================================================================================
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, 2012
================================================================================
Item 1. Reports to Stockholders
[GRAPHIC]
SEMI-ANNUAL REPORT 2012
SUNAMERICA
Senior Floating Rate Fund
[LOGO]
JUNE 30, 2012 SEMI-ANNUAL REPORT
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
SUNAMERICA SENIOR FLOATING RATE FUND (SASFX)
TABLE OF CONTENTS
SHAREHOLDERS' LETTER............................... 2
EXPENSE EXAMPLE.................................... 4
STATEMENT OF ASSETS AND LIABILITIES................ 6
STATEMENT OF OPERATIONS............................ 7
STATEMENT OF CHANGES IN NET ASSETS................. 8
STATEMENT OF CASH FLOWS............................ 9
FINANCIAL HIGHLIGHTS............................... 10
PORTFOLIO OF INVESTMENTS........................... 12
NOTES TO FINANCIAL STATEMENTS...................... 23
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT
AGREEMENT.......................................... 32
JUNE 30, 2012 SEMI-ANNUAL REPORT
SHAREHOLDERS' LETTER -- (unaudited)
Dear Shareholders,
We are pleased to present this semi-annual report for the SunAmerica Senior
Floating Rate Fund, Inc. (the "Fund") for the six months ended June 30, 2012.
The semi-annual period proved to be a challenging one for many investors.
Indeed, almost all areas of the global financial markets experienced a broad
"risk on/risk off" trading pattern, wherein investors vacillated en masse
between sharply optimistic or pessimistic views toward the financial markets.
By the end of June 2012, however, the more bullish views toward the financial
markets had dominated, such that floating rate loans, as represented by the
S&P/LSTA Leveraged Loan Index ("LLI")/1/, returned 4.54% during the semi-annual
period. The LLI outperformed the broad U.S. fixed income market, as measured by
the Barclays U.S. Aggregate Bond Index/2/, which returned 2.37% for the same
period ended June 30, 2012.
During the first quarter of 2012, the floating rate loan market fared
especially well, with credit fundamentals for this market segment strong. At
the end of March 2012, the default rate within this asset class, whether
examined by principal amount or by issuer count, remained at historical lows
(0.21% and 0.61%, respectively). Only $40 billion was scheduled to mature
through 2013 as of February 29, 2012, supporting the potential for continued
low default rates. On the other hand, technicals, or supply/demand factors,
were challenging. Bank-loan mutual funds reported net outflows of $254 million
during the first quarter, following net outflows of $7.7 billion over the final
22 weeks of 2011. With the Federal Reserve Board (the "Fed") vowing to keep
interest rates low through 2014, the floating-rate feature of bank loans had
seemingly lost its near-term appeal. One silver lining to the technical picture
was that the market for collateralized loan obligations ("CLOs"), one of the
main sources of demand for banks loans, appeared to be reviving. In terms of
quality, B-rated loans outperformed both higher-rated (BB) and lower-rated
(CCC) loans.
The floating rate loan market generated more modest yet still positive returns
during the second quarter of 2012. The asset class continued to benefit from
strong credit fundamentals, as issuers' balance sheets improved. The bank loan
default rate by principal amount and by issuer count remained near historical
lows (1.04% and 1.08%, respectively). Less than $20 billion was scheduled to
mature through 2013, supporting continued low defaults. The technical picture
improved compared to the prior quarter. Bank loan mutual funds reported net
inflows of $1.95 billion for the second quarter. Moreover, the market for CLOs
revived. By quality rating, loans rated CCC outperformed higher-rated B-rated
and BB-rated loans during the second quarter. Still, bank loan valuations at
the end of June 2012 appeared to reflect investor hesitation toward holding
riskier assets.
On the following pages, you will find detailed financial statements and
portfolio information for the Fund for the semi-annual period ended June 30,
2012.
As always, we remain diligent in the management of your assets. If you have any
questions, or require additional information on this or other SunAmerica Mutual
Funds, we invite you to visit www.safunds.com or call the Shareholder Services
Department at 800-858-8850. We value your ongoing confidence in us and look
forward to serving your investment needs in the future.
2
SHAREHOLDERS' LETTER -- (unaudited) (continued)
Sincerely,
THE SUNAMERICA SENIOR FLOATING RATE FUND PORTFOLIO MANAGER
Jeffrey W. Heuer
Wellington Management
--------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
/1/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.
/2/The BARCLAYS U.S. AGGREGATE BOND INDEX represents securities that are U.S.
domestic, taxable and dollar denominated. The index covers components for
government and corporate securities, mortgage pass-through securities and
asset-backed securities.
Indices are not managed and an investor cannot invest directly into an index.
The Fund is not a money market fund and its net asset value may fluctuate.
Investments in loans involve certain risks including nonpayment of principal
and interest; collateral impairment; non-diversification and borrower industry
concentration; and lack of an active trading market, in certain cases, which
may impair the Fund's ability to obtain full value for loans sold. The Fund may
invest all or substantially all of its assets in loans or other securities that
are rated below investment grade, or in comparable unrated securities. Credit
risks include the possibility of a default on the loan or bankruptcy of the
borrower. The value of these loans is subject to a greater degree of volatility
in response to interest rate fluctuations.
3
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
EXPENSE EXAMPLE -- JUNE 30, 2012 -- (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, 2012 and
held until June 30, 2012.
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, 2012" 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, 2012" 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, 2012" 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, 2012" 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, 2012" 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, 2012" 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, 2012" 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.
4
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
EXPENSE EXAMPLE -- JUNE 30, 2012 -- (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, 2012 JUNE 30, 2012 JUNE 30, 2012* AT JANUARY 1, 2012 JUNE 30, 2012
------------------ ------------- ---------------- ------------------ -----------------
Senior Floating Rate Fund#
Class A................. $1,000.00 $1,039.22 $7.35 $1,000.00 $1,017.65
Class C................. $1,000.00 $1,037.74 $8.87 $1,000.00 $1,016.16
-----------------
EXPENSE
EXPENSES PAID RATIO
DURING THE AS OF
SIX MONTHS ENDED JUNE 30,
JUNE 30, 2012* 2012*
---------------- --------
Senior Floating Rate Fund#
Class A................. $7.27 1.45%
Class C................. $8.77 1.75%
--------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 182 days divided by 366
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, 2012" and the "Expense Ratios" would have been higher.
5
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES -- JUNE 30, 2012 -- (UNAUDITED)
ASSETS:
Investments at value (unaffiliated)*............................... $331,033,565
Repurchase agreements (cost approximates value).................... 1,705,000
------------
Total investments................................................ 332,738,565
Receivable for:
Fund shares sold................................................. 998,814
Dividends and interest........................................... 2,004,265
Investments sold................................................. 7,621,318
Prepaid expenses and other assets.................................. 5,805
Due from investment adviser for expense reimbursements/fee waivers. 102,012
------------
Total assets..................................................... 343,470,779
------------
LIABILITIES:
Payable for:
Fund shares redeemed............................................. 1,043,110
Investments purchased............................................ 13,579,111
Investment advisory and management fees.......................... 226,239
Distribution and service maintenance fees........................ 156,564
Administration fees.............................................. 53,233
Transfer agent fees and expenses................................. 65,137
Directors' fees and expenses..................................... 7,770
Other accrued expenses........................................... 231,458
Dividends payable.................................................. 372,983
Commitments (Note 11).............................................. --
------------
Total liabilities................................................ 15,735,605
------------
Net Assets...................................................... $327,735,174
============
NET ASSETS REPRESENTED BY:
Common stock, $.01 par value....................................... $ 405,353
Additional paid-in capital......................................... 397,578,718
------------
397,984,071
Accumulated undistributed net investment income (loss)............. (232,631)
Accumulated undistributed net realized gain (loss) on investments.. (59,632,196)
Unrealized appreciation (depreciation) on investments.............. (10,384,070)
------------
Net Assets...................................................... $327,735,174
============
CLASS A:
Net assets......................................................... $133,709,488
Shares outstanding................................................. 16,530,955
Net asset value and redemption price per share..................... $ 8.09
Maximum sales charge (3.75% of offering price)..................... 0.32
------------
Maximum offering price to public................................... $ 8.41
============
CLASS C:
Net assets......................................................... $194,025,686
Shares outstanding................................................. 24,004,358
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charges)...... $ 8.08
============
*COST
Investment securities (unaffiliated)............................. $341,417,635
============
See Notes to Financial Statements
6
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF OPERATIONS -- FOR THE SIX MONTHS ENDED JUNE 30, 2012 --
(UNAUDITED)
INVESTMENT INCOME:
Interest (unaffiliated)........................................................... $ 9,173,298
Dividends (unaffiliated).......................................................... 890
Facility and other fee income (Note 2)............................................ 1,103,975
-----------
Total investment income........................................................ 10,278,163
-----------
EXPENSES:
Investment advisory and management fees........................................... 1,496,299
Administration fees............................................................... 352,070
Distribution and service maintenance fees:
Class A......................................................................... 272,551
Class C......................................................................... 736,227
Transfer agent fees and expenses:
Class A......................................................................... 177,185
Class C......................................................................... 222,222
Registration fees:
Class A......................................................................... 9,119
Class C......................................................................... 5,118
Accounting service fees........................................................... 29,826
Custodian and accounting fees..................................................... 56,154
Reports to shareholders........................................................... 46,256
Audit and tax fees................................................................ 49,783
Legal fees........................................................................ 3,190
Directors' fees and expenses...................................................... 31,030
Interest expense.................................................................. 1,329
Other expenses.................................................................... 57,412
-----------
Total expenses before fee waivers, expense reimbursements and custody credits.. 3,545,771
Fees waived and expenses reimbursed by investment adviser (Note 5)............. (698,760)
Custody credits earned on cash balances........................................ (10)
-----------
Net expenses................................................................... 2,847,001
-----------
Net investment income (loss)...................................................... 7,431,162
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments (unaffiliated)............................ (2,646,499)
Change in unrealized appreciation (depreciation) on investments (unaffiliated).... 8,782,496
-----------
Net realized and unrealized gain (loss) on investments............................ 6,135,997
-----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $13,567,159
===========
See Notes to Financial Statements
7
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE
SIX MONTHS
ENDED FOR THE YEAR
JUNE 30, ENDED
2012 DECEMBER 31,
(UNAUDITED) 2011
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss)......................................... $ 7,431,162 $ 19,197,704
Net realized gain (loss) on investments (unaffiliated)............... (2,646,499) (10,179,559)
Net unrealized gain (loss) on investments (unaffiliated)............. 8,782,496 (11,283,617)
------------ ------------
Increase (decrease) in net assets resulting from operations........... 13,567,159 (2,265,472)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)...................................... (3,513,605) (10,260,446)
Net investment income (Class C)...................................... (4,141,785) (8,385,337)
------------ ------------
Total distributions to shareholders................................... (7,655,390) (18,645,783)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS (NOTE 3)................................................ (37,903,900) (65,226,604)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS............................... (31,992,131) (86,137,859)
NET ASSETS:
Beginning of period................................................... 359,727,305 445,865,164
------------ ------------
End of period+........................................................ $327,735,174 $359,727,305
============ ============
+Includes accumulated undistributed net investment income (loss)...... $ (232,631) $ (8,403)
============ ============
See Notes to Financial Statements
8
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF CASH FLOWS -- FOR THE SIX MONTHS ENDED JUNE 30, 2012 --
(UNAUDITED)
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets from operations.................................................................... $ 13,567,159
ADJUSTMENTS TO RECONCILE NET INCREASE IN NET ASSETS FROM OPERATIONS TO NET CASH USED IN OPERATING ACTIVITIES:
Purchase of loans/securities................................................................................ (89,084,383)
Proceeds from loans/securities sold......................................................................... 77,895,360
Loan principal paydowns..................................................................................... 49,231,990
Net purchases of short-term securities...................................................................... (4,436,256)
Accretion of facility fee income............................................................................ (739,876)
Decrease in receivable for dividends and interest........................................................... 162,211
Increase in receivable for investments sold................................................................. (523,083)
Increase in amount due from investment adviser for expense reimbursements/fee waivers....................... (21,402)
Decrease in prepaid expenses and other assets............................................................... 356
Increase in payable for investments purchased............................................................... 5,603,833
Decrease in payable for investment advisory and management fees............................................. (35,816)
Decrease in payable for distribution and service maintenance fees........................................... (21,482)
Decrease in payable for administration fees................................................................. (8,427)
Decrease in other accrued expenses.......................................................................... (65,686)
Unrealized appreciation on investments...................................................................... (8,782,496)
Net realized loss from investments.......................................................................... 2,646,499
------------
Net cash provided by operating activities..................................................................... $ 45,388,501
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shares sold..................................................................................... 55,615,463
Payment on shares redeemed.................................................................................... (97,866,336)
Cash dividends paid........................................................................................... (3,139,867)
------------
Net cash used in financing activities......................................................................... $(45,390,740)
------------
Net decrease in cash.......................................................................................... (2,239)
Cash balance at beginning of period........................................................................... 2,239
------------
Cash balance at end of period................................................................................. $ 0
============
Supplemental disclosure of cash flow information:
Noncash financing activities not included herein consist of reinvestment of
dividends and distributions of $ 4,515,662.
See Notes to Financial Statements
9
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
-------
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
12/31/11 8.27 0.36 (0.33) 0.03 (0.34) -- (0.34) 7.96 0.36 160,949 1.45
06/30/12(5) 7.96 0.18 0.13 0.31 (0.18) -- (0.18) 8.09 3.92 133,709 1.45(4)
CLASS C
-------
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
12/31/11 8.26 0.33 (0.32) 0.01 (0.32) -- (0.32) 7.95 0.06 198,778 1.75
06/30/12(5) 7.95 0.17 0.13 0.30 (0.17) -- (0.17) 8.08 3.77 194,026 1.75(4)
RATIO OF
NET
INVESTMENT
INCOME TO
PERIOD AVERAGE PORTFOLIO
ENDED NET ASSETS(3) TURNOVER
----------- ------------- ---------
12/31/07 6.58% 91%
12/31/08 6.05 32
12/31/09 4.94 74
12/31/10 4.34 41
12/31/11 4.27 63
06/30/12(5) 4.38(4) 26
12/31/07 6.24% 91%
12/31/08 5.89 32
12/31/09 4.88 74
12/31/10 4.03 41
12/31/11 4.02 63
06/30/12(5) 4.09(4) 26
--------
(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):
12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 06/30/12(4)(5)
-------- -------- -------- -------- -------- --------------
Class A. 0.59% 0.65% 0.55% 0.38% 0.33% 0.35%
Class C. 0.65 0.73 0.66 0.48 0.44 0.44
(4)Annualized
(5)Unaudited
See Notes to Financial Statements
10
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO PROFILE -- JUNE 30, 2012 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Media....................................................... 8.8%
Hotels, Restaurants & Leisure............................... 6.4
IT Services................................................. 4.4
Health Care Providers & Services............................ 4.3
Registered Investment Companies............................. 4.1
Pharmaceuticals............................................. 4.0
Chemicals................................................... 3.7
Auto Components............................................. 3.7
Food & Staples Retailing.................................... 3.2
Commercial Services & Supplies.............................. 3.1
Semiconductors & Semiconductor Equipment.................... 3.1
Diversified Financial Services.............................. 2.9
Oil, Gas & Consumable Fuels................................. 2.8
Software.................................................... 2.5
Wireless Telecommunication Services......................... 2.5
Communications Equipment.................................... 2.2
Diversified Telecommunication Services...................... 2.0
Industrial Conglomerates.................................... 2.0
Capital Markets............................................. 1.8
Road & Rail................................................. 1.7
Insurance................................................... 1.7
Aerospace & Defense......................................... 1.7
Specialty Retail............................................ 1.6
Food Products............................................... 1.6
Containers & Packaging...................................... 1.6
Machinery................................................... 1.5
Industrial Power Producers & Energy Traders................. 1.5
Household Products.......................................... 1.4
Internet Software & Services................................ 1.3
Health Care Equipment & Supplies............................ 1.3
Metals & Mining............................................. 1.2
Multi Utilities............................................. 1.1
Health Care Technology...................................... 1.1
Energy Equipment & Services................................. 1.0
Electronic Equipment, Instruments & Components.............. 1.0
Airlines.................................................... 1.0
Automobiles................................................. 0.9
Leisure Equipment & Products................................ 0.9
Gas Utilities............................................... 0.8
Multiline Retail............................................ 0.8
Personal Products........................................... 0.8
Household Durables.......................................... 0.7
Diversified Consumer Services............................... 0.7
Thrifts & Mortgage Finance.................................. 0.6
Consumer Finance............................................ 0.6
Real Estate Management & Development........................ 0.5
Repurchase Agreements....................................... 0.5
Marine...................................................... 0.5
Life Sciences Tools & Services.............................. 0.5
Professional Services....................................... 0.5
Transportation Infrastructure............................... 0.4
Building Products........................................... 0.4
Paper & Forest Products..................................... 0.3
Electrical Equipment........................................ 0.2
Internet & Catalog Retail................................... 0.1
-----
101.5%
=====
CREDIT QUALITY+#
BBB-........................................................ 2.1%
BB+......................................................... 5.1
BB.......................................................... 10.7
BB-......................................................... 23.6
B+.......................................................... 25.0
B........................................................... 18.2
B-.......................................................... 5.6
CCC+........................................................ 1.2
CCC......................................................... 1.9
Not Rated@ ................................................. 6.6
-----
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.
11
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2012 -- (UNAUDITED)
RATINGS/(1)/
(UNAUDITED)
-----------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
-------------------------------------------------------------------------------------------------------
LOANS(3)(4) -- 95.0%
AEROSPACE & DEFENSE -- 1.7%
DigitalGlobe, Inc................ BTL-B Ba3 BB+ 5.75% 10/12/2018 $1,243,750 $ 1,230,994
Transdigm Group, Inc............. BTL-B Ba2 BB- 4.00 02/14/2017 1,989,899 1,991,556
Transdigm Group, Inc............. BTL-B2 Ba2 BB- 4.00 02/14/2017 666,650 664,982
Wyle Laboratories, Inc........... BTL-B B1 BB 5.00 03/26/2017 1,359,111 1,345,519
-----------
5,233,051
-----------
AIRLINES -- 1.0%
Delta Air Lines, Inc............. BTL Ba2 BB- 5.50 04/20/2017 1,824,019 1,821,169
United Airlines, Inc............. Tranche B Ba3 BB- 2.25 02/01/2014 1,094,444 1,063,321
-----------
2,884,490
-----------
AUTO COMPONENTS -- 3.7%
Allison Transmission, Inc........ BTL-B Ba3 BB- 2.75 08/07/2014 1,658,289 1,641,700
August LuxUK Holding Co.......... 1st Lien NR NR 6.25 04/27/2018 217,607 218,150
August LuxUK Holding Co.......... 2nd Lien NR NR 10.50 04/27/2019 565,000 564,999
August U.S. Holding Co., Inc..... 1st Lien NR NR 6.25 04/27/2018 167,393 167,811
August U.S. Holding Co., Inc..... 2nd Lien NR NR 10.50 04/27/2019 435,000 434,999
Federal Mogul Corp............... BTL-B Ba3 B+ 2.18-2.19 06/27/2015 937,798 894,619
Federal Mogul Corp............... BTL-C Ba3 B+ 2.18-2.19 06/27/2015 478,468 456,438
Goodyear Tire & Rubber Co........ 2nd Lien Ba1 BB 4.75 04/30/2019 1,000,000 978,749
Metaldyne Co. LLC................ BTL-B B1 B+ 5.25 05/18/2017 987,500 980,094
Remy International, Inc.......... BTL-B B1 B+ 6.25 12/16/2016 1,947,229 1,956,966
UCI International, Inc........... BTL-B Ba2 B+ 5.50 07/26/2017 2,211,325 2,227,910
Viking Acquisition, Inc.......... BTL-B Ba3 B- 6.00 11/05/2016 1,708,975 1,685,477
-----------
12,207,912
-----------
AUTOMOBILES -- 0.9%
Chrysler Group LLC............... BTL-B Ba2 BB 6.00 05/24/2017 2,846,250 2,870,978
-----------
BUILDING PRODUCTS -- 0.4%
Armstrong World Industries, Inc.. BTL-B B1 BB- 4.00 03/10/2018 323,619 321,354
HD Supply, Inc................... BTL-B B2 B+ 7.25 10/12/2017 1,020,000 1,025,100
-----------
1,346,454
-----------
CAPITAL MARKETS -- 1.8%
AlixPartners LLC................. BTL-B2 Ba3 B+ 6.50 06/28/2019 695,000 688,050
AlixPartners LLC................. 2nd Lien B3 B- 10.75 11/15/2019 285,000 280,369
BNY ConvergEX Group LLC.......... BTL-B B1 B+ 5.25 12/16/2016 269,287 259,862
BNY ConvergEX Group LLC.......... BTL-B B2 B- 5.25 12/16/2017 613,067 591,610
BNY ConvergEX Group LLC.......... BTL-A B1 B+ 8.75 12/16/2016 613,325 579,592
BNY ConvergEX Group LLC.......... BTL-A B2 B- 8.75 12/16/2017 1,461,675 1,381,283
Nuveen Investments, Inc.......... BTL-B B2 B 5.96-5.97 05/13/2017 383,480 381,380
Nuveen Investments, Inc.......... BTL B2 B 5.96-5.97 05/13/2017 1,616,520 1,592,676
-----------
5,754,822
-----------
CHEMICALS -- 3.6%
Chemtura Corp.................... BTL Ba1 BB+ 5.50 08/27/2016 1,890,000 1,897,088
GenTek........................... BTL B1 B 5.00-5.75 10/06/2015 732,700 729,723
Hexion Specialty Chemicals, Inc.. BTL-C1 Ba3 B- 4.00 05/05/2015 468,353 457,229
Hexion Specialty Chemicals, Inc.. BTL-C2 Ba3 B- 4.25 05/05/2015 211,101 206,087
Houghton International, Inc...... BTL-B B1 B 6.75 01/29/2016 491,606 494,064
Huntsman International LLC....... BTL-C Ba1 BB+ 2.50-2.60 06/30/2016 262,215 257,790
Ineos U.S. Finance LLC........... BTL-B B1 B+ 6.50 05/04/2018 1,246,875 1,222,561
Momentive Performance............ BTL-B B1 B+ 3.75 05/05/2015 866,453 859,594
OMNOVA Solutions, Inc............ BTL-B Ba2 B+ 5.75 05/31/2017 541,750 543,443
Solutia, Inc..................... BTL-B Ba1 BB+ 3.50 08/01/2017 654,493 654,698
Styron LLC....................... BTL-B B1 B+ 6.00-6.75 08/02/2017 1,269,447 1,192,750
Univar, Inc...................... BTL-B B2 B+ 5.00 06/30/2017 2,541,275 2,495,215
Veyance Technologies, Inc........ 2nd Lien NR NR 6.00 07/31/2015 950,000 886,271
-----------
11,896,513
-----------
12
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2012 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES -- 3.1%
ACCO Brands Corp............................. BTL-B Ba1 BB+ 4.25% 05/01/2019 $1,194,000 $ 1,194,000
Altegrity, Inc............................... BTL-B B1 B 7.75 02/21/2015 1,115,231 1,109,655
ATI Schools(10)(11).......................... BTL-B Ba3 D 12.25 12/30/2014 1,104,961 110,496
ATI Schools(5)(6)(9)(11)..................... BTL NR NR 13.25 06/30/2012 248,682 198,945
ATI Schools(5)(6)(9)(11)..................... BTL NR NR 13.25 06/30/2012 15,362 12,290
Audio Visual Services Group, Inc............. 2nd Lien NR NR 5.97 08/28/2014 1,077,040 883,173
AWAS Aviation Capital, Ltd................... BTL Ba2 BBB- 4.96 06/25/2018 676,000 676,282
Brand Services, Inc.......................... BTL B2 B 2.50 02/07/2014 1,819,984 1,711,923
Brand Services, Inc.......................... BTL-B2 B2 B 3.50-3.75 02/07/2014 914,683 865,137
KAR Auction Services, Inc.................... BTL-B Ba3 BB- 5.00 05/19/2017 1,039,500 1,042,619
ValleyCrest Cos.............................. 1st Lien NR NR 8.00 10/04/2016 862,930 821,941
WCA Waste Systems, Inc....................... BTL B1 B+ 5.50 03/23/2018 1,700,738 1,693,297
-----------
10,319,758
-----------
COMMUNICATIONS EQUIPMENT -- 2.2%
Blue Coat Systems, Inc....................... BTL-B B1 BB- 7.50 02/15/2018 1,085,000 1,083,644
Sorenson Communications, Inc................. BTL-C NR NR 6.00 08/16/2013 5,000,017 4,818,142
Telesat Holdings, Inc........................ BTL-B Ba3 BB- 4.25 03/28/2019 1,465,000 1,452,181
-----------
7,353,967
-----------
CONSUMER FINANCE -- 0.6%
Fifth Third Processing Solutions LLC......... BTL-B Ba2 BBB- 3.75 03/27/2019 1,890,263 1,887,900
-----------
CONTAINERS & PACKAGING -- 1.6%
Anchor Glass Container Corp.................. 1st Lien B1 BB- 6.00 03/02/2016 1,000,000 998,750
Anchor Glass Container Corp.................. 2nd Lien B3 B- 10.00 09/02/2016 560,000 559,300
Consolidated Container Co.................... 2nd Lien Caa1 CCC+ 5.75 09/28/2014 1,250,000 1,245,313
Consolidated Container Co.................... BTL-B B1 B 6.25 06/15/2019 825,000 828,094
Tank Intermediate Holding Corp............... BTL-A B1 B+ 6.75 04/15/2016 973,585 972,368
TricorBraun, Inc............................. BTL-B B1 B 5.50 05/03/2018 550,000 550,458
-----------
5,154,283
-----------
DIVERSIFIED CONSUMER SERVICES -- 0.7%
Vertrue, Inc.(7)(10)......................... BTL NR NR 5.81 08/16/2014 2,065,056 650,493
Vertrue, Inc.(7)(10)......................... 2nd Lien NR NR 13.25 08/14/2015 1,490,000 9,313
Weight Watchers International, Inc........... BTL-F Ba1 BB+ 3.75 03/15/2019 1,545,000 1,513,328
-----------
2,173,134
-----------
DIVERSIFIED FINANCIAL SERVICES -- 2.9%
Aptalis Pharma, Inc.......................... BTL-B1 B2 B+ 5.50 02/10/2017 2,270,376 2,207,940
Aptalis Pharma, Inc.......................... BTL-B2 B2 B+ 5.50 02/10/2017 1,496,250 1,455,103
BLB Management Services, Inc................. 1st Lien B2 BB 8.50 11/05/2015 118,575 119,242
Foxco Acquisition LLC........................ BTL-B NR BB 4.75 07/14/2015 1,801,580 1,797,065
Global Cash Access LLC....................... BTL B1 BB 7.00 03/01/2016 1,276,190 1,288,952
Visant Corp.................................. BTL Ba3 BB- 5.25 12/22/2016 2,886,814 2,800,210
-----------
9,668,512
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES -- 2.0%
Cequel Communications LLC.................... BTL-B Ba2 BB- 4.00 02/14/2019 2,458,838 2,412,734
IPC Systems, Inc............................. 2nd Lien Caa2 CCC 5.50 06/01/2015 1,000,000 827,500
Level 3 Financing, Inc....................... BTL-B3 Ba3 B+ 5.75 09/01/2018 445,000 445,046
U.S. TelePacific Corp........................ BTL B3 B- 5.75 02/23/2017 1,919,177 1,784,834
West Corp.................................... BTL-B2 Ba3 BB- 2.62-2.84 10/24/2013 986,558 985,727
-----------
6,455,841
-----------
ELECTRICAL EQUIPMENT -- 0.2%
WireCo WorldGroup, Inc....................... BTL-B Ba2 BB- 5.90 05/31/2017 680,000 681,700
-----------
13
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2012 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
-----------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
----------------------------------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS -- 1.0%
Aeroflex, Inc........................................ BTL-B B1 BB- 5.75% 05/09/2018 $1,844,506 $ 1,784,560
CDW Corp............................................. BTL-B B1 B 4.00 07/15/2017 1,421,239 1,390,327
-----------
3,174,887
-----------
ENERGY EQUIPMENT & SERVICES -- 1.0%
Aquilex Holdings LLC................................. BTL-B NR NR 8.75 04/01/2016 1,210,362 1,204,310
FTS International LLC................................ BTL-B B2 B 6.25 05/06/2016 2,373,597 2,176,128
-----------
3,380,438
-----------
FOOD & STAPLES RETAILING -- 3.2%
BJ's Wholesale Club, Inc............................. 1st Lien B1 B+ 5.25 09/28/2018 796,000 799,234
Rite Aid Corp........................................ BTL-B2 B2 B+ 2.00 06/04/2014 1,886,109 1,849,566
Rite Aid Corp........................................ BTL-B5 B2 B+ 4.50 03/03/2018 2,401,707 2,372,886
Roundy's Supermarkets, Inc........................... BTL-B B1 BB- 5.75 02/13/2019 1,571,063 1,575,645
Smart & Final, Inc................................... 1st Lien B2 BB- 5.00 05/31/2016 416,420 414,338
Smart & Final, Inc................................... 2nd Lien B3 NR 9.00 11/30/2016 999,999 995,000
Sprouts Farmers Market LLC........................... BTL B2 B+ 6.00 04/18/2018 166,000 163,925
Sprouts Farmers Market LLC........................... BTL-B B2 B+ 6.00 04/18/2018 2,251,500 2,231,799
-----------
10,402,393
-----------
FOOD PRODUCTS -- 1.6%
Brickman Group Holdings, Inc......................... BTL-B NR NR 5.50 10/14/2016 2,001,323 2,006,327
Michael Foods, Inc................................... BTL-B B1 B+ 4.25 02/25/2018 2,051,908 2,048,061
Pinnacle Foods Group, Inc............................ BTL-B Ba3 B+ 3.74-3.97 10/02/2016 949,541 945,783
Pinnacle Foods Group, Inc............................ BTL-E Ba3 B+ 4.75 10/17/2018 339,150 337,666
-----------
5,337,837
-----------
GAS UTILITIES -- 0.4%
EP Energy Corp....................................... BTL Ba3 BB- 6.50 05/24/2018 735,000 743,085
NGPL PipeCo LLC...................................... BTL-B Ba3 B+ 6.75 09/15/2017 725,000 714,125
-----------
1,457,210
-----------
HEALTH CARE EQUIPMENT & SUPPLIES -- 1.3%
Bausch & Lomb, Inc................................... BTL-B B1 B+ 5.25 05/17/2019 1,225,000 1,219,641
Catalent Pharma Solutions, Inc....................... BTL Ba3 BB- 4.25 09/15/2016 1,900,000 1,889,313
Immucor, Inc......................................... BTL-B Ba3 BB- 7.25 08/19/2018 868,438 875,494
Kinetic Concepts, Inc................................ BTL-B Ba2 BB- 7.00 05/04/2018 407,950 411,622
-----------
4,396,070
-----------
HEALTH CARE PROVIDERS & SERVICES -- 4.3%
Alliance HealthCare Services, Inc.................... BTL-B Ba3 B+ 7.25 06/01/2016 304,377 286,875
DaVita, Inc.......................................... BTL-B Ba2 BB 4.50 10/20/2016 1,718,825 1,727,419
HCA, Inc............................................. Tranche B3 Ba3 BB 3.50 05/01/2018 1,000,000 972,969
Health Management Associates, Inc.................... BTL-B Ba3 BB- 4.50 11/16/2018 611,925 607,718
inVentiv Health, Inc................................. BTL-B NR B+ 6.50 08/04/2016 2,182,407 2,052,826
Kindred Healthcare, Inc.............................. BTL-B Ba3 B+ 5.25 06/01/2018 1,234,882 1,178,283
Multiplan, Inc....................................... BTL Ba3 B 4.75 08/26/2017 2,323,769 2,294,722
National Surgical Hospitals, Inc.(12)................ BTL B2 B 8.25 01/04/2017 1,385,701 1,351,058
Sheridan Holdings, Inc............................... 1st Lien B1 B+ 6.00 06/13/2018 1,030,000 1,030,000
Sheridan Holdings, Inc............................... 2nd Lien B1 B- 9.00 06/13/2019 721,000 724,605
Vantage Oncology, Inc................................ BTL-B B2 B 7.75 02/28/2017 204,773 203,749
Vantage Oncology, Inc................................ BTL B2 B 7.75 02/28/2017 1,685,530 1,677,102
-----------
14,107,326
-----------
HEALTH CARE TECHNOLOGY -- 1.1%
Emdeon Business Services LLC......................... BTL-B NR BB- 5.00 11/02/2018 272,953 273,252
IMS Health, Inc...................................... BTL-B Ba3 BB 4.50 08/26/2017 1,666,282 1,659,617
MedAssets, Inc....................................... BTL Ba3 BB- 5.25 11/16/2016 1,542,994 1,546,852
-----------
3,479,721
-----------
14
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2012 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
-----------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE -- 6.0%
24 Hour Fitness Worldwide, Inc.................... BTL-B Ba3 B+ 7.50% 04/22/2016 $1,577,913 $ 1,579,885
Affinity Gaming LLC............................... BTL-B Ba3 BB 5.50 11/09/2017 932,663 932,663
Burger King Corp.................................. BTL-B Ba3 BB- 4.50 10/19/2016 1,053,940 1,050,862
Caesars Entertainment Operating Co., Inc.......... BTL-B2 B2 B 4.50 01/28/2018 4,000,000 3,440,716
CCM Merger, Inc................................... BTL-B B2 B+ 6.00 03/01/2017 1,829,602 1,818,167
DineEquity, Inc................................... BTL-B Ba2 BB- 4.25 10/19/2017 1,467,399 1,462,508
Golden Nugget, Inc.(11)........................... 1st Lien Caa3 B- 3.25 06/30/2014 1,264,517 1,206,033
Golden Nugget, Inc.(11)........................... Delayed Draw Caa3 B- 3.25 06/30/2014 719,791 686,500
Isle of Capri Casinos, Inc........................ BTL-B Ba3 BB- 4.75 11/01/2013 1,133,470 1,137,475
Landry's Restaurants, Inc......................... BTL-B B1 B+ 6.50 04/24/2018 558,600 558,135
P.F. Changs China Bistro, Inc..................... BTL-B1 Ba3 NR 6.25 05/15/2019 430,000 432,016
Quizno's LLC...................................... 1st Lien NR NR 9.00 01/24/2017 1,806,243 1,517,244
Rock Ohio Caesars LLC............................. BTL Ba3 BB- 8.50 08/19/2017 800,000 802,666
Six Flags Theme Parks, Inc........................ BTL-B B1 BB+ 4.25 12/20/2018 1,105,000 1,098,978
Town Sports International Holdings, Inc........... BTL-B Ba3 B+ 7.00 05/11/2018 1,516,161 1,535,113
Travelport, Inc................................... Delayed Draw NR NR 4.97 08/21/2015 180,689 165,976
Wendy's/Arby's Restaurants LLC(12)................ BTL-B B1 BB- 4.75 05/15/2019 278,086 276,638
-----------
19,701,575
-----------
HOUSEHOLD DURABLES -- 0.7%
Scotsman Industries, Inc.......................... BTL-B B1 B+ 5.75-6.50 04/30/2016 1,385,549 1,376,889
Yankee Candle Co., Inc............................ BTL B1 B+ 5.25 04/02/2019 853,860 851,548
-----------
2,228,437
-----------
HOUSEHOLD PRODUCTS -- 1.4%
Reynolds Group Holdings, Inc...................... Tranch E Ba3 BB- 6.50 02/09/2018 3,895,070 3,925,366
Spectrum Brands, Inc.............................. BTL B1 B 5.00-6.25 06/17/2016 610,048 612,209
-----------
4,537,575
-----------
INDUSTRIAL CONGLOMERATES -- 2.0%
American Rock Salt Co. LLC........................ BTL-B B3 B 5.50 04/25/2017 1,707,750 1,620,940
Diversified Machines, Inc......................... BTL-B Caa1 B- 9.25 12/01/2016 947,520 945,151
Fram Group Holdings, Inc.......................... 1st Lien B1 B 6.50 07/29/2017 540,913 522,995
Harland Clarke Holdings Corp...................... BTL-B B1 B+ 2.75 06/30/2014 1,301,216 1,171,094
Sequa Corp........................................ BTL-B B1 B 3.72 12/03/2014 1,674,706 1,641,911
TriMas Corp....................................... BTL-B Ba1 BB+ 4.25 06/21/2017 551,633 551,633
-----------
6,453,724
-----------
INDUSTRIAL POWER PRODUCERS & ENERGY TRADERS -- 1.5%
AES Corp.......................................... BTL-B Ba1 BB+ 4.25 06/01/2018 1,145,500 1,147,137
BRSP LLC.......................................... BTL B1 BB 7.50 06/04/2014 1,516,594 1,524,177
Calpine Corp...................................... BTL-B B1 BB- 4.50 04/01/2018 1,076,363 1,070,084
LS Power Funding Corp............................. BTL Ba2 BB+ 5.50 06/28/2019 1,071,000 1,060,290
-----------
4,801,688
-----------
INSURANCE -- 1.7%
Alliant Holdings, Inc............................. BTL-D B2 B- 6.75 08/21/2014 1,315,516 1,325,383
Asurion Corp...................................... BTL-B NR BB- 5.50 05/24/2018 1,823,394 1,819,690
Asurion Corp...................................... 2nd Lien NR B- 9.00 05/24/2019 1,750,000 1,794,844
Asurion Corp...................................... BTL NR B- 11.00 09/02/2019 550,000 565,675
-----------
5,505,592
-----------
INTERNET & CATALOG RETAIL -- 0.1%
Acosta, Inc....................................... BTL NR B+ 5.75 03/01/2018 445,000 446,669
-----------
INTERNET SOFTWARE & SERVICES -- 1.2%
Web.com Group, Inc................................ BTL-B Ba3 B 7.00 10/27/2017 968,333 967,115
Zayo Bandwith LLC................................. 1st Lien B1 B 7.13 03/18/2019 2,656,000 2,665,960
Zayo Group LLC.................................... BTL-B B2 B 7.75 12/01/2016 442,775 444,159
-----------
4,077,234
-----------
15
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2012 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
------------------------------------------------------------------------------------------------------------------
IT SERVICES -- 3.7%
Ceridian Corp............................ BTL B1 B- 5.99% 11/09/2014 $ 623,743 $ 600,976
Evertec, Inc............................. BTL-B Ba3 BB- 5.25 09/30/2016 435,000 434,184
First Data Corp.......................... BTL-B B1 B+ 4.25 03/23/2018 6,218,681 5,728,475
MoneyGram International, Inc............. BTL-B Ba2 BB- 4.25 11/18/2017 1,115,897 1,103,344
Sungard Data Systems, Inc................ BTL-B Ba3 BB 3.87-4.09 02/28/2016 664,060 659,245
Sungard Data Systems, Inc................ BTL Ba3 BB 3.99 02/28/2017 713,992 712,802
TransFirst Holdings, Inc................. BTL-B B2 B 3.00 06/15/2014 2,850,381 2,768,433
-----------
12,007,459
-----------
LEISURE EQUIPMENT & PRODUCTS -- 0.9%
Freedom Group, Inc....................... BTL-B Ba3 B+ 5.50 04/19/2019 292,000 293,095
SRAM LLC................................. BTL-B Ba3 B+ 4.75-5.75 06/07/2018 1,690,689 1,683,292
SRAM LLC................................. 2nd Lien B3 B- 8.50 12/07/2018 875,000 877,188
-----------
2,853,575
-----------
LIFE SCIENCES TOOLS & SERVICES -- 0.5%
Pharmaceutical Product Development, Inc.. BTL-B Ba3 BB- 6.25 12/05/2018 1,606,925 1,617,772
-----------
MACHINERY -- 1.5%
Harbor Freight Tools USA, Inc............ BTL-B B1 B+ 5.50 11/14/2017 1,540,000 1,536,920
Pro Mach, Inc............................ BTL-B B2 B+ 6.25 07/06/2017 1,511,129 1,488,462
Rexnord Corp............................. BTL-B Ba2 BB 5.00 04/01/2018 1,921,185 1,933,592
-----------
4,958,974
-----------
MARINE -- 0.5%
Dockwise Transport BV.................... BTL-B NR NR 2.00 01/12/2015 175,933 166,696
Dockwise Transport BV.................... BTL-B2 NR NR 2.00 01/12/2015 359,958 341,061
Dockwise Transport BV.................... BTL-C NR NR 3.09 01/11/2016 147,578 139,830
Dockwise Transport BV.................... BTL-C2 NR NR 3.09 01/11/2016 360,227 341,315
Dockwise Transport BV.................... BTL-D NR NR 4.96 07/11/2016 241,913 221,350
Dockwise Transport BV.................... BTL-D2 NR NR 4.96 07/11/2016 483,825 442,700
-----------
1,652,952
-----------
MEDIA -- 8.8%
Advanstar Communications, Inc............ 1st Lien Caa2 CCC+ 2.72 06/02/2014 1,902,381 1,480,686
Charter Communications Operating LLC..... BTL-D Ba1 BB+ 4.00 05/15/2019 1,546,125 1,538,781
Cinram International, Inc.(10)(11)....... 1st Lien C NR 12.25 12/31/2013 495,665 137,134
Cumulus Media, Inc....................... 1st Lien Ba2 BB- 5.75 09/17/2018 1,540,155 1,540,155
Cumulus Media, Inc....................... 2nd Lien B2 CCC+ 7.50 03/18/2019 1,070,000 1,072,675
Dallas Sports & Entertainment LP......... BTL NR NR 3.49 11/18/2016 534,602 433,028
Entercom Communications Corp............. BTL-B Ba3 BB- 6.25 11/23/2018 333,667 335,196
Fender Musical Instruments Corp.......... Delayed Draw B2 B 2.50 06/09/2014 269,766 263,697
Fender Musical Instruments Corp.......... BTL-B B2 B 2.50 06/09/2014 533,894 521,881
Formula One Holdings..................... BTL-B Ba3 BB- 5.75 04/28/2017 2,493,750 2,496,421
Getty Images, Inc........................ BTL-B Ba3 BB- 5.25-6.00 11/07/2016 1,220,751 1,223,609
Gray Television, Inc..................... BTL-B B2 B+ 3.74 12/31/2014 2,422,754 2,402,048
Hicks Sports Group+(7)(8)................ BTL-B NR NR 6.75 06/22/2011 1,172,242 325,297
Interactive Data Corp.................... BTL-B Ba3 B+ 4.50 02/11/2018 2,240,087 2,207,400
Kabel Deutschland AG..................... BTL-F NR NR 4.25 02/01/2019 1,010,000 1,001,373
LIN Television Corp...................... BTL-B Ba3 BB- 5.00 12/21/2018 726,350 728,166
Mediacom Broadband LLC................... BTL-F Ba3 BB- 4.50 10/23/2017 1,460,637 1,455,160
Mediacom LLC............................. BTL-E Ba3 BB- 4.50 10/23/2017 1,702,445 1,691,804
NextMedia Operating, Inc................. BTL-B B3 B 8.25 05/27/2016 2,618,181 2,559,272
Regal Cinemas, Inc....................... BTL-B NR BB- 3.25-3.46 08/23/2017 1,354,375 1,344,217
Rovi Solutions Corp...................... BTL-B NR NR 4.00 03/29/2019 807,975 803,915
Sinclair Television Group, Inc........... BTL-B Ba1 BB+ 4.00 10/28/2016 770,236 768,633
Truven Health Analytics, Inc............. BTL-B Ba3 B+ 6.75 06/06/2019 315,000 314,213
Univision Communications, Inc............ BTL-B B2 B+ 4.50 03/31/2017 812,801 767,843
WideOpenWest Finance LLC................. BTL-B B1 B 6.74-8.75 06/30/2014 1,470,274 1,465,680
-----------
28,878,284
-----------
16
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2012 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
-------------------------------------------------------------------------------------------------------------------
METALS & MINING -- 1.2%
Novelis, Inc................................ BTL-B Ba2 BB- 4.00% 03/10/2017 $1,333,712 $ 1,311,205
Tube City IMS Corp.......................... BTL-B B1 B+ 5.75 03/20/2019 2,660,000 2,672,470
-----------
3,983,675
-----------
MULTI UTILITIES -- 1.1%
Texas Competitive Electric Holdings Co. LLC. BTL B2 CCC 4.74 10/10/2017 6,174,956 3,704,381
-----------
MULTILINE RETAIL -- 0.8%
99 Cents Only Store......................... BTL-B B2 B+ 5.25 01/11/2019 527,353 528,013
Lord & Taylor, Ltd.......................... BTL-B Ba3 BB 5.75 01/11/2019 533,663 534,663
Neiman Marcus Group, Inc.................... BTL-B B2 BB- 4.75 05/16/2018 1,500,000 1,486,242
Savers Inc.................................. 1st Lien Ba3 B 6.25 06/11/2019 187,000 187,000
-----------
2,735,918
-----------
OIL, GAS & CONSUMABLE FUELS -- 2.6%
Alon USA, Inc. (Edgington Facility)......... BTL B1 B+ 2.50 08/05/2013 26,111 25,327
Alon USA, Inc. (Paramount Facility)......... BTL B1 B+ 2.50 08/05/2013 208,889 202,622
Arch Coal, Inc.............................. BTL Ba3 BB 5.75 05/16/2018 1,465,000 1,441,717
Chesapeake Energy Corp...................... BTL NR BB- 8.50 12/02/2017 2,850,000 2,828,625
Energy Transfer Equity LP................... BTL-B Ba2 BB 3.75 03/23/2017 2,170,000 2,128,538
MEG Energy Corp............................. BTL-B Ba2 BBB- 4.00 03/18/2018 1,756,700 1,750,112
-----------
8,376,941
-----------
PAPER & FOREST PRODUCTS -- 0.3%
NewPage Corp.(7)............................ DIP NR BB- 8.00 03/08/2013 425,000 429,781
Unifrax Corp................................ BTL-B B2 B+ 6.50 11/28/2018 696,500 696,500
-----------
1,126,281
-----------
PERSONAL PRODUCTS -- 0.8%
NBTY, Inc................................... BTL-B Ba3 BB- 4.25 10/01/2017 548,719 547,536
Revlon, Inc................................. BTL-B Ba3 BB- 4.75 11/19/2017 1,993,728 1,986,963
-----------
2,534,499
-----------
PHARMACEUTICALS -- 4.0%
Alkermes, Inc............................... BTL-B B1 BB 6.75 09/16/2017 2,487,500 2,506,156
Alkermes, Inc............................... 2nd Lien Caa1 B 9.50 09/16/2018 1,750,000 1,793,750
Capsugel Healthcare, Ltd.................... BTL-B B1 BB- 5.25 08/01/2018 1,841,102 1,847,432
Grifols SA.................................. BTL-B Ba3 BB 4.50 06/01/2017 1,514,965 1,503,760
Harvard Drug Group LLC...................... BTL-B B1 B+ 6.50 04/05/2016 648,666 645,423
Harvard Drug Group LLC...................... Delayed Draw B1 B+ 6.50 04/05/2016 89,191 88,745
Jazz Pharmaceuticals PLC.................... BTL-B Ba3 BBB- 5.25 06/12/2018 315,000 313,950
Quintiles Transnational Corp................ BTL-B B1 BB- 5.00 06/08/2018 1,705,269 1,688,216
Quintiles Transnational Corp................ BTL B3 B 7.50 02/24/2017 800,000 806,000
Valeant Pharmaceuticals International, Inc.. BTL-B Ba1 BBB- 4.75 02/13/2019 675,000 666,394
Warner Chilcott PLC......................... BTL-B3 Ba3 BBB- 4.25 03/15/2018 433,706 432,390
Warner Chilcott PLC......................... Tranche B1 Ba3 BBB- 4.25 03/15/2018 630,846 628,931
Warner Chilcott PLC......................... Tranche B2 Ba3 BBB- 4.25 03/15/2018 315,423 314,465
-----------
13,235,612
-----------
PROFESSIONAL SERVICES -- 0.5%
Bankruptcy Management Solutions, Inc.(11)... 2nd Lien NR NR 8.24 08/20/2015 135,517 2,710
Nexeo Solutions LLC......................... BTL-B B1 B 5.00 09/08/2017 1,518,175 1,485,281
-----------
1,487,991
-----------
REAL ESTATE MANAGEMENT & DEVELOPMENT -- 0.5%
Realogy Corp................................ CLTL B1 B- 4.49 10/10/2016 225,374 214,293
Realogy Corp................................ BTL B1 B- 4.49 10/10/2016 1,596,593 1,511,774
-----------
1,726,067
-----------
17
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2012 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
-----------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------------------------------
ROAD & RAIL -- 1.7%
Avis Budget Car Rental LLC..................... BTL-B Ba1 BB 6.25% 09/22/2018 $ 181,257 $ 180,880
Evergreen Tank Solutions, Inc.................. 2nd Lien B2 B- 4.22 04/04/2014 497,500 496,256
RailAmerica, Inc............................... BTL-B B1 BB+ 4.00 03/01/2019 2,638,388 2,638,388
Swift Transportation Co., Inc.................. BTL-B B1 BB 5.00 12/21/2017 2,183,118 2,192,215
------------
5,507,739
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 3.1%
Freescale Semiconductor, Inc................... BTL B1 B 4.49 12/01/2016 4,574,472 4,336,600
Freescale Semiconductor, Inc................... BTL-B2 B1 B 6.00 02/28/2019 2,872,800 2,843,176
Microsemi Corp................................. BTL-B Ba2 BB 4.00 02/02/2018 1,280,629 1,266,222
NXP BV......................................... BTL-B B3 B+ 5.25 03/19/2019 997,500 995,006
NXP BV......................................... BTL-A2 B3 B+ 5.50 03/03/2017 694,750 686,500
------------
10,127,504
------------
SOFTWARE -- 2.5%
Attachmate Corp................................ BTL B1 BB- 7.25 11/22/2017 721,000 713,430
Eagle Parent, Inc.............................. BTL-B Ba3 B+ 5.00 05/16/2018 2,821,500 2,786,231
Kronos, Inc.................................... BTL-C B1 B 6.25 12/28/2017 1,870,600 1,876,423
Lawson Software, Inc........................... BTL-B Ba3 B+ 6.25 04/05/2018 840,000 845,300
Misys PLC...................................... BTL Ba3 B+ 7.25 12/12/2018 1,485,000 1,457,528
VeriFone....................................... BTL-B Ba3 BB 4.25 12/28/2018 621,875 620,574
------------
8,299,486
------------
SPECIALTY RETAIL -- 1.6%
J Crew Operating Corp.......................... BTL-B B1 B 4.75 03/07/2018 1,826,538 1,802,069
Michaels Stores, Inc........................... BTL-B2 B1 BB- 5.00 07/31/2016 1,468,693 1,465,940
National Bedding Co............................ 1st Lien B1 BB- 4.00-6.00 11/28/2013 1,126,701 1,128,109
National Bedding Co............................ 2nd Lien Caa1 B 5.25 02/28/2014 1,000,000 993,750
------------
5,389,868
------------
THRIFTS & MORTGAGE FINANCE -- 0.6%
Ocwen Financial Corp........................... BTL-B NR B 7.00 09/01/2016 2,011,863 2,019,408
------------
TRANSPORTATION INFRASTRUCTURE -- 0.4%
Central Parking Corp........................... LOC Ba3 CCC 2.50 05/22/2014 379,310 375,517
Central Parking Corp........................... 1st Lien Ba3 CCC 2.75 05/22/2014 1,014,784 1,004,636
------------
1,380,153
------------
WIRELESS TELECOMMUNICATION SERVICES -- 2.5%
Crown Castle International Corp................ BTL-B Ba3 B+ 4.00 01/31/2019 1,004,950 990,313
Intelstat Jackson Holdings, Ltd................ BTL B1 BB- 5.25 04/02/2018 2,002,519 1,996,251
MetroPCS Wireless, Inc......................... BTL-B3 Ba1 BB 4.00 03/19/2018 3,046,419 2,983,858
Syniverse Technologies, Inc.................... BTL-B B1 BB- 5.00 04/23/2019 2,296,000 2,284,520
------------
8,254,942
------------
TOTAL LOANS (cost $319,288,869)..................................................................... 311,237,172
------------
U.S. CORPORATE BONDS & NOTES -- 1.9%
CHEMICALS -- 0.1%
LyondellBassell Industries NV*................. Bond Ba2 BB+ 6.00 11/15/2021 521,000 571,798
------------
GAS UTILITIES -- 0.4%
Everest Acquisition LLC*....................... Bond B2 B 9.38 05/01/2020 1,258,000 1,303,603
------------
HOTELS, RESTAURANTS & LEISURE -- 0.4%
Caesars Entertainment Operating Co., Inc.*..... Bond B2 B 8.50 02/15/2020 1,225,000 1,234,188
------------
INTERNET SOFTWARE & SERVICES -- 0.1%
Zayo Escrow Corp.*............................. Bond B1 B 8.13 01/01/2020 340,000 355,300
------------
18
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2012 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
-----------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
----------------------------------------------------------------------------------------------------------
IT SERVICES -- 0.7%
Ceridian Corp.*........................ Bond B1 NR 8.88% 07/15/2019 $ 590,000 $ 609,175
First Data Corp.*...................... Bond B1 B+ 7.38 06/15/2019 1,635,000 1,667,700
------------
2,276,875
------------
OIL, GAS & CONSUMABLE FUELS -- 0.2%
Plains Exploration & Production Co..... Bond B1 BB- 6.13 06/15/2019 585,000 587,925
------------
TOTAL U.S. CORPORATE BONDS & NOTES (cost $6,146,066)....................... 6,329,689
------------
COMMON STOCK -- 0.0%
DIVERSIFIED FINANCIAL SERVICES -- 0.0%
Bankruptcy Management Solutions, Inc.+(5)(6)............................... 1,360 0
BLB Management Services, Inc.+............................................. 5,141 61,049
------------
61,049
------------
MEDIA -- 0.0%
Berry Co. LLC+(5)(6)....................................................... 1,136 61,855
Cinram International Income Fund+(5)....................................... 898,980 90
------------
61,945
------------
TOTAL COMMON STOCK (cost $925,137)......................................... 122,994
------------
MEMBERSHIP INTEREST -- 0.0%
MEDIA -- 0.0%
Advanstar Communications, Inc.+(5)(6)...................................... 12,608 0
NextMedia Operating, Inc.+(5)(6)........................................... 7,916 41,074
------------
TOTAL MEMBERSHIP INTEREST (cost $1,506,365)................................ 41,074
------------
RIGHTS -- 0.0%
DIVERSIFIED FINANCIAL SERVICES -- 0.0%
BLB Management Services, Inc.
Expires 11/05/2017+
(cost $250,000)........................................................... 250 1,438
------------
WARRANTS -- 0.0%
DIVERSIFIED FINANCIAL SERVICES -- 0.0%
Bankruptcy Management Solutions, Inc.
Expires 10/01/2017
(Strike Price $30.00)+(5)(6)
(cost $0)................................................................. 126 0
------------
TOTAL LONG-TERM INVESTMENT SECURITIES (cost $328,116,437).................. 317,732,367
------------
SHORT-TERM INVESTMENT SECURITIES -- 4.1%
REGISTERED INVESTMENT COMPANIES -- 4.1%
SSgA Money Market Fund (cost $13,301,198).................................. 13,301,198 13,301,198
------------
REPURCHASE AGREEMENTS -- 0.5%
Bank of America Securities LLC Joint Repurchase Agreement(13).............. 415,000 415,000
BNP Paribas SA Joint Repurchase Agreement(13).............................. 275,000 275,000
Deutsche Bank AG Joint Repurchase Agreement(13)............................ 300,000 300,000
Royal Bank of Scotland Joint Repurchase Agreement(13)...................... 385,000 385,000
UBS Securities LLC Joint Repurchase Agreement(13).......................... 330,000 330,000
------------
TOTAL REPURCHASE AGREEMENTS (cost $1,705,000).............................. 1,705,000
------------
TOTAL INVESTMENTS
(cost $343,122,635)(14).................................................... 101.5% 332,738,565
LIABILITIES IN EXCESS OF OTHER ASSETS.......................................... (1.5) (5,003,391)
----------- ------------
NET ASSETS..................................................................... 100.0% $327,735,174
=========== ============
--------
BTL Bank Term Loan
CLTLCredit Linked Term Loan
19
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2012 -- (UNAUDITED) (CONTINUED)
DIP Debtor in Possession
LOC Letter of Credit
NR Security is not rated.
+ Non-income producing security
* Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. The Fund has no
rights to demand registration of these securities. At June 30, 2012, the
aggregate value of these securities was $5,741,764 representing 1.8% of net
assets. Unless otherwise indicated, these securities are not considered to
be illiquid.
(1) Bank loans rated below Baa by Moody's Investor Service, Inc. or BBB by
Standard & Poor's Group are considered below investment grade. Ratings
provided are as of June 30, 2012.
(2) Based on the stated maturity, the weighted average to maturity of the loans
held in the portfolio will be approximately 58 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) Illiquid security. At June 30, 2012, the aggregate value of these
securities was $378,930, representing 0.1% of net assets.
(6) Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(7) Company has filed for Chapter 11 bankruptcy protection.
(8) Loan is in default and did not pay principal at maturity. Final outcome of
Chapter 11 bankruptcy still to be determined.
(9) Loan is in default and subsequent to June 30, 2012 did not pay principal at
maturity.
(10)Loan is in default.
(11)PIK ("Payment-In-Kind") security. Loan that pays interest in the form of
additional loans.
(12)Loan is subject to an unfunded loan commitment. See Note 11 for details.
(13)See Note 2 for details of the Joint Repurchase Agreement.
(14)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, 2012 (see Note 2):
LEVEL 1--UNADJUSTED LEVEL 2--OTHER LEVEL 3--SIGNIFCANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
------------------- ----------------- ------------------- -----------
ASSETS;
Long-Term Investment Securities:
Loans:
Aerospace & Defense............................. $-- $ 3,887,532 $1,345,519 $ 5,233,051
Airlines........................................ -- 2,884,490 -- 2,884,490
Auto Components................................. -- 3,971,506 8,236,406 12,207,912
Automobiles..................................... -- 2,870,978 -- 2,870,978
Building Products............................... -- 1,346,454 -- 1,346,454
Capital Markets................................. -- 2,662,106 3,092,716 5,754,822
Chemicals....................................... -- 10,195,690 1,700,823 11,896,513
Commercial Services & Supplies.................. -- 4,295,961 6,023,797 10,319,758
Communications Equipment........................ -- 6,270,323 1,083,644 7,353,967
Consumer Finance................................ -- -- 1,887,900 1,887,900
Containers & Packaging.......................... -- 2,623,865 2,530,418 5,154,283
Diversified Consumer Services................... -- 1,513,328 659,806 2,173,134
Diversified Financial Services.................. -- 4,716,517 4,951,995 9,668,512
Diversified Telecommunication Services.......... -- 3,843,507 2,612,334 6,455,841
Electrical Equipment............................ -- 681,700 -- 681,700
Electrical Equipment, Instruments & Components.. -- 3,174,887 -- 3,174,887
Energy Equipment & Services..................... -- 2,176,128 1,204,310 3,380,438
Food & Staples Retailing........................ -- 6,597,331 3,805,062 10,402,393
Food Products................................... -- 1,283,449 4,054,388 5,337,837
Gas Utilities................................... -- 1,457,210 -- 1,457,210
Health Care Equipment & Supplies................ -- 1,631,263 2,764,807 4,396,070
Health Care Providers & Services................ -- 8,861,123 5,246,203 14,107,326
Health Care Technology.......................... -- 3,479,721 -- 3,479,721
Hotels, Restaurants & Leisure................... -- 13,466,372 6,235,203 19,701,575
Household Durables.............................. -- 851,548 1,376,889 2,228,437
Household Products.............................. -- 4,537,575 -- 4,537,575
Industrial Conglomerates........................ -- 3,262,851 3,190,873 6,453,724
Industrial Power Producers & Energy Traders..... -- 3,277,511 1,524,177 4,801,688
20
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2012 -- (UNAUDITED) (CONTINUED)
LEVEL 1--UNADJUSTED LEVEL 2--OTHER LEVEL 3--SIGNIFCANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
------------------- ----------------- ------------------- ------------
Insurance................................. $ -- $ 2,385,365 $ 3,120,227 $ 5,505,592
Internet & Catalog Retail................. -- -- 446,669 446,669
Internet Software & Services.............. -- 3,633,075 444,159 4,077,234
IT Services............................... -- 7,701,498 4,305,961 12,007,459
Leisure Equipment & Products.............. -- 293,095 2,560,480 2,853,575
Life Sciences Tools & Services............ -- 1,617,772 -- 1,617,772
Machinery................................. -- 3,470,512 1,488,462 4,958,974
Marine.................................... -- 988,902 664,050 1,652,952
Media..................................... -- 20,007,975 8,870,309 28,878,284
Metals & Mining........................... -- -- 3,983,675 3,983,675
Multi Utilities........................... -- 3,704,381 -- 3,704,381
Multiline Retail.......................... -- 2,735,918 -- 2,735,918
Oil, Gas & Consumable Fuels............... -- 8,148,992 227,949 8,376,941
Paper & Forest Products................... -- 429,781 696,500 1,126,281
Personal Products......................... -- 2,534,499 -- 2,534,499
Pharmaceuticals........................... -- 5,707,322 7,528,290 13,235,612
Professional Services..................... -- 1,485,281 2,710 1,487,991
Real Estate Management & Development...... -- 1,726,067 -- 1,726,067
Road & Rail............................... -- 2,373,095 3,134,644 5,507,739
Semiconductors & Semiconductor Equipment.. -- 7,179,776 2,947,728 10,127,504
Software.................................. -- 6,423,063 1,876,423 8,299,486
Specialty Retail.......................... -- 3,268,009 2,121,859 5,389,868
Thrifts & Mortgage Finance................ -- -- 2,019,408 2,019,408
Transportation Infrastructure............. -- -- 1,380,153 1,380,153
Wireless Telecommunication Services....... -- 5,970,422 2,284,520 8,254,942
U.S. Corporate Bonds & Notes............... -- 6,329,689 -- 6,329,689
Common Stock............................... -- 61,139 61,855 122,994
Membership Interest........................ -- -- 41,074 41,074
Rights..................................... -- -- 1,438 1,438
Warrants................................... -- -- 0 0
Short-Term Investments:
Registered Investment Companies............ 13,301,198 -- -- 13,301,198
Repurchase Agreements........................ -- 1,705,000 -- 1,705,000
----------- ------------ ------------ ------------
TOTAL........................................ $13,301,198 $205,701,554 $113,735,813 $332,738,565
=========== ============ ============ ============
21
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2012 -- (UNAUDITED) (CONTINUED)
The Fund's policy is to recognize transfers in and transfers out as of the end
of the reporting period. There were no material transfers between Level 1 and
Level 2. Transfers between Level 2 and Level 3 are disclosed in the level 3
rollfoward below.
The following is a reconciliation of Level 3 assets for which significant
unobservable inputs were used to determine fair value:
COMMON MEMBERSHIP
LOANS STOCK INTEREST RIGHTS WARRANTS TOTAL
------------ -------- ---------- ------ -------- ------------
Balance as of 12/31/2011................ $127,498,824 $ 21,576 $ 710,745 $ 0 $ 0 $128,231,145
Accrued discounts....................... 255,060 -- -- -- -- 255,060
Accrued premiums........................ (294) -- -- -- -- (294)
Realized gain........................... 326,582 -- -- -- -- 326,582
Realized loss........................... (1,277,946) -- (307,625) -- -- (1,585,571)
Change in unrealized appreciation @..... 3,690,100 -- 331,501 1,438 -- 4,023,039
Change in unrealized depreciation @..... (1,550,046) (21,486) (1,172) -- -- (1,572,704)
Purchases............................... 57,955,291 -- -- -- -- 57,955,291
(Sales)................................. (66,361,655) -- (692,375) -- -- (67,054,030)
Transfers into Level 3.................. 14,491,499# 61,855# -- -- -- 14,553,354
Transfers out of Level 3................ (21,395,969)* (90)* -- -- -- (21,396,059)
------------ -------- --------- ------ --- ------------
Balance as of 6/30/2012................. $113,631,446 $ 61,855 $ 41,074 $1,438 $ 0 $113,735,813
============ ======== ========= ====== === ============
--------
@ The total change in unrealized appreciation (depreciation) attributable to Level
3 investments still held at June 30, 2012 includes:
COMMON MEMBERSHIP
LOANS STOCK INTEREST RIGHTS WARRANTS
------------ -------- ---------- ------ --------
$ 1,287,414 $ -- $ (1,172) $1,438 $--
============ ======== ========= ====== ===
# Transferred from Level 2 to Level 3 due to an decrease in market activity
and observable market data for these securities.
* Transferred from Level 3 to Level 2 due to an increase in market activity
and observable market data for these securities.
The following is quantitative information about Level 3 fair value measurements:
------------------------------------------------------------------------------------------------------------------------
DESCRIPTION FAIR VALUE AT 6/30/12/(1)/ VALUATION TECHNIQUE(S) UNOBSERVABLE INPUT/(2)/ RANGE (WEIGHTED AVERAGE)
------------------------------------------------------------------------------------------------------------------------
Loans Discount for lack of 20%
$211,235 Income marketability
------------------------------------------------------------------------------------------------------------------------
Common Stock EBITDA Multiple and $0-3.35(1.675)
Discount for lack of 10%
$61,855 Market Comparable marketability
------------------------------------------------------------------------------------------------------------------------
Membership Interest EBITDA Multiple and $0-6.41(3.205)
Discount for lack of 10%
$41,074 Market Comparable marketability
------------------------------------------------------------------------------------------------------------------------
Warrants Lack of marketability of $0
$0 Intrinsic Value underlying security
------------------------------------------------------------------------------------------------------------------------
(1)The Portfolio's other securities classified as Level 3, with a fair value of
$113,421,649 at 6/30/12, are attributable to limited identified market
makers and/or trading activity.
(2)The significant unobservable inputs regarding the Level 3 securities in the
table above are attributable to private securities received from debt
restructuring events and include assumptions made from non public and/or
unaudited financial statements and market comparables. Significant increases
(decreases) in any of those inputs in isolation may result in a
significantly higher (lower) fair value measurement.
See Notes to Financial Statements
22
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2012 -- (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.
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: In accordance with the authoritative guidance on fair
value measurements and disclosures under accounting principles generally
accepted in the United States of America ("GAAP"), the Fund discloses the
fair value of its investments in a hierarchy that prioritizes the inputs to
valuation techniques used to measure the fair value. In accordance with
GAAP, fair value is defined as the price that the Fund would receive upon
selling an asset or transferring a liability in a timely transaction to an
independent third party in the principal or most advantageous market. GAAP
established a three-tier hierarchy to provide more transparency around the
inputs used to measure fair
23
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2012 -- (UNAUDITED)
(CONTINUED)
value and to establish classification of fair value measurements for
disclosure purposes. Inputs refer broadly to the assumptions that market
participants would use in pricing the asset or liability, including
assumptions about risk. Inputs may be observable or unobservable. Observable
inputs are inputs that reflect the assumptions market participants would use
in pricing the asset or liability developed based on market data obtained
from sources independent of the reporting entity. Unobservable inputs are
inputs that reflect the reporting entity's own assumptions about the
assumptions market participants would use in pricing the asset or liability
developed based on the best information available in the circumstances. The
three-tiers are as follows:
Level 1 -- Unadjusted quoted prices in active markets for identical
securities
Level 2 -- Other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
referenced indices, quoted prices in inactive markets, adjusted quoted
prices in active markets, 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.)
Changes in valuation techniques may result in transfers in or out of an
investment's assigned Level within the hierarchy. The methodology used for
valuing investments are not necessarily an indication of the risk associated
with investing in those investments and the determination of the
significance of a particular input to the fair value measurement in its
entirety requires judgment and consideration of factors specific to each
security.
The availability of observable inputs can vary from security to security and
is affected by a wide variety of factors, including, for example, the type
of security, whether the security is recently issued and not yet established
in the marketplace, the liquidity of markets, and other characteristics
particular to the security. To the extent that valuation is based on models
or inputs that are less observable or unobservable in the market, the
determination of fair value requires more judgment. Accordingly, the degree
of judgment exercised in determining fair value is greatest for instruments
categorized in Level 3.
The summary of inputs used to value the Fund's net assets as of June 30,
2012 are reported on a schedule following the Portfolio of Investments.
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
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, and are generally
categorized as Level 2. 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, and are generally categorized as Level 3. 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 and are generally categorized as Level 1. 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.
24
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2012 -- (UNAUDITED)
(CONTINUED)
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 and are generally categorized as Level 2 or Level 3
depending on the observability of inputs. 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, and are generally
categorized as Level 2.
The Board is responsible for the share valuation process and has adopted a
policy and procedures (the "PRC Procedures") for valuing the securities and
other assets held by the Fund, including procedures for the fair valuation
of securities and other assets for which market quotations are not readily
available or are unreliable. The PRC Procedures provide for the
establishment of a pricing review committee, which is responsible for, among
other things, making certain determinations in connection with the Fund's
fair valuation procedures. Securities for which market quotations are not
readily available or the values of which may be significantly impacted by
the occurrence of developments or significant events are generally
categorized as Level 3. 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.
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. In a
repurchase agreement, the seller of a security agrees to repurchase the
security at a mutually agreed-upon time and price, which reflects the
effective rate of return for the term of the agreement. 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, 2012, the Fund held an undivided interest in a joint
repurchase agreement with Bank of America Securities LLC:
PERCENTAGE PRINCIPAL
OWNERSHIP AMOUNT
---------- ---------
Senior Floating Rate Fund..... 0.28% $415,000
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 29, 2012, bearing interest at a
rate of 0.11% per annum, with a principal amount of $148,520,000, a
repurchase price of $148,521,361, and a maturity date of July 2, 2012. The
repurchase agreement is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT MARKET VALUE
------------------ -------- -------- ---------------- ------------
U.S. Treasury Notes........... 0.25% 04/30/14 $50,022,000 $ 49,987,985
U.S. Treasury Notes........... 1.00 05/15/14 99,945,000 101,327,239
25
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2012 -- (UNAUDITED)
(CONTINUED)
As of June 30, 2012, the Fund held an undivided interest in a joint
repurchase agreement with BNP Paribas SA:
PERCENTAGE PRINCIPAL
OWNERSHIP AMOUNT
---------- ---------
Senior Floating Rate Fund..... 0.27% $275,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
BNP Paribas SA, dated June 29, 2012, bearing interest at a rate of 0.10% per
annum, with a principal amount of $100,090,000, a repurchase price of
$100,090,834, and a maturity date of July 2, 2012. The repurchase agreement
is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT MARKET VALUE
------------------ -------- -------- ---------------- ------------
U.S. Treasury Bonds........... 3.13% 11/15/41 $92,832,800 $102,087,302
As of June 30, 2012, the Fund held an undivided interest in a joint
repurchase agreement with Deutsche Bank AG:
PERCENTAGE PRINCIPAL
OWNERSHIP AMOUNT
---------- ---------
Senior Floating Rate Fund..... 0.28% $300,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Deutsche Bank AG, dated June 29, 2012, bearing interest at a rate of 0.13%
per annum, with a principal amount of $108,750,000, a repurchase price of
$108,751,178, and a maturity date of July 2, 2012. The repurchase agreement
is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT MARKET VALUE
------------------ -------- -------- ---------------- ------------
U.S. Treasury Notes........... 0.88% 11/30/16 $109,790,000 $111,138,221
As of June 30, 2012, the Fund held an undivided interest in a joint
repurchase agreement with Royal Bank of Scotland:
PERCENTAGE PRINCIPAL
OWNERSHIP AMOUNT
---------- ---------
Senior Floating Rate Fund..... 0.28% $385,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Royal Bank of Scotland, dated June 29, 2012, bearing interest at a rate of
0.14% per annum, with a principal amount of $139,650,000, a repurchase price
of $139,651,629, and a maturity date of July 2, 2012. 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% 06/30/16 $136,706,000 $142,815,391
As of June 30, 2012, the Fund held an undivided interest in a joint
repurchase agreement with UBS Securities LLC:
PERCENTAGE PRINCIPAL
OWNERSHIP AMOUNT
---------- ---------
Senior Floating Rate Fund..... 0.27% $330,000
26
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2012 -- (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 29, 2012, bearing interest at a rate of 0.13%
per annum, with a principal amount of $121,120,000, a repurchase price of
$121,121,312, and a maturity date of July 2, 2012. The repurchase agreement
is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT MARKET VALUE
------------------ -------- -------- ---------------- ------------
U.S. Treasury Notes........... 0.50% 11/30/12 $89,000,000 $89,158,420
U.S. Treasury Notes........... 1.75 01/31/14 33,875,000 34,894,976
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 $739,876 for the six months ended June 30, 2012, are accreted to
income over the life of the Loans. Other income, including amendment fees,
commitment fees, letter of credit fees, etc., which were $364,099 for the
six months ended June 30, 2012, 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 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 2008.
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, 2012.
27
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2012 -- (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, 2012 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2011
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS A ---------- ------------ ----------- -------------
Shares sold................. 5,313,783 $ 43,037,008 22,268,025 $ 184,329,786
Reinvested distributions.... 259,712 2,103,756 770,385 6,329,878
Shares redeemed............. (9,261,421) (75,088,771) (33,660,398) (273,254,039)
---------- ------------ ----------- -------------
Net increase (decrease).. (3,687,926) $(29,948,007) (10,621,988) $ (82,594,375)
========== ============ =========== =============
FOR THE
SIX MONTHS ENDED FOR THE
JUNE 30, 2012 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2011
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS C ---------- ------------ ----------- -------------
Shares sold................. 1,558,917 $ 12,600,876 9,204,874 $ 76,496,972
Reinvested distributions.... 298,073 2,411,906 550,109 4,489,104
Shares redeemed............. (2,840,627) (22,968,675) (7,863,582) (63,618,305)
---------- ------------ ----------- -------------
Net increase (decrease).. (983,637) $ (7,955,893) 1,891,401 $ 17,367,771
========== ============ =========== =============
Note 4. Purchases and Sales of Securities
During the six months ended June 30, 2012, the Fund's cost of purchases and
proceeds from sale of long-term investments, including loan principal
paydowns were $89,084,383 and $127,127,350, 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 management
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% in excess of $2 billion.
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, 2012, the Fund incurred administration fees in the
amount of $352,070.
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
28
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2012 -- (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, 2012,
SACS received fees (see Statement of Operations) based upon the
aforementioned rates. For the six months ended June 30, 2012 SACS received
sales charges on Class A shares of $43,147, of which $19,757 was reallowed
to affiliated broker-dealers and $15,726 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, 2012, SACS received early
withdrawal charges of $15,044.
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, 2012, 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, 2012
-------- -------------
Class A....................... $171,316 $23,682
Class C....................... 215,960 34,874
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, 2012, SunAmerica waived fees
and reimbursed expenses as follows: Class A $269,085 and Class C $429,675.
As of the date of this report, the United States Department of the Treasury
("Department of the Treasury") owned a majority of outstanding shares of
common stock of American International Group, Inc. ("AIG"), ultimate parent
of SunAmerica, SACS and SAFS. AIG has stated that it understands that,
subject to market conditions, the Department of the Treasury intends to
dispose of its ownership interest in AIG over time, and that AIG has granted
certain registration rights to the Department of the Treasury to facilitate
such sales.
29
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2012 -- (UNAUDITED)
(CONTINUED)
Note 6. Federal Income Taxes
The following details the tax basis distributions as well as the components
of distributable earnings. The tax basis components of distributable
earnings differ from the amounts reflected in the Statement of Assets and
Liabilities by temporary book/tax differences primarily arising from wash
sales, post October losses, and treatment of defaulted securities.
DISTRIBUTABLE EARNINGS TAX DISTRIBUTIONS
------------------------------------------------------------- -------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 2011 FOR THE YEAR ENDED DECEMBER 31, 2011
------------------------------------------------------------- -------------------------------------
LONG-TERM
ORDINARY LONG-TERM GAINS/CAPITAL AND UNREALIZED APPRECIATION/ ORDINARY CAPITAL
INCOME OTHER LOSSES (DEPRECIATION) INCOME GAINS
-------- --------------------------- ------------------------ ------------ ---------
$436 $(56,199,320) $(19,166,566) $18,645,783 $ --
CAPITAL LOSS CARRYFORWARDS. At December 31, 2011 capital loss carryforward
available to offset future recognized gains were $46,805,017 with $3,498,813
expiring in 2012, $16,003,027 expiring in 2016, and $27,303,177 expiring in
2017. Additionally, the fund generated unlimited short-term capital losses
of $3,141,474 and unlimited long-term capital losses of $6,252,829.+
Unrealized appreciation and depreciation in the value of investments at June
30, 2012 for federal income tax purposes were as follows:
Cost (tax basis)............................................ $343,122,635
============
Gross unrealized appreciation............................... $ 2,426,658
Gross unrealized depreciation............................... (12,810,728)
------------
Net unrealized depreciation................................. $(10,384,070)
============
Note 7. Director Retirement Plan
The Directors of the Fund have adopted the SunAmerica Disinterested
Trustees' and Directors' Retirement Plan (the "Retirement Plan") effective
January 1, 1993, as amended, for the Disinterested Directors. The Retirement
Plan provides generally that a Disinterested Director may become a
participant ("Participant") in the Retirement Plan if he or she has at least
10 years of consecutive service as a Disinterested Director of any of the
adopting SunAmerica mutual funds (the "Adopting Funds") or has attained the
age of 60 while a Director and completed five (5) consecutive years of
service as a Director of any Adopting Fund (an "Eligible Director").
Pursuant to the Retirement Plan, an Eligible Director may receive benefits
upon (i) his or her death or disability while a Director or (ii) the
termination of his or her tenure as a Director, other than removal for cause
from each of the Adopting Funds with respect to which he or she is an
Eligible Director.
As of each of the first 10 birthdays after becoming a Participant and on
which he or she is both a Director and Participant, each Eligible Director
will be credited with an amount equal to 50% of his or her regular fees
(excluding committee fees) for services as a Disinterested Director of each
Adopting Fund for the calendar year in which such birthday occurs. In
addition, an amount equal to 8.50% of any amounts credited under the
preceding clause during prior years is added to each Eligible Director's
account. The rights of any Participant to benefits under the Retirement Plan
shall be an unsecured claim against the assets of the Adopting Funds. An
Eligible Director may receive any benefits payable under the Retirement
Plan, at his or her election, either in one lump sum or in up to 15 annual
installments. Any undistributed amounts shall continue to accrue interest at
8.50%.
--------
+ On December 22, 2010, the Regulated Investment Company Modernization Act of
2010 (the "Act") was enacted which changed various technical rules governing
the tax treatment of regulated investment companies. The changes are
generally effective for taxable years beginning after the date of enactment.
Under the Act, the fund will be permitted to carry forward capital losses
incurred in taxable years beginning after the date of enactment for an
unlimited period. However, any losses incurred during those future taxable
years will be required to be utilized prior to the losses incurred in
pre-enactment taxable years, which carry an expiration date. As a result of
this ordering rule, pre-enactment capital loss carryforwards may be more
likely to expire unused. Additionally, post-enactment capital losses that
are carried forward will retain their character as either short-term or
long-term losses rather than being considered all short-term as under
previous law.
30
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2012 -- (UNAUDITED)
(CONTINUED)
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 the
overnight 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 10
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, 2012, the Fund had borrowings outstanding for 9 days under the line
of credit and incurred $1,329 in interest charges related to these
borrowings. The Fund's average amount of debt under the line of credit for
the days utilized was $3,756,866 at a weighted average interest rate of
1.42%. At June 30, 2012, 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, 2012, 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, 2012, the Fund had the following unfunded loan commitments which
could be extended at the option of the Borrower:
MATURITY PRINCIPAL
NAME TYPE DATE AMOUNT
---- ------------ -------- ---------
National Surgical Hospitals, Inc.............. Delayed Draw 01/04/17 $244,736
Wendy's/Arby's Restaurants LLC................ Delayed Draw 05/15/19 221,914
31
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT -- JUNE
30, 2012 -- (UNAUDITED)
The Board of the Fund, including the Disinterested Directors of the Fund,
SunAmerica and Wellington, approved the continuation of the Advisory Agreement
for a one-year period ending June 30, 2013 at an in-person meeting held on
May 29, 2012 (the "Meeting"). At the Meeting, the Board, including the
Disinterested Directors, also approved the continuation of the Subadvisory
Agreement between SunAmerica and Wellington with respect to the Fund for a
one-year period ending June 30, 2013 (the Subadvisory Agreement and the
Advisory Agreement are referred to collectively herein as the "Agreements").
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 Agreements. 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, along with fee and performance data with respect to the Fund and any
other mutual funds or accounts advised or subadvised by SunAmerica or
Wellington with similar investment objectives and/or strategies, as applicable;
(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 about SunAmerica's general compliance policies and procedures
and the services it provides in connection with its oversight of subadvisers,
(f) information about SunAmerica's and Wellington's risk management process;
(g) information regarding brokerage and soft dollar practices; and
(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.
In determining whether to approve the continuation of the Agreements, the
Board, including Disinterested Directors, considered at the Meeting, and from
time to time as appropriate, factors it deemed relevant, including 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 provided by SunAmerica. The Board noted that the
services include acting as investment manager and adviser to the Fund, managing
the daily business affairs of the Fund, and obtaining and evaluating economic,
statistical and financial information to formulate and implement investment the
Fund's investment policies. Additionally, the Board observed that SunAmerica
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 provided by SunAmerica, the Board
considered the quality of the administrative and other services provided by
SunAmerica to the Fund pursuant to the Advisory Agreement. Additionally, the
Board observed that SunAmerica performs or supervises the performance by others
of other administrative services in connection with the operation of the Fund
pursuant to the Administrative Agreement between SunAmerica and the Fund.
In connection with the services provided by SunAmerica, the Board analyzed the
structure and duties of SunAmerica's fund administration, accounting,
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 has been able to retain quality portfolio
managers, analysts and other personnel; (ii) SunAmerica has exhibited a high
level of diligence and attention to detail in carrying out its advisory and
other responsibilities under the Advisory Agreement; (iii) SunAmerica has been
responsive to requests of the Board; and (iv) SunAmerica has kept the Board
apprised of developments relating to the Fund and the industry in general. The
Board concluded that the nature and extent of services provided under the
Advisory Agreement were reasonable and appropriate in relation to the
management fee and that the quality of services continues to be high. The Board
also noted the high quality of services under the Administrative Services
Agreement.
32
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT -- JUNE
30, 2012 -- (UNAUDITED) (CONTINUED)
The Board also considered SunAmerica's reputation and relationship with the
Fund and considered the benefit to shareholders of investing in funds that are
part of a family of funds offering a variety of types of mutual funds and
shareholder services. The Board considered SunAmerica's experience in providing
management and investment advisory and administrative services to advisory
clients and noted that as of March 31, 2012, SunAmerica managed, advised and/or
administered approximately $46.3 billion in assets. In addition, the Board
considered SunAmerica's code of ethics and its commitment to compliance
generally and with respect to its management and administration of the Fund.
The Board also considered SunAmerica's risk management process. The Board
further observed that SunAmerica has developed internal procedures for
monitoring compliance with the investment objectives, policies and restrictions
of the Fund as set forth in the Fund's prospectuses. The Board also reviewed
SunAmerica's compliance and regulatory history and noted that there were no
material legal, regulatory or compliance issues that would potentially impact
SunAmerica from effectively serving as the investment adviser to the Fund.
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 day-to-day 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) has been able to retain high quality portfolio managers
and other investment personnel; (ii) has exhibited a high level of diligence
and attention to detail in carrying out its responsibilities under the
Subadvisory Agreement; and (iii) has been responsive to requests of the Board
and of SunAmerica. In addition, the Board considered Wellington's code of
ethics and risk management process. The Board further observed 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 reviewed Wellington's compliance and
regulatory history and noted that there were no material legal, regulatory or
compliance issues that would potentially impact Wellington from effectively
serving as a subadviser to the Fund. The Board concluded that the nature and
extent of services 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.
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.
It was noted that performance information was for the periods ended March 31,
2012. The Board also noted that it regularly reviews the performance of the
Fund throughout the year. The Board further 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.
The Board considered that the Fund's performance was below the median of its
Peer Group and Peer Universe for the one- and five- year periods and above the
median of its Peer Group and Peer Universe for the three-year period. The Board
noted management's discussion of the Fund's performance, including the fact
that the Fund ranked in the first quintile of its Peer Group and Peer Universe
for the three-year period, and concluded that the Fund's overall performance
was satisfactory.
33
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT -- JUNE
30, 2012 -- (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 also considered the various expense components of the Fund and 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 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 and determined that these amounts were
reasonable in light of the services performed by SunAmerica and the Subadviser,
respectively.
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 noted in particular that the similar accounts
identified by Wellington were institutional separate accounts, and Wellington
highlighted certain differences between these separate accounts and the Fund,
including that these separate accounts are subject to different investment
limitations and restrictions and do not experience daily cash flows in a manner
similar to the Fund. The Board then noted that the subadvisory fees paid by
SunAmerica to Wellington were reasonable as compared to fees Wellington
receives for other comparable accounts for which they serve as adviser or
subadviser.
34
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT -- JUNE
30, 2012 -- (UNAUDITED) (CONTINUED)
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
further noted management's discussions regarding the Fund's expenses.
PROFITABILITY
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, including the amount of management fees retained after payment to
the Subadviser, as well as the profitability of SunAmerica under the
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 the
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 Agreements 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 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 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 noted that the Subadvisory Agreement included breakpoints, but 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.
35
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT -- JUNE
30, 2012 -- (UNAUDITED) (CONTINUED)
OTHER FACTORS
In consideration of the Agreements, the Board also received information
regarding SunAmerica's and Wellington's brokerage and soft dollar practices.
The Board considered that Wellington is responsible for decisions to buy and
sell securities for the Fund, selection of broker-dealers and negotiation of
commission rates, as applicable. The Board also considered that the Fund
invests primarily in senior secured floating rate loans and, therefore, the
Fund generally does not incur significant brokerage commissions.
CONCLUSION
After a full and complete discussion, the Board approved the Agreements, each
for a one-year period ending June 30, 2013. Based upon its evaluation of all
these factors in their totality, the Board, including the Disinterested
Directors, was satisfied that the terms of the Agreements s 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 Agreements, the Board did not identify
any single factor or group of factors as all-important or controlling, but
considered all factors together. The Disinterested Directors were also assisted
by the advice of independent counsel in making this determination.
36
[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.
[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.SAFUNDS.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.safunds.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.safunds.com. Read
the prospectus carefully before investing.
WWW.SAFUNDS.COM
SFSAN - 6/12
[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 7, 2012
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 7, 2012
By: /s/ Donna M. Handel
------------------------------------
Donna M. Handel
Treasurer
Date: September 7, 2012