N-CSRS 1 dncsrs.txt SUNAMERICA SENIOR FLOATING RATE FUND UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-08727 SunAmerica Senior Floating Rate Fund, Inc. (Exact name of registrant as specified in charter) Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311 (Address of principal executive offices) (Zip code) Vincent M. Marra Senior Vice President AIG SunAmerica Asset Management Corp. Harborside Financial Center 3200 Plaza 5 Jersey City, NJ 07311 (Name and address of agent for service) Registrant's telephone number, including area code: (201) 324-6464 Date of fiscal year end: December 31 Date of reporting period: June 30, 2006 Item 1. Reports to Stockholders SunAmerica Senior Floating Rate Fund, Inc. Semiannual report at June 30, 2006. 2006 Semi-annual SunAmerica Report --------------------------
[PHOTO] [GRAPHIC] Senior Floating Rate Fund Table of Contents SHAREHOLDERS' LETTER............... 1 STATEMENT OF ASSETS AND LIABILITIES 2 STATEMENT OF OPERATIONS............ 3 STATEMENT OF CHANGES IN NET ASSETS. 4 STATEMENT OF CASH FLOWS............ 5 FINANCIAL HIGHLIGHTS............... 6 PORTFOLIO OF INVESTMENTS........... 10 NOTES TO FINANCIAL STATEMENTS...... 18 DIRECTORS AND OFFICERS INFORMATION. 25 SPECIAL MEETING OF SHAREHOLDERS.... 27
June 30, 2006 SEMI-ANNUAL REPORT Shareholders' Letter Dear Shareholders, We are pleased to present the semi-annual shareholder report for the SunAmerica Senior Floating Rate Fund for the six-month period ending June 30, 2006. This period began on a very strong note, with institutional new issue volume setting a record pace of more than US$160 billion. As was the case in 2005, much of this volume was spurred by mergers and acquisitions activity. Demand for bank loans was exceedingly strong during the first half of the year. Many issuers took advantage of these market conditions to reprice their loans. Offsetting the spread compression was the steady increase in LIBOR (London Interbank Offered Rate). About mid-way through the six-month period, the market reached an inflection point. The huge supply of bank loans finally absorbed the excess loan demand and the bank-loan asset class began to trade at more normalized levels. This is best illustrated by the average bid of a composite of large, liquid loans tracked by a division of Standard & Poors. The average bid price of this loan composite reached a high for the year of $101.05 on March 2. Shortly thereafter, the market reversed course, bringing the average bid price to a 13-month low of $99.91 on June 29. The drop in the average bid price of the loan market negatively impacted our portfolio's net asset value, but overall, the recent change in market conditions will benefit investors. In general, spreads are widening, structures are improving and investors should have the opportunity to find better value in the secondary market given current market levels. We thank you for your continued investment in the Fund. Sincerely, The SunAmerica Senior Floating Rate Fund Portfolio Managers AIG Global Investment Group Thomas G. Brandt John G. Lapham Steven S. Oh -------- The Fund is not a money market fund and its net asset value may fluctuate. Investments in loans involve certain risks including nonpayment of principal and interest; collateral impairment; non-diversification and borrower industry concentration; and lack of full liquidity, which may impair the Fund's ability to obtain full value for loans sold. The Fund may invest all or substantially all of its assets in loans or other securities that are rated below investment grade, or in comparable unrated securities. Credit risks include the possibility of a default on the loan or bankruptcy of the borrower. The value of these loans is subject to a greater degree of volatility in response to interest rate fluctuations. Past performance is no guarantee of future results. 1 SunAmerica Senior Floating Rate Fund, Inc. STATEMENT OF ASSETS AND LIABILITIES -- June 30, 2006 (unaudited) ASSETS: Long-term investment securities, at value (unaffiliated)*......... $208,745,882 Short-term investment securities, at value (unaffiliated)*........ 4,536,632 ------------ Total investments............................................... 213,282,514 Receivable for: Fund shares sold................................................ 369,040 Dividends and interest.......................................... 2,427,632 Investments sold................................................ 4,654,002 Prepaid expenses and other assets................................. 102,833 Due from investment adviser for expense reimbursements/fee waivers 67,272 Due from distributor for fee waivers.............................. 40,719 ------------ Total assets.................................................... 220,944,012 ------------ LIABILITIES: Payable for: Fund shares repurchased......................................... 12,076,499 Investments purchased........................................... 5,472,222 Investment advisory and management fees......................... 157,128 Distribution and service maintenance fees....................... 122,260 Administration fees............................................. 73,942 Directors' fees and expenses.................................... 18,428 Other accrued expenses.......................................... 197,311 Dividends payable................................................. 458,135 Commitments (Note 11)............................................. -- ------------ Total liabilities............................................... 18,575,925 ------------ Net assets..................................................... $202,368,087 ============ NET ASSETS REPRESENTED BY: Capital shares at par value of $.01............................... $ 215,610 Additional paid-in capital........................................ 230,625,789 ------------ 230,841,399 Accumulated undistributed net investment income (loss)............ (39,753) Accumulated undistributed net realized gain (loss) on investments. (27,379,381) Unrealized appreciation (depreciation) on investments............. (1,054,178) ------------ Net assets...................................................... $202,368,087 ============
Class A Class B Class C Class D NET ASSET VALUES: -------- ----------- ------------ ------------ Net assets................................................... $379,663 $25,562,017 $158,728,298 $ 17,698,109 Shares outstanding........................................... 40,443 2,723,344 16,911,385 1,885,783 Net asset value, offering and repurchase price per share (excluding any applicable contingent deferred sales charges) $ 9.39 $ 9.39 $ 9.39 $ 9.39 ======== =========== ============ ============ *COST Long-term investment securities (unaffiliated)............................................. $209,800,060 ============ Short-term investment securities (unaffiliated)............................................ $ 4,536,632 ============
See Notes to Financial Statements 2 SunAmerica Senior Floating Rate Fund, Inc. STATEMENT OF OPERATIONS -- For the six months ended June 30, 2006 (unaudited) INVESTMENT INCOME: Interest (unaffiliated)........................................................... $7,573,824 Dividends (unaffiliated).......................................................... 117,447 Facility and other fee income (Note 2)............................................ 353,362 ---------- Total investment income........................................................ 8,044,633 ---------- EXPENSES: Investment advisory and management fees........................................... 887,031 Administration fees............................................................... 417,427 Distribution and service maintenance fees: Class A......................................................................... 472 Class B......................................................................... 96,355 Class C......................................................................... 595,229 Transfer agent fees and expenses: Class A......................................................................... 1,277 Class B......................................................................... 10,210 Class C......................................................................... 36,243 Class D......................................................................... 5,143 Registration fees: Class A......................................................................... 3,192 Class B......................................................................... 5,570 Class C......................................................................... 8,860 Class D......................................................................... 6,673 Accounting service fees........................................................... 34,350 Custodian fees.................................................................... 47,529 Reports to shareholders........................................................... 92,327 Audit and tax fees................................................................ 42,024 Legal fees........................................................................ 40,513 Directors' fees and expenses...................................................... 25,454 Interest expense.................................................................. 116 Other expenses.................................................................... 39,258 ---------- Total expenses before fee waivers, expense reimbursements and custody credits.. 2,395,253 Fees waived and expenses reimbursed by investment adviser and distributor...... (629,006) Custody credits earned on cash balances........................................ (356) ---------- Net expenses................................................................... 1,765,891 ---------- Net investment income (loss)...................................................... 6,278,742 ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (unaffiliated)............................ 318,131 Change in unrealized appreciation (depreciation) on investments (unaffiliated).... (374,465) ---------- Net realized and unrealized gain (loss) on investments............................ (56,334) ---------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $6,222,408 ==========
See Notes to Financial Statements 3 SunAmerica Senior Floating Rate Fund, Inc. STATEMENT OF CHANGES IN NET ASSETS
For the six months ended For the year June 30, ended 2006 December 31, (unaudited) 2005 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS: Operations: Net investment income (loss).......................................................... $ 6,278,742 $ 9,753,762 Net realized gain (loss) on investments (unaffiliated)................................ 318,131 14,295 Net unrealized gain (loss) on investments (unaffiliated).............................. (374,465) (618,514) ------------ ------------ Increase (decrease) in net assets resulting from operations............................. 6,222,408 9,149,543 ------------ ------------ Distributions To Shareholders From: Net investment income (Class A)....................................................... (11,761) (16,613) Net investment income (Class B)....................................................... (765,501) (1,163,563) Net investment income (Class C)....................................................... (4,729,080) (7,353,487) Net investment income (Class D)....................................................... (772,452) (1,212,647) ------------ ------------ Total distributions to shareholders..................................................... (6,278,794) (9,746,310) ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 3) (889,403) (26,056,887) ------------ ------------ Total increase (decrease) in net assets................................................. (945,789) (26,653,654) ============ ============ NET ASSETS: Beginning of period..................................................................... 203,313,876 229,967,530 ------------ ------------ End of period+.......................................................................... $202,368,087 $203,313,876 ============ ============ -------- +Includes accumulated undistributed net investment income (loss)........................ $ (39,753) $ (39,701) ============ ============
See Notes to Financial Statements 4 SunAmerica Senior Floating Rate Fund, Inc. STATEMENT OF CASH FLOWS -- For the six months ended June 30, 2006 -- (unaudited) INCREASE (DECREASE) IN CASH Cash flows from operating activities: Net increase in net assets from operations...................................................................... $ 6,222,408 Adjustments to reconcile net increase in net assets from operations to net cash provided by operating activities Purchase of loans............................................................................................. (73,215,592) Proceed from loans sold....................................................................................... 29,517,664 Loan principal paydowns....................................................................................... 37,952,035 Proceeds from short-term securities sold...................................................................... 5,278,173 Accretion of facility fee income.............................................................................. (43,312) Increase in dividends and interest receivable................................................................. (530,028) Increase in receivables for investments sold.................................................................. (3,895,704) Decrease in amount due from investment adviser................................................................ 17,245 Increase in amount due from distributor....................................................................... (2,033) Increase in other assets...................................................................................... (77,517) Decrease in payable for investments purchased................................................................. (1,245,417) Increase in payable to the adviser............................................................................ 7,971 Increase in other liabilities................................................................................. 90,997 Unrealized depreciation on investments........................................................................ 374,465 Net realized gain from investments............................................................................ (318,131) ------------ Net cash provided by operating activities....................................................................... $ 133,224 ------------ Cash flows from financing activities: Proceeds from shares sold....................................................................................... 31,655,380 Payment on shares repurchased................................................................................... (29,685,144) Cash dividends paid (not including reinvested dividends of $4,053,048).......................................... (2,093,279) ------------ Net cash used by financing activities........................................................................... $ (123,043) ------------ Net increase in cash............................................................................................ 10,181 Cash balance at beginning of period............................................................................. (10,181) ------------ Cash balance at end of period................................................................................... $ -- ============
See Notes to Financial Statements 5 SunAmerica Senior Floating Rate Fund, Inc. FINANCIAL HIGHLIGHTS
Class A ----------------------------- For the For the Six Months period from ended Year 4/28/04* 06/30/06 ended through (unaudited) 12/31/05 12/31/04 ----------- -------- ----------- Net Asset Value, Beginning of Period........................................... $ 9.39 $ 9.41 $ 9.42 Investment Operations: Net investment income (loss)@.................................................. 0.30 0.43 0.22 Net realized and unrealized gain (loss) on investments......................... (0.00) (0.01) (0.01) ------ ------ ------ Total from investment operations............................................. 0.30 0.42 0.21 ------ ------ ------ Distributions: Dividends from net investment income........................................... (0.30) (0.44) (0.22) ------ ------ ------ Net Asset Value, End of Period................................................. $ 9.39 $ 9.39 $ 9.41 ------ ------ ------ Total Return(1)................................................................ 3.14% 4.55% 2.22% Ratios/Supplemental Data Net assets, end of period ($000's)............................................. $ 380 $ 401 $ 224 Ratio of net expenses to average net assets.................................... 1.45%# 1.45% 1.45%# Ratio of net investment income to average net assets........................... 6.23%# 4.74% 3.44%# Portfolio turnover rate........................................................ 33% 57% 24% Expense ratio before waiver of fees and reimbursement of expenses.............. 4.18%# 4.32% 9.31%# Net investment income ratio before waiver of fees and reimbursement of expenses 3.50%# 1.87% (4.42)%#
-------- * Inception date of class @ Calculated based upon average shares outstanding. # Annualized (1)Total return is not annualized and does not reflect sales load but does include expense reimbursements. See Notes to Financial Statements 6 SunAmerica Senior Floating Rate Fund, Inc. FINANCIAL HIGHLIGHTS -- (continued)
Class B ------------------------------------------------------- For the Six Months ended Year Year Year Year Year 06/30/06 ended ended ended ended ended (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 ----------- -------- -------- -------- -------- -------- Net Asset Value, Beginning of Period.... $ 9.39 $ 9.41 $ 9.33 $ 8.78 $ 9.03 $ 9.64 Investment Operations: Net investment income (loss)@........... 0.28 0.41 0.29 0.40 0.40 0.58 Net realized and unrealized gain (loss) on investments......................... (0.00) (0.02) 0.08 0.54 (0.26) (0.60) ------- ------- ------- ------- ------- ------- Total from investment operations....... 0.28 0.39 0.37 0.94 0.14 (0.02) ------- ------- ------- ------- ------- ------- Distributions: Dividends from net investment income.... (0.28) (0.41) (0.29) (0.39) (0.39) (0.59) ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period.......... $ 9.39 $ 9.39 $ 9.41 $ 9.33 $ 8.78 $ 9.03 ------- ------- ------- ------- ------- ------- Total Return(1)......................... 2.99% 4.24% 3.97% 10.95% 1.54% (0.41)% Ratios/Supplemental Data Net assets, end of period ($000's)...... $25,562 $25,181 $27,530 $26,565 $31,906 $42,335 Ratio of net expenses to average net assets................................. 1.75%# 1.75% 1.75% 1.54% 1.45% 1.45% Ratio of net investment income to average net assets..................... 5.96%# 4.36% 3.04% 4.35% 4.42% 6.23% Portfolio turnover rate................. 33% 57% 24% 75% 112% 69% Expense ratio before waiver of fees and reimbursement of expenses.............. 2.43%# 2.38% 2.38% 2.57% 2.51% 2.47% Net investment income ratio before waiver of fees and reimbursement of expenses............................... 5.28%# 3.73% 2.41% 3.33% 3.36% 5.21%
-------- @ Calculated based upon average shares outstanding. # Annualized (1)Total return is not annualized and does not reflect sales load but does include expense reimbursements. See Notes to Financial Statements 7 SunAmerica Senior Floating Rate Fund, Inc. FINANCIAL HIGHLIGHTS -- (continued)
Class C ----------------------------------------------------------- For the Six Months ended Year Year Year Year Year 06/30/06 ended ended ended ended ended (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 ----------- -------- -------- -------- -------- -------- Net Asset Value, Beginning of Period.... $ 9.39 $ 9.41 $ 9.33 $ 8.78 $ 9.03 $ 9.64 Investment Operations: Net investment income (loss)@........... 0.28 0.42 0.28 0.38 0.40 0.57 Net realized and unrealized gain (loss) on investments......................... (0.00) (0.03) 0.09 0.56 (0.27) (0.60) -------- -------- -------- -------- ------- -------- Total from investment operations....... 0.28 0.39 0.37 0.94 0.13 (0.03) -------- -------- -------- -------- ------- -------- Distributions: Dividends from net investment income.... (0.28) (0.41) (0.29) (0.39) (0.38) (0.58) -------- -------- -------- -------- ------- -------- Net Asset Value, End of Period.......... $ 9.39 $ 9.39 $ 9.41 $ 9.33 $ 8.78 $ 9.03 -------- -------- -------- -------- ------- -------- Total Return(1)......................... 2.99% 4.24% 3.97% 10.92% 1.47% (0.45)% Ratios/Supplemental Data Net assets, end of period ($000's)...... $158,728 $154,584 $174,583 $103,726 $86,101 $140,664 Ratio of net expenses to average net assets................................. 1.75%# 1.75% 1.75% 1.59% 1.50% 1.50% Ratio of net investment income to average net assets..................... 5.96%# 4.36% 3.06% 4.22% 4.33% 6.28% Portfolio turnover rate................. 33% 57% 24% 75% 112% 69% Expense ratio before waiver of fees and reimbursement of expenses.............. 2.36%# 2.32% 2.35% 2.51% 2.48% 2.52% Net investment income ratio before waiver of fees and reimbursement of expenses............................... 5.34%# 3.79% 2.46% 3.31% 3.36% 5.26%
-------- @ Calculated based upon average shares outstanding. # Annualized (1)Total return is not annualized and does not reflect sales load but does include expense reimbursements. See Notes to Financial Statements 8 SunAmerica Senior Floating Rate Fund, Inc. FINANCIAL HIGHLIGHTS -- (continued)
Class D --------------------------------------------------------- For the For the Six Months period from ended Year Year Year Year 5/02/01* 06/30/06 ended ended ended ended through (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 ----------- -------- -------- -------- -------- ----------- Net Asset Value, Beginning of Period.... $ 9.39 $ 9.41 $ 9.33 $ 8.78 $ 9.03 $ 9.46 Investment Operations: Net investment income (loss)@........... 0.32 0.47 0.33 0.43 0.43 0.35 Net realized and unrealized gain (loss) on investments......................... (0.02) (0.03) 0.08 0.54 (0.27) (0.42) ------- ------- ------- ------- ------- ------- Total from investment operations....... 0.30 0.44 0.41 0.97 0.16 (0.07) ------- ------- ------- ------- ------- ------- Distributions: Dividends from net investment income.... (0.30) (0.46) (0.33) (0.42) (0.41) (0.36) ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period.......... $ 9.39 $ 9.39 $ 9.41 $ 9.33 $ 8.78 $ 9.03 ------- ------- ------- ------- ------- ------- Total Return(1)......................... 3.24% 4.76% 4.49% 11.28% 1.72% (0.79)% Ratios/Supplemental Data Net assets, end of period ($000's)...... $17,698 $23,148 $27,630 $13,369 $15,037 $26,372 Ratio of net expenses to average net assets................................. 1.25%# 1.25% 1.25% 1.25% 1.25% 1.25%# Ratio of net investment income to average net assets..................... 6.46%# 4.86% 3.60% 4.63% 4.58% 5.66%# Portfolio turnover rate................. 33% 57% 24% 75% 112% 69% Expense ratio before waiver of fees and reimbursement of expenses.............. 1.66%# 1.60% 1.62% 1.86% 1.77% 2.27%# Net investment income ratio before waiver of fees and reimbursement of expenses............................... 6.05%# 4.51% 3.23% 4.02% 4.06% 4.64%#
-------- * Inception date of class @ Calculated based upon average shares outstanding. # Annualized (1)Total return is not annualized and does not reflect sales load but does include expense reimbursements. See Notes to Financial Statements 9 SunAmerica Senior Floating Rate Fund, Inc. PORTFOLIO PROFILE -- June 30, 2006 -- (unaudited) Industry Allocation* Broadcasting & Entertainment........................ 17.32% Chemicals, Plastics and Rubber...................... 8.32 Telecommunications.................................. 6.62 Leisure, Amusement, Entertainment................... 6.54 Healthcare, Education and Childcare................. 5.92 Hotels, Motels, Inns and Gaming..................... 5.28 Containers, Packaging and Glass..................... 4.84 Electronics......................................... 4.55 Buildings & Real Estate............................. 4.51 Automobile.......................................... 4.19 Diversified/Conglomerate Manufacturing.............. 4.02 Printing and Publishing............................. 3.96 Utilities........................................... 3.30 Oil and Gas......................................... 2.86 Home and Office Furnishings, Housewares and Durables 2.80 Personal Transportation............................. 2.39 Registered Investment Companies..................... 2.24 Retail Stores....................................... 2.17 Beverage, Food & Tobacco............................ 1.92 Personal and Nondurable Consumer Products........... 1.81 Personal, Goods and Misc. Services.................. 1.76 Diversified/Conglomerate Service.................... 1.61 Ecological.......................................... 1.60 Cargo Transport..................................... 1.34 Aerospace/Defense................................... 1.26 Finance............................................. 1.23 Farming and Agriculture............................. 0.45 Mining, Steel, Iron and Nonprecious Metals.......... 0.39 Textiles and Leather................................ 0.19 ------ 105.39% ======
Credit Quality+# BBB-............ 1.44% BB+............. 2.86 BB.............. 9.02 BB-............. 19.75 B+.............. 26.32 B............... 20.55 B-.............. 7.04 CCC+............ 1.57 CCC............. 0.72 CCC-............ 0.48 D............... 0.37 Not Rated@...... 9.88 ------ 100.00% ======
-------- * Calculated as a percentage of Net Assets. @ Represents debt issues that either have no rating, or the rating is unavailable from the data source. + Source: Standard and Poors # Calculated as a percentage of total debt issues, excluding short-term securities. 10 SunAmerica Senior Floating Rate Fund, Inc. PORTFOLIO OF INVESTMENTS -- June 30, 2006 -- (unaudited)
Ratings/(1)/ ------------ Interest Maturity Principal Value Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2) ------------------------------------------------------------------------------------------------------------------------ LOANS(3)(4) -- 102.52% Aerospace/Defense -- 1.26% Axle Tech International.................. 1st Lien B2 B+ 7.32-7.36% 10/20/12 $ 239,286 $ 241,428 Hexcel Corp.............................. BTL-B Ba3 BB- 6.75-6.94 03/01/12 820,146 822,537 Midwestern Aircraft...................... BTL-B B1 BB- 7.32 07/01/13 594,000 598,009 SI International, Inc.................... BTL B1 B+ 6.97 02/01/11 855,446 857,584 ----------- 2,519,558 ----------- Automobile -- 4.19% Dura Operating Corp...................... 2nd Lien B3 B 8.95 04/13/11 500,000 507,499 FleetPride Corp.......................... BTL-B B2 B 8.49-8.59 06/29/13 250,000 250,312 Goodyear Tire & Rubber Co................ 2nd Lien B2 B+ 7.95 04/30/10 2,000,000 2,010,833 HLI Operating Co., Inc................... BTL-C Caa1 B- 10.68-11.26 06/03/10 500,000 504,791 Key Plastics LLC......................... BTL-B B1 BB- 8.11-8.23 06/25/10 1,207,459 1,219,533 Navistar International Corp.............. BTL B1 BB- 10.01-10.11 02/28/09 1,739,963 1,755,186 Ozburn-Hessey Holding Co. LLC............ BTL B2 B+ 7.29 08/01/12 522,198 527,420 Plastech, Inc.@.......................... 2nd Lien B1 B 12.58 02/15/10 1,000,000 962,500 United Components, Inc................... BTL-D B2 BB- 7.41 06/30/10 723,333 725,142 ----------- 8,463,216 ----------- Beverage, Food & Tobacco -- 1.92% Alliance One International, Inc.......... BTL-B B2 B+ 8.49 05/13/10 491,269 494,339 Dole Food Co............................. BTL B1 BB- 7.00-9.00 04/01/13 208,779 207,034 Dole Food Co............................. Tranche C B1 BB- 7.00-9.00 04/01/13 695,930 690,113 Dole Food Co............................. LOC B1 BB- 4.92 04/01/13 93,023 92,246 Keystone Foods Holdings LLC.............. BTL Ba3 B+ 7.13-7.25 06/16/11 1,188,088 1,192,048 Leiner Health Products Group, Inc........ BTL-B B2 B 8.61 05/27/11 496,203 498,684 Pierre Foods, Inc........................ BTL-B B1 B+ 6.93 06/30/10 715,121 715,568 ----------- 3,890,032 ----------- Broadcasting & Entertainment -- 16.83% Adelphia Communications Corp.(5)......... BTL-B NR NR 7.31 08/07/06 2,000,000 2,003,750 Century -- TCI California LP(5).......... Revolver NR NR 8.25 06/30/09 1,000,000 994,583 Century Cable Holdings LLC(5)............ Discretionary BTL Ca NR 10.25 12/31/09 2,500,000 2,393,750 Cequel Communications LLC................ 1st Lien B1 B+ 7.38 05/01/13 2,000,000 1,991,072 Cequel Communications LLC................ 2nd Lien Caa1 B- 9.85 05/05/14 1,000,000 970,000 Charter Communications Operating LLC..... BTL B2 B 7.76 04/28/13 4,000,000 4,012,648 CSC Holdings, Inc........................ BTL Ba3 BB 6.49-6.74 03/29/13 1,995,000 1,987,311 Haights Cross Operating Co............... BTL B3 B- 9.67 08/20/08 1,456,313 1,471,786 Hilton Head Communications LP(5)(10)..... BTL NR NR 9.50 03/31/08 1,000,000 948,542 HIT Entertainment, Ltd................... 2nd Lien B2 CCC+ 10.58 02/05/13 1,000,000 1,009,375 HIT Entertainment, Ltd................... BTL B1 B 7.42 08/05/15 497,500 499,988 Insight Midwest Holdings LLC............. BTL-C Ba3 BB- 7.38 12/31/09 975,000 976,625 Intelstat Zeus, Ltd...................... BTL B1 B 9.00 07/28/11 985,000 987,052 Liberty Cablevision of Puerto Rico, Ltd.. BTL NR NR 7.48 02/13/13 1,496,250 1,498,120 Mission Broadcasting, Inc................ BTL-B Ba3 B+ 6.28 10/01/12 1,207,076 1,206,321 Nexstar Broadcasting, Inc................ BTL-B Ba3 B 7.25 10/01/12 1,172,405 1,171,672 NextMedia Operating...................... 2nd Lien B3 CCC+ 9.75 11/18/12 500,000 508,334 PANAMSAT Corp............................ BTL-B1 Ba3 BB+ 7.18 08/20/11 4,432,500 4,445,798 Panavision, Inc.......................... 2nd Lien Caa3 CCC 12.13 04/10/13 500,000 510,313 Spanish Broadcasting Systems, Inc........ 1st Lien B1 B+ 7.25 06/01/12 987,500 987,500 UPC Financing Partnership................ BTL-J2 B1 B 7.11 09/30/13 1,000,000 999,821 UPC Financing Partnership................ BTL-K2 B1 B 7.11 09/30/12 1,000,000 999,821 WideOpenWest Finance LLC................. 2nd Lien B2 NR 10.23 06/22/11 500,000 503,500 Young Broadcasting, Inc.................. BTL B2 B- 7.69-7.75 11/02/12 990,000 988,144 ----------- 34,065,826 -----------
11 SunAmerica Senior Floating Rate Fund, Inc. PORTFOLIO OF INVESTMENTS -- June 30, 2006 -- (unaudited) (continued)
Ratings/(1)/ ------------ Interest Maturity Principal Value Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2) --------------------------------------------------------------------------------------------------------- Buildings & Real Estate -- 4.51% Atrium Cos., Inc.................... BTL B2 B 7.83-8.25% 12/28/11 $ 445,294 $ 445,851 Kyle Acquisition Group LLC.......... BTL Ba3 BB 7.38 07/15/10 500,000 500,000 Masonite International Corp......... BTL B2 BB- 7.11-7.50 04/16/13 1,483,749 1,472,050 Masonite International Corp......... CND TL B2 BB- 7.11-7.50 04/16/13 1,481,226 1,469,546 North Las Vegas..................... 1st Lien B1 BB 8.25 05/01/11 498,750 499,997 North Las Vegas..................... 2nd Lien B2 B 12.50 05/01/12 250,000 253,125 Palmdale Hills Property LLC......... 1st Lien B1 B+ 8.26-8.50 05/01/12 990,000 992,475 Palmdale Hills Property LLC......... 2nd Lien B2 B- 12.76 05/01/12 1,000,000 1,002,500 PGT Industries, Inc................. 1st Lien B2 B+ 8.13 02/01/12 748,125 752,801 PGT Industries, Inc................. 2nd Lien B3 CCC+ 12.13 02/01/13 250,000 255,000 Rhodes Homes........................ 1st Lien Ba3 BB- 8.75 11/10/10 231,250 232,406 TCO Funding Corp.................... BTL B2 B- 8.12 10/25/12 995,000 1,004,950 Yellowstone Mountain Club........... BTL B1 B+ 7.73 09/30/10 237,733 238,365 ----------- 9,119,066 ----------- Cargo Transport -- 1.34% Hertz Corp.......................... BTL Ba2 BB 7.26-7.41 12/21/12 497,562 499,548 Pacer International, Inc............ BTL B1 NR 6.63-8.75 06/10/10 627,451 627,451 Transport Industries LP............. BTL-B B2 NR 8.00 09/30/12 201,551 202,811 United States Shipping LLC.......... BTL Ba3 NR 7.50 04/30/10 1,371,842 1,376,129 ----------- 2,705,939 ----------- Chemicals, Plastics & Rubber -- 8.32% Basell Finance Co................... BTL-B2 Ba3 B+ 7.73 08/01/13 104,167 105,686 Basell Finance Co................... BTL-B4 Ba3 B+ 7.73 08/01/13 20,833 21,137 Basell Finance Co................... BTL-C2 Ba3 B+ 8.23 08/01/13 104,167 105,686 Basell Finance Co................... BTL-C4 Ba3 B+ 8.23 08/01/13 20,833 21,137 Brenntag Holdings................... BTL-B2 B2 B 7.44 12/22/13 200,909 202,617 Brenntag Holdings................... BTL B2 B 7.44 12/22/13 49,091 49,582 Celanese AG......................... BTL B1 B+ 7.50 04/06/11 2,575,951 2,584,967 Hercules, Inc....................... BTL-B Ba1 BB 6.53-7.00 10/08/10 879,750 882,829 Hexion Specialty Chemicals, Inc..... BTL-C1 B2 B+ 7.13 05/15/13 821,538 814,949 Hexion Specialty Chemicals, Inc..... BTL-C2 B2 B+ 7.13 05/15/13 178,462 177,030 Huntsman International LLC.......... BTL-B Ba3 BB- 7.04 08/31/12 3,479,262 3,467,846 Ineos US Finance LLC................ BTL-B2 Ba3 B+ 7.34 12/31/13 750,000 755,906 Ineos US Finance LLC................ BTL-C2 Ba3 B+ 7.84 12/31/14 750,000 755,906 Invista B.V......................... BTL-B1 Ba3 BB 7.00 04/29/11 985,692 987,129 Invista B.V......................... BTL-B2 Ba3 BB 7.00 04/29/11 501,059 501,789 ISP Chemco, Inc..................... BTL Ba3 BB- 6.94 02/14/13 498,750 499,284 Kraton Polymers LLC................. BTL B1 BB- 7.38 12/23/10 439,871 439,871 PQ Corp............................. BTL B1 B+ 7.50 02/15/13 740,625 742,477 Rockwood Specialties Group, Inc..... BTL-E B1 B+ 7.13 07/30/12 1,980,000 1,986,324 Wellman, Inc........................ 2nd Lien B2 B- 11.90 02/10/10 1,700,000 1,727,413 ----------- 16,829,565 ----------- Containers, Packaging & Glass -- 4.84% Appleton Papers, Inc................ BTL Ba3 BB- 7.40-7.68 06/11/10 943,119 947,834 Berry Plastics Corp................. BTL B1 B+ 7.10 12/02/11 1,159,097 1,159,581 Boise Cascade Corp.................. BTL-D Ba3 BB 7.13-7.25 10/28/11 726,450 728,926 Captive Plastics, Inc............... BTL B2 B- 8.50 08/10/11 481,250 487,266 Captive Plastics, Inc............... 2nd Lien B3 CCC 12.34 12/15/12 1,000,000 1,000,000 Georgia-Pacific Corp................ 1st Lien Ba2 BB- 7.30-7.50 12/20/12 1,990,000 1,988,446 Georgia-Pacific Corp................ 2nd Lien Ba3 B+ 8.30 12/23/13 1,000,000 1,009,663 Graham Packaging Co. LP............. Tranche B B2 B 6.94-7.75 04/07/12 2,462,500 2,469,272 ----------- 9,790,988 -----------
12 SunAmerica Senior Floating Rate Fund, Inc. PORTFOLIO OF INVESTMENTS -- June 30, 2006 -- (unaudited) (continued)
Ratings/(1)/ ------------ Interest Maturity Principal Value Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2) ------------------------------------------------------------------------------------------------------------------- Diversified/Conglomerate Manufacturing -- 4.02% Accuride Corp................................ BTL-B B1 B+ 7.31% 01/31/12 $1,398,636 $1,403,182 Aearo Technologies, Inc...................... 2nd Lien Caa1 CCC+ 11.96 09/24/13 500,000 509,375 Aearo Technologies, Inc...................... BTL B2 B 7.96 03/24/13 997,500 1,006,436 AGY Holding Corp............................. 1st Lien B2 B 8.25 03/31/12 498,750 502,179 Bombardier Capital, Inc...................... BTL NR NR 8.24 06/30/13 1,000,000 1,001,250 Enersys, Inc................................. BTL Ba3 BB 7.03-7.44 03/17/11 588,000 589,470 Flowserve Corp............................... BTL Ba3 BB- 7.00-7.25 08/10/12 468,870 469,676 Maxim Crane Works LP......................... BTL B1 BB 7.31-9.25 01/31/10 318,052 318,848 National Distributing@....................... 2nd Lien B2 B- 11.85 06/16/10 1,000,000 1,002,500 Penn Engineering & Manufacturing Corp........ BTL B2 B 7.60 05/01/12 365,664 371,149 Polypore, Inc................................ BTL B2 B 8.35 11/12/11 948,547 958,033 ---------- 8,132,098 ---------- Diversified/Conglomerate Service -- 1.61% Billing Services Group....................... 1st Lien B1 B+ 7.63 04/27/11 493,750 496,219 Bridge Information Systems, Inc.+#@(5)(6).... BTL-B Caa1 NR 11.25 06/30/05 417,016 -- Coinstar, Inc................................ BTL Ba3 BB- 7.03 07/07/11 798,440 803,430 NES Rentals Holdings, Inc.................... 2nd Lien B3 B 11.13-13.25 07/20/10 1,470,000 1,482,862 Protection One, Inc.......................... BTL B2 B+ 7.70-8.00 04/11/11 465,300 466,463 ---------- 3,248,974 ---------- Ecological -- 1.60% Allied Waste North America, Inc.............. Tranche A B1 BB 6.58 01/15/12 765,132 763,045 Allied Waste North America, Inc.............. BTL B1 BB 6.48-6.86 01/15/12 1,971,199 1,965,599 Wastequip, Inc............................... 2nd Lien B3 B 11.00 07/15/11 500,000 502,500 ---------- 3,231,144 ---------- Electronics -- 4.55% Amkor Technology, Inc........................ 2nd Lien B2 NR 9.69 10/27/10 1,000,000 1,036,875 Aspect Software.............................. 1st Lien B2 B 7.94 09/22/10 250,000 250,469 Eastman Kodak Co............................. BTL-B1 Ba3 B+ 7.33-7.70 10/15/12 995,006 994,384 Epicor Software Corp......................... BTL B1 B+ 7.71-9.15 03/31/12 498,750 504,049 SSA Global Technologies, Inc................. BTL-B B2 BB- 7.49 08/02/12 248,125 248,125 Sungard Data Systems, Inc.................... BTL-B B1 B+ 7.66 08/01/13 3,960,000 3,978,149 UGS Corp..................................... BTL B1 B+ 7.35 03/31/12 1,950,668 1,949,855 Vertafore, Inc............................... 2nd Lien B3 CCC+ 10.98-11.23 12/22/10 250,000 253,958 ---------- 9,215,864 ---------- Farming & Agriculture -- 0.45% AGCO Corp.................................... BTL Ba1 BB+ 7.25 07/03/09 903,167 908,811 ---------- Finance -- 1.23% Check$mart Financial Co...................... BTL-B B2 B 8.03-8.14 04/28/12 498,750 499,373 iPayment, Inc................................ BTL B2 B 7.42-7.75 05/08/13 997,500 997,500 Nasdaq Stock Market, Inc..................... BTL-B Ba3 BBB- 6.97-7.25 04/18/12 631,458 631,695 Nasdaq Stock Market, Inc..................... BTL-C Ba2 BBB- 6.83-7.25 04/18/12 366,042 366,179 ---------- 2,494,747 ----------
13 SunAmerica Senior Floating Rate Fund, Inc. PORTFOLIO OF INVESTMENTS -- June 30, 2006 -- (unaudited) (continued)
Ratings/(1)/ ------------ Interest Maturity Principal Value Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2) ------------------------------------------------------------------------------------------------------------------------------- Healthcare, Education & Childcare -- 5.92% Accellent Corp......................................... BTL B2 BB- 7.23% 11/18/12 $ 497,500 $ 496,878 AMR/EmCare Holdings.................................... BTL B2 B+ 6.91-7.17 02/15/12 677,213 678,483 Community Health Systems, Inc.......................... BTL Ba3 BB- 6.97 08/19/11 1,305,497 1,309,343 ComPsych Investment Corp............................... BTL-B NR NR 7.86-8.25 03/01/12 992,500 994,981 DaVita, Inc............................................ BTL-B B1 BB- 6.99-7.69 07/30/12 2,706,912 2,715,934 HealthSouth Corp....................................... BTL-B B2 NR 8.52 03/10/13 1,000,000 1,001,161 Magellan Health Services, Inc.......................... BTL B1 B+ 7.33-7.42 08/15/08 277,778 278,472 Magellan Health Services, Inc.......................... LOC B1 B+ 5.01 08/15/08 277,778 278,472 Spectrum Labs.......................................... BTL-B NR NR 8.75 12/20/12 995,000 1,002,463 Team Health, Inc....................................... BTL-B B2 B+ 7.69 11/18/12 248,750 250,072 Vanguard Health Holding Co. II......................... BTL B2 B 6.95 09/23/11 985,075 990,411 Warner Chilcott Holdings Co............................ BTL B2 B 7.63 01/18/12 44,054 44,246 Warner Chilcott Holdings Co............................ BTL B2 B 7.61-8.00 01/18/12 220,268 221,232 Warner Chilcott Holdings Co............................ BTL-B B2 B 7.61-7.63 01/18/12 1,078,173 1,083,564 Warner Chilcott Holdings Co............................ BTL-C B2 B 7.61 01/18/12 434,451 436,623 Warner Chilcott Holdings Co............................ BTL-D B2 B 7.61 01/18/12 200,704 201,708 ----------- 11,984,043 ----------- Home & Office Furnishings, Housewares & Durables -- 2.80% Jarden Corp............................................ BTL B1 B+ 7.50 04/11/12 1,278,674 1,280,159 Jarden Corp............................................ BTL-B2 B1 B+ 6.74 01/24/12 681,035 679,474 Maax Corp.............................................. BTL-B B2 B- 8.13-8.50 06/04/11 1,646,058 1,637,828 Sealy Mattress Co...................................... BTL-D Ba3 B+ 6.98-8.75 08/06/12 1,226,246 1,229,503 Simmons Co............................................. BTL-D B2 B+ 7.25-9.50 12/19/11 843,120 847,467 ----------- 5,674,431 ----------- Hotels, Motels, Inns, & Gaming -- 5.28% CCM Merger, Inc........................................ BTL-B B1 B+ 7.21-7.49 07/13/12 495,001 494,197 Fairmont Hotels and Resorts............................ BTL-B NR NR 8.61 06/15/11 2,000,000 2,000,000 Isle of Capri Black Hawk LLC........................... BTL B1 B+ 7.03-7.51 10/24/11 496,250 497,491 Isle of Capri Casinos, Inc............................. BTL Ba2 BB- 6.47-7.25 02/04/11 295,500 296,239 Kulima Resort Co....................................... 2nd Lien B2 CCC+ 11.85 09/30/11 250,000 235,000 Penn National Gaming, Inc.............................. BTL-B Ba2 BB 6.86-7.25 06/01/12 1,985,000 1,993,271 Trump Entertainment Resorts Holdings LP................ BTL-B1 B2 BB- 7.92-8.03 05/04/12 495,000 499,563 Venetian Casino Resorts LLC............................ Delayed Draw Ba3 BB- 7.25 06/15/11 683,761 685,363 Venetian Casino Resorts LLC............................ BTL-B Ba3 BB- 7.25 06/15/11 3,316,239 3,324,013 Venetian Macau, Ltd.................................... BTL B1 BB- 8.10 04/01/13 166,667 167,570 Wembley, Inc........................................... 1st Lien B1 B+ 6.99 07/18/12 247,500 247,655 Wembley, Inc........................................... 2nd Lien B2 B 8.74 07/18/12 250,000 252,188 ----------- 10,692,550 ----------- Leisure, Amusement, Entertainment -- 6.54% 24 Hour Fitness Worldwide, Inc......................... BTL-B B2 B 7.50-8.12 06/30/12 1,995,000 2,010,587 Deluxe, Inc............................................ 1st Lien B1 B 9.25 01/28/11 480,518 486,224 Fender Musical Instruments Corp........................ 1st Lien B2 B+ 7.24-7.37 03/31/12 417,920 420,009 Metro-Goldwyn-Mayer Studios, Inc....................... BTL-B Ba3 B+ 7.75 04/08/12 2,992,500 3,010,524 Regal Cinemas, Inc..................................... BTL Ba2 BB- 7.07-7.25 11/10/10 1,421,925 1,422,248 Six Flags Theme Parks, Inc............................. BTL-B B1 B- 7.26-7.41 06/30/09 987,406 993,754 Southwest Sports Group LLC............................. BTL NR NR 7.80 12/22/12 1,000,000 1,000,625 True Temper Sports, Inc................................ BTL B2 B 8.03-8.41 03/15/11 465,026 468,514 WMG Acquisition Corp................................... BTL Ba2 B+ 7.09-7.32 02/28/11 3,414,155 3,426,484 ----------- 13,238,969 ----------- Mining, Steel, Iron & Nonprecious Metals -- 0.39% Novelis, Inc........................................... BTL-B Ba2 BB- 7.38 01/07/12 389,525 391,138 Novelis, Inc........................................... CND TL Ba2 BB- 7.38 01/07/12 224,272 225,201 Walter Industries, Inc................................. BTL-B Ba3 B+ 6.87-7.25 10/03/12 180,571 181,192 ----------- 797,531 -----------
14 SunAmerica Senior Floating Rate Fund, Inc. PORTFOLIO OF INVESTMENTS -- June 30, 2006 -- (unaudited) (continued)
Ratings/(1)/ ------------ Interest Maturity Principal Value Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2) ------------------------------------------------------------------------------------------------------------------------ Oil & Gas -- 2.81% Alon USA, Inc................................... BTL-B B2 BB- 7.91% 06/15/14 $ 222,222 $ 223,819 Calumet Lubricants Co. LP....................... BTL B2 B 8.79 11/30/12 110,556 111,730 Calumet Lubricants Co. LP....................... CLD B2 B 5.13 11/30/12 111,111 112,292 CDX Funding LLC................................. 2nd Lien NR NR 10.75 03/01/13 1,000,000 1,017,917 Epco Holdings, Inc.............................. BTL-C Ba3 B+ 7.08-7.35 08/18/10 495,000 497,828 Helix Energy Solutions Group, Inc............... BTL-B B2 BB 7.39-7.64 05/05/13 1,000,000 1,001,500 Key Energy Services, Inc........................ Delayed Draw NR NR 8.40 06/30/12 995,000 999,975 Petrohawk Energy Corp........................... 2nd Lien NR B- 9.69-9.88 02/24/09 777,778 785,556 Primary Energy Finance LLC...................... BTL Ba2 BB- 7.35 08/24/12 433,700 436,682 Targa Resources, Inc............................ LOC Ba3 B+ 7.23 10/31/12 96,774 97,046 Targa Resources, Inc............................ BTL-B Ba3 B+ 7.23-7.75 10/31/12 400,202 401,327 ---------- 5,685,672 ---------- Personal & Nondurable Consumer Products -- 1.81% American Achievement Corp....................... BTL-B Ba3 BB- 7.63-9.75 03/22/11 687,164 690,600 American Safety Razor Co........................ BTL-B B2 B 7.97 02/28/12 928,056 930,376 Bushnell Performance Optics..................... BTL B1 B+ 8.32 08/19/11 496,341 500,271 Hillman Group, Inc.............................. BTL-B B2 B 8.38 03/31/11 814,583 820,439 Solo Cup, Inc................................... 2nd Lien B3 B- 9.66 02/27/12 250,000 253,281 Spectrum Brands, Inc............................ BTL-B B1 B- 8.03-8.44 02/07/12 461,700 463,864 ---------- 3,658,831 ---------- Personal, Goods & Misc. Services -- 1.76% Burt's Bees, Inc................................ BTL B2 B 7.92-8.37 03/29/11 487,750 487,750 Garden Fresh Restaurants Corp................... BTL B2 B 8.23-10.50 06/22/11 248,438 249,059 Maidenform, Inc................................. BTL Ba3 B+ 6.92-7.04 05/11/10 416,667 417,188 Reynolds American, Inc.......................... BTL B1 BBB- 7.19-7.31 06/01/13 2,000,000 2,009,218 Stewart Enterprises, Inc........................ BTL-B Ba3 BB 6.66-7.28 11/19/11 402,737 403,744 ---------- 3,566,959 ---------- Personal Transportation -- 2.39% Delta Air Lines, Inc.(5)........................ BTL-C B3 B 12.77 10/01/08 1,500,000 1,551,000 Northwest Airlines, Inc.(5)..................... BTL-A Caa2 D 10.54 11/17/09 750,000 763,438 United Airlines, Inc............................ BTL B1 B+ 9.13 02/01/12 250,000 252,839 United Airlines, Inc............................ BTL-B B1 B+ 8.63 02/01/12 1,750,000 1,769,870 US Airways Group, Inc........................... BTL B2 B 9.00 04/10/13 500,000 503,563 ---------- 4,840,710 ---------- Printing & Publishing -- 3.96% Affinity Group, Inc............................. BTL Ba3 B+ 7.85 06/24/09 1,169,732 1,178,505 Dex Media West LLC.............................. BTL-B Ba2 BB 6.67-7.00 03/09/10 1,031,712 1,028,429 FSC Acquisition LLC............................. Delayed Draw B2 B 7.46 08/01/12 51,391 51,541 FSC Acquisition LLC............................. BTL B2 B 7.33-7.42 08/01/12 430,257 431,512 GateHouse Media Operating, Inc.................. 1st Lien B1 B+ 5.14-7.39 12/06/13 2,000,000 2,000,000 New Publications, Inc........................... 2nd Lien B3 CCC+ 12.32 02/05/13 250,000 252,188 Primedia, Inc................................... BTL-B B2 B 7.38 12/31/09 1,087,114 1,075,156 R.H. Donnelly, Inc.............................. BTL-D2 Ba3 BB 6.49-7.00 06/30/11 1,506,523 1,501,412 Thomas Nelson Publishers........................ BTL-B B1 B 7.43 05/13/13 500,000 502,813 ---------- 8,021,556 ---------- Retail Stores -- 2.17% Alimentation Couche-Tard, Inc................... BTL Ba1 BB+ 7.13 12/17/10 598,469 603,207 Burlington Coat Factory......................... BTL-B B2 B 7.43-7.53 05/28/13 498,750 484,723 Jean Coutu Group, Inc........................... BTL-B B2 BB- 7.63 07/30/11 1,352,840 1,356,503 Neiman-Marcus Group, Inc........................ BTL B1 B+ 7.77 04/15/13 949,367 956,953 Quality Stores, Inc. (Central Tractor)+#@(5)(6). BTL-B Caa2 NR 10.75 04/30/06 833,705 -- Supervalu, Inc.................................. BTL-B Ba3 BB- 7.06 06/01/13 1,000,000 999,297 ---------- 4,400,683 ----------
15 SunAmerica Senior Floating Rate Fund, Inc. PORTFOLIO OF INVESTMENTS -- June 30, 2006 -- (unaudited) (continued)
Ratings/(1)/ ------------ Interest Maturity Principal Value Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2) ----------------------------------------------------------------------------------------------------------- Telecommunications -- 6.53% Cavalier Telecom...................... BTL-B B2 B 9.52% 03/31/12 $ 249,375 $ 252,492 Centennial Cellular Operating Co...... BTL B2 B- 7.23-7.75 02/09/11 1,375,000 1,381,875 Cricket Communications, Inc........... BTL-B B2 B 8.25 12/20/10 3,000,000 3,025,125 Crown Castle Operating Co............. BTL-B B2 BB 7.65 06/01/14 2,000,000 2,010,626 FairPoint Communications, Inc......... BTL B1 BB- 7.25 02/07/12 1,000,000 998,125 Hawaiian Telecom Communications, Inc.. BTL-B B1 B 7.75 10/31/12 997,778 1,003,034 Madison River Capital LLC............. BTL-B1 B1 B+ 7.26 08/01/12 750,000 752,579 Ntelos, Inc........................... 1st Lien B2 B 7.60 08/31/11 1,477,517 1,477,517 Paetec Communications, Inc............ 2nd Lien B3 CCC+ 12.88 06/15/13 250,000 255,625 Paetec Communications, Inc............ BTL-B B3 B 8.88 06/15/13 500,000 504,375 Syniverse Holding LLC................. BTL-B Ba3 BB- 7.25 02/01/12 1,550,453 1,552,391 ------------ 13,213,764 ------------ Textiles & Leather -- 0.19% Globe Manufacturing Corp.+#@(5)(7).... BTL-B Caa2 NR 11.00 08/15/06 837,014 -- William Carter Co..................... BTL-B B1 BB 6.63-6.76 07/14/12 393,894 393,647 ------------ 393,647 ------------ Utilities -- 3.30% Calpine Corp.......................... DIP B2 B 9.50 12/20/07 500,000 507,917 Cheniere LNG Holdings LLC............. BTL Ba2 BB 8.25 08/30/12 248,125 250,374 Complete Production Services, Inc..... BTL-B NR B 7.66 08/01/12 248,125 248,849 La Paloma Generating Co............... BTL Ba3 BB- 6.73 08/16/12 15,338 15,278 La Paloma Generating Co............... LOC Ba3 BB- 7.10 08/16/12 32,787 32,659 La Paloma Generating Co............... BTL-C B2 B 9.00 08/16/13 250,000 250,391 La Paloma Generating Co............... BTL-B Ba3 BB- 7.25 08/16/12 192,588 191,836 NRG Energy, Inc....................... CLD Ba2 BB- 7.50 02/02/13 1,000,000 1,002,031 NRG Energy, Inc....................... BTL Ba2 BB- 7.23 02/02/13 2,992,500 2,999,131 Reliant Energy, Inc................... BTL B2 B 7.50-7.66 10/01/10 995,000 997,384 Reliant Energy Resources, Inc......... BTL B2 B 7.47 03/15/07 180,978 181,247 ------------ 6,677,097 ------------ Total Loans (Cost $208,641,517)................................................ 207,462,271 ------------ CORPORATE BONDS -- 0.49% Broadcasting & Entertainment -- 0.49% Paxson Communications Corp.*(8) 11.32% due 01/15/13 (Cost $981,389)........................................... 1,000,000 1,002,500 ------------ COMMON STOCK -- 0.14% Oil & Gas -- 0.05% Shaw Group, Inc.+.............................................................. 3,276 91,073 ------------ Telecommunications -- 0.09% Global Crossing, Ltd.+......................................................... 175 3,110 SAVVIS Communications Corp.+................................................... 6,313 186,928 ------------ 190,038 ------------ Total Common Stock (Cost $177,154)............................................. 281,111 ------------ Total Long-Term Investment Securities (Cost $209,800,060)...................... 208,745,882 ------------
16 SunAmerica Senior Floating Rate Fund, Inc. PORTFOLIO OF INVESTMENTS -- June 30, 2006 -- (unaudited) (continued)
Principal Value Industry Description Amount (Note 2) ---------------------------------------------------------------------------- SHORT-TERM INVESTMENT SECURITIES -- 2.24% Registered Investment Companies -- 2.24% SSgA Money Market Fund (Cost $4,536,632)....... $4,536,632 $ 4,536,632 ------------ TOTAL INVESTMENTS -- 105.39%....................... (Cost $214,336,692)(9)......................... 213,282,514 Liabilities in Excess of Other Assets -- (5.39)%... (10,914,427) ------------ NET ASSETS -- 100.00%.............................. $202,368,087 ============
-------- BTL Bank Term Loan CNDTL Canadian Term Loan LOC Letter of Credit CLD Credit Linked Deposit DIP Debtor in Possession NR Security is not rated. + Non-income producing security @ Illiquid security. At June 30, 2006, the aggregate value of these securities was $1,965,000 representing 0.97% of net assets. # Fair valued security (see Note 2) * Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no rights to demand registration of these securities. At June 30, 2006, the aggregate value of these securities was $1,002,500 representing 0.49% of net assets. Unless otherwise indicated, these securities are not considered to be illiquid. (1) Bank loans rated below Baa by Moody's Investor Service, Inc. or BBB by Standard & Poor's Group are considered below investment grade. Ratings are unaudited. Ratings provided are as of June 30, 2006. (2) Loans in the Fund's portfolio are generally subject to mandatory and/or optional prepayment. Because of these mandatory prepayment conditions and because there may be significant economic incentives for a Borrower to prepay, prepayments may occur. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. The Fund estimates that the maturity of the Loans held in its portfolio will be approximately 65 months. (3) The Fund invests in Senior Loans which generally pay interest at rates which are periodically re-determined by reference to a base lending rate plus a premium. These base lending rates are generally either the lending rate offered by one or more major European banks, such as the London Inter- Bank Offer Rate ("LIBOR") or the prime rate offered by one or more major United States banks, or the certificate of deposit rate. Senior Loans are generally considered to be restrictive in that the Fund is ordinarily contractually obligated to receive approval from the Agent Bank and/or borrower prior to the disposition of a Senior Loan. (4) All loans in the portfolio were purchased through assignment agreements unless otherwise indicated. (5) Company has filed Chapter 11 bankruptcy protection. (6) Bond is in default and did not pay principal at maturity. Final outcome of Chapter 11 bankruptcy still to be determined. (7) Loan is in default of interest payments. (8) Floating rate security where the rate fluctuates. The rate moves up or down at each reset date. The rate reflected is as of June 30, 2006. (9) See Note 6 for cost of investments on a tax basis. (10) Loan was purchased through a participation agreement. See Notes to Financial Statements 17 SunAmerica Senior Floating Rate Fund, Inc. NOTES TO FINANCIAL STATEMENTS -- June 30, 2006 -- (unaudited) Note 1. Organization of the Fund The SunAmerica Senior Floating Rate Fund, Inc. (the "Fund"), is a non-diversified closed-end, investment management company. The Fund is organized as a Maryland corporation and is registered under the Investment Company Act of 1940, as amended. The Fund is managed by AIG SunAmerica Asset Management Corp. (the "Adviser" or "SAAMCo"), an indirect wholly-owned subsidiary of American International Group, Inc. ("AIG"). The Fund's investment objective is to provide as high a level of current income as is consistent with the preservation of capital by investing primarily in senior secured floating rate loans and other institutionally traded senior secured floating rate debt obligations. The Fund offers three classes of shares. Class B shares are offered for sale at net asset value without a front-end sales charge but are subject to an Early Withdrawal Charge which declines from 3% during the first year after purchase to zero after the fourth year. Class C shares are offered for sale at net asset value without a front-end sales charge, but are subject to an Early Withdrawal Charge of 1% during the first year after purchase. Class D shares are offered for sale at net asset value without a front-end sales charge and no Early Withdrawal Charge. Class D shares are available only to investors participating in a fee-based investment advisory program (such as a "wrap" program) or agency commission program or to CypressTree Investors. Class A shares are not currently offered for sale to the public and are available only through a conversion of Class B shares after being held by the shareholders for approximately eight years. Class C shares do not have a conversion feature (except that Class C shares purchased before August 18, 1999 will automatically convert to Class A shares ten years after purchase). The share classes differ in their respective distribution and service fees. All classes have equal rights to assets and voting privileges except as may otherwise be provided in the Fund's registration statement. Indemnifications: Under the Fund's organizational documents, its officers and directors are indemnified against certain liability arising out of the performance of their duties to the Fund. In addition, in the normal course of business the Fund enters into contracts that may contain the obligation to indemnify others. The Fund's maximum exposure under these arrangements is unknown. Currently, however, the Fund expects the risk of loss to be remote. Note 2. Significant Accounting Policies The preparation of financial statements in accordance with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements: Security Valuation: The Fund's investments in loan interests ("Loans") are valued in accordance with guidelines established by the Board of Directors. Under the Fund's current guidelines, Loans for which an active secondary market exists to a reliable degree will be valued at the mean of the last available bid and asked prices in the market for such Loans, as provided by a Board-approved loan pricing service. Loans for which an active secondary market does not exist to a reliable degree will be valued at fair value, which is intended to approximate market value. In valuing a Loan at fair value, the following factors will be considered, (a) the creditworthiness of the borrower and any intermediate participants, (b) the terms of the Loan, (c) recent prices in the market for similar Loans, if any, and (d) recent prices in the market for instruments of similar quality, rate, and period until next interest rate reset and maturity. Stocks are generally valued based upon closing sales prices reported on recognized securities exchanges. Stocks listed on the NASDAQ are valued using the NASDAQ Official Closing Price ("NOCP"). Generally, the NOCP will be the last sale price unless the reported trade for the stock is outside the range of the bid/ask price. In such cases, the NOCP will be normalized to the nearer of the bid or ask price. For listed securities having no sales reported and for unlisted securities, such securities will be valued based upon the last reported bid price. Non-convertible bonds and debentures, other long-term debt securities, and short-term debt securities with maturities in excess of 60 days, are valued at bid prices obtained for the day of valuation from a bond pricing service, when such prices are available. If a vendor quote is unavailable the securities may be priced at the mean of two independent quotes obtained from brokers. Securities for which market quotations are not readily available are valued as determined pursuant to procedures adopted in good faith by the Board of Directors. Short-term securities with 18 SunAmerica Senior Floating Rate Fund, Inc. NOTES TO FINANCIAL STATEMENTS -- June 30, 2006 -- (unaudited) (continued) 60 days or less to maturity are amortized to maturity based on their cost to the Fund if acquired within 60 days of maturity or, if already held by the Fund on the 60/th/ day, are amortized to maturity based on the value determined on the 61/st/ day. Securities for which market quotations are not readily available or if a development/significant event occurs that may significantly impact the value of the security, then these securities are valued, as determined pursuant to procedures adopted in good faith by the Board of Directors. The Senior Loans in which the Fund primarily invests are generally not listed on any exchange and the secondary market for those senior Loans is comparatively illiquid relative to markets for other fixed income securities. Consequently, obtaining valuations for those Loans may be more difficult than obtaining valuations for actively traded securities. Thus, the value upon disposition on any given Loan may differ from its current valuation. Repurchase Agreements: The Fund may enter into repurchase agreements. The Fund's custodian takes possession of the collateral pledged for investments in repurchase agreements. The underlying collateral is valued daily on a mark to market basis to ensure that the value, including accrued interest, is at least 102% of the repurchase price. In the event of default of the obligation to repurchase, the Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited. At June 30, 2006, the Fund did not enter into any repurchase agreements. Securities Transactions, Investment Income, Expenses, Dividends and Distributions to Shareholders: Security transactions are recorded on a trade date basis. Realized gains and losses on sales of investments are calculated on the identified cost basis. Interest income is accrued daily except when collection is not expected. Dividend income is recorded on the ex-dividend date. For financial statement purposes, the Fund amortizes all premiums and accretes all discounts. Facility fees received, which were $43,312 for the period ended June 30, 2006, are amortized as income over the stated life of the Loans. Other income, including amendment fees, commitment fees, letter of credit fees, etc., which were $310,050 for the period ended June 30, 2006, are recorded as income when received or contractually due to the Fund. Net investment income, other than class specific expenses, and realized and unrealized gains and losses, are allocated daily to each class of shares based upon the relative net asset value of outstanding shares of each class of shares at the beginning of the day (after adjusting for the current capital share activity of the respective class). Interest earned on cash balances held at the custodian are shown as custody credits on the statement of operations. Dividends from net investment income are normally declared daily and paid monthly. Capital gain distributions, if any, are paid annually. The Fund records dividends and distributions to the shareholders on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts at fiscal year end based on their federal tax-basis treatment; temporary differences do not require reclassification. Net investment income/loss, net realized gain/loss, and net assets are not affected. The Fund intends to comply with the requirements of the Internal Revenue Code, as amended, applicable to regulated investment companies and distribute all of its taxable income, including any net realized gain on investments, to its shareholders. Therefore, no federal tax provision is required. On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements, if any, has not yet been determined. 19 SunAmerica Senior Floating Rate Fund, Inc. NOTES TO FINANCIAL STATEMENTS -- June 30, 2006 -- (unaudited) (continued) Statement of Cash Flows: Information on financial transactions which have been settled through the receipt or disbursement of cash is presented in the Statement of Cash Flows. The cash amount shown in the Statement of Cash Flows is the amount included in the Fund's Statement of Assets and Liabilities and represents cash on hand at its custodian bank account, and does not include any short-term investments at June 30, 2006. Note 3. Capital Share Transactions The Fund has 1,000,000,000 of $.01 par value shares authorized that may be issued in four different classes. Transactions in capital shares of each class were as follows:
For the period ended For the June 30, 2006 year ended (unaudited) December 31, 2005 ------------------------- ------------------------- Shares Amount Shares Amount Class A ---------- ------------ ---------- ------------ Shares sold................. 4,939* $ 46,487* 20,621@ $ 194,088@ Reinvested distributions.... 762 7,176 1,003 9,426 Shares repurchased.......... (8,006) (75,647) (2,715) (25,453) ---------- ------------ ---------- ------------ Net increase (decrease).. (2,305) $ (21,984) 18,909 $ 178,061 ========== ============ ========== ============ For the period ended For the June 30, 2006 year ended (unaudited) December 31, 2005 ------------------------- ------------------------- Shares Amount Shares Amount Class B ---------- ------------ ---------- ------------ Shares sold................. 224,867 $ 2,118,522 254,487 $ 2,391,460 Reinvested distributions.... 56,926 536,385 84,193 791,345 Shares repurchased.......... (240,785)* (2,268,270)* (581,114)@ (5,462,413)@ ---------- ------------ ---------- ------------ Net increase (decrease).. 41,008 $ 386,637 (242,434) $ (2,279,608) ========== ============ ========== ============ For the period ended For the June 30, 2006 year ended (unaudited) December 31, 2005 ------------------------- ------------------------- Shares Amount Shares Amount Class C ---------- ------------ ---------- ------------ Shares sold................. 2,701,011 $ 25,452,135 3,815,180 $ 35,893,397 Reinvested distributions.... 310,261 2,923,431 480,086 4,512,412 Shares repurchased.......... (2,567,327) (24,190,770) (6,375,191) (59,926,283) ---------- ------------ ---------- ------------ Net increase (decrease).. 443,945 $ 4,184,796 (2,079,925) $(19,520,474) ========== ============ ========== ============ For the period ended For the June 30, 2006 year ended (unaudited) December 31, 2005 ------------------------- ------------------------- Shares Amount Shares Amount Class D ---------- ------------ ---------- ------------ Shares sold................. 451,655 $ 4,258,199 923,576 $ 8,679,305 Reinvested distributions.... 62,174 586,056 101,255 951,642 Shares repurchased.......... (1,093,804) (10,283,107) (1,494,315) (14,065,813) ---------- ------------ ---------- ------------ Net increase (decrease).. (579,975) $ (5,438,852) (469,484) $ (4,434,866) ========== ============ ========== ============
----- * Includes automatic conversion of 4,939 shares of Class B shares in the amount of $46,487 to 4,939 shares of Class A shares in the amount of $46,487. @ Includes automatic conversion of 20,621 shares of Class B shares in the amount of $194,088 to 20,621 shares of Class A shares in the amount of $194,088. 20 SunAmerica Senior Floating Rate Fund, Inc. NOTES TO FINANCIAL STATEMENTS -- June 30, 2006 -- (unaudited) (continued) In order to provide shareholders with liquidity and the ability to receive net asset value on a disposition of shares, the Fund will make monthly offers to repurchase a percentage (usually 10%) of outstanding shares at net asset value. Shareholders are sent a Notification of Repurchase Offer seven to fourteen days before each monthly repurchase offer. During the period ended June 30, 2006, the Fund made six Repurchase Offers, and redeemed the amounts shown in the table below. In no case was a monthly Repurchase Offer oversubscribed.
Amount Tendered --------------------- Shares Amount --------- ----------- January. 544,880 $ 5,127,272 February 482,301 4,548,038 March... 590,069 5,576,080 April... 457,271 4,321,214 May..... 530,129 4,988,532 June.... 1,305,272 12,256,658
Note 4. Purchases And Sales Of Securities During the period ended June 30, 2006, the Fund's cost of purchases of Loans and proceeds from Loan sales were $73,215,592 and $67,469,699, respectively. Note 5. Investment Advisory Agreement And Other Transactions With Affiliates The Fund currently maintains an Investment Advisory Agreement with SAAMCo, who oversees the administration of certain aspects of the business and affairs of the Fund, and selects, contracts with and compensates the subadviser to manage the Fund's assets. The Fund will pay SAAMCo a monthly advisory fee at the following annual rates, based on the average daily net assets of the Fund: 0.85% on the first $1 billion; 0.80% on the next $1 billion; and 0.75% thereafter. For the period ended June 30, 2006, SAAMCo received advisory fees in the amount of $887,031. American International Group Global Investment Corp. ("AIGGIC") acts as subadviser to the Fund pursuant to a Subadvisory Agreement with SAAMCo. Under the Subadvisory Agreement, AIGGIC manages the investment and reinvestment of the Fund's assets. As compensation for its services as subadviser, AIGGIC is entitled to receive from SAAMCo an annual fee paid monthly equal to the following percentage of average daily net assets: 0.25% for the first $1 billion of average daily net assets; 0.20% for average daily net assets of more than $1 billion. AIGGIC received $257,967 as compensation for its services. The fee paid to the subadviser is paid by SAAMCo. SAAMCo acts as the Fund's administrator under an Administration Agreement and is responsible for managing the Fund's business affairs, subject to supervision by the Fund's Board of Directors. For its services, SAAMCo receives an annual fee equal to 0.40% of average daily net assets of the Fund. For the period ended June 30, 2006, SAAMCo received administration fees in the amount of $417,427. The Fund has adopted Distribution Plans ("Plans") applicable to Class A, Class B and C shares to use the assets attributable to that class of shares of the Fund to finance certain activities relating to the distribution of shares to investors. The Plans are compensation plans providing for the payment to AIG SunAmerica Capital Services, Inc. ("SACS"), of a fixed percentage of 0.50% of average net assets to finance distribution expenses for Class B and Class C, and 0.25% of average net assets to finance service fees for Class A, Class B and Class C. For the period ended June 30, 2006 SACS received distribution fees of $692,056. In addition, SACS receives the proceeds of early withdrawal charges paid by investors in connection with certain redemptions of Class B and Class C shares. For the period ended June 30, 2006, SACS received early withdrawal charges of $29,431. For the period ended June 30, 2006 SACS waived fees for the following classes: Class A $94, Class B $32,079, and Class C $198,150. SAAMCo contractually agreed to waive fees or reimburse expenses, if necessary, at or below 1.75% for Class B and Class C average net assets. The expense reimbursements and fee waivers will continue indefinitely, subject to 21 SunAmerica Senior Floating Rate Fund, Inc. NOTES TO FINANCIAL STATEMENTS -- June 30, 2006 -- (unaudited) (continued) termination by the Directors, including a majority of the Independent Directors. SAAMCo voluntarily agreed to waive fees or reimburse expenses, if necessary, at or below 1.45% for Class A and 1.25% for Class D average net assets. The expense waiver and fee reimbursement will continue indefinitely, but may be terminated at any time. For the period ended June 30, 2006, SAAMCo waived fees and reimbursed expenses as follows: Class A $5,057, Class B $55,383, Class C $289,624, and Class D $48,619. Note 6. Federal Income Taxes The following details the tax basis distributions as well as the components of distributable earnings. The tax basis components of distributable earnings differ from the amounts reflected in the Statement of Assets and Liabilities by temporary book/tax differences primarily arising from wash sales, retirement pension expense, dividends payable and treatment of defaulted securities.
Distributable Earnings Tax Distributions ---------------------------------------- ------------------------------------ For the year ended December 31, 2005 For the year ended December 31, 2005 ---------------------------------------- ------------------------------------ Long-term Gains/ Unrealized Long-term Ordinary Capital Loss Appreciation Ordinary Capital Income Carryover (Depreciation) Income Gains -------- ---------------- -------------- ---------- --------- $ -- $(27,697,156) $(680,069) $9,746,310 $ --
Capital Loss Carryforwards. At December 31, 2005 capital loss carryforwards available to offset future recognized gains were $27,697,156, with $329,673 expiring in 2007, $1,179,134 expiring in 2008, $9,997,029 expiring in 2009, $7,736,363 expiring in 2010, $4,956,144 expiring in 2011, and $3,498,813 expiring in 2012. During the year ending December 31, 2005, the Senior Floating Rate Fund utilized $14,305 of capital loss carry forwards to offset current year capital gains. Unrealized appreciation and depreciation in the value of investments at June 30, 2006 for federal income tax purposes were as follows: Cost (tax basis)............................................ $214,364,826 ============ Gross unrealized appreciation............................... $ 998,268 Gross unrealized depreciation............................... (2,052,802) ------------ Net unrealized depreciation................................. $ (1,054,534) ============
Note 7. Director Retirement Plan The Directors of the SunAmerica Senior Floating Rate Fund, Inc. have adopted the AIG SunAmerica Disinterested Trustees' and Directors' Retirement Plan ("Retirement Plan") for the unaffiliated Directors. The Retirement Plan provides generally that if an unaffiliated Director who has at least 10 years of consecutive service as a Disinterested Director of any of the AIG SunAmerica mutual funds (an "Eligible Director") retires after reaching age 60 but before age 70, or who has at least 5 years of consecutive service after reaching age 65 but before age 70, or dies while a Director, such person will be eligible to receive a retirement or death benefit from each AIG SunAmerica mutual fund with respect to which he or she is an Eligible Director. As of each birthday, prior to the 70th birthday, but in no event for a period greater than 10 years, each Eligible Director will be credited with an amount equal to 50% of his or her regular fees (excluding committee fees) for services as a Disinterested Director of each AIG SunAmerica mutual fund for the calendar year in which such birthday occurs. In addition, an amount equal to 8.50% of any amounts credited under the preceding clause during prior years, is added to each Eligible Director's account until such Eligible Director reaches his or her 70th birthday. An Eligible Director may elect to receive any benefits payable under the Retirement Plan, at his or her election either in one lump sum or in up to fifteen annual installments. Any undistributed amounts continue to accrue interest at 8.50% per year. As of June 30, 2006, the Fund had accrued $15,854 for the Retirement Plan, which is included in Directors' fees and expenses line on the Statement of Assets and Liabilities and for the 22 SunAmerica Senior Floating Rate Fund, Inc. NOTES TO FINANCIAL STATEMENTS -- June 30, 2006 -- (unaudited) (continued) period ended June 30, 2006, expensed $4,110 for the Retirement Plan, which is included in Directors' fees and expenses line on the Statement of Operations. Note 8. Line of Credit The Fund currently has an agreement with State Street Bank & Trust Company that provides a $20,000,000 committed unsecured Line of Credit to the Fund which will be used for cash overdraft protection. Interest is currently payable at the Federal Funds rate plus 50 basis points. There is also a commitment fee of 10 basis points per annum on the daily unused portion of the line of credit which is included in other expenses on the Statement of Operations. For the period ended June 30, 2006, the Fund had borrowings outstanding for 3 days under the line of credit and incurred $116 in interest charges related to these borrowings. The Fund's average amount of debt under the line of credit for the days utilized was $266,066 at a weighted average interest rate of 5.25%. At June 30, 2006, there were no borrowings outstanding. Note 9. Interfund Leading Agreement Pursuant to the exemptive relief granted by the Securities and Exchange Commission, the Fund is permitted to participate in an interfund lending program among investment companies advised by SAAMCo or an affiliate. The interfund lending program allows the participating funds to borrow money from and lend money to each other for temporary or emergency purposes. An interfund loan will be made under this facility only if the participating Funds receive a more favorable interest rate than would otherwise be available from a typical bank for a comparable transaction. For the period ended June 30, 2006, the Fund did not participate in this program. Note 10. Investment Concentration The Fund invests primarily in participations and assignments, or acts as a party to the primary lending syndicate of a Variable Rate Senior Loan interest to United States corporations, partnerships, and other entities. If the lead lender in a typical lending syndicate becomes insolvent, enters receivership or, if not FDIC insured, enters into bankruptcy, the Fund may incur certain costs and delays in receiving payment, or may suffer a loss of principal and/or interest. When the Fund purchases a participation of a Senior Loan interest, the Fund typically enters into a contractual agreement with the lender or other third party selling the participation, but not with the borrower directly. As such, the Fund assumes the credit risk of the Borrower, Selling Participant or other persons positioned between the Fund and the Borrower. Note 11. Unfunded Loan Commitments On June 30, 2006, the Fund had the following unfunded loan commitments which could be extended at the option of the Borrower:
Maturity Name Type Date Amount ---- ---------------------- -------- -------- Alon U.S.A, Inc......................... Term Loan 06/15/14 $ 27,778 Atrium Cos., Inc........................ Delayed Draw Term Loan 05/31/12 54,706 Navistar International Corp............. Term Loan 02/22/09 260,037 Trump Entertainment Resorts Holdings LP. Delayed Draw Term Loan 05/22/12 495,000 Venetian Macau, Ltd..................... Delayed Draw Term Loan 05/26/12 83,333 WMG Acquisition Corp.................... Revolver 02/28/10 500,000
Note 12. Other Information On February 9, 2006, American International Group, Inc. ("AIG"), the parent company and an affiliated person of AIG SunAmerica Asset Management Corp. ("Adviser"), AIG SunAmerica Capital Services, Inc., the distributor of the Fund ("Distributor), and AIG Global Investment Corp., the subadviser to the Fund ("AIGGIC"), announced that it had consented to the settlement of an injunctive action instituted by the Securities and Exchange Commission ("SEC"). In 23 SunAmerica Senior Floating Rate Fund, Inc. NOTES TO FINANCIAL STATEMENTS -- June 30, 2006 -- (unaudited) (continued) its complaint, the SEC alleged that AIG violated Section 17(a) of the Securities Act of 1933, as amended, Sections 10(b), 13(a), 13(b)(2) and 13(b)(5) of the Securities Exchange Act of 1934, as amended, and Rules 10b-5, 12b-20, 13a-1 and 13b2-1 promulgated thereunder, in connection with AIG's accounting and public reporting practices. The conduct described in the complaint did not involve any conduct of AIG or its subsidiaries related to their investment advisory or distribution activities with respect to the assets of the Fund. AIG, without admitting or denying the allegations in the complaint (except as to jurisdiction), consented to the entry of an injunction against further violations of the statutes referred to above. Absent exemptive relief granted by the SEC, the entry of such an injunction would prohibit AIG and its affiliated persons from, among other things, serving as an investment adviser of any registered investment management company or principal underwriter for any registered open-end investment company pursuant to Section 9(a) of the Investment Company Act of 1940, as amended ("1940 Act"). Certain affiliated persons of AIG, including the Adviser, received a temporary order from the SEC pursuant to Section 9(c) of the 1940 Act with respect to the entry of the injunction, granting exemptive relief from the provisions of Section 9(a) of the 1940 Act. The temporary order permits AIG and its affiliated persons, including AIG's investment management subsidiaries, to serve as investment adviser, sub-adviser, principal underwriter or sponsor of the Fund. The Adviser expects that a permanent exemptive order will be granted, although there is no assurance the SEC will issue the order. Additionally, AIG and its subsidiaries reached a resolution of claims and matters under investigation with the United States Department of Justice ("DOJ"), the Attorney General of the State of New York ("NYAG") and the New York State Department of Insurance ("DOI"), regarding accounting, financial reporting and insurance brokerage practices of AIG and its subsidiaries, as well as claims relating to the underpayment of certain workers compensation premium taxes and other assessments. As a result of the settlements with the SEC, the DOJ, the NYAG and the DOI, AIG will make payments totaling approximately $1.64 billion. In addition, as part of its settlements, AIG has agreed to retain for a period of three years an Independent Consultant who will conduct a review that will include the adequacy of AIG's internal controls over financial reporting and the remediation plan that AIG has implemented as a result of its own internal review. Subject to receipt of permanent relief, the Adviser, Distributor and AIGGIC believe that the settlements are not likely to have a material adverse effect on their ability to perform their respective investment advisory or distribution services relating to the Fund. Note 13. Subsequent Events At a meeting held on February 21, 2006, the Board of Directors of the Fund approved a proposal to convert the Fund from its current status as a closed-end investment company into an open-end investment company (the "Conversion") and certain related matters, subject to approval by shareholders. At meetings held on or before August 4, 2006, shareholders approved the conversion and the related matters. 24 SunAmerica Senior Floating Rate Fund, Inc. DIRECTORS AND OFFICERS INFORMATION -- June 30, 2006 -- (unaudited) The following table contains basic information regarding the Directors and Officers that oversee operations of the Fund and other investment companies within the Fund complex.
Number of Position Term of Funds in Name, Held With Office and Fund Complex Address and SunAmerica Length of Principal Occupations Overseen by Other Directorships Date of Birth* Complex Time Served(4) During Past 5 Years Director(1) Held by Director(2) ---------------------- ---------- -------------- ----------------------------- ------------ ------------------------------- Directors Dr. Judith L. Craven Director 2000- Retired. 90 Director, A.G. Belo DOB: October 6, 1945 present Corporation (1992 to present); Director, Sysco Corporation (1996 to present); Director, Luby's Inc. (1998 to present); Director, University of Texas Board of Regents (2001-Present). William F. Devin Director 1998- Retired. 90 Member of the Board of DOB: December 30, 1938 present Governors, Boston Stock Exchange (1985-Present). Samuel M. Eisenstat Director 2001- Attorney, solo practitioner. 52 Director of North European DOB: March 7, 1940 present Oil Royalty Trust. Stephen J. Gutman Director 2001- Senior Associate, Corcoran 52 None DOB: May 10, 1943 present Group (Real Estate) (2003 to present); Partner and Member of Managing Directors, Beau Brummell -- Soho, LLC (Licensing of menswear specialty retailing and other activities) (June 1988 to present). Peter A. Harbeck(3) Director 2001- President, CEO and Director, 99 None DOB: January 23, 1954 present AIG SunAmerica Asset Management Corp. ("SAAMCo") (August 1995 to present); Director, AIG SunAmerica Capital Services, Inc. ("SACS") (August 1993 to present); President and CEO, AIG AdvisorGroup, Inc. (June 2004 to present). William J. Shea Director 2004- President and CEO, 52 Chairman of the Board, Royal DOB: February 9, 1948 present Conseco, Inc. (Financial and SunAlliance, U.S.A., Inc. Services) (2001 to 2004); (March 2005 to present); Chairman of the Board of Director, Boston Private Centennial Technologies, Inc. Financial Holdings (October (1998 to 2001); Vice 2004 to present). Chairman, Bank Boston Corporation (1993 to 1998).
25 SunAmerica Senior Floating Rate Fund, Inc. DIRECTORS AND OFFICERS INFORMATION -- June 30, 2006 -- (unaudited) (continued)
Number of Position Term of Funds in Name, Held With Office and Fund Complex Address and SunAmerica Length of Principal Occupations Overseen by Other Directorships Date of Birth* Complex Time Served(4) During Past 5 Years Director(1) Held by Director(2) ---------------------- ---------- -------------- ------------------------------ ------------ ------------------- Officers Vincent M. Marra President 2004- Senior Vice President, N/A N/A DOB: May 28, 1950 present SAAMCo (February 2003 to Present); Chief Administrative Officer, Chief Operating Officer and Chief Financial Officer, Carret & Co., LLC (June 2002 to February 2003); President, Bowne Digital Solutions (1999 to May 2002). Donna M. Handel Treasurer 2002- Senior Vice President, N/A N/A DOB: June 25, 1966 present SAAMCo (December 2004- Present); Assistant Treasurer (2001 to 2002); Vice President, SAAMCo (August 1997 to December 2004). Gregory N. Bressler Secretary September Senior Vice President and N/A N/A DOB: November 17, 1966 and Chief 2005 to General Counsel, SAAMCo Legal Present (June 2005 to Present); Vice Officer President and Director of U.S. Asset Management Compliance, Goldman Sachs Asset Management, L.P. (June 2004 to June 2005); Deputy General Counsel, Credit Suisse Asset Management, LLC. (June 2002-June 2004); Vice President and Counsel, Credit Suisse Asset Management, LLC (January 2000-June 2002).
-------- * The business address for each Director and Officer is the Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311-4992. (1) The "Fund Complex" consists of all registered investment company portfolios for which SAAMCo serves as investment adviser or administrator. The "Fund Complex" includes the SunAmerica Money Market Funds (2 funds), SunAmerica Equity Funds (10 funds), SunAmerica Income Funds (5 funds), SunAmerica Focused Series, Inc. (17 portfolios), SunAmerica Focused Alpha Growth Fund, Inc. (1 fund), SunAmerica Focused Alpha Large-Cap Fund (1 fund), Anchor Series Trust (9 portfolios), SunAmerica Senior Floating Rate Fund, Inc. (1 fund), SunAmerica Series Trust (32 portfolios), AIG Series Trust (6 funds), VALIC Company I (32 portfolios), VALIC Company II (15 funds) and Seasons Series Trust (24 portfolios). (2) Directorships of companies required to report to the Securities and Exchange Commission under the Securities Exchange Act of 1934 (i.e. "public companies") or other investment companies registered under the Investment Company Act of 1940. (3) Interested Director, as defined in the Investment Company Act of 1940, because he is an officer and director of the adviser and a director of the principal underwriter of the Fund. (4) Directors serve until their successors are duly elected and qualified, subject to the Board's retirement plan discussed in Note 7 of the financial statements. Additional information concerning the Directors and Officers is contained in the Statement of Additional Information and is available without charge by calling (800) 858-8850. 26 SunAmerica Senior Floating Rate Fund, Inc. SPECIAL MEETING OF SHAREHOLDERS -- Proxy Voting Results -- June 30, 2006 (unaudited) A Special Meeting of the Shareholders of the Fund was held on June 23, 2006. At this meeting the Class A and Class B shareholders of the Fund approved Rule 12b-1 Plans for their respective class of shares. The meeting was adjourned to allow for the continued solicitation of votes with respect to the proposal to convert the Fund from a closed-end investment company to that of an open-end investment company and the proposal to amend the Fund's charter to discontinue the monthly repurchase offers made by the Fund. Additionally, the meeting was adjourned with respect to the approval of a Rule 12b-1 Plan for Class C shares. The Rule 12b-1 Plan approvals are contingent upon the approval of the proposal to convert the Fund from a closed-end investment company to an open-end investment company. The voting results of the shareholder meeting to approve the Class A and Class B shares' Rule 12b-1 Plans are listed below. Approval of the Rule 12b-1 Plan for Class A shares
For Against Abstain Total - ------ ------- ------- ------ Shares Voted 21,880 5,262 4,632 31,774
Approval of the Rule 12b-1 Plan for Class B shares
For Against Abstain Total - --------- ------- ------- --------- Shares Voted 1,271,070 40,712 147,877 1,459,659
27 [LOGO] AIG Sun America Mutual Funds AIG SunAmerica Asset Management Corp. Harborside Financial Center 3200 Plaza 5 Jersey City, NJ 07311-4992 Directors Investment Adviser DISCLOSURE OF QUARTERLY Dr. Judith L. Craven PORTFOLIO HOLDINGS William F. Devin AIG SunAmerica Asset Management Corp. The Fund is required to Samuel M. Eisenstat Harborside Financial file its com-plete Stephen J. Gutman Center schedule of portfolio Peter A. Harbeck 3200 Plaza 5 holdings with the U.S. William J. Shea Jersey City, NJ Securities and Exchange 07311-4992 Commission for its first Officers and third fiscal quarters Vincent M. Marra, Distributor on Form N-Q. The Fund's President AIG SunAmerica Capital Forms N-Q are available Donna M. Handel, Services, Inc. on the U.S. Securities Treasurer Harborside Financial and Exchange Commission's Gregory R. Kingston, Center website at www.sec.gov. Vice President and 3200 Plaza 5 You can also review and Assistant Treasurer Jersey City, NJ obtain copies of the Cynthia A. Gibbons, Vice 07311-4992 Forms N-Q at the U.S. President and Chief Securities and Ex-change Compliance Officer Shareholder Servicing Commission's Public Gregory N. Bressler, Agent Reference Room in Chief Legal AIG SunAmerica Fund Washington, DC Officer and Secretary Services, Inc. (information on the Nori L. Gabert, Harborside Financial operation of the Public Assistant Secretary Center Reference Room may be Corey A. Issing, 3200 Plaza 5 ob-tained by calling Assistant Secretary Jersey City, NJ 1-800-SEC-0330). Kathryn A. Pearce, 07311-4992 Assistant Treasurer PROXY VOTING RECORD ON Custodian and Transfer FUND PORTFOLIO SECURITIES Agent Information regarding how State Street Bank and the Fund voted proxies Trust Company related to securities P.O. Box 219373 held in the Fund's Kansas City, MO 64141 portfolio during the most recent twelve month VOTING PROXIES ON FUND period ended June 30, is PORTFOLIO SECURITIES available, once filed A description of the with the U.S. Securities policies and proce-dures and Exchange Commission that the Fund uses to (i) without charge, upon determine how to vote request, by calling proxies relating to (800) 858-8850 or (ii) on secu-rities held in the the U.S. Securities and Fund's portfolio, which Exchange Commis-sion's is available in the website at Fund's State-ment of http://www.sec.gov. Additional Information and Form N-CSR, may be This report is submitted obtained with-out charge solely for the general upon request, by calling information of (800) 858-8850. This shareholders of the Fund. information is also Distribution of this available from the EDGAR report to persons other data-base on the U.S. than shareholders of the Securities and Ex-change Fund is authorized only Commission's website in connection with a at http://www.sec.gov. currently effective prospectus, setting forth details of the Fund which must precede or accompany this report. The accompanying report has not been audited by independent accountants and accordingly no opinion has been expressed thereon.
28 [LOGO] Distributed by: AIG SunAmerica Capital Services, Inc. Harborside Financial Center 3200 Plaza 5 Jersey City, NJ 07311-4992 Investors should carefully consider the investment objectives, risks, charges and expenses of any mutual fund before investing. This and other important information is contained in the prospectus, which can be obtained from your financial adviser or from the AIG SunAmerica Sales Desk at 800-858-8850, ext. 6003. Read the prospectus carefully before you invest. Funds distributed by AIG SunAmerica Capital Services, Inc. www.sunamericafunds.com SFSAN-6/06 Item 2. Code of Ethics. Not applicable. Item 3. Audit Committee Financial Expert. Not applicable. Item 4. Principal Accountant Fees and Services. Not applicable. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. Schedule of Investments. Included in Item 1 to the Form. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable. Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. None. Item 10. Submission of Matters to a Vote of Security Holders. Not applicable. Item 11. Controls and Procedures. (a) An evaluation was performed within 90 days of the filing of this report, under the supervision and with the participation of the registrant's management, including the President and Treasurer, of the effectiveness of the design and operation of the registrant's disclosure controls and procedures, as defined under Rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR 270.30a-3(c)). Based on that evaluation, the registrant's management, including the President and Treasurer, concluded that the registrant's disclosure controls and procedures are effective. (b) There was no change in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940 (17 CFR 270.30a-3(d))) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits. (a) (1) Not applicable. (2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT. (3) Not applicable. (b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes- Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SunAmerica Senior Floating Rate Fund, Inc. By: /s/ Vincent M. Marra -------------------- Vincent M. Marra President Date: September 7, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Vincent M. Marra -------------------- Vincent M. Marra President Date: September 7, 2006 By: /s/ Donna M. Handel ------------------- Donna M. Handel Treasurer Date: September 7, 2006