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 811-4708
---------------------------------------------
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)
John T. Genoy
Senior Vice President
SunAmerica Asset Management Corp.
Harborside Financial Center,
3200 Plaza 5
Jersey City, NJ 07311
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6414
-----------------------------
Date of fiscal year end: March 31
--------------------------
Date of reporting period: March 31, 2009
-------------------------
Item 1. Reports to Stockholders
[PHOTO]
ANNUAL REPORT 2009
SUNAMERICA
Income Funds
[LOGO]
MARCH 31, 2009 ANNUAL REPORT
SUNAMERICA INCOME FUNDS
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.......................... 8
FINANCIAL HIGHLIGHTS........................................ 11
PORTFOLIO OF INVESTMENTS.................................... 16
NOTES TO FINANCIAL STATEMENTS............................... 62
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..... 78
TRUSTEE AND OFFICER INFORMATION............................. 79
SHAREHOLDER TAX INFORMATION................................. 83
COMPARISONS: PORTFOLIOS VS. INDICES......................... 85
SHAREHOLDER LETTER
Dear Shareholder:
Enclosed is the Annual Report for the SunAmerica Income Funds for the
twelve-month period ended March 31, 2009.
The annual period will long be remembered with dramatic action in the economy,
the financial markets and financial institutions. We ended the fiscal year with
the economy contracting, consumer confidence eroding, rising unemployment, a
lethargic housing market and low levels of consumer confidence.
During 2008, the Federal Reserve aggressively reduced the Federal Funds rate
from 4.25% to a target rate of between 0.00% and 0.25% with the outlook toward
downside growth. The Federal Reserve announced plans to directly purchase
mortgage and Treasury securities in an effort to keep rates low. The Federal
Reserve's expectation is that low rates will keep borrowing rates, such as
mortgage rates, low, and encourage lending activity. In addition, several
government programs were implemented, including the U.S. Department of the
Treasury's Troubled Asset Relief Program (TARP), which provided a significant
stimulus to banks, financial institutions and other participants.
This economic backdrop further challenged the credit markets which had been hit
hard by liquidity fears during the second half of the period. Credit spreads
widened significantly in both investment-grade and below-investment-grade
credits. Along with posing many challenges, the action in the credit markets
also presented opportunities. We urge you to read the detailed discussions of
each Fund to gain greater insights regarding how each Fund navigated these
challenging markets.
We strongly recommend that you consult with your financial adviser regularly to
assure that you maintain a diversified portfolio that is appropriate to your
individual requirements. We also encourage you to utilize our website,
www.sunamericafunds.com, for additional information.
Thank you for your investment in the SunAmerica Income Funds. We remain focused
on the management of your assets and continue to work diligently to preserve
and grow your capital consistent with each Fund's individual objectives.
Sincerely,
THE SUNAMERICA INCOME FUNDS INVESTMENT PROFESSIONALS
Michael Cheah J. Hutchison Bryan Robert Vanden Assem
Geoffrey Cornell John Yovanovic
Tim Lindvall Bryan Petermann
Peter Stevenson Raphael Davis
Rajeev Mittal Anthony King
- --------
Past performance is no guarantee of future results.
2
SUNAMERICA INCOME FUNDS
EXPENSE EXAMPLE -- March 31, 2009 -- (unaudited)
DISCLOSURE OF PORTFOLIO EXPENSES IN SHAREHOLDER REPORTS
As a shareholder of a fund (each, a "Fund" and collectively the "Funds") in the
SunAmerica Income Funds (the "Trust"), you may incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchase payments,
contingent deferred sales charges and (2) ongoing costs, including management
fees; distribution and service fees; and other Fund expenses. The example set
forth below is intended to help you understand your ongoing costs (in dollars)
of investing in the 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 October 1, 2008 and held until March 31, 2009.
ACTUAL EXPENSES
The "Actual" section of the table provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the column under the heading entitled "Expenses Paid During the Six
Months Ended March 31, 2009" to estimate the expenses you paid on your account
during this period. The "Expenses Paid During the Six Months Ended March 31,
2009" column does not include small account fees that may be charged if your
account balance is below $500 ($250 for retirement plan accounts). In addition,
the "Expenses Paid During the Six Months Ended March 31, 2009" column does not
include administrative fees that may apply to qualified retirement plan
accounts. See the Trust's prospectus and/or your retirement plan document for a
full description of these fees. Had these fees been included, the "Expenses
Paid During the Six Months Ended March 31, 2009" 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 these 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. The "Expenses Paid During the Six Months
Ended March 31, 2009" column does not include small account fees that may be
charged if your account balance is below $500 ($250 for retirement plan
accounts). In addition, the "Expenses Paid During the Six Months Ended March
31, 2009" column does not include administrative fees that may apply to
qualified retirement plan accounts. See the Fund's prospectus and/or your
retirement plan document for a full description of these fees. Had these fees
been included, the "Expenses Paid During the Six Months Ended March 31, 2009"
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 -- March 31, 2009 -- (unaudited) (continued)
ACTUAL HYPOTHETICAL
------------------------------------------ ------------------------------------------
ENDING ACCOUNT
ENDING ACCOUNT EXPENSES PAID VALUE USING EXPENSES PAID
VALUE USING DURING THE A HYPOTHETICAL DURING THE EXPENSE
BEGINNING ACTUAL SIX MONTHS BEGINNING 5% ASSUMED SIX MONTHS RATIO
ACCOUNT VALUE RETURN AT ENDED ACCOUNT VALUE RETURN AT ENDED AS OF
AT OCTOBER 1, MARCH 31, MARCH 31, AT OCTOBER 1, MARCH 31, MARCH 31, MARCH 31,
FUND 2008 2009 2009* 2008 2009 2009* 2009*
- ---- ------------- -------------- ------------- ------------- -------------- ------------- ---------
U.S. GOVERNMENT SECURITIES
Class A#................. $1,000.00 $1,064.36 $5.10 $1,000.00 $1,020.00 $ 4.99 0.99%
Class B#................. $1,000.00 $1,060.92 $8.43 $1,000.00 $1,016.75 $ 8.25 1.64%
Class C#................. $1,000.00 $1,060.97 $8.43 $1,000.00 $1,016.75 $ 8.25 1.64%
GNMA
Class A#................. $1,000.00 $1,063.48 $5.09 $1,000.00 $1,020.00 $ 4.99 0.99%
Class B#................. $1,000.00 $1,059.93 $8.42 $1,000.00 $1,016.75 $ 8.25 1.64%
Class C#................. $1,000.00 $1,059.89 $8.42 $1,000.00 $1,016.75 $ 8.25 1.64%
STRATEGIC BOND
Class A.................. $1,000.00 $ 909.17 $6.43 $1,000.00 $1,018.20 $ 6.79 1.35%
Class B.................. $1,000.00 $ 906.13 $9.69 $1,000.00 $1,014.76 $10.25 2.04%
Class C.................. $1,000.00 $ 906.71 $9.55 $1,000.00 $1,014.91 $10.10 2.01%
HIGH YIELD BOND
Class A#................. $1,000.00 $ 725.02 $5.85 $1,000.00 $1,018.15 $ 6.84 1.36%
Class B#................. $1,000.00 $ 723.49 $8.64 $1,000.00 $1,014.91 $10.10 2.01%
Class C#................. $1,000.00 $ 724.42 $8.64 $1,000.00 $1,014.91 $10.10 2.01%
TAX EXEMPT INSURED
Class A#................. $1,000.00 $1,060.98 $5.14 $1,000.00 $1,019.95 $ 5.04 1.00%
Class B#................. $1,000.00 $1,056.52 $9.43 $1,000.00 $1,015.76 $ 9.25 1.84%
Class C#................. $1,000.00 $1,058.02 $7.90 $1,000.00 $1,017.25 $ 7.75 1.54%
- --------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 182 days divided by 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, if these fees and expenses had not been waived or assumed, the
"Actual/Hypothetical Ending Account Value" would have been lower and the
"Actual/Hypothetical Expenses Paid During the Six Months Ended March 31,
2009" and the "Expenses Ratios" would have been higher.
4
SUNAMERICA INCOME FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- March 31, 2009
U.S. GOVERNMENT STRATEGIC
SECURITIES GNMA BOND
FUND FUND FUND
--------------- ------------ -------------
ASSETS:
Long-term investment securities, at market value* (unaffiliated)........... $189,022,602 $381,038,219 $ 430,579,303
Short term investment securities, at market value* (unaffiliated).......... -- -- 9,997,624
Repurchase agreements (cost approximates market value)..................... 25,144,000 162,387,000 13,579,000
------------ ------------ -------------
Total investments........................................................ 214,166,602 543,425,219 454,155,927
------------ ------------ -------------
Cash....................................................................... 148 568 63,344
Foreign cash*.............................................................. -- -- 95,446
Receivable for:
Shares of beneficial interest sold....................................... 512,875 4,744,432 1,980,608
Dividends and interest................................................... 878,445 1,538,982 10,002,363
Investments sold......................................................... -- -- 6,490,364
Prepaid expenses and other assets.......................................... 646 1,247 2,506
Due from investment adviser for expense reimbursements/fee waivers......... 73,551 55,523 --
------------ ------------ -------------
Total assets............................................................... 215,632,267 549,765,971 472,790,558
------------ ------------ -------------
LIABILITIES:
Payable for-
Shares of beneficial interest redeemed................................... 323,011 515,437 1,249,627
Investments purchased.................................................... -- 81,998,611 3,653,553
Interest on securities sold short........................................ -- -- --
Investment advisory and management fees.................................. 118,159 174,236 249,203
Distribution and service maintenance fees................................ 83,837 196,183 266,769
Transfer agent fees and expenses......................................... 45,895 94,522 93,717
Trustees' fees and expenses.............................................. 19,538 7,480 6,961
Other accrued expenses................................................... 84,050 84,741 220,528
Dividends payable.......................................................... 98,898 193,642 988,095
Securities sold short, at market value#.................................... -- -- --
Commitments (Note 11)...................................................... -- -- --
------------ ------------ -------------
Total liabilities.......................................................... 773,388 83,264,852 6,728,453
------------ ------------ -------------
Net assets................................................................. $214,858,879 $466,501,119 $ 466,062,105
============ ============ =============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01 par value............................. $ 214,485 $ 395,797 $ 1,703,025
Paid-in capital............................................................ 202,344,328 449,469,754 662,159,533
------------ ------------ -------------
202,558,813 449,865,551 663,862,558
Accumulated undistributed net investment income (loss)..................... 27,608 (378,883) (1,427,417)
Accumulated undistributed net realized gain (loss) on investments, futures
contracts, securities sold short and foreign exchange transactions........ (2,077,699) 1,665,800 (103,751,223)
Unrealized appreciation (depreciation) on investments...................... 14,350,157 15,348,651 (92,585,277)
Unrealized appreciation (depreciation) on foreign exchange transactions.... -- -- (36,536)
Unrealized appreciation (depreciation) on securities sold short............ -- -- --
------------ ------------ -------------
NET ASSETS................................................................. $214,858,879 $466,501,119 $ 466,062,105
============ ============ =============
*Cost
Long-term investment securities (unaffiliated)........................... $174,672,445 $365,689,568 $ 523,164,580
============ ============ =============
Short-term securities (unaffiliated)..................................... $ -- $ -- $ 9,997,624
============ ============ =============
Foreign cash............................................................. $ -- $ -- $ 96,340
============ ============ =============
#Proceeds from securities sold short....................................... $ -- $ -- $ --
============ ============ =============
HIGH YIELD TAX EXEMPT
BOND INSURED
FUND FUND
------------- -----------
ASSETS:
Long-term investment securities, at market value* (unaffiliated)........... $ 103,354,463 $63,340,291
Short term investment securities, at market value* (unaffiliated).......... -- 7,891,808
Repurchase agreements (cost approximates market value)..................... 3,317,000 --
------------- -----------
Total investments........................................................ 106,671,463 71,232,099
------------- -----------
Cash....................................................................... 289,197 --
Foreign cash*.............................................................. -- --
Receivable for:
Shares of beneficial interest sold....................................... 1,454,128 267,029
Dividends and interest................................................... 3,850,611 813,433
Investments sold......................................................... 1,866,354 435,854
Prepaid expenses and other assets.......................................... 71,074 174
Due from investment adviser for expense reimbursements/fee waivers......... 22,877 20,598
------------- -----------
Total assets............................................................... 114,225,704 72,769,187
------------- -----------
LIABILITIES:
Payable for-
Shares of beneficial interest redeemed................................... 434,484 189,241
Investments purchased.................................................... 2,702,586 1,962,779
Interest on securities sold short........................................ 30,031 --
Investment advisory and management fees.................................. 68,532 29,421
Distribution and service maintenance fees................................ 59,907 29,486
Transfer agent fees and expenses......................................... 28,537 15,705
Trustees' fees and expenses.............................................. 8,274 5,419
Other accrued expenses................................................... 118,518 62,011
Dividends payable.......................................................... 344,274 68,330
Securities sold short, at market value#.................................... 809,250 --
Commitments (Note 11)...................................................... -- --
------------- -----------
Total liabilities.......................................................... 4,604,393 2,362,392
------------- -----------
Net assets................................................................. $ 109,621,311 $70,406,795
============= ===========
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01 par value............................. $ 433,428 $ 57,365
Paid-in capital............................................................ 291,255,986 68,796,750
------------- -----------
291,689,414 68,854,115
Accumulated undistributed net investment income (loss)..................... 1,059,921 (17,237)
Accumulated undistributed net realized gain (loss) on investments, futures
contracts, securities sold short and foreign exchange transactions........ (120,160,808) (740,698)
Unrealized appreciation (depreciation) on investments...................... (62,957,466) 2,310,615
Unrealized appreciation (depreciation) on foreign exchange transactions.... -- --
Unrealized appreciation (depreciation) on securities sold short............ (9,750) --
------------- -----------
NET ASSETS................................................................. $ 109,621,311 $70,406,795
============= ===========
*Cost
Long-term investment securities (unaffiliated)........................... $ 166,311,929 $61,029,676
============= ===========
Short-term securities (unaffiliated)..................................... $ -- $ 7,891,808
============= ===========
Foreign cash............................................................. $ -- $ --
============= ===========
#Proceeds from securities sold short....................................... $ 799,500 $ --
============= ===========
See Notes to Financial Statements
5
SUNAMERICA INCOME FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- March 31, 2009 -- (continued)
U.S. GOVERNMENT STRATEGIC
SECURITIES GNMA BOND
FUND FUND FUND
--------------- ------------ ------------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $178,962,775 $346,090,992 $227,601,020
Shares of beneficial interest issued and outstanding................................ 17,864,357 29,388,831 83,298,769
Net asset value and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................. $ 10.02 $ 11.78 $ 2.73
Maximum sales charge (4.75% of offering price)...................................... 0.50 0.59 0.14
------------ ------------ ------------
Maximum offering price to public.................................................... $ 10.52 $ 12.37 $ 2.87
============ ============ ============
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $ 15,802,519 $ 44,467,366 $ 38,281,465
Shares of beneficial interest issued and outstanding................................ 1,576,946 3,766,384 14,016,095
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge).................................................. $ 10.02 $ 11.81 $ 2.73
============ ============ ============
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $ 20,093,585 $ 75,942,761 $200,179,620
Shares of beneficial interest issued and outstanding................................ 2,007,211 6,424,477 72,987,639
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge).................................................. $ 10.01 $ 11.82 $ 2.74
============ ============ ============
HIGH YIELD TAX EXEMPT
BOND INSURED
FUND FUND
----------- -----------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $59,210,019 $53,570,115
Shares of beneficial interest issued and outstanding................................ 23,458,275 4,365,576
Net asset value and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................. $ 2.52 $ 12.27
Maximum sales charge (4.75% of offering price)...................................... 0.13 0.61
----------- -----------
Maximum offering price to public.................................................... $ 2.65 $ 12.88
=========== ===========
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $17,017,544 $ 2,925,816
Shares of beneficial interest issued and outstanding................................ 6,730,442 238,166
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge).................................................. $ 2.53 $ 12.28
=========== ===========
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $33,393,748 $13,910,864
Shares of beneficial interest issued and outstanding................................ 13,154,068 1,132,734
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge).................................................. $ 2.54 $ 12.28
=========== ===========
See Notes to Financial Statements
6
SUNAMERICA INCOME FUNDS
STATEMENT OF OPERATIONS -- For the YEAR ended March 31, 2009
U.S. GOVERNMENT STRATEGIC
SECURITIES GNMA BOND
FUND FUND FUND
--------------- ----------- -------------
INCOME:
Dividends (unaffiliated)....................................................... $ -- $ -- $ 252,818
Interest (unaffiliated)........................................................ 8,278,942 16,843,723 51,227,233
----------- ----------- -------------
Total investment income*..................................................... 8,278,942 16,843,723 51,480,051
----------- ----------- -------------
EXPENSES:
Investment advisory and management fees........................................ 1,440,218 1,803,355 4,078,689
Distribution and service maintenance fees:
Class A...................................................................... 661,740 1,056,072 1,295,399
Class B...................................................................... 158,240 437,196 456,780
Class C...................................................................... 177,233 469,579 2,348,229
Transfer agent fees:
Class A...................................................................... 449,430 691,111 845,538
Class B...................................................................... 40,755 107,206 109,649
Class C...................................................................... 43,316 110,462 533,341
Registration fees:
Class A...................................................................... 24,853 19,252 8,180
Class B...................................................................... 7,398 2,609 6,124
Class C...................................................................... 9,110 6,072 7,260
Custodian and accounting fees.................................................. 88,983 149,266 398,093
Reports to shareholders........................................................ 14,695 27,625 101,343
Audit and tax fees............................................................. 48,170 49,290 53,536
Legal fees..................................................................... 12,260 11,132 15,651
Trustees' fees and expenses.................................................... 20,498 35,314 65,947
Interest expense............................................................... -- -- 4,410
Interest expense on securities sold short...................................... -- -- --
Other expenses................................................................. 23,563 28,049 36,579
----------- ----------- -------------
Total expenses before fee waivers, reimbursements, and custody credits....... 3,220,462 5,003,590 10,364,748
Fees waived and expenses reimbursed by investment advisor (Note 3)........... (798,504) (529,195) --
Custody credits earned on cash balances...................................... (5) (110) (2,366)
----------- ----------- -------------
Net expenses................................................................. 2,421,953 4,474,285 10,362,382
----------- ----------- -------------
Net investment income (loss).................................................... 5,856,989 12,369,438 41,117,669
----------- ----------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated).......................... 2,492,555 4,332,582 (80,111,139)
Net realized foreign exchange gain (loss) on other assets and liabilities....... -- -- 1,927,991
Net realized gain (loss) on securities sold short............................... -- -- --
----------- ----------- -------------
Net realized gain (loss) on investments and foreign currencies.................. 2,492,555 4,332,582 (78,183,148)
----------- ----------- -------------
Change in unrealized appreciation (depreciation) on investments (unaffiliated).. 7,055,161 7,314,226 (76,336,467)
Change in unrealized foreign exchange gain (loss) on other assets and
liabilities.................................................................... -- -- (313,964)
Change in unrealized appreciation (depreciation) on securities sold short....... -- -- --
----------- ----------- -------------
Net unrealized gain (loss) on investments and foreign currencies................ 7,055,161 7,314,226 (76,650,431)
----------- ----------- -------------
Net realized and unrealized gain (loss) on investments, and foreign currencies.. 9,547,716 11,646,808 (154,833,579)
----------- ----------- -------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... $15,404,705 $24,016,246 $(113,715,910)
=========== =========== =============
- --------
* Net of foreign withholding taxes on interest and dividends of................ $ -- $ -- $ 419
=========== =========== =============
HIGH YIELD TAX EXEMPT
BOND INSURED
FUND FUND
------------ ----------
INCOME:
Dividends (unaffiliated)....................................................... $ 348,099 $ --
Interest (unaffiliated)........................................................ 20,338,667 2,678,047
------------ ----------
Total investment income*..................................................... 20,686,766 2,678,047
------------ ----------
EXPENSES:
Investment advisory and management fees........................................ 1,275,441 292,267
Distribution and service maintenance fees:
Class A...................................................................... 327,013 167,106
Class B...................................................................... 271,454 32,321
Class C...................................................................... 498,739 74,767
Transfer agent fees:
Class A...................................................................... 226,905 115,786
Class B...................................................................... 67,152 9,014
Class C...................................................................... 118,037 18,530
Registration fees:
Class A...................................................................... 5,733 17,480
Class B...................................................................... 5,376 8,542
Class C...................................................................... 8,346 8,757
Custodian and accounting fees.................................................. 86,283 30,940
Reports to shareholders........................................................ 29,054 3,109
Audit and tax fees............................................................. 55,269 44,588
Legal fees..................................................................... 17,504 12,397
Trustees' fees and expenses.................................................... 18,152 5,212
Interest expense............................................................... 13,459 --
Interest expense on securities sold short...................................... 21,057 --
Other expenses................................................................. 25,492 20,755
------------ ----------
Total expenses before fee waivers, reimbursements, and custody credits....... 3,070,466 861,571
Fees waived and expenses reimbursed by investment advisor (Note 3)........... (250,706) (152,373)
Custody credits earned on cash balances...................................... (991) (37)
------------ ----------
Net expenses................................................................. 2,818,769 709,161
------------ ----------
Net investment income (loss).................................................... 17,867,997 1,968,886
------------ ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated).......................... (34,201,584) (632,662)
Net realized foreign exchange gain (loss) on other assets and liabilities....... -- --
Net realized gain (loss) on securities sold short............................... 46,500 --
------------ ----------
Net realized gain (loss) on investments and foreign currencies.................. (34,155,084) (632,662)
------------ ----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated).. (43,361,349) 1,114,958
Change in unrealized foreign exchange gain (loss) on other assets and
liabilities.................................................................... -- --
Change in unrealized appreciation (depreciation) on securities sold short....... (9,750) --
------------ ----------
Net unrealized gain (loss) on investments and foreign currencies................ (43,371,099) 1,114,958
------------ ----------
Net realized and unrealized gain (loss) on investments, and foreign currencies.. (77,526,183) 482,296
------------ ----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... $(59,658,186) $2,451,182
============ ==========
- --------
* Net of foreign withholding taxes on interest and dividends of................ $ (1,390) $ --
============ ==========
See Notes to Financial Statements
7
SUNAMERICA INCOME FUNDS
STATEMENT OF CHANGES IN NET ASSETS
U.S. GOVERNMENT
SECURITIES FUND
--------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, MARCH 31,
2009 2008
------------ ------------
OPERATIONS:
Net investment income (loss)........................................................... $ 5,856,989 $ 7,237,467
Net realized gain (loss) on investments and foreign currencies......................... 2,492,555 1,008,787
Net unrealized gain (loss) on investments and foreign currencies....................... 7,055,161 8,877,258
------------ ------------
Increase (decrease) in net assets resulting from operations.............................. 15,404,705 17,123,512
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (5,369,678) (6,695,513)
Net investment income (Class B)........................................................ (345,850) (464,501)
Net investment income (Class C)........................................................ (381,222) (392,650)
Net realized gain on securities (Class A).............................................. -- --
Net realized gain on securities (Class B).............................................. -- --
Net realized gain on securities (Class C).............................................. -- --
------------ ------------
Total distributions to shareholders...................................................... (6,096,750) (7,552,664)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (17,856,605) 37,000,481
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (8,548,650) 46,571,329
NET ASSETS:
Beginning of period...................................................................... 223,407,529 176,836,200
------------ ------------
End of period+........................................................................... $214,858,879 $223,407,529
============ ============
- --------
+Includes accumulated undistributed net investment income (loss)......................... $ 27,608 $ 24,694
============ ============
See Notes to Financial Statements
8
SUNAMERICA INCOME FUNDS
STATEMENT OF CHANGES IN NET ASSETS -- (continued)
GNMA FUND STRATEGIC BOND FUND
-------------------------- ---------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2009 2008 2009 2008
------------ ------------ ------------- ------------
OPERATIONS:
Net investment income (loss)............................... $ 12,369,438 $ 15,979,518 $ 41,117,669 $ 40,202,721
Net realized gain (loss) on investments and foreign
currencies............................................... 4,332,582 6,905,478 (78,183,148) 7,026,495
Net unrealized gain (loss) on investments and foreign
currencies............................................... 7,314,226 10,107,965 (76,650,431) (31,067,542)
------------ ------------ ------------- ------------
Increase (decrease) in net assets resulting from operations. 24,016,246 32,992,961 (113,715,910) 16,161,674
------------ ------------ ------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)............................ (10,909,235) (13,925,153) (30,006,872) (29,257,025)
Net investment income (Class B)............................ (1,314,574) (1,870,179) (3,566,240) (2,805,432)
Net investment income (Class C)............................ (1,383,879) (1,078,120) (18,381,363) (13,185,521)
Net realized gain on securities (Class A).................. (2,340,430) -- -- --
Net realized gain on securities (Class B).................. (411,116) -- -- --
Net realized gain on securities (Class C).................. (540,648) -- -- --
------------ ------------ ------------- ------------
Total distributions to shareholders......................... (16,899,882) (16,873,452) (51,954,475) (45,247,978)
------------ ------------ ------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
CAPITAL SHARE TRANSACTIONS (NOTE 6)........................ 47,194,149 (2,267,507) (170,519,517) 103,961,925
------------ ------------ ------------- ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS..................... 54,310,513 13,852,002 (336,189,902) 74,875,621
NET ASSETS:
Beginning of period......................................... 412,190,606 398,338,604 802,252,007 727,376,386
------------ ------------ ------------- ------------
End of period+.............................................. $466,501,119 $412,190,606 $ 466,062,105 $802,252,007
============ ============ ============= ============
- --------
+Includes accumulated undistributed net investment income
(loss)..................................................... $ (378,883) $ 201,906 $ (1,427,417) $ 6,775,150
============ ============ ============= ============
See Notes to Financial Statements
9
SUNAMERICA INCOME FUNDS
STATEMENT OF CHANGES IN NET ASSETS -- (continued)
HIGH YIELD BOND FUND TAX EXEMPT INSURED FUND
--------------------------- ------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2009 2008 2009 2008
------------ ------------- ------------ ------------
OPERATIONS:
Net investment income (loss).......................... $ 17,867,997 $ 21,635,708 $ 1,968,886 $ 1,807,840
Net realized gain (loss) on investments and foreign
currencies.......................................... (34,155,084) (3,800,036) (632,662) (110,884)
Net unrealized gain (loss) on investments and foreign
currencies.......................................... (43,371,099) (36,536,170) 1,114,958 (1,245,963)
------------ ------------- ----------- -----------
Increase (decrease) in net assets resulting from
operations............................................ (59,658,186) (18,700,498) 2,451,182 450,993
------------ ------------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)....................... (8,583,504) (12,979,716) (1,633,906) (1,606,491)
Net investment income (Class B)....................... (2,374,059) (2,908,997) (82,242) (99,116)
Net investment income (Class C)....................... (4,308,886) (5,292,760) (212,850) (105,563)
Net realized gain on securities (Class A)............. -- -- -- (396,574)
Net realized gain on securities (Class B)............. -- -- -- (32,437)
Net realized gain on securities (Class C)............. -- -- -- (34,730)
------------ ------------- ----------- -----------
Total distributions to shareholders.................... (15,266,449) (21,181,473) (1,928,998) (2,274,911)
------------ ------------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
CAPITAL SHARE TRANSACTIONS (NOTE 6)................... (20,708,775) (134,674,504) 15,549,201 (2,960,840)
------------ ------------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS................ (95,633,410) (174,556,475) 16,071,385 (4,784,758)
NET ASSETS:
Beginning of period.................................... 205,254,721 379,811,196 54,335,410 59,120,168
------------ ------------- ----------- -----------
End of period+......................................... $109,621,311 $ 205,254,721 $70,406,795 $54,335,410
============ ============= =========== ===========
- --------
+Includes accumulated undistributed net investment
income (loss)......................................... $ 1,059,921 $ (1,882,760) $ (17,237) $ (54,332)
============ ============= =========== ===========
See Notes to Financial Statements
10
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT SECURITIES FUND
-------------------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET NET
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSES
BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
PERIOD ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENTS BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS(3)
- ------------ --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- -------- -------------
CLASS A
- -
03/31/05 $9.64 $0.31 $(0.26) $ 0.05 $(0.32) $-- $(0.32) $ 9.37 0.61% $174,905 0.99%
03/31/06 9.37 0.36 (0.20) 0.16 (0.37) -- (0.37) 9.16 1.68 151,284 0.99
03/31/07 9.16 0.37 0.10 0.47 (0.39) -- (0.39) 9.24 5.25 152,239 0.99
03/31/08 9.24 0.35 0.46 0.81 (0.37) -- (0.37) 9.68 9.03 191,057 0.99
03/31/09 9.68 0.26 0.36 0.62 (0.28) -- (0.28) 10.02 6.52 178,963 0.99
CLASS B
- -
03/31/05 $9.65 $0.25 $(0.27) $(0.02) $(0.26) $-- $(0.26) $ 9.37 (0.14)% $ 27,013 1.64%
03/31/06 9.37 0.30 (0.20) 0.10 (0.31) -- (0.31) 9.16 1.02 19,276 1.64
03/31/07 9.16 0.32 0.09 0.41 (0.33) -- (0.33) 9.24 4.57 14,716 1.64
03/31/08 9.24 0.30 0.45 0.75 (0.31) -- (0.31) 9.68 8.33 15,354 1.64
03/31/09 9.68 0.20 0.35 0.55 (0.21) -- (0.21) 10.02 5.83 15,803 1.64
CLASS C
- -
03/31/05 $9.64 $0.25 $(0.27) $(0.02) $(0.26) $-- $(0.26) $ 9.36 (0.14)% $ 9,945 1.64%
03/31/06 9.36 0.30 (0.20) 0.10 (0.31) -- (0.31) 9.15 1.02 8,281 1.64
03/31/07 9.15 0.31 0.10 0.41 (0.33) -- (0.33) 9.23 4.57 9,881 1.64
03/31/08 9.23 0.29 0.46 0.75 (0.31) -- (0.31) 9.67 8.34 16,997 1.64
03/31/09 9.67 0.20 0.35 0.55 (0.21) -- (0.21) 10.01 5.83 20,094 1.64
-
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS(3) TURNOVER
- ------------- --------- -
-
3.26% 253%(4)
3.80 357
4.05 243
3.83 343
2.73 84
-
2.61% 253%(4)
3.14 357
3.40 243
3.20 343
2.08 84
-
2.61% 253%(4)
3.14 357
3.40 243
3.14 343
2.05 84
- --------
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/05 03/31/06 03/31/07 03/31/08 03/31/09
-------- -------- -------- -------- --------
U.S. Government Securities Fund Class A. 0.39% 0.36% 0.38% 0.39% 0.35%
U.S. Government Securities Fund Class B. 0.43 0.43 0.43 0.48 0.40
U.S. Government Securities Fund Class C. 0.48 0.57 0.43 0.50 0.40
(4)Portfolio turnover includes paydowns on securities. Previously, portfolio
turnover was calculated prior to including paydowns on securities and was as
follows:
2005
----
U.S. Government Securities Fund......... 246%
See Notes to Financial Statements
11
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (continued)
GNMA FUND
---------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET NET
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSES
PERIOD BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENTS BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS(3)
- -------- --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- -------- -------------
CLASS A
- -
03/31/05 $11.38 $0.31 $(0.16) $0.15 $(0.33) $ -- $(0.33) $11.20 1.41% $338,031 0.99%
03/31/06 11.20 0.35 (0.07) 0.28 (0.40) (0.08) (0.48) 11.00 2.18 303,343 0.99
03/31/07 11.00 0.46 0.10 0.56 (0.48) -- (0.48) 11.08 5.23 310,508 0.99
03/31/08 11.08 0.46 0.48 0.94 (0.49) -- (0.49) 11.53 8.69 330,202 0.99
03/31/09 11.53 0.37 0.41 0.78 (0.42) (0.11) (0.53) 11.78 6.98 346,091 0.99
CLASS B
- -
03/31/05 $11.41 $0.24 $(0.16) $0.08 $(0.26) $ -- $(0.26) $11.23 0.75% $102,497 1.64%
03/31/06 11.23 0.28 (0.08) 0.20 (0.33) (0.08) (0.41) 11.02 1.43 76,304 1.64
03/31/07 11.02 0.39 0.11 0.50 (0.41) -- (0.41) 11.11 4.64 57,224 1.64
03/31/08 11.11 0.40 0.47 0.87 (0.42) -- (0.42) 11.56 7.98 46,389 1.64
03/31/09 11.56 0.31 0.40 0.71 (0.35) (0.11) (0.46) 11.81 6.28 44,467 1.64
CLASS C
- -
03/31/05 $11.42 $0.24 $(0.16) $0.08 $(0.26) $ -- $(0.26) $11.24 0.75% $ 54,936 1.64%
03/31/06 11.24 0.28 (0.07) 0.21 (0.33) (0.08) (0.41) 11.04 1.53 40,188 1.64
03/31/07 11.04 0.40 0.10 0.50 (0.41) -- (0.41) 11.13 4.64 30,606 1.64
03/31/08 11.13 0.39 0.47 0.86 (0.42) -- (0.42) 11.57 7.88 35,599 1.64
03/31/09 11.57 0.28 0.43 0.71 (0.35) (0.11) (0.46) 11.82 6.27 75,943 1.64
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS(3) TURNOVER
- ------------- ---------
2.73% 204%(4)
3.17 138
4.19 142
4.15 354
3.32 73
2.10% 204%(4)
2.50 138
3.53 142
3.52 354
2.67 73
2.11% 204%(4)
2.49 138
3.53 142
3.49 354
2.55 73
- --------
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/05 03/31/06 03/31/07 03/31/08 03/31/09
-------- -------- -------- -------- --------
GNMA Fund Class A............. 0.17% 0.13% 0.15% 0.15% 0.13%
GNMA Fund Class B............. 0.18 0.17 0.18 0.19 0.15
GNMA Fund Class C............. 0.18 0.19 0.17 0.22 0.15
(4)Portfolio turnover includes paydowns on securities. Previously, portfolio
turnover was calculated prior to including paydowns on securities and was as
follows:
2005
----
GNMA Fund............................... 204%
See Notes to Financial Statements
12
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (continued)
STRATEGIC BOND FUND
-------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET NET
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSE
PERIOD BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENTS BUTIONS PERIOD+ RETURN(2) (000'S) NET ASSETS
- -------- --------- ---------- ----------- ---------- ---------- ------------- ------- ------- --------- -------- ----------
CLASS A
- -
03/31/05 $3.41 $0.20 $ 0.11 $ 0.31 $(0.23) $-- $(0.23) $3.49 9.36% $ 59,279 1.40%(3)(4)
03/31/06 3.49 0.17 0.05 0.22 (0.18) -- (0.18) 3.53 6.54 167,072 1.34(4)
03/31/07 3.53 0.16 0.12 0.28 (0.18) -- (0.18) 3.63 8.07 453,893 1.31(6)
03/31/08 3.63 0.19 (0.11) 0.08 (0.21) -- (0.21) 3.50 2.29 483,820 1.28(6)
03/31/09 3.50 0.21 (0.71) (0.50) (0.27) -- (0.27) 2.73 (14.67) 227,601 1.31
CLASS B
- -
03/31/05 $3.41 $0.18 $ 0.10 $ 0.28 $(0.21) $-- $(0.21) $3.48 8.35% $ 37,250 2.05%(3)(4)
03/31/06 3.48 0.16 0.05 0.21 (0.16) -- (0.16) 3.53 6.14 46,294 2.00(3)(4)
03/31/07 3.53 0.15 0.10 0.25 (0.15) -- (0.15) 3.63 7.36 55,728 1.99(6)
03/31/08 3.63 0.16 (0.10) 0.06 (0.19) -- (0.19) 3.50 1.61 52,528 1.96(6)
03/31/09 3.50 0.19 (0.71) (0.52) (0.25) -- (0.25) 2.73 (15.25) 38,281 1.99
CLASS C
- -
03/31/05 $3.42 $0.18 $ 0.11 $ 0.29 $(0.21) $-- $(0.21) $3.50 8.65% $ 36,867 2.05%(3)(4)
03/31/06 3.50 0.15 0.05 0.20 (0.16) -- (0.16) 3.54 5.84 97,651 1.99(3)(4)
03/31/07 3.54 0.14 0.12 0.26 (0.16) -- (0.16) 3.64 7.36 217,755 1.98(6)
03/31/08 3.64 0.17 (0.11) 0.06 (0.19) -- (0.19) 3.51 1.64 265,904 1.94(6)
03/31/09 3.51 0.19 (0.71) (0.52) (0.25) -- (0.25) 2.74 (15.16) 200,180 1.96
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS TURNOVER
- ---------- ---------
5.94%(3)(4) 196%(5)(7)
5.19(4) 118(7)
4.79(6) 134(7)
5.30(6) 162(7)
6.54 112
5.32%(3)(4) 196%(5)(7)
4.51(3)(4) 118(7)
4.12(6) 134(7)
4.63(6) 162(7)
6.00 112
5.29%(3)(4) 196%(5)(7)
4.54(3)(4) 118(7)
4.12(6) 134(7)
4.65(6) 162(7)
6.03 112
- --------
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/05 03/31/06
-------- --------
Strategic Bond Fund Class A............. 0.03% -- %
Strategic Bond Fund Class B............. 0.02 0.00
Strategic Bond Fund Class C............. 0.03 0.00
(4)Net of custody credits of:
03/31/05 03/31/06
-------- --------
Strategic Bond Fund..................... 0.01% 0.07%
(5)Portfolio turnover includes paydowns on securities. Previously, portfolio
turnover was calculated prior to including paydowns on securities and was as
follows:
2005
- ----
Strategic Bond Fund. 188%
(6)Gross of custody credits of:
03/31/07 03/31/08
-------- --------
Strategic Bond Fund..................... 0.05% 0.02%
(7)Portfolio turnover includes "to be announced" ("TBA") transactions.
Previously, portfolio turnover was calculated excluding TBA transactions and
was as follows:
2005 2006 2007 2008
- ---- ---- ---- ----
Strategic Bond Fund..................... 190% 119% 131% 151%
See Notes to Financial Statements
13
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (continued)
HIGH YIELD BOND FUND
--------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET
ASSET (BOTH DIVIDENDS FROM NET ASSET NET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSE
PERIOD BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENT BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS(3)
- -------- --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- ----------- -------------
CLASS A
- -
03/31/05 $4.23 $0.33 $ 0.21 $ 0.54 $(0.34) $-- $(0.34) $4.43 13.26% $101,661 1.38%
03/31/06 4.43 0.31 0.19 0.50 (0.33) -- (0.33) 4.60 11.61 214,041 1.36(5)
03/31/07 4.60 0.30 0.19 0.49 (0.32) -- (0.32) 4.77 11.01 241,554 1.36
03/31/08 4.77 0.36 (0.63) (0.27) (0.34) -- (0.34) 4.16 (5.92) 109,219 1.36
03/31/09 4.16 0.38 (1.69) (1.31) (0.33) -- (0.33) 2.52 (32.66) 59,210 1.36
CLASS B
- -
03/31/05 $4.24 $0.31 $ 0.20 $ 0.51 $(0.31) $-- $(0.31) $4.44 12.57% $ 61,961 2.03%
03/31/06 4.44 0.31 0.16 0.47 (0.30) -- (0.30) 4.61 10.88 52,346 2.01(5)
03/31/07 4.61 0.27 0.19 0.46 (0.29) -- (0.29) 4.78 10.29 51,479 2.01
03/31/08 4.78 0.31 (0.60) (0.29) (0.32) -- (0.32) 4.17 (6.50) 34,911 2.01
03/31/09 4.17 0.36 (1.69) (1.33) (0.31) -- (0.31) 2.53 (33.00) 17,018 2.01
CLASS C
- -
03/31/05 $4.25 $0.30 $ 0.22 $ 0.52 $(0.31) $-- $(0.31) $4.46 12.77% $ 65,385 2.03%
03/31/06 4.46 0.30 0.17 0.47 (0.30) -- (0.30) 4.63 10.86 70,140 2.01(5)
03/31/07 4.63 0.27 0.19 0.46 (0.29) -- (0.29) 4.80 10.27 86,777 2.01
03/31/08 4.80 0.31 (0.61) (0.30) (0.32) -- (0.32) 4.18 (6.67) 61,125 2.01
03/31/09 4.18 0.36 (1.69) (1.33) (0.31) -- (0.31) 2.54 (32.90) 33,394 2.01
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS(3) TURNOVER
- ------------- ---------
7.59% 85%(4)
7.20(5) 91
6.44 86
7.49 72
10.74 77
7.04% 85%(4)
6.71(5) 91
5.82 86
6.80 72
10.18 77
6.97% 85%(4)
6.67(5) 91
5.80 86
6.75 72
10.16 77
- --------
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/05 03/31/06 03/31/07 03/31/08 03/31/09
-------- -------- -------- -------- --------
High Yield Bond Fund Class A............ 0.08% 0.11% 0.09% 0.17% 0.14%
High Yield Bond Fund Class B............ 0.07 0.14 0.11 0.20 0.16
High Yield Bond Fund Class C............ 0.09 0.12 0.10 0.18 0.15
(4)Portfolio turnover includes paydowns on securities. Previously, portfolio
turnover was calculated prior to including paydown on securities and was as
follows:
2005
----
High Yield Bond Fund. 85%
(5)Net of custody credits of 0.01%.
See Notes to Financial Statements
14
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (continued)
TAX EXEMPT INSURED FUND
-----------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET NET
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSES
BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
PERIOD ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENTS BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS
- ------------ --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- ------- ----------
CLASS A
- -
03/31/05 $13.16 $0.41 $(0.18) $ 0.23 $(0.41) $(0.17) $(0.58) $12.81 1.83% $62,032 1.25%
03/31/06 12.81 0.41 (0.10) 0.31 (0.40) (0.13) (0.53) 12.59 2.43 56,875 1.30
03/31/07 12.59 0.42 0.15 0.57 (0.42) (0.09) (0.51) 12.65 4.63 50,036 1.27
03/31/08 12.65 0.42 (0.31) 0.11 (0.42) (0.10) (0.52) 12.24 0.91 46,843 1.32
03/31/09 12.24 0.42 0.03 0.45 (0.42) -- (0.42) 12.27 3.74 53,570 1.09(3)
CLASS B
- -
03/31/05 $13.16 $0.33 $(0.18) $ 0.15 $(0.32) $(0.17) $(0.49) $12.82 1.21% $ 9,000 1.94%
03/31/06 12.82 0.32 (0.09) 0.23 (0.32) (0.13) (0.45) 12.60 1.77 6,694 1.95
03/31/07 12.60 0.31 0.15 0.46 (0.32) (0.09) (0.41) 12.65 3.72 5,093 2.11
03/31/08 12.65 0.31 (0.31) (0.00) (0.29) (0.10) (0.39) 12.26 0.06 3,351 2.21
03/31/09 12.26 0.32 0.01 0.33 (0.31) -- (0.31) 12.28 2.75 2,926 2.02(3)
CLASS C
- -
03/31/05 $13.16 $0.32 $(0.18) $ 0.14 $(0.32) $(0.17) $(0.49) $12.81 1.12% $ 5,701 1.95%(3)
03/31/06 12.81 0.32 (0.09) 0.23 (0.32) (0.13) (0.45) 12.59 1.81 4,497 1.95(3)
03/31/07 12.59 0.33 0.17 0.50 (0.34) (0.09) (0.43) 12.66 3.98 3,991 1.95(3)
03/31/08 12.66 0.34 (0.31) 0.03 (0.34) (0.10) (0.44) 12.25 0.29 4,141 1.95(3)
03/31/09 12.25 0.33 0.04 0.37 (0.34) -- (0.34) 12.28 3.12 13,911 1.64(3)
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS TURNOVER
- ---------- ---------
3.14% 153%
3.14 81
3.28 84
3.35 57
3.49(3) 92
2.44% 153%
2.48 81
2.44 84
2.46 57
2.58(3) 92
2.44%(3) 153%
2.48(3) 81
2.60(3) 84
2.71(3) 57
2.92(3) 92
- --------
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/05 03/31/06 03/31/07 03/31/08 03/31/09
-------- -------- -------- -------- --------
Tax Exempt Insured Fund Class A......... -- % -- % -- % -- % 0.24%
Tax Exempt Insured Fund Class B......... -- -- -- -- 0.23
Tax Exempt Insured Fund Class C......... 0.09 0.20 0.09 0.31 0.42
See Notes to Financial Statements
15
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO PROFILE -- March 31, 2009 -- (unaudited)
INDUSTRY ALLOCATION*
United States Treasury Notes.... 41.7%
Government National Mtg. Assoc.. 35.8
Repurchase Agreements........... 11.7
United States Treasury Bonds.... 9.5
Federal Farm Credit Bank........ 0.6
Small Business Administration... 0.4
----
99.7%
====
CREDIT QUALITY+#
Government -- Treasury. 58.2%
Government -- Agency... 41.8
-----
100.0%
=====
- --------
*Calculated as a percentage of net assets.
+Source: Standard and Poor's
#Calculated as a percentage of total debt issues, excluding short-term
securities.
16
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 36.8%
FEDERAL FARM CREDIT BANK -- 0.6%
5.64% due 04/04/11.................... $ 500,000 $ 541,374
6.00% due 03/07/11.................... 200,000 217,304
6.30% due 12/03/13.................... 500,000 578,192
-----------
1,336,870
-----------
FEDERAL NATIONAL MTG. ASSOC. -- 0.0%
8.00% due 01/01/23.................... 30,941 33,584
11.00% due 02/01/15................... 27 30
11.50% due 09/01/19................... 7,356 8,347
-----------
41,961
-----------
GOVERNMENT NATIONAL MTG. ASSOC. -- 35.8%
4.50% due 05/15/18.................... 684,665 715,746
4.50% due 08/15/18.................... 1,059,147 1,107,228
4.50% due 09/15/18.................... 3,099,439 3,240,141
4.50% due 10/15/18.................... 3,133,043 3,275,270
4.50% due 09/15/33.................... 3,973,909 4,075,816
5.00% due 04/15/18.................... 2,955,374 3,118,166
5.00% due 04/15/33.................... 26,680 27,786
5.00% due 08/15/33.................... 1,531,470 1,594,467
5.00% due 09/15/33.................... 689,325 717,903
5.00% due 10/15/33.................... 490,141 510,461
5.00% due 04/15/34.................... 23,823 24,796
5.00% due 11/15/34.................... 158,351 164,817
5.00% due 02/15/35.................... 20,144 20,951
5.00% due 03/15/35.................... 488,094 507,644
5.00% due 04/15/35.................... 52,415 54,515
5.00% due 05/15/35.................... 1,493,849 1,553,681
5.00% due 09/15/35.................... 768,467 799,246
5.00% due 10/15/35.................... 131,768 137,047
5.00% due 12/15/35.................... 82,224 85,517
5.00% due 03/15/36.................... 719,383 747,746
5.00% due 05/15/36.................... 1,181,637 1,228,226
5.00% due 06/15/36.................... 810,626 842,586
5.00% due 09/15/36.................... 1,821,462 1,893,540
5.00% due 10/15/36.................... 491,913 511,308
5.00% due 11/15/36.................... 41,972 43,626
5.00% due 12/15/36.................... 328,583 341,536
5.00% due 01/15/37.................... 4,055,937 4,214,584
5.00% due 02/15/37.................... 1,908,415 1,983,063
5.00% due 03/15/37.................... 1,480,866 1,538,790
5.00% due 04/15/37.................... 1,619,858 1,683,218
5.00% due 08/15/38.................... 9,708,029 10,086,237
5.50% due 11/15/32.................... 10,786 11,278
5.50% due 03/15/33.................... 371,623 388,444
5.50% due 04/15/33.................... 448,917 469,239
5.50% due 05/15/33.................... 1,018,918 1,064,935
5.50% due 06/15/33.................... 4,755,894 4,971,170
5.50% due 07/15/33.................... 1,330,356 1,390,574
5.50% due 10/15/33.................... 1,355,192 1,416,535
5.50% due 12/15/33.................... 271,419 283,705
5.50% due 01/15/34.................... 2,988,447 3,120,918
5.50% due 02/15/34.................... 1,664,693 1,738,484
6.00% due 01/15/28.................... 2,301 2,423
6.00% due 04/15/28.................... 965,751 1,013,372
6.00% due 05/15/28.................... 1,314 1,383
6.00% due 10/15/28.................... 3,442 3,624
6.00% due 03/15/29.................... 31,889 33,572
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.00% due 04/15/29....................... $ 30,410 $ 32,015
6.00% due 05/15/29....................... 61,301 64,536
6.00% due 06/15/29....................... 21,731 22,878
6.00% due 04/15/31....................... 20,571 21,657
6.00% due 05/15/31....................... 36,986 38,937
6.00% due 11/15/31....................... 157,226 165,522
6.00% due 12/15/31....................... 244,897 257,819
6.00% due 01/15/32....................... 115,301 121,349
6.00% due 02/15/32....................... 30,857 32,475
6.00% due 03/15/32....................... 7,079 7,450
6.00% due 08/15/32....................... 209,455 220,441
6.00% due 11/15/32....................... 30,684 32,294
6.00% due 12/15/32....................... 5,569 5,861
6.00% due 01/15/33....................... 15,775 16,592
6.00% due 02/15/33....................... 44,771 47,091
6.00% due 03/15/33....................... 63,115 66,387
6.00% due 04/15/33....................... 251,454 264,487
6.00% due 07/15/33....................... 191,645 201,577
6.00% due 08/15/33....................... 1,869,828 1,961,248
6.00% due 09/15/33....................... 282,586 297,232
6.00% due 10/15/33....................... 1,013,707 1,066,226
6.00% due 11/15/33....................... 116,758 122,809
6.00% due 12/15/33....................... 508,534 534,890
6.00% due 02/15/34....................... 157,973 165,765
6.00% due 05/15/34....................... 27,538 28,897
6.00% due 06/15/34....................... 32,909 34,532
6.00% due 07/15/34....................... 1,130,200 1,185,949
6.00% due 08/15/34....................... 139,055 145,914
6.00% due 09/15/34....................... 847,607 889,418
6.00% due 10/15/34....................... 3,190,085 3,347,443
6.00% due 12/15/34....................... 261,384 274,277
6.00% due 06/15/35....................... 190,009 199,084
6.00% due 08/15/35....................... 112,629 118,009
6.50% due 02/15/29....................... 10,797 11,497
6.50% due 05/15/31....................... 10,570 11,255
6.50% due 06/15/31....................... 46,654 49,675
6.50% due 07/15/31....................... 21,651 23,053
6.50% due 08/15/31....................... 51,661 55,006
6.50% due 09/15/31....................... 118,176 125,829
6.50% due 10/15/31....................... 220,725 235,019
6.50% due 11/15/31....................... 10,809 11,509
6.50% due 12/15/31....................... 15,437 16,436
6.50% due 01/15/32....................... 29,402 31,269
6.50% due 02/15/32....................... 407,746 433,644
6.50% due 06/15/32....................... 46,204 49,139
7.00% due 07/15/23....................... 19,808 21,177
7.00% due 10/15/23....................... 34,401 36,778
7.00% due 09/15/25....................... 175,452 188,034
7.00% due 03/20/29....................... 13,652 14,628
7.00% due 06/20/29....................... 2,184 2,340
7.00% due 11/20/30....................... 49,540 53,101
7.50% due 04/15/17....................... 8,903 9,417
7.50% due 08/15/23....................... 149,998 161,707
7.50% due 09/15/23....................... 408,231 440,091
9.00% due 12/15/16....................... 33,127 35,738
11.00% due 08/20/15...................... 85 95
11.00% due 09/20/15...................... 299 333
17
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
11.50% due 05/20/15...................... $ 1,134 $ 1,267
12.50% due 09/15/14...................... 4,168 4,838
13.00% due 02/15/11...................... 1,305 1,361
13.00% due 04/15/11...................... 191 209
13.00% due 10/20/14...................... 867 1,005
13.00% due 11/15/14...................... 463 543
13.00% due 02/20/15...................... 487 552
13.50% due 02/15/13...................... 6,320 7,394
15.00% due 01/15/12...................... 221 260
15.00% due 02/15/12...................... 655 770
15.00% due 06/15/12...................... 3,743 4,399
15.00% due 09/15/12...................... 416 489
15.50% due 09/15/11...................... 20,879 23,791
------------
76,810,023
------------
SMALL BUSINESS ADMINISTRATION -- 0.4%
6.30% due 06/01/18....................... 872,813 930,781
------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $75,506,976)....................... 79,119,635
------------
U.S. GOVERNMENT TREASURIES -- 51.2%
UNITED STATES TREASURY BONDS -- 9.5%
4.75% due 02/15/37....................... 17,000,000 20,368,125
------------
UNITED STATES TREASURY NOTES -- 41.7%
2.00% due 02/28/10....................... 4,000,000 4,050,312
3.13% due 08/31/13....................... 20,000,000 21,414,060
3.38% due 11/30/12....................... 10,000,000 10,730,470
4.00% due 08/15/18....................... 48,000,000 53,340,000
------------
89,534,842
------------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $99,165,469)....................... 109,902,967
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $174,672,445)...................... 189,022,602
------------
REPURCHASE AGREEMENT -- 11.7%
UBS Securities LLC Joint Repurchase
Agreement(1)
(cost $25,144,000)....................... 25,144,000 25,144,000
------------
TOTAL INVESTMENTS --
(cost $199,816,445)(2)................... 99.7% 214,166,602
Other assets less liabilities............... 0.3 692,277
----------- ------------
NET ASSETS -- 100.0% $214,858,879
=========== ============
- --------
(1)See Note 2 for details of Joint Repurchase Agreement.
(2)See Note 5 for cost of investments on a tax basis.
See Notes to Financial Statements
18
SUNAMERICA GNMA FUND
PORTFOLIO PROFILE -- March 31, 2009 -- (unaudited)
INDUSTRY ALLOCATION*
Government National Mtg. Assoc.. 77.0%
Repurchase Agreements........... 34.8
United States Treasury Notes.... 3.1
United States Treasury Bonds.... 1.5
Small Business Administration... 0.1
-----
116.5%
=====
CREDIT QUALITY+#
Government -- Agency... 94.3%
Government -- Treasury. 5.7
-----
100.0%
=====
- --------
*Calculated as a percentage of net assets.
+Source: Standard and Poor's
#Calculated as a percentage of total debt issues, excluding short-term
securities.
19
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 77.1%
GOVERNMENT NATIONAL MTG. ASSOC. -- 77.0%
4.50% due 05/15/18.................... $ 1,369,330 $ 1,431,492
4.50% due 08/15/18.................... 677,583 708,343
4.50% due 09/15/18.................... 2,428,710 2,538,963
4.50% due 10/15/18.................... 3,650,051 3,815,747
4.50% due 08/15/33.................... 2,285,846 2,344,464
4.50% due 09/15/33.................... 2,941,031 3,016,451
5.00% due 03/15/18.................... 389,475 410,928
5.00% due 04/15/18.................... 4,952,086 5,224,863
5.00% due 05/15/18.................... 7,011,773 7,398,007
5.00% due 01/15/33.................... 16,705 17,398
5.00% due 05/15/33.................... 10,146 10,547
5.00% due 08/15/33.................... 2,323,240 2,419,558
5.00% due 09/15/33.................... 2,056,874 2,142,149
5.00% due 10/15/33.................... 4,767,888 4,965,556
5.00% due 04/15/34.................... 48,193 50,161
5.00% due 05/15/34.................... 129,999 135,307
5.00% due 11/15/34.................... 541,790 563,913
5.00% due 12/15/34.................... 528,040 549,602
5.00% due 09/15/35.................... 18,541 19,283
5.00% due 10/15/35.................... 102,612 106,722
5.00% due 11/15/35.................... 101,499 105,564
5.00% due 12/15/35.................... 56,079 58,325
5.00% due 02/15/36.................... 139,413 144,910
5.00% due 04/15/36.................... 412,849 429,126
5.00% due 06/15/36.................... 1,396,332 1,451,386
5.00% due 07/15/36.................... 480,710 499,663
5.00% due 08/15/36.................... 25,846 26,865
5.00% due 09/15/36.................... 777,588 808,416
5.00% due 10/15/36.................... 25,761 26,777
5.00% due 11/15/36.................... 305,575 317,623
5.00% due 12/15/36.................... 1,008,390 1,048,148
5.00% due 01/15/37.................... 738,767 767,663
5.00% due 02/15/37.................... 746,820 776,031
5.00% due 04/15/37.................... 8,515,855 8,848,947
5.00% due April TBA................... 80,000,000 82,950,000
5.50% due 06/15/29.................... 4,475 4,693
5.50% due 01/15/32.................... 39,081 40,863
5.50% due 12/15/32.................... 574,607 600,797
5.50% due 01/15/33.................... 394,216 412,060
5.50% due 02/15/33.................... 1,509,322 1,577,642
5.50% due 03/15/33.................... 887,278 927,442
5.50% due 04/15/33.................... 4,597,524 4,805,629
5.50% due 05/15/33.................... 5,579,712 5,830,718
5.50% due 06/15/33.................... 5,887,403 6,153,523
5.50% due 07/15/33.................... 315,480 329,761
5.50% due 08/15/33.................... 1,859,896 1,944,085
5.50% due 09/15/33.................... 303,671 317,417
5.50% due 10/15/33.................... 5,279,868 5,518,862
5.50% due 12/15/33.................... 5,606,927 5,860,728
5.50% due 01/15/34.................... 7,293,682 7,616,994
5.50% due 02/15/34.................... 1,030,930 1,076,629
5.50% due 04/15/35.................... 1,707,076 1,781,680
5.50% due 07/15/35.................... 1,844,277 1,924,877
5.50% due 09/15/35.................... 20,005,669 20,879,970
5.50% due 10/15/35.................... 12,249,515 12,784,851
5.50% due 11/15/35.................... 24,027,328 25,077,386
5.50% due 12/15/35.................... 15,211,518 15,876,301
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.50% due 02/15/36....................... $2,197,948 $2,291,256
5.50% due 03/15/36....................... 8,499,592 8,860,421
5.50% due 04/15/36....................... 351,807 366,742
5.50% due 05/15/36....................... 2,827,603 2,947,641
6.00% due 11/15/23....................... 3,593 3,795
6.00% due 01/15/24....................... 5,194 5,466
6.00% due 07/15/28....................... 2,760 2,905
6.00% due 11/15/28....................... 262,126 275,957
6.00% due 12/15/28....................... 227,037 239,017
6.00% due 01/15/29....................... 498,944 525,272
6.00% due 02/15/29....................... 556,518 585,883
6.00% due 03/15/29....................... 505,747 532,432
6.00% due 04/15/29....................... 1,129,284 1,188,648
6.00% due 05/15/29....................... 44,727 47,088
6.00% due 06/15/29....................... 396,410 417,238
6.00% due 07/15/29....................... 140,367 147,774
6.00% due 08/15/29....................... 13,738 14,463
6.00% due 10/15/29....................... 101,292 106,637
6.00% due 04/15/31....................... 13,113 13,805
6.00% due 07/15/31....................... 14,765 15,544
6.00% due 10/15/31....................... 68,074 71,666
6.00% due 11/15/31....................... 1,013,276 1,066,743
6.00% due 12/15/31....................... 436,231 459,248
6.00% due 01/15/32....................... 551,875 580,822
6.00% due 02/15/32....................... 30,922 32,544
6.00% due 03/15/32....................... 354,242 372,823
6.00% due 07/15/32....................... 79,907 84,099
6.00% due 08/15/32....................... 1,221,260 1,281,426
6.00% due 09/15/32....................... 837,060 880,966
6.00% due 10/15/32....................... 131,177 138,058
6.00% due 11/15/32....................... 2,938 3,092
6.00% due 12/15/32....................... 162,675 171,208
6.00% due 01/15/33....................... 1,165,996 1,226,427
6.00% due 02/15/33....................... 1,152,151 1,211,865
6.00% due 03/15/33....................... 1,078,369 1,134,260
6.00% due 04/15/33....................... 1,017,572 1,070,311
6.00% due 05/15/33....................... 1,057,290 1,112,087
6.00% due 06/15/33....................... 741,487 779,917
6.00% due 08/15/33....................... 1,118,865 1,176,078
6.00% due 10/15/33....................... 387,036 407,095
6.00% due 11/15/33....................... 1,329,199 1,397,918
6.00% due 12/15/33....................... 2,361,883 2,484,293
6.00% due 01/15/34....................... 1,378,820 1,446,833
6.00% due 02/15/34....................... 8,136,738 8,538,104
6.00% due 03/15/34....................... 161,684 169,659
6.00% due 04/15/34....................... 2,623,837 2,753,264
6.00% due 05/15/34....................... 217,882 228,629
6.00% due 06/15/34....................... 287,436 301,614
6.00% due 07/15/34....................... 2,611,968 2,740,811
6.00% due 08/15/34....................... 3,934,022 4,125,006
6.00% due 09/15/34....................... 177,863 186,514
6.00% due 10/15/34....................... 535,040 561,432
6.00% due 11/15/34....................... 979,186 1,027,487
6.00% due 12/15/34....................... 57,109 59,926
6.00% due 01/15/35....................... 77,437 81,136
6.00% due 02/15/35....................... 670,092 702,098
6.00% due 04/15/35....................... 51,190 53,635
20
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.00% due 05/15/35....................... $ 69,032 $ 72,329
6.00% due 06/15/35....................... 324,825 340,339
6.00% due 11/15/35....................... 11,999 12,572
6.00% due 12/15/35....................... 1,327,141 1,391,430
6.00% due 01/15/36....................... 807,255 845,310
6.00% due 02/15/36....................... 1,533,672 1,605,970
6.00% due 03/15/36....................... 1,210,266 1,267,318
6.00% due 04/15/36....................... 3,144,911 3,293,163
6.00% due 05/15/36....................... 4,910,937 5,142,440
6.00% due 06/15/36....................... 2,322,104 2,431,568
6.00% due 07/15/36....................... 1,267,120 1,326,852
6.00% due 08/15/36....................... 16,846 17,636
6.00% due 09/15/36....................... 167,736 175,643
6.00% due 10/15/36....................... 1,279,209 1,339,358
6.00% due 11/15/36....................... 1,964,678 2,057,294
6.00% due 09/15/38....................... 17,678,721 18,495,524
6.50% due 03/15/28....................... 19,330 20,653
6.50% due 08/15/28....................... 37,700 40,236
6.50% due 01/15/29....................... 3,545 3,775
6.50% due 02/15/29....................... 1,170 1,246
6.50% due 03/15/29....................... 98,065 104,416
6.50% due 04/15/29....................... 1,358 1,446
6.50% due 05/15/29....................... 9,466 10,113
6.50% due 06/15/29....................... 32,003 34,075
6.50% due 07/15/29....................... 2,451 2,609
6.50% due 10/15/29....................... 3,283 3,495
6.50% due 08/15/31....................... 186,482 198,559
6.50% due 09/15/31....................... 10,579 11,264
6.50% due 10/15/31....................... 220,725 235,020
6.50% due 11/15/31....................... 107,604 114,574
6.50% due 12/15/31....................... 139,248 148,267
6.50% due 02/15/32....................... 162,393 172,707
6.50% due 05/15/32....................... 987,949 1,050,696
6.50% due 06/15/32....................... 90,312 96,048
7.00% due 03/15/23....................... 80,925 86,518
7.00% due 01/20/24....................... 466 497
7.00% due 03/20/24....................... 486 518
7.00% due 07/20/25....................... 2,015 2,152
7.00% due 09/15/25....................... 76,195 81,659
7.00% due 01/20/29....................... 30,094 32,245
7.00% due 02/20/29....................... 5,586 5,985
7.00% due 06/20/29....................... 10,831 11,606
7.00% due 07/20/29....................... 37,999 40,716
7.00% due 09/20/29....................... 3,850 4,125
7.00% due 10/20/29....................... 7,774 8,330
7.00% due 11/20/29....................... 2,518 2,698
7.00% due 03/20/30....................... 3,998 4,285
7.00% due 06/20/30....................... 4,438 4,757
7.00% due 08/20/30....................... 18,837 20,191
7.00% due 09/20/30....................... 18,347 19,666
7.00% due 10/20/30....................... 23,035 24,691
8.00% due 11/15/26....................... 125,024 135,760
8.00% due 12/15/29....................... 15,143 16,469
8.00% due 04/15/30....................... 28,993 31,543
8.00% due 05/15/30....................... 2,789 3,034
8.00% due 08/15/30....................... 28,900 31,442
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
8.50% due 03/15/17.................. $ 13,201 $ 14,262
8.50% due 05/15/21.................. 29,872 32,337
8.50% due 12/15/22.................. 42,459 45,883
8.50% due 01/15/23.................. 104,720 113,289
8.50% due 09/15/24.................. 19,624 21,249
9.00% due 07/15/16.................. 45,492 49,077
9.00% due 10/15/16.................. 4,770 5,146
------------
359,092,959
------------
SMALL BUSINESS ADMINISTRATION -- 0.1%
Small Business Administration
6.30% due 06/01/18.................. 290,938 310,260
------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $347,012,146)................. 359,403,219
------------
U.S. GOVERNMENT TREASURIES -- 4.6%
UNITED STATES TREASURY BONDS -- 1.5%
4.75% due 02/15/37.................. 6,000,000 7,188,750
------------
UNITED STATES TREASURY NOTES -- 3.1%
4.00% due 08/15/18.................. 13,000,000 14,446,250
------------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $18,677,422).................. 21,635,000
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $365,689,568)................. 381,038,219
------------
REPURCHASE AGREEMENTS -- 34.8%
UBS Securities LLC Joint
Repurchase Agreement(1)............. 100,000,000 100,000,000
State Street Bank & Trust Co. Joint
Repurchase Agreement(1)............. 62,387,000 62,387,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $162,387,000)................. 162,387,000
------------
TOTAL INVESTMENTS --
(cost $528,076,568)(2).............. 116.5% 543,425,219
Liabilities in excess of other assets.. (16.5) (76,924,100)
------------ ------------
NET ASSETS -- 100.0% $466,501,119
============ ============
- --------
(1) See Note 2 for details of Joint Repurchase Agreement.
(2) See Note 5 for cost of investments on a tax basis.
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 Notes to Financial Statements
21
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- March 31, 2009 (unaudited)
INDUSTRY ALLOCATION*
Foreign Government Agencies............ 15.6%
Federal Home Loan Mtg. Corp............ 12.4
Federal National Mtg. Assoc............ 8.3
Telephone-Integrated................... 3.5
Oil Companies-Exploration & Production. 3.4
Cable/Satellite TV..................... 3.1
Electric-Integrated.................... 3.1
Repurchase Agreements.................. 2.9
Diversified Financial Services......... 2.6
Diversified Banking Institutions....... 2.4
Medical-Hospitals...................... 2.0
Pipelines.............................. 1.9
Time Deposits.......................... 1.8
Medical-Drugs.......................... 1.6
Electric-Generation.................... 1.5
Satellite Telecom...................... 1.3
Telecom Services....................... 1.2
United States Treasury Bonds........... 1.1
Medical Products....................... 1.1
Special Purpose Entities............... 1.0
Cellular Telecom....................... 0.9
Transport-Air Freight.................. 0.9
Banks-Commercial....................... 0.8
Airlines............................... 0.7
Finance-Auto Loans..................... 0.7
Medical-HMO............................ 0.7
Electronic Components-Semiconductors... 0.6
Diversified Manufacturing Operations... 0.6
Chemicals-Specialty.................... 0.5
Theaters............................... 0.5
Computer Services...................... 0.5
Containers-Metal/Glass................. 0.5
Banks-Super Regional................... 0.5
Steel-Producers........................ 0.5
Oil-Field Services..................... 0.5
Government National Mtg. Assoc......... 0.5
Energy-Alternate Sources............... 0.5
Physicians Practice Management......... 0.5
Multimedia............................. 0.5
Advertising Services................... 0.4
Electronics-Military................... 0.4
Independent Power Producers............ 0.4
Transport-Rail......................... 0.4
Retail-Petroleum Products.............. 0.4
Finance-Investment Banker/Broker....... 0.4
Beverages-Non-alcoholic................ 0.4
Casino Services........................ 0.4
Oil Companies-Integrated............... 0.3
United States Treasury Notes........... 0.3
Real Estate Investment Trusts.......... 0.3
Food-Retail............................ 0.3
Casino Hotels.......................... 0.3
Food-Misc.............................. 0.3
Television............................. 0.3
Paper & Related Products............... 0.3
Decision Support Software.............. 0.3
Insurance Brokers...................... 0.3
Distribution/Wholesale................. 0.3
Agricultural Chemicals................. 0.3
Transport-Services..................... 0.3
Retail-Restaurants..................... 0.2%
Food-Meat Products..................... 0.2
Human Resources........................ 0.2
Consumer Products-Misc................. 0.2
Storage/Warehousing.................... 0.2
Medical Labs & Testing Services........ 0.2
Office Automation & Equipment.......... 0.2
Chemicals-Diversified.................. 0.2
Brewery................................ 0.2
Direct Marketing....................... 0.2
Broadcast Services/Program............. 0.2
Finance-Mortgage Loan/Banker........... 0.2
Seismic Data Collection................ 0.2
Insurance-Multi-line................... 0.2
Gambling (Non-Hotel)................... 0.2
Aerospace/Defense...................... 0.2
Machinery-Construction & Mining........ 0.1
Medical-Generic Drugs.................. 0.1
Oil Refining & Marketing............... 0.1
Insurance-Life/Health.................. 0.1
Computers-Memory Devices............... 0.1
Funeral Services & Related Items....... 0.1
Applications Software.................. 0.1
Schools................................ 0.1
Insurance-Reinsurance.................. 0.1
Medical Information Systems............ 0.1
Building & Construction Products-Misc.. 0.1
Metal-Copper........................... 0.1
Hotels/Motels.......................... 0.1
Non-Hazardous Waste Disposal........... 0.1
Insurance-Property/Casualty............ 0.1
Savings & Loans/Thrifts................ 0.1
Metal-Aluminum......................... 0.1
Investment Management/Advisor Services. 0.1
Rental Auto/Equipment.................. 0.1
Printing-Commercial.................... 0.1
Mining................................. 0.1
Federal Home Loan Bank................. 0.1
Cosmetics & Toiletries................. 0.1
Diversified Operations................. 0.1
Finance-Commercial..................... 0.1
Real Estate Operations & Development... 0.1
Medical-Biomedical/Gene................ 0.1
Retail-Drug Store...................... 0.1
Food-Wholesale/Distribution............ 0.1
Retail-Major Department Stores......... 0.1
Finance-Credit Card.................... 0.1
Banks-Money Center..................... 0.1
Transactional Software................. 0.1
Health Care Cost Containment........... 0.1
Diversified Minerals................... 0.1
Banks-Fiduciary........................ 0.1
Tools-Hand Held........................ 0.1
Cruise Lines........................... 0.1
Publishing-Periodicals................. 0.1
----
97.4%
====
- --------
*Calculated as a percentage of net assets
22
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- March 31, 2009 (unaudited) -- (continued)
COUNTRY ALLOCATION*
United States........ 76.7%
Canada............... 2.2
Brazil............... 1.9
Norway............... 1.6
Russia............... 1.5
United Kingdom....... 1.2
Turkey............... 1.2
Bermuda.............. 1.1
Australia............ 1.2
Japan................ 1.1
Philippines.......... 0.9
Sweden............... 0.8
Mexico............... 0.8
Venezuela............ 0.6
Germany.............. 0.5
Colombia............. 0.5
Cayman Islands....... 0.5
Ireland.............. 0.4
Luxembourg........... 0.4
Netherlands.......... 0.4
Peru................. 0.3
Indonesia............ 0.3
Uruguay.............. 0.2
South Africa......... 0.2
Belgium.............. 0.2
France............... 0.1
Panama............... 0.1
Argentina............ 0.1
Hungary.............. 0.1
Spain................ 0.1
Liberia.............. 0.1
United Arab Emirates. 0.1
----
97.4%
====
CREDIT QUALITY+#
Government -- Treasury. 1.7%
Government -- Agency... 23.0
AAA.................... 7.8
AA..................... 3.7
A...................... 9.2
BBB.................... 12.1
BB..................... 15.3
B...................... 15.7
CCC.................... 6.8
CC..................... 0.5
C...................... 0.1
Below C................ 1.7
Not Rated@............. 2.4
-----
100.0%
=====
- --------
*Calculated as a percentage of net assets.
+Source: Standard and Poor's
#Calculated as a percentage of total debt issues, excluding short-term
securities.
@Represents debt issues that either have no rating or the rating is unavailable
from the data source.
23
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
ASSET BACKED SECURITIES -- 1.9%
DIVERSIFIED FINANCIAL SERVICES -- 1.9%
Banc of America Commercial Mtg., Inc.,
Series 2006-6, Class AM
5.39% due 10/10/45(22)......................... $ 145,000 $ 66,137
Bear Stearns Commercial Mtg. Securities, Inc.,
Series 2007-PW15, Class A2
5.21% due 02/11/44(22)......................... 825,000 664,143
Chase Mtg. Finance Corp.,
Series 2007-A2, Class 1A1
4.93% due 07/25/37(1)(2)....................... 1,568,035 1,429,752
Citigroup Commercial Mtg. Trust,
Series 2008-C7, Class AM
6.10% due 12/10/49(22)......................... 285,000 129,106
Commercial Mtg. Pass Through Certs.,
Series 2004-LB2A, Class A3
4.22% due 03/10/39(22)......................... 77,230 71,120
Commercial Mtg. Asset Trust,
Series 1999-C1, Class D
7.35% due 01/17/32(22)......................... 360,000 327,903
Commercial Mtg. Pass Through Certs.
Series 2006-CN2A, Class A2FL
0.73% due 02/05/19*(3)(22)..................... 1,575,000 1,112,081
Commercial Mtg. Pass Through Certs.,
Series 2004-LB4A, Class A3,
4.41% due 10/15/37(1).......................... 1,500,000 1,334,002
Deutsche ALT-A Securities, Inc.,
Series 2006-AB2, Class A5A,
6.09% due 06/25/36(1).......................... 600,000 257,664
JP Morgan Chase Commercial Mtg. Securities
Corp.
Series 2006-LDP9, Class AM
5.37% due 05/15/47(22)......................... 413,000 167,892
LB Commercial Conduit Mtg. Trust,
Series 1998-C1, Class E
7.00% due 02/18/30(22)......................... 205,000 203,562
Ocwen Advance Receivables Backed Notes
Series 2006-1A
5.34% due 11/24/15*(4)......................... 830,000 498,000
Swift Master Auto Receivables Trust
Series 2007-2, Class A
1.21% due 10/15/12(3).......................... 2,957,126 2,099,592
Wells Fargo Mtg. Backed Securities Trust
Series 2006-AR12, Class 2A1
6.10% due 09/25/36(1)(3)....................... 589,887 370,276
----------
TOTAL ASSET BACKED SECURITIES
(cost $11,827,181)............................. 8,731,230
----------
CONVERTIBLE BONDS & NOTES -- 0.0%
DRUG DELIVERY SYSTEMS -- 0.0%
Nektar Therapeutics
Sub. Notes
3.25% due 09/28/12............................. 125,000 80,937
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.0%
Spansion, Inc.
Senior Sub. Notes
2.25% due 06/15/16*(5)(12)..................... 1,270,000 3,175
----------
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS (CONTINUED)
TELECOM SERVICES -- 0.0%
ICO North America, Inc.
Notes
7.50% due 08/15/09(4)(6)(11)(23)...... $ 297,000 $ 59,400
----------
TOTAL CONVERTIBLE BONDS & NOTES
(cost $1,500,842)..................... 143,512
----------
CORPORATE BONDS & NOTES -- 44.9%
ADVERTISING SERVICES -- 0.4%
R.H. Donnelley, Inc.
Company Guar. Bonds
11.75% due 05/15/15*(25).............. 1,194,000 155,220
Visant Corp.
Company Guar. Notes
7.63% due 10/01/12 1,390,000 1,317,025
Visant Holding Corp.
Senior Notes
8.75% due 12/01/13.................... 125,000 113,750
Visant Holding Corp.
Senior Notes
10.25% due 12/01/13(8)................ 458,000 425,940
----------
2,011,935
----------
AEROSPACE/DEFENSE -- 0.2%
Boeing Co.
Senior Notes
6.88% due 03/15/39.................... 573,000 573,325
Hawker Beechcraft Acquisition Co. LLC
Company Guar. Notes
9.75% due 04/01/17.................... 810,000 137,700
----------
711,025
----------
AEROSPACE/DEFENSE-EQUIPMENT -- 0.0%
Goodrich Corp.
Senior Notes
6.13% due 03/01/19.................... 210,000 203,694
----------
AGRICULTURAL CHEMICALS -- 0.3%
Monsanto Co.
Senior Notes
5.50% due 08/15/25.................... 176,000 165,149
Terra Capital, Inc.
Company Guar. Notes
7.00% due 02/01/17.................... 1,170,000 1,076,400
----------
1,241,549
----------
AIRLINES -- 0.7%
American Airlines, Inc.
Pass Through Certs.
Series 2001-1, Class A-2
6.82% due 05/23/11.................... 1,743,000 1,220,100
American Airlines, Inc.
Pass Through Certs.
Series 2001-2, Class A-2
7.86% due 04/01/13.................... 719,000 582,390
Continental Airlines, Inc.
Pass Through Certs.
Series 1991, Class A
6.55% due 02/02/19.................... 615,238 529,105
24
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
AIRLINES (CONTINUED)
Delta Air Lines, Inc.
Pass Thru Certs.
Series 2001-1, Class A2
7.11% due 09/18/11................. $550,000 $ 478,500
Delta Air Lines, Inc.
Pass Through Certs.
Series 2000-1, Class A-2
7.57% due 11/18/10................. 275,000 248,875
Northwest Airlines, Inc.
Pass Through Certs.
Series 2002-1, Class G2
6.26% due 11/20/21................. 263,624 176,628
United AirLines, Inc.
Pass Through Certs.
Series 2001-1, Class A-2
6.20% due 03/29/49................. 4,233 4,042
----------
3,239,640
----------
APPLICATIONS SOFTWARE -- 0.1%
SS&C Technologies, Inc.
Company Guar. Notes
11.75% due 12/01/13................ 730,000 620,500
----------
AUTO/TRUCK PARTS & EQUIPMENT-REPLACEMENT -- 0.0%
Exide Corp.
Notes
10.00% due 03/15/25+(4)(6)......... 225,000 0
----------
BANKS-COMMERCIAL -- 0.5%
CoBank ACB
Sub. Notes
7.88% due 04/16/18*................ 122,000 119,068
Independence Community Bank Corp.
Sub. Notes
3.35% due 06/20/13(3).............. 172,000 129,497
KeyBank NA
Sub. Notes
5.45% due 03/03/16................. 372,000 312,193
KeyBank NA
Sub. Notes
7.41% due 10/15/27................. 128,000 116,667
SouthTrust Bank
Sub. Notes
4.75% due 03/01/13................. 281,000 253,783
SouthTrust Corp.
Sub. Notes
5.80% due 06/15/14................. 470,000 411,460
Sovereign Bank
Sub. Notes
8.75% due 05/30/18................. 175,000 140,875
Swiss Bank Corp. NY
Sub. Notes
7.75% due 09/01/26................. 446,000 362,560
Union Bank of California NA
Sub. Notes
5.95% due 05/11/16................. 330,000 236,549
Wachovia Bank NA
Sub. Notes
6.60% due 01/15/38................. 564,000 446,042
----------
2,528,694
----------
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------
BANKS-FIDUCIARY -- 0.1%
State Street Capital Trust IV
Company Guar. Notes
2.32% due 06/15/37(3)................ $ 590,000 $ 231,493
----------
BANKS-SUPER REGIONAL -- 0.5%
Banc One Corp.
Sub. Debentures
8.00% due 04/29/27................... 135,000 133,339
Capital One Financial Corp.
Sub. Notes
6.15% due 09/01/16................... 255,000 161,416
JPMorgan Chase Bank NA
Sub. Notes
6.00% due 07/05/17................... 1,030,000 985,345
JPMorgan Chase Bank NA
Sub. Notes
6.00% due 10/01/17................... 460,000 431,193
PNC Preferred Funding Trust I
Jr. Sub. Notes
6.11% due 03/15/12*(3)(9)............ 390,000 107,965
Wachovia Corp.
Sub. Notes
4.88% due 02/15/14................... 99,000 83,127
Wells Fargo & Co.
Senior Notes
5.25% due 10/23/12................... 349,000 339,127
----------
2,241,512
----------
BEVERAGES-NON-ALCOHOLIC -- 0.4%
Bottling Group LLC
Senior Notes
5.13% due 01/15/19................... 412,000 414,650
Coca-Cola Enterprises, Inc.
Senior Notes
4.25% due 03/01/15................... 460,000 463,687
PepsiCo, Inc.
Senior Notes
3.75% due 03/01/14................... 414,000 419,932
The Coca-Cola Co.
Senior Notes
4.88% due 03/15/19................... 440,000 444,646
----------
1,742,915
----------
BREWERY -- 0.1%
Anheuser-Busch InBev Worldwide, Inc.
Company Guar. Notes
8.20% due 01/15/39*.................. 500,000 490,617
----------
BROADCAST SERVICES/PROGRAM -- 0.2%
Fisher Communications, Inc.
Senior Notes
8.63% due 09/15/14................... 765,000 650,250
Nexstar Broadcasting, Inc.
Company Guar. Notes
7.00% due 01/15/14................... 133,000 57,855
Nexstar Broadcasting, Inc.
Company Guar. Notes
7.00% due 01/15/14*(4)............... 400,401 104,104
----------
812,209
----------
25
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.1%
Associated Materials, Inc.
Senior Sub. Notes
9.75% due 04/15/12........................... $ 440,000 $ 347,600
Interline Brands, Inc.
Senior Sub. Notes
8.13% due 06/15/14........................... 202,000 180,790
----------
528,390
----------
BUILDING PRODUCTS-WOOD -- 0.0%
Masonite Corp.
Company Guar. Notes
11.00% due 04/06/15+(5)(12).................. 1,088,000 10,880
----------
CABLE/SATELLITE TV -- 3.1%
CCH I LLC/CCH I Capital Corp.
Senior Sec Notes
11.00% due 10/01/15+(5)(12).................. 568,000 56,800
CCH II LLC/CCH II Capital Corp.
Senior Notes
10.25% due 09/15/10+(5)(12).................. 1,197,000 1,077,300
CCH II LLC/CCH II Capital Corp.
Senior Notes,
Series B 10.25% due 09/15/10+(5)(12)......... 696,000 619,440
CCH II LLC/CCH II Capital Corp.
Company Guar. Notes
10.25% due 10/01/13*+(5)(12)................. 91,000 79,170
CCO Holdings LLC/CCO Holdings Capital Corp.
Senior Notes
8.75% due 11/15/13+(5)(12)................... 2,101,000 1,754,335
Charter Communications Operating LLC
Senior Notes
10.88% due 09/15/14*+(5)(12)................. 1,044,000 1,012,680
Charter Communications Operating LLC/Charter
Communications Operating Capital
Senior Notes
8.38% due 04/30/14*+(5)(12).................. 1,881,000 1,655,280
Comcast Corp.
Company Guar. Notes
5.85% due 11/15/15........................... 1,147,000 1,100,432
COX Communications, Inc.
Senior Notes
6.95% due 06/01/38*.......................... 212,000 171,199
COX Communications, Inc.
Bonds
8.38% due 03/01/39*.......................... 275,000 258,019
COX Communications, Inc.
Senior Notes
9.38% due 01/15/19*.......................... 579,000 620,310
CSC Holdings, Inc.
Senior Notes
7.63% due 04/01/11........................... 2,175,000 2,158,687
CSC Holdings, Inc.
Senior Notes
8.63% due 02/15/19*.......................... 125,000 120,313
DirecTV Holdings LLC/DirecTV Financing Co.
Company Guar. Notes
7.63% due 05/15/16........................... 3,330,000 3,263,400
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
CABLE/SATELLITE TV (CONTINUED)
Time Warner Cable, Inc.
Company Guar. Notes
5.40% due 07/02/12..................... $ 255,000 $ 246,316
Time Warner Cable, Inc.
Company Guar. Notes
8.25% due 04/01/19..................... 308,000 316,508
-----------
14,510,189
-----------
CASINO HOTELS -- 0.3%
Eldorado Casino Corp. (Shreveport)
Sec. Bonds
10.00% due 08/01/12(6)(10)............. 946,489 738,261
Eldorado Resorts LLC
Senior Notes
9.00% due 04/15/14(4)(6)............... 425,000 382,500
Turning Stone Resort Casino Enterprise
Senior Notes
9.13% due 09/15/14*.................... 618,000 376,980
-----------
1,497,741
-----------
CASINO SERVICES -- 0.2%
Indianapolis Downs LLC & Capital Corp.
Senior Sec. Notes
11.00% due 11/01/12*................... 1,285,000 687,475
Snoqualmie Entertainment Authority
Senior Sec. Notes
5.38% due 02/01/14*(3)................. 75,000 18,750
Snoqualmie Entertainment Authority
Senior Sec. Notes
9.13% due 02/01/15*.................... 1,525,000 396,500
-----------
1,102,725
-----------
CELLULAR TELECOM -- 0.9%
Centennial Communications Corp.
Senior Notes
10.13% due 06/15/13.................... 1,192,000 1,233,720
Centennial Communications Corp.
Senior Notes
7.19% due 01/01/13(3).................. 727,000 727,000
Cingular Wireless Services, Inc.
Senior Notes
7.88% due 03/01/11..................... 1,406,000 1,502,318
Nextel Communications, Inc.
Company Guar. Notes
5.95% due 03/15/14..................... 315,000 174,825
Verizon Wireless Capital LLC
Senior Notes
5.55% due 02/01/14*.................... 566,000 566,473
-----------
4,204,336
-----------
CHEMICALS-DIVERSIFIED -- 0.2%
E.I. du Pont de Nemours & Co.
Senior Notes
4.75% due 03/15/15..................... 230,000 226,679
Huntsman LLC
Senior Notes
11.63% due 10/15/10.................... 625,000 618,750
-----------
845,429
-----------
26
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
CHEMICALS-SPECIALTY -- 0.5%
Huntsman International LLC
Senior Sub. Notes
7.38% due 01/01/15.................... $1,260,000 $ 516,600
Huntsman International LLC
Company Guar. Notes
7.88% due 11/15/14.................... 477,000 195,570
Johnsondiversey Holdings, Inc.
Company Guar. Notes
9.63% due 05/15/12.................... 950,000 859,750
Momentive Performance Materials, Inc.
Company Guar. Notes
9.75% due 12/01/14.................... 575,000 169,625
Momentive Performance Materials, Inc.
Company Guar. Notes
11.50% due 12/01/16................... 2,530,000 474,375
Tronox Worldwide LLC
Company Guar. Notes
9.50% due 12/01/12+(5)(12)............ 2,408,000 319,060
----------
2,534,980
----------
COMPUTER SERVICES -- 0.5%
Compucom Systems, Inc.
Senior Sub. Notes
12.50% due 10/01/15*.................. 1,495,000 867,100
Electronic Data Systems Corp.
Senior Notes
6.00% due 08/01/13.................... 660,000 699,022
Sungard Data Systems, Inc.
Company Guar. Notes
9.13% due 08/15/13.................... 1,045,000 909,150
----------
2,475,272
----------
CONSULTING SERVICES -- 0.0%
FTI Consulting, Inc.
Company Guar. Notes
7.75% due 10/01/16.................... 125,000 124,688
----------
CONSUMER PRODUCTS-MISC. -- 0.2%
American Achievement Corp.
Company Guar. Notes
8.25% due 04/01/12*................... 971,000 703,975
Prestige Brands, Inc.
Senior Sub. Notes
9.25% due 04/15/12.................... 325,000 310,375
----------
1,014,350
----------
CONTAINERS-METAL/GLASS -- 0.4%
Crown Cork & Seal Co., Inc.
Debentures
8.00% due 04/15/23.................... 1,410,000 1,254,900
Owens-Brockway Glass Container, Inc.
Company Guar. Notes
8.25% due 05/15/13.................... 793,000 796,965
----------
2,051,865
----------
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
CONTAINERS-PAPER/PLASTIC -- 0.0%
Jefferson Smurfit Corp.
Senior Notes
8.25% due 10/01/12+(5)(12)............ $ 461,000 $ 57,625
----------
COSMETICS & TOILETRIES -- 0.1%
The Procter & Gamble Co.
Notes
4.70% due 02/15/19.................... 400,000 403,470
----------
DECISION SUPPORT SOFTWARE -- 0.3%
Vangent, Inc.
Company Guar. Notes
9.63% due 02/15/15.................... 2,050,000 1,332,500
----------
DIRECT MARKETING -- 0.2%
Affinity Group, Inc.
Company Guar. Notes
9.00% due 02/15/12.................... 1,494,000 829,170
----------
DISTRIBUTION/WHOLESALE -- 0.3%
KAR Holdings, Inc.
Company Guar. Notes
5.17% due 05/01/14(3)................. 1,215,000 571,050
KAR Holdings, Inc.
Company Guar. Notes
8.75% due 05/01/14.................... 1,330,000 704,900
----------
1,275,950
----------
DIVERSIFIED BANKING INSTITUTIONS -- 2.4%
Bank of America Corp.
Senior Notes
5.13% due 11/15/14.................... 288,000 246,053
Bank of America Corp.
Sub. Notes
5.75% due 08/15/16.................... 635,000 416,594
Bank of America Corp.
Sub. Notes
7.25% due 10/15/25.................... 117,000 73,005
Citigroup, Inc.
Senior Notes
1.34% due 05/18/11(3)................. 475,000 383,559
Citigroup, Inc.
Senior Notes
4.63% due 08/03/10.................... 275,000 257,985
Citigroup, Inc.
Senior Notes
5.30% due 10/17/12.................... 396,000 349,037
Citigroup, Inc.
Senior Notes
5.50% due 04/11/13.................... 494,000 434,015
Citigroup, Inc.
Sub. Notes
5.50% due 02/15/17.................... 763,000 479,310
Citigroup, Inc.
Senior Notes
5.85% due 07/02/13.................... 622,000 556,738
Citigroup, Inc.
Sub. Notes
6.13% due 08/25/36.................... 417,000 224,078
27
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
DIVERSIFIED BANKING INSTITUTIONS (CONTINUED)
GMAC LLC
Company Guar. Notes
6.00% due 12/15/11*................................ $1,646,000 $ 1,120,613
GMAC LLC
Company Guar. Notes
6.88% due 09/15/11*................................ 1,426,000 1,013,344
GMAC LLC
Company Guar. Notes
7.75% due 01/19/10*................................ 375,000 315,045
JP Morgan Chase & Co.
Sub. Notes
4.89% due 09/01/15(3).............................. 451,000 366,843
JP Morgan Chase & Co.
Sub. Notes
5.13% due 09/15/14................................. 340,000 300,793
JP Morgan Chase & Co.
Senior Notes
5.38% due 01/15/14................................. 520,000 510,665
Morgan Stanley
Sub. Notes
4.75% due 04/01/14................................. 635,000 519,161
Morgan Stanley
Senior Notes
5.38% due 10/15/15................................. 340,000 307,163
Morgan Stanley
Senior Notes
5.45% due 01/09/17................................. 317,000 277,375
Morgan Stanley
Senior Notes
6.00% due 04/28/15................................. 1,330,000 1,255,677
The Goldman Sachs Group, Inc.
Senior Notes
5.13% due 01/15/15................................. 608,000 547,888
The Goldman Sachs Group, Inc.
Senior Notes
5.30% due 02/14/12................................. 277,000 267,283
The Goldman Sachs Group, Inc.
Senior Notes
5.95% due 01/18/18................................. 400,000 363,136
The Goldman Sachs Group, Inc.
Senior Notes
6.13% due 02/15/33................................. 266,000 221,530
The Goldman Sachs Group, Inc.
Sub. Notes
6.75% due 10/01/37................................. 447,000 302,324
-----------
11,109,214
-----------
DIVERSIFIED FINANCIAL SERVICES -- 0.5%
American Express Travel Related Services Co., Inc.
Senior Notes
5.25% due 11/21/11*................................ 613,000 553,307
General Electric Capital Corp.
Senior Notes
5.65% due 06/09/14................................. 850,000 804,403
General Electric Capital Corp.
Senior Notes
5.88% due 01/14/38................................. 504,000 360,000
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
General Electric Capital Corp.
Senior Notes
6.75% due 03/15/32............................. $ 279,000 $ 226,241
General Electric Capital Corp.
Senior Notes
6.88% due 01/10/39............................. 259,000 211,238
----------
2,155,189
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.3%
General Electric Co.
Senior Notes
5.25% due 12/06/17............................. 750,000 693,607
Harland Clarke Holdings Corp.
Notes
5.98% due 05/15/15(3).......................... 425,000 143,438
Harland Clarke Holdings Corp.
Notes
9.50% due 05/15/15............................. 1,150,000 508,875
Ingersoll-Rand Global Holding Co., Ltd.
Company Guar. Notes
9.50% due 04/15/14............................. 138,000 137,989
----------
1,483,909
----------
ELECTRIC-GENERATION -- 1.5%
Bruce Mansfield Unit
Pass Through Certs.
6.85% due 06/01/34............................. 649,000 504,934
Edison Mission Energy
Senior Notes
7.20% due 05/15/19............................. 515,000 357,925
Edison Mission Energy
Senior Notes
7.63% due 05/15/27............................. 950,000 570,000
Edison Mission Energy
Senior Notes
7.75% due 06/15/16............................. 775,000 589,000
Homer City Funding LLC
Senior Notes
8.14% due 10/01/19............................. 490,590 402,284
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs.
Series B
9.24% due 07/02/17............................. 862,061 821,113
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs.
Series C
9.68% due 07/02/26............................. 675,000 607,500
Sithe/Independence Funding Corp.
Senior Notes
9.00% due 12/30/13............................. 737,237 676,709
The AES Corp.
Senior Notes
8.00% due 10/15/17............................. 1,320,000 1,131,900
The AES Corp.
Senior Notes
8.00% due 06/01/20*............................ 625,000 506,250
28
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
ELECTRIC-GENERATION (CONTINUED)
The AES Corp.
Senior Sec. Notes
8.75% due 05/15/13*..................... $ 947,000 $ 932,795
----------
7,100,410
----------
ELECTRIC-INTEGRATED -- 2.9%
Appalachian Power Co.
Senior Notes
7.95% due 01/15/20...................... 220,000 225,787
Arizona Public Service Co.
Senior Notes
8.75% due 03/01/19...................... 220,000 220,893
CenterPoint Energy Houston Electric LLC
General Refunding Mtg.
7.00% due 03/01/14...................... 415,000 432,791
Central Illinois Light Co.
Senior Sec. Notes
8.88% due 12/15/13...................... 275,000 288,831
Dominion Resources, Inc.
Jr. Sub Notes
6.30% due 09/30/66(3)................... 374,000 211,310
Energy Future Holdings Corp.
Company Guar. Notes
10.88% due 11/01/17..................... 700,000 451,500
Entergy Arkansas, Inc.
1st Mtg. Bonds
5.40% due 08/01/13...................... 264,000 258,640
Entergy Gulf States Louisiana LLC
1st Mtg. Bonds
6.00% due 05/01/18...................... 487,000 449,032
Mackinaw Power LLC
Senior Sec. Notes
6.30% due 10/31/23*..................... 613,898 537,328
Mirant Americas Generation LLC
Senior Notes
8.30% due 05/01/11...................... 1,170,000 1,134,900
Mirant Americas Generation LLC
Senior Notes
8.50% due 10/01/21...................... 1,380,000 1,021,200
Mirant Mid-Atlantic LLC
Pass Through Certs.
Series B
9.13% due 06/30/17...................... 463,365 436,143
Nevada Power Co.
Notes
7.13% due 03/15/19...................... 440,000 431,982
Peco Energy Co.
1st Mtg. Bonds
5.00% due 10/01/14...................... 440,000 439,413
Pepco Holdings, Inc.
Senior Notes
6.45% due 08/15/12...................... 940,000 940,524
PSEG Power LLC
Company Guar. Notes
5.00% due 04/01/14...................... 653,000 617,688
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
ELECTRIC-INTEGRATED (CONTINUED)
PSEG Power LLC
Company Guar. Notes
7.75% due 04/15/11........................... $ 50,000 $ 52,323
Sierra Pacific Power Co.
1st Mtg. Bonds
5.45% due 09/01/13........................... 257,000 250,821
Sierra Pacific Power Co.
Senior Notes
6.75% due 07/01/37........................... 1,071,000 904,064
South Carolina Electric & Gas Co.
1st Mtg. Bonds
6.05% due 01/15/38........................... 275,000 272,379
Southern California Edison Co.
1st Mtg. Bonds
Series 04-G
5.75% due 04/01/35........................... 80,000 77,179
Southern California Edison Co.
1st Mtg. Bonds
6.05% due 03/15/39........................... 550,000 548,468
Southern Energy, Inc.
Notes
7.90% due 07/15/09+(4)(6)(23)................ 1,550,000 0
Texas Competitive Electric Holdings Co., LLC
Series A
Company Guar. Notes
10.25% due 11/01/15.......................... 3,190,000 1,595,000
Texas Competitive Electric Holdings Co., LLC
Series B
Company Guar. Notes
10.25% due 11/01/15.......................... 1,370,000 685,000
Texas Competitive Electric Holdings Co., LLC
Company Guar. Notes
10.50% due 11/01/16(11)...................... 1,445,000 541,875
Union Electric Co.
Senior Sec. Notes
6.70% due 02/01/19........................... 307,000 292,424
-----------
13,317,495
-----------
ELECTRONIC COMPONENTS-MISC. -- 0.0%
Sanmina-SCI Corp.
Company Guar. Notes
6.75% due 03/01/13........................... 175,000 68,250
-----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.6%
Advanced Micro Devices, Inc.
Senior Notes
7.75% due 11/01/12........................... 1,225,000 650,781
Amkor Technology, Inc.
Senior Notes
7.75% due 05/15/13........................... 1,475,000 1,187,375
Freescale Semiconductor, Inc.
Company Guar. Notes
9.13% due 12/15/14(11)....................... 638,000 47,850
National Semiconductor Corp.
Senior Notes
6.60% due 06/15/17........................... 590,000 388,536
29
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
ELECTRONIC COMPONENTS-SEMICONDUCTORS (CONTINUED)
Spansion LLC
Senior Sec. Notes
4.38% due 06/01/13*+(5)(12)................ $3,005,000 $ 676,125
Spansion LLC
Senior Notes
11.25% due 01/15/16*+(5)(12)............... 180,000 4,050
----------
2,954,717
----------
ELECTRONICS-MILITARY -- 0.4%
L-3 Communications Corp.
Company Guar. Notes
6.13% due 07/15/13......................... 1,075,000 1,032,000
L-3 Communications Corp.
Company Guar. Notes
7.63% due 06/15/12......................... 925,000 928,469
----------
1,960,469
----------
ENERGY-ALTERNATE SOURCES -- 0.0%
VeraSun Energy Corp.
Sec. Notes
9.88% due 12/15/12+(5)(12)................. 135,000 129,600
----------
FINANCE-AUTO LOANS -- 0.3%
Ford Motor Credit Co. LLC
Senior Notes
7.38% due 02/01/11......................... 2,000,000 1,511,418
----------
FINANCE-COMMERCIAL -- 0.1%
Textron Financial Corp.
Senior Notes
5.40% due 04/28/13......................... 640,000 390,984
----------
FINANCE-CREDIT CARD -- 0.1%
FIA Card Services NA
Sub. Notes
7.13% due 11/15/12*........................ 298,000 273,339
----------
FINANCE-INVESTMENT BANKER/BROKER -- 0.4%
Lehman Brothers Holdings Capital Trust VII
Company Guar. Notes
5.86% due 05/31/12+(5)(9)(12).............. 222,000 22
Lehman Brothers Holdings, Inc.
Sub. Notes
6.75% due 12/28/17+(5)(12)................. 280,000 28
Lehman Brothers Holdings, Inc.
Sub. Notes
7.50% due 05/11/38+(5)(12)................. 361,000 36
Lehman Brothers Holdings, Inc.
Senior Notes
8.80% due 03/01/15+(5)(12)................. 517,000 65,918
Merrill Lynch & Co., Inc.
Senior Notes
5.45% due 07/15/14......................... 275,000 208,355
Merrill Lynch & Co., Inc.
Sub. Notes
5.70% due 05/02/17......................... 301,000 178,226
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
FINANCE-INVESTMENT BANKER/BROKER (CONTINUED)
Merrill Lynch & Co., Inc.
Sub. Notes
6.22% due 09/15/26........................ $350,000 $ 172,769
Morgan Stanley
Senior Notes
5.75% due 10/18/16........................ 451,000 410,567
Schwab Capital Trust I
Company Guar. Notes
7.50% due 11/15/37(3)..................... 138,000 86,983
The Bear Stearns Cos., Inc.
Senior Notes
5.70% due 11/15/14........................ 714,000 678,606
----------
1,801,510
----------
FINANCE-MORTGAGE LOAN/BANKER -- 0.2%
Countrywide Financial Corp.
Company Guar. Notes
5.80% due 06/07/12........................ 523,000 454,193
Countrywide Home Loans, Inc.
Company Guar. Notes
4.00% due 03/22/11........................ 270,000 240,273
Countrywide Home Loans, Inc.
Notes
4.13% due 09/15/09........................ 90,000 88,936
----------
783,402
----------
FOOD-MEAT PRODUCTS -- 0.1%
Smithfield Foods, Inc.
Senior Notes
7.75% due 05/15/13........................ 275,000 184,250
Tyson Foods, Inc.
Senior Notes
10.50% due 03/01/14*...................... 225,000 229,500
----------
413,750
----------
FOOD-MISC. -- 0.3%
General Mills, Inc.
Senior Notes
5.65% due 02/15/19........................ 262,000 266,730
Kraft Foods, Inc.
Senior Notes
6.75% due 02/19/14........................ 416,000 449,751
Kraft Foods, Inc.
Senior Notes
6.88% due 01/26/39........................ 553,000 542,961
----------
1,259,442
----------
FOOD-RETAIL -- 0.2%
SUPERVALU, Inc.
Notes
7.88% due 08/01/09........................ 725,000 725,906
----------
FOOD-WHOLESALE/DISTRIBUTION -- 0.1%
Sysco Corp.
Bonds
6.63% due 03/17/39........................ 275,000 275,166
----------
30
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
FUNERAL SERVICES & RELATED ITEMS -- 0.1%
Service Corp. International
Debentures
7.88% due 02/01/13.................... $ 650,000 $ 620,750
----------
GAMBLING (NON-HOTEL) -- 0.2%
Downstream Development Authority
Senior Sec. Notes
12.00% due 10/15/15*.................. 1,200,000 312,000
Greektown Holdings LLC
Senior Notes
10.75% due 12/01/13*+(5)(12).......... 1,045,000 52,250
Waterford Gaming LLC
Senior Notes
8.63% due 09/15/14*................... 548,000 328,800
----------
693,050
----------
GAS-DISTRIBUTION -- 0.0%
MXEnergy Holdings, Inc.
Senior Notes
9.13% due 08/01/11(3)................. 650,000 211,250
----------
HEALTH CARE COST CONTAINMENT -- 0.1%
McKesson Corp.
Senior Notes
6.50% due 02/15/14.................... 230,000 237,899
----------
HOME FURNISHINGS -- 0.0%
Simmons Co.
Senior Disc. Notes
10.00% due 12/15/14+(8)............... 152,000 1,520
----------
HOTEL/MOTELS -- 0.1%
Gaylord Entertainment Co.
Company Guar. Notes
6.75% due 11/15/14.................... 852,000 523,980
----------
HUMAN RESOURCES -- 0.2%
Team Health, Inc.
Company Guar. Notes
11.25% due 12/01/13................... 1,228,000 1,068,360
----------
INDEPENDENT POWER PRODUCERS -- 0.4%
NRG Energy, Inc.
Company Guar. Notes
7.38% due 02/01/16.................... 910,000 846,300
Orion Power Holdings, Inc.
Senior Notes
12.00% due 05/01/10................... 650,000 670,313
Reliant Energy, Inc.
Senior Notes
7.88% due 12/31/17.................... 495,000 391,050
----------
1,907,663
----------
INSURANCE BROKERS -- 0.3%
Marsh & McLennan Cos., Inc.
Senior Notes
5.15% due 09/15/10.................... 200,000 195,002
USI Holdings Corp.
Senior Notes
5.11% due 11/15/14*(3)................ 615,000 289,050
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
INSURANCE BROKERS (CONTINUED)
USI Holdings Corp.
Senior Sub. Notes
9.75% due 05/15/15*..................... $1,865,000 $ 839,250
----------
1,323,302
----------
INSURANCE-LIFE/HEALTH -- 0.1%
Americo Life, Inc.
Notes
7.88% due 05/01/13*..................... 38,000 24,700
Lincoln National Corp.
Senior Notes
5.65% due 08/27/12...................... 391,000 176,477
Monumental Global Funding II
Senior Sec. Notes
5.65% due 07/14/11*..................... 174,000 168,046
Pricoa Global Funding I
Notes
5.30% due 09/27/13*..................... 320,000 256,239
----------
625,462
----------
INSURANCE-MULTI-LINE -- 0.0%
Hartford Financial Services Group, Inc.
Senior Notes
6.00% due 01/15/19...................... 313,000 177,214
----------
INSURANCE-MUTUAL -- 0.0%
Liberty Mutual Group, Inc.
Company Guar. Bonds
10.75% due 06/15/58*(3)................. 370,000 181,300
----------
INSURANCE-PROPERTY/CASUALTY -- 0.1%
ACE INA Holdings, Inc.
Company Guar. Notes
5.60% due 05/15/15...................... 536,000 499,703
----------
INSURANCE-REINSURANCE -- 0.1%
PartnerRe Finance A LLC
Company Guar. Notes
6.88% due 06/01/18...................... 643,000 569,242
----------
INVESTMENT MANAGEMENT/ADVISOR SERVICES -- 0.1%
Ameriprise Financial, Inc.
Senior Notes
5.35% due 11/15/10...................... 507,000 470,943
----------
MACHINERY-CONSTRUCTION & MINING -- 0.1%
Caterpillar, Inc.
Senior Notes
7.90% due 12/15/18...................... 657,000 679,779
----------
MEDICAL INFORMATION SYSTEMS -- 0.1%
Spheris, Inc.
Senior Sub. Notes
11.00% due 12/15/12..................... 1,575,000 563,063
----------
MEDICAL LABS & TESTING SERVICES -- 0.2%
Roche Holdings, Inc.
Company Guar. Notes
5.00% due 03/01/14*..................... 490,000 501,528
31
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
MEDICAL LABS & TESTING SERVICES (CONTINUED)
Roche Holdings, Inc.
Company Guar. Notes
6.00% due 03/01/19*...................... $ 468,000 $ 481,694
----------
983,222
----------
MEDICAL PRODUCTS -- 0.9%
Baxter International, Inc.
Senior Notes
5.90% due 09/01/16....................... 1,001,000 1,056,338
Biomet, Inc.
Company Guar. Notes
10.38% due 10/15/17(11).................. 1,274,000 1,076,530
DJO Finance LLC/DJO Finance Corp.
Company Guar. Notes
10.88% due 11/15/14...................... 375,000 278,438
Universal Hospital Services, Inc.
Senior Sec. Notes
5.94% due 06/01/15(3).................... 1,505,000 1,091,125
Universal Hospital Services, Inc.
Senior Sec. Notes
8.50% due 06/01/15(11)................... 525,000 467,250
----------
3,969,681
----------
MEDICAL-BIOMEDICAL/GENE -- 0.1%
Amgen, Inc.
Senior Notes
6.40% due 02/01/39....................... 326,000 313,390
----------
MEDICAL-DRUGS -- 0.7%
Axcan Intermediate Holdings, Inc.
Senior Notes
9.25% due 03/01/15....................... 1,150,000 1,112,625
Axcan Intermediate Holdings, Inc.
Senior Notes
12.75% due 03/01/16...................... 439,000 409,367
Pfizer, Inc.
Senior Notes
4.45% due 03/15/12....................... 161,000 165,372
Pfizer, Inc.
Senior Notes
7.20% due 03/15/39....................... 550,000 589,828
Wyeth
Bonds
5.50% due 02/01/14....................... 1,074,000 1,128,147
----------
3,405,339
----------
MEDICAL-HMO -- 0.7%
Humana, Inc.
Senior Bonds
8.15% due 06/15/38....................... 315,000 232,283
Multiplan, Inc.
Senior Sub. Notes
10.38% due 04/15/16*..................... 2,825,000 2,302,375
UnitedHealth Group, Inc.
Senior Notes
5.25% due 03/15/11....................... 325,000 327,781
WellPoint, Inc.
Senior Notes
5.00% due 01/15/11....................... 195,000 195,560
----------
3,057,999
----------
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
MEDICAL-HOSPITALS -- 2.0%
AMR HoldCo, Inc./EmCare HoldCo, Inc.
Senior Sub. Notes
10.00% due 02/15/15...................... $ 125,000 $ 124,375
Community Health Systems, Inc.
Company Guar. Notes
8.88% due 07/15/15....................... 1,875,000 1,771,875
HCA, Inc.
Senior Notes
6.25% due 02/15/13....................... 880,000 660,000
HCA, Inc.
Senior Notes
7.88% due 02/01/11....................... 950,000 919,125
HCA, Inc.
Senior Notes
8.75% due 09/01/10....................... 525,000 522,375
HCA, Inc.
Senior Sec. Notes
9.13% due 11/15/14....................... 810,000 761,400
HCA, Inc.
Senior Sec. Notes
9.25% due 11/15/16....................... 1,430,000 1,301,300
HCA, Inc.
Senior Sec. Notes
9.63% due 11/15/16(11)................... 1,905,000 1,519,238
Health Management Associates, Inc.
Senior Notes
6.13% due 04/15/16....................... 1,350,000 1,103,625
IASIS Healthcare LLC/IASIS Capital Corp.
Company Guar. Notes
8.75% due 06/15/14....................... 772,000 725,680
----------
9,408,993
----------
METAL PROCESSORS & FABRICATION -- 0.0%
Timken Co.
Notes
5.75% due 02/15/10....................... 162,000 161,836
----------
METAL-ALUMINUM -- 0.1%
Alcoa, Inc.
Senior Notes
6.50% due 06/15/18....................... 577,000 388,525
Noranda Aluminum Holding Corp.
Senior Notes
8.35% due 11/15/14(3)(11)................ 500,000 102,500
----------
491,025
----------
METAL-COPPER -- 0.1%
Freeport-McMoRan Copper & Gold, Inc.
Senior Notes
8.25% due 04/01/15....................... 550,000 526,625
----------
MINING -- 0.1%
Noranda Aluminum Acquisition Corp.
Company Guar. Notes
6.60% due 11/15/14(3)(11)................ 1,360,000 421,600
----------
32
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
MULTIMEDIA -- 0.4%
Haights Cross Operating Co.
Senior Notes
11.75% due 08/15/11......................... $ 125,000 $ 48,125
News America, Inc.
Company Guar. Bonds
7.30% due 04/30/28.......................... 1,074,000 894,818
Time Warner Entertainment Co. LP
Senior Notes
8.38% due 07/15/33.......................... 411,000 388,813
Viacom, Inc.
Senior Notes
6.25% due 04/30/16.......................... 550,000 482,868
----------
1,814,624
----------
NETWORKING PRODUCTS -- 0.0%
Cisco Systems, Inc.
Notes
5.90% due 02/15/39.......................... 218,000 200,302
----------
NON-FERROUS METALS -- 0.0%
Renco Metals, Inc.
Bonds
11.50% due 07/01/03+(4)(6)(13)(14).......... 500,000 0
----------
NON-HAZARDOUS WASTE DISPOSAL -- 0.1%
Waste Management, Inc.
Company Guar. Notes
6.38% due 11/15/12.......................... 270,000 271,879
Waste Management, Inc.
Company Guar. Notes
7.38% due 03/11/19.......................... 105,000 107,092
Waste Services, Inc.
Senior Sub. Notes
9.50% due 04/15/14.......................... 165,000 124,163
----------
503,134
----------
OFFICE AUTOMATION & EQUIPMENT -- 0.2%
Pitney Bowes, Inc.
Senior Notes
5.25% due 01/15/37.......................... 680,000 660,424
Xerox Corp.
Senior Notes
6.35% due 05/15/18.......................... 280,000 208,600
----------
869,024
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 2.8%
Atlas Energy Resources LLC
Senior Notes
10.75% due 02/01/18*........................ 1,150,000 842,375
Belden & Blake Corp.
Company Guar. Sec. Notes
8.75% due 07/15/12.......................... 150,000 104,250
Brigham Exploration Co.
Company Guar. Notes
9.63% due 05/01/14.......................... 1,020,000 311,100
Chaparral Energy, Inc.
Company Guar. Notes
8.50% due 12/01/15.......................... 895,000 308,775
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
Chesapeake Energy Corp.
Senior Notes
6.25% due 01/15/18.................. $ 775,000 $ 604,500
Chesapeake Energy Corp.
Senior Notes
6.63% due 01/15/16.................. 1,150,000 957,375
Chesapeake Energy Corp.
Senior Notes
7.25% due 12/15/18.................. 900,000 739,125
Chesapeake Energy Corp.
Senior Notes
9.50% due 02/15/15.................. 550,000 534,875
Costilla Energy, Inc.
Senior Notes
10.25% due 10/01/06+(4)(6).......... 500,000 0
Dune Energy, Inc.
Senior Sec. Notes
10.50% due 06/01/12................. 945,000 222,075
Encore Acquisition Co.
Senior Sub. Notes
6.00% due 07/15/15.................. 675,000 496,125
Encore Acquisition Co.
Senior Sub. Notes
6.25% due 04/15/14.................. 325,000 253,500
Energy Partners, Ltd.
Senior Notes
9.75% due 04/15/14(24)(25).......... 2,025,000 475,875
Exco Resources, Inc.
Company Guar. Notes
7.25% due 01/15/11.................. 1,430,000 1,108,250
Hilcorp Energy I LP
Senior Notes
7.75% due 11/01/15*................. 430,000 313,900
Hilcorp Energy I LP
Senior Notes
9.00% due 06/01/16*................. 150,000 111,000
Kerr-McGee Corp.
Company Guar. Notes
6.95% due 07/01/24.................. 364,000 278,918
Linn Energy LLC
Senior Notes
9.88% due 07/01/18*................. 725,000 594,500
Plains Exploration & Production Co.
Company Guar. Notes
7.75% due 06/15/15.................. 575,000 494,500
Plains Exploration & Production Co.
Company Guar. Notes
10.00% due 03/01/16................. 600,000 567,000
Quicksilver Resources, Inc.
Company Guar. Notes
7.13% due 04/01/16.................. 275,000 130,625
Quicksilver Resources, Inc.
Senior Notes
8.25% due 08/01/15.................. 1,125,000 725,625
Sabine Pass LNG LP
Senior Sec. Notes
7.50% due 11/30/16.................. 4,090,000 2,740,300
33
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
Transmeridian Exploration, Inc.
Company Guar. Notes
12.00% due 12/15/10+(5)(12)......... $ 375,000 $ 18,750
-----------
12,933,318
-----------
OIL COMPANIES-INTEGRATED -- 0.2%
Hess Corp.
Senior Notes
7.13% due 03/15/33.................. 320,000 274,687
Hess Corp.
Senior Notes
7.88% due 10/01/29.................. 461,000 417,215
Phillips Petroleum Co.
Debentures
7.00% due 03/30/29.................. 286,000 283,872
-----------
975,774
-----------
OIL REFINING & MARKETING -- 0.1%
The Premcor Refining Group, Inc.
Company Guar. Notes
6.75% due 05/01/14.................. 446,000 423,070
Valero Energy Corp.
Senior Notes
9.38% due 03/15/19.................. 230,000 237,445
-----------
660,515
-----------
OIL-FIELD SERVICES -- 0.3%
Helix Energy Solutions Group, Inc.
Senior Notes
9.50% due 01/15/16*................. 1,090,000 643,100
Key Energy Services, Inc.
Company Guar. Notes
8.38% due 12/01/14.................. 810,000 510,300
Oslo Seismic Services, Inc.
1st Mtg. Bonds
8.28% due 06/01/11.................. 103,648 105,554
Weatherford International, Ltd.
Company Guar. Notes
6.50% due 08/01/36.................. 265,000 186,551
-----------
1,445,505
-----------
PAPER & RELATED PRODUCTS -- 0.3%
Caraustar Industries, Inc.
Notes
7.38% due 06/01/09.................. 650,000 302,250
Georgia-Pacific LLC
Company Guar. Notes
7.00% due 01/15/15*................. 770,000 719,950
Georgia-Pacific LLC
Company Guar. Notes
7.13% due 01/15/17*................. 365,000 337,625
-----------
1,359,825
-----------
PHYSICIANS PRACTICE MANAGEMENT -- 0.5%
US Oncology, Inc.
Company Guar. Notes
10.75% due 08/15/14................. 2,395,000 2,203,400
-----------
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
PIPELINES -- 1.8%
Copano Energy LLC
Company Guar. Notes
8.13% due 03/01/16............................ $1,835,000 $1,550,575
DCP Midstream LLC
Senior Notes
9.75% due 03/15/19*........................... 215,000 213,152
Dynegy-Roseton Danskammer
Pass Through Certs., Series B
7.67% due 11/08/16............................ 3,295,000 2,495,962
El Paso Corp.
Senior Sub. Notes
6.88% due 06/15/14............................ 925,000 823,914
El Paso Corp.
Senior Notes
12.00% due 12/12/13........................... 150,000 159,000
El Paso Natural Gas Co.
Senior Notes
5.95% due 04/15/17............................ 575,000 504,982
MarkWest Energy Finance Corp.
Senior Notes
6.88% due 11/01/14............................ 255,000 179,775
MarkWest Energy Finance Corp.
Company Guar. Notes
8.50% due 07/15/16............................ 550,000 393,250
MarkWest Energy Partners LP / MarkWest Energy
Finance Corp.
Senior Notes
8.75% due 04/15/18............................ 525,000 366,188
NGC Corp. Capital Trust
Company Guar. Bonds
8.32% due 06/01/27............................ 1,290,000 516,000
ONEOK, Inc.
Senior Notes
6.00% due 06/15/35............................ 464,000 317,153
Williams Cos., Inc.
Senior Notes
7.88% due 09/01/21............................ 690,000 638,250
----------
8,158,201
----------
PRINTING-COMMERCIAL -- 0.1%
Valassis Communications, Inc.
Senior Notes
8.25% due 03/01/15............................ 865,000 373,031
----------
PUBLISHING-NEWSPAPERS -- 0.0%
Knight Ridder, Inc.
Debentures
6.88% due 03/15/29............................ 205,000 24,600
----------
PUBLISHING-PERIODICALS -- 0.1%
Dex Media West LLC
Senior Notes
8.50% due 08/15/10............................ 87,000 43,500
Idearc, Inc.
Company Guar. Notes
8.00% due 11/15/16+(5)(12).................... 1,099,000 28,849
34
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
PUBLISHING-PERIODICALS (CONTINUED)
The Reader's Digest Association, Inc.
Company Guar. Notes
9.00% due 02/15/17.................... $2,115,000 $ 148,050
----------
220,399
----------
REAL ESTATE INVESTMENT TRUSTS -- 0.3%
Omega Healthcare Investors, Inc.
Senior Notes
7.00% due 04/01/14.................... 1,400,000 1,288,000
PPF Funding, Inc.
Bonds
5.35% due 04/15/12*................... 270,000 191,627
Simon Property Group LP
Senior Notes
10.35% due 04/01/19................... 115,000 111,766
----------
1,591,393
----------
RECYCLING -- 0.0%
Aleris International, Inc.
Company Guar. Notes
9.00% due 12/15/14(5)(11)(12)......... 3,285,000 2,300
----------
RENTAL AUTO/EQUIPMENT -- 0.1%
Rental Service Corp.
Notes
9.50% due 12/01/14.................... 958,000 469,420
----------
RESEARCH & DEVELOPMENT -- 0.0%
Alion Science and Technology Corp.
Company Guar. Notes
10.25% due 02/01/15................... 1,015,000 152,250
----------
RETAIL-DRUG STORE -- 0.1%
Rite Aid Corp.
Company Guar. Notes
9.50% due 06/15/17.................... 1,216,000 279,680
----------
RETAIL-MAJOR DEPARTMENT STORES -- 0.1%
Saks, Inc.
Company Guar. Notes
9.88% due 10/01/11.................... 375,000 273,750
----------
RETAIL-PETROLEUM PRODUCTS -- 0.4%
Ferrellgas LP
Senior Notes
6.75% due 05/01/14.................... 664,000 557,760
Ferrellgas Partners LP
Senior Notes
6.75% due 05/01/14*................... 703,000 590,520
Inergy LP/Inergy Finance Corp.
Company Guar. Notes
8.25% due 03/01/16.................... 725,000 688,750
----------
1,837,030
----------
RETAIL-RESTAURANTS -- 0.2%
McDonald's Corp.
Senior Notes
5.70% due 02/01/39.................... 304,000 294,643
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
RETAIL-RESTAURANTS (CONTINUED)
NPC International, Inc.
Company Guar. Notes
9.50% due 05/01/14........................ $1,020,000 $ 795,600
----------
1,090,243
----------
RUBBER-TIRES -- 0.0%
Cooper Standard Automotive, Inc.
Company Guar. Notes
8.38% due 12/15/14........................ 1,220,000 85,400
----------
RUBBER/PLASTIC PRODUCTS -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/07+(4)(6)(12)(14)........ 100,000 10
----------
SATELLITE TELECOM -- 0.3%
Telesat Canada/Telesat LLC
Senior Notes
11.00% due 11/01/15*...................... 1,475,000 1,253,750
----------
SAVINGS & LOANS/THRIFTS -- 0.1%
Western Financial Bank
Sub. Notes
9.63% due 05/15/12........................ 495,000 494,208
----------
SCHOOLS -- 0.1%
Johns Hopkins University
Notes
5.25% due 07/01/19........................ 220,000 217,769
Princeton University
Notes
5.70% due 03/01/39........................ 360,000 359,589
----------
577,358
----------
SEISMIC DATA COLLECTION -- 0.2%
Seitel, Inc.
Senior Notes
9.75% due 02/15/14........................ 1,710,000 756,675
----------
SOAP & CLEANING PREPARATION -- 0.0%
Johnsondiversey Holdings, Inc.
Notes
10.67% due 05/15/13(8).................... 75,000 56,250
----------
SPECIAL PURPOSE ENTITIES -- 0.8%
AAC Group Holding Corp.
Senior Notes
10.25% due 10/01/12*(8)................... 565,000 310,750
Buffalo Thunder Development Authority
Senior Notes
9.38% due 12/15/14*(25)................... 2,650,000 159,000
CCM Merger, Inc.
Notes
8.00% due 08/01/13*....................... 825,000 338,250
Chukchansi Economic Development Authority
Senior Notes
6.10% due 11/15/12*(3).................... 150,000 31,125
Chukchansi Economic Development Authority
Senior Notes
8.00% due 11/15/13*....................... 1,845,000 401,288
35
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
SPECIAL PURPOSE ENTITIES (CONTINUED)
FireKeepers Development Authority
Senior Notes
13.88% due 05/15/15*................ $1,300,000 $ 793,000
Fox Acquisition Sub LLC
Senior Notes
13.38% due 07/15/16*................ 1,000,000 240,000
ING USA Global Funding
Trust Notes
4.50% due 10/01/10.................. 268,000 264,462
Local TV Finance LLC
Senior Notes
9.25% due 06/15/15*(11)............. 917,000 91,700
Principal Life Global Funding I
Senior Sec. Notes
5.25% due 01/15/13*................. 296,000 275,393
Southern Star Central Corp.
Senior Notes
6.75% due 03/01/16.................. 500,000 417,500
The Goldman Sachs Capital III
Company Guar. Notes
2.03% due 09/01/12(3)(9)............ 942,000 296,730
----------
3,619,198
----------
SPECIFIED PURPOSE ACQUISITIONS -- 0.0%
ESI Tractebel Acquisition Corp.
Company Guar. Bonds
7.99% due 12/30/11.................. 150,000 146,965
----------
STEEL-PRODUCERS -- 0.5%
ArcelorMittal USA
Senior Notes
6.50% due 04/15/14.................. 540,000 424,329
Reliance Steel & Aluminum Co.
Company Guar. Notes
6.85% due 11/15/36.................. 1,070,000 652,849
Ryerson, Inc.
Senior Sec. Notes
12.00% due 11/01/15*................ 1,222,000 693,485
Steel Dynamics, Inc.
Company Guar. Notes
6.75% due 04/01/15.................. 740,000 501,350
United States Steel Corp.
Senior Notes
7.00% due 02/01/18.................. 215,000 146,719
----------
2,418,732
----------
STORAGE/WAREHOUSING -- 0.2%
Mobile Mini, Inc.
Notes
6.88% due 05/01/15.................. 725,000 500,250
Mobile Services Group, Inc.
Company Guar. Notes
9.75% due 08/01/14.................. 655,000 486,338
----------
986,588
----------
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------
TELECOM SERVICES -- 1.0%
Bellsouth Telecommunications, Inc.
Debentures
7.00% due 12/01/95................. $ 462,000 $ 364,576
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.18% due 12/15/23................. 50,000 33,750
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.20% due 11/29/23................. 225,000 151,875
Fairpoint Communications, Inc.
Senior Notes
13.13% due 04/01/18*............... 1,081,000 205,390
Fairpoint Communications, Inc.
Senior Notes
13.13% due 04/01/18................ 725,000 137,750
PAETEC Holding Corp.
Company Guar. Notes
9.50% due 07/15/15................. 1,735,000 1,214,500
Qwest Corp.
Senior Notes
6.50% due 06/01/17................. 500,000 415,000
Qwest Corp.
Senior Notes
7.88% due 09/01/11................. 600,000 591,000
Qwest Corp.
Senior Notes
8.88% due 03/15/12................. 725,000 715,938
Verizon Global Funding Corp.
Senior Notes
6.88% due 06/15/12................. 750,000 796,088
----------
4,625,867
----------
TELEPHONE-INTEGRATED -- 3.1%
AT&T Corp.
Company Guar. Notes
7.30% due 11/15/11................. 1,003,000 1,077,732
AT&T, Inc.
Senior Notes
5.63% due 06/15/16................. 235,000 235,515
AT&T, Inc.
Senior Notes
6.30% due 01/15/38................. 490,000 430,275
BellSouth Corp.
Senior Notes
6.00% due 10/15/11................. 1,300,000 1,352,234
Cincinnati Bell, Inc.
Company Guar. Notes
7.00% due 02/15/15................. 1,444,000 1,328,480
Cincinnati Bell, Inc.
Senior Notes
7.25% due 06/15/23................. 25,000 19,125
Pacific Bell Telephone Co.
Company Guar. Notes
7.13% due 03/15/26................. 570,000 551,236
Qwest Capital Funding, Inc.
Notes
7.25% due 02/15/11................. 700,000 668,500
36
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
TELEPHONE-INTEGRATED (CONTINUED)
Qwest Communications International, Inc.
Company Guar. Notes
7.50% due 02/15/14....................... $ 351,000 $ 303,615
Qwest Communications International, Inc.
Company Guar. Notes, Series B
7.50% due 02/15/14....................... 1,710,000 1,479,150
Sprint Capital Corp.
Company Guar. Bonds
6.38% due 05/01/09....................... 825,000 825,000
Sprint Capital Corp.
Company Guar. Notes
6.90% due 05/01/19....................... 286,000 201,630
Sprint Capital Corp.
Company Guar. Notes
8.38% due 03/15/12....................... 1,161,000 1,044,900
Sprint Capital Corp.
Company Guar. Notes
8.75% due 03/15/32....................... 3,752,000 2,513,840
Valor Telecommunications Enterprises LLC
Company Guar. Notes
7.75% due 02/15/15....................... 1,175,000 1,142,687
Verizon Communications, Inc.
Senior Notes
6.35% due 04/01/19....................... 205,000 202,528
Verizon New York, Inc.
Senior Notes
6.88% due 04/01/12....................... 751,000 769,218
Verizon Pennsylvania, Inc.
Senior Bonds
8.35% due 12/15/30....................... 250,000 244,568
Verizon Virginia, Inc.
Senior Notes
4.63% due 03/15/13....................... 250,000 242,510
-----------
14,632,743
-----------
TELEVISION -- 0.3%
Allbritton Communications Co.
Senior Sub. Notes
7.75% due 12/15/12....................... 2,217,000 820,290
Bonten Media Acquisition Co.
Company Guar. Notes
9.00% due 06/01/15*(11).................. 178,000 30,483
LIN Television Corp.
Senior Sub. Notes
6.50% due 05/15/13....................... 1,015,000 527,800
Paxson Communications Corp.
Senior Sec. Notes
7.34% due 01/15/13*(11)(24)(25).......... 2,619,467 23,575
Young Broadcasting, Inc.
Senior Sub. Notes
8.75% due 01/15/14+(5)(12)............... 380,000 42
Young Broadcasting, Inc.
Company Guar. Notes
10.00% due 03/01/11+(5)(12).............. 1,075,000 118
-----------
1,402,308
-----------
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------
THEATERS -- 0.5%
AMC Entertainment, Inc.
Senior Sub. Notes
8.00% due 03/01/14................. $ 599,000 $ 491,180
AMC Entertainment, Inc.
Company Guar. Notes
8.63% due 08/15/12................. 150,000 147,375
AMC Entertainment, Inc.
Senior Sub Notes
11.00% due 02/01/16................ 539,000 490,490
Cinemark, Inc.
Senior Notes
9.75% due 03/15/14(8).............. 1,260,000 1,187,550
----------
2,316,595
----------
TOOLS-HAND HELD -- 0.1%
Black & Decker Corp.
Notes
8.95% due 04/15/14................. 230,000 227,256
----------
TRANSACTIONAL SOFTWARE -- 0.1%
Open Solutions, Inc.
Company Guar. Notes
9.75% due 02/01/15*................ 1,675,000 253,344
----------
TRANSPORT-AIR FREIGHT -- 0.9%
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class A-2
6.88% due 01/02/11................. 184,173 141,813
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class A-1
7.20% due 01/02/19................. 1,455,993 1,048,315
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class B
7.63% due 01/02/15................. 1,724,036 1,155,104
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class A
8.71% due 01/02/20................. 435,247 369,960
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class C
8.77% due 01/02/11................. 62,428 29,341
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class B
9.06% due 07/02/17................. 1,346,314 1,319,388
----------
4,063,921
----------
TRANSPORT-EQUIPMENT & LEASING -- 0.0%
GATX Corp.
Pass Through Certs.
9.00% due 11/15/13................. 130,000 136,846
----------
37
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
TRANSPORT-RAIL -- 0.2%
CSX Corp.
Senior Notes
6.25% due 04/01/15..................... $ 615,000 $ 559,071
CSX Corp.
Senior Notes
6.25% due 03/15/18..................... 283,000 243,793
------------
802,864
------------
TRANSPORT-SERVICES -- 0.3%
Bristow Group, Inc.
Senior Notes
7.50% due 09/15/17..................... 699,000 524,250
PHI, Inc.
Company Guar. Notes
7.13% due 04/15/13..................... 660,000 406,725
United Parcel Service, Inc.
Senior Notes
3.88% due 04/01/14..................... 147,000 147,360
United Parcel Service, Inc.
Senior Notes
5.13% due 04/01/19..................... 96,000 96,632
------------
1,174,967
------------
TOTAL CORPORATE BONDS & NOTES
(cost $281,962,840).................... 209,153,266
------------
FOREIGN CORPORATE BONDS &
NOTES -- 5.4%
BANKS-COMMERCIAL -- 0.1%
Barclays Bank PLC
Jr. Sub. Notes
5.93% due 12/15/16*(3)(9).............. 630,000 211,308
Caisse Nationale des Caisses
d'Epargne et de Prevoyance
Senior Notes
3.06% due 12/30/09(3)(9)............... 141,000 86,010
Credit Agricole SA
Jr. Sub. Notes
6.64% due 05/31/17*(3)(9).............. 494,000 148,383
Lloyds Banking Group PLC
Jr. Sub. Notes
5.92% due 10/01/15*(9)................. 320,000 57,600
------------
503,301
------------
BREWERY -- 0.1%
SABMiller PLC
Notes
6.50% due 07/15/18*.................... 370,000 344,583
------------
BUILDING PRODUCTS-DOORS & WINDOWS -- 0.0%
Masonite International Corp.
Company Guar. Notes
11.00% due 04/06/15+(5)(12)............ 117,000 1,170
------------
COMPUTERS-MEMORY DEVICES -- 0.1%
Seagate Technology HDD Holdings
Company Guar. Notes
6.80% due 10/01/16..................... 1,071,000 621,180
------------
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
CONTAINERS-METAL/GLASS -- 0.1%
Rexam PLC
Senior Notes
6.75% due 06/01/13*....................... $ 430,000 $ 373,592
----------
CRUISE LINES -- 0.1%
Royal Caribbean Cruises, Ltd.
Senior Notes
7.00% due 06/15/13........................ 400,000 224,500
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.3%
Bombardier, Inc.
Senior Notes
8.00% due 11/15/14*....................... 1,685,000 1,234,263
----------
DIVERSIFIED MINERALS -- 0.1%
BHP Billiton Finance USA, Ltd.
Company Guar. Notes
5.50% due 04/01/14........................ 230,000 231,586
----------
DIVERSIFIED OPERATIONS -- 0.1%
EnCana Holdings Finance Corp.
Company Guar. Notes
5.80% due 05/01/14........................ 405,000 398,390
----------
ELECTRIC-INTEGRATED -- 0.2%
Electricite de France
Notes
6.50% due 01/26/19*....................... 394,000 405,876
Electricite de France
Notes
6.95% due 01/26/39*....................... 510,000 505,493
----------
911,369
----------
FOOD-MEAT PRODUCTS -- 0.1%
JBS SA
Company Guar. Notes
9.38% due 02/07/11........................ 591,000 502,350
JBS SA
Senior Notes
10.50% due 08/04/16*...................... 250,000 165,000
----------
667,350
----------
FOOD-RETAIL -- 0.2%
Delhaize Group
Senior Notes
6.50% due 06/15/17........................ 855,000 826,489
----------
INDEPENDENT POWER PRODUCERS -- 0.0%
AES Drax Energy, Ltd.
Sec. Notes
11.50% due 08/30/10+(5)(6)(15)............ 725,000 725
----------
INSURANCE-MULTI-LINE -- 0.1%
Aegon NV
Senior Notes
2.57% due 07/15/14(3)(9).................. 201,000 48,441
XL Capital Finance PLC
Company Guar. Notes
6.50% due 01/15/12........................ 279,000 203,049
38
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
INSURANCE-MULTI-LINE (CONTINUED)
XL Capital, Ltd.
Senior Notes
5.25% due 09/15/14.......................... $ 488,000 $ 319,756
----------
571,246
----------
INVESTMENT COMPANIES -- 0.0%
Xstrata Finance Canada, Ltd.
Company Guar. Notes
6.90% due 11/15/37*......................... 266,000 159,097
----------
MEDICAL PRODUCTS -- 0.2%
Angiotech Pharmaceuticals, Inc.
Company Guar. Notes
5.01% due 12/01/13(3)....................... 1,410,000 916,500
Angiotech Pharmaceuticals, Inc.
Company Guar. Notes
7.75% due 04/01/14.......................... 340,000 96,900
----------
1,013,400
----------
MEDICAL-DRUGS -- 0.5%
Elan Finance PLC
Company Guar. Notes
5.23% due 11/15/11(3)....................... 2,430,000 1,992,600
Novartis Securities Investment, Ltd.
Company Guar. Notes
5.13% due 02/10/19.......................... 445,000 451,818
----------
2,444,418
----------
METAL-DIVERSIFIED -- 0.0%
Vedanta Resources PLC
Senior Notes
8.75% due 01/15/14.......................... 240,000 172,800
----------
MULTIMEDIA -- 0.1%
Quebecor Media, Inc.
Senior Notes
7.75% due 03/15/16.......................... 375,000 285,000
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.5%
Compton Petroleum Finance Corp.
Company Guar. Notes
7.63% due 12/01/13.......................... 1,515,000 477,225
Nexen, Inc.
Bonds
5.88% due 03/10/35.......................... 306,000 202,456
OPTI Canada, Inc.
Senior Notes
7.88% due 12/15/14.......................... 2,230,000 975,625
OPTI Canada, Inc.
Senior Notes
8.25% due 12/15/14.......................... 1,125,000 503,438
----------
2,158,744
----------
OIL COMPANIES-INTEGRATED -- 0.1%
Shell International Finance BV
Company Guar. Notes
4.00% due 03/21/14.......................... 230,000 233,227
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
OIL COMPANIES-INTEGRATED (CONTINUED)
Shell International Finance BV
Company Guar. Notes
6.38% due 12/15/38........................ $ 300,000 $ 315,907
Suncor Energy, Inc.
Senior Notes
6.85% due 06/01/39........................ 120,000 90,690
----------
639,824
----------
OIL-FIELD SERVICES -- 0.2%
North American Energy Partners, Inc.
Senior Notes
8.75% due 12/01/11........................ 1,160,000 846,800
----------
PIPELINES -- 0.1%
Kinder Morgan Finance Co. ULC
Company Guar. Notes
5.35% due 01/05/11........................ 350,000 334,250
Kinder Morgan Finance Co. ULC
Company Guar. Notes
5.70% due 01/05/16........................ 183,000 153,720
----------
487,970
----------
PRINTING-COMMERCIAL -- 0.0%
Quebecor World Capital Corp.
Company Guar. Notes
8.75% due 03/15/16*+(5)(15)............... 1,640,000 57,400
----------
REAL ESTATE OPERATIONS & DEVELOPMENT -- 0.1%
Agile Property Holdings, Ltd.
Company Guar. Notes
9.00% due 09/22/13........................ 530,000 376,888
----------
SATELLITE TELECOM -- 1.0%
Intelsat Intermediate Holding Co., Ltd.
Senior Notes
9.50% due 02/01/15*(8).................... 1,450,000 1,203,500
Intelsat Subsidiary Holding Co., Ltd.
Senior Notes
8.50% due 01/15/13*....................... 1,849,000 1,742,682
Intelsat Subsidiary Holding Co., Ltd.
Company Guar. Notes
8.88% due 01/15/15*....................... 550,000 510,125
Intelsat Subsidiary Holding Co., Ltd.
Senior Notes
8.88% due 01/15/15*....................... 1,335,000 1,244,888
----------
4,701,195
----------
SPECIAL PURPOSE ENTITIES -- 0.1%
Hellas Telecommunications Luxembourg II
Sub. Notes
6.84% due 01/15/15*(3).................... 1,330,000 219,450
Hybrid Capital Funding I LP
Bonds
8.00% due 06/30/11(9)..................... 338,000 40,543
SMFG Preferred Capital, Ltd.
Sub. Notes
6.08% due 01/25/17*(3)(9)................. 373,000 228,228
----------
488,221
----------
39
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
TELECOM SERVICES -- 0.2%
Global Crossing UK Finance PLC
Company Guar. Notes
10.75% due 12/15/14.......................... $ 1,225,000 $ 747,250
Wind Acquisition Finance SA
Company Guar. Bonds
10.75% due 12/01/15*......................... 375,000 371,250
-----------
1,118,500
-----------
TELEPHONE-INTEGRATED -- 0.4%
Deutsche Telekom International Finance BV
Company Guar. Bonds
6.75% due 08/20/18........................... 245,000 246,055
Telecom Italia Capital SA
Company Guar. Notes
4.95% due 09/30/14........................... 727,000 627,714
Telecom Italia Capital SA
Company Guar. Bonds
6.20% due 07/18/11........................... 1,000,000 982,004
-----------
1,855,773
-----------
TRANSPORT-RAIL -- 0.2%
Canadian National Railway Co.
Senior Notes
6.38% due 10/15/11........................... 750,000 800,738
Canadian Pacific Railway Co.
Notes
6.50% due 05/15/18........................... 350,000 314,845
-----------
1,115,583
-----------
WAREHOUSING & HARBOR TRANSPORTATION SERVICES -- 0.1%
DP World, Ltd.
Notes
6.85% due 07/02/37........................... 430,000 205,110
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $35,045,450)........................... 25,036,467
-----------
FOREIGN GOVERNMENT AGENCIES -- 14.3%
SOVEREIGN -- 14.3%
Canadian Government Bond
Bonds
3.75% due 06/01/12........................... CAD 1,855,000 1,579,369
Canadian Government Bond
Notes
4.25% due 06/01/18........................... CAD 1,815,000 1,629,052
Credit Suisse First Boston International for
City of Kiev Ukraine
Bonds
8.00% due 11/06/15........................... 1,100,000 219,788
Federal Republic of Brazil
Bonds
6.00% due 01/17/17........................... 1,090,000 1,087,275
Federal Republic of Brazil
Bonds
7.13% due 01/20/37........................... 310,000 310,775
Federal Republic of Brazil
Notes
8.00% due 01/15/18........................... 1,200,000 1,309,200
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------
SOVEREIGN (CONTINUED)
Federal Republic of Brazil
Bonds
8.25% due 01/20/34.......... $ 795,000 $ 882,450
Federal Republic of Brazil
Notes
8.75% due 02/04/25.......... 805,000 917,700
Federal Republic of Brazil
Bonds
8.88% due 10/14/19.......... 760,000 893,000
Federal Republic of Brazil
Notes
11.00% due 08/17/40......... 1,684,000 2,138,680
Federal Republic of Brazil
Bonds
12.50% due 01/05/16......... BRL 1,000,000 452,635
Federal Republic of Germany
Bonds
4.00% due 01/04/18.......... EUR 975,000 1,407,371
Federal Republic of Germany
Bonds
4.50% due 01/04/13.......... EUR 595,000 861,403
Government of Australia
Bonds
6.00% due 02/15/17.......... AUD 845,000 656,399
Government of Australia
Bonds
6.25% due 06/15/14.......... AUD 2,400,000 1,847,839
Government of Hungary
Bonds
6.75% due 04/22/11.......... HUF 107,000,000 414,580
Government of Japan
Bonds
1.30% due 06/20/12.......... JPY 139,500,000 1,441,686
Government of Japan
Bonds
1.40% due 12/20/15.......... JPY 258,600,000 2,692,646
Government of Japan
Bonds
1.50% due 09/20/13.......... JPY 61,000,000 637,040
Government of Japan
Bonds
1.70% due 09/20/17.......... JPY 43,000,000 454,165
Government of Netherlands
Bonds
3.25% due 07/15/15.......... EUR 900,000 1,209,551
Kingdom of Norway
Bonds
5.00% due 05/15/15.......... NOK 31,300,000 5,098,860
Kingdom of Norway
Bonds
6.50% due 05/15/13.......... NOK 13,630,000 2,319,481
Kingdom of Sweden
Bonds
4.00% due 12/01/09.......... SEK 20,380,000 2,540,223
Kingdom of Sweden
Bonds
4.50% due 08/12/15.......... SEK 10,710,000 1,453,539
40
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (CONTINUED)
SOVEREIGN (CONTINUED)
Republic of Argentina
Notes
5.25% due 12/31/38(8)........ $ 839,761 $ 146,958
Republic of Argentina
Bonds
8.28% due 12/31/33........... 998,777 269,670
Republic of Colombia
Notes
7.38% due 01/27/17........... 450,000 455,400
Republic of Colombia
Notes
7.38% due 03/18/19........... 460,000 458,850
Republic of Colombia
Bonds
7.38% due 09/18/37........... 785,000 700,612
Republic of Colombia
Bonds
12.00% due 10/22/15.......... COP 475,000,000 209,338
Republic of Columbia
Bonds
8.13% due 05/21/24........... 360,000 361,800
Republic of Georgia
Notes
7.50% due 04/15/13........... 2,280,000 1,562,370
Republic of Indonesia
Bonds
6.63% due 02/17/37........... 1,440,000 973,283
Republic of Indonesia
Senior Bonds
6.88% due 01/17/18........... 520,000 421,200
Republic of Panama
Bonds
6.70% due 01/26/36........... 660,000 579,150
Republic of Peru
Bonds
6.55% due 03/14/37........... 90,000 80,550
Republic of Peru
Notes
7.35% due 07/21/25........... 650,000 653,250
Republic of Peru
Bonds
8.75% due 11/21/33........... 720,000 806,400
Republic of Philippines
Bonds
7.75% due 01/14/31........... 1,000,000 1,021,250
Republic of Philippines
Bonds
8.38% due 06/17/19........... 875,000 953,750
Republic of Philippines
Notes
8.88% due 03/17/15........... 850,000 977,500
Republic of Philippines
Senior Notes
9.50% due 02/02/30........... 240,000 283,800
Republic of Philippines
Notes
10.63% due 03/16/25.......... 895,000 1,138,887
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------
SOVEREIGN (CONTINUED)
Republic of South Africa
Bonds
13.50% due 09/15/15...... ZAR 6,450,000 $ 859,346
Republic of Turkey
Notes
6.88% due 03/17/36....... 500,000 397,500
Republic of Turkey
Notes
7.00% due 06/05/20....... 970,000 892,400
Republic of Turkey
Notes
7.38% due 02/05/25....... 1,030,000 929,575
Republic of Turkey
Notes
8.00% due 02/14/34....... 611,000 549,900
Republic of Turkey
Notes
9.50% due 01/15/14....... 1,660,000 1,817,700
Republic of Turkey
Senior Bonds
11.88% due 01/15/30...... 570,000 752,400
Republic of Uruguay
Notes
7.63% due 03/21/36....... 390,000 312,000
Republic of Uruguay
Bonds
8.00% due 11/18/22....... 630,000 568,134
Republic of Venezuela
Bonds
7.65% due 04/21/25....... 490,000 220,500
Republic of Venezuela
Notes
8.50% due 10/08/14....... 830,000 510,450
Republic of Venezuela
Bonds
9.00% due 05/07/23....... 1,100,000 561,000
Republic of Venezuela
Bonds
9.25% due 09/15/27....... 1,860,000 1,078,800
Republic of Venezuela
Bonds
9.25% due 05/07/28....... 1,100,000 553,300
Republic of Venezuela
Bonds
9.38% due 01/13/34....... 760,000 389,500
Russian Federation
Senior Bonds
7.50% due 03/31/30(8).... 5,641,920 5,319,936
Russian Federation
Notes
12.75% due 06/24/28...... 340,000 450,653
United Mexican States
Notes
5.63% due 01/15/17....... 1,130,000 1,105,140
United Mexican States
Notes
6.05% due 01/11/40....... 600,000 513,000
41
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (CONTINUED)
SOVEREIGN (CONTINUED)
United Mexican States
Notes
6.75% due 09/27/34..................... $ 495,000 $ 466,191
United Mexican States
Bonds
7.50% due 04/08/33..................... 840,000 873,600
United Mexican States
Bonds
8.30% due 08/15/31..................... 470,000 520,995
United Mexican States
Bonds
9.50% due 12/18/14..................... MXN 5,800,000 449,493
-----------
TOTAL FOREIGN GOVERNMENT AGENCIES
(cost $70,857,009)..................... 66,600,238
-----------
FOREIGN GOVERNMENT TREASURIES -- 1.3%
SOVEREIGN -- 1.3%
New South Wales Treasury Corp.
Local Government Guar. Bonds
6.00% due 05/01/12..................... AUD 3,148,000 2,302,104
Queensland Treasury Corp.
Government Guar. Notes
5.50% due 12/18/14..................... GBP 350,000 249,674
United Kingdom Gilt Treasury
Government Guar. Notes
4.50% due 03/07/13..................... AUD 1,030,000 1,602,334
United Kingdom Gilt Treasury
Government Guar. Notes
5.00% due 03/07/18..................... AUD 1,250,000 2,078,201
-----------
TOTAL FOREIGN GOVERNMENT TREASURIES
(cost $6,852,061)...................... 6,232,313
-----------
LOANS(16)(17) -- 1.2%
CASINO SERVICES -- 0.1%
Holding Gaming Borrower LP
Term Loan B
9.25% due 02/19/13(6)(23).............. 1,000,000 600,000
-----------
DIVERSIFIED FINANCIAL SERVICES -- 0.2%
Wind Acquisition Holdings Finance S.A.
8.39% due 12/21/11(6)(10)(23).......... 1,462,911 1,053,296
-----------
ENERGY-ALTERNATE SOURCES -- 0.5%
VeraSun Energy Corp.
Superior Priority Secured Debtor
16.50% due 11/03/09(4)(6)(12)(23)...... 2,100,000 2,100,000
-----------
MEDICAL-DRUGS -- 0.3%
Triax Pharmaceuticals LLC
11.41% due 08/30/11(4)(6)(18)(23)...... 1,561,252 1,407,949
-----------
THEATERS -- 0.1%
AMC Entertainment Holdings, Inc.
6.32% due 06/15/12(6)(23).............. 466,936 210,121
-----------
TOTAL LOANS
(cost $5,787,226)...................... 5,371,366
-----------
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 21.2%
FEDERAL HOME LOAN BANK -- 0.1%
3.13% due 06/10/11................. $ 400,000 $ 411,035
-----------
FEDERAL HOME LOAN MTG. CORP. -- 12.4%
4.13% due 07/12/10................. 300,000 312,312
4.50% due 02/01/20................. 159,260 164,350
4.50% due 08/01/20................. 273,384 282,121
4.50% due 03/01/23................. 867,078 893,249
4.50% due 01/01/39................. 846,875 865,501
5.00% due 09/01/18................. 366,136 382,529
5.00% due 07/01/20................. 580,796 604,258
5.00% due 01/01/24................. 1,451,528 1,506,680
5.00% due 02/01/34................. 386,041 399,752
5.00% due 03/01/34................. 2,957,008 3,059,261
5.00% due 05/01/34................. 248,239 256,823
5.00% due 02/01/35................. 560,158 579,528
5.00% due 07/01/35................. 937,501 969,334
5.00% due 08/01/35................. 832,137 860,392
5.00% due 10/01/35................. 1,103,884 1,141,366
5.00% due 04/01/36................. 483,792 500,219
5.00% due 05/01/36................. 331,571 342,467
5.00% due 08/01/36................. 401,501 414,695
5.00% due 11/01/37................. 1,562,514 1,613,284
5.33% due 12/01/35(3).............. 339,413 351,164
5.47% due 03/01/36(3).............. 212,994 218,201
5.50% due 05/01/37................. 1,726,594 1,793,487
5.50% due 06/01/37................. 375,710 390,266
5.50% due 09/01/37................. 1,298,135 1,348,428
5.50% due 10/01/37................. 5,070,748 5,267,202
5.50% due 11/01/37................. 1,754,768 1,822,752
5.50% due 12/01/37................. 1,245,486 1,293,740
5.50% due 01/01/38................. 3,154,761 3,277,162
5.50% due 02/01/38................. 2,002,027 2,079,590
5.50% due 07/01/38................. 820,821 852,622
5.80% due 01/01/37(3).............. 148,020 153,795
5.95% due 10/01/36(3).............. 3,555,119 3,701,248
6.00% due 10/01/37................. 1,456,665 1,524,562
6.00% due 12/01/37................. 3,627,969 3,797,073
6.19% due 09/01/36(3).............. 474,770 495,224
6.50% due 05/01/29................. 4,629 4,926
6.50% due 02/01/35................. 175,801 186,188
6.50% due 11/01/37................. 5,729,843 6,047,460
6.88% due 09/15/10................. 156,000 168,022
7.00% due 06/01/29................. 13,177 14,307
Federal Home Loan Mtg. Corp. REMIC
Series 41, Class F
10.00% due 05/15/20(1)............. 10,829 11,536
Series 1103, Class N
11.57% due 06/15/21(1)(20)......... 6,891 1,520
Series 3102, Class PG
5.00% due 11/15/28(1).............. 730,000 758,707
Series 3317, Class PD
5.00% due 09/15/31(1).............. 935,000 976,371
Series 3116, Class PD
5.00% due 10/15/34(1).............. 4,050,000 4,228,097
Series 3349, Class HB
5.50% due 06/15/31(1).............. 1,724,000 1,803,210
-----------
57,714,981
-----------
42
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
FEDERAL NATIONAL MTG. ASSOC. -- 8.2%
2.50% due 04/09/10................. $ 500,000 $ 506,529
4.45% due 02/01/34(3).............. 357,392 365,827
4.50% due 06/01/19................. 413,563 428,330
4.50% due 11/01/22................. 809,872 836,767
4.50% due 06/01/23................. 942,039 971,062
4.50% due 01/01/39................. 3,699,835 3,785,366
4.71% due 10/01/35(3).............. 167,588 170,138
4.75% due 12/15/10................. 375,000 397,533
4.86% due 01/01/35(3).............. 759,400 772,606
5.00% due 03/15/16................. 407,000 451,676
5.00% due 06/01/19................. 200,244 208,771
5.00% due 01/01/23................. 1,929,161 2,003,064
5.00% due 02/01/23................. 238,588 247,728
5.00% due 03/01/34................. 259,551 268,453
5.00% due 05/01/35................. 117,152 121,152
5.00% due 10/01/35................. 51,597 53,359
5.00% due 02/01/37................. 242,174 250,190
5.00% due 04/01/37................. 1,681,578 1,737,053
5.00% due 05/01/37................. 356,506 368,267
5.00% due 06/01/37................. 28,615 29,559
5.00% due 07/01/37................. 252,331 260,656
5.00% due 05/01/38................. 2,627,519 2,714,202
5.49% due 01/01/37(3).............. 3,367,616 3,396,826
5.50% due 11/01/19................. 1,058,318 1,108,500
5.50% due 08/01/20................. 262,292 274,238
5.50% due 11/01/22................. 778,696 812,776
5.50% due 08/01/23................. 2,041,557 2,130,909
5.50% due 01/01/29................. 6,352 6,662
5.50% due 02/01/35................. 453,138 471,299
5.50% due 12/01/35................. 619,319 644,140
5.50% due 02/01/36(3).............. 274,124 283,054
5.50% due 12/01/36................. 652,208 677,736
5.50% due 04/01/37................. 380,380 395,187
5.50% due 03/01/38................. 38,384 39,878
6.00% due 02/01/32................. 82,978 87,273
6.00% due 05/01/34................. 16,469 17,270
6.00% due 10/01/34................. 448,132 469,930
6.00% due 06/01/35................. 150,583 157,626
6.00% due 07/01/37................. 4,855,522 5,077,019
6.00% due 08/01/37................. 3,757,167 3,928,560
6.00% due 10/01/37................. 553,374 578,617
6.50% due 02/01/35................. 43,002 45,393
7.50% due 01/01/30................. 10,058 10,904
7.50% due 09/01/30................. 3,349 3,626
8.00% due 11/01/28................. 18,069 19,665
13.00% due 11/01/15................ 2,863 3,159
Federal National Mtg. Assoc. REMIC
Series 1989-2, Class D
8.80% due 01/25/19(1).............. 30,925 32,307
Series 1989-17, Class E
10.40% due 04/25/19(1)............. 3,449 3,747
Series 2005-12, Class BE
5.00% due 11/25/30(1).............. 900,000 935,736
-----------
38,560,325
-----------
SHARES/ MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. -- 0.5%
6.00% due 09/15/38......................... $2,144,847 $ 2,243,945
7.50% due 07/15/27......................... 9,506 10,246
7.50% due 10/15/27......................... 61,005 65,754
-----------
2,319,945
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $95,427,801)......................... 99,006,286
-----------
U.S. GOVERNMENT TREASURIES -- 1.4%
UNITED STATES TREASURY BONDS -- 1.1%
3.63% due 04/15/28 TIPS.................... 1,253,050 1,544,775
4.38% due 02/15/38......................... 598,000 679,291
4.50% due 05/15/38......................... 775,000 904,812
4.75% due 02/15/37......................... 350,000 419,344
5.25% due 11/15/28......................... 719,000 884,370
6.25% due 08/15/23......................... 166,000 218,394
8.13% due 08/15/19......................... 271,000 392,950
-----------
5,043,936
-----------
UNITED STATES TREASURY NOTES -- 0.3%
2.75% due 02/15/19......................... 690,000 694,313
3.38% due 07/31/13......................... 130,000 140,644
3.75% due 11/15/18......................... 331,000 360,816
3.88% due 09/15/10......................... 7,000 7,333
3.88% due 05/15/18......................... 162,000 178,706
4.25% due 08/15/15......................... 198,000 225,596
4.38% due 12/15/10......................... 1,000 1,062
-----------
1,608,470
-----------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $6,725,568).......................... 6,652,406
-----------
COMMON STOCK -- 0.3%
CELLULAR TELECOM -- 0.0%
iPCS, Inc.+(6)(23).......................... 17,872 173,537
-----------
FOOD-MISC. -- 0.1%
Wornick Co.+(4)(6)(23)...................... 4,592 229,600
-----------
GAMBLING (NON-HOTEL) -- 0.0%
Shreveport Gaming Holdings, Inc.+(4)(6)(23). 2,441 47,136
-----------
INDEPENDENT POWER PRODUCERS -- 0.0%
Mirant Corp.+............................... 1,929 21,991
-----------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC+(4)(6)(21)(23).... 128,418 53,936
-----------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.0%
Critical Care Systems International,
Inc.+(4)(6)(23)............................ 4,107 41
-----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.2%
EXCO Resources, Inc.+....................... 77,474 774,740
Transmeridian Exploration, Inc.+............ 5,460 95
-----------
774,835
-----------
OIL-FIELD SERVICES -- 0.0%
Trico Marine Services, Inc.+................ 21,747 45,669
-----------
TOTAL COMMON STOCK
(cost $3,109,341).......................... 1,346,745
-----------
43
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
SHARES/ MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
PREFERRED STOCK -- 0.5%
BANKS-COMMERCIAL -- 0.1%
CoBank ACB
11.00%*.................................... 12,063 $ 550,592
------------
BANKS-MONEY CENTER -- 0.1%
Santander Finance Preferred SA
4.00%(3)................................... 32,800 270,600
------------
BANKS-SUPER REGIONAL -- 0.0%
Wachovia Capital Trust IX
6.38%...................................... 12,800 179,072
------------
DIVERSIFIED FINANCIAL SERVICES -- 0.0%
General Electric Capital Corp.
8.00%(8)................................... 8,582 166,405
------------
FINANCE-MORTGAGE LOAN/BANKER -- 0.0%
Freddie Mac
8.38%(3)................................... 11,300 5,198
------------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC, Class C
14.70%(4)(6)(21)(23)....................... 39,177 78,353
------------
MEDICAL-GENERIC DRUGS -- 0.2%
Mylan, Inc.
6.50%...................................... 782 666,608
------------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.0%
Transmeridian Exploration, Inc.
15.00%(4)(10).............................. 3,851 30,808
------------
SPECIAL PURPOSE ENTITY -- 0.1%
Structured Repackaged Asset-Backed
Trust Securities
3.00%(3)................................... 29,200 357,700
------------
TOTAL PREFERRED STOCK
(cost $4,030,001).......................... 2,305,336
------------
WARRANTS+ -- 0.0%
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.0%
Transmeridian Exploration, Inc.
Expires 12/15/10
(strike price $4.31)(4).................... 13,811 138
------------
TELECOM SERVICES -- 0.0%
Leap Wireless International, Inc.
Expires 04/15/10
(strike price $96.80)*(4)(6)............... 500 0
------------
TOTAL WARRANTS
(cost $39,260)............................. 138
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $523,164,580)........................ 430,579,303
------------
SHORT-TERM INVESTMENT SECURITIES -- 2.1%
COMMERCIAL PAPER -- 0.3%
Ford Motor Credit Co. LLC
5.54% due 04/15/09......................... $1,700,000 1,664,624
------------
TIME DEPOSITS -- 1.8%
Euro Time Deposit with State Street Bank &
Trust Co.
0.01% due 04/01/09......................... 8,333,000 8,333,000
------------
TOTAL SHORT-TERM INVESTMENT SECURITIES
(cost $9,997,624).......................... 9,997,624
------------
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
REPURCHASE AGREEMENT -- 2.9%
State Street Bank & Trust Co., Joint
Repurchase Agreement(19)
(cost $13,579,000)................... $13,579,000 $ 13,579,000
------------
TOTAL INVESTMENTS --
(cost $546,741,204)(7)............... 97.4% 454,155,927
Other assets less liabilities........... 2.5 11,906,178
----------- ------------
NET ASSETS -- 100.0% $466,062,105
=========== ============
- --------
* Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. The Fund has no
right to demand registration of these securities. At March 31, 2009, the
aggregate value of these securities was $41,414,974 representing 8.9% of
net assets. Unless otherwise indicated these securities are not considered
to be illiquid.
** Denominated in United States Dollars unless otherwise indicated.
+ Non-income producing security
(1) Collateralized Mortgage Obligation
(2) Variable Rate Security -- the rate reflected is as of March 31, 2009,
maturity date reflects the stated maturity date.
(3) Floating rate security where the rate fluctuates. The rate moves up or
down at each reset date. The rate reflected is as of March 31, 2009.
(4) Fair valued security; see Note 2
(5) Bond in default
(6) Illiquid security. At March 31, 2009, the aggregate value of these
securities was $7,134,865 representing 1.5% of net assets.
(7) See Note 5 for cost of investments on a tax basis.
(8) "Step-up" security where the rate increases ("steps-up") at a
predetermined rate. Rate shown reflects the increased rate.
(9) Perpetual maturity -- maturity date reflects the next call date.
(10) PIK ("Payment-in-Kind") security. Bond or preferred stock that pays
interest/dividends in the form of additional bonds or preferred stocks.
(11) Income may be received in cash or additional bonds at the discretion of
the issuer.
(12) Company has filed for Chapter 11 bankruptcy protection.
(13) Company has filed for Chapter 7 bankruptcy.
(14) Bond is in default and did not pay principal at maturity
(15) Company has filed for bankruptcy in country of issuance.
(16) Senior Loans in the Fund's Portfolio are generally subject to mandatory
and/or optional prepayment. Because of these mandatory prepayment
conditions and because there may be significant economic incentives for a
borrower to prepay, prepayments may occur. As a result, the actual
remaining maturity may be substantially less than the stated maturities
shown.
(17) The Fund invests in Senior Loans which generally pay interest at rates
which are periodically re-determined by reference to a base lending rate
plus a premium. These base lending rates are generally either the lending
rate offered by one or more major United States banks, or the certificate
of deposit rate. Senior Loans are generally considered to be restrictive
in that the Fund is ordinarily contractually obligated to receive approval
from the Agent Bank and/or borrower prior to the disposition of a Senior
Loan.
(18) A portion of the interest is paid in the form of additional bonds.
(19) See Note 2 for details of Joint Repurchase Agreement.
(20) Interest Only
(21) Consists of more than one class of securities traded together as a unit.
(22) Commercial Mortgage Backed Security
44
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
(23) To the extent permitted by the Fund's Prospectus, the SunAmerica Strategic
Bond Fund may invest in restricted securities. The Fund has no right to
demand registration of these securities. The securities are 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 the securities of 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 markets exist. As of March 31, 2009, the
SunAmerica Strategic Bond Fund held the following restricted securities:
MARKET
PRINCIPAL VALUE % OF
ACQUISITION AMOUNT / ACQUISITION MARKET PER NET
NAME DATE SHARES COST VALUE SHARE ASSETS
---- ----------- ---------- ----------- -------- ------ ------
AMC
Entertainment
Holdings, Inc.
6.32% due
06/15/12 Loan
Agreement....... 6/8/2007 $ 400,000 $390,000
9/27/2007 11,051 11,051
12/20/2007 11,014 11,014
3/19/2008 10,658 11,918
6/23/2008 8,532 8,943
9/26/2008 8,674 9,108
12/19/2008 8,892 9,332
3/30/2009 8,115 8,565
---------- --------
466,936 459,931 $210,121 $45.00 0.05%
Critical Care
Systems
International,
Inc. Common
Stock........... 7/20/2006 4,107 37,181 41 0.01 0.00
Holding Gaming
Borrower LP
9.25% due
02/19/13 Loan
Agreement....... 9/9/2008 1,000,000 940,000 600,000 60.00 0.13
ICO North
America, Inc.
7.50% due
08/15/09........ 8/11/2005 200,000 200,000
4/19/2006 65,000 80,925
3/5/2008 10,000 10,000
9/11/2008 11,000 11,000
2/27/2009 11,000 11,000
---------- --------
297,000 312,925 59,400 20.00 0.01
iPCS, Inc.
Common
Stock........... 7/20/2004 17,872 271,129 173,537 9.71 0.04
Shreveport
Gaming
Holdings, Inc.
Common
Stock........... 7/29/2005 2,047 47,128
7/21/2005 394 9,062
---------- --------
2,441 56,190 47,136 19.31 0.01
Southern Energy,
Inc. 7.90% due
07/15/09........ 1/25/2006 $1,125,000 $ 0
6/6/2006 425,000 0
---------- --------
1,550,000 0 $ 0 $ 0.00 0.00%
MARKET
PRINCIPAL VALUE % OF
ACQUISITION AMOUNT / ACQUISITION MARKET PER NET
NAME DATE SHARES COST VALUE SHARE ASSETS
---- ----------- ---------- ----------- ---------- ------- ------
Triax
Pharmaceuticals
LLC 11.41%
due 08/30/11
Loan
Agreement....... 8/31/2007 $1,500,000 $1,388,010
10/31/2007 3,875 3,875
1/10/2008 11,404 11,404
4/4/2008 11,239 11,238
7/3/2008 11,449 11,449
10/9/2008 11,534 19,670
1/6/2009 11,751 11,750
---------- ----------
1,561,252 1,457,396 $1,407,949 $ 90.18 0.30%
Triax
Pharmaceuticals
LLC Common
Stock........... 8/31/2007 128,418 53,936 53,936 0.42 0.01
Triax
Pharmaceuticals
LLC Preferred
Stock........... 8/31/2007 39,177 78,353 78,353 2.00 0.02
VeraSun Energy
Corp. 16.50%
due 11/03/09
Loan
Agreement....... 11/3/2008 191,930 191,930
12/11/2008 1,643,542 1,643,542
12/18/2008 264,528 264,528
---------- ----------
2,100,000 2,100,000 2,100,000 100.00 0.45
Wind Acquisition
Holdings
Finance SA
8.39% due
12/21/11 Loan
Agreement....... 12/12/2008 1,420,255 781,140
3/9/2009 42,656 264,528
---------- ----------
1,462,911 1,045,668 1,053,296 72.00 0.23
Wornick Co.
Common
Stock........... 8/08/2008 4,592 596,039 229,600 50.00 0.05
---------- ----
$6,013,369 1.30%
========== ====
(24) Subsequent to March 31, 2009, the company has filed for Chapter 11
bankruptcy protection.
(25) Security is in default of interest subsequent to March 31, 2009.
REMIC --Real Estate Mortgage Investment Conduit
TIPS --Treasury Inflation Protected Security
AUD --Australian Dollar
BRL --Brazilian Real
CAD --Canadian Dollar
COP --Colombian Peso
EUR --Euro Dollar
GBP --British Pound
HUF --Hungarian Forint
JPY --Japanese Yen
MXN --Mexican Peso
NOK --Norwegian Krone
SEK --Swedish Krona
ZAR --South African Rand
See Notes to Financial Statements
45
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO PROFILE -- March 31, 2009 -- (unaudited)
INDUSTRY ALLOCATION*
Oil Companies-Exploration & Production. 6.6%
Medical-Hospitals...................... 5.9
Cable/Satellite TV..................... 5.3
Transport-Air Freight.................. 5.1
Telecom Services....................... 3.7
Satellite Telecom...................... 3.6
Pipelines.............................. 3.5
Telephone-Integrated................... 3.5
Casino Hotels.......................... 3.4
Finance-Auto Loans..................... 3.1
Repurchase Agreements.................. 3.0
Medical-Drugs.......................... 2.9
Electric-Generation.................... 2.8
Electric-Integrated.................... 2.2
Special Purpose Entities............... 2.1
Medical Products....................... 2.0
Diversified Banking Institutions....... 1.7
Computer Services...................... 1.6
Gambling (Non-Hotel)................... 1.5
Independent Power Producers............ 1.5
Chemicals-Specialty.................... 1.5
Oil-Field Services..................... 1.4
Theaters............................... 1.4
Food-Retail............................ 1.3
Airlines............................... 1.2
Casino Services........................ 1.1
Diversified Manufacturing Operations... 1.0
Energy-Alternate Sources............... 1.0
Diversified Financial Services......... 1.0
Agricultural Chemicals................. 0.9
Medical-HMO............................ 0.9
Physicians Practice Management......... 0.9
Electronic Components-Semiconductors... 0.9
Advertising Services................... 0.8
Storage/Warehousing.................... 0.8
Paper & Related Products............... 0.8
Direct Marketing....................... 0.8
Decision Support Software.............. 0.7
Containers-Metal/Glass................. 0.7
Electronics-Military................... 0.7
Food-Meat Products..................... 0.7
Steel-Producers........................ 0.7
Human Resources........................ 0.6
Retail-Petroleum Products.............. 0.6
Distribution/Wholesale................. 0.6
Insurance Brokers...................... 0.5
Transport-Services..................... 0.5
Real Estate Investment Trusts.......... 0.5
Seismic Data Collection................ 0.5
Retail-Restaurants..................... 0.4
Hotels/Motels.......................... 0.4
Metal-Diversified...................... 0.4
Television............................. 0.4
Consumer Products-Misc................. 0.4
Medical Information Systems............ 0.4
Funeral Services & Related Items....... 0.4
Applications Software.................. 0.4
Multimedia............................. 0.3
Chemicals-Diversified.................. 0.3
Building-Residential/Commercial........ 0.3
Food-Misc.............................. 0.3%
Rental Auto/Equipment.................. 0.3
Printing-Commercial.................... 0.3
Building & Construction Products-Misc.. 0.3
Mining................................. 0.3
Gas-Distribution....................... 0.3
Broadcast Services/Program............. 0.2
Non-Hazardous Waste Disposal........... 0.2
Transactional Software................. 0.1
Drug Delivery Systems.................. 0.1
Metal-Aluminum......................... 0.1
Beverages-Non-alcoholic................ 0.1
Research & Development................. 0.1
Retail-Drug Store...................... 0.1
Aerospace/Defense...................... 0.1
Publishing-Periodicals................. 0.1
Consulting Services.................... 0.1
Rubber-Tires........................... 0.1
----
97.3%
====
CREDIT QUALITY+#
BBB........ 3.3%
BB......... 23.1
B.......... 34.9
CCC........ 20.6
CC......... 1.3
C.......... 0.2
Below C.... 5.3
Not Rated@. 11.3
-----
100.0%
=====
- --------
*Calculated as a percentage of net assets.
@Represents debt issues that either have no rating or the rating is unavailable
from the data source.
+Source: Standard and Poor's
#Calculated as a percentage of total debt issues, excluding short-term
securities.
46
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------------------
CONVERTIBLE BONDS & NOTES -- 0.2%
DRUG DELIVERY SYSTEMS -- 0.2%
Nektar Therapeutics
Sub. Notes
3.25% due 09/28/12........................ $ 250,000 $ 161,875
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.0%
Spansion, Inc.
Senior Sub. Notes
2.25% due 06/15/16*(8)(9)................. 1,845,000 4,613
----------
TELECOM SERVICES -- 0.0%
ICO North America, Inc.
Notes
7.50% due 08/15/09(1)(2)(18)(20).......... 84,000 16,800
----------
TOTAL CONVERTIBLE BONDS & NOTES
(cost $1,876,249)......................... 183,288
----------
CORPORATE BONDS & NOTES -- 76.1%
ADVERTISING SERVICES -- 0.8%
R.H. Donnelley, Inc.
Company Guar. Bonds
11.75% due 05/15/15*(3)................... 573,000 74,490
Visant Corp.
Company Guar. Notes
7.63% due 10/01/12........................ 225,000 213,187
Visant Holding Corp.
Senior Notes
10.25% due 12/01/13(4).................... 655,000 609,150
----------
896,827
----------
AEROSPACE/DEFENSE -- 0.1%
Hawker Beechcraft Acquisition Co. LLC
Company Guar. Notes
9.75% due 04/01/17........................ 608,000 103,360
----------
AGRICULTURAL CHEMICALS -- 0.9%
Terra Capital, Inc.
Company Guar. Notes
7.00% due 02/01/17........................ 700,000 644,000
The Mosaic Co.
Senior Notes
7.38% due 12/01/14*....................... 400,000 392,000
----------
1,036,000
----------
AIRLINES -- 1.2%
American Airlines, Inc.
Pass Through Certs.
Series 2001-1, Class A-2
6.82% due 05/23/11........................ 775,000 542,500
American Airlines, Inc.
Pass Through Certs.
Series 2001-2, Class A-2
7.86% due 10/01/11........................ 675,000 546,750
Delta Air Lines, Inc.
Pass Through Certs.
Series 2000-1, Class A-1
7.38% due 05/18/10........................ 199,093 187,148
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
AIRLINES (CONTINUED)
United AirLines, Inc.
Pass Through Certs.
Series 2001-1, Class A-2
6.20% due 12/31/49........................... $ 13,757 $ 13,138
----------
1,289,536
----------
APPLICATIONS SOFTWARE -- 0.4%
SS&C Technologies, Inc.
Company Guar. Notes
11.75% due 12/01/13.......................... 475,000 403,750
----------
AUTO/TRUCK PARTS & EQUIPMENT-REPLACEMENT -- 0.0%
Exide Corp.
Notes
10.00% due 03/15/25+(1)(2)................... 1,650,000 0
----------
BROADCAST SERVICES/PROGRAM -- 0.2%
Fisher Communications, Inc.
Senior Notes
8.63% due 09/15/14........................... 326,000 277,100
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.3%
Associated Materials, Inc.
Senior Sub. Notes
9.75% due 04/15/12........................... 275,000 217,250
Interline Brands, Inc.
Senior Sub. Notes
8.13% due 06/15/14........................... 97,000 86,815
----------
304,065
----------
BUILDING PRODUCTS-WOOD -- 0.0%
Masonite Corp.
Company Guar. Notes
11.00% due 04/06/15+(8)(9)................... 552,000 5,520
----------
CABLE/SATELLITE TV -- 5.3%
CCH I LLC/CCH I Capital Corp.
Senior Notes
11.00% due 10/01/15+(8)(9)................... 326,000 32,600
CCH II LLC/CCH II Capital Corp.
Senior Notes, Series B
10.25% due 09/15/10+(8)(9)................... 440,000 391,600
CCH II LLC/CCH II Capital Corp.
Senior Notes
10.25% due 09/15/10+(8)(9)................... 565,000 508,500
CCH II LLC/CCH II Capital Corp.
Company Guar. Notes
10.25% due 10/01/13+*(8)(9).................. 45,000 39,150
CCO Holdings LLC/CCO Holdings Capital Corp.
Senior Notes
8.75% due 11/15/13+(8)(9).................... 1,878,000 1,568,130
Charter Communications Operating LLC
Senior Notes
10.88% due 09/15/14+*(8)(9).................. 1,162,000 1,127,140
Charter Communications Operating LLC/Charter
Communications
Senior Notes
8.38% due 04/30/14+*(8)(9)................... 876,000 770,880
CSC Holdings, Inc.
Senior Notes
7.63% due 04/01/11........................... 625,000 620,312
47
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
CABLE/SATELLITE TV (CONTINUED)
DirecTV Holdings LLC/DirecTV
Financing Co.
Company Guar. Notes
7.63% due 05/15/16..................... $ 745,000 $ 730,100
----------
5,788,412
----------
CASINO HOTELS -- 3.4%
Eldorado Casino Corp. (Shreveport)
Sec. Bonds
10.00% due 08/01/12(2)(5).............. 1,721,177 1,342,518
Eldorado Resorts LLC
Senior Notes
9.00% due 04/15/14(1)(2)............... 2,675,000 2,407,500
----------
3,750,018
----------
CASINO SERVICES -- 0.3%
Indianapolis Downs LLC & Capital Corp.
Senior Sec. Notes
11.00% due 11/01/12*................... 450,000 240,750
Snoqualmie Entertainment Authority
Senior Sec. Notes
9.13% due 02/01/15*.................... 550,000 143,000
----------
383,750
----------
CHEMICALS-DIVERSIFIED -- 0.3%
Huntsman LLC
Senior Notes
11.63% due 10/15/10.................... 375,000 371,250
----------
CHEMICALS-SPECIALTY -- 1.5%
Huntsman International LLC
Senior Sub. Notes
7.38% due 01/01/15..................... 70,000 28,700
Huntsman International LLC
Company Guar. Notes
7.88% due 11/15/14..................... 944,000 387,040
Johnsondiversey Holdings, Inc.
Company Guar. Notes
9.63% due 05/15/12..................... 675,000 610,875
Momentive Performance Materials, Inc.
Company Guar. Notes
9.75% due 12/01/14..................... 350,000 103,250
Momentive Performance Materials, Inc.
Company Guar. Notes
11.50% due 12/01/16.................... 1,320,000 247,500
Tronox Worldwide LLC
Company Guar. Notes
9.50% due 12/01/12+(8)(9).............. 1,627,000 215,577
----------
1,592,942
----------
COMPUTER SERVICES -- 0.9%
Compucom Systems, Inc.
Senior Sub. Notes
12.50% due 10/01/15*................... 900,000 522,000
Sungard Data Systems, Inc.
Senior Notes
5.13% due 02/28/14*.................... 550,000 484,000
----------
1,006,000
----------
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------------------
CONSULTING SERVICES -- 0.1%
FTI Consulting, Inc.
Company Guar. Notes
7.75% due 10/01/16........................ $ 75,000 $ 74,813
----------
CONSUMER PRODUCTS-MISC. -- 0.4%
American Achievement Corp.
Company Guar. Notes
8.25% due 04/01/12*....................... 587,000 425,575
----------
CONTAINERS-METAL/GLASS -- 0.7%
Crown Cork & Seal Co., Inc.
Debentures
8.00% due 04/15/23........................ 875,000 778,750
----------
CONTAINERS-PAPER/PLASTIC -- 0.0%
Jefferson Smurfit Corp.
Senior Notes
8.25% due 10/01/12+(8)(9)................. 310,000 38,750
----------
DECISION SUPPORT SOFTWARE -- 0.7%
Vangent, Inc.
Company Guar. Notes
9.63% due 02/15/15........................ 1,225,000 796,250
----------
DIRECT MARKETING -- 0.8%
Affinity Group, Inc.
Company Guar. Notes
9.00% due 02/15/12........................ 1,500,000 832,500
----------
DISTRIBUTION/WHOLESALE -- 0.6%
KAR Holdings, Inc.
Company Guar. Notes
5.17% due 05/01/14(6)..................... 675,000 317,250
KAR Holdings, Inc.
Company Guar. Notes
8.75% due 05/01/14........................ 590,000 312,700
----------
629,950
----------
DIVERSIFIED BANKING INSTITUTIONS -- 1.7%
GMAC LLC
Company Guar. Notes
6.00% due 12/15/11*....................... 1,123,000 764,549
GMAC LLC
Company Guar. Notes
6.88% due 09/15/11*....................... 693,000 492,460
GMAC LLC
Company Guar. Notes
7.75% due 01/19/10*....................... 675,000 567,081
----------
1,824,090
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.4%
Harland Clarke Holdings Corp.
Notes
5.17% due 05/01/14(6)..................... 500,000 168,750
Harland Clarke Holdings Corp.
Notes
9.50% due 05/15/15........................ 575,000 254,438
----------
423,188
----------
48
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
ELECTRIC-GENERATION -- 2.8%
Edison Mission Energy
Senior Notes
7.20% due 05/15/19............................. $ 680,000 $ 472,600
Edison Mission Energy
Senior Notes
7.63% due 05/15/27............................. 465,000 279,000
Homer City Funding LLC
Senior Notes
8.14% due 10/01/19............................. 343,650 281,793
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs.
Series B
9.24% due 07/02/17............................. 517,236 492,668
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs.
Series C
9.68% due 07/02/26............................. 125,000 112,500
Sithe/Independence Funding Corp.
Senior Notes
9.00% due 12/30/13............................. 484,470 444,695
The AES Corp.
Senior Notes
8.00% due 10/15/17............................. 805,000 690,287
The AES Corp.
Senior Notes
8.00% due 06/01/20*............................ 425,000 344,250
----------
3,117,793
----------
ELECTRIC-INTEGRATED -- 2.2%
Energy Future Holdings Corp.
Company Guar. Notes
10.88% due 11/01/17............................ 425,000 274,125
Mirant Americas Generation LLC
Senior Notes
8.50% due 10/01/21............................. 665,000 492,100
Mirant Mid-Atlantic LLC
Pass Through Certs.
Series B
9.13% due 06/30/17............................. 289,827 272,800
Southern Energy, Inc.
Notes
7.90% due 07/15/09+(1)(2)(20).................. 3,525,000 0
Texas Competitive Electric Holdings Co., LLC
Series A
Company Guar. Notes
10.25% due 11/01/15............................ 1,480,000 740,000
Texas Competitive Electric Holdings Co., LLC
Series B
Company Guar. Notes
10.25% due 11/01/15............................ 190,000 95,000
Texas Competitive Electric Holdings Co., LLC
Company Guar. Notes
10.50% due 11/01/16(18)........................ 1,545,000 579,375
----------
2,453,400
----------
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------------------
ELECTRONIC COMPONENTS-MISC. -- 0.0%
Sanmina-SCI Corp.
Company Guar. Notes
6.75% due 03/01/13........................ $ 125,000 $ 48,750
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.9%
Advanced Micro Devices, Inc.
Senior Notes
7.75% due 11/01/12........................ 492,000 261,375
Amkor Technology, Inc.
Senior Notes
7.75% due 05/15/13........................ 295,000 237,475
Freescale Semiconductor, Inc.
Company Guar. Notes
9.13% due 12/15/14(18).................... 415,000 31,125
Spansion LLC
Senior Sec. Notes
4.39% due 06/01/13*+(6)(8)(9)............. 1,950,000 438,750
Spansion LLC
Senior Notes
11.25% due 01/15/16*+(8)(9)............... 115,000 2,587
----------
971,312
----------
ELECTRONICS-MILITARY -- 0.7%
L-3 Communications Corp.
Company Guar. Notes
6.13% due 07/15/13........................ 775,000 744,000
----------
ENERGY-ALTERNATE SOURCES -- 0.0%
VeraSun Energy Corp.
Sec. Notes
9.88% due 12/15/12+(8)(9)................. 20,000 19,200
----------
FINANCE-AUTO LOANS -- 3.1%
Ford Motor Credit Co. LLC
Senior Notes
5.70% due 01/15/10........................ 1,425,000 1,220,599
Ford Motor Credit Co. LLC
Senior Notes
7.38% due 02/01/11........................ 1,725,000 1,303,598
Ford Motor Credit Co. LLC
Notes
7.88% due 06/15/10........................ 1,000,000 826,405
----------
3,350,602
----------
FOOD-MEAT PRODUCTS -- 0.2%
Smithfield Foods, Inc.
Senior Notes
7.75% due 05/15/13........................ 180,000 120,600
Tyson Foods, Inc.
Senior Notes
10.50% due 03/01/14*...................... 150,000 153,000
----------
273,600
----------
FOOD-RETAIL -- 0.5%
SUPERVALU, Inc.
Notes
7.88% due 08/01/09........................ 500,000 500,625
----------
49
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
FUNERAL SERVICES & RELATED ITEMS -- 0.4%
Service Corp. International
Debentures
7.88% due 02/01/13.................... $ 425,000 $ 405,875
----------
GAMBLING (NON-HOTEL) -- 0.5%
Downstream Development Authority
Senior Sec. Notes
12.00% due 10/15/15*.................. 725,000 188,500
Greektown Holdings LLC
Senior Notes
10.75% due 12/01/13*+(8)(9)........... 489,000 24,450
Waterford Gaming LLC
Senior Notes
8.63% due 09/15/14*................... 610,000 366,000
----------
578,950
----------
GAS-DISTRIBUTION -- 0.3%
MXEnergy Holdings, Inc.
Senior Notes
9.13% due 08/01/11(6)................. 900,000 292,500
----------
HOME FURNISHINGS -- 0.0%
Simmons Co.
Senior Disc. Notes
10.00% due 12/15/14(4)................ 44,000 440
----------
HOTEL/MOTELS -- 0.4%
Gaylord Entertainment Co.
Company Guar. Notes
6.75% due 11/15/14.................... 741,000 455,715
----------
HUMAN RESOURCES -- 0.6%
Team Health, Inc.
Company Guar. Notes
11.25% due 12/01/13................... 792,000 689,040
----------
INDEPENDENT POWER PRODUCERS -- 1.5%
Mirant North America LLC
Senior Notes
7.38% due 12/31/13.................... 325,000 294,125
NRG Energy, Inc.
Company Guar. Notes
7.38% due 02/01/16.................... 740,000 688,200
Orion Power Holdings, Inc.
Senior Notes
12.00% due 05/01/10................... 300,000 309,375
Reliant Energy, Inc.
Senior Notes
7.88% due 12/31/17.................... 440,000 347,600
----------
1,639,300
----------
INSURANCE BROKERS -- 0.5%
USI Holdings Corp.
Senior Sub. Notes
9.75% due 05/15/15*................... 1,225,000 551,250
----------
MEDICAL INFORMATION SYSTEMS -- 0.4%
Spheris, Inc.
Senior Sub. Notes
11.00% due 12/15/12................... 1,175,000 420,063
----------
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------
MEDICAL PRODUCTS -- 1.4%
Biomet, Inc.
Company Guar. Notes
10.00% due 10/15/17...................... $ 80,000 $ 79,200
Biomet, Inc.
Company Guar. Notes
10.38% due 10/15/17(18).................. 964,000 814,580
DJO Finance LLC/DJO Finance Corp.
Company Guar. Notes
10.88% due 11/15/14...................... 250,000 185,625
Universal Hospital Services, Inc.
Senior Sec. Notes
5.94% due 06/01/15(6).................... 685,000 496,625
----------
1,576,030
----------
MEDICAL-DRUGS -- 0.8%
Axcan Intermediate Holdings, Inc.
Senior Notes
9.25% due 03/01/15....................... 600,000 580,500
Axcan Intermediate Holdings, Inc.
Senior Notes
12.75% due 03/01/16...................... 299,000 278,817
----------
859,317
----------
MEDICAL-HMO -- 0.9%
Multiplan, Inc.
Senior Sub. Notes
10.38% due 04/15/16*..................... 1,250,000 1,018,750
----------
MEDICAL-HOSPITALS -- 4.2%
Community Health Systems, Inc.
Company Guar. Notes
8.88% due 07/15/15....................... 700,000 661,500
HCA, Inc.
Senior Notes
6.25% due 02/15/13....................... 700,000 525,000
HCA, Inc.
Senior Notes
7.88% due 02/01/11....................... 550,000 532,125
HCA, Inc.
Senior Notes
8.75% due 09/01/10....................... 265,000 263,675
HCA, Inc.
Senior Sec. Notes
9.25% due 11/15/16....................... 875,000 796,250
HCA, Inc.
Senior Sec. Notes
9.63% due 11/15/16(18)................... 950,000 757,625
Health Management Associates, Inc.
Senior Notes
6.13% due 04/15/16....................... 625,000 510,937
IASIS Healthcare LLC/IASIS Capital Corp.
Company Guar. Notes
8.75% due 06/15/14....................... 546,000 513,240
----------
4,560,352
----------
50
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
METAL-ALUMINUM -- 0.4%
Noranda Aluminum Acquisition Corp.
Company Guar. Notes
6.60% due 11/15/14(6)(18)................... $ 945,000 $ 292,950
Noranda Aluminum Holding Corp.
Senior Notes
8.35% due 11/15/14(6)(18)................... 750,000 153,750
----------
446,700
----------
METAL-DIVERSIFIED -- 0.4%
Freeport-McMoRan Copper & Gold, Inc.
Senior Notes
8.38% due 04/01/17.......................... 475,000 444,125
----------
MULTIMEDIA -- 0.1%
Haights Cross Operating Co.
Senior Notes
11.75% due 08/15/11......................... 325,000 125,125
----------
NON-FERROUS METALS -- 0.0%
Renco Metals, Inc.
Bonds
11.50% due 07/01/03+(1)(2)(11)(12).......... 2,150,000 0
----------
NON-HAZARDOUS WASTE DISPOSAL -- 0.2%
Waste Services, Inc.
Senior Sub. Notes
9.50% due 04/15/14.......................... 250,000 188,125
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 5.4%
Atlas Energy Resources LLC
Senior Notes
10.75% due 02/01/18*........................ 600,000 439,500
Belden & Blake Corp.
Company Guar. Sec. Notes
8.75% due 07/15/12.......................... 390,000 271,050
Brigham Exploration Co.
Company Guar. Notes
9.63% due 05/01/14.......................... 760,000 231,800
Chaparral Energy, Inc.
Company Guar. Notes
8.50% due 12/01/15.......................... 610,000 210,450
Chesapeake Energy Corp.
Senior Notes
6.63% due 01/15/16.......................... 1,250,000 1,040,625
Chesapeake Energy Corp.
Senior Notes
9.50% due 02/15/15.......................... 375,000 364,687
Dune Energy, Inc.
Senior Sec. Notes
10.50% due 06/01/12......................... 350,000 82,250
Encore Acquisition Co.
Senior Sub. Notes
6.00% due 07/15/15.......................... 500,000 367,500
Encore Acquisition Co.
Senior Sub. Notes
6.25% due 04/15/14.......................... 115,000 89,700
Energy Partners, Ltd.
Senior Notes
9.75% due 04/15/14(3)(21)................... 645,000 151,575
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------------
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
Hilcorp Energy I LP
Senior Notes
7.75% due 11/01/15*................. $ 195,000 $ 142,350
Linn Energy LLC
Senior Notes
9.88% due 07/01/18*................. 450,000 369,000
Plains Exploration & Production Co.
Company Guar. Notes
7.75% due 06/15/15.................. 350,000 301,000
Plains Exploration & Production Co.
Company Guar. Notes
10.00% due 03/01/16................. 375,000 354,375
Quicksilver Resources, Inc.
Senior Notes
8.25% due 08/01/15.................. 500,000 322,500
Sabine Pass LNG LP
Senior Sec. Notes
7.50% due 11/30/16.................. 1,655,000 1,108,850
Transmeridian Exploration, Inc.
Company Guar. Notes
12.00% due 12/15/10+(8)(9).......... 650,000 32,500
----------
5,879,712
----------
OIL-FIELD SERVICES -- 0.7%
Helix Energy Solutions Group, Inc.
Senior Notes
9.50% due 01/15/16*................. 435,000 256,650
Key Energy Services, Inc.
Company Guar. Notes
8.38% due 12/01/14.................. 300,000 189,000
Oslo Seismic Services, Inc.
1st Mtg. Bonds
8.28% due 06/01/11.................. 355,365 361,900
----------
807,550
----------
PAPER & RELATED PRODUCTS -- 0.5%
Caraustar Industries, Inc.
Notes
7.38% due 06/01/09.................. 535,000 248,775
Georgia-Pacific LLC
Company Guar. Notes
7.13% due 01/15/17*................. 290,000 268,250
----------
517,025
----------
PHYSICIANS PRACTICE MANAGEMENT -- 0.9%
US Oncology, Inc.
Company Guar. Notes
10.75% due 08/15/14................. 1,100,000 1,012,000
----------
PIPELINES -- 3.5%
Copano Energy LLC
Company Guar. Notes
8.13% due 03/01/16.................. 925,000 781,625
Dynegy-Roseton Danskammer
Pass Through Certs.,
Series B
7.67% due 11/08/16.................. 1,725,000 1,306,687
51
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
PIPELINES (CONTINUED)
El Paso Corp.
Senior Sub. Notes
6.88% due 06/15/14.................... $ 700,000 $ 623,503
MarkWest Energy Partners LP /
MarkWest Energy Finance Corp.
Senior Notes
8.75% due 04/15/18.................... 850,000 592,875
NGC Corp. Capital Trust
Company Guar. Bonds
8.32% due 06/01/27.................... 1,425,000 570,000
----------
3,874,690
----------
PRINTING-COMMERCIAL -- 0.2%
Valassis Communications, Inc.
Senior Notes
8.25% due 03/01/15.................... 610,000 263,063
----------
PUBLISHING-PERIODICALS -- 0.1%
Idearc, Inc.
Company Guar. Notes
8.00% due 11/15/16+(8)(9)............. 838,000 21,998
The Reader's Digest Association, Inc.
Company Guar. Notes
9.00% due 02/15/17.................... 1,020,000 71,400
----------
93,398
----------
REAL ESTATE INVESTMENT TRUSTS -- 0.5%
Omega Healthcare Investors, Inc.
Senior Notes
7.00% due 04/01/14.................... 555,000 510,600
----------
RECYCLING -- 0.0%
Aleris International, Inc.
Company Guar. Notes
9.00% due 12/15/14(8)(9)(18).......... 2,145,000 1,502
----------
RENTAL AUTO/EQUIPMENT -- 0.3%
Rental Service Corp.
Notes
9.50% due 12/01/14.................... 660,000 323,400
----------
RESEARCH & DEVELOPMENT -- 0.1%
Alion Science and Technology Corp.
Company Guar. Notes
10.25% due 02/01/15................... 930,000 139,500
----------
RETAIL-DRUG STORE -- 0.1%
Rite Aid Corp.
Company Guar. Notes
9.50% due 06/15/17.................... 604,000 138,920
----------
RETAIL-PETROLEUM PRODUCTS -- 0.6%
Ferrellgas Partners LP
Senior Notes
6.75% due 05/01/14*................... 425,000 357,000
Inergy LP/Inergy Finance Corp.
Company Guar. Notes
8.25% due 03/01/16.................... 325,000 308,750
----------
665,750
----------
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
RETAIL-RESTAURANTS -- 0.4%
NPC International, Inc.
Company Guar. Notes
9.50% due 05/01/14........................ $ 630,000 $ 491,400
----------
RUBBER-TIRES -- 0.1%
Cooper Standard Automotive, Inc.
Company Guar. Notes
8.38% due 12/15/14........................ 985,000 68,950
----------
RUBBER/PLASTIC PRODUCTS -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/07+(1)(2)(9)(11)......... 550,000 55
----------
SATELLITE TELECOM -- 0.7%
Telesat Canada/Telesat LLC
Senior Notes
11.00% due 11/01/15*...................... 875,000 743,750
----------
SEISMIC DATA COLLECTION -- 0.5%
Seitel, Inc.
Senior Notes
9.75% due 02/15/14........................ 1,125,000 497,813
----------
SPECIAL PURPOSE ENTITIES -- 1.9%
AAC Group Holding Corp.
Senior Notes
10.25% due 10/01/12*(4)................... 1,100,000 605,000
Buffalo Thunder Development Authority
Senior Notes
9.38% due 12/15/14*(3).................... 1,635,000 98,100
CCM Merger, Inc.
Notes
8.00% due 08/01/13*....................... 500,000 205,000
Chukchansi Economic Development Authority
Senior Notes
6.10% due 11/15/12*(6).................... 100,000 20,750
Chukchansi Economic Development Authority
Senior Notes
8.00% due 11/15/13*....................... 1,000,000 217,500
FireKeepers Development Authority
Senior Notes
13.88% due 05/15/15*...................... 875,000 533,750
Fox Acquisition Sub LLC
Senior Notes
13.38% due 07/15/16*...................... 625,000 150,000
Local TV Finance LLC
Senior Notes
9.25% due 06/15/15*(18)................... 545,000 54,500
Southern Star Central Corp.
Senior Notes
6.75% due 03/01/16........................ 250,000 208,750
----------
2,093,350
----------
STEEL-PRODUCERS -- 0.7%
Ryerson, Inc.
Senior Sec. Notes
12.00% due 11/01/15*...................... 725,000 411,438
52
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
STEEL-PRODUCERS (CONTINUED)
Steel Dynamics, Inc.
Company Guar. Notes
6.75% due 04/01/15....................... $ 450,000 $ 304,875
----------
716,313
----------
STORAGE/WAREHOUSING -- 0.8%
Mobile Mini, Inc.
Notes
6.88% due 05/01/15....................... 555,000 382,950
Mobile Services Group, Inc.
Company Guar. Notes
9.75% due 08/01/14....................... 685,000 508,612
----------
891,562
----------
TELECOM SERVICES -- 3.0%
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.18% due 12/15/23....................... 375,000 253,125
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.20% due 11/29/23....................... 1,525,000 1,029,375
Fairpoint Communications, Inc.
Senior Notes
13.13% due 04/01/18...................... 350,000 66,500
Fairpoint Communications, Inc.
Senior Notes
13.13% due 04/01/18*..................... 699,000 132,810
PAETEC Holding Corp.
Company Guar. Notes
9.50% due 07/15/15....................... 1,370,000 959,000
Qwest Corp.
Senior Notes
7.88% due 09/01/11....................... 175,000 172,375
Qwest Corp.
Senior Notes
8.88% due 03/15/12....................... 700,000 691,250
----------
3,304,435
----------
TELEPHONE-INTEGRATED -- 3.5%
Cincinnati Bell, Inc.
Company Guar. Notes
7.00% due 02/15/15....................... 227,000 208,840
Cincinnati Bell, Inc.
Senior Notes
7.25% due 06/15/23....................... 225,000 172,125
Sprint Capital Corp.
Company Guar. Notes
8.38% due 03/15/12....................... 1,081,000 972,900
Sprint Capital Corp.
Company Guar. Notes
8.75% due 03/15/32....................... 2,611,000 1,749,370
Valor Telecommunications Enterprises LLC
Company Guar. Notes
7.75% due 02/15/15....................... 740,000 719,650
----------
3,822,885
----------
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------
TELEVISION -- 0.4%
LIN Television Corp.
Senior Sub. Notes
6.50% due 05/15/13............. $ 800,000 $ 416,000
Paxson Communications Corp.
Senior Sec. Notes
7.34% due 01/15/13*(3)(18)(21). 2,657,171 23,915
Young Broadcasting, Inc.
Senior Sub. Notes
8.75% due 01/15/14+(8)(9)...... 685,000 75
Young Broadcasting, Inc.
Company Guar. Notes
10.00% due 03/01/11+(8)(9)..... 635,000 70
-----------
440,060
-----------
THEATERS -- 1.1%
AMC Entertainment, Inc.
Senior Sub. Notes
8.00% due 03/01/14............. 709,000 581,380
Cinemark, Inc.
Senior Notes
9.75% due 03/15/14(4).......... 625,000 589,062
-----------
1,170,442
-----------
TRANSACTIONAL SOFTWARE -- 0.1%
Open Solutions, Inc.
Company Guar. Notes
9.75% due 02/01/15*............ 1,075,000 162,594
-----------
TRANSPORT-AIR FREIGHT -- 5.1%
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class B
7.63% due 01/02/15+............ 5,437,354 3,643,027
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class A
8.71% due 01/02/20*............ 729,150 619,778
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class A
8.71% due 01/02/20............. 18,509 15,733
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class B
9.06% due 07/02/17............. 1,301,358 1,275,331
-----------
5,553,869
-----------
TRANSPORT-SERVICES -- 0.5%
Bristow Group, Inc.
Senior Notes
7.50% due 09/15/17............. 425,000 318,750
PHI, Inc.
Company Guar. Notes
7.13% due 04/15/13............. 340,000 209,525
-----------
528,275
-----------
TOTAL CORPORATE BONDS & NOTES
(cost $126,760,086)............ 83,476,198
-----------
53
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES -- 7.6%
BUILDING PRODUCTS-DOORS & WINDOWS -- 0.0%
Masonite International Corp.
Company Guar. Notes
11.00% due 04/06/15+(8)(9).................. $ 223,000 $ 2,230
--------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.6%
Bombardier, Inc.
Senior Notes
8.00% due 11/15/14*......................... 885,000 648,263
--------
FOOD-MEAT PRODUCTS -- 0.4%
JBS SA
Company Guar. Notes
9.38% due 02/07/11.......................... 275,000 233,750
JBS SA
Senior Notes
10.50% due 08/04/16*........................ 325,000 214,500
--------
448,250
--------
INDEPENDENT POWER PRODUCERS -- 0.0%
AES Drax Energy, Ltd.
Sec. Notes
11.50% due 08/30/10+(2)(8)(10).............. 4,460,000 4,460
--------
MEDICAL PRODUCTS -- 0.6%
Angiotech Pharmaceuticals, Inc.
Company Guar. Notes
5.01% due 12/01/13(6)....................... 755,000 490,750
Angiotech Pharmaceuticals, Inc.
Company Guar. Notes
7.75% due 04/01/14.......................... 370,000 105,450
--------
596,200
--------
MEDICAL-DRUGS -- 0.7%
Elan Finance PLC
Company Guar. Bonds
7.75% due 11/15/11.......................... 970,000 814,800
--------
METAL PROCESSORS & FABRICATION -- 0.0%
International Utility Structures
Senior Sub Notes
10.75% due 02/01/08+(1)(2)(8)(10)........... 2,150,000 0
--------
MULTIMEDIA -- 0.2%
Quebecor Media, Inc.
Senior Notes
7.75% due 03/15/16.......................... 325,000 247,000
--------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.8%
Compton Petroleum Finance Corp.
Company Guar. Notes
7.63% due 12/01/13.......................... 510,000 160,650
OPTI Canada, Inc.
Senior Notes
7.88% due 12/15/14.......................... 1,585,000 693,437
--------
854,087
--------
OIL-FIELD SERVICES -- 0.4%
North American Energy Partners, Inc.
Senior Notes
8.75% due 12/01/11.......................... 660,000 481,800
--------
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------------
PRINTING-COMMERCIAL -- 0.1%
Quebecor World Capital Corp.
Company Guar. Notes
8.75% due 03/15/16*+(8)(10)............. $1,555,000 $ 54,425
----------
SATELLITE TELECOM -- 2.9%
Intelsat Intermediate Holding Co., Ltd.
Senior Notes
zero coupon due 02/01/15*............... 1,000,000 830,000
Intelsat Subsidiary Holding Co., Ltd.
Senior Notes
8.50% due 01/15/13*..................... 1,275,000 1,201,687
Intelsat Subsidiary Holding Co., Ltd.
Senior Notes
8.88% due 01/15/15*..................... 1,275,000 1,182,563
----------
3,214,250
----------
SPECIAL PURPOSE ENTITY -- 0.2%
Hellas Telecommunications Luxembourg II
Sub. Notes
6.88% due 01/15/15*(6).................. 1,025,000 169,125
----------
TELECOM SERVICES -- 0.7%
Global Crossing UK Finance PLC
Company Guar. Notes
10.75% due 12/15/14..................... 835,000 509,350
Wind Acquisition Finance SA
Company Guar. Bonds
10.75% due 12/01/15*.................... 250,000 247,500
----------
756,850
----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $17,621,661)...................... 8,291,740
----------
LOANS(13)(14) -- 9.2%
BEVERAGES-NON-ALCOHOLIC -- 0.1%
Le-Natures, Inc.
9.39% due 03/01/11+(2)(8)(9)(20)........ 1,200,000 142,000
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.3%
TOUSA, Inc.
12.25% due 07/31/13+(5)(20)............. 1,221,059 366,318
----------
CASINO SERVICES -- 0.7%
Herbst Gaming, Inc.
12.50% due 12/02/11+(2)(8)(20).......... 265,517 59,741
Herbst Gaming, Inc.
Delayed Draw-Term B
12.50% due 12/02/11+(2)(8)(20).......... 726,922 163,557
Holding Gaming Borrower LP
9.25% due 02/19/13(2)(20)............... 1,000,000 600,000
----------
823,298
----------
COMPUTER SERVICES -- 0.7%
CompuCom Systems, Inc.
4.02% due 08/30/14(2)(20)............... 908,700 726,960
----------
DIVERSIFIED FINANCIAL SERVICES -- 1.0%
Wind Acquisition Holdings Finance S.A.
8.39% due 12/21/11(2)(5)(20)............ 1,462,911 1,053,296
----------
ENERGY-ALTERNATE SOURCES -- 1.0%
VeraSun Energy Corp.
16.50% due 11/03/09+(1)(2)(9)(20)....... 1,050,000 1,050,000
----------
54
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
SHARES/ MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
LOANS (CONTINUED)
FOOD-RETAIL -- 0.8%
Dole Foods, Inc.
2.63% due 04/12/13(2)(20).................. $ 199,894 $ 182,514
Dole Foods, Inc.
Term Loan B
7.25% due 04/12/13(2)(20).................. 11,171 10,199
Solvest, Ltd.
3.25% due 04/12/13(2)(20).................. 32,275 29,469
Solvest, Ltd.
4.25% due 04/12/13(2)(20).................. 383,030 349,728
Solvest, Ltd.
8.00% due 04/12/13(2)(20).................. 371,060 338,799
-----------
910,709
-----------
GAMBLING (NON-HOTEL) -- 0.8%
Greektown Holdings LLC
16.75% due 11/11/09(2)(17)(20)............. 29,349 24,580
Greektown Holdings LLC
16.75% due 06/01/09(2)(20)................. 975,840 817,266
-----------
841,846
-----------
MEDICAL-DRUGS -- 1.3%
Triax Pharmaceuticals LLC
11.41% due 08/30/11(1)(2)(20).............. 1,561,252 1,407,949
-----------
MEDICAL-HOSPITALS -- 1.7%
Capella Healthcare, Inc.
13.00% due 02/29/16(2)(20)................. 1,000,000 890,000
Iasis Healthcare Corp.
6.43% due 06/15/14(2)(20).................. 1,177,790 1,003,477
-----------
1,893,477
-----------
OIL-FIELD SERVICES -- 0.2%
Stallion Oilfield Service
7.74% due 07/30/12(2)(20).................. 2,000,000 170,000
-----------
PAPER & RELATED PRODUCTS -- 0.3%
Boise Paper Holdings LLC
9.25% due 02/22/15(2)(20).................. 1,000,000 372,500
-----------
THEATERS -- 0.3%
AMC Entertainment Holdings, Inc.
6.32% due 06/15/12(2)(20).................. 700,403 315,181
-----------
TOTAL LOANS
(cost $16,587,880)......................... 10,073,534
-----------
COMMON STOCK -- 1.1%
CASINO SERVICES -- 0.0%
Capital Gaming International, Inc.+(1)...... 77 0
-----------
FOOD-MISC. -- 0.3%
Wornick Co.+(1)(2)(20)...................... 7,270 363,500
-----------
GAMBLING (NON-HOTEL) -- 0.3%
Shreveport Gaming Holdings, Inc.+(1)(2)(20). 14,150 273,236
-----------
INDEPENDENT POWER PRODUCERS -- 0.0%
Mirant Corp.+............................... 4,388 50,023
-----------
MEDICAL-DRUGS -- 0.1%
Triax Pharmaceuticals LLC+(1)(2)(16)(20).... 128,418 53,936
-----------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.0%
Critical Care Systems International,
Inc.+(1)(2)(20)............................ 69,700 697
-----------
SHARES/ MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.4%
EXCO Resources, Inc.+................ $ 41,817 $ 418,170
Transmeridian Exploration, Inc.+..... 40 1
------------
418,171
------------
OIL-FIELD SERVICES -- 0.0%
Trico Marine Services, Inc.+......... 15,559 32,674
------------
TOTAL COMMON STOCK
(cost $2,602,506)................... 1,192,237
------------
PREFERRED STOCK -- 0.1%
MEDICAL-DRUGS -- 0.1%
Triax Pharmaceuticals LLC,
Class C
14.70% (1)(2)(16)(20)............... 39,177 78,353
------------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.0%
Transmeridian Exploration, Inc.
15.00%(1)(5)........................ 7,333 58,664
------------
TOTAL PREFERRED STOCK
(cost $734,543)..................... 137,017
------------
WARRANTS+-- 0.0%
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.0%
Transmeridian Exploration, Inc.
Expires 12/15/10
(strike price $4.31)(1)............. 44,885 449
------------
TELECOM SERVICES -- 0.0%
Leap Wireless International, Inc.
Expires 04/15/10
(strike price $96.80)*(1)(2)........ 2,250 0
------------
TOTAL WARRANTS
(cost $129,004)..................... 449
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $166,311,929)................. 103,354,463
------------
REPURCHASE AGREEMENT -- 3.0%
State Street Bank & Trust Co. Joint
Repurchase Agreement(19)
(cost $3,317,000)................... $3,317,000 $ 3,317,000
------------
TOTAL INVESTMENTS --
(cost $169,628,929)(7).............. 97.3% 106,671,463
Other assets less liabilities.......... 2.7 2,949,848
---------- ------------
NET ASSETS -- 100.0% $109,621,311
========== ============
BONDS & NOTES SOLD SHORT -- (0.7%)
GAMBLING (NON-HOTEL) -- (0.7%)
Pokagon Gaming Authority............... $ (975,000) $ (809,250)
Senior Notes
10.37% due 06/15/14
------------
TOTAL BONDS & NOTES SOLD SHORT
(proceeds $(799,500))................. $ (809,250)
------------
55
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
* Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from registration,
normally to qualified institutional buyers. The Fund has no right to demand
registration of these securities. At March 31, 2009, the aggregate value of
these securities was $19,494,923 representing 17.8% of net assets. Unless
otherwise indicated these securities are not considered to be illiquid.
+ Non-income producing security
(1)Fair valued security; see Note 2
(2)Illiquid security. At March 31,2009, the aggregate value of these securities
was $14,248,271 representing 13.0% of net assets.
(3)Security is in default of interest subsequent to March 31,2009.
(4)"Step-up" security where the rate increases ("steps-up") at a predetermined
rate. Rate shown reflects the increased rate.
(5)PIK ("Payment-in-Kind") security. Bond or preferred stock that pays
interest/dividends in the form of additional bonds or preferred stocks.
(6)Floating rate security where the rate fluctuates. The rate moves up or down
at each reset date. The rate reflected is as of March 31,2009.
(7)See Note 3 for cost of investments on a tax basis.
(8)Security in default
(9)Company has filed for Chapter 11 bankruptcy protection.
(10)Company has filed for bankruptcy in country of issuance.
(11)Bond is in default and did not pay principal at maturity.
(12)Company has filed for Chapter 7 bankruptcy protection.
(13)The Fund invests in Senior Loans which generally pay interest at rates
which are periodically re-determined by reference to a base lending rate
plus a premium. These base lending rates are generally either the lending
rate offered by one or more major United States banks, or the certificate
of deposit rate. Senior Loans are generally considered to be restrictive in
that the Fund is ordinarily contractually obligated to receive approval
from the Agent Bank and/or borrower prior to the disposition of a Senior
Loan.
(14)Senior Loans in the Fund's Portfolio are generally subject to mandatory
and/or optional prepayment. Because of these mandatory prepayment
conditions and because there may be significant economic incentives for a
borrower to prepay, prepayments may occur. As a result, the actual
remaining maturity may be substantially less than the stated maturities
shown.
(15)A portion of the interest is paid in the form of additional bonds.
(16)Consist of more than one class of securities traded together as a unit.
(17)Loan is subject to an unfunded loan commitment. See Note 11 for details.
(18)Income may be received in cash or additional bonds at the discretion of the
issuer.
(19)See Note 2 for details of Joint Repurchase Agreement.
(20)To the extent permitted by the Statement of Additional Information, the
High Yield Bond Fund may invest in restricted securities. The Fund has no
right to demand registration of these securities. The securities are 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 the securities of 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 markets exist. As of March 31, 2009, the
High Yield Bond Fund held the following restricted securities:
MARKET
VALUE % OF
ACQUISITION PRINCIPAL/ ACQUISITION MARKET PER NET
NAME DATE SHARES COST VALUE SHARE ASSETS
---- ----------- ---------- ----------- -------- ------ ------
AMC
Entertainment
Holdings
6.32% due
06/15/12
Loan
Agreement........ 6/8/2007 $ 600,000 $585,000
9/17/2007 16,576 16,576
12/20/2007 16,521 16,521
3/19/2008 15,988 15,988
6/23/2008 12,798 12,798
9/25/2008 13,010 16,168
12/19/2008 13,339 13,339
3/17/2009 12,171 13,507
---------- --------
700,403 689,897 $315,181 $45.00 0.29%
Boise Paper
Holdings LLC
10.50% due
02/22/15
Loan
Agreement........ 2/20/2008 1,000,000 932,455 372,500 37.25 0.34%
Capella
Healthcare, Inc.
13.00% due
02/29/16
Loan
Agreement........ 3/3/2008 1,000,000 991,326 890,000 89.00 0.81%
CompuCom
Systems, Inc.
4.02% due
08/30/14
Loan
Agreement........ 3/31/2008 908,700 878,343 726,960 80.00 0.66%
Critical Care
Systems
International,
Inc.
Common
Stock............ 7/20/2006 69,700 0 697 0.01 0.00%
Dole Foods, Inc
2.63% due
04/12/13
Loan
Agreement........ 2/11/2009 199,894 183,122 182,514 91.31 0.17%
Dole Foods, Inc
7.25% due
04/12/13
Loan
Agreement........ 3/31/2009 11,171 10,233 10,199 91.30 0.01%
Greektown
Holdings LLC
16.75% due
11/11/09
Loan
Agreement........ 2/20/2009 29,349 29,349 24,580 83.75 0.02%
56
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
VALUE % OF
ACQUISITION PRINCIPAL/ ACQUISITION MARKET PER NET
NAME DATE SHARES COST VALUE SHARE ASSETS
---- ----------- ---------- ----------- --------- ------ ------
Greektown
Holdings LLC
16.75% due
06/01/09 Loan
Agreement....... 6/6/2008 89,634 89,683
6/6/2008 82,642 82,642
6/6/2008 225,647 223,845
6/6/2008 47,997 49,042
8/11/2008 118,762 118,762
10/8/2008 74,505 74,505
11/5/2008 89,259 89,259
12/16/2008 101,465 101,465
12/30/2008 70,932 70,932
2/20/2009 69,807 69,807
2/27/2009 931 931
3/31/2009 4,259 4,259
--------- ---------
975,840 975,132 817,266 83.75 0.75%
Herbst Gaming,
Inc. 12.50% due
12/02/11
Loan
Agreement....... 3/26/2008 1,526 1,602
3/26/2008 90,617 76,694
3/26/2008 173,374 123,529
--------- ---------
265,517 201,825 59,741 22.50 0.05%
Herbst Gaming,
Inc. Delayed
Draw-Term B,
Tranche 2
12.50% due
12/02/11
Loan
Agreement....... 3/26/2008 564,394 567,516
3/26/2008 51,891 36,973
8/5/2008 110,637 92,849
--------- ---------
726,922 604,489 163,557 22.50 0.15%
Holding Gaming
Borrower LP
9.25% due
02/19/13
Loan
Agreement....... 8/19/2008 1,000,000 944,715 600,000 60.00 0.55%
Iasis Healthcare
Corp. 6.43%
due 06/15/14
Loan
Agreement....... 4/13/2007 1,000,000 985,415
7/26/2007 26,516 26,516
10/31/2007 27,834 27,834
1/31/2008 28,396 28,397
5/1/2008 23,503 23,502
8/5/2008 22,825 24,979
10/28/2008 23,208 23,208
1/28/2009 25,508 25,933
--------- ---------
1,177,790 1,165,784 1,003,477 85.20 0.92%
MARKET
VALUE % OF
ACQUISITION PRINCIPAL/ ACQUISITION MARKET PER NET
NAME DATE SHARES COST VALUE SHARE ASSETS
---- ----------- ---------- ----------- ------- ------ ------
ICO North America,
Inc. 7.50% due
08/15/09........... 8/11/2005 75,000 75,000
3/5/2008 3,000 3,000
9/11/2008 3,000 3,000
2/24/2009 3,000 3,000
--------- ---------
84,000 84,000 16,800 20.00 0.02%
Le-Natures, Inc.
9.39% due
03/01/11
Loan
Agreement.......... 9/26/2006 1,200,000 1,200,000 142,000 11.83 0.13%
Shreveport Gaming
Holdings, Inc.
Common
Stock.............. 7/21/2005 2,321 53,437
7/29/2005 11,829 272,336
--------- ---------
14,150 325,773 273,236 19.31 0.25%
Solvest, Ltd. 3.25%
due 04/12/13
Loan
Agreement.......... 2/11/2009 32,275 29,565 29,469 91.31 0.03%
Solvest, Ltd. 4.25%
due 04/12/13
Loan
Agreement.......... 2/11/2009 383,030 350,880 349,728 91.31 0.32%
Solvest, Ltd. 8.00%
due 04/12/13
Loan
Agreement.......... 2/11/2009 371,060 340,098 338,799 91.31 0.31%
Southern Energy,
Inc. 7.90% due
07/15/09........... 1/10/2006 3,525,000 0 0 0.00 0.00%
Stallion Oilfield
Service 7.74%
due 07/30/12
Loan
Agreement.......... 7/18/2007 1,000,000 1,000,608
12/4/2007 1,000,000 950,000
--------- ---------
2,000,000 1,950,608 170,000 8.50 0.16%
TOUSA,Inc. 12.25%
due 07/31/13
Loan
Agreement.......... 10/11/2007 1,022,732 937,282
1/16/2008 11,293 11,293
3/6/2008 10,700 10,700
3/31/2008 26,285 26,285
7/24/2008 37,503 37,503
10/7/2008 39,014 39,014
1/15/2009 37,729 37,729
3/31/2009 35,803 35,803
--------- ---------
1,221,059 1,135,609 366,318 30.00 0.33%
57
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
VALUE % OF
ACQUISITION PRINCIPAL/ ACQUISITION MARKET PER NET
NAME DATE SHARES COST VALUE SHARE ASSETS
---- ----------- ---------- ----------- ----------- ------ ------
Triax
Pharmaceuticals
LLC 11.41%
due 08/30/11
Loan
Agreement....... 8/30/2007 1,500,000 1,379,794
10/31/2007 3,875 3,875
1/10/2008 11,404 11,404
4/4/2008 11,239 11,239
7/3/2008 11,449 11,449
10/1/2008 11,534 19,670
1/5/2009 11,751 19,965
--------- ---------
1,561,252 1,457,396 1,407,949 90.18 1.28%
Triax
Pharmaceuticals
LLC
Common
Stock........... 8/31/2007 128,418 53,936 53,936 0.42 0.05%
Triax
Pharmaceuticals
LLC, Class C
Preferred
Stock........... 8/31/2007 39,177 78,353 78,353 2.00 0.07%
Verasun Energy
Corp.
16.50% due
11/03/09
Loan
Agreement....... 11/3/2008 95,679 95,679
11/25/2008 165,000 165,000
12/11/2008 550,000 550,000
12/11/2008 107,450 107,450
12/18/2008 131,871 131,871
--------- ---------
1,050,000 1,050,000 1,050,000 100.00 0.96%
Wind Acqusition
Holdings
Finance S.A.
8.39% due
12/21/11
Loan
Agreement....... 6/21/2007 230,325 230,325
8/15/2007 16,438 16,438
7/18/2007 6,575 6,575
7/18/2007 6,575 6,575
7/18/2007 9,863 9,863
11/05/2007 54,462 54,462
11/09/2007 800,000 801,854
1/31/2008 81,014 81,014
4/29/2008 74,340 74,340
8/5/2008 68,135 68,135
10/21/2008 72,528 75,194
1/20/2009 42,656 42,279
--------- ---------
1,462,911 1,467,054 1,053,296 72.00 0.96%
Wornick Co.
Common
Stock........... 8/8/2008 7,270 951,882 363,500 50.00 0.33%
----------- ----
$10,860,056 9.92%
=========== ====
- --------
(21)Subsequent to March 31, 2009, the company has filed for Chapter 11
bankruptcy protection.
See Notes to Financial Statements
58
SUNAMERICA TAX EXEMPT INSURED FUND
PORTFOLIO PROFILE -- March 31, 2009 -- (unaudited)
ALLOCATION BY STATES*
New York...................... 21.3%
Massachusetts................. 15.1
Texas......................... 11.3
Ohio.......................... 10.5
New Jersey.................... 7.2
California.................... 4.3
Connecticut................... 4.0
New Mexico.................... 3.8
South Dakota.................. 3.2
Pennsylvania.................. 3.1
North Carolina................ 2.9
Missouri...................... 2.8
Arizona....................... 2.6
Maryland...................... 2.3
South Carolina................ 2.2
Kentucky...................... 1.6
Arkansas...................... 1.1
Nevada........................ 0.9
Florida....................... 0.7
Idaho......................... 0.1
Georgia....................... 0.1
Registered Investment Company. 0.1
-----
101.2%
=====
CREDIT QUALITY ALLOCATION+#
AAA. 46.1%
AA.. 46.6
A... 7.3
-----
100.0%
=====
- --------
*Calculated as a percentage of net assets.
+Source: Standard and Poor's
#Calculated as a percentage of total debt issues, excluding short-term
securities.
59
SUNAMERICA TAX EXEMPT INSURED FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES -- 90.0%
ARIZONA -- 2.6%
Arizona Health Facilities Authority Revenue,
Revenue Bonds
5.50% due 01/01/31............................. $2,000,000 $ 1,842,840
-----------
ARKANSAS -- 1.1%
Little Rock Arkansas Sewer Revenue,
Series C
5.00% due 10/01/37(1).......................... 750,000 742,125
-----------
CALIFORNIA -- 4.3%
California State Department Water Resources,
Revenue Bonds
5.00% due 12/01/25(1).......................... 1,000,000 1,032,010
Los Angeles California Water & Power Revenue,
Power System-Subseries A-1
5.25% due 07/01/38............................. 2,000,000 1,993,900
-----------
3,025,910
-----------
CONNECTICUT -- 4.0%
State of Connecticut, Refunded,
Series B,
5.00% due 06/01/14(1).......................... 2,500,000 2,830,550
-----------
GEORGIA -- 0.1%
Georgia Municipal Electric Authority,
Power Revenue,
Series Y,
6.40% due 01/01/13(1).......................... 85,000 94,924
-----------
MARYLAND -- 2.3%
Baltimore Maryland Project Revenue,
Series A
5.00% due 07/01/38(1).......................... 1,650,000 1,647,360
-----------
MASSACHUSETTS -- 15.1%
Massachusetts State School Building Authority,
Series A
5.00% due 08/15/24(1).......................... 3,000,000 3,119,100
Massachusetts State Water Resources Authority,
Revenue Bonds,
Series A,
5.00% due 08/01/24(1).......................... 3,910,000 4,033,204
University Massachusetts Building Authority
Project Revenue,
Series 04-1,
5.25% due 11/01/27(1).......................... 3,000,000 3,488,040
-----------
10,640,344
-----------
MISSOURI -- 2.8%
Missouri State Health & Educational Facilities
Authority,
Series 2003-B
5.50% due 11/15/32(1).......................... 2,000,000 2,002,820
-----------
NEW JERSEY -- 7.2%
Garden State New Jersey Preservation Trust
Open Space And Farmland Preservation,
Series A,
5.80% due 11/01/17(1).......................... 2,500,000 2,895,575
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------------------------
NEW JERSEY (CONTINUED)
New Jersey Economic Development Authority
Revenue Bond, School Facility Construction
5.00% due 09/01/09(1)(2)........................ $2,000,000 $ 2,166,140
-----------
5,061,715
-----------
NEW MEXICO -- 3.8%
New Mexico Finance Authority Transportation,
Series A,
5.25% due 06/15/21(1)........................... 2,500,000 2,673,100
-----------
NEW YORK -- 17.4%
City of Niagara Falls New York,
General Obligation
7.50% due 03/01/13(1)........................... 410,000 473,661
City of Niagara Falls New York,
Prerefunded, General Obligation
7.50% due 03/01/13(1)........................... 35,000 42,798
City of Niagara Falls New York,
General Obligation
7.50% due 03/01/14(1)........................... 510,000 598,031
City of Niagara Falls New York,
Prerefunded, General Obligation
7.50% due 03/01/14(1)........................... 45,000 56,545
Metropolitan Transportation Authority New York,
Transit Improvement,
Series A
5.00% due 11/15/31(1)........................... 1,650,000 1,666,566
New York New York City Municipal Water
Finance Authority, Water & Sewer Revenue,
Fiscal 2009-Series A
5.75% due 06/15/40.............................. 2,600,000 2,736,292
New York State Thruway Authority,
Series H
5.00% due 01/01/19(1)........................... 1,000,000 1,078,480
New York State Thruway Authority,
Series G,
5.25% due 01/01/27(1)........................... 1,500,000 1,523,805
Sales Tax Asset Receivables Corp.,
Series A,
5.25% due 10/15/27(1)........................... 2,000,000 2,062,840
Triborough Bridge & Tunnel Authority,
Series A-2
5.25% due 11/15/34.............................. 2,000,000 2,008,880
-----------
12,247,898
-----------
NORTH CAROLINA -- 2.9%
Wake County North Carolina, General Obligation
4.50% due 03/01/26.............................. 2,000,000 2,004,680
-----------
OHIO -- 10.5%
Franklin County, Ohio Hospital Revenue,
Series C,
5.25% due 05/15/23.............................. 815,000 817,339
Ohio State Higher Educational Facility
Commission,
Revenue Bonds
5.25% due 01/01/29.............................. 1,845,000 1,822,509
Olentangy Local School District Ohio,
Series A,
5.25% due 12/01/27(1)........................... 3,250,000 3,749,883
60
SUNAMERICA TAX EXEMPT INSURED FUND
PORTFOLIO OF INVESTMENTS -- March 31, 2009 -- (continued)
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES (CONTINUED)
OHIO (CONTINUED)
Woodridge, Ohio, Woodmore Local School
District,
6.80% due 12/01/14(1).......................... $ 880,000 $ 991,936
-----------
7,381,667
-----------
PENNSYLVANIA -- 1.5%
Pennsylvania State Higher Educational Facility
Authority,
Series B
6.00% due 08/15/22............................. 1,000,000 1,056,380
-----------
SOUTH DAKOTA -- 3.2%
South Dakota State Health & Educational
Facilities Revenue, Refunding,
6.25% due 07/01/10(1).......................... 2,120,000 2,236,324
-----------
TEXAS -- 11.2%
Corpus Christi Texas Utility System Revenue,
Revenue Bonds
5.25% due 07/15/20(1).......................... 2,325,000 2,502,584
University Houston Texas, Refunding Notes--
University & College Improvement
5.25% due 02/15/26(1).......................... 3,000,000 3,118,350
Williamson County Texas,
Series A
5.00% due 02/15/19(1).......................... 2,000,000 2,230,720
-----------
7,851,654
-----------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $61,029,676)............................. 63,340,291
-----------
SHORT-TERM INVESTMENT SECURITIES -- 11.2%
FLORIDA -- 0.7%
Broward County Florida School Board,
Certificates Participation
0.55% due 04/07/09(1)(2)....................... 500,000 500,000
-----------
IDAHO -- 0.1%
Idaho Health Facilities Authority Revenue,
St. Lukes Regional Medical Center Project
0.85% due 04/01/09(1)(2)....................... 100,000 100,000
-----------
KENTUCKY -- 1.6%
Louisville & Jefferson County Kentucky
Metropolitan Sewer District,
Series A
0.90% due 04/01/09(1)(2)....................... 150,000 150,000
Louisville & Jefferson County Kentucky
Visitors & Convention Commission,
Series B
0.90% due 04/02/09(1)(2)....................... 945,000 945,000
-----------
1,095,000
-----------
NEVADA -- 0.9%
Clark County Nevada School District,
Series A
0.32% due 04/01/09(1)(2)....................... 630,000 630,000
-----------
NEW YORK -- 3.9%
New York NY,
Series H
0.30% due 04/02/09(1)(2)....................... 1,365,000 1,365,008
MARKET
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------
NEW YORK (CONTINUED)
New York NY,
Subseries A-6
0.50% due 04/03/09(1)(2).............. $1,295,000 $ 1,295,000
Triborough Bridge & Tunnel Authority,
Refunding Bonds
2.75% due 07/01/09(1)(2).............. 85,000 85,000
-----------
2,745,008
-----------
PENNSYLVANIA -- 1.6%
Lehigh County Pennsylvania General
Hospital Revenue, Refunding
0.35% due 04/01/09(1)(2).............. 700,000 700,000
Lehigh County Pennsylvania General
Purpose Authority,
Hospital-Lehigh Valley Health
0.55% due 04/02/09(1)(2).............. 400,000 400,000
-----------
1,100,000
-----------
SOUTH CAROLINA -- 2.2%
Rock Hill South Carolina Utility
System Revenue,
Series B
0.55% due 04/05/09(1)(2).............. 1,540,000 1,540,000
-----------
TEXAS -- 0.1%
Harris County Texas Health Facilities
Development Corp.,
Revenue Bonds
0.40% due 04/01/09(1)(2).............. 105,000 105,000
-----------
REGISTERED INVESTMENT COMPANY -- 0.1%
SSGA Tax Free Money Market Fund........ 76,800 76,800
-----------
TOTAL SHORT-TERM INVESTMENT SECURITIES
(cost $7,891,808)..................... 7,891,808
-----------
TOTAL INVESTMENTS --
(cost $68,921,484)(3)................. 101.2% 71,232,099
Liabilities in excess of other assets.... (1.2) (825,304)
---------- -----------
NET ASSETS -- 100.0% $70,406,795
========== ===========
- --------
(1)All or part of this security is insured by the Assured Guaranty Corp.
("AGC"), Berkshire Hathaway Assurance Corp. ("BHAC"), Financial Security
Assurance ("FSA"), Financial Guaranteed Insurance Corp. ("FGIC"), Municipal
Bond Insurance Association ("MBIA"), or American Municipal Bond Assurance
Corp. ("AMBAC"). The aggregate value is $56,872,479 or 80.8% of Net Assets.
(2)Variable Rate Security -- the rate reflected is as of March 31, 2009,
maturity date reflects next reset date.
(3)See Note 5 for cost of investments on a tax basis.
See Notes to Financial Statements
61
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 2009
NOTE 1. ORGANIZATION
The SunAmerica Income Funds is an open-end diversified management investment
company organized as a Massachusetts business trust (the "Trust"). It
currently consists of five different 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
SunAmerica Asset Management Corp. (the "Adviser" or "SunAmerica")*, an
indirect wholly-owned subsidiary of American International Group, Inc.
("AIG"). An investor may invest in one or more of the following Funds:
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 and
principal investment techniques for each of the Funds are as follows:
U.S. GOVERNMENT SECURITIES FUND seeks high current income consistent with
relative safety of capital by the active trading of U.S. government
securities, without regard to the maturities of such securities. Under
normal market conditions, at least 80% of the Fund's net assets plus any
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 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 net assets plus any 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 U.S. and foreign 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 net assets plus any
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 Fund's net 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 the
active trading of municipal bonds and other municipal securities. Under
normal market conditions, at least 80% of Fund's net assets plus any
borrowing for investment purposes will be invested in municipal bonds and
other municipal securities, 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 securities 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, purchases of Class A shares in amounts of
$1,000,000 or more 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.
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. Certain Class C shares of
particular Funds issued in connection with particular reorganizations or
mergers will convert automatically to Class A shares approximately ten years
after purchase and at such time will be subject to the lower distribution
fee applicable to Class A shares.
- --------
* Effective April 1, 2009, AIG SunAmerica Asset Management Corp. changed its
name to SunAmerica Asset Management Corp.
62
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 2009 -- (continued)
Each class of shares bears the same voting, dividend, liquidation and other
rights and conditions except as may otherwise be provided in the Trust's
registration statement. Class A, Class B and Class C shares each makes
distribution and account maintenance and service fee payments under the
distribution plan pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "1940 Act") except that Class B and Class C shares are
subject to higher distribution fees.
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 the obligation to
indemnify others. The Funds' maximum exposure under these arrangements is
unknown. Currently, however, the Funds expect the risk of loss to be remote.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles 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. Stocks listed on the
NASDAQ are valued using the NASDAQ Official Closing Price ("NOCP").
Generally, the NOCP will be the last sale price unless the reported trade
for the stock is outside the range of the bid/ask price. In such cases, the
NOCP will be normalized to the nearer of the bid or ask price. For listed
securities having no sales reported and for unlisted securities, such
securities will be valued based upon the last reported bid price.
As of the close of regular trading on the New York Stock Exchange ("NYSE"),
securities traded primarily on security exchanges outside the United States
are valued at the last sale price on such exchanges on the day of valuation,
or if there is no sale on the day of valuation, at the last-reported bid
price. If a security's price is available from more than one exchange, a
portfolio 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 a 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 a 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 Trustee's (the "Board") to reflect what
it believes to be the fair value of the securities as of the close of
regular trading on the NYSE. The Funds may also fair value securities in
other situations, for example, when a particular foreign market is closed
but the Funds are open. For foreign equity securities, the Funds use an
outside pricing service to provide it with closing market prices and
information used for adjusting those prices.
Non-convertible bonds and debentures, other long-term debt securities, and
short term debt securities with maturities in excess of 60 days, are valued
at bid prices obtained for the day of valuation from a bond pricing service,
when such prices are available. If a vendor quote is unavailable the
securities may be priced by using the average of at least two independent
quotes obtained from brokers.
Forward contracts are valued at the 4:00 p.m. eastern time forward rate.
Other securities are valued on the basis of last sale or bid price (if a
last sale price is not available) in what is, in the opinion of the Adviser,
the broadest and most representative market, that may be either a securities
exchange or over-the-counter market. 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.
Investments in open-end and closed-end registered investment companies that
do not trade on an exchange are valued at the end of day net asset value per
share. Investments in open-end and closed-end registered investment
companies that trade on an exchange are valued at the last sales price or
official closing price as of the close of the customary trading session on
the exchange where the security is principally traded.
Short-term securities with 60 days or less to maturity are amortized to
maturity based on their cost to a Fund if acquired within 60 days of
maturity or, if already held by the Fund on the 60th day, are amortized to
maturity based on the value determined on the 61st day.
63
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 2009 -- (continued)
Securities for which market quotations are not readily available or where a
development/significant event occurs that may significantly impact the value
of the security, then those securities are fair valued, as determined
pursuant to procedures adopted in good faith by the Board of Trustees. There
is no single standard for making fair value determinations, which may result
in prices that vary from those of other funds.
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement on Financial Accounting Standards No. 157, " Fair Value
Measurements " ("FAS 157"). This standard clarifies the definition of fair
value for financial reporting, establishes a framework for measuring fair
value and requires additional disclosures about the use of fair value
measurements. FAS 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and interim periods within
those fiscal years. Various inputs are used in determining the value of the
Portfolios' investments. These inputs are summarized in the three broad
levels listed below:
Level 1 -- Unadjusted quoted prices in active markets for identical
securities
Level 2 -- Other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk, quoted
prices in inactive markets, etc.)
Level 3 -- Significant unobservable inputs (including the Portfolios' own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
The following is a summary of the inputs used to value the Funds' net assets
as of March 31, 2009:
U.S GOVERNMENT SECURITIES FUND GNMA FUND
------------------------------ ------------------------------
INVESTMENTS IN OTHER FINANCIAL INVESTMENTS IN OTHER FINANCIAL
VALUATION INPUTS SECURITIES INSTRUMENTS* SECURITIES INSTRUMENTS*
- ---------------- -------------- --------------- -------------- ---------------
Level 1 -- Unadjusted
Quoted Prices........... $109,902,967 $ -- $ 21,635,000 $ --
Level 2 -- Other
Significant Observable
Inputs.................. 104,263,635 -- 521,790,219 --
Level 3 -- Significant
Unobservable Inputs..... -- -- -- --
------------ --------- ------------ ---------
Total.................... $214,166,602 $ -- $543,425,219 $ --
============ ========= ============ =========
STRATEGIC BOND FUND HIGH-YIELD BOND PORTFOLIO
------------------------------ ------------------------------
INVESTMENTS IN OTHER FINANCIAL INVESTMENTS IN OTHER FINANCIAL
VALUATION INPUTS SECURITIES INSTRUMENTS* SECURITIES INSTRUMENTS*
- ---------------- -------------- --------------- -------------- ---------------
Level 1 -- Unadjusted
Quoted Prices........... $ 9,314,020 $ -- $ 500,868 $ --
Level 2 -- Other
Significant Observable
Inputs.................. 432,079,681 -- 87,264,202 --
Level 3 -- Significant
Unobservable Inputs..... 12,762,226 -- 18,097,143 --
------------ --------- ------------ ---------
Total.................... $454,155,927 $ -- $105,862,213 $ --
============ ========= ============ =========
TAX EXEMPT INSURED FUND
------------------------------
INVESTMENTS IN OTHER FINANCIAL
VALUATION INPUTS SECURITIES INSTRUMENTS*
- ---------------- -------------- ---------------
Level 1 -- Unadjusted
Quoted Prices........... $ -- $ --
Level 2 -- Other
Significant Observable
Inputs.................. 71,232,099 --
Level 3 -- Significant
Unobservable Inputs..... -- --
------------ ---------
Total.................... $ 71,232,099 $ --
============ =========
- --------
* Other financial instruments are derivative instruments not reflected in the
Portfolio of Investments, such as future, forward, swap and written
contracts, which are valued at the unrealized appreciation/depreciation on
the instrument.
64
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 2009 -- (continued)
The following is a reconciliation of Level 3 assets for which significant
unobservable inputs were used to determine fair value:
STRATEGIC BOND FUND HIGH-YIELD BOND PORTFOLIO
------------------------------ ------------------------------
INVESTMENTS IN OTHER FINANCIAL INVESTMENTS IN OTHER FINANCIAL
SECURITIES INSTRUMENTS* SECURITIES INSTRUMENTS*
-------------- --------------- -------------- ---------------
Balance as of 03/31/08... $ 1,975,892 $ -- $ 4,537,495 $ --
Accrued
discounts/premiums...... 55,407 -- 122,143 --
Realized gain (loss)..... (73,614) -- (695,008) --
Change in unrealized
appreciation
(depreciation).......... (3,071,647) -- (8,743,346) --
Net purchases (sales).... 6,022,865 -- 4,963,479 --
Transfers in and/or out
of Level 3.............. 7,853,323 -- 17,912,380 --
----------- --------- ----------- ---------
Balance as of 03/31/09... $12,762,226 $ -- $18,097,143 $ --
=========== ========= =========== =========
- --------
* Other financial instruments are derivative instruments not reflected in the
Portfolio of Investments, such as future, forward, swap and written
contracts, which are valued at the unrealized appreciation/depreciation on
the instrument.
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 March 31, 2009, the following Funds held an undivided interest in a
joint repurchase agreement with State Street Bank & Trust Co.:
PERCENTAGE PRINCIPAL
FUND INTEREST AMOUNT
- ---- ---------- -----------
GNMA................ 29.41% $62,387,000
Strategic Bond...... 6.40 13,579,000
High Yield Bond..... 1.56 3,317,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
State Street Bank & Trust Co., dated March 31, 2009, bearing interest at a
rate of 0.01% per annum, with a principal amount of $212,131,000, a
repurchase price of $212,131,059, and a maturity date of April 1, 2009. The
repurchase agreement is collateralized by the following:
MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL INTEREST RATE DATE AMOUNT VALUE
- ------------------ ------------- -------- ------------ ------------
U.S. Treasury Bills......... 0.17% 07/16/09 $173,760,000 $173,673,120
U.S. Treasury Bills......... 0.27 08/13/09 42,745,000 42,702,255
As of March 31, 2009, the following Funds held an undivided interest in a
joint repurchase agreement with UBS Securities, LLC.:
PERCENTAGE PRINCIPAL
FUND INTEREST AMOUNT
- ---- ---------- ------------
U.S. Government..... 10.06% $ 25,144,000
GNMA................ 40.00 100,000,000
65
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 2009 -- (continued)
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Securities, LLC, dated March 31, 2009, bearing interest at a rate of
0.10% per annum, with a principal amount of $250,000,000, a repurchase price
of $250,000,694, and a maturity date of April 1, 2009. The repurchase
agreement is collateralized by the following:
MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL INTEREST RATE DATE AMOUNT VALUE
- ------------------ ------------- -------- ------------ ------------
U.S. Treasury Inflation Index Notes. 3.00% 07/15/12 $250,000,000 $255,000,032
SECURITIES TRANSACTIONS, INVESTMENT INCOME, EXPENSES, DIVIDENDS AND
DISTRIBUTIONS TO SHAREHOLDERS: Security transactions are recorded on a trade
date basis. Realized gains and losses on sales of investments are calculated
on the identified cost basis. Interest income, is accrued daily 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 Fund 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. Under applicable foreign law, a withholding tax may be imposed on
interest, dividends, and capital gains at various rates.
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).
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.
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 Funds reserve the right to declare and pay dividends less frequently
than disclosed above, provided that the net realized capital gains and net
investment income, if any, are paid at least annually. 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 by these
reclassifications.
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. Each Fund files U.S. federal
and certain state income tax returns. With few exceptions, each Fund is no
longer subject to U.S. federal and state tax examinations by tax authorities
for tax returns ending before 2005.
NEW ACCOUNTING PRONOUNCEMENTS: In March 2009, the Financial Accounting
Standards (FASB) issued FASB Statement No. 161, Disclosures about Derivative
Instruments and Hedging Activities. The standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand
their effects on an entity's financial position and financial performance.
It is effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008. Management is currently in the
process of determining the impact of the standard on the Funds' disclosures
in the financial statements.
FORWARD FOREIGN CURRENCY CONTRACTS: Certain Funds 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
66
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 2009 -- (continued)
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 Fund as unrealized
gain or loss. On the settlement date, the Fund 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.
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 Funds do 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
Funds do 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: Each Fund may engage in "short sales against the box." A short
sale is against the box to the extent that the Fund contemporaneously owns,
or has the right to obtain without payment, securities identical to those
sold short. In addition, the High Yield Bond Fund and the GNMA 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: Certain Funds may enter into dollar roll
transactions 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. During the year ended March 31, 2009, the U.S. Government
Securities Fund and the GNMA Fund entered into dollar roll transactions.
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.
67
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 2009 -- (continued)
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 SunAmerica. Under the Agreement, SunAmerica
provides continuous supervision of a Fund's portfolio and administers its
corporate affairs, subject to general review by the Trustees. In connection
therewith, SunAmerica 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
SunAmerica and its affiliates.
The Funds pay SunAmerica 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
---------------------------- ----------
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
- --------
* Pursuant to a Fee Waiver Agreement, effective July 29, 2008, SunAmerica is
contractually obligated to waive its advisory fee with respect to the Tax
Exempt Insured Fund so that the advisory fee payable by the Fund to
SunAmerica under the agreement equals 0.15% of average daily net assets.
This fee waiver will continue indefinitely, subject to termination by the
Trustees, including a majority of the Trustees who are not interested
persons of the Trust, SunAmerica or AIG Global Investment Corp., within the
meaning of the 1940 Act.
For the period ended March 31, 2009, the amount of the investment advisor
fee waived was $141,693 for the Tax Exempt Insured Fund. The amount is
reflected in the Statement of Operations.
The 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 SunAmerica. AIGGIC is an indirect wholly-owned
subsidiary of AIG and an affiliate of SunAmerica. AIGGIC receives the
following fees from SunAmerica, based upon each Fund's average daily net
assets:
SUB-ADVISORY FEES
--------------------------------------
STRATEGIC BOND HIGH YIELD TAX EXEMPT
ASSETS FUND BOND FUND INSURED FUND*
- ------ -------------- ---------- -------------
$0 - $200 million............. 0.35% 0.45% 0.08%
(greater than) $200 million. 0.25 0.35 --
(greater than) $500 million. 0.20 0.30 --
- --------
* Pursuant to a Subadvisory Fee Waiver Agreement, effective July 29, 2008,
AIGGIC is contractually obligated to waive its subadvisory fee with respect
to the Tax Exempt Insured Fund so that the subadvisory fee payable by
SunAmerica to AIGGIC under the subadvisory agreement equals 0.075% of
average daily net assets. The Subadvisory Fee Waiver Agreement will continue
in effect as long as the Fee Waiver Agreement remains in effect.
68
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 2009 -- (continued)
SunAmerica has contractually agreed to waive fees and/or reimburse expenses,
to the extent necessary to cap the Funds' annual fund operating expenses at
the following percentages of each Fund's average net assets. Annual Fund
operating expenses shall not include extraordinary expenses as determined
under generally accepted accounting principles, or acquired Fund fees and
expenses. The contractual expense waivers and fee reimbursements will
continue indefinitely, subject to termination by the Trustees, including a
majority of the Trustees who are not interested persons of the Trust,
SunAmerica or AIGGIC, within the meaning of the 1940 Act ("Disinterested
Trustees").
FUND PERCENTAGE
- ---- ----------
U.S. Government Securities Class A. 0.99%
U.S. Government Securities Class B. 1.64
U.S. Government Securities Class C. 1.64
GNMA Fund Class A.................. 0.99
GNMA Fund Class B.................. 1.64
GNMA Fund Class C.................. 1.64
Strategic Bond Class A............. 1.40
Strategic Bond Class B............. 2.05
Strategic Bond Class C............. 2.05
High Yield Bond Class A............ 1.36
High Yield Bond Class B............ 2.01
High Yield Bond Class C............ 2.01
Further, SunAmerica 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. The voluntary fee waivers and/or
expense reimbursements may be terminated at any time at the option of
SunAmerica.
FUND PERCENTAGE
- ---- ----------
Tax Exempt Insured Fund Class C. 1.95%
For the U.S. Government Fund and GNMA Fund, any voluntary or contractual
waivers and/or reimbursements made by SunAmerica are subject to recoupment
from the Funds within the following two years of making such waivers or
reimbursements, provided that the Funds are able to effect such payment to
SunAmerica and remain in compliance with the foregoing expense limitations.
For the year ended March 31, 2009, pursuant to the contractual and voluntary
expense limitations in the above tables SunAmerica has waived and/or
reimbursed expenses as follows:
OTHER EXPENSES
FUND REIMBURSED
- ---- --------------
U.S. Government Securities. $198,480
CLASS SPECIFIC
FUND EXPENSES
- ---- --------------
U.S. Government Securities Class A. $495,642
U.S. Government Securities Class B. 48,575
U.S. Government Securities Class C. 55,807
GNMA Class A....................... 395,528
GNMA Class B....................... 64,691
GNMA Class C....................... 68,976
High Yield Bond Class A............ 132,259
High Yield Bond Class B............ 44,580
High Yield Bond Class C............ 73,867
Tax Exempt Insured Class C......... 10,680
At March 31, 2009, expenses previously waived or reimbursed by SunAmerica
that are subject to recoupment are as follows:
OTHER EXPENSES
FUND REIMBURSED
- ---- --------------
U.S. Government Securities. $458,747
69
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 2009 -- (continued)
CLASS SPECIFIC
EXPENSES
FUND REIMBURSED
- ---- --------------
U.S. Government Securities Class A. $922,640
U.S. Government Securities Class B. 96,240
U.S. Government Securities Class C. 99,393
GNMA Class A....................... 886,292
GNMA Class B....................... 161,382
GNMA Class C....................... 133,044
The Trust, on behalf of each Fund, has entered into a Distribution Agreement
with SunAmerica Capital Services, Inc. ("SACS" or "Distributor"),+ an
affiliate of the Adviser. Each Fund has adopted a Distribution Plan on
behalf of each Class in accordance with the provisions of Rule 12b-1 under
the 1940 Act (each a "Plan" and collectively the "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
such 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.
The Class A, Class B and Class C Plans, provide that the Trust, on behalf of
the respective classes, shall pay the Distributor a distribution fee at an
annual rate of up to 0.10%, 0.75% and 0.75%, of average daily net assets of
such Fund's Class A, Class B and Class C shares respectively, 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 Plans also provide that each class of shares
of the Trust will also pay the Distributor an account maintenance fee at the
annual rate of up to 0.25% of the aggregate average daily net assets of such
class of shares to compensate the Distributor and securities firms for
account maintenance activities. Accordingly, for the year ended March 31,
2009, SACS received fees (see the Statement of Operations) based upon the
aforementioned rates.
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 year
ended March 31, 2009, 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 CLASS C
----------------------------------------------------- -------------- --------------
CONTINGENT CONTINGENT CONTINGENT
SALES AFFILIATED NON-AFFILIATED DEFERRED SALES DEFERRED SALES DEFERRED SALES
FUND CHARGES BROKER-DEALERS BROKER-DEALERS CHARGES CHARGES CHARGES
- ---- -------- -------------- -------------- -------------- -------------- --------------
U.S. Government Securities. $103,006 $ 25,015 $ 53,980 $20,596 $ 27,094 $ 7,214
GNMA....................... 547,988 101,448 338,358 9,120 50,025 33,532
Strategic Bond............. 355,469 54,301 236,802 9,945 120,772 48,961
High Yield Bond............ 153,981 15,700 112,327 755 88,885 12,870
Tax Exempt Insured......... 63,838 15,623 36,507 1,322 2,806 3,126
- --------
+ Effective November 12, 2008 AIG SunAmerica Capital Services, Inc. changed
its name to SunAmerica Capital Services, Inc.
70
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 2009 -- (continued)
The Trust has entered into a Service Agreement with SunAmerica Fund
Services, Inc. ("SAFS"),+ an affiliate of the Adviser. Under the Service
Agreement, SAFS performs certain shareholder account functions by assisting
the 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 year ended March 31, 2009, 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
FUND EXPENSES MARCH 31, 2009
- ---- -------- --------------
US Government Securities Class A. $415,951 $33,345
US Government Securities Class B. 34,813 3,013
US Government Securities Class C. 38,991 3,760
GNMA Class A..................... 663,817 62,253
GNMA Class B..................... 96,183 8,254
GNMA Class C..................... 103,307 13,118
Strategic Bond Class A........... 814,251 41,902
Strategic Bond Class B........... 100,492 7,075
Strategic Bond Class C........... 516,610 36,949
High Yield Bond Class A.......... 205,551 10,651
High Yield Bond Class B.......... 59,720 3,188
High Yield Bond Class C.......... 109,723 6,264
Tax Exempt Insured Class A....... 105,038 9,935
Tax Exempt Insured Class B....... 7,111 566
Tax Exempt Insured Class C....... 16,449 2,444
At March 31, 2009, the following affiliates owned a percentage of the
outstanding shares of the following funds; Focused Fixed Income Strategy
Portfolio and Focused Fixed Income and Equity Strategy Portfolio owned 5.1%
and 7.7% of the SunAmerica U.S. Government Fund, respectively; Focused
Balanced Strategy Portfolio and Focused Multi-Asset Strategy Portfolio owned
15.1% and 10.4% of the SunAmerica GNMA Fund, respectively; and Focused
Multi-Asset Strategy Portfolio owned 16.0% of SunAmerica Strategic Bond Fund.
On March 4, 2009, AIG, the ultimate parent of SunAmerica, SACS, SAFS and
AIGGIC, issued and sold to the AIG Credit Facility Trust, a trust
established for the sole benefit of the United States Treasury (the
"Trust"), 100,000 shares of AIG's Series C Perpetual, Convertible,
Participating Preferred Stock (the "Stock") for an aggregate purchase price
of $500,000, with an understanding that additional and independently
sufficient consideration was also furnished to AIG by the Federal Reserve
Bank of New York (the "FRBNY") in the form of its lending commitment (the
"Credit Facility") under the Credit Agreement, dated as of September 22,
2008, between AIG and the FRBNY. The Stock has preferential liquidation
rights over AIG common stock, and, to the extent permitted by law, votes
with AIG's common stock on all matters submitted to AIG's shareholders. The
Trust has approximately 79.9% of the aggregate voting power of AIG's common
stock and is entitled to approximately 79.9% of all dividends paid on AIG's
common stock, in each case treating the Stock as if converted. The Stock
will remain outstanding even if the Credit Facility is repaid in full or
otherwise terminates.
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 year ended March 31, 2009 were as follows:
U.S. GOVERNMENT TAX EXEMPT
SECURITIES GNMA STRATEGIC HIGH YIELD INSURED
FUND FUND BOND FUND BOND FUND FUND
--------------- ------------ ------------ ------------ -----------
Purchases (excluding U.S. government
securities)............................ $ -- $ -- $583,505,557 $123,883,049 $61,401,423
Sales (excluding U.S. government
securities)............................ -- -- 681,776,707 138,060,571 50,482,339
Purchases of U.S. government securities. 169,978,005 272,069,296 111,210,835 -- --
Sales of U.S. government securities..... 187,023,843 345,099,667 168,244,868 -- --
- --------
+ Effective March 17, 2009 AIG SunAmerica Fund Services, Inc. changed its name
to SunAmerica Fund Services, Inc.
71
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 2009 -- (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, treatment of defaulted securities, deferred directors
compensation, amortization of premium/discount, post-October losses, and
derivative transactions.
DISTRIBUTABLE EARNINGS TAX DISTRIBUTIONS
FOR THE YEAR ENDED MARCH 31, 2009 FOR THE YEAR ENDED MARCH 31, 2009
--------------------------------------- ------------------------------------
LONG-TERM
GAINS/CAPITAL UNREALIZED
ORDINARY LOSS APPRECIATION ORDINARY LONG-TERM
INCOME CARRYOVER (DEPRECIATION) INCOME CAPITAL GAINS TAX EXEMPT
- - ---------- ------------- -------------- ----------- ------------- ----------
U.S. Government Securities. $ 281,907 $ (1,844,407) $ 14,043,968 $ 6,096,750 $ -- $ --
GNMA....................... 2,265,563 -- 14,784,913 16,899,882 -- --
Strategic Bond............. 2,167,867 (41,107,772) (94,299,209) 51,954,475 -- --
High Yield Bond............ 2,200,551 (94,680,692) (64,044,645) 15,266,449 -- --
Tax Exempt Insured......... 53,346* (443,460) 2,313,106 -- -- 1,928,998
TAX DISTRIBUTIONS
FOR THE YEAR ENDED MARCH 31, 2008
------------------------------------
ORDINARY LONG-TERM
INCOME CAPITAL GAINS TAX EXEMPT
- - ----------- ------------- ----------
U.S. Government Securities. $ 7,552,664 $ -- $ --
GNMA....................... 16,873,452 -- --
Strategic Bond............. 45,247,978 -- --
High Yield Bond............ 21,181,473 -- --
Tax Exempt Insured......... 103,254 360,487 1,811,170
- --------
* Tax exempt distributable earnings.
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
SECURITIES GNMA STRATEGIC HIGH YIELD INSURED
FUND FUND BOND FUND BOND FUND FUND
------------ ------------ ------------- ------------ -----------
Cost.......................................... $200,122,634 $528,640,306 $ 548,434,419 $170,706,358 $68,918,993
============ ============ ============= ============ ===========
Appreciation.................................. 14,217,567 15,078,692 8,595,824 2,027,002 2,702,773
Depreciation.................................. (173,599) (293,779) (102,874,316) (66,061,897) (389,667)
------------ ------------ ------------- ------------ -----------
Unrealized appreciation (depreciation) -- net. $ 14,043,968 $ 14,784,913 $ (94,278,492) $(64,034,895) $ 2,313,106
============ ============ ============= ============ ===========
As of March 31, 2009, for Federal income tax purposes, the Funds indicated
below have capital loss carryforwards, which expire in the year indicated,
which are available to offset future capital gains, if any:
FUND 2010 2011 2012 2013 2014 2015 2016 2017
- ---- ----------- ----------- ---- ---- ---- ---------- ---------- -----------
U.S. Government Securities. $ -- $ -- $ -- $ -- $ -- $1,844,407 $ -- $ --
GNMA....................... -- -- -- -- -- -- -- --
Strategic Bond............. 6,464,175 10,040,945 -- -- -- -- 1,093,730 23,508,922
High Yield Bond............ 32,249,552 48,994,980 -- -- -- -- 4,051,423 9,384,737
Tax Exempt Insured......... -- -- -- -- -- -- 110,179 333,281
The Funds indicated below utilized capital loss carryforwards, which offset
net taxable gains realized in the year ended March 31, 2009:
CAPITAL LOSS CAPITAL LOSS
CARRYFORWARD CARRYFORWARD
FUND UTILIZED EXPIRED
- ---- ------------ ------------
U.S. Government Securities. $2,110,840 $ --
Strategic Bond............. -- 5,601,470
High Yield Bond............ -- 5,383,683
72
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 2009 -- (continued)
Under the current law, capital losses related to securities and foreign
currency realized after October 31 and prior to the Fund's fiscal year end
may be deferred as occurring on the first day of the following year. For the
fiscal year ended March 31, 2009, the Funds elected to defer losses as
follows:
DEFERRED DEFERRED
POST-OCTOBER POST-OCTOBER
FUND CAPITAL LOSS CURRENCY LOSS
- ---- ------------ -------------
U.S. Government Securities. $ 62,965 $ --
GNMA....................... 214,074 --
Strategic Bond............. 61,991,961 944,426
High Yield Bond............ 24,552,841 --
Tax Exempt Insured......... 296,588 --
For the period ended March 31, 2009, the reclassifications arising from
book/tax differences resulted in increases (decreases) that were primarily
due to net paydown adjustments, expiration of capital loss carry forward
amounts and treatment of foreign currency to the components of net assets as
follows:
ACCUMULATED ACCUMULATED
UNDISTRIBUTED UNDISTRIBUTED
NET INVESTMENT NET REALIZED CAPITAL
INCOME (LOSS) GAIN (LOSS) PAID-IN
-------------- ------------- -----------
U.S. Government Securities. $ 242,675 $ (242,675) $ --
GNMA....................... 657,461 (657,461) --
Strategic Bond............. 2,634,239 2,967,231 (5,601,470)
High Yield Bond............ 341,133 5,042,550 (5,383,683)
Tax Exempt Insured......... (2,793) 2,793 --
NOTE 6. CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of each class of each series were as follows:
U.S. GOVERNMENT SECURITIES FUND
--------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- --------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2009 MARCH 31, 2008 MARCH 31, 2009 MARCH 31, 2008
-------------------------- ------------------------ --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- ------------ -------- ----------- -------- -----------
Shares sold(1)(2)(3)(4). 9,690,670 $ 93,729,200 9,490,829 $ 88,581,997 732,418 $ 7,103,474 455,993 $ 4,311,869
Reinvested shares....... 421,489 4,055,900 544,377 5,081,275 25,816 248,047 37,519 349,840
Shares redeemed(1)(2)... (11,990,274) (117,892,171) (6,776,630) (63,242,348) (767,191) (7,490,841) (500,368) (4,646,557)
----------- ------------- ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease). (1,878,115) $ (20,107,071) 3,258,576 $ 30,420,924 (8,957) $ (139,320) (6,856) $ 15,152
=========== ============= ========== ============ ======== =========== ======== ===========
U.S. GOVERNMENT SECURITIES FUND
----------------------------------------------------
CLASS C
----------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2009 MARCH 31, 2008
-------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- ------------
Shares sold............. 1,499,699 $ 14,536,998 1,530,061 $ 14,467,476
Reinvested shares....... 24,122 231,902 28,676 267,675
Shares redeemed(3)(4)... (1,274,412) (12,379,114) (871,773) (8,170,746)
----------- ------------- ---------- ------------
Net increase (decrease). 249,409 $ 2,389,786 686,964 $ 6,564,405
=========== ============= ========== ============
- --------
(1)For the year ended March 31, 2008, includes automatic conversion of 108,807
shares of Class B shares in the amount of $1,005,224 to 108,851 shares of
Class A shares in the amount of $1,005,224.
(2)For the year ended March 31, 2008, includes automatic conversion of 11,097
shares of Class C shares in the amount of $102,964 to 11,091 shares of Class
A shares in the amount of $102,964.
(3)For the year ended March 31, 2009, includes automatic conversion of 79,946
shares of Class B shares in the amount of $787,506 to 79,992 shares of Class
A shares in the amount of $787,506.
(4)For the year ended March 31, 2009, includes automatic conversion of 8,074
shares of Class C shares in the amount of $76,701 to 8,070 shares of Class A
shares in the amount of $76,701.
73
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 2009 -- (continued)
GNMA FUND
----------------------------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------------ --------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2009 MARCH 31, 2008 MARCH 31, 2009 MARCH 31, 2008
-------------------------- -------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Shares
sold(1)(3)(5)(7) 16,454,058 $ 190,740,558 6,310,957 $ 70,104,250 893,277 $ 10,341,831 229,129 $ 2,590,101
Reinvested
shares.......... 930,075 10,662,369 1,044,195 11,665,053 115,705 1,333,338 125,700 1,405,978
Shares
redeemed(1)(5).. (16,639,819) (190,295,408) (6,724,233) (75,305,388) (1,256,553) (14,461,371) (1,490,358) (16,623,314)
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Net
increase
(decrease)...... 744,314 $ 11,107,519 630,919 $ 6,463,915 (247,571) $(2,786,202) (1,135,529) $(12,627,235)
=========== ============= =========== ============= ========== ============ ========== ============
GNMA FUND
------------------------------------------------------
CLASS C
------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2009 MARCH 31, 2008
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
Shares sold...... 4,782,459 $ 55,469,801 1,042,164 $ 11,890,901
Reinvested
shares.......... 110,892 1,283,588 71,319 799,761
Shares
redeemed(3)(7).. (1,545,670) (17,880,557) (787,761) (8,794,849)
----------- ------------- ----------- -------------
Net
increase
(decrease)...... 3,347,681 $ 38,872,832 325,722 $ 3,895,813
=========== ============= =========== =============
STRATEGIC BOND FUND
----------------------------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------------ --------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2009 MARCH 31, 2008 MARCH 31, 2009 MARCH 31, 2008
-------------------------- -------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Shares
sold(2)(4)(6)(8) 28,181,402 $ 88,303,532 54,454,486 $ 194,890,790 2,768,121 $ 8,604,917 3,096,751 $ 11,052,278
Reinvested
shares.......... 6,911,590 20,910,397 6,083,610 21,672,951 757,346 2,245,433 501,399 1,784,869
Shares
redeemed(2)(6).. (90,064,427) (269,765,594) (47,409,808) (168,605,626) (4,525,516) (13,765,056) (3,950,315) (14,098,342)
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Net increase
(decrease)...... (54,971,435) $(160,551,665) 13,128,288 $ 47,958,115 (1,000,049) $(2,914,706) (352,165) $ (1,261,195)
=========== ============= =========== ============= ========== ============ ========== ============
STRATEGIC BOND FUND
------------------------------------------------------
CLASS C
------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2009 MARCH 31, 2008
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
Shares sold...... 20,978,989 $ 65,587,436 29,322,990 $ 105,186,765
Reinvested
shares.......... 3,188,058 9,483,900 1,920,377 6,862,329
Shares
redeemed(4)(8).. (26,879,603) (82,124,482) (15,350,229) (54,784,089)
----------- ------------- ----------- -------------
Net
increase
(decrease)...... (2,712,556) $ (7,053,146) 15,893,138 $ 57,265,005
=========== ============= =========== =============
- --------
(1)For the year ended March 31, 2008, includes automatic conversion of 200,853
shares of Class B shares in the amount of $2,222,151 to 201,376 shares of
Class A shares in the amount of $2,222,151.
(2)For the year ended March 31, 2008, includes automatic conversion of 783,363
shares of Class B shares in the amount of $2,805,179 to 783,205 shares of
Class A shares in the amount of $2,805,179.
(3)For the year ended March 31, 2008, includes automatic conversion of 4,799
shares of Class C shares in the amount of $54,501 to 4,819 shares of Class A
shares in the amount of $54,501.
(4)For the year ended March 31, 2008, includes automatic conversion of 5,731
shares of Class C shares in the amount of $20,785 to 5,762 shares of Class A
shares in the amount of $20,785.
(5)For the year ended March 31, 2009, includes automatic conversion of 194,261
shares of Class B shares in the amount of $2,260,711 to 194,763 shares of
Class A shares in the amount of $2,260,711.
(6)For the year ended March 31, 2009, includes automatic conversion of 486,542
shares of Class B shares in the amount of $1,447,732 to 486,396 shares of
Class A shares in the amount of $1,447,732.
(7)For the year ended March 31, 2009, includes automatic conversion of 2,419
shares of Class C shares in the amount of $27,243 to 2,428 shares of Class A
shares in the amount of $27,243.
(8)For the year ended March 31, 2009, includes automatic conversion of 1,926
shares of Class C shares in the amount of $5,981 to 1,934 shares of Class A
shares in the amount of $5,981.
74
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 2009 -- (continued)
HIGH YIELD BOND FUND
----------------------------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------------ --------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2009 MARCH 31, 2008 MARCH 31, 2009 MARCH 31, 2008
-------------------------- -------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Shares
sold(1)(3)(5)(7)... 22,337,994 $ 75,859,217 21,291,423 $ 98,716,860 906,056 $ 3,224,831 835,493 $ 3,802,244
Reinvested shares... 1,546,637 4,985,176 1,906,335 8,688,722 399,013 1,255,376 321,980 1,456,523
Shares
redeemed(1)(5)..... (26,686,670) (90,949,453) (47,531,258) (215,847,758) (2,955,881) (9,863,942) (3,540,260) (16,200,779)
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Net increase
(decrease)......... (2,802,039) $(10,105,060) (24,333,500) $(108,442,176) (1,650,812) $(5,383,735) (2,382,787) $(10,942,012)
=========== ============= =========== ============= ========== ============ ========== ============
HIGH YIELD BOND FUND
------------------------------------------------------
CLASS C
------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2009 MARCH 31, 2008
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
Shares sold......... 6,335,877 $ 22,432,864 3,568,020 $ 16,513,470
Reinvested shares... 708,423 2,246,671 598,038 2,714,045
Shares
redeemed(3)(7)..... (8,506,235) (29,899,515) (7,623,260) (34,517,831)
----------- ------------- ----------- -------------
Net increase
(decrease)......... (1,461,935) $ (5,219,980) (3,457,202) $ (15,290,316)
=========== ============= =========== =============
TAX EXEMPT INSURED FUND
----------------------------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------------ --------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2009 MARCH 31, 2008 MARCH 31, 2009 MARCH 31, 2008
-------------------------- -------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Shares
sold(2)(4)(6)(8)... 898,941 $ 10,737,867 314,629 $ 3,914,692 60,526 $ 732,314 42,191 $ 526,453
Reinvested shares... 80,083 971,850 101,332 1,260,224 4,261 51,727 6,362 79,132
Shares
redeemed(2)(6)..... (438,991) (5,309,371) (545,959) (6,802,151) (99,866) (1,189,974) (177,944) (2,214,363)
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Net increase
(decrease)......... 540,033 $ 6,400,346 (129,998) $ (1,627,235) (35,079) $ (405,933) (129,391) $ (1,608,778)
=========== ============= =========== ============= ========== ============ ========== ============
TAX EXEMPT INSURED FUND
------------------------------------------------------
CLASS C
------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2009 MARCH 31, 2008
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
Shares sold......... 931,608 $ 11,190,502 155,729 $ 1,935,925
Reinvested shares... 9,925 120,592 6,235 77,637
Shares
redeemed(4)(8)..... (146,791) (1,756,306) (139,213) (1,738,389)
----------- ------------- ----------- -------------
Net increase
(decrease)......... 794,742 $ 9,554,788 22,751 $ 275,173
=========== ============= =========== =============
- --------
(1)For the year ended March 31, 2008, includes automatic conversion of 640,153
shares of Class B shares in the amount of $2,976,742 to 640,228 shares of
Class A shares in the amount of $2,976,742.
(2)For the year ended March 31, 2008, includes automatic conversion of 81,330
shares of Class B shares in the amount of $1,007,811 to 81,332 shares of
Class A shares in the amount of $1,007,811.
(3)For the year ended March 31, 2008, includes automatic conversion of 48
shares of Class C shares in the amount of $218 to 49 shares of Class A
shares in the amount of $218.
(4)For the year ended March 31, 2008, includes automatic conversion of 431
shares of Class C shares in the amount of $5,299 to 432 shares of Class A
shares in the amount of $5,299.
(5)For the year ended March 31, 2009, includes automatic conversion of 503,556
shares of Class B shares in the amount of $1,482,942 to 504,345 shares of
Class A shares in the amount of $1,482,942.
(6)For the year ended March 31, 2009, includes automatic conversion of 39,126
shares of Class B shares in the amount of $479,229 to 39,169 shares of Class
A shares in the amount of $479,229.
(7)For the year ended March 31, 2009, includes automatic conversion of 157
shares of Class C shares in the amount of $638 to 157 shares of Class A
shares in the amount of $638.
(8)For the year ended March 31, 2009, includes automatic conversion of 104
shares of Class C shares in the amount of $1,284 to 104 shares of Class A
shares in the amount of $1,284.
75
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 2009 -- (continued)
NOTE 7. LINES OF CREDIT
The 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 year
ended March 31, 2009, the following Funds had borrowings:
AVERAGE WEIGHTED
DAYS INTEREST DEBT AVERAGE
FUND OUTSTANDING CHARGES UTILIZED INTEREST
- ---- ----------- -------- ---------- --------
Strategic Bond.. 75 $ 4,410 $1,393,803 1.48%
High Yield Bond. 65 13,459 3,565,038 1.73
At March 31, 2009, there were no borrowings outstanding.
NOTE 8. INTERFUND LENDING AGREEMENT
Pursuant to exemptive relief granted by the Securities and Exchange
Commission, the Funds are permitted to participate in an interfund lending
program among investment companies advised by SunAmerica or an affiliate.
The interfund lending program allows the participating funds to borrow money
from and 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 year
ended March 31, 2009 none of the Funds participated in this program.
NOTE 9. TRUSTEES RETIREMENT PLAN
The Trustees of the Trust have adopted the SunAmerica Disinterested
Trustees' and Directors' Retirement Plan (the "Retirement Plan") effective
January 1, 1993, as amended, for the unaffiliated Trustees. The Retirement
Plan provides generally that an unaffiliated Trustee may become a
participant ("Participant") in the Retirement Plan if he or she has at least
10 years of consecutive service as a Disinterested Trustee of any of the
adopting SunAmerica mutual funds (the "Adopting Funds") or has attained the
age of 60 while a Trustee and completed five (5) consecutive years of
service as a Trustee of any Adopting Fund (an "Eligible Trustee"). Pursuant
to the Retirement Plan, an Eligible Trustee may receive benefits upon (i)
his or her death or disability while a Trustee or (ii) the termination of
his or her tenure as a Trustee, other than removal for cause from each of
the Adopting Funds with respect to which he or she is an Eligible Trustee.
As of each of the first 10 birthdays after becoming a Participant and on
which he or she is both a Trustee and Participant, 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
Adopting Fund for the calendar year in which such birthday occurs. In
addition, an amount equal to 8.50% of any amounts credited under the
preceding statement during prior years is added to each Eligible Trustee's
account. The rights of any Participant to benefits under the Retirement Plan
shall be an unsecured claim against the assets of the Adopting Funds. An
Eligible Trustee may receive any benefits payable under the Retirement Plan,
at his or her election, either in one lump sum or in up to 15 annual
installments. Any undistributed amounts shall continue to accrue interest at
8.50%.
Effective December 3, 2008, the Retirement Plan was amended to, among other
things, (1) freeze the Retirement Plan as to future accruals for active
Participants as of December 31, 2008, (2) prohibit Disinterested Directors
from first becoming participants in the Retirement Plan after December 31,
2008 and (3) permit active Participants to elect to receive a distribution
of their entire Retirement Plan account balance in 2009. The freeze on
future accruals does not apply to Participants that have commenced receiving
benefits under the Retirement Plan on or before December 31, 2008.
76
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 2009 -- (continued)
The following amounts for the Retirement Plan Liabilities are included in
the Trustees' fees and expenses payable line on the Statement of Assets and
Liabilities and the amounts for the Retirement Plan Expenses are included in
the Trustees' fees and expenses line on the Statement of Operations.
RETIREMENT PLAN RETIREMENT PLAN RETIREMENT PLAN
LIABILITY EXPENSE PAYMENTS
--------------- --------------- ---------------
FUND AS OF MARCH 31, 2009
- ---- -----------------------------------------------
U.S. Government
Securities.............. $19,538 $ 4,930 $70,771
GNMA..................... 7,480 7,574 57,882
Strategic Bond........... 6,961 12,516 44,825
High Yield Bond.......... 8,274 3,590 45,619
Tax Exempt Insured....... 5,419 1,208 22,698
NOTE 10. SECURITY TRANSACTIONS WITH AFFILIATED FUNDS
The Funds are permitted to transfer securities by purchasing from and/or
selling to other affiliated funds under certain conditions approved by the
board of directors. The affiliated funds involved in such transaction must
have common investment adviser or investment advisers which are affiliated
persons of each other, common directors, and/or common officers in
compliance with Rule 17a-7 of the 1940 Act. Pursuant to the Act, such
transaction must be either a purchase or a sale, for no consideration other
than cash payment against prompt delivery of the security at the current
market price. No brokerage commission or fee (except for customary transfer
fees), or other remuneration is paid in connection with such transaction.
For the period ended March 31, 2009, the following Fund engaged in
securities transactions with affiliated Funds:
COST OF PROCEEDS REALIZED
FUND PURCHASES FROM SALES GAIN/LOSS
- ---- --------- ---------- ---------
Strategic Bond........... $6,925,846 $-- $--
NOTE 11. UNFUNDED LOAN COMMITMENTS
On March 31, 2009, the High Yield Bond Fund had the following unfunded loan
commitment which could be extended at the option of the borrower:
MATURITY
FUND NAME TYPE DATE AMOUNT
- ---- ------------------------ ----------------------- -------- -------
High Yield Bond... Greektown Holdings, LLC Delayed Draw Term Loan 11/11/09 $29,349
NOTE 12. INVESTMENT CONCENTRATION
The High Yield Bond Fund's investment in high yield securities, whether
rated or unrated, may be considered speculative and subject to greater
market fluctuations and risk of loss of income and principal than
lower-yielding, higher-rated, fixed-income securities. The risk of loss due
to default by the issuer may be significantly greater for the holders of
high yield securities, because such securities are generally unsecured and
are often subordinated to other creditors of the issuer.
The Funds may invest in obligations issued by agencies and instrumentalities
of the U.S. Government that may vary in the level of support they receive
from the government. The government may choose not to provide financial
support to government sponsored agencies or instrumentalities if it is not
legally obligated to do so. In this case, if the issuer defaulted, the fund
holding securities of such issuer might be able to recover its investment
from the U.S. Government. As a result of the U.S. Government Fund, GNMA
Fund, and Strategic Bond Fund's concentration in such investments, it may be
subject to risks associated with the U.S. Government. At the end of period,
the Funds had 36.8%, 77.1% and 21.2%, respectively, of their total net
assets invested in such securities.
77
SUNAMERICA INCOME FUNDS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of SunAmerica Income Funds:
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of each of the five
funds constituting SunAmerica Income Funds (the "Funds") at March 31, 2009, the
results of each of their operations for the year then ended, the changes in
each of their net assets for each of the two years in the period then ended and
the financial highlights for each of the five years in the period then ended,
in conformity with accounting principles generally accepted in the United
States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Funds' management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at March 31, 2009 by correspondence with the custodian and
brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Houston, Texas
May 27, 2009
78
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- March 31, 2009 -- (unaudited)
The following table contains basic information regarding the Trustees and
Officers who oversee operations of the Funds and other investment companies
within the Fund Complex.
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* THE FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
- -------------------- ----------- -------------- ----------------------------- ------------ -----------------------------
DISINTERESTED
TRUSTEES
Jeffrey S. Burum Trustee 2004- Founder and Chairman of 39 None
DOB: February 27, present the Board, National
1963 Community Renaissance
(1992-present); Founder,
Owner and Partner of
Colonies Crossroads, Inc.
(2000-present); Owner and
Managing Member of
Diversified Pacific
Development Group, LLC
(1998-present).
Dr. Judith L. Craven Trustee 2001- Retired. 88 Director, Belo Corporation
DOB: October 6, 1945 present (1992-present); Director,
Sysco Corporation (1996-
present); Director, Luby's
Inc. (1998-present).
William F. Devin Trustee 2001- Retired. 89 Director, Boston Options
DOB: December 30, present Exchange (2001-present).
1938
Samuel M. Eisenstat Chairman 1986- Attorney, solo practitioner. 49 Director, North European
DOB: March 7, 1940 of the present Oil Royal Trust.
Board
Stephen J. Gutman Trustee 1984- Vice President, Corcoran 49 None
DOB: May 10, 1943 present Group (Real Estate) (2003-
present); President and
Member of Managing
Directors, Beau Brummell
Soho LLC (licensing of
menswear specialty retailing
and other activities) (1988-
present).
William J. Shea Trustee 2004- Executive Chairman, Lucid, 49 Chairman of the Board,
DOB: February 9, present Inc., (medical technology Royal and SunAlliance Co.
1948 and information); Managing U.S.A., Inc. (2005-present);
Partner, DLB Capital, LLC Director, Boston Private
(Private Equity) (2006- Financial Holdings (2004-
present); President and present).
CEO, Conseco, Inc.
(financial services) (2001-
2004); Chairman of the
Board of Centennial
Technologies, Inc. (1998-
2001).
79
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- March 31, 2009 -- (unaudited)
(continued)
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* THE FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
- ------------------- ----------- -------------- ---------------------------- ------------ --------------------
INTERESTED TRUSTEE
Peter A. Harbeck(3) Trustee 1994- President, CEO and 97 None
DOB: January 23, present Director, SunAmerica,
1954 (1995-present); Director,
SunAmerica Capital
Services, Inc. ("SACS")
(1993-present); Chairman,
AIG Advisor Group, Inc.
(2004-present).
OFFICERS
John T. Genoy President 2007- Chief Financial Officer, N/A N/A
DOB: November 8, present SunAmerica (2002-present);
1968 Senior Vice President,
SunAmerica (2003-present);
Chief Operating Officer,
SunAmerica (2006-present).
Donna M. Handel Treasurer 2002- Senior Vice President, N/A N/A
DOB: June 25, 1966 present SunAmerica (2004-present);
Vice President, SunAmerica
(1997-2004).
Gregory N. Bressler Secretary 2005- Senior Vice President and N/A N/A
DOB: November 17, present General Counsel,
1966 SunAmerica (2005-present);
Vice President and Director
of U.S. Asset Management
Compliance, Goldman
Sachs Asset Management
L.P. (2004-2005); Deputy
General Counsel, Credit
Suisse Asset Management
(2002-2004).
80
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- March 31, 2009 -- (unaudited)
(continued)
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
- -------------------- ------------- -------------- ----------------------------- ------------ --------------------
Timothy Pettee Vice 2004- Chief Investment Officer, N/A N/A
DOB: April 7, 1958 President present SunAmerica (2003-
present).
Michael Cheah Vice 2000- Senior Vice President, N/A N/A
DOB: January 4, 1960 President present SunAmerica (1999-present).
James Nichols Vice 2006- Director, President and N/A N/A
DOB: April 7, 1966 President present CEO, SACS (2006-
present); Senior Vice
President, SACS (2002-
2006); Senior Vice
President, SunAmerica
(2002-present).
Cynthia Skrehot Chief 2002- Vice President, SunAmerica N/A N/A
DOB: December 6, Compliance present (2007-present); Chief
1967 Officer Compliance Officer,
("CCO") SunAmerica (2003-2006);
Securities Compliance
Manager, American General
Corporation (2000-2002).
Gregory R. Kingston Vice 2002- Vice President, SunAmerica N/A N/A
DOB: January 18, President present (2001-present); Vice
1966 and President, American
Assistant General Corporation (1999-
Treasurer 2001).
Nori L. Gabert Vice 2002- Vice President and Deputy N/A N/A
DOB: August 15, 1953 President present General Counsel,
and SunAmerica (2001-
Assistant present); Vice President and
Secretary Secretary, VALIC Co. I and
VALIC Co. II (2000-
present); Associate General
Counsel, American General
Corporation (1997-2001).
81
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- March 31, 2009 -- (unaudited)
(continued)
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
- -------------------- ------------- -------------- ---------------------------- ------------ --------------------
Matthew J. Hackethal Anti- 2006- Chief Compliance Officer, N/A N/A
DOB: December 31, Money present SunAmerica (2007-present);
1971 Laundering Vice President, Credit
Compliance Suisse Asset Management,
Officer LLC (2001-2006); CCO,
Credit Suisse Alternative
Funds (2005-2006); CCO,
Credit Suisse Asset
Management Securities, Inc.
(2004- 2005).
- --------
* The business address for each Trustee and Officer is Harborside Financial
Center, 3200 Plaza 5, Jersey City, NJ 07311-4992.
(1) The term "Fund Complex" means two or more registered investment companies
that hold themselves out to investors as related companies for purposes of
investment services or have a common investment adviser or an investment
adviser that is an affiliated person of the investment adviser. The "Fund
Complex" includes the Trust (5 funds), SunAmerica Equity Funds (9 funds),
SunAmerica Focused Series, Inc. (17 portfolios), SunAmerica Focused Alpha
Growth Fund, Inc. (1 fund), SunAmerica Focused Alpha Large-Cap Fund, Inc.
(1 fund), SunAmerica Money Market Funds, Inc. (2 funds); Anchor Series
Trust (9 portfolios), SunAmerica Senior Floating Rate Fund, Inc. (1 fund),
SunAmerica Series Trust (35 portfolios), VALIC Company I (33 portfolios),
VALIC Company II (15 portfolios), Seasons Series Trust (24 portfolios), AIG
Series Trust (3 portfolios), AIG Strategic Hedge Fund of Funds (1 fund) and
Brazos Mutual Funds (4 funds).
(2) Trusteeships of companies required to report to the Commission under the
Securities Exchange Act of 1934 (I.E. "public companies") or other
investment companies regulated under the 1940 Act.
(3) Mr. Harbeck is an "interested person" of the Funds, as defined within the
1940 Act, because he is an officer and a director of the Adviser and a
director of the principal underwriter of the Trust.
(4) Trustees serve until their successors are duly elected and qualified,
subject to the Trustees' retirement plan as discussed in Note 9 of the
financial statements. Each officer will hold office for an indefinite term,
until the date he or she resigns or retires or until his/her successor is
duly elected and qualifies.
Additional information concerning the Trustees and Officers is contained in the
Statement of Additional Information and is available without charge by calling
(800) 858-8850.
82
SUNAMERICA INCOME FUNDS
SHAREHOLDER TAX INFORMATION -- March 31, 2009 -- (unaudited)
Certain tax information regarding the SunAmerica Income Funds is required to be
provided to shareholders based upon each Fund's income and capital gain
distributions for the taxable year ended March 31, 2009. During the year ended
March 31, 2009 the Funds paid the following dividends per share along with the
percentage of ordinary income dividends that qualified for the 70% dividends
received deductions for corporations.
NET NET NET LONG-
TOTAL INVESTMENT SHORT-TERM TERM
DIVIDENDS INCOME CAPITAL GAINS CAPITAL GAINS
--------- ---------- ------------- -------------
U.S. Government Securities Fund Class A . . . . . . . . . . . . ................ $0.28 $0.28 $ -- $--
U.S. Government Securities Fund Class B . . . . . . . . . . . . ................ 0.21 0.21 -- --
U.S. Government Securities Fund Class C . . . . . . . . . . . . ................ 0.21 0.21 -- --
GNMA Fund Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 0.53 0.42 0.11 --
GNMA Fund Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 0.46 0.35 0.11 --
GNMA Fund Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 0.46 0.35 0.11 --
Strategic Bond Fund Class A . . . . . . . . . . . . . . . . . . . . . . . ...... 0.27 0.27 -- --
Strategic Bond Fund Class B . . . . . . . . . . . . . . . . . . . . . . . ...... 0.25 0.25 -- --
Strategic Bond Fund Class C . . . . . . . . . . . . . . . . . . . . . . . ...... 0.25 0.25 -- --
High Yield Bond Fund Class A . . . . . . . . . . . . . . . . . . . . . . ....... 0.33 0.33 -- --
High Yield Bond Fund Class B . . . . . . . . . . . . . . . . . . . . . . ....... 0.31 0.31 -- --
High Yield Bond Fund Class C . . . . . . . . . . . . . . . . . . . . . . ....... 0.31 0.31 -- --
Tax-Exempt Insured Fund Class A . . . . . . . . . . . . . . . . . . ............ 0.42 0.42* -- --
Tax-Exempt Insured Fund Class B . . . . . . . . . . . . . . . . . . ............ 0.31 0.31* -- --
Tax-Exempt Insured Fund Class C . . . . . . . . . . . . . . . . . . ............ 0.34 0.34* -- --
QUALIFYING % FOR THE
70% DIVIDENDS
RECEIVED DEDUCTION
--------------------
U.S. Government Securities Fund Class A . . . . . . . . . . . . ................ --%
U.S. Government Securities Fund Class B . . . . . . . . . . . . ................ --
U.S. Government Securities Fund Class C . . . . . . . . . . . . ................ --
GNMA Fund Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. --
GNMA Fund Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. --
GNMA Fund Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... --
Strategic Bond Fund Class A . . . . . . . . . . . . . . . . . . . . . . . ...... 0.53
Strategic Bond Fund Class B . . . . . . . . . . . . . . . . . . . . . . . ...... 0.53
Strategic Bond Fund Class C . . . . . . . . . . . . . . . . . . . . . . . ...... 0.53
High Yield Bond Fund Class A . . . . . . . . . . . . . . . . . . . . . . ....... 2.26
High Yield Bond Fund Class B . . . . . . . . . . . . . . . . . . . . . . ....... 2.26
High Yield Bond Fund Class C . . . . . . . . . . . . . . . . . . . . . . ....... 2.26
Tax-Exempt Insured Fund Class A . . . . . . . . . . . . . . . . . . ............ --
Tax-Exempt Insured Fund Class B . . . . . . . . . . . . . . . . . . ............ --
Tax-Exempt Insured Fund Class C . . . . . . . . . . . . . . . . . . ............ --
- --------
* Tax exempt interest dividends
For the year ended March 31, 2009, certain dividends paid by the Strategic Bond
Fund and High Yield Bond Fund may be subject to a maximum tax rate of 15%, as
provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the
distributions paid during the fiscal year, the following represents the maximum
amount that may be considered qualified dividend income:
PORTFOLIO AMOUNT
--------- -------
Strategic Bond Fund.. 252,818
High Yield Bond Fund. 348,099
83
(THIS PAGE INTENTIONALLY LEFT BLANK)
84
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED)
The following graphs compare the performance of a $10,000 investment in the
SunAmerica Income Funds' portfolios to a similar investment in an index. Please
note that "inception", as used herein, reflects the date on which a specific
class of shares commenced operations. It is important to note that the
SunAmerica Income Funds are professionally managed mutual funds, while the
indices are not available for investment and are unmanaged. The comparison is
shown for illustrative purposes only. The graphs present the performance of the
largest class of that particular Fund. The performance of the other classes
will vary based upon the difference in sales charges and fees assessed to
shareholders of that class.
85
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (unaudited) (continued)
THE SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
The SunAmerica U.S. Government Securities Fund Class A returned 6.52% (before
maximum sales charge) for the fiscal year ended March 31, 2009. The Fund
underperformed its benchmark, the Barclays Capital U.S. Government Index*,
which returned 6.95% over the annual period.
The Fund performed well but lagged the benchmark as the manager invested
cautiously in the interest of managing risk and maintaining a healthy cash
position to stay liquid for potential investment opportunities. Cash yields
have been low given declining interest rates.
The unquestioned emphasis of the twelve-month period was the credit crunch that
began in August. The deterioration in the housing market created concerns
regarding the subprime mortgage market. Fear spread throughout the credit
markets and created great uncertainty as the era of seemingly endless liquidity
came to an end. Banks tightened lending standards and investors migrated to
short-term Treasury securities, thereby reducing yields. The period also was
marked by rising oil prices and a declining dollar which raised the specter of
inflation in some circles. As the equity markets sold off and the credit
markets were functioning inefficiently, the state of the economy hung in the
balance.
During the second half of the annual period, the U.S. economy continued to
struggle under the weight of a protracted decline in housing prices and a weak
labor market. At the same time, personal income and consumption declined
further as worries about the financial crisis deepened.
In response to these economic conditions, the Federal Open Market Committee
lowered the Federal Funds target rate from 2.25% to a range of 0.00-0.25% over
the fiscal period. As of March 31, 2009, the 10-year Treasury note closed at
2.67%, 75 basis points lower than the level a year ago. In general, easier
monetary policy amidst weakening economic data led to a drop in mortgage rates
and treasury yields.
The Fund was well-positioned for the decline in interest rates as it held an
average duration that was longer than the benchmark. This positioning was a
contributor to fund performance. The Fund ended the annual period with a
duration that was 10 months longer than its benchmark.
The Fund continued to benefit from a strategy of holding a minimal amount of
Freddie Mac and Fannie Mae securities. This positioning contributed to fund
performance as the market became increasingly concerned with the credit risks
of government-sponsored enterprises. In aggregate, the portfolio held no
Freddie Mac or Fannie Mae securities at the end of the fiscal period.
- --------
Past performance is no guarantee of future results.
U.S. Government guarantee applies only to the underlying securities of the
Fund's portfolio and not to the Fund shares.
* The Barclays Capital U.S. Government Index is a broad market value-weighted
index of U.S. Treasury securities with maturities of one year or more,
securities issued by U.S. Government agencies and quasi-federal corporations,
and corporate or foreign debt guaranteed by the U.S. Government. Indices are
not managed and an investor cannot invest directly into an index. (Effective
November 14, 2008, the Index formerly known as The Lehman Brothers U.S.
Government Index became known as the Barclays Capital U.S. Government Index.)
Securities listed may or may not be a part of current Fund construction.
86
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (unaudited) (continued)
Over the past ten years, $10,000 invested in U.S. Government Securities Fund
Class A shares would have increased to $16,572. The same amount invested in
securities mirroring the performance of the Barclays Capital U.S. Government
Index would be valued at $18,268.
[CHART]
U.S. Government
Securities Barclays Capital
Class A U.S. Government Index**
------------------ ----------------
3/31/1999 $9,526 $10,000
4/30/1999 9,554 10,023
5/31/1999 9,472 9,935
6/30/1999 9,399 9,915
7/31/1999 9,380 9,900
8/31/1999 9,419 9,900
9/30/1999 9,501 9,980
10/31/1999 9,528 9,996
11/30/1999 9,522 9,983
12/31/1999 9,511 9,918
1/31/2000 9,439 9,932
2/29/2000 9,514 10,073
3/31/2000 9,611 10,250
4/30/2000 9,619 10,222
5/31/2000 9,624 10,228
6/30/2000 9,770 10,411
7/31/2000 9,837 10,512
8/31/2000 9,961 10,667
9/30/2000 10,039 10,697
10/31/2000 10,158 10,800
11/30/2000 10,337 11,012
12/31/2000 10,611 11,231
1/31/2001 10,677 11,345
2/28/2001 10,773 11,474
3/31/2001 10,868 11,514
4/30/2001 10,762 11,397
5/31/2001 10,780 11,434
6/30/2001 10,857 11,487
7/31/2001 11,124 11,763
8/31/2001 11,241 11,908
9/30/2001 11,433 12,116
10/31/2001 11,650 12,428
11/30/2001 11,372 12,150
12/31/2001 11,227 12,044
1/31/2002 11,335 12,122
2/28/2002 11,481 12,234
3/31/2002 11,242 11,968
4/30/2002 11,525 12,253
5/31/2002 11,620 12,327
6/30/2002 11,792 12,499
7/31/2002 12,017 12,774
8/31/2002 12,255 13,027
9/30/2002 12,546 13,332
10/31/2002 12,526 13,225
11/30/2002 12,451 13,111
12/31/2002 12,722 13,429
1/31/2003 12,699 13,395
2/28/2003 12,867 13,611
3/31/2003 12,830 13,572
4/30/2003 12,879 13,635
5/31/2003 13,197 13,989
6/30/2003 13,112 13,916
7/31/2003 12,389 13,341
8/31/2003 12,510 13,415
9/30/2003 12,954 13,805
10/31/2003 12,765 13,609
11/30/2003 12,778 13,624
12/31/2003 12,895 13,745
1/31/2004 13,009 13,859
2/29/2004 13,152 14,025
3/31/2004 13,252 14,148
4/30/2004 12,821 13,723
5/31/2004 12,768 13,672
6/30/2004 12,850 13,727
7/31/2004 12,973 13,855
8/31/2004 13,219 14,125
9/30/2004 13,240 14,154
10/31/2004 13,347 14,266
11/30/2004 13,241 14,097
12/31/2004 13,347 14,223
1/31/2005 13,454 14,312
2/28/2005 13,390 14,211
3/31/2005 13,334 14,164
4/30/2005 13,577 14,391
5/31/2005 13,693 14,558
6/30/2005 13,733 14,640
7/31/2005 13,585 14,463
8/31/2005 13,785 14,676
9/30/2005 13,610 14,503
10/31/2005 13,463 14,401
11/30/2005 13,525 14,466
12/31/2005 13,706 14,600
1/31/2006 13,697 14,575
2/28/2006 13,728 14,598
3/31/2006 13,557 14,467
4/30/2006 13,456 14,427
5/31/2006 13,430 14,429
6/30/2006 13,462 14,470
7/31/2006 13,647 14,642
8/31/2006 13,862 14,849
9/30/2006 13,986 14,981
10/31/2006 14,067 15,060
11/30/2006 14,222 15,213
12/31/2006 14,105 15,108
1/31/2007 14,063 15,089
2/28/2007 14,309 15,321
3/31/2007 14,269 15,325
4/30/2007 14,334 15,402
5/31/2007 14,183 15,280
6/30/2007 14,108 15,274
7/31/2007 14,301 15,492
8/31/2007 14,478 15,726
9/30/2007 14,556 15,825
10/31/2007 14,675 15,941
11/30/2007 15,058 16,379
12/31/2007 15,058 16,416
1/31/2008 15,361 16,809
2/29/2008 15,450 16,968
3/31/2008 15,525 17,080
4/30/2008 15,325 16,840
5/31/2008 15,109 16,656
6/30/2008 15,215 16,753
7/31/2008 15,226 16,827
8/31/2008 15,448 16,998
9/30/2008 15,570 17,075
10/31/2008 15,463 17,028
11/30/2008 16,253 17,835
12/31/2008 16,793 18,450
1/31/2009 16,329 17,991
2/28/2009 16,242 17,942
3/31/2009 16,572 18,268
U.S. GOVERNMENT SECURITIES FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
- ----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return 1.49% 6.52% 1.83% 5.83% 4.83% 5.83%
- --------------------------------------------------------------------------
5 Year Return 3.56% 25.05% 3.53% 20.94% 3.88% 20.94%
- --------------------------------------------------------------------------
10 Year Return 5.18% 73.96% 5.15% 65.17% NA NA
- --------------------------------------------------------------------------
Since Inception* 5.35% 135.26% 6.07% 289.39% 5.17% 64.12%
- --------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 10/1/93; Class B: 03/3/86; Class C: 06/1/99.
# For the purpose of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price, was deducted from the initial $10,000
investment in the Fund.
For the 12-month period ending March 31, 2009, the SunAmerica U.S. Government
Securities Fund Class A returned 1.49%, compared to 6.95% for the Barclays
Capital U.S. Government Index. (The performance table and graph do not reflect
the deduction of taxes that a shareholder would pay on fund distributions or
the redemption of fund shares.)
- --------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. MAXIMUM SALES CHARGE: CLASS A: 4.75%, CLASS B: 4.00% CONTINGENT
DEFERRED SALES CHARGE (CDSC), CLASS C: 1.00% CDSC. CLASS B SHARES OF THE FUND
CONVERT AUTOMATICALLY TO CLASS A SHARES APPROXIMATELY EIGHT YEARS AFTER
PURCHASE. THE FUND'S DAILY NET ASSET VALUES ARE NOT GUARANTEED AND SHARES ARE
NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE HIGHER OR LOWER THAN THE ORIGINAL
COST. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THAT SHOWN. PERFORMANCE
AS OF THE MOST RECENT MONTH END IS AVAILABLE AT WWW.SUNAMERICAFUNDS.COM.
** The Barclays Capital U.S. Government Index is a broad market value-weighted
index of U.S. Treasury securities with maturities of one year or more,
securities issued by U.S. Government agencies and quasi-federal
corporations, and corporate or foreign debt guaranteed by the U.S.
Government. Indicies are not managed and an investor cannot invest directly
into an index. (Effective November 14, 2008, the Index formerly known as The
Lehman Brothers U.S. Government Index became known as the Barclays Capital
U.S. Government Index.)
87
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (unaudited) (continued)
SUNAMERICA GNMA FUND
The SunAmerica GNMA Fund Class A returned 6.98% (before maximum sales charge)
for the fiscal year ended March 31, 2009. The Fund underperformed its
benchmark, the Citigroup Mortgage GNMA Index*, which returned 7.41% over the
annual period.
The Fund performed well but lagged the benchmark in the interest of attempting
to manage risk in the current economic environment. Accordingly, the Fund
maintained a higher cash position than usual even though cash yields have been
low given the declining interest rate environment. The portfolio manager also
maintained a cash reserve to stay liquid for forthcoming potential investment
opportunities.
The U.S. economy continues to struggle under the weight of a protracted decline
in housing prices, a weak labor market and tighter credit conditions. At the
same time, personal income and consumption declined further as worries about
the global financial crisis deepened. As the fiscal period progressed, U.S.
business activity continued to rapidly decline and the economy continued to
deteriorate.
In response to these economic conditions, the Federal Open Market Committee
lowered the Federal Funds target rate from 2.25% to a range of 0.00-0.25% over
the fiscal period. As of March 31, 2009, the 10-year Treasury note closed at
2.67%, 75 basis points lower than the level one year ago. In general, easier
monetary policy amidst weakening economic data led to a drop in mortgage rates
and treasury yields.
Contributors to the Fund's performance were its strategy of holding minimal
Freddie Mac and Fannie Mae securities and the relatively long duration of the
portfolio as compared to the benchmark. As the financial markets worsened, the
credit risks of government-sponsored entities became a major concern. In
aggregate, the portfolio held no Freddie Mac or Fannie Mae securities at the
end of the annual period. The Fund's duration, which was longer than the
benchmark, also contributed to Fund performance.
- --------
Past performance is no guarantee of future results.
U.S. Government guarantee applies only to the underlying securities of the
Fund's portfolio and not to the Fund shares.
* The Citigroup Mortgage GNMA Index is a market capitalization-weighted index
of 15- and 30-year fixed-rate securities backed by mortgage pools of the
Government National Mortgage Association (GNMA). Indices are not managed and
an investor cannot invest directly into an index.
Securities listed may or may not be a part of current Fund construction.
88
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (unaudited) (continued)
Over the past ten years, $10,000 invested in GNMA Fund Class A shares would
have increased to $16,941. The same amount invested in securities mirroring the
performance of the Citigroup Mortgage GNMA Index would be valued at $18,098.
[CHART]
Citigroup Mortgage
GNMA Class A GNMA Index**
------------- ------------------
3/31/1999 $ 9,527 $10,000
4/30/1999 9,556 10,050
5/31/1999 9,477 10,001
6/30/1999 9,415 9,964
7/31/1999 9,405 9,897
8/31/1999 9,416 9,890
9/30/1999 9,526 10,060
10/31/1999 9,573 10,113
11/30/1999 9,596 10,119
12/31/1999 9,602 10,091
1/31/2000 9,510 10,012
2/29/2000 9,605 10,138
3/31/2000 9,755 10,295
4/30/2000 9,751 10,285
5/31/2000 9,802 10,331
6/30/2000 9,959 10,521
7/31/2000 10,006 10,573
8/31/2000 10,147 10,730
9/30/2000 10,242 10,838
10/31/2000 10,315 10,916
11/30/2000 10,467 11,068
12/31/2000 10,681 11,222
1/31/2001 10,842 11,405
2/28/2001 10,955 11,459
3/31/2001 11,035 11,524
4/30/2001 10,988 11,549
5/31/2001 11,022 11,642
6/30/2001 11,056 11,666
7/31/2001 11,373 11,876
8/31/2001 11,468 11,964
9/30/2001 11,682 12,126
10/31/2001 11,910 12,283
11/30/2001 11,607 12,180
12/31/2001 11,481 12,148
1/31/2002 11,606 12,279
2/28/2002 11,791 12,396
3/31/2002 11,547 12,281
4/30/2002 11,840 12,492
5/31/2002 11,919 12,579
6/30/2002 12,060 12,674
7/31/2002 12,247 12,816
8/31/2002 12,409 12,921
9/30/2002 12,603 13,030
10/31/2002 12,642 13,070
11/30/2002 12,622 13,076
12/31/2002 12,804 13,207
1/31/2003 12,834 13,248
2/28/2003 12,961 13,320
3/31/2003 12,965 13,316
4/30/2003 13,034 13,347
5/31/2003 13,217 13,355
6/30/2003 13,188 13,393
7/31/2003 12,484 13,181
8/31/2003 12,638 13,259
9/30/2003 13,063 13,463
10/31/2003 12,934 13,433
11/30/2003 12,921 13,486
12/31/2003 13,076 13,605
1/31/2004 13,179 13,672
2/29/2004 13,285 13,763
3/31/2004 13,362 13,820
4/30/2004 13,013 13,603
5/31/2004 12,964 13,566
6/30/2004 13,076 13,690
7/31/2004 13,216 13,807
8/31/2004 13,423 14,017
9/30/2004 13,437 14,045
10/31/2004 13,546 14,162
11/30/2004 13,501 14,124
12/31/2004 13,591 14,227
1/31/2005 13,671 14,314
2/28/2005 13,594 14,267
3/31/2005 13,550 14,229
4/30/2005 13,700 14,378
5/31/2005 13,786 14,485
6/30/2005 13,823 14,532
7/31/2005 13,762 14,485
8/31/2005 13,886 14,606
9/30/2005 13,792 14,542
10/31/2005 13,710 14,473
11/30/2005 13,740 14,509
12/31/2005 13,900 14,702
1/31/2006 13,933 14,743
2/28/2006 13,950 14,775
3/31/2006 13,846 14,672
4/30/2006 13,778 14,619
5/31/2006 13,726 14,582
6/30/2006 13,737 14,588
7/31/2006 13,928 14,797
8/31/2006 14,121 15,040
9/30/2006 14,224 15,129
10/31/2006 14,317 15,239
11/30/2006 14,433 15,388
12/31/2006 14,397 15,367
1/31/2007 14,373 15,367
2/28/2007 14,580 15,559
3/31/2007 14,570 15,588
4/30/2007 14,637 15,665
5/31/2007 14,521 15,579
6/30/2007 14,429 15,483
7/31/2007 14,578 15,610
8/31/2007 14,754 15,804
9/30/2007 14,858 15,936
10/31/2007 15,026 16,099
11/30/2007 15,378 16,421
12/31/2007 15,393 16,442
1/31/2008 15,640 16,724
2/29/2008 15,771 16,807
3/31/2008 15,836 16,849
4/30/2008 15,734 16,831
5/31/2008 15,536 16,739
6/30/2008 15,613 16,748
7/31/2008 15,607 16,742
8/31/2008 15,797 16,924
9/30/2008 15,930 17,040
10/31/2008 15,739 16,795
11/30/2008 16,418 17,416
12/31/2008 16,729 17,724
1/31/2009 16,614 17,716
2/28/2009 16,691 17,822
3/31/2009 16,941 18,098
GNMA FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
- ----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return 1.94% 6.98% 2.28% 6.28% 5.27% 6.27%
- --------------------------------------------------------------------------
5 Year Return 3.84% 26.78% 3.84% 22.73% 4.18% 22.72%
- --------------------------------------------------------------------------
10 Year Return 5.41% 77.82% 5.22% 66.39% NA NA
- --------------------------------------------------------------------------
Since Inception* 5.91% 155.38% 7.38% 534.19% 5.43% 68.11%
- --------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 10/11/93; Class B: 04/25/83; Class C: 06/1/99.
# For the purpose of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering, was deducted from the initial $10,000
investment in the Fund.
For the 12-month period ending March 31, 2009, the SunAmerica GNMA Fund Class A
returned 1.94%, compared to 7.41% for the Citigroup Mortgage GNMA Index. (The
performance table and graph do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.)
- --------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. MAXIMUM SALES CHARGE: CLASS A: 4.75%, CLASS B: 4.00% CONTINGENT
DEFERRED SALES CHARGE (CDSC), CLASS C: 1.00% CDSC. CLASS B SHARES OF THE FUND
CONVERT AUTOMATICALLY TO CLASS A SHARES APPROXIMATELY EIGHT YEARS AFTER
PURCHASE. THE FUND'S DAILY NET ASSET VALUES ARE NOT GUARANTEED AND SHARES ARE
NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE HIGHER OR LOWER THAN THE ORIGINAL
COST. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THAT SHOWN. PERFORMANCE
AS OF THE MOST RECENT MONTH END IS AVAILABLE AT WWW.SUNAMERICAFUNDS.COM.
**The Citigroup Mortgage GNMA Index is a market capitalization-weighted index
of 15- and 30-year fixed-rate securities backed by mortgage pools of the
Government National Mortgage Association (GNMA). Indices are not managed and
an investor cannot invest directly into an index.
89
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (unaudited) (continued)
THE SUNAMERICA STRATEGIC BOND FUND
The SunAmerica Strategic Bond Fund Class A returned -14.67% (before maximum
sales charge) for the fiscal year ended March 31, 2009. The Fund underperformed
its benchmark, the Barclays Capital U.S. Aggregate Bond Index*, which returned
3.13% over the fiscal year.
Credit markets, both domestic and globally, were negatively impacted by the
large leverage unwind and deteriorating economic conditions experienced
globally in 2008. The Fund's exposure to corporate debt in the Bank and Finance
sectors was one of the largest detractors from performance following the
bankruptcy of Lehman Brothers and increased fears related to the broader
financial system. As the fourth quarter of 2008 progressed, corporate exposure
in the industrial sector also detracted from performance as concern shifted
away from financials and toward the overall economy. Furthermore, exposure to
lower rated credits in the High Yield markets weighed heavily on performance.
Currency movements, notably the decline in the value of the Australian dollar,
negatively impacted performance. In addition, exposure to CMBS and ABS within
the securitized portion of the portfolio negatively impacted the portfolio as
the housing and consumer markets remained under pressure.
Specific securities that detracted from performance within the High Yield
market were issued by Aleris International and Tronox Worldwide, which both
filed for bankruptcy. Within the High Grade Credit portion of the Fund, several
positions in Lehman Brothers Holdings contributed to underperformance following
the firm's bankruptcy filing. International exposure to Ecuador and the Ukraine
detracted from performance as concern over economic weakness in Emerging
Markets mounted.
The Fund's holdings of Ford Motor Credit 2/01/11, GMAC Sr. Note 12/15/11 and
FNMA 5/25/38 were positive contributors to performance. In addition, the
higher-yielding positioning of the portfolio was a positive contributor in this
challenging market. The Fund's positioning in longer duration, higher quality
securities in the investment-grade sleeve also benefited the Fund as interest
rates declined.
- --------
Past performance is no guarantee of future results.
Interest rates and bond prices typically move inversely to each other;
therefore, as with any bond fund, the value of an investment in this Fund may
go up or down in response to changes in interest rates.
* The Barclays Capital U.S. Aggregate Bond Index represents securities that
are SEC-registered, taxable and dollar denominated. The index covers the
U.S. investment-grade fixed-rate bond market, with index components for
government and corporate securities, mortgage pass-through securities and
asset-backed securities. Indices are not managed and an investor cannot
invest directly into an index. (Effective November 14, 2008, the Index
formerly known as The Lehman Brothers U.S. Aggregate Bond Index became known
as the Barclays Capital U.S. Aggregate Bond Index.)
Securities listed may or may not be a part of current Fund construction.
90
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (unaudited) (continued)
Over the past ten years, $10,000 invested in Strategic Bond Fund Class A shares
would have increased to $15,116. The same amount invested in securities
mirroring the performance of the Barclays Capital U.S. Aggregate Bond Index
would be valued at $17,402.
[CHART]
Strategic Bond Fund Barclays Capital U.S.
Class A Aggregate Bond Index+
------------------- ---------------------
3/31/1999 $ 9,521 $10,000
4/30/1999 9,701 10,032
5/31/1999 9,488 9,944
6/30/1999 9,458 9,912
7/31/1999 9,406 9,870
8/31/1999 9,300 9,865
9/30/1999 9,392 9,980
10/31/1999 9,408 10,017
11/30/1999 9,523 10,016
12/31/1999 9,599 9,968
1/31/2000 9,592 9,935
2/29/2000 9,665 10,055
3/31/2000 9,727 10,188
4/30/2000 9,589 10,158
5/31/2000 9,521 10,153
6/30/2000 9,747 10,364
7/31/2000 9,885 10,459
8/31/2000 10,061 10,610
9/30/2000 10,013 10,677
10/31/2000 9,793 10,748
11/30/2000 9,644 10,924
12/31/2000 9,906 11,127
1/31/2001 10,300 11,308
2/28/2001 10,367 11,407
3/31/2001 10,230 11,464
4/30/2001 10,101 11,416
5/31/2001 10,206 11,484
6/30/2001 10,195 11,528
7/31/2001 10,262 11,786
8/31/2001 10,438 11,921
9/30/2001 10,185 12,060
10/31/2001 10,427 12,312
11/30/2001 10,586 12,142
12/31/2001 10,546 12,065
1/31/2002 10,625 12,162
2/28/2002 10,687 12,280
3/31/2002 10,683 12,076
4/30/2002 10,886 12,310
5/31/2002 10,838 12,415
6/30/2002 10,571 12,522
7/31/2002 10,370 12,673
8/31/2002 10,639 12,887
9/30/2002 10,614 13,096
10/31/2002 10,701 13,036
11/30/2002 10,935 13,033
12/31/2002 11,182 13,302
1/31/2003 11,356 13,313
2/28/2003 11,553 13,498
3/31/2003 11,652 13,487
4/30/2003 12,096 13,599
5/31/2003 12,471 13,852
6/30/2003 12,576 13,825
7/31/2003 12,259 13,360
8/31/2003 12,443 13,448
9/30/2003 12,861 13,804
10/31/2003 12,932 13,676
11/30/2003 13,119 13,708
12/31/2003 13,464 13,848
1/31/2004 13,693 13,959
2/29/2004 13,679 14,110
3/31/2004 13,754 14,216
4/30/2004 13,460 13,846
5/31/2004 13,285 13,791
6/30/2004 13,521 13,869
7/31/2004 13,680 14,006
8/31/2004 13,965 14,273
9/30/2004 14,174 14,312
10/31/2004 14,426 14,432
11/30/2004 14,719 14,317
12/31/2004 15,126 14,449
1/31/2005 15,159 14,539
2/28/2005 15,287 14,454
3/31/2005 14,999 14,379
4/30/2005 15,066 14,574
5/31/2005 15,221 14,732
6/30/2005 15,415 14,812
7/31/2005 15,480 14,677
8/31/2005 15,718 14,865
9/30/2005 15,696 14,712
10/31/2005 15,496 14,596
11/30/2005 15,607 14,660
12/31/2005 15,817 14,800
1/31/2006 16,032 14,801
2/28/2006 16,137 14,850
3/31/2006 16,025 14,704
4/30/2006 16,139 14,677
5/31/2006 15,936 14,662
6/30/2006 15,911 14,693
7/31/2006 16,258 14,891
8/31/2006 16,515 15,119
9/30/2006 16,584 15,252
10/31/2006 16,791 15,353
11/30/2006 17,045 15,531
12/31/2006 17,070 15,441
1/31/2007 17,044 15,435
2/28/2007 17,249 15,673
3/31/2007 17,318 15,673
4/30/2007 17,482 15,758
5/31/2007 17,458 15,638
6/30/2007 17,288 15,592
7/31/2007 17,070 15,722
8/31/2007 17,144 15,915
9/30/2007 17,551 16,035
10/31/2007 17,835 16,180
11/30/2007 17,664 16,470
12/31/2007 17,737 16,517
1/31/2008 17,716 16,794
2/29/2008 17,688 16,818
3/31/2008 17,716 16,875
4/30/2008 17,948 16,840
5/31/2008 17,929 16,716
6/30/2008 17,705 16,703
7/31/2008 17,588 16,689
8/31/2008 17,577 16,847
9/30/2008 16,626 16,621
10/31/2008 14,677 16,229
11/30/2008 14,394 16,757
12/31/2008 14,965 17,382
1/31/2009 15,111 17,229
2/28/2009 14,917 17,164
3/31/2009 15,116 17,402
STRATEGIC BOND FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
- ----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -18.63% -14.67% -18.37% -15.25% -15.94% -15.16%
- --------------------------------------------------------------------------
5 Year Return 0.92% 9.90% 0.93% 6.32% 1.20% 6.15%
- --------------------------------------------------------------------------
10 Year Return 4.22% 58.77% 4.15% 50.19% 4.07% 49.00%
- --------------------------------------------------------------------------
Since Inception* 5.18% 128.68% 5.62% 126.96% 5.33% 117.98%
- --------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 11/1/93; Class B: 04/1/94; Class C: 04/1/94.
# For the purposes of the graph, it has been assumed that the maximum sales
charge, of 4.75% of offering price, was deducted from the initial $10,000
investment in the Fund.
For the 12-month period ending March 31, 2009, the SunAmerica Strategic Bond
Fund Class A returned -18.63%, compared to 3.13% for the Barclays Capital U.S.
Aggregate Bond Index. (The performance table and graph do not reflect the
deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares.)
- --------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. MAXIMUM SALES CHARGE: CLASS A: 4.75%, CLASS B: 4.00% CONTINGENT
DEFERRED SALES CHARGE (CDSC), CLASS C: 1.00% CDSC. CLASS B SHARES OF THE FUND
CONVERT AUTOMATICALLY TO CLASS A SHARES APPROXIMATELY EIGHT YEARS AFTER
PURCHASE. THE FUND'S DAILY NET ASSET VALUES ARE NOT GUARANTEED AND SHARES ARE
NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE HIGHER OR LOWER THAN THE ORIGINAL
COST. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THAT SHOWN. PERFORMANCE
AS OF THE MOST RECENT MONTH END IS AVAILABLE AT WWW.SUNAMERICAFUNDS.COM.
+ The Barclays Capital U.S. Aggregate Bond Index represents securities that
are SEC-registered, taxable and dollar denominated. The index covers the
U.S. investment-grade fixed-rate bond market, with index components for
government and corporate securities, mortgage pass-through securities and
asset-backed securities. Indices are not managed and an investor cannot
invest directly into an index. (Effective November 14, 2008, the Index
formerly known as The Lehman Brothers U.S. Aggregate Bond Index became known
as the Barclays Capital U.S. Aggregate Bond Index.)
91
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (unaudited) (continued)
THE SUNAMERICA HIGH YIELD BOND FUND
The SunAmerica High Yield Bond Fund Class A returned -32.66% (before maximum
sales charge) for the fiscal year ended March 31, 2009. The Fund underperformed
its benchmark, the Citigroup High Yield Market Index*, which returned -19.88%
over the annual period.
The high yield market posted one of its worst years in the history of high
yield bonds as macroeconomics statistics have deteriorated with jobless claims,
consumer spending and consumer confidence all moving sharply to the downside.
The majority of the losses for the period came in the fourth quarter of 2008 as
the Fund was down 27.89% during this period. Financial failures ignited the
massive sell-off within the market. Bank lending was largely constrained and
consumer retrenching continued over the period.
During the fiscal year, spreads widened 862 basis points. In addition, spreads
reached record highs in December, but have tightened 318 basis points since
December 31/st/, as recent actions taken by the government to jump-start the
economy have provided a boost to the high yield market.
Sector selection was the primary positive contributor to performance for the
period. The most notable sectors were pharmaceuticals, healthcare services and
publishing. The Fund's overweight positions within pharmaceuticals and
healthcare services contributed to the portfolio's performance as these sectors
outperformed relative to the index. In addition, the underweight position
within the publishing sector contributed to performance as this sector
underperformed relative to the index for the period. The Fund's return was
negatively impacted by its underweight position within finance. A large portion
of the negative performance in finance was related to our underweight in GMAC
as the Fed approved the company's application for bank holding status and the
Treasury followed-up with a $6 billion preferred investment in the company.
Security selection was the primary contributor to the Fund's underperformance
versus the index for the period. Detractors from performance in the period were
the Fund's holdings in Exco Resources Inc. and Huntsman International LLC
within the secondary oil & gas producers and chemicals sectors, respectively. A
notable positive contributor to performance in the period was the execution of
a short position in the funded Dow Jones CDX high yield index product to hedge
the portfolio during the decline.
- --------
Past performance is no guarantee of future results.
High-yield bonds tend to have lower interest-rate risk than higher-quality
bonds of similar maturity but carry greater credit and default risk.
Interest rates and bond prices typically move inversely to each other:
therefore, as with any bond fund, the value of an investment in this Fund may
go up or down in response to changes in interest rates.
* The Citigroup High Yield Market Index is a broad-based, unmanaged index of
high-yield securities. Indices are not managed and an investor cannot invest
directly into an index.
Securities listed may or may not be a part of current Fund construction.
92
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (unaudited) (continued)
Since inception*, $10,000 invested in High Yield Bond Fund Class A shares would
have increased to $10,089. The same amount invested in securities mirroring the
performance of the Citigroup High Yield Market Index would be valued at $12,842.
[CHART]
High Yield Bond Fund Citigroup High
Class A Yield Market Index+
-------------------- -------------------
3/31/1999 $ 9,522 $10,000
4/30/1999 9,789 10,209
5/31/1999 9,564 10,049
6/30/1999 9,540 10,027
7/31/1999 9,584 10,048
8/31/1999 9,455 9,929
9/30/1999 9,396 9,854
10/31/1999 9,277 9,787
11/30/1999 9,437 9,940
12/31/1999 9,538 10,023
1/31/2000 9,450 9,941
2/29/2000 9,452 9,964
3/31/2000 9,247 9,761
4/30/2000 9,319 9,800
5/31/2000 9,262 9,664
6/30/2000 9,428 9,881
7/31/2000 9,471 9,988
8/31/2000 9,656 10,063
9/30/2000 9,565 9,955
10/31/2000 9,280 9,660
11/30/2000 8,785 9,265
12/31/2000 8,910 9,454
1/31/2001 9,544 10,091
2/28/2001 9,671 10,212
3/31/2001 9,406 10,026
4/30/2001 9,218 9,879
5/31/2001 9,349 10,037
6/30/2001 9,134 9,761
7/31/2001 9,172 9,945
8/31/2001 9,291 10,081
9/30/2001 8,900 9,355
10/31/2001 9,078 9,666
11/30/2001 9,287 10,033
12/31/2001 9,227 9,969
1/31/2002 9,217 10,011
2/28/2002 9,044 9,903
3/31/2002 9,230 10,166
4/30/2002 9,318 10,333
5/31/2002 9,162 10,204
6/30/2002 8,479 9,306
7/31/2002 8,114 8,885
8/31/2002 8,159 9,223
9/30/2002 8,061 9,042
10/31/2002 7,984 9,011
11/30/2002 8,427 9,698
12/31/2002 8,527 9,817
1/31/2003 8,768 10,182
2/28/2003 8,832 10,318
3/31/2003 9,003 10,666
4/30/2003 9,538 11,329
5/31/2003 9,709 11,404
6/30/2003 10,031 11,758
7/31/2003 9,979 11,584
8/31/2003 10,104 11,703
9/30/2003 10,459 12,050
10/31/2003 10,641 12,330
11/30/2003 10,822 12,502
12/31/2003 11,183 12,822
1/31/2004 11,563 13,044
2/29/2004 11,416 12,973
3/31/2004 11,349 13,054
4/30/2004 11,370 13,010
5/31/2004 11,178 12,784
6/30/2004 11,483 12,975
7/31/2004 11,566 13,142
8/31/2004 11,700 13,382
9/30/2004 11,862 13,564
10/31/2004 12,139 13,845
11/30/2004 12,572 14,004
12/31/2004 12,948 14,206
1/31/2005 13,023 14,186
2/28/2005 13,251 14,399
3/31/2005 12,854 13,995
4/30/2005 12,642 13,802
5/31/2005 12,893 14,086
6/30/2005 13,210 14,322
7/31/2005 13,557 14,529
8/31/2005 13,842 14,590
9/30/2005 13,743 14,444
10/31/2005 13,562 14,336
11/30/2005 13,714 14,373
12/31/2005 13,901 14,501
1/31/2006 14,203 14,728
2/28/2006 14,239 14,802
3/31/2006 14,346 14,908
4/30/2006 14,548 14,990
5/31/2006 14,534 14,980
6/30/2006 14,487 14,915
7/31/2006 14,664 15,076
8/31/2006 14,972 15,328
9/30/2006 15,149 15,540
10/31/2006 15,363 15,763
11/30/2006 15,478 16,025
12/31/2006 15,661 16,218
1/31/2007 15,741 16,371
2/28/2007 15,912 16,598
3/31/2007 15,926 16,623
4/30/2007 16,139 16,848
5/31/2007 16,188 16,975
6/30/2007 15,964 16,650
7/31/2007 15,401 16,105
8/31/2007 15,551 16,301
9/30/2007 15,934 16,731
10/31/2007 16,063 16,838
11/30/2007 15,765 16,466
12/31/2007 15,803 16,516
1/31/2008 15,212 16,308
2/29/2008 14,935 16,097
3/31/2008 14,983 16,028
4/30/2008 15,571 16,735
5/31/2008 15,695 16,824
6/30/2008 15,527 16,269
7/31/2008 15,143 16,025
8/31/2008 15,127 16,067
9/30/2008 13,916 14,780
10/31/2008 11,388 12,513
11/30/2008 10,002 11,293
12/31/2008 10,035 12,237
1/31/2009 10,357 12,899
2/28/2009 10,121 12,411
3/31/2009 10,089 12,842
HIGH YIELD BOND FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
- ----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -35.90% -32.66% -35.43% -33.00% -35.51% -32.90%
- --------------------------------------------------------------------------
5 Year Return -3.27% -11.10% -3.19% -13.77% -2.90% -13.67%
- --------------------------------------------------------------------------
10 Year Return 0.09% 5.95% 0.04% 0.39% NA NA
- --------------------------------------------------------------------------
Since Inception* 0.56% 11.24% 0.50% 5.34% -0.01% -0.09%
- --------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 11/2/98; Class B: 11/2/98; Class C: 08/21/00.
# For the purposes of the graph, it has been assumed that the maximum sales
charge, of 4.75% of offering price, was deducted from the initial $10,000
investment in the Fund.
For the 12-month period ending March 31, 2009, the SunAmerica High Yield Bond
Fund Class A returned -35.90%, compared to -19.88% for the Citigroup High Yield
Market Index. (The performance table and graph do not reflect the deduction of
taxes that a shareholder would pay on fund distributions or the redemption of
fund shares.)
- --------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. MAXIMUM SALES CHARGE: CLASS A: 4.75%, CLASS B: 4.00% CONTINGENT
DEFERRED SALES CHARGE (CDSC), CLASS C: 1.00% CDSC. CLASS B SHARES OF THE FUND
CONVERT AUTOMATICALLY TO CLASS A SHARES APPROXIMATELY EIGHT YEARS AFTER
PURCHASE. THE FUND'S DAILY NET ASSET VALUES ARE NOT GUARANTEED AND SHARES ARE
NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE HIGHER OR LOWER THAN THE ORIGINAL
COST. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THAT SHOWN. PERFORMANCE
AS OF THE MOST RECENT MONTH END IS AVAILABLE AT WWW.SUNAMERICAFUNDS.COM.
+ The Citigroup High Yield Market Index is a broad-based, unmanaged index of
high-yield securities. Indices are not managed and an investor cannot invest
directly into an index.
93
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (unaudited) (continued)
THE SUNAMERICA TAX EXEMPT INSURED FUND
The SunAmerica Tax Exempt Insured Fund Class A returned 3.74% (before maximum
sales charge) for the fiscal year ended March 31, 2009. The Fund outperformed
its benchmark, the Barclays Capital Municipal Bond Index*, which returned 2.27%
in the fiscal year.
For the year ended March 31, 2009, the Fund outperformed its benchmark as
several of the monoline bond insurers were downgraded and bonds began trading
according to their underlying credit ratings. This resulted in quality spreads
widening. The Fund's outperformance was the result of having higher credit
quality than its benchmark. Additionally, the Fund had a shorter average
maturity and an underweight in the longer end of the municipal curve, which
also benefited performance.
The Fund had an overweight in healthcare, and several bonds were added during
the period as credit spreads widened. Specifically, Missouri Health and
Education Facilities (St. Luke's Health) and Pennsylvania Higher Education
Facilities (University of Pennsylvania Health System) were purchased during the
period and performed well.
The Fund also benefited from purchases of essential service revenue bonds on
higher tax states, such as New York and California. Specifically, Los Angeles,
California Department of Water and Power, State of California Department of
Water Resources and New York City, New York Municipal Water Finance Authority
bonds were purchased during the period and provided strong returns.
Conversely, Williamson County, Texas, University of Houston, Texas and
Massachusetts School Building Authority were purchases during the period that
detracted from the Fund's performance. All three bonds are still in the
portfolio as we do not believe there are any significant credit concerns with
any of these securities.
- --------
Past performance is no guarantee of future results.
Interest rates and bond prices typically move inversely to each other,
therefore, as with any bond fund, the value of an investment in this Fund may
go up or down in response to changes in interest rates.
* The Barclays Capital Municipal Bond Index is a market value-weighted index
for the tax-exempt bond market. Indices are not managed and an investor
cannot invest directly into an index. (Effective November 14, 2008, the Index
formerly known as The Lehman Brothers Municipal Bond Index became known as
the Barclays Capital Municipal Bond Index.)
Securities listed may or may not be a part of current Fund construction.
94
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (unaudited) (continued)
Over the past ten years, $10,000 invested in Tax Exempt Insured Fund Class A
shares would have increased to $13,792. The same amount invested in securities
mirroring the performance of the Barclays Capital Municipal Bond Index would be
valued at $15,676.
[CHART]
Tax Exempt Insured Barclays Capital
Class A Municipal Bond Index+
------------------ ---------------------
3/31/1999 $ 9,526 $10,000
4/30/1999 9,544 10,025
5/31/1999 9,454 9,967
6/30/1999 9,288 9,823
7/31/1999 9,328 9,859
8/31/1999 9,242 9,780
9/30/1999 9,230 9,784
10/31/1999 9,121 9,678
11/30/1999 9,229 9,781
12/31/1999 9,195 9,708
1/31/2000 9,106 9,666
2/29/2000 9,233 9,778
3/31/2000 9,412 9,992
4/30/2000 9,350 9,933
5/31/2000 9,270 9,881
6/30/2000 9,513 10,143
7/31/2000 9,650 10,284
8/31/2000 9,778 10,443
9/30/2000 9,720 10,388
10/31/2000 9,819 10,502
11/30/2000 9,886 10,581
12/31/2000 10,173 10,843
1/31/2001 10,253 10,950
2/28/2001 10,291 10,985
3/31/2001 10,361 11,084
4/30/2001 10,174 10,964
5/31/2001 10,299 11,083
6/30/2001 10,392 11,157
7/31/2001 10,550 11,322
8/31/2001 10,717 11,509
9/30/2001 10,672 11,470
10/31/2001 10,797 11,606
11/30/2001 10,650 11,509
12/31/2001 10,516 11,400
1/31/2002 10,669 11,598
2/28/2002 10,824 11,737
3/31/2002 10,556 11,507
4/30/2002 10,770 11,732
5/31/2002 10,832 11,803
6/30/2002 10,935 11,928
7/31/2002 11,108 12,082
8/31/2002 11,256 12,227
9/30/2002 11,548 12,495
10/31/2002 11,233 12,288
11/30/2002 11,143 12,236
12/31/2002 11,399 12,495
1/31/2003 11,328 12,463
2/28/2003 11,518 12,637
3/31/2003 11,514 12,645
4/30/2003 11,609 12,728
5/31/2003 11,869 13,026
6/30/2003 11,792 12,971
7/31/2003 11,357 12,517
8/31/2003 11,488 12,611
9/30/2003 11,820 12,981
10/31/2003 11,734 12,916
11/30/2003 11,839 13,051
12/31/2003 11,940 13,159
1/31/2004 11,987 13,234
2/29/2004 12,180 13,433
3/31/2004 12,082 13,386
4/30/2004 11,799 13,069
5/31/2004 11,736 13,022
6/30/2004 11,767 13,069
7/31/2004 11,901 13,241
8/31/2004 12,129 13,507
9/30/2004 12,180 13,578
10/31/2004 12,279 13,695
11/30/2004 12,162 13,582
12/31/2004 12,320 13,748
1/31/2005 12,450 13,877
2/28/2005 12,404 13,830
3/31/2005 12,294 13,743
4/30/2005 12,479 13,960
5/31/2005 12,579 14,059
6/30/2005 12,639 14,146
7/31/2005 12,545 14,082
8/31/2005 12,673 14,224
9/30/2005 12,568 14,128
10/31/2005 12,472 14,042
11/30/2005 12,504 14,110
12/31/2005 12,608 14,231
1/31/2006 12,615 14,270
2/28/2006 12,705 14,366
3/31/2006 12,592 14,266
4/30/2006 12,576 14,262
5/31/2006 12,612 14,325
6/30/2006 12,556 14,271
7/31/2006 12,692 14,441
8/31/2006 12,880 14,655
9/30/2006 12,965 14,757
10/31/2006 13,053 14,849
11/30/2006 13,171 14,973
12/31/2006 13,107 14,920
1/31/2007 13,062 14,882
2/28/2007 13,220 15,078
3/31/2007 13,174 15,041
4/30/2007 13,190 15,086
5/31/2007 13,113 15,019
6/30/2007 13,045 14,941
7/31/2007 13,135 15,057
8/31/2007 13,110 14,992
9/30/2007 13,249 15,214
10/31/2007 13,281 15,282
11/30/2007 13,381 15,379
12/31/2007 13,424 15,422
1/31/2008 13,483 15,616
2/29/2008 12,944 14,901
3/31/2008 13,295 15,327
4/30/2008 13,461 15,506
5/31/2008 13,553 15,600
6/30/2008 13,413 15,424
7/31/2008 13,449 15,483
8/31/2008 13,611 15,664
9/30/2008 13,000 14,929
10/31/2008 13,008 14,777
11/30/2008 13,105 14,824
12/31/2008 13,349 15,040
1/31/2009 13,778 15,591
2/28/2009 13,777 15,673
3/31/2009 13,792 15,676
TAX EXEMPT INSURED FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
- ----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -1.18% 3.74% -1.25% 2.75% 2.12% 3.12%
- --------------------------------------------------------------------------
5 Year Return 1.68% 14.15% 1.53% 9.75% 2.02% 10.54%
- --------------------------------------------------------------------------
10 Year Return 3.27% 44.78% 3.19% 36.88% NA NA
- --------------------------------------------------------------------------
Since Inception* 5.22% 244.77% 3.88% 80.34% 3.25% 36.99%
- --------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, return would be lower.
* Inception Date - Class A: 11/22/85; Class B: 10/4/93; Class C: 06/1/99.
# For the purposes of the graph, it has been assumed that the maximum sales
charge, of 4.75% of offering price, was deducted from the initial $10,000
investment in the Fund.
For the 12-month period ending March 31, 2009, SunAmerica Tax Exempt Insured
Fund Class A returned -1.18%, compared to 2.27% for the Barclays Capital
Municipal Bond Index. (The performance table and graph do not reflect the
deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares.)
- --------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. MAXIMUM SALES CHARGE: CLASS A: 4.75%, CLASS B: 4.00% CONTINGENT
DEFERRED SALES CHARGE (CDSC), CLASS C: 1.00% CDSC. CLASS B SHARES OF THE FUND
CONVERT AUTOMATICALLY TO CLASS A SHARES APPROXIMATELY EIGHT YEARS AFTER
PURCHASE. THE FUND'S DAILY NET ASSET VALUES ARE NOT GUARANTEED AND SHARES ARE
NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE HIGHER OR LOWER THAN THE ORIGINAL
COST. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THAT SHOWN. PERFORMANCE
AS OF THE MOST RECENT MONTH END IS AVAILABLE AT WWW.SUNAMERICAFUNDS.COM.
+ The Barclays Capital Municipal Bond Index is a market value-weighted index
for the tax-exempt bond market. Indices are not managed and an investor
cannot invest directly into an index. (Effective November 14, 2008, the
Index formerly known as The Lehman Brothers Municipal Bond Index became
known as the Barclays Capital Municipal Bond Index.)
95
[LOGO] SunAmerica
Mutual Funds
HARBORSIDE FINANCIAL CENTER
3200 PLAZA 5
JERSEY CITY, NJ 07311-4992
DIRECTORS/TRUSTEES VOTING PROXIES ON TRUST DISCLOSURE OF QUARTERLY
SAMUEL M. EISENSTAT PORTFOLIO SECURITIES PORTFOLIO HOLDINGS
PETER A. HARBECK A description of the The Trust is required to
DR. JUDITH L. CRAVEN policies and proce-dures file its com-plete
WILLIAM F. DEVIN that the Trust uses to schedule of portfolio
STEPHEN J. GUTMAN determine how to vote holdings with the U.S.
JEFFREY S. BURUM proxies relating to Securities and Exchange
WILLIAM J. SHEA secu-rities held in a Commission for its first
Fund's portfolio, which and third fiscal quarters
OFFICERS is available in the on Form N-Q. The Trust's
JOHN T. GENOY, PRESIDENT Trust's Statement of Forms N-Q are available
DONNA M. HANDEL, Additional Information, on the U.S. Securities
TREASURER may be ob-tained without and Exchange Commis-sion
JAMES NICHOLS, VICE charge upon request, by website at www.sec.gov.
PRESIDENT calling (800) 858-8850. You can also review and
TIMOTHY PETTEE, VICE The in-formation is also obtain copies of the
PRESIDENT available from the EDGAR Forms N-Q at the U.S.
MICHAEL CHEAH, VICE database on the U.S. Securities and Exchange
PRESIDENT Secu-rities and Exchange Commission Public
CYNTHIA SKREHOT, VICE Commission's website at Refer-ence Room in
PRESIDENT AND CHIEF http://www.sec.gov. Washington DC
COMPLIANCE OFFICER (information on the
GREGORY N. BRESSLER, DELIVERY OF SHAREHOLDER operation of the Public
CHIEF LEGAL OFFICER DOCUMENTS Reference Room may be
AND SECRETARY The Funds have adopted a ob-tained by calling
NORI L. GABERT, VICE policy that allows them 1-800-SEC-0330).
PRESIDENT AND to send only one copy of
ASSISTANT SECRETARY a Fund's prospectus, PROXY VOTING RECORD ON
KATHLEEN FUENTES, proxy material, annual SUNAMERICA INCOME FUNDS
ASSISTANT SECRETARY report and semi-annual Information regarding how
JOHN E. MCLEAN, report (the "shareholder the Funds voted proxies
ASSISTANT SECRETARY documents") to relating to securities
GREGORY R. KINGSTON, shareholders with held in the Funds during
VICE PRESIDENT AND multiple accounts the most recent twelve
ASSISTANT TREASURER residing at the same month period ended June
CHRISTOPHER A. OKEKE, "household." This 30 is available, once
ASSISTANT TREASURER practice is called filed with the U.S.
MATTHEW J. HACKETHAL, householding and reduces Securities and Exchange
ANTI-MONEY LAUNDERING Fund expenses, which Commission, without
COMPLIANCE OFFICER benefits you and other charge, upon request, by
shareholders. Unless the calling (800) 858-8850 or
INVESTMENT ADVISER Funds receive on the U.S. Securities
SUNAMERICA ASSET instructions to the and Exchange Commission's
MANAGEMENT CORP. con-trary, you will only website at
HARBORSIDE FINANCIAL receive one copy of the http://www.sec.gov.
CENTER shareholder documents.
3200 PLAZA 5 The Funds will continue This report is submitted
JERSEY CITY, NJ to household the solely for the general
07311-4992 share-holder documents information of
indefinitely, until we shareholders of the
DISTRIBUTOR are instructed otherwise. Funds. Distribution of
SUNAMERICA CAPITAL If you do not wish to this report to persons
SERVICES, INC. participate in other than shareholders
HARBORSIDE FINANCIAL householding please of the Funds is
CENTER contact Shareholder authorized only in
3200 PLAZA 5 Services at (800) con-nection with a
JERSEY CITY, NJ 858-8850 ext. 6010 or currently effective
07311-4992 send a written request pro-spectus, setting
with your name, the name forth details of the
SHAREHOLDER SERVICING of your fund(s) and your Funds, which must precede
AGENT account number(s) to or accom-pany this report.
SUNAMERICA FUND SunAmerica Mutual Funds
SERVICES, INC. c/o BFDS, P.O. Box
HARBORSIDE FINANCIAL 219186, Kansas City MO,
CENTER 64121-9186. We will
3200 PLAZA 5 resume individual
JERSEY CITY, NJ mailings for your account
07311-4992 within thirty (30) days
of receipt of your
CUSTODIAN AND TRANSFER request.
AGENT
STATE STREET BANK AND
TRUST COMPANY
P.O. BOX 419572
KANSAS CITY, MO
64141-6572
96
[GRAPHIC]
GO PAPERLESS!!
Did you know that you have the option to
receive your shareholder reports online?
By choosing this convenient service, you will no longer receive paper copies of
Fund documents such as annual reports, semi-annual reports, prospectuses and
proxy statements in the mail. Instead, you are provided with quick and easy
access to this information via the Internet.
Why Choose Electronic Delivery?
IT'S QUICK -- Fund documents will be received faster than via traditional mail.
IT'S CONVENIENT -- Elimination of bulky documents from personal files.
IT'S COST EFFECTIVE -- Reduction of your Fund's printing and mailing costs.
TO SIGN UP FOR ELECTRONIC DELIVERY, FOLLOW
THESE SIMPLE STEPS:
1 GO TO
WWW.SUNAMERICAFUNDS.COM
2 UNDER THE "SHAREHOLDER SERVICES"
SECTION, click on the "Go Paperless" link.
3 FILL OUT THE APPROPRIATE INFORMATION
including the email address to which you
would like your information sent.
4 CLICK "SUBMIT" --
IT'S THAT EASY!
The email address you provide will be kept strictly confidential. Once your
enrollment has been processed, you will begin receiving email notifications
when anything you receive electronically is available online.
You can return to www.sunamericafunds.com at any time to change your email
address, edit your preferences or to cancel this service if you choose to
resume physical delivery of your Fund documents.
Please note - this option is only available to accounts opened through the
Funds.
FOR INFORMATION ON RECEIVING THIS REPORT online, SEE INSIDE BACK COVER.
DISTRIBUTED BY:
SUNAMERICA CAPITAL SERVICES, INC.
Investors should carefully consider a Fund's investment objectives, risks,
charges and expenses before investing. The prospectus, containing this and
other important information, can be obtained from your financial adviser, the
SunAmerica Sales Desk at 800-858-8850, ext. 6003, or at
www.sunamericafunds.com. Read the prospectus carefully before investing.
WWW.SUNAMERICAFUNDS.COM
INANN - 3/09
[LOGO]
AIG
Sun America
Mutual Funds
Item 2. Code of Ethics.
The SunAmerica Income Funds (the "registrant") has adopted a Code of
Ethics applicable to its Principal Executive and Principal Accounting
Officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002.
During the fiscal year ended 2009, there were no reportable amendments,
waivers, or implicit waivers to a provision of the Code of Ethics that
applies to the registrant's Principal Executives and Principal
Accounting Officers.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Trustees has determined that William J. Shea,
the Chairman of the registrant's Audit Committee, qualifies as an audit
committee financial expert, as defined in Item 3(a) of Form N-CSR.
Mr. Shea is considered to be "independent" for purposes of Item 3(a)(2)
of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a)--(d) Aggregate fees billed to the registrant for the last two
fiscal years for services rendered by the registrant's principal
accountant were as follows:
2009 2008
(a) Audit Fees ....................$ 162,427 $ 144,643
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 59,428 $ 54,874
(d) All Other Fees ................$ 0 $ 0
Audit Fees include amounts related to the audit of the registrant's
annual financial statements and services normally provided by the
principal accountant in connection with statutory and regulatory
filings. Tax Fees principally include tax compliance, tax advice, tax
planning and preparation of tax returns.
Aggregate fees billed to the investment adviser and Adviser Affiliates
(as defined below in Item 4(e)) that are required to be pre-approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X for
the last two fiscal years for services rendered by the Registrant's
principal accountant were as follows:
2009 2008
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 0 $ 0
(d) All Other Fees ................$ 0 $ 0
(e) (1) The registrant's audit committee pre-approves all audit services
provided by the registrant's principal accountant for the registrant
and all non-audit services provided by the registrant's principal
accountant for the registrant, its investment adviser and any entity
controlling, controlled by, or under common control with the
investment adviser ("Adviser Affiliates") that provides ongoing
services to the registrant, if the engagement by the investment
adviser or Adviser Affiliates relates directly to the operations and
financial reporting of the registrant. The audit committee has not
presently established any pre-approval policies and procedures that
permit the pre-approval of the above services other than by the full
audit committee. Certain de minimis exceptions are allowed for non-
audit services in accordance with Rule 2-01(c)(7)(i)(C) of Regulation
S-X as set forth in the Registrant's audit committee charter.
(2) No services included in (b)-(d) above in connection with fees
billed to the registrant or the investment adviser or Adviser
Affiliates were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-
01 of Regulation S-X.
(f) Not Applicable.
(g) The aggregate fees billed for the most recent fiscal year and the
preceding fiscal year by the registrant's principal accountant for
non-audit services rendered to the registrant, its investment adviser,
and Adviser Affiliates that provides ongoing services to the registrant
for 2009 and 2008 were $943,449 and $521,528, respectively.
(h) Non-audit services rendered to the registrant's investment adviser and
any Adviser Affiliate that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X were considered by the registrant's audit
committee as to whether they were compatible with maintaining the
principal accountant's independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders
may recommend nominees to the registrant's board of trustees that were
implemented after the registrant last provided disclosure in response
to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a-
101), or this Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures as (defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270.30a-3(c))). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(d))) that occurred during the registrant's
last fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal contro1 over financial reporting.
Item 12. Exhibits.
(a) (1) Code of Ethics applicable to its Principal Executive and
Principle Accounting Officers pursuant to Section 406 of the
Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.406.
Code of Ethics.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Income Funds
By: /s/ John T. Genoy
-------------------
John T. Genoy
President
Date: June 8, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John T. Genoy
-------------------
John T. Genoy
President
Date: June 8, 2009
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: June 8, 2009