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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: December 31, 2009
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Item 1. Reports to Stockholders
[GRAPHIC]
ANNUAL REPORT 2009
SUNAMERICA
Senior Floating Rate Fund
[LOGO] SunAmerica
Mutual Funds
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........................... 21
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. 29
APPROVAL OF ADVISORY AGREEMENTS......................... 30
DIRECTORS AND OFFICERS INFORMATION...................... 35
RESULTS OF SPECIAL SHAREHOLDERS MEETING................. 38
SHAREHOLDER AND TAX INFORMATION......................... 39
COMPARISON: FUND VS. INDEX.............................. 40
DECEMBER 31, 2009 ANNUAL REPORT
SHAREHOLDERS' LETTER -- (unaudited)
Dear Shareholders,
We are pleased to present the annual shareholder report for the SunAmerica
Senior Floating Rate Fund. Below, we've briefly outlined the market conditions
that have shaped the investment environment over the annual period ended
December 31, 2009.
Both the financial and economic markets withstood many remarkable twists and
turns during the past twelve months as fears that the Great Recession would
become the second Great Depression dissipated. The fiscal year began on a
precarious note as both the U.S. and global economic conditions continued to
deteriorate. On the fiscal front, the U.S. government responded by supporting a
variety of programs designed to support financial institutions and restart
consumer credit markets. With short-term interest rates effectively at zero,
the Federal Reserve embarked on a program of buying government bonds to create
new money in the economy.
The second fiscal quarter brought a belief that the economy had bottomed and
was on its way to a sustainable recovery. This renewed economic optimism
increased investors' risk appetite, launching a rally in the equity and credit
markets. The Federal Reserve met twice during the three-month period, leaving
rates unchanged and reiterating its commitment to employ all available tools to
promote price stability and economic recovery.
This Fed policy was warranted as conditions worsened over the course of the
summer and the unemployment rate rose to its highest rate in over 25 years,
leading some to worry that a weak labor market would undermine consumer
spending and damage the environment for a strong, sustainable economic recovery.
At year-end, a challenging economic landscape confronted both policymakers and
investors. Along with high unemployment, other critical issues included the
uncertain impact of consumer de-leveraging on the economy, a growing federal
budget deficit, and future inflationary threats. While the residential housing
market has begun showing signs of improvement, concerns remain regarding the
stability of the commercial real estate market.
The improvement in the credit markets and investors' greater appetite for risk
both benefited the leveraged loan market. As of year end, fundamentals had
improved as demand for bank loans have been strong. The new issue market has
also re-opened, which is providing new investment opportunities. With current
interest rates at all-time lows, the floating-rate coupons on bank loans can
provide investors a hedge against a future rise in rates. In addition, loans
benefit from being secured by collateral, which can help to provide downside
protection against negative surprises.
We remain diligent in the management of your assets and thank you for your
continued investment in the Fund. If you have any questions, or require
additional information on this or other SunAmerica Funds, we invite you to
visit www.sunamericafunds.com or call the Shareholder Services Department at
800-858-8850.
Sincerely,
THE SUNAMERICA SENIOR FLOATING RATE FUND PORTFOLIO MANAGER
Jeffrey W. Heuer
Wellington Management
- --------
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 -- DECEMBER 31, 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 July 1, 2009 and
held until December 31, 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 December 31, 2009" to estimate the expenses you paid on your
account during this period. For shareholder accounts in Class A and Class C,
the "Expenses Paid During the Six Months Ended December 31, 2009" column does
not include small account fees that may be charged if your account balance is
below $500 ($250 for retirement plan accounts). In addition, the "Expenses Paid
During the Six Months Ended December 31, 2009" column does not include
administrative fees that may apply to qualified retirement plan accounts. See
the Fund's prospectus, your retirement plan documents and/or materials from
your financial adviser, for a full description of these fees. Had these fees
been included, the "Expenses Paid During the Six Months Ended December 31,
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 Portfolios 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. For shareholder accounts in Class A and
Class C, the "Expenses Paid During the Six Months Ended December 31, 2009"
column does not include small account fees that may be charged if your account
balance is below $500 ($250 for retirement plan accounts). In addition, the
"Expenses Paid During the Six Months Ended December 31, 2009" column does not
include administrative fees that may apply to qualified retirement plan
accounts and accounts held through financial institutions. See the Fund's
prospectus, your retirement plan document and/or materials from your financial
adviser for full description of these fees. Had these fees been included, the
"Expenses Paid During the Six Months Ended December 31, 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, qualified retirement plan document and/or materials from your
financial adviser, for more information. Therefore, the "Hypothetical" example
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. In addition, if these
transaction costs and other fees were included, your costs would have been
higher.
2
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
EXPENSE EXAMPLE -- DECEMBER 31, 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 JULY 1, 2009 DECEMBER 31, 2009 DECEMBER 31, 2009* AT JULY 1, 2009 DECEMBER 31, 2009
--------------- ----------------- ------------------ --------------- -----------------
Senior Floating Rate Fund
Class A#............... $1,000.00 $1,183.29 $7.98 $1,000.00 $1,017.90
Class C#............... $1,000.00 $1,181.95 $9.62 $1,000.00 $1,016.38
-------------------
EXPENSE
EXPENSES PAID RATIO
DURING THE AS OF
SIX MONTHS ENDED DECEMBER 31,
DECEMBER 31, 2009* 2009*
------------------ ------------
Senior Floating Rate Fund
Class A#............... $7.38 1.45%
Class C#............... $8.89 1.75%
- --------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 184 days divided by 365
days. These ratios do not reflect transaction costs, including sales charges
on purchase payments, contingent deferred sales charges and administrative
fees, if applicable to your account. Please refer to your Prospectus, your
qualified retirement plan document and/or materials from your financial
advisor 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 Fund. As a result, if these fees and expenses had not been
waived, the "Actual/Hypothetical Ending Account Value" would have been lower
and the "Actual/Hypothetical Expenses Paid During the Six Months Ended
December 31, 2009" and the "Expense Ratios" would have been higher.
3
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES -- DECEMBER 31, 2009
ASSETS:
Long-term investment securities, at value (unaffiliated)*.......... $226,045,559
Short-term investment securities, at value (unaffiliated)*......... 1,738,618
Repurchase agreement (cost approximates market value).............. 14,205,000
------------
Total investments................................................ 241,989,177
Cash............................................................... 174,083
Receivable for:
Fund shares sold................................................. 2,025,704
Dividends and interest........................................... 1,355,227
Investments sold................................................. 7,040,592
Prepaid expenses and other assets.................................. 2,687
Due from investment adviser for expense reimbursements/fee waivers. 30,157
Due from distributor for fee waivers............................... 73,496
------------
Total assets..................................................... 252,691,123
------------
LIABILITIES:
Payable for:
Fund shares redeemed............................................. 346,451
Investments purchased............................................ 17,996,155
Investment advisory and management fees.......................... 161,849
Distribution and service maintenance fees........................ 110,023
Administration fees.............................................. 38,082
Transfer agent fees and expenses................................. 50,915
Directors' fees and expenses..................................... 848
Other accrued expenses........................................... 188,375
Dividends payable.................................................. 316,011
Commitments (Note 11).............................................. --
------------
Total liabilities................................................ 19,208,709
------------
Net Assets...................................................... $233,482,414
============
NET ASSETS REPRESENTED BY:
Common stock, $.01 par value....................................... $ 298,503
Additional paid-in capital......................................... 316,245,912
------------
316,544,415
Accumulated undistributed net investment income (loss)............. (229,083)
Accumulated undistributed net realized gain (loss) on investments.. (59,625,217)
Unrealized appreciation (depreciation) on investments.............. (23,207,701)
------------
Net Assets...................................................... $233,482,414
============
CLASS A:
Net assets......................................................... $103,932,294
Shares outstanding................................................. 13,282,042
Net asset value and redemption price per share..................... $ 7.83
Maximum sales charge (3.75% of offering price)..................... 0.31
------------
Maximum offering price to public................................... $ 8.14
============
CLASS C:
Net assets......................................................... $129,550,120
Shares outstanding................................................. 16,568,276
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charges)...... $ 7.82
============
*COST
Long-term investment securities (unaffiliated)................... $249,253,260
============
Short-term investment securities (unaffiliated).................. $ 1,738,618
============
See Notes to Financial Statements
4
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF OPERATIONS -- FOR THE YEAR ENDED DECEMBER 31, 2009
INVESTMENT INCOME:
Interest (unaffiliated)................................................................ $ 9,265,580
Dividends (unaffiliated)............................................................... 18,921
Facility and other fee income (Note 2)................................................. 2,279,729
------------
Total investment income............................................................. 11,564,230
------------
EXPENSES:
Investment advisory and management fees................................................ 1,491,196
Administration fees.................................................................... 560,437
Distribution and service maintenance fees:
Class A.............................................................................. 206,677
Class B*............................................................................. 21,378
Class C.............................................................................. 810,243
Class Q*............................................................................. 6,202
Transfer agent fees and expenses:
Class A.............................................................................. 137,320
Class B*............................................................................. 7,925
Class C.............................................................................. 251,101
Class D*............................................................................. 5,827
Class Q*............................................................................. 8,228
Registration fees:
Class A.............................................................................. 26,185
Class B*............................................................................. 6,609
Class C.............................................................................. 23,879
Class D*............................................................................. --
Class Q*............................................................................. --
Accounting service fees................................................................ 27,265
Custodian and accounting fees.......................................................... 68,044
Reports to shareholders................................................................ 51,760
Audit and tax fees..................................................................... 89,944
Legal fees............................................................................. 40,690
Directors' fees and expenses........................................................... 29,734
Interest expense....................................................................... 764
Other expenses......................................................................... 105,029
------------
Total expenses before fee waivers, expense reimbursements and custody credits....... 3,976,437
Fees waived and expenses reimbursed by investment adviser and distributor (Note 5).. (1,103,856)
Custody credits earned on cash balances............................................. (2)
------------
Net expenses........................................................................ 2,872,579
------------
Net investment income (loss)........................................................... 8,691,651
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments (unaffiliated)................................. (20,970,390)
Change in unrealized appreciation (depreciation) on investments (unaffiliated)......... 92,014,874
------------
Net realized and unrealized gain (loss) on investments................................. 71,044,484
------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................ $ 79,736,135
============
- --------
* See Note 1
See Notes to Financial Statements
5
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2009 2008
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss)......................................... $ 8,691,651 $ 15,913,863
Net realized gain (loss) on investments (unaffiliated)............... (20,970,390) (22,486,848)
Net unrealized gain (loss) on investments (unaffiliated)............. 92,014,874 (91,985,010)
------------- -------------
Increase (decrease) in net assets resulting from operations........... 79,736,135 (98,557,995)
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)...................................... (2,992,553) (3,963,017)
Net investment income (Class B)*..................................... (193,048) (828,020)
Net investment income (Class C)...................................... (5,360,408) (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................................... (8,860,311) (15,916,541)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS (NOTE 3)................................................ 35,187,841 (117,400,217)
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS............................... 106,063,665 (231,874,753)
------------- -------------
NET ASSETS:
Beginning of period................................................... 127,418,749 359,293,502
------------- -------------
End of period+........................................................ $ 233,482,414 $ 127,418,749
============= =============
- --------
+Includes accumulated undistributed net investment income (loss)...... $ (229,083) $ (35,961)
============= =============
* See Note 1
See Notes to Financial Statements
6
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF CASH FLOWS -- FOR THE YEAR ENDED DECEMBER 31, 2009
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets from operations.................................................................... $ 79,736,135
ADJUSTMENTS TO RECONCILE NET INCREASE IN NET ASSETS FROM OPERATIONS TO NET CASH USED IN OPERATING ACTIVITIES:
Purchase of loans........................................................................................... (150,610,283)
Proceeds from loans sold.................................................................................... 113,029,283
Loan principal paydowns..................................................................................... 12,343,326
Net purchases of short-term securities...................................................................... (15,943,618)
Accretion of facility fee income............................................................................ (1,930,963)
Decrease in receivable for dividends and interest........................................................... 1,015,948
Increase in receivable for investments sold................................................................. (4,115,229)
Decrease in amount due from investment adviser for expense reimbursements/fee waivers....................... 11,403
Increase in amount due from distributor for fee waivers..................................................... (49,091)
Decrease in prepaid expenses and other assets............................................................... 12,688
Increase in payable for investments purchased............................................................... 17,740,762
Increase in payable for investment advisory and management fees............................................. 65,334
Increase in payable for distribution and service maintenance fees........................................... 38,739
Decrease in payable for administration fees................................................................. (7,337)
Decrease in other accrued expenses.......................................................................... (4,095,656)
Unrealized appreciation on investments...................................................................... (92,014,874)
Net realized loss from investments.......................................................................... 20,970,390
-------------
Net cash used in operating activities......................................................................... $ (23,803,043)
-------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shares sold..................................................................................... 112,674,073
Payment on shares redeemed.................................................................................... (85,059,652)
Cash dividends paid........................................................................................... (3,637,295)
-------------
Net cash provided by financing activities..................................................................... $ 23,977,126
-------------
Net increase in cash.......................................................................................... 174,083
Cash balance at beginning of period........................................................................... --
-------------
Cash balance at end of period................................................................................. $ 174,083
=============
Supplemental disclosure of cash flow information:
Noncash financing activities not included herein consist of reinvestment of
dividends and distributions of $5,206,478.
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%(4)
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
12/31/09 5.14 0.32 2.72 3.04 (0.35) -- (0.35) 7.83 60.63 103,932 1.45
CLASS C
- - - - - - - -------
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
12/31/09 5.14 0.32 2.69 3.01 (0.33) -- (0.33) 7.82 59.94 129,550 1.75
RATIO OF
NET
INVESTMENT
INCOME TO
PERIOD AVERAGE PORTFOLIO
ENDED NET ASSETS(3) TURNOVER
- ---------- ------------- ---------
- -
10/04/06*-
12/31/06 6.78%(4) 61%
12/31/07 6.58 91
12/31/08 6.05 32
12/31/09 4.94 74
- -
12/31/05 4.36% 57%
12/31/06 6.26 61
12/31/07 6.24 91
12/31/08 5.89 32
12/31/09 4.88 74
- --------
* 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
daily net assets) (See Note 5):
12/31/05 12/31/06 12/31/07 12/31/08 12/31/09
-------- -------- -------- -------- --------
Class A. -- 1.81%(4) 0.59% 0.65% 0.55%
Class C. 0.57 0.64 0.65 0.73 0.66
(4)Annualized
See Notes to Financial Statements
8
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO PROFILE -- DECEMBER 31, 2009 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Media....................................................... 18.3%
Repurchase Agreement........................................ 6.1
Hotels, Restaurants & Leisure............................... 6.1
Diversified Financial Services.............................. 5.8
Chemicals................................................... 5.3
Commercial Services & Supplies.............................. 4.2
IT Services................................................. 4.1
Oil, Gas & Consumable Fuels................................. 3.6
Auto Components............................................. 3.3
Specialty Retail............................................ 2.9
Software.................................................... 2.7
Insurance................................................... 2.6
Road & Rail................................................. 2.6
Household Products.......................................... 2.2
Food & Staples Retailing.................................... 2.2
Industrial Conglomerates.................................... 2.0
Building Products........................................... 1.9
Airlines.................................................... 1.7
Health Care Equipment & Supplies............................ 1.6
Machinery................................................... 1.6
Energy Equipment & Services................................. 1.5
Industrial Power Producers & Energy Traders................. 1.4
Health Care Providers & Services............................ 1.3
Containers & Packaging...................................... 1.2
Multi Utilities............................................. 1.2
Capital Markets............................................. 1.2
Automobiles................................................. 1.2
Semiconductors & Semiconductor Equipment.................... 1.1
Distributors................................................ 0.9
Marine...................................................... 0.9
Multiline Retail............................................ 0.8
Communications Equipment.................................... 0.8
Aerospace & Defense......................................... 0.8
Registered Investment Companies............................. 0.7
Real Estate Management & Development........................ 0.7
Electrical Equipment........................................ 0.6
Diversified Consumer Services............................... 0.6
Wireless Telecommunication Services......................... 0.6
Internet Software & Services................................ 0.6
Electric Utilities.......................................... 0.6
Pharmaceuticals............................................. 0.5
Metals & Mining............................................. 0.5
Transportation Infrastructure............................... 0.5
Internet & Catalog Retail................................... 0.4
Professional Services....................................... 0.4
Diversified Telecommunication Services...................... 0.4
Energy -- Alternate Sources................................. 0.3
Gas Utilities............................................... 0.3
Electronic Equipment, Instruments & Components.............. 0.2
Textiles, Apparel & Luxury Goods............................ 0.2
Paper & Forest Products..................................... 0.2
Food Products............................................... 0.1
Publishing.................................................. 0.1
-----
103.6%
=====
CREDIT QUALITY+#
BBB-....... 0.4%
BB+........ 1.4
BB......... 5.6
BB-........ 9.7
B+......... 22.2
B.......... 12.1
B-......... 13.5
CCC+....... 4.2
CCC........ 3.5
CCC-....... 1.9
CC......... 1.0
D.......... 3.6
Not Rated@. 20.9
-----
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 -- DECEMBER 31, 2009
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL MARKET VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
- ------------------------------------------------------------------------------------------------------------
LOANS(3)(4) -- 92.6%
AEROSPACE & DEFENSE -- 0.8%
TASC, Inc........................ BTL-A Ba2 BB 3.25% 12/18/14 $ 383,333 $ 384,931
TASC, Inc........................ BTL-B Ba2 BB 6.56 12/18/15 766,667 771,618
Wesco International, Inc......... 2nd Lien B3 B- 5.99 03/29/14 800,000 714,000
------------
1,870,549
------------
AIRLINES -- 1.7%
Continental Airlines, Inc........ BTL-A1 NR NR 3.63 06/03/11 285,714 271,429
Continental Airlines, Inc........ BTL-A2 NR NR 3.63 06/01/11 714,286 678,571
Delta Air Lines, Inc............. 2nd Lien NR BB- 3.53 04/30/14 975,000 816,156
United Airlines, Inc............. Tranche B B3 B+ 2.31 02/01/14 1,394,444 1,098,125
US Airways Group, Inc............ BTL B3 B+ 2.78 03/23/14 1,460,000 993,321
------------
3,857,602
------------
AUTO COMPONENTS -- 3.3%
Allison Transmission, Inc........ BTL-B B2 B 2.99-3.04 08/07/14 940,810 866,251
Federal Mogul Corp............... BTL-B NR NR 2.17 12/27/15 1,655,405 1,394,679
Federal Mogul Corp............... BTL-C Ba3 B+ 2.17 12/27/15 844,595 711,571
FleetPride Corp.................. BTL-B Ba3 BB- 2.75-2.78 06/28/13 226,563 193,711
Lear Corp........................ BTL-B Ba2 BB- 7.50 11/09/14 1,120,313 1,127,782
United Components, Inc........... Tranche D B1 B+ 2.25 06/30/12 1,066,465 987,813
Veyance Technologies, Inc........ 1st Lien NR NR 2.74 07/31/14 2,565,937 2,102,999
Veyance Technologies, Inc........ Delayed Draw NR NR 2.74 07/31/14 367,500 301,197
------------
7,686,003
------------
AUTOMOBILES -- 1.2%
Ford Motor Co.................... BTL-B Ba3 B- 3.29 12/15/13 3,000,000 2,787,501
------------
BUILDING PRODUCTS -- 1.9%
Brand Services, Inc.............. BTL NR B 2.56 02/07/14 1,945,000 1,811,281
Brand Services, Inc.............. BTL-B2 NR B 3.56 02/07/14 977,500 912,741
Building Materials Holding Corp.. Junior 2nd Lien B2 NR 6.06 09/15/14 714,286 658,929
Building Materials Holding Corp.. BTL Ba3 BB 3.00 02/22/14 970,409 902,178
PGT Industries, Inc.............. BTL-A2 NR NR 7.25 02/14/12 248,780 192,805
------------
4,477,934
------------
CAPITAL MARKETS -- 1.2%
Nuveen Investments, Inc.......... BTL-B B3 B 3.28 11/13/14 1,000,000 879,250
Tensar Earth Technologies, Inc... BTL-B B3 CCC+ 3.78 10/31/12 831,826 657,142
TPF Generation Holdings LLC...... 2nd Lien B3 B+ 4.48-4.50 12/15/14 1,500,000 1,288,125
------------
2,824,517
------------
10
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2009 -- (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL MARKET VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------
CHEMICALS -- 5.3%
AZ Chemicals, Inc.................... 1st Lien B1 BB- 2.24% 02/28/13 $ 847,320 $ 819,782
Brenntag AG.......................... BTL NR B+ 1.98-2.74 01/18/14 47,975 46,296
Brenntag AG.......................... BTL-B2 NR B+ 1.98 01/18/14 158,762 153,205
Cognis GmbH.......................... BTL-C NR NR 2.25 09/15/13 1,000,000 935,000
Cristal Inorganic Chemicals US, Inc.. 1st Lien B1 B 2.50 05/15/14 890,236 803,438
Ferro Corp........................... BTL NR NR 6.25-6.29 06/06/12 651,262 633,352
Hexion Specialty Chemicals, Inc...... BTL-C1 B1 CCC+ 2.56 05/05/13 1,044,838 914,234
Hexion Specialty Chemicals, Inc...... BTL-C2 NR NR 2.56 05/05/13 172,215 150,688
Huntsman International LLC........... BTL-B Ba2 B+ 1.98 04/21/14 2,848,978 2,700,423
Huntsman International LLC........... BTL-C Ba2 B+ 2.48 06/23/16 310,000 295,275
Ineos US Finance LLC................. BTL-B Caa1 B- 7.50 12/16/13 671,681 610,390
Ineos US Finance LLC................. BTL-C Caa1 B- 10.00 12/16/14 671,497 610,223
LyondellBasell Industries(5)(8)...... DIP NR NR 13.00 12/15/09 374,526 391,660
LyondellBasell Industries(5)......... Dutch TL-A NR NR 3.73 12/20/13 57,188 42,713
LyondellBasell Industries(5)......... Dutch Revolver NR NR 3.73 12/20/13 25,265 18,870
LyondellBasell Industries(5)......... GRM TL-B1 NR NR 3.98 12/22/14 72,533 54,173
LyondellBasell Industries(5)......... GRM TL-B2 NR NR 3.98 12/22/14 72,533 54,173
LyondellBasell Industries(5)......... GRM TL-B3 NR NR 3.98 12/22/14 72,533 54,173
LyondellBasell Industries(5)......... BTL-A Ba2 BB 3.73 12/20/13 180,513 134,482
LyondellBasell Industries(5)......... BTL-B1 NR NR 7.00 12/22/14 314,742 234,876
LyondellBasell Industries(5)......... BTL-B2 NR NR 7.00 12/22/14 314,742 234,482
LyondellBasell Industries(5)......... BTL-B3 NR NR 7.00 12/22/14 314,742 234,482
LyondellBasell Industries(5)......... Revolver NR NR 3.73 12/20/13 94,743 70,584
LyondellBasell Industries(5)......... Roll-up TL NR NR 5.79-6.56 12/15/09 560,595 583,720
Momentive Performance................ BTL-B1 B1 CCC+ 2.50 12/04/13 1,000,000 904,500
Solutia, Inc......................... BTL Ba3 B+ 7.25 02/28/14 741,117 754,086
------------
12,439,280
------------
COMMERCIAL SERVICES & SUPPLIES -- 3.2%
ATI Schools.......................... BTL-B B1 B 3.25 12/28/14 1,000,000 975,000
Audio Visual Services Group, Inc..... 2nd Lien NR NR 5.76 08/28/14 1,077,040 156,171
Entegra Power Group LLC.............. 2nd Lien B3 B+ 2.75 04/19/14 443,250 377,871
Key Safety Systems, Inc.............. 1st Lien NR BB 2.48-2.50 03/08/14 1,458,641 1,083,041
Ozburn-Hessey Holding Co. LLC........ BTL B1 B 3.50-3.53 08/10/12 498,487 474,809
Protection One, Inc.................. BTL NR BB 6.25 03/31/14 622,842 600,264
Reynolds Group Holdings, Inc......... BTL-B B1 BB- 6.25 11/05/15 990,000 997,425
Spectrum Brands, Inc................. BTL B3 B- 8.50 06/30/12 1,000,000 992,188
ValleyCrest Cos...................... 1st Lien NR NR 2.29 10/04/13 955,135 878,724
World Color (USA) Corp............... BTL Ba3 B+ 9.00 07/21/12 998,194 1,005,057
------------
7,540,550
------------
COMMUNICATIONS EQUIPMENT -- 0.8%
Aeroflex, Inc........................ BTL-B1 Ba3 BB- 3.56 08/15/14 1,980,126 1,818,418
------------
CONTAINERS & PACKAGING -- 1.2%
Berry Plastics Corp.................. BTL-C B1 B 2.25 04/03/15 994,885 868,348
Consolidated Container Co............ 2nd Lien Caa1 CCC 5.75 09/28/14 1,250,000 1,047,916
Graham Packaging Co. LP.............. BTL-B B1 B+ 2.50 10/07/11 84,600 83,437
Graham Packaging Co. LP.............. BTL-C B1 B+ 6.75 04/05/14 846,705 854,231
------------
2,853,932
------------
DISTRIBUTORS -- 0.9%
CDW Corp............................. BTL-B B2 B- 4.23 10/12/14 2,493,734 2,155,744
------------
DIVERSIFIED CONSUMER SERVICES -- 0.6%
Vertrue, Inc......................... BTL Ba3 B 3.26 08/18/14 1,250,000 1,025,000
Vertrue, Inc......................... 2nd Lien Caa1 CCC+ 7.26 08/14/15 605,000 408,375
------------
1,433,375
------------
11
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2009 -- (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL MARKET VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
- -----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES -- 5.8%
BLB Management Services, Inc.+(5)(7)................. 1st Lien NR B+ 4.75% 08/11/11 $ 244,571 $ 152,857
BLB Management Services, Inc.+(5)(7)................. 2nd Lien NR B- 6.50 07/18/12 250,000 16,875
Bridge Information Systems, Inc. +@# (5)(6).......... BTL-B NR NR 6.25 05/29/05 356,779 0
BRSP LLC............................................. BTL B2 NR 7.50 06/17/14 976,760 957,224
CIT Group, Inc....................................... BTL-A NR NR 9.50 01/20/12 6,000,000 6,165,000
Fox Acquisition LLC.................................. BTL-B B2 B 7.50 07/14/15 997,475 942,614
LPL Holdings, Inc.................................... Tranche D Ba3 B+ 2.00 06/28/13 1,954,774 1,843,596
National Processing Co. LLC.......................... 1st Lien B2 B+ 5.25-7.00 09/29/12 1,213,211 1,163,166
National Processing Co. LLC.......................... 2nd Lien Caa2 CCC+ 10.75 09/29/14 500,000 445,000
Pinnacle Foods Group, Inc............................ BTL-B B2 B 2.99 04/02/14 975,000 911,218
Universal City Apartment Holding..................... BTL-B Ba2 B+ 6.50 10/20/14 870,000 874,568
------------
13,472,118
------------
DIVERSIFIED TELECOMMUNICATION SERVICES -- 0.4%
West Corp............................................ BTL-B2 B1 BB- 2.61 10/24/13 994,885 940,166
------------
ELECTRIC UTILITIES -- 0.6%
KGen Power Corp...................................... LOC B1 BB 2.06 02/08/14 375,000 356,250
KGen Power Corp...................................... BTL B1 BB 2.00 02/08/14 606,250 575,938
La Paloma Generating Co.............................. Delayed Draw B3 B- 2.00 08/16/12 14,464 12,439
La Paloma Generating Co.............................. LOC B3 B- 1.98 08/16/12 32,787 28,197
La Paloma Generating Co.............................. 1st Lien B3 B- 2.00 08/16/12 181,615 156,189
La Paloma Generating Co.............................. 2nd Lien Caa2 CCC- 3.75 08/16/13 250,000 183,250
Mach Gen LLC......................................... LOC Ba3 BB- 2.28 02/22/13 88,760 81,215
------------
1,393,478
------------
ELECTRICAL EQUIPMENT -- 0.6%
Generac Power Systems, Inc........................... 2nd Lien NR NR 6.28 05/10/14 1,000,000 920,000
NSG Holdings II LLC.................................. LOC Ba2 BB 1.75 06/15/14 102,041 93,878
NSG Holdings II LLC.................................. BTL Ba2 BB 1.75 06/15/14 498,882 458,972
------------
1,472,850
------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS -- 0.2%
X-Rite, Inc.......................................... 1st Lien B2 B+ 6.75-7.50 10/24/12 582,513 503,145
------------
ENERGY EQUIPMENT & SERVICES -- 1.3%
Big West Oil LLC(5).................................. Delayed Draw NR D 4.50 05/15/14 1,092,342 1,048,648
Big West Oil LLC(5).................................. BTL-B Caa3 NR 4.50 05/15/14 868,908 834,152
MEG Energy Corp...................................... BTL-D B2 BB+ 6.00 04/03/16 1,246,875 1,234,406
------------
3,117,206
------------
FOOD & STAPLES RETAILING -- 2.2%
Best Brands Corp..................................... BTL-C Caa2 CCC 12.00 06/12/13 1,671,666 1,379,124
Rite Aid Corp........................................ BTL-B2 B3 B+ 1.99 06/04/14 994,937 936,235
Rite Aid Corp........................................ BTL-4 B3 B+ 9.50 06/10/15 1,000,000 1,038,281
Smart & Final, Inc................................... Delayed Draw NR B 3.25-3.26 05/31/14 402,010 368,342
Smart & Final, Inc................................... 1st Lien B3 B 3.23-3.26 05/31/14 572,915 524,933
Smart & Final, Inc................................... 2nd Lien Caa2 CCC 7.78 11/30/14 1,040,994 879,640
------------
5,126,555
------------
FOOD PRODUCTS -- 0.1%
Fresh Start Bakeries, Inc............................ 2nd Lien NR NR 6.00 03/29/14 250,000 207,500
------------
GAS UTILITIES -- 0.3%
Targa Resources, Inc................................. BTL-B B1 BB- 2.23 01/06/16 670,000 672,513
------------
12
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2009 -- (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL MARKET VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
- ----------------------------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES -- 1.6%
AMR/EmCare Holdings............................... BTL B2 B+ 2.23% 02/15/12 $ 570,756 $ 550,780
Butler Animal Health Supply LLC................... BTL-B B1 BB- 13.00 11/30/16 690,000 692,588
Gambro AB......................................... BTL-B NR NR 2.77 06/05/14 430,973 382,847
Gambro AB......................................... BTL-C NR NR 3.27 06/05/15 430,973 382,847
PTS Pharmaceuticals............................... BTL-B Ba3 BB- 2.48 04/10/14 1,950,000 1,664,813
------------
3,673,875
------------
HEALTH CARE PROVIDERS & SERVICES -- 1.3%
Alliance HealthCare Services, Inc................. BTL-B Ba3 BB- 5.50 06/01/16 335,000 331,231
Community Health Systems, Inc..................... Delayed Draw Ba3 BB 2.51 07/25/14 97,078 91,766
Community Health Systems, Inc..................... BTL NR NR 2.51 07/15/14 1,899,332 1,795,396
RehabCare Group, Inc.............................. BTL-B Ba3 BB 6.00 11/24/15 495,000 491,030
Team Health, Inc.................................. BTL-B B1 BB 2.25-2.29 11/23/12 240,000 228,600
------------
2,938,023
------------
HOTELS, RESTAURANTS & LEISURE -- 6.1%
24 Hour Fitness Worldwide, Inc.................... BTL-B Ba3 B+ 2.76-2.79 06/08/12 1,925,000 1,802,281
CCM Merger, Inc................................... BTL-B B3 BB- 8.50 07/21/12 427,910 418,817
Fairmont Hotels and Resorts....................... BTL-B NR NR 6.50 05/11/11 305,031 227,248
Gateway Casinos & Entertainment, Inc.+(7)......... Delayed Draw B3 CCC- 2.79 09/30/14 497,500 414,169
Gateway Casinos & Entertainment, Inc.+(7)......... 1st Lien B3 CCC- 2.79 09/30/14 2,456,250 2,044,828
Golden Nugget, Inc................................ 1st Lien Caa3 CC 2.26 06/30/14 1,266,364 847,672
Golden Nugget, Inc................................ Delayed Draw Caa3 CC 2.26-2.29 06/30/14 720,909 482,559
Green Valley Ranch Gaming LLC..................... 2nd Lien Ca BB- 3.50 08/06/14 1,000,000 170,000
Isle of Capri Casinos, Inc........................ BTL B1 B+ 2.00 07/26/14 1,100,388 1,035,587
Isle of Capri Casinos, Inc........................ Delayed Draw A B1 B+ 1.98 07/26/14 331,815 312,275
Isle of Capri Casinos, Inc........................ Delayed Draw B B1 B+ 1.98 07/26/14 440,155 414,235
Las Vegas Sands, Inc.............................. BTL B3 B- 2.01 05/23/14 2,925,000 2,569,820
NPC International, Inc............................ BTL Ba3 B+ 1.99-2.04 09/29/13 1,474,594 1,387,962
Quizno's LLC...................................... 1st Lien NR NR 2.56 05/05/13 2,162,730 1,777,044
Travelport, Inc................................... BTL-B Ba3 NR 2.78 08/23/13 261,577 250,297
------------
14,154,794
------------
HOUSEHOLD PRODUCTS -- 2.2%
American Achievement Corp......................... BTL-B B1 B+ 6.25-6.50 03/25/11 224,215 213,004
Diversey, Inc..................................... BTL-B Ba2 BB- 5.50 11/23/15 1,150,000 1,160,781
Huish Detergents, Inc............................. 1st Lien Ba2 BB 2.01 04/26/14 1,950,000 1,833,000
KIK Custom Products............................... CND TL NR NR 2.54 05/31/14 354,354 294,114
KIK Custom Products............................... BTL B3 CCC+ 2.54 05/24/14 2,067,067 1,715,666
------------
5,216,565
------------
INDUSTRIAL CONGLOMERATES -- 2.0%
Dresser, Inc...................................... 2nd Lien B3 B- 5.99-6.02 05/04/15 1,000,000 942,500
GenTek, Inc....................................... BTL B1 B+ 4.30 10/29/14 1,125,000 1,137,422
Harland Clarke Holdings Corp...................... BTL-B B1 B+ 2.73-2.75 04/04/14 1,989,796 1,683,865
Sequa Corp........................................ BTL-B B2 B- 3.51-3.94 12/03/14 1,000,000 895,625
------------
4,659,412
------------
INDUSTRIAL POWER PRODUCERS & ENERGY TRADERS -- 0.2%
Calpine Corp...................................... BTL B2 B+ 3.14 03/29/14 574,666 544,784
------------
INSURANCE -- 2.6%
Alliant Holdings, Inc............................. BTL-B B2 B 3.25 08/21/14 977,500 896,856
Amwins Group, Inc................................. 1st Lien B2 B- 2.76 06/08/13 1,950,000 1,701,375
Hub International Holdings, Inc................... BTL B2 B 2.75 06/13/14 2,389,706 2,198,529
Hub International Holdings, Inc................... Delayed Draw B2 B 2.75 06/13/14 537,147 494,175
USI Holdings Corp................................. BTL-B B2 B- 3.01 05/04/14 977,444 872,368
------------
6,163,303
------------
13
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2009 -- (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL MARKET VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
- ------------------------------------------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL -- 0.4%
Affinity Group, Inc...................... BTL B1 CC 12.75% 03/31/10 $ 833,712 $ 787,858
Affinity Group, Inc...................... BTL-A B1 CC 12.75 03/31/10 181,518 171,534
------------
959,392
------------
INTERNET SOFTWARE & SERVICES -- 0.6%
Skype Technologies SA.................... BTL B1 B+ 9.00 11/19/14 1,370,000 1,411,784
------------
IT SERVICES -- 4.1%
First Data Corp.......................... BTL-B1 B1 B+ 2.98-3.00 09/24/14 1,960,012 1,744,411
First Data Corp.......................... BTL-B2 B1 B+ 3.00 09/24/14 496,193 442,728
First Data Corp.......................... BTL-B3 B1 B+ 3.00 09/24/14 977,500 868,753
iPayment, Inc............................ BTL-B B1 B- 2.23-2.25 05/10/13 1,744,966 1,609,731
Sabre Holdings Corp...................... BTL-B B1 B 2.48-2.49 09/30/14 1,443,615 1,315,494
Sungard Data Systems, Inc................ BTL-B Ba3 BB 3.87-3.90 02/28/16 958,397 937,312
TransFirst Holdings, Inc................. BTL-B NR B 3.01 06/15/14 2,929,887 2,600,275
------------
9,518,704
------------
MACHINERY -- 1.6%
Accuride Corp.(5)........................ BTL-B NR NR 9.25 01/31/12 1,071,364 1,071,922
Gleason Corp............................. BTL-B NR NR 2.00-2.06 06/23/13 974,912 945,665
Manitowoc Co., Inc....................... BTL-B B1 BB 7.50 11/07/14 867,500 843,644
NACCO Materials Handling Group, Inc...... BTL NR NR 2.23-2.52 03/21/13 969,849 785,578
------------
3,646,809
------------
MARINE -- 0.9%
Dockwise Transport BV.................... BTL-B NR NR 2.00 04/01/15 229,538 221,963
Dockwise Transport BV.................... BTL-B2 NR NR 2.03 04/01/15 469,635 454,137
Dockwise Transport BV.................... BTL-C NR NR 3.16 04/01/16 192,401 186,051
Dockwise Transport BV.................... BTL-C2 NR NR 3.16 04/01/16 469,635 454,137
Dockwise Transport BV.................... BTL-D NR NR 4.75 07/12/16 241,913 226,491
Dockwise Transport BV.................... BTL-D2 NR NR 4.78 07/12/16 483,825 452,981
------------
1,995,760
------------
MEDIA -- 17.9%
Advanstar Communications, Inc............ 1st Lien Caa2 CCC+ 2.50 05/31/14 1,952,444 1,343,931
Caribe Information Investment, Inc....... BTL-B B2 CCC+ 2.49-2.54 03/31/13 1,676,157 1,173,310
Century -- TCI California LP+@#(5)....... Revolver NR NR 6.50 12/31/07 10,000 0
Cequel Communications LLC................ BTL NR NR 2.26-4.25 11/05/13 1,656,224 1,575,483
Charter Communications Operating LLC..... BTL Ba2 B+ 2.26 03/06/14 3,974,709 3,734,569
Cinram International, Inc................ BTL-B B2 B 2.28-2.48 05/05/11 822,615 713,619
Citadel Broadcasting Co.+(5)............. BTL-B NR D 1.99 06/12/14 6,178,317 4,627,300
Cumulus Media, Inc....................... BTL Caa1 B- 4.23 06/11/14 1,698,374 1,452,110
Fender Musical Instruments Corp.......... Delayed Draw B2 B+ 2.54 06/06/14 329,167 281,438
Fender Musical Instruments Corp.......... BTL-B B2 B+ 2.51 06/07/14 650,000 555,750
Formula One Holdings..................... BTL-B1 NR NR 2.36 12/31/13 1,120,285 1,015,103
Formula One Holdings..................... BTL-B2 NR NR 2.36 12/31/13 756,721 685,673
Formula One Holdings..................... BTL-D2 NR NR 3.73 06/30/14 1,500,000 1,284,167
GateHouse Media Operating, Inc........... Delayed Draw Ca CCC 2.24 08/28/14 815,217 300,611
GateHouse Media Operating, Inc........... BTL-B Ca CCC 2.24 08/28/14 3,184,783 1,174,389
GateHouse Media Operating, Inc........... BTL-C NR NR 2.49 08/28/14 1,000,000 368,750
Gray Television, Inc..................... BTL-B Caa1 CCC 3.79 12/31/14 856,009 748,651
Hicks Sports Group+(7)................... BTL-B NR NR 6.75 12/22/10 3,000,000 2,512,500
HIT Entertainment, Ltd................... BTL B1 B+ 2.53 08/05/12 896,357 773,108
HIT Entertainment, Ltd................... 2nd Lien Caa2 CCC 5.78 02/05/13 1,000,000 550,000
Idearc, Inc.@............................ BTL-B NR NR 6.25 12/31/15 771,501 760,892
Idearc, Inc.@............................ BTL-B NR NR 6.25 11/17/14 850,673 0
Local Insight Regatta Holdings, Inc...... BTL B2 B- 7.75 04/23/15 721,315 569,839
Media Communiations LLC.................. BTL-D Ba3 BB- 5.50 03/31/17 962,588 896,891
Metro-Goldwyn-Mayer Studios, Inc.+(7)(9). BTL-B NR NR 20.50 03/15/12 2,887,500 1,867,595
Mission Broadcasting, Inc................ BTL-B B1 B 5.00 10/01/12 1,164,509 1,094,638
14
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2009 -- (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL MARKET VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------------------------------------------
MEDIA -- (CONTINUED)
Nexstar Broadcasting, Inc................... BTL-B NR B+ 5.00% 10/01/12 $1,100,905 $ 1,034,851
NextMedia Operating, Inc.+(5)(7)............ 2nd Lien NR D 9.25 11/15/13 506,366 200,014
Nielsen Finance LLC......................... BTL Ba3 B+ 2.23 08/09/13 1,287,160 1,207,517
Sinclair Television Group, Inc.............. BTL-B Ba2 BB- 6.50 10/16/15 1,490,000 1,498,381
Spanish Broadcasting Systems, Inc........... 1st Lien Caa3 CCC+ 2.01 06/10/12 952,500 795,338
Tribune Co.+(5)(7).......................... BTL-B NR NR 6.50 05/17/14 3,925,075 2,036,133
Univision Communications, Inc............... BTL-B B2 B- 2.50 09/29/14 4,000,000 3,490,000
WideOpenWest Finance LLC.................... BTL B1 B- 2.76-4.75 06/18/14 992,500 917,236
Yell Group, Ltd............................. BTL-B NR NR 3.98 10/27/12 845,147 635,269
------------
41,875,056
------------
METALS & MINING -- 0.5%
Aleris International, Inc.(5)(8)............ DIP NR BB- 13.00 05/13/10 92,655 94,971
Aleris International, Inc.(5)............... BTL-C1 NR BB- 4.25 12/19/13 175,092 133,507
Novelis, Inc................................ BTL-B Ba3 BB 2.24-2.26 07/06/14 742,692 680,890
Novelis, Inc................................ BTL NR NR 2.24 07/06/14 252,220 231,232
------------
1,140,600
------------
MULTI UTILITIES -- 1.2%
Texas Competitive Electric Holdings Co. LLC. BTL-B1 B1 B+ 3.75-3.78 10/10/14 1,984,772 1,617,589
Texas Competitive Electric Holdings Co. LLC. BTL-B2 B1 B+ 3.73-3.75 10/10/14 1,484,810 1,212,904
------------
2,830,493
------------
MULTILINE RETAIL -- 0.8%
Neiman Marcus Group, Inc.................... BTL-B B3 BB- 2.26 04/06/13 1,254,116 1,140,350
RGIS LLC.................................... Delayed Draw B1 B- 2.75 04/30/14 45,153 39,763
RGIS LLC.................................... BTL-B B1 B- 2.75-2.78 04/30/14 903,061 795,258
------------
1,975,371
------------
OIL, GAS & CONSUMABLE FUELS -- 2.6%
Alon USA, Inc. (Edgington Facility)......... BTL B1 BB- 2.48 06/22/13 26,805 22,729
Alon USA, Inc. (Paramount Facility)......... BTL B1 BB- 2.48-2.51 06/22/13 214,444 181,831
ATP Oil & Gas Corp.......................... BTL-B1 NR NR 11.25 07/15/14 2,401,668 2,340,500
ATP Oil & Gas Corp.......................... BTL-B2 NR NR 11.75 01/15/11 373,170 363,666
Coffeyville Resources LLC................... BTL-B B2 B 8.50 12/28/13 518,382 520,585
NE Energy, Inc.............................. 2nd Lien B3 CCC+ 4.81 05/01/14 250,000 212,500
Pilot Travel Centers LLC.................... BTL-B Ba2 BBB- 1.81 11/12/15 965,000 972,474
Venoco, Inc................................. 2nd Lien B3 BB- 4.25 05/07/14 1,513,971 1,367,779
------------
5,982,064
------------
PAPER & FOREST PRODUCTS -- 0.2%
MMGS Packaging Acquisition.................. 2nd Lien NR NR 5.76 03/07/15 500,000 357,500
------------
PHARMACEUTICALS -- 0.5%
Warner Chilcott PLC......................... Tranche B1 B1 BB+ 5.75 04/30/15 222,034 222,778
Warner Chilcott PLC......................... Tranche B2 NR NR 5.75 04/30/15 488,475 490,112
Warner Chilcott PLC......................... BTL-A B1 BB+ 5.50 10/30/14 444,068 445,557
------------
1,158,447
------------
PROFESSIONAL SERVICES -- 0.4%
Bankruptcy Management Solutions, Inc........ 2nd Lien Caa3 B+ 6.48 07/31/13 241,875 19,350
CHG Cos., Inc............................... 2nd Lien NR NR 6.28 01/08/14 1,000,000 900,000
------------
919,350
------------
REAL ESTATE MANAGEMENT & DEVELOPMENT -- 0.7%
Realogy Corp................................ CLTL Caa1 CCC- 3.25 10/10/13 408,912 364,614
Realogy Corp................................ BTL Caa1 CCC- 3.29 10/10/13 1,518,816 1,354,278
------------
1,718,892
------------
15
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2009 -- (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL MARKET VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
- ------------------------------------------------------------------------------------------------------------------------
ROAD & RAIL -- 2.6%
Cardinal Logistics Management, Inc............. 2nd Lien NR NR 15.50% 03/28/14 $1,002,333 $ 100,233
Greatwide Logistics Services, Inc.+(5)(7)...... 2nd Lien NR B 9.31 06/05/14 1,000,000 150,000
Neff Corp...................................... 2nd Lien Ca NR 3.78 11/30/14 500,000 92,500
NES Rentals Holdings........................... 2nd Lien Caa2 D 7.13 07/20/13 2,157,140 1,542,355
NES Tanks...................................... 2nd Lien NR NR 4.03 04/06/14 500,000 285,000
Rental Service Corp............................ 2nd Lien Caa1 B- 3.79 11/30/13 1,638,949 1,533,783
Swift Transportation Co., Inc.................. BTL-B B3 B- 3.56 05/10/14 2,653,506 2,418,007
------------
6,121,878
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 1.1%
Freescale Semiconductor, Inc................... BTL-B B2 B- 1.99 12/01/13 2,989,659 2,629,031
------------
SOFTWARE -- 2.7%
Aspect Software, Inc........................... Tranche A-1 B1 BB- 3.25 06/29/11 286,552 268,642
Infor Global Solutions......................... Delayed Draw NR B+ 3.99 07/28/12 331,714 299,994
Infor Global Solutions......................... BTL NR B+ 3.99 04/18/11 635,786 574,989
IPC Systems, Inc............................... 2nd Lien Caa2 CCC 5.50 05/31/15 1,000,000 716,667
Reynolds & Reynolds Co......................... 1st Lien Ba2 BB 2.25 10/24/12 829,695 766,949
Reynolds & Reynolds Co......................... 2nd Lien B3 B 5.75 10/24/13 250,000 215,833
Sensata Technologies BV........................ BTL-B B2 B 2.03 04/27/13 2,687,760 2,398,826
Verint Systems, Inc............................ BTL NR B+ 3.49 05/25/14 1,110,000 1,046,175
------------
6,288,075
------------
SPECIALTY RETAIL -- 2.9%
Hillman Group, Inc............................. BTL-B NR BB- 4.77 03/01/12 612,091 609,031
Michaels Stores, Inc........................... BTL-B B3 B 2.56 10/31/13 1,246,762 1,129,879
Michaels Stores, Inc........................... BTL-B2 B3 B 4.81 07/31/16 1,677,861 1,584,080
National Bedding Co............................ 1st Lien NR BB 2.31 02/28/13 1,403,365 1,292,265
National Bedding Co............................ 2nd Lien NR CCC+ 5.31 02/28/14 1,000,000 831,667
Petco Animal Supplies, Inc..................... BTL-B B1 B+ 2.48-2.53 10/26/13 485,000 462,569
Simmons Co.(5)................................. BTL-C NR D 10.50 12/19/11 816,772 810,136
------------
6,719,627
------------
TEXTILES, APPAREL & LUXURY GOODS -- 0.2%
Hanesbrands, Inc............................... BTL-B Ba1 BB+ 5.25 12/10/15 400,000 404,750
------------
TRANSPORTATION INFRASTRUCTURE -- 0.5%
Central Parking Corp........................... LOC Ba2 CCC 2.56 05/22/14 379,310 292,069
Central Parking Corp........................... 1st Lien Ba2 CCC 2.56 05/22/14 1,044,514 804,276
------------
1,096,345
------------
WIRELESS TELECOMMUNICATION SERVICES -- 0.6%
MetroPCS Wireless, inc......................... BTL Ba2 BB- 2.50-2.56 11/03/13 1,488,462 1,424,738
------------
TOTAL LOANS (cost $236,196,097)................................................... 216,176,358
------------
CONVERTIBLE BONDS & NOTES -- 0.0%
CHEMICALS -- 0.0%
Wellman, Inc.
Bond
5.00% due 01/29/19@#
(cost $1,023,921)................................................................ 93,464 1,869
------------
16
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2009 -- (CONTINUED)
PRINCIPAL MARKET VALUE
INDUSTRY DESCRIPTION AMOUNT/SHARES (NOTE 2)
- -----------------------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES -- 4.0%
COMMERCIAL SERVICES & SUPPLIES -- 1.0%
ACCO Brands Corp.
Senior Sec. Notes
10.63% due 03/15/15*................................... $ 640,000 $ 704,000
Reynolds Group Holdings, Inc.
Senior Sec. Notes
7.75% due 10/15/16*.................................... 1,525,000 1,559,313
------------
2,263,313
------------
ENERGY -- ALTERNATE SOURCES -- 0.3%
Headwaters, Inc.
Senior Notes
11.38% due 11/01/14*................................... 750,000 781,875
------------
ENERGY EQUIPMENT & SERVICES -- 0.2%
McJunkin Red Man Corp.
Senior Notes
9.50% due 12/15/16*.................................... 545,000 532,738
------------
INDUSTRIAL POWER PRODUCERS & ENERGY TRADERS -- 1.2%
Calpine Corp.
Senior Sec. Notes
7.25% due 10/15/17*.................................... 2,902,000 2,785,920
------------
MEDIA -- 0.4%
QVC, Inc.
Senior Sec. Notes
7.50% due 10/01/19*.................................... 875,000 892,500
------------
OIL, GAS & CONSUMABLE FUELS -- 0.9%
Antero Resources Corp.
Senior Notes
9.38% due 12/01/17*.................................... 940,000 958,800
SandRidge Energy, Inc.
Senior Notes
8.75% due 01/15/20*.................................... 1,225,000 1,225,000
------------
2,183,800
------------
TOTAL U.S. CORPORATE BONDS & NOTES (cost $9,784,108).... 9,440,146
------------
COMMON STOCK -- 0.1%
PUBLISHING -- 0.1%
SuperMedia, Inc.@+# (cost $249,134)..................... 3,577 125,195
------------
MEMBERSHIP INTEREST -- 0.1%
MEDIA -- 0.0%
Advanstar Communications, Inc.+......................... 12,608 122,928
------------
OIL, GAS & CONSUMABLE FUELS -- 0.1%
Vitruvian Exploration LLC+.............................. 23,875 179,063
------------
TOTAL MEMBERSHIP INTEREST (cost $2,000,000)............. 301,991
------------
TOTAL LONG-TERM INVESTMENT SECURITIES (cost $249,253,260) 226,045,559
------------
17
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2009 -- (CONTINUED)
PRINCIPAL MARKET VALUE
INDUSTRY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT SECURITIES -- 0.7%
REGISTERED INVESTMENT COMPANIES -- 0.7%
SSgA Money Market Fund
(cost $1,738,618)....................................... $ 1,738,618 $ 1,738,618
------------
REPURCHASE AGREEMENT -- 6.1%
Banc of America Securities Joint Repurchase Agreement(10)
(cost $14,205,000)...................................... 14,205,000 14,205,000
------------
TOTAL INVESTMENTS -- 103.6%
(cost $265,196,878)(11).................................. 241,989,177
LIABILITIES IN EXCESS OF OTHER ASSETS -- (3.6)%.............. (8,506,763)
------------
NET ASSETS -- 100.0%......................................... $233,482,414
============
- --------
BTL Bank Term Loan
CLTL Credit Linked Term Loan
CND TL Canadian Term Loan
DIP Debtor in Possession
Dutch TLDutch Term Loan
GRM TL German Term Loan
LOC Letter of Credit
NR Security is not rated.
+ Non-income producing security
* Securities exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. The Fund has
no right to demand registration of these securities. At December 31,
2009, the aggregate value of these securities was $9,440,146
representing 4.0% of net assets. Unless otherwise indicated these
securities are not considered to be illiquid.
@ Illiquid security. At December 31, 2009, the aggregate value of these
securities was $886,087, representing 0.4% of net assets.
# Fair valued security. Securities are classified as Level 3 based on
securities valuation inputs; see Note 2
(1) Bank loans rated below Baa by Moody's Investor Service, Inc.
("Moody's") or BBB by Standard & Poor's Group ("S&P") are considered
below investment grade. Ratings provided are as of December 31, 2009.
(2) Based on the stated maturity, the weighted average to maturity of the
Loans held in the portfolio will be approximately 51 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 for 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) Company entered into a forbearance agreement under which consenting
lenders extended the date by which specified payments otherwise would
be due and payable to a subsequent date, subject to certain conditions.
(10) See Note 2 for details of the Joint Repurchase Agreement.
(11) See Note 6 for cost of investments on a tax basis.
18
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2009 -- (CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of December 31, 2009 (see Note 2):
LEVEL 1--UNADJUSTED LEVEL 2--OTHER LEVEL 3--SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
------------------- ----------------- -------------------- ------------
Long-Term Investment Securities:
Loans:
Aerospace & Defense............................. $ -- $ 1,156,549 $ 714,000 $ 1,870,549
Airlines........................................ -- 2,907,602 950,000 3,857,602
Auto Components................................. -- 5,109,800 2,576,203 7,686,003
Automobiles..................................... -- 2,787,501 -- 2,787,501
Building Products............................... -- 1,814,919 2,663,015 4,477,934
Capital Markets................................. -- 2,167,375 657,142 2,824,517
Chemicals....................................... -- 10,786,645 1,652,635 12,439,280
Commercial Services & Supplies.................. -- 2,367,484 5,173,066 7,540,550
Communications Equipment........................ -- 1,818,418 -- 1,818,418
Containers & Packaging.......................... -- 2,853,932 -- 2,853,932
Distributors.................................... -- 2,155,744 -- 2,155,744
Diversified Consumer Services................... -- -- 1,433,375 1,433,375
Diversified Financial Services.................. -- 10,957,548 2,514,570 13,472,118
Diversified Telecommunication Services.......... -- 940,166 -- 940,166
Electric Utilities.............................. -- 461,290 932,188 1,393,478
Electrical Equipment............................ -- -- 1,472,850 1,472,850
Electronic Equipment, Instruments & Components.. -- 503,145 -- 503,145
Energy Equipment & Services..................... -- -- 3,117,206 3,117,206
Food & Staples Retailing........................ -- 1,974,516 3,152,039 5,126,555
Food Products................................... -- -- 207,500 207,500
Gas Utilities................................... -- -- 672,513 672,513
Health Care Equipment & Supplies................ -- 2,430,507 1,243,368 3,673,875
Health Care Providers & Services................ -- 2,709,423 228,600 2,938,023
Hotels, Restaurants & Leisure................... -- 12,369,584 1,785,210 14,154,794
Household Products.............................. -- 1,833,000 3,383,565 5,216,565
Industrial Conglomerates........................ -- 4,659,412 -- 4,659,412
Industrial Power Producers & Energy Traders..... -- 544,784 -- 544,784
Insurance....................................... -- 872,368 5,290,935 6,163,303
Internet & Catalog Retail....................... -- -- 959,392 959,392
Internet Software & Services.................... -- 1,411,784 -- 1,411,784
IT Services..................................... -- 7,908,973 1,609,731 9,518,704
Machinery....................................... -- 1,915,566 1,731,243 3,646,809
Marine.......................................... -- 1,995,760 -- 1,995,760
Media........................................... -- 32,882,476 8,992,580 41,875,056
Metals & Mining................................. -- 1,007,093 133,507 1,140,600
Multi Utilities................................. -- 2,830,493 -- 2,830,493
Multiline Retail................................ -- 1,140,350 835,021 1,975,371
Oil, Gas & Consumable Fuels..................... -- 5,769,564 212,500 5,982,064
Paper & Forest Products......................... -- -- 357,500 357,500
Pharmaceuticals................................. 1,158,447 -- 1,158,447
Professional Services........................... -- -- 919,350 919,350
Real Estate Management & Development............ -- 1,718,892 -- 1,718,892
Road & Rail..................................... -- 4,044,290 2,077,588 6,121,878
Semiconductors & Semiconductor Equipment........ -- 2,629,031 -- 2,629,031
Software........................................ -- 4,973,258 1,314,817 6,288,075
Specialty Retail................................ -- 6,110,596 609,031 6,719,627
Textiles, Apparel & Luxury Goods................ -- 404,750 -- 404,750
Transportation Infrastructure................... -- 1,096,345 -- 1,096,345
Wireless Telecommunication Services............. -- 1,424,738 -- 1,424,738
Convertible Bonds & Notes........................ -- -- 1,869 1,869
U.S. Corporate Bonds & Notes..................... -- 9,440,146 -- 9,440,146
Common Stock..................................... -- -- 125,195 125,195
Membership Interest.............................. -- -- 301,991 301,991
Short-Term Investments:
Registered Investment Companies.................. -- 1,738,618 -- 1,738,618
Repurchase Agreement............................... -- 14,205,000 -- 14,205,000
---- ------------ ----------- ------------
TOTAL.............................................. $ -- $181,987,882 $60,001,295 $241,989,177
==== ============ =========== ============
19
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2009 -- (CONTINUED)
The following is a reconciliation of Level 3 assets for which significant
unobservable inputs were used to determine fair value:
CONVERTIBLE COMMON MEMBERSHIP
LOANS BONDS & NOTES STOCK INTEREST
------------ ------------- --------- -----------
Balance as of 12/31/2008......................... $ 67,034,563 $ -- $ -- $ --
Accrued discounts/premiums....................... 247,887 (81,376) -- --
Realized gain (loss)............................. (5,783,549) -- -- --
Change in unrealized appreciation (depreciation). 43,847,413 (926,550) (123,939) (1,698,009)
Net purchases (sales)............................ (19,127,758) 1,009,795 249,134 2,000,000
Transfers in and/or out of Level 3............... (26,646,316) -- -- --
------------ ---------- --------- -----------
Balance as of 12/31/2009......................... $ 59,572,240 $ 1,869 $ 125,195 $ 301,991
============ ========== ========= ===========
See Notes to Financial Statements
20
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2009
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
maintenance 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 its 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 Fund's 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 1940 Act, of the Fund (collectively, the
"Disinterested Directors"), the Fund provides the Disinterested Directors
with a limited indemnification against liabilities arising out of the
performance of their duties to the Fund, whether such liabilities are
asserted during or after their service as directors. In addition, in the
normal course of business the Fund enters into contracts that contain the
obligation to indemnify others. The Fund's maximum exposure under these
arrangements is unknown. Currently, however, the Fund expects the risk of
loss to be remote.
Note 2. Significant Accounting Policies
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles (GAAP) requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from these estimates and
those differences could be significant. The 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.
21
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2009 -- (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. The pricing services may use valuation models or matrix pricing
which considers information with respect to comparable bond and note
transactions, quotations from bond dealers, or by reference to other
securities that are considered comparable in such characteristics as rating,
interest rate, and maturity date, option adjusted spreads models,
prepayments projections, interest rate spreads, and yield curves to
determine current value. 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 60th day, are amortized to
maturity based on the value determined on the 61st 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.
The various inputs that may be used to determine the value of the Fund's
investments are summarized into 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,
referenced indices, quoted prices in inactive markets, adjusted quoted
prices in active 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
December 31, 2009 are reported on a schedule following the Portfolio of
Investments.
REPURCHASE AGREEMENTS: The Fund, along with other affiliated registered
investment companies, pursuant to procedures adopted by the Board and
applicable guidance from the Securities and Exchange Commission, may
transfer uninvested cash balances into a single joint account, the daily
aggregate balance of which is invested in one or more repurchase agreements
collateralized by U.S. Treasury or federal agency obligations. For
repurchase agreements and joint repurchase agreements, the Fund's custodian
takes possession of the collateral pledged for
22
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2009 -- (CONTINUED)
investments in such repurchase agreements. The underlying collateral is
valued daily on a mark-to-market basis, plus accrued interest, to ensure
that the value, at the time the agreement is entered into, is equal to at
least 102% of the repurchase price, including accrued interest. In the event
of default of the obligation to repurchase, a Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. If the seller defaults and the value of the collateral declines
or if bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Fund may be delayed or
limited.
As of December 31, 2009, the Fund held an undivided interest in the joint
repurchase agreement with Banc of America Securities, LLC:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- -----------
Senior Floating Rate Fund......................... 11.00% $14,205,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
Banc of America Securities, LLC, dated December 31, 2009, bearing interest
at a rate of 0.01% per annum, with a principal amount of $129,150,000, a
repurchase price of $129,150,144 and maturity date of January 4, 2010. The
repurchase agreement is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT MARKET VALUE
------------------ -------- -------- ---------------- ------------
U.S. Treasury Notes........... 1.88% 02/28/14 $132,730,000 $131,432,606
SECURITIES TRANSACTIONS, INVESTMENT INCOME, EXPENSES, DIVIDENDS AND
DISTRIBUTIONS TO SHAREHOLDERS: Security transactions are recorded on a trade
date basis. Realized gains and losses on sales of investments are calculated
on the identified cost basis. Interest income is accrued daily from
settlement date except when collection is 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 $1,930,963 for the year ended December 31, 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 $348,766 for the
year ended December 31, 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 by the
reclassifications.
The Fund intends to comply with the requirements of the Internal Revenue
Code, as amended, applicable to regulated investment companies and to
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 2006.
STATEMENT OF CASH FLOWS: Information on financial transactions which have
been settled through the receipt or disbursement of cash is presented in the
Statement of Cash Flows. The cash amount shown in the Statement of Cash
Flows is the amount included in the Fund's Statement of Assets and
Liabilities and represents cash on hand at its custodian bank account and
does not include any short-term investments at December 31, 2009.
23
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2009 -- (CONTINUED)
Note 3. Capital Share Transactions
The Fund has 1,000,000,000 of $.01 par value shares authorized that may be
issued in two different classes. Transactions in shares of each class were
as follows:
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 2009 DECEMBER 31, 2008
----------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS A ---------- ------------ ----------- -------------
Shares sold................. 11,873,563 $ 80,693,876 6,245,181 $ 51,114,036
Reinvested distributions.... 253,297 1,718,873 273,292 2,092,988
Shares redeemed............. (3,810,598) (26,274,981) (11,589,177) (91,945,003)
---------- ------------ ----------- -------------
Net increase (decrease).. 8,316,262 $ 56,137,768 5,070,704 $ (38,737,979)
========== ============ =========== =============
FOR THE
PERIOD FOR THE
JANUARY 1, 2009 THROUGH YEAR ENDED
JUNE 26, 2009 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 FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 2009 DECEMBER 31, 2008
----------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS C ---------- ------------ ----------- -------------
Shares sold................. 4,470,581 $ 29,899,027 3,712,260 $ 30,768,232
Reinvested distributions.... 486,422 3,166,433 812,486 6,128,175
Shares redeemed............. (5,154,834)(2) (33,536,109)(2) (14,346,426)(4) (109,402,031)(4)
---------- ------------ ----------- -------------
Net increase (decrease).. (197,831) $ (470,649) (9,821,680) $ (72,505,624)
========== ============ =========== =============
FOR THE
PERIOD FOR THE
JANUARY 1, 2009 THROUGH YEAR ENDED
JUNE 26, 2009 DECEMBER 31, 2008
----------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
CLASSD(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 FOR THE
JANUARY 1, 2009 THROUGH YEAR ENDED
JUNE 26, 2009 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.
24
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2009 -- (CONTINUED)
Note 4. Purchases and Sales of Securities
During the year ended December 31, 2009, the Fund's cost of purchases of
Loans and proceeds from Loan sales, including loan principal paydowns were
$150,610,283 and $125,372,609, 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 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.
Effective July 24, 2009, Wellington Management Company, LLP ("Wellington")
replaced AIG Global Investment Corp. ("AIGGIC") as subadviser to the Fund
pursuant to an Interim Subadvisory Agreement with SunAmerica. Under the
Interim Subadvisory Agreement, SunAmerica paid to Wellington a subadvisory
fee equal to the subadvisory fee that was previously paid to AIGGIC, which
was an annual rate of 0.25% of average daily net assets on the first $1
billion and 0.20% thereafter. Effective October 6, 2009, the New Subadvisory
Agreement between SunAmerica and Wellington went into effect. Pursuant to
the terms of the New Subadvisory Agreement, SunAmerica pays Wellington a
subadvisory fee equal to an annual rate of 0.30% of average daily net assets
on the first $500 million and 0.25% thereafter as compensation for its
services as subadviser. The fee paid to the subadviser is paid by SunAmerica
and not the Fund.
Pursuant to the Administrative Services Agreement (the "Administrative
Agreement") SunAmerica acts as the Fund's administrator and is responsible
for providing and supervising the performance by others, of administrative
services in connection with the operations of the Fund, subject to
supervision by the Fund's Board. For its services, SunAmerica receives an
annual fee equal to 0.20% of average daily net assets of the Fund+. For the
year ended December 31, 2009, the Fund incurred administration fees in the
amount of $560,437.
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
(each a "Plan" and collectively, the "Plans") in accordance with the
provisions of Rule 12b-1 under the 1940 Act, hereinafter referred to as the
"Class A Plan" and "Class C Plan". In adopting the Plans, the Board
determined that there was a reasonable likelihood that each such Plan would
benefit the Fund and the shareholders of the respective class. The sales
charge and distribution fees of a particular class will not be used to
subsidize the sale of shares of any other class.
Under the Class A Plan and Class C Plan, the Distributor receives payments
from the Fund at an annual rate of 0.10% and 0.50%, respectively, of the
average daily net assets of the Fund's Class A and Class C shares to
compensate the Distributor and certain securities firms for providing sales
and promotional activities for distributing that class of shares. The
distribution costs for which the Distributor may be compensated include fees
paid to broker-dealers that have sold Fund shares, commissions and other
expenses such as those incurred for sales literature, prospectus printing
and distribution and compensation to wholesalers. It is possible that in any
given year the amount paid to the Distributor under each Class' Plan may
exceed the Distributor's distribution costs as described above. The Plans
provide that the Class A and Class C shares of the Fund will pay the
Distributor an account maintenance fee up to an annual rate of 0.25% of the
aggregate average daily net assets of such class of shares for payments to
compensate the Distributor and certain securities firms for account
maintenance activities. Accordingly, for the year ended December 31, 2009,
SACS received fees (see Statement of Operations) based upon the
aforementioned rates. For the year ended December 31, 2009 SACS received
sales charges on Class A shares of $109,902, of which
- --------
+ Effective September 1, 2009, the fee paid pursuant to the Administrative
Agreement was reduced from 0.40% of average daily net assets of the Fund to
0.20% of average daily net assets of the Fund.
25
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2009 -- (CONTINUED)
$22,341 was reallowed to affiliated broker-dealers and $68,015 to
non-affiliated broker-dealers. In addition, SACS receives the proceeds of
early withdrawal charges paid by investors in connection with certain
redemptions of Class A, Class B* and Class C shares. For the year ended
December 31, 2009, SACS received early withdrawal charges of $67,035. For
the year ended December 31, 2009 SACS voluntarily waived fees for the
following classes: Class A $176,867, Class B* $6,917, Class C $401,443 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 SACS.
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 year ended December 31, 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 DECEMBER 31, 2009
-------- -----------------
Class A........................................... $129,912 $18,032
Class B*.......................................... 7,203 --
Class C........................................... 237,672 23,858
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 do not include extraordinary expenses, as determined
under generally accepted accounting principles or acquired fees and
expenses. The expense reimbursements and fee waivers will continue in effect
indefinitely, unless terminated 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 year ended December 31, 2009, SunAmerica waived fees and reimbursed
expenses as follows: Class A $149,351, Class B $22,912, Class C $316,370,
Class D $12,285 and Class Q $16,619.
On March 4, 2009, AIG, the ultimate parent of SunAmerica, SACS and SAFS,
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, post October losses, and treatment of defaulted securities.
- --------
+ Effective March 17, 2009, AIG SunAmerica Fund Services, Inc. changed its
name to SunAmerica Fund Services, Inc.
* See Note 1.
26
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2009 -- (CONTINUED)
DISTRIBUTABLE EARNINGS TAX DISTRIBUTIONS
- ------------------------------------------------- ---------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 2009 FOR THE YEAR ENDED DECEMBER 31, 2009 FOR THE YEAR ENDED DECEMBER 31, 2008
- ------------------------------------------------- ------------------------------------- -------------------------------------
LONG-TERM UNREALIZED
GAINS/CAPITAL AND APPRECIATION/ ORDINARY LONG-TERM LONG-TERM
ORDINARY INCOME OTHER LOSSES (DEPRECIATION) INCOME CAPITAL GAINS ORDINARY INCOME CAPITAL GAINS
- --------------- ----------------- --------------- ------------ ------------- --------------- -------------
$ 449,694 $ (59,497,524) $ (23,068,956) $ 8,860,311 $ -- $15,916,541 $ --
CAPITAL LOSS CARRYFORWARDS. At December 31, 2009 capital loss carryforward
available to offset future recognized gains were $59,497,524 with $7,736,363
expiring in 2010, $4,956,144 expiring in 2011, $3,498,813 expiring in 2012,
$16,003,027 expiring in 2016, and $27,303,177 expiring in 2017.
During the year ended December 31, 2009, the Senior Floating Rate Fund had
$9,997,029 of capital loss carryforward expire.
Under the current tax law, capital losses and foreign currency losses
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, 2009, the fund elected to defer $266,438 of
Post-October Capital Losses.
For the period ended December 31, 2009, reclassifications were made to
decrease accumulated net investment income by $(24,462) with offsetting
adjustments to accumulated net realized gain/(loss) of $10,021,491 and
paid-in capital of $(9,997,029). The reclassifications arising from book/tax
differences were primarily due to the expiration of capital loss
carryforward.
Unrealized appreciation and depreciation in the value of investments at
December 31, 2009 for federal income tax purposes were as follows:
Cost (tax basis).............. $265,058,133
=============
Gross unrealized appreciation. $ 7,158,401
Gross unrealized depreciation. ($ 30,227,357)
-------------
Net unrealized depreciation... ($ 23,068,956)
=============
Note 7. Director Retirement Plan
The Directors of the Fund 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
27
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2009 -- (CONTINUED)
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 December 31, 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 a $75 million
committed and $50 million uncommitted line of credit with State Street
Bank and Trust Company, the Fund's custodian. Interest is currently payable
at the higher the Federal Funds Rate or London Interbank Offered Rate plus
125 points on the committed line and State Street Bank and Trust Company's
discretionary bid rate on the uncommitted line of credit. Prior to
September 18, 2009, interest was payable at the Federal Funds Rate plus 50
basis points on the committed line and State Street Bank and Trust Company's
discretionary bid rate on the uncommitted line of credit. There is also a
commitment fee of 15 basis points per annum on the daily unused portion of
the committed line of credit which is included in the other expenses line on
the Statement of Operations. Prior to September 18, 2009, the commitment fee
was 10 basis points per annum on the daily unused portion of the committed
line of credit. Borrowings under the line of credit will commence when the
respective Fund's cash shortfall exceeds $100,000. For the year ended
December 31, 2009, the Fund had borrowings outstanding for 18 days under the
line of credit and incurred $764 in interest charges related to these
borrowings. The Fund's average amount of debt under the line of credit for
the days utilized was $2,319,054 at a weighted average interest rate of
0.78%. At December 31, 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 year ended December 31, 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
At December 31, 2009, the Fund had the following unfunded loan commitment
which could be extended at the option of the Borrower:
MATURITY PRINCIPAL
NAME TYPE DATE AMOUNT
- ---- ------------- -------- ---------
Aleris International, Inc......................... DIP Term Loan 05/13/10 $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 February
26, 2010, which is the date the financial statements were issued. There were
no subsequent events noted requiring further disclosure.
28
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of SunAmerica Senior Floating Rate
Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations, of
changes in net assets and of cash flows and the financial highlights present
fairly, in all material respects, the financial position of SunAmerica Senior
Floating Rate Fund, Inc. (the "Fund") at December 31, 2009, the results of its
operations and its cash flows for the year then ended, the changes in its net
assets for each of the two years in the period then ended and the financial
highlights for each of the periods indicated, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at December 31, 2009 by
correspondence with the custodian, brokers and selling or agent banks, provide
a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
February 26, 2010
Houston, Texas
29
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY AGREEMENT -- DECEMBER 31, 2009 -- (UNAUDITED)
The Board of Directors of SunAmerica Senior Floating Rate Fund, Inc., including
the Directors who are not "interested persons," as defined in Section 2(a)(19)
of the Investment Company Act of 1940, as amended (the "1940 Act"), of the
Fund, SunAmerica or Wellington (the "Disinterested Directors"), approved the
continuation of the Investment Advisory and Management Agreement between the
Fund and SunAmerica (the "Advisory Agreement") for a one-year period ending
August 31, 2010 at an in-person meeting held on August 25, 2009.
In addition, at an in-person meeting held on May 27, 2009, the Board, including
the Disinterested Directors, approved both an interim Subadvisory Agreement
between SunAmerica and Wellington (the "Interim Subadvisory Agreement") and a
new Subadvisory Agreement between SunAmerica and Wellington (the "New
Subadvisory Agreement" and together with the Interim Subadvisory Agreement, the
"Wellington Subadvisory Agreements"), each with respect to the Fund, with the
New Subadvisory Agreement being subject to shareholder approval. As a result,
effective June 24, 2009, Wellington replaced AIG Global Investment Corp.
("AIGGIC") as the subadviser of the Fund under the terms of the Interim
Subadvisory Agreement. The Interim Subadvisory Agreement was approved by the
Board pursuant to Rule 15a-4 under the 1940 Act, to ensure uninterrupted
subadvisory services during the period between the effective date of the
termination of the prior Subadvisory Agreement between SunAmerica and AIGGIC
with respect to the Fund (the "Prior Subadvisory Agreement") and the date of
the special meeting of shareholders of the Fund to vote on the approval of the
New Subadvisory Agreement. Pursuant to the requirements of Rule 15a-4 under the
1940 Act, the subadvisory fee in the Interim Subadvisory Agreement was
identical to the subadvisory fee in the Prior Subadvisory Agreement and the
Interim Subadvisory Agreement was to remain in effect until December 21, 2009,
or until the New Subadvisory Agreement was approved by the Fund's shareholders,
whichever was earlier. On October 6, 2009, shareholders of the Fund approved
the New Subadvisory Agreement and such Agreement became effective that same day
for an initial term ending August 31, 2011.
In accordance with Section 15(c) of the 1940 Act, the Board requested and
SunAmerica and Wellington, where applicable, provided materials relating to the
Board's consideration of whether to approve the continuation of the Advisory
Agreement and whether to approve the Wellington Subadvisory Agreements. These
materials included (a) a summary of the services provided by SunAmerica and its
affiliates to the Fund; (b) information independently compiled and prepared by
Lipper, Inc. ("Lipper") on Fund fees and expenses, and the investment
performance of the Fund as compared with a peer group of funds; (c) information
on the profitability of SunAmerica, Wellington and their affiliates, and a
discussion of any indirect benefits; (d) a report on economies of scale; (e) a
discussion on general compliance policies and procedures; (f) a summary of
brokerage and soft dollar practices; (g) a discussion of the key personnel of
SunAmerica, Wellington and their affiliates; and (h) an internal comparison of
management fees received for other mutual funds and accounts with similar
investment objectives and strategies for which SunAmerica and Wellington serve
as adviser or subadviser, as applicable.
In determining whether to approve the continuation of the Advisory Agreement
and whether to approve the Wellington Subadvisory Agreements, the Board,
including Disinterested Directors, considered the following information:
Nature, Extent and Quality of Services Provided by SunAmerica and Wellington.
The Board, including the Disinterested Directors, considered the nature,
quality and extent of services to be provided by SunAmerica and Wellington. The
Board noted that the services include acting as investment manager and adviser
to the Fund, managing the daily business affairs of the Fund, and obtaining and
evaluating economic, statistical and financial information to formulate and
implement investment the Fund's investment policies. Additionally, the Board
observed that SunAmerica would provide office space, bookkeeping, accounting,
clerical, secretarial and certain administrative services (excusive of, and in
addition to, any such service provided by any other party retained by the Fund)
and has authorized any of its officers and employees, if elected, to serve as
officers or trustees of the Fund without compensation. Finally, the Board noted
that SunAmerica is responsible for monitoring and reviewing the activities of
affiliated and unaffiliated third-party service providers, including
Wellington. In addition to the quality of the advisory services, the Board
considered the quality of the administrative and non-investment advisory
services provided to the Fund pursuant to the Advisory Agreement. Additionally,
the Board observed that SunAmerica performs or supervises the performance by
others of other administrative services in connection with the operation of the
Fund pursuant to the Administrative Services Agreement between SunAmerica and
the Fund (the "Administrative Services Agreement").
30
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY AGREEMENT -- DECEMBER 31, 2009 -- (UNAUDITED)
In connection with the services provided by SunAmerica, the Board analyzed the
structure and duties of SunAmerica's fund administration, accounting, legal and
compliance departments and concluded that they were adequate to meet the needs
of the Fund. The Board also reviewed the personnel responsible for providing
advisory services to the Fund and other key personnel of SunAmerica and
concluded, based on their experience and interaction with SunAmerica, that:
(i) SunAmerica is able to retain quality portfolio managers, analysts and other
personnel; (ii) SunAmerica exhibited a high level of diligence and attention to
detail in carrying out its advisory and other responsibilities under the
Advisory Agreement; (iii) SunAmerica had been responsive to requests of the
Board; and (iv) SunAmerica had kept the Board apprised of developments relating
to the Fund and the industry in general. The Board concluded that the nature
and extent of services provided under the Advisory Agreement were reasonable
and appropriate in relation to the management fee and that the quality of
services continues to be high. The Board also noted the high quality of
services under the Administrative Services Agreement.
The Board also considered SunAmerica's reputation and relationship with the
Fund and considered the benefit to shareholders of investing in funds that are
part of a family of funds offering a variety of types of mutual funds and
shareholder services. The Board considered SunAmerica's experience in providing
management and investment advisory and administrative services to advisory
clients and noted that as of June 30, 2009, SunAmerica managed, advised an/or
administered approximately $35.3 billion in assets. The Board also considered
SunAmerica's code of ethics, and that it has developed internal procedures,
adopted by the Board, for monitoring compliance with the investment objectives,
policies and restrictions of the Fund as set forth in the Fund's prospectus.
Additionally, the Board considered SunAmerica's compliance and regulatory
history.
With respect to the approval of the Wellington Subadvisory Agreements at the
May 27, 2009 meeting, 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 fund complex. The Board also noted that the
services to be provided by Wellington would be substantially similar to the
services that Wellington has provided to certain other funds in the SunAmerica
fund complex, which would include investment management services such as
investment research, advice and supervision, and determining which securities
will be purchased or sold by the 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 fund
complex, 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 the Fund's
prospectus. The Board also considered Wellington's code of ethics, 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 Wellington
Subadvisory Agreements were reasonable and appropriate in relation to the
proposed subadvisory fees and that the quality of services was reasonably
expected to be high.
Investment Performance. The Board, including the Disinterested Directors, also
considered the investment performance of SunAmerica and Wellington with respect
to the Fund, as applicable. In connection with its review, the Board received
and reviewed information regarding the investment performance of the Fund as
compared to the Fund's peer group ("Peer Group") and peer universe ("Peer
Universe") as independently determined by Lipper and to an appropriate index or
combination of indices, including the Fund's benchmarks. The Board was provided
with a description of the methodology used by Lipper to select the funds in the
Peer Group and Peer Universe. The Board also noted that it regularly reviews
the performance of the Fund throughout the year. The Board noted that, while it
monitors performance of the Fund closely, it generally attaches more importance
to performance over relatively long periods of time, typically three to five
years.
In preparation for the August 25, 2009 meeting, the Board was provided with
reports independently prepared by Lipper. Based on the Lipper reports, the
Board reviewed the Fund's annualized total returns for the prior one- and
two-year
31
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY AGREEMENT -- DECEMBER 31, 2009 -- (UNAUDITED)
periods ended May 31, 2009 and since inception. The Board noted that it was
also provided with a supplemental Lipper performance report for the periods
ended June 30, 2009. In addition, the Board received a report prepared by
SunAmerica that detailed the Fund's performance for the three-month period
ended June 30, 2009.
Specifically, the Board considered that the Fund ranked in the fifth quintile
of its Peer Universe, which consists of all funds within the applicable Lipper
classification, for the one-and two-year periods ended May 31, 2009 and since
inception. The Board noted that quintile rankings were not included in the
Lipper report with respect to the Fund's Peer Group because of the limited
number of comparable funds in the Peer Group. The Board noted, however, that at
the May 27, 2009 Board meeting, it had considered the investment performance of
AIGGIC with respect to the Fund and had terminated the Prior Subadvisory
Agreement, and had subsequently approved the Wellington Subadvisory Agreements.
In connection with the approval of the Wellington Subadvisory Agreements, 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 fund complex 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 also noted that SunAmerica recommended that the Board approve of
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 to the
Fund, their organizational structures, investment process and style, and
performance records over varying periods of time.
Consideration of the Management Fee and Subadvisory Fee and the Cost of the
Services and Profits to be Realized by SunAmerica and Wellington and their
Affiliates from the Relationship with the Fund. The Board, including the
Disinterested Directors, received and reviewed information regarding the fees
to be paid by the Fund to SunAmerica pursuant to the Advisory Agreement and the
fees 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 fees in light of the nature and quality of services to be
provided and any potential additional benefits to be received by SunAmerica,
Wellington or their affiliates in connection with providing such services to
the Fund.
To assist in analyzing the reasonableness of the management fee for the Fund,
the Board received reports independently prepared by Lipper. The reports showed
comparative fee information for the Fund's Peer Group and Peer Universe. In
considering the reasonableness of the management fee to be paid by the Fund to
SunAmerica, the Board reviewed a number of expense comparisons, including:
(i) contractual and actual management fees; and (ii) actual total operating
expenses. In considering the Fund's total operating expenses, the Board
analyzed the level of fee waivers and expense reimbursements and the net
expense caps contractually agreed upon by SunAmerica. The Board compared the
Fund's net expense ratio to those of other funds within its Peer Group and Peer
Universe as a guide to help assess the reasonableness of the management fee for
the Fund. The Board further considered that SunAmerica had agreed to reduce the
administrative fee payable under the Administrative Services Agreement from an
annual rate of 0.40% of average daily net assets to an annual rate of 0.20% of
average daily net assets. The Board acknowledged that it was difficult to make
precise comparisons with other funds in the Peer Group and Peer Universe since
the exact nature of services provided under the various fund agreements is
often not apparent. The Board also noted the relative small size of the Fund's
Peer Group. The Board noted, however, that the comparative fee information
provided by Lipper as a whole was useful in assessing whether SunAmerica was
providing services at a cost that was competitive with other, similar funds.
The Board did not consider services and fees paid under investment advisory
contracts that SunAmerica has with other registered investment companies or
other types of clients with similar investment strategies to the Fund since
SunAmerica informed the Board that there were no such Funds or accounts.
32
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY AGREEMENT -- DECEMBER 31, 2009 -- (UNAUDITED)
The Board also received and reviewed information regarding the fees to be paid
by SunAmerica to Wellington pursuant to the New Subadvisory Agreement. The
Board noted that Lipper was not able to provide a report addressing the expense
information with respect to the New Subadvisory Agreement and a peer group of
similar funds since there were no other peer funds within this same investment
classification with disclosed subadvisory fees. The Board then 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 fees are paid by SunAmerica out of its
management fee and not by the Fund, and that subadvisory fees may vary widely
among similar types of funds or accounts for various reasons, including market
pricing demands, existing relationships, experience and success, and individual
client needs. The Board compared the subadvisory fees paid to AIGGIC under the
Prior Subadvisory Agreement with respect to the Fund and the proposed
subadvisory fees 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 considered SunAmerica's profitability and the benefits
SunAmerica and its affiliates received from its relationship with the Fund. The
Board received and reviewed financial statements relating to SunAmerica's
financial condition and profitability with respect to the services it provided
the Fund and considered how profit margins could affect SunAmerica's ability to
attract and retain high quality investment professionals and other key
personnel. The Board was also provided with a profitability analysis that
detailed the revenues earned and the expenses incurred by SunAmerica and its
affiliates that provide services to the Fund.
The Board considered the profitability of SunAmerica under the Advisory
Agreement and Administrative Services Agreement, and considered the
profitability of SunAmerica's affiliates under the Service Agreement and Rule
12b-1 Plans. In particular, and as noted previously, the Board also considered
that SunAmerica had agreed to reduce the administrative fee payable under the
Administrative Services Agreement from an annual rate of 0.40% of average daily
net assets to an annual rate of 0.20% of average daily net assets.
Additionally, the Board considered whether SunAmerica, Wellington and its
affiliates received any indirect benefits from the relationship with the Fund.
Specifically, the Board observed that AIG Federal Savings Bank, an affiliate of
SunAmerica, serves as custodian with respect to certain shareholder retirement
accounts that are administered by SunAmerica and receives a fee payable by the
qualifying shareholders. The Board further considered whether there were any
collateral or "fall-out" benefits that SunAmerica and its affiliates may derive
as a result of their relationship with the Fund. The Board noted that
SunAmerica believes that any such benefits are de minimis and do not impact the
reasonableness of the management fees.
The Board also reviewed financial statements and other reports from Wellington
and considered whether Wellington had the financial resources necessary to
attract and retain high quality investment management personnel and to continue
to provide the high quality of services.
The Board concluded that SunAmerica had the financial resources necessary to
perform its obligations under the Advisory Agreement and to continue to provide
the Fund with the high quality services that they had provided in the past. The
Board also concluded that Wellington had the financial resources necessary to
perform its obligations under the Wellington Subadvisory Agreements and would
provide its Fund with high quality services. The Board further concluded that
the management fee and subadvisory fee were reasonable in light of the factors
discussed above.
Economies of Scale. The Board, including the Disinterested Directors,
considered whether the shareholders would benefit from economies of scale and
whether there was potential for future realization of economies with respect to
the Fund. The Board considered that as a result of being part of the SunAmerica
fund complex, the Fund shares common resources and may share certain expenses,
and if the size of the complex increases, the Fund could incur lower expenses
than it otherwise would achieve as a stand-alone entity. The Board also
considered the anticipated efficiencies in the processes of SunAmerica as it
adds labor and capital to expand the scale of operations. The Board further
noted that SunAmerica has agreed to contractually cap the total annual
operating expenses of Class A and C shares of the Fund at certain levels. The
Board observed that those expense caps benefited shareholders by keeping total
fees down even in the absence of breakpoints or economies of scale. The Board
concluded that the Fund's management fee structure was reasonable and that it
would continue to review fees in connection with the renewal of the Advisory
Agreement, including whether the implementation of additional breakpoints would
be appropriate in the future due to an increase in asset size or otherwise.
33
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY AGREEMENT -- DECEMBER 31, 2009 -- (UNAUDITED)
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 considered information regarding economies of scale in the context of
the renewal of the Advisory Agreement.
Other Factors. In consideration of the Advisory Agreement and Subadvisory
Agreements, the Board also received information regarding SunAmerica's and
Wellington's brokerage and soft dollar practices. The Board considered that
SunAmerica and Wellington are responsible for decisions to buy and sell
securities for the portfolios they manage, selection of broker-dealers and
negotiation of commission rates.
Conclusion. After a full and complete discussion, the Board approved the
Advisory Agreement for a one-year period ending August 31, 2010. The Board also
approved the Interim Subadvisory Agreement and New Subadvisory Agreement. The
New Subadvisory Agreement was approved by shareholders on October 6, 2009 and
will remain in effect for an initial term ending August 31, 2011. Based upon
its evaluation of all these factors in their totality, the Board, including the
Disinterested Directors, was satisfied that the terms of the Advisory Agreement
and Wellington Subadvisory Agreements were fair and reasonable and in the best
interests of the Fund and the Fund's shareholders. In arriving at a decision to
approve the Advisory Agreement and Wellington Subadvisory Agreements, the Board
did not identify any single factor or group of factors as all-important or
controlling, but considered all factors together. The Disinterested Directors
were also assisted by the advice of independent counsel in making this
determination.
34
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
DIRECTORS AND OFFICERS INFORMATION -- DECEMBER 31, 2009 -- (UNAUDITED)
The following table contains basic information regarding the Directors and
Officers who oversee operations of the Fund and other investment companies
within the Fund complex.
NUMBER OF
TERM OF FUNDS IN
NAME, POSITION(S) OFFICE AND FUND COMPLEX
ADDRESS AND HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER DIRECTORSHIPS
DATE OF BIRTH* THE FUND TIME SERVED(4) DURING PAST 5 YEARS DIRECTOR(1) HELD BY DIRECTOR(2)
- ---------------------- ----------- -------------- ------------------------------- ------------ -------------------------------
DISINTERESTED
DIRECTORS
Dr. Judith L. Director 2000- Retired. 78 Director, Belo Corp. (1992 to
Craven present present); Director, Sysco
DOB: October 6, 1945 Corp. (1996 to present);
Director, Luby's Inc. (1998 to
present).
William F. Devin Director 1998- Retired. 78 Director, Boston Options
DOB: December 30, 1938 present Exchange (2001 to Present).
Samuel M. Eisenstat Chairman 2001- Attorney, sole practitioner. 78 Director, North European Oil
DOB: March 7, 1940 of the present Royalty Trust (1996 to
Board present).
Stephen J. Gutman Director 2001- Vice President, Corcoran 39 None
DOB: May 10, 1943 present Group (Real Estate) (2003
to present); President and
Member of Managing
Directors, Beau Brummell --
Soho, LLC (Licensing of
menswear specialty retailing
and other activities) (1988 to
2006).
William J. Shea Director 2004- Managing Director, DLB 39 Executive Chairman, Lucid,
DOB: February 9, present Capital LLC Private Equity Inc. (2007 to Present);
1948 (2006 to present); President Chairman of the Board,
and CEO, Conseco, Inc. Royal and SunAlliance Co.
(Financial Services) (2001 to U.S.A., Inc. (2004 to 2006);
2004) Director, Boston Private
Financial Holdings (2004 to
present); Chairman,
Demoullas Supermarkets
(1999 to Present).
INTERESTED DIRECTOR
Peter A. Harbeck(3) Director 2001- President, CEO and 87 None
DOB: January 23, 1954 present Director, SunAmerica (1995
to present); Director,
SunAmerica Capital
Services, Inc. ("SACS")
(1993 to present); Chairman,
Advisor Group, Inc. (2004 to
present).
35
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
DIRECTORS AND OFFICERS INFORMATION -- DECEMBER 31, 2009 -- (UNAUDITED)
(CONTINUED)
NUMBER OF
TERM OF FUNDS IN
NAME, OFFICE AND FUND COMPLEX
ADDRESS AND POSITION(S) HELD LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN BY OTHER DIRECTORSHIPS
DATE OF BIRTH* WITH THE FUND TIME SERVED(4) DURING PAST 5 YEARS DIRECTOR(1) HELD BY DIRECTOR(2)
- ---------------------- ---------------- -------------- ----------------------------- ------------ -------------------
OFFICERS
John T. Genoy President 2007- Chief Financial Officer, N/A N/A
DOB: November 8, 1968 present SunAmerica (2002 to
present); Senior Vice
President, SunAmerica
(2003 to present); Chief
Operating Officer,
SunAmerica (2006 to
present).
Donna M. Handel Treasurer 2002- Senior Vice President, N/A N/A
DOB: June 25, 1966 present SunAmerica (2004 to
present).
Gregory N. Bressler Secretary and 2005- Senior Vice President and N/A N/A
DOB: November 17, 1966 Chief Legal Present General Counsel,
Officer SunAmerica (2005 to
present); Vice President and
Director of U.S. Asset
Management Compliance,
Goldman Sachs Asset
Management, L.P. (2004 to
2005).
James Nichols Vice President 2006- Director, President and N/A N/A
DOB: April 7, 1966 Present CEO, SACS (2006 to
present); Senior Vice
President, SACS (2002 to
2006);
Cynthia A. Skrehot Vice President 2002- Vice President, SunAmerica N/A N/A
DOB: December 6, and Chief present (2002 to present); Chief
1967 Compliance Compliance Officer,
Officer ("CCO") SunAmerica (2002-2006).
Gregory R. Kingston Vice President 2002- Vice President, SunAmerica N/A N/A
DOB: January 18, and Assistant present (2001 to present)
1966 Treasurer
36
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
DIRECTORS AND OFFICERS INFORMATION -- DECEMBER 31, 2009 -- (UNAUDITED)
(CONTINUED)
NUMBER OF
TERM OF FUNDS IN
NAME, OFFICE AND FUND COMPLEX
ADDRESS AND POSITION(S) HELD LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN BY OTHER DIRECTORSHIPS
DATE OF BIRTH* WITH THE FUND TIME SERVED(4) DURING PAST 5 YEARS DIRECTOR(1) HELD BY DIRECTOR(2)
- ---------------------- ---------------- -------------- ----------------------------- ------------ -------------------
Nori L. Gabert Vice 2002- Vice President and Deputy N/A N/A
DOB: August 15, 1953 President present General Counsel,
and SunAmerica (2005 to
Assistant present); Vice President and
Secretary Associate General Counsel,
SunAmerica, (2002 to 2005);
Matthew J. Hackethal Anti-Money 2006- Chief Compliance Officer, N/A N/A
DOB: December 31, 1971 Laundering present SunAmerica (2006 to
Compliance present); Vice President,
Officer Credit Suisse Asset
Management (2001 to
2006); Chief Compliance
Officer, Credit Suisse
Alternative Funds (2005 to
2006); CCO, Credit Suisse
Asset Management
Securities, Inc. (2004 to
2005)
- --------
* The business address for each Director and Officer is Harborside Financial
Center, 3200 Plaza 5, Jersey City, NJ 07311-4992.
(1) The "Fund Complex" means two or more registered investment companies that
hold themselves out to investors as related companies for purposes of
investment services or have a common investment adviser or an investment
adviser that is an affiliated person of the Adviser. The "Fund Complex"
includes the SunAmerica Money Market Funds (2 funds), SunAmerica Equity
Funds (3 funds), SunAmerica Income Funds (5 funds), SunAmerica Focused
Series, Inc. (14 portfolios), SunAmerica Focused Alpha Growth Fund, Inc.
(1 fund), SunAmerica Focused Alpha Large-Cap Fund, Inc. (1 fund), Anchor
Series Trust (9 portfolios), the Fund, (1 fund), SunAmerica Series Trust
(35 portfolios), SunAmerica Specialty Series (3 funds), VALIC Company I
(33 portfolios), VALIC Company II (15 funds), Seasons Series Trust (24
portfolios), and Brazos Mutual Funds (4 funds).
(2) Directorships of companies required to report to the Commission under the
Securities Exchange Act of 1934 (i.e. "public companies") or other
investment companies registered under the 1940 Act, other than those
listed under the preceding column.
(3) Interested Director, as defined within the Investment Company Act of 1940,
because he or she is an officer and a director of the Adviser and a
director of the principal underwriter of the Fund.
(4) Directors serve until their successors are duly elected and qualified,
subject to the Directors' retirement plan as discussed in Note 7 of the
financial statements. Each officer will hold office for an indefinite term
until the date he or she resigns or retires or until his/her successor is
duly elected and qualifies.
Additional information concerning the Directors is contained in the Statement
of Additional Information and is available without charge by calling (800)
858-8850.
37
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
RESULTS OF SPECIAL SHAREHOLDER MEETING -- DECEMBER 31, 2009 --
(UNAUDITED)
A special meeting of shareholders of the Fund was held on October 6, 2009 (the
"Meeting"). At the Meeting, shareholders approved (i) a new subadvisory
agreement between SunAmerica and Wellington and (ii) the operation of the Fund
in a manner consistent with the exemptive order received from the Securities
and Exchange Commission that permits SunAmerica to, among other things, enter
into or amend subadvisory agreements with unaffiliated subadvisers upon
approval by the Board of Directors, but without obtaining shareholder approval
(the "Manager of Managers Proposal").
The voting results were as follows:
To approve a new subadvisory agreement between SunAmerica and Wellington
Management:
FOR AGAINST ABSTAIN
- ------------------------- ------------------------- -------------------------
11,504,249.007 554,569.871 744,849.303
To approve the Manager of Managers Proposal:
FOR AGAINST ABSTAIN
- ------------------------- ------------------------- -------------------------
10,858,820.008 1,178,251.929 766,596.244
38
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
SHAREHOLDER TAX INFORMATION -- (UNAUDITED)
Certain tax information regarding the Fund is required to be provided to
shareholders based upon the Fund's income and distributions for the taxable
year ended December 31, 2009. The information necessary to complete your income
tax returns is included with your Form 1099-DIV mailed to you in January 2009.
During the year ended December 31, 2009 the Fund paid the following dividends:
NET
ORDINARY NET NET QUALIFYING % FOR QUALIFYING
TOTAL INVESTMENT SHORT-TERM LONG-TERM THE 70% DIVIDENDS DIVIDEND
DIVIDENDS INCOME CAPITAL GAINS* CAPITAL GAINS RECEIVED DEDUCTION INCOME %
--------- ---------- -------------- ------------- ------------------ ----------
Class A....................... $0.35 $0.35 $-- $-- --% --%
Class B....................... 0.16 0.16 -- -- -- --
Class C....................... 0.33 0.33 -- -- -- --
Class D....................... 0.18 0.18 -- -- -- --
Class Q....................... 0.17 0.17 -- -- -- --
- --------
* Short-term capital gains are treated as ordinary income for tax purposes.
39
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
COMPARISON: FUND VS. INDEX -- (UNAUDITED)
The following graph shows how the value of a $10,000 investment in the Fund
would have changed over the period shown in the graph, and also shows how the
index shown performed over the same period of time. The graph and table shown
do not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. Please note that the term
"inception" as used herein reflects the date on which a specific class of
shares commenced operations. It is important to note that the Fund is a
professionally managed mutual fund while the index is not available for
investment and is unmanaged. The comparison is shown for illustrative purposes
only. The graph presents the performance of Class C shares of the Fund. The
performance of the other class will vary based upon the difference in sales
charges and fees assessed to shareholders of that class. Past performance does
not predict future results.
40
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
COMPARISON: FUND VS. INDEX -- (UNAUDITED) (CONTINUED)
The SunAmerica Senior Floating Rate Fund (Class C) returned 59.94%,
outperforming its benchmark, the S&P/LSTA Leveraged Loan Index (LLI),* which
returned 51.62% for the annual period ended December 31, 2009.
Non-government fixed income sectors broadly outperformed during the year, as
investors continued to allocate out of lower-yielding cash vehicles into
higher-yielding fixed income alternatives. In a strong market for nearly all
asset classes, some fixed income markets delivered greater returns than the
equity markets. The leveraged loan market was one such example. The S&P/LSTA
LLI significantly outperformed the S&P 500 Index for the full year, 51.62% vs.
26.46%.
The annual period was bright for the leveraged loan market. After posting a
9.8% return in the first quarter of the 2009 calendar year, the S&P/LSTA LLI
posted an impressive 20.4% gain in the second quarter. Investor sentiment
reversed from fear to optimism and led to increasing retail fund 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 for the first six months of the annual period,
there is a tale of two markets. In the first three months, the loan market
discriminated significantly against lower-rated issuers; in the following three
months the market reversed course and did the opposite. This reversal
significantly benefited the Fund as our conviction in the credits that were
disproportionately sold by investors in 2008 paid off in 2009. All sectors
participated in the rally, but the segments that had previously been most
depressed generally exhibited the highest returns for the second calendar
quarter.
This positive tone continued in the second half of the annual period as
improving economic news and better-than-expected corporate earnings supported
the risk markets. Additionally, the Federal Reserve maintained its
accommodative monetary policy, holding the Federal Funds rate in the
0.00%-0.25% range. In the closing months of 2009, the global economy
demonstrated clear signs of responsiveness to the massive stimulus injected
following a severe contraction in late 2008. Markets settled into a cyclical
'sweet spot' as stimulus remained in place and signs of economic recovery
broadened. Investors became increasingly comfortable with risk as indicators of
financial stress faded.
The lower-quality segment of the bank loan market significantly outperformed
the higher-quality segment for the year. The BB-rated loans in the S&P/LSTA LLI
returned 35.79% for the full year versus 61.23% for B-rated and 88.61% for
CCC-rated loans. In this environment, the Fund's more aggressive positioning in
lower-rated priced loans contributed to performance.
Additionally, underweight positioning of defensive sectors such as
Healthcare and Utilities that lagged in the strong market environment were
contributors to the Fund's relative performance. We had built up our position
in the Auto sector over the course of five months, which was also additive to
the overall performance of the Fund. Among the largest contributors to the
Fund's absolute returns were Citadel Broadcasting, Tribune, Formula One, and
LyondellBasell.
Our underweight positions in the strong-performing Publishing sector as well
as the Building and Development sectors detracted from the overall return of
the Fund. Among the largest detractors to absolute performance during the
annual period were Reader's Digest, Golden Nugget, and West Corp.
- --------
Past performance is no guarantee of future results.
*The S&P/LSTA Leveraged Loan Index (LLI) reflects the market-weighted
performance of U.S. dollar-denominated institutional leveraged loan portfolios.
The LLI is the only domestic leveraged loan index that utilizes real-time
market weightings, spreads and interest payments. Indices are not managed and
an investor cannot invest directly into an index.
Securities listed may or may not be a part of current portfolio construction.
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.
41
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
COMPARISON: FUND VS. INDEX -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in Senior Floating Rate Fund Class C
shares would have increased to $13,409. The same amount invested in securities
mirroring the performance of the S&P/LSTA Leveraged Loan Index would be valued
at $15,862.
[CHART]
Senior Floating Rate Class C S&P/LSTA Leveraged Loan Index
----------------------------- -----------------------------
12/31/1999 $10,000.00 $10,000.00
1/31/2000 10,059.00 10,086.70
2/29/2000 10,106.00 10,132.70
3/31/2000 10,067.00 10,078.49
4/30/2000 10,100.00 10,110.84
5/31/2000 10,166.00 10,192.94
6/30/2000 10,222.00 10,267.35
7/31/2000 10,272.00 10,350.51
8/31/2000 10,332.00 10,381.46
9/30/2000 10,379.00 10,410.01
10/31/2000 10,378.00 10,407.41
11/30/2000 10,407.00 10,445.18
12/31/2000 10,460.00 10,498.66
1/31/2001 10,500.00 10,612.57
2/28/2001 10,547.00 10,717.75
3/31/2001 10,535.00 10,720.64
4/30/2001 10,508.00 10,705.42
5/31/2001 10,591.00 10,826.82
6/30/2001 10,559.00 10,838.18
7/31/2001 10,564.00 10,921.31
8/31/2001 10,614.00 11,002.46
9/30/2001 10,492.00 10,820.26
10/31/2001 10,364.00 10,714.11
11/30/2001 10,384.00 10,845.04
12/31/2001 10,424.00 10,937.00
1/31/2002 10,460.00 10,992.78
2/28/2002 10,451.00 10,960.13
3/31/2002 10,524.00 11,091.11
4/30/2002 10,587.00 11,219.87
5/31/2002 10,654.00 11,230.87
6/30/2002 10,642.00 11,120.36
7/31/2002 10,539.00 11,020.94
8/31/2002 10,486.00 10,984.35
9/30/2002 10,492.00 10,991.71
10/31/2002 10,335.00 10,861.57
11/30/2002 10,450.00 11,014.61
12/31/2002 10,565.00 11,146.23
1/31/2003 10,612.00 11,281.88
2/28/2003 10,627.00 11,331.07
3/31/2003 10,771.00 11,375.38
4/30/2003 10,966.00 11,510.17
5/31/2003 11,118.00 11,635.06
6/30/2003 11,268.00 11,776.66
7/31/2003 11,339.00 11,855.09
8/31/2003 11,367.00 11,882.00
9/30/2003 11,482.00 11,994.29
10/31/2003 11,566.00 12,103.80
11/30/2003 11,637.00 12,182.11
12/31/2003 11,706.00 12,257.64
1/31/2004 11,838.00 12,363.30
2/29/2004 11,854.00 12,402.12
3/31/2004 11,879.00 12,446.89
4/30/2004 11,958.00 12,507.88
5/31/2004 11,962.00 12,522.01
6/30/2004 12,003.00 12,599.77
7/31/2004 12,031.00 12,640.98
8/31/2004 12,022.00 12,663.22
9/30/2004 12,051.00 12,715.78
10/31/2004 12,098.00 12,779.99
11/30/2004 12,146.00 12,837.25
12/31/2004 12,184.00 12,890.65
1/31/2005 12,234.00 12,942.73
2/28/2005 12,295.00 13,012.23
3/31/2005 12,336.00 13,066.36
4/30/2005 12,312.00 13,057.08
5/31/2005 12,302.00 13,064.66
6/30/2005 12,372.00 13,149.32
7/31/2005 12,456.00 13,249.12
8/31/2005 12,530.00 13,328.35
9/30/2005 12,564.00 13,382.59
10/31/2005 12,591.00 13,423.55
11/30/2005 12,644.00 13,474.02
12/31/2005 12,701.00 13,545.16
1/31/2006 12,788.00 13,638.89
2/28/2006 12,870.00 13,725.23
3/31/2006 12,962.00 13,808.26
4/30/2006 13,027.00 13,875.65
5/31/2006 13,040.00 13,910.48
6/30/2006 13,080.00 13,949.57
7/31/2006 13,141.00 14,028.66
8/31/2006 13,229.00 14,115.08
9/30/2006 13,299.00 14,190.87
10/31/2006 13,400.00 14,284.96
11/30/2006 13,444.00 14,360.67
12/31/2006 13,532.00 14,462.63
1/31/2007 13,645.00 14,588.90
2/28/2007 13,738.00 14,689.20
3/31/2007 13,780.00 14,747.90
4/30/2007 13,865.00 14,835.52
5/31/2007 13,934.00 14,925.83
6/30/2007 13,958.00 14,959.10
7/31/2007 13,510.00 14,458.32
8/31/2007 13,525.00 14,491.95
9/30/2007 13,732.00 14,775.10
10/31/2007 13,821.00 14,916.16
11/30/2007 13,590.00 14,709.13
12/31/2007 13,590.00 14,755.09
1/31/2008 13,098.00 14,278.50
2/29/2008 12,752.00 13,920.37
3/31/2008 12,682.00 13,907.84
4/30/2008 13,106.00 14,423.07
5/31/2008 13,271.00 14,558.68
6/30/2008 13,321.00 14,595.04
7/31/2008 13,121.00 14,483.46
8/31/2008 13,094.00 14,464.55
9/30/2008 12,242.00 13,574.98
10/31/2008 10,242.00 11,780.75
11/30/2008 9,045.00 10,778.79
12/31/2008 8,368.00 10,461.32
1/31/2009 8,861.00 11,235.68
2/28/2009 8,789.00 11,323.25
3/31/2009 8,768.00 11,486.58
4/30/2009 9,844.00 12,485.42
5/31/2009 10,652.00 13,247.14
6/30/2009 11,345.00 13,827.84
7/31/2009 11,926.00 14,482.86
8/31/2009 12,274.00 14,810.82
9/30/2009 12,751.00 15,284.51
10/31/2009 12,985.00 15,369.14
11/30/2009 13,053.00 15,408.68
12/31/2009 13,409.00 15,861.65
Class A Class C
Senior -------------------------------------
Floating Average Average
Rate Annual Cumulative Annual Cumulative
Fund# Return Return+ Return Return+
- - -------------------------------------
1 Year Return 54.62% 60.63% 58.94% 59.94%
- -------------------------------------------------------
5 Year Return NA NA 1.93% 10.05%
- -------------------------------------------------------
10 Year Return NA NA 2.98% 34.09%
- -------------------------------------------------------
Since Inception* (0.62)% 1.86% 3.41% 46.30%
- -------------------------------------------------------
# For the purposes of the table, it has been assumed that
the maximum sales charge with respect to Class A shares
was deducted from the initial investment in the Fund
and that the CDSCs with respect to the Class C shares
have been deducted, as applicable.
+ Cumulative returns do not include sales load. If sales
load had been included, the return would have been
lower.
* Inception date: Class A: 10/04/2006; Class C:
08/31/1998.
For the 12 month period ended December 31, 2009, the
SunAmerica Senior Floating Rate Class C returned 58.94%
compared to 51.62% for the S&P/LSTA Leveraged Loan Index.
(The performance data and graph do not reflect the
deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares.)
- --------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 3.75%; Contingent Deferred Sales
Charge (CDSC): Class C: 1.00% CDSC. The fund's daily net asset values are not
guaranteed and shares are not insured by the FDIC, the Federal Reserve Board or
any other agency. The investment return and principal value of an investment
will fluctuate so that an investor's shares, when redeemed, may be higher or
lower than the original cost. Current performance may be higher or lower than
that shown. Performance as of the most recent month end is available at
www.sunamericafunds.com
42
[LOGO] AIG Sun America
Mutual Funds
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 it to the Fund voted proxies
Diedre L. Shepherd, send only one copy of the relating to securities
Assistant Treasurer Fund's prospectus, proxy held in the Fund's
Matthew J. Hackethal, material, annual report portfolio during the most
Anti-Money Laundering and semi-annual report recent twelve month
Compliance Officer (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 Fund receives
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 Fund will continue to Distribution of this
Jersey City, NJ 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
07311-4992 with your name, the name
of your fund(s) and your
TRANSFER AGENT account number(s) to
State Street Bank and SunAmerica Mutual Funds
Trust Company c/o BFDS, P.O. Box
P.O. Box 219373 219186, Kansas City MO,
Kansas City, MO 64141 64121-9186. We will
resume individual
mailings for your account
within thirty (30) days
of receipt of your
request.
43
[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.
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
SFANN - 12/09
[LOGO]
Sun America
Mutual Funds
Item 2. Code of Ethics
The SunAmerica Senior Floating Rate Fund, Inc. (the "registrant") has
adopted a Code of Ethics applicable to its Principal Executive and
Principal Accounting Officers pursuant to Section 406 of the Sarbanes-Oxley
Act of 2002. During the fiscal year ended 2009, there were no reportable
amendments, waivers or implicit waivers to a provision of the code of
ethics that applies to the registrant's Principal Executive and Principal
Accounting Officers.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Directors has determined that William J. Shea,
the Chairman of the registrant's Audit Committee, qualifies as an audit
committee financial expert, as defined in the instructions to Item 3(a) of
Form N-CSR. Mr. Shea is considered to be "independent" for purposes of Item
3(a)(2) of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a)--(d) Aggregate fees billed to the registrant for the last two fiscal
years for professional services rendered by the registrant's principal
accountant were as follows:
2008 2009
------- -------
(a) Audit Fees $80,591 $80,320
(b) Audit-Related Fees $ 0 $ 0
(c) Tax Fees $12,166 $12,172
(d) All Other Fees $ 0 $ 0
Audit Fees include amounts related to the audit of the registrant's annual
financial statements and services normally provided by the principal
accountant in connection with statutory and regulatory filings. Tax Fees
principally include tax compliance, tax advice, tax planning and
preparation of tax returns.
Aggregate fees billed to the investment adviser and Adviser Affiliates (as
defined below in Item 4(e)) that are required to be pre-approved pursuant
to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X for the last two
fiscal years for services rendered by the registrant's principal accountant
were as follows:
2008 2009
---- ----
(b) Audit-Related Fees $ 0 $ 0
(c) Tax Fees $ 0 $ 0
(d) All Other Fees $ 0 $ 0
(e) (1) The registrant's audit committee pre-approves all audit services
provided by the registrant's principal accountant for the registrant
and all non-audit services provided by the registrant's principal
accountant for the registrant, its investment adviser and any entity
controlling, controlled by, or under common control with the
investment adviser ("Adviser Affiliates") that provides ongoing
services to the registrant, if the engagement by the investment
adviser or Adviser Affiliate relates directly to the operations and
financial reporting of the registrant. The audit committee has not
presently established any pre-approval policies and procedures that
permit the pre-approval of the above services other than by the full
audit committee. Certain de minimis exceptions are allowed for non-
audit services in accordance with Rule 2-01(c)(7)(i)(C) of Regulation
S-X as set forth in the registrant's audit committee charter.
(2) No services included in (b)-(d) above in connection with fees
billed to the registrant or the investment adviser or Adviser
Affiliates were approved pursuant to paragraph (c)(7)(i)(C) of Rule
2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the
preceding fiscal year by the registrant's principal accountant for
non-audit services rendered to the registrant, its investment adviser,
and Adviser Affiliates that provides ongoing services to the
registrant for 2009 and 2008 were $320,147 and $626,231, respectively.
(h) Non-audit services rendered to the registrant's investment adviser and
any Adviser Affiliates that provides ongoing services to the
registrant that were not pre-approved pursuant to Paragraph (c)(7)(ii)
of Rule 2-01 of Regulation S-X were considered by the registrant's
audit committee as to whether they were compatible with maintaining
the principal accountant's independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. 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) Code of Ethics applicable to its Principal Executive and Principle
Accounting Officers pursuant to Section 406 of the Sarbanes-Oxley Act
of 2002 attached hereto as Exhibit 99.406. Code of Ethics.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Senior Floating Rate Fund, Inc.
By: /s/ John T. Genoy
------------------------------------
John T. Genoy
President
Date: March 10, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John T. Genoy
------------------------------------
John T. Genoy
President
Date: March 10, 2010
By: /s/ Donna M. Handel
------------------------------------
Donna M. Handel
Treasurer
Date: March 10, 2010