<PAGE>
REPORT TO
SHAREHOLDERS
Senior Floating Rate Fund
--------------------------------------------------------------------------------
North American Funds(R) Semi-Annual Report June 30, 2000
--------------------------------------------------------------------------------
Unaudited
Financial
Statements
AMERICAN
GENERAL
FINANCIAL GROUP
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
President's Message
--------------------------------------------------------------------------------
August 18, 2000
Dear Shareholder:
I am pleased to announce that in March, North American Funds became part of
American General Corporation. Headquartered in Houston, American General is a
leading provider of retirement services, investments, life insurance and
consumer loans. The acquisition of North American Funds by American General
Corporation provides you with the backing of one of the largest and most
successful financial organizations in the country. We believe that the
additional access to resources which American General offers, combined with our
continuing commitment to providing you with exceptional investment managers and
excellent customer service will help you to reach your goals in the months and
years to come.
Fund Update
As of June 30, 2000, the North American Senior Floating Rate Fund had an NAV of
$9.83 and a 30-day SEC yield of 8.03%. Overall, the Fund continues to maintain
a strong BB- credit profile and remains well diversified with investments in
140 issuers representing 29 industries. At June 30, 2000, the largest single
position in the Fund was Starwood Hotels at 1.39% and the largest industry
weighting was telecommunications at 13.1% of the portfolio.
For the twelve months ending June 30, 2000, the Fund remained almost 200 basis
points ahead of its benchmark, the DLJ Leveraged Loan Index Plus, posting a net
total return of 5.51% vs. 3.53% for the index. In the second quarter, the Fund
slightly underperformed the index by 27 basis points with a net total return of
1.56%. The Fund's underweighting in the energy and manufacturing sectors and an
overweighting of the service sector led to the Fund's underperformance in the
quarter, but those declines were partially offset by gains in Aurora Foods,
Knowles Electronics and Allied Waste.
Market Update
Loan market volatility remained at above average levels during the first half
of the year, though still well below the volatility experienced by the broader
fixed income and equity markets. Senior loan investors remained cautious,
favoring the higher-rated, more liquid end of the market. As a result, bid
levels for better credits continued to strengthen during the quarter, while
underperforming names and distressed loans weakened significantly. In this
environment, the Fund experienced its first default, when Safety-Kleen Corp.,
an industrial waste services company, filed for bankruptcy. Although the short-
term impact to the NAV of the Fund was negative, the event was anticipated and
we believe is a necessary step in the restructuring process for this company,
which remains a holding of the Fund. Another factor that has negatively
impacted the loan market is the continued weakness in the high yield market.
The high yield market represents a critical source of capital for below
investment grade companies and tends to be a key driver of senior loan issuance
and refinancings.
With volatility in the financial markets expected to remain high, we believe
that senior loans will continue to offer strong relative value to investors as
compared to other shorter-term investments. Senior loans continue to represent
an attractive investment choice for investors who are looking to earn a
reasonable level of income with minimal exposure to interest rate movements.
At North American Funds, we are committed to you and to your investment future,
and the relationship with American General only strengthens that commitment.
You have our promise that we will continue to strive to provide you with
disciplined investment management expertise and high quality customer service.
<PAGE>
If you have any questions about your investments, simply call us at 800-872-
8037. Due to recently extended coverage, you can now reach a North American
Funds representative any time between the hours of 9:00 to 7:00 PM, Eastern
Time, Monday through Friday. Or, you can access account information 24 hours a
day from the same number, using our automated information line. Finally, you
can obtain up-to-date information on any North American Fund, including
performance information, daily pricing and other facts, on our website at
www.northamericanfunds.com. Thank you for your continued support.
Sincerely,
/s/ Alice T. Kane
Alice T. Kane
Chairman and President
North American Funds
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
Portfolio Of Investments - June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Maturity
Industry Description Type Date Par Value
-------- ----------- ---- -------- --- -----
<C> <S> <C> <C> <C> <C>
LOANS - 83.1%
Aerospace & Defense - 1.6%
K&F Industries Inc BTL-B 10/15/05 $1,565,852 $1,564,385
Titan Corporation BTL-C 2/23/07 1,496,250 1,502,796
United Defense Corp BTL-B 10/6/05 735,325 731,464
United Defense Corp BTL-C 10/6/06 715,706 711,948
----------
4,510,593
Automobile - 5.9%
Accuride Corp BTL-C 1/21/07 1,212,500 1,193,807
American Axle &
Manufacturing BTL-B 4/30/06 2,247,000 2,242,277
Collins & Aikman Corp BTL-C 12/31/05 2,189,848 2,168,635
CSK Auto Inc BTL-B-2 10/31/03 2,689,000 2,662,110
Dura Automotive Systems Inc BTL-B 3/31/06 1,250,000 1,251,367
Exide Corp BTL-B 3/18/05 1,483,300 1,457,898
Federal Mogul Corp BTL-B 2/24/05 994,286 934,214
J.L. French Automotive
Castings Inc BTL-B 10/21/06 784,280 781,666
Polypore Inc BTL-B 12/31/06 1,500,000 1,503,750
Tenneco Automotive BTL-B 10/15/07 1,000,000 986,250
Tenneco Automotive BTL-C 4/15/08 1,000,000 986,250
Venture Holdings Trust BTL-B 4/1/05 990,000 978,862
----------
17,147,086
Beverage, Food & Tobacco - 2.1%
Aurora Foods Inc BTL-A 6/30/05 1,117,528 1,000,188
Aurora Foods Inc BTL-B 9/30/06 1,783,760 1,617,276
B&G Foods Inc BTL-B 3/31/06 1,000,000 928,333
Doane Pet Care Company BTL-B 9/30/05 236,152 237,185
Doane Pet Care Company BTL-B 12/31/05 499,311 501,495
Doane Pet Care Company BTL-C 9/30/06 255,782 257,168
Shoney's Inc BTL-B 4/30/02 694,836 654,304
Tabletop Acquisition Corp BTL-B 3/31/07 997,500 1,001,864
----------
6,197,813
Broadcasting & Entertainment - 2.5%
AMFM Inc BTL-A 11/19/01 3,750,000 3,744,727
Classic Cable Inc BTL-B 1/31/08 1,736,842 1,737,059
Muzak LLC BTL-B 12/31/06 1,243,750 1,241,937
Telemundo Group Inc BTL-B 2/28/06 496,250 492,528
----------
7,216,251
Buildings & Real Estate - 3.8%
Atrium Companies Inc BTL-B 6/30/05 74,311 74,172
Atrium Companies Inc BTL-C 6/30/06 106,759 106,559
ClubCorp Inc BTL-B 3/24/07 997,500 999,683
Dal-Tile Intern'l BTL-B 12/31/03 2,236,325 2,192,158
</TABLE>
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
Portfolio Of Investments - June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Maturity
Industry Description Type Date Par Value
-------- ----------- ---- -------- --- -----
<C> <S> <C> <C> <C> <C>
Buildings & Real Estate - continued
Lennar Corp BTL-B 5/3/07 $2,500,000 $ 2,505,207
Pebble Beach Co BTL-B 7/30/06 1,495,273 1,501,582
Prison Realty Trust Inc BTL-C 12/31/02 746,231 711,407
Prison Realty Trust Inc TL 12/31/02 985,000 934,108
Tapco International
Corporation BTL-B 6/23/07 1,240,625 1,237,523
Tapco International
Corporation BTL-C 6/23/08 744,375 742,514
------------
11,004,913
Cargo Transport - 1.5%
Atlas Freighter Leasing
III Inc BTL-A 4/25/05 800,000 798,750
Atlas Freighter Leasing
III Inc BTL-B 4/25/06 1,200,000 1,201,126
Gemini Air Cargo Inc BTL-A 8/12/05 1,962,054 1,938,755
Kansas City Southern
Industries Inc BTL-B 1/11/07 500,000 502,545
------------
4,441,176
Chemicals, Plastics & Rubber - 4.3%
Foamex LP BTL-B 6/30/05 242,567 238,170
Foamex LP BTL-C 6/30/06 220,517 216,520
Foamex LP BTL-D 12/22/06 479,078 470,395
Hexcel Corp BTL-B 9/14/05 1,260,110 1,253,809
Huntsman Corp BTL-A 2/7/02 547,050 542,947
Huntsman Corp BTL-C 10/7/04 2,000,000 2,003,126
Huntsman ICI Chemicals LLC BTL-B 6/30/07 1,155,000 1,163,859
Huntsman ICI Chemicals LLC BTL-C 6/30/08 1,155,000 1,163,859
Huntsman Packaging Corp BTL-B 5/31/08 1,000,000 1,002,625
Lyondell Petrochemical Co BTL-B 6/30/05 430,427 434,950
Lyondell Petrochemical Co BTL-E 12/31/03 2,032,340 2,092,414
Scotts Company BTL-B 6/30/06 1,009,312 1,014,359
Scotts Company BTL-C 6/30/07 971,370 976,167
------------
12,573,200
Containers, Packaging & Glass - 3.9%
Graham Packaging Co BTL-B 1/31/06 979,957 978,167
Graham Packaging Co BTL-C 1 1/31/07 811,964 810,520
Graham Packaging Co BTL-C 2 1/31/07 1,179,089 1,177,280
Graphics Packaging Corp Bridge 8/12/02 421,250 414,273
Jefferson Smurfit BTL-B 3/31/06 95,833 96,002
Packaging Corporation of
America BTL-B 6/29/07 986,395 991,080
RIC/Riverwood
International BTL-A 2/28/03 1,500,000 1,486,171
RIC/Riverwood
International BTL-B 2/28/04 1,522,108 1,526,469
RIC/Riverwood
International BTL-C 8/28/04 403,116 404,271
Stone Container BTL-D 10/1/03 3,493,525 3,502,930
------------
11,387,163
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
Portfolio Of Investments - June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Maturity
Industry Description Type Date Par Value
-------- ----------- ---- -------- --- -----
<C> <S> <C> <C> <C> <C>
Diversified & Conglomerate
Manufacturing - 4.4%
Alliance Laundry Systems
LLC BTL-B 6/30/05 $1,000,000 $ 995,000
General Cable
Corporation BTL-B 5/27/07 2,315,703 2,307,019
GenTek Inc BTL-B 4/30/07 990,000 992,475
Goodman Manufacturing Co
LP BTL-B 7/31/05 951,206 940,951
Mueller Group Inc BTL-B 8/16/06 1,736,856 1,740,384
Mueller Group Inc BTL-C 8/16/07 1,736,856 1,740,384
SPX Corp BTL-B 12/31/06 1,244,997 1,250,444
Terex Corporation BTL-B 3/1/05 739,173 738,942
Terex Corporation Delayed BTL-C 7/15/06 2,212,543 2,212,543
------------
12,918,142
Diversified & Conglomerate
Service - 1.9%
infoUSA Inc BTL-B 6/30/06 1,354,639 1,324,160
NationsRent Inc BTL-B 7/20/06 750,000 743,438
United Rentals Inc BTL-B 6/30/05 1,240,602 1,225,870
United Rentals Inc BTL-C 6/30/06 2,250,000 2,222,343
------------
5,515,811
Ecological - 3.7%
Allied Waste Industries BTL-B 7/21/06 1,704,545 1,601,771
Allied Waste Industries BTL-C 7/21/07 2,045,455 1,922,126
Casella Waste Systems
Inc BTL-B 12/14/06 1,500,000 1,471,500
Intern'l Technology Corp BTL-B 6/11/06 1,714,765 1,705,119
Safety-Kleen Corp. BTL-A 4/3/04 322,918 129,167
Safety-Kleen Corp. BTL-B 4/3/05 1,241,796 498,098
Safety-Kleen Corp. BTL-C 4/3/06 1,241,796 498,098
Stericycle Inc BTL-B 11/10/06 2,809,125 2,820,097
------------
10,645,976
Electronics - 1.9%
Amkor Technology BTL-B 9/30/05 1,995,000 2,006,429
Knowles Electronics BTL-B 1/29/07 1,250,000 1,150,000
ON Semiconductor, Inc. BTL-B 8/4/06 627,542 632,641
ON Semiconductor, Inc. BTL-C 8/4/07 675,815 681,306
ON Semiconductor, Inc. Delayed BTL 8/4/07 1,000,000 1,001,000
------------
5,471,376
Farming & Agriculture - 0.9%
Central Tractor Farm &
Country BTL-B 4/30/06 1,737,500 1,718,768
Hines Nurseries Inc BTL-B 2/28/05 1,000,000 1,000,000
------------
2,718,768
Finance - 0.3%
Bridge Information
Systems Inc BTL-B 5/29/05 1,117,717 979,120
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
Portfolio Of Investments - June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Maturity
Industry Description Type Date Par Value
-------- ----------- ---- -------- --- -----
<C> <S> <C> <C> <C> <C>
Grocery - 1.6%
Pantry Inc BTL-B 1/31/06 $1,482,746 $ 1,467,919
Pantry Inc BTL-C 1/31/06 748,125 747,813
Pathmark Stores Inc BTL-B 12/15/01 2,490,201 2,434,171
------------
4,649,903
Healthcare, Education &
Childcare - 3.5%
Alliance Imaging Inc BTL-B 6/18/04 412,935 409,322
Alliance Imaging Inc BTL-C 12/18/04 587,065 581,928
CONMED Corp BTL-B 1/1/05 1,250,000 1,249,062
Dade Behring Inc BTL-B 6/30/06 1,359,370 1,278,293
Dade Behring Inc BTL-C 6/30/07 1,359,370 1,278,293
Hanger Orthopedic Group BTL-B 1/1/08 1,492,500 1,403,883
King Pharmaceuticals Inc BTL-B 12/22/06 917,101 918,343
Quest Diagnostics Inc Bridge 8/16/01 953,488 950,211
Quest Diagnostics Inc BTL-B 8/16/06 258,677 259,665
Quest Diagnostics Inc BTL-C 8/16/07 238,781 239,693
Stryker Corp BTL-B 12/4/05 666,988 669,698
Stryker Corp BTL-C 12/4/06 949,093 952,949
------------
10,191,340
Home & Office Furniturings, Housewares &
Durable Consumer Products - 1.1%
Shop Vac Corp BTL-B 6/30/07 2,000,000 1,998,750
Simmons Co BTL-B 10/29/05 355,828 356,718
Simmons Co BTL-C 10/29/06 890,625 892,852
------------
3,248,320
Hotels, Motels, Inns & Gaming -
3.7%
Extended Stay America
Inc BTL-D 6/7/07 2,000,000 2,003,750
Felcor Lodging Trust BTL-B 3/31/04 1,747,333 1,740,052
Isle of Capri Casinos
Inc BTL-B 3/2/06 533,333 536,143
Isle of Capri Casinos
Inc BTL-C 3/2/07 466,667 469,125
Starwood Hotels &
Resorts Trust Tr 2 Loan 2/23/03 4,000,000 4,013,752
Wyndham International
Inc BTL-B 6/30/06 2,000,000 1,934,876
------------
10,697,698
Insurance - 0.7%
Willis Corroon Group plc BTL-B 11/19/06 1,522,308 1,519,770
Willis Corroon Group plc BTL-C 11/19/07 223,846 223,473
Willis Corroon Group plc BTL-D 5/19/08 223,846 223,473
------------
1,966,716
Leisure, Amusement,
Entertainment - 1.7%
DreamWorks LLC BTL-B 1/15/09 2,000,000 2,013,126
Premier Parks Inc BTL-B 9/30/05 2,000,000 2,013,000
Regal Cinemas Inc BTL-B 5/27/06 1,000,000 797,857
------------
4,823,983
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
Portfolio Of Investments - June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Maturity
Industry Description Type Date Par Value
-------- ----------- ---- -------- --- -----
<C> <S> <C> <C> <C> <C>
Mining, Steel, Iron & Nonprecious
Metals - 3.1%
Ispat Inland Inc Hybrid TL 7/16/05 $1,732,956 $ 1,717,311
Ispat Inland Inc Hybrid TL 2 7/16/06 1,732,956 1,717,311
Neenah Corp BTL-B 9/30/05 2,226,588 2,221,022
Peabody Holding Company
Inc BTL-B 6/30/06 3,325,000 3,320,013
------------
8,975,657
Oil & Gas - 0.7%
TravelCenters of America
Inc BTL-B 3/27/05 1,977,918 1,984,099
------------
Personal & Nondurable Consumer
Products (Mfg. Only) - 2.7%
Buhrmann NV US BTL-B 10/26/07 3,343,952 3,352,312
Sealy Mattress BTL-B 12/15/04 1,320,248 1,321,898
Sealy Mattress BTL-C 12/15/05 951,434 953,516
Sealy Mattress BTL-D 12/15/06 1,216,018 1,218,045
United Industries Corp BTL-B 1/20/06 982,500 948,112
------------
7,793,883
Printing & Publishing - 6.5%
American Color Graphics BTL-B 3/31/05 1,750,000 1,741,250
American Media Inc BTL-B 4/1/07 2,500,000 2,504,688
Benedek Broadcasting
Corp BTL-B 11/20/07 2,000,000 1,991,876
Big Flower Press Inc BTL-A 12/31/05 992,252 984,810
Big Flower Press Inc BTL-B 12/31/08 994,851 994,851
Hollinger Intern'l
Publishing BTL-B 12/31/04 2,250,000 2,258,438
Hollinger Intern'l
Publishing TL B1 9/30/05 1,000,000 1,005,000
Jostens Inc BTL-B 5/10/08 1,000,000 1,003,250
Journal Register Co BTL-B 9/6/06 1,498,500 1,485,388
Lamar Advertising
Company BTL-B 8/1/06 1,000,000 1,001,875
Mail-Well Corp BTL-B 2/22/07 997,500 999,370
Merrill Corp BTL-B 11/23/07 1,990,000 1,991,244
R.H. Donnelley Corp BTL-B 12/5/05 370,163 369,006
R.H. Donnelley Corp BTL-C 12/5/06 614,762 612,841
------------
18,943,887
Retail Stores - 0.7%
SDM Corporation BTL-C 2/4/08 1,000,000 1,002,000
SDM Corporation BTL-E 2/4/09 1,000,000 1,002,000
------------
2,004,000
Telecommunications - 12.8%
Adelphia Communications
Corp BTL-B 6/30/09 2,000,000 2,007,812
American Tower Corp BTL-B 12/31/07 3,500,000 3,512,471
Centennial Cellular Corp BTL-B-PR 5/31/07 997,478 1,000,259
Charter Communications
Holding Co LLC BTL-B 2/2/08 1,500,000 1,489,249
Charter Communications
Holding Co LLC BTL-B 11/5/08 250,000 249,781
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
Portfolio Of Investments - June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Maturity
Industry Description Type Date Par Value
-------- ----------- ---- -------- --- -----
<C> <S> <C> <C> <C> <C>
Telecommunications - continued
Charter Communications
Holding Co LLC BTL-B 2/2/00 $1,500,000 $ 1,501,093
Cincinnati Bell Inc Delayed BTL 1/6/06 1,600,000 1,602,125
Davel Communications Inc BTL-B 6/23/05 493,750 370,313
Dobson Communication BTL-B 3/31/08 513,333 513,425
Dobson Communication BTL-B 3/23/07 677,978 679,108
Dobson Communication BTL-B 12/31/07 995,000 995,124
Dobson Communication BTL-C 3/31/09 586,667 586,772
Dobson Communication BTL-C 12/23/07 686,118 687,557
McLeodUSA Corp BTL-B 5/31/08 1,000,000 1,000,625
Microcell
Telecommunications Inc BTL-B 3/1/06 2,000,000 1,995,626
Nextel Communications BTL-B 6/30/08 1,250,000 1,255,781
Nextel Communications BTL-C 12/31/08 1,250,000 1,255,781
NEXTLINK Communications
Inc BTL-B 6/30/07 2,000,000 2,011,072
RCN Corp BTL-B 6/3/07 1,500,000 1,496,116
Rural Cellular Corp BTL-B 10/3/08 1,500,000 1,498,500
Rural Cellular Corp BTL-C 4/3/09 1,500,000 1,498,500
SpectraSite
Communications Inc BTL-B 6/30/06 1,000,000 1,002,250
Superior TeleCom Inc BTL-A 5/27/04 1,440,840 1,433,035
Superior TeleCom Inc BTL-B 11/27/05 966,085 963,756
Tritel Inc BTL-B 12/31/07 3,250,000 3,258,125
Voicestream Wireless BTL-A 12/31/07 2,500,000 2,442,360
Voicestream Wireless BTL-B 2/25/09 1,000,000 987,448
------------
37,294,064
Textiles & Leather - 2.2%
Globe Manufacturing Co BTL-B 7/15/06 993,750 670,781
Pillowtex Corp BTL-B 12/31/04 974,719 806,093
Polymer Group BTL-B 12/20/05 2,224,846 2,220,285
St John Knits Inc BTL-B 7/31/07 1,341,146 1,290,853
Synthetic Industries Inc BTL-B 12/14/07 1,500,000 1,486,875
------------
6,474,887
Transportation - 2.0%
American Commercial
Lines LLC BTL-B 6/30/06 604,387 585,122
American Commercial
Lines LLC BTL-C 6/30/07 1,325,623 1,283,369
RailAmerica Inc BTL-B 12/31/06 3,980,000 3,998,905
------------
5,867,396
Utilities - 1.4%
AES Texas Funding II LLC BTL 4/24/01 1,000,000 997,500
Western Resources Inc BTL-B 3/17/03 3,000,000 3,005,625
------------
4,003,125
TOTAL LOANS (Cost $245,632,538) $241,646,346
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
Portfolio Of Investments - June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Maturity
Industry Description Type Date Par Value
-------- ----------- ---- -------- --- -----
<C> <S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS - 14.6%
American Express Co., 6.42% 7/03/00 $32,096,549 $ 32,096,549
SSGA Money Market Fund 10,297,940 10,297,940
------------
TOTAL SHORT-TERM INVESTMENTS (Cost
$42,394,489) $ 42,394,489
------------
TOTAL INVESTMENTS - 97.7% - (Cost
$288,027,027)* $284,040,835
------------
OTHER ASSETS AND LIABILITIES, NET -
2.3% $ 6,776,521
------------
NET ASSETS - 100.0% $290,817,356
============
</TABLE>
*The cost for Federal Income Tax purposes is the same.
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
Statement of Assets and Liabilities - June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in loans and securities, at value (Identified cost,
$288,027,027) (See accompanying Portfolio of Investments) .... $284,040,835
Cash........................................................... 1,753,892
Receivables:
Investments sold............................................. 741,698
Fund shares sold............................................. 2,944,977
Interest receivable on bank loans............................ 2,470,200
From investment adviser...................................... 521,285
Other assets................................................... 396,655
------------
Total assets............................................... 292,869,542
------------
LIABILITIES:
Payables:
Fund shares repurchased...................................... 200
Fund dividends............................................... 1,838,166
Distribution and service fees................................ 167,100
Accrued expenses............................................. 46,720
------------
Total liabilities.......................................... 2,052,186
------------
NET ASSETS..................................................... $290,817,356
============
NET ASSETS CONSIST OF:
Accumulated net realized gains............................... ($95,058)
Unrealized depreciation on investments....................... (3,986,192)
Capital shares at par value of $.01 (Note 3)................. 295,731
Additional paid-in capital................................... 294,602,875
------------
Net assets................................................. $290,817,356
============
NET ASSET VALUES:
Class B Shares
Net assets at value........................................... $ 46,300,324
Shares outstanding............................................ 4,708,208
Net Asset Value, offering and redemption price per share....... $9.83
============
Class C Shares
Net assets at value........................................... $244,517,032
Shares outstanding............................................ 24,864,889
Net Asset Value, offering and redemption price per share....... $9.83
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
Statement of Operations (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months
ended
June 30, 2000
------------------
<S> <C>
INVESTMENT INCOME:
Interest................................................. $11,123,443
Facility and other fee income............................ 121,115
-----------
Total income............................................ 11,244,558
-----------
EXPENSES:
Investment adviser fee (Note 5).......................... 1,076,993
Distribution fee for Class B (Note 7).................... 157,139
Distribution fee for Class C (Note 7).................... 793,209
Custody fee.............................................. 70,697
Transfer agent fee....................................... 63,515
Audit and legal fees..................................... 60,014
Accounting and administration fees (Note 5).............. 506,820
Directors' fees and expenses............................. 6,387
Registration and filing fees............................. 75,067
Miscellaneous............................................ 34,221
-----------
Expenses before waiver of fees by investment adviser .... 2,844,062
-----------
Waiver of fees by investment adviser (Note 5)............ (1,062,831)
-----------
Net expenses.......................................... 1,781,231
-----------
Net investment income ................................ $ 9,463,327
-----------
REALIZED AND UNREALIZED GAIN/(LOSS):
Net realized gain on investment transactions............. ($145,192)
Unrealized (depreciation) on investments................. (3,551,081)
-----------
Net realized and unrealized loss...................... (3,696,273)
-----------
Net increase in net assets resulting from operations...... $ 5,767,054
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months
ended For the Year
June 30, 2000 ended
(Unaudited) December 31, 1999
------------------ -----------------
<S> <C> <C>
Increase/(Decrease) in Net Assets from:
OPERATIONS:
Net investment income................. $ 9,463,327 $ 7,272,344
Net realized gain on investment
transactions......................... (145,192) 43,884
Change in unrealized depreciation on
investments.......................... (3,551,081) (417,821)
------------ ------------
Net increase in net assets resulting
from operations....................... 5,767,054 6,898,407
DISTRIBUTIONS FROM:
Net investment income, Class B........ (1,565,179) (1,508,735)
Net investment income, Class C........ (7,898,148) (5,763,609)
------------ ------------
Total distributions.................. (9,463,327) (7,272,334)
Increase in net assets from capital
share transactions (Note 3)........... 83,753,085 192,049,560
------------ ------------
Increase in net assets................. 80,056,812 191,675,623
Net assets at beginning of period...... 210,760,544 19,084,921
------------ ------------
Net assets at end of period............ $290,817,356 $210,760,544
============ ============
</TABLE>
* Commencement of Operations
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
Statements of Cash Flows (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months
ended
June 30, 2000
------------------
<S> <C>
Increase/(Decrease) in Cash
Cash Flows From (Used for) Operating Activities:
Purchase of loans....................................... $(111,723,890)
Interest and facility fees received..................... 9,761,206
Purchase of short-term securities, net.................. (2,320,813)
Proceeds from loans sold................................ 33,572,943
Operating expenses paid................................. (2,111,995)
-------------
Net Cash used for operating activities................... (72,822,549)
-------------
Cash Flows From (Used for) Financing Activities:
Proceeds from shares sold............................... 118,664,036
Payments for shares redeemed............................ (41,841,269)
Cash dividends paid (not including reinvested dividends
of $5,448,074)......................................... (2,527,414)
-------------
Net Cash from financing activities....................... 74,295,353
-------------
Net Increase in Cash..................................... 1,472,804
Cash at beginning of period............................. 281,088
-------------
Cash at end of period................................... $ 1,753,892
-------------
Reconciliation of Net Increase in Net Assets from
Operations to Net Cash used for Operating Activities
Net increase in net assets from operations.............. $ 5,767,054
Increase in interest and facility fees receivable....... (918,547)
Increase in payable for investments purchased........... (3,022)
Increase in receivable for investments sold............. 2,969,198
Decrease in prepaid expenses and other assets........... (396,655)
Increase in net accrued expenses........................ (330,764)
Net increase in investments............................. (79,909,813)
-------------
Net cash used for operating activities................... $ (72,822,549)
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
Financial Highlights (For a Share Outstanding Throughout the Period)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
----------------------------------
Six Months Period from
ended Year 8/31/98 *
06/30/00 ended through
(Unaudited) 12/31/99 12/31/98
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period......... $9.98 $9.98 $10.00
---------------------------------------------------------------------------------
Investment Operations:
Net investment income....................... 0.37 0.69 0.20
Net realized and unrealized gain on
investments................................ (0.15) 0.00 (0.02)
--------------------------
Total from investment operations............ 0.22 0.69 0.18
--------------------------
Distributions
Dividends from net investment income........ (0.37) (0.69) (0.20)
---------------------------------------------------------------------------------
Net Asset Value, End of Period............... $9.83 $9.98 $9.98
---------------------------------------------------------------------------------
Total Return................................. 2.22% + 7.13% 1.89% +
---------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (000's)........... $46,300 $37,439 $4,826
Ratio of net expenses to average net
assets..................................... 1.40% # 0.70% 0.00% #
Ratio of net investment income to average
net assets................................. 7.50% # 6.87% 6.11% #
Portfolio turnover rate..................... 18% + 30% 18% +
Expense ratio before waiver of fees and
reimbursement of expenses by adviser....... 2.25% # 2.29% 4.02% #
Net investment income before waiver of fees
and reimbursement of expenses by adviser... 6.65% # 5.28% 2.09% #
<CAPTION>
Class C
----------------------------------
Six Months Period from
ended Year 8/31/98 *
06/30/00 ended through
(Unaudited) 12/31/99 12/31/98
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period......... $9.98 $9.98 $10.00
---------------------------------------------------------------------------------
Investment Operations:
Net investment income....................... 0.37 0.69 0.20
Net realized and unrealized gain on
investments................................ (0.15) 0.00 (0.02)
--------------------------
Total from investment operations............ 0.22 0.69 0.18
--------------------------
Distributions
Dividends from net investment income........ (0.37) (0.69) (0.20)
---------------------------------------------------------------------------------
Net Asset Value, End of Period............... $9.83 $9.98 $9.98
---------------------------------------------------------------------------------
Total Return................................. 2.22% + 7.12% 1.89% +
---------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (000's)........... $244,517 $173,322 $14,259
Ratio of net expenses to average net
assets..................................... 1.40% # 0.79% 0.00% #
Ratio of net investment income to average
net assets................................. 7.49% # 6.82% 6.11% #
Portfolio turnover rate..................... 18% + 30% 18% +
Expense ratio before waiver of fees and
reimbursement of expenses by adviser....... 2.25% # 2.25% 4.01% #
Net investment income before waiver of fees
and reimbursement of expenses by adviser... 6.64% # 5.36% 2.10% #
</TABLE>
*Commencement of Operations
+Not annualized
#Annualized
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
Notes to Financial Statements
-------------------------------------------------------------------------------
1. ORGANIZATION OF THE FUND. The North American Senior Floating Rate Fund,
Inc. (the "Fund") is a non-diversified closed-end, management investment
company. The Fund is organized as a Maryland Corporation and is registered
under the Investment Company Act of 1940, as amended. The Fund's investment
objective is to provide as high a level of current income as is consistent
with the preservation of capital by investing primarily in senior secured
floating rate loans and other institutionally traded senior secured floating
rate debt obligations.
The Fund may offer three classes of shares. Class B shares are sold to the
public at net asset value and are subject to an Early Withdrawal Charge which
declines from 3% in the first year after purchase to zero after the fourth
year. Class C shares are sold to the public at net asset value and are subject
to an Early Withdrawal Charge of 1% in the first year after purchase. Class A
shares are not currently offered, and are available only upon the conversion
of Class B and C shares after being held by the shareholders for eight and ten
years, respectively. The share classes also differ in their respective
distribution and certain other class-specific expenses. Investment income,
realized and unrealized capital gains and losses and common expenses of the
Fund are allocated pro-rata to each class based on the average daily net
assets of each class. Dividends are declared separately for each class. All
classes have equal rights to assets and voting privileges.
Effective March 10, 2000, CypressTree Investments, Inc. ("CypressTree") sold
substantially all of its assets including all of the stock of CypressTree
Asset Management Corporation, Inc. ("CAM"), the Fund's investment adviser, and
all of the stock of CypressTree Funds Distributors, Inc. ("CFD"), the Fund's
distributor, to American General Corporation ("American General"). The
acquisition by American General of CypressTree's assets (herein "the
Acquisition") took place pursuant to a Purchase Agreement dated February 25,
2000. The names of these entities were then changed, so that CAM was renamed
American General Asset Management Corp. ("AGAM") and CFD became American
General Funds Distributors, Inc. ("AGFD").
AGAM, serves as investment adviser and principal underwriter for the Fund,
effective March 10, 2000, pursuant to approval by the Fund's Board of
Directors and the Fund's shareholders at a special shareholder meeting held on
June 1, 2000. CypressTree Investment Management Company, Inc. (CIMCO) serves
as the Fund's subadviser. AGFD serves as distributor for the Fund.
2. SIGNIFICANT ACCOUNTING POLICIES. The policies described below are followed
when preparing the Fund's financial statements. These policies are in
accordance with generally accepted accounting principles ("GAAP").
Security Valuation. The Fund's investments in loan interests ("Loans") are
valued in accordance with guidelines established by the Board of Directors.
Under the Fund's current guidelines, Loans for which an active secondary
market exists to a reliable degree in CIMCO's opinion and for which CIMCO can
obtain at least two quotations from banks or dealers in Loans will be valued
by calculating the mean of the last available bid and asked prices in the
market for such Loans, and then using the mean of those two means. If only one
quote for a particular Loan is available, the Loan will be valued on the basis
of the mean of the last available bid and asked prices in the market. Loans
for which an active secondary market does not exist to a reliable degree in
CIMCO's opinion will be valued at fair value, which is intended to approximate
market value. In valuing a Loan at fair value, CIMCO will consider, among
other factors, (a) the creditworthiness of the borrower and any intermediate
participants, (b) the terms of the Loan, (c) recent prices in the market for
similar Loans, if any, and (d) recent prices in the market for instruments of
similar quality, rate, period until next interest rate reset and maturity.
Other portfolio securities may be valued on the basis of prices furnished by
one or more pricing services that determine prices for normal, institutional-
size trading units of such securities using market information, transactions
for comparable securities and various relationships between securities which
are generally recognized by institutional traders. In certain circumstances,
other portfolio securities are valued at the last sale price on the exchange
that is the primary market for such securities, or the last quoted bid price
for those securities for which the over-the-counter market is the primary
market or for listed securities in which there were no sales during the day.
Obligations purchased with remaining maturities of 60 days or less are valued
at amortized cost unless this method is determined not to produce fair
valuation. Repurchase agreements and investments in money market funds are
valued at cost plus accrued interest. Securities for which there exist no
price quotations or valuations and all other assets are valued at fair value
as determined in good faith by or on behalf of the Board of Directors of the
Fund.
13
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
Notes to Financial Statements - (Continued)
-------------------------------------------------------------------------------
Note 2, continued
Federal Income Taxes. It is the Fund's policy to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code, as
amended, and to distribute all of its taxable income and any net realized gain
on investments to its shareholders each year. Accordingly, no federal income
tax provision is required.
Distributions of Income and Gains. Distributions of net investment income are
declared as a dividend to shareholders of record as of the close of business
each day and are paid monthly. The Fund distributes realized net capital
gains, if any, at least annually, after offset by any capital loss carryovers.
Repurchase Agreements. The Fund may enter into repurchase agreements. When the
Fund enters into a repurchase agreement through its custodian, it receives
delivery of the underlying securities, the amount of which at the time of
purchase and each subsequent business day is required to be maintained at such
a level that the market value is equal to at least 102% of the resale price,
and the Fund will take constructive receipt of all securities underlying the
repurchase agreements until such agreements expire. If the seller defaults,
the Fund would suffer a loss to the extent that proceeds from the sale of
underlying securities were less than the repurchase price.
Estimates. Preparing the financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates
and assumptions that affect the amounts reported for the reporting period and
as of the end of the reporting period. Actual results could differ from those
estimates.
Income. Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount. Facility fees received are
recognized as income over the stated life of the loan. Other income, including
amendment fees, commitment fees, letter of credit fees, etc., are recorded as
income when received or contractually due to the Fund.
Gains/Losses. Gains or losses realized on the sale of portfolio assets are
recognized on the trade date using the specific identification method.
3. CAPITAL SHARES. The Fund has 1,000,000,000 of $.01 par value shares
authorized that may be issued in three different classes. Share activity for
the period ended June 30, 2000 was as follows:
<TABLE>
<CAPTION>
Class B Class C
---------------------- ------------------------
Shares Capital Shares Capital
--------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Sold.................... 1,301,470 $12,895,094 10,822,319 $107,251,386
Reinvestment of
distributions.......... 67,209 664,883 483,557 4,783,191
Redeemed................ (413,418) (4,097,019) (3,814,995) (37,744,450)
--------- ----------- ---------- ------------
Net
increase/(decrease)... 955,261 $ 9,462,958 7,490,881 $ 74,290,127
========= =========== ========== ============
</TABLE>
Share activity for the year ended December 31, 1999 was as follows:
<TABLE>
<CAPTION>
Class B Class C
---------------------- ------------------------
Shares Capital Shares Capital
--------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Sold.................... 3,459,562 $34,573,208 16,873,222 $168,635,916
Reinvestment of
distributions.......... 68,860 687,863 431,932 4,314,630
Redeemed................ (258,961) (2,584,552) (1,359,625) (13,577,505)
--------- ----------- ---------- ------------
Net
increase/(decrease)... 3,269,461 $32,676,519 15,945,529 $159,373,041
========= =========== ========== ============
Net
increase/(decrease)... 3,269,461 $32,676,519 15,945,529 $159,373,041
========= =========== ========== ============
</TABLE>
In order to provide shareholders with liquidity and the ability to receive net
asset value on a disposition of shares, the Fund will make monthly offers to
repurchase a percentage (usually 10%) of outstanding shares at net asset
value. Shareholders will be sent a Notification of Repurchase Offer seven to
fourteen days before each monthly repurchase offer. During the
14
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
Notes to Financial Statements - (Continued)
-------------------------------------------------------------------------------
Note 3, continued
period ended June 30, 2000, the Fund made six Repurchase Offers, and actually
redeemed the amounts shown in the table below. In no case was a monthly
Repurchase Offer oversubscribed.
<TABLE>
<CAPTION>
Amount Tendered
---------------------
Shares Capital
--------- -----------
<S> <C> <C>
January............... 383,372 $ 3,826,068
February.............. 598,924 5,977,221
March................. 487,642 4,859,927
April................. 1,176,697 11,613,565
May................... 771,546 7,592,015
June.................. 810,232 7,972,673
</TABLE>
4. PURCHASES AND SALES OF SECURITIES. During the period ended June 30, 2000,
the Fund's cost of purchases of Loans and proceeds from Loan sales were
$111,720,868 and $35,400,773, respectively. Unrealized appreciation and
depreciation in the value of those investments at June 30, 2000 for federal
income tax purposes were as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation... $ 396,014
Gross unrealized depreciation... (4,382,206)
-----------
Net unrealized depreciation..... $(3,986,192)
===========
</TABLE>
5. INVESTMENT ADVISORY AGREEMENT. The Fund maintains an Investment Advisory
Agreement with AGAM ("Adviser"), who is responsible for managing the corporate
and business affairs of the Fund, and selects, contracts with and compensates
the subadviser to manage the Fund's assets. As compensation for its services
the Adviser receives from the Fund an annual fee equal to the following
percentage of average daily gross assets: 0.85% for the first $1 billion of
average daily gross assets; 0.80% for average daily gross assets between $1
billion and $2 billion; and 0.75% for average daily gross assets of more than
$2 billion. For purposes of computing the advisory fee, average daily gross
assets are determined by deducting from total assets of the Fund all
liabilities except the principal amount of any indebtedness from money
borrowed, including debt securities issued by the Fund.
AGAM has retained CIMCO to serve as the Fund's subadviser to manage the
investment and reinvestment of the Fund's assets. As compensation for its
services as subadviser, CIMCO is entitled to receives from AGAM an annual fee
paid monthly equal to the following percentage of average daily gross assets:
0.45% for the first $1 billion of average daily gross assets; 0.40% for
average daily gross assets between $1 billion and $2 billion; and 0.35% for
average daily gross assets of more than $2 billion. During the period ended
June 30, 2000, CIMCO voluntarily waived a portion of its compensation,
receiving 0.25% of average daily gross assets. Average daily gross assets are
computed as described above. The fee paid to CIMCO is not an additional charge
to the Fund or its shareholders.
AGAM, as the Fund's Administrator under an Administration Agreement, is
responsible for managing the Fund's business affairs, subject to supervision
by the Fund's Board of Directors. For its services, AGAM receives an annual
fee equal to 0.40% of average daily gross assets of the Fund. Average daily
gross assets are computed as described above.
For the period ended June 30, 2000, AGFD, as the Fund's distributor, received
$266,812 in Early Withdrawal Charges on redemptions from the Fund.
During the period ended June 30, 2000, the Fund engaged in purchase and sale
transactions with other investment vehicles managed by CIMCO. These purchase
and sale transactions complied with Rule 17a-7 under the Investment Company
Act of 1940, and amounted to $12,207,295.
15
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND, INC.
Notes to Financial Statements - (Continued)
-------------------------------------------------------------------------------
6. EXPENSE REIMBURSEMENT. Pursuant to the Investment Advisory Agreement, the
Adviser reduced voluntarily reduced the advisory fee in order to maintain an
expense ratio on the Fund that does not exceed a certain voluntary rate.
Currently, the expenses of the Fund are capped at 1.40%. For the period ended
June 30, 2000, the Adviser waived fees of $1,062,831.
7. DISTRIBUTION PLAN. The Fund has adopted Distribution Plans ("Plans")
applicable to Class B and C shares to use the assets attributable to that
class of shares of the Fund to finance certain activities relating to the
distribution of shares to investors. The Plans are compensation plans
providing for the payment of a fixed percentage of .75% of average net assets
to finance distribution expenses.
8. DIRECTOR COMPENSATION. The Fund pays each Director who is not an employee
or a director of the Adviser or its affiliates a fee of $750 plus travel
expenses for each Board of Directors meeting attended, $200 for each telephone
meeting and an annual retainer of $3,000.
16
<PAGE>
Directors
Alice T. Kane, Chairperson
Joseph T. Grause, Jr.
Dr. Judith I. Craven
William F. Devin
Dr. Timothy J. Ebner
Judge Gustavo E. Gonzales, Jr.
Kenneth J. Lavery
Dr. John E. Maupin, Jr.
Ben H. Love
Officers
Alice T. Kane, President
Joseph T. Grause, Jr., Vice President
Thomas J. Brown, Vice President
and Treasurer
John I. Fitzgerald, Vice President
and Secretary
John N. Packs, Vice President
and Assistant Treasurer
Independent Accounts
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116
Adviser
American General Asset Management Corp.
286 Congress Street
Boston, MA 02110
Transfer and Dividend Agent
State Street Bank and Trust Company
P.O. Box 8505
Boston, MA 02266-8505
Distributor
American General Funds Distributors, Inc.
286 Congress Street
Boston, MA 02110
North American Funds Shareholder Service
286 Congress Street
Boston, MA 02210
800-872-8037
<PAGE>
0700:90417
