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 811-04708
---------------------------------------------
SunAmerica Income Funds
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Vincent M. Marra
Senior Vice President & Chief Operating Officer
AIG SunAmerica Asset Management Corp.
Harborside Financial Center,
3200 Plaza 5
Jersey City, NJ 07311
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6464
-----------------------------
Date of fiscal year end: March 31
--------------------------
Date of reporting period: September 30, 2004
-------------------------
Item 1. Reports to Stockholders
SunAmerica Income Funds, Semiannual Report at September 30, 2004.
[GRAPHIC]
SunAmerica
THE RETIREMENT SPECIALIST
Income Funds
2004 SEMIANNUAL REPORT
[LOGO] AIG Sun America
Mutual Funds
September 30, 2004 SEMIANNUAL REPORT
SUNAMERICA INCOME FUNDS
SunAmerica Core Bond Fund (NAIBX)
SunAmerica U.S. Government Securities Fund (SGTAX)
SunAmerica GNMA Fund (GNMAX)
SunAmerica Strategic Bond Fund (SDIAX)
SunAmerica High Yield Bond Fund (SHNAX)
SunAmerica Tax Exempt Insured Fund (STEAX)
Table of Contents
SHAREHOLDER LETTER................. 2
EXPENSE EXAMPLE.................... 3
STATEMENT OF ASSETS AND LIABILITIES 5
STATEMENT OF OPERATIONS............ 7
STATEMENT OF CHANGES IN NET ASSETS. 9
FINANCIAL HIGHLIGHTS............... 12
PORTFOLIO OF INVESTMENTS........... 18
NOTES TO FINANCIAL STATEMENTS...... 60
TRUSTEE INFORMATION................ 77
Shareholder Letter
Dear Shareholders:
While yields ended the Funds' semiannual reporting period relatively unchanged,
the intervening six months were very volatile for the fixed income market.
Inflation fears fueled weakness early in the reporting period, but the U.S.
Treasury market rallied in the third quarter as job growth and consumer
spending slowed. The yield on the bell weather ten-year U.S. Treasury closed at
4.1%, little removed from its 3.9% level at the start of the period. In the
interim, the Federal Reserve increased its federal funds rate by a total of 75
basis points to 1.75%.
The second quarter opened with the March payroll report showing job growth
averaging 200,000-300,000 jobs/month. This was significantly higher than
expected, and spurred concerns that the Federal Reserve's generous monetary
stimulus policy would soon end. Higher oil prices and a troublesome up-tick in
core inflation added to investor pessimism. Core inflation--the Consumer Price
Index (CPI) minus food and energy prices--rose from 1.5 to 1.8%.
On June 30, the Federal Reserve boosted the federal funds rate 25 basis points.
Initially, the credit markets faltered as investors reacted to the resultant
decline in liquidity associated with such a change in policy. But evidence of a
cooling of the economy surfaced early in the third quarter and the markets
rallied. The June non-farm payrolls report showed job growth at a disappointing
100,000-150,000 jobs/month, and inflation indicators remained tepid. In the
absence of global growth, escalating oil prices continued to dampen spending
power.
Despite signs that the uptick in inflation was transitory, the Federal Reserve
again raised the fed fund rates another 25 basis points in early August and
once again in mid-September. Investors shook off the hike, however, reading the
Fed's measured approach as a signal that the strong environment for fixed
income securities would remain.
Throughout the six-month period fixed income investors were rewarded for risk.
Buoyed by low volatility Treasuries, GNMAs and mortgage-backed securities (MBS)
performed well. The third quarter witnessed a significant flattening of the
yield curve as yields on 2-year and 10-year Treasury notes fell by 7 and 45
basis points, respectively. Nevertheless, lower rated credits outperformed.
The high-yield market benefited the most, with the lower rated sectors
exhibiting the best performance. Default rates remained at historic lows.
Emerging market debt kept pace, bolstered by the stable dollar and strong
commodity and oil markets. Investment grade corporate credits also benefited
from strengthening balance sheets and reduced supply. Investment grade issuance
declined across the board as companies turned to stock buybacks and demand
overseas grew for US credit.
The municipal market continued to provide an attractive after-tax alternative,
outperforming Treasuries as a result of lower new issue supply and strong
demand from Property and Casualty Insurance companies. With municipalities
reaping higher tax revenues and improving budgets, the need to float new
municipal issues is declining. The 10-year AAA Municipal yield, as a percent of
the 10-year Treasury Note yield, finished the period at 84.1% as compared to
89.1% at the start.
Thank you for your continued investment in our Funds and we encourage you to
visit our website, www.sunamericafunds.com, for more information.
Sincerely,
The AIG SunAmerica Income Funds Investment Professionals
AIG SunAmerica Asset Management Corp. AIG Global Investment Corp.
Michael Cheah Greg Braun Steven Guterman
Brian Tesseyman Hutch Bryan Rob Vandem Assem
Brian Wiese
2
SunAmerica Income Funds
EXPENSE EXAMPLE -- September 30, 2004 -- (unaudited)
Disclosure of Portfolio Expenses in Shareholder Reports
As a shareholder of a Fund in the SunAmerica Income Funds (the "Trust"), you
may incur two types of costs: (1) transaction costs, including sales charges on
purchase payments, contingent deferred sales charges and (2) ongoing costs,
including management fees; distribution and service fees; and other Fund
expenses. This Example is intended to help you understand your ongoing costs
(in dollars) on investing in the Funds 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 April 1, 2004 and held until September 30,
2004.
Actual Expenses
The "Actual" section of the table provides information about your 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 Period" to estimate the expenses you paid on your account during this
period. For shareholder accounts in classes other than Class I, Class X, and
Class Z the "Expenses Paid During Period" column does not include small account
fees that may be charged if your account balance is below $500 ($250 for
retirement plan accounts). In addition, the "Expenses Paid" column does not
include administrative fees that may apply to qualified retirement plan
accounts. See the Funds prospectus and/or the retirement plan document for full
description of these fees. Had these fees been included, the "Expenses Paid
During the Period" column and the "Expense Ratio" column would have been higher
and the "Ending Account Value" would have been lower.
Hypothetical Example for Comparison Purposes
The "Hypothetical" section of the table provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is
not the Fund's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid
for the period. You may use this information to compare the ongoing costs of
investing in the Funds 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. For shareholder accounts in classes other than Class I,
Class X, and Class Z the "Expenses Paid During Period" column does not include
small account fees that may be charged if your account balance is below $500
($250 for retirement plan accounts). In addition, the "Expenses Paid" column
does not include administrative fees that may apply to qualified retirement
plan accounts. See the Funds prospectus and/or the retirement plan document for
full description of these fees. Had these fees been included, the "Expenses
Paid During the Period" column and the "Expense Ratio" column would have been
higher and the "Ending Account Value" would have been lower.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, including sales
charges on purchase payments, contingent deferred sales charges; small account
fees and administrative fees, if applicable to your account. Please refer to
your Prospectus and/or qualified retirement plan document for more information.
Therefore, the "Hypothetical" example is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transaction costs and other fees were
included, your costs would have been higher.
3
SunAmerica Income Funds
EXPENSE EXAMPLE -- September 30, 2004 -- (unaudited) (continued)
Actual Hypothetical
----------------------------------------------- -----------------------------------------------
Ending Account
Ending Account Expenses Paid Value Using a Expenses Paid
Value Using During the Hypothetical 5% During the
Beginning Actual Return Period Ended Beginning Assumed Return Period Ended
Account Value at September 30, September 30, Account Value at September 30, September 30,
at April 1, 2004 2004 2004* at April 1, 2004 2004 2004*
---------------- ---------------- ------------- ---------------- ---------------- -------------
Core Bond Fund@
Class A #.................... $1,000.00 $1,007.18 $ 6.14 $1,000.00 $1,018.95 $ 6.17
Class B #.................... $1,000.00 $1,003.88 $ 9.39 $1,000.00 $1,015.69 $ 9.45
Class C #.................... $1,000.00 $1,003.90 $ 9.39 $1,000.00 $1,015.69 $ 9.45
Class I #.................... $1,000.00 $1,007.70 $ 5.64 $1,000.00 $1,019.45 $ 5.67
Class Z #.................... $1,000.00 $1,010.06 $ 3.28 $1,000.00 $1,021.81 $ 3.29
U.S. Government Securities Fund
Class A #.................... $1,000.00 $ 999.11 $ 4.96 $1,000.00 $1,020.10 $ 5.01
Class B #.................... $1,000.00 $ 995.89 $ 8.21 $1,000.00 $1,016.85 $ 8.29
Class C #.................... $1,000.00 $ 994.82 $ 8.20 $1,000.00 $1,016.85 $ 8.29
GNMA Fund
Class A #.................... $1,000.00 $1,005.59 $ 4.98 $1,000.00 $1,020.10 $ 5.01
Class B #.................... $1,000.00 $1,003.24 $ 8.24 $1,000.00 $1,016.85 $ 8.29
Class C #.................... $1,000.00 $1,003.25 $ 8.24 $1,000.00 $1,016.85 $ 8.29
Class X...................... $1,000.00 $1,007.59 $ 3.88 $1,000.00 $1,021.21 $ 3.90
Strategic Bond Fund@
Class A #.................... $1,000.00 $1,030.50 $ 7.28 $1,000.00 $1,017.90 $ 7.23
Class B #.................... $1,000.00 $1,027.18 $10.57 $1,000.00 $1,014.64 $10.50
Class C #.................... $1,000.00 $1,027.20 $10.57 $1,000.00 $1,014.64 $10.50
High Yield Bond Fund@
Class A #.................... $1,000.00 $1,045.28 $ 7.23 $1,000.00 $1,018.00 $ 7.13
Class B #.................... $1,000.00 $1,042.36 $10.55 $1,000.00 $1,014.74 $10.40
Class C #.................... $1,000.00 $1,041.92 $10.54 $1,000.00 $1,014.74 $10.40
Class Z #.................... $1,000.00 $1,050.87 $ 4.22 $1,000.00 $1,020.96 $ 4.15
Tax Exempt Insured Fund
Class A...................... $1,000.00 $1,008.85 $ 6.29 $1,000.00 $1,018.80 $ 6.33
Class B...................... $1,000.00 $1,006.17 $ 9.76 $1,000.00 $1,015.34 $ 9.80
Class C #.................... $1,000.00 $1,006.10 $ 9.81 $1,000.00 $1,015.29 $ 9.85
Expense Ratio
as of
September 30,
2004*
-------------
Core Bond Fund@
Class A #.................... 1.22%
Class B #.................... 1.87%
Class C #.................... 1.87%
Class I #.................... 1.12%
Class Z #.................... 0.65%
U.S. Government Securities Fund
Class A #.................... 0.99%
Class B #.................... 1.64%
Class C #.................... 1.64%
GNMA Fund
Class A #.................... 0.99%
Class B #.................... 1.64%
Class C #.................... 1.64%
Class X...................... 0.77%
Strategic Bond Fund@
Class A #.................... 1.43%
Class B #.................... 2.08%
Class C #.................... 2.08%
High Yield Bond Fund@
Class A #.................... 1.41%
Class B #.................... 2.06%
Class C #.................... 2.06%
Class Z #.................... 0.82%
Tax Exempt Insured Fund
Class A...................... 1.25%
Class B...................... 1.94%
Class C #.................... 1.95%
- --------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 183 days 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 and/or qualified retirement plan document for more information.
# During the stated period, the investment adviser either waived a portion of
or all fees and assumed a portion of or all expenses for the Funds. As a
result, the "Hypothetical Ending Account Value", the "Actual/Hypothetical
Expenses Paid During the Period" and the "Expenses Ratios" would have been
higher for a Fund that reimbursed or waived fees and expenses.
@ Effective September 1, 2004, the following Funds had changes to their
expense cap. Had the expense changes been in effect for the entire period,
the Expense Example would have been as follows:
Actual Hypothetical
----------------------------------------------- -----------------------------------------------
Ending Account
Ending Account Expenses Paid Value Using a Expenses Paid
Value Using During the Hypothetical 5% During the
Beginning Actual Return Period Ended Beginning Assumed Return Period Ended
Account Value at September 30, September 30, Account Value at September 30, September 30,
at April 1, 2004 2004 2004* at April 1, 2004 2004 2004*
---------------- ---------------- ------------- ---------------- ---------------- -------------
Core Bond Fund
Class A........... $1,000.00 $1,007.18 $ 5.53 $1,000.00 $1,019.55 $ 5.57
Class B........... $1,000.00 $1,003.88 $ 8.79 $1,000.00 $1,016.29 $ 8.85
Class C........... $1,000.00 $1,003.90 $ 8.79 $1,000.00 $1,016.29 $ 8.85
Class I........... $1,000.00 $1,007.70 $ 5.03 $1,000.00 $1,020.05 $ 5.06
Class Z........... $1,000.00 $1,010.06 $ 2.67 $1,000.00 $1,022.41 $ 2.69
Strategic Bond Fund
Class A........... $1,000.00 $1,030.50 $ 7.13 $1,000.00 $1,018.05 $ 7.08
Class B........... $1,000.00 $1,027.18 $10.42 $1,000.00 $1,014.79 $10.35
Class C........... $1,000.00 $1,027.20 $10.42 $1,000.00 $1,014.79 $10.35
High Yield Bond Fund
Class A........... $1,000.00 $1,045.28 $ 6.97 $1,000.00 $1,018.25 $ 6.88
Class B........... $1,000.00 $1,042.36 $10.29 $1,000.00 $1,014.99 $10.15
Class C........... $1,000.00 $1,041.92 $10.29 $1,000.00 $1,014.99 $10.15
Class Z........... $1,000.00 $1,050.87 $ 4.06 $1,000.00 $1,021.11 $ 4.00
Expense Ratio
as of
September 30,
2004*
-------------
Core Bond Fund
Class A........... 1.10%
Class B........... 1.75%
Class C........... 1.75%
Class I........... 1.00%
Class Z........... 0.53%
Strategic Bond Fund
Class A........... 1.40%
Class B........... 2.05%
Class C........... 2.05%
High Yield Bond Fund
Class A........... 1.36%
Class B........... 2.01%
Class C........... 2.01%
Class Z........... 0.79%
4
SunAmerica Income Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2004 -- (unaudited)
U.S. Government Strategic
Core Bond Securities GNMA Bond
Fund Fund Fund Fund
------------ --------------- ------------ ------------
ASSETS:
Investment securities, at value* (unaffiliated)............ $205,069,014 $221,199,275 $445,576,712 $ 99,933,068
Short term securities, at value*........................... 5,000,000 -- -- 353,000
Repurchase agreements (cost equals market)................. 4,274,000 45,064,000 237,540,000 549,000
Cash....................................................... 406,941 -- -- 2,945,479
Foreign cash*.............................................. -- -- -- 89,296
Deposit with broker for securities sold short.............. -- -- -- --
Receivable for:
Shares of beneficial interest sold....................... 69,860 127,246 413,868 167,771
Dividends and interest................................... 2,073,945 1,264,556 1,723,567 1,674,376
Investments sold......................................... 3,996,204 6,036,583 15,412,877 1,405,779
Prepaid expenses and other assets.......................... 2,814 2,839 6,117 1,089
Due from investment adviser for expense reimbursements/fee
waivers................................................... 21,310 68,696 82,376 4,537
------------ ------------ ------------ ------------
Total assets............................................. 220,914,088 273,763,195 700,755,517 107,123,395
------------ ------------ ------------ ------------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed................... 6,381,734 386,920 1,190,051 178,437
Investments purchased.................................... 9,295,243 43,121,073 168,365,938 2,689,513
Investment advisory and management fees.................. 102,748 123,781 200,280 56,351
Distribution and service maintenance fees................ 53,221 90,143 248,712 61,339
Transfer agent fees and expenses......................... 36,807 35,523 97,182 17,857
Dividends payable.......................................... 8,518 143,928 128,162 239,780
Trustees' fees and expenses................................ 29,888 110,132 46,617 26,439
Other accrued expenses..................................... 213,795 63,307 53,785 70,012
Securities sold short, at value#........................... -- -- -- --
Unrealized depreciation on forward foreign currency
contracts................................................. -- -- -- 21,169
Due to custodian........................................... -- 186,273 457,731 --
------------ ------------ ------------ ------------
Total liabilities........................................ 16,121,954 44,261,080 170,788,458 3,360,897
------------ ------------ ------------ ------------
Net assets.............................................. $204,792,134 $229,502,115 $529,967,059 $103,762,498
============ ============ ============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01 par value............. $ 197,830 $ 242,510 $ 469,961 $ 305,273
Paid-in capital............................................ 202,753,905 239,310,553 528,258,776 133,965,041
------------ ------------ ------------ ------------
202,951,735 239,553,063 528,728,737 134,270,314
Accumulated undistributed net investment income (loss)..... (281,380) (475,660) (919,603) 101,394
Accumulated undistributed net realized gain (loss) on
investments, securities sold short and foreign exchange
transactions.............................................. 623,784 (11,687,764) 479,563 (34,575,740)
Unrealized appreciation (depreciation) on investments...... 1,497,995 2,112,476 1,678,362 3,981,282
Unrealized appreciation (depreciation) on securities sold
short..................................................... -- -- -- --
Unrealized foreign exchange gain (loss) on other assets and
liabilities............................................... -- -- -- (14,752)
------------ ------------ ------------ ------------
Net assets................................................. $204,792,134 $229,502,115 $529,967,059 $103,762,498
============ ============ ============ ============
*Cost......................................................
Investment securities (unaffiliated)..................... $203,571,019 $219,086,799 $443,898,350 $ 95,951,786
============ ============ ============ ============
Short-term securities.................................... $ 5,000,000 $ -- $ -- $ 353,000
============ ============ ============ ============
Foreign cash............................................. $ -- $ -- $ -- $ 86,988
============ ============ ============ ============
#Proceeds from securities sold short....................... $ -- $ -- $ -- $ --
============ ============ ============ ============
High Yield Tax Exempt
Bond Insured
Fund Fund
------------- -----------
ASSETS:
Investment securities, at value* (unaffiliated)............ $ 310,672,713 $73,744,753
Short term securities, at value*........................... -- 8,610,222
Repurchase agreements (cost equals market)................. 11,647,000 --
Cash....................................................... 792,859 --
Foreign cash*.............................................. 141,449 --
Deposit with broker for securities sold short.............. 188,384 --
Receivable for:
Shares of beneficial interest sold....................... 1,449,705 9,308
Dividends and interest................................... 7,188,902 1,111,993
Investments sold......................................... 3,184,119 2,260,069
Prepaid expenses and other assets.......................... 3,297 1,038
Due from investment adviser for expense reimbursements/fee
waivers................................................... 10,215 534
------------- -----------
Total assets............................................. 335,278,643 85,737,917
------------- -----------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed................... 459,650 52,400
Investments purchased.................................... 7,195,144 4,218,209
Investment advisory and management fees.................. 195,209 34,380
Distribution and service maintenance fees................ 133,624 34,003
Transfer agent fees and expenses......................... 51,283 19,414
Dividends payable.......................................... 764,157 75,722
Trustees' fees and expenses................................ 48,281 34,777
Other accrued expenses..................................... 29,021 60,388
Securities sold short, at value#........................... 180,733 --
Unrealized depreciation on forward foreign currency
contracts................................................. -- --
Due to custodian........................................... -- --
------------- -----------
Total liabilities........................................ 9,057,102 4,529,293
------------- -----------
Net assets.............................................. $ 326,221,541 $81,208,624
============= ===========
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01 par value............. $ 768,196 $ 62,112
Paid-in capital............................................ 438,240,788 75,879,979
------------- -----------
439,008,984 75,942,091
Accumulated undistributed net investment income (loss)..... (1,681,237) (23,669)
Accumulated undistributed net realized gain (loss) on
investments, securities sold short and foreign exchange
transactions.............................................. (114,759,280) 435,795
Unrealized appreciation (depreciation) on investments...... 3,652,124 4,854,407
Unrealized appreciation (depreciation) on securities sold
short..................................................... 568 --
Unrealized foreign exchange gain (loss) on other assets and
liabilities............................................... 382 --
------------- -----------
Net assets................................................. $ 326,221,541 $81,208,624
============= ===========
*Cost......................................................
Investment securities (unaffiliated)..................... $ 307,020,589 $68,890,346
============= ===========
Short-term securities.................................... $ -- $ 8,610,222
============= ===========
Foreign cash............................................. $ 141,067 $ --
============= ===========
#Proceeds from securities sold short....................... $ 181,301 $ --
============= ===========
See Notes to Financial Statements
5
SunAmerica Income Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30,
2004 -- (unaudited) (continued)
U.S. Government Strategic
Core Bond Securities GNMA Bond
Fund Fund Fund Fund
------------ --------------- ------------ -----------
Class A (unlimited shares authorized):
Net assets......................................................... $156,489,529 $187,139,493 $338,607,780 $45,953,392
Shares of beneficial interest issued and outstanding............... 15,119,621 19,774,712 30,058,834 13,528,119
Net asset value and redemption price per share (excluding any
applicable contingent deferred sales charge)...................... $ 10.35 $ 9.46 $ 11.26 $ 3.40
Maximum sales charge (4.75% of offering price)..................... 0.52 0.47 0.56 0.17
------------ ------------ ------------ -----------
Maximum offering price to public................................... $ 10.87 $ 9.93 $ 11.82 $ 3.57
============ ============ ============ ===========
Class B (unlimited shares authorized):
Net assets......................................................... $ 5,094,145 $ 30,087,628 $116,385,836 $34,851,552
Shares of beneficial interest issued and outstanding............... 493,410 3,177,971 10,304,148 10,265,129
Net asset value, offering and redemption price per share (excluding
any applicable contingent deferred sales charge).................. $ 10.32 $ 9.47 $ 11.30 $ 3.40
============ ============ ============ ===========
Class C (unlimited shares authorized):
Net assets......................................................... $ 4,736,111 $ 12,274,994 $ 65,476,697 $22,957,554
Shares of beneficial interest issued and outstanding............... 458,089 1,298,290 5,791,109 6,734,020
Net asset value, offering and redemption price per share (excluding
any applicable contingent deferred sales charge).................. $ 10.34 $ 9.45 $ 11.31 $ 3.41
============ ============ ============ ===========
Class I (unlimited shares authorized):
Net assets......................................................... $ 1,846,430 $ -- $ -- $ --
Shares of beneficial interest issued and outstanding............... 178,175 -- -- --
Net asset value, offering and redemption price per share........... $ 10.36 $ -- $ -- $ --
============ ============ ============ ===========
Class Z (unlimited shares authorized):
Net assets......................................................... $ 36,625,919 $ -- $ -- $ --
Shares of beneficial interest issued and outstanding............... 3,533,705 -- -- --
Net asset value, offering and redemption price per share........... $ 10.36 $ -- $ -- $ --
============ ============ ============ ===========
Class X (unlimited shares authorized):
Net assets......................................................... $ -- $ -- $ 9,496,746 $ --
Shares of beneficial interest issued and outstanding............... -- -- 841,981 --
Net asset value, offering and redemption price per share........... $ -- $ -- $ 11.28 $ --
============ ============ ============ ===========
High Yield Tax Exempt
Bond Insured
Fund Fund
------------ -----------
Class A (unlimited shares authorized):
Net assets......................................................... $122,280,713 $64,855,620
Shares of beneficial interest issued and outstanding............... 28,845,767 4,960,983
Net asset value and redemption price per share (excluding any
applicable contingent deferred sales charge)...................... $ 4.24 $ 13.07
Maximum sales charge (4.75% of offering price)..................... 0.21 0.65
------------ -----------
Maximum offering price to public................................... $ 4.45 $ 13.72
============ ===========
Class B (unlimited shares authorized):
Net assets......................................................... $ 66,535,909 $10,475,911
Shares of beneficial interest issued and outstanding............... 15,667,721 800,830
Net asset value, offering and redemption price per share (excluding
any applicable contingent deferred sales charge).................. $ 4.25 $ 13.08
============ ===========
Class C (unlimited shares authorized):
Net assets......................................................... $ 55,643,428 $ 5,877,093
Shares of beneficial interest issued and outstanding............... 13,051,236 449,347
Net asset value, offering and redemption price per share (excluding
any applicable contingent deferred sales charge).................. $ 4.26 $ 13.08
============ ===========
Class I (unlimited shares authorized):
Net assets......................................................... $ -- $ --
Shares of beneficial interest issued and outstanding............... -- --
Net asset value, offering and redemption price per share........... $ -- $ --
============ ===========
Class Z (unlimited shares authorized):
Net assets......................................................... $ 81,761,491 $ --
Shares of beneficial interest issued and outstanding............... 19,254,865 --
Net asset value, offering and redemption price per share........... $ 4.25 $ --
============ ===========
Class X (unlimited shares authorized):
Net assets......................................................... $ -- $ --
Shares of beneficial interest issued and outstanding............... -- --
Net asset value, offering and redemption price per share........... $ -- $ --
============ ===========
See Notes to Financial Statements
6
SunAmerica Income Funds
STATEMENT OF OPERATIONS -- For the six months ended September 30, 2004
-- (unaudited)
Core U.S. Government
Bond Fund Securities Fund GNMA Fund
----------- --------------- -----------
INVESTMENT INCOME:
Income:
Interest* (unaffiliated).......................... $ 5,237,316 $ 5,116,418 $10,535,696
Dividends* (unaffiliated)......................... -- -- --
----------- ----------- -----------
Total investment income......................... 5,237,316 5,116,418 10,535,696
----------- ----------- -----------
Expenses:
Investment advisory and management fees........... 638,123 767,943 1,238,850
Distribution and service maintenance fees:
Class A......................................... 255,687 336,977 588,335
Class B......................................... 25,995 163,100 615,230
Class C......................................... 24,427 64,208 370,270
Service fees -- Class I........................... 2,931 -- --
Transfer agent fees:
Class A......................................... 160,717 217,231 381,560
Class B......................................... 8,208 41,072 140,765
Class C......................................... 7,021 16,753 82,850
Class I......................................... 2,579 -- --
Class Z......................................... -- -- --
Class X......................................... -- -- 9,850
Registration fees:
Class A......................................... 26,783 15,205 49,365
Class B......................................... 3,660 4,392 10,230
Class C......................................... 5,573 3,518 13,541
Class I......................................... -- -- --
Class Z......................................... -- -- --
Class X......................................... -- -- --
Custodian fees.................................... 43,794 40,293 90,321
Reports to shareholders........................... -- 56,600 114,267
Audit and tax fees................................ 16,824 17,592 15,180
Legal fees........................................ 3,294 3,111 9,660
Trustees' fees and expenses....................... 9,633 7,345 19,032
Interest expense.................................. -- 282 172
Interest expense on securities sold short......... -- -- --
Other expenses.................................... 7,404 7,930 12,548
----------- ----------- -----------
Total expenses before fee waivers, expense
reimbursements and custody credits............. 1,242,653 1,763,552 3,762,026
Fees waived and expenses reimbursed by
investment advisor............................. (64,664) (437,212) (446,861)
Custody credits earned on cash balances......... (282) (111) (11)
----------- ----------- -----------
Net expenses.................................... 1,177,707 1,326,229 3,315,154
----------- ----------- -----------
Net investment income (loss)...................... 4,059,609 3,790,189 7,220,542
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments
(unaffiliated).................................. (1,287,240) (1,657,738) 1,024,499
Net realized gain (loss) on securities sold short. -- -- --
Net realized foreign exchange gain (loss) on
other assets and liabilities.................... -- -- --
----------- ----------- -----------
Net realized gain (loss) on investments and
foreign currencies................................ (1,287,240) (1,657,738) 1,024,499
----------- ----------- -----------
Change in unrealized appreciation (depreciation)
on investments (unaffiliated)................... (1,540,385) (3,086,394) (6,254,294)
Change in unrealized foreign exchange gain
(loss) on other assets and liabilities.......... -- -- --
Change in unrealized appreciation (depreciation)
on securities sold short........................ -- -- --
----------- ----------- -----------
Net unrealized gain (loss) on investments and
foreign currencies................................ (1,540,385) (3,086,394) (6,254,294)
----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments and foreign currencies................ (2,827,625) (4,744,132) (5,229,795)
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS........................................ $ 1,231,984 $ (953,943) $ 1,990,747
=========== =========== ===========
*Net of foreign withholding taxes on interest and
dividends of...................................... $ -- $ -- $ --
=========== =========== ===========
See Notes to Financial Statements
7
SunAmerica Income Funds
STATEMENT OF OPERATIONS -- For the six months ended September 30, 2004
-- (unaudited) (continued)
Strategic High Yield Tax Exempt
Bond Fund Bond Fund Insured Fund
----------- ----------- ------------
INVESTMENT INCOME:
Income:
Interest* (unaffiliated).......................... $ 4,073,973 $14,437,760 $1,856,170
Dividends* (unaffiliated)......................... 20,381 151,758 27
----------- ----------- ----------
Total investment income......................... 4,094,354 14,589,518 1,856,197
----------- ----------- ----------
Expenses:
Investment advisory and management fees........... 335,925 1,125,745 213,823
Distribution and service maintenance fees:
Class A......................................... 75,047 187,934 114,914
Class B......................................... 175,699 338,165 70,172
Class C......................................... 108,941 252,326 29,148
Service fees -- Class I........................... 4,436 -- --
Transfer agent fees:
Class A......................................... 48,473 121,249 76,702
Class B......................................... 40,274 77,185 16,818
Class C......................................... 24,440 56,971 7,073
Class I......................................... 3,975 -- --
Class Z......................................... -- -- --
Class X......................................... -- -- --
Registration fees:
Class A......................................... 9,105 10,468 5,721
Class B......................................... 6,433 4,941 3,284
Class C......................................... 4,789 4,758 3,389
Class I......................................... 3,740 -- --
Class Z......................................... -- -- --
Class X......................................... -- -- --
Custodian fees.................................... 53,429 54,065 28,586
Reports to shareholders........................... 15,586 30,030 8,427
Audit and tax fees................................ 12,598 20,618 17,237
Legal fees........................................ 4,165 2,562 2,071
Trustees' fees and expenses....................... 2,773 9,256 2,929
Interest expense.................................. -- 1,940 --
Interest expense on securities sold short......... -- 6,343 --
Other expenses.................................... 5,308 7,226 4,921
----------- ----------- ----------
Total expenses before fee waivers, expense
reimbursements and custody credits............. 935,136 2,311,782 605,215
Fees waived and expenses reimbursed by
investment advisor............................. (5,467) (10,214) (1,708)
Custody credits earned on cash balances......... (6,414) (6,255) (283)
----------- ----------- ----------
Net expenses.................................... 923,255 2,295,313 603,224
----------- ----------- ----------
Net investment income (loss)....................... 3,171,099 12,294,205 1,252,973
----------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments
(unaffiliated).................................. 1,815,043 4,859,527 (624,849)
Net realized gain (loss) on securities sold short. -- 41,040 --
Net realized foreign exchange gain (loss) on
other assets and liabilities.................... (41,158) 13,024 --
----------- ----------- ----------
Net realized gain (loss) on investments and
foreign currencies................................ 1,773,885 4,913,591 (624,849)
----------- ----------- ----------
Change in unrealized appreciation (depreciation)
on investments (unaffiliated)................... (2,178,551) (4,228,346) (47,193)
Change in unrealized foreign exchange gain
(loss) on other assets and liabilities.......... 29,834 2,694 --
Change in unrealized appreciation (depreciation)
on securities sold short........................ -- (5,617) --
----------- ----------- ----------
Net unrealized gain (loss) on investments and
foreign currencies................................ (2,148,717) (4,231,269) (47,193)
----------- ----------- ----------
Net realized and unrealized gain (loss) on
investments and foreign currencies................ (374,832) 682,322 (672,042)
----------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS........................................ $ 2,796,267 $12,976,527 $ 580,931
=========== =========== ==========
* Net of foreign withholding taxes on interest
and dividends of.................................. $ (4,931) $ 5,173 $ --
=========== =========== ==========
See Notes to Financial Statements
8
SunAmerica Income Funds
STATEMENT OF CHANGES IN NET ASSETS
Core Bond Fund
--------------------------
For the
six months
ended For the year
September 30, ended
2004 March 31,
(unaudited) 2004
------------- ------------
Operations:
Net investment income (loss).......................................................... $ 4,059,609 $ 8,609,219
Net realized gain (loss) on investments and foreign currencies........................ (1,287,240) 7,228,394
Net unrealized appreciation (depreciation) on investments and foreign currencies...... (1,540,385) (2,724,903)
------------ ------------
Increase (decrease) in net assets resulting from operations............................. 1,231,984 13,112,710
------------ ------------
Distributions to shareholders from:
Net investment income (Class A)....................................................... (3,008,604) (1,752,869)
Net investment income (Class B)....................................................... (90,045) (128,070)
Net investment income (Class C)....................................................... (84,576) (100,070)
Net investment income (Class I)....................................................... (49,406) (539,121)
Net investment income (Class Z)....................................................... (1,306,438) (6,618,532)
Net investment income (Class X)....................................................... -- --
Net realized gain on securities (Class A)............................................. -- --
Net realized gain on securities (Class B)............................................. -- --
Net realized gain on securities (Class C)............................................. -- --
Net realized gain on securities (Class I)............................................. -- --
Net realized gain on securities (Class Z)............................................. -- --
Net realized gain on securities (Class X)............................................. -- --
------------ ------------
Decrease in net assets resulting from distributions to shareholders..................... (4,539,069) (9,138,662)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 6) (18,948,424) (99,825,778)
------------ ------------
Total increase (decrease) in net assets................................................. (22,255,509) (95,851,730)
NET ASSETS:
Beginning of period..................................................................... 227,047,643 322,899,373
------------ ------------
End of period+.......................................................................... $204,792,134 $277,047,643
============ ============
+Includes accumulated undistributed net investment income (loss)........................ $ (281,380) $ 198,080
============ ============
U.S. Government
Securities Fund
--------------------------
For the
six months
ended For the year
September 30, ended
2004 March 31,
(unaudited) 2004
------------- ------------
Operations:
Net investment income (loss).......................................................... $ 3,790,189 $ 8,037,454
Net realized gain (loss) on investments and foreign currencies........................ (1,657,738) 2,311,744
Net unrealized appreciation (depreciation) on investments and foreign currencies...... (3,086,394) (2,984,953)
------------ ------------
Increase (decrease) in net assets resulting from operations............................. (953,943) 7,364,245
------------ ------------
Distributions to shareholders from:
Net investment income (Class A)....................................................... (3,458,333) (6,367,993)
Net investment income (Class B)....................................................... (480,277) (1,202,312)
Net investment income (Class C)....................................................... (188,986) (488,725)
Net investment income (Class I)....................................................... -- --
Net investment income (Class Z)....................................................... -- --
Net investment income (Class X)....................................................... -- --
Net realized gain on securities (Class A)............................................. -- --
Net realized gain on securities (Class B)............................................. -- --
Net realized gain on securities (Class C)............................................. -- --
Net realized gain on securities (Class I)............................................. -- --
Net realized gain on securities (Class Z)............................................. -- --
Net realized gain on securities (Class X)............................................. -- --
------------ ------------
Decrease in net assets resulting from distributions to shareholders..................... (4,127,596) (8,059,030)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 6) (21,778,001) (40,708,822)
------------ ------------
Total increase (decrease) in net assets................................................. (26,859,540) (41,403,607)
NET ASSETS:
Beginning of period..................................................................... 256,361,655 297,765,262
------------ ------------
End of period+.......................................................................... $229,502,115 $256,361,655
============ ============
+Includes accumulated undistributed net investment income (loss)........................ $ (479,660) $ (138,253)
============ ============
See Notes to Financial Statements
9
SunAmerica Income Funds
STATEMENT OF CHANGES IN NET ASSETS -- (continued)
GNMA Fund
--------------------------
For the
six months
ended For the year
September 30, ended
2004 March 31,
(unaudited) 2004
------------- ------------
Operations:
Net investment income (loss).......................................................... $ 7,220,542 $ 12,805,080
Net realized gain (loss) on investments and foreign currencies........................ 1,024,499 1,476,272
Net unrealized appreciation (depreciation) on investments and foreign currencies...... (6,254,294) (1,054,237)
------------ ------------
Increase (decrease) in net assets resulting from operations............................. 1,990,747 13,227,115
------------ ------------
Distributions to shareholders from:
Net investment income (Class A)....................................................... (5,421,132) (8,229,827)
Net investment income (Class B)....................................................... (1,599,612) (3,268,894)
Net investment income (Class C)....................................................... (970,208) (2,301,935)
Net investment income (Class I)....................................................... -- (586)
Net investment income (Class Z)....................................................... -- --
Net investment income (Class X)....................................................... (153,392) (187,234)
Net realized gain on securities (Class A)............................................. -- (5,268,652)
Net realized gain on securities (Class B)............................................. -- (2,564,269)
Net realized gain on securities (Class C)............................................. -- (1,788,770)
Net realized gain on securities (Class I)............................................. -- (487)
Net realized gain on securities (Class Z)............................................. -- --
Net realized gain on securities (Class X)............................................. -- (115,741)
------------ ------------
Decrease in net assets resulting from distributions to shareholders..................... (8,144,344) (23,726,395)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 6) (34,893,907) (4,226,113)
------------ ------------
Total increase (decrease) in net assets................................................. (41,047,504) (14,725,393)
NET ASSETS:
Beginning of period..................................................................... 571,014,563 585,739,956
------------ ------------
End of period+.......................................................................... $529,967,059 $571,014,563
============ ============
+Includes accumulated undistributed net investment income (loss)........................ $ (919,603) $ 4,199
============ ============
Strategic Bond Fund
--------------------------
For the
six months
ended For the year
September 30, ended
2004 March 31,
(unaudited) 2004
------------- ------------
Operations:
Net investment income (loss).......................................................... $ 3,171,099 $ 5,727,055
Net realized gain (loss) on investments and foreign currencies........................ 1,773,885 4,382,421
Net unrealized appreciation (depreciation) on investments and foreign currencies...... (2,148,717) 4,765,239
------------ ------------
Increase (decrease) in net assets resulting from operations............................. 2,796,267 14,874,715
------------ ------------
Distributions to shareholders from:
Net investment income (Class A)....................................................... (1,417,242) (2,573,307)
Net investment income (Class B)....................................................... (1,047,016) (1,914,488)
Net investment income (Class C)....................................................... (649,375) (1,049,774)
Net investment income (Class I)....................................................... (116,760) (233,825)
Net investment income (Class Z)....................................................... -- --
Net investment income (Class X)....................................................... -- --
Net realized gain on securities (Class A)............................................. -- --
Net realized gain on securities (Class B)............................................. -- --
Net realized gain on securities (Class C)............................................. -- --
Net realized gain on securities (Class I)............................................. -- --
Net realized gain on securities (Class Z)............................................. -- --
Net realized gain on securities (Class X)............................................. -- --
------------ ------------
Decrease in net assets resulting from distributions to shareholders..................... (3,230,393) (5,771,394)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 6) (1,542,222) 14,052,523
------------ ------------
Total increase (decrease) in net assets................................................. (1,976,348) 23,155,844
NET ASSETS:
Beginning of period..................................................................... 105,738,846 82,583,002
------------ ------------
End of period+.......................................................................... $103,762,498 $105,738,846
============ ============
+Includes accumulated undistributed net investment income (loss)........................ $ 101,394 $ 160,688
============ ============
See Notes to Financial Statements
10
SunAmerica Income Funds
STATEMENT OF CHANGES IN NET ASSETS -- (continued)
High Yield Bond Fund
--------------------------
For the
six months
ended For the year
September 30, ended
2004 March 31,
(unaudited) 2004
------------- ------------
Operations:
Net investment income (loss).......................................................... $ 12,294,205 $ 22,245,096
Net realized gain (loss) on investments and foreign currencies........................ 4,913,591 16,147,344
Net unrealized appreciation (depreciation) on investments and foreign currencies...... (4,231,269) 22,647,739
------------ ------------
Increase (decrease) in net assets resulting from operations............................. 12,976,527 61,040,179
------------ ------------
Distributions to shareholders from:
Net investment income (Class A)....................................................... (4,500,516) (7,714,823)
Net investment income (Class B)....................................................... (2,642,735) (5,797,385)
Net investment income (Class C)....................................................... (1,954,762) (3,614,674)
Net investment income (Class I)....................................................... (3,549,510) (1,687)
Net investment income (Class Z)....................................................... -- (6,692,901)
Net investment income (Class X)....................................................... -- --
Net realized gain on securities (Class A)............................................. -- --
Net realized gain on securities (Class B)............................................. -- --
Net realized gain on securities (Class C)............................................. -- --
Net realized gain on securities (Class I)............................................. -- --
Net realized gain on securities (Class Z)............................................. -- --
Net realized gain on securities (Class X)............................................. -- --
------------ ------------
Decrease in net assets resulting from distributions to shareholders..................... (12,647,523) (23,821,470)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 6) 27,504,811 47,785,931
------------ ------------
Total increase (decrease) in net assets................................................. 27,833,815 85,004,640
NET ASSETS:
Beginning of period..................................................................... 298,387,726 213,383,086
------------ ------------
End of period+.......................................................................... $326,221,541 $298,387,726
============ ============
+Includes accumulated undistributed net investment income (loss)........................ $ (1,681,237) $ (1,327,919)
============ ============
Tax Exempt Insured Fund
--------------------------
For the
six months
ended For the year
September 30, ended
2004 March 31,
(unaudited) 2004
------------- ------------
Operations:
Net investment income (loss).......................................................... $ 1,252,973 $ 2,635,731
Net realized gain (loss) on investments and foreign currencies........................ (624,849) 1,897,409
Net unrealized appreciation (depreciation) on investments and foreign currencies...... (47,193) (129,136)
------------ ------------
Increase (decrease) in net assets resulting from operations............................. 580,931 4,404,004
------------ ------------
Distributions to shareholders from:
Net investment income (Class A)....................................................... (1,027,602) (2,009,916)
Net investment income (Class B)....................................................... (171,097) (366,880)
Net investment income (Class C)....................................................... (70,994) (122,956)
Net investment income (Class I)....................................................... -- --
Net investment income (Class Z)....................................................... -- --
Net investment income (Class X)....................................................... -- --
Net realized gain on securities (Class A)............................................. -- (2,345,579)
Net realized gain on securities (Class B)............................................. -- (558,969)
Net realized gain on securities (Class C)............................................. -- (187,274)
Net realized gain on securities (Class I)............................................. -- --
Net realized gain on securities (Class Z)............................................. -- --
Net realized gain on securities (Class X)............................................. -- --
------------ ------------
Decrease in net assets resulting from distributions to shareholders..................... (1,269,693) (5,591,574)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 6) (9,635,050) (11,118,979)
------------ ------------
Total increase (decrease) in net assets................................................. (10,323,812) (12,306,549)
NET ASSETS:
Beginning of period..................................................................... 91,532,436 103,838,985
------------ ------------
End of period+.......................................................................... $ 81,208,624 $ 91,532,436
============ ============
+Includes accumulated undistributed net investment income (loss)........................ $ (23,669) $ (6,949)
============ ============
See Notes to Financial Statements
11
SunAmerica Income Funds
FINANCIAL HIGHLIGHTS
CORE BOND FUND
--------------
Net gain
(loss) on
Net investments Net Net
Asset (both Dividends Asset Assets,
Value, Net realized Total from from net Total Value, end of
beginning investment and investment investment Return of Distri- end of Total period
Period Ended of period income(1) unrealized) operations income capital butions period Return(2) (000's)
- ----------------- --------- ---------- ----------- ---------- ---------- --------- ------- ------ --------- --------
Class A
- -
11/01/98-10/31/99 $10.63 $0.66 $(0.77) $(0.11) $(0.67) $ -- $(0.67) $ 9.85 (1.08)% $ 3,507
11/01/99-10/31/00 9.85 0.62 (0.21) 0.41 (0.60) (0.06) (0.66) 9.60 4.35 3,858
11/01/00-10/31/01 9.60 0.55 0.65 1.20 (0.51) -- (0.51) 10.29 12.85 5,901
11/01/01-3/31/02# 10.29 0.20 (0.48) (0.28) (0.19) -- (0.19) 9.82 (2.77) 5,312
4/01/02-3/31/03 9.82 0.34 0.58 0.92 (0.42) -- (0.42) 10.32 9.58 21,260
4/01/03-3/31/04 10.32 0.24 0.20 0.44 (0.27) -- (0.27) 10.49 4.30 140,877
4/01/04-9/30/04+ 10.49 0.19 (0.12) 0.07 (0.21) -- (0.21) 10.35 0.72 156,490
Class B
- -
11/01/98-10/31/99 $10.62 $0.59 $(0.75) $(0.16) $(0.61) $ -- $(0.61) $ 9.85 (1.56)% $ 4,295
11/01/99-10/31/00 9.85 0.58 (0.24) 0.34 (0.55) (0.05) (0.60) 9.59 3.70 4,937
11/01/00-10/31/01 9.59 0.48 0.64 1.12 (0.45) -- (0.45) 10.26 11.93 6,444
11/01/01-3/31/02# 10.26 0.17 (0.49) (0.32) (0.16) -- (0.16) 9.78 (3.14) 3,220
4/01/02-3/31/03 9.78 0.31 0.55 0.86 (0.36) -- (0.36) 10.28 8.90 7,198
4/01/03-3/31/04 10.28 0.18 0.19 0.37 (0.19) -- (0.19) 10.46 3.68 5,683
4/01/04-9/30/04+ 10.46 0.16 (0.12) 0.04 (0.18) -- (0.18) 10.32 0.39 5,094
Class C*
- -
11/01/98-10/31/99 $10.62 $0.59 $(0.75) $(0.16) $(0.61) $ -- $(0.61) $ 9.85 (1.56)% $ 4,593
11/01/99-10/31/00 9.85 0.57 (0.23) 0.34 (0.55) (0.05) (0.60) 9.59 3.70 2,778
11/01/00-10/31/01 9.59 0.48 0.64 1.12 (0.45) -- (0.45) 10.26 11.93 4,541
11/01/01-3/31/02# 10.26 0.18 (0.49) (0.31) (0.16) -- (0.16) 9.79 (3.04) 3,772
4/01/02-3/31/03 9.79 0.31 0.56 0.87 (0.36) -- (0.36) 10.30 9.00 5,598
4/01/03-3/31/04 10.30 0.18 0.19 0.37 (0.19) -- (0.19) 10.48 3.68 5,352
4/01/04-9/30/04+ 10.48 0.16 (0.12) 0.04 (0.18) -- (0.18) 10.34 0.39 4,736
Class I
- -
7/10/00-10/31/00@ $ 9.65 $0.19 $(0.02) $ 0.17 $(0.18) $(0.02) $(0.20) $ 9.62 1.85% $ 19,971
11/01/00-10/31/01 9.62 0.57 0.65 1.22 (0.52) -- (0.52) 10.32 13.01 22,782
11/01/01-3/31/02# 10.32 0.21 (0.52) (0.31) (0.19) -- (0.19) 9.82 (3.01) 21,707
2/01/02-3/31/03 9.82 0.40 0.55 0.95 (0.44) -- (0.44) 10.33 9.80 20,617
4/01/03-3/31/04 10.33 0.20 0.24 0.44 (0.27) -- (0.27) 10.50 4.35 3,092
4/01/04-9/30/04+ 10.50 0.20 (0.12) 0.08 (0.22) -- (0.22) 10.36 0.77 1,846
Class Z*
- -
7/10/00-10/31/00@ $ 9.64 $0.19 $(0.03) $ 0.16 $(0.18) $(0.02) $(0.20) $ 9.60 1.81% $317,842
11/01/00-10/31/01 9.60 0.59 0.65 1.24 (0.55) -- (0.55) 10.29 13.37 323,570
11/01/01-3/31/02# 10.29 0.21 (0.47) (0.26) (0.21) -- (0.21) 9.82 (2.57) 297,081
4/01/02-3/31/03 9.82 0.47 0.53 1.00 (0.49) -- (0.49) 10.33 10.38 268,226
4/01/03-3/31/04 10.33 0.32 0.18 0.50 (0.33) -- (0.33) 10.50 4.92 72,043
4/01/04-9/30/04+ 10.50 0.24 (0.14) 0.10 (0.24) -- (0.24) 10.36 1.01 36,626
Ratio
of net
Ratio of investment
expenses income to
to average average Portfolio
net assets net assets Turnover
- ---------- ---------- ---------
1.25%(4) 4.775%(4) 43%
1.29(4) 6.45(4) 94
1.31(4) 5.51(4) 215
1.33(3)(4) 5.03(3)(4) 94
1.33(4) 3.72(4) 179
1.25(4) 2.50(4) 229
1.22(3)(4) 3.67(3)(4) 91
1.90%(4) 5.71%(4) 43%
1.95(4) 5.95(4) 94
1.97(4) 4.88(4) 215
1.98(3)(4) 4.36(3)(4) 94
1.98(4) 3.15(4) 179
1.92(4) 1.75(4) 229
1.87(3)(4) 3.02(3)(4) 91
1.90%(4) 5.70%(4) 43%
1.95(4) 5.84(4) 94
1.97(4) 4.79(4) 215
1.98(3)(4) 4.39(3)(4) 94
1.98(4) 3.13(4) 179
1.93(4) 1.77(4) 229
1.87(3)(4) 3.02(3)(4) 91
1.16%(3) 6.18%(3) 94%
1.22(4) 5.68(4) 215
1.23(3)(4) 5.12(3)(4) 94
1.24(4) 3.98(4) 179
1.23(4) 2.39(4) 229
1.12(3)(4) 3.75(3)(4) 91
0.95%(3)(4) 6.39%(3)(4) 94%
0.97(4) 5.97(4) 215
0.74(3)(4) 5.62(3)(4) 94
0.67 4.56 179
0.66(4) 2.97(4) 229
0.65(3)(4) 4.22(3)(4) 91
- --------
* In conjunction with the reorganization on November 16, 2001, Class C was
redesignated as Class II and Class II was redesignated as Class Z. Effective
February 23, 2004, Class II was redesignated to Class C.
@ Inception date of class.
# Effective November 16, 2001, the SunAmerica Core Bond, a newly created
portfolio of the SunAmerica Income Funds, acquired all the assets and
liabilities of the North American Core Bond Fund.
+ Unaudited
(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)Annualized
(4)Net of the following expense reimbursements and custody credits, if
applicable (based on average net assets):
10/31/99 10/31/00 10/31/01 3/31/02(3) 3/31/03 3/31/04 9/30/04(3)+
-------- -------- -------- ---------- ------- ------- -----------
Core Bond Fund Class A.................. 0.45% 0.49% 0.04% 0.19% 0.11% 0.10% 0.06%
Core Bond Fund Class B.................. 0.49 0.50 0.03 0.32 0.23 0.15 0.26
Core Bond Fund Class C.................. 0.48 0.54 0.04 0.32 0.18 0.14 0.32
Core Bond Fund Class I.................. -- -- 0.03 0.13 0.05 0.05 0.02
Core Bond Fund Class Z.................. -- 0.01(3) 0.03 0.02 -- 0.02 0.02
See Notes to Financial Statements
12
SunAmerica Income Funds
FINANCIAL HIGHLIGHTS -- (continued)
U.S. GOVERNMENT SECURITIES FUND
-------------------------------
Net gain
(loss) on
Net investments Net Net
Asset (both Dividends Asset Assets, Ratio of
Value, Net realized Total from from net Total Value, end of expenses
beginning investment and investment investment Distri- end of Total period to average
Period Ended of period income(1) unrealized) operations income butions period Return(2) (000's) net assets
- ---------------- --------- ---------- ----------- ---------- ---------- ------- ------ --------- -------- ----------
Class A
- -
3/31/00 $8.65 $0.44 $(0.37) $ 0.07 $(0.41) $(0.41) $8.31 0.89% $150,975 1.51%
3/31/01 8.31 0.45 0.60 1.05 (0.45) (0.45) 8.91 13.06 169,524 1.49
3/31/02 8.91 0.37(5) (0.08) 0.29 (0.40) (0.40) 8.80 3.25 187,615 1.42
3/31/03 8.80 0.37 0.86 1.23 (0.40) (0.40) 9.63 14.14 210,848 1.12(4)
3/31/04 9.63 0.30 0.01 0.31 (0.30) (0.30) 9.64 3.29 204,618 0.99(4)
4/01/04-9/30/04+ 9.64 0.16 (0.17) (0.01) (0.17) (0.17) 9.46 (0.09) 187,139 0.99(3)(4)
Class B
- -
3/31/00 $8.65 $0.40 $(0.38) $ 0.02 $(0.36) $(0.36) $8.31 0.23% $ 42,273 2.18%
3/31/01 8.31 0.39 0.61 1.00 (0.40) (0.40) 8.91 12.29 32,085 2.17
3/31/02 8.91 0.31(5) (0.08) 0.23 (0.34) (0.34) 8.80 2.55 38,878 2.09(4)
3/31/03 8.80 0.30 0.87 1.17 (0.33) (0.33) 9.64 13.51 62,595 1.76(4)
3/31/04 9.64 0.24 0.01 0.25 (0.24) (0.24) 9.65 2.62 36,605 1.64(4)
4/01/04-9/30/04+ 9.65 0.13 (0.17) (0.04) (0.14) (0.14) 9.47 (0.41) 30,088 1.64(3)(4)
Class C*
- -
6/01/99-3/31/00@ $8.49 $0.31 $(0.20) $ 0.11 $(0.28) $(0.28) $8.32 1.30% $ 907 2.20%(3)(4)
3/31/01 8.32 0.37 0.61 0.98 (0.39) (0.39) 8.91 12.10 3,303 2.20(4)
3/31/02 8.91 0.29(5) (0.09) 0.20 (0.32) (0.32) 8.79 2.40 12,209 2.10(4)
3/31/03 8.79 0.30 0.87 1.17 (0.33) (0.33) 9.63 13.52 24,322 1.75(4)
3/31/04 9.63 0.24 0.01 0.25 (0.24) (0.24) 9.64 2.62 15,139 1.64(4)
4/01/04-9/30/04+ 9.64 0.13 (0.18) (0.05) (0.14) (0.14) 9.45 (0.52) 12,275 1.64(3)(4)
Ratio
of net
investment
income to
average Portfolio
net assets Turnover
- ---------- ---------
5.33% 717%
5.27 1,561
4.12(5) 570
3.88(4) 614
3.14(4) 256
3.31(3)(4) 144
4.69% 717%
4.59 1,561
3.42(4)(5) 570
3.20(4) 614
2.45(4) 256
2.66(3)(4) 144
4.50%(3)(4) 717%
4.48(4) 1,561
3.33(4)(5) 570
3.18(4) 614
2.45(4) 256
2.66(3)(4) 144
- --------
* Effective February 23, 2004, Class II was redesignated to Class C.
@ Inception date of class.
+ Unaudited
(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) Annualized
(4) Net of the following expense reimbursements and custody credits, if
applicable (based on average net assets):
3/31/00 3/31/01 3/31/02 3/31/03 3/31/04 9/30/04(3)+
------- ------- ------- ------- ------- -----------
U.S. Government Securities Fund Class A. -- % -- % -- % 0.21% 0.37% 0.36%
U.S. Government Securities Fund Class B. -- -- 0.01 0.23 0.37 0.40
U.S. Government Securities Fund Class C. 0.86(3) 1.18 0.16 0.27 0.38 0.43
(5)The Trust has adopted the provisions of the AICPA Audit and Accounting Guide
for Investment Companies and began accreting discount and amortizing premium
on debt securities. The per share effect of this change for the year ended
March 31, 2002 on investment income and realized and unrealized gains and
losses was less than $0.01 per share for all classes of shares. The effect
of this change was to decrease the ratio of net investment income to average
net assets by 0.11% for all classes of shares. Per share data and ratios for
periods prior to March 31, 2002 have not been restated to reflect this
change in accounting policy.
See Notes to Financial Statements
13
SunAmerica Income Funds
FINANCIAL HIGHLIGHTS -- (continued)
GNMA FUND
---------
Net gain
(loss) on
Net investments Net Net
Asset (both Dividends Distributions Asset Assets,
Value, Net realized Total from from net from net Total Value, end of
beginning investment and investment investment realized Distri- end of Total period
Period Ended of period income(1) unrealized) operations income gains butions period Return(2) (000's)
- ---------------- --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- --------
Class A
- -
3/31/00 $10.68 $0.53 $(0.29) $0.24 $(0.50) $ -- $(0.50) $10.42 2.40% $ 44,155
3/31/01 10.42 0.61 0.72 1.33 (0.62) (0.01) (0.63) 11.12 13.10 72,092
3/31/02 11.12 0.51(6) (0.03) 0.48 (0.51) (0.32) (0.83) 10.77 4.45 118,440
3/31/03 10.77 0.37 0.93 1.30 (0.42) (0.11) (0.53) 11.54 12.29 255,096
3/31/04 11.54 0.28 0.07 0.35 (0.31) (0.20) (0.51) 11.38 3.06 337,467
4/01/04-9/30/04+ 11.38 0.16 (0.10) 0.06 (0.18) -- (0.18) 11.26 0.56 338,608
Class B
- -
3/31/00 $10.72 $0.46 $(0.30) $0.16 $(0.44) $ -- $(0.44) $10.44 1.55% $ 22,376
3/31/01 10.44 0.53 0.74 1.27 (0.55) (0.01) (0.56) 11.15 12.45 38,190
3/31/02 11.15 0.44(6) (0.03) 0.41 (0.44) (0.32) (0.76) 10.80 3.78 90,011
3/31/03 10.80 0.30 0.93 1.23 (0.35) (0.11) (0.46) 11.57 11.54 189,323
3/31/04 11.57 0.21 0.06 0.27 (0.23) (0.20) (0.43) 11.41 2.39 136,923
4/01/04-9/30/04+ 11.41 0.13 (0.10) 0.03 (0.14) -- (0.14) 11.30 0.32 116,386
Class C*
- -
6/01/99-3/31/00@ $10.52 $0.37 $(0.09) $0.28 $(0.34) $ -- $(0.34) $10.46 2.72% $ 1,406
3/31/01 10.46 0.49 0.77 1.26 (0.55) (0.01) (0.56) 11.16 12.33 15,851
3/31/02 11.16 0.44(6) (0.03) 0.41 (0.44) (0.32) (0.76) 10.81 3.78 36,258
3/31/03 10.81 0.29 0.94 1.23 (0.35) (0.11) (0.46) 11.58 11.53 137,173
3/31/04 11.58 0.20 0.07 0.27 (0.23) (0.20) (0.43) 11.42 2.39 88,184
4/01/04-9/30/04+ 11.42 0.13 (0.10) 0.03 (0.14) -- (0.14) 11.31 0.32 65,477
Class X
- -
3/19/02-3/31/02@ $10.80 $0.02(6) $(0.01) $0.01 $(0.02) $ -- $(0.02) $10.79 0.08% $ 106
3/31/03 10.79 0.36 0.95 1.31 (0.44) (0.11) (0.55) 11.55 12.36 4,107
3/31/04 11.55 0.32 0.06 0.38 (0.34) (0.20) (0.54) 11.39 3.31 8,441
4/01/04-9/30/04+ 11.39 0.17 (0.09) 0.08 (0.19) -- (0.19) 11.28 0.76 9,497
Ratio
of net
Ratio of investment
expenses income to
to average average Portfolio
net assets net assets Turnover
- ---------- ---------- ---------
1.37% 5.06% 910%
0.99(5) 5.78(5) 833
0.99(4)(5) 4.61(4)(5)(6) 537
0.99(5) 3.36(5) 421
0.99(5) 2.51(5) 213
0.99(3)(5) 2.88%(3)(5) 114
2.03% 4.41% 910%
1.64(5) 5.11(5) 833
1.64(4)(5) 3.96(4)(5)(6) 537
1.64(5) 2.71(5) 421
1.64(5) 1.77(5) 213
1.64(3)(5) 2.26(3)(5) 114
2.10%(3)(5) 4.34%(3)(5) 910%
1.64(5) 4.99(5) 833
1.64(4)(5) 3.96(4)(5)(6) 537
1.64(5) 2.59(5) 421
1.64(5) 1.74(5) 213
1.64(3)(5) 2.28(3)(5) 114
0.89%(3)(4)(5) 3.84%(3)(4)(5)(6) 537%
0.78(5) 3.31(5) 421
0.75(5) 2.88(5) 213
0.77(3) 3.09(3) 114
- --------
* Effective February 23, 2004, Class II was redesignated to Class C.
@ Inception date of class.
+ Unaudited
(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)Annualized
(4)The ratios reflect an expense cap of 0.99%, 1.64% and 1.64% for Class A,
Class B and Class C, respectively, which are net of custody credits of 0.01%
for Class A, Class B, and Class C or waivers/reimbursements if applicable.
Custody credits for Class X are less than 0.01%.
(5)Net of the following expense reimbursements and custody credits, if
applicable (based on average net assets):
3/31/00 3/31/01 3/31/02 3/31/03 3/31/04 9/30/04(3)+
------- ------- ------- ------- ------- -----------
GNMA Fund Class A -- % 0.30% 0.19% 0.13% 0.18% 0.17%
GNMA Fund Class B -- 0.33 0.19 0.14 0.16 0.16
GNMA Fund Class C 1.98(3) 0.62 0.21 0.13 0.16 0.17
GNMA Fund Class X -- -- 56.17(3) 0.37 0.03 --
(6)The Trust has adopted the provisions of the AICPA Audit and Accounting Guide
for Investment Companies and began accreting discount and amortizing premium
on debt securities. The per share effect of this change for the year ended
March 31, 2002 on investment income and realized and unrealized gains and
losses was less than $0.01 per share on all classes of shares. The effect of
this change was to decrease the ratio of net investment income to average
net assets by 0.03% for all classes of shares. Per share data and ratios for
periods prior to March 31, 2002 have not been restated to reflect this
change in accounting policy.
See Notes to Financial Statements
14
SunAmerica Income Funds
FINANCIAL HIGHLIGHTS -- (continued)
STRATEGIC BOND FUND**
---------------------
Net gain
(loss) on
Net investments Dividends Net
Asset (both Dividends from net Asset
Value, Net realized Total from from net realized Total Value,
beginning investment and investment investment gain on Return of Distri- end of Total
Period Ended of period+ income(1)+ unrealized)+ operations+ income+ investments+ capital+ butions period+ Return(2)
- ----------------- ---------- ---------- ------------ ----------- ---------- ------------ --------- ------- ------- ---------
Class A
- -
11/01/98-10/31/99 $3.52 $0.28 $(0.20) $0.08 $(0.29) $(0.02) $ -- $(0.31) $3.29 2.10%
11/01/99-10/31/00 3.29 0.28 (0.14) 0.14 (0.26) -- (0.04) (0.30) 3.13 4.09
11/01/00-10/31/01 3.13 0.28 (0.09) 0.19 (0.28) -- -- (0.28) 3.04 6.48
11/01/01-3/31/02 3.04 0.11(6) (0.03) 0.08 (0.12) -- -- (0.12) 3.00 2.46
4/01/02-3/31/03 3.00 0.20 0.06 0.26 (0.18) -- -- (0.18) 3.08 9.07(7)
4/01/03-3/31/04 3.08 0.21 0.33 0.54 (0.21) -- -- (0.21) 3.41 18.04
4/01/04-9/30/04++ 3.41 0.11 (0.01) 0.10 (0.11) -- -- (0.11) 3.40 3.05
Class B
- -
11/01/98-10/31/99 $3.53 $0.26 $(0.21) $0.05 $(0.26) $(0.02) $ -- $(0.28) $3.30 1.56%
11/01/99-10/31/00 3.30 0.26 (0.14) 0.12 (0.24) -- (0.04) (0.28) 3.14 3.33
11/01/00-10/31/01 3.14 0.26 (0.09) 0.17 (0.26) -- -- (0.26) 3.05 5.65
11/01/01-3/31/02 3.05 0.10(6) (0.04) 0.06 (0.11) -- -- (0.11) 3.00 2.05
4/01/02-3/31/03 3.00 0.18 0.06 0.24 (0.16) -- -- (0.16) 3.08 8.36(7)
4/01/03-3/31/04 3.08 0.19 0.33 0.52 (0.19) -- -- (0.19) 3.41 17.29
4/01/04-9/30/04++ 3.41 0.10 (0.01) 0.09 (0.10) -- -- (0.10) 3.40 2.72
Class C*
- -
11/01/98-10/31/99 $3.53 $0.26 $(0.20) $0.06 $(0.26) $(0.02) $ -- $(0.28) $3.31 1.56%
11/01/99-10/31/00 3.31 0.26 (0.16) 0.10 (0.24) -- (0.03) (0.27) 3.14 3.32
11/01/00-10/31/01 3.14 0.26 (0.09) 0.17 (0.26) -- -- (0.26) 3.05 5.65
11/01/01-3/31/02 3.05 0.10(6) (0.03) 0.07 (0.11) -- -- (0.11) 3.01 2.25
4/01/02-3/31/03 3.01 0.19 0.05 0.24 (0.16) -- -- (0.16) 3.09 8.47(7)
4/01/03-3/31/04 3.09 0.19 0.34 0.53 (0.20) -- -- (0.20) 3.42 17.43
4/01/04-9/30/04++ 3.42 0.10 (0.01) 0.09 (0.10) -- -- (0.10) 3.41 2.72
Ratio
Net of net
Assets, Ratio of investment
end of expense income to
period to average average Portfolio
(000's) net assets net assets Turnover
- ------- ---------- ---------- ---------
$ 8,997 1.50%(5) 8.21%(5) 119%
6,439 1.55(5) 8.70(5) 46
8,478 1.57(5) 9.07(5) 49
35,365 1.52(3)(4)(5) 8.09(3)(4)(5)(6) 99
37,136 1.62(8) 6.93(8) 65
43,840 1.55(5)(9) 6.41(9) 69
45,953 1.43(4)(5)(8) 6.49(4)(5)(8) 106
$21,340 2.15%(5) 7.58%(5) 119%
15,131 2.20(5) 8.00(5) 46
9,964 2.21(5) 8.41(5) 49
26,892 2.19(3)(4)(5) 7.48(3)(4)(5)(6) 99
27,879 2.28(8) 6.26(8) 65
36,110 2.19(5)(9) 5.76(5)(9) 69
34,852 2.08(4)(5)(8) 5.85(4)(5)(8) 106
$20,749 2.15%(5) 7.57%(5) 119%
13,056 2.20(5) 8.04(5) 46
11,461 2.22(5) 8.41(5) 49
14,289 2.22(3)(4)(5) 7.34(3)(4)(5)(6) 99
14,423 2.17(5)(8) 6.37(5)(8) 65
22,064 2.16(5)(9) 5.78(5)(9) 69
22,958 2.08(4)(5)(8) 5.89(4)(5)(8) 106
- --------
* In conjunction with the reorganization on November 16, 2001, Class C was
redesignated as Class II. Effective February 23, 2004, Class II was
redesignated to Class C.
** The financial information for the fiscal periods prior to November 16, 2001
reflect the financial information of the North American Strategic Income
Fund, which was reorganized in SunAmerica Strategic Bond Fund on that date.
+ Prior to the fund merger, the North American Strategic Income Fund issued a
stock split. The per share information for all periods prior to the stock
split have been restated. For amounts reflecting activity subsequent to
November 16, 2001, no restatement was necessary.
++ Unaudited
(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)The ratios reflect an expense cap of 2.22%, for Class C, which is net of
custody credits of 0.02% for Class C. Class A and Class B are gross of
custody credits of 0.03% for the period ended March 31, 2002.
(4)Annualized
(5)Net of the following expense reimbursements and custody credits, if
applicable (based on average net assets):
10/31/99 10/31/00 10/31/01 03/31/02(4) 3/31/03 3/31/04 9/30/04(4)++
-------- -------- -------- ----------- ------- ------- ------------
Strategic Bond Fund Class A............. 0.17% 0.32% 0.17% 0.01% -- % 0.02% 0.01%
Strategic Bond Fund Class B............. 0.17 0.32 0.18 0.01 -- 0.02 0.01
Strategic Bond Fund Class C............. 0.17 0.32 0.17 0.08 0.11 0.02 0.01
(6)The Trust has adopted the provisions of the AICPA Audit and Accounting Guide
for Investment Companies and began accreting discount and amortizing premium
on debt securities. The effect of this change for the year ended March 31,
2002 on net investment income and realized and unrealized gains and losses
was less than $0.01 per share for all classes. The effect of this change on
the ratio of net investment income to average net asset was less than 0.01%
for all classes. Per share data and ratios for the periods prior to March
31, 2002 have not been restated to reflect this change in accounting policy.
(7)Total return for each class was increased by less than 0.01% from
reimbursements for losses realized on the disposal of investments in
violation of investment restrictions.
(8)Net of custody credits of 0.01%.
(9)Gross of custody credits of 0.02%.
See Notes to Financial Statements
15
SunAmerica Income Funds
FINANCIAL HIGHLIGHTS -- (continued)
HIGH YIELD BOND FUND**
----------------------
Net gain
(loss) on
Net investments Net
Asset (both Dividends Asset Net Assets,
Value, Net realized Total from from net Total Value, end of
beginning investment and investment investment Distri- end of Total period
Period Ended of period+ income(1)+ unrealized)+ operations+ income+ butions period+ Return(2) (000's)
- ----------------- ---------- ---------- ------------ ----------- ---------- ------- ------- --------- -----------
Class A
- -
11/01/98-10/31/99 $5.63 $0.46 $(0.32) $ 0.14 $(0.46) $(0.46) $5.31 2.28% $ 34
11/01/99-10/31/00 5.31 0.50 (0.49) 0.01 (0.50) (0.50) 4.82 0.04 286
11/01/00-10/31/01 4.82 0.44 (0.55) (0.11) (0.46) (0.46) 4.25 (2.23) 722
11/01/01-3/31/02 4.25 0.18(6) (0.11) 0.07 (0.19) (0.19) 4.13 1.67 59,075
4/01/02-3/31/03 4.13 0.37 (0.49) (0.12) (0.35) (0.35) 3.66 (2.45) 66,521
4/01/03-3/31/04 3.66 0.33 0.60 0.93 (0.36) (0.36) 4.23 26.05 93,818
4/01/04-9/30/04++ 4.23 0.16 0.03 0.19 (0.18) (0.18) 4.24 4.53 122,281
Class B
- -
11/01/98-10/31/99 $5.64 $0.42 $(0.32) $ 0.10 $(0.42) $(0.42) $5.32 1.53% $ 652
11/01/99-10/31/00 5.32 0.46 (0.50) (0.04) (0.46) (0.46) 4.82 (0.83) 1,594
11/01/00-10/31/01 4.82 0.41 (0.54) (0.13) (0.43) (0.43) 4.26 (2.84) 2,911
11/01/01-3/31/02 4.26 0.16(6) (0.11) 0.05 (0.18) (0.18) 4.13 1.23 67,599
4/01/02-3/31/03 4.13 0.35 (0.49) (0.14) (0.33) (0.33) 3.66 (3.06) 57,596
4/01/03-3/31/04 3.66 0.31 0.60 0.91 (0.33) (0.33) 4.24 25.55 73,751
4/01/04-9/30/04++ 4.24 0.16 0.01 0.17 (0.16) (0.16) 4.25 4.24 66,536
Class C*
- -
8/21/00-10/31/00@ $5.09 $0.11 $(0.28) $(0.17) $(0.09) $(0.09) $4.83 (3.29)% $ 545
11/01/00-10/31/01 4.83 0.40 (0.52) (0.12) (0.44) (0.44) 4.27 (2.84) 2,274
11/01/01-3/31/02 4.27 0.17(6) (0.11) 0.06 (0.18) (0.18) 4.15 1.43 20,670
4/01/02-3/31/03 4.15 0.34 (0.48) (0.14) (0.33) (0.33) 3.68 (2.97) 27,814
4/01/03-3/31/04 3.68 0.30 0.60 0.90 (0.33) (0.33) 4.25 25.14 52,868
4/01/04-9/30/04++ 4.25 0.16 0.01 0.17 (0.16) (0.16) 4.26 4.19 55,643
Class Z*
- -
11/01/98-10/31/99 $5.64 $0.49 $(0.32) $ 0.17 $(0.49) $(0.49) $5.32 2.74% $ 62,506
11/01/99-10/31/00 5.32 0.54 (0.51) 0.03 (0.52) (0.52) 4.83 0.30 62,702
11/01/00-10/31/01 4.83 0.47 (0.57) (0.10) (0.48) (0.48) 4.25 (2.07) 61,451
11/01/01-3/31/02 4.25 0.19(6) (0.11) 0.08 (0.20) (0.20) 4.13 1.98 62,245
4/01/02-3/31/03 4.13 0.39 (0.49) (0.10) (0.37) (0.37) 3.66 (1.84) 61,439
4/01/03-3/31/04 3.66 0.36 0.59 0.95 (0.38) (0.38) 4.23 26.83 77,951
4/01/04-9/30/04++ 4.23 0.22 (0.01) 0.21 (0.19) (0.19) 4.25 5.09 81,761
Ratio
of net
Ratio of investment
expense income to
to average average Portfolio
net assets net assets Turnover
- ---------- ---------- ---------
1.25%(5) 5.69%(5) 72%
1.38(5) 10.13(5) 57
1.57(5) 9.73(5) 83
1.48(3)(4) 9.56(3)(4)(6) 61
1.56 10.26 117
1.49 8.15 126
1.41(4)(5) 8.13(4)(5) 46
2.00%(5) 7.30%(5) 72%
2.10(5) 9.41(5) 57
2.21(5) 9.17(5) 83
2.12(3)(4) 8.91(3)(4)(6) 61
2.18 9.63 117
2.14 7.52 126
2.06(4)(5) 7.56(4)(5) 46
2.07%(4) 9.10%(4) 57%
2.21(5) 9.02(5) 83
2.17(3)(4)(5) 8.86(3)(4)(5)(6) 61
2.15(5) 9.67(5) 117
2.11(5) 7.53(5) 126
2.06(4)(5) 7.54(4)(5) 46
0.88%(5) 8.84%(5) 72%
0.96(5) 10.41(5) 57
1.15(5) 10.45(5) 83
0.93(3)(4)(5) 10.04(3)(4)(5)(6) 61
0.92(5) 10.90(5) 117
0.88(5) 8.80(5) 126
0.82(4)(5) 8.80(4)(5) 46
- --------
* In conjunction with the reorganization on November 16, 2001, Class C was
redesignated as Class II and Class II was redesignated as Class Z. Effective
February 23, 2004, Class II was redesignated to Class C.
** The financial information for the fiscal periods prior to November 16, 2001
reflect the financial information of the North American High Yield Bond
Fund, which was reorganized in SunAmerica High Yield Bond Fund on that date.
+ Prior to the fund merger, the North American High Yield Bond Fund issued a
stock split. The per share information for all periods prior to the stock
split have been restated. For amounts subsequent to November 16, 2001, no
restatement was necessary. See Note 2 for further discussion.
++ Unaudited
@ Inception date of class.
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Gross of custody credits of 0.01%.
(4)Annualized
(5)Net of the following expense reimbursements and custody credits, if
applicable (based on average net assets):
10/31/99 10/31/00 10/31/01 3/31/02(4) 3/31/03 3/31/04 9/30/04(4)+
-------- -------- -------- ---------- ------- ------- -----------
High Yield Bond Fund Class A............ 0.76% 0.43% 0.18% -- % -- % -- % 0.01%
High Yield Bond Fund Class B............ 0.37 0.42 0.18 -- -- -- 0.01
High Yield Bond Fund Class C............ -- -- 0.18 0.01 0.10 0.01 0.01
High Yield Bond Fund Class Z............ 0.47 0.60 0.18 0.03 0.03 0.00 0.01
(6)The Trust has adopted the provisions of the AICPA Audit and Accounting Guide
for Investment Companies and began accreting discount and amortizing premium
on debt securities. The effect of this change for the year ended March 31,
2002 on net investment income and realized and unrealized gains and losses
was less than $0.01 per share for all classes. The effect of this change on
the ratio of net investment income to average net assets was less than
0.01%. Per share data and ratios for the years prior to March 31, 2002 have
not been restated to reflect this change in accounting policy.
See Notes to Financial Statements
16
SunAmerica Income Funds
FINANCIAL HIGHLIGHTS -- (continued)
TAX EXEMPT INSURED FUND
-----------------------
Net gain
(loss) on
Net investments
Asset (both Dividends
Value, Net realized Total from from net Distributions Total
beginning investment and investment investment from net Distri-
Period Ended of period income(1) unrealized) operations income realized gains butions
- ------------------------------------------------- --------- ---------- ----------- ---------- ---------- -------------- -------
Class A
-------
3/31/00 $13.07 $0.55 $(0.71) $(0.16) $(0.54) $ -- $(0.54)
3/31/01 12.37 0.56 0.66 1.22 (0.57) -- (0.57)
3/31/02 13.02 0.52(6) (0.30) 0.22 (0.52) -- (0.52)
3/31/03 12.72 0.41 0.73 1.14 (0.43) (0.09) (0.52)
3/31/04 13.34 0.39 0.24 0.63 (0.37) (0.44) (0.81)
4/01/04-9/30/04+ 13.16 0.20 (0.09) 0.11 (0.20) -- (0.20)
Class B
-------
3/31/00 $13.07 $0.47 $(0.71) $(0.24) $(0.46) $ -- $(0.46)
3/31/01 12.37 0.47 0.66 1.13 (0.48) -- (0.48)
3/31/02 13.02 0.41(6) (0.28) 0.13 (0.43) -- (0.43)
3/31/03 12.72 0.32 0.73 1.05 (0.34) (0.09) (0.43)
3/31/04 13.34 0.30 0.23 0.53 (0.27) (0.44) (0.71)
4/01/04-9/30/04+ 13.16 0.16 (0.08) 0.08 (0.16) -- (0.16)
Class C*
--------
6/01/99-3/31/00@ $12.83 $0.37 $(0.47) $(0.10) $(0.36) $ -- $(0.36)
3/31/01 12.37 0.47 0.66 1.13 (0.48) -- (0.48)
3/31/02 13.02 0.41(6) (0.28) 0.13 (0.43) -- (0.43)
3/31/03 12.72 0.31 0.74 1.05 (0.34) (0.09) (0.43)
3/31/04 13.34 0.30 0.24 0.54 (0.28) (0.44) (0.72)
4/01/04-9/30/04+ 13.16 0.15 (0.07) 0.08 (0.16) -- (0.16)
Ratio
Net Net of net
Asset Assets, Ratio of investment
Value, end of expenses income to
end of Total period to average average Portfolio
Period Ended period Return(2) (000's) net assets net assets Turnover
- ------------------------------------------------- ------ --------- ------- ---------- ---------- ---------
3/31/00 $12.37 (1.20)% $68,650 1.28% 4.41% 33%
3/31/01 13.02 10.08 72,394 1.26 4.41 24
3/31/02 12.72 1.70 75,071 1.29(3) 3.99(3)(6) 140
3/31/03 13.34 9.08 78,358 1.24 3.12 195
3/31/04 13.16 4.86 69,098 1.26 2.90 131
4/01/04-9/30/04+ 13.07 0.89 64,856 1.25(4) 3.09(4) 89
3/31/00 $12.37 (1.83)% $16,269 1.92% 3.77% 33%
3/31/01 13.02 9.31 16,302 1.97 3.71 24
3/31/02 12.72 0.95 18,090 2.04(3) 3.22(3)(6) 140
3/31/03 13.34 8.30 19,031 1.97 2.39 195
3/31/04 13.16 4.10 16,632 1.96 2.20 131
4/01/04-9/30/04+ 13.08 0.62 10,476 1.94(4) 2.40(4) 89
6/01/99-3/31/00@ $12.37 (0.76)% $ 577 1.95%(4)(5) 3.82%(4)(5) 33%
3/31/01 13.02 9.32 721 1.95(5) 3.73(5) 24
3/31/02 12.72 0.99 4,095 1.95(3)(5) 3.21(3)(5)(6) 140
3/31/03 13.34 8.32 6,451 1.95(5) 2.40(5) 195
3/31/04 13.16 4.14 5,803 1.95(5) 2.21(5) 131
4/01/04-9/30/04+ 13.08 0.61 5,877 1.95(4)(5) 2.39(4)(5) 89
- --------
* Effective February 23, 2004, Class II was redesignated to Class C.
@ Inception date of class.
+ Unaudited
(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) The ratios for Class C reflects an expense cap of 1.95%, which is net of
custody credits of 0.01%. Ratios for Class A and Class B are gross of
custody credits of 0.01%.
(4) Annualized
(5) Net of the following expense reimbursements and custody credits, if
applicable (based on average net assets):
3/31/00(4) 3/31/01 3/31/02 3/31/03 3/31/04 9/30/04(4)+
---------- ------- ------- ------- ------- -----------
Tax Exempt Insured Fund Class C......... 5.20% 1.59% 0.56% 0.00% 0.12% 0.06%
(6)The Trust has adopted the provisions of the AICPA Audit and Accounting Guide
for Investment Companies and began accreting discount and amortizing premium
on debt securities. The effect of this change for the year ended March 31,
2002 on net investment income and net realized and unrealized gains and
losses was less than $0.01 per share for all classes. The effect of this
change on the ratio of net investment income to average net assets was less
than 0.01%. Per share date and ratios for the years prior to March 31, 2002
have not been restated to reflect this change in accounting policy.
See Notes to Financial Statements
17
SunAmerica Core Bond Fund
PORTFOLIO PROFILE -- September 30, 2004 -- (unaudited)
Industry Allocation*
Federal National Mortgage Association... 20.9%
Federal Home Loan Mortgage Corporation.. 20.3%
Financial Services...................... 17.3%
Utilities............................... 6.4%
Telecommunications...................... 4.5%
Banks................................... 4.2%
Broadcasting & Media.................... 4.0%
U.S. Treasury Bonds..................... 3.5%
Leisure & Tourism....................... 2.5%
Foreign Government Agency............... 2.4%
Repurchase Agreement.................... 2.1%
Energy Sources.......................... 1.6%
Insurance............................... 1.6%
Retail Stores........................... 1.4%
Automotive.............................. 1.3%
Forest Products......................... 1.1%
Metals & Mining......................... 1.1%
Pharmaceuticals......................... 1.0%
Chemicals............................... 0.8%
Aerospace & Military Technology......... 0.7%
Food, Beverage & Tobacco................ 0.7%
Communication Equipment................. 0.6%
Federal Farm Credit Bank................ 0.6%
Transportation.......................... 0.6%
Business Services....................... 0.5%
Computes & Business Equipment........... 0.5%
Federal Home Loan Bank.................. 0.5%
Health Services......................... 0.5%
Real Estate Investment Trusts........... 0.5%
Conglomerate............................ 0.4%
Government National Mortgage Association 0.2%
Household Products...................... 0.2%
Energy Services......................... 0.1%
Machinery............................... 0.1%
-----
104.7%
=====
Credit Quality+#
Government -- Treasury 3.5%
Government -- Agency.. 41.9%
AAA................... 5.2%
AA.................... 2.1%
A..................... 12.9%
BBB................... 18.4%
BB.................... 4.2%
B..................... 5.3%
CCC................... 3.0%
Not Rated@............ 3.5%
-----
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 Poors.
# Calculated as a percentage of total debt issues, excluding short-term
securities.
18
SunAmerica Core Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
Principal Value
Security Description Amount (Note 2)
------------------------------------------------------------------
BONDS & NOTES -- 41.8%
Aerospace & Military Technology -- 0.7%
Goodrich Corp.
Sr. Notes
6.45% due 12/15/07........................ $ 289,000 $ 312,010
Northrop Grumman Corp.
Notes
4.08% due 11/16/06........................ 663,000 673,537
Northrop Grumman Corp.
Guaranteed Sr. Notes
7.13% due 02/15/11........................ 171,000 196,558
Raytheon Co.
Notes
4.85% due 01/15/11........................ 208,000 213,527
----------
1,395,632
----------
Automotive -- 1.4%
Ford Motor Co.
Notes
7.45% due 07/16/31........................ 1,114,000 1,092,310
General Motors Corp.
Notes
7.20% due 01/15/11........................ 373,000 395,032
General Motors Corp.
Sr. Debentures
8.25% due 07/15/23........................ 284,000 298,741
Hertz Corp.
Sr. Notes
4.70% due 10/02/06........................ 517,000 526,925
Hertz Corp.
Notes
6.35% due 06/15/10........................ 272,000 281,820
Hertz Corp.
Notes
6.90% due 08/15/14........................ 190,000 197,968
----------
2,792,796
----------
Banks -- 4.3%
American Express Centurion Bank
Notes
4.38% due 07/30/09........................ 272,000 277,911
Bank of America Corp.
Notes
4.25% due 10/01/10........................ 500,000 501,299
BankBoston Capital Trust IV
Guaranteed Capital Securities
2.45% due 12/08/04(6)..................... 622,000 599,323
Downey Financial Corp.
Notes
6.50% due 07/01/14........................ 576,000 603,205
Dresdner Funding Trust I
Silent Partnership Certificate
8.15% due 06/30/31*....................... 603,000 728,766
Emigrant Capital Trust
Guaranteed Notes
4.43% due 12/10/04(6)*.................... 959,000 950,808
First Maryland Capital II
Guaranteed Sub. Capital Income Securities
2.54% due 11/01/04(6)..................... 508,000 493,082
Principal Value
Security Description Amount (Note 2)
------------------------------------------------------------
Banks (continued)
Huntington National Bank
Sr. Notes
4.65% due 06/30/09.................. $ 272,000 $ 279,142
Key Bank NA
Sr. Notes
4.10% due 06/30/05.................. 232,000 235,147
Key Bank NA
Sub. Notes
7.00% due 02/01/11.................. 249,000 278,973
KeyCorp
Notes
2.75% due 02/27/07.................. 579,000 573,279
National City Bank
Notes
2.50% due 04/17/06.................. 534,000 532,867
PNC Funding Corp.
Guaranteed Sr. Notes
5.75% due 08/01/06.................. 565,000 591,947
RBS Capital Trust IV
Trust Preferred Securities
2.78% due 12/30/04(6)............... 275,000 276,919
US Bank NA
Notes
3.70% due 08/01/07.................. 543,000 548,543
Wachovia Corp.
Sub. Debentures
7.50% due 04/15/35.................. 366,000 456,336
Washington Mutual Bank FA
Sub. Notes
5.65% due 08/15/14.................. 76,000 78,783
Wells Fargo & Co.
Sub. Notes
5.13% due 09/01/12.................. 382,000 392,628
World Savings Bank FSB
Sr. Notes
4.50% due 06/15/09.................. 327,000 335,040
----------
8,733,998
----------
Broadcasting & Media -- 3.6%
Cablevision Systems Corp.
Sr. Notes
8.00% due 04/15/12*................. 375,000 391,875
Charter Communications Holdings, LLC
Sr. Sub. Notes
11.13% due 01/15/11................. 975,000 789,750
Clear Channel Communications, Inc.
Sr. Notes
5.75% due 01/15/13.................. 354,000 363,600
Clear Channel Communications, Inc.
Sr. Notes
6.00% due 11/01/06.................. 272,000 285,615
Comcast Cable Commerce, Inc.
Sr. Notes
6.88% due 06/15/09.................. 159,000 176,723
Cox Communications, Inc.
Tranche Trust
6.85% due 01/15/18.................. 285,000 289,685
Cox Communications, Inc.
Notes
7.75% due 08/15/06.................. 408,000 437,662
19
SunAmerica Core Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount (Note 2)
--------------------------------------------------------
BONDS & NOTES (continued)
Broadcasting & Media (continued)
CSC Holdings, Inc.
Sr. Notes, Series B
7.63% due 04/01/11.............. $ 25,000 $ 26,344
CSC Holdings, Inc.
Sr. Debentures
7.88% due 02/15/18.............. 225,000 232,312
Insight Communications Co., Inc.
Sr. Sub. Disc. Notes
12.25% due 02/15/11(5).......... 1,250,000 1,168,750
Liberty Media Corp.
Sr. Notes
3.38% due 12/15/04(6)........... 579,000 585,201
News America Holdings, Inc.
Guaranteed Sr. Notes
7.75% due 12/01/45.............. 264,000 312,832
News America, Inc.
Guaranteed Sr. Debentures
7.63% due 11/30/28.............. 422,000 493,202
TCI Communications, Inc.
Notes
6.88% due 02/15/06.............. 271,000 284,139
TCI Communications, Inc.
Sr. Debentures
8.75% due 08/01/15.............. 391,000 487,367
Time Warner, Inc.
Guaranteed Sr. Notes
6.13% due 04/15/06.............. 321,000 335,602
Time Warner, Inc.
Guaranteed Sr. Notes
6.88% due 06/15/18.............. 165,000 180,292
Young Broadcasting, Inc.
Guaranteed Sr. Sub. Notes
10.00% due 03/01/11............. 450,000 463,500
----------
7,304,451
----------
Business Services -- 0.5%
Allied Waste North America, Inc.
Guaranteed Sr. Secures Notes
5.75% due 02/15/11.............. 344,000 326,800
USA Waste Services, Inc.
Sr. Notes
7.00% due 07/15/28.............. 331,000 366,312
Waste Management, Inc.
Guaranteed Sr. Notes
7.38% due 05/15/29.............. 246,000 282,565
----------
975,677
----------
Chemicals -- 0.8%
Huntsman, LLC
Sr. Sec. Notes
11.63% due 10/15/10............. 450,000 520,875
ICI North America, Inc.
Debentures
8.88% due 11/15/06.............. 42,000 46,411
Lubrizol Corp.
Sr. Debenture
6.50% due 10/01/34.............. 362,000 353,137
Rohm & Haas Co.
Sr. Debentures
7.85% due 07/15/29.............. 394,000 501,900
Principal Value
Security Description Amount (Note 2)
-------------------------------------------------------------
Chemicals (continued)
RPM International, Inc.
Sr. Notes
4.45% due 10/15/09*.................. $ 281,000 $ 279,387
----------
1,701,710
----------
Communication Equipment -- 0.6%
Pacific Bell
Notes
6.63% due 10/15/34................... 620,000 630,444
Rural Cellular Corp.
Sr. Sub. Notes
9.75% due 01/15/10................... 700,000 609,000
----------
1,239,444
----------
Computers & Business Equipment -- 0.5%
Computer Sciences Corp.
Notes
6.75% due 06/15/06................... 321,000 340,876
International Business Machines Corp.
Sr. Debentures
6.22% due 08/01/27................... 309,000 331,816
Xerox Corp.
Sr. Notes
6.88% due 08/15/11................... 350,000 365,750
----------
1,038,442
----------
Conglomerate -- 0.3%
Tyco International Group SA
Participation Certificates
4.44% due 06/15/07*.................. 544,000 555,914
----------
Energy Services -- 0.2%
Hanover Compressor Co.
Sub. Notes
zero coupon due 03/31/07............. 375,000 316,875
----------
Energy Sources -- 1.5%
Amerada Hess Corp.
Notes
6.65% due 08/15/11................... 488,000 538,801
Chesapeake Energy Corp.
Guaranteed Sr. Notes
7.75% due 01/15/15................... 550,000 599,500
Conoco, Inc.
Sr. Notes
6.95% due 04/15/29................... 424,000 489,215
Devon Energy Corp.
Sr. Notes
2.75% due 08/01/06................... 470,000 466,818
Enterprise Products Operating LP
Sr. Notes
6.65% due 10/15/34*.................. 362,000 362,925
Pemex Project Funding Master Trust
Guaranteed Notes
8.63% due 02/01/22................... 363,000 412,731
Pennzoil Co. Debentures
10.25% due 11/01/05.................. 132,000 141,283
----------
3,011,273
----------
20
SunAmerica Core Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount (Note 2)
--------------------------------------------------------------
BONDS & NOTES (continued)
Financial Services -- 8.9%
American Honda Finance Corp.
Notes
4.50% due 05/26/09*...................... $302,000 $309,339
Athena Neurosciences Finance, LLC
Guaranteed Sr. Notes
7.25% due 02/21/08....................... 325,000 329,063
Bunge Ltd. Finance Corp.
Guaranteed Notes
4.38% due 12/15/08....................... 237,000 238,696
Chukchansi Economic Development Authority
Sr. Notes
4.50% due 06/15/09*...................... 500,000 625,000
CIT Group, Inc.
Sr. Notes
5.13% due 09/30/14....................... 385,000 384,540
CIT Group, Inc.
Sr. Note
7.75% due 04/02/12....................... 272,000 321,900
Citicorp Capital I
Guaranteed Capital Securities
7.93% due 02/15/27....................... 514,000 568,290
Citigroup Inc.
Global Sub. Note
6.00% due 10/31/33....................... 346,000 350,764
Citigroup, Inc.
Sub. Notes
5.00% due 09/15/14*...................... 351,775 352,213
Consolidated Communications Holdings
Sr. Notes
9.75% due 04/01/12*...................... 375,000 384,375
Duke Capital LLC
Notes
5.67% due 08/15/14....................... 545,000 555,868
Duke Capital LLC
Sr. Notes, Series A
6.25% due 07/15/05....................... 199,000 204,258
Ford Motor Credit Co.
Notes
7.38% due 10/28/09....................... 503,000 550,954
FPL Group Capital, Inc.
Notes
3.25% due 04/11/06....................... 528,000 531,315
General Electric Capital Corp.
Notes
2.80% due 01/15/07....................... 579,000 575,445
General Electric Capital Corp.
Bonds
4.75% due 09/15/14....................... 730,000 725,608
General Electric Capital Corp.
Notes
6.13% due 02/22/11....................... 541,000 596,554
General Motors Acceptance Corp.
Tranche Trust
3.08% due 12/23/04(6).................... 568,000 567,721
General Motors Acceptance Corp.
Notes
4.50% due 07/15/06....................... 462,000 469,236
Principal Value
Security Description Amount (Note 2)
--------------------------------------------------------------------------
Financial Services (continued)
Goldman Sachs Group, Inc.
Sr. Notes
6.13% due 02/15/33................................ $1,021,000 $1,025,520
Household Finance Corp.
Notes
3.38% due 02/21/06................................ 415,000 418,429
Household Finance Corp.
Notes
4.75% due 05/15/09................................ 265,000 273,511
iPCS Escrow Co.
Sr. Notes
11.50% due 05/01/12*.............................. 900,000 945,000
J.P. Morgan Chase & Co.
Notes
5.25% due 05/30/07................................ 541,000 568,515
J.P. Morgan Chase & Co.
Global Sub. Notes
6.63% due 03/15/12................................ 428,000 480,402
J.P. Morgan Chase Capital XIII
Capital Securities
2.88% due 12/30/04(6)............................. 440,000 435,563
Lehman Brothers Holdings, Inc.
Notes
6.63% due 01/18/12................................ 348,000 389,240
Morgan Stanley Global
Sub. Notes
4.75% due 04/01/14................................ 654,000 633,122
Morgan Stanley Dean Witter & Co.
Bonds
6.75% due 04/15/11................................ 321,000 359,698
National Rural Utilities Cooperative Finance Corp.
Secured Collateral Trust Bonds
3.88% due 02/15/08................................ 448,000 451,993
NGC Corp. Capital Trust I
Guaranteed Sub. Notes, Series B
8.32% due 06/01/27................................ 750,000 600,000
NiSource Finance Corp.
Guaranteed Sr. Notes
7.63% due 11/15/05................................ 322,000 338,356
Pricoa Global Funding I
Secured Notes
4.35% due 06/15/08*............................... 289,000 296,152
Principal Life Global Funding
Secured Notes
5.13% due 06/28/07*............................... 482,000 504,093
Qwest Capital Funding, Inc.
Guaranteed Notes
7.90% due 08/15/10................................ 625,000 576,562
TIAA Global Markets
Notes
4.13% due 11/15/07*............................... 321,000 328,310
Unilever Capital Corp.
Guaranteed Bonds
5.90% due 11/15/32................................ 386,000 399,985
21
SunAmerica Core Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount (Note 2)
---------------------------------------------------------------
BONDS & NOTES (continued)
Financial Services (continued)
Washington Mutual Finance Corp.
Sr. Notes
6.25% due 05/15/06..................... $529,000 $ 557,781
-----------
18,223,371
-----------
Food, Beverage & Tobacco -- 0.8%
Anheuser-Busch Cos., Inc.
Sr. Debentures
5.95% due 01/15/33..................... 386,000 407,294
Coca-Cola Enterprises, Inc.
Debentures
8.50% due 02/01/22..................... 480,000 633,658
PepsiCo, Inc.
Notes
3.20% due 05/15/07..................... 526,000 528,201
-----------
1,569,153
-----------
Forest Products -- 0.9%
Crown Cork & Seal Co., Inc.
Notes
8.00% due 04/15/23..................... 850,000 790,500
Georgia-Pacific Corp.
Sr. Notes
8.00% due 01/15/24..................... 275,000 312,813
Weyerhaeuser Co.
Notes
5.50% due 03/15/05..................... 158,000 160,075
Weyerhaeuser Co.
Notes
6.13% due 03/15/07..................... 532,000 566,312
-----------
1,829,700
-----------
Health Services -- 0.5%
HCA, Inc.
Sr. Notes
6.95% due 05/01/12..................... 575,000 620,864
IASIS Healthcare Capital Corp.
Sr. Sub. Notes
8.75% due 06/15/14*.................... 65,000 68,087
Tenet Healthcare Corp.
Sr. Notes
6.50% due 06/01/12..................... 350,000 313,250
-----------
1,002,201
-----------
Household Products -- 0.2%
Procter & Gamble Co.
Notes
5.80% due 08/15/34..................... 417,000 435,835
-----------
Insurance -- 1.0%
Assurant, Inc.
Sr. Notes
5.63% due 02/15/14..................... 263,000 269,874
ING Security Life Institutional Funding
Notes
2.70% due 02/15/07*.................... 578,000 573,980
Kingsway America Inc.
Guaranteed Sr. Notes
7.50% due 02/01/14..................... 319,000 330,802
Principal Value
Security Description Amount (Note 2)
---------------------------------------------------------
Insurance (continued)
Ohio Casualty Corp.
Notes
7.30% due 06/15/14............... $ 521,000 $ 549,812
Prudential Financial, Inc.
Tranche Trust
5.10% due 09/20/14............... 275,000 275,237
----------
1,999,705
----------
Leisure & Tourism -- 2.5%
American Airlines, Inc.
Pass-Thru Certificates, Series
2001-1, Class A2
6.82% due 05/23/11............... 1,225,000 1,086,482
Atlas Air, Inc.
Pass-Thru Certificates, Series
1999-1, Class A-2
6.88% due 01/02/11............... 474,617 443,011
Atlas Air, Inc.
Pass-Thru Certificates, Series
1999-1, Class B
7.63% due 07/02/16............... 950,432 674,460
Atlas Air, Inc.
Pass-Thru Certificates, Series
2000-1, Class A
8.71% due 07/02/21............... 433,097 426,189
Bally Total Fitness Holding Corp.
Sr. Notes
10.50% due 07/15/11.............. 140,000 133,000
Continental Airlines, Inc.
Pass-Thru Certificates, Series
1998-1, Class A
6.65% due 09/15/17............... 59,208 55,420
Continental Airlines, Inc.
Pass-Thru Certificates, Series
1997-4, Class A
6.90% due 01/02/18............... 82,608 79,538
Continental Airlines, Inc.
Pass-Thru Certificates, Series
1999-1, Class C
6.95% due 08/02/09............... 327,278 249,056
Continental Airlines, Inc.
Pass-Thru Certificates, Series
1998-3, Class C1
7.08% due 11/01/04............... 11,204 11,098
Continental Airlines, Inc.
Pass-Thru Certificates, Series
2004, Class J
9.56% due 09/01/19............... 575,704 572,353
Delta Air Lines, Inc.
Sr. Notes
10.00% due 08/15/08.............. 140,000 42,000
Hilton Hotels Corp.
Sr. Notes
7.50% due 12/15/17............... 318,000 364,110
MGM Mirage, Inc.
Sr. Notes
5.88% due 02/27/14............... 650,000 625,625
Riviera Holdings Corp.
Guaranteed Sr. Notes
11.00% due 06/15/10.............. 125,000 137,500
22
SunAmerica Core Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount (Note 2)
-----------------------------------------------------------
BONDS & NOTES (continued)
Leisure & Tourism (continued)
Six Flags, Inc.
Sr. Notes
9.75% due 04/15/13.................. $175,000 $ 165,375
United Airlines, Inc.
Pass-Thru Certificates, Series
2000-2, Class A1
7.03% due 10/01/10(8)............... 7,840 6,564
----------
5,071,781
----------
Metals & Mining -- 0.3%
Alcoa, Inc.
Notes
6.75% due 01/15/28.................. 287,000 329,200
Owens-Brockway Glass Container, Inc.
Guaranteed Sr. Secured Notes
8.88% due 02/15/09.................. 300,000 326,250
----------
655,450
----------
Pharmaceuticals -- 1.0%
Merck & Co., Inc.
Debenture
5.95% due 12/01/28.................. 319,000 334,379
Pfizer, Inc.
Global Notes
2.50% due 03/15/07.................. 578,000 571,959
Schering-Plough Co.
Sr. Notes
6.50% due 12/01/33.................. 367,000 397,375
Wyeth
Notes
6.45% due 02/01/24.................. 325,000 333,301
Wyeth
Notes
6.70% due 10/15/04.................. 320,000 355,836
----------
1,992,850
----------
Real Estate Investment Trusts -- 0.5%
CarrAmerica Realty Corp.
Notes
5.13% due 09/01/11.................. 248,000 250,813
Omega Healthcare Investors, Inc.
Sr. Notes
7.00% due 04/01/14*................. 425,000 431,375
Vornado Realty LP
Notes
4.50% due 08/15/09.................. 305,000 305,646
----------
987,834
----------
Retail Stores -- 1.3%
Fortune Brands, Inc
Notes
2.88% due 12/01/06.................. 541,000 538,636
May Department Stores Co.
Notes
3.95% due 07/15/07*................. 543,000 547,230
Rent-Way, Inc.
Sr. Notes
11.88% due 06/15/10................. 225,000 245,250
Principal Value
Security Description Amount (Note 2)
----------------------------------------------------------
Retail Stores (continued)
Safeway, Inc.
Notes
2.50% due 11/01/05................ $ 441,000 $ 439,326
Wal-Mart Stores, Inc.
Sr. Notes
6.88% due 08/10/09................ 729,000 826,766
----------
2,597,208
----------
Telecommunications -- 3.4%
American Cellular Corp.
Sr. Notes, Series B
10.00% due 08/01/11............... 740,000 599,400
Bell Atlantic Pennsylvania, Inc.
Debentures
8.75% due 08/15/31................ 471,000 620,166
Citizens Communications Co.
Sr. Notes
9.00% due 08/15/31................ 357,000 364,586
FairPoint Communications, Inc.
Sr. Sub. Notes, Series B
9.50% due 05/01/08................ 700,000 700,000
Iridium, LLC
Guaranteed Sr. Notes, Series C
11.25% due 07/15/05(1)+........... 25,000 2,313
LCI International, Inc.
Sr. Notes
7.25% due 06/15/07................ 905,000 821,288
Nextel Communications, Inc.
Sr. Notes
5.95% due 03/15/14................ 125,000 122,500
Nextel Communications, Inc.
Sr. Notes
7.38% due 08/01/15................ 750,000 806,250
Qwest Corp.
Debentures
7.13% due 11/15/43................ 750,000 622,500
Sprint Capital Corp.
Guaranteed Sr. Notes
6.13% due 11/15/08................ 396,000 427,434
Telecom Italia Capital SA
Guaranteed Sr. Notes
6.00% due 09/30/34*............... 638,000 623,170
Verizon Communications, Inc.
Debentures
7.90% due 02/01/27................ 680,000 746,293
Verizon New York, Inc.
Sr. Debentures, Series B
7.38% due 04/01/32................ 437,000 486,228
----------
6,942,128
----------
Transportation -- 0.6%
Burlington Northern Santa Fe Corp.
Debentures
8.13% due 04/15/20................ 937,000 1,172,861
----------
Utilities -- 5.9%
AES Corp.
Sr. Notes
7.75% due 03/01/14................ 1,100,000 1,135,750
23
SunAmerica Core Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount (Note 2)
---------------------------------------------------------
BONDS & NOTES (continued)
Utilities (continued)
Alabama Power Co.
Sr. Notes
2.80% due 12/01/06................ $441,000 $ 438,607
Appalachian Power Co.
Sr. Notes, Series G
3.60% due 05/15/08................ 348,000 345,720
Appalachian Power Co.
Sr. Notes, Series E
4.80% due 06/15/05................ 278,000 281,771
CenterPoint Energy Resources Corp.
Debentures
8.90% due 12/15/06................ 579,000 643,258
Connecticut Light & Power Co.
1st Mtg. Bonds, Series B
5.75% due 09/15/34................ 383,000 385,116
Constellation Energy Group, Inc.
Notes, Series A
7.88% due 04/01/05................ 257,000 263,737
Consumers Energy Co.
1st Mtg. Bonds, Series F
4.00% due 05/15/10................ 267,000 262,538
Duke Energy Co.
1st Mtg. Bonds
5.30% due 10/01/15................ 632,000 650,625
Dynegy Holdings, Inc.
Sr. Notes
8.75% due 02/15/12................ 700,000 728,000
Edison Mission Energy
Sr. Notes
9.88% due 04/15/11................ 875,000 1,019,375
El Paso Production Holding Co.
Guaranteed Sr. Notes
7.75% due 06/01/13................ 450,000 451,125
Georgia Power Co.
Sr. Notes, Series G
6.20% due 02/01/06................ 318,000 332,431
Indianapolis Power & Light Co.
1st Mtg. Bonds
6.60% due 01/01/34*............... 228,000 237,339
Kinder Morgan Energy Partners, LP
Notes
7.75% due 03/15/32................ 347,000 410,747
Old Dominion Electric Cooperative
1st Mtg. Bond, Series A
5.68% due 12/01/28................ 289,000 302,054
Pacific Gas & Electric Co.
1st Mortgage Bond
6.05% due 03/01/34................ 373,000 379,640
PNPP II Funding Corp.
Collateral Lease Bond
9.12% due 05/30/16................ 323,000 381,250
Progress Energy, Inc.
Sr. Notes
6.75% due 03/01/06................ 533,000 559,731
Reliant Resources, Inc.
Notes
9.50% due 07/15/13................ 575,000 624,594
Principal Value
Security Description Amount (Note 2)
---------------------------------------------------------------------
Utilities (continued)
Southern California Edison Co.
1st Mtg. Bonds
8.00% due 02/15/07.......................... $ 644,000 $ 712,837
TECO Energy, Inc.
Sr. Notes
7.50% due 06/15/10.......................... 48,000 51,840
Virginia Electric & Power Co.
Notes
4.10% due 12/15/08.......................... 381,000 378,474
Virginia Electric & Power Co.
Sr. Notes, Series A
5.75% due 03/31/06.......................... 416,000 432,788
Westar Energy, Inc.
1st Mtg. Bonds
7.88% due 05/01/07.......................... 267,000 295,978
Williams Cos, Inc.
Notes
7.88% due 09/01/21.......................... 400,000 444,000
-----------
12,149,325
-----------
Total Bonds & Notes
(cost $85,108,454).......................... 85,695,614
-----------
ASSET-BACKED SECURITIES -- 5.1%
Financial Services - 5.1%
Bear Steams Commercial Mtg. Securities, Inc.
Commercial Mtg. \ Certificates,
Series 2001-Top4, Class A3
5.61% due 11/15/33&&........................ 100,000 106,541
Bear Steams Commercial Mtg. Securities, Inc.
Commercial Mtg. Certificates,
Series 1999-C1, Class A2
6.02% due 2/14/31&&......................... 525,000 568,909
DLJ Commercial Mtg. Corp.
Commercial Mtg. Certificates,
Series 1999-CG3, Class A1B
7.34% due 10/10/32&&........................ 1,000,000 1,146,129
Honda Auto Receivables Owner Trust
Asset Backed Notes, Series 2002-4, Class A4
2.70% due 3/17/08........................... 2,000,000 1,999,458
Honda Auto Receivables Owner Trust
Asset Backed Notes, Series 2003-3, Class A4
2.77% due 11/21/08.......................... 1,000,000 996,834
Morgan Stanley Dean Witter Capital I
Commercial Mtg. Certificates,
Series 2002-Top1, Class A4
6.66% due 2/15/33(9)........................ 1,850,600 2,081,302
Morgan Stanley Dean Witter Capital I
Commercial Mtg. Certificates,
Series 2000-LIF2, Class A2
7.20% due 10/15/33(9)....................... 2,125,000 2,432,736
Residential Funding Mtg. Securities II
Series 2004 HI1, Class A3
3.06% due 7/25/16........................... 1,100,000 1,086,438
-----------
Total Asset-Backed Securities
(cost $10,265,009).......................... 10,418,347
-----------
24
SunAmerica Core Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount (Note 2)
-----------------------------------------------------------------
FOREIGN BONDS & NOTES (continued)
FOREIGN BONDS & NOTES -- 7.3%
Broadcasting & Media -- 0.4%
Telenet Group Holding NV
Sr. Disc. Notes
11.50% due 06/15/14(5)*.................. $1,000,000 $ 735,000
----------
Business Services -- 0.0%
SCL Terminal Aereo Santiago SA
Sr. Secured Notes
6.95% due 07/01/12*...................... 80,991 87,220
----------
Conglomerate -- 0.1%
Tyco International Group SA
Guaranteed Notes
6.38% due 10/15/11....................... 260,000 287,539
----------
Energy Sources -- 0.1%
Gazprom International SA
Guaranteed Sr. Notes
7.20% due 02/01/20*...................... 275,000 278,437
----------
Financial Services -- 0.8%
Canadian Oil Sands Ltd.
Sr. Notes
4.80% due 08/10/09*...................... 108,000 109,532
Deutsche Telekom International Finance BV
Guaranteed Bonds
8.75% due 06/15/30....................... 383,000 495,057
Ford Motor Credit Co.
Euro MTN Notes
2.07% due 12/13/04(6).................... 566,000 555,752
Nationwide Building Society
Sr. Notes
2.63% due 01/30/07*...................... 578,000 569,990
----------
1,730,331
----------
Forest Products -- 0.2%
Abitibi-Consolidated, Inc.
Debenture
8.55% due 08/01/10....................... 225,000 241,312
Norske Skogindustrier ASA
Bonds
7.13% due 10/15/33*...................... 102,000 107,634
----------
348,946
----------
Government Agency -- 2.4%
China Development Bank
Notes
4.75% due 10/08/14(2).................... 534,000 518,407
Italian Government
Bonds
3.75% due 12/14/07....................... 544,000 550,531
United Mexican States
Notes
6.75% due 09/27/34....................... 606,000 582,063
United Mexican States
Notes
7.50% due 04/08/33....................... 700,000 735,700
Quebec Province Canada
Notes
5.00% due 07/17/09....................... 643,000 675,848
Principal Value
Security Description Amount (Note 2)
----------------------------------
Government Agency (continued)
Quebec Province Canada
Debentures
7.50% due 09/15/29.............. $ 625,000 $ 809,772
Russia Government International
Bonds
5.00% due 03/31/07*............. 325,000 312,813
United Kingdom
Notes
2.25% due 07/08/08*............. 749,000 724,775
----------
4,909,909
----------
Insurance -- 0.6%
Fairfax Financial Holdings, Ltd.
Notes
7.38% due 04/15/18.............. 175,000 141,750
Fairfax Financial Holdings, Ltd.
Notes
8.25% due 10/01/15.............. 675,000 614,250
XL Capital Ltd.
Sr. Notes
5.25% due 09/15/14.............. 496,000 497,855
----------
1,253,855
----------
Machinery -- 0.1%
Atlas Copco AB
Notes
6.50% due 04/01/08*............. 232,000 251,065
----------
Metals & Mining -- 0.8%
Alcan, Inc.
Bonds
6.13% due 12/15/33.............. 163,000 169,222
Noranda, Inc.
Notes
6.00% due 10/15/15.............. 1,002,000 1,068,703
Noranda, Inc.
Debentures
7.00% due 07/15/05.............. 285,000 294,313
----------
1,532,238
----------
Retail Stores -- 0.1%
Jean Coutu Group, Inc.
Sr. Sub. Notes
8.50% due 08/01/14*............. 200,000 198,500
----------
Telecommunications -- 1.1%
France Telecom SA
Sr. Notes
8.50% due 03/01/11.............. 536,000 641,635
Koninklijke KPN NV
Sr. Notes
7.50% due 10/01/05.............. 339,000 355,058
Koninklijke KPN NV
Notes
8.00% due 10/01/10.............. 441,000 524,425
Telus Corp.
Notes
7.50% due 06/01/07.............. 544,000 596,527
25
SunAmerica Core Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount (Note 2)
------------------------------------
Telecommunications (continued)
Telus Corp.
Notes
8.00% due 06/01/11................ $ 161,000 $ 188,650
-----------
2,306,295
-----------
Utilities -- 0.5%
Calpine Canada Energy Finance, ULC
Guaranteed Sr. Notes
8.50% due 05/01/08................ 1,000,000 690,000
Great Lakes Power, Inc.
Sr. Notes
8.30% due 03/01/05................ 267,000 272,483
-----------
962,483
-----------
Total Foreign Bonds & Notes
(cost $14,852,077)................ 14,881,818
-----------
U.S. GOVERNMENT OBLIGATIONS -- 3.5%
U.S. Treasury Bonds -- 2.2%
5.38% due 02/15/31................. 3,075,000 3,294,094
6.88% due 08/15/25................. 199,000 249,815
7.25% due 08/15/22................. 726,000 934,782
-----------
4,478,691
-----------
U.S. Treasury Notes -- 1.3%
2.00% due 01/15/14................. 753,478 771,520
2.25% due 02/15/07................. 67,000 66,285
4.25% due 08/15/13................. 2,000 2,030
4.25% due 08/15/14................. 319,000 322,340
4.75% due 05/15/14................. 370,000 388,385
5.00% due 08/15/11................. 136,000 146,163
5.50% due 05/15/09................. 850,000 930,949
-----------
2,627,672
-----------
Total U.S. Government Obligations
(cost $7,085,739)................. 7,106,363
-----------
U.S. GOVERNMENT AGENCY -- 42.5%
Federal Home Loan Bank -- 0.5%
4.50% due 09/16/13................. 985,000 983,879
-----------
Federal Home Loan Mortgage Corporation -- 20.3%
2.50% due 12/04/06................ 1,450,000 1,437,740
2.63% due 09/17/07................ 856,000 843,211
3.00% due 10/27/06................ 1,103,000 1,103,636
3.38% due 08/23/07................ 633,000 633,096
4.50% due 11/01/18................ 3,062,268 3,059,417
4.50% due 02/01/19................ 2,258,257 2,252,319
5.00% due 10/01/33................ 62,384 61,969
5.00% due 10/01/34................ 3,800,159 3,767,317
5.00% due 03/01/34................ 3,175,711 3,148,266
5.00% due 06/01/34................ 4,769,965 4,728,742
5.50% due 02/01/18................ 2,278,518 2,357,116
5.50% due 10/01/18................ 1,753,152 1,813,627
5.50% due 10/01/33................ 1,737,275 1,764,866
5.50% due 07/01/34................ 2,794,186 2,835,948
6.00% due 02/01/32................ 58,525 60,559
6.00% due 11/01/33................ 3,971,250 4,107,577
6.50% due 08/01/16................ 19,250 20,377
6.50% due 06/01/32................ 1,247,647 1,309,839
6.50% due 08/01/32................ 2,482,663 2,606,456
6.50% due 02/01/33................ 192,862 202,479
6.50% due 09/01/33................ 747,283 784,690
7.00% due 03/01/12(7)............. 15,260 16,185
7.00% due 11/01/16(7)............. 94,184 99,900
7.50% due 04/01/31(7)............. 648,070 695,588
7.50% due 12/01/31(7)............. 1,304,455 1,400,102
Principal Value
Security Description Amount (Note 2)
-------------------------------
Federal National Mortgage Association (continued)
8.00% due 10/01/29(7)......... $ 23,861 $ 25,965
8.00% due 07/01/30(7)......... 8,496 9,240
8.00% due 08/01/30(7)......... 33,490 36,420
8.00% due 10/01/30(7)......... 68,222 74,192
8.00% due 11/01/30(7)......... 69,954 76,075
8.00% due 12/01/30(7)......... 138,707 150,844
8.00% due 01/01/31(7)......... 128,705 139,967
-----------
41,623,725
-----------
Federal National Mortgage Association -- 20.9%
2.77% due 08/25/06............ 1,392,000 1,391,869
3.25% due 06/28/06............ 648,000 649,304
4.50% due 06/01/18............ 881,866 881,365
5.00% due 06/01/18............ 2,449,449 2,493,781
5.00% due 09/01/18............ 830,301 845,328
5.00% due 10/01/18............ 1,668,427 1,698,623
5.00% due 11/01/18............ 1,331,119 1,355,211
5.00% due 11/01/33............ 61,717 61,225
5.00% due 03/01/34............ 3,985,074 3,948,143
5.50% due 12/01/33............ 8,677,439 8,811,355
5.50% due 03/01/34............ 1,094,974 1,110,832
5.50% due 07/01/34............ 3,196,553 3,242,848
5.50% due 09/01/34............ 999,900 1,014,381
6.00% due 12/01/16............ 1,222,018 1,282,244
6.00% due 05/01/17............ 219,695 230,514
6.00% due 03/01/34............ 1,053,895 1,091,701
6.00% due 08/01/34............ 3,552,052 3,678,455
6.00% TBA due Oct............. 4,700,000 4,860,092
6.18% due 07/01/08............ 18,438 19,796
6.27% due 11/01/07............ 50,576 53,908
6.31% due 02/01/08............ 183,403 192,648
6.34% due 01/01/08............ 17,535 18,759
6.43% due 01/01/08............ 18,356 19,696
6.50% due 03/01/17............ 631,858 669,343
6.50% due 04/01/29............ 80,652 84,757
6.50% due 02/01/32............ 682,946 716,866
6.50% due 07/01/32............ 310,490 325,911
6.85% due 06/01/07............ 6,653 7,004
7.00% due 09/01/10(7)......... 2,783 2,954
7.00% due 07/01/11(7)......... 888 942
7.00% due 11/01/11(7)......... 2,128 2,259
7.00% due 05/01/12(7)......... 3,543 3,759
7.00% due 06/01/12(7)......... 5,285 5,610
7.00% due 09/01/12(7)......... 2,820 2,993
7.00% due 10/01/12(7)......... 1,655 1,756
7.00% due 07/01/13(7)......... 3,278 3,480
7.00% due 04/01/28(7)......... 18,372 19,522
7.00% due 10/01/28(7)......... 2,467 2,622
7.00% due 09/01/31(7)......... 1,468,422 1,558,161
7.04% due 03/01/07............ 18,351 19,581
7.50% due 10/01/10(7)......... 156,886 167,088
7.50% due 11/01/14(7)......... 9,022 9,609
7.50% due 05/01/15(7)......... 6,077 6,470
7.50% due 06/01/15(7)......... 91,293 97,186
7.50% due 07/01/15(7)......... 38,796 41,300
7.50% due 08/01/15(7)......... 16,867 17,956
-----------
42,719,207
-----------
Government National Mortgage Association -- 0.2%
6.50% due 06/15/29............ 142,283 150,484
7.00% due 12/15/22(7)......... 96,142 103,095
7.00% due 08/15/29(7)......... 95,254 101,674
8.00% due 04/15/30............ 35,831 39,117
-----------
394,370
-----------
26
SunAmerica Core Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Amount/ Value
Security Description Shares/Warrants (Note 2)
---------------------------------------
Federal Farm Credit Bank -- 0.6%
2.38% due 10/02/06................... $1,257,000 $ 1,244,698
------------
Total U.S. Government Agency
(cost $86,194,887)................... 86,965,879
------------
COMMON STOCK -- 0.0%
Machinery -- 0.0%
Manitowoc Co., Inc. (cost $261)....... 28 993
------------
PREFERRED STOCK -- 0.0%
Machinery -- 0.0%
Fairfield Manufacturing Co.,
Inc.(2)(3)(4)
(cost $24,592)....................... 28 0
------------
WARRANTS -- 0.0%
Communication Equipment -- 0.0%
Concentric Network Corp.(2)(4)........ 5 0
------------
Telecommunications -- 0.0%
KMC Telecom Holdings, Inc.(2)(4)...... 50 0
------------
Total Warrants
(cost $0)............................ 0
------------
Total Investment Securities -- 100.2%
(cost $203,571,019).................. 205,069,014
------------
SHORT-TERM SECURITIES -- 2.4%
UBS Finance 1.88% due 10/01/04(7)..... $5,000,000 5,000,000
------------
REPURCHASE AGREEMENT -- 2.1%
Agreement with State Street Bank
& Trust Co., bearing interest at
1.67% dated 09/30/04 to be
repurchased 10/01/04 in the
amount of $4,274,198 and
collateralized by $3,755,000 of
Federal National Mtg. Association
Notes, bearing interest at 7.25% due
01/15/10 having an
approximate value of $4,402,738
(cost $4,274,000)(7)................. 4,274,000 4,274,000
------------
TOTAL INVESTMENTS --
(cost $212,845,019)@................. 104.7% 214,343,014
Liabilities in excess of other assets... (4.7) (9,550,880)
---------- ------------
NET ASSETS -- 100.0% $204,792,134
========== ============
- --------
* Security 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 September 30, 2004,
the aggregate value of these securities was $12,870,304 representing 6.04%
of net assets. Unless otherwise indicated, these securities are not
considered to be illiquid.
+ Non-income producing security.
@ See Note 5 for cost of investments on a tax basis.
TBA -- Securitiespurchased on a forward commitments basis with an approximate
principal amount and no definitive maturity date. The actual
principal and maturity date will be determined upon
settlement date.
(1) Bond in default.
(2) Fair valued security.
(3) PIK ("Payment-in-kind") bond. Payments made with additional securities in
lieu of cash.
(4) Illiquid security
(5) Security is a "step-up" bond where the coupon rate increases or steps up
at a predetermined rate. Rate shown reflects the increased rate.
(6) Security is a "floating rate" bond where the coupon rate fluctuates. The
rate steps up or down for each rate downgrade or upgrade. The rate
reflected is as of September 30, 2004.
(7) The security or a portion thereof represents collateral for TBA securities.
(8) Company has filed Chapter 11 bankruptcy.
(9) Commercial mortgaged backed security.
See Notes to Financial Statements
27
SunAmerica U.S. Government Securities Fund
PORTFOLIO PROFILE -- September 30, 2004 -- (unaudited)
Industry Allocation*
Government National Mortgage Association 51.5%
Repurchase Agreements................... 19.6%
U.S. Treasury Notes..................... 13.2%
Federal Farm Credit Bank................ 11.5%
U.S. Treasury Bonds..................... 10.9%
U.S. Government Agencies................ 6.4%
Federal Home Loan Mortgage Corporation.. 1.6%
Federal National Mortgage Association... 1.3%
-----
116.0%
=====
Credit Quality+#
Government -- Agency.. 73.9%
Government -- Treasury 25.0%
Not Rated@............ 1.1%
-----
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 Poors.
# Calculated as a percentage of total debt issues, excluding short-term
securities.
28
SunAmerica U.S. Government Securities Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
Principal Value
Security Description Amount (Note 2)
------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS -- 24.1%
U.S Treasury Bonds -- 10.9%
5.38% due 02/15/31(1)............. $23,250,000 $24,906,562
-----------
U.S. Treasury Notes -- 13.2%
4.25% due 08/15/14................ 30,000,000 30,314,070
-----------
Total U.S. Government Obligations
(cost $55,335,938)............... 55,220,632
-----------
U.S. GOVERNMENT AGENCIES -- 72.3%
Federal Home Loan Mortgage Corporation -- 1.6%
6.00% due 11/01/13................ 1,152,362 1,210,778
6.00% due 10/01/16................ 386,094 404,908
6.50% due 09/01/16................ 339,454 359,325
7.00% due 11/01/31................ 363,993 386,327
7.50% due 06/01/25................ 68,833 74,119
8.00% due 06/01/08................ 21,959 22,720
8.25% due 07/01/06................ 4,544 4,627
8.50% due 05/01/08................ 6,066 6,112
9.50% due 04/01/20................ 193,740 218,084
10.00% due 08/01/21............... 847,532 941,096
39.36% due 10/01/04(3)............ 21,318 21,494
-----------
3,649,590
-----------
Federal National Mortgage Association -- 1.3%
6.53% due 05/25/30................ 2,346,067 2,474,006
7.50% due 07/01/26................ 144,734 155,844
8.00% due 12/01/22................ 133,140 145,718
8.00% due 01/01/23................ 175,814 192,544
8.00% due 01/01/23................ 14,208 15,550
11.00% due 02/01/15............... 37 42
11.50% due 09/01/19............... 25,356 28,703
-----------
3,012,407
-----------
Government National Mortgage Association -- 51.5%
4.50% due 05/15/18................. 1,783,946 1,791,567
4.50% due 08/15/18................. 2,570,189 2,581,168
4.50% due 09/15/18................. 7,067,016 7,097,206
4.50% due 10/15/18................. 6,389,635 6,416,931
4.50% due 09/15/33................. 6,623,742 6,432,869
5.00% due 04/15/18................. 7,888,086 8,098,721
5.00% due 08/15/33................. 5,392,881 5,379,525
5.00% due 09/15/33................. 1,456,754 1,453,147
5.00% due 10/15/33................. 562,244 560,851
5.00% TBA due Nov.................. 1,000,000 991,562
5.50% due 11/15/32................. 24,652 25,148
5.50% due 03/15/33................. 936,204 954,407
5.50% due 04/15/33................. 1,325,433 1,351,204
5.50% due 05/15/33................. 2,687,000 2,739,245
5.50% due 06/15/33................. 12,721,328 12,968,674
5.50% due 07/15/33................. 3,452,780 3,519,913
5.50% due 10/15/33................. 3,411,256 3,477,582
5.50% due 12/15/33................. 702,383 716,039
5.50% due 01/15/34................. 2,974,962 3,031,224
5.50% due 02/15/34................. 3,675,260 3,744,765
6.00% due 03/15/29................. 108,580 112,918
6.00% due 04/15/29................. 74,849 77,839
6.00% due 05/15/29................. 172,040 178,913
6.00% due 12/15/31................. 652,144 677,566
6.00% TBA due Nov.................. 35,000,000 36,181,250
6.50% due 02/15/29................. 41,377 43,762
6.50% due 05/15/31................. 74,135 78,309
6.50% due 06/15/31................. $ 117,257 $ 123,859
6.50% due 07/15/31................. 180,790 190,969
Principal Value
Security Description Amount (Note 2)
----------------------------------------------------------------
Government National Mortgage Association (continued)
6.50% due 08/15/31..................... 214,861 226,958
6.50% due 09/15/31..................... 355,907 375,947
6.50% due 10/15/31..................... 805,648 851,010
6.50% due 11/15/31..................... 35,043 37,016
6.50% due 12/15/31..................... 62,986 66,532
6.50% due 01/15/32..................... 85,534 90,336
6.50% due 02/15/32..................... 1,946,584 2,055,867
6.50% due 06/15/32..................... 435,317 459,756
7.00% due 07/15/23..................... 90,256 96,694
7.00% due 10/15/23..................... 178,048 190,749
7.00% due 09/15/25..................... 449,269 481,046
7.00% due 03/20/29..................... 46,053 49,043
7.00% due 06/20/29..................... 8,070 8,594
7.00% due 11/20/30..................... 203,587 216,801
7.50% due 04/15/17..................... 17,950 19,423
7.50% due 08/15/23..................... 371,607 402,314
7.50% due 09/15/23..................... 1,179,295 1,276,742
7.50% due 10/15/23..................... 26,842 29,060
8.00% due 11/15/06..................... 1,650 1,712
8.00% due 02/15/08..................... 2,438 2,589
9.00% due 12/15/16..................... 137,822 154,877
11.00% due 08/20/15.................... 388 437
11.00% due 09/20/15.................... 830 937
11.50% due 03/15/13.................... 26,466 30,200
11.50% due 06/15/13.................... 26,124 29,713
11.50% due 05/20/15.................... 4,281 4,880
12.50% due 09/15/14.................... 8,612 9,930
13.00% due 01/15/11.................... 4,178 4,797
13.00% due 02/15/11.................... 7,082 8,130
13.00% due 03/15/11.................... 322 370
13.00% due 04/15/11.................... 676 776
13.00% due 09/15/13.................... 5,801 6,706
13.00% due 10/20/14.................... 4,439 5,110
13.00% due 11/15/14.................... 929 1,077
13.00% due 02/20/15.................... 1,638 1,880
13.50% due 02/15/13.................... 13,396 15,604
15.00% due 01/15/12.................... 567 670
15.00% due 02/15/12.................... 1,320 1,561
15.00% due 06/15/12.................... 14,240 16,840
15.00% due 09/15/12.................... 771 911
15.50% due 08/15/11.................... 5,699 6,730
15.50% due 09/15/11.................... 42,754 50,489
16.00% due 11/15/11.................... 7,275 8,599
-----------
118,296,546
-----------
Federal Farm Credit Bank -- 11.5%
2.50% due 03/15/06..................... 5,000,000 4,992,445
3.88% due 12/15/04(1).................. 20,000,000 20,080,400
5.64% due 04/04/11..................... 500,000 542,953
6.00% due 03/07/11..................... 200,000 220,741
6.30% due 12/03/13..................... 500,000 565,796
-----------
26,402,335
-----------
International Bank for Reconstruction and
Development -- 0.2%
5.00% due 03/28/06..................... 350,000 362,605
-----------
Private Export Funding Corp. -- 4.7%
5.87% due 07/31/08..................... 10,000,000 10,850,930
-----------
Small Business Administration -- 1.5%
6.30% due 06/01/18..................... 3,173,002 3,404,230
-----------
29
SunAmerica U.S. Government Securities Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount (Note 2)
----------------------------------------------------------------
U.S. GOVERNMENT AGENCY (continued)
Total U.S. Government Agency
(cost $163,750,861)................ $165,978,643
------------
Total Investment Securities -- 96.4%
(cost $219,086,799)................ 221,199,275
------------
REPURCHASE AGREEMENTS -- 19.6%
State Street Bank & Trust Co. Joint
Repurchase Agreement(1)(2)......... $ 5,064,000 5,064,000
UBS Warburg, LLC Joint Repurchase
Agreement(1)(2).................... 40,000,000 40,000,000
------------
Total Repurchase Agreements
(cost $45,064,000)................. 45,064,000
------------
TOTAL INVESTMENTS --
(cost $264,150,799)@............... 116.0% 266,263,275
Liabilities in excess of other assets. (16.0) (36,761,160)
----------- ------------
NET ASSETS -- 100.0% $229,502,115
=========== ============
- --------
TBA --Securities purchased on a forward commitment basis with an approximate
principal amount and no definitive maturity date. The actual principal
and maturity date will be determined upon settlement date.
@ See Note 5 for cost of investments on a tax basis.
(1) The security or a portion thereof represents collateral for TBA securities.
(2) See Note 2 for details of Joint Repurchase Agreement.
(3) Variable rate security -- the rate reflected is as of September 30, 2004;
maturity date reflects next reset date.
See Notes to Financial Statements
30
SunAmerica GNMA Fund
PORTFOLIO PROFILE -- September 30, 2004 -- (unaudited)
Industry Allocation*
Government National Mortgage Association 81.0%
Repurchase Agreements................... 44.8%
Federal Farm Credit Bank................ 2.8%
Small Business Administration........... 0.2%
Federal Home Loan Mortgage Corporation.. 0.1%
-----
128.9%
=====
Credit Quality+#
Government -- Agency 100.0%
-----
100.0%
=====
* Calculated as a percentage of net assets.
+ Source Standard and Poors.
# Calculated as a percentage of total debt issues, excluding short-term
securities.
31
SunAmerica GNMA Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
Principal Value
Security Description Amount (Note 2)
-------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 84.1%
Federal Home Loan Mortgage Corporation -- 0.1%
7.50% due 5/01/24............... $ 58,089 $ 62,619
7.50% due 6/01/25............... 23,596 25,408
10.00% due 01/01/17............. 254,225 279,922
------------
367,949
------------
Federal National Mortgage Association -- 0.0%
7.00% due 9/01/10............... 158,349 168,086
------------
Government National Mortgage Association -- 81.0%
4.50% due 05/15/18............... 3,567,892 3,583,133
4.50% due 08/15/18............... 1,687,803 1,695,013
4.50% due 09/15/18............... 5,339,802 5,362,613
4.50% due 10/15/18............... 7,380,723 7,412,252
4.50% due 08/15/33............... 4,957,532 4,814,674
4.50% due 09/15/33............... 5,278,292 5,126,191
5.00% due 03/15/18............... 1,185,412 1,217,066
5.00% due 04/15/18............... 12,824,373 13,166,821
5.00% due 05/15/18............... 18,371,986 18,862,572
5.00% due 01/15/33............... 24,212 24,152
5.00% due 05/15/33............... 21,052 20,999
5.00% due 08/15/33............... 22,692,597 22,636,398
5.00% due 09/15/33............... 7,924,658 7,905,032
5.00% due 10/15/33............... 28,965,554 28,893,820
5.00% TBA due Nov................ 103,000,000 102,130,886
5.50% due 06/15/29............... 11,490 11,745
5.50% due 12/15/32............... 1,516,587 1,547,140
5.50% due 01/15/33............... 821,627 837,602
5.50% due 02/15/33............... 3,817,669 3,891,898
5.50% due 03/15/33............... 2,295,186 2,339,812
5.50% due 04/15/33............... 12,655,723 12,901,793
5.50% due 05/15/33............... 15,105,385 15,399,085
5.50% due 06/15/33............... 13,814,072 14,082,664
5.50% due 06/15/33............... 1,720,669 1,755,148
5.50% due 07/15/33............... 871,004 887,939
5.50% due 08/15/33............... 5,433,601 5,539,249
5.50% due 09/15/33............... 753,944 768,603
5.50% due 10/15/33............... 13,290,352 13,548,762
5.50% due 12/15/33............... 14,044,076 14,317,141
5.50% due 01/15/34............... 22,430,986 22,855,193
5.50% due 02/15/34............... 2,775,283 2,827,768
5.50% TBA due Nov................ 40,000,000 40,562,480
6.00% due 11/15/23............... 11,139 11,643
6.00% due 01/15/24............... 13,629 14,229
6.00% due 12/15/28............... 436,290 454,077
6.00% due 01/15/29............... 1,433,632 1,490,903
6.00% due 02/15/29............... 1,391,326 1,446,907
6.00% due 03/15/29............... 1,069,268 1,111,984
6.00% due 04/15/29............... 2,289,019 2,380,462
6.00% due 04/15/29............... 459,723 478,401
6.00% due 05/15/29............... 329,854 343,031
6.00% due 06/15/29............... 801,649 833,674
6.00% due 07/15/29............... 475,561 494,559
6.00% due 08/15/29............... 48,725 50,671
6.00% due 10/15/29............... 243,680 253,414
6.00% due 04/15/31............... 41,525 43,144
6.00% due 07/15/31............... 60,972 63,349
6.00% due 10/15/31............... 157,272 163,403
6.00% due 11/15/31............... 2,524,462 2,622,873
6.00% due 12/15/31............... 479,609 498,305
6.00% due 07/15/32............... 250,116 259,721
Principal Value
Security Description Amount (Note 2)
----------------------------------------------------------------
Government National Mortgage Association (continued)
6.00% due 02/15/33................... $ 4,950,664 $ 5,140,307
6.00% due 02/15/34................... 1,844,095 1,914,281
6.00% due 04/15/34................... 5,140,498 5,336,148
6.00% due 07/15/34................... 4,777,212 4,959,034
6.00% TBA due Nov.................... 10,000,000 10,337,500
6.50% due 03/15/28................... 56,004 59,291
6.50% due 08/15/28................... 123,758 130,968
6.50% due 12/15/28................... 2,661 2,815
6.50% due 01/15/29................... 11,738 12,414
6.50% due 02/15/29................... 4,263 4,508
6.50% due 03/15/29................... 246,448 260,652
6.50% due 04/15/29................... 3,518 3,721
6.50% due 05/15/29................... 27,284 28,868
6.50% due 05/15/29................... 4,040 4,275
6.50% due 06/15/29................... 89,370 94,521
6.50% due 07/15/29................... 12,375 13,088
6.50% due 10/15/29................... 10,307 10,901
6.50% due 08/15/31................... 610,134 644,488
6.50% due 09/15/31................... 40,379 42,653
6.50% due 10/15/31................... 699,603 738,994
6.50% due 11/15/31................... 544,326 574,975
6.50% due 12/15/31................... 607,178 641,365
6.50% due 02/15/32................... 1,013,427 1,070,322
6.50% due 05/15/32................... 3,714,988 3,923,551
6.50% due 06/15/32................... 263,909 278,726
7.00% due 03/15/23................... 220,657 236,398
7.00% due 01/20/24................... 1,719 1,838
7.00% due 03/20/24................... 1,700 1,817
7.00% due 07/20/25................... 9,251 9,883
7.00% due 09/15/25................... 195,108 208,908
7.00% due 01/20/29................... 100,185 106,688
7.00% due 02/20/29................... 20,777 22,126
7.00% due 06/20/29................... 40,018 42,616
7.00% due 07/20/29................... 151,533 161,369
7.00% due 09/20/29................... 13,942 14,847
7.00% due 10/20/29................... 28,775 30,643
7.00% due 11/20/29................... 10,218 10,882
7.00% due 03/20/30................... 11,881 12,652
7.00% due 06/20/30................... 26,804 28,543
7.00% due 08/20/30................... 80,041 85,236
7.00% due 09/20/30................... 62,811 66,887
7.00% due 10/20/30................... 89,159 94,946
8.00% due 11/15/26................... 549,369 602,724
8.00% due 12/15/29................... 36,987 40,396
8.00% due 01/15/30................... 1,725 1,883
8.00% due 04/15/30................... 55,406 60,489
8.00% due 05/15/30................... 10,117 11,045
8.00% due 08/15/30................... 111,541 121,772
8.50% due 03/15/17................... 46,581 51,597
8.50% due 05/15/21................... 92,073 102,005
8.50% due 12/15/22................... 157,676 174,613
8.50% due 01/15/23................... 170,438 188,640
8.50% due 09/15/24................... 92,793 102,477
9.00% due 07/15/16................... 117,881 132,468
9.00% due 10/15/16................... 29,767 33,450
------------
428,928,598
------------
Small Business Administration -- 0.2%
6.30% due 06/01/18................... 1,057,667 1,134,744
------------
32
SunAmerica GNMA Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount (Note 2)
-------------------------------------
U.S. GOVERNMENT AGENCIES (continued)
Federal Farm Credit Bank -- 2.8%
2.50% due 03/15/06(1)............... $ 15,000,000 $ 14,977,335
-------------
Total Investment Securities
(cost $443,898,350)................ 445,576,712
-------------
REPURCHASE AGREEMENTS -- 44.8%
State Street Bank & Trust Co. Joint
Repurchase Agreement(1)(2)......... 117,540,000 117,540,000
UBS Warburg, LLC Joint Repurchase
Agreement(1)(2).................... 120,000,000 120,000,000
-------------
Total Repurchase Agreements
(cost $237,540,000)................ 237,540,000
-------------
TOTAL INVESTMENTS --
(cost $681,438,350)@............... 128.9% 683,116,712
Liabilities in excess of other assets. (28.9) (153,149,653)
------------ -------------
NET ASSETS -- 100.0% $ 529,967,059
============ =============
- --------
TBA --Securities Purchased on a forward commitment basis with an approximate
principal amount and no definitive maturity date. The actual principal
and maturity date will be determined upon settlement date.
@ See Note 5 for cost of investments on a tax basis.
(1) The security or a portion thereof represents collateral for TBA securities.
(2) See Note 2 for details of Joint Repurchase Agreement.
See Notes to Financial Statements
33
SunAmerica Strategic Bond Fund
PORTFOLIO PROFILE -- September 30, 2004 -- (unaudited)
Industry Allocation*
Foreign Government Agency............... 34.0%
Financial Services...................... 10.2%
Federal National Mortgage Association... 7.1%
Telecommunications...................... 6.6%
Broadcasting & Media.................... 5.4%
Leisure & Tourism....................... 4.8%
Utilities............................... 4.2%
Energy Sources.......................... 2.8%
Retail Stores........................... 2.0%
Chemicals............................... 1.7%
Forest Products......................... 1.4%
Bank.................................... 1.4%
Pharmaceuticals......................... 1.3%
Energy Services......................... 1.2%
Federal Home Loan Mortgage Corporation.. 1.2%
Insurance............................... 1.2%
U.S. Treasury Notes..................... 1.1%
Automotive.............................. 0.9%
Health Services......................... 0.9%
Metals & Mining......................... 0.8%
Real Estate Investment Trusts........... 0.8%
U.S. Treasury Bonds..................... 0.8%
Business Services....................... 0.6%
Conglomerate............................ 0.6%
Food, Beverage & Tobacco................ 0.6%
Machinery............................... 0.5%
Repurchase Agreement.................... 0.5%
Communication Equipment................. 0.4%
Restaurant.............................. 0.4%
Time Deposit............................ 0.3%
Medical Products........................ 0.3%
Computes & Business Equipment........... 0.2%
Electronics............................. 0.2%
Government National Mortgage Association 0.2%
Transportation.......................... 0.2%
Aerospace & Military Technology......... 0.1%
Education............................... 0.1%
Entertainment Products.................. 0.1%
Apparel & Textiles...................... 0.1%
----
97.2%
====
Credit Quality+#
Government -- Treasury 1.9%
Government -- Agency.. 8.3%
AAA................... 5.9%
AA.................... 5.9%
A..................... 2.4%
BBB................... 10.3%
BB.................... 22.7%
B..................... 20.8%
CCC................... 10.5%
CC.................... 0.2%
C..................... 0.1%
BELOW C............... 0.2%
Not Rated@............ 10.8%
-----
100.0%
=====
* Calculated as a percentage of net assets.
@ Represents debt issues that either have no rating or the rating is
unavailable from the data source.
+ Source Standard and Poors.
# Calculated as a percentage of total debt issues, excluding short-term
securities.
34
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
Principal Value
Security Description Amount** (Note 2)
-----------------------------------------------------------
BONDS & NOTES -- 42.3%
Aerospace & Military Technology -- 0.1%
Condor Systems, Inc.
Guaranteed Sr. Sub. Notes, Series B
11.88% due 05/01/09+(1)(2)(5)(9).... $ 25,000 $ 1,750
DeCrane Aircraft Holdings, Inc.
Guaranteed Sr. Sub. Notes, Series B
12.00% due 09/30/08................. 175,000 113,750
--------
115,500
--------
Apparel & Textiles -- 0.1%
Warnaco, Inc.
Sr. Notes
8.88% due 06/15/13.................. 50,000 55,625
--------
Automotive -- 0.9%
BREED Technologies, Inc.
Guaranteed Sr. Sub. Notes
9.25% due 04/15/08(1)(2)............ 500,000 0
Collins & Aikman Prods Co.
Sr. Sub. Notes
12.88% due 08/15/12*................ 50,000 46,125
Diamond Triumph Auto Glass, Inc.
Guaranteed Sr. Sub. Notes
9.25% due 04/01/08.................. 100,000 96,000
Exide Corp.
Term Loan
10.00% due 04/15/05+(2)(5).......... 225,000 0
Ford Motor Co.
Notes
7.45% due 07/16/31.................. 494,000 484,382
Hertz Corp.
Notes
6.35% due 06/15/10.................. 295,000 305,650
--------
932,157
--------
Banks -- 0.4%
Emigrant Capital Trust
Guaranteed Notes
4.43% due 12/10/04(3)*.............. 395,000 391,626
RBS Capital Trust IV
Trust Preferred Securities
2.78% due 09/29/49(3)............... 33,000 33,230
--------
424,856
--------
Broadcasting & Media -- 4.6%
Affinity Group, Inc.
Sr. Sub. Notes
9.00% due 02/15/12.................. 150,000 160,500
American Lawyer Media, Inc.
Guaranteed Sr. Notes, Series B
9.75% due 12/15/07.................. 175,000 175,219
Charter Communications Holdings, LLC
Sr. Sub. Notes
9.63% due 11/15/09.................. 925,000 728,437
Charter Communications Holdings, LLC
Sr. Sub. Disc. Notes
9.92% due 04/01/11(4)............... 125,000 96,250
Charter Communications Holdings, LLC
Sr. Notes
10.00% due 05/15/11................. 75,000 57,750
Principal Value
Security Description Amount** (Note 2)
----------------------------------------------------------
Broadcasting & Media (continued)
Charter Communications Holdings, LLC
Sr. Sub. Notes
10.25% due 01/15/10................. $ 25,000 $ 20,063
Charter Communications Holdings, LLC
Sr. Sub. Notes
10.75% due 10/01/09................. 450,000 369,000
Charter Communications Holdings, LLC
Sr. Sub. Notes
11.13% due 01/15/11................. 300,000 243,000
Cinemark, Inc.
Sr. Disc. Notes
9.75% due 03/15/14(4)............... 225,000 154,687
Clear Channel Communications, Inc.
Sr. Notes
5.75% due 01/15/13.................. 70,000 71,898
Clear Channel Communications, Inc.
Sr. Notes
6.00% due 11/01/06.................. 590,000 619,532
Coleman Cable, Inc.
Sr. Notes
9.88% due 10/01/12*................. 75,000 76,219
Cox Communications, Inc.
Sr. Notes
6.85% due 01/15/18.................. 35,000 35,575
CSC Holdings, Inc.
Sr. Notes
6.75% due 04/15/12*................. 75,000 75,375
CSC Holdings, Inc.
Sr. Notes, Series B
7.63% due 04/01/11.................. 50,000 52,688
CSC Holdings, Inc.
Sr. Debentures
7.63% due 07/15/18.................. 125,000 127,500
Fisher Communications, Inc.
Sr. Notes
8.63% due 09/15/14*................. 100,000 104,000
Haights Cross Operating Co.
Guaranteed Sr. Notes
11.75% due 08/15/11................. 100,000 110,000
Insight Communications Co., Inc.
Sr. Sub. Disc. Notes
12.25% due 02/15/11(4).............. 475,000 444,125
NextMedia Operating, Inc.
Guaranteed Sr. Sub. Notes
10.75% due 07/01/11................. 75,000 84,469
Paxson Communications Corp.
Guaranteed Sr. Sub. Notes
12.25% due 01/15/09(4).............. 275,000 235,812
Rogers Cable, Inc.
Sr. Notes
5.50% due 03/15/14.................. 125,000 115,000
Rogers Cable, Inc.
Sr. Notes
6.25% due 06/15/13.................. 50,000 49,000
Rogers Cable, Inc.
Bonds
8.75% due 05/01/32.................. 50,000 54,500
35
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount** (Note 2)
------------------------------------------------------------
BONDS & NOTES (continued)
Broadcasting & Media (continued)
Salem Communications Holding Corp.
Guaranteed Sr. Sub. Notes
7.75% due 12/15/10.................. $ 50,000 $ 52,750
TCI Communications, Inc.
Sr. Debentures
8.75% due 08/01/15.................. 47,000 58,584
Telex Communications, Inc.
Sr. Sec. Notes
11.50% due 10/15/08................. 50,000 54,000
Young Broadcasting, Inc.
Guaranteed Sr. Sub. Notes
8.75% due 01/15/14.................. 75,000 72,000
Young Broadcasting, Inc.
Guaranteed Sr. Sub. Notes
10.00% due 03/01/11................. 250,000 257,500
----------
4,755,433
----------
Business Services -- 0.6%
Allied Waste North America, Inc.
Guaranteed Sr. Notes
7.38% due 04/15/14.................. 125,000 120,313
HydroChem Industrial Services, Inc.
Guaranteed Sr. Sub. Notes, Series B
10.38% due 08/01/07................. 150,000 151,125
Mobile Mini, Inc.
Sr. Notes
9.50% due 07/01/13.................. 100,000 111,000
Monitronics International, Inc.
Sr. Sub. Notes
11.75% due 09/01/10*................ 225,000 245,250
----------
627,688
----------
Chemicals -- 1.7%
Associated Materials, Inc.
Sr. Disc. Notes
11.25% due 03/01/14(4)*............. 275,000 200,062
Equistar Chemicals LP
Sr. Notes
10.63% due 05/01/11................. 175,000 199,500
Foamex LP/Foamex Capital Corp.
Guaranteed Sr. Sec. Notes
10.75% due 04/01/09................. 50,000 47,000
Huntsman International, LLC
Guaranteed Sr. Notes
9.88% due 03/01/09.................. 225,000 248,062
Huntsman International, LLC
Sr. Sub Notes
10.13% due 07/01/09................. 150,000 157,500
Huntsman, LLC
Sr. Sec. Notes
11.63% due 10/15/10................. 125,000 144,687
Lubrizol Corp.
Sr. Debenture
6.50% due 10/01/34.................. 131,000 127,793
Lyondell Chemical Co.
Guaranteed Sr. Sec. Notes
9.50% due 12/15/08.................. 50,000 54,563
Principal Value
Security Description Amount** (Note 2)
-------------------------------------------------------------
Chemicals (continued)
Phosphate Resource Partners LP
Sr. Notes
7.00% due 02/15/08................. $125,000 $ 132,500
Rhodia SA
Sr. Sub. Notes
8.88% due 06/01/11................. 200,000 174,000
Rockwood Specialties, Inc.
Sr. Sub. Notes
10.63% due 05/15/11................ 150,000 165,000
RPM International, Inc.
Sr. Notes
4.45% due 10/15/09*................ 33,000 32,811
Westlake Chemical Corp.
Sr. Notes
8.75% due 07/15/11................. 81,000 90,923
----------
1,774,401
----------
Communication Equipment -- 0.4%
Rural Cellular Corp.
Sr. Sub. Notes
9.63% due 05/15/08................. 250,000 231,250
Rural Cellular Corp.
Sr. Sub. Notes
9.75% due 01/15/10................. 250,000 217,500
----------
448,750
----------
Computers & Business Equipment -- 0.2%
Seagate Technology HDD Holdings
Guaranteed Sr. Notes
8.00% due 05/15/09................. 50,000 53,250
Xerox Corp.
Sr. Notes
6.88% due 08/15/11................. 125,000 130,625
----------
183,875
----------
Conglomerate -- 0.6%
Tyco International Group SA
Participation Certificates
4.44% due 06/15/07*................ 590,000 602,921
----------
Education -- 0.1%
KinderCare Learning Centers, Inc.
Sr. Sub. Notes, Series B
9.50% due 02/15/09................. 57,000 57,784
----------
Electronics -- 0.2%
Freescale Semiconductor, Inc.
Sr. Notes
7.13% due 07/15/14*................ 125,000 130,000
ON Semiconductor Corp.
Sr. Notes
12.00% due 03/15/10................ 49,000 56,350
----------
186,350
----------
Energy Services -- 1.2%
ENI Coordination Center
Notes
5.25% due 12/27/07................. GBP 205,000 373,264
36
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount** (Note 2)
--------------------------------------------------------
BONDS & NOTES (continued)
Energy Services (continued)
Hanover Compressor Co.
Sub. Notes
zero coupon due 03/31/07........ $375,000 $ 316,875
Oslo Seismic Services, Inc.
1st Mtg. Notes
8.28% due 06/01/11.............. 172,883 185,931
Pride International, Inc.
Sr. Notes
7.38% due 07/15/14*............. 50,000 55,500
Seitel, Inc.
Sr. Notes
11.75% due 07/15/11*............ 100,000 102,500
Trico Marine Services, Inc.
Sr. Notes
8.88% due 05/15/12(1)(9)........ 500,000 220,000
----------
1,254,070
----------
Energy Sources -- 2.8%
Belden & Blake Corp.
Sr. Sec. Notes
8.75% due 07/15/12*............. 25,000 26,625
Chesapeake Energy Corp.
Sr. Notes
6.88% due 01/15/16.............. 50,000 52,250
Chesapeake Energy Corp.
Sr. Notes
7.50% due 09/15/13.............. 50,000 54,750
Chesapeake Energy Corp.
Guaranteed Sr. Notes
7.75% due 01/15/15.............. 25,000 27,250
Chesapeake Energy Corp.
Guaranteed Sr. Notes
9.00% due 08/15/12.............. 25,000 28,562
CITGO Petroleum Corp.
Sr. Notes
11.38% due 02/01/11............. 100,000 117,750
Colorado Interstate Gas Co.
Sr. Debentures
6.85% due 06/15/37.............. 150,000 156,000
Costilla Energy, Inc.
Sr. Notes
10.25% due 10/01/06+(1)(2)...... 500,000 0
Encore Acquisition Co.
Sr. Sub. Notes
6.25% due 04/15/14.............. 50,000 50,000
Encore Acquisition Co.
Guaranteed Sr. Notes
8.38% due 06/15/12.............. 75,000 83,625
Enterprise Products Operating LP
Sr. Notes
6.65% due 10/15/34*............. 132,000 132,337
EXCO Resources, Inc.
Guaranteed Sr. Notes
7.25% due 01/15/11.............. 75,000 79,500
Frontier Oil Corp.
Sr. Notes
6.63% due 10/01/11*............. 50,000 50,625
Principal Value
Security Description Amount** (Note 2)
--------------------------------------------------------------------
Energy Sources (continued)
KCS Energy, Inc.
Sr. Notes
7.13% due 04/01/12.......................... $ 125,000 $ 130,625
Mission Energy Holding Co.
Sr. Sec. Notes
13.50% due 07/15/08......................... 1,125,000 1,423,125
North American Energy Partners, Inc.
Sr. Notes
8.75% due 12/01/11*......................... 100,000 98,000
Pacific Energy Partners LP
Sr. Notes
7.13% due 06/15/14*......................... 125,000 135,313
Roseton Danskammer
Guaranteed Pass-Thru Certificates, Series B
7.67% due 11/08/16.......................... 150,000 139,500
Southern Natural Gas Co.
Sr. Notes
8.88% due 03/15/10.......................... 125,000 140,625
----------
2,926,462
----------
Entertainment Products -- 0.1%
Steinway Musical Instruments, Inc.
Guaranteed Sr. Notes
8.75% due 04/15/11.......................... 75,000 81,750
----------
Financial Services -- 6.7%
Alamosa Delaware, Inc.
Guaranteed Sr. Disc. Notes
12.00% due 07/31/09(4)...................... 93,000 95,790
Arch Western Finance, LLC
Guaranteed Sr. Notes
7.25% due 01/01/05*......................... 125,000 134,375
Athena Neurosciences Finance, LLC
Guaranteed Sr. Notes
7.25% due 02/21/08.......................... 325,000 329,062
Bear Island Paper Co., LLC
Sr. Sec. Notes, Series B
10.00% due 12/01/07......................... 250,000 245,000
Bluewater Finance, Ltd.
Guaranteed Sr. Notes
10.25% due 02/15/12......................... 175,000 189,875
Borden United States Finance Corp.
Sr. Sec. Notes
9.00% due 07/15/14*......................... 75,000 78,750
Chukchansi Economic Development Authority
Sr. Notes
14.50% due 06/15/09*........................ 600,000 750,000
CIT Group, Inc.
Sr. Notes
5.13% due 09/30/14.......................... 46,000 45,945
Citicorp Capital I
Guaranteed Capital Securities
7.93% due 02/15/27.......................... 590,000 652,317
Citigroup, Inc.
Sub. Notes
5.00% due 09/15/14*......................... 48,398 48,458
37
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount** (Note 2)
-------------------------------------------------------------
BONDS & NOTES (continued)
Financial Services (continued)
Consolidated Communications Holdings
Sr. Notes
9.75% due 04/01/12*.................... 200,000 205,000
Duke Capital LLC
Notes
5.67% due 08/15/14..................... 75,000 76,496
ESI Tractebel Acquisition Corp.
Guaranteed Bonds, Series B
7.99% due 12/30/11..................... 233,000 240,573
General Electric Capital Corp.
Bonds
4.75% due 09/15/14..................... 40,000 39,759
Goldman Sachs Group, Inc.
Sr. Notes
6.13% due 02/15/33..................... 232,000 233,027
H & E Equipment Services, LLC
Guaranteed Sr. Sec. Notes
11.13% due 06/15/12.................... 125,000 128,750
Hilcorp Energy I LP/Hilcorp Finance Co.
Sr. Notes
10.50% due 09/01/10*................... 250,000 276,875
Huntsman Advanced Materials, LLC
Sr. Sec. Notes
11.00% due 07/15/10*................... 175,000 203,000
iPCS Escrow Co.
Sr. Notes
11.50% due 05/01/12*................... 175,000 183,750
iPCS, Inc.
14.00% due 07/15/10+(1)(2)............. 2,075,000 0
J.P. Morgan Chase Capital
XIII Capital Securities
2.88% due 09/30/34(3).................. 53,000 52,466
Labranche & Co., Inc.
Sr. Notes
11.00% due 05/15/12*................... 75,000 77,063
Madison River Capital, LLC/
Madison River Finance Corp.
Sr. Notes, Series B
13.25% due 03/01/10.................... 500,000 530,000
MedCath Holdings Corp.
Notes
9.88% due 07/15/12*.................... 75,000 78,375
Muzak, LLC/ Muzak Finance Corp.
Guaranteed Sr. Sub. Notes
9.88% due 03/15/09..................... $ 225,000 $165,375
Nexstar Finance Holdings, LLC
Guaranteed Sr. Disc. Notes
11.38% due 04/01/13(4)................. 300,000 229,875
NGC Corp. Capital Trust I
Guaranteed Sub. Notes, Series B
8.32% due 06/01/27..................... 800,000 640,000
PCA, LLC
Sr. Notes
11.88% due 08/01/09.................... 175,000 187,250
Px Escrow Corp.
Sr. Sub. Disc. Notes
9.63% due 02/01/06(4).................. 125,000 106,250
Principal Value
Security Description Amount** (Note 2)
------------------------------------------------------
Financial Services (continued)
Qwest Capital Funding, Inc.
Guaranteed Notes
6.88% due 07/15/28........... 25,000 17,938
Qwest Capital Funding, Inc.
Guaranteed Notes
7.90% due 08/15/10........... 325,000 299,812
Rainbow National Services LLC
Guaranteed Sr. Sub. Notes
10.38% due 09/01/14*......... 75,000 78,563
Terra Capital, Inc.
Guaranteed Sr. Sec. Notes
11.50% due 06/01/10.......... 250,000 282,500
Terra Capital, Inc.
Guaranteed Sr. Sec. Notes
12.88% due 10/15/08.......... 75,000 93,000
----------
6,995,269
----------
Food, Beverage & Tobacco -- 0.5%
Coca-Cola Enterprises, Inc.
Debentures
8.50% due 02/01/22........... 78,000 102,969
Doane Pet Care Co.
Sr. Sub. Notes
9.75% due 05/15/07........... 50,000 47,875
Doane Pet Care Co.
Guaranteed Sr. Notes
10.75% due 03/01/10.......... 50,000 53,375
Wornick Co.
Sr. Sec. Notes
10.88% due 07/15/11*......... 250,000 267,500
----------
471,719
----------
Forest Products -- 1.3%
Caraustar Industries, Inc.
Notes
7.38% due 06/01/09........... 25,000 25,875
Caraustar Industries, Inc.
Guaranteed Sr. Sub. Notes
9.88% due 04/01/11........... $ 75,000 $ 80,250
Constar International, Inc.
Sr. Sub. Notes
11.00% due 12/01/12.......... 100,000 94,500
Crown Cork & Seal Co., Inc.
Notes
8.00% due 04/15/23........... 350,000 325,500
FiberMark, Inc.
Sr. Notes
10.75% due 04/15/11(1)(5)(9). 125,000 78,750
Georgia-Pacific Corp.
Debentures
7.75% due 11/15/29........... 25,000 26,875
Georgia-Pacific Corp.
Sr. Notes
8.00% due 1/15/24............ 200,000 227,500
Graham Packaging Co., Inc.
Sr. Notes
8.50% due 10/15/12*.......... 25,000 25,500
38
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------------
BONDS & NOTES (continued)
Forest Products (continued)
Pliant Corp.
Sr. Sec. Notes
11.13% due 09/01/09.......................... 75,000 78,000
Speciality Paperboard, Inc.
Sr. Notes
9.38% due 10/15/06(1)(9)..................... 550,000 346,500
----------
1,309,250
----------
Health Services -- 0.9%
Concentra Operating Corp.
Guaranteed Sr. Sub. Notes
9.13% due 06/01/12*.......................... 50,000 54,750
HCA, Inc.
Sr. Notes
6.95% due 05/01/12........................... 200,000 215,953
IASIS Healthcare Capital Corp.
Sr. Sub. Notes
8.75% due 06/15/14*.......................... 125,000 130,937
Pediatric Services of America, Inc.
Guaranteed Sr. Sub. Notes
10.00% due 04/15/08(2)....................... 25,000 25,250
Psychiatric Solutions, Inc.
Guaranteed Sr. Sub. Notes
10.63% due 06/15/13.......................... 100,000 113,000
Team Health, Inc.
Sr. Sub. Notes
9.00% due 04/01/12*.......................... 125,000 124,375
Tenet Healthcare Corp.
Sr. Notes
5.00% due 07/01/07........................... 100,000 99,250
Tenet Healthcare Corp.
Sr. Notes
6.50% due 06/01/12........................... 125,000 111,875
Triad Hospitals, Inc.
Sr. Notes
7.00% due 05/15/12........................... 25,000 26,125
Triad Hospitals, Inc.
Sr. Sub. Notes
7.00% due 11/15/13........................... 75,000 76,313
----------
977,828
----------
Insurance -- 0.8%
Crum & Forster Holdings Corp.
Sr. Notes
10.38% due 06/15/13.......................... $125,000 $ 133,437
LNR Property Corp.
Sr. Sub. Notes
7.63% due 07/15/13........................... 75,000 82,125
Ohio Casualty Corp.
Notes
7.30% due 06/15/14........................... 590,000 622,628
Prudential Financial, Inc.
Tranche Trust 00005
5.10% due 09/20/14........................... 33,000 33,028
----------
871,218
----------
Leisure & Tourism -- 4.5%
American Airlines, Inc.
Pass-Thru Certificates, Series 2001-1, Class
A2
6.82% due 05/23/11........................... 100,000 88,693
Principal Value
Security Description Amount** (Note 2)
----------------------------------------------------------------------
Leisure & Tourism (continued)
American Airlines, Inc.
Pass-Thru Certificates, Series 2001-2, Class C
7.80% due 04/01/08.............................. 300,000 249,510
Atlas Air, Inc.
Pass-Thru Certificates, Series 1999-1, Class A-
2
6.88% due 07/02/09.............................. 299,758 279,796
Atlas Air, Inc.
Pass-Thru Certificates, Series 1999-1, Class B
7.63% due 01/02/15.............................. 751,504 533,294
Atlas Air, Inc.
Pass-Thru Certificates, Series 2000-1
8.71% due 07/02/21.............................. 281,513 277,023
Atlas Air, Inc.
Pass-Thru Certificates, Series 1999-1, Class C
8.77% due 01/02/11.............................. 62,428 26,197
Atlas Air, Inc.
Pass-Thru Certificates Series 2000-1, Class B
9.06% due 07/02/17.............................. 157,740 117,854
Bally Total Fitness Holding Corp.
Sr. Notes
10.50% due 07/15/11............................. 100,000 95,000
Continental Airlines, Inc.
Pass-Thru Certificates, Series 1999-1, Class C
6.95% due 08/02/09.............................. 146,833 111,739
Continental Airlines, Inc.
Pass-Thru Certificates, Series 1999-2, Class C1
7.73% due 03/15/11.............................. 46,804 33,284
Continental Airlines, Inc.
Secured Pass-Thru Certificates,
Series 2000-2, Class B
8.31% due 10/02/19.............................. 134,914 110,325
Continental Airlines, Inc.
Pass-Thru Certificates, Series 2004, Class J
9.56% due 09/01/19.............................. 586,641 583,226
Courtyard by Marriott II
Sr. Sec. Notes, Series B
10.75% due 02/01/08............................. 150,000 150,750
Delta Air Lines, Inc.
Pass-Thru Certificates, Series 2002-1, Class C
7.78% due 01/02/12.............................. 166,968 64,078
Delta Air Lines, Inc.
Sr. Notes
10.00% due 08/15/08............................. $175,000 $ 52,500
Eldorado Resorts, LLC
Sr. Notes
9.00% due 01/15/14(2)(5)........................ 425,000 425,000
Hilton Hotels Corp.
Sr. Notes
7.50% due 12/15/17.............................. 38,000 43,510
Hollywood Casino Shreveport/
Shreveport Capital Corp.
Guaranteed Sr. Sec. Notes
13.00% due 08/01/06+(1)......................... 400,000 338,500
Riviera Holdings Corp.
Guaranteed Sr. Notes
11.00% due 06/15/10............................. 135,000 148,500
39
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount** (Note 2)
------------------------------------------------------------
BONDS & NOTES (continued)
Leisure & Tourism (continued)
Six Flags, Inc.
Sr. Notes
9.75% due 04/15/13.................. 375,000 354,375
True Temper Sports, Inc.
Guaranteed Sr. Sub. Notes
8.38% due 09/15/11.................. 150,000 139,500
Waterford Gaming, LLC
Sr. Notes
8.63% due 09/15/12*................. 182,000 192,920
Worldspan LP
Sr. Notes
9.63% due 06/15/11.................. 250,000 226,875
----------
4,642,449
----------
Machinery -- 0.3%
Dresser, Inc.
Guaranteed Sr. Sub. Notes
9.38% due 04/15/11.................. 75,000 82,500
Navistar International Corp.
Sr. Notes
7.50% due 06/15/11.................. 50,000 53,375
Stanadyne Corp.
Sr. Sub. Notes
10.00% due 08/15/14*................ 125,000 130,000
Venture Holdings Co., LLC
Guaranteed Sr. Sub. Notes
11.00% due 06/01/07+(1)(9).......... 100,000 4,500
----------
270,375
----------
Medical Products -- 0.3%
Encore Medical IHC, Inc.
Sr. Sub. Notes
9.75% due 10/01/12*................. 75,000 74,063
Inverness Medical Innovations, Inc.
Sr. Sub. Notes
8.75% due 02/15/12*................. 125,000 125,625
Universal Hospital Services, Inc.
Sr. Notes
10.13% due 11/01/11................. 125,000 126,875
----------
326,563
----------
Metals & Mining -- 0.7%
Allegheny Technologies, Inc.
Notes
8.38% due 12/15/11.................. $ 75,000 $ 79,875
CSN Islands VII Corp.
Guaranteed Notes
10.75% due 09/12/08*................ 150,000 167,250
CSN Islands VIII Corp.
Guaranteed Sr. Notes
9.75% due 12/16/13*................. 200,000 200,500
Eagle-Picher, Inc.
Sr. Notes
9.75% due 09/01/13.................. 175,000 178,500
Renco Metals, Inc.
Guaranteed Sr. Notes
11.50% due 07/01/03(1)(2)(5)(9)(12). 500,000 0
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------
Metals & Mining (continued)
Ryerson Tull, Inc.
Notes
9.13% due 07/15/06................ 75,000 79,125
--------
705,250
--------
Pharmaceuticals -- 0.6%
Curative Health Services, Inc.
Sr. Notes
10.75% due 05/01/11............... 150,000 137,250
Merck & Co., Inc.
Debenture
5.95% due 12/01/28................ 116,000 121,591
NeighborCare, Inc.
Guaranteed Sr. Sub. Notes
6.88% due 11/15/13................ 225,000 234,000
Schering-Plough Co.
Sr. Notes
6.50% due 12/01/33................ 58,000 62,801
Wyeth
Notes
6.95% due 03/15/11................ 58,000 64,495
--------
620,137
--------
Real Estate Investment Trusts -- 0.6%
CarrAmerica Realty Corp.
Notes
5.13% due 09/01/11................ 35,000 35,397
National Health Investors, Inc.
Notes
7.30% due 07/16/07................ 200,000 204,751
Omega Healthcare Investors, Inc.
Sr. Notes
6.95% due 08/01/07................ 50,000 51,750
Omega Healthcare Investors, Inc.
Sr. Notes
7.00% due 04/01/14*............... 75,000 76,125
Senior Housing Properties Trust
Sr. Notes
8.63% due 01/15/12................ 202,000 224,725
Vornado Realty LP
Notes
4.50% due 08/15/09................ $ 46,000 $ 46,097
--------
638,845
--------
Restaurants -- 0.4%
Advantica Restaurant Group, Inc.
Sr. Notes
11.25% due 01/15/08............... 175,000 181,563
Denny's Holdings, Inc.
Sr. Notes
10.00% due 10/01/12*.............. 250,000 250,937
Sbarro, Inc.
Sr. Notes
11.00% due 09/15/09............... 19,000 17,765
--------
450,265
--------
40
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount** (Note 2)
------------------------------------------------------------
BONDS & NOTES (continued)
Retail Stores -- 1.7%
Alderwoods Group, Inc.
Sr. Notes
7.75% due 09/15/12*................. 50,000 52,875
Blockbuster, Inc.
Sr. Sub. Notes
9.00% due 09/01/12*................. 50,000 51,875
Collins & Aikman Floor Cover
Guaranteed Sr. Sub. Notes
9.75% due 02/15/10.................. 75,000 79,500
J.C. Penney Co., Inc.
Notes
6.88% due 10/15/15.................. 150,000 159,750
Jostens Holding Corp.
Sr. Disc. Notes
10.25% due 12/01/13(4).............. 190,000 130,625
May Department Stores Co.
Notes
3.95% due 07/15/07*................. 590,000 594,596
Rent-Way, Inc.
Sr. Notes
11.88% due 06/15/10................. 175,000 190,750
Rite Aid Corp.
Debentures
6.88% due 08/15/13.................. 50,000 43,750
Saks, Inc.
Guaranteed Notes
7.00% due 12/01/13.................. 125,000 127,500
Saks, Inc.
Guaranteed Notes
9.88% due 10/01/11.................. 100,000 119,000
Stater Bros. Holdings, Inc.
Sr. Notes
8.13% due 06/15/12*................. 175,000 183,313
----------
1,733,534
----------
Telecommunications -- 4.9%
AirGate PCS, Inc.
Sr. Sub. Sec. Notes
9.38% due 09/01/09.................. 198,300 201,275
Alaska Communications Holdings, Inc.
Guaranteed Sr. Sub. Notes
9.38% due 05/15/09.................. $275,000 $ 259,875
American Cellular Corp.
Sr. Notes, Series B
10.00% due 08/01/11................. 325,000 263,250
Bell Atlantic Pennsylvania, Inc.
Debentures
8.75% due 08/15/31.................. 70,000 92,169
Cincinnati Bell, Inc.
Notes
7.25% due 06/15/23.................. 25,000 23,406
Cincinnati Bell, Inc.
Guaranteed Sr. Sub. Notes
8.38% due 01/15/14.................. 25,000 22,813
Citizens Communications Co.
Sr. Notes
9.00% due 08/15/31.................. 590,000 602,537
Principal Value
Security Description Amount** (Note 2)
-----------------------------------------------------------------
Telecommunications (continued)
FairPoint Communications, Inc.
Sr. Sub. Notes, Series B
9.50% due 05/01/08....................... 325,000 325,000
FairPoint Communications, Inc.
Sr. Sub. Notes
12.50% due 05/01/10...................... 250,000 267,500
IWO Holdings, Inc.
Guaranteed Sr. Notes
14.00% due 01/15/11+(1).................. 1,625,000 715,000
LCI International, Inc.
Sr. Notes
7.25% due 06/15/07....................... 1,100,000 998,250
Nextel Communications, Inc.
Sr. Notes
5.95% due 03/15/14....................... 100,000 98,000
Qwest Corp.
Debentures
7.13% due 11/15/43....................... 300,000 249,000
Qwest Corp.
Debentures
7.25% due 10/15/35....................... 450,000 385,875
Qwest Corp.
Debentures
8.88% due 06/01/31....................... 50,000 49,375
Triton PCS, Inc.
Guaranteed Sr. Sub. Notes
8.75% due 11/15/11....................... 75,000 51,000
Triton PCS, Inc.
Guaranteed Sr. Sub. Notes
9.38% due 02/01/11....................... 545,000 391,038
TSI Telecommunications Services, Inc.
Guaranteed Sr. Sub. Notes
12.75% due 02/01/09...................... 50,000 56,000
----------
5,051,363
----------
Transportation -- 0.2%
Burlington Northern Santa Fe Corp.
Debentures
8.13% due 04/15/20....................... $ 162,000 $ 202,778
Petroleum Helicopters, Inc.
Guaranteed Sr. Notes, Series B
9.38% due 05/01/09....................... 50,000 53,750
----------
256,528
----------
Utilities -- 3.9%
AES Corp.
Sr. Sub. Debentures
8.88% due 11/01/27....................... 150,000 144,188
AES Drax Energy, Ltd.
Guaranteed Sr. Sub. Sec. Notes, Series B
11.50% due 08/30/10+(1).................. 725,000 3,625
Appalachian Power Co.
Sr. Notes, Series G
3.60% due 05/15/08....................... 42,000 41,725
CenterPoint Energy Resources Corp.
Debentures
8.90% due 12/15/06....................... 565,000 627,704
41
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount** (Note 2)
------------------------------------------------------------
BONDS & NOTES (continued)
Utilities (continued)
Cincinnati Bell Telephone Co.
Notes
7.18% due 12/15/23................. 50,000 47,813
Cincinnati Bell Telephone Co.
Guaranteed Notes
7.20% due 11/29/23................. 225,000 215,156
Connecticut Light & Power Co.
1st Mtg. Bonds, Series B
5.75% due 09/15/34................. 139,000 139,768
Dynegy Holdings, Inc.
Sr. Notes
8.75% due 02/15/12................. 100,000 104,000
Edison Mission Energy
Sr. Notes
9.88% due 04/15/11................. 150,000 174,750
El Paso Natural Gas Co.
Debentures
8.63% due 01/15/22................. 450,000 495,000
El Paso Production Holding Co.
Guaranteed Sr. Notes
7.75% due 06/01/13................. 325,000 325,813
Ferrellgas LP
Sr. Notes
6.75% due 05/01/14................. 225,000 229,500
Kinder Morgan Energy Partners, LP
Notes
7.75% due 03/15/32................. 115,000 136,126
Mirant Corp.
Sr. Notes
7.90% due 07/15/09(1)*............. 1,125,000 711,562
Reliant Resources, Inc.
Notes
9.50% due 7/15/13.................. 125,000 135,781
Tiverton/Rumford Power Assoc., Ltd.
Guaranteed Notes
9.00% due 07/15/18*................ 124,172 90,645
Williams Cos, Inc.
Notes
7.88% due 09/01/21................. $ 425,000 $ 471,750
-----------
4,094,906
-----------
Total Bonds & Notes
(cost $43,290,087)................. 43,843,121
-----------
ASSET-BACKED SECURITIES -- 3.3%
Financial Services -- 3.3%
Commercial Mtg. Asset Trust
Commercial Mtg. Certificates,
Series 1999-C1, Class C
7.35% due 10/18/04(11)............. 1,200,000 1,422,857
DLJ Commercial Mtg. Corp.
Commercial Mtg. Certificates,
Series 1998-CG1, Class S
0.64% due 10/01/04(6)(7)(11)....... 8,040,462 187,347
DLJ Commercial Mtg. Corp.
Commercial Mtg. Certificates
Series 1998-CG1, Class S
1.00% due 10/12/04(6)(7)(11)....... 6,735,506 206,119
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------------
Financial Services (continued)
Mid-State Trust Asset Backed Notes,
Series 6, Class A1 7.34% due 7/01/35........ 843,679 907,513
PNC Mtg. Securities Corp. Mtg. Certificates,
Series 1999-1, Class CB2
6.80% due 10/01/04(7)10).................... 333,338 332,892
PNC Mtg. Securities Corp. Mtg. Certificates,
Series 1992-2, Class DB3
6.91% due 04/25/29(7)(10)................... 359,542 365,478
---------
Total Asset-Backed Securities
(cost $3,093,720)........................... 3,422,206
---------
FOREIGN BONDS & NOTES -- 37.6%
Broadcasting & Media -- 0.5%
CF Cable TV, Inc.
Guaranteed Sr. Notes
9.13% due 07/15/07.......................... 50,000 52,187
Telenet Group Holding NV
Sr. Disc. Notes
11.50% due 06/15/14(1)(4)*.................. 625,000 459,375
---------
511,562
---------
Financial Services -- 0.2%
Deutsche Telekom International Finance BV
Guaranteed Bonds
8.25% due 12/15/04.......................... 139,000 179,668
---------
Food, Beverage & Tobacco -- 0.1%
Vitro Envases Norteamerica SA
Sr. Sec. Notes
10.75% due 07/23/11*........................ 150,000 144,917
---------
Forest Products -- 0.1%
Abitibi-Consolidated, Inc.
Debenture
8.55% due 08/01/10.......................... 100,000 107,250
---------
Government Agency -- 33.9%
Australia Commonwealth
Bonds
6.75% due 11/15/06.......................... AUD1,100,000 825,919
Canadian Government
Bond
4.25% due 09/01/08.......................... CAD 175,000 140,965
Canadian Government
Bonds
5.75% due 06/01/29.......................... CAD 420,000 362,583
Canadian Government
Bonds
5.75% due 09/01/06.......................... CAD 735,000 610,054
Deutsche Bundesrepublik
Bonds
5.63% due 01/04/28.......................... EUR 200,000 283,349
Dutch Government
Bonds
5.25% due 07/15/08.......................... 205,000 274,493
Federal Republic of Brazil
Bonds
3.13% due 04/15/12(3)....................... 1,905,886 1,765,422
Federal Republic of Brazil
Bonds
8.00% due 04/15/14.......................... 1,334,606 1,319,659
42
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount** (Note 2)
-----------------------------------------------------------
FOREIGN BONDS & NOTES (continued)
Government Agency (continued)
Federal Republic of Brazil
Bonds
8.88% due 04/15/24............ $ 145,000 $ 138,910
Federal Republic of Brazil
Bonds
10.13% due 05/15/27........... 245,000 259,700
Federal Republic of Brazil
Notes
10.25% due 06/17/13........... 580,000 641,770
Federal Republic of Brazil
Bonds
11.00% due 08/17/40........... 2,260,000 2,533,460
Federal Republic of Brazil
Bonds
12.00% due 04/15/10........... 150,000 178,725
Federal Republic of Brazil
Notes
14.50% due 10/15/09........... 250,000 322,500
Federal Republic of Brazil
Notes
11.00% due 01/11/12........... 600,000 688,500
Government of Japan
Bonds
1.10% due 06/20/05............ JPY107,000,000 979,990
Italian Government
Bonds
3.75% due 12/14/07............ 590,000 597,084
Kingdom of Denmark
Bonds
7.00% due 11/15/07............ DKK 2,500,000 467,052
Kingdom of Sweden
Bonds
5.00% due 01/28/09............ SEK 3,000,000 433,899
Kingdom of Sweden
Bonds
5.50% due 10/08/12............ SEK 4,245,000 634,082
Kingdom of Sweden
Bonds
6.75% due 05/05/14............ SEK 3,000,000 489,898
Republic of Colombia
Notes
8.25% due 12/22/14............ 125,000 123,437
Republic of Colombia
Notes
10.75% due 01/15/13........... 470,000 538,620
Republic of Colombia
Bonds
11.75% due 02/25/20........... 300,000 366,750
Republic of Ecuador
Bonds
8.00% due 08/15/05(4)......... 730,000 591,300
Republic of Greece
Sr. Notes
4.65% due 04/19/07............ EUR 300,000 389,749
Republic of Greece
5.25% due 05/18/12............ EUR 310,000 419,301
Principal Value
Security Description Amount** (Note 2)
--------------------------------------------------
Government Agency (continued)
Republic of Italy
Bonds
5.25% due 12/15/05........ EUR 695,000 $892,923
Republic of Italy
Bonds
5.25% due 11/01/29........ EUR 333,000 442,940
Republic of Panama
Bonds
9.38% due 01/16/23........ $ 25,000 27,250
Republic of Panama
Bonds
9.63% due 02/08/11........ 400,000 459,000
Republic of Peru
Bonds
5.00% due 03/01/07(7)..... 176,000 161,920
Republic of Peru
Bonds
8.38% due 05/03/16........ 260,000 270,400
Republic of Peru
Guaranteed Global Bonds
9.13% due 02/21/12........ 305,000 341,600
Republic of Peru
Notes
9.88% due 02/06/15........ 75,000 86,250
Republic of Peru
Bonds
4.50% due 03/07/05(7)..... 100,000 88,750
Republic of Philippines
Bonds
8.25% due 01/15/14........ 300,000 294,750
Republic of Philippines
Bonds
9.00% due 02/15/13........ 120,000 123,600
Republic of Philippines
Bonds
10.63% due 03/16/25....... 380,000 405,650
Republic of Turkey
Notes
7.25% due 03/15/15........ 125,000 123,216
Republic of Turkey
Notes
9.00% due 06/30/11........ 330,000 366,919
Republic of Turkey
Notes
9.50% due 01/15/14........ 130,000 147,550
Republic of Turkey
Notes
11.00% due 01/14/13....... 355,000 435,319
Republic of Turkey
Bonds
11.75% due 06/15/10....... 625,000 775,000
Republic of Turkey
Sr. Bonds
11.88% due 01/15/30....... 390,000 538,200
Republic of Uruguay
Bonds
7.50% due 03/15/15........ 225,000 199,125
43
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount** (Note 2)
------------------------------------------------------------
FOREIGN BONDS & NOTES (continued)
Government Agency (continued)
Republic of Venezuela
Debentures
2.75% due 12/18/07(3).......... $ 416,650 $ 414,567
Republic of Venezuela
Bonds
8.50% due 10/08/14............. 250,000 246,375
Republic of Venezuela
Bonds
9.25% due 09/15/27............. 1,520,000 1,497,960
Russia Government International
Bonds
5.00% due 03/31/30(4)*......... 650,000 625,625
Russian Federation
Debentures
3.00% due 05/14/08............. 925,000 837,125
Russian Federation
Bonds
8.25% due 03/31/10............. 520,000 565,500
Russian Federation
Bonds
5.00% due 03/31/30(4).......... 2,890,000 2,779,891
Spanish Government
Bonds
5.15% due 07/30/09............. EUR 238,000 320,402
Spanish Government
Bonds
6.15% due 01/31/13............. EUR 196,000 282,959
United Kingdom
Bonds
7.50% due 12/07/06............. GBP 152,000 291,387
United Mexican States
Notes
5.88% due 01/15/14............. 200,000 203,000
United Mexican States
Notes
6.38% due 01/16/13............. 475,000 500,175
United Mexican States
Notes
6.63% due 03/03/15............. 825,000 874,500
United Mexican States
Notes
7.50% due 01/14/12............. 525,000 591,675
United Mexican States
Bonds
8.00% due 12/24/08............. MXN 12,395,000 1,033,370
United Mexican States
Bonds
8.13% due 12/30/19............. 445,000 510,638
United Mexican States
Bonds
8.30% due 08/15/31............. 325,000 369,688
United Mexican States
Notes
8.38% due 01/14/11............. 525,000 615,562
-----------
35,117,932
-----------
Principal
Amount/ Value
Security Description Shares** (Note 2)
-----------------------------------------------------------
Insurance -- 0.4%
Fairfax Financial Holdings, Ltd.
Notes
7.38% due 04/15/18................ $ 75,000 $ 60,750
Fairfax Financial Holdings, Ltd.
Notes
8.25% due 10/01/15................ 300,000 273,000
XL Capital Ltd.
Sr. Notes
5.25% due 09/15/14................ 70,000 70,262
----------
404,012
----------
Leisure & Tourism -- 0.1%
Grupo Posadas S A De CV
Sr. Notes
8.75% due 10/04/11*............... 125,000 127,500
----------
Metals & Mining -- 0.1%
Noranda, Inc.
Notes
6.00% due 10/15/15................ 81,000 86,392
Vitro SA de CV
Notes
11.75% due 11/01/13*.............. 50,000 46,375
----------
132,767
----------
Pharmaceuticals - 0.7%
Abbott Japan
Guaranteed Bonds
1.05% due 11/06/08................ 76,000,000 700,364
----------
Retail Stores -- 0.2%
Jean Coutu Group, Inc.
Sr. Sub. Notes
8.50% due 08/01/14*............... 250,000 248,125
----------
Telecommunications -- 0.8%
Empresa Brasileira De Telcom
Guaranteed Sr. Notes, Series B
11.00% due 12/15/08............... 25,000 27,687
Kyivstar GSM Loan Participation
Notes
10.38% due 08/17/09*.............. 100,000 106,500
Telecom Italia Capital SA
Guaranteed Sr. Notes
6.00% due 9/30/34*................ 232,000 226,607
Telus Corp.
Notes
7.50% due 06/01/07................ 590,000 646,969
----------
1,007,763
----------
Utilities -- 0.3%
Calpine Canada Energy Finance, ULC
Guaranteed Sr. Notes
8.50% due 05/01/08................ 300,000 207,000
Cia de Saneamento Basico do
Estado de Sao Paulo
Notes
12.00% due 06/20/08*.............. 75,000 80,437
----------
287,437
----------
44
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal
Amount/ Value
Security Description Shares** (Note 2)
--------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS (continued)
Total Foreign Bonds & Notes
(cost $35,803,549)........................ 38,969,297
-----------
U.S. GOVERNMENT OBLIGATIONS -- 1.9%
U.S Treasury Bonds -- 0.8%
5.38% due 02/15/31......................... 761,000 815,221
-----------
U.S. Treasury Notes -- 1.1%
2.00% due 08/31/05......................... $ 500,000 $ 499,239
4.75% due 05/15/14......................... 86,000 90,273
7.00% due 07/15/06......................... 495,000 533,517
-----------
1,123,029
-----------
Total U.S. Government Obligations
(cost $1,928,580)......................... 1,938,250
-----------
U.S. GOVERNMENT AGENCY -- 8.5%
Federal Home Loan Mortgage Corporation -- 1.2%
5.00% due 05/01/34........................ 1,165,534 1,155,461
6.50% due 05/01/29........................ 18,328 19,264
7.00% due 06/01/29........................ 30,605 32,511
8.50% due 05/01/08........................ 45,916 49,195
10.00% due 05/15/20(10)................... 38,454 38,495
11.57% due 10/15/04(6)(10)................ 25,638 501
-----------
1,295,427
-----------
Federal National Mortgage Association -- 7.1%
0.45% due 10/18/04(6)(7)(10).............. 4,255,382 59,761
0.54% due 10/18/04(6)(7)(10).............. 1,657,720 16,663
0.83% due 10/01/04(6)(7)(10).............. 3,636,582 153,202
1.33% due 10/01/04(6)(7)(10).............. 1,970,238 62,459
4.50% due 06/01/19........................ 759,614 757,854
5.00% due 06/01/19........................ 765,548 778,764
5.50% due 07/01/19........................ 753,147 779,329
6.00% due 05/01/34........................ 1,091,276 1,130,423
6.50% due 04/01/34........................ 908,439 953,685
7.50% due 09/01/30........................ 13,647 14,627
8.00% due 11/01/28........................ 56,621 62,031
8.80% due 01/25/19(10).................... 74,544 81,809
10.40% due 04/25/19(10)................... 13,420 14,683
13.00% due 11/15/15....................... 14,181 16,240
5.50% due 01/01/29........................ 15,540 15,848
5.50% due 06/01/29........................ 222,355 226,344
7.50% due 01/01/30........................ 22,835 24,483
5.50% due 06/01/34........................ 1,938,151 1,966,220
6.00% due 02/01/32........................ 230,437 238,860
-----------
7,353,285
-----------
Government National Mortgage Association -- 0.2%
7.50% due 07/15/27........................ 32,014 34,532
7.50% due 10/15/27........................ 120,624 130,110
7.50% due 10/15/27........................ 10,716 11,559
-----------
176,201
-----------
Total U.S. Government Agency
(cost $8,950,443)......................... 8,824,913
-----------
COMMON STOCK -- 2.3%
Automotive -- 0.0%
Exide Technologies, Inc.+.................. 1,088 17,245
-----------
Banks -- 1.0%
iPCS, Inc.+................................ 59,130 1,079,122
-----------
Broadcasting & Media -- 0.1%
Cablevision Systems Corp., Class A+........ 5,620 113,974
-----------
Principal
Amount/ Value
Security Description Shares** (Note 2)
---------------------------------------------------------------------
COMMON STOCK (continued)
Financial Services -- 0.0%
Ono Finance, PLC(2)(5)*....................... $ 100 $ 0
----------
Leisure & Tourism -- 0.2%
John Q. Hammons Hotels, Inc.+................. 2,875 31,481
MGM Mirage, Inc.+............................. 4,275 212,254
----------
243,735
----------
Machinery -- 0.2%
NES Rentals Holding, Inc.+.................... 19,435 145,762
----------
Real Estate Investment Trusts -- 0.2%
Meristar Hospitality Corp.+................... 31,820 173,419
----------
Telecommunications -- 0.6%
AirGate PCS, Inc.+............................ 5,600 109,760
AirGate PCS, Inc.(2).......................... 15,419 302,213
Dobson Communications Corp.+.................. 270 359
IMPSAT Fiber Networks, Inc.+.................. 4,019 20,939
Telewest Global, Inc.+........................ 16,202 188,267
----------
621,538
----------
Total Common Stock
(cost $2,432,898)............................ 2,394,795
----------
PREFERRED STOCK -- 0.4%
Broadcasting & Media -- 0.2%
Paxson Communications Corp. 13.50%(8)......... 24 180,000
----------
Financial Services -- 0.0%
TCR Holdings, Class B(2)...................... 570 6
TCR Holdings, Class C(2)...................... 314 3
TCR Holdings, Class D(2)...................... 827 8
TCR Holdings, Class E(2)...................... 1,711 17
----------
34
----------
Retail Stores -- 0.1%
General Nutrition Centers, Inc. 12.00%(2)(5)*. 100 106,000
Rent-Way, Inc.(2)(5)(13)...................... 4 35,000
----------
141,000
----------
Telecommunications -- 0.1%
Alamosa Holdings, Inc. 7.50%.................. 208 122,767
----------
Total Preferred Stock
(cost $414,914).............................. 443,801
----------
RIGHTS -- 0.1%
Government Agency -- 0.1%
United Mexico States Series C(2).............. 1,400,000 26,600
United Mexico States Series E(2).............. 1,400,000 29,400
United Mexico States Series D(2).............. 1,400,000 32,200
----------
88,200
----------
Total Rights
(cost $0).................................... 88,200
----------
WARRANTS -- 0.0%
Automotive -- 0.0%
Exide Technologies, Inc. Expires 05/15/11..... 2,720 8,108
----------
Broadcasting & Media -- 0.0%
Knology Holdings, Inc. Expires
10/22/07(2)(5)*.............................. 1,500 375
----------
45
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------
WARRANTS (continued)
Telecommunications -- 0.0%
GT Group Telecom, Inc. Expires
02/01/10(2)(5)*...................... $ 150 $ 2
Leap Wireless International, Inc.
Expires 04/15/10(2)(5)*.............. 500 0
Leap Wireless International, Inc.
Expires 04/15/10(2)(5)*.............. 350 0
------------
2
------------
Total Warrants
(cost $37,595)....................... 8,485
------------
Total Investment Securities -- 96.3%
(cost $95,951,786)................... 99,933,068
------------
SHORT-TERM SECURITIES -- 0.3%
Time Deposits -- 0.3%
Time Deposit with State Street Bank &
Trust Co............................. 353,000 353,000
------------
REPURCHASE AGREEMENT -- 0.5%
State Street Bank & Trust Co. Joint
Repurchase Agreement (Note 2)........ 549,000 549,000
------------
TOTAL INVESTMENTS --
(cost $96,853,786)@.................. 97.2% 100,835,068
Other assets less liabilities........... 2.8 2,927,430
-------- ------------
NET ASSETS -- 100.0% $103,762,498
======== ============
- --------
* Security exempt from registration under Rule 144A of the Security Act of
1993. 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 September 30, 2004,
the aggregate value of these securities was $10,598,896 representing 10.5%
of net assets. Unless otherwise indicated, these securities are not
considered to be illiquid.
** In United States dollars unless otherwise indicated.
AUD --Australian Dollar
CAD --Canadian Dollar
DKK --Danisk Krone
EUR --Euro
GBP --Pound Sterling
JPY --Japanese Yen
MXN --Mexican Peso
SEK --Swedish Krona
+ Non-income producing security.
@ See Note 5 for cost of investments on a tax basis.
(1) Bond in default.
(2) Fair Valued Security; See Note 2.
(3) Security is a "floating rate" bond where the coupon rate fluctuates. The
rate steps up or down for each rate downgrade or upgrade. The rate
reflected is as of September 30, 2004.
(4) Security is a "step-up" bond where the coupon rate increases or steps up
at a predetermined rate. Rate shown reflects the increased rate.
(5) Illiquid Security
(6) Interest only
(7) Variable rate security -- the rate reflected is as of September 30, 2004;
maturity date reflects next reset date.
(8) PIK ("Payment-in-kind") payment made with additional securities in lieu of
cash.
(9) Company has filed Chapter 11 bankruptcy.
(10) Collateralized Mortgaged Obligation
(11) Commercial Mortgaged Backed Security
(12) Security is subject to litigation, the outcome of which is still to be
determined.
(13) To the extent permitted by the Statement of Additional Information, The
Strategic Bond Fund may invest in restricted securities. This restricted
security is valued pursuant to Note 2. Restricted securities held by a
Fund may not be sold except in exempt transactions or in a public offering
registered under the Securities Act of 1933. The risk of investing in such
securities is generally greater than the risk of investing in widely held,
publicly traded companies. 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, these securities may exhibit greater price volatility than
securities for which secondary market exists. As of September 30, 2004,
the Strategic Bond Fund held the following restricted securities:
Acquisition Acquisition Market % of Net
Name Date Shares Cost Value Assets
---- ----------- ------ ----------- ------- --------
Rent-Way, Inc.
Preferred Stock 05/29/03 3 $25,000 $25,000 0.02%
Rent-Way, Inc.
Preferred Stock 05/19/04 1 10,000 10,000 0.01%
Allocation of investment by country as a percentage of net assets as of
September 30, 2004.
Country Percentage
------- ----------
United States. 59.3%
Brazil........ 7.7
Mexico........ 4.8
Russia........ 4.6
Canada........ 2.8
Venezuela..... 2.1
Italy......... 1.9
Turkey........ 1.9
Japan......... 1.6
Sweden........ 1.5
Columbia...... 0.9
Peru.......... 0.9
Australia..... 0.8
Belgium....... 0.8
Greece........ 0.8
Philippines... 0.7
Spain......... 0.6
Ecuador....... 0.6
Panama........ 0.5
Denmark....... 0.4
Germany....... 0.4
Netherlands... 0.4
United Kingdom 0.3
Cayman Islands 0.2
France........ 0.2
Luxembourg.... 0.2
Uruguay....... 0.2
Czech Republic 0.1
----
97.2%
====
Open Forward Foreign Currency Contracts
Contract In Delivery Unrealized
to Deliver Exchange For Date Depreciation
-----------------
EUR 1,270,000 USD 1,557,820 11/05/2004 $(21,169)
========
- --------
EUR -- Euro
USD -- UnitedStates Dollar
See Notes to Financial Statements
46
SunAmerica High Yield Bond Fund
PORTFOLIO PROFILE -- September 30, 2004 -- (unaudited)
Industry Allocation*
Financial Services............. 13.0%
Telecommunications............. 12.1%
Broadcasting & Media........... 11.3%
Utilities...................... 11.0%
Leisure & Tourism.............. 9.7%
Energy Sources................. 6.4%
Chemicals...................... 3.8%
Repurchase Agreements.......... 3.6%
Retail Stores.................. 3.3%
Forest Products................ 3.1%
Health Services................ 2.4%
Energy Services................ 2.1%
Bank........................... 1.9%
Metals & Mining................ 1.8%
Food, Beverage & Tobacco....... 1.6%
Real Estate Investment Trusts.. 1.6%
Business Services.............. 1.4%
Communication Equipment........ 1.3%
Insurance...................... 1.3%
Restaurant..................... 1.1%
Machinery...................... 1.0%
Medical Products............... 0.8%
Pharmaceuticals................ 0.8%
Automotive..................... 0.4%
Computes & Business Equipment.. 0.4%
Electronics.................... 0.4%
Aerospace & Military Technology 0.3%
Household Products............. 0.3%
Entertainment Products......... 0.2%
Apparel & Textiles............. 0.1%
Education...................... 0.1%
Transportation................. 0.1%
----
98.7%
====
Credit Quality+#
BBB....... 1.6%
BB........ 13.6%
B......... 38.0%
CCC....... 28.7%
CC........ 0.6%
C......... 0.2%
BELOW C... 0.6%
Not Rated@ 16.7%
-----
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 Poors.
# Calculated as a percentage of total debt issues, excluding short-term
securities.
47
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
Principal Value
Security Description Amount (Note 2)
-------------------------------------------------------------
BONDS & NOTES -- 82.1%
Aerospace & Military Technology -- 0.3%
Condor Systems, Inc.
Guaranteed Sr. Sub. Notes, Series B
11.88% due 05/01/09+(1)(3)(6)(9).... $ 500,000 $ 35,000
DeCrane Aircraft Holdings, Inc.
Guaranteed Sr. Sub. Notes, Series B
12.00% due 09/30/08................. 1,700,000 1,105,000
----------
1,140,000
----------
Apparel & Textiles -- 0.1%
Warnaco, Inc.
Sr. Notes
8.88% due 06/15/13.................. 350,000 389,375
----------
Automotive -- 0.4%
Collins & Aikman Products Corp.
Sr. Sub. Notes
12.88% due 08/15/12*................ 400,000 369,000
Diamond Triumph Auto Glass, Inc.
Guaranteed Sr. Sub. Notes
9.25% due 04/01/08.................. 820,000 787,200
Exide Corp.
Term Loan
10.00% due 04/15/05+(3)(6).......... 1,650,000 0
----------
1,156,200
----------
Broadcasting & Media -- 9.6%
Affinity Group, Inc.
Sr. Sub. Notes
9.00% due 02/15/12.................. 975,000 1,043,250
AMC Entertainment, Inc.
Sr. Sub. Notes
8.00% due 03/01/14*................. 50,000 47,000
American Lawyer Media, Inc.
Guaranteed Sr. Notes, Series B
9.75% due 12/15/07.................. 1,175,000 1,176,469
Cablevision Systems Corp.
Sr. Notes
8.00% due 04/15/12*................. 1,300,000 1,355,250
Charter Communications Holdings, LLC
Sr. Sub. Notes
9.63% due 11/15/09.................. 4,850,000 3,819,375
Charter Communications Holdings, LLC
Sr. Sub. Disc. Notes
9.92% due 04/01/11(2)............... 3,375,000 2,598,750
Charter Communications Holdings, LLC
Sr. Notes
10.00% due 05/15/11................. 450,000 346,500
Charter Communications Holdings, LLC
Sr. Sub. Notes
10.25% due 01/15/10................. 375,000 300,937
Charter Communications Holdings, LLC
Sr. Sub. Notes
10.75% due 10/01/09................. 2,075,000 1,701,500
Charter Communications Holdings, LLC
Sr. Sub. Notes
11.13% due 01/15/11................. 4,875,000 3,948,750
Cinemark, Inc.
Sr. Disc. Notes
9.75% due 03/15/14(2)............... 1,400,000 962,500
Principal Value
Security Description Amount (Note 2)
-------------------------------------------------------------
Broadcasting & Media (continued)
Coleman Cable, Inc.
Sr. Notes
9.88% due 10/01/12*................. $ 450,000 $ 461,250
CSC Holdings, Inc.
Sr. Notes
6.75% due 04/15/12*................. 450,000 452,250
CSC Holdings, Inc.
Sr. Notes, Series B
7.63% due 04/01/11.................. 25,000 26,344
CSC Holdings, Inc.
Sr. Debentures
7.63% due 07/15/18.................. 525,000 535,500
Fisher Communications, Inc.
Sr. Notes
8.63% due 09/15/14*................. 800,000 832,000
Haights Cross Operating Co.
Guaranteed Sr. Notes
11.75% due 08/15/11................. 775,000 852,500
Insight Communications Co., Inc.
Sr. Sub. Disc. Notes
12.25% due 02/15/11(2).............. 3,875,000 3,623,125
NextMedia Operating, Inc.
Guaranteed Sr. Sub. Notes
10.75% due 07/01/11................. 450,000 506,813
Paxson Communications Corp.
Guaranteed Sr. Sub. Notes
10.75% due 01/15/09(2).............. 2,425,000 2,079,437
Paxson Communications Corp.
Guaranteed Sr. Sub. Notes
10.75% due 07/15/08................. 450,000 452,250
Rogers Cable, Inc.
Sr. Sec. Notes
5.50% due 03/15/14.................. 525,000 483,000
Rogers Cable, Inc.
Sr. Sec. Notes
6.25% due 06/15/13.................. 75,000 73,500
Rogers Cable, Inc.
Bonds
8.75% due 05/01/32.................. 450,000 490,500
Telex Communications, Inc.
Sr. Sec. Notes
11.50% due 10/15/08................. 300,000 324,000
Young Broadcasting, Inc.
Guaranteed Sr. Sub. Notes
8.75% due 01/15/14.................. 575,000 552,000
Young Broadcasting, Inc.
Guaranteed Sr. Sub. Notes
10.00% due 03/01/11................. 2,300,000 2,369,000
-----------
31,413,750
-----------
Business Services -- 1.4%
Allied Waste North America, Inc.
Guaranteed Sr. Notes
7.38% due 04/15/14.................. 775,000 745,937
HydroChem Industrial Services, Inc.
Guaranteed Sr. Sub. Notes, Series B
10.38% due 08/01/07................. 950,000 957,125
48
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount (Note 2)
-------------------------------------------------------------
BONDS & NOTES (continued)
Business Services (continued)
Mobile Mini, Inc.
Sr. Notes
9.50% due 07/01/13................. $ 575,000 $ 638,250
Monitronics International, Inc.
Sr. Sub. Notes
11.75% due 09/01/10*............... 1,950,000 2,125,500
-----------
4,466,812
-----------
Chemicals -- 3.8%
Associated Materials, Inc.
Sr. Disc. Notes
11.25% due 03/01/14(2)*............ 1,550,000 1,127,625
Equistar Chemicals LP
Sr. Notes
10.63% due 05/01/11................ 1,225,000 1,396,500
Foamex LP/Foamex Capital Corp.
Guaranteed Sr. Sec. Notes
10.75% due 04/01/09................ 350,000 329,000
Huntsman International, LLC
Guaranteed Sr. Notes
9.88% due 03/01/09................. 1,405,000 1,549,012
Huntsman International, LLC
Sr. Sub. Notes
10.13% due 07/01/09................ 1,125,000 1,181,250
Huntsman, LLC
Sr. Notes
11.50% due 07/15/12*............... 75,000 82,781
Huntsman, LLC
Sr. Sec. Notes
11.63% due 10/15/10................ 850,000 983,875
Lyondell Chemical Co.
Guaranteed Sr. Sec. Notes
9.50% due 12/15/08................. 2,175,000 2,373,469
Phosphate Resource Partners LP
Sr. Notes
7.00% due 02/15/08................. 725,000 768,500
Rhodia SA
Sr. Sub. Notes
8.88% due 06/01/11................. 1,600,000 1,392,000
Rockwood Specialties, Inc.
Sr. Sub. Notes
10.63% due 05/15/11................ 750,000 825,000
Westlake Chemical Corp.
Sr. Notes
8.75% due 07/15/11................. 471,000 528,698
-----------
12,537,710
-----------
Communication Equipment -- 1.3%
Rural Cellular Corp.
Sr. Sub. Notes
9.63% due 05/15/08................. 2,850,000 2,636,250
Rural Cellular Corp.
Sr. Sub. Notes
9.75% due 01/15/10................. 1,875,000 1,631,250
-----------
4,267,500
-----------
Computers & Business Equipment -- 0.4%
Seagate Technology HDD Holdings
Guaranteed Sr. Notes
8.00% due 05/15/09................. 250,000 266,250
Principal Value
Security Description Amount (Note 2)
----------------------------------------------------------------
Computers & Business Equipment (continued)
Xerox Corp.
Sr. Notes
6.88% due 08/15/11..................... $ 925,000 $ 966,625
----------
1,232,875
----------
Education -- 0.1%
KinderCare Learning Centers, Inc.
Sr. Sub. Notes, Series B
9.50% due 02/15/09..................... 365,000 370,019
----------
Electronics -- 0.4%
Freescale Semiconductor, Inc.
Sr. Notes
7.13% due 07/15/14*.................... 800,000 832,000
ON Semiconductor Corp.
Sr. Notes
12.00% due 03/15/10.................... 423,000 486,450
----------
1,318,450
----------
Energy Services -- 2.1%
Hanover Compressor Co.
Sub. Notes
zero coupon due 03/31/07............... 2,550,000 2,154,750
Oslo Seismic Services, Inc.
1st Mtg. Notes
8.28% due 06/01/11..................... 1,665,966 1,791,703
Pride International, Inc.
Sr. Notes
7.38% due 07/15/14*.................... 350,000 388,500
Seitel, Inc.
Sr. Notes
11.75% due 07/15/11*................... 725,000 743,125
Trico Marine Services, Inc.
Sr. Notes
8.88% due 05/15/12+(1)(9).............. 4,200,000 1,848,000
----------
6,926,078
----------
Energy Sources -- 6.4%
Belden & Blake Corp.
Sr. Sec. Notes
8.75% due 07/15/12*.................... 225,000 239,625
Chesapeake Energy Corp.
Sr. Notes
6.88% due 01/15/16..................... 275,000 287,375
Chesapeake Energy Corp.
Sr. Notes
7.50% due 09/15/13..................... 325,000 355,875
Chesapeake Energy Corp.
Guaranteed Sr. Notes
7.75% due 01/15/15..................... 350,000 381,500
Chesapeake Energy Corp.
Guaranteed Sr. Notes
9.00% due 08/15/12..................... 175,000 199,937
CITGO Petroleum Corp.
Sr. Notes
11.38% due 02/01/11.................... 775,000 912,563
Colorado Interstate Gas Co.
Sr. Debentures
6.85% due 06/15/37..................... 1,000,000 1,040,000
49
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount (Note 2)
---------------------------------------------------------------------
BONDS & NOTES (continued)
Energy Sources (continued)
Encore Acquisition Co.
Sr. Sub. Notes
6.25% due 04/15/14.......................... $ 300,000 $ 300,000
Encore Acquisition Co.
Guaranteed Sr. Notes
8.38% due 06/15/12.......................... 550,000 613,250
EXCO Resources, Inc.
Guaranteed Sr. Notes
7.25% due 01/15/11.......................... 525,000 556,500
Frontier Oil Corp.
Sr. Notes
6.63% due 10/01/11*......................... 400,000 405,000
KCS Energy, Inc.
Sr. Notes
7.13% due 04/01/12.......................... 675,000 705,375
Mission Energy Holding Co.
Sr. Sec. Notes
13.50% due 07/15/08......................... 9,100,000 11,511,500
North American Energy Partners, Inc.
Sr. Notes
8.75% due 12/01/11*......................... 550,000 539,000
Pacific Energy Partners LP
Sr. Notes
7.13% due 06/15/14*......................... 850,000 920,125
Roseton Danskammer
Guaranteed Pass-Thru Certificates, Series B
7.67% due 11/08/16.......................... 1,125,000 1,046,250
Southern Natural Gas Co.
Sr. Notes
8.88% due 03/15/10.......................... 725,000 815,625
-----------
20,829,500
-----------
Entertainment Products -- 0.2%
Steinway Musical Instruments, Inc.
Guaranteed Sr. Notes
8.75% due 04/15/11.......................... 475,000 517,750
-----------
Financial Services -- 13.0%
Alamosa Delaware, Inc.
Guaranteed Sr. Disc. Notes
12.00% due 07/31/09(2)...................... 584,000 601,520
Arch Western Finance, LLC
Guaranteed Sr. Notes
7.25% due 01/01/05*......................... 900,000 967,500
Athena Neurosciences Finance, LLC
Guaranteed Sr. Notes
7.25% due 02/21/08.......................... 2,175,000 2,202,187
Bear Island Paper Co., LLC
Sr. Sec. Notes, Series B
10.00% due 12/01/07......................... 1,950,000 1,911,000
Bluewater Finance, Ltd.
Guaranteed Sr. Notes
10.25% due 02/15/12......................... 1,075,000 1,166,375
Borden United States Finance Corp.
Sr. Sec. Notes
9.00% due 07/15/14*......................... 800,000 840,000
Chukchansi Economic Development Authority
Sr. Notes
14.50% due 06/15/09*........................ 3,225,000 4,031,250
Principal Value
Security Description Amount (Note 2)
----------------------------------------------------------------
Financial Services (continued)
Consolidated Communications Holdings
Sr. Notes
9.75% due 04/01/12*.................... $ 1,400,000 $1,435,000
ESI Tractebel Acquisition Corp.
Guaranteed Bonds, Series B
7.99% due 12/30/11..................... 799,000 824,968
H & E Equipment Services, LLC
Guaranteed Sr. Sec. Notes
11.13% due 06/15/12.................... 950,000 978,500
Hilcorp Energy I LP/Hilcorp Finance Co.
Sr. Notes
10.50% due 09/01/10*................... 1,925,000 2,131,937
Huntsman Advanced Materials, LLC
Sr. Sec. Notes
11.00% due 07/15/10*................... 1,175,000 1,363,000
iPCS Escrow Co.
Sr. Notes
11.50% due 05/01/12*................... 1,025,000 1,076,250
iPCS, Inc.
14.00% due 07/15/10+(1)(3)(6).......... 11,825,000 0
Jostens IH Corp.
Sr. Sub. Notes
7.63% due 10/01/12*.................... 25,000 25,125
Labranche & Co., Inc.
Sr. Notes
11.00% due 05/15/12*................... 575,000 590,813
Madison River Capital, LLC/
Madison River Finance Corp.
Sr. Notes, Series B
13.25% due 03/01/10.................... 3,475,000 3,683,500
MedCath Holdings Corp.
Notes
9.88% due 07/15/12*.................... 475,000 496,375
Muzak, LLC/ Muzak Finance Corp.
Guaranteed Sr. Sub. Notes
9.88% due 03/15/09..................... 1,650,000 1,212,750
Nexstar Finance Holdings, LLC
Guaranteed Sr. Disc. Notes
11.38% due 04/01/13(2)................. 2,675,000 2,049,719
NGC Corp. Capital Trust I
Guaranteed Sub. Notes, Series B
8.32% due 06/01/27..................... 7,325,000 5,860,000
PCA, LLC
Sr. Notes
11.88% due 08/01/09.................... 1,275,000 1,364,250
PX Escrow Corp.
Sr. Sub. Disc. Notes
9.63% due 02/01/06(2).................. 725,000 616,250
Qwest Capital Funding, Inc.
Guaranteed Notes
6.88% due 07/15/28..................... 275,000 197,312
Qwest Capital Funding, Inc.
Guaranteed Notes
7.90% due 08/15/10..................... 2,800,000 2,583,000
Rainbow National Services LLC
Guaranteed Sr. Sub. Notes
10.38% due 09/01/14*................... 625,000 654,688
50
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount (Note 2)
-------------------------------------------------------
BONDS & NOTES (continued)
Financial Services (continued)
Terra Capital, Inc.
Guaranteed Sr. Sec. Notes
11.50% due 06/01/10........... $1,725,000 $ 1,949,250
Terra Capital, Inc.
Guaranteed Sr. Sec. Notes
12.88% due 10/15/08........... 1,125,000 1,395,000
-----------
42,207,519
-----------
Food, Beverage & Tobacco -- 1.3%
Del Monte Corp.
Sr. Sub. Notes
8.63% due 12/15/12............ 450,000 500,625
Doane Pet Care Co.
Sr. Sub. Notes
9.75% due 05/15/07............ 200,000 191,500
Doane Pet Care Co.
Guaranteed Sr. Notes
10.75% due 03/01/10........... 500,000 533,750
Smithfield Foods, Inc.
Sr. Notes, Series B
7.75% due 05/15/13............ 550,000 596,750
Wornick Co.
Sr. Sec. Notes
10.88% due 07/15/11*.......... 2,150,000 2,300,500
-----------
4,123,125
-----------
Forest Products -- 2.9%
Caraustar Industries, Inc.
Notes
7.38% due 06/01/09............ 300,000 310,500
Caraustar Industries, Inc.
Guaranteed Sr. Sub. Notes
9.88% due 04/01/11............ 650,000 695,500
Constar International, Inc.
Sr. Sub. Notes
11.00% due 12/01/12........... 650,000 614,250
Crown Cork & Seal Co., Inc.
Notes
8.00% due 04/15/23............ 2,625,000 2,441,250
FiberMark, Inc.
Sr. Notes
10.75% due 04/15/11+(1)(6)(9). 750,000 472,500
Georgia-Pacific Corp.
Debentures
7.75% due 11/15/29............ 675,000 725,625
Georgia-Pacific Corp.
Sr. Notes
8.00% due 01/15/24............ 1,100,000 1,251,250
Graham Packaging Co., Inc.
Sr. Notes
8.50% due 10/15/12*........... 225,000 229,500
Pliant Corp.
Sr. Sec. Notes
11.13% due 09/01/09........... 575,000 598,000
Speciality Paperboard, Inc.
Sr. Notes
9.38% due 10/15/06+(1)(9)..... 3,275,000 2,063,250
-----------
9,401,625
-----------
Principal Value
Security Description Amount (Note 2)
-----------------------------------------------------------
Health Services -- 2.4%
Concentra Operating Corp.
Guaranteed Sr. Sub. Notes
9.13% due 06/01/12*................ $ 375,000 $ 410,625
Genesis Healthcare Corp.
Sr. Sub. Notes
8.00% due 10/15/13................. 350,000 381,500
HCA, Inc.
Sr. Notes
6.95% due 05/01/12................. 1,450,000 1,565,656
IASIS Healthcare Capital Corp.
Sr. Sub. Notes
8.75% due 06/15/14*................ 850,000 890,375
Pediatric Services Of America, Inc.
Guaranteed Sr. Sub. Notes
10.00% due 04/15/08(3)(6).......... 200,000 202,000
Psychiatric Solutions, Inc.
Guaranteed Sr. Sub. Notes
10.63% due 06/15/13................ 650,000 734,500
Team Health, Inc.
Sr. Sub. Notes
9.00% due 04/01/12*................ 1,250,000 1,243,750
Tenet Healthcare Corp.
Sr. Notes
5.00% due 07/01/07................. 725,000 719,562
Tenet Healthcare Corp.
Sr. Notes
6.50% due 06/01/12................. 1,025,000 917,375
Triad Hospitals, Inc.
Sr. Notes
7.00% due 05/15/12................. 325,000 339,625
Triad Hospitals, Inc.
Sr. Sub. Notes
7.00% due 11/15/13................. 575,000 585,063
----------
7,990,031
----------
Household Products -- 0.3%
Vitro Envases Norteamerica SA
Sr. Sec. Term Loan
10.25% due 09/24/06(6)............. 1,000,000 1,002,500
----------
Insurance -- 0.4%
Crum & Forster Holdings Corp.
Sr. Notes
10.38% due 06/15/13................ 775,000 827,313
LNR Property Corp.
Sr. Sub. Notes
7.63% due 07/15/13................. 500,000 547,500
----------
1,374,813
----------
Leisure & Tourism -- 8.8%
American Airlines, Inc.
Pass-Thru Certificates, Series
2001-1, Class A2
6.82% due 05/23/11................. 625,000 554,327
American Airlines, Inc.
Pass-Thru Certificates, Series
2001-2, Class C
7.80% due 04/01/08................. 2,425,000 2,016,875
Atlas Air, Inc.
Pass-Thru Certificates, Series
1999-1, Class A-2
6.88% due 07/02/09................. 2,947,623 2,751,329
51
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount (Note 2)
------------------------------------------------------------
BONDS & NOTES (continued)
Leisure & Tourism (continued)
Atlas Air, Inc.
Pass-Thru Certificates, Series
1999-1, Class B
7.63% due 01/02/15.................. $5,437,354 $3,858,538
Atlas Air, Inc.
Pass-Thru Certificates, Series
2000-1, Class A
8.71% due 07/02/21.................. 2,490,308 2,450,587
Atlas Air, Inc.
Pass-Thru Certificates, Series
1999-1, Class C
8.77% due 01/02/11.................. 574,341 241,017
Atlas Air, Inc.
Pass-Thru Certificates Series
2000-1, Class B
9.06% due 07/02/17.................. 1,084,465 810,247
Bally Total Fitness Holding Corp.
Sr. Notes
10.50% due 07/15/11................. 575,000 546,250
Continental Airlines, Inc.
Pass-Thru Certificates, Series
1999-1, Class C
6.95% due 08/02/09.................. 760,699 578,887
Continental Airlines, Inc.
Pass-Thru Certificates, Series
1999-2, Class C1
7.73% due 03/15/11.................. 351,029 249,627
Continental Airlines, Inc.
Secured Pass-Thru Certificates,
Series 2000-2, Class B
8.31% due 10/02/19.................. 1,349,135 1,103,256
Courtyard by Marriott II
Sr. Sec. Notes, Series B
10.75% due 02/01/08................. 1,000,000 1,005,000
Delta Air Lines, Inc.
Pass-Thru Certificates, Series
2002-1, Class C
7.78% due 01/02/12.................. 980,938 376,456
Delta Air Lines, Inc.
Sr. Notes
10.00% due 08/15/08................. 1,600,000 480,000
Eldorado Resorts, LLC
Sr. Notes
9.00% due 04/15/14(3)(6)............ 2,675,000 2,675,000
Hollywood Casino
Shreveport/Shreveport Capital Corp.
Guaranteed Sr. Sec. Notes
13.00% due 08/01/06+(1)............. 2,311,000 1,955,684
Riviera Holdings Corp.
Guaranteed Sr. Notes
11.00% due 06/15/10................. 800,000 880,000
Six Flags, Inc.
Sr. Notes
9.75% due 04/15/13.................. 2,625,000 2,480,625
True Temper Sports, Inc.
Guaranteed Sr. Sub. Notes
8.38% due 09/15/11.................. 1,050,000 976,500
Principal Value
Security Description Amount (Note 2)
--------------------------------------------------------------
Leisure & Tourism (continued)
Waterford Gaming, LLC
Sr. Notes
8.63% due 09/15/12(6)*............... $1,067,000 $ 1,131,020
Worldspan LP
Sr. Notes
9.63% due 06/15/11................... 1,725,000 1,565,437
-----------
28,686,662
-----------
Machinery -- 0.7%
Anthony Crane Rental LP
Guaranteed Sr. Secured Notes
9.38% due 02/01/08+(1)(3)(4)(6)...... 1,261,659 126
Briggs & Stratton Corp.
Guaranteed Sr. Notes
8.88% due 03/15/11................... 475,000 567,031
Dresser, Inc.
Guaranteed Sr. Sub. Notes
9.38% due 04/15/11................... 500,000 550,000
Navistar International Corp.
Sr. Notes
7.50% due 06/15/11................... 425,000 453,688
Stanadyne Corp.
Sr. Sub. Notes
10.00% due 08/15/14*................. 700,000 728,000
Venture Holdings Co., LLC
Guaranteed Sr. Sub. Notes
11.00% due 06/01/07+(1)(9)........... 550,000 24,750
-----------
2,323,595
-----------
Medical Products -- 0.8%
Encore Medical IHC, INC.
Sr. Sub. Notes
9.75% due 10/01/12*.................. 625,000 617,187
Inverness Medical Innovations, Inc.
Sr. Sub. Notes
8.75% due 02/15/12*.................. 875,000 879,375
Universal Hospital Services, Inc.
Sr. Notes
10.13% due 11/01/11.................. 1,000,000 1,015,000
-----------
2,511,562
-----------
Metals & Mining -- 1.6%
Allegheny Technologies, Inc.
Notes
8.38% due 12/15/11................... 600,000 639,000
CSN Islands VII Corp.
Guaranteed Notes
10.75% due 09/12/08*................. 925,000 1,031,375
CSN Islands VIII Corp.
Guaranteed Sr. Notes
9.75% due 12/16/13*.................. 1,400,000 1,403,500
Eagle-Picher, Inc.
Sr. Notes
9.75% due 09/01/13................... 1,525,000 1,555,500
Renco Metals, Inc.
Guaranteed Sr. Notes
11.50% due 07/01/03+(1)(3)(6)(9)(10). 2,150,000 0
52
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount (Note 2)
-----------------------------------------------------------
BONDS & NOTES (continued)
Metals & Mining (continued)
Ryerson Tull, Inc.
Notes
9.13% due 07/15/06................ $ 525,000 $ 553,875
----------
5,183,250
----------
Pharmaceuticals -- 0.8%
Curative Health Services, Inc.
Sr. Notes
10.75% due 05/01/11............... 1,125,000 1,029,375
NeighborCare, Inc.
Guaranteed Sr. Sub. Notes
6.88% due 11/15/13................ 1,600,000 1,664,000
----------
2,693,375
----------
Real Estate Investment Trusts -- 1.2%
National Health Investors, Inc.
Notes
7.30% due 07/16/07................ 1,120,000 1,146,606
Omega Healthcare Investors, Inc.
Sr. Notes
6.95% due 08/01/07................ 225,000 232,875
Omega Healthcare Investors, Inc.
Sr. Notes
7.00% due 04/01/14*............... 600,000 609,000
Senior Housing Properties Trust
Sr. Notes
8.63% due 01/15/12(5)............. 1,625,000 1,807,812
----------
3,796,293
----------
Restaurants -- 1.1%
Advantica Restaurant Group, Inc.
Sr. Notes
11.25% due 01/15/08............... 1,475,000 1,530,312
Denny's Holdings, Inc.
Sr. Notes
10.00% due 10/01/12*.............. 2,025,000 2,032,594
Sbarro, Inc.
Sr. Notes
11.00% due 09/15/09............... 150,000 140,250
----------
3,703,156
----------
Retail Stores -- 2.6%
Alderwoods Group, Inc.
Sr. Notes
7.75% due 09/15/12*............... 425,000 449,438
Blockbuster, Inc.
Sr. Sub. Notes
9.00% due 09/01/12*............... 425,000 440,938
Collins & Aikman Floor Cover
Guaranteed Sr. Sub. Notes
9.75% due 02/15/10................ 480,000 508,800
J.C. Penney Co., Inc.
Notes
6.88% due 10/15/15................ 1,175,000 1,251,375
Jostens Holding Corp.
Sr. Disc. Notes
10.25% due 12/01/13(2)............ 1,275,000 876,562
Rent-Way, Inc.
Sr. Notes
11.88% due 06/15/10............... 1,175,000 1,280,750
Principal Value
Security Description Amount (Note 2)
-------------------------------------------------------------
Retail Stores (continued)
Rite Aid Corp.
Debentures
6.88% due 08/15/13.................. $ 400,000 $ 350,000
Saks, Inc.
Guaranteed Notes
7.00% due 12/01/13.................. 950,000 969,000
Saks, Inc.
Guaranteed Notes
9.88% due 10/01/11.................. 725,000 862,750
Stater Bros. Holdings, Inc.
Sr. Notes
8.13% due 06/15/12*................. 1,275,000 1,335,562
----------
8,325,175
----------
Telecommunications -- 10.2%
AirGate PCS, Inc.
Sr. Sub. Sec. Notes
9.38% due 09/01/09(6)............... 1,258,300 1,277,175
Alaska Communications Holdings, Inc.
Guaranteed Sr. Sub. Notes
9.38% due 05/15/09.................. 1,125,000 1,063,125
American Cellular Corp.
Sr. Notes, Series B
10.00% due 08/01/11................. 3,125,000 2,531,250
Cincinnati Bell, Inc.
Notes
7.25% due 06/15/23.................. 225,000 210,656
Cincinnati Bell, Inc.
Guaranteed Sr. Sub. Notes
8.38% due 01/15/14.................. 300,000 273,750
Dobson Communications Corp.
Sr. Notes
10.88% due 07/01/10................. 25,000 18,000
Excelcomindo Finance Co.
Sr. Notes
8.00% due 01/27/09*................. 175,000 172,813
FairPoint Communications, Inc.
Sr. Sub. Notes, Series B
9.50% due 05/01/08.................. 4,175,000 4,175,000
FairPoint Communications, Inc.
Sr. Sub. Notes
12.50% due 05/01/10................. 175,000 187,250
IWO Holdings, Inc.
Guaranteed Sr. Notes
14.00% due 01/15/11+(1)............. 11,075,000 4,873,000
LCI International, Inc.
Sr. Notes
7.25% due 06/15/07.................. 10,425,000 9,460,687
Nextel Communications, Inc.
Sr. Notes
5.95% due 03/15/14.................. 1,000,000 980,000
Qwest Corp.
Debentures
7.13% due 11/15/43.................. 2,150,000 1,784,500
Qwest Corp.
Debentures
7.25% due 10/15/35.................. 2,275,000 1,950,812
53
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount (Note 2)
------------------------------------------------------------------
BONDS & NOTES (continued)
Telecommunications (continued)
Qwest Corp.
Debentures
8.88% due 06/01/31....................... $ 550,000 $ 543,125
Triton PCS, Inc.
Guaranteed Sr. Sub. Notes
8.75% due 11/15/11....................... 1,375,000 935,000
Triton PCS, Inc.
Guaranteed Sr. Sub. Notes
9.38% due 02/01/11....................... 3,475,000 2,493,313
TSI Telecommunications Services, Inc.
Guaranteed Sr. Sub. Notes
12.75% due 02/01/09...................... 400,000 448,000
US West Communications, Inc.
Secured Debentures
7.50% due 06/15/23....................... 50,000 45,500
-----------
33,422,956
-----------
Transportation -- 0.1%
Petroleum Helicopters, Inc.
Guaranteed Sr. Notes, Series B
9.38% due 05/01/09....................... 275,000 295,625
-----------
Utilities -- 7.4%
AES Corp.
Sr. Sub. Debentures
8.88% due 11/01/27....................... 1,350,000 1,297,688
AES Drax Energy, Ltd.
Guaranteed Sr. Sub. Sec. Notes, Series B
11.50% due 08/30/10+(1).................. 4,460,000 22,300
Calpine Corp.
1st Priority Secured Notes
9.63% due 09/30/14*...................... 1,400,000 1,375,500
Cincinnati Bell Telephone Co.
Notes
7.18% due 12/15/23....................... 375,000 358,594
Cincinnati Bell Telephone Co.
Guaranteed Notes
7.20% due 11/29/23....................... 1,525,000 1,458,281
Dynegy Holdings, Inc.
Sr. Notes
8.75% due 02/15/12....................... 875,000 910,000
Edison Mission Energy
Sr. Notes
9.88% due 04/15/11....................... 1,400,000 1,631,000
El Paso Natural Gas Co.
Debentures
8.63% due 01/15/22....................... 2,900,000 3,190,000
El Paso Production Holding Co.
Guaranteed Sr. Notes
7.75% due 06/01/13....................... 2,425,000 2,431,062
Ferrellgas L P
Sr. Notes
6.75% due 05/01/14....................... 1,500,000 1,530,000
Mirant Corp.
Sr. Notes
7.90% due 07/15/09(1)*................... 7,325,000 4,633,062
Reliant Resources, Inc.
Notes
9.50% due 07/15/13....................... 1,075,000 1,167,719
Tiverton/Rumford Power Assoc., Ltd.
Guaranteed Notes
9.00% due 07/15/18*...................... 1,092,712 797,680
Principal Value
Security Description Amount (Note 2)
----------------------------------------------------------------
Utilities (continued)
Williams Cos, Inc.
Notes
7.88% due 09/01/21.................... $3,025,000 $ 3,357,750
------------
24,160,636
------------
Total Bonds & Notes
(cost $260,495,947)................... 267,767,917
------------
FOREIGN BONDS & NOTES -- 7.4%
Broadcasting & Media -- 1.1%
CF Cable TV, Inc.
Guaranteed Sr. Notes
9.13% due 07/15/07.................... 400,000 417,495
Telenet Group Holding NV
Sr. Disc. Notes
11.50% due 06/15/14(2)*............... 4,425,000 3,252,375
------------
3,669,870
------------
Food, Beverage & Tobacco -- 0.3%
Vitro Envases Norteamerica SA
Sr. Sec. Notes
10.75% due 07/23/11*.................. 950,000 917,805
------------
Forest Products -- 0.2%
Abitibi-Consolidated, Inc.
Debenture
8.55% due 08/01/10.................... 725,000 777,563
------------
Insurance -- 0.9%
Fairfax Financial Holdings, Ltd.
Notes
7.38% due 04/15/18.................... 600,000 486,000
Fairfax Financial Holdings, Ltd.
Notes
8.25% due 10/01/15.................... 2,500,000 2,275,000
------------
2,761,000
------------
Leisure & Tourism -- 0.3%
Grupo Posadas SA de CV
Sr. Notes
8.75% due 10/04/11*................... 900,000 918,000
------------
Metals & Mining -- 0.2%
International Utility Structures, Inc.
Sr. Sub. Notes
10.75% due 02/01/08(1)(3)(6).......... 2,150,000 279,500
Vitro SA de CV
Notes
11.75% due 11/01/13*.................. 500,000 463,750
------------
743,250
------------
Retail Stores -- 0.5%
Jean Coutu Group, Inc.
Sr. Sub. Notes
8.50% due 08/01/14*................... 1,725,000 1,712,062
------------
Telecommunications -- 0.3%
Empresa Brasileira de Telcom
Guaranteed Sr. Notes, Series B
11.00% due 12/15/08................... 150,000 166,125
Kyivstar GSM
Loan Participation Notes
10.38% due 08/17/09*.................. 825,000 878,625
------------
1,044,750
------------
54
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal
Amount/ Value
Security Description Shares (Note 2)
--------------------------------------------------------------------
FOREIGN BONDS & NOTES (continued)
Utilities -- 3.6%
Calpine Canada Energy Finance, ULC
Guaranteed Sr. Notes
8.50% due 05/01/08........................ $16,000,000 $11,040,000
Cia de Saneamento Basico do
Estado de Sao Paulo
Notes
12.00% due 06/20/08*...................... 550,000 589,875
-----------
11,629,875
-----------
Total Foreign Bonds & Notes
(cost $26,831,506)........................ 24,174,175
-----------
COMMON STOCK -- 4.8%
Automotive -- 0.0%
Exide Technologies, Inc.+.................. 7,980 126,483
-----------
Banks -- 1.9%
iPCS, Inc.+................................ 336,972 6,149,739
-----------
Broadcasting & Media -- 0.2%
Cablevision Systems Corp., Class A+........ 38,484 780,455
-----------
Energy Sources -- 0.0%
Tri-Union Development Corp.(3)(6).......... 1,061 11
Tribo Petroleum Corp.(3)(6)................ 1,800 18
-----------
29
-----------
Financial Services -- 0.0%
Ono Finance, PLC*(3)(6).................... 500 0
-----------
Leisure & Tourism -- 0.6%
Capital Gaming International, Inc.(3)(6)+.. 77 0
John Q. Hammons Hotels, Inc.+.............. 18,550 203,123
MGM Mirage, Inc.+.......................... 35,225 1,748,921
-----------
1,952,044
-----------
Machinery -- 0.3%
NES Rentals Holding, Inc.+................. 150,124 1,125,930
-----------
Real Estate Investment Trusts -- 0.4%
Meristar Hospitality Corp.+................ 209,550 1,142,047
-----------
Telecommunications -- 1.4%
AirGate PCS, Inc.+......................... 38,200 748,720
AirGate PCS, Inc.(3)....................... 104,631 2,050,768
Dobson Communications Corp.+............... 147,082 195,619
Telewest Global, Inc.+..................... 126,210 1,466,560
-----------
4,461,667
-----------
Total Common Stock
(cost $16,348,370)........................ 15,738,394
-----------
PREFERRED STOCK -- 0.9%
Broadcasting & Media -- 0.4%
Paxson Communications Corp.
14.25%(4)(6).............................. 170 1,275,000
-----------
Retail Stores -- 0.3%
General Nutrition Centers, Inc. 12.00%*(3). 725 768,500
Rent-Way, Inc.(3)(6)(11)................... 13 130,000
-----------
898,500
-----------
Telecommunications -- 0.2%
Alamosa Holdings, Inc. 7.50%............... 1,176 694,104
-----------
Total Preferred Stock
(cost $2,820,774)......................... 2,867,604
-----------
Warrants/
Principal Value
Security Description Amount (Note 2)
-----------------------------------------------------------------------
WARRANTS -- 0.0%+
Automotive -- 0.0%
Exide Technologies, Inc. Expires 05/05/11.. 19,950 $ 59,471
------------
Broadcasting & Media -- 0.0%
Knology Holdings, Inc. Expires
10/22/07*(3)(6)........................... 4,500 1,125
XM Satellite Radio, Inc. Expires 03/15/01*. 1,000 64,000
------------
65,125
------------
Telecommunications -- 0.0%
GT Group Telecom, Inc. Expires
02/01/10*(3)(6)........................... 2,650 27
KMC Telecom Holdings, Inc. Expires
01/31/08(3)(6)............................ 3,650 0
Leap Wireless International, Inc. Expires
04/15/10*(3)(6)........................... 2,250 0
Leap Wireless, Inc. Expires
04/15/10*(3)(6)........................... 1,950 0
------------
27
------------
Total Warrants
(cost $523,992)........................... 124,623
------------
Total Investment Securities -- 95.2%
(cost $307,020,589)....................... 310,672,713
------------
REPURCHASE AGREEMENTS -- 3.6%
State Street Bank & Trust Co. Joint
Repurchase Agreement(8)................... $ 647,000 647,000
UBS Warburg, LLC Joint Repurchase
Agreement Account(8)...................... 11,000,000 11,000,000
------------
Total Repurchase Agreements
(cost $11,647,000)........................ 11,647,000
------------
TOTAL INVESTMENTS --
(cost $318,667,589)@...................... 98.8% 322,319,713
Other assets less liabilities................ 1.2 3,901,828
----------- ------------
NET ASSETS -- 100.0% $326,221,541
=========== ============
PREFERRED STOCK SOLD SHORT -- (0.1%) Value
Shares (Note 2)
----------- ------------
Retail Stores -- (0.1%)
Fedders Corp. 8.6% Series A
(Proceeds $181,301)....................... (7,642) (180,733)
----------- ------------
- --------
* Security 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 September 30, 2004, the aggregate value
of these securities was $56,041,407 representing 15.75% of net assets.
Unless otherwise indicated these securities are not considered to be
illiquid.
+ Non-income producing security.
@ See Note 5 for cost of investments on a tax basis.
(1)Bond in default.
(2)Security is a "step-up" bond where the coupon rate increases or steps up at
a predetermined rate. Rate shown reflects the increased rate.
(3)Fair valued security.
(4)PIK ("Payment-in-kind") bonds. Payments made with additional securities in
lieu of cash.
(5)The security or a portion thereof represents collateral for securities sold
short.
(6)Illiquid security.
(7)Security is a "floating rate" bond where the coupon rate fluctuates. The
rate steps up or down for each rate downgrade or upgrade. The rate reflected
is as of September 30, 2004.
(8)See Note 2 for details of Joint Repurchase Agreement.
(9)Company has filed Chapter 11 Bankruptcy.
(10)Security is subject to litigation, the outcome of which is still to be
determined.
55
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
(11)To the extent permitted by the Statement of Additional Information, The
High Yield Bond Fund may invest in restricted securities. This restricted
security is valued pursuant to Note 2. Restricted securities held by a Fund
may not be sold except in exempt transactions or in a public offering
registered under the Securities Act of 1933. The risk of investing in such
securities is generally greater than the risk of investing in widely held,
publicly traded companies. 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, these securities may exhibit greater price volatility than
securities for which secondary market exists. As of September 30, 2004, the
High Yield Bond Fund held the following restricted securities:
-----------------------------------------------------------------
Acquisition Acquisition Market % of Net
Name Date Shares Cost Value Assets
-----------------------------------------------------------------
Rent-Way, Inc.
Preferred Stock 05/29/03 10 $100,000 $100,000 0.03%
Rent-Way Inc.
Preferred Stock 05/19/04 3 30,000 30,000 0.01%
See Notes to Financial Statements
56
SunAmerica Tax Exempt Insured Bond Fund
PORTFOLIO PROFILE -- September 30, 2004 -- (unaudited)
State Allocation*
Ohio........................... 16.0%
California..................... 14.9%
Missouri....................... 9.3%
Massachusetts.................. 8.9%
New York....................... 8.1%
Illinois....................... 7.4%
Texas.......................... 6.8%
Alabama........................ 6.3%
New Jersey..................... 5.5%
New Mexico..................... 4.7%
Indiana........................ 4.6%
South Dakota................... 3.0%
Colorado....................... 2.8%
Virginia....................... 2.7%
Georgia........................ 0.2%
Tennessee...................... 0.1%
Registered Investment Companies 0.1%
-----
101.4%
=====
Credit Quality+#
AAA 84.6%
AA. 11.7%
BBB 3.7%
-----
100.0%
=====
* Calculated as a percentage of net assets.
+ Source Standard and Poors.
# Calculated as a percentage of total debt issues, excluding short-term
securities.
57
SunAmerica Tax Exempt Insured Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
Principal Value
Security Description Amount (Note 2)
------------------------------------------------------------------------
MUNICIPAL BONDS -- 90.8%
Alabama -- 6.3%
Jefferson County, Alabama Sewer, Capital
Improvement, Series D,
5.25% due 02/01/26(1).......................... $4,500,000 $ 5,133,690
-----------
California -- 14.8%
California State, Variable Purpose,
5.50% due 04/01/28............................. 2,500,000 2,674,250
Metropolitan Water District Southern California
Waterworks, Series C,
5.00% due 07/01/27(1).......................... 3,000,000 3,205,560
San Ramon Valley, California Unified School
District, General Obligation,
5.00% due 08/01/23(1).......................... 4,000,000 4,183,560
University of California Revenues, Limited
Project Series A,
4.75% due 05/15/27(1).......................... 2,000,000 1,986,420
-----------
12,049,790
-----------
Colorado -- 2.8%
Highlands Ranch Metropolitan District No. 2,
General Obligation,
6.50% due 06/15/09(1).......................... 1,960,000 2,277,206
-----------
Georgia -- 0.2%
Georgia Municipal Electric Authority, Power
Revenue, Series Y,
6.40% due 01/01/09(1).......................... 60,000 69,275
Georgia Municipal Electric Authority, Power
Revenue, Series Y,
6.40% due 01/01/13(1).......................... 85,000 101,776
-----------
171,051
-----------
Illinois -- 4.6%
Illinois Health Facilities Authority Revenue,
Lutheran General Health Systems, Series C,
7.00% due 04/01/08(1).......................... 3,400,000 3,704,844
-----------
Indiana -- 4.6%
Indiana Transportation Finance Authority
Highway Revenue, Series A,
5.25% due 06/01/26(1).......................... 3,500,000 3,716,055
-----------
Massachusetts -- 8.9%
Massachusetts State Water Resources Authority,
Series A,
5.00% due 08/01/24(1).......................... 3,910,000 4,093,536
University Massachusetts Building Authority
Project Revenue, Series 4,
5.25% due 11/01/27(1).......................... 3,000,000 3,164,310
-----------
7,257,846
-----------
Missouri -- 7.2%
Sikeston, Missouri, Electric Revenue,
6.20% due 06/01/10(1).......................... 5,000,000 5,817,300
-----------
New Jersey -- 5.5%
New Jersey Economic Development Authority,
School Facilities Construction, Series C,
5.00% due 06/15/12(1).......................... 4,000,000 4,459,320
-----------
Principal Value
Security Description Amount (Note 2)
-------------------------------------------------------------------------
New Mexico -- 4.7%
New Mexico Finance Authority Transportation,
Senior Lien Series A,
5.25% due 06/15/21(1)........................... $3,500,000 $ 3,835,300
-----------
New York -- 5.7%
New York, New York, Series A,
6.00% due 05/15/30(1)........................... 2,865,000 3,344,515
Niagara Falls, New York, Public Improvement,
General Obligation,
7.50% due 03/01/14(1)........................... 555,000 728,282
Niagara Falls, New York, Public Improvement,
General Obligation,
7.50% due 03/01/13(1)........................... 445,000 573,076
-----------
4,645,873
-----------
Ohio -- 16.0%
Cincinnati, Ohio City School District, Classroom
Facilities Construction & Improvement,
5.00% due 12/01/24(1)........................... 3,000,000 3,123,630
Cuyahoga County, Ohio Revenue, Cleveland
Clinic Health Systems, Series A,
5.75% due 01/01/24.............................. 2,000,000 2,143,460
Franklin County, Ohio Hospital Revenue,
OhioHealth Corp., Series C,
5.25% due 05/15/23.............................. 3,000,000 3,084,000
Olentangy Local School District Ohio, School
Facilities Construction & Improvement Series A,
5.25% due 12/01/27(1)........................... 3,250,000 3,429,725
Woodridge, Ohio Local School District, General
Obligation,
6.80% due 12/01/14(1)........................... 1,000,000 1,206,200
-----------
12,987,015
-----------
South Dakota -- 3.0%
South Dakota State Health & Educational
Facilities Revenue, McKennan Hospital,
6.25% due 07/01/10(1)........................... 2,120,000 2,462,211
-----------
Texas -- 3.7%
Harris County, Texas Hospital District, Mtg.
Revenue,
7.40% due 02/15/10(1)........................... 1,290,000 1,467,207
San Antonio Texas Hotel Occupancy Texas,
Unrefunded Capital Appreciation Gonzalez,
zero coupon due 08/15/17(1)(2).................. 2,700,000 1,538,737
-----------
3,005,944
-----------
Virginia -- 2.7%
Fairfax County, Virginia Water Authority
Revenue,
5.00% due 04/01/27.............................. 2,155,000 2,221,308
-----------
Total Investment Securities
(cost $68,888,286).............................. 73,744,753
-----------
SHORT-TERM INVESTMENTS -- 10.6%
Illinois -- 2.8%
Illinois Development Finance Authority Revenue,
Jewish Federal Metropolitan Chicago Projects,
0.98% due 04/08/04(1)(3)........................ 2,300,000 2,300,000
-----------
58
SunAmerica Tax Exempt Insured Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (unaudited)
(continued)
Principal Value
Security Description Amount (Note 2)
-----------------------------------------------------------------------
SHORT-TERM INVESTMENTS (continued)
Missouri -- 2.1%
Missouri Higher Education Loan, Student Loan
Revenue, Series B,
1.10% due 04/07/04(1)(3).................... $1,200,000 $ 1,200,000
Wright City, Missouri Industrial Revenue,
Watlow Process Systems, Inc.,
0.95% due 09/04/03(3)....................... 530,000 530,000
-----------
1,730,000
-----------
New York -- 2.4%
New York City, NY Municipal Water Finance
Authority Revenue, Series G,
0.99% due 09/03/04(1)(3).................... 1,900,000 1,900,000
-----------
Tennessee -- 0.1%
Metropolitan Government Nashville & Davidson
County, Tennessee, H & Facilities Board
Revenue, Timberlake Project,
1.65% due 10/06/04(1)(3).................... 100,000 100,000
-----------
Texas -- 3.1%
State of Texas Transportation, Tax & Revenue
Anticipation Notes 3.00% due 08/31/05....... 2,500,000 2,531,730
-----------
Registered Investment Companies -- 0.1%
SSGA Municipal Money Market Fund Tax Free
Money Market Fund........................... 48,492 48,492
-----------
Total Short-Term Investments
(cost $8,610,222)........................... 8,610,222
-----------
TOTAL INVESTMENTS --
(cost $77,498,508)@......................... 101.4% 82,354,975
Liabilities in excess of other assets.......... (1.4) (1,146,351)
---------- -----------
NET ASSETS -- 100.0% $81,208,624
========== ===========
- --------
@ See Note 5 for cost of investments on a tax basis.
(1) All or part of this security is insured by the Financial Security
Assurance ("FSA"), Financial Guaranteed Insurance Corp. ("FGIC"),
Municipal Bond Insurance Association ("MBIA"), or American Municipal Bond
Assurance Corp. ("AMBAC") ($68,952,459 or 84.0% of Net Assets).
(2) Represents a zero coupon bond which will convert to an interest-bearing
security at a later date.
(3) Variable rate security -- the rate reflected is as of September 30, 2004;
maturity date reflects next reset date.
See Notes to Financial Statements
59
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (unaudited)
Note 1. Organization
SunAmerica Income Funds is an open-end diversified management investment
company organized as a Massachusetts business trust (the "Trust"). It
currently consists of six different investment series (each, a "Fund" and
collectively, the "Funds"). Each Fund is a separate series of the Trust with
distinct investment objectives and/or strategies. Each Fund is managed by
AIG SunAmerica Asset Management Corp. (the "Adviser" or "SAAMCo"), an
indirect wholly-owned subsidiary of American International Group, Inc.
("AIG"). An investor may invest in one or more of the following Funds:
SunAmerica Core Bond Fund, SunAmerica U.S. Government Securities Fund,
SunAmerica GNMA Fund, SunAmerica Strategic Bond Fund, SunAmerica High Yield
Bond Fund and SunAmerica Tax Exempt Insured Fund. The Funds are considered
to be separate entities for financial and tax reporting purposes. The
investment objectives for each of the Funds are as follows:
Core Bond Fund seeks a high level of current income consistent with relative
safety of capital by the active trading of investment-grade fixed-income
securities, or in securities issued or guaranteed by the U.S. Government and
mortgage-backed or asset-backed securities without regard to the maturities
of such securities. Under normal market conditions, at least 80% of the
Fund's assets plus borrowing for investment purposes will be invested in
bonds.
U.S. Government Securities Fund seeks high current income consistent with
relative safety of capital by the active trading of securities of high
credit quality, issued or guaranteed by the U.S. government, or any agency
or instrumentality thereof without regard to the maturities of such
securities. Under normal market conditions, at least 80% of the Fund's
assets plus borrowing for investment purposes will be invested in such
securities.
GNMA Fund seeks current income, with capital appreciation as a secondary
objective by the active trading of mortgage-backed securities of high credit
quality issued or guaranteed by the Government National Mortgage Association
(GNMA) without regard to the maturities of such securities. Under normal
market conditions, at least 80% of the Fund's assets plus borrowing for
investment purposes will be invested in such securities.
Strategic Bond Fund seeks a high level of total return by the active trading
of a broad range of bonds, including both investment grade and
non-investment grade bonds (which may include "junk bonds"), U.S. Government
and agency obligations, and mortgage-backed securities, without regard to
the maturities of such securities. Under normal market conditions, at least
80% of the Fund's assets plus borrowing for investment purposes will be
invested in bonds.
High Yield Bond Fund seeks a high level of total return by the active
trading of below-investment grade U.S. and foreign junk bonds (rated below
Baa by Moody's and below BBB by S&P) without regard to the maturities of
such securities and bank debt. For purposes of this policy, bonds include
fixed-income securities other than short-term commercial paper and preferred
stock. Under normal market conditions, at least 80% of the Funds assets plus
borrowing for investment purposes will be invested in such securities.
Tax Exempt Insured Fund seeks as high a level of current income exempt from
federal income taxes as is consistent with preservation of capital by
investing, under normal market conditions, at least 80% of its assets in
municipal bonds, the income of which is exempt from federal income taxes,
and that are insured as to the scheduled payment of principal and interest
for as long as such bonds are held by the Fund, without regard to the
maturities of such securities.
Each Fund offers multiple classes of shares. The classes within each Fund
are presented in the Statement of Assets and Liabilities. The cost structure
for each class is as follows:
Class A shares are offered at net asset value per share plus an initial
sales charge. Additionally, any 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 on redemptions made within two years of
purchase.
Class B shares are offered without an initial sales charge, although a
declining contingent deferred sales charge may be imposed on redemptions
made within six years of purchase. Class B shares of each Fund convert
automatically to Class A shares on the first business day of the month
following the eighth anniversary of the issuance of such Class B shares and
at such time will be subject to the lower distribution fee applicable to
Class A shares.
60
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (unaudited)
(continued)
Class C shares are offered at net asset value per share without an initial
sales charge and may be subject to a contingent deferred sales charge on
redemptions made within 12 months of purchase. Effective February 23, 2004,
Class II shares were redesignated to Class C shares.
Class I, Class Z, and Class X are offered at net asset value per share.
These classes are offered exclusively to participants in certain employee
retirement plans and other programs. Effective December 29, 2003, Class I
shares of the GNMA Fund and High Yield Bond Fund are no longer being offered
for sale. Effective September 24, 2004, Class I shares of the Strategic Bond
Fund are no longer being offered for sale.
Each class of shares bears the same voting, dividend, liquidation and other
rights and conditions and each (other than Class I, Class X and Class Z)
makes distribution and account maintenance and service fee payments under a
distribution plan pursuant to Rule 12b-1 under the Investment Company Act of
1940 (the "1940 Act") except that Class B and Class C shares are subject to
higher distribution fee rates. There are no distribution payments applicable
to Class I, Class X and Class Z.
Indemnifications: Under the Funds' organizational documents, its officers
and trustees are indemnified against certain liability arising out of the
performance of their duties to the Funds. In addition, in the normal course
of business the Funds enter into contracts that contain a variety of
representations and warranties which provide general indemnifications. The
Funds' maximum exposure under these arrangements are unknown as this would
involve future claims that may be made against the Funds that have not yet
occurred. However, the Funds expect the risk of loss to be remote.
Note 2. Significant Accounting Policies
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America 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. The following is a summary of the significant
accounting policies followed by the Funds in the preparation of their
financial statements:
Security Valuations: Stocks are generally valued based upon closing sales
prices reported on recognized securities exchanges or, for listed securities
having no sale reported and for unlisted securities, upon last-reported bid
prices. Securities listed on the NASDAQ stock market are valued using the
NASDAQ Official Closing Price ("NOCP"). Generally, the NOCP will be the last
sale price unless the reported trade for the securities 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. Nonconvertible bonds, debentures, other
long-term debt securities, and short-term securities with original or
remaining maturities in excess of 60 days are valued at prices obtained for
the day of valuation from a bond pricing service of a major dealer in bonds
when such prices are available; however, in circumstances where the
investment adviser deems it appropriate to do so, an over-the-counter or
exchange quotation at the mean of representative bid or asked prices may be
used. Senior Secured Floating Rate Loans ("Loans") for which an active
secondary market exists to a reliable degree, will be valued at the mean of
the last available bid and ask prices in the market for such Loans, as
provided by a third party pricing service. Securities traded primarily on
securities 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 foreign exchange, a fund uses the exchange
that is the primary market for the security. However, depending on the
foreign market, closing prices may be up to 15 hours old when they are used
to price the Fund's shares, and the Fund may determine that certain closing
prices are unreliable. This determination will be based on 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
of Trustees to reflect what it believes to be the fair value of the
securities as of the close of regular trading on the New York Stock
Exchange. A 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, the Fund uses an outside pricing service to
provide it with closing market prices and information used for adjusting
those prices Short-term securities with 60 days or less to maturity are
amortized to maturity based on their cost to the Trust if acquired within 60
days of maturity or, if already held by the Trust on the 60th day, are
amortized to maturity based on the value determined on the 61st day.
Securities for which quotations are not readily available or if a
development/event occurs that may significantly impact the value of the
securities, then these securities may be fair valued as determined pursuant
to procedures adopted in good faith under the direction of the Trust's
Trustees.
61
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (unaudited)
(continued)
Repurchase Agreements: The Funds, along with other affiliated registered
investment companies, pursuant to exemptive relief granted by the Securities
and Exchange Commission, may transfer uninvested cash balances into a single
joint account, the daily aggregate balance of which is invested in one or
more repurchase agreements collateralized by U.S. Treasury or federal agency
obligations. For repurchase agreements and joint repurchase agreements, the
Funds' custodian takes possession of the collateral pledged for investments
in such repurchase agreements. The underlying collateral is valued daily on
a mark to market basis to ensure that the value, at the time the agreement
is entered into, is equal to at least 102% of the repurchase price,
including accrued interest. In the event of default of the obligation to
repurchase, a Fund has the right to liquidate the collateral and apply the
proceeds in satisfaction of the obligation. If the seller defaults and the
value of the collateral declines or if bankruptcy proceedings are commenced
with respect to the seller of the security, realization of the collateral by
the Fund may be delayed or limited.
As of September 30, 2004, the following Funds held a percentage of an
undivided interest in a joint repurchase agreement with State Street Bank &
Trust Co.:
Fund Percentage Interest Principal Amount
- ---- ------------------- ----------------
U.S. Government Securities Fund 2.78% $ 5,064,000
GNMA Fund...................... 64.45 117,540,000
Strategic Bond Fund............ 0.30 549,000
High Yield Bond Fund........... 0.35 647,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
State Street Bank & Trust Co., dated September 30, 2004, bearing interest at
a rate of 1.58% per annum, with a principal amount of $182,364,000, a
repurchase price of $182,372,004 and a maturity date of October 1, 2004. The
repurchase agreement is collateralized by the following:
Interest Rate/
Type of collateral Discount Yield Maturity Date Principal Amount Market Value
- ------------------ -------------- ------------- ---------------- ------------
U.S. Treasury Notes 4.75% 05/15/14 $ 2,364,000 $ 2,412,225
U.S. Treasury Bonds 7.50 11/15/16 180,000,000 183,631,282
In addition, at September 30, 2004, the following Funds held a percentage of
an undivided interest in a joint repurchase agreement with UBS Warburg, LLC:
Fund Percentage Interest Principal Amount
- ---- ------------------- ----------------
U.S. Government Securities Fund 16.00% $ 40,000,000
GNMA Fund...................... 48.00 120,000,000
High Yield Bond Fund........... 4.40 11,000,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Warburg, LLC, dated September 30, 2004, bearing interest at a rate of
1.73% per annum, with a principal amount of $250,000,000, a repurchase price
of $250,012,014 and a maturity date of October 1, 2004. The repurchase
agreement is collateralized by the following:
Interest Rate/
Type of collateral Discount Yield Maturity Date Principal Amount Market Value
- ------------------ -------------- ------------- ---------------- ------------
U.S. Treasury Notes 1.88% 07/15/13 $51,348,000 $52,375,000
U.S. Treasury Notes 3.00 07/15/12 57,230,000 58,375,000
U.S. Treasury Bonds 2.38 01/15/25 51,041,000 52,062,500
U.S. Treasury Bonds 3.38 04/15/32 17,342,000 17,689,451
U.S. Treasury Bonds 3.63 04/15/28 73,039,000 74,500,000
62
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (unaudited)
(continued)
Securities Transactions, Investment Income, Expenses, Dividends and
Distributions to Shareholders: Securities 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
except when collection is not expected. Dividend income is recorded on the
ex-dividend date except for certain dividends from foreign securities, which
are recorded as soon as the Trust is informed after the ex-dividend date.
For financial statement purposes, the Funds amortize all premiums and
accrete all discounts on fixed income securities. Funds which earn foreign
income and capital gains may be subject to foreign withholding taxes at
various rates.
Expenses common to all Funds, not directly related to individual Funds are
allocated among the Funds based on relative net assets or other appropriate
methods. In all other respects, expenses are charged to each Fund as
incurred on a specific identification basis. Interest earned on cash
balances held at the custodian are shown as custody credits on the Statement
of Operations.
Net investment income, other than class specific expenses, and realized and
unrealized gains and losses are allocated daily to each class of shares
based upon the relative net asset value of outstanding shares (or the value
of dividend-eligible shares, as appropriate) of each class of shares at the
beginning of the day (after adjusting for the current capital share activity
of the respective class).
Dividends from net investment income are accrued daily and paid monthly.
Capital gain distributions, if any, are paid annually. The Funds record
dividends and distributions to their 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 accounting principles generally accepted
in the United States of America. These "book/tax" differences are either
considered temporary or permanent in nature. To the extent these differences
are permanent in nature, such amounts are reclassified within the capital
accounts at fiscal year end based on their federal tax-basis treatment;
temporary differences do not require reclassification. Net investment
income/loss, net realized gain/loss and net assets are not affected. Each
Fund intends to comply with the requirements of the Internal Revenue Code,
as amended, applicable to regulated investment companies and to distribute
all of their net income (taxable and tax exempt) to their shareholders.
Therefore, no federal tax provision is required. Each Fund is considered a
separate entity for tax purposes.
Investment Securities Loaned: During the period ended September 30, 2004,
U.S. Government Securities Fund and GNMA Fund participated in securities
lending with qualified brokers. In lending portfolio securities to brokers
the Funds receive cash as collateral against the loaned securities, which
must be maintained at not less than 102% of the market value of the loaned
securities during the period of the loan. The Funds may use the cash
collateral received to invest in short-term investments which earn interest
income or to cover bank overdrafts. Any interest earned from the investment
of the collateral is recorded by the Funds net of the portion of interest
that is rebated to the borrowing broker. If the amounts are used to cover
bank overdrafts, the broker rebates incurred are reflected as interest
expense on the Statement of Operations. During the period ended September
30, 2004, $282 and $172 of broker rebates were reclassified to interest
expense for the U.S. Government and GNMA funds, respectively. As with other
extensions of credit, should the borrower of the securities fail
financially, the Funds may bear the risk of delay in recovery or may be
subject to replacing the loaned securities by purchasing them with the cash
collateral held, which may be less than 100% of the market value of such
securities at the time of replacement.
At September 30, 2004 there were no loaned securities outstanding in the
U.S. Government Securities Fund or the GNMA Fund.
Forward Foreign Currency Contracts: Certain Portfolios may enter into
forward foreign currency contracts ("forward contracts") to attempt to
protect securities and related receivables and payables against changes in
future foreign exchange rates or to enhance return. 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 change in market value is recorded by the Portfolio as
unrealized gain or loss. On the settlement date, the Portfolio records
either realized gains or losses when the contract is closed 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. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar. Forward contracts involve
elements of risk in excess of the amount reflected in the Statement of
Assets and Liabilities. The Trust bears the risk of an unfavorable change in
the foreign exchange rate underlying the forward contract.
63
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (unaudited)
(continued)
Foreign Currency Translation: The books and records of the Funds are
maintained in U.S. dollars. Assets and liabilities denominated in foreign
currencies and commitments under forward foreign currency contracts are
translated into U.S. dollars based on the exchange rate of such currencies
against U.S. dollars on the date of valuation.
The Fund does not isolate that portion of the results of operations arising
as a result of changes in the foreign exchange rates from the changes in the
market prices of securities held at the end of the period. Similarly, the
Fund does not isolate the effect of changes in foreign exchange rates from
the changes in the market prices of portfolio securities sold during the
year.
Realized foreign exchange gains and losses on other assets and liabilities
and change in unrealized foreign exchange gains and losses on other assets
and liabilities include foreign exchange gains and losses from currency
gains or losses realized between the trade and settlement dates of
securities transactions, the difference between the amounts of interest,
dividends and foreign withholding taxes recorded on the Fund's books and the
U.S. dollar equivalent amounts actually received or paid and changes in the
unrealized foreign exchange gains and losses relating to other assets and
liabilities arising as a result of changes in the exchange rate.
Short Sales: The High Yield Bond Fund ("Fund") may sell a security it does
not own in anticipation of a decline in the market value of that security
(short sales). To complete such a transaction, the Fund must borrow the
security to make delivery to the buyer. The Fund then is obligated to
replace the security borrowed by purchasing it at market price at the time
of replacement.
The price at such time may be more or less than the price at which the
security was sold by the Fund. Until the security is replaced, the Fund is
required to pay to the lender any dividends or interest that accrue during
the period of the loan. To borrow the security, the Fund also may be
required to pay a premium, which would increase the cost of the security
sold. The proceeds of the short sale will be retained by the broker, to the
extent necessary to meet margin requirements, until the short position is
closed out. Until the Fund replaces a borrowed security, the Fund will
maintain daily a segregated account, containing cash or liquid securities,
at such a level that (i) the amount deposited in the account plus the amount
deposited with the broker as collateral will equal the current value of the
security sold short and (ii) the amount deposited in the segregated account
plus the amount deposited with the broker as collateral will not be less
than the market value of the security at the time it was sold short.
Liabilities for securities sold short are reported at market value in the
financial statements. Such liabilities are subject to off balance sheet risk
to the extent of any future increases in market value of the securities sold
short. The ultimate liability for securities sold short could exceed the
liabilities recorded in the Statement of Assets and Liabilities. The Fund
bears the risk of potential inability of the broker to meet their obligation
to perform.
Mortgage-Backed Dollar Rolls: During the period ended September 30, 2004,
the Core Bond Fund, U.S. Government Securities Fund and the GNMA Fund
entered into dollar rolls using "to be announced" ("TBA") mortgage-backed
securities ("TBA Rolls"). The Funds' policy is to record the components of
TBA Rolls as purchase/sale transactions. Any difference between the purchase
and sale price is recorded as a realized gain or loss on the date the
transaction is entered into. The Core Bond Fund, U.S. Government Securities
Fund and the GNMA Fund had TBA Rolls outstanding at period-end, which are
included in receivable for investments sold and payable for investments
purchased in the Statement of Assets and Liabilities.
Dollar roll transactions involve the risk that the market value of the
securities held by the Fund may decline below the price of the securities
that the Fund has sold but is obligated to repurchase under the agreement.
In the event that the buyer of securities in a dollar roll transaction files
bankruptcy or becomes insolvent, the Fund's use of the proceeds from the
sale of the securities may be restricted pending a determination by the
other party, or its trustee or receiver, whether to enforce the Fund's
obligation to repurchase the securities. The return earned by the Fund with
the proceeds of the dollar roll transaction may not exceed transaction costs.
Note 3. Investment Advisory and Management Agreement, Distribution Agreement
and Service Agreement
The Trust, on behalf of each Fund, has an Investment Advisory and Management
Agreement (the "Agreement") with SAAMCo. Under the Agreement, SAAMCo
provides continuous supervision of a Fund's portfolio and administers its
corporate affairs, subject to general review by the Trustees. In connection
therewith, SAAMCo furnishes the Funds with office facilities, maintains
certain of the Funds' books and records, and pays the salaries and expenses
of all personnel, including officers of the Funds, who are employees of
SAAMCo and its affiliates.
64
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (unaudited)
(continued)
The Funds pay SAAMCo a monthly investment advisory and management fee
calculated daily at the following annual percentages of each Fund's average
daily net assets:
Management
Assets Fees
--------------------------- ----------
Core Bond Fund................. $0 - $200 million 0.600%
(greater than) $300 million 0.525
(greater than) $500 million 0.475
U.S. Government Securities Fund $0 - $200 million 0.650
(greater than) $200 million 0.620
(greater than) $400 million 0.550
GNMA Fund...................... $0 - $25 million 0.550
(greater than) $25 million 0.500
(greater than) $50 million 0.450
Strategic Bond Fund............ $0 - $350 million 0.650
(greater than) $350 million 0.600
High Yield Bond Fund........... $0 - $200 million 0.750
(greater than) $200 million 0.720
(greater than) $400 million 0.550
Tax Exempt Insured Fund........ $0 - $350 million 0.500
(greater than) $350 million 0.450
The Core Bond Fund, Strategic Bond Fund, High Yield Bond Fund and Tax Exempt
Insured Fund are subadvised by AIG Global Investment Corp. ("AIGGIC")
pursuant to a subadvisory agreement with SAAMCo. AIGGIC is an indirect
wholly-owned subsidiary of AIG and an affiliate of SAAMCo. AIGGIC receives
the following fees from SAAMCo., based upon each Fund's average daily net
assets:
Sub-advisory Fees
-----------------------------------------------
Core Bond Strategic Bond High Yield Tax Exempt
Assets Fund Fund Bond Fund Insured Fund
- ------ --------- -------------- ---------- ------------
$0 - $200 million............ 0.25% 0.35% 0.45% 0.25%
(greater than) $200 million 0.20 0.25 0.35 0.22
(greater than) $500 million 0.15 0.20 0.30 0.15
Effective September 1, 2004, SAAMCo has contractually agreed to waive fees
and/or reimburse expenses, if necessary, so that the total net expense
ratios for the following classes do not exceed the amounts set forth below.
Fund Percentage
---- ----------
Core Bond Class A...... 1.10%
Core Bond Class B...... 1.75
Core Bond Class C...... 1.75
Core Bond Class I...... 1.00
Core Bond Class Z...... 0.53
Strategic Bond Class A. 1.40
Strategic Bond Class B. 2.05
Strategic Bond Class C. 2.05
Strategic Bond Class I. 1.30
High Yield Bond Class A 1.36
High Yield Bond Class B 2.01
High Yield Bond Class C 2.01
High Yield Bond Class Z 0.79
Effective September 1, 2004, SAAMCo is voluntarily waiving fees and/or
reimbursing expenses, if necessary, so that the total net expense ratios for
the following classes do not exceed the amounts set forth below.
Fund Percentage
---- ----------
U.S. Government Securities Fund Class A 0.99%
U.S. Government Securities Fund Class B 1.64
U.S. Government Securities Fund Class C 1.64
GNMA Fund Class A...................... 0.99
GNMA Fund Class B...................... 1.64
GNMA Fund Class C...................... 1.64
GNMA Fund Class X...................... 0.89
Tax Exempt Insured Fund Class C........ 1.95
65
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (unaudited)
(continued)
Prior to September 1, 2004 the contractual expense caps were as follows:
Fund Percentage
---- ----------
Core Bond Class A...... 1.24%
Core Bond Class B...... 1.89
Core Bond Class C...... 1.89
Core Bond Class I...... 1.14
Core Bond Class Z...... 0.67
Strategic Bond Class A. N/A
Strategic Bond Class B. N/A
Strategic Bond Class I. 1.44
High Yield Bond Class A N/A
High Yield Bond Class B N/A
Prior to September 1, 2004 the voluntarily expense caps were as follows:
Fund Percentage
---- ----------
GNMA Class A........... 0.99
GNMA Class B........... 1.64
GNMA Class C........... 1.64
GNMA Class X........... 0.89
Strategic Bond Class C. 2.22
High Yield Bond Class C 2.18
High Yield Bond Class Z 0.95
For the six months ended September 30, 2004, expenses were reimbursed to the
Funds as follows:
SAAMCO
--------
Core Bond Class A...................... $ 44,991
Core Bond Class B...................... 6,751
Core Bond Class C...................... 7,778
Core Bond Class I...................... 222
Core Bond Class Z...................... 4,922
U.S. Government Securities Fund Class A 344,981
U.S. Government Securities Fund Class B 64,475
U.S. Government Securities Fund Class C 27,756
GNMA Fund Class A...................... 285,067
GNMA Fund Class B...................... 97,571
GNMA Fund Class C...................... 64,223
GNMA Fund Class X...................... --
Strategic Bond Class A................. 1,734
Strategic Bond Class B................. 1,365
Strategic Bond Class C................. 906
Strategic Bond Class I................. 1,462
High Yield Bond Class A................ 3,879
High Yield Bond Class B................ 2,053
High Yield Bond Class C................ 1,695
High Yield Bond Class Z................ 2,587
Tax Exempt Insured Fund Class A........ --
Tax Exempt Insured Fund Class B........ --
Tax Exempt Insured Fund Class C........ 1,708
66
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (unaudited)
(continued)
The Trust, on behalf of each Fund, has a Distribution Agreement with AIG
SunAmerica Capital Services, Inc. ("SACS" or "Distributor"), an affiliate of
the Adviser. Each Fund, has adopted a Distribution Plan (the "Plan") in
accordance with the provisions of Rule 12b-1 under the 1940 Act. Rule 12b-1
under the 1940 Act permits an investment company directly or indirectly to
pay expenses associated with the distribution of its shares ("distribution
expenses") in accordance with a plan adopted by the investment company's
board of trustees and approved by its shareholders. Pursuant to such rule,
the Trustees and the shareholders of each class of shares of each Fund have
adopted Distribution Plans, hereinafter referred to as the "Class A Plan,"
the "Class B Plan" and the "Class C Plan." In adopting the Class A Plan, the
Class B Plan and the Class C Plan, the Trustees determined that there was a
reasonable likelihood that each Plan would benefit the Trust 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, Class B Plan and Class C Plan, the Distributor
receives payments from the Funds at an annual rate of up to 0.10%, 0.75% and
0.75%, respectively, of average daily net assets of such Fund's Class A,
Class B 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 for, include fees paid to broker-dealers that
have sold Fund shares, commissions, and other expenses such as those
incurred for sales literature, prospectus printing and distribution and
compensation to wholesalers. It is possible that in any given year the
amount paid to the Distributor under the Class A Plan, Class B Plan or Class
C Plan may exceed the Distributor's distribution costs as described above.
The Distribution Plans provide that each class of shares of each Fund may
also pay the Distributor an account maintenance and service fee at the
annual rate of up to 0.25% of the aggregate average daily net assets of such
class of shares for payments to broker-dealers for providing continuing
account maintenance. Accordingly, for the period ended September 30, 2004,
SACS received fees (see the Statement of Operations) based upon the
aforementioned rates.
In addition, AIG SunAmerica Capital Services, Inc. is paid a fee of 0.25% of
average daily net assets of Class I shares in compensation for providing
additional shareholder services to Class I shareholders.
SACS receives sales charges on each Fund's Class A shares, portions of which
are reallowed to affiliated broker-dealers and non-affiliated
broker-dealers. SACS also receives the proceeds of contingent deferred sales
charges paid by investors in connection with certain redemptions of Class A,
Class B and Class C shares. SACS has advised the Funds that for the period
ended September 30, 2004, the proceeds received from Class A sales (and paid
out to affiliated and non-affiliated broker-dealers) and Class A, Class B
and Class C redemptions were as follows:
Class A Class B
-------------------------------------- --------------
Contingent
Sales Affiliated Non-affiliated Deferred Sales
Fund Charges Broker-dealers Broker-dealers Charges
- ---- -------- -------------- -------------- --------------
U.S. Government Securities $ 19,950 $ 9,709 $ 6,868 $ 80,232
GNMA...................... 113,548 46,045 46,025 383,575
Strategic Bond............ 93,238 16,274 60,470 145,780
High Yield Bond........... 152,270 20,974 106,141 119,159
Core Bond................. 12,743 3,351 7,252 8,884
Tax Exempt Insured........ 39,794 16,268 16,694 18,577
Class C
--------------
Contingent
Deferred Sales
Fund Charges
- ---- --------------
U.S. Government Securities $10,753
GNMA...................... 66,061
Strategic Bond............ 14,413
High Yield Bond........... 45,831
Core Bond................. 2,221
Tax Exempt Insured........ 3,076
67
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (unaudited)
(continued)
The Trust has entered into a Service Agreement with AIG SunAmerica Fund
Services, Inc. ("SAFS"), an affiliate of the Adviser. Under the Service
Agreement, SAFS performs certain shareholder account functions by assisting
the Funds' transfer agent in connection with the services that it offers to
the shareholders of the Funds. The Service Agreement permits the Funds to
compensate SAFS for services rendered, based upon an annual rate of 0.22% of
average daily net assets, which is approved annually by the Trustees. For
the six months ended September 30, 2004 the Funds incurred the following
expenses which are included in transfer agent fees and expenses in the
Statement of Operations to compensate SAFS pursuant to the terms of the
Service Agreement:
Payable at
Expenses September 30, 2004
-------- ------------------
Core Bond Fund Class A................. 160,717 $28,098
Core Bond Fund Class B................. 5,719 929
Core Bond Fund Class C................. 5,374 862
Core Bond Fund Class I................. 2,579 339
Core Bond Fund Class Z................. -- --
U.S. Government Securities Fund Class A 211,814 34,370
U.S. Government Securities Fund Class B 35,882 5,585
U.S. Government Securities Fund Class C 14,126 2,217
GNMA Fund Class A...................... 369,811 61,465
GNMA Fund Class B...................... 135,351 21,182
GNMA Fund Class C...................... 81,459 12,027
GNMA Fund Class X...................... 9,839 1,723
Strategic Bond Class A................. 47,173 7,975
Strategic Bond Class B................. 38,654 6,485
Strategic Bond Class C................. 23,967 4,087
High Yield Bond Class A................ 118,130 21,659
High Yield Bond Class B................ 74,396 12,010
High Yield Bond Class C................ 55,512 9,808
High Yield Bond Class Z................ -- --
Tax Exempt Insured Fund Class A........ 72,232 11,764
Tax Exempt Insured Fund Class B........ 15,438 2,292
Tax Exempt Insured Fund Class C........ 6,412 1,071
At September 30, 2004, AIGGIC, an indirect wholly owned subsidiary of AIG,
owned 100% of the outstanding Class Z shares of Core Bond Fund and High
Yield Bond Fund. Affiliate funds of the SunAmerica Focused Funds, Inc. owned
45%, 8%, 5% and 92% of the outstanding Class A Shares of GNMA Fund, U.S.
Government Securities Fund, High Yield Bond Fund, and Core Bond Fund,
respectively.
Note 4. Purchases and Sales of Investment Securities
The aggregate cost of purchases and proceeds from sales and maturities of
long-term investments during the period ended September 30, 2004 were as
follows:
U.S. Government High Tax Exempt
Core Bond Securities GNMA Strategic Yield Bond Insured
Fund Fund Fund Bond Fund Fund Fund
------------ --------------- ------------ ----------- ------------ -----------
Purchases (excluding U.S.
government securities)......... $116,098,032 $ -- $ -- $90,064,527 $163,096,878 $65,174,811
Sales (excluding U.S. government
securities).................... 104,472,733 -- -- 78,373,762 132,073,309 67,654,725
Purchases of U.S. government
securities..................... 77,824,769 338,201,019 568,156,396 23,201,982 -- 2,206,820
Sales of U.S. government
securities..................... 95,480,221 380,452,053 718,398,499 25,631,302 -- 2,248,680
68
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
Note 5. Federal Income Taxes
The following details the tax basis of distributions as well as the
components of distributable earnings. The tax basis components of
distributable earnings differ from the amounts reflected in the Statement of
Assets and Liabilities by temporary book/tax differences primarily arising
from wash sales, post October losses, Fund mergers, treatment of defaulted
securities and derivative transactions.
Distributable Earnings Tax Distributions
For the year ended March 31, 2004 For the year ended March 31, 2004
----------------------------------------- ------------------------------------
Long-term Unrealized
Ordinary Gains/Capital Appreciation Ordinary Long-term
Income Loss Carryforward (Depreciation) Income Capital Gains Tax Exempt
-------- ----------------- -------------- ----------- ------------- ----------
Core Bond Fund................. $225,952 $ 2,408,211 $2,541,194 $ 9,138,662 $ -- $ --
U.S. Government Securities Fund 188,740 (9,473,697) 4,567,615 8,059,030 -- --
GNMA Fund...................... 195,646 (333,039) 7,809,721 21,435,452 2,290,943 --
Strategic Bond Fund............ 527,492 (36,270,706) 6,068,759 5,771,394 -- --
High Yield Bond Fund........... 290,774 (119,235,552) 7,471,117 23,821,470 -- --
Tax Exempt Insured Fund........ 644,786 516,899 4,908,813 4,169,977 1,421,597 2,499,752
The amounts of aggregate unrealized gain (loss) and the cost of investment
securities for federal tax purposes, including short-term securities and
repurchase agreements, were as follows:
U.S.
Government Tax Exempt
Core Bond Securities Strategic High Yield Insured
Fund Fund GNMA Fund Bond Fund Bond Fund Fund
------------ ------------ ------------ ----------- ------------ -----------
Cost......................................... $213,342,205 $264,782,054 $681,561,285 $96,946,318 $319,080,815 $77,493,355
============ ============ ============ =========== ============ ===========
Appreciation................................. 2,728,449 2,887,017 2,432,817 7,174,511 20,009,446 4,877,881
Depreciation................................. (1,727,640) (1,405,796) (877,390) (3,285,761) (16,770,548) (16,261)
------------ ------------ ------------ ----------- ------------ -----------
Unrealized appreciation (depreciation) -- net $ 1,000,809 $ 1,481,221 $ 1,555,427 $ 3,888,750 $ 3,238,898 $ 4,861,620
============ ============ ============ =========== ============ ===========
For Federal income tax purposes, the Fund's indicated below have capital
loss carryforwards, which expire in the year indicated, as of March 31,
2004, which are available to offset future capital gains, if any:
Capital Loss Carryforward
-----------------------------------------------------------------------------------------
Fund 2005 2006 2007 2008 2009 2010 2011 2012
- ---- ---------- ---------- ---------- ----------- ----------- ----------- ----------- --------
U.S. Government
Securities Fund.... $1,212,612 $ -- $ 997,836 $ 7,263,249 $ -- $ -- $ -- $ --
GNMA Fund........... -- -- -- -- -- -- -- 333,039
Strategic Bond Fund. -- 3,866,240 5,489,442 4,808,434 5,601,470 6,464,175 10,040,945 --
High Yield Bond Fund -- 332,457 8,018,288 18,397,433 11,242,842 32,249,552 48,994,980 --
Included in the capital loss carryforward amounts at March 31, 2004 are the
amounts of losses acquired from the following acquired Funds as a result of
the reorganizations of the North American Funds ("NA Funds") on November 7,
2001.
North American U.S. Government Securities Fund $ 997,836
North American Strategic Income Fund.......... 9,347,515
North American High Yield Bond Fund........... 13,574,972
North American Municipal Bond Fund............ --
As a result of reorganizations into some of these portfolios during the
period ended March 31, 2002, certain capital loss carryforwards may be
subject to limitations on use pursuant to applicable U.S. Federal Income Tax
Law. Therefore, it is possible not all of these capital losses will be
available for use.
69
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
The Fund's indicated below utilized capital loss carryforwards, which offset
net taxable gains realized in the year ended March 31, 2004:
Capital Loss
Fund Utilized
- ---- ------------
Core Bond Fund................. $ 4,465,152
U.S. Government Securities Fund 1,647,446
Strategic Bond Fund............ 3,757,332
High Yield Bond Fund........... 14,023,345
As of March 31, 2004, Strategic Bond Fund had $14,474,804 of capital loss
carryforwards that expired.
As of March 31, 2004, GNMA Fund had post October 31, 2003 capital loss
deferrals of $50,562. The High Yield Bond Fund had post October 31, 2003
currency loss deferrals of $8,548.
Note 6. Capital Share Transactions
Transactions in capital shares of each class of each series were as follows:
Core Bond Fund
---------------------------------------------------------------------------------------------------------
Class A Class B
--------------------------------------------------- ---------------------------------------------------
For the For the
six months ended For the six months ended For the
September 30, 2004 year ended September 30, 2004 year ended
(unaudited) March 31, 2004 (unaudited) March 31, 2004
------------------------ ------------------------- ---------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ -------- ----------- ---------- ------------
Shares sold......... 2,591,833* $ 26,394,403* 12,157,837** $126,019,538** 37,698 $ 385,444 230,410 $ 2,390,630
Reinvested shares... 292,736 2,989,490 166,183 1,724,538 6,254 63,695 9,326 96,502
Shares redeemed..... (1,195,170) (12,126,812) (954,192) (9,874,674) (93,554)* (951,520)* (396,722)** (4,094,764)**
---------- ------------ ---------- ------------ -------- ----------- ---------- ------------
Net increase
(decrease)......... 1,689,399 $ 17,257,081 11,369,828 $117,869,402 (49,602) $ (502,381) (156,986) $ (1,607,632)
========== ============ ========== ============ ======== =========== ========== ============
Core Bond Fund
---------------------------------------------------------------------------------------------------------
Class C+ Class I
--------------------------------------------------- ---------------------------------------------------
For the For the
six months ended For the six months ended For the
September 30, 2004 year ended September 30, 2004 year ended
(unaudited) March 31, 2004 (unaudited) March 31, 2004
------------------------ ------------------------- ---------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ -------- ----------- ---------- ------------
Shares sold......... 37,968 $ 385,796 311,782 $ 3,235,617 22,609 $ 230,661 794,446 $ 8,247,779
Reinvested shares... 7,075 72,138 8,152 84,453 4,848 49,474 48,795 505,629
Shares redeemed..... (97,805) (998,118) (352,835) (3,659,430) (143,650) (1,451,626) (2,544,683) (26,520,623)
---------- ------------ ---------- ------------ -------- ----------- ---------- ------------
Net increase
(decrease)......... (52,762) $ (540,184) (32,901) $ (339,360) (116,193) $(1,171,491) (1,701,442) $(17,767,215)
========== ============ ========== ============ ======== =========== ========== ============
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
* Includes automatic conversion of 4,559 shares of Class B shares in the
amount of $46,282 to 4,547 shares of Class A shares in the amount of $46,282.
** Includes automatic conversion of 11,101 shares of Class B shares in the
amount of $115,303 to 11,069 shares of Class A shares in the amount of
$115,303.
70
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
Core Bond Fund
-----------------------------------------------------
Class Z
-----------------------------------------------------
For the
six months ended For the
September 30, 2004 year ended
(unaudited) March 31, 2004
------------------------ ---------------------------
Shares Amount Shares Amount
---------- ------------ ----------- -------------
Shares sold.... -- $ -- -- $ --
Reinvested
shares........ 128,182 1,308,551 638,407 6,619,027
Shares redeemed (3,452,872) (35,300,000) (19,744,617) (204,600,000)
---------- ------------ ----------- -------------
Net increase
(decrease).... (3,324,690) $(33,991,449) (19,106,210) $(197,980,973)
========== ============ =========== =============
U.S. Government Securities Fund
-----------------------------------------------------------------------------------------------------------
Class A Class B
----------------------------------------------------- ---------------------------------------------------
For the For the
six months ended For the six months ended For the
September 30, 2004 year ended September 30, 2004 year ended
(unaudited) March 31, 2004 (unaudited) March 31, 2004
------------------------ --------------------------- ---------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ----------- ------------- -------- ----------- ---------- ------------
Shares sold.... 1,315,241* $ 12,229,937* 8,249,574** $ 79,163,236** 134,741 $ 1,255,239 604,504 $ 5,811,186
Reinvested
shares........ 277,314 2,588,182 485,614 4,631,195 38,511 359,481 95,405 911,700
Shares redeemed (3,034,470) (28,304,611) (9,407,755) (89,858,298) (789,130)* (7,373,566)* (3,402,329)** (32,359,944)**
---------- ------------ ----------- ------------- -------- ----------- ---------- ------------
Net increase
(decrease).... (1,441,915) $(13,486,492) (672,567) $ (6,063,867) (615,878) $(5,758,846) (2,702,420) $(25,637,058)
========== ============ =========== ============= ======== =========== ========== ============
U.S. Government Securities Fund
-----------------------------------------------------
Class C+
-----------------------------------------------------
For the
six months ended For the
September 30, 2004 year ended
(unaudited) March 31, 2004
------------------------ ---------------------------
Shares Amount Shares Amount
---------- ------------ ----------- -------------
Shares sold.... 156,170 $ 1,469,108 769,814 $ 7,424,108
Reinvested
shares........ 15,359 143,159 40,198 383,624
Shares redeemed (444,222) (4,144,930) (1,765,228) (16,815,629)
---------- ------------ ----------- -------------
Net increase
(decrease).... (272,693) $ (2,532,663) (955,216) $ (9,007,897)
========== ============ =========== =============
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
* Includes automatic conversion of 80,609 shares of Class B shares in the
amount of $752,738 to 80,651 shares of Class A shares in the amount of
$752,738.
** Includes automatic conversion of 246,879 shares of Class B shares in the
amount of $2,357,940 to 246,951 shares of Class A shares in the amount of
$2,357,940.
71
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
GNMA Fund
--------------------------------------------------------------------------------------------------------------
Class A Class B
----------------------------------------------------- ------------------------------------------------------
For the For the
six months ended For the six months ended For the
September 30, 2004 year ended September 30, 2004 year ended
(unaudited) March 31, 2004 (unaudited) March 31, 2004
------------------------ --------------------------- ------------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Shares sold.... 4,495,804* $ 49,890,665* 20,547,588** $ 235,257,794** 285,011 $ 3,182,018 2,951,236 $ 34,058,784
Reinvested
shares........ 437,949 4,859,041 1,035,426 11,718,293 101,115 1,124,040 377,158 4,280,751
Shares redeemed (4,537,605) (50,439,716) (14,030,583) (159,555,489) (2,085,234)* (23,165,800)* (7,691,285)** (87,771,353)**
---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Net increase
(decrease).... 396,148 $ 4,309,990 7,552,431 $ 87,420,598 (1,699,108) $(18,859,742) (4,362,891) $(49,431,818)
========== ============ =========== ============= ========== ============ ========== ============
GNMA Fund
--------------------------------------------------------------------------------------------------------------
Class C+ Class I
----------------------------------------------------- ------------------------------------------------------
For the For the
six months ended For the six months ended For the
September 30, 2004 year ended September 30, 2004 year ended
(unaudited) March 31, 2004 (unaudited) March 31, 2004
------------------------ --------------------------- ------------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Shares sold.... 500,288 $ 5,599,759 3,729,057 $ 43,094,583 -- $ -- (126) $ (1,423)
Reinvested
shares........ 62,323 693,279 274,348 3,116,823 -- -- 78 877
Shares redeemed (2,494,139) (27,758,143) (8,127,227) (92,785,359) -- -- (3,502) (39,640)
---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Net increase
(decrease).... (1,931,528) $(21,465,105) (4,123,822) $ (46,573,953) -- $ -- (3,550) $ (40,186)
========== ============ =========== ============= ========== ============ ========== ============
GNMA Fund
-----------------------------------------------------
Class X
-----------------------------------------------------
For the
six months ended For the
September 30, 2004 year ended
(unaudited) March 31, 2004
------------------------ ---------------------------
Shares Amount Shares Amount
---------- ------------ ----------- -------------
Shares sold.... 141,626 $ 1,575,468 407,941 $ 4,654,916
Reinvested
shares........ 13,787 153,270 26,729 302,771
Shares redeemed (54,439) (607,788) (49,150) (558,441)
---------- ------------ ----------- -------------
Net increase
(decrease).... 100,974 $ 1,120,950 385,520 $ 4,399,246
========== ============ =========== =============
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
* Includes automatic conversion of 56,121 shares of Class B shares in the
amount of $625,323 to 56,272 shares of Class A shares in the amount of
$625,323.
** Includes automatic conversion of 149,977 shares of Class B in the amount of
$1,707,937 to 149,914 shares of Class A shares in the amount of $1,707,937.
72
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
Strategic Bond Fund
----------------------------------------------------------------------------------------------------------
Class A Class B
-------------------------------------------------- -----------------------------------------------------
For the For the
six months ended For the six months ended For the
September 30, 2004 year ended September 30, 2004 year ended
(unaudited) March 31, 2004 (unaudited) March 31, 2004
----------------------- ------------------------- ------------------------ --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ----------- ---------- ------------ ---------- ----------- ---------- ------------
Shares sold.... 2,422,390* $ 8,085,010* 4,819,218** $ 15,918,204** 1,510,174 $ 5,012,342 4,759,644 $ 15,630,339
Reinvested
shares........ 251,739 838,522 467,498 1,542,884 183,119 609,449 333,984 1,103,198
Shares redeemed (1,994,952) (6,622,078) (4,479,867) (14,659,821) (2,015,665)* (6,726,299)* (3,552,293)** (11,726,594)**
---------- ----------- ---------- ------------ ---------- ----------- ---------- ------------
Net increase
(decrease).... 679,177 $ 2,301,454 806,849 $ 2,801,267 (322,372) $(1,104,508) 1,541,335 $ 5,006,943
========== =========== ========== ============ ========== =========== ========== ============
Strategic Bond Fund
----------------------------------------------------------------------------------------------------------
Class C+ Class I
-------------------------------------------------- -----------------------------------------------------
For the For the
six months ended For the six months ended For the
September 30, 2004 year ended September 30, 2004 year ended
(unaudited) March 31, 2004 (unaudited) March 31, 2004
----------------------- ------------------------- ------------------------ --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ----------- ---------- ------------ ---------- ----------- ---------- ------------
Shares sold.... 1,174,333 $ 3,935,211 3,749,967 $ 12,469,971 -- $ -- -- $ --
Reinvested
shares........ 111,263 371,970 188,761 626,355 29,881 99,113 70,772 233,826
Shares redeemed (1,000,436) (3,328,060) (2,151,437) (7,085,839) (1,122,765) (3,817,402) -- --
---------- ----------- ---------- ------------ ---------- ----------- ---------- ------------
Net increase
(decrease).... 285,160 $ 979,121 1,787,291 $ (6,010,487) (1,092,884) $(3,718,289) 70,772 $ 233,826
========== =========== ========== ============ ========== =========== ========== ============
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
* Includes automatic conversion of 119,673 shares of Class B shares in the
amount of $399,625 to 119,673 shares of Class A shares in the amount of
$399,625.
** Includes automatic conversion of 426,671 shares of Class B shares in the
amount of $1,417,374 to 424,151 shares of Class A shares in the amount of
$1,417,374.
73
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
High Yield Bond Fund
--------------------------------------------------------------------------------------------------------------
Class A Class B
----------------------------------------------------- ------------------------------------------------------
For the For the
six months ended For the six months ended For the
September 30, 2004 year ended September 30, 2004 year ended
(unaudited) March 31, 2004 (unaudited) March 31, 2004
------------------------- -------------------------- ------------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
----------- ------------ ----------- ------------ ---------- ------------ ---------- ------------
Shares sold.... 22,465,486* $ 94,123,148* 24,186,781** $ 97,119,896** 1,564,253 $ 6,560,918 8,482,068 $ 34,228,906
Reinvested
shares........ 623,552 2,616,002 1,176,656 4,828,068 274,131 1,150,471 657,839 2,698,352
Shares redeemed (16,434,574) (68,168,872) (21,361,447) (86,944,156) (3,578,904)* (14,937,069)* (7,449,571)** (30,359,369)**
----------- ------------ ----------- ------------ ---------- ------------ ---------- ------------
Net increase...
(decrease)..... 6,654,464 $ 28,570,278 4,001,990 $ 15,003,808 (1,740,520) $ (7,225,680) 1,690,336 $ 6,567,889
=========== ============ =========== ============ ========== ============ ========== ============
High Yield Bond Fund
--------------------------------------------------------------------------------------------------------------
Class C+ Class I
----------------------------------------------------- ------------------------------------------------------
For the For the
six months ended For the six months ended For the
September 30, 2004 year ended September 30, 2004 year ended
(unaudited) March 31, 2004 (unaudited) March 31, 2004
------------------------- -------------------------- ------------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
----------- ------------ ----------- ------------ ---------- ------------ ---------- ------------
Shares sold.... 3,321,932 $ 14,006,916 10,265,844 $ 41,606,962 -- $ -- 50,125 $ 199,923
Reinvested
shares........ 236,289 989,622 460,883 1,902,362 -- -- 227 905
Shares redeemed (2,940,239) (12,383,976) (5,858,398) (23,969,331) -- -- (54,097) (219,345)
----------- ------------ ----------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease).... 617,982 $ 2,612,562 4,868,329 $ 19,539,993 -- $ -- (3,745) $ (18,517)
=========== ============ =========== ============ ========== ============ ========== ============
High Yield Bond Fund
-----------------------------------------------------
Class Z
-----------------------------------------------------
For the
six months ended For the
September 30, 2004 year ended
(unaudited) March 31, 2004
------------------------- --------------------------
Shares Amount Shares Amount
----------- ------------ ----------- ------------
Shares sold.... -- $ -- -- $ --
Reinvested
shares........ 845,232 3,547,651 1,634,144 6,692,758
Shares redeemed -- -- -- --
----------- ------------ ----------- ------------
Net increase
(decrease).... 845,232 $ $3,547,651 1,634,144 $ 6,692,758
=========== ============ =========== ============
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
* Includes automatic conversion of 380,444 shares of Class B shares in the
amount of $1,603,426 to 381,349 of shares of Class A shares in the amount of
$1,603,426.
** Includes automatic conversion of 702,453 shares of Class B shares in the
amount of $2,892,417 to 704,002 shares of Class A shares in the amount of
$2,892,417.
74
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (unaudited)
(continued)
Tax Exempt Insured Fund
---------------------------------------------------------------------------------------------------
Class A Class B
------------------------------------------------ ------------------------------------------------
For the For the
six months ended For the six months ended For the
September 30, 2004 year ended September 30, 2004 year ended
(unaudited) March 31, 2004 (unaudited) March 31, 2004
--------------------- ------------------------- ---------------------- -----------------------
Shares Amount Shares Amount Shares Amount Shares Amount
-------- ----------- ---------- ------------ -------- ----------- -------- -----------
Shares sold.... 116,321* $ 1,506,845* 682,967** $ 9,118,210** 18,240 $ 238,010 114,501 $ 1,538,768
Reinvested
shares........ 48,215 620,817 223,173 2,932,244 7,505 96,614 43,442 569,970
Shares redeemed (455,528) (5,852,913) (1,529,607) (20,408,255) (488,522)* (6,344,415)* (321,289)** (4,281,374)**
-------- ----------- ---------- ------------ -------- ----------- -------- -----------
Net increase
(decrease).... (290,992) $(3,725,251) (623,467) $ (8,357,801) (462,777) $(6,009,791) (163,346) $(2,172,636)
======== =========== ========== ============ ======== =========== ======== ===========
Tax Exempt Insured Fund
------------------------------------------------
Class C+
------------------------------------------------
For the
six months ended For the
September 30, 2004 year ended
(unaudited) March 31, 2004
--------------------- -------------------------
Shares Amount Shares Amount
-------- ----------- ---------- ------------
Shares sold.... 48,112 $ 612,807 138,250 $ 1,836,415
Reinvested
shares........ 3,080 39,695 15,551 204,119
Shares redeemed (42,663) (552,510) (196,573) (2,629,076)
-------- ----------- ---------- ------------
Net increase
(decrease).... 8,529 $ 99,992 (42,772) $ (588,542)
======== =========== ========== ============
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
* Includes automatic conversion of 29,593 shares of Class B shares in the
amount of $383,328 to 29,607 shares of Class A shares in the amount of
$383,328.
** Includes automatic conversion of 85,689 shares of Class B shares in the
amount of $1,140,500 to 85,710 shares of Class A shares in the amount of
$1,140,500.
Note 7. Lines of Credit
The AIG SunAmerica Family of Mutual Funds has established $75 million
committed and $50 million uncommitted lines of credit with State Street Bank
and Trust Company, the Funds' custodian. Interest is currently payable at
the Federal Funds rate plus 50 basis points on the committed line and State
Street's discretionary bid rate on the uncommitted line of credit. There is
also a commitment fee of 10 basis points per annum on the daily unused
portion of the $75 million committed line of credit, which is included in
other expenses on the Statement of Operations. Borrowings under the line of
credit will commence when the Fund's cash shortfall exceeds $100,000. For
the six months ended September 30, 2004, the following Funds had borrowings:
Weighted
Days Interest Average Debt Average
Fund Outstanding Charges Utilized Interest
- ---- ----------- -------- ------------ --------
High Yield Bond Fund 10 $1,940 $4,040,317 1.69%
Note 8. Interfund Lending Agreement
The Funds, pursuant to exemptive relief granted by the Securities and
Exchange Commission are permitted to participate in an interfund lending
program among investment companies advised by SAAMCo or an affiliate. The
interfund lending program allows the participating Funds to borrow money
from and loan 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 September 30, 2004 none of the Funds participated in this
program.
Note 9. Trustees Retirement Plan
The Trustees of the SunAmerica Income Funds have adopted the AIG SunAmerica
Disinterested Trustees' and Directors' Retirement Plan (the "Retirement
Plan") effective January 1, 1993 for the unaffiliated Trustees. The
Retirement Plan provides generally that if an unaffiliated Trustee who has
at least 10 years of consecutive service as a Disinterested Trustee of any
of the SunAmerica mutual funds (an "Eligible Trustee") retires after
reaching age 60 but before age 70, or who has at least 5 years of
75
SunAmerica Income Funds
TRUSTEE INFORMATION -- September 30, 2004 -- (unaudited)
consecutive service after reaching age 65 but before age 70, or dies while a
Trustee, such person will be eligible to receive a retirement or death
benefit from each AIG SunAmerica mutual fund with respect to which he or she
is an Eligible Trustee. As of each birthday, prior to the 70th birthday, but
in no event for a period greater than 10 years, each Eligible Trustee will
be credited with an amount equal to 50% of his or her regular fees
(excluding committee fees) for services as a Disinterested Trustee of each
AIG SunAmerica mutual fund for the calendar year in which such birthday
occurs. In addition, an amount equal to 8.5% of any amounts credited under
the preceding clause during prior years is added to each Eligible Trustee's
Account until such Eligible Trustee reaches his or her 70th birthday. An
Eligible Trustee may receive any benefits payable under the Retirement Plan,
at his or her election, either in one lump sum or in up to fifteen annual
installments. Any undistributed amounts shall continue to accrue interest at
8.50%.
The following amounts of the Retirement Plan liability are included in the
Trustees fees and expenses line on the Statement of Assets and Liabilities
and the amount for the Retirement Plan expenses are included in the
Trustees' fees on the Statement of Operations.
Retirement Retirement Retirement
Plan Plan Plan
Liability Expense Payments
---------- ---------- ----------
As of September 30, 2004
--------------------------------
Core Bond Fund................. $ 21,035 $1,673 $ 432
U.S. Government Securities Fund 108,541 1,855 5,440
GNMA Fund...................... 43,582 4,025 1,175
Strategic Bond Fund............ 26,052 708 1,236
High Yield Bond Fund........... 46,235 2,192 1,862
Tax Exempt Insured Fund........ 32,801 674 1,523
76
The following table contains basic information regarding the Trustees that
oversee operations of the Funds and other investment companies within the Fund
complex.
Number of
Position Term of Funds in
Name, Held With Office and Fund Complex
Address and SunAmerica Length of Principal Occupations Overseen by Other Directorships
Date of Birth* Complex Time Served(4) During Past 5 Years Trustee(1) Held by Trustee(2)
- ---------------------- ---------- -------------- ----------------------------- ------------ -----------------------------
Jeffrey S. Burum Trustee 2004-present Founder and CEO of 32 None
DOB: February 27, 1963 National Housing
Development Corp.
Dr. Judith L. Craven Trustee 2001-present Retired. 73 Director, A.G. Belo
DOB: October 6, 1945 Corporation (1992 to
present); Director, Sysco
Corporation (1996 to
present); Director, Luby's
Inc. (1998 to present);
Director, University of Texas
Board of Regents
(2001-Present).
William F. Devin Trustee 2001-present Retired. 73 Member of the Board of
DOB: December 30, 1938 Governors, Boston Stock
Exchange (1985-Present).
Samuel M. Eisenstat Chairman 1986-present Attorney, solo practitioner. 46 Director, North European Oil
DOB: March 7, 1940 of the Royalty Trust.
Board
Stephen J. Gutman Trustee 1986-present Partner and Member of 46 None
DOB: May 10, 1943 Managing Directors, Beau
Brummell-Soho, LLC
(licensing of menswear
specialty retailing and other
activities) (June 1988 to
present).
Peter A. Harbeck(3) Trustee 1995-present President, CEO and Director, 82 None
DOB: January 23, 1954 AIG SunAmerica Asset
Management Corp.
("SAAMCo") (August 1995
to present); Director, AIG
SunAmerica Capital
Services, Inc. ("SACS")
(August 1993 to present).
- --------
* The business address for each Trustee is the Harborside Financial Center,
3200 Plaza 5, Jersey City, NJ 07311-4992.
(1) The "Fund Complex" consists of all registered investment company portfolios
for which SAAMCo serves as investment adviser or business manager. The
"Fund Complex" includes the SunAmerica Money Market Funds (2 funds),
SunAmerica Equity Funds (9 funds), SunAmerica Income Funds (6 funds),
SunAmerica Focused Series, Inc. (15 portfolios), Anchor Series Trust
(9 portfolios), SunAmerica Senior Floating Rate Fund, Inc. (1 fund),
SunAmerica Series Trust (32 portfolios), VALIC Company I (21 portfolios),
VALIC Company II (15 funds), Seasons Series Trust (19 portfolios) and AIG
Series Trust (4 funds).
(2) Directorships of companies required to report to the Securities and
Exchange Commission under the Securities Exchange Act of 1934 (i.e. "public
companies") or other investment companies registered under the Investment
Company Act of 1940.
(3) Interested trustee, as defined within the Investment Company Act of 1940.
(4) Trustees serve until their successors are duly elected and qualified,
subject to the Trustee's retirement plan discussed in Note 9 of the
financial statements.
Additional information concerning the Trustees is contained in the Statement of
Additional Information and is available without charge by calling (800)
858-8850.
77
SunAmerica Income Funds
TRUSTEE INFORMATION -- September 30, 2004 -- (unaudited)
[LOGO] AIG Sun America
Mutual Funds
Harborside Financial Center
3200 Plaza 5
Jersey City, NJ 07311-4992
Directors/Trustees Investment Adviser DISCLOSURE OF QUARTERLY
Samuel M. Eisenstat PORTFOLIO HOLDINGS
Peter A. Harbeck AIG SunAmerica Asset Management Corp. The Trust is required to
Dr. Judith L. Craven Harborside Financial file its com-plete
William F. Devin Center schedule of portfolio
Stephen J. Gutman 3200 Plaza 5 holdings with the SEC for
Jeffrey S. Burum Jersey City, NJ its first and third
07311-4992 fis-cal quarters on Form
Officers N-Q for fiscal quarters
Robert M. Zakem, Distributor ending after July 9,
President AIG SunAmerica Capital 2004. Once filed, the
Donna M. Handel, Services, Inc. Trust's Form N-Q will be
Treasurer Harborside Financial available without charge
Michael Cheah, Vice Center on the SEC's website at
President 3200 Plaza 5 www.sec.gov. You can also
J. Steven Neamtz, Vice Jersey City, NJ obtain copies of Form N-Q
President 07311-4992 by (i) visiting the SEC's
Joseph P. Kelly, Public Reference Room in
Secretary Shareholder Servicing Washington DC
Stacey V. Morrison, Agent (information on the
Assistant Secretary AIG SunAmerica Fund operation of the Public
Gregory R. Kingston, Services, Inc. Reference Room may be
Vice President and Harborside Financial obtained by calling
Assistant Treasurer Center 1-800-SEC-0330); (ii)
Robert A. Chopyak, 3200 Plaza 5 sending your request and
Assistant Treasurer Jersey City, NJ a duplicating fee to the
07311-4992 SEC's Public Reference
Room, Washington, DC
Custodian and Transfer 20549-0102 or (iii)
Agent sending your request
State Street Bank and electronically to
Trust Company publicinfo.sec.gov.
P.O. Box 419572
Kansas City, MO PROXY VOTING RECORD ON
64141-6572 FUND PORTFOLIO SECURITIES
Information regarding how
VOTING PROXIES ON FUND the Trust voted proxies
PORTFOLIO SECURITIES related to securities
A description of the held in the Fund's during
policies and proce-dures the six month period
that the Trust uses to ended September 30, 2004
determine how to vote is available (i) without
proxies relating to charge, upon request, by
secu-rities held in the calling (800) 858-8850 or
Fund's portfolio which is (ii) on the SEC's website
available in the Trust's at http://www.sec.gov.
State-ment of Additional
Information, may be This report is submitted
obtained without charge solely for the general
upon re-quest, by calling information of
(800) 858-8850. The shareholders of the Fund.
information is also Distribution of this
available from the EDGAR report to persons other
database on the than shareholders of the
Securities and Exchange Fund is authorized only
Commission's website at in connection with a
http://www.sec.gov. currently effective
propsectus, setting forth
details of the Fund,
which must precede or
accompany this report.
The accompanying report
has not been audited by
independent accountants
and accordingly no
opinion has been
expressed thereon.
78
[LOGO] AIG Sun America
Mutual Funds
Distributed by:
AIG SunAmerica Capital Services, Inc.
INSAN-9/04
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. Schedule of Investments.
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 10. 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. 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) that occurred during the registrant's last fiscal half-year that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 11. Exhibits.
(a) (1) Not applicable.
(2) Certification pursuant to Rule 30a-2 under the Investment Company Act
of 1940 (17 CFR 270.30a-2) attached hereto as Exhibit 99.CERT.
(3) Not applicable.
(b) Certification pursuant to 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 Income Funds
By: /s/ Vincent M. Marra
Vincent M. Marra
President
Date: December 9, 2004
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/ Vincent M. Marra
Vincent M. Marra
President
Date: December 9, 2004
By: /s/ Donna M. Handel
Donna M. Handel
Treasurer
Date: December 9, 2004