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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-CSR
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08727
SunAmerica Senior Floating Rate Fund, Inc.
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(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311
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(Address of principal executive offices) (Zip code)
John T. Genoy
Senior Vice President
SunAmerica Asset Management Corp.
Harborside Financial Center 3200 Plaza 5
Jersey City, NJ 07311
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(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6414
Date of fiscal year end: December 31
Date of reporting period: June 30, 2009
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Item 1. Reports to Stockholders
[GRAPHIC]
SEMI-ANNUAL REPORT 2009
SUNAMERICA
Senior Floating Rate Fund
[LOGO]
Table of Contents
SHAREHOLDERS' LETTER...................... 1
EXPENSE EXAMPLE........................... 2
STATEMENT OF ASSETS AND LIABILITIES....... 4
STATEMENT OF OPERATIONS................... 5
STATEMENT OF CHANGES IN NET ASSETS........ 6
STATEMENT OF CASH FLOWS................... 7
FINANCIAL HIGHLIGHTS...................... 8
PORTFOLIO OF INVESTMENTS.................. 9
NOTES TO FINANCIAL STATEMENTS............. 18
APPROVAL OF INTERIM SUBADVISORY AGREEMENT. 26
June 30, 2009 SEMI-ANNUAL REPORT
Shareholders' Letter
Dear Shareholder:
We are pleased to present you with the semi-annual shareholder report for the
SunAmerica Senior Floating Rate Fund for the six-month period ended June 30,
2009.
The semi-annual period was a strong one for the leveraged loan market. After
posting a 9.8% return in the first quarter, the S&P/LSTA Leveraged Loan Index+
posted a record 20.4% gain in the second quarter. During the period, investor
sentiment appeared to reverse from fear to optimism, which led to increasing
retail and institutional investor flows into the asset class. In addition,
repayments from high yield issuance resulted in loan demand greatly exceeding
supply. This powerful combination fueled the record rally.
Behind the strong returns of the asset class for the semi-annual period, there
is a tale of two markets. In the first quarter, the loan market discriminated
significantly against lower-rated issuers, but the trend reversed course in the
second quarter. All sectors participated in the rally, but the segments that
had previously been most depressed generally exhibited the highest returns for
the second quarter.
We value your support and thank you for your continued investment in the Fund.
Sincerely,
THE SUNAMERICA SENIOR FLOATING RATE FUND PORTFOLIO MANAGERS
AIG Global Investment Corp.*
Thomas G. Brandt
John G. Lapham
Steven S. Oh
- --------
+The S&P/LSTA Leveraged Loan Index is an unmanaged loan market index that
reflects the market-weighted performance of U.S. dollar-denominated
institutional leveraged loan portfolios. Indices are not managed and an
investor cannot invest directly into an index.
*Effective July 24, 2009, Wellington Management Company LLP replaced AIG Global
Investment Corp. as the subadvisor to the Fund.
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 an active trading market, in certain cases, which
may impair the Fund's ability to obtain full value for loans sold. The Fund may
invest all or substantially all of its assets in loans or other securities 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 -- June 30, 2009 -- (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 January 1, 2009 and
held until June 30, 2009.
Actual Expenses
The "Actual" section of the table provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the column under the heading entitled "Expenses Paid During the Six
Months Ended June 30, 2009" to estimate the expenses you paid on your account
during this period. In addition, the "Expenses Paid During the Six Months Ended
June 30, 2009" 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 June 30, 2009"
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 Funds of 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 June 30, 2009" 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 June 30, 2009"
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 -- June 30, 2009 -- (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 January 1, 2009 June 30, 2009 June 30, 2009* at January 1, 2009 June 30, 2009
------------------ ------------- ---------------- ------------------ -----------------
Senior Floating Rate Fund
Class A#............... $1,000.00 $1,357.50 $ 8.48 $1,000.00 $1,017.60
Class C#............... $1,000.00 $1,353.18 $10.21 $1,000.00 $1,016.12
-----------------
Expense
Expenses Paid Ratio
During the as of
Six Months Ended June 30,
June 30, 2009* 2009*
---------------- --------
Senior Floating Rate Fund
Class A#............... $7.25 1.45%
Class C#............... $8.75 1.75%
- --------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 181 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 June
30, 2009" and the "Expense Ratios" would have been higher.
3
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES -- June 30, 2009 -- (unaudited)
ASSETS:
Long-term investment securities, at value (unaffiliated)*.......... $162,270,018
Short-term investment securities, at value (unaffiliated)*......... 7,077,902
------------
Total investments................................................ 169,347,920
Cash............................................................... 14,889
Receivable for:
Fund shares sold................................................. 936,710
Dividends and interest........................................... 1,206,418
Investments sold................................................. 5,300,944
Prepaid expenses and other assets.................................. 4,856
Due from investment adviser for expense reimbursements/fee waivers. 11,385
------------
Total assets..................................................... 176,823,122
------------
LIABILITIES:
Payable for:
Fund shares redeemed............................................. 94,129
Investments purchased............................................ 3,740,805
Investment advisory and management fees.......................... 126,226
Distribution and service maintenance fees........................ 83,465
Administration fees.............................................. 59,400
Transfer agent fees and expenses................................. 43,985
Directors' fees and expenses..................................... 5,685
Other accrued expenses........................................... 206,722
Dividends payable.................................................. 239,309
Commitments (Note 11).............................................. --
------------
Total liabilities................................................ 4,599,726
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Net assets...................................................... $172,223,396
============
NET ASSETS REPRESENTED BY:
Common stock, $.01 par value....................................... $ 254,656
Additional paid-in capital......................................... 293,483,362
------------
293,738,018
Accumulated undistributed net investment income (loss)............. (53,981)
Accumulated undistributed net realized gain (loss) on investments.. (61,186,695)
Unrealized appreciation (depreciation) on investments.............. (60,273,946)
------------
Net Assets...................................................... $172,223,396
============
Class A:
Net assets......................................................... $ 62,684,192
Shares outstanding................................................. 9,265,741
Net asset value and redemption price per share..................... $ 6.77
Maximum sales charge (3.75% of offering price)..................... 0.26
------------
Maximum offering price to public................................... $ 7.03
============
Class C:
Net assets......................................................... $109,539,204
Shares outstanding................................................. 16,199,822
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charges)...... $ 6.76
============
*COST
Long-term investment securities (unaffiliated)................... $222,543,964
============
Short-term investment securities (unaffiliated).................. $ 7,077,902
============
See Notes to Financial Statements
4
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF OPERATIONS -- For the six months ended June 30, 2009
INVESTMENT INCOME:
Interest (unaffiliated)................................................................ $ 4,714,528
Dividends (unaffiliated)............................................................... 12,557
Facility and other fee income (Note 2)................................................. 814,604
------------
Total investment income............................................................. 5,541,689
------------
EXPENSES:
Investment advisory and management fees................................................ 626,874
Administration fees.................................................................... 294,999
Distribution and service maintenance fees:
Class A.............................................................................. 66,795
Class B*............................................................................. 21,378
Class C.............................................................................. 347,354
Class Q*............................................................................. 6,202
Transfer agent fees and expenses:
Class A.............................................................................. 43,025
Class B*............................................................................. 7,925
Class C.............................................................................. 107,595
Class D*............................................................................. 5,827
Class Q*............................................................................. 8,228
Registration fees:
Class A.............................................................................. 24,109
Class B*............................................................................. 6,609
Class C.............................................................................. 19,247
Class D*............................................................................. --
Class Q*............................................................................. --
Accounting service fees................................................................ 11,682
Custodian and accounting fees.......................................................... 35,969
Reports to shareholders................................................................ 30,740
Audit and tax fees..................................................................... 41,195
Legal fees............................................................................. 20,988
Directors' fees and expenses........................................................... 11,986
Interest expense....................................................................... 616
Other expenses......................................................................... 56,196
------------
Total expenses before fee waivers, expense reimbursements and custody credits....... 1,795,539
Fees waived and expenses reimbursed by investment adviser and distributor (Note 5).. (582,545)
Custody credits earned on cash balances............................................. (1)
------------
Net expenses........................................................................ 1,212,993
------------
Net investment income (loss)........................................................... 4,328,696
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments (unaffiliated)................................. (12,510,377)
Change in unrealized appreciation (depreciation) on investments (unaffiliated)......... 54,948,629
------------
Net realized and unrealized gain (loss) on investments................................. 42,438,252
------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................ $ 46,766,948
============
- --------
* See Note 1
See Notes to Financial Statements
5
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF CHANGES IN NET ASSETS
For the six For the year
months ended ended
June 30, 2009 December 31,
(unaudited) 2008
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)......................................... $ 4,328,696 $ 15,913,863
Net realized gain (loss) on investments (unaffiliated)............... (12,510,377) (22,486,848)
Net unrealized gain (loss) on investments (unaffiliated)............. 54,948,629 (91,985,010)
------------ -------------
Increase (decrease) in net assets resulting from operations........... 46,766,948 (98,557,995)
------------ -------------
Distributions to Shareholders from:
Net investment income (Class A)...................................... (1,152,130) (3,963,017)
Net investment income (Class B)*..................................... (193,048) (828,020)
Net investment income (Class C)...................................... (2,687,236) (10,303,857)
Net investment income (Class D)*..................................... (132,560) (503,781)
Net investment income (Class Q)*..................................... (181,742) (317,866)
------------ -------------
Total distributions to shareholders................................... (4,346,716) (15,916,541)
------------ -------------
Net increase (decrease) in net assets resulting from capital share
transactions (Note 3)................................................ 2,384,415 (117,400,217)
------------ -------------
Total increase (decrease) in net assets............................... 44,804,647 (231,874,753)
============ =============
NET ASSETS:
Beginning of period................................................... 127,418,749 359,293,502
------------ -------------
End of period+........................................................ $172,223,396 $ 127,418,749
============ =============
- --------
+Includes accumulated undistributed net investment income (loss)...... $ (53,981) $ (35,961)
============ =============
* See Note 1
See Notes to Financial Statements
6
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF CASH FLOWS -- For the six months ended June 30, 2009 --
(unaudited)
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Net increase in net assets from operations.................................................................... $ 46,766,948
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
Purchase of loans........................................................................................... (66,623,415)
Proceeds from loans sold.................................................................................... 70,856,973
Loan principal paydowns..................................................................................... 4,441,352
Net purchases of short-term securities...................................................................... (7,077,902)
Accretion of facility fee income............................................................................ (674,238)
Decrease in receivable for dividends and interest........................................................... 1,164,757
Increase in receivable for investments sold................................................................. (2,375,581)
Decrease in amount due from investment adviser for expense reimbursements/fee waivers....................... 30,175
Increase in amount due from distributor for fee waivers..................................................... 24,405
Decrease in prepaid expenses and other assets............................................................... 10,519
Increase in payable for investments purchased............................................................... 3,485,412
Increase in payable for investment advisory and management fees............................................. 29,711
Increase in payable for distribution and maintenance fees................................................... 12,181
Increase in payable for administration fees................................................................. 13,981
Decrease in other accrued expenses.......................................................................... (4,079,402)
Unrealized appreciation on investments...................................................................... (54,948,629)
Net realized loss from investments.......................................................................... 12,510,377
------------
Net cash provided by operating activities..................................................................... $ 3,567,624
------------
Cash flows from financing activities:
Proceeds from shares sold..................................................................................... 49,464,344
Payment on shares redeemed.................................................................................... (51,170,241)
Cash dividends paid........................................................................................... (1,846,838)
------------
Net cash used by financing activities......................................................................... $ (3,552,735)
------------
Net increase in cash.......................................................................................... 14,889
Cash balance at beginning of period........................................................................... --
------------
Cash balance at end of period................................................................................. $ 14,889
============
Supplemental disclosure of cash flow information:
Noncash financing activities not included herein consist of reinvestment of
dividends and distributions of $2,560,042.
See Notes to Financial Statements
7
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS
Net gain
(loss) on Ratio of
investments Dividends Net Net expenses
Net Asset (both Dividends from net Asset Assets, to
Value, Net realized Total from from net realized Total Value, end of average
Period beginning investment and investment investment gains on Distri- end of Total period net
Ended of period income(1) unrealized) operations income investments butions period Return(2) (000's) assets(3)
- ----------- --------- ---------- ----------- ---------- ---------- ----------- ------- ------ --------- -------- ---------
Class A+
- - - - - - - --------
10/04/06*-
12/31/06 $9.39 $0.38 $(0.22) $ 0.16 $(0.15) $ -- $(0.15) $9.40 1.75% $ 14,165 1.45%(5)
12/31/07 9.40 0.56 (0.48) 0.08 (0.60) -- (0.60) 8.88 0.84 89,077 1.45
12/31/08 8.88 0.49 (3.74) (3.25) (0.49) -- (0.49) 5.14 (38.20) 25,546 1.45
06/30/09(4) 5.14 0.16 1.64 1.80 (0.17) -- (0.17) 6.77 35.75 62,684 1.45(5)
Class C
- - - - - - - -------
12/31/04 $9.33 $0.28 $ 0.09 $ 0.37 $(0.29) $ -- $(0.29) $9.41 3.97% $174,583 1.75%
12/31/05 9.41 0.42 (0.03) 0.39 (0.41) -- (0.41) 9.39 4.24 154,584 1.75
12/31/06 9.39 0.59 0.01 0.60 (0.59) -- (0.59) 9.40 6.54 176,743 1.75
12/31/07 9.40 0.57 (0.52) 0.05 (0.58) -- (0.58) 8.87 0.43 235,957 1.75
12/31/08 8.87 0.47 (3.74) (3.27) (0.46) -- (0.46) 5.14 (38.31) 86,126 1.75
06/30/09(4) 5.14 0.17 1.61 1.78 (0.16) -- (0.16) 6.76 35.32 109,539 1.75(5)
Ratio of
net
investment
income to
Period average Portfolio
Ended net assets(3) Turnover
- ----------- ------------- ---------
- -
10/04/06*-
12/31/06 6.78%(5) 61%
12/31/07 6.58 91
12/31/08 6.05 32
06/30/09(4) 5.96(5) 47
- -
12/31/04 3.06% 24%
12/31/05 4.36 57
12/31/06 6.26 61
12/31/07 6.24 91
12/31/08 5.89 32
06/30/09(4) 5.80(5) 47
- --------
+ 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.
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load but does
include expense reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets) (See Note 4):
12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 06/30/09(4)(5)
-------- -------- -------- -------- -------- --------------
Class A. -- -- 1.81%(5) 0.59% 0.65% 0.76%
Class C. 0.60 0.57 0.64 0.65 0.73 0.81
(4)Unaudited
(5)Annualized
See Notes to Financial Statements
8
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO PROFILE -- June 30, 2009 -- (unaudited)
Industry Allocation*
Broadcasting & Entertainment................................ 10.9%
Finance..................................................... 10.3
Retail Stores............................................... 7.9
Utilities................................................... 5.4
Leisure, Amusement, Entertainment........................... 5.3
Chemicals, Plastics and Rubber.............................. 5.2
Healthcare, Education and Childcare......................... 4.9
Printing and Publishing..................................... 4.6
Hotels, Motels, Inns and Gaming............................. 4.6
Buildings & Real Estate..................................... 4.6
Registered Investment Companies............................. 4.1
Oil and Gas................................................. 4.0
Diversified/Conglomerate Manufacturing...................... 3.2
Electronics................................................. 3.2
Cargo Transport............................................. 2.8
Beverage, Food & Tobacco.................................... 2.3
Telecommunications.......................................... 2.1
Personal, Goods and Misc. Services.......................... 1.8
Personal Transportation..................................... 1.8
Aerospace/Defense........................................... 1.7
Personal and Nondurable Consumer Products................... 1.6
Home and Office Furnishings, Housewares and Durables........ 1.5
Machinery................................................... 1.2
Automobile.................................................. 1.1
Diversified/Conglomerate Service............................ 0.9
Containers, Packaging and Glass............................. 0.6
Mining, Steel, Iron and Nonprecious Metals.................. 0.5
Textiles and Leather........................................ 0.2
----
98.3%
====
Credit Quality+#
BBB-........................................................ 0.8%
BB+......................................................... 0.6
BB.......................................................... 6.2
BB-......................................................... 9.0
B+.......................................................... 24.1
B........................................................... 21.2
B-.......................................................... 17.2
CCC+........................................................ 3.9
CCC......................................................... 4.2
CCC-........................................................ 1.6
CC.......................................................... 1.1
C........................................................... 0.7
D........................................................... 6.3
Not Rated@.................................................. 3.1
-----
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 Poor's
# Calculated as a percentage of total debt issues, excluding short-term
securities.
9
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2009 -- (unaudited)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- -------------------------------------------------------------------------------------------------------------------
LOANS(3)(4) -- 93.7%
Aerospace/Defense -- 1.7%
Aeroflex, Inc........................... BTL-B1 Ba3 BB- 3.63-4.13% 08/15/14 $1,995,647 $ 1,616,474
McKechnie Aerospace De, Inc............. 2nd Lien Ba3 CCC+ 5.31 05/11/15 1,500,000 873,750
Wesco International, Inc................ 2nd Lien Caa1 B- 6.06 03/28/14 500,000 358,749
-----------
2,848,973
-----------
Automobile -- 1.1%
Allison Transmission, Inc............... BTL-B B2 B 3.07-3.08 08/07/14 945,808 754,450
FleetPride Corp......................... BTL-B Ba3 BB- 3.10-3.60 06/06/13 226,563 163,690
Key Safety Systems, Inc................. 1st Lien Caa1 D 2.56-3.36 03/08/14 1,466,250 576,724
United Components, Inc.................. Tranche D B1 B+ 3.21 06/30/12 416,465 358,159
-----------
1,853,023
-----------
Beverage, Food & Tobacco -- 2.3%
Best Brands Corp.@...................... BTL-C Ca CCC- 9.25 06/30/13 1,638,531 798,783
Birds Eye Foods, Inc.................... BTL B2 B 2.06-2.35 03/22/13 844,167 810,400
Fresh Start Bakeries, Inc.@............. 2nd Lien B2 B- 6.13 03/29/14 250,000 177,500
NPC International, Inc.................. BTL Ba3 B+ 2.07-2.92 05/03/13 1,474,594 1,360,312
Pinnacle Foods Group, Inc............... BTL-B B2 B 3.07 04/02/14 980,000 878,937
-----------
4,025,932
-----------
Broadcasting & Entertainment -- 10.9%
Century -- TCI California LP+#@(5)...... Revolver NR NR 6.50 12/31/07 10,000 9,900
Cequel Communications LLC............... BTL B1 BB- 2.32-4.25 11/05/13 1,913,736 1,755,852
Charter Communications Operating LLC(5). BTL B1 D 6.25 03/06/14 2,989,886 2,711,453
Citadel Broadcasting Co................. BTL-B Caa3 CCC 2.35-2.93 06/12/14 6,000,000 3,154,998
CSC Holdings, Inc....................... BTL-B Baa3 BBB- 2.07 03/29/13 997,423 941,068
Cumulus Media, Inc...................... BTL Caa1 B 2.07 06/07/14 1,727,717 1,157,570
Gray Television, Inc.................... BTL-B Caa1 CCC+ 3.82 12/31/14 860,377 535,047
HIT Entertainment, Ltd.@................ 2nd Lien Caa1 CCC 6.51 02/26/13 1,000,000 340,000
HIT Entertainment, Ltd.................. BTL B1 B- 3.26 03/20/12 896,357 661,063
Intelsat Zeus, Ltd...................... BTL B1 BB- 2.82 07/03/13 960,375 899,666
Local TV LLC............................ BTL-B B2 B- 2.31 05/07/13 843,070 535,350
Mission Broadcasting, Inc............... BTL-B B1 B 2.35 10/01/12 1,170,590 875,016
Nexstar Broadcasting, Inc............... BTL-B B1 B 2.79 10/01/12 1,107,095 827,554
NextMedia Operating, Inc.(7)............ 2nd Lien Ca CC 11.25 11/15/13 506,366 45,573
Spanish Broadcasting Systems, Inc....... 1st Lien Caa3 CCC+ 2.35 06/10/12 957,500 552,956
Univision Communications, Inc........... BTL-B B2 B- 2.56 09/15/14 4,000,000 3,001,428
WideOpenWest Finance LLC................ BTL B2 B- 2.82-4.75 06/22/14 997,500 855,356
-----------
18,859,850
-----------
Buildings & Real Estate -- 4.6%
Brand Services, Inc..................... BTL B1 B 2.31-3.19 02/07/14 1,955,000 1,725,288
Brand Services, Inc..................... BTL-B2 B1 B 3.69-4.50 02/07/14 982,500 876,881
Building Materials Holding Corp......... Junior 2nd Lien Caa2 B+ 6.13 09/15/14 714,286 573,214
Building Materials Holding Corp......... BTL B3 B+ 3.06 02/22/14 975,279 854,832
Capital Automotive REIT................. BTL Ba1 B 2.07 12/16/10 1,000,000 776,667
North Las Vegas@(7)..................... 1st Lien Caa3 D 6.25 05/01/11 223,578 111,789
North Las Vegas@(7)..................... 2nd Lien C D 12.50 05/09/12 252,272 18,920
PGT Industries, Inc..................... BTL-A2 Caa1 B- 6.25 02/14/12 329,268 207,439
Realogy Corp............................ CLTL Caa1 CCC- 3.50 10/10/13 411,009 299,744
Realogy Corp............................ BTL Caa1 CCC- 4.18 10/10/13 1,526,605 1,113,332
Tensar Earth Technologies, Inc.......... BTL-B B3 B 4.54 10/31/12 862,604 582,257
ValleyCrest Cos......................... 1st Lien B2 B+ 2.32 10/08/13 975,526 740,180
Yellowstone Club+@(5)(7)................ BTL Ca D 4.63 09/30/10 204,667 39,910
-----------
7,920,453
-----------
10
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2009 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- ---------------------------------------------------------------------------------------------------------------------
Cargo Transport -- 2.8%
Cardinal Logistics Management, Inc.#@........ 2nd Lien B2 B- 6.82% 03/23/14 $1,000,000 $ 100,000
Dockwise Transport BV........................ BTL-B B1 B 2.60 04/01/15 229,538 180,187
Dockwise Transport BV........................ BTL-B2 B1 B 3.47 04/01/15 469,635 368,663
Dockwise Transport BV........................ BTL-C B1 B 3.47 04/01/16 229,538 180,187
Dockwise Transport BV........................ BTL-C2 B1 B 3.47 04/01/16 469,635 368,663
Dockwise Transport BV........................ BTL-D B1 B 4.81 07/12/16 500,000 265,000
Dockwise Transport BV........................ BTL-D2 B1 B 5.10 07/12/16 1,000,000 530,000
Greatwide Logistics Services, Inc.+@(5)(7)... 2nd Lien C NR 9.31 06/19/14 1,000,000 150,000
Hertz Corp................................... Tranche B Ba1 BB- 2.07-2.08 12/21/12 341,133 314,574
Ozburn-Hessey Holding Co. LLC@............... BTL B1 B 3.85-4.29 08/10/12 501,565 388,713
Swift Transportation Co., Inc................ BTL-B B3 B- 3.63 05/10/14 2,662,728 1,988,725
----------
4,834,712
----------
Chemicals, Plastics & Rubber -- 5.2%
AZ Chemicals, Inc............................ 1st Lien B1 BB- 2.32 02/28/13 929,137 792,089
Brenntag AG.................................. BTL B1 B+ 2.31-3.50 01/20/14 48,279 44,538
Brenntag AG.................................. BTL-B2 B1 B+ 2.31-3.50 01/20/14 199,865 184,376
Cognis GmbH.................................. STFA B2 B- 2.61 09/15/13 1,000,000 791,667
Cristal Inorganic Chemicals US, Inc.......... 1st Lien B1 B 2.85 05/15/14 894,778 666,610
Georgia Gulf Corp............................ BTL-B B3 C 6.82-8.75 10/03/13 494,759 398,667
Hexion Specialty Chemicals, Inc.............. BTL-C1 B1 CCC+ 3.50 05/05/13 798,946 550,829
Hexion Specialty Chemicals, Inc.............. BTL-C2 B1 CCC+ 2.88 05/05/13 173,108 119,348
Huntsman International LLC................... BTL-B Ba1 B+ 2.06 04/21/14 2,848,978 2,564,080
Ineos US Finance LLC......................... BTL-B Caa1 CCC+ 7.50 12/16/13 678,677 504,483
Ineos US Finance LLC......................... BTL-C Caa1 CCC+ 8.00 12/16/14 678,491 504,345
Kraton Polymers LLC.......................... BTL-B B1 B 3.25 05/12/13 370,417 304,668
LyondellBasell Industries(5)(8).............. DIP Caa1 BB- 13.00 12/15/09 561,702 387,025
LyondellBasell Industries(5)................. Roll-up TL Caa2 B- 5.83-5.94 12/15/09 561,148 468,910
LyondellBasell Industries(5)................. Dutch TL-A Caa2 C 3.82 12/20/13 58,689 25,823
LyondellBasell Industries(5)................. Dutch Revolver Caa2 C 3.82 12/20/14 25,265 11,243
LyondellBasell Industries(5)................. GRM TL-B1 Caa2 C 4.07 12/20/14 72,533 31,915
LyondellBasell Industries(5)................. GRM TL-B2 Caa2 C 4.07 12/20/14 72,533 31,915
LyondellBasell Industries(5)................. GRM TL-B3 Caa2 C 4.07 12/20/14 72,533 31,915
LyondellBasell Industries(5)................. BTL-A Caa2 C 3.82 12/20/14 180,513 79,426
LyondellBasell Industries(5)................. BTL-B1 Caa2 C 7.00 12/20/14 314,742 138,486
LyondellBasell Industries(5)................. BTL-B2 Caa2 C 7.00 12/20/14 314,742 138,486
LyondellBasell Industries(5)................. BTL-B3 Caa2 C 7.00 12/20/14 314,742 138,486
LyondellBasell Industries(5)................. Revolver Caa1 C 3.82 12/20/14 94,743 41,687
----------
8,951,017
----------
Containers, Packaging & Glass -- 0.6%
Graham Packaging Co. LP...................... BTL-B B1 B+ 2.56-2.63 10/07/11 85,035 81,011
Graham Packaging Co. LP...................... BTL-C B1 B+ 6.75 04/05/14 850,971 843,737
MMGS Packaging Acquisition@.................. 2nd Lien Caa3 CC 6.10 03/08/15 500,000 110,000
----------
1,034,748
----------
Diversified/Conglomerate Manufacturing -- 3.2%
Accuride Corp.(11)........................... BTL-B Caa1 B- 3.00 01/31/12 1,071,364 838,878
Cinram International, Inc.................... BTL-B B2 D 2.32-3.02 05/05/11 894,007 623,570
Manitowoc Co., Inc........................... BTL-B B1 BB 7.50 11/09/14 995,000 902,134
RGIS LLC..................................... Delayed Draw B1 B- 3.10 05/01/14 45,153 34,693
RGIS LLC..................................... BTL-B B1 B- 3.10-3.54 04/27/14 903,061 693,852
Veyance Technologies, Inc.................... 1st Lien B3 B 2.58 07/31/14 2,579,063 1,730,120
Veyance Technologies, Inc.................... Delayed Draw B3 B 2.58 07/31/14 369,375 247,789
X-Rite, Inc.................................. 1st Lien B2 B+ 7.75-8.00 10/29/12 625,525 492,992
----------
5,564,028
----------
11
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2009 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- ------------------------------------------------------------------------------------------------------------------------------
Diversified/Conglomerate Service -- 0.9%
Bridge Information Systems, Inc.+#@(5)(6).............. BTL-B NR NR 6.25% 05/29/05 $ 397,353 $ 0
NES Rentals Holdings................................... 2nd Lien Caa2 D 7.13-7.75 07/20/13 2,157,140 1,078,570
Protection One, Inc.@.................................. BTL Ba2 BB- 2.56 03/31/12 451,306 406,175
-----------
1,484,745
-----------
Electronics -- 2.7%
Aspect Software, Inc................................... Tranche A-1 B1 B- 3.38 07/11/11 321,034 268,064
Infor Global Solutions................................. Delayed Draw B1 B+ 4.06 07/28/12 333,429 275,079
Infor Global Solutions................................. BTL B1 B+ 4.06 07/28/12 639,071 527,234
Radio Systems, Inc.@................................... BTL-B B2 B+ 3.07 10/05/13 409,905 334,073
Reynolds & Reynolds Co................................. 1st Lien Ba2 BB 2.31 10/26/12 834,695 696,970
Reynolds & Reynolds Co................................. 2nd Lien B3 B 5.81 10/26/13 250,000 140,000
Sensata Technologies BV................................ BTL-B B3 B 2.80 04/30/13 1,949,749 1,501,307
Sungard Data Systems, Inc.............................. BTL-A Ba3 BB 2.07-2.72 02/28/14 34,105 30,978
Sungard Data Systems, Inc.............................. BTL-B Ba3 BB 2.07-2.72 02/28/16 963,337 897,280
-----------
4,670,985
-----------
Finance -- 10.3%
Alliant Holdings....................................... BTL-B B2 B 3.60 11/01/14 982,500 879,338
Amwins Group, Inc...................................... 1st Lien B2 B- 3.11-3.16 06/08/13 1,960,000 1,239,700
Bankruptcy Management Solutions, Inc................... 2nd Lien Caa1 CCC- 6.56 07/31/13 243,125 63,213
First Data Corp........................................ BTL-B1 B1 B+ 3.06-3.07 09/24/14 1,970,038 1,481,358
First Data Corp........................................ BTL-B2 B1 B+ 3.06-3.07 09/24/14 498,731 375,295
First Data Corp........................................ BTL-B3 B1 B+ 3.06-3.07 09/24/14 982,500 738,411
Hub International Holdings, Inc........................ BTL B2 B+ 2.81 06/13/14 2,401,961 2,121,731
Hub International Holdings, Inc........................ Delayed Draw B2 B+ 2.81 06/13/14 539,892 476,905
iPayment, Inc.......................................... BTL-B B1 B- 2.32-2.60 05/08/13 1,822,930 1,367,197
LPL Holdings, Inc...................................... Tranche D Ba3 B+ 2.06-2.35 06/28/13 1,964,824 1,797,814
National Processing Co. LLC............................ 1st Lien B2 B 3.32-5.25 09/29/13 1,260,023 963,918
National Processing Co. LLC@........................... 2nd Lien Caa2 CCC 7.67 09/29/14 500,000 212,500
Neff Corp.@............................................ 2nd Lien Caa2 CCC 3.82 11/30/14 500,000 97,500
NES Tanks.............................................. 2nd Lien Caa2 B 4.76 04/06/14 500,000 212,500
Nielsen Finance LLC.................................... BTL Ba3 B+ 2.32 08/15/13 1,315,831 1,187,538
Rental Service Corp.................................... 2nd Lien Caa1 B- 3.81-4.67 11/30/13 2,295,841 1,767,797
TransFirst Holdings, Inc............................... BTL-B B2 B 3.06 06/15/14 2,940,192 2,058,134
USI Holdings Corp...................................... BTL-B B2 B- 3.35 05/04/14 982,456 736,842
-----------
17,777,691
-----------
Healthcare, Education & Childcare -- 4.9%
AMR/EmCare Holdings.................................... BTL Ba1 BB+ 2.31-2.32 02/10/12 573,753 535,741
CHG Cos., Inc.......................................... 2nd Lien B1 B 6.31 12/08/13 1,000,000 825,000
Community Health Systems, Inc.......................... Delayed Draw Ba3 BB 2.56 07/15/14 97,078 87,624
Community Health Systems, Inc.......................... BTL Ba3 BB 2.56-2.92 07/15/14 1,902,922 1,717,604
Gambro AB.............................................. BTL-B B2 B- 4.27 06/05/14 430,973 339,750
Gambro AB.............................................. BTL-C B2 B- 4.77 06/05/15 430,973 339,750
Health Management Associates, Inc...................... BTL-B B1 BB- 2.35 02/28/14 1,776,786 1,571,622
Hologic, Inc........................................... BTL-B Baa3 BB+ 3.63 03/31/13 375,009 362,822
PTS Pharmaceuticals.................................... BTL-B Ba3 BB- 2.56 04/10/14 1,960,000 1,634,967
Spectrum Labs.......................................... BTL-B NR NR 8.50 12/23/11 819,973 750,276
Team Health, Inc....................................... BTL-B B1 BB- 2.61-2.72 11/23/12 241,250 212,903
-----------
8,378,059
-----------
Home & Office Furnishings, Housewares & Durables -- 1.5%
National Bedding Co.................................... 1st Lien B1 BB- 2.38 02/28/13 1,410,599 1,220,168
National Bedding Co.@.................................. 2nd Lien Caa1 B- 5.32 02/28/14 1,000,000 648,333
Simmons Co............................................. BTL-C B2 CC 9.50 12/19/11 816,772 746,326
-----------
2,614,827
-----------
12
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2009 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- -----------------------------------------------------------------------------------------------------------------------
Hotels, Motels, Inns, & Gaming -- 4.6%
CCM Merger, Inc................................ BTL-B B3 B+ 8.50% 07/13/12 $ 434,254 $ 365,859
Fairmont Hotels and Resorts@................... BTL-B NR NR 3.81 05/12/11 362,353 280,824
Golden Nugget, Inc............................. 1st Lien B3 B- 2.31 06/30/14 1,272,727 879,376
Golden Nugget, Inc............................. Delayed Draw B3 B- 2.32-2.66 06/30/14 724,545 500,616
Green Valley Ranch Gaming LLC@................. 2nd Lien Ca CC 3.88 08/16/14 1,000,000 145,000
Isle of Capri Casinos, Inc..................... BTL B1 B+ 2.35 07/26/14 1,106,031 1,003,170
Isle of Capri Casinos, Inc..................... Delayed Draw B B1 B+ 2.06 07/26/14 442,412 401,268
Isle of Capri Casinos, Inc..................... Delayed Draw A B1 B+ 2.35 07/26/14 333,508 302,492
Las Vegas Sands, Inc........................... BTL B3 B- 2.06 05/23/14 2,940,000 2,086,483
New World Gaming Partners, Ltd................. Delayed Draw B3 B+ 3.71 09/30/14 498,750 315,875
New World Gaming Partners, Ltd................. 1st Lien B3 B+ 3.71 09/30/14 2,462,500 1,559,583
Wembley, Inc.@(10)............................. 1st Lien NR CCC 4.75 07/18/11 244,571 122,286
Wembley, Inc.@(10)............................. 2nd Lien NR D 6.50 07/18/12 250,000 18,750
----------
7,981,582
----------
Leisure, Amusement, Entertainment -- 5.3%
24 Hour Fitness Worldwide, Inc................. BTL-B Ba3 B+ 2.81-3.67 06/08/12 1,935,000 1,528,650
Audio Visual Services Group, Inc.@............. 2nd Lien NR NR 7.10 08/28/14 1,039,803 71,053
Fender Musical Instruments Corp................ Delayed Draw B2 B+ 2.57 06/06/14 330,833 241,508
Fender Musical Instruments Corp................ BTL-B B2 B+ 2.85-4.50 06/06/14 655,000 478,150
Formula One Holdings........................... BTL-B1 NR NR 2.69 12/31/13 1,120,285 822,610
Formula One Holdings........................... BTL-B2 NR NR 2.69 12/31/13 756,721 555,650
Formula One Holdings@.......................... BTL-D2 NR NR 3.81 06/30/14 1,500,000 885,000
Hicks Sports Group@(7)......................... BTL-B B2 D 5.75 12/22/10 3,000,000 2,625,000
Metro-Goldwyn-Mayer Studios, Inc............... BTL-B Ba3 B- 3.56 04/08/12 2,902,500 1,618,144
Panavision, Inc................................ 2nd Lien Caa3 CCC- 8.54-8.59 03/30/12 500,000 265,000
----------
9,090,765
----------
Machinery -- 1.2%
Generac Power Systems, Inc.@................... 2nd Lien B2 CCC+ 6.32 05/07/14 1,000,000 394,525
Gleason Corp................................... BTL-B Ba3 B 2.38-2.94 06/30/13 974,912 906,668
NACCO Materials Handling Group, Inc............ BTL B1 BB- 2.31-3.41 03/21/13 974,874 687,286
----------
1,988,479
----------
Mining, Steel, Iron & Nonprecious Metals -- 0.5%
Aleris International, Inc.(5)(8)............... DIP B3 B+ 13.00 02/13/10 92,655 87,714
Aleris International, Inc.(5).................. BTL-C1 Ca NR 4.25 12/19/13 175,994 91,517
Algoma Steel, Inc.............................. BTL-B B3 B+ 2.81 06/20/13 701,453 561,164
Walter Industries, Inc......................... BTL B2 BB+ 2.56-2.85 10/03/12 76,787 70,260
----------
810,655
----------
Oil & Gas -- 4.0%
Alon Krotz Springs............................. BTL-B B1 B+ 11.75 06/30/14 271,224 206,130
Alon USA, Inc. (Edgington Facility)............ BTL B1 BB 2.56-2.92 06/22/13 26,944 17,110
Alon USA, Inc. (Paramount Facility)............ BTL B1 BB 2.56-2.92 06/22/13 215,556 136,878
ATP Oil & Gas Corp............................. BTL-B1 Caa1 B+ 8.50 07/15/14 2,017,949 1,549,785
ATP Oil & Gas Corp............................. BTL-B2 Caa1 B+ 8.50 01/15/11 530,548 407,461
Big West Oil LLC............................... Delayed Draw Caa3 D 4.50 05/15/14 1,100,000 898,334
Big West Oil LLC............................... BTL-B Caa3 D 4.50 05/31/14 875,000 714,584
CDX Funding LLC+@(5)(7)........................ 2nd Lien NR NR 7.50 03/31/13 1,000,000 236,667
Coffeyville Resources LLC...................... LOC B2 BB- 8.75 12/27/10 64,865 59,432
Coffeyville Resources LLC...................... BTL-B B2 BB- 8.75 12/27/13 520,983 477,351
Dresser, Inc................................... 2nd Lien B3 B- 6.07 05/04/15 1,000,000 710,625
Helix Energy Solutions Group, Inc.............. BTL-B Ba2 BB 2.31-3.14 07/01/13 499,317 462,284
Targa Resources, Inc........................... LOC Ba3 B+ 3.35 10/31/12 96,774 93,180
Targa Resources, Inc........................... BTL-B Ba3 B+ 2.31-2.60 10/31/12 166,427 160,246
Venoco, Inc.................................... 2nd Lien Caa1 B 4.38 05/07/14 988,971 761,508
----------
6,891,575
----------
13
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2009 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount (Note 2)
- ----------------------------------------------------------------------------------------------------------------------
Personal & Nondurable Consumer Products -- 1.6%
American Achievement Corp.@................... BTL-B B1 B 6.25-6.50% 03/25/11 $ 301,634 $ 259,405
Hillman Group, Inc............................ BTL-B Ba3 B+ 3.85 03/31/11 654,611 595,696
Huish Detergents, Inc......................... 1st Lien Ba3 BB 2.06 04/25/14 1,960,000 1,848,933
-----------
2,704,034
-----------
Personal, Goods & Misc. Services -- 1.8%
Central Parking Corp.......................... LOC Ba2 B- 2.81 05/22/13 379,310 266,940
Central Parking Corp.......................... 1st Lien Ba2 B- 2.56 05/22/14 1,044,514 735,077
NEP, Inc.@.................................... BTL-B B1 B 2.56 02/16/14 977,486 862,632
Sabre Holdings Corp........................... BTL-B B1 B 2.57-3.29 09/30/14 1,443,615 1,040,434
Travelport, Inc............................... BTL-B Ba2 B 2.81 08/23/13 262,918 207,911
-----------
3,112,994
-----------
Personal Transportation -- 1.8%
Continental Airlines, Inc..................... BTL-A1 Ba3 B 4.04 06/01/11 285,714 232,857
Continental Airlines, Inc..................... BTL-A2 Ba3 B 4.04 06/01/11 714,286 582,143
Delta Air Lines, Inc.......................... 2nd Lien B2 B 3.57 04/30/14 980,000 677,950
United Airlines, Inc.......................... Tranche B B3 B+ 2.31-2.38 02/02/14 1,404,444 831,548
US Airways Group, Inc......................... BTL B3 B+ 2.81 03/21/14 1,460,000 779,478
-----------
3,103,976
-----------
Printing & Publishing -- 4.6%
Advanstar Communications, Inc................. 1st Lien B2 B- 2.85 05/31/14 1,962,456 1,103,882
Advanstar Communications, Inc.@............... 2nd Lien Caa2 CCC 5.60 11/30/14 1,000,000 95,000
Affinity Group, Inc........................... BTL B1 B- 10.75 03/31/10 896,718 748,760
Affinity Group, Inc........................... BTL-A B1 B- 10.75 03/31/10 194,879 158,657
Caribe Information Investment, Inc............ BTL-B B2 B 2.56-2.58 03/31/13 1,686,571 864,368
GateHouse Media Operating, Inc................ Delayed Draw Caa1 CCC 2.31-2.33 08/28/14 815,217 201,087
GateHouse Media Operating, Inc................ BTL-B Caa1 CCC 2.31 08/28/14 3,184,783 785,581
GateHouse Media Operating, Inc................ BTL-C Caa1 CCC 2.58 08/28/14 1,000,000 246,667
Idearc, Inc.+(5)(7)........................... BTL-B NR D 6.25 11/17/14 1,902,719 821,567
Local Insight Regatta Holdings, Inc........... BTL B2 B+ 7.75 04/23/15 721,315 414,756
Reader's Digest Associations, Inc............. BTL-B Caa2 CCC 2.64-2.65 03/02/14 977,500 426,434
Thomas Nelson Publishers...................... BTL-B B3 CCC 7.75-8.75 06/12/12 395,047 219,251
Tribune Co.+(5)(7)............................ BTL-B NR NR 6.50 05/19/14 3,925,075 1,203,283
Yell Group, Ltd............................... BTL-B NR B+ 3.31 10/27/12 1,000,000 609,167
-----------
7,898,460
-----------
Retail Stores -- 7.9%
Claire's Stores, Inc.......................... BTL-B Caa2 B- 3.06-3.35 05/29/14 2,940,000 1,647,626
David's Bridal, Inc........................... BTL B2 B 2.31-2.60 01/31/14 1,947,835 1,675,138
JRD Holdings, Inc............................. BTL Ba3 BB- 2.57 07/02/14 968,750 932,422
KIK Custom Products........................... CND TL B3 CCC+ 2.57 05/23/14 356,167 247,536
KIK Custom Products........................... BTL B3 CCC+ 2.57 05/23/14 2,077,640 1,443,960
Michaels Stores, Inc.......................... BTL B3 B 2.63-2.75 10/31/13 2,939,698 2,341,961
Petco Animal Supplies, Inc.................... BTL-B B1 B+ 2.56-3.29 10/25/13 487,500 458,076
Quizno's LLC.................................. 1st Lien B2 B+ 2.88 05/05/13 2,173,936 1,586,973
Smart & Final, Inc............................ Delayed Draw B2 B 3.31-4.10 05/31/14 402,010 365,829
Smart & Final, Inc............................ 1st Lien B2 B 3.31-3.67 05/31/14 577,915 525,902
Smart & Final, Inc.@.......................... 2nd Lien Caa1 CCC 8.10 11/30/14 1,000,000 715,000
The Pantry, Inc............................... BTL B1 BB 1.81 05/15/14 1,446,199 1,341,350
The Pantry, Inc............................... Delayed Draw B1 BB 1.81 05/04/14 416,362 386,176
-----------
13,667,949
-----------
Telecommunications -- 2.1%
IPC Systems, Inc.............................. 2nd Lien Caa2 CCC+ 5.56 05/31/14 1,000,000 432,500
MetroPCS Wireless, Inc........................ BTL Ba2 BB- 2.56-3.31 11/03/13 1,496,154 1,427,144
Sorenson Communications, Inc.................. Tranche C Ba2 B 2.81 08/16/13 1,918,913 1,757,005
-----------
3,616,649
-----------
14
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2009 -- (unaudited) (continued)
Ratings/(1)/
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount/Shares (Note 2)
- ------------------------------------------------------------------------------------------------------------------------
Textiles & Leather -- 0.2%
William Carter Co........................... BTL-B Ba3 BBB- 1.81-2.54% 07/14/12 $ 336,275 $ 321,142
------------
Utilities -- 5.4%
Calpine Corp................................ BTL B2 B+ 3.48 03/29/14 3,487,361 3,096,002
Entegra Power Group LLC..................... 2nd Lien B3 B+ 3.72 03/30/14 445,750 368,699
KGen Power Corp............................. LOC B1 BB 2.38 01/31/14 375,000 341,250
KGen Power Corp............................. BTL B1 BB 2.06 01/31/14 609,375 554,531
La Paloma Generating Co..................... Delayed Draw B2 B 2.35 08/16/12 14,545 12,520
La Paloma Generating Co..................... LOC B2 B 1.96 08/16/12 32,787 28,224
La Paloma Generating Co..................... 1st Lien B2 B 2.35 08/16/12 182,621 157,206
La Paloma Generating Co..................... 2nd Lien B3 CCC 4.10 08/16/13 250,000 165,208
Mach Gen LLC................................ LOC Ba3 BB- 2.60 02/22/13 88,760 76,629
NE Energy, Inc.............................. 2nd Lien B3 CCC+ 5.13 05/01/14 250,000 190,625
NSG Holdings II LLC......................... LOC Ba2 BB 2.13 06/15/14 102,041 94,388
NSG Holdings II LLC......................... BTL Ba2 BB 2.13 06/15/14 610,062 564,308
Texas Competitive Electric Holdings Co. LLC. BTL-B1 B1 B+ 3.81-3.82 10/01/14 1,994,924 1,427,202
Texas Competitive Electric Holdings Co. LLC. BTL-B2 B1 B+ 3.81-3.82 10/01/14 1,492,405 1,070,148
TPF Generation Holdings LLC................. 2nd Lien B3 B+ 4.56 12/15/14 1,500,000 1,240,001
------------
9,386,941
------------
Total Loans (cost $219,445,283)................................................ 161,394,244
------------
CORPORATE BONDS -- 0.5%
Chemicals, Plastics & Rubber -- 0.0%
Wellman, Inc.
Bond
9.99% due 01/30/19#@(5)................................................................. 91,000 1,820
------------
Electronics -- 0.5%
NXP BV
Note
3.88% due 10/15/13(9)................................................................... 2,000,000 800,000
------------
Total Corporate Bonds (cost $2,972,700).................................................. 801,820
------------
COMMON STOCK -- 0.0%
Telecommunications -- 0.0%
Global Crossing, Ltd.+................................................................... 175 1,607
SAVVIS Communications Corp.+............................................................. 6,313 72,347
------------
Total Common Stock (cost $125,981)....................................................... 73,954
------------
Total Long-Term Investment Securities (cost $222,543,964)................................ 162,270,018
------------
SHORT-TERM INVESTMENT SECURITIES -- 4.1%
Registered Investment Companies -- 4.1%
SSgA Money Market Fund (cost $7,077,902)................................................. 7,077,902 7,077,902
------------
TOTAL INVESTMENTS -- 98.3%
(cost $229,621,866)(12).................................................................. 169,347,920
Other assets less liabilities -- 1.7%........................................................ 2,875,476
------------
NET ASSETS -- 100.0%......................................................................... $172,223,396
============
- --------
BTL Bank Term Loan
CLTL Credit Linked Term Loan
CND TLCanadian Term Loan
DIP Debtor in Possession
Dutch TLDutch Term Loan
GRM TLGerman Term Loan
LOC Letter of Credit
NR Security is not rated.
STFA Senior Term Facilities Agreement
+ Non-income producing security
@ Illiquid security. At June 30, 2009, the aggregate value of these
securities was $10,657,058, representing 6.2% of net assets.
15
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2009 -- (unaudited) (continued)
# Fair valued security. Securities are classified as Level 3 for FAS 157
disclosures based on securities valuation inputs; see Note 2
(1) Bank loans rated below Baa by Moody's Investor Service, Inc. or BBB by
Standard & Poor's Group are considered below investment grade. Ratings
provided are as of June 30, 2009.
(2) Based on the stated maturity, the weighted average to maturity of the
Loans held in the portfolio will be approximately 53 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 still to be determined.
(7) Loan is in default.
(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 June 30, 2009.
(10) PIK ("Payment-in-Kind") security. Loan that pays interest/dividends in the
form of additional loans.
(11) As of August 17, 2009, the loan is not in default, however, Accuride
Corporation ("Accuride") has disclosed in filings with the Securities and
Exchange Commission (the "SEC") that it has entered into a temporary
waiver agreement (the "Temporary Waiver") with respect to the amended and
restated credit agreement, as amended (the "Credit Agreement") among
Accuride, the lenders and certain other parties. Pursuant to the terms of
the Temporary Waiver, the lenders have agreed to waive Accuride's
non-compliance with certain financial covenants under the Credit
Agreement, as well as any default under the Credit Agreement if Accuride
fails to make certain interest payments due and owing to the holders of
certain of Accuride's senior subordinated notes (which the Fund does not
hold). The Temporary Waiver terminates on September 7, 2009, unless
terminated earlier upon the occurrence of certain specified events, and
may be extended to September 15, 2009 under certain circumstances. Under
the Temporary Waiver, interest on advances and all outstanding obligations
under the Credit Agreement, including the bank term loan held by the Fund,
will accrue during the Temporary Waiver period at an annual rate of 2.0%
plus the otherwise applicable rate, Accuride and its subsidiaries must
also comply with certain restrictions. If the Temporary Waiver period
expires and no further amendment to or restructuring of the Credit
Agreement takes place, then an event of default would likely occur under
the Credit Agreement.
(12) See Note 6 for cost of investments on a tax basis.
16
SunAmerica Senior Floating Rate Fund, Inc.
PORTFOLIO OF INVESTMENTS -- June 30, 2009 -- (unaudited) (continued)
The following is a summary of the inputs used to value the Portfolio's net
assets as of June 30, 2009 (see Note 2):
Level 1-- Level 2-- Level 3-
Unadjusted Other Significant
Quoted Observable Unobservable
Prices Inputs Inputs Total
- ---------- ------------ ------------ ------------
Long-Term Investment Securities:
Loans:
Aerospace/Defense................................. $ -- $ 873,750 $ 1,975,223 $ 2,848,973
Automobile........................................ -- 1,331,174 521,849 1,853,023
Beverage, Food & Tobacco.......................... -- 878,937 3,146,995 4,025,932
Broadcasting & Entertainment...................... -- 13,854,868 5,004,982 18,859,850
Buildings & Real Estate........................... -- 3,617,789 4,302,664 7,920,453
Cargo Transport................................... -- 4,195,999 638,713 4,834,712
Chemicals, Plastics & Rubber...................... -- 6,594,022 2,356,995 8,951,017
Containers, Packaging & Glass..................... -- 924,748 110,000 1,034,748
Diversified/Conglomerate Manufacturing............ -- 4,940,458 623,570 5,564,028
Diversified/Conglomerate Service.................. -- 1,078,570 406,175 1,484,745
Electronics....................................... -- 2,429,565 2,241,420 4,670,985
Finance........................................... -- 6,478,738 11,298,953 17,777,691
Healthcare, Education & Childcare................. -- 5,691,317 2,686,742 8,378,059
Home & Office Furnishings, Housewares & Durables.. -- 1,868,501 746,326 2,614,827
Hotels, Motels, Inns, & Gamings................... -- 7,048,863 932,719 7,981,582
Leisure, Amusement, Entertainment................. -- 3,952,457 5,138,308 9,090,765
Machinery......................................... -- 394,525 1,593,954 1,988,479
Mining, Steel Iron & Nonprecious Metals........... -- 87,714 722,941 810,655
Oil & Gas......................................... -- 5,769,949 1,121,626 6,891,575
Personal & Nondurable Consumer Products........... -- 1,848,933 855,101 2,704,034
Personal, Goods, & Misc. Services................. -- 1,248,345 1,864,649 3,112,994
Personal Transportation........................... -- 2,288,976 815,000 3,103,976
Printing & Publishing............................. -- 3,962,352 3,936,108 7,898,460
Retails Stores.................................... -- 6,034,636 7,633,313 13,667,949
Telecommunications................................ -- 3,184,149 432,500 3,616,649
Textiles & Leather................................ -- -- 321,142 321,142
Utilities......................................... -- 7,641,839 1,745,102 9,386,941
Corporate Bonds.................................... -- 800,000 1,820 801,820
Common Stock....................................... 73,954 -- -- 73,954
Short-Term Investments
Registered Investment Companies.................... -- 7,077,902 -- 7,077,902
------- ------------ ----------- ------------
Total................................................ $73,954 $106,099,076 $63,174,890 $169,347,920
======= ============ =========== ============
The following is a reconciliation of Level 3 assets for which significant
unobservable inputs were used to determine fair value:
Corporate
Loans Bonds Total
------------ ---------- ------------
Balance as of 12/31/2008......................... $ 67,034,563 $ -- $ 67,034,563
Accrued discounts/premiums....................... 134,477 (35,026) 99,451
Realized gain (loss)............................. (2,115,215) -- (2,115,215)
Change in unrealized appreciation (depreciation). 25,178,861 (970,880) 24,207,981
Net purchases (sales)............................ (11,032,779) 1,007,726 (10,025,053)
Transfers in and/or out of Level 3............... (16,026,837) -- (16,026,837)
------------ ---------- ------------
Balance as of 6/30/2009.......................... $ 63,173,070 $ 1,820 $ 63,174,890
============ ========== ============
See Notes to Financial Statements
17
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2009 -- (unaudited)
Note 1. Organization of the Fund
SunAmerica Senior Floating Rate Fund, Inc. (the "Fund"), is an open-end,
non-diversified management investment company. The Fund was organized as a
Maryland corporation in 1998, and is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"). The Fund is managed by SunAmerica
Asset Management Corp. (the "Adviser" or "SunAmerica")*, an indirect
wholly-owned subsidiary of American International Group, Inc. ("AIG"). The
Fund's investment goal and principal investment techniques are to provide a
high level of current income as is consistent with the preservation of
capital by investing, under normal market conditions, at least 80% of its
net assets, plus any borrowings for investment purposes, in senior secured
floating rate loans and other institutionally traded secured floating rate
debt obligations. 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 into 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 two 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 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. 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.
Effective as of the close of business on June 26, 2009 (the "Liquidation
Date"), the Fund liquidated Class B, Class D and Class Q shares, as well as
those Class C shares purchased before August 18, 1999 ("Old Class C
Shares"), including those shares purchased through the reinvestment of
dividends and distributions paid on Old Class C Shares and held in a
separate sub-account, as described in the Prospectus, that were eligible for
conversion to Class Q shares. Any shares outstanding as of the Liquidation
Date were automatically redeemed by the Fund on that date and shareholders
received proceeds equal to the net asset value of their shares.
Indemnifications: The Fund's organizational documents provide current and
former officers and directors with a limited indemnification against
liabilities arising out of the performance of their duties to the Fund. In
addition, pursuant to Indemnification Agreements between the Fund and each
of the current directors who is not an "interested person," as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended (the
"1940 Act"), of the Fund (collectively, the "Disinterested Directors"), the
Fund provides the Disinterested Directors with a limited indemnification
against liabilities arising out of the performance of their duties to the
Fund, whether such liabilities are asserted during or after their service as
directors. In addition, in the normal course of business the Fund enters
into contracts that contain the obligation to indemnify others. The Fund's
maximum exposure under these arrangements is unknown. Currently, however,
the Fund expects the risk of loss to be remote.
Note 2. Significant Accounting Policies
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles (GAAP) requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from these estimates. The
following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements:
Security Valuation: The investments by the Fund 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
- --------
* Effective April 1, 2009, AIG SunAmerica Asset Management Corp. changed its
name to SunAmerica Asset Management Corp.
18
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2009 -- (unaudited)
(continued)
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 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 fair valued, as
determined pursuant to procedures adopted in good faith by the Board. There
is no single standard for making fair value determinations, which may result
in prices that vary from those of other funds.
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 more actively traded securities.
Thus, the value upon disposition on any given Loan may differ from its
current valuation.
In September 2006, the Financial Accounting Standards Board ("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. Various inputs are used in determining the value of the
Funds' investments. These inputs are summarized in the three broad levels
listed below:
Level 1 -- Unadjusted quoted prices in active markets for identical
securities
Level 2 -- Other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk, quoted
prices in inactive markets, etc.)
Level 3 -- Significant unobservable inputs (includes inputs that reflect the
Fund's own assumptions about the assumptions market participants would use
in pricing the security, developed based on the best information available
under the circumstances)
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
The summary of the inputs used to value the Fund's net assets as of June 30,
2009 are reported on a schedule following the Portfolio of Investments.
Repurchase Agreements: The Fund may enter into repurchase agreements. The
Fund's custodian takes possession of the collateral pledged for investments
in repurchase agreements. The underlying collateral is valued daily on a
mark to market basis to ensure that the value, including accrued interest,
is at least 102% of the repurchase price. In the event of default of the
obligation to repurchase, the Fund has the right to liquidate the collateral
and apply the proceeds in satisfaction of the obligation. If the seller
defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited. At June
30, 2009, the Fund did not enter into any repurchase agreements.
19
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2009 -- (unaudited)
(continued)
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 $674,238 for the
period ended June 30, 2009, are accreted to income over the life of the
Loans. Other income, including amendment fees, commitment fees, letter of
credit fees, etc., which were $140,366 for the period ended June 30, 2009,
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 (or the value
of dividend-eligible shares, as appropriate) of each class of shares at the
beginning of the day (after adjusting for the current capital share activity
of the respective class). 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 2005.
Statement of Cash Flows: Information on financial transactions which have
been settled through the receipt or disbursement of cash is presented in the
Statement of Cash Flows. The cash amount shown in the Statement of Cash
Flows is the amount included in the Fund's Statement of Assets and
Liabilities and represents cash on hand at its custodian bank account, and
does not include any short-term investments at June 30, 2009.
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
period ended For the
June 30, 2009 year ended
(unaudited) December 31, 2008
----------------------- -------------------------
Shares Amount Shares Amount
Class A ---------- ----------- ----------- ------------
Shares sold................. 5,515,452 $33,097,904 6,245,181 $ 51,114,036
Reinvested distributions.... 111,340 650,184 273,292 2,092,988
Shares redeemed............. (1,326,831) (7,924,793) (11,589,177) (91,945,003)
---------- ----------- ----------- ------------
Net increase (decrease).. 4,299,961 $25,823,295 (5,070,704) $(38,737,979)
========== =========== =========== ============
20
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2009 -- (unaudited)
(continued)
For the
period
January 1, 2009 through For the
June 26, 2009 year ended
(unaudited) December 31, 2008
----------------------------- -------------------------------
Shares Amount Shares Amount
Class B(5) ---------- ------------ ----------- -------------
Shares sold................. 20,514 $ 135,436 103,608 $ 828,739
Reinvested distributions.... 21,530 120,991 77,570 586,529
Shares redeemed............. (1,368,996)(1) (8,881,065)(1) (1,018,041)(3) (7,804,218)(3)
---------- ------------ ----------- -------------
Net increase (decrease).. (1,326,952) $ (8,624,638) (836,863) $ (6,388,950)
========== ============ =========== =============
For the
period ended For the
June 30, 2009 year ended
(unaudited) December 31, 2008
----------------------------- -------------------------------
Shares Amount Shares Amount
Class C ---------- ------------ ----------- -------------
Shares sold................. 2,197,079 $ 13,196,276 3,712,260 $ 30,768,232
Reinvested distributions.... 275,779 1,588,686 812,486 6,128,175
Shares redeemed............. (3,039,143)(2) (17,744,564)(2) (14,346,426)(4) (109,402,031)(4)
---------- ------------ ----------- -------------
Net increase (decrease).. (566,285) $ (2,959,602) (9,821,680) $ (72,505,624)
========== ============ =========== =============
For the
period
January 1, 2009 through For the
June 26, 2009 year ended
(unaudited) December 31, 2008
----------------------------- -------------------------------
Shares Amount Shares Amount
Class D(5) ---------- ------------ ----------- -------------
Shares sold................. 200 $ 1,100 4,615 $ 38,808
Reinvested distributions.... 15,585 87,561 52,090 391,164
Shares redeemed............. (856,987) (5,526,585) (390,769) (2,984,986)
---------- ------------ ----------- -------------
Net increase (decrease).. (841,202) $ (5,437,924) (334,064) $ (2,555,014)
========== ============ =========== =============
For the
period
January 1, 2009 through For the
June 26, 2009 year ended
(unaudited) December 31, 2008
----------------------------- -------------------------------
Shares Amount Shares Amount
Class Q(5) ---------- ------------ ----------- -------------
Shares sold................. 517,522(1)(2) $ 2,979,493(1)(2) 562,812(3)(4) $ 4,143,860(3)(4)
Reinvested distributions.... 19,882 112,620 29,709 211,182
Shares redeemed............. (1,436,032) (9,508,829) (215,377) (1,567,692)
---------- ------------ ----------- -------------
Net increase (decrease).. (898,628) $ (6,416,716) 377,144 $ 2,787,350
========== ============ =========== =============
- --------
(1)Includes automatic conversion of 125,792 shares of Class B shares in the
amount of $715,294 to 126,150 shares of Class Q shares in the amount of
$715,294.
(2)Includes automatic conversion of 379,334 shares of Class C shares in the
amount of $2,191,418 to 379,497 shares of Class Q shares in the amount of
$2,191,418.
(3)Includes automatic conversion of 419,528 shares of Class B shares in the
amount of $3,261,102 to 419,281 shares of Class Q shares in the amount of
$3,261,102.
(4)Includes automatic conversion of 138,651 shares of Class C shares in the
amount of $866,418 to 138,651 shares of Class Q shares in the amount of
$866,418.
(5)See Note 1.
Note 4. Purchases and Sales of Securities
During the period ended June 30, 2009, the Fund's cost of purchases of Loans
and proceeds from Loan sales were $66,623,415 and $75,298,325, respectively.
Note 5. Investment Advisory Agreement and Other Transactions with Affiliates
The Fund has entered into an Investment Advisory and Management Agreement
(the "Advisory Agreement") with SunAmerica. Pursuant to the Advisory
Agreement, SunAmerica provides continuous supervision of the Fund and
administers its corporate affairs, subject to the general review and
oversight of the Board. In connection therewith, SunAmerica furnishes the
Fund with office facilities, maintains certain of the Fund's books and
records and pays the
21
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2009 -- (unaudited)
(continued)
salaries and expenses of all personnel, including officers of the Fund who
are employees of SunAmerica and its affiliates. SunAmerica also selects,
contracts with and compensates the subadviser to manage the Fund's assets.
The Fund will pay SunAmerica a monthly 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.
During the six-month period ended June 30, 2009, AIG Global Investment Corp.
("AIGGIC") served as subadviser to the Fund pursuant to a Subadvisory
Agreement with SunAmerica./(1)/ AIGGIC is an indirect wholly-owned
subsidiary of AIG and is an affiliate of SunAmerica. Under the Subadvisory
Agreement, AIG managed the investment and reinvestment of the Fund's assets.
As compensation for its services as subadviser, AIGGIC received from
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 was
paid by SunAmerica and not the Fund.
Pursuant to the Administrative Services Agreement (the "Administrative
Agreement") SunAmerica acts as the Fund's administrator and is responsible
for providing and supervising the performance by others, of administrative
services in connection with the operations of the Fund, subject to
supervision by the Fund's Board. For its services, SunAmerica receives an
annual fee equal to 0.40% of average daily net assets of the Fund./(2)/ For
the period ended June 30, 2009, SunAmerica accrued administration fees in
the amount of $294,999.
The Fund has entered into a Distribution Agreement with SunAmerica Capital
Services, Inc. ("SACS" or the "Distributor"), an affiliate of the Adviser.
The Fund has adopted a Distribution Plan on behalf of each class of shares
(other than Class D shares) (each a "Plan" and collectively, the "Plans") in
accordance with the provisions of Rule 12b-1 under the 1940 Act, hereinafter
referred to as the "Class A Plan," "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.
Under the Class A Plan, Class B Plan and Class C Plan, the Distributor
receives payments from the Fund at an annual rate of 0.10%, 0.50% and 0.50%,
respectively, of the average daily net assets of the Fund's Class A, Class B
and Class C shares to compensate the Distributor and certain securities
firms for providing sales and promotional activities for distributing that
class of shares. The distribution costs for which the Distributor may be
compensated include fees paid to broker-dealers that have sold Fund shares,
commissions and other expenses such as those incurred for sales literature,
prospectus printing and distribution and compensation to wholesalers. It is
possible that in any given year the amount paid to the Distributor under
each Class' Plan may exceed the Distributor's distribution costs as
described above. The Plans provide that the Class A, Class B, Class C and
Class Q shares of each Fund will pay the Distributor an account maintenance
fee up to an annual rate of 0.25% of the aggregate average daily net assets
of such class of shares for payments to compensate the Distributor and
certain securities firms for account maintenance activities. Accordingly,
for the period ended June 30, 2009, SACS received fees (see Statement of
Operations) based upon the aforementioned rates. For the period ended June
30, 2009 SACS received sales charges on Class A shares of $60,128, of which
$12,364 was reallowed to affiliated broker-dealers and $37,439 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 and Class C shares. For the period ended June 30,
2009, SACS received early withdrawal charges of $35,529. For the period
ended June 30, 2009 SACS voluntarily waived fees for the following classes:
Class A $36,980, Class B $6,917, Class C $97,429 and Class Q $1,092. The fee
waiver and expense reimbursement will continue indefinitely but may be
terminated at any time at the option of SunAmerica. As noted above in Note
1, the Fund liquidated Class B, Class D and Class Q shares, as well Old
Class C shares, effective as of the close of business on June 26, 2009 (the
"Liquidation Date"). As a result of the liquidation of these
- --------
/(1)/Effective July 24, 2009, Wellington Management Company, LLP ("Wellington")
replaced AIGGIC as subadviser to the Fund. See Note 12 for more
information.
/(2)/Effective September 1, 2009, the fee paid pursuant to the Administrative
Agreement will be reduced from 0.40% of average daily net assets of the
Fund to 0.20% of average daily net assets of the Fund.
22
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2009 -- (unaudited)
(continued)
classes, fees are no longer being paid to SACS under the Class B Plan or
Class Q Plan (or with respect to the Old Class C shares).
The Fund has entered into a Service Agreement with SunAmerica Fund Services,
Inc. ("SAFS")+, an indirect wholly-owned subsidiary of 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 June 30, 2009, 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 June 30, 2009
-------- -------------
Class A....................... $ 41,986 $ 9,826
Class B*...................... 7,203 --
Class C....................... 101,891 19,659
Class D*...................... 4,557 --
Class Q*...................... 6,613 --
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 C, of average daily net assets. Annual Fund
operating expenses shall not include extraordinary expenses, as determined
under generally accepted accounting principles or acquired fees and
expenses. 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"). For
the period ended June 30, 2009, SunAmerica waived fees and reimbursed
expenses as follows: Class A $121,205, Class B $22,912, Class C $267,106,
Class D $12,285 and Class Q $16,619.
On March 4, 2009, AIG, the ultimate parent of SunAmerica, SACS, SAFS and
AIGGIC, issued and sold to the AIG Credit Facility Trust, a trust
established for the sole benefit of the United States Treasury (the
"Trust"), 100,000 shares of AIG's Series C Perpetual, Convertible,
Participating Preferred Stock (the "Stock") for an aggregate purchase price
of $500,000, with an understanding that additional and independently
sufficient consideration was also furnished to AIG by the Federal Reserve
Bank of New York (the "FRBNY") in the form of its lending commitment (the
"Credit Facility") under the Credit Agreement, dated as of September 22,
2008, between AIG and the FRBNY. The Stock has preferential liquidation
rights over AIG common stock, and, to the extent permitted by law, votes
with AIG's common stock on all matters submitted to AIG's shareholders. The
Trust has approximately 79.9% of the aggregate voting power of AIG's common
stock and is entitled to approximately 79.9% of all dividends paid on AIG's
common stock, in each case treating the Stock as if converted. The Stock
will remain outstanding even if the Credit Facility is repaid in full or
otherwise terminates.
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, and treatment of defaulted securities.
Distributable Earnings Tax Distributions
- ---------------------------------------------------- -------------------------------------
For the year ended December 31, 2008 For the year ended December 31, 2008
- ---------------------------------------------------- -------------------------------------
Unrealized
Ordinary Long-term Gains/Capital and Appreciation/ Ordinary Long-term
Income Other Losses (Depreciation) Income Capital Gains
- -------- --------------------------- --------------- ------------ -------------
$38,417 $(41,919,687) $(115,222,932) $15,916,541 $ --
- --------
+ Effective March 17, 2009, AIG SunAmerica Fund Services, Inc. changed its
name to SunAmerica Fund Services, Inc.
* See Note 1
23
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2009 -- (unaudited)
(continued)
Capital Loss Carryforwards. At December 31, 2008 capital loss carryforward
available to offset future recognized gains were $41,919,687 with $9,997,029
expiring in 2009, $7,736,363 expiring in 2010, $4,956,144 expiring in 2011,
$3,498,813 expiring in 2012, and $15,731,338 expiring in 2016.
During the year ended December 31, 2008, the Senior Floating Rate Fund had
$1,009,013 of capital loss carryforward expire.
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, 2008, the Fund elected to defer $6,756,274 of
Post-October Capital Losses.
Unrealized appreciation and depreciation in the value of investments at June
30, 2009 for federal income tax purposes were as follows:
Cost (tax basis)............................................ $229,417,556
============
Gross unrealized appreciation............................... $ 1,647,356
Gross unrealized depreciation............................... (61,756,909)
------------
Net unrealized depreciation................................. $(60,109,553)
============
Note 7. Director Retirement Plan
The Directors of the Corporation have adopted the SunAmerica Disinterested
Trustees' and Directors' Retirement Plan (the "Retirement Plan") effective
January 1, 1993, as amended, for the Disinterested Directors. The Retirement
Plan provides generally that a Disinterested 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 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 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%.
Effective December 3, 2008, the Retirement Plan was amended to, among other
things, (1) freeze the Retirement Plan as to future accruals for active
Participants as of December 31, 2008, (2) prohibit Disinterested Directors
from first becoming participants in the Retirement Plan after December 31,
2008 and (3) permits active Participants to elect to receive a distribution
of their entire Retirement Plan account balance in 2009. The freeze on
future accruals does not apply to Participants that have commenced receiving
benefits under the Retirement Plan on or before December 31, 2008.
As of June 30, 2009, the Fund expensed $1,177 for the Retirement Plan, which
is included in Directors' fees and expenses line on the Statement of
Operations and paid $56,724 for the Retirement Plan.
Note 8. Line of Credit
The SunAmerica Family of Mutual Funds has established $75 million committed
and $50 million uncommitted lines of credit with State Street Bank & Trust
Company ("State Street"), 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
24
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2009 -- (unaudited)
(continued)
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 June 30, 2009,
the Fund had borrowings outstanding for 14 days under the line of credit and
incurred $616 in interest charges related to these borrowings. The Fund's
average amount of debt under the line of credit for the days utilized was
$2,715,646 at a weighted average interest rate of 0.59%. At June 30, 2009,
there were no borrowings outstanding.
Note 9. Interfund Lending
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 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 June 30, 2009, the Fund did not participate in this program.
Note 10. Investment Concentration
The Fund invests primarily in participations and assignments, or acts as a
party to the primary lending syndicate of a Variable Rate Senior Loan
interest to United States corporations, partnerships, and other entities. If
the lead lender in a typical lending syndicate becomes insolvent, enters
receivership or, if not FDIC insured, enters into bankruptcy, the Fund may
incur certain costs and delays in receiving payment, or may suffer a loss of
principal and/or interest. When the Fund purchases a participation of a
Senior Loan interest, the Fund typically enters into a contractual agreement
with the lender or other third party selling the participation but not with
the borrower directly. As such, the Fund assumes the credit risk of the
Borrower, Selling Participant or other persons positioned between the Fund
and the Borrower.
Note 11. Unfunded Loan Commitments
On June 30, 2009, the Fund had the following unfunded loan commitments which
could be extended at the option of the Borrower:
Maturity
Name Type Date Amount
---- ------------- -------- --------
Aleris International, Inc..... DIP Term Loan 02/13/10 $138,983
LyondellBasell Industries..... DIP Term Loan 12/15/09 187,176
Note 12. Subsequent Events
The Fund has performed an evaluation of subsequent events through August 27,
2009, which is the date the financial statements were issued. The following
subsequent events were noted:
At a meeting held on May 27, 2009, the Board of the Fund approved a new
subadvisory agreement between SunAmerica and Wellington (the "New
Subadvisory Agreement") with respect to the Fund. The New Subadvisory
Agreement is subject to approval by the Fund's shareholders. The Board also
approved an interim Subadvisory Agreement between SunAmerica and Wellington
(the "Interim Subadvisory Agreement") with respect to the Fund, effective
July 24, 2009, pursuant to which Wellington replaced AIGGIC as the
subadviser to the Fund. Pursuant to the terms of the Interim Subadvisory
Agreement, SunAmerica pays Wellington a subadvisory fee equal to the
subadvisory fee that was paid to AIGGIC under the prior subadvisory
agreement. The Interim Subadvisory Agreement will remain in effect until
December 21, 2009, or until the Fund's New Subadvisory Agreement is approved
by Fund shareholders, whichever is earlier. If the New Subadvisory Agreement
is approved by shareholders, SunAmerica would pay Wellington a subadvisory
fee equal to an annual rate of 0.30% of average daily net assets of the Fund
on the first $500 million and 0.25% for average daily net assets of more
than $500 million.
At a meeting held on August 26, 2009, the Board of the Fund approved an
amendment to the Administrative Agreement between SunAmerica and the Fund
reducing the annual fee payable by the Fund to SunAmerica from 0.40% of
average daily net assets to 0.20% of average daily net assets, effective
September 1, 2009.
25
SunAmerica Senior Floating Rate Fund, Inc.
APPROVAL OF INTERIM SUBADVISORY AGREEMENT AND
NEW SUBADVISORY AGREEMENT -- June 30, 2009 -- (unaudited)
Approval of Interim Subadvisory Agreement and New Subadvisory Agreement
The Board, including its Disinterested Directors, approved both the Interim
Subadvisory Agreement and the New Subadvisory Agreement between SunAmerica and
Wellington with respect to the Fund, the latter being subject to shareholder
approval, at an in-person meeting of the Board held on May 27, 2009. As a
result, effective July 24, 2009, Wellington assumed portfolio management
responsibilities for the Fund under the terms of the Interim Subadvisory
Agreement. In accordance with Section 15(c) of the 1940 Act, the Board
requested, and SunAmerica and Wellington provided, materials relating to the
Board's consideration of whether to approve the New Subadvisory Agreement for
the Fund. These materials included (a) a summary of the services provided by
Wellington; (b) information provided by Wellington on fees and expenses
relating to institutional accounts with similar investment styles as the Funds;
(c) a discussion of indirect benefits to Wellington; (d) a report by SunAmerica
of Wellington's compliance policies and procedures; (e) a summary of brokerage
and soft dollar practices; and (f) a discussion of the key personnel of
Wellington. In determining whether to approve the New Subadvisory Agreement for
the Fund, the Board, including the Disinterested Directors, considered the
following information:
Nature, Extent and Quality of Services Provided by Wellington.
The Board, including the Disinterested Directors, considered the nature, extent
and quality of services to be provided to the Fund by Wellington. The Board
observed that it had a long-standing relationship with Wellington in connection
with Wellington's role as subadviser to certain other funds in the SunAmerica
Family of Funds. The Board also noted that the services to be provided by
Wellington would be substantially similar to the services that Wellington has
provided to the other funds in the SunAmerica Family of Funds, which would
include investment management services such as investment research, advice and
supervision, and determining which securities will be purchased or sold by a
Fund, subject to the oversight and review of SunAmerica. In addition, the Board
reviewed Wellington's history, structure, size, visibility and resources, which
are needed to attract and retain highly qualified investment professionals. The
Board also reviewed the personnel that would be responsible for providing
subadvisory services to the Fund. The Board concluded, based on the materials
provided and its prior experience with Wellington as a subadviser to certain
other funds in the SunAmerica Family of Funds, that: (i) Wellington was able to
retain high quality portfolio managers and other investment personnel;
(ii) Wellington exhibited a high level of diligence and attention to detail in
carrying out its responsibilities as a subadviser; and (iii) Wellington was
responsive to requests of the Board and of SunAmerica. The Board considered
that Wellington had developed internal policies and procedures for monitoring
compliance with the investment objectives, policies and restrictions of the
Fund as set forth in its prospectus. The Board also considered Wellington's
code of ethics and compliance and regulatory history. The Board further
concluded that the nature and extent of services to be provided by Wellington
to the Fund under the New Subadvisory Agreement were reasonable and appropriate
in relation to the proposed subadvisory fee and that the quality of services
was reasonably expected to be high.
Investment Performance.
The Board, including the Disinterested Directors, received information prepared
by Wellington regarding its investment performance. The information provided to
the Board included composite performance of certain institutional accounts
managed by Wellington with investment policies and/or strategies similar to the
Fund. The Board noted that the accounts included within these composites were
not open-end mutual funds, as Wellington did not manage any mutual funds with
investment policies and/or strategies similar to the Fund. However, the Board
noted that Wellington acts as subadviser to other mutual funds in the
SunAmerica Family of Funds and is very experienced in managing mutual funds
generally. In considering Wellington's anticipated performance with respect to
the Fund, the Board also considered that Wellington's flexible investment
approach would be well suited to the Fund. The Board also acknowledged that
past performance is no guarantee of future results.
The Board noted that SunAmerica recommended that the Board approve Wellington
as a new subadviser to the Fund in the course of the Board's evaluation of
subadviser performance and investment strategy. It was noted that SunAmerica's
evaluation involved extensive research, including both qualitative and
quantitative analysis of Wellington and AIGGIC, the prior subadviser, their
organizational structures, investment process and style, and performance
records over varying periods of time.
26
SunAmerica Senior Floating Rate Fund, Inc.
APPROVAL OF INTERIM SUBADVISORY AGREEMENT AND NEW SUBADVISORY AGREEMENT
-- June 30, 2009 -- (unaudited)
Consideration of the Subadvisory Fee and the Cost of the Services and Profits
to be Realized by Wellington and its Affiliates from the Relationship with the
Fund.
The Board, including the Disinterested Directors, received and reviewed
information regarding the fee to be paid by SunAmerica to Wellington pursuant
to the New Subadvisory Agreement. The Board examined this information in order
to determine the reasonableness of the fee in light of the nature and quality
of services to be provided and any potential additional benefits to be received
by Wellington or its affiliates in connection with providing such services to
the Fund.
The Board of the Fund noted that Lipper, Inc. was not able to provide a report
addressing the expense information with respect to the proposed New Subadvisory
Agreement since there were no other peer funds within this same investment
classification with disclosed subadvisory fees. In considering the
reasonableness of the subadvisory fee to be paid by SunAmerica to Wellington on
behalf of the Fund, therefore, the Board considered information provided by
Wellington on fees and expenses relating to institutional accounts with similar
investment styles as the Fund. The Board also considered that the subadvisory
fee is paid by SunAmerica out of its management fee and not by the Fund, and
that subadvisory fee 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 compared the subadvisory fee
paid to AIGGIC under the prior subadvisory agreement and the proposed
subadvisory fee that will be paid to Wellington under the New Subadvisory
Agreement. The Board also considered the amount of subadvisory fees paid out by
SunAmerica and the amount of the management fees which it retained.
The Board also reviewed financial statements and other reports from Wellington
and considered whether Wellington had the financial resources necessary to
attract and retain high quality investment management personnel and to provide
a high quality of services. The Board concluded that Wellington had the
financial resources necessary to perform its obligations under the Fund's New
Subadvisory Agreement and would provide the Fund with high quality services.
The Board also concluded that the subadvisory fees were reasonable in light of
the factors discussed above.
Economies of Scale.
The Board did not review specific information regarding whether there would be
economies of scale with respect to Wellington's management of the Fund because
it regards that information as less relevant at the subadviser level. Rather,
the Board noted that they considered information regarding economies of scale
in the context of the renewal of the Fund's Investment Advisory and Management
Agreement with SunAmerica.
Other Factors.
In consideration of the New Subadvisory Agreement, the Board also received
information regarding Wellington's brokerage and soft dollar practices. The
Board considered that SunAmerica and Wellington are responsible for decisions
to buy and sell securities, selection of broker-dealers and negotiation of
commission rates.
Conclusion.
After a full and complete discussion, the Fund's Board approved, subject to
shareholder approval, the Fund's New Subadvisory Agreement. Based upon their
evaluation of all these factors in their totality, the Board, including its
Disinterested Directors, was satisfied that the terms of the New Subadvisory
Agreement were fair and reasonable and in the best interests of the Fund and
its shareholders. In arriving at a decision to approve the New Subadvisory
Agreement on behalf of the Fund, 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 these determinations. Accordingly, the Board,
including the Disinterested Directors, unanimously approved, and recommended
that shareholders of the Fund approve, the New Subadvisory Agreement.
27
[LOGO] AIG Sun America
Mutual Funds
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
James Nichols, Vice Fund's portfolio, which http://www.sec.gov. You
President is available in the can also review and
Cynthia A. Skrehot, Vice Fund's Statement of obtain copies of the
President and Chief Additional Information, Forms N-Q at the U.S.
Compliance Officer may be ob-tained without Securities and Exchange
Gregory N. Bressler, charge upon request, by Commission's Public
Chief Legal calling (800) 858-8850. Refer-ence Room in
Officer and Secretary This in-formation is also Washington, DC
Gregory R. Kingston, available from the EDGAR (information on the
Vice President and database on the U.S. operation of the Public
Assistant Treasurer Secu-rities and Exchange Reference Room may be
Nori L. Gabert, Vice Commission's website at ob-tained by calling
President and http://www.sec.gov. 1-800-SEC-0330).
Assistant Secretary
John E. McLean, DELIVERY OF SHAREHOLDER PROXY VOTING RECORD ON
Assistant Secretary DOCUMENTS FUND PORTFOLIO SECURITIES
Kathleen Fuentes, The Fund has adopted a Information regarding how
Assistant Secretary policy that allows them the Fund voted proxies
Diedre L. Shepherd, to send only one copy of relating to securities
Assistant Treasurer a Fund's prospectus, held in the Fund's
Matthew J. Hackethal, proxy material, annual portfolio during the most
Anti-Money Laundering report and semi-annual recent twelve month
Compliance Officer report (the "shareholder period ended June 30 is
documents") to available, once filed
Investment Adviser shareholders with with the U.S. Securities
SunAmerica Asset multiple accounts and Exchange Commis-sion,
Management Corp. residing at the same without charge, upon
Harborside Financial "household." This request, by calling
Center practice is called (800) 858-8850 or on the
3200 Plaza 5 householding and reduces U.S. Securities and
Jersey City, NJ Fund expenses, which Exchange Commission's
07311-4992 benefits you and other website at
shareholders. Unless the http://www.sec.gov.
Distributor Funds receive
SunAmerica Capital instructions to the This report is submitted
Services, Inc. con-trary, you will only solely for the general
Harborside Financial receive one copy of the information of
Center shareholder documents. shareholders of the Fund.
3200 Plaza 5 The Funds will continue Distribution of this
Jersey City, NJ to household the report to persons other
07311-4992 share-holder documents than shareholders of the
indefinitely, until we Fund is authorized only
Shareholder Servicing are instructed otherwise. in connection with a
Agent If you do not wish to currently effective
SunAmerica Fund participate in prospectus, setting forth
Services, Inc. householding, please details of the Fund,
Harborside Financial contact Shareholder which must precede or
Center Services at (800) accompany this report.
3200 Plaza 5 858-8850 ext. 6010 or
Jersey City, NJ send a written request The accompanying report
07311-4992 with your name, the name has not been audited by
of your fund(s) and your independent accountants
Transfer Agent account number(s) to and accordingly no
State Street Bank and SunAmerica Mutual Funds opinion has been
Trust Company c/o BFDS, P.O. Box expressed thereon.
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.
28
[GRAPHIC]
Go Paperless!!
Did you know that you have the option to
receive your shareholder reports online?
By choosing this convenient service, you will no longer receive paper copies of
Fund documents such as annual reports, semi-annual reports, prospectuses and
proxy statements in the mail. Instead, you are provided with quick and easy
access to this information via the Internet.
Why Choose Electronic Delivery?
It's Quick -- Fund documents will be received faster than via traditional mail.
It's Convenient -- Elimination of bulky documents from personal files.
It's Cost Effective -- Reduction of your Fund's printing and mailing costs.
To sign up for electronic delivery, follow
these simple steps:
1 Go to
www.sunamericafunds.com
2
Click on the "Go Paperless" link.
3 Fill out the appropriate information
including the email address to which you
would like your information sent.
4 Click "Submit" --
It's that easy!
The email address you provide will be kept strictly confidential. Once your
enrollment has been processed, you will begin receiving email notifications
when anything you receive electronically is available online.
You can return to www.sunamericafunds.com at any time to change your email
address, edit your preferences or to cancel this service if you choose to
resume physical delivery of your Fund documents.
Please note - this option is only available to accounts opened through the
Funds.
For information on receiving this report online, see inside back cover.
Distributed by:
SunAmerica Capital Services, Inc.
Investors should carefully consider a Fund's investment objectives, risks,
charges and expenses before investing. The prospectus, containing this and
other important information, can be obtained from your financial adviser, the
SunAmerica Sales Desk at 800-858-8850, ext. 6003, or at
www.sunamericafunds.com. Read the prospectus carefully before investing.
www.sunamericafunds.com
SFSAN - 6/09
[LOGO]
AIG
Sun America
Mutual Funds
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board of Directors that were
implemented after the registrant last provided disclosure in response to
the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407)
(as required by 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this
Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures (as defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270.30a-3(c))). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940 (17 CFR 270.30a-3(d))) that occurred during the
registrant's last fiscal quarter of the period covered by this report
that has materially affected, or is reasonably likely to materially
affect, the registrant's internal contro1 over financial reporting.
Item 12. Exhibits.
(a) (1) Not applicable.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Senior Floating Rate Fund, Inc.
By: /s/ John T. Genoy
------------------------------------
John T. Genoy
President
Date: September 4, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John T. Genoy
------------------------------------
John T. Genoy
President
Date: September 4, 2009
By: /s/ Donna M. Handel
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Donna M. Handel
Treasurer
Date: September 4, 2009