIAL HIGHLIGHTS -- (continued)
Class B ------------------------------------------- Year Year Year Year Year ended ended ended ended ended 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 -------- -------- -------- -------- -------- Net Asset Value, Beginning of Period........................ $ 9.41 $ 9.33 $ 8.78 $ 9.03 $ 9.64 Investment Operations: Net investment income (loss)@............................... 0.41 0.29 0.40 0.40 0.58 Net realized and unrealized gain (loss) on investments...... (0.02) 0.08 0.54 (0.26) (0.60) ------- ------- ------- ------- ------- Total from investment operations........................... 0.39 0.37 0.94 0.14 (0.02) ------- ------- ------- ------- ------- Distributions: Dividends from net investment income........................ (0.41) (0.29) (0.39) (0.39) (0.59) ------- ------- ------- ------- ------- Net Asset Value, End of Period.............................. $ 9.39 $ 9.41 $ 9.33 $ 8.78 $ 9.03 ------- ------- ------- ------- ------- Total Return(1)............................................. 4.24% 3.97% 10.95% 1.54% (0.41)% Ratios/Supplemental Data Net assets, end of period ($000's).......................... $25,181 $27,530 $26,565 $31,906 $42,335 Ratio of net expenses to average net assets................. 1.75% 1.75% 1.54% 1.45% 1.45% Ratio of net investment income to average net assets........ 4.36% 3.04% 4.35% 4.42% 6.23% Portfolio turnover rate..................................... 57% 24% 75% 112% 69% Expense ratio before waiver of fees and reimbursement of expenses................................................... 2.38% 2.38% 2.57% 2.51% 2.47% Net investment income ratio before waiver of fees and reimbursement of expenses.................................. 3.73% 2.41% 3.33% 3.36% 5.21%
- -------- @ Calculated based upon average shares outstanding. (1)Total return is not annualized and does not reflect sales load but does include expense reimbursements. See Notes to Financial Statements 8 SunAmerica Senior Floating Rate Fund, Inc. FINANCIAL HIGHLIGHTS -- (continued)
Class C ----------------------------------------------- Year Year Year Year Year ended ended ended ended ended 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 -------- -------- -------- -------- -------- Net Asset Value, Beginning of Period.... $ 9.41 $ 9.33 $ 8.78 $ 9.03 $ 9.64 Investment Operations: Net investment income (loss)@........... 0.42 0.28 0.38 0.40 0.57 Net realized and unrealized gain (loss) on investments......................... (0.03) 0.09 0.56 (0.27) (0.60) -------- -------- -------- ------- -------- Total from investment operations....... 0.39 0.37 0.94 0.13 (0.03) -------- -------- -------- ------- -------- Distributions: Dividends from net investment income.... (0.41) (0.29) (0.39) (0.38) (0.58) -------- -------- -------- ------- -------- Net Asset Value, End of Period.......... $ 9.39 $ 9.41 $ 9.33 $ 8.78 $ 9.03 -------- -------- -------- ------- -------- Total Return(1)......................... 4.24% 3.97% 10.92% 1.47% (0.45)% Ratios/Supplemental Data Net assets, end of period ($000's)...... 154,584 174,583 103,726 86,101 140,664 Ratio of net expenses to average net assets................................. 1.75% 1.75% 1.59% 1.50% 1.50% Ratio of net investment income to average net assets..................... 4.36% 3.06% 4.22% 4.33% 6.28% Portfolio turnover rate................. 57% 24% 75% 112% 69% Expense ratio before waiver of fees and reimbursement of expenses.............. 2.32% 2.35% 2.51% 2.48% 2.52% Net investment income ratio before waiver of fees and reimbursement of expenses............................... 3.79% 2.46% 3.31% 3.36% 5.26%
- -------- @ Calculated based upon average shares outstanding. (1)Total return is not annualized and does not reflect sales load but does include expense reimbursements. See Notes to Financial Statements 9 SunAmerica Senior Floating Rate Fund, Inc. FINANCIAL HIGHLIGHTS -- (continued)
Class D --------------------------------------------- For the period from Year Year Year Year 5/02/01* ended ended ended ended through 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 -------- -------- -------- -------- ----------- Net Asset Value, Beginning of Period.... $ 9.41 $ 9.33 $ 8.78 $ 9.03 $ 9.46 Investment Operations: Net investment income (loss)@........... 0.47 0.33 0.43 0.43 0.35 Net realized and unrealized gain (loss) on investments......................... (0.03) 0.08 0.54 (0.27) (0.42) ------- ------- ------- ------- ------- Total from investment operations....... 0.44 0.41 0.97 0.16 (0.07) ------- ------- ------- ------- ------- Distributions: Dividends from net investment income.... (0.46) (0.33) (0.42) (0.41) (0.36) ------- ------- ------- ------- ------- Net Asset Value, End of Period.......... $ 9.39 $ 9.41 $ 9.33 $ 8.78 $ 9.03 ------- ------- ------- ------- ------- Total Return(1)......................... 4.76% 4.49% 11.28% 1.72% (0.79)% Ratios/Supplemental Data Net assets, end of period ($000's)...... $23,148 $27,630 $13,369 $15,037 $26,372 Ratio of net expenses to average net assets................................. 1.25% 1.25% 1.25% 1.25% 1.25%# Ratio of net investment income to average net assets..................... 4.86% 3.60% 4.63% 4.58% 5.66%# Portfolio turnover rate................. 57% 24% 75% 112% 69% Expense ratio before waiver of fees and reimbursement of expenses.............. 1.60% 1.62% 1.86% 1.77% 2.27%# Net investment income ratio before waiver of fees and reimbursement of expenses............................... 4.51% 3.23% 4.02% 4.06% 4.64%#
- -------- * Inception date of class @ Calculated based upon average shares outstanding. # Annualized (1)Total return is not annualized and does not reflect sales load but does include expense reimbursements. See Notes to Financial Statements 10 SunAmerica Senior Floating Rate Fund, Inc. PORTFOLIO PROFILE -- December 31, 2005 (unaudited) Industry Allocation* Broadcasting & Entertainment........................ 16.17% Chemicals, Plastics and Rubber...................... 8.35% Healthcare, Education and Childcare................. 7.54% Leisure, Amusement, Entertainment................... 6.37% Buildings & Real Estate............................. 5.16% Electronics......................................... 5.10% Telecommunications.................................. 4.96% Registered Investment Companies..................... 4.83% Hotels, Motels, Inns and Gaming..................... 4.24% Printing and Publishing............................. 3.95% Automobile.......................................... 3.85% Containers, Packaging and Glass..................... 3.75% Oil and Gas......................................... 3.55% Diversified/Conglomerate Manufacturing.............. 3.38% Utilities........................................... 3.26% Home and Office Furnishings, Housewares and Durables 2.60% Diversified/Conglomerate Service.................... 2.58% Retail Stores....................................... 2.48% Beverage, Food & Tobacco............................ 2.35% Personal and Nondurable Consumer Products........... 1.79% Ecological.......................................... 1.67% Personal Transportation............................. 1.51% Cargo Transport..................................... 1.39% Personal, Goods and Misc. Services.................. 1.38% Aerospace/Defense................................... 1.33% Mining, Steel, Iron and Nonprecious Metals.......... 0.48% Farming and Agriculture............................. 0.45% Textiles and Leather................................ 0.21% ------ 104.68% ======
Credit Quality +# BB+.............. 3.45% BB............... 8.33% BB-.............. 18.57% B+............... 28.59% B................ 17.51% B-............... 7.88% CCC+............. 1.91% CCC.............. 0.49% D................ 1.61% Not Rated@....... 11.66% ------ 100.00% ======
- -------- * Calculated as a percentage of Net Assets. @ Represents debt issues that either have no rating, or the rating is unavailable from the data source. + Source: Standard and Poors # Calculated as a percentage of total debt issues, excluding short-term securities. 11 SunAmerica Senior Floating Rate Fund, Inc. PORTFOLIO OF INVESTMENTS -- December 31, 2005
Ratings/(1)/ ------------ Interest Maturity Principal Value Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2) - ------------------------------------------------------------------------------------------------------------------ LOANS(3)(4) -- 99.24% Aerospace/Defense -- 1.33% Axle Tech International.............. 1st Lien B2 B+ 6.57-8.50% 10/20/12 $ 239,286 $ 242,353 Hexcel Corp.......................... BTL-B B2 B+ 5.81-6.13 03/01/12 822,222 830,444 Midwestern Aircraft.................. BTL-B B1 BB- 6.41 07/01/13 597,000 605,893 SI International, Inc................ BTL B1 B+ 5.78 02/01/11 992,500 1,006,147 ----------- 2,684,837 ----------- Automobile -- 3.85% Dura Operating Corp.................. 2nd Lien B3 B+ 7.87 04/13/11 1,000,000 1,001,250 Goodyear Tire & Rubber Co............ 2nd Lien B2 B+ 7.06 04/30/10 2,000,000 2,016,250 HLI Operating Co., Inc............... BTL-C Caa1 B- 9.83-10.03 06/03/10 500,000 487,125 Key Plastics LLC..................... BTL-B B1 BB- 7.29-9.25 06/25/10 1,214,926 1,210,370 Ozburn-Hessey Holding Co. LLC........ BTL B2 B+ 6.74 08/01/12 546,696 554,897 Plastech, Inc.@...................... 2nd Lien B1 B 11.65 02/15/10 1,000,000 922,500 Tenneco Automotive, Inc.............. BTL-B B1 B+ 6.63 12/12/10 608,359 618,929 Tenneco Automotive, Inc.............. BTL-B1 B1 B+ 6.54 12/12/10 267,241 271,885 United Components, Inc............... BTL-C B1 BB- 6.81 06/30/10 723,333 733,279 ----------- 7,816,485 ----------- Beverage, Food & Tobacco -- 2.35% Alliance One International, Inc...... BTL-B B1 BB- 8.03 05/13/10 493,756 494,065 Dole Holding Co...................... BTL B3 B 9.44 07/21/10 1,500,000 1,531,875 Keystone Foods Holdings LLC.......... BTL Ba3 B+ 6.19-6.31 06/16/11 1,188,088 1,204,424 Leiner Health Products Group, Inc.... BTL-B B2 B 7.70 05/27/11 498,734 505,124 Meow Mix Co.......................... BTL B2 B+ 7.09 07/01/13 233,516 237,263 Pierre Foods, Inc.................... BTL-B B1 B+ 5.56 06/30/10 796,157 806,772 ----------- 4,779,523 ----------- Broadcasting & Entertainment -- 15.69% Adelphia Communications Corp.(5)..... BTL-B B1 NR 6.31 03/31/06 2,000,000 2,010,000 Cebridge Connections, Inc............ 1st Lien B3 NR 7.25-9.25 02/23/09 689,500 693,809 Cebridge Connections, Inc............ 2nd Lien Caa1 NR 9.77-12.25 02/04/09 1,280,500 1,325,318 Century -- TCI California LP(5)...... Revolver NR NR 7.25 06/30/09 1,000,000 994,750 Century Cable Holdings LLC(5)........ Discretionary BTL Ca NR 9.25 12/31/09 2,500,000 2,443,360 Charter Communications Operating LLC. BTL-B B2 B 7.50 04/27/11 3,942,523 3,957,461 Haights Cross Operating Co........... BTL B3 B- 8.84 08/20/08 1,463,800 1,485,757 Hilton Head Communications LP(5)(10). BTL NR NR 8.50 03/31/08 1,000,000 970,375 HIT Entertainment, Ltd............... 2nd Lien B2 CCC+ 9.71 02/05/13 1,000,000 1,005,125 HIT Entertainment, Ltd............... BTL B1 B 6.46 08/05/15 500,000 502,250 Insight Midwest Holdings LLC......... BTL-C Ba3 BB- 6.56 12/31/09 980,000 993,782 Intelstat Zeus, Ltd.................. BTL B1 B 5.81 07/28/11 992,500 1,003,045 Mediacom Illinois LLC................ BTL-A Ba3 BB- 5.68-5.89 09/30/12 2,000,000 1,999,464 Mission Broadcasting, Inc............ BTL-B Ba3 B+ 6.28 10/01/12 1,213,157 1,221,749 Nexstar Broadcasting, Inc............ BTL-B Ba3 B+ 6.28 10/01/12 1,234,933 1,243,680 NextMedia Operating.................. 2nd Lien Caa1 D 8.87 11/18/12 500,000 506,667 PANAMSAT Corp........................ BTL-B1 Ba3 BB+ 6.44-6.49 08/20/11 4,455,000 4,512,915 Spanish Broadcasting Systems, Inc.... 1st Lien B1 B+ 6.53 06/01/12 992,500 1,007,388 UPC Financing Partnership............ BTL-H B1 B 6.81 09/03/12 2,000,000 2,020,536 WideOpenWest Finance LLC............. BTL-B B2 NR 7.25-7.53 06/22/11 992,443 997,819 Young Broadcasting, Inc.............. BTL B1 B 6.56-6.81 11/02/12 995,000 1,000,442 ----------- 31,895,692 -----------
12 SunAmerica Senior Floating Rate Fund, Inc. PORTFOLIO OF INVESTMENTS -- December 31, 2005 -- (continued)
Ratings/(1)/ ------------ Interest Maturity Principal Value Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2) - ---------------------------------------------------------------------------------------------------------- Buildings & Real Estate -- 5.16% Atrium Cos., Inc.................... BTL B2 CCC+ 7.91-8.28% 12/28/11 $2,414,956 $ 2,394,327 Kyle Acquisition Group LLC.......... BTL Ba3 BB 6.50 07/15/10 500,000 502,813 Masonite International Corp......... BTL B2 BB- 6.21-6.53 04/16/13 1,491,262 1,478,136 Masonite International Corp......... CND TL B2 BB- 6.21-6.53 04/16/13 1,488,726 1,475,622 Palmdale Hills Property LLC......... 1st Lien B1 B+ 7.24 05/01/12 995,000 995,000 Palmdale Hills Property LLC......... 2nd Lien B2 B- 11.74 05/01/12 1,000,000 1,000,000 PGT Industries, Inc................. BTL-A1 B1 B 7.23-7.38 01/29/10 876,090 887,589 Rhodes Homes........................ 1st Lien Ba3 BB- 7.75 11/10/10 243,750 243,750 Spanish Peaks LLC................... Tranche A B1 B+ 4.43 07/29/13 75,000 75,750 Spanish Peaks LLC................... Tranche B B1 B+ 6.72-7.23 07/29/13 170,247 171,949 TCO Funding Corp.................... BTL B2 B- 7.00 10/25/12 1,000,000 1,010,000 Yellowstone Mountain Club........... BTL B1 B+ 6.76 09/30/10 248,933 250,074 ----------- 10,485,010 ----------- Cargo Transport -- 1.39% Hertz Corp.......................... BTL Ba2 BB 6.83-6.96 12/21/12 500,000 506,836 Pacer International, Inc............ BTL B1 NR 5.81-6.25 06/10/10 705,765 711,058 Transport Industries LP............. BTL-B B2 NR 6.56 09/30/12 209,297 210,474 United States Shipping LLC.......... BTL Ba3 NR 6.20 04/30/10 1,381,826 1,399,963 ----------- 2,828,331 ----------- Chemicals, Plastics & Rubber -- 8.35% Basell Finance Co................... BTL-B2 Ba3 B+ 6.91 08/01/13 104,167 105,973 Basell Finance Co................... BTL-B4 Ba3 B+ 6.91 08/01/13 20,833 21,125 Basell Finance Co................... BTL-C2 Ba3 B+ 7.24 08/01/13 104,167 105,973 Basell Finance Co................... BTL-C4 Ba3 B+ 7.24 08/01/13 20,833 21,155 Brenntag Holdings................... BTL B2 B 6.89 12/22/13 250,000 253,386 Celanese AG......................... BTL B1 B+ 6.53 04/06/11 2,596,999 2,626,540 Hercules, Inc....................... BTL-B Ba1 BB 5.86-6.28 10/08/10 884,250 895,524 Hexion Specialty Chemicals, Inc..... Tranche B1 B1 BB- 6.88 05/30/12 835,800 848,337 Hexion Specialty Chemicals, Inc..... Tranche B2 B1 BB- 7.06 05/31/12 1,154,200 1,171,513 Huntsman International LLC.......... BTL-B Ba3 BB- 6.12 08/31/12 3,564,862 3,587,420 Invista B.V......................... BTL-B1 Ba3 BB 6.69 04/29/11 1,322,235 1,336,284 Invista B.V......................... BTL-B2 Ba3 BB 6.69 04/29/11 568,196 574,233 PQ Corp............................. BTL B1 B+ 6.56 02/15/13 744,375 753,369 Rockwood Specialties Group, Inc..... BTL-E B1 B+ 6.22 07/30/12 1,990,000 2,013,786 Wellman, Inc........................ 2nd Lien B2 B- 11.00 02/10/10 2,500,000 2,556,250 Westlake Chemical Corp.............. BTL-B Ba2 NR 6.64 07/23/10 112,500 112,500 ----------- 16,983,368 ----------- Containers, Packaging & Glass -- 3.75% Appleton Papers, Inc................ BTL Ba3 BB 6.33-6.83 06/11/10 1,040,892 1,051,952 Berry Plastics Corp................. BTL B1 B+ 6.45 12/02/11 1,195,326 1,210,891 Boise Cascade Corp.................. BTL-D Ba3 BB 6.16-6.28 10/28/11 839,776 851,848 Captive Plastics, Inc............... BTL B2 B- 7.50 08/10/11 498,750 504,984 Captive Plastics, Inc............... 2nd Lien B3 CCC 11.86 12/15/12 1,000,000 1,000,000 Graham Packaging Co. LP............. Tranche B B2 B 6.38-6.81 04/07/12 2,475,000 2,506,905 Owens-Illinois Group, Inc........... BTL-A1 B1 BB- 6.10 04/01/07 486,733 489,369 ----------- 7,615,949 -----------
13 SunAmerica Senior Floating Rate Fund, Inc. PORTFOLIO OF INVESTMENTS -- December 31, 2005 -- (continued)
Ratings/(1)/ ----------- Interest Maturity Principal Value Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2) - ------------------------------------------------------------------------------------------------------------------------- Diversified/Conglomerate Manufacturing -- 3.38% Accuride Corp................................. BTL-B B1 B+ 6.25-6.75% 01/31/12 $1,507,727 $ 1,522,019 Enersys, Inc.................................. BTL Ba3 BB 6.07-6.68 03/17/11 591,000 598,018 Flowserve Corp................................ BTL Ba3 BB- 6.19-6.50 08/10/12 482,083 488,486 Maxim Crane Works LP.......................... 2nd Lien B3 B+ 9.63 01/31/12 250,000 256,771 Maxim Crane Works LP.......................... BTL B2 BB- 6.88-9.00 01/31/10 374,306 379,608 National Distributing@........................ 2nd Lien B2 B- 10.88 06/16/10 1,000,000 1,002,500 Penn Engineering & Manufacturing Corp......... BTL B2 B 6.89-7.03 05/01/12 416,936 422,147 Ply Gem Industries, Inc....................... BTL B1 B+ 6.16 02/24/11 1,063,629 1,070,277 Ply Gem Industries, Inc....................... CND TL B1 B+ 6.16 03/15/10 183,847 184,996 Polypore, Inc................................. BTL B2 B 7.53 11/12/11 948,547 944,200 ----------- 6,869,022 ----------- Diversified/Conglomerate Service -- 2.58% Billing Concepts, Inc......................... BTL-A B2 B+ 7.38 04/22/10 925,000 938,875 Bridge Information Systems, Inc.+#@(5)(6)..... BTL-B Caa1 NR 10.25 06/30/05 421,180 -- Coinstar, Inc................................. BTL Ba3 BB- 6.10 07/07/11 874,496 883,788 Fidelity National Information Solutions, Inc.. BTL-B Ba3 BB 6.11 03/04/13 762,833 766,774 InfoUSA, Inc.................................. BTL-A Ba3 BB 6.89 03/25/09 677,083 678,776 NES Rentals Holdings, Inc..................... 2nd Lien B3 B 10.21-12.25 07/20/10 1,481,250 1,512,727 Protection One, Inc........................... BTL B2 B+ 7.38-7.39 04/11/11 467,644 472,613 ----------- 5,253,553 ----------- Ecological -- 1.67% Allied Waste North America, Inc............... Tranche A B1 BB 6.03 01/15/12 802,703 807,943 Allied Waste North America, Inc............... BTL B1 BB 6.09-6.39 01/15/12 2,067,516 2,081,143 Wastequip, Inc................................ 2nd Lien B3 B- 10.53 07/15/11 500,000 506,875 ----------- 3,395,961 ----------- Electronics -- 5.10% Amkor Technology, Inc......................... 2nd Lien B2 NR 8.88 10/27/10 1,000,000 1,026,875 Aspect Software............................... 1st Lien B2 B 6.56 09/22/10 250,000 253,125 Eastman Kodak Co.............................. BTL-B1 Ba2 B+ 6.42-6.75 10/15/12 1,000,000 1,002,569 Fairchild Semiconductor Corp.................. BTL-B3 Ba3 BB- 6.31 06/19/08 1,462,725 1,473,695 SSA Global Technologies, Inc.................. BTL-B B2 BB- 6.52 08/02/12 249,375 251,245 Sungard Data Systems, Inc..................... BTL-B B1 B+ 6.81 08/01/13 3,980,000 4,010,885 Targus Group International, Inc............... 2nd Lien B3 NR 12.07 11/22/12 250,000 252,188 UGS Corp...................................... BTL B1 B+ 6.39 03/31/12 2,067,588 2,096,017 ----------- 10,366,599 ----------- Farming & Agriculture -- 0.45% AGCO Corp..................................... BTL Ba1 BB+ 6.28 07/03/09 908,167 918,384 ----------- Healthcare, Education & Childcare -- 7.54% Accellent Corp................................ BTL B2 B+ 6.39 11/18/12 500,000 505,625 AMR/EmCare Holdings........................... BTL B2 B+ 6.56-6.78 02/15/12 709,286 716,379 Community Health Systems, Inc................. BTL Ba3 BB- 6.16 08/19/11 1,312,141 1,330,319 Conmed Corp................................... BTL-C Ba3 NR 6.62 12/15/09 756,431 765,886 DaVita, Inc................................... BTL-B B1 BB- 6.40-6.94 07/30/12 2,875,147 2,917,277 Hanger Orthopedic Group, Inc.................. BTL-B B1 B+ 8.27 09/30/09 977,500 990,941 HealthSouth Corp.............................. LOC Caa2 NR 3.86 03/17/10 925,000 929,915 HealthSouth Corp.............................. BTL Caa2 NR 6.89 03/17/10 1,567,125 1,575,451 Magellan Health Services, Inc................. BTL B1 B+ 6.74 08/15/08 347,222 351,128 Magellan Health Services, Inc................. BTL B1 B+ 4.19 08/15/08 277,778 280,903 Multiplan, Inc................................ BTL Ba3 B+ 7.03 03/04/09 958,333 970,312 Spectrum Labs................................. BTL-B NR NR 7.78 12/20/12 1,000,000 1,007,500 Team Health, Inc.............................. BTL-B B2 B+ 6.88 11/18/12 250,000 252,344 Vanguard Health Holding Co. II................ BTL B2 B 6.77-6.95 09/23/11 990,019 1,003,632 Warner Chilcott Holdings Co................... BTL-B B2 B 7.01-7.28 01/18/12 1,083,632 1,084,115 Warner Chilcott Holdings Co................... BTL-C B2 B 7.28 01/18/12 436,651 436,846 Warner Chilcott Holdings Co................... BTL-D B2 B 7.28 01/18/12 201,720 201,810 ----------- 15,320,383 -----------
14 SunAmerica Senior Floating Rate Fund, Inc. PORTFOLIO OF INVESTMENTS -- December 31, 2005 -- (continued)
Ratings/(1)/ ------------ Interest Maturity Principal Value Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2) - ----------------------------------------------------------------------------------------------------------------- Home & Office Furnishings, Housewares & Durables -- 2.60% Jarden Corp.............................. BTL B1 B+ 6.53% 04/11/12 $1,341,855 $ 1,349,522 Jarden Corp.............................. BTL-B2 B1 B+ 6.28 01/24/12 714,668 717,348 Maax Corp................................ BTL-B B1 B 7.23-7.53 06/04/11 1,044,130 1,038,910 Sealy Mattress Co........................ BTL-D B1 B+ 6.12-6.16 08/06/12 1,240,025 1,254,943 Simmons Co............................... Tranche C B2 B+ 5.75-8.75 12/19/11 913,414 923,832 ----------- 5,284,555 ----------- Hotels, Motels, Inns, & Gaming -- 4.24% CCM Merger, Inc.......................... BTL-B B1 B+ 6.39-6.52 07/13/12 497,500 501,605 Isle of Capri Black Hawk LLC............. BTL B1 B+ 6.11-6.53 10/24/11 498,750 502,802 Isle of Capri Casinos, Inc............... BTL Ba2 BB- 5.89-6.27 02/04/11 297,000 300,341 Kulima Resort Co......................... 2nd Lien B2 CCC+ 10.89 09/30/11 250,000 252,500 Penn National Gaming, Inc................ BTL-B Ba3 BB- 5.97-6.28 06/01/12 1,995,000 2,021,340 Trump Entertainment Resorts Holdings LP.. BTL-B1 B2 BB- 7.17 05/04/12 497,500 504,548 Venetian Casino Resorts LLC.............. Delayed Draw Ba3 BB- 6.28 06/15/11 683,761 688,996 Venetian Casino Resorts LLC.............. BTL-B Ba3 BB- 6.28 06/15/11 3,316,239 3,341,628 Wembley, Inc............................. 1st Lien B1 B+ 6.08 07/18/12 248,750 253,103 Wembley, Inc............................. 2nd Lien B1 B- 7.83 07/18/12 250,000 255,156 ----------- 8,622,019 ----------- Leisure, Amusement, Entertainment -- 6.37% 24 Hour Fitness Worldwide, Inc........... BTL-B B2 B 6.78 06/30/12 2,000,000 2,028,334 Fender Musical Instruments Corp.......... 1st Lien B1 B+ 6.31-6.47 03/31/12 471,890 477,789 Metro-Goldwyn-Mayer Studios, Inc......... BTL-B Ba3 B+ 6.78 04/08/12 3,000,000 3,023,523 Regal Cinemas, Inc....................... BTL Ba2 BB- 6.53 11/10/10 1,428,979 1,446,643 Six Flags Theme Parks, Inc............... BTL-B B1 B- 6.59-6.80 06/30/09 992,443 1,005,557 Southwest Sports Group LLC............... BTL NR NR 7.06 12/22/12 1,000,000 1,012,500 True Temper Sports, Inc.................. BTL B2 B 7.45-9.25 03/15/11 475,180 479,932 WMG Acquisition Corp..................... BTL B2 B+ 6.19-6.59 02/28/11 3,434,493 3,474,972 ----------- 12,949,250 ----------- Mining, Steel, Iron & Nonprecious Metals -- 0.48% Novelis, Inc............................. BTL-B Ba2 BB- 6.01 01/07/12 456,435 461,855 Novelis, Inc............................. CND TL Ba2 BB- 6.01 01/07/12 262,796 265,917 Walter Industries, Inc................... BTL-B Ba3 B+ 6.05-6.53 10/03/12 249,375 252,882 ----------- 980,654 ----------- Oil & Gas -- 3.46% Calumet Lubricants Co. LP................ BTL B2 B 7.84 11/30/12 388,889 391,806 Calumet Lubricants Co. LP................ BTL B2 B 4.33 11/30/12 111,111 111,944 Epco Holdings, Inc....................... BTL-B Ba3 B+ 6.42-6.64 08/18/10 495,000 502,541 Key Energy Services, Inc................. Delayed Draw B1 B- 7.02-7.52 06/30/12 1,000,000 1,014,375 Petrohawk Energy Corp.................... 2nd Lien NR NR 8.88-8.94 02/24/09 1,000,000 1,010,000 Primary Energy Finance LLC............... BTL Ba2 BB- 6.53 08/24/12 498,750 505,296 Targa Resources, Inc..................... LOC Ba3 B+ 4.40 10/31/12 96,774 97,651 Targa Resources, Inc..................... BTL-B Ba3 B+ 6.59-6.78 10/31/12 402,218 405,863 TXOK Acquisition, Inc.................... 2nd Lien B2 NR 8.88 09/21/10 1,000,000 1,012,500 Williams Production RMT Co............... BTL-C Ba3 BB 6.62 05/30/07 1,462,650 1,479,105 Wolf Hollow I LP......................... 2nd Lien B2 B 9.00 12/22/12 500,000 507,500 ----------- 7,038,581 ----------- Personal & Nondurable Consumer Products -- 1.79% American Achievement Corp................ BTL-B B1 B+ 6.92-8.75 03/22/11 852,233 866,081 American Safety Razor Co................. BTL-B B2 B 7.15 02/28/12 928,056 941,976 Bushnell Performance Optics.............. BTL B1 B+ 7.53-9.00 08/19/11 500,000 507,188 Hillman Group, Inc....................... BTL-B B2 B 7.69-9.50 03/31/11 820,833 831,864 Spectrum Brands, Inc..................... BTL-B B2 B 6.17-6.78 02/07/12 496,250 499,869 ----------- 3,646,978 -----------
15 SunAmerica Senior Floating Rate Fund, Inc. PORTFOLIO OF INVESTMENTS -- December 31, 2005 -- (continued)
Ratings/(1)/ ------------ Interest Maturity Principal Value Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2) - -------------------------------------------------------------------------------------------------- Personal, Goods & Misc. Services -- 1.38% Burt's Bees, Inc............. BTL B2 B 7.04-7.44% 03/29/11 $ 496,250 $ 500,282 Maidenform, Inc.............. BTL Ba3 B+ 5.76-6.12 05/11/10 458,333 462,344 Stewart Enterprises, Inc..... BTL-B Ba3 BB 5.77-6.25 11/19/11 473,497 479,712 Worldspan LP................. BTL B2 B 6.81-7.31 02/14/10 1,406,088 1,372,693 ------------ 2,815,031 ------------ Personal Transportation -- 1.51% Delta Air Lines, Inc.(5)..... BTL-C Caa1 B 13.51 10/01/08 1,500,000 1,549,220 Northwest Airlines, Inc.(5).. BTL-A B3 B- 9.56 11/17/09 750,000 756,428 United Airlines, Inc......... Tranche B Ba3 BB- 8.62 07/15/09 747,783 756,351 ------------ 3,061,999 ------------ Printing & Publishing -- 3.95% Affinity Group, Inc.......... BTL Ba3 NR 6.95-6.97 06/30/06 1,190,893 1,202,802 American Lawyers Media, Inc.. 1st Lien B3 B- 7.03 03/14/10 993,744 994,572 Dex Media West LLC........... BTL-B Ba2 BB 5.87-6.28 03/09/10 1,054,103 1,061,110 FSC Acquisition LLC.......... BTL B2 B 6.33-6.69 08/01/12 443,667 445,516 Journal Register Co.......... Tranche B Ba2 BB+ 5.55-5.74 08/12/12 1,000,000 1,006,094 Liberty Group Publishing, 6.63 Inc........................ BTL-B B1 B+ 02/28/12 490,047 494,794 New Publications, Inc........ 2nd Lien B3 CCC+ 10.90 02/05/13 250,000 229,583 Primedia, Inc................ BTL-B B2 B 6.56 12/31/09 1,098,095 1,081,486 R.H. Donnelly, Inc........... BTL-D Ba3 BB 5.81-6.28 06/30/11 1,514,171 1,523,271 ------------ 8,039,228 ------------ Retail Stores -- 2.48% Alimentation Couche-Tard, 6.19 Inc........................ BTL Ba2 BB 12/17/10 601,531 609,050 Eddie Bauer, Inc............. BTL-B Ba3 B+ 7.12-9.00 06/21/11 995,000 968,881 Jean Coutu Group, Inc........ BTL-B B2 BB- 6.50 07/30/11 1,452,662 1,468,298 Linens'n Things, Inc......... BTL NR NR 1.50 11/30/06 1,000,000 990,000 Neiman-Marcus Group, Inc..... BTL B1 B+ 6.95 04/15/13 1,000,000 1,009,183 Quality Stores, Inc. 9.75 (Central Tractor)+#@(5)(7). BTL-B Caa2 NR 04/30/06 846,495 -- ------------ 5,045,412 ------------ Telecommunications -- 4.92% Centennial Cellular 6.45-6.83 Operating Co............... BTL B2 B- 02/09/11 1,375,000 1,393,369 Cricket Communications, Inc.. BTL-B B1 B- 7.03 12/20/10 1,980,000 2,004,502 FairPoint Communications, 6.31 Inc........................ BTL B1 BB- 02/07/12 1,000,000 1,004,125 Hawaiian Telecom 6.78 Communications, Inc........ BTL-B B1 B+ 10/31/12 1,000,000 1,006,875 Madison River Capital LLC.... BTL-B B1 B+ 6.59 08/01/12 750,000 761,485 Ntelos, Inc.................. 1st Lien B1 B 6.89 08/31/11 1,485,000 1,497,623 Ntelos, Inc.................. 2nd Lien B2 B 9.39 02/28/12 500,000 504,375 Syniverse Holding LLC........ BTL-B Ba3 BB- 6.28 02/01/12 1,558,323 1,579,750 Time Warner Telecom 6.92-7.11 Holdings, Inc.............. BTL-B B1 B 11/30/10 250,000 254,479 ------------ 10,006,583 ------------ Textiles & Leather -- 0.21% Globe Manufacturing 10.00 Corp.+#@(5)(7)............. BTL-B Caa2 NR 08/15/06 837,014 -- William Carter Co............ BTL-B B1 BB 5.65-5.81 07/14/12 430,032 435,049 ------------ 435,049 ------------ Utilities -- 3.26% Allegheny Energy Supply Co... BTL-C Ba2 BB 5.76-6.41 03/08/11 387,717 392,644 Calpine Corp.(5)............. 2nd Lien NR D 9.90 07/16/07 3,433,623 2,760,633 Cheniere LNG Holdings LLC.... BTL Ba2 BB 6.95 08/30/12 249,375 251,869 Cogentrix Deleware Holdings, 6.28 Inc........................ BTL Ba2 BB+ 04/13/12 561,698 567,725 Complete Production 7.28 Services, Inc.............. BTL-B NR B 08/01/12 249,375 252,375 La Paloma Generating Co...... BTL Ba3 BB- 6.28 08/16/12 15,482 15,652 La Paloma Generating Co...... LOC Ba3 BB- 6.11 08/16/12 32,787 33,148 La Paloma Generating Co...... 2nd lien B2 B 8.03 08/16/13 250,000 253,985 La Paloma Generating Co...... BTL-B Ba3 BB- 6.28 08/16/12 194,394 196,532 Reliant Energy, Inc.......... BTL B1 B+ 6.64-6.92 10/01/10 1,000,000 998,750 Reliant Energy Resources, 6.09-6.57 Inc........................ BTL B1 B+ 03/15/07 916,012 914,867 ------------ 6,638,180 ------------ Total Loans (Cost $202,488,708)............................... 201,776,616 ------------
16 SunAmerica Senior Floating Rate Fund, Inc. PORTFOLIO OF INVESTMENTS -- December 31, 2005 -- (continued)
Principal Value Industry Description Amount/Shares (Note 2) -------------------------------------------------------------------- CORPORATE BONDS -- 0.48% Broadcasting & Entertainment -- 0.48% Paxson Communications Corp.*(8) 10.78% due 01/15/13 (Cost $980,000)......... $1,000,000 $ 980,000 ------------ COMMON STOCK -- 0.13% Oil & Gas -- 0.09% Shaw Group, Inc.+...................... 6,276 182,569 ------------ Telecommunications -- 0.04% Global Crossing, Ltd.+................. 175 2,805 SAVVIS Communications Corp.+........... 94,695 71,021 ------------ 73,826 ------------ Total Common Stock (Cost $224,016)..... 256,395 ------------ Total Long-Term Investment Securities (Cost $203,692,724).................. 203,013,011 ------------ SHORT-TERM INVESTMENT SECURITIES -- 4.83% Registered Investment Companies -- 4.83% SSgA Money Market Fund (Cost $9,814,805).......................... 9,814,805 9,814,805 ------------ TOTAL INVESTMENTS -- 104.68%............ (Cost $213,507,529)(9)................. 212,827,816 Liabilities in Excess of Other Assets -- (4.68)%............................. (9,513,940) ------------ NET ASSETS -- 100.00%................... $203,313,876 ============
- -------- BTL Bank Term Loan CND TLCanadian Term Loan LOC Letter of Credit NR Security is not rated. + Non-income producing security @ Illiquid security. At December 31, 2005, the aggregate value of these securities was $1,925,000, representing 0.95% of net assets. # Fair valued security (see Note 2) * Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no rights to demand registration of these securities. At December 31, 2005, the aggregate value of these securities was $980,000 representing 0.48% of net assets. Unless otherwise indicated, these securities are not considered to be illiquid. (1) Bank loans rated below Baa by Moody's Investor Service, Inc. or BBB by Standard & Poor's Group are considered below investment grade. Ratings are unaudited. Ratings provided are as of December 31, 2005. (2) Loans in the Fund's portfolio are generally subject to mandatory and/or optional prepayment. Because of these mandatory prepayment conditions and because there may be significant economic incentives for a Borrower to prepay, prepayments may occur. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. The Fund estimates that the maturity of the Loans held in its portfolio will be approximately 63 months. (3) The Fund invests in Senior Loans which generally pay interest at rates which are periodically re-determined by reference to a base lending rate plus a premium. These base lending rates are generally either the lending rate offered by one or more major European banks, such as the London Inter- Bank Offer Rate ("LIBOR") or the prime rate offered by one or more major United States banks, or the certificate of deposit rate. Senior Loans are generally considered to be restrictive in that the Fund is ordinarily contractually obligated to receive approval from the Agent Bank and/or borrower prior to the disposition of a Senior Loan. (4) All loans in the portfolio were purchased through assignment agreements unless otherwise indicated. (5) Company has filed for Chapter 11 bankruptcy protection. (6) Bond is in default and did not pay principal at maturity. Final outcome of Chapter 11 bankruptcy still to be determined. (7) Loan is in default of interest payments. (8) Floating rate security where the rate fluctuates. The rate moves up or down at each reset date. The rate reflected is as of December 31, 2005. (9) See Note 6 for cost of investments on a tax basis. (10) Loan was purchased through a participation agreement. See Notes to Financial Statements 17 SunAmerica Senior Floating Rate Fund, Inc. NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 Note 1. Organization of the Fund The SunAmerica Senior Floating Rate Fund, Inc. (the "Fund"), is a non-diversified closed-end, investment management company. The Fund is organized as a Maryland corporation and is registered under the Investment Company Act of 1940, as amended. The Fund is managed by AIG SunAmerica Asset Management Corp. (the "Adviser" or "SAAMCo"), an indirect wholly-owned subsidiary of American International Group, Inc. ("AIG"). The Fund's investment objective is to provide as high a level of current income as is consistent with the preservation of capital by investing primarily in senior secured floating rate loans and other institutionally traded senior secured floating rate debt obligations. The Fund offers three classes of shares. Class B shares are offered for sale at net asset value without a front-end sales charge but are subject to an Early Withdrawal Charge which declines from 3% during the first year after purchase to zero after the fourth year. Class C shares are offered for sale at net asset value without a front-end sales charge, but are subject to an Early Withdrawal Charge of 1% during the first year after purchase. Class D shares are offered for sale at net asset value without a front-end sales charge and no Early Withdrawal Charge. Class D shares are available only to investors participating in a fee-based investment advisory program (such as a "wrap" program) or agency commission program or to CypressTree Investors. Class A shares are not currently offered for sale to the public and are available only through a conversion of Class B shares after being held by the shareholders for approximately eight years. Class C shares do not have a conversion feature (except that Class C shares purchased before August 18, 1999 will automatically convert to Class A shares ten years after purchase). The share classes differ in their respective distribution and service fees. All classes have equal rights to assets and voting privileges. Indemnifications: Under the Fund's organizational documents, its officers and directors are indemnified against certain liability arising out of the performance of their duties to the Fund. In addition, in the normal course of business the Fund enters into contracts that may contain the obligation to indemnify others. The Fund's maximum exposure under these arrangements is unknown. Currently, however, the Fund expects the risk of loss to be remote. Note 2. Significant Accounting Policies The preparation of financial statements in accordance with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements: Security Valuation: The Fund's investments in loan interests ("Loans") are valued in accordance with guidelines established by the Board of Directors. Under the Fund's current guidelines, Loans for which an active secondary market exists to a reliable degree will be valued at the mean of the last available bid and asked prices in the market for such Loans, as provided by a Board-approved loan pricing service. Loans for which an active secondary market does not exist to a reliable degree will be valued at fair value, which is intended to approximate market value. In valuing a Loan at fair value, the following factors will be considered, (a) the creditworthiness of the borrower and any intermediate participants, (b) the terms of the Loan, (c) recent prices in the market for similar Loans, if any, and (d) recent prices in the market for instruments of similar quality, rate, and period until next interest rate reset and maturity. Stocks are generally valued based upon closing sales prices reported on recognized securities exchanges. Stocks listed on the NASDAQ are valued using the NASDAQ Official Closing Price ("NOCP"). Generally, the NOCP will be the last sale price unless the reported trade for the stock is outside the range of the bid/ask price. In such cases, the NOCP will be normalized to the nearer of the bid or ask price. For listed securities having no sales reported and for unlisted securities, such securities will be valued based upon the last reported bid price. Non-convertible bonds and debentures, other long-term debt securities, and short-term debt securities with maturities in excess of 60 days, are valued at bid prices obtained for the day of valuation from a bond pricing service, when such prices are available. If a vendor quote is unavailable the securities may be priced at the mean of two independent quotes obtained from brokers. Securities for which market quotations are not readily available are valued as determined pursuant to procedures adopted in good faith by the Board of Directors. Short-term securities with 60 days or less to maturity are amortized to maturity based on their cost to the Fund if acquired within 60 days of 18 SunAmerica Senior Floating Rate Fund, Inc. NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued) maturity or, if already held by the Fund on the 60/th/ day, are amortized to maturity based on the value determined on the 61/st/ day. Securities for which market quotations are not readily available or if a development/significant event occurs that may significantly impact the value of the security, then these securities are valued, as determined pursuant to procedures adopted in good faith by the Board of Directors. The Senior Loans in which the Fund primarily invests are generally not listed on any exchange and the secondary market for those senior Loans is comparatively illiquid relative to markets for other fixed income securities. Consequently, obtaining valuations for those Loans may be more difficult than obtaining valuations for actively traded securities. Thus, the value upon disposition on any given Loan may differ from its current valuation. Repurchase Agreements: The Fund may enter into repurchase agreements. The Fund's custodian takes possession of the collateral pledged for investments in repurchase agreements. The underlying collateral is valued daily on a mark to market basis to ensure that the value, including accrued interest, is at least 102% of the repurchase price. In the event of default of the obligation to repurchase, the Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited. At December 31, 2005, the Fund did not enter into any repurchase agreements. Securities Transactions, Investment Income, Expenses, Dividends and Distributions to Shareholders: Security transactions are recorded on a trade date basis. Realized gains and losses on sales of investments are calculated on the identified cost basis. Interest income is accrued daily except when collection is not expected. Dividend income is recorded on the ex-dividend date. For financial statement purposes, the Fund amortizes all premiums and accretes all discounts. Facility fees received, which were $98,243 for the period ended December 31, 2005, are amortized as income over the stated life of the Loans. Other income, including amendment fees, commitment fees, letter of credit fees, etc., which were $360,762 for the period ended December 31, 2005, are recorded as income when received or contractually due to the Fund. Net investment income, other than class specific expenses, and realized and unrealized gains and losses, are allocated daily to each class of shares based upon the relative net asset value of outstanding shares of each class of shares at the beginning of the day (after adjusting for the current capital share activity of the respective class). Interest earned on cash balances held at the custodian are shown as custody credits on the statement of operations. Dividends from net investment income are normally declared daily and paid monthly. Capital gain distributions, if any, are paid annually. The Fund records dividends and distributions to the shareholders on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts at fiscal year end based on their federal tax-basis treatment; temporary differences do not require reclassification. Net investment income/loss, net realized gain/loss, and net assets are not affected. The Fund intends to comply with the requirements of the Internal Revenue Code, as amended, applicable to regulated investment companies and distribute all of its taxable income, including any net realized gain on investments, to its shareholders. Therefore, no federal tax provision is required. Statement of Cash Flows: Information on financial transactions which have been settled through the receipt or disbursement of cash is presented in the Statement of Cash Flows. The cash amount shown in the Statement of Cash Flows is the amount included in the Fund's Statement of Assets and Liabilities and represents cash on hand at its custodian bank account, and does not include any short-term investments at December 31, 2005. 19 SunAmerica Senior Floating Rate Fund, Inc. NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued) Note 3. Capital Share Transactions The Fund has 1,000,000,000 of $.01 par value shares authorized that may be issued in four different classes. Transactions in capital shares of each class were as follows:
For the For the period year ended April 28, 2004**- December 31, 2005 December 31, 2004 ------------------------- ------------------------- Shares Amount Shares Amount Class A ---------- ------------ ---------- ------------ Shares sold................. 20,621@ $ 194,088@ 23,650* $ 222,806* Reinvested distributions.... 1,003 9,426 391 3,681 Shares repurchased.......... (2,715) (25,453) (202) (1,902) ---------- ------------ ---------- ------------ Net increase (decrease).. 18,909 $ 178,061 23,839 $ 224,585 ========== ============ ========== ============ For the For the year ended year ended December 31, 2005 December 31, 2004 ------------------------- ------------------------- Shares Amount Shares Amount Class B ---------- ------------ ---------- ------------ Shares sold................. 254,487 $ 2,391,460 649,863 $ 6,108,232 Reinvested distributions.... 84,193 791,345 60,214 566,344 Shares repurchased.......... (581,114)@ (5,462,413)@ (633,762)* (5,961,214)* ---------- ------------ ---------- ------------ Net increase (decrease).. (242,434) $ (2,279,608) 76,315 $ 713,362 ========== ============ ========== ============ For the For the year ended year ended December 31, 2005 December 31, 2004 ------------------------- ------------------------- Shares Amount Shares Amount Class C ---------- ------------ ---------- ------------ Shares sold................. 3,815,180 $ 35,893,397 11,042,355 $103,837,676 Reinvested distributions.... 480,086 4,512,412 300,723 2,828,393 Shares repurchased.......... (6,375,191) (59,926,283) (3,917,703) (36,835,107) ---------- ------------ ---------- ------------ Net increase (decrease).. (2,079,925) $(19,520,474) 7,425,375 $ 69,830,962 ========== ============ ========== ============ For the For the year ended year ended December 31, 2005 December 31, 2004 ------------------------- ------------------------- Shares Amount Shares Amount Class D ---------- ------------ ---------- ------------ Shares sold................. 923,576 $ 8,679,305 1,986,376 $ 18,679,110 Reinvested distributions.... 101,255 951,642 59,527 559,853 Shares repurchased.......... (1,494,315) (14,065,813) (544,090) (5,117,136) ---------- ------------ ---------- ------------ Net increase (decrease).. (469,484) $ (4,434,866) 1,501,813 $ 14,121,827 ========== ============ ========== ============
- -------- @ Includes automatic conversion of 20,621 shares of Class B shares in the amount of $194,088 to 20,621 shares of Class A shares in the amount of $194,088. * Includes automatic conversion of 13,025 shares of Class B shares in the amount of $122,726 to 13,025 shares of Class A shares in the amount of $122,726. ** Inception date of class. In order to provide shareholders with liquidity and the ability to receive net asset value on a disposition of shares, the Fund will make monthly offers to repurchase a percentage (usually 10%) of outstanding shares at net asset value. Shareholders are sent a Notification of Repurchase Offer seven to fourteen days before each monthly repurchase offer. During the period ended December 31, 2005, the Fund made twelve Repurchase Offers, and redeemed the amounts shown in the table below. In no case was a monthly Repurchase Offer oversubscribed.
Amount Tendered Amount Tendered --------------------- ------------------- Shares Amount Shares Amount --------- ----------- ------- ----------- January. 661,676 $ 6,232,968 July..... 884,668 $ 8,315,784 February 1,170,031 11,044,512 August... 526,903 4,964,450 March... 608,742 5,746,522 September 679,591 6,388,689 April... 1,011,550 9,498,612 October.. 374,146 3,513,277 May..... 553,973 5,179,654 November. 644,785 6,054,515 June.... 793,654 7,436,496 December. 543,616 5,104,483
20 SunAmerica Senior Floating Rate Fund, Inc. NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued) Note 4. Purchases And Sales Of Securities During the period ended December 31, 2005, the Fund's cost of purchases of Loans and proceeds from Loan sales were $208,085,718 and $122,164,302, respectively. Note 5. Investment Advisory Agreement And Other Transactions With Affiliates The Fund currently maintains an Investment Advisory Agreement with SAAMCo, who oversees the administration of certain aspects of the business and affairs of the Fund, and selects, contracts with and compensates the subadviser to manage the Fund's assets. The Fund will pay SAAMCo a monthly advisory fee at the following annual rates, based on the average daily net assets of the Fund: 0.85% on the first $1 billion; 0.80% on the next $1 billion; and 0.75% thereafter. For the period ended December 31, 2005, SAAMCo received advisory fees in the amount of $1,878,221. American International Group Global Investment Corp. ("AIGGIC") acts as subadviser to the Fund pursuant to a Subadvisory Agreement with SAAMCo. Under the Subadvisory Agreement, AIGGIC manages the investment and reinvestment of the Fund's assets. As compensation for its services as subadviser, AIGGIC is entitled to receive from SAAMCo an annual fee paid monthly equal to the following percentage of average daily net assets: 0.25% for the first $1 billion of average daily net assets; 0.20% for average daily net assets of more than $1 billion. AIGGIC received $552,418 as compensation for its services. The fee paid to the subadviser is paid by SAAMCo. SAAMCo acts as the Fund's administrator under an Administration Agreement and is responsible for managing the Fund's business affairs, subject to supervision by the Fund's Board of Directors. For its services, SAAMCo receives an annual fee equal to 0.40% of average daily net assets of the Fund. For the period ended December 31, 2005, SAAMCo received administration fees in the amount of $883,869. The Fund has adopted Distribution Plans ("Plans") applicable to Class A, Class B and C shares to use the assets attributable to that class of shares of the Fund to finance certain activities relating to the distribution of shares to investors. The Plans are compensation plans providing for the payment to AIG SunAmerica Capital Services, Inc. ("SACS"), of a fixed percentage of 0.50% of average net assets to finance distribution expenses for Class B and Class C, and 0.25% of average net assets to finance service fees for Class A, Class B and Class C. For the period ended December 31, 2005 SACS received distribution fees of $1,468,197. In addition, SACS receives the proceeds of early withdrawal charges paid by investors in connection with certain redemptions of Class B and Class C shares. For the period ended December 31, 2005, SACS received early withdrawal charges of $143,432. For the period ended December 31, 2005 SACS voluntarily waived fees for the following classes: Class A $176, Class B $66,760, and Class C $422,337. SAAMCo contractually agreed to waive fees or reimburse expenses, if necessary, at or below 1.75% for Class B and Class C average net assets. The expense reimbursements and fee waivers will continue indefinitely, subject to termination by the Directors, including a majority of the Independent Directors. SAAMCo voluntarily agreed to waive fees or reimburse expenses, if necessary, at or below 1.45% for Class A and 1.25% for Class D average net assets. The expense waiver and fee reimbursement will continue indefinitely, but may be terminated at any time. For the period ended December 31, 2005, SAAMCo waived fees and reimbursed expenses as follows: Class A $9,859, Class B $99,925, Class C $522,525, and Class D $86,559. Note 6. Federal Income Taxes The following details the tax basis distributions as well as the components of distributable earnings. The tax basis components of distributable earnings differ from the amounts reflected in the Statement of Assets and Liabilities by temporary book/tax differences primarily arising from wash sales, retirement pension expense, dividends payable and treatment of defaulted securities.
Distributable Earnings Tax Distributions - ---------------------------------------- ------------------------------------------------------------------------- For the year ended December 31, 2005 For the year ended December 31, 2005 For the year ended December 31, 2004 - ---------------------------------------- ------------------------------------ ------------------------------------ Long-term Gains/ Unrealized Long-term Long-term Ordinary Capital Loss Appreciation Ordinary Capital Ordinary Capital Income Carryover (Depreciation) Income Gains Income Gains - -------- ---------------- -------------- ---------- --------- ---------- --------- $ -- $(27,697,156) $(680,069) $9,746,310 $ -- $6,107,401 $ --
21 SunAmerica Senior Floating Rate Fund, Inc. NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued) Capital Loss Carryforwards. At December 31, 2005 capital loss carryforwards available to offset future recognized gains were $27,697,156, with $329,673 expiring in 2007, $1,179,134 expiring in 2008, $9,997,029 expiring in 2009, $7,736,363 expiring in 2010, $4,956,144 expiring in 2011, and $3,498,813 expiring in 2012. During the year ending December 31, 2005, the Senior Floating Rate Fund utilized $14,305 of capital loss carry forwards to offset current year capital gains. Unrealized appreciation and depreciation in the value of investments at December 31, 2005 for federal income tax purposes were as follows: Cost (tax basis)............................................ $213,507,885 ============ Gross unrealized appreciation............................... $ 1,918,453 Gross unrealized depreciation............................... (2,598,522) ------------ Net unrealized depreciation................................. $ (680,069) ============
Note 7. Director Retirement Plan The Directors of the SunAmerica Senior Floating Rate Fund, Inc. have adopted the AIG SunAmerica Disinterested Trustees' and Directors' Retirement Plan ("Retirement Plan") for the unaffiliated Directors. The Retirement Plan provides generally that if an unaffiliated Director who has at least 10 years of consecutive service as a Disinterested Director of any of the AIG SunAmerica mutual funds (an "Eligible Director") retires after reaching age 60 but before age 70, or who has at least 5 years of consecutive service after reaching age 65 but before age 70, or dies while a Director, such person will be eligible to receive a retirement or death benefit from each AIG SunAmerica mutual fund with respect to which he or she is an Eligible Director. As of each birthday, prior to the 70th birthday, but in no event for a period greater than 10 years, each Eligible Director will be credited with an amount equal to 50% of his or her regular fees (excluding committee fees) for services as a Disinterested Director of each AIG SunAmerica mutual fund for the calendar year in which such birthday occurs. In addition, an amount equal to 8.50% of any amounts credited under the preceding clause during prior years, is added to each Eligible Director's account until such Eligible Director reaches his or her 70th birthday. An Eligible Director may elect to receive any benefits payable under the Retirement Plan, at his or her election either in one lump sum or in up to fifteen annual installments. Any undistributed amounts continue to accrue interest at 8.50% per year. As of December 31, 2005, the Fund had accrued $11,744 for the Retirement Plan, which is included in Directors' fees and expenses line on the Statement of Assets and Liabilities and for the period ended December 31, 2005, expensed $4,227 for the Retirement Plan, which is included in Directors' fees and expenses line on the Statement of Operations. Note 8. Line of Credit The Fund currently has an agreement with State Street Bank & Trust Company that provides a $20,000,000 committed unsecured Line of Credit to the Fund which will be used for cash overdraft protection. Interest is currently payable at the Federal Funds rate plus 50 basis points. There is also a commitment fee of 10 basis points per annum on the daily unused portion of the line of credit which is included in other expenses on the Statement of Operations. For the period ended December 31, 2005, the Fund had borrowings outstanding for 3 days under the line of credit and incurred $100 in interest charges related to these borrowings. The Fund's average amount of debt under the line of credit for the days utilized was $266,775 at a weighted average interest rate of 4.50%. At December 31, 2005, there were no borrowings outstanding. Note 9. Interfund Leading Agreement Pursuant to the exemptive relief granted by the Securities and Exchange Commission, the Fund is permitted to participate in an interfund lending program among investment companies advised by SAAMCo or an affiliate. The interfund lending program allows the participating funds to borrow money from and lend money to each other for temporary or emergency purposes. An interfund loan will be made under this facility only if the participating Funds 22 SunAmerica Senior Floating Rate Fund, Inc. NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued) receive a more favorable interest rate than would otherwise be available from a typical bank for a comparable transaction. For the period ended December 31, 2005, the Fund did not participate in this program. Note 10. Investment Concentration The Fund invests primarily in participations and assignments, or acts as a party to the primary lending syndicate of a Variable Rate Senior Loan interest to United States corporations, partnerships, and other entities. If the lead lender in a typical lending syndicate becomes insolvent, enters receivership or, if not FDIC insured, enters into bankruptcy, the Fund may incur certain costs and delays in receiving payment, or may suffer a loss of principal and/or interest. When the Fund purchases a participation of a Senior Loan interest, the Fund typically enters into a contractual agreement with the lender or other third party selling the participation, but not with the borrower directly. As such, the Fund assumes the credit risk of the Borrower, Selling Participant or other persons positioned between the Fund and the Borrower. Note 11. Unfunded Loan Commitments On December 31, 2005, the Fund had the following unfunded loan commitments which could be extended at the option of the Borrower:
Maturity Name Type Date Amount - ---- ---------------------- -------- ---------- FSC Acquisition LLC..................... Delayed Draw Term Loan 08/01/12 $ 52,980 NRG Energy, Inc......................... Bridge Loan 02/01/13 1,000,000 Trump Entertainment Resorts Holdings LP. Delayed Draw Term Loan 05/20/12 497,500 Warner Chilcott Corp.................... Delayed Draw Term Loan 06/30/06 44,164 Warner Chilcott Corp.................... Delayed Draw Term Loan 01/18/12 220,820 WMG Acquisition Corp.................... Revolver 02/28/10 500,000
Note 12. Other Information On February 9, 2006, American International Group, Inc. ("AIG"), the parent company and an affiliated person of AIG SunAmerica Asset Management Corp. ("Adviser"), AIG SunAmerica Capital Services, Inc., the distributor of the Fund ("Distributor), and AIG Global Investment Corp., the subadviser to the Fund ("AIGGIC"), announced that it had consented to the settlement of an injunctive action instituted by the Securities and Exchange Commission ("SEC"). In its complaint, the SEC alleged that AIG violated Section 17(a) of the Securities Act of 1933, as amended, Sections 10(b), 13(a), 13(b)(2) and 13(b)(5) of the Securities Exchange Act of 1934, as amended, and Rules 10b-5, 12b-20, 13a-1 and 13b2-1 promulgated thereunder, in connection with AIG's accounting and public reporting practices. The conduct described in the complaint did not involve any conduct of AIG or its subsidiaries related to their investment advisory or distribution activities with respect to the assets of the Fund. AIG, without admitting or denying the allegations in the complaint (except as to jurisdiction), consented to the entry of an injunction against further violations of the statutes referred to above. Absent exemptive relief granted by the SEC, the entry of such an injunction would prohibit AIG and its affiliated persons from, among other things, serving as an investment adviser of any registered investment management company or principal underwriter for any registered open-end investment company pursuant to Section 9(a) of the Investment Company Act of 1940, as amended ("1940 Act"). Certain affiliated persons of AIG, including the Adviser, received a temporary order from the SEC pursuant to Section 9(c) of the 1940 Act with respect to the entry of the injunction, granting exemptive relief from the provisions of Section 9(a) of the 1940 Act. The temporary order permits AIG and its affiliated persons, including AIG's investment management subsidiaries, to serve as investment adviser, sub-adviser, principal underwriter or sponsor of the Fund. The Adviser expects that a permanent exemptive order will be granted, although there is no assurance the SEC will issue the order. 23 SunAmerica Senior Floating Rate Fund, Inc. NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued) Additionally, AIG and its subsidiaries reached a resolution of claims and matters under investigation with the United States Department of Justice ("DOJ"), the Attorney General of the State of New York ("NYAG") and the New York State Department of Insurance ("DOI"), regarding accounting, financial reporting and insurance brokerage practices of AIG and its subsidiaries, as well as claims relating to the underpayment of certain workers compensation premium taxes and other assessments. As a result of the settlements with the SEC, the DOJ, the NYAG and the DOI, AIG will make payments totaling approximately $1.64 billion. In addition, as part of its settlements, AIG has agreed to retain for a period of three years an Independent Consultant who will conduct a review that will include the adequacy of AIG's internal controls over financial reporting and the remediation plan that AIG has implemented as a result of its own internal review. Subject to receipt of permanent relief, the Adviser, Distributor and AIGGIC believe that the settlements are not likely to have a material adverse effect on their ability to perform their respective investment advisory or distribution services relating to the Fund. Note 13. Subsequent Events At a meeting held on February 21, 2006, the Board of Directors of the Fund approved a proposal to convert the Fund from its current status as a closed-end investment company into an open-end investment company (the "Conversion") and certain related matters, subject to approval by shareholders at a meeting to be held in the future. 24 SunAmerica Senior Floating Rate Fund, Inc. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of SunAmerica Senior Floating Rate Fund, Inc.: In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations, of changes in net assets and of cash flows and the financial highlights present fairly, in all material respects, the financial position of SunAmerica Senior Floating Rate Fund, Inc. (the "Fund") at December 31, 2005, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2005 by correspondence with the custodian, brokers, and selling or agent banks, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Houston, TX February 24, 2006 25 SunAmerica Senior Floating Rate Fund, Inc. APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2005 -- (unaudited) Annual Approval of the Advisory Agreement and Subadvisory Agreements The Board of Directors (the "Board"), including the Directors that are not interested persons of the SunAmerica Senior Floating Rate Fund, Inc. (the "Fund") (the "Disinterested Directors"), last approved the Investment Advisory and Management Agreement between the Fund and AIG SunAmerica Asset Management Corp. ("SAAMCo") (the "Advisory Agreement") for a period of one year, at a meeting held on August 31, 2005. At this same meeting, the Board also approved the renewal of the subadvisory agreement between SAAMCo and AIG Global Investment Company ("AIGGIC" or the "Subadviser") with respect to the Fund (the "Subadvisory Agreement"). The Board noted that the discussion and approval of the Advisory Agreement and Subadvisory Agreement at the August 31, 2005 meeting was the culmination of numerous discussions and meetings that had taken place in recent months. The Board further noted that certain members of the Board had met with senior management on numerous occasions and had in-depth discussions regarding the Fund's performance, advisory expenses and other fees and negotiations with respect to advisory expenses. In accordance with Section 15(c) of the Investment Company Act of 1940, as amended (the "1940 Act"), the Board was provided with materials relating to its consideration of the Advisory Agreement. These materials assisted the Board in analyzing: (1) the nature, extent and quality of services to be provided by SAAMCo and the Subadviser, including administrative and shareholder services to be provided by SAAMCo and certain other affiliated companies; (2) the costs of services to be provided and benefits realized by SAAMCo and the Subadviser, including a comparison of fees and expense ratios of other similar funds, as well as SAAMCo's profitability and financial condition; (3) the terms of the Advisory Agreement and Subadvisory Agreement; (4) economies of scale and whether the fee levels reflect these economies of scale; (5) SAAMCo's overall organization, compliance policies and history, as well as the Subadviser's compliance policies and history; and (6) the investment performance of the Fund in its peer group ("Peer Group") as determined by Lipper, Inc. ("Lipper") and as compared to their relevant benchmarks and indices. Experienced counsel that is independent of SAAMCo provided advice to the Disinterested Directors ("Independent Counsel"). The Disinterested Directors considered additional information, such as expense and other comparative data from Lipper. In considering these factors, as described in more detail below, the Board did not identify any single factor or group of factors as being more important than the others, but considered all factors together. Nature, Extent and Quality of Services The Board, including the Disinterested Directors, considered the nature, quality and extent of services to be provided by SAAMCo. In making its evaluation, the Board considered that SAAMCo acts as investment manager and adviser to the Fund, manages the daily business affairs of the Fund, and obtains and evaluates economic, statistical and financial information to formulate and implement investment policies. Additionally, SAAMCo provides office space, accounting, legal, compliance, clerical and administrative services (exclusive of, and in addition to, overseeing of any such service provided by any others retained by the Fund), and has authorized its officers and employees, if elected, to serve as officers or directors of the Fund without compensation. Finally, SAAMCo is responsible for monitoring and reviewing the activities of third-party service providers. In making their determination regarding the nature and quality of SAAMCo's services, the Directors considered SAAMCo's responsibility to provide and supervise the activities of all administrative and clerical personnel required to provide effective administration of the Fund. The Board also reviewed the performance of the Fund, the details of which are described below. The Board also reviewed the compliance and administrative services of SAAMCo. The Board noted that SAAMCo provides and compensates a Chief Compliance Officer for the Fund, and that SAAMCo maintains a compliance staff of eight people. The Board analyzed the structure and duties of SAAMCo's accounting, legal and compliance departments and concluded that they were adequate to meet the needs of the Fund. SAAMCo has delegated daily investment management responsibilities to AIGGIC. Therefore, the Board also considered the nature, quality and extent of services to be provided by the Subadviser. The Board considered that the Subadviser is responsible for providing investment management services, including investment research, advice and supervision, and 26 SunAmerica Senior Floating Rate Fund, Inc. APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2005 -- (unaudited) (continued) determining which securities will be purchased or sold by the Fund. The Board reviewed each Subadviser's history, structure and size, visibility and resources, which are needed to attract and retain highly qualified investment professionals. With respect to administrative services to be provided by the Subadviser, the Board considered that each Subadviser provides assistance in general marketing assistance and has developed internal procedures for monitoring compliance with investment objectives, policies and restrictions of the Fund as set forth in the prospectus. The Board concluded that it was satisfied with the nature, quality and extent of the services provided by or to be provided by SAAMCo and the Subadviser and that there was a reasonable basis on which to conclude that SAAMCo and the Subadviser would continue to provide a high quality of investment management services. Fees and Expenses The Board, including the Disinterested Directors, reviewed information regarding the fees paid by the Fund to SAAMCo for investment advisory and management services. The Board examined this information in order to determine the reasonableness of the fees in light of the nature and quality of SAAMCo's services and any additional benefits received by SAAMCo or its affiliates in connection with providing such services to the Fund. To assist in analyzing the reasonableness of the fees, the Board received reports prepared independently by Lipper detailing comparative advisory fee and other information of the Fund's Peer Group as determined objectively by Lipper, and rankings within the relevant Lipper categories. The Board also received reports prepared by SAAMCo (including reports on investment management fees charged by SAAMCo to other funds it manages) and by the Board's Independent Counsel. In considering the reasonableness of the advisory fee, the Board reviewed a number of expense comparisons, including: (i) contractual management fees; (ii) actual total expenses; and (iii) actual and allowable Rule 12b-1 and non-12b-1 fees. The Board also took into account that certain fee arrangements included breakpoints that will adjust the fee downward as the size of Fund increases, thereby allowing the shareholders to participate in economies of scale Additionally, the Board reviewed the Fund's net expense ratios and analyzed the expense reimbursements and/or fee waivers. The Board further considered net expense ratio caps contractually agreed upon by SAAMCo for certain classes of shares of the Fund. The Board compared the Fund's net expense ratios to those of other funds within its Peer Group. Based upon the reports prepared by Lipper and other information provided by SAAMCo and by counsel to the Disinterested Trustees, the Board was satisfied that the fee and expense ratios of the Fund were acceptable given the quality of services expected to be provided and were comparable to the fee and expense ratios of similar funds within the Peer Group. In considering the subadvisory fee, the Board, including the Disinterested Directors, considered that the Fund pays a fee to SAAMCo pursuant to the Advisory Agreement, and that, in turn, SAAMCo, rather than the Fund, pays a fee to the Subadviser. Therefore, the Board considered the amount retained by SAAMCo and the fee paid to the Subadviser, which is an affiliate of SAAMCo, with respect to the different services provided by the Subadviser. The Board also considered that the shareholders of the Fund had approved the Subadvisory Agreement, including the fee schedule, by majority vote, at a Special Meeting of Shareholders on March 31, 2005. The Board also considered that the Subadvisory Agreement contained breakpoints in the fee schedule if the Fund reached certain asset levels. The Board noted that such breakpoints would not directly benefit the shareholders, but would result in SAAMCo retaining a larger portion of the advisory fee. The Board, however, was satisfied that the Advisory Agreement also contained breakpoints in the fee schedule that would directly benefit shareholders if the Fund reached certain asset levels. Furthermore, the Board noted that SAAMCo had agreed to contractual expense caps for certain classes which benefited shareholders, as described above. Costs of Services and Benefits Derived, as well as the Adviser's Profitability and Financial Condition. The Board, including the Disinterested Directors, considered the direct and indirect costs and benefits of SAAMCo's providing services to the Fund. The Board reviewed financial statements relating to SAAMCo's profitability and financial condition with respect to the services it provided the Fund, and considered how profit margins could affect SAAMCo's ability to attract and retain qualified investment personnel. The Board concluded that SAAMCo had a satisfactory financial condition, and that their profitability was not excessive as compared to standards set forth in applicable Court cases and other available industry information. 27 SunAmerica Senior Floating Rate Fund, Inc. APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2005 -- (unaudited) (continued) With respect to indirect costs and benefits, the Board was informed, based on management's judgment, that (1) any indirect costs incurred by SAAMCo in connection with rendering investment advisory services to the Fund are inconsequential to the analysis of the adequacy of the advisory fees, and (2) any collateral benefits derived as a result of providing advisory services to the Fund are de minimis and do not impact upon the reasonableness of the advisory fee. The Board also considered the reputational value to SAAMCo from serving as investment adviser. The Board also considered fees and, where applicable, profits earned by affiliates for providing other services to the Fund, and, as described above, research and other services SAAMCo obtained in connection with soft dollar commissions. The Board concluded that any benefits that SAAMCo and its affiliates could be expected to receive with regard to providing investment advisory and other services to the Fund were not excessive. Terms of the Advisory Agreement and Subadvisory Agreement The Board, including the Disinterested Directors, received a draft of the proposed Advisory Agreement and Subadvisory Agreement. The Board considered that they may be renewed from year to year, so long as their continuance is specifically approved at least annually in accordance with the requirements of the 1940 Act and that the Agreements provide that they will terminate in the event of an assignment (as defined in the 1940 Act) or upon termination of the agreement. In reviewing the terms of the Advisory Agreement, the Board considered that SAAMCo pays all of its own expenses in connection with the performance of its duties, as well as the salaries, fees and expenses of the Directors and Officers who are employees of SAAMCo. The Board noted, however, that the Fund bears certain proxy-related expenses. The Board also considered the termination and liability provisions of the Advisory Agreement. With respect to the Subadvisory Agreement, the Board further considered, that under the terms of the Subadvisory Agreement, the Subadviser is not liable to the Fund, or its shareholders, for any act or omission by the Subadviser or for any losses sustained by the Fund, or its shareholders, except in the case of willful misfeasance, bad faith, gross negligence and reckless disregard of obligations or duties. The Board also considered that the Subadvisory Agreement provides that the Subadviser will pay all of its own expenses in connection with the performance of its duties as well as the cost of maintaining the staff and personnel as necessary for it to perform its obligations. Economies of Scale The Board, including the Disinterested Directors, considered whether the Fund has benefited from economies of scale and whether there is potential for future realization of economies with respect to the Fund. The Board concluded that any potential economies of scale are being shared between shareholders and SAAMCo in an appropriate manner. The Board considered that the Funds in the AIG SunAmerica complex share common resources and as a result, an increase in the overall size of the complex could permit each fund to incur lower expenses than they otherwise would achieve as stand-alone entities. The Board also considered the anticipated efficiencies in the processes of SAAMCo as it adds labor and capital to expand the scale of operations. The Board concluded that the advisory fee structure was reasonable and that no changes were currently necessary to further reflect economies of scale. The Board noted that it will continue to review fees, including breakpoints and expense caps in connection with contract renewals. The Overall Organization of SAAMCo The Directors considered the benefit to shareholders of investing in a Fund that is part of a family of funds offering a variety of types of mutual funds and shareholder services. The Directors also considered SAAMCo's experience in providing management and investment advisory services to advisory clients, and the fact that SAAMCo currently managed, advised and/or administered approximately $42 billion of assets. The Directors also considered SAAMCo's record of compliance with the Fund's objectives, strategies and restrictions and its positive regulatory and compliance history. The Directors also considered SAAMCo's relationships with its affiliates and the resources available to them. 28 SunAmerica Senior Floating Rate Fund, Inc. APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2005 -- (unaudited) (continued) Compliance The Board considered SAAMCo's and AIGGIC's compliance and regulatory history, and inquired whether SAAMCo or AIGGIC had been the target of any regulatory actions or investigations. In addition, the Board reviewed information concerning SAAMCo's compliance staff that would be responsible for providing compliance functions on behalf of the Fund. Finally, the Board reviewed the Code of Ethics of SAAMCo and AIGGIC, and determined that they contain provisions reasonably necessary to prevent fraudulent, deceptive or manipulative acts by personnel in connection with their personal transactions in securities held or to be acquired by the Fund. Investment Performance The Board regularly reviews the performance of the Fund over various periods of time. At the Board meeting held on August 31, 2005, in connection with the approval of the continuation of the Advisory Agreement and the Subadvisory Agreement, the Board reviewed the Fund's annualized total return for the one-, two-, three-, four- and five-year periods. The Board, including the Disinterested Directors, received and reviewed information regarding the investment performance of the Fund as compared to its respective benchmarks, the performance of the Fund's Peer Group, and to an appropriate index or combination of indices. The Board also received reports detailing the Fund's daily liquidity record, which included cash positions, and monthly repurchase rates. In preparation for the August 31, 2005 meeting, the Board was provided with performance reports independently prepared by Lipper. Based on the Lipper reports, the Board reviewed the Fund's annualized total return for the prior one-, two-, three-, four- and five-year periods ending on June 30, 2005. The Board also received a report prepared by SAAMCo's management which detailed the Fund's performance with respect to 2005. In reviewing the performance of the Fund, the Board noted that AIGGIC had assumed portfolio management responsibilities on January 1, 2005 and that the Fund's performance history prior to that date was the result of a different subadviser. The Board considered AIGGIC's performance record in managing a portfolio with similar investment objectives prior to assuming portfolio management responsibilities of the Fund. The Board further considered that while the Fund's performance still lagged its Peer Group and relevant Index they remained confident that AIGGIC would provide the high level of investment management services expected by the Board. Conclusion After a full and complete discussion, and following negotiations with SAAMCo's management, the Board renewed the Advisory and Subadvisory Agreement with respect to the Fund for a period of one year. The Board indicated that it would carefully monitor the performance of the Fund and that the Board would take appropriate action, as necessary, in an effort to enhance performance Based on their evaluation of all material factors and assisted by the advice of independent counsel, the Board, including the Disinterested Directors, were satisfied that the terms of the Advisory Agreement and Subadvisory Agreement were fair, and in the best interest of the Fund and its shareholders, and that the advisory fee rates provided in the Advisory Agreement are acceptable in light of the usual and customary charges made for services of similar nature and quality. In arriving at a decision to approve the continuation of the Advisory Agreement and Subadvisory Agreement, the Board did not single out any one factor or group of factors as being more important than other factors, but considered all factors together. 29 SunAmerica Senior Floating Rate Fund, Inc. DIRECTORS AND OFFICERS INFORMATION -- December 31, 2005 -- (unaudited) The following table contains basic information regarding the Directors and Officers that oversee operations of the Fund and other investment companies within the Fund complex.
Number of Position Term of Funds in Name, Held With Office and Fund Complex Address and SunAmerica Length of Principal Occupations Overseen by Other Directorships Date of Birth* Complex Time Served(4) During Past 5 Years Director(1) Held by Director(2) - ---------------------- ---------- -------------- ----------------------------- ------------ ------------------------------- Directors Dr. Judith L. Craven Director 2000- Retired. 91 Director, A.G. Belo DOB: October 6, 1945 present Corporation (1992 to present); Director, Sysco Corporation (1996 to present); Director, Luby's Inc. (1998 to present); Director, University of Texas Board of Regents (2001-Present). William F. Devin Director 1998- Retired. 91 Member of the Board of DOB: December 30, 1938 present Governors, Boston Stock Exchange (1985-Present). Samuel M. Eisenstat Director 2001- Attorney, solo practitioner. 52 Director of North European DOB: March 7, 1940 present Oil Royalty Trust. Stephen J. Gutman Director 2001- Associate, Corcoran Group 52 None DOB: May 10, 1943 present (Real Estate) (2003 to present); Partner and Member of Managing Directors, Beau Brummell- Soho, LLC (Licensing of menswear specialty retailing and other activities) (June 1988 to present). Peter A. Harbeck(3) Director 2001- President, CEO and Director, 100 None DOB: January 23, 1954 present AIG SunAmerica Asset Management Corp. ("SAAMCo") (August 1995 to present); Director, AIG SunAmerica Capital Services, Inc. ("SACS") (August 1993 to present); President and CEO, AIG AdvisorGroup, Inc. (June 2004 to present). William J. Shea Director 2004- President and CEO, 52 Chairman of the Board, Royal DOB: February 9, 1948 present Conseco, Inc. (Financial and SunAlliance, U.S.A., Inc. Services) (2001 to 2004); (March 2005 to present); Chairman of the Board of Director, Boston Private Centennial Technologies, Inc. Financial Holdings (October (1998 to 2001); Vice 2004 to present). Chairman, Bank Boston Corporation (1993 to 1998).
30 SunAmerica Senior Floating Rate Fund, Inc. DIRECTORS AND OFFICERS INFORMATION -- December 31, 2005 -- (unaudited) (continued)
Number of Position Term of Funds in Name, Held With Office and Fund Complex Address and SunAmerica Length of Principal Occupations Overseen by Other Directorships Date of Birth* Complex Time Served(4) During Past 5 Years Director(1) Held by Director(2) - ------------------- ---------- -------------- ------------------------------ ------------ ------------------- Officers Vincent M. Marra President 2004- Senior Vice President and N/A N/A DOB: May 28, 1950 present Chief Operating Officer, SAAMCo (February 2003 to Present); Chief Administrative Officer, Chief Operating Officer and Chief Financial Officer, Carret & Co., LLC (June 2002 to February 2003); President, Bowne Digital Solutions (1999 to May 2002). Donna M. Handel Treasurer 2002- Senior Vice President, N/A N/A DOB: June 25, 1966 present SAAMCo (December 2004- Present); Assistant Treasurer (2001 to 2002); Vice President, SAAMCo (August 1997 to December 2004). Gregory N. Bressler Secretary September Senior Vice President and N/A N/A DOB: November 17, and Chief 2005 to General Counsel, SAAMCo 1966 Legal Present (June 2005 to Present); Vice Officer President and Director of U.S. Asset Management Compliance, Goldman Sachs Asset Management, L.P. (June 2004 to June 2005); Deputy General Counsel, Credit Suisse Asset Management, LLC. (June 2002-June 2004); Vice President and Counsel, Credit Suisse Asset Management, LLC (January 2000-June 2002).
- -------- * The business address for each Director and Officer is the Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311-4992. (1) The "Fund Complex" consists of all registered investment company portfolios for which SAAMCo serves as investment adviser or business manager. The "Fund Complex" includes the SunAmerica Money Market Funds (2 funds), SunAmerica Equity Funds (9 funds), SunAmerica Income Funds (6 funds), SunAmerica Focused Series, Inc. (17 portfolios), SunAmerica Focused Alpha Growth Fund, Inc. (1 fund), SunAmerica Focused Alpha Large-Cap Fund (1 fund), Anchor Series Trust (9 portfolios), SunAmerica Senior Floating Rate Fund, Inc. (1 fund), SunAmerica Series Trust (32 portfolios), AIG Series Trust (6 funds), VALIC Company I (33 portfolios), VALIC Company II (15 funds) and Seasons Series Trust (24 portfolios). (2) Directorships of companies required to report to the Securities and Exchange Commission under the Securities Exchange Act of 1934 (i.e. "public companies") or other investment companies registered under the Investment Company Act of 1940. (3) Interested Director, as defined in the Investment Company Act of 1940, because he is an officer and director of the adviser and a director of the principal underwriter of the Fund. (4) Directors serve until their successors are duly elected and qualified, subject to the Board's retirement plan discussed in Note 7 of the financial statements. Additional information concerning the Directors and Officers is contained in the Statement of Additional Information and is available without charge by calling (800) 858-8850. 31 [LOGO] AIG Sun America Mutual Funds AIG SunAmerica Asset Management Corp. Harborside Financial Center 3200 Plaza 5 Jersey City, NJ 07311-4992 Directors Investment Adviser DISCLOSURE OF QUARTERLY Dr. Judith L. Craven PORTFOLIO HOLDINGS William F. Devin AIG SunAmerica Asset Management Corp. The Fund is required to Samuel M. Eisenstat Harborside Financial file its com-plete Stephen J. Gutman Center schedule of portfolio Peter A. Harbeck 3200 Plaza 5 holdings with the U.S. William J. Shea Jersey City, NJ Securities and Exchange 07311-4992 Commission for its first Officers and third fiscal quarters Vincent M. Marra, Distributor on Form N-Q. Once filed, President AIG SunAmerica Capital the Fund's Form N-Q will Donna M. Handel, Services, Inc. be available without Treasurer Harborside Financial charge on the U.S. J. Steven Neamtz, Vice Center Securities and Exchange President 3200 Plaza 5 Commission's website at Gregory R. Kingston, Jersey City, NJ www.sec.gov. You can also Vice President and 07311-4992 obtain cop-ies of Form Assistant Treasurer N-Q by (i) visiting the Cynthia A. Gibbons, Vice Shareholder Servicing U.S. Securities and President and Chief Agent Exchange Commis-sion's Compliance Officer AIG SunAmerica Fund Public Reference Room in Gregory N. Bressler, Services, Inc. Washington DC Chief Legal Harborside Financial (information on the Officer and Secretary Center operation of the Public Nori L. Gabert, 3200 Plaza 5 Reference Room may be Assistant Secretary Jersey City, NJ obtained by calling Corey A. Issing, 07311-4992 1-800-SEC-0330); (ii) Assistant Secretary sending your request and Kathryn A. Pearce, Custodian and Transfer a duplicating fee to the Assistant Treasurer Agent U.S. Securities and State Street Bank and Exchange Commis-sion's Trust Company Public Reference Room, P.O. Box 219373 Washington, DC 20549-0102 Kansas City, MO 64141 or (iii) sending your request electronically to VOTING PROXIES ON FUND publicinfo@sec.gov. PORTFOLIO SECURITIES A description of the PROXY VOTING RECORD ON policies and proce-dures FUND PORTFOLIO SECURITIES that the Fund uses to Information regarding how determine how to vote the Fund voted proxies proxies relating to related to securities secu-rities held in the held in the Fund's Fund's portfolio which is portfolio during the available in the Fund's twelve month period ended State-ment of Additional June 30, 2005 is Information, may be available (i) without obtained without charge charge, upon request, by upon re-quest, by calling calling (800) 858-8850 or (800) 858-8850. This (ii) on the U.S. information is also Securities and Exchange available from the EDGAR Commission's website at database on the U.S. http://www.sec.gov. Secu-rities and Exchange Commission's website at This report is submitted http://www.sec.gov. solely for the general information of shareholders of the Fund. Distribution of this report to persons other than shareholders of the Fund is authorized only in connection with a currently effective prospectus, setting forth details of the Fund which must precede or accompany this report.
32 [LOGO] Distributed by: AIG SunAmerica Capital Services, Inc. Harborside Financial Center 3200 Plaza 5 Jersey City, NJ 07311-4992 Investors should carefully consider the investment objectives, risks, charges and expenses of any mutual fund before investing. This and other important information is contained in the prospectus, which can be obtained from your financial adviser or from the AIG SunAmerica Sales Desk at 800-858-8850, ext. 6003. Read the prospectus carefully before you invest. Funds distributed by AIG SunAmerica Capital Services, Inc. www.sunamericafunds.com SFANN-12/05 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. Item 3. Audit Committee Financial Expert. The registrant's Board of Directors has determined that William J. Shea, the Charirman of the registrant's Audit Committe, qualifies as an audit committee financial expert, as defined in the instructions to Item 3(a) of Form N-CSR. Mr. Shea 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: 2004 2005 ---- ---- Audit Fees ................... $65,637 $67,006 Audit-Related Fees ........... $22,138 $22,334 Tax Fees ..................... $ 8,650 $ 8,871 All Other Fees ............... $ 0 $ 0 Audit Fees include amounts related to the audit of the registrant's annual financial statements and services normally provided by the principal accountant in connection with statutory and regulatory filings. Audit-Related Fees principally include a SAS No. 100 review of the registrant's Semiannual Shareholder Report. Tax Fees principally include tax compliance, tax advice, tax planning and preparation of tax returns. (e) (1) The registrant's audit committee pre-approves all audit services provided by the registrant's principal accountant for the registrant and all non-audit services provided by the registrant's principal accountant for the registrant, its investment adviser and any entity controlling, controlled by, or under common control with the investment adviser ("Adviser Affiliate") that provides ongoing services to the registrant, if the engagement by the investment adviser or Adviser Affiliate relates directly to the operations and financial reporting of the registrant. (2) No services included in (b) - (d) above were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (f) Not Applicable. (g) The aggregate fees billed for the most recent fiscal year and the preceding fiscal year by the registrant's principal accountant for non-audit services rendered to the registrant, its investment adviser, and Adviser Affiliate that provides ongoing services to the registrant for 2005 and 2004 were $298,518 and $1,651,391 respectively. (h) Non-audit services rendered to the registrant's investment adviser and any Adviser Affiliate that were not pre-approved pursuant to Paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X were considered by the registrant's audit committee as to whether they were compatible with maintaining the principal accountant's independence. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. Schedule of Investments. Included in Item 1 to the Form. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. PROXY VOTING POLICIES AND PROCEDURES Proxy Voting Responsibility. The Fund has adopted policies and procedures for the voting of proxies relating to portfolio securities. The policies and procedures were drafted according to recommendations by a proxy voting committee composed of senior management of the Fund and the Fund's investment adviser. The policies and procedures enable the Fund to vote proxies in a manner consistent with the best interests of the Fund's shareholders. The Fund has retained a proxy voting service, Institutional Shareholder Services ("ISS"), to effect votes on behalf of the Fund according to the Fund's policies and procedures, and to assist the Fund with record keeping of proxy votes. Company Management Recommendations. When determining whether to invest in the securities of a particular company, one of the key factors a portfolio manager considers is the quality and depth of the company's management. In holding portfolio securities, the Fund is seeking to maximize the investment value for shareholders, but not necessarily exercise control over the issuers of portfolio securities or otherwise advance a particular social agenda. The Fund's policies and procedures therefore provide that the Fund will generally vote in support of management recommendations on most corporate matters. When a corporation's portfolio manager is dissatisfied with a company's management, the Fund typically will sell the holding. Case-By-Case Voting Matters. The policies and procedures identify certain voting matters that will be decided on a case-by-case basis. In these circumstances, the proxy voting committee generally will rely on the guidance or a recommendation from the proxy voting service, but may also rely on other appropriate personnel of the investment adviser (or "SunAmerica" or the "Adviser") and/or the subadviser of the Fund, or other sources. In these instances, suchperson(s) will recommend the vote that will maximize value for, and is in thebest interests of, the Fund's shareholders. Examples of the Fund's Positions on Voting Matters. Consistent with the approaches described above, the following are examples of the Fund's voting positions on specific matters: . Vote with management recommendations on most corporate and mutual fund matters; . Vote on a case-by-case basis on proposals to increase authorized common stock; . Vote against the authorization of preferred stock with unspecified voting, conversion, dividend distribution and other rights ("blank check" preferred stock); . Vote on a case-by-case basis regarding finance, merger and acquisition matters; . Vote against most shareholder proposals; . Abstain from voting on social responsibility or environmental matters, unless the fund's objective is directly related to the social or environmental matter in question; . Not vote proxies for index funds/portfolios and passively managed funds/portfolios; and . Vote on a case-by-case basis on equity compensation plans. Conflicts of Interest. Members of the proxy voting committee will resolve conflicts of interest presented by a proxy vote. In practice, application of the Fund's proxy voting policies and procedures will in most instances adequately address any possible conflicts of interest, as the policies and procedures were pre-determined by the proxy voting committee, and votes are effected according to the policies and procedures by ISS, an independent third party. However, if a situation arises where a vote presents a conflict between the interests of the Fund's shareholders and the interests of SunAmerica, or one of SunAmerica's affiliates, and the conflict is known to the proxy voting committee, the proxy voting committee will consult with a Director who is not an "interested" person, as that term is defined in the Investment Company Act of 1940, as amended, time permitting before casting the vote to ensure that the Fund votes in the best interests of its shareholders. Any individual with a known conflict may be required by the proxy voting committee to recuse himself or herself from being involved in the proxy voting decision. Senior management, including the proxy voting committee, will evaluate the situation and ensure that the Fund selects the vote that is in the best interests of the Fund's shareholders. Proxy Voting Records. ISS will maintain records of voting decisions for each vote cast on behalf of the Fund. Pursuant to SEC requirements, beginning in August of 2004, on an annual basis the Fund will make available on its website its proxy voting record for the one-year period ending on June 30th. The proxy voting record will also be available on the SEC's website at http://www.sec.gov. Item 8. Portfolio Managers of Closed-End Management Investment Companies. AIG Global Investment Company ("AIGGIC") is the Subadviser to the SunAmerica Senior Floating Rate Fund (the "Fund"). Steven Oh, John Lapham and Thomas Brandt are the Fund's portfolio managers and are jointly and primarily responsible for the day-to-day management of the Fund. Steven Oh, CFA, joined AIGGIC in 2002 and is currently Managing Director and co-portfolio manager for the Leveraged Loan Group. Prior to joining AIGGIC, Mr. Oh served as a portfolio manager at Citadel Investments and Koch Capital and was a Vice President in high yield and distressed debt trading at BancAmerica Securities. John Lapham, CFA, joined AIGGIC with the acquisition of SunAmerica in 1999. He is a co-portfolio manager for the Leveraged Loan Group. Mr. Lapham joined SunAmerica in 1995 as a Managing Director in the Corporate Finance Group. Thomas Brandt joined AIGGIC in 2000 as a trader. Mr. Brandt as co- portfolio manager of the Fund is responsible for purchases and sales of bank debt. Prior to joining AIGGIC, Mr. Brandt was a Managing Director at BNO Paribas' Media and Technology Finance Department, where he was responsible for a $2.8 billion media and telecom loan portfolio. Other Accounts Managed by the Portfolio Managers The following table indicates the type (Registered Investment Company ("RIC"), Other Pooled Investments ("OPI"), and Other Accounts ("OA"), number of accounts, and total assets of the accounts which each Portfolio Manager had day- to-day responsibilities as of December 31, 2005, Total Assets Name of Portfolio Number of Managed in Manager Type of Account Accounts Accounts ($millions) - ----------------- --------------- --------- -------------------- Steven Oh RIC 0 None OPI None N/A OA 1 $241.47 - ----------------- --------------- --------- -------------------- John Lapham RIC 0 None OPI 0 None OA 10 $4,421.55 - ----------------- --------------- --------- -------------------- Thomas Brandt RIC 0 None OPI 0 None OA 10 $4,421.55 - ----------------- --------------- --------- -------------------- Potential Conflicts of Interest As shown in the tables above, the Portfolio Managers are responsible for managing other accounts for other clients, ("Other Client Accounts") in addition to the Fund. In certain instances, conflicts may arise in their management of the Fund and such Other Client Accounts. The Portfolio Managers aim to conduct their activities in such a manner that permits them to deal fairly with each of their clients on an overall basis in accordance with applicable securities laws and fiduciary obligations. Notwithstanding, transactions, holdings and performance, among others, may vary among the Fund and such Other Client Accounts. .. Trade Allocations. Conflicts may arise between the Fund and Other Client Accounts in the allocation of trades among the Fund and the Other Client Accounts, as the case may be. For example, the Adviser and/or the Portfolio Manager may determine that there is a security that is suitable for the Fund as well as for Other Client Accounts that have a similar investment objective. Likewise, a particular security may be bought for one or more clients when one or more other clients are selling that same security, or the Adviser and/or the Portfolio Manager may take "short" positions in Other Client Accounts with respect to securities held "long" within the Fund, or vice-versa, which may adversely affect the value of securities held by the Fund. Such ownership or different interests may cause a conflict of interest. The Fund, Adviser and/or AIGGIC have adopted policies, procedures and/or practices regarding the allocation of trades and brokerage (where applicable), which address the conflicts associated with managing multiple accounts for multiple clients (including affiliated clients). Subject to cash and security availability and lot size, among other factors, the policies, procedures and/or practices generally require that securities be allocated among the Fund and Other Client Accounts with a similar investment objective in a manner that is fair, equitable and consistent with their fiduciary obligations to each. .. Allocation of Portfolio Managers' Time. The Portfolio Managers' management of the Fund and Other Client Accounts may result in the Portfolio Managers devoting a disproportionate amount of time and attention to the management of the Fund and Other Client Accounts if the Fund and Other Client Accounts have different objectives, benchmarks, time horizons, and fees. Generally, such competing interests for the time and attention of the Portfolio Managers are managed. Although the Adviser does not track the time the Portfolio Managers spends on the Fund or a single Other Client Account, the Adviser and/or AIGGIC do periodically assess whether the Portfolio Managers have adequate time and resources to effectively manage all of such Portfolio Managers' accounts. In certain instances, Portfolio Managers may be employed by two or more employers. Where the Portfolio Manager receives greater compensation, benefits or incentives from one employer over another, the Portfolio Managers may favor one employer over the other (or Other Client Accounts) causing a conflict of interest. .. Personal Trading by Portfolio Managers. The management of personal accounts by a Portfolio Manager may give rise to potential conflicts of interest. While generally, AIGGIC's Code of Ethics will impose limits on the ability of a Portfolio Manager to trade for his or her personal account, especially where such trading might give rise to a potential conflict of interest, there is no assurance that AIGGIC's Code of Ethics will eliminate such conflicts. AIGGIC's Portfolio Manager Compensation Compensation for AIGGIG Portfolio Managers has both a salary and a bonus component. The salary component is a fixed base salary, which is generally based upon several factors, including experience and market levels of salary for such position. The bonus component is based both on a Portfolio Manager's individual performance and the organizational performance of AIGGIC. The bonus component is generally calculated as follows: (1) 60% is linked to the management of a Portfolio Manager's funds; (2) 20% is based on AIGGIC's profitability; and (3) 20% is determined on a discretionary basis (including individual qualitative goals). For the 60% component, the measures for a Portfolio Manager may vary according to the day-to-day responsibilities of a particular Portfolio Manager. The measures comprise any combination of (a) total return measures, (b) benchmark measures and (c) peer group measures. Any long-term compensation may include stock options and restricted stock units, both having vesting schedules. Portfolio Manager Ownership of Fund Shares The following table shows the dollar range of shares beneficially owned by each Portfolio Manager as of December 31, 2005. Aggregate Dollar Range of Equity Securities in All Dollar Range of Equity Registered Investment Name of Securities in each Fund managed Companies Managed by Portfolio Manager by the named Portfolio Manager SunAmerica - ----------------- ------------------------------ ------------------------- Steven Oh None None - ----------------- ------------------------------ ------------------------- John Lapham None None - ----------------- ------------------------------ ------------------------- Thomas Brandt None None - ----------------- ------------------------------ ------------------------- (b) Not applicable. Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. None. Item 10. Submission of Matters to a Vote of Security Holders. Not applicable. Item 11. Controls and Procedures. (a) An evaluation was performed within 90 days of the filing of this report, under the supervision and with the participation of the registrant's management, including the President and Treasurer, of the effectiveness of the design and operation of the registrant's disclosure controls and procedures. Based on that evaluation, the registrant's management, including the President and Treasurer, concluded that the registrant's disclosure controls and procedures are effective. (b) There was no change in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940 (17 CFR 270.30a-3(d))) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits. (a) (1) Code of Ethics applicable to its Principal Executive and Principal Accounting Officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.406.Code of Ethics. (2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT. (3) Not applicable. (b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SunAmerica Senior Floating Rate Fund, Inc. By: /s/ Vincent M. Marra -------------------- Vincent M. Marra President Date: March 10, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Vincent M. Marra -------------------- Vincent M. Marra President Date: March 10, 2006 By: /s/ Donna M. Handel ------------------- Donna M. Handel Treasurer Date: March 10, 2006 EX-99.406.CODE 2 dex99406code.txt CODE OF ETHICS Exhibit 99.406. Code of Ethics AIG SERIES TRUST ANCHOR SERIES TRUST SUNAMERICA EQUITY FUNDS SUNAMERICA FOCUSED ALPHA GROWTH FUND, INC. SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC. SUNAMERICA FOCUSED SERIES, INC. SUNAMERICA INCOME FUNDS SUNAMERICA MONEY MARKET FUNDS, INC. SUNAMERICA SENIOR FLOATING RATE FUND, INC. (collectively, the "Funds") CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND PRINCIPAL ACCOUNTING OFFICERS I. INTRODUCTION The Boards of Directors/Trustees of the Funds (the "Boards") have adopted this Code of Ethics (this "Code") pursuant to Section 406 of the Sarbanes-Oxley Act applicable to the Funds' Principal Executive Officer and Principal Accounting Officer (the "Covered Officers" each of whom is set forth in Exhibit A) for the purpose of promoting: o Honest and ethical conduct, including the ethical handling of conflicts of interest between personal and professional relationships; o Full, fair, accurate, timely and understandable disclosure; o Compliance with applicable laws and governmental rules and regulations; o The prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and o Accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. COVERED OFFICERS SHOULD HANDLE ETHICALLY ACTUAL AND APPARENT CONFLICTS OF INTEREST A "conflict of interest" occurs when a Covered Officer's private interest improperly interferes with the interests of, or his or her service to, the Funds. For example, a conflict of interest would arise if a Covered Officer, or a member of his or her family, receives improper personal benefits as a result of his or her position with the Funds. Certain conflicts of interest arise out of the relationships between Covered Officers and the Funds and already are subject to conflict of interest provisions in the Investment Company Act of 1940, as amended (the "Investment Company Act") and the Investment Advisers Act of 1940, as amended (the 1 "Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Funds because of their status as "affiliated persons" of the Funds. The compliance programs and procedures of the Funds and the Funds' investment adviser, AIG SunAmerica Asset Management Corp. ("SAAMCo"), are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts may arise from, or as a result of, the contractual relationship between, the Funds and SAAMCo, of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Funds or for SAAMCo, or for both), be involved in establishing policies and implementing decisions that will have different effects on the Funds and SAAMCo. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Funds and SAAMCo and is consistent with the performance by the Covered Officers of their duties as officers of the Funds. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Boards that the Covered Officers may also be officers or employees of other investment companies advised by SAAMCo. In particular, each Covered Officer must: o Not use his or her personal influence or personal relationships to influence investment decisions or financial reporting by the Funds whereby the Covered Officer would benefit personally to the detriment of the Funds; o Not cause the Funds to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Funds; and o Report at least annually to the Ethics Committee any material transaction or relationship that could reasonably be expected to give rise to a conflict of interest. There are certain potential conflict of interest situations that should be discussed with the Ethics Committee if material. Examples of these include: o Service as a director on the board of any company; o The receipt of any non-nominal gifts; o The receipt of any entertainment from any company with which the Funds have current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; 2 o Any ownership interest in, or any consulting or employment relationship with, any of the Funds' service providers, other than SAAMCo, the Funds' principal underwriter or any affiliated person thereof; o A direct or indirect financial interest in commissions, transaction charges or spreads paid by the Funds for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. DISCLOSURE AND COMPLIANCE o Each Covered Officer should familiarize himself or herself with the disclosure requirements generally applicable to the Funds; o Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Funds to others, whether within or outside the Funds, including to the Boards and auditors, or to governmental regulators and self-regulatory organizations; o Each Covered Officer should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the Funds and SAAMCo with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents that the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and o It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. REPORTING AND ACCOUNTABILITY Each Covered Officer must: o Upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Boards that he or she has received, read and understands the Code; o Annually thereafter affirm to the Boards that he or she has complied with the requirements of the Code; o Not retaliate against any other Covered Officer or affiliated person of the Funds for reports of potential violations of this Code that are made in good faith; and o Notify the Ethics Committee promptly if he or she knows of any violation of this Code. Failure to do so is itself a violation of this Code. The Ethics Committee is responsible for applying this Code to specific situations in which questions are presented to it and has the authority to interpret this Code in any particular situation. The Ethics Committee will also consider waivers sought by the Covered Officers. 3 The Funds will act according to the following procedures in investigating and enforcing this Code: o The Ethics Committee will take all appropriate action to investigate any potential violations reported to it; o If, after such investigation, the Ethics Committee believes that no violation has occurred, the Ethics Committee is not required to take any further action; o If the Ethics Committee determines that a violation has occurred, it will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of SAAMCo or its board; or a recommendation to dismiss the Covered Officer; o The Ethics Committee will be responsible for granting waivers, as appropriate; o The Ethics Committee will inform the Boards of violations or waivers of this Code; and o Any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. OTHER POLICIES AND PROCEDURES This Code shall be the sole Code of Ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to investment companies thereunder. Insofar as other policies or procedures of the Funds, SAAMCo, the Funds' principal underwriter or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Code of Ethics of the Funds, SAAMCo and the Funds' principal underwriter, under Rule 17j-1 of the Investment Company Act, and SAAMCo's more detailed policies and procedures set forth in the SAAMCo Compliance Procedures Manual are separate requirements applying to Covered Officers and others, and are not part of this Code. VI. AMENDMENTS Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Boards. VII. CONFIDENTIALITY All reports and records prepared or maintained pursuant to this Code shall be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Funds, the Ethics Committee, SAAMCo and the Boards and their independent counsel. 4 VIII. INTERNAL USE The Code is intended solely for internal use by the Funds and does not constitute an admission, by or on behalf of the Funds, as to any fact, circumstance or legal conclusion. Date: August 7, 2003 EXHIBIT A* Vincent Marra, as President of the Funds Donna M. Handel, as Treasurer of the Funds * Exhibit A was amended as follows, effective December 1, 2004 Robert M. Zakem resigned as President of the Funds. 5 EX-99.CERT 3 dex99cert.txt CERTIFICATION PURSUANT TO SECTION 302 Exhibit 99.CERT CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, Vincent M. Marra, certify that: 1. I have reviewed this report on Form N-CSR of SunAmerica Senior Floating Rate Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 15, 2006 /s/ Vincent M. Marra - -------------------- Vincent M. Marra President CERTIFICATION PURSUANT TO SECTION 302 OF THE SARDINES-OXLEY ACT I, Donna M. Handel, certify that: 1. I have reviewed this report on Form N-CSR of SunAmerica Senior Floating Rate Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 15, 2006 /s/ Donna M. Handel - ------------------- Donna M. Handel Treasurer EX-99.906.CERT 4 dex99906cert.txt CERTIFICATION PURSUANT TO SECTION 906 EXHIBIT 99.906.CERT CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Vincent M. Marra, President, and Donna M. Handel, Treasurer of SunAmerica Senior Floating Rate Fund, Inc. (the "Registrant"), each certify to the best of his or her knowledge that: 1. The attached Form N-CSR report of the Registrant fully complies with the requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in such N-CSR report fairly represents, in all material respects, the financial conditions and results of operations of the Registrant as of, and for, the periods presented in the report. Dated: February 15, 2006 /s/ Vincent M. Marra - -------------------- Vincent M. Marra President /s/ Donna M. Handel - ------------------- Donna M. Handel Treasurer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----