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: September 30, 2009
-------------------------
Item 1. Reports to Stockholders
[PHOTO]
SEMI-ANNUAL REPORT 2009
SUNAMERICA
Income Funds
[LOGO]
September 30, 2009 SEMI-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............................... 66
APPROVAL OF ADVISORY AGREEMENTS............................. 82
RESULTS OF SPECIAL SHAREHOLDER MEETING...................... 88
Shareholder Letter
Dear Shareholder:
Enclosed is the semi-annual report for the SunAmerica Income Funds for the
six-month period ended September 30, 2009.
The six-month period was marked by renewed optimism that the economy, while
still in a fragile state, was showing hopeful signs. This was illustrated by a
stabilization of the credit markets and an increased appetite for riskier
assets.
The positive response in the financial markets was a function of continued
government support and optimism over an economic recovery, as illustrated by
the revised 2009 Second Quarter (Q2) Gross Domestic Product (GDP). U.S. GDP
fell just 0.70% in Q2, a smaller decline than the previous 1.00% estimate.
Moreover, core consumer prices increased at a 2% annual rate in Q2. Core
consumer prices have now risen just 1.6% in the past 12 months, well within the
Federal Reserve's 'comfort zone' for inflation. Other economic reports such as
consumer sentiment and new home sales also showed signs of improvement.
However, the September jobs report dampened expectations of a strong economic
recovery. The economy lost another 263,000 jobs in September and the
unemployment rate rose to 9.8%, its highest rate in over 25 years. This set off
concerns that a weak labor market would undermine consumer spending and damage
prospects for a strong, sustainable economic recovery.
These mixed economic signals raise questions about whether we are heading for a
tepid economic recovery or, perhaps, a return to a more recessionary
environment. While the Federal Reserve acknowledged that a recovery appears
underway, they maintained the current Federal Funds Rate target between
0.00-0.25%, and will continue purchases of mortgage-backed securities albeit at
a slower pace to support the housing market. While the Federal Reserve has sent
signals to the market about withdrawing its stimulus policies, the fragility of
the recovery now apparently underway has kept current monetary and fiscal
policy in place.
Credit markets reacted positively to the renewed economic optimism and
financial flows into fixed income improved dramatically. Risky assets, such as
high-yield bonds, led the way. During the six-month period, The Citigroup High
Yield Market Index returned 40.29%. Both the Barclays Capital U.S. Aggregate
Bond Index and Citigroup Mortgage GNMA Index delivered solid returns of 5.59%
and 2.82%, respectively. Expectations of economic growth and, among some
investors, future inflation led to a decline of 2.32% in the Barclays Capital
U.S. Government Index*. As always, we recommend that you consult your financial
adviser to make sure that your portfolio is appropriate given your risk
tolerance, time horizon and financial objectives.
Thank you for your investment in the SunAmerica Income Funds. We continue to
work diligently to preserve and grow your capital consistent with each Fund's
individual objectives. We also encourage you to visit our website,
www.sunamericafunds.com, for more information.
Sincerely,
The SunAmerica Income Funds Investment Professionals
Michael Cheah Robert Vanden Assem Rajeev Mittal Christopher Jones
Andrew Doulos Geoffrey Cornell Peter Stevenson
Anthony King
- --------
Past performance is no guarantee of future results.
* The Citigroup High Yield Market Index is a broad-based, unmanaged index of
high-yield securities. 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. 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). 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.
2
SunAmerica Income Funds
EXPENSE EXAMPLE -- September 30, 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 April 1, 2009 and held until September 30, 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 September 30, 2009" to estimate the expenses you paid on your
account during this period. The "Expenses Paid During the Six Months Ended
September 30, 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
September 30, 2009" column does not include administrative fees that may apply
to qualified retirement plan accounts. See the Trust's prospectus, your
retirement plan document and/or materials from your financial adviser, for a
full description of these fees. Had these fees been included, the "Expenses
Paid During the Six Months Ended September 30, 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 September 30, 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
September 30, 2009" column does not include administrative fees that may apply
to qualified retirement plan accounts. See the Trust's prospectus, your
retirement plan document and/or materials from your financial adviser, for a
full description of these fees. Had these fees been included, the "Expenses
Paid During the Six Months Ended September 30, 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, your retirement plan document and/or materials from your
financial adviser, for more information. Therefore, the "Hypothetical" example
is useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transaction costs and other fees were included, your costs would have been
higher.
3
SunAmerica Income Funds
EXPENSE EXAMPLE -- September 30, 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 April 1, September 30, September 30, at April 1, September 30, September 30, September 30,
Fund 2009 2009 2009* 2009 2009 2009* 2009*
- ---- ------------- -------------- ------------- ------------- -------------- ------------- -------------
U.S. Government Securities
Class A#................. $1,000.00 $ 999.06 $ 4.96 $1,000.00 $1,020.10 $ 5.01 0.99%
Class B#................. $1,000.00 $ 996.83 $ 8.21 $1,000.00 $1,016.85 $ 8.29 1.64%
Class C#................. $1,000.00 $ 996.82 $ 8.21 $1,000.00 $1,016.85 $ 8.29 1.64%
GNMA
Class A#................. $1,000.00 $1,016.72 $ 5.01 $1,000.00 $1,020.10 $ 5.01 0.99%
Class B#................. $1,000.00 $1,013.41 $ 8.28 $1,000.00 $1,016.85 $ 8.29 1.64%
Class C#................. $1,000.00 $1,014.26 $ 8.28 $1,000.00 $1,016.85 $ 8.29 1.64%
Strategic Bond
Class A.................. $1,000.00 $1,231.20 $ 7.16 $1,000.00 $1,018.65 $ 6.48 1.28%
Class B.................. $1,000.00 $1,226.94 $11.11 $1,000.00 $1,015.09 $10.05 1.99%
Class C.................. $1,000.00 $1,226.59 $10.77 $1,000.00 $1,015.39 $ 9.75 1.93%
High Yield Bond
Class A#................. $1,000.00 $1,334.84 $ 7.96 $1,000.00 $1,018.25 $ 6.88 1.36%
Class B#................. $1,000.00 $1,325.36 $11.72 $1,000.00 $1,014.99 $10.15 2.01%
Class C#................. $1,000.00 $1,328.37 $11.73 $1,000.00 $1,014.99 $10.15 2.01%
Tax Exempt Insured
Class A#................. $1,000.00 $1,072.23 $ 4.73 $1,000.00 $1,020.51 $ 4.61 0.91%
Class B#................. $1,000.00 $1,066.88 $10.62 $1,000.00 $1,014.79 $10.35 2.05%
Class C#................. $1,000.00 $1,068.30 $ 8.50 $1,000.00 $1,016.85 $ 8.29 1.64%
- --------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 183 days divided by 365
days. These ratios do not reflect transaction costs, including sales charges
on purchase payments, contingent deferred sales charges, small account fees
and administrative fees, if applicable to your account. Please refer to your
Prospectus and/or qualified retirement plan document for more information.
# During the stated period, the investment adviser either waived a portion of
or all fees and assumed a portion of or all expenses for the Funds. As a
result, 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 September 30,
2009" and the "Expenses Ratios" would have been higher.
4
SunAmerica Income Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2009 -- (unaudited)
U.S. Government Strategic High Yield Tax Exempt
Securities GNMA Bond Bond Insured
Fund Fund Fund Fund Fund
--------------- ------------ ------------- ------------- -----------
ASSETS:
Long-term investment securities, at market value
(unaffiliated)*....................................... $174,886,894 $415,630,591 $ 556,295,352 $ 144,986,798 $75,363,868
Short-term investment securities, at market value
(unaffiliated)........................................ 10,000,000 105,000,000 22,842,000 -- 2,995,320
Repurchase agreements (cost approximates market value). 11,058,000 49,686,000 2,657,000 1,685,000 --
------------ ------------ ------------- ------------- -----------
Total investments..................................... 195,944,894 570,316,591 581,794,352 146,671,798 78,359,188
------------ ------------ ------------- ------------- -----------
Cash................................................... 635 586 390,118 333,249 --
Foreign cash*.......................................... -- -- 872,464 -- --
Receivable for:
Shares of beneficial interest sold.................... 91,218 1,065,686 1,544,188 262,396 298,206
Dividends and interest................................ 937,412 1,665,189 9,885,817 3,549,901 947,204
Investments sold...................................... -- -- 5,959,686 4,406,292 --
Prepaid expenses and other assets...................... 2,340 2,340 2,430 2,340 2,340
Due from investment adviser for expense
reimbursements/fee waivers............................ 63,323 56,173 -- 23,978 21,965
------------ ------------ ------------- ------------- -----------
Total assets........................................... 197,039,822 573,106,565 600,449,055 155,249,954 79,628,903
------------ ------------ ------------- ------------- -----------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed................ 584,731 1,427,396 1,682,080 370,334 87,890
Investments purchased................................. 23,210,234 122,906,597 11,111,189 6,780,478 --
Investment advisory and management fees............... 92,442 168,499 297,095 89,252 31,378
Distribution and service maintenance fees............. 65,433 191,117 321,849 76,513 31,670
Transfer agent fees and expenses...................... 45,829 94,341 118,821 40,399 16,434
Trustees' fees and expenses........................... 19,676 4,535 6,431 7,099 4,641
Other accrued expenses................................ 110,757 103,901 254,310 89,807 67,791
Dividends payable...................................... 55,514 163,633 1,079,424 440,121 84,721
------------ ------------ ------------- ------------- -----------
Total liabilities...................................... 24,184,616 125,060,019 14,871,199 7,894,003 324,525
------------ ------------ ------------- ------------- -----------
Net Assets............................................. $172,855,206 $448,046,546 $ 585,577,856 $ 147,355,951 $79,304,378
============ ============ ============= ============= ===========
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01 par value......... $ 174,709 $ 378,058 $ 1,799,053 $ 459,666 $ 61,268
Paid-in capital........................................ 164,007,550 428,853,581 691,056,100 298,783,116 73,719,954
------------ ------------ ------------- ------------- -----------
164,182,259 429,231,639 692,855,153 299,242,782 73,781,222
Accumulated undistributed net investment income (loss). 123,248 (500,810) (1,794,599) 1,250,857 21,667
Accumulated undistributed net realized gain (loss) on
investments, futures contracts, securities sold short
and foreign exchange transactions..................... 3,432,065 6,056,797 (114,979,115) (137,099,984) (33,266)
Unrealized appreciation (depreciation) on investments.. 5,117,634 13,258,920 9,418,793 (16,037,752) 5,534,755
Unrealized appreciation (depreciation) on foreign
exchange transactions................................. -- -- 77,624 48 --
------------ ------------ ------------- ------------- -----------
Net Assets............................................. $172,855,206 $448,046,546 $ 585,577,856 $ 147,355,951 $79,304,378
============ ============ ============= ============= ===========
* Cost
Long-term investment securities (unaffiliated)........ $169,769,260 $402,371,671 $ 546,876,559 $ 161,024,550 $69,829,113
============ ============ ============= ============= ===========
Short-term investment securities (unaffiliated)....... $ 10,000,000 $105,000,000 $ 22,842,000 $ -- $ 2,995,320
============ ============ ============= ============= ===========
Foreign cash.......................................... $ -- $ -- $ 852,923 $ -- $ --
============ ============ ============= ============= ===========
See Notes to Financial Statements
5
SunAmerica Income Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2009 --
(unaudited) (continued)
U.S. Government Strategic High Yield Tax Exempt
Securities GNMA Bond Bond Insured
Fund Fund Fund Fund Fund
--------------- ------------ ------------ ----------- -----------
Class A (unlimited shares authorized):
Net assets............................................. $143,784,393 $330,347,262 $286,360,532 $81,236,292 $60,488,532
Shares of beneficial interest issued and outstanding... 14,531,907 27,899,187 88,123,265 25,392,389 4,674,144
Net asset value and redemption price per share
(excluding any applicable contingent deferred sales
charge)............................................... $ 9.89 $ 11.84 $ 3.25 $ 3.20 $ 12.94
Maximum sales charge (4.75% of offering price)......... $ 0.49 $ 0.59 $ 0.16 $ 0.16 $ 0.65
------------ ------------ ------------ ----------- -----------
Maximum offering price to public....................... $ 10.38 $ 12.43 $ 3.41 $ 3.36 $ 13.59
============ ============ ============ =========== ===========
Class B (unlimited shares authorized):
Net assets............................................. $ 10,911,018 $ 37,721,235 $ 45,164,872 $20,073,703 $ 2,330,756
Shares of beneficial interest issued and outstanding... 1,102,362 3,177,609 13,903,194 6,263,888 179,851
Net asset value, offering and redemption price per
share (excluding any applicable contingent deferred
sales charge)......................................... $ 9.90 $ 11.87 $ 3.25 $ 3.20 $ 12.96
============ ============ ============ =========== ===========
Class C (unlimited shares authorized):
Net assets............................................. $ 18,159,795 $ 79,978,049 $254,052,452 $46,045,956 $16,485,090
Shares of beneficial interest issued and outstanding... 1,836,656 6,729,012 77,878,800 14,310,313 1,272,810
Net asset value, offering and redemption price per
share (excluding any applicable contingent deferred
sales charge)......................................... $ 9.89 $ 11.89 $ 3.26 $ 3.22 $ 12.95
============ ============ ============ =========== ===========
See Notes to Financial Statements
6
SunAmerica Income Funds
STATEMENT OF OPERATIONS -- For the period ended September 30, 2009 --
(unaudited)
U.S. Government Strategic High Yield Tax Exempt
Securities GNMA Bond Bond Insured
Fund Fund Fund Fund Fund
--------------- ----------- ------------ ------------ ----------
INVESTMENT INCOME:
Dividends (unaffiliated)............................... $ -- $ -- $ 78,580 $ 13,867 $ --
Interest (unaffiliated)................................ 3,285,505 7,367,589 20,988,211 7,871,133 1,620,833
----------- ----------- ------------ ------------ ----------
Total investment income*............................. 3,285,505 7,367,589 21,066,791 7,885,000 1,620,833
----------- ----------- ------------ ------------ ----------
EXPENSES:
Investment advisory and management fees................ 605,913 1,042,836 1,674,894 499,891 186,760
Distribution and service maintenance fees:
Class A.............................................. 271,750 588,056 451,763 127,234 98,708
Class B.............................................. 63,835 204,659 209,130 94,642 12,524
Class C.............................................. 92,579 390,813 1,145,374 208,354 78,975
Transfer agent fees and expenses:
Class A.............................................. 195,939 392,058 306,030 95,918 68,172
Class B.............................................. 18,847 54,125 53,083 26,323 3,875
Class C.............................................. 23,556 92,090 264,499 51,772 18,581
Registration fees:
Class A.............................................. 19,167 13,971 192 2,559 8,851
Class B.............................................. 8,624 6,879 8,382 7,749 5,707
Class C.............................................. 11,558 16,149 2,577 6,456 11,516
Custodian and accounting fees.......................... 41,694 70,251 25,336 23,823 16,947
Reports to shareholders................................ 16,201 28,323 46,151 7,922 2,529
Audit and tax fees..................................... 19,773 19,698 21,113 23,190 20,391
Legal fees............................................. 1,582 8,393 22,116 11,483 1,590
Trustees' fees and expenses............................ 16,834 26,125 32,143 7,584 4,498
Interest expense....................................... 452 -- 304 125 --
Interest expense on securities sold short.............. -- -- -- 11,837 --
Other expenses......................................... 8,031 10,521 15,782 7,167 5,020
----------- ----------- ------------ ------------ ----------
Total expenses before fee waivers, expense
reimbursements, expense recoupments and custody
credits............................................. 1,416,335 2,964,947 4,278,869 1,214,029 544,644
Net (fees waived and expenses reimbursed)/recouped
by investment adviser (Note 3)...................... (391,151) (325,012) -- (110,602) (132,903)
Custody credits earned on cash balances.............. -- -- (27) (10) --
----------- ----------- ------------ ------------ ----------
Net expenses......................................... 1,025,184 2,639,935 4,278,842 1,103,417 411,741
----------- ----------- ------------ ------------ ----------
Net investment income (loss)............................ 2,260,321 4,727,654 16,787,949 6,781,583 1,209,092
----------- ----------- ------------ ------------ ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated).. 5,509,764 4,390,997 (13,390,731) (16,775,863) 707,432
Net realized foreign exchange gain (loss) on other
assets and liabilities................................. -- -- 2,162,839 -- --
Net realized gain (loss) on securities sold short....... -- -- -- (163,313) --
Net realized gain (loss) on disposal of investments in
violation of investment restrictions (Note 3).......... (647) -- -- -- --
Net increase from payment by affiliates (Note 3)........ 647 -- -- -- --
----------- ----------- ------------ ------------ ----------
Net realized gain (loss) on investments and foreign
currencies............................................. 5,509,764 4,390,997 (11,227,892) (16,939,176) 707,432
----------- ----------- ------------ ------------ ----------
Change in unrealized appreciation (depreciation) on
investments (unaffiliated)............................. (9,232,523) (2,089,731) 102,004,070 46,919,714 3,224,140
Change in unrealized foreign exchange gain (loss) on
other assets and liabilities........................... -- -- 114,160 48 --
Change in unrealized appreciation (depreciation) on
securities sold short.................................. -- -- -- 9,750 --
----------- ----------- ------------ ------------ ----------
Net unrealized gain (loss) on investments and foreign
currencies............................................. (9,232,523) (2,089,731) 102,118,230 46,929,512 3,224,140
----------- ----------- ------------ ------------ ----------
Net realized and unrealized gain (loss) on investments
and foreign currencies................................. (3,722,759) 2,301,266 90,890,338 29,990,336 3,931,572
----------- ----------- ------------ ------------ ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................. $(1,462,438) $ 7,028,920 $107,678,287 $ 36,771,919 $5,140,664
=========== =========== ============ ============ ==========
* Net of foreign withholding taxes on interest and
dividends of......................................... $ -- $ -- $ 53,629 $ -- $ --
=========== =========== ============ ============ ==========
See Notes to Financial Statements
7
SunAmerica Income Funds
STATEMENT OF CHANGES IN NET ASSETS
U.S. Government
Securities Fund
--------------------------
For the
six months
ended For the year
September 30, ended
2009 March 31,
(unaudited) 2009
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss)........................................................... $ 2,260,321 $ 5,856,989
Net realized gain (loss) on investments and foreign currencies......................... 5,509,764 2,492,555
Net unrealized gain (loss) on investments and foreign currencies....................... (9,232,523) 7,055,161
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... (1,462,438) 15,404,705
------------ ------------
Distribution to shareholders from:
Net investment income (Class A)........................................................ (1,886,711) (5,369,678)
Net investment income (Class B)........................................................ (113,784) (345,850)
Net investment income (Class C)........................................................ (164,186) (381,222)
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...................................................... (2,164,681) (6,096,750)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 6). (38,376,554) (17,856,605)
------------ ------------
Total increase (decrease) in net assets.................................................. (42,003,673) (8,548,650)
------------ ------------
NET ASSETS:
Beginning of period...................................................................... 214,858,879 223,407,529
------------ ------------
End of period+........................................................................... $172,855,206 $214,858,879
============ ============
- --------
+ Includes accumulated undistributed net investment income (loss)........................ $ 123,248 $ 27,608
============ ============
See Notes to Financial Statements
8
SunAmerica Income Funds
STATEMENT OF CHANGES IN NET ASSETS -- (continued)
GNMA Fund Strategic Bond Fund
-------------------------- ---------------------------
For the For the
six months six months
ended For the year ended For the year
September 30, ended September 30, ended
2009 March 31, 2009 March 31,
(unaudited) 2009 (unaudited 2009
------------- ------------ ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss)............................... $ 4,727,654 $ 12,369,438 $ 16,787,949 $ 41,117,669
Net realized gain (loss) on investments and foreign
currencies............................................... 4,390,997 4,332,582 (11,227,892) (78,183,148)
Net unrealized gain (loss) on investments and foreign
currencies............................................... (2,089,731) 7,314,226 102,118,230 (76,650,431)
------------ ------------ ------------ -------------
Net increase (decrease) in net assets resulting from
operations................................................. 7,028,920 24,016,246 107,678,287 (113,715,910)
------------ ------------ ------------ -------------
Distribution to shareholders from:
Net investment income (Class A)............................ (3,866,210) (10,909,235) (8,805,644) (30,006,872)
Net investment income (Class B)............................ (337,900) (1,314,574) (1,279,566) (3,566,240)
Net investment income (Class C)............................ (645,471) (1,383,879) (7,069,921) (18,381,363)
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......................... (4,849,581) (16,899,882) (17,155,131) (51,954,475)
------------ ------------ ------------ -------------
Net increase (decrease) in net assets resulting from
capital share transactions (Note 6)........................ (20,633,912) 47,194,149 28,992,595 (170,519,517)
------------ ------------ ------------ -------------
Total increase (decrease) in net assets..................... (18,454,573) 54,310,513 119,515,751 (336,189,902)
------------ ------------ ------------ -------------
NET ASSETS:
Beginning of period......................................... 466,501,119 412,190,606 466,062,105 802,252,007
------------ ------------ ------------ -------------
End of period+.............................................. $448,046,546 $466,501,119 $585,577,856 $ 466,062,105
============ ============ ============ =============
- --------
+ Includes accumulated undistributed net investment income
(loss)..................................................... $ (500,810) $ (378,883) $ (1,794,599) $ (1,427,417)
============ ============ ============ =============
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 For the
six months six months
ended For the year ended For the year
September 30, ended September 30, ended
2009 March 31, 2009 March 31,
(unaudited) 2009 (unaudited) 2009
------------- ------------ ------------- ------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).......................... $ 6,781,583 $ 17,867,997 $ 1,209,092 $ 1,968,886
Net realized gain (loss) on investments and foreign
currencies.......................................... (16,939,176) (34,155,084) 707,432 (632,662)
Net unrealized gain (loss) on investments and foreign
currencies.......................................... 46,929,512 (43,371,099) 3,224,140 1,114,958
------------ ------------ ----------- -----------
Net increase (decrease) in net assets resulting from
operations............................................ 36,771,919 (59,658,186) 5,140,664 2,451,182
------------ ------------ ----------- -----------
Distribution to shareholders from:
Net investment income (Class A)....................... (3,701,364) (8,583,504) (937,874) (1,633,906)
Net investment income (Class B)....................... (903,350) (2,374,059) (27,299) (82,242)
Net investment income (Class C)....................... (1,985,933) (4,308,886) (205,015) (212,850)
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.................... (6,590,647) (15,266,449) (1,170,188) (1,928,998)
------------ ------------ ----------- -----------
Net increase (decrease) in net assets resulting from
capital share transactions (Note 6)................... 7,553,368 (20,708,775) 4,927,107 15,549,201
------------ ------------ ----------- -----------
Total increase (decrease) in net assets................ 37,734,640 (95,633,410) 8,897,583 16,071,385
------------ ------------ ----------- -----------
NET ASSETS:
Beginning of period.................................... 109,621,311 205,254,721 70,406,795 54,335,410
------------ ------------ ----------- -----------
End of period+......................................... $147,355,951 $109,621,311 $79,304,378 $70,406,795
============ ============ =========== ===========
- --------
+ Includes accumulated undistributed net investment
income (loss)......................................... $ 1,250,857 $ 1,059,921 $ 21,667 $ (17,237)
============ ============ =========== ===========
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,
Value, Net realized Total from from net realized Total Value, end of
beginning investment and investment investment gains on Distri- end of Total period
Period Ended of period income(1) unrealized) operations income investments butions period Return(2) (000's)
- ------------ --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- --------
Class A
- -
03/31/05 $ 9.64 $0.31 $(0.26) $ 0.05 $(0.32) $-- $(0.32) $ 9.37 0.61% $174,905
03/31/06 9.37 0.36 (0.20) 0.16 (0.37) -- (0.37) 9.16 1.68 151,284
03/31/07 9.16 0.37 0.10 0.47 (0.39) -- (0.39) 9.24 5.25 152,239
03/31/08 9.24 0.35 0.46 0.81 (0.37) -- (0.37) 9.68 9.03 191,057
03/31/09 9.68 0.26 0.36 0.62 (0.28) -- (0.28) 10.02 6.52 178,963
09/30/09+ 10.02 0.13 (0.14) (0.01) (0.12) -- (0.12) 9.89 (0.09)(5) 143,784
Class B
- -
03/31/05 $ 9.65 $0.25 $(0.27) $(0.02) $(0.26) $-- $(0.26) $ 9.37 (0.14)% $ 27,013
03/31/06 9.37 0.30 (0.20) 0.10 (0.31) -- (0.31) 9.16 1.02 19,276
03/31/07 9.16 0.32 0.09 0.41 (0.33) -- (0.33) 9.24 4.57 14,716
03/31/08 9.24 0.30 0.45 0.75 (0.31) -- (0.31) 9.68 8.33 15,354
03/31/09 9.68 0.20 0.35 0.55 (0.21) -- (0.21) 10.02 5.83 15,803
09/30/09+ 10.02 0.10 (0.13) (0.03) (0.09) -- (0.09) 9.90 (0.32)(5) 10,911
Class C
- -
03/31/05 $ 9.64 $0.25 $(0.27) $(0.02) $(0.26) $-- $(0.26) $ 9.36 (0.14)% $ 9,945
03/31/06 9.36 0.30 (0.20) 0.10 (0.31) -- (0.31) 9.15 1.02 8,281
03/31/07 9.15 0.31 0.10 0.41 (0.33) -- (0.33) 9.23 4.57 9,881
03/31/08 9.23 0.29 0.46 0.75 (0.31) -- (0.31) 9.67 8.34 16,997
03/31/09 9.67 0.20 0.35 0.55 (0.21) -- (0.21) 10.01 5.83 20,094
09/30/09+ 10.01 0.09 (0.12) (0.03) (0.09) -- (0.09) 9.89 (0.32)(5) 18,160
-
Ratio
of net
Ratio of investment
expenses income to
to average average Portfolio
net assets(3) net assets(3) Turnover
- ------------- ------------- --------- -
-
0.99% 3.26% 253%(4)
0.99 3.80 357
0.99 4.05 243
0.99 3.83 343
0.99 2.73 84
0.99(6) 2.53(6) 353
-
1.64% 2.61% 253%(4)
1.64 3.14 357
1.64 3.40 243
1.64 3.20 343
1.64 2.08 84
1.64(6) 1.89(6) 353
-
1.64% 2.61% 253%(4)
1.64 3.14 357
1.64 3.40 243
1.64 3.14 343
1.64 2.05 84
1.64(6) 1.87(6) 353
- --------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)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 09/30/09+(6)
-------- -------- -------- -------- -------- ------------
U.S. Government Securities Fund Class A. 0.39% 0.36% 0.38% 0.39% 0.35% 0.40%
U.S. Government Securities Fund Class B. 0.43 0.43 0.43 0.48 0.40 0.55
U.S. Government Securities Fund Class C. 0.48 0.57 0.43 0.50 0.40 0.50
(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%
(5)The Fund's performance figure was increased by less than 0.01% from
reimbursements for losses realized from a violation of an investment
restriction (Note 3).
(6)Annualized
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
09/30/09+ 11.78 0.13 0.07 0.20 (0.14) -- (0.14) 11.84 1.67 330,347 0.99(5)
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
09/30/09+ 11.81 0.10 0.06 0.16 (0.10) -- (0.10) 11.87 1.34 37,721 1.64(5)
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
09/30/09+ 11.82 0.09 0.08 0.17 (0.10) -- (0.10) 11.89 1.43 79,978 1.64(5)
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
2.25(5) 59
2.10% 204%(4)
2.50 138
3.53 142
3.52 354
2.67 73
1.60(5) 59
2.11% 204%(4)
2.49 138
3.53 142
3.49 354
2.55 73
1.60(5) 59
- --------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)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 09/30/09+(5)
-------- -------- -------- -------- -------- ------------
GNMA Fund Class A............. 0.17% 0.13% 0.15% 0.15% 0.13% 0.13%
GNMA Fund Class B............. 0.18 0.17 0.18 0.19 0.15 0.19
GNMA Fund Class C............. 0.18 0.19 0.17 0.22 0.15 0.17
(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%
(5)Annualized
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
09/30/09+ 2.73 0.10 0.52 0.62 (0.10) -- (0.10) 3.25 23.12 286,361 1.28(8)
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
09/30/09+ 2.73 0.09 0.52 0.61 (0.09) -- (0.09) 3.25 22.69 45,165 1.99(8)
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
09/30/09+ 2.74 0.09 0.52 0.61 (0.09) -- (0.09) 3.26 22.66 254,052 1.93(8)
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
6.68(8) 74
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
5.98(8) 74
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
6.03(8) 74
- --------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)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%
(8)Annualized
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
09/30/09+ 2.52 0.15 0.68 0.83 (0.15) -- (0.15) 3.20 33.48 81,236 1.36(6)
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
09/30/09+ 2.53 0.15 0.66 0.81 (0.14) -- (0.14) 3.20 32.54 20,074 2.01(6)
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
09/30/09+ 2.54 0.14 0.68 0.82 (0.14) -- (0.14) 3.22 32.84 46,046 2.01(6)
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
10.46(6) 78
7.04% 85%(4)
6.71(5) 91
5.82 86
6.80 72
10.18 77
9.88(6) 78
6.97% 85%(4)
6.67(5) 91
5.80 86
6.75 72
10.16 77
9.80(6) 78
- --------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)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 09/30/09+(6)
-------- -------- -------- -------- -------- ------------
High Yield Bond Fund Class A............ 0.08% 0.11% 0.09% 0.17% 0.14% 0.15%
High Yield Bond Fund Class B............ 0.07 0.14 0.11 0.20 0.16 0.24
High Yield Bond Fund Class C............ 0.09 0.12 0.10 0.18 0.15 0.16
(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%.
(6)Annualized
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)
09/30/09+ 12.27 0.21 0.67 0.88 (0.21) -- (0.21) 12.94 7.22 60,489 0.91(3)(4)
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)
09/30/09+ 12.28 0.15 0.67 0.82 (0.14) -- (0.14) 12.96 6.69 2,331 2.05(3)(4)
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)
09/30/09+ 12.28 0.17 0.66 0.83 (0.16) -- (0.16) 12.95 6.83 16,485 1.64(3)(4)
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
3.43(3)(4) 33
2.44% 153%
2.48 81
2.44 84
2.46 57
2.58(3) 92
2.29(3)(4) 33
2.44%(3) 153%
2.48(3) 81
2.60(3) 84
2.71(3) 57
2.92(3) 92
2.70(3)(4) 33
- --------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)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 09/30/09+(4)
-------- -------- -------- -------- -------- ------------
Tax Exempt Insured Fund Class A......... -- % -- % -- % -- % 0.24% 0.35%
Tax Exempt Insured Fund Class B......... -- -- -- -- 0.23 0.35
Tax Exempt Insured Fund Class C......... 0.09 0.20 0.09 0.31 0.42 0.38
(4)Annualized
See Notes to Financial Statements
15
SunAmerica U.S. Government Securities Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
Industry Allocation*
Government National Mtg. Assoc.. 53.4%
United States Treasury Notes.... 42.9
Repurchase Agreements........... 6.4
U.S. Government Agencies........ 5.8
United States Treasury Bonds.... 3.6
Federal Farm Credit Bank........ 0.8
Small Business Administration... 0.5
-----
113.4%
=====
Credit Quality+#
Government - Treasury. 46.0%
Government - Agency... 54.0
-----
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 -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount (Note 2)
-----------------------------------------
U.S. GOVERNMENT AGENCIES -- 54.7%
Federal Farm Credit Bank -- 0.8%
5.64% due 04/04/11.................... $ 500,000 $ 535,927
6.00% due 03/07/11.................... 200,000 214,708
6.30% due 12/03/13.................... 500,000 576,097
-----------
1,326,732
-----------
Federal National Mtg. Assoc. -- 0.0%
8.00% due 01/01/23.................... 30,083 33,951
11.00% due 02/01/15................... 25 29
11.50% due 09/01/19................... 6,773 7,530
-----------
41,510
-----------
Government National Mtg. Assoc. -- 53.4%
4.50% due 05/15/18.................... 625,104 660,723
4.50% due 08/15/18.................... 969,721 1,024,978
4.50% due 09/15/18.................... 2,669,041 2,821,130
4.50% due 10/15/18.................... 2,815,443 2,975,874
4.50% due 09/15/33.................... 3,654,040 3,735,114
4.50% due October TBA................. 23,000,000 23,337,824
5.00% due 04/15/18.................... 2,708,031 2,874,533
5.00% due 04/15/33.................... 26,380 27,499
5.00% due 08/15/33.................... 1,387,461 1,446,505
5.00% due 09/15/33.................... 648,489 675,989
5.00% due 10/15/33.................... 422,985 440,922
5.00% due 04/15/34.................... 21,381 22,261
5.00% due 11/15/34.................... 149,774 155,939
5.00% due 02/15/35.................... 18,927 19,685
5.00% due 03/15/35.................... 482,643 501,979
5.00% due 04/15/35.................... 47,767 49,681
5.00% due 05/15/35.................... 1,317,898 1,370,697
5.00% due 09/15/35.................... 749,791 779,829
5.00% due 10/15/35.................... 118,158 122,891
5.00% due 12/15/35.................... 72,203 75,096
5.00% due 03/15/36.................... 712,788 739,896
5.00% due 05/15/36.................... 1,047,012 1,086,830
5.00% due 06/15/36.................... 702,245 728,953
5.00% due 09/15/36.................... 1,694,517 1,758,925
5.00% due 10/15/36.................... 344,426 357,525
5.00% due 11/15/36.................... 39,529 41,032
5.00% due 12/15/36.................... 285,699 296,565
5.00% due 01/15/37.................... 3,277,220 3,399,297
5.00% due 02/15/37.................... 1,597,919 1,657,441
5.00% due 03/15/37.................... 1,251,242 1,297,851
5.00% due 04/15/37.................... 1,377,189 1,428,490
5.00% due 08/15/38.................... 9,634,749 9,992,138
5.50% due 11/15/32.................... 10,184 10,763
5.50% due 03/15/33.................... 336,204 355,272
5.50% due 04/15/33.................... 398,071 420,650
5.50% due 05/15/33.................... 908,166 959,760
5.50% due 06/15/33.................... 4,147,395 4,382,630
5.50% due 07/15/33.................... 1,210,283 1,278,929
5.50% due 10/15/33.................... 1,175,736 1,242,422
5.50% due 12/15/33.................... 234,377 247,670
5.50% due 01/15/34.................... 2,703,344 2,853,295
5.50% due 02/15/34.................... 1,545,491 1,631,218
6.00% due 01/15/28.................... 2,263 2,416
6.00% due 04/15/28.................... 869,898 927,467
6.00% due 05/15/28.................... 1,295 1,382
Market
Principal Value
Security Description Amount (Note 2)
------------------------------------------------------------------
Government National Mtg. Assoc. (continued)
6.00% due 10/15/28....................... $ 3,398 $ 3,626
6.00% due 04/15/29....................... 29,818 31,821
6.00% due 05/15/29....................... 59,203 63,180
6.00% due 06/15/29....................... 21,396 22,834
6.00% due 04/15/31....................... 20,257 21,618
6.00% due 05/15/31....................... 31,790 33,925
6.00% due 11/15/31....................... 146,931 156,803
6.00% due 12/15/31....................... 172,721 184,326
6.00% due 01/15/32....................... 100,756 107,525
6.00% due 02/15/32....................... 26,529 28,312
6.00% due 03/15/32....................... 5,666 6,047
6.00% due 08/15/32....................... 188,346 201,000
6.00% due 11/15/32....................... 27,653 29,511
6.00% due 12/15/32....................... 5,506 5,876
6.00% due 01/15/33....................... 14,132 15,073
6.00% due 02/15/33....................... 30,844 32,898
6.00% due 03/15/33....................... 57,314 61,129
6.00% due 04/15/33....................... 248,672 265,225
6.00% due 07/15/33....................... 164,315 175,252
6.00% due 08/15/33....................... 1,636,837 1,746,972
6.00% due 09/15/33....................... 257,193 274,313
6.00% due 10/15/33....................... 726,911 775,302
6.00% due 11/15/33....................... 102,986 109,842
6.00% due 12/15/33....................... 463,976 494,859
6.00% due 02/15/34....................... 156,096 165,974
6.00% due 05/15/34....................... 18,291 19,448
6.00% due 06/15/34....................... 28,080 29,857
6.00% due 07/15/34....................... 1,031,443 1,096,714
6.00% due 08/15/34....................... 121,321 128,998
6.00% due 09/15/34....................... 775,249 824,307
6.00% due 10/15/34....................... 2,423,393 2,576,748
6.00% due 12/15/34....................... 234,298 249,124
6.00% due 06/15/35....................... 167,592 177,804
6.00% due 08/15/35....................... 111,750 118,560
6.50% due 02/15/29....................... 8,529 9,219
6.50% due 05/15/31....................... 10,443 11,271
6.50% due 06/15/31....................... 46,176 49,836
6.50% due 07/15/31....................... 21,440 23,139
6.50% due 08/15/31....................... 46,629 50,323
6.50% due 09/15/31....................... 116,476 125,707
6.50% due 10/15/31....................... 181,292 195,659
6.50% due 11/15/31....................... 9,625 10,387
6.50% due 12/15/31....................... 11,294 12,189
6.50% due 01/15/32....................... 29,103 31,327
6.50% due 02/15/32....................... 369,396 397,633
6.50% due 06/15/32....................... 44,454 47,852
7.00% due 07/15/23....................... 15,564 17,124
7.00% due 10/15/23....................... 30,710 33,788
7.00% due 09/15/25....................... 163,732 180,356
7.00% due 03/20/29....................... 13,020 14,265
7.00% due 06/20/29....................... 2,032 2,226
7.00% due 11/20/30....................... 45,246 49,596
7.50% due 04/15/17....................... 8,433 9,189
7.50% due 08/15/23....................... 142,440 158,974
7.50% due 09/15/23....................... 392,032 437,539
9.00% due 12/15/16....................... 31,619 34,549
11.00% due 08/20/15...................... 78 86
17
SunAmerica U.S. Government Securities Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount (Note 2)
---------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (continued)
Government National Mtg. Assoc. (continued)
11.00% due 09/20/15...................... $ 275 $ 304
11.50% due 05/20/15...................... 1,066 1,187
12.50% due 09/15/14...................... 3,825 4,384
13.00% due 02/15/11...................... 965 991
13.00% due 04/15/11...................... 117 122
13.00% due 10/20/14...................... 801 918
13.00% due 11/15/14...................... 392 430
13.00% due 02/20/15...................... 439 493
13.50% due 02/15/13...................... 5,634 6,537
15.00% due 01/15/12...................... 166 192
15.00% due 02/15/12...................... 549 635
15.00% due 06/15/12...................... 3,217 3,721
15.00% due 09/15/12...................... 358 415
15.50% due 09/15/11...................... 17,338 19,286
------------
92,394,618
------------
Small Business Administration -- 0.5%
6.30% due 06/01/18....................... 767,479 828,586
------------
Total U.S. Government Agencies
(cost $90,738,790)....................... 94,591,446
------------
U.S. GOVERNMENT TREASURIES -- 46.5%
United States Treasury Bonds -- 3.6%
4.25% due 05/15/39....................... 6,000,000 6,207,186
------------
United States Treasury Notes -- 42.9%
2.00% due 02/28/10....................... 4,000,000 4,029,844
3.13% due 05/15/19....................... 18,000,000 17,711,712
3.63% due 08/15/19....................... 51,000,000 52,346,706
------------
74,088,262
------------
Total U.S. Government Treasuries
(cost $79,030,470)....................... 80,295,448
------------
Total Long-Term Investment Securities
(cost $169,769,260)...................... 174,886,894
------------
Market
Principal Value
Security Description Amount (Note 2)
----------------------------------------------------------------
SHORT-TERM INVESTMENT SECURITIES -- 5.8%
U.S. Government Agencies -- 5.8%
Federal Home Loan Bank
Disc. Notes
zero coupon due 10/01/09
(cost $10,000,000).................. 10,000,000 10,000,000
------------
REPURCHASE AGREEMENT -- 6.4%
State Street Bank & Trust Co. Joint
Repurchase Agreement(1)
(cost $11,058,000).................. 11,058,000 11,058,000
------------
TOTAL INVESTMENTS
(cost $190,827,260)(2).............. 113.4% 195,944,894
Liabilities in excess of other assets.. (13.4) (23,089,688)
---------- ------------
NET ASSETS 100.0% $172,855,206
========== ============
- --------
(1) See Note 2 for details of Joint Repurchase Agreements.
(2) See Note 5 for cost of investments on a tax basis.
TBA -- Securitiespurchased on a forward commitment basis with an approximate
principal amount and no definite maturity date. The actual
principal and maturity date will be determined upon settlement
date
18
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2009 (see Note 2):
Level 1--Unadjusted Level 2--Other Level 3--Significant
Quoted Prices Observable Inputs Unobservable Inputs Total
- - ------------------- ----------------- -------------------- ------------
Long-Term Investment Securities:
U.S. Government Agencies:
Federal Farm Credit Bank......... $ -- $ 1,326,732 $ -- $ 1,326,732
Federal National Mtg. Assoc...... -- 41,510 -- 41,510
Government National Mtg. Assoc... -- 92,394,618 -- 92,394,618
Small Business Administration.... -- 828,586 828,586
U.S. Government Treasuries........ 80,295,448 -- -- 80,295,448
Short Term Investment Securities:
U.S. Government Agencies.......... -- 10,000,000 -- 10,000,000
Repurchase Agreements............... -- 11,058,000 -- 11,058,000
----------- ------------ ----------- ------------
Total............................... $80,295,448 $115,649,446 $ -- $195,944,894
=========== ============ =========== ============
See Notes to Financial Statements
SunAmerica GNMA Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
Industry Allocation*
Government National Mtg. Assoc.. 88.7%
U.S. Government Agencies........ 23.4
Repurchase Agreements........... 11.1
United States Treasury Notes.... 4.0
Small Business Administration... 0.1
-----
127.3%
=====
Credit Quality+#
Government - Treasury. 4.3%
Government - Agency... 95.7
-----
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 -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount (Note 2)
-----------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 88.8%
Government National Mtg. Assoc. -- 88.7%
4.50% due 05/15/18.................... $ 1,250,207 $ 1,321,447
4.50% due 08/15/18.................... 626,490 662,189
4.50% due 09/15/18.................... 2,162,158 2,285,362
4.50% due 10/15/18.................... 3,230,573 3,414,658
4.50% due 08/15/33.................... 2,136,064 2,183,458
4.50% due 09/15/33.................... 2,880,771 2,944,688
4.50% due 05/15/39.................... 29,838,180 30,341,700
4.50% due October TBA................. 40,000,000 40,587,520
5.00% due 03/15/18.................... 372,166 395,048
5.00% due 04/15/18.................... 4,442,714 4,715,870
5.00% due 05/15/18.................... 6,176,466 6,556,222
5.00% due 01/15/33.................... 16,354 17,047
5.00% due 05/15/33.................... 9,365 9,772
5.00% due 08/15/33.................... 2,107,516 2,196,889
5.00% due 09/15/33.................... 1,929,086 2,010,891
5.00% due 10/15/33.................... 4,412,448 4,599,562
5.00% due 04/15/34.................... 37,699 39,250
5.00% due 05/15/34.................... 118,172 123,035
5.00% due 11/15/34.................... 512,445 533,535
5.00% due 12/15/34.................... 483,147 503,032
5.00% due 09/15/35.................... 15,014 15,616
5.00% due 10/15/35.................... 94,591 98,380
5.00% due 11/15/35.................... 95,837 99,676
5.00% due 12/15/35.................... 50,809 52,844
5.00% due 02/15/36.................... 138,126 143,380
5.00% due 04/15/36.................... 399,247 414,430
5.00% due 06/15/36.................... 1,325,681 1,376,098
5.00% due 07/15/36.................... 352,896 366,317
5.00% due 08/15/36.................... 25,617 26,592
5.00% due 09/15/36.................... 699,019 725,580
5.00% due 10/15/36.................... 25,559 26,531
5.00% due 11/15/36.................... 302,981 314,504
5.00% due 12/15/36.................... 916,138 950,979
5.00% due 01/15/37.................... 557,186 577,941
5.00% due 02/15/37.................... 645,076 669,105
5.00% due 04/15/37.................... 7,576,125 7,858,336
5.00% due October TBA................. 80,000,000 82,775,040
5.50% due 06/15/29.................... 4,050 4,283
5.50% due 01/15/32.................... 35,375 37,387
5.50% due 12/15/32.................... 492,595 520,611
5.50% due 01/15/33.................... 360,180 380,609
5.50% due 02/15/33.................... 1,251,447 1,322,427
5.50% due 03/15/33.................... 788,283 832,992
5.50% due 04/15/33.................... 3,881,113 4,101,244
5.50% due 05/15/33.................... 4,984,337 5,268,296
5.50% due 06/15/33.................... 5,089,530 5,378,556
5.50% due 07/15/33.................... 281,232 297,183
5.50% due 08/15/33.................... 1,647,411 1,740,851
5.50% due 09/15/33.................... 299,117 316,083
5.50% due 10/15/33.................... 4,580,701 4,840,513
5.50% due 12/15/33.................... 4,781,416 5,052,612
5.50% due 01/15/34.................... 6,518,586 6,880,164
5.50% due 02/15/34.................... 952,405 1,005,235
5.50% due 04/15/35.................... 1,435,997 1,513,855
5.50% due 07/15/35.................... 1,744,085 1,838,647
5.50% due 09/15/35.................... 19,039,801 20,072,115
5.50% due 10/15/35.................... 11,850,486 12,493,004
Market
Principal Value
Security Description Amount (Note 2)
--------------------------------------------------------------------
Government National Mtg. Assoc. (continued)
5.50% due 11/15/35....................... $19,763,001 $20,834,526
5.50% due 12/15/35....................... 13,923,435 14,678,346
5.50% due 02/15/36....................... 1,802,643 1,897,845
5.50% due 03/15/36....................... 7,863,811 8,279,118
5.50% due 04/15/36....................... 288,196 303,417
5.50% due 05/15/36....................... 2,495,793 2,627,603
6.00% due 11/15/23....................... 3,480 3,711
6.00% due 01/15/24....................... 5,085 5,419
6.00% due 07/15/28....................... 2,683 2,864
6.00% due 11/15/28....................... 238,112 254,110
6.00% due 12/15/28....................... 200,273 213,729
6.00% due 01/15/29....................... 447,885 477,977
6.00% due 02/15/29....................... 489,760 522,667
6.00% due 03/15/29....................... 405,728 432,990
6.00% due 04/15/29....................... 1,037,884 1,107,692
6.00% due 05/15/29....................... 35,282 37,653
6.00% due 06/15/29....................... 382,145 407,833
6.00% due 07/15/29....................... 125,602 134,041
6.00% due 08/15/29....................... 13,467 14,371
6.00% due 10/15/29....................... 100,007 106,727
6.00% due 04/15/31....................... 11,593 12,372
6.00% due 07/15/31....................... 14,614 15,595
6.00% due 10/15/31....................... 66,976 71,476
6.00% due 11/15/31....................... 730,011 779,058
6.00% due 12/15/31....................... 368,644 393,411
6.00% due 01/15/32....................... 444,673 474,548
6.00% due 02/15/32....................... 24,407 26,047
6.00% due 03/15/32....................... 313,865 334,953
6.00% due 07/15/32....................... 72,393 77,257
6.00% due 08/15/32....................... 1,061,110 1,132,939
6.00% due 09/15/32....................... 707,863 755,422
6.00% due 10/15/32....................... 120,478 128,572
6.00% due 11/15/32....................... 843 899
6.00% due 12/15/32....................... 50,059 53,423
6.00% due 01/15/33....................... 982,265 1,047,648
6.00% due 02/15/33....................... 1,019,213 1,087,054
6.00% due 03/15/33....................... 1,026,136 1,094,438
6.00% due 04/15/33....................... 901,655 961,672
6.00% due 05/15/33....................... 987,526 1,053,256
6.00% due 06/15/33....................... 682,961 728,422
6.00% due 08/15/33....................... 1,011,734 1,079,225
6.00% due 10/15/33....................... 374,942 399,899
6.00% due 11/15/33....................... 1,134,720 1,210,259
6.00% due 12/15/33....................... 1,982,664 2,114,635
6.00% due 01/15/34....................... 1,198,161 1,273,982
6.00% due 02/15/34....................... 7,355,027 7,820,461
6.00% due 03/15/34....................... 132,088 140,447
6.00% due 04/15/34....................... 2,292,507 2,437,580
6.00% due 05/15/34....................... 197,994 210,523
6.00% due 06/15/34....................... 234,118 248,934
6.00% due 07/15/34....................... 2,154,808 2,291,167
6.00% due 08/15/34....................... 3,334,344 3,545,387
6.00% due 09/15/34....................... 170,383 181,156
6.00% due 10/15/34....................... 463,402 492,727
6.00% due 11/15/34....................... 666,177 708,334
6.00% due 12/15/34....................... 56,572 60,152
6.00% due 01/15/35....................... 69,026 73,232
20
SunAmerica GNMA Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount (Note 2)
--------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (continued)
Government National Mtg. Assoc. (continued)
6.00% due 02/15/35....................... $ 561,141 $ 595,336
6.00% due 04/15/35....................... 46,713 49,559
6.00% due 05/15/35....................... 12,214 12,958
6.00% due 06/15/35....................... 286,471 303,928
6.00% due 11/15/35....................... 11,893 12,618
6.00% due 12/15/35....................... 1,210,123 1,288,071
6.00% due 01/15/36....................... 715,430 757,461
6.00% due 02/15/36....................... 1,264,383 1,338,666
6.00% due 03/15/36....................... 508,454 538,326
6.00% due 04/15/36....................... 2,789,288 2,953,161
6.00% due 05/15/36....................... 4,520,908 4,786,510
6.00% due 06/15/36....................... 1,788,541 1,893,616
6.00% due 07/15/36....................... 1,129,700 1,196,070
6.00% due 08/15/36....................... 14,247 15,091
6.00% due 09/15/36....................... 110,937 117,455
6.00% due 10/15/36....................... 1,032,803 1,093,665
6.00% due 11/15/36....................... 1,644,388 1,740,997
6.00% due 09/15/38....................... 12,866,062 13,609,881
6.50% due 03/15/28....................... 17,089 18,474
6.50% due 08/15/28....................... 32,169 34,789
6.50% due 01/15/29....................... 3,165 3,421
6.50% due 02/15/29....................... 1,003 1,084
6.50% due 03/15/29....................... 93,649 101,216
6.50% due 04/15/29....................... 1,112 1,202
6.50% due 05/15/29....................... 8,599 9,296
6.50% due 06/15/29....................... 29,114 31,467
6.50% due 07/15/29....................... 1,730 1,870
6.50% due 10/15/29....................... 3,217 3,477
6.50% due 08/15/31....................... 157,904 170,418
6.50% due 09/15/31....................... 10,480 11,311
6.50% due 10/15/31....................... 181,292 195,659
6.50% due 11/15/31....................... 99,814 107,724
6.50% due 12/15/31....................... 118,791 128,205
6.50% due 02/15/32....................... 159,478 171,668
6.50% due 05/15/32....................... 776,257 835,593
6.50% due 06/15/32....................... 86,840 93,478
7.00% due 03/15/23....................... 19,070 20,981
7.00% due 01/20/24....................... 440 481
7.00% due 03/20/24....................... 441 482
7.00% due 07/20/25....................... 1,955 2,136
7.00% due 09/15/25....................... 71,105 78,325
7.00% due 01/20/29....................... 28,416 31,133
7.00% due 02/20/29....................... 5,136 5,628
7.00% due 06/20/29....................... 10,075 11,038
7.00% due 07/20/29....................... 36,306 39,778
7.00% due 09/20/29....................... 3,510 3,846
7.00% due 10/20/29....................... 6,933 7,595
7.00% due 11/20/29....................... 2,359 2,585
7.00% due 03/20/30....................... 3,639 3,989
7.00% due 06/20/30....................... 3,731 4,089
7.00% due 08/20/30....................... 13,116 14,377
7.00% due 09/20/30....................... 16,980 18,613
7.00% due 10/20/30....................... 20,067 21,997
8.00% due 11/15/26....................... 98,839 112,147
8.00% due 12/15/29....................... 9,334 10,612
8.00% due 04/15/30....................... 28,722 32,669
8.00% due 05/15/30....................... 2,305 2,622
Market
Principal Value
Security Description Amount (Note 2)
-------------------------------------------------------------------
Government National Mtg. Assoc. (continued)
8.00% due 08/15/30.................. $ 28,538 $ 32,460
8.50% due 03/15/17.................. 11,894 13,170
8.50% due 05/15/21.................. 28,018 31,967
8.50% due 12/15/22.................. 41,554 47,450
8.50% due 01/15/23.................. 100,552 115,037
8.50% due 09/15/24.................. 17,493 20,044
9.00% due 07/15/16.................. 36,970 40,397
9.00% due 10/15/16.................. 4,505 4,923
-------------
397,642,684
-------------
Small Business Administration -- 0.1%
6.30% due 06/01/18.................. 255,826 276,195
-------------
Total U.S. Government Agencies
(cost $384,989,640)................. 397,918,879
-------------
U.S. GOVERNMENT TREASURIES -- 4.0%
United States Treasury Notes -- 4.0%
3.13% due 05/15/19
(cost $17,382,031).................. 18,000,000 17,711,712
-------------
Total Long-Term Investment Securities
(cost $402,371,671)................. 415,630,591
-------------
SHORT-TERM INVESTMENT SECURITIES -- 23.4%
U.S. Government Agencies -- 23.4%
Federal Home Loan Bank
Disc. Notes
zero coupon due 10/01/09
(cost $105,000,000)................. 105,000,000 105,000,000
-------------
REPURCHASE AGREEMENT -- 11.1%
State Street Bank & Trust Co. Joint
Repurchase Agreement(1)
(cost $49,686,000).................. 49,686,000 49,686,000
-------------
TOTAL INVESTMENTS
(cost $557,057,671)(2).............. 127.3 % 570,316,591
Liabilities in excess of other assets.. (27.3) (122,270,045)
------------ -------------
NET ASSETS 100.0 % $ 448,046,546
============ =============
- --------
(1) See Note 2 for details of Joint Repurchase Agreements.
(2) See Note 5 for cost of investments on a tax basis.
TBA -- Securitiespurchased on a forward commitment basis with an approximate
principal amount and no definite maturity date. The actual
principal and maturity date will be determined upon settlement
date
21
SunAmerica GNMA Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2009 (see Note 2):
Level 1--Unadjusted Level 2--Other Level 3--Significant
Quoted Prices Observable Inputs Unobservable Inputs Total
- - ------------------- ----------------- -------------------- ------------
Long-Term Investment Securities:
U.S. Government Agencies:
Government National Mtg. Assoc... $ -- $397,642,684 $ -- $397,642,684
Small Business Administration.... -- 276,195 -- 276,195
U.S. Government Treasuries........ 17,711,712 -- -- 17,711,712
Short Term Investment Securities:
U.S. Government Agencies.......... -- 105,000,000 -- 105,000,000
Repurchase Agreements............... -- 49,686,000 -- 49,686,000
----------- ------------ ------------ ------------
Total............................... $17,711,712 $552,604,879 $ -- $570,316,591
=========== ============ ============ ============
See Notes to Financial Statements
22
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
Industry Allocation*
Foreign Government Agencies............ 24.8%
Federal Home Loan Mtg. Corp............ 7.6
Federal National Mtg. Assoc............ 4.8
Time Deposits.......................... 3.9
Oil Companies-Exploration & Production. 3.5
Diversified Banking Institutions....... 3.2
Telephone-Integrated................... 2.8
Cable/Satellite TV..................... 2.5
Electric-Integrated.................... 2.4
Diversified Financial Services......... 2.2
Medical-Hospitals...................... 2.0
Telecom Services....................... 1.7
Pipelines.............................. 1.4
Banks-Commercial....................... 1.3
Special Purpose Entities............... 1.2
Finance-Auto Loans..................... 1.2
Paper & Related Products............... 1.1
Airlines............................... 1.1
Electric-Generation.................... 1.0
Cellular Telecom....................... 1.0
United States Treasury Bonds........... 0.9
Medical-Drugs.......................... 0.8
Casino Hotels.......................... 0.8
Medical Products....................... 0.7
Steel-Producers........................ 0.7
Banks-Super Regional................... 0.6
Satellite Telecom...................... 0.6
Medical-HMO............................ 0.6
Chemicals-Specialty.................... 0.5
Oil-Field Services..................... 0.5
Oil Companies-Integrated............... 0.5
United States Treasury Notes........... 0.5
Gambling (Non-Hotel)................... 0.5
Diversified Manufacturing Operations... 0.5
Transport-Air Freight.................. 0.5
Food-Meat Products..................... 0.5
Repurchase Agreements.................. 0.5
Transport-Rail......................... 0.4
Containers-Metal/Glass................. 0.4
Electronic Components-Semiconductors... 0.4
Insurance-Multi-line................... 0.4
Computer Services...................... 0.4
Finance-Investment Banker/Broker....... 0.4
Non-Hazardous Waste Disposal........... 0.4
Finance-Commercial..................... 0.4
Insurance-Life/Health.................. 0.4
Independent Power Producers............ 0.3
Retail-Regional Department Stores...... 0.3
Insurance Brokers...................... 0.3
Diversified Minerals................... 0.3
Decision Support Software.............. 0.3
Auto/Truck Parts & Equipment-Original.. 0.3
Agricultural Chemicals................. 0.3
Rubber-Tires........................... 0.3
Chemicals-Diversified.................. 0.3
Retail-Apparel/Shoe.................... 0.3
Advertising Services................... 0.3
Government National Mtg. Assoc......... 0.3
Transactional Software................. 0.3
Auto-Cars/Light Trucks................. 0.3
Food-Misc.............................. 0.3
Multimedia............................... 0.3%
Building Products-Cement................. 0.3
Music.................................... 0.2
Storage/Warehousing...................... 0.2
Building-Residential/Commercial.......... 0.2
Theaters................................. 0.2
Television............................... 0.2
Consumer Products-Misc................... 0.2
Funeral Services & Related Items......... 0.2
Retail-Petroleum Products................ 0.2
Office Automation & Equipment............ 0.2
Casino Services.......................... 0.2
Rental Auto/Equipment.................... 0.2
Retail-Drug Store........................ 0.2
Auto/Truck Parts & Equipment-Replacement. 0.2
Real Estate Investment Trusts............ 0.2
Electronics-Military..................... 0.2
Food-Retail.............................. 0.2
Finance-Other Services................... 0.2
Broadcast Services/Program............... 0.2
Direct Marketing......................... 0.2
Physicians Practice Management........... 0.2
Transport-Services....................... 0.2
Auction Houses/Art Dealers............... 0.2
Mining................................... 0.2
Banks-Money Center....................... 0.2
Building & Construction Products-Misc.... 0.2
Regional Authority....................... 0.2
Beverages-Wine/Spirits................... 0.2
Printing-Commercial...................... 0.1
Medical-Biomedical/Gene.................. 0.1
Metal-Aluminum........................... 0.1
Metal-Copper............................. 0.1
Containers-Paper/Plastic................. 0.1
Insurance-Mutual......................... 0.1
Hotels/Motels............................ 0.1
Publishing-Newspapers.................... 0.1
Applications Software.................... 0.1
Research & Development................... 0.1
Hazardous Waste Disposal................. 0.1
Medical Information Systems.............. 0.1
Publishing-Periodicals................... 0.1
Real Estate Management/Services.......... 0.1
Seismic Data Collection.................. 0.1
Oil Refining & Marketing................. 0.1
Retail-Restaurants....................... 0.1
Human Resources.......................... 0.1
Office Supplies & Forms.................. 0.1
Aerospace/Defense........................ 0.1
Beverages-Non-alcoholic.................. 0.1
Real Estate Operations & Development..... 0.1
Steel-Specialty.......................... 0.1
Finance-Mortgage Loan/Banker............. 0.1
Property Trust........................... 0.1
Gas-Distribution......................... 0.1
Coal..................................... 0.1
Brewery.................................. 0.1
Medical-Generic Drugs.................... 0.1
SupraNational............................ 0.1
Investment Management/Advisor Services... 0.1
Publishing-Books......................... 0.1
23
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Pharmacy Services............................ 0.1%
Retail-Sporting Goods........................ 0.1
Machinery-Farming............................ 0.1
Chemicals-Plastics........................... 0.1
Schools...................................... 0.1
Banks-Fiduciary.............................. 0.1
Warehousing & Harbor Transportation Services. 0.1
Retail-Major Department Stores............... 0.1
Wireless Equipment........................... 0.1
Transport-Equipment & Leasing................ 0.1
Finance-Credit Card.......................... 0.1
Insurance-Property/Casualty.................. 0.1
----
99.4%
====
Country Allocation*
United States........ 67.3%
Canada............... 3.2
Brazil............... 2.6
Australia............ 2.6
Japan................ 2.2
Russia............... 2.1
Sweden............... 2.0
Mexico............... 1.9
Turkey............... 1.5
Norway............... 1.5
United Kingdom....... 1.5
Luxembourg........... 1.3
Philippines.......... 1.1
Venezuela............ 1.0
Bermuda.............. 0.7
Colombia............. 0.6
Greece............... 0.5
Germany.............. 0.5
Spain................ 0.5
Indonesia............ 0.4
Netherlands.......... 0.5
Peru................. 0.4
South Korea.......... 0.4
Italy................ 0.3
Cayman Islands....... 0.4
Uruguay.............. 0.4
France............... 0.3
Argentina............ 0.3
United Arab Emirates. 0.3
Poland............... 0.2
South Africa......... 0.2
Panama............... 0.2
Trinidad and Tobago.. 0.1
Austria.............. 0.1
Ireland.............. 0.2
SupraNational........ 0.1
----
99.4%
====
Credit Quality+#
Government -- Treasury. 1.6%
Government -- Agency... 13.4
AAA.................... 10.1
AA..................... 4.9
A...................... 7.6
BBB.................... 15.1
BB..................... 17.6
B...................... 16.3
CCC.................... 8.2
CC..................... 1.0
C...................... 0.4
Below C................ 1.8
Not Rated@............. 2.0
-----
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.
24
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
Market
Principal Value
Security Description Amount** (Note 2)
----------------------------------------------------------------------
ASSET BACKED SECURITIES -- 1.6%
Diversified Financial Services -- 1.6%
Banc of America Commercial Mtg., Inc.,
Series 2006-6, Class AM
5.39% due 10/10/45(11)........................ $ 145,000 $ 108,796
Bear Stearns Commercial Mtg. Securities, Inc.
Series 2007-PW15, Class A2
5.21% due 02/11/44(11)........................ 825,000 812,902
Chase Mtg. Finance Corp.,
Series 2007-A2, Class 1A1
4.05% due 07/25/37(1)(2)...................... 1,416,787 1,198,934
Citigroup Commercial Mtg. Trust,
Series 2008-C7, Class AM
6.30% due 12/10/49(2)(11)..................... 285,000 197,551
Commercial Mtg. Asset Trust,
Series 1999-C1, Class D
7.35% due 01/17/32(11)........................ 360,000 385,430
Commercial Mtg. Pass Through Certs.
Series 2006-CN2A, Class A2FL
0.47% due 02/05/19*(3)(11).................... 1,575,000 1,187,698
Commercial Mtg. Pass Through Certs.,
Series 2004-LB2A, Class A3
4.22% due 03/10/39(11)........................ 73,573 74,329
Commercial Mtg. Pass Through Certs.,
Series 2004-LB4A, Class A3,
4.41% due 10/15/37(11)........................ 1,500,000 1,456,562
Deutsche ALT-A Securities, Inc.,
Series 2006-AB2, Class A5A,
6.09% due 06/25/36(1)......................... 588,727 289,708
JP Morgan Chase Commercial Mtg.
Securities Corp.,
Series 2006-LDP9, Class AM
5.37% due 05/15/47(11)........................ 413,000 307,043
LB Commercial Conduit Mtg. Trust,
Series 1998-C1, Class E
7.00% due 02/18/30(11)........................ 205,000 225,762
Swift Master Auto Receivables Trust,
Series 2007-2, Class A
0.89% due 10/15/12(3)......................... 2,957,126 2,910,813
Wells Fargo Mtg. Backed Securities Trust,
Series 2006-AR12, Class 2A1
6.10% due 09/25/36(1)(3)...................... 517,575 408,617
----------
Total Asset Backed Securities
(cost $10,759,768)............................ 9,564,145
----------
CONVERTIBLE BONDS & NOTES -- 0.0%
Telecom Services -- 0.0%
ICO North America, Inc.
Notes
7.50% due 08/15/09+(5)(6)(9)(12)(14)(22)......
Total Convertible Bonds & Notes
(cost $312,925)............................... 297,000 103,950
----------
U.S. CORPORATE BONDS & NOTES -- 45.7%
Advertising Services -- 0.3%
Visant Holding Corp.
Company Guar. Notes
7.63% due 10/01/12............................ 1,065,000 1,066,331
Market
Principal Value
Security Description Amount** (Note 2)
-------------------------------------------------------
Advertising Services (continued)
Visant Holding Corp.
Senior Notes
10.25% due 12/01/13(4)........ $ 458,000 $ 474,030
----------
1,540,361
----------
Aerospace/Defense -- 0.1%
Meccanica Holdings USA
Company Guar. Notes
7.38% due 07/15/39*........... 192,000 226,326
Spirit Aerosystems, Inc.
Company Guar. Notes
7.50% due 10/01/17*........... 300,000 298,500
----------
524,826
----------
Agricultural Chemicals -- 0.3%
Terra Capital, Inc.
Company Guar. Notes
7.00% due 02/01/17............ 1,695,000 1,767,037
----------
Airlines -- 1.1%
American Airlines, Inc.
Pass Through Certs.
Series 2001-1, Class A-2
6.82% due 05/23/11............ 1,243,000 1,143,560
American Airlines, Inc.
Pass Through Certs.
Series 1999-1, Class B
7.32% due 10/15/09............ 25,000 24,937
American Airlines, Inc.
Pass Through Certs.
Series 2001-2, Class A-2
7.86% due 04/01/13............ 719,000 718,101
Continental Airlines, Inc.
Pass Through Certs.
Series 2001-1, Class A-2
6.50% due 06/15/11............ 400,000 382,000
Continental Airlines, Inc.
Pass Through Certs.
Series 1991, Class A
6.55% due 02/02/19............ 508,441 480,477
Delta Air Lines, Inc.
Pass Through Certs.
Series 2001-1, Class A2
7.11% due 09/18/11............ 800,000 780,000
Delta Air Lines, Inc.
Pass Through Certs.
Series 2000-1, Class A-2
7.57% due 11/18/10............ 275,000 272,250
Delta Air Lines, Inc.
Senior Sec. Notes
9.50% due 09/15/14*........... 700,000 700,000
Delta Air Lines, Inc.
Senior Sec. Notes
11.75% due 03/15/15*.......... 700,000 652,750
United AirLines, Inc.
Pass Through Certs.
Series 2001-1 Class B
6.93% due 09/01/11............ 752,820 749,055
25
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Airlines (continued)
United AirLines, Inc.
Pass Through Certs.
Series 2000-2, Class A-2
7.19% due 04/01/11......................... $ 303,771 $ 303,012
----------
6,206,142
----------
Applications Software -- 0.1%
SS&C Technologies, Inc.
Company Guar. Notes
11.75% due 12/01/13........................ 730,000 767,413
----------
Auction Houses/Art Dealers -- 0.2%
KAR Holdings, Inc.
Company Guar. Notes
4.48% due 05/01/14(3)...................... 715,000 643,500
KAR Holdings, Inc.
Company Guar. Notes
8.75% due 05/01/14......................... 355,000 351,450
----------
994,950
----------
Auto-Cars/Light Trucks -- 0.3%
Ford Motor Co.
Notes
7.45% due 07/16/31......................... 1,825,000 1,478,250
----------
Auto/Truck Parts & Equipment-Original -- 0.3%
ArvinMeritor, Inc.
Senior Notes
8.13% due 09/15/15......................... 2,118,000 1,842,660
----------
Auto/Truck Parts & Equipment-Replacement -- 0.2%
Allison Transmission
Senior Notes
11.00% due 11/01/15*....................... 1,150,000 1,127,000
Exide Corp.
Notes
10.00% due 03/15/25+(5)(6)................. 225,000 0
----------
1,127,000
----------
Banks-Commercial -- 0.6%
BB&T Corp.
Sub. Notes
0.71% due 05/23/17(3)...................... 280,000 237,817
BB&T Corp.
Senior Notes
3.38% due 09/25/13......................... 200,000 200,800
BB&T Corp.
Sub. Notes
5.25% due 11/01/19......................... 400,000 398,023
CoBank ACB
Sub. Notes
7.88% due 04/16/18*........................ 122,000 118,782
Credit Suisse New York
Sub. Notes
6.00% due 02/15/18......................... 199,000 208,344
KeyBank NA
Sub. Notes
5.45% due 03/03/16......................... 372,000 329,238
Market
Principal Value
Security Description Amount** (Note 2)
-------------------------------------------------------
Banks-Commercial (continued)
KeyBank NA
Sub. Notes
7.41% due 10/15/27............. $ 128,000 $ 128,240
Union Bank of California NA
Sub. Notes
5.95% due 05/11/16............. 330,000 328,137
Wachovia Bank NA
Sub. Notes
5.00% due 08/15/15............. 948,000 913,948
Wachovia Bank NA
Sub. Notes
5.60% due 03/15/16............. 167,000 168,918
Zions Bancorporation
Senior Notes
7.75% due 09/23/14............. 308,000 275,660
----------
3,307,907
----------
Banks-Fiduciary -- 0.1%
State Street Capital Trust IV
Company Guar. Notes
1.30% due 06/15/37(3).......... 590,000 380,504
----------
Banks-Super Regional -- 0.6%
BAC Capital Trust VI
Bank Guar. Bonds
5.63% due 03/08/35............. 350,000 271,387
BAC Capital Trust XI
Bank Guar. Bonds
6.63% due 05/23/36............. 325,000 283,563
BAC Capital Trust XIII
Bank Guar. Notes
0.70% due 03/15/12(3)(7)....... 1,070,000 580,747
Banc One Corp.
Sub. Debentures
8.00% due 04/29/27............. 135,000 160,937
National City Corp.
Senior Notes
4.90% due 01/15/15............. 165,000 166,991
National City Corp.
Sub. Notes
6.88% due 05/15/19............. 400,000 434,273
PNC Funding Corp.
Bank Guar. Notes
4.25% due 09/21/15............. 200,000 200,786
PNC Preferred Funding Trust II
Jr. Sub. Notes
6.11% due 03/15/12*(3)(7)...... 390,000 230,754
USB Capital IX
Company Guar. Notes
6.19% due 04/15/11(3)(7)....... 685,000 525,737
Wachovia Corp.
Senior Notes
0.57% due 06/15/17(3).......... 160,000 137,716
Wachovia Corp.
Sub. Notes
5.63% due 10/15/16............. 200,000 208,807
26
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Banks-Super Regional (continued)
Wells Fargo Bank NA
Sub. Notes
5.75% due 05/16/16.......................... $ 421,000 $ 432,868
----------
3,634,566
----------
Beverages-Non-alcoholic -- 0.1%
Bottling Group LLC
Company Guar. Notes
6.95% due 03/15/14.......................... 446,000 519,792
----------
Beverages-Wine/Spirits -- 0.2%
Constellation Brands, Inc.
Company Guar. Notes
7.25% due 05/15/17.......................... 950,000 945,250
----------
Brewery -- 0.1%
Anheuser-Busch InBev Worldwide, Inc.
Company Guar. Notes
7.75% due 01/15/19*......................... 386,000 456,738
----------
Broadcast Services/Program -- 0.2%
Fisher Communications, Inc.
Senior Notes
8.63% due 09/15/14.......................... 865,000 800,125
Nexstar Broadcasting, Inc.
Company Guar. Notes
0.50% due 01/15/14*(23)..................... 400,984 180,443
Nexstar Broadcasting, Inc.
Company Guar. Notes
7.00% due 01/15/14.......................... 133,000 66,500
----------
1,047,068
----------
Building & Construction Products-Misc. -- 0.2%
Interline Brands, Inc.
Senior Sub. Notes
8.13% due 06/15/14.......................... 752,000 736,960
USG Corp.
Company Guar. Notes
9.75% due 08/01/14*......................... 225,000 235,125
----------
972,085
----------
Building Products-Cement -- 0.2%
Texas Industries, Inc.
Company Guar. Notes
7.25% due 07/15/13.......................... 925,000 888,000
----------
Building-Residential/Commercial -- 0.1%
D.R. Horton, Inc.
Senior Notes
6.50% due 04/15/16.......................... 800,000 787,000
----------
Cable/Satellite TV -- 2.5%
CCH II LLC/CCH II Capital Corp.
Senior Notes, Series B
10.25% due 09/15/10+(8)(12)................. 696,000 779,520
CCH II LLC/CCH II Capital Corp.
Senior Notes
10.25% due 09/15/10+(8)(12)................. 1,197,000 1,346,625
Market
Principal Value
Security Description Amount** (Note 2)
----------------------------------------------------------------------
Cable/Satellite TV (continued)
CCH II LLC/CCH II Capital Corp.
Company Guar. Notes
10.25% due 10/01/13*+(8)(12)................. $ 91,000 $ 95,778
CCO Holdings LLC/CCO Holdings Capital Corp.
Senior Notes
8.75% due 11/15/13+(8)(12)................... 2,101,000 2,132,515
Charter Communications Operating LLC
Senior Notes
12.88% due 09/15/14*+(8)(12)................. 1,044,000 1,130,130
Charter Communications Operating LLC/Charter
Communications Operating Capital
Senior Notes
8.38% due 04/30/14*+(8)(12).................. 1,881,000 1,918,620
Comcast Corp.
Company Guar. Notes
5.85% due 11/15/15........................... 393,000 430,493
Comcast Corp.
Company Guar. Notes
5.90% due 03/15/16........................... 2,030,000 2,181,645
COX Communications, Inc.
Senior Notes
6.95% due 06/01/38*.......................... 212,000 228,667
COX Communications, Inc.
Notes
7.13% due 10/01/12........................... 211,000 235,375
COX Communications, Inc.
Senior Notes
9.38% due 01/15/19*.......................... 579,000 731,550
CSC Holdings, Inc.
Senior Notes
8.50% due 06/15/15*.......................... 1,075,000 1,128,750
DirecTV Holdings LLC/DirecTV Financing Co.
Company Guar. Notes
7.63% due 05/15/16........................... 994,000 1,063,580
DISH DBS Corp.
Company Guar. Notes
7.75% due 05/31/15........................... 1,100,000 1,122,000
Time Warner Cable, Inc.
Company Guar. Notes
5.85% due 05/01/17........................... 185,000 195,054
-----------
14,720,302
-----------
Casino Hotels -- 0.8%
Eldorado Casino Corp. (Shreveport)
Sec. Bonds
10.00% due 08/01/12(6)(23)................... 946,489 802,149
Eldorado Resorts LLC
Senior Notes
9.00% due 04/15/14(5)(6)..................... 425,000 375,339
Harrahs Entertainment, Inc.
Senior Sec. Notes
11.25% due 06/01/17*......................... 1,450,000 1,489,875
MGM Mirage, Inc.
Senior Sec. Notes
11.13% due 11/15/17*......................... 1,125,000 1,240,313
27
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Casino Hotels (continued)
Turning Stone Resort Casino Enterprise
Senior Notes
9.13% due 09/15/14*.................... $ 618,000 $ 590,190
----------
4,497,866
----------
Casino Services -- 0.1%
Snoqualmie Entertainment Authority
Senior Sec. Notes
9.13% due 02/01/15*.................... 1,300,000 689,000
----------
Cellular Telecom -- 0.8%
Cingular Wireless Services, Inc.
Senior Notes
7.88% due 03/01/11..................... 1,406,000 1,525,839
Cricket Communications, Inc.
Company Guar. Notes
9.38% due 11/01/14..................... 500,000 507,500
Cricket Communications, Inc.
Company Guar. Notes
10.00% due 07/15/15.................... 1,225,000 1,258,687
MetroPCS Wireless, Inc.
Company Guar. Notes
9.25% due 11/01/14..................... 925,000 945,813
Nextel Communications, Inc.
Company Guar. Notes
5.95% due 03/15/14..................... 315,000 278,775
----------
4,516,614
----------
Chemicals-Diversified -- 0.3%
E.I. du Pont de Nemours & Co.
Senior Notes
4.75% due 03/15/15..................... 230,000 246,526
Olin Corp.
Senior Notes
8.88% due 08/15/19..................... 858,000 896,610
The Dow Chemical Co.
Senior Notes
5.90% due 02/15/15..................... 200,000 205,277
The Dow Chemical Co.
Senior Notes
8.55% due 05/15/19..................... 257,000 288,905
----------
1,637,318
----------
Chemicals-Plastics -- 0.1%
Hexion US Finance Corp.
Senior Sec. Notes
9.75% due 11/15/14..................... 475,000 408,500
----------
Chemicals-Specialty -- 0.5%
Huntsman International LLC
Senior Sub. Notes
7.38% due 01/01/15..................... 1,260,000 1,143,450
Huntsman International LLC
Company Guar. Notes
7.88% due 11/15/14..................... 35,000 32,638
Johnsondiversey Holdings, Inc.
Company Guar. Notes
9.63% due 05/15/12..................... 625,000 634,375
Market
Principal Value
Security Description Amount** (Note 2)
--------------------------------------------------------------
Chemicals-Specialty (continued)
Momentive Performance Materials, Inc.
Company Guar. Notes
9.75% due 12/01/14.................... $ 683,000 $ 529,325
Momentive Performance Materials, Inc.
Company Guar. Notes
12.50% due 06/15/14*.................. 495,000 516,037
Tronox Worldwide LLC
Company Guar. Notes
9.50% due 12/01/12+(8)(12)............ 795,000 306,075
----------
3,161,900
----------
Coal -- 0.1%
Arch Coal, Inc.
Senior Notes
8.75% due 08/01/16*................... 450,000 463,500
----------
Computer Services -- 0.4%
Compucom Systems, Inc.
Senior Sub. Notes
12.50% due 10/01/15*.................. 1,495,000 1,394,087
Sungard Data Systems, Inc.
Company Guar. Notes
9.13% due 08/15/13.................... 1,045,000 1,055,450
----------
2,449,537
----------
Consumer Products-Misc. -- 0.2%
American Achievement Corp.
Company Guar. Notes
8.25% due 04/01/12*................... 971,000 966,145
Prestige Brands, Inc.
Senior Sub. Notes
9.25% due 04/15/12.................... 325,000 331,500
----------
1,297,645
----------
Containers-Metal/Glass -- 0.3%
Ball Corp.
Company Guar. Notes
7.13% due 09/01/16.................... 228,000 232,560
Ball Corp.
Company Guar. Notes
7.38% due 09/01/19.................... 675,000 685,125
Crown Cork & Seal Co., Inc.
Debentures
8.00% due 04/15/23.................... 735,000 698,250
Owens-Brockway Glass Container, Inc.
Company Guar. Notes
8.25% due 05/15/13.................... 418,000 427,405
----------
2,043,340
----------
Containers-Paper/Plastic -- 0.1%
Graphic Packaging International, Inc.
Company Guar. Notes
9.50% due 06/15/17*................... 750,000 796,875
----------
Decision Support Software -- 0.3%
Vangent, Inc.
Company Guar. Notes
9.63% due 02/15/15.................... 2,050,000 1,909,062
----------
28
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Direct Marketing -- 0.2%
Affinity Group, Inc.
Company Guar. Notes
9.00% due 02/15/12.................... $1,494,000 $1,030,860
----------
Diversified Banking Institutions -- 3.1%
Bank of America Corp.
Senior Notes
4.90% due 05/01/13.................... 352,000 360,859
Bank of America Corp.
Sub. Notes
5.75% due 08/15/16.................... 635,000 625,121
Bank of America Corp.
Senior Notes
5.75% due 12/01/17.................... 424,000 423,227
Bank of America Corp.
Notes
6.50% due 08/01/16.................... 413,000 434,125
Bank of America Corp.
Sub. Notes
7.25% due 10/15/25.................... 117,000 118,436
Bank of America Corp.
Junior Sub. Notes
8.00% due 01/30/18(3)(7).............. 900,000 800,190
Citigroup, Inc.
Sub. Notes
5.00% due 09/15/14.................... 1,067,000 1,015,341
Citigroup, Inc.
Senior Notes
5.50% due 04/11/13.................... 414,000 423,657
Citigroup, Inc.
Senior Notes
5.85% due 07/02/13.................... 622,000 633,202
Citigroup, Inc.
Global Sub. Notes
6.00% due 10/31/33.................... 240,000 200,839
Citigroup, Inc.
Senior Notes
6.13% due 05/15/18.................... 515,000 507,091
Citigroup, Inc.
Senior Notes
6.38% due 08/12/14.................... 200,000 206,778
Citigroup, Inc.
Senior Notes
6.88% due 03/05/38.................... 262,000 262,794
GMAC LLC
Company Guar. Notes
6.00% due 04/01/11*................... 2,655,000 2,489,063
GMAC LLC
Company Guar. Notes
6.88% due 09/15/11*................... 2,376,000 2,245,320
GMAC LLC
Sub. Notes
8.00% due 12/31/18*................... 2,875,000 2,170,625
JP Morgan Chase & Co.
Sub. Notes
4.89% due 09/01/15(3)................. 451,000 421,685
Market
Principal Value
Security Description Amount** (Note 2)
--------------------------------------------------------------------
Diversified Banking Institutions (continued)
JPMorgan Chase & Co.
Senior Notes
3.70% due 01/20/15........................ $ 446,000 $ 442,067
Morgan Stanley
Sub. Notes
4.75% due 04/01/14........................ 208,000 206,465
Morgan Stanley
Senior Notes
5.63% due 09/23/19........................ 200,000 196,660
Morgan Stanley
Senior Notes
6.00% due 04/28/15........................ 1,986,000 2,103,114
The Goldman Sachs Group, Inc.
Senior Notes
5.13% due 01/15/15........................ 608,000 635,377
The Goldman Sachs Group, Inc.
Senior Notes
5.95% due 01/18/18........................ 400,000 414,989
The Goldman Sachs Group, Inc.
Sub. Notes
6.75% due 10/01/37........................ 584,000 602,706
-----------
17,939,731
-----------
Diversified Financial Services -- 0.5%
Citigroup Capital XXI
Company Guar. Bonds
8.30% due 12/21/57(3)..................... 1,400,000 1,244,250
General Electric Capital Corp.
Senior Notes
5.88% due 01/14/38........................ 504,000 462,208
General Electric Capital Corp.
Senior Notes
6.15% due 08/07/37........................ 881,000 836,048
General Electric Capital Corp.
Senior Notes
6.75% due 03/15/32........................ 279,000 284,838
USAA Capital Corp.
Notes
3.50% due 07/17/14*....................... 172,000 171,861
-----------
2,999,205
-----------
Diversified Manufacturing Operations -- 0.4%
General Electric Co.
Senior Notes
5.25% due 12/06/17........................ 190,000 194,988
Harland Clarke Holdings Corp.
Notes
6.00% due 05/15/15(3)..................... 425,000 326,187
Harland Clarke Holdings Corp.
Notes
9.50% due 05/15/15........................ 1,150,000 1,029,250
SPX Corp.
Senior Notes
7.63% due 12/15/14........................ 525,000 528,937
Textron, Inc.
Senior Notes
6.20% due 03/15/15........................ 80,000 80,317
-----------
2,159,679
-----------
29
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
-----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Electric-Generation -- 1.0%
Edison Mission Energy
Senior Notes
7.63% due 05/15/27............................. $ 950,000 $ 679,250
Homer City Funding LLC
Senior Notes
8.14% due 10/01/19............................. 471,960 455,441
Midwest Generation LLC
Pass Thru Certs., Series B
8.56% due 01/02/16............................. 480,010 487,210
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs., Series B
9.24% due 07/02/17............................. 783,242 787,159
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs., Series C
9.68% due 07/02/26............................. 675,000 702,000
Sithe/Independence Funding Corp.
Senior Notes
9.00% due 12/30/13............................. 677,709 684,045
The AES Corp.
Senior Notes
8.00% due 10/15/17............................. 1,320,000 1,328,250
The AES Corp.
Senior Notes
8.00% due 06/01/20............................. 625,000 620,313
----------
5,743,668
----------
Electric-Integrated -- 1.8%
Ameren Corp.
Senior Notes
8.88% due 05/15/14............................. 329,000 369,811
CenterPoint Energy Houston Electric LLC
General Refunding Mtg.
7.00% due 03/01/14............................. 415,000 471,630
Commonwealth Edison Co.
1st Mtg. Notes
6.15% due 09/15/17............................. 237,000 261,888
Dominion Resources, Inc.
Jr. Sub Notes
6.30% due 09/30/66(3).......................... 374,000 299,200
Energy East Corp.
Notes
6.75% due 07/15/36............................. 246,000 279,415
FirstEnergy Corp.
Senior Notes
7.38% due 11/15/31............................. 326,000 365,422
FirstEnergy Solutions Corp.
Company Guar. Notes
6.80% due 08/15/39*............................ 241,000 255,446
Mirant Americas Generation LLC
Senior Notes
8.50% due 10/01/21............................. 1,380,000 1,200,600
Mirant Mid-Atlantic LLC
Pass Through Certs., Series B
9.13% due 06/30/17............................. 463,365 472,633
Nevada Power Co.
General Refunding Mtg.
7.13% due 03/15/19............................. 613,000 697,263
Market
Principal Value
Security Description Amount** (Note 2)
----------------------------------------------------------------------
Electric-Integrated (continued)
Ohio Power Co.
Senior Notes
5.38% due 10/01/21........................... $ 380,000 $ 385,570
Pennsylvania Electric Co
Senior Notes
5.20% due 04/01/20........................... 415,000 413,703
Pennsylvania Electric Co.
Senior Notes
6.15% due 10/01/38........................... 470,000 470,058
Pepco Holdings, Inc.
Senior Notes
6.13% due 06/01/17........................... 120,000 123,800
Pepco Holdings, Inc.
Senior Notes
6.45% due 08/15/12........................... 940,000 1,008,591
PSEG Power LLC
Company Guar. Notes
7.75% due 04/15/11........................... 50,000 54,020
Puget Sound Energy, Inc.
Senior Sec. Notes
5.76% due 10/01/39........................... 240,000 244,774
Southern California Edison Co.
1st Mtg. Bonds Series 04-G
5.75% due 04/01/35........................... 80,000 87,990
Texas Competitive Electric Holdings Co., LLC
Company Guar. Notes, Series A
10.25% due 11/01/15.......................... 2,690,000 1,936,800
Texas Competitive Electric Holdings Co., LLC
Company Guar. Notes
10.50% due 11/01/16(9)....................... 1,526,281 1,022,608
Toledo Edison Co.
1st Mtg. Notes
7.25% due 05/01/20........................... 193,000 227,287
-----------
10,648,509
-----------
Electronic Components-Misc. -- 0.0%
Sanmina-SCI Corp.
Company Guar. Notes
6.75% due 03/01/13........................... 175,000 166,250
-----------
Electronic Components-Semiconductors -- 0.4%
Amkor Technology, Inc.
Senior Notes
7.75% due 05/15/13........................... 875,000 876,094
National Semiconductor Corp.
Senior Notes
6.60% due 06/15/17........................... 333,000 329,090
Spansion LLC
Senior Sec. Notes
5.33% due 06/01/13*+(8)(12).................. 1,230,000 1,245,375
-----------
2,450,559
-----------
Electronics-Military -- 0.2%
L-3 Communications Corp.
Senior Notes
5.20% due 10/15/19*.......................... 160,000 160,400
30
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Electronics-Military (continued)
L-3 Communications Corp.
Company Guar. Notes
7.63% due 06/15/12......................... $ 925,000 $ 937,719
----------
1,098,119
----------
Finance-Auto Loans -- 1.2%
Ford Motor Credit Co. LLC
Senior Notes
7.38% due 02/01/11......................... 4,050,000 4,028,871
Ford Motor Credit Co. LLC
Senior Notes
7.50% due 08/01/12......................... 1,225,000 1,176,205
Ford Motor Credit Co. LLC
Senior Notes
9.75% due 09/15/10......................... 1,700,000 1,737,211
----------
6,942,287
----------
Finance-Commercial -- 0.4%
CIT Group, Inc.
Senior Notes
5.65% due 02/13/17(24)(25)................. 2,401,000 1,501,364
Textron Financial Corp.
Senior Notes
5.40% due 04/28/13......................... 640,000 628,415
----------
2,129,779
----------
Finance-Consumer Loans -- 0.0%
SLM Corp.
Senior Notes
5.13% due 08/27/12......................... 236,000 201,939
----------
Finance-Credit Card -- 0.1%
FIA Card Services NA
Sub. Notes
7.13% due 11/15/12......................... 298,000 321,999
----------
Finance-Investment Banker/Broker -- 0.3%
Jefferies Group, Inc.
Senior Notes
8.50% due 07/15/19......................... 80,000 84,669
Lehman Brothers Holdings Capital Trust VII
Company Guar. Notes
5.86% due 05/31/12+(7)(8)(12).............. 222,000 22
Lehman Brothers Holdings, Inc.
Sub. Notes
6.75% due 12/28/17+(8)(12)................. 280,000 28
Lehman Brothers Holdings, Inc.
Sub. Notes
7.50% due 05/11/38+(8)(12)................. 361,000 36
Merrill Lynch & Co., Inc.
Sub. Notes
5.70% due 05/02/17......................... 301,000 294,722
Merrill Lynch & Co., Inc.
Sub. Notes
6.22% due 09/15/26......................... 350,000 331,762
Merrill Lynch & Co., Inc.
Senior Notes
6.40% due 08/28/17......................... 293,000 296,740
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------------------
Finance-Investment Banker/Broker (continued)
The Bear Stearns Cos., Inc.
Senior Notes
5.30% due 10/30/15................................. $ 507,000 $ 535,325
The Bear Stearns Cos., Inc.
Senior Notes
6.40% due 10/02/17................................. 444,000 483,014
----------
2,026,318
----------
Finance-Mortgage Loan/Banker -- 0.1%
Countrywide Financial Corp.
Sub. Notes
6.25% due 05/15/16................................. 200,000 200,316
Countrywide Home Loans, Inc.
Company Guar. Notes
4.00% due 03/22/11................................. 270,000 274,410
----------
474,726
----------
Finance-Other Services -- 0.0%
National Rural Utilities Cooperative Finance Corp.
Senior Sec. Notes
3.88% due 09/16/15................................. 200,000 202,170
----------
Food-Meat Products -- 0.3%
Smithfield Foods, Inc.
Senior Sec. Notes
10.00% due 07/15/14*............................... 1,225,000 1,286,250
Tyson Foods, Inc.
Senior Notes
10.50% due 03/01/14................................ 225,000 254,812
----------
1,541,062
----------
Food-Misc. -- 0.2%
Del Monte Foods Co.
Senior Sub. Notes
7.50% due 10/15/19*................................ 450,000 454,500
HJ Heinz Finance Co.
Company Guar. Notes
7.13% due 08/01/39*................................ 192,000 227,248
Kraft Foods, Inc.
Senior Notes
6.75% due 02/19/14................................. 416,000 464,097
----------
1,145,845
----------
Food-Retail -- 0.2%
Ingles Markets, Inc.
Senior Notes
8.88% due 05/15/17................................. 700,000 717,500
SUPERVALU, Inc.
Senior Notes
8.00% due 05/01/16................................. 350,000 362,250
----------
1,079,750
----------
Funeral Services & Related Items -- 0.2%
Carriage Services, Inc.
Senior Notes
7.88% due 01/15/15................................. 1,375,000 1,289,062
----------
31
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Gambling (Non-Hotel) -- 0.3%
Downstream Development Authority
Senior Sec. Notes
12.00% due 10/15/15*.................. $1,275,000 $ 988,125
Waterford Gaming LLC
Senior Notes
8.63% due 09/15/14*................... 1,139,000 740,350
----------
1,728,475
----------
Gas-Distribution -- 0.1%
Sempra Energy
Senior Notes
6.50% due 06/01/16.................... 420,000 464,286
----------
Hazardous Waste Disposal -- 0.1%
Clean Harbors, Inc.
Senior Sec. Notes
7.63% due 08/15/16*................... 725,000 742,219
----------
Home Furnishings -- 0.0%
Simmons Co.
Senior Disc. Notes
10.00% due 12/15/14(4)(24)............ 152,000 38,000
----------
Hotel/Motels -- 0.1%
Gaylord Entertainment Co.
Company Guar. Notes
6.75% due 11/15/14.................... 852,000 788,100
----------
Human Resources -- 0.1%
Team Health, Inc.
Company Guar. Notes
11.25% due 12/01/13................... 543,000 571,508
----------
Independent Power Producers -- 0.3%
NRG Energy, Inc.
Company Guar. Notes
7.38% due 02/01/16.................... 910,000 880,425
Orion Power Holdings, Inc.
Senior Notes
12.00% due 05/01/10................... 650,000 672,750
RRI Energy, Inc.
Senior Notes
7.88% due 12/31/17.................... 495,000 483,244
----------
2,036,419
----------
Industrial Gases -- 0.0%
Airgas, Inc.
Company Guar. Notes
4.50% due 09/15/14.................... 160,000 162,833
----------
Insurance Brokers -- 0.3%
Marsh & McLennan Cos., Inc.
Senior Notes
5.15% due 09/15/10.................... 200,000 204,103
USI Holdings Corp.
Senior Sub. Notes
9.75% due 05/15/15*................... 2,015,000 1,785,794
----------
1,989,897
----------
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------
Insurance-Life/Health -- 0.4%
Americo Life, Inc.
Notes
7.88% due 05/01/13*..................... $ 38,000 $ 30,400
Genworth Financial, Inc.
Notes
5.75% due 06/15/14...................... 200,000 179,322
Monumental Global Funding II
Senior Sec. Notes
5.65% due 07/14/11*..................... 174,000 177,924
National Life Insurance Co.
Sub. Notes
10.50% due 09/15/39*.................... 248,000 252,568
Pacific Life Insurance Co.
Notes
9.25% due 06/15/39*..................... 218,000 249,969
Prudential Financial, Inc.
Notes
4.75% due 09/17/15...................... 360,000 357,474
Prudential Financial, Inc.
Senior Notes
6.20% due 01/15/15...................... 390,000 412,606
Torchmark Corp.
Senior Notes
9.25% due 06/15/19...................... 200,000 224,852
Unum Group
Senior Notes
7.13% due 09/30/16...................... 220,000 222,595
----------
2,107,710
----------
Insurance-Multi-line -- 0.3%
Hartford Financial Services Group, Inc.
Senior Notes
5.95% due 10/15/36...................... 453,000 369,939
MetLife, Inc.
Senior Notes
6.75% due 06/01/16...................... 230,000 256,682
Metropolitan Life Global Funding I
Notes
2.88% due 09/17/12*..................... 460,000 461,137
Metropolitan Life Global Funding I
Notes
5.13% due 06/10/14*..................... 494,000 516,077
Nationwide Mutual Insurance Co.
Notes
9.38% due 08/15/39*..................... 302,000 321,827
----------
1,925,662
----------
Insurance-Mutual -- 0.1%
Liberty Mutual Group, Inc.
Notes
6.50% due 03/15/35*..................... 240,000 193,869
Liberty Mutual Group, Inc.
Company Guar. Bonds
10.75% due 06/15/58*(3)................. 633,000 601,350
----------
795,219
----------
32
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Insurance-Property/Casualty -- 0.1%
Markel Corp.
Senior Notes
7.13% due 09/30/19.................... $ 200,000 $ 207,455
W.R. Berkley Corp.
Senior Notes
6.25% due 02/15/37.................... 115,000 103,960
----------
311,415
----------
Investment Management/Advisor Services -- 0.1%
Ameriprise Financial, Inc.
Senior Notes
5.35% due 11/15/10.................... 15,000 15,275
Janus Capital Group, Inc.
Notes
6.95% due 06/15/17.................... 434,000 412,988
----------
428,263
----------
Machinery-Farming -- 0.1%
Case New Holland, Inc.
Company Guar. Notes
7.75% due 09/01/13*................... 425,000 422,875
----------
Medical Information Systems -- 0.1%
Spheris, Inc.
Senior Sub. Notes
11.00% due 12/15/12................... 1,800,000 738,000
----------
Medical Products -- 0.5%
Baxter International, Inc.
Senior Notes
5.90% due 09/01/16.................... 1,001,000 1,124,792
CareFusion Corp.
Senior Notes
4.13% due 08/01/12*................... 240,000 246,359
DJO Finance LLC/DJO Finance Corp.
Company Guar. Notes
10.88% due 11/15/14................... 475,000 485,687
LVB Acquisition Holding LLC
Company Guar. Notes
10.00% due 10/15/17................... 1,000,000 1,065,000
----------
2,921,838
----------
Medical-Biomedical/Gene -- 0.1%
Amgen, Inc.
Senior Notes
5.85% due 06/01/17.................... 450,000 494,938
Bio-Rad Laboratories, Inc.
Senior Sub. Notes
8.00% due 09/15/16*................... 350,000 363,125
----------
858,063
----------
Medical-Drugs -- 0.6%
Axcan Intermediate Holdings, Inc.
Senior Notes
9.25% due 03/01/15.................... 1,150,000 1,213,250
Merck & Co., Inc.
Senior Notes
4.00% due 06/30/15.................... 168,000 176,524
Market
Principal Value
Security Description Amount** (Note 2)
------------------------------------------------------------------
Medical-Drugs (continued)
Valeant Pharmaceuticals International
Senior Notes
8.38% due 06/15/16*...................... $1,150,000 $ 1,167,250
Wyeth
Bonds
5.50% due 02/01/14....................... 1,074,000 1,172,923
-----------
3,729,947
-----------
Medical-Generic Drugs -- 0.1%
Watson Pharmaceuticals, Inc.
Senior Notes
6.13% due 08/15/19....................... 433,000 455,384
-----------
Medical-HMO -- 0.6%
CIGNA Corp.
Senior Notes
8.50% due 05/01/19....................... 825,000 946,837
Multiplan, Inc.
Senior Sub. Notes
10.38% due 04/15/16*..................... 1,850,000 1,785,250
UnitedHealth Group, Inc.
Senior Notes
5.25% due 03/15/11....................... 325,000 337,781
WellPoint, Inc.
Senior Notes
5.00% due 01/15/11....................... 195,000 200,975
-----------
3,270,843
-----------
Medical-Hospitals -- 1.8%
Community Health Systems, Inc.
Company Guar. Notes
8.88% due 07/15/15....................... 1,525,000 1,563,125
HCA, Inc.
Senior Notes
7.50% due 11/15/95....................... 1,925,000 1,361,911
HCA, Inc.
Senior Notes
7.88% due 02/01/11....................... 900,000 907,875
HCA, Inc.
Senior Notes
8.50% due 04/15/19*...................... 2,225,000 2,325,125
HCA, Inc.
Senior Notes
8.75% due 09/01/10....................... 525,000 532,875
HCA, Inc.
Senior Sec. Notes
9.25% due 11/15/16....................... 2,975,000 3,075,406
IASIS Healthcare LLC/IASIS Capital Corp.
Company Guar. Notes
8.75% due 06/15/14....................... 872,000 872,000
-----------
10,638,317
-----------
Metal-Aluminum -- 0.1%
Alcoa, Inc.
Senior Notes
6.50% due 06/15/18....................... 577,000 558,732
33
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Metal-Aluminum (continued)
Noranda Aluminum Holding Corp.
Senior Notes
7.16% due 11/15/14(3)(9).............. $ 522,737 $ 256,141
----------
814,873
----------
Metal-Copper -- 0.1%
Freeport-McMoRan Copper & Gold, Inc.
Senior Notes
8.25% due 04/01/15.................... 550,000 585,062
Freeport-McMoRan Copper & Gold, Inc.
Senior Notes
8.38% due 04/01/17.................... 213,000 226,579
----------
811,641
----------
Mining -- 0.2%
Noranda Aluminum Acquisition Corp.
Company Guar. Notes
5.41% due 11/15/14(3)(9).............. 1,409,946 994,012
----------
Multimedia -- 0.2%
Haights Cross Operating Co.
Senior Notes
11.75% due 08/15/11(8)................ 125,000 54,062
News America, Inc.
Company Guar. Notes
6.15% due 03/01/37.................... 268,000 262,224
News America, Inc.
Company Guar. Notes
6.90% due 08/15/39*................... 240,000 255,500
Time Warner Entertainment Co. LP
Senior Notes
8.38% due 07/15/33.................... 250,000 300,470
----------
872,256
----------
Music -- 0.2%
WMG Acquisition Corp.
Senior Notes
9.50% due 06/15/16*................... 1,300,000 1,371,500
----------
Non-Ferrous Metals -- 0.0%
Renco Metals, Inc.
Bonds
11.50% due 07/01/03+(5)(6)(13)(14).... 500,000 0
----------
Non-Hazardous Waste Disposal -- 0.4%
Allied Waste North America, Inc.
Company Guar. Notes
7.38% due 04/15/14.................... 175,000 182,097
Casella Waste Systems, Inc.
Senior Sec. Notes
11.00% due 07/15/14*.................. 325,000 341,250
Waste Management, Inc.
Company Guar. Notes
6.38% due 11/15/12.................... 270,000 295,491
Waste Management, Inc.
Company Guar. Notes
7.75% due 05/15/32.................... 255,000 309,811
Waste Services, Inc.
Senior Sub. Notes
9.50% due 04/15/14*................... 1,125,000 1,119,375
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------------
Non-Hazardous Waste Disposal (continued)
Waste Services, Inc.
Senior Sub. Notes
9.50% due 04/15/14.......................... $ 165,000 $ 164,175
----------
2,412,199
----------
Office Automation & Equipment -- 0.2%
Pitney Bowes, Inc.
Senior Notes
5.25% due 01/15/37.......................... 920,000 949,999
Xerox Corp.
Senior Notes
6.35% due 05/15/18.......................... 280,000 291,090
----------
1,241,089
----------
Office Supplies & Forms -- 0.1%
ACCO Brands Corp.
Senior Sec. Notes
10.63% due 03/15/15*........................ 525,000 548,625
----------
Oil Companies-Exploration & Production -- 2.4%
Atlas Energy Resources LLC
Senior Notes
10.75% due 02/01/18*........................ 1,150,000 1,196,000
Belden & Blake Corp.
Company Guar. Sec. Notes
8.75% due 07/15/12.......................... 150,000 139,500
Brigham Exploration Co.
Company Guar. Notes
9.63% due 05/01/14.......................... 1,020,000 902,700
Chaparral Energy, Inc.
Company Guar. Notes
8.50% due 12/01/15.......................... 895,000 720,475
Chesapeake Energy Corp.
Senior Notes
6.63% due 01/15/16.......................... 1,150,000 1,086,750
Chesapeake Energy Corp.
Senior Notes
7.25% due 12/15/18.......................... 900,000 850,500
Chesapeake Energy Corp.
Senior Notes
9.50% due 02/15/15.......................... 550,000 578,875
Concho Resources, Inc.
Company Guar. Notes
8.63% due 10/01/17.......................... 200,000 205,000
Costilla Energy, Inc.
Senior Notes
10.25% due 10/01/06+(5)(6).................. 500,000 0
Encore Acquisition Co.
Senior Sub. Notes
6.00% due 07/15/15.......................... 675,000 610,875
Encore Acquisition Co.
Senior Sub. Notes
6.25% due 04/15/14.......................... 325,000 302,250
Encore Acquisition Co.
Senior Notes
9.50% due 05/01/16.......................... 550,000 580,250
Hilcorp Energy I LP
Senior Notes
7.75% due 11/01/15*......................... 430,000 406,350
34
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Oil Companies-Exploration & Production (continued)
Hilcorp Energy I LP
Senior Notes
9.00% due 06/01/16*................... $ 150,000 $ 148,875
Kerr-McGee Corp.
Company Guar. Notes
6.95% due 07/01/24.................... 524,000 561,020
MXEnergy Holdings, Inc.
Senior Sec. Notes
13.25% due 08/01/14*(5)(6)............ 277,000 221,600
Plains Exploration & Production Co.
Company Guar. Notes
7.75% due 06/15/15.................... 575,000 570,687
Plains Exploration & Production Co.
Company Guar. Notes
10.00% due 03/01/16................... 600,000 646,500
Quicksilver Resources, Inc.
Company Guar. Notes
7.13% due 04/01/16.................... 275,000 238,563
Quicksilver Resources, Inc.
Senior Notes
8.25% due 08/01/15.................... 1,125,000 1,096,875
Quicksilver Resources, Inc.
Senior Notes
9.13% due 08/15/19.................... 625,000 621,875
Quicksilver Resources, Inc.
Senior Notes
11.75% due 01/01/16................... 150,000 165,375
Sabine Pass LNG LP
Senior Sec. Notes
7.50% due 11/30/16.................... 2,690,000 2,296,587
-----------
14,147,482
-----------
Oil Companies-Integrated -- 0.3%
ConocoPhillips Holding Co.
Senior Notes
6.95% due 04/15/29.................... 258,000 302,778
Hess Corp.
Senior Notes
7.13% due 03/15/33.................... 320,000 352,099
Hess Corp.
Senior Notes
7.88% due 10/01/29.................... 691,000 809,374
Phillips Petroleum Co.
Debentures
7.00% due 03/30/29.................... 286,000 326,111
-----------
1,790,362
-----------
Oil Refining & Marketing -- 0.1%
Valero Energy Corp.
Senior Notes
6.63% due 06/15/37.................... 248,000 221,482
Western Refining, Inc.
Senior Sec. Notes
11.25% due 06/15/17*.................. 425,000 401,625
-----------
623,107
-----------
Market
Principal Value
Security Description Amount** (Note 2)
-------------------------------------------------------------
Oil-Field Services -- 0.3%
Basic Energy Services, Inc.
Senior Sec. Notes
11.63% due 08/01/14*................ $ 725,000 $ 768,500
Helix Energy Solutions Group, Inc.
Senior Notes
9.50% due 01/15/16*................. 1,140,000 1,140,000
Oslo Seismic Services, Inc.
1st Mtg. Bonds
8.28% due 06/01/11.................. 88,123 89,329
----------
1,997,829
----------
Paper & Related Products -- 1.0%
Caraustar Industries, Inc.
Senior Sec. Notes
10.00% due 08/15/14(5)(6)(9)........ 252,571 252,571
Cellu Tissue Holdings, Inc.
Senior Sec. Notes
11.50% due 06/01/14................. 625,000 668,750
Georgia-Pacific LLC
Company Guar. Notes
7.00% due 01/15/15*................. 770,000 758,450
Georgia-Pacific LLC
Company Guar. Notes
7.13% due 01/15/17*................. 365,000 356,788
Georgia-Pacific LLC
Senior Notes
7.75% due 11/15/29.................. 277,000 254,840
International Paper Co.
Senior Notes
7.95% due 06/15/18.................. 266,000 288,333
International Paper Co.
Senior Notes
9.38% due 05/15/19.................. 1,728,000 2,023,308
MeadWestvaco Corp.
Senior Notes
7.38% due 09/01/19.................. 220,000 230,461
NewPage Corp.
Senior Sec. Notes
11.38% due 12/31/14*................ 1,125,000 1,105,312
----------
5,938,813
----------
Pharmacy Services -- 0.1%
Express Scripts, Inc.
Senior Notes
6.25% due 06/15/14.................. 230,000 252,757
Express Scripts, Inc.
Senior Notes
7.25% due 06/15/19.................. 146,000 171,470
----------
424,227
----------
Physicians Practice Management -- 0.2%
US Oncology, Inc.
Senior Sec. Notes
9.13% due 08/15/17*................. 975,000 1,026,188
----------
35
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Pipelines -- 1.4%
Copano Energy LLC
Company Guar. Notes
8.13% due 03/01/16.......................... $1,835,000 $1,789,125
Dynegy-Roseton Danskammer
Pass Through Certs., Series B
7.67% due 11/08/16.......................... 1,945,000 1,786,969
El Paso Corp.
Senior Sub. Notes
6.88% due 06/15/14.......................... 925,000 906,500
El Paso Corp.
Senior Notes
12.00% due 12/12/13......................... 150,000 171,375
El Paso Natural Gas Co.
Senior Notes
5.95% due 04/15/17.......................... 575,000 594,016
Enterprise Products Operating LLC
Company Guar. Notes
4.60% due 08/01/12.......................... 230,000 238,316
MarkWest Energy Partners LP/MarkWest Energy
Finance Corp.
Company Guar. Notes
8.50% due 07/15/16.......................... 550,000 544,500
MarkWest Energy Partners LP/MarkWest Energy
Finance Corp.
Senior Notes
8.75% due 04/15/18.......................... 525,000 522,375
NGC Corp. Capital Trust
Company Guar. Bonds
8.32% due 06/01/27.......................... 1,290,000 580,500
ONEOK, Inc.
Senior Notes
6.00% due 06/15/35.......................... 299,000 295,151
Plains All American Pipeline, LP
Senior Notes
4.25% due 09/01/12.......................... 332,000 341,301
Plains All American Pipeline, LP
Company Guar. Notes
5.75% due 01/15/20.......................... 228,000 229,764
Regency Energy Partners LP/Regency Energy
Finance Corp.
Company Guar. Notes
8.38% due 12/15/13.......................... 350,000 353,500
----------
8,353,392
----------
Printing-Commercial -- 0.1%
Valassis Communications, Inc.
Senior Notes
8.25% due 03/01/15.......................... 865,000 775,256
----------
Property Trust -- 0.1%
WEA Finance LLC / WT Finance Australia
Property, Ltd.
Company Guar. Notes
6.75% due 09/02/19*......................... 460,000 465,290
----------
Publishing-Books -- 0.1%
TL Acquisitions, Inc.
Senior Notes
10.50% due 01/15/15*........................ 450,000 425,250
----------
Market
Principal Value
Security Description Amount** (Note 2)
-------------------------------------------------------------------
Publishing-Newspapers -- 0.1%
Gannett Co., Inc.
Company Guar. Notes
8.75% due 11/15/14*....................... $ 425,000 $ 415,437
Gannett Co., Inc.
Company Guar. Notes
9.38% due 11/15/17*....................... 275,000 267,438
Knight Ridder, Inc.
Debentures
6.88% due 03/15/29........................ 205,000 98,400
----------
781,275
----------
Publishing-Periodicals -- 0.1%
Nielsen Finance LLC / Nielsen Finance Co.
Company Guar. Notes
11.50% due 05/01/16....................... 650,000 682,500
The Reader's Digest Association, Inc.
Company Guar. Notes
9.00% due 02/15/17+(8)(12)................ 2,115,000 47,588
----------
730,088
----------
Real Estate Investment Trusts -- 0.2%
Omega Healthcare Investors, Inc.
Senior Notes
7.00% due 04/01/14........................ 1,150,000 1,118,375
----------
Real Estate Management/Services -- 0.1%
CB Richard Ellis Services, Inc.
Senior Sub. Notes
11.63% due 06/15/17*...................... 650,000 702,000
----------
Real Estate Operations & Development -- 0.1%
Country Garden Holdings Co.
Senior Notes
11.75% due 09/10/14*...................... 330,000 326,700
----------
Recycling -- 0.0%
Aleris International, Inc.
Company Guar. Notes
9.00% due 12/15/14*+(8)(9)(12)............ 3,285,000 3,285
----------
Rental Auto/Equipment -- 0.2%
RSC Equipment Rental, Inc.
Notes
9.50% due 12/01/14........................ 1,188,000 1,146,420
----------
Research & Development -- 0.1%
Alion Science and Technology Corp.
Company Guar. Notes
10.25% due 02/01/15....................... 1,015,000 756,175
----------
Retail-Apparel/Shoe -- 0.3%
Limited Brands, Inc.
Senior Notes
5.25% due 11/01/14........................ 646,000 599,314
Limited Brands, Inc.
Senior Notes
6.95% due 03/01/33........................ 847,000 636,016
Limited Brands, Inc.
Senior Notes
8.50% due 06/15/19*....................... 365,000 381,838
----------
1,617,168
----------
36
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Retail-Discount -- 0.0%
Wal-Mart Stores, Inc.
Senior Notes
3.20% due 05/15/14..................... $210,000 $ 214,411
----------
Retail-Drug Store -- 0.2%
Rite Aid Corp. Company Guar.
Notes
9.50% due 06/15/17..................... 616,000 498,960
Rite Aid Corp.
Senior Sec. Notes
9.75% due 06/12/16*.................... 200,000 216,000
Rite Aid Corp.
Senior Sec. Notes
10.38% due 07/15/16.................... 425,000 419,687
----------
1,134,647
----------
Retail-Major Department Stores -- 0.1%
Saks, Inc.
Company Guar. Notes
9.88% due 10/01/11..................... 375,000 375,000
----------
Retail-Petroleum Products -- 0.2%
Ferrellgas LP
Senior Notes
6.75% due 05/01/14..................... 589,000 560,286
Inergy LP/Inergy Finance Corp.
Company Guar. Notes
8.25% due 03/01/16..................... 725,000 728,625
----------
1,288,911
----------
Retail-Regional Department Stores -- 0.3%
JC Penney Corp., Inc.
Senior Notes
7.40% due 04/01/37..................... 455,000 404,950
Macy's Retail Holdings, Inc.
Company Guar. Notes
5.90% due 12/01/16..................... 679,000 622,095
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.38% due 03/15/37..................... 421,000 331,682
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.65% due 07/15/24..................... 450,000 354,881
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.90% due 04/01/29..................... 400,000 315,546
----------
2,029,154
----------
Retail-Restaurants -- 0.1%
Brinker International, Inc.
Senior Notes
5.75% due 06/01/14..................... 358,000 341,531
Wendy's/Arby's Restaurants LLC
Senior Notes
10.00% due 07/15/16*................... 225,000 239,062
----------
580,593
----------
Market
Principal Value
Security Description Amount** (Note 2)
------------------------------------------------------------
Retail-Sporting Goods -- 0.1%
Freedom Group, Inc.
Senior Sec. Notes
10.25% due 08/01/15*............... $ 400,000 $ 424,000
----------
Rubber-Tires -- 0.3%
The Goodyear Tire & Rubber Co.
Senior Notes
9.00% due 07/01/15................. 625,000 648,437
The Goodyear Tire & Rubber Co.
Senior Notes
10.50% due 05/15/16................ 1,025,000 1,112,125
----------
1,760,562
----------
Rubber/Plastic Products -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/07+(5)(6)(12)(14). 100,000 0
----------
Schools -- 0.1%
Princeton University
Senior Notes
5.70% due 03/01/39................. 360,000 395,813
----------
Seismic Data Collection -- 0.1%
Seitel, Inc.
Senior Notes
9.75% due 02/15/14................. 1,010,000 686,800
----------
Special Purpose Entities -- 0.9%
AAC Group Holding Corp.
Senior Notes
10.25% due 10/01/12*(4)............ 565,000 539,575
Buffalo Thunder Development
Authority
Senior Notes
9.38% due 12/15/14+*(8)............ 3,200,000 568,000
CCM Merger, Inc.
Notes
8.00% due 08/01/13*................ 625,000 512,500
Chukchansi Economic Development
Authority
Senior Notes
8.00% due 11/15/13*................ 845,000 667,550
FireKeepers Development Authority
Senior Notes
13.88% due 05/15/15*............... 750,000 796,875
Fox Acquisition Sub LLC
Senior Notes
13.38% due 07/15/16*............... 1,000,000 635,000
ING USA Global Funding Trust
Notes
4.50% due 10/01/10................. 268,000 271,266
Local TV Finance LLC
Senior Notes
9.25% due 06/15/15*(9)............. 962,850 327,369
Principal Life Global Funding I
Senior Sec. Notes
5.25% due 01/15/13*................ 296,000 301,412
Southern Star Central Corp.
Senior Notes
6.75% due 03/01/16................. 500,000 477,500
37
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Special Purpose Entities (continued)
TECO Finance, Inc.
Company Guar. Notes
6.57% due 11/01/17.................... $ 160,000 $ 165,170
----------
5,262,217
----------
Specified Purpose Acquisitions -- 0.0%
ESI Tractebel Acquisition Corp.
Company Guar. Bonds
7.99% due 12/30/11.................... 134,000 133,307
----------
Steel-Producers -- 0.6%
AK Steel Corp.
Company Guar. Notes
7.75% due 06/15/12.................... 425,000 426,594
Reliance Steel & Aluminum Co.
Company Guar. Notes
6.85% due 11/15/36.................... 1,070,000 929,144
Ryerson, Inc.
Senior Sec. Notes
12.00% due 11/01/15................... 1,222,000 1,160,900
Steel Dynamics, Inc.
Company Guar. Notes
6.75% due 04/01/15.................... 790,000 756,425
----------
3,273,063
----------
Steel-Specialty -- 0.1%
Allegheny Technologies, Inc.
Senior Notes
9.38% due 06/01/19.................... 450,000 509,477
----------
Storage/Warehousing -- 0.2%
Mobile Mini, Inc.
Notes
6.88% due 05/01/15.................... 725,000 661,563
Mobile Mini, Inc.
Company Guar. Notes
9.75% due 08/01/14.................... 655,000 666,462
----------
1,328,025
----------
Telecom Services -- 0.9%
Bellsouth Telecommunications, Inc.
Senior Notes
7.00% due 12/01/95.................... 269,000 267,100
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.18% due 12/15/23.................... 50,000 37,750
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.20% due 11/29/23.................... 225,000 178,875
Cincinnati Bell Telephone Co., LLC
Company Guar. Notes
7.27% due 12/11/23.................... 375,000 260,625
Embarq Corp.
Senior Notes
8.00% due 06/01/36.................... 102,000 106,571
PAETEC Holding Corp.
Senior Sec. Notes
8.88% due 06/30/17*................... 800,000 796,000
PAETEC Holding Corp.
Company Guar. Notes
9.50% due 07/15/15.................... 1,917,000 1,739,677
Market
Principal Value
Security Description Amount** (Note 2)
-----------------------------------------------------------------
Telecom Services (continued)
Qwest Corp.
Senior Notes
8.38% due 05/01/16*...................... $ 225,000 $ 232,875
Qwest Corp.
Senior Notes
8.88% due 03/15/12....................... 725,000 763,063
SBA Telecommunications, Inc.
Company Guar. Notes
8.25% due 08/15/19*...................... 875,000 901,250
----------
5,283,786
----------
Telephone-Integrated -- 2.3%
AT&T, Inc.
Senior Notes
5.63% due 06/15/16....................... 235,000 252,803
BellSouth Corp.
Senior Notes
6.88% due 10/15/31....................... 240,000 262,400
CenturyTel, Inc.
Senior Notes
7.60% due 09/15/39....................... 453,000 451,429
Cincinnati Bell, Inc.
Senior Notes
7.25% due 06/15/23....................... 25,000 20,125
Frontier Communications Corp.
Senior Notes
8.13% due 10/01/18....................... 1,100,000 1,106,875
Level 3 Financing, Inc.
Company Guar. Notes
8.75% due 02/15/17....................... 1,317,000 1,093,110
Level 3 Financing, Inc.
Senior Notes
12.25% due 03/15/13...................... 2,043,000 2,063,430
Pacific Bell Telephone Co.
Company Guar. Notes
7.13% due 03/15/26....................... 570,000 636,482
Qwest Capital Funding, Inc.
Notes
7.25% due 02/15/11....................... 700,000 700,000
Qwest Communications International, Inc.
Company Guar. Notes
7.50% due 02/15/14....................... 351,000 346,613
Qwest Communications International, Inc.
Company Guar. Notes, Series B
7.50% due 02/15/14....................... 535,000 528,312
Qwest Communications International, Inc.
Company Guar. Notes
8.00% due 10/01/15*...................... 275,000 274,656
Sprint Capital Corp.
Company Guar. Notes
6.88% due 11/15/28....................... 5,700,000 4,759,500
Valor Telecommunications Enterprises LLC
Company Guar. Notes
7.75% due 02/15/15....................... 325,000 333,125
Verizon Pennsylvania, Inc.
Senior Notes
8.35% due 12/15/30....................... 250,000 290,050
38
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Telephone-Integrated (continued)
Verizon Virginia, Inc.
Senior Notes
4.63% due 03/15/13.................... $ 250,000 $ 259,706
Windstream Corp.
Senior Notes
7.88% due 11/01/17*................... 350,000 348,250
-----------
13,726,866
-----------
Television -- 0.2%
Allbritton Communications Co.
Senior Sub. Notes
7.75% due 12/15/12.................... 1,292,000 1,214,480
Bonten Media Acquisition Co.
Company Guar. Notes
9.75% due 06/01/15*(9)................ 186,677 61,136
Paxson Communications Corp.
Senior Sec. Notes
7.38% due 01/15/13*+(8)(9)(12)........ 1,849,114 23,114
Young Broadcasting, Inc.
Senior Sub. Notes
8.75% due 01/15/14+(8)(12)............ 380,000 475
Young Broadcasting, Inc.
Company Guar. Notes
10.00% due 03/01/11+(8)(12)........... 1,075,000 1,344
-----------
1,300,549
-----------
Textile-Home Furnishings -- 0.0%
Mohawk Industries, Inc.
Senior Notes
7.20% due 04/15/12.................... 240,000 248,808
-----------
Theaters -- 0.2%
AMC Entertainment, Inc.
Senior Sub. Notes
8.00% due 03/01/14.................... 599,000 578,035
AMC Entertainment, Inc.
Senior Notes
8.75% due 06/01/19.................... 700,000 722,750
-----------
1,300,785
-----------
Transactional Software -- 0.3%
Open Solutions, Inc.
Company Guar. Notes
9.75% due 02/01/15*................... 2,175,000 1,503,469
-----------
Transport-Air Freight -- 0.5%
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class A-2
6.88% due 01/02/11.................... 159,581 146,814
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class A-1
7.20% due 01/02/19.................... 1,420,271 1,107,811
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class B
7.63% due 01/02/15.................... 43,718 32,788
Market
Principal Value
Security Description Amount** (Note 2)
--------------------------------------------------------------
Transport-Air Freight (continued)
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class A
8.71% due 01/02/20................. $ 422,707 $ 304,349
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class
C 8.77% due 01/02/11............... 62,428 43,700
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class B
9.06% due 07/02/17................. 1,234,148 1,098,392
------------
2,733,854
------------
Transport-Equipment & Leasing -- 0.1%
GATX Corp.
Notes
4.75% due 10/01/12................. 332,000 334,018
------------
Transport-Rail -- 0.2%
CSX Corp.
Senior Notes
6.15% due 05/01/37................. 240,000 254,219
CSX Corp.
Senior Notes
7.90% due 05/01/17................. 387,000 457,627
Union Pacific Corp.
Senior Notes
5.75% due 11/15/17................. 604,000 647,491
------------
1,359,337
------------
Transport-Services -- 0.2%
Bristow Group, Inc.
Senior Notes
7.50% due 09/15/17................. 699,000 664,050
PHI, Inc.
Company Guar. Notes
7.13% due 04/15/13................. 385,000 361,419
------------
1,025,469
------------
Wireless Equipment -- 0.1%
CC Holdings GS V LLC/Crown Castle
GS III Corp.
Senior Notes
7.75% due 05/01/17*................ 325,000 336,375
------------
Total U.S. CORPORATE BONDS & NOTES
(cost $271,004,233)................ 267,259,971
------------
FOREIGN CORPORATE BONDS & NOTES -- 7.1%
Auto-Heavy Duty Trucks -- 0.0%
Volvo Treasury AB
Notes
5.95% due 04/01/15*................ 220,000 219,795
------------
Banks-Commercial -- 0.6%
Barclays Bank PLC
Senior Notes
5.00% due 09/22/16................. 200,000 202,554
39
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
------------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (continued)
Banks-Commercial (continued)
Barclays Bank PLC
Jr. Sub. Notes
5.93% due 12/15/16*(3)(7)....................... $ 630,000 $ 466,200
Caisse Nationale des Caisses d'Epargne et
de Prevoyance
Senior Notes
3.82% due 12/30/09(3)(7)........................ 141,000 86,010
Lloyds Banking Group PLC
Jr. Sub. Notes
5.92% due 10/01/15*(3)(7)....................... 320,000 182,400
Rabobank Nederland NV
Senior Notes
4.20% due 05/13/14*............................. 500,000 520,804
Standard Chartered PLC
Senior Notes
5.50% due 11/18/14*............................. 400,000 430,956
Svenska Handelsbanken AB
Senior Notes
4.88% due 06/10/14*............................. 355,000 371,360
Westpac Banking Corp.
Sub. Notes
1.91% due 03/31/10(3)(7)........................ 1,050,000 630,000
Westpac Banking Corp.
Senior Notes
4.20% due 02/27/15.............................. 200,000 203,276
Woori Bank
Notes
7.00% due 02/02/15*............................. 500,000 539,179
----------
3,632,739
----------
Banks-Money Center -- 0.1%
Bank of Scotland PLC
Senior Sub. Notes
1.50% due 11/30/09(3)(7)........................ 850,000 390,613
KBC Internationale Financieringsmaatschappij NV
Bank Guar. Notes
6.00% due 02/07/25(3)........................... 263,000 171,996
----------
562,609
----------
Building Products-Cement -- 0.1%
Holcim Capital Corp., Ltd.
Company Guar. Notes
6.88% due 09/29/39*............................. 276,000 284,422
----------
Building-Residential/Commercial -- 0.1%
Corporacion GEO SAB de CV
Company Guar. Notes
8.88% due 09/25/14*............................. 510,000 535,500
----------
Cellular Telecom -- 0.2%
VIP Finance Ireland Ltd.
Notes
9.13% due 04/30/18.............................. 250,000 262,500
Vodafone Group PLC
Senior Notes
4.15% due 06/10/14.............................. 112,000 115,016
Vodafone Group PLC
Senior Notes
5.38% due 01/30/15.............................. 129,000 138,246
Market
Principal Value
Security Description Amount** (Note 2)
------------------------------------------------------------------
Cellular Telecom (continued)
Vodafone Group PLC
Senior Notes
5.45% due 06/10/19........................ $443,000 $ 461,258
----------
977,020
----------
Containers-Metal/Glass -- 0.1%
Rexam PLC
Senior Notes
6.75% due 06/01/13*....................... 430,000 451,012
----------
Diversified Banking Institutions -- 0.1%
Credit Agricole SA
Jr. Sub. Notes
6.64% due 05/31/17*(3)(7)................. 494,000 350,740
Natixis
Sub. Notes
0.76% due 01/15/19(3)..................... 150,000 128,466
----------
479,206
----------
Diversified Financial Services -- 0.1%
TNK-BP Finance SA
Company Guar. Notes
7.88% due 03/13/18........................ 360,000 353,700
----------
Diversified Manufacturing Operations -- 0.1%
Bombardier, Inc.
Senior Notes
8.00% due 11/15/14*....................... 610,000 625,250
----------
Diversified Minerals -- 0.3%
Teck Resources, Ltd.
Senior Sec. Notes
10.25% due 05/15/16....................... 950,000 1,073,500
Teck Resources, Ltd.
Senior Sec. Notes
10.75% due 05/15/19....................... 625,000 726,562
Vale Overseas, Ltd.
Company Guar. Notes
5.63% due 09/15/19........................ 132,000 134,268
----------
1,934,330
----------
Electric-Integrated -- 0.6%
EDP Finance BV
Senior Notes
4.90% due 10/01/19*....................... 446,000 448,196
Electricite de France
Notes
6.50% due 01/26/19*....................... 779,000 892,590
Electricite de France
Notes
6.95% due 01/26/39*....................... 475,000 588,504
Empresas Publicas de Medellin E.S.P.
Senior Notes
7.63% due 07/29/19*....................... 345,000 373,463
Enel Finance International SA
Company Guar. Notes
5.13% due 10/07/19*....................... 490,000 487,844
Enel Finance International SA
Company Guar. Notes
6.00% due 10/07/39*....................... 715,000 711,160
----------
3,501,757
----------
40
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (continued)
Finance-Investment Banker/Broker -- 0.1%
Macquarie Group, Ltd.
Notes
7.30% due 08/01/14*................... $ 380,000 $ 405,445
----------
Finance-Other Services -- 0.2%
BP Capital Markets PLC
Company Guar. Notes
3.88% due 03/10/15.................... 600,000 619,836
Iberdrola Finance Ireland, Ltd.
Company Guar. Notes
5.00% due 09/11/19*................... 243,000 244,714
----------
864,550
----------
Food-Meat Products -- 0.2%
JBS SA
Company Guar. Notes
9.38% due 02/07/11.................... 591,000 605,775
JBS SA
Senior Notes
10.50% due 08/04/16*.................. 525,000 546,000
----------
1,151,775
----------
Independent Power Producers -- 0.0%
AES Drax Energy, Ltd.
Sec. Notes
11.50% due 08/30/10+(6)(8)(15)........ 725,000 725
----------
Insurance-Multi-line -- 0.1%
Aegon NV
Senior Notes
3.60% due 07/14/14(3)(7).............. 111,000 52,004
XL Capital, Ltd.
Senior Notes
5.25% due 09/15/14.................... 488,000 479,054
XL Capital, Ltd.
Senior Notes
6.38% due 11/15/24.................... 318,000 256,789
----------
787,847
----------
Investment Companies -- 0.0%
Xstrata Finance Canada, Ltd.
Company Guar. Notes
6.90% due 11/15/37*................... 266,000 250,359
----------
Medical Products -- 0.2%
Angiotech Pharmaceuticals, Inc.
Company Guar. Notes
4.11% due 12/01/13(3)................. 1,410,000 1,191,450
----------
Metal-Diversified -- 0.0%
Noranda, Inc.
Notes
6.00% due 10/15/15.................... 263,000 267,374
----------
Multimedia -- 0.1%
Quebecor Media, Inc.
Senior Notes
7.75% due 03/15/16.................... 375,000 371,250
----------
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------------
Oil Companies-Exploration & Production -- 0.7%
Compton Petroleum Finance Corp.
Company Guar. Notes
7.63% due 12/01/13.......................... $ 965,000 $ 728,575
KazMunaiGaz Finance Sub BV
Company Guar. Notes
11.75% due 01/23/15*........................ 400,000 473,000
Nexen, Inc.
Senior Notes
5.88% due 03/10/35.......................... 760,000 696,057
Nexen, Inc.
Bonds
6.40% due 05/15/37.......................... 235,000 228,781
OPTI Canada, Inc.
Senior Sec. Notes
7.88% due 12/15/14.......................... 2,230,000 1,705,950
Talisman Energy, Inc.
Senior Notes
7.75% due 06/01/19.......................... 440,000 517,363
----------
4,349,726
----------
Oil Companies-Integrated -- 0.2%
Ecopetrol SA
Notes
7.63% due 07/23/19*......................... 325,000 355,875
Petroleum Co. of Trinidad & Tobago, Ltd.
Senior Notes
9.75% due 08/14/19*......................... 510,000 577,575
Total Capital SA
Company Guar. Notes
3.13% due 10/02/15.......................... 400,000 398,410
----------
1,331,860
----------
Oil-Field Services -- 0.2%
North American Energy Partners, Inc.
Senior Notes
8.75% due 12/01/11.......................... 1,160,000 1,136,800
----------
Paper & Related Products -- 0.1%
PE Paper Escrow GmbH
Senior Sec. Notes
12.00% due 08/01/14*........................ 475,000 507,505
----------
Pipelines -- 0.0%
Kinder Morgan Finance Co. ULC
Company Guar. Notes
5.70% due 01/05/16.......................... 183,000 174,308
----------
Printing-Commercial -- 0.0%
Quebecor World Capital Corp.
Bonds
6.50% due 08/01/27+(5)(8)(15)............... 1,640,000 0
----------
Real Estate Operations & Development -- 0.0%
Atlantic Finance Ltd.
Notes
8.75% due 05/27/14*......................... 190,000 188,881
----------
41
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
----------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (continued)
Satellite Telecom -- 0.6%
Intelsat Intermediate Holding Co., Ltd.
Company Guar. Notes
9.50% due 02/01/15(4)................... $1,075,000 $1,072,313
Intelsat Subsidiary Holding Co., Ltd.
Company Guar. Notes
8.50% due 01/15/13...................... 1,324,000 1,340,550
Intelsat Subsidiary Holding Co., Ltd.
Company Guar. Notes
8.88% due 01/15/15...................... 1,335,000 1,358,362
----------
3,771,225
----------
Special Purpose Entities -- 0.2%
CCL Finance, Ltd.
Company Guar. Notes
9.50% due 08/15/14*..................... 415,000 440,938
Grupo Petrotemex SA de CV
Senior Notes
9.50% due 08/19/14*..................... 215,000 221,450
Hellas Telecommunications
Luxembourg II
Sub. Notes
6.26% due 01/15/15*(3)(25).............. 1,330,000 206,150
SMFG Preferred Capital, Ltd.
Sub. Notes
6.08% due 01/25/17*(3)(7)............... 373,000 325,804
----------
1,194,342
----------
Steel-Producers -- 0.1%
ArcelorMittal
Senior Notes
6.13% due 06/01/18...................... 168,000 165,506
Evraz Group SA
Notes
8.88% due 04/24/13...................... 530,000 511,450
----------
676,956
----------
SupraNational -- 0.1%
Eurasian Development Bank
Senior Notes
7.38% due 09/29/14*..................... 425,000 438,812
----------
Telecom Services -- 0.8%
Alestra SA
Senior Notes
11.75% due 08/11/14*.................... 210,000 232,285
Global Crossing UK Finance PLC
Company Guar. Notes
10.75% due 12/15/14..................... 1,363,000 1,288,035
Wind Acquisition Finance SA
Company Guar. Bonds
10.75% due 12/01/15*.................... 394,000 433,400
Wind Acquisition Finance SA
Senior Notes
11.75% due 07/15/17*.................... 2,250,000 2,536,875
----------
4,490,595
----------
Market
Principal Value
Security Description Amount** (Note 2)
----------------------------------------------------------------
Telephone-Integrated -- 0.5%
Axtel SAB de CV
Company Guar. Notes
7.63% due 02/01/17................... $ 157,000 $ 150,720
Telecom Italia Capital SA
Company Guar. Notes
4.95% due 09/30/14................... 2,007,000 2,076,810
Telefonica Emisiones SAU
Company Guar. Notes
5.88% due 07/15/19................... 400,000 434,606
-----------
2,662,136
-----------
Transport-Marine -- 0.0%
BW Group, Ltd.
Notes
6.63% due 06/28/17................... 250,000 222,500
-----------
Transport-Rail -- 0.2%
Canadian National Railway Co.
Senior Notes
6.38% due 10/15/11................... 750,000 822,277
Canadian Pacific Railway Co.
Notes
6.50% due 05/15/18................... 350,000 381,009
-----------
1,203,286
-----------
Warehousing & Harbor Transportation Services -- 0.1%
DP World, Ltd.
Notes
6.85% due 07/02/37................... 430,000 379,174
-----------
Total Foreign Corporate Bonds & Notes
(cost $40,970,357)................... 41,576,221
-----------
FOREIGN GOVERNMENT AGENCIES -- 23.7%
Regional Authority -- 0.2%
Emirate of Abu Dhabi
Notes
6.75% due 04/08/19*.................. 400,000 446,714
Emirate of Abu Dhabi
Notes
6.75% due 04/08/19................... 450,000 502,875
-----------
949,589
-----------
Sovereign -- 23.5%
Federal Republic of Brazil
Bonds
5.63% due 01/07/41................... 1,025,000 999,355
Federal Republic of Brazil
Notes
5.88% due 01/15/19................... 880,000 946,000
Federal Republic of Brazil
Bonds
6.00% due 01/17/17................... 1,090,000 1,179,380
Federal Republic of Brazil
Bonds
7.13% due 01/20/37................... 310,000 369,675
42
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
----------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (continued)
Sovereign (continued)
Federal Republic of Brazil
Notes
8.00% due 01/15/18............. $ 2,266,667 $2,624,800
Federal Republic of Brazil
Bonds
8.25% due 01/20/34............. 1,695,000 2,234,858
Federal Republic of Brazil
Notes
8.75% due 02/04/25............. 1,495,000 1,973,400
Federal Republic of Brazil
Bonds
8.88% due 10/14/19............. 1,140,000 1,479,150
Federal Republic of Brazil
Notes
11.00% due 08/17/40............ 1,894,000 2,547,430
Federal Republic of Germany
Bonds
4.25% due 07/04/39............. EUR 865,000 1,334,568
Federal Republic of Germany
Bonds
4.50% due 01/04/13............. 1,245,000 1,967,364
Government of Australia
Bonds
6.00% due 02/15/17............. AUD 3,245,000 2,981,771
Government of Australia
Bonds
6.25% due 06/15/14............. 4,470,000 4,112,331
Government of Australia
Bonds
6.50% due 05/15/13............. 3,700,000 3,413,931
Government of Canada
Notes
3.00% due 06/01/14............. CAD 2,350,000 2,245,324
Government of Canada
Bonds
3.75% due 06/01/12............. 3,935,000 3,867,778
Government of Canada
Notes
4.25% due 06/01/18............. 2,650,000 2,678,712
Government of Japan
Bonds
1.30% due 06/20/12............. JPY 339,500,000 3,882,925
Government of Japan
Bonds
1.40% due 12/20/15............. 347,600,000 4,025,248
Government of Japan
Bonds
1.70% due 09/20/17............. 309,000,000 3,631,866
Government of Japan
Bonds
2.10% due 03/20/27............. 114,000,000 1,298,082
Government of Netherlands
Bonds
3.25% due 07/15/15............. EUR 632,000 947,310
Kingdom of Norway
Bonds
5.00% due 05/15/15............. NOK 24,845,000 4,571,009
Market
Principal Value
Security Description Amount** (Note 2)
------------------------------------------------------
Sovereign (continued)
Kingdom of Norway
Bonds
6.50% due 05/15/13....... NOK 22,060,000 $4,206,906
Kingdom of Spain
Bonds
3.15% due 01/31/16....... EUR 1,430,000 2,098,741
Kingdom of Sweden
Bonds
4.00% due 12/01/09....... SEK 13,930,000 2,010,067
Kingdom of Sweden
Bonds
4.50% due 08/12/15....... 35,360,000 5,488,767
Kingdom of Sweden
Bonds
5.50% due 10/08/12....... 24,500,000 3,861,956
Perusahaan Penerbit SBSN
Notes
8.80% due 04/23/14*...... 220,000 251,350
Republic of Argentina
Notes
5.25% due 12/31/38(4).... 2,269,761 760,370
Republic of Argentina
Bonds
5.77% due 12/31/33....... 1,589,026 1,072,592
Republic of Colombia
Notes
7.38% due 01/27/17....... 450,000 515,700
Republic of Colombia
Notes
7.38% due 03/18/19....... 613,000 700,966
Republic of Colombia
Bonds
7.38% due 09/18/37....... 1,395,000 1,576,350
Republic of Colombia
Bonds
8.13% due 05/21/24....... 360,000 432,000
Republic of Georgia
Bonds
7.50% due 04/15/13....... 2,280,000 2,245,800
Republic of Greece
Bonds
6.00% due 07/19/19....... EUR 1,960,000 3,195,680
Republic of Indonesia
Bonds
6.63% due 02/17/37....... 1,090,000 1,063,537
Republic of Indonesia
Senior Bonds
8.50% due 10/12/35....... 1,120,000 1,349,600
Republic of Italy
Bonds
4.75% due 02/01/13....... EUR 1,310,000 2,065,918
Republic of Panama
Bonds
6.70% due 01/26/36....... 860,000 950,300
Republic of Peru
Bonds
6.55% due 03/14/37....... 90,000 97,650
43
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
--------------------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (continued)
Sovereign (continued)
Republic of Peru
Notes
7.35% due 07/21/25................... $ 926,000 $1,081,105
Republic of Peru
Bonds
8.75% due 11/21/33................... 720,000 961,200
Republic of Philippines
Bonds
7.75% due 01/14/31................... 1,000,000 1,136,250
Republic of Philippines
Bonds
8.38% due 06/17/19................... 2,085,000 2,538,487
Republic of Philippines
Senior Notes
9.50% due 02/02/30................... 540,000 716,850
Republic of Philippines
Notes
10.63% due 03/16/25.................. 895,000 1,256,356
Republic of Poland
Bonds
6.38% due 07/15/19................... 898,000 1,008,831
Republic of South Africa
Bonds
6.88% due 05/27/19................... 858,000 956,670
Republic of South Korea
Bonds
7.13% due 04/16/19................... 1,330,000 1,559,922
Republic of the Philippines
Bonds
6.50% due 01/20/20................... 1,060,000 1,135,525
Republic of Turkey
Notes
6.88% due 03/17/36................... 900,000 900,000
Republic of Turkey
Bonds
7.00% due 09/26/16................... 630,000 678,069
Republic of Turkey
Notes
7.00% due 06/05/20................... 970,000 1,030,625
Republic of Turkey
Notes
7.38% due 02/05/25................... 1,580,000 1,716,354
Republic of Turkey
Bonds
7.50% due 11/07/19................... 1,250,000 1,378,125
Republic of Turkey
Notes
8.00% due 02/14/34................... 611,000 694,279
Republic of Turkey
Notes
9.50% due 01/15/14................... 795,000 933,171
Republic of Turkey
Senior Bonds
11.88% due 01/15/30.................. 1,170,000 1,886,625
Republic of Uruguay
Bonds
6.88% due 09/28/25................... 370,000 379,435
Market
Principal Value
Security Description Amount** (Note 2)
----------------------------------------------------------
Sovereign (continued)
Republic of Uruguay
Notes
7.63% due 03/21/36............. $ 390,000 $ 411,450
Republic of Uruguay
Bonds
8.00% due 11/18/22............. 960,000 1,075,200
Republic of Venezuela
Bonds
5.75% due 02/26/16............. 735,000 540,225
Republic of Venezuela
Bonds
7.65% due 04/21/25............. 490,000 324,625
Republic of Venezuela
Notes
8.50% due 10/08/14............. 540,000 480,600
Republic of Venezuela
Bonds
9.00% due 05/07/23............. 1,100,000 825,000
Republic of Venezuela
Bonds
9.25% due 09/15/27............. 2,810,000 2,262,050
Republic of Venezuela
Bonds
9.25% due 05/07/28............. 700,000 532,700
Republic of Venezuela
Bonds
9.38% due 01/13/34............. 510,000 392,700
Russian Federation
Senior Bonds
7.50% due 03/31/30(4).......... 8,425,920 9,147,179
Russian Federation
Notes
12.75% due 06/24/28............ 340,000 566,134
United Mexican States
Notes
5.63% due 01/15/17............. 1,760,000 1,826,880
United Mexican States
Notes
5.95% due 03/19/19............. 4,014,000 4,214,700
United Mexican States
Notes
6.05% due 01/11/40............. 600,000 598,500
United Mexican States
Notes
6.75% due 09/27/34............. 995,000 1,094,500
United Mexican States
Bonds
7.50% due 04/08/33............. 840,000 997,500
United Mexican States
Bonds
8.30% due 08/15/31............. 1,070,000 1,369,600
------------
137,863,939
------------
Total Foreign Government Agencies
(cost $126,391,030)............ 138,813,528
------------
44
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
------------------------------------------------------------
FOREIGN GOVERNMENT TREASURIES -- 1.3%
Sovereign -- 1.3%
United Kingdom Gilt Treasury
Bonds
4.50% due 03/07/13................. $1,100,000 $1,890,376
New South Wales Treasury Corp.
Local Government Guar. Bonds
6.00% due 05/01/12................. 3,148,000 2,831,822
Queensland Treasury Corp.
Government Guar. Notes
5.50% due 05/14/10................. 350,000 311,934
United Kingdom Gilt Treasury
Bonds
5.00% due 03/07/18................. 1,250,000 2,235,814
----------
Total Foreign Government Treasuries
(cost $7,091,637).................. 7,269,946
----------
LOANS(16)(17) -- 0.7%
Casino Services -- 0.1%
Holding Gaming Borrower LP
Tranche B1
9.25% due 02/19/13(6)(22).......... 2,500 2,312
Holding Gaming Borrower LP
9.25% due 02/19/13(6)(22).......... 497,500 460,188
----------
462,500
----------
Gambling (Non-Hotel) -- 0.2%
Greektown Holdings
Delayed Draw
11.75% due 09/09/13(6)(8)(22)...... 1,030,542 1,036,983
----------
Medical-Drugs -- 0.2%
Triax Pharmaceuticals LLC
16.50% due 08/30/11(5)(6)(18)(22).. 1,584,627 1,442,011
----------
Medical-Hospitals -- 0.2%
Capella Healthcare, Inc.
13.00% due 02/29/16(6)(22)......... 1,000,000 1,000,000
----------
Total Loans
(cost $3,830,397).................. 3,941,494
----------
U.S. GOVERNMENT AGENCIES -- 12.7%
Federal Home Loan Mtg. Corp. -- 7.6%
4.13% due 07/12/10................. 300,000 308,751
4.50% due 02/01/20................. 139,017 145,549
4.50% due 08/01/20................. 243,992 255,455
4.50% due 01/01/39................. 735,804 745,458
5.00% due 09/01/18................. 324,275 345,226
5.00% due 07/01/20................. 508,126 537,780
5.00% due 01/01/24................. 944,414 992,540
5.00% due 02/01/34................. 341,032 354,155
5.00% due 03/01/34................. 2,572,737 2,670,126
5.00% due 05/01/34................. 223,209 231,658
5.00% due 02/01/35................. 489,070 507,583
5.00% due 07/01/35................. 811,802 841,772
5.00% due 08/01/35................. 746,785 774,354
5.00% due 10/01/35................. 1,015,243 1,052,722
5.00% due 04/01/36................. 422,858 438,468
5.00% due 05/01/36................. 277,030 286,868
5.00% due 08/01/36................. 349,323 361,728
5.00% due 11/01/37................. 1,453,845 1,504,564
5.33% due 12/01/35(3).............. 310,252 325,937
5.48% due 03/01/36(3).............. 170,463 178,750
Market
Principal Value
Security Description Amount** (Note 2)
----------------------------------------------------------------
Federal Home Loan Mtg. Corp. (continued)
5.50% due 05/01/37.................... $1,347,982 $ 1,412,924
5.50% due 06/01/37.................... 328,817 344,658
5.50% due 09/01/37.................... 1,082,699 1,134,860
5.50% due 10/01/37.................... 4,254,701 4,459,680
5.50% due 11/01/37.................... 1,367,459 1,433,340
5.50% due 12/01/37.................... 1,049,090 1,099,633
5.50% due 01/01/38.................... 2,618,312 2,746,500
5.50% due 02/01/38.................... 814,714 853,964
5.50% due 07/01/38.................... 696,484 730,038
5.81% due 01/01/37(3)................. 127,011 134,127
5.95% due 10/01/36(3)................. 759,174 803,216
6.00% due 10/01/37.................... 1,209,556 1,279,559
6.00% due 12/01/37.................... 3,090,014 3,268,849
6.14% due 09/01/36(3)................. 247,276 262,523
6.50% due 05/01/29.................... 4,555 4,910
6.50% due 02/01/35.................... 158,729 170,094
6.50% due 11/01/37.................... 5,232,264 5,584,548
6.88% due 09/15/10.................... 156,000 165,406
7.00% due 06/01/29.................... 13,010 14,307
Federal Home Loan Mtg. Corp. REMIC
Series 3317, Class PD
5.00% due 09/15/31(1)................. 935,000 986,194
Series 3116, Class PD.................
5.00% due 10/15/34(1)................. 3,000,000 3,160,064
Series 3349, Class HB.................
5.50% due 06/15/31(1)................. 1,724,000 1,824,713
Series 41, Class F....................
10.00% due 05/15/20(1)................ 10,005 10,768
Series 1103, Class N..................
11.57% due 06/15/21(1)(19)............ 5,734 1,302
-----------
44,745,621
-----------
Federal National Mtg. Assoc. -- 4.8%
2.50% due 04/09/10.................... 500,000 505,733
4.45% due 02/01/34(3)................. 304,851 316,723
4.50% due 06/01/19.................... 373,039 392,897
4.50% due 11/01/22.................... 703,192 736,669
4.50% due 06/01/23.................... 826,817 857,912
4.50% due 01/01/39.................... 3,570,493 3,621,804
4.75% due 12/15/10.................... 375,000 393,885
4.77% due 10/01/35(3)................. 135,347 140,427
4.86% due 01/01/35(3)................. 682,600 705,327
5.00% due 03/15/16.................... 407,000 449,495
5.00% due 06/01/19.................... 176,423 186,995
5.00% due 01/01/23.................... 154,410 162,134
5.00% due 03/01/34.................... 221,339 229,579
5.00% due 05/01/35.................... 110,827 114,884
5.00% due 10/01/35.................... 46,983 48,703
5.00% due 02/01/37.................... 219,553 227,215
5.00% due 04/01/37.................... 1,583,876 1,638,635
5.00% due 05/01/37.................... 307,335 317,959
5.00% due 06/01/37.................... 19,904 20,592
5.00% due 07/01/37.................... 229,133 237,055
5.00% due 05/01/38.................... 2,400,987 2,483,861
5.38% due 01/01/37(3)................. 2,941,730 3,068,572
5.50% due 11/01/19.................... 1,012,603 1,081,191
5.50% due 08/01/20.................... 248,896 264,744
5.50% due 11/01/22.................... 519,732 550,469
5.50% due 08/01/23.................... 417,702 442,382
45
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
----------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (continued)
Federal National Mtg. Assoc. (continued)
5.50% due 01/01/29.................... $ 6,133 $ 6,485
5.50% due 02/01/35.................... 406,613 427,029
5.50% due 12/01/35.................... 560,096 588,218
5.50% due 02/01/36(3)................. 228,793 240,591
5.50% due 12/01/36.................... 506,811 531,544
5.50% due 04/01/37.................... 302,436 316,959
5.50% due 03/01/38.................... 36,513 38,250
6.00% due 02/01/32.................... 81,577 86,935
6.00% due 05/01/34.................... 14,799 15,725
6.00% due 10/01/34.................... 391,247 415,724
6.00% due 06/01/35.................... 108,875 115,414
6.00% due 07/01/37.................... 4,305,606 4,552,102
6.00% due 08/01/37.................... 216,293 228,676
6.00% due 10/01/37.................... 467,139 493,883
6.50% due 02/01/35.................... 42,694 45,778
7.50% due 01/01/30.................... 9,919 11,111
7.50% due 09/01/30.................... 3,319 3,718
8.00% due 11/01/28.................... 16,888 19,108
13.00% due 11/01/15................... 2,161 2,377
Federal National Mtg. Assoc. REMIC
Series 2005-12, Class BE
5.00% due 11/25/30(1)................. 900,000 950,491
Series 1989-2, Class D
8.80% due 01/25/19(1)................. 28,248 30,789
Series 1989-17, Class E
10.40% due 04/25/19(1)................ 2,791 3,080
-----------
28,319,829
-----------
Government National Mtg. Assoc. -- 0.3%
6.00% due 09/15/38.................... 1,359,859 1,438,476
7.50% due 07/15/27.................... 9,389 10,514
7.50% due 10/15/27.................... 59,774 66,933
-----------
1,515,923
-----------
Total U.S. Government Agencies
(cost $71,155,273).................... 74,581,373
-----------
U.S. GOVERNMENT TREASURIES -- 1.4%
United States Treasury Bonds -- 0.9%
3.63% due 04/15/28 TIPS............... 1,278,269 1,580,260
4.25% due 05/15/39.................... 459,000 474,850
4.38% due 02/15/38.................... 598,000 629,956
4.50% due 05/15/38.................... 775,000 833,973
4.75% due 02/15/37.................... 350,000 390,523
5.25% due 11/15/28.................... 719,000 834,714
6.25% due 08/15/23.................... 166,000 208,071
8.13% due 08/15/19.................... 271,000 377,621
-----------
5,329,968
-----------
United States Treasury Notes -- 0.5%
1.88% due 06/15/12.................... 500,000 507,812
2.63% due 06/30/14.................... 573,000 583,206
2.75% due 02/15/19.................... 190,000 181,316
3.00% due 08/31/16.................... 195,000 196,158
3.13% due 05/15/19.................... 342,000 336,523
3.38% due 07/31/13.................... 130,000 137,698
3.63% due 08/15/19.................... 396,000 406,457
Principal Market
Amount** Value
Security Description /Shares (Note 2)
-------------------------------------------------------------------
United States Treasury Notes (continued)
3.75% due 11/15/18......................... $331,000 $ 342,508
3.88% due 09/15/10......................... 7,000 7,231
3.88% due 05/15/18......................... 162,000 169,784
4.25% due 08/15/15......................... 198,000 215,634
4.38% due 12/15/10......................... 1,000 1,047
----------
3,085,374
----------
Total U.S. Government Treasuries
(cost $8,716,899).......................... 8,415,342
----------
COMMON STOCK -- 0.5%
Energy-Alternate Sources -- 0.0%
VeraSun Energy Corp.(5)(6).................. 135,000 0
----------
Food-Misc. -- 0.1%
Wornick Co.(5)(6)(22)....................... 4,592 229,600
----------
Gambling (Non-Hotel) -- 0.0%
Shreveport Gaming Holdings, Inc.+(5)(6)(22). 2,441 36,993
----------
Independent Power Producers -- 0.0%
Mirant Corp.+............................... 1,929 31,694
----------
Medical-Drugs -- 0.0%
Triax Pharmaceuticals LLC+(5)(6)(20)(22).... 128,418 1,284
----------
Medical-Outpatient/Home Medical -- 0.0%
Critical Care Systems International,
Inc.+(5)(6)(22)............................ 4,107 856
----------
Oil Companies-Exploration & Production -- 0.4%
Energy Partners, Ltd.+...................... 95,123 709,617
EXCO Resources, Inc......................... 77,474 1,447,989
MXEnergy Holdings, Inc.(5)(6)............... 138,937 186,176
----------
2,343,782
----------
Paper & Related Products -- 0.0%
Caraustar Industries, Inc.(5)(6)............ 89 149,253
----------
Printing-Commercial -- 0.0%
World Color Press, Inc.+.................... 10,604 101,799
----------
Total Common Stock
(cost $3,875,341).......................... 2,895,261
----------
PREFERRED STOCK -- 0.3%
Banks-Commercial -- 0.1%
CoBank ACB
11.00%*.................................... 12,063 554,898
----------
Banks-Money Center -- 0.1%
Santander Finance Preferred SA
4.00%(3)................................... 16,971 279,343
----------
Banks-Super Regional -- 0.0%
Wachovia Capital Trust IX
6.38%...................................... 12,800 276,736
----------
Diversified Financial Services -- 0.0%
General Electric Capital Corp.
4.50%(4)................................... 8,582 199,188
----------
Finance-Mortgage Loan/Banker -- 0.0%
Freddie Mac
8.38%(3)................................... 11,300 20,453
----------
46
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Shares/ Market
Principal Value
Security Description Amount** (Note 2)
-----------------------------------------------------------------------
PREFERRED STOCK (continued)
Medical-Drugs -- 0.0%
Triax Pharmaceuticals LLC,
Class C 14.70%(5)(6)(22)................... $ 39,177 $ 392
------------
Special Purpose Entity -- 0.1%
Structured Repackaged Asset-Backed Trust
Securities 3.00%(3)........................ 29,200 512,460
------------
Total Preferred Stock
(cost $2,510,126).......................... 1,843,470
------------
WARRANTS +-- 0.0%
Oil Companies-Exploration & Production -- 0.0%
Transmeridian Exploration, Inc.
Expires 12/15/10
(Strike price $4.31)(5).................... 13,811 0
------------
Printing-Commercial -- 0.0%
World Color Press, Inc.
Expires 07/20/14
(strike price $13.00)...................... 6,010 18,330
World Color Press, Inc.
Expires 07/20/14
(strike price $16.30)...................... 6,010 12,321
------------
30,651
------------
Telecom Services -- 0.0%
Leap Wireless International, Inc.
Expires 04/15/10*(5)(6)
(strike price $96.80)...................... 500 0
------------
Total Warrants
(cost $258,573)............................ 30,651
------------
Total Long-Term Investment Securities
(cost $546,876,559)........................ 556,295,352
------------
SHORT-TERM INVESTMENT SECURITIES -- 3.9%
Time Deposits -- 3.9%
Euro Time Deposit with State Street Bank &
Trust Co.
0.01% due 10/01/09
(cost $22,842,000)......................... 22,842,000 22,842,000
------------
REPURCHASE AGREEMENT -- 0.5%
State Street Bank & Trust Co.
Joint Repurchase Agreement(21)
(cost $2,657,000).......................... 2,657,000 2,657,000
------------
TOTAL INVESTMENTS --
(cost $572,375,559)(10).................... 99.4% 581,794,352
Other assets less liabilities................. 0.6 3,783,504
----------- ------------
NET ASSETS -- 100.0% $585,577,856
=========== ============
- --------
* 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 September 30, 2009, the aggregate value
of these securities was $84,846,363 representing 14.3% 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 September 30, 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 September 30, 2009.
(4)"Step-up" security where the rate increases ("steps-up") at a predetermined
rate. Rate shown reflects the increased rate.
(5)Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs. See Note 2.
(6)Illiquid security. At September 30, 2009, the aggregate value of these
securities was $6,302,382 representing 1.1% of net assets.
(7)Perpetual maturity -- maturity date reflects the next call date.
(8)Bond in default
(9)Income may be received in cash or additional bonds at the discretion of the
issuer.
(10)See Note 5 for cost of investments on a tax basis.
(11)Commercial Mortgage Backed Security
(12)Company has filed for Chapter 11 bankruptcy protection.
(13)Company has filed for Chapter 7 bankruptcy protection.
(14)Bond is in default and did not pay principal at maturity.
(15)Company has filed for bankruptcy in country of issuance.
(16)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 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. 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 Loan.
(18)A portion of the interest is paid in the form of additional bonds.
(19)Interest only.
(20)Consists of more than one class of securities traded together as a unit.
(21)See Note 2 for details of Joint Repurchase Agreement.
(22)Denotes a restricted security that: (a) cannot be offered for public sale
without first being registered, or being able to take advantage of an
exemption from registration, under the Securities Act of 1933, as amended
(the "1933 Act"); (b) is subject to a contractual restriction on public
sales; or (c) is otherwise subject to a restriction on sales by operation
of applicable law. Restricted securities are valued pursuant to Note 2.
Certain restricted securities held by a Fund may not be sold except in
exempt transactions or in a public offering registered under the 1933 Act.
The Fund has no right to demand registration of these securities. The risk
of investing in certain restricted securities is greater than the risk of
investing in the securities of widely held, publicly traded companies. To
the extent applicable, lack of a secondary market and resale restrictions
may result in the inablility of a Fund to sell a security at a fair price
and may substantially delay the sale of the security. In addition, certain
restricted securities may exhibit greater price volatility than securities
for which secondary markets exist. As of September 30, 2009, the SunAmerica
Strategic Bond Fund held the following restricted securities:
47
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value % of
Acquisition Amount/ Acquisition Market per Net
Name Date Shares Cost Value Share Assets
---- ----------- ---------- ----------- ---------- ------- ------
Capella
Healthcare,
Inc. 13.00%
due 02/29/16
Loan
Agreement...... 6/16/2009 $1,000,000 $872,341 $1,000,000 $100.00 0.17%
Critical Care
Systems
International,
Inc.
Common
Stock.......... 7/20/2006 4,107 37,181 856 0.21 0.00
Greektown
Holdings
11.75% due
09/09/13
Loan
Agreement...... 6/30/2009 1,017,663 968,571
7/31/2009 4,322 4,322
8/31/2009 4,340 4,340
9/30/2009 4,217 4,217
---------- --------
1,030,542 981,450 1,036,983 101.90 0.18
Holding Gaming
Borrower LP
9.25% due
02/19/13
Loan
Agreement...... 8/19/2008 497,500 472,652 460,188 92.50 0.08
Holding Gaming
Borrower LP
9.25% due
02/19/13
Loan
Agreement
Tranche B1..... 09/03/09 2,500 2,377 2,312 92.5 0.00
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
---------- --------
297,000 312,925 103,950 35.00 0.02
Shreveport
Gaming
Holdings, Inc.
Common
Stock.......... 7/29/2005 $ 2,047 $ 47,128
7/21/2005 394 9,062
---------- --------
2,441 56,190 36,993 $ 15.15 0.01%
Market
Principal Value % of
Acquisition Amount/ Acquisition Market per Net
Name Date Shares Cost Value Share Assets
---- ----------- ---------- ----------- ---------- ------ ------
Triax
Pharmaceuticals
LLC 16.50%
due 08/30/11
Loan
Agreement....... 8/31/2007 $1,500,000 $1,414,107
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 11,534
1/6/2009 11,751 11,750
4/7/2009 11,579 11,579
7/1/2009 11,796 11,796
---------- ----------
1,584,627 1,498,732 $1,442,011 $91.00 0.25%
Triax
Pharmaceuticals
LLC
Common
Stock........... 8/31/2007 128,418 53,936 1,284 0.01 0.00
Triax
Pharmaceuticals
LLC
Preferred
Stock........... 8/31/2007 39,177 78,353 392 0.01 0.00
Wornick Co.
Common
Stock........... 8/8/2008 4,592 596,039 229,600 50.00 0.04
---------- ----
$4,314,569 0.75%
========== ====
(23)PIK ("Payment-in-kind") security. Bond or preferred stock that pays
interest/dividends in the form of additional bonds or preferred stocks.
(24)Subsequent to September 30, 2009, Company filed for Chapter 11 bankruptcy
protection.
(25)Bond was in default subsequent to September 30, 2009.
REMIC --Real Estate Mortgage Investment Conduit
TIPS --Treasury Inflation Protected Security
AUD --Australian Dollar
CAD --Canadian Dollar
EUR --Euro Dollar
JPY --Japanese Yen
NOK --Norwegian Krone
SEK --Swedish Krona
See Notes to Financial Statements
48
SunAmerica Strategic Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2009 (see Note 2):
Level 1--Unadjusted Level 2--Other Level 3--Significant
Quoted Prices Observable Inputs Unobservable Inputs Total
- - ------------------- ----------------- -------------------- ------------
Long-Term Investment Securities:
Asset Backed Securities.......... $ -- $ 9,564,145 $ -- $ 9,564,145
Convertible Bonds & Notes........ -- -- 103,950 103,950
U.S. Corporate Bonds & Notes..... -- 261,018,842 6,241,129 267,259,971
Foreign Corporate Bonds & Notes.. -- 41,576,221 0 41,576,221
Foreign Government Agencies...... -- 138,813,528 -- 138,813,528
Foreign Government Treasuries.... -- 7,269,946 -- 7,269,946
Loans............................ -- -- 3,941,494 3,941,494
U.S. Government Agencies......... -- 74,581,373 -- 74,581,373
U.S. Government Treasuries....... 8,415,342 -- -- 8,415,342
Common Stock..................... 2,291,099 -- 604,162 2,895,261
Preferred Stock.................. 1,288,180 554,898 392 1,843,470
Warrants......................... 30,651 -- 0 30,651
Short Term Investment Securities:
Time Deposits..................... -- 22,842,000 -- 22,842,000
Repurchase Agreements............... -- 2,657,000 -- 2,657,000
----------- ------------ ----------- ------------
Total............................... $12,025,272 $558,877,953 $10,891,127 $581,794,352
=========== ============ =========== ============
The following is a reconciliation of Level 3 assets which significant
unobservable inputs were used to determine fair value:
Asset Convertible U.S. Corporate Foreign Corporate Common
Backed Securities Bonds & Notes Bonds & Notes Bonds & Notes Loans Stock
- - ----------------- ------------- -------------- ----------------- ----------- --------
Balance as of 3/31/2009............ $ 498,000 $ 59,400 $6,393,447 $ -- $ 5,371,367 $330,713
Accrued discounts/premiums......... -- -- 6,224 -- 130,225 --
Realized gain (loss)............... 22 -- (129,475) -- 532,486 --
Change in unrealized appreciation
(depreciation).................... 331,978 44,550 (300,299) -- 527,020 267,721
Net purchases (sales).............. (830,000) -- 451,675 0 (2,619,604) 5,728
Transfers in and/or out of Level 3. -- -- (180,443) -- -- --
--------- -------- ---------- --------- ----------- --------
Balance as of 09/30/2009........... $ -- $103,950 $6,241,129 $ 0 $ 3,941,494 $604,162
========= ======== ========== ========= =========== ========
Preferred
Stock Warrants
- - --------- --------
Balance as of 3/31/2009............ $ 109,161 $ 138
Accrued discounts/premiums......... -- --
Realized gain (loss)............... (344,575) --
Change in unrealized appreciation
(depreciation).................... 235,806 (138)
Net purchases (sales).............. 0 --
Transfers in and/or out of Level 3. -- --
--------- -----
Balance as of 09/30/2009........... $ 392 $ 0
========= =====
See Notes to Financial Statements
49
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
Industry Allocation*
Medical-Hospitals.......................... 6.1%
Cable/Satellite TV......................... 4.9
Diversified Banking Institutions........... 4.0
Telecom Services........................... 3.8
Casino Hotels.............................. 3.6
Oil Companies-Exploration & Production..... 3.3
Computer Services.......................... 3.1
Auto/Truck Parts & Equipment-Original...... 3.0
Finance-Auto Loans......................... 2.9
Telephone-Integrated....................... 2.3
Electric-Integrated........................ 2.2
Medical-Drugs.............................. 2.2
Oil-Field Services......................... 2.1
Pipelines.................................. 2.0
Theaters................................... 2.0
Banks-Super Regional....................... 1.8
Casino Services............................ 1.8
Electric-Generation........................ 1.8
Finance-Commercial......................... 1.8
Data Processing/Management................. 1.7
Satellite Telecom.......................... 1.7
Cellular Telecom........................... 1.6
Airlines................................... 1.5
Independent Power Producers................ 1.5
Diversified Financial Services............. 1.4
Diversified Manufacturing Operations....... 1.4
Auto-Cars/Light Trucks..................... 1.4
Paper & Related Products................... 1.2
Rental Auto/Equipment...................... 1.2
Medical Products........................... 1.2
Repurchase Agreements...................... 1.1
Banks-Commercial........................... 1.1
Chemicals-Specialty........................ 1.1
Tobacco.................................... 1.0
Diversified Operations/Commercial Services. 1.0
Gambling (Non-Hotel)....................... 0.9
Containers-Paper/Plastic................... 0.9
Storage/Warehousing........................ 0.8
Auto/Truck Parts & Equipment-Replacement... 0.8
Machinery-General Industrial............... 0.8
Retail-Drug Store.......................... 0.8
Retail-Regional Department Stores.......... 0.8
Web Hosting/Design......................... 0.7
Computers-Memory Devices................... 0.7
Banks-Money Center......................... 0.7
Direct Marketing........................... 0.7
Rubber-Tires............................... 0.7
Diversified Minerals....................... 0.7
Retail-Apparel/Shoe........................ 0.6
Machinery-Farming.......................... 0.6
Food-Meat Products......................... 0.6
Transactional Software..................... 0.6
Semiconductor Equipment.................... 0.6
Agricultural Chemicals..................... 0.5
Funeral Services & Related Items........... 0.5
Chemicals-Plastics......................... 0.5
Metal-Aluminum............................. 0.5
Special Purpose Entities................... 0.5
Medical-HMO................................ 0.5
Diagnostic Kits............................ 0.5
Electronic Components-Semiconductors... 0.5%
Advertising Services................... 0.5
Food-Retail............................ 0.4
Metal-Copper........................... 0.4
Beverages-Wine/Spirits................. 0.4
Containers-Metal/Glass................. 0.4
Applications Software.................. 0.3
Office Supplies & Forms................ 0.3
Multimedia............................. 0.3
Publishing-Periodicals................. 0.3
Transport-Services..................... 0.3
Building-Residential/Commercial........ 0.3
Broadcast Services/Program............. 0.3
Food-Misc.............................. 0.2
Retail-Petroleum Products.............. 0.2
Beverages-Non-alcoholic................ 0.2
Steel-Specialty........................ 0.2
Retail-Sporting Goods.................. 0.2
Electronic Components-Misc............. 0.2
Building & Construction-Misc........... 0.2
Medical-Biomedical/Gene................ 0.2
Drug Delivery Systems.................. 0.2
Investment Management/Advisor Services. 0.2
Hazardous Waste Disposal............... 0.2
Wireless Equipment..................... 0.1
Retail-Restaurants..................... 0.1
Medical Information Systems............ 0.1
----
99.5%
====
Credit Quality+#
A.......... 2.1%
BBB........ 3.4
BB......... 24.9
B.......... 37.4
CCC........ 19.8
CC......... 2.9
C.......... 1.6
Below C.... 3.6
Not Rated@. 4.3
-----
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.
50
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
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 $ 226,875
----------
Telecom Services -- 0.0%
ICO North America, Inc.
Notes 7.50% due 08/15/09(1)(2)(9)(11)(17). 84,000 29,400
----------
Total Convertible Bonds & Notes
(cost $331,703)........................... 256,275
----------
U.S. CORPORATE BONDS & NOTES -- 81.3%
Advertising Services -- 0.5%
Visant Holding Corp.
Senior Notes
10.25% due 12/01/13(4).................... 655,000 677,925
----------
Agricultural Chemicals -- 0.5%
Terra Capital, Inc.
Company Guar. Notes
7.00% due 02/01/17........................ 775,000 807,938
----------
Airlines -- 1.5%
American Airlines, Inc.
Pass Through Certs.
Series 1999-1, Class B
7.32% due 10/15/09........................ 25,000 24,937
American Airlines, Inc.
Pass Through Certs.
Series 2001-2, Class A-2
7.86% due 10/01/11........................ 675,000 674,156
Continental Airlines, Inc.
Pass Through Certs.
Series 2001-1, Class A-2
6.50% due 06/15/11........................ 400,000 382,000
Delta Air Lines, Inc.
Pass Through Certs.
Series 2001-1, Class A2
7.11% due 03/18/13........................ 400,000 390,000
Delta Air Lines, Inc.
Pass Through Certs.
Series 2000-1, Class A-1
7.38% due 05/18/10........................ 141,479 139,357
United AirLines, Inc.
Pass Through Certs.
Series 2001-1 Class B
6.93% due 09/01/11........................ 416,312 414,230
United AirLines, Inc.
Pass Through Certs.
Series 2000-2, Class A-2
7.19% due 04/01/11........................ 225,743 225,179
----------
2,249,859
----------
Applications Software -- 0.3%
SS&C Technologies, Inc.
Company Guar. Notes
11.75% due 12/01/13....................... 475,000 499,344
----------
Auto-Cars/Light Trucks -- 1.4%
Ford Motor Co.
Notes
7.45% due 07/16/31........................ 2,525,000 2,045,250
----------
Market
Principal Value
Security Description Amount** (Note 2)
--------------------------------------------------------------------
Auto/Truck Parts & Equipment-Original -- 1.7%
ArvinMeritor, Inc.
Senior Notes
8.13% due 09/15/15......................... $ 875,000 $ 761,250
Cooper-Standard Automotive, Inc.
Company Guar. Notes
8.38% due 12/15/14+(8)(9).................. 985,000 147,750
Tenneco Automotive, Inc.
Company Guar. Notes
8.63% due 11/15/14......................... 405,000 379,687
Tenneco, Inc.
Company Guar. Notes
8.13% due 11/15/15......................... 90,000 87,300
TRW Automotive, Inc.
Company Guar. Notes
7.00% due 03/15/14*........................ 550,000 500,500
TRW Automotive, Inc.
Company Guar. Notes
7.25% due 03/15/17*........................ 725,000 638,000
----------
2,514,487
----------
Auto/Truck Parts & Equipment-Replacement -- 0.8%
Affinia Group, Inc.
Senior Sec. Notes
10.75% due 08/15/16*....................... 730,000 784,750
Allison Transmission
Senior Notes
11.00% due 11/01/15*....................... 400,000 392,000
Exide Corp.
Notes
10.00% due 03/15/25+(1)(2)................. 1,650,000 0
----------
1,176,750
----------
Banks-Money Center -- 0.7%
NB Capital Trust IV Bank
Company Guar. Notes
8.25% due 04/15/27......................... 1,100,000 1,072,500
----------
Banks-Super Regional -- 1.8%
BAC Capital Trust XI
Company Guar. Notes
6.63% due 05/23/36......................... 423,000 369,067
Wells Fargo & Co.
Jr. Sub. Notes
7.98% due 03/15/18(6)(19).................. 2,575,000 2,343,250
----------
2,712,317
----------
Beverages-Wine/Spirits -- 0.4%
Constellation Brands, Inc.
Company Guar. Notes
7.25% due 05/15/17......................... 550,000 547,250
----------
Broadcast Services/Program -- 0.3%
Fisher Communications, Inc.
Senior Notes
8.63% due 09/15/14......................... 401,000 370,925
----------
Building & Construction-Misc. -- 0.2%
Esco Corp.
Senior Notes
8.63% due 12/15/13*........................ 255,000 249,900
----------
51
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Cable/Satellite TV -- 4.9%
CCH II LLC/CCH II Capital Corp.
Senior Notes, Series B
10.25% due 09/15/10+(8)(9)................... $ 440,000 $ 492,800
CCH II LLC/CCH II Capital Corp.
Senior Notes
10.25% due 09/15/10+(8)(9)................... 565,000 635,625
CCO Holdings LLC/CCO Holdings Capital Corp.
Senior Notes
8.75% due 11/15/13+(8)(9).................... 1,878,000 1,906,170
Charter Communications Operating LLC
Senior Notes
12.88% due 09/15/14+*(8)(9).................. 587,000 635,428
Charter Communications Operating LLC/Charter
Communications Operating Capital
Senior Notes
8.38% due 04/30/14+*(8)(9)................... 876,000 893,520
CSC Holdings, Inc.
Senior Notes
7.63% due 04/01/11........................... 625,000 648,437
Mediacom LLC / Mediacom Capital Corp.
Senior Notes
9.13% due 08/15/19*.......................... 1,895,000 1,947,112
----------
7,159,092
----------
Casino Hotels -- 3.6%
Eldorado Casino Corp. (Shreveport)
Sec. Bonds
10.00% due 08/01/12(5)....................... 1,721,177 1,458,698
Eldorado Resorts LLC
Senior Notes
9.00% due 04/15/14(1)(2)..................... 2,675,000 2,362,426
Harrah's Operating Co., Inc.
Senior Sec. Notes
11.25% due 06/01/17*......................... 715,000 722,150
MGM Mirage, Inc.
Senior Sec. Notes
11.13% due 11/15/17*......................... 675,000 744,187
----------
5,287,461
----------
Casino Services -- 0.8%
Indianapolis Downs LLC & Capital Corp.
Senior Sec. Notes
11.00% due 11/01/12*......................... 450,000 265,500
Peninsula Gaming LLC
Senior Sec. Notes
8.38% due 08/15/15*.......................... 600,000 600,000
Peninsula Gaming LLC
Senior Notes
10.75% due 08/15/17*......................... 360,000 361,800
----------
1,227,300
----------
Cellular Telecom -- 1.6%
Cricket Communications, Inc.
Senior Sec. Notes
7.75% due 05/15/16*.......................... 575,000 583,625
Market
Principal Value
Security Description Amount** (Note 2)
--------------------------------------------------------------
Cellular Telecom (continued)
Leap Wireless International, Inc.
Senior Notes
4.50% due 07/15/14.................... $ 938,000 $ 857,097
MetroPCS Wireless, Inc.
Company Guar. Notes
9.25% due 11/01/14.................... 550,000 562,375
Nextel Communications, Inc.
Senior Notes
7.38% due 08/01/15.................... 328,000 294,380
----------
2,297,477
----------
Chemicals-Plastics -- 0.5%
Hexion US Finance Corp.
Senior Sec. Notes
9.75% due 11/15/14.................... 900,000 774,000
----------
Chemicals-Specialty -- 1.1%
Huntsman International LLC
Company Guar. Notes
7.88% due 11/15/14*................... 665,000 620,112
Momentive Performance Materials, Inc.
Company Guar. Notes
9.75% due 12/01/14(4)................. 915,000 709,125
Momentive Performance Materials, Inc.
Company Guar. Notes
12.50% due 06/15/14*.................. 297,000 309,623
----------
1,638,860
----------
Computer Services -- 3.1%
Stream Global Services, Inc.
Senior Sec. Notes
11.25% due 10/01/14*.................. 1,125,000 1,082,812
Sungard Data Systems, Inc.
Company Guar. Notes
10.25% due 08/15/15................... 726,000 740,520
Sungard Data Systems, Inc.
Senior Notes
10.63% due 05/15/15*.................. 550,000 587,125
Unisys Corp.
Senior Sec. Notes
12.75% due 10/15/14*.................. 1,470,000 1,558,200
Unisys Corp.
Senior Sec. Notes
14.25% due 09/15/15*.................. 620,000 638,600
----------
4,607,257
----------
Containers-Metal/Glass -- 0.4%
Ball Corp.
Company Guar. Notes
7.38% due 09/01/19.................... 145,000 147,175
Crown Cork & Seal Co., Inc.
Debentures
8.00% due 04/15/23.................... 400,000 380,000
----------
527,175
----------
52
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Containers-Paper/Plastic -- 0.3%
Graphic Packaging International, Inc.
Company Guar. Notes
9.50% due 06/15/17*....................... $ 450,000 $ 478,125
----------
Data Processing/Management -- 1.7%
First Data Corp.
Company Guar. Notes
9.88% due 09/24/15........................ 1,750,000 1,616,562
First Data Corp.
Company Guar. Notes
10.55% due 09/24/15(17)................... 1,025,000 881,500
----------
2,498,062
----------
Diagnostic Kits -- 0.5%
Inverness Medical Innovations, Inc.
Senior Notes
7.88% due 02/01/16........................ 745,000 718,925
----------
Direct Marketing -- 0.7%
Affinity Group, Inc.
Company Guar. Notes
9.00% due 02/15/12........................ 1,500,000 1,035,000
----------
Diversified Banking Institutions -- 3.5%
Citigroup, Inc.
Senior Sub. Notes
5.88% due 02/22/33........................ 660,000 547,027
GMAC LLC
Company Guar. Notes
6.00% due 04/01/11*....................... 1,527,000 1,431,563
GMAC LLC
Company Guar. Notes
6.88% due 09/15/11*....................... 1,400,000 1,323,000
GMAC LLC
Sub. Notes
8.00% due 12/31/18*....................... 1,100,000 830,500
GMAC LLC
Company Guar. Notes
8.00% due 11/01/31*....................... 1,350,000 1,086,750
----------
5,218,840
----------
Diversified Financial Services -- 1.1%
Citigroup Capital Corp.
Company Guar. Bonds
8.30% due 12/21/37(6)(19)................. 1,865,000 1,657,519
----------
Diversified Manufacturing Operations -- 1.0%
Harland Clarke Holdings Corp.
Notes
6.00% due 05/15/15(6)..................... 500,000 383,750
Harland Clarke Holdings Corp.
Notes
9.50% due 05/15/15........................ 575,000 514,625
SPX Corp.
Senior Notes
7.63% due 12/15/14........................ 500,000 503,750
----------
1,402,125
----------
Market
Principal Value
Security Description Amount** (Note 2)
-----------------------------------------------------------------------
Diversified Operations/Commercial Services -- 1.0%
ARAMARK Corp.
Company Guar. Notes
8.50% due 02/01/15............................. $1,500,000 $1,513,125
----------
Electric-Generation -- 1.8%
Edison Mission Energy
Senior Notes
7.63% due 05/15/27............................. 465,000 332,475
Homer City Funding LLC
Senior Notes
8.14% due 10/01/19............................. 330,600 319,029
Midwest Generation LLC
Pass Thru Certs.,
Series B
8.56% due 01/02/16............................. 292,180 296,563
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs.,
Series B
9.24% due 07/02/17............................. 469,945 472,295
Sithe/Independence Funding Corp.
Senior Notes
9.00% due 12/30/13............................. 445,351 449,516
The AES Corp.
Senior Notes
8.00% due 10/15/17............................. 805,000 810,031
----------
2,679,909
----------
Electric-Integrated -- 2.2%
CMS Energy Corp.
Senior Notes
8.75% due 06/15/19............................. 100,000 108,779
Mirant Americas Generation LLC
Senior Notes
8.50% due 10/01/21............................. 715,000 622,050
Mirant Mid-Atlantic LLC
Pass Through Certs.,
Series B
9.13% due 06/30/17............................. 289,827 295,624
Texas Competitive Electric Holdings Co., LLC
Company Guar. Notes,
Series A
10.25% due 11/01/15(4)......................... 1,480,000 1,065,600
Texas Competitive Electric Holdings Co., LLC
Company Guar. Notes,
Series B
10.25% due 11/01/15(4)......................... 115,000 82,800
Texas Competitive Electric Holdings Co., LLC
Company Guar. Notes
10.50% due 11/01/16(17)........................ 1,631,906 1,093,377
----------
3,268,230
----------
Electronic Components-Misc. -- 0.2%
Jabil Circuit, Inc.
Senior Notes
7.75% due 07/15/16............................. 135,000 137,025
Sanmina-SCI Corp.
Company Guar. Notes
6.75% due 03/01/13............................. 125,000 118,750
----------
255,775
----------
53
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Electronic Components-Semiconductors -- 0.5%
Freescale Semiconductor, Inc.
Company Guar. Notes
8.88% due 12/15/14........................ $ 925,000 $ 707,625
----------
Finance-Auto Loans -- 2.9%
Ford Motor Credit Co. LLC
Senior Notes
7.38% due 02/01/11........................ 2,425,000 2,412,349
Ford Motor Credit Co., LLC
Senior Notes
8.70% due 10/01/14........................ 1,885,000 1,846,453
----------
4,258,802
----------
Finance-Commercial -- 1.8%
CIT Group, Inc.
Senior Notes
5.40% due 01/30/16(18)(20)................ 1,025,000 646,166
CIT Group, Inc.
Senior Notes
5.65% due 02/13/17(18)(20)................ 2,375,000 1,485,107
CIT Group, Inc.
Senior Notes
5.80% due 07/28/11(18)(20)................ 745,000 506,692
----------
2,637,965
----------
Food-Meat Products -- 0.6%
Smithfield Foods, Inc.
Senior Notes
7.75% due 07/01/17........................ 480,000 394,800
Smithfield Foods, Inc.
Senior Sec. Notes
10.00% due 07/15/14*...................... 475,000 498,750
----------
893,550
----------
Food-Retail -- 0.4%
Ingles Markets, Inc.
Senior Notes
8.88% due 05/15/17........................ 400,000 410,000
SUPERVALU, Inc.
Senior Notes
8.00% due 05/01/16........................ 200,000 207,000
----------
617,000
----------
Funeral Services & Related Items -- 0.5%
Carriage Services, Inc.
Senior Notes
7.88% due 01/15/15........................ 850,000 796,875
----------
Gambling (Non-Hotel) -- 0.1%
Greektown Holdings LLC
Senior Notes ch11
10.75% due 12/01/13*+(8)(9)............... 489,000 118,583
----------
Hazardous Waste Disposal -- 0.2%
Clean Harbors, Inc.
Senior Sec. Notes
7.63% due 08/15/16*....................... 220,000 225,225
----------
Market
Principal Value
Security Description Amount** (Note 2)
-----------------------------------------------------------
Independent Power Producers -- 1.5%
Mirant North America LLC
Senior Notes
7.38% due 12/31/13................ $ 325,000 $ 323,375
NRG Energy, Inc.
Company Guar. Notes
7.38% due 02/01/16................ 740,000 715,950
NRG Energy, Inc.
Company Guar. Notes
7.38% due 01/15/17................ 750,000 725,625
RRI Energy, Inc.
Senior Notes
7.88% due 12/31/17................ 440,000 429,550
----------
2,194,500
----------
Investment Management/Advisor Services -- 0.2%
Janus Capital Group, Inc.
Notes
6.95% due 06/15/17................ 238,000 226,477
----------
Machinery-Farming -- 0.6%
Case New Holland, Inc.
Company Guar. Notes
7.75% due 09/01/13*............... 925,000 920,375
----------
Machinery-General Industrial -- 0.8%
CPM Holdings, Inc.
Senior Sec. Notes
10.63% due 09/01/14*.............. 1,105,000 1,140,913
----------
Medical Information Systems -- 0.1%
Spheris, Inc.
Senior Sub. Notes
11.00% due 12/15/12............... 250,000 102,500
----------
Medical Products -- 1.2%
DJO Finance LLC/DJO Finance Corp.
Company Guar. Notes
10.88% due 11/15/14............... 300,000 306,750
LVB Acquisition Holding LLC
Company Guar. Notes
10.00% due 10/15/17............... 838,000 892,470
LVB Acquisition Holding LLC
Company Guar. Notes
10.38% due 10/15/17(17)........... 481,000 511,062
----------
1,710,282
----------
Medical-Biomedical/Gene -- 0.2%
Bio-Rad Laboratories, Inc.
Senior Sub. Notes
8.00% due 09/15/16*............... 225,000 233,438
----------
Medical-Drugs -- 0.4%
Axcan Intermediate Holdings, Inc.
Senior Notes
9.25% due 03/01/15................ 600,000 633,000
----------
Medical-HMO -- 0.5%
Multiplan, Inc.
Senior Sub. Notes
10.38% due 04/15/16*.............. 750,000 723,750
----------
54
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Medical-Hospitals -- 4.9%
Community Health Systems, Inc.
Company Guar. Notes
8.88% due 07/15/15.......................... $1,435,000 $1,470,875
HCA, Inc.
Senior Notes
6.25% due 02/15/13.......................... 675,000 644,625
HCA, Inc.
Senior Notes
7.88% due 02/01/11*......................... 550,000 554,813
HCA, Inc.
Senior Sec. Notes
7.88% due 02/15/20*......................... 1,030,000 1,033,862
HCA, Inc.
Senior Notes
8.50% due 04/15/19.......................... 550,000 574,750
HCA, Inc.
Senior Sec. Notes
9.25% due 11/15/16.......................... 875,000 904,531
IASIS Healthcare LLC/IASIS Capital Corp.
Company Guar. Notes
8.75% due 06/15/14.......................... 546,000 546,000
Tenet Healthcare Corp.
Senior Sec. Notes
9.00% due 05/01/15*......................... 1,370,000 1,431,650
----------
7,161,106
----------
Metal-Copper -- 0.4%
Freeport-McMoRan Copper & Gold, Inc.
Senior Notes
8.38% due 04/01/17.......................... 575,000 611,656
----------
Multimedia -- 0.1%
Haights Cross Operating Co.
Senior Notes
11.75% due 08/15/11(8)...................... 325,000 140,563
----------
Non-Ferrous Metals -- 0.0%
Renco Metals, Inc.
Bonds
11.50% due 07/01/03+(1)(2)(11)(12).......... 2,150,000 0
----------
Office Supplies & Forms -- 0.3%
ACCO Brands Corp.
Senior Sec. Notes
10.63% due 03/15/15*........................ 475,000 496,375
----------
Oil Companies-Exploration & Production -- 3.1%
Atlas Energy Resources LLC
Senior Notes
10.75% due 02/01/18*........................ 600,000 624,000
Belden & Blake Corp.
Company Guar. Notes
8.75% due 07/15/12.......................... 15,000 13,950
Chesapeake Energy Corp.
Senior Notes
6.63% due 01/15/16.......................... 1,250,000 1,181,250
Chesapeake Energy Corp.
Senior Notes
9.50% due 02/15/15.......................... 375,000 394,688
Market
Principal Value
Security Description Amount** (Note 2)
-------------------------------------------------------------
Oil Companies-Exploration & Production (continued)
Encore Acquisition Co.
Senior Sub. Notes
6.00% due 07/15/15................... $500,000 $ 452,500
Encore Acquisition Co.
Senior Sub. Notes
6.25% due 04/15/14................... 115,000 106,950
Hilcorp Energy I LP
Senior Notes
7.75% due 11/01/15*.................. 195,000 184,275
MXEnergy Holdings, Inc.
Senior Sec. Notes
13.25% due 08/01/14*(1)(2)........... 384,000 307,200
Plains Exploration & Production Co.
Company Guar. Notes
7.75% due 06/15/15................... 350,000 347,375
Plains Exploration & Production Co.
Company Guar. Notes
10.00% due 03/01/16.................. 375,000 404,062
Quicksilver Resources, Inc.
Senior Notes
8.25% due 08/01/15................... 500,000 487,500
Quicksilver Resources, Inc.
Senior Notes
11.75% due 01/01/16.................. 100,000 110,250
----------
4,614,000
----------
Oil-Field Services -- 1.4%
Basic Energy Services, Inc.
Senior Sec. Notes
11.63% due 08/01/14*................. 700,000 742,000
Helix Energy Solutions Group, Inc.
Senior Notes
9.50% due 01/15/16*.................. 435,000 435,000
Hornbeck Offshore Services, Inc.
Senior Notes
8.00% due 09/01/17*.................. 655,000 645,175
Oslo Seismic Services, Inc.
1st Mtg. Bonds
8.28% due 06/01/11................... 302,136 306,272
----------
2,128,447
----------
Paper & Related Products -- 1.2%
Caraustar Industries, Inc.
Senior Sec. Notes
10.00% due 08/15/14(1)(2)............ 207,885 207,885
Cellu Tissue Holdings, Inc.
Senior Sec. Notes
11.50% due 06/01/14.................. 175,000 187,250
Georgia-Pacific LLC
Company Guar. Notes
7.13% due 01/15/17*.................. 290,000 283,475
Georgia-Pacific LLC
Senior Notes
7.75% due 11/15/29................... 159,000 146,280
Georgia-Pacific LLC
Company Guar. Notes
8.25% due 05/01/16*.................. 425,000 440,937
55
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Paper & Related Products (continued)
Neenah Paper, Inc.,
Senior Notes
7.38% due 11/15/14.............................. $ 65,000 $ 51,188
NewPage Corp.
Senior Sec. Notes
11.38% due 12/31/14*............................ 385,000 378,262
----------
1,695,277
----------
Pipelines -- 2.0%
Dynegy-Roseton Danskammer
Pass Through Certs.,
Series B
7.67% due 11/08/16.............................. 1,550,000 1,424,062
El Paso Corp.
Senior Sub. Notes
6.88% due 06/15/14.............................. 700,000 686,000
NGC Corp. Capital Trust
Company Guar. Bonds
8.32% due 06/01/27.............................. 1,425,000 641,250
Regency Energy Partners LP/Regency Energy
Finance Corp.
Company Guar. Notes
8.38% due 12/15/13.............................. 200,000 202,000
----------
2,953,312
----------
Publishing-Periodicals -- 0.3%
Nielsen Finance LLC / Nielsen Finance Co.
Company Guar. Notes
11.50% due 05/01/16............................. 375,000 393,750
The Reader's Digest Association, Inc.
Company Guar. Notes
9.00% due 02/15/17(8)(9)........................ 1,020,000 22,950
----------
416,700
----------
Recycling -- 0.0%
Aleris International, Inc.
Company Guar. Notes
9.00% due 12/15/14+(8)(9)(17)................... 2,145,000 2,145
----------
Rental Auto/Equipment -- 1.2%
Avis Budget Car Rental LLC/Avis Budget Finance,
Inc.
Company Guar. Notes
7.63% due 05/15/14.............................. 1,475,000 1,327,500
RSC Equipment Rental, Inc.
Senior Sec. Notes
10.00% due 07/15/17*............................ 400,000 431,000
----------
1,758,500
----------
Retail-Apparel/Shoe -- 0.6%
Limited Brands, Inc.
Senior Notes
5.25% due 11/01/14.............................. 380,000 352,538
Limited Brands, Inc.
Senior Notes
6.95% due 03/01/33.............................. 489,000 367,192
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------
Retail-Apparel/Shoe (continued)
Limited Brands, Inc.
Senior Notes
8.50% due 06/15/19*.................... $200,000 $ 209,226
----------
928,956
----------
Retail-Drug Store -- 0.8%
Rite Aid Corp.
Company Guar. Notes
9.50% due 06/15/17..................... 304,000 246,240
Rite Aid Corp.
Senior Sec. Notes
9.75% due 06/12/16*.................... 125,000 135,000
Rite Aid Corp.
Senior Sec. Notes
10.38% due 07/15/16.................... 750,000 740,625
----------
1,121,865
----------
Retail-Petroleum Products -- 0.2%
Inergy LP/Inergy Finance Corp.
Company Guar. Notes
8.25% due 03/01/16..................... 325,000 326,625
----------
Retail-Regional Department Stores -- 0.8%
JC Penney Corp., Inc.
Senior Notes
7.40% due 04/01/37..................... 268,000 238,520
Macy's Retail Holdings, Inc.
Company Guar. Notes
5.90% due 12/01/16..................... 396,000 362,812
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.38% due 03/15/37..................... 246,000 193,810
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.65% due 07/15/24..................... 172,000 135,643
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.90% due 04/01/29..................... 233,000 183,806
----------
1,114,591
----------
Retail-Restaurants -- 0.1%
Wendy's/Arby's Restaurants LLC
Senior Notes
10.00% due 07/15/16*................... 125,000 132,813
----------
Retail-Sporting Goods -- 0.2%
Freedom Group, Inc.
Senior Sec. Notes
10.25% due 08/01/15*................... 250,000 265,000
----------
Rubber-Tires -- 0.7%
The Goodyear Tire & Rubber Co.
Senior Notes
9.00% due 07/01/15..................... 350,000 363,125
The Goodyear Tire & Rubber Co.
Senior Notes
10.50% due 05/15/16.................... 600,000 651,000
----------
1,014,125
----------
56
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
-----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Rubber/Plastic Products -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/07+(1)(2)(9)(11)........ $ 550,000 $ 0
----------
Special Purpose Entities -- 0.4%
Fox Acquisition Sub LLC
Senior Notes
13.38% due 07/15/16*..................... 625,000 396,875
Local TV Finance LLC
Senior Notes
9.25% due 06/15/15*(17).................. 572,250 194,565
----------
591,440
----------
Steel-Specialty -- 0.2%
Allegheny Technologies, Inc.
Senior Notes
9.38% due 06/01/19....................... 250,000 283,043
----------
Storage/Warehousing -- 0.8%
Mobile Mini, Inc.
Notes
6.88% due 05/01/15....................... 555,000 506,438
Mobile Mini, Inc.
Company Guar. Notes
9.75% due 08/01/14....................... 685,000 696,987
----------
1,203,425
----------
Telecom Services -- 2.5%
GCI, Inc.
Senior Notes
7.25% due 02/15/14....................... 450,000 424,125
PAETEC Holding Corp.
Senior Sec. Notes
8.88% due 06/30/17*...................... 475,000 472,625
PAETEC Holding Corp.
Company Guar. Notes
9.50% due 07/15/15....................... 870,000 789,525
Qwest Corp.
Senior Notes
8.38% due 05/01/16*...................... 225,000 232,875
Time Warner Telecom Holdings, Inc.
Company Guar. Notes
9.25% due 02/15/14....................... 125,000 128,750
West Corp.
Company Guar. Notes
9.50% due 10/15/14....................... 1,500,000 1,470,000
West Corp.
Company Guar. Notes
11.00% due 10/15/16...................... 160,000 158,800
----------
3,676,700
----------
Telephone-Integrated -- 2.3%
Citizens Communications Co.
Senior Notes
7.13% due 03/15/19....................... 350,000 329,875
Qwest Communications International, Inc.
Company Guar. Notes
8.00% due 10/01/15*...................... 570,000 569,287
Market
Principal Value
Security Description Amount** (Note 2)
-----------------------------------------------------------------
Telephone-Integrated (continued)
Sprint Capital Corp.
Company Guar. Notes
8.75% due 03/15/32....................... $2,286,000 $2,160,270
Valor Telecommunications Enterprises LLC
Company Guar. Notes
7.75% due 02/15/15....................... 190,000 194,750
Windstream Corp.
Senior Notes
7.88% due 11/01/17*...................... 165,000 164,175
----------
3,418,357
----------
Television -- 0.0%
Paxson Communications Corp.
Senior Sec. Notes
7.38% due 01/15/13*+(8)(9)(17)........... 1,862,605 23,283
Young Broadcasting, Inc.
Senior Sub. Notes
8.75% due 01/15/14+(8)(9)................ 685,000 856
Young Broadcasting, Inc.
Company Guar. Notes
10.00% due 03/01/11+(8)(9)............... 635,000 794
----------
24,933
----------
Theaters -- 1.5%
AMC Entertainment, Inc.
Senior Sub. Notes
8.00% due 03/01/14....................... 749,000 722,785
AMC Entertainment, Inc.
Senior Notes
8.75% due 06/01/19....................... 425,000 438,812
AMC Entertainment, Inc.
Senior Sub Notes
11.00% due 02/01/16...................... 380,000 404,700
Marquee Holdings, Inc.
Senior Disc. Notes
12.00% due 08/15/14(6)................... 840,000 695,100
----------
2,261,397
----------
Tobacco -- 1.0%
Alliance One International, Inc.
Senior Notes
10.00% due 07/15/16*..................... 1,055,000 1,089,288
Alliance One International, Inc.
Senior Notes
10.00% due 07/15/16*..................... 430,000 443,975
----------
1,533,263
----------
Transactional Software -- 0.6%
Open Solutions, Inc.
Company Guar. Notes
9.75% due 02/01/15*...................... 1,250,000 864,063
----------
Transport-Services -- 0.3%
Bristow Group, Inc.
Senior Notes
7.50% due 09/15/17....................... 425,000 403,750
----------
57
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (continued)
Web Hosting/Design -- 0.7%
Terremark Worldwide, Inc.
Senior Sec. Notes
12.00% due 06/15/17*..................... $1,000,000 $ 1,090,000
------------
Wireless Equipment -- 0.1%
CC Holdings GS V LLC/Crown Castle GS III
Corp.
Senior Notes
7.75% due 05/01/17*...................... 200,000 207,000
------------
Total U.S. Corporate Bonds & Notes
(cost $127,018,358)...................... 119,748,989
------------
FOREIGN CORPORATE BONDS & NOTES -- 8.9%
Banks-Commercial -- 1.1%
Barclays Bank PLC
Sub. Notes
8.55% due 06/15/11*(6)(19)............... 800,000 728,000
Lloyds Banking Group PLC
Jr. Sub. Notes
5.92% due 10/01/15*(6)(19)............... 1,625,000 926,250
------------
1,654,250
------------
Computers-Memory Devices -- 0.7%
Seagate Technology HDD Holdings
Company Guar. Notes
6.80% due 10/01/16....................... 1,175,000 1,078,063
------------
Diversified Banking Institutions -- 0.5%
Credit Agricole SA
Sub. Notes
9.75% due 12/31/49....................... EUR 690,000 715,875
------------
Diversified Financial Services -- 0.3%
CIT Group Funding Co. of Canada
Company Guar. Notes
5.20% due 06/01/15....................... 605,000 473,227
------------
Diversified Manufacturing Operations -- 0.5%
Bombardier, Inc.
Senior Notes
8.00% due 11/15/14*...................... 710,000 727,750
------------
Diversified Minerals -- 0.7%
Teck Resources, Ltd.
Senior Sec. Notes
10.25% due 05/15/16...................... 525,000 593,250
Teck Resources, Ltd.
Senior Sec. Notes
10.75% due 05/15/19...................... 350,000 406,875
------------
1,000,125
------------
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-Drugs -- 0.8%
Elan Corp PLC
Company Guar. Notes
8.75% due 10/15/16*...................... 530,000 522,050
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------------
Medical-Drugs (continued)
Elan Finance PLC
Company Guar. Notes
8.88% due 12/01/13......................... $ 575,000 $ 579,312
-----------
1,101,362
-----------
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
-----------
Metal-Aluminum -- 0.5%
Novelis, Inc.
Senior Notes
11.50% due 02/15/15*....................... 760,000 767,600
-----------
Multimedia -- 0.2%
Quebecor Media, Inc.
Senior Notes
7.75% due 03/15/16......................... 325,000 321,750
-----------
Satellite Telecom -- 1.7%
Intelsat Intermediate Holding Co., Ltd.
Company Guar. Notes
9.50% due 02/01/15(6)...................... 700,000 698,250
Intelsat Subsidiary Holding Co., Ltd.
Company Guar. Notes
8.50% due 01/15/13......................... 475,000 480,938
Intelsat Subsidiary Holding Co., Ltd.
Senior Notes
8.88% due 01/15/15*........................ 1,275,000 1,290,937
-----------
2,470,125
-----------
Semiconductor Equipment -- 0.6%
Sensata Technologies BV
Company Guar. Notes
8.00% due 05/01/14......................... 905,000 843,913
-----------
Special Purpose Entity -- 0.1%
Hellas Telecommunications Luxembourg II
Sub. Notes
6.03% due 01/15/15*(6)(21)................. 1,025,000 158,875
-----------
Telecom Services -- 1.2%
Wind Acquisition Finance SA
Company Guar. Bonds
10.75% due 12/01/15*....................... 261,000 287,100
Wind Acquisition Finance SA
Senior Notes
11.75% due 07/15/17*....................... 1,375,000 1,550,312
-----------
1,837,412
-----------
Total Foreign Corporate Bonds & Notes
(cost $17,278,084)......................... 13,154,787
-----------
LOANS(13)(14) -- 7.2%
Auto/Truck Parts & Equipment-Original -- 1.3%
Federal Mogul Corp.
Term Loan C
2.19% due 12/27/15......................... 422,297 324,465
58
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
---------------------------------------------------------------
LOANS(13)(14) (continued)
Auto/Truck Parts & Equipment-Original (continued)
Federal Mogul Corp.
Term Loan Tranche B
2.19% due 12/27/15................... $ 827,703 $ 635,951
Lear Corp.
Term Loan B
10.46% due 04/25/12(2)............... 1,000,000 906,875
-----------
1,867,291
-----------
Beverages-Non-alcoholic -- 0.2%
Le-Natures, Inc.
9.39% due 03/01/11+(2)(8)(9)......... 1,200,000 288,000
-----------
Building-Residential/Commercial -- 0.2%
Tousa, Inc.
12.25% due 08/15/13+(2)(5)........... 1,297,308 389,192
-----------
Casino Services -- 1.0%
Herbst Gaming, Inc.
Tranche 1
12.50% due 12/02/11+(2)(8)........... 265,517 148,689
Herbst Gaming, Inc.
Tranche 2
Delayed Draw-
Term B
12.50% due 12/02/11+(2)(8)........... 726,922 407,076
Holding Gaming Borrower LP
9.25% due 02/19/13(2)................ 997,500 922,687
Holding Gaming Borrower LP
Term Loan Tranche B1
9.25% due 02/19/13(2)................ 2,500 2,313
-----------
1,480,765
-----------
Containers-Paper/Plastic -- 0.5%
Consolidated Container Co.
Second Lien Term Loan
2.50% due 09/28/14(2)................ 1,000,000 816,250
-----------
Gambling (Non-Hotel) -- 0.7%
Greektown Holdings Delayed Draw
11.75% due 09/09/13(2)............... 1,030,542 1,036,983
-----------
Medical-Drugs -- 1.0%
Triax Pharmaceuticals LLC
16.50% due 08/30/11(1)(2)(15)........ 1,584,627 1,442,011
-----------
Medical-Hospitals -- 1.3%
Capella Healthcare, Inc.
13.00% due 02/29/16(2)............... 1,000,000 1,000,000
Iasis Healthcare Corp.
BTL
6.29% due 06/15/14(2)................ 916,397 866,568
-----------
1,866,568
-----------
Oil-Field Services -- 0.6%
Stallion Oilfield Service
8.75% due 08/01/12(2)................ 2,000,000 865,000
-----------
Theaters -- 0.4%
AMC Entertainment Holdings, Inc.
5.62% due 06/15/12(2)................ 721,834 633,410
-----------
Total Loans
(cost $13,605,606)................... 10,685,470
-----------
Shares/ Market
Principal Value
Security Description Amount** (Note 2)
----------------------------------------------------------------------
COMMON STOCK -- 0.8%
Building Products-Doors & Windows -- 0.0%
Masonite Worldwide Holdings+................. $ 692 $ 26,296
------------
Casino Services -- 0.0%
Capital Gaming International, Inc.+(1)(2).... 77 0
------------
Energy-Alternate Sources -- 0.0%
VeraSun Energy Corp.(1)(2)................... 20,000 0
------------
Food-Misc. -- 0.3%
Wornick Co.+(1)(2)........................... 7,270 363,500
------------
Gambling (Non-Hotel) -- 0.1%
Shreveport Gaming Holdings, Inc.+(1)(2)...... 14,150 214,443
------------
Medical-Drugs -- 0.0%
Triax Pharmaceuticals LLC+(1)(2)(16)......... 128,418 1,284
------------
Medical-Outpatient/Home Medical -- 0.0%
Critical Care Systems International,
Inc.+(1)(2)................................. 69,700 14,532
------------
Oil Companies-Exploration & Production -- 0.2%
MXEnergy Holdings, Inc.+(1)(2)............... 192,375 257,783
------------
Oil-Field Services -- 0.1%
Trico Marine Services, Inc.+................. 15,559 120,116
------------
Paper & Related Products -- 0.1%
Caraustar Industries, Inc.(1)(2)............. 73 122,421
------------
Total Common Stock
(cost $2,583,442)........................... 1,120,375
------------
PREFERRED STOCK -- 0.0%
Medical-Drugs -- 0.0%
Triax Pharmaceuticals LLC,
Class C
14.70%(1)(2)
(cost $78,353).............................. 39,177 392
------------
WARRANTS+ -- 0.0%
Building Products-Doors & Windows -- 0.0%
Masonite Worldwide Holdings
Expires 06/09/14
(strike price $55.31)....................... 3,355 12,078
Masonite Worldwide Holdings
Expires 06/09/16
(strike price $55.31)....................... 2,517 8,432
------------
20,510
------------
Oil Companies-Exploration & Production -- 0.0%
Transmeridian Exploration, Inc.
Expires 12/15/10
(Strike price $4.31)(1)..................... 44,885 0
------------
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)............................. 20,510
------------
Total Long-Term Investment Securities
(cost $161,024,550)......................... 144,986,798
------------
59
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount** (Note 2)
----------------------------------------------------------
REPURCHASE AGREEMENT -- 1.1%
Bank of America Securities
Joint Repurchase Agreement(3)
(cost $1,685,000).............. $1,685,000 $ 1,685,000
------------
TOTAL INVESTMENTS --
(cost $162,709,550)(7)......... 99.5% 146,671,798
Other assets less liabilities..... 0.5 684,153
---------- ------------
NET ASSETS -- 100.0% $147,355,951
========== ============
- --------
* 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 September 30, 2009, the aggregate value
of these securities was $43,962,689 representing 29.8% 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)Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs. See Note 2.
(2)Illiquid security. At September 30, 2009, the aggregate value of these
securities was $14,571,196 representing 9.9% of net assets.
(3)See Note 2 for details of Joint Repurchase Agreement.
(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 September 30, 2009.
(7)See Note 5 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 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. 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 Loan.
(14)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)Income may be received in cash or additional bonds at the discretion of the
issuer.
(18)Security is in default subsequent to September 30, 2009.
(19)Perpetual maturity-maturity date reflects the next call date.
(20)Subsequent to September 30, 2009. Company filed for Chapter 11 bankruptcy
protection.
(21)Bond was in default subsequent to September 30, 2009.
60
SunAmerica High Yield Bond Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2009 (see Note 2):
Level 1--Unadjusted Level 2--Other Level 3--Significant
Quoted Prices Observable Inputs Unobservable Inputs Total
- - ------------------- ----------------- -------------------- ------------
Long-Term Investment Securities:
Convertible Bonds & Notes....... $ -- $ 226,875 $ 29,400 $ 256,275
U.S. Corporate Bonds & Notes.... -- 115,261,028 4,487,961 119,748,989
Foreign Corporate Bonds & Notes. -- 13,154,787 0 13,154,787
Loans........................... -- 3,550,109 7,135,361 10,685,470
Common Stock.................... 146,412 -- 973,963 1,120,375
Preferred Stock................. -- -- 392 392
Warrants........................ 20,510 -- 0 20,510
Repurchase Agreements............. -- 1,685,000 -- 1,685,000
-------- ------------ ----------- ------------
Total............................. $166,922 $133,877,799 $12,627,077 $146,671,798
======== ============ =========== ============
The following is a reconciliation of Level 3 assets which significant
unobservable inputs were used to determine fair value:
Convertible U.S. Corporate Foreign Corporate Common Preferred
Bonds & Notes Bonds & Notes Bonds & Notes Loans Stock Stock
- - ------------- -------------- ----------------- ----------- -------- ---------
Balance as of 3/31/2009.......................... $16,800 $ 8,088,682 $ 0 $ 9,162,825 $691,369 $ 137,017
Accrued discounts/premiums....................... -- (237) -- 81,536 -- --
Realized gain (loss)............................. -- 1,017,775 -- (732,717) -- (656,190)
Change in unrealized appreciation (depreciation). 12,600 (1,801,171) -- 3,246,443 274,659 519,565
Net purchases (sales)............................ -- (2,817,088) -- (3,756,159) 7,935 0
Transfers in and/or out of Level 3............... -- -- -- (866,567) -- --
------- ----------- ----------- ----------- -------- ---------
Balance as of 09/30/2009......................... $29,400 $ 4,487,961 $ 0 $ 7,135,361 $973,963 $ 392
======= =========== =========== =========== ======== =========
Warrants
- - --------
Balance as of 3/31/2009.......................... $ 449
Accrued discounts/premiums....................... --
Realized gain (loss)............................. --
Change in unrealized appreciation (depreciation). (449)
Net purchases (sales)............................ --
Transfers in and/or out of Level 3............... --
-----
Balance as of 09/30/2009......................... $ 0
=====
See Notes to Financial Statements
61
SunAmerica Tax Exempt Insured Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
Allocation by States*
New York...................... 19.6%
Massachusetts................. 17.3
New Jersey.................... 9.4
Ohio.......................... 8.4
Colorado...................... 7.4
California.................... 6.6
Texas......................... 6.2
Connecticut................... 3.6
New Mexico.................... 3.5
Missouri...................... 2.9
South Dakota.................. 2.8
Hawaii........................ 2.6
Maryland...................... 2.2
North Carolina................ 2.1
Arizona....................... 1.8
Pennsylvania.................. 1.4
Nevada........................ 0.6
Kentucky...................... 0.3
Georgia....................... 0.1
Registered Investment Company. 0.0
----
98.8%
====
Credit Quality Allocation+#
AAA........ 45.0%
AA......... 39.9
A.......... 9.6
Not Rated@. 5.5
-----
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.
62
SunAmerica Tax Exempt Insured Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount (Note 2)
----------------------------------------------------
MUNICIPAL BONDS & NOTES -- 95.0%
Arizona -- 1.8%
Arizona Health Facilities Authority Revenue,
Revenue Bonds
5.50% due 01/01/31................................ $1,325,000 $1,394,761
----------
California -- 6.6%
East Bay California Municipal Utility
District Water System Revenue,
Series A
5.00% due 06/01/32(1)............................. 2,500,000 2,706,175
University of California Revenues,
Series J
4.50% due 05/15/35(1)............................. 2,500,000 2,515,525
----------
5,221,700
----------
Colorado -- 7.4%
Aurora Colorado Water Improvement Revenue,
Series A
5.00% due 08/01/36(1)............................. 3,000,000 3,160,470
Regional Transportation District
Colorado Sales Tax Revenue,
Series A
5.00% due 11/01/28(1)............................. 2,500,000 2,686,050
----------
5,846,520
----------
Connecticut -- 3.6%
State of Connecticut, Refunded,
Series B,
5.00% due 06/01/14(1)............................. 2,500,000 2,871,350
----------
Georgia -- 0.1%
Georgia Municipal Electric Authority,
Power Revenue,
Series Y,
6.40% due 01/01/13(1)............................. 85,000 93,763
----------
Hawaii -- 2.6%
Honolulu Hawaii City & County Broad Water Supply,
Water System Revenue,
Series A
4.75% due 07/01/31(1)............................. 2,000,000 2,079,340
----------
Maryland -- 2.2%
Baltimore Maryland Project Revenue,
Series A
5.00% due 07/01/38(1)............................. 1,650,000 1,768,057
----------
Massachusetts -- 17.3%
Massachusetts State School Building Authority,
Series A
5.00% due 08/15/24(1)............................. 3,000,000 3,306,630
Massachusetts State Water Resources Authority,
Revenue Bonds,
Series A,
5.00% due 08/01/24(1)............................. 3,910,000 4,242,037
Massachusetts State,
Series C
5.25% due 08/01/24(1)............................. 2,300,000 2,620,482
Market
Principal Value
Security Description Amount (Note 2)
------------------------------------------------------------------------
Massachusetts (continued)
University of Massachusetts Building Authority
Project Revenue,
Series 04-1,
5.25% due 11/01/27(1).......................... $3,000,000 $ 3,529,800
-----------
13,698,949
-----------
Missouri -- 2.9%
Missouri State Health & Educational Facilities
Authority,
Series 2003-B
5.50% due 11/15/32(1).......................... 2,000,000 2,274,540
-----------
New Jersey -- 9.4%
Garden State Preservation Trust New Jersey
Open Space & Farmland, Series A,
5.80% due 11/01/17(1).......................... 2,500,000 2,994,775
New Jersey Economic Development Authority
Revenue Bond, School Facility Construction
5.00% due 03/01/10(1)(2)....................... 2,000,000 2,273,980
New Jersey State Transportation Transit Fund
Authority,
Series C
zero coupon due 12/15/25(1).................... 5,000,000 2,218,950
-----------
7,487,705
-----------
New Mexico -- 3.5%
New Mexico Finance Authority Transportation,
Series A,
5.25% due 06/15/21(1).......................... 2,500,000 2,746,800
-----------
New York -- 16.7%
City of Niagara Falls New York,
General Obligation
7.50% due 03/01/13(1).......................... 410,000 475,059
City of Niagara Falls New York,
Prerefunded,
General Obligation
7.50% due 03/01/13(1).......................... 35,000 42,440
City of Niagara Falls New York,
General Obligation
7.50% due 03/01/14(1).......................... 510,000 605,885
City of Niagara Falls New York,
Prerefunded,
General Obligation
7.50% due 03/01/14(1).......................... 45,000 56,710
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 2,966,054
New York State Thruway Authority,
Series G,
5.25% due 01/01/27(1).......................... 1,500,000 1,616,730
63
SunAmerica Tax Exempt Insured Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
Market
Principal Value
Security Description Amount (Note 2)
------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES (continued)
New York (continued)
Port Authority New York & New Jersey,
Revenue Bonds
4.50% due 09/15/39............................. $3,000,000 $ 3,055,380
Sales Tax Asset Receivables Corp.,
Series A,
5.25% due 10/15/27(1).......................... 2,000,000 2,206,580
Triborough Bridge & Tunnel Authority,
Series A-2
5.25% due 11/15/34............................. 2,000,000 2,219,860
-----------
13,244,698
-----------
North Carolina -- 2.1%
Wake County North Carolina, General Obligation
4.50% due 03/01/26............................. 1,550,000 1,678,433
-----------
Ohio -- 8.4%
Ohio State Higher Educational Facility
Commission,
Revenue Bonds
5.25% due 01/01/29............................. 1,845,000 1,939,242
Olentangy Local School District Ohio,
Series A,
5.25% due 12/01/27(1).......................... 3,250,000 3,770,585
Woodridge, Ohio, Woodmore Local School
District,
6.80% due 12/01/14(1).......................... 880,000 978,798
-----------
6,688,625
-----------
Pennsylvania -- 1.4%
Pennsylvania State Higher Educational Facility
Authority,
Series B
6.00% due 08/15/22............................. 1,000,000 1,143,920
-----------
South Dakota -- 2.8%
South Dakota State Health & Educational
Facilities Revenue, Refunding,
6.25% due 07/01/10(1).......................... 2,120,000 2,201,366
-----------
Texas -- 6.2%
Austin Texas Water & Wastewater System,
Series A
5.00% due 11/15/34(1).......................... 2,140,000 2,264,441
Dallas Texas Area Rapid Transportation,
Sales Tax Revenue
5.00% due 12/01/36(1).......................... 2,500,000 2,658,900
-----------
4,923,341
-----------
Total Long-Term Investment Securities
(cost $69,829,113).............................. 75,363,868
-----------
Principal Market
Amount/ Value
Security Description Shares (Note 2)
-----------------------------------------------------------------
SHORT-TERM INVESTMENT SECURITIES -- 3.8%
MUNICIPAL BONDS & NOTES
Kentucky -- 0.3%
Louisville & Jefferson County Kentucky
Metropolitan Sewer District,
Series A
0.35% due 10/01/09(1)(2)............... $ 190,000 $ 190,000
-----------
Nevada -- 0.6%
Clark County Nevada School District,
Series A
0.35% due 10/01/09(1)(2)............... 470,000 470,000
-----------
New York -- 2.9%
New York NY,
Series H
0.35% due 10/01/09(1)(2)............... 2,330,000 2,330,000
-----------
Total Municipal Bonds & Notes
(cost $2,990,000)...................... 2,990,000
-----------
Registered Investment Company -- 0.0%
SSGA Tax Free Money Market Fund
(cost $5,320)........................... 5,320 5,320
-----------
Total Short-Term Investment Securities
(cost $2,995,320)...................... 2,995,320
-----------
TOTAL INVESTMENTS --
(cost $72,824,433)(3).................. 98.8 % 78,359,188
Other assets less liabilities............. 1.2 945,190
---------- -----------
NET ASSETS -- 100.0 % $79,304,378
========== ===========
- --------
(1)All or part of this security is insured by the Financial Security Assurance
("FSA"), Financial Guaranteed Insurance Corp. ("FGIC"), Municipal Bond
Insurance Association ("MBIA"), or American Municipal Bond Assurance Corp.
("AMBAC"). The aggregate value of these securities is $63,956,218 or 80.7%
of Net Assets.
(2)Variable Rate Security -- the rate reflected is as of September 30, 2009,
maturity date reflects next reset date.
(3)See Note 5 for cost of investments on a tax basis.
64
SunAmerica Tax Exempt Insured Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2009 -- (unaudited)
(continued)
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2009 (see Note 2):
Level 1--Unadjusted Level 2--Other Level 3--Significant
Quoted Prices Observable Inputs Unobservable Inputs Total
- - ------------------- ----------------- -------------------- -----------
Long-Term Investment Securities:
Municipal Bonds & Notes......... $ -- $75,363,868 $ -- $75,363,868
Short Term Investment Securities:
Municipal Bonds & Notes......... -- 2,990,000 -- 2,990,000
Registered Investment Companies. -- 5,320 -- 5,320
---------- ----------- ---------- -----------
Total............................. $ -- $78,359,188 $ -- $78,359,188
========== =========== ========== ===========
See Notes to Financial Statements
65
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2009 -- (unaudited)
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.
66
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2009 -- (unaudited)
(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: The Trust's organizational documents provide current and
former officers and trustees with a limited indemnification against
liabilities arising out of the performance of their duties to the Trust. In
addition, pursuant to Indemnification Agreements between the Trust and each
of the current trustees who is not an "interested person," as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended (the
"1940 Act"), of the Trust (collectively, the "Disinterested Trustees"), the
Trust provides the Disinterested Trustees with a limited indemnification
against liabilities arising out of the performance of their duties to the
Trust, whether such liabilities are asserted during or after their service
as trustees. In addition, in the normal course of business the Trust enters
into contracts that contain the obligation to indemnify others. The Trust's
maximum exposure under these arrangements is unknown. Currently, however,
the Trust expects the risk of loss to be remote.
Note 2. Significant Accounting Policies
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles 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
67
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2009 -- (unaudited)
(continued)
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.
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.
The various inputs that may be used to determine the value of the Funds'
investments are summarized into 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 (includes inputs that reflect
the Funds' own assumptions about the assumptions market participants would
use in pricing the security, developed based on the best information
available under the circumstances).
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
The summary of the inputs used to value the Funds' net assets as of
September 30, 2009, are reported on a schedule following the Portfolio of
Investments.
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
68
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2009 -- (unaudited)
(continued)
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 period ended September 30, 2009, 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.
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, plus accrued interest, to ensure that the value, at
the time the agreement is entered into, is equal to at least 102% of the
repurchase price, including accrued interest. In the event of default of the
obligation to repurchase, a Fund has the right to liquidate the collateral
and apply the proceeds in satisfaction of the obligation. If the seller
defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.
At September 30, 2009, the following Funds held an undivided interest in a
joint repurchase agreement with State Street Bank & Trust Co.:
Percentage Principal
Fund Interest Amount
- ---- ---------- ----------
U.S. Government Securities. 5.95% 11,058,000
GNMA....................... 26.75 49,686,000
Strategic Bond............. 1.43 2,657,000
As of that date, the repurchase agreement in the joint account and the
collateral therefore were as follows:
State Street Bank & Trust Co., dated September 30, 2009, bearing interest at
a rate of 0.01% per annum, with a principal amount of $185,727,000, a
repurchase price of $185,727,052, and a maturity date of October 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. 0.15% 02/25/10 $189,560,000 $189,446,264
At September 30, 2009, the following Funds held an undivided interest in a
joint repurchase agreement with Bank of America Securities:
Percentage Principal
Fund Interest Amount
- ---- ---------- ----------
High Yield Bond. 1.45% $1,685,000
69
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2009 -- (unaudited)
(continued)
As of that date, the repurchase agreement in the joint account and the
collateral therefore were as follows:
Bank of America Securities, dated September 30, 2009, bearing interest at a
rate of 0.03% per annum, with a principal amount of $116,125,000, a
repurchase price of $116,125,097 and a maturity date of October 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. 0.04% 12/10/09 $118,450,000 $118,440,524
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.
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.
70
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2009 -- (unaudited)
(continued)
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 September 30, 2009, the amount of the investment
advisory fee waived was $130,732 for the Tax Exempt Insured Fund. The amount
is reflected in the Statement of Operations.
The Strategic Bond Fund and Tax Exempt Insured Fund are subadvised by AIG
Global Investment Corp. ("AIGGIC") pursuant to a Subadvisory Agreement with
SunAmerica. The High Yield Bond Fund is subadvised by Wellington Management
Company, LLP ("Wellington Management"), who replaced AIGGIC as the
subadviser to this Fund on July 24, 2009. Under the Subadvisory Agreements,
AIGGIC and Wellington Management manage the investment and reinvestment of
the assets of the Strategic Bond Fund and Tax Exempt Insured Fund, and the
High Yield Bond Fund, respectively. AIGGIC is an indirect wholly-owned
subsidiary of AIG, and an affiliate of SunAmerica.
SunAmerica pays AIGGIC and Wellington Management fees out of advisory fees
it receives from the Funds. The portion of the investment advisory fees
received by SunAmerica that are paid to AIGGIC with respect to the Strategic
Bond Fund and Tax Exempt Insured Fund, and to Wellington Management with
respect to the High Yield Bond Fund, are as follows:
Subadvisory Fees
- ---------------------------
Strategic Bond Tax Exempt
Assets Fund Insured Fund+
- ------ -------------- -------------
$0 - $200 million............. 0.35% 0.25%
(greater than) $200 million. 0.25 0.22
(greater than) $500 million. 0.20 0.15
High Yield Bond
Fund*
---------------
$0 - $150 million............. 0.40%
(greater than) $150 million. 0.35
(greater than) $500 million. 0.30
- --------
* Prior to September 15, 2009, the amount of subadvisory fees paid to AIGGIC
under its prior subadvisory agreement with SunAmerica, and to Wellington
Management under its interim subadvisory agreement with SunAmerica, which
went into effect on July 24, 2009 when Wellington Management replaced
AIGGIC, were 0.45% on the first $200 million, 0.35% on the next $300
million, and 0.30% on assets over $500 million. Upon shareholder approval of
the new subadvisory agreement with Wellington Management on September 15,
2009, the rates reflected in the table went into effect.
+ 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.
71
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2009 -- (unaudited)
(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 period ended September 30, 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. $117,733
Class Specific
Fund Expenses
- ---- --------------
U.S. Government Securities Class A. $211,283
U.S. Government Securities Class B. 26,936
U.S. Government Securities Class C. 35,199
GNMA Class A....................... 221,254
GNMA Class B....................... 38,464
GNMA Class C....................... 65,294
High Yield Bond Class A............ 54,636
High Yield Bond Class B............ 22,980
High Yield Bond Class C............ 32,986
Tax Exempt Insured Class C......... 2,171
72
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2009 -- (unaudited)
(continued)
At September 30, 2009, expenses previously waived or reimbursed by
SunAmerica that are subject to recoupment are as follows:
Other Expenses
Fund Reimbursed
- ---- --------------
U.S. Government Securities. $454,896
Class Specific
Expenses
Fund Reimbursed
- ---- --------------
U.S. Government Securities Class A. $938,438
U.S. Government Securities Class B. 95,389
U.S. Government Securities Class C. 111,141
GNMA Class A....................... 886,707
GNMA Class B....................... 150,805
GNMA Class C....................... 166,485
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 period ended
September 30, 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 period
ended September 30, 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. $ 40,183 $ 2,865 $ 30,949 $(1,296) $11,551 $ 2,955
GNMA....................... 324,160 34,615 234,264 2,875 21,764 29,479
Strategic Bond............. 209,103 20,521 152,237 4,465 34,771 15,755
High Yield Bond............ 77,281 12,049 50,510 0 23,068 2,753
Tax Exempt Insured......... 73,232 10,640 50,263 0 3,199 503
73
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2009 -- (unaudited)
(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 period ended September 30, 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 September 30, 2009
- ---- -------- ------------------
U.S. Government Securities Fund Class A. $170,814 $25,988
U.S. Government Securities Fund Class B. 14,044 2,009
U.S. Government Securities Fund Class C. 20,367 3,291
GNMA Fund Class A....................... 369,635 59,730
GNMA Fund Class B....................... 45,025 6,899
GNMA Fund Class C....................... 85,979 14,241
Strategic Bond Fund Class A............. 283,966 50,547
Strategic Bond Fund Class B............. 46,009 8,019
Strategic Bond Fund Class C............. 251,982 45,097
High Yield Bond Fund Class A............ 79,976 14,381
High Yield Bond Fund Class B............ 20,821 3,575
High Yield Bond Fund Class C............ 45,838 8,224
Tax Exempt Insured Fund Class A......... 62,045 10,521
Tax Exempt Insured Fund Class B......... 2,755 414
Tax Exempt Insured Fund Class C......... 17,374 2,871
At September 30, 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 6.0%
and 8.9% of the SunAmerica U.S. Government Fund, respectively; Focused
Balanced Strategy Portfolio and Focused Multi-Asset Strategy Portfolio owned
15.3% and 11.0% of the SunAmerica GNMA Fund, respectively; and Focused
Multi-Asset Strategy Portfolio owned 15.8% of SunAmerica Strategic Bond Fund.
Due to redemptions of shares in the U.S. Government Securities Fund on June
6, 2009, June 9, 2009 and June 10, 2009, the Fund had borrowings in excess
of 5% of the Fund's total assets. The U.S. Government Securities Fund is
subject to an investment restriction which prohibits the Fund from borrowing
in excess of 5% of total assets for temporary or emergency purposes. On June
10, 2009, the U.S. Government Securities Fund closed out its excess
borrowing position. SunAmerica reimbursed the U.S. Government Securities
Fund for the accumulated interest charges on the excess borrowings of $647.
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.
74
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2009 -- (unaudited)
(continued)
Note 4. Purchases and Sales of Investment Securities
The aggregate cost of purchases and proceeds from sales and maturities of
long-term investments during the period ended September 30, 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). $ -- $ -- $391,791,135 $111,096,225 $30,784,747
Sales (excluding U.S. government securities)..... -- -- 332,168,313 99,050,693 22,627,510
Purchases of U.S. government securities.......... 608,349,888 245,999,011 19,795,624 -- --
Sales of U.S. government securities.............. 618,536,226 281,816,459 42,542,921 -- --
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 Fund. $ 281,907 $ (1,844,407) $ 14,043,968 $ 6,096,750 $ -- $ --
GNMA Fund....................... 2,265,563 -- 14,784,913 16,899,882 -- --
Strategic Bond Fund............. 2,167,867 (41,107,772) (94,299,209) 51,954,475 -- --
High Yield Bond Fund............ 2,200,551 (94,680,692) (64,044,645) 15,266,449 -- --
Tax Exempt Insured Fund......... 53,346* (443,460) 2,313,106 -- -- 1,928,998
- --------
* 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.......................................... $191,110,300 $557,614,519 $574,068,780 $163,786,979 $72,821,608
============ ============ ============ ============ ===========
Appreciation.................................. 5,008,375 13,117,068 37,031,240 8,670,655 5,534,755
Depreciation.................................. (173,781) (414,996) (29,305,668) (25,785,836) 2,825
------------ ------------ ------------ ------------ -----------
Unrealized appreciation (depreciation) -- net. $ 4,834,594 $ 12,702,072 $ 7,725,572 $(17,115,181) $ 5,537,580
============ ============ ============ ============ ===========
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
75
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2009 -- (unaudited)
(continued)
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
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 --
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
six months ended For the six months ended For the
September 30, 2009 year ended September 30, 2009 year ended
(unaudited) March 31, 2009 (unaudited) March 31, 2009
------------------------ -------------------------- --------------------- ---------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ----------- ------------- -------- ----------- -------- -----------
Shares sold(1)(2)(3)(4). 931,057 $ 9,116,940 9,690,670 $ 93,729,200 60,077 $ 590,902 732,418 $ 7,103,474
Reinvested shares....... 149,314 1,461,108 421,489 4,055,900 7,786 76,197 25,816 248,047
Shares redeemed(1)(2)... (4,412,821) (42,667,064) (11,990,274) (117,892,171) (542,447) (5,294,378) (767,191) (7,490,841)
---------- ------------ ----------- ------------- -------- ----------- -------- -----------
Net increase (decrease). (3,332,450) $(32,089,016) (1,878,115) $ (20,107,071) (474,584) $(4,627,279) (8,957) $ (139,320)
========== ============ =========== ============= ======== =========== ======== ===========
U.S. Government Securities Fund
----------------------------------------------------
Class C
----------------------------------------------------
For the
six months ended For the
September 30, 2009 year ended
(unaudited) March 31, 2009
------------------------ --------------------------
Shares Amount Shares Amount
---------- ------------ ----------- -------------
Shares sold............. 228,907 $ 2,245,705 1,499,699 $ 14,536,998
Reinvested shares....... 9,877 96,583 24,122 231,902
Shares redeemed(3)(4)... (409,339) (4,002,547) (1,274,412) (12,379,114)
---------- ------------ ----------- -------------
Net increase (decrease). (170,555) $ (1,660,259) 249,409 $ 2,389,786
========== ============ =========== =============
- --------
(1)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.
(2)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.
(3)For the six month period ended September 30, 2009, includes automatic
conversion of 145,067 shares of Class B shares in the amount of $1,418,143
to 145,077 shares of Class A shares in the amount of $1,418,143.
(4)For the six month period ended September 30, 2009, includes automatic
conversion of 3,788 shares of Class C shares in the amount of $37,556 to
3,785 shares of Class A shares in the amount of $37,556.
76
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2009 -- (unaudited)
(continued)
GNMA Fund
--------------------------------------------------------------------------------------------------------
Class A Class B
----------------------------------------------------- -------------------------------------------------
For the For the
six months ended For the six months ended For the
September 30, 2009 year ended September 30, 2009 year ended
(unaudited) March 31, 2009 (unaudited) March 31, 2009
------------------------- -------------------------- ----------------------- ------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
----------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Shares
sold(1)(3)(5)(7).... 5,574,277 $ 65,337,908 16,454,058 $ 190,740,558 237,581 $ 2,794,956 893,277 $ 10,341,831
Reinvested shares.... 259,144 3,042,048 930,075 10,662,369 21,559 253,697 115,705 1,333,338
Shares redeemed(1)(5) (7,323,065) (85,712,078) (16,639,819) (190,295,408) (847,915) (9,958,185) (1,256,553) (14,461,371)
----------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Net increase
(decrease).......... (1,489,644) $(17,332,122) 744,314 $ 11,107,519 (588,775) $(6,909,532) (247,571) $(2,786,202)
=========== ============ =========== ============= ========== =========== ========== ============
GNMA Fund
-----------------------------------------------------
Class C
-----------------------------------------------------
For the
six months ended For the
September 30, 2009 year ended
(unaudited) March 31, 2009
------------------------- --------------------------
Shares Amount Shares Amount
----------- ------------ ----------- -------------
Shares sold.......... 1,806,799 $ 21,263,939 4,782,459 $ 55,469,801
Reinvested shares.... 33,194 391,211 110,892 1,283,588
Shares redeemed(3)(7) (1,535,458) (18,047,408) (1,545,670) (17,880,557)
----------- ------------ ----------- -------------
Net increase
(decrease).......... 304,535 $ 3,607,742 3,347,681 $ 38,872,832
=========== ============ =========== =============
Strategic Bond Fund
--------------------------------------------------------------------------------------------------------
Class A Class B
----------------------------------------------------- -------------------------------------------------
For the For the
six months ended For the six months ended For the
September 30, 2009 year ended September 30, 2009 year ended
(unaudited) March 31, 2009 (unaudited) March 31, 2009
------------------------- -------------------------- ----------------------- ------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
----------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Shares
sold(2)(4)(6)(8).... 16,994,182 $ 51,016,799 28,181,402 $ 88,303,532 1,393,224 $ 4,208,505 2,768,121 $ 8,604,917
Reinvested shares.... 1,898,366 5,805,586 6,911,590 20,910,397 257,336 785,081 757,346 2,245,433
Shares redeemed(2)(6) (14,068,052) (42,291,913) (90,064,427) (269,765,594) (1,763,461) (5,283,067) (4,525,516) (13,765,056)
----------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Net increase
(decrease).......... 4,824,496 $ 14,530,472 (54,971,435) $(160,551,665) (112,901) $ (289,481) (1,000,049) $(2,914,706)
=========== ============ =========== ============= ========== =========== ========== ============
Strategic Bond Fund
-----------------------------------------------------
Class C
-----------------------------------------------------
For the
six months ended For the
September 30, 2009 year ended
(unaudited) March 31, 2009
------------------------- --------------------------
Shares Amount Shares Amount
----------- ------------ ----------- -------------
Shares sold.......... 12,325,996 $ 37,227,719 20,978,989 $ 65,587,436
Reinvested shares.... 1,209,527 3,711,561 3,188,058 9,483,900
Shares redeemed(4)(8) (8,644,362) (26,187,676) (26,879,603) (82,124,482)
----------- ------------ ----------- -------------
Net increase
(decrease).......... 4,891,161 $ 14,751,604 (2,712,556) $ (7,053,146)
=========== ============ =========== =============
- --------
(1)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.
(2)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.
(3)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.
(4)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.
(5)For the six month period ended September 30, 2009, includes automatic
conversion of 392,434 shares of Class B shares in the amount of $4,607,745
to 393,486 shares of Class A shares in the amount of $4,607,745.
(6)For the six month period ended September 30, 2009, includes automatic
conversion of 623,037 shares of Class B shares in the amount of $1,880,996
to 622,703 shares of Class A shares in the amount of $1,880,996.
(7)For the six month period ended September 30, 2009, includes automatic
conversion of 2,338 shares of Class C shares in the amount of $27,582 to
2,348 shares of Class A shares in the amount of $27,582.
(8)For the six month period ended September 30, 2009, includes automatic
conversion of 2,163 shares of Class C shares in the amount of $6,093 to
2,171 shares of Class A shares in the amount of $6,093.
77
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2009 -- (unaudited)
(continued)
High Yield Bond Fund
--------------------------------------------------------------------------------------------------------
Class A Class B
---------------------------------------------------- --------------------------------------------------
For the For the
six months ended For the six months ended For the
September 30, 2009 year ended September 30, 2009 year ended
(unaudited) March 31, 2009 (unaudited) March 31, 2009
------------------------ -------------------------- ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Shares sold(1)(3)(5)(7) 5,135,215 $ 14,882,834 22,337,994 $ 75,859,217 653,209 $ 1,937,467 906,056 $ 3,224,831
Reinvested shares...... 738,187 2,206,345 1,546,637 4,985,176 166,896 498,678 399,013 1,255,376
Shares redeemed(1)(5).. (3,939,288) (11,518,423) (26,686,670) (90,949,453) (1,286,659) (3,757,007) (2,955,881) (9,863,942)
---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Net increase (decrease) 1,934,114 $ 5,570,756 (2,802,039) $(10,105,060) (466,554) $(1,320,862) (1,650,812) $(5,383,735)
========== ============ =========== ============= ========== ============ ========== ============
High Yield Bond Fund
----------------------------------------------------
Class C
----------------------------------------------------
For the
six months ended For the
September 30, 2009 year ended
(unaudited) March 31, 2009
------------------------ --------------------------
Shares Amount Shares Amount
---------- ------------ ----------- -------------
Shares sold............ 2,907,168 $ 8,448,908 6,335,877 $ 22,432,864
Reinvested shares...... 354,883 1,066,869 708,423 2,246,671
Shares redeemed(3)(7).. (2,105,806) (6,212,303) (8,506,235) (29,899,515)
---------- ------------ ----------- -------------
Net increase (decrease) 1,156,245 $ 3,303,474 (1,461,935) $ (5,219,980)
========== ============ =========== =============
Tax Exempt Insured Fund
--------------------------------------------------------------------------------------------------------
Class A Class B
---------------------------------------------------- --------------------------------------------------
For the For the
six months ended For the six months ended For the
September 30, 2009 year ended September 30, 2009 year ended
(unaudited) March 31, 2009 (unaudited) March 31, 2009
------------------------ -------------------------- ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Shares sold(2)(4)(6)(8) 667,531 $ 8,359,506 898,941 $ 10,737,867 31,331 $ 391,453 60,526 $ 732,314
Reinvested shares...... 39,788 498,861 80,083 971,850 1,433 17,975 4,261 51,727
Shares redeemed(2)(6).. (398,751) (4,967,418) (438,991) (5,309,371) (91,079) (1,139,063) (99,866) (1,189,974)
---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Net increase (decrease) 308,568 $ 3,890,949 540,033 $ 6,400,346 (58,315) $ (729,635) (35,079) $ (405,933)
========== ============ =========== ============= ========== ============ ========== ============
Tax Exempt Insured Fund
----------------------------------------------------
Class C
----------------------------------------------------
For the
six months ended For the
September 30, 2009 year ended
(unaudited) March 31, 2009
------------------------ --------------------------
Shares Amount Shares Amount
---------- ------------ ----------- -------------
Shares sold............ 353,081 $ 4,415,232 931,608 $ 11,190,502
Reinvested shares...... 9,321 116,870 9,925 120,592
Shares redeemed(4)(8).. (222,326) (2,766,309) (146,791) (1,756,306)
---------- ------------ ----------- -------------
Net increase (decrease) 140,076 $ 1,765,793 794,742 $ 9,554,788
========== ============ =========== =============
- --------
(1)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.
(2)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.
(3)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.
(4)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.
(5)For the six month period ended September 30, 2009, includes automatic
conversion of 636,672 shares of Class B shares in the amount of $1,851,241
to 638,635 shares of Class A shares in the amount of $1,851,241.
(6)For the six month period ended September 30, 2009, includes automatic
conversion of 42,855 shares of Class B shares in the amount of $537,185 to
42,890 shares of Class A shares in the amount of $537,185.
(7)For the six month period ended September 30, 2009, includes automatic
conversion of 3,693 shares of Class C shares in the amount of $9,886 to
3,708 shares of Class A shares in the amount of $9,886.
(8)For the six month period ended September 30, 2009, includes automatic
conversion of 1,334 shares of Class C shares in the amount of $16,425 to
1,335 shares of Class A shares in the amount of $16,425.
78
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2009 -- (unaudited)
(continued)
Note 7. Lines of Credit
The SunAmerica family of mutual funds has established a $75 million
committed and $50 million uncommitted line of credit with State Street Bank
and Trust Company, the Funds' custodian. Interest is currently payable at
the higher of the Federal Funds Rate or London Interbank Offered Rate plus
125 basis points on the committed line and State Street Bank and Trust
Company's discretionary bid rate on the uncommitted line of credit. Prior to
September 18, 2009, interest was payable at the Federal Funds Rate plus 50
basis points on the committed line and State Street Bank and Trust Company's
discretionary bid rate on the uncommitted line of credit. There is also a
commitment fee of 15 basis points per annum on the daily unused portion of
the committed line of credit which is included in other expenses on the
Statement of Operations. Prior to September 18, 2009 the commitment fee was
10 basis points per annum on the daily unused portion of the committed line
of credit. Borrowings under the line of credit will commence when the
respective Fund's cash shortfall exceeds $100,000. For the period ended
September 30, 2009, the following Funds had borrowings:
Average Weighted
Days Interest Debt Average
Fund Outstanding Charges Utilized Interest
- ---- ----------- -------- ---------- --------
U.S. Government Securities. 3 $452 $7,592,175 0.72%
Strategic Bond............. 17 304 948,130 0.68
High Yield Bond............ 8 125 806,987 0.70
At September 30, 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 period
ended September 30, 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.
79
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2009 -- (unaudited)
(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 September 30, 2009
- ---- -----------------------------------------------
U.S. Government
Securities.............. $17,418 $448 $2,568
GNMA..................... 7,043 516 953
Strategic Bond........... 6,655 538 844
High Yield Bond.......... 7,312 135 1,097
Tax Exempt Insured....... 4,800 101 720
Note 10. 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 Securities Fund
and GNMA Fund's concentration in such investments, it may be subject to
risks associated with the U.S. Government. At the end of period, the U.S.
Government Securities Fund and GNMA Fund had 54.7% and 88.8%, respectively,
of their total net assets invested in such securities.
Note 11: Subsequent Events
The Trust has performed an evaluation of subsequent events through November
25, 2009, which is the date the financial statements were issued. The
following subsequent events were noted.
Strategic Bond Fund
On September 5, 2009, AIG entered into an agreement to sell a portion of its
investment advisory and asset management business (the "Transaction") to
Bridge Partners, L.P. ("Bridge Partners"), a partnership formed by Pacific
Century Group, a Hong Kong-based private investment firm. The entities being
sold include AIGGIC. Prior to the closing of the Transaction, AIGGIC will be
merged with and into a Delaware limited liability company (the surviving
entity, PineBridge Investments LLC, being referred to herein as
"PineBridge"). As part of the Transaction, AIG will cause the indirect
transfer of PineBridge to Bridge Partners. PineBridge, as successor to
AIGGIC, will remain a registered investment adviser pursuant to the
Investment Advisers Act of 1940, as amended. The Transaction is expected to
close in December 2009, and is subject to the receipt of the requisite
regulatory approvals and the satisfaction of other conditions to closing.
Upon the closing of the Transaction, the existing subadvisory agreement
between SunAmerica and AIGGIC with respect to the Strategic Bond Fund (the
"Current Strategic Bond Subadvisory Agreement") will terminate.
At a meeting held on November 9, 2009, the Board of Trustees appointed
PineBridge, as the successor to AIGGIC, to serve as subadviser to the
Strategic Bond Fund pursuant to a new subadvisory agreement between
SunAmerica and PineBridge (the "PineBridge Subadvisory Agreement"), subject
to approval by the Strategic Bond Fund's shareholders. The Board also
approved an interim subadvisory agreement between SunAmerica and PineBridge
with respect to the Strategic Bond Fund (the "Interim PineBridge Subadvisory
Agreement") that will go into effect upon the closing of the Transaction,
and will remain in effect for 150 days from its effective date or until the
PineBridge Subadvisory Agreement is approved by the Strategic Bond Fund's
shareholders, whichever is earlier. Pursuant to both the PineBridge
Subadvisory Agreement and the Interim PineBridge
80
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2009 -- (unaudited)
(continued)
Subadvisory Agreement, SunAmerica will pay PineBridge a subadvisory fee
equal to the subadvisory fee that is currently paid to AIGGIC under the
Current Strategic Bond Subadvisory Agreement.
At this same meeting, the Board also recommended that a special meeting of
shareholders be convened so that shareholders of the Strategic Bond Fund can
vote on a proposal to approve the operation of the Fund in a manner
consistent with the Fund's exemptive order from the Securities and Exchange
Commission that would permit SunAmerica to, among other things, enter into
or amend subadvisory agreements with unaffiliated subadvisers upon approval
by the Board but without obtaining shareholder approval, subject to certain
conditions (the "Manager of Managers Proposal").
On or about February 16, 2010, the Strategic Bond Fund expects to convene a
special meeting of shareholders with respect to the Manager of Managers
Proposal and the proposal to approve the PineBridge Subadvisory Agreement.
Shareholders of record on the record date, entitled to notice of and to vote
at the special meeting, will receive proxy materials describing the
PineBridge Subadvisory Agreement and the Manager of Managers Proposal in
greater detail.
Tax Exempt Insured Fund
The portion of AIG's investment advisory and asset management business that
is not being sold in connection with the Transaction, including the portion
responsible for managing the Tax Exempt Insured Fund, will remain with AIG
under a newly organized investment advisory subsidiary, AIG Asset Management
(U.S.), LLC ("AMG"), which is a wholly owned subsidiary of AIG Global Asset
Management Holdings Corp. ("AGAMCO"), a holding company that is a
wholly-owned indirect subsidiary of AIG. As a result, at this same meeting,
the Board also approved the transfer from AIGGIC to AMG of the current
subadvisory agreement and current subadvisory fee waiver agreement between
SunAmerica and AIGGIC with respect to the Tax Exempt Insured Fund (the "AMG
Subadvisory Agreement"), which is anticipated to become effective on or
before the closing of the Transaction. The subadvisory fee rate to be paid
by SunAmerica to AMG under the AMG Subadvisory Agreement will remain the
same as the subadvisory fee rate currently paid by SunAmerica to AIGGIC.
81
SunAmerica Income Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2009 -- (unaudited)
Approval of the Investment Advisory and Management Agreement and Subadvisory
Agreements
The Board of Trustees (the "Board" the members of which are referred to as
"Trustees") of the Trust, including the Trustees who are not "interested
persons," as defined in Section 2(a)(19) of the Investment Company Act of 1940,
as amended (the "1940 Act"), of the Trust or its separate series (each a "Fund"
and collectively, the "Funds"), SunAmerica, AIGGIC or Wellington Management
(the "Disinterested Trustees"), approved the continuation of the Investment
Advisory and Management Agreement between the Trust, on behalf of the Funds,
and SunAmerica (the "Advisory Agreement") for a one-year period ending
August 31, 2010 at an in-person meeting held on August 25, 2009. The Trust
currently consists of five separate Funds, including the SunAmerica GNMA Fund,
High Yield Bond Fund, Strategic Bond Fund, Tax Exempt Insured Fund and U.S.
Government Securities Fund. At this same meeting, the Board also approved the
continuation of the Subadvisory Agreement between SunAmerica and AIGGIC (the
"AIGGIC Subadvisory Agreement") with respect to the Strategic Bond Fund and Tax
Exempt Insured Fund for a one-year period ending August 31, 2010.
In addition, at an in-person meeting held on May 27, 2009, the Board, including
the Disinterested Trustees, approved both an interim Subadvisory Agreement
between SunAmerica and Wellington (the "Interim Wellington Subadvisory
Agreement") and a new Subadvisory Agreement between SunAmerica and Wellington
(the "New Wellington Subadvisory Agreement"), each with respect to the
SunAmerica High Yield Bond Fund ("High Yield Bond Fund"), with the New
Wellington Subadvisory Agreement being subject to shareholder approval. As a
result, effective July 24, 2009, Wellington replaced AIGGIC as the subadviser
of the High Yield Bond Fund under the terms of the Interim Wellington
Subadvisory Agreement. The Interim Wellington Subadvisory Agreement was
approved by the Board pursuant to Rule 15a-4 under the 1940 Act, to ensure
uninterrupted subadvisory services during the period between the effective date
of the termination of the prior Subadvisory Agreement between SunAmerica and
AIGGIC with respect to the High Yield Bond Fund (the "Prior Subadvisory
Agreement") and the date of the special meeting of shareholders of the High
Yield Bond Fund to vote on the approval of the New Wellington Subadvisory
Agreement. Pursuant to the requirements of Rule 15a-4 under the 1940 Act, the
subadvisory fee in the Interim Wellington Subadvisory Agreement was identical
to the subadvisory fee in the Prior Subadvisory Agreement and the Interim
Wellington Subadvisory Agreement was to remain in effect until December 21,
2009, or until the New Wellington Subadvisory Agreement was approved by the
High Yield Bond Fund's shareholders, whichever was earlier. On September 15,
2009, shareholders of the High Yield Bond Fund approved the New Wellington
Subadvisory Agreement and such Agreement became effective that same day for an
initial term ending August 31, 2011.
In accordance with Section 15(c) of the 1940 Act, the Board requested and
SunAmerica, AIGGIC and Wellington (each of AIGGIC and Wellington are referred
to herein as a "Subadviser" and collectively, the "Subadvisers"), where
applicable, provided materials relating to the Board's consideration of whether
to approve the continuation of the Advisory Agreement and AIGGIC Subadvisory
Agreement, and whether to approve the Interim Wellington Subadvisory Agreement
and New Wellington Subadvisory Agreement. These materials included (a) a
summary of the services provided by SunAmerica and its affiliates to the Funds;
(b) information independently compiled and prepared by Lipper, Inc. ("Lipper")
on Fund fees and expenses, and the investment performance of the Fund as
compared with a peer group of funds; (c) information on the profitability of
SunAmerica, the Subadvisers and their affiliates, and a discussion of any
indirect benefits; (d) a report on economies of scale; (e) a discussion on
general compliance policies and procedures; (f) a summary of brokerage and soft
dollar practices; (g) a discussion of the key personnel of SunAmerica, the
Subadvisers and their affiliates; and (h) an internal comparison of management
fees received for other mutual funds and accounts with similar investment
objectives and strategies for which SunAmerica, and the Subadvisers serve as
adviser or subadviser, as applicable.
In determining whether to approve the continuation of the Advisory Agreement
and AIGGIC Subadvisory Agreement, and whether to approve the Interim Wellington
Subadvisory Agreement and New Wellington Subadvisory Agreement, the Board,
including Disinterested Trustees, considered the following information:
Nature, Extent and Quality of Services Provided by SunAmerica and the
Subadvisers. The Board, including the Disinterested Trustees, considered the
nature, quality and extent of services to be provided by SunAmerica and the
Subadvisers. The Board noted that the services include acting as investment
manager and adviser to the Funds, managing the daily business affairs of the
Funds, and obtaining and evaluating economic, statistical and financial
information to formulate and implement investment policies. Additionally, the
Board observed that SunAmerica would provide office space, accounting, legal,
and compliance, clerical and administrative services and has authorized any of
its officers and employees, if elected, to serve as officers or trustees of the
Funds without compensation. Finally, the Board noted that SunAmerica is
responsible for monitoring and reviewing the activities of affiliated and
unaffiliated third-party service providers, including the Subadvisers. In
addition to the quality of the advisory services,
82
SunAmerica Income Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2009 -- (unaudited)
(continued)
the Board considered the quality of the administrative and non-investment
advisory services provided to the Funds pursuant to the Advisory Agreement and
noted that such services include (i) preparing disclosure documents, such as
the prospectus, the statement of additional information and shareholder
reports; (ii) assisting with daily accounting and pricing; (iii) organizing
Board meetings and preparing the materials for such Board meetings;
(iv) providing legal and compliance support; and (v) performing other
administrative functions necessary for the operation of the Funds, such as tax
reporting and fulfilling regulatory filing requirements.
In connection with the services provided by SunAmerica, the Board analyzed the
structure and duties of SunAmerica's fund administration, accounting, legal and
compliance departments and concluded that they were adequate to meet the needs
of the Funds. The Board also reviewed the personnel responsible for providing
advisory services to the Funds and other key personnel of SunAmerica and
concluded, based on its experience and interaction with SunAmerica, that:
(i) SunAmerica is able to retain quality portfolio managers, analysts and other
personnel; (ii) SunAmerica exhibited a high level of diligence and attention to
detail in carrying out its advisory and other responsibilities under the
Advisory Agreement; (iii) SunAmerica had been responsive to requests of the
Board; and (iv) SunAmerica had kept the Board apprised of developments relating
to the Funds and the industry in general. The Board concluded that the nature
and extent of services provided under the Advisory Agreement were reasonable
and appropriate in relation to the management fee and that the quality of
services continues to be high.
The Board also considered SunAmerica's reputation and long-standing
relationship with the Funds and considered the benefit to shareholders of
investing in funds that are part of a family of funds offering a variety of
types of mutual funds and shareholder services. The Board considered
SunAmerica's experience in providing management and investment advisory and
administrative services to advisory clients and noted that as of June 30, 2009,
SunAmerica managed, advised an/or administered approximately $35.3 billion in
assets. The Board also considered SunAmerica's code of ethics, and that it has
developed internal procedures, adopted by the Board, for monitoring compliance
with the investment objectives, policies and restrictions of the Funds as set
forth in the Fund's prospectus. Additionally, the Board considered SunAmerica's
compliance and regulatory history.
With respect to the Strategic Bond Fund and Tax Exempt Fund, for which
SunAmerica has delegated daily investment management responsibilities to
AIGGIC, the Board considered the nature, quality and extent of subadvisory
services provided by AIGGIC. The Board observed that AIGGIC is responsible for
providing investment management services, including investment research, advice
and supervision, and determining which securities will be purchased or sold by
each of the Strategic Bond Fund and Tax Exempt Fund, subject to the oversight
and review of SunAmerica. The Board reviewed AIGGIC's history, structure, size,
visibility and resources, which are needed to attract and retain highly
qualified investment professionals. The Board reviewed the personnel that are
responsible for providing subadvisory services to the Strategic Bond Fund and
Tax Exempt Fund and concluded, based on their experience with AIGGIC, that:
(i) AIGGIC is able to retain high quality portfolio managers and other
investment personnel; (ii) AIGGIC exhibited a high level of diligence and
attention to detail in carrying out its responsibilities under the Subadvisory
Agreement; and (iii) AIGGIC had been responsive to requests of the Board and of
SunAmerica. The Board considered that AIGGIC has developed internal policies
and procedures for monitoring compliance with the investment objectives,
policies and restrictions of the Strategic Bond Fund and Tax Exempt Fund as set
forth in the Fund's prospectus. The Board also considered AIGGIC's code of
ethics, compliance and regulatory history. The Board concluded that the nature
and extent of services to be provided by AIGGIC under the AIGGIC Subadvisory
Agreement were reasonable and appropriate in relation to the subadvisory fees
and that the quality of services continues to be high.
With respect to the approval of the Interim Wellington Subadvisory Agreement
and New Wellington Subadvisory Agreement at the May 27, 2009 meeting, the
Board, including the Disinterested Trustees, considered the nature, quality and
extent of subadvisory services to be provided by Wellington with respect to the
High Yield Bond Fund. The Board observed that it had a long-standing
relationship with Wellington in connection with Wellington's role as subadviser
to certain other funds in the SunAmerica fund complex. The Board also noted
that the services to be provided by Wellington would be substantially similar
to the services that Wellington has provided to certain other funds in the
SunAmerica fund complex, which would include investment management services
such as investment research, advice and supervision, and determining which
securities will be purchased or sold by the High Yield Bond Fund, subject to
the oversight and review of SunAmerica. In addition, the Board reviewed
Wellington's history, structure, size, visibility and resources, which are
needed to attract and retain highly qualified investment professionals. The
Board also reviewed the personnel that would be responsible for providing
subadvisory services to the High Yield Bond Fund. The Board concluded, based on
the materials provided and its prior experience with Wellington as a subadviser
to certain other funds in the SunAmerica fund complex, that: (i) Wellington was
able to retain high quality portfolio managers and other investment personnel;
83
SunAmerica Income Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2009 -- (unaudited)
(continued)
(ii) Wellington exhibited a high level of diligence and attention to detail in
carrying out its responsibilities as a subadviser; and (iii) Wellington was
responsive to requests of the Board and of SunAmerica. The Board considered
that Wellington had developed internal policies and procedures for monitoring
compliance with the investment objectives, policies and restrictions of the
High Yield Bond Fund as set forth in the Funds' prospectus. The Board also
considered Wellington's code of ethics, compliance and regulatory history. The
Board further concluded that the nature and extent of services to be provided
by Wellington to the High Yield Fund under the Interim Wellington Subadvisory
Agreement and New Wellington Subadvisory Agreement were reasonable and
appropriate in relation to the proposed subadvisory fees and that the quality
of services was reasonably expected to be high.
Investment Performance. The Board, including the Disinterested Trustees, also
considered the investment performance of SunAmerica and the Subadvisers with
respect to the Funds, as applicable. In connection with its review, the Board
received and reviewed information regarding the investment performance of the
Funds as compared to each Fund's peer group ("Peer Group") and/or peer universe
("Peer Universe") as independently determined by Lipper and to an appropriate
index or combination of indices, including the Funds' benchmarks. The Board was
provided with a description of the methodology used by Lipper to select the
funds in the Peer Groups and Universes. The Board also noted that it regularly
reviews the performance of the Funds throughout the year. The Board noted that,
while it monitors performance of the Funds closely, it generally attaches more
importance to performance over relatively long periods of time, typically three
to five years.
In preparation for the August 25, 2009 meeting, the Board was provided with
reports independently prepared by Lipper. Based on the Lipper reports, the
Board reviewed each Fund's annualized total returns for the prior one-, two-,
three-, four-, five- and ten-year periods ended May 31, 2009. The Board noted
that it was also provided with a supplemental Lipper performance report for the
periods ended June 30, 2009. In addition, the Board received a report prepared
by SunAmerica that detailed the Funds' performance for the three-month period
ended June 30, 2009.
Specifically, the Board considered that the U.S. Government Securities Fund
ranked in the first quintile of its Peer Group for the five- and ten-year
periods ended May 31, 2009, ranked in the second quintile for the one- two and
three-year periods and in the fourth quintile for the four year period. The
Board noted that it was generally pleased with the Fund's performance. The
Board considered that the GNMA Fund ranked in the first quintile of its Peer
Group for the one- and two-year periods ended May 31, 2009. The Board further
considered that the GNMA Fund ranked in the second quintile of its Peer
Universe for the three-, four- and five-year periods ended May 31, 2009. The
Board noted that it was generally pleased with the Fund's performance.
The Board then considered that the High Yield Bond Fund was ranked in the fifth
quintile of its Peer Group for the one-, two-, three, four- and five-year
periods ended May 31, 2009, and ranked in the third quintile for the ten-year
period. The Board noted, however, that at the May 27, 2009 Board meeting, it
had considered the investment performance of AIGGIC with respect to the High
Yield Bond Fund and had terminated the Prior Subadvisory Agreement, and had
subsequently approved the Interim Wellington Subadvisory Agreement and New
Wellington Subadvisory Agreement In connection with the approval of the Interim
Wellington Subadvisory Agreement and New Wellington Subadvisory Agreement, the
Board, including the Disinterested Trustees, received information prepared by
Wellington regarding its investment performance. The information provided to
the Board included composite performance of certain institutional accounts
managed by Wellington with investment policies and/or strategies similar to the
Fund. The Board noted that the accounts included within these composites were
not open-end mutual funds, as Wellington did not manage any mutual funds with
investment policies and/or strategies similar to the High Yield Bond Fund.
However, the Board noted that Wellington acts as subadviser to other mutual
funds in the SunAmerica fund complex and is very experienced in managing mutual
funds generally. In considering Wellington's anticipated performance with
respect to the Fund, the Board also considered that Wellington's flexible
investment approach would be well suited to the Fund. The Board also
acknowledged that past performance is no guarantee of future results.
The Board also noted that SunAmerica recommended that the Board approve of
Wellington as a new subadviser to the High Yield Bond Fund in the course of the
Board's evaluation of subadviser performance and investment strategy. It was
noted that SunAmerica's evaluation involved extensive research, including both
qualitative and quantitative analysis of Wellington and AIGGIC, the prior
subadviser, their organizational structures, investment process and style, and
performance records over varying periods of time.
84
SunAmerica Income Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2009 -- (unaudited)
(continued)
The Board then considered the performance of the Funds subadvised by AIGGIC,
which include the Strategic Bond Fund and Tax Exempt Insured Fund. The Board
considered that while the Strategic Bond Fund ranked in the fifth quintile of
its Peer Group for the one-year period ended May 31, 2009, the Fund ranked in
the second quintile for the ten-year period and ranked in the third quintile
for the two-, three- four- and five-year periods. The Board noted that, despite
the lagging short-term performance, it was pleased with the Fund's overall
performance. The Board considered that the Tax Exempt Insured Fund ranked in
the first quintile of its Peer Universe, which consists of all funds within the
applicable Lipper classification, for the one-, two-, three-, four- and
five-year periods ended May 31, 2009 and ranked in the second quintile of its
Peer Universe for the ten -year period ended May 31, 2009. The Board noted that
it was pleased with the Fund's overall performance. The Board further noted
that quintile rankings were not included in the Lipper report with respect to
the Tax Exempt Insured Fund's Peer Group because of the limited number of
comparable funds in the Peer Group.
Consideration of the Management Fees and Subadvisory Fees and the Cost of the
Services and Profits to be Realized by SunAmerica and the Subadvisers and their
Affiliates from the Relationship with the Funds. The Board, including the
Disinterested Trustees, received and reviewed information regarding the fees to
be paid by the Funds to SunAmerica pursuant to the Advisory Agreement, the fees
to be paid by SunAmerica to AIGGIC pursuant to the AIGGIC Subadvisory Agreement
and the fees to be paid by SunAmerica to Wellington pursuant to the New
Wellington Subadvisory Agreement. The Board examined this information in order
to determine the reasonableness of the fees in light of the nature and quality
of services to be provided and any potential additional benefits to be received
by SunAmerica, the Subadvisers or their affiliates in connection with providing
such services to the Funds.
To assist in analyzing the reasonableness of the management fee for each of the
Funds, the Board received reports independently prepared by Lipper. The reports
showed comparative fee information for each Fund's Peer Group and/or Peer
Universe. In considering the reasonableness of the management fee to be paid by
each Fund to SunAmerica, the Board reviewed a number of expense comparisons,
including: (i) contractual and actual management fees; and (ii) actual total
operating expenses. In considering each Fund's total operating expenses, the
Board analyzed the level of fee waivers and expense reimbursements and the net
expense caps contractually agreed upon by SunAmerica with respect to each Fund.
The Board also considered the voluntary fee waivers and/or expense
reimbursements agreed to by SunAmerica with respect to the Class C shares of
the Tax Exempt Insured Fund. The Board compared each Fund's net expense ratio
(taking into account the contractual fee caps and waivers) to those of other
funds within its Peer Group and/or Peer Universe as a guide to help assess the
reasonableness of the management fee for certain Funds. The Board acknowledged
that it was difficult to make precise comparisons with other funds in the Peer
Groups and Peer Universes since the exact nature of services provided under the
various fund agreements is often not apparent. The Board noted, however, that
the comparative fee information provided by Lipper as a whole was useful in
assessing whether SunAmerica was providing services at a cost that was
competitive with other, similar funds.
The Board also considered the management fees received by SunAmerica with
respect to other mutual funds and accounts with similar investment strategies
to the Funds, to the extent applicable, noting in particular the differences in
services that SunAmerica provides as adviser compared to the services it
provides as subadviser. The Board noted the management fees paid by the Funds
were reasonable as compared to the fees SunAmerica was receiving from other
mutual funds and accounts for which it serves as adviser or subadviser.
The Board also received and reviewed information regarding the fees paid by
SunAmerica to AIGGIC pursuant to the AIGGIC Subadvisory Agreement. To assist in
analyzing the reasonableness of the subadvisory fees, the Board received a
report independently prepared by Lipper. The report showed comparative fee
information of each Fund's Peer Group that the Board used as a guide to help
assess the reasonableness of the subadvisory fees. The Board noted that Peer
Group information as a whole was useful in assessing whether AIGGIC was
providing services at a cost that was competitive with other similar funds. The
Board also considered that the subadvisory fees are paid by SunAmerica out of
its management fee and not by the Funds, and that subadvisory fees may vary
widely within a Peer Group for various reasons, including market pricing
demands, existing relationships, experience and success, and individual client
needs. The Board further considered the amount of subadvisory fees paid out by
SunAmerica and the amount of the management fees which it retained. The Board
also considered advisory fees received by AIGGIC with respect to other mutual
funds and accounts with similar investment strategies to the Strategic Bond
Fund and Tax Exempt Fund. The Board noted that the subadvisory fees paid by
SunAmerica to AIGGIC were reasonable as compared to fees AIGGIC receives for
other mutual funds and accounts for which it serves as adviser or subadviser.
85
SunAmerica Income Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2009 -- (unaudited)
(continued)
The Board also received and reviewed information regarding the fees to be paid
by SunAmerica to Wellington pursuant to the New Wellington Subadvisory
Agreement. To assist in analyzing the reasonableness of the subadvisory fees to
be paid pursuant to the New Subadvisory Agreement, the Board received a report
independently prepared by Lipper addressing the expense information with
respect to the New Subadvisory Agreement and its Peer Group of similar funds as
determined by Lipper. In considering the reasonableness of the subadvisory fee
to be paid by SunAmerica to Wellington on behalf of the High Yield Bond Fund,
the Board reviewed expense comparisons by Lipper including contractual and
actual subadvisor fees as a portion of actual net management fees. The Board
compared the High Yield Bond Fund's contractual subadvisory fees to those of
other funds within its Peer Group and Peer Universe as a guide to help assess
the subadvisory fee to be paid to Wellington. The Board noted that the Peer
Group information as a whole was useful in assessing whether Wellington was
providing services at a cost that was competitive with other similar funds. The
Board also considered information provided by Wellington on fees and expenses
relating to institutional accounts with similar investment styles as the High
Yield Bond Fund. The Board also considered that the subadvisory fees are paid
by SunAmerica out of its management fee and not by the High Yield Bond Fund,
and that subadvisory fees may vary widely within a Peer Group for various
reasons, including market pricing demands, existing relationships, experience
and success, and individual client needs. The Board compared the subadvisory
fees paid to AIGGIC under the Prior Subadvisory Agreement and the proposed
subadvisory fees that will be paid to Wellington under the New Wellington
Subadvisory Agreement. The Board also considered the amount of subadvisory fees
paid out by SunAmerica and the amount of the management fees which it retained.
The Board also considered SunAmerica's profitability and the benefits
SunAmerica and its affiliates received from its relationship with the Funds.
The Board received and reviewed financial statements relating to SunAmerica's
financial condition and profitability with respect to the services it provided
the Funds and considered how profit margins could affect SunAmerica's ability
to attract and retain high quality investment professionals and other key
personnel. The Board was also provided with a profitability analysis that
detailed the revenues earned and the expenses incurred by SunAmerica and its
affiliates that provide services to the Funds on a Fund by Fund basis.
The Board considered the profitability of SunAmerica under the Advisory
Agreement, and considered the profitability of SunAmerica's affiliates under
the Rule 12b-1 Plans, and Service Agreements. Additionally, the Board
considered whether SunAmerica, the Subadvisers and their affiliates received
any indirect benefits from the relationship with the Funds. Specifically, the
Board observed that AIG Federal Savings Bank, an affiliate of SunAmerica and
AIGGIC, serves as custodian with respect to certain shareholder retirement
accounts that are administered by SunAmerica and receives a fee payable by the
qualifying shareholders. The Board further considered whether there were any
collateral or "fall-out" benefits that SunAmerica and its affiliates may derive
as a result of their relationship with the Funds. The Board noted that
SunAmerica believes that any such benefits are de minimis and do not impact the
reasonableness of the management fees.
The Board also reviewed the Subadvisers' financial statements and considered
whether the Subadvisers had the financial resources necessary to attract and
retain high quality investment management personnel and to provide a high
quality of services.
The Board concluded that SunAmerica and AIGGIC had the financial resources
necessary to perform their obligations under the Advisory Agreement and AIGGIC
Subadvisory Agreement, respectively, and to continue to provide the Funds with
the high quality services that they had provided in the past. The Board further
concluded that Wellington had the financial resources necessary to perform its
obligations under the Interim Wellington Subadvisory Agreement and the New
Wellington Subadvisory Agreement and would provide the High Yield Bond Fund
with high quality services. The Board also concluded that the management fee
and subadvisory fees were reasonable in light of the factors discussed above.
Economies of Scale. The Board, including the Disinterested Trustees, considered
whether the shareholders would benefit from economies of scale and whether
there was potential for future realization of economies with respect to the
Funds. The Board considered that as a result of being part of the SunAmerica
fund complex, the Funds share common resources and may share certain expenses,
and if the size of the complex increases, each Fund could incur lower expenses
than they otherwise would achieve as stand-alone entities. The Board also
considered the anticipated efficiencies in the processes of SunAmerica as it
adds labor and capital to expand the scale of operations. The Board also took
into account that each of the Funds had management fee arrangements that
included breakpoints that will adjust the fee downward as the size of the Fund
increases, thereby allowing the shareholders to potentially participate in any
economies of scale. The Board further noted that, with the exception of the Tax
Exempt Insured Fund, SunAmerica has agreed to contractually cap the total
annual operating expenses of the Funds, at certain levels. The Board also noted
86
SunAmerica Income Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2009 -- (unaudited)
(continued)
that SunAmerica has contractually agreed to waive a portion of its management
fee with respect to the Tax Exempt Insured Fund. The Board observed that those
expense caps and fee waivers benefited shareholders by keeping total fees down
even in the absence of breakpoints or economies of scale. The Board concluded
that the Funds' management fee structure was reasonable and that it would
continue to review fees in connection with the renewal of the Advisory
Agreement, including whether the implementation of additional breakpoints would
be appropriate in the future due to an increase in asset size or otherwise.
The Board did not review specific information regarding whether there have been
economies of scale with respect to the Subadvisers' management of the Funds
because it regards that information as less relevant at the subadviser level.
Rather, the Board considered information regarding economies of scale in the
context of the renewal of the Advisory Agreement.
Other Factors. In consideration of the Advisory Agreement, AIGGIC Subadvisory
Agreement and Wellington Subadvisory Agreements, the Board also received
information regarding SunAmerica's and the Subadvisers' brokerage and soft
dollar practices. The Board considered that SunAmerica and the Subadvisers are
responsible for decisions to buy and sell securities for the portfolios they
manage, selection of broker-dealers and negotiation of commission rates. The
Board also considered the benefits SunAmerica and the Subadvisers may derive
from their soft dollar arrangements, including arrangement under which brokers
provide brokerage and/or research services to SunAmerica and/or the Subadvisers
in return for allocating brokerage. The Board further observed that when making
purchases of new issues with fixed underwriting fees, SunAmerica or the
Subadvisers may designate the use of broker-dealers who have agreed to provide
certain statistical, research and other information.
Conclusion. After a full and complete discussion, the Board approved the
Advisory Agreement, and the AIGGIC Subadvisory Agreement with respect to the
Strategic Bond Fund and Tax Exempt Insured Fund, each for a one-year period
ending August 31, 2010. The Board also approved the Interim Wellington
Subadvisory Agreement and New Wellington Subadvisory Agreement. The New
Wellington Subadvisory Agreement was approved by shareholders on September 15,
2009 and will remain in effect for an initial term ending August 31, 2011.
Based upon their evaluation of all these factors in their totality, the Board,
including the Disinterested Trustees, was satisfied that the terms of the
Advisory Agreement, AIGGIC Subadvisory Agreement, Interim Wellington
Subadvisory Agreement and New Wellington Subadvisory Agreement were fair and
reasonable and in the best interests of the Funds and the Funds' shareholders.
In arriving at a decision to approve the Advisory Agreement, AIGGIC Subadvisory
Agreement, Interim Wellington Subadvisory Agreement and New Wellington
Subadvisory Agreement, the Board did not identify any single factor or group of
factors as all-important or controlling, but considered all factors together.
The Disinterested Trustees were also assisted by the advice of independent
counsel in making this determination.
87
SunAmerica Income Funds
RESULTS OF SPECIAL SHAREHOLDER MEETING -- September 30, 2009 --
(unaudited)
A special meeting of shareholders of the High Yield Fund was held on
September 15, 2009 (the "Meeting"). At the Meeting, shareholders approved (i) a
new subadvisory agreement between SunAmerica and Wellington Management and
(ii) the operation of High Yield Bond Fund in a manner consistent with the
exemptive order received from the Securities and Exchange Commission that
permits SunAmerica to, among other things, enter into or amend subadvisory
agreements with unaffiliated subadvisers upon approval by the Board of
Trustees, but without obtaining shareholder approval (the "Manager of Managers
Proposal").
The voting results were as follows:
To approve a new subadvisory agreement between SunAmerica and Wellington
Management:
FOR AGAINST ABSTAIN
--- ------- -------
21,282,208.479 821,777.982 1,038,893.937
To approve the Manager of Managers Proposal:
FOR AGAINST ABSTAIN
--- ------- -------
19,677,818.260 2,389,431.062 1,075,631.076
88
[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 The accompanying report
Harborside Financial 219186, Kansas City MO, has not been audited by
Center 64121-9186. We will independent accountants
3200 Plaza 5 resume individual and accordingly no
Jersey City, NJ mailings for your account opinion has been
07311-4992 within thirty (30) days expressed thereon.
of receipt of your
Custodian and Transfer request.
Agent
State Street Bank and
Trust Company
P.O. Box 419572
Kansas City, MO
64141-6572
89
[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 Click on the link to
"Go Paperless!!"
The email address you provide will be kept strictly confidential. Once your
enrollment has been processed, you will begin receiving email notifications
when anything you receive electronically is available online.
You can return to www.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
INSAN - 9/09
[LOGO]
AIG
Sun America
Mutual Funds
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders
may recommend nominees to the registrant's board of 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) Not applicable.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Income Funds
By: /s/ John T. Genoy
-------------------
John T. Genoy
President
Date: December 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: December 8, 2009
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: December 8, 2009