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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, 2010
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Item 1. Reports to Stockholders
[GRAPHIC]
ANNUAL REPORT 2010
SUNAMERICA
Senior Floating Rate Fund
[LOGO]
TABLE OF CONTENTS
SHAREHOLDERS' LETTER.................................... 1
EXPENSE EXAMPLE......................................... 3
STATEMENT OF ASSETS AND LIABILITIES..................... 5
STATEMENT OF OPERATIONS................................. 6
STATEMENT OF CHANGES IN NET ASSETS...................... 7
STATEMENT OF CASH FLOWS................................. 8
FINANCIAL HIGHLIGHTS.................................... 9
PORTFOLIO OF INVESTMENTS................................ 10
NOTES TO FINANCIAL STATEMENTS........................... 22
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. 31
APPROVAL OF ADVISORY AGREEMENTS......................... 32
DIRECTORS AND OFFICERS INFORMATION...................... 35
SHAREHOLDER AND TAX INFORMATION......................... 38
COMPARISON: FUND VS. INDEX.............................. 39
DECEMBER 31, 2010 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, 2010.
The U.S. economic recovery gained momentum during the year, resulting in equity
markets outperforming fixed income markets. The annual period saw the broad
equity market, as represented by the S&P 500 Index*, return 15.06%, while the
fixed income market, as represented by the Barclays Capital U.S. Aggregate Bond
Index*, returned 6.54% for the same period. The performance of the leveraged
loan market, as measured by the S&P/LSTA Leveraged Loan Index (LLI)*, came in
almost exactly halfway between the 2 broader markets, returning 10.13%, also
for the same period.
The year started on a high note, as signs of an improving economy, continuation
of an accommodative monetary policy and a stock market rally highlighted the
first quarter of 2010. Positive manufacturing reports helped fuel economic
optimism, even though the unemployment rate remained at 9.7% and the
Congressional Budget Office projected that rate would remain constant for the
rest of the year. The Federal Reserve kept the Fed Funds rate at 0-0.25% during
the first quarter and anticipated keeping rates within that range for an
extended period.
The second quarter reintroduced uncertainty over the direction of the economy
and brought the seemingly straight-up recovery of the stock market to an end. A
clear slowdown in the economic recovery, exemplified by anemic job growth and
declining consumer confidence, as well as the sovereign debt crisis in Europe,
weighed on the markets.
The market took on a schizophrenic character in the third quarter as positive
equity returns in July and September were interrupted by negative returns in
August. This was a period of risk on/risk off behavior in the markets. Risk was
favored at signs of economic growth, but then was avoided at the release of
growth, employment or housing data. Debate continued as to whether the U.S. was
heading into a deflationary or inflationary environment. Fears of a double-dip
in the economy permeated the markets.
By the end of the year, the tides had turned once again as investors embraced
risk assets. Investors exited 2010 on the back of strong equity returns and
improving confidence that the U.S. was in the midst of an economic recovery.
The Fed's announcement that it would launch a second round of Quantitative
Easing (QE2), the retention of the Bush-era tax rates for two years, and
positive data on manufacturing and consumer spending were among the
contributors that fueled the market higher in the fourth quarter.
The improvement in the credit markets and investors' greater appetite for risk
both benefited the leveraged loan market. In addition, the floating-rate nature
of bank-loan coupons contributed to the performance of this asset class as
Treasury rates rose.
We continue to view the loan market positively, with market valuations
remaining attractive. We have positioned the Fund in line with our expectation
of a continued slow economic recovery. We continue to favor the middle part of
the credit curve, reflecting our desire to avoid default risk at the lower end
of the quality spectrum and less attractive return opportunities in the
highest-quality loans.
Currently, we are taking advantage of opportunities in the new-issue market to
buy loans at attractive current yields and with defensive capital structures,
where the structure has material value below the bank debt claim, as in
unsecured bonds and/or equity. In addition, we continue to see select total
return opportunities in the secondary market, where we are targeting selected
loans that are trading at a discount and that we see as likely candidates to be
paid off early.
1
SHAREHOLDERS' LETTER -- (unaudited) (continued)
We remain diligent in the management of your assets during this volatile
environment 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 S&P 500 INDEX is Standard & Poor's 500 Composite Stock Price Index, a
widely recognized, unmanaged index of common stock prices. The BARCLAYS CAPITAL
U.S. AGGREGATE BOND INDEX represents securities that are U.S. domestic, taxable
and dollar denominated. The index covers components for government and
corporate securities, mortgage pass-through securities and asset-backed
securities. 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.
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.
2
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
EXPENSE EXAMPLE -- DECEMBER 31, 2010 -- (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, 2010 and
held until December 31, 2010.
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, 2010" 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, 2010" 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, 2010" 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 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, 2010" 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, 2010"
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, 2010" 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, 2010" 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.
3
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
EXPENSE EXAMPLE -- DECEMBER 31, 2010 -- (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, 2010 DECEMBER 31, 2010 DECEMBER 31, 2010* AT JULY 1, 2010 DECEMBER 31, 2010
--------------- ----------------- ------------------ --------------- -----------------
Senior Floating Rate Fund#
Class A................. $1,000.00 $1,062.63 $7.54 $1,000.00 $1,017.90
Class C................. $1,000.00 $1,059.78 $9.09 $1,000.00 $1,016.38
-------------------
EXPENSE
EXPENSES PAID RATIO
DURING THE AS OF
SIX MONTHS ENDED DECEMBER 31,
DECEMBER 31, 2010* 2010*
------------------ ------------
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 either waived/reimbursed a
portion of or all of the fees/expenses and assumed a portion of or all
expenses for the Fund. As a result, if these fees and expenses had not been
waived/reimbursed, the "Actual/Hypothetical Ending Account Value" would have
been lower and the "Actual/Hypothetical Expenses Paid During the Six Months
Ended December 31, 2010" and the "Expense Ratios" would have been higher.
4
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES -- DECEMBER 31, 2010
ASSETS:
Investments at value (unaffiliated)*............................... $428,400,511
Repurchase agreements (cost approximates value).................... 42,920,000
------------
Total investments................................................ $471,320,511
------------
Receivable for:
Fund shares sold................................................. 3,562,183
Dividends and interest........................................... 1,862,075
Investments sold................................................. 2,883,969
Prepaid expenses and other assets.................................. 5,562
Due from investment adviser for expense reimbursements/fee waivers. 150,248
------------
Total assets..................................................... 479,784,548
------------
LIABILITIES:
Payable for:
Fund shares redeemed............................................. 1,682,321
Investments purchased............................................ 30,475,132
Investment advisory and management fees.......................... 308,773
Distribution and service maintenance fees........................ 192,385
Administration fees.............................................. 72,653
Transfer agent fees and expenses................................. 87,496
Directors' fees and expenses..................................... 1,479
Other accrued expenses........................................... 254,495
Dividends payable.................................................. 844,650
Commitments (Note 11).............................................. --
------------
Total liabilities................................................ 33,919,384
------------
Net Assets...................................................... $445,865,164
============
NET ASSETS REPRESENTED BY:
Common stock, $.01 par value....................................... $ 539,375
Additional paid-in capital......................................... 505,531,344
------------
506,070,719
Accumulated undistributed net investment income (loss)............. (560,324)
Accumulated undistributed net realized gain (loss) on investments.. (51,762,282)
Unrealized appreciation (depreciation) on investments.............. (7,882,949)
------------
Net Assets...................................................... $445,865,164
============
CLASS A:
Net assets......................................................... $255,025,896
Shares outstanding................................................. 30,840,869
Net asset value and redemption price per share..................... $ 8.27
Maximum sales charge (3.75% of offering price)..................... 0.32
------------
Maximum offering price to public................................... $ 8.59
============
CLASS C:
Net assets......................................................... $190,839,268
Shares outstanding................................................. 23,096,594
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charges)...... $ 8.26
============
*COST
Investment securities (unaffiliated)............................. $436,283,460
============
See Notes to Financial Statements
5
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF OPERATIONS -- FOR THE YEAR ENDED DECEMBER 31, 2010
INVESTMENT INCOME:
Interest (unaffiliated)........................................................... $15,642,006
Dividends (unaffiliated).......................................................... 53,719
Facility and other fee income (Note 2)............................................ 4,319,692
-----------
Total investment income........................................................ 20,015,417
-----------
EXPENSES:
Investment advisory and management fees........................................... 2,940,301
Administration fees............................................................... 691,836
Distribution and service maintenance fees:
Class A......................................................................... 655,227
Class C......................................................................... 1,190,324
Transfer agent fees and expenses:
Class A......................................................................... 432,390
Class C......................................................................... 362,224
Registration fees:
Class A......................................................................... 47,416
Class C......................................................................... 38,104
Accounting service fees........................................................... 82,514
Custodian and accounting fees..................................................... 102,179
Reports to shareholders........................................................... 102,167
Audit and tax fees................................................................ 91,906
Legal fees........................................................................ 36,431
Directors' fees and expenses...................................................... 47,363
Interest expense.................................................................. 2,773
Other expenses.................................................................... 131,303
-----------
Total expenses before fee waivers, expense reimbursements and custody credits.. 6,954,458
Fees waived and expenses reimbursed by investment adviser (Note 5)............. (1,462,457)
Custody credits earned on cash balances........................................ (65)
-----------
Net expenses................................................................... 5,491,936
-----------
Net investment income (loss)...................................................... 14,523,481
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments (unaffiliated)............................ 1,339,860
Change in unrealized appreciation (depreciation) on investments (unaffiliated).... 15,324,752
-----------
Net realized and unrealized gain (loss) on investments............................ 16,664,612
-----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $31,188,093
===========
See Notes to Financial Statements
6
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2010 2009
------------ -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss)......................................... $ 14,523,481 $ 8,691,651
Net realized gain (loss) on investments (unaffiliated)............... 1,339,860 (20,970,390)
Net unrealized gain (loss) on investments (unaffiliated)............. 15,324,752 92,014,874
------------ -------------
Increase (decrease) in net assets resulting from operations........... 31,188,093 79,736,135
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)...................................... (8,312,099) (2,992,553)
Net investment income (Class B)*..................................... -- (193,048)
Net investment income (Class C)...................................... (6,542,623) (5,360,408)
Net investment income (Class D)*..................................... -- (132,560)
Net investment income (Class Q)*..................................... -- (181,742)
------------ -------------
Total distributions to shareholders................................... (14,854,722) (8,860,311)
------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS (NOTE 3)................................................ 196,049,379 35,187,841
------------ -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS............................... 212,382,750 106,063,665
------------ -------------
NET ASSETS:
Beginning of period................................................... 233,482,414 127,418,749
------------ -------------
End of period+........................................................ $445,865,164 $ 233,482,414
============ =============
--------
+Includes accumulated undistributed net investment income (loss)...... $ (560,324) $ (229,083)
============ =============
* See Note 1
See Notes to Financial Statements
7
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF CASH FLOWS -- FOR THE YEAR ENDED DECEMBER 31, 2010
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets from operations.................................................................... $ 31,188,093
ADJUSTMENTS TO RECONCILE NET INCREASE IN NET ASSETS FROM OPERATIONS TO NET CASH USED IN OPERATING ACTIVITIES:
Purchase of loans........................................................................................... (304,387,539)
Proceeds from loans sold.................................................................................... 40,402,327
Loan principal paydowns..................................................................................... 93,602,360
Net purchases of short-term securities...................................................................... (39,141,185)
Accretion of facility fee income............................................................................ (3,142,685)
Increase in receivable for dividends and interest........................................................... (506,848)
Decrease in receivable for investments sold................................................................. 4,156,623
Increase in amount due from investment adviser for expense reimbursements/fee waivers....................... (46,595)
Increase in prepaid expenses and other assets............................................................... (2,875)
Increase in payable for investments purchased............................................................... 12,478,977
Increase in payable for investment advisory and management fees............................................. 146,924
Increase in payable for distribution and service maintenance fees........................................... 82,362
Increase in payable for administration fees................................................................. 34,571
Increase in other accrued expenses.......................................................................... 103,332
Unrealized appreciation on investments...................................................................... (15,324,752)
Net realized gain from investments.......................................................................... (1,339,860)
-------------
Net cash used in operating activities......................................................................... $(181,696,770)
-------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shares sold..................................................................................... 308,947,858
Payment on shares redeemed.................................................................................... (122,011,476)
Cash dividends paid........................................................................................... (5,413,695)
-------------
Net cash provided by financing activities..................................................................... $ 181,522,687
-------------
Net decrease in cash.......................................................................................... (174,083)
Cash balance at beginning of period........................................................................... 174,083
-------------
Cash balance at end of period................................................................................. $ 0
=============
Supplemental disclosure of cash flow information:
Noncash financing activities not included herein consist of reinvestment of
dividends and distributions of $8,912,388.
See Notes to Financial Statements
8
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
12/31/10 7.83 0.34 0.46 0.80 (0.36) -- (0.36) 8.27 10.33 255,026 1.45
CLASS C
- - - - - - -------
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
12/31/10 7.82 0.32 0.45 0.77 (0.33) -- (0.33) 8.26 10.01 190,839 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
12/31/10 4.34 41
-
12/31/06 6.26% 61%
12/31/07 6.24 91
12/31/08 5.89 32
12/31/09 4.88 74
12/31/10 4.03 41
--------
* 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):
12/31/06 12/31/07 12/31/08 12/31/09 12/31/10
-------- -------- -------- -------- --------
Class A. 1.81%(4) 0.59% 0.65% 0.55% 0.38%
Class C. 0.64 0.65 0.73 0.66 0.48
(4)Annualized
See Notes to Financial Statements
9
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO PROFILE -- DECEMBER 31, 2010 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Media....................................................... 11.7%
Repurchase Agreements....................................... 9.6
Hotels, Restaurants & Leisure............................... 7.0
Commercial Services & Supplies.............................. 5.0
Health Care Providers & Services............................ 4.7
Auto Components............................................. 3.9
IT Services................................................. 3.8
Chemicals................................................... 3.4
Insurance................................................... 3.1
Capital Markets............................................. 3.0
Software.................................................... 2.8
Containers & Packaging...................................... 2.8
Registered Investment Companies............................. 2.7
Specialty Retail............................................ 2.7
Industrial Conglomerates.................................... 2.7
Diversified Financial Services.............................. 2.6
Diversified Telecommunication Services...................... 2.1
Aerospace & Defense......................................... 2.0
Semiconductors & Semiconductor Equipment.................... 1.9
Food Products............................................... 1.9
Wireless Telecommunication Services......................... 1.8
Oil, Gas & Consumable Fuels................................. 1.5
Household Products.......................................... 1.4
Food & Staples Retailing.................................... 1.3
Consumer Finance............................................ 1.3
Energy Equipment & Services................................. 1.1
Road & Rail................................................. 1.1
Health Care Technology...................................... 1.1
Communications Equipment.................................... 1.1
Multiline Retail............................................ 1.0
Building Products........................................... 1.0
Personal Products........................................... 1.0
Multi Utilities............................................. 0.9
Pharmaceuticals............................................. 0.9
Internet & Catalog Retail................................... 0.8
Airlines.................................................... 0.8
Machinery................................................... 0.8
Health Care Equipment & Supplies............................ 0.7
Diversified Consumer Services............................... 0.7
Distributors................................................ 0.7
Leisure Equipment & Products................................ 0.6
Industrial Power Producers & Energy Traders................. 0.6
Biotechnology............................................... 0.6
Real Estate Management & Development........................ 0.5
Automobiles................................................. 0.5
Textiles, Apparel & Luxury Goods............................ 0.5
Marine...................................................... 0.4
Metals & Mining............................................. 0.4
Electric Utilities.......................................... 0.3
Internet Software & Services................................ 0.3
Transportation Infrastructure............................... 0.3
Electrical Equipment........................................ 0.1
Electronic Equipment, Instruments & Components.............. 0.1
Paper & Forest Products..................................... 0.1
-----
105.7%
=====
CREDIT QUALITY+#
BBB......................................................... 0.5%
BBB-........................................................ 2.1
BB+......................................................... 5.1
BB.......................................................... 11.2
BB-......................................................... 23.5
B+.......................................................... 21.9
B........................................................... 14.9
B-.......................................................... 9.2
CCC+........................................................ 2.5
CCC......................................................... 0.7
CCC-........................................................ 1.5
CC.......................................................... 0.5
D........................................................... 0.1
Not Rated@.................................................. 6.3
-----
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.
10
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2010
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
--------------------------------------------------------------------------------------------------------
LOANS(3)(4) -- 91.6%
AEROSPACE & DEFENSE -- 2.0%
TASC, Inc........................ BTL-A Ba2 BB 5.50% 12/18/14 $ 345,000 $ 347,011
TASC, Inc........................ BTL-B Ba2 BB 5.75 12/18/14 759,000 766,589
The SI Organization, Inc......... BTL-B Ba3 B+ 5.75 11/22/16 1,250,000 1,259,375
Transdigm Group, Inc............. BTL-B Ba2 BB- 5.00 12/06/16 2,105,000 2,129,340
Wesco International, Inc......... 2nd Lien B3 B- 6.02 03/29/14 688,000 682,410
Wyle Laboratories, Inc........... BTL-B B1 BB 7.75 03/16/16 3,293,738 3,306,090
-----------
8,490,815
-----------
AIRLINES -- 0.8%
Delta Air Lines, Inc............. 2nd Lien B2 B 3.54 04/30/14 965,000 937,106
United Airlines, Inc............. Tranche B Ba3 BB- 2.31 02/01/14 1,374,444 1,329,989
US Airways Group, Inc............ BTL B3 B+ 2.79 03/23/14 1,440,000 1,300,051
-----------
3,567,146
-----------
AUTO COMPONENTS -- 3.9%
Allison Transmission, Inc........ BTL-B B2 B 3.02-3.04 08/07/14 2,342,798 2,293,990
Federal Mogul Corp............... BTL-B Ba3 B+ 2.20-2.21 06/27/15 1,630,196 1,524,525
Federal Mogul Corp............... BTL-C Ba3 B+ 2.20-2.21 06/27/15 831,733 777,819
FleetPride Corp.................. BTL-B Ba3 BB- 2.80 06/28/13 226,563 218,633
Metaldyne Co. LLC................ BTL-B B1 B+ 7.75 10/16/16 942,638 959,134
Remy International, Inc.......... BTL-B B1 B+ 6.25 12/17/16 2,025,000 2,043,984
Tenneco, Inc..................... BTL-B Ba1 BB+ 5.05 06/03/16 995,000 1,003,084
United Components, Inc........... Tranche D Ba3 B 6.25 03/23/17 4,124,663 4,167,971
Veyance Technologies, Inc........ 1st Lien NR NR 2.77 07/31/14 2,539,687 2,241,274
Veyance Technologies, Inc........ Delayed Draw NR NR 2.77 07/31/14 363,750 321,009
Viking Acquisition, Inc.......... BTL-B Ba3 B+ 6.00 11/05/16 1,735,000 1,741,506
-----------
17,292,929
-----------
AUTOMOBILES -- 0.5%
Ford Motor Co.................... BTL-B Baa3 BB 3.02-3.04 12/15/13 2,291,484 2,285,430
-----------
BIOTECHNOLOGY -- 0.6%
Grifols SA....................... BTL-B Ba3 BB 6.25 06/04/16 2,535,000 2,567,745
-----------
BUILDING PRODUCTS -- 1.0%
Armstrong World Industries, Inc.. BTL-B B1 BB- 5.00 05/23/17 1,675,000 1,690,703
Brand Services, Inc.............. BTL B1 B 2.56 02/07/14 1,834,081 1,772,181
Brand Services, Inc.............. BTL-B2 B1 B 3.56 02/07/14 921,763 901,023
PGT Industries, Inc.............. BTL-A2 NR NR 7.25 02/14/12 182,927 180,183
-----------
4,544,090
-----------
CAPITAL MARKETS -- 3.0%
BNY ConvergEX Group LLC.......... 1st Lien NR B+ 5.25 12/16/16 3,940,000 3,972,832
BNY ConvergEX Group LLC.......... 2nd Lien NR B- 8.75 12/16/17 2,075,000 2,076,728
Nuveen Investments, Inc.......... BTL-B B3 B 3.29-3.30 11/13/14 1,383,480 1,319,062
Nuveen Investments, Inc.......... BTL B3 B 3.29-3.30 05/13/17 1,616,520 1,582,169
Pinafore LLC..................... BTL-B Ba2 BB 6.25 09/21/16 2,466,554 2,504,213
Tensar Earth Technologies, Inc... BTL-B B3 CCC+ 3.79 10/31/12 719,137 647,223
TPF Generation Holdings LLC...... 2nd Lien B3 B 4.55 12/15/14 1,500,000 1,380,938
-----------
13,483,165
-----------
11
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
-----------------------------------------------------------------------------------------------------------
CHEMICALS -- 2.8%
Brenntag AG.......................... BTL NR B+ 3.76-4.23% 01/18/14 $ 28,962 $ 29,017
Brenntag AG.......................... BTL-B2 NR B+ 3.76-3.79 01/18/14 166,444 166,756
Chemtura Corp........................ BTL Ba1 NR 5.50 08/27/16 1,890,000 1,911,263
Cristal Inorganic Chemicals US, Inc.. 1st Lien B1 BB- 2.55 05/15/14 881,152 872,708
Hexion Specialty Chemicals, Inc...... BTL-C1 B1 CCC+ 4.06 05/05/15 483,074 478,364
Hexion Specialty Chemicals, Inc...... BTL-C2 B1 CCC+ 4.06 05/05/15 214,470 212,379
Huntsman International LLC........... BTL-B Ba2 BB- 1.77-1.79 04/19/14 2,434,163 2,385,811
Huntsman International LLC........... BTL-C Ba2 BB- 2.51-2.52 06/30/16 264,918 262,600
Ineos US Finance LLC................. BTL-B2 B1 B 7.50 12/16/13 1,399,433 1,446,664
Ineos US Finance LLC................. BTL-C2 B1 B 8.00 12/16/14 1,590,673 1,644,358
Momentive Performance................ BTL-B1 Ba3 B 2.56 12/04/13 1,976,863 1,928,810
OMNOVA Solutions, Inc................ BTL-B Ba2 B+ 5.75 05/31/17 550,000 555,500
Solutia, Inc......................... BTL-B Ba1 BB- 4.50 03/17/17 754,570 760,465
-----------
12,654,695
-----------
COMMERCIAL SERVICES & SUPPLIES -- 5.0%
Altegrity, Inc....................... BTL-B B1 B+ 7.75 08/03/15 2,392,975 2,404,940
ATI Schools.......................... BTL-B Ba3 B 8.25 12/31/14 990,000 905,850
Audio Visual Services Group, Inc..... 2/nd/ Lien NR NR 5.81 08/28/14 1,077,040 613,913
AWAS................................. BTL-B Ba2 BBB- 7.75 05/12/16 2,489,200 2,545,207
Entegra Power Group LLC.............. 2/nd/ Lien B3 B 2.79 04/19/14 278,361 266,821
KAR Holding, Inc..................... BTL-B Ba3 B+ 3.02 10/19/13 938,504 934,750
Key Safety Systems, Inc.............. 1/st/ Lien NR BB 2.52 03/08/14 1,443,206 1,349,397
New Customer Services Cos., Inc...... BTL B3 B- 9.50 03/23/17 1,750,000 1,739,063
New Customer Services Cos., Inc...... BTL-B Ba3 B+ 6.00 03/23/16 2,828,571 2,817,082
Quad Graphics, Inc................... BTL-B Ba2 BB+ 5.50 07/01/16 2,019,850 1,987,852
Reynolds Group Holdings, Inc......... BTL B1 BB 6.25 05/05/16 3,303,188 3,334,155
Reynolds Group Holdings, Inc......... BTL-B Ba3 BB 6.75 05/05/16 1,187,407 1,199,776
Reynolds Group Holdings, Inc......... BTL-D Ba3 BB 6.50 05/05/16 1,195,000 1,208,274
ValleyCrest Cos...................... 1/st/ Lien NR NR 6.50 10/04/16 882,969 825,576
-----------
22,132,656
-----------
COMMUNICATIONS EQUIPMENT -- 1.1%
Aeroflex, Inc........................ BTL-B1 Ba3 BB- 4.31 08/15/14 1,891,059 1,878,058
Airvana, Inc......................... BTL B2 B+ 11.00 08/26/14 1,053,167 1,058,213
Sorenson Communications, Inc......... BTL-C NR NR 6.00 08/16/13 1,867,667 1,783,622
-----------
4,719,893
-----------
CONSUMER FINANCE -- 1.3%
Fifth Third Processing Solutions LLC. 2nd Lien B2 B- 8.25 11/03/17 880,000 897,600
Fifth Third Processing Solutions LLC. BTL-B Ba3 BB- 5.50 11/03/16 5,040,000 5,087,880
-----------
5,985,480
-----------
CONTAINERS & PACKAGING -- 2.8%
Anchor Glass Container Corp.......... 1st Lien B1 BB- 6.00 02/03/16 1,722,447 1,731,059
Anchor Glass Container Corp.......... 2nd Lien B3 B- 10.00 09/02/16 560,000 557,900
Berry Plastics Corp.................. BTL-C B1 B 2.28 04/03/15 1,976,923 1,869,922
BWAY Corp............................ BTL-B Ba3 B+ 5.50-6.00 03/28/17 2,729,144 2,749,612
BWAY Corp............................ BTL-C Ba3 B+ 5.50-6.00 03/28/17 255,857 257,776
Consolidated Container Co............ 2nd Lien Caa1 CCC+ 5.75 09/28/14 1,250,000 1,056,250
Graham Packaging Co. LP.............. BTL-D B1 B+ 6.00 09/23/16 1,795,500 1,818,692
Graham Packaging Co. LP.............. BTL-C B1 B+ 6.75 04/05/14 734,306 742,960
Smurfit-Stone Container Corp......... BTL B2 BB+ 6.75 06/30/16 1,467,625 1,494,409
-----------
12,278,580
-----------
DISTRIBUTORS -- 0.7%
CDW Corp............................. BTL-B B2 B- 5.26 07/15/17 3,023,159 3,004,264
-----------
12
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED CONSUMER SERVICES -- 0.7%
Vertrue, Inc......................................... BTL Ba3 B 3.31% 08/18/14 $2,445,907 $ 2,097,365
Vertrue, Inc......................................... 2nd Lien Caa1 CCC+ 7.31 08/14/15 1,490,000 1,195,725
-----------
3,293,090
-----------
DIVERSIFIED FINANCIAL SERVICES -- 2.6%
BLB Management Services, Inc......................... 1st Lien NR BB- 8.50 11/05/15 149,256 148,199
Bridge Information Systems, Inc.+@# (5)(6)........... BTL-B NR NR 6.25 05/29/05 356,779 0
BRSP LLC............................................. BTL B2 BB- 7.50 06/17/14 1,949,504 1,964,125
CIT Group, Inc....................................... BTL-A B1 BB 6.25 08/11/15 2,486,836 2,540,199
Fox Acquisition LLC.................................. BTL-B B2 B 7.50 07/14/15 966,596 961,159
Ocwen Financial Corp................................. BTL-B B1 B 9.00 07/29/15 3,399,821 3,416,821
Pinnacle Foods Group, Inc............................ BTL-B Ba3 B+ 2.76 04/02/14 958,955 942,397
Securus Technologies, Inc............................ BTL-B B1 B 8.00 10/30/14 903,175 914,465
Universal City Apartment Holding..................... BTL-B Ba2 B+ 5.50 10/20/14 861,300 884,986
-----------
11,772,351
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES -- 2.1%
SAVVIS Communications Corp........................... BTL B1 B 6.75 08/04/16 2,094,750 2,129,772
Telcordia Technologies, Inc.......................... BTL-B B1 B+ 6.75 04/28/16 1,119,375 1,129,170
U.S. TelePacific Corp................................ BTL B2 CCC+ 9.25 08/17/15 992,500 1,003,872
Vonage Holdings Corp................................. BTL-B B2 BB 9.75 12/14/15 3,980,000 3,970,050
West Corp............................................ BTL-B2 Ba3 BB- 2.64-2.83 10/24/13 986,558 978,770
-----------
9,211,634
-----------
ELECTRIC UTILITIES -- 0.3%
KGen Power Corp...................................... LOC B1 BB- 0.15 02/08/14 375,000 360,000
KGen Power Corp...................................... BTL B1 BB- 2.06 02/08/14 417,998 401,278
La Paloma Generating Co.............................. Delayed Draw B3 CCC+ 2.05 08/16/12 14,304 13,428
La Paloma Generating Co.............................. LOC B3 CCC+ 2.01 08/16/12 32,787 30,779
La Paloma Generating Co.............................. 1st Lien B3 CCC+ 2.05 08/16/12 179,603 168,603
La Paloma Generating Co.............................. 2nd Lien Caa2 CC 3.79 08/16/13 250,000 214,844
Mach Gen LLC......................................... LOC Ba3 BB- 2.30 02/22/13 88,760 82,713
-----------
1,271,645
-----------
ELECTRICAL EQUIPMENT -- 0.1%
NSG Holdings II LLC.................................. LOC Ba2 BB 1.80 06/15/14 102,041 98,852
NSG Holdings II LLC.................................. BTL Ba2 BB 1.80 06/15/14 377,069 365,285
-----------
464,137
-----------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS -- 0.1%
X-Rite, Inc.......................................... 1st Lien B1 BB- 6.25 10/24/12 483,697 480,523
-----------
ENERGY EQUIPMENT & SERVICES-1.1%
Aquilex Holdings LLC................................. BTL-B Ba3 BB- 5.50 04/01/16 1,596,350 1,593,688
Big West Oil LLC..................................... BTL B2 B+ 7.00 04/04/16 1,125,000 1,139,063
MEG Energy Corp...................................... BTL-D B1 BBB- 6.00 04/03/16 2,226,837 2,233,796
-----------
4,966,547
-----------
FOOD & STAPLES RETAILING -- 1.3%
Great Atlantic & Pacific Tea Co., Inc.(5)............ DIP NR NR 8.75 06/13/12 1,150,000 1,164,375
Rite Aid Corp........................................ BTL-B2 B3 B+ 2.02 06/04/14 2,969,504 2,949,089
Smart & Final, Inc................................... 1st Lien B3 B 5.01-5.59 05/31/16 944,802 921,181
Smart & Final, Inc................................... 2nd Lien Caa2 CCC 9.04 11/30/14 1,047,067 956,757
-----------
5,991,402
-----------
13
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
-----------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
----------------------------------------------------------------------------------------------------------------
FOOD PRODUCTS -- 1.9%
Brickman Group Holdings, Inc........... BTL-B B1 B+ 7.25% 10/14/16 $2,090,000 $ 2,119,609
Darling International, Inc............. BTL-B Ba2 BB+ 5.00 12/17/16 1,370,000 1,383,700
Dole Food Co., Inc..................... BTL-B Ba2 BB- 5.00-5.50 03/03/17 325,073 327,647
Dole Food Co., Inc..................... BTL-C Ba2 BB- 5.00-5.50 03/03/17 807,400 813,792
Green Mountain Coffee Roasters, Inc.... BTL-B Ba3 B+ 5.50 12/17/16 1,665,000 1,670,897
Michael Foods, Inc..................... BTL-B B1 BB- 6.25-6.75 06/29/16 1,945,126 1,975,923
-----------
8,291,568
-----------
HEALTH CARE EQUIPMENT & SUPPLIES -- 0.7%
Butler Animal Health Supply LLC........ BTL-B B1 BB- 5.50 12/31/15 683,100 686,516
Gambro AB.............................. BTL-B NR NR 2.53 06/05/14 430,973 400,805
Gambro AB.............................. BTL-C NR NR 3.28 06/05/15 430,973 400,805
PTS Pharmaceuticals.................... BTL-B Ba3 BB- 2.51 04/10/14 1,930,000 1,838,325
-----------
3,326,451
-----------
HEALTH CARE PROVIDERS & SERVICES -- 4.7%
Alliance HealthCare Services, Inc...... BTL-B Ba3 BB- 5.50 06/01/16 331,650 332,376
Community Health Systems, Inc.......... BTL Ba3 BB 2.54 07/25/14 944,522 922,503
Community Health Systems, Inc.......... BTL Ba3 BB 2.54 07/25/14 833,629 832,006
Community Health Systems, Inc.......... Delayed Draw Ba3 BB 2.54 07/25/14 49,007 47,865
DaVita, Inc............................ BTL-B Ba2 NR 4.50 10/20/16 1,745,000 1,763,853
HCA, Inc............................... BTL-B Ba3 BB 2.55 11/17/13 1,000,000 999,792
HealthSpring, Inc...................... BTL-B Ba3 B+ 6.00 10/22/16 3,700,000 3,663,000
inVentiv Health, Inc................... BTL-B Ba3 BB- 6.50 08/04/16 925,350 934,025
Multiplan, Inc......................... BTL Ba3 B 6.50 08/26/17 3,901,154 3,946,871
Prime Healthcare Services, Inc......... BTL-B B1 NR 7.25 04/28/15 992,500 965,206
RehabCare Group, Inc................... BTL-B Ba3 BB 6.00 11/24/15 424,050 427,018
Renal Advantage Holdings, Inc.......... BTL-B Ba3 B 5.75 12/17/16 2,665,000 2,680,825
Team Health, Inc....................... BTL-B B1 BB 2.28-2.30 11/23/12 237,500 232,898
Universal Health Services, Inc......... BTL-B Ba2 BB+ 5.50 11/15/16 3,000,000 3,044,175
-----------
20,792,413
-----------
HEALTH CARE TECHNOLOGY -- 1.1%
IMS Health, Inc........................ BTL-B Ba3 BB 5.25 02/26/16 2,698,404 2,732,134
MedAssets, Inc......................... BTL Ba3 BB- 5.25 11/16/16 2,000,000 2,012,916
-----------
4,745,050
-----------
HOTELS, RESTAURANTS & LEISURE -- 6.7%
24 Hour Fitness Worldwide, Inc......... BTL-B Ba3 B+ 6.75 04/22/16 2,736,250 2,652,110
Burger King Corp....................... BTL-B Ba3 BB- 6.25 10/19/16 3,725,000 3,783,870
CCM Merger, Inc........................ BTL-B Caa1 BB- 8.50 07/23/12 2,688,747 2,696,590
Cedar Fair LP.......................... BTL-B Ba2 BB- 5.50 12/15/16 2,343,667 2,371,707
Denny's Corp........................... BTL-B B1 B+ 6.50 09/30/16 1,920,000 1,946,400
DineEquity, Inc........................ BTL-B Ba2 BB- 6.00 10/19/17 3,390,067 3,448,844
Dunkin' Finance Corp................... BTL-B B1 B+ 5.75 11/19/17 760,000 770,064
Golden Nugget, Inc..................... 1st Lien Caa3 CC 3.27 06/30/14 1,264,731 1,029,174
Golden Nugget, Inc..................... Delayed Draw Caa3 CC 3.27 06/30/14 719,921 585,836
Green Valley Ranch Gaming LLC+(7)...... 2nd Lien Ca NR 3.50 08/06/14 1,000,000 32,708
Harrah's Operating Co., Inc............ BTL-B2 Caa1 B 3.29 01/28/15 2,000,000 1,813,750
Isle of Capri Casinos, Inc............. BTL B2 B+ 5.00 11/25/13 1,089,102 1,091,280
Isle of Capri Casinos, Inc............. Delayed Draw A B2 B+ 5.00 11/25/13 328,429 329,086
Isle of Capri Casinos, Inc............. Delayed Draw B B2 B+ 5.00 11/25/13 435,641 436,512
NPC International, Inc................. BTL Ba3 B+ 2.02-2.04 05/03/13 1,295,962 1,271,663
Quizno's LLC........................... 1st Lien NR NR 5.01 05/05/13 2,001,572 1,788,905
Six Flags Theme Parks, Inc............. BTL-B B1 B+ 5.50 06/30/16 2,720,000 2,748,900
Travelport, Inc........................ Delayed Draw Ba3 B 4.96 08/23/15 258,894 245,885
Wendy's/Arby's Restaurants LLC......... BTL-B Ba2 BB 5.00 05/24/17 995,000 1,001,094
-----------
30,044,378
-----------
14
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
-------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 1.4%
Diversey, Inc..................................... BTL-B Ba2 BB- 5.25% 11/24/15 $ 986,603 $ 995,852
Huish Detergents, Inc............................. 1st Lien Ba2 BB 2.02 04/26/14 1,930,000 1,848,566
KIK Custom Products............................... BTL B3 CCC+ 2.56 05/24/14 2,045,920 1,759,492
KIK Custom Products............................... CND TL B3 CCC+ 2.56 05/31/14 350,729 301,627
Scotsman Industries, Inc.......................... BTL-B B1 B+ 5.75-6.50 04/30/16 1,492,500 1,504,627
-----------
6,410,164
-----------
INDUSTRIAL CONGLOMERATES -- 2.7%
Clopay Ames True Temper Holding Corp.............. BTL B1 BB+ 7.75 08/03/16 2,370,000 2,393,700
Dresser, Inc...................................... 2nd Lien B3 B- 6.03 05/04/15 3,000,000 3,001,875
GenTek, Inc....................................... BTL B1 B 6.75-7.25 10/06/15 2,942,625 2,972,051
Harland Clarke Holdings Corp...................... BTL-B NR B+ 2.76-2.80 06/30/14 2,961,676 2,684,019
Sequa Corp........................................ BTL-B B2 B- 3.54-3.56 12/03/14 999,706 970,548
-----------
12,022,193
-----------
INDUSTRIAL POWER PRODUCERS & ENERGY TRADERS -- 0.6%
New Development Holdings LLC...................... BTL-B Ba3 BB- 7.00 07/01/17 2,665,681 2,714,205
-----------
INSURANCE -- 3.1%
Alliant Holdings, Inc............................. BTL-B B2 B- 3.30 08/21/14 956,400 937,272
Alliant Holdings, Inc............................. BTL-D B2 B- 6.75 08/21/14 1,350,000 1,360,125
Amwins Group, Inc................................. 1st Lien B2 B- 2.80-2.81 06/08/13 1,898,650 1,789,478
Asurion Corp...................................... BTL-B Ba3 B+ 3.26-3.29 07/07/14 2,947,576 2,804,341
Asurion Corp...................................... BTL Ba3 B+ 6.75 03/31/15 2,970,000 2,981,933
Hub International Holdings, Inc................... BTL B2 B 2.80 06/13/14 2,365,196 2,300,894
Hub International Holdings, Inc................... Delayed Draw B2 B 2.80 06/13/14 531,657 517,203
USI Holdings Corp................................. BTL-B B2 B- 2.77 05/04/14 967,419 937,187
-----------
13,628,433
-----------
INTERNET & CATALOG RETAIL -- 0.8%
Affinion Group, Inc............................... BTL-B Ba2 BB- 5.00 10/09/16 1,692,213 1,687,188
SkillSoft Corp.................................... BTL Ba3 BB 6.50 05/26/17 1,990,000 2,010,730
-----------
3,697,918
-----------
INTERNET SOFTWARE & SERVICES -- 0.3%
Skype Technologies SA............................. BTL B1 B+ 7.00 02/23/15 1,203,125 1,208,598
-----------
IT SERVICES -- 3.8%
DynCorp International, Inc........................ BTL-B Ba1 BB 6.25 07/07/16 1,995,000 2,012,456
Fidelity National Information Services, Inc....... BTL-B Ba1 BBB- 5.25 07/18/16 3,062,325 3,104,738
First Data Corp................................... BTL-B1 B1 B+ 3.01 09/24/14 2,487,974 2,299,239
First Data Corp................................... BTL-B2 B1 B+ 3.01 09/24/14 2,384,365 2,203,490
First Data Corp................................... BTL-B3 B1 B+ 3.01 09/24/14 931,794 862,233
iPayment, Inc..................................... BTL-B B1 B- 2.26-2.30 03/31/13 1,639,716 1,590,524
Sabre Holdings Corp............................... BTL-B B1 B 2.26-2.29 09/30/14 1,429,789 1,335,571
Sungard Data Systems, Inc......................... BTL-B Ba3 BB 3.91 02/28/16 930,065 924,544
TransFirst Holdings, Inc.......................... BTL-B B2 B 3.06 06/15/14 2,899,837 2,671,475
-----------
17,004,270
-----------
LEISURE EQUIPMENT & PRODUCTS -- 0.6%
Leslie's Poolmart, Inc............................ BTL-B Ba3 B+ 6.00 11/15/17 1,100,000 1,109,282
SRAM LLC.......................................... BTL-B Ba3 BB- 5.00-5.50 04/30/15 1,620,690 1,638,922
-----------
2,748,204
-----------
MACHINERY -- 0.8%
Bucyrus International, Inc........................ BTL-C Ba2 BB+ 4.25 02/19/16 1,477,700 1,485,635
Gleason Corp...................................... BTL-B NR NR 2.00-2.06 06/23/13 874,561 855,977
Manitowoc Co., Inc................................ BTL-B Ba2 BB 8.00 11/07/14 281,767 284,819
NACCO Materials Handling Group, Inc............... BTL NR NR 2.01-2.19 03/21/13 959,799 923,807
-----------
3,550,238
-----------
15
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
--------------------------------------------------------------------------------------------------------------------
MARINE -- 0.4%
Dockwise Transport BV....................... BTL-B NR NR 2.04-2.05% 04/01/15 $ 185,246 $ 172,742
Dockwise Transport BV....................... BTL-B2 NR NR 2.05 04/01/15 379,013 353,430
Dockwise Transport BV....................... BTL-C NR NR 2.91 04/01/16 155,275 144,794
Dockwise Transport BV....................... BTL-C2 NR NR 2.93 04/01/16 379,013 353,430
Dockwise Transport BV....................... BTL-D NR NR 4.80 07/12/16 241,913 219,233
Dockwise Transport BV....................... BTL-D2 NR NR 4.79 07/12/16 483,825 438,466
-----------
1,682,095
-----------
MEDIA -- 10.9%
Advanstar Communications, Inc............... 1st Lien Caa2 B- 2.55 05/31/14 1,932,418 1,628,063
Bresnan Communications, Inc................. BTL-B Ba3 BB+ 4.50 12/14/17 1,230,000 1,239,225
Caribe Information Investment, Inc.......... BTL-B B3 CCC- 2.54-2.56 03/31/13 1,610,481 1,038,760
Carmike Cinemas, Inc........................ BTL B1 B- 5.50 01/27/16 1,451,661 1,459,698
Century -- TCI California LP+@#(5).......... Revolver NR NR 6.50 12/31/07 10,000 0
Cequel Communications LLC................... BTL Ba3 BB- 2.27 11/05/13 1,651,933 1,638,764
Cinram International, Inc................... BTL-B Caa1 CCC+ 2.27 05/06/11 763,058 602,053
Cumulus Media, Inc.......................... BTL Caa1 B- 4.01 06/11/14 1,583,346 1,492,304
Fender Musical Instruments Corp............. Delayed Draw B2 B 2.54 06/07/14 286,634 267,286
Fender Musical Instruments Corp............. BTL-B B2 B 2.52 06/07/14 567,382 529,084
Formula One Holdings........................ BTL-B1 NR NR 2.71 12/31/13 1,120,285 1,066,897
Formula One Holdings........................ BTL-B2 NR NR 2.71 12/31/13 756,721 720,659
Formula One Holdings........................ BTL-D2 NR NR 3.96 06/30/14 1,500,000 1,369,062
GateHouse Media Operating, Inc.............. Delayed Draw Ca CCC- 2.27 08/28/14 813,503 322,961
GateHouse Media Operating, Inc.............. BTL-B Ca CCC- 2.27 08/28/14 3,178,085 1,261,700
GateHouse Media Operating, Inc.............. BTL-C Ca CCC- 2.52 08/28/14 997,897 396,165
Getty Images, Inc........................... BTL-B Ba3 BB- 5.25 11/04/16 2,279,288 2,301,795
Gray Television, Inc........................ BTL-B B2 B 3.77-5.75 12/31/14 1,460,807 1,430,982
Hicks Sports Group+(5)(7)................... BTL-B NR NR 6.75 06/22/11 1,760,758 783,537
HIT Entertainment, Ltd...................... BTL B2 CCC+ 5.54 06/01/12 891,676 877,465
HIT Entertainment, Ltd...................... 2nd Lien Caa3 CCC- 5.79 02/05/13 1,000,000 845,000
Idearc, Inc................................. BTL-B B3 B- 11.00 12/31/15 681,102 469,393
Interactive Data Corp....................... BTL-B Ba3 B+ 6.75 01/29/17 3,034,750 3,082,156
Knology, Inc................................ BTL-B B1 B+ 5.50 10/15/16 900,000 907,172
Local Insight Regatta Holdings, Inc.+(5)(7). BTL NR D 7.75 04/23/15 696,017 252,306
Mediacom Broadband LLC...................... BTL-F Ba3 BB- 4.50 10/23/17 2,741,225 2,708,103
Mediacom LLC................................ BTL-D Ba3 BB- 5.50 03/31/17 952,938 916,004
Mediacom LLC................................ BTL-E Ba3 BB- 4.50 10/23/17 2,741,225 2,689,827
Mission Broadcasting, Inc................... BTL Ba3 BB- 5.00 09/30/16 388,050 388,050
NextMedia Operating, Inc.................... BTL-B B3 B+ 8.25 05/21/16 2,922,913 2,935,092
Nextstar Broadcasting, Inc.................. BTL-B Ba3 BB- 5.00-6.25 09/30/16 606,950 606,950
Nielsen Finance LLC......................... BTL Ba3 BB- 2.26 08/09/13 1,248,419 1,236,158
Sinclair Television Group, Inc.............. BTL-B Baa3 BB 5.50 10/29/15 1,448,182 1,468,396
Spanish Broadcasting Systems, Inc........... 1st Lien Caa1 B- 2.06 06/10/12 942,500 903,033
Tribune Co.+(5)(7).......................... BTL-B NR NR 6.50 06/04/14 3,925,075 2,635,409
Univision Communications, Inc............... BTL-B B2 B 4.51 10/25/17 3,527,597 3,360,036
WideOpenWest Finance LLC.................... BTL B1 B- 2.76-4.75 06/27/14 977,547 907,082
WideOpenWest Finance LLC.................... BTL-B B1 B- 6.76-8.75 06/27/14 1,481,320 1,453,545
Yell Group, Ltd............................. BTL-B NR NR 4.01 07/31/14 804,056 384,741
-----------
48,574,913
-----------
METALS & MINING -- 0.4%
Novelis, Inc................................ BTL Ba2 BB- 5.25 11/29/16 1,600,000 1,623,000
-----------
MULTI UTILITIES -- 0.9%
Texas Competitive Electric Holdings Co. LLC. BTL-B1 B2 B- 3.76 10/10/14 1,964,467 1,522,350
Texas Competitive Electric Holdings Co. LLC. BTL-B2 B2 B- 3.76 10/10/14 3,498,648 2,710,060
-----------
4,232,410
-----------
16
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------------------------------
MULTILINE RETAIL -- 1.0%
Neiman Marcus Group, Inc....................... BTL-B B2 BB- 4.30% 04/06/16 $2,123,459 $2,105,544
RGIS LLC....................................... BTL-B B1 B 2.75-2.80 04/30/14 848,650 793,488
RGIS LLC....................................... Delayed Draw B1 B 2.80 04/30/14 42,432 39,674
Savers, Inc.................................... BTL-B Ba3 B+ 5.75 03/11/16 1,667,400 1,673,653
----------
4,612,359
----------
OIL, GAS & CONSUMABLE FUELS -- 1.4%
Alon USA, Inc. (Edgington Facility)............ BTL B1 B+ 2.54 08/02/13 26,527 20,426
Alon USA, Inc. (Paramount Facility)............ BTL B1 B+ 2.25-2.51 08/02/13 212,222 163,411
Great Point Power LLC.......................... BTL Ba1 BB+ 5.50 06/04/17 1,652,891 1,655,990
NE Energy, Inc................................. 2nd Lien B3 CCC+ 4.81 05/01/14 250,000 232,500
Pilot Travel Centers LLC....................... BTL-B Ba2 BBB- 5.25 06/30/16 830,439 844,142
Venoco, Inc.................................... 2nd Lien B3 BB- 4.31 05/08/14 3,288,534 3,157,677
----------
6,074,146
----------
PAPER & FOREST PRODUCTS -- 0.1%
MMGS Packaging Acquisition..................... 2nd Lien Caa3 CC 5.81 03/07/15 500,000 380,000
----------
PERSONAL PRODUCTS -- 1.0%
NBTY, Inc...................................... BTL-B Ba3 BB- 6.25 07/14/17 2,730,000 2,772,077
Revlon, Inc.................................... BTL-B Ba3 BB- 6.00 03/11/15 1,488,750 1,496,310
----------
4,268,387
----------
PHARMACEUTICALS -- 0.9%
ConvaTec, Inc.................................. BTL Ba3 B+ 5.75 12/01/16 1,620,000 1,641,749
Harvard Drug Group LLC......................... BTL-B B1 B+ 6.50 04/05/16 731,923 713,625
Harvard Drug Group LLC......................... Delayed Draw B1 B+ 6.50 04/05/16 100,639 98,123
Warner Chilcott PLC............................ BTL-A Ba3 BB 6.00 10/31/14 399,661 401,035
Warner Chilcott PLC............................ BTL-B3 Ba3 BB 6.50 02/20/16 722,908 730,756
Warner Chilcott PLC............................ Tranche B1 Ba3 BB 6.25 04/30/15 197,781 199,316
Warner Chilcott PLC............................ Tranche B2 Ba3 BB 6.25 04/30/15 329,341 331,897
----------
4,116,501
----------
PROFESSIONAL SERVICES -- 0.0%
Bankruptcy Management Solutions, Inc........... 2nd Lien NR NR 8.26 09/29/15 121,744 9,740
----------
REAL ESTATE MANAGEMENT & DEVELOPMENT -- 0.5%
Realogy Corp................................... CLTL B1 CCC- 3.26 10/10/13 311,264 292,765
Realogy Corp................................... BTL B1 CCC- 3.29 10/10/13 2,285,041 2,149,225
----------
2,441,990
----------
ROAD & RAIL -- 1.1%
Cardinal Logistics Management, Inc.@#.......... 2nd Lien NR NR 15.50 03/23/14 1,064,714 53,236
NES Rentals Holdings........................... 2nd Lien Caa2 CCC+ 10.00 07/20/13 798,142 708,351
NES Tanks...................................... 2nd Lien Caa2 B- 4.04 04/07/14 500,000 422,500
Rental Service Corp............................ 2nd Lien Caa1 B- 3.80 11/30/13 1,638,949 1,605,351
Swift Transportation Co., Inc.................. BTL-B B1 BB- 6.00 12/21/16 2,135,000 2,140,604
----------
4,930,042
----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 1.9%
Freescale Semiconductor, Inc................... BTL B2 B- 4.51 12/01/16 3,376,712 3,279,631
Intersil Corp.................................. BTL-B Ba2 BB+ 4.75 04/27/16 3,980,000 4,015,820
Microsemi Corp................................. BTL-B Ba1 BB+ 5.00 11/02/17 1,080,000 1,093,500
----------
8,388,951
----------
17
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT/SHARES (NOTE 2)
---------------------------------------------------------------------------------------------------------------------
SOFTWARE -- 2.8%
Infor Global Solutions.................... BTL NR NR 6.02% 07/28/15 $ 629,214 $ 602,630
Infor Global Solutions.................... Delayed Draw B1 B+ 6.02 07/28/15 328,286 313,923
IPC Systems, Inc.......................... 2nd Lien Caa2 CCC 5.55 05/31/15 1,000,000 870,000
Open Solutions, Inc....................... BTL-B B1 BB- 2.42 01/23/14 2,580,769 2,190,427
Reynolds & Reynolds Co.................... BTL-B Ba3 BB- 5.25 04/01/17 2,191,786 2,209,936
Sensata Technologies BV................... BTL-B B1 BB 2.04 04/27/13 1,296,234 1,268,041
Verint Systems, Inc....................... BTL B1 BB- 5.25 05/25/14 3,051,363 3,049,456
Vertafore, Inc............................ BTL-B B1 B+ 6.75 07/29/16 2,119,350 2,132,596
------------
12,637,009
------------
SPECIALTY RETAIL -- 2.7%
Bass Pro Group LLC........................ BTL-B B1 BB- 5.00-5.75 04/09/15 1,468,900 1,477,154
Gymboree Corp............................. BTL B1 B+ 5.50 11/23/17 1,722,000 1,733,031
Michaels Stores, Inc...................... BTL-B B2 B+ 2.56 10/31/13 2,118,202 2,066,698
Michaels Stores, Inc...................... BTL-B2 B2 B+ 4.81 07/31/16 1,542,310 1,544,652
National Bedding Co....................... 1st Lien NR BB 2.31 11/28/13 1,146,505 1,140,773
National Bedding Co....................... 2nd Lien NR CCC+ 5.31 02/28/14 1,000,000 975,000
Petco Animal Supplies, Inc................ BTL-B B1 B 6.00 11/24/17 3,070,000 3,094,695
------------
12,032,003
------------
TEXTILES, APPAREL & LUXURY GOODS -- 0.5%
Phillips-Van Heusen Corp.................. BTL-B Ba2 BBB 4.75 05/06/16 2,173,281 2,205,194
------------
TRANSPORTATION INFRASTRUCTURE -- 0.3%
Central Parking Corp...................... 1st Lien Ba3 CCC 2.56 05/22/14 1,036,435 818,783
Central Parking Corp...................... LOC Ba3 CCC 2.56 05/22/14 379,310 299,655
------------
1,118,438
------------
WIRELESS TELECOMMUNICATION SERVICES -- 1.8%
Intelstat Jackson Holdings, Ltd........... BTL B1 BB- 5.25 04/03/18 4,000,000 4,044,272
Syniverse Technologies, Inc............... BTL-B B1 BB- 5.25 12/15/17 4,000,000 4,055,000
------------
8,099,272
------------
TOTAL LOANS (cost $414,086,623)....................................................... 408,068,750
------------
CONVERTIBLE BONDS & NOTES -- 0.0%
CHEMICALS -- 0.0%
Wellman, Inc.@#(9) (cost $1,014,538)...... Bond NR NR 5.00 01/29/19 98,207 0
------------
COMMON STOCK -- 1.7%
CHEMICALS -- 0.6%
LyondellBasell Industries, Class A+................................................... 79,944 2,750,074
------------
DIVERSIFIED FINANCIAL SERVICES -- 0.0%
Bankruptcy Management Solutions, Inc.(8)+@#........................................... 1,360 0
BLB Management Services, Inc.+........................................................ 5,141 41,128
------------
41,128
------------
HOTELS, RESTAURANTS & LEISURE -- 0.3%
MGM Holdings, Inc.(8)+#@.............................................................. 52,273 1,176,143
------------
MEDIA -- 0.8%
Citadel Broadcasting Corp.+........................................................... 128,107 3,747,130
------------
TOTAL COMMON STOCK (cost $6,261,130).................................................. 7,714,475
------------
MEMBERSHIP INTEREST -- 0.1%
MEDIA -- 0.0%
Advanstar Communications, Inc.+@(8)................................................... 12,608 126,080
NextMedia Operating, Inc.+@#(8)....................................................... 7,916 78,701
------------
204,781
------------
18
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
SHARES/PRINCIPAL VALUE
INDUSTRY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS -- 0.1%
Vitruvian Exploration LLC+@............................. 23,875 $ 247,702
------------
TOTAL MEMBERSHIP INTEREST (cost $2,506,366)............. 452,483
------------
RIGHTS -- 0.0%
DIVERSIFIED FINANCIAL SERVICES -- 0.0%
BLB Management Services, Inc.
Expires 11/05/17+@#
(cost $250,000)........................................ 250 0
------------
WARRANTS -- 0.0%
DIVERSIFIED FINANCIAL SERVICES -- 0.0%
Bankruptcy Management Solutions, Inc.
Expires 10/01/17
(Strike Price $30.00)(8)+@
(cost $0).............................................. 126 0
------------
TOTAL LONG-TERM INVESTMENT SECURITIES (cost $424,118,657) 416,235,708
------------
SHORT-TERM INVESTMENT SECURITIES -- 2.7%
REGISTERED INVESTMENT COMPANIES -- 2.7%
SSgA Money Market Fund
(cost $12,164,803)..................................... 12,164,803 12,164,803
------------
REPURCHASE AGREEMENTS -- 9.6%
Bank of America Securities Joint Repurchase Agreement(10) $20,310,000 20,310,000
UBS Securities LLC Joint Repurchase Agreement(10)....... 22,610,000 22,610,000
------------
TOTAL REPURCHASE AGREEMENTS (cost $42,920,000).......... 42,920,000
------------
TOTAL INVESTMENTS
(cost $479,203,460)(11)................................. 105.7% 471,320,511
LIABILITIES IN EXCESS OF OTHER ASSETS....................... (5.7)% (25,455,347)
----------- ------------
NET ASSETS.................................................. 100.0% $445,865,164
=========== ============
--------
BTL Bank Term Loan
CLTL Credit Linked Term Loan
CNDTLCanadian Term Loan
DIP Debtor in Possession
LOC Letter of Credit
NR Security is not rated.
+ Non-income producing security
@ Illiquid security. At December 31, 2010, the aggregate value of these
securities was $1,681,862, representing 0.4% of net assets.
# Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(1) Bank loans rated below Baa by Moody's Investor Service, Inc. or BBB by
Standard & Poor's Group are considered below investment grade. Ratings
provided are as of December 31, 2010.
(2) Based on the stated maturity, the weighted average to maturity of the
loans held in the portfolio will be approximately 53 months. Loans in the
Fund's portfolio are generally subject to mandatory and/or optional
prepayment. Because of these mandatory prepayment conditions and because
there may be significant economic incentives for a Borrower to prepay,
prepayments may occur. As a result, the actual remaining maturity may be
substantially less than the stated maturities shown.
(3) The Fund invests in senior loans which generally pay interest at rates
which are periodically re-determined by reference to a base lending rate
plus a premium. These base lending rates are generally either the lending
rate offered by one or more major European banks, such as the London
Inter-Bank Offer Rate ("LIBOR") or the prime rate offered by one or more
major United States banks, or the certificate of deposit rate. Senior
loans are generally considered to be restrictive in that the Fund is
ordinarily contractually obligated to receive approval from the Agent Bank
and/or borrower prior to the disposition of a senior loan
(4) All loans in the portfolio were purchased through assignment agreements
unless otherwise indicated.
(5) Company has filed 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) Denotes a restricted security that: (a) cannot be offered for public sale
without first being registered, or being able to take advantage of an
exemption from registration, under the Securities Act of 1933, as amended
(the "1933 Act"); (b) is subject to a contractual restriction on public
sales; or (c) is otherwise subject to a restriction on sales by operation
of applicable law. Restricted securities are valued pursuant to Note 2.
Certain restricted securities held by the Fund may not be sold except in
exempt transactions or in a public offering registered under the 1933 Act.
The Fund has no right to demand registration of these securities. The risk
of investing in certain restricted securities is greater than the risk of
investing in the securities of widely held, publicly traded companies. To
the extent applicable,
19
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
lack of a secondary market and resale restrictions may result in the
inability of a Fund to sell a security at a fair price and may
substantially delay the sale of the security. In addition, certain
restricted securities may exhibit greater price volatility than securities
for which secondary markets exist. As of December 31, 2010, the Fund held
the following restricted securities:
VALUE AS
ACQUISITION ACQUISITION VALUE A % OF
NAME DATE SHARES COST VALUE PER SHARE NET ASSETS
---- ----------- ------ ----------- ---------- --------- ----------
Advanstar Communications, Inc. Membership Interests.. 11/24/09 12,608 $1,000,000 $ 126,080 $10.00 0.03%
Bankruptcy Management Solutions, Inc. Common Stock... 11/12/10 1,360 0 0 0.00 0.00
Bankruptcy Management Solutions, Inc. Warrants....... 11/12/10 126 0 0 0.00 0.00
MGM Holdings, Inc. Common Stock...................... 12/30/10 52,273 2,887,500 1,176,143 22.50 0.26
NextMedia Operating, Inc. Membership Interests....... 06/16/10 7,916 506,366 78,701 9.94 0.02
---------- ----
$1,380,924 0.31%
========== ====
(9) PIK ("Payment-in-Kind") security. Bond or preferred stock that pays
interest/dividends in the form of additional bonds or preferred stock.
(10)See Note 2 for details of the Joint Repurchase Agreement.
(11)See Note 6 for cost of investments on a tax basis.
The following is a summary of the inputs used to value the Fund's net assets as
of December 31, 2010 (see Note 2):
LEVEL 1--UNADJUSTED LEVEL 2--OTHER LEVEL 3--SIGNIFCANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
------------------- ----------------- ------------------- -----------
ASSETS:
Long-Term Investment Securities:
Loans:
Aerospace & Defense............................. $-- $ 2,476,351 $ 6,014,464 $ 8,490,815
Airlines........................................ -- 3,567,146 -- 3,567,146
Auto Components................................. -- 11,326,588 5,966,341 17,292,929
Automobiles..................................... -- 2,285,430 -- 2,285,430
Biotechnology................................... -- 2,567,745 -- 2,567,745
Building Products............................... -- 1,690,703 2,853,387 4,544,090
Capital Markets................................. -- 12,835,942 647,223 13,483,165
Chemicals....................................... -- 11,903,422 751,273 12,654,695
Commercial Services & Supplies.................. -- 16,032,980 6,099,676 22,132,656
Communications Equipment........................ -- 2,841,835 1,878,058 4,719,893
Consumer Finance................................ -- 5,985,480 -- 5,985,480
Containers & Packaging.......................... -- 5,925,983 6,352,597 12,278,580
Distributors.................................... -- 3,004,264 -- 3,004,264
Diversified Consumer Services................... -- -- 3,293,090 3,293,090
Diversified Financial Services.................. -- 5,476,940 6,295,411 11,772,351
Diversified Telecommunication Services.......... -- 5,241,584 3,970,050 9,211,634
Electric Utilities.............................. -- 297,557 974,088 1,271,645
Electrical Equipment............................ -- -- 464,137 464,137
Electronic Equipment, Instruments & Components.. -- 480,523 -- 480,523
Energy Equipment & Services..................... -- 3,827,484 1,139,063 4,966,547
Food & Staples Retailing........................ -- 2,949,089 3,042,313 5,991,402
Food Products................................... -- 8,291,568 -- 8,291,568
Health Care Equipment & Supplies................ -- 2,639,935 686,516 3,326,451
Health Care Providers & Services................ -- 13,250,484 7,541,929 20,792,413
Health Care Technology.......................... -- 4,745,050 -- 4,745,050
Hotels, Restaurants & Leisure................... -- 24,077,415 5,966,963 30,044,378
Household Products.............................. -- 3,909,685 2,500,479 6,410,164
Industrial Conglomerates........................ -- 9,628,493 2,393,700 12,022,193
Industrial Power Producers & Energy Traders..... -- 2,714,205 -- 2,714,205
Insurance....................................... -- 9,541,558 4,086,875 13,628,433
Internet & Catalog Retail....................... -- 3,697,918 -- 3,697,918
Internet Software & Services.................... -- 1,208,598 -- 1,208,598
IT Services..................................... -- 12,742,271 4,261,999 17,004,270
Leisure Equipment & Products.................... -- -- 2,748,204 2,748,204
Machinery....................................... -- 1,770,454 1,779,784 3,550,238
Marine.......................................... -- 1,024,396 657,699 1,682,095
Media........................................... -- 38,344,811 10,230,102 48,574,913
Metals & Mining................................. -- 1,623,000 -- 1,623,000
20
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
LEVEL 1--UNADJUSTED LEVEL 2--OTHER LEVEL 3--SIGNIFCANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
------------------- ----------------- ------------------- ------------
Multi Utilities........................... $ -- $ 4,232,410 $ -- $ 4,232,410
Multiline Retail.......................... -- 2,105,544 2,506,815 4,612,359
Oil, Gas & Consumable Fuels............... -- 4,001,819 2,072,327 6,074,146
Paper & Forest Products................... -- -- 380,000 380,000
Personal Products......................... -- 4,268,387 -- 4,268,387
Pharmaceuticals........................... -- 3,304,753 811,748 4,116,501
Professional Services..................... -- -- 9,740 9,740
Real Estate Management & Development...... -- 2,441,990 -- 2,441,990
Road & Rail............................... -- 3,745,955 1,184,087 4,930,042
Semiconductors & Semiconductor Equipment.. -- 8,388,951 -- 8,388,951
Software.................................. -- 8,403,630 4,233,379 12,637,009
Specialty Retail.......................... -- 9,916,230 2,115,773 12,032,003
Textiles, Apparel & Luxury Goods.......... -- 2,205,194 -- 2,205,194
Transportation Infrastructure............. -- -- 1,118,438 1,118,438
Wireless Telecommunication Services....... -- 4,044,272 4,055,000 8,099,272
Convertible Bonds & Notes.................. -- -- 0 0
Common Stock............................... 6,497,204 -- 1,217,271 7,714,475
Membership Interest........................ -- -- 452,483 452,483
Rights..................................... -- -- 0 0
Warrants................................... -- -- 0 0
Short-Term Investments:
Registered Investment Companies............ -- 12,164,803 -- 12,164,803
Repurchase Agreements........................ -- 42,920,000 -- 42,920,000
---------- ------------ ------------ ------------
TOTAL........................................ $6,497,204 $352,070,825 $112,752,482 $471,320,511
========== ============ ============ ============
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 RIGHTS WARRANTS
------------ ------------- ----------- ---------- --------- --------
Balance as of 12/31/2009............................ $ 59,572,240 $ 1,869 $ 125,195 $ 301,991 $ -- $--
Accrued discounts/premiums.......................... 454,452 81,376 -- -- -- --
Realized gain/(loss)................................ (1,017,907) -- (120,132) -- -- --
Change in unrealized appreciation(depreciation) (1). 5,554,382 (87,988) (1,582,218) (355,873) (250,000) --
Purchases........................................... 73,288,306 4,743 2,923,428 506,365 250,000 0
(Sales)............................................. (28,348,835) -- (129,002) -- -- --
Transfers into Level 3#............................. 14,905,015 -- -- -- -- --
Transfers (out) of Level 3#......................... (13,324,925) -- -- -- -- --
------------ -------- ----------- --------- --------- ---
Balance as of 12/31/2010............................ $111,082,728 $ 0 $ 1,217,271 $ 452,483 $ 0 $ 0
============ ======== =========== ========= ========= ===
TOTAL
------------
Balance as of 12/31/2009............................ $ 60,001,295
Accrued discounts/premiums.......................... 535,828
Realized gain/(loss)................................ (1,138,039)
Change in unrealized appreciation(depreciation) (1). 3,528,303
Purchases........................................... 76,722,842
(Sales)............................................. (28,477,837)
Transfers into Level 3#............................. 14,905,015
Transfers (out) of Level 3#......................... (13,324,925)
------------
Balance as of 12/31/2010............................ $112,752,482
============
# The Fund's policy is to recognize transfers in and transfers out as of the
end of the reporting period.
(1) The total change in unrealized appreciation(depreciation) included in the
statement of operations attributable to level 3 investments still held at
December 31, 2010 includes:
CONVERTIBLE COMMON MEMBERSHIP
LOANS BONDS & NOTES STOCK INTEREST RIGHTS WARRANTS
---------- ------------- ----------- ---------- --------- --------
$2,784,158 $(87,988) $(1,706,158) $(355,873) $(250,000) $--
========== ======== =========== ========= ========= ===
See Notes to Financial Statements
21
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2010
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 an active
22
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
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 for which the securities are principally
traded. 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.
Short-term securities with 60 days or less to maturity are amortized to
maturity based on their cost to the Fund if acquired within 60 days of
maturity or, if already held by the Fund on the 60 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 Loans in which the Fund primarily invests are generally not listed on
any exchange and the secondary market for the Loans is comparatively
illiquid relative to markets for other fixed income securities.
Consequently, obtaining valuations for the 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 indicies, quoted prices in inactive markets, adjusted quoted
prices in active markets, adjusted quoted prices on foreign equity
securities that were adjusted in accordance with pricing procedures approved
by the Board, 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.
23
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
The summary of the inputs used to value the Fund's net assets as of December
31, 2010 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 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, 2010, the Fund held an undivided interest in the joint
repurchase agreement with Bank of America Securities LLC:
PERCENTAGE
OWNERSHIP PRINCIPAL AMOUNT
- ---------- ----------------
Senior Floating Rate Fund..... 18.14% $20,310,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
Bank of America Securities LLC, dated December 31, 2010, bearing interest at
a rate of 0.10% per annum, with a principal amount of $111,950,000, a
repurchase price of $111,950,933, and a maturity date of January 3, 2011.
The repurchase agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- -------- ------------ ------------
U.S. Treasury Notes........... 1.38% 09/15/12 $112,139,000 $114,294,365
As of December 31, 2010, the Fund held an undivided interest in the joint
repurchase agreement with UBS Securities LLC:
PERCENTAGE
OWNERSHIP PRINCIPAL AMOUNT
---------- ----------------
Senior Floating Rate Fund..... 18.13% $22,610,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Securities LLC, dated December 31, 2010, bearing interest at a rate of
0.20% per annum, with a principal amount of $124,685,000, a repurchase price
of $124,687,078 and a maturity date of January 3, 2011. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- -------- ------------ ------------
U.S. Treasury Notes........... 3.38% 11/15/19 $124,331,100 $127,758,898
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 $3,142,685 for the year ended
24
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
December 31, 2010, are accreted to income over the life of the Loans. Other
income, including amendment fees, commitment fees, letter of credit fees,
etc., which were $1,177,007 for the year ended December 31, 2010, 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 2007.
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, 2010.
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, 2010 DECEMBER 31, 2009
------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS A ----------- ------------ ---------- ------------
Shares sold................. 27,777,461 $225,844,201 11,873,563 $ 80,693,876
Reinvested distributions.... 656,689 5,340,187 253,297 1,718,873
Shares redeemed............. (10,875,323) (88,357,357) (3,810,598) (26,274,981)
----------- ------------ ---------- ------------
Net increase (decrease).. 17,558,827 $142,827,031 8,316,262 $ 56,137,768
=========== ============ ========== ============
FOR THE FOR THE PERIOD
YEAR ENDED JANUARY 1, 2009 THROUGH
DECEMBER 31, 2010 JUNE 26, 2009
------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS B(2) ----------- ------------ ---------- ------------
Shares sold................. -- $ -- 20,514 $ 135,436
Reinvested distributions.... -- -- 21,530 120,991
Shares redeemed............. -- -- (1,368,996)(1) (8,881,065)(1)
----------- ------------ ---------- ------------
Net increase (decrease).. -- $ -- (1,326,952) $ (8,624,638)
=========== ============ ========== ============
--------
(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)See Note 1
25
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 2010 DECEMBER 31, 2009
------------------------ -----------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS C ---------- ------------ ---------- ------------
Shares sold................. 10,408,539 $ 84,640,136 4,470,581 $ 29,899,027
Reinvested distributions.... 439,751 3,572,201 486,422 3,166,433
Shares redeemed............. (4,319,972) (34,989,989) (5,154,834)(2) (33,536,109)(2)
---------- ------------ ---------- ------------
Net increase (decrease).. 6,528,318 $ 53,222,348 (197,831) $ (470,649)
========== ============ ========== ============
FOR THE FOR THE PERIOD
YEAR ENDED JANUARY 1, 2009 THROUGH
DECEMBER 31, 2010 JUNE 26, 2009
------------------------ -----------------------------
SHARES AMOUNT SHARES AMOUNT
CLASSD(3) ---------- ------------ ---------- ------------
Shares sold................. -- $ -- 200 $ 1,100
Reinvested distributions.... -- -- 15,585 87,561
Shares redeemed............. -- -- (856,987) (5,526,585)
---------- ------------ ---------- ------------
Net increase (decrease).. -- $ -- (841,202) $ (5,437,924)
========== ============ ========== ============
FOR THE FOR THE PERIOD
YEAR ENDED JANUARY 1, 2009 THROUGH
DECEMBER 31, 2010 JUNE 26, 2009
------------------------ -----------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS Q(3) ---------- ------------ ---------- ------------
Shares sold................. -- $ -- 517,522(1)(2) $ 2,979,493(1)(2)
Reinvested distributions.... -- -- 19,882 112,620
Shares redeemed............. -- -- (1,436,032) (9,508,829)
---------- ------------ ---------- ------------
Net increase (decrease).. -- $ -- (898,628) $ (6,416,716)
========== ============ ========== ============
--------
(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)See Note 1.
Note 4. Purchases and Sales of Securities
During the year ended December 31, 2010, the Fund's cost of purchases and
proceeds from sale of long-term investments, including loan principal
paydowns were $304,387,539 and $134,004,687, 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.
Wellington Management Company, LLP ("Wellington") acts as subadviser to the
Fund pursuant to a Subadvisory Agreement with SunAmerica. Under the
Subadvisory Agreement, Wellington manages the investment and reinvestment of
the Fund's assets. For compensation for its services as subadviser,
Wellington is entitled to receive from SunAmerica a monthly fee payable at
the following annual rates: 0.30% of average daily net assets on the first
$500 million and 0.25% thereafter. The fee paid to the subadviser is paid by
SunAmerica and not the Fund.
26
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
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, 2010, the Fund incurred administration fees in the
amount of $691,836.
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, 2010,
SACS received fees (see Statement of Operations) based upon the
aforementioned rates. For the year ended December 31, 2010 SACS received
sales charges on Class A shares of $441,261, of which $75,816 was reallowed
to affiliated broker-dealers and $283,057 to non-affiliated broker-dealers.
In addition, SACS receives the proceeds of early withdrawal charges paid by
investors in connection with certain redemptions of Class A and Class C
shares. For the year ended December 31, 2010, SACS received early withdrawal
charges of $57,000.
The Fund has entered into a Service Agreement with SunAmerica Fund Services,
Inc. ("SAFS") an affiliate 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, 2010, 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, 2010
-------- -----------------
Class A....................... $411,679 $45,199
Class C....................... 348,875 34,719
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. For purposes
of waived fees and/or reimbursed expense calculations, 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 Disinterested
Directors. For the year ended December 31, 2010, SunAmerica waived fees and
reimbursed expenses as follows: Class A $707,916 and Class C $754,541.
27
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
On September 22, 2008, AIG, the ultimate parent of SunAmerica, SACS and
SAFS, entered into a revolving credit facility ("FRBNY Credit Facility")
with the Federal Reserve Bank of New York ("NY Fed"). In connection with the
FRBNY Credit Facility, on March 4, 2009, AIG issued its Series C Perpetual,
Convertible, Participating Preferred Stock (the "Series C Preferred Stock")
to the AIG Credit Facility Trust, a trust established for the sole benefit
of the United States Treasury (the "Trust"). The Series C Preferred Stock
was entitled to approximately 77.8% of the voting power of AIG's outstanding
stock.
On January 14, 2011, AIG completed a series of previously announced
integrated transactions (the "Recapitalization") to recapitalize AIG. In the
Recapitalization, AIG repaid the NY Fed approximately $21 billion in cash,
representing all amounts owing under the FRBNY Credit Facility and the
facility was terminated. Also as part of the Recapitalization, (i) the
Series C Preferred Stock was exchanged for shares of AIG Common Stock, which
was then transferred to the U.S. Department of the Treasury, and the Trust,
which had previously held all shares of the Series C Preferred Stock, was
terminated, and, (ii) AIG's Series E Preferred Shares and Series F Preferred
Shares were exchanged for shares of AIG Common Stock and a new Series G
Preferred Shares (which functions as a $2 billion commitment to provide
funding that AIG will have the discretion and option to use). As a result of
the Recapitalization, the United States Treasury held a majority of
outstanding shares of AIG Common Stock.
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 and treatment of defaulted securities.
DISTRIBUTABLE EARNINGS TAX DISTRIBUTIONS
---------------------------------------- ---------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 2010 FOR THE YEAR ENDED DECEMBER 31, 2010 FOR THE YEAR ENDED DECEMBER 31, 2009
---------------------------------------- ------------------------------------- -------------------------------------
LONG-TERM GAINS/ UNREALIZED
ORDINARY CAPITAL AND APPRECIATION/ ORDINARY LONG-TERM ORDINARY LONG-TERM
INCOME OTHER LOSSES (DEPRECIATION) INCOME CAPITAL GAINS INCOME CAPITAL GAINS
-------- ---------------- -------------- ------------ ------------- ----------- -------------
$6,440 $(51,761,161) $(7,884,070) $14,854,722 $ -- $8,860,311 $ --
CAPITAL LOSS CARRYFORWARDS. At December 31, 2010 capital loss carryforward
available to offset future recognized gains were $51,761,161 with $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, 2010, the Senior Floating Rate Fund had
$6,523,075 of capital loss carryforward expire and utilized $1,213,288 of
capital loss carry forwards to offset current year capital gains.
For the period ended December 31, 2010, reclassifications were made to
increase accumulated net realized gain/(loss) by $6,523,075 with an
offsetting adjustment to paid-in capital of $(6,523,075). The
reclassifications arising from book/tax differences were due primarily to
the expiration of capital loss carryforward.
Unrealized appreciation and depreciation in the value of investments at
December 31, 2010 for federal income tax purposes were as follows:
Cost (tax basis).............. $479,204,581
=============
Gross unrealized appreciation. $ 12,174,088
Gross unrealized depreciation. ($ 20,058,158)
-------------
Net unrealized depreciation... ($ 7,884,070)
=============
28
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
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 first becoming participants in the Retirement Plan after December 31,
2008 and (3) permit 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.
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 of the Federal Funds Rate plus 125 basis points or London
Interbank Offered Rate plus 125 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 12.5 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 17, 2010, the commitment fee was 15 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, 2010, the Fund had
borrowings outstanding for 53 days under the line of credit and incurred
$2,773 in interest charges related to these borrowings. The Fund's average
amount of debt under the line of credit for the days utilized was $1,258,650
at a weighted average interest rate of 1.48%. At December 31, 2010, 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, 2010, the Fund did not participate in this
program.
29
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2010 -- (CONTINUED)
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 is subject to the credit risk of
the borrower, selling participant, lender or other persons positioned
between the Fund and the borrower.
Note 11. Unfunded Loan Commitments
At December 31, 2010, the Fund had no unfunded loan commitments.
30
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of SunAmerica Senior Floating Rate
Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations, of
changes in net assets and of cash flows and the financial highlights present
fairly, in all material respects, the financial position of SunAmerica Senior
Floating Rate Fund, Inc. (the "Fund") at December 31, 2010, 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, 2010 by
correspondence with the custodian, brokers and selling or agent banks, and the
application of alternative auditing procedures where securities purchased had
not been received, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Houston, Texas
February 25, 2011
31
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY AGREEMENT -- DECEMBER 31, 2010 -- (UNAUDITED)
The Board of Directors (the "Board" the members of which are referred to as
"Directors") of the Fund, including the Directors who are not "interested
persons," as defined in Section 2(a)(19) of the 1940 Act, of the Fund, or
SunAmerica (the "Disinterested Directors"), approved the continuation of the
Advisory Agreement between the Fund and SunAmerica for a one-year period ending
August 31, 2011 at an in-person meeting held on August 24, 2010.1
In accordance with Section 15(c) of the 1940 Act, the Board requested and
SunAmerica provided materials relating to the Board's consideration of whether
to approve the continuation of the Advisory Agreement. These materials included
(a) a summary of the services provided to the Fund by SunAmerica and its
affiliates; (b) information independently compiled and prepared by Lipper, Inc.
("Lipper") on fees and expenses of the Fund, and the investment performance of
the Fund as compared with a peer group of funds; (c) information on the
profitability of SunAmerica and its affiliates, and a discussion relating to
indirect benefits; (d) a report on economies of scale; (e) information on
SunAmerica's risk management process; (f) a discussion on general compliance
policies and procedures; (g) a summary of brokerage and soft dollar practices;
(h) a discussion of the key personnel of SunAmerica and its affiliates, and the
Subadvisers, that are involved in the investment management, administration,
compliance and risk management activities with respect to the Fund, as well as
current and projected staffing levels and compensation practices; and (i) an
internal comparison of management fees received for other mutual funds and
accounts with similar investment objectives and strategies for which SunAmerica
serves as adviser or subadviser, as applicable.
In determining whether to approve the continuation of the Advisory Agreement,
the Board, including Disinterested Directors, considered the following
information:
Nature, Extent and Quality of Services Provided by SunAmerica. The Board,
including the Disinterested Directors, considered the nature, quality and
extent of services to be provided by SunAmerica. The Board noted that the
services include acting as investment manager and adviser to the Fund, managing
the daily business affairs of the Fund, and obtaining and evaluating economic,
statistical and financial information to formulate and implement 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 Agreement between SunAmerica and the Fund.
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 in addition
to current and projected staffing levels and compensation practices 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 Agreement.
--------
// 1The Subadvisory Agreement between SunAmerica and Wellington with respect
to the Fund expires in 2011 and did not require approval at the Meeting.
32
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY AGREEMENT -- DECEMBER 31, 2010 -- (UNAUDITED) (CONTINUED)
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, 2010, SunAmerica managed, advised and/or
administered approximately $37.5 billion in assets. The Board also considered
SunAmerica's code of ethics and its risk management process, 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.
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 Meeting, the Board was provided with reports
independently prepared by Lipper. Based on the Lipper reports, the Board
reviewed the Fund's annualized total returns for the prior one-, two- and
three-year periods ended May 31, 2010, and since inception. The Board noted
that it was also provided with a supplemental Lipper performance report for the
periods ended June 30, 2010. In addition, the Board received a report prepared
by SunAmerica that detailed the Fund's performance for the three- and six-month
periods ended June 30, 2010.
The Board considered that the Fund ranked in the first quintile of its Peer
Group for the one-year period ended May 31, 2010. The Board also considered
that the Fund ranked in the third quintile of its larger Peer Universe, which
consists of all funds within the applicable Lipper classification, for the two-
and three-year and since inception periods ended May 31, 2010. The Board noted
that it was pleased with the Fund's performance.
Consideration of the Management Fee and the Cost of the Services and Profits to
be Realized by SunAmerica and its 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. 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 or its 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 as
determined by Lipper, including rankings within each category. 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 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.
33
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY
AGREEMENT -- DECEMBER 31, 2010 -- (UNAUDITED) (CONTINUED)
The Board also considered SunAmerica's profitability and the benefits
SunAmerica and its affiliates received from their relationship with the Fund.
The Board received and reviewed financial statements relating to SunAmerica's
financial condition and profitability with respect to the services it provided
the Fund and considered how profit margins could affect SunAmerica's ability to
attract and retain high quality investment professionals and other key
personnel. The Board was also provided with a profitability analysis that
detailed the revenues earned and the expenses incurred by SunAmerica and its
affiliates that provide services to the Fund. In particular, the Board
considered the contractual fee waivers and/or expense reimbursements agreed to
by SunAmerica.
The Board considered the profitability of SunAmerica under the Advisory
Agreement and Administrative Agreement, and considered the profitability of
SunAmerica's affiliates under the Service Agreement and Rule 12b-1 Plans.
Additionally, the Board considered whether SunAmerica 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 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 further concluded that the management fee was 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 also took
into account that the Fund had a management fee arrangement that included
breakpoints that will adjust the fee downward as the size of the Fund
increases, thereby allowing the shareholders to potentially participate in any
economies of scale. The Board further noted that SunAmerica has agreed to
contractually cap the total annual operating expenses of 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.
Other Factors. In consideration of the Advisory Agreement, the Board also
received information regarding SunAmerica's brokerage and soft dollar
practices, to the extent applicable.
Conclusion. After a full and complete discussion, the Board approved the
Advisory Agreement for a one-year period 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
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, 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, 2010 -- (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. 39 Director, North European Oil
DOB: March 7, 1940 of the present Royalty Trust (1996 to
Board present).
Stephen J. Gutman Director 2001- Vice President and 39 None
DOB: May 10, 1943 present Associate Broker, Corcoran
Group (real estate) (2002 to
present); Managing
Member, Beau Brummel
Soho, LLC (licensing of
menswear specialty
retailing) (1995 to 2009);
President, SJG Marketing,
Inc. (2009 to present).
William J. Shea Director 2004- Executive Chairman, Lucid, 39 Chairman of the Board,
DOB: February 9, present Inc. (medical technology and Royal and SunAlliance Co.
1948 information) (2007 to U.S.A., Inc. (2004 to 2006);
present); Managing Director, Director, Boston Private
DLB Capital, LLC (private Financial Holdings (2004 to
equity) (2006 to 2007). present); Chairman,
Demoulas 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, 2010 -- (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).
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); Senior Vice
President, SunAmerica
(2002 to present)
Cynthia A. Gibbons 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, 2010 -- (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).
--------
* 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) and Seasons Series Trust (21
portfolios).
(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.
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, 2010. The information necessary to complete your income
tax returns is included with your Form 1099-DIV, which will be mailed to
shareholders in early 2011.
During the year ended December 31, 2010 the Fund paid the following dividends:
NET QUALIFYING % FOR QUALIFYING
LONG-TERM THE 70% DIVIDENDS DIVIDEND
CAPITAL GAINS RECEIVED DEDUCTION INCOME %
------------- ------------------ ----------
Class A....................... $-- --% --%
Class C....................... -- -- --
38
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
COMPARISON: FUND VS. INDEX -- (UNAUDITED)
As required by the Securities and Exchange Commission, 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.
39
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
COMPARISON: FUND VS. INDEX -- (UNAUDITED) (CONTINUED)
The Senior Floating Rate Fund (Class C) returned 10.01%, just
underperforming its benchmark, the S&P/LSTA Leveraged Loan Index (LLI),* which
returned 10.13% for the annual period ended December 31, 2010.
Fixed income markets benefited from a combination of tighter spreads and
lower government bond yields to produce positive absolute returns for the year;
but it wasn't a smooth ride, as high volatility rocked markets at several
points during the year. Non-government fixed income sectors got off to a
positive start at the beginning of the year as the global economy stabilized
and cyclical improvements materialized across a broad swath of markets. Fear
struck in the second and third quarters of 2010, primarily from sovereign risk
in peripheral Europe; there were also concerns that the U.S. would suffer a
double-dip recession. However, expectations of low inflation and easier
monetary policy helped reignite investors' appetite for risk, increasing demand
for riskier assets. By year end, markets began to shift their focus to
inflationary concerns. In the fourth quarter, global yields generally rose and
bank loans, as measured by the S&P/LSTA LLI, posted positive returns amid
investors' demand for higher-yielding securities.
The lower-quality segment of the bank loan market outperformed the
higher-quality segment by a significant margin. The CCC-rated loans in the
S&P/LSTI LLI returned 23.17%, compared to 7.88% and 11.10% for loans rated BB
and B, respectively. In this environment, the Fund's underweight positioning to
riskier, lower-rated bank loans detracted from performance.
All of the bank loan sectors in the S&P/LSTA LLI produced positive returns
for the 12-month period. Among the industries that outperformed relative to the
S&P/LSTA LLI were Ecological Services and Equipment (+22.44%), Broadcast Radio
and Television (+18.91%), Home Furnishing (+15.90%), Electronics (+14.28%) and
Building & Development (+14.16%). Those that underperformed relative to the
S&P/LSTA LLI were Leisure (+2.62%), Forest Products (+5.80%) and Utilities
(+6.14%).
Contributing to the Fund's relative performance was our underweight
positioning to defensive industries such as Health Care, Food Products and
Utilities which each lagged in the strong market environment. In addition, we
held overweight positions in our Retailers and Chemical/Plastics holdings,
which were additive to the overall performance of the Fund. An underweight to
certain cyclical industries, such as Lodging and Gaming, detracted from the
Fund's overall relative performance.
Among individual loans, the largest contributors to the Fund's returns
during the annual period were Lyondell Basell Industries, Tribune Co., and
Gateway Casinos & Entertainment, Inc. Detractors from the Fund's absolute
returns during the annual period were Sorenson Communications, Inc.,
Metro-Goldwyn-Mayer Studios, Inc., and Idearc, Inc.
--------
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.
40
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 $14,103 The same amount invested in securities
mirroring the performance of the S&P/LSTA Leveraged Loan Index would be valued
at $16,638.
[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 6.13% 10.33% 9.01% 10.01%
-------------------------------------------------------
5 Year Return NA NA 3.04% 16.15%
-------------------------------------------------------
10 Year Return NA NA 3.50% 41.03%
-------------------------------------------------------
Since Inception* 1.86% 12.39% 3.93% 60.95%
-------------------------------------------------------
# For the purposes of the table, it has been assumed that
the maximum sales charge of 3.75% 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, 2010, the
SunAmerica Senior Floating Rate Class C returned 9.01%
compared to 10.13% 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
41
[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. Gibbons Fund's Statement of obtain copies of the
Skrehot, Vice Additional Information Forms N-Q at the U.S.
President and Chief may be ob-tained without Securities and Exchange
Compliance Officer charge upon request, by Commission's Public
Gregory N. Bressler, calling (800) 858-8850. Refer-ence Room in
Chief Legal This in-formation is also Washington, DC
Officer and Secretary available from the EDGAR (information on the
Gregory R. Kingston, database on the U.S. operation of the Public
Vice President and Secu-rities and Exchange Reference Room may be
Assistant Treasurer Commission's website at ob-tained by calling
Nori L. Gabert, Vice http://www.sec.gov. 1-800-SEC-0330).
President and
Assistant Secretary DELIVERY OF SHAREHOLDER PROXY VOTING RECORD ON
John E. McLean, DOCUMENTS FUND PORTFOLIO SECURITIES
Assistant Secretary The Fund has adopted a Information regarding how
Kathleen Fuentes, policy that allows it to the Fund voted proxies
Assistant Secretary send only one copy of the relating to securities
Diedre L. Shepherd, Fund's prospectus, proxy held in the Fund's
Assistant Treasurer material, annual report portfolio during the most
Matthew J. Hackethal, and semi-annual report recent twelve month
Anti-Money Laundering (the "shareholder period ended June 30 is
Compliance Officer documents") to available, once filed
shareholders with with the U.S. Securities
INVESTMENT ADVISER multiple accounts and Exchange Commis-sion,
SunAmerica Asset residing at the same without charge, upon
Management Corp. "household." This request, by calling
Harborside Financial practice is called (800) 858-8850 or on the
Center householding and reduces U.S. Securities and
3200 Plaza 5 Fund expenses, which Exchange Commission's
Jersey City, NJ benefits you and other website at
07311-4992 shareholders. Unless the http://www.sec.gov.
Fund receives
DISTRIBUTOR instructions to the This report is submitted
SunAmerica Capital con-trary, you will only solely for the general
Services, Inc. receive one copy of the information of
Harborside Financial shareholder documents. shareholders of the Fund.
Center The Fund will continue to Distribution of this
3200 Plaza 5 household the report to persons other
Jersey City, NJ share-holder documents than shareholders of the
07311-4992 indefinitely, until we Fund is authorized only
are instructed otherwise. in connection with a
SHAREHOLDER SERVICING If you do not wish to currently effective
AGENT participate in prospectus, setting forth
SunAmerica Fund householding, please details of the Fund,
Services, Inc. contact Shareholder which must precede or
Harborside Financial Services at (800) accompany this report.
Center 858-8850 ext. 6010 or
3200 Plaza 5 send a written request
Jersey City, NJ with your name, the name
07311-4992 of your fund(s) and your
account number(s) to
TRANSFER AGENT SunAmerica Mutual Funds
State Street Bank and c/o BFDS, P.O. Box
Trust Company 219186, Kansas City MO,
P.O. Box 219373 64121-9186. We will
Kansas City, MO 64141 resume individual
mailings for your account
within thirty (30) days
of receipt of your
request.
42
[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 LINK TO "GO PAPERLESS!!"
The email address you provide will be kept strictly confidential. Once your
enrollment has been processed, you will begin receiving email notifications
when anything you receive electronically is available online.
You can return to www.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.
This fund report must be preceded by or accompanied by a prospectus.
Investors should carefully consider a Fund's investment objectives, risks,
charges and expenses before investing. The prospectus, containing this and
other important information, can be obtained from your financial adviser, the
SunAmerica Sales Desk at 800-858-8850, ext. 6003, or at
www.sunamericafunds.com. Read the prospectus carefully before investing.
WWW.SUNAMERICAFUNDS.COM
SFANN - 12/10
[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 2010, 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 Item 3(b) 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:
2009 2010
------- -------
(a) Audit Fees $80,320 $81,940
(b) Audit-Related Fees $ 0 $ 0
(c) Tax Fees $12,172 $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:
2009 2010
---- ----
(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 2010 and 2009 were $12,172 and $320,147, 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 9, 2011
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 9, 2011
By: /s/ Donna M. Handel
------------------------------------
Donna M. Handel
Treasurer
Date: March 9, 2011