UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08727
SunAmerica Senior Floating Rate Fund, Inc.
(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311
(Address of principal executive offices) (Zip code)
John T. Genoy
Senior Vice President
AIG SunAmerica Asset Management Corp.
Harborside Financial Center 3200 Plaza 5
Jersey City, NJ 07311
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6414
Date of fiscal year end: December 31
Date of reporting period: December 31, 2007
Item 1. Reports to Stockholders
[GRAPHIC]
ANNUAL REPORT 2007
SUNAMERICA
Senior Floating Rate Fund
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www.sunamericafunds.com
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Table of Contents
SHAREHOLDERS' LETTER................................... 1
EXPENSE EXAMPLE........................................ 2
STATEMENT OF ASSETS AND LIABILITIES.................... 4
STATEMENT OF OPERATIONS................................ 6
STATEMENT OF CHANGES IN NET ASSETS..................... 7
STATEMENT OF CASH FLOWS................................ 8
FINANCIAL HIGHLIGHTS................................... 9
PORTFOLIO OF INVESTMENTS............................... 14
NOTES TO FINANCIAL STATEMENTS.......................... 23
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 31
APPROVAL OF ADVISORY AGREEMENTS........................ 32
DIRECTORS AND OFFICERS INFORMATION..................... 36
SHAREHOLDER AND TAX INFORMATION........................ 39
COMPARISON: FUND VS. INDEX............................. 40
December 31, 2007 ANNUAL REPORT
Shareholders' Letter
Dear Shareholder:
We are pleased to present the annual shareholder report for the SunAmerica
Senior Floating Rate Fund. Included is a discussion about the market conditions
that have shaped the investment environment during the annual period ended
December 31, 2007.
The year was certainly an interesting and challenging one in the financial
markets. Concerns over the state of the housing market and the potential impact
on the consumer, along with price increases in food and energy transitioned
during the summer to worries about subprime mortgages. The fear of a credit
crunch weighed on investors who became risk-averse as the stock market sold off
in both August and November. In September, the Federal Reserve Open Market
Committee lowered the Federal Funds target rate for the first time in 2007,
signaling concern that the economy's prospects were then at least equal with
inflationary concerns. Unease about the housing market and the potential
dampening effect of constrained lenders continued through year-end with the
Federal Reserve continuing to ease. The Federal Funds rate ended the year at
4.25%--100 basis points lower than where it began the year.
The markets have posed challenges to managers in all asset classes,
including bank loans. Senior, secured and floating rate loans gained increased
prominence in the press for their use in financing private equity buyouts in
2007; however, we believe that this asset class continues to offer strong
risk/return characteristics in building a diversified portfolio.
We remain diligent in the management of your assets and thank you for your
continued investment in our Fund.
Sincerely,
THE AIG SUNAMERICA SENIOR FLOATING RATE FUND PORTFOLIO MANAGERS
AIG Investments
Thomas G. Brandt
John G. Lapham
Steven S. Oh
- --------
Past performance is no guarantee of future results.
The Fund is not a money market fund and its net asset value may fluctuate.
Investments in loans involve certain risks including nonpayment of principal
and interest; collateral impairment; non-diversification and borrower industry
concentration; and lack of full liquidity, which may impair the Fund's ability
to obtain full value for loans sold. The Fund may invest all or substantially
all of its assets in loans or other securities that are rated below investment
grade or in comparable unrated securities. Credit risks include the possibility
of a default on the loan or bankruptcy of the borrower. The value of these
loans is subject to a greater degree of volatility in response to interest rate
fluctuations.
1
SunAmerica Senior Floating Rate Fund, Inc.
EXPENSE EXAMPLE -- December 31, 2007 -- (unaudited)
Disclosure of Portfolio Expenses in Shareholder Reports
As a shareholder of the SunAmerica Senior Floating Rate Fund, Inc. (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 service fees,
and other Fund expenses. The example set forth below is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at July 1, 2007 and
held until December 31, 2007.
Actual Expenses
The "Actual" section of the table provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the column under the heading entitled "Expenses Paid During the Six
Months Ended December 31, 2007" to estimate the expenses you paid on your
account during this period. In addition, the "Expenses Paid During the Six
Months Ended December 31, 2007" column does not include administrative fees
that may apply to qualified retirement plan accounts. See the Fund's prospectus
and/or your retirement plan documents for a full description of these fees. Had
these fees been included, the "Expenses Paid During the Six Months Ended
December 31, 2007" column would have been higher and the "Ending Account Value"
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 assumed rate of return of 5% per year 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 the 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. In addition, the "Expenses Paid During the Six Months
Ended December 31, 2007" column does not include administrative fees that may
apply to qualified retirement plan accounts. See the Fund's prospectus and/or
your retirement plan document for full description of these fees. Had these
fees been included, the "Expenses Paid During the Six Months Ended December 31,
2007" column would have been higher and the "Ending Account Value" 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 and/or qualified retirement plan document 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.
2
SunAmerica Senior Floating Rate Fund, Inc.
EXPENSE EXAMPLE -- December 31, 2007 -- (unaudited) (continued)
Actual Hypothetical
---------------------------------------------------- ---------------------------------
Ending Ending Account
Account Value Expenses Paid Value using
Beginning Using Actual During the Beginning a Hypothetical 5%
Account Value Returns at Six Months Ended Account Value Assumed Return at
at July 1, 2007 December 31, 2007 December 31, 2007* at July 1, 2007 December 31, 2007
--------------- ----------------- ------------------ --------------- -----------------
Senior Floating Rate Fund
Class A#+............. $1,000.00 $976.19 $7.22 $1,000.00 $1,017.90
Class B#.............. $1,000.00 $973.62 $8.71 $1,000.00 $1,016.38
Class C#.............. $1,000.00 $973.61 $8.71 $1,000.00 $1,016.38
Class D#.............. $1,000.00 $976.07 $6.23 $1,000.00 $1,018.90
Class Q#+............. $1,000.00 $976.19 $7.22 $1,000.00 $1,017.90
-------------------
Expense
Expenses Paid Ratio
During the as of
Six Months Ended December 31,
December 31, 2007* 2007*
------------------ ------------
Senior Floating Rate Fund
Class A#+............. $7.38 1.45%
Class B#.............. $8.89 1.75%
Class C#.............. $8.89 1.75%
Class D#.............. $6.36 1.25%
Class Q#+............. $7.38 1.45%
- --------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 184 days divided by 365
days. These ratios do not reflect transaction costs, including sales charges
on purchase payments, contingent deferred sales charges and administrative
fees, if applicable to your account. Please refer to your Prospectus and/or
your qualified retirement plan document for more information.
# During the stated period, the investment adviser and distributor either
waived a portion of or all of the fees and assumed a portion of or all
expenses for the Funds. As a result, if these fees and expenses had not been
waived, the "Actual/Hypothetical Ending Account Value" would have been lower
and the "Actual/Hypothetical Expenses Paid During the Six Months Ended
December 31, 2007" and the "Expense Ratios" would have been higher.
3
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES -- December 31, 2007
ASSETS:
Long-term investment securities, at value (unaffiliated)*............. $354,607,641
Receivable for:
Fund shares sold..................................................... 2,341,655
Dividends and interest............................................... 4,359,137
Investments sold..................................................... 4,429,268
Due from investment adviser for expense reimbursements/fee waivers.... 112,645
Due from distributor for fee waivers.................................. 67,174
------------
Total assets......................................................... 365,917,520
------------
LIABILITIES:
Payable for:
Fund shares redeemed................................................. 2,067,121
Investments purchased................................................ 12,478
Investment advisory and management fees.............................. 265,531
Distribution and service maintenance fees............................ 194,025
Administration fees.................................................. 124,956
Transfer agent fees and expenses..................................... 84,705
Directors' fees and expenses......................................... 35,661
Other accrued expenses............................................... 186,773
Line of credit....................................................... 2,919,355
Dividends payable..................................................... 714,943
Due to custodian...................................................... 18,470
Commitments (Note 11)................................................. --
------------
Total liabilities.................................................... 6,624,018
------------
Net assets......................................................... $359,293,502
============
NET ASSETS REPRESENTED BY:
Common stock, $.01 par value.......................................... $ 404,848
Additional paid-in capital............................................ 409,357,985
------------
409,762,833
Accumulated undistributed net investment income (loss)................ (33,283)
Accumulated undistributed net realized gain (loss) on investments..... (27,198,483)
Unrealized appreciation (depreciation) on investments................. (23,237,565)
------------
Net assets........................................................... $359,293,502
============
*COST
Long-term investment securities (unaffiliated). $377,845,206
============
See Notes to Financial Statements
4
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES -- December 31, 2007 -- (continued)
Class A:
Net assets................................................... $ 89,076,757
Shares outstanding........................................... 10,036,484
Net asset value and redemption price per share............... $ 8.88
Maximum sales charge (3.75% of offering price)............... 0.35
------------
Maximum offering price to public............................. $ 9.23
============
Class B:
Net assets................................................... $ 19,202,938
Shares outstanding........................................... 2,163,815
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charges) $ 8.87
============
Class C:
Net assets................................................... $235,956,935
Shares outstanding........................................... 26,587,787
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charges) $ 8.87
============
Class D:
Net assets................................................... $ 10,428,465
Shares outstanding........................................... 1,175,266
Net asset value, offering and redemption price per share..... $ 8.87
============
Class Q:
Net assets................................................... $ 4,628,407
Shares outstanding........................................... 521,484
Net asset value, offering and redemption price per share..... $ 8.88
============
See Notes to Financial Statements
5
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF OPERATIONS -- For the year ended December 31, 2007
INVESTMENT INCOME:
Interest (unaffiliated)........................................................... $ 24,666,788
Dividends (unaffiliated).......................................................... 1,218,017
Facility and other fee income (Note 2)............................................ 477,571
------------
Total investment income........................................................ 26,362,376
------------
EXPENSES:
Investment advisory and management fees........................................... 2,802,069
Administration fees............................................................... 1,318,621
Distribution and service maintenance fees:
Class A......................................................................... 224,932
Class B......................................................................... 171,861
Class C......................................................................... 1,699,129
Class Q......................................................................... 6,868
Transfer agent fees and expenses:
Class A......................................................................... 146,795
Class B......................................................................... 56,743
Class C......................................................................... 520,425
Class D......................................................................... 30,047
Class Q......................................................................... 7,562
Registration fees:
Class A......................................................................... 36,803
Class B......................................................................... 10,941
Class C......................................................................... 24,849
Class D......................................................................... 1,102
Class Q......................................................................... 5,509
Accounting service fees........................................................... 56,261
Custodian and accounting fees..................................................... 149,830
Reports to shareholders........................................................... 89,380
Audit and tax fees................................................................ 76,035
Legal fees........................................................................ 12,885
Directors' fees and expenses...................................................... 59,638
Interest expense.................................................................. 1,268
Other expenses.................................................................... 74,792
------------
Total expenses before fee waivers, expense reimbursements and custody credits.. 7,584,345
Fees waived and expenses reimbursed by investment adviser and distributor...... (2,080,670)
Custody credits earned on cash balances........................................ (1,629)
------------
Net expenses................................................................... 5,502,046
------------
Net investment income (loss)...................................................... 20,860,330
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments (unaffiliated)............................ 193,887
Change in unrealized appreciation (depreciation) on investments (unaffiliated).... (22,534,602)
------------
Net realized and unrealized gain (loss) on investments............................ (22,340,715)
------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $ (1,480,385)
============
See Notes to Financial Statements
6
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF CHANGES IN NET ASSETS
For the year For the year
ended ended
December 31, December 31,
2007 2006
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)......................................... $ 20,860,330 $ 13,291,634
Net realized gain (loss) on investments (unaffiliated)............... 193,887 305,142
Net unrealized gain (loss) on investments (unaffiliated)............. (22,534,602) (23,250)
------------ ------------
Increase (decrease) in net assets resulting from operations........... (1,480,385) 13,573,526
------------ ------------
Distributions To Shareholders From:
Net investment income (Class A)...................................... (4,228,420) (91,162)
Net investment income (Class B)...................................... (1,423,645) (1,606,103)
Net investment income (Class C)...................................... (14,137,627) (10,179,734)
Net investment income (Class D)...................................... (883,440) (1,385,857)
Net investment income (Class Q)...................................... (180,690) (28,646)
------------ ------------
Total distributions to shareholders................................... (20,853,822) (13,291,502)
------------ ------------
Net increase (decrease) in net assets resulting from capital share
transactions (Note 3)................................................ 148,026,767 30,005,042
------------ ------------
Total increase (decrease) in net assets............................... 125,692,560 30,287,066
============ ============
NET ASSETS:
Beginning of period................................................... 233,600,942 203,313,876
------------ ------------
End of period+........................................................ $359,293,502 $233,600,942
============ ============
- --------
+ Includes accumulated undistributed net investment income (loss)..... $ (33,283) $ (39,569)
============ ============
See Notes to Financial Statements
7
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF CASH FLOWS -- For the year ended December 31, 2007
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Net decrease in net assets from operations...................... $ (1,480,385)
Adjustments to reconcile net increase in net assets from
operations to net cash used in operating activities:
Purchase of loans.............................................. (437,409,390)
Proceeds from loans sold....................................... 176,035,634
Loan principal paydowns........................................ 106,532,894
Net sales of short-term securities............................. 13,083,087
Accretion of facility fee income............................... (82,073)
Increase in receivable for dividends and interest.............. (1,503,370)
Increase in receivable for investments sold.................... (301,786)
Decrease in amount due from investment adviser for expense
reimbursements/fee waivers................................... 9,067
Increase in amount due from distributor for fee waivers........ (23,095)
Decrease in prepaid expenses and other assets.................. 45,526
Decrease in payable for investments purchased.................. (8,996,897)
Increase in payable for investment advisory and management fees 101,534
Increase in payable for distribution and service maintenance
fees......................................................... 63,477
Increase in payable for administration fees.................... 47,781
Increase in other accrued expenses............................. 2,952,886
Unrealized depreciation on investments......................... 22,534,602
Net realized gain from investments............................. (193,887)
-------------
Net cash used in operating activities........................... $(128,584,395)
-------------
Cash flows from financing activities:
Proceeds from shares sold....................................... 290,629,135
Payment on shares redeemed...................................... (154,301,801)
Cash dividends paid............................................. (7,761,409)
Increase in due to custodian.................................... 18,470
-------------
Net cash provided by financing activities....................... $ 128,584,395
-------------
Net increase in cash............................................ --
Cash balance at beginning of period............................. --
-------------
Cash balance at end of period................................... $ --
=============
Supplemental disclosure of cash flow information:
Noncash financing activities not included herein consist of reinvestment of
dividends and distributions of $12,811,676.
See Notes to Financial Statements
8
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS
Class A+
------------------
For the
period from
Year 10/04/06*
ended through
12/31/07 12/31/06
-------- -----------
Net Asset Value, Beginning of Period.................................. $ 9.40 $ 9.39
Investment Operations:
Net investment income (loss)@......................................... 0.56 0.38
Net realized and unrealized gain (loss) on investments................ (0.48) (0.22)
------- -------
Total from investment operations..................................... 0.08 0.16
------- -------
Distributions:
Dividends from net investment income.................................. (0.60) (0.15)
------- -------
Net Asset Value, End of Period........................................ $ 8.88 $ 9.40
------- -------
Total Return(1)....................................................... 0.84% 1.75%
Ratios/Supplemental Data
Net assets, end of period ($000's).................................... $89,077 $14,165
Ratio of net expenses to average net assets........................... 1.45% 1.45%#
Ratio of net investment income to average net assets.................. 6.58% 6.78%#
Portfolio turnover rate............................................... 91% 61%
Expense ratio before waiver of fees and reimbursement of expenses..... 2.04% 3.26%#
Net investment income ratio before waiver of fees and reimbursement
of expenses.......................................................... 5.99% 4.97%#
- --------
+ Effective October 4, 2006, Class A shares were redesignated to Class Q
shares and a new class of shares designated as Class A commenced offering.
* Inception date of class
@ Calculated based upon average shares outstanding.
# Annualized
(1)Total return is not annualized and does not reflect sales load but does
include expense reimbursements.
See Notes to Financial Statements
9
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS -- (continued)
Class B
-------------------------------------------
Year Year Year Year Year
ended ended ended ended ended
12/31/07 12/31/06 12/31/05 12/31/04 12/31/03
-------- -------- -------- -------- --------
Net Asset Value, Beginning of Period.................................. $ 9.40 $ 9.39 $ 9.41 $ 9.33 $ 8.78
Investment Operations:
Net investment income (loss)@......................................... 0.58 0.59 0.41 0.29 0.40
Net realized and unrealized gain (loss) on investments................ (0.53) 0.01 (0.02) 0.08 0.54
------- ------- ------- ------- -------
Total from investment operations..................................... 0.05 0.60 0.39 0.37 0.94
------- ------- ------- ------- -------
Distributions:
Dividends from net investment income.................................. (0.58) (0.59) (0.41) (0.29) (0.39)
------- ------- ------- ------- -------
Net Asset Value, End of Period........................................ $ 8.87 $ 9.40 $ 9.39 $ 9.41 $ 9.33
------- ------- ------- ------- -------
Total Return(1)....................................................... 0.43% 6.55% 4.24% 3.97% 10.95%
Ratios/Supplemental Data
Net assets, end of period ($000's).................................... $19,203 $25,885 $25,181 $27,530 $26,565
Ratio of net expenses to average net assets........................... 1.75% 1.75% 1.75% 1.75% 1.54%
Ratio of net investment income to average net assets.................. 6.22% 6.25% 4.36% 3.04% 4.35%
Portfolio turnover rate............................................... 91% 61% 57% 24% 75%
Expense ratio before waiver of fees and reimbursement of expenses..... 2.46% 2.45% 2.38% 2.38% 2.57%
Net investment income ratio before waiver of fees and reimbursement
of expenses.......................................................... 5.51% 5.55% 3.73% 2.41% 3.33%
- --------
@ Calculated based upon average shares outstanding.
(1)Total return is not annualized and does not reflect sales load but does
include expense reimbursements.
See Notes to Financial Statements
10
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS -- (continued)
Class C
------------------------------------------------
Year Year Year Year Year
ended ended ended ended ended
12/31/07 12/31/06 12/31/05 12/31/04 12/31/03
-------- -------- -------- -------- --------
Net Asset Value, Beginning of Period.................................. $ 9.40 $ 9.39 $ 9.41 $ 9.33 $ 8.78
Investment Operations:
Net investment income (loss)@......................................... 0.57 0.59 0.42 0.28 0.38
Net realized and unrealized gain (loss) on investments................ (0.52) 0.01 (0.03) 0.09 0.56
-------- -------- -------- -------- --------
Total from investment operations..................................... 0.05 0.60 0.39 0.37 0.94
-------- -------- -------- -------- --------
Distributions:
Dividends from net investment income.................................. (0.58) (0.59) (0.41) (0.29) (0.39)
-------- -------- -------- -------- --------
Net Asset Value, End of Period........................................ $ 8.87 $ 9.40 $ 9.39 $ 9.41 $ 9.33
-------- -------- -------- -------- --------
Total Return(1)....................................................... 0.43% 6.54% 4.24% 3.97% 10.92%
Ratios/Supplemental Data
Net assets, end of period ($000's).................................... $235,957 $176,743 $154,584 $174,583 $103,726
Ratio of net expenses to average net assets........................... 1.75% 1.75% 1.75% 1.75% 1.59%
Ratio of net investment income to average net assets.................. 6.24% 6.26% 4.36% 3.06% 4.22%
Portfolio turnover rate............................................... 91% 61% 57% 24% 75%
Expense ratio before waiver of fees and reimbursement of expenses..... 2.40% 2.39% 2.32% 2.35% 2.51%
Net investment income ratio before waiver of fees and reimbursement
of expenses.......................................................... 5.59% 5.62% 3.79% 2.46% 3.31%
- --------
@ Calculated based upon average shares outstanding.
(1)Total return is not annualized and does not reflect sales load but does
include expense reimbursements.
See Notes to Financial Statements
11
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS -- (continued)
Class D
-------------------------------------------
Year Year Year Year Year
ended ended ended ended ended
12/31/07 12/31/06 12/31/05 12/31/04 12/31/03
-------- -------- -------- -------- --------
Net Asset Value, Beginning of Period.... $ 9.40 $ 9.39 $ 9.41 $ 9.33 $ 8.78
Investment Operations:
Net investment income (loss)@........... 0.63 0.66 0.47 0.33 0.43
Net realized and unrealized gain (loss)
on investments......................... (0.54) (0.01) (0.03) 0.08 0.54
------- ------- ------- ------- -------
Total from investment operations....... 0.09 0.65 0.44 0.41 0.97
------- ------- ------- ------- -------
Distributions:
Dividends from net investment income.... (0.62) (0.64) (0.46) (0.33) (0.42)
------- ------- ------- ------- -------
Net Asset Value, End of Period.......... $ 8.87 $ 9.40 $ 9.39 $ 9.41 $ 9.33
------- ------- ------- ------- -------
Total Return(1)......................... 0.93% 7.08% 4.76% 4.49% 11.28%
Ratios/Supplemental Data
Net assets, end of period ($000's)...... $10,428 $16,034 $23,148 $27,630 $13,369
Ratio of net expenses to average net
assets................................. 1.25% 1.25% 1.25% 1.25% 1.25%
Ratio of net investment income to
average net assets..................... 6.71% 6.71% 4.86% 3.60% 4.63%
Portfolio turnover rate................. 91% 61% 57% 24% 75%
Expense ratio before waiver of fees and
reimbursement of expenses.............. 1.65% 1.72% 1.60% 1.62% 1.86%
Net investment income ratio before
waiver of fees and reimbursement of
expenses............................... 6.31% 6.24% 4.51% 3.23% 4.02%
- --------
@ Calculated based upon average shares outstanding.
(1)Total return is not annualized and does not reflect sales load but does
include expense reimbursements.
See Notes to Financial Statements
12
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS -- (continued)
Class Q(2)
-----------------------------------
For the
period from
Year Year Year 4/28/04*
ended ended ended through
12/31/07 12/31/06 12/31/05 12/31/04
-------- -------- -------- -----------
Net Asset Value, Beginning of Period.................................. $ 9.40 $ 9.39 $ 9.41 $ 9.42
Investment Operations:
Net investment income (loss)@......................................... 0.55 0.59 0.43 0.22
Net realized and unrealized gain (loss) on investments................ (0.47) 0.04 (0.01) (0.01)
------ ------ ------ ------
Total from investment operations..................................... 0.08 0.63 0.42 0.21
------ ------ ------ ------
Distributions:
Dividends from net investment income.................................. (0.60) (0.62) (0.44) (0.22)
------ ------ ------ ------
Net Asset Value, End of Period........................................ $ 8.88 9.40 $ 9.39 $ 9.41
------ ------ ------ ------
Total Return(1)....................................................... 0.85% 6.86% 4.55% 2.22%
Ratios/Supplemental Data
Net assets, end of period ($000's).................................... $4,628 $ 773 $ 401 $ 224
Ratio of net expenses to average net assets........................... 1.45% 1.45% 1.45% 1.45%#
Ratio of net investment income to average net assets.................. 6.58% 6.57% 4.74% 3.44%#
Portfolio turnover rate............................................... 91% 61% 57% 24%
Expense ratio before waiver of fees and reimbursement of expenses..... 2.13% 4.06% 4.32% 9.31%#
Net investment income ratio before waiver of fees and reimbursement
of expenses.......................................................... 5.90% 3.97% 1.87% (4.42)%#
- --------
* Inception date of class
@ Calculated based upon average shares outstanding.
# Annualized
(1)Total return is not annualized and does not reflect sales load but does
include expense reimbursements.
(2)Effective October 4, 2006, Class A shares were redesignated to Class Q
shares and a new class of shares designated as Class A commenced offering.
See Notes to Financial Statements
13
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO PROFILE -- December 31, 2007 -- (unaudited)
Industry Allocation*
Broadcasting & Entertainment........................ 10.2%
Retail Stores....................................... 7.9
Printing and Publishing............................. 7.7
Healthcare, Education and Childcare................. 7.0
Leisure, Amusement, Entertainment................... 6.5
Finance............................................. 6.4
Utilities........................................... 5.1
Buildings & Real Estate............................. 4.5
Chemicals, Plastics and Rubber...................... 4.3
Oil and Gas......................................... 4.2
Telecommunications.................................. 4.2
Hotels, Motels, Inns and Gaming..................... 4.0
Electronics......................................... 3.7
Beverage, Food & Tobacco............................ 3.3
Diversified/Conglomerate Manufacturing.............. 3.2
Containers, Packaging and Glass..................... 2.8
Cargo Transport..................................... 2.7
Personal, Goods and Misc. Services.................. 1.7
Automobile.......................................... 1.6
Machinery........................................... 1.5
Personal Transportation............................. 1.4
Home and Office Furnishings, Housewares and Durables 1.3
Personal and Nondurable Consumer Products........... 1.1
Aerospace/Defense................................... 0.7
Mining, Steel, Iron and Nonprecious Metals.......... 0.7
Diversified/Conglomerate Service.................... 0.7
Textiles and Leather................................ 0.3
----
98.7%
====
Credit Quality+#
BBB-............ 0.3%
BB+............. 9.4
BB.............. 12.9
BB-............. 23.4
B+.............. 22.3
B............... 15.9
B-.............. 6.4
CCC+............ 4.9
CCC............. 0.8
CCC-............ 0.1
CC.............. 0.4
Not Rated@...... 3.2
-----
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: Standard and Poors
# Calculated as a percentage of total debt issues, excluding short-term
securities.
14
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2007
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- ----------------------------------------------------------------------------------------------------------
LOANS(3)(4) -- 98.1%
Aerospace/Defense -- 0.7%
Axle Tech International.............. BTL-B Ba3 BB- 7.23% 10/21/12 $ 196,429 $ 194,136
McKechnie Aerospace De, Inc.......... 2nd Lien Caa1 CCC+ 9.83 05/11/15 1,500,000 1,413,749
SI International, Inc................ BTL Ba3 BB- 6.89-8.75 02/09/11 712,539 703,631
Wesco International.................. 2nd Lien Caa1 B 10.58 03/28/14 500,000 500,000
------------
2,811,516
------------
Automobile -- 1.6%
FleetPride Corp...................... BTL-B B1 BB- 7.33-7.35 06/06/13 226,563 220,048
KAR Holdings, Inc.................... BTL Ba3 B 7.08 10/20/13 2,987,494 2,811,443
Key Safety Systems, Inc.............. 1st Lien B1 B+ 6.94-7.45 03/08/14 1,488,750 1,364,067
Ozburn-Hessey Holding Co. LLC........ BTL B1 B 8.45-8.58 08/10/12 510,932 466,226
United Components, Inc............... Tranche D Ba3 BB- 6.89-7.21 06/30/10 438,384 423,040
Visteon Corp......................... BTL-B Ba3 BB- 8.38 12/13/13 1,000,000 933,500
------------
6,218,324
------------
Beverage, Food & Tobacco -- 3.3%
Aramark Corp......................... LOC Ba3 BB- 7.20 01/26/14 244,274 232,762
Aramark Corp......................... BTL Ba3 BB- 6.71 01/26/14 3,417,805 3,256,741
B&G Foods, Inc....................... BTL-B Ba2 BB- 7.06 02/26/13 565,217 554,620
Best Brands Corp..................... BTL-C Caa3 CC 17.23 06/30/13 1,447,252 1,280,818
Birds Eye Foods, Inc................. BTL B1 B+ 6.58 03/22/13 859,167 817,282
Dean Foods Co........................ BTL-B B1 BB+ 6.58 04/02/14 992,500 938,646
Dole Food Co., Inc................... BTL-B Ba3 BB- 6.94-8.25 04/12/13 205,640 191,193
Dole Food Co., Inc................... BTL-C Ba3 BB- 6.94-8.25 04/12/13 685,465 637,311
Dole Food Co., Inc................... CLD Ba3 BB- 5.11 04/12/13 93,023 86,488
Fresh Start Bakeries, Inc............ 2nd Lien Caa1 CCC+ 10.94 03/29/14 250,000 238,750
Leiner Health Products Group, Inc.... BTL-B Caa2 CCC+ 9.65 05/27/11 488,608 412,629
NPC International, Inc............... BTL Ba3 BB- 6.58-7.14 05/03/13 1,600,000 1,506,000
Pierre Foods, Inc.................... BTL-B B2 B+ 8.88 06/30/10 702,738 687,366
Pinnacle Foods Group, Inc............ BTL-B B2 B 7.59-7.95 03/30/14 995,000 938,783
------------
11,779,389
------------
Broadcasting & Entertainment -- 10.2%
Century -- TCI California LP+#@...... Revolver NR NR 7.25 12/31/07 10,000 9,900
Cequel Communications LLC............ 2nd Lien B1 BB- 6.89-9.25 11/05/13 1,985,000 1,860,938
Charter Communications Operating LLC. BTL B1 B+ 6.99 03/06/14 4,000,000 3,745,192
Citadel Broadcasting Co.............. BTL-B Ba3 BB- 6.46-6.48 05/31/14 6,000,000 5,456,250
CSC Holdings, Inc.................... BTL-B Ba2 BB 6.90 02/24/12 2,458,719 2,327,880
Cumulus Media, Inc................... BTL Ba3 B 6.60-6.95 06/07/14 1,963,467 1,890,655
Gray Television, Inc................. BTL-B Ba3 B+ 6.73 12/31/14 1,000,000 933,125
Haights Cross Operating Co........... BTL B1 B- 9.37 08/20/08 1,433,850 1,423,096
HIT Entertainment, Ltd............... 2nd Lien B3 B- 10.38 02/26/13 1,000,000 955,000
Insight Midwest Holdings LLC......... BTL-B Ba3 BB- 7.00 04/06/14 3,000,000 2,901,666
Intelsat Zeus, Ltd................... BTL Ba2 BB+ 7.23 07/03/13 975,150 969,055
Local TV LLC......................... BTL-B Ba3 B+ 7.31 05/07/13 855,974 807,826
Mission Broadcasting, Inc............ BTL-B Ba3 BB- 6.58 10/01/12 1,188,833 1,141,280
Nexstar Broadcasting, Inc............ BTL-B Ba3 BB- 6.58 10/01/12 1,125,665 1,080,639
NextMedia Operating.................. 2nd Lien Caa1 CCC+ 9.35 11/15/13 500,000 472,500
PanAmSat Corp........................ BTL-A Ba2 BB+ 7.23 07/03/12 122,549 120,455
PanAmSat Corp........................ BTL-B2 Ba2 BB+ 7.23 01/03/14 4,253,371 4,181,974
Spanish Broadcasting Systems, Inc.... 1st Lien B2 B+ 6.58 06/10/12 972,500 905,235
Univision Communications, Inc.(8).... BTL-B Ba3 B+ 7.10-7.21 09/29/14 3,865,772 3,532,349
WideOpenWest Finance LLC............. BTL B2 B- 7.48-7.70 06/22/14 1,000,000 939,583
Young Broadcasting, Inc.............. BTL Ba3 B 7.38-7.75 11/03/12 975,000 901,875
------------
36,556,473
------------
Buildings & Real Estate -- 4.5%
Atrium Cos., Inc..................... BTL B1 BB- 8.10-9.00 05/31/12 438,586 410,261
Brand Services, Inc.................. BTL B1 B 7.13-7.31 02/07/14 1,985,000 1,885,750
15
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2007 -- (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- -------------------------------------------------------------------------------------------------------------------
Buildings & Real Estate (continued)
Brand Services, Inc.................... BTL-B2 B1 B 8.13% 02/07/14 $ 997,500 $ 980,044
Brickman Group Holdings, Inc........... BTL-B Ba3 BB- 7.14 01/23/14 1,985,000 1,885,750
Building Materials Holding Corp........ Junior 2nd Lien Caa1 B 10.69 09/15/14 1,000,000 740,833
Building Materials Holding Corp........ BTL B2 BB 7.94 02/22/14 990,037 837,996
LandSource Communities Development LLC. 1st Lien Ba2 BB+ 7.62-9.00 02/27/13 895,175 691,523
LandSource Communities Development LLC. 2nd Lien B2 BB 9.52 02/27/14 500,000 287,500
Masonite International Corp............ BTL Ba3 BB 6.83-7.08 04/05/13 1,461,211 1,333,965
Masonite International Corp............ CND TL Ba3 BB 7.08-7.23 04/05/13 1,458,720 1,331,690
North Las Vegas........................ 1st Lien B3 B+ 7.60 05/09/11 224,799 189,955
North Las Vegas........................ 2nd Lien Caa1 CCC+ 11.85 05/09/12 250,000 125,000
PGT Industries, Inc.................... BTL-A2 B2 B+ 7.93-8.52 02/14/12 475,610 423,293
Realogy Corp........................... CLTL Ba3 BB- 7.97 04/10/13 738,712 648,425
Realogy Corp........................... BTL Ba3 BB- 8.24 10/10/13 2,743,788 2,408,437
Tensar Earth Technologies.............. BTL-B Ba3 B+ 7.71 10/31/12 947,129 923,451
ValleyCrest Cos........................ 1st Lien B1 B+ 7.13 10/04/13 1,050,957 1,012,860
Yellowstone Club....................... 2nd Lien B1 B 7.22 09/30/10 205,733 187,474
------------
16,304,207
------------
Cargo Transport -- 2.7%
Cardinal Logistics Management, Inc..... 2nd Lien NR NR 10.60 03/23/14 1,000,000 950,000
Dockwise Transport BV.................. BTL-B2 B1 B 8.24 04/01/15 500,000 481,563
Dockwise Transport BV.................. BTL-B1 B1 B 7.21 04/01/15 244,379 235,826
Dockwise Transport BV.................. BTL-C B1 B 7.71 04/01/16 244,379 237,048
Dockwise Transport BV.................. BTL-C2 B1 B 7.71 04/01/16 500,000 485,000
Dockwise Transport BV.................. BTL-D1 B1 B 9.33 07/12/16 500,000 481,563
Dockwise Transport BV.................. BTL-D2 B1 B 9.33 07/12/16 1,000,000 963,125
Greatwide Logistics Services, Inc...... 2nd Lien Caa2 CCC 11.33 06/19/14 1,000,000 748,333
Hertz Corp............................. Tranche B Ba1 BB+ 6.75-6.92 12/21/12 346,295 339,703
RailAmerica, Inc....................... BTL-B B2 B 7.12 12/30/08 1,000,000 982,500
Swift Transportation Co., Inc.......... BTL-B B1 BB- 7.94 05/10/14 4,418,605 3,646,732
------------
9,551,393
------------
Chemicals, Plastics & Rubber -- 4.3%
AZ Chemicals, Inc...................... 1st Lien B1 BB- 7.08 02/28/13 997,487 907,714
Brenntag AG............................ BTL-B2 B1 B+ 7.39 01/20/14 200,909 192,370
Brenntag AG............................ BTL B1 B+ 7.39 01/20/14 49,091 47,005
Celanese AG............................ BTL-B Ba3 BB+ 6.98 04/02/14 2,487,500 2,404,756
Cognis GmbH............................ STFA B1 B 7.69 09/15/13 1,000,000 938,958
Cristal Inorganic Chemicals US, Inc.... 1st Lien Ba3 BB- 7.08 05/21/14 1,000,000 925,000
Hexion Specialty Chemicals, Inc........ BTL-C1 Ba3 B+ 7.50 05/05/13 811,269 785,347
Hexion Specialty Chemicals, Inc........ BTL-C2 Ba3 B+ 7.13 05/05/13 175,785 170,168
Huntsman International LLC............. BTL-B Ba1 BB+ 6.62 04/19/14 1,878,049 1,848,053
Ineos US Finance LLC................... BTL-B Ba3 B+ 7.45 12/16/13 720,900 700,550
Ineos US Finance LLC................... BTL-C Ba3 B+ 7.86 12/16/14 713,423 693,284
ISP Chemco, Inc........................ BTL-B Ba3 BB- 6.69-6.94 06/04/14 1,492,500 1,424,591
Kraton Polymers LLC.................... BTL-B Ba3 B+ 7.25 05/12/13 387,673 368,774
Momentive Performance.................. BTL Ba3 BB- 7.13 12/04/13 990,000 950,223
Rockwood Specialties Group, Inc........ Tranche D Ba2 BB+ 6.46 12/13/13 1,950,000 1,885,541
Wellman, Inc........................... 2nd Lien Caa3 CCC- 11.66 02/10/10 1,000,000 451,250
Yankee Candle Co....................... BTL-B Ba3 B 6.86-6.87 02/06/14 923,269 865,565
------------
15,559,149
------------
Containers, Packaging & Glass -- 2.8%
Boise Cascade Holdings LLC............. Delayed Draw Ba2 BB+ 6.38 04/30/14 365,039 361,024
Boise Cascade Holdings LLC............. BTL-E Ba2 BB+ 6.38 04/30/14 1,621,791 1,603,951
Captive Plastics....................... BTL B1 B- 7.60 08/08/11 416,345 405,936
Captive Plastics....................... 2nd Lien Caa1 CCC 12.34 02/18/12 1,000,000 995,000
Domtar, Inc............................ BTL Ba1 BB+ 6.40 03/05/14 1,607,500 1,546,645
Georgia-Pacific Corp................... BTL-B Ba2 BB+ 6.58-6.90 12/20/12 1,960,000 1,870,749
16
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2007 -- (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- ---------------------------------------------------------------------------------------------------------------------
Containers, Packaging & Glass (continued)
Graham Packaging Co. LP..................... BTL-B B1 B+ 7.13-7.75% 10/30/11 $2,977,500 $ 2,868,169
MMGS Packaging Acquisition.................. 2nd Lien NR NR 10.35 03/10/14 500,000 425,000
------------
10,076,474
------------
Diversified/Conglomerate Manufacturing -- 3.2%
Accuride Corp............................... BTL-B Ba3 BB- 8.50 01/31/12 1,071,364 1,049,936
Aearo Technologies, Inc..................... 2nd Lien Caa1 B- 10.33 11/30/14 1,340,000 1,341,675
Cinram International, Inc................... BTL-B B1 BB- 6.88 05/05/11 989,950 881,055
Culligan International Co................... BTL-B B2 B+ 7.06-7.45 11/24/12 992,500 834,941
Enersys Capital, Inc........................ BTL Ba2 BB 6.63-7.03 03/17/11 579,150 563,947
Maxim Crane Works LP........................ BTL-B B1 B+ 7.23-8.25 06/29/14 995,000 930,325
Oshkosh Truck Corp.......................... BTL-B Ba3 BBB- 6.90 12/06/13 987,500 949,684
RGIS LLC.................................... Delayed Draw Ba3 B- 7.35 05/01/14 47,381 43,196
RGIS LLC.................................... BTL-B Ba3 B- 7.35-7.59 05/01/14 947,619 863,913
Veyance Technologies, Inc................... 1st Lien Ba3 B+ 7.46 07/02/14 2,618,438 2,523,519
Veyance Technologies, Inc................... Delayed Draw Ba3 B+ 7.35 07/02/14 375,000 361,406
X-Rite, Inc................................. 1st Lien Ba3 B+ 8.38-9.75 10/29/12 997,500 998,747
------------
11,342,344
------------
Diversified/Conglomerate Service -- 0.7%
Bridge Information Systems, Inc.+#@(5)(6)... BTL-B Caa1 D 10.25 05/29/05 412,852 0
NES Rentals Holdings........................ 2nd Lien Caa1 B- 11.88 07/20/13 2,157,140 2,031,308
Protection One, Inc......................... BTL Ba3 BB 7.10-7.32 03/31/12 458,303 441,117
------------
2,472,425
------------
Electronics -- 3.2%
Affiliated Computer Services................ FSRI Ba2 BB 6.82-7.24 03/20/13 985,000 959,683
Aspect Software, Inc........................ Tranche A-1 Ba3 BB- 7.94 07/11/11 442,026 428,765
Infor Global Solutions...................... Delayed Draw B1 B- 8.58 07/28/12 338,571 325,875
Infor Global Solutions...................... BTL B1 B+ 8.58 07/28/12 648,929 624,594
Itron, Inc.................................. BTL Ba3 B+ 6.83-6.85 04/18/14 986,274 966,241
Radio Systems, Inc.......................... BTL-B B1 B+ 8.36 09/15/13 493,750 487,115
Reynolds & Reynolds Co...................... 1st Lien Ba2 BB+ 6.84 10/26/12 926,524 899,887
Reynolds & Reynolds Co...................... 2nd Lien B3 B 10.34 10/26/13 250,000 247,500
Sensata Technologies BV..................... BTL-B Ba3 BB 6.76 04/30/13 1,979,899 1,886,561
SunGard Data Systems, Inc................... BTL-B Ba3 BB 6.90 02/28/14 4,895,575 4,738,765
------------
11,564,986
------------
Finance -- 6.4%
Alliant Insurance Services.................. BTL-B B2 B- 7.83 11/01/14 997,500 957,600
Amwins Group, Inc........................... 1st Lien B2 B- 7.59-8.07 06/08/13 1,990,000 1,691,500
Bankruptcy Management Solutions............. 2nd Lien Caa1 CCC 11.10 07/31/13 246,875 207,992
Chrysler Financial Services LLC............. BTL-B B1 BB- 9.00 08/03/12 997,500 961,681
First Data Corp............................. BTL-B1 Ba3 BB- 7.58-7.63 09/25/14 1,995,000 1,896,373
First Data Corp............................. BTL-B3 Ba3 BB- 7.58-7.63 09/25/14 997,500 951,490
Hub International Holdings, Inc.(8)......... BTL B2 B 7.33 06/13/14 2,438,725 2,313,741
Hub International Holdings, Inc.(8)......... Delayed Draw B2 B 7.33-7.34 06/13/14 425,951 404,121
iPayment, Inc............................... BTL-B B1 B 6.82-7.03 05/10/13 1,954,883 1,808,266
LPL Holdings, Inc........................... Tranche D B1 B+ 6.83 06/29/14 1,994,975 1,916,423
Metavante Corp.............................. BTL-B Ba2 BB 6.66 11/01/14 2,000,000 1,948,750
National Processing Co. LLC................. 1st Lien B2 B+ 8.24 09/29/13 971,795 921,990
National Processing Co. LLC................. 2nd Lien Caa2 CCC+ 11.74 09/29/14 500,000 473,750
Neff Corp................................... 2nd Lien B3 B 8.40 10/31/14 500,000 402,032
NES Tanks................................... 2nd Lien B3 B 8.65 04/06/14 500,000 467,500
Nielsen Finance LLC......................... BTL-B Ba3 B+ 7.15-7.49 08/09/13 997,476 947,880
Rental Service Corp......................... 2nd Lien B3 B- 8.75 11/30/13 795,841 744,111
RiskMetrics Group Holdings LLC.............. 2nd Lien B3 B 10.33 07/11/14 250,000 244,219
TransFirst Holdings, Inc.................... BTL-B B2 B 7.95 06/15/14 2,989,987 2,799,376
USI Holdings Corp........................... BTL-B B2 B- 7.95 05/04/14 997,494 951,360
------------
23,010,155
------------
17
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2007 -- (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
Healthcare, Education & Childcare -- 7.0%
AMR/EmCare Holdings................................... BTL Ba1 B+ 7.03-7.15% 02/10/12 $ 640,477 $ 625,066
Biomet, Inc.(7)....................................... BTL-B B1 BB- 7.86 03/25/15 1,995,000 1,976,297
CHG Cos., Inc......................................... 2nd Lien B3 CCC+ 11.18 12/20/13 1,000,000 950,000
Community Health Systems, Inc.(8)..................... BTL-B Ba3 BB 7.33 07/15/14 3,690,642 3,557,816
DaVita, Inc........................................... BTL-B Ba1 BB+ 6.35-6.75 10/05/12 2,000,000 1,932,272
Gambro AB............................................. BTL-B B2 B- 7.51 12/06/14 430,973 414,811
Gambro AB............................................. BTL-C B2 B- 8.01 12/06/15 430,973 421,276
HCA, Inc.............................................. BTL-A Ba3 BB 6.83 11/17/12 1,468,677 1,396,373
HCA, Inc.............................................. BTL-B Ba3 BB 7.08 11/17/13 3,964,975 3,826,034
Health Management Associates.......................... BTL-B Ba2 BB- 6.58-6.60 02/16/14 2,977,500 2,786,029
Hologic, Inc.......................................... BTL-B1 Baa3 BB- 7.43 03/15/13 166,505 166,297
IASIS Healthcare Corp.(8)............................. Delayed Draw Ba2 B+ 7.15 03/15/14 352,941 335,441
IASIS Healthcare Corp.(8)............................. LOC Ba2 B+ 7.12 03/15/14 127,186 120,880
IASIS Healthcare Corp.(8)............................. BTL Ba2 B+ 6.83-7.07 03/15/14 1,385,397 1,316,705
Magellan Health Services, Inc......................... BTL B1 B+ 6.74 08/15/08 69,444 68,056
Magellan Health Services, Inc......................... CLC B1 B+ 5.25 08/15/08 277,778 272,222
PTS Pharmaceuticals................................... BTL-B Ba3 BB- 7.08 04/10/14 1,990,000 1,857,333
Spectrum Labs......................................... BTL-B NR NR 8.08 12/23/11 980,000 955,500
Team Health, Inc...................................... BTL-B B1 BB- 7.35 11/23/12 245,000 231,525
Vanguard Health Systems, Inc.......................... Tranche 1 Ba3 B 7.45 09/23/11 970,391 940,471
Warner Chilcott Corp.................................. BTL-B Ba3 BB- 6.83-6.88 01/18/12 747,141 725,506
Warner Chilcott Corp.................................. BTL-C Ba3 BB- 6.83-6.84 01/18/12 256,986 249,544
------------
25,125,454
------------
Home & Office Furnishings, Housewares & Durables -- 1.3%
Jarden Corp........................................... BTL-B1 Ba3 BB- 6.58 01/24/12 1,027,866 994,460
Jarden Corp........................................... BTL-B2 Ba3 BB- 6.58 01/24/12 547,492 529,699
National Bedding Co................................... 2nd Lien Caa1 BB 9.88 08/31/12 1,000,000 910,000
National Bedding Co................................... 1st Lien B1 BB 6.85-8.25 02/28/13 1,432,300 1,304,586
Simmons Co............................................ BTL-C Ba2 BB- 6.38-8.25 12/19/11 816,772 780,017
------------
4,518,762
------------
Hotels, Motels, Inns, & Gaming -- 4.0%
CCM Merger, Inc....................................... BTL-B Ba3 BB- 6.84-7.15 07/13/12 487,504 469,223
Fairmont Hotels and Resorts........................... BTL-B NR NR 8.03 06/15/11 587,712 582,570
Golden Nugget, Inc.(8)................................ 1st Lien B1 BB- 6.86-6.97 06/08/14 1,272,727 1,202,727
Green Valley Ranch Gaming LLC......................... 2nd Lien Caa1 CCC+ 8.33 08/16/14 1,000,000 910,000
Isle of Capri Casinos, Inc.(8)........................ BTL Ba3 BB+ 6.58 11/30/13 1,170,588 1,087,672
Isle of Capri Casinos, Inc.(8)........................ Delayed Draw Ba3 BB+ 6.58 11/30/13 468,235 435,069
Las Vegas Sands, Inc.................................. BTL Ba3 BB 6.58 05/23/15 2,985,000 2,807,088
New World Gaming Partners, Ltd........................ Delayed Draw B2 B 8.75 06/28/08 500,000 460,000
New World Gaming Partners, Ltd........................ 1st Lien Ba3 B+ 8.75 09/30/14 2,500,000 2,300,000
Riviera Holdings Corp................................. BTL-B B2 BB- 6.86 05/30/14 2,000,000 1,950,000
Venetian Macau, Ltd................................... BTL B1 BB- 7.08 04/01/13 500,000 478,828
Venetian Macau, Ltd................................... BTL-B B1 BB- 7.08 05/26/13 166,667 159,609
Wembley, Inc.......................................... 1st Lien B1 B+ 7.35-7.97 08/11/11 243,756 227,912
Wembley, Inc.......................................... 2nd Lien Caa1 B+ 9.72 08/11/11 250,000 228,750
Wimar Landco LLC...................................... BTL B3 B- 7.10 07/03/08 1,000,000 981,667
------------
14,281,115
------------
Leisure, Amusement, Entertainment -- 6.5%
24 Hour Fitness Worldwide, Inc........................ BTL-B Ba3 B 7.22-7.74 06/08/12 1,965,000 1,896,225
Audio Visual Services Group, Inc...................... 2nd Lien B3 CCC+ 10.35 08/28/14 1,000,000 955,000
Cedar Fair LP......................................... BTL Ba3 BB 6.85 08/30/12 1,982,468 1,881,362
Deluxe Entertainment Service Group, Inc............... CND TL B1 B 7.08 05/11/13 75,953 69,497
Deluxe Entertainment Service Group, Inc............... Tranche A B1 B 4.73 05/11/13 39,370 36,024
Deluxe Entertainment Service Group, Inc............... BTL-B B1 B 7.08 05/11/13 821,685 751,842
Fender Musical Instruments Corp....................... Delayed Draw B2 B+ 6.97 06/06/14 333,333 307,500
Fender Musical Instruments Corp....................... BTL-B B2 B+ 7.08-7.25 06/06/14 665,000 613,463
18
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2007 -- (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- ---------------------------------------------------------------------------------------------------------------------
Leisure, Amusement, Entertainment (continued)
Formula One Holdings.......................... BTL-B1 NR NR 7.09% 12/31/13 $1,142,857 $ 1,100,613
Formula One Holdings.......................... BTL-B2 NR NR 7.09 12/31/13 857,143 825,459
Formula One Holdings.......................... BTL-D2 NR NR 8.22 06/30/14 1,500,000 1,436,625
Hicks Sports Group............................ BTL-B B2 CCC+ 7.38 12/22/10 3,000,000 2,932,500
Metro-Goldwyn-Mayer Studios, Inc.............. BTL-B Ba3 CCC+ 8.11 04/08/12 2,947,500 2,738,496
Panavision, Inc............................... 2nd Lien Caa2 CCC+ 12.44-12.46 03/30/12 500,000 455,000
Six Flags Theme Parks, Inc.................... BTL B1 B 7.03-7.25 05/17/14 3,980,000 3,664,362
True Temper Sports, Inc....................... BTL B1 B+ 8.10-8.73 03/15/11 357,975 341,866
WMG Acquisition Corp.(8)...................... BTL-B Ba2 BB- 7.02-7.15 02/28/11 3,353,141 3,210,633
------------
23,216,467
------------
Machinery -- 1.5%
Baldor Electric Co............................ BTL Ba3 BB+ 6.75-7.13 01/31/14 1,677,408 1,650,499
Generac Power Systems, Inc.................... 1st Lien B1 B 7.73 11/09/13 990,000 895,597
Generac Power Systems, Inc.................... 2nd Lien Caa1 CCC+ 11.23 05/10/14 1,000,000 818,333
Gleason Corp.................................. BTL-B Ba3 B+ 6.63-7.00 06/30/13 974,913 929,823
NACCO Materials Handling Group, Inc........... BTL Caa1 CCC+ 6.74-6.87 03/21/13 989,950 951,589
------------
5,245,841
------------
Mining, Steel, Iron & Nonprecious Metals -- 0.7%
Aleris International, Inc..................... BTL B2 BB- 7.00 12/19/13 990,000 903,788
Algoma Steel, Inc............................. BTL-B B3 BB- 7.33 06/08/13 708,611 674,952
Novelis, Inc.................................. CND TL Ba2 BB 6.83 06/28/14 310,938 293,318
Novelis, Inc.................................. BTL Ba2 B+ 6.83 06/28/14 684,063 645,299
Walter Industries, Inc........................ BTL B1 BB 6.58-7.00 10/03/12 121,399 117,757
------------
2,635,114
------------
Oil & Gas -- 4.2%
Alon USA, Inc. (Edgington Facility)........... BTL B1 BB 7.10 06/22/13 27,361 26,403
Alon USA, Inc. (Paramount Facility)........... BTL B1 BB 7.10 06/22/13 218,889 211,228
Atlas Pipeline Partners LP.................... BTL-B Ba3 BB- 7.60 07/19/13 2,000,000 1,986,666
ATP Oil & Gas Corp............................ BTL B1 B- 8.29-8.89 04/14/10 944,806 933,882
Big West Oil LLC(8)........................... BTL-B B1 BB 7.10 05/31/14 890,000 868,306
Calumet Lubricants Co. LP..................... BTL B1 BB- 8.74 11/09/12 66,886 66,719
Calumet Lubricants Co. LP#.................... CLD B1 BB- 8.46 11/09/12 44,444 44,333
CDX Funding LLC............................... 2nd Lien NR NR 11.39 03/31/13 1,000,000 932,500
Coffeyville Resources LLC..................... LOC B2 B- 8.48 12/28/10 162,162 157,551
Coffeyville Resources LLC..................... BTL-B B2 B+ 8.48-9.25 12/28/13 528,867 513,828
Dresser, Inc.................................. 1st Lien B2 B+ 7.35-7.45 05/04/14 1,964,231 1,886,153
Dresser, Inc.................................. 2nd Lien B3 B- 11.13 05/04/15 1,000,000 953,750
Helix Energy Solutions Group, Inc............. BTL-B Ba2 BB+ 6.83-7.20 05/05/13 507,088 492,763
Kinder Morgan, Inc............................ BTL-B Ba2 BB- 6.35 05/08/14 1,934,394 1,925,327
McJunkin Corp................................. BTL B2 B+ 8.08 01/30/14 990,000 984,122
Targa Resources, Inc.......................... LOC Ba3 B+ 7.17 10/31/12 96,774 94,863
Targa Resources, Inc.......................... BTL-B Ba3 B+ 6.83-6.91 10/31/12 172,476 169,069
Venoco, Inc................................... 2nd Lien Caa1 B- 8.94 04/01/14 1,000,000 980,000
Western Refining Co. LP....................... BTL B1 BB+ 6.60 05/30/14 1,847,857 1,758,545
------------
14,986,008
------------
Personal & Nondurable Consumer Products -- 1.1%
American Achievement Corp..................... BTL-B Ba2 BB- 7.50-8.50 03/25/11 557,371 532,289
Hillman Group, Inc............................ BTL-B Ba3 BB- 7.88 03/30/11 802,365 770,270
Huish Detergents, Inc......................... 1st Lien B1 B+ 6.83 04/25/14 1,990,000 1,741,250
Huish Detergents, Inc......................... 2nd Lien Caa1 CCC+ 9.08 10/26/14 1,000,000 805,000
------------
3,848,809
------------
Personal, Goods & Misc. Services -- 1.7%
Central Parking Corp.......................... LOC Ba2 B 7.44 05/22/14 379,310 358,922
Central Parking Corp.......................... 1st Lien Ba2 B 7.22-8.50 05/22/14 1,207,501 1,142,598
19
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2007 -- (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- -------------------------------------------------------------------------------------------------------------------------
Personal, Goods & Misc. Services (continued)
Garden Fresh Restaurants Corp................... BTL-B B2 B+ 8.48% 06/22/11 $ 724,679 $ 717,433
NEP, Inc........................................ BTL-B B1 B 7.11 02/16/14 992,495 946,592
Sabre Holdings Corp............................. BTL-B B1 B+ 6.96 09/30/14 2,943,615 2,691,736
Travelport, Inc................................. BTL-B Ba3 BB- 7.08 08/23/13 222,332 211,597
Travelport, Inc................................. LOC Ba3 BB- 7.08 08/08/13 44,611 42,457
------------
6,111,335
------------
Personal Transportation -- 1.4%
Continental Airlines, Inc....................... BTL-A1 Ba3 B 8.50 06/01/11 285,714 286,071
Continental Airlines, Inc....................... BTL-A2 Ba3 B 8.50 06/01/11 714,286 715,179
Delta Air Lines, Inc............................ 2nd Lien B2 B 8.08 04/30/14 995,000 950,935
United Airlines, Inc............................ Tranche B B1 BB- 7.13 02/02/14 1,434,444 1,343,397
US Airways Group, Inc........................... BTL B2 B+ 7.35 03/21/14 2,000,000 1,851,666
------------
5,147,248
------------
Printing & Publishing -- 7.7%
Advanstar Communications, Inc................... 1st Lien Ba3 B 7.09 05/31/14 1,992,494 1,823,132
Advanstar Communications, Inc................... 2nd Lien Caa2 CCC+ 9.84 11/30/14 1,000,000 925,000
Affinity Group, Inc............................. BTL Ba2 BB- 7.35-7.46 06/24/09 1,118,663 1,100,485
Affinity Group, Inc............................. BTL-A Ba2 BB- 7.35 03/20/14 241,960 238,028
Caribe Information Investment, Inc.............. BTL-B B1 B+ 7.08-7.50 03/31/13 1,814,899 1,746,840
Discovery Communications, Inc................... BTL-B NR NR 6.83 05/01/14 2,985,000 2,898,062
GateHouse Media Operating, Inc.................. Delayed Draw B1 BB- 7.07-7.25 08/28/14 543,478 469,837
GateHouse Media Operating, Inc.................. BTL B1 BB- 7.07 08/28/14 2,456,522 2,123,663
GateHouse Media Operating, Inc.................. BTL-C B1 B+ 7.41 05/07/14 1,000,000 881,250
Idearc, Inc..................................... BTL-B Ba2 BB+ 6.83 11/17/11 1,980,000 1,888,987
National CineMedia, Inc......................... BTL B1 B+ 6.87 02/13/15 1,000,000 941,953
Penton Media, Inc............................... BTL-B B1 BB- 7.11-7.23 02/01/13 992,500 904,726
Reader's Digest Associations, Inc............... BTL-B B1 B+ 7.13 03/01/14 992,500 905,656
Thomas Nelson Publishers........................ BTL-B B1 B 7.10-7.54 06/12/12 492,500 472,184
Thompson Publishing Group, Inc.................. BTL B1 B+ 7.58-7.60 07/05/14 2,992,500 2,836,848
Tribune Co...................................... BTL-B B2 BB 7.91 05/01/14 5,970,000 5,097,634
Valassis Communications, Inc.(8)................ BTL Ba2 BB- 6.58 03/02/14 1,361,533 1,283,245
Yell Group, Ltd................................. BTL-B Ba3 BB- 6.85 10/27/12 1,000,000 961,094
------------
27,498,624
------------
Retail Stores -- 7.9%
Claire's Stores, Inc............................ BTL-B B1 B+ 7.58-7.60 05/29/14 2,985,000 2,523,444
CSK Automotive, Inc............................. BTL Ba3 B+ 10.25 06/30/12 987,562 908,557
David's Bridal, Inc............................. BTL B2 B 6.90 01/31/14 1,985,000 1,836,125
Dollar General Corp............................. BTL-B1 B2 B+ 7.71 07/06/14 1,000,000 920,781
General Nutrition Centers....................... BTL-B B1 B- 7.08-7.48 08/16/13 1,985,000 1,826,200
JRD Holdings, Inc............................... BTL Ba3 B+ 7.74 05/15/17 968,750 944,531
KIK Custom Products............................. CND TL Ba3 B 7.11 05/23/14 583,902 521,863
KIK Custom Products............................. BTL Ba3 B 7.11 05/23/14 3,406,098 3,044,200
Michaels Stores, Inc............................ BTL B2 B 7.19-7.63 10/31/13 2,984,925 2,753,593
Neiman-Marcus Group, Inc........................ BTL Ba3 BB+ 6.90-7.00 04/06/13 822,785 793,199
Petco Animal Supplies, Inc...................... BTL-B Ba3 BB- 7.21-7.45 10/25/13 495,000 475,716
Quality Stores, Inc. (Central Tractor)+#@(5)(6). BTL-B Caa2 B 9.75 04/30/07 833,705 0
Quizno's LLC.................................... 1st Lien B2 B 7.45 05/05/13 2,207,554 2,078,474
Sally Holdings LLC.............................. BTL-B B2 BB- 7.52 11/01/13 987,500 953,349
Sally Holdings LLC.............................. BTL-A B2 B+ 7.86 11/01/13 1,623,598 1,607,362
Smart & Final, Inc.............................. Delayed Draw B1 B 8.20 11/30/14 402,010 373,869
Smart & Final, Inc.............................. 1st Lien B1 B 8.08 05/31/14 592,965 551,457
Smart & Final, Inc.............................. 2nd Lien B3 CCC 12.13 11/30/14 1,000,000 925,000
The Pantry, Inc.(8)............................. BTL Ba3 BB 6.60 05/04/14 1,547,778 1,446,205
Toys R Us, Inc.................................. BTL B2 BB- 9.16 07/19/12 1,990,050 1,961,266
VCA Antech, Inc................................. BTL-B Ba3 B+ 6.38 05/01/11 1,985,000 1,935,375
------------
28,380,566
------------
20
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2007 -- (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- ----------------------------------------------------------------------------------------------------------------------
Telecommunications -- 4.1%
Centennial Cellular Operating Co. LLC....... BTL Ba2 BB- 6.83-7.08% 02/09/11 $1,375,000 $ 1,343,489
Cricket Communications, Inc................. BTL-B Ba2 B+ 7.83 06/16/13 2,955,000 2,915,687
Crown Castle Operating Co................... BTL Ba3 BB+ 6.64 01/26/14 1,985,000 1,898,512
FairPoint Communications, Inc............... BTL-B B1 BB- 6.63 02/08/12 1,000,000 989,000
Hargray Communications Group, Inc........... BTL B1 B 7.08 06/29/14 1,922,767 1,863,282
Hawaiian Telecom............................ BTL-B Ba3 B- 7.08 06/01/14 801,763 756,377
IPC Systems, Inc............................ 1st Lien B1 B+ 7.09 05/31/14 995,000 864,406
IPC Systems, Inc............................ 2nd Lien Caa1 CCC+ 10.09 05/31/14 1,000,000 797,500
MetroPCS Wireless, Inc...................... BTL-B Ba3 B+ 7.13-7.19 11/02/13 987,500 950,401
Ntelos, Inc................................. 1st Lien Ba3 BB- 7.10 08/24/11 1,440,746 1,424,177
Paetec Communications, Inc.................. 1st Lien Ba3 B- 7.35 02/15/13 642,672 630,755
Sorenson Communications, Inc................ Tranche B B1 B 7.38 11/15/12 465,258 453,045
------------
14,886,631
------------
Textiles & Leather -- 0.3%
Globe Manufacturing Corp.+#@(5)(6).......... BTL-B Caa2 NR 10.00 07/16/06 837,014 0
Hanesbrands, Inc............................ BTL-B Ba2 BB 6.53-6.82 09/05/13 697,321 681,341
William Carter Co........................... BTL-B Ba3 BB 6.36-6.46 07/14/12 341,529 331,283
------------
1,012,624
------------
Utilities -- 5.1%
Boston Generating LLC....................... BTL-B B1 BB- 7.45 12/20/13 771,517 745,298
Boston Generating LLC....................... Synthetic LOC B1 BB- 7.45 12/20/13 172,414 166,554
Boston Generating LLC....................... Synthetic LOC B1 BB- 7.57 12/20/13 48,276 46,635
Calpine Corp................................ BTL Ba3 CCC+ 7.08 04/01/09 992,500 968,928
Concho Resources, Inc....................... 2nd Lien NR NR 9.23 03/28/12 1,119,000 1,112,006
Entegra Power Group LLC..................... 2nd Lien B3 B+ 7.33 03/30/14 485,139 456,940
KGen Power Corp............................. LOC Ba3 BB 6.63 01/31/14 375,000 350,625
KGen Power Corp............................. BTL Ba3 BB 6.63 01/31/14 618,750 578,531
La Paloma Generating Co..................... Delayed Draw B1 B+ 6.58 08/16/12 14,785 13,824
La Paloma Generating Co..................... LOC B1 BB- 6.57 08/16/12 32,787 30,656
La Paloma Generating Co..................... BTL-C B1 B- 8.33 11/18/12 250,000 233,750
La Paloma Generating Co..................... BTL-B B3 B+ 6.58 08/16/12 185,639 173,573
LS Power Acquisition Co..................... 1st Lien B1 BB- 6.85 05/01/14 787,542 782,620
Mach Gen LLC................................ LOC B2 B+ 6.83 02/22/13 281,250 266,836
Mach Gen LLC................................ BTL-B B2 B+ 7.00 02/22/14 2,691,563 2,553,620
NE Energy, Inc.............................. 2nd Lien B3 B- 9.44 05/01/14 250,000 232,969
NRG Energy, Inc.(8)......................... CLD Ba1 BB 6.48 02/01/13 878,527 839,762
NRG Energy, Inc.(8)......................... BTL Ba1 BB 6.58 02/01/13 1,902,825 1,818,863
NSG Holdings II LLC......................... LOC Ba2 BB 6.56 06/15/14 102,041 95,918
NSG Holdings II LLC......................... BTL Ba2 BB 6.56 06/15/14 772,284 725,947
Reliant Energy, Inc......................... LOC B2 B 5.11 12/01/13 2,000,000 1,888,750
Texas Competitive Electric Holdings Co. LLC. BTL-B2 Ba3 B+ 8.40 10/01/14 1,995,000 1,960,838
Texas Competitive Electric Holdings Co. LLC. BTL-B3 Ba3 B+ 8.40 10/01/14 997,500 981,460
TPF Generation Holdings LLC................. 2nd Lien B3 B- 9.08 12/15/14 1,500,000 1,421,250
------------
18,446,153
------------
Total Loans (cost $375,719,225)...................................................................... 352,587,586
------------
21
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- December 31, 2007 -- (continued)
Principal
Amount/ Value
Industry Description Shares (Note 2)
------------------------------------------------------------------------------------
CORPORATE BONDS -- 0.5%
Electronics -- 0.5%
NXP BV*(9)
Note
7.99% due 10/15/13 (cost $2,000,000)................... $2,000,000 $ 1,840,000
------------
COMMON STOCK -- 0.1%
Telecommunications -- 0.1%
Global Crossing, Ltd.+.................................. 175 3,859
SAVVIS Communications Corp.+............................ 6,313 176,196
------------
Total Common Stock (cost $125,981)...................... 180,055
------------
Total Long-Term Investment Securities (cost $377,845,206) 354,607,641
------------
TOTAL INVESTMENTS -- 98.7%..................................
(cost $377,845,206)(10)................................. 354,607,641
Other assets less liabilities -- 1.3%....................... 4,685,861
------------
NET ASSETS -- 100.0%........................................ $359,293,502
============
- --------
BTL Bank Term Loan
CND TL Canadian Term Loan
LOC Letter of Credit
FSRI First Securities Repurchase Increase
CLD Credit Linked Deposit
CLC Credit Linked Commitment
CLTL Credit Linked Term Loan
STFA Senior Term Facilities Agreement
NR Security is not rated.
+ Non-income producing security
@ Illiquid security. At December 31, 2007, the aggregate value of these
securities was $9,900, representing 0.0% of net assets.
# Fair valued security; see Note 2
* Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. The Fund has no
rights to demand registration of these securities. At December 31, 2007,
the aggregate value of these securities was $1,840,000 representing 0.5%
of net assets. Unless otherwise indicated, these securities are not
considered to be illiquid.
(1) Bank loans rated below Baa by Moody's Investor Service, Inc. or BBB by
Standard & Poor's Group are considered below investment grade. Ratings are
unaudited. Ratings provided are as of December 31, 2007.
(2) Based on the stated maturity, the weighted average to maturity of the
Loans held in the portfolio will be 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) Company has filed Chapter 11 bankruptcy protection.
(6) Loan is in default and did not pay principal at maturity. Final outcome of
Chapter 11 bankruptcy is still to be determined.
(7) Loan was purchased through a participation agreement.
(8) Loan is subject to an unfunded loan commitment. See Note 11 for details.
(9) Floating rate security where the rate fluctuates. The rate moves up or
down at each reset date. The rate reflected is as of December 31, 2007.
(10) See Note 6 for cost of investments on a tax basis.
See Notes to Financial Statements
22
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2007
Note 1. Organization of the Fund
The SunAmerica Senior Floating Rate Fund, Inc. (the "Fund"), is a
non-diversified open-end management investment company. The Fund was
organized as a Maryland corporation on March 6, 1998, and is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"). The
Fund is managed by AIG SunAmerica Asset Management Corp. (the "Adviser" or
"AIG 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 senior secured floating rate debt obligations. The
Fund may also purchase investment grade fixed income debt securities and
money market instruments.
Prior to October 4, 2006, the Fund operated as a closed-end investment
management company. On October 4, 2006, the Fund converted from a closed-end
investment management company to an open-end investment management company.
Concurrently with the conversion, the Class A shares were redesignated as
Class Q shares and a new class of shares designated as Class A commenced
offering.
The Fund offers four classes of shares. Class A shares are offered at net
asset value per share plus an initial sales charge. Additionally, purchases
of Class A shares in excess of $1,000,000 will be purchased at net asset
value but will be subject to a contingent deferred sales charge ("CDSC") on
redemptions made within two years of purchase. Class B shares are offered
for sale at net asset value without a front-end sales charge, although a
declining CDSC charge may be imposed on redemptions made within four years
of purchase. Class C shares are offered for sale at net asset value without
a front-end sales charge, although a CDSC may be imposed on redemptions made
within 12 months of purchase. Class D shares are offered for sale at net
asset value without a front-end sales charge and no CDSC. Class Q shares are
not currently offered for sale and are available only through a conversion
of Class B shares eight years after purchase and Class C shares purchased
before 1999, after ten years from purchase. The share classes differ in
their respective distribution and service fees. All classes have equal
rights to assets and voting privileges except as may otherwise be provided
in the Fund's registration statement.
Indemnifications: Under the Fund's organizational documents, its officers
and directors are indemnified against certain liability arising out of the
performance of their duties to the Fund. In addition, in the normal course
of business the Fund enters into contracts that may contain the obligation
to indemnify others. The Fund's maximum exposure under these arrangements is
unknown. Currently, however, the Fund expects the risk of loss to be remote.
Note 2. Significant Accounting Policies
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles (GAAP) requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from these estimates. The
following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements:
Security Valuation: The Fund's investments in loan interests ("Loans") are
valued in accordance with guidelines established by the Board of Directors
(the "Board"). Under the Fund's current guidelines, Loans for which an
active secondary market exists to a reliable degree will be valued at the
mean of the last available bid and asked prices in the market for such
Loans, as provided by a Board-approved loan pricing service. Loans for which
an active secondary market does not exist to a reliable degree will be
valued at fair value, which is intended to approximate market value. In
valuing a Loan at fair value, the following factors will be considered, (a)
the creditworthiness of the borrower and any intermediate participants, (b)
the terms of the Loan, (c) recent prices in the market for similar Loans, if
any, and (d) recent prices in the market for instruments of similar quality,
rate, and period until the next interest rate reset and maturity. Stocks are
generally valued based upon closing sales prices reported on recognized
securities exchanges. Stocks listed on the NASDAQ are valued using the
NASDAQ Official Closing Price ("NOCP"). Generally, the NOCP will be the last
sale price unless the reported trade for the stock is outside the range of
the
23
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2007 -- (continued)
bid/ask price. In such cases, the NOCP will be normalized to the nearer of
the bid or ask price. For listed securities having no sales reported and for
unlisted securities, such securities will be valued based upon the last
reported bid price. Non-convertible bonds and debentures, other long-term
debt securities, and short-term debt securities with maturities in excess of
60 days, are valued at bid prices obtained for the day of valuation from a
bond pricing service, when such prices are available. If a vendor quote is
unavailable the securities may be priced at the mean of two independent
quotes obtained from brokers. Securities for which market quotations are not
readily available are valued as determined pursuant to procedures adopted in
good faith by the Board. Short-term securities with 60 days or less to
maturity are amortized to maturity based on their cost to the Fund if
acquired within 60 days of maturity or, if already held by the Fund on the
60/th/ day, are amortized to maturity based on the value determined on the
61/st/ day. Securities for which market quotations are not readily available
or if a development/significant event occurs that may significantly impact
the value of the security, then these securities are valued, as determined
pursuant to procedures adopted in good faith by the Board.
The senior Loans in which the Fund primarily invests are generally not
listed on any exchange and the secondary market for those senior Loans is
comparatively illiquid relative to markets for other fixed income
securities. Consequently, obtaining valuations for those Loans may be more
difficult than obtaining valuations for actively traded securities. Thus,
the value upon disposition on any given Loan may differ from its current
valuation.
Repurchase Agreements: The Fund may enter into repurchase agreements. The
Fund's custodian takes possession of the collateral pledged for investments
in repurchase agreements. The underlying collateral is valued daily on a
mark to market basis to ensure that the value, including accrued interest,
is at least 102% of the repurchase price. In the event of default of the
obligation to repurchase, the Fund has the right to liquidate the collateral
and apply the proceeds in satisfaction of the obligation. If the seller
defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited. At
December 31, 2007, the Fund did not enter into any repurchase agreements.
Securities Transactions, Investment Income, Expenses, Dividends and
Distributions to Shareholders: Security transactions are recorded on a trade
date basis. Realized gains and losses on sales of investments are calculated
on the identified cost basis. Interest income is accrued daily except when
collection is not expected. Dividend income is recorded on the ex-dividend
date. For financial statement purposes, the Fund amortizes all premiums and
accretes all discounts. Facility fees received, which were $82,073 for the
period ended December 31, 2007, are accreted to income over the life of the
Loans. Other income, including amendment fees, commitment fees, letter of
credit fees, etc., which were $395,498 for the period ended December 31,
2007, are recorded as income when received or contractually due to the Fund.
Net investment income, other than class specific expenses, and realized and
unrealized gains and losses, are allocated daily to each class of shares
based upon the relative net asset value of outstanding shares of each class
of shares at the beginning of the day (after adjusting for the current
capital share activity of the respective class). Interest earned on cash
balances held at the custodian are shown as custody credits on the Statement
of Operations.
Dividends from net investment income are normally declared daily and paid
monthly. Capital gain distributions, if any, are paid annually. The Fund
records dividends and distributions to the shareholders on the ex-dividend
date. The amount of dividends and distributions from net investment income
and net realized capital gains are determined in accordance with federal
income tax regulations, which may differ from U.S. generally accepted
accounting principles. These "book/tax" differences are either considered
temporary or permanent in nature. To the extent these differences are
permanent in nature, such amounts are reclassified within the capital
accounts at fiscal year end based on their federal tax-basis treatment;
temporary differences do not require reclassification. Net investment
income/loss, net realized gain/loss, and net assets are not affected. The
Fund intends to comply with the requirements of the Internal Revenue Code,
as amended, applicable to regulated investment companies and distribute all
of its taxable income, including any net realized gain on investments, to
its shareholders. Therefore, no federal tax provision is required. 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 years ending before 2004.
24
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2007 -- (continued)
New Accounting Pronouncements: On July 13, 2006, the Financial Accounting
Standards Board (FASB) released FASB Interpretation No. 48 "Accounting for
Uncertainty in Income Taxes" (FIN 48). FIN 48 provides guidance for how
uncertain tax positions should be recognized, measured, presented and
disclosed in the financial statements. FIN 48 requires the evaluation of tax
positions taken or expected to be taken in the course of preparing the
Fund's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority.
Adoption of FIN 48 is required for fiscal years beginning after December 15,
2006 and is to be applied to all open tax years as of the effective date.
However, Registered Investment Companies are not required to implement FIN
48 until their last net asset value calculation in the first required
financial statement reporting period for fiscal years beginning after
December 15, 2006. Management has evaluated the implications of FIN 48 and
determined there is no impact to the financial statements.
In September 2006, the FASB issued Statement on Financial Accounting
Standards No. 157, "Fair Value Measurements" (FAS 157). This standard
clarifies the definition of fair value for financial reporting, establishes
a framework for measuring fair value and requires additional disclosures
about the use of fair value measurements. FAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007 and
interim periods within those fiscal years. As of December 31, 2007, the
management of the Fund does not believe the adoption of FAS 157 will impact
the amounts reported in the financial statements, however, additional
disclosures will be required about the inputs used to develop the
measurements of fair value.
Statement of Cash Flows: Information on financial transactions which have
been settled through the receipt or disbursement of cash is presented in the
Statement of Cash Flows. The cash amount shown in the Statement of Cash
Flows is the amount included in the Fund's Statement of Assets and
Liabilities and represents cash on hand at its custodian bank account, and
does not include any short-term investments at December 31, 2007.
Note 3. Capital Share Transactions
The Fund has 1,000,000,000 of $.01 par value shares authorized that may be
issued in five different classes. Transactions in shares of each class were
as follows:
For the For the period
year ended October 4, 2006**-
December 31, 2007 December 31, 2006
------------------------- -------------------------
Shares Amount Shares Amount
Class A# ---------- ------------ ---------- ------------
Shares sold................. 16,345,482 $151,739,920 1,759,134 $ 16,531,338
Reinvested distributions.... 261,188 2,384,009 5,048 47,437
Shares redeemed............. (8,076,898) (73,605,625) (257,470) (2,418,681)
---------- ------------ ---------- ------------
Net increase (decrease).. 8,529,772 $ 80,518,304 1,506,712 $ 14,160,094
========== ============ ========== ============
For the For the
year ended year ended
December 31, 2007 December 31, 2006
------------------------- -------------------------
Shares Amount Shares Amount
Class B ---------- ------------ ---------- ------------
Shares sold................. 319,757 $ 2,962,829 453,924 $ 4,269,518
Reinvested distributions.... 107,332 990,697 118,659 1,116,260
Shares redeemed............. (1,016,781)@ (9,403,485)@ (501,412)* (4,716,044)*
---------- ------------ ---------- ------------
Net increase (decrease).. (589,692) $ (5,449,959) 71,171 $ 669,734
========== ============ ========== ============
For the For the
year ended year ended
December 31, 2007 December 31, 2006
------------------------- -------------------------
Shares Amount Shares Amount
Class C ---------- ------------ ---------- ------------
Shares sold................. 14,008,359 $130,699,614 6,565,881 $ 61,753,971
Reinvested distributions.... 940,512 8,648,660 673,809 6,338,411
Shares redeemed............. (7,162,128)+ (65,556,497)+ (4,906,086) (46,157,931)
---------- ------------ ---------- ------------
Net increase (decrease).. 7,786,743 $ 73,791,777 2,333,604 $ 21,934,451
========== ============ ========== ============
25
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2007 -- (continued)
For the For the
year ended year ended
December 31, 2007 December 31, 2006
---------------------- ------------------------
Shares Amount Shares Amount
Class D -------- ----------- ---------- ------------
Shares sold................. 41,222 $ 381,302 819,357 $ 7,710,168
Reinvested distributions.... 73,932 683,176 110,443 1,039,375
Shares redeemed............. (645,739) (5,976,532) (1,689,707) (15,879,854)
-------- ----------- ---------- ------------
Net increase (decrease).. (530,585) $(4,912,054) (759,907) $ (7,130,311)
======== =========== ========== ============
For the For the
year ended year ended
December 31, 2007 December 31, 2006
---------------------- ------------------------
Shares Amount Shares Amount
Class Q# -------- ----------- ---------- ------------
Shares sold................. 526,688@+ $ 4,876,693@+ 49,174* $ 462,208*
Reinvested distributions.... 11,501 105,134 2,075 19,516
Shares redeemed............. (98,969) (903,128) (11,733) (110,650)
-------- ----------- ---------- ------------
Net increase (decrease).. 439,220 $ 4,078,699 39,516 $ 371,074
======== =========== ========== ============
-----
@ Includes automatic conversion of 523,771 shares of Class B shares in the
amount of $4,850,526 to 523,771 shares of Class Q shares in the amount of
$4,850,526.
* Includes automatic conversion of 45,900 shares of Class B shares in the
amount of $431,458 to 45,900 shares of Class Q shares in the amount of
$431,458.
** Inception date of class.
+ Includes automatic conversion of 1,596 shares of Class C shares in the
amount of $14,348 to 1,596 shares of Class Q shares in the amount of
$14,348.
# Effective October 4, 2006, Class A shares were redesignated to Class Q
shares and a new class of shares designated as Class A commenced offering.
Note 4. Purchases and Sales of Securities
During the year ended December 31, 2007, the Fund's cost of purchases of
Loans and proceeds from Loan sales were $437,409,390 and $282,568,528,
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 AIG SunAmerica. Pursuant to the Advisory
Agreement, AIG 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, AIG 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 AIG SunAmerica and its affiliates.
AIG SunAmerica also selects, contracts with and compensates the subadviser
to manage the Fund's assets. The Fund will pay AIG SunAmerica a monthly
advisory fee at the following annual rates, based on the average daily net
assets of the Fund: 0.85% on the first $1 billion; 0.80% on the next $1
billion; and 0.75% thereafter.
AIG Global Investment Corp. ("AIGGIC") acts as subadviser to the Fund
pursuant to a Subadvisory Agreement with AIG SunAmerica. AIGGIC is an
indirect wholly-owned subsidiary of AIG and is an affiliate of AIG
SunAmerica. Under the Subadvisory Agreement, AIGGIC manages the investment
and reinvestment of the Fund's assets. As compensation for its services as
subadviser, AIGGIC is entitled to receive from AIG SunAmerica a monthly fee
payable at the following annual rates: 0.25% for the first $1 billion of
average daily net assets; and 0.20% for average daily net assets of more
than $1 billion. The fee paid to the subadviser is paid by AIG SunAmerica
and not the Fund.
Pursuant to the Administrative Services Agreement (the "Administrative
Agreement") AIG 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, AIG SunAmerica
receives an annual fee equal to 0.40% of average daily net assets of the
Fund. For the year ended December 31, 2007, AIG SunAmerica accrued
administration fees in the amount of $1,318,621.
26
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2007 -- (continued)
The Fund has entered into a Distribution Agreement with AIG SunAmerica
Capital Services, Inc. ("AIG SACS" or the "Distributor"), an affiliate of
AIG SunAmerica. The Fund, on behalf of each Class, except Class D, has
adopted a plan of distribution pursuant to Rule 12b-1 under the 1940 Act
(each a "Plan" and collectively, the "Plans"). Hereinafter referred to as
the "Class A Plan," "Class B Plan," "Class C Plan," and "Class Q 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.
The Class A, Class B and Class C Plans provide that the Fund, on behalf of
the respective classes, shall pay the Distributor a distribution fee at an
annual rate of 0.10% of average daily net assets of Class A shares and 0.50%
of average daily net assets of Class B and 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 for 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 the Class A, Class B and
Class C Plans may exceed the Distributor's distribution costs as described
above. The Plans also provide that Class A, Class B, Class C and Class Q
shares of the Fund shall pay the Distributor an account maintenance fee of
0.25% of the average daily net assets of such class of shares to compensate
the Distributor and securities firms for account maintenance activities. For
the period ended December 31, 2007 SACS received sales charges on Class A
shares of $446,852, of which $60,792 was reallowed to affiliated
broker-dealers and $303,525 to non-affiliated broker-dealers. In addition,
SACS receives the proceeds of early withdrawal charges paid by investors in
connection with certain redemptions of Class A, Class B and Class C shares.
For the period ended December 31, 2007, SACS received early withdrawal
charges of $166,490. For the period ended December 31, 2007 SACS voluntarily
waived fees for the following classes: Class A $96,365, Class B $57,287,
Class C $566,435, and Class Q $1,377. The fee waiver and expense
reimbursement will continue indefinitely but may be terminated at any time.
The Fund has entered into a Service Agreement with AIG SunAmerica Fund
Services, Inc. ("SAFS"), an indirect wholly-owned subsidiary of AIG
SunAmerica. Under the Service Agreement, SAFS 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 SAFS for services rendered
based upon an annual rate of 0.22% of average daily net assets, is approved
annually by the Board of Directors. For the period ended December 31, 2007,
the Fund incurred the following expenses, which are included in the transfer
agent fees and expenses payable on the Statement of Assets and Liabilities
and in transfer agent fees and expenses in the Statement of Operations to
compensate SAFS pursuant to the terms of the Service Agreement.
Payable at
Expense December 31, 2007
-------- -----------------
Class A+...................... $141,386 $17,489
Class B....................... 50,413 3,687
Class C....................... 498,411 44,828
Class D....................... 28,988 1,946
Class Q+...................... 6,044 637
- --------
+ Effective October 4, 2006, Class A shares were redesignated to Class Q
shares and a new class of shares designated as Class A commenced offering.
AIG SunAmerica has contractually agreed to waive fees and/or reimburse
expenses to the extent necessary to cap the Fund's annual operating expenses
at 1.45% for Class A, and 1.75% for Class B and Class C, of average daily
net assets. The expense reimbursements and fee waivers will continue
indefinitely, subject to termination by the Board, including a majority of
the directors that are not deemed to be "interested persons" of the Fund, as
defined by Section 2(a)(19) of the 1940 Act ("Disinterested Directors"). AIG
SunAmerica is voluntarily waiving fees and/or reimbursing expenses, so that
the total net expense ratios do not exceed 1.45% for Class Q and 1.25% for
Class D of average daily net assets. The voluntary fee waivers and/or
expense reimbursements may be terminated at any time
27
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2007 -- (continued)
at the option of AIG SunAmerica. For the period ended December 31, 2007, AIG
SunAmerica waived fees and reimbursed expenses as follows: Class A $280,542,
Class B $104,870, Class C $903,919, Class D $52,647, and Class Q $17,228.
Note 6. Federal Income Taxes
The following details the tax basis distributions as well as the components
of distributable earnings. The tax basis components of distributable
earnings differ from the amounts reflected in the Statement of Assets and
Liabilities by temporary book/tax differences primarily arising from wash
sales, retirement pension expense, dividends payable and treatment of
defaulted securities.
Distributable Earnings Tax Distributions
- ---------------------------------------- --------------------------------------------------------------------------
For the year ended
For the year ended December 31, 2007 For the year ended December 31, 2007 December 31, 2006
- ---------------------------------------- ------------------------------------ -------------------------------------
Long-term Gains/ Unrealized Long-term Long-term
Ordinary Capital Loss Appreciation Ordinary Capital Ordinary Capital
Income Carryover (Depreciation) Income Gains Income Gains
- -------- ---------------- -------------- ----------- --------- ----------- -------------------------
$23,381 $(27,197,362) $(23,237,922) $20,853,822 $ -- $13,291,502 $ --
Capital Loss Carryforwards. At December 31, 2007 capital loss carryforwards
available to offset future recognized gains were $27,192,362 with $1,009,013
expiring in 2008, $9,997,029 expiring in 2009, $7,736,363 expiring in 2010,
$4,956,144 expiring in 2011, and $3,498,813 expiring in 2012.
During the year ending December 31, 2007, the Senior Floating Rate Fund
utilized $186,815 of capital loss carry forwards to offset current year
capital gains.
Under the current tax law, capital losses related to securities and foreign
currency realized after October 31 and prior to the Fund's fiscal year end
may be deferred as occurring on the first day of the following year. For the
fiscal year ended December 31, 2007, the Fund elected to defer $764 of
Post-October Capital Losses.
Unrealized appreciation and depreciation in the value of investments at
December 31, 2007 for federal income tax purposes were as follows:
Cost (tax basis)............................................ $377,845,563
============
Gross unrealized appreciation............................... $ 66,359
Gross unrealized depreciation............................... (23,304,281)
------------
Net unrealized depreciation................................. $(23,237,922)
============
Note 7. Director Retirement Plan
The Directors of the Corporation have adopted the AIG SunAmerica
Disinterested Trustees' and Directors' Retirement Plan (the "Retirement
Plan") effective January 1, 1993, as amended December 9, 2006 for the
unaffiliated Directors. The Retirement Plan provides generally that an
unaffiliated Director may become a participant ("Participant") in the
Retirement Plan if he or she has at least 10 years of consecutive service as
a Disinterested Director of any of the adopting AIG SunAmerica mutual funds
(the "Adopting Funds") or has attained the age of 60 while a Director and
completed five (5) consecutive years of service as a Director of any
Adopting Fund (an "Eligible Director"). Pursuant to the Retirement Plan, an
Eligible Director may receive benefits upon (i) his or her death or
disability while a Director or (ii) the termination of his or her tenure as
a Director, other than removal for cause from each of the Adopting Funds
with respect to which he or she is an Eligible Director.
As of each of the first 10 birthdays after becoming a Participant and on
which he or she is both a Director and Participant, each Eligible Director
will be credited with an amount equal to 50% of his or her regular fees
(excluding
28
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2007 -- (continued)
committee fees) for services as a Disinterested Director of each Adopting
Fund for the calendar year in which such birthday occurs. In addition, an
amount equal to 8.50% of any amounts credited under the preceding clause
during prior years is added to each Eligible Director's account. The rights
of any Participant to benefits under the Retirement Plan shall be an
unsecured claim against the assets of the Adopting Funds.
An Eligible Director may receive any benefits payable under the Retirement
Plan, at his or her election, either in one lump sum or in up to 15 annual
installments. Any undistributed amounts shall continue to accrue interest at
8.50%.
As of December 31, 2007, the Fund had accrued $30,329 for the Retirement
Plan, which is included in Directors' fees and expenses line on the
Statement of Assets and Liabilities and for the period ended December 31,
2007, expensed $13,987 for the Retirement Plan, which is included in
Directors' fees and expenses line on the Statement of Operations.
Note 8. Line of Credit
The AIG SunAmerica Family of Mutual Funds has established $75 million
committed and $50 million uncommitted lines of credit with State Street Bank
& Trust Company, the Fund's custodian. Interest is currently payable at the
Federal Funds rate plus 50 basis points on the committed line and State
Street's discretionary bid rate on the uncommitted line of credit. There is
also a commitment fee of 10 basis points per annum on the daily unused
portion of the $75 million committed line of credit, which is included in
other expenses on the Statement of Operations. Borrowings under the line of
credit will commence when the Fund's cash shortfall exceeds $100,000. For
the period ended December 31, 2007, the Fund had borrowings outstanding for
4 days under the line of credit and incurred $1,268 in interest charges
related to these borrowings. The Fund's average amount of debt under the
line of credit for the days utilized was $2,419,615 at a weighted average
interest rate of 4.73%. At December 31, 2007, the line of credit had a
balance outstanding of $2,919,355.
Note 9. Interfund Lending Agreement
Pursuant to the exemptive relief granted by the Securities and Exchange
Commission (the "Commission"), the Fund is permitted to participate in an
interfund lending program among investment companies advised by AIG
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 period ended December 31, 2007, the Fund did not
participate in this program.
Note 10. Investment Concentration
The Fund invests primarily in participations and assignments, or acts as a
party to the primary lending syndicate of a Variable Rate Senior Loan
interest to United States corporations, partnerships, and other entities. If
the lead lender in a typical lending syndicate becomes insolvent, enters
receivership or, if not FDIC insured, enters into bankruptcy, the Fund may
incur certain costs and delays in receiving payment, or may suffer a loss of
principal and/or interest. When the Fund purchases a participation of a
Senior Loan interest, the Fund typically enters into a contractual agreement
with the lender or other third party selling the participation but not with
the borrower directly. As such, the Fund assumes the credit risk of the
Borrower, Selling Participant or other persons positioned between the Fund
and the Borrower.
29
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- December 31, 2007 -- (continued)
Note 11. Unfunded Loan Commitments
On December 31, 2007, the Fund had the following unfunded loan commitments
which could be extended at the option of the Borrower:
Maturity
Name Type Date Amount
---- ---------------------- -------- ----------
Big West Oil LLC.............. Delayed Draw Term Loan 05/15/14 $1,100,000
Community Health Systems, Inc. Delayed Draw Term Loan 07/15/14 185,615
Golden Nugget, Inc............ Delayed Draw Term Loan 06/08/14 727,273
Hub International Holdings,
Inc......................... Delayed Draw Term Loan 06/13/14 121,569
IASIS Healthcare Corp......... Delayed Draw Term Loan 06/15/14 124,006
Isle of Capri Casinos, Inc.... Delayed Draw Term Loan 11/30/13 352,941
NRG Energy, Inc............... Delayed Draw Term Loan 05/23/14 2,000,000
The Pantry, Inc............... Delayed Draw Term Loan 05/04/14 444,444
Univision Communications, Inc. Delayed Draw Term Loan 03/28/14 241,611
Valassis Communications, Inc.. Delayed Draw Term Loan 03/02/14 426,667
WMG Acquisition Corp.......... Revolver 01/18/11 500,000
Note 12. Other Information
The matter related to AIG's settlement with the Commission and other
governmental authorities that was reported in recent shareholder reports has
been resolved. With respect to such matter, in September 2007, the
Commission issued a permanent exemptive order (the "Order") pursuant to
Section 9(c) of the 1940 Act, to AIG and certain affiliated persons of AIG,
including AIG SunAmerica, AIGGIC and SACS. The Order permits each entity to
continue to provide advisory or distribution services to the Funds, as
applicable. There has been no adverse impact on the Fund or the Fund's
shareholder.
30
SunAmerica Senior Floating Rate Fund, Inc.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of SunAmerica Senior Floating Rate
Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations, of
changes in net assets and of cash flows and the financial highlights present
fairly, in all material respects, the financial position of SunAmerica Senior
Floating Rate Fund, Inc. (the "Fund") at December 31, 2007, the results of its
operations and its cash flows for the year then ended, the changes in its net
assets for each of the two years in the period then ended and the financial
highlights for the periods indicated, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 2007 by correspondence with the
custodian, brokers and selling or agent banks, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Houston, Texas
February 28, 2008
31
SunAmerica Senior Floating Rate Fund, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY AGREEMENT -- December 31, 2007 -- (unaudited)
The Board, including the Directors who are not interested persons of the Fund,
AIG SunAmerica or AIGGIC, approved the continuation of the Advisory Agreement
between the Fund and AIG SunAmerica for a one-year period ending August 31,
2008 at a meeting held on August 27, 2007. At this same meeting, the Board also
approved the continuation of the Subadvisory Agreement, as amended,/1/ between
AIG SunAmerica and AIGGIC (the "Subadvisory Agreement") with respect to the
Fund for a one-year period ending August 31, 2008.
In accordance with Section 15(c) of the 1940 Act, the Board requested and the
Adviser provided materials relating to the Board's consideration of whether to
approve the continuation of the Advisory Agreement and Subadvisory Agreement.
In determining whether to approve the continuation of the Advisory Agreement
and Subadvisory Agreement, the Board, including the Disinterested Directors,
considered the following information:
Nature, Extent and Quality of Services Provided by the Adviser and Subadviser.
The Board, including the Disinterested Directors, considered the nature,
quality and extent of services to be provided by AIG SunAmerica and AIGGIC. The
Board noted that AIG SunAmerica acts as investment manager and adviser to the
Fund pursuant to the Advisory Agreement, and in such capacity is responsible
for obtaining and evaluating economic, statistical and financial information to
formulate and implement the Fund's investment policies, or for providing
oversight with respect to the daily management of the Fund's portfolio by a
subadviser. The Board noted that the services under the Advisory Agreement also
included certain clerical, bookkeeping and administrative services.
Additionally, the Board observed that AIG 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
AIG SunAmerica and the Fund (the "Administrative Services Agreement"). Finally,
the Board noted that AIG SunAmerica is responsible for overseeing the
activities of affiliated and unaffiliated third-party service providers,
including AIGGIC.
In connection with the services provided by AIG SunAmerica, the Board analyzed
the structure and duties of AIG SunAmerica's fund administration, accounting,
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 AIG
SunAmerica and concluded, based on their experience and interaction with AIG
SunAmerica, that: (i) AIG SunAmerica is able to retain quality portfolio
managers and other personnel; (ii) AIG SunAmerica exhibited a high level of
diligence and attention to detail in carrying out its advisory responsibilities
under the Advisory Agreement; (iii) AIG SunAmerica had been responsive to
requests of the Board; and (iv) AIG SunAmerica had 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 fee 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 AIG 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 AIG SunAmerica's experience in
providing management and investment advisory and administrative services to
advisory clients and noted that as of July 31, 2007, AIG SunAmerica managed,
advised and/or administered approximately $56.2 billion in assets. The Board
also considered AIG SunAmerica's code of ethics, and that it has developed
internal procedures, adopted by the Board, for monitoring compliance with the
investment objectives, policies and restrictions of the Fund as set forth in
the Fund's prospectus. Additionally, the Board considered AIG SunAmerica's
compliance and regulatory history, and noted that with respect to AIG's
settlement with the Commission and other governmental authorities, AIG
SunAmerica applied for a permanent exemptive order granting relief from the
provisions of Section 9(a) of the 1940 Act./2/
- --------
/1/ The Subadvisory Agreement was amended in order to comply with the
requirements of the exemptive rules relating to subadvisory affiliates (Rules
17a-10, 10f-3, 12d3-1 and 17e-1 under the 1940 Act) so that the Fund can rely
on these provisions. These provisions permit certain exemptions for
transactions with subadvisory affiliates.
32
SunAmerica Senior Floating Rate Fund, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY AGREEMENT -- December 31, 2007 -- (unaudited) (continued)
The Board also considered the nature, quality and extent of subadvisory
services provided by AIGGIC. The Board observed that AIGGIC is responsible for
providing investment management services, including investment research, advice
and supervision, and determining which securities will be purchased or sold by
the Fund. The Board reviewed AIGGIC'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 concluded, based on their
experience with AIGGIC, that: (i) AIGGIC is able to retain high quality
portfolio managers and other investment personnel; (ii) AIGGIC exhibited a high
level of diligence and attention to detail in carrying out its responsibilities
under the Subadvisory Agreement; and (iii) AIGGIC had been responsive to
requests of the Board and of AIG SunAmerica. The Board considered that AIGGIC
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 considered AIGGIC's code of ethics,
compliance and regulatory history, and noted that AIGGIC also applied for a
permanent exemptive order from the provisions of Section 9(a) of the 1940 Act
with respect to AIG's settlement with the Commission and other governmental
authorities./1/ The Board concluded that the nature and extent of services to
be provided by AIGGIC under the Subadvisory Agreement were reasonable and
appropriate in relation to the subadvisory fee and that the quality of services
continues to be high.
Investment Performance. The Board, including the Disinterested Directors, also
considered the investment performance of AIG SunAmerica and AIGGIC 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
determined by Lipper, Inc. ("Lipper") and to the S&P/LSTA Leveraged Loan Index.
The Board also noted that it regularly reviews the performance of the Fund
throughout the year.
In preparation for the August 27, 2007 meeting, the Board was provided with
reports independently prepared by Lipper. Based on the Lipper reports, the
Board reviewed the Fund's annualized total returns for the prior one-, two-,
three-, four- and five-year periods ended June 30, 2007.
Specifically, the Board considered that the Fund ranked in the first quintile
of its Peer Group for the five-year period ended June 30, 2007, ranked in the
second quintile for the prior two-year and four-year periods, and ranked in the
third quintile during the one-year and three-year periods.
Consideration of the Management Fee and Subadvisory Fee and the Cost of the
Services and Profits to be Realized by the Adviser, Subadviser and their
Affiliates from the Relationship with the Fund. The Board, including the
Disinterested Directors, received and reviewed information regarding the fees
to be paid by the Fund to AIG SunAmerica pursuant to the Advisory Agreement and
the fees paid by AIG SunAmerica to AIGGIC 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 AIG
SunAmerica, AIGGIC or their affiliates in connection with providing such
services to the Fund.
To assist in analyzing the reasonableness of the management fee for the Fund,
the Board received reports independently prepared by Lipper. The reports showed
comparative fee information for the Fund's Peer Group and Peer Universe. In
considering the reasonableness of the management fee to be paid by the Fund to
AIG SunAmerica, the Board reviewed a number of expense comparisons, including:
(i) contractual and actual advisory 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 AIG SunAmerica. The Board compared
the Fund's net expense ratio to those of other funds within its Peer Group as a
guide to help assess the reasonableness of the Fund's management fee. 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
- --------
/2/ Please see Note 12 to the Financial Statements contained in this Annual
Shareholder report for additional information regarding final resolution of
this matter.
33
SunAmerica Senior Floating Rate Fund, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY AGREEMENT -- December 31, 2007 -- (unaudited) (continued)
often not apparent. The Board noted, however, that the comparative fee
information provided by Lipper as a whole was useful in assessing whether AIG
SunAmerica was providing services at a cost that was competitive with other,
similar funds. The Board did not consider services and fees paid under
investment advisory contracts that AIG SunAmerica has with other registered
investment companies or other types of clients with similar investment
strategies to the Fund since AIG SunAmerica informed the Board that there were
no such Funds or accounts.
The Board also received and reviewed information regarding the fees paid by AIG
SunAmerica to AIGGIC pursuant to the Subadvisory Agreement. To assist in
analyzing the reasonableness of the subadvisory fee, the Board received a
report prepared independently by Lipper. The report showed comparative fee
information of the Fund's Peer Group that the Directors used as a guide to help
assess the reasonableness of the subadvisory fee. The Directors noted that Peer
Group information as a whole was useful in assessing whether AIGGIC was
providing services at a cost that was competitive with other similar funds. The
Directors also considered that the subadvisory fee is paid by AIG SunAmerica
out of its management fee 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 the subadvisory fee paid out
by AIG SunAmerica and the amount of the management fee which it retained. The
Board noted that the subadvisory fee paid by AIG SunAmerica to AIGGIC was
reasonable as compared to fees AIGGIC receives for other mutual funds and
accounts for which it serves as adviser or subadviser.
In addition, the Board received and reviewed financial statements relating to
AIG SunAmerica's financial condition and profitability with respect to the
services it provided to the Fund and considered how profit margins could affect
AIG 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 AIG SunAmerica and its affiliates that provide services to the
Fund. In particular, the Board considered the profitability of AIG SunAmerica
under the Advisory Agreement and Administrative Services Agreement, and
considered the profitability of AIG SunAmerica's affiliates under the Service
Agreement, Rule 12b-1 Plans and Distribution Agreement. Additionally, the Board
considered whether AIG SunAmerica, AIGGIC and its affiliates received any
indirect benefits from the relationship with the Fund. Specifically, the Board
observed that AIG Federal Savings Bank, an affiliate of AIG SunAmerica and
AIGGIC, serves as custodian with respect to certain shareholder retirement
accounts that are administered by AIG SunAmerica and receives a fee payable by
the qualifying shareholders.
The Board also reviewed AIGGIC's financial statements and considered whether
AIGGIC had the financial resources necessary to attract and retain high quality
investment management personnel and to continue to provide the high quality of
services that it had provided to the Fund to date.
The Board concluded that AIG SunAmerica and AIGGIC had the financial resources
necessary to perform their obligations under the Advisory Agreement and
Subadvisory Agreement and to continue to provide the Fund with the high quality
services that they had provided in the past. The Board also concluded that the
management fee and subadvisory fee were reasonable in light of the factors
discussed above.
Economies of Scale. The Board, including the Disinterested 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 the funds in the AIG SunAmerica complex
share common resources and, as a result, an increase in the overall size of the
complex could permit the Fund to incur lower expenses than it otherwise would
achieve as a stand-alone entity. The Board also considered the anticipated
efficiencies in the processes of AIG SunAmerica as it adds labor and capital to
expand the scale of operations. The Board further noted that AIG SunAmerica has
agreed to contractually cap the total annual operating expenses of Class A, B
and C shares of the Fund at certain levels and is voluntarily waiving fees
and/or reimbursing expenses for Class D and Class Q shares. The Board observed
that those expense caps benefited shareholders by keeping total fees down even
in the absence of breakpoints or economies of scale. The Board concluded that
the Fund's 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.
34
SunAmerica Senior Floating Rate Fund, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY AGREEMENT -- December 31, 2007 -- (unaudited) (continued)
The Board did not review specific information regarding whether there have been
economies of scale with respect to AIGGIC'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.
Other Factors. In consideration of the Advisory Agreement and Subadvisory
Agreement, the Board also received information regarding AIG SunAmerica's and
AIGGIC's brokerage and soft dollar practices. The Board considered that AIG
SunAmerica and AIGGIC are responsible for decisions to buy and sell securities
for the portfolios they manage, selection of broker-dealers and negotiation of
commission rates. The Board also considered the benefits AIG SunAmerica and
AIGGIC derive from their soft dollar arrangements, including arrangements under
which brokers provide brokerage and/or research services to AIG SunAmerica
and/or AIGGIC in return for allocating brokerage; however, they noted that
AIGGIC generally does not pay commissions to soft dollar brokerages for the
Fund. The Board further observed that when making purchases of new issues with
fixed underwriting fees, AIGGIC may designate the use of broker-dealers who
have agreed to provide certain statistical, research and other information.
Conclusion. After a full and complete discussion, the Board approved the
Advisory Agreement and the Subadvisory Agreement with respect to the Fund, each
for a one-year period ending August 31, 2008. Based upon their evaluation of
all these factors in their totality, the Board, including the Disinterested
Directors, was satisfied that the terms of the Advisory Agreement and
Subadvisory Agreement 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
Advisory Agreement and Subadvisory Agreement, the Board did not identify any
single factor or group of factors as all-important or controlling, but
considered all factors together. The Disinterested Directors were also assisted
by the advice of independent counsel in making this determination.
35
SunAmerica Senior Floating Rate Fund, Inc.
DIRECTORS AND OFFICERS INFORMATION -- December 31, 2007 -- (unaudited)
The following table contains basic information regarding the Directors and
Officers who oversee operations of the Fund and other investment companies
within the Fund complex.
Number of
Term of Funds in
Name, Position(s) Office and Fund Complex
Address and Held With Length of Principal Occupation(s) Overseen by Other Directorships
Date of Birth* the Fund Time Served(4) During Past 5 Years Director(1) Held by Director(2)
- ----------------------- ----------- -------------- ------------------------------ ------------ -------------------------------
Disinterested Directors
Dr. Judith L. Craven Director 2000 - Retired. 87 Director, Belo Corporation
DOB: October 6, 1945 present (1992 to present); Director,
Sysco Corporation (1996 to
present); Director, Luby's Inc.
(1998 to present).
William F. Devin Director 1998 - Retired. 88 Member of the Board of
DOB: December 30, 1938 present Governors, Boston Stock
Exchange (1985 to Present).
Samuel M. Eisenstat Chairman 2001 - Attorney, sole practitioner. 49 Director of North European
DOB: March 7, 1940 of the present Oil Royalty Trust.
Board
Stephen J. Gutman Director 2001 - Senior Associate, Corcoran 49 None
DOB: May 10, 1943 present Group (Real Estate) (2003 to
present); President and
Member of Managing
Directors, Beau Brummell --
Soho, LLC (Licensing of
menswear specialty retailing
and other activities) (1988 to
present).
William J. Shea Director 2004 - Managing Partner, DLB 49 Chairman of the Board, Royal
DOB: February 9, 1948 present Capital LLC Private Equity and SunAlliance Co. U.S.A.,
(2006 to present); President Inc. (2005 to present);
and CEO, Conseco, Inc. Director, Boston Private
(Financial Services) (2001 to Financial Holdings (2004 to
2004); Chairman of the Board present).
of Centennial Technologies,
Inc. (1998 to 2001).
Interested Director
Peter A. Harbeck(3) Director 2001 - President, CEO and Director, 96 None
DOB: January 23, 1954 present AIG SunAmerica (1995 to
present); Director, SACS
(1993 to present); President
and CEO, AIG Advisor Group,
Inc. (2004 to present).
36
SunAmerica Senior Floating Rate Fund, Inc.
DIRECTORS AND OFFICERS INFORMATION -- December 31, 2007 -- (unaudited)
The following table contains basic information regarding the Directors and
Officers who oversee operations of the Fund and other investment companies
within the Fund complex.
Number of
Term of Funds in
Name, Office and Fund Complex
Address and Position(s) Held Length of Principal Occupations Overseen by Other Directorships
Date of Birth* With the Fund Time Served(4) During Past 5 Years Director(1) Held by Director(2)
- ------------------- ---------------- -------------- ----------------------------- ------------ -------------------
Officers
John T. Genoy** President 2007 - Chief Financial Officer, AIG N/A N/A
DOB: November 8, present SunAmerica (2002 to
1968 present); Senior Vice
President, AIG SunAmerica
(2003 to present); Chief
Operating Officer, AIG
SunAmerica (2006 to
present).
Donna M. Handel Treasurer 2002 - Senior Vice President, AIG N/A N/A
DOB: June 25, 1966 present SunAmerica (2004 to
present); Vice President, AIG
SunAmerica (1997 to 2004).
Gregory N. Bressler Secretary and 2005 - Senior Vice President and N/A N/A
DOB: November 17, Chief Legal Present General Counsel, AIG
1966 Officer SunAmerica (2005 to
present); Vice President and
Director of U.S. Asset
Management Compliance,
Goldman Sachs Asset
Management, L.P. (2004 to
2005); Deputy General
Counsel, Credit Suisse Asset
Management, LLC. (2002 to
2004); and Counsel, Credit
Suisse Asset Management,
LLC (2000 to 2002).
James Nichols Vice President 2006 - Director, President and CEO, N/A N/A
DOB: April 7, 1966 Present SACS (2006 to present);
Senior Vice President, SACS
(2002 to 2006); Vice
President, AIG SunAmerica
(1995 to 2002)
Cynthia Gibbons Vice President 2002 - Vice President, AIG N/A N/A
DOB: December 6, and Chief present SunAmerica (2002 to
1967 Compliance present); Securities
Officer ("CCO") Compliance Manager,
American General Investment
Management (2000 to 2002).
- --------
** On December 10, 2007, John T. Genoy was elected President and Chief
Executive Officer of the Fund.
37
SunAmerica Senior Floating Rate Fund, Inc.
DIRECTORS AND OFFICERS INFORMATION -- December 31, 2007 -- (unaudited)
(continued)
Number of
Term of Funds in
Name, Position(s) Office and Fund Complex
Address and Held With Length of Principal Occupations Overseen by Other Directorships
Date of Birth* the Fund Time Served(4) During Past 5 Years Director(1) Held by Director(2)
- ---------------------- ----------- -------------- ------------------------------- ------------ -------------------
Gregory R. Kingston Vice 2002 - Vice President, AIG N/A N/A
DOB: January 18, 1966 President present SunAmerica (2001 to
and present); formerly, Vice
Assistant President, American General
Treasurer Investment Management, L.P.
(1999 to 2001)
Nori L. Gabert Vice 2002 - Vice President and Deputy N/A N/A
DOB: August 15, 1953 President present General Counsel, AIG
and SunAmerica (2001 to
Assistant present); Vice President and
Secretary Secretary, VALIC Company I
and VALIC Company II (2000
to present) formerly,
Associate General Counsel,
American General
Corporation, (1997 to 2001).
Matthew J. Hackethal Anti-Money 2006 - Chief Compliance Manager, N/A N/A
DOB: December 31, 1971 Laundering present AIG SunAmerica (2006 to
Compliance present); Vice President,
Officer Credit Suisse Asset
Management (2001 to 2006);
CCO, Credit Suisse
Alternative Funds (2005 to
2006); CCO, Credit Suisse
Asset Management
Securities, Inc. (2004 to 2005)
- --------
* The business address for each Director and Officer is Harborside Financial
Center, 3200 Plaza 5, Jersey City, NJ 07311-4992.
(1) The "Fund Complex" consists of all registered investment company portfolios
for which AIG SunAmerica serves as investment adviser or administrator. The
"Fund Complex" includes the SunAmerica Money Market Funds (2 funds),
SunAmerica Equity Funds (9 funds), SunAmerica Income Funds (5 funds),
SunAmerica Focused Series, Inc. (18 portfolios), SunAmerica Focused Alpha
Growth Fund, Inc. (1 fund), SunAmerica Focused Alpha Large-Cap Fund, Inc.
(1 fund), Anchor Series Trust (9 portfolios), the Fund, (1 fund),
SunAmerica Series Trust (35 portfolios), AIG Series Trust (3 funds), VALIC
Company I (32 portfolios), VALIC Company II (15 funds) and Seasons Series
Trust (24 portfolios), AIG Strategic Hedge Fund of Funds (1 fund) and
Brazos Mutual Funds (4 funds).
(2) Directorships of companies required to report to the Commission under the
Securities Exchange Act of 1934 (i.e. "public companies") or other
investment companies registered under the 1940 Act, other than those listed
under the preceding column.
(3) Mr. Harbeck is an "interested person" of the Fund, as defined within the
1940 Act, because he is an officer and director of the adviser and a
director of the principal underwriter of the Fund.
(4) Directors serve until their successors are duly elected and qualified,
subject to the Directors' retirement plan as discussed in Note 7 of the
financial statements. Each officer will hold office for an indefinite term
until the date he or she resigns or retires or until his/her successor is
duly elected and qualifies.
Additional information concerning the Directors and Officers is contained in
the Statement of Additional Information and is available without charge by
calling (800) 858-8850.
38
SunAmerica Series Trust Senior Floating Fund
SHAREHOLDER TAX INFORMATION -- (unaudited)
Certain tax information regarding the Fund is required to be provided to
shareholders based upon the Fund's income and distributions for the taxable
year ended December 31, 2007. The information necessary to complete your income
tax returns is included with your Form 1099-DIV mailed to you in January 2008.
During the year ended December 31, 2007 the Fund paid the following dividends:
Net
Ordinary Net Net Qualifying % for Qualifying
Total Investment Short-Term Long-Term the 70% Dividends Dividend
Dividends Income Capital Gains* Capital Gains Received Deduction Income %
--------- ---------- -------------- ------------- ------------------ ----------
Class A....................... $0.60 $0.60 $-- $-- --% --%
Class B....................... 0.58 0.58 -- -- -- --
Class C....................... 0.58 0.58 -- -- -- --
Class D....................... 0.62 0.62 -- -- -- --
Class Q....................... 0.60 0.60 -- -- -- --
- --------
* Short-term capital gains are treated as ordinary income for tax purposes.
39
SunAmerica Senior Floating Rate Fund, Inc.
COMPARISON: FUND vs. INDEX -- (unaudited)
The following graph shows how the value of a $10,000 investment in the Fund
would have changed over the period shown in the graph, and also shows how the
index shown performed over the same period of time. The graph and table shown
do not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. Please note that the term
"inception" as used herein reflects the date on which a specific class of
shares commenced operations. It is important to note that the Fund is a
professionally managed mutual fund while the index is not available for
investment and is unmanaged. The comparison is shown for illustrative purposes
only. The graph presents the performance of Class B shares of the Fund. The
performance of the other classes will vary based upon the difference in sales
charges and fees assessed to shareholders of that class. Past performance does
not predict future results.
40
SunAmerica Senior Floating Rate Fund, Inc.
COMPARISON: FUND vs. INDEX -- (unaudited) (continued)
The SunAmerica Senior Floating Rate Fund (Class B) returned 0.43% for the
annual period ended December 31, 2007, lagging its benchmark, the S&P/LSTA
Leveraged Loan Index*, which returned 2.02% for the same period.
The leveraged loan market got off to a strong start in 2007. For the first
six months of the year, there was a record level of new issuance driven largely
by mergers and acquisition activity and leveraged buy-outs by private equity
firms. Despite the significant level of new issuance, the market readily
absorbed the record level of supply. Demand for the asset class in the first
half of the year came from record collateralized loan obligations ("CLO")
issuance and near record mutual fund inflows. In July, however, the leveraged
loan market experienced a severe technically-driven market correction. The
technical correction was the result of a huge supply/demand imbalance. The
calendar of loans anticipated to enter the institutional loan market stood in
excess of $230 million at the end of July, an enormous amount for this market.
In contrast, demand for the asset class weakened severely as CLO issuance, the
driving force of the loan market, largely ground to a halt. Also impacting the
demand side of the equation were outflows from retail loan funds.
The supply/demand imbalance that caused the market correction led to the
worst monthly performance on record for the loan market as measured by our
benchmark. Loans that had been trading at or above par were soon trading at
substantial discounts to par. This was generally not due to credit
deterioration. Good quality credits were trading in the mid-90s in order to
compare favorably with new issue credits that were launching at much higher
spreads in order to clear the market. According to S&P, the average discounted
spread of the LSTA Index was LIBOR +373 as of the end of July as compared to
LIBOR +215 for the first six months of 2007. July's monthly loss effectively
wiped out most of the Fund's gains for the year.
In mid-September, the leveraged loan market did begin to rebound as
investors returned to the asset class given the wider spreads. This rally,
however, did not last. In mid-October, prices began to retreat and the
pull-back remained with us for the rest of the year.
At the close of the fiscal year, the Fund included senior loans to 257
issuers spanning 29 industries. In our efforts to maintain a diversified
portfolio, the average loan size was $1.5 million and the largest industry
concentration was in the Broadcasting & Entertainment sector, representing
10.2% of the Fund's assets. The average credit quality of the portfolio
averaged between a B1 and B2 as of 12/31/07.
The Energy sector was the best performing sector for our Fund this year. We
had a slightly overweight position in this sector as compared to the index. The
two worst-performing sectors of the Fund this year were Building & Development
and Retail. Many retail companies have seen sales slow as consumers reined in
their spending. Building product companies continue to suffer through the worst
real estate market in more than a decade. We ended the fiscal year with a 7.9%
weighting in the Retail sector and a 4.5% weighting in the Building &
Development sector. The portfolio did not have any direct exposure to subprime
or prime mortgage lenders during the fiscal year.
Despite the difficulties in certain sectors, default rates remain low for
our asset class. According to S&P, the loan default rate was a record low 0.26%
as of December 31, 2007. The loans in the Fund's portfolio remained
default-free for the year.
- --------
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 loan portfolios.
The LLI is the only domestic leveraged loan index that utilizes real-time
market weightings, spreads and interest payments. Indices are not managed and
an investor cannot invest directly into an index.
Holdings and weightings are as of 12/31/07 and are subject to change after that
date. The Portfolio is actively managed and its holdings and composition will
differ over time.
The Fund is not a money market fund and its net asset value may fluctuate.
Investments in loans involve certain risks including nonpayment of principal
and interest; collateral impairment; non-diversification and borrower industry
concentration; and lack of full liquidity, which may impair the Fund's ability
to obtain full value for loans sold. The Fund may invest all or substantially
all of its assets in loans or other securities that are rated below investment
grade or in comparable unrated securities. Credit risks include the possibility
of a default on the loan or bankruptcy of the borrower. The value of these
loans is subject to a greater degree of volatility in response to interest rate
fluctuations.
S&P (Standard & Poor) is a widely-recognized ranking entity.
LIBOR is the London Interbank Offered Rate, the interest rate that banks charge
each other for loans (usually in Eurodollars). This rate applies to very large
loans borrowed for anywhere from one day to five years.
41
SunAmerica Senior Floating Rate Fund, Inc.
COMPARISON: FUND vs. INDEX -- (unaudited) (continued)
Over the past ten years, $10,000 invested in Senior Floating Rate Fund Class B
shares would have increased to $14,851. The same amount invested in securities
mirroring the performance of the S&P/LSTA Leveraged Loan Index would be valued
at $15,512.
[CHART]
Senior Floating Rate Class B S&P/LSTA Leveraged Loan Index
---------------------------- -----------------------------
31-Aug-98 $10,000.00 $10,000.00
30-Sep-98 10,045.00 9,925.60
31-Oct-98 10,084.00 9,994.38
30-Nov-98 10,112.00 10,092.13
31-Dec-98 10,185.00 10,142.49
31-Jan-99 10,259.00 10,177.58
28-Feb-99 10,311.00 10,162.01
31-Mar-99 10,380.00 10,095.55
30-Apr-99 10,446.00 10,158.14
31-May-99 10,506.00 10,284.82
30-Jun-99 10,574.00 10,366.07
31-Jul-99 10,625.00 10,429.92
31-Aug-99 10,669.00 10,432.84
30-Sep-99 10,719.00 10,351.15
31-Oct-99 10,772.00 10,366.47
30-Nov-99 10,844.00 10,432.51
31-Dec-99 10,911.00 10,512.84
31-Jan-00 10,976.00 10,603.98
29-Feb-00 11,027.00 10,652.34
31-Mar-00 10,984.00 10,595.35
30-Apr-00 11,020.00 10,629.36
31-May-00 11,092.00 10,715.67
30-Jun-00 11,153.00 10,793.89
31-Jul-00 11,207.00 10,881.32
31-Aug-00 11,274.00 10,913.86
30-Sep-00 11,325.00 10,943.87
31-Oct-00 11,324.00 10,941.14
30-Nov-00 11,355.00 10,980.85
31-Dec-00 11,414.00 11,037.07
31-Jan-01 11,458.00 11,156.83
28-Feb-01 11,510.00 11,267.39
31-Mar-01 11,497.00 11,270.43
30-Apr-01 11,468.00 11,254.43
31-May-01 11,559.00 11,382.05
30-Jun-01 11,525.00 11,394.00
31-Jul-01 11,531.00 11,481.40
31-Aug-01 11,585.00 11,566.70
30-Sep-01 11,453.00 11,375.16
31-Oct-01 11,313.00 11,263.57
30-Nov-01 11,336.00 11,401.21
31-Dec-01 11,380.00 11,497.89
31-Jan-02 11,420.00 11,556.53
28-Feb-02 11,410.00 11,522.21
31-Mar-02 11,491.00 11,659.90
30-Apr-02 11,561.00 11,795.27
31-May-02 11,636.00 11,806.83
30-Jun-02 11,624.00 11,690.65
31-Jul-02 11,511.00 11,586.14
31-Aug-02 11,455.00 11,547.67
30-Sep-02 11,461.00 11,555.41
31-Oct-02 11,290.00 11,418.59
30-Nov-02 11,416.00 11,579.48
31-Dec-02 11,542.00 11,717.85
31-Jan-03 11,593.00 11,860.46
28-Feb-03 11,611.00 11,912.17
31-Mar-03 11,769.00 11,958.75
30-Apr-03 11,982.00 12,100.46
31-May-03 12,148.00 12,231.75
30-Jun-03 12,313.00 12,380.61
31-Jul-03 12,391.00 12,463.06
31-Aug-03 12,422.00 12,491.36
30-Sep-03 12,547.00 12,609.40
31-Oct-03 12,639.00 12,724.52
30-Nov-03 12,717.00 12,806.85
31-Dec-03 12,792.00 12,886.25
31-Jan-04 12,937.00 12,997.33
29-Feb-04 12,954.00 13,038.14
31-Mar-04 12,982.00 13,085.21
30-Apr-04 13,067.00 13,149.33
31-May-04 13,072.00 13,164.19
30-Jun-04 13,117.00 13,245.94
31-Jul-04 13,147.00 13,289.25
31-Aug-04 13,137.00 13,312.64
30-Sep-04 13,170.00 13,367.89
31-Oct-04 13,221.00 13,435.40
30-Nov-04 13,273.00 13,495.59
31-Dec-04 13,315.00 13,551.73
31-Jan-05 13,370.00 13,606.48
28-Feb-05 13,436.00 13,679.54
31-Mar-05 13,481.00 13,736.45
30-Apr-05 13,455.00 13,726.70
31-May-05 13,443.00 13,734.66
30-Jun-05 13,520.00 13,823.66
31-Jul-05 13,612.00 13,928.58
31-Aug-05 13,693.00 14,011.87
30-Sep-05 13,730.00 14,068.90
31-Oct-05 13,759.00 14,111.95
30-Nov-05 13,817.00 14,165.01
31-Dec-05 13,879.00 14,239.81
31-Jan-06 13,974.00 14,338.35
28-Feb-06 14,065.00 14,429.11
31-Mar-06 14,164.00 14,516.40
30-Apr-06 14,236.00 14,587.24
31-May-06 14,250.00 14,623.86
30-Jun-06 14,294.00 14,664.95
31-Jul-06 14,361.00 14,748.10
31-Aug-06 14,457.00 14,838.95
30-Sep-06 14,534.00 14,918.63
31-Oct-06 14,644.00 15,017.54
30-Nov-06 14,691.00 15,097.14
31-Dec-06 14,788.00 15,204.33
31-Jan-07 14,912.00 15,337.08
28-Feb-07 15,014.00 15,442.52
31-Mar-07 15,075.00 15,504.22
30-Apr-07 15,151.00 15,596.34
31-May-07 15,227.00 15,691.29
30-Jun-07 15,254.00 15,726.26
31-Jul-07 14,764.00 15,199.79
31-Aug-07 14,780.00 15,235.15
30-Sep-07 15,007.00 15,532.83
31-Oct-07 15,104.00 15,681.12
30-Nov-07 14,852.00 15,463.46
31-Dec-07 14,851.00 15,511.79
Class A++ Class B Class C Class D Class Q++
Senior ------------------ ------------------ ------------------ ------------------ ------------------
Floating Average Average Average Average Average
Rate Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
Fund Return Return+ Return Return+ Return Return+ Return Return+ Return Return+
- ---------------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
1 Year Return (2.97)% 0.84% (2.40)% 0.43% (0.51)% 0.43% 0.93% 0.93% 0.85% 0.85%
- ---------------------------------------------------------------------------------------------------------------
5 Year Return NA NA 5.17% 28.67% 5.16% 28.63% 5.65% 31.65% NA NA
- ---------------------------------------------------------------------------------------------------------------
Since Inception* (1.12)% 2.49% 4.33% 48.51% 4.31% 48.28% 4.35% 32.86% 3.89% 15.04%
- ---------------------------------------------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would have been lower.
* Inception date: Class A: 10/04/2006; Class B: 08/31/1998; Class C:
08/31/1998; Class D: 05/02/2001; Class Q: 04/28/2004.
++ Effective October 4, 2006, Class A shares were redesignated to Class Q
shares and a new class of shares designated as Class A commenced offering.
For the 12 month period ended December 31, 2007, the SunAmerica Senior Floating
Rate Class B returned (2.40)% compared to 2.02% for the S&P/LSTA Leveraged Loan
Index. (The performance data and graph do not reflect the deduction of taxes
that a shareholder would pay on fund distributions or the redemption of fund
shares.)
- --------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 3.75% Contingent Deferred Sales
Charge (CDSC), Class B: 3.00%, Class C 1.00% CDSC. The fund's daily net asset
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.sunamericafunds.com
42
[LOGO] AIG Sun America
Mutual Funds
AIG SunAmerica Asset Management Corp.
Harborside Financial Center
3200 Plaza 5
Jersey City, NJ 07311-4992
Directors Custodian DISCLOSURE OF QUARTERLY
Dr. Judith L. Craven State Street Bank and PORTFOLIO HOLDINGS
William F. Devin Trust Company The Fund is required to
Samuel M. Eisenstat P.O. Box 5607 file its com-plete
Stephen J. Gutman Boston, MA 02110 schedule of portfolio
Peter A. Harbeck holdings with the U.S.
William J. Shea VOTING PROXIES ON FUND Securities and Exchange
PORTFOLIO SECURITIES Commission for its first
Officers A description of the and third fiscal quarters
John T. Genoy, President policies and proce-dures on Form N-Q. The Fund's
and Chief Executive that the Fund uses to Forms N-Q are available
Officer determine how to vote on the U.S. Securities
Donna M. Handel, proxies related to and Exchange Commission's
Treasurer securities held in the website at www.sec.gov.
James Nichols, Vice Fund's portfolio, which You can also review and
President is available in the obtain copies of the
Cynthia A. Gibbons, Vice Fund's Statement of Forms N-Q at the U.S.
President and Chief Additional Information, Securities and Ex-change
Compliance Officer may be ob-tained without Commission's Public
Gregory N. Bressler, charge upon request, by Reference Room in
Chief Legal calling (800) 858-8850. Washington, DC
Officer and Secretary This in-formation is also (information on the
Gregory R. Kingston, available from the EDGAR operation of the Public
Vice President and database on the U.S. Reference Room may be
Assistant Treasurer Secu-rities and Exchange ob-tained by calling
Nori L. Gabert, Vice Commission's website at 1-800-SEC-0330).
President and http://www.sec.gov.
Assistant Secretary PROXY VOTING RECORD ON
Richard J. Barton, DELIVERY OF SHAREHOLDER FUND PORTFOLIO SECURITIES
Assistant Secretary DOCUMENTS Information regarding how
Kathleen Fuentes, The Funds have adopted a the Fund voted proxies
Assistant Secretary policy that allows them relating to securities
Diedre L. Shepherd, to send only one copy of held in the Fund's
Assistant Treasurer a Fund's prospectus, portfolio during the most
Matthew J. Hackethal, proxy material, annual recent twelve month
Anti-Money Laundering report and semi-annual period ended June 30 is
Compliance Officer report (the "shareholder available, once filed
documents") to with the U.S. Securities
Investment Adviser shareholders with and Exchange Commis-sion,
AIG SunAmerica Asset multiple accounts without charge, upon
Management Corp. residing at the same request, by calling
Harborside Financial "household." This (800) 858-8850 or on the
Center practice is called U.S. Securities and
3200 Plaza 5 householding and reduces Exchange Commission's
Jersey City, NJ Fund expenses, which website at
07311-4992 benefits you and other http://www.sec.gov.
shareholders. Unless the
Distributor Funds receive This report is submitted
AIG SunAmerica Capital instructions to the solely for the general
Services, Inc. con-trary, you will only information of
Harborside Financial receive one copy of the shareholders of the Fund.
Center shareholder documents. Distribution of this
3200 Plaza 5 The Funds will continue report to persons other
Jersey City, NJ to household the than shareholders of the
07311-4992 share-holder documents Fund is authorized only
indefinitely, until we in connection with a
Shareholder Servicing are instructed otherwise. currently effective
Agent If you do not wish to prospectus, setting forth
AIG SunAmerica Fund participate in details of the Fund,
Services, Inc. householding, please which must precede or
Harborside Financial contact Shareholder accompany this report.
Center Services at (800)
3200 Plaza 5 858-8850 ext. 6010 or
Jersey City, NJ send a written request
07311-4992 with your name, the name
of your fund(s) and your
Transfer Agent account number(s) to AIG
State Street Bank and SunAmerica Mutual Funds
Trust Company c/o BFDS, P.O. Box
P.O. Box 219373 219186, Kansas City MO,
Kansas City, MO 64141 64121-9186. We will
resume individual
mailings for your account
within thirty (30) days
of receipt of your
request.
43
Distributed by:
AIG SunAmerica Capital Services, Inc.
Investors should carefully consider the investment objectives, risks, charges
and expenses of any mutual fund before investing. This and other important
information is contained in the prospectus, which can be obtained from your
financial adviser or from the AIG SunAmerica Sales Desk at 800-858-8850, ext.
6003. Read the prospectus carefully before investing.
www.sunamericafunds.com
SFANN - 12/07
[LOGO] AIG
Sun America
Mutual Funds
live longer retire stronger/sm/
Item 2. Code of Ethics.
SunAmerica Senior Floating Rate Fund, Inc. (the "registrant") has adopted a Code
of Ethics applicable to its Principal Executive and Principal Accounting
Officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Directors has determined that William J. Shea, the
Chairman of the registrant's audit committee, qualifies as an audit committee
financial expert, as defined in the instructions to Item 3(a) of Form N-CSR. Mr.
Shea is considered to be "independent" for purposes of Item 3(a)(2) of Form
N-CSR.
Item 4. Principal Accountant Fees and Services.
(a)--(d) Aggregate fees billed to the registrant for the last two fiscal years
for professional services rendered by the registrant's principal
accountant were as follows:
2006 2007
------- -------
(a) Audit Fees ....................... $76,848 $74,471
(b) Audit-Related Fees ............... $ 0 $ 0
(c) Tax Fees ......................... $ 9,356 $11,372
(d) All Other Fees ................... $ 0 $ 0
Audit Fees include amounts related to the audit of the registrant's
annual financial statements and services normally provided by the
principal accountant in connection with statutory and regulatory
filings. Tax Fees principally include tax compliance, tax advice, tax
planning and preparation of tax returns.
Aggregate fees billed to the investment adviser and Adviser Affiliates
(as defined below in Item 4(e)) that are required to be pre-approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X for the
last two fiscal years for services rendered by the registrant's
principal accountant were as follows:
2006 2007
---- ----
(b) Audit-Related Fees ............ $0 $0
(c) Tax Fees ...................... $0 $0
(d) All Other Fees ................ $0 $0
(e)
(1) The registrant's audit committee pre-approves all audit services
provided by the registrant's principal accountant for the registrant
and all non-audit services provided by the registrant's principal
accountant for the registrant, its investment adviser and any entity
controlling, controlled by, or under common control with the
investment adviser ("Adviser Affiliate") that provides ongoing
services to the registrant, if the engagement by the investment
adviser or Adviser Affiliate relates directly to the operations and
financial reporting of the registrant. The audit committee has not
presently established any pre-approval policies and procedures that
permit the pre-approval of the above services other than by the full
audit committee. Certain de minimis exceptions are allowed for non-
audit services in accordance with Rule 2-01 (c)(7)(i)(C) of Regulation
S-X as set forth in the registrant's audit committee charter.
(2) No services included in (b) - (d) above in connection with fees billed
to the registrant or the investment adviser or Advisor Affiliate were
approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation
S-X.
(f) Not Applicable.
(g) The aggregate fees billed for the most recent fiscal year and the preceding
fiscal year by the registrant's principal accountant for non-audit services
rendered to the registrant, its investment adviser, and Adviser Affiliate
that provides ongoing services to the registrant for 2007 and 2006 were $
478,375 and $973,056 respectively.
(h) Non-audit services rendered to the registrant's investment adviser and
any Adviser Affiliate that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X were considered by the
registrant's audit committee as to whether they were compatible with
maintaining the principal accountant's independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board of Directors that were
implemented after the registrant last provided disclosure in response to
the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229. 407)
(as required by 22(b)(15)) of Schedule 14A (17 CFR 240. 14a-101), or this
Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures, as defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270.30a-3(c)). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940 (17 CFR 270.30a-3(d))) that occurred during the
registrant's last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
Item 12. Exhibits.
(a) (1) Code of Ethics applicable to its Principal Executive and
Principal Accounting Officers pursuant to Section 406 of the
Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.406.Code
of Ethics.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as
Exhibit 99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the
Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Senior Floating Rate Fund, Inc.
By: /s/ John T. Genoy
---------------------------------
John T. Genoy
President
Date: March 10, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John T. Genoy
---------------------------------
John T. Genoy
President
Date: March 10, 2008
By: /s/ Donna M. Handel
---------------------------------
Donna M. Handel
Treasurer
Date: March 10, 2008