================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM N-CSR
----------
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08727
SunAmerica Senior Floating Rate Fund, Inc.
--------------------------------------------------
(Exact name of registrant as specified in charter)
Harborside 5, 185 Hudson Street, Suite 3300, Jersey City, NJ 07311
------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
John T. Genoy
Senior Vice President
SunAmerica Asset Management, LLC
Harborside 5, 185 Hudson Street, Suite 3300
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, 2017
================================================================================
Item 1. Reports to Stockholders
SEMI-ANNUAL REPORT 2017
AIG
Senior Floating
Rate Fund
[GRAPHIC]
[LOGO]
[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.......................................... 33
June 30, 2017 SEMI-ANNUAL REPORT
Shareholders' Letter -- (unaudited)
Dear Shareholders:
We are pleased to present this semi-annual report for the AIG Senior Floating
Rate Fund (the "Fund") for the six-month period ended June 30, 2017. Please
note that effective February 28, 2017, SunAmerica Mutual Funds was rebranded as
AIG Funds, and each Fund's name was changed accordingly. SunAmerica Asset
Management, LLC, the investment adviser to each Fund, continues to serve as
investment adviser of the Funds and retains its current name. In addition,
there was no change in the Funds' investment goals or strategies, portfolio
managers or ticker symbols in connection with the rebranding.
Overall, fixed income markets generated strong gains during the semi-annual
period as bouts of elevated political uncertainty kept government bond yields
relatively low. Generally solid corporate earnings, improving economic data and
ongoing demand for yield-producing assets supported credit markets, despite
concerns for retailers. Spreads tightened. In the U.S., political controversies
-- in particular, the Administration's failure to secure a repeal of the
Affordable Care Act in Congress and the investigation into alleged involvement
by Russia in the 2016 presidential election -- cast doubt on prospects for
other policies on the President's agenda, which led to a reversal in some of
the post-election sell-off in U.S. Treasuries and to a short-lived dip in risk
assets. Elsewhere, the U.K. took the next step in the Brexit process, setting
the stage for the nation's departure from the European Union, and U.K.
government bond yields declined. Elections in France and the U.K. presented
potential sources of volatility, but proved benign in the aftermath. Most
currencies strengthened versus the U.S. dollar during the semi-annual period.
Meanwhile, on the monetary policy front, the U.S. Federal Reserve (the "Fed")
raised interest rates in March and June 2017, proposed an additional increase
later in the year and laid out a plan for tapering its asset purchases. The
Bank of England indicated interest rate hikes may be looming for the U.K.,
though lower inflation forecasts triggered speculation it might postpone
tapering its asset purchases into 2018. The Bank of Japan remained
accommodative, re-stating its commitment to maintain a zero-yield policy on
10-year Japanese government bonds.
For the semi-annual period overall, global government bond yields generally
increased on shorter-maturity securities and decreased on longer-maturity
securities, suppressed by a lack of global inflation. Most non-government bond
sectors outperformed government bonds as spreads tightened, led by lower-rated
sectors.
Amid this backdrop, floating rate loans, as represented by the S&P/LSTA
Leveraged Loan Index,/*/ returned 1.91% during the semi-annual period ended
June 30, 2017, only modestly underperforming the broad U.S. fixed income
market, as represented by the Bloomberg Barclays U.S. Aggregate Bond Index,/*/
which returned 2.27% for the same time period.
The bank loan sector's credit fundamentals generally remained stable; elevated
interest coverage helped to balance higher leverage. Technicals, or
supply/demand factors, remained favorable as well. Bank loan mutual funds
experienced inflows of $19.3 billion/**/ during the semi-annual period -- with
June 2017 marking the 12/th/ consecutive month of inflow. Issuance of
collateralized loan obligation (CLO), one of the main sources of demand for
bank loans, reached its highest level of 2017 during June, as $13.7 billion
priced.+ The trailing 12-month loan default rate, examined by principal amount,
decreased at the end of the semi-annual period to 1.42%, down from 2.18% one
year prior and from 1.49% at the end of 2016./ ++/
On the following pages, you will find financial statements and portfolio
information for the Fund for the semi-annual period ended June 30, 2017.
2
June 30, 2017 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 AIG Funds, we
invite you to visit our new website, www.aig.com/funds, 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 AIG SENIOR FLOATING RATE FUND PORTFOLIO MANAGER
Jeffrey W. Heuer
Wellington Management Company 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 utilizes real-time
market weightings, spreads and interest payments. The Bloomberg 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: Lipper, Inc.
+Source: S&P Leveraged Commentary & Data.
++Source: JP Morgan.
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, 2017 -- (unaudited)
Disclosure of Portfolio Expenses in Shareholder Reports
As a shareholder of the AIG Senior Floating Rate Fund (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 account maintenance 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, 2017 and held until
June 30, 2017.
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, 2017" to estimate the expenses you paid on your account
during this period. The "Expenses Paid During the Six Months Ended June 30,
2017" column and the "Annualized Expense Ratio" column do 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, 2017" column and the "Annualized Expense Ratio" column do
not include administrative or other 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, 2017" column would have
been higher and the "Ending Account Value" column 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 annual rate of return of 5% 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 this Fund and other funds. To do so, compare this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder reports of
other funds. The "Expenses Paid During the Six Months Ended June 30, 2017"
column and the "Annualized Expense Ratio" column do 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, 2017" column and the "Annualized Expense Ratio" column do
not include administrative or other 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, 2017" column would have
been higher and the "Ending Account Value" column 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, 2017 -- (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 Annual Return at Six Months Ended
at January 1, 2017 June 30, 2017 June 30, 2017* at January 1, 2017 June 30, 2017 June 30, 2017*
------------------ ------------- ---------------- ------------------ ----------------- ----------------
AIG Senior Floating
Rate Fund#+
Class A.......... $1,000.00 $1,019.01 $7.26 $1,000.00 $1,017.60 $7.25
Class C.......... $1,000.00 $1,018.77 $8.76 $1,000.00 $1,016.12 $8.75
Class W@......... $1,000.00 $1,002.59 $2.47 $1,000.00 $1,018.60 $6.26
Annualized
Expense
Ratio*
----------
AIG Senior Floating
Rate Fund#+
Class A.......... 1.45%
Class C.......... 1.75%
Class W@......... 1.25%
--------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 181 days then divided
by 365 days (to reflect the one-half year period) except for Class W "Actual
Return" information which was multiplied by 72 days then divided by 365
days. These ratios do not reflect transaction costs, including sales charges
on purchase payments, contingent deferred sales charges, small account fees
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 a portion of
or all of the fees and assumed a portion of or all expenses for the Fund. As
a result, if these fees and expenses had not been waived or assumed, the
"Actual/Hypothetical Ending Account Value" would have been lower and the
"Actual/Hypothetical Expenses Paid During the Six Months Ended June 30,
2017" and the "Annualized Expense Ratio" would have been higher.
+ See Note 1
@ Effective April 20, 2017, Class W commenced operations.
5
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES -- June 30, 2017 -- (unaudited)
AIG
Senior
Floating Rate
Fund+
-------------
ASSETS:
Investments at value (unaffiliated)*............................................ $ 278,178,872
Repurchase agreements (cost approximates value)................................. 8,670,000
-------------
Total investments.............................................................. 286,848,872
-------------
Foreign cash*................................................................... 4,311
Receivable for:
Fund shares sold............................................................... 170,435
Dividends and interest......................................................... 1,496,668
Investments sold............................................................... 1,166,856
Investments sold on an extended settlement basis............................... 4,523,872
Prepaid expenses and other assets............................................... 7,579
Due from investment adviser for expense reimbursements/fee waivers.............. 201,398
-------------
Total assets................................................................... 294,419,991
-------------
LIABILITIES:
Payable for:
Fund shares redeemed........................................................... 1,685,637
Investments purchased.......................................................... 28,714
Investments purchased on an extended settlement basis.......................... 19,978,688
Investment advisory and management fees........................................ 193,167
Distribution and account maintenance fees...................................... 127,167
Administration fees............................................................ 45,452
Transfer agent fees and expenses............................................... 49,981
Directors' fees and expenses................................................... 266
Other accrued expenses......................................................... 213,367
Dividends payable............................................................... 88,429
Commitments (Note 10)........................................................... 200,000
Unrealized depreciation on forward foreign currency contracts................... 23,933
-------------
Total liabilities.............................................................. 22,634,801
-------------
Net Assets................................................................... $ 271,785,190
=============
NET ASSETS REPRESENTED BY:
Common stock, $.01 par value.................................................... $ 337,184
Additional paid-in capital...................................................... 328,123,987
-------------
328,461,171
Accumulated undistributed net investment income (loss).......................... 41,907
Accumulated undistributed net realized gain (loss) on investments and foreign
exchange transactions.......................................................... (47,963,662)
Unrealized appreciation (depreciation) on investments........................... (8,730,201)
Unrealized foreign exchange gain (loss) on other assets and liabilities......... (24,025)
-------------
Net Assets................................................................... $ 271,785,190
=============
Class A:
Net assets...................................................................... $ 121,920,052
Shares outstanding.............................................................. 15,120,159
Net asset value and redemption price per share.................................. $ 8.06
Maximum sales charge (3.75% of offering price).................................. 0.31
-------------
Maximum offering price to public................................................ $ 8.37
=============
Class C:
Net assets...................................................................... $ 145,639,566
Shares outstanding.............................................................. 18,074,587
Net asset value, offering and redemption price per share (excluding any
applicable contingent deferred sales charges).................................. $ 8.06
=============
Class W:
Net assets...................................................................... $ 4,225,572
Shares outstanding.............................................................. 523,659
Net asset value, offering and redemption price per share........................ $ 8.07
=============
*COST
Investment securities (unaffiliated)........................................... $ 286,909,073
=============
Foreign cash................................................................... 4,308
=============
--------
+ See Note 1
See Notes to Financial Statements
6
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF OPERATIONS -- For the six months ended June 30, 2017 --
(unaudited)
AIG
Senior
Floating Rate
Fund+
-------------
INVESTMENT INCOME:
Interest (unaffiliated)........................................................... $ 6,549,983
Dividends (unaffiliated).......................................................... 14,268
Facility and other fee income (Note 2)............................................ 920,964
-----------
Total investment income........................................................ $ 7,485,215
-----------
EXPENSES:
Investment advisory and management fees........................................... 1,194,560
Administration fees............................................................... 281,074
Distribution and account maintenance fees:
Class A......................................................................... 223,081
Class C......................................................................... 569,896
Service fees:
Class W......................................................................... 1,219
Transfer agent fees and expenses:
Class A......................................................................... 146,264
Class C......................................................................... 172,682
Class W......................................................................... 2,776
Registration fees:
Class A......................................................................... 15,863
Class C......................................................................... 16,764
Class W......................................................................... 4,931
Accounting service fees........................................................... 11,124
Custodian and accounting fees..................................................... 47,088
Reports to shareholders........................................................... 43,087
Audit and tax fees................................................................ 62,966
Legal fees........................................................................ 20,884
Directors' fees and expenses...................................................... 19,530
Other expenses.................................................................... 13,759
-----------
Total expenses before fee waivers and expense reimbursements................... 2,847,548
Fees waived and expenses reimbursed by investment adviser (Note 5)............. (583,431)
-----------
Net expenses................................................................... 2,264,117
-----------
Net investment income (loss)...................................................... 5,221,098
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)............................ (11,013)
Net realized foreign exchange gain (loss) on other assets and liabilities......... (88,801)
-----------
Net realized gain (loss) on investments and foreign currencies.................... (99,814)
-----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated).... 208,551
Change in unrealized foreign exchange gain (loss) on other assets and liabilities. (1,458)
-----------
Net unrealized gain (loss) on investments and foreign currencies.................. 207,093
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies..... 107,279
-----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $ 5,328,377
===========
--------
+ See Note 1
See Notes to Financial Statements
7
SunAmerica Senior Floating Rate Fund, Inc.
STATEMENT OF CHANGES IN NET ASSETS
AIG
Senior Floating
Rate Fund*
--------------------------
For the
six months
ended For the year
June 30, ended
2017 December 31,
(unaudited) 2016
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)........................................................... $ 5,221,098 $ 10,378,060
Net realized gain (loss) on investments and foreign currencies......................... (99,814) (1,667,515)
Net unrealized gain (loss) on investments and foreign currencies....................... 207,093 16,908,218
------------ ------------
Net Increase (decrease) in net assets resulting from operations.......................... 5,328,377 25,618,763
------------ ------------
Distributions to Shareholders from:
Net investment income (Class A)........................................................ (2,424,145) (4,365,132)
Net investment income (Class C)........................................................ (2,663,465) (5,735,535)
Net investment income (Class W)........................................................ (31,230) --
------------ ------------
Total distributions to shareholders...................................................... (5,118,840) (10,100,667)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 3). (15,752,613) (14,800,758)
------------ ------------
Total increase (decrease) in net assets.................................................. (15,543,076) 717,338
NET ASSETS:
Beginning of period...................................................................... 287,328,266 286,610,928
------------ ------------
End of period+........................................................................... $271,785,190 $287,328,266
============ ============
+Includes accumulated undistributed net investment income (loss)......................... $ 41,907 $ (60,351)
============ ============
--------
* See Note 1
See Notes to Financial Statements
8
SunAmerica Senior Floating Rate Fund, Inc.
FINANCIAL HIGHLIGHTS
AIG Senior Floating Rate Fund+
------------------------------
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
-------
12/31/12 $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
12/31/14 8.34 0.31 (0.29) 0.02 (0.31) -- (0.31) 8.05 0.20 150,966 1.45
12/31/15 8.05 0.33 (0.44) (0.11) (0.33) -- (0.33) 7.61 (1.42) 114,375 1.45
12/31/16 7.61 0.31 0.44 0.75 (0.30) -- (0.30) 8.06 10.08 131,640 1.45
06/30/17(5) 8.06 0.16 (0.01) 0.15 (0.15) -- (0.15) 8.06 1.90 121,920 1.45(4)
Class C
-------
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
12/31/14 8.34 0.29 (0.30) (0.01) (0.28) -- (0.28) 8.05 (0.10) 217,174 1.75
12/31/15 8.05 0.31 (0.45) (0.14) (0.31) -- (0.31) 7.60 (1.85) 172,236 1.75
12/31/16 7.60 0.29 0.44 0.73 (0.28) -- (0.28) 8.05 9.76 155,688 1.75
06/30/17(5) 8.05 0.14 0.01 0.15 (0.14) -- (0.14) 8.06 1.88 145,640 1.75(4)
Class W
-------
04/20/17@ -
06/30/17(5) $8.11 $0.06 $(0.04) $ 0.02 $(0.06) $ -- $(0.06) $8.07 0.26% $ 4,226 1.25%(4)
Ratio of
net
investment
income to
average Portfolio
net assets(3) Turnover
------------- ---------
4.41% 61%
3.98 84
3.73 65
4.14 48
3.95 60
3.88(4) 42
4.12% 61%
3.68 84
3.44 65
3.84 48
3.68 60
3.58(4) 42
3.85%(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):
12/31/12 12/31/13 12/31/14 12/31/15 12/31/16 06/30/17(4)(5)
-------- -------- -------- -------- -------- --------------
Class A............. 0.35% 0.34% 0.32% 0.34% 0.33% 0.36%
Class C............. 0.44 0.43 0.41 0.44 0.42 0.45
Class W............. -- -- -- -- -- 1.07
(4)Annualized
(5)Unaudited
@ Inception date of class.
+ See Note 1
See Notes to Financial Statements
9
AIG Senior Floating Rate Fund++
PORTFOLIO PROFILE -- June 30, 2017 -- (unaudited)
Industry Allocation*
Commercial Services & Supplies.............................. 9.5%
Media....................................................... 7.7
IT Services................................................. 7.6
Hotels, Restaurants & Leisure............................... 7.0
Oil, Gas & Consumable Fuels................................. 7.0
Health Care Providers & Services............................ 6.2
Software.................................................... 4.0
Machinery................................................... 3.8
Food Products............................................... 3.3
Repurchase Agreements....................................... 3.2
Insurance................................................... 2.9
Containers & Packaging...................................... 2.7
Capital Markets............................................. 2.7
Chemicals................................................... 2.6
Health Care Equipment & Supplies............................ 2.2
Pharmaceuticals............................................. 2.1
Food & Staples Retailing.................................... 2.1
Specialty Retail............................................ 1.9
Energy Equipment & Services................................. 1.6
Real Estate Management & Development........................ 1.6
Registered Investment Companies............................. 1.5
Life Sciences Tools & Services.............................. 1.5
Industrial Conglomerates.................................... 1.5
Building Products........................................... 1.5
Diversified Telecommunication Services...................... 1.4
Wireless Telecommunication Services......................... 1.3
Real Estate Investment Trusts............................... 1.1
Household Products.......................................... 1.1
Household Durables.......................................... 1.1
Road & Rail................................................. 1.1
Metals & Mining............................................. 1.0
Electric Utilities.......................................... 0.9
Aerospace & Defense......................................... 0.9
Internet Software & Services................................ 0.8
Industrial Power Producers & Energy Traders................. 0.8
Internet & Direct Marketing Retail.......................... 0.7
Leisure Equipment & Products................................ 0.7
Professional Services....................................... 0.6
Diversified Financial Services.............................. 0.6
Personal Products........................................... 0.6
Construction Materials...................................... 0.5
Banks....................................................... 0.4
Construction & Engineering.................................. 0.4
Distributors................................................ 0.4
Consumer Finance............................................ 0.3
Air Freight & Logistics..................................... 0.3
Electrical Equipment........................................ 0.2
Semiconductors & Semiconductor Equipment.................... 0.2
Multiline Retail............................................ 0.2
Electronic Equipment, Instruments & Components.............. 0.2
-----
105.5%
=====
Credit Quality+#
BBB-........................................................ 3.7%
BB+......................................................... 5.9
BB.......................................................... 13.2
BB-......................................................... 17.7
B+.......................................................... 18.0
B........................................................... 24.7
B-.......................................................... 6.2
CCC+........................................................ 6.3
CCC......................................................... 1.0
CCC-........................................................ 0.2
D........................................................... 0.7
Not Rated@ ................................................. 2.4
-----
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.
++ See Note 1
10
AIG Senior Floating Rate Fund#
PORTFOLIO OF INVESTMENTS -- June 30, 2017 -- (unaudited)
Ratings/(1)/
(unaudited)
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount** (Note 2)
----------------------------------------------------------------------------------------------------------------------------
LOANS(3)(4) -- 91.9%
Aerospace & Defense -- 0.9%
Digital Globe, Inc.................................. BTL-B Ba3 BB+ 3.98% 01/15/2024 $ 999,975 $ 1,000,807
Transdigm Group, Inc................................ BTL-F Ba2 B+ 4.23 06/09/2023 1,398,081 1,395,896
-----------
2,396,703
-----------
Air Freight & Logistics -- 0.3%
Air Medical Group Holdings LLC...................... BTL-B B3 B 4.47 04/28/2022 705,700 691,762
-----------
Building Products -- 1.3%
Beacon Roofing Supply, Inc.......................... BTL-B B2 BB+ 3.96-6.00 10/01/2022 1,095,488 1,099,367
HD Supply, Inc...................................... BTL-B Ba3 BB 3.90 10/17/2023 1,339,875 1,345,178
Summit Materials LLC................................ BTL Ba2 BB+ 3.98 07/17/2022 931,000 937,983
-----------
3,382,528
-----------
Capital Markets -- 2.7%
AlixPartners LLC.................................... BTL-B B2 B+ 4.30 04/04/2024 1,710,713 1,717,555
Focus Financial Partners LLC........................ 1st Lien Ba3 B+ 4.55 07/03/2024 785,000 790,560
Fortress Investment Group LLC....................... BTL-B Baa3 BB- 2.75 06/02/2022 2,150,000 2,161,647
Russell Investments U.S. Institutional Holdco, Inc.. BTL Ba2 BB 6.79 06/01/2023 2,560,841 2,586,450
-----------
7,256,212
-----------
Chemicals -- 2.6%
Allnex (Lux) & Cy SCA............................... BTL-B2 B1 B 4.41 09/13/2023 997,206 997,206
Allnex USA, Inc..................................... BTL-B3 B1 B 4.41 09/13/2023 751,285 751,285
Chemours Co......................................... BTL-B1 Ba1 BB+ 3.57 05/12/2022 358,245 359,253
DuBois Chemicals, Inc.(8)........................... Delayed Draw B1 B- 1.00 03/15/2024 200,000 201,250
DuBois Chemicals, Inc............................... 1st Lien B1 B- 4.91-7.00 03/15/2024 798,000 800,993
Gates Global, Inc................................... BTL-B B2 B+ 4.55 04/01/2024 990,641 991,054
MacDermid, Inc...................................... BTL-B6 B2 BB- 4.23 06/07/2023 1,159,558 1,161,491
Minerals Technologies, Inc.......................... BTL-B Ba2 BB+ 3.47-3.55 02/14/2024 972,173 978,249
Univar, Inc......................................... BTL-B2 B2 BB 3.98 07/01/2022 748,449 748,761
-----------
6,989,542
-----------
Commercial Services & Supplies -- 7.8%
ADS Waste Holdings, Inc............................. BTL B1 BB 3.94 11/10/2023 1,035,477 1,040,099
Ascend Learning LLC................................. BTL-B B2 B+ 4.53 07/05/2022 685,000 681,575
Avolon Holdings, Ltd................................ BTL-B Ba2 BBB- 3.96 03/20/2022 2,345,000 2,363,381
AVSC Holding Corp................................... BTL B2 B 4.56-4.67 04/27/2024 3,066,010 3,058,344
Berlin Packaging LLC................................ BTL-B B2 B 4.30-4.55 10/01/2021 496,197 497,065
Brand Energy and Infrastructure Services, Inc....... BTL-B B3 B 5.46-5.50 06/21/2024 2,250,000 2,239,875
Brickman Group Holdings, Inc........................ 1st Lien B2 B 4.21-4.22 12/18/2020 1,389,959 1,390,610
Brickman Group Holdings, Inc........................ 2nd Lien Caa1 CCC+ 7.71 12/17/2021 1,048,979 1,048,105
Camelot UK Holdco, Ltd.............................. BTL-B B2 BB- 4.73 10/03/2023 1,022,288 1,027,399
Casella Waste Systems, Inc.......................... BTL-B1 NR B+ 3.96 10/17/2023 1,084,550 1,087,939
Clean Harbors, Inc.................................. BTL-B Baa3 BBB- 3.23 06/27/2024 755,000 755,944
Element Materials Tech Group........................ BTL-B B1 B 4.75 06/01/2024 575,000 578,939
Fly Funding II SARL................................. BTL Ba3 BB+ 3.43 02/09/2023 1,226,332 1,227,865
KAR Auction Services, Inc........................... BTL-B5 Ba2 NR 3.81 03/09/2023 439,444 441,642
Peak 10, Inc.(5).................................... 2nd Lien Caa2 CCC+ 8.41 06/17/2022 845,000 834,966
Sedgwick CMS Holdings, Inc.......................... 2nd Lien Caa2 CCC+ 6.98 02/28/2022 1,465,000 1,465,000
ServiceMaster Co.................................... BTL-B Ba2 BB+ 3.73 11/08/2023 497,041 499,319
Waste Industries USA, Inc........................... BTL-B B1 BB- 4.05 02/27/2020 1,016,600 1,019,777
-----------
21,257,844
-----------
Construction & Engineering -- 0.3%
Pike Corp........................................... 1st Lien B1 B 4.98 03/10/2024 473,813 478,551
Pike Corp........................................... 2nd Lien Caa1 CCC+ 9.23 09/02/2024 275,000 276,719
-----------
755,270
-----------
11
AIG Senior Floating Rate Fund#
PORTFOLIO OF INVESTMENTS -- June 30, 2017 -- (unaudited) (continued)
Ratings/(1)/
(unaudited)
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount** (Note 2)
----------------------------------------------------------------------------------------------------------------------------
Construction Materials -- 0.5%
Quikrete Companies, Inc.............................. 1st Lien B1 BB- 3.98% 11/15/2023 $1,452,700 $1,449,270
----------
Consumer Finance -- 0.2%
Vantiv LLC........................................... BTL-B Ba2 BBB- 3.66 10/14/2023 663,096 667,240
----------
Containers & Packaging -- 2.0%
Berry Plastics Holding Corp.......................... BTL-I Ba3 BB 3.62-3.73 10/01/2022 2,445,347 2,446,264
Berry Plastics Holding Corp.......................... BTL-J Ba3 BB 3.62 01/19/2024 244,388 244,388
Flex Acquisition Co., Inc............................ BTL B1 B 4.40 12/29/2023 1,550,000 1,555,425
ProAmpac PG Borrower LLC............................. 1st Lien B2 B 5.17-7.25 11/18/2023 791,574 801,138
ProAmpac PG Borrower LLC............................. 2nd Lien Caa2 CCC+ 9.67 11/18/2024 385,000 390,294
----------
5,437,509
----------
Distributors -- 0.4%
ABC Supply Co., Inc.................................. BTL-B B1 BB+ 3.73 10/31/2023 1,007,948 1,009,768
----------
Diversified Financial Services -- 0.5%
NAB Holdings LLC..................................... BTL-B B2 B 4.80 07/01/2024 750,000 750,000
TransUnion LLC....................................... BTL Ba3 BB 3.73 04/09/2023 513,133 516,065
----------
1,266,065
----------
Diversified Telecommunication Services -- 1.4%
Level 3 Financing, Inc............................... BTL-B Ba1 BBB- 3.47 02/22/2024 500,000 500,938
Numericable Finance & Co. SCA........................ BTL-B11 B1 B+ 3.94 07/31/2025 750,000 743,170
Numericable Finance & Co. SCA........................ BTL-B10 B1 B+ 4.42 01/14/2025 1,179,075 1,176,127
Telenet Bidco NV..................................... BTL-AI Ba3 BB- 3.91 06/30/2025 750,000 750,000
UPC Financing Partnership............................ BTL-AP Ba3 BB 3.91 04/15/2025 750,000 750,375
----------
3,920,610
----------
Electric Utilities -- 0.5%
Helix Gen Funding LLC................................ BTL Ba2 BB 4.96 06/02/2024 1,260,000 1,267,425
----------
Electrical Equipment -- 0.2%
WireCo WorldGroup, Inc............................... 1st Lien B3 B+ 6.70 09/30/2023 620,313 624,706
----------
Electronic Equipment, Instruments & Components -- 0.2%
Ortho Clinical Diagnostics SA........................ BTL B1 B- 5.05 06/30/2021 465,401 462,657
----------
Energy Equipment & Services -- 1.3%
Drillships Financing Holding, Inc.(5)(18)............ BTL-B Ca D 7.75 07/25/2021 978,910 809,232
Pacific Drilling SA.................................. BTL-B Caa3 NR 4.75 06/04/2018 801,600 332,664
Paragon Offshore, Ltd.(7)............................ BTL-B NR NR 6.00 07/18/2021 682,500 261,056
Pinnacle Holdco SARL................................. BTL B3 CCC 4.80 07/30/2019 1,004,313 873,752
Seadrill Partners Finco LLC.......................... BTL-B Caa2 CCC+ 4.30 02/21/2021 1,855,972 1,169,262
----------
3,445,966
----------
Food & Staples Retailing -- 2.1%
Albertson's Holdings LLC............................. BTL-B4 Ba2 BB 3.98 08/25/2021 915,040 902,888
Rite Aid Corp........................................ BTL B2 BB- 5.11 06/21/2021 2,230,000 2,235,111
Rite Aid Corp........................................ 2nd Lien B2 BB- 5.98 08/21/2020 1,055,000 1,058,429
SF CC Intermediate Holdings, Inc..................... BTL B3 B 4.73-4.80 11/15/2022 575,000 553,438
U.S. Foods, Inc...................................... BTL B1 BB 3.98 06/27/2023 1,000,163 1,003,696
----------
5,753,562
----------
Food Products -- 3.3%
B&G Foods, Inc....................................... BTL-B2 Ba2 BB+ 3.48 11/02/2022 500,421 502,476
Hearthside Food Solutions LLC........................ BTL-B B1 B 4.23 06/02/2021 996,240 999,976
Hostess Brands, Inc.................................. BTL B1 BB- 3.73 08/03/2022 2,090,621 2,098,026
JBS USA LLC.......................................... BTL-B Ba3 BB 5.75 10/30/2022 708,225 687,864
Pinnacle Foods Finance LLC........................... BTL-B Ba2 BB+ 3.08 02/02/2024 711,051 712,868
Pinnacle Operating Corp.(5)(15)...................... BTL-B2 Caa1 NR 8.48 11/15/2021 737,872 680,687
Post Holdings, Inc.(16).............................. Delayed Draw Ba2 BB- 3.25 05/17/2024 1,059,091 1,059,843
Post Holdings, Inc................................... BTL-B Ba2 BB- 3.47 05/24/2024 2,330,000 2,331,820
----------
9,073,560
----------
12
AIG Senior Floating Rate Fund#
PORTFOLIO OF INVESTMENTS -- June 30, 2017 -- (unaudited) (continued)
Ratings/(1)/
(unaudited)
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount** (Note 2)
-------------------------------------------------------------------------------------------------------------------------
Health Care Equipment & Supplies -- 2.2%
Alere, Inc........................................... BTL-B Ba3 BB- 4.48% 06/18/2022 $1,292,232 $ 1,293,241
Immucor, Inc......................................... BTL-B2 B2 B- 5.00 08/17/2018 1,780,211 1,781,694
Kinetic Concepts, Inc................................ BTL-E1 B1 B 4.55 02/02/2024 840,000 834,050
Sterigenics-Nordion Holdings LLC..................... BTL-B B1 B 4.15 05/15/2022 2,022,232 2,014,648
-----------
5,923,633
-----------
Health Care Providers & Services -- 5.8%
American Renal Holdings, Inc......................... BTL-B B2 B+ 4.48 06/14/2024 557,365 555,799
CHS/Community Health Systems, Inc.................... BTL-H Ba3 BB- 4.04-4.20 01/27/2021 901,134 899,428
Envision Healthcare Corp............................. BTL-B Ba3 BB- 4.30 12/01/2023 1,764,494 1,769,787
Genoa, a QoL Healthcare Co. LLC...................... 1st Lien B1 B 4.98 10/28/2023 932,950 935,282
Genoa, a QoL Healthcare Co. LLC...................... 2nd Lien Caa1 CCC+ 9.23 10/25/2024 500,000 501,667
Healogics, Inc....................................... 1st Lien B2 B- 5.32 07/01/2021 982,908 769,944
Inventiv Health, Inc................................. BTL-B B2 B 4.95 11/09/2023 2,930,275 2,937,601
MPH Acquisition Holdings LLC......................... BTL-B B1 B+ 4.30 06/07/2023 2,695,843 2,692,473
Opal Acquisition, Inc................................ BTL-B B2 B- 5.15-5.30 11/27/2020 598,659 553,012
Surgery Center Holdings, Inc.(16).................... BTL-B B1 B 4.25 06/06/2024 550,000 551,031
Surgery Center Holdings, Inc......................... 1st Lien B2 B 4.83 11/03/2020 1,199,263 1,202,637
Team Health, Inc..................................... 1st Lien B1 B 3.98 02/06/2024 753,113 747,841
U.S. Renal Care, Inc................................. BTL-B B2 B 5.55 12/31/2022 1,760,675 1,706,534
-----------
15,823,036
-----------
Hotels, Restaurants & Leisure -- 6.6%
1011778 B.C. ULC..................................... BTL-B3 Ba3 B+ 3.48-3.55 02/16/2024 622,137 621,100
Affinity Gaming LLC.................................. BTL B1 B+ 4.73 07/01/2023 616,929 620,013
Aristocrat Leisure, Ltd.............................. BTL-B Ba1 BB+ 3.41 10/20/2021 642,851 645,241
Boyd Gaming Corp..................................... BTL-B2 Ba3 BB 3.69 09/15/2023 1,023,352 1,024,266
Caesars Entertainment Operating Co., Inc.(7)(18)..... BTL-B6 NR NR 1.50 03/01/2022 1,910,401 2,270,990
Caesars Entertainment Operating Co., Inc.(7)(16)(18). BTL Ba3 BB 3.50 03/31/2024 1,755,000 1,748,784
Caesars Growth Properties Holdings LLC............... BTL B1 BB- 4.23 05/08/2021 1,065,009 1,069,003
CityCenter Holdings LLC.............................. BTL-B B1 BB- 3.72 04/18/2024 1,183,243 1,184,510
Eldorado Resorts LLC................................. BTL-B Ba3 BB 3.38 04/17/2024 2,094,750 2,077,730
Four Seasons Holdings, Inc........................... 1st Lien B1 BB 3.73 11/30/2023 616,900 619,599
Hilton Worldwide Finance LLC......................... BTL-B2 Ba1 BBB- 3.22 10/25/2023 748,439 750,415
Lindblad Expeditons, Inc............................. BTL B2 BB 5.95 05/08/2021 223,998 225,118
Lindblad Expeditons, Inc............................. CTL B2 BB 5.95 05/08/2021 1,736,002 1,744,682
Scientific Games International, Inc.................. BTL-B3 Ba3 B+ 5.08-5.23 10/01/2021 443,294 447,410
Station Casinos, Inc................................. BTL-B B1 BB 3.71 06/08/2023 1,043,400 1,042,841
Town Sports International Holdings, Inc.............. BTL Caa1 CCC+ 4.73 11/15/2020 2,200,578 1,962,183
-----------
18,053,885
-----------
Household Durables -- 1.1%
Installed Building Products, Inc..................... 1st Lien B1 BB 4.00 03/23/2024 690,000 690,431
Wilsonart LLC........................................ BTL B2 B+ 4.80 12/19/2023 2,288,500 2,294,221
-----------
2,984,652
-----------
Household Products -- 1.1%
Prestige Brands, Inc................................. BTL-B4 B1 BB- 3.98 01/26/2024 429,376 430,910
Reynolds Group Holdings, Inc......................... BTL B2 B+ 4.23 02/05/2023 2,615,270 2,619,928
-----------
3,050,838
-----------
Industrial Conglomerates -- 1.3%
American Rock Salt Co. LLC........................... BTL-B B2 B 4.98 05/20/2021 1,724,912 1,725,631
American Rock Salt Co. LLC........................... 2nd Lien B2 B 4.98 05/20/2021 973,890 973,890
Ameriforge Group, Inc.(15)(17)....................... BTL NR NR 9.30 05/12/2024 105,322 105,322
Utex Industries, Inc................................. 1st Lien Caa1 CCC+ 5.23 05/22/2021 818,670 728,616
-----------
3,533,459
-----------
13
AIG Senior Floating Rate Fund#
PORTFOLIO OF INVESTMENTS -- June 30, 2017 -- (unaudited) (continued)
Ratings/(1)/
(unaudited)
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount** (Note 2)
----------------------------------------------------------------------------------------------------------------------
Industrial Power Producers & Energy Traders -- 0.6%
AES Corp.......................................... BTL-B Ba1 BBB- 3.19% 05/24/2022 $ 977,550 $ 974,292
Calpine Corp...................................... BTL-B7 Ba2 BB 4.05 05/31/2023 685,500 684,521
-----------
1,658,813
-----------
Insurance -- 2.4%
Asurion Corp...................................... BTL-B5 Ba3 BB- 4.23 11/03/2023 1,013,975 1,019,045
Asurion Corp...................................... BTL-B4 Ba3 BB- 4.48 08/04/2022 973,088 977,345
Asurion Corp...................................... 2nd Lien B3 B- 8.73 03/03/2021 1,905,000 1,912,938
Compass Investments, Inc.......................... BTL-B B2 B 4.18 05/16/2024 1,345,000 1,335,249
Hub International, Ltd............................ BTL B1 B+ 4.42 10/02/2020 447,686 448,976
NFP Corp.......................................... BTL-B B2 B 4.80 01/08/2024 727,086 729,449
-----------
6,423,002
-----------
Internet & Direct Marketing Retail -- 0.7%
Acosta, Inc....................................... BTL B2 B 4.48 09/26/2021 1,338,489 1,202,026
Lands' End, Inc................................... BTL-B B3 B- 4.48 04/04/2021 928,832 782,541
-----------
1,984,567
-----------
Internet Software & Services -- 0.8%
Go Daddy Operating Co. LLC........................ BTL-B Ba3 BB- 3.73 02/15/2024 998,926 1,000,550
GTT Communications, Inc........................... BTL-B B1 B+ 5.25 01/09/2024 592,025 595,725
Zayo Group LLC.................................... BTL-B Ba2 BB 3.72 01/19/2024 711,388 712,722
-----------
2,308,997
-----------
IT Services -- 7.0%
CCC Information Services, Inc..................... 1st Lien B2 B 4.23 04/27/2024 860,000 857,313
Ceridian Corp..................................... BTL-B2 Ba3 B- 4.73 09/15/2020 762,066 757,303
Evo Payments International........................ 1st Lien B1 B 6.23 12/22/2023 1,615,950 1,632,615
Evo Payments International(5)..................... 2nd Lien Caa1 B- 10.23 11/15/2024 645,000 648,225
First Data Corp................................... BTL Ba3 BB 3.47 07/08/2022 2,321,195 2,317,003
First Data Corp................................... BTL Ba3 BB 3.72 04/26/2024 3,404,904 3,402,776
Gartner, Inc...................................... BTL-B Ba1 BB+ 3.23 04/05/2024 703,238 705,875
Global Payments, Inc.............................. BTL-B2 Ba2 BBB- 3.23 04/22/2023 960,810 963,555
iPayment, Inc..................................... BTL-B B1 B+ 7.16 04/06/2023 630,000 634,725
Tempo Acquisition LLC............................. BTL B1 B 4.06 05/01/2024 2,570,000 2,574,284
WEX, Inc.......................................... BTL-B Ba3 BB- 4.73 07/01/2023 2,866,050 2,872,192
Xerox Business Services LLC....................... BTL-B Ba2 BB+ 5.23 12/07/2023 1,771,100 1,793,239
-----------
19,159,105
-----------
Leisure Equipment & Products -- 0.7%
SRAM LLC.......................................... BTL B2 B 4.58-6.75 03/15/2024 1,776,426 1,778,647
-----------
Life Sciences Tools & Services -- 1.5%
INC Research LLC.................................. BTL-B Ba2 BB+ 3.48 06/27/2024 1,400,000 1,402,334
Pharmaceutical Product Development, Inc........... BTL-B Ba3 B 3.98-4.05 08/18/2022 2,671,779 2,671,362
-----------
4,073,696
-----------
Machinery -- 3.7%
Clark Equipment Co................................ BTL-B B1 BB- 3.93 05/18/2024 997,500 999,059
Columbus McKinnon Corp............................ BTL-B Ba3 B+ 4.30 01/31/2024 1,150,530 1,159,159
Gardner Denver, Inc............................... BTL B2 B+ 4.55 07/30/2020 1,576,137 1,579,290
Harbor Freight Tools USA, Inc..................... BTL-B Ba3 BB- 4.48 08/18/2023 1,434,555 1,433,360
Harsco Corp....................................... BTL-B Ba1 BB 6.25 11/02/2023 1,124,350 1,141,918
NN, Inc........................................... BTL B2 B+ 4.98 03/22/2021 1,767,150 1,762,732
Paladin Brands Holding, Inc.(5)................... BTL B3 B+ 7.30 08/16/2019 1,580,439 1,540,928
Utility One Source LP............................. BTL B2 B 6.80 04/07/2023 525,000 530,250
-----------
10,146,696
-----------
14
AIG Senior Floating Rate Fund#
PORTFOLIO OF INVESTMENTS -- June 30, 2017 -- (unaudited) (continued)
Ratings/(1)/
(unaudited)
------------
Interest Maturity Principal
Industry Description Type Moody's S&P Rate Date/(2)/ Amount** Value (Note 2)
------------------------------------------------------------------------------------------------------------------------
Media -- 7.5%
Advantage Sales & Marketing LLC............. 1st Lien B1 B 4.55% 07/23/2021 $1,957,690 $ 1,878,403
Advantage Sales & Marketing LLC............. 2nd Lien Caa1 CCC+ 7.80 07/25/2022 1,000,000 955,000
CBS Radio, Inc.(16)......................... BTL-B Ba3 BB- 3.75 10/17/2023 570,000 570,713
CBS Radio, Inc.............................. BTL-B Ba3 BB- 4.72 10/17/2023 567,416 570,785
Charter Communications Operating LLC........ BTL Ba1 BBB- 3.48 01/15/2024 817,131 819,855
CSC Holdings, Inc........................... 1st Lien Ba1 BB 3.46 07/17/2025 510,625 508,870
Delta 2 (Lux) SARL.......................... BTL-B3 B2 B 4.50 02/01/2024 3,944,124 3,945,358
Delta 2 (Lux) SARL.......................... 2nd Lien Caa2 CCC+ 8.00 07/29/2022 448,500 451,191
Galleria Co................................. BTL-B Ba1 BBB- 4.13 09/29/2023 995,000 999,353
Getty Images, Inc........................... BTL-B B3 CCC+ 4.75 10/18/2019 1,816,614 1,671,285
ION Media Networks, Inc..................... BTL-B3 B1 B+ 4.13 12/18/2020 2,662,221 2,672,204
Unitymedia Hessen GmbH & Co. KG(16)......... BTL-B Ba3 BB- 3.25 09/30/2025 1,260,000 1,255,800
Univision Communications, Inc............... BTL-C4 B2 BB- 3.98 03/15/2024 2,512,202 2,464,470
Virgin Media Investments, Ltd............... BTL-I Ba3 BB- 3.91 01/31/2025 750,000 750,000
Ziggo Secured Finance Partners.............. BTL-E Ba3 BB- 3.66 04/15/2025 750,000 747,857
-----------
20,261,144
-----------
Metals & Mining -- 0.7%
Crosby Worldwide, Ltd....................... 1st Lien Caa1 B- 4.17 11/23/2020 1,018,962 922,161
Signode Industrial Group U.S., Inc.......... BTL-B B1 B 3.98-4.05 05/04/2021 1,013,859 1,011,324
-----------
1,933,485
-----------
Multiline Retail -- 0.2%
Neiman Marcus Group, Inc.................... BTL-B Caa1 CCC 4.34 10/25/2020 673,799 504,507
-----------
Oil, Gas & Consumable Fuels -- 5.7%
American Energy Marcellus LLC(19)........... 1st Lien Ca D 5.34 08/04/2020 1,478,241 931,292
Arch Coal, Inc.(7).......................... BTL B1 BB- 5.23 03/07/2024 2,184,525 2,181,794
BCP Raptor LLC.............................. BTL-B B3 B+ 5.51 06/06/2024 830,000 819,625
California Resources Corp................... 2nd Lien Caa1 B 11.53 12/31/2021 1,315,000 1,392,256
Chesapeake Energy Corp...................... BTL B3 B+ 8.69 08/23/2021 880,000 936,100
Chief Exploration & Development LLC......... 2nd Lien NR NR 7.93 05/16/2021 2,160,000 2,079,000
Energy Transfer Equity LP................... BTL Ba2 BB- 3.83 02/02/2024 929,412 923,603
Foresight Energy LLC........................ 1st Lien B2 B 6.98 03/28/2022 2,788,013 2,660,809
Peabody Energy Corp......................... 1st Lien Ba3 B+ 5.73 03/31/2022 1,052,363 1,049,732
Philadelphia Energy Solutions LLC(5)........ BTL-B B3 B+ 6.25 04/04/2018 914,413 843,546
Power Buyer LLC............................. BTL B2 B+ 4.55 05/06/2020 1,025,973 1,019,132
Power Buyer LLC(5).......................... 2nd Lien Caa2 CCC+ 8.55 11/06/2020 670,000 656,600
-----------
15,493,489
-----------
Personal Products -- 0.4%
Revlon Consumer Products Corp............... BTL-B Ba3 B+ 4.73 09/07/2023 1,091,750 1,014,872
-----------
Pharmaceuticals -- 1.7%
Catalent Pharma Solutions, Inc.............. BTL-B2 Ba3 BB 3.98 05/20/2021 1,154,492 1,163,872
Endo Luxembourg Finance Co.................. BTL-B Ba2 BB 5.50 04/29/2024 2,120,000 2,134,244
Valeant Pharmaceuticals International, Inc.. BTL-F1 Ba3 BB- 5.83 04/01/2022 1,412,809 1,431,333
-----------
4,729,449
-----------
Professional Services -- 0.6%
Nexeo Solutions LLC......................... BTL-B B3 B 4.92-5.05 06/09/2023 1,618,691 1,630,326
-----------
Real Estate Investment Trusts -- 1.1%
Capital Automotive LP....................... 1st Lien B1 B 4.22 03/24/2024 310,000 312,131
Capital Automotive LP....................... 2nd Lien B3 CCC+ 7.22 03/24/2025 475,000 480,542
Equinix, Inc................................ BTL-B Ba2 BBB- 3.25 01/05/2024 EUR 1,127,175 1,298,868
MGM Growth Properties LLC................... BTL Ba3 BB+ 3.48 04/25/2023 988,706 989,448
-----------
3,080,989
-----------
15
AIG Senior Floating Rate Fund#
PORTFOLIO OF INVESTMENTS -- June 30, 2017 -- (unaudited) (continued)
Ratings/(1)/
(unaudited)
------------
Interest Maturity Principal Value
Industry Description Type Moody's S&P Rate Date/(2)/ Amount** (Note 2)
---------------------------------------------------------------------------------------------------------------------------------
Real Estate Management & Development -- 1.6%
DTZ US Borrower LLC............................. 1st Lien B1 B+ 4.42-4.55% 11/04/2021 $3,289,823 $ 3,288,589
DTZ US Borrower LLC............................. 2nd Lien B3 B- 9.42 11/04/2022 92,340 92,167
Realogy Corp.................................... BTL-B Ba1 BB+ 3.48 07/20/2022 858,159 862,235
------------
4,242,991
------------
Road & Rail -- 1.1%
Kenan Advantage Group, Inc...................... BTL B1 B+ 4.23 07/31/2022 920,224 919,074
Kenan Advantage Group, Inc...................... BTL-B B1 B+ 4.23 07/31/2022 222,385 222,107
Neff Rental LLC................................. 2nd Lien B3 B- 7.66 06/09/2021 1,726,263 1,724,825
------------
2,866,006
------------
Semiconductors & Semiconductor Equipment -- 0.2%
Integrated Device Technology, Inc............... BTL-B Baa3 BB 4.23 03/20/2024 538,650 539,997
------------
Software -- 3.9%
Almonde, Inc.................................... BTL Caa2 CCC+ 8.46 06/13/2025 230,000 233,738
Change Healthcare Holdings, Inc................. BTL-B8 Ba3 B+ 3.98 03/01/2024 1,496,250 1,496,017
Epicore Software Co............................. 1st Lien B2 B- 4.98 06/01/2022 1,019,330 1,017,873
Hyland Software, Inc............................ BTL-B1 B1 B 4.48 07/01/2022 329,175 330,547
Hyland Software, Inc............................ BTL-B3 B1 B 8.00 07/01/2022 385,000 386,604
Hyland Software, Inc............................ 2nd Lien Caa1 CCC+ 8.23 07/12/2025 315,000 317,363
Lawson Software, Inc............................ BTL-B6 B1 B 4.05 02/01/2022 693,898 689,189
MA FinanceCo. LLC............................... BTL-B3 B1 BB- 3.96 06/21/2024 172,186 172,057
Misys Europe SA(16)............................. 1st Lien B2 B 4.25 06/13/2024 1,655,000 1,654,470
Oberthur Technologies SA........................ BTL-B1 B2 B- 3.75 01/10/2024 380,625 381,577
Oberthur Technologies SA(15).................... BTL-B2 B2 B- 3.75 12/15/2023 616,875 618,417
RP Crown Parent LLC............................. BTL-B B1 B 4.73 10/12/2023 885,550 889,608
Seattle Spinco, Inc............................. BTL-B3 B1 BB- 4.03 06/21/2024 1,162,814 1,161,942
SS&C Technologies, Inc.......................... BTL-B1 Ba2 BB+ 3.48 07/08/2022 1,239,133 1,243,337
SS&C Technologies, Inc.......................... BTL-B2 Ba2 BB+ 3.48 07/08/2022 75,100 75,355
------------
10,668,094
------------
Specialty Retail -- 1.9%
At Home Holding III, Inc........................ BTL B2 B 4.67 06/03/2022 1,417,753 1,418,639
Bass Pro Group LLC.............................. BTL-B B1 B+ 6.30 12/16/2023 2,490,000 2,416,635
J Crew Operating Corp........................... BTL-B1 Caa1 CCC- 4.16-4.30 03/05/2021 733,743 434,743
PetSmart, Inc................................... BTL-B2 Ba3 B+ 4.22 03/11/2022 1,070,711 991,746
------------
5,261,763
------------
Wireless Telecommunication Services -- 1.3%
LTS Buyer LLC................................... BTL-B B1 B 4.55 04/13/2020 1,474,960 1,479,263
Sprint Communications, Inc...................... BTL-B Ba2 BB- 3.75 02/02/2024 1,995,000 1,993,931
------------
3,473,194
------------
Total Loans (cost $252,634,079)................. 249,711,531
------------
U.S. CORPORATE BONDS & NOTES -- 5.4%
Building Products -- 0.2%
FBM Finance, Inc.*.............................. Sec. Notes B3 B+ 8.25 08/15/2021 516,000 552,765
------------
Commercial Services & Supplies -- 1.7%
Alpine Finance Merger*.......................... Senior Notes Caa2 CCC+ 6.88 08/01/2025 715,000 727,513
Brand Energy and Infrastructure Services, Inc.*. Senior Notes Caa2 CCC+ 8.50 07/15/2025 1,170,000 1,210,949
Hertz Corp.*.................................... Sec. Notes B1 BB- 7.63 06/01/2022 1,000,000 997,599
Reynolds Group Issuer, Inc. FRS*................ Senior Sec. Notes B2 B+ 4.66 07/15/2021 1,245,000 1,265,232
Reynolds Group Issuer, Inc.*.................... Company Guar. Notes Caa2 B- 7.00 07/15/2024 390,000 418,358
------------
4,619,651
------------
Construction & Engineering -- 0.1%
Beazer Homes, Inc............................... Company Guar. Notes B3 NR 8.75 03/15/2022 331,000 369,065
------------
16
AIG Senior Floating Rate Fund#
PORTFOLIO OF INVESTMENTS -- June 30, 2017 -- (unaudited) (continued)
Ratings/(1)/
(unaudited)
------------
Interest Maturity Principal
Industry Description Type Moody's S&P Rate Date/(2)/ Amount**
-------------------------------------------------------------------------------------------------------------------------
Consumer Finance -- 0.1%
Navient Corp.......................................... Senior Notes Ba3 B+ 6.50% 06/15/2022 $ 300,000
Containers & Packaging -- 0.2%
Flex Acquisition Co., Inc.*........................... Senior Notes Caa1 CCC+ 6.88 01/15/2025 635,000
Health Care Providers & Services -- 0.4%
CHS/Community Health Systems, Inc..................... Senior Sec. Notes Ba3 BB- 6.25 03/31/2023 750,000
MPH Acquisition Holdings LLC*......................... Senior Notes Caa1 B- 7.13 06/01/2024 265,000
Industrial Power Producers & Energy Traders -- 0.2%
Dynegy Finance, Inc................................... Senior Sec. Notes B3 B+ 6.75 11/01/2019 500,000
Insurance -- 0.5%
Springleaf Finance Corp............................... Company Guar. Notes B2 B 6.13 05/15/2022 500,000
USIS Merger Sub, Inc.*................................ Senior Notes Caa2 CCC+ 6.88 05/01/2025 760,000
IT Services -- 0.6%
First Data Corp.*..................................... Company Guar. Notes B3 B 7.00 12/01/2023 1,500,000
Machinery -- 0.1%
BlueLine Rental*...................................... Sec. Notes Caa1 B 9.25 03/15/2024 325,000
Media -- 0.2%
Gray Television, Inc.*................................ Company Guar. Notes B2 B+ 5.88 07/15/2026 475,000
Metals & Mining -- 0.1%
Novelis Corp.*........................................ Senior Notes B2 B 6.25 08/15/2024 210,000
Multi Utilities -- 0.0%
Texas Competitive Electric Holdings Co. LLC*(5)....... Escrow Notes NR NR 6.25 10/01/2020 4,174,956
Oil, Gas & Consumable Fuels -- 0.7%
Foresight Energy/Finance*............................. Sec. Notes Caa2 CCC 11.50 04/01/2023 915,000
Peabody Securities Finance Corp.*..................... Senior Sec. Notes Ba3 B+ 6.00 03/31/2022 310,000
SM Energy Co.......................................... Senior Notes B2 B+ 6.75 09/15/2026 470,000
WPX Energy, Inc....................................... Senior Notes B3 B+ 5.25 09/15/2024 315,000
Personal Products -- 0.2%
Revlon Escrow Corp.................................... Company Guar. Notes B3 B 6.25 08/01/2024 505,000
Software -- 0.1%
Infor Software Parent LLC*(9)......................... Company Guar. Notes Caa2 CCC 7.13 05/01/2021 330,000
Total U.S. Corporate Bonds & Notes (cost $14,436,272).
FOREIGN CORPORATE BONDS & NOTES -- 2.3%
Containers & Packaging -- 0.5%
Ardagh Packaging Finance PLC*......................... Senior Sec. Notes Ba3 BB 4.25 09/15/2022 500,000
Ardagh Packaging Finance PLC*......................... Company Guar. Notes B3 B 7.25 05/15/2024 685,000
Diversified Financial Services -- 0.1%
Tervita Escrow Corp.*................................. Senior Sec. Notes B2 B- 7.63 12/01/2021 305,000
Energy Equipment & Services -- 0.3%
Shelf Drilling Holdings, Ltd.*........................ Sec. Notes B2 B- 9.50 11/02/2020 936,977
Hotels, Restaurants & Leisure -- 0.4%
Codere Finance 2*..................................... Senior Sec. Notes B2 B 7.63 11/01/2021 1,000,000
Metals & Mining -- 0.2%
Costellium NV*........................................ Senior Notes Caa1 CCC+ 6.63 03/01/2025 655,000
Oil, Gas & Consumable Fuels -- 0.4%
Tullow Oil PLC*....................................... Company Guar. Notes Caa1 B- 6.00 11/01/2020 1,000,000
Value
Industry Description (Note 2)
--------------------------------------------------------------------
Consumer Finance -- 0.1%
Navient Corp.......................................... $ 318,000
-----------
Containers & Packaging -- 0.2%
Flex Acquisition Co., Inc.*........................... 660,399
-----------
Health Care Providers & Services -- 0.4%
CHS/Community Health Systems, Inc..................... 774,263
MPH Acquisition Holdings LLC*......................... 282,556
-----------
1,056,819
-----------
Industrial Power Producers & Energy Traders -- 0.2%
Dynegy Finance, Inc................................... 515,625
-----------
Insurance -- 0.5%
Springleaf Finance Corp............................... 527,500
USIS Merger Sub, Inc.*................................ 773,300
-----------
1,300,800
-----------
IT Services -- 0.6%
First Data Corp.*..................................... 1,601,250
-----------
Machinery -- 0.1%
BlueLine Rental*...................................... 338,000
-----------
Media -- 0.2%
Gray Television, Inc.*................................ 484,500
-----------
Metals & Mining -- 0.1%
Novelis Corp.*........................................ 220,500
-----------
Multi Utilities -- 0.0%
Texas Competitive Electric Holdings Co. LLC*(5)....... 10,438
-----------
Oil, Gas & Consumable Fuels -- 0.7%
Foresight Energy/Finance*............................. 855,525
Peabody Securities Finance Corp.*..................... 307,675
SM Energy Co.......................................... 448,700
WPX Energy, Inc....................................... 299,250
-----------
1,911,150
-----------
Personal Products -- 0.2%
Revlon Escrow Corp.................................... 439,350
-----------
Software -- 0.1%
Infor Software Parent LLC*(9)......................... 339,900
-----------
Total U.S. Corporate Bonds & Notes (cost $14,436,272). 14,738,212
-----------
FOREIGN CORPORATE BONDS & NOTES -- 2.3%
Containers & Packaging -- 0.5%
Ardagh Packaging Finance PLC*......................... 513,250
Ardagh Packaging Finance PLC*......................... 749,219
-----------
1,262,469
-----------
Diversified Financial Services -- 0.1%
Tervita Escrow Corp.*................................. 307,288
-----------
Energy Equipment & Services -- 0.3%
Shelf Drilling Holdings, Ltd.*........................ 908,868
-----------
Hotels, Restaurants & Leisure -- 0.4%
Codere Finance 2*..................................... 993,500
-----------
Metals & Mining -- 0.2%
Costellium NV*........................................ 627,162
-----------
Oil, Gas & Consumable Fuels -- 0.4%
Tullow Oil PLC*....................................... 950,000
-----------
17
AIG Senior Floating Rate Fund#
PORTFOLIO OF INVESTMENTS -- June 30, 2017 -- (unaudited) (continued)
Ratings/(1)/
(unaudited)
-----------
Interest Maturity
Industry Description Type Moody's S&P Rate Date/(2)/
-------------------------------------------------------------------------------------------------------------------------------
Pharmaceuticals -- 0.4%
Endo International PLC*................................................ Company Guar. Notes B3 B- 6.00% 07/15/2023
Valeant Pharmaceuticals*............................................... Senior Sec. Notes Ba3 BB- 7.00 03/15/2024
Total Foreign Corporate Bonds & Notes (cost $7,178,488)................
COMMON STOCKS -- 0.8%
Electric Utilities -- 0.4%
Vistra Energy Corp.....................................................
Vistra Energy Corp. CVR+...............................................
Industrial Conglomerates -- 0.2%
AFG Holdings, Inc.+....................................................
Media -- 0.0%
Vivial+(5)(6)(10)......................................................
Oil, Gas & Consumable Fuels -- 0.2%
TE Holdcorp LLC, Class A+(5)(6)(10)....................................
Total Common Stocks (cost $7,310,466)..................................
PREFERRED SECURITIES/CAPITAL SECURITIES -- 0.4%
Banks -- 0.4%
Banco Bilbao Vizcaya Argentaria SA VRS(11)............................. NR NR 9.00 05/09/2018
Royal Bank of Scotland Group PLC VRS(11)............................... Ba3 B 8.63 08/15/2021
Societe Generale SA VRS(11)............................................ Ba2 BB+ 8.25 11/29/2018
Total Preferred Securities/Capital Securities
(cost $1,195,378).....................................................
Total Long-Term Investment Securities
(cost $282,754,683)...................................................
SHORT-TERM INVESTMENT SECURITIES -- 1.5%
Registered Investment Companies -- 1.5%
State Street Institutional Liquid Reserves Fund, Administration Class
0.85%(12)
(cost $4,154,390)......................................................
REPURCHASE AGREEMENTS -- 3.2%
Bank of America Securities LLC Joint Repurchase Agreement(13)..........
Barclays Capital, Inc. Joint Repurchase Agreement(13)..................
BNP Paribas SA Joint Repurchase Agreement(13)..........................
Deutsche Bank AG Joint Repurchase Agreement(13)........................
RBS Securities, Inc. Joint Repurchase Agreement(13)....................
Total Repurchase Agreements (cost $8,670,000)..........................
TOTAL INVESTMENTS-
(cost $295,579,073)(14)................................................
Liabilities in excess of other assets....................................
NET ASSETS-..............................................................
Principal
Amount**/ Value
Industry Description Shares (Note 2)
----------------------------------------------------------------------------------------
Pharmaceuticals -- 0.4%
Endo International PLC*................................................ $ 560,000 $ 470,680
Valeant Pharmaceuticals*............................................... 630,000 662,287
------------
1,132,967
------------
Total Foreign Corporate Bonds & Notes (cost $7,178,488)................ 6,182,254
------------
COMMON STOCKS -- 0.8%
Electric Utilities -- 0.4%
Vistra Energy Corp..................................................... 69,610 1,168,752
Vistra Energy Corp. CVR+............................................... 69,610 70,793
------------
1,239,545
------------
Industrial Conglomerates -- 0.2%
AFG Holdings, Inc.+.................................................... 14,309 472,197
------------
Media -- 0.0%
Vivial+(5)(6)(10)...................................................... 1,136 24,992
------------
Oil, Gas & Consumable Fuels -- 0.2%
TE Holdcorp LLC, Class A+(5)(6)(10).................................... 44,278 442,783
------------
Total Common Stocks (cost $7,310,466).................................. 2,179,517
------------
PREFERRED SECURITIES/CAPITAL SECURITIES -- 0.4%
Banks -- 0.4%
Banco Bilbao Vizcaya Argentaria SA VRS(11)............................. 400,000 417,995
Royal Bank of Scotland Group PLC VRS(11)............................... 340,000 370,600
Societe Generale SA VRS(11)............................................ 400,000 424,364
------------
Total Preferred Securities/Capital Securities
(cost $1,195,378)..................................................... 1,212,959
------------
Total Long-Term Investment Securities
(cost $282,754,683)................................................... 274,024,473
------------
SHORT-TERM INVESTMENT SECURITIES -- 1.5%
Registered Investment Companies -- 1.5%
State Street Institutional Liquid Reserves Fund, Administration Class
0.85%(12)
(cost $4,154,390)...................................................... 4,153,983 4,154,399
------------
REPURCHASE AGREEMENTS -- 3.2%
Bank of America Securities LLC Joint Repurchase Agreement(13).......... 1,785,000 1,785,000
Barclays Capital, Inc. Joint Repurchase Agreement(13).................. 1,485,000 1,485,000
BNP Paribas SA Joint Repurchase Agreement(13).......................... 2,540,000 2,540,000
Deutsche Bank AG Joint Repurchase Agreement(13)........................ 610,000 610,000
RBS Securities, Inc. Joint Repurchase Agreement(13).................... 2,250,000 2,250,000
------------
Total Repurchase Agreements (cost $8,670,000).......................... 8,670,000
------------
TOTAL INVESTMENTS-
(cost $295,579,073)(14)................................................ 105.5% 286,848,872
Liabilities in excess of other assets.................................... (5.5) (15,063,682)
---------- ------------
NET ASSETS-.............................................................. 100.0% $271,785,190
========== ============
--------
BTL Bank Term Loan
CTL Cayman Term Loan
CVR Contingent Value Rights
EUR Euro Currency
NR Security is not rated.
FRS--FloatingRate Security
VRS--VariableRate Security
18
AIG Senior Floating Rate Fund#
PORTFOLIO OF INVESTMENTS -- June 30, 2017 -- (unaudited) (continued)
The rates shown on FRS and VRS are the current interest rates as of June 30,
2017 and unless noted otherwise, the dates shown are the original maturity
dates.
+ 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, 2017, the
aggregate value of these securities was $17,228,713, representing 6.3% of
net assets. Unless otherwise indicated, these securities are not considered
to be illiquid.
** Denominated in United States Dollars unless otherwise noted.
# See Note 1
(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, 2017.
(2) Based on the stated maturity, the weighted average to maturity of the loans
held in the portfolio is approximately 69 months. Loans in the Fund's
portfolio are generally subject to mandatory and/or optional prepayment.
Because of these mandatory prepayment conditions and because there may be
significant economic incentives for a Borrower to prepay, prepayments may
occur. As a result, the actual remaining maturity may be substantially less
than the stated maturities shown.
(3) The Fund invests in senior loans which generally pay interest at rates
which are periodically re-determined by reference to a base lending rate
plus a premium. These base lending rates are generally either the lending
rate offered by one or more major European banks, such as the London
Inter-Bank Offer Rate ("LIBOR") or the prime rate offered by one or more
major United States banks, or the certificate of deposit rate. Senior loans
are generally considered to be restrictive in that the Fund is ordinarily
contractually obligated to receive approval from the Agent Bank and/or
borrower prior to the disposition of a senior loan.
(4) All loans in the portfolio were purchased through assignment agreements
unless otherwise indicated.
(5) Illiquid security. At June 30, 2017, the aggregate value of these
securities was $6,492,397, representing 2.4% 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 bankruptcy protection.
(8) All or a portion of this holding is subject to unfunded loan commitments
(see Note 10).
(9) "Payment-in-Kind" (PIK) security -- Income may be paid in additional
securities or cash at the discretion of the issuer. The security is
currently paying interest in cash at the coupon rate listed.
(10)Denotes a restricted security that: (a) cannot be offered for public sale
without first being registered, or being able to take advantage of an
exemption from registration, under the Securities Act of 1933, as amended
(the "1933 Act"); (b) is subject to a contractual restriction on public
sales; or (c) is otherwise subject to a restriction on sales by operation
of applicable law. Restricted securities are valued pursuant to Note 1.
Certain restricted securities held by the Fund may not be sold except in
exempt transactions or in a public offering registered under the 1933 Act.
The Fund has no right to demand registration of these securities. The risk
of investing in certain restricted securities is greater than the risk of
investing in the securities of widely held, publicly traded companies. To
the extent applicable, lack of a secondary market and resale restrictions
may result in the inability of a Fund to sell a security at a fair price
and may substantially delay the sale of the security. In addition, certain
restricted securities may exhibit greater price volatility than securities
for which secondary markets exist. As of June 30, 2017, the Fund held the
following restricted securities:
Acquisition Acquisition Value Per % of Net
Description Date Shares Cost Value Share Assets
----------- ----------- ------ ----------- -------- --------- --------
Common Stocks
-------------
Vivial................... 04/24/2008 1,136 $ 668,529 $ 24,992 $22.00 0.00%
TE Holdcorp LLC, Class A. 12/31/2016 44,278 1,638,216 442,783 10.00 0.02
-------- ----
$467,775 0.02%
======== ====
(11)Perpetual maturity -- maturity date reflects the next call date.
(12)The rate shown is the 7-day yield as of June 30, 2017.
(13)See Note 2 for details of the Joint Repurchase Agreement.
(14)See Note 6 for cost of investments on a tax basis.
(15)"Payment-in-Kind" (PIK) security. Income may be paid in additional loans or
cash at the discretion of the issuer. The security is currently paying
interest in the form of additional loans at the coupon rate listed.
(16)As of June 30, 2017, the loan has not settled and as a result, the interest
rate is estimated based on information available.
(17)Company has entered into a forbearance agreement under which consenting
lenders extended the date by which specified payments otherwise would be
due and payable to a subsequent date, subject to certain conditions.
(18)Loan is in default of interest.
(19)Subsequent to June 30, 2017, loan is in default of interest.
Forward Foreign Currency Contracts
--------------------------------------------------------------------------------
Contract to In Exchange Delivery Unrealized Unrealized
Counterparty Deliver For Date Appreciation Depreciation
-------------- ------------- ------------- ---------- ------------ ------------
Citibank N.A.. EUR 1,130,000 USD 1,268,414 07/31/2017 $-- $(23,933)
=== ========
--------
EUR Euro Currency
USD United States Dollar
19
AIG Senior Floating Rate Fund#
PORTFOLIO OF INVESTMENTS -- June 30, 2017 -- (unaudited) (continued)
The following is a summary of the inputs used to value the Fund's net assets as
of June 30, 2017 (see Note 2):
Level 1 -- Unadjusted Level 2 -- Other Level 3 -- Significant
Quoted Prices Observable Inputs Unobservable Inputs Total
--------------------- ----------------- ---------------------- ------------
ASSETS:
Investments at Value:*
Loans:
Energy Equipment & Services........... $ -- $ 2,852,246 $ 593,720 $ 3,445,966
Industrial Conglomerates.............. -- 3,428,137 105,322 3,533,459
Other Industries...................... -- 242,732,106 -- 242,732,106
U.S. Corporate Bonds & Notes............ -- 14,738,212 -- 14,738,212
Foreign Corporate Bonds & Notes......... -- 6,182,254 -- 6,182,254
Common Stocks:
Electric Utilities.................... 1,168,752 70,793 -- 1,239,545
Industrial Conglomerates.............. 472,197 -- -- 472,197
Media................................. -- -- 24,992 24,992
Oil, Gas & Consumable Fuels........... -- -- 442,783 442,783
Preferred Securities/Capital Securities. -- 1,212,959 -- 1,212,959
Short-Term Investment Securities........ 4,154,399 -- -- 4,154,399
Repurchase Agreements................... -- 8,670,000 -- 8,670,000
---------- ------------ ---------- ------------
Total Investments at Value.............. $5,795,348 $279,886,707 $1,166,817 $286,848,872
========== ============ ========== ============
LIABILITIES:
Other Financial Instruments:@
Forward Foreign Currency Contracts...... $ -- $ 23,933 $ -- $ 23,933
========== ============ ========== ============
* For a detailed presentation of investments, please refer to the Portfolio of
Investments.
@ Other financial instruments are derivative instruments not reflected in the
Portfolio of Investments, such as futures, forward, swap and written option
contracts, which are valued at the unrealized appreciation (depreciation) on
the instrument.
# See Note 1
The Fund's policy is to recognize transfers between Levels as of the end of the
reporting period. There were no material 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 Financial Statements
20
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2017 -- (unaudited)
Note 1. Organization of the Fund
SunAmerica Senior Floating Rate Fund, Inc. (the "Corporation") is an
open-end, diversified management investment company organized as a Maryland
corporation in 1998 and is registered under the Investment Company Act of
1940, as amended (the "1940 Act"). The Corporation consists of one series --
AIG Senior Floating Rate Fund (the "Fund"). 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 ("Loans"). 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.
On November 18, 2016, the Board of Directors approved a change in the name
of the SunAmerica Senior Floating Rate Fund to the AIG Senior Floating Rate
Fund effective February 28, 2017. SunAmerica Asset Management, LLC continues
to serve as investment adviser of the Fund and retains its current name. In
addition, there was no change in the Fund's investment goal or strategy,
portfolio manager or ticker symbols in connection with the rebranding.
The Fund offers three classes of shares: Class A, Class C and Class W. These
classes within the Fund are presented in the Statement of Assets and
Liabilities. The cost structure for each class is as follows:
Class A shares-- 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-- 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.
Class W shares-- Offered at net asset value per share. The class is offered
exclusively through advisory fee-based programs sponsored
by certain financial intermediaries and other programs.
Each class of shares bears the same voting, dividend, liquidation and other
rights and conditions, except as may otherwise be provided in the Fund's
registration statement. Class A and Class C shares each make distribution
and account maintenance fee payments under the distribution plans pursuant
to Rule 12b-1 under the 1940 Act, except Class C shares are subject to
higher distribution fee rates. Class W shares have not adopted a 12b-1 plan
and make no payments thereunder, however, Class W shares pay a service fee
to the Fund's distributor for providing administrative and shareholder
services.
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.
21
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2017 -- (unaudited)
(continued)
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 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
establishes 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. 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"), etc.)
Level 3 -- Significant unobservable inputs (includes inputs that reflect the
Fund's own assumptions about the assumptions market participants would use
in pricing the security, developed based on the best information available
under the circumstances)
Changes in valuation techniques may result in transfers in or out of an
investment's assigned Level within the hierarchy. The methodology used for
valuing investments 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 the Fund's assets and liabilities classified in the fair
value hierarchy as of June 30, 2017, is reported on a schedule following the
Portfolio of Investments.
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.
22
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2017 -- (unaudited)
(continued)
As of the close of regular trading on the New York Stock Exchange ("NYSE"),
securities traded primarily on security exchanges outside the United States
are valued at the last sale price on such exchanges on the day of valuation,
or if there is no sale on the day of valuation, at the last-reported bid
price. If a security's price is available from more than one exchange, the
Fund uses the exchange that is the primary market for the security. Such
securities are generally categorized as Level 1. However, depending on the
foreign market, closing prices may be up to 15 hours old when they are used
to price a Fund's shares, and the Fund may determine that certain closing
prices do not reflect the fair value of the security. This determination
will be based on the review of a number of factors, including developments
in foreign markets, the performance of U.S. securities markets, and the
performance of instruments trading in U.S. markets that represent foreign
securities and baskets of foreign securities. If the Fund determines that
closing prices do not reflect the fair value of the securities, the Fund
will adjust the previous closing prices in accordance with pricing
procedures approved by the Board to reflect what it believes to be the fair
value of the securities as of the close of regular trading on the NYSE. The
Fund may also fair value securities in other situations, for example, when a
particular foreign market is closed but the Fund is open. For foreign equity
securities and foreign equity futures contracts, the Fund uses an outside
pricing service to provide it with closing market prices and information
used for adjusting those prices, and when so adjusted, such securities and
futures are generally categorized as Level 2.
Bonds, debentures, and other debt securities 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 spread 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.
Senior secured 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.
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. Investments in registered investment companies are generally
categorized as Level 1.
Forward foreign currency contracts ("forward contracts") are valued at the
4:00 pm Eastern time forward rate 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.
Derivative Instruments:
Forward Foreign Currency Contracts: During the period, the Fund used forward
contracts to protect against uncertainty in the level of future exchange
rates.
A forward contract is an agreement between two parties to buy or sell
currency at a set price on a future date. The market value of the contract
will fluctuate with changes in currency exchange rates. The contract is
marked-to-market daily using the forward rate and the cumulative change in
market value is recorded by the Fund as unrealized appreciation or
depreciation. On the settlement date, the Fund records either realized gains
or losses equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
23
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2017 -- (unaudited)
(continued)
Risks to the Fund of entering into forward contracts include counterparty
risk, market risk and illiquidity risk. Counterparty risk arises upon
entering into these contracts from the potential inability of counterparties
to meet the terms of their contracts. If the counterparty defaults, the
Fund's loss will generally consist of the net amount of contractual payments
that the Fund has not yet received though the Fund's maximum exposure due to
counterparty risk could extend to the notional amount of the contract.
Market risk is the risk that the value of the forward contract will
depreciate due to unfavorable changes in the exchange rates. These contracts
may involve market risk in excess of the unrealized appreciation or
depreciation reported on the Statement of Assets and Liabilities.
Illiquidity risk arises because the secondary market for forwards may have
less liquidity relative to markets for other securities. Currency
transactions are also subject to risks different from those of other
portfolio transactions. Because currency control is of great importance to
the issuing governments and influences economic planning and policy,
purchases and sales of currency and related instruments can be adversely
affected by government exchange controls, limitations or restrictions on
repatriation of currency, and manipulations or exchange restrictions imposed
by governments.
Forward foreign currency contracts outstanding at the end of the period, if
any, are reported on a schedule following the Fund's Portfolio of
Investments.
Master Agreements: The Fund holds derivative instruments and other financial
instruments whereby the Fund may be a party to ISDA (International Swaps and
Derivatives Association, Inc.) Master Agreements or similar agreements
("Master Agreements") with certain counterparties that govern such
instruments. Master Agreements may contain provisions regarding, among other
things, the parties' general obligations, representations, agreements,
collateral requirements, events of default and early termination. Collateral
can be in the form of cash or securities as agreed to by the Fund and
applicable counterparty. Collateral requirements are generally determined
based on the Fund's net position with each counterparty. Master Agreements
may also include certain provisions that require the Fund to post additional
collateral upon the occurrence of certain events, such as when a Fund's net
assets fall below a specified level. In addition, 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. Termination events applicable to the Fund may also occur upon a
decline in the Fund's net assets below a specified level over a certain
period of time. Additional termination events applicable to counterparties
may occur upon a decline in a counterparty's long-term and short-term credit
ratings below a specified level, or upon a decline in the ratings of a
counterparty's credit support provider. Upon the occurrence of a termination
event, the other party may elect to terminate early and cause settlement of
all instruments 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, which settlement
amounts could be in excess of the amount of assets that are already posted
as collateral. 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 a result, the early termination with respect to derivative
instruments subject to Master Agreements that are in a net liability
position could be material to the Fund's financial statements. The Fund does
not offset derivative assets and derivative liabilities that are subject to
netting arrangements in the Statement of Assets and Liabilities.
The following tables represent the value of derivatives held as of June 30,
2017, by their primary underlying risk exposure and respective location on
the Statement of Assets and Liabilities and the effect of derivatives on the
Statement of Operations for the six months ended June 30, 2017. The
derivative contracts held during the period are not accounted for as hedging
instruments under GAAP. For a detailed presentation of derivatives held as
of June 30, 2017, please refer to a schedule following the Fund's Portfolio
of Investments.
Asset Derivatives Liability Derivatives
----------------- --------------------
Foreign
Foreign Exchange Contracts Exchange Contracts
-------------------------- -----------------
Forward Foreign
Forward Foreign Currency Contracts(1) Currency Contracts(2)
------------------------------------- --------------------
$-- $23,933
=== =======
Statement of Assets and Liabilities Location:
(1) Unrealized appreciation on forward foreign currency contracts
(2) Unrealized depreciation on forward foreign currency contracts
24
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2017 -- (unaudited)
(continued)
Change in Unrealized
Realized Gain (Loss) Appreciation (Depreciation)
on Derivatives Recognized on Derivatives Recognized
in Statement of Operations in Statement of Operations
-------------------------- -------------------------
Foreign
Foreign Exchange Contracts Exchange Contracts
-------------------------- ----------------
Forward Foreign
Forward Foreign Currency Contracts(1) Currency Contracts(2)
------------------------------------- -------------------
$(76,807) $(13,909)
========= ========
Statement of Operations Location:
(1) Net realized foreign exchange gain (loss) on other assets and
liabilities
(2) Change in unrealized foreign exchange gain (loss) on other
assets and liabilities
The following table represents the average monthly balance of derivatives
held during the six months ended June 30, 2017:
Average Amount
Outstanding
During the Period
---------------------
Foreign
Fund Exchange Contracts(1)
---- ---------------------
Senior Floating Rate............... $1,229,934
==========
-
(1) Amounts represent notional amounts in US dollars.
The following table sets forth the Fund's derivative assets and liabilities
by counterparty, net of amounts available for offset under Master Agreements
and net of the related collateral pledged/(received) as of June 30, 2017.
The repurchase agreements held by the Fund as of June 30, 2017, are also
subject to Master Agreements but are not included in the following tables.
See the Portfolio of Investments and the Notes to the Financial Statements
for more information about the Fund's holdings in repurchase agreements.
Senior Floating Rate Fund
-----------------------------------------------------------------
Derivative Assets(1) Derivative Liabilities(1)
------------------------------- ---------------------------------
Forward Forward Net
Foreign Foreign Derivative Collateral
Currency OTC Options Currency OTC Options Assets Pledged/
Counterparty Contracts Swaps Purchased Total Contracts Swaps Purchased Total (Liabilities) (Received)(2)
------------ --------- ----- --------- ----- --------- ----- --------- ------- ------------- -------------
Citibank N.A.................. $-- $-- $-- $-- $23,933 $-- $-- $23,933 $(23,933) $--
=== === === === ======= === === ======= ======== ===
Net
Counterparty Amount(3)
------------ ---------
Citibank N.A.................. $(23,933)
========
-
(1)Gross amounts of recognized assets and liabilities not offset in the
Statement of Assets and Liabilities.
(2)For each respective counterparty, collateral pledged or (received) is
limited to an amount not to exceed 100% of the net amount of the
derivative asset/liability in the above table.
(3)Net amount represents the net amount due (to)/from counterparty in
the event of a default based on the contractual set-off rights under
the agreement.
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, the 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.
25
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2017 -- (unaudited)
(continued)
As of June 30, 2017, 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.......... 2.98% $1,785,000
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, 2017, bearing interest at a
rate of 1.06% per annum, with a principal amount of $60,000,000, a
repurchase price of $60,005,300, and a maturity date of July 3, 2017. The
repurchase agreement is collateralized by the following:
Interest Maturity
Type of Collateral Rate Date Principal Amount Value
------------------ -------- ---------- ---------------- -----------
U.S. Treasury Notes................ 2.13% 05/15/2025 $61,526,000 $61,516,387
As of June 30, 2017, the Fund held an undivided interest in a joint
repurchase agreement with Barclays Capital, Inc.:
Percentage Principal
Ownership Amount
---------- ----------
Senior Floating Rate Fund.......... 2.97% $1,485,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Barclays Capital, Inc., dated June 30, 2017, bearing interest at a rate of
1.05% per annum, with a principal amount of $50,000,000, a repurchase price
of $50,004,375, and a maturity date of July 3, 2017. The repurchase
agreement is collateralized by the following:
Interest Maturity
Type of Collateral Rate Date Principal Amount Value
------------------ -------- ---------- ---------------- -----------
U.S. Treasury Bonds................ 3.00% 11/15/2045 $49,098,000 $51,038,905
As of June 30, 2017, the Fund held an undivided interest in a joint
repurchase agreement with BNP Paribas SA:
Percentage Principal
Ownership Amount
---------- ----------
Senior Floating Rate Fund.......... 2.99% $2,540,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
BNP Paribas SA, dated June 30, 2017, bearing interest at a rate of 1.08% per
annum, with a principal amount of $85,000,000, a repurchase price of
$85,007,650, and a maturity date of July 3, 2017. The repurchase agreement
is collateralized by the following:
Interest Maturity
Type of Collateral Rate Date Principal Amount Value
------------------ -------- ---------- ---------------- -----------
U.S. Treasury Notes................ 2.25% 01/31/2024 $84,893,900 $86,733,292
As of June 30, 2017, the Fund held an undivided interest in a joint
repurchase agreement with Deutsche Bank AG:
Percentage Principal
Ownership Amount
---------- ---------
Senior Floating Rate Fund.......... 2.97% $610,000
26
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2017 -- (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, 2017, bearing interest at a rate of
1.10% per annum, with a principal amount of $20,525,000, a repurchase price
of $20,526,881, and a maturity date of July 3, 2017. The repurchase
agreement is collateralized by the following:
Interest Maturity
Type of Collateral Rate Date Principal Amount Value
------------------ -------- ---------- ---------------- -----------
U.S. Treasury Notes................ 2.00% 10/31/2021 $20,692,000 $20,969,135
As of June 30, 2017, the Fund held an undivided interest in a joint
repurchase agreement with RBS Securities, Inc.:
Percentage Principal
Ownership Amount
---------- ----------
Senior Floating Rate Fund.......... 2.98% $2,250,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
RBS Securities, Inc., dated June 30, 2017, bearing interest at a rate of
1.04% per annum, with a principal amount of $75,600,000, a repurchase price
of $75,606,552, and a maturity date of July 3, 2017. The repurchase
agreement is collateralized by the following:
Interest Maturity
Type of Collateral Rate Date Principal Amount Value
------------------ -------- ---------- ---------------- -----------
U.S. Treasury Notes................ 1.50% 08/31/2018 $76,570,000 $77,086,920
When-Issued Securities and Forward Commitments: The Fund may purchase or
sell when-issued securities that have been authorized, but not yet issued in
the market. In addition, the Fund may purchase or sell securities on a
forward commitment basis. A forward commitment involves entering into a
contract to purchase or sell securities, typically on an extended settlement
basis, for a fixed price at a future date. The Fund may engage in
when-issued or forward commitment transactions in order to secure what is
considered to be an advantageous price and yield at the time of entering
into the obligation. The purchase of securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines before the settlement date. Conversely, the sale of
securities on a when-issued or forward commitment basis involves the risk
that the value of the securities sold may increase before the settlement
date.
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 $132,594 for the six months ended June 30, 2017, are accreted to
income over the life of the Loans. Other income, including amendment fees,
commitment fees, letter of credit fees, etc., which were $788,370 for the
six months ended June 30, 2017, are recorded as income when received or
contractually due to the Fund.
Securities purchased or sold on a when-issued or forward commitment basis
are included in investments sold/purchased on an extended settlement basis
in the Statement of Assets and Liabilities.
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).
27
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2017 -- (unaudited)
(continued)
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 GAAP. 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.
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
2013-2015 or expected to be taken in the Fund's 2016 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
2013.
New Accounting Pronouncement: In October 2016, the SEC adopted amendments to
rules under the 1940 Act ("final rules") intended to modernize the reporting
and disclosure of information by registered investment companies. The final
rules amend Regulation S-X and require funds to provide standardized,
enhanced derivative disclosure in fund financial statements in a format
designed for individual investors. The amendments to Regulation S-X also
update the disclosures for other investments and investments in and advances
to affiliates and amend the rules regarding the general form and content of
fund financial statements. The compliance date for the amendments to
Regulation S-X is August 1, 2017. Management is currently evaluating the
amendments and their impact, if any, on the Fund's financial statements.
Note 3. Capital Share Transactions
Transactions in capital shares of each class of the Fund were as follows:
For the
six months ended For the
June 30, 2017 year ended
(unaudited) December 31, 2016
------------------------ ------------------------
Shares Amount Shares Amount
Class A ---------- ------------ ---------- ------------
Shares sold................. 2,277,170 $ 18,449,126 4,951,013 $ 39,136,197
Reinvested distributions.... 231,006 1,869,979 440,371 3,436,435
Shares redeemed............. (3,723,114) (30,143,649) (4,091,329) (31,742,954)
---------- ------------ ---------- ------------
Net increase (decrease).. (1,214,938) $ (9,824,544) 1,300,055 $ 10,829,678
========== ============ ========== ============
For the
six months ended For the
June 30, 2017 year ended
(unaudited) December 31, 2016
------------------------ ------------------------
Shares Amount Shares Amount
Class C ---------- ------------ ---------- ------------
Shares sold................. 1,094,370 $ 8,863,152 1,250,845 $ 9,840,545
Reinvested distributions.... 257,291 2,082,294 545,310 4,246,724
Shares redeemed............. (2,609,442) (21,117,260) (5,119,483) (39,717,705)
---------- ------------ ---------- ------------
Net increase (decrease).. (1,257,781) $(10,171,814) (3,323,328) $(25,630,436)
========== ============ ========== ============
28
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2017 -- (unaudited)
(continued)
For the
period April 20, 2017@
through
June 30, 2017
(unaudited)
--------------------
Shares Amount
Class W -------- ----------
Shares sold................. 622,734 $5,044,335
Reinvested distributions.... 3,967 32,075
Shares redeemed............. (103,042) (832,665)
-------- ----------
Net increase (decrease).. 523,659 $4,243,745
======== ==========
--------
@ Inception date of class
Note 4. Purchases and Sales of Securities
During the six months ended June 30, 2017, the Fund's cost of purchases and
proceeds from sale of long-term investments, including loan principal
paydowns, were $120,583,662 and $126,298,030, respectively.
Note 5. Investment Advisory Agreement and Other Transactions with Affiliates
The Fund has entered into an Investment Advisory and Management Agreement
(the "Advisory Agreement") with SunAmerica. Pursuant to the Advisory
Agreement, SunAmerica provides continuous supervision of the Fund and
administers its corporate affairs, subject to the general review and
oversight of the Board. In connection therewith, SunAmerica furnishes the
Fund with office facilities, maintains certain of the Fund's books and
records and pays the salaries and expenses of all personnel, including
officers of the Fund who are employees of SunAmerica and its affiliates.
SunAmerica also selects, contracts with and compensates the subadviser to
manage the Fund's assets. The Fund will pay SunAmerica a monthly management
fee at the following annual rates, based on the average daily net assets of
the Fund: 0.85% on the first $1 billion; 0.80% on the next $1 billion; and
0.75% in excess of $2 billion.
Wellington Management Company LLP ("Wellington") acts as subadviser to the
Fund pursuant to a Subadvisory Agreement with SunAmerica. Under the
Subadvisory Agreement, Wellington manages the investment and reinvestment of
the Fund's assets. For compensation for its services as subadviser,
Wellington is entitled to receive from SunAmerica a monthly fee payable at
the following annual rates: 0.30% of average daily net assets on the first
$500 million and 0.25% thereafter. The fee paid to the subadviser is paid by
SunAmerica and not the Fund.
Pursuant to the Administrative Services Agreement (the "Administrative
Agreement"), SunAmerica acts as the Fund's administrator and is responsible
for providing and supervising the performance by others, of administrative
services in connection with the operations of the Fund, subject to
supervision by the Fund's Board. For its services, SunAmerica receives an
annual fee equal to 0.20% of average daily net assets of the Fund. For the
six months ended June 30, 2017, SunAmerica earned fees as reflected in the
Statement of Operations based upon the aforementioned rate.
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
(other than Class W 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,
29
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2017 -- (unaudited)
(continued)
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. For the six months ended June 30,
2017, ACS received fees (see Statement of Operations) based upon the
aforementioned rates. The Fund has entered into an Administrative and
Shareholder Services Agreement with ACS, pursuant to which ACS is paid an
annual fee of 0.15% of average daily net assets of Class W shares as
compensation for providing additional shareholder services to Class W
shareholders. For the period ended June 30, 2017, ACS earned fees as
reflected in the Statements of Operations based on the aforementioned rate.
For the six months ended June 30, 2017, ACS received sales charges on
Class A shares of $76,073, of which $23,043 was reallowed to affiliated
broker-dealers and $37,866 to non-affiliated broker-dealers. In addition,
ACS receives the proceeds of contingent deferred sales charges paid by
investors in connection with certain redemptions of Class A and Class C
shares. For the six months ended June 30, 2017, ACS received contingent
deferred sales charges of $4,865.
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. For the six
months ended June 30, 2017, the Fund incurred the following expenses, which
are included in the transfer agent fees and expenses payable in the
Statement of Assets and Liabilities and in transfer agent fees and expenses
in the Statement of Operations to compensate SAFS pursuant to the terms of
the Service Agreement.
Payable at
Expense June 30, 2017
-------- -------------
Class A............................ $140,222 $22,557
Class C............................ 167,169 26,610
Class W............................ 1,789 829
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, 1.75% for Class C and 1.25% for Class W of average daily net
assets. For purposes of waived fees and/or reimbursed expense calculations,
annual Fund operating expenses shall not include extraordinary expenses,
(i.e., expenses that are unusual in nature and/or infrequent in occurrence,
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, taxes 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 indefinitely,
unless terminated by the Board, including a majority of the Disinterested
Directors. For the six months ended June 30, 2017, SunAmerica waived fees
and/or reimbursed expenses as follows: Class A $229,226, Class C $345,520
and Class W $8,685.
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 and wash sales.
Distributable Earnings Tax Distributions
---------------------------------------- -------------------------------------
For the year ended December 31, 2016 For the year ended December 31, 2016
---------------------------------------- -------------------------------------
Long-term Gains/ Unrealized Long-term
Ordinary Capital and Appreciation/ Ordinary Capital
Income Other Losses (Depreciation) Income Gains
-------- ---------------- -------------- ------------ ---------
$-- $(47,861,156) $(8,953,986) $10,100,667 $--
30
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2017 -- (unaudited)
(continued)
Capital Loss Carryforwards: At December 31, 2016 for Federal income tax
purposes, the Fund has capital loss carryforwards available to offset future
capital gains of $27,303,177 expiring in 2017. Additionally, the Fund has
$307,778 and $20,250,201 of unlimited short-term and long-term capital
losses respectively. For the year ended December 31, 2016, the fund utilized
short-term capital losses of $145,785 and expired capital loss carryforwards
of $16,003,027.+
-----
+ 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, a 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.
Under the current law, capital losses realized after October 31 and
specified ordinary losses may be deferred and treated as occurring on the
first day of the following year. For the year ended December 31, 2016, the
fund did not defer any Post-October capital losses.
Unrealized appreciation and depreciation in the value of investments at
June 30, 2017 for federal income tax purposes were as follows:
Cost (tax basis)................... $295,581,764
============
Gross unrealized appreciation...... 2,461,585
Gross unrealized depreciation...... (11,194,477)
------------
Net unrealized depreciation........ $ (8,732,892)
============
Note 7. Line of Credit
The Fund, along with certain other funds managed by the Adviser has access
to a $75 million committed unsecured line of credit and a $50 million
uncommitted unsecured line of credit. The committed and uncommitted lines of
credit are renewable on an annual basis with State Street Bank and Trust
Company ("State Street"), the Fund's custodian. Interest is currently
payable on the committed line of credit at the higher of the Federal Funds
Rate (but not less than zero) plus 125 basis points or the One-Month London
Interbank Offered Rate (but not less than zero) plus 125 basis points and
State Street's discretionary bid rate on the uncommitted line of credit. The
Fund has paid State Street for its own account, such Fund's ratable portion
of an upfront fee in an amount equal to $100,000 in the aggregate for the
committed and uncommitted lines of credit and the committed line of credit
made available by State Street to certain other funds managed by the
Adviser, which are also party to the uncommitted line of credit. The
$100,000 upfront fee is inclusive of a closing fee of 5 basis points on the
uncommitted line of credit. There is also a commitment fee of 25 basis
points per annum on the daily unused portion of the committed line of
credit. Borrowings under the line of credit will commence when the
respective Fund's cash shortfall exceeds $100,000.
For the six months ended June 30, 2017, the Fund did not utilize the line of
credit.
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, 2017, the Fund did
not participate in this program.
31
SunAmerica Senior Floating Rate Fund, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2017 -- (unaudited)
(continued)
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, 2017, the Fund had the following unfunded loan commitments which
could be extended at the option of the Borrower:
Borrower Type Maturity Date Principal Amount Value
-------- ------------ ------------- ---------------- --------
DuBois Chemicals, Inc.............. Delayed Draw 03/15/2024 $200,000 $201,250
32
SunAmerica Senior Floating Rate Fund, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND SUBADVISORY AGREEMENTS -- June
30, 2017 -- (unaudited)
The Board of Directors (the "Board" the members of which are referred to as
"Directors") of AIG 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, 2018 at an in-person meeting held on June 6-7, 2017 (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, 2018 (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 Broadridge Financial Solutions, Inc. ("Broadridge"),
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, legal and compliance, clerical and
administrative services 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 concluded, based on its 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 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
33
SunAmerica Senior Floating Rate Fund, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND SUBADVISORY AGREEMENTS -- June
30, 2017 -- (unaudited) (continued)
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 fees
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, 2017, SunAmerica managed, advised and/or
administered approximately $83.9 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 in effectively serving as the investment adviser to the Fund.
The Board also considered the nature, extent and quality of services 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,
and other key personnel of Wellington, 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 Broadridge 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 Broadridge to select the funds in the Peer Group and
Peer Universe.
The Board noted that performance information was for the periods ended
March 31, 2017. The Board also noted that it regularly reviews the performance
of the Fund throughout the year. The Board further noted that, while it
monitors performance of the Fund closely, it generally attaches more importance
to performance over relatively long periods of time, typically three to five
years.
The Board considered that the Fund's performance was above the median of its
Peer Group for the one- and three-year periods and equal to the median of its
Peer Group for the five-year period. The Board also considered that the Fund's
performance was above the median of its Peer Universe for the one-, three- and
five-year periods. The Board further
34
SunAmerica Senior Floating Rate Fund, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND SUBADVISORY AGREEMENTS -- June
30, 2017 -- (unaudited) (continued)
noted that the Fund outperformed its Broadridge Index for the one-, three- and
five-year periods. The Board concluded that the Fund's performance was
satisfactory.
Consideration of the Management Fees 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 fees for the Fund,
the Board received reports independently prepared by Broadridge. The reports
showed comparative fee information for the Fund's Peer Group and Peer Universe
as determined by Broadridge, including rankings within each category. In
considering the reasonableness of the management fees 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 Broadridge
reports, rather than also being reflected as specific management fee waivers in
the actual management fees category of the Broadridge reports. As a result, the
Board took into account that the actual management fees presented by Broadridge
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 noted, however, that the
comparative fee information provided by Broadridge as a whole was useful in
assessing whether SunAmerica was providing services at a cost that was
competitive with other, similar funds.
The Board further considered services and management fees received by
SunAmerica with respect to other mutual funds with similar investment
strategies to the Fund. The Board then noted the management fee paid by the
Fund was reasonable as compared to the fees SunAmerica was receiving from other
mutual funds for which it serves as adviser.
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 fee, the Board received a
report independently prepared by Broadridge. 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 fee. 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 fee is paid by SunAmerica out of its management fees 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 fee 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 Wellington,
respectively.
The Board also considered fees received by Wellington with respect to other
mutual funds and accounts with similar investment strategies to the Fund for
which Wellington serves as adviser or subadviser, 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
35
SunAmerica Senior Floating Rate Fund, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND SUBADVISORY AGREEMENTS -- June
30, 2017 -- (unaudited) (continued)
manner similar to the Fund. The Board then noted that the subadvisory fee paid
by SunAmerica to Wellington was 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
medians of its Peer Group and Peer Universe. The Board also considered that the
Fund's total expenses were above the medians 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
Wellington, as well as the profitability of SunAmerica under the Administrative
Services Agreement, and considered the profitability of SunAmerica's affiliates
under the Rule 12b-1 Plans, Service Agreement and Administrative and
Shareholder Services Agreement. 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 information from
Wellington and considered whether Wellington had the financial resources
necessary to attract and retain high quality investment management personnel
and to provide a high quality of services.
The Board concluded that SunAmerica and Wellington had the financial resources
necessary to perform its obligations under the 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 fees were 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
limiting total fees even in the absence of breakpoints or economies of scale.
The Board concluded that the Fund's management fee structure was reasonable and
that it would continue to review fees in connection with the renewal of the
Advisory Agreement, including whether the implementation of additional
breakpoints would be appropriate in the future due to an increase in asset size
or otherwise.
36
SunAmerica Senior Floating Rate Fund, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND SUBADVISORY AGREEMENTS -- June
30, 2017 -- (unaudited) (continued)
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 and concluded that the management fee
structure, including the amount of management fee retained by SunAmerica, was
reasonable in light of the factors described above.
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, 2018. 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.
37
[LOGO]
AIG Funds
Harborside 5
185 Hudson Street, Suite 3300
Jersey City, NJ 07311
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 One Lincoln St. file its com-plete
Stephen J. Gutman Boston, MA 02111 schedule of portfolio
Peter A. Harbeck VOTING PROXIES ON FUND holdings with the U.S.
Officers PORTFOLIO SECURITIES Securities and Exchange
John T. Genoy, President A description of the Commission for its first
and Chief Executive policies and proce-dures and third fiscal quarters
Officer that the Fund uses to on Form N-Q. The Fund's
James Nichols, Vice determine how to vote Forms N-Q are available
President proxies related to on the U.S. Securities
Kara Murphy, Vice securities held in the and Exchange Commission's
President Fund's portfolio, which website at
Christopher C. Joe, is available in the http://www.sec.gov. You
Chief Compliance Fund's Statement of can also review and
Officer Additional Information obtain copies of the
Gregory N. Bressler, may be ob-tained without Forms N-Q at the U.S.
Secretary charge upon request, by Securities and Exchange
Gregory R. Kingston, calling (800) 858-8850. Commission's Public
Treasurer This in-formation is also Refer-ence Room in
Kathleen Fuentes, Chief available from the EDGAR Washington, DC
Legal Officer and database on the U.S. (information on the
Assistant Secretary Secu-rities and Exchange operation of the Public
Matthew J. Hackethal, Commission's website at Reference Room may be
Anti-Money Laundering http://www.sec.gov. ob-tained by calling
Compliance Officer DELIVERY OF SHAREHOLDER 1-800-SEC-0330).
Donna McManus, Vice DOCUMENTS PROXY VOTING RECORD ON
President and The Fund has adopted a FUND PORTFOLIO SECURITIES
Assistant Treasurer policy that allows it to Information regarding how
Shawn Parry, Vice send only one copy of the the Fund voted proxies
President and Fund's prospectus, proxy relating to securities
Assistant Treasurer material, annual report held in the Fund's
Investment Adviser and semi-annual report portfolio during the most
SunAmerica Asset (the "shareholder recent twelve month
Management, LLC documents") to period ended June 30 is
Harborside 5 shareholders with available, once filed
185 Hudson Street, Suite multiple accounts with the U.S. Securities
3300 residing at the same and Exchange Commis-sion,
Jersey City, NJ 07311 "household." This without charge, upon
Distributor practice is called request, by calling
AIG Capital Services, householding and reduces (800) 858-8850 or on the
Inc. Fund expenses, which U.S. Securities and
Harborside 5 benefits you and other Exchange Commission's
185 Hudson Street, Suite shareholders. Unless the website at
3300 Fund receives http://www.sec.gov.
Jersey City, NJ 07311 instructions to the This report is submitted
Shareholder Servicing con-trary, you will only solely for the general
Agent receive one copy of the information of
AIG Fund Services, Inc. shareholder documents. shareholders of the Fund.
Harborside 5 The Fund will continue to Distribution of this
185 Hudson Street, Suite household the report to persons other
3300 share-holder documents than shareholders of the
Jersey City, NJ 07311 indefinitely, until we Fund is authorized only
Transfer Agent are instructed otherwise. in connection with a
State Street Bank and If you do not wish to currently effective
Trust Company participate in prospectus, setting forth
P.O. Box 219373 householding, please details of the Fund,
Kansas City, MO 64141 contact Shareholder which must precede or
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 AIG opinion has been
Funds c/o BFDS, P.O. Box expressed thereon.
219186, Kansas City MO,
64121-9186. We will
resume in-dividual
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.aig.com/funds
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.aig.com/funds 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.
AIG Funds are advised by SunAmerica Asset Management, LLC (SAAMCo) and
distributed by AIG Capital Services, Inc. (ACS), Member FINRA. Harborside
5, 185 Hudson Street, Suite 3300, Jersey City, NJ 07311, 800-858-8850. SAAMCo
and ACS are members of American International Group, Inc. (AIG).
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
AIG Funds Sales Desk at 800-858-8850, ext. 6003, or at aig.com/funds. Read the
prospectus carefully before investing.
SFSAN - 6/17
[LOGO]
aig.com/funds
Item 2. Code of Ethics
Not Applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board of Directors that were
implemented after the registrant last provided disclosure in response to
the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407)
(as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a-101), or this
Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures (as defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270.30a-3(c))). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940 (17 CFR 270.30a-3(d))) that occurred during the
registrant's last fiscal quarter of the period covered by this report
that has materially affected, or is reasonably likely to materially
affect, the registrant's internal contro1 over financial reporting.
Item 12. Exhibits.
(a) (1) Not applicable.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Senior Floating Rate Fund, Inc.
By: /s/ John T. Genoy
------------------------------------
John T. Genoy
President
Date: September 7, 2017
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John T. Genoy
------------------------------------
John T. Genoy
President
Date: September 7, 2017
By: /s/ Gregory R. Kingston
------------------------------------
Gregory R. Kingston
Treasurer
Date: September 7, 2017