================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM N-CSR
----------
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08727
SunAmerica Senior Floating Rate Fund, Inc.
--------------------------------------------------
(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311
----------------------------------------------------------------
(Address of principal executive offices) (Zip code)
John T. Genoy
Senior Vice President
SunAmerica Asset Management Corp.
Harborside Financial Center 3200 Plaza 5
Jersey City, NJ 07311
----------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6414
Date of fiscal year end: December 31
Date of reporting period: June 30, 2011
================================================================================
Item 1. Reports to Stockholders
[GRAPHIC]
SEMI-ANNUAL REPORT 2011
SUNAMERICA
Senior Floating Rate Fund
[LOGO]
TABLE OF CONTENTS
SHAREHOLDERS' LETTER................ 1
EXPENSE EXAMPLE..................... 2
STATEMENT OF ASSETS AND LIABILITIES. 4
STATEMENT OF OPERATIONS............. 5
STATEMENT OF CHANGES IN NET ASSETS.. 6
STATEMENT OF CASH FLOWS............. 7
FINANCIAL HIGHLIGHTS................ 8
PORTFOLIO OF INVESTMENTS............ 9
NOTES TO FINANCIAL STATEMENTS....... 21
APPROVAL OF ADVISORY AGREEMENTS..... 30
JUNE 30, 2011 SEMI-ANNUAL REPORT
SHAREHOLDERS' LETTER -- (unaudited)
Dear Shareholders,
We are pleased to present you with the semi-annual shareholder report for the
SunAmerica Senior Floating Rate Fund for the six-month period ended June 30,
2011.
The strong absolute performance of the bank loan market in 2010 continued into
the first quarter of 2011, though returns were roughly flat during the second
quarter, as worries of a sovereign debt default by Greece weighed heavily on
all credit markets. However, fundamentals remain attractive within the bank
loan market due to the wide yield curve and default rates being well below
historical averages. The S&P/LSTA Leveraged Loan Index* posted a 2.61% gain for
the entire six-month period, much of that coming from the first half of the
period.
The demand for bank loans stayed positive during the period, as investors were
attracted to their yield and low interest-rate sensitivity. AMG Data Services
has reported over $25 billion of inflows into bank-loan mutual funds in the
first half of 2011. New-issue volume of collateralized loan obligations remains
high this year with $100 billion through March 2011.
The Fund continues to be positioned in line with our expectation of a continued
slow economic recovery. We favor the middle of the credit quality spectrum,
which we see as offering the best risk-adjusted return opportunities. We
continue to take advantage of opportunities in the new-issue market to buy
loans at attractive current yields where increased supply and systemic risk
aversion have pushed spreads somewhat wider.
We value your support and thank you for your continued investment in the Fund.
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/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
(e.g. unsecured loans or high yield securities) that are rated below investment
grade, or in comparable unrated securities. Credit risks include the
possibility of a default on the loan or bankruptcy of the borrower. The value
of these loans is subject to a greater degree of volatility in response to
interest rate fluctuations.
1
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
EXPENSE EXAMPLE -- JUNE 30, 2011 -- (UNAUDITED)
DISCLOSURE OF PORTFOLIO EXPENSES IN SHAREHOLDER REPORTS
As a shareholder of the SunAmerica Senior Floating Rate Fund, Inc. (the
"Fund"), you may incur two types of costs: (1) transaction costs, including
sales charges on purchase payments and contingent deferred sales charges and
(2) ongoing costs, including management fees, distribution and service fees,
and other Fund expenses. The example set forth below is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at January 1, 2011 and
held until June 30, 2011.
ACTUAL EXPENSES
The "Actual" section of the table provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the column under the heading entitled "Expenses Paid During the Six
Months Ended June 30, 2011" 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 June 30, 2011" 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 June 30, 2011" 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 June 30, 2011" 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 June 30, 2011" 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 June 30, 2011" 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 June 30, 2011" column would have been higher and
the "Ending Account Value" would have been lower.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, including sales
charges on purchase payments, contingent deferred sales charges and
administrative fees, if applicable to your account. Please refer to the Fund's
prospectus, qualified retirement plan document and/or materials from your
financial adviser, for more information. Therefore, the "Hypothetical" example
is useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. In addition, if these
transaction costs and other fees were included, your costs would have been
higher.
2
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
EXPENSE EXAMPLE -- JUNE 30, 2011 -- (UNAUDITED) (CONTINUED)
ACTUAL HYPOTHETICAL
------------------------------------------------- ------------------------------------
ENDING ENDING ACCOUNT
ACCOUNT VALUE EXPENSES PAID VALUE USING
BEGINNING USING ACTUAL DURING THE BEGINNING A HYPOTHETICAL 5%
ACCOUNT VALUE RETURNS AT SIX MONTHS ENDED ACCOUNT VALUE ASSUMED RETURN AT
AT JANUARY 1, 2011 JUNE 30, 2011 JUNE 30, 2011* AT JANUARY 1, 2011 JUNE 30, 2011
------------------ ------------- ---------------- ------------------ -----------------
Senior Floating Rate Fund#
Class A................. $1,000.00 $1,024.35 $7.28 $1,000.00 $1,017.60
Class C................. $1,000.00 $1,022.84 $8.78 $1,000.00 $1,016.12
-----------------
EXPENSE
EXPENSES PAID RATIO
DURING THE AS OF
SIX MONTHS ENDED JUNE 30,
JUNE 30, 2011* 2011*
---------------- --------
Senior Floating Rate Fund#
Class A................. $7.25 1.45%
Class C................. $8.75 1.75%
--------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 181 days divided by 365
days. These ratios do not reflect transaction costs, including sales charges
on purchase payments, contingent deferred sales charges and administrative
fees, if applicable to your account. Please refer to your Prospectus, 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 June 30, 2011" and the "Expense Ratios" would have been higher.
3
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES -- JUNE 30, 2011 -- (UNAUDITED)
ASSETS:
Investments at value (unaffiliated)*............................... $516,278,801
Repurchase agreements (cost approximates value).................... 11,050,000
------------
Total investments................................................ $527,328,801
------------
Cash............................................................... 3,250
Receivable for:
Fund shares sold................................................. 1,900,942
Dividends and interest........................................... 2,766,372
Investments sold................................................. 1,243,046
Prepaid expenses and other assets.................................. 33,922
Due from investment adviser for expense reimbursements/fee waivers. 157,989
------------
Total assets..................................................... 533,434,322
------------
LIABILITIES:
Payable for:
Fund shares redeemed............................................. 1,499,614
Investments purchased............................................ 3,057,150
Investment advisory and management fees.......................... 370,955
Distribution and service maintenance fees........................ 232,093
Administration fees.............................................. 87,284
Transfer agent fees and expenses................................. 102,206
Directors' fees and expenses..................................... 2,000
Other accrued expenses........................................... 227,227
Dividends payable.................................................. 734,110
Commitments (Note 11).............................................. --
------------
Total liabilities................................................ 6,312,639
------------
Net Assets...................................................... $527,121,683
============
NET ASSETS REPRESENTED BY:
Common stock, $.01 par value....................................... $ 635,611
Additional paid-in capital......................................... 585,982,735
------------
586,618,346
Accumulated undistributed net investment income (loss)............. (491,856)
Accumulated undistributed net realized gain (loss) on investments.. (50,168,960)
Unrealized appreciation (depreciation) on investments.............. (8,835,847)
------------
Net Assets...................................................... $527,121,683
============
CLASS A:
Net assets......................................................... $292,210,129
Shares outstanding................................................. 35,222,659
Net asset value and redemption price per share..................... $ 8.30
Maximum sales charge (3.75% of offering price)..................... 0.32
------------
Maximum offering price to public................................... $ 8.62
============
CLASS C:
Net assets......................................................... $234,911,554
Shares outstanding................................................. 28,338,449
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charges)...... $ 8.29
============
*COST
Investment securities (unaffiliated)............................. $525,114,648
============
See Notes to Financial Statements
4
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF OPERATIONS -- FOR THE SIX MONTHS ENDED JUNE 30, 2011 --
(UNAUDITED)
INVESTMENT INCOME:
Interest (unaffiliated)........................................................... $11,426,067
Dividends (unaffiliated).......................................................... 6,999
Facility and other fee income (Note 2)............................................ 2,934,507
-----------
Total investment income........................................................ 14,367,573
-----------
EXPENSES:
Investment advisory and management fees........................................... 2,175,359
Administration fees............................................................... 511,849
Distribution and service maintenance fees:
Class A......................................................................... 512,803
Class C......................................................................... 820,572
Transfer agent fees and expenses:
Class A......................................................................... 332,515
Class C......................................................................... 247,166
Registration fees:
Class A......................................................................... 34,255
Class C......................................................................... 25,794
Accounting service fees........................................................... 48,873
Custodian and accounting fees..................................................... 75,588
Reports to shareholders........................................................... 39,577
Audit and tax fees................................................................ 47,999
Legal fees........................................................................ 2,796
Directors' fees and expenses...................................................... 30,146
Interest expense.................................................................. 240
Other expenses.................................................................... 68,626
-----------
Total expenses before fee waivers, expense reimbursements and custody credits.. 4,974,158
Fees waived and expenses reimbursed by investment adviser (Note 5)............. (935,019)
Custody credits earned on cash balances........................................ (5)
-----------
Net expenses................................................................... 4,039,134
-----------
Net investment income (loss)...................................................... 10,328,439
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments (unaffiliated)............................ 1,593,322
Change in unrealized appreciation (depreciation) on investments (unaffiliated).... (952,898)
-----------
Net realized and unrealized gain (loss) on investments............................ 640,424
-----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $10,968,863
===========
See Notes to Financial Statements
5
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE
SIX MONTHS
ENDED FOR THE YEAR
JUNE 30, ENDED
2011 DECEMBER 31,
(UNAUDITED) 2010
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss)......................................... $ 10,328,439 $ 14,523,481
Net realized gain (loss) on investments (unaffiliated)............... 1,593,322 1,339,860
Net unrealized gain (loss) on investments (unaffiliated)............. (952,898) 15,324,752
------------ ------------
Increase (decrease) in net assets resulting from operations........... 10,968,863 31,188,093
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)...................................... (6,061,006) (8,312,099)
Net investment income (Class C)...................................... (4,198,965) (6,542,623)
------------ ------------
Total distributions to shareholders................................... (10,259,971) (14,854,722)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS (NOTE 3)................................................ 80,547,627 196,049,379
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS............................... 81,256,519 212,382,750
NET ASSETS:
Beginning of period................................................... 445,865,164 233,482,414
------------ ------------
End of period+........................................................ $527,121,683 $445,865,164
============ ============
+Includes accumulated undistributed net investment income (loss)...... $ (491,856) $ (560,324)
============ ============
See Notes to Financial Statements
6
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF CASH FLOWS -- FOR THE SIX MONTHS ENDED JUNE 30, 2011 --
(UNAUDITED)
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets from operations.................................................................... $ 10,968,863
ADJUSTMENTS TO RECONCILE NET INCREASE IN NET ASSETS FROM OPERATIONS TO NET CASH USED IN OPERATING ACTIVITIES:
Purchase of loans........................................................................................... (229,843,927)
Proceeds from loans sold.................................................................................... 12,499,298
Loan principal paydowns..................................................................................... 125,817,784
Net sales of short-term securities.......................................................................... 37,729,288
Accretion of facility fee income............................................................................ (1,570,309)
Increase in receivable for dividends and interest........................................................... (904,297)
Decrease in receivable for investments sold................................................................. 1,640,923
Increase in amount due from investment adviser for expense reimbursements/fee waivers....................... (7,741)
Increase in prepaid expenses and other assets............................................................... (28,360)
Decrease in payable for investments purchased............................................................... (27,417,982)
Increase in payable for investment advisory and management fees............................................. 62,182
Increase in payable for distribution and maintenance fees................................................... 39,708
Increase in payable for administration fees................................................................. 14,631
Decrease in other accrued expenses.......................................................................... (12,037)
Unrealized depreciation on investments...................................................................... 952,898
Net realized gain from investments.......................................................................... (1,593,322)
-------------
Net cash used in operating activities......................................................................... $ (71,652,400)
-------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shares sold..................................................................................... 201,490,812
Payment on shares redeemed.................................................................................... (125,531,089)
Cash dividends paid........................................................................................... (4,304,073)
-------------
Net cash provided by financing activities..................................................................... $ 71,655,650
-------------
Net increase in cash.......................................................................................... 3,250
Cash balance at beginning of period........................................................................... --
-------------
Cash balance at end of period................................................................................. $ 3,250
=============
Supplemental disclosure of cash flow information:
Noncash financing activities not included herein consist of reinvestment of
dividends and distributions of $6,066,438.
See Notes to Financial Statements
7
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
FINANCIAL HIGHLIGHTS
NET GAIN
(LOSS) ON
NET INVESTMENTS DIVIDENDS NET NET RATIO OF
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, EXPENSES
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF TO 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
06/30/11(5) 8.27 0.17 0.03 0.20 (0.17) -- (0.17) 8.30 2.44 292,210 1.45(3)(4)
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
06/30/11(5) 8.26 0.16 0.03 0.19 (0.16) -- (0.16) 8.29 2.28 234,912 1.75(3)(4)
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
06/30/11(5) 4.17(3)(4) 28
-
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
06/30/11(5) 3.86(3)(4) 28
--------
* 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 waivers and/or 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 06/30/11(4)(5)
-------- -------- -------- -------- -------- --------------
Class A. 1.81%(4) 0.59% 0.65% 0.55% 0.38% 0.32%
Class C. 0.64 0.65 0.73 0.66 0.48 0.42
(4)Annualized
(5)Unaudited
See Notes to Financial Statements
8
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO PROFILE -- JUNE 30, 2011 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Media....................................................... 9.8%
Hotels, Restaurants & Leisure............................... 7.9
Health Care Providers & Services............................ 6.9
Commercial Services & Supplies.............................. 4.2
Chemicals................................................... 4.2
Software.................................................... 4.1
Diversified Financial Services.............................. 3.9
Auto Components............................................. 3.7
IT Services................................................. 3.6
Specialty Retail............................................ 3.0
Capital Markets............................................. 2.6
Food Products............................................... 2.5
Wireless Telecommunication Services......................... 2.3
Containers & Packaging...................................... 2.2
Repurchase Agreements....................................... 2.1
Food & Staples Retailing.................................... 2.1
Semiconductors & Semiconductor Equipment.................... 2.0
Insurance................................................... 1.9
Aerospace & Defense......................................... 1.9
Industrial Conglomerates.................................... 1.8
Communications Equipment.................................... 1.7
Diversified Telecommunication Services...................... 1.6
Energy Equipment & Services................................. 1.6
Health Care Equipment & Supplies............................ 1.4
Multiline Retail............................................ 1.3
Industrial Power Producers & Energy Traders................. 1.2
Registered Investment Companies............................. 1.2
Internet & Catalog Retail................................... 1.1
Multi Utilities............................................. 1.1
Professional Services....................................... 1.0
Airlines.................................................... 1.0
Personal Products........................................... 1.0
Household Products.......................................... 1.0
Pharmaceuticals............................................. 1.0
Oil, Gas & Consumable Fuels................................. 1.0
Consumer Finance............................................ 1.0
Building Products........................................... 0.9
Health Care Technology...................................... 0.9
Metals & Mining............................................. 0.8
Automobiles................................................. 0.7
Road & Rail................................................. 0.7
Leisure Equipment & Products................................ 0.7
Diversified Consumer Services............................... 0.5
Distributors................................................ 0.5
Biotechnology............................................... 0.5
Machinery................................................... 0.5
Marine...................................................... 0.3
Real Estate Management & Development........................ 0.3
Transportation Infrastructure............................... 0.2
Internet Software & Services................................ 0.2
Textiles, Apparel & Luxury Goods............................ 0.2
Electric Utilities.......................................... 0.1
Paper & Forest Products..................................... 0.1
-----
100.0%
=====
CREDIT QUALITY+#
BBB......................................................... 0.2%
BBB-........................................................ 2.7
BB+......................................................... 4.8
BB.......................................................... 8.9
BB-......................................................... 22.4
B+.......................................................... 27.8
B........................................................... 17.2
B-.......................................................... 5.2
CCC+........................................................ 1.2
CCC......................................................... 1.8
CCC-........................................................ 0.5
CC.......................................................... 0.5
Not Rated@ ................................................. 6.8
-----
100.0%
=====
--------
* Calculated as a percentage of net assets.
@ Represents debt issues that either have no rating, or the rating is
unavailable from the data source.
+ Source: Standard and Poor's
# Calculated as a percentage of total debt issues, excluding short-term
securities.
9
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2011 -- (UNAUDITED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
--------------------------------------------------------------------------------------------------------
LOANS(3)(4) -- 94.9%
AEROSPACE & DEFENSE -- 1.9%
SI Organization, Inc............. BTL-B Ba3 NR 4.50 11/22/16 $2,303,425 $ 2,303,424
Transdigm Group, Inc............. BTL-B Ba1 BB- 4.00 02/14/17 3,064,600 3,079,205
Wesco International, Inc......... BTL-B Ba3 BB- 4.25 04/07/17 652,800 657,899
Wyle Laboratories, Inc........... BTL-B B1 BB 5.75 05/14/17 3,229,029 3,241,137
-----------
9,281,665
-----------
AIRLINES -- 1.0%
Delta Air Lines, Inc............. BTL Ba2 BB- 5.50 04/20/17 2,850,000 2,829,812
United Airlines, Inc............. Tranche B Ba3 BB- 2.19-2.25 02/01/14 1,364,444 1,304,181
US Airways Group, Inc............ BTL B3 B+ 2.69 03/23/14 1,420,000 1,289,664
-----------
5,423,657
-----------
AUTO COMPONENTS -- 3.7%
Allison Transmission, Inc........ BTL-B B1 B+ 2.94 08/07/14 4,221,507 4,145,980
Federal Mogul Corp............... BTL-B Ba3 B+ 2.13 06/27/15 2,939,291 2,788,126
Federal Mogul Corp............... BTL-C Ba3 B+ 2.13 06/27/15 1,499,638 1,422,513
FleetPride Corp.................. BTL-B Ba3 BB- 2.69 06/28/13 226,563 222,598
Metaldyne Co. LLC................ BTL-B B1 B+ 5.25 05/18/17 997,500 999,370
Remy International, Inc.......... BTL-B B1 B+ 6.25 12/17/16 2,014,875 2,027,468
Tenneco, Inc..................... BTL-B Ba1 BBB- 5.00 06/03/16 990,000 994,950
UCI International, Inc........... BTL-B Ba2 B 5.50 07/26/17 2,233,775 2,251,460
Veyance Technologies, Inc........ 1st Lien NR NR 2.69 07/31/14 2,526,562 2,406,551
Veyance Technologies, Inc........ Delayed Draw NR NR 2.69 07/31/14 361,875 344,686
Viking Acquisition, Inc.......... BTL-B Ba3 B+ 6.00 11/05/16 1,726,325 1,729,562
-----------
19,333,264
-----------
AUTOMOBILES -- 0.7%
Chrysler Group LLC............... BTL-B Ba2 BB 6.00 05/24/17 2,875,000 2,807,918
Ford Motor Co.................... BTL-B Baa3 BB+ 2.94 12/15/13 995,122 995,770
-----------
3,803,688
-----------
BIOTECHNOLOGY -- 0.5%
Grifols SA....................... BTL-B Ba3 NR 6.00 11/10/16 2,535,000 2,549,787
-----------
BUILDING PRODUCTS -- 0.9%
Armstrong World Industries, Inc.. BTL-B B1 BB- 4.00 03/10/18 2,478,788 2,484,727
Brand Services, Inc.............. BTL B2 B 2.50-2.56 02/07/14 1,819,984 1,656,186
Brand Services, Inc.............. BTL-B2 B2 B 3.56 02/07/14 914,683 841,508
-----------
4,982,421
-----------
CAPITAL MARKETS -- 2.6%
BNY ConvergEX Group LLC.......... 1st Lien B1 B+ 5.25 12/16/16 3,920,300 3,933,778
BNY ConvergEX Group LLC.......... 2nd Lien B2 B- 8.75 12/16/17 2,075,000 2,119,959
Nuveen Investments, Inc.......... BTL-B B2 B 3.25-3.27 11/13/14 1,383,480 1,368,132
Nuveen Investments, Inc.......... BTL B2 B 5.75-5.77 05/13/17 1,616,520 1,619,215
Pinafore LLC..................... BTL-B Ba2 BB 4.25 09/21/16 2,454,221 2,457,500
Tensar Earth Technologies, Inc... BTL-B B2 B- 7.75 10/31/12 708,680 676,790
TPF Generation Holdings LLC...... 2nd Lien B3 B 4.50 12/15/14 1,500,000 1,457,813
-----------
13,633,187
-----------
10
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2011 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
--------------------------------------------------------------------------------------------------------
CHEMICALS -- 3.6%
Brenntag AG.......................... BTL-B2 Ba2 BBB- 3.69-3.75 01/18/14 $ 166,444 $ 166,548
Brenntag AG.......................... BTL Ba2 BBB- 3.69-3.95 01/18/14 28,962 28,981
Chemtura Corp........................ BTL Ba1 BB+ 5.50 08/27/16 1,890,000 1,901,024
GenTek............................... BTL NR B 5.00-5.75 03/09/18 2,865,838 2,882,555
Hexion Specialty Chemicals, Inc...... BTL-C1 Ba3 B- 4.00 05/05/15 478,167 472,070
Hexion Specialty Chemicals, Inc...... BTL-C2 Ba3 B- 4.00 05/05/15 213,347 210,627
Houghton International, Inc.......... BTL-B B1 B 6.75 01/31/16 496,606 500,641
Huntsman International LLC........... BTL Ba2 BB- 2.77 04/19/17 1,780,968 1,739,783
Huntsman International LLC........... BTL-C Ba2 BB- 2.44-2.47 06/30/16 264,918 258,768
Ineos US Finance LLC................. BTL-B2 B1 B 7.50 12/16/13 1,399,433 1,449,726
Ineos US Finance LLC................. BTL-C2 B1 B 8.00 12/16/14 1,590,432 1,647,589
Momentive Performance................ BTL-B Ba3 B 3.69 05/05/15 1,966,567 1,933,791
OMNOVA Solutions, Inc................ BTL-B Ba2 B+ 5.75 05/31/17 547,250 549,986
Solutia, Inc......................... BTL-B Ba1 BB+ 3.50 08/01/17 654,493 657,122
Styron LLC........................... BTL-B B1 B+ 6.00 08/02/17 781,075 781,482
Univar, Inc.......................... BTL-B B2 B 5.00 04/28/17 3,567,075 3,566,119
-----------
18,746,812
-----------
COMMERCIAL SERVICES & SUPPLIES -- 4.2%
Altegrity, Inc....................... BTL-B B1 B+ 7.75 08/03/15 2,386,963 2,408,596
ATI Schools.......................... BTL-B Ba3 CCC 8.25 12/31/14 985,000 920,975
Audio Visual Services Group, Inc..... 2nd Lien NR NR 5.81 08/28/14 1,077,040 651,609
AWAS................................. BTL-B NR NR 5.25 06/13/16 2,387,600 2,398,046
KAR Auction Services, Inc............ BTL-B Ba3 BB- 5.00 05/20/17 2,050,000 2,058,007
Key Safety Systems, Inc.............. 1st Lien NR BB 2.44 03/08/14 1,435,488 1,346,667
New Holdings I LLC................... BTL B3 B- 9.50 03/23/17 1,750,000 1,824,375
New Holdings I LLC................... BTL-B Ba3 B+ 6.00 03/23/16 2,785,714 2,783,394
Quad Graphics, Inc................... BTL-B Ba2 BBB- 5.50 07/01/16 2,009,700 2,017,638
Reynolds Group Holdings, Inc......... Tranch E Ba3 BB 4.25 02/09/18 4,977,525 4,957,132
ValleyCrest Cos...................... 1st Lien NR NR 6.50 10/04/16 878,403 865,227
-----------
22,231,666
-----------
COMMUNICATIONS EQUIPMENT -- 1.7%
Aeroflex, Inc........................ BTL-B B1 BB- 4.25 05/09/18 2,085,000 2,081,078
CommScope, Inc....................... BTL-B Ba3 BB 5.00 01/14/18 1,686,773 1,694,827
Sorenson Communications, Inc......... BTL-C NR NR 6.00 08/16/13 5,539,235 5,376,869
-----------
9,152,774
-----------
CONSUMER FINANCE -- 1.0%
Fifth Third Processing Solutions LLC. BTL-B Ba3 BB- 4.50 11/18/16 5,014,832 5,036,771
-----------
CONTAINERS & PACKAGING -- 2.2%
Anchor Glass Container Corp.......... 1st Lien B1 BB- 6.00 02/03/16 1,546,373 1,561,837
Anchor Glass Container Corp.......... 2nd Lien B3 B- 10.00 09/02/16 560,000 571,900
Berry Plastics Corp.................. BTL-C B1 B 2.26 04/03/15 1,966,653 1,862,790
BWAY Corp............................ BTL-B Ba3 B+ 4.50 02/09/18 2,727,886 2,734,989
BWAY Corp............................ BTL-C Ba3 B+ 4.50-5.50 02/09/18 242,190 243,553
Consolidated Container Co............ 2nd Lien Caa1 CCC+ 5.69 09/28/14 1,250,000 1,140,625
Graham Packaging Co. LP.............. BTL-D B1 B+ 6.00 09/23/16 1,786,500 1,792,697
Graham Packaging Co. LP.............. BTL-C B1 B+ 6.75 04/05/14 730,569 733,661
Tank Intermediate Holding Corp....... BTL-A B1 B+ 5.00 04/15/16 1,132,075 1,134,906
-----------
11,776,958
-----------
DISTRIBUTORS -- 0.5%
CDW Corp............................. BTL-B B2 B 4.50 07/15/17 2,784,560 2,750,332
-----------
DIVERSIFIED CONSUMER SERVICES -- 0.5%
Vertrue, Inc......................... BTL B1 B 5.25 08/18/14 2,111,645 1,752,665
Vertrue, Inc......................... 2nd Lien Caa2 CCC+ 9.25 08/14/15 1,490,000 1,080,250
-----------
2,832,915
-----------
11
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2011 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES -- 3.9%
Axcan Pharma, Inc............................ BTL-B B1 BB 5.50 02/11/17 $4,293,425 $ 4,259,078
BLB Management Services, Inc................. 1st Lien B2 BB 7.75 11/05/15 143,728 144,207
Bridge Information Systems, Inc.+@# (5)(6)... BTL-B NR NR 6.25 05/29/05 353,314 0
BRSP LLC..................................... BTL B2 BB- 7.50 06/04/14 1,939,421 1,949,119
CIT Group, Inc............................... BTL-A Ba3 BB 6.25 08/11/15 2,486,836 2,506,375
Foxco Acquisition LLC........................ BTL-B B1 B+ 4.75 07/21/15 3,103,071 3,106,950
Global Cash Access LLC....................... BTL B1 BB- 7.00 03/01/16 1,780,952 1,790,600
Pinnacle Foods Group, Inc.................... BTL-B Ba3 B+ 2.69 04/02/14 958,955 952,895
Universal City Apartment Holding............. BTL-B Ba2 BB 5.50 11/06/14 774,300 777,684
Visant Corp.................................. BTL Ba3 BB- 5.25 12/22/16 5,049,625 5,048,050
-----------
20,534,958
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES -- 1.6%
SAVVIS Communications Corp................... BTL B1 B 6.75 08/04/16 2,084,250 2,098,840
Telcordia Technologies, Inc.................. BTL-B B1 B+ 6.75 04/28/16 972,736 974,762
U.S. TelePacific Corp........................ BTL B3 B- 5.75 02/23/17 1,936,585 1,931,017
Vonage Holdings Corp......................... BTL-B B2 BB 9.75-10.25 12/14/15 2,587,000 2,599,935
West Corp.................................... BTL-B2 Ba3 BB- 2.62-2.65 10/24/13 986,558 980,597
-----------
8,585,151
-----------
ELECTRIC UTILITIES -- 0.1%
La Paloma Generating Co...................... Delayed Draw B3 CCC+ 2.00 08/16/12 14,224 13,886
La Paloma Generating Co...................... LOC B3 CCC+ 1.94 08/16/12 32,787 32,008
La Paloma Generating Co...................... 1st Lien B3 CCC+ 2.00 08/16/12 178,598 174,356
La Paloma Generating Co...................... 2nd Lien Caa2 CC 3.75 08/16/13 250,000 238,500
Mach Gen LLC................................. LOC Ba3 BB- 2.31 02/22/13 88,760 82,991
-----------
541,741
-----------
ENERGY EQUIPMENT & SERVICES -- 1.6%
Aquilex Holdings LLC......................... BTL-B Ba3 BB- 6.00 04/01/16 1,970,819 1,969,587
Big West Oil LLC............................. BTL B2 B+ 7.00 04/04/16 868,421 875,477
Frac Tech International LLC.................. BTL-B B2 B+ 6.25 05/06/16 2,583,232 2,582,222
MEG Energy Corp.............................. BTL-B Ba3 BBB- 4.00 03/18/18 2,775,000 2,780,852
-----------
8,208,138
-----------
FOOD & STAPLES RETAILING -- 2.1%
Great Atlantic & Pacific Tea Co., Inc.(5).... DIP B2 NR 8.75 06/14/12 1,150,000 1,164,375
Rite Aid Corp................................ BTL-B2 B3 B+ 1.94 06/04/14 2,886,109 2,763,449
Rite Aid Corp................................ BTL-B5 B3 B+ 4.50 03/03/18 3,401,707 3,351,212
Smart & Final, Inc........................... 1st Lien B3 B+ 5.00 05/31/16 416,420 416,940
Smart & Final, Inc........................... 2nd Lien Caa1 CCC+ 9.06 11/30/14 1,000,000 998,750
Sprouts Farmers Market LLC................... BTL-B B2 B+ 6.00 04/18/18 2,274,300 2,260,086
-----------
10,954,812
-----------
FOOD PRODUCTS -- 2.5%
Brickman Group Holdings, Inc................. BTL-B B1 B+ 7.25 10/14/16 2,079,550 2,110,419
Darling International, Inc................... BTL-B Ba2 BBB- 5.00 12/17/16 274,000 275,370
Del Monte Corp............................... BTL-B Ba3 B+ 4.50 03/08/18 6,470,000 6,462,922
Dole Food Co., Inc........................... BTL-B Ba2 BB- 5.00-5.50 03/03/17 317,062 317,822
Dole Food Co., Inc........................... BTL-C Ba2 BB- 5.00-5.50 03/03/17 787,502 789,389
Michael Foods, Inc........................... BTL-B B1 B+ 4.25 02/25/18 3,131,004 3,137,266
-----------
13,093,188
-----------
HEALTH CARE EQUIPMENT & SUPPLIES -- 1.4%
Carestream Health, Inc....................... BTL-B B1 BB- 5.00 02/25/17 6,034,875 5,654,678
Gambro AB.................................... BTL-B NR NR 2.44 06/05/14 8,402 8,355
Gambro AB.................................... BTL-C NR NR 3.19 06/05/15 8,402 8,355
PTS Pharmaceuticals.......................... BTL-B Ba3 BB- 2.44 04/10/14 1,920,000 1,840,800
-----------
7,512,188
-----------
12
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2011 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
-----------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES -- 6.9%
Alliance HealthCare Services, Inc......... BTL-B Ba3 BB- 5.50 06/01/16 $ 329,975 $ 329,425
Community Health Systems, Inc............. BTL Ba3 BB 3.75 01/25/17 829,450 810,785
Community Health Systems, Inc............. Delayed Draw Ba3 BB 2.50 07/25/14 48,740 47,183
Community Health Systems, Inc............. BTL Ba3 BB 2.50 07/25/14 942,276 912,179
DaVita, Inc............................... BTL-B Ba2 BB 4.50 10/20/16 1,736,275 1,743,406
Emergency Medical Services Corp........... BTL-B B1 B+ 5.25 05/25/18 2,942,625 2,937,108
HCA, Inc.................................. Tranche B3 Ba2 BB 3.50 05/01/18 1,000,000 986,181
HealthSpring, Inc......................... BTL-B Ba3 B+ 6.00 10/22/16 2,823,877 2,823,877
inVentiv Health, Inc...................... BTL-B NR NR 4.75 08/04/16 1,210,865 1,205,870
inVentiv Health, Inc...................... BTL-B1 NR NR 4.75 08/04/16 332,500 331,128
inVentiv Health, Inc...................... BTL-B2 NR NR 4.75 08/04/16 661,142 658,414
Kindred Healthcare, Inc................... BTL-B Ba3 B+ 5.25 06/01/18 3,600,000 3,600,900
Multiplan, Inc............................ BTL Ba3 B 4.75 08/18/17 4,567,308 4,558,031
National Surgical Hospitals, Inc.......... BTL B2 B 8.25 01/04/17 3,112,891 3,120,674
Prime Healthcare Services, Inc............ BTL-B B1 NR 7.25 04/28/15 987,500 962,813
Quintiles Transnational Corp.............. BTL-B B1 BB- 5.00 06/08/18 2,725,000 2,712,228
Renal Advantage Holdings, Inc............. BTL-B Ba3 B 5.75 12/17/16 2,651,675 2,661,619
Universal Health Services, Inc............ BTL-B Ba2 BB+ 4.00 11/15/16 2,750,625 2,761,322
Vantage Oncology, Inc..................... BTL B2 B 6.25 02/28/17 3,468,874 3,447,194
-----------
36,610,337
-----------
HEALTH CARE TECHNOLOGY -- 0.9%
IMS Health, Inc........................... BTL-B Ba3 BB 4.50 08/31/17 2,690,968 2,697,695
MedAssets, Inc............................ BTL Ba3 BB- 5.25 11/16/16 1,911,260 1,919,622
-----------
4,617,317
-----------
HOTELS, RESTAURANTS & LEISURE -- 7.7%
24 Hour Fitness Worldwide, Inc............ BTL-B Ba3 B+ 6.75 04/22/16 2,722,500 2,705,484
Ameristar Casinos, Inc.................... BTL-B Ba3 BB+ 4.00 04/14/18 877,800 881,884
Burger King Corp.......................... BTL-B Ba3 BB- 4.50 10/19/16 6,253,575 6,246,296
Caesars Entertainment Operating Co., Inc.. BTL-B2 B3 B 4.44-4.48 01/28/18 5,000,000 4,370,835
CCM Merger, Inc........................... BTL-B B3 B+ 7.00 03/01/17 3,850,269 3,906,822
Cedar Fair LP............................. BTL-B Ba2 BB- 4.00 12/15/17 2,164,125 2,173,323
Denny's Corp.............................. BTL-B B1 B+ 5.25 09/30/16 1,760,000 1,768,228
DineEquity, Inc........................... BTL-B Ba2 BB- 4.25 10/19/17 2,759,919 2,764,109
Dunkin' Finance Corp...................... BTL-B1 B2 B 4.25 11/23/17 1,553,145 1,552,903
Golden Nugget, Inc........................ 1st Lien Caa3 CC 3.19 06/30/14 1,264,657 1,112,898
Golden Nugget, Inc........................ Delayed Draw Caa3 CC 3.19 06/30/14 719,897 633,509
Isle of Capri Casinos, Inc................ BTL-B Ba3 BB- 4.75 03/25/17 2,958,585 2,976,434
NPC International, Inc.................... BTL Ba3 B+ 1.94-2.02 05/03/13 1,126,850 1,119,807
Penn National Gaming...................... BTL-B Ba1 BBB- 3.75 06/29/18 1,140,000 1,143,911
Quizno's LLC.............................. 1st Lien NR NR 4.94 05/05/13 1,990,366 1,825,884
Six Flags Theme Parks, Inc................ BTL-B B1 B+ 5.25 06/30/16 2,720,000 2,740,400
Town Sports International Holdings, Inc... BTL-B B1 B 7.00-7.75 05/11/18 1,675,800 1,682,084
Travelport, Inc........................... Delayed Draw Ba3 B 4.74 08/23/15 181,549 174,060
Wendy's/Arby's Restaurants LLC............ BTL-B Ba2 BB 5.00 05/24/17 940,502 943,729
-----------
40,722,600
-----------
HOUSEHOLD PRODUCTS -- 1.0%
Diversey, Inc............................. BTL-B Ba2 BB- 5.00 11/24/15 980,853 982,079
KIK Custom Products....................... BTL B2 B- 2.53 05/24/14 2,035,347 1,782,964
KIK Custom Products....................... CND TL B3 CCC+ 2.53 05/31/14 348,917 305,651
Scotsman Industries, Inc.................. BTL-B B1 B+ 5.75-6.00 04/30/16 1,485,000 1,490,569
Spectrum Brands, Inc...................... BTL B1 B 5.00 06/17/16 768,608 774,853
-----------
5,336,116
-----------
13
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2011 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES -- 1.8%
American Rock Salt Co. LLC........................ BTL-B B2 B+ 5.50 04/25/17 $1,725,000 $ 1,728,593
Harland Clarke Holdings Corp...................... BTL-B B1 B+ 2.69-2.75 06/30/14 4,935,968 4,454,711
Sequa Corp........................................ BTL-B B2 B- 3.50-3.51 12/03/14 2,999,706 2,970,960
TriMas Corp....................................... BTL-B Ba2 BB 4.25 06/21/17 570,000 572,138
-----------
9,726,402
-----------
INDUSTRIAL POWER PRODUCERS & ENERGY TRADERS -- 1.2%
AES Corp.......................................... BTL-B Ba1 BB+ 4.25 05/27/18 1,157,100 1,159,993
Calpine Corp...................................... BTL-B B1 B+ 4.50 04/01/18 3,087,263 3,063,917
EquiPower Resources Corp.......................... BTL-B Ba3 BB- 5.75 01/28/18 2,179,538 2,187,711
-----------
6,411,621
-----------
INSURANCE -- 1.9%
Alliant Holdings, Inc............................. BTL-D B2 B- 6.75 08/21/14 1,315,516 1,331,960
Amwins Group, Inc................................. 1st Lien B2 B 2.75-2.76 06/08/13 1,882,016 1,869,077
Asurion Corp...................................... 2nd Lien B2 B- 9.00 05/24/19 1,750,000 1,761,211
Asurion Corp...................................... BTL-B Ba3 B+ 5.50 05/24/18 3,975,000 3,928,286
USI Holdings Corp................................. BTL-B B2 B- 2.69 05/04/14 962,406 943,158
-----------
9,833,692
-----------
INTERNET & CATALOG RETAIL -- 1.1%
Affinion Group, Inc............................... BTL-B Ba3 BB- 5.00 10/09/16 3,673,643 3,675,939
SkillSoft Corp.................................... BTL Ba3 BB 6.50 05/26/17 1,956,773 1,984,901
-----------
5,660,840
-----------
INTERNET SOFTWARE & SERVICES -- 0.2%
Skype Technologies SA............................. BTL B1 B+ 7.00 02/23/15 1,150,736 1,156,793
-----------
IT SERVICES -- 3.6%
DynCorp International, Inc........................ BTL-B Ba2 BB- 6.25 07/07/16 1,814,990 1,828,375
Fidelity National Information Services, Inc....... BTL-B Ba1 BBB- 5.25 07/18/16 3,046,975 3,061,110
First Data Corp................................... BTL-B B1 B+ 4.19 03/24/18 7,468,681 6,866,220
MoneyGram International, Inc...................... BTL-B Ba1 BB- 4.50-5.50 11/18/17 1,115,897 1,118,339
Sabre Holdings Corp............................... BTL-B B1 B 2.19-2.27 09/30/14 1,414,934 1,266,278
Sungard Data Systems, Inc......................... BTL-B Ba3 BB 3.85-3.89 02/28/16 930,065 929,480
Sungard Data Systems, Inc......................... BTL Ba3 BB 3.69 02/28/14 1,000,000 998,750
TransFirst Holdings, Inc.......................... BTL-B B2 B 3.00 06/15/14 2,877,050 2,769,161
-----------
18,837,713
-----------
LEISURE EQUIPMENT & PRODUCTS -- 0.7%
Leslie's Poolmart, Inc............................ BTL-B Ba3 B+ 4.50 11/15/17 1,144,250 1,144,965
SRAM LLC.......................................... BTL-B Ba2 B+ 4.75-5.75 06/07/18 1,825,000 1,826,141
SRAM LLC.......................................... 2nd Lien B3 B- 8.50 12/07/18 475,000 476,188
-----------
3,447,294
-----------
MACHINERY -- 0.5%
Bucyrus International, Inc........................ BTL-C Ba2 BB+ 4.25 02/19/16 1,470,400 1,474,178
NACCO Materials Handling Group, Inc............... BTL NR NR 1.94-2.17 03/21/13 954,774 940,452
-----------
2,414,630
-----------
MARINE -- 0.3%
Dockwise Transport BV............................. BTL-B NR NR 2.00 04/01/15 185,246 179,071
Dockwise Transport BV............................. BTL-B2 NR NR 2.00 04/01/15 379,013 366,380
Dockwise Transport BV............................. BTL-C NR NR 2.87 04/01/16 155,275 150,099
Dockwise Transport BV............................. BTL-C2 NR NR 2.87 04/01/16 379,013 366,380
Dockwise Transport BV............................. BTL-D NR NR 4.75 07/12/16 241,913 226,188
Dockwise Transport BV............................. BTL-D2 NR NR 4.81 07/12/16 483,825 452,376
-----------
1,740,494
-----------
14
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2011 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
-------------------------------------------------------------------------------------------------------------------
MEDIA -- 9.0%
Advanstar Communications, Inc............... 1st Lien Caa1 B- 2.50 05/31/14 $1,922,406 $ 1,630,840
AMC Entertainment, Inc...................... BTL Caa1 CCC+ 5.25 06/13/12 218,000 216,364
Bresnan Communications, Inc................. BTL-B Ba3 BB+ 4.50 12/14/17 1,223,850 1,225,937
Caribe Information Investment, Inc.(5)(7)... BTL-B NR NR 6.50 03/31/13 1,610,481 453,619
Carmike Cinemas, Inc........................ BTL B1 B- 5.50 01/27/16 1,291,732 1,298,651
Century -- TCI California LP+@#(5)(6)....... Revolver NR NR 6.50 12/31/07 10,000 0
Cinram International, Inc................... 1st Lien B3 NR 10.25 12/31/13 498,490 442,410
Cinram International, Inc................... 2nd Lien NR CCC 15.00 12/31/11 187,259 72,407
Fender Musical Instruments Corp............. Delayed Draw B2 B 2.44 06/07/14 285,801 276,870
Fender Musical Instruments Corp............. BTL-B B2 B 2.44 06/07/14 564,049 546,423
Formula One Holdings........................ BTL-B1 NR NR 2.65 12/31/13 1,120,285 1,080,608
Formula One Holdings........................ BTL-B2 NR NR 2.65-2.71 12/31/13 712,230 687,005
Formula One Holdings........................ BTL-D2 NR NR 3.90 06/30/14 1,500,000 1,435,179
GateHouse Media Operating, Inc.............. Delayed Draw Ca CCC- 2.19 08/28/14 805,829 289,427
GateHouse Media Operating, Inc.............. BTL-B Ca CCC- 2.19 08/28/14 3,148,105 1,130,695
GateHouse Media Operating, Inc.............. BTL-C Ca CCC- 2.44 08/28/14 988,484 355,031
Getty Images, Inc........................... BTL-B Ba3 BB- 5.25 11/04/16 2,267,863 2,283,454
Gray Television, Inc........................ BTL-B B2 B 3.70 12/31/14 2,448,123 2,410,178
Hicks Sports Group+(5)(7)................... BTL-B NR NR 6.75 06/22/11 1,760,758 1,197,315
HIT Entertainment, Ltd...................... BTL B2 CCC+ 5.52 06/01/12 886,994 880,342
HIT Entertainment, Ltd...................... 2nd Lien Caa3 CCC- 5.78 02/05/13 1,000,000 933,750
Interactive Data Corp....................... BTL-B Ba3 B+ 4.75 02/11/18 3,334,830 3,341,863
Knology, Inc................................ BTL-B B1 B+ 4.00 08/18/17 1,072,313 1,069,967
Local Insight Regatta Holdings, Inc.+(5)(7). BTL NR NR 7.75 04/23/15 696,017 147,034
Mediacom Broadband LLC...................... BTL-F Ba3 BB- 4.50 10/23/17 2,727,450 2,710,382
Mediacom LLC................................ BTL-D Ba3 BB- 5.50 03/31/17 948,113 946,880
Mediacom LLC................................ BTL-E Ba3 BB- 4.50 10/23/17 2,727,450 2,715,858
Mission Broadcasting, Inc................... BTL Ba3 BB- 5.00 09/30/16 386,100 385,617
Nexstar Broadcasting, Inc................... BTL-B Ba3 BB- 5.00 09/30/16 1,102,650 1,101,272
NextMedia Operating, Inc.................... BTL-B B3 B+ 8.25 05/21/16 2,908,188 2,914,245
Regal Cinemas, Inc.......................... BTL-B Ba2 BB- 3.50 08/23/17 1,368,125 1,369,469
Sinclair Television Group, Inc.............. BTL-B Baa3 BB+ 4.00 10/29/16 1,197,968 1,201,463
Spanish Broadcasting Systems, Inc........... 1st Lien Caa1 B- 2.00 06/10/12 937,500 900,781
SuperMedia, Inc............................. BTL B3 B- 11.00 12/31/15 669,806 407,147
Tribune Co.+(5)(7).......................... BTL-B NR NR 6.50 06/04/14 3,925,075 2,595,456
Univision Communications, Inc............... BTL-B B2 B+ 4.44 03/31/17 4,487,801 4,272,081
WideOpenWest Finance LLC.................... BTL-B B1 B- 2.69-4.75 06/27/14 971,309 940,500
WideOpenWest Finance LLC.................... BTL B1 B- 6.69-8.75 06/27/14 1,480,962 1,487,441
Yell Group, Ltd............................. BTL-B NR NR 3.94 07/31/14 784,964 317,125
-----------
47,671,086
-----------
METALS & MINING -- 0.8%
JMC Steel Group, Inc........................ BTL-B B1 BB- 4.75 03/11/17 1,232,910 1,238,289
Novelis, Inc................................ BTL-B Ba2 BB- 3.75 03/10/17 2,910,375 2,920,884
-----------
4,159,173
-----------
MULTI UTILITIES -- 1.1%
Texas Competitive Electric Holdings Co. LLC. BTL B2 CCC 4.69-4.77 10/10/17 7,174,956 5,610,557
-----------
MULTILINE RETAIL -- 1.3%
Neiman Marcus Group, Inc.................... BTL-B B2 BB- 4.75 05/16/18 4,500,000 4,450,653
RGIS LLC.................................... BTL-B B1 B 2.75 04/30/14 812,397 796,149
RGIS LLC.................................... Delayed Draw B1 B 2.75 04/30/14 40,620 39,807
Savers, Inc................................. BTL-B Ba3 B+ 4.25 03/04/17 1,689,900 1,695,886
-----------
6,982,495
-----------
15
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2011 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
----------------------------------------------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS -- 0.8%
Alon USA, Inc. (Edgington Facility)............ BTL B1 B+ 2.44-2.50 08/02/13 $ 26,388 $ 24,123
Alon USA, Inc. (Paramount Facility)............ BTL B1 B+ 2.44-2.50 08/02/13 211,111 192,991
Great Point Power LLC.......................... BTL Ba1 BB+ 3.48-5.50 06/04/17 1,345,199 1,355,288
NE Energy, Inc................................. 2nd Lien B3 CCC+ 4.75 05/01/14 250,000 235,938
Pilot Travel Centers LLC....................... BTL-B Ba2 BB+ 4.25 03/07/18 2,450,000 2,461,486
-----------
4,269,826
-----------
PAPER & FOREST PRODUCTS -- 0.1%
MMGS Packaging Acquisition..................... 2nd Lien Caa3 CC 5.75 03/07/15 500,000 440,000
-----------
PERSONAL PRODUCTS -- 1.0%
NBTY, Inc...................................... BTL-B Ba3 BB- 4.25 10/01/17 3,213,850 3,216,527
Revlon, Inc.................................... BTL-B Ba3 BB- 4.75 11/19/17 2,165,000 2,171,991
-----------
5,388,518
-----------
PHARMACEUTICALS -- 1.0%
ConvaTec, Inc.................................. BTL Ba3 B+ 5.75 12/22/16 1,611,900 1,615,416
Harvard Drug Group LLC......................... BTL-B B1 B+ 6.50 04/05/16 712,912 707,565
Harvard Drug Group LLC......................... Delayed Draw B1 B+ 6.50 04/05/16 98,025 97,290
Warner Chilcott PLC............................ BTL-B3 Ba3 BBB- 4.25 03/03/18 910,718 912,211
Warner Chilcott PLC............................ Tranche B1 Ba3 BBB- 4.25 03/03/18 1,324,680 1,326,852
Warner Chilcott PLC............................ Tranche B2 Ba3 BBB- 4.25 03/03/18 662,340 663,426
-----------
5,322,760
-----------
PROFESSIONAL SERVICES -- 1.0%
Bankruptcy Management Solutions, Inc........... 2nd Lien NR NR 8.30 09/29/15 124,622 2,492
Nexeo Solutions LLC............................ BTL-B B1 B 5.00 09/30/17 3,541,125 3,543,338
Scitor Corp.................................... BTL-B B2 B 5.00 02/15/17 1,910,400 1,910,400
-----------
5,456,230
-----------
REAL ESTATE MANAGEMENT & DEVELOPMENT -- 0.3%
Realogy Corp................................... CLTL B1 B- 4.34 10/10/16 269,439 251,758
Realogy Corp................................... BTL B1 B- 4.52 10/10/16 1,596,593 1,424,960
-----------
1,676,718
-----------
ROAD & RAIL -- 0.7%
Cardinal Logistics Management, Inc............. 2nd Lien NR NR 15.50 03/23/14 1,097,255 384,039
Evergreen Tank Solutions, Inc.................. 2nd Lien B3 B- 4.02 04/07/14 497,500 465,163
NES Rentals Holdings........................... 2nd Lien Caa2 CCC+ 10.00 07/20/13 798,142 796,147
Swift Transportation Co., Inc.................. BTL-B B1 BB- 6.00 12/21/16 2,014,061 2,030,413
-----------
3,675,762
-----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 2.0%
Freescale Semiconductor, Inc................... BTL B1 B 4.44 12/01/16 5,341,885 5,324,359
Intersil Corp.................................. BTL-B Ba2 BB+ 4.75 04/27/16 3,709,267 3,727,813
Microsemi Corp................................. BTL-B Ba1 BB+ 4.00 11/02/17 1,293,500 1,295,386
-----------
10,347,558
-----------
SOFTWARE -- 4.1%
Eagle Parent, Inc.............................. BTL-B Ba3 B+ 5.00 05/16/18 3,850,000 3,757,600
Infor Global Solutions......................... Delayed Draw B1 B+ 5.94 07/28/15 326,571 316,774
Infor Global Solutions......................... BTL B1 B+ 5.94 07/28/15 625,929 610,150
IPC Systems, Inc............................... 2nd Lien Caa2 CCC 5.50 05/31/15 1,000,000 952,500
Lawson Software, Inc........................... BTL-B Ba3 B 6.75 07/05/17 2,000,000 1,920,000
Open Solutions, Inc............................ BTL-B B1 BB- 2.40 01/23/14 4,556,977 3,953,177
Reynolds & Reynolds Co......................... BTL-B Ba2 BB+ 3.75 04/21/18 1,220,000 1,221,715
Rovi Corp...................................... BTL-B Ba1 BB+ 4.00 02/07/18 997,500 1,001,864
Sensata Technologies BV........................ BTL-B Ba3 BB+ 4.00 05/12/18 675,000 675,359
Verint Systems, Inc............................ BTL-B B1 B+ 4.50 10/06/17 4,740,000 4,740,000
Vertafore, Inc................................. BTL-B B1 B+ 5.25 07/29/16 2,587,000 2,598,318
-----------
21,747,457
-----------
16
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2011 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
-----------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT/SHARES (NOTE 2)
-----------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL -- 3.0%
Gymboree Corp............................. BTL-B B1 B 5.00 02/23/18 $2,407,900 $ 2,338,028
J Crew Operating Corp..................... BTL-B B1 B 4.75 03/07/18 3,850,000 3,707,793
Michaels Stores, Inc...................... BTL-B B2 B+ 2.50-2.56 10/31/13 2,017,108 1,986,736
Michaels Stores, Inc...................... BTL-B2 B2 B+ 4.75-4.81 07/31/16 1,468,693 1,466,123
National Bedding Co....................... 1st Lien NR BB 3.75-5.75 11/28/13 1,139,904 1,132,067
National Bedding Co....................... 2nd Lien Caa1 B 5.31 02/28/14 1,000,000 967,500
Petco Animal Supplies, Inc................ BTL-B B1 B 4.50 11/24/17 4,331,250 4,327,192
------------
15,925,439
------------
TEXTILES, APPAREL & LUXURY GOODS -- 0.2%
Phillips-Van Heusen Corp.................. BTL-B Ba2 BBB 3.50 05/06/16 872,813 876,163
------------
TRANSPORTATION INFRASTRUCTURE -- 0.2%
Central Parking Corp...................... 1st Lien Ba3 CCC 2.50 05/22/14 1,031,065 902,182
Central Parking Corp...................... LOC Ba3 CCC 2.50 05/22/14 379,310 331,897
------------
1,234,079
------------
WIRELESS TELECOMMUNICATION SERVICES -- 2.3%
Intelstat Jackson Holdings, Ltd........... BTL B1 BB- 5.25 04/02/18 4,000,000 4,018,332
MetroPCS Wireless, Inc.................... BTL-B3 Ba1 BB 3.94-4.00 03/17/18 4,077,295 4,075,595
Syniverse Technologies, Inc............... BTL-B B1 BB- 5.25 12/21/17 3,980,000 4,004,875
------------
12,098,802
------------
TOTAL LOANS (cost $508,765,920)................................................... 500,364,545
------------
CONVERTIBLE BONDS & NOTES -- 0.0%
CHEMICALS -- 0.0%
Wellman, Inc.@#(9) (cost $1,016,979)...... Bond NR NR 5.00 01/29/19 100,648 42,836
------------
COMMON STOCK -- 1.6%
CHEMICALS -- 0.6%
LyondellBasell Industries, Class A+............................................... 79,944 3,079,443
------------
DIVERSIFIED FINANCIAL SERVICES -- 0.0%
Bankruptcy Management Solutions, Inc.+@#(8)....................................... 1,360 0
BLB Management Services, Inc.+.................................................... 5,141 57,836
------------
57,836
------------
HOTELS, RESTAURANTS & LEISURE -- 0.2%
MGM Holdings, Inc.+#.............................................................. 52,273 1,176,143
------------
MEDIA -- 0.8%
Citadel Broadcasting Corp.+....................................................... 128,107 4,272,368
Cinram International Income Fund+#@(8)............................................ 12,483 8,738
------------
4,281,106
------------
TOTAL COMMON STOCK (cost $6,269,869).............................................. 8,594,528
------------
MEMBERSHIP INTEREST -- 0.2%
MEDIA -- 0.0%
Advanstar Communications, Inc.+#@................................................. 12,608 126,080
NextMedia Operating, Inc.+@#(8)................................................... 7,916 45,485
------------
171,565
------------
OIL, GAS & CONSUMABLE FUELS -- 0.2%
Vitruvian Exploration LLC+@....................................................... 23,875 799,812
------------
TOTAL MEMBERSHIP INTEREST (cost $2,506,365)....................................... 971,377
------------
RIGHTS -- 0.0%
DIVERSIFIED FINANCIAL SERVICES -- 0.0%
BLB Management Services, Inc.
Expires 11/05/17+@#
(cost $250,000)................................................................... 250 0
------------
17
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2011 -- (UNAUDITED) (CONTINUED)
PRINCIPAL VALUE
INDUSTRY DESCRIPTION AMOUNT/SHARES (NOTE 2)
--------------------------------------------------------------------------------------------
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 $518,809,133)..... 509,973,286
------------
SHORT-TERM INVESTMENT SECURITIES -- 1.2%
REGISTERED INVESTMENT COMPANIES -- 1.2%
SSgA Money Market Fund
(cost $6,305,515)............................................ 6,305,515 6,305,515
------------
REPURCHASE AGREEMENTS -- 2.1%
Bank of America Securities LLC Joint Repurchase Agreement(10). $ 880,000 880,000
Barclays Capital PLC Joint Repurchase Agreement(10)........... 1,910,000 1,910,000
BNP Paribas SA Joint Repurchase Agreement(10)................. 1,910,000 1,910,000
Deutsche Bank AG Joint Repurchase Agreement(10)............... 2,065,000 2,065,000
Royal Bank Of Scotland Joint Repurchase Agreement(10)......... 1,910,000 1,910,000
UBS Securities LLC Joint Repurchase Agreement(10)............. 2,375,000 2,375,000
------------
TOTAL REPURCHASE AGREEMENTS (cost $11,050,000)................ 11,050,000
------------
TOTAL INVESTMENTS
(cost $536,164,648)(11)....................................... 100.0% 527,328,801
LIABILITIES IN EXCESS OF OTHER ASSETS........................... (0.0)% (207,118)
---------- ------------
NET ASSETS -- 100.0%............................................ 100.0% $527,121,683
========== ============
--------
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 June 30, 2011, the aggregate value of these
securities was $1,022,951, representing 0.2% 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 June 30, 2011.
(2) Based on the stated maturity, the weighted average to maturity of the
loans held in the portfolio will be approximately 59 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, 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 June 30, 2011, the Fund held the
following restricted securities:
18
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2011 -- (UNAUDITED) (CONTINUED)
VALUE AS
ACQUISITION ACQUISITION VALUE A % OF
NAME DATE SHARES COST VALUE PER SHARE NET ASSETS
---- ----------- ------ ----------- ------- --------- ----------
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
Cinram International Income Fund. Common Stock 04/11/11 12,483 8,738 8,738 0.70 0.00
NextMedia Operating, Inc. Membership Interests 06/16/10 7,916 506,366 45,485 5.75 0.01
------- ----
$54,223 0.01%
======= ====
(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 June 30, 2011 (see Note 2):
LEVEL 1--UNADJUSTED LEVEL 2--OTHER LEVEL 3--SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
------------------- ----------------- -------------------- -----------
ASSETS:
Long-Term Investment Securities:
Loans:
Aerospace & Defense.......................... $-- $ 6,040,528 $ 3,241,137 $ 9,281,665
Airlines..................................... -- 5,423,657 -- 5,423,657
Auto Components.............................. -- 13,359,316 5,973,948 19,333,264
Automobiles.................................. -- 3,803,688 -- 3,803,688
Biotechnology................................ -- 2,549,787 -- 2,549,787
Building Products............................ -- 2,484,727 2,497,694 4,982,421
Capital Markets.............................. -- 12,956,397 676,790 13,633,187
Chemicals.................................... -- 17,500,656 1,246,156 18,746,812
Commercial Services & Supplies............... -- 11,816,171 10,415,495 22,231,666
Communications Equipment..................... -- 9,152,774 -- 9,152,774
Consumer Finance............................. -- -- 5,036,771 5,036,771
Containers & Packaging....................... -- 8,264,762 3,512,196 11,776,958
Distributors................................. -- 2,750,332 -- 2,750,332
Diversified Consumer Services................ -- -- 2,832,915 2,832,915
Diversified Financial Services............... -- 18,585,839 1,949,119 20,534,958
Diversified Telecommunication Services....... -- 5,985,216 2,599,935 8,585,151
Electric Utilities........................... -- 541,741 -- 541,741
Energy Equipment & Services.................. -- 5,363,074 2,845,064 8,208,138
Food & Staples Retailing..................... -- 6,114,661 4,840,151 10,954,812
Food Products................................ -- 12,817,818 275,370 13,093,188
Health Care Equipment & Supplies............. -- 7,512,188 -- 7,512,188
Health Care Providers & Services............. -- 23,594,160 13,016,177 36,610,337
Health Care Technology....................... -- 4,617,317 -- 4,617,317
Hotels, Restaurants & Leisure................ -- 36,152,481 4,570,119 40,722,600
Household Products........................... -- 2,863,468 2,472,648 5,336,116
Industrial Conglomerates..................... -- 4,699,553 5,026,849 9,726,402
Industrial Power Producers & Energy Traders.. -- 4,223,910 2,187,711 6,411,621
Insurance.................................... -- 6,632,655 3,201,037 9,833,692
Internet & Catalog Retail.................... -- 3,675,939 1,984,901 5,660,840
Internet Software & Services................. -- 1,156,793 -- 1,156,793
IT Services.................................. -- 13,951,463 4,886,250 18,837,713
Leisure Equipment & Products................. -- -- 3,447,294 3,447,294
Machinery.................................... -- 1,474,178 940,452 2,414,630
Marine....................................... -- 1,061,930 678,564 1,740,494
Media........................................ -- 41,083,624 6,587,462 47,671,086
Metals & Mining.............................. -- 2,920,884 1,238,289 4,159,173
Multi Utilities.............................. -- 5,610,557 -- 5,610,557
Multiline Retail............................. -- 6,146,539 835,956 6,982,495
Oil, Gas & Consumable Fuels.................. -- 2,914,538 1,355,288 4,269,826
Paper & Forest Products...................... -- -- 440,000 440,000
Personal Products............................ -- 5,388,518 -- 5,388,518
19
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2011 -- (UNAUDITED) (CONTINUED)
LEVEL 1--UNADJUSTED LEVEL 2--OTHER LEVEL 3--SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
------------------- ----------------- -------------------- ------------
Pharmaceuticals........................... $ -- $ 4,517,905 $ 804,855 $ 5,322,760
Professional Services..................... -- 3,543,338 1,912,892 5,456,230
Real Estate Management & Development...... -- 1,676,718 -- 1,676,718
Road & Rail............................... -- 2,030,413 1,645,349 3,675,762
Semiconductors & Semiconductor Equipment.. -- 10,347,558 -- 10,347,558
Software.................................. -- 12,138,001 9,609,456 21,747,457
Specialty Retail.......................... -- 14,793,372 1,132,067 15,925,439
Textiles, Apparel & Luxury Goods.......... -- 876,163 -- 876,163
Transportation Infrastructure............. -- 1,234,079 -- 1,234,079
Wireless Telecommunication Services....... -- 12,098,802 -- 12,098,802
Convertible Bonds & Notes................. -- -- 42,836 42,836
Common Stock.............................. 7,351,811 -- 1,242,717 8,594,528
Membership Interest....................... -- -- 971,377 971,377
Rights.................................... -- -- 0 0
Warrants.................................. -- -- 0 0
Short-Term Investments:
Registered Investment Companies........... -- 6,305,515 -- 6,305,515
Repurchase Agreements...................... -- 11,050,000 -- 11,050,000
---------- ------------ ------------ ------------
TOTAL........................................ $7,351,811 $401,803,703 $118,173,287 $527,328,801
========== ============ ============ ============
The following is a reconciliation of Level 3 assets for which significant
unobservable inputs were used to determine fair value:
CONVERTIBLE BONDS COMMON MEMBERSHIP
LOANS & NOTES STOCK INTEREST RIGHTS WARRANTS TOTAL
------------ ----------------- ---------- ---------- ------ -------- ------------
Balance as of 12/31/2010............. $111,082,728 $ 0 $1,217,271 $452,483 $ 0 $ 0 $112,752,482
Accrued discounts.................... 265,528 -- -- -- -- -- 265,528
Accrued premiums..................... (1,069) -- -- -- -- -- (1,069)
Realized gain........................ 879,384 -- -- -- -- -- 879,384
Realized loss........................ (8,407) -- -- -- -- -- (8,407)
Change in unrealized appreciation(1). 2,433,703 40,394 16,708 552,110 -- -- 3,042,915
Change in unrealized depreciation(1). (2,178,738) -- -- (33,216) -- -- (2,211,954)
Purchases............................ 35,595,867 2,442 8,738 -- -- -- 35,607,047
Sales................................ (32,231,877) -- -- -- -- -- (32,231,877)
Transfers into Level 3(2)............ 17,943,761 -- -- -- -- -- 17,943,761
Transfers out of Level 3(2).......... (17,864,523) -- -- -- -- -- (17,864,523)
------------ ------- ---------- -------- --- --- ------------
Balance as of 6/30/2011.............. $115,916,357 $42,836 $1,242,717 $971,377 $ 0 $ 0 $118,173,287
============ ======= ========== ======== === === ============
--------
(1)The total change in unrealized appreciation (depreciation) attributable to
level 3 investments still held at June 30, 2011 includes:
CONVERTIBLE BONDS COMMON MEMBERSHIP
LOANS & NOTES STOCK INTEREST RIGHTS WARRANTS
---------- ----------------- ------- ---------- ------ --------
$1,463,047 $40,394 $16,708 $518,894 $-- $--
========== ======= ======= ======== === ===
(2)The Fund's policy is to recognize transfers in and transfers out as of the
end of the reporting period.
See Notes to Financial Statements
20
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2011 -- (UNAUDITED)
Note 1. Organization of the Fund
SunAmerica Senior Floating Rate Fund, Inc. (the "Fund") is an open-end,
non-diversified management investment company. The Fund was organized as a
Maryland corporation in 1998 and is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"). The Fund is managed by SunAmerica
Asset Management Corp. (the "Adviser" or "SunAmerica"), an indirect
wholly-owned subsidiary of American International Group, Inc. ("AIG"). The
Fund's investment goal and principal investment techniques are to provide as
high a level of current income as is consistent with the preservation of
capital by investing, under normal market conditions, at least 80% of its
net assets, plus any borrowings for investment purposes, in senior secured
floating rate loans and other institutionally traded secured floating rate
debt obligations. The Fund may also purchase both investment grade and high
yield fixed income securities and money market instruments, although the
Fund may not invest more than 10% of its total assets in high yield fixed
income securities.
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
21
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2011 -- (UNAUDITED)
(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 60th day, are amortized to
maturity based on the value determined on the 61st day.
Securities for which market quotations are not readily available or if a
development/significant event occurs that may significantly impact the value
of the security, then these securities are fair valued, as determined
pursuant to procedures adopted in good faith by the Board. There is no
single standard for making fair value determinations, which may result in
prices that vary from those of other funds.
The 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.
22
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2011 -- (UNAUDITED)
(CONTINUED)
The summary of the inputs used to value the Fund's net assets as of June 30,
2011 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 June 30, 2011, the Fund held an undivided interest in a joint
repurchase agreement with Bank of America Securities LLC:
PERCENTAGE
OWNERSHIP PRINCIPAL AMOUNT
- ---------- ----------------
Senior Floating Rate Fund..... 2.59% $880,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Bank of America Securities LLC, dated June 30, 2011, bearing interest at a
rate of 0.00% per annum, with a principal amount of $33,975,000, a
repurchase price of $33,975,001, and a maturity date of July 1, 2011. The
repurchase agreement is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT MARKET VALUE
------------------ -------- -------- ---------------- ------------
U.S. Treasury Notes........... 1.50% 12/31/13 $33,429,000 $34,199,434
U.S. Treasury Notes........... 4.25% 08/15/13 509,000 557,867
As of June 30, 2011, the Fund held an undivided interest in a joint
repurchase agreement with Barclays Capital PLC:
PERCENTAGE
OWNERSHIP PRINCIPAL AMOUNT
---------- ----------------
Senior Floating Rate Fund......................... 2.58% $1,910,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Barclays Capital PLC, dated June 30, 2011, bearing interest at a rate of
0.01% per annum, with a principal amount of $73,910,000, a repurchase price
of $73,910,021, and a maturity date of July 1, 2011. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT MARKET VALUE
------------------ -------- -------- ---------------- ------------
U.S. Treasury Notes........... 1.75% 04/15/13 $73,500,000 $75,547,168
As of June 30, 2011, the Fund held an undivided interest in a joint
repurchase agreement with BNP Paribas SA:
PERCENTAGE
OWNERSHIP PRINCIPAL AMOUNT
---------- ----------------
Senior Floating Rate Fund..... 2.58% $1,910,000
23
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2011 -- (UNAUDITED)
(CONTINUED)
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
BNP Paribas SA, dated June 30, 2011, bearing interest at a rate of 0.01% per
annum, with a principal amount of $73,910,000, a repurchase price of
$73,910,010, and a maturity date of July 1, 2011. The repurchase agreement
is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT MARKET VALUE
------------------ -------- -------- ---------------- ------------
U.S. Treasury Bonds............................... 4.50% 02/15/36 $71,800,300 $75,877,248
As of June 30, 2011, the Fund held an undivided interest in a joint
repurchase agreement with Deutsche Bank AG:
PERCENTAGE
OWNERSHIP PRINCIPAL AMOUNT
---------- ----------------
Senior Floating Rate Fund......................... 2.58% $2,065,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Deutsche Bank AG, dated June 30, 2011, bearing interest at a rate of 0.01%
per annum, with a principal amount of $79,895,000, a repurchase price of
$79,895,011, and a maturity date of July 1, 2011. The repurchase agreement
is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT MARKET VALUE
------------------ -------- -------- ---------------- ------------
U.S. Treasury Notes............................... 1.25% 09/30/15 $81,600,000 $81,655,982
As of June 30, 2011, the Fund held an undivided interest in a joint
repurchase agreement with Royal Bank of Scotland:
PERCENTAGE
OWNERSHIP PRINCIPAL AMOUNT
---------- ----------------
Senior Floating Rate Fund......................... 2.58% $1,910,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Royal Bank of Scotland, dated June 30, 2011, bearing interest at a rate of
0.01% per annum, with a principal amount of $73,910,000, a repurchase price
of $73,910,010, and a maturity date of July 1, 2011. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT MARKET VALUE
------------------ -------- -------- ---------------- ------------
U.S. Treasury Notes........... 0.75% 08/15/13 $74,856,000 $75,539,068
As of June 30, 2011, the Fund held an undivided interest in a joint
repurchase agreement with UBS Securities LLC:
PERCENTAGE
OWNERSHIP PRINCIPAL AMOUNT
---------- ----------------
Senior Floating Rate Fund..... 2.58% $2,375,000
24
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2011 -- (UNAUDITED)
(CONTINUED)
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
UBS Securities LLC, dated June 30, 2011, bearing interest at a rate of 0.01%
per annum, with a principal amount of $91,895,000, a repurchase price of
$91,895,026 and a maturity date of July 1, 2011. The repurchase agreement is
collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT MARKET VALUE
------------------ -------- -------- ---------------- ------------
U.S. Treasury Notes........... 1.25% 10/31/15 $94,126,600 $93,924,535
SECURITIES TRANSACTIONS, INVESTMENT INCOME, EXPENSES, DIVIDENDS AND
DISTRIBUTIONS TO SHAREHOLDERS: Security transactions are recorded on a trade
date basis. Realized gains and losses on sales of investments are calculated
on the identified cost basis. Interest income is accrued daily from
settlement date except when collection is not expected. Dividend income is
recorded on the ex-dividend date. For financial statement purposes, the Fund
amortizes all premiums and accretes all discounts. Facility fees received,
which were $1,570,309 for the six months ended June 30, 2011, are accreted
to income over the life of the Loans. Other income, including amendment
fees, commitment fees, letter of credit fees, etc., which were $1,364,198
for the six months ended June 30, 2011, 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 June 30, 2011.
25
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2011 -- (UNAUDITED)
(CONTINUED)
Note 3. Capital Share Transactions
The Fund has 1,000,000,000 of $.01 par value shares authorized that may be
issued in two different classes. Transactions in shares of each class were
as follows:
FOR THE
SIX MONTHS ENDED FOR THE
JUNE 30, 2011 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2010
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS A ----------- ------------- ----------- ------------
Shares sold................. 16,205,870 $ 135,608,399 27,777,461 $225,844,201
Reinvested distributions.... 455,483 3,811,439 656,689 5,340,187
Shares redeemed............. (12,279,563) (102,719,328) (10,875,323) (88,357,357)
----------- ------------- ----------- ------------
Net increase (decrease).. 4,381,790 $ 36,700,510 17,558,827 $142,827,031
=========== ============= =========== ============
FOR THE
SIX MONTHS ENDED FOR THE
JUNE 30, 2011 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2010
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS C ----------- ------------- ----------- ------------
Shares sold................. 7,680,592 $ 64,221,172 10,408,539 $ 84,640,136
Reinvested distributions.... 269,856 2,254,999 439,751 3,572,201
Shares redeemed............. (2,708,593) (22,629,054) (4,319,972) (34,989,989)
----------- ------------- ----------- ------------
Net increase (decrease).. 5,241,855 $ 43,847,117 6,528,318 $ 53,222,348
=========== ============= =========== ============
Note 4. Purchases and Sales of Securities
During the six months ended June 30, 2011, the Fund's cost of purchases and
proceeds from sale of long-term investments, including loan principal
paydowns were $229,843,927 and $138,317,082, 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.
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
six months ended June 30, 2011, the Fund incurred administration fees in the
amount of $511,849.
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
26
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2011 -- (UNAUDITED)
(CONTINUED)
(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 six months ended June 30, 2011,
SACS received fees (see Statement of Operations) based upon the
aforementioned rates. For the six months ended June 30, 2011 SACS received
sales charges on Class A shares of $330,765, of which $55,132 was reallowed
to affiliated broker-dealers and $209,695 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 six months ended June 30, 2011, SACS received early
withdrawal charges of $26,340.
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 six months ended June 30, 2011, the Fund incurred the following
expenses, which are included in the transfer agent fees and expenses payable
on the Statement of Assets and Liabilities and in transfer agent fees and
expenses in the Statement of Operations to compensate SAFS pursuant to the
terms of the Service Agreement.
PAYABLE AT
EXPENSE JUNE 30, 2011
-------- -------------
Class A....................... $322,333 $53,536
Class C....................... 240,701 42,476
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 six months ended June 30, 2011, SunAmerica waived fees
and reimbursed expenses as follows: Class A $472,440 and Class C $462,579.
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.
27
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2011 -- (UNAUDITED)
(CONTINUED)
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
------------------------------------------------------------- -------------------------------------
LONG-TERM
ORDINARY LONG-TERM GAINS/CAPITAL AND UNREALIZED APPRECIATION/ ORDINARY CAPITAL
INCOME OTHER LOSSES (DEPRECIATION) INCOME GAINS
-------- --------------------------- ------------------------ ------------ ---------
$6,440 $(51,761,161) $(7,884,070) $14,854,722 $ --
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.
Unrealized appreciation and depreciation in the value of investments at June
30, 2011 for federal income tax purposes were as follows:
Cost (tax basis).............. $536,165,769
============
Gross unrealized appreciation. $ 9,172,247
Gross unrealized depreciation. $(18,009,215)
------------
Net unrealized depreciation... $ (8,836,968)
============
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
28
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2011 -- (UNAUDITED)
(CONTINUED)
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.
Borrowings under the line of credit will commence when the respective Fund's
cash shortfall exceeds $100,000. For the six months ended June 30, 2011, the
Fund had borrowings outstanding for 4 days under the line of credit and
incurred $240 in interest charges related to these borrowings. The Fund's
average amount of debt under the line of credit for the days utilized was
$1,492,181 at a weighted average interest rate of 1.45%. At June 30, 2011,
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 six months ended June 30, 2011, the Fund did not participate in this
program.
Note 10. Investment Concentration
The Fund invests primarily in participations and assignments, or acts as a
party to the primary lending syndicate of a variable rate senior loan
interest to United States corporations, partnerships, and other entities. If
the lead lender in a typical lending syndicate becomes insolvent, enters
receivership or, if not FDIC insured, enters into bankruptcy, the Fund may
incur certain costs and delays in receiving payment, or may suffer a loss of
principal and/or interest. When the Fund purchases a participation of a
senior loan interest, the Fund typically enters into a contractual agreement
with the lender or other third party selling the participation but not with
the borrower directly. As such, the Fund 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 June 30, 2011, the Fund had the following unfunded loan commitments which
could be extended at the option of the Borrower:
MATURITY PRINCIPAL
NAME TYPE DATE AMOUNT
---- ------------ -------- ---------
NSH Merger Sub., Inc.......................... Delayed Draw 02/03/17 $544,307
Vantage Oncology, Inc......................... Delayed Draw 08/29/11 421,429
29
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF ADVISORY AGREEMENTS -- JUNE 30, 2011 -- (UNAUDITED)
The Board of Directors (the "Board" the members of which are referred to as
"Directors") of SunAmerica Senior Floating Rate Fund, Inc (the "Fund"),
including the Directors who are not "interested persons," as defined in Section
2(a)(19) of the Investment Company Act of 1940, as amended (the "1940 Act"), of
the Fund, or SunAmerica Asset Management Corp. ("SunAmerica") (the
"Disinterested Directors"), approved the continuation of the Investment
Advisory and Management Agreement between the Fund and SunAmerica (the
"Advisory Agreement") for a one-year period ending June 30, 2012 at an
in-person meeting held on June 14, 2011. At the Meeting, the Board also
approved the continuation of the Subadvisory Agreement between SunAmerica and
Wellington Management Company, LLP ("Wellington") with respect to the Fund.
In accordance with Section 15(c) of the 1940 Act, the Board requested and
SunAmerica and Wellington provided materials relating to the Board's
consideration of whether to approve the continuation of the Advisory Agreement.
These materials included (a) a summary of the services provided to the Fund by
SunAmerica and its affiliates, and by Wellington; (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 and Wellington's risk
management process; (f) a discussion on general compliance policies and
procedures; (g) a summary of brokerage and soft dollar practices; (h)
information about the key personnel of SunAmerica and its affiliates, and
Wellington, 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
and Wellington serve 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 AND WELLINGTON
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 the
Fund's investment policies. Additionally, the Board observed that SunAmerica
provides 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
its officers and employees, if elected, to serve as officers or trustees of the
Fund without compensation. Finally, the Board noted that SunAmerica is
responsible for monitoring and reviewing the activities of affiliated and
unaffiliated third-party service providers, including Wellington. In addition
to the quality of the advisory services, the Board considered the quality of
the administrative and non-investment advisory services provided to the Fund
pursuant to the Advisory Agreement. Additionally, the Board observed that
SunAmerica performs or supervises the performance by others of other
administrative services in connection with the operation of the Fund pursuant
to the Administrative Services Agreement between SunAmerica and the Fund (the
"Administrative Services Agreement").
In connection with the services provided by SunAmerica, the Board analyzed the
structure and duties of SunAmerica's fund administration, accounting,
operations, 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
30
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF ADVISORY AGREEMENTS -- JUNE 30, 2011 -- (UNAUDITED)
(CONTINUED)
Agreement were reasonable and appropriate in relation to the management fee and
that the quality of services continues to be high. The Board also noted the
high quality of services under the Administrative Services Agreement.
The Board also considered SunAmerica's reputation and relationship with the
Fund and considered the benefit to shareholders of investing in funds that are
part of a family of funds offering a variety of types of mutual funds and
shareholder services. The Board considered SunAmerica's experience in providing
management and investment advisory and administrative services to advisory
clients and noted that as of March 31, 2011, SunAmerica managed, advised and/or
administered approximately $45.3 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 prospectuses. Additionally, the Board considered
SunAmerica's compliance and regulatory history.
The Board also considered the nature, quality and extent of services to be
provided by Wellington. The Board observed that Wellington is responsible for
providing investment management services, including investment research, advice
and supervision, and determining which securities will be purchased or sold by
the Fund, or portion thereof, that Wellington manages, subject to the oversight
and review of SunAmerica. The Board reviewed Wellington's history, structure,
size, visibility and resources, which are needed to attract and retain highly
qualified investment professionals. The Board reviewed the personnel that are
responsible for providing subadvisory services to the Fund, in addition to
current and projected staffing levels and compensation practices, and
concluded, based on its experience with Wellington, that Wellington: (i) is
able to retain high quality portfolio managers and other investment personnel;
(ii) exhibited a high level of diligence and attention to detail in carrying
out its responsibilities under the Subadvisory Agreement; and (iii) had been
responsive to requests of the Board and of SunAmerica. The Board considered
that Wellington has developed internal policies and procedures for monitoring
compliance with the investment objectives, policies and restrictions of the
Fund as set forth in the Fund's prospectus. The Board also considered
Wellington's code of ethics, compliance and regulatory history and risk
management process. The Board noted that Wellington has not experienced any
material regulatory or compliance problems nor has Wellington been involved in
any material litigation or administrative proceedings that would potentially
impact them from effectively serving as a subadviser to the Fund. The Board
concluded that the nature and extent of services to be provided by Wellington
under the Subadvisory Agreement were reasonable and appropriate in relation to
the subadvisory fees and that the quality of services continues to be high.
INVESTMENT PERFORMANCE
The Board, including the Disinterested Directors, also considered the
investment performance of SunAmerica and Wellington with respect to the Fund,
as applicable. In connection with its review, the Board received and reviewed
information regarding the investment performance of the Fund as compared to the
Fund's peer group ("Peer Group") and peer universe ("Peer Universe") as
independently determined by Lipper and to an appropriate index or combination
of indices, including the Fund's benchmarks. The Board was provided with a
description of the methodology used by Lipper to select the funds in the Peer
Group and Peer Universe. The Board also noted that it regularly reviews the
performance of the Fund throughout the year. The Board noted that, while it
monitors performance of the Fund closely, it generally attaches more importance
to performance over relatively long periods of time, typically three to five
years.
It was noted that performance information was for the periods ended March 31,
2011. The Board also noted that it regularly reviews the performance of the
Fund throughout the year.
The Board considered that the Fund's performance was below the median of its
Peer Group for the one- and three- year periods. The Board also considered that
the Fund's performance was slightly below the median of its Peer Universe for
the one-year period and above the median of its Peer Universe for the
three-year period. The Board took into account management's discussion of the
Fund's performance, including the fact that Fund ranked in the first quintile
of its Peer Group/Universe for the two-year period, and concluded that the
Fund's overall performance is satisfactory.
31
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF ADVISORY AGREEMENTS -- JUNE 30, 2011 -- (UNAUDITED)
(CONTINUED)
CONSIDERATION OF THE MANAGEMENT FEE AND THE COST OF THE SERVICES AND PROFITS TO
BE REALIZED BY SUNAMERICA, WELLINGTON AND THEIR AFFILIATES FROM THE
RELATIONSHIP WITH THE FUND
The Board, including the Disinterested Directors, received and reviewed
information regarding the fees to be paid by the Fund to SunAmerica pursuant to
the Advisory Agreement and the fees paid by SunAmerica to Wellington pursuant
to the Subadvisory Agreement. The Board examined this information in order to
determine the reasonableness of the fees in light of the nature and quality of
services to be provided and any potential additional benefits to be received by
SunAmerica, Wellington or their affiliates in connection with providing such
services to the Fund.
To assist in analyzing the reasonableness of the management fee for the Fund,
the Board received reports independently prepared by Lipper. The reports showed
comparative fee information for the Fund's Peer Group and Peer Universe 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 further considered that,
unlike the funds in the Peer Group and Peer Universe, the fee waivers and/or
reimbursements being made by SunAmerica with respect to the Funds are only
reflected in the total expenses category of the Lipper reports, rather than
also being reflected as specific management fee waivers in the actual
management fees category of the Lipper reports. As a result, the Board took
into account that the actual management fees presented by Lipper for the funds
in the Peer Group and Peer Universe may appear lower on a relative basis. The
Board then 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.
The Board considered that the Fund's actual management fees were above the
median of its Peer Group and Peer Universe. The Board also considered that the
Fund's total expenses were above the median of its Peer Group and Peer
Universe. The Board noted that the Fund's advisory fee contains breakpoints and
took into account management's discussions regarding the Fund's expenses.
The Board also received and reviewed information regarding the fees paid by
SunAmerica to Wellington pursuant to the Subadvisory Agreement. To assist in
analyzing the reasonableness of the subadvisory fees, the Board received a
report independently prepared by Lipper. The report showed comparative fee
information of each Portfolio's Peer Group and/or Peer Universe that the
Directors used as a guide to help assess the reasonableness of the subadvisory
fees. The Directors noted that the Peer Group/Universe information as a whole
was useful in assessing whether Wellington was providing services at a cost
that was competitive with other, similar funds. The Directors also considered
that the subadvisory fees are paid by SunAmerica out of its management fee and
not by the Fund, and that subadvisory fees may vary widely within a Peer Group
for various reasons, including market pricing demands, existing relationships,
experience and success, and individual client needs. The Board further
considered the amount of subadvisory fees paid out by SunAmerica and the amount
of the management fees which it retained.
The Board also considered fees received by Wellington with respect to other
mutual funds and accounts with similar investment strategies to the Fund, to
the extent applicable. The Board then noted that the subadvisory fees paid by
SunAmerica to Wellington were reasonable as compared to fees Wellington
receives for other comparable mutual funds and accounts for which they serve as
adviser or subadviser.
32
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF ADVISORY AGREEMENTS -- JUNE 30, 2011 -- (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 Services Agreement, and considered the
profitability of SunAmerica's affiliates under the Service Agreement and Rule
12b-1 Plans. Additionally, the Board considered whether SunAmerica, Wellington
and their affiliates received any indirect benefits from the relationship with
the Fund. Specifically, the Board observed that AIG Federal Savings Bank, an
affiliate of SunAmerica, serves as custodian with respect to certain
shareholder retirement accounts that are administered by SunAmerica and
receives a fee payable by the qualifying shareholders. The Board further
considered whether there were any collateral or "fall-out" benefits that
SunAmerica and its affiliates may derive as a result of their relationship with
the Fund. The Board noted that SunAmerica believes that any such benefits are
de minimis and do not impact the reasonableness of the management fees.
The Board also reviewed financial statements and/or other reports from
Wellington and considered whether Wellington had the financial resources
necessary to attract and retain high quality investment management personnel
and to provide a high quality of services.
The Board concluded that SunAmerica and Wellington had the financial resources
necessary to perform its obligations under the Advisory Agreement and
Subadvisory Agreement and to continue to provide the Fund with the high quality
services that they had provided in the past. The Board 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.
The Board did not review specific information regarding whether there have been
economies of scale with respect to Wellington's management of the Fund because
it regards that information as less relevant at the subadviser level. Rather,
the Board considered information regarding economies of scale in the context of
the renewal of the Advisory Agreement.
OTHER FACTORS
In consideration of the Advisory Agreement and Subadvisory Agreement, the Board
also received information regarding SunAmerica's and Wellington's brokerage and
soft dollar practices, to the extent applicable.
33
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF ADVISORY AGREEMENTS -- JUNE 30, 2011 -- (UNAUDITED)
(CONTINUED)
CONCLUSION
After a full and complete discussion, the Board approved the Advisory Agreement
and Subadvisory Agreement, each for a one-year period ending June 30, 2012.
Based upon its evaluation of all these factors in their totality, the Board,
including the Disinterested Directors, was satisfied that the terms of the
Advisory Agreement and Subadvisory Agreement were fair and reasonable and in
the best interests of the Fund and the Fund's shareholders. In arriving at a
decision to approve the Advisory Agreement and Subadvisory Agreement, the Board
did not identify any single factor or group of factors as all-important or
controlling, but considered all factors together. The Disinterested Directors
were also assisted by the advice of independent counsel in making this
determination.
34
[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
Richard W. Grant 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
Katherine Stoner, Chief Fund's Statement of obtain copies of the
Compliance Officer Additional Information Forms N-Q at the U.S.
Gregory N. Bressler, may be ob-tained without Securities and Exchange
Chief Legal charge upon request, by Commission's Public
Officer and Secretary calling (800) 858-8850. Refer-ence Room in
Gregory R. Kingston, This in-formation is also Washington, DC
Vice President and available from the EDGAR (information on the
Assistant Treasurer database on the U.S. operation of the Public
Nori L. Gabert, Vice Secu-rities and Exchange Reference Room may be
President and Commission's website at ob-tained by calling
Assistant Secretary http://www.sec.gov. 1-800-SEC-0330).
John E. McLean,
Assistant Secretary DELIVERY OF SHAREHOLDER PROXY VOTING RECORD ON
Kathleen Fuentes, DOCUMENTS FUND PORTFOLIO SECURITIES
Assistant Secretary The Fund has adopted a Information regarding how
Diedre L. Shepherd, policy that allows it to the Fund voted proxies
Assistant Treasurer send only one copy of the relating to securities
Matthew J. Hackethal, Fund's prospectus, proxy held in the Fund's
Anti-Money Laundering material, annual report portfolio during the most
Compliance Officer and semi-annual report recent twelve month
(the "shareholder period ended June 30 is
INVESTMENT ADVISER documents") to available, once filed
SunAmerica Asset shareholders with with the U.S. Securities
Management Corp. multiple accounts and Exchange Commis-sion,
Harborside Financial residing at the same without charge, upon
Center "household." This request, by calling
3200 Plaza 5 practice is called (800) 858-8850 or on the
Jersey City, NJ householding and reduces U.S. Securities and
07311-4992 Fund expenses, which Exchange Commission's
benefits you and other website at
DISTRIBUTOR shareholders. Unless the http://www.sec.gov.
SunAmerica Capital Fund receives
Services, Inc. instructions to the This report is submitted
Harborside Financial con-trary, you will only solely for the general
Center receive one copy of the information of
3200 Plaza 5 shareholder documents. shareholders of the Fund.
Jersey City, NJ The Fund will continue to Distribution of this
07311-4992 household the report to persons other
share-holder documents than shareholders of the
SHAREHOLDER SERVICING indefinitely, until we Fund is authorized only
AGENT are instructed otherwise. in connection with a
SunAmerica Fund If you do not wish to currently effective
Services, Inc. participate in prospectus, setting forth
Harborside Financial householding, please details of the Fund,
Center contact Shareholder which must precede or
3200 Plaza 5 Services at (800) accompany this report.
Jersey City, NJ 858-8850 ext. 6010 or
07311-4992 send a written request The accompanying report
with your name, the name has not been audited by
TRANSFER AGENT of your fund(s) and your independent accountants
State Street Bank and account number(s) to and accordingly no
Trust Company SunAmerica Mutual Funds opinion has been
P.O. Box 219373 c/o BFDS, P.O. Box expressed thereon.
Kansas City, MO 64141 219186, Kansas City MO,
64121-9186. We will
resume individual
mailings for your account
within thirty (30) days
of receipt of your
request.
35
[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
SFSAN - 6/11
[LOGO]
Sun America
Mutual Funds
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board of Directors that were
implemented after the registrant last provided disclosure in response to
the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407)
(as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a-101), or this
Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures (as defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270.30a-3(c))). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940 (17 CFR 270.30a-3(d))) that occurred during the
registrant's last fiscal quarter of the period covered by this report
that has materially affected, or is reasonably likely to materially
affect, the registrant's internal contro1 over financial reporting.
Item 12. Exhibits.
(a) (1) Not applicable.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Senior Floating Rate Fund, Inc.
By: /s/ John T. Genoy
------------------------------------
John T. Genoy
President
Date: September 6, 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: September 6, 2011
By: /s/ Donna M. Handel
------------------------------------
Donna M. Handel
Treasurer
Date: September 6, 2011