Form N-CSRS
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-CSR
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08727
SunAmerica Senior Floating Rate Fund, Inc.
--------------------------------------------------
(Exact name of registrant as specified in charter)
Harborside 5, 185 Hudson Street, Jersey City, NJ 07311
--------------------------------------------------------
(Address of principal executive offices) (Zip code)
John T. Genoy
Senior Vice President
SunAmerica Asset Management, LLC
Harborside 5, 185 Hudson Street
Jersey City, NJ 07311
-------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6414
Date of fiscal year end: December 31
Date of reporting period: June 30, 2019
================================================================================
Item 1. Reports to Stockholders
SEMI-ANNUAL REPORT 2019
AIG
Senior Floating
Rate Fund
[GRAPHIC]
Beginning on January 1, 2021, as permitted by regulations adopted by the
Securities and Exchange Commission, paper copies of each Fund's shareholder
reports will no longer be sent by mail, unless you specifically request paper
copies of the reports from the Fund or your financial intermediary. Instead,
the reports will be made available on a website, and you will be notified by
mail each time a report is posted and provided with a website link to access
the report.
If you already elected to receive shareholder reports electronically, you will
not be affected by this change and you need not take any action. At any time,
you may elect to receive reports and other communications from a Fund
electronically by calling 800-858-8850 or contacting your financial
intermediary directly.
You may elect to receive all future reports in paper free of charge. If your
account is held directly at the Fund, you can inform the Fund that you wish to
receive paper copies of reports by calling 800-858-8850. If your account is
held through a financial intermediary, please contact the financial
intermediary to make this election. Your election to receive paper will apply
to all AIG Funds in which you are invested and may apply to all funds held with
your financial intermediary.
[LOGO]
aig.com/funds
Table of Contents
SHAREHOLDERS' LETTER............................... 2
EXPENSE EXAMPLE.................................... 4
STATEMENT OF ASSETS AND LIABILITIES................ 6
STATEMENT OF OPERATIONS............................ 7
STATEMENT OF CHANGES IN NET ASSETS................. 8
FINANCIAL HIGHLIGHTS............................... 9
PORTFOLIO OF INVESTMENTS........................... 10
NOTES TO FINANCIAL STATEMENTS...................... 23
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT
AGREEMENT AND SUBADVISORY AGREEMENT................ 35
June 30, 2019 SEMI-ANNUAL REPORT
Shareholders' Letter -- (unaudited)
Dear Shareholders:
We are pleased to present this semi-annual report for the AIG Senior Floating
Rate Fund, Inc. (the "Fund") for the six-month period ended June 30, 2019.
Overall, fixed income markets generated solid positive returns during the
semi-annual period. In most markets, sovereign yields declined amid concerns
about deteriorating global economic growth and more dovish central bank policy
rhetoric and actual pivots by both the U.S. Federal Reserve (the "Fed") and the
European Central Bank (ECB). The Fed left interest rates unchanged but set the
stage for potential interest rate cuts later in 2019, indicating potential
risks from trade policy and manufacturing. Inflation showed no signs of a
meaningful acceleration, even as wage growth edged higher and oil prices
recovered. The ECB signaled the possibility of a new round of quantitative
easing alongside rate cuts later this year. Indeed, across most developed and
emerging markets countries, central banks either eased monetary policy or
signaled an intention to do so, supporting markets. Sentiment soured at times
due to ongoing tensions between the U.S. and its trading partners, but
corporate bond spreads tightened, benefiting from falling government bond
yields and as investors grew more optimistic that trade would improve. The U.S.
dollar ended mixed as dovish monetary policy developments balanced concerns of
a global economic growth slowdown.
Amid this backdrop, floating rate loans, as represented by the S&P/LSTA
Leveraged Loan Index,/*/ returned 5.74% during the semi-annual period ended
June 30, 2019, modestly lagging the broad U.S. fixed income market, which
returned 6.11% for the same period as represented by the Bloomberg Barclays
U.S. Aggregate Bond Index./*/
During the semi-annual period, higher quality loans outperformed during the
first quarter of 2019, but lower quality loans performed better during the
second calendar quarter. Bank loan deal quality remained weak, but the sector's
overall credit fundamentals remained stable -- including elevated interest
coverage and stable leverage -- and bank loan valuations appeared attractive,
in our view. Technicals, or supply/demand factors, were rather balanced. Bank
loan mutual funds experienced outflows of $20.0 billion/**/ during the
semi-annual period. However, gross U.S. collateralized loan obligation volume,
one of the main sources of demand for bank loans, countered these outflows,
totaling $50.4 billion for the six-month period.+ The trailing 12-month loan
default rate, examined by principal amount, was 2.50% at the end of the
semi-annual period, as compared to 1.63% at the end of 2018 and 1.84% at the
end of 2017, but still historically benign.++
On the following pages, you will find financial statements and portfolio
information for the Fund for the semi-annual period ended June 30, 2019.
2
June 30, 2019 SEMI-ANNUAL REPORT
Shareholders' Letter -- (unaudited) (continued)
As always, we remain diligent in the management of your assets. We value your
ongoing confidence in us and look forward to serving your investment needs in
the future.
Sincerely,
THE AIG SENIOR FLOATING RATE FUND PORTFOLIO MANAGER
Jeffrey W. Heuer
Wellington Management Company LLP
--------
Past performance is no guarantee of future results.
* The S&P/LSTA Leveraged Loan Index (LLI) reflects the market-weighted
performance of U.S. dollar-denominated institutional leveraged loans. The
LLI is the only domestic leveraged loan index that utilizes real-time market
weightings, spreads and interest payments. The Bloomberg Barclays U.S.
Aggregate Bond Index represents securities that are U.S. domestic, taxable
and dollar denominated. The index covers components for government and
corporate securities, mortgage pass-through securities and asset-backed
securities. Indices are not managed and an investor cannot invest directly
into an index.
** Source: Lipper, Inc.
+ Source: S&P Leveraged Commentary & Data.
++ Source: Moody's.
The Fund is not a money market fund and its net asset value may fluctuate.
Investments in loans involve certain risks including nonpayment of principal
and interest; collateral impairment; non-diversification and borrower industry
concentration; and lack of an active trading market, in certain cases, which
may impair the Fund's ability to obtain full value for loans sold. The Fund may
invest all or substantially all of its assets in loans or other securities
(e.g., unsecured loans or high yield securities) that are rated below
investment grade, or in comparable unrated securities. Credit risks include the
possibility of a default on the loan or bankruptcy of the borrower. The value
of these loans is subject to a greater degree of volatility in response to
interest rate fluctuations.
3
SunAmerica Senior Floating Rate Fund, Inc.
EXPENSE EXAMPLE -- June 30, 2019 -- (unaudited)
Disclosure of Portfolio Expenses in Shareholder Reports
As a shareholder of the AIG Senior Floating Rate Fund (the "Fund"), you may
incur two types of costs: (1) transaction costs, including sales charges on
purchase payments and contingent deferred sales charges and (2) ongoing costs,
including management fees, distribution and account maintenance fees, and other
Fund expenses. The example set forth below is intended to help you understand
your ongoing costs (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds. The Example is
based on an investment of $1,000 invested at January 1, 2019 and held until
June 30, 2019.
Actual Expenses
The "Actual" section of the table provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the column under the heading entitled "Expenses Paid During the Six
Months Ended June 30, 2019" to estimate the expenses you paid on your account
during this period. The "Expenses Paid During the Six Months Ended June 30,
2019" column and the "Annualized Expense Ratio" column do not include small
account fees that may be charged if your account balance is below $500 ($250
for retirement plan accounts). In addition, the "Expenses Paid During the Six
Months Ended June 30, 2019" column and the "Annualized Expense Ratio" column do
not include administrative or other fees that may apply to qualified retirement
plan accounts and accounts held through financial institutions. See the Fund's
prospectus, your retirement plan documents and/or materials from your financial
adviser, for a full description of these fees. Had these fees been included,
the "Expenses Paid During the Six Months Ended June 30, 2019" column would have
been higher and the "Ending Account Value" column would have been lower.
Hypothetical Example for Comparison Purposes
The "Hypothetical" section of the table provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an annual rate of return of 5% before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in this Fund and other funds. To do so, compare this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder reports of
other funds. The "Expenses Paid During the Six Months Ended June 30, 2019"
column and the "Annualized Expense Ratio" column do not include small account
fees that may be charged if your account balance is below $500 ($250 for
retirement plan accounts). In addition, the "Expenses Paid During the Six
Months Ended June 30, 2019" column and the "Annualized Expense Ratio" column do
not include administrative or other fees that may apply to qualified retirement
plan accounts and accounts held through financial institutions. See the Fund's
prospectus, your retirement plan document and/or materials from your financial
adviser for full description of these fees. Had these fees been included, the
"Expenses Paid During the Six Months Ended June 30, 2019" column would have
been higher and the "Ending Account Value" column would have been lower.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, including sales
charges on purchase payments, contingent deferred sales charges and
administrative fees, if applicable to your account. Please refer to the Fund's
prospectus, qualified retirement plan document and/or materials from your
financial adviser, for more information. Therefore, the "Hypothetical" example
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. In addition, if these
transaction costs and other fees were included, your costs would have been
higher.
4
SunAmerica Senior Floating Rate Fund, Inc.
EXPENSE EXAMPLE -- June 30, 2019 -- (unaudited) (continued)
Actual Hypothetical
------------------------------------------------- -----------------------------------------------------
Ending Ending Account
Account Value Expenses Paid Value Using Expenses Paid
Beginning Using Actual During the Beginning a Hypothetical 5% During the Annualized
Account Value Return at Six Months Ended Account Value Annual Return at Six Months Ended Expense
at January 1, 2019 June 30, 2019 June 30, 2019* at January 1, 2019 June 30, 2019* June 30, 2019* Ratio*
------------------ ------------- ---------------- ------------------ ----------------- ---------------- ----------
AIG Senior Floating Rate Fund#
Class A.. $1,000.00 $1,051.58 $5.24 $1,000.00 $1,019.69 $5.16 1.03%
Class C.. $1,000.00 $1,049.64 $7.27 $1,000.00 $1,017.70 $7.15 1.43%
Class W.. $1,000.00 $1,052.29 $4.22 $1,000.00 $1,020.68 $4.16 0.83%
--------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 181 days then divided
by 365 days (to reflect the one-half year period). These ratios do not
reflect transaction costs, including sales charges on purchase payments,
contingent deferred sales charges, small account fees and administrative
fees, if applicable to your account. Please refer to your Prospectus, your
qualified retirement plan document and/or materials from your financial
advisor for more information.
# During the stated period, the investment adviser either waived a portion of
or all of the fees and assumed a portion of or all expenses for the Fund. As
a result, if these fees and expenses had not been waived or assumed, the
"Actual/Hypothetical Ending Account Value" would have been lower and the
"Actual/Hypothetical Expenses Paid During the Six Months Ended June 30,
2019" and the "Annualized Expense Ratio" would have been higher.
5
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES -- June 30, 2019 -- (unaudited)
AIG
Senior
Floating Rate
Fund
-------------
ASSETS:
Investments at value (unaffiliated)*............................... $235,561,350
Repurchase agreements (cost approximates value).................... 4,000,000
Foreign cash*...................................................... 765,506
Due from broker.................................................... 860
Receivable for:
Fund shares sold................................................. 249,322
Dividends and interest........................................... 1,610,110
Investments sold................................................. 1,573,939
Investments sold on an extended settlement basis................. 5,148,475
Prepaid expenses and other assets.................................. 9,054
Due from investment adviser for expense reimbursements/fee waivers. 332,916
Unrealized appreciation on forward foreign currency contracts...... 30,087
------------
Total assets..................................................... 249,281,619
------------
LIABILITIES:
Payable for:
Fund shares redeemed............................................. 334,787
Investments purchased............................................ 27,823
Investments purchased on an extended settlement basis............ 8,912,192
Investment advisory and management fees.......................... 168,684
Distribution and service maintenance fees........................ 92,882
Administration fees.............................................. 39,690
Transfer agent fees and expenses................................. 48,360
Directors' fees and expenses..................................... 959
Other accrued expenses........................................... 262,969
Dividends payable.................................................. 94,713
Commitments (Note 10).............................................. 83,606
Due to custodian................................................... 6,379
------------
Total liabilities................................................ 10,073,044
------------
Net Assets...................................................... $239,208,575
============
NET ASSETS REPRESENTED BY:
Common stock, $0.01 par value...................................... $ 301,787
Additional paid-in capital......................................... 272,188,444
------------
272,490,231
Total accumulated earnings (loss).................................. (33,281,656)
------------
Net Assets...................................................... $239,208,575
============
Class A:
Net assets......................................................... $111,838,663
Shares outstanding................................................. 14,111,144
Net asset value and redemption price per share..................... $ 7.93
Maximum sales charge (3.75% of offering price)..................... 0.31
------------
Maximum offering price to public................................... $ 8.24
============
Class C:
Net assets......................................................... $ 89,243,006
Shares outstanding................................................. 11,268,156
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charges)...... $ 7.92
============
Class W:
Net assets......................................................... $ 38,126,906
Shares outstanding................................................. 4,799,378
Net asset value, offering and redemption price per share........... $ 7.94
============
*Cost
Investments securities (unaffiliated)............................ $243,300,540
============
Foreign cash..................................................... $ 765,809
============
See Notes to Financial Statements
6
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF OPERATIONS -- For the six months ended June 30, 2019 --
(unaudited)
AIG
Senior
Floating
Rate Fund
-----------
INVESTMENT INCOME:
Interest (unaffiliated)........................................................... $ 6,903,687
Dividends (unaffiliated).......................................................... 54,105
Facility and other fee income (Note 2)............................................ 156,008
-----------
Total investment income........................................................ 7,113,800
-----------
EXPENSES:
Investment advisory and management fees........................................... 1,033,575
Administrative fees............................................................... 243,194
Distribution and account maintenance fees:
Class A......................................................................... 197,827
Class C......................................................................... 344,853
Service fees:
Class W......................................................................... 27,995
Transfer agent fees and expenses:
Class A......................................................................... 132,554
Class C......................................................................... 106,439
Class W......................................................................... 41,432
Registration fees:
Class A......................................................................... 10,227
Class C......................................................................... 8,906
Class W......................................................................... 17,357
Accounting service fees........................................................... 8,518
Custodian and accounting fees..................................................... 39,215
Reports to shareholders........................................................... 25,794
Audit and tax fees................................................................ 68,901
Legal fees........................................................................ 17,351
Directors' fees and expenses...................................................... 40,601
Other expenses.................................................................... 15,499
-----------
Total expenses before fee waivers and expense reimbursements................... 2,380,238
Fees waived and expenses reimbursed by investment adviser (Note 5)............. (984,580)
-----------
Net expenses................................................................... 1,395,658
-----------
Net investment income (loss)...................................................... 5,718,142
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investments (unaffiliated)...................................................... (1,201,707)
Forward contracts............................................................... 252,248
Net realized foreign exchange gain (loss) on other assets and liabilities......... (6,006)
-----------
Net realized gain (loss) on investments and foreign currencies.................... (955,465)
-----------
Change in unrealized appreciation (depreciation) on:
Investments (unaffiliated)...................................................... 7,377,054
Forward contracts............................................................... (4,391)
Change in unrealized foreign exchange gain (loss) on other assets and liabilities. (4,046)
-----------
Net unrealized gain (loss) on investments and foreign currencies.................. 7,368,617
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies..... 6,413,152
-----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $12,131,294
===========
See Notes to Financial Statements.
7
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF CHANGES IN NET ASSETS
AIG
Senior Floating
Rate Fund
--------------------------
For the
six months
ended For the year
June 30, ended
2019 December 31,
(unaudited) 2018
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)........................................................... $ 5,718,142 $ 9,627,494
Net realized gain (loss) on investments and foreign currencies......................... (955,465) (1,228,237)
Net unrealized gain (loss) on investments and foreign currencies....................... 7,368,617 (9,973,023)
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 12,131,294 (1,573,766)
------------ ------------
Distributions to shareholders from:
Distributable earnings (Class A)....................................................... (2,549,649) (4,860,861)
Distributable earnings (Class C)....................................................... (1,880,209) (4,268,732)
Distributable earnings (Class W)....................................................... (877,142) (1,010,466)
------------ ------------
Total distributions to shareholders...................................................... (5,307,000) (10,140,059)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 3). (5,137,402) 197,672
------------ ------------
Total increase (decrease) in net assets.................................................. 1,686,892 (11,516,153)
NET ASSETS:
Beginning of period...................................................................... 237,521,683 249,037,836
------------ ------------
End of period............................................................................ $239,208,575 $237,521,683
============ ============
See Notes to Financial Statements
8
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS
AIG Senior Floating Rate Fund
-
Net gain
(loss) on
Net investments Dividends Net Net Ratio of
Asset (both Dividends from net Asset Assets, expenses
Value, Net realized Total from from net realized Total Value, end of to average
Period beginning investment and investment investment gains on Distri- end of Total period net
Ended of period income(1) unrealized) operations income investments butions period Return(2) (000's) assets(3)
------------ --------- ---------- ----------- ---------- ---------- ----------- ------- ------ --------- -------- ----------
Class A
-
12/31/14 $8.34 $0.31 $(0.29) $ 0.02 $(0.31) $-- $(0.31) $8.05 0.20% $150,966 1.45%
12/31/15 8.05 0.33 (0.44) (0.11) (0.33) -- (0.33) 7.61 (1.42) 114,375 1.45
12/31/16 7.61 0.31 0.44 0.75 (0.30) -- (0.30) 8.06 10.08 131,640 1.45
12/31/17 8.06 0.30 0.03 0.33 (0.30) -- (0.30) 8.09 4.14 93,346 1.45
12/31/18 8.09 0.33 (0.36) (0.03) (0.35) -- (0.35) 7.71 (0.41) 113,869 1.22
06/30/19(5) 7.71 0.19 0.21 0.40 (0.18) -- (0.18) 7.93 5.16 111,839 1.03(4)
Class C
-
12/31/14 $8.34 $0.29 $(0.30) $(0.01) $(0.28) $-- $(0.28) $8.05 (0.10)% $217,174 1.75%
12/31/15 8.05 0.31 (0.45) (0.14) (0.31) -- (0.31) 7.60 (1.85) 172,236 1.75
12/31/16 7.60 0.29 0.44 0.73 (0.28) -- (0.28) 8.05 9.76 155,688 1.75
12/31/17 8.05 0.28 0.03 0.31 (0.27) -- (0.27) 8.09 3.96 135,902 1.75
12/31/18 8.09 0.31 (0.38) (0.07) (0.32) -- (0.32) 7.70 (0.90) 95,038 1.61
06/30/19(5) 7.70 0.18 0.20 0.38 (0.16) -- (0.16) 7.92 4.96 89,243 1.43(4)
Class W
-
04/20/17 @ -
12/31/17 $8.11 $0.25 $(0.03) $ 0.22 $(0.22) $-- $(0.22) $8.11 2.69% $ 19,790 1.25%(4)
12/31/18 8.11 0.35 (0.37) (0.02) (0.37) -- (0.37) 7.72 (0.34) 28,615 1.02
06/30/19(5) 7.72 0.19 0.21 0.40 (0.18) -- (0.18) 7.94 5.23 38,127 0.83(4)
Ratio of
net
investment
income to
average Portfolio
net assets(3) Turnover
------------- ---------
3.73% 65%
4.14 48
3.95 60
3.69 68
4.21 44
4.82(4) 13
3.44% 65%
3.84 48
3.68 60
3.38 68
3.77 44
4.42(4) 13
3.72%(4) 68%
4.43 44
5.05(4) 13
--------
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load but does
include expense reimbursements.
(3)Net of the following expense waivers and/or reimbursements, if applicable
(based on average daily net assets) (see Note 5):
12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 06/30/19(4)(5)
-------- -------- -------- -------- -------- --------------
Class A............. 0.32% 0.34% 0.33% 0.38% 0.64% 0.80%
Class C............. 0.41 0.44 0.42 0.48 0.65 0.80
Class W............. -- -- -- 0.50(4) 0.69 0.87
(4)Annualized
(5)Unaudited
@ Inception date of class.
See Notes to Financial Statements
9
AIG Senior Floating Rate Fund
PORTFOLIO PROFILE -- June 30, 2019 -- (unaudited)
Industry Allocation*
Hotels, Restaurants & Leisure............................... 6.9%
Software.................................................... 6.5
Commercial Services & Supplies.............................. 6.1
Media....................................................... 6.0
IT Services................................................. 5.4
Containers & Packaging...................................... 5.3
Health Care Providers & Services............................ 5.2
Oil, Gas & Consumable Fuels................................. 4.3
Machinery................................................... 4.3
Insurance................................................... 4.0
Chemicals................................................... 3.5
Diversified Telecommunication Services...................... 2.5
Diversified Financial Services.............................. 2.5
Specialty Retail............................................ 2.2
Trading Companies & Distributors............................ 2.0
Pharmaceuticals............................................. 2.0
Food Products............................................... 1.9
Registered Investment Companies............................. 1.7
Repurchase Agreements....................................... 1.7
Entertainment............................................... 1.6
Capital Markets............................................. 1.5
Construction & Engineering.................................. 1.4
Auto Components............................................. 1.4
Professional Services....................................... 1.3
Building Products........................................... 1.3
Consumer Finance............................................ 1.3
Health Care Equipment & Supplies............................ 1.2
Wireless Telecommunication Services......................... 1.2
Personal Products........................................... 1.1
Electronic Equipment, Instruments & Components.............. 0.9
Metals & Mining............................................. 0.9
Road & Rail................................................. 0.9
Semiconductors & Semiconductor Equipment.................... 0.8
Construction Materials...................................... 0.8
Real Estate Investment Trusts............................... 0.8
Textiles, Apparel & Luxury Goods............................ 0.8
Household Products.......................................... 0.7
Industrial Conglomerates.................................... 0.7
Aerospace & Defense......................................... 0.6
Internet & Direct Marketing Retail.......................... 0.6
Leisure Products............................................ 0.6
Life Sciences Tools & Services.............................. 0.5
Diversified Consumer Services............................... 0.4
Transportation Infrastructure............................... 0.4
Energy Equipment & Services................................. 0.4
Food & Staples Retailing.................................... 0.4
Banks....................................................... 0.3
Interactive Media & Services................................ 0.3
Household Durables.......................................... 0.3
Communications Equipment.................................... 0.2
Paper & Forest Products..................................... 0.2
Multiline Retail............................................ 0.2
Electric Utilities.......................................... 0.2
-----
100.2%
=====
Credit Quality+#
Baa3........................................................ 1.3%
Baa2........................................................ 0.3
Ba3......................................................... 17.7
Ba2......................................................... 15.2
Ba1......................................................... 3.6
B3.......................................................... 8.3
B2.......................................................... 25.7
B1.......................................................... 22.0
Caa3........................................................ 0.2
Caa2........................................................ 3.7
Caa1........................................................ 1.6
Ca.......................................................... 0.2
Not Rated@.................................................. 0.2
-----
100.0%
=====
--------
* Calculated as a percentage of net assets.
@ Represents debt issues that either have no rating, or the rating is
unavailable from the data source.
+ Source: Moody's
# Calculated as a percentage of total debt issues, excluding short-term
securities.
10
AIG Senior Floating Rate Fund
PORTFOLIO OF INVESTMENTS -- June 30, 2019 -- (unaudited)
Ratings/(1)/
------------
Interest Reference Maturity Principal
Industry Description Type Moody's S&P Rate Rate Date/(2)/ Amount**
--------------------------------------------------------------------------------------------------------------------------------
LOANS(3)(4) -- 89.8%
Aerospace & Defense -- 0.6%
TransDigm Group, Inc............................ BTL-F Ba3 B+ 4.83% 3 ML+2.50% 06/09/2023 $ 1,123,977
TransDigm Group, Inc............................ BTL-E Ba3 B+ 4.83 3 ML+2.50% 05/30/2025 449,313
Auto Components -- 1.2%
Adient US LLC................................... BTL-B Ba2 BB- 6.82-6.89 3 ML+4.25% 05/06/2024 575,000
Panther BF Aggregator 2 LP(13).................. BTL-B Ba3 B+ 3.75 1 ME+3.75% 04/30/2026 EUR 945,000
Panther BF Aggregator 2 LP...................... BTL-B Ba3 B+ 5.90 1 ML+3.50% 04/30/2026 1,165,000
Building Products -- 1.3%
NCI Building Systems, Inc....................... BTL-B B2 B+ 6.35 3 ML+3.75% 04/12/2025 1,258,379
TAMKO Building Products, Inc.................... BTL-B B2 BB- 5.58 3 ML+3.25% 04/23/2026 320,833
TAMKO Building Products, Inc.................... BTL-B B2 BB- 5.65 1 ML+3.25% 04/23/2026 64,167
Wilsonart LLC................................... BTL-D B2 B+ 5.58 3 ML+3.25% 12/19/2023 1,502,167
Capital Markets -- 1.5%
Aretec Group, Inc............................... 1st Lien B2 B 6.65 1 ML+4.25% 10/01/2025 841,149
NFP Corp........................................ BTL-B B2 B 5.40 1 ML+3.00% 01/08/2024 837,241
Russell Investments U.S. Institutional Holdco,
Inc............................................ BTL-B Ba2 BB- 5.65 1 ML+3.25% 06/01/2023 854,979
UFC Holdings LLC................................ BTL B2 B+ 5.66 1 ML+3.25% 04/29/2026 230,000
Victory Capital Holdings, Inc................... BTL-B Ba3 BB- TBD 07/01/2026 920,000
Chemicals -- 3.5%
Allnex (Lux) & Cy SCA........................... BTL-B2 B2 B 5.77 3 ML+3.25% 09/13/2023 330,363
Allnex USA, Inc................................. BTL-B3 B2 B 5.77 3 ML+3.25% 09/13/2023 248,903
CTC AcquiCo GmbH(13)............................ BTL-B1 B2 B 2.50 3 ME+2.50% 03/07/2025 EUR 388,094
H.B. Fuller Company............................. BTL-B Ba2 BB+ 4.38 1 ML+2.00% 10/20/2024 912,356
Hexion, Inc..................................... BTL Ba3 BB- TBD 06/25/2026 545,000
LTI Holdings, Inc............................... 1st Lien B2 B- 5.90 1 ML+3.50% 09/06/2025 610,387
Messer Industries GmbH.......................... BTL-B1 B1 BB- 4.83 3 ML+2.50% 03/01/2026 812,962
Messer Industries GmbH(13)...................... BTL-B2 B1 BB- 2.75 3 ME+2.75% 03/01/2026 EUR 220,000
Minerals Technologies, Inc...................... BTL-B1 Ba2 BB+ 4.65-4.68 1 ML+2.25% 02/14/2024 716,239
Minerals Technologies, Inc...................... BTL-B1 Ba2 BB+ 4.60 3 ML+2.25% 02/14/2024 150,549
Momentive Performance Materials, Inc............ BTL-B B1 BB- 5.59 3 ML+3.25% 05/15/2024 655,000
Platform Specialty Products Corp................ BTL Ba2 BB 4.65 1 ML+2.25% 01/30/2026 442,775
Starfruit Finco BV(13).......................... BTL-B B1 B+ 3.75 6 ME+3.75% 10/01/2025 EUR 165,000
Starfruit Finco BV.............................. BTL-B B1 B+ 5.67 1 ML+3.25% 10/01/2025 413,963
Tronox Finance LLC.............................. BTL-B Ba3 BB- 5.33 3 ML+3.00% 09/23/2024 334,438
Tronox Finance LLC.............................. BTL-B Ba3 BB- 5.40 1 ML+3.00% 09/23/2024 523,085
U.S. Coating Acquisition, Inc................... BTL-B2 Ba1 BBB- 4.08 3 ML+1.75% 06/01/2024 454,250
WR Grace & Co................................... BTL-B1 Ba1 BBB- 4.08 3 ML+1.75% 04/03/2025 184,657
WR Grace & Co................................... BTL-B2 Ba1 BBB- 4.08 3 ML+1.75% 04/03/2025 316,555
Commercial Services & Supplies -- 5.3%
ADS Waste Holdings, Inc......................... BTL-B3 Ba3 BB+ 4.64 1 WL+2.25% 11/10/2023 973,736
Allied Universal Holdco LLC..................... BTL-B B3 NR TBD 07/10/2026 844,424
Allied Universal Holdco LLC(6).................. Delayed Draw B3 NR TBD 07/10/2026 83,606
APX Group, Inc.................................. BTL-B B2 B- 7.33 3 ML+5.00% 04/01/2024 641,768
APX Group, Inc.................................. BTL-B B2 B- 9.50 USFRBPLR+4.00% 04/01/2024 739
Blitz F18-675 GmbH(13).......................... BTL-B2 B1 B+ 3.75 3 ME+3.75% 07/31/2025 EUR 1,355,000
Brickman Group, Ltd............................. BTL-B B1 BB- 4.94 1 ML+2.50% 08/15/2025 1,240,973
Clean Harbors, Inc.............................. BTL-B Ba1 BBB- 4.15 1 ML+1.75% 06/28/2024 541,920
Grizzly Acquisition, Inc........................ BTL-B Ba3 BB+ 5.85 3 ML+3.25% 10/01/2025 977,612
IAA Spinco, Inc................................. BTL-B Ba2 BB TBD 06/28/2026 200,000
Value
Industry Description (Note 2)
-------------------------------------------------------------
LOANS(3)(4) -- 89.8%
Aerospace & Defense -- 0.6%
TransDigm Group, Inc............................ $1,102,551
TransDigm Group, Inc............................ 438,802
----------
1,541,353
----------
Auto Components -- 1.2%
Adient US LLC................................... 560,146
Panther BF Aggregator 2 LP(13).................. 1,074,336
Panther BF Aggregator 2 LP...................... 1,153,641
----------
2,788,123
----------
Building Products -- 1.3%
NCI Building Systems, Inc....................... 1,223,774
TAMKO Building Products, Inc.................... 319,630
TAMKO Building Products, Inc.................... 63,926
Wilsonart LLC................................... 1,464,988
----------
3,072,318
----------
Capital Markets -- 1.5%
Aretec Group, Inc............................... 822,924
NFP Corp........................................ 812,274
Russell Investments U.S. Institutional Holdco,
Inc............................................ 846,251
UFC Holdings LLC................................ 229,589
Victory Capital Holdings, Inc................... 921,150
----------
3,632,188
----------
Chemicals -- 3.5%
Allnex (Lux) & Cy SCA........................... 323,136
Allnex USA, Inc................................. 243,458
CTC AcquiCo GmbH(13)............................ 433,138
H.B. Fuller Company............................. 895,882
Hexion, Inc..................................... 544,319
LTI Holdings, Inc............................... 575,672
Messer Industries GmbH.......................... 800,514
Messer Industries GmbH(13)...................... 249,693
Minerals Technologies, Inc...................... 714,448
Minerals Technologies, Inc...................... 150,173
Momentive Performance Materials, Inc............ 648,450
Platform Specialty Products Corp................ 441,115
Starfruit Finco BV(13).......................... 188,208
Starfruit Finco BV.............................. 406,804
Tronox Finance LLC.............................. 330,676
Tronox Finance LLC.............................. 517,200
U.S. Coating Acquisition, Inc................... 448,572
WR Grace & Co................................... 183,965
WR Grace & Co................................... 315,368
----------
8,410,791
----------
Commercial Services & Supplies -- 5.3%
ADS Waste Holdings, Inc......................... 971,843
Allied Universal Holdco LLC..................... 841,961
Allied Universal Holdco LLC(6).................. 83,363
APX Group, Inc.................................. 612,086
APX Group, Inc.................................. 705
Blitz F18-675 GmbH(13).......................... 1,550,401
Brickman Group, Ltd............................. 1,237,870
Clean Harbors, Inc.............................. 541,514
Grizzly Acquisition, Inc........................ 975,692
IAA Spinco, Inc................................. 200,500
11
AIG Senior Floating Rate Fund
PORTFOLIO OF INVESTMENTS -- June 30, 2019 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Reference Maturity Principal Value
Industry Description Type Moody's S&P Rate Rate Date/(2)/ Amount** (Note 2)
--------------------------------------------------------------------------------------------------------------------------------
Commercial Services & Supplies (continued)
KAR Auction Services, Inc.................... BTL-B5 Ba2 BB 4.88% 3 ML+2.50% 03/09/2023 $ 113,278 $ 112,960
PSAV Holdings LLC............................ 1st Lien B2 B- 5.58 3 ML+3.25% 03/01/2025 52,039 50,543
PSAV Holdings LLC............................ 1st Lien B2 B- 5.66-5.69 1 ML+3.25% 03/01/2025 1,698,063 1,649,244
PSAV Holdings LLC............................ 2nd Lien Caa2 CCC 9.83 3 ML+7.25% 09/01/2025 870,000 826,500
Quad Graphics, Inc........................... BTL-B Ba2 BB- 7.41 1 ML+5.00% 01/31/2026 680,719 677,315
USAGM Holdco LLC............................. BTL B2 B- 6.65 1 ML+4.25% 07/28/2022 835,800 833,971
Verisure Holding AB(13)...................... BTL-B B1 B 3.50 3 ME+3.50% 10/21/2022 EUR 1,290,000 1,467,675
-----------
12,634,143
-----------
Communications Equipment -- 0.2%
Lumentum Holdings............................ 1st Lien Ba2 BB 4.90 1 ML+2.50% 12/10/2025 577,100 573,493
-----------
Construction & Engineering -- 1.2%
Brand Energy & Infrastructure Services, Inc.. 1st Lien B3 B- 6.58-6.84 3 ML+4.25% 06/21/2024 856,493 829,299
Brand Energy & Infrastructure Services, Inc.. 1st Lien B3 B- 6.73 2 ML+4.25% 06/21/2024 752,054 728,177
Gopher Sub, Inc.............................. 2nd Lien Caa2 CCC 9.15 1 ML+6.75% 02/02/2026 190,000 182,400
Hamilton Holdco, LLC......................... BTL-B Ba1 BB+ 4.33 3 ML+2.00% 07/02/2025 623,700 619,022
Verra Mobility Corporation................... BTL-B B2 B+ 6.15 1 ML+3.75% 02/28/2025 459,684 460,402
-----------
2,819,300
-----------
Construction Materials -- 0.8%
Quikrete Holdings, Inc....................... 1st Lien B1 BB- 5.15 1 ML+2.75% 11/15/2023 1,153,846 1,132,572
Summit Materials LLC......................... BTL-B Ba2 BBB- 4.40 1 ML+2.00% 11/21/2024 896,350 890,524
-----------
2,023,096
-----------
Consumer Finance -- 0.9%
Capital Automotive LP........................ 2nd Lien B3 CCC+ 8.41 1 ML+6.00% 03/24/2025 447,501 447,501
GreenSky Holdings, Inc....................... BTL-B B1 B+ 5.69 1 ML+3.25% 03/31/2025 1,728,125 1,719,483
-----------
2,166,984
-----------
Containers & Packaging -- 4.5%
Berlin Packaging LLC......................... BTL-B B3 B- 5.33 3 ML+3.00% 11/07/2025 13,039 12,648
Berlin Packaging LLC......................... BTL-B B3 B- 5.41-5.44 1 ML+3.00% 11/07/2025 611,343 593,003
Berry Plastics Holding Corp.................. BTL-Q Ba2 BBB- 4.41 1 ML+2.00% 10/01/2022 2,228,913 2,211,982
Berry Plastics Holding Corp.................. BTL-U Ba2 BBB- TBD 07/01/2026 1,230,000 1,221,335
Berry Plastics Holding Corp.................. BTL-V Ba2 BBB- TBD 07/01/2026 EUR 645,000 734,652
Crown Americas LLC(13)....................... BTL-B Baa2 BBB- 2.38 1 ME+2.38% 04/03/2025 EUR 386,115 441,978
Crown Americas LLC........................... BTL-B Baa2 BBB- 4.40 1 ML+2.00% 04/03/2025 279,048 280,129
Flex Acquisition Co., Inc.................... 1st Lien B2 B 5.44 1 ML+3.00% 12/29/2023 1,505,800 1,427,821
Flex Acquisition Co., Inc.................... BTL B2 B 5.69 3 ML+3.25% 06/29/2025 491,938 466,199
ProAmpac PG Borrower LLC..................... 1st Lien B3 B 5.88 1 ML+3.50% 11/18/2023 322,437 308,599
ProAmpac PG Borrower LLC..................... 1st Lien B3 B 6.02-6.08 3 ML+3.50% 11/18/2023 559,821 535,795
ProAmpac PG Borrower LLC..................... 2nd Lien Caa2 CCC+ 11.02 3 ML+8.50% 11/18/2024 385,000 364,306
Reynolds Group Holdings, Inc................. BTL B1 B+ 5.15 1 ML+2.75% 02/05/2023 2,067,778 2,050,626
-----------
10,649,073
-----------
Diversified Consumer Services -- 0.4%
Belron Finance US LLC........................ BTL-B Ba3 BB 5.04 3 ML+2.50% 11/13/2025 597,000 596,254
Weight Watchers International, Inc........... BTL-B Ba2 BB- 7.35 3 ML+4.75% 11/29/2024 486,430 477,107
-----------
1,073,361
-----------
Diversified Financial Services -- 2.5%
EVO Payments International LLC............... 1st Lien B2 B 5.66 1 ML+3.25% 12/22/2023 1,789,482 1,782,771
Financial & Risk US Holdings, Inc.(13)....... BTL-B B2 B 4.00 6 ME+4.00% 10/01/2025 EUR 99,500 112,859
Financial & Risk US Holdings, Inc............ BTL-B B2 B 6.15 1 ML+3.75% 10/01/2025 567,150 549,528
Millennium Trust Company, LLC................ BTL-B B2 B 7.40 1 ML+5.00% 02/26/2026 423,937 419,168
NAB Holdings LLC............................. BTL B2 B 5.33 3 ML+3.00% 07/01/2024 736,922 726,482
Nets Holding AS(13).......................... BTL-B B1 B 3.25 3 ME+3.25% 02/06/2025 EUR 798,159 899,520
Trans Union LLC.............................. BTL-A2 Ba2 BB+ 4.40 1 ML+2.00% 06/19/2025 732,600 730,463
12
AIG Senior Floating Rate Fund
PORTFOLIO OF INVESTMENTS -- June 30, 2019 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Reference Maturity Principal Value
Industry Description Type Moody's S&P Rate Rate Date/(2)/ Amount** (Note 2)
--------------------------------------------------------------------------------------------------------------------------
Diversified Financial Services (continued)
Vantiv LLC........................... BTL-B4 Ba2 BBB- 4.13% 1 WL+1.75% 08/09/2024 $ 281,837 $ 281,548
Vantiv LLC........................... BTL-B4 Ba2 BBB- 4.15 1 ML+1.75% 08/09/2024 532,232 531,688
----------
6,034,027
----------
Diversified Telecommunication Services -- 2.5%
Altice France SA..................... BTL-B12 B2 B 6.08 1 ML+3.69% 01/31/2026 1,236,651 1,198,005
Centurylink Escrow LLC............... BTL-B Ba3 BBB- 5.15 1 ML+2.75% 01/31/2025 746,212 727,790
MTN Infrastructure TopCo, Inc........ BTL-B B2 B 5.40 1 ML+3.00% 11/15/2024 1,675,309 1,662,744
Telenet Bidco NV..................... BTL-AN Ba3 BB- 4.64 1 ML+2.25% 08/15/2026 1,020,000 1,008,313
Zacapa SARL.......................... BTL B2 B- 7.33 3 ML+5.00% 07/02/2025 530,988 532,647
Zayo Group LLC....................... BTL Ba2 BB 4.65 1 ML+2.25% 01/19/2024 906,388 905,595
----------
6,035,094
----------
Electric Utilities -- 0.2%
Pike Corp............................ BTL-B B2 B 5.91 1 ML+3.50% 03/23/2025 438,567 438,704
----------
Entertainment -- 1.6%
Crown Finance US, Inc.(13)........... BTL B1 BB- 2.38 1 ME+2.38% 02/28/2025 EUR 414,750 469,746
Crown Finance US, Inc................ BTL B1 BB- 4.65 1 ML+2.25% 02/28/2025 842,639 827,998
Delta 2 (Lux) SARL................... BTL-B B2 B+ 4.90 1 ML+2.50% 02/01/2024 2,000,951 1,949,260
NAI Entertainment Holdings LLC....... BTL-B B1 BB 4.91 1 ML+2.50% 05/08/2025 476,400 475,209
----------
3,722,213
----------
Electronic Equipment, Instruments & Components -- 0.9%
Avantor, Inc......................... 1st Lien Ba2 B+ 5.40 1 ML+3.00% 11/21/2024 190,644 190,763
Immucor, Inc......................... BTL-B3 B2 B- 7.33 3 ML+5.00% 06/15/2021 976,497 972,530
Lifescan Global Corporation.......... BTL-B B2 B+ 8.66 3 ML+6.00% 10/01/2024 723,750 689,975
Resideo Funding, Inc................. BTL-B Ba2 BBB- 4.33 3 ML+2.00% 10/24/2025 303,475 302,969
----------
2,156,237
----------
Energy Equipment & Services -- 0.4%
Paragon Offshore, Ltd.(5)+........... Escrow Holding NR NR 6.00 07/18/2021 4,516 0
Philadelphia Energy Solutions LLC(7). BTL-C Ca B- 10.09 3 ML+0.50% 12/31/2022 766,433 351,026
Seadrill Partners Finco LLC.......... BTL-B Caa2 CCC+ 8.33 3 ML+6.00% 02/21/2021 882,261 628,611
----------
979,637
----------
Food & Staples Retailing -- 0.4%
U.S. Foods, Inc...................... BTL-B Ba3 BBB- 4.40 1 ML+2.00% 06/27/2023 979,957 972,783
----------
Food Products -- 1.8%
CHG PPC Parent LLC(13)............... BTL-B B2 B 4.00 1 ME+4.00% 03/30/2025 EUR 195,000 223,536
CHG PPC Parent LLC................... BTL-B B2 B 5.15 1 ML+2.75% 03/31/2025 425,700 421,709
Hearthside Food Solutions LLC........ BTL-B B2 B 6.09 1 ML+3.69% 05/23/2025 495,000 481,852
Hostess Brands LLC................... BTL-B B1 BB- 4.60 2 ML+2.25% 08/03/2022 159,282 158,088
Hostess Brands LLC................... BTL-B B1 BB- 4.65 1 ML+2.25% 08/03/2022 477,845 474,261
Hostess Brands LLC................... BTL-B B1 BB- 4.83 3 ML+2.25% 08/03/2022 922,012 915,097
Pinnacle Operating Corp.(12)......... BTL Caa2 NR 9.65 1 ML+5.50% 11/15/2021 764,432 596,257
Post Holdings, Inc................... BTL Ba1 BB 4.40 1 ML+2.00% 05/24/2024 1,036,570 1,030,831
----------
4,301,631
----------
Health Care Equipment & Supplies -- 1.2%
Agiliti Health, Inc.................. BTL-B B1 B 5.50 1 ML+3.00% 01/04/2026 465,000 464,419
Kinetic Concepts, Inc................ BTL-B B1 B+ 5.58 3 ML+3.25% 02/02/2024 825,300 825,300
Ortho Clinical Diagnostics SA........ BTL-B B1 B- 5.68 1 ML+3.25% 06/30/2025 449,152 431,373
Sotera Health Holdings, LLC.......... BTL-B B1 B 5.40 1 ML+3.00% 05/15/2022 1,091,291 1,076,741
----------
2,797,833
----------
Health Care Providers & Services -- 5.2%
Air Medical Group Holdings, Inc...... BTL-B1 B1 B 5.64 1 ML+3.25% 04/28/2022 245,467 230,432
Catalent Pharma Solutions, Inc....... BTL-B2 Ba3 BB 4.65 1 ML+2.25% 05/18/2026 583,537 583,051
Change Healthcare Holdings, Inc...... BTL-B B1 B+ 5.15 1 ML+2.75% 03/01/2024 1,190,737 1,180,153
13
AIG Senior Floating Rate Fund
PORTFOLIO OF INVESTMENTS -- June 30, 2019 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Reference Maturity Principal Value
Industry Description Type Moody's S&P Rate Rate Date/(2)/ Amount** (Note 2)
--------------------------------------------------------------------------------------------------------------------------
Health Care Providers & Services (continued)
Dental Corp. Perfect Smile ULC............ 1st Lien B2 B- 6.15% 1 ML+3.75% 06/06/2025 $ 704,416 $ 695,611
DuPage Medical Group, Ltd................. 1st Lien B1 B 5.15 1 ML+2.75% 08/15/2024 912,432 889,622
DuPage Medical Group, Ltd................. 2nd Lien Caa1 CCC+ 9.43 3 ML+7.00% 08/15/2025 623,968 608,369
Envision Healthcare Corp.................. 1st Lien B1 B+ 6.15 1 ML+3.75% 10/10/2025 658,184 569,603
Gentiva Health Services, Inc.............. BTL-B B1 B 6.19 1 ML+3.75% 07/02/2025 1,000,322 1,000,323
Gentiva Health Services, Inc.............. BTL-B2 Caa1 CCC+ 9.40 1 ML+7.00% 07/02/2026 145,000 146,450
Healogics, Inc............................ 1st Lien B3 CCC+ 6.73 3 ML+4.25% 07/01/2021 962,693 774,968
MPH Acquisition Holdings LLC.............. BTL-B B1 B+ 5.08 3 ML+2.75% 06/07/2023 1,761,068 1,681,085
NVA Holdings, Inc......................... BTL-B3 B2 B 5.15 1 ML+2.75% 02/02/2025 703,706 702,533
NVA Holdings, Inc......................... BTL-B4 B2 B 5.94 1 ML+3.50% 02/02/2025 640,000 638,400
One Call Corporation...................... BTL-B1 B3 CCC 7.64 1 ML+5.25% 11/25/2022 265,905 213,389
Pharmaceutical Product Development, Inc... BTL-B Ba3 B 4.90 1 ML+2.50% 08/18/2022 1,039,560 1,033,063
Sound Inpatient Physicians................ 1st Lien Ba3 B 5.15 1 ML+2.75% 06/27/2025 569,998 568,929
Sound Inpatient Physicians................ 2nd Lien B3 CCC+ 9.15 1 ML+6.75% 06/26/2026 205,000 203,719
Surgery Center Holdings, Inc.............. 1st Lien B1 B- 5.66 1 ML+3.25% 09/02/2024 793,443 764,350
-----------
12,484,050
-----------
Hotels, Restaurants & Leisure -- 6.7%
8th Avenue Food & Provisions, Inc......... 1st Lien B2 B 6.17 1 ML+3.75% 10/01/2025 422,875 422,170
8th Avenue Food & Provisions, Inc......... 2nd Lien Caa1 CCC+ 10.17 1 ML+7.75% 10/01/2026 270,000 268,650
Aramark Services, Inc..................... BTL-B1 Ba1 BBB- 4.08 3 ML+1.75% 03/11/2025 596,904 594,541
Boyd Gaming Corp.......................... BTL-B3 Ba3 BB 4.62 1 WL+2.25% 09/15/2023 893,039 887,792
Caesars Entertainment Operating Co., Inc.. BTL-B B1 BB 4.40 1 ML+2.00% 10/06/2024 1,913,331 1,899,460
Caesars Resort Collection LLC............. BTL-B Ba3 BB 5.15 1 ML+2.75% 12/22/2024 2,903,275 2,846,766
Carrols Restaurant Group, Inc............. BTL-B B2 B 5.66 1 ML+3.25% 04/30/2026 640,000 634,133
CityCenter Holdings LLC................... BTL-B B1 BB- 4.65 1 ML+2.25% 04/18/2024 1,483,422 1,477,594
Eldorado Resorts LLC...................... BTL-B Ba1 BB 4.69 3 ML+2.25% 04/17/2024 1,135,638 1,131,379
Four Seasons Holdings, Inc................ 1st Lien Ba3 BB+ 4.40 1 ML+2.00% 11/30/2023 604,500 603,083
Golden Entertainment, Inc................. 1st Lien B1 B+ 5.41 1 ML+3.00% 10/21/2024 1,905,875 1,896,346
Hilton Worldwide Finance LLC.............. BTL-B2 Baa3 BBB- 4.15 1 ML+1.75% 06/22/2026 591,190 591,190
IRB Holding Corp.......................... BTL-B B2 B 5.64 1 ML+3.25% 02/05/2025 382,098 377,401
Penn National Gaming, Inc................. BTL-B Ba2 BB 4.65 1 ML+2.25% 10/15/2025 701,475 698,318
Scientific Games International, Inc....... BTL-B5 Ba3 B+ 5.15 1 ML+2.75% 08/14/2024 111,902 110,144
Scientific Games International, Inc....... BTL-B5 Ba3 B+ 5.23 2 ML+2.75% 08/14/2024 464,724 457,421
Station Casinos, Inc...................... BTL-B Ba3 BB- 4.91 1 ML+2.50% 06/08/2023 684,501 680,437
Wynn Resorts, Ltd......................... BTL-B Ba3 BB 4.69 1 ML+2.25% 10/30/2024 433,913 429,845
-----------
16,006,670
-----------
Household Durables -- 0.3%
Installed Building Products, Inc.......... BTL-B2 B1 BB 4.90 1 ML+2.50% 04/15/2025 677,938 664,944
-----------
Household Products -- 0.7%
Diamond (BC) BV(13)....................... BTL B1 B- 3.25 3 ME+3.25% 09/06/2024 EUR 206,850 215,216
Diamond (BC) BV........................... BTL B1 B- 5.58 3 ML+3.00% 09/06/2024 901,275 790,869
Energizer Holdings, Inc................... BTL-B Ba1 BB+ 4.75 1 ML+2.25% 01/02/2026 304,237 302,906
Prestige Brands, Inc...................... BTL-B4 Ba3 BB 4.40 1 ML+2.00% 01/26/2024 249,725 248,164
-----------
1,557,155
-----------
Industrial Conglomerates -- 0.3%
Ameriforge Group, Inc..................... BTL NR NR 9.33 3 ML+7.00% 06/08/2022 105,915 104,856
UTEX Industries, Inc...................... 1st Lien B3 CCC+ 6.40 1 ML+4.00% 05/22/2021 677,769 630,326
-----------
735,182
-----------
Insurance -- 3.8%
Asurion LLC............................... BTL-B4 Ba3 B+ 5.40 1 ML+3.00% 08/04/2022 845,278 842,953
Asurion LLC............................... BTL-B6 Ba3 B+ 5.40 1 ML+3.00% 11/03/2023 840,177 838,076
Asurion LLC............................... 2nd Lien B3 B- 8.90 1 ML+6.50% 08/04/2025 1,480,000 1,499,117
Asurion LLC............................... BTL-B7 Ba3 B+ 5.40 1 ML+3.00% 11/03/2024 1,009,800 1,007,276
Compass Investments, Inc.................. BTL-B B2 B 5.33 3 ML+3.00% 05/16/2024 1,833,576 1,785,903
Genworth Financial, Inc................... BTL Ba3 B+ 6.99 2 ML+4.50% 03/07/2023 366,300 369,047
14
AIG Senior Floating Rate Fund
PORTFOLIO OF INVESTMENTS -- June 30, 2019 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Reference Maturity Principal Value
Industry Description Type Moody's S&P Rate Rate Date/(2)/ Amount** (Note 2)
-----------------------------------------------------------------------------------------------------------------------------
Insurance (continued)
Hub International, Ltd................ BTL-B B2 B 5.59% 3 ML+3.00% 04/25/2025 $ 975,150 $ 950,010
Sedgwick Claims Management Services,
Inc.................................. BTL-B B2 B 5.65 1 ML+3.25% 12/31/2025 1,721,350 1,696,390
-----------
8,988,772
-----------
Interactive Media & Services -- 0.3%
Go Daddy Operating Co. LLC............ BTL-B1 Ba1 BB- 4.40 1 ML+2.00% 02/15/2024 738,686 738,686
-----------
Internet & Direct Marketing Retail -- 0.6%
Acosta, Inc........................... BTL Caa2 CCC 5.65 1 ML+3.25% 09/26/2021 797,886 288,569
Rodan & Fields, LLC................... BTL-B B2 BB- 6.39 1 ML+4.00% 06/16/2025 559,350 503,415
Shutterfly, Inc....................... BTL-B2 Ba3 BB- 4.91 1 ML+2.50% 08/17/2024 561,618 561,150
-----------
1,353,134
-----------
IT Services -- 5.4%
Blackhawk Network Holdings, Inc....... 1st Lien B1 B 5.40 1 ML+3.00% 06/15/2025 1,841,176 1,825,066
Carbonite, Inc........................ BTL-B B1 B 6.15 1 ML+3.75% 03/26/2026 450,000 450,375
CCC Information Services, Inc......... 1st Lien B2 B 5.16 1 ML+2.75% 04/26/2024 646,800 637,745
EVERTEC Group LLC..................... BTL-B B2 B+ 5.90 1 ML+3.50% 11/27/2024 1,218,875 1,221,922
First Data Corp....................... BTL Ba2 BB 4.40 1 ML+2.00% 04/26/2024 2,681,026 2,678,044
First Data Corp....................... BTL Ba2 BB 4.40 1 ML+2.00% 07/08/2022 843,713 842,790
Global Payments, Inc.................. BTL-B3 Ba2 BBB- 4.15 1 ML+1.75% 04/21/2023 941,546 940,033
Tempo Acquisition LLC................. BTL-B B1 B 5.40 1 ML+3.00% 05/01/2024 997,021 992,036
Web.com Group, Inc.................... 1st Lien B2 B+ 6.16 1 ML+3.75% 10/10/2025 463,425 457,632
Web.com Group, Inc.................... BTL-B2 Caa2 CCC+ 10.16 1 ML+7.75% 10/11/2026 633,015 620,882
WEX, Inc.............................. BTL-B3 Ba3 BB- 4.65 1 ML+2.25% 05/15/2026 1,576,655 1,570,085
Xerox Business Services LLC........... BTL-B Ba3 BBB- 4.90 1 ML+2.50% 12/07/2023 787,930 769,019
-----------
13,005,629
-----------
Leisure Products -- 0.6%
Hayward Industries, Inc............... 1st Lien B3 B 5.90 1 ML+3.50% 08/05/2024 398,905 390,304
SRAM LLC.............................. BTL-B B1 B+ 5.10-5.23 2 ML+2.75% 03/15/2024 904,149 901,889
SRAM LLC.............................. BTL-B B1 B+ 7.25 USFRBPLR+1.75% 03/15/2024 32,027 31,947
-----------
1,324,140
-----------
Life Sciences Tools & Services -- 0.5%
PAREXEL International Corp............ BTL-B B2 B- 5.15 1 ML+2.75% 09/27/2024 611,818 585,242
Syneos Health, Inc.................... BTL-B Ba3 BB 4.40 1 ML+2.00% 08/01/2024 678,948 675,694
-----------
1,260,936
-----------
Machinery -- 4.3%
Altra Industrial Motion Corp.......... BTL-B Ba2 BB- 4.40 1 ML+2.00% 10/01/2025 961,978 943,339
Brookfield WEC Holdings, Inc.......... 1st Lien B2 B 5.90 1 ML+3.50% 08/01/2025 955,200 954,006
CIRCOR International, Inc............. 1st Lien B1 B+ 5.91 1 ML+3.50% 12/11/2024 957,297 955,701
Columbus McKinnon Corp................ BTL-B Ba2 BB- 4.83 3 ML+2.50% 01/31/2024 820,364 818,313
Gardner Denver, Inc.(13).............. BTL-B Ba3 BB+ 3.00 1 ME+3.00% 07/30/2024 EUR 1,032,607 1,176,233
Gardner Denver, Inc................... BTL-B Ba3 BB+ 5.15 1 ML+2.75% 07/30/2024 944,905 945,656
Manitowoc Foodservice, Inc............ BTL-B B1 BB- 4.90 1 ML+2.50% 10/23/2025 120,000 118,200
Navistar International Corp........... BTL-B Ba2 BB- 5.91 1 ML+3.50% 11/06/2024 923,312 921,004
NN, Inc............................... BTL B3 B 5.65 1 ML+3.25% 04/02/2021 1,184,027 1,160,347
Pro Mach Group, Inc................... BTL-B B2 B- 5.14 1 ML+2.75% 03/07/2025 541,130 519,823
Utility One Source LP................. BTL-B B2 B 7.83 3 ML+5.50% 04/18/2023 711,986 713,766
WireCo WorldGroup, Inc................ 1st Lien B3 B+ 7.40 1 ML+5.00% 09/30/2023 607,813 606,863
Zodiac Pool Solutions LLC............. BTL Ba3 BB 4.65 1 ML+2.25% 07/02/2025 435,600 431,607
-----------
10,264,858
-----------
Media -- 6.0%
Advantage Sales & Marketing LLC....... 1st Lien B2 B- 5.58 3 ML+3.25% 07/23/2021 682,322 620,231
Advantage Sales & Marketing LLC....... 2nd Lien Caa2 CCC 8.83 3 ML+6.50% 07/25/2022 1,000,000 786,250
Altice Financing SA................... 1st Lien B2 B+ 5.14 1 ML+2.75% 01/31/2026 500,650 476,243
Charter Communications Operating
LLC.................................. BTL-B Ba1 BBB- 4.33 3 ML+2.00% 04/30/2025 653,971 652,789
15
AIG Senior Floating Rate Fund
PORTFOLIO OF INVESTMENTS -- June 30, 2019 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Reference Maturity Principal Value
Industry Description Type Moody's S&P Rate Rate Date/(2)/ Amount** (Note 2)
------------------------------------------------------------------------------------------------------------------------------
Media (continued)
CSC Holdings, Inc............................ BTL-B Ba3 BB 4.64% 1 ML+2.25% 07/17/2025 $ 500,413 $ 491,811
CSC Holdings, Inc............................ BTL-B Ba3 BB 4.89 1 ML+2.50% 01/25/2026 693,000 684,164
E.W. Scripps Co.............................. BTL-B Ba3 BB 5.15 1 ML+2.75% 05/01/2026 638,400 636,538
Gray Television, Inc......................... BTL-C Ba2 BB 4.93 1 ML+2.50% 01/02/2026 1,736,275 1,732,245
Houghton Mifflin Harcourt Publishing
Company..................................... BTL-B Caa2 B 5.40 1 ML+3.00% 05/31/2021 1,018,277 958,453
ION Media Networks, Inc...................... BTL-B3 B1 BB- 5.16 1 ML+2.75% 12/18/2020 2,251,045 2,247,292
NEP Group, Inc............................... 1st Lien B1 B+ 5.65 1 ML+3.25% 10/20/2025 199,000 198,627
NEP Group, Inc............................... 2nd Lien Caa1 CCC+ 9.40 1 ML+7.00% 10/19/2026 595,000 586,075
Nexstar Broadcasting, Inc.................... BTL-B4 Ba3 BB TBD 06/19/2026 1,345,000 1,339,956
Unitymedia Hessen GmbH & Co. KG.............. BTL-B Ba3 BB- 4.64 1 ML+2.25% 09/30/2025 750,000 747,469
Univision Communications, Inc................ BTL-C5 B2 B 5.15 1 ML+2.75% 03/15/2024 727,380 691,921
UPC Financing Partnership.................... BTL-AR Ba3 BB 4.89 1 ML+2.50% 01/15/2026 416,456 415,789
Virgin Media Bristol LLC..................... BTL-K Ba3 BB- 4.89 1 ML+2.50% 01/15/2026 500,000 497,986
Ziggo Secured Finance Partnership............ BTL-E B1 B+ 4.89 1 ML+2.50% 04/15/2025 500,000 489,514
-----------
14,253,353
-----------
Metals & Mining -- 0.6%
American Rock Salt Co. LLC................... 1st Lien B3 B 6.15 1 ML+3.75% 03/21/2025 1,434,485 1,432,692
-----------
Multiline Retail -- 0.2%
Neiman Marcus Group Ltd. LLC................. BTL Caa2 CCC+ 8.47 3 ML+6.00% 10/25/2023 529,701 453,557
-----------
Oil, Gas & Consumable Fuels -- 3.3%
Ascent Resources Marcellus LLC............... 1st Lien NR NR 8.91 1 ML+6.50% 03/30/2023 260,833 247,792
BCP Renaissance Parent LLC................... BTL-B B1 B+ 6.08 3 ML+3.50% 10/31/2024 994,950 990,330
Blackstone CQP Holdco LP..................... BTL-B B1 B+ TBD 09/30/2024 885,000 886,106
California Resources Corp.................... 1st Lien B2 B 7.15 1 ML+4.75% 12/31/2022 395,000 375,908
California Resources Corp.................... 2nd Lien Caa1 B 12.78 1 ML+10.38% 12/31/2021 500,000 506,875
Foresight Energy LLC......................... 1st Lien B2 B- 8.27 3 ML+5.75% 03/28/2022 1,234,656 988,959
Medallion Midland Acquisition LLC............ 1st Lien B2 B+ 5.65 1 ML+3.25% 10/30/2024 707,267 686,270
Oryx Midstream Services LLC.................. BTL-B B2 B 6.40 1 ML+4.00% 05/22/2026 820,000 816,924
Power Buyer LLC.............................. 1st Lien B3 B- 5.58 3 ML+3.25% 03/06/2025 1,007,203 946,771
Power Buyer LLC.............................. 2nd Lien Caa2 CCC 9.58 3 ML+7.25% 03/06/2026 585,000 561,600
Traverse Midstream Partners LLC.............. BTL-B B2 B+ 6.59 3 ML+4.00% 09/27/2024 843,625 832,025
-----------
7,839,560
-----------
Personal Products -- 1.0%
Coty, Inc.(13)............................... BTL-B Ba3 BB 2.50 1 ME+2.50% 04/07/2025 EUR 816,750 899,472
Coty, Inc.................................... BTL-B Ba3 BB 4.67 1 ML+2.25% 04/07/2025 565,324 550,720
Revlon Consumer Products Corp................ BTL-B B3 CCC+ 6.02 3 ML+3.50% 09/07/2023 1,069,750 892,795
-----------
2,342,987
-----------
Pharmaceuticals -- 1.3%
Endo Luxembourg Finance Co. I SARL........... BTL-B Ba3 B+ 6.65 1 ML+4.25% 04/29/2024 641,314 600,030
Valeant Pharmaceuticals International, Inc... BTL-B Ba2 BB- 5.16 1 ML+2.75% 11/27/2025 1,476,562 1,467,334
Valeant Pharmaceuticals International, Inc... BTL-B Ba2 BB- 5.41 1 ML+3.00% 06/02/2025 1,163,536 1,162,497
-----------
3,229,861
-----------
Professional Services -- 1.3%
AlixPartners LLP............................. BTL-B B2 B+ 5.15 1 ML+2.75% 04/04/2024 1,676,412 1,670,724
AlixPartners LLP(13)......................... BTL-B B2 NR 3.25 1 ME+3.25% 04/04/2024 EUR 250,000 284,097
Dun & Bradstreet Corporation................. BTL B2 B- 7.40 1 ML+5.00% 02/08/2026 845,000 845,000
Team Health Holdings, Inc.................... 1st Lien B2 B 5.15 1 ML+2.75% 02/06/2024 488,125 427,110
-----------
3,226,931
-----------
Real Estate Investment Trusts -- 0.8%
MGM Growth Properties Operating Partnership
LP.......................................... BTL-B Ba3 BB+ 4.40 1 ML+2.00% 03/21/2025 521,877 518,429
VICI Properties 1 LLC........................ BTL Ba3 BBB- 4.40 1 ML+2.00% 12/20/2024 1,453,864 1,436,297
-----------
1,954,726
-----------
16
AIG Senior Floating Rate Fund
PORTFOLIO OF INVESTMENTS -- June 30, 2019 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Reference Maturity Principal Value
Industry Description Type Moody's S&P Rate Rate Date/(2)/ Amount** (Note 2)
-----------------------------------------------------------------------------------------------------------------------------
Road & Rail -- 0.9%
Fly Funding II SARL........................ BTL-B Ba2 BB+ 4.56% 3 ML+2.00% 02/09/2023 $ 1,099,098 $ 1,093,603
Savage Enterprises LLC..................... BTL-B B1 B+ 6.92 1 ML+4.50% 08/01/2025 986,129 987,054
-----------
2,080,657
-----------
Semiconductors & Semiconductor Equipment -- 0.8%
Cabot Microelectronics Corp................ BTL-B Ba2 BB+ 4.69 1 ML+2.25% 11/14/2025 473,079 472,488
Entegris, Inc.............................. BTL-B Baa3 BBB- 4.40 1 ML+2.00% 11/01/2025 995,000 994,378
Microchip Technology, Inc.................. BTL-B Baa3 BB+ 4.41 1 ML+2.00% 05/29/2025 563,394 559,873
-----------
2,026,739
-----------
Software -- 5.7%
Almonde, Inc............................... 1st Lien B2 B- 6.10 3 ML+3.50% 06/13/2024 1,171,601 1,140,428
Almonde, Inc............................... 2nd Lien Caa2 CCC 9.65 1 ML+7.25% 06/13/2025 230,000 227,585
Ascend Learning LLC........................ BTL-B Ba3 B 5.40 1 ML+3.00% 07/12/2024 500,211 491,145
Ceridian HCM Holding, Inc.................. BTL-B B2 B 5.40 1 ML+3.00% 04/30/2025 1,082,038 1,083,039
Compuware Corp............................. BTL-B B2 B 5.90 1 ML+3.50% 08/23/2025 194,025 193,863
Epicore Software Co........................ 1st Lien B2 B- 5.66 1 ML+3.25% 06/01/2022 1,099,360 1,090,886
Hyland Software, Inc....................... 1st Lien B1 B- 5.65 1 ML+3.25% 07/01/2024 972,254 966,663
Hyland Software, Inc....................... 2nd Lien Caa1 CCC 9.40 1 ML+7.00% 07/07/2025 535,000 536,338
IQVIA, Inc................................. BTL-B Ba1 BBB- 2.50 3 ME+2.00% 06/11/2025 EUR 1,173,150 1,334,990
Infor US, Inc.............................. BTL-B6 Ba3 B 5.08 3 ML+2.75% 02/01/2022 679,172 676,201
MA FinanceCo. LLC.......................... BTL-B3 B1 BB- 4.90 1 ML+2.50% 06/21/2024 123,320 120,700
McAfee LLC................................. BTL-B1 B2 B 6.08 1 ML+3.75% 09/30/2024 184,535 184,131
Quest Software US Holdings, Inc............ 1st Lien B2 B+ 6.83 3 ML+4.25% 05/16/2025 834,550 820,989
RP Crown Parent LLC........................ BTL-B B1 B 5.15 1 ML+2.75% 10/12/2023 867,750 861,965
Seattle Spinco, Inc........................ BTL-B3 B1 BB- 4.90 1 ML+2.50% 06/21/2024 832,815 815,117
SS&C Technologies, Inc..................... BTL-B3 Ba2 BB+ 4.65 1 ML+2.25% 04/16/2025 592,919 590,202
SS&C Technologies, Inc..................... BTL-B4 Ba2 BB+ 4.65 1 ML+2.25% 04/16/2025 406,618 404,755
SS&C Technologies, Inc..................... BTL-B5 Ba2 BB+ 4.65 1 ML+2.25% 04/16/2025 1,369,517 1,363,431
Ultimate Software Group, Inc............... BTL-B B2 B 6.08 3 ML+3.75% 05/04/2026 680,000 680,680
-----------
13,583,108
-----------
Specialty Retail -- 2.1%
At Home Holding III, Inc................... BTL B2 B+ 6.08 3 ML+3.50% 06/03/2022 674,973 600,726
Bass Pro Group LLC......................... BTL-B B1 B+ 7.40 1 ML+5.00% 09/25/2024 1,490,548 1,421,145
Foundation Building Materials Holding Co.
LLC....................................... BTL-B B2 BB- 5.40 1 ML+3.00% 08/13/2025 497,500 493,458
J. Crew Group, Inc......................... BTL-B Caa2 CCC- 5.40 1 ML+3.00% 03/05/2021 388,913 331,062
J. Crew Group, Inc......................... BTL-B Caa2 CCC- 5.33-5.58 3 ML+3.00% 03/05/2021 325,665 277,222
PetSmart, Inc.............................. BTL-B2 B3 B 6.67 1 ML+4.25% 03/11/2022 878,647 851,409
Staples, Inc............................... BTL-B B1 B+ 7.60 3 ML+5.00% 04/16/2026 1,109,126 1,062,334
-----------
5,037,356
-----------
Textiles, Apparel & Luxury Goods -- 0.8%
ASP Unifrax Holdings, Inc.................. BTL-B1 B3 B- 6.08 1 ML+3.75% 12/12/2025 1,496,578 1,447,939
ASP Unifrax Holdings, Inc.................. BTL-B2 Caa2 CCC+ 10.93 3 ML+8.50% 12/14/2026 375,000 360,000
-----------
1,807,939
-----------
Trading Companies & Distributors -- 1.8%
ABC Supply Co., Inc........................ BTL-B B1 BB+ 4.40 1 ML+2.00% 10/31/2023 987,738 972,614
Beacon Roofing Supply, Inc................. BTL-B B1 BB+ 4.66 1 ML+2.25% 01/02/2025 444,375 438,618
HD Supply, Inc............................. BTL-B5 Ba2 BBB- 4.15 1 ML+1.75% 10/17/2023 1,068,403 1,066,686
HD Supply Waterworks, Ltd.................. BTL-B B2 B+ 5.52 3 ML+3.00% 08/01/2024 445,200 443,716
Sage Borrowco LLC.......................... BTL-B B2 B TBD 06/22/2026 580,000 580,363
Univar, Inc................................ BTL-B Ba3 BB+ 4.90 1 ML+2.50% 07/01/2024 355,305 354,506
Univar USA, Inc............................ BTL-B3 Ba3 BB+ 4.65 1 ML+2.25% 07/01/2024 470,139 468,506
-----------
4,325,009
-----------
17
AIG Senior Floating Rate Fund
PORTFOLIO OF INVESTMENTS -- June 30, 2019 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Reference Maturity Principal Value
Industry Description Type Moody's S&P Rate Rate Date/(2)/ Amount** (Note 2)
--------------------------------------------------------------------------------------------------------------------------------
Transportation Infrastructure -- 0.4%
DAE Aviation Holdings, Inc............. BTL-B1 B2 NR 6.33% 3 ML+4.00% 04/06/2026 $ 684,579 $ 686,932
Dynasty Acquisition Co., Inc........... BTL-B2 B2 NR 6.33 3 ML+4.00% 04/06/2026 368,053 369,318
------------
1,056,250
------------
Wireless Telecommunication Services -- 1.2%
Sprint Communications, Inc............. BTL-B Ba2 BB- 4.94 1 ML+2.50% 02/02/2024 2,203,096 2,167,296
Sprint Communications, Inc............. BTL-B Ba2 BB- 5.44 1 ML+3.00% 02/02/2024 611,925 605,550
------------
2,772,846
------------
Total Loans (cost $219,599,847)........ 214,630,109
------------
U.S. CORPORATE BONDS & NOTES -- 4.0%
Commercial Services & Supplies -- 0.5%
IAA Spinco, Inc.*...................... Senior Notes B2 B 5.50 06/15/2027 360,000 374,400
Allied Universal Holdco LLC*........... Senior Sec. Notes B3 B- 6.63 07/15/2026 750,000 761,250
------------
1,135,650
------------
Construction & Engineering -- 0.3%
Brand Energy & Infrastructure
Services, Inc.*...................... Senior Notes Caa2 CCC 8.50 07/15/2025 700,000 634,375
------------
Consumer Finance -- 0.3%
Navient Corp........................... Senior Notes Ba3 B+ 6.50 06/15/2022 300,000 318,672
Springleaf Finance Corp................ Company Guar. Notes Ba3 BB- 6.13 05/15/2022 500,000 536,250
------------
854,922
------------
Containers & Packaging -- 0.5%
Reynolds Group Issuer, Inc. FRS*....... Senior Sec. Notes B1 B+ 6.10 3 ML+3.50% 07/15/2021 1,245,000 1,245,000
------------
Food Products -- 0.1%
Darling Ingredients, Inc.*............. Senior Notes Ba3 BB+ 5.25 04/15/2027 130,000 135,850
------------
Insurance -- 0.3%
Acrisure LLC / Acrisure Finance, Inc.*. Senior Sec. Notes B2 B 8.13 02/15/2024 670,000 691,775
------------
Multi Utilities -- 0.0%
Texas Competitive Electric Holdings
Co. LLC*............................. Escrow Notes NR NR 6.25 10/01/2020 4,174,956 16,700
------------
Oil, Gas & Consumable Fuels -- 0.8%
Chesapeake Energy Corp................. Company Guar. Notes B2 B+ 7.00 10/01/2024 500,000 448,750
Foresight Energy/Finance*.............. Sec. Notes Caa2 CCC- 11.50 04/01/2023 715,000 400,400
Jagged Peak Energy LLC................. Company Guar. Notes B3 B+ 5.88 05/01/2026 500,000 492,500
Vine Oil & Gas LP / Vine Oil & Gas
Finance Corp.*....................... Company Guar. Notes Caa1 B- 8.75 04/15/2023 1,000,000 650,000
------------
1,991,650
------------
Personal Products -- 0.1%
Revlon Consumer Products Corp.......... Company Guar. Notes Caa3 CCC 6.25 08/01/2024 505,000 345,925
------------
Software -- 0.8%
SS&C Technologies, Inc.*............... Company Guar. Notes B2 B+ 5.50 09/30/2027 1,780,000 1,846,750
------------
Specialty Retail -- 0.1%
PetSmart, Inc.*........................ Senior Sec. Notes B3 B 5.88 06/01/2025 250,000 242,500
------------
Trading Companies & Distributors -- 0.2%
Beacon Roofing Supply, Inc.*........... Company Guar. Notes B3 B+ 4.88 11/01/2025 500,000 495,000
------------
Total U.S. Corporate Bonds &
Notes (cost $10,377,046)............. 9,636,097
------------
FOREIGN CORPORATE BONDS & NOTES -- 2.1%
Auto Components -- 0.2%
Panther BF Aggregator 2 LP*............ Company Guar. Notes B3 B 8.50 05/15/2027 560,000 576,800
------------
Commercial Services & Supplies -- 0.3%
Avolon Holdings Funding Ltd.*.......... Company Guar. Notes Baa3 BBB- 3.63 05/01/2022 750,000 760,200
------------
18
AIG Senior Floating Rate Fund
PORTFOLIO OF INVESTMENTS -- June 30, 2019 -- (unaudited) (continued)
Ratings/(1)/
------------
Principal
Interest Reference Maturity Amount**/
Industry Description Type Moody's S&P Rate Rate Date/(2)/ Shares
-----------------------------------------------------------------------------------------------------------------------
Containers & Packaging -- 0.3%
Ardagh Packaging Finance PLC*.......... Company Guar. Notes B3 B 7.25% 05/15/2024 $ 685,000
Hotels, Restaurants & Leisure -- 0.2%
LHMC Finco Sarl FRS*(13)............... Senior Sec. Notes B2 B+ 5.75 3 ME+5.75% 12/20/2023 EUR 320,000
Metals & Mining -- 0.3%
Costellium NV*......................... Company Guar. Notes B2 B 6.63 03/01/2025 655,000
Paper & Forest Products -- 0.2%
Norbord, Inc.*......................... Senior Sec. Notes Ba1 BB+ 5.75 07/15/2027 485,000
Pharmaceuticals -- 0.6%
Endo, Ltd./Endo Finance LLC*........... Company Guar. Notes Caa1 CCC+ 6.00 07/15/2023 560,000
Valeant Pharmaceuticals*............... Senior Sec. Notes Ba2 BB- 7.00 03/15/2024 630,000
Valeant Pharmaceuticals*............... Company Guar. Notes B3 B- 9.00 12/15/2025 385,000
Total Foreign Corporate Bonds & Notes
(cost $5,071,215).....................
COMMON STOCKS -- 0.6%
Energy Equipment & Services -- 0.0%
Paragon Offshore, Litigation Trust,
Class A+(8)........................... 1,242
Paragon Offshore, Litigation Trust,
Class B+(8)........................... 621
Industrial Conglomerates -- 0.4%
AFG Holdings, Inc.+(8)................. 14,309
Oil, Gas & Consumable Fuels -- 0.2%
Ascent Resources Marcellus LLC,
Class A+(5)(8)........................ 187,384
Philadelphia Energy Solutions LLC,
Class A+(8)........................... 35,161
TE Holdcorp LLC, Class A+(5)(8)........ 44,278
Total Common Stocks (cost $3,313,313)..
PREFERRED SECURITIES/CAPITAL SECURITIES -- 0.3%
Banks -- 0.3%
Banco Bilbao Vizcaya Argentaria SA(9)
(cost $800,000)....................... Ba2 NR 6.13 11/16/2027 800,000
WARRANTS -- 0.0%
Oil, Gas & Consumable Fuels -- 0.0%
Ascent Resources Marcellus LLC+(5)(8)
Expires 03/30/2023
(strike price $6.15)
(cost $4,625)......................... 48,515
Total Long-Term Investment Securities
(cost $239,166,046)...................
SHORT-TERM INVESTMENT SECURITIES -- 1.7%
Registered Investment Companies -- 1.7%
State Street Institutional Liquid
Reserves Fund,
Administration Class 2.20%(10)
(cost $4,134,494)..................... 4,133,876
Value
Industry Description (Note 2)
------------------------------------------------------
Containers & Packaging -- 0.3%
Ardagh Packaging Finance PLC*.......... $ 721,819
------------
Hotels, Restaurants & Leisure -- 0.2%
LHMC Finco Sarl FRS*(13)............... 369,021
------------
Metals & Mining -- 0.3%
Costellium NV*......................... 681,200
------------
Paper & Forest Products -- 0.2%
Norbord, Inc.*......................... 488,031
------------
Pharmaceuticals -- 0.6%
Endo, Ltd./Endo Finance LLC*........... 403,200
Valeant Pharmaceuticals*............... 669,438
Valeant Pharmaceuticals*............... 430,160
------------
1,502,798
------------
Total Foreign Corporate Bonds & Notes
(cost $5,071,215)..................... 5,099,869
------------
COMMON STOCKS -- 0.6%
Energy Equipment & Services -- 0.0%
Paragon Offshore, Litigation Trust,
Class A+(8)........................... 435
Paragon Offshore, Litigation Trust,
Class B+(8)........................... 17,078
------------
17,513
------------
Industrial Conglomerates -- 0.4%
AFG Holdings, Inc.+(8)................. 786,995
------------
Oil, Gas & Consumable Fuels -- 0.2%
Ascent Resources Marcellus LLC,
Class A+(5)(8)........................ 492,820
Philadelphia Energy Solutions LLC,
Class A+(8)........................... 8,789
TE Holdcorp LLC, Class A+(5)(8)........ 0
------------
501,609
------------
Total Common Stocks (cost $3,313,313).. 1,306,117
------------
PREFERRED SECURITIES/CAPITAL SECURITIES -- 0.3%
Banks -- 0.3%
Banco Bilbao Vizcaya Argentaria SA(9)
(cost $800,000)....................... 753,000
------------
WARRANTS -- 0.0%
Oil, Gas & Consumable Fuels -- 0.0%
Ascent Resources Marcellus LLC+(5)(8)
Expires 03/30/2023
(strike price $6.15)
(cost $4,625)......................... 1,455
------------
Total Long-Term Investment Securities
(cost $239,166,046)................... 231,426,647
------------
SHORT-TERM INVESTMENT SECURITIES -- 1.7%
Registered Investment Companies -- 1.7%
State Street Institutional Liquid
Reserves Fund,
Administration Class 2.20%(10)
(cost $4,134,494)..................... 4,134,703
------------
19
AIG Senior Floating Rate Fund
PORTFOLIO OF INVESTMENTS -- June 30, 2019 -- (unaudited) (continued)
Principal Value
Industry Description Amount** (Note 2)
---------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 1.7%
Bank of America Securities LLC Joint Repurchase Agreement(11) $ 820,000 $ 820,000
Barclays Capital, Inc. Joint Repurchase Agreement(11)....... 685,000 685,000
BNP Paribas SA Joint Repurchase Agreement(11)............... 820,000 820,000
Deutsche Bank AG Joint Repurchase Agreement(11)............. 755,000 755,000
RBS Securities, Inc. Joint Repurchase Agreement(11)......... 920,000 920,000
------------
Total Repurchase Agreements
(cost $4,000,000).......................................... 4,000,000
------------
TOTAL INVESTMENTS
(cost $247,300,540)(14)..................................... 100.2% 239,561,350
Liabilities in excess of other assets........................... (0.2)% (352,775)
------------ ------------
NET ASSETS...................................................... 100.0% $239,208,575
============ ============
--------
BTL Bank Term Loan
EUR Euro Currency
NR Security is not rated.
FRS--Floating Rate Security
The rates shown on FRS are the current interest rates as of June 30, 2019
and unless noted otherwise, the dates shown are the original maturity dates.
TBD--Senior loan purchased on a when-issued or delayed-delivery basis. Certain
details associated with this purchase are not known prior to the settlement
date of the transaction. In addition, senior loans typically trade without
accrued interest and therefore a coupon rate is not available prior to the
settlement.
+ Non-income producing security
* Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. The Fund has no
rights to demand registration of these securities. At June 30, 2019, the
aggregate value of these securities was $12,593,869, representing 5.3% of
net assets.
** Denominated in United States Dollars unless otherwise noted.
(1) Bank loans rated below Baa by Moody's Investor Service, Inc. or BBB by
Standard & Poor's Group are considered below investment grade. Ratings
provided are as of June 30, 2019.
(2) Based on the stated maturity, the weighted average to maturity of the loans
held in the portfolio is approximately 68 months. Loans in the Fund's
portfolio are generally subject to mandatory and/or optional prepayment.
Because of these mandatory prepayment conditions and because there may be
significant economic incentives for a Borrower to prepay, prepayments may
occur. As a result, the actual remaining maturity may be substantially less
than the stated maturities shown.
(3) The Fund invests in senior loans which generally pay interest at rates
which are periodically re-determined by reference to a base lending rate
plus a premium. These base lending rates are generally either the lending
rate offered by one or more major European banks, such as the London
Inter-Bank Offer Rate ("LIBOR") or the prime rate offered by one or more
major United States banks, or the certificate of deposit rate. Senior loans
are generally considered to be restrictive in that the Fund is ordinarily
contractually obligated to receive approval from the Agent Bank and/or
borrower prior to the disposition of a senior loan.
(4) All loans in the portfolio were purchased through assignment agreements
unless otherwise indicated.
(5) Security classified as Level 3 (see Note 2).
(6) All or a portion of this holding is subject to unfunded loan commitments
(see Note 10).
(7) "Payment-in-Kind" (PIK) security -- Income may be paid in additional
securities or cash at the discretion of the issuer. The security is
currently paying interest in cash at 3.10%. The security is also currently
paying interest in the form of additional loans at 6.99%.
(8) Denotes a restricted security that: (a) cannot be offered for public sale
without first being registered, or being able to take advantage of an
exemption from registration, under the Securities Act of 1933, as amended
(the "1933 Act"); (b) is subject to a contractual restriction on public
sales; or (c) is otherwise subject to a restriction on sales by operation
of applicable law. Restricted securities are valued pursuant to Note 2.
Certain restricted securities held by the Fund may not be sold except in
exempt transactions or in a public offering registered under the 1933 Act.
The Fund has no right to demand registration of these securities. The risk
of investing in certain restricted securities is greater than the risk of
investing in the securities of widely held, publicly traded companies. To
the extent applicable, lack
20
AIG Senior Floating Rate Fund
PORTFOLIO OF INVESTMENTS -- June 30, 2019 -- (unaudited) (continued)
of a secondary market and resale restrictions may result in the inability
of a Fund to sell a security at a fair price and may substantially delay
the sale of the security. In addition, certain restricted securities may
exhibit greater price volatility than securities for which secondary
markets exist. As of June 30, 2019, the Fund held the following restricted
securities:
Acquisition Acquisition Value Per % of Net
Description Date Shares Cost Value Share Assets
----------- ----------- ------- ----------- ---------- --------- --------
Common Stocks
-------------
AFG Holdings, Inc............ 01/22/2013 14,309 $ 911,111 $ 786,995 $55.00 0.33%
Ascent Resources Marcellus
LLC, Class A............... 03/30/2018 187,384 567,151 492,820 2.63 0.21
Paragon Offshore Litigation
Trust, Class A............. 07/11/2014 1,242 704 435 0.35 0.00
Paragon Offshore Litigation
Trust, Class B............. 10/21/2014 621 10,557 17,078 27.50 0.01
Philadelphia Energy
Solutions LLC, Class A..... 04/04/2018 35,161 185,574 8,789 0.25 0.00
TE Holdcorp LLC, Class A..... 11/21/2013 44,278 1,638,216 0 0.00 0.00
Warrants
--------
Ascent Resources Marcellus
LLC........................ 03/30/2018 48,515 4,625 1,455 0.03 0.00
---------- ----
$1,307,572 0.55%
========== ====
(9) Perpetual maturity -- maturity date reflects the next call date.
(10)The rate shown is the 7-day yield as of June 30, 2019.
(11)See Note 2 for details of the Joint Repurchase Agreement.
(12)"Payment-in-Kind" (PIK) security -- Income may be paid in additional
securities or cash at the discretion of the issuer. The security is
currently paying interest in cash at 7.90%. The security is also currently
paying interest in the form of additional loans at 1.75%.
(13)The referenced Index is less than 0.00% at the period end. The loan has an
interest rate floor whereby the floating rate used in the coupon rate
calculation cannot be less than zero.
(14)See Note 6 for cost of investments on a tax basis.
Index Legend
1 ME--1 Month Euribor
1 ML--1 Month USD LIBOR
1 WL--1 Week USD LIBOR
2 ML--2 Month USD LIBOR
3 ME--3 Month Euribor
3 ML--3 Month USD LIBOR
6 ME--6 Month Euribor
USFRBPLR--US Federal Reserve Bank Prime Loan Rate
Forward Foreign Currency Contracts
------------------------------------------------------------------------------------------------------
Contract to In Exchange Delivery Unrealized Unrealized
Counterparty Deliver For Date Appreciation Depreciation
------------------------------------------------------------------------------------------------------
Goldman Sachs International........ EUR 10,707,745 USD 12,235,130 07/31/2019 $30,087 $--
======= ===
--------
EUR--EuroCurrency
USD--UnitedStates Dollar
The following is a summary of the inputs used to value the Fund's net assets as
of June 30, 2019 (see Note 2):
Level 1 -- Unadjusted Level 2 -- Other Level 3 -- Significant
Quoted Prices Observable Inputs Unobservable Inputs Total
--------------------- ----------------- ---------------------- ------------
ASSETS:
Investments at Value:*
Loans:
Energy Equipment & Services.. $-- $ 979,637 $ 0 $ 979,637
Other Industries............. -- 213,650,472 -- 213,650,472
U.S. Corporate Bonds & Notes.. -- 9,636,097 -- 9,636,097
Foreign Corporate Bonds &
Notes........................ -- 5,099,869 -- 5,099,869
21
AIG Senior Floating Rate Fund
PORTFOLIO OF INVESTMENTS -- June 30, 2019 -- (unaudited) (continued)
Level 1 -- Unadjusted Level 2 -- Other Level 3 -- Significant
Quoted Prices Observable Inputs Unobservable Inputs Total
--------------------- ----------------- ---------------------- ------------
Common Stocks:
Oil, Gas & Consumable Fuels.. $ -- $ 8,789 $492,820 $ 501,609
Other Industries............. -- 804,508 -- 804,508
Preferred Securities/Capital
Securities................... -- 753,000 -- 753,000
Warrants...................... -- -- 1,455 1,455
Short-Term Investment
Securities................... 4,134,703 -- -- 4,134,703
Repurchase Agreements......... -- 4,000,000 -- 4,000,000
---------- ------------ -------- ------------
Total Investments at Value.... $4,134,703 $234,932,372 $494,275 $239,561,350
========== ============ ======== ============
Other Financial Instruments:@
Forward Foreign Currency
Contracts.................... $ -- $ 30,087 $ -- $ 30,087
========== ============ ======== ============
--------
* For a detailed presentation of investments, please refer to the Portfolio of
Investments.
@ Amounts represent unrealized appreciation/depreciation as of the end of the
reporting period.
At the beginning and end of the reporting period, Level 3 investments in
securities were not considered a material portion of the Fund. There were no
Level 3 transfers during the reporting period.
See Notes to Financial Statements
22
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2019 -- (unaudited)
Note 1. Organization of the Fund
SunAmerica Senior Floating Rate Fund, Inc. (the "Corporation") is an
open-end, diversified management investment company organized as a Maryland
corporation in 1998 and is registered under the Investment Company Act of
1940, as amended (the "1940 Act"). The Corporation consists of one series --
AIG Senior Floating Rate Fund (the "Fund"). The Fund is managed by
SunAmerica Asset Management, LLC (the "Adviser" or "SunAmerica"), an
indirect wholly-owned subsidiary of American International Group, Inc.
("AIG"). The Fund's investment goal and principal investment techniques are
to provide as high a level of current income as is consistent with the
preservation of capital by investing, under normal market conditions, at
least 80% of its net assets, plus any borrowings for investment purposes, in
senior secured floating rate loans and other institutionally traded secured
floating rate debt obligations ("Loans"). The Fund may also purchase both
investment grade and high yield fixed income securities and money market
instruments, although the Fund may not invest more than 10% of its total
assets in high yield fixed income securities. The Fund may invest in foreign
securities, including up to 10% of its total assets in non-U.S. dollar
denominated Loans and high yield fixed income securities and up to 25% of
its total assets in U.S. dollar denominated Loans issued by non-U.S.
companies.
The Fund offers three classes of shares: Class A, Class C and Class W. These
classes within the Fund are presented in the Statement of Assets and
Liabilities. The cost structure for each class is as follows:
Class A shares-- Offered at net asset value per share plus an initial sales
charge. Additionally, purchases of Class A shares in excess
of $1,000,000 will be purchased at net asset value but will
be subject to a contingent deferred sales charge ("CDSC")
on redemptions made within one year of purchase.
Class C shares-- Offered at net asset value without an initial sales charge
and may be subject to a CDSC on redemptions made within 12
months of purchase. Effective March 1, 2018, Class C shares
will convert automatically to Class A shares approximately
ten years after purchase and at such time will be subject
to the lower distribution fee applicable to Class A shares.
Class W shares-- Offered at net asset value per share. The class is offered
exclusively through advisory fee-based programs sponsored
by certain financial intermediaries and other programs.
Each class of shares bears the same voting, dividend, liquidation and other
rights and conditions, except as may otherwise be provided in the Fund's
registration statement. Class A and Class C shares each make distribution
and account maintenance fee payments under the distribution plans pursuant
to Rule 12b-1 under the 1940 Act, with Class C shares being subject to
higher distribution fee rates. Class W shares have not adopted a 12b-1 plan
and make no payments thereunder, however, Class W shares pay a service fee
to the Fund's distributor for providing administrative and shareholder
services.
Indemnifications: The Fund's organizational documents provide current and
former officers and directors with a limited indemnification against
liabilities arising out of the performance of their duties to the Fund. In
addition, pursuant to Indemnification Agreements between the Fund and each
of the current directors who is not an "interested person," as defined in
Section 2(a)(19) of the 1940 Act, of the Fund (collectively, the
"Disinterested Directors"), the Fund provides the Disinterested Directors
with a limited indemnification against liabilities arising out of the
performance of their duties to the Fund, whether such liabilities are
asserted during or after their service as directors. In addition, in the
normal course of business, the Fund enters into contracts that contain the
obligation to indemnify others. The Fund's maximum exposure under these
arrangements is unknown. Currently, however, the Fund expects the risk of
loss to be remote.
Note 2. Significant Accounting Policies
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles ("GAAP") requires management to make
estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from these
estimates and those differences could be significant. The Fund is considered
an investment company under GAAP and follows the accounting and reporting
guidance applicable to
23
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2019 -- (unaudited)
(continued)
investment companies. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements:
Security Valuation: In accordance with the authoritative guidance on fair
value measurements and disclosures under GAAP, the Fund discloses the fair
value of its investments in a hierarchy that prioritizes the inputs to
valuation techniques used to measure the fair value. In accordance with
GAAP, fair value is defined as the price that the Fund would receive upon
selling an asset or transferring a liability in a timely transaction to an
independent third party in the principal or most advantageous market. GAAP
establishes a three-tier hierarchy to provide more transparency around the
inputs used to measure fair value and to establish classification of fair
value measurements for disclosure purposes. Inputs refer broadly to the
assumptions that market participants would use in pricing the asset or
liability, including assumptions about risk. Inputs may be observable or
unobservable. Observable inputs are inputs that reflect the assumptions
market participants would use in pricing the asset or liability developed
based on market data obtained from sources independent of the reporting
entity. Unobservable inputs are inputs that reflect the reporting entity's
own assumptions about the assumptions market participants would use in
pricing the asset or liability developed based on the best information
available in the circumstances. The three-tiers are as follows:
Level 1 -- Unadjusted quoted prices in active markets for identical
securities
Level 2 -- Other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
referenced indices, quoted prices in inactive markets, adjusted quoted
prices in active markets, adjusted quoted prices on foreign equity
securities that were adjusted in accordance with pricing procedures approved
by the Board of Directors (the "Board"), etc.)
Level 3 -- Significant unobservable inputs (includes inputs that reflect the
Fund's own assumptions about the assumptions market participants would use
in pricing the security, developed based on the best information available
under the circumstances)
Changes in valuation techniques may result in transfers in or out of an
investment's assigned Level within the hierarchy. The methodology used for
valuing investments is not necessarily an indication of the risk associated
with investing in those investments and the determination of the
significance of a particular input to the fair value measurement in its
entirety requires judgment and consideration of factors specific to each
security.
The availability of observable inputs can vary from security to security and
is affected by a wide variety of factors, including, for example, the type
of security, whether the security is recently issued and not yet established
in the marketplace, the liquidity of markets, and other characteristics
particular to the security. To the extent that valuation is based on models
or inputs that are less observable or unobservable in the market, the
determination of fair value requires more judgment. Accordingly, the degree
of judgment exercised in determining fair value is greatest for instruments
categorized in Level 3.
The summary of the Fund's assets and liabilities classified in the fair
value hierarchy as of June 30, 2019, is reported on a schedule at the end of
the Portfolio of Investments.
Stocks are generally valued based upon closing sales prices reported on
recognized securities exchanges on which the securities are principally
traded and are generally categorized as Level 1. Stocks listed on the NASDAQ
are valued using the NASDAQ Official Closing Price ("NOCP"). Generally, the
NOCP will be the last sale price unless the reported trade for the stock is
outside the range of the bid/ask price. In such cases, the NOCP will be
normalized to the nearer of the bid or ask price. For listed securities
having no sales reported and for unlisted securities, such securities will
be valued based upon the last reported bid price.
As of the close of regular trading on the New York Stock Exchange ("NYSE"),
securities traded primarily on security exchanges outside the United States
are valued at the last sale price on such exchanges on the day of valuation,
or if there is no sale on the day of valuation, at the last-reported bid
price. If a security's price is available from more than
24
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2019 -- (unaudited)
(continued)
one exchange, the Fund uses the exchange that is the primary market for the
security. Such securities are generally categorized as Level 1. However,
depending on the foreign market, closing prices may be up to 15 hours old
when they are used to price a Fund's shares, and the Fund may determine that
certain closing prices do not reflect the fair value of the security. This
determination will be based on the review of a number of factors, including
developments in foreign markets, the performance of U.S. securities markets,
and the performance of instruments trading in U.S. markets that represent
foreign securities and baskets of foreign securities. If the Fund determines
that closing prices do not reflect the fair value of the securities, the
Fund will adjust the previous closing prices in accordance with pricing
procedures approved by the Board to reflect what it believes to be the fair
value of the securities as of the close of regular trading on the NYSE. The
Fund may also fair value securities in other situations, for example, when a
particular foreign market is closed but the Fund is open. For foreign equity
securities and foreign equity futures contracts, the Fund uses an outside
pricing service to provide it with closing market prices and information
used for adjusting those prices, and when so adjusted, such securities and
futures are generally categorized as Level 2.
Bonds, debentures, and other debt securities are valued at evaluated bid
prices obtained for the day of valuation from a Board-approved pricing
service, and are generally categorized as Level 2. The pricing service may
use valuation models or matrix pricing which considers information with
respect to comparable bond and note transactions, quotations from bond
dealers, or by reference to other securities that are considered comparable
in such characteristics as rating, interest rate, and maturity date, option
adjusted spread models, prepayments projections, interest rate spreads, and
yield curves to determine current value. If a price is unavailable from a
Board-approved pricing service, the securities may be priced at the mean of
two independent quotes obtained from brokers.
Senior secured floating rate loans ("Loans") are valued at the average of
available bids in the market for such Loans, as provided by a Board-approved
loan pricing service, and are generally categorized as Level 2.
Investments in registered investment companies that do not trade on an
exchange are valued at the end of day net asset value per share. Investments
in registered investment companies that trade on an exchange are valued at
the last sales price or official closing price as of the close of the
customary trading session on the exchange where the security is principally
traded. Investments in registered investment companies are generally
categorized as Level 1.
Swap contracts traded on national securities exchanges are valued at the
closing price of the exchange on which they are traded or if a closing price
of the exchange is not available, the swap will be valued using a mid
valuation provided by a Board-approved pricing service, and are generally
categorized as Level 2. Swap contracts traded in the over-the-counter
("OTC") market are valued at a mid valuation provided by a Board-approved
pricing service, and are generally categorized as Level 2. Forward foreign
currency contracts ("forward contracts") are valued at the 4:00 pm Eastern
time forward rate and are generally categorized as Level 2.
The Board is responsible for the share valuation process and has adopted
policies and procedures (the "PRC Procedures") for valuing the securities
and other assets held by the Fund, including procedures for the fair
valuation of securities and other assets for which market quotations are not
readily available or are unreliable. The PRC Procedures provide for the
establishment of a pricing review committee, which is responsible for, among
other things, making certain determinations in connection with the Fund's
fair valuation procedures. Securities for which market quotations are not
readily available or the values of which may be significantly impacted by
the occurrence of developments or significant events are generally
categorized as Level 3. There is no single standard for making fair value
determinations, which may result in prices that vary from those of other
funds.
Derivative Instruments:
Forward Foreign Currency Contracts: During the period, the Fund used forward
contracts to protect against uncertainty in the level of future exchange
rates.
A forward contract is an agreement between two parties to buy or sell
currency at a set price on a future date. The market value of the contract
will fluctuate with changes in currency exchange rates. The contract is
marked-to-market
25
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2019 -- (unaudited)
(continued)
daily using the forward rate and the cumulative change in market value is
recorded by the Fund as unrealized appreciation or depreciation. On the
settlement date, the Fund records either realized gains or losses equal to
the difference between the value of the contract at the time it was opened
and the value at the time it was closed.
Risks to the Fund of entering into forward contracts include counterparty
risk, market risk and illiquidity risk. Counterparty risk arises upon
entering into these contracts from the potential inability of counterparties
to meet the terms of their contracts. If the counterparty defaults, the
Fund's loss will generally consist of the net amount of contractual payments
that the Fund has not yet received though the Fund's maximum exposure due to
counterparty risk could extend to the notional amount of the contract.
Market risk is the risk that the value of the forward contract will
depreciate due to unfavorable changes in the exchange rates. These contracts
may involve market risk in excess of the unrealized appreciation or
depreciation reported on the Statement of Assets and Liabilities.
Illiquidity risk arises because the secondary market for forwards may have
less liquidity relative to markets for other securities. Currency
transactions are also subject to risks different from those of other
portfolio transactions. Because currency control is of great importance to
the issuing governments and influences economic planning and policy,
purchases and sales of currency and related instruments can be adversely
affected by government exchange controls, limitations or restrictions on
repatriation of currency, and manipulations or exchange restrictions imposed
by governments.
Forward foreign currency contracts outstanding at the end of the period, if
any, are reported on a schedule at the end of the Fund's Portfolio of
Investments.
Master Agreements: The Fund holds derivative instruments and other financial
instruments whereby the Fund may be a party to ISDA (International Swaps and
Derivatives Association, Inc.) Master Agreements or similar agreements
("Master Agreements") with certain counterparties that govern such
instruments. Master Agreements may contain provisions regarding, among other
things, the parties' general obligations, representations, agreements,
collateral requirements, events of default and early termination. Collateral
can be in the form of cash or securities as agreed to by the Fund and
applicable counterparty. Collateral requirements are generally determined
based on the Fund's net position with each counterparty. Master Agreements
may also include certain provisions that require the Fund to post additional
collateral upon the occurrence of certain events, such as when a Fund's net
assets fall below a specified level. In addition, Master Agreements
typically specify certain standard termination events, such as failure of a
party to pay or deliver, credit support defaults and other events of
default. Termination events applicable to the Fund may also occur upon a
decline in the Fund's net assets below a specified level over a certain
period of time. Additional termination events applicable to counterparties
may occur upon a decline in a counterparty's long-term and short-term credit
ratings below a specified level, or upon a decline in the ratings of a
counterparty's credit support provider. Upon the occurrence of a termination
event, the other party may elect to terminate early and cause settlement of
all instruments outstanding pursuant to a particular Master Agreement,
including the payment of any losses and costs resulting from such early
termination, as reasonably determined by the terminating party. Any decision
by one or more of the Fund's counterparties to elect early termination could
cause the Fund to accelerate the payment of liabilities, which settlement
amounts could be in excess of the amount of assets that are already posted
as collateral. Typically, the Master Agreement will permit a single net
payment in the event of default. Note, however, that bankruptcy or
insolvency laws of a particular jurisdiction may impose restrictions on or
prohibitions against the right of offset in bankruptcy, insolvency or other
events. As a result, the early termination with respect to derivative
instruments subject to Master Agreements that are in a net liability
position could be material to the Fund's financial statements. The Fund does
not offset derivative assets and derivative liabilities that are subject to
netting arrangements in the Statement of Assets and Liabilities.
The following tables represent the value of derivatives held as of June 30,
2019, by their primary underlying risk exposure and respective location on
the Statement of Assets and Liabilities and the effect of derivatives on the
Statement of Operations for the six months ended June 30, 2019. The
derivative contracts held during the period are not accounted for as hedging
instruments under GAAP. For a detailed presentation of derivatives held as
of June 30, 2019, please refer to the schedule at the end of the Fund's
Portfolio of Investments.
26
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2019 -- (unaudited)
(continued)
Asset Derivatives Liability Derivatives
-------------------------- - --------------------------
Forward Foreign Forward Foreign
Currency Contracts(1) Currency Contracts(2)
-------------------------- --------------------------
Foreign Exchange Contracts Foreign Exchange Contracts
-------------------------- --------------------------
$30,087 $ --
======= ===
Statement of Assets and Liabilities Location:
(1) Unrealized appreciation on forward foreign currency contracts
(2) Unrealized depreciation on forward foreign currency contracts
Realized Gain (Loss) on Change in Unrealized Appreciation (Depreciation)
Derivatives Recognized in on Derivatives Recognized in
Statement of Operations Statement of Operations
-------------------------- - ------------------------------------------------
Forward Foreign Forward Foreign
Currency Contracts(1) Currency Contracts(2)
-------------------------- ------------------------------------------------
Foreign Exchange Contracts Foreign Exchange Contracts
-------------------------- ------------------------------------------------
$252,248 $(4,391)
======== ========
Statement of Operations Location:
(1) Net realized gain (loss) on forward contracts
(2) Change in unrealized appreciation (depreciation) on forward
contracts
The following table represents the average monthly balances of derivatives
held during the six months ended June 30, 2019.
Average Amount Outstanding During the Period
--------------------------------------------
Foreign Exchange Contracts(1)
--------------------------------------------
$11,811,212
===========
--------
(1) Amounts represent notional amounts in US dollars.
The following table sets forth the Fund's derivative assets and liabilities
by counterparty, net of amounts available for offset under Master Agreements
and net of the related collateral pledged/(received) as of June 30, 2019.
The repurchase agreements held by the Fund as of June 30, 2019, are also
subject to Master Agreements but are not included in the following tables.
See the Portfolio of Investments and the Notes to the Financial Statements
for more information about the Fund's holdings in repurchase agreements.
Derivative Assets(1) Derivative Liabilities(1)
-------------------- -------------------------
Forward Forward Net
Foreign Foreign Derivative Collateral
Currency Currency Assets Pledged/
Counterparty Contracts Total Contracts Total (Liabilities) (Received)(2) Net Amount(3)
------------ --------- ------- --------- ----- ------------- ------------- -------------
Goldman Sachs International........ $30,087 $30,087 $ -- $ -- $30,087 $ -- $30,087
======= ======= ==== ==== ======= ==== =======
-
(1)Gross amounts of recognized assets and liabilities not offset in the
Statement of Assets and Liabilities.
(2)For each respective counterparty, collateral pledged or (received) is
limited to an amount not to exceed 100% of the derivative
asset/liability in the table above.
(3)Net amount represents the net amount due (to)/from counterparty in
the event of a default based on the contractual set-off rights under
the agreement.
Repurchase Agreements: The Fund, along with other affiliated registered
investment companies, pursuant to procedures adopted by the Board and
applicable guidance from the Securities and Exchange Commission ("SEC"), may
transfer uninvested cash balances into a single joint account, the daily
aggregate balance of which is invested in one or more repurchase agreements
collateralized by U.S. Treasury or federal agency obligations. In a
repurchase agreement, the seller of a security agrees to repurchase the
security at a mutually agreed-upon time and price, which reflects the
effective rate of return for the term of the agreement. For repurchase
agreements and joint repurchase agreements, the Fund's custodian takes
possession of the collateral pledged for investments in such repurchase
agreements ("repo" or collectively "repos"). The underlying collateral is
valued daily on a mark to market basis, plus accrued interest, to ensure
that the value,
27
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2019 -- (unaudited)
(continued)
at the time the agreement is entered into, is equal to at least 102% of the
repurchase price, including accrued interest. In the event of default of the
obligation to repurchase, the Fund has the right to liquidate the collateral
and apply the proceeds in satisfaction of the obligation. If the seller
defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.
As of June 30, 2019, the Fund held an undivided interest in a joint
repurchase agreement with Bank of America Securities LLC:
Percentage Principal
Ownership Amount
---------- ---------
Senior Floating Rate Fund.......... 2.73% $820,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Bank of America Securities LLC, dated June 28, 2019, bearing interest at a
rate of 2.47% per annum, with a principal amount of $30,000,000, a
repurchase price of $30,006,175, and a maturity date of July 1, 2019. The
repurchase agreement is collateralized by the following:
Interest Principal
Type of Collateral Rate Maturity Date Amount Value
------------------ -------- ------------- ----------- -----------
U.S. Treasury Bonds................ 3.00% 02/15/2047 $27,907,000 $30,930,208
As of June 30, 2019, the Fund held an undivided interest in a joint
repurchase agreement with Barclays Capital, Inc.:
Percentage Principal
Ownership Amount
---------- ---------
Senior Floating Rate Fund.......... 2.74% $685,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Barclays Capital, Inc., dated June 28, 2019, bearing interest at a rate of
2.50% per annum, with a principal amount of $25,000,000, a repurchase price
of $25,005,208, and a maturity date of July 1, 2019. The repurchase
agreement is collateralized by the following:
Interest Principal
Type of Collateral Rate Maturity Date Amount Value
------------------ -------- ------------- ----------- -----------
U.S. Treasury Bonds................ 3.38% 05/15/2044 $21,889,000 $25,534,613
As of June 30, 2019, the Fund held an undivided interest in a joint
repurchase agreement with BNP Paribas SA:
Percentage Principal
Ownership Amount
---------- ---------
Senior Floating Rate Fund.......... 2.73% $820,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
BNP Paribas SA, dated June 28, 2019, bearing interest at a rate of 2.48% per
annum, with a principal amount of $30,000,000, a repurchase price of
$30,006,200, and a maturity date of July 1, 2019. The repurchase agreement
is collateralized by the following:
Interest Principal
Type of Collateral Rate Maturity Date Amount Value
------------------ -------- ------------- ----------- -----------
U.S. Treasury Notes................ 2.13% 11/30/2024 $30,110,800 $30,660,322
28
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2019 -- (unaudited)
(continued)
As of June 30, 2019, the Fund held an undivided interest in a joint
repurchase agreement with Deutsche Bank AG:
Percentage Principal
Ownership Amount
---------- ---------
Senior Floating Rate Fund.......... 2.74% $755,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Deutsche Bank AG, dated June 28, 2019, bearing interest at a rate of 2.49%
per annum, with a principal amount of $27,570,000, a repurchase price of
$27,575,721, and a maturity date of July 1, 2019. The repurchase agreement
is collateralized by the following:
Interest Principal
Type of Collateral Rate Maturity Date Amount Value
------------------ -------- ------------- ----------- -----------
U.S. Treasury Notes................ 2.63% 07/15/2021 $27,654,000 $28,459,097
As of June 30, 2019, the Fund held an undivided interest in a joint
repurchase agreement with RBS Securities, Inc.:
Percentage Principal
Ownership Amount
---------- ---------
Senior Floating Rate Fund.......... 2.79% $920,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
RBS Securities, Inc., dated June 28, 2019, bearing interest at a rate of
2.48% per annum, with a principal amount of $33,000,000, a repurchase price
of $33,006,820, and a maturity date of July 1, 2019. The repurchase
agreement is collateralized by the following:
Interest Principal
Type of Collateral Rate Maturity Date Amount Value
------------------ -------- ------------- ----------- -----------
U.S. Treasury Notes................ 2.88% 10/31/2023 $32,035,000 $33,680,548
When-Issued Securities and Forward Commitments: The Fund may purchase or
sell when-issued securities that have been authorized, but not yet issued in
the market. In addition, the Fund may purchase or sell securities on a
forward commitment basis. A forward commitment involves entering into a
contract to purchase or sell securities, typically on an extended settlement
basis, for a fixed price at a future date. The Fund may engage in
when-issued or forward commitment transactions in order to secure what is
considered to be an advantageous price and yield at the time of entering
into the obligation. The purchase of securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines before the settlement date. Conversely, the sale of
securities on a when-issued or forward commitment basis involves the risk
that the value of the securities sold may increase before the settlement
date. Securities purchased or sold on a when-issued or forward commitment
basis outstanding at the end of the period, if any, are included in
investments purchased/sold on an extended settlement basis in the Statement
of Assets and Liabilities.
Loans: The Fund invests in senior loans which generally consist of direct
debt obligations of companies (collectively, "Borrowers"), primarily U.S.
companies and their affiliates, undertaken to finance the growth of the
Borrower's business internally and externally, or to finance a capital
restructuring. Transactions in senior loans may settle on a delayed basis.
Unsettled loans at the end of the period, if any, are included in
investments purchased/sold on an extended settlement basis in the Statement
of Assets and Liabilities.
Securities Transactions, Investment Income, Expenses, Dividends and
Distributions to Shareholders: Security transactions are recorded on a trade
date basis. Realized gains and losses on sales of investments are calculated
on the identified cost basis. Interest income is accrued daily from
settlement date except when collection is
29
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2019 -- (unaudited)
(continued)
not expected. Dividend income is recorded on the ex-dividend date. For
financial statement purposes, the Fund amortizes all premiums and accretes
all discounts. Facility fees are accreted over the life of the loan. Fees in
the amount of $89,046 were recognized for the six months ended June 30,
2019. Other income, including amendment fees, commitment fees, letter of
credit fees, etc., which were $66,962 for the six months ended June 30,
2019, 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 value of outstanding shares (or the value of
dividend-eligible shares, as appropriate) of each class of shares at the
beginning of the day (after adjusting for the current capital share activity
of the respective class).
Dividends from net investment income are normally declared daily and paid
monthly. Capital gain distributions, if any, are paid annually. The Fund
records dividends and distributions to the shareholders on the ex-dividend
date. The amount of dividends and distributions from net investment income
and net realized capital gains are determined in accordance with federal
income tax regulations, which may differ from GAAP. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are
reclassified within the capital accounts at fiscal year end based on their
federal tax-basis treatment; temporary differences do not require
reclassification. Net assets are not affected by the reclassifications.
The Fund is considered a separate entity for tax purposes and intends to
comply with the requirements of the Internal Revenue Code, as amended,
applicable to regulated investment companies and distribute all of its
taxable income, including any net capital gains on investments, to its
shareholders. The Fund also intends to distribute sufficient net investment
income and net capital gains, if any, so that the Fund will not be subject
to excise tax on undistributed income and gains. Therefore, no federal
income tax or excise tax provision is required.
The Fund recognizes the tax benefits of uncertain tax positions only when
the position is more likely than not to be sustained, assuming examination
by tax authorities. Management has analyzed the Fund's tax positions and
concluded that no liability for unrecognized tax benefits should be recorded
related to uncertain tax positions taken on returns filed for open tax years
2015-2017 or expected to be taken in the Fund's 2018 tax return. The Fund is
not aware of any tax provisions for which it is reasonably possible that the
total amounts of unrecognized tax benefits will change materially in the
next twelve months. The Fund files U.S. federal and certain state income tax
returns. With few exceptions, the Fund is no longer subject to U.S. federal
and state tax examinations by tax authorities for tax returns ending before
2015.
Foreign Currency Translation: The books and records of the Fund is
maintained in U.S. dollars. Assets and liabilities denominated in foreign
currencies and commitments under forward foreign currency contracts are
translated into U.S. dollars based on the exchange rate of such currencies
against U.S. dollars on the date of valuation.
The Fund does not isolate that portion of the results of operations arising
as a result of changes in the foreign exchange rates from the changes in the
market prices of securities held at the end of the period. Similarly, the
Fund does not isolate the effect of changes in foreign exchange rates from
the changes in the market prices of portfolio securities sold during the
period.
Realized foreign exchange gains and losses on other assets and liabilities
and change in unrealized foreign exchange gains and losses on other assets
and liabilities located in the Statements of Operations include realized
foreign exchange gains and losses from currency gains or losses between the
trade and the settlement dates of securities transactions, the difference
between the amounts of interest, dividends and foreign withholding taxes
recorded on the Funds' books and the U.S. dollar equivalent amounts actually
received or paid and changes in the unrealized foreign exchange gains and
losses relating to the other assets and liabilities arising as a result of
changes in the exchange rates.
30
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2019 -- (unaudited)
(continued)
New Accounting Pronouncements: In August 2018, the FASB issued Accounting
Standards Update ("ASU") No. 2018-13 "Disclosure Framework -- Changes to the
Disclosure Requirements for Fair Value Measurement". The ASU eliminates,
modifies, and adds disclosure requirements for fair value measurements and
is effective for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2019. The ASU allows for early adoption
of either the entire standard or only the provisions that eliminate or
modify the requirements. Management has elected to early adopt the
provisions that eliminate disclosure requirements and is still evaluating
the impact of applying the rest of the ASU.
Effective January 1, 2019, the Fund is subject to ASU 2017-08, "Premium
Amortization on Purchased Callable Debt Securities", which requires the
premiums on certain purchased debt securities with non-contingent call
features to be amortized to the earliest call date. The amortization period
for callable debt securities purchased at a discount will not be impacted.
Adoption of the ASU had no material impact on the Fund.
Note 3. Capital Share Transactions
For the For the
six months ended year ended
June 30, 2019 December 31, 2018
----------------------- ------------------------
Shares Amount Shares Amount
Class A ---------- ----------- ---------- ------------
Shares sold............................................................... 1,497,404 $11,919,872 5,481,742 $44,300,731
Reinvested dividends...................................................... 272,978 2,169,523 509,372 4,096,024
Shares redeemed........................................................... (2,554,727) (20,291,164) (4,147,475) (33,471,507)
---------- ----------- ---------- ------------
Net increase (decrease) in shares outstanding before automatic conversion. (784,345) (6,201,769) 1,843,639 14,925,248
Shares issued/(reacquired) upon automatic conversion...................... 117,853 928,998 1,400,892 11,357,027
---------- ----------- ---------- ------------
Net increase (decrease)................................................ (666,492) $(5,272,771) 3,244,531 $26,282,275
========== =========== ========== ============
For the For the
six months ended year ended
June 30, 2019 December 31, 2018
----------------------- ------------------------
Shares Amount Shares Amount
Class C ---------- ----------- ---------- ------------
Shares sold............................................................... 747,985 $5,938,289 2,003,292 $15,909,264
Reinvested dividends...................................................... 193,300 1,535,657 427,597 3,440,328
Shares redeemed........................................................... (1,897,277) (15,042,925) (5,490,815) (44,322,304)
---------- ----------- ---------- ------------
Net increase (decrease) in shares outstanding before automatic conversion. (955,992) (7,568,979) (3,059,926) (24,972,712)
Shares issued/(reacquired) upon automatic conversion...................... (117,933) (928,998) (1,402,611) (11,357,027)
---------- ----------- ---------- ------------
Net increase (decrease)................................................ (1,073,925) $(8,497,977) (4,462,537) $(36,329,739)
========== =========== ========== ============
For the For the
six months ended year ended
June 30, 2019 December 31, 2018
----------------------- ------------------------
Shares Amount Shares Amount
Class W ---------- ----------- ---------- ------------
Shares sold............................................................... 3,307,383 $26,309,179 3,006,055 $24,317,429
Reinvested dividends...................................................... 109,578 873,017 110,289 885,761
Shares redeemed........................................................... (2,324,196) (18,548,850) (1,851,429) (14,958,054)
---------- ----------- ---------- ------------
Net increase (decrease)................................................ 1,092,765 $8,633,346 1,264,915 $10,245,136
========== =========== ========== ============
Note 4. Purchases and Sales of Securities
During the six months ended June 30, 2019, the Fund's cost of purchases and
proceeds from sale of long-term investments, including loan principal
paydowns, were $31,638,087 and $34,274,847, respectively.
Note 5. Investment Advisory Agreement and Other Transactions with Affiliates
The Fund has entered into an Investment Advisory and Management Agreement
(the "Advisory Agreement") with SunAmerica. Pursuant to the Advisory
Agreement, SunAmerica provides continuous supervision of the Fund and
administers its corporate affairs, subject to the general review and
oversight of the Board. In connection therewith,
31
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2019 -- (unaudited)
(continued)
SunAmerica furnishes the Fund with office facilities, maintains certain of
the Fund's books and records and pays the salaries and expenses of all
personnel, including officers of the Fund who are employees of SunAmerica
and its affiliates. SunAmerica also selects, contracts with and compensates
the subadviser to manage the Fund's assets. The Fund will pay SunAmerica a
monthly management fee at the following annual rates, based on the average
daily net assets of the Fund: 0.85% on the first $1 billion; 0.80% on the
next $1 billion; and 0.75% in excess of $2 billion.
Pursuant to an Advisory Fee Waiver Agreement, SunAmerica is contractually
obligated to waive its advisory fee with respect to the Fund so that the
advisory fee payable by the Fund to SunAmerica equals 0.63% on the first
$2 billion of average daily net assets and 0.58% above $2 billion of average
daily net assets. For the six months ended June 30, 2019, SunAmerica waived
$267,513 of investment advisory fees.
Wellington Management Company LLP ("Wellington") acts as subadviser to the
Fund pursuant to a Subadvisory Agreement with SunAmerica. Under the
Subadvisory Agreement, Wellington manages the investment and reinvestment of
the Fund's assets. The fee paid to the subadviser is paid by SunAmerica and
not the Fund.
Pursuant to the Administrative Services Agreement (the "Administrative
Agreement"), SunAmerica acts as the Fund's administrator and is responsible
for providing and supervising the performance by others, of administrative
services in connection with the operations of the Fund, subject to
supervision by the Fund's Board. For its services, SunAmerica receives an
annual fee equal to 0.20% of average daily net assets of the Fund. For the
six months ended June 30, 2019, SunAmerica earned fees as reflected in the
Statement of Operations based upon the aforementioned rate.
The Fund has entered into a Distribution Agreement with AIG Capital
Services, Inc. ("ACS" or the "Distributor"), an affiliate of the Adviser.
The Fund has adopted a Distribution Plan on behalf of each class of shares
(other than Class W shares) (each a "Plan" and collectively, the "Plans") in
accordance with the provisions of Rule 12b-1 under the 1940 Act, hereinafter
referred to as the "Class A Plan" and "Class C Plan". In adopting the Plans,
the Board determined that there was a reasonable likelihood that each such
Plan would benefit the Fund and the shareholders of the respective class.
The sales charge and distribution fees of a particular class will not be
used to subsidize the sale of shares of any other class.
Under the Class A Plan and Class C Plan, the Distributor receives payments
from the Fund at an annual rate of 0.10% and 0.50%, respectively, of the
average daily net assets of the Fund's Class A and Class C shares to
compensate the Distributor and certain securities firms for providing sales
and promotional activities for distributing that class of shares. The
distribution costs for which the Distributor may be compensated include fees
paid to broker-dealers that have sold Fund shares, commissions and other
expenses such as those incurred for sales literature, prospectus printing
and distribution and compensation to wholesalers. It is possible that in any
given year, the amount paid to the Distributor under each Class' Plan may
exceed the Distributor's distribution costs as described above. The Plans
provide that the Class A and Class C shares of the Fund will pay the
Distributor an account maintenance fee up to an annual rate of 0.25% of the
aggregate average daily net assets of such class of shares for payments to
compensate the Distributor and certain securities firms for account
maintenance activities. The Distributor does not receive or retain any
distribution and/or account maintenance fees for any shares when the
shareholder does not have a broker of record. For the six months ended
June 30, 2019, ACS received fees (see Statement of Operations) based upon
the aforementioned rates.
The Fund has entered into an Administrative and Shareholder Services
Agreement with ACS, pursuant to which ACS is paid an annual fee of 0.15% of
average daily net assets of Class W shares as compensation for providing
additional shareholder services to Class W shareholders. For the six months
ended June 30, 2019, ACS earned fees as reflected in the Statement of
Operations based on the aforementioned rate.
For the six months ended June 30, 2019, ACS received sales charges on
Class A shares of $85,525, of which $39,644 was reallowed to affiliated
broker-dealers and $30,631 to non-affiliated broker-dealers. In addition,
ACS receives the proceeds of contingent deferred sales charges paid by
investors in connection with certain redemptions of Class A and Class C
shares. For the six months ended June 30, 2019, ACS received contingent
deferred sales charges of $3,549.
32
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2019 -- (unaudited)
(continued)
The Fund has entered into a Service Agreement with AIG Fund Services, Inc.
("AFS") an affiliate of the Adviser. Under the Service Agreement, AFS
performs certain shareholder account functions by assisting the Fund's
transfer agent in connection with the services that it offers to the
shareholders of the Fund. The Service Agreement, which permits the Fund to
compensate AFS for services rendered based upon an annual rate of 0.22% of
average daily net assets, is approved annually by the Board. For the
six months ended June 30, 2019, the Fund incurred the following expenses,
which are included in the transfer agent fees and expenses payable in the
Statement of Assets and Liabilities and in transfer agent fees and expenses
in the Statement of Operations to compensate AFS pursuant to the terms of
the Service Agreement.
Payable at
Expense June 30, 2019
- -------- -------------
Class A............................ $125,293 $20,450
Class C............................ 101,161 16,324
Class W............................ 41,060 6,884
Effective March 8, 2019, SunAmerica has contractually agreed to waive fees
and/or reimburse expenses to the extent necessary to cap the Fund's annual
operating expenses at 1.02% for Class A, 1.42% for Class C and 0.82% for
Class W of average daily net assets. Prior to March 8, 2019, SunAmerica
contractually agreed to waive fees and/or reimburse expenses to the extent
necessary to cap the Fund's annual operating expenses at 1.04% for Class A,
1.44% for Class C and 0.84% for Class W of average daily net assets. For
purposes of waived fees and/or reimbursed expense calculations, annual Fund
operating expenses shall not include extraordinary expenses, (i.e., expenses
that are unusual in nature and infrequent in occurrence, such as
litigation), or acquired fund fees and expenses, brokerage commissions and
other transactional expenses relating to the purchase and sale of portfolio
securities, interest, taxes and governmental fees and other expenses not
incurred in the ordinary course of the Fund's business. The expense
reimbursements and fee waivers will continue indefinitely, unless terminated
by the Board, including a majority of the Disinterested Directors. For the
six months ended June 30, 2019, SunAmerica waived fees and/or reimbursed
expenses as follows: Class A $328,819, Class C $266,528 and Class W $121,720.
Note 6. Federal Income Taxes
The following details the tax basis distributions as well as the components
of distributable earnings. The tax basis components of distributable
earnings differ from the amounts reflected in the Statement of Assets and
Liabilities by temporary book/tax differences primarily arising from
dividends payable and wash sales.
Distributable Earnings Tax Distributions
---------------------------------------- -------------------------------------
For the year ended December 31, 2018 For the year ended December 31, 2018
---------------------------------------- -------------------------------------
Long-term Gains/ Unrealized Long-term
Ordinary Capital and Appreciation/ Ordinary Capital
Income Other Losses (Depreciation) Income Gains
-------- ---------------- -------------- ------------ ---------
$ -- $(24,525,023) $(15,136,235) $10,140,060 $ --
Capital Loss Carryforwards: At December 31, 2018 for Federal income tax
purposes, the Fund has $24,525,023 of unlimited long-term capital losses.
Under the current law, capital losses realized after October 31 and
specified ordinary losses may be deferred and treated as occurring on the
first day of the following year. For the year ended December 31, 2018, the
fund deferred $48,712 of late year ordinary losses, $152,773 of post-October
short-term capital losses and $69,182 of post-October long-term capital
losses.
For the year ended December 31, 2018, reclassifications were made to
increase accumulated net realized gain (loss) by $293,176 and undistributed
net investment income by $293,176. The reclassifications arising from
book/tax differences were due primarily to the reclassification of foreign
currency gains and losses.
33
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2019 -- (unaudited)
(continued)
At June 30, 2019, the amounts of aggregate unrealized gain (loss) and the
cost of investment securities for federal tax purposes, including short-term
securities, repurchase agreements and derivatives, were as follows:
Cost (tax basis)............................................ $247,310,795
============
Gross unrealized appreciation............................... 712,479
Gross unrealized depreciation............................... (8,466,315)
------------
Net unrealized depreciation................................. $ (7,753,836)
============
Note 7. Line of Credit
The Fund, along with certain other funds managed by the Adviser has access
to a $75 million committed unsecured line of credit and a $50 million
uncommitted unsecured line of credit. The committed and uncommitted lines of
credit are renewable on an annual basis with State Street Bank and Trust
Company ("State Street"), the Fund's custodian. Interest is currently
payable on the committed line of credit at the higher of the Federal Funds
Rate (but not less than zero) plus 125 basis points or the One-Month London
Interbank Offered Rate (but not less than zero) plus 125 basis points and
State Street's discretionary bid rate on the uncommitted line of credit.
There is also a commitment fee of 25 basis points per annum on the daily
unused portion of the committed line of credit and a one-time closing fee of
$25,000 on the uncommitted line of credit. Borrowings under the line of
credit will commence when the respective Fund's cash shortfall exceeds
$100,000.
For the six months ended June 30, 2019, the Fund did not utilize the line of
credit.
Note 8. Interfund Lending
Pursuant to the exemptive relief granted by the SEC, the Fund is permitted
to participate in an interfund lending program among investment companies
advised by SunAmerica or an affiliate. The interfund lending program allows
the participating funds to borrow money from and lend money to each other
for temporary or emergency purposes. An interfund loan will be made under
this facility only if the participating funds receive a more favorable
interest rate than would otherwise be available from a typical bank for a
comparable transaction. For the six months ended June 30, 2019, the Fund did
not participate in this program.
Note 9. Investment Concentration
The Fund invests primarily in participations and assignments, or acts as a
party to the primary lending syndicate of a variable rate senior loan
interest to United States corporations, partnerships, and other entities. If
the lead lender in a typical lending syndicate becomes insolvent, enters
receivership or, if not FDIC insured, enters into bankruptcy, the Fund may
incur certain costs and delays in receiving payment, or may suffer a loss of
principal and/or interest. When the Fund purchases a participation of a
senior loan interest, the Fund typically enters into a contractual agreement
with the lender or other third party selling the participation but not with
the borrower directly. As such, the Fund is subject to the credit risk of
the borrower, selling participant, lender or other persons positioned
between the Fund and the borrower.
Note 10. Unfunded Loan Commitments
At June 30, 2019, the Fund had the following unfunded loan commitments which
could be extended at the option of the Borrower:
Maturity Principal
Borrower Type Date Amount Value
-------- ------------ ---------- --------- -------
Allied Universal Holdco LLC........ Delayed Draw 07/10/2026 $83,606 $83,363
34
SunAmerica Senior Floating Rate Fund, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY AGREEMENT -- June 30, 2019 -- (unaudited)
The Board of Directors (the "Board" the members of which are referred to as
"Directors") of AIG Senior Floating Rate Fund, Inc. (the "Fund"), including the
Directors who are not "interested persons," as defined in Section 2(a)(19) of
the Investment Company Act of 1940, as amended (the "1940 Act") (the
"Independent Directors"), of the Fund, SunAmerica Asset Management, LLC
("SunAmerica") or Wellington Management Company LLP ("Wellington"), approved
the continuation of the Investment Advisory and Management Agreement between
the Fund and SunAmerica (the "Advisory Agreement") for a one-year period ending
June 30, 2020 at an in-person meeting held on June 4-5, 2019 (the "Meeting").
At the Meeting, the Board, including the Independent Directors, also approved
the continuation of the Subadvisory Agreement between SunAmerica and Wellington
with respect to the Fund for a one-year period ending June 30, 2020 (the
"Subadvisory Agreement," and together with the Advisory Agreement, the
"Agreements").
In accordance with Section 15(c) of the 1940 Act, the Board requested, and
SunAmerica and Wellington provided materials relating to the Board's
consideration of whether to approve the continuation of the Agreements. These
materials included: (a) a summary of the services provided to the Fund by
SunAmerica and its affiliates, and by Wellington; (b) information independently
compiled and prepared by Broadridge Financial Solutions, Inc. ("Broadridge"),
an independent third-party provider of mutual fund data on fees and expenses of
the Fund, and the investment performance of the Fund as compared with a peer
group of funds, along with fee and performance data with respect to the Fund
and any other mutual funds or accounts advised or subadvised by SunAmerica or
Wellington with similar investment objectives and/or strategies, as applicable;
(c) information on the profitability of SunAmerica and its affiliates, and a
discussion relating to indirect benefits; (d) information relating to economies
of scale; (e) information about SunAmerica's general compliance policies and
procedures and the services it provides in connection with its oversight of
subadvisers; (f) information about SunAmerica's and Wellington's risk
management processes; (g) information regarding brokerage and soft dollar
practices; and (h) information about the key personnel of SunAmerica and its
affiliates, and Wellington, that are involved in the investment management,
administration, compliance and risk management activities with respect to the
Fund, as well as current and projected staffing levels and compensation
practices.
In determining whether to approve the continuation of the Agreements, the
Board, including Independent Directors, considered at the Meeting, and from
time to time as appropriate, factors it deemed relevant, including the
following information:
Nature, Extent and Quality of Services Provided by SunAmerica and Wellington
The Board, including the Independent Directors, considered the nature, extent
and quality of services provided by SunAmerica. The Board noted that the
services include acting as investment manager and adviser to the Fund, managing
the daily business affairs of the Fund, and obtaining and evaluating economic,
statistical and financial information to formulate and implement the Fund's
investment policies. Additionally, the Board observed that SunAmerica provides
office space, bookkeeping, accounting, legal and compliance, clerical and
administrative services and has authorized its officers and employees, if
elected, to serve as officers or directors of the Fund without compensation.
The Board also noted that SunAmerica is responsible for monitoring and
reviewing the activities of affiliated and unaffiliated third-party service
providers, including Wellington. In addition to the quality of the advisory
services provided by SunAmerica, the Board considered the quality of the
administrative and other services provided by SunAmerica to the Fund pursuant
to the Advisory Agreement. The Board also considered the significant risks
assumed by SunAmerica in connection with the services provided to the Fund
including investment, operational, enterprise, litigation, regulatory and
compliance risks with respect to the Fund. Additionally, the Board observed
that SunAmerica performs or supervises the performance by others of other
administrative services in connection with the operation of the Fund pursuant
to the Administrative Services Agreement between SunAmerica and the Fund (the
"Administrative Services Agreement").
In connection with the services provided by SunAmerica, the Board analyzed the
structure and duties of SunAmerica's fund administration, accounting,
operations, legal and compliance departments and concluded that they were
adequate to meet the needs of the Fund. The Board also reviewed the personnel
responsible for providing advisory services to the Fund and other key personnel
of SunAmerica in addition to current and projected staffing levels and
compensation practices. The Board concluded, based on its experience and
interaction with SunAmerica, that: (i) SunAmerica would continue to be able to
retain quality investment and other personnel; (ii) SunAmerica has exhibited a
high level of
35
SunAmerica Senior Floating Rate Fund, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY AGREEMENT -- June 30, 2019 -- (unaudited) (continued)
diligence and attention to detail in carrying out its advisory and other
responsibilities under the Advisory Agreement; (iii) SunAmerica has been
responsive to requests of the Board; and (iv) SunAmerica has kept the Board
apprised of developments relating to the Fund and the industry in general. The
Board concluded that the nature and extent of services provided under the
Advisory Agreement were reasonable and appropriate in relation to the
management fees and that the quality of services continues to be high. The
Board also noted the high quality of services under the Administrative Services
Agreement.
The Board also considered SunAmerica's reputation and relationship with the
Fund and considered the benefit to shareholders of investing in funds that are
part of a family of funds offering a variety of types of mutual funds and
shareholder services. The Board considered SunAmerica's experience in providing
management and investment advisory and administrative services to advisory
clients and noted that as of March 31, 2019, SunAmerica managed, advised and/or
administered approximately $85.8 billion in assets. In addition, the Board
considered SunAmerica's code of ethics and its commitment to compliance
generally and with respect to its management and administration of the Fund.
The Board also considered SunAmerica's risk management processes. The Board
further observed that SunAmerica has developed internal procedures for
monitoring compliance with the investment objectives, policies and restrictions
of the Fund as set forth in the Fund's prospectus. The Board also reviewed
SunAmerica's compliance and regulatory history and noted that there were no
material legal, regulatory or compliance issues that would potentially impact
SunAmerica in effectively serving as the investment adviser to the Fund.
The Board also considered the nature, extent and quality of services provided
by Wellington. The Board observed that Wellington is responsible for providing
day-to-day investment management services, including investment research,
advice and supervision, and determining which securities will be purchased or
sold by the Fund, or portion thereof, that Wellington manages, subject to the
oversight and review of SunAmerica. The Board reviewed Wellington's history,
structure, size, visibility and resources, which are needed to attract and
retain highly qualified investment professionals. The Board reviewed the
personnel that are responsible for providing subadvisory services to the Fund,
and other key personnel of Wellington, in addition to current and projected
staffing levels and compensation practices, and concluded, based on its
experience with Wellington, that Wellington: (i) has been able to retain high
quality portfolio managers and other investment personnel; (ii) has exhibited a
high level of diligence and attention to detail in carrying out its
responsibilities under the Subadvisory Agreement; and (iii) has been responsive
to requests of the Board and of SunAmerica. In addition, the Board considered
Wellington's code of ethics and risk management process. The Board further
observed that Wellington has developed internal policies and procedures for
monitoring compliance with the investment objectives, policies and restrictions
of the Fund as set forth in the Fund's prospectus. The Board also reviewed
Wellington's compliance and regulatory history and noted that there were no
material legal, regulatory or compliance issues that would potentially impact
Wellington from effectively serving as a subadviser to the Fund. The Board
concluded that the nature and extent of services provided by Wellington under
the Subadvisory Agreement were reasonable and appropriate in relation to the
subadvisory fees and that the quality of services continues to be high.
Investment Performance
The Board, including the Independent Directors, also considered the investment
performance of SunAmerica and Wellington with respect to the Fund. In
connection with its review, the Board received and reviewed information
regarding the investment performance of the Fund as compared to the Fund's peer
group ("Peer Group") and peer universe ("Peer Universe") as independently
determined by Broadridge and to an appropriate index or combination of indices,
including the Fund's benchmarks. The Board was provided with a description of
the methodology used by Broadridge to select the funds in the Peer Group and
Peer Universe.
The Board noted that performance information was for the periods ended
March 31, 2019. The Board also noted that it regularly reviews the performance
of the Fund throughout the year. The Board further noted that, while it
monitors performance of the Fund closely, it generally attaches more importance
to performance over relatively long periods of time, typically three to five
years.
36
SunAmerica Senior Floating Rate Fund, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY AGREEMENT -- June 30, 2019 -- (unaudited) (continued)
The Board considered that the Fund's performance was above the medians of its
Peer Group and Peer Universe for the one-, three- and five-year periods. The
Board further noted that the Fund outperformed its Broadridge Index for the
three-year period and underperformed its Broadridge Index for the one- and
five-year periods. The Board noted management's discussion of the Fund's
performance and concluded that the Portfolio's overall performance was
satisfactory.
Consideration of the Management Fees and the Cost of the Services and Profits
to be Realized by SunAmerica, Wellington and their Affiliates from the
Relationship with the Fund
The Board, including the Independent Directors, received and reviewed
information regarding the fees paid by the Fund to SunAmerica pursuant to the
Advisory Agreement and the fees paid by SunAmerica to Wellington pursuant to
the Subadvisory Agreement. The Board examined this information in order to
determine the reasonableness of the fees in light of the nature and quality of
services to be provided and any potential additional benefits to be received by
SunAmerica, Wellington or their affiliates in connection with providing such
services to the Fund.
To assist in analyzing the reasonableness of the management fees for the Fund,
the Board received reports independently prepared by Broadridge. The reports
showed comparative fee information for the Fund's Peer Group and Peer Universe
as determined by Broadridge, including rankings within each category. In
considering the reasonableness of the management fees to be paid by the Fund to
SunAmerica, the Board reviewed a number of expense comparisons, including:
(i) contractual and actual management fees; and (ii) actual total operating
expenses. In considering the Fund's total operating expenses, the Board
analyzed the level of fee waivers and expense reimbursements and the net
expense caps contractually agreed upon by SunAmerica. The Board further
considered that, unlike the funds in the Peer Group and Peer Universe, the fee
waivers and/or reimbursements being made by SunAmerica with respect to the
Funds are only reflected in the total expenses category of the Broadridge
reports, rather than also being reflected as specific management fee waivers in
the actual management fees category of the Broadridge reports. As a result, the
Board took into account that the actual management fees presented by Broadridge
for the funds in the Peer Group and Peer Universe may appear lower on a
relative basis. The Board also considered the various expense components of the
Fund and compared the Fund's net expense ratio to those of other funds within
its Peer Group and Peer Universe as a guide to help assess the reasonableness
of the management fee for the Fund. The Board acknowledged that it was
difficult to make precise comparisons with other funds in the Peer Group and
Peer Universe since the exact nature of services provided under the various
fund agreements is often not apparent. The Board noted, however, that the
comparative fee information provided by Broadridge as a whole was useful in
assessing whether SunAmerica was providing services at a cost that was
competitive with other, similar funds.
The Board further considered services and management fees received by
SunAmerica with respect to other mutual funds with similar investment
strategies to the Fund. The Board then noted the management fee paid by the
Fund was reasonable as compared to the fees SunAmerica was receiving from other
mutual funds for which it serves as adviser.
The Board also received and reviewed information regarding the fees paid by
SunAmerica to Wellington pursuant to the Subadvisory Agreement. To assist in
analyzing the reasonableness of the subadvisory fee, the Board received a
report independently prepared by Broadridge. The report showed comparative fee
information of the Fund's Peer Group and/or Peer Universe that the Directors
used as a guide to help assess the reasonableness of the subadvisory fee. The
Directors noted that the Peer Group/Universe information as a whole was useful
in assessing whether Wellington was providing services at a cost that was
competitive with other, similar funds. The Directors also considered that the
subadvisory fee is paid by SunAmerica out of its management fees and not by the
Fund, and that subadvisory fees may vary widely within a Peer Group for various
reasons, including market pricing demands, existing relationships, experience
and success, and individual client needs. The Board further considered the
amount of subadvisory fee paid out by SunAmerica and the amount of the
management fees which it retained and determined that these amounts were
reasonable in light of the services performed by SunAmerica and Wellington,
respectively.
The Board also considered fees received by Wellington with respect to other
mutual funds and accounts with similar investment strategies to the Fund for
which Wellington serves as adviser or subadviser, to the extent applicable. The
Board noted in particular that the similar accounts identified by Wellington
were institutional separate accounts, and
37
SunAmerica Senior Floating Rate Fund, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY AGREEMENT -- June 30, 2019 -- (unaudited) (continued)
Wellington highlighted certain differences between these separate accounts and
the Fund, including that these separate accounts are subject to different
investment limitations and restrictions and do not experience daily cash flows
in a manner similar to the Fund. The Board then noted that the subadvisory fee
paid by SunAmerica to Wellington was reasonable as compared to fees Wellington
receives for other comparable accounts for which they serve as adviser or
subadviser.
The Board considered that the Fund's actual management fees were above the
medians of its Peer Group and Peer Universe. The Board also considered that the
Fund's total expenses were below the median of its Peer Group and above the
median of its Peer Universe. The Board noted that the Fund's advisory fee
contains breakpoints and further noted management's discussions regarding the
Fund's expenses. The Board also took into account recent actions to reduce Fund
expenses through management fee waivers and expense limitations.
Profitability
The Board also considered SunAmerica's profitability and the benefits
SunAmerica and its affiliates received from their relationship with the Fund.
The Board received and reviewed financial statements relating to SunAmerica's
financial condition and profitability with respect to the services it provided
the Fund and considered how profit margins could affect SunAmerica's ability to
attract and retain high quality investment professionals and other key
personnel. The Board was also provided with a profitability analysis that
detailed the revenues earned and the expenses incurred by SunAmerica and its
affiliates that provide services to the Fund, as well as an Investment
Management Profitability Analysis prepared by an independent information
service, Broadridge. In particular, the Board considered the contractual fee
waivers and/or expense reimbursements agreed to by SunAmerica.
The Board considered the profitability of SunAmerica under the Advisory
Agreement, including the amount of management fees retained after payment to
Wellington, as well as the profitability of SunAmerica under the Administrative
Services Agreement, and considered the profitability of SunAmerica's affiliates
under the Rule 12b-1 Plans, Service Agreement and Administrative and
Shareholder Services Agreement. Additionally, the Board considered whether
SunAmerica, Wellington and their affiliates received any indirect benefits from
the relationship with the Fund. Specifically, the Board observed that AIG
Federal Savings Bank, an affiliate of SunAmerica, serves as custodian with
respect to certain shareholder retirement accounts that are administered by
SunAmerica and receives a fee payable by the qualifying shareholders. The Board
further considered whether there were any collateral or "fall-out" benefits
that SunAmerica and its affiliates may derive as a result of their relationship
with the Fund. The Board noted that SunAmerica believes that any such benefits
are de minimis and do not impact the reasonableness of the management fees.
The Board also reviewed financial statements and/or other information from
Wellington and considered whether Wellington had the financial resources
necessary to attract and retain high quality investment management personnel
and to provide a high quality of services.
The Board concluded that SunAmerica and Wellington had the financial resources
necessary to perform its obligations under the Agreements and to continue to
provide the Fund with the high quality services that they had provided in the
past. The Board further concluded that the management fees were reasonable in
light of the factors discussed above.
Economies of Scale
The Board, including the Independent Directors, considered whether the
shareholders would benefit from economies of scale and whether there was
potential for future realization of economies with respect to the Fund. The
Board considered that as a result of being part of the AIG fund complex, the
Fund shares common resources and may share certain expenses, and if the size of
the complex increases, the Fund could incur lower expenses than it otherwise
would achieve as a stand-alone entity. The Board also took into account that
the Fund had a management fee arrangement that included breakpoints that will
adjust the fee downward as the size of the Fund increases, thereby allowing the
shareholders to potentially participate in any economies of scale. The Board
further noted that SunAmerica has agreed to contractually cap the total annual
operating expenses of the Fund at certain levels. The Board observed that those
expense caps benefited shareholders by limiting total fees even in the absence
of breakpoints. The Board concluded that the Fund's
38
SunAmerica Senior Floating Rate Fund, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY AGREEMENT -- June 30, 2019 -- (unaudited) (continued)
management fee structure was reasonable and that it would continue to review
fees in connection with the renewal of the Advisory Agreement, including
whether the implementation of additional breakpoints would be appropriate in
the future due to an increase in asset size or otherwise.
The Board noted that the Subadvisory Agreement included breakpoints, but did
not review specific information regarding whether there have been economies of
scale with respect to Wellington's management of the Fund because it regards
that information as less relevant at the subadviser level. Rather, the Board
considered information regarding economies of scale in the context of the
renewal of the Advisory Agreement and concluded that the management fee
structure, including the amount of management fee retained by SunAmerica, was
reasonable in light of the factors described above.
Other Factors
In consideration of the Agreements, the Board also received information
regarding SunAmerica's and Wellington's brokerage and soft dollar practices.
The Board considered that Wellington is responsible for decisions to buy and
sell securities for the Fund, selection of broker-dealers and negotiation of
commission rates, as applicable. The Board also considered that the Fund
invests primarily in senior secured floating rate loans and, therefore, the
Fund generally does not incur significant brokerage commissions.
Conclusion
After a full and complete discussion, the Board approved the Agreements, each
for a one-year period ending June 30, 2020. Based upon its evaluation of all
these factors in their totality, the Board, including the Independent
Directors, was satisfied that the terms of the Agreements were fair and
reasonable and in the best interests of the Fund and the Fund's shareholders.
In arriving at a decision to approve the Agreements, the Board did not identify
any single factor or group of factors as all-important or controlling, but
considered all factors together, and each Independent Director may have
attributed different weights to different factors. The Independent Directors
were also assisted by the advice of independent legal counsel in making this
determination.
39
[LOGO]
AIG Funds
Harborside 5
185 Hudson Street, Suite 3300
Jersey City, NJ 07311
Directors VOTING PROXIES ON FUND DISCLOSURE OF QUARTERLY
Dr. Judith L. Craven PORTFOLIO SECURITIES PORTFOLIO HOLDINGS
William F. Devin A description of the The Fund is required to
Richard W. Grant policies and proce-dures file its complete
Stephen J. Gutman that the Fund uses to schedule of portfolio
Peter A. Harbeck determine how to vote holdings for its first
Eileen A. Kamerick proxies related to and third fiscal quarters
Officers securities held in the with the U.S. Securities
John T. Genoy, President Fund's portfolio, which and Exchange Commission
and Chief Executive is available in the on Form N-PORT. The
Officer Fund's Statement of Fund's Form N-PORT is
James Nichols, Vice Additional Information available on the U.S.
President may be ob-tained without Securities and Exchange
Timothy Pettee, Vice charge upon request, by Commission's website at
President calling (800) 858-8850. http://www.sec.gov.
Christopher C. Joe, This in-formation is also PROXY VOTING RECORD ON
Chief Compliance available from the EDGAR FUND PORTFOLIO SECURITIES
Officer database on the U.S. Information regarding how
Gregory N. Bressler, Secu-rities and Exchange the Fund voted proxies
Secretary Commission's website at relating to securities
Gregory R. Kingston, http://www.sec.gov. held in the Fund's
Treasurer DELIVERY OF SHAREHOLDER portfolio during the most
Kathleen Fuentes, Chief DOCUMENTS recent twelve month
Legal Officer and The Fund has adopted a period ended June 30 is
Assistant Secretary policy that allows it to available, once filed
Matthew J. Hackethal, send only one copy of the with the U.S. Securities
Anti-Money Laundering Fund's prospectus, proxy and Exchange Commis-sion,
Compliance Officer material, annual report without charge, upon
Donna McManus, Vice and semi-annual report request, by calling
President and (the "shareholder (800) 858-8850 or on the
Assistant Treasurer documents") to U.S. Securities and
Shawn Parry, Vice shareholders with Exchange Commission's
President and multiple accounts website at
Assistant Treasurer residing at the same http://www.sec.gov.
Investment Adviser "household." This This report is submitted
SunAmerica Asset practice is called solely for the general
Management, LLC householding and reduces information of
Harborside 5 Fund expenses, which shareholders of the Fund.
185 Hudson Street, Suite benefits you and other Distribution of this
3300 shareholders. Unless the report to persons other
Jersey City, NJ 07311 Fund receives than shareholders of the
Distributor instructions to the Fund is authorized only
AIG Capital Services, con-trary, you will only in connection with a
Inc. receive one copy of the currently effective
Harborside 5 shareholder documents. prospectus, setting forth
185 Hudson Street, Suite The Fund will continue to details of the Fund,
3300 household the which must precede or
Jersey City, NJ 07311 share-holder documents accompany this report.
Shareholder Servicing indefinitely, until we The accompanying report
Agent are instructed otherwise. has not been audited by
AIG Fund Services, Inc. If you do not wish to independent accountants
Harborside 5 participate in and accordingly no
185 Hudson Street, Suite house-holding, please opinion has been
3300 contact Shareholder expressed thereon.
Jersey City, NJ 07311 Services at (800)
Transfer Agent 858-8850 ext. 6010 or
DST Asset Manager send a written request
Solutions, Inc. with your name, the name
303 W 11th Street of your fund(s) and your
Kansas City, MO 64105 account number(s) to AIG
Custodian Funds, P.O. Box 219186,
State Street Bank and Kansas City MO,
Trust Company 64121-9186. We will
One Lincoln St. resume individual
Boston, MA 02111 mailings for your account
within thirty (30) days
of receipt of your
request.
[GRAPHIC]
Go Paperless!!
Did you know that you have the option to
receive your shareholder reports online?
By choosing this convenient service, you will no longer receive paper copies of
Fund documents such as annual reports, semi-annual reports, prospectuses and
proxy statements in the mail. Instead, you are provided with quick and easy
access to this information via the Internet.
Why Choose Electronic Delivery?
It's Quick -- Fund documents will be received faster than via traditional mail.
It's Convenient -- Elimination of bulky documents from personal files.
It's Cost Effective -- Reduction of your Fund's printing and mailing costs.
To sign up for electronic delivery, follow
these simple steps:
1 Go to www.aig.com/funds
2 Click on the link to "Go Paperless!!"
The email address you provide will be kept strictly confidential. Once your
enrollment has been processed, you will begin receiving email notifications
when anything you receive electronically is available online.
You can return to www.aig.com/funds at any time to change your email
address, edit your preferences or to cancel this service if you choose to
resume physical delivery of your Fund documents.
Please note - this option is only available to accounts opened through the
Funds.
For information on receiving this report online, see inside back cover.
AIG Funds are advised by SunAmerica Asset Management, LLC (SAAMCo) and
distributed by AIG Capital Services, Inc. (ACS), Member FINRA. Harborside
5, 185 Hudson Street, Suite 3300, Jersey City, NJ 07311, 800-858-8850. SAAMCo
and ACS are members of American International Group, Inc. (AIG).
This fund report must be preceded by or accompanied by a prospectus.
Investors should carefully consider a Fund's investment objectives, risks,
charges and expenses before investing. The prospectus, containing this and
other important information, can be obtained from your financial adviser, the
AIG Funds Sales Desk at 800-858-8850, ext. 6003, or at aig.com/funds. Read the
prospectus carefully before investing.
[LOGO]
aig.com/funds
SFSAN- 6/19
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. Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board of Directors that were
implemented after the registrant last provided disclosure in response to
the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407)
(as required by 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this
Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures (as defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270.30a-3(c))). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940 (17 CFR 270.30a-3(d))) that occurred during the
most recent fiscal-half year that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
contro1 over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management
Investment Companies.
Not applicable.
Item 13. Exhibits.
(a) (1) 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.
(4) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Senior Floating Rate Fund, Inc.
By: /s/ John T. Genoy
------------------------------------
John T. Genoy
President
Date: September 6, 2019
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John T. Genoy
------------------------------------
John T. Genoy
President
Date: September 6, 2019
By: /s/ Gregory R. Kingston
------------------------------------
Gregory R. Kingston
Treasurer
Date: September 6, 2019