================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-CSR
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08727
SunAmerica Senior Floating Rate Fund, Inc.
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(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311
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(Address of principal executive offices) (Zip code)
John T. Genoy
Senior Vice President
SunAmerica Asset Management, LLC
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, 2014
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Item 1. Reports to Stockholders
[GRAPHIC]
SEMI-ANNUAL REPORT 2014
SUNAMERICA
Senior Floating Rate Fund
[LOGO]
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
FINANCIAL HIGHLIGHTS........................................ 9
PORTFOLIO OF INVESTMENTS.................................... 10
NOTES TO FINANCIAL STATEMENTS............................... 21
APPROVAL OF THE INVESTMENT ADVISORY AND SUBADVISORY
AGREEMENTS.................................................. 30
JUNE 30, 2014 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, 2014.
The semi-annual period proved to be one during which persistent geopolitical
risks and emerging market economic developments contributed to a flight to
quality as investor risk appetite was kept low. While global equity markets
pushed higher, global fixed income markets also posted positive returns amidst
improving, albeit, below-trend macroeconomic data. Expectations of prolonged
easy monetary policy by major central banks helped suppress volatility, but at
the same time, monetary policy approaches across major central banks started to
exhibit greater differentiation after years of synchronized stimulus. Floating
rate loans, as represented by the S&P/LSTA Leveraged Loan Index/*/ (the "LLI"),
returned 2.60% during the semi-annual period. However, the LLI lagged the broad
U.S. fixed income market, as measured by the Barclays U.S. Aggregate Bond
Index,/*/ which returned 3.93% for the same period.
Credit quality in the floating rate loan market began to degrade slightly with
the entry of some lower quality first-time issuers, but the sector's overall
credit fundamentals remained strong. The default rate for bank loans, examined
by principal amount, ended the semi-annual period at 4.41%.+ This was sharply
higher than the 1.37% default rate seen at the end of March 2014 due to the
widely anticipated default of Energy Future Holdings (formerly TXU), a
non-regulated retail electric provider in Texas that filed for bankruptcy at
the end of April 2014. Excluding Energy Future Holdings, the default rate at
the end of June 2014 stood at 1.08%, well below the historical average. The
majority of new issuance represented refinancings, allowing issuers to reduce
their borrowing costs and extend maturities. As a result, at the end of June
2014, less than $67 billion was scheduled to mature through 2016, suggesting
that defaults may remain low for some time to come.
The sector's technicals, or supply and demand factors, were also supportive
during the semi-annual period. Bank loan mutual funds experienced inflows of
approximately $8.0 billion during the first quarter of 2014 and outflows of
approximately $6.7 billion during the second quarter./**/ But despite the mixed
retail demand, issuance of collateralized loan obligations (CLOs), another
major source of demand for bank loans, remained robust.
In our view, bank loan valuations remained reasonable at the end of the
semi-annual period and attractive relative to high yield bond valuations,
reflecting persistent investor skittishness about holding perceived higher-risk
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,
2014.
2
JUNE 30, 2014 SEMI-ANNUAL REPORT
SHAREHOLDERS' LETTER -- (unaudited) (continued)
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 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.
Sincerely,
THE SUNAMERICA SENIOR FLOATING RATE FUND PORTFOLIO MANAGER
Jeffrey W. Heuer
Wellington Management LLP
--------
Past performance is no guarantee of future results.
*The S&P/LSTA LEVERAGED LOAN INDEX (LLI) reflects the market-weighted
performance of U.S. dollar-denominated institutional leveraged loan portfolios.
The LLI is the only domestic leveraged loan index that utilized real-time
market weightings, spreads and interest payments. 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.
+Source: S&P Leveraged Commentary & Data.
**Source: Lipper, Inc.
The Fund is not a money market fund and its net asset value may fluctuate.
Investments in loans involve certain risks including nonpayment of principal
and interest; collateral impairment; non-diversification and borrower industry
concentration; and lack of an active trading market, in certain cases, which
may impair the Fund's ability to obtain full value for loans sold. The Fund may
invest all or substantially all of its assets in loans or other securities
(e.g. unsecured loans or high yield securities) that are rated below investment
grade, or in comparable unrated securities. Credit risks include the
possibility of a default on the loan or bankruptcy of the borrower. The value
of these loans is subject to a greater degree of volatility in response to
interest rate fluctuations.
3
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
EXPENSE EXAMPLE -- JUNE 30, 2014 -- (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, 2014 and
held until June 30, 2014.
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, 2014" 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, 2014" 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, 2014" 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, 2014" 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, 2014" 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, 2014" 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, 2014" 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, 2014 -- (UNAUDITED) (CONTINUED)
ACTUAL HYPOTHETICAL
------------------------------------------------- -----------------------------------------------------
ENDING ENDING ACCOUNT
ACCOUNT VALUE EXPENSES PAID VALUE USING EXPENSES PAID
BEGINNING USING ACTUAL DURING THE BEGINNING A HYPOTHETICAL 5% DURING THE
ACCOUNT VALUE RETURNS AT SIX MONTHS ENDED ACCOUNT VALUE ASSUMED RETURN AT SIX MONTHS ENDED
AT JANUARY 1, 2014 JUNE 30, 2014 JUNE 30, 2014* AT JANUARY 1, 2014 JUNE 30, 2014 JUNE 30, 2014
------------------ ------------- ---------------- ------------------ ----------------- ----------------
Senior Floating
Rate Fund#
Class A.......... $1,000.00 $1,019.41 $7.26 $1,000.00 $1,017.60 $7.25
Class C.......... $1,000.00 $1,016.60 $8.75 $1,000.00 $1,016.12 $8.75
EXPENSE
RATIO
AS OF
JUNE 30,
2014
--------
Senior Floating
Rate Fund#
Class A.......... 1.45%
Class C.......... 1.75%
--------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 181 days divided by 365
days. These ratios do not reflect transaction costs, including sales charges
on purchase payments, contingent deferred sales charges and administrative
fees, if applicable to your account. Please refer to your Prospectus, your
qualified retirement plan document and/or materials from your financial
advisor for more information.
# During the stated period, the investment adviser either waived/reimbursed a
portion of or all of the fees/expenses and assumed a portion of or all
expenses for the Fund. As a result, if these fees and expenses had not been
waived/reimbursed, the "Actual/Hypothetical Ending Account Value" would have
been lower and the "Actual/Hypothetical Expenses Paid During the Six Months
Ended June 30, 2014 and the "Expense Ratios" would have been higher.
5
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES -- JUNE 30, 2014 -- (UNAUDITED)
ASSETS:
Investments at value (unaffiliated)*............................................ $ 444,129,801
Repurchase agreements (cost approximates value)................................. 9,590,000
-------------
Total investments.............................................................. 453,719,801
-------------
Receivable for:
Fund shares sold............................................................... 1,316,553
Dividends and interest......................................................... 2,786,188
Investments sold............................................................... 7,900,445
Prepaid expenses and other assets............................................... 5,696
Due from investment adviser for expense reimbursements/fee waivers.............. 242,516
-------------
Total assets................................................................... 465,971,199
-------------
LIABILITIES:
Payable for:
Fund shares redeemed........................................................... 736,415
Investments purchased.......................................................... 30,933,615
Investment advisory and management fees........................................ 300,685
Distribution and service maintenance fees...................................... 203,126
Administration fees............................................................ 70,749
Transfer agent fees and expenses............................................... 87,001
Directors' fees and expenses................................................... 1,326
Other accrued expenses......................................................... 193,538
Dividends payable............................................................... 282,854
Commitments (Note 10)........................................................... 871,287
-------------
Total liabilities.............................................................. 33,680,596
-------------
Net Assets................................................................... $ 432,290,603
=============
NET ASSETS REPRESENTED BY:
Common stock, $.01 par value.................................................... $ 518,088
Additional paid-in capital...................................................... 487,725,598
-------------
488,243,686
Accumulated undistributed net investment income (loss).......................... (264,282)
Accumulated undistributed net realized gain (loss) on investments............... (55,325,148)
Unrealized appreciation (depreciation) on investments........................... (363,653)
-------------
Net Assets................................................................... $ 432,290,603
=============
CLASS A:
Net assets...................................................................... $ 192,808,599
Shares outstanding.............................................................. 23,099,617
Net asset value and redemption price per share.................................. $ 8.35
Maximum sales charge (3.75% of offering price).................................. 0.33
-------------
Maximum offering price to public................................................ $ 8.68
=============
CLASS C:
Net assets...................................................................... $ 239,482,004
Shares outstanding.............................................................. 28,709,169
Net asset value, offering and redemption price per share (excluding any
applicable contingent deferred sales charges).................................. $ 8.34
=============
*COST
Investment securities (unaffiliated)........................................... $ 444,493,454
=============
See Notes to Financial Statements
6
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
STATEMENT OF OPERATIONS -- FOR THE SIX MONTHS ENDED JUNE 30, 2014 --
(UNAUDITED)
INVESTMENT INCOME:
Interest (unaffiliated)........................................................ $10,367,905
Dividends (unaffiliated)....................................................... 13,945
Facility and other fee income (Note 2)......................................... 578,246
-----------
Total investment income*.................................................... $10,960,096
-----------
EXPENSES:
Investment advisory and management fees........................................ 1,837,276
Administration fees............................................................ 432,300
Distribution and service maintenance fees:
Class A...................................................................... 332,528
Class C...................................................................... 908,567
Transfer agent fees and expenses:
Class A...................................................................... 215,427
Class C...................................................................... 274,123
Registration fees:
Class A...................................................................... 17,308
Class C...................................................................... 10,637
Accounting service fees........................................................ 17,152
Custodian and accounting fees.................................................. 65,929
Reports to shareholders........................................................ 47,366
Audit and tax fees............................................................. 52,449
Legal fees..................................................................... 7,825
Directors' fees and expenses................................................... 26,924
Interest expense............................................................... 524
Other expenses................................................................. 57,975
-----------
Total expenses before fee waivers, expense reimbursements................... 4,304,310
Fees waived and expenses reimbursed by investment adviser (Note 5).......... (806,706)
-----------
Net expenses................................................................ 3,497,604
-----------
Net investment income (loss)................................................... 7,462,492
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments (unaffiliated)......................... 1,392,187
Change in unrealized appreciation (depreciation) on investments (unaffiliated). (1,057,195)
-----------
Net realized and unrealized gain (loss) on investments......................... 334,992
-----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.................... $ 7,797,484
===========
*Net of foreign withholding taxes on interest and dividends of................. $ 5,976
-----------
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
2014 DECEMBER 31,
(UNAUDITED) 2013
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss)......................................... $ 7,462,492 $ 14,794,754
Net realized gain (loss) on investments (unaffiliated)............... 1,392,187 (1,295,657)
Net unrealized gain (loss) on investments (unaffiliated)............. (1,057,195) 4,909,000
------------ ------------
Increase (decrease) in net assets resulting from operations........... 7,797,484 18,408,097
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)...................................... (3,459,284) (6,706,870)
Net investment income (Class C)...................................... (4,027,968) (8,083,805)
------------ ------------
Total distributions to shareholders................................... (7,487,252) (14,790,675)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS (NOTE 3)................................................ (5,304,649) 90,085,199
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS............................... (4,994,417) 93,702,621
NET ASSETS:
Beginning of period................................................... 437,285,020 343,582,399
------------ ------------
End of period+........................................................ $432,290,603 $437,285,020
============ ============
+Includes accumulated undistributed net investment income (loss)...... $ (264,282) $ (239,522)
============ ============
See Notes to Financial Statements
8
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
-------
12/31/09 $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
12/31/12 7.96 0.36 0.31 0.67 (0.37) -- (0.37) 8.26 8.51 146,103 1.45
12/31/13 8.26 0.33 0.08 0.41 (0.33) -- (0.33) 8.34 5.08 195,309 1.45
06/30/14(5) 8.34 0.15 0.01 0.16 (0.15) -- (0.15) 8.35 1.94 192,809 1.45(4)
CLASS C
-------
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
12/31/12 7.95 0.34 0.30 0.64 (0.34) -- (0.34) 8.25 8.20 197,480 1.75
12/31/13 8.25 0.30 0.10 0.40 (0.31) -- (0.31) 8.34 4.89 241,976 1.75
06/30/14(5) 8.34 0.14 0.00 0.14 (0.14) -- (0.14) 8.34 1.66 239,482 1.75(4)
RATIO OF
NET
INVESTMENT
INCOME TO
PERIOD AVERAGE PORTFOLIO
ENDED NET ASSETS(3) TURNOVER
----------- ------------- ---------
12/31/09 4.94% 74%
12/31/10 4.34 41
12/31/11 4.27 63
12/31/12 4.41 61
12/31/13 3.98 84
06/30/14(5) 3.62(4) 42
12/31/09 4.88% 74%
12/31/10 4.03 41
12/31/11 4.02 63
12/31/12 4.12 61
12/31/13 3.68 84
06/30/14(5) 3.32(4) 42
--------
(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):
12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 06/30/14(4)(5)
-------- -------- -------- -------- -------- --------------
Class A. 0.55% 0.38% 0.33% 0.35% 0.34% 0.32%
Class C. 0.66 0.48 0.44 0.44 0.43 0.41
(4)Annualized
(5)Unaudited
See Notes to Financial Statements
9
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO PROFILE -- JUNE 30, 2014 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Media....................................................... 7.5%
Commercial Services & Supplies.............................. 5.5
Oil, Gas & Consumable Fuels................................. 5.4
Hotels, Restaurants & Leisure............................... 5.0
Health Care Providers & Services............................ 4.7
Software.................................................... 4.3
Chemicals................................................... 3.4
Machinery................................................... 3.3
Insurance................................................... 3.3
IT Services................................................. 3.2
Food & Staples Retailing.................................... 2.8
Energy Equipment & Services................................. 2.8
Metals & Mining............................................. 2.8
Diversified Telecommunication Services...................... 2.6
Diversified Financial Services.............................. 2.6
Semiconductors & Semiconductor Equipment.................... 2.5
Capital Markets............................................. 2.5
Communications Equipment.................................... 2.2
Specialty Retail............................................ 2.2
Repurchase Agreements....................................... 2.2
Registered Investment Companies............................. 2.2
Multi Utilities............................................. 2.1
Food Products............................................... 2.0
Wireless Telecommunication Services......................... 1.9
Pharmaceuticals............................................. 1.9
Professional Services....................................... 1.6
Industrial Conglomerates.................................... 1.5
Containers & Packaging...................................... 1.5
Auto Components............................................. 1.5
Health Care Equipment & Supplies............................ 1.4
Multiline Retail............................................ 1.1
Electronic Equipment, Instruments & Components.............. 1.1
Airlines.................................................... 1.0
Building Products........................................... 0.9
Automobiles................................................. 0.9
Aerospace & Defense......................................... 0.9
Road & Rail................................................. 0.8
Leisure Equipment & Products................................ 0.8
Industrial Power Producers & Energy Traders................. 0.8
Internet Software & Services................................ 0.8
Consumer Finance............................................ 0.7
Internet & Catalog Retail................................... 0.7
Biotechnology............................................... 0.7
Household Durables.......................................... 0.7
Construction Materials...................................... 0.5
Pooled Vehicle.............................................. 0.5
Diversified Consumer Services............................... 0.4
Health Care Technology...................................... 0.4
Real Estate Management & Development........................ 0.4
Life Sciences Tools & Services.............................. 0.4
Gas Utilities............................................... 0.3
Real Estate Investment Trusts............................... 0.3
Paper & Forest Products..................................... 0.3
Distributors................................................ 0.3
Thrifts & Mortgage Finance.................................. 0.3
Textiles, Apparel & Luxury Goods............................ 0.2
Computers & Peripherals..................................... 0.2
Electrical Equipment........................................ 0.2
-----
105.0%
=====
CREDIT QUALITY+#
BBB......................................................... 0.3%
BBB-........................................................ 2.3
BB+......................................................... 4.3
BB.......................................................... 7.0
BB-......................................................... 15.4
B+.......................................................... 26.3
B........................................................... 25.5
B-.......................................................... 5.1
CCC+........................................................ 7.3
CCC......................................................... 2.0
CCC-........................................................ 0.7
Not Rated@.................................................. 3.8
-----
100.0%
=====
--------
* Calculated as a percentage of net assets.
@ Represents debt issues that either have no rating, or the rating is
unavailable from the data source.
+ Source: Standard and Poor's
# Calculated as a percentage of total debt issues, excluding short-term
securities.
10
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2014 -- (UNAUDITED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
-------------------------------------------------------------------------------------------------------------
LOANS(3)(4) -- 95.5%
AEROSPACE & DEFENSE -- 0.9%
DigitalGlobe, Inc..................... BTL-B Ba2 BBB- 3.75% 01/31/2020 $1,886,125 $ 1,889,072
Transdigm Group, Inc.................. BTL-C Ba3 B 3.75 02/28/2020 1,987,209 1,978,017
-----------
3,867,089
-----------
AIRLINES -- 1.0%
American Airlines, Inc................ BTL Ba2 BB- 3.75 06/27/2019 1,252,063 1,254,521
Delta Air Lines, Inc.................. BTL Ba1 BB+ 3.50 04/20/2017 1,787,170 1,785,573
Delta Air Lines, Inc.................. BTL-B1 Ba1 BB 3.50 10/18/2018 1,103,200 1,101,303
-----------
4,141,397
-----------
AUTO COMPONENTS -- 1.5%
Affinia Group......................... BTL-B2 B2 B 4.75 04/25/2020 1,053,638 1,064,174
American Tire Distributors, Inc....... Delayed Draw B2 CCC+ 5.75 06/01/2018 270,667 272,357
American Tire Distributors, Inc....... 1st Lien B2 CCC+ 5.75 06/01/2018 1,012,463 1,018,789
August U.S. Holding Co., Inc.......... 1st Lien NR B 5.00 04/27/2018 655,343 661,895
August U.S. Holding Co., Inc.......... 2nd Lien NR B 5.00 04/27/2018 295,884 298,843
Goodyear Tire & Rubber Co............. 2nd Lien Ba1 BB 4.75 04/30/2019 500,000 502,709
TI Group Automotive Systems LLC....... BTL-B NR NR 5.50 03/28/2019 602,375 604,634
Tower International, Inc.............. BTL-B B1 BB- 4.00 04/23/2020 775,232 772,648
UCI International, Inc................ BTL-B Ba3 B 5.50 07/26/2017 1,176,898 1,178,860
-----------
6,374,909
-----------
AUTOMOBILES -- 0.9%
Casco Automotive Group, Inc........... BTL B1 B+ 6.00 11/14/2018 958,438 960,834
Chrysler Group LLC.................... BTL Ba1 BB+ 3.25 12/31/2018 1,815,450 1,809,399
Chrysler Group LLC.................... BTL-B Ba1 BB+ 3.50 05/24/2017 1,095,166 1,098,686
-----------
3,868,919
-----------
BIOTECHNOLOGY -- 0.7%
Ikaria, Inc........................... BTL B1 B- 5.00 02/12/2021 570,000 573,206
Ikaria, Inc........................... 2nd Lien Caa1 CCC 8.75 02/12/2022 410,000 416,560
Medpace, Inc.......................... BTL B2 B+ 5.00 04/01/2021 1,940,000 1,941,616
-----------
2,931,382
-----------
BUILDING PRODUCTS -- 0.9%
Interline Brands, Inc................. BTL B2 B 4.00 03/21/2021 2,314,200 2,303,594
Nortek, Inc........................... BTL Ba3 BB- 3.75 10/30/2020 1,625,000 1,622,941
-----------
3,926,535
-----------
CAPITAL MARKETS -- 2.5%
AlixPartners LLC...................... BTL-B2 B1 B+ 4.00 07/10/2020 679,467 677,909
AlixPartners LLC...................... 2nd Lien Caa1 B- 9.00 07/09/2021 285,000 288,563
Nuveen Investments, Inc............... 1st Lien B2 B 4.15 05/13/2017 3,170,000 3,173,081
Nuveen Investments, Inc............... 2nd Lien Caa1 CCC 6.50 02/28/2019 3,800,000 3,831,893
Walter Investment Management Co....... Tranche B B2 B+ 4.75 12/19/2020 2,713,631 2,680,389
-----------
10,651,835
-----------
CHEMICALS -- 3.4%
Al Chem & Cy SCA...................... BTL-B Ba3 B+ 4.50 10/03/2019 498,604 499,539
Al Chem & Cy SCA...................... BTL-B1 Ba3 B+ 4.50 10/03/2019 258,702 259,187
Al Chem & Cy SCA...................... 2nd Lien B3 B- 8.25 04/03/2020 221,490 227,027
Gates Global, Inc..................... BTL B2 B+ 4.25 07/05/2021 3,935,000 3,921,475
Ineos U.S. Finance LLC................ BTL-B Ba3 BB- 3.75 05/04/2018 1,507,903 1,503,087
Minerals Technologies, Inc............ BTL-B Ba3 BB 4.00 05/09/2021 2,055,000 2,064,418
Momentive Performance Materials, Inc.. BTL-B Ba3 BB- 4.00 04/15/2015 2,265,000 2,266,416
PQ Corp............................... 1st Lien B2 B+ 4.00 08/07/2017 625,475 626,592
U.S. Coatings Acquisition, Inc........ BTL-B B1 B+ 4.00 02/01/2020 628,650 628,563
Univar, Inc........................... BTL-B B3 B+ 5.00 06/30/2017 2,489,743 2,497,745
-----------
14,494,049
-----------
11
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2014 -- (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 -- 5.5%
ADS Waste Holdings, Inc........................ BTL B1 B+ 3.75% 10/09/2019 $1,502,125 $ 1,493,809
ARG IH Corp.................................... BTL-B B3 B 5.00 11/15/2020 1,412,900 1,419,940
ATI Schools(5)(6)(8)(10)(11)(12)............... BTL-B NR NR 12.25 12/30/2014 1,184,859 0
ATI Schools(5)(6)(8)(9)(11)(12)................ BTL NR NR 13.25 06/30/2012 266,663 0
ATI Schools(5)(6)(8)(9)(11)(12)................ BTL NR NR 13.25 06/30/2012 16,473 0
Audio Visual Services Group, Inc............... BTL-B B1 B+ 4.50 01/24/2021 1,980,038 1,982,513
Brand Energy and Infrastructure Services, Inc.. BTL-B B1 B 4.75 11/26/2020 4,378,000 4,395,026
Brickman Group Holdings, Inc................... BTL B2 B 4.00 12/18/2020 3,725,925 3,686,337
Brickman Group Holdings, Inc................... 2nd Lien Caa1 CCC+ 7.50 12/18/2021 1,340,000 1,360,100
Fly Funding II SARL............................ BTL Ba3 BBB- 4.50 08/06/2019 1,445,742 1,458,995
Peak 10, Inc................................... 1st Lien B2 B 5.00 06/17/2021 460,000 461,294
Peak 10, Inc................................... 2nd Lien Caa2 CCC+ 8.25 06/17/2022 1,845,000 1,844,424
ServiceMaster Co............................... BTL-B B2 B+ 4.25 07/01/2021 1,069,557 1,067,552
ServiceMaster Co............................... BTL B1 B+ 6.50 01/31/2017 1,066,835 1,066,702
Star West Generation LLC....................... BTL-B Ba3 BB- 4.25 03/13/2020 1,019,833 1,021,533
WCA Waste Systems, Inc......................... BTL B1 B+ 4.00 03/23/2018 1,666,638 1,664,034
West Corp...................................... BTL-B10 Ba3 BB 3.25 06/30/2018 1,001,835 995,574
-----------
23,917,833
-----------
COMMUNICATIONS EQUIPMENT -- 2.1%
Alcatel-Lucent SA.............................. BTL-C B1 B+ 4.50 01/30/2019 8,186,032 8,188,594
ARRIS Group, Inc............................... BTL-B Ba3 BB- 3.50 04/17/2020 1,110,696 1,105,490
-----------
9,294,084
-----------
COMPUTERS & PERIPHERALS -- 0.2%
CDW Corp....................................... BTL Ba3 BB- 3.25 04/29/2020 882,560 871,896
-----------
CONSTRUCTION MATERIALS -- 0.5%
Quikrete Companies, Inc........................ 2nd Lien B1 B+ 4.00 09/26/2020 1,602,888 1,603,556
Quikrete Companies, Inc........................ 1st Lien B3 B- 7.00 03/26/2021 640,000 652,800
-----------
2,256,356
-----------
CONSUMER FINANCE -- 0.7%
Ocwen Financial Corp........................... BTL B1 B+ 5.00 02/15/2018 1,738,000 1,743,431
Vantiv LLC..................................... BTL-B Ba3 BB+ 3.75 05/12/2021 1,455,000 1,457,728
-----------
3,201,159
-----------
CONTAINERS & PACKAGING -- 1.5%
Ardagh Packaging Finance PLC................... BTL Ba3 B+ 4.00 12/17/2019 660,000 659,450
Ardagh Packaging Finance PLC................... BTL-B Ba3 B+ 4.25 12/17/2019 706,450 706,892
Devix Midco SA................................. BTL-B B1 B 4.25 05/02/2021 885,000 885,553
Devix Midco SA................................. 2nd Lien Caa1 CCC+ 8.00 05/02/2022 500,000 501,250
Mauser Holding GmbH(13)........................ 1st Lien B2 B 4.50 06/04/2021 1,180,000 1,180,000
Mauser Holding GmbH(13)........................ 2nd Lien Caa2 CCC+ 8.25 06/30/2022 2,605,000 2,591,975
-----------
6,525,120
-----------
DISTRIBUTORS -- 0.3%
ABC Supply Co., Inc............................ BTL-B B1 BB+ 3.50 04/16/2020 1,344,838 1,340,425
-----------
DIVERSIFIED CONSUMER SERVICES -- 0.4%
Bright Horizons Family Solutions, Inc.......... BTL-B B1 BB- 3.75--5.00 01/30/2020 1,142,600 1,140,815
Weight Watchers International, Inc............. BTL-F B1 B+ 4.00 04/02/2020 965,884 762,646
-----------
1,903,461
-----------
DIVERSIFIED FINANCIAL SERVICES -- 2.5%
BLB Management Services, Inc................... BTL-B B1 BB- 5.25 11/10/2018 597,438 592,957
ION Trading Technologies, Ltd.................. 2nd Lien Caa2 NR 7.25 05/15/2022 2,345,000 2,352,816
Ipreo Holdings LLC............................. BTL-B4 B1 BB- 5.00 08/05/2017 1,879,165 1,879,165
Opal Acquisition, Inc.......................... BTL-B B1 B 5.00 11/27/2020 2,771,075 2,773,846
Santander Asset Management..................... BTL Ba2 BB 4.25 12/17/2020 2,026,920 2,032,832
TransUnion LLC................................. BTL Ba3 B+ 4.00 04/09/2021 1,015,382 1,014,874
-----------
10,646,490
-----------
12
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2014 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES -- 1.6%
Altice Financing SA.................................. BTL B1 BB- 5.50% 07/15/2019 $2,950,175 $ 3,014,710
Level 3 Financing, Inc............................... BTL-B2 Ba3 BB 4.00 08/01/2019 1,425,000 1,425,891
Level 3 Financing, Inc............................... Tranche B Ba3 BB 4.00 01/15/2020 1,226,000 1,227,533
XO Communications, Inc............................... BTL B2 BB- 4.25 03/19/2021 1,152,113 1,157,667
-----------
6,825,801
-----------
ELECTRICAL EQUIPMENT -- 0.2%
WireCo WorldGroup, Inc............................... BTL-B Ba2 B+ 6.00 02/15/2017 661,775 665,911
-----------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS -- 1.1%
Minimax GmbH & Co. KG................................ BTL-B B2 B 4.50 08/14/2020 1,507,002 1,510,770
Ortho Clinical Diagnostics SA........................ BTL B1 B 4.75 06/30/2021 3,250,000 3,271,648
-----------
4,782,418
-----------
ENERGY EQUIPMENT & SERVICES -- 2.5%
EMG Utica LLC........................................ BTL B2 B 4.75 03/27/2020 690,000 691,725
Pacific Drilling SA.................................. BTL-B B1 B+ 4.50 06/04/2018 826,650 828,975
Pinnacle Holdco SARL................................. BTL B1 B+ 4.75 07/24/2019 1,633,548 1,633,888
Pinnacle Holdco SARL................................. 2nd Lien Caa1 CCC+ 10.50 07/24/2020 1,931,000 1,952,241
Seadrill Partners Finco LLC.......................... BTL-B Ba3 BB- 4.00 02/21/2021 4,261,829 4,231,050
Shelf Drilling Midco, Ltd............................ BTL B2 B- 10.00 10/08/2018 1,240,000 1,264,800
-----------
10,602,679
-----------
FOOD & STAPLES RETAILING -- 2.8%
BJ's Wholesale Club, Inc............................. 1st Lien B3 B- 4.50 09/26/2019 2,787,825 2,790,599
Rite Aid Corp........................................ BTL B2 B 4.88 06/21/2021 2,230,000 2,252,998
Rite Aid Corp........................................ 2nd Lien B2 B 5.75 08/21/2020 1,055,000 1,076,364
Roundy's Supermarkets................................ BTL-B B1 B 4.95-5.75 03/03/2021 1,256,850 1,258,870
Sprouts Farmers Market LLC........................... BTL-B Ba3 BB- 4.00 04/23/2020 757,907 759,171
Stater Brothers Markets, Inc......................... BTL-B B1 B+ 4.75 05/12/2021 725,000 727,266
Supervalu, Inc....................................... BTL-B B1 B+ 4.50 03/21/2019 1,225,808 1,224,850
U.S. Foodservice..................................... BTL B2 B- 4.50 03/29/2019 2,203,743 2,205,579
-----------
12,295,697
-----------
FOOD PRODUCTS -- 2.0%
Arysta LifeScience Corp.............................. BTL B1 B 4.50 05/30/2020 850,703 855,488
H.J. Heinz Co........................................ BTL-B2 Ba2 BB 3.50 06/05/2020 2,279,469 2,295,129
Hearthside Food Solutions LLC........................ BTL B1 B 4.50 06/02/2021 1,745,000 1,755,179
Hostess Brands, Inc.................................. BTL-B NR B- 6.75 04/09/2020 1,092,263 1,133,222
JBS USA LLC.......................................... BTL-B Ba2 BB 3.75 09/18/2020 1,037,163 1,032,841
Pinnacle Operating Corp.............................. BTL-B2 B1 B 4.75 11/15/2018 1,414,890 1,420,196
-----------
8,492,055
-----------
GAS UTILITIES -- 0.1%
NGPL PipeCo LLC...................................... BTL-B B3 B- 6.75 09/15/2017 646,410 641,965
-----------
HEALTH CARE EQUIPMENT & SUPPLIES -- 1.4%
Biomet, Inc.......................................... BTL-B2 B1 BB- 3.73 07/25/2017 913,234 914,228
Catalent Pharma Solutions, Inc....................... BTL-B2 Ba3 BB- 4.50 05/20/2021 2,450,906 2,462,396
Catalent Pharma Solutions, Inc....................... BTL Caa1 B 6.50 12/29/2017 720,000 725,400
Immucor, Inc......................................... BTL-B2 B1 B+ 5.00 08/17/2018 1,836,134 1,844,167
-----------
5,946,191
-----------
HEALTH CARE PROVIDERS & SERVICES -- 4.1%
American Renal Holdings, Inc......................... 1st Lien Ba3 B 4.50 09/22/2019 2,098,438 2,096,690
American Renal Holdings, Inc......................... 2nd Lien Caa1 CCC+ 8.50 03/20/2020 1,880,000 1,880,000
CHS/Community Health Systems, Inc.................... BTL-D Ba2 BB 4.25 01/22/2021 2,845,700 2,862,598
DaVita, Inc.......................................... BTL-B Ba1 BB 3.50 06/24/2021 1,160,000 1,165,386
DSI Renal, Inc....................................... 1st Lien B1 B 4.75 04/23/2021 570,000 570,713
DSI Renal, Inc....................................... 2nd Lien Caa2 CCC+ 7.75 10/22/2021 825,000 829,125
Healogics, Inc....................................... 1st Lien B2 B 5.25 07/01/2021 730,000 722,700
13
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2014 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
-------------------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (CONTINUED)
MPH Acquisition Holdings LLC...................... BTL B1 B 4.00% 03/31/2021 $1,215,909 $ 1,212,261
Sheridan Holdings, Inc............................ BTL B1 B 4.50 06/29/2018 1,997,973 1,999,638
Sheridan Holdings, Inc............................ 2nd Lien Caa1 CCC+ 8.25 12/18/2021 1,220,000 1,245,925
U.S. Renal Care, Inc.............................. 1st Lien Ba3 NR 4.25 07/03/2019 1,835,051 1,840,785
U.S. Renal Care, Inc.............................. BTL Caa1 CCC+ 8.50 07/03/2020 735,000 743,269
U.S. Renal Care, Inc.............................. 2nd Lien Caa1 CCC+ 10.25 12/27/2019 666,000 675,990
-----------
17,845,080
-----------
HEALTH CARE TECHNOLOGY -- 0.4%
IMS Health, Inc................................... BTL-B Ba3 BB- 3.50 03/17/2021 1,799,265 1,787,570
-----------
HOTELS, RESTAURANTS & LEISURE -- 5.0%
24 Hour Fitness Worldwide, Inc.................... BTL-B Ba3 B+ 4.75 05/28/2021 2,500,000 2,513,543
Bally Technologies, Inc........................... BTL-B Ba3 BB 4.25 11/25/2020 1,155,138 1,159,109
Caesars Entertainment Operating Co., Inc.......... BTL-B2 Caa2 CCC- 4.40-6.50 01/28/2018 3,193,554 2,945,609
Caesers Growth Properties Holdings LLC............ BTL B2 B+ 6.25 05/08/2021 1,950,000 1,946,866
California Pizza Kitchen, Inc..................... BTL B2 B- 5.25 03/29/2018 1,481,250 1,410,891
CityCenter Holdings LLC........................... BTL-B B2 B+ 5.00 10/16/2020 2,386,820 2,403,229
Four Seasons Holdings, Inc........................ 2nd Lien Caa1 B- 6.25 12/24/2020 835,000 847,525
Hilton Worldwide Finance LLC...................... BTL-B2 Ba3 BB+ 3.50 10/26/2020 1,920,424 1,916,343
La Quinta Intermediate Holdings LLC............... BTL-B B1 BB- 4.00 04/14/2021 1,640,048 1,641,073
Station Casinos, Inc.............................. BTL-B B1 B 4.25 03/02/2020 2,696,815 2,704,682
Town Sports International Holdings, Inc........... BTL B1 B+ 4.50 11/15/2020 2,368,100 2,190,493
-----------
21,679,363
-----------
HOUSEHOLD DURABLES -- 0.7%
Apex Tool Group LLC............................... BTL-B B2 B 4.50 02/01/2020 1,021,364 1,008,810
Tempur-Pedic International, Inc................... BTL-B Ba3 BB 3.50 03/18/2020 745,642 742,225
Wilsonart International Holdings LLC.............. BTL B2 B+ 4.00 10/31/2019 1,083,501 1,077,271
-----------
2,828,306
-----------
INDUSTRIAL CONGLOMERATES -- 1.5%
American Rock Salt Co. LLC........................ BTL-B B3 B 4.75 05/20/2021 1,780,000 1,777,220
American Rock Salt Co. LLC........................ 2nd Lien Caa1 CCC 8.00 05/20/2022 1,785,000 1,798,388
Filtration Group Corp............................. 1st Lien B1 B+ 4.50 11/21/2020 651,725 655,798
Filtration Group Corp............................. 2nd Lien Caa1 B- 8.25 11/22/2021 790,000 802,508
Harland Clarke Holdings Corp...................... Tranche B3 B1 B+ 6.00 08/04/2019 701,125 711,992
Sequa Corp........................................ BTL-B B2 B 5.25 06/19/2017 863,841 855,202
-----------
6,601,108
-----------
INDUSTRIAL POWER PRODUCERS & ENERGY TRADERS -- 0.8%
Calpine Corp...................................... BTL-B B1 BB- 4.00 04/01/2018 1,054,563 1,057,492
Calpine Corp...................................... BTL B1 BB- 4.00 10/09/2019 1,518,945 1,522,320
Dynegy Holdings, Inc.............................. BTL-B2 B1 BB- 4.00 04/23/2020 764,585 766,223
-----------
3,346,035
-----------
INSURANCE -- 3.3%
Asurion Corp...................................... 1st Lien Ba3 B 5.00 05/24/2019 3,775,230 3,795,522
Asurion Corp...................................... 2nd Lien B3 CCC+ 8.50 03/03/2021 3,450,000 3,575,063
Compass Investments, Inc.......................... BTL B1 B 4.25 12/27/2019 1,134,182 1,134,182
Cooper, Gay, Swett & Crawford, Ltd................ 1st Lien B2 B 5.00 04/16/2020 900,900 877,627
Cooper, Gay, Swett & Crawford, Ltd................ 2nd Lien Caa2 CCC+ 8.25 10/16/2020 1,430,000 1,379,950
Hub International, Ltd............................ BTL B1 B 4.25 10/02/2020 2,565,670 2,568,343
National Financial Partners Corp.................. BTL-B B2 B 5.25 06/24/2020 1,069,204 1,073,213
-----------
14,403,900
-----------
INTERNET & CATALOG RETAIL -- 0.7%
Acosta, Inc....................................... BTL B1 B+ 3.40 03/03/2018 1,567,723 1,572,622
Lands' End, Inc................................... BTL-B B1 B+ 4.25 04/04/2021 1,571,063 1,567,627
-----------
3,140,249
-----------
14
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2014 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
--------------------------------------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES -- 0.8%
Dealertrack Technologies, Inc............ BTL-B Ba2 BB- 3.50% 02/24/2021 $1,073,274 $ 1,071,249
Web.com Group, Inc....................... BTL-B Ba3 BB 4.50 10/27/2017 438,753 438,205
Zayo Group LLC........................... BTL-B B1 B 4.00 07/02/2019 1,820,454 1,821,876
-----------
3,331,330
-----------
IT SERVICES -- 2.9%
Ceridian Corp............................ BTL B1 B- 4.40 05/09/2017 1,037,798 1,038,724
Evertec, Inc............................. BTL-B B1 BB- 3.50 04/17/2020 603,900 594,842
First Data Corp.......................... BTL-B B1 B+ 4.15 03/23/2018 6,218,681 6,225,297
First Data Corp.......................... BTL-1 B1 B+ 4.15 09/24/2018 2,170,000 2,173,164
MoneyGram International, Inc............. BTL-B B1 BB- 4.25 03/27/2020 1,590,742 1,567,676
TransFirst Holdings, Inc................. 2nd Lien NR NR 7.50 06/27/2018 750,000 752,813
-----------
12,352,516
-----------
LEISURE EQUIPMENT & PRODUCTS -- 0.8%
Bauer Performance Sports, Ltd............ BTL-B B2 B+ 4.50 04/15/2021 873,876 874,696
SRAM LLC................................. BTL-B B1 BB- 4.00-5.25 04/10/2020 2,542,808 2,511,023
-----------
3,385,719
-----------
LIFE SCIENCES TOOLS & SERVICES -- 0.4%
Pharmaceutical Product Development, Inc.. BTL-B Ba3 B+ 4.00 12/05/2018 1,673,367 1,676,853
-----------
MACHINERY -- 3.3%
Alliance Laundry Systems LLC............. BTL B2 B 3.25-4.25 12/10/2018 735,006 738,451
Gardner Denver, Inc...................... BTL B1 B 4.25 07/30/2020 1,354,763 1,354,070
Harbor Freight Tools USA, Inc............ BTL-B B1 B+ 4.75 07/26/2019 1,023,224 1,030,642
Husky International, Ltd................. 1st Lien B1 B 4.25 06/30/2021 465,000 466,163
Husky International, Ltd................. 2nd Lien Caa1 CCC+ 7.25 06/30/2022 870,000 872,175
Navistar International Corp.............. BTL-B Ba3 B 5.75 08/17/2017 645,188 657,688
Paladin Brands Holding, Inc.............. BTL B2 B+ 6.75 08/16/2019 1,902,861 1,921,890
Pro Mach, Inc............................ BTL-B B2 B+ 4.50 07/06/2017 1,461,464 1,465,118
Rexnord Corp............................. BTL-B B2 BB- 4.00 08/21/2020 5,909,243 5,900,214
-----------
14,406,411
-----------
MEDIA -- 7.5%
Advantage Sales & Marketing LLC.......... BTL B1 B+ 4.25 12/18/2017 1,134,258 1,134,967
Delta 2 (Lux) SARL....................... BTL-B B1 B+ 4.50 04/30/2019 2,444,124 2,452,270
Getty Images, Inc........................ BTL-B B2 B 4.75 10/18/2019 2,876,225 2,772,615
Gray Television, Inc..................... BTL-B Ba3 BB 3.75 06/10/2021 1,030,000 1,034,720
Hicks Sports Group+(7)(9)................ BTL-B NR NR 6.75 12/22/2011 1,101,919 176,307
Hoyts Cinemas Group...................... 2nd Lien B3 CCC+ 8.25 11/20/2020 450,000 459,000
Interactive Data Corp.................... BTL B2 B+ 4.75 05/02/2021 3,114,521 3,137,879
ION Media Networks, Inc.................. BTL B1 B+ 5.00 12/18/2020 1,870,600 1,872,938
LIN Television Corp...................... BTL-B Ba2 BB+ 4.00 12/21/2018 711,771 711,771
Media General, Inc....................... BTL-B B1 BB- 4.25 07/31/2020 899,853 903,498
Mediacom LLC............................. BTL-E Ba3 BB 3.13 10/23/2017 893,670 892,926
Numericable Finance & Co. SCA............ BTL-B1 Ba3 B+ 4.50 05/21/2020 1,249,238 1,256,071
Numericable Finance & Co. SCA............ BTL-B2 Ba3 B+ 4.50 05/21/2020 1,080,762 1,086,672
Salem Communications Corp................ BTL-B B2 B 4.50 03/16/2020 876,633 873,346
Tribune Co............................... BTL Ba3 BB+ 4.00 12/27/2020 5,363,050 5,365,732
Truven Health Analytics, Inc............. BTL-B B1 B 4.50 06/06/2019 1,116,684 1,104,121
Univision Communications, Inc............ BTL-C4 B2 B+ 4.00 03/01/2020 5,669,437 5,662,350
Visant Corp.............................. BTL B1 B+ 5.25 12/22/2016 1,346,665 1,338,810
-----------
32,235,993
-----------
METALS & MINING -- 2.6%
Ameriforge Group, Inc.................... BTL B1 B+ 5.00 12/19/2019 2,017,450 2,027,537
Crosby Worldwide, Ltd.................... 1st Lien B1 B 3.20 11/18/2020 2,003,666 1,996,987
Fortescue Metals Group, Ltd.............. BTL Baa3 BBB- 3.75 06/30/2019 3,212,152 3,213,938
Novelis, Inc............................. BTL-B Ba2 BB- 3.75 03/10/2017 1,140,077 1,140,647
Signode Industrial Group U.S., Inc....... BTL-B B1 B 4.00 05/01/2021 2,695,000 2,683,770
-----------
11,062,879
-----------
15
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2014 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------------------------------------
MULTI UTILITIES -- 2.1%
Energy Future Intermediate Holding Co. LLC.......... DIP NR NR 4.25% 06/19/2016 $1,215,000 $ 1,222,594
La Frontera Generation LLC.......................... BTL-B B1 BB- 4.50 09/30/2020 1,774,639 1,778,632
Texas Competitive Electric Holdings Co. LLC+(7)(14). DIP NR NR -- 05/05/2016 871,287 873,738
Texas Competitive Electric Holdings Co. LLC+(7)(10). DIP NR NR 3.75 05/05/2016 1,128,713 1,133,651
Texas Competitive Electric Holdings Co. LLC+(7)(10). BTL NR NR 4.65 10/10/2017 5,174,956 4,269,339
-----------
9,277,954
-----------
MULTILINE RETAIL -- 1.1%
99 Cents Only Store................................. BTL-B B2 B+ 4.50 01/11/2019 1,185,745 1,191,673
Neiman Marcus Group, Inc............................ BTL-B B2 B 4.25 10/25/2020 3,619,242 3,611,200
-----------
4,802,873
-----------
OIL, GAS & CONSUMABLE FUELS -- 4.9%
Arch Coal, Inc...................................... BTL B1 B+ 6.25 05/16/2018 3,500,698 3,435,059
Chief Exploration & Development LLC................. 2nd Lien NR NR 7.50 05/12/2021 1,785,000 1,802,850
Endeavour International Holding BV.................. Tranche A NR NR 8.25 11/30/2017 1,000,689 980,676
Endeavour International Holding BV.................. Tranche B NR NR 8.25 11/30/2017 719,114 704,732
Philadelphia Energy Solutions LLC................... BTL-B B1 BB- 6.25 04/04/2018 943,063 872,333
Power Buyer LLC..................................... BTL B2 B 4.25 05/06/2020 1,003,200 984,390
Power Buyer LLC..................................... Delayed Draw B2 B 4.25 05/06/2020 53,296 52,097
Power Buyer LLC..................................... 2nd Lien Caa2 CCC+ 8.25 11/06/2020 1,670,000 1,640,775
Samson Investment Co................................ 2nd Lien B1 B 5.00 09/25/2018 1,500,000 1,499,196
Sandy Creek Energy Associates....................... BTL-B Ba3 BB- 5.00 11/08/2020 3,298,857 3,320,299
Seventy Seven Operating LLC......................... BTL-B Ba1 BB+ 3.75 06/25/2021 1,010,000 1,013,788
Templar Energy LLC.................................. 2nd Lien B3 B- 8.00 11/25/2020 1,825,000 1,806,750
Western Refining LP................................. BTL-B B1 BB- 4.25 11/12/2020 3,164,100 3,180,911
-----------
21,293,856
-----------
PAPER & FOREST PRODUCTS -- 0.3%
Exopack LLC(15)..................................... BTL B1 B 5.25 05/08/2019 1,397,975 1,418,945
-----------
PHARMACEUTICALS -- 1.7%
Alkermes, Inc....................................... BTL-B Ba3 BB+ 3.50 09/18/2019 1,000,844 999,176
Grifols Worldwide Operations, Ltd................... BTL-B Ba1 BB 3.15 02/27/2021 1,112,213 1,110,266
PRA Holdings, Inc................................... 1st Lien B1 B 4.50 09/23/2020 2,416,738 2,399,620
Salix Pharmaceuticals, Ltd.......................... BTL Ba1 BB 4.25 01/02/2020 2,725,125 2,744,103
-----------
7,253,165
-----------
POOLED VEHICLE -- 0.5%
Bombardier Recreational Products, Inc............... 1st Lien B1 BB- 4.00 01/30/2019 1,961,143 1,961,494
-----------
PROFESSIONAL SERVICES -- 1.6%
Nexeo Solutions LLC................................. BTL-B1 B2 B+ 5.00 09/08/2017 1,487,427 1,487,427
Nexeo Solutions LLC................................. BTL-B2 B2 B+ 5.00 09/08/2017 653,363 653,363
Sedgwick CMS Holdings, Inc.......................... 1st Lien B1 B 3.75 03/01/2021 2,099,738 2,067,979
Sedgwick CMS Holdings, Inc.......................... 2nd Lien Caa2 CCC+ 6.75 02/28/2022 2,565,000 2,551,375
-----------
6,760,144
-----------
REAL ESTATE INVESTMENT TRUSTS -- 0.3%
Capital Automotive LP............................... 2nd Lien B1 B- 6.00 04/30/2020 1,090,000 1,111,345
ESH Hospitality, Inc................................ BTL NR B+ 5.00 06/24/2019 390,000 393,169
-----------
1,504,514
-----------
REAL ESTATE MANAGEMENT & DEVELOPMENT -- 0.4%
Realogy Corp........................................ CLTL Ba3 BB 0.02 10/10/2016 132,482 132,151
Realogy Corp........................................ BTL Ba3 BB 3.75 03/05/2020 1,576,696 1,579,160
-----------
1,711,311
-----------
ROAD & RAIL -- 0.8%
Neff Rental LLC..................................... 2nd Lien Caa1 CCC+ 7.25 06/09/2021 1,990,000 1,980,050
Swift Transportation Co., Inc....................... BTL-B Ba2 BB- 3.75 06/09/2021 1,625,925 1,626,941
-----------
3,606,991
-----------
16
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2014 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
------------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 2.2%
Avago Technologies, Ltd........................ BTL-B Ba1 BBB- 3.75% 05/06/2021 $2,960,000 $ 2,969,493
Entegris, Inc.................................. BTL-B Ba3 BB+ 3.50 04/30/2021 1,110,000 1,101,675
Freescale Semiconductor, Inc................... BTL-B4 B1 B 4.25 03/01/2020 5,598,990 5,598,990
------------
9,670,158
------------
SOFTWARE -- 4.1%
Activision Blizzard, Inc....................... BTL-B Baa3 BBB 3.25 10/12/2020 1,195,000 1,197,561
Attachmate Corp................................ BTL B1 BB- 7.25 11/22/2017 606,951 611,314
Eagle Parent, Inc.............................. BTL-B2 Ba3 B+ 4.00 05/16/2018 2,728,418 2,731,828
Hyland Software, Inc........................... BTL B2 B 4.75 02/19/2021 2,565,221 2,574,841
Kronos, Inc.................................... BTL-C B1 B- 4.50 10/30/2019 3,638,883 3,664,355
Kronos, Inc.................................... 2nd Lien Caa2 CCC 9.75 04/30/2020 2,680,463 2,763,109
Lawson Software, Inc........................... BTL-B5 Ba3 B+ 3.75 06/03/2020 979,218 973,098
Magic Newco LLC................................ BTL B1 B+ 5.00 12/12/2018 2,104,107 2,118,135
RP Crown Parent LLC............................ BTL B2 B+ 6.00 12/21/2018 750,529 749,858
Verint Systems, Inc............................ Transhe B B1 BBB- 3.50 09/06/2019 435,762 435,217
------------
17,819,316
------------
SPECIALTY RETAIL -- 2.1%
Hillman Group, Inc............................. BTL-B B1 B 4.50 06/30/2021 1,270,000 1,274,763
J Crew Operating Corp.......................... BTL-B1 B1 B 4.00 03/05/2021 1,319,250 1,300,699
Michaels Stores, Inc........................... BTL-B2 Ba3 B+ 3.75 01/28/2020 1,006,265 1,003,930
Michaels Stores, Inc........................... Delayed Draw Ba3 B+ 4.00 01/28/2020 1,450,000 1,449,395
Party City Holdings, Inc....................... BTL B2 B 4.00 07/27/2019 2,541,774 2,524,980
Serta Simmons Holdings LLC..................... BTL-B B1 B+ 4.25 10/01/2019 1,468,943 1,471,459
------------
9,025,226
------------
TEXTILES, APPAREL & LUXURY GOODS -- 0.2%
Kate Spade & Co................................ BTL-B B2 B 4.00 04/10/2021 1,025,000 1,024,667
------------
WIRELESS TELECOMMUNICATION SERVICES -- 1.2%
Intelsat Jackson Holdings, Ltd................. BTL-B2 Ba3 BB 3.75 06/30/2019 1,915,416 1,917,810
LTS Buyer LLC.................................. 1st Lien B1 B 4.00 04/11/2020 787,050 785,574
LTS Buyer LLC.................................. 2nd Lien Caa1 CCC+ 8.00 04/12/2021 271,975 274,921
Syniverse Technologies, Inc.................... BTL-B B1 BB- 4.00 04/23/2019 2,203,761 2,201,696
------------
5,180,001
------------
TOTAL LOANS (cost $412,895,127)................ 412,859,583
------------
U.S. CORPORATE BONDS & NOTES -- 3.1%
COMMUNICATIONS EQUIPMENT -- 0.1%
Alcatel-Lucent USA, Inc.*...................... Company Guar. Notes B3 CCC+ 6.75 11/15/2020 890,000 947,850
------------
ENERGY EQUIPMENT & SERVICES -- 0.1%
Sevent Seven Energy, Inc.*..................... Senior Notes B2 B 6.50 07/15/2022 505,000 517,625
------------
GAS UTILITIES -- 0.2%
EP Energy LLC.................................. Senior Notes B2 B 9.38 05/01/2020 758,000 867,910
------------
HEALTH CARE PROVIDERS & SERVICES -- 0.6%
CHS/Community Health Systems, Inc.*............ Company Guar. Notes B3 B- 6.88 02/01/2022 620,000 657,200
MPH Acquisition Holdings LLC*.................. Senior Notes Caa1 CCC+ 6.63 04/01/2022 285,000 298,538
Tenet Healthcare Corp.......................... Senior Notes B3 CCC+ 8.13 04/01/2022 1,235,000 1,429,513
------------
2,385,251
------------
IT SERVICES -- 0.3%
First Data Corp.*.............................. Senior Sec. Notes B1 B+ 7.38 06/15/2019 1,135,000 1,218,706
------------
OIL, GAS & CONSUMABLE FUELS -- 0.2%
Rosetta Resources, Inc......................... Company Guar. Notes B1 B+ 5.88 06/01/2022 975,000 1,018,875
------------
PHARMACEUTICALS -- 0.2%
Salix Pharmaceuticals, Ltd.*................... Company Guar. Notes B2 B 6.00 01/15/2021 635,000 681,038
------------
17
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2014 -- (UNAUDITED) (CONTINUED)
RATINGS/(1)/
(UNAUDITED)
------------
INTEREST MATURITY PRINCIPAL VALUE
INDUSTRY DESCRIPTION TYPE MOODY'S S&P RATE DATE/(2)/ AMOUNT (NOTE 2)
------------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 0.3%
Freescale Semiconductor, Inc.*................... Senior Sec. Notes B1 B 6.00% 01/15/2022 $1,015,000 $ 1,080,975
-----------
SOFTWARE -- 0.2%
Infor Software Parent LLC*....................... Company Guar. Notes Caa1 CCC+ 7.13 05/01/2021 895,000 915,138
-----------
SPECIALTY RETAIL -- 0.1%
Party City Holdings, Inc......................... Company Guar. Notes Caa1 CCC+ 8.88 08/01/2020 540,000 598,050
-----------
THRIFTS & MORTGAGE FINANCE -- 0.3%
Ocwen Financial Corp.*........................... Company Guar. Notes B2 B 6.63 05/15/2019 1,105,000 1,140,913
-----------
WIRELESS TELECOMMUNICATION SERVICES -- 0.5%
Sprint Corp.*.................................... Company Guar. Notes B1 BB- 7.25 09/15/2021 1,000,000 1,102,500
T Mobile USA, Inc................................ Company Guar. Notes Ba3 BB 6.46 04/28/2019 1,000,000 1,052,500
-----------
2,155,000
-----------
TOTAL U.S. CORPORATE BONDS & NOTES (cost
$12,615,277)................................... 13,527,331
-----------
FOREIGN CORPORATE BONDS & NOTES -- 1.9%
DIVERSIFIED TELECOMMUNICATION SERVICES -- 1.0%
Altice Financing SA*............................. Company Guar. Notes B1 BB- 6.50 01/15/2022 1,910,000 2,034,150
Wind Acquisition Finance SA*..................... Senior Sec. Notes Ba3 BB 6.50 04/30/2020 915,000 991,631
Wind Acquisition Finance SA*..................... Company Guar. Notes Caa1 B 7.38 04/23/2021 1,245,000 1,329,038
-----------
4,354,819
-----------
ENERGY EQUIPMENT & SERVICES -- 0.2%
Shelf Drilling Holdings, Ltd.*................... Senior Sec. Notes B1 B+ 8.63 11/01/2018 695,000 743,650
-----------
METALS & MINING -- 0.2%
AuRico Gold, Inc.*............................... Sec. Notes B3 B 7.75 04/01/2020 715,000 707,850
-----------
OIL, GAS & CONSUMABLE FUELS -- 0.3%
Tullow Oil PLC*.................................. Company Guar. Notes B1 BB- 6.00 11/01/2020 1,300,000 1,348,750
-----------
WIRELESS TELECOMMUNICATION SERVICES -- 0.2%
Intelsat Luxembourg SA........................... Company Guar. Notes Caa2 B- 7.75 06/01/2021 1,000,000 1,058,750
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $7,756,233).............................. 8,213,819
-----------
18
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2014 -- (UNAUDITED) (CONTINUED)
SHARES/
PRINCIPAL VALUE
INDUSTRY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------------------------------
COMMON STOCK -- 0.1%
DIVERSIFIED FINANCIAL SERVICES -- 0.1%
BLB Management Services, Inc.................................. 5,141 $ 170,296
------------
MEDIA -- 0.0%
Berry Co. LLC+(5)(6).......................................... 1,136 28,332
------------
TOTAL COMMON STOCK (cost $704,457)............................ 198,628
------------
PREFERRED SECURITIES -- 0.0%
COMMERCIAL SERVICES & SUPPLIES -- 0.0%
Ancora Holdings LLC
6.00%(5)(6) (cost $0)........................................ 56 0
------------
MEMBERSHIP INTEREST -- 0.0%
MEDIA -- 0.0%
NextMedia Operating, Inc.+(5)(6).............................. 7,916 12,191
VSS-AHC Holdings LLC+(5)(6)................................... 12,608 66,570
------------
TOTAL MEMBERSHIP INTEREST (cost $1,270,681)................... 78,761
------------
WARRANTS -- 0.0%
COMMERCIAL SERVICES & SUPPLIES -- 0.0%
Ancora Holdings LLC
Expires 08/12/2020
(Strike Price $1.90)+(5)(6) (cost $0)........................ 3 0
------------
TOTAL LONG-TERM INVESTMENT SECURITIES (cost $435,241,775)..... 434,878,122
------------
SHORT-TERM INVESTMENT SECURITIES -- 2.2%
REGISTERED INVESTMENT COMPANIES -- 2.2%
SSgA Money Market Fund (cost $9,251,679)...................... 9,251,679 9,251,679
------------
REPURCHASE AGREEMENTS -- 2.2%
Bank of America Securities LLC Joint Repurchase Agreement(16). $2,155,000 2,155,000
Barclays Capital, Inc. Joint Repurchase Agreement(16)......... 2,075,000 2,075,000
BNP Paribas SA Joint Repurchase Agreement(16)................. 1,380,000 1,380,000
Deutsche Bank AG Joint Repurchase Agreement(16)............... 1,910,000 1,910,000
UBS Securities LLC Joint Repurchase Agreement(16)............. 2,070,000 2,070,000
------------
TOTAL REPURCHASE AGREEMENTS (cost $9,590,000)................. 9,590,000
------------
TOTAL INVESTMENTS
(cost $454,083,454)(17)....................................... 105.0% 453,719,801
LIABILITIES IN EXCESS OF OTHER ASSETS........................... (5.0) (21,429,198)
---------- ------------
NET ASSETS...................................................... 100.0% $432,290,603
========== ============
--------
BTLBank Term Loan
CLTLCredit Linked Term Loan
DIPDebtor in Possession
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, 2014, the aggregate value of
these securities was $15,715,552, representing 3.6% 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, 2014.
(2)Based on the stated maturity, the weighted average to maturity of the loans
held in the portfolio will be approximately 66 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.
19
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2014 -- (UNAUDITED) (CONTINUED)
(5)Illiquid security. At June 30, 2014, the aggregate value of these securities
was $86,082, representing 0.0% 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)Company has filed for Chapter 7 bankruptcy.
(9)Loan is in default of interest and did not pay principal at maturity.
(10)Loan is in default of interest.
(11)PIK ("Payment-In-Kind") security. Income may be paid in additional loans or
cash at the discretion of the issuer.
(12)Security currently paying interest in the form of additional loans.
(13)As of June 30, 2014, the loan has not settled and as a result, the interest
rate is estimated based on information available.
(14)All or a portion of this holding is subject to unfunded loan commitments.
Interest rate will be determined at the time of funding. See Note 10.
(15)Loan was purchased through a participation agreement.
(16)See Note 2 for details of the Joint Repurchase Agreement.
(17)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, 2014 (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:
Commercial Services & Supplies.. $ -- $ 23,917,833 $ 0 $ 23,917,833
Hotels, Restaurants & Leisure... -- 21,679,363 -- 21,679,363
Media........................... -- 32,059,686 176,307 32,235,993
Other Industries*............... -- 335,026,394 -- 335,026,394
U.S. Corporate Bonds & Notes..... -- 13,527,331 -- 13,527,331
Foreign Corporate Bonds & Notes.. -- 8,213,819 -- 8,213,819
Common Stock:
Diversified Financial Services.. -- 170,296 -- 170,296
Media........................... -- -- 28,332 28,332
Preferred Securities............. -- -- 0 0
Membership Interest.............. -- -- 78,761 78,761
Warrants......................... -- -- 0 0
Short-Term Investment Securities:
Registered Investment Companies.. 9,251,679 -- -- 9,251,679
Repurchase Agreements.............. -- 9,590,000 -- 9,590,000
---------- ------------ -------- ------------
TOTAL.............................. $9,251,679 $444,184,722 $283,400 $453,719,801
========== ============ ======== ============
--------
* Sum of all other industries each of which individually has an aggregate
market value of less than 5% of net assets. For a detailed presentation of
securities by industry classification, please refer to the Portfolio of
Investments.
The Fund's policy is to recognize transfers between Levels as of the end of the
reporting period. There were no transfers between Levels during the reporting
period.
At the beginning and end of the reporting period, Level 3 investments in
securities were not considered a material portion of the Fund.
See Notes to Portfolio of Investments
20
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2014 -- (UNAUDITED)
Note 1. Organization of the Fund
SunAmerica Senior Floating Rate Fund, Inc. (the "Fund") is an open-end,
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, LLC. (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 may invest in foreign securities, including up
to 10% of its total assets in non-U.S. dollar denominated Loans and high
yield fixed income securities and up to 25% of its total assets in U.S.
dollar denominated Loans issued by non-U.S. companies.
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.
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 significant accounting policies consistently 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 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.
21
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2014 -- (UNAUDITED)
(CONTINUED)
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 of Directors ("the Board").
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 is 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,
2014 is reported on a schedule following the Portfolio of Investments.
Senior floating rate loans ("Loans") are valued at the average of available
bids in the market for such Loans, as provided by a Board-approved loan
pricing service, and are generally categorized as Level 2.
Stocks are generally valued based upon closing sales prices reported on
recognized securities exchanges on 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.
Bonds, debentures, other long-term debt securities, and short term debt
securities with maturities in excess of 60 days, are valued at evaluated bid
prices obtained for the day of valuation from a Board-approved pricing
service, and are generally categorized as Level 2. The pricing service 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 price is unavailable from a
Board-approved pricing service, the securities may be priced at the mean of
two independent quotes obtained from brokers.
22
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2014 -- (UNAUDITED)
(CONTINUED)
Investments in registered investment companies that do not trade on an
exchange are valued at the end of day net asset value per share. Investments
in registered investment companies that trade on an exchange are valued at
the last sales price or official closing price as of the close of the
customary trading session on the exchange where the security is principally
traded. Registered investment companies are generally categorized as Level 1.
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
policies 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.
MASTER AGREEMENTS: The Fund has entered into Master Repurchase Agreements
("Master Agreements") with certain counterparties that govern repurchase
agreement transactions. The Master Agreements may contain provisions
regarding, among other things, the parties' general obligations,
representations, agreements, collateral requirements and events of default.
Collateral can be in the form of cash or securities as agreed to by the Fund
and applicable counterparty. The Master Agreements typically specify certain
standard termination events, such as failure of a party to pay or deliver,
credit support defaults and other events of default. Upon the occurrence of
an event of default, the other party may elect to terminate early and cause
settlement of all repurchase agreement transactions outstanding pursuant to
a particular Master Agreement, including the payment of any losses and costs
resulting from such early termination, as reasonably determined by the
terminating party. Any decision by one or more of the Fund's counterparties
to elect early termination could cause the Fund to accelerate the payment of
liabilities. Typically, the Master Agreement will permit a single net
payment in the event of default. Note, however, that bankruptcy or
insolvency laws of a particular jurisdiction may impose restrictions on or
prohibitions against the right of offset in bankruptcy, insolvency or other
events. As of June 30, 2014, the repurchase agreements held by the Fund are
subject to master netting provisions. See the Portfolio of Investments and
the Notes to Financial Statements for more information about the Fund's
holdings in repurchase agreements.
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 ("SEC"), 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 ("repo" or collectively "repos"). 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.
23
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2014 -- (UNAUDITED)
(CONTINUED)
As of June 30, 2014, 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......................... 1.39% $2,155,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Bank of America Securities LLC, dated June 30, 2014, bearing interest at a
rate of 0.05% per annum, with a principal amount of $155,185,000, a
repurchase price of $155,185,216, and a maturity date of July 1, 2014. The
repurchase agreement is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT VALUE
------------------ -------- ---------- ---------------- ------------
U.S. Treasury Notes........... 1.88% 06/30/2015 $155,408,000 $158,110,545
As of June 30, 2014, the Fund held an undivided interest in a joint
repurchase agreement with Barclay's Capital, Inc.:
PERCENTAGE PRINCIPAL
OWNERSHIP AMOUNT
---------- ----------
Senior Floating Rate Fund......................... 1.38% $2,075,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Barclay's Capital, Inc., dated June 30, 2014, bearing interest at a rate of
0.07% per annum, with a principal amount of $149,965,000, a repurchase price
of $149,965,292, and a maturity date of July 1, 2014. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT VALUE
------------------ -------- ---------- ---------------- ------------
U.S. Treasury Notes........... 2.63% 11/15/2020 $146,763,000 $152,909,434
As of June 30, 2014, the Fund held an undivided interest in a joint
repurchase agreement with BNP Paribas SA:
PERCENTAGE PRINCIPAL
OWNERSHIP AMOUNT
---------- ----------
Senior Floating Rate Fund......................... 1.38% $1,380,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
BNP Paribas SA, dated June 30, 2014, bearing interest at a rate of 0.09% per
annum, with a principal amount of $99,955,000, a repurchase price of
$99,955,250, and a maturity date of July 1, 2014. The repurchase agreement
is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT VALUE
------------------ -------- ---------- ---------------- ------------
U.S. Treasury Notes........... 1.75% 07/31/2015 $99,633,700 $102,092,660
As of June 30, 2014, the Fund held an undivided interest in a joint
repurchase agreement with Deutsche Bank AG:
PERCENTAGE PRINCIPAL
OWNERSHIP AMOUNT
---------- ----------
Senior Floating Rate Fund......................... 1.38% $1,910,000
24
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2014 -- (UNAUDITED)
(CONTINUED)
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Deutsche Bank AG, dated June 30, 2014, bearing interest at a rate of 0.04%
per annum, with a principal amount of $137,955,000, a repurchase price of
$137,955,153, and a maturity date of July 1, 2014. The repurchase agreement
is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT VALUE
------------------ -------- ---------- ---------------- ------------
U.S. Treasury Notes........... 0.88% 11/30/2016 $139,901,000 $140,835,539
As of June 30, 2014, the Fund held an undivided interest in a joint
repurchase agreement with UBS Securities LLC:
PERCENTAGE PRINCIPAL
OWNERSHIP AMOUNT
---------- ----------
Senior Floating Rate Fund......................... 1.38% $2,070,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
UBS Securities LLC, dated June 30, 2014, bearing interest at a rate of 0.05%
per annum, with a principal amount of $149,705,000, a repurchase price of
$149,705,208, and a maturity date of July 1, 2014. The repurchase agreement
is collateralized by the following:
INTEREST MATURITY
TYPE OF COLLATERAL RATE DATE PRINCIPAL AMOUNT VALUE
------------------ -------- ---------- ---------------- ------------
U.S. Treasury Notes........... 1.75% 10/31/2020 $ 53,175,200 $ 52,534,439
U.S. Treasury Notes........... 2.13 08/15/2021 100,000,000 100,650,000
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 $412,273 for the six months ended June 30, 2014, are accreted to
income over the life of the Loans. Other income, including amendment fees,
commitment fees, letter of credit fees, etc., which were $165,973 for the
six months ended June 30, 2014, 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).
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 is considered a separate entity for tax purposes and intends to
comply with the requirements of the Internal Revenue Code, as amended,
applicable to regulated investment companies and distribute all of its
taxable income, including any net capital gains on investments, to its
shareholders. The Fund also intends to distribute sufficient net investment
income and net capital gains, if any, so that the Fund will not be subject
to excise tax on undistributed income and gains. Therefore, no federal
income tax or excise tax provision is required.
25
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2014 -- (UNAUDITED)
(CONTINUED)
The Fund recognizes the tax benefits of uncertain tax positions only when
the position is more likely than not to be sustained, assuming examination
by tax authorities. Management has analyzed the Fund's tax positions and
concluded that no liability for unrecognized tax benefits should be recorded
related to uncertain tax positions taken on returns filed for open tax years
2010-2012 or expected to be taken in the Fund's 2013 tax return. The Fund is
not aware of any tax provisions for which it is reasonably possible that the
total amounts of unrecognized tax benefits will change materially in the
next twelve months. 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 returns ending before
2010.
NEW ACCOUNTING PRONOUNCEMENTS: In December 2011, the FASB issued Accounting
Standards Update ("ASU") No. 2011-11, "Disclosures about Offsetting Assets
and Liabilities", which was subsequently clarified in ASU 2013-01
"Clarifying the Scope of Disclosures about Offsetting Assets and
Liabilities" which was issued in January 2013. The amended Standard requires
an entity to disclose information about offsetting and related arrangements
to enable users of its financial statements to understand the effect of
those arrangements on its financial position. The new and revised
disclosures are effective for annual reporting periods beginning on or after
January 1, 2013 and interim periods within those annual periods. All
required changes to accounting policies have been made in accordance with
ASU No. 2011-11 and No. 2013-01.
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, 2014 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2013
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS A ---------- ------------ ---------- ------------
Shares sold................. 5,011,026 $ 41,818,633 14,522,838 $120,864,898
Reinvested distributions.... 297,263 2,481,162 607,488 5,054,754
Shares redeemed............. (5,624,391) (46,945,354) (9,407,392) (78,252,775)
---------- ------------ ---------- ------------
Net increase (decrease).. (316,102) $ (2,645,559) 5,722,934 $ 47,666,877
========== ============ ========== ============
FOR THE
SIX MONTHS ENDED FOR THE
JUNE 30, 2014 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2013
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS C ---------- ------------ ---------- ------------
Shares sold................. 3,266,790 $ 27,251,054 9,683,350 $80,521,886
Reinvested distributions.... 334,283 2,787,854 633,446 5,267,346
Shares redeemed............. (3,923,213) (32,697,998) (5,217,008) (43,370,910)
---------- ------------ ---------- ------------
Net increase (decrease).. (322,140) $ (2,659,090) 5,099,788 $ 42,418,322
========== ============ ========== ============
Note 4. Purchases and Sales of Securities
During the six months ended June 30, 2014, the Fund's cost of purchases and
proceeds from sale of long-term investments, including loan principal
paydowns were $182,970,892 and $183,652,327 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
26
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2014 -- (UNAUDITED)
(CONTINUED)
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, 2014, the Fund incurred administration fees in the
amount of $432,300.
The Fund has entered into a Distribution Agreement with AIG Capital
Services, Inc. ("ACS" or the "Distributor")*, an affiliate of the Adviser.
The Fund has adopted a Distribution Plan on behalf of each class of shares
(each, a "Plan" and collectively, the "Plans") in accordance with the
provisions of Rule 12b-1 under the 1940 Act, hereinafter referred to as the
"Class A Plan" and "Class C Plan". In adopting the Plans, the Board
determined that there was a reasonable likelihood that each such Plan would
benefit the Fund and the shareholders of the respective class. The sales
charge and distribution fees of a particular class will not be used to
subsidize the sale of shares of any other class.
Under the Class A Plan and Class C Plan, the Distributor receives payments
from the Fund at an annual rate of 0.10% and 0.50%, respectively, of the
average daily net assets of the Fund's Class A and Class C shares to
compensate the Distributor and certain securities firms for providing sales
and promotional activities for distributing that class of shares. The
distribution costs for which the Distributor may be compensated include fees
paid to broker-dealers that have sold Fund shares, commissions and other
expenses such as those incurred for sales literature, prospectus printing
and distribution and compensation to wholesalers. It is possible that in any
given year the amount paid to the Distributor under each Class' Plan may
exceed the Distributor's distribution costs as described above. The Plans
provide that the Class A and Class C shares of the Fund will pay the
Distributor an account maintenance fee up to an annual rate of 0.25% of the
aggregate average daily net assets of such class of shares for payments to
compensate the Distributor and certain securities firms for account
maintenance activities. Accordingly, for the six months ended June 30, 2014,
ACS received fees (see Statement of Operations) based upon the
aforementioned rates. For the six months ended June 30, 2014, ACS received
sales charges on Class A shares of $225,538, of which $137,116 was reallowed
to affiliated broker-dealers and $51,041 to non-affiliated broker-dealers.
In addition, ACS 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, 2014, ACS received early
withdrawal charges of $39,810.
The Fund has entered into a Service Agreement with SunAmerica Fund Services,
Inc. ("SAFS") an affiliate of the Adviser. 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, 2014, 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.
--------
* Effective February 28, 2014, SunAmerica Capital Services, Inc. ("SACS")
changed its name to AIG Capital Services, Inc. ("ACS").
27
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2014 -- (UNAUDITED)
(CONTINUED)
PAYABLE AT
EXPENSE JUNE 30, 2014
-------- -------------
Class A....................... $209,018 $34,202
Class C....................... 266,513 43,623
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, such as litigation, or acquired
fund fees and expenses, brokerage commissions and other transactional
expenses relating to the purchase and sale of portfolio securities,
interest, fares and governmental fees, and other expenses not incurred in
the ordinary course of the Fund's business. 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, 2014, SunAmerica waived fees and reimbursed expenses
as follows: Class A $306,650 and Class C $500,056.
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
dividends payable, wash sales, and treatment of defaulted securities.
DISTRIBUTABLE EARNINGS TAX DISTRIBUTIONS
------------------------------------------------------------- -------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 2013 FOR THE YEAR ENDED DECEMBER 31, 2013
------------------------------------------------------------- -------------------------------------
LONG-TERM
ORDINARY LONG-TERM GAINS/CAPITAL AND UNREALIZED APPRECIATION/ ORDINARY CAPITAL
INCOME OTHER LOSSES (DEPRECIATION) INCOME GAINS
-------- --------------------------- ------------------------ ------------ ---------
$-- $(56,717,145) $693,353 $14,790,675 $--
CAPITAL LOSS CARRYFORWARDS+. At December 31, 2013 capital loss carryforward
available to offset future recognized gains were $43,306,204 with
$16,003,027 expiring in 2016, and $27,303,177 expiring in 2017.
Additionally, the Fund generated unlimited short-term capital losses of
$827,079 and unlimited long-term losses of $12,583,862.
--------
+ 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.
Unrealized appreciation and depreciation in the value of investments at June
30, 2014 for federal income tax purposes were as follows:
Cost (tax basis)............................................ $454,083,643
============
Gross unrealized appreciation............................... $ 5,143,434
Gross unrealized depreciation............................... (5,507,276)
------------
Net unrealized appreciation................................. $ (363,842)
============
Note 7. 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
28
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2014 -- (UNAUDITED)
(CONTINUED)
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, 2014, the Fund had
borrowings outstanding for 12 days under the line of credit and incurred
$524 in interest charges related to these borrowings. The Fund's average
amount of debt under the line of credit for the days utilized was $1,172,453
at a weighted average interest rate of 1.34%. At June 30, 2014, there were
no borrowings outstanding.
Note 8. Interfund Lending
Pursuant to the exemptive relief granted by the SEC, 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, 2014, the Fund did
not participate in this program.
Note 9. 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 10. Unfunded Loan Commitments
At June 30, 2014, the Fund had the following unfunded loan commitment which
could be extended at the option of the Borrower:
MATURITY PRINCIPAL
BORROWER TYPE DATE AMOUNT VALUE
-------- ------------ ---------- --------- --------
Texas Competitive Electric
Holdings Co. LLC............ Delayed Draw 05/05/2016 $871,287 $873,738
29
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND SUBADVISORY AGREEMENTS -- JUNE
30, 2014 -- (UNAUDITED)
The Board of Directors (the "Board" the members of which are referred to as
"Directors") of SunAmerica Senior Floating Rate Fund, Inc (the "Fund"),
including the Directors who are not "interested persons," as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended (the "1940
Act") (the "Independent Directors"), of the Fund, SunAmerica Asset Management,
LLC ("SunAmerica") or Wellington Management Company LLP ("Wellington"),
approved the continuation of the Investment Advisory and Management Agreement
between the Fund and SunAmerica (the "Advisory Agreement") for a one-year
period ending June 30, 2015 at an in-person meeting held on June 3, 2014 (the
"Meeting"). At the Meeting, the Board, including the Independent 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,
2015 (the "Subadvisory Agreement," and together with the Advisory Agreement,
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"), an independent third-party
provider of mutual fund data 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) information relating to 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 processes;
(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 Independent 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 Independent Directors, considered the nature, extent
and quality 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 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 directors of the
Fund without compensation. The Board also 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 Services Agreement between SunAmerica and the Fund (the
"Administrative Services Agreement").
In connection with the services provided by SunAmerica, the Board analyzed the
structure and duties of SunAmerica's fund administration, accounting,
operations, legal and compliance departments and concluded that they were
adequate to meet the needs of the Fund. The Board also reviewed the personnel
responsible for providing advisory services to the Fund and other key personnel
of SunAmerica in addition to current and projected staffing levels and
compensation practices. The Board further considered certain strategic changes
that SunAmerica had implemented with respect to its investment department, and
concluded, based on their experience and interaction with SunAmerica, that:
(i) SunAmerica would continue to be able to retain quality investment and other
personnel; (ii) SunAmerica has exhibited a high level of
30
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND SUBADVISORY AGREEMENTS -- JUNE
30, 2014 -- (UNAUDITED) (CONTINUED)
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.
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, 2014, SunAmerica managed, advised and/or
administered approximately $66.7 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 processes. 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 prospectus. 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 Independent 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.
The Board noted that performance information was for the periods ended
March 31, 2014. 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.
31
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND SUBADVISORY AGREEMENTS -- JUNE
30, 2014 -- (UNAUDITED) (CONTINUED)
The Board considered that the Fund's performance was below the median of its
Peer Group for the one- and three-year periods and above the median of its Peer
Group for the five- year period. The Board further considered that the Fund's
performance was above the median of its Peer Universe for the one- and
five-year periods and below the median of its Peer Unverse for the three-year
period. The Board further considered that the Fund underperformed its Lipper
Index for the one- and three-year periods and outperformed its Lipper Index for
the five-year period. The Board further considered the improvement in the
Fund's more recent performance. The Board noted management's discussion of the
Fund's performance, and also considered the fact that the Fund ranked in the
first quintile of its Peer Group and Peer Universe for the five-year period.
The Board concluded that the Fund's overall performance was satisfactory.
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 Independent 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 the Fund'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.
32
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND SUBADVISORY AGREEMENTS -- JUNE
30, 2014 -- (UNAUDITED) (CONTINUED)
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.
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 Independent 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
33
SUNAMERICA SENIOR FLOATING RATE FUND, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND SUBADVISORY AGREEMENTS -- JUNE
30, 2014 -- (UNAUDITED) (CONTINUED)
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.
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, 2015. Based upon its evaluation of all
these factors in their totality, the Board, including the Independent
Directors, was satisfied that the terms of the Agreements were fair and
reasonable and in the best interests of the Fund and the Fund's shareholders.
In arriving at a decision to approve the Agreements, the Board did not identify
any single factor or group of factors as all-important or controlling, but
considered all factors together, and each Independent Director may have
attributed different weights to different factors. The Independent Directors
were also assisted by the advice of independent legal counsel in making this
determination.
34
[LOGO] AIG Sun America
Mutual Funds
HARBORSIDE FINANCIAL CENTER
3200 PLAZA 5
JERSEY CITY, NJ 07311-4992
DIRECTORS CUSTODIAN DISCLOSURE OF QUARTERLY
Dr. Judith L. Craven State Street Bank and PORTFOLIO HOLDINGS
William F. Devin Trust Company The Fund is required to
Richard W. Grant P.O. Box 5607 file its com-plete
Stephen J. Gutman Boston, MA 02110 schedule of portfolio
Peter A. Harbeck VOTING PROXIES ON FUND holdings with the U.S.
William J. Shea PORTFOLIO SECURITIES Securities and Exchange
OFFICERS A description of the Commission for its first
John T. Genoy, President policies and proce-dures and third fiscal quarters
Gregory R. Kingston, that the Fund uses to on Form N-Q. The Fund's
Treasurer determine how to vote Forms N-Q are available
James Nichols, Vice proxies related to on the U.S. Securities
President securities held in the and Exchange Commission's
Katherine Stoner, Chief Fund's portfolio, which website at
Compliance Officer is available in the http://www.sec.gov. You
Gregory N. Bressler, Fund's Statement of can also review and
Secretary Additional Information obtain copies of the
Nori L. Gabert, Vice may be ob-tained without Forms N-Q at the U.S.
President and charge upon request, by Securities and Exchange
Assistant Secretary calling (800) 858-8850. Commission's Public
Thomas D. Peeney, This in-formation is also Refer-ence Room in
Assistant Secretary available from the EDGAR Washington, DC
Kathleen Fuentes, Chief database on the U.S. (information on the
Legal Officer and Secu-rities and Exchange operation of the Public
Assistant Secretary Commission's website at Reference Room may be
Diedre L. Shepherd, http://www.sec.gov. ob-tained by calling
Assistant Treasurer DELIVERY OF SHAREHOLDER 1-800-SEC-0330).
Matthew J. Hackethal, DOCUMENTS PROXY VOTING RECORD ON
Anti-Money Laundering The Fund has adopted a FUND PORTFOLIO SECURITIES
Compliance Officer policy that allows it to Information regarding how
INVESTMENT ADVISER send only one copy of the the Fund voted proxies
SunAmerica Asset Fund's prospectus, proxy relating to securities
Management, LLC. material, annual report held in the Fund's
Harborside Financial and semi-annual report portfolio during the most
Center (the "shareholder recent twelve month
3200 Plaza 5 documents") to period ended June 30 is
Jersey City, NJ shareholders with available, once filed
07311-4992 multiple accounts with the U.S. Securities
DISTRIBUTOR residing at the same and Exchange Commis-sion,
AIG Capital Services, "household." This without charge, upon
Inc. practice is called request, by calling
Harborside Financial householding and reduces (800) 858-8850 or on the
Center Fund expenses, which U.S. Securities and
3200 Plaza 5 benefits you and other Exchange Commission's
Jersey City, NJ shareholders. Unless the website at
07311-4992 Fund receives http://www.sec.gov.
SHAREHOLDER SERVICING instructions to the This report is submitted
AGENT con-trary, you will only solely for the general
SunAmerica Fund receive one copy of the information of
Services, Inc. shareholder documents. shareholders of the Fund.
Harborside Financial The Fund will continue to Distribution of this
Center household the report to persons other
3200 Plaza 5 share-holder documents than shareholders of the
Jersey City, NJ indefinitely, until we Fund is authorized only
07311-4992 are instructed otherwise. in connection with a
TRANSFER AGENT If you do not wish to currently effective
State Street Bank and participate in prospectus, setting forth
Trust Company householding, please details of the Fund,
P.O. Box 219373 contact Shareholder which must precede or
Kansas City, MO 64141 Services at (800) accompany this report.
858-8850 ext. 6010 or The accompanying report
send a written request has not been audited by
with your name, the name independent accountants
of your fund(s) and your and accordingly no
account number(s) to opinion has been
SunAmerica Mutual Funds expressed thereon.
c/o BFDS, P.O. Box
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:
AIG 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 - 6/14
[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 5, 2014
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 5, 2014
By: /s/ Gregory R. Kingston
------------------------------------
Gregory R. Kingston
Treasurer
Date: September 5, 2014